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QUEST MEANS BUSINESS

Stocks Fall As China Retaliates, Orders U.S. Consulate In Chengdu Closed; Republican Discord Delays U.S. Stimulus As Benefits Run Out; Europe Moves Ahead With Rescue Plan; New CDC Guidelines Strongly Favor Reopening U.S. Schools; McDonald's, Chipotle Make Face Masks Mandatory; Goldman Sachs Reaches Settlement In 1MDB Scandal. Aired 3-4p ET

Aired July 24, 2020 - 15:00:00   ET

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


[15:00:19]

RICHARD QUEST, CNN BUSINESS ANCHOR: U.S. stocks set to end the week lower. I'm surprised they're not lower than they actually appear to be at the

moment.

But there you are, we are off 173 points, just half a percentage point at the moment, and the reasons why. The reasons why -- firstly, tit-for-tat

retaliations, shutting down a U.S. consulate in Chengdu as the diplomatic crisis continues to escalate.

We're live from New York. It is Friday. It's the end of the week. I am Richard Quest and yes, I mean business.

Good evening. We begin tonight with the perilous state of what's happening in the economy and the way the stocks so far are weathering the pandemic

and its wider implications.

Stocks are now well and truly rattled amid a breakdown between the world's largest economies. China has now announced it is closing the U.S.

consulates in Chengdu after the U.S. a closed Chinese Consulate in Houston. There are other things as well that we need to talk about.

The Chinese scientists now in U.S. custody that has taken place. The U.S. is alleging mass espionage network in the United States. Harsh rhetoric has

been spoken by Mike Pompeo, who described it as a modern day Cold War.

(BEGIN VIDEO CLIP)

MIKE POMPEO, U.S. SECRETARY OF STATE: Look, we have to admit a hard truth. We must admit a hard truth that should guide us in the years and decades to

come. That if we want to have a free 21st Century and not the Chinese century of what Xi Jinping dreams, the old paradigm of blind engagement

with China simply won't get it done.

We must not continue it. We must not return to it.

(END VIDEO CLIP)

QUEST: Kylie Atwood is with us, U.S. security correspondent at the State Department. OK, so what actually now is the situation? First, the U.S.

closes the Houston consulate -- China's consulate there. Now, China kicks the U.S. out of Chengdu. Now we have this arrest. Tell me more.

KYLIE ATWOOD, CNN NATIONAL SECURITY REPORTER: Yes, that's right. There's a lot of moving parts here, Richard. And the bottom line is that all of this

action is following suit with what the Trump administration has essentially been ratcheting up towards China. This aggression, taking on China for its

widespread economic espionage here in the United States, as well as intellectual property theft that they have been alleging from Department of

Justice officials and State Department officials over the last few months here.

So the question is, so what's next, right? By the end of the day, we expect that the Chinese will have completely gotten out of their consulate in

Houston.

Now, I'm told that there are about 60 Chinese officials who are working there, and they're all given 30 days to get home themselves and their

families.

And so now what's next? We're watching to see what happens with that U.S. consulate that the Chinese have shut down and we really don't know the

specifics of that. The State Department not saying a whole lot on that front today, but making it very clear that this is only the beginning of

what the U.S. intends to be a really confrontational approach towards China.

QUEST: OK, so this is a worsening situation in the middle of a pandemic, where we're apt to be so concerned with what's happening with coronavirus.

This is almost a sideshow threatening to get out of control. How far can this go?

ATWOOD: Well, it can go very far and it actually has implications for the coronavirus pandemic. Of course, you know, if the U.S. continues to push

too far, there have been the fears that the imports that the U.S. get from China that actually feed the pharmaceuticals here in the United States and

also provide medical equipment in the United States could potentially be cut off.

So there are real threats, real live threats that could impact American everyday lives here. But the Trump administration continues to say that the

bottom line here is that China has been allowed for too long to get away with all this stuff and they really want to be the ones to carry the baton

on this front.

[15:05:14]

ATWOOD: Now, yesterday, Secretary Pompeo called confronting the Chinese Communist Party the mission of our time, and he said that the U.S. is in

the best position to lead that fight. But of course, we have seen that this has also created some tension between U.S. and our allies.

QUEST: Kylie Atwood. Kylie, thank you at the State Department. China, of course sees things very differently, but even in China, the stock market

reacted very badly to what it perceived of these rising tensions and the dangers that could have for the economy.

This is the way the U.S. markets are down and this is the way the Shanghai Composite is off. Nearly four percent for the main market. Hong Kong

similarly down.

Europe is also down -- all on the back of these concerns. Shanghai was off four percent and China is blaming the U.S. for of course, what's taking

place, but relations have plummeted to pretty much all-time lows in recent memory.

Think about what we're talking about here. Trade wars, pandemics, Human Rights with Hong Kong and the Uighurs. CNN's David Culver is in Beijing.

(BEGIN VIDEOTAPE)

DAVID CULVER, CNN CORRESPONDENT: I'm David Culver in Beijing, where China in many ways is feeling domestic pressure to retaliate against the U.S., so

they chose to shut down the U.S. consulate in Chengdu. It is in Central China near Tibet. Their reason? Well, they claim U.S. personnel there

engaged in activities that harm China's national security interest.

Not surprisingly, it is similar to the claim the U.S. made about the Chinese Houston consulate serving as a front of illegal spying, according

to U.S. officials.

Well, state media here suggested the American diplomats have until Monday morning, local time to move out. The announcement from the Foreign Ministry

came just hours after Secretary of State Mike Pompeo delivered a speech essentially themed the China threat, saying that the Chinese Communist

Party threatened global freedom.

China responded saying Pompeo ignored facts and carries an ideological bias. If the U.S. takes further action, Chinese officials have said China

is prepared to retaliate until the end.

(END VIDEOTAPE)

QUEST: David Culver in Beijing. This would all be serious in any circumstances, but for the U.S. economy, it's simply one more trouble and

storm that it's having to weather.

Officially, the new stimulus is now delayed, at least for the time being. The Republicans are unable to agree amongst themselves, and the effect of

that is it's now -- we're expecting a proposal perhaps on Monday.

The Democrats say Republicans are dithering. Bear in mind, of course, the unemployment benefits, that now -- well, it essentially has expired because

of the date and the way things are planned. This is a crucial $600.00 a week given to those who are unemployed. It officially expires at the end of

the month, but the way it's paid, the way the states do it effectively de facto, it's gone.

Airline jobs are a ticking time bomb. Come September, the CARES Act no longer is holding the handcuffs to the airlines, and they've already said

United, Delta and American that job losses will take place in the tens of thousands.

And the health crisis, the second wave, remember, we're still seeing record numbers of confirmed cases and more than a thousand deaths a day in the

United States.

Paul Krugman is with me, the Nobel Prize winning economist, author of "Arguing with Zombies." He joins me from Princeton in the U.S.

Paul, this is the situation has been bad before in this crisis. But I get the feeling that we are now in a truly precarious position where decisions

taken now will have very long-lasting effects.

PAUL KRUGMAN, NOBEL PRIZE WINNING ECONOMIST: Well, yes, I mean, we're actually -- we're heading over a cliff. We have actually gone over the

cliff already in terms of policy. I mean, the thing that happened in March was that somewhat miraculously, the CARES Act, although it was highly

imperfect, was actually not bad and it provided a crucial, you know, lifeline for workers, which in turn provided a crucial backstop for the

economy because workers could keep on spending even though they were unemployed.

Now, all that's gone, as you said. The reference week is the week that starts tomorrow, so there will be no more benefits, no more $600.00

supplements, which is a huge, huge hit to incomes.

And meanwhile, they counted on economic recovery, it is not happening. I mean, I had been looking -- I am just looking at the latest, the real-time

Population Survey from the Dallas Fed, which is suggesting that if anything, we're headed down again, and we're about to take off -- take away

money of more than $800 billion at an annual rate from workers. That's a huge -- that's a contractionary in fiscal policy that is on the order of

four percent of GDP right in the middle of mass unemployment even before we did that. So this is a desperate situation.

[15:10:23]

QUEST: In this situation, whether it becomes a double dip recession and L- shaped or whatever, U-shaped whatever it becomes, it seems we are in for worse times ahead.

KRUGMAN: Well, I don't know. Yes, I mean, it's anybody's guess whether the next couple of job numbers will be disappointing positive or actual

negative. We still don't have -- it is very hard to track this, but it's not looking good and we're not remotely out of the woods.

So we are -- the odds that this will be a depression with people kind of informally used the measure, a year of 10 percent plus unemployment, those

odds now look very much higher than you might have hoped for.

It actually looks I say more likely than not that we will be looking at a really extended terrible period. So yes, this is a mess.

QUEST: And this China -- this China, when I say side play, I am not trying to diminish it, but to be getting involved in this at a time like this, I'm

not sure I see that there's benefit on either side.

KRUGMAN: Well, I have -- you know, the Chinese are definitely not good guys. Never make that mistake. But why do all this now in the midst of all

of -- you know, it's not as if there's any clear policy or any set of demands the Chinese could actually meet right away that's being posed and

it it's hard not to suspect that there's a kind of wag the dog element.

You know, the Trump administration, they really need something to distract people from their mishandling of the coronavirus and so OK, China. China is

the enemy. The Chinese virus is -- and this is, again, it's not to let the Chinese off the hook, but the idea that this is a good time to ratchet up

the confrontation with China is just -- it's probably -- it's definitely not in the national interest and I doubt this even in Trump's political

interest. I think this is just a kind of desperation play.

QUEST: Paul, stay with me. Your article this week that you wish America looked more like Italy. We'll talk about it after the break, when we'll

also hear about how European leaders were feeling very satisfied, having put together their great recovery fund. That's still to come.

It's QUEST MEANS BUSINESS at the end of the week. It's a Friday.

(COMMERCIAL BREAK)

[15:15:32]

QUEST: U.S. lawmakers may be stuck on the next stimulus round. In Europe, leaders have put together their and $850 billion package, the large

recovery fund. On this program, throughout the course of the week, we've brought you the European leaders on how they managed to do the deal.

(BEGIN VIDEO CLIP)

HANS DAHLGREN, SWEDISH MINISTER FOR E.U. AFFAIRS: This is a very serious crisis we have in Europe. The European economies need to recover, and this

plan and this project will make it possible to give an extra effort to that recovery work with all our member states.

ROBERTO GUALTIERI, ITALIAN MINISTER OF ECONOMY AND FINANCE: It is a victory for Europe, but is not for a specific country. Because with a challenge

like this pandemic and subsequent unprecedented economic crisis, Europe is moving forward and also doing something new.

DAHLGREN: We have an economic crisis that is worse than we've seen since the 30s, I think, and therefore, we need to do this one-off action. That

doesn't mean that it is a step towards a system or a pattern for the future.

ALEXANDER STUBB, FORMER FINNISH PRIME MINISTER: This is a little bit more of a Madisonian moment. In other words, we're unified and united in

diversity. It's certainly a step towards some kind of a Federal union, but not yet the Hamiltonian moment.

(END VIDEO CLIP)

QUEST: Madisonian, Hamiltonian -- Europe is feeling pleased with itself, which is why when I read, Paul, your article, America should look more like

Italy. It rang a bell bearing in mind what we've been talking about this week. But you -- how did you mean it?

KRUGMAN: Oh, I meant mostly in terms of actually taking epidemiologically, I mean, the Italians did what was necessary after being incredibly hard hit

at the beginning. They have brought the spread way down. And they have also, despite everything, despite the financial constraints that Italy

faces, they've done a decent job of keeping the social safety net in place.

Nobody has lost health insurance, which everybody in Italy has, guaranteed healthcare. And in general, they've actually -- where they fell short, I

was just totally impressed by the fact that Prime Minister Conte actually apologized for people who didn't get the aid right away that they needed.

And can you imagine our leader doing that?

So Italy has done well, but of course Italy desperately needs help from -- and Europe as a whole desperately needs more aggressive measures.

QUEST: If you had to sort of compare the U.S. stimulus response, versus say, for example, the way Europe. I mean, two continents roughly -- not

vastly dissimilar in size populations, but if you had to say who so far seems to have put in place the best umbrella for protection, who would it

be?

KRUGMAN: Well, on average, the Europeans have done somewhat better, but it's not -- I mean, the U.S. did, as I said in the last segment that the

U.S. did better than most of us expected.

I mean, the Europeans largely sustained incomes with wage subsidies, with incentives for firms to keep people on payrolls. The United States mostly

did unemployment benefits. You know, each side of the Atlantic gets some of what the other one did as a prime thrust, but we'd mostly relied upon

unemployment benefits as a safety net, which is not great. But on the other hand, the unemployment benefits have been a real lifeline and have been

remarkably generous

But the Europeans have done OK. The trouble with Europe is that it doesn't have fiscal federalism. So for a country like Italy, that is not in a

strong position fiscally to keep on sustaining this, it is very hard, which is why it's very important to see this kind of pan-European fiscal

response, which is new, it's unprecedented. I wish it was a lot bigger.

QUEST: And on that note, now, finally, you wish it was bigger and the U.S. has still got to do it. For our viewers, help us understand what is the one

or two things that we really need to focus on to determine what happens next in the sense of economically, what's the things that we should be

worried about now?

KRUGMAN: Oh, it's not even. Look, the economic crisis will end when the pandemic is under control and -- period. That's it.

The main thing is to make it tolerable to sustain, to avoid massive secondary job losses, because of loss of purchasing power to avoid enormous

personal hardship or vast cutbacks in public services.

[15:20:25]

KRUGMAN: So it's all about keeping the money flowing to individuals, to lower levels of government. In the European case, that means nations -- in

the United States, that means state and local governments until we're out of the woods on the infection.

And, you know, we're notably failing on that here. The Europeans, you know, this is better, but if you actually ask about the money flows, it's

probably on an annual rate, not much more than one percent of GDP. And that's not that much considering the scale of the problem.

QUEST: Paul, I'm very grateful to you, sir. Thank you. Please have a good weekend. And keep staying well.

KRUGMAN: Same to you.

QUEST: Thank you, Paul Krugman, joining me from New York.

Now, here in England, facemasks must be worn in public places such as shops, railway stations, and the like. It already exists in Scotland. The

new rules took effect today, as Anna Stewart now explains what England is discovering is pretty much the same as many other places. New York, for

example, has also discovered, enforcing compulsory facemasks is much easier said than done.

(BEGIN VIDEOTAPE)

ANNA STEWART, CNN REPORTER: It is now mandatory in England where face covering in shops and other public enclosed spaces like airports, train

stations and post offices. Failure to do so could result in a fine of 100 pounds, that's a little over $125.00.

However, enforcement is expected to be lax. Some of the retailers have already said that they will not enforce this themselves, such as the

supermarket chain, Sainsbury's. They encourage customers to wear face coverings, they will not police it themselves.

And then there is the police who can issue fines; however, some of the forces such as London's Met Police have said they will not be on facemask

patrol and will only intervene as a matter of last resort.

Authorities are hoping that the public will actually be able to encourage those who are reluctant to wearing face masks.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: It makes everyone feel safer, and yes, it makes everyone do their part, I guess.

UNIDENTIFIED FEMALE: But it was nice to just go out for sure.

UNIDENTIFIED MALE: I think face masks is definitely something that's needed right now. I think it's time. I think the quicker everyone adopts to it,

the safer it is for everyone as a whole.

UNIDENTIFIED FEMALE: I must say, it's annoying, but you've got to in and out from today.

UNIDENTIFIED MALE: I suppose that for now, let's just do it now. It's certainly right that you do it. So, join the cause.

(END VIDEO CLIP)

STEWART: The latest figures from the ONS show that retail sales in June nearly recovered to pre-lockdown levels, but it wasn't an even recovery. We

could see a boost for online sales, for food sales. But looking at brick and mortar stores selling clothes and shoes, it's still down over 30

percent since February.

Now making wearing facemasks mandatory in these shops could encourage those who don't feel safe to venture out and shop, but it may put some others

off.

An Ipsos MORI poll that was published yesterday show that nine out of 10 Brits do agree that you should wear a facemask in a public setting, but

Richard, currently only three out of 10 do, so there is some catching up to do here.

(END VIDEOTAPE)

QUEST: Anna Stewart in London. South Africa's reopening plan is very much facing a setback because of the latest numbers of coronavirus, which is

getting considerably worse.

An ominous surge in COVID cases, schools that reopened in June and are shutting again for at least a month. The country has now surpassed 400,000

cases, the fifth most in the world. And for countries like France and Germany, they've got South Africa as a high risk country for travel and

requiring a compulsory test -- a COVID test when you return, which might of course lead to 14 days in quarantine.

The South African Tourism Minister, Mmamoloko Kubayi-Ngubane joins me from Johannesburg via Skype and Minister, what's gone wrong?

South Africa seemed to have a very strong lockdown. It had perhaps somewhat odd rules about alcohol and smoking. But now, the reopening, the numbers

are going up.

MMAMOLOKO KUBAYI-NGUBANE, SOUTH AFRICAN TOURISM MINISTER: Greetings, Richard. I think one of the things that you've got to understand like many

other countries, as you look at the trends globally, is that we are now in our winter season.

We started -- when they pandemic actually, we first had our first imported case, we were still in summer and that's why the cases and the numbers were

not moving quite faster and we moved quickly to get our systems ready, and then we did a lockdown.

[15:25:07]

KUBAYI-NGUBANE: But because of the economic impact on activities such as in tourism, and then we moved into -- we adopted a risk adjusted strategy,

where we had about five -- we have five levels. Level five is hard lockdown. Level four, it's almost closer to lockdown restriction. And we

are now at level three. So it's almost like moderate.

And now we've seen community transmission. So it's not that we've locked down completely from level five to now. We've opened up. We've started to

make some movements. We've allowed people to go to work, so that's why you're seeing some of the transmissions happening, so it is not out of

control but we are managing it.

QUEST: The fear is that this is going to get out of control. I mean, I know you're the Tourism Minister, but realistically, tourism will not take place

this year in any meaningful sense and may not be -- maybe well into next year before that's able to happen. And the risk is that the situation in

South Africa will get out of control?

KUBAYI-NGUBANE: I don't think so. When we look at our projections, working as a government, together with our epidemiologists who are doing trends in

terms of how we are performing, that's what I'm saying, if you look now, South Africa is in winter.

And if you look at how the pandemic has conducted itself, or has performed in other regions, they've seen the surge during winter, as summer

approached, they started to see stability. And that's what we expect in South Africa.

We don't expect that you're not going to see tourism completely out of this year. We do have mainly -- we have tourism activities in winter, but our

peak season starts in September until March. So that's what we are targeting to have.

Our recovery strategies starts with domestic activities, then moves to regional and then into international from --

QUEST: OK, but realistically, you can't be -- I mean, are you seriously expecting large scale tourism, which to me even in September, particularly

bearing in mind countries like France and Germany have still got you on the high risk list requiring testing. Minister, I just wonder how far and how

real those expectations can be?

KUBAYI-NGUBANE: Richard, that's what I'm saying domestic tourism. If you look at our potential as a country, in 2018, we had about 2.6 million in

terms of movement of tourists domestically. In 2019, we were able to move into 7.1. So there is an opportunity for us to really drive domestic

tourism, not only depending on international.

We will move into international area where we are seeing -- that's what we are seeing. Our strategy starts with domestic, having South Africans to

move, people are sitting in their houses. They are tired of being closed down.

The minute to open for domestic movement, while not yet calling for international market to come in, that's what we think we'll still be able

to. People that have not seen their friends in other provinces and have not seen their families in other provinces.

The VFR, visiting friends and family will drive as well, the domestic tourism.

QUEST: Minister, we thank you for coming on this evening. Very kind of you always. I've always loved my visit to South Africa as you know, and I can't

wait for the opportunity when things improve to be coming back and visiting again. Minister, I appreciate your time with us.

KUBAYI-NGUBANE: Thank you.

QUEST: Tonight, the F.A.A. in the United States is warning about 737s. No, it's not MAX, it's the existing next generations and the classics.

Apparently, there's a little bit of it, a little valve that can corrode with potentially devastating circumstances and results and consequences.

We'll talk about it after the break. It's QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

[15:32:15]

QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS coming up in just a moment. The CEO of Southwest Airlines will be with us,

basically telling us that things will not get back to normal to the airline industry, or even approaching that until there's a vaccine and COVID eases

off. And with the World Economic founder -- World Economic Forum, the founder, that's easy to say, Klaus Schwab is talking to me about the great

reset.

The book that he's just brought out which basically says this is a moment in time where we could actually make a real difference for the future if we

get it right to make changes. Klaus will be with me in just a moment or three. Otherwise, this is CNN. And on this network, the news always comes

first.

The U.S. Centers for Disease Control now strongly favors we opening schools this fall. The head of agency calls it critically important to public

health. Latest guidelines follow pressure from President Trump and the White House. They're still recommending school -- they still recommend

store closures where outbreaks are out of control.

McDonald's and Chipotle are joining other U.S. businesses in requiring their customers to wear face masks. The two fast food chains announced the

new rules as coronavirus cases keep rising across the nation. Masks already mandated many other chains including Wal-Mart, Starbucks, and the grocers

Kroger.

Goldman Sachs is to pay close to $4 billion to settle a massive corruption case in Malaysia. Goldman sold bonds for the Malaysian sovereign wealth

fund. One MDB. Malaysia's former Prime Minister's accused of helping himself to that money. Goldman says Malaysia is dropping all charges

against the bank

The FAA in the United States has issued an emergency directive a safety warning for 737 planes, the NGs and the Classics, not the MAXs that are

parked that have been mothballed for the time being because there's no need in aviation. There are four reports of engine failures. Warning that

applies to planes parked during the pandemic; the carriers must inspect some 2000 aircraft.

737 is the main workhorse. Now the bit we're talking about is the fifth stage bleed air check, which is in where each of those two engines. It's an

extremely complicated bit. You can see it highlighted in this schematic of the engine. Pete Muntean is with us. He's our aviation correspondent in

Washington. The fifth stage bleed air check. We see it there. Why is it so important?

[15:35:10]

PETER MUNTEAN, CNN AVIATION CORRESPONDENT: It's immensely critical, Richard, you know, this is likened to an old car that's been sitting for a

long time. Problems just start to creep in what's happening with these airplanes that have been sitting in every nook and cranny at airports

across the country. Airlines not using 737 because frankly, they don't need to, the demand is not there.

This bleed air valve will get corroded, rusted over and stuck in a position. Now it's so interesting and there's emergency action from the

FAA, that it is said in this warning that the possibility exists of dual engine failure. I just want to read you part of this. It says dual engine

power loss without the ability to restart which could result in a forced off airport landing. A nightmare scenario for any flight crew to face

especially during the pandemic.

You know, folks have been looking for reasons not to fly because of the virus, and now they found just one more reason to skip flying on the

commercial airlines.

QUEST: Is -- how much of this gone? You're aviation correspondent. how much of this can Boeing say, well, this is just one of these things. I mean,

yes, we parked planes for months. And we've discovered this happens and we're going to fix it. You can't blame us for this.

MUNTEAN: Well, Boeing says it's sending directives to operators to airlines that fly Boeing 737, trying to explain to them how to make these fixes and

these inspections going forward. Essentially, inspections will be -- have to take place for airplanes that have been sitting for any longer than five

days but at no point in the history of aviation. Have we ever had scores of airplanes sitting on tarmacs waiting to be flown again, the demand is not

there.

Airlines were starting to re-fly these airplanes again, but as coronavirus began to surge across the country, they sort of scrapped their planes. And

so now these airplanes were flying. Now that's not exactly what we're seeing. And now they're going to get another shot and making these fixes.

One airline tells me that these inspections take about four hours each engine so eight hours per airplane.

QUEST: Pete Muntean who is in Reagan National Airport in Washington. Pete, thank you. Now before that news about Boeing broke on the 737, I spoke to

Gary Kelly, the CEO of Southwest of the United States. Somewhat of a shame since Southwest has an all 737 fleet but that's the way it is. We were

talking about the airlines results and Gary Kelly's view that now -- that they -- there's been a surge in coronavirus cases. So, bookings have

stalled once again.

(BEGIN VIDEO CLIP)

GARY KELLY, CHIEF EXECUTIVE OFFICER, SOUTHWEST AIRLINES: Certainly not welcome news. We were on a really improving very nice trajectory, a really

a line of sight to the end of the year if things kept continuing to getting back to break even cash flow, and yes, we've lost hundreds of millions of

dollars of momentum here in the third quarter. So, I don't think we've taken a step backwards. We've just lost momentum.

And I think it's, you know, directly correlated with the spike in COVID-19 cases here in the United States. That's very disappointing to see that.

And, you know, you can see the direct correlation with travel and future bookings.

QUEST: The issue of air travel, and passengers still don't believe no matter how many times you tell them about hyper filters, and the like,

passengers are still worried about flying the middle seat, and so forth, are they?

KELLY: I think there's some degree of anxiety there. But I think more important than that is people travel for a purpose, they want to go places,

they want to be able to do things when they get there. And you look around the world and there are no sporting events. Businesses aren't having

meetings, there aren't conventions. And a lot of entertainment venues are either closed or very limited.

There are quarantines in place in certain states. So, all that, you know, very much provides a deterrent. That's on the more consumer side of travel,

then on the business side of travel, large corporations, in particular, have travel bans in place. So, I think we need to have very modest

expectations in the near term here about travel until we get to the point where there's a vaccine or therapeutics.

QUEST: Finally, Gary, what's your gut telling you about the situation when all the numbers have been put in front of you by the CFO, and the CEO has

given you the operating numbers and you've seen the revenue forecast, and you've digested it all? What is your gut telling you?

[15:40:03]

KELLY: Well, I think in the end, I feel like there's every reason to be hopeful at Southwest Airlines. We're the strongest in the industry, we came

into this crisis with the least amount of balance sheet leverage we've had in our history. We have plentiful levels of cash to see our way through.

We're still in investment grade credit. We have outstanding service that our people offer every single day.

We have very high brand rankings from our customers. And we have low cost on an operating basis in what is a very low fare environment. And I think

it's going to be this way for a long time. So, we're very well prepared for the crisis. So, I'm confident. I'm encouraged I'm hopeful what is -- what

we also know is that this too shall pass. There will be a vaccine we will defeat this virus. If we can put a man on the moon 50 years ago, we can

beat this coronavirus. So, we just need to be smart and manage our way through this.

(END VIDEO CLIP)

QUEST: And that's what you call optimism from Gary Kelly. After the break, we have more optimism or at least looking forward, it's called the great

reset. It's the thoughts from the founder of the World Economic Forum, Klaus Schwab, who basically in a nutshell, not says not to miss the

opportunity to put things right because of the pandemic. The great reset after the break.

(COMMERCIAL BREAK)

QUEST: The British Prime Minister Boris Johnson today conceded that the pandemic could have been handled differently, in hindsight. Saying that the

government did not fully understand the virus early on, it took some weeks and months to get to grips with it. He is not alone amongst leaders who are

already now looking and trying to learn the lessons. Some will be related to public health.

Others like Klaus Schwab, the World Economic Forum, Davos, here with me, believes that this is a moment when we can look forward to what he calls

the great reset, a chance to put right many of the wrongs and social inequalities that we had before the pandemic. So, what will change look

like?

[15:45:01]

KLAUS SCHWAB, FOUNDER AND EXECUTIVE, WORLD ECONOMIC FORUM: Exactly. What I did in the book is to describe the situation and all the consequences. I

didn't offer yet. solutions at all policies for the post corona time. What has to stop now is a global mobilization process, engaging all

stakeholders, business leaders, politicians, civil society, to sink and to reflect about how do we create and construct a future which is learning

from some mistakes which we made.

Because the corner cases as put into evidence, right? Some dysfunctionality of our present system.

QUEST: Right. So, let's talk about that dysfunctionality. What what's for you is the most significant part of the dysfunctionality?

SCHWAB: I think two elements. The first one is the lack of equity, I mean, some app, which we see nationally, but also internationally. And with all

the negative impact survivors has this gap will increase, and we see already is the first signs of social unrest. And second, we have, of

course, the environment. And see environmental climate change, creates the next guys is similar to, I would say, even more serious compared to what we

see now this corona.

QUEST: let's take China where this thing supposedly began, and the lack arguably of transparency of the Chinese in those early days to either

recognize or to report or to deal with the rest of the world. If we are starting from such a lack of trust and faith, why should any inquiry or why

would you be helpful that we can -- I'm not be pessimistic, I realize I'm being pessimistic, but I'm being realistic. Where I would suggest you're

being optimistic.

SCHWAB: You have to be optimistic I've been -- I have grandchildren, I enjoyed a very good life.

It was a golden season in some way. And I do not accept that we cannot do our part in order to ensure for our children and country then. At least to

same level of quality of life as we have tried. Always think of icing such as still also today, many parts of society which are left behind.

QUEST: So who do you think -- your book is it, a clarion call to have some form of structured reflection which (INAUDIBLE) or is it more an

individualistic organizational everybody needs to do it?

SCHWAB: Yes, it provides everybody with -- I think, sufficient arguments. If you're our government or an individual, it's a call for action. And what

the form wants to do, we don't have seen solutions. But we want to be a platform for getting everybody mobilized input process of designing our

future. So the future is not happening. The future is depending on us.

QUEST: But if you have -- and I understand that you're talking about a much greater issue than next year's or this year's presidential election or

whatever. You're talking about an almost an existential crisis and potential solution, but everything is governed by the geopolitical

realities of what's possible, and in the poisoned world out of China, U.S. (INAUDIBLE) is it possible?

SCHWAB: It has to be possible. And when we look at wireless again, it has just demonstrated how interdependent we are (INAUDIBLE) and I hope, also

politicians who now naturally are defending national interests because in a situation of crisis as we have now, you become individually and nationally,

much more egoistic. Now we have to overcome this barrier and we have to remind everybody again, look over the so collaboration, you will secure

your own individual and national future.

QUEST: Finally, will we be -- will be all getting together up a mountain in January? Is it still your hope to have us all in person?

SCHWAB: It's still my hope. I think what's about needs is a big global summit just devoted to the Great Recession. It cannot be -- I pray so they

may happen physically.

[15:50:04]

SCHWAB: If not, I think we have to use modern technology to achieve the same objective.

QUEST: They are there in January, we will be there to up the mountain in Davos. After the break. The show must go on, but it will eventually go on

in January. Broadway, which has remained of course dark for so long. Now what it will take to reopen Broadway. How to do it safely. The president of

the Broadway League after the break.

(COMMERCIAL BREAK)

QUEST: The voice of the crisis goes to house business. Excuse me, in this case non-existence because Broadway is experiencing its longest dark period

in history. The streets around Times Square back at the time of the height of the pandemic in New York at least, were practically empty when I visited

in April. Things are getting better. But shows on Broadway are not due to open until January according to Broadway League.

Charlotte St. Martin is the president of the Broadway League. He joins me from New York via Skype. January is a long way off. What are your members

doing too -- well, initially to try and bring money and business in. And secondly, just to keep saying,

CHARLOTTE ST. MARTIN, PRESIDENT, BROADWAY LEAGUE: Well, certainly, we have about 300 members on 40 task forces trying to bring Broadway back in

various formats, certainly the marketing, the labor and union, past forces. We have governmental task forces attempting to get governmental relief and

governmental stimulus to get Broadway back. Because until we're back, New York's not really back completely. We're responsible for 97,000 jobs in

this city.

QUEST: So what do you think of all these in the meantime, all these streaming extraction in Hamilton, and do they offer a sort of temporary

respite or do they offer a worrying prognosis for what might happen in the future?

ST. MARTIN: I think people need theater and they need entertainment.

[15:55:00]

ST MARTIN: So I think all of these streaming opportunities are a good substitute until we can get people back into our theaters around the

country. Broadway's in 242 cities in the United States plus all over the world. And we've never looked at streaming as something that would kill

Broadway. We look at the experience of being in a theater and experiencing the incredible emotion, the laughter, the tears, the anger that you get if

you don't like what the story is.

And that can't be experienced streaming. So we think it's good that there's something to do now but there -- it's certainly no substitute.

QUEST: Charlotte, it's Friday, the end of the week, we looked some -- we look for some hope and cheer. Please reassure me that Broadway will be

back.

ST. MARTIN: We will absolutely be back. There have been other crisis points that are history. For example, after 911 we had no idea how long it would

take to get back, and then how long it would take to build our audiences back. And it was a very short time. There's no question. This is the

longest shutdown. We're not 100 percent sure that we will open in January, but we know we will open and we know that Broadway will be back and

probably very strongly because there's such a pent-up demand.

QUEST: Make me a promise -- make me a promise. Once it's opened you and I'll go and see a show. Socially distance (INAUDIBLE)

ST. MARTIN: We're off.

QUEST: Charlotte, thank you. I appreciate it. Have a lovely weekend. We will have a profitable moment after the break. When you're going to learn

something about how I have spent the last 14 days in quarantine besides because I think Quest Means Business.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment, as you know, of course, I've been in quarantine for the last 14 days and I decided I had to do more. I couldn't

just walk around the apartment non-stop. So I realized I never learn to bake. No, it's true. I can cook and I can do this together. But I can't

make bake. I don't understand what combining or mixing or different in beating or whisking, so on with nothing more than Joy's Easy Banana loaf

recipe and Google to explain some of these techniques of I went.

I went to the kitchen and I started to learn how to bake. When I say learn how to bake. I had several goes, a banana bread, muffins, apple pies. I

have been baking and making Joe's non-stop ever since for the last 14 days. Have they been successful? Some of them absolutely not. Some of them have

been horrible. They sank in the middle. They looked awful. So I threw them away and I had another go.

But some not too bad. This is my banana life. Now look, it's a bit burnt around the side, but it's nice and moist. So, all in all, I have put my

quarantine to good use. Now I've just got to put my stomach and get rid of the calories. And that's QUEST MEANS BUSINESS for tonight. I'm Richard

Quest in New York.

END