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Quest Means Business
White House Monitoring Wild Trading Swings At GameStop; E.U. Official Rejects AstraZeneca's Delay Explanation; U.K. Imposes Tough New 14-Day Quarantine On Returning Brits; At Your Fingertips: Digital Transformation Of The Travel Experience; What Is The World's Current Mistrust Index?; Speculative GameStop Trading Drags Market Down. Aired 3-4p ET
Aired January 27, 2021 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:21]
RICHARD QUEST, CNN INTERNATIONAL HOST: Sixty minutes to the close of trade, an hour to go and a dreadful day on Wall Street. Midweek session and a sea
of red across the market. We're down two percent and we are just about the lows of the day on the Dow.
The triple stack shows a similar story, very heavily down, two percent, if not worse for the NASDAQ and the S&P 500. So tech and broader market doing
worse. We will monitor. We'll watch and we will explain that the markets and the events that have driven behind it.
It is the battle royale that has captivated Wall Street. GameStop shares are surging. Many others are, too. There's something going on. Jordan
Belfort, the original Wolf of Wall Street will be with us to discuss.
On vaccines: Europe's health chief says it's unacceptable if vaccine makers don't honor their contracts.
And the United Kingdom is officially launching hotel quarantines. We'll explain.
We are live in New York on Wednesday. It's the 27th of January, I and Richard Quest, I mean business.
Good evening, tonight, U.S. markets are falling sharply across the board. Behind it, a variety of reasons. We can look for technicals and we can look
for fundamentals. Weak corporate earnings is certainly a fundamental reason. However, wild market speculation is truly shaking the street.
The name on every trader's lips is a declining video game retailer called GameStop. Now GameStop has absolutely nothing to do with the wider economy.
Nor indeed, with the current earnings season that's underway, which will pass later. However, GameStop is soaring once again.
We ended yesterday's show talking about the wild run it is having and it's more than doubled again, doubled in a day. Driving these gains is what's
driving attention including the White House.
(BEGIN VIDEO CLIP)
JEN PSAKI, WHITE HOUSE PRESS SECRETARY: Our team is of course, our economic team, including Secretary Yellen and others are monitoring the situation.
It's a good reminder though, that the stock market isn't the only measure of the health of our economy.
(END VIDEO CLIP)
QUEST: Good. And today, you shouldn't take the stock market as a barometer of the health of anything except some shenanigans and funny business.
GameStop's actual business is totally irrelevant to what we're talking about tonight. It's a bricks and mortar video game shop, a sort of thing of
yesteryear.
However, it's in the middle of a battle between retail traders who are using Reddit and hedge funds. The funds have been betting on the share
price to fall, so-called shorting the stock. The retailers through Reddit have fought back, they are buying shares. The funds have had to cover their
shorts, and that's driven the share price even higher.
Then the traders bought more options reminiscent of the dot-com boom of the 1990s, and now some hedge funds are down for the count cutting their
losses. Does it continue like this? Other companies are starting to gather the same momentum. Nokia, BlackBerry and the cinema chain, AMC.
Paul La Monica is with me. Paul, this is a highly technical in the weeds of the market, but it can be basically summed up with traditional hedge funds,
shorting a stock, retail investors buying it to cause them pain.
PAUL LA MONICA, CNN BUSINESS REPORTER: Exactly, they are squeezing the life out of the big hedge funds with this trade. The people that are very active
on Reddit, the Robin Hood crowd, they are simply put buying shares of GameStop which pushes shares even higher and that makes the bet that the
short sellers are betting lose even more money.
Because when you are shorting a stock, your losses are infinite. So it's a huge problem for any of the hedge funds that are in GameStop it's why
you're seeing a lot of them abandon the trade, you even had the big, you know, short selling based research firm Citron kind of pullback on its
bearish call. You are going to see, I think more of this because now the retail investor has a taste of the power that they can wield, and you're
seeing it with those stocks that you mentioned, AMC, BlackBerry, there are many others that are hated by professionals.
But the individual investor loves them and also loves inflicting pain on the quote-unquote, "fat cat" hedge fund management.
[15:05:26]
QUEST: Right. But if -- but this is the problem, if those retail investors who are using chat rooms and fora in Reddit, if they don't get out, and
suddenly, the fundamentals of the company become the driving force of the price, the EPS if we're going to be old fashioned about things, then those
prices are going to collapse, leaving other retail investors where?
LA MONICA: Yes, that is a great question. I mean, cynics would argue that the earnings don't matter anymore, that that's a relic of yesteryear, kind
of like that eight-bit video game music you were playing that made the 80s kid in me like all get excited again.
But that all being said, Richard, I think that a big question right now for investors is how much stronger can these stocks go up even in the face of
poor fundamentals? Because it may not take much for the sentiment change for the Better -- to play devil's advocate here, GameStop had a good
holiday quarter, especially online.
And also they have the backing now of Ryan Cohen, cofounder at Chewy, which is a wildly successful online pet store retailer. So there is some new
blood coming in that could shake up GameStop even though GameStop is closing lots of brick and mortar stores, the one in my neighborhood where
my son got this little guy for Christmas, it is closing.
QUEST: We will find him another one for next year. The point, though, for the -- look those stocks were being shorted, whether you love or hate the
shorts, the hedges were shorting the stock because they see a weakness in the company's balance sheet and they believe the share price is heading
down.
Now the reason for the short doesn't go away, because somebody decides to take them on.
LA MONICA: No, you are right. But all I'm saying though, is that the risk that a lot of short sellers face when they're going against these cult
stocks, is that you could have someone come in to try and save them, and I think that's what people are optimistic about with GameStop because you
have a new investor with online commerce chops.
AMC, for example, another heavily shorted stock, but it just raised nearly a billion dollars in funding to try and help them get through the pandemic.
I think the risk here with short sellers, and they're learning this the hard way, it is one thing when you can be an accounting guru, and you're
looking at the nitty-gritty and you see fraud like we had with Enron, like we have with WorldCom and Tyco.
When you short those stocks because you think that the bottom is about to fall out of their entire business because it's built on a house of cards,
that's one thing, but if you're just worried about valuations, people could have shorted Amazon in the late 90s because it was overvalued. It's now,
you know, more than trillion dollar market cap company.
Companies can remain expensive for a very long time and these Reddit investors seemingly can stay solvent a lot longer than the shorts can.
QUEST: Paul, thank you, Guru La Monica. Let's continue the speculations drawing comparisons. The infamous exploits of Jordan Belfort is known, of
course as the wolf, the original -- the real Wolf of Wall Street.
(BEGIN VIDEO CLIP)
LEONARDO DICAPRIO, ACTOR IN THE MOVIE "THE WOLF OF WALL STREET": The name of the company, Arrow Time International. It is a cutting edge high tech
firm out of the Midwest, awaiting imminent patent approval on a next generation of radar detectors that have both huge military and civilian
applications.
Now, right now, John, the stock trades over the counter at 10 cents a share. And by the way, John, our analyst indicator could go a heck of a lot
higher than that.
Hey, John, thank you for your vote of confidence. Welcome to the investor center. Bye-bye.
UNIDENTIFIED MALE: How did you [bleep] do that?
(END VIDEO CLIP)
QUEST: Yes, the real Jordan Belfort is with me. In 1990, he pled guilty to money laundering and securities fraud. After his release from prison, he
became a motivational speaker and wrote the memoir, inspiring the movie. Jordan, it is absolutely brilliant to have you on the program on this
particular story.
Now look, this -- the Reddit investors that the retail investors don't at first blush, not like they're doing anything illegal if not particularly
good, but what do you make of it? What does it smell like to you?
[15:10:04]
JORDAN BELFORT, AUTHOR, "WOLF OF WALL STREET": Well, if you could prove that they are actually colluding together, then it would be illegal. The
problem is, is that, you know, it's sort of this sort of weird, loose collusion where you know, one person is let's stick together and stay
strong. Theoretically, that's not legal. But I would doubt that the S.E.C. would try to make a case out of something like that.
I think more importantly, you know, what you have to realize here is that if just for the average person, that there's money to be made in this and
money to be lost massively on both sides. You'd be really, really careful.
I think you could actually makes a lot of money. And I have friends that are making a ton of money playing these hot, you know, Reddit stocks just
being pumped up. It's truly -- it's like a modified pumping dump. Because at the end of the day, it will most certainly go back down, because it's
not trading based on any rational fundamental value.
But you know, as you said, and your last guest pointed out, stocks can stay up for a long time until they come back down
QUEST: Right now, on that point, I mean, there's a reason why the professionals -- I'm using that with a small P and inverted commas, because
others would challenge that -- the hedge funds would short those stocks in a moment, for the time being, and yet, at the same time, these Reddits are
basically using nothing more than the force of persuasion, to get everybody else into the leaking boat.
BELFORT: So what happens is, the short sellers need to just be a lot more careful in this market. What happens is, just remember, every time the
market goes up, like GameStop goes up, it's going to get harder and harder to make that next move up, because the market cap eventually gets to a
point it is just not sustainable.
So at a certain point, you know, someone has got to be, you know, crossing out the people who are selling and moving on to the next one. So the
question really is, is what is the overall size like there -- it's almost like there is basket of these Reddit stocks, and a certain amount of buying
capital that's going to be spread over amongst these different five or six stocks.
There's no difference between one to the other, they're just all one in the same and the same way, the cryptos, they trade as a basket. They are
beginning the same thing.
So what has to happen is, eventually you'll find some equilibrium where it's basically the max amount of this sort of short term hot capital, it's
going to go into these five or eight or 10 Reddit stocks will sort of reach its peak, and it'll have to flow from one through to the next to the next.
And eventually, smart short sellers are going to be able to time this and say, you know, it, just simply -- it's reached the peak of what the
allowable capital is for all of these stocks together, you can start really making a lot of money.
And on the upside, if you're smart, you just kind of get into these things, when they first start making their run. So I think there's a lot of money
to be made. And I think you're right, there is certainly some loose sort of weird crime going on. But it's going to be a very tough one to prove, I
think.
QUEST: No, but the regulators may try to step in to stop it. Because I'm not suggesting widows and orphans get hurt in this because we are sort of
at a slightly more day trader professional, sort of extreme. But I do ask, so, what can and what do you think the regulators should do?
BELFORT: Well, let me say, you're right, by the way, because here's what's going to happen is that right now, it's not widows and orphans. But who do
you think the last people to eventually jump on the bandwagon are going to be? It's going to be the widows and orphans of the unprofessional that keep
hearing about and hearing about it and maybe the ones that end up getting in at the end of the party and the professional day traders will move on to
the next one.
So that's -- there are going to be some massive victims in this and most certainly, I think that, frankly, it is already starting, I think some of
the brokerage firms like Ameritrade and others have suspended their own internal trading in some of these, you know, ultra-hot stocks.
And ultimately, I would not be the least bit surprised if the S.E.C., or the N.E.C. passes some sort of rules about the ability of people to be able
to manipulate these stocks, because here's what happens, Richard.
QUEST: Yes. Sorry, now you tell me what happens, you go ahead. You tell me.
BELFORT: Well, what happens, the wheels of -- the S.E.C. -- when I was doing what I was doing, I was always trying to stay one step at the next
way to get around the laws. How do you do what you're going to do? Well, that's what's happening right now.
And the SEC, and N.E.C. playing catch a ball, they're always trying to stop it. So eventually, they will do something here and they'll come up with
some laws or circuit breakers that don't allow this to happen. But that could take three to six months. It will eventually, I believe, stop and
should.
QUEST: Jordan, finally, I know you're under various restrictions and you can't trade, you can't do various things like this, that and the other. So
I'm aware of all of that. But when you saw this, did it get the blood racing? You know, did you for split second --
BELFORT: No, I am allowed to trade. I could trade as much as I want. I can trade all I want, I just can't own a brokerage firm.
The truth is, is that I have not been trading. I have friends trading it, and I was tempted but here's the thing. I just know, it's got to be more of
a full time job. And of course, if you're on, let's say, catching a falling knife when things start to go the wrong way.
So I believe that you can make money, but you better be watching this all day long, and have the stomach to play both sides of the equation, and I'm
just not at this point in my life. I don't want to or really care to do that. But I could, I just -- I choose not to.
[15:15:32]
QUEST: Very wise. Very wise. The mere thought of it. I look at this and I think, Richard, just do a bit -- just have a go, and then I thought as you
say, it's catching the knife. Jordan, thank you so much.
BELFORT: My pleasure.
QUEST: I appreciate it. It's great to have you. Thank you. Jordan Belfort joined us there. Coming up next, we'll turn to vaccines, the escalating war
of words between the E.U. and AstraZeneca and they're fighting over the delivery of COVID-19 vaccines, in a moment.
(COMMERCIAL BREAK)
QUEST: Let's continue our boxing analogy from earlier. The gloves are off. The E.U. is accusing AstraZeneca of not meeting its moral, societal and
contractual responsibilities. European officials are seething over the company's inability to deliver COVID-19 vaccines as promised.
AstraZeneca's Chief Exec said the company is not contractually tied to a schedule and that the U.K. secured its supplies first. The U.S. Health
Commissioner says the company can't play favorites.
(BEGIN VIDEO CLIP)
STELLA KYRIAKIDES, E.U. HEALTH COMMISSIONER: Not being able to ensure manufacturing capacity is against the letter and the spirit of our
agreement. We reject the logic of first come first served. That may work at the neighborhood butcher's but not in contracts and not in our advanced
purchase agreements.
(END VIDEO CLIP)
QUEST: Cyril Vanier is following the story from Paris. I don't understand this. If the U.K. was first and has the contract first, then -- and there
are production problems, then first come first serve.
CYRIL VANIER, CNN CORRESPONDENT: Well, Richard, good evening. First of all, I don't believe that you don't understand it. But I totally understand your
question. Look, there are two competing logics here.
The European Union is saying we have a country contract with AstraZeneca, which is true, Richard. They have pre ordered 300 million doses from the
pharmaceutical giant with an option for 100 million more and that extraordinary amount of money that they put on the table months ago back
last year was aimed at helping AstraZeneca not only develop a vaccine, which they did, but also pre-developed their production facilities so that
they would be able to roll out the required number of doses on day one.
[15:20:26]
VANIER: And day one, Richard, might be in 48 hours, because the AstraZeneca vaccine is expected to be approved here in the European Union on Friday,
and so Europeans wanted the rollout of the doses to start immediately. That is the European logic.
The AstraZeneca logic is they're thinking in silos. They're saying, look, we have two contracts, one of them was signed before the other, and that's
the contract that AstraZeneca signed with the U.K. for delivery there.
Of course, the elephant in the room is that the U.K. is no longer part of the E.U., so there are two separate worlds now. And AstraZeneca is saying,
we have different supply chains. We supply the U.K. with our production sites in the U.K., we supply Europe with our production sites in Europe.
The problem that we have with production right now is that a European plants, and that is why we have a delay for the Europeans and not for the
British that they have been supplying at scale and at speed for several weeks now -- Richard.
QUEST: All right, Cyril, but that doesn't answer the problem that there is not enough vaccine to go round at the moment, not just because of demand,
but also because of production problems and changing of factories and all sorts of things.
So what -- I mean, in its own way, the E.U. and the U.K. are both doing vaccine nationalism, and pretending the other one is really doing it.
VANIER: Absolutely, Richard. You and I were talking on air around the time when the Brexit deal was struck with the Europeans. And I remember telling
you at that time that despite all the talk about them, having this deep lasting friendship between the two sides, and that they would act as
allies, I told you that they were now rivals and that their friendship would be tested sooner rather than later and that is what is happening now.
Because the E.U. is imposing a logic whereby every dose that is manufactured in the U.K. and going to Britons are doses that are not going
to Europeans. So in other words, in the E.U.'s logic if you're saving British lives, those are lives in Europe that are not being saved. And that
is -- you know, that question was asked tangentially to Boris Johnson today during his press conference, he did not address it at all.
He gave an answer on COVAX, which is a mechanism destined to provide vaccines to poor countries. And I suspect there's a reason Boris Johnson
doesn't really want to get into this debate, it is because right now, he has a win-win.
He is being supplied with the doses of AstraZeneca vaccine that are made in the U.K. and the U.K. is also receiving doses of the Pfizer vaccine that
are made in Europe, Richard. So it's a win-win for the Britons at the moment.
QUEST: Cyril, thank you, in Paris. The Biden administration's COVID team is pledging full transparency with its response earlier today. They held a
virtual public briefing for the first time.
The President's advisers said they were working as fast as possible to speed up vaccinations with this warning.
(BEGIN VIDEO CLIP)
ANDY SLAVITT, SENIOR ADVISER TO THE WHITE HOUSE: We are taking action to increase supply and increase capacity. But even so, it will be months
before everyone who wants a vaccine will be able to get one.
(END VIDEO CLIP)
QUEST: Now, President Biden says he hopes to get more Americans, 300 million people vaccinated by the end of the summer. That means the White
House Taskforce is promising to increase distribution by more than 15 percent immediately.
The President announced plans to buy 200 million more doses of the Pfizer and Moderna vaccines, the AstraZeneca has not been approved yet.
Michael Osterholm is an infectious disease expert who served on the President's COVID Advisory Board during the transition. He's with me now
from Minneapolis.
This is a real mess. I mean, first of all, you hear what's happening in the United States, not enough vaccines, the number is going up in terms of how
to go -- then you hear what's going on in Europe with AstraZeneca. Where does this play out, do you think?
MICHAEL OSTERHOLM, DIRECTOR FOR INFECTIOUS DISEASE RESEARCH AND POLICY AT THE UNIVERSITY OF MINNESOTA: Well, first of all, it shouldn't be a surprise
that everyone wants their vaccine right now. And when I say everyone, I mean those who clearly want to get a dose and we just don't have enough
production.
We didn't set out clear expectations to the public to say over the course of X number of weeks to months, this is how much we can produce. This is
the order in which we are going to recommend people get it and why. And I think you are beginning to see that now in the United States.
Clearly, over the course of the last several days, the White House has been extremely transparent. They've actually now even given states the
information they need to know three weeks in advance of how much vaccine will be coming, but it's going to be far short of what people want right
now and we just have to adjust our expectations accordingly.
[15:25:10]
QUEST: Michael, one thing puzzles me, which is the situation in the United States, again, vis-a-vis Europe. In Europe, countries like the U.K. are in
total lockdown for many more weeks to come and the numbers are still very high. Same with Germany, same in France.
And yet I look in the United States, New York is planning to lift some restrictions and maybe start inside dining again. There hasn't -- there
doesn't seem to be any -- California has lifted its lockdown. Why is that? I mean, what's going on? Why is Europe seemingly so much worse at the
moment than the United States in terms of doing what it's doing?
OSTERHOLM: Well, Richard is actually a combination of factors, but let me just say right now Europe is experiencing a real challenge with his new
virus variant, B-1-1-7, or the U.K. variant as it has been called. This is clearly causing a big increase in the transmission of the virus and the
number of cases. We have yet to see that take off in the United States, but I'm certain we're going to.
And I think, unfortunately, as the case numbers in the United States have dropped down from 300,000 new cases reported today to 150,000 cases
reported a day which in many people's minds seems a big success. I'm sitting here saying, oh, my, we still have a baseline of 150,000 cases
reported a day, that's all going to change in the weeks ahead when that same variant virus start spreading widespread in the United States, we're
going to see cases, I think, far exceed anything we've had to date.
In a sense, we are really just entering the darkest days of the pandemic and then we'll go back all over again, put in place these kinds of actions.
And it just reminds me, of someone who is trying to pump the brakes in their car only after they wrap it around the tree. We seem to be pretty
good in this country of doing that.
QUEST: Michael, a lot of people myself included, find it hard to accept, you know that when things are looking better, you're telling me they're
going to get a great deal worse, at the same time, as the vaccinations, I would have thought would have taken some of the pressure off the worst
cases.
OSTERHOLM: The vaccines will not take the pressure off. We're not in a race with vaccines and the virus right now. We just don't have enough vaccine
material to make a difference at this time. By next summer, yes.
But think about this, if we actually deliver on a hundred million doses of vaccine, not in a hundred days, but in 65 days after the Inauguration. If
you look at that that means 33 million Americans will get two doses of vaccine, 33 million Americans will get one dose of vaccine.
And if you consider how effective the vaccines would be in both instances, that's only going to protect about 12 percent of our population that is
far, far below what is going to have a material and major impact on the transmission of the new variant virus and how many cases might occur.
So yes, vaccines are critical. But we have to understand this is a long run issue. This is not going to happen overnight. And the public however, I
understand I'm part of that wants that to end overnight, but it's not going to.
QUEST: Michael, we will talk again as this goes on and I know you don't want to be able to -- I do know you don't want to say I told you so. But we
will talk again to see exactly to gauge where things are. Thank you. I appreciate your time tonight.
OSTERHOLM: Thank you very much.
QUEST: Thank you. It just got a lot more expensive for some travelers to arrive in the United Kingdom or it will soon.
The U.K. is requiring hotel quarantine for certain arrivals. It's quite a small number. The travelers themselves pay the bill. We will explain after
the break.
This is QUEST MEANS BUSINESS. Good evening.
(COMMERCIAL BREAK)
[15:30:00]
QUEST: Hello, I'm Richard Quest. There's more QUEST MEANS BUSINESS in just a moment.
New COVID restrictions mean your next trip to the U.K. could cost you more than $2,000 to pay for your 10 days in a hotel in quarantine.
And the chief executive of Edelman tells me how misinformation, instability and a global health crisis are eroding public trust.
As you and I continue tonight, of course, this is CNN. And here, the facts always come first.
President Biden's ordering a halt to new oil and natural gas leases on U.S. federal land. One of several executive actions he took today to combat
climate change.
The president says protecting the environment can lead to growth in clean energy jobs.
The New York governor's lifting some COVID-19 restrictions as infection rates decline. Andrew Cuomo says the holiday surge is now over and that by
the end of this week he'll have a plan for opening struggling New York City restaurants.
Brazil's supreme court is investigating the country's health minster as the public health disaster in Manaus continues to spiral. The shortage of
oxygen there has coincided with a surge in cases. And that's led to dozens of deaths.
The U.K.'s imposed tough new COVID restrictions. It will require some travelers to quarantine for ten days in an hotel at their own expense.
Prime Minister Boris Johnson said the requirement applies to arrivals from several high-risk countries including South Africa and Portugal.
(BEGIN VIDEO CLIP)
BORIS JOHNSON, BRITISH PRIME MINISTER: In order to reduce the risk posed by U.K. nationals and residents returning home from these countries, I can
announce that we will require all such arrivals who cannot be refused entry to isolate in government-provided accommodation such as hotels for 10 days
without exception.
They will be met at the airport and transported directly into quarantine.
(END VIDEO CLIP)
QUEST: Anna Stewart is at Heathrow Airport. Anna, this doesn't -- from those countries involved there are existing travel bans so nationals of
that country won't be able to go anyway.
This is quite restricted. It's U.K. nationals and those with right of abode, right to reside, in Britain who can't be stopped. Now they have to
go into quarantine.
Are we talking many people?
ANNA STEWART, CNN REPORTER: No, Richard, I don't think we are. I think we're talking about yes, as you said British citizens who are already there
or have to travel for some reason or diplomats perhaps, you may have some exceptions.
But 30 countries -- but, as you say, 30 countries that are already on the travel ban list and have been for a few weeks now.
This is a policy designed, of course, to stop people from countries of high levels of coronavirus entering the U.K but also, critically, some of the
variants which could jeopardize the vaccine rollout.
[15:35:00]
However, some of these variants have been identified in countries not on this list. And, in addition to that, as many people point out, some
countries don't have the gene sequencing services of others so perhaps don't even know whether these variants are spreading in their countries
anyway.
There's lots of criticism here, not least from some of the other nations of the U.K. Scotland's first minister, Nicola Sturgeon, saying her measures do
not go far enough. She will implement them as the U.K. is doing it right now but she may go further. She wants the U.K. to go further to make this
actually effective.
But, of course, Richard, if you consider a blanket hotel quarantine across the board but all arrivals into the U.K., well currently that would be
between 8,000 and 10,000 people a day.
QUEST: Simply not realistic in those sort of numbers. Can't compare it to, say, Australia or Hong Kong or anything like that.
Anna Stewart, thank you.
The hospitality industry says it has the capacity to help with the new restrictions in the U.K. and businesses have to put plans in place to
ensure venues are safe.
The international hotel group, Accor, has issued a statement.
"Our hotels stand ready to support the government's call for quarantine in order to enable safe travel for Brits and international tourists in these
challenging times."
Sebastien Bazin is the chairman and CEO of Accor. Sebastian is with me from Paris.
Now good evening to you, sir.
The role that the hotels play -- you say that you'll be able to accommodate and to take part. What are your plans?
SEBASTIEN BAZIN, CHAIRMAN & CEO, ACCOR: Well, the plan is to basically replicate with England what Accor has done in Australia and China and
Singapore. It exists elsewhere.
So we have empty rooms, we might as well use them. So anything a hospitality group like us can do to slow down the epidemic and help
facilitating return to business, Accor will be the guy.
With one caveat. We want to make sure that as much as we have to take care of our guests we have to take care of the teams of Accor to make sure they
as well protected. Which should be the case, by --
QUEST: Right. But there is a difficulty isn't there in this. To try and balance what's right and what's necessary -- at a time when, of course, the
hotel industry is on its knees in many places.
I'm not suggesting you would use this just as a way of making up the revenue but it is a factor.
BAZIN: No. And I guess -- there's no compromise here. Our life is to serve and welcome people and Accor has been there for the last nine months
welcoming nurses, doctors, firemen, vulnerable people. This is our job, irrespective of making money in this debacle.
So whatever we can to help authorities to win that battle Accor will be there with safe protocols -- no, there's no hesitation one minute.
QUEST: And if we look at how you're now moving forward. You've carried on with a lot of deals in the sense of integrating -- Ennismore, you've got
Hoxton, you've got (inaudible) -- there's a whole variety of things that is ready for when things get better.
Are you putting in play some plans now hoping for -- that there will be a better summer?
BAZIN: Richard, I put the Eiffel Tower behind me just to make sure that you guys don't forget that Paris is a wonderful place.
So, yes, of course it's going to get better. The hospitality industry is still a blessed industry. We're going through difficult times but you have
to be prepared for the rebound, you have to anticipate clients' changing behavior.
And part of it is the client of tomorrow is going to be looking for better fulfillment, better experience, unique properties, greater design.
And Accor decided -- actually five years ago it has nothing to do with the pandemic --
QUEST: Right.
BAZIN: -- is to go much faster and much stronger when it comes to unique lifestyle experiences.
QUEST: And on that point, how far do you think the changes we've seen are permanent --
BAZIN: Huge.
QUEST: -- versus they'll be reversed when in 18 months, two years when it's behind us?
BAZIN: No, I think it's -- a lot of thing is permanent. This desire for something less commoditized and more unique, that would be permanent for
the next two or three decades.
Business, international travel, when it comes to internal meetings from the same company from one side to the other, that will slow down because people
will use digital tools.
Anything which is international business travel we need to seduce, charm and get a contract that will come back as fast as it was in 2019.
So it's going to be different behaviors. But don't bet against the hospitality sector because it is there to survive. And we're probably going
to be in better behavior with the guests --
QUEST: Right.
BAZIN: -- probably more human interaction. And then greater and better product.
[15:40:00]
QUEST: Never bet against. And the idea of seducing and charming, there's a thought to spur us on. Thank you, sir, I appreciate your time. Good to see
you as always, Sebastian.
BAZIN: Thank you, Richard. Bye.
QUEST: Spurred on by the pandemic, digital transformations are shaking up the travel industry. In Dubai, one startup is trying to make exploring
cities more autonomous.
(BEGIN VIDEOTAPE)
ANNA STEWART, NARRATOR: Digital tour guides, fully personalized itineraries and blogging. Travel is becoming digitized and Dubai-based tech
entrepreneur, Fabian Dagostin, is seeing a gap in the market.
FABIAN DAGOSTIN, FOUNDER, STREET LIFE: The next big idea in the travel industry is autonomous travel. To be able to plan, book and navigate travel
experiences.
STEWART: Spurred on by the global pandemic, individual and small group travel is becoming more popular.
Dagostin believes tourists are looking for tailored and authentic experiences. He's developed Street Life, an app that allows users to create
their entire trip on their phones.
UNIDENTIFIED SPEAKER: Hi, everyone. I'm Zara (ph).
STEWART: Local bloggers and Instagram influencers like Zara Emira (ph) can feed high-quality tools of unexplored shops and public places, sharing
their local experiences.
Users can watch and choose the places they want to visit creating a customized itinerary before starting their physical journey.
DAGOSTIN: You have to imagine it like a TikTok for travel where you can swipe up and down between different tours, bookmark the places you like,
create your own tours and book Careems and ubers to be able to get from one place to the next.
STEWART: Digital tools such as virtual reality, A.I. and algorithms are increasingly being adopted in the travel industry. This tech will add up to
$305 billion of value to the travel industry by 2025, according to research by the World Economic Forum.
The pandemic is forcing cities to showcase their landmarks through virtual tours and interactive experiences. But Dagostin believes advances in
technology will complement the physical travel experience.
DAGOSTIN: Always will have to have the physical experience. So we're building the technology to fully personalize it.
STEWART: His ambitions go beyond Dubai. Street Life will launch shortly in Zurich and Berlin. And, as more travel restrictions will be lifted,
Dagostin has plans to expand to other locations.
Combining technology with physical travel, Dagostin's Street Life is aiming to become the digital go-to for autonomous, personalized and seamless
travel.
Anna Stewart, CNN.
[15:45:00]
(COMMERCIAL BREAK)
QUEST: Misinformation, instability and the global health economic crisis. Put them all together and you get widespread mistrust -- remember those
words. Widespread mistrust in the world's institutions.
Every time at this time normally at the mountain in Davos we talk about Edelman's trust barometer. It's a stalwart of our Januarys.
Now it's reached the point where businesses are trusted more than NGOs, government and perhaps, not surprising, the media.
Isolate the last eight months and all four categories are down.
Richard Edelman is the chief executive of Edelman. He's with me now.
Richard, I'm sorry we're not up a mountain freezing ourselves up (ph) as we try and discuss this.
But when I look at this, trust in everybody is down. Should we be surprised?
RICHARD EDELMAN, CEO, EDELMAN: So we had a peak in trust in May when it seemed that government was going to be able to solve the COVID crisis. It
was like World War II and we relied on the big government.
And what's happened in the subsequent months is deep disappointment. So government trust has declined.
Business declined a little bit but more or less business is the clearwater favorite at the moment. And that's because they've delivered the vaccines,
they've also gotten people back to work safely.
And the next months, particularly as there's a new administration in the States and there's a lot of to-ing and fro-ing about who's going to get
vaccines among government, business is going to be left to its own devices on a lot of these issues.
And it's the time for CEOs to stand up, speak up and be heard.
QUEST: OK. So what's the cost to it all -- and I don't mean money wise. If we have trust -- you and I have been talking about the trust barometer for
a good while. And trust always seems to ebb and flow and some are up and some are down -- admittedly, government tends to be more on the down side
at times. But what's the real effect of us losing trust?
EDELMAN: I think it has a major effect on employees. You're not going to get the best and brightest to work for your companies unless they trust
what you're doing. And also, Richard, it has a now effect on consumers, they're just not going to buy your brands.
The key moment is that trust has moved local. It's in my employer, my CEO, even my company's publication more than in mainstream media.
So there's a desperate request for quality information from my company. And that's a big new mandate for business.
QUEST: Business itself -- and on this program we frequently talk about the CEOs, the moral barometer. Do you think that rubric still stands? Do you
think that CEOs and businesses -- they performed well in the early parts of the pandemic but now as we move into this much more difficult part, do you
think that holds?
EDELMAN: Well, for example, this week Alan Jope of Unilever unveiled a plan in which he called for a living wage not just across Unilever's vast number
of employees but the entire supply chain and retail network. And so it's going to affect 3 million employees around the world.
That's the next step for business. To get involved in upskilling, fair wages and also the sustainability challenges beyond the vaccine.
QUEST: But as you look at your clients, the one thing we know is -- we can use the word accelerate -- everything's been accelerated, our use of
technology accelerated, our work from home, the way we interact with each other, everything has been accelerated.
Where do you see, with your clients, that acceleration moving next? Because I can see an argument that says people do go back into the workplace,
people do sort of retreat back to where they were.
EDELMAN: I think on systemic racism, for example, business is really taking the ball. Example is Yum! Brands where they've got a fund now. If there's
an African-American or Hispanic who's running a restaurant and he wants to or she wants to apply for a franchise, Yum! will put up the capital and
have it mesh with a bank loan so that person can become a franchisee.
[15:50:00]
That's a major change in the ecosystem. And it really changes how an individual feels he or she can be treated if you're diverse.
Those sorts of things business must be on offense. It's time for action not just communications.
QUEST: You see, I worry about that. I think business is very good at talking a good talk. And as long as -- we talked about this last night on
this program -- as long as the bottom line holds up, they're happy to do the right thing.
Although Brian Moynihan who you'll know very well from Bank of America said when it comes to the ESGs, on this program he said last night it's about
doing the right thing regardless.
When people say why are you doing it? Because we are. And if you don't like it, we're going to do it anyway.
EDELMAN: So but --
QUEST: How do you inculcate that?
EDELMAN: So, Richard, Larry Fink has now sort of doubled down on the BlackRock commitment to ESG and he's insisting that companies show a plan
or then BlackRock's not going to invest in you. That's a big hammer.
The other hammer is -- you and I have talked about this -- the pyramid of authority of authority have been flipped upside down. The employees who
were on this part are demanding, and so are the consumers, an activist role by business.
And they'll give you trust and they'll also give you their employment and they'll buy -- they're belief-driven buyers. But they'll only do it if a
company stands up and doesn't just let all of this pass by.
QUEST: Right. Richard, we may not be up a mountain but we still had a good discussion. And I'm grateful that you've taken the time. I'll maybe see you
in Singapore in May, if not before or wherever (ph).
Thank you, sir. Keep well.
EDELMAN: Thank you.
QUEST: The markets, the markets were truly horrible today, absolutely awful. Down -- the worst of the day, give or take.
After the break, a "Profitable Moment".
(COMMERCIAL BREAK)
QUEST: Now afore ye go. The Fed chair, Jerome Powell, today giving his press conference after the FRMC meeting.
Rates stay obviously the same, the Q.E. stays the same.
But the Fed chair was asked about GameStop, he was asked multiple times during the monthly press conference and the central banker would not be
drawn on the wild swings in the market.
[15:55:00]
(BEGIN VIDEO CLIP)
JEROME POWELL, FEDERAL RESERVE CHAIR: The connection between low interest rates and asset values is probably something not as tight as people think
because of a lot of different factors are driving asset prices at any given time.
(END VIDEO CLIP)
QUEST: Well, that's a good way of telling us nothing. A lot of different factors are driving asset prices.
And so on the last few minutes of trade on Wall Street, what are those factors? U.S. stocks are on trend for the worst day, it is the worst day
since October.
You've got the Dow down two percent, the NASDAQ is off two -- well, you can see the numbers for yourself.
It is earnings, and earnings -- perhaps. It's the speculative trading that's drawn it. It's the fifth straight day off for the Dow as its losing
streak.
And the reason is, of course, people are unhappy for speculative trading over GameStop. Now GameStop is still on track to end the day more than
double where it did on Tuesday.
It's meteoric rise and all the risks it entails are factors dragging down the broader market.
The Democratic Senator Elizabeth Warren has released a statement saying she's neither shocked nor saddened at the sight of hedge funds losing money
over GameStop.
Remember this is a battle. The hedge funds shorted, the Reddit investors have come in to try and shore up. You take the two together, you end up
with a battle royale in the market at the moment in which the collateral damage would appear to be the rest of the market. And popping the bubble of
optimism that we've had so far.
Dow is off after good gains in recent days.
"Profitable Moment" this time after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment". So the U.K.'s doing a hotel quarantine for those passengers who have right of abode in the U.K.,
citizens and the like, but are coming from red countries.
And, look, hotels have been used before. They've been used in Australia, in New Zealand, Hong Kong has a hotel system for quarantining.
And there's some merit in it but I wonder if it isn't too little, too late. Shutting the stable door after the horse has well and truly bolted.
It's all designed, of course, to prevent against the new variants. So you've got South America, you've got Portugal, you've got those countries
and certain Southern African countries where the new variant is again prevalent.
But you have to ask what's the point? Because -- by the way, you can't circumnavigate by going through another country. The question is have you
been in one of those countries in the last ten 10 not where did you start your journey?
And that means, is this going to work? Well, I guess if you're the U.K. prime minister, you're going to do whatever you can. After all, 24 hours
ago, he had to announce 100,000 deaths from COVID.
And in the House of Commons today he said now was not the time to have the investigation on why the U.K.'s numbers were so much worse than any other
European country. There would be a time but that's not now.
So in those cases he has to do something. Scotland says it will do more.
I question the validity of the measures being taken at a time like this.
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.
Horrible day on the Dow. Down more than two percent.
The bell is ringing, the day is done.
END
