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Quest Means Business

Trump Pitches New Stimulus After $8B Spending Package; IEA Forecasts First Fall In Global Oil Demand Since 2009; Dow Up 1,000 Points, Now At Session Highs. Aired 3:30-4p ET

Aired March 10, 2020 - 15:30   ET

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

[15:00:17]

RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: You would be forgiven if you needed to catch your breath and wonder what has been going

on? We open up over 900 or so, we go negative in the lunchtime. We come back up again in the last hour.

We are in the last hour. This is the way the triple stack looks. Up again, up again, and up again. Good gains for the NASDAQ.

The markets are all over the place and this is the reasons why. Investors are on edge as Donald Trump tries to put together an emergency stimulus

package.

Italy is on total lockdown. In a moment, I'll speak to the country's head of tourism.

And global airlines are in retreat. The biggest carriers are cutting capacity.

We are live in the world's financial capital, New York City. It is Tuesday. It is March the 10th. I'm Richard Quest and I mean business.

Good evening. Stimulus hopes are battling coronavirus fears on Wall Street. The Dow is shooting higher in the last hour of trade, now, still well off

the highs of the day. President Trump is floating the idea of stimulus to limit the economic damage from coronavirus.

It has been a historic two weeks for the Dow, the biggest points gain and the biggest points lost and the volatility index remains high which means

investors expect much more to come.

Alison Kosik has the highs and the lows. What has happened in the last hour and a half or so that's given that V-shape to the graph?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: I think it's what you've been talking about. I think you're seeing the market really pin its hopes on

some sort of fiscal stimulus coming out of Congress.

The problem is there's no confirmation whether Congress is part of that discussion or not, and this idea that President Trump floated is light on

details, still, we're seeing investors run with it despite the volatility today.

I don't know if you've noticed, but I think you have showing your chart, we've seen the Dow swing hundreds of points today into the green and

hundreds into the red and then back to the green.

Traders I'm talking with say, look, volatility is here to stay as long as we see the numbers of coronavirus cases accelerating and that's what we are

currently seeing -- Richard.

QUEST: Okay. So always the last hour can be the most volatile and it depends on whether or not the market chooses to follow its current

direction in the absence of any further fuel, or does it turn turtle?

KOSIK: You know what? If I knew, I'd be quite a wealthy woman, but no one really knows. Although this is looking pretty positive for a positive

close, but you know what, Richard, you never know.

And then of course there is tomorrow. This once again, volatility means that this is a market that you can't really depend to go one way or

another, and one that may or may not make sense to you depending on the headlines.

QUEST: Thank you. That's Alison at the Exchange. Let's go straight to Italy. Many of Italy's busiest streets are empty tonight as millions of

residents remain in their homes.

The country's in its biggest increase in deaths because of the virus since the outbreak began. The government has placed the entire country on

lockdown as officials desperately try to contain.

School, theaters and cinemas are closed and many public services shut down. Bars close down at six o'clock. Ryanair and EasyJet are among the major

airlines who are canceling flights to Italy.

The country's Economic Ministry is calling on banks to suspend mortgage payments.

And speaking to CNN, Italy's Deputy Health Minister said even stricter measures may be needed.

(BEGIN VIDEO CLIP)

PIERPAOLO SILERI, ITALIAN DEPUTY MINISTER OF HEALTH: We are living in a particular moment where everything is closed, basically, and probably we

may need to increase these over the next few weeks if this doesn't work.

I mean, and I believe also the other countries in Europe will do or should do the same.

(END VIDEO CLIP)

QUEST: Italy is locked down to drastic. It's a dire crisis and it compares to the only other major country implementing widespread lockdowns, which

was China, where more than 80,000 of the virus have been reported in China. That's 0.006 percent of the population.

In, Italy, it's more than double that rate. Visitor numbers in both countries have plummeted, it is at least more resilient and reliant in some

ways to tourism to fuel economic growth, and that could spell disaster for Italy's economy on the brink of recession.

[15:05:17]

QUEST: Delia Gallagher is in Rome and with me tonight. The lockdown, the curfew if you like, came in at 6:00 p.m. which is just a couple of hours

ago. It looks like it's being maintained.

DELIA GALLAGHER, CNN CORRESPONDENT: Well, that's right, Richard. We've come out to Rome's Prati area. This is an area which normally at this time

of night, it is eight o'clock here, would be buzzing with people. People coming home from work, going out to have a drink. This is about dinnertime

here in Rome.

As you can see, there's not anybody on the streets. We've seen a bit of traffic cars coming back, of course, people are allowed to go out to work

if they need to. So we've seen some cars coming back. We've seen quite a few police cars actually.

The only thing open around here, Richard is the pharmacy around the corner. That's probably a good thing. We heard a lot of Italians were going out,

trying to get food at supermarkets and rushing to pharmacies when they heard this announcement yesterday from the Prime Minister.

But I have to say from walking around the city today, being here this evening, the first day of lockdown, people are trying to abide by these

regulations to stay in their house or at least not gather in groups when they're outside -- Richard.

QUEST: And what are the restrictions for example, if you want to go -- if you have to go from the north to the south of the country? Fly from Rome

down to the south?

GALLAGHER: Yes, no. Right now, movement from regions is forbidden except for work or health reasons.

So you've got to have a very good reason it's based on a self- certification. You can explain to the authorities why you need to move, but really, the message is don't go unless you really have to.

So Italians trying to adapt, at least, until April 3rd, to these new stricter regulations -- Richard.

QUEST: Let's talk on the policy front rather than practical front. This is a very bold some would say, foolish move, by the Italian government and

others would say it was simply too extreme. It wasn't necessary to do this.

GALLAGHER: Well, actually, Richard we're hearing from a lot of politicians that they would even prefer more extreme measures.

So you know, that has also come out that really this has been a gradual movement towards a total lockdown. We saw it first in the north, obviously

in advance from the red zones and then on Sunday, the declaration for the north and gradually coming to this total lockdown.

Frankly, this sense from people here is that they're willing to do it, Richard. There is a real fear of this virus going in and affecting the rest

of the country especially because the health system in Lombardi is really one of the best in Italy. They are under immense pressure.

And so talking to doctors in other parts of the country, they're saying, look, you know, our hospitals really may not be able to handle those kind

of numbers.

So they actually wanted this lockdown -- Richard.

QUEST: Delia, thank you. Delia is out in Rome tonight. Mohamed El-Erian is the Chief Economic Adviser -- well, you know that. He joins me now from

Irvine in California.

We talk again. Good to see you. Thank you. And we'll deal with the U.S. and let's just follow on from what Delia was saying.

I'm guessing when the fourth largest economy in Europe, including the U.K., go and has these measures, Italy goes into something like a shock in terms

of its fall off its economic performance, and it takes the Eurozone and Europe with it.

MOHAMED EL-ERIAN,CHIEF ECONOMIC ADVISER, ALLIANZ: I'm afraid it does. For two reasons, one, is you're giving a sudden stop -- an economic sudden stop

-- to a large economy and two, is you're establishing a big demonstration effect.

So should we have a spread of the virus elsewhere in Europe, it's going to be very difficult for governments not to follow Italy's example, which

means that that demonstration effect will then amplify the sudden stop.

QUEST: Some of the things I really want to focus on in our discussion today. Italy, the Eurozone, the sort of recession that it's now going to

experience, some are saying short, but deep. What can the E.C.B. do besides -- I mean, with rates already negative?

EL-ERIAN: And they meet tomorrow and they've been flying under the radar screen so far, but tomorrow, the spotlight is going to shine on them.

I don't know what they can do. I know what they will do, but I'm not sure it's going to help. They will probably give us a notional interest rate cut

of 10 basis points.

They will talk about being ready to increase the asset purchases where they go and buy bonds, but rates are so low. This is not about funding costs.

This is about something that the E.C.B. cannot alter itself.

I hope that they will be focusing like a laser on the functioning of markets and the health of banks.

[15:10:16]

QUEST: But that's the sort of the plumbing side of it, isn't it? Which is vital, absolutely vital. I want to -- so let's come to the U.S.

Donald Trump, today in a tweet is refers to European economies where there is a two percentage point difference in interest rates, of course, he's

referring to negative rates in many countries, and he is saying this is what the United States or the Fed should do to make the U.S. competitive.

Should the Fed cut rates like the President suggests into negative?

EL-ERIAN: No, not in my opinion. I think they should keep the little ammunition they have and they haven't got much ammunition before they hit

zero and they certainly don't want to follow the E.C.B. negative interest rate territory.

They should keep it for when monetary policy can be effective. I think it was a mistake to cut last week. The market stall here was a mistake. It's

had no effects pushing on a string, you don't want to use the limited ammunition you have to push on a string.

QUEST: But it's very hard when, you know, a lot of people watching are Americans who will hear the American President say that -- and I'm trying

to -- I'm not trying to get you into a political argument, Mohamed, but you know, the U.S. President is saying that the Fed is behind the curve. The

Fed has been slow, the Fed should do more.

EL-ERIAN: So there was a time the Fed was behind the curve and that is when they hiked three times in 2018 and continued to signal more hikes when

it was clear to many of us that the global economy was weakening.

Whenever you look at policy, remember the phrase, benefits costs risks. So the one benefit from lower interest rates is you may weaken the dollar

more. That is the one benefit.

But against that, you've got to think of the cost and the risks.

QUEST: Right now, let's talk about benefit costs risk. Which of the plans that are floating out there and I realized we don't have any -- payroll

tax, direct help to the airlines, hospitality and cruise lines -- obviously, we all -- I think everybody will be in favor of paid medical

leave.

But what fiscal measures do you believe would work in the United States to alleviate and perhaps add some stimulus?

EL-ERIAN: So this is a really complicated engineering challenge when it comes to designing something that works. And for a number of reasons.

One is the environment is really uncertain.

QUEST: Right.

EL-ERIAN: Two, your tools are blunt. Three, you're dealing with the economics of fear. We haven't talked yet about how fear is amplifying

everything.

I think the focus has to be sequentially on protecting the most vulnerable segments of the population, including trying to entice firms not to lay off

workers, including protecting the uninsured, and also making lots of resources available to the medical side because it's the medical side

that's going to get us out of this mess.

And then once you've done that, and put that in place, complement that with a more holistic pro-growth agenda and do it through also including

international coordination. That's how I would do it if I was designing it.

QUEST: Busy days. Thank you, sir for talking to us tonight as well as last night. It's appreciated to make sense of it all, thank you.

The planes that are flying empty or flying to nowhere, they are ghost flights, which are now being seen as regulators finally allow slight relief

to airlines.

And questions about President Trump's stimulus plan. You heard Mohamed El- Erian on this, but the details, we still don't know what it would look like. So we are just modeling different thoughts.

(COMMERCIAL BREAK)

[15:16:48]

QUEST: The coronavirus pandemic is stifling global travel and airlines are slashing flights and issuing dire warnings. The Delta Chief Executive, Ed

Bastian, has called it, a fear event akin to what he saw after 9/11.

So you've got Delta, which is cutting 20 to 25 percent cuts in international flights. American has a 10 percent cut on international

flights.

United -- extraordinary -- they are all taking part in a JPMorgan conference. United's President, Scott Kirby says he is expecting -- not

expecting the worst case scenario is a 70 percent -- 70 percent drop in revenue in April and 60 percent and 50 percent in the months thereafter.

And Qantas of Australia is cutting for the next six months by 23 percent. Alan Joyce the CEO is going to forego his salary.

Brian Sumers is the Senior Aviation Business Editor at Skift. He is in Los Angeles. We haven't seen anything quite like this, have we, in terms of the

amount of damage and confusion that's happening as a result?

BRIAN SUMERS, SENIOR AVIATION BUSINESS EDITOR, SKIFT: Well, we certainly haven't seen it and a long time, probably since the post 9/11 period. A lot

of the airlines speaking at this conference today did compare this to 9/11 because the big factor right now is fear, right?

In the 2008 and 2009 financial recession, people didn't feel like they had any money. They were trying to conserve costs. They just didn't want to get

on airplanes because they felt they couldn't afford it.

But people are so scared now. There's almost no price that you can offer folks to get on an airplane right now. And that's very scary if you're an

airline.

QUEST: I was talking to senior execs at several of the major carriers, the logistical nightmare, as well as everything of canceling routes,

redeploying planes on different routes, and at the same time, trying to work out to keep the staff safe.

SUMERS: Oh, you're right, Richard. I mean, these airlines, they usually are like aircraft carriers. They move so slowly.

What United Airlines did recently in the United States is nothing short of amazing. They didn't cut capacity for three months or six months down the

line. It is here in early March and they cut capacity -- international capacity -- by 20 percent; next month 10 percent domestically.

They just went through the schedule and cut, cut, cut. So people like me were getting these e-mails from the airline. I'm sorry, your flight is

canceled. We've rebooked you.

Airlines rarely do stuff like that, most of this stuff is done well in advances as you know.

QUEST: But what's interesting is the way they've done it. Now let's stay with United because I was chatting to them recently, you know, they say,

look, April is now baked. We can't change it, even if coronavirus goes away.

But we will be able to for May or June and yet Scott's comments there of a 70 percent drop in revenue. I agree that's worst case scenario. So what

would you think? Thirty? Forty? Fifty?

SUMERS: So he was very clear on the call today that this was not a forecast. It was simply a worst case scenario. He basically said, you know,

I hope that I'm going to be wrong.

You know, Scott Kirby always thinks he's the smartest guy in the room. He thinks so here. He is planning for something that may or may not happen,

but if it does happen, he knows that he's going to be a lot more prepared than his competitors at American or Delta

[15:25:12]

SUMERS: So it's almost like he is -- I wouldn't say he is wishing for a worst case scenario, but if it does happen, United is going to be clear

ahead of the U.S. pack because it knows exactly what's going to do if travel just completely falls off a cliff even more than it already has.

QUEST: Among the European carriers, we are going to be talking to airlines for Europe in just a second. Among the European carriers, Lufthansa was

first out the gate grounding the A380 fleet.

I'm not hearing quite as much. I mean, I think that the others like BA and the IAG Group, are doing it in a more stealth fashion.

SUMERS: Yes, I think other airlines are doing it more quietly. I mean, it's interesting what you say about the A380, Richard, because there's a

lot of folks who talk to me that wonder if the A380 will ever come back.

You know, it's going to be a year or two before everything gets back to normal in a best case scenario. A lot of these airplanes were due to be

retired already, Airbus isn't making them anymore. Maybe the A380 era ended in the world a little bit sooner than we thought.

It's hard to believe some of these airlines like Qantas, which is going to be grounding eight of them very soon, are ever going to bring them out of

storage. I just don't know.

QUEST: Oh, oh. All right, thank you. Thank you, Brian. I like the A380. It's a terrible weight for a beautiful plane to end like this.

Thank you. Good to see you, sir. Thank you.

SUMERS: Good to see you.

QUEST: Now, as airlines cut more and more routes, the industry is asking governments around the world to do whatever they can to help.

The E.U. is putting forward legislation to temporarily change airport rules so that airlines don't have to operate flights just to keep the right of

the takeoff and landing. It's called a slot.

The E.U. Commission President says it should help relieve pressure.

(BEGIN VIDEO CLIP)

URSULA VON DER LEYEN, EUROPEAN COMMISSION PRESIDENT: We want to make it easier for airlines to keep their airport slot, even if they do not operate

flights in those slots because of the declining traffic.

This is a temporary measure, and this temporary measure helps both our industry, but it also helps our environment.

(END VIDEO CLIP)

QUEST: Now, slots and slot rules. The slot, the right for a plane to take off and land at a particular airport is now, in particular, what's known as

a slot congested airports like Heathrow, Paris, Frankfurt, and Kennedy. It's very lucrative. Those slots are worth a lot of money, but they are a

logistical nightmare.

Now, this explains it for you. Every one of these airplanes has a slot. Okay, it is the right to take off and land at that airport. You have to

have it before you can operate. The slot is for a time, it's not for a route, it's not for a particular type of aircraft. It simply gives you the

right to take off and land.

The problem is, of course, at the moment, the way in which, there's simply no one traveling. You see, if you don't take off and land for 80 percent of

the season, you lose the slot in the next season -- summer or winter.

And so airlines are saying, well hang on a second, there are no passengers, so we're canceling flights. But if we cancel a flight for any length of

time, we won't be able to have the slot. We'll lose the slot. It might cost them tens of millions of dollars.

And so you have what they call these ghost flights. Virgin Atlantic has admitted it is running planes from A to B, almost empty, just to keep the

slot.

There have been other cases where the airline has changed and just run a little plane as little as they can from A to B, not the big run to make

sure that they keep the slot.

The IATA Chief called ghost flights economically insane.

(BEGIN VIDEO CLIP)

ALEXANDRE DE JUNIAC, DIRECTOR GENERAL, IATA: What we have asked them is to do that quickly and to include in this waiver the summer season so that is

the heart of the discussion because we think that it will last up to September -- at least -- at least in Europe.

And second -- but I don't expect that the airline will continue you know, to fly empty aircraft only to maintain the slots, economically it's insane.

(END VIDEO CLIP)

QUEST: Thomas Reynaert is in Brussels. He is the Managing Director of Airlines for Europe, A4E. Good to see you as always, sir.

So has the airline industry got the risk -- got the relief required so it can cancel and not run flights, but not risk losing the slots at major

airports like Heathrow?

[15:25:00]

THOMAS REYNAERT, MANAGING DIRECTOR OF AIRLINES FOR EUROPE, A4E: Well, good evening, Richard.

The European airlines, the CEOs last week, we sent a letter to the European Commission asking exactly that what Alexandre just referred to, and we are

quite hopeful that by tomorrow, the European Commission will issue, will publish its proposal to review the slots regulation, which should ideally

give us what we've been asking for.

QUEST: Why is this so difficult? Why can't the regulator just simply say, yes, this makes perfect sense suspended for three months or suspended for

the summer season?

REYNAERT: Well, first of all, it needs to -- we need to prove that this is about an extraordinary circumstance before we would get a temporary waiver.

So extraordinary circumstances, this certainly is the current situation and a temporary waiver.

So we have to prove as airlines with data as much as we can to the European Commission and the slots coordinators, because they of course, they will

have to allow this waiver as well at the end of the day.

We need to come up with the right evidence and the proof, and so that's been -- that's taken a couple of days, at least, to come forward with that.

But I think I'm quite confident we delivered sufficient evidence by now for the Commission to come forward with a decent proposal.

QUEST: Right. The situation for airlines at the moment, how bad is it? You heard me probably just talk about the U.S. How bad and how great do you

think the downturn is for European carriers?

REYNAERT: Well, certainly -- I mean, every day, the situation changes, but certainly since yesterday, with Italy, putting the entire country on

quarantine, it doesn't make it easier.

So we are following the situation day by day, and we hope that of course the whole situation, the crisis in Europe will be over as soon as possible.

That's why we think a temporary waiver would be sufficient, but we hope to have a waiver that is at least active throughout the summer period.

QUEST: Sure. You're going to get the waiver, I'll almost put money on it that the waiver will be granted. But if we talk about the bottom line for

European airlines, how bad is it going to be?

REYNAERT: Well, the latest estimates from last week, the worst case analysis, it could be up to $44 billion of revenue losses. So that's the

latest figures. So it's bad enough.

QUEST: And do you expect -- I mean, Flybe has already gone under -- you expect other -- don't worry, I'm not going to ask you to name them. But do

you expect other European airlines to fold during this crisis?

REYNAERT: Well, Richard, as you know very well, the airline's business, our business is very cyclical. It's very cost driven and anything that adds

to the costs is going to be -- is a challenge, I would say certainly for the smaller airlines.

I can't give you any names. But this is exactly why we need the European Commission to take urgent action together with the member states to

alleviate the costs somehow.

There are some things that can be done. The slots waiver is one of them.

QUEST: And they're the ones you want, I suppose you would like relief on taxes, APD in the U.K., all of these, you'd like some relief there?

REYNAERT: Well, there are some measures, so as taxes -- aviation taxes, and certainly as APD, which is the heaviest one in Europe, with more than

three billion euros of taxes every year that the airlines are paying the U.K. government.

But we would certainly be asking for the European Commission member states to seriously reconsider any future aviation taxes, of which they've been

talking for the last couple of months.

QUEST: Good to have you, Sir Thomas. Thank you. Nice to have you with us on tonight's program.

REYNAERT: Thank you, Richard. Bye-bye.

QUEST: So just look at the market, while we had a U-shape in one day, straight away down, bounces along, and a strong recovery of three and a

half percent. This is people taking positions before the end of the day.

After the sell off on Monday, President Trump seemed to be proposing relief in the form of a payroll tax break in the United States. But would that

help? We'll talk about it in a moment.

(COMMERCIAL BREAK)

[15:30:00]

(COMMERCIAL BREAK)

RICHARD QUEST, CNN INTERNATIONAL HOST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment. Investors are waiting and

seeing. Donald Trump is trying to put together a stimulus plan for the U.S. economy. All prices are on the way back from Monday's route. The outlook

for 2020 is being slashed wherever you look. This is CNN. And here, the facts always come first.

President Xi Jinping has made his first visit to Wuhan since the coronavirus outbreak began more than two months ago. Throughout his visit,

he said the spread of the disease has been basically contained in Hubei Province, and Wuhan, the epicenter of the outbreak.

The U.S. President says while he considered getting tested for coronavirus, his doctor doesn't think it's necessary. The question came up because Mr.

Trump has come into contact with two lawmakers who had also been exposed to someone related tested positive. The President says because extremely

(INAUDIBLE) no symptoms.

Sources tell us that the Coachella Valley Music and Arts Festival will be delayed because of this outbreak, potentially until October. For the

largest music events in the U.S. and it was supposed to happen next month in California. It follows last week's cancellation of South by Southwest in

Austin, Texas.

FC Barcelona will play the games behind closed doors for at least the next two weeks because of the virus. The football club says the decision affects

all professional and youth levels. Ticketholders will be refunded.

The president, the U.S. President says he wants dramatic stimulus measures to combat the coronavirus without offering details. Now, he has suggested a

broad payroll tax, paid sick leave for hourly workers, assistance to the cruise and airline industries and loans to small businesses and measures a

lot likely to need Congress approval.

However, lawmakers are scheduled to go into recess next month, or next week, I beg your pardon (INAUDIBLE) Jason Furman is the former chair of the

White House Council of Economic Advisors. He joins me now. Jason, always very good to have you with us. Thank you, sir. What do you make of the

toolkit, the stimulus toolkit being put forward by the administration?

[15:39:58]

JASON FURMAN, FORMER CHAIR, WHITE HOUSE COUNCIL OF ECONOMIC ADVISORS: I think it is absolutely needed. I think he is starting a conversation, but

we could do a lot better than the specifics of his proposals, more of a focus on bang for buck for the economy and protecting the families that

have been most hurt by this virus.

QUEST: Okay. So, if we put protecting the families to one side, because that is sort of a, you know, paid medical leave and help for mortgages, and

those sort of things can be done in a -- in a not, not difficult way. But in terms of the general economy and everybody else, what plan what policy,

what tax would you cut?

FURMAN: I would just give people money. At a time like this, people need money as quickly as possible. For some people, they'll just save it.

There's not anything they want to spend right now. For some, maybe it'll enable them to get by if they're not getting a paycheck. For others, it

means, you know, when we come out of this, their balance sheet will be in less bad place. Family of four, I would give them $3,000, too. I think we

should get them this --

(CROSSTALK)

QUEST: How?

FURMAN: -- within two to three months.

QUEST: How -- what's your vehicle for doing it?

(CROSSTALK)

FURMAN: We did something similar -- we did something similar in 2008. And that was administered as a refundable tax credit through the tax system. In

2009, we did something like this for seniors, but we didn't include others, we had a different thing for working age.

So, this is something that is very administrable. We studied this option, as well. And I think it's simple. It's fair. It's more progressive than a

payroll tax cut. I don't think you want to give $5,000 to high income household and nothing to someone who just lost their job because of the

coronavirus.

QUEST: And have you modeled the cost of this because the U.S. economy already has a trillion dollar deficit. I know -- I realize you don't worry

about -- as I always say, you don't worry about how to pay for the house when the house is burning, but this would be very costly.

FURMAN: Yeah, the -- my proposal would be by itself, $270 billion. Adding in all the other targeted assistance would bring the total to about 350

billion. Real interest rates right now are negative, the Fed is close to out of conventional ammunition.

There's questions about how well monetary policy works, and I think the question we need to ask ourselves is what's better for the economy?

Thousand dollars for someone today, or $900 for them a decade from now, because with negative real interest rates, that's the choice that

policymakers face right now.

QUEST: The other issue is, if you look at the Fed, the position that the Fed is in, this is exactly what people warned about, people like you warned

about to some extent in 2008, '09, '10, '11 and '12. The fear was in the next crisis, there wouldn't be ammunition available, but nobody ever

thought that they wouldn't be able to normalize over a period of 10 years.

FURMAN: Yeah, yeah. I mean, I've been consistently talking about low interest rates. And low interest rates are a double-edged sword. They're

restrict the economic space for conventional monetary policy, but they expand the economic space, as well, as the need for fiscal policy. So, it

means, you know, we need to change the tools that we might normally use in a situation like this. And fiscal policy has to be the primary, in some

sense, almost first line of defense for the economy right now.

QUEST: Let me read you the -- what the President tweeted a few hours ago. And, you know, I'm looking for an economic answer, rather than a political

response --

FURMAN: Sure.

QUEST: "Our pathetic, slow-moving Federal Reserve headed by Jay Powell, who raised rates too slow and moved too fast and lowered too late, should get

all Fed rate down to the level of our competitor nations. They now have as much as a two point advantage with even bigger currency help."

FURMAN: I don't -- I guess I don't understand the two points are our interest rates are just above one percent.

QUEST: Well, I think he's -- I think he's --

(CROSSTALK)

FURMAN: -- basically zero.

QUEST: I think he's talking about the --

FURMAN: And, you know, the Fed is going to cut rates at the next meeting. I think the only question is, do they cut? How much do they cut by at the

next reading, so those rates are going to come down, and they should come down.

QUEST: Negative rates?

FURMAN: You know, I think they should be studying that and prepared to do that if they need to. You can't get that much more monetary space, even

with negative rates. So, it's the difference between zero and, you know, say, -0.5. That helps a little bit. It's an important question. I hope

they're studying it hard, I hope they're ready to do it if they need to, but it does not take away the need for cutting taxes or raising spending

doing it in a way that's fast and large.

[15:40:11]

QUEST: Jason, thank you. Always good to see you, sir. Much appreciated. Thank you.

FURMAN: Good to see you, Richard.

QUEST: Now, the plunge in oil prices has triggered concerns about the health of the energy companies behind them. And economies that depend on

oil. Also, look at the Dow before we go. The Dow is really on a tear. We were nearly 4 percent, an absolute reversal as we've come towards the

close. Quite remarkable, what's going on.

(COMMERCIAL BREAK)

QUEST: Russia's Energy Minister says he's not ruling out working with OPEC to stabilize the oil market. Saudi Arabia seems to show no sign of backing

down in the price war. The kingdom is planning to boost its supply to a record level. Prices up around 10 percent today, coming off the worst of

the lows since the Gulf War.

The International Energy Agency is forecasting global demand for oil will be -- will fall for this year. It will be the first drop since 2000. Fatih

Birol is the executive director of the IEA. Always good to have you, sir, joining us from Paris. How surprised are you that Russia and Saudi Arabia

having seen what the effect was of that disagreement haven't put it together, you know, haven't met, come back for an agreement?

FATIH BIROL, EXECUTIVE DIRECTOR, IEA: This is a big surprise to many observers in the oil markets, because the consequences of this sudden

policy change may be rather grave for many countries around the world.

Not only for the energy companies, but more importantly, many major oil- producing countries whose economies are very closely linked to their oil revenues, such as Iraq, for example, or Nigeria, Angola, Algeria, many,

many countries will be negatively and seriously affected from the current price trajectory.

QUEST: So, Russia was worried that if they cut all happened is that the shale oil takes over and that U.S. shale oil, but why did the Saudis do you

think decide to do what seems like almost suicidal. Having heard that and pump and discount

[15:45:08]

BIROL: I think both of the countries may have their own plans and strategies, which may not be easy to understand for the outsiders. But what

the policy which was announced or the target, which was announced to kill shale industry in United States, may very well be not the right one,

because shale industry is strong. Yes, with this process, we will see a downward pressure on the current production of shale oil in United States.

But I am sure as we have seen in the past, the shale oil production will go up with the recovery of the prices. This is one.

Second, the world is going through very difficult days. The global economy is extremely weak. People talk about recession and maybe more importantly

the entire world is fighting a major challenge, which is called coronavirus.

It is a time that we all need to come together and bring our forces to address these challenges and the country taking a position to kill shale I

think is a very short-sighted position. I think it is, for me, not different than a Russian Roulette -- playing Russian roulette, which may

have grave consequences for many of us in the world.

QUEST: What's Mohammad bin Salman up to? I mean, the last thing the world needed was an oil disagreement, even if they kiss and make up tomorrow, and

-- actually, it wouldn't be kissing, it would be fist bumping tomorrow to actually put together a deal. This is playing with fire.

BIROL: Exactly. It is as I said this is playing Russian roulette and if we don't know then, it fires and whom it fires and the (INAUDIBLE) is unique

in the history of oil, because we see for the first time, the decline in the demand, global oil demand and the major massive oversupply of oil at

the same time coming at the same time, it is very serious. And if it was at a time when the global economy is weak and we are facing the coronavirus

challenge for all the citizens of the world.

QUEST: I know I would normally finish the interview by saying, what do you see as the medium term price for oil, but I'm guessing that's almost

impossible to forecast.

BIROL: I think it is impossible to forecast. The only thing I would talk that the -- in the oil markets, the common sense will prevail and all the

actors behave responsibly as the world is facing major challenges today, weak economy and the coronavirus a problem for all of us. If they don't do

it, the citizens of this world will not forget it.

QUEST: That's a very good point. Fatih, we're always so glad that you give us time particularly late into the evening in Paris. Thank you, sir, for

joining us. Now, we're at 12, 13 minutes away now -- 12 minutes away from the end of trading. If you look at the Dow, you sort of get an idea where

we're going to be. We were up 950 points (INAUDIBLE) a moment ago. Oh, come on, Richard, where'd you put it? Nope? I'll have to look it up again. I'll

have the details for you after the break.

(COMMERCIAL BREAK)

[15:50:00]

ANNOUNCER: This is CNN Breaking News.

QUEST: They have the number. The Dow is now up 1000 points, 4.3 percent. So, we are higher than when we opened, and the day opened very strongly.

The Dow 30 showed J.P. Morgan Chase is what's pulling the market up.

The big heavyweight, Apple is up six percent. Microsoft up five percent. Oils doing better as well on the rise, but the only stock that's not, of

course, is Boeing. But Boeing has so many woes of its own. It is somewhat generous in terms of the market. But this rally in J.P. Morgan over the

last hour or so -- Clare Sebastian is with me. And what happened? What happened, Clare, at 2:30 this afternoon, that started this extreme rally?

CLARE SEBASTIAN, CNN INTERNATIONAL CORRESPONDENT: You know, it is really hard to pinpoint, Richard. We've had a lot of different headlines today.

We've had the promise of stimulus from the administration but without actual details. We've had Mike Pence speaking to the insurance companies

about waiving copays and covering costs of treatment. All of that has helped sentiment.

I think there was a moment today where the market just wasn't sure that this was the button. This was going to be a buying opportunity, and now, we

have the sort of late in the day rally that we're seeing in a reversal. If you look at the individual stocks, it's -- to some extent, it's a reversal

of what we saw yesterday.

We see the lights, the banks are up, the energy companies are up, and then, towards the bottom, you see the stocks that we saw, that it's sort of more

-- the stuff that are more associated with stability, the likes of Verizon and Pfizer, they are (INAUDIBLE) at the end of the pack today.

(CROSSTALK)

QUEST: It is true. You know, we joke about this. But yesterday, Verizon was number two and at the top.

SEBASTIAN: Right. Walgreens -- yes.

QUEST: And now, it's -- Walgreens again. And J.P. Morgan, this is an interesting one.

SEBASTIAN: Yes.

QUEST: It fell five percent last week on Jamie Dimon's heart operation. So, that already had a bit of more of a loss built into it than today.

SEBASTIAN: And -- but anyway, I still think this reversal is potentially more to do with, you know, bargain hunting than anything else. Because if

you look at it, J.P. Morgan is exposed to. Lower interest rates in the market is now pricing in an almost certain chance of a three-quarter point

cut at the next meeting, which is, of course, eight days from now, Richard.

Plus, they're exposed to lending to energy companies. We know that despite the fact that oil has come up significantly today, there's still intense

pressure on that sector because of the price war between Russia and Saudi Arabia. So, there is still a lot of pressure on the financials. Of course,

J.P. Morgan is the biggest so they are perhaps the strongest, the best place to weather this, but it's still an interesting move to see them at

the top of the pack.

QUEST: What happened today? It's just almost impossible --

SEBASTIAN: Yes.

QUEST: -- to -- you know, I feel sort of slightly useless.

SEBASTIAN: Yes.

QUEST: In the sense that we were supposed to understand what -- I can say - - I suppose, arguably, the afternoon has been dominated by administration measures --

SEBASTIAN: Yes.

QUEST: -- to put together a plan of some sort. And as we saw the President on Congress, and as we saw the President doing this -- that is the moment

when it sort of got a bit of a boost.

SEBASTIAN: Yes, I think that -- and more and more and more things are starting to leak out. We're starting to get a sense of a payroll tax

holiday and all that. But, Richard -- but throughout the coronavirus, sort of, developments that we've seen over the last month or two, I think a

better way to understand it has been to look at the bond market.

I don't know if we can see the 10-year yield right now, but it has -- it's still under one percent significantly, but it has come up today. We're

backup at more like 9.7. So, while that is clearly still a popular thing, basically --

QUEST: (INAUDIBLE) 0.55 to 0.7.

SEBASTIAN: Yes, right. So, the sort of the risk sentiment has come back just a little.

QUEST: I'm going to go and just finish off the day on un the market. It has been the most extraordinary day. Let me show you with the -- with over

here. First of all, J.P. Morgan is up eight percent. The Dow is at the bottom -- Boeing is at the bottom along with Verizon and Walgreens. But

that really doesn't have not in max seven -- sorry, min-max problems as well for that.

[15:55:13]

And the graph here shows we start up -- and we go up 900 odd points. This is a moment where we thought the day was all going to turn turtle and go

down. We're down over 150 odd points. And then, there's a late rally, which seems to be predicated around the President going to Capitol Hill, talk

about what's happening next.

But frankly, nobody at this point of the day, it would have been a brave person to have forecasted we would be up 4-1/2 percent over 1000 points at

the close. I'll have a "PROFITABLE MOMENT" after the break.

(COMMERCIAL BREAK)

QUEST: Tonight's "PROFITABLE MOMENT", it's very difficult to make good common sense of what's happening in the markets. We all know by now, you

know the underlying reasons why, at any given moment, the market goes up or down.

You see from the graph over there, we can point to 2:00 and come up with 1001 reasons that might give an idea of what took place. But the real issue

becomes about economic fundamentals. When United Airlines today said a dire worst-case scenario is a 70 percent drop in revenue in April.

And no one thinks about -- Scott Kirby doesn't think that that's actually going to be the ultimate outcome. But that's the first sort of numbers that

we're getting. By the way, it's not surprising that the European Commission is going to give European airlines some form of slot relief so they don't

have to fly empty planes. And the U.S. regulators will have to look at the same thing.

Now, we're not out of this yet. This -- today will be remembered as just one of those days that exemplifies the volatility that we've come to expect

in turbulent times. And now, frankly, forget the Fed, forget the ECB, you heard Mohamed El-Erian say that they really are not in control.

This is not about policymakers. This is about governments. It's about the administrations and what they can do, what policies they can put in place,

tax cuts, health for people, that's going to actually make a real difference. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest

in New York. Whatever you're up to in the hours ahead, I hope it is profitable.

Jake Tapper with "THE LEAD" is next.

END