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Quest Means Business
Dow Sinks, Erasing All Gains From Trump Era; New Warnings On Massive U.S. Economic Damage; Carnival Princess Cruise Particularly Hard Hit By The Pandemic. Aired 3-3:30p ET
Aired March 18, 2020 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:11]
RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: We are an hour or so from the close of trade on Wall Street and the steep you're seeing,
very sharp. We're off the lows of the day which is over 10 percent, over 2,000 points.
But the Dow has now fallen 2,000 points. All the gains from the Trump presidency are now gone.
Travel stocks are being hammered. The CEO of Carnival Cruises tells me tonight, his company, along with others needs cash.
And small businesses, SMEs facing impossible choices.
Today and every day we're bringing you the business voices of the crisis.
We are live in the world's financial capital. We're in New York City. It is Wednesday. It's March the 18th. I'm Richard Quest, and I mean business.
Well, the forecasts are dreadful and the market is in turmoil and the panic on Wall Street seems to have reached a sobering milestone.
The Dow has fallen below 20,000 as news of massive economic stimulus plans are outweighed by fears -- growing fears of a global recession. Trading was
briefly halted as the selloff worsened. All the gains from the Trump era have now erased from the stock market.
It comes as governments across Europe and the United States have all unveiled massive stimulus plans to ease the economic strain.
We're talking in the hundreds of billions and the trillions. Now the U.S. Senate is scrambling to pass a $1 trillion proposal. Don't be put off by
what you're seeing there in terms of no senators. Many of them are sort of doing it remotely and the like, but they're vowing to stay in Washington
until it passes.
Julia Chatterley is with me from "First Move." Julia, so we went into 20,000 and although sort of numeric targets or not that always important.
There's a different mood. What is it?
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Real fear, I think, Richard, that you were just talking there about the Carnival CEO that all
the big businesses here are drawing on their credit lines that despite the trillions of dollars now that the Federal Reserve is throwing into the
system, we just can't cope with SMEs letting go workers overnight and that will accelerate big businesses drawing on credit lines.
The banks then have to either give them or not give them. It's just the foundations, I think first of the financial sector, but then business right
down to individual workers and it is not just one sector.
This is the critical thing, Richard, it's every sector. We are shutting down nation states economies to cure a health crisis and perhaps I'm
arguing creating a far bigger crisis.
QUEST: I've just seen in the last few minutes. I just got an e-mail. JPMorgan's latest forecast. We already had Deutsch's earlier today where
Deutsche said it was going to be the low -- the greatest fall in GDP up to 13 percent since World War II, now, if you look at the U.S. from JPMorgan,
they're forecasting Q2 down 14 percent and the U.K. down 30 percent in Q2.
CHATTERLEY: Richard, it might as well be 90. We are shutting down nation economies. The point here is and I know you're urging me to get there, we
don't understand at this stage how much money is required just in the next two to three years months just to keep everything going.
What I'm saying is, we need no rent payments, no debt repayments. I'm talking individuals. No utility switching off because people aren't paying
their bills.
Everything has to freeze in order to simply just allow people to use money to buy food and we need other measures. Remove the tariffs from health
products.
Goodness, Richard, we've still got tariffs. This is insane. We need a big Treasury fund to give money to small and medium-sized enterprises.
I know I sound alarmist, but we have seen nothing like we are seeing at this moment at all levels.
QUEST: Right, but Julia, if you have those measures, such as rent holidays or grants, if you have all of these measures, somebody somewhere along the
economic chain will have to lose out. My question to you is obviously you want to push the losses to the deepest pocket and those most able to
withstand it? Who is that? Is it the big businesses?
[15:05:10]
CHATTERLEY: I don't want losses, Richard. What I want is us to freeze this system to get through the next two to three months and I understand what
you're saying that it backs up that small and medium-sized enterprises, if they're not paying their bills to suppliers, then they have a problem.
But if no one is paying, no one is paying for anything. We send checks out to people and we just flood the system. People buy the basics here -- food,
health products. This is how dire the situation is.
We need to have a Marshall Plan at the leadership level to repurpose workers in warehouses to build the ventilators, to build masks.
The hotels are now empty. Use those rooms as makeshift hospitals. This is the kind of Marshall Plan solution that I'm talking about.
And the key thing is, we don't have time. We've burned through weeks of saying this isn't a crisis and this is not going to be a crisis. We can't
act soon enough. I guess that's my message right now and that's the message the markets are giving you.
And the only reason that it's important for us, Richard and I apologize for taking too much time is to even suggest that this is Donald Trump's gains
throughout his leadership wiped out is that this, we know he sensitive to.
This is the message to say, game over if you don't do more to fix this. Forget the 2020 elections. Game over.
QUEST: Thank you, Julia.
CHATTERLEY: Thank you.
QUEST: We'll take all those points and we'll talk with Mohamed El-Erian shortly. Thank you. Julia Chatterley, "First Move." She'll be with us
tomorrow morning, and with you tomorrow morning and me to continue our coverage.
Now the U.S. Senate Republicans are scrambling to pass a $1 trillion Coronavirus Relief Package.
The Leader Mitch McConnell has said that the Senate will work at warp speed and to expect an agreement by today or tomorrow. President Trump announced
he was taking steps to deal with equipment shortages.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: I will be invoking the Defense Production Act, just in case we need it. In other words, I think
you all know what it is and it can do a lot of good things if we need it.
(END VIDEO CLIP)
QUEST: Boris, obviously -- Boris Sanchez is with me -- the air of seriousness and the gravity of the situation is now evident to all. But you
know, the markets are saying a trillion won't be enough.
BORIS SANCHEZ, CNN WHITE HOUSE CORRESPONDENT: Yes, that's right. There are serious questions about just how expansive this trillion dollar plan that
Senate Republicans are considering is.
I can tell you that, as far as the details of that plan go, they're still being worked out. But it sounds like they're going to have a serious boost
for the airline industry. Considerable stimulus for small businesses, as well as what amounts to a payout to the average American.
There are concerns about whether that payout is going to be enough, exactly when those payments would land specifically in a moment of crisis where, as
Julia noted, people are in need of basic necessities, things like food, cleaning gear, et cetera.
The President though assuming a sort of wartime role invoking the Defense Production Act to try to avoid shortages in medical equipment, et cetera.
The President also announcing the closure of the northern border to Canada, except for essential travel and also freezing any refugee admissions to the
United States. So he is very much embracing this more somber tone, one that is distinct from what we've heard him say in previous weeks, where he sort
of didn't look at the worst case scenario regarding the coronavirus -- Richard.
QUEST: Boris, thank you. Boris Sanchez in Washington. It just shows you the sort of day that we're talking about on any other day, the headline --
Boris, thank you -- it would be the closing of the northern border with Canada to all but essential travelers and goods.
But that is just one of the items that we're going to talk about over the course of the hour.
And there are a couple of warnings about the impending damage, particularly to the U.S. economy. The Treasury Secretary Steve Mnuchin has told senators
unemployment could soar as high as 20 percent unless Congress delivers fiscal stimulus, 32 million Americans out of work and Deutsche Bank is
predicting Q2, the U.S. fall will be on an annualized basis, 13 percent the sharpest contraction since World War II. The forecast for Europe is even
worse.
Governments are proposing a variety of solutions to help blunt the economic damage, and the U.S. is making plans for cash handouts and tax relief.
Some companies in the travel and hospitality sector are calling for taxpayer bailouts. Other countries are proposing bridge loans to help
companies and businesses stay afloat and they will be paid back interest free once the crisis is over.
Mohamed El-Erian is the Chief Economic adviser at Allianz.
[15:10:07]
QUEST: Let's take this point by point and we've got as much time as we need, in this sense. The two major banks, JPMorgan talks about a deep
recession, short but deep. JPMorgan worst -- sorry, Deutsche says worse since the Second World War. How are you seeing it?
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: I'm really worried. I'm worried because you and I have been discussing it for the last six to eight
weeks, the economics of a sudden stop and we have reached critical mass.
This is no longer a sudden stop of a country. This is a sudden stop of the global economy. It is massive destruction in demand and supply.
Then there's a second dynamic, completely independent, but feeding on itself, which is an economic deleveraging. People are selling everything.
On a day when the stocks are down sharply, the risk free asset is down sharply in price.
And what you have is an economic deleveraging and then a financial deleveraging, and they feed on to each other.
And then the final point I would make Richard is policy can do a lot and should do a lot. It can protect the most vulnerable segments of our society
and it should. It should protect the strategic element and it can help balance it, but it cannot restore economic activity.
QUEST: Right. But if we take what you've said and put it into two distinct areas, the health crisis, which I know they're related, but the health
crisis and actually getting over the virus, and then the economic crisis/financial crisis, dealing with the aftermath.
Do we have -- is there -- it sounds naive, but we're going to be talking about trillions of dollars over the next few weeks, is there enough money
to ensure the survival of the global economy?
EL-ERIAN: Yes, there is enough money to ensure the survival of the global economy, but it will survive and come out of this looking very different.
If -- and here is the qualifier because what I'm about to say is what will change prospects in a major way.
If we get a health solution defined as containing the virus, and on the other side, treating illness better and increasing immunity, a vaccine does
both, that will be math. If we get that then we recover rather quickly and we do minimal damage to the landscape.
If we do not get that in next three to six months, we are going to be doing lasting damage to the global economy, not because we're going to run out of
money, we're not going to run out of money. Banks are going to print them until tomorrow morning.
But because we are going to change fundamental relationships, and we've got a bankrupt, liquid solvent companies that will become insolvent.
QUEST: On that point, Deutsche Bank made in its case this morning and Morgan did the same that they revised their numbers because the downturn in
China -- we're only just getting those numbers -- was more steep and severe than we first thought.
But by the same token, all things being equal, the recovery has been faster, and the move to normality has been faster than we first thought.
Can we take comfort from that second part?
EL-ERIAN: A little bit, but there's a very fundamental difference. When you restart an economy and the rest of the system is healthy, you can get a
quick response. When you try to restart a global economy. That is a very different proposition. And we've got to be trying to restart a global
economy.
And there's a few things we know about that. One is that you need a certain amount of synchronization for this to happen. You can't restart one place
and the other one does not start.
So it is -- I do think if we get a health solution quickly, we can restart ala China, but the longer we wait, the more complicated the restart is.
QUEST: This level of layoffs and the speed of it, in a global financial crisis, it was sort of drip by drip by drip over several months as it bit.
This is the equivalent of hitting a brick wall.
I mean, I'm sure where you are as well, you go down the streets, every shop is closed. Workers are laid off. Every restaurant is closed, particularly
here in New York.
So I'm wondering from your point of view, what is the best -- there is no single bullet, but what's the best bit of armory that they can deploy now?
Is it the helicopter cash?
[15:15:08]
EL-ERIAN: So that's part of it, but we have to be realistic about what it does. So damage containment right now is the most important thing. If we
don't stabilize the situation, we are going to feed on to each other.
You know, I don't -- I'm not a person who panics. But when I see the empty shelves, I think twice about what I should be buying. Right? The person
cutting my hair has stopped doing so not because she doesn't need the income, but because she's worried about her health.
You know, it is incredible how other people's interactions are accelerating all of all. So we need to stabilize.
Full information, full transparent information of what's going on, on a high frequency basis. We're getting much better at that.
Two is supporting balance sheets, and three is getting to the most vulnerable segments. That's where the damage is going to be done the most.
QUEST: We'll talk more. Thank you. We always appreciate it very much. Thank you.
EL-ERIAN: Thank you, Richard.
QUEST: Now, the cruise industry, none more hit and is being crushed by coronavirus. Carnival shares are down the best part of 70 to 80 percent.
The company's chief executive tells me how he plans to weather this storm. After the break.
(COMMERCIAL BREAK)
QUEST: The Carnival chief executive tells me tonight, the coronavirus crisis has been devastating for the travel industry.
U.S. stocks are tumbling. The Dow fell below 19,000. Trade was halted after President Trump spoke at the White House briefing on the response.
Travel shares remains the hardest hit. Carnival share price is down 30 percent today, but it's 85 percent down since its highs just a few weeks
ago.
And Carnival Princess Cruise lines has been particularly hard hit by the pandemic. Hundreds of passengers aboard two of its ships, the Diamond
Princess and the Grand Princess, have tested positive for the virus, and at least eight of those passengers died.
The company has now halted operations of its 18 Princess cruise ships. In fact, fleet-wide, Carnival has grounded the fleet if you like. The chief
executive of Carnival says right now, the company is mostly focused on cash.
Arnold Donald told me that Carnival is focused on minimizing disruption to workers lives.
[15:20:00]
ARNOLD DONALD, CEO, CARNIVAL: You know, for us right now, with pausing our sailings, and also taking consideration for how long this might last.
The critical thing for us is cash. So we drew down on our revolver, that's public information, and we're busy securing additional cash to make certain
we can weather the storm, however long it might persist.
We want to make certain that our 150,000 employees around the world, many of them here in the United States that their livelihoods are not disrupted,
et cetera, and while we have no revenue coming in, we'd like to be able to maintain taking care of our employee base, and also to get back to sailing
as soon as possible, because there are tens of thousands more as you well know, who are so dependent on our industry for their livelihoods.
QUEST: But are we talking here about an existential crisis? Are you talking about -- is there a real or serious risk of Carnival having to seek
protection?
DONALD: I think that in this kind of an environment, we don't know fully what the risks are. Hopefully, with the steps that the world is taking, the
community spread can be mitigated and brought under control so that the health facilities around the world are not overwhelmed and that we can all
get back to normal life again, in a relatively short period of time.
If that occurs, our industry is resilient. We've gone through many things in the past. People want to cruise. They want to enjoy their vacation time.
So if that can happen, we will be fine.
If it goes on for an extended period of time, and there's no reason to believe that that should happen, especially as you look at how things are
developing in China where it first became an issue.
I think that if it persisted for a long time, then we're in a position now as a company, we have to think about, you know, shareholders and so
therefore, we are securing financing to make certain we can weather a much longer storm.
So we have aspirations, but we have no expectations, you know, for help from government activity like loan guarantees, et cetera.
QUEST: Right. But of course those loan guarantees would require collateral and things like that on assets that are already encumbered in some shape or
form.
I mean, are we talking here about difficulty, do you think, getting help from the Federal government?
ARNOLD: I don't know. Again, we're hopeful. We have not made any particular, you know, plans around receiving help. We're very hopeful.
Obviously, the travel and tourism industry broadly needs to help. This has been devastating for the travel industry. It certainly been devastating for
cruise as part of that.
And as I mentioned, so many people are dependent and a lot of those where you're talking taxi drivers and baggage handlers, and so on.
So we're hopeful that we'll be included and have the opportunity to have, you know, at least a long guarantee. We're not necessarily looking for an
infusion of money, but at least the guarantees that we would be able to access financing. But we'll see what happens with that.
Either way, we're planning to, you know, secure what we need to take care of our people and position ourselves, once you know this storm has passed,
to be back up exciting people once again, exceeding their expectations with great cruise vacations.
QUEST: Every time I tweet or broadcast or talk about the assistance, some would say bailout given to corporations, airlines or cruise industries. I
get a barrage of e-mails and insults coming back saying these companies shouldn't be bailed out firstly, because they did huge share buybacks and
that money should have been put into a rainy day fund.
And second because the executives need to take basically zero pay until the taxpayer bails them out. How would you respond to people who say have that
view?
DONALD: My response would be, first of all, we went into this crisis with a great credit rating and a great balance sheet. So that obviously is
serving us, you know, pretty well now given the circumstances, but it won't last forever.
And the most important thing for people to consider, it's not so much the companies ourselves, yes, we have 150,000 employees, many of whom are
everyday people who are just trying to have a decent living, but we impact.
One job on a cruise ship is four to five other jobs in the rest of the community. And so, therefore, we impact so many other jobs and so many
other people.
So keeping the industry strong helps keep you know, those jobs available to people and help keeps Americans strong and that would be my response.
In terms of, you know, senior executives and so on, of course we are going to make, you know, whatever sacrifices we need to make to protect our
people and their livelihood, you know, those that partner with us and then those that have invested in us.
[15:25:10]
DONALD: So again, we're optimistic, cautiously on all fronts, but with fiduciary responsibility, we have to be prepared any event that things, you
know go on for an extended period of time, much longer than anybody anticipates. So we are gearing up to be prepared for that.
And we, like everyone else could use some help. If we don't get the help, we'll do our best to figure it out on our own. But of course, we could use
help.
QUEST: What's the difficulty of running a company where you see the share price, having fallen by some 70 percent? I know you don't look at the share
price on a minute by minute basis, maybe you do, and maybe you don't. But there comes a point --
DONALD: Certainly not right now, we're not.
QUEST: But just even today, you're down 25 percent. I mean, what is the -- what is the practical problems that you face with a share price that has
fallen so far?
DONALD: You know, the practical -- obviously, it is a reflection of the market's consternation around the ability to continue to operate a company
with no revenues coming and having taken a pause and people not certain how long this will last and how quickly it will recover once we began to return
to normalcy as a society. So that's what it reflects. We understand that.
I think, in terms of running a company is very basic for us, you know, we have great people, so we want to retain our people. And number two, we need
to get cash in. We have to secure financing so we can weather the storm.
We've done a bit of that already with the $3 billion drawdown of our revolver and we're seeking to do additional.
The most practical challenge from a business standpoint with a very low valuation relative to where you are as if you do any kind of equity
financing, obviously, that's very expensive in terms of dilution for the current shareholders. And so that's the practical fallout of having a low
share price.
But most importantly for us, is number one, our highest responsibility and our top priorities are compliance, environmental protection, and the
health, safety and wellbeing of our guests, the communities that we touch, and our people, our crew on the ships and our people shore side.
And so that's our highest responsibility and that includes their livelihood. And so we're focused on making certain that our people and
those we touch have an opportunity to lead a quality life by being provided for through the work opportunities and employment opportunities that are
generated from the business.
QUEST: Final question. This will end one day, and whether it's in May, June, August, whatever it might be.
DONALD: Yes, it will.
QUEST: This is going to come to an end, however, the reputation of the cruise industry, valid or otherwise, Arnold, the truth -- you know, people
will say, the worst examples were seen on cruise ships. How does the industry -- how do you manage to convince people that that's a myth not a
reality?
DONALD: Well, I think the practical approach to that is sharing the facts, and the facts are, as you look at the spread, first of all, no ship
inherently has any virus or illness on it. It's obviously people.
And so whatever happened on the ships, you know, originally came in from people coming on the ships, and so what we've done is we've have great
protocols already. We've enhanced those protocols.
We're working very closely with the Centers for Disease Control and with the World Health Organization and other global medical experts to make
certain we have a long history of effectively managing and containing spreaders of illnesses on the ships themselves and we've been set up for
that. We have medical facilities on the ships.
We identify early. We prescreen before people come on the ships, and then we can show the facts on the actual number of cases of confirmed, you know,
COVID and there's no evidence whatsoever that community spread was dramatically, you know, enhanced by people going on cruise ships.
In fact, if you think about a cruise ship -- just for a second -- if you think about a cruise ship and you compare it to other forms of travel, we
do temperature screening. We do medical records. You don't do that when you go to a movie theater, or you're on a train, or you're on an airport
terminal, a subway terminal.
You know, we have much more natural social distancing, often people who haven't cruised, think of cruises as these congested, you know, places. You
know that there's much more space and, and social distancing that naturally happens on cruise.
So we just have to educate, provide the information, and most importantly, let our guests many of whom were trying to cruise up until the day we
paused cruising. We have turned away a lot of people in the days we paused cruising.
[15:30:00]
Let them -- you know, speak -- you know, for us, because they know they experienced it and they can help those who haven't experienced the cruise
understand it better.
(END VIDEO CLIP)
RICHARD QUEST, CNN INTERNATIONAL HOST: Arnold Donald of Carnival talking to me earlier.
Before we take a break, look at this particular share price. Look at what's happening with Boeing under $100 a share, hasn't been that way for several
many years. And bear in mind that that was a stock that only a few -- before the max crisis, so 10, 12, 14 months ago, was trading at over $420 a
share. Now it's lost the best parts of 80 percent of its value, and it's under $100 a share, down 20 percent today.
We'll have more, QUEST MEANS BUSINESS, 30 minutes left of trading today.
(COMMERCIAL BREAK)
QUEST: Hello, QUEST MEANS BUSINESS in just a moment, of course. Remembering that this is CNN and here on this network, we guarantee you the facts and
the news always come first.
The Dow is off more than nine percent. Just half an hour left of trade, and some investors are worrying the U.S. government isn't going far enough to
hold the economic effects of the virus outbreak.
Energy stocks are by far the worst affected as oil prices collapsed.
Trading was halted for 15 minutes around 1:00, as the losses trip the market so called circuit breaker.
In a rare take to address, the German Chancellor Angela Merkel issued a stark warning to her country. She called for solidarity and accountability.
The chancellor also reassured the public supermarkets and stores won't stay open, and she thanked people on the front lines.
(BEGIN VIDEO CLIP)
[15:35:04]
ANGELA MERKEL, CHANCELLOR OF GERMANY (through translator): It is serious, take it seriously, not since German reunification. No, not since World War
II has there been such a challenge to our country that so much relies on our universal solidarity.
I am absolutely sure that we will emerge from this crisis, but how high will the sacrifice be? How many loved ones will we lose?
To a large degree, we have the answers in our own hands. We can now all act decisively and together we can accept the current restrictions and stand
together and be there for each other.
(END VIDEO CLIP)
QUEST: Democratic presidential candidate Bernie Sanders says he will assess his campaign after another round of decisive wins by Joe Biden. The former
vice president swept all three Democratic state primaries on Tuesday. Sanders campaign manager says the Vermont Senator will be talking to
supporters in the coming weeks about the next steps.
There are now more than 200,000 people infected worldwide and governments are taking unprecedented measures to fight the pandemic.
Canada and the U.S. have now agreed to close their shared border to all but essential travel. The Canadian government also announced a massive $82
billion stimulus package to protect the economy.
In the U.K., the Prime Minister Boris Johnson has announced schools across the country will be closed starting on Friday, and he's described the
outbreak as a national emergency.
The Bank of England's governor has urged businesses to contact the central bank if they think there's a thinking of sacking staff.
Nic Robertson is outside number 10 Downing Street, and it's still with -- well, Nic, you're the international diplomatic editor, so you've got the
global view in a sense. Put together what we heard today, Angela Merkel saying it's the worst since World War II, Boris Johnson closing the
national schools. What's the tone change?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: You know, you listened to the governor of Lombardy in the north of Italy as well saying
essentially that the health service there is close to collapse that they cannot cope with more sick people in essence.
We listened to the French Prime Minister speaking a little while ago, saying that their infection rate is doubling every day. They're at about
9,600, 9-1/2 thousand at the moment, one-third of all those are in hospital and one-third of those in hospital are in ICU.
So I think when you take the big picture when you sit in the Prime Minister here, Boris Johnson's shoes, you can see what's happening in countries that
are handling this outbreak already, your fellow compatriots who you normally sit across the table to from meetings -- world leaders meetings.
So this I think is clearly a moment when leaders like Angela Merkel, who doesn't normally take to the T.V. airwaves tell their populations to be
very concerned. Leaders are at the moment figuring out just how much they need to put controls on their populations, and how to do it, and how to
trade that off against the economy, and how to ensure that they can save lives.
These days, such as these leaders have never had to experience before, their populations have never had to experience before. That said, 15
minutes ago the British Secretary of State for Health walked in here behind me to number 10, Matt Hancock. And you know, there in -- there's a man with
a spring in his step, there's a man with a smile on his face.
He knows he's got a lot to do, but these leaders are not shirking away from it, they're stepping up. And I think in the big picture, that is what we're
seeing, Richard.
QUEST: OK, so they've got two distinct issues to crisis to balance, obviously, the health but the worsening economy. Health comes first dealing
with that even at the cost of what's happening with the economy.
As you look at those countries, who seems to be most on top of it all?
ROBERTSON: The countries who appear to be most on top of it all are those who are least impacted. You know, the French sort of boasted if you will,
or spoke of in the early days that they were doing a large amount of testing and that was the right way forward. The numbers of tests that
they've done so far, a little over 40,000. The British are tracking pretty high up there, even though they've been criticized for that.
Clearly, Italy is suffering hard. Spain has really put a very hard lockdown on its population at the moment, not allowing them to move around at all.
France is taking similar measures.
You know, I think the real judgment of this, Richard, is how societies and economies emerge at the end of this. It's not possible to say right now.
Each country is in a different position and we can't make that find that -- we can't make that -- I don't think we can make an apples to apples comparison today.
[15:40:17]
QUEST: Nic, Nic Robertson at Downing Street. Thank you.
Now the crisis could (INAUDIBLE) to almost 25 million jobs as a prediction from the International Labor Organization. The director of the ILO, Guy
Ryder, he's with us after the break.
(COMMERCIAL BREAK)
QUEST: International Labor Organization, the ILO it's part of the U.N., is trying to estimate how bad things might get. The ILO's sunniest outlook,
the sunniest, more than five million jobs will be lost globally. The worst case scenario, 24 -- best part of 25 million more people will be made
jobless by this crisis. And that's the estimate and it will be worse than the financial crisis of 2008. That's the big picture and the ILO will be
with me in a moment to discuss it.
But each day we're going to bring you the voices of this crisis, the business. Small businesses across the world having to make impossible
decisions on everything from staffing to deliveries.
And my next guest says the bookshop industry is in a state of limbo. Nic Bottomley is the founder of Mr. B's Emporium, an independent bookstore in
Bath in The U.K.
Sir, I'm assuming like many other stores, the sales have just stopped and shops have to be closed.
NIC BOTTOMLEY, FOUNDER, MR. B'S EMPORIUM BOOKSHOP (via Skype): Sales are definitely slowing, I would say that there is a small element of
stockpiling because in books -- you know, people are looking forward to -- you know, they're going to need some books. They always look to books for
solace, and they're going to have some time to read them. So there's a little element of which our customers are kind of rallying around.
But obviously, the big fear is that -- you know, the footfall is definitely dropping off a cliff the last couple of days, especially people who come in
are buying things. But also bookshops are wondering whether they should still be open and working out how to protect their staff jobs.
QUEST: What's your biggest challenge? I mean, is it the debt that you've already got, is you're worry about taking on more loans and more debt just
to try and keep the thing going to pay wages to eventually -- you know, have to shut the doors. What's your biggest problem?
[15:45:00]
BOTTOMLEY: In most cases of them, for us, and in the case of most bookshops, I would say it's probably not the existing debt. It's just it is
-- it is the -- it's the -- right now, the cash flow. It's the fact that month end bills are coming and it is the -- we want to make sure more than
anything we -- that we can pay salaries and that we can keep people going.
And it's -- so it's to -- its up to the crux of two things, the income threatens to drop completely if you've not got a shop floor, and a lot of
bills are coming to you.
QUEST: How concerned -- well, silly question, of course, you're concerned. But you know, knowing your -- knowing the position of the bookshop, the --
how much it's loved in the community, scale of one to 10. Where's your worry, with 10 being the highest?
BOTTOMLEY: Well, I mean, I think my worry -- my worry is seven or eight because -- and it's not it -- because this is something we've never seen
before. So we're working flat out ways to combat it.
The reason it's not higher than that and I think you'd get this from most independent booksellers, certainly in the U.K. and even that I speak to in
the U.S. and elsewhere, is because our customers are used to rallying around us. We are community hubs in all sorts of different ways. We do all
kinds of things.
And we're repurposing quickly so that we can offer them book, subscriptions, vouchers, online and via telephone. And we're out there
trying to get books to our customers, because we know they are going to want them and that they they're going to want us to be around after this.
So yes, that's the one thing we've got going for us.
QUEST: Good to see you, meet you, Nic Bottomley, England (INAUDIBLE) joining me from the U.K. in Bath. Thank you, sir. I appreciate it.
Guy Ryder is the ILO Director General. He's with me from Geneva. He joins me via Skype.
And we'll do the big and the little first. I mean, you hear this, the little businesses, SMEs, the backbone, are all suffering and so are big
businesses. What do you want?
GUY RYDER, DIRECTOR GENERAL, INTERNATIONAL LABOR ORGANIZATION (via Skype): Three things really, with this situation before us, one is starting very
close to home. We need workplaces, we need enterprises to be doing the right things. As you said a few minutes ago, health comes first in the
workplace, that means making sure workers are safe, that alternative work forms are available where practicable. We're all moving towards tele-
working in different ways. We want the people who are expected to present when they're showing symptoms that's expected to present themselves as
being infected, they need sick pay.
You talked about impossible choices. Let's not put people in a situation where they're expected to declare themselves sick in the knowledge that
they have no income.
We want better social protection to be available and extended to all. We want enterprises to be supported in the way that your previous speaker was
saying. We need enterprises to make the efforts to retain workers. Call somebody before you think about firing them.
And then we need the big macro impact. We need the fiscal, we need the monetary initiatives that have been seen country by country. But what is
glaringly missing in that scenario is that international cooperation, that common purpose, that so characterize the reaction in 2008 to the financial
crisis.
QUEST: But Guy, the one thread I'm hearing in terms of which companies should be helped or bailed out, whatever phrase we want to use, is that
workers fear that the bosses will get the company bailed out, but they won't see the benefit. They are the ones that are being laid off, they are
the ones that have not got sick pay, but the company gets bailed out and the big cheeses take all.
RYDER: Well, you make a great point there. And this is the case, we do want to see enterprises helped protected kept going, but they have also to play
their role in all of this. This is not a free gift. Enterprises do need to be protected, but they need to protect, they need to retain their workers.
And we learn -- if we learn from the past what happened in 2008, 2009. It was those enterprises, it was those economies which engaged with workers,
as well as with the private sector that found their way out of the crisis more quickly, and actually were not impacted quite so severely by the
disease. These are great lesson.
QUEST: Right, Guy, the -- you know, the White House in a meeting -- White House officials in a meeting said, that U.S. Unemployment levels could go
up to 20 percent. It's been reported at the height of this crisis. You should have seen that number.
The fear is that global Unemployment could rise substantially. You put a number on it, and but really, guesswork, isn't it?
RYDER: Well, things are moving very quickly. I mean, I would be the first to say this is not really a prediction. It is an estimation based on where
we stand today of where we might get to this year.
[15:50:06]
RYDER: But the important point, because the worst thing in the world is to think this is all a fatality. This is going to happen whatever we do. We
need to construct the right responses in those three areas, the workplace, national and international matters a great deal.
You know, we heard today that the G20 is going to have a summit next week, a virtual summit. Hopefully this is a step in the direction that we need to
go, Richard.
QUEST: Thank you, sir. Good to see you, Guy, as always, we will talk more. You and I are on this program over the days and weeks ahead.
Still to come, oil prices have plunged. They've dropped to most levels we haven't seen in 20 years, John Defterios. We need to understand they're up
just a bit now, but that's just a minor blip from what we've seen over the course of the day.
(COMMERCIAL BREAK)
QUEST: Oil prices had the worst day in almost 20 years. Look at the numbers, Brent was off some nine percent, crude was down 18.
And John Defterios is with me. John, and what are the -- are the Saudis and the Russians still bickering whilst all this is going on?
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR (via telephone): You can say that, Richard, in fact, we saw the first hints of surrender by the
Russians with the spokesman for Vladimir Putin, Dmitry Peskov suggesting we'd like to see higher prices, that doesn't mean anybody sitting down. The
Iraqis are kind of begging for an OPEC plus meeting, because this is very painful for them.
But this is Saudi Arabia pulling off the gloves and a very nasty fight for market share, and applying the pressure, Richard, when the global economy
can least afford it because of the coronavirus.
We have to think in a very different context, usually have a one to 1-1/2 percent swing in demand. We're looking at a drop of 14 percent between the
drop in demand of eight million barrels and the new supplies of six million barrels coming on to the market, Richard. It's extraordinary.
The Saudis see an opportunity and I don't think they're going to be done until they take the number one slot for about 700,000 barrels behind the
United States in April to move ahead of Russia. I think they're going to wait this out even though they can't really afford it until they become
number one.
QUEST: But John, there's no demand at the moment. I mean, this price will fall just simply on the lack of industrial demand.
DEFTERIOS: Drop in demand right now Richard by Goldman Sachs, adjusting eight million barrels a day. I'm talking about adding six million barrels,
so that's the 14 million barrels swinging about 14 percent. And that's going to get worse as you're suggesting. I'm looking at estimates of
surplus crude of two billion barrel. They don't know where to find it.
[15:55:12]
DEFTERIOS: But again, the Saudis are putting pressure on the shale producers at the same time. We're seeing discussion in North Dakota and
Montana in the (INAUDIBLE) say the whole back production, they want to see a very painful correction in the United States. And also hit Russia at the
same time.
QUEST: John Defterios, thank you. Updating us on that, which is just another of these strands that go towards this story.
The markets as I leave you this evening, the Dow Jones Industrials, we are off the lows of the day, as you can see there. We're down to six percent,
they we're down 10 percent. So, somewhat of an improvement, still under 20,000. The NASDAQ -- well, you see all the numbers under 7,000. You can
make up your own judgments on that.
We had one halt in trade during the course of the day. We do it all again tomorrow. I'm Richard Quest in New York, whatever you're up to in the hours
ahead, please be safe. (INAUDIBLE)
(COMMERCIAL BREAK)
ANNOUNCER: This is CNN breaking news.
JAKE TAPPER, CNN HOST: And welcome to THE LEAD, I'm Jake Tapper. We are continuing with our coverage of the coronavirus pandemic continuing to
rattle Wall Street. The Dow will be closing in a moment, it's down around 1,600 points today. Today was the fourth time in two weeks the trading had
to be temporarily halted because stocks were dropping so fast.
Right now the Senate is voting on a bill to help alleviate the impacts of the coronavirus pandemic. President Trump invoked what's called the Defense
Production Act that will enable him to ramp up the manufacture and sharing of protective gear for healthcare workers.
The U.S. Secretary of Defense Mark Esper will join me in just a moment to discuss that and more as the number of cases of coronavirus continues to
climb in the U.S., now up to more than 7,500 confirmed infected, the death toll now 125. It's gone up five since this hour began.
Coronavirus cases have now been reported in all 50 states. West Virginia now reporting its first case.
Some doctors and healthcare workers and even 49 U.S. service members have tested positive for the coronavirus. President Trump calling himself a
wartime president today as he announced that he would invoke that Defense Production Act, a law from the Korean War era that allows the U.S.
government to mandate production of equipment.
And our CNN's Kaitlan Collins reports for us. This should or at least could drastically help make up for medical supply shortages.
(BEGIN VIDEOTAPE)
KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: As the U.S. braces for an onslaught of coronavirus
END
