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Quest Means Business

Trump Bets on Economic Recovery as Winning Message; FT Reveals U.K. Would Undermine E.U. Withdrawal Agreement; Softbank's Checkered History with Big Tech Gambling. Aired 3-4p ET

Aired September 07, 2020 - 15:00   ET

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

[15:00:15]

RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: As we continue with QUEST MEANS BUSINESS, there's no trading on Wall Street, it being the

Labor Day holidays, so no trading on Wall Street for today.

This is the way European markets look. There was a strong session on European bosses, up nearly over two and a third percent for the FTSE.

The reasons are many, and these are some of the things the market was talking about today.

A strong session. Donald Trump says he is taking the high road by not negotiating on new stimulus measures.

Boris Johnson, the British Prime Minister is testing Europe's patience over a trade deal with Brussels.

And Softbank shares slide after traders find out about its Big Tech betting habit.

Live tonight from London, on Monday, it is September 7th. I'm Richard Quest and I mean business.

Good evening tonight from London. Donald Trump's campaign seems to be searching for a message. In a wide-ranging interview and press conference

the President held a short time ago, there were many messages but the President still trails Joe Biden by the same amount as he did some months

ago.

Donald Trump is sticking to his doomsday scenarios and doomsday rhetoric if Biden is elected. He is warning that the Democrats will bring about an

economic collapse.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Joe Biden and the radical socialist Democrats would immediately collapse the economy. If they

got in, they would collapse it. You'll have a crash the likes of which you've never seen before. Your stocks, your 401(k), remember, it's the

people that own these massive listed companies. Lots of people.

Rich people and not so rich people and middle income people and those stocks will crash like you've never seen before.

(END VIDEO CLIP)

QUEST: So that's the message from the President, warning of stock market collapses. Joe Biden was in Pennsylvania today. He is courting working

families and union workers.

His vice presidential nominee, Kamala Harris, says Trump only cares about catering to wealthy.

(BEGIN VIDEO CLIP)

SEN. KAMALA HARRIS (D-CA), DEMOCRATIC VICE PRESIDENTIAL NOMINEE: His perspective for too long is to talk about how well the economy is doing

based on how rich people are doing.

We need to talk about how the economy is going based on how working people are doing, and right now, working people are suffering, people are standing

or sitting in their cars in food lines for hours.

Dana, we have -- I saw a number that one in five mothers in America is describing her children under the age of 12 as being hungry. That's America

today.

And we need leadership that cares about that instead of looking in a mirror and then professing greatness when, in fact, there is abject despair.

(END VIDEO CLIP)

QUEST: Our White House correspondent is John Harwood, he joins me now.

John, we'll take this at a fair clip as there's a fair bit to cover. Listening to, today, this weekend, today being the holiday, the Labor Day

holiday, it puts it into perspective, John.

Here was Joe Biden with working families, union families, if you like. The President is talking about the stock market. If it hadn't been for COVID,

he would have a very good economy to talk about.

JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Well, he would. Unfortunately, COVID has more than doubled the unemployment rate, taken a

big hit to growth. We're still even with the job gains we've had for the last four months. We're still 11 million jobs down from where we were at

the beginning of the year.

Now, important to note, the President was trailing Joe Biden before COVID ever hit. The effect of COVID and the economic damage that's ensued has

been to make it more difficult for him to climb out of that hole and part of the battleground, of course, is these white working class voters that

Donald Trump counts as the most important members of his base, but Joe Biden has been fairly successful as a moderate, as somebody with a bit of a

blue-collar political identity himself, and chipping away at some of that Trump support while also significantly ramping up his support among white

college educated people.

And of course, getting overwhelming support from African-Americans and majority support from Latinos.

So that's a good formula for Biden right now. The President has got two months to try to change it. Not going to be easy.

[15:05:17]

QUEST: The president sounded angry. He sounded frustrated. But to some extent, the fact that he is caged in the White House and is not able to go

and do his big rallies, it's now starting to show.

HARWOOD: Yes, he is very frustrated. He knows that he is behind. He took a huge hit this weekend with that story in "The Atlantic" that Jeffrey

Goldberg, our colleague, wrote with anonymous sources, but four of them, saying that the President had privately disparaged members of the military,

fallen soldiers in past American wars.

The President has denied it. He has trotted out a bunch of aides to join him in denying it, but we do know that the purported private comments

tracked things that he has said in public in spirit as when he said of John McCain, "I like people who weren't captured." That was derogating John

McCain on the basis of something that happened to him in wartime.

So there's a consistency to the reported private and the on-tape public remarks and the President was fighting back against that today, saying it

was a made-up story and making a bunch of wild claims about the success of the Trump economy.

QUEST: John, I'm just going to throw this out on a limb, some of my weekend reading has come back to haunt me. John, we've not heard from John

Kelly, obviously, an Army chief and former White House Chief of Staff, noticeably quiet, normally, but his silence is deafening. He is one man who

would know whether "The Atlantic" story is true.

HARWOOD: Well, the President said a couple of things about the story. One is he said it was made-up, but secondly, he said, well, it may have come

from disgruntled former employees, and then he ripped John Kelly and said John Kelly wasn't up to the job of White House Chief of Staff.

That gives away the game a little bit and suggests that the President knows that the comments that we're talking about were things that either John

Kelly told the reporter or he told others who told the reporter.

Now, the President did tout the statement put out by former aide to Kelly, saying that he was on that trip and he didn't hear those remarks.

But again, the people saying that they didn't hear Trump make the remarks don't refute the fact that other people may have heard them, but until some

of those people go on the record, there's going to be some doubt about exactly what was said and said to whom.

QUEST: John Harwood joins me from Washington.

The E.U. and the U.K. are at it again over Brexit. This time, it's as a result of the British government at first blush seeming to row back on

commitments made over Northern Ireland and the peace treaty and the way forward after the U.K. finally does leave.

The report in the FT says that the British Prime Minister is planning to pass legislation that could undermine key aspects of the withdrawal deal

and that's an international treaty agreed by both sides, and those words, no deal, seem to be on the horizon again.

(BEGIN VIDEO CLIP)

DANIEL FERRIE, SPOKESMAN FOR E.U.'S CHIEF BREXIT NEGOTIATOR, MICHEL BARNIER: I would finally point out that while we are determined to reach

an agreement with the U.K., the E.U. will be ready in the event of a no deal scenario to trade with the U.K. on W.T.O. terms as of the 1st of

January, 2021.

(END VIDEO CLIP)

QUEST: Nic Robertson, our diplomatic editor knows more about this subject and he is on, he is still decent. He joins me now. Nic, when you heard what

the Prime Minister is supposed to be planning, it begs the question, why? Why would you start doing something like this that at very best is going to

be undermining of the positions?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: I think the first judgment is an instinctive one and that says the Prime Minister, because

his negotiators are going into the eighth round of talks this week, and he has already set over the weekend a deadline for the talks, the 15th of

October and has said, it's just fine if it doesn't work out, we'll just move on.

He says the country is in a good place. We'll have a trading relationship like Australia.

So, on the one hand, you think, well, yes, the Prime Minister is setting out a tough position, saying I'm going to rip up some of what we've agreed

if you don't essentially move to my position or move a little bit towards my position.

[15:10:02]

ROBERTSON: And then there's another analysis that says the Prime Minister has got hardliners in his party. Let's not forget, all the way along,

Brexit has been about divisions within the conservative party.

The Prime Minister still has those. He has a big majority. He doesn't need as many of those hardliners.

But perhaps he is setting them up by sounding tough now and taking a tough position with E.U. where he may climb down a little bit over the coming

weeks, but it isn't clear, and we don't know precisely the new legislation yet until it's issued on Wednesday.

QUEST: At best, it seems to be unhelpful. At worst, some say it's destructive, what he is doing.

ROBERTSON: Yes, and they're saying it's destructive because what he is talking about is undermining the protocols that determine how goods move

from Great Britain -- Mainland Great Britain, to Northern Ireland, because that was the big thing for the E.U. and the concession the Prime Minister

made last year, agreeing to these protocols.

Because you have to have, the E.U. says, those protocols because if Britain ships goods to Northern Ireland, there's no border between Northern Ireland

and South Ireland, i.e., the European Union to stop those goods going across.

So you have to have these checks between GB -- Great Britain and Northern Ireland. What the Prime Minister is talking about, hold on, that doesn't

fit with our national interest. We're going to undermine those.

And the E.U. is saying, hold on. They're a prerequisite to any deal that we have. So what you are left with, if the Prime Minister follows through, and

there is no deal, is the potential for a hard border between Northern Ireland and the Republic of Ireland, and that's what everyone has said all

along could lead to an increase in violence in Northern Ireland.

Very dangerous and very bad for business.

QUEST: All right. Nic Robertson is there. Joining me now also, Simon Fraser, former head of the British Foreign Office, now Managing Partner of

Flint Global. Simon, when I heard this morning, my heart sank.

I thought, you know, it is going to be difficult to get a -- virtually impossible to get a trade deal. Why is the government -- why is the British

government rocking the boat with this, seemingly unnecessarily?

SIMON FRASER, FORMER HEAD OF THE BRITISH FOREIGN OFFICE: Well, I mean, it's serious, but frankly, I don't think we should be too surprised by it.

If you look at where we are in this negotiation now, the next round of talks is due to start tomorrow. Time is really short, as Nic has said, if

we are going to get a deal, and there hasn't been much progress over the summer.

So, what often happens in negotiations like this is that people have a sort of controlled explosion to get things moving, and I think that's what we're

seeing.

It's a time for muscle flexing and chest beating before we go into the final round of negotiations. So, I'm not surprised by that. And secondly,

very quickly, these issues around Northern Ireland were frankly sort of unexploded bombs that lay there as a result of the withdrawal agreement

because clearly, there are differences of interpretation between the U.K. and the E.U. about some of these issues relating to the status of Northern

Ireland.

And I think the British government probably wanted to get those on the table at this point so that they can be addressed.

So, some of it is negotiating tactics, but it's still serious.

QUEST: The Prime Minister, the British Prime Minister has said if a deal is not ready by October, well, it's highly unlikely that there will be a

full-scale trade deal. But does anybody genuinely believe that there could be a full-scale trade deal? At best, it will be a standstill.

FRASER: Well, I mean, first of all, if there isn't an agreement by October, I think it will be very difficult to get any sort of deal, because

it's got to be ratified and implemented before we, you know, before the deadline at the end of December, so that's right.

But I agree with you, in any case, at this stage. There's no possibility and indeed there's no ambition to have a very, you know, a big trade deal.

It's a pretty basic deal that is now available, which will cover mainly trade in goods, not trade in services, for example.

And therefore, you know, it's a fairly limited ambition. Having said that, it's still better to have a deal, in my view, than not to have a deal with

all the acrimony and the chaos, the short-term chaos that would ensue in that situation.

QUEST: Is it your understanding that the U.K. is better prepared to leave the transitional period with no deal, i.e. go to W.T.O. terms with all the

lines and queues that there will be at Dover. Or has COVID pretty much scuppered any ability to put themselves on the front foot?

FRASER: Well, I think we're probably better prepared because let's face it, we've had several practice runs because we've been up and down this

hill a few times and there's been more time to prepare for a no deal, so in that sense, logistically, they're better prepared.

[15:15:02]

FRASER: But the economic situation and the overall circumstances are much worse as a result of COVID. We have an economic recession and therefore

adding to that or having a gratuitous no deal when frankly, I believe a deal can be achieved, in my view, would be a very bad outcome.

QUEST: Simon, I'm going on a punt here. You can plead the fifth if necessary. I just want to know, what are people like you, the foreign

policy experts, not in the United States, what are you thinking as you look at the U.S. election at this point?

Not so much who is going to win, but what are your gut feelings on how this is playing out?

FRASER: Well, I mean, at the moment, it seems like the gap is closing, and there are some really big issues, clearly, within American society that are

coming to the fore.

From the British perspective, I think we need to think about how we prepare ourselves to work with whichever administration emerges at the end of this

election.

Now, the British government has, you know, Boris Johnson has a good relationship with Donald Trump. How would we use that relationship?

I'm not sure that this British government would have quite such a close relationship with a Biden administration, even if in my personal view, a

Biden victory would be a preferable outcome in terms of British and broader western interests.

QUEST: Simon, it is good to talk to you. We will talk again on Brexit, on Biden-Trump. There are plenty of things to keep you busy, sir. I appreciate

your time this Monday evening.

FRASER: Thank you.

QUEST: Now, as we continue, Softbank shares have plunged very sharply as news of the bank's latest big gamble on tech came out. Their recent run on

bets is less than stellar. We'll review after the break.

(COMMERCIAL BREAK)

QUEST: Softbank shares have plunged in Tokyo. They're down some seven percent on Monday. It's the worst day since the pandemic began for

Softbank.

Investors are shunning the stock because of the reports of Big Tech bets that might not have gone as well as might have expected.

Now, Softbank is known for its big gambles in technology stocks in various companies. Some of them, in fact, most of them haven't gone very well.

It's -- the situation has become so dire in a sense, it's got a reputation as being reckless.

[15:20:07]

QUEST: Spin the (speaking in foreign language). Softbank made its name with Alibaba investment. Now, Jack Ma left the Softbank Board last year and

Jack Ma is no longer leading Alibaba.

The Vision Fund lost billions of dollars on scandal-ridden WeWork, which performed exceptionally badly. Then it made deals -- Softbank made deals

with Wirecard, the German company. The billion dollar investment is now under scrutiny.

If all this wasn't grim, Softbank has now been revealed as the NASDAQ whale, propping up the runaway tech rally. If you want to know why tech has

been so strong, Softbank's call puts in the market have been the reason why.

Softbank's core options have been doing the deal. Selina Wang in Hong Kong now reviews the Softbank business.

(BEGIN VIDEOTAPE)

SELINA WANG, CNN CORRESPONDENT: Softbank has been called the NASDAQ whale that turbo charged the most recent rally on Wall Street, driven by its bets

on major tech stocks.

Softbank, according to "The Financial Times" and "The Wall Street Journal" had purchased roughly $4 billion worth of options tied to the underlying

shares of stocks that it had purchased previously in companies like Microsoft, Netflix, and Amazon.

At play here are call options. These are bullish contracts that give an investor the option to purchase a stock at an agreed-upon price. It becomes

profitable when that share price rises above that fixed level.

Now, this strategy seems to be working so far for Softbank. Reportedly, it is sitting on some $4 billion of trading gains, but these are unrealized

gains, and this is a risky strategy.

If this market pullback continues, it could be major losses for Softbank. Prior to the selloffs last week, the S&P 500 and NASDAQ were reaching

record highs.

Softbank itself had been up about a third this year, up until Monday when its stock plunged more than seven percent as investors reacted to this new

strategy of pushing into the options market.

This has been a deeply controversial strategy, even within Softbank according to "The Financial Times." Now, this aggressive move into options

is new territory for Softbank, and many investors see it as Softbank looking increasingly like a hedge fund as it makes these riskier and

riskier bets.

Selina Wang, CNN, Hong Kong.

(END VIDEOTAPE)

QUEST: Taking a look at the markets from Asia to Europe, Europe had a strong session with most of the major markets being up more than one

percent. The London market was particularly ebullient. London gained two and a third percent.

Zurich was last of the day, just at 1.4, but still, as you can see, it's a performance. It's an impressive performance. It's Thursday's policy

decisions by the E.C.B. that's giving much room for talk.

In France, the maker of Absolut vodka has seen sales slump. Hardly surprising that Pernod Ricard had such a difficult time when you think that

the number of restaurants, bars, and clubs that have been closed as a result of the pandemic.

However, the Chief Executive is not all downhearted. He points out there have been many ways in which the company has found new and growing markets.

(BEGIN VIDEOTAPE)

ALEXANDRE RICARD, CEO, PERNOD RICARD: Well, that's a great question, but if you look at our numbers and our net sales numbers, down 9.5 percent for

the full 12 months ending June, bearing in mind that we've basically gained market share or maintained market share in most markets, this means that

people have been drinking at home, but overall, during this crisis, people have indeed been drinking less.

That's key. It's true.

Now, there are new ways of drinking that have come up. There's been quite a lot of innovation in terms of home-tainment, in terms of Zoom drinks and so

on and so forth, but overall, during the peak of the crisis, people have been drinking somewhat less.

QUEST: The Zoom-tainment, the Zoom happy hour. That started really strongly at the beginning of the pandemic, and people either got sick of it

or they just couldn't face it. Did you see that in the numbers?

RICARD: Yes, I mean, at the end of the day, initially, it was a new way. It was quite innovative and fun, but then as always, there's a little bit

of fatigue on one side. But what this says, this proves, fundamentally, the need people have to connect together.

The need people need -- the need they have to really share celebration moments, to really share a drink together, and we're also seeing that as

the trade is reopening around the world, people are reconnecting together.

[15:25:10]

RICARD: Does this mean it's the end of Zoom happy hours? No, I think it will stay as well, because it's a way people discover to share something

together when they're not in the same place, when they're in different cities, different countries.

QUEST: Biggest seller? Come on? Of all those bottles behind, which one sells the most?

RICARD: Well, from a value point of view, profit-wise, Martell, our cognac and we have Martell Blue Swift in the U.S., which is doing very well.

If we look in volume, Absolut, which has been quite resilient but has been the brand most exposed to travel retail and to the night trade and if we

look at growth brands, the fastest-growing brand on average, which is Jameson. You cannot not mention Jameson, which has proven to be extremely

resilient during this crisis and still managed to grow in 50 markets around the world over the last 12 months.

QUEST: Extraordinary. Thank you, sir. It's lovely to hear the story of how the world is drinking at a time of crisis. And it proves that the on trade

is vital. The in-home is important, but there's a shifting market.

It's really interesting. What has surprised you most, finally, as you look at your data and as you've analyzed it, what has surprised you most?

RICARD: Well, what has surprised me is, in fact, the resilience of consumption around the world. Initially, when the crisis hit, we were a

little bit more pessimistic on how the future might look like, the short- term future, especially in the off trade, and when we started seeing the Nielsen panels and the off trade in most countries in the world growing

double digit, we said to ourselves, at the end of the day, we're in quite a resilient industry.

(END VIDEOTAPE)

QUEST: The CEO of Pernod Ricard talking to me and not a drop in sight.

In a moment, the Prime Minister of Croatia, the country kept its beaches open and welcomed all tourists. Was that a wise decision? We will review

that and as winter comes forward, the Prime Minister tells me how he hopes to keep the country from a second wave.

It is QUEST MEANS BUSINESS. Good evening tonight from London.

(COMMERCIAL BREAK)

[15:30:00]

QUEST: Hello, I'm Richard Quest. More QUEST MEANS BUSINESS in a moment. India is looking to reopen its economy as it moves into second place for

the total number of COVID cases. We'll be talking about that. And I'll speak to Croatia's prime minister. Now, the country kept the beaches open

and the tourist industry going, it could be now paying the price with higher numbers in terms of cases, and of course, the autumn is around the

corner. All of that will be coming your way in just a moment. But this is CNN, and on this network, the news and the facts always come first.

The hospital in Berlin says the Russian opposition leader Alexei Navalny is responding to verbal stimuli after being roused from medically induced

coma. He came here last month while on a flight to Moscow from Siberia. He was later moved to Germany for treatment. The German government says he was

poisoned with the Soviet-era nerve agent Novichok. Typhoon Haishen has lashed South Korea with a 160-kilometer-per-hour winds and torrential rain.

On Monday, tens of thousands of people are without power. At least two people are missing. It's the second typhoon to hit the region in less than

a week.

A grim milestone in Spain. The nation has now passed half a million confirmed coronavirus cases. It's the first European country to reach the

500,000 mark. The football star Kylian Mbappe has tested positive for the virus. According to the French Football Association, Mbappe who's been seen

in training today played in France's win over Sweden on Saturday. He was set to play against Croatia on Tuesday night. Several of his teammates have

already withdrawn from the squad. They also tested positive.

It's an impressive number, 2-1/2 million people managed to visit Croatia. This summer, tourists, they were able to go. It was down 50 percent from

last year. But as Croatia points out, it's much better than many of its neighbors and fellow European countries. And the reason is, of course, that

the Croatian government kept the country open. It kept the tourism industry going, and it opened its borders early in summer and encouraged more

visitors, but COVID cases have surged over the summer. And now, the U.K. and others have added Croatia to their quarantine list. If I look at the

new numbers, the new case numbers per day, it's in the 200, 300-mark number, but it is higher than it's been before.

Andrej Plenkovic is the Croatian Prime Minister. The Prime Minister is with me from Zagreb. Prime Minister, first, I will say we have a very long delay

between me speaking, you hearing, and replying. So, I apologize for that. It is longer than usual. But Prime Minister, the decision to open up the

country early this summer, you're now paying the price many say with increased number of cases.

ANDREJ PLENKOVIC, PRIME MINISTER OF CROATIA: Well, first of all, Croatia was at the helm of the European Union when the COVID-19 broke out, and I

have to admit, we did a lot of work in coordinating the E.U. efforts during the first half of 2020. We had a lockdown. Once there was the outbreak of

the epidemic, and I think we did extremely well. We protected the health of our citizens. Then gradually, we opened our borders. It was the end of

April and beginning of May, so we were able to welcome the tourists to Croatia, as of mid of June.

In overall numbers, the tourism actually much better than we expected. It went pretty well. We had around 7 million tourists coming to Croatia. The

overnights are around 50 percent of the last year, which was the record- breaking year for the Croatian tourism. Naturally, it was a bit of a calculated risk if you like the numbers of people which are infected have

risen over the last couple of weeks.

[15:35:00]

But what is very good that we still have a very, very low mortality rate only five compared to 100,000 ratio, which is much, much, much lower than

any other country in Europe, especially in the Western Europe. So, we've managed to combine both health of our citizens and the income coming from

one of the most important branches of our economy, and that is tourism.

QUEST: But is there a ticking time bomb now waiting to go off? The number of cases has risen and we are going into the autumn. Admittedly, the good

weather lasts in Croatia a bit longer than it does say here in London. But the risk is growing. And I'm wondering what your next strategy is.

PLENKOVIC: Well, just as many of our neighbors, we know focus at the opening of the school season. School started today in Croatia and we

undertook epidemiological measures in order to provide for our pupils to feel secure and to conduct the first day of the class in the most secure

manner possible. We are also observing the sort of hotspots of the contagion, and then we are adopting the tailor-made measures in different

parts of Croatia. What we advocated to our neighboring countries to look at Croatia, the subnational level, meaning if there is a county or a

particular city, where we do have a certain outbreak, then the measures should be targeted towards people who were in that region.

And this is what I was saying towards Slovenian colleagues, Hungarian, Austrian, or German. We expect that the other level of the European Union

we should undertake similar measures, especially at the subnational level. So, so far today, for instance, we just had over 100 people infected. But

no difficult epidemiological or clinical situation on our hospitals. We only have 20 people at respirators, which is very, very low.

QUEST: Prime Minister, if we look at countries and the measures taken, for example, by Hungary, do you -- do you criticize the Hungarian government

for closing the borders and then being selective about those country citizens it will allow in? Isn't it time for the E.U. to do something about

that?

PLENKOVIC: Well, what I said last week when we had a strategic forum at Bled in Slovenia. I said, we should strike the right balance between what

we do jointly at the European level and what we do at the national level. I think that the COVID-19 pandemic has really proved the most important role

of the state. No other actor but the state could have assisted the citizens to be protected from this pandemic. And I think now the discussions which

are being held under the German presidency are actually aimed towards taking common measures so as to have similar protocols once we see the

outbreak of the epidemic. But in terms of the bilateral relations, I think most of the countries undertook measures to close or to introduce

quarantine or to ask for tests exactly in the line of the -- in the light of the start of the school year or the academic year.

QUEST: Prime Minister, thank you, sir. I do appreciate it. I thank you for joining us tonight from Zagreb. The Prime Minister of Croatia talking to

us. Now, India is setting a dangerous new trend in the fight against COVID. The case the number of cases is dramatically on the rise, but the country

is continuing to open moving forward. After the break, we'll talk about that.

(COMMERCIAL BREAK)

[15:40:00]

QUEST: India's overtaken Brazil as the second country largest number of Coronavirus cases. A total of more than 4 million infections. But then, of

course, the population is 1.3 billion. It registered a new all-time high in term of daily cases as well over a 24-hour period. 90,000 cases in a single

day. Now, that would all be bad enough. But what's really disconcerting to the experts is that the Indian government continues to push on with opening

or reopening the economy, believing that the economic woes could be worse than the actual Coronavirus. Vedika Sud reports from New Delhi.

(BEGIN VIDEOTAPE)

VEDIKA SUD, CNN FIELD PRODUCER: Congested streets, crowded markets, India's exponential increase in COVID-19 numbers has done little to deter people

from venturing out.

DR. RAJIV PARAKH, CHAIRMAN, MEDANTA DIVISION OF PERIPHERAL VASCULAR & ENDOVASCULAR SCIENCES: People thought that once the numbers started to go

down, this was it. They had won the war, and everybody was out. And everybody was, you know, was out there without wearing a mask, without any

social distancing, without any sanitizers. Basically, just abandoned.

SUD: While it took India 5-1/2 months to surpass a million cases, it's taken the country just 50 days to add more than 3 million infections.

Medical experts say one of the reasons for the big surge is aggressive testing.

DR. HARSH VARDHAN, HEALTH MINISTER, INDIA: Now, twice, when we set our target to do one lac tests a day, and then later 1 million tests per day,

we achieved that target much before the targeted date.

SUD: A significant increase in caseload has been reported from rural areas, where the public healthcare system remains extremely poor and lean.

DR. MANOJ JUMAR, DIRECTOR, CARDIOLOGY DEPARTMENT, MAX HOSPITAL: The pandemic is spreading in the rural area. It is mainly affecting the seven

states of this country, which are responsible for almost 75 percent of the cases.

SUD: India's health ministry is often quoted low fatality and high recovery rates to explain its numbers. The medical experts say this has made people

complacent.

DR. SHAHID JAMEEL, VIROLOGIST: I think it's because of the mixed messaging that we are putting out. We're not telling people exactly what is going on.

We are giving them half truths about recovery rates but not telling the exact gravity of the situation.

SUD: Forced repeated lockdowns, economic compulsions have led the government to relax restrictions. With malls, restaurants and temples

already reopened, subway trains will be back on track from Monday, another possible hazard in the times of COVID. With the fastest growing caseload in

the world, India has now surpassed Brazil's numbers, second only to the U.S. in COVID-19 cases. Vedika Sud, CNN, New Delhi.

(END VIDEOTAPE)

QUEST: What are we buying as season changes and COVID takes its toll? How are retailing trends changing? Well, some retailers have cashed in on our

changing habits and made great strides in doing so. L.L.Bean, for instance, their winter gear is now already in the shops or at least is now being

demanded. CEO Stephen Smith says snowshoes and sleds are the big sellers. He joins us now from Lake Canada.

[15:45:05]

I almost hate discussing the forthcoming winter, not just because of COVID reasons and the problems, but we're barely out of summer here in London.

It's already dark and the weather has changed. But you really get a taste at L.L. Bean for the future, for what's coming next. What is coming?

STEPHEN SMITH, CEO, L.L. BEAN (via Skype): Yes, Richard, nice to be with you and good afternoon -- good evening to you. You know, we're seeing right

now already snow tubes, kids sleds, snow shoes, outerwear, all starting to move really quickly. We've been right in line with the U.S. psyche as

people wanted to get outdoors a lot more the spring and summer. And a lot of new participants are coming into the outdoors, and that's through hiking

and stand up paddleboarding and kayaking and fishing and archery. And now, we're starting to see that already starting to sell in our fall and winter

gear.

QUEST: Do you think you're going to see an increase? I mean, it's really balancing, isn't it? Because on the one hand, retailing is being hit,

because people aren't going shopping as much. And even online, e-commerce is doing well, but not that much -- as much better but, you know, there is

this also this trend of everybody going outdoors. So, if you net net it out, L.L. Bean, how are you trading?

SMITH: Yes, we're actually trading well. I appreciate that. You know, we're an omnichannel retailer. So, we have, you know, two-thirds of our business

is direct through e-commerce and catalog, and then about 25 percent is through our stores. And e-commerce and direct has been very strong anywhere

from five to 20 percent over last year. Of course, physical retail is down anywhere from 20 to 30 percent, depending on the market, but we've been

trading very well through our channels.

And then, our assortment has been dead on for what's right for the country, and especially with work at home, a lot of people, you know, have really

hunkered down. And I think the uniform for working at home this fall is going to be a flannel shirt on top and slippers on your feet. And we saw

that all through the spring and summer. And I think that's going to continue through the fall and winter.

QUEST: If you have to make a course correction now with what you are seeing, what would you correct?

SMITH: That's a great question. You know, the biggest issue I think for all retailers right now is inventory and projecting what the fall and the

winter is going to look like. A lot of new people participating in the outdoors, you know, experiencing the benefits of getting outside, a lot of

new participants, people working at home, but also thinking about, you know, obviously COVID-19 and sort of what happens to shopping habits. So

many retailers, us included, we cut inventory to protect liquidity in the spring and summer. And we are working really diligently to make sure that

we stay in stock on the items that people are looking for and trying to project that is probably the biggest challenge.

QUEST: And just finally, related to that, have you found supply chain issues? I mean, the last thing you want is to have a best seller that you

can't get into the -- into the stores or into the warehouse. But over this last few, it's not the beginning of COVID. But over this last few weeks,

have you found the integrity of the supply chain?

SMITH: Rock solid. So, our teams have been working, you know, almost 24/7 around supply chain, around making sure that we are getting the inventory

that we need. You know, the interesting dynamics in the market. There are a lot of businesses in the U.S. that are going out of business, and they are

relinquishing factory capacity, which is allowing us to chase capacity and be able to get in stock on the items that we have. So, the teams do that

every year as we go into the holiday. It's accelerated this year.

QUEST: Stephen, I was thinking about the working from home uniform in the fall, a flannel shirt and slippers. And I may get away with wearing the

slippers. In fact, I already have on more than one occasion. I'm not sure that -- maybe if they do a flannel shirt in pinstripes, I'll get away with

that. But thank you for joining us. Always good to see you. We appreciate you giving us time.

SMITH: Thank you very much, Richard. Great to see you as well. I'm happy to outfit you in any way you need. Thank you.

QUEST: Now, there's a -- there is a request for something in flannel and pinstripes that we might just take you up on before the year -- end of the

year. As we continue --

SMITH: That'd be fantastic.

QUEST: -- on QUEST MEANS BUSINESS tonight (LAUGHTER) Egypt's candidate to lead the WTO will be with us. You'll know we're talking to all eight

candidates here on QUEST MEANS BUSINESS as the countries decide who will lead the World Trade Organization.

[15:50:00]

(COMMERCIAL BREAK)

QUEST: The third and final stage of the leadership race for the WTO, the World Trade Organization is now underway. Eight candidates have made

themselves known, and now the members of the WTO which operates by consensus will try and reach a consensus on who should be the next leader

taking over. Of course, as soon as possible. Hamid Mamdouh is the Egypt's candidate. He is the former director of trade at WTO Services Division. He

joins me now. And, sir, you're different to all the others, they are politicians, they're ministers, they come with great rank. You are, so to

speak a technocrat, and you believe that the politician is the problem.

ABDEL-HAMID MAMDOUH, WTO DIRECTOR-GENERAL NOMINEE: Well, thank you, Richard, for having me. I don't think the politician is the problem. But I

think the WTO now needs a different kind of leadership. We've been having political leaders for the past 25 years, the only exception is the last

one. But the WTO is facing an existential crisis now. And the solution out of this is going to be in negotiating reform package. And that is a

different kind of an exercise. Of course, it's about political vision, but you need to anchor the political solutions into the substantive details of

how the system functions. And this is where I'm coming from. I think the WTO needs an honest broker who has the political vision and also has the

knowledge to suggest solutions to the membership.

QUEST: Isn't the -- isn't the -- but isn't the real problem with that, that every candidate I've spoken to says that there needs to be new will, new

drive, new ideas, new -- but you have all been around. The WTO has languished on all of your watches.

MAMDOUH: Absolutely. This is the problem, which is we're not having the right kind of conversations in the WTO. Because we're dealing with the

problems from the long -- the wrong aspect of it, the wrong end of it, which is the politics of trade. Of course, it's very political. But to find

solutions to political problems, you need to have the right substantive formula for it. And that's not something that you can -- you can mobilize a

simple political will for. You need to find the solutions to the right conversations.

[15:55:05]

QUEST: You'll know what I mean when I ask you this. Have you got the right pizzazz? Have you got the leadership zing? Can you stand there and look

Donald Trump, assuming he wins, for the purpose of this question, to look them in the eye or Boris Johnson, are you -- are you able to do that?

MAMDOUH: Well, I have been almost doing that for the past 30 years at different degrees, not at the level of heads of states, but certainly with

ministers. Because the argument about having a politician is that this will give you access to political leaders. But my point here is that if you're

Director-General of the WTO, you do have access. The real question is when you have access, what do you do with it? What kind of conversations would

you have behind closed doors with USTR in Washington, or the Trade Commissioner in Brussels, or the Chinese trade minister in Beijing, or with

any political leader anywhere? It's how you mobilize the kind of substantive arguments that would inspire the enlightened self-interest that

would lead them to see the WTO as the solution and not the problem.

QUEST: "Inspire the enlightened self-interest." Now, there's a thought for you. Good luck, sir, in your candidacy. We will follow closely and see how

things go. I appreciate you giving us time tonight on QUEST MEANS BUSINESS. And just a reminder to viewers that there are eight candidates, we will

have spoken to all of them as the countries make their decision. They work by consensus, which means it's a messy process, and we don't really get an

idea of who's won until just about the end. There's no voting or at least, there's never has been so far -- so far. We'll have a "PROFITABLE MOMENT"

after the break.

(COMMERCIAL BREAK)

QUEST: So, now it's profitable moment. I'm back in London, starting a two- week quarantine ahead of traveling in Europe. And big difference, when I was here in the summer, it was daylight still at this time of night. Now,

it's night and we're moving into autumn and then onto winter. And there are great concerns, of course, about what this means for COVID. One thing

hasn't changed, Brexit is back on the agenda, and likely it will be between now and the end of the year. More Brexit, more COVID. And that's QUEST

MEANS BUSINESS for tonight, I'm Richard Quest in London. Whatever you're up to in the hours ahead -- yes, the bell travels with me -- I hope it's

profitable. I'll see you tomorrow.

END