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Quest Means Business
Tech Stocks Lead Sell-Off; U.S. Lawmakers Debate Benefits, Consequences of $15.00 Minimum Wage; Angela Merkel Says Vaccine Passports Likely in European Union by Summer; Jeff Immelt Of GE On The Decisions He Wishes He Could Do Over; Facebook's Stand On Myanmar; A Media Coup Of Its Own?; Beaver Dams That Restore Watercourses And Ecosystems. Aired 3-4p ET
Aired February 25, 2021 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:23]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR: We are off the stock market lows, but it could be a choppy final hour of trade on Wall Street.
Let me give you a look at what we're seeing for the Dow. We are off some 1.4 percent as you can see, down 440 points. Those are the markets, and
these are the main events.
The great rotation, well, bond market blues are dragging down stocks across the board.
Angela Merkel says vaccine passports are on their way in Europe.
And Facebook wades into the turmoil in Myanmar by banning the country's military from its platform.
Live from New York, it's Thursday, the 25th of February. I'm Julia Chatterley and this is QUEST MEANS BUSINESS.
Good evening and a warm welcome to QUEST MEANS BUSINESS once again. U.S. stocks are falling as investors nervously watch the moves in the bond
markets.
Higher bond yields make stocks look relatively less attractive as an investment, and that's what's going on right now. The U.S. 10-year Treasury
yield hit its highest level in a year, 1.5 percent. It is even topped the S&P 500's dividend yield at one point today.
The NASDAQ has seen massive growth throughout the pandemic, far outpacing the broader market. This week, however, it is falling back to earth. As you
can see, down this session some 2.7 percent.
Alison Kosik is with us. Just talk us through today's price action, and Alison, great to have you with us.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Great to see you, Julia. So there is something that happened earlier today that kind of spooked
equities investors. They saw that 10-year Treasury yield spike two-tenths of a percent to over 1.6 percent, and then as you said, it did settle back
down, but it's making investors really, really nervous.
And they've had their eye on these rising bond yields, but now, they are getting especially nervous. The thing is, if you look historically, these
yields are historically low, but we're seeing sort of a different landscape now.
Now, we're seeing more of a recovery in the economy, and we're seeing movement in the bond market, and the concern is, of course that rising
yields can make a load of corporate debt that companies are carrying.
It can make it more expensive and that could eat into corporate profits. It could also hurt the housing market, which as you know, Julia, has been
booming since the pandemic started and the concern is that could eat into the economic recovery.
And this, despite what we saw from Fed Chair Jay Powell talk about on Capitol Hill, him sort of you know, sidestepping inflation, any kind of
inflationary pressures saying he is going to go ahead to keep rates near zero, continue on with the $120 billion bond buying activity that is going
on per month.
But it looks like, you know, investors aren't willing to really listen to that today. Today, it seems like these worries that have been building for
a long time, long time meaning for a few weeks, those worries seem to be winning out today -- Julia.
CHATTERLEY: Yes, that's the conundrum, isn't it? It's driven by economic recovery, but at what point does it actually start to be a problem for that
economic recovery when it dries up things like mortgage rates?
Great to have you with us, Alison and great context.
So as Alison was saying, these moves are being driven by rising bond yields, but the rotation within stock markets is also key. Investors
starting to move out to some of the pandemic winners and into those that will benefit from economic recovery.
If you remember when the lockdowns first started, companies like Zoom and Peloton enjoyed huge growth and tech stocks have gone through a historic
run over the last year from the giants right down to the small caps, but now, we're seeing things like entertainment benefit, think movie theaters
and theme parks and airlines, of course, hoping that once vaccines get into play here, we will see passengers jump back in seats and we'll see a
resurgence in tourism.
Now, while hotel chains hope to welcome back all of those eager travelers and see their vacation spending.
All right, JPMorgan Chief Global Strategist, David Kelly joins us now. David, great to have you with us. Just talk us through in your mind what
we're seeing in markets.
DAVID KELLY, CHIEF GLOBAL STRATEGIST, JPMORGAN: What we are seeing is the market has figured out this economy is going to absolutely boom later on
this year.
The numbers in the pandemic are getting better, they are getting a lot better. The vaccinations are being rolled out, and so by the summer, I
think things will begin to get back to normal. The pandemic will recede.
In the fourth quarter, we're going to see a boat load of spending. And then, you add on all of these fiscal stimulus, the economy should be really
humming, and if it is doing that, that pushes up long-term interest rates.
[15:05:08]
KELLY: It pushes up the total of inflation, but it also pushes up real interest rates. That is what is going on with the Treasury market, and I
think all other markets are taking their cue from that basic, you know, reflationary trade. The idea that the economy is going to do much better
going forward.
CHATTERLEY: I mean, that is the irony, isn't it? It is a positive thing, but at some point it's becoming or at least, investors are suggesting it
could become a challenge more broadly for stocks at the same time.
Is the perception here, perhaps that the Federal Reserve is losing control to some degree? I mean, Jay Powell came out this week and said, look, don't
worry about inflation. We're going to be as stimulative as ever because we care more about jobs.
But investors seem to be saying, at some point you're going to have to talk about the recovery and you're going to have to acknowledge that perhaps
inflation risks are a problem.
KELLY: Yes, I think that's right. I mean, I think the Federal Reserve, for example, if you look at their forecast, they think at the end of this year,
the U.S. economy will have grown by about 4.2 percent year-over-year and now, we think it will be a lot stronger than that based on our models.
We think unemployment will be below five percent, so I think the Federal Reserve is very dovish. It is trying to keep rates low, but I think people
do understand that the economy might do better.
And by the way, I don't think the stock market is getting hurt by the idea that higher rates will slow the economy. The real problem if you have a
stock which is selling at 25 times earnings, what it really means is that that stock is valued on decades and decades of earnings into the future and
when long term interest rates go up, all of those future earnings are worth less now, and through that discount rate, it is actually hurting those high
PE stocks.
CHATTERLEY: It is a relative play, isn't it, as well? For so long, we have not seen any real return from bond markets as well, and stocks look so
attractive, but they are a riskier asset relative to bonds and if you start to see bond yields go up, suddenly, it is like, okay, well, there is some
return being offered by bonds.
KELLY: Well, some, but to be honest, I think that long-term rates have got a lot further to go. So I think that's a tough trade also.
What is helping though is value stocks, the stocks which traded lower PEs, things like financials, energy companies, industrial companies who will
really benefit from this cyclical rebound and aren't as sensitive to long term interest rates or sometimes, in the case of financials, actually
helped by higher long-term interest rates.
So that is why I think you're seeing this rotation going on in the market towards these value stocks because of higher interest rates.
CHATTERLEY: I want to talk to our viewers as well about GameStop. Its share surging once again after doubling in price late Wednesday.
There were several theories about what is driving the rally. One claim that this tweet, the soft serve ice-cream cone could be the trigger. It was
posted by Ryan Cohen, a GameStop investor and incoming Board member. He is pushing for change at the company.
David, I'm not going to ask you what your take is on them. Ice-cream cones and what signal perhaps that sends to the market. But you know, how is all
this playing in, do you think, in terms of what we're seeing to the broader structure of markets?
KELLY: Well, I think it should send a message to the Federal Reserve. There's some price for having easy liquidity and very low interest rates
forever because it is fueling some bubbles in different areas.
You know, I think for long-term investors, you've got to realize, look, you've got your Vegas money and you've got your long-term investment money.
And your long-term investment money should not be put into things that do not make fundamental sense because what goes up ridiculously fast can come
down ridiculously fast, too.
So, I think people should make sure they understand what they're buying, understand that it does make sense in the long run that a lot of these bets
just don't.
CHATTERLEY: Yes, but the Fed is willing to put up with frothiness in markets and concerns about inflation in order to try and bring back -- what
-- the 10 million jobs that we are still down since the pandemic started.
What's the outlook here? Because as you've said, bond yields are still on a relative basis historically low. A lot of this is just being driven by the
hopes of recovery, hereto. What's the outlook for stocks? David, what's your message to investors?
KELLY: Well, I think the stock prices are pretty high particularly in a rising rate environment. I do think that we will see those 10 million jobs
come back pretty fast because a lot of them are in the service sectors, which have been hit by this pandemic.
When the pandemic ends, a lot of these people are going to have to get hard back and hard back fast to staff our hotels and our restaurants and
entertainment and all of these things.
But for stocks it is -- U.S. stocks are a little bit more expensive. Growth stocks certainly are expensive, so I think people should look at
international stocks, look at value stocks, but particularly look at valuations everywhere. Just buy stuff that makes sense in the long run
based on valuations because, you know, as we get out of this pandemic environment, as things get clearer, I think those evaluations will be more
important.
CHATTERLEY: Yes, it makes perfect sense to me. David Kelly, great to have you with us. Thank you so much for that.
Now, amid all the market turmoil, we're seeing encouraging signs from the U.S. labor market: 730,000 Americans filed new jobless claims last week.
That number is down from the week before, but it's still about three times higher -- just to give you a sense -- than pre-pandemic levels.
[15:10:13]
CHATTERLEY: It comes as U.S. lawmakers' debate Joe Biden's plan to raise the minimum wage for thousands of Federal workers. Earlier, I spoke to one
of the country's most powerful union bosses, Richard Trumka and he told me that raising the minimum wage wouldn't hurt the recovery.
(BEGIN VIDEO CLIP)
RICHARD TRUMKA, PRESIDENT, AFL-CIO: We've done a number of minimum wage increases, and every time that we do a minimum wage increase, somebody says
this could cost a job here or there, and it's never been that way at all, it has always increased.
This is going to increase payrolls so that workers can buy things, create demand, and it will create more jobs. That's been what's happened with
every one of the increases in the minimum wage, and this one will be no different.
(END VIDEO CLIP)
CHATTERLEY: The Congressional Budget Office has said that raising the minimum wage to $15.00 an hour would lift nearly a million people out of
poverty, but many Republicans say businesses simply can't afford it. Vanessa Yurkevich reports.
(BEGIN VIDEOTAPE)
NISHAD SAYEM, EMPLOYEE, WELL-PAID MAIDS: I used to work two jobs a day. I had to support my family.
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS REPORTER (voice over): Nishad Sayem used to make $10.00 an hour, working from 8:00 a.m. to 10:00 p.m. to
scrape by.
Now, he makes $18.00 an hour cleaning homes. That allows him to not only cover his bills, but to take time to care for his disabled father.
SAYEM: I work only 35 to 40 hours a week, and I'm making more than two jobs, and now I can give some time to my family. I can help my dad when he
wakes up.
YURKEVICH (voice over): The Federal minimum wage has been stuck at $7.25 for over a decade, but 29 states and Washington, D.C. pay more than that.
D.C. where Sayem works is the highest at $15.00. The same city where congress is currently debating raising the Federal wage to that same level.
JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: No one should work 40 hours a week and live in poverty.
YURKEVICH (voice over): President Biden wants that sweeping move to be part of his COVID-19 relief plan.
DELVONE MICHAEL, ACTIVIST, FIGHT FOR 15: We did it here in D.C. We were like the first major jurisdiction to get it down. Federal is the way to go
about it to do it the quickest to the most people.
YURKEVICH (voice over): A $15.00 minimum wage by 2025 would lift nearly one million people out of poverty, but could also cost 1.4 million jobs,
according to the nonpartisan Congressional Budget Office.
ANGELA FRANCO, INTERIM PRESIDENT AND CEO, D.C. CHAMBER OF COMMERCE: Small businesses and especially ones that have the hourly rate, sometimes they
handle like lower margin, and at the end, they have to transfer that cost.
So they have either to cut hours, right, or cut employees or increase prices.
YURKEVICH (voice over): But some small businesses like Little Sesame in D.C. have made the math work.
The restaurant paid employees $13.25 an hour when it opened in 2018, but quickly pivoted to the new $15.00 minimum when it took effect this past
summer.
NICK WISEMAN, COFOUNDER, LITTLE SESAME: We knew that this $15.00 mark was coming and we made sure that the model supported that.
That was an integral part of our business. It was the right thing to do and it was a good thing for us as a business.
YURKEVICH (voice over): But during the pandemic, more than 400,000 small businesses had closed by September. At the same time, support for workers
has grown. Sixty seven percent of Americans back raising the minimum wage.
MICHAEL: Just under a year ago we decided and declared these people to be essential. And I think the right thing to do is to pay them $15.00 an hour,
a living wage.
YURKEVICH (voice over): A living wage means a world of difference for Sayem. He is saving money for the first time. He has plans to go back to
school for a career in I.T. and for a reunion from Bangladesh a year in the making.
SAYEM: I am saving because of our future and I just got married one year ago. So --
YURKEVICH (on camera): Congratulations.
SAYEM: Thank you. And my wife is coming soon, hopefully by 2022, she will be here.
(END VIDEOTAPE)
CHATTERLEY: Angela Merkel says vaccine passports are coming to Europe and it could be a matter of months before they are rolled out. We'll have the
details next.
(COMMERCIAL BREAK)
[15:16:53]
CHATTERLEY: German Chancellor Angela Merkel says vaccine passports are likely coming to Europe by summertime. It's a sign of borne agreement that
such documents will be necessary going forward, but it's how and when to implement them that's been stirring debate.
Some states like Spain and Greece want to move quickly. They say passports would help boost travel and help recover some of the pandemic's lost
tourism revenue.
They argue it will help speed an economic recovery by adding another incentive for people to seek out vaccines, too.
Others like France and Germany have been urging caution. They say the sluggish pace of vaccinations makes a corresponding passport untenable for
now, adding ethical concerns about fair distribution.
Anna Stewart is following these discussions in London. Anna, great to have you with us. Interesting comments from Angela Merkel about this, but of
course, it is difficult at a time when they are desperate to get vaccines and of course, they've struggled with the early stages of the rollout.
ANNA STEWART, CNN REPORTER: Three months they're saying that it would take them to be able to have a vaccine passport system up and running. That
seems like quite a long time.
Already, some countries like Seychelles and Iceland who are of course very reliant on tourism have already adopted the vaccine passport. This is
something, Julia, that the travel industry had been working on and coordinating for many, many months.
IATA which is the organization representing global airlines are behind one of the app's Travel Pass. There are quite a few others vying for people's
attention. There is CommonPass, AOKpass, both of those have been trialed by airlines.
But now is the moment, airlines, airports want to see governments getting onboard. And it will be good news for many that the E.U. appears to be
there finally, but despite the huge arguments for and against the vaccine passport, and that is a conversation being had in many nations including
the U.K.
CHATTERLEY: What about the ethical concerns here, Anna, as well, of those that have had the vaccines, that haven't. You're going to have huge subsets
of populations particularly in the next three months that haven't been vaccinated. Are they not going to be allowed to travel as a result? How is
this going to work in practice?
STEWART: Well, that's just it. There are issues of freedom and fairness. I mean, let's take fairness. Of course, a vaccine passport is in many ways
discriminatory because vaccine rollouts like in the U.K., well, the vaccines are being prioritized for older generations who are more
vulnerable to COVID-19. That is certainly fair, I think.
However, is it fair that younger generations wouldn't be allowed to travel? What about nations who are less developed and don't have as much vaccine or
aren't already rolling out, does that mean people from those nations can't travel?
And then, there will be the arguments for freedom, people who say they cannot have the vaccine for whatever political or religious reason, and
they will be very upset if for that reason they can't travel.
And to add to all of that, Julia, there's also some scientific reasons you could be opposed, I guess to vaccine passports. One being that a vaccine
doesn't offer 100 percent protection. High efficacy levels, but obviously not 100 percent.
And also, with all the new variants of coronavirus, there are always going to be concerns that a new variant of coronavirus that could easily travel
between countries, well, that might reduce the efficacy of some of those vaccines.
Huge teething problems as well as to how you adopt it and also of course, protecting people's data.
[15:20:20]
STEWART: So, those are all of the arguments against it, but I think recently, it looks like both the travel industry and governments are
beginning to embrace this idea to unlock and reopen borders.
CHATTERLEY: Oh, my goodness, I hadn't even thought about the data privacy and protecting data implications.
Goodness, that's a whole new Pandora's Box to open. But I think, what about for the business community hereto and for big businesses particularly in
the tourism industry. They have to start saying, okay, fine, so you can't travel if you don't have a vaccine.
It almost makes them -- and this brings us back to the ethical issues -- of being effectively mandatory to have a vaccine in order to be able to
travel.
STEWART: Exactly. Governments aren't saying, at least very few I think are saying that you have to have a vaccine. But if you have this sort of
incentivization where you can't travel if you don't have a vaccine, and also Julia, it is not just travel, although that certainly is the focus at
the moment, there are some people arguing that you could have vaccine passports to say you want to go to a cinema, you want to go to a football
match. Perhaps you'll have to prove you have had a vaccine and that you're not going to pose a risk to those around you.
But that brings up such big ethical questions, and I'm not sure anyone is really ready to answer them yet.
CHATTERLEY: No, I asked the IMAX CEO about that, about whether he could envisage even just in Asia, perhaps having to ask for people to produce a
vaccine passport of some kind to be able to go to the cinema, and he was like, I'm not sure about that. I am not sure about that.
But to our bigger point, it is not mandatory to have a vaccine.
STEWART: Move on to the next question.
CHATTERLEY: But you need to have a vaccine to have a passport, and you need a passport in order to be able to travel.
Anna, great to have you with us. Thank you, Anna Stewart.
All right, let's take a look at European markets as well because they ended the day softer, too. Similar story in Europe as in the United States.
Higher bond yields reflecting hopes of course for Eurozone recovery, but that then asking questions of what that means for stocks and the continued
rally that we are seeing in stocks.
All this, too, despite Jay Powell at the Federal Reserve trying to calm investors' nerves and downplaying the threat of inflation.
The British boardrooms are no longer exclusive. Boy clubs, the latest Hampton Alexander Review says, there are no male only Boards left in the
FTSE 350.
The number of women on those Boards is up 50 percent in the last five years. However, men still dominate the upper ranks of top firms.
One leader, though, that shattered the glass ceiling again and again is Christine Lagarde. She was the first woman to serve as the Finance Minister
of a G-7 nation, the Managing Director of the I.M.F. and now of course, the President of the European Central Bank, and she told Richard she has a
responsibility to help the next generation of female leaders.
(BEGIN VIDEOTAPE)
CHRISTINE LAGARDE, PRESIDENT, EUROPEAN CENTRAL BANK: I tell you my hope is that all these women that you've mentioned had to break a few ceilings,
didn't get too bruised in the process and hopefully are making way for others to follow suit.
I was really pleased that after me, a woman was appointed as Managing Director of the I.M.F. And I very much hope that after me, after Janet,
after Ngozi, after so many other women, there will be other women.
And if anything, it gives us an additional responsibility of demonstrating that, of course, it can be done, and of course we can do the job, and
sometimes we can do it even better than others.
But I'm confident that there will be many more women who will do these jobs because there are many junior women who are unbelievably talented and our
job, us, the oldies is to actually help them, nurture them, coach them, and show them the way.
And I know that for those you've mentioned, they are doing it.
RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: That's the key point though, isn't it? Pardon the phrase, the oldies in the past, some
oldies didn't, and what you're now saying is, you know, I'm okay, I've made it, pull up the ladder mentality was very destructive in the past.
LAGARDE: Correct. I'll never forget one interview at a big law firm that will remain unnamed and a woman partner saying to me, I've had it tough,
you'll have it tough, too. Don't count on me. And I thought, whoa, that's a nice entry.
QUEST: As we look -- what's the big difference from -- because like Janet Yellen, you are -- you have a particular view in that you have been a
Finance Minister ahead of an international -- the international monetary organization, and now the -- one of the premier central bankers.
What's the difference? What's the difference between -- I mean, I always think, you know, you must be either be a poacher turned gamekeeper or a
gamekeeper turned poacher. If you've done one and then you do the other and you can see both sides, so what's the difference?
[15:25:18]
LAGARDE: Each of the three is very different. As a Finance Minister, you establish policies, you go to Parliament, you have to deal with politics
and its nastiness and its grandeur as well.
As International Monetary Fund Managing Director, you really are helping many countries around the world, you deal with very competent people and
you have a terribly international role in supporting those that are sometimes the poorest of the poor or sometimes, you know, the least well-
governed of the governed.
As a Central Bank Governor, you move a lot of money around for sure, and you deal probably less with people directly, but you participate in the
economic situation, the economic recovery and the wellbeing of people, of small enterprises, of big corporate guys, and you help them by providing
the financing and the stability and the predictability so that they can make their decisions in an environment where financing costs and terms are
not yet another uncertainty.
QUEST: Has Mario Draghi proved there's life after the E.C.B. for you?
LAGARDE: He is certainly showing that you can actually morph into something different from where you had excelled in the past, and that's
very encouraging for all of us.
(END VIDEOTAPE)
CHATTERLEY: All right, coming up, Facebook flexes its muscle in two different parts of the world in two very different ways.
The social media giant siding with pro-democracy activists in Myanmar while taking on lawmakers in Australia. We'll discuss.
(COMMERCIAL BREAK)
[15:30:00]
CHATTERLEY: Hello, I'm Julia Chatterley. There's more QUEST MEANS BUSINESS in a moment when we'll look at Facebook's controversial decision to ban
members of Myanmar's military after a recent coup.
And Jeff Immelt reflects on his turbulent years at the helm of GE and the decisions he wishes he could make again.
Before that, though, the headlines this hour.
President Joe Biden marking an important milestone in the fight against coronavirus, even while acknowledging there's still a long way to go.
At a White House event he and Vice President Kamala Harris highlighting the 50 millionth vaccine dose administered in the United States since they took
office last month.
Donald Trump's tax returns and other financial documents are now in the hands of the New York district attorney. Prosecutors obtained them Monday
after the Supreme Court denied the former president's last ditch bid to keep the records private. He's under investigation for alleged hush money
payments and other possible offenses.
Doctors say Tiger Woods may undergo further surgery after his near fatal car crash on Tuesday. The golf legend rolled his car off the road while
driving near Los Angeles.
The severity of his injuries is casting doubt on the future of his career. Woods has not yet said whether he'll attempt a comeback.
Lady Gaga is offering a $500,000 reward for the return of her two French bull dogs after they were stolen in an armed robbery. Los Angeles police
say the pop star's dogwalker was shot by a man using a semi-automatic handgun.
A source says the walker, who is hospitalized in stable condition is, quote, "recovering well."
Australia has passed a new law that will require big tech companies to pay for news. Facebook opposed an initial version of the bill and briefly news
to Australian users on its platform. But the social media giant now says it's satisfied that the number of changes and guarantees, quote, has been
made in the measure.
As Facebook agrees to a truce with the Australian government, it's taking a clear side in Myanmar showing its support for the pro-democracy movement.
The tech giant is banning the military and military-linked accounts from using its platform. The move comes after the army seized power in a coup
earlier this month prompting weeks of mass demonstrations.
Our next guest says Facebook is having a direct impact on world events which shows just powerful it is.
Vivian Schiller is the executive director of Aspen Digital, she's also the former president and CEO of NPR and the former global chair of news at
Twitter. And she joins us now.
Vivienne, fantastic to have you on the show. I'm glad you want to talk about Myanmar because I want to, too.
It actually reminds me in some ways of the social media silencing of former U.S. President Donald Trump. It doesn't matter what he says or didn't say
or what Myanmar or who in Myanmar is in the right, it's a demonstration of extreme power and in Myanmar it's absolute.
VIVIAN SCHILLER, EXECUTIVE DIRECTOR, ASPEN DIGITAL: Yes, that's without a doubt -- thanks for having me, Julia.
So in many ways this is much more consequential than the banning or blocking of Donald Trump's account on Facebook.
First of all, the important thing to know is that, in Myanmar, Facebook is the Internet. That is basically the vast, vast majority of people mostly on
their mobile devices, that is how they access their information. It's not just one of many sources like it is here.
So, as you said, Facebook has blocked the military, all the sub-units, the army-controlled media, many of the ministries and also not only blocked
those entities but also blocked ads from government-owned businesses.
So they're hitting the military both in terms of their ability to communicate with people, win hearts and minds, and also economically.
CHATTERLEY: Yes. Private companies making these kind of decisions for the outcome of a coup in Myanmar. Mark Zuckerberg is in charge.
SCHILLER: He has put his thumb on the scale and by thumb I mean the vast global power of Facebook which is basically, like I say, everything in
Myanmar.
So their statement was that they blocked these accounts because they said there were severe human rights abuses, clear risks for violence, very
similar to the statements we heard about Trump.
But imagine if in the United States -- this is akin to Facebook blocking all of the government departments' entities and shutting down the ability
for all U.S. agencies to communicate with the public and there were very little alternatives.
[15:35:00]
So this is much more profound in many ways and harkens to what will happen in other countries. I mean there's been enough controversy about blocking
Trump. But this is literally calling winners and losers, effectively, in Myanmar.
You may agree with the sides that they have chosen, but the precedent is absolutely tremendous and slightly terrifying.
CHATTERLEY: We've gone from one extreme to the other where Facebook and some of these other social media giants say, look, we're not going to
police the Internet, we're not going to police content --
SCHILLER: Right.
CHATTERLEY: -- to an absolute and extreme decision like this. I don't even know -- and perhaps you can answer better. Where should the regulators
stand on this when we're at this degree of extreme power? And which regulators when talking about a nation like Myanmar?
I just want to remind our viewers of a quote -- and I used this earlier this week on this show -- from the Australian prime minister, Scott
Morrison, in light of the decision they made to try and make Facebook and other social media platforms pay for news.
He said of Facebook, "They may be changing the world but that doesn't mean they run it."
SCHILLER: Well --
CHATTERLEY: Prescient in light of these events -- I know. What do you think of Australia?
SCHILLER: Yes. Not so sure that's entirely true.
CHATTERLEY: Yes. I know.
SCHILLER: I think in many ways we've all been following -- and you led with the new law that's taken place in Australia. And that, of course, that
story is very consequential in terms of a decision that Facebook made to shut off all access to news accounts on Facebook in Australia. They have
now gotten their way in terms of some changes to the legal system.
But, like I said, in many ways this move in Myanmar which is getting less attention, globally -- I'm glad we're talking about it -- is in many ways
much more consequential in terms of who can make the call, who can make the decision?
We could argue whether this is -- many people would disagree whether they have any real authority or it's a fig leaf but the Facebook oversight board
is going to be taking up the decision about Facebook's blocking of Donald Trump.
If they rule -- again, this is an independent body that Facebook set up -- if their ruling is that Trump should be reinstated, I think that will have
-- that is allegedly binding and I think it will have consequences for moves like this in the future. We'll know more about that I think in April.
CHATTERLEY: Vivian, the reason why I'm tying the two things is because -- and you said it about Myanmar. Facebook is effectively picking a side here.
SCHILLER: Yes.
CHATTERLEY: And I think one of the criticisms even of the progress perhaps that we've seen in Australia to try and protect some of the local news
sources that were going out of business while news was being viewed on social media is that now Facebook is in a position where will do a deal and
they will be bargaining over what they pay these news media sources. And if they don't do a deal, that news doesn't appear.
So they now get to pick the news, effectively, too. So they pick sides in Myanmar and they're picking the news sources that will be appearing on
social media.
And the vast majority of Australians get their news from social media according to surveys. This is a frightening degree of power.
SCHILLER: It is. And frankly, that power has always been there. I think these two incidents just have made it more visible.
Without a doubt the influence on American politics, for example, through the algorithmic decisions and the way that Facebook is structured and
Facebook groups has had a tremendous impact on public opinion, the rise of extremism, the rise of conspiracy theories.
But what we're seeing is a much sort of clearer, so to speak, overt decision-making on the part of Facebook. And it's hard to imagine this is
not going to lead to some very serious consequences with regulators around the world.
CHATTERLEY: That's what I was going to ask you. Where does this lead?
SCHILLER: Yes. It concerns me, frankly. On the one hand, clearly the free market is not necessarily working the way we would like.
On the other hand, if you look at Australia, that was not a great situation. There were no really -- you think about heroes and villains, I'm
not sure there were any heroes in there.
I thought that the legislation from the Australian government overreached in terms of trying to charge platforms for links. I think Google which made
big payments, big payments to Murdoch's organization, Facebook took all of the news sites down and then finally had their way to a certain degree.
The losers here potentially are the public and also the small news organizations. To be fair, Facebook and Google have said they will be
funding those news organizations. I hope that's true.
[15:40:00]
Because at the end, what matters is the public's right to know and the access the public has to quality news and information.
CHATTERLEY: Yes. And we're showing that tackling tech is really tough.
Vivian Schiller, great to have you on the show. Thank you. Executive director of Aspen Digital, great to get your insights.
All right. A quick look at the Dow as we head towards the market close.
It's been a bit of a roller coaster day and we are at the lows of the session, down near two percent for the Dow, off some 630 points this
session.
We'll keep abreast of those movements as we head toward the close.
For now -- for 16 years Jeff Immelt led the company with imagination at work. Now he's looking back at his time at GE in his new book "Hot Seat,"
and he tells Richard how he would grade himself as a leader.
Next.
(COMMERCIAL BREAK)
CHATTERLEY: "Call to Earth" is CNN's initiative to promote a more sustainable future.
And today's story is about beavers. They may be small, cute and furry but they can have a large impact on the environment.
In the west of England they have the potential to reduce flooding by up to 60 percent.
(BEGIN VIDEOTAPE)
NARRATOR, CNN CALL TO EARTH: This is Pink Tag (ph), she's a Eurasian beaver.
Pink Tag and her family live on the River Otter in Devon and they are some of the first wild beavers in England for around 400 years.
Historically, beavers were hunted for their pelts. What people didn't realize is how important beavers are to the landscape. The dams they build
regulate water flow, increase biodiversity and even drive down pollution.
In short, beavers are what are known as ecosystem engineers.
JAKE CHANT, BEAVER TRAIL FIELD OFFICER, DEVON WILDLIFE TRUST: It's just been shocking how much we've missed from this country by not having
beavers.
There is a climate crisis going on, there's a biodiversity crisis going on. And this is a species that could help solve both of those issues.
NARRATOR: Beavers build damages and canals for their own protection. The dams raise the surrounding water which helps them escape from predators.
It also slows the water flow, reducing floods downstream in the wet season and drought in the dry season.
[15:45:00]
As the climate crisis worsens, experts warn that areas like Devon are expected to see more flooding. But a recent study on beavers in England
showed that their damages can reduce average flood waters up to 60 percent.
The organization behind reintroducing beavers to Devon is the Devon Wildlife Trust.
CHANT: So this is a three-hectare enclosure that was built in 2010. What can you see?
UNKNOWN: The dam.
CHANT: That's right, that's the dam there. And that goes all the way across, so it's about 40 meters long.
When we put them in here and started to see what they did to the watercourse it was really profound. We all suddenly became much more
conscious of just how powerful this animal was.
NARRATOR: The Trust received permission to release beavers into the wild in 2015. It was the first licensed in England to do so. And the effect on
the River Otter basin was dramatic.
CHANT: This pond has been created by the beavers. They've built a small dam that has increased the water level in this area.
NARRATOR: There's also been a huge increase in biodiversity as the wetland habitat attracts water boles, amphibians and wildlife.
But beavers can cause trouble. For one, they're big. Beavers like Pink Tag can weigh up to 30 kilograms or 66 pounds.
CHANT: That's quite a big dog. We've had fishermen telling us stories that they've been a bit scared whilst fishing close to beavers.
NARRATOR: They also can waterlog farmland and eat orchard trees. But overall beavers are a huge benefit. And nations across Europe are working
to restore them to their original range.
CHANT: None of us really, I don't think, quite realized the significance of the animal that we were talking about The opportunity to bring them
back is an amazing one.
(END VIDEOTAPE)
CHATTERLEY: We'll continue showcasing inspirational stories like this as part of the initiative at CNN. And let us know what you're doing to answer
the call with the hashtag #call to earth. We would love to hear from you.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to QUEST MEANS BUSINESS.
Jeff Immelt is legendary in the business world for his years as CEO of GE. Now he's saying there's some decisions he wishes he could do over.
When Immelt took over in 2001 the company was coming off a period of staggering growth.
[15:50:00]
Several years later, GE was in a deep hole from the financial crisis. Its shares plunged, its market value dropped and it sold off several businesses
including NBC.
Now in a new book Immelt is looking back at what he tells Richard is the complete story of his time at the company.
(BEGIN VIDEOTAPE)
JEFF IMMELT, FORMER CEO, GENERAL ELECTRIC: In some areas the company did well, right, Richard. If you look at our cumulative earnings and our
position in key markets, the talent; the company did a pretty good job.
But on balance if you go to the negative side, our stock price trailed. We had challenges getting through the financial crisis.
And I would say when I look back in time, I let the financial business grow over fixing the industrial. And by the time the global financial crisis
hit, that didn't look very smart.
So one of the reasons why I wrote the book, it's a complicated story, I wanted to add some context to it.
And I think from a reader's standpoint or from a leader's standpoint you can only live life forward, you can't live it in reverse. You have to make
decisions and live with them.
RICHARD QUEST, CNN, QUEST MEANS BUSINESS: I was looking it and I was remembering -- because as a financial journalist or as a business
journalist, I covered -- we've spoken many times --
IMMELT: Yes.
QUEST: -- but I also covered your decisions.
IMMELT: Yes.
QUEST: And you sell off NBC and I'm thinking at the time why would you do that? I know this prompted this idea if it's not core to what we're about
now but it's making money, why would you do that? Maybe sell off the plastics business and I'm thinking why would you do that?
So how difficult is it to -- bearing in mind that it is a wheel, the conglomerate is a wheel that turns. It's in vogue, it's out of vogue, it's
in, it's out -- so what was your thinking?
IMMELT: Each decision was different. I would say when I first took over I wanted the company to be more technical, more global and closer to the
customer because I thought those were our core competencies, as a company and I never thought in many ways that NBC kind of fit that model.
When the financial crisis hit we needed additional cash reserves. NBC was the best asset because it had the most number of suitors for a business
like that.
But over time, Richard, I did $100 billion of divestitures,, $100 million of acquisitions but all on the goal to improving the company's technology,
making it more global and that's really kind of the work we did.
QUEST: And at what point in the great financial crisis did you realize you had a massive unexploded bomb sitting right in the center of the company?
IMMELT: Oh, gosh, I'd say like the minute Lehman Brothers went bankrupt, right. In other words, we were a finance company, we were a wholesale debt
funded finance company, the biggest in the world, at a moment when the debt markets went crazy.
So there was no company whose business model got hurt more by the financial crisis than GE Capital. And for the next year or so we were just really
going after wave after wave of actions to shore up the finance company. Which we did.
But it was a huge challenge. And like I said we didn't have deposits so we had nothing to fall back on. We had to kind of do it on our own.
QUEST: Did you have any fear during those times?
IMMELT: Oh, gosh, yes. With the size of the company, the number of people inside the company. I would say just the need to protect the aviation
business and the health care business and NBC.
I'd say beyond that, Richard, if you put yourself back in 2008, which it's hard for your viewers to do, there was no kind of context that the
government would be all in, really. So the government in the financial crisis, you know, kind of finally came in and offered programs.
If you compare that to COVID -- look, the government was in on day one, on minute one, right. So you basically had the (inaudible), 2008, you were on
your own. You had to kind of fix it and get wherever you needed to get to on your own.
QUEST: What is it that they say? The average tenure of a CEO is under three years, you went 16. Too long?
IMMELT: Maybe. In other words, I tried to stay sharp, I was always curious. We drove good initiatives all the way through but there's an
argument that can be made that maybe I should have left earlier. I think there's no magic time.
When you have tail wind you can stay as long as you want, when you're going from one crisis to the next, you have to really work to stay as sharp,
right.
[15:55:00]
So again, there wasn't a day though that I wasn't curious and loved the company and loved the people I worked with.
QUEST: Sure. But I'm trying to understand because you're now teaching and you've now written this book on leadership. What is the essence of the
Immelt philosophy that you wish to pass on?
IMMELT: So, again, Richard what I basically say is that in this era all leadership is crisis leadership. So good leaders absorb fear, right? They
show their team a path forward even on uncertainty.
They make decisions in a crowded room. They're not afraid to get second guessed. They're the communicator in chief and they say flexible.
They have a flexible point of view with the understanding the worst could happen but the best could happen and know how to (inaudible) and best to
protect against both.
QUEST: What's the one quality you think that CEOs need? Ruthlessness, arguably, you're going to take decisions the are going to cut costs,
whatever.
IMMELT: I just think, Richard, every CEO needs to infinitely curious. It's just -- the world changes so quickly.
Elon Musk could wake up tomorrow morning and launch an all-electric airplane and the entire aviation sector would be on its heels, right.
So if you're not thinking that way -- I just see too much in my current life that says you better be curious about everything because change is
underway.
(END VIDEOTAPE)
CHATTERLEY: Infinitely curious. Well, there are just minutes left to trade on Wall Street. We'll have the final numbers and the closing bell right
after this. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: There are just moments left to trade on Wall Street this Thursday.
Stocks have been under pressure for most of the day as that chart shows. The Dow right now down some 1.7 percent.
Investors, of course, responding to rising bond yields and what that means, they've been taking some profits on some of those pandemic winning trades,
in the tech sector in particular. And, of course, adjusting their portfolios now for a vaccine-driven recovery.
It's mostly been a sea of red across the Dow 30. Just a handful of stocks that are up right now. There's a sharp sell off, as I mentioned, in tech
stocks. Microsoft, Apple, Salesforce, Boeing right at the bottom of the index down some five and three quarters of a percent.
One more trading day left for the week.
But that's for now QUEST MEANS BUSINESS. I'm Julia Chatterley in New York.
And THE LEAD with Jake Tapper is next.
[16:00:00]
END
