Return to Transcripts main page

Quest Means Business

Moderna Announces Progress In Early Vaccine Trial; Merkel And Macron Propose Recovery Fund; Europe Reopens Further As Restrictions Ease. Aired 3-4p ET

Aired May 18, 2020 - 15:00   ET

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

[15:00:00]

RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: ... could be a gain of a thousand points, 24,600 powering ahead. You want to know why?

Well, those are the markets and these are the reasons why.

Early results from a COVID vaccine trial is encouraging and that sparked the rally on Wall Street.

The Fed chair helps, too. Jay Powell says more stimulus could be on the way, and European markets surge as Merkel and Macron join forces on a so-

called E.U. Recovery Fund.

We are live in New York. It is Monday. It is the 18th of May. I'm Richard Quest, and as we start a new week together, of course, I mean business.

Good evening. We begin tonight with a glimmer of hope concerning a new vaccine and the company, Moderna which has announced, it could have had a

possible breakthrough.

Now, we've had numerous of these over the last couple of weeks. So, we take them with a certain pinch of salt bearing in mind the way things are.

But if you look at the way the triple stack mounts up, all three are up sharply, with the Dow showing the best at the date, up nearly four percent.

According to Moderna, only a handful of people have tested in Phase 1, but they all produced COVID-19 antibodies. The results have not been peer

reviewed.

However, this vaccine potential by Madonna has now been cleared for Phase 2. The U.S. economic potential and the global economic potential, but

particularly to the U.S. at the moment, the potential could be enormous.

We've got a slice of that from the Fed Chair, Jerome Powell speaking last night to CBS News. He said unemployment could hit 25 percent and although

growth will be slow, it could rebound this year, and there will be an eventual strong rebound later on.

(BEGIN VIDEO CLIP)

JEROME POWELL, U.S. FEDERAL RESERVE CHAIRMAN: Assuming there's not a second wave of the Coronavirus, I think you'll see the economy recover

steadily through the second half of this year.

So, for the economy to fully recover, people will have to be fully confident and that may have to await the arrival of a vaccine.

(END VIDEO CLIP)

QUEST: Well, you start to see how the picture comes together. He says for a full recovery, you may have to wait until you see a vaccine.

Today, the evidence of Moderna suggested potentially that, a vaccine sooner rather than later.

Julia Chatterley is with me. As I look at today's market, Miss Chatterley, one plus one, equals four percent gain today.

JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Yes, it does, in an eight-people trial but hope floats and hope of a vaccine is driving this.

What's interesting for me though, Richard, if you look in aggregate levels for these stock markets, the outperformers are the domestic focusing stocks

like the Russell 2000 Index.

But also below the surface, things that have been really beaten up like the big financials. They've outperformed the broader markets today, too. And I

think they're the best judge of some of the challenges going forward.

Tech is lifting the whole sector. Today, even the most beaten up are rising. That tells me something about the fundamentals here and Jay Powell

underscore those, the short term challenges here are huge.

QUEST: Julia, look at that graph on the screen at the moment, and we see - - it's gone. Bring it back.

You've got the NASDAQ nearly not that far off from where it was. You've got the S&P, look at those, and I'm not saying we're off to the races, but I'm

saying the horse is getting ready for a canter.

CHATTERLEY: I think you can say we're off to a race, I just don't know where the end destination is here. There's hope of a vaccine, the Federal

Reserve is throwing trillions of dollars of stimulus at these markets.

We're getting a sense now of what reopening looks like and what the new normal looks like. But we don't really have an indication of more

fundamentally what that means in practice, or what the time horizon here is to a vaccine.

There are too many uncertainties, but the message I take in aggregate from the markets here is you can fight the Federal Reserve or you can fight the

fundamentals and there's one that you don't fight and that's the Federal Reserve.

Cash. We are riding away with the first the stimulus here.

QUEST: How much more do you think the U.S. administration provides? They are -- I mean, the House Democrats put in for $3 trillion. The Republicans

say that's not likely, but they're going to pay something, so it'll be somewhere between here and $3 trillion.

CHATTERLEY: I said at the beginning, we need $4 trillion to $5 trillion. I stand by that. $1 trillion to $2 trillion more. And it also depends on how

well we handle the health crisis.

[15:05:09]

CHATTERLEY: The longer that we struggle to get back out there to have to live an entirely new normal because cases rise and we have to retreat in

some manner will require more cash.

So, it's a balancing act here between tackling the health crisis and providing more stimulus for a drawn out recovery.

QUEST: Every -- quick one here, Julia, every restaurant, bar, diner, near where I live here downtown in New York, they've all sort of opened to the

back door so to speak, by the front door. They have put trellis tables out. They are serving booze and food, and people are standing on the streets,

neatly negating the rules.

CHATTERLEY: Circumventing the rules and good on them because they need to survive and they need to try and do it safely and that means workers come

back, but I'd be willing to bet that they're not making anywhere near the amount of money that they were making before, Richard and that's the

challenge.

How many jobs come back? How many jobs don't? We don't know what the new normal looks like or what the ongoing challenges are going to be.

But I will say, and you said quickly, so I'll try and speed up. The balance has to be right here. Businesses need to be in a position to reopen.

Workers need to be incentivized -- protected, but incentivized to come back and Congress hasn't got that balance right beyond July and that needs

fixing short term, too.

QUEST: Julia, thank you. Julia Chatterley with us. "First Move." Thank you.

Now, let me give you more details on this promising vaccine trial. Moderna is calling it an important first step.

All right, let's get the caveats out of the way. It was a Phase 1. It had 45 participants and they all developed some antibodies.

Further testing on eight volunteers all had neutralizing antibodies capable of preventing virus from invading cells.

Phase 2 is already approved. Large scale Phase 3 expected in July.

What does the market say? Soaring shares for Moderna up more than 20 percent. Elizabeth Cohen is our senior medical correspondent, joins me now.

Elizabeth, before you say a word, I should do the caveats. It was a small survey, a small trial, and it has not been peer reviewed. Now, tell me,

should I still be optimistic?

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Well, I'll tell you, Richard, I reached out to a doctor who I consider one of the more

curmudgeonly doctors, a vaccine expert who I consult with, and he was enthusiastic. So, I think that that says something right there.

He wasn't enthusiastic, like, a-ha, we've got the answer. He was enthusiastic, saying, hey, this is what we want to see. We want to see this

in order to move on.

Now, pre-pandemic, we would want to see way bigger numbers than just these eight or just 45. We would want to see numbers in the hundreds.

But given that we need to move quickly and thousands of people are dying every day, he will take this. He said it's exactly what you want to see

happen in order to move forward.

QUEST: If it works, but lots of ifs coming up here, standby. If it works and if it can be manufactured in large numbers, which Moderna has got to

deal with and if it can be distributed, that would great -- I mean, could it be with us, do you think before the next flu season?

COHEN: So I asked Dr. Tal Zaks, who is the Chief Medical Officer of Moderna, when do you think -- give me a ballpark timeframe for when you

think this could be on the market if everything goes well?

And he said, I'm going to go with what Dr. Fauci says. Dr. Fauci back in January of this year said a year to 18 months, so that puts us to January

to June of next year and Dr. Zaks of Moderna said yes, that is what I think. I think that it is realistic to think, not certain, but realistic to

think that we could have a vaccine on the market January to June of next year.

And what they're doing, Richard, and you and I have talked about this before, is that there is -- that some vaccines are going to be

manufacturing in parallel. It's also called manufacturing at risk.

So, while they're testing it out, they're also building up as many doses as they possibly can, hopefully, you know, hundreds and hundreds of million

doses.

It's dangerous because if the vaccine doesn't work out, then you have a bunch of product that you can't do anything with and you've spent a whole

lot of money, but that is how we will get enough vaccine for the one that does work.

QUEST: Elizabeth, as always, thank you. Elizabeth Cohen with questions on vaccines.

Now, Angela Merkel and President Macron have reached an agreement to lend country's money, a multibillion dollar fund hoping to bridge the divisions.

Just don't call them corona bonds. But what's the difference?

In a moment on QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

[15:12:47]

QUEST: President Macron and Chancellor Angela Merkel are proposing a Franco-German Recovery Plan for Europe that involves borrowing or letting

the E.U. borrow some $540 odd billion.

Now, there would be grants to the hardest hit countries. The money borrowed will be repaid by all E.U. members and according to Chancellor Merkel, the

crisis transcends borders.

(BEGIN VIDEO CLIP)

ANGELA MERKEL, GERMAN CHANCELLOR (through translator): We are both convinced that the only answer is if Europe acts together, or all national

state does not have a future.

What is clear is that Germany can only be successful if Europe is successful. And that means peace, freedom, a strong economy and prosperity.

(END VIDEO CLIP)

QUEST: And if you look at what those words did, let's plunge into the market, you'll see exactly why. It went up very sharply.

It was the best gains in Germany itself up 5.4 percent, 5.6 percent. The CAC and Zurich -- even London followed on sharpish.

Jim Bittermann is live in Paris. It looks like a corona bond. It smells like a corona bond. So why is it not a corona bond?

JIM BITTERMANN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Richard, I think it is a corona bond. It depends how this borrowing takes place.

But this really has been something that Germans have resisted all along, and that's really the news here, it is that they have backed off their

insistence that you can't borrow mutually as a European entity, and they've said that they now will go along with this idea that 500 billion euros can

be borrowed by the European Union as a whole.

And that still has to be approved by all 27 of the European Union countries, but having Macron and Merkel behind it, there seems to be a good

shot at getting it approved by everybody.

And these -- it should be made clear, there's a lot of question marks here. Like, for example, how is this money going to be spent?

The two leaders said that they were going to go -- it was going to go to the hardest hit countries and the hardest hit sectors.

They specifically pointed to the tourism sector, for example. But you know, there's going to be an awful lot of debate about that. The other debate is

going to be about how much each country should chip in for this borrowing, how much they're going to put on their line in terms of risk for the

borrowing that takes place on a mutualized basis -- Richard.

[15:15:13]

QUEST: I mean, one can see this ending up before the German courts as well at some particular point, but the sums that we're now talking about are not

a million miles away from what the E.C.B. said was going to have to be.

I mean, they've done it in dribs and drabs. The E.C.B. said one and a half trillion, and by my guessing, this adds up to about that, when you include

everything else that's been put in the past.

BITTERMANN: Well, we are about 1.1 trillion now with this announcement today, if it actually comes to pass with the 27 countries approving, we are

at 1.1 trillion, and Angela Merkel actually did an estimate because she is good with numbers.

With all the borrowings and all the money being provided by all of the countries nationally as well as across the European borders, she came up

with 3 trillion as the amount of euros that are going to be ponied up to fight the economic damage created by the coronavirus -- Richard.

QUEST: Jim Bittermann. Jim is in Paris. Jim, thank you.

Now across Europe, there have been reopening of various speeds and various levels, but life as spring and summer gets underway, life is not back to

normal, but it's on its way.

In Paris where Jim is, of course, people have been enjoying the first weekend of three opening across the country and you can see the along the

river in Paris.

Hundreds of archaeological sites in Greece have been reopened as Greece -- you've heard the Tourism Minister on this program, say trying to get the

industry -- they are trying to get tourism back in business.

And Italians are back in the shops, restaurants and churches. CNN's Ben Wedeman is in Rome.

(BEGIN VIDEOTAPE)

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Monday, Italy entered the next part of Phase 2, the reopening of the country. What's different

today is that bars, restaurants, hair salons and shops can reopen again with restrictions, however.

There are requirements for maintaining high strict standards of hygiene. Social distancing must be maintained at least one meter between tables.

And as far as shops go, there are limits on the number of people allowed in.

What's also different is as of today, churches can hold masses for the public. And in fact, Pope Francis today held his first public mass in St.

Peter's Basilica in almost two months. Until now, they have been live streamed.

Also reopening, Italy's museums and because there are almost no tourists in the country, the lines are surprisingly short.

Also some more good news for Italy as today, the latest statistics are that in the last 24 hours, only 99 people died from coronavirus.

The total is now as far as the dead, 32,007. But the numbers are continuing to drop.

But Prime Minister Giuseppe Conte has warned that the reopening is a calculated risk, and there is still very much the danger of a second wave

of deadly infections.

I'm Ben Wedeman, CNN, reporting from Rome.

(END VIDEOTAPE)

QUEST: Tonight's voice of the crisis comes from Europe which is starting to reopen. It's an art center that is working on being socially distanced

and has an extremely important restaurant within it.

Mediamatic ETEN in Amsterdam is testing ways to serve guests in greenhouses -- individual greenhouses. It involves putting food on long planks, having

servers wear face shields, and if it all goes according to plan, there will be a big reopening on June the first.

Willem Velthoven is the Founding Director of Mediamatic. He joins me from Amsterdam via Skype. This is really -- I mean, here you are. You have an

art center that is already absolutely cutting edge where the restaurant was extremely important at the center of it all.

And now you're using this as a way to come back into business in a big way. This is fascinating, Willem.

WILLEM VELTHOVEN, FOUNDING DIRECTOR OF MEDIAMATIC: Yes, we're looking very much forward to reopening in two weeks, yes. Hello.

QUEST: Can you hear me, sir? Can you hear me?

VELTHOVEN: I can hear you. Yes, I can hear you but you can't me?

QUEST: Yes, I can. We will try to keep it running as best we can. And so when we look at how you're using these greenhouses, what are you doing?

What's the idea? And where did it come from?

[15:20:12]

VELTHOVEN: Well, we actually had a few of these little greenhouses already for our projects, like here, and you see our big restaurant, which is a

greenhouse, but the small ones here are the ones we're going to use for the restaurants and we built -- we are going to build a couple extra.

They're very small, like basically six by nine feet, and now they're six by four feet actually.

So you barely fit in with three and easily fit in with two people and a small table. So, you feel totally protected from the environment. You still

enjoy the water side view and the evening light.

You're separated from the rest. So, you can be very comfortable while also having your dinner.

QUEST: And you these long planks, again, that you're going to use. I know, it's been very difficult to keep everybody on the staff. You've obviously

been relying on government programs.

But you've been very imaginative in what you've had people do. You've managed to keep people with you.

VELTHOVEN: Yes, we've been -- just started to work on our backlog and then developing new concepts and not just doing a restaurant also developing

other programs actually even starting to do funerals here.

So, it's not just a restaurant. It's a much broader program that we've done as an art center.

QUEST: Willem, thank you for joining us. Lovely to talk to you, sir. Thank you in Amsterdam, with the greenhouses.

Now, the other side of the story of course, unfortunately, is Willem is getting ready to reopen with his greenhouses, Uber is announcing more

layoffs. Three thousand more jobs to go.

Clare Sebastian is with me. Hang on a second, Clare. They only just laid off 3,700. How can the situation change so dramatically that when they laid

those off only a few weeks ago, they didn't know more would have to go and do it then?

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Richard that was less than two weeks ago and those cuts, those original 3,700 cuts, they came

mainly from their recruiting and customer support teams.

That was largely because they've seen an 80 percent drop in rides. That most profitable, biggest part of the business has been devastated by the

pandemic.

But what we're seeing now is a much broader, much deeper set of cuts. This is about a shift in strategy, much like we saw, Richard, with Airbnb a

couple of weeks ago.

They are saying that they're going to refocus on their core, which is moving people and delivering things. They are winding down certain more

experimental parts of the business, that AI lab, the Incubator.

They say they're exploring strategical alternatives for Uber Works, which is a fairly new part of the business designed to match shift workers with

flexible work.

So, refocusing on the core. These cuts are going to be global, Richard and Dara Khosrowshahi, the CEO, saying that, you know, he really was hoping

that they could ride this out.

But the realization has now hit that that things are going to be very different. There's a layer of uncertainty around their rides business. They

don't know how people are going to behave even once the sort of stay-at- home orders have kept the ridership down end.

QUEST: But that's what I'm finding interesting about this, Clare, because these cuts are coming because they can't see. There's no visibility on what

the business might be towards the end of the year.

SEBASTIAN: Absolutely. And so they have to adapt. This is a company, Richard that has promised its investors, it's going to be profitable, which

it hasn't been so far. That it will be profitable next year.

So, they are trying to now create what the CEO calls a self-sustaining model where they don't have to constantly rely on fundraising and investors

to keep themselves going.

One area of the business, of course, which has seen a big uptick since the pandemic is Uber Eats. That so far is still relatively small. It's only

about 16 percent of revenue, and it's still not profitable.

But of course, we hear the rumors and the various reports that Uber is looking to, to buy Grubhub, that would make it the leader in this market.

That might bring down costs and help them on their path to profitability.

So, they are trying to sort of pivot, trying to adapt in order to now survive in this new climate.

QUEST: Stocks up three percent today, so it's one of those awful cases, and the market likes it because cutting costs, of course, I was going to

say increases profitability, but that's something that Uber has never seen on a good day. So, it is not likely to see it in the current crisis.

SEBASTIAN: Yes, I mean, the stock is actually up year-to-date as well, Richard. It has seen as sort of a run up that parallels the rest of the

market since the lows towards the end of March.

I think you're right, you know, investors look at this and they think the CEO is still very focused on becoming profitable. He is still promising

that.

I think there is a lot of uncertainty around how he will achieve it because of what we've been talking about, because of the lockdowns still in place

in a lot of the world and because of the uncertainty around how people will behave.

[15:25:16]

SEBASTIAN: I think there is perhaps an element that people might prefer to use Uber rather than public transportation coming out of this, but again,

it is still very uncertain.

QUEST: Clare, thank you. Clare Sebastian.

Now before we go to the break, look at the market. The Dow is up very sharply at the moment. I'm wondering whether we are going to hit four

percent in terms of the gains for the Dow. We are up about 3.94 percent a moment ago, there you go, 2.85 -- it just pulled back just a tad. Strong

markets for you.

After the break, Beijing puts barley tariffs on Australia. The Australia Finance Minister is with me after the break to talk more about it. It's

QUEST MEANS BUSINESS, a very good day to you.

(COMMERCIAL BREAK)

QUEST: Hello, I'm Richard Quest and there is more QUEST MEANS BUSINESS for you in just a moment. I'll be talking to Australia's Finance Minister, as

the country faces tariffs from China over barley. Is that what this is really all about? The Minister will be with us in a moment.

And the pandemic is imposing enormous challenges for insurers, not only on the P&C front, but also now on the liability front as employees go back to

work. Lloyd's of London will be with us shortly in a moment or two.

In fact, they will all be with us. But only after we've had the news headlines because this is CNN, and on this network, the news always comes

first.

The Biotech firm, Moderna is reporting promising results from an early clinical trial of an experimental coronavirus vaccine.

It says eight participants developed neutralizing antibodies that can prevent the virus from invading cells.

[15:30:00]

The vaccine will head for phase two trials soon. Well, the hundred countries including Russia, are calling for an independent investigation

into the origins of the virus. The resolution was presented on Monday the World Health Organization's annual oversight assembly. China's President Xi

Jinping told the assembly that the country acted with openness and responsibility. Says he supports an investigation on the handling, but only

after the virus is contained.

U.S. officials say they found links between al Qaeda and the Saudi military trainee who attacked a base in Pensacola in Florida last year. The FBI

reportedly broke the encryption protecting the attackers iPhone and found evidence of contact with the terror group. That attack killed three

soldiers and wounded several more.

China is to impose 80 percent tariffs on Australian barley exports. Now China can buy that barley elsewhere. But for Australia, exporting that

barley can create many more problems from that. The Commerce Ministry in China says it's following anti-dumping investigation that began in 2018. It

also halted some beef exports last week, calling it political retribution according to some. China's unhappy with Australia calling for coronavirus

investigations.

Mathias Cormann is with me, the Australia Minister for Finance joins me from Perth. Minister, now, good to have you. I'm do grateful that you've

given us time.

Look, I know you'll say its coincidence that the WTO process was already underway. But it smells a bit, doesn't it? China puts these tariffs on just

as you get nasty over coronavirus.

MATHIAS CORMANN, AUSTRALIA MINISTER FOR FINANCE: Well, it is a process that started some (INAUDIBLE) months ago and under the World Trade Organization

framework, anti-dumping investigations do happen on a regular basis in all sorts of different directions by countries all around the world.

But look, we're very disappointed with the outcome. We don't believe that it's appropriate. There is farmers here in Australia, highly productive.

They're not benefiting from government subsidies. And indeed, they're not dumping so we are exploring the opportunities under the World Trade

Organization framework to appeal this decision and take it from there.

QUEST: From Australia's point of view, if you look at the virus and the remarkable, extraordinary way in which it has been contained, both in

Australia and New Zealand, that's should allow a trans-Tasman bubble to be created for travel without quarantine and full free (INAUDIBLE) the

restoration of trade. How quickly do you think you can get a trans-Tasman bubble?

CORMANN: Well, look, I mean, that is one of the things that we are looking at. I mean, right now in Australia, we still have a hard border closures

between individual states. So I guess in the first instance, we want to see those lifted at the appropriate time.

I mean, you're right. I mean, we have been winning the fight against the virus. And the most important decision at the outset that we made was to

impose restrictions on return travel from Mainland China as of one February that really slowed down the initial spread of the virus and enabled us to

put significant responses in place. And, you know, obviously take all the measures required to suppress the spread of the virus.

But we are now in the phase of easing economic restrictions and you know, what you're suggesting there is something that would be very popular, no

doubt -- you know, here and in New Zealand.

QUEST: What about the sort of policies that you're now going to introduce? Obviously, there's an infrastructure plan already in the works. What more

fiscal measures do you see you have a roomful to introduce to sort of alleviate the worst of this (INAUDIBLE)? I mean, a country's going to

suffer its first recession, technical or otherwise in 30 odd years. But that's aside to ensures growth returns. What more can you do?

CORMANN: Well, we have shifted our budget, annual budget to early October. And, you know, what we're looking at at the moment is -- you know, on the

tax front, lower taxes, less regulation, making it easier. making it -- you know, lowering the cost of doing business in Australia, providing

incentives to business to invest more in the future success. So they can start hiring again.

[15:35:00]

CORMANN: I mean, the easing of restrictions is the first game in town. The trajectory we're on at the moment we hope will bring 850,000 Australians

back into the workforce over the next few months. And beyond that, yes, someday there'll be a comprehensive plan of lower taxes, more investment in

infrastructure, less regulation, providing -- facilitating better access to markets around the world. You know, beyond -- you know, obviously, our

current free trade agreements, we're looking at further free trade agreements with Europe, India, and others to provide better access for

exporting businesses to markets around the world.

I mean, recently, our free trade agreement with Indonesia came into effect. And that's that's been an exciting development, but we'll continue to work

on that front as well.

QUEST: So, on for this free trade idea, is getting a free trade agreement with the post-Brexit Britain. And it sounds very quaint when we talk about

Brexit, which which of course dominated our lives for so much of the last few years, and now is one of those things are (INAUDIBLE) but still

haven't. But how -- Minister, how important is it? I mean, is it still a priority for the Canberra to get some form of post-Brexit free trade deal

with the U.K.?

CORMANN: Absolutely, it's a high priority on both sides. And we're very confident that it'll happen swiftly. I mean, we want to have the best

possible free trade agreement both with the United Kingdom and with the European Union. We've been engaged in the process with the European Union

for a number of years now. And so, our preference would be to have a very strong, very attractive free trade agreement both with the U.K. and the

European Union.

QUEST: Good to see you as always, Minister. I appreciate it. It's early for you in Perth.

(CROSSTALK)

QUEST: Thank you, Sir.

Now, before we take a short break, I do want to show you the markets because remember what I said at the beginning? Where are we going to see a

four percent gain on the Dow? Well we have four percent? Well, we weren't expecting to see that.

Although it looked like it's an extremely unpleasant weather system that's going to cause a great deal of problems over the engine peninsula, but that

is what we're looking at. The best of today, it would seem so far, up four percent, a gain of nearly a thousand.

I'm just wondering will we see a thousand in the next -- excuse me, next 23 minutes or so. The reason you saw that before the Dow was because that's

super cyclone Amphan, which is bearing down in one of the most vulnerable parts of the world. We'll (INAUDIBLE) speak to the head of the world's

largest insurers in a moment. It is QUEST MEANS BUSINESS (INAUDIBLE).

(COMMERCIAL BREAK)

[15:40:20]

QUEST: India and Bangladesh are both struggling to contain the ravages of coronavirus. Now more problem and struggles seem to be on the way. It's a

superstorm, it's heading towards them. Tropical Cyclone Amphan, it's the strongest storm ever recorded in the Bay of Bengal, there you see it. Winds

of 270 kilometers.

Now to give that a comparison, it's a strong as a Category 5 Atlantic hurricane. It will weaken after landfall but not before it's done a great

deal of damage over the poor in densely populated areas that will be hit hard. Storm season is one of of course, for insurance companies, one of the

biggest costs and risks that they do undertake. This year will be truly dreadful for the insurance industry.

Lloyd's of London says it is going to be on a par with 9/11, the pandemic costs that is will be on a par with 9/11. Now the chief executive of

Lloyd's of London with me, John Neal, he joins me via Skype.

What do you believe, Lloyd, this is going to cost Lloyd's of London itself? Just take the pandemic costs, I presume from property and casualty, P&I and

all of those, what will it be?

JOHN NEAL, CEO, LLOYD'S OF LONDON: Serves customers literally all over the world and the effects of the pandemic, devastating for loss of life and so

far, reaching with our economic impacts. So we've estimated that just for Lloyd's, that cost could be around about $4.3 billion and that's for claims

up to the 30th of June. So if any form of lockdown continues beyond that period, then the cost of the claims will be higher.

QUEST: How much are you budgeting if at all, for liability claims from employers/employees, people who go back to work, they catch the virus? Do

you -- I know the U.S. is looking at litigate laws to give indemnity. Is this something Lloyd's of London is worried about?

NEAL: So I think, or we think the claims will be right across a range of different insurances. So as of today, the biggest single class affected

that we insure is cancellation of events. So that could be the Olympics or the U.S. Open, right the way down to local events.

So that's about 30 percent of that bill, and about 30 percent of the bill is business interruption or property claims where people do have protection

against government preventing access to premises or some form of disease or pandemic.

And then the balance is about 16 different classes of insurance, which to your point are insurance lines that are affected by economics, it could be

professional indemnity, directors and offices or employers liability, or even dare I say, liabilities arising from the clinical trials that are now

taking place to find a vaccine.

QUEST: This is something that you're obviously involved in. I mean, is it - - is it expensive for the drug companies to get insurance so that they can do these clinical trials?

NEAL: So I don't think it's outrageously expensive in the concept of the investment that they make into research and development. But we're aware of

73 trials that are going on at present to -- you know, get to a vaccine as quickly as possible. And you know, we're involved in the insurance of about

a third of those.

So it is something we're well used to doing and we do understand the structure of clinical trials and how to provide cover. So there's nothing

unusual in its structure in itself. And we're quite happy to be providing insurance.

QUEST: If the losses that say till the end of June are in the region of four billion, that sounds a lot. But my understanding of Lloyd's is that

that's well within your buffers, and abilities.

NEAL: But it is on an annual basis. But as you were recording as I just came on air, there's always a hurricane or a cyclone or a typhoon occurring

somewhere. And as your viewers know, they're all roughly the same type of event just with winds going in different directions.

So I was reading only the other day that apparently the North Atlantic hurricane season is going to be particularly active. So a lot depends on

what happens in the second half of the year. So now, we have to assume that as we serve our customers that we've set aside the money not only to deal

with claims arising from -- you know, COVID-19.

[15:45:00]

But we've also got the funds set aside for any other form of loss that's occurring throughout the year. So, we're spending roughly $650 million a

week, settling normal claims, I say normal in inverted commas. So, the years got a way to go yet.

QUEST: Well, in a blunt question, are you comfortable that you have the money? Let's say COVID goes on. You've got a slow reopening through June,

July, August, September, maybe until the end of the year. There's a bad hurricane season in the North Atlantic. The Olympics don't take place next

year. Are you comfortable, you can pay all these bills?

NEAL: Well, you know, it's a really good question. There's two parts to it. We've estimated that the total claims bill for COVID-19 will be about $100

billion for the insurance industry worldwide. And let's remind ourselves, in addition, if you look at their asset values where they set investments

aside to meet future claims, they probably fallen by $100 billion, which is why we're saying this is probably the largest loss that the industry has

ever seen.

However, you know, we have to maintain a solvency margin, and if that margin of 100 percent says you're solvent, most of us are in excess of 200

percent. So, the good news is, is the regulators and rating agencies around the world require us to hold on an awful lot of capital. So, yes, is the

short answer. We do have the money to meet these obligations and whatever else we'll encounter this year, but some will be challenged. There's no

doubt about that. Some will be challenged.

QUEST: John, it is always good to talk to you. I'm grateful for your time tonight, sir. I appreciate it. Thank you. Yes.

NEAL: Good to talk to you.

QUEST: Nuclear power -- nuclear power is a dirty word for many countries, but in (INAUDIBLE) but in the UAE, they've decided that nuclear power might

be the way forward. CNN's John Defterios reports now in this week's "GLOBAL ENERGY CHALLENGE."

(BEGIN VIDEOTAPE)

JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Nuclear power is a controversial energy source. Japan's Fukushima disaster in 2011 raised

safety concerns, and in recent years, several countries have moved away from it, citing both environmental issues and financial cost. However, its

advocates say it has green credentials, its carbon footprint is much smaller than other energy sources. Now, the United Arab Emirates has become

the first Arab nation to bet big on it.

CHRISTOF RUHL, SENIOR RESEARCH SCHOLAR, CENTER ON GLOBAL ENERGY POLICY: Normally, you'll find nuclear power stations typically in resource scarce

countries, countries which don't have energy, Europe, U.S., China, India, big energy importers. So, why would it be here?

Because they don't want to use their own resources, they own gas resources, they're much better off generating power with something else, like the

nuclear plant, and then taking the oil and gas and selling it. And I think that is, in a way a strategy to diversify further.

DEFTERIOS: Two hours west of Abu Dhabi and close to the Saudi Arabian border, you will find the Barakah nuclear plant. It's a massive site with

four reactors, and when fully operational, will provide a quarter of the country's energy needs.

MOHAMED AL HAMMADI, CEO, EMIRATES NUCLEAR ENERGY CORPORATION: This is one of the biggest commercial industrial facility that the country built, this

source of energy will provide 25 percent electricity for the nation, will avoid us emitting a 21 million tons of CO2 emissions on annual basis. So,

that will completely dramatically change the footprint from CO2 and carbon, the decarbonization for the UAE.

DEFTERIOS: But it comes with a huge price tag, more than $24 billion. Why then develop nuclear when the UAE has an abundance of oil and the cost of

developing solar and wind power has fallen dramatically over the last few years.

AL HAMMADI: Oil and fossil fuel have been used for decades and the hydrocarbon industries in (INAUDIBLE) we're using it everywhere in our

lives, on mobile, plastics, in your car, everywhere. Oh, it has a better use to be -- to be used on just burn for electricity. We need global, we

need nuclear, we need fossil fuel to create a basket of portfolio of energies that's resilient from energy security point of view and also from

a commerce point of view.

DEFTERIOS: Now, in a few weeks, the UAE is expected to switch on the Arab world's first commercial nuclear power plant. John Defterios, CNN, Abu

Dhabi.

(END VIDEOTAPE) (COMMERCIAL BREAK)

[15:50:00]

(COMMERCIAL BREAK)

QUEST: It's a [(INAUDIBLE) classic that's got a new lease on life. The drive-in movie has now become very much in vogue as a result of, of course,

social distancing. CNN's Tom Foreman reports.

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT: Even with Virginia rain coming steadily down --

UNIDENTIFIED MALE: I hate it when it looks like this.

FOREMAN: -- business is up.

UNIDENTIFIED MALE: How are you doing? Which movie?

UNIDENTIFIED FEMALE: Invisible Man.

FOREMAN: The James Cops drive-in theater.

UNIDENTIFIED FEMALE: Hi, what's the first name?

UNIDENTIFIED MALE: Right hand lane.

FOREMAN: Just in the nick of time.

UNIDENTIFIED MALE: Small businesses a South one. If it wasn't for my retirement accounts, we would -- we would not be able to put a show on.

People are seeing it as a safe environment, a safe way to come out to see the movie.

UNIDENTIFIED FEMALE: Which movie?

UNIDENTIFIED FEMALE: How many is in the car?

FOREMAN: With traditional cinemas in Hollywood itself reeling from lost income, drive-ins appear to be offering a rare and surging bright spot for

the industry.

UNIDENTIFIED MALE: Invisible Man, we got online tickets from ticket (INAUDIBLE) 1550 03:14

FOREMAN: And for fans.

UNIDENTIFIED MALE: We drove from Washington, D.C.

FOREMAN: Weary of sheltering at home.

UNIDENTIFIED MALE: Maybe about an hour to get here. It's the first time out of the house in a couple weeks.

FOREMAN: Drive-ins were started way back in the early 1900s, as an alternative to the stuffy, cramped conditions in some early theaters. They

boomed in the 50s and 60s, then fell into decades of decline. But now, that old idea, complete with popcorn, suddenly seems new --

UNIDENTIFIED MALE: You must provide space between that vehicle.

FOREMAN: -- and needed.

UNIDENTIFIED FEMALE: Definitely worked out in this pandemic time.

UNIDENTIFIED MALE: We, six feet away, and you know, we can -- we can stay in our cars if we need to.

FOREMAN: And not just for movies. Country star Keith Urban, days ago, staged a tribute concert to healthcare workers at a drive-in --

KEITH URBAN, SINGER: God bless the healthcare workers.

FOREMAN: -- suggesting live entertainment may find a home in the automotive amphitheaters too.

URBAN: Well, first of all, thank God the drive-ins are still happening.

UNIDENTIFIED FEMALE: Will all of the essential workers out there --

FOREMAN: At cops, movie goers expressed their support for hospital staffers with a blast of horns.

UNIDENTIFIED FEMALE: Let's hear those horns.

FOREMAN: Then, the light faded, the projector came alive and for at least a little while, people sat apart but felt close. And in the dark, the future

seemed brighter.

UNIDENTIFIED FEMALE: It helps to make things seem not as bad in the world.

UNIDENTIFIED MALE: To me, it's like, yes. Oh, my goodness. It's like, whoa, back here. We're bringing the community back together. Yes. The American

drive-in theater rides again.

FOREMAN: They're still practicing social distancing, telling people to stay apart. They're limiting the number of people who come in. People have to

make advance reservations. But for a lot of people, this is a really good option for a night out after so many nights in.

[15:55:11]

Tom Foreman, CNN, Bethesda, Maryland.

(END VIDEOTAPE)

QUEST: The market did go above 1,000 points a short while ago, and then it decided to retreat back again. We saw four -- we still got four percent,

but we're now down just -- went up 950 odd points, but a very, very strong performance, and it's all on the back, as we were saying at the beginning

of the prospect of a vaccine sooner rather than later.

Excuse me, bearing in mind what Jerome Powell said over the weekend. With markets ringing in our ears, we will take a profitable moment after the

break. QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

QUEST: Tonight's profitable moment, look at this chart, we showed you at the beginning of the program. It's slightly troubling, but at the same

time, it's reassuring, the way the market has recovered. So much of its losses for Dow is just off 70. What you're looking at there, besides

general wellbeing, what you're looking at there is also FOMO, fear of missing out.

Ever since there is, myself included, missed out on the losses at the end of the middle of March. Everybody's been thinking the first sign of a good

market, we will be off to the races and we will join on in. And that's exactly what's happening now.

You see it with the first scintilla of news. Well, there you are. Will it last? I don't know. But that is QUEST MEANS BUSINESS for tonight. I'm

Richard Quest in New York. Thank you for making time to be with us. Much appreciate it. As always, whatever you're up to in the hours ahead, yes, we

still got it, I hope it's profitable. Jake Tapper on "THE LEAD" is next.

END