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Quest Means Business
Stimulus Talks Continue As Procedural Vote Fails; Germany To Release Extra Funds For Small Businesses; NYSE Closes Trading Floor After Two Test Positive; British Prime Minister To Address The Nation; U.S. Hotel Industry Ramps Up Call For Bailout; Pernod Ricard USA To Make And Donate Hand Sanitizer. Aired 3-4p ET
Aired March 23, 2020 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:19]
RICHARD QUEST, CNN INTERNATIONAL HOST: Difficult days. The Dow is below 19,000. Stocks are off the session lows, but they're not in the session
best anyway.
The market and how they look and the reasons why.
The Fed has come through. The Senate is stuck. So U.S. stimulus is in the balance, but monetary power is doing its job.
A CNN exclusive interview, Germany's Finance Minister tells us the government will do whatever it takes.
And all-hands on deck. I'll speak to one drinks company that's now making hand sanitizer.
Together, we are live in the world's financial capital. We're in New York City on Monday, March 23rd. I'm Richard Quest, and yes, I mean business.
A very good evening to you once again, as you would properly expect, a whole raft of various measures and stories and challenges to bring your
news about, for example, the Federal Reserve of the U.S. It said it will do whatever it takes to avoid a depression.
While on Capitol Hill, the Senate is still negotiating the details of a massive $2 trillion Stimulus Bill. A procedural vote failed in the last
hour, still, the Democrats and the Senate's leader says a deal is close.
Investors are not pleased with what's happening. Just look at the way the day has gone. There are many undercurrents to this day, such as the Fed et
cetera, et cetera, et cetera. But fundamentally, the failure of the lawmakers to pass a package is what's moving this market.
The Fed has announced a major expansion of QE saying it is prepared to buy bonds "in the amounts needed." Unlimited, in other words, and it's invoking
emergency powers so it can buy corporate bonds and preparing to support small and medium businesses, a Main Street Business Lending Program in the
near term.
Governments and Central Banks around the world are confronting this crisis, and they're doing so with huge amounts of cash. We know that the Senate is
working on a $2 trillion stimulus package. The Democrats have blocked it so far, but it was slated to pass at some point. The Democratic Senate leader
says the two parties are close to a deal.
The U.K.'s plan announced on Friday, it's a range of measures. Most significantly, the government says it will pay up to 80 percent of the
wages for workers who might lose their jobs up to a certain amount.
And Germany is taking on around $170 billion in new debt just as a beginning to pass a supplementary budget. It's part of a massive $800
billion package to mitigate the damage.
And the Finance Minister of Germany says it'll do whatever it takes to stabilize the economy. Fred Pleitgen has been talking to him. Fred, can you
hear me?
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hi, there, Richard. Yes, yes, sorry. Hi there, Richard. Yes, you're absolutely right.
We did speak to the finance minister today.
And as you know, Richard from reporting extensively from Germany, the Germans usually don't come out with big language when they approve things
like this. But the German Finance Minister today called this program a bazooka of measures that they say they believe will get them through the
crisis.
But the first question I did ask them is, what if it doesn't? Is the German government willing to do more, and the financer clearly told me, yes, they
are going to do whatever it takes. Here's what he said.
(BEGIN VIDEOTAPE)
OLAF SCHOLZ, GERMAN FINANCE MINISTER: Germany is going to do whatever it takes to stabilize the economy. Yes, this is what we are doing. And we are
willing to do it all the time that is needed.
This is a crisis, which is really a big task for all of us in any country of the world and we have to save the life of our peoples. We have to
cooperate also internationally.
When the things will change, and we will have new horizon with a better situation, we will use money to get a better push for the economy and to
recover.
PLEITGEN: At some point it might become necessary to do something on a European level. Would Germany be on board with that, and for instance, also
with an idea like euro bonds?
SCHOLZ: I think it is absolutely key that we cooperate in Europe, as it is key that we also cooperate globally and that it is a big mistake to think
that this pandemic can be fought just nation by nation. We have to have some cooperation.
[15:05:04]
SCHOLZ: But looking at Europe, I think we are already starting with the necessary things. So we discuss a lot about what we can do together. There
is a coordinated strategy in fighting against the crisis.
PLEITGEN: What is Germany's message to the world as far as trying to get out of this crisis strong?
SCHOLZ: It is very difficult.
PLEITGEN: It is unchartered territory, isn't it?
SCHOLZ: It is a territory we haven't seen before, and it's really something very new to us. No one of us and even of my age ever had a real experience
with a pandemic like this in his life, but it is a new task and we have to do what is our -- what is our job and as Ministers, as leaders, I think we
are responsible for doing the right things and we are responsible for taking decisions.
This is the most important thing. I'm sure that we all will be able to come through the crisis, but we should understand that this is something which
shows us that we are humans, and that as humans, we just can survive if we cooperate.
(END VIDEOTAPE)
PLEITGEN: And Richard, two things that the German government really wants to project here in this situation, on the one hand, they want to show that
there's political unity here in Germany, and on the other hand, they obviously also want to show that they are willing to whip out the big guns.
What's happened tonight is that Angela Merkel from her quarantine that she's currently in, has put out an audio message saying how important this
package is and that she is fully behind this, and she believes that this is something that will help Germany get through the crisis.
Also, Richard, look at the situation in America and juxtapose it with a situation in Germany, both houses of German Parliament have already come
out and said that they support this package as well. So we expect that it's probably going to get through Parliament by the end of this week --
Richard.
QUEST: On this question of -- all the amount of deficits and extra spending, the Minister there was being very honest, but somewhat
uncomfortable.
And in fact, in Germany, there's sort of an -- there is an air, isn't it as if they've just been told the world is flat?
PLEITGEN: Yes, I think you're absolutely right. And this same Minister is actually the Minister who always said that he does not want to bust the
budget.
He is always someone who said that he is for balanced budgets. But I think also one of the things, Richard, that the Germans have been saying, in this
very situation, they said, look, because we've had these balanced budgets over the past couple of years, because we have been prudent in our
spending. That's the reason why they now believe that they have the financial muscle to be able to get through all this and to support the
economy in the way that they need to.
But you are absolutely right. This is really a sea change from what we've seen in German politics, basically, since 2003-2004, since the Germans have
really become serious about balancing their budgets. It is a very, very difficult step for them, but it seems to be a step that right now, once
they've taken it, they want to follow all the way through, as we can see, by these giant numbers that they're putting out there with this giant
package that they've proposed today -- Richard.
QUEST: Fred Pleitgen who is in Berlin and watching the German side of the story for us.
The U.S. approach is still evolving, unlimited money from the Fed. Clare Sebastian is with us. The Fed does not have a different -- I mean, an
alphabet soup of various plans and programs, which are all designed to shore up what?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Two things, Richard. One to bring liquidity to markets that have been seeing serious disruptions. That
is why essentially the QE that they announced last week at a level of $700 billion in Treasuries and mortgage backed securities is now essentially
unlimited.
But there's more. It's not just about these markets, Richard. It's about the real economy itself. The Fed is now trying to get money as quickly as
it can to small and medium-sized businesses. They announced three new credit facilities.
They are launching soon a Mainstreet Business Lending Program to get money to small and medium-sized businesses. This isn't just about avoiding a
credit crunch now, this is about avoiding a depression in the economy and not just sort of bridging companies just so they can get to the end of
this, but really trying to bring sort of a soft landing so they can recover once these locked down measures and the virus spread has started to abate.
QUEST: If we take a look, Clare, you've been watching over all the different countries, and I mean, I'm still sort of perhaps most impressed
at the moment by the U.K.'s 80 percent of wages for laid off workers.
I'm not seeing -- it was the specificity with which they managed to do it whether or not they ever get around to it and it is still successful is
another matter.
SEBASTIAN: Well, and it's the coordination as well, Richard, and in the U.K., it was a coordinated response from government and the Central Bank,
and we haven't really seen that in the U.S. yet.
The Congress, as you've been reporting is still stalled over how to pass this Stimulus Bill. Maybe we shouldn't even call it stimulus since we're
not actually trying to get people out and spending. We're just trying to bridge them until this is over.
But that is what people are sort of nervous about in the business community.
[15:10:10]
SEBASTIAN: Can this actually get done? Can the money from the Fed or from government get to the right places? And I think coordination would bring
some confidence there.
QUEST: Why are the markets falling and not just trading sideways? I can understand when they rally on these Central Bank developments, but the Dow
is down a further three and three quarter percent.
SEBASTIAN: Well, Richard, it is interesting because I was looking at the kinds of stocks that were rising, as we saw that sort of bounce at the open
today on the Fed measures and it was the ones that had been really beaten down.
It was the likes of Boeing, it was the airlines that were coming back up, so that's -- this isn't sort of a change in the fact. This is people coming
in and trying to sort of get a bargain at a time when they think stocks are really beaten down. And that is the kind of euphoria that we've seen fade.
We have yet to see a Fed fueled rally in this current climate hold, be it their announcements last week or the week before with rate cuts that these
rallies have sort of faded over the course of the day as reality about the situation with this virus has set in.
It remains to be seen whether the markets believe any of these measures are enough. But as I say, coordination between government and Central Bank
would help.
QUEST: Clare Sebastian, thank you. Clare is watching events for us in the markets. As you and I continue tonight, the New York Stock Exchange has
gone electronic only to try to stem the spread of coronavirus. The President of the NYSC Stacey Cunningham is with me after the break.
(COMMERCIAL BREAK)
QUEST: And the markets continue to fall. The Dow is off, look at the numbers, down nearly four percent. Again, still off the lows of the day,
but it really is see-sawing around the negative areas down to 900, up to 600 or 400 or 300, and then back down again. And this is all at the Senate
waits to pass nearly $2 trillion stimulus package.
On the New York Stock Exchange, it's the first all-electronic trading day without the floor. It comes after two NYSC employees tested positive for
the virus.
With me is Stacey Cunningham, President of the New York Stock Exchange. She joins me now. It must be a very strange feeling for you, Stacey on the
floor of the Exchange on your own basically.
STACEY CUNNINGHAM, PRESIDENT, NEW YORK STOCK EXCHANGE: It is interesting, Richard. I mean, I've been in this business for 25 years. I started my
career on the trading floor 25 years ago and wouldn't have expected a moment like this, but certainly we're being challenged by this crisis on a
number of fronts.
[15:15:10]
CUNNINGHAM: So having the exchange open for trading without the trading floor open for trading was a precautionary measure we thought appropriate
to take given this crisis.
QUEST: Have there been any problems or what have been the challenges today as the thing got underway, and you put into practice what you've been
preparing for?
CUNNINGHAM: Yes, we run electronic markets. We run a number of markets across equities and options, asset classes, and globally even more broadly.
And so running electronic markets is not something we're unfamiliar with.
At the New York Stock Exchange, and on two of our options trading floors, we incorporate human judgment and human oversight into that electronic
trading as well.
So today, we took that piece of it away and we're continuing to run markets electronically, much of that volume is done electronically. Today, even the
people on the floor are using technology and using algorithms to execute their trades, which is why even before this crisis, you don't see paper and
shouting quite the same way you used to.
QUEST: No, but you do see people walking around to the different DMS -- designated market makers -- to find out what the situation is. If there's a
moment when a stock has to be halted, trading has to be halted while news is given out. How are you going to handle that?
CUNNINGHAM: So we still communicate across our membership very, very broadly, electronically, as we do on any of our markets that trade a
hundred percent electronic all of the time, you are sacrificing that human judgment.
And so in the NYSC model, the most critical parts of the day, the most critical parts of trading are where you see the human involvement at its at
its highest with an IPO, through the opening and closing auctions
And so at those moments in time, we are not getting the benefit of that human judgment layered on top. But certainly those human beings are still
using algorithms to trade and so are market makers that are usually standing at these posts each single day opening and closing their list of
securities are still opening and closing stocks. They're doing it remotely.
QUEST: And it begs the question which I know you will have faced. If this works and it is successful, does it not call into question, the floor has
an entity?
At the end of the day, it is there, the stock -- the New York Stock Exchange has it, but if you can trade successfully without it, is its
future numbered?
CUNNINGHAM: Richard, this does work. We can trade successfully without it. This is not something that's new to us. The fact that we allow humans to
apply their judgment to complex situations just means they're better.
So our stocks trade with less volatility. We have now our bid ask spreads on any given day, which saves investors' money. So yes, we will go back to
that full level of service when the time is right and we can guarantee peoples' safety.
So we make a conscious decision to choose that model because of the benefit it gives to our customers.
QUEST: I'm going to back you into a corner here, Stacey, so the floor is not dead.
CUNNINGHAM: The floor is alive and well and the people that work on the trading floor are looking forward to and waiting to come back to work. They
are true patriots.
So this is a challenging time for them, because they've lived through so many historic moments over the decades of their careers, and this is one
where they're being asked to live through it remotely because of the nature of this epidemic.
They are on the front lines so often throughout history, but right now our healthcare workers are on the front lines, and so this is the step that we
feel like we can take to protect the people in our healthcare system at this moment in time. So they're being asked to play a slightly different
role this go around.
QUEST: Stacey, good to see you. Thank you for taking time in what I know is very busy days for you as well. I appreciate it ma'am. Thank you.
CUNNINGHAM: Thank you.
QUEST: Now, to India where stocks finish down 10 percent. Millions of people in India are now under lockdown until at least the end of the month,
and residents in 75 districts which includes New Delhi, Mumbai and Bangalore have had to travel and work restricted.
John Defterios is our emerging markets editor who joins us from Abu Dhabi. Let's deal with India first, and then I want to just talk about the UAE
which has introduced even more measures.
John, India is a vast economy, but it is not equipped in quite the same way as other cities to actually handle it.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Yes, you are correct, Richard. If you look at the number of cases, you would suggest, you know
why the alarm here but it's a 1.3 billion people, four times the population and then some of the United States and the market did not digest as well.
Narendra Modi also restricting domestic flights as of midnight on Wednesday evening as well, so the wheels of commerce will definitely come to a halt.
The SENSEX Index was down some 13 percent, it is now down 37 percent since the crisis started and we saw the rupee here hit a record low.
[15:20:05]
DEFTERIOS: This is going to be very difficult also because of the global slowdown affecting India. The software manufacturers, the textile makers,
the steel makers, and India, Richard, very interestingly, was decelerating coming into this coronavirus.
Growth was pegged at just five percent for 2020. It is now projected to drop to four percent. It sounds decent, but as you well know, three, four
years ago, this is an economy under Modi that was averaging eight to nine percent quite healthily.
This is quite a shift, and this is just the beginning of the virus, and has that market reaction so sharply today for both the rupee and the stock
market.
QUEST: John, I read the G-20 statement after the meeting in Saudi Arabia or the virtual conference in Saudi Arabia. Talk about understatement when they
talk about a significant slowdown.
I mean, as I read the statement, I sort of wondered whether they grasped what was happening, though it didn't seem to be any reality in that
statement of the magnitude. I realized it's just words on a piece of paper. But when I read what Angela Merkel says, and I read what everybody else is
saying, they didn't capture the moment.
DEFTERIOS: Yes, I think you hit the nail right on the head here, Richard. That statement was talking about forming a taskforce. Yes, we need to have
greater coordination going forward.
The International Monetary Fund Managing Director, Ms. Georgieva was suggesting that this slowdown though, however, because of the coronavirus,
will be equal to if not worse than what we saw during the global financial crisis. That doesn't surprise me.
She is saying the recovery in 2021 is now expected, but the emerging markets are vulnerable, Richard. I am talking India there before because of
the announcements today by Prime Minister Modi.
But if you add some other countries like Indonesia, Brazil, Nigeria, the Philippines, I picked these five countries because it's a population
collective of some two billion consumers. What's the common thread here? The healthcare systems that the Managing Director was talking about in her
statement from the G-20 are not holding up.
They are under dollar pressure right now. They need fiscal stimulus. And to your point here, the G-20 convened by Saudi Arabia virtual meeting, which
is not simple, doesn't seem to be resonating or responded like we did during the global financial crisis which Gordon Brown did, then British
Prime Minister convened everybody.
So I'm a little bit alarmed. They're supposed to have the leaders, the G-20 virtual leaders. I'm not expecting a lot after looking at the statement
that we see this evening, Richard. I have to agree with you on that one.
QUEST: And we will have more on the G-20 and the statement, in our Profitable Moment at the end of the program. John Defterios, thank you.
As John said, the IMF is now predicting a recession, at least as bad as the one of the last financial crisis.
Paul Gruenwald is the Global Chief Economist at S&P Global Ratings, which is forecasting also a global recession. I guess we are now at the point
where it is pretty clear that that is going to be, but we're now looking at the measures taken. Okay. Do you believe, Paul, the measures taken can
stave off the worst?
PAUL GRUENWALD, GLOBAL CHIEF ECONOMIST, S&P GLOBAL RATINGS: Yes. Hi, Richard. On the monetary front, I think we're pretty happy with what we're
seeing with the Fed and other Central Banks swinging into action, first lowering rates and then commitments on swaps and buying CDs and this
morning's measures from the Fed look like they're working really hard to make sure markets are functioning properly. They're reasonably liquid and
price discovery is taking place.
On the fiscal, we still have some work to do. What we need from the fiscal authorities in the U.S. and elsewhere is to create public demand to replace
the private demand that's disappearing. Clearly, that's going to have to be direct response into SMEs and into the labor market and we don't see that
yet.
QUEST: So what do you now forecast as being the depth of this recession? I mean, it is going to be global. How bad and how long?
GRUENWALD: Yes, well, it's pretty clear that we're going to have a very bad Q2 in the U.S., probably double digit decline on an annualized basis.
The two things that we're still trying to nail down and they are going to be difficult, one is obviously the health situation, which is outside or
exogenous of the economic system. And the other is the policy response.
So the policy response should not only cushion the downturn, it should set the stage for the recovery. We don't know whether it's going to be two,
three or four months, hopefully not longer than that.
But when the crisis in the health system clears or the COVID-19 starts to level off in place and the SMEs that will function and support the
recovery, and as I said, we don't have the fiscal measures to support that yet.
QUEST: When I look at the fact that the best part of 30 percent of the U.S. economy is now in some form of lockdown or shut down. What worries me, yes,
the giant companies now have this new facility that the Fed has put in place.
[15:25:05]
QUEST: It means, larger companies can get money these days. It's the restaurants. It's the ordinary, very small businesses, less than 50
employees, less than 30 employees. Many of them won't come back, will they?
GRUENWALD: Right. That's the risk. Absolutely. And that's where I think we need these targeted fiscal measures. The Fed can help the larger firms. We
saw that from the measures this morning, but it's the SMEs, which had a lot of employment and the affected employees that need to be helped and what
we're waiting for from the Congress.
QUEST: Quickly, roughly $2 trillion is up for grabs so far from Congress, if you had to put a thumbnail view on how much ultimately. $5 trillion? $6
trillion?
GRUENWALD: I've been talking with our U.S. economist and our sovereign colleagues, we think two is probably the right number for now. But again,
we're basing our forecast of the health situation with the experts and we're looking at that from the macro angle. That's the best we can do right
now.
QUEST: Paul, the best is good enough, always. Thank you, sir. We'll talk more on that and keep you informed. Thanks very much.
In the United States, the big issue is the U.S. senators, it is a completely partisan standoff. And it's nearly a $2 trillion bill. It's
meant to bring major relief to Americans. That's just what we were just talking about with Paul and with others.
However, they are hoping to pass it today, will they? After the break.
(COMMERCIAL BREAK)
QUEST: I am Richard Quest. A lot more QUEST MEANS BUSINESS in just a moment. You're going to hear from the CEO of the American Hotel and Lodging
Association. He is warning half a million workers in these industries very likely will be laid off.
And the drinks giant Pernod Ricard is starting to make hand sanitizer, addressing the world shortage. The CEO for the United States will be with
me.
This is CNN and here, the facts always come first.
British Prime Minister Boris Johnson will address the nation in the United Kingdom in around one hour from now on new measures to deal with the
coronavirus pandemic.
[15:30:10]
Earlier on Monday, the government announced all Britons traveling abroad to come back to the U.K. as soon as possible.
The (INAUDIBLE) death toll in Italy rose by another 600 people on Monday, and now top 6,000. Officials say this may actually be a good bit of news
because the number of deaths and cases have been small declines over the last two days.
To the U.S. state of New York, the governor has announced that there are more than 2-- 20,000 people with coronavirus, almost 6,000 new cases
reported after thousands more people were tested overnight. And the governor has asked the state's hospitals to increase their capacity by 50
percent to help with this new wave.
The statement from the British Prime Minister, which will just be in, I don't know, it's in the two hours, an hour from now. It's a departure from
several days of news conferences. Max Foster is in Windsor. Max, the rumor mill is working full time. And it's everything from curfews to lockdowns,
to travel bans. Do we have any idea what Boris Johnson is going to say?
MAX FOSTER, CNN LONDON CORRESPONDENT: No, but partly that narrative that you just described, it's obviously a big deal. He is holding this 8:30 in
the evening, primetime address to the nation. That's how it's being trailed. So, this is a big statement. It is basically a statement to say
the nation gather around your T.V. sets and listen to what the Prime Minister has to say.
What we've got building up to this moment is the scenes over the weekend, where people were out in parks, getting very close to each other. This
morning, we had more images from the London Underground, people crammed together, people basically not sticking to the rules he's been very clear
about over the past week. Most people are sticking to the rules but there are people who aren't and they're creating a risk, particularly in London.
So, I think almost certainly, he's going to be appealing to the nation to try to stick to the rules. But the bigger question, Richard, is whether he
goes any further, he's certainly under pressure to do so.
QUEST: OK. So, we'll find out in an hour and 10 minutes so -- or so. So, I guess much speculation is not -- but the U.K.'s position, having had us if
you like a slower start on the social distancing, tightening of rules, and are the numbers becoming of infected and dead, are they becoming alarming?
Ahla, Italy?
FOSTER: Well, in terms of the percentages, they're alarming, but and tracking back to Italy, it's following a similar sort of trend. So, you're
seeing a lot of this in the media. The government has what they called a science-based approach to all of this. The issue is, of course, that it's
fear driving a lot of the coverage in the country and what people are, you know, you see people panic buying in shops. It's fear driving that, it's
not science driving that. And that's what the Prime Minister is grappling with.
He's trying not to enforce laws and curfews before it's necessary, he's trying to follow the natural rate of the curve. And on a very basic level,
he knows that once people are locked up in their homes, they're going to be there for weeks and possibly months. And he doesn't want to do that. So,
he's trying to be rational, but people aren't being rational in response.
QUEST: Max is at Windsor. We'll talk more with Max tomorrow. Now, nearly $2 trillion stimulus package is locked in partisan stalemate. Senate Democrats
voted down advancing the building. There's a bill and it did so again, saying the Republicans are not adequately protecting workers from
coronavirus economic damage. The Republican Leader Mitch McConnell has pointed the finger right back.
(BEGIN VIDEO CLIP)
SEN. MITCH MCCONNELL (R-KY): The markets are tanking once again, as I said, because this body can't get his act together, and the only reason he can't
get his act together is right over here on the other side of the aisle.
(END VIDEO CLIP)
QUEST: Towns across the country are mounting pressure on Congress for a bailout. Industry executives have asked administration for $150 billion in
loans and income assistance. Since it's a matter close to the President. Donald Trump says the pandemic has hurt businesses such as that his own
hotels, the American Hotel and Lodging Association. Now, believes 44 percent of U.S. hotel workers could lose their job due to the virus.
The President Chip Rogers is with me via Skype from Washington. I understand the gravity and the severity. So, when you look at the partisan
bickering in Washington, who do you blame?
CHIP ROGERS, PRESIDENT, AMERICAN HOTEL AND LODGING ASSOCIATION (via Skype): Well, I'm not here to blame anybody right now. But we do know that as every
minute goes by, you have more and more workers being laid off. You have more businesses that are contemplating closing. And that number you gave
just a moment ago, 44 percent, we've actually updated that.
We believe that right now in the United States, 70 percent of all hotel workers are either furloughed or let go, and that number is only going to
increase if they don't get this bill passed.
[15:35:05]
QUEST: What do you want from the government? You -- I think -- I look at the U.K., where the U.K. -- you'll be familiar with the U.K.'s rule.
They're paying 80 percent of laid off staff's wages or potentially. Is that the sort of thing you want from the federal government?
ROGERS: Well, something along those lines, but the main thing is, is that you are taking care of the people that work in the industry, because it's
going to be millions of people laid off if they're not already laid off, we're going to see those numbers pop up through the system over the next
couple of weeks. So, what we're hoping is that the government realizes that this happened through no fault of their own. And in fact, in many states,
the government is the ones that are telling every single business to shut down.
We understand that medically, when we support that medically. But the reality is, is that millions of people will be without a job and without a
paycheck if this doesn't go through. So, whether it's 70 percent or 80 percent, it just needs to happen, and it needs to happen quickly. People
can adapt, but they've got to have some sort of lifeline.
QUEST: Isn't the real worry here, of course, that at the end of the day, many of the smaller hotels and restaurants, they simply won't come back.
Because what they need, I mean, they're not going to take on more debt. With loans, they need grounds, and they just won't come back.
ROGERS: You're exactly right. And many of them will not come back. And the thing to keep in mind is, unlike the airline industry or the cruise
industry, the hotel industry is really made up of tens of thousands of small business owners. When you see that sign at the top of a hotel, it may
say Marriott or Hilton or IHG, many great companies that we work with every day. The reality is, it's a small business owner that actually owns the
building, they're a franchisee.
So, what we have are all these owners trying to make their debt payments, trying to keep their businesses afloat, and trying to make sure that their
employees can keep their livelihood afloat. So, we really need help.
QUEST: That's not overstated. I mean, a lot of their -- a lot of the friends, the owners of the buildings, are large corporations in their own
right, but I'll take your point, that there are many that there will be badly affected. So, how --
ROGERS: Well, I think 61 percent of all hotels in the United States are owned by something that's classified by the Small Business Administration
as a small business.
QUEST: So, how far are you prepared? Do you want to have restrictions on any form of funding financing loans, whatever it is, to bid to these
corporations, in terms of to the larger companies, in terms of stock buybacks, dividends, executive compensation and pay, depending on how big
the company is?
ROGERS: Well, let me be real clear, every -- just about every hotel executive I know at the large brands you referenced a moment ago, they've
either cut their pay significantly, or they're taking no pay at all. So, I don't think that's a problem.
In fact, I've heard none of them defend the idea that somehow, they're going to get a bonus out of this. But what we need to focus on are the
workers, because those are the millions that are going to be impacted.
So, if the government can have that plan to make sure that they either on - - are on unemployment insurance immediately if they're furloughed, or they're getting paid through a loan that will be forgiven if in fact, the
owner is paying them with money that they borrowed from the government.
And the second part of small business owners, they've got to make their debt payments, they've got to make the mortgage because if you pay the
workers, and there's no job to come back to, and they're going to be unemployed, ultimately, anyway.
QUEST: The size and scale, is simply mind-boggling. Thank you, sir. We'll talk again as we continue. Thank you. Appreciate it.
ROGERS: Thank you.
QUEST: Yes. Corporations worldwide are answering the call of the duty and with the double pandemic. You know, how does a drinks company make hand
sanitizer? We'll find out after the best -- after the rest -- after the break, when the CEO of Pernod Ricard USA joins us.
(COMMERCIAL BREAK)
[15:40:00]
(COMMERCIAL BREAK)
QUEST: The maker of Absolut Vodka, Pernod Ricard USA, says it's producing hand sanitizer at all of its manufacturing plants and donating the bottles.
Ann Mukherjee is the company's chair and CEO. She joins me now. And good to have you in. Just how difficult was it to convert your factories from
making normal beverages to making sanitizer?
ANN MUKHERJEE, CHAIR AND CEO, ABSOLUT VODKA, PERNOD RICARD USA (via telephone): Hello, Richard. It's great to be on. And I'll tell you, it
wasn't as hard as we thought it would be. We actually did it very fast within 48 hours. And you know when ethanol is kind of the very base that
you need for hand sanitizer, that's what we make. So, it was pretty easy to do from a manufacturing standpoint.
QUEST: I just keep thinking, that all companies that make sanitizer, they will sort of have this bit of equipment and that bit of equipment, and
they'll mix it all up and (INAUDIBLE) the other that you were able to do it so fast is remarkable.
MUKHERJEE: We were very blessed. I will tell you that our head of manufacturing came up with the idea literally last week, Monday morning.
And our public affairs team was able to work with the administration and trade advisor Peter Navarro within 48 hours, cleared the way for us to be
able to do it. We needed to get to the Trade Bureau for alcohol and be able to manufacture this in our plants which they got us that approval.
We then needed the FDA to approve us to register our facilities so we can be over-the-counter manufacturers. And then FEMA has been amazing and
helping us figure out the distribution and getting this to the places that the government needs.
QUEST: It's so remarkable. I mean, the speed with which you are able to navigate bureaucracy and bureaucracy was able to respond in a timely
fashion.
MUKHERJEE: I think when it comes in times of crisis, it's amazing what we can do when we remember that people matter.
QUEST: Right.
MUKHERJEE: And we were able to do that.
QUEST: But what is interesting here, and I've been reading up a lot, as we all have, about how you can have wartime shifts in production to from
there. You've got to stick to your knitting, though, haven't you? You've got to stick to those areas that you haven't -- you're not about to start
making ventilators or masks.
MUKHERJEE: No, not at all. You know, the reason we were able to do this is because you know, we make what is needed for making our beverages which is
-- which you have to start with, which is ethanol, but what we did not have were the other ingredients. And so, when you looked at the World Health
Organization, in terms of how you make this, we all -- we needed to also add in glycerin, as well as hydrogen peroxide, which we were able to source
very quickly.
And we had to figure out how to deed nature the ethanol so people would not drink it, because of course, what we make is drinkable. And we were able to
train our staff very quickly because it's a part of what we do from a capability perspective. And then, of course, what we do best, we blend it,
we know how to blend. And so, then we have to source the bottles, and we were ready to go.
QUEST: It's an extraordinary tale. Ann, but tell me, I mean, thinking to the future, how long will it take you to put your factory back together
again?
MUKHERJEE: Not long at all. We were able to convert our excess capacity in our facilities. And we have over five different facilities that we are
converting to be able to do this.
QUEST: Right.
MUKHERJEE: We're doing it in the short run for as long as the government needs it. And we've trained our people to do it very, very quickly.
QUEST: What would you say to any CEO that is looking at where -- because this is going to go on for several months.
[15:45:07]
And I mean, you know, obviously if you're a manufacturing plant, retooling it, could take you three months or two months to do it, if you're making
something complicated. So, what would you say to a CEO who wants to be involved, has some form of manufacturing plant, but isn't quite sure what
to do next?
MUKHERJEE: Yes, what I would say is, now is the time to be entrepreneurial. In our case, you know, our chairman, Alexandre Ricard, pretty much told all
our affiliates look, go dig in, figure out how you can do this. You know, our Sweden operation that sells Absolut, they're also a part of this, our
Irish distillers. So, you know, we went across the company.
And I would urge CEOs, this is the time not to think about, you know, bureaucracy or process or, you know, what does it mean to the bottom line,
it is time to tell your people, get agile, get flexible, get creative. When we can do that as leaders and then partner with the government, and just
put people first, that's how we're going to win together.
QUEST: Ann, good to talk to you. Thank you. And we'll check in again with you, if we may, ma'am --
MUKHERJEE: Absolutely.
QUEST: -- as this (INAUDIBLE). Thank you so much.
MUKHERJEE: Be safe. Thank you.
QUEST: Thank you. And to you, ma'am. Thank you. Now, in California, restaurants having to rely on delivery, after the government issued a
statewide stay-at-home order. Kyung Lah spoke to one restaurant losing thousands of dollars a day from reduced demand.
(BEGIN VIDEOTAPE)
JOSH SOUDER, DIRECTOR OF OPERATIONS, I.E. ENTERTAINMENT GROUP: How you doing, guys? It's just been a completely life-altering experience from
start to finish, and within a week. I mean, this is unbelievable.
UNIDENTIFIED FEMALE: Yes, I'll have a two ounce and I'll have an eight ounce.
KYUNG LAH, CNN CORRESPONDENT: Like the virus spreading across the globe, the economic damage leaves no restaurant untouched.
SOUDER: We would have all the seats filled.
LAH: All of these seats?
SOUDER: We've had -- it would -- it would be a line out the door.
LAH: California's stay-at-home order to fight coronavirus changed the entire industry in an instant.
SOUDER: We went from being about to franchise to basically running it to go business. I, you know, haven't slept. I'm worried about having a heart
attack, to be perfectly honest with you.
LAH: With no diners, the Drunken Crab is hemorrhaging thousands of dollars a day. Restaurants, a sign of what's to come in the U.S. economy. The
industry estimates up to 7 million people will lose their jobs in the next three months, nearly half of all service workers. Josh Souder, already
forced to make that hard choice.
SOUDER: I had to, you know, was forced to lay off 75 people. At first, you're thinking about them. OK, I feel horrible for them, and then they
have to go home and tell their family, I just got laid off.
JAY BOCKEN, RESTAURANT GENERAL MANAGER LAID OFF THIS MONTH: I called my wife over the phone and said honey, I'm on my way home. And she just -- she
pretty much immediately knew.
LAH: Laid off from the Drunken Crab, former General Manager Jay Bocken immediately filed for unemployment. One of the 2.25 million Americans that
Goldman Sachs estimates filed jobless claims in the first week. And more expected in the weeks to come.
BOCKEN: You're talking thousands and thousands of people looking for work simultaneously. It's going to hit every aspect of life. And the government
needs to react and help us get through this. That's the only way it's going to work. And people are not going to be able to support their families for
more than two months.
LAH: And already signs money is getting tight. Outside this West Hollywood bar, employees only, align. Inside, the small staff preps meals, free meals
for workers who show a pay stub, like bartender Jerry Courtney Austin.
GERI COURTNEY-AUSTEIN: All of us, like, immediately lost our jobs. I think as of Monday or Tuesday.
LAH: Are you worried about how long this is going to last?
COURTNEY-AUSTEIN: A hundred percent. Yes. If it goes on months, like, I don't think any of us have any idea what we're going to do.
TOM SOPIT, RESTAURANT OWNER: The moment this happened, we're going to dig ourselves in a hole, regardless.
LAH: Are you scared?
SOPIT: I'm concerned.
LAH: Restaurant owner Tom Sopit's rent is $1,000 per day. He doesn't want to fire anyone. But this is a new reality he will have to face.
SOPIT: All we can do is help each other.
LAH: Kyung Lah, CNN, Los Angeles.
(END VIDEOTAPE)
QUEST: And we will have more. Ten minutes ago, before the closing bell. Well, there's the bell. You know what I mean. Now, so -- but we will
(INAUDIBLE) 700 on the Dow. This is QUEST MEANS BUSINESS. A very good evening to you.
(COMMERCIAL BREAK)
[15:50:00]
(COMMERCIAL BREAK)
QUEST: On this program, we're committed to bringing you the voices of this crisis. The businesses big and small, making difficult decisions in order
to stay in business. These are your corner diners, barber shops, Laundromats, struggling to meet payroll and the manufacturers who've just
seen orders collapse, companies whose supply chains have been severely disrupted.
Our next two guests have been forced to lay off their staff at their New York restaurant, as the city introduces stricter measures to (INAUDIBLE)
Alex Guzman and Jenifar Chowdhury, co-owners of Archer & Goat. They join me via Skype. You are now closed, relying on a delivery-only basis. Is that
right?
ALEX GUZMAN, CO-OWNER, ARCHER & GOAT (via Skype): That is correct.
QUEST: So, give me an idea --
JENIFAR CHOWDHURY, CO-OWNER, ARCHER & GOAT (via Skype): Just take (INAUDIBLE)
QUEST: Give me an idea of how many staff did you have, how many did you have to lay off, the sort of hard economic problems you've had?
CHOWDHURY: First of all, thank you for having us. We had about 14 staff. We're a very small operation. We're completely family-owned. We only opened
about a year ago. And you know, we survived a lot of the challenges that, you know, a first-year restaurant has to go through. And we were just
building steam and a couple of weeks ago, we had couple of media appearances, including on our local news channels. We were getting so much
-- so many new customers coming through the door.
I mean, we're actually trying to ramp up our business just before all of the, you know, new restrictions that came into place, you know, via
(INAUDIBLE) Governor. And we were just in a position when you know, when -- it was a rapidly escalating situation, but when it was announced that we
were ordered to close, except for takeout and delivery, we did the math and (INAUDIBLE) we just could not afford our staff on.
QUEST: So, Alex, how possible will it be for you to reopen when it's all over and done with?
GUZMAN: It depends what kind of aid we get from the government, really.
CHOWDHURY: We have so many fixed costs. You know, we have our rent, we have our equipment leases.
QUEST: Right.
CHOWDHURY: We don't know. And we don't know how long it's going to be.
QUEST: Bearing in mind, this is your life's work as we come to the end here, and this is -- this is gutting for both of you.
GUZMAN: Yes, this is -- this is a life-long passion and dream. We've been a part of this community in Harlem for almost 12 years. Like my wife said,
we've only been open a year. And we just started getting our legs under us.
[15:55:10]
GUZMAN: And then this happens. We've been doing our best to try to adjust with the daily loss that have been changing, evolving. It seems like it's
changing hour to hour, so we're going to adapt as best as we can.
QUEST: Thank you for joining us. Thank you. I appreciate it. And that's QUEST MEANS BUSINESS. I, Richard Quest, in New York, the market closes in
just a few moments from now. We are down depths about 500 points on the Dow Jones, we'll update you on that, of course, at the top of the hour.
And if you take a look (INAUDIBLE) having a better day. That's only because Goldman has recommended it as a buy or at least to change his view on that.
But that's what's pulling the market up, or at least preventing it from going down any further.
I did promise you a profitable moment on the G-20. It's too (INAUDIBLE) to discuss what the G-20 said, we'll leave that for tomorrow when perhaps we
can revisit it. Whatever you're up to in the hours ahead. I forgot the bell. I'll bring it up next time. I hope it's profitable.
(COMMERCIAL BREAK)
ANNOUNCER: This is CNN BREAKING NEWS.
JAKE TAPPER, CNN HOST: Welcome to THE LEAD. I'm Jake Tapper. We are continuing this hour with our coverage of the coronavirus pandemic that the
World Health Organization said today, is not just continuing at the same rate as it is actually accelerating. The Dow closing in a moment down with
Wall Street and its first day of electronic-only trading.
The U.S. Surgeon General today warning quote this week, it's going to get bad. And indeed, the coronavirus numbers in the U.S. continued to climb,
now more than 41,000 confirmed cases. That's up 10 times from the 4,000 cases last week. There's also been a huge surge in the number of deaths.
That number is now 501. This time last Monday, 70.
About half those cases are in New York, dozens of people lined up outside one emergency room in New York City to be tested for the virus today. As
U.S. Defense Secretary Mark Esper warns that while he wants to set up military field hospitals in hard-hit areas such as New York, the military
cannot do everything.
In New York, Mayor Bill de Blasio is warning if the city does not get more ventilators in the next 10 days, quote, people will die. It is not just the
hotspots that are affected, of course. A top official with the American Hospital Association tells CNN quote, every hospital and every community is
expecting shortages of critical supplies.
END
