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Quest Means Business
AMC Warns Investors after Wild Volatility; White House Plan to Share First 25 Million Vaccine Doses Abroad; Brazilians Bang Pots in Protest during Bolsonaro Speech; Carney: We Will End Up with Digital Bank Currencies; U.S. Weekly Jobless Claims at New Pandemic-Era Low. Aired 3-4p ET
Aired June 03, 2021 - 15:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN BUSINESS HOST: An hour left on the Thursday trading session, and the Dow has pulled back from a 200-point loss. You can see the
sea of red, then you get a little smidge of -- well, a lot of green and sent it on a long period of green, and then we're back in the losses again,
but only by a short amount.
Anything could happen between now and 4:00 on the market. Whatever does happen, these are the main events we've been talking about today.
Caveat emptor, AMC tells its own investors you could lose everything on our stock.
The United States reveals which countries will get some of its spare vaccines.
And real anger in aviation as airline leaders with the U.K. as it tightens up its travel rules as green goes to amber for Portugal.
Live from New York, it is Thursday, it's June the 3rd. I'm Richard Quest, and I mean business.
If all that wasn't enough, on top of it all this hour, we are going to hear from Mark Carney, the former Bank of England Governor on whether or not
Bitcoin is a currency. It's not, he says.
Brazil's Tourism Minister on holding the Copa Cup, and the Chief Executive of Goodyear all on QUEST MEANS BUSINESS tonight.
We begin though with AMC, which is cashing in on a stunning comeback in its own stock price. Shares in the struggling movie chain dropped 30 percent
after it raised half a billion dollars in a share sale. Now you can see it has since recovered most of those losses, down 30 percent, now down just
five. But that price is reflecting an extraordinary 2,000 percent rise in the last few days.
The graph, the chart shows it, up like a rocket.
AMC was one of those companies hit hardest by the pandemic. At one point as you can see on the far left, over $2.00 a share, now $59.00 a share. Even
the company recognizes the situation is bizarre.
AMC has told investors, "We caution you against investing in our Class A common stock unless you are prepared to incur the risk of losing all or a
substantial portion of your investment."
AMC has been in the saddle of a powerful bull market, and the forces that go with it. It was a meme stock, part of that army of retail investors that
defended AMC against short sellers, and the company embraced its status as a meme, offering free perks like popcorn to shareholders.
Last weekend, box office numbers spurred the rally further. The numbers at the box office, the best of the pandemic, and then AMC took out the
problem, and said it would sell 11 million shares to raise some badly needed cash, and the bull started to buck. And buck, boy, it did, after
days of improbable gains, shares stumbled around a third before we saw this late rally.
Clare Sebastian is with me. It is, I mean, this is classically the bull stock that has thrown investors off, or not yet completely because it is
only down 30 percent.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Richard, it has been an extraordinary day, as you say down 30 percent on the news of that shares
sale, which by the way was completed in barely the time it takes to watch a feature film despite the company saying they would sell those shares from
time to time.
Rocketed back up 15 percent, and in the last hour, back down around 13 percent. So you know, I could be wrong about that in the time that it has
taken me to say that such is the volatility in this stock.
But the really interesting thing is how these retail investors have come in and they have been able to actually change the course of this company
without the interest from retail investors, which now own about 80 percent of AMC. They wouldn't have been to raise this capital. This was the second
shares sale so far this week, Richard.
They raised according to the CEO about $1.2 billion in new equity so far in this quarter. That will enable them to reinvest back in the business to try
to combat the falling numbers at movie theaters that we saw even before the pandemic as they compete with streaming, and try to bring about some kind
of renewal, frankly, against all the odds.
This was a company as you noted just a few months ago that was just on the verge of bankruptcy. So extraordinary how these traders have changed the
course of the company and how their changing behavior within the market, as well, Richard, you have to be very careful as the company noted to buy and
very careful what you short.
QUEST: Clare, I want to just split this into two things, please. Firstly, the company itself. I'm impressed that they've managed to -- they managed
to get the share sale done and out while the prices were so good. They put this together very quickly.
SEBASTIAN: They did, Richard, and the CEO has actually been very sort of vocal reaching out directly to these shareholders on the first share sale
this week, which was 8.5 million shares, which they sold to a hedge fund called Mudrick Capital. The CEO came out and he said, look, in our view, he
said on Twitter, this is not mindless delusion, but rather this is very smart raising of cash, so we can grow this company.
There was also, as you noted, the direct outreach to the shareholders through that portal that the company launched, the sort of popcorn
dividend, they have it called where people can get free perks for just self-certifying as shareholders.
He is trying to harness this not only to raise capital, but to build loyalty in hopes that this strange dynamic will stick around long enough
for the company to be able to use it to their advantage.
QUEST: Clare Sebastian, thank you. AMC, as we were talking raised more money today, nearly $600 million than the entire company was worth at the
start of the year. The market cap is roughly $30 billion, bigger than half the companies in the S&P, and it is worth as much as Best Buy, Delta Air
Lines, Tyson Foods, CBRE and Hess Corp.
Alicia Levine is the Chief Strategist at BNY Mellon Investment Management. I think -- look, I'm going to say it, I wish I had bought at $2.12 at the
beginning of the year. Even with -- I mean, we would all be doing well, but a price and a volatility like this does not make fundamental sense. I think
we can also agree on that.
ALICIA LEVINE, CHIEF STRATEGIST AND MANAGING DIRECTOR, BNY MELLON INVESTMENT MANAGEMENT: Great to see you again, Richard. Yes, I think we all
have that same feeling when thinking about these stock prices. But the truth is, there are fundamentals in play. And I think we know how this
What I find fascinating and what I think is great is that I think we are bringing in a new generation of investors. I'm very concerned that for the
last 10 years since the post-global financial crisis, we lost a whole generation of investors, and I think the excitement over this will bring
people in. So, I think that democratization is terrific.
The other thing it shows you is really the power of American capitalism. Let's face it, equities are the riskiest asset class. These companies that
we are talking about, these meme stocks were really on the other side of history and on the wrong side of the pandemic, and nevertheless they have
survived another day, raised capital well enough to transform their businesses. It's actually quite astounding and I applaud them.
QUEST: You've got to applaud Adam Aron, the CEO for the way he has ridden this bull. He must know, like you and I know that that price is going to
fall back either when the market falls out of favor or just because there is such a speculative bubble.
But to get a share offering out of the door at these prices to institutions, as well as individual investors is an achievement.
LEVINE: It is an achievement. It's very savvy, but it is also an understanding of where this business is going. This business needs capital
to survive another day and to transform. Because the world is going digital, not clearly, but as everyone is wanting to get in movie theaters
again, maybe a certain age will, but not everybody and it is very savvy.
I think that all these meme stocks that have seen their prices take off can use this as an example of where to go, how to use the markets in a way not
just to generate buzz, not just to get new investors, but also think about transforming the business.
Because in the end, you have to survive on fundamentals. You know, these stocks are now some of the largest cap weight in the Russell 2000. That's
going to be tough. That's going to be tough, so, you know, you need the fundamentals to catch up to where the prices are.
We've seen this before. It doesn't always end well. But for the moment, those who are there are having a great day.
QUEST: And now, you've summed up the argument. I am going to tell you the fundamentals have to catch up with the stock price. There's no way that can
happen on things like AMC. This is going to fall back. And, surely, whilst I agree with you that this is sort of American capitalism at its finest in
many ways, it is also going to leave some people nursing some very, very nasty losses when it does return.
LEVINE: Nasty losses and nasty losses in the retail sector and also possibly drawing this scrutiny of regulators. Because don't forget, this is
the second time, we had this in January, and then right after the insanity of those two weeks in January, we had the de-grossing of all the funds
across Wall Street where the S&P fell pretty quickly four to five percent, and it felt ugly, and it was over three days because there was concern
about too much exposure.
You're going to see some sort of echo effect from this. Hard to say what. You could see a de-grossing again because it seems so far in the past, back
in January, but here we are.
LEVINE: You know, in the end, these short stocks that are heavily shorted is not a great strategy. There is more risk in there than you would think
going in, and if you didn't learn the lesson the first time, you've certainly learned it the second time.
QUEST: Good to see you, Alicia, thank you. I appreciate it.
LEVINE: Thanks, Richard. Great to see you.
QUEST: Now, Brazil is gearing up for a kickoff in an international football tournament as COVID-19 is surging again. The tourism minister on the wisdom
of having the Copa Cup.
QUEST: The Biden administration has announced a plan to share at least 18 million COVID-19 vaccines with the rest of the world by the end of the
month. The White House says 75 percent will be shared with the COVAX program, and the rest directly with countries in need.
Now, the first round is to be distributed in 25 million doses and approximately six million of them go to Latin America and the Caribbean. A
further seven million earmarked for South and Southeast Asia, around five million doses will go to Africa.
The rest to neighbors, allies, and other countries that are in need. Kaitlan is with us, Kaitlan Collins at the White House.
How aware -- I mean, call me a cynic, call me, if you will, but are they going to use this in a strange sort of way as a bit of vaccine diplomacy,
vaccine geo-strategy as well?
KAITLAN COLLINS, CNN CHIEF WHITE HOUSE CORRESPONDENT: Well, they have been pretty clear, they say they are not expecting any political favors and
returns for where these vaccines are going. But I think obviously that is something that is a consideration here when you see places like China and
Russia handing out the vaccine to other countries throughout the world that are desperately in need of it.
And so, that is something it appears the White House is considering because if you look at how the structure is, yes, a majority of these are going to
COVAX, that international vaccine initiative. But the White House says that the U.S. does ultimately have a final say over where those vaccines are
going and when they are going there.
And then, of course, the rest of them, you note that 75 percent, the other 25 percent, those are decisions the U.S. is going to make unilaterally
about where they feel it is best to send these vaccines.
And if you look at where those other six million are going, in this case it's a lot of U.S. allies, of course, India, South Korea, Mexico, and
Canada as well. Those are places that are getting them because I think if you look at the way COVAX structures where they think the vaccines belong,
a lot of it has to do with population.
COLLINS: That has been a big discussion behind the scenes here before this announcement, Richard, where they were basically saying should we partner
with COVAX in deciding where this go? Should we do it on our own?
It ended up being a little bit of a combination of both.
QUEST: And which vaccines?
COLLINS: This is the Moderna vaccine, Johnson & Johnson, and Pfizer. This is not yet the AstraZeneca vaccines. That's why it's only these 25 million
numbers because, remember, President Biden said by July 4th, those 60 million AZ doses that are still sitting here in the U.S. would be cleared
and ready to go out throughout the globe, but they are still waiting on an F.D.A. safety and efficacy review. That hasn't yet happened.
So, they are not part of this, that AstraZeneca, which of course, that's a much larger number than the 25 million that will be going out. And so
that's certainly a big consideration that's also happening here at the White House.
QUEST: Kaitlan, thank you. Thank you.
Brazil is preparing to host the football tournament despite soaring COVID- 19 cases and slowing vaccinations. The country recorded 95,000 new cases on Wednesday. That's the second highest daily number of the pandemic.
[VIDEO CLIP PLAYS]
QUEST: Brazilians also banged pots during President Jair Bolsonaro's televised address. He appears undeterred by the protest announcing that
Copa America will be held in Brazil in less than two weeks' time.
Gilson Machado Neto is the Brazilian Tourism Minister. He joins me now. Minister, I hope you can hear me, and the connection is good. Minister, a
very straightforward question. Why are you hosting this tournament when your COVID numbers are so bad?
GILSON MACHADO NETO, BRAZILIAN TOURISM MINISTER: Well, our government is doing the job about the vaccines. We are the fourth country in the world in
the number of vaccines that has been distributed. We already distributed from today, a hundred million vaccine doses, and now we can build -- we can
produce the vaccine here in Brazil.
And right now, Brazil is happening, many tournaments of football, all of them, with no public, okay, and if you are against one tournament that
already is happening here. A South America tournament between the Brazilian teams that happens here called the Libertadores de America with more than a
hundred games between, there is no problem to have it here because it's not going to have any public inside.
If you -- all the people, all the players, all the people that are involved with it, they are going to be vaccinated. If you don't allow them to come,
you just say that you don't believe in the vaccine.
Then they will be PCR tested. If you don't believe in PCR test, you are against the games. If you are against these games, why are you not against
the other games with -- and all the extra people that are returning to Brazil at the same levels?
QUEST: Okay, the reason, of course, they say, is because you don't want -- you want to get your own people up to a level of vaccination so that there
is no risk for the mutations and the variations of the virus.
But I wonder, the experts say, and I'm quoting this morning's "New York Times." The experts say this is complete insanity to do what the President
NETO: Well, but why they don't say that's complete insanity with the other teams that are coming here from the Libertadores de America. Why? That is
happening at the same --
QUEST: They are probably not aware of it.
NETO: With more players involved with the same media companies that are coming here to cover it. But that's what the media is saying.
QUEST: Let us turn to your tourism industry. Let us turn to tourism, Minister, since that's the area that you do. What are you going to do to
rebuild confidence in your tourism industry?
NETO: Well, we are in a very new time for tourists after the pandemic. The world is searching for ecotourism and no country has the capacity of
ecotourism like Brazil does.
NETO: Brazil is the best place to invest. One is off of the profitable exchange rates for investors, and we are contracting many new things to
help like infrastructure like airports, and here in Brazil right now, we have a hundred hotels under development in our country.
So, the trade believes in Brazil in tourism. It is an investment of about more than $1 billion. We have for Americans, for Canadians, for Japanese,
for Australians. And these numbers, we are feeling the confidence in Brazil's business environment.
And our country's tourism potential, and Google said, it points to a strong increase in search for ecotourism. Right now, 54 of 100 searches in Google
for tourism is for ecotourism. And no one has the capacity for that. In Brazil, we have seven --
QUEST: We will have to leave it there. I'm grateful that you joined us tonight. Thank you, sir. We will talk more about Brazil, the line is not as
good as we had hoped and so we can't hear you as clearly as we would have wished, but we will indeed come back and talk more about this.
The Brazilian Tourism Minister there outlining the measures being taken by the country to restore tourism. But a sign of how precarious the tourism
picture is comes this evening from the United Kingdom.
Britain has drawn fury from the airline industry by taking Portugal off the so-called green list of approved destinations return from which does not
The government said it was worried about the Nepal variant spreading in Portugal, and it was one of the few countries that even made it onto the
Shares in airlines in Europe are down sharply. The Heathrow chief executive said it guaranteed another lost summer for the travel sector. EasyJet's CEO
said it would cut the U.K. off from the world.
Bianca is with me in London. Bianca, what's interesting is that Johan Lundgren of EasyJet, he doesn't say that there isn't a risk. He says that
it is a manageable risk, and it is that they didn't need to take this drastic action.
BIANCA NOBILO, CNN CORRESPONDENT: Yes. The EasyJet CEO and others have all complained as well about the lack of consultation. They've said in their
statement that there was a plan to discuss whether or not countries would be removed from the green list and that they would have more advanced
warning than what they had.
Now, next week these rules would apply from Tuesday. So it is a shock that is what one of the main refrains we've been hearing today. It's a shock.
It's not justified by the science, that's something else that the EasyJet CEO said, so furious statements from these companies.
Also pointing out that there are many countries in Europe where the incidents of COVID is quite low. On the face of it, if you look at
Portugal, they confirmed 700 coronavirus cases yesterday. The U.K. confirmed over 4,000. Now 5,000 today. So there does seem to be signs of
that exponential rise in cases here that scientists were warning about.
So that's why you've heard CEOs and others criticize the government's decision-making as illogical. But the government maintains that this is
what's necessary to protect the path to freedom on the 21st of June.
QUEST: No, but what Grant Shapps, the Minister said, as I read it, is, yes, but we're worried about, to use his words, not mine, the mutation from
Nepal making the India virus vaccine defeatable in the sense or would defeat the vaccine, and we're not prepared to take that risk. That's what
NOBILO: That is what he said. He asked people to be patient because they don't know yet whether or not that mutation on the so-called India variant
as you refer to it is going to cause vaccine failure. In fact, they are still trying to determine whether or not the vaccines are efficient enough
against the current so-called Indian variant in the U.K. which is now the dominant strain, over three-quarters of cases in Britain. There is about 70
to 80 percent increase of that variant even in the last week on the previous variant, which was more contagious than the first variant.
So obviously, they're trying to stem the tide at this exponential increase in cases. He also said there was just an uptick in cases in general in
Portugal, which is one of the reasons that the Transport Secretary wanted to put this further restriction in place.
QUEST: Bianca, thank you. Bianca Nobilo.
As QUEST MEANS BUSINESS continues tonight, Mark Carney, the former Governor of the Bank of England tells me a massive rewiring of the global economy is
underway, in a moment.
QUEST: Hello, I'm Richard Quest on QUEST MEANS BUSINESS tonight. The former Governor of the Bank of England, Mark Carney is going to tell me how the
pandemic has rewired the global economy and what that means for you and me.
The Chief Executive of Goodyear, the global supply shortage is undermining the tire company's recovery, which is very strong. He will tell us about
And before we get to any of it, this is CNN, and here on this network, the news always comes first.
Israel's Prime Minister Benjamin Netanyahu is attacking the new coalition that's on track to replace him. He is urging hard-line politicians to
defect. The centrist, Yair Lapid has managed to unite eight political parties to create a new government and must still be approved by
Parliament, and so far, no vote has been scheduled.
The head of Japan's coronavirus task force says that holding the Olympics now is not normal. He says hosting the Games this summer will have an
impact on infections in Japan. Organizers have said they do not plan to postpone the Games again.
French officials say no explosive device had been found on board an AirFrance flight that was evacuated on Thursday.
The airline says the flight originated in Chad and was escorted by a French Air Force fighter plane to Paris after an anonymous threat.
It's anybody's guess whether the Dow will close higher or lower today. Down heavily at the open and from much of it as you can see, bouncing around a
little bit in the green, then back into the red, and then a bit of green.
It's flat at the moment and we have 30 minutes left of trading with investors clearly looking for direction and looking forward to tomorrow's
U.S. job numbers, which will be a crucial number that could well decide the future in terms of -- well, the short term future for inflation.
Mark Carney tells me, for all of investors' worries about inflation, it is a good sign the economy's moving forward. The former Bank of England
governor says the pandemic has spurred a fundamental rewiring of the economy and that new policies will be necessary.
I spoke to him following the release of his new book, "Value(s)" and asked him what he made of the recent inflation fears.
MARK CARNEY, FORMER GOVERNOR, BANK OF ENGLAND: We've seen some shorter-term supply shocks in terms of supply bottlenecks. We know that issues with
chips and others that are flowing through to the manufacturing sector, particularly autos.
We're also seeing some frictions, though, in labor markets and one of the judgments my former colleagues at central banks are going to have to make
is whether those are temporary because the support mechanisms are still there, of whether they're more permanent.
But I would say in general, Richard, the combination of the strength of the initial bouncebacks, the scale of the stimulus that's still being provided
and the fact that we're seeing some of these supply frictions, if I can put it that way, suggest that we will be in a position where inflation returns
more firmly and policy will need to be adjusted.
And I'd underscore though, that that is a good scenario because that means that economies are moving forward.
QUEST: But, by your own admission in the book, you say, we're not going back to the pre-COVID economy.
CARNEY: That's right.
QUEST: And the acceleration of job losses, the preparation time that, perhaps we squandered for the fourth Industrial Revolution, that time of
preparation no longer exists. We're in it.
CARNEY: That's absolutely right. We've had this acceleration. So we have two big rewirings of our economy underway right now, the acceleration of
the digital revolution. And I don't think it's an overstatement to call it a revolution. That means -- that brings big restructuring.
It also, of course, brings big opportunity. I think one of the things we've learned is how distributed activity can be. I can be in Ottawa, be
connected to you. There's many examples.
So we will see activity distributed across our economies in a good way. That requires, you know, specific policies to make sure those
interconnections are there. So that can lean against the job loss.
But one of the points is -- and I think it's your -- the core of your question -- if we just let this unfurl, roll out, it will be like every
other industrial revolution, which leads initially to big spikes in inequality and large dislocation of jobs. We can't let that happen. That's
why we have to be deliberate.
QUEST: I guess many central bankers -- and you're a former central banker - - but many central bankers and former central bankers are concerned at the loss of -- control makes it sound like the Prince of Darkness but you know
what I mean -- loss of the ability to control the money supply, loss of the ability to control economies, if cryptocurrency takes on a life of its own.
CARNEY: Yes. I think -- I think the concerns are -- some of the concerns are pretty fundamental. The concerns are the use cases for some of these
currencies, for activities out of the formal financial sector through to money laundering, ransomware and other factors.
I mean this -- these are core use cases of some of these currencies, particularly bitcoin. That is a concern. It's a very legitimate concern.
Secondly, there's concern about resilience of the system and not just the crypto asset itself but the entire ecosystem, because you have to think
about how it works overall.
Thirdly, the fact is that, as part of the system, these ultimately reconnect to the formal financial system. So in the end, it's about the
resilience of the formal financial system.
Look, there is learnings to be taken from crypto. There are areas, where, as I say, distributive finance could be quite effective. But in the end, my
judgment, very much rooted in values, rooted in history, rooted in what people want, is that we will end up with central bank digital currencies
that are programmable themselves.
And the key is that that is done in a way that improves competition, improves the effectiveness of the financial system.
QUEST: In reviewing where you've been and looking forward to what you're doing now, what is your biggest concern?
I mean, you have sat at the top table of international economics and finance for -- I was going to say decades but that ages both of us, since
we're sort of very similarly aged. But you've sat at the top table.
QUEST: What worries you now?
CARNEY: What worries me immediately -- and this won't surprise you because it's staring us in the face -- is COVID. And it's COVID globally. The
importance -- we all know it's -- here's another line that isn't a slogan, it's a reality. It's not over anywhere till it's over everywhere.
And are we doing enough?
The answer is no, we are not yet doing enough to ensure that COVID is rapidly addressed globally. We need to do more on that.
And then that links in to the ability for international cooperation on a host of other issues. Of course, as you know, Richard, I'm spending all my
time basically on climate change, helping the U.N., helping the U.K. presidency of COP26 working in terms of investing to help reduce emissions.
So that is my principal focus and it's the ultimate issue. But in the immediate term, it's the health issue around COVID and really wrestling it
to the ground.
QUEST: As we continue, continuing with the economy, the Chamber of Commerce is warning of an emergency labor shortage in the United States. Where this
might be and how with the chief executive of Goodyear in a moment.
QUEST: Signs the U.S. recovery is gathering speed, initial jobless claims fell below 400,000 for the first time in the pandemic. Companies also had
nearly 980,000, nearly a million workers, in May. It's the best gain in a year.
Still, economists are worrying about the shortage of labor as some workers remain hesitant to rejoin the workforce. Key production material shortages
of things like microchips and rubber are also weighing on many companies.
Richard Kramer is the CEO of Goodyear, joining me via Skype in Ohio.
Richard, it is good to have you, sir, thank you.
So shortages, who would have thought, who would have thought, a year ago, we would now be complaining about shortages of labor, shortages of chips,
shortages of commodities and raw materials?
How are you handling these shortages?
RICHARD KRAMER, CEO, GOODYEAR: Well, Richard, first of all, I have to agree with you but I want to say what a pleasure it is to be with you. I've been
traveling around the world a long time. I've seen your pieces for a long time. It's just great to be here with you. So thanks for having me and keep
up the good work.
QUEST: Thank you.
KRAMER: Listen, I think you're correct.
KRAMER: I think what we've experienced is demand really snapping back much greater than we thought it would. And as a result, you're seeing shortages
of a lot of products out there.
I heard you mention earlier, chips for the OEs, whether it's getting raw materials for our tires, I think is the consequences of inventories going
down so low, is everybody went to cash in the midst of the pandemic. We're seeing the results of that in terms of rebuilding inventories right now.
And it's certainly turning up in the shortage of some of the materials. But we've -- we're working our way through. We've planned for a lot of this.
And I'm happy to say our team has done a great job, keeping our factories full and trying to get those tires out to our customers.
QUEST: You see, what I find fascinating is, if I look at your numbers, I mean, you're beating '19; '20 was good. As car sales roar forward at all
levels, as the driving season arguably takes over from people who aren't preferring to fly, I don't -- I'm not suggesting that you're -- you know,
this is a good -- what's happened is good for you.
But I'm saying your numbers are strong and you're one of those that is putting in a very, very favorable performance.
KRAMER: Well, thank you, Richard, for saying that. And I do think that you're correct. I think we have a lot of pent-up demand out there. I can
tell you, in the U.S. right now, there's about 75 percent of the people out there are planning a road trip of some sort. About 65 percent of that is
really about 200 miles or more.
So I think we are certainly benefiting from the pent-up demand of people wanting to get out there and travel.
It also impacts us -- I have to say, in the airline industry we have a substantial share in the airline industry and we're seeing volumes come
back, as you suggest. In fact, in the U.S. in the second half of May, I think we're at about 70 percent capacity of where we were in 2019.
So you're absolutely right. It's coming back and we are benefiting from it. We're happy to do that.
QUEST: As a CEO of a major company with tens of thousands of employees, how difficult is it, running a company at the moment in such -- and I'm not
asking a political question; I'm asking sort of a, how do you manage a company in divisive times?
When I know the one thing you look for is certainty of policy and the one thing you ever got is certainty of policy and the divided -- I assume your
workforce is just as divided in the sense as everybody else.
KRAMER: Well, I think you hit on a really good point. You know, Richard, I might go back and maybe, by analogy, say the skills are what we're having
to do and I'm having to do now, really can be rooted back to what we did about a year ago.
You know, we all got ready for COVID in a similar way of closing factories, certainly watching out for our people and we all, I think as industries, as
business, as journalists, everyone worked very well through that.
But I think what we learned is really, when we looked at where we were a year ago, nobody knew what was ahead of us. It was the ultimate in not
knowing what was coming. And, therefore, it really challenged us as individuals and teams and companies to really rely on our resiliency and
agility to deal with the unknown that's ahead of us.
And I think the key for us is to take that and deal with all these uncertainties we have every day and use that agility and resiliency to work
through problems we might not have known that we've had.
QUEST: I always use a phrase with colleagues, don't reinvent the wheel when we're doing something, because people always look -- but you really do
reinvent the wheel on a daily basis in a sense of your tires.
So tell me, sir, I look at a tire and I think, all right, it's rubber, it goes 'round, it's got (INAUDIBLE), it's got this, that and the other and,
hopefully, it's fuel-efficient.
What is the one major development that you are expecting in terms of tires in the next 10 years?
KRAMER: You know, it's actually similar to what I know you've been talking about, Richard. It's this new mobility ecosystem that's developing and how,
what we might refer to as the intelligent tire fits into that.
So in addition to doing all the things that you would expect that tire to do, we are continuing to be able to measure pressure and temperature but
also where in load and friction.
And when we take that real-time data off the road, we can, again, real-time put it into driving systems of vehicles, AV vehicles or semi-autonomous
vehicles, and improve the safety and riding and handling of that car.
That has tremendous application as we think about where transportation is moving. And as we know, whether there's a driver behind that wheel or not,
the tires aren't going anywhere. So their role is arguably going to be even more important as we think about where mobility is going.
QUEST: Richard Kramer, the CEO of Goodyear, who is not reinventing the wheel.
QUEST: But is reinventing the wheel, if you see what I mean. Good to have you, sir. We'll talk more again. (INAUDIBLE) moves on. Thank you.
We're going to stay with automobiles. Isuzu Motors in South Africa has named its first Black CEO. CNN's Eleni Giokos talked to Billy Tom about
what it means to be first and what he believes Africans bring to the auto components industry.
ELENI GIOKOS, CNNMONEY CORRESPONDENT: You've been in the job for now almost a year as CEO. And it's -- what is also shocking is that you're the first
Black person to hold this executive role of international OEM in Africa.
Why do you think it's taken this long?
BILLY TOM, CEO, ISUZU MOTORS: Well, first of all, to answer your question, I think the challenge I have myself -- and I'm always keeping myself honest
-- is to say being the first Black CEO, you become the poster child for this.
But what poster child do you want to be?
Because you also want to create and position yourself so that people become more aspirational in moving and fulfilling their roles going forward.
GIOKOS: South Africa's had over a hundred years in experiencing with assembly and then eventually the component industry started growing.
But how do we speed that up now today in the African context?
TOM: You can't just treat South Africa as one country (ph). You've got to look at the economic clusters. And you've got Sadek (ph) where South Africa
operates, you've got East Africa, West Africa. Your approach needs to be by economic plus (ph). (INAUDIBLE) developmental way and then grow your scale.
GIOKOS: What is the starting point when you've going into such a new territory, where the automotive sector is starting from zero?
TOM: You need to build scale first. So what you do is you start with setting up (INAUDIBLE), which is a light assembly (ph). The scale is very
important. Because what you want to avoid is to have to build factories in a few years down the line you close them because there's no demand.
So you want to build scale and ensure that the numbers increase. It's critical that we pass our learnings because my view is, Africans need to
take the place of Africa (ph).
QUEST: Now when we return, back to work in fashion, the chief executive of L.L.Bean -- there he is -- joins me.
Look, I'm in a suit with a tie. He is comfortable, comfortable. We'll talk about why in a moment after the break. QUEST MEANS BUSINESS.
QUEST: Deutsche Bank is the latest Wall Street bank to tell its employees to be back in the office by the end of the summer, along with JPMorgan and
Goldman Sachs. Indeed, here at WarnerMedia, we've started bringing more and more people back into the office.
So now the question is, what's everybody going to wear?
The U.S. clothing giant L.L.Bean is hoping to capitalize on a shift in trends with back-to-work attire in fashion. Now after benefiting from a
big, booming casual wear and WFH, working from home, now the company says customers are restocking wardrobes with more formal attire.
Sales of items with buttons and zippers, of serge. Stephen Smith is the chief executive of L.L.Bean.
All right, Stephen, back to -- we had -- you and I talked a lot about working from home and all that. But back-to-work fashion, how is it going
to be reimagined, do you think?
STEPHEN SMITH, CEO, L.L.BEAN: Yes. Nice to see you again, Richard. And happy summer to you soon. I'll tell you actually, it's really interesting.
There are sort of three complex dynamics right now.
We are still seeing active apparel and gear and people getting outside. So stand-up paddleboards and bikes continue to be way ahead of 2019 and 2020
levels. Your previous guest from Goodyear mentioning we're definitely seeing people start to get ready to travel.
So we're seeing swimwear, duffle bags, which typically indicate sort of weekend travel and driving, you know, beach tents, things like that, as
people are starting to venture out.
And then for sure, people are starting to clean themselves up a bit. And whether it's returning to the office, going out to eat, going over to
friends' houses and, as you said, we've seen a fantastic pop of really simply things with buttons and zippers and men's polo shirts, men's chinos,
QUEST: OK, but how do you create a new fashion for those going back to the office, if we accept that the future will not be like the past, unless
you're like me and wear pinstripes, as we've talked about before?
But how do you generate a new fashion that is more casual and more in tune with a post-pandemic employee?
SMITH: You know, there's a lot of little hidden technologies in casual and work clothes right now. And I'd say people are dressing up but they're not
giving up on comfort, because they've had comfort for the past 15 months with the clothing.
So we are seeing our -- we are putting stretch into our oxfords, stretch into our denim, our chinos have stretch. So all of those you could have a
comfort waistband or you could have a little bit of stretch and flex. You know, your size may have changed a little bit through COVID.
SMITH: And that is allowing the clothes to be more comfortable, more active if you're doing things but also allows you to look cleaned up and ready to
go to work.
QUEST: And, Stephen, the competition is extraordinary in apparel. But some didn't make it. Obviously there were many who just couldn't make it. And
this balance between bricks and mortar and online has been accelerated hugely.
Do you still see a major role for going out shopping in a bricks and mortar?
SMITH: We do. It's really interesting. In 2020, the brands like ours and many others that were omnichannel and had really big ecommerce businesses,
we fared well, were able to flex channels from bricks and mortar to ecom.
What we're seeing right now in '21, each month, store traffic is growing dramatically. And we are very close to our 2019 bricks and mortar store
sales numbers. And traffic is only down 11 percent from 2019.
So people are, they want to get out of their houses. Products that we sell, a lot of our gear and a lot of our performance products, people want to
touch them, they want to feel them, they've been isolated for quite a long time. So we do still see a role for bricks and mortar.
I think you have to be very efficient, you have to be very technology- oriented so that you can meet a customer wherever they want to shop. But there absolutely is a role for bricks and mortar as well as ecom.
QUEST: We talked during the pandemic. I'm asking all CEOs this question.
What did you learn about yourself and your management style?
At the worst of it, when the money's going out faster than it's coming in and it's existential in some cases, Stephen Smith, what did Stephen Smith
learn about himself?
SMITH: That's a great question. We've talked a fair amount about sort of recapping the year. I'll give you, just for me personally, there happens to
be an alliteration.
SMITH: But I found myself being more decisive, more direct and more deliberate. And what I mean by that was, we as an executive team, we didn't
have -- we had imperfect data and we had urgency. And so we had to be incredibly decisive in the decisions that we needed to make in the moment.
There was no time to -- you know, we had to be clear and direct in our communication with our employees. And then I'll tell you, the big thing
that I learned, was energy management. There are moments in July and August, where I realized I could work 16 hours a day, seven days a week and
that was not going to be sustainable and became very deliberate about taking care of my mental and physical health while also trying to lead the
QUEST: Great to talk to you. We'll talk more as the year wears on and our summer wardrobe goes to winter and I see the latest in pinstripes. Thank
you, sir. Good to see you.
SMITH: Fantastic. Thank you, Richard. Nice to see you.
QUEST: Thank you.
And the market is -- oh, it's not doing much. No point wasting time talking about it. Instead, a profitable moment after the break.
QUEST: Tonight's profitable moment: a sharp, brutal reminder of the precariousness of travel and tourism, as the U.K. removes Portugal from the
green list, puts it on the amber list, meaning quarantining, test and release if you return.
The U.K. government said this might happen, but nobody thought it would. I think what's most interesting about the development is the way in which the
airlines have rounded on the U.K. government.
The CEO of easyJet says, with Portuguese rates similar to the U.K., it simply isn't justified by the science.
And, indeed, parts of the U.K. that has higher numbers than Portugal. Never mind the rights and wrongs in this case. It makes it clear that, as travel
starts, it's not going to be easy this summer.
I venture that we fooled ourselves with all the reopenings in all the European countries to thinking this might be easier than it's going to be.
Southeast Asia is still locked down in many cases. The United States still has issues.
Latin America, you heard from Brazil earlier. And so, my caution tonight is, travel and tourism, that backbone of the global economy, is still
somewhat -- well, greatly under pressure. You book your ticket at your own risk.
That's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. As the closing bell gets ready, whatever you're up to in the hours ahead, I
hope it's profitable. The bell is ringing, the Dow just barely off. Jake Tapper is next.