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Quest Means Business

US Markets Mixed As Companies Report Results; Cineworld Emerges From Bankruptcy; Coup In Niger: Evacuation Of Foreign Nationals Underway; Myanmar Military Pardons Some Charges against Aung San Suu Kyi; Heat Is Scorching American Businesses; China`s New Generative AI Rules; New Zealand Looks to Capitalize on World Cup. Aired 3-4p ET

Aired August 01, 2023 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[15:00:21]

RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": An hour before the end of trading, and the market is, well, we know tech stocks are

certainly lower as well. The big board shows a different picture. The big board shows it is up, but it is tech that is suffering and we`ll get into

that over the course of the program as we look at the markets.

That is the market and the main events of the day: Corporate America is holding up in the thick of earnings season, the bulk of companies are

beating expectations.

Cineworld exits bankruptcy amid hopes for a cinema revival.

And the challenge of turning World Cup viewers into real life visitors. The head of Tourism New Zealand is with me tonight live from Auckland.

Live from New York, it is the first of August. I`m Richard Quest and I mean business.

Good evening.

We start tonight, with a very busy week for earnings across the board and an understanding of exactly so far what`s been happening. The results have

been positive.

Caterpillar shares have been trading at a record high on the back of its strong earnings. The industrial bellwether said it is seeing good demand

for construction and mining equipment.

Uber and Jet Blue are -- interestingly, Uber posted its first ever unadjusted operating profit. Its revenues growth fell short of

expectations, which is why the stock is off some six percent, but it has shown good gains lately. And JetBlue is down because even though the

outlook is strong for travelers going abroad, JetBlue is spending a lot on international expansion.

And they say roughly eight of the 10 companies reporting so far have beat their earnings.

Matt Egan is with me. If you`ve pulled strands from what we`ve seen, what does it tell us?

MATT EGAN, CNN REPORTER: Richard, I think the message from corporate America is not as bad as feared. I don`t think these results have been

stellar. Profits are actually down year-over-year, sales are barely budging and profit margins, they are under pressure.

But Richard, you know, as well as I do that everything is relative, especially in the stock market and investors had been bracing for the

worst, right, they were fearing a recession and obviously, that is not what we have gotten.

So when you look at how things are stacking up against expectations, you can see that S&P 500 companies so far, 80 percent of them have beaten on

earnings. That is ahead of the 10-year average of 73 percent.

So this is better than expected. It is exactly what investors want to see. We`ve seen big earnings beat this earning season from the likes of Netflix

and General Electric, Intel. And just today, we heard from Caterpillar, which is benefiting from the boom in construction. Their profits nearly

doubled, blew away expectations. Sales also beat, so a lot of positives.

You see Caterpillar up almost nine percent on this earnings. This is an economic bellwether. So that is the good news, Richard.

I think the bad news, though, is the fact that these companies are reporting drops in profits. In fact, if this plays out, as expected, this

would actually be the worst earnings season since the middle of 2020, when the economy was dealing with COVID.

QUEST: So it`s a case of they are making the money -- they are making more money than they`re expected to, but less money than they have in the

past.

EGAN: That`s exactly right, less than they did a year ago, but investors fear they have been making a lot less than a year ago. And so that`s why

we`ve seen the market go up in a lot of these earning speeches just like Caterpillar.

QUEST: Okay, if you take over all the question moving forward. If you bear in mind, you know, the component in our share price is forward

earnings. Can the current high level of the market -- we`ve been at eight percent in the year -- can the level of market be sustained on the basis of

these numbers?

EGAN: Well, that may ultimately be decided by Jerome Powell and his colleagues because what happens next with the Fed is going to really be

huge.

We know that in some ways, the market is kind of pricing in perfection. If you look at valuations, valuations have gone up and up and that is because

expectations for Federal Reserve interest rate hikes have come back and investors are hoping that the Fed is either done or near really done.

And so if that happens, right, if the Fed only has to raise interest rates one or maybe no more times, then that could support the market going

further; however, on the other hand, if inflation continues to be a problem in the eyes of the Fed, and there is a lot more rate hikes, that would be a

problem for the stock market.

[15:05:13]

QUEST: Matt Egan, grateful for you, sir, tonight. We`ll talk more as the earning season continues.

Europe`s biggest bank says its profit doubled in the last quarter. HSBC has seen a steady recovery from the pandemic. Now higher interest rates, of

course are pumping up its profit margins. The bank also raised its outlook.

In London, CNN`s Clare Sebastian reports.

(BEGIN VIDEOTAPE)

CLARE SEBASTIAN, CNN CORRESPONDENT: Belt tightening by the bank and its tighter global monetary policy, those were the two key ingredients and

another very strong set of earnings from HSBC. The bank more than doubling its profits in the first half of the year compared to the same period in

2022. Pre-tax earnings hitting $21.7 billion in the six months to June.

Well, higher interest rates, of course, mean banks can charge more for loans and mortgages than they pay out on deposit and HSBC has been

aggressively cutting jobs and assets for the past few years.

It also notched up this time an extra one-and-a-half billion dollars in provisional earnings from the acquisition of the UK arm of Silicon Valley

Bank, which collapsed in March.

All of this was good news for shareholders who will be rewarded with a share buyback of up to $2 billion, HSBC`s chief executive announced on

Tuesday, and yet, there are questions around whether savers should also be getting more. HSBC and other lenders are under scrutiny from a UK regulator

for failing to raise rates on customers savings accounts at a similar pace to interest rates.

The Financial Conduct Authority said UK`s top nine financial service providers including HSBC, Barclays, and NatWest had on average pass through

of only 28 percent of the base rate rise compared to an average of 80 percent between 2004 and 2009 for the majority of cash savings accounts.

A spokesperson for HSBC told CNN that the lender had raised its savings rates more than a dozen times since the beginning of last year.

Well, the bank on Tuesday raising its outlook for the rest of this year.

Clare Sebastian, CNN, London.

(END VIDEOTAPE)

QUEST: Regal Cinema`s owner, Cineworld is emerging from bankruptcy as Barbenheimer breathes new life into the theater industry.

The group filed for Chapter 11 two years ago, as the pandemic forced it to close worldwide. The chief executive now says what it needs to reach new

levels of success, it comes as "Barbie" and "Oppenheimer" drive a surge in ticket sales.

AMC, the world`s biggest cinema chain says the two blockbusters led to record revenue last week.

Nathaniel Meyersohn is with me. It is fascinating. Here we have the cinemas, in effect on their last legs and barely breathing. You`ve got

these two movies and they`re off to the races.

NATHANIEL MEYERSOHN, CNN BUSINESS REPORTER: Yes, it is quite a time right now for the movie industry, Richard.

We have Cineworld emerging from bankruptcy. AMC says that it is its best week in its 103-year history on the back of these two movies "Barbie" and

"Oppenheimer." But I still think that the long-term future of the movie theater industry, a lot of questions about it. They still face challenges

from streaming.

And of course, this actors and writer strike that we`re seeing that could delay movie new releases into the fall and longer term.

QUEST: These writers, what sort of time -- I mean, the streaming thing is, it`s not new, but it`s becoming more developed and more pronounced. How

long before you think the dual strikes take their toll?

MEYERSOHN: Okay, so Moody`s says that movie theaters are most at risk if this strike drags out more than a few months. The last time we saw the

writers and actors strike more than a decade ago, movie theaters took a -- it took a tremendous toll on them, and I think right now, it would hurt

even more because of the rise of streaming and because of all of the competition that movie theaters now face that they didn`t a decade or two

decades ago.

QUEST: But the "Barbie" and the "Oppenheimer," without them, I mean, this is sort of almost impossible to know because we have them, but in a sense,

without them, how bad would the situation have been in this quarter?

MEYERSOHN: I think it would have been just terrible. I mean, this is about a once in a hundred year occasion that you have these two just

tremendous blockbuster movies come out at the same time, but you looking at "Indiana Jones," the recent movie, that underperformed. "Mission

Impossible" with Tom Cruise also has been a little bit sluggish.

[15:10:02]

So look, obviously, "Barbie" and "Oppenheimer" are great news for the movie theaters, everything they could have asked for, but without these types of

blockbusters that get so many people into theaters, they`re really going to struggle.

QUEST: Have you seen either of them yet?

MEYERSOHN: I saw "Oppenheimer" on Friday evening and it stuck with me throughout the weekend.

QUEST: I haven`t seen either yet. I`m determined to go and see one of them in a movie theater, and not have to sit on a plane as I end up seeing

most of my movies.

Nathaniel, grateful for you. Thank you, sir.

QUEST MEANS BUSINESS tonight. Efforts are underway to evacuate foreign nationals from Niger, as the political uncertainty reigns. Its neighboring

countries are warning the international community not to intervene or it would be an act of war.

(COMMERCIAL BREAK)

QUEST: The evacuation of foreign nationals is picking up the pace in Niger. France, Italy, and Spain are amongst EU countries that getting their

citizens out. It follows warnings from Mali and Burkina Faso amongst others that they will consider any outside intervention to restore the ousted

government as a declaration of war.

The US isn`t calling this a coup. I asked the Vedant Patel from the State Department. I said look, it looks like a coup, it sounds like a coup, it

feels like a coup, so why aren`t you calling it a coup?

(BEGIN VIDEO CLIP)

VEDANT PATEL, PRINCIPAL DEPUTY SPOKESPERSON, US STATE DEPARTMENT: Ultimately, this continues to be an incredibly fluid situation. Look,

President Bazoum has not resigned. He continues to be constitutionally elected leader of the government of Niger, and we`re going to continue to

consult closely with regional partners and entities including ECOWAS, which has shown immense leadership in calling for the release of President Bazoum

and his family, a call that we are going to continue to echo and we will continue to assess and monitor this situation closely.

(END VIDEO CLIP)

QUEST: Larry Madowo is in Nairobi.

Larry, I know why the US won`t call it coup because that will automatically trigger sanctions and financial penalties. But at what point does the US

have to show teeth and basically stop trying to find some negotiated solutions whilst everybody else is digging in?

[15:15:00]

LARRY MADOWO, CNN CORRESPONDENT: We`re starting to see some of those teeth because a short while ago, they are saying that they`re suspending

military cooperation with the Nigerian forces, but they`re not stopping military aid, they are not stopping military assistance, not stopping

economic and humanitarian aid. So there is a small step there.

I can see why the US is kind of slow to call this a coup yet, because President Mohamed Bazoum remains holed up in the Presidential Palace. He

has met recently with the president of Chad, who is trying to mediate in there.

So he is not been put on trial or arrested or left the country. So there`s still a path here that the US believes back to diplomacy that can lead to a

peaceful resolution to this, but a short while ago, the first flights has evacuated out of the country run by the French. They said that they had two

A330s on the ground in in Niamey to evacuate several hundred French citizens, several hundred European citizens who wanted to leave the

country. It is voluntary at this stage and they expect all of this to be over in 24 hours.

So the first one has taken off. There are likely be more and they`re ready to send a third A330, the French say, if that`s necessary.

This follows the protest at the French Embassy in Niamey on Sunday, which they believe were coordinated and planned by supporters of the military

junta. But on the streets, the people of Niger say, good riddance to bad rubbish, essentially, I`m paraphrasing here. Listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (through translator): As an African, I can say that all the problems that Africans are experiencing in Niger and Africa, it`s

France. That`s at the heart of it. It is France that`s at the root of our suffering.

UNIDENTIFIED MALE (through translator): All the French have to do is leave. We don`t need them. Even without them, the country will develop.

(END VIDEO CLIP)

MADOWO: There has been a growing anti-French sentiment in Niger, which the coup leaders are riding on. This exists not just in the country, but

across the Sahel region, especially in Mali, in Burkina Faso, in Guinea, all former French colonies that have now decided to ally themselves with

the military junta leading Guinea, partly because they`re also led by the military, having overthrown democratically elected governments.

So if there were to be any economic sanctions, they will not apply them, but especially they`re saying that if there were to be a military

intervention by the West African bloc, ECOWAS, they will support the Nigerian forces to try and beat this back -- Richard.

QUEST: Okay, Larry, perhaps an impossible question to answer, and certainly one that I hope we never get to. But if ECOWAS were to launch

military action, and now you have these other countries saying they would go to their end, where is the balance of strength militarily between these

two different groups?

MADOWO: They can try. They`ve all had some experience fighting extremist groups in their respective countries, but a combined military force of the

other West African states would be a very strong one, especially if it had the backing of the African Union.

So if the Nigerians the Ghanians, the Sierra Leoneans, other militaries from the region came together and did do something like this. I think they

would have an upper hand here.

Obviously, this is all speculative. We hope it never leads to this, but right now with five days to go because ECOWAS gave them a week, it is a

possibility.

QUEST: Larry Madowo, we are grateful to you, sir. Thank you.

The United States is limiting its Visa Waiver Program for Hungarians over security concerns. Washington says Budapest hasn`t done enough to verify

the identities of nearly a million people who have been granted Hungarian citizenship from 2011 to 2020.

People traveling under Hungarian passports will no longer be allowed multiple entries into the US. The authorization to travel visa free will

last only one year, rather than two.

Jennifer Hansler is at the State Department and she is with me.

It is an interesting one, isn`t it, because for the US to take such quite dramatic action against an EU country that is part of ESTA, the US must be

feeling pretty pissed off about it.

JENNIFER HANSLER, CNN STATE DEPARTMENT PRODUCER: Well, that`s right, Richard. They said they took this as a last resort option that they had

raised these issues repeatedly across multiple administrations with the Hungarian government and they said the Hungarian government did not take

the steps that the US had asked for, for these restrictions not to be put in place, so they said that is what led to today`s restrictions on the

ability for people with a Hungarian passport to travel here to the US.

Now, the State Department spokesperson, Matt Miller said this was the only reason they made these restrictions. It had nothing to do with some of the

tensions we`ve seen between Washington and Budapest. However, he said that there were concerns about that nine-year period in which Hungary had that

simplified naturalization process. He said that there were criminals and people without a connection to that country who were granted passports in

that time, but he didn`t know if those people had been actually able to come to the US under those passports.

But you know, we will wait to see what Hungary`s response is to these new restrictions -- Richard.

[15:20:10]

QUEST: Right. Because there is also some tax treaty issues with Hungary. We know that the ambassador in Budapest has had some LGBT issues with the

Hungarian government. I think it`s fair to say that maybe the State Department would never go as far as to say bilateral relations were bad,

but they`re not good.

HANSLER: That`s right. I mean, there are ongoing controversies between the two countries. The US has repeatedly raised concerns about repression

in that country against, as you said, the LGBTQ community there, against journalist, against civil activists there.

And David Pressman, the ambassador there, has raised these issues very staunchly, very loudly with the Orban government. And this is, of course, a

government, you know, that has been more close to Russia than other EU partners and other NATO partners. So there is a bevy of issues between the

US and Hungary.

And as Matt Miller said, this doesn`t have anything to do with what they did today, but these are issues that the US will continue to raise.

QUEST: Jennifer, grateful. Thank you, in Washington.

HANSLER: Thank you.

QUEST: A tiny village in Ukraine is symbolizing the enormous challenge that the Kyiv government troops is facing with their ongoing

counteroffensive. Even when they do manage to recapture territory, the fight isn`t over. They have to defend it, hold it, and see what happens

next.

Nick Paton Walsh is at the southern frontlines.

(BEGIN VIDEOTAPE)

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): The fight so fierce and victory so bitter, there is little left of

Staromaiorske to defend it from. No cover for troops, no structures, just the dust of a tiny four-road village, the first gains of Ukraine`s renewed

full-throttle counteroffensive.

So small, but symbolic, Russia even claimed Monday with constant shelling it had pushed Ukraine out of it again.

Something these men, fresh back from that fight, would scoff at. Krivbas (ph), his callsign, fought all the 10 days of the assault until the

Russians finally fled. Here he is as shells rain around in the initial advance.

(KRIVBAS speaking in foreign language.)

WALSH (voice over): "When you assault under enemy shelling," he says, "You have nowhere to hide. That`s the hardest part."

They`ve since tried to assault again twice with small groups.

And he fought for here too, Neskuchne, the town before it where the Russians hid 200 troops in the basements, not even leaving for the toilet,

so Ukraine attacked with a smaller force.

He takes us to where the Russians made their final stand, the school hall and its corridors. "There is no love," says the wall. They seemed to relish

the nothing they brought and left no clues as to why they fought.

WALSH (on camera): One of the hard things for the Ukrainians to understand is quite why the Russians are fighting so hard for here,

Neskuchne and the more recent victory of Staromaiorske down the road.

Is it that these are their last lines of defense? Well, no, they think there`s far more fighting to be done.

(UNIDENTIFIED MALE speaking in foreign language.)

WALSH (voice over): "I hope that when we get through their last line of defense," he says, "Then they start to run. For now, they still feel there

is something behind them. Yes, we feel support, but we are very, very tired."

There is so much more ahead to come. Ukraine may have put in its reserves now to the fight, but they face the same Russian brutality.

(REAVER speaking in foreign language.)

WALSH (voice over): "Their tactics haven`t changed," he says. "They put the Storm Z convicts in front with no communications or information. They

stand till the death. I don`t understand their motivation or what they`re fighting for."

Reaver (ph) carries a new Russian AK-12 as a trophy as he describes the gas they used on him.

(REAVER speaking in foreign language.)

WALSH (voice over): "There was chaotic shooting," he says, "To find out where we were. Then the gas. You don`t feel it. It moves slow along the

ground. I was packing my rucksack when I felt burning on my throat and nose."

One mine sapper, call sign Volt, is busy telling me how the Russians have started booby-trapping mines putting a grenade under an anti-tank mine when

he is interrupted.

Almost endless the noise of outgoing fire. They are moving, but just not sure how much longer for.

Nick Paton Walsh, CNN, Neskuchne, Ukraine.

(END VIDEOTAPE)

[15:25:10]

QUEST: Extreme heat will carry a major price tag counting hundreds of billions of dollars. The stifling effect of climate change on business in a

moment.

It is QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Hi, I am Richard Quest. More QUEST MEANS BUSINESS in just a moment.

Extreme heat is costing the US economy $100 billion a year in lost productivity. The former governor of New Jersey is with me.

The World Cup host, New Zealand, is hoping the football hype will draw more tourists.

That will all come your way after I`ve given you the news, because here, the news always comes first.

Ukraine says a new drone strike on Moscow is a sign that the Russian capital is becoming used to a full-fledged war. A drone hit this high-rise

building in Moscow`s business district for the second time in three days. The building houses government offices including the Ministry of Economics.

The federal grand jury investigating Donald Trump`s role in the 2020 election interferences met in Washington, DC as part of the Special Counsel

Jack Smith`s probe to decide whether to bring new indictments against the former president.

The head of a hate speech watchdog is being sued by Twitter. It says the legal action sounds like a conspiracy theory. Twitter has accused the

Center for Countering Digital Hate of collecting user data in violation of its terms of services and federal hacking law.

Military rulers in Myanmar have pardoned Aung San Suu Kyi for five of the charges for which she has been convicted. As a result, the ousted leader`s

jail sentence has been reduced to 27 years instead of 33, although she still faces sentencing for 14 more offenses. The Supreme Court is set to

hear some of her appeals in the next two weeks.

[15:30:10]

(MUSIC PLAYING)

QUEST (voice-over): But she still faces sentences for 14 more offenses. The supreme court is set to hear some of her appeals in the next two weeks.

(MUSIC PLAYING)

QUEST: The cleanup is underway in Beijing after the Chinese capital was drenched by Typhoon Doksuri. It is one of the biggest storms to hit the

city in over a decade. The typhoon dumped a month`s worth of rain in 48 hours. CNN`s Marc Stewart reports.

(BEGIN VIDEOTAPE)

MARC STEWART, CNN INTERNATIONAL CORRESPONDENT: Violent floodwaters race across China after record-setting rain, destroying roads, flooding streets

and prompting rescues in the aftermath of Typhoon Doksuri.

UNIDENTIFIED FEMALE (through translator): I say, it`s the first time in my life that I`ve seen such a scary flood. I haven`t seen this before and

hence it`s scary. I`ve lived so long and I`ve not seen this before.

STEWART (voice-over): Near the capital, Beijing, the force so fierce, the driver is trapped in their car amid the raging water. A rescue worker drops

a line and the driver is hoisted to safety.

In Beijing, a giant hole sits in front of a newly opened mall. One of the venues from the 2022 Winter Olympic Games is underwater. And a recently

built hotel is damaged, according to a state-run media outlet. In some cases, the water is so high it nearly tops the power lines.

River banks are hovering close to the street. And where the water has receded, a mess is left behind. The flooding is disrupting everyday life.

At a Beijing airport, water is flooding the tarmac. Flights are facing delays and, in some cases, trains are at a standstill.

Evacuations are underway in Beijing; tourist attractions remain closed. As emergency workers do what they can to help, family members are looking for

loved ones. A city brought to a standstill as another massive storm lingers in the horizon -- Marc Stewart, CNN, Tokyo.

(END VIDEOTAPE)

QUEST: New research shows extreme heat could cost the U.S. $100 billion per year only in lost positivity. If temperatures are left unchecked, the

impact on GDP could be extreme as well, with heat stress on workers like you and me, reducing world output by more than 15 percent.

Other research is all reaching similar conclusions. Workers are about 70 percent less productive than usual in temperatures past 37 degrees Celsius.

Yesterday I talked about this with Rich Lesser, the global chair of the Boston Consulting Group. He told me the climate change is a big concern for

chief executives but not their number one.

(BEGIN VIDEO CLIP)

RICH LESSER, GLOBAL CHAIR, BOSTON CONSULTING: I think it`s top three for many CEOs. I don`t know that it`s number one for all CEOs; in some

industries, if you`re in energy, parts of the industrial sector, it`s hard for this not to be the top priority or tied for the top priority.

I think in many other sectors, it`s on the very short list but, of course, we have an AI revolution underway. We have the economic uncertainty you and

I just discussed. There is all the geopolitics. So I think it is on the shortlist. It needs to be higher for most companies, I want to be clear.

(END VIDEO CLIP)

Christine Todd Whitman is with me. She used to run the U.S. Environmental Protection Agency and is also the former governor of New Jersey.

That`s where we find you tonight. Governor, so it doesn`t really matter which way we look at it. If you want an existential threat, if you want an

economic threat, it doesn`t matter which way you choose to take it. If you want hard numbers, this climate change is going to hit us.

CHRISTINE TODD WHITMAN (R-NJ), FORMER GOVERNOR: Oh, it already is. Absolutely, as you mentioned in that last report. Economically, it`s a huge

disaster not to mention what it does to people, what it does to human beings who lose their lives in the floods and the fires that you have

because of it.

And the heat prostration, the deaths we`ve seen from this heat. I have a home in Arizona where I go for the winter. And they have been just hammered

in Phoenix. It is nothing they`ve ever seen.

People are finally beginning to understand that we have to take this seriously. It is an existential threat, it is here and now. The real

problem is that most average Americans think, what can I do about it?

And until the leaders take it seriously and make it a top priority --

[15:35:00]

WHITMAN: -- it`s going to be very hard to focus everybody else on that issue.

QUEST: That is back to what Rich Lesser of BCG was saying. It is in the top three but it`s not number one.

Do you think it has to go to number one for CEOs?

WHITMAN: I think it does. And for many of them, it is starting to climb there. They are beginning to see what damage it does to them, whether they

are headquartered in the U.S. or just have satellites around the world.

They are being hammered wherever they are. They are starting to see the importance of that. A lot of it also rests on governments taking it

seriously. At least this president has been taking it seriously by getting Congress to move on it. It has been a different question altogether.

When you have a lot of rhetoric saying, oh, it`s not really all that serious and we can`t do anything about it without destroying our economy,

which is absolutely wrong. Actually, it can be a big boon to the economy trying to address this issue and coming up with new technologies that we do

so well in this country. But we haven`t crossed that bridge yet.

QUEST: Should we be encouraged or discouraged by COP28 about to happen?

It`s in the UAE. Let`s ignore the questions of who is leading it, it is an oil state. The real reality is whether the countries are prepared to make

decent offers or are we going to hear the same old arguments?

You`ve got your industrial revolution, it is time for us to catch up. You have to pay the bills for what`s happened in our countries over decades

and centuries.

WHITMAN: Well, I think we`re still going to hear that. But again, that offers an opportunity. We can do a lot for developing countries. Exporting

some of our knowledge, particularly things like small modular reactors, new technologies.

This can be something for the U.S. that really results in significant economic growth and we need to be part of it. The developing economies are

not wrong, when they say, listen, you guys looted everything to get your economic advantage. And now you`re trying to hold us back.

But I think even they are beginning to see that it is to nobody`s advantage to allow ourselves to continue to pollute the atmosphere the way we have,

because it is impacting them so directly. Actually, it has a bigger impact on some of the developing countries, most of them, than it does on the

developed countries.

QUEST: So Governor, why am I so pessimistic?

Why am I so, you know -- I`d like to hope that we could do it. But I sort of feel, COP28, how many more COPs would you like before we finally get

there?

So why am I so pessimistic?

Give me a little bit of hope.

(LAUGHTER)

WHITMAN: Well, that`s going to be a challenge. But I would say the hope comes as this becomes more and more of a reality to people.

I mean, it is a security threat to the United States, besides being an economic threat. It is a security threat around the world, particularly

when you have countries that don`t have the most stable government anyway and all of a sudden people can`t support themselves.

Agriculture is gone, so they are starting to see we cannot keep ignoring this. The new -- what gives me hope is all the new technology being

developed, the entrepreneurs who are really gotten this and are starting to focus on it and starting to make the kinds of changes that can help us all

and providing things for the average --

The average person would do anything they could as long as they could afford it. So when you start to bring down the cost of solar panels, let`s

say, give people alternatives that doesn`t cost them an arm and a leg, doesn`t mean they have to make the decision between feeding their family

and doing the right thing for the environment.

We give them those tools and people will do it. And there are a lot of entrepreneurs that are working on that right now.

QUEST: Finally, I want to turn to a completely different subject. Each week on a Friday during the summer, we take our program on the road, Summer

Fridays. It has been a chance of -- I`m going to a place you probably know quite well, just down the road from you.

I`m going to Asbury Park. We`re going to be broadcasting on Friday from the boardwalk and the beach there. I assume this is an area that you know well.

WHITMAN: I do. There is nothing like the Jersey Shore, believe me, 127 miles of beaches. Some of the best water you`ll find anywhere. It seems the

nice thing is -- and I might be wrong, it might change -- but it seems the sharks have moved north. And they are up off Long Island. We haven`t had --

(AUDIO GAP)

QUEST: Oh. Well -- yes, sorry. We just lost you for a moment, Governor. You were just telling me about the sharks.

(AUDIO GAP)

QUEST: No, we can see you but we can`t hear you. I`ll take it as a good sign that there are no sharks.

[15:40:00]

QUEST: Again the reminder, our program comes from Asbury Park on Friday. The pictures we just showed you there were me walking. That`s The Stone

Pony, the famous Stone Pony Music Club, Bruce Springsteen and Co.

And of course there`s the boardwalk itself, a wonderful walk along the Jersey Shore, which is where Friday`s Summer Friday will be coming from.

Let`s just hope the weather holds good.

In a moment, China is getting ready to launch new rules for AI. AI regulation behind the country`s great firewall.

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QUEST: China has become one of the first countries to build the guardrails for the technology that powers popular AI services. The recently unveiled

guidelines will take effect i around two weeks. Kristie Lu Stout has more.

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KRISTIE LU STOUT, CNN CORRESPONDENT (voice-over): Meet Xijaja (ph), a virtual idol powered by artificial intelligence to Sell Burgers in China,

McDonald`s hired Xijaja (ph) to interact with Chinese customers.

The U.S. may be curbing AI chip exports to China. But the nation is fast becoming an AI powerhouse. The country`s home to top tech firms leading the

AI charge like Alibaba, Huawei, Tencent and Baidu creator of Xijaja (ph) boasts that its chatbot Ernie has beaten OpenAI and ChatGPT on several

metrics.

At the state-backed world AI conference in July, billionaire entrepreneur Elon Musk praised China`s AI prowess.

ELON MUSK, CEO, TESLA MOTORS: China will have very strong AI capability is my prediction.

STOUT: China has become one of the first countries in the world to regulate the technology that powers popular services like ChatGPT. In July,

it unveiled interim rules to manage generative AI, seeing it needs to be aligned with the core values of socialism.

ANGELA ZHANG, CHINESE LAW PROFESSOR, UNIVERSITY OF HONG KONG: The Chinese government is trying to ensure that the use and application of AI will be

aligned with its own set of moral principles that underscores its political and social stability.

The government not only placed the burden on the service providers but also on the users of AI services.

STOUT (voice-over): In January, China`s new rules against deep fake technologies came into effect.

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STOUT (voice-over): Chinese authorities have detained people for allegedly using generative AI to commit fraud and create fake news.

STOUT: And while China is moving fast to regulate the industry, some critics warned that it may not be equipped to avoid an AI disaster.

BILL DREXEL, ASSOC. FELLOW FOR TECHNOLOGY AND NATIONAL SECURITY PROGRAM, CNAS: Most societies to kind of learn from disasters but the PRC has a

kind of propaganda machine that makes it hard to do that where there`s a sort of disaster amnesia.

There`s a kind of a chronic culture of crisis mismanagement in authoritarian regimes generally and China`s no exception.

STOUT (voice-over): Drexel cites China`s zero COVID policy as a recent example of crisis mismanagement. But the danger posed by AI is not limited

to one country, top technologists the world over including China have signed this petition to warn of the risk of human extinction from AI.

SAM ALTMAN, CEO, OPENAI: As these systems get very, very powerful. That does require special concern and it has global impact, so it also requires

global cooperation.

STOUT: China`s new AI rules have a provision to encourage participation and global standards setting.

ZHANG: They are very keen to take part in shaping global regulation of AI.

STOUT (voice-over): For now, Beijing is steering its own AI future with a heavy hand to encourage Chinese tech success and ensure that artificial

intelligence will not undermine the state -- Kristie Lu Stout, CNN, Hong Kong.

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QUEST: As we continue in just a moment, it is sunrise in New Zealand.

This is a live picture from the city of Queenstown, beautiful, 7:46, remember it`s winter there so it is a bit darker, a bit later. The head of

tourism in New Zealand will be with me. His country is trying to capitalize on the Women`s World Cup and so much more.

Oh, that`s gorgeous.

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QUEST: Ten to 8 in the morning in Queenstown, New Zealand. That is the sun as it rises. New Zealand is the co-host of the Women`s World Cup, with

their neighbors, Australia. Last time, the favorite U.S. team barely made it to the knockout stage during a dramatic game in Auckland. More than a

billion people are watching the World Cup.

[15:50:00]

QUEST: It has given New Zealand a golden opportunity to boost its tourism. The country has already put out this campaign using women`s football and

some of its best-known sites, like "Hobbiton" and Mt. Cook.

The so-called seamless travel is a possibility for residents of the -- both sides of the Tasman. The countries are working to simplify border checks

for people traveling across the Tasman. And the process could be as simple as using a self service kiosk in the airport.

Leaders say a common passport is not on the table. Next year, more decisions will be taken. Rene de Monchy is the CEO of Tourism New Zealand,

he joins me from Auckland.

Thank you, sir, for getting up -- well, you are up and moving I`m sure, anyway, with the World Cup there.

Doing a brilliant job. The pictures are great, the football is excellent. And I guess, although I always wonder with New Zealand, it`s so well known.

Do you need those events to showcase the country?

RENE DE MONCHY, CEO, TOURISM NEW ZEALAND: Absolutely. Good morning, Richard, from New Zealand.

Absolutely. I think, yes, New Zealand is well known. And lots of people dream about New Zealand. But at a global scale, we are a pretty niche

destination.

So pre-COVID we represented about 0.8 percent of global travel spend. And only a quarter of 1 percent of global travel, so pretty niche by any

definition. These sorts of events really allow us to get awareness, get people to dream about New Zealand, see the variety. So we take that

opportunity.

QUEST: Double edged sword, pandemic; on the one hand, you were closed for X number of years but that only has been boosted by the other side, which

is bucket list and now people are deciding.

I`m not saying you would have had a pandemic if you`d had a decision but you`re benefiting from the fact that bucket list spend has got New Zealand

at the top of its list.

DE MONCHY: Yes, absolutely. We are actually one year, it was just the one year anniversary since we fully opened on 1st of August, total borders open

to the world. People are looking for meaningful travel. They want to explore after being locked up for a few years due to the pandemic. So we

are trying to capitalize on that opportunity.

QUEST: How important is, for example, the new nonstop -- it ends at 1 -- from New Zealand to New York and back, which incidentally -- and double-

edged sword again.

I noticed Qantas didn`t waste any time taking advantage of its treaty rights and running the same flight, Auckland to New York, which, even

though it is from Australia, benefits you because it lands in New Zealand first.

DE MONCHY: Absolutely. Direct connectivity is one of the things we really want, particularly where we are geographically in the world. We are not the

closest to the rest of the world.

So having a direct service, for example, to New York, it just lowers the barrier, makes it easier for somebody in New York to make the decision, one

flight versus two flights is easier.

And quite frankly, Qantas heading to that route is good for the consumer. Having competition on the route, both Air New Zealand and Qantas, in

partnership with American Airlines, means that it is that little bit easier for people to choose and book New Zealand. So that is a great outcome for

us.

QUEST: What is it you need now from policymakers?

Because both at the national and global level of policymaking, tourism, it has always been, everybody talks about the significance of tourism to their

economy. Some countries do better than others because they realize it.

But what do you need now?

DE MONCHY: Look, you`re right. Tourism in New Zealand, pre-COVID numbers, was the number one exporter and the number one foreign exchange earner, the

number one employer. So very significant for us here in New Zealand.

I think what we need to be conscious of is it is a competitive global world out there. So I think, important for us as New Zealand, given where we are,

given we`re quite niche, is the easier we can make it for people to choose investing in tourism promotion, making it easier for people to choose our

destination.

It is a very competitive landscape. So how -- you know, anything we can do to make it easier for people to choose, make that booking and make their

way here, I think will make a significant impact in what was the number one export earner.

And if we look at the last quarter`s data, it is back up to number two. We are seeing strong growth out of what has been our first summer. But we

shouldn`t underestimate the global competition.

QUEST: Right. Finally, I was talking to the CEO of Air New Zealand at IATA earlier this year.

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QUEST: We were talking about the new Skynest, the bed at the back of the bus that they are going to start renting.

Are you up for a journey on that?

I`m sure I can get him to give us a bit of discount if we call go -- you can have three hours, I`ll have three hours, he can have three hours. We`ll

get him to do us a deal, a bucket rate.

DE MONCHY: Yes, I`ve seen a prototype. But obviously, it hasn`t started flying yet. So I haven`t seen it up in the air. But look, anything that can

make that flat more comfortable, a 3-4 hour block of sleep, I`d certainly be willing to give it a try. We`ve all tried long haul flights.

And I think getting a few hours of sleep makes a significant amount of difference to the trip.

QUEST: Thank you very much, Rene, good to see you, sir, thank you.

DE MONCHY: Thank you.

QUEST: We were hoping to actually be in New Zealand. Unfortunately, other news events got in the way. We were going down there for that nonstop

flight. In the next year, we will get there. I promise you, we will get there somehow.

The market quickly; the Dow is tootling along at 68 points. It is the summer, it is the summer. I`m blaming the summer. The earnings are good but

the market is just basically treading water. A Profitable Moment is next.

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QUEST: Tonight`s Profitable Moment: the undercurrents in the travel and tourism industry, absolutely fascinating at the moment and that is why it

was great to have the head of New Zealand tourism. There`s a really good example.

Shut for several years, reopens and it is one of the bucket list of places that people want to go to. You then add in, for example, the new nonstop

flight from Air New Zealand, Auckland to New York, and the competitor, Qantas, comes in; Sydney, Auckland, New York, nonstop.

And you start to see the undercurrents and shifting in the post pandemic world, which means, frankly, that everything is on the table. All options

are there. No country can take its tourism business for granted.

But every country has the opportunity to adapt. And it is countries like New Zealand and Australia, which have both suffered sharply on the downside

of the pandemic, that are now being the most innovative in ways to get things moving again and take advantage.

Airlift, capacity, accommodation, good deals and all that stuff. We`ll watch it closely. It`s one of the subjects we cover most, aviation and

tourism, here on QUEST MEANS BUSINESS. Because we know that`s what`s important to you.

And that is QUEST MEANS BUSINESS for tonight. I`m Richard Quest in New York. Whatever you`re up to in the hours ahead, I hope it`s profitable. The

bell is ringing, I`ll see you tomorrow.

END