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Quest Means Business

I.M.F. Saying The Worst Recession Since The Great Depression; JPMorgan and Wells Fargo Shares Drop As Virus Hits Earnings; Trump To Announce New Economic Taskforce. Aired 3-4p ET

Aired April 14, 2020 - 15:00   ET

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

[15:00:05]

RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: What a difference a day makes, 24 hours. Yesterday, it was raining; today, it's

sunshine. The same can be said for the markets. Yesterday, it was sharply lower. Today those losses have been erased.

The market is buoyant, I would almost say booming, but it is up two and a third percent, over 500 points. That's the market. And these are the

reasons why.

Oddly enough, we've got numbers from the I.M.F. saying the worst recession since the Great Depression.

Stark new numbers. The I.M.F.'s Chief Economist will be with me live in a moment or two.

The earnings season has begun. The banks come first and earnings season like none other. We need to make sense of these numbers.

And the tech stocks are fighting back. They're pretty much Even Stevens for 2020. That's remarkable in itself.

We are alive from New York. I'm Richard Quest on April, the 14th. And of course, back on the roof, I mean business.

If it is spring, then it must be the spring meeting of the I.M.F. and World Bank, but of course, this year it's all virtual and that includes the World

Economic Outlook, the WEO. It's the most depressing reading in years. It forecasts the worst economic slump since the Great Depression, and it says

the I.M.F.'s strong responses are required to prevent an even worse outcome. Gita Gopinath is the Chief Economist and left no doubt as to how

bad the situation is.

(BEGIN VIDEO CLIP)

GITA GOPINATH, CHIEF ECONOMIST, I.M.F.: ... allows health systems to cope with this crisis, which then permits a resumption economic activity.

In the sense, there is no tradeoff between saving lives and saving livelihoods.

(END VIDEO CLIP)

QUEST: Now Gita is with me in just a moment. First, though, let's just understand what it is the I.M.F. said is going to likely to happen.

The forecast is a three percent contraction this year, and six percent growth in 2021. Now, that's a sharp reversal from January's forecast. In

terms of 2020, that's a six percent differential on the year.

The developed economies will be hit the hardest as the strength in China will limit damage in emerging economies. Gita is with me now, the I.M.F.'s

Chief Economist.

I listened to your -- I listened to your press conference and your statement very closely, Gita. Obviously, we've never seen anything like

this. Certainly, not since the Great Depression, but I'm wondering, how do you think we are managing it?

I mean, the numbers tell their own story. How do you think policymakers are responding to it?

GOPINATH: Then policymakers are responding aggressively and swiftly, and if you compare this to the global financial crisis, I think lessons have

been learned, and we are responding much faster and at a much bigger scale.

We're talking about fiscal stimulus globally of about $8 trillion, and most of that, of course, is in advanced economies. But that is an important role

and monetary policy also has stepped in in a major way. So there is a lot of support being provided to people, to firms, to houses.

QUEST: What are you not seeing being done? When all that money is being spent monetary and fiscal? But as you look at it from your vantage point,

what are you not seeing that should be done in your view?

GOPINATH: I think there are a few things. So first, we have to keep in mind that while advanced economies that issue reserve currencies are able

to borrow very cheaply, and therefore finance very large amounts of bills, that's not the case for developing countries for whom borrowing costs are

going up. They have much less fiscal space, but the same needs in terms of spending.

So that's going to require concessional financing from the international community. It's going to call for aid so that some countries can do the

spending that they need, and is going to call for debt service relief for poor countries. So that's one big bucket that needs still to be met.

QUEST: Are you in favor of debt relief from existing debts? Because if we're talking about concessionary lending for the developed -- for the

developing world, that's just heaping more debt on the back of countries that are already indebted?

[15:05:06]

GOPINATH: Richard, the question here is, if you -- you know, what would it look like if you did not do this kind of spending? So if countries were not

able to spend on their health systems in terms of, you know, the medical professionals, in terms of medical equipment, then this pandemic is going

to continue for much longer than any of us would like to see.

Secondly, we want these countries to be able to meet the needs of their people and their firms to ensure that they have livelihoods. So if this

spending is not incurred, you can actually see a scenario where the debt situation is even worse because even if they've not borrowed more, a

collapse in economic activity will just make it that much harder for them to repay.

QUEST: You talked in your statement in the press conference about the need for fiscal stimulus by those countries that have fiscal room once the

immediate pandemic is over. At some point, the bill has to be paid. How long do you think we have before there needs to be a retrenchment?

And I mean, I'm not going to use the -- suggest austerity yet, but at some point, the bill for this needs paying.

GOPINATH: Richard, for now, this crisis calls for big measures now and in the recovery to countries with fiscal space should do a coordinated fiscal

boost.

Now your question is what does all this mean in terms of debt levels and how you pay for all of that? Now, what we're seeing is that interest rates

are very low, and as long as interest rates stay low for the next several years, which is what is projected at this point, that combined with the

fact that we are projecting a recovery in 2021 for many of these economies implies that debt levels should stabilize relatively quickly and start

coming down.

So we have growth prospect that is there and we have the prospect of low interest rates that will help sustain this kind of debt levels.

QUEST: Gita, good to talk to you. Thank you, looking forward to the annual meetings when at least, we will be able to be face-to-face once again until

then. Now, let's look at the banking season -- the earning season which had begun with the banks, and they do so under a coronavirus shadow because the

banks are not only being hit by loans going sour, but they are of course responsible as a transmission mechanism for many of the lending plans being

put in place by governments.

So JPMorgan share under pressure, Wells Fargo likewise, and Q1 well below. I was going to say well below expectations, but the expectations were pre-

coronavirus. So I guess we're just making it up as we go along in the sense of what the numbers should and could would be.

Clare, since we didn't know really what to expect, what are the banks actually saying in in their statements with their numbers?

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Well, Richard, it is pretty striking because in the case of JPMorgan, for example, they say that they

have now sort of upped their reserves, set aside an extra $6.8 billion for future credit losses. They've booked that charge in this quarter. They're

that confident it's going to happen.

But the question is, will it be enough? When they made that decision, when they selected that number, they were working off assumptions from their

economists that GDP would slump 25 percent and unemployment would go over 10 percent.

Now, their economists are saying GDP will slump 40 percent and unemployment will go over 20 percent. So even since they made that assumption, things

are changing very fast. That means that JPMorgan may have to increase its reserves even more that they may see even more losses on things like credit

card payments, small business loans, things like that.

So they are very worried about the depth of this recession. They're worried about businesses. They say that, you know, companies are drawing down

credit lines at twice the rate of the financial crisis and they are worried about consumers as well, Richard.

This isn't a crisis where we have to wait for things to trickle down to consumers. It's already happening. Most of that reserve build from JPMorgan

is in their consumer sector, especially credit cards, so they are expecting that regular people are going to struggle to make payments.

QUEST: But the -- to the point of their statement -- JPMorgan -- the bank is solid, the banks and I guess that is a sort of a slight difference to

2008. The recession is worse. The crisis is deeper, but the banks themselves are not in the same crisis.

SEBASTIAN: Yes, so both JPMorgan and Wells Fargo today, Richard are at pains to point out that they were very strong going into this, they are

well capitalized. They are keeping above the regulatory standards for capital ratio and they are going to continue to do that even in the face of

potential losses.

[15:10:10]

SEBASTIAN: And the other point about this, Richard, which sets it apart from the financial crisis is that the banks are keen to be part of the

solution. They are not only participating in things like the PPP, the Paycheck Protection Program from the government. JPMorgan says it's already

made $9.3 billion worth of loans, but they are doing their own programs as well, things like forbearance schemes. They're delaying payments for people

on a variety of different things.

There are waivers on certain fees. They are also trying to improve the situation for their clients, and so that is a big part of this. They are,

you know, likely to take losses in order to be part of the solution here.

QUEST: Clare Sebastian. Clare, thank you. To the markets, looking at the trading -- they are all trading up. Julia Chatterley is with me. Julia, the

reason the New York Governor says we think we're at the apex, and that's, of course for perhaps for New York, the rest of the country still has some

way to go.

This market is up strongly besides the banks. What's your understanding as to why? Why does this market want to get back to as near as it was, when we

know that the underlying trading position of the companies is anything but?

JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Because it's riding a wave of liquidity at this moment. Trillions and trillions of dollars of

stimulus. We've got a Federal Reserve that's just about said it will buy anything indiscriminately, even some of the bonds of some of the weakest

companies in America can now be supported by the Federal Reserve.

You know, Richard, you and I have discussed this, to what extent can we even look at the fundamentals that we are being given and the read that

we're getting from companies here, in the face of that sheer quantity of cash sloshing around in the system? I do think there'll be winners and

losers, though.

I mean, we're already seeing this coming out today. Johnson & Johnson is a great example, a company that downgraded its forecast because it says it's

not clear what the outlook looks like, but at the same time it raised its dividend.

That was a message from a company going, we have a strong balance sheet, we have the cash, we can do this. And I think it will be a case of sorting

winners from losers as we go forward. But you can't fight the Fed. Isn't that the message?

QUEST: You can't fight the Fed, but at the end of the day, you know, these share prices have to be supported by an earnings and underlying earnings.

The Fed -- I mean, maybe the Fed can just be the buyer of last resort for the foreseeable future. Technically it can, but we need to see the numbers

from the companies.

CHATTERLEY: Yes, and I couldn't agree more with you. I don't think it's healthy. I look across broader asset classes, and I see gold at year highs.

Again, that's a response to all the money that's being pumped in. At some point, the chickens have to come home to roost.

And while I think we're looking at the health crisis, and we're seeing a degree of improvement around the world and the United States, there's a

huge difference between where we are today and shut down locking conditions and getting the economy back up and running.

And I think Clare's point on the banks here was critical, too. These are banks that are expecting a consumer cash crunch. We know the challenges.

They're hoarding money in anticipation of what comes.

And I have to say, you know, the I.M.F.'s expectations for the U.S. economy alone, I think are way too optimistic. But you know, my views.

QUEST: Yes, I do. I do -- and tomorrow, let's have a talk about exactly how much of this Fed money is going out the door versus merely being

promised. I think it's either Wednesday or Thursday that we get the Fed weekly balance sheet, which I shall spend five minutes and 10 minutes

looking after, so that we can discuss exactly because the Fed can be promising a lot. But it's only when we see the results on the balance sheet

as to how much it's actually being taken up. Would you agree?

CHATTERLEY: Sometimes the promise is enough. Sometimes Atlas's arms holding things up are enough, and actually nothing has to be bought in the

kind of quantity that they're talking about. It's about confidence.

And Richard, you and I know that the difference between a minor slowdown, a recession, a recession and depression come down to the confidence,

particularly in a consumer-driven economy, and that's why getting cash out to people, why the spending support and not just the lending from the

Federal Reserve to your point is so critical hereto. And of course, getting on top of the health crisis.

QUEST: Which of course, as you rightly point out is first and foremost because everything else flows, now Julia, we are grateful to have you with

us and we will talk Fed hopefully, tomorrow.

Now, when should the economy -- any economy -- be reopened from all of this? They're starting to do that in Europe and Italy, fix and start. Here

in the United States, there's a nasty battle brewing between President Trump who says he is in total control and the governors who say, not so

fast.

(COMMERCIAL BREAK)

[15:17:58]

QUEST: Welcome back. President Trump says some of the best names in the business will serve on his Advisory Taskforce about when to open and how to

open the U.S. economy.

It will be unveiled later today, and it will help the guide of the reopening. The President says he has total authority to decide when states

should reopen. The New York Governor, Andrew Cuomo and others disagree.

(BEGIN VIDEO CLIP)

GOV. ANDREW CUOMO (D-NY): If he ordered me to reopen in a way that would endanger the public health of the people of my state, I wouldn't do it and

we would have a constitutional challenge between the state and the Federal government and that would go into the courts.

(END VIDEO CLIP)

QUEST: Jamie Diamond is with me. I heard the President yesterday. I have total control. When it comes to this, the President is in total control.

But surely the White House upon reflection must now be realizing A, it's actually a state's matter and B, the president doesn't have total control.

JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT: Right. Well, Richard, I don't think anybody at the White House is actually under the impression

that the President has total control in the way that he portrayed his power just yesterday.

In fact, most people at the White House and Republicans who are close to the White House are very aware of the Constitution of the different roles

that the Federal government versus the states play.

Of course, the problem here, Richard, is that the President doesn't seem to quite understand that. Now, the President did try and walk that back a

little bit today, suggesting that the decision on reopening the country is a decision that he is going to be making with the governors in consultation

with those governors.

We also heard the New York Governor Andrew Cuomo, suggesting that he does not want to fight with Trump over this. But again, it comes down to the

question of how far will Trump ultimately go in terms of trying to pressure the states?

We know that this is a President who has wanted to have it both ways on this issue at the same time refusing to urge those governors -- of those

eight Republican governors to issue stay-at-home orders in those states, or even to simply urge those governors to take those steps, instead pointing

to the Constitution the fact that he wasn't able to do that.

Now, of course, the President would like the power to reopen the country. That conflict still seems to be brewing, but we'll see if the President

comes to a better understanding.

QUEST: Jeremy, this taskforce, what purpose is it going to serve? I can understand there needs to be some process, but are the right people going

to be on this? Or is this just another grandstanding taskforce with no real practical purpose?

DIAMOND: Well, this has really been a scramble at the White House in the last few days as far as who exactly will be part of this taskforce, who

will be leading it? How will it actually advise the President?

That has been shifting actually at the White House hour to hour depending on who you're talking to. They have different understandings of what this

taskforce is actually going to do.

Now I spoke with a White House official just a little bit ago, who told me that this is actually going to be more of an economic advisory board

consulting with the President on how to most effectively recharge and ensure that the economy is ready to rebuild once the President actually

makes the decision to open the economy back up and once those governors of those states make that decision.

This official said to me that the primary Coronavirus Taskforce which includes the medical experts, as well as some of the economic officials is

going to be the body that's going to be primarily responsible for helping the President make this decision about when and whether to begin to reopen

this country.

But again, depending on who you talk to, some officials say that this economic advisory board is actually going to be helping the President make

that decision. Others as I said, say that it's simply about helping the President once he has made that decision to be able to get the economy back

on track.

But again, this is just a sign of how the White House has been handling this issue, and it's just the latest scramble that we've seen inside the

White House trying to handle this coronavirus pandemic.

QUEST: Jeremy Diamond. Jeremy, thank you. And anybody who thinks it's going to be a quick blast to open up, just have a listen to what Gary Cohn,

the former National Economic Adviser to President Trump, listen to what he said to Christiane Amanpour a short while ago.

(BEGIN VIDEO CLIP)

GARY COHN, FORMER NATIONAL ECONOMIC ADVISER TO PRESIDENT TRUMP: I don't think there's a big bang here. I think we have to approach this as a very

incremental approach.

First of all, we've got to make sure we can test and I think testing is the key. Once we start reopening the economy, we're going to have to make sure

that we can test people and test people quite aggressively because the minute we start seeing early signs of infection, we're going to want to

make sure we can capture that and capture that early so we don't get a re- spread or a reinfection and the whole economy have to shut it down again.

(END VIDEO CLIP)

QUEST: It gives you the idea of exactly how it will all work. Now, Donald Trump is meeting with major healthcare executives any moment now. It's a

closed door session that will take place at the White House.

The W.H.O. says shut downs alone cannot stop the virus and the Head of Global Outbreak spoke to Julia Chatterley.

(BEGIN VIDEO CLIP)

DR. DALE FISHER, WORLD HEALTH ORGANIZATION'S GLOBAL OUTBREAK ALERT AND RESPONSE NETWORK: Shutdowns definitely stopped transmission. There's no

doubt about that. If you stop people interacting, then the virus can jump from person to person. So no one should celebrate that a shutdown works,

because it does. It's just got all the negative benefits for the economy and sort of social infrastructure.

The second thing that a lockdown will do is because the transmission is stopped, then over the subsequent weeks, maybe two or three months, the

health system can recover. So the beds will be emptied up. The ventilators will become free one way or the other.

But the third thing that's most important that mustn't be underrated, is building out these essential public health interventions. These are the --

when this comes back, because I don't believe it's likely to be eradicated, so when it comes back, do you have the capacity for isolating your cases,

for testing everybody that needs to be tested, for doing the contact tracing, and have you got the laws in place to ensure that the quarantining

works.

And I think the public's appetite for isolation of cases and quarantining may not have been there if you'd have done this in February, but I think

now that people can see the consequences, the economic impact that this virus can have, I think people are generally a bit more inclined to part

with a little bit of their freedom and privacy during this period.

(END VIDEO CLIP)

[15:25:01]

QUEST: As the answer to all of this, you heard Gary Cohn. You heard the W.H.O. while in the future, the answer of course is a vaccine and today,

big rivals, excuse me -- two big pharma rivals announced that they were going to be working together, Sanofi and GSK said that they will be pooling

their resources to find a vaccine and using GSK technology and knowhow will be ramping it up.

It's an unprecedented collaboration with Roger Connor, the President of GSK Global Vaccines. He joins me from Belgium. Roger, it is good to have you.

Roger, we need to understand first of all, you know, everybody is talking about a vaccine. Just tell me in simple terms, there is no doubt somebody

will find a vaccine in the next year. Is that right? It's not a question of if, it is a question of when, isn't it?

ROGER CONNOR, PRESIDENT, GSK GLOBAL VACCINES: Yes, Richard, it's good to talk to you. Yes. I think about will be found. There's no doubt that it's a

challenge to find a vaccine. This is -- it is not a normal, easy research and development process. What we really believe is that this is all about

creating multiple options.

So today announcing that GSK and Sanofi come together, I mean, two of the world's biggest vaccines player saying that we're going to join forces and

work on this together I think is a big day. We're joining forces to share our technology, people capability. But actually, to scale the vaccine

that's going to be important. How much can you make and when? And that's the great thing about these two companies coming together because we have

that manufacturing steel.

But you're right, it's going to take time to get there because it's not a quick process.

QUEST: So as I understand it, Sanofi is bringing in sort of the knowhow about the vaccines and you're bringing in your knowhow about how to make

that vaccine go as far as possible and be able to scale it up. What about this -- there are many people now trying to make or working on making

vaccines?

Is it a case of first to succeed and get through trials wins the jackpot? Or do you anticipate there will be multiple vaccines in the fullness of

time?

CONNOR: Well, we really think that there has to be a number of vaccines to really service the complete need of the population. So I think there is

going to need to be a number of those vaccines that come through.

The important thing is that we need more now going into the development process, because some of those will fail. So we want a high number now,

some of those will fall over, and then we'll have a number of vaccines that come through.

It's not necessarily the first vaccine that comes through. It is the vaccine that comes through with the skill of manufacturing process that we

think will make the biggest difference.

So what we've done in GSK, is we've done a number of collaborations. We're working with seven groups working on different vaccines using this adjuvant

technology that you mentioned, this technology allows you to boost the immune response in the vaccine, to make the dose smaller, which means that

we can get more doses out faster and help more people.

Therefore, having a collaboration means that we've got more shots on goal.

QUEST: Finally, we don't count dollars before bodies on this program -- a business program, but it is a reality that you'll be making this and

selling these vaccines if and when you actually get it.

In the view of GSK, is this potentially a big earner in the future? Or is this really just simply not a consideration? If you lose money until your

heart's content for the foreseeable future on this vaccine, that'll be just fine by you?

CONNOR: You see for us at the moment, this is completely all about the science and getting this done and getting it done fast. This taskforce

we've put in between GSK and Sanofi, these scientists are just thinking about how do we see it every single day in this development approach?

What we have said in GSK, though, Richard is across that portfolio of vaccines that we have, we don't expect to make a profit during this

pandemic. What we're going to do if we make any short term profit, we're going to put it back into the development of coronavirus vaccines, but also

pandemic preparedness.

We have to make sure the world is better prepared for this if it were to happen again, and I think we've got some work to do on that.

We're also going to discount the price of the adjuvant that we supply and for the most in-need countries, we will donate it as well.

QUEST: Roger, we have a second or two more. I just want to pick up on that point you just made about pandemic preparedness. How do we prevent -- once

it's over, we're back to work. The offices are open. How do policymakers sort of yes, yes, yes, we'll spend a bit extra on pandemic preparedness,

but we won't spend what's necessary.

[15:30:10]

(COMMERCIAL BREAK)

RICHARD QUEST, CNN INTERNATIONAL HOST: -- makers for not, you know, sort of say, yes, yes, yes, we'll spend a bit extra on pandemic preparedness, but

we won't expend what's necessary.

ROGER CONNOR, PRESIDENT, GSK GLOBAL VACCINES (via Skype): I think this will be a big topic and one that will be talked across the industry. As far as

we're concerned, there are a number of key elements that need to be looked into. That ability to react, react fast with technologies, and with

tracking and tracing of infection is critical to any pandemic readiness. Also, having the capacity, let's say capacity available to sprint, that the

minute that you've identified that a pandemic might happen, that you're making vaccine at risk in capacity that is ready to go. And at GSK, that's

one of the things we're really focused on at the moment, making sure that we continue to invest in pandemic readiness, both in terms of that

technology readiness, but also capacity readiness for the future, as well.

QUEST: Good to see you. Good to talk. Thank you, sir. After the break --

CONNOR: Richard, thank you.

QUEST: -- our attention will turn to Austria. It is now one of the countries that is starting to reopen. And everybody's watching very

closely. This is QUEST MEANS BUSINESS. Spring is definitely here. It is a beautiful day in New York. The skyline has rarely looked better.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS for you live from New York in just a moment. We're going to be looking at Austria

where some shops have opened in a limited fashion, but we'll see exactly what has happened and understand why it's one of the first E.U. countries

to loosen the restriction. So, as you'll understand, there's a lot of attention and the "VOICE OF THE CRISIS." It's 130-year-old company that is

from Turkey with spices and herbal teas, and how they've had to that 75 percent of the staff, for 75 percent of the business has gone. We'll hear

what they have to say in just a moment.

[15:35:11]

First, though, this is CNN, and on this network, the facts always come fast. New York Governor Andrew Cuomo says the state is at the apex, and

it's on the plateau. Number of hospitalizations on Coronavirus is staying essentially flat is by far, the hardest hit state and nearly 11,000 people

have died so far.

The International Monetary Fund is calling it the great lockdown recession. It predicts it will be the worst economic downturn since the Great

Depression of the 1930s. The IMF is projecting this year's global growth will fall to negative three percent.

Former President Obama was to endorse Joe Biden. He says, Biden and the Democrats will focus on progress while Republicans are interested in

power." Mr. Biden tweeted, there's no one I draw to have standing by my side. Joe Biden served two terms as Barack Obama's vice president.

Although, I was saying Austria has eased some of the restrictions of the lockdown, the first major E.U. country to take such moves. Now, it's a --

it's not like it's off to the races again, it's a very targeted and defined. Small shops, more -- smaller than 400 square meters are allowed to

open. Hardware, gardening stores, face masks and social distancing remain mandatory. And the Austrian Chancellor is warning against everybody rushing

at once.

(BEGIN VIDEO CLIP)

SEBASTIAN KURZ, CHANCELLOR OF AUSTRIA (through translator): Shop's opening hours have been extended now, and there is no need to go shopping on the

very first day. All those who wait until Wednesday or Thursday are contributing towards avoiding an overload. But since we counted on this

development, we installed the necessary safety precautions.

(END VIDEO CLIP)

QUEST: Within the European Union, countries will be opening independently, pretty much as they shut down. And that's called the E.U. to call upon some

form of coordination to ensure that they get it right. There's a failure for countries to coordinate on their plans could really -- could lead to a

spike afresh a number of cases. And the main criteria for when countries should relax is through either decrease spread of the virus for a sustained

period. There is a general acceptance that social distancing cannot last indefinitely. Fred Pleitgen, our correspondent, is in Berlin. He joins me

tonight from there. The E.U. is worried that countries are not coordinating, and what can they do about it? Not much.

FRED PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: You're absolutely right. I don't think they can do very much. I think they can call on

countries to coordinate more. They've obviously put out a sort of a draft paper that we've seen that says, look, any sort of return to -- away from

the social distancing measures, any sort of opening up of the economy is something that has to happen gradually. It's something that countries need

to take into account that they need to have a decrease in new Coronavirus cases. And the commission also in that draft paper says that they need to

be ready to put lockdown measures back in place if there is a sudden spike in new Coronavirus cases.

Now, all of these, Richard, is stuff that most of these countries are talking about anyway. The big question is, how much coordination are they

going to be able to do? Because one of the things, of course, that we have to keep in mind that we've been talking about so much, is that a lot of

these countries in the European Union are at very different stages of where they are in this Coronavirus pandemic. You look at Germany, it's doing

quite well so far with the pandemic. Still has enough hospital beds, for instance. You've had countries where it's been more difficult, like, for

instance, Italy and Spain, but which were also very keen to at least open parts of the economy.

So, in the end, what the E.U. is saying is, look, we need to coordinate this in some shape or form, but at the same time, they need to make sure

that every country gets to make its own tailor-made approach, because of course, all of them are facing very different situations. I think to the

E.U. commissioner, Richard, is also trying to do one other thing, as well. You know, at the beginning of this crisis, and we've talked about this, the

E.U. was seen to be somewhat weak. There was -- every country sort of doing its own thing, some countries blocking other countries from getting medical

supplies, like for instance, the Germans issuing an order saying that no medical supplies would be exported from this country.

And the E.U. really felt that at the beginning, they weren't doing enough and countries weren't doing enough to make this a European effort. And

that's not something they want to see happen again. And so, therefore, they're calling for this European coordination to happen. And if you hear

governments, like for instance, the one here in Berlin, they pay lip service to that as well.

[15:40:03]

They say, look, we want to coordinate this on this -- on E.U. scale, but at the same time, of course, there's a meeting tomorrow in Berlin, Angela

Merkel and her state governors and they are going to decide what they want to do for Germany. They might coordinate that a little bit with the

European Union. But in the end, this is the German response to how the crisis is going in this country, just like we've seen from Austria, as

well, as you mentioned before, Richard.

QUEST: Fred Pleitgen in Berlin, thank you. When we come back, the "VOICE OF THE CRISIS," the spice company in Turkey, in Istanbul, more than a century

old, facing an existential crisis.

(COMMERCIAL BREAK)

QUEST: Well, now to the "VOICE OF THE CRISIS" and for tonight, we're visiting a spice and herbal tea company in Istanbul. It's called the -- the

company has been around since the Ottoman Empire. Revenues normally comes from restaurants and tourists. Business is down some 75 percent because of

the lockdown. Ahmet Kadioglu is with me. He's the fifth generation to run. Hayfene Spices. You join me now from Istanbul via Skype. To lose 75 percent

of your business in this short-term, how are you managing to keep going, what are you actually managing to keep going?

AHMET KADIOGLU, MANAGING PARTNER, HAYFENE SPICES (via Skype): Hello, Richard. Well, we've been dealing with crisis in the past couple of years

as (INAUDIBLE) and as Turkey as well. So, we were trying to hold the defensive position to find new ways for revenue. So, we are mainly focusing

on online right now in Turkey and in the world. Like, we do e-commerce a lot. That is what keeps us going right now, but it'll help by closing 75

percent of the business (INAUDIBLE).

QUEST: One of the -- we spend a lot of time talking to companies in the U.K. or in the U.S. or France, where there's a well -- there's a

sophisticated assistance program in place for business. That doesn't exist really for you in Turkey, does it? There is somehow, but it's not much and

it's hard to get.

KADIOGLU: The government is announcing some programs. The credit lines are open. There are support lines for the employees, the employees will be paid

partially by the government. But as the day goes by, they announced more, and we would have expected it to be announced altogether at the beginning,

it would have made us feel so much safer. So far, it's partial, but we are waiting for more.

[15:45:20]

QUEST: Ahmet, will you be able to reopen? I mean, what is your plan? In many parts of the world, people are still thinking about reopening. Are you

starting to think about that now?

KADIOGLU: I think it's too early to talk about opening. I think we need to focus on our health first. But like our goal is to keep all of our staff,

employees with us because they are our most important things that they are very important to us. And we are hoping that when it's all over, we will be

open again with everyone, just like the crisis started.

You know, the one thing I was reading, I was looking on your Web-site and I was reading about the family, the name of the company, the name of the

shop, the name of the business, your grandfather and your grandfather's grandfather was started it. So, this has been a business a long time.

You'll -- whether you'll succeed here, you'll see this one through, won't you?

KADIOGLU: I'm hoping, it's been 134 years since the business has been established. I'm hoping that I can keep it open for 134 years more. So, we

are in an important position right now. I'm doing my best to keep it going.

QUEST: It's what we can all do in this situation, doing your best. Thank you, Ahmet, I appreciate you giving me time tonight to talk about it.

(INAUDIBLE) after the break.

(CROSSTALK)

KADIOGLU: (INAUDIBLE)

QUEST: Some food for jury says. Yes, absolutely. Next time, I'm in Istanbul. I'll be coming to get my spices. That's another promise I'm

making. I'm keeping a list of all my promises next time in Istanbul. Actually, I have to say, I always enjoy getting some spices when you're in

Istanbul. And the herbal teas are magnificent. Look, we'll stick with this idea of food after the break. Some food producers are having to destroy

their produce, because there's simply nobody to buy it. Others like Food Banks are running out of food, because there's simply not enough and demand

is so great. After the break, we'll be talking to the president of Driscoll, the largest berries company in the world (INAUDIBLE)

(COMMERCIAL BREAK)

[15:50:12]

QUEST: The issue facing the global food supplies become ever more pressing. In some cases, food is being destroyed, in other cases it's having to be

horded. Coronavirus has exposed flaws in the U.S. food supply chain. So, American farmers are pouring out milk, they're plowing crops under, and

they should be actually getting ready to harvest crops. CNN's Rosa Flores is in Florida.

(BEGIN VIDEOTAPE)

ROSA FLORES, CNN CORRESPONDENT: I'm Rosa Flores in Homestead, Florida, where farmers are having to destroy their crop. This farm is owned by Sam

Arcusio (PH). His family has been working this land since 1948. But he says that the COVID-19 nightmare started a few weeks ago when restaurants and

schools started closing, and the supply chain got completely severed. Since then, he's had to destroy about 70 percent of his acreage. He says it's

been a nightmare. No, he does not have insurance. Yes, some of this is going to food banks, but there was just too much excess.

(END VIDEOTAPE)

QUEST: Now joining me is one of the world's best known berry producers, who's helping out with food and with money. Soren Bjorn is the President,

the U.S. President of Driscoll's, giant berries. I think you're the largest in the world as a manufacturer, harvesters, and dealers of berries. You

join me from Santa Cruz in California. Soren, good to have you. And as you understand it, at the moment, we'll deal with the charitable side of your

business at the moment. How are you handling what would be the peak time now for picking crops and processing berries at the moment? How are you

managing to handle it?

SOREN BJORN, U.S. PRESIDENT, DRISCOLL'S: I mean, so far, we're doing just fine, but we really got the big strawberry peak is right ahead of us in

about four weeks. And this year, it looks to be a record crop. And so, with all disruption in food service, schools closed, theme parks closed, cruise

ships not sailing. There's a very big shift in where the supply needs to go. And today, retail is having a difficult time keeping up.

QUEST: What would you do? I mean, just sketch it out for me, assuming all this stuff -- I mean, does it not get picked? Does it rot in the fields? Or

does it get picked? I can't work out in four weeks' time, if you're not -- I mean, do -- with social distancing, which may of course, been relaxed.

What will you do?

BJORN: I mean, worst case scenario, it does not get picked. I mean, that would be the reality. If we cannot find a home for this food, it's just not

going to get picked. It's going to get left in a field, thrown in the ditch. Unfortunately, we have to pick it all. We can't just leave the

strawberries out there on the vine, they actually have to come off the planes. So, our farmers would have to incur the expense of picking the

berries and then throw them in a ditch. That's what would happen in the worst case scenario.

QUEST: And I mean, the economics of this, besides the grotesqueness in the sense of food waste, which for understandable reasons, and you've been

helping Driscoll's, you've been very keen to help the farmers who are being affected directly by this crisis, aren't you?

BJORN: Yes, I mean, really, our job one was to try to help everybody to stay safe, right? I mean, that's really our number one priority. We got

thousands of farm workers out there. Next month in California alone, there'll be 20,000 people harvesting Driscoll's berries. And so, our job,

one, is to try to keep them safe. And so far, it looks like we're doing a pretty good job on that, which means we should be able to pick all the

berries. And now, we really want to find a home for these berries.

And if it isn't going to be in the grocery outlets, then we really think that the food banks make a lot of sense. And so, we are making donations on

our own, but you know, you're talking about potentially $100 million worth of strawberries, OK, and we can't donate all of those, that won't pay the

farmers, and it definitely will not pay the wages of the farm workers.

QUEST: Finally, the distribution chain, the whole thing is so difficult, and unlike any other industry, you're time sensitive, aren't you?

BJORN: I mean, we essentially do not carry inventory, whatever inventory comes in today is hopefully gone tomorrow morning. And so, we rotate our

inventory over 300 times a year. And that's due to the highly perishable nature of our products. So, yes, we cannot live with a supply chain that's

gobbled up like it is right now. Retailers just having a really difficult time with the increased demand, shortage of their own staff, and handling,

you know, the extra pressure that has been put on that outlet.

[15:55:02]

QUEST: Do you have an answer? Do you have something -- is there -- I mean, is there something that's not being done that you think should now be done?

BJORN: Yes, I think what would make a lot of sense is that there are a lot of people that know how to handle food, prepare food that's currently out

of a job, OK, they work in a restaurant, they work in a hotel. I think they can go and help out the food banks. Surely, the government can find a way

to pay them. Anyway, it's going to have to pay them one way or another anyway, the USDA could buy up a lot of this fresh fruits and vegetables,

OK, and get it to the food bank, and have professional people that know how to prepare the food, prepare for people that really need it.

By next week, we will have more than 20 million people that have joined the unemployment ranks, and why don't we get the food that they really need and

deserve? Why don't we get that to them. That way the farmer can get paid, cover that cost, and thousands of farm workers can keep their job and they

can get paid, as well.

QUEST: Thank you, sir. I appreciate it. Thank you for taking time to talk to us tonight. A final look at the --

BJORN: Thank you.

QUEST: -- markets tonight here on QUEST MEANS BUSINESS. It's going to be a stronger close, as well. It's been very strong day, throughout right from

the beginning of the day, the markets have been higher, all the major indices are up, you can take a look there, and see the numbers as they take

-- a quick, profitable moment. A quick final thought. It really is -- what we've hope to shown you tonight is that there are many difficulties across

the economic spectrum. But as our last guest proved, as well, there are also plenty of sensible solutions that can come forward. And that is QUEST

MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it's profitable. Let's be together

tomorrow again.

(COMMERCIAL BREAK)

END