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Quest Means Business

Oil Prices Challenge COVID, Rising Demand; Sixt Plans New Robotaxi Service; Facebook Aims To Create 10,000 Jobs In The E.U.; Tributes for Colin Powell, Dead at 84; Energy, Shipping, Property Woes Slow China's GDP Growth; Bain Co-Chair on Rebuilding Boston Post-Pandemic. Aired 3-4p ET

Aired October 18, 2021 - 15:00:00   ET

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

[15:00:23]

PAULA NEWTON, CNN HOST: So early losses for U.S. stocks have now been erased and the Dow is up just slightly. You see it they're down now 60

points. Those are the markets and these are the main events.

China's growth takes a stumble as supply chain problems keep stacking up.

Facebook wants 10,000 Europeans to help it fill the metaverse. We will explain.

And the leadership lessons of Colin Powell. Washington mourns the death of a trail blazing figure.

Live from CNN Center. It's Monday, October the 18th. I'm Paula Newton and this is QUEST MEANS BUSINESS.

Good night, tonight China's economy is cooling off as the pandemic's aftershocks take their toll on a country that had avoided a full blown

recession. Now, shipping disruptions and energy crunch in the country's property crisis have all slowed China's growth to its slowest pace in a

year.

Now the economic headwinds weighed on European markets as well. They closed mostly lower as you see there, Zurich ended Monday barely in the green

though.

The Dow in the meantime dropped about 260 points at the open, but as you can see there, it has pared back those losses at some point today, as you

can see the little bits of green there, it did turn only slightly positive. I have to say though, most people waiting to see what happens to growth

prospects given what's going on with the Fed and with inflation.

Meantime, China says its third quarter GDP was up just 4.9 percent. Yes, it is growth, but not nearly what was expected compared to last year. Now,

that's less than economists were saying and it matches a low hit during the third quarter last year.

Kristie Lu Stout reports from Hong Kong.

(BEGIN VIDEOTAPE)

KRISTIE LU STOUT, CNN CORRESPONDENT: China's latest GDP report signals a clear slowdown in growth. Today, China announced its economy has grown 4.9

percent in the third quarter. That is a sharp slowdown from the 7.9 percent growth posted in the previous quarter.

China is confronting an array of economic challenges including a major energy crisis. The price of coal, that's China's main source of energy has

spiked to record highs leading to widespread power outages. That has forced the government to ration electricity in 20 provinces and forced some

factories to suspend production, moves that led to a sharp fall in industrial output.

China is also contending with another problem, the Evergrande debt crisis. The Hong Kong listed Evergrande is China's most indebted developer with

more than $300 billion worth of liabilities. The fate of Evergrande has triggered concern about systemic risks to the property sector, which

accounts for as much as 30 percent of China's GDP, which could seriously hurt the greater economy.

Now, before today's GDP data was released, several economists revised down their growth forecast for China, including Aiden Yao at AXA Investment

Managers.

AIDAN YAO, SENIOR EMERGING ASIA ECONOMIST, AXA INVESTMENT MANAGERS: I think that data suggests that there are multiple headwinds facing the

Chinese economy at the moment, some of which are temporary. Some of them could be more long lasting.

I think the key long term challenge is the housing market crack down.

STOUT: Last week, Chinese Premier Li Keqiang said despite slowing growth, China has the tools to cope with these challenges.

Kristie Lu stout, CNN, Hong Kong.

(END VIDEOTAPE)

NEWTON: Now, a globalized supply chain during a global pandemic is of course going to have global issues. There are the power shortages as we

were just talking about in China, the world's largest exporter of goods, remember. There are truck driver shortages further down the chain in places

like the U.S., Germany, and the U.K., which is of course also dealing with those troublesome post-Brexit realities.

And then there are the massive port backlogs, like those right here in the United States. President Biden has called for a 90-day sprint to try and

get caught up on the backlog. Now, the disruption is likely to get worse as many developed economies enter their busiest period -- Christmas is now

just 68 days away. What's happening in China now may affect what Americans can put under their Christmas trees, and even whether they can put up that

Christmas tree. David Culver has more.

(BEGIN VIDEOTAPE)

DAVID CULVER, CNN CORRESPONDENT (voice over): With Americans starting their holiday shopping, whether or not they tick off one essential item on

their list depends on what's happening thousands of miles away.

Here in Southern China, workers in this factory twist, pull, cut, and print together shredded plastic strips, creating branches for artificial

Christmas trees destined for the U.S.

[15:05:08]

CULVER (on camera): And these are the finished product. They do about 500 trees a day in this factory alone, then they're packaged up, and shipped

out. But in this case, they have nowhere to go.

CULVER (voice over): The reason --

JAMES LI, SUPPLIER FOR NATIONAL TREE COMPANY (through translator): Because many ships went to the United States this year, got stuck at the ports, and

did not return, so we are waiting for the ships to return.

Our factories goods are therefore staying here and cannot be shipped out.

CULVER (voice over): James Li says his factory has a backlog of about 150 containers worth about $3 million just waiting to be shipped out.

CULVER (on camera): It's led the company to rent storage space right here in China. This warehouse has two floors just like this packed with trees.

The inventory that normally this time of year would already be in the U.S., well ahead of Christmas.

CULVER (voice over): Li warns if the shipping backlog continues --

LI (through translator): Many consumers may not be able to buy Christmas trees at Christmas this year.

CULVER (voice over): CNN followed the jammed supply chain from Li's factory in China to where most of the goods usually end up, The National

Tree Company in New Jersey, a large wholesaler of holiday decor that sells to retailers like Target and Amazon.

The company's CEO Chris Butler, blames the ongoing global supply chain crisis for the shipping backlog.

CHRIS BUTLER, CEO, THE NATIONAL TREE COMPANY: So COVID created some of the shortages. COVID -- post-COVID has created this enormous post-COVID demand.

CULVER (voice over): It's in turn jamming up ports like these in Southern California with a recent flyover showing some 60 container ships sitting

anchored off the LA coast.

BUTLER: Every day is a fight to get containers who are fighting against toy manufacturers, electronic manufacturers, other manufacturers to get the

containers and we're having to pay a lot more for those containers.

CULVER (voice over): The company says it is paying 10 times more this year to bring their products across the ocean compared to last year.

BUTLER: Because of that, we're having to pass on some of those price increases to the consumer.

CULVER (voice over): The result -- a 20 to 25 percent increase in the price of artificial trees this year if you're lucky enough to still find

one by Thanksgiving.

David Culver, CNN, ?Kiautschou, China.

(END VIDEOTAPE)

NEWTON: We've looked at some of the costs in that report. Here's to give you a little indication. Shipping container costs alone have roughly

tripled this year, and that's according to one leading index.

Now while that has now curbed demand, there are still backlogs at so many ports. Ships are waiting along the U.S. West Coast to offload their cargo.

About a month ago, the Port of Long Beach launched a pilot program for 24- hour truck pickup to try and speed up deliveries amid the cargo surge.

Mario Cordero is the Executive Director of the Port of Long Beach in California, and he joins us now. You're responsible for all those ships we

just saw in the harbor. You were at the White House last week. I know you guys were already trying to move to this 24-hour setup in terms of

operations. How is it going? Give us an update.

MARIO CORDERO, EXECUTIVE DIRECTOR, PORT OF LONG BEACH, CALIFORNIA: Well, thank you, Paula, for the invitation. I think that clearly everyone agrees

that the supply chain needs transformational change. And for the Port of Long Beach, one of those changes is extended gates and this framework of

24/7.

So it's going to be a slow process, so to speak, because for that to happen, it's just not for the port to have extended gates or marine

terminal operators. Everybody in the supply chain has to collaborate -- truckers, warehouses, railroads. The good news, I think, our meetings at

the White House last week, there was a lot of very strong commitments. So I look forward to continue to make progress on this concept that again, even

after the crisis, we need to put in place.

NEWTON: We just saw a story where there were Christmas trees still stuck in China. Christmas comes once a year. I mean, do you think it will take a

significant amount of time for this to iron itself out?

CORDERO: Well, we're hoping there will be short-term measures that we can accomplish and of course, long-term objectives. But either way, I think as

we approach the holidays, I think the best advice I have for everyone is to do your holiday shopping early.

NEWTON: Yes, I mean, everybody has been saying that. Unfortunately, that just kind of plugs up the supply chains even more. How disruptive has all

of this been? And you're talking about, you know, short term changes, but you know, long term effects. How do you see this shaking out in the coming

months?

CORDERO: Well, I think in the coming months, number one, we mentioned the fact that we have about 62 vessels that are anchored, waiting to get into

the port of you know, Long Beach or Los Angeles. This is the nation's largest container port complex. So we hope to make progress with regard to

diminishing that number. I'm talking about the vessels that anchor as we approach the end of the year.

But this disruption of supply chain will continue through 2022, and again, this is not just a national issue, it is a global crisis that we have here

with the supply chain. So clearly what COVID brought up is ignited a whole question of what we need to do here, at least at the nation's largest port

complex to keep the containers moving, keep competitive and in that regard, that's where the 24/7 conversation is with regard to what we need to do.

[15:10:13]

CORDERO: And by the way, the Port of Long Beach, you know, we have referenced this concept, even prior to this crisis, given the volume of

trade that we have, that's not going to diminish even after this crisis.

NEWTON: Yes, and we hear you, and you have flagged this not just as a global crisis, but you know, you've said yourself that this was a national

crisis in the making. That was even before the pandemic. Look, we've discussed there's no quick fix, but what about that infrastructure bill,

that right now, many people hope will pass in Congress.

How much do you think that will change things here in the United States? Because you've discussed how those ports in the United States and the

supply chain in general is behind its Asian and European competitors.

CORDERO: Absolutely. I think the good news is the Biden administration has earmarked at least proposed $17 million for port authorities and the inland

waterways, I think that's a great step in the right direction in terms of the type of infrastructure we need to put in place here in the United

States.

NEWTON: Okay, just before I let you go, any ventured guess -- four dozen ships still out there? Five dozen? Or have we gotten the backlog down to 20

or 30?

CORDERO: We've made progress. I mean, a couple of weeks ago, we had as high as 73. Again, it's going to be challenging, but we're working again

full court press here in the nation's largest port complex, press and pull all the levers that we need to do to make sure that not only we mitigate

the vessels that anchor, but we continue to talk about cargo velocity, as opposed to cargo volatility.

NEWTON: Okay. All right. We'll have to leave it there. I appreciate your time, and good luck.

Now, the head of Bain Capital says Jerome Powell is having to walk a very thin line and tightrope as Chairman of the Fed. Richard's exclusive

interview with Stephen Pagliuca, and he is up next.

(COMMERCIAL BREAK)

NEWTON: U.S. President Joe Biden has led tributes to Colin Powell who died at the age of 84. He was the child of Jamaican immigrants. Powell was the

first African-American to become Secretary of State.

Well, he will be remembered for his military and political service. His credentials as a leader have left a profound impact on the business world

as well.

Now, he served on the boards of Salesforce and Bloom Energy. And in 2012, he listed his 13 rules of leadership. So listen up. Rule number one, it

ain't as bad as you think. Not ever. Rule number four, it can be done. Rule seven, you can't make someone else's choices. Rule 10 -- this is important,

right, especially now -- remain calm and be kind. And finally, rule 13 perpetual optimism is a force multiplier.

[15:15:28]

NEWTON: Lieutenant General Mark Hertling served under Colin Powell, and he joins me now from Florida. And first and foremost, condolences to you and

the larger military community because I know how much he meant to that community. There are tributes pouring in from everywhere now. How does that

inform us in terms of what his legacy will be? And how transformative was his leadership?

LT. GEN. MARK HERTLING (RET), CNN MILITARY ANALYST: Paula, first, I have to smile because of your re-citation of some of the 13 rules that were

published in his book, and he explains how those rules came about. They were just snippets of paper underneath his desk. And one of his secretaries

told a reporter that she ought to ask about those rules. So he listed them out, and they suddenly, they became famous as his 13 rules.

But there are much more -- there are so many more things about General Powell that those of us who knew him will relate. Everyone has a story.

I've been seeing stories all day on the internet, from friends, from e- mails that I've received.

This guy was a Titan. He lifted the services up. He rebuilt -- he was one of the few General officers who lived through Vietnam and then decided as a

cabal that they would reframe the American Army into a much better force after they had seen the disaster of Vietnam.

So these were the individuals that literally bridged the generation. And all the much younger guys, I was a Major when General Powell was the

Chairman of the Joint Chiefs, watched him, listened to him, closely observed the kinds of things he was doing, and it just made so much of a

difference in all of our lives and those rules of leadership are just one of myriad examples of things that he did for us.

NEWTON: Yes, and I'm sure so much of that was, again, as you said, you know, framed really from Vietnam, and that difficult service that he pretty

much started his military career with. Now, his tenure as both in the military and Secretary of State, as you know, was at times contentious,

especially the insistence that Iraq had weapons of mass destruction.

And yet, do you think that so-called Powell Doctrine, right, go in with overwhelming military force have an exit plan? Did it endure? And I have to

say, again, we didn't see it endure just now in Afghanistan?

HERTLING: Yes, it's true. I'm smiling because I just had a conversation with a colleague about that that some, like me would say that the Powell

Doctrine is something that's actually diffused from Clausewitz, one of the great military theorist of the last 300 years. There are others that say,

hey, that's damaging to the military, because sometimes it's not politically feasible to do the things that Powell asked to do.

But really, it's steeped in theory, you have a tremendous military force, which is what Clausewitz said, you have the support of the people, which

was what Clausewitz says, and you have the backing of the government. When you have those three things in military forces, give it much greater chance

of success.

And as we've seen, in some recent wars, we've been missing one or two of those things as we've attempted to conduct operations all over the world.

But truthfully, one of the biggest things that General Powell was, was he was a peacekeeper. You know, we all see him as a soldier, but he really

abhorred war.

So he was telling the political masters that once you make the decision to go to war, you better have overwhelming force and the support of the

people, as well as the backing of the government. And I'd add to all those things, a clear exit strategy, knowing when the war is over when you've

achieved your objectives, so you can get out very quickly.

And I truthfully believe that the Powell Doctrine is actually very good and should be applied in most cases where the United States besides to send our

young men and women in to combat.

NEWTON: Yes, and I'm so glad that you made that reference to him being a diplomat, first and foremost. You know, he always said, look, the military

option should be the last option when you've exhausted everything else.

What kind of a mark, do you think that will leave on the military? I don't have to remind you the kind of turmoil that it's in at times.

HERTLING: Well, truthfully, Paula, it's fascinating because what you ask, I was in the Pentagon after 9/11 and I saw military leaders try and make

those arguments to the civilian policy masters of how does this end? What does success equal? How do we see getting out of these kinds of conflicts

and truthfully, there were many times when those questions weren't answered. Those are the demands of a military leader who in a democratic

society that's dealing with his or her civilian masters to try and help them make the right decisions.

[15:20:11]

HERTLING: And then you have to force those issues sometimes and it gets to one of Powell's 13, don't take counsel of your fears are the naysayers.

When folks are telling you, oh, no, you just have to do it. You better continue to press hard as a military leader until you get to the point

where you can no longer press and then you have to salute and conduct the mission as you see fit.

But those are some important lessons to be learned, and we are certainly seeing them now after the end of the Afghanistan war on how things could

have been done much differently.

NEWTON: Well, thanks so much for helping us really discern what his legacy is and really pay tribute to his life. Appreciate your time.

HERTLING: Thank you, Paula.

NEWTON: Now, the co-chair of Bain Capital says he is concerned about U.S. government debt levels. Stephen Pagliuca is one of the most powerful fund

managers in the country, and Richard met up with him in Boston for an exclusive interview, including a walk around the famous Boston Common.

(BEGIN VIDEOTAPE)

STEPHEN PAGLIUCA, CO-CHAIR, BAIN CAPITAL: You can see people have fun here in Boston, they have weddings in the church there, come out to the Boston

Common in the duck pond.

RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: Congratulations.

QUEST (voice over): Stephen Pagliuca takes his responsibilities as a Bostonian very seriously, especially when it comes to giving this

Englishman a tour of the town.

PAGLIUCA: It is a very liberal city. The Boston Garden is down the street, so you can walk and go see a basketball game. You can walk to Fenway Park

and see a baseball game.

QUEST (voice over): Pagliuca is the co-chair of the investment firm, Bain Capital. He is also part owner of the Celtics, the hometown basketball

team, and he holds many leadership roles with several civic organizations.

In World Finance and in Boston, he is a big deal.

QUEST (on camera): What is a real Bostonian?

PAGLIUCA: I think he is a very straightforward person that's not into pomp and circumstance. It's a much lower key place. It's a very family oriented,

you know, people and place.

QUEST: You've been very much involved in the post-pandemic future for Boston, haven't you?

PAGLIUCA: Yes. So we've come together with lots of other organizations in Boston to kind of rebuild the coming out of crisis even better.

You know, Boston has a history. We had the bombing here and it emerged stronger after the bombing. So it's a very, you know, tight-knit and

unified company. And what I like is business works with government, and it works with academia here to get great things to happen.

QUEST: The company I work for, it's basically got a vaccine mandate. The airlines are being told vaccine mandate. What are you doing at Bain?

PAGLIUCA: We're requiring vaccines as well. Because -- unless there's extenuating circumstances, and then we'll make accommodations for that. And

again, the main thing is we're trying to protect our employees' children, protect their parents.

QUEST: The NBA has said that if a player can't play because they're unvaccinated, you know that they don't get paid. Do you support that?

PAGLIUCA: You know --

QUEST: And crucially, have you got players at Celtics at all in this position?

PAGLIUCA: You know, we don't know because of HIPAA rules. So we're advising everybody to get vaccinated. And my biggest concern on that is not

about the pay and not about the games. It is really the health of the players.

I mean, they really make money by using their bodies. And there can be a lot of long-term negative effects from COVID even if you catch a mild case.

QUEST: In terms of the game, when a player refused to say they're vaccinated or otherwise, what should happen?

PAGLIUCA: Well, that is being negotiated with closely with a great relationship with the players union and Adam Silver. And it's a very

complex subject because people want their personal rights. And the question is, where do you cross that line?

So we have licenses to drive cars, because you can kill someone with a car, if you can't drive it. If you can kill someone getting COVID, it kind of

makes sense that you should get a vaccine so you're not putting other people at risk.

My office is right over there that we're looking out at the city.

QUEST: It is the corner. Yes.

PAGLIUCA: It is just a wonderful, wonderful view and great building, IMP Building.

QUEST (voice over): The building is extremely impressive. With views wherever you look.

QUEST (on camera): Your office is a beautiful -- it must be costing you a pretty penny or two for these offices? You ought to get people back in

here, don't you?

PAGLIUCA: We'd love to have people come back in because I think it's important for the culture. Now, I'm one of those that steps back and says,

we were already going to some remote work because of the commutes and people's lifestyles. This generation which I really applaud, they are more

about doing the right thing and having, you know life balance. We always said it, but we never really attained it in my generation.

[15:25:01]

PAGLIUCA: We talked about it, but I would have to say, you know, if I had to go back, I wish I had a little more work life balance. But they're

serious about it, and for Bain Capital, and banks and private equity shops to be competitive, I think you're going to have to -- it would be in your

own interest to be responsible for that.

So we already had some work from home program starting. So, I think the future of these kinds of companies is some kind of hybrid system where you

can get the culture and get the interactions you need to get -- you can't replace on a screen. At the other hand, you make people's lives easier if

they can work flexibly, work from home, work together with the internet systems, and actually, we have not seen productivity go down.

QUEST: What did you learn about yourself during this crisis?

PAGLIUCA: I think I look back and I had never had a week where I wasn't on a plane for the past 10 years. And in COVID, I didn't -- I wasn't on a

plane for 14 months in a row, which gives you time to be a lot more introspective, and I think what I learned is that it's about people, your

family, those close relationships. And a lot of times you don't need the glitz, you don't need the extra dinner, you don't need to rush to get out

there and go to the next conference, and it is very valuable to kind of look inward, focus on your family, focus on your deepest relationships. And

I really value them even more now having been in the pandemic because it's a lonely place to be in the pandemic.

QUEST (voice over): That family focus often brings him here with his grandchildren to Boston's public gardens, where today, the search isn't for

high finance, but feathered friends.

PAGLIUCA: It needs to be on your bucket list to visit these famous ducks.

QUEST (on camera): There are some real ducks over there.

PAGLIUCA: We're going for bronze ducks. Where are the bronze ducks? Where are the ducks? Where are the ducks, do you know?

UNIDENTIFIED MALE: You head to that corner there, right before you get to the corner of the front --

PAGLIUCA: Okay, okay. Great. Thank you

QUEST (voice over): Stay with ducks, if it looks like a duck, quacks like a duck. It's a duck. This case, we're talking about the U.S. national debt.

PAGLIUCA: I'm very concerned. We've had a period of unprecedented expansion of the money supply, as you know. And at some point that music

has to stop. Now, there was a Reduce the Debt Commission Form probably 15 to 20 years ago, and that was a big issue. It was a big issue when I was in

Business School in 1982, when the national debt crossed $1 trillion. It's now you know, way to 25 to 40 times that and going up every year.

QUEST: Are you more Joe Manchin or are you more progressive? Do you want Manchin to win on this one or Bernie Sanders?

PAGLIUCA: I hope they come right down the middle. So that might be more Manchin, because again, we've got to rebalance this and get on a track

where not tomorrow, not the next day, but for a 20-year path, we've got a balance that because we're starting in such a large level of debt.

The other knock-on effect of that is, I believe that will keep interest rates low for a long period of time. Because if you look at the U.S.

government budget, you know, average T-bills previous to that kind of the 2005 period, averaged more like five percent interest, and now they're

paying 20 basis points, 30 basis points.

So the burden of the debt, you know, it has gone up as much as the debt is going up. But if those interest rates start to go up, that's going to cause

a big burden on the government and the taxation and social programs and all the rest.

So, I think that bodes for lower interest rates and to walk them up slowly, but I don't think we're going to see five percent government interest rates

anytime soon.

QUEST: Can the Fed do the impossible in your view? Let the air out of the pressure cooker without collapsing it in the process?

PAGLIUCA: You know, I really feel for Jerome Powell and the Fed. It's a tough, tough thing about a tiny, tiny thread tightrope and, you know, try

to walk across a chiasm. That's what they have to do.

QUEST: Can they do it in your view?

PAGLIUCA: I think they can, but it's going to have to be over a long period of time. I think it's going to crawl up in rates, and we're probably

going to have to have some changes in taxation. So you get those two lines to cross, the spending versus the taxes coming in. And right now, there's

been a big imbalance for the last 10 years.

QUEST (voice over): Back to that search for the ducks. Those ducks are here somewhere.

PAGLIUCA: I'll introduce you to -- make way for ducklings. There we go. We've got to picture you on that.

QUEST: There you go.

PAGLIUCA: It's perfect. This could be the opening of your show. All right, Richard, there you go. You're going to make the ducklings world famous.

Thanksgiving is around the corner. It's a duck, not a turkey.

QUEST: Oh, how could you? All right. Good luck.

Richard Quest, CNN, Boston.

(END VIDEOTAPE)

NEWTON: Great interview there. New opening for the show. I don't know. We'll check with producers.

Next, rising fuel costs and inflation are taking about a bite out of economic growth. You speak to the head of the car rental company Sixt about

how it's navigating through those challenges.

(COMMERCIAL BREAK)

[15:30:16]

NEWTON: Fuel prices in Germany are heading toward an all-time high. The German Automobile Association says a liter of diesel now cost the

equivalent of a buck 79. This is part of a wider global crisis of course in the fossil fuel industry. Though as we speak, a barrel of Brent crude has

come down slightly today as you see it there just over $82.00. Now to London there are growing expectations of the Bank of England could raise

interest rates as early as next month after the governor of the institution said it would have to act to curb rising inflation.

In the United States, meantime, inflation has been driven by things like energy. That includes gasoline prices as you see there. And also the jump

in rental cars. Think about that up now more than 40 percent. We want to bring in Alexander Sixt, he is co-CEO of the rental car company Sixt. And

thanks so much for being here with us to try and parse through all this. You know, travel and leisure, don't have to remind you, right?

Really tough road to the recovery after the pandemic. And yet so much has changed in unanticipated ways. One of the challenges that this industry

still faces especially yours, as you see right there cost of rental cars up 40 percent.

ALEXANDER SIXT, CO-CEO SIXT: Well, Paula, thanks for having me. It's a great privilege to be on the show. But obviously, the year 2020 was one of

the toughest year for the car rental industry since World War II, you know from one day to the next demand collapse dramatically as part of the travel

and tourism industry, car rental companies are certainly not among the winners of the corona crisis.

But we tried to adapt quickly and go on the offensive. We took out some one billion in cost because we had a second quarter of almost loss of 120

million in Q2 2020. And with that cost saving we managed to bring up our profitability back to 70 million euros in Q3 already.

[15:35:07]

SIXT: And on the other hand, we went on the offensive. We have acquired 12 strategic important airport locations from a distressed competitor. These

investments have really paid off in Miami, where meanwhile, the market leader in August and also the newly acquired new applications are now with

a market share of approximately eight percent. This is an incredible accomplishment by Sixt team around the globe and Sixt in the United States

is now 30 percent higher in terms of revenue than pre-coronavirus for 2019.

And almost six times higher in terms of earnings versus (INAUDIBLE) to 2019. This trend is also continuing globally, where we just updated our

guidance back to earnings level of 2019. And maybe above.

NEWTON: In terms of this being company specific though there are so many challenges ahead, right? In terms of maybe costs, trying to get labor,

trying to get that kind of efficiency. I know you have heard from your customers, there have been a lot of bumps in the road. What do you think

will make the difference going forward?

SIXT: Well, we do see an increase in pricing over the last 24 months. This has made me three reasons. First of all, there's a rebound of travel

activities, people are eager to travel again and experience the world. Our demand, as I said before in the United States is well above the 2019

levels. And then obviously, there's a shortage of supply in vehicles due to massive de-fleets of all car rental companies during the corner crisis.

And obviously due to the global chip shortage that has largely affecting the car rental supply industry. And thirdly, there are structural or catch

up effects mechanical pricing in the last 10 years global airline and hotel prices went up by almost 30 percent or more. And car rental prices were

declining during the same timeframe. We therefore believe that the car rental pick up in pricing is a long overdue catch up effect and will

somehow be necessary to sustain to the future.

And it will be interesting to see how the sustainable -- how sustainable these changes are in the next two to three years.

NEWTON: Yes. And --

SIXT: We have six -- please go ahead.

NEWTON: Sorry, just somebody cost, though, may end up really hampering some of your growth prospects. And if we move on to the issue of innovation, I

know this idea of a robotaxi, it's just a pilot at this point. And yet it'd be hard to have imagined that this will actually be embraced by consumers.

What can -- convinces you that this is the direction your company should go in?

SIXT: Well, as you may know, we follow the three main strategic pillars, which is (INAUDIBLE) the premium proposition then our internationalization

strategy. And first and foremost, our digitalization industry. We started that initiative already back in 2019 where we consolidated all our

offerings a one single app, more than 250,000 vehicles, or 1.3 million drivers online on our app. And the next step is obviously offering

autonomous vehicles.

And to begin with, we plan to operate a fleet of fully electric autonomous vehicles right here in Munich, consumers will be able to hail the

autonomous vehicle through the movement app as well as the Sixt app. We intend to start with a pilot as early as next year, as you mentioned,

initially was an early rider program before starting our regular commercial operation, after receiving all regulatory approvals.

And this cooperation to us is truly a lighthouse project in Europe. Demonstrating technical progress and capabilities of Intel mobile, I move

it Sixt. This will be for us the basis to expand the collaboration within Germany, Europe, and other countries worldwide. Improve our technology

leadership in aerospace.

NEWTON: Well, we'll see. We'll see whether people actually have the confidence to be doing those so called robotaxis and will continue to

follow the development of that industry. Thanks so much for your time. Appreciate it.

SIXT: Thank you very much for having me.

NEWTON: And now from something that connects us physically, like that rental car to a network that connects us socially. Facebook says it plans

to create 10,000 highly skilled jobs in the E.U. over the next five years. And it's all part of Facebook's plan to enter the so called Metaverse. Anna

Stewart is here to explain it all to us. OK. First off, you are going to have to give us the quick line on what is the Metaverse.

And specifically, yes, you know, you can do that. I always turn to you for these new trends. And what specifically are Facebook's intentions and

ambitions with it?

ANNA STEWART, CNN REPORTER: Well, it's fascinating. I mean, the Metaverse sounds like something straight out of science fiction. What it really means

is that you and I could exist, we could work, we could socialize, we could enjoy and experience life in a virtual online world. And it's very much

using technology like V.R. and A.R. to make it that immersive. So it almost feels like real life but just different.

I mean you and I might not even have to come into the studio. We might not need hair or makeup. We could just have avatars. Speaking for us. How about

that? But where there is huge potential here is the fact that lots of people have actually dipped their toes into the Metaverse perhaps really

without even knowing it. So for instance, some gaming online we have multiple players with avatars and you can chat to each other.

There's a whole e-commerce side to it. People are already doing this. And people actually during the pandemic have even experimented with V.R.

headsets when it comes to attending a business conference or meeting. They have dipped their toes and this is why there is huge potential in this

space. Facebook clearly wants to be a big player here. Currently the competition though, is very much the gaming developers. Roblox and Epic

Games and so on.

[15:40:08]

STEWART: For me, I feel like during the pandemic, all I wanted to do is see people in real life. But, you know, this is the new world. We have to open

our eyes up to the potential of the Metaverse, Paula.

NEWTON: Oh, you're so old fashion that way, Anna, and see pleasing people in person. You know, I do know though, from the younger generation, I get

what you're saying in terms of them connecting, especially when you give it that gaming analogy. Now, look, there's tough competition to make this

happen hiring 10,000 workers in this industry, how is Facebook making this work? And I want to go to a different topic now.

Is this even something that sought over by employees in Europe? I mean, does this have a stigma on ours? It's still kind of the place to be because

Facebook must be hitting a wall in terms of hires at this point.

STEWART: Well, I think it's really interesting to think about that because Facebook, of course, is new, such a trendy social media player that people

wanted to work for. And we don't know whether some of the negative news that's been swirling around this company, particularly recently will impact

where people want to work. And I'm sure lots of people think Facebook as a social media platform, at least, is quite old.

Of course, they also have WhatsApp and Instagram and other platforms to them as well. It's fascinating to me that Facebook have decided to pick out

the E.U. for this big investment. One of the toughest markets for U.S. tech giants, and one that hope to interview the Facebook whistleblower next

month. One that has already waged a big antitrust probe, and so on. Very interesting stuff, Paula.

NEWTON: It is. Especially as you said all eyes on that E.U. trade commissioner and what's going to happen next in the next few months. Anna,

I appreciate you pointing that out and explaining that Metaverse to us. Thanks so much. And that does it for us today on QUEST MEANS BUSINESS.

We'll be back at the top of the hour as we make the dash to the closing bell. But up next, Living Golf.

(COMMERCIAL BREAK)

[15:59:03]

NEWTON: Hello. I'm Paula Newton and this is the dash to the closing bell. We are just a few minutes away. U.S. markets are downplaying the supply

chain issues that have given investors some jitters in other parts of the world. The Dow fell to a session low down almost 260 points at the open.

Look at that though recovered much of that and the S&P meantime turned positive and has stayed there all day.

Big tech there with that heavy lifting. The NASDAQ up again more than 100 points. Investors seem up optimistic both those quarterly earning reports

that have yet to come. When you look at that NASDAQ, you know, the analysts keep going back and forth as to whether or not tech is the right play. But

there you go. A lot of people still betting on tech. Goldman Sachs in the meantime is in the lead after a strong earnings report on Friday.

Home Depot and Apple also keeping the Dow's losses on the lighter side. Disney and Amgen are providing the most of the drag there as you see there

from the board. Travelers and Proctor are near those bottom. Those two companies are reporting earnings before the bell tomorrow.

[16:00:04]

NEWTON: So is by the way, Johnson and Johnson. And that does it for your dash to the bell.

END