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Quest Means Business
Mark Carney Hails Sea Change In Climate Crisis Fight; OPEC Resists U.S. Calls To Ramp Up Oil Production; W.T.O. Chief Says It Is Essential To Adopt Global Carbon Price; British Pound Down As Bank Of England Holds Rates Steady; Moderna Misses On Sales And Vaccine Shipments; Greek Tourism Minister: Expect Good Year In 2022; GOL Airlines On U.S. Lifting Travel Restrictions; Profitable Moment. Aired 3-4p ET
Aired November 04, 2021 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:25]
RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: With an hour to go before the closing bell, the Dow just about clings on to 36,000. It'll
be the first down day of the week. It's heavily down. We may not hold up 36,000. I don't know. It could go either way, I wouldn't put money on it
today. It doesn't really matter. We are down and it'll stay down for the hour, my guess is.
The markets as they stand and the events of the day. Mark Carney tells me there's a sea change in the climate crisis, as he puts together a
multitrillion dollar war chest.
OPEC says it won't budge despite U.S. pressure to pump more oil.
And the Bank of England sans Carney takes the markets by surprise and doesn't raise rates.
Live from New York on Thursday, November the fourth, I'm Richard Quest, and I mean business.
Good evening. Tonight, the nuts and bolts of paying for the great carbon transition. COP 26 has turned its attention to fossil fuels, and this means
every business, every industry, yours will in some way be affected.
So tonight, we speak to the man who is going to help everyone pay for it. Mark Carney, the former Governor of the Bank of England, and now the U.N.
Special Envoy for Climate Action and Finance. He has corralled $130 trillion initiative --- count the zeros -- $130 trillion initiative to
accelerate the transition, from 450 banks, insurers, pension funds, and money managers. They've all signed on to the so-called Glasgow Financial
Alliance for Net Zero, just known as the Alliance,
Mark Carney, you're going to hear from three times during this program. In a moment, he's going to explain what he hopes to achieve with all this wall
of money, as he calls it. Then the politics of making sure governments and businesses work together the biggest criticism is that business doesn't
know what government wants.
And finally, the nitty-gritty, how do we get to net zero? Carbon pricing, emissions trading -- you get the idea. Detailed, but important.
Part one, Mark Carney told me the plumbing of the global financial system is being reorganized.
(BEGIN VIDEO CLIP)
MARK CARNEY; U.N. SPECIAL ENVOY FOR CLIMATE ACTION AND FINANCE: At the core of Glasgow, the objective of the negotiations, in the words of Prime
Minister Johnson is to keep 1.5 alive. In other words, to have enough ambition from countries and a series of initiatives so that the world can
still get emissions down fast enough so that we can limit temperature increases to one and a half degrees.
Now, there has been big progress already. Targets put in place by India, a huge deforestation -- ending deforestation pact announced two days ago. Big
news on ending coal -- powering past coal being announced today as we're speaking. So -- and progress expected on methane led by the United States,
30 percent reduction in methane.
So these components are big, they're all significant. But we need all of them and more in order to, as I say, keep 1.5 alive. And as you say, what
business is looking for, what finance is looking for, is a clear roadmap of not just objectives, but very importantly policy, so it can make the
investments that are necessary and improve people's lives.
QUEST: So what does this money go for? This money that you're talking about. How does it get invested by whom and where?
CARNEY: Well, so these are the world's largest banks -- virtually all the world's systemically important banks. The leading asset managers, the big
pension funds from around the world, 45 different countries, over 450 different institutions. It takes a lot to get to $130 trillion of assets,
and it goes to their clients first and foremost.
These are institutions that go out to their clients, all of whom or most of whom have figured it out. That they are going to need to decarbonize, get
their own emissions down quite rapidly.
Now in some sectors, that is relatively straightforward. Think about the tech sector where effectively you're looking to buy in renewable power, you
have to make some investments, but it's straightforward.
[15:05:14]
In other sectors, the steel sector, the auto sector, these two big examples, you're retooling business processes. You know, auto is obviously,
you're moving from internal combustion engine to zero emission vehicle. And if you're in Europe, you've got to do that by 2030. So, it has to go quite
rapidly. That takes tremendous amount of capital in order to get there, and that is where a lot of this money is going to go.
And if I could simplify it, there is a lot which will go to proven net zero, renewable technologies, wind, solar, et cetera rolled out at enormous
scale, but then a whole other component of it is going to go to where the emissions are today, those hard to abate sectors -- steel, cement,
automobiles, other transport, shipping, to make big investments to get emissions down.
QUEST: It's going to be slow, isn't it, in the sense of once the headline number has been grasped and gasped, but at the end of the day, this money
gets spent and it gets dissipated around the world in a much more slower fashion. And I wonder how you keep control of all of that? Because we've
missed targets so far, Mark, targets have been missed. And on something this gigantic scale, there'll be missed again.
CARNEY: Well, I'll say a couple of things. First, it helps if you're going to have a target, it helps to have people who can count make those targets
and very clear things you can count. Now that the financial sector, the world's biggest banks, insurers, asset managers, and others, they know how
to count and these are targets around emissions, specifically, where they are today and where they're going, and will be reporting those emissions,
again, of their portfolios, not just their own, but of their portfolios, people they invest and lend to on an annual basis. And they will have five-
year targets for their own emission reduction, again, of those clients.
And I think actually, the money is going to move pretty quickly. This is -- this is one of the big elements of the growth story of this expansion. It
is going to be the scale of investment that is shifting into these areas. And after all, Richard, you know, if we're going to be on track, if we're
going to keep 1.5 degrees alive, the world needs to get emissions down by over 45 percent, almost 50 percent this decade. That's not going to happen
by flipping a switch, it's going to happen by big investment, big shifts of capital.
So if we're going to get there, the money is going to have to move. But one thing -- one thing, just to reiterate to your point, this is from the
financial sector. They know how to count, they're going to be accountable for this, and we will know who is making progress and who is lagging
behind.
(END VIDEOTAPE)
QUEST: So getting business on board and finding the money. That's half the battle, as Carney says. Governments, though, haven't been providing the
guidance or the certainty needed for business to make net zero commitments a reality. It's a question of policy. What policies are going to be
followed? There is a lack of certainty. And so Mark Carney believes the real work begins after COP 26.
(BEGIN VIDEOTAPE)
CARNEY: The road from Glasgow is almost, I think, this is your essence -- the essence of your point. The road from Glasgow is almost more important
than the road to Glasgow. So in other words, what is implemented afterwards, and how quickly, and I think we cannot make -- as a collective,
we cannot make the mistake that was made after Paris, which was to relax, to sit back, congratulate governments on making the commitments, but not
following through.
QUEST: On that, the speed, let's say, for example, and I'm not asking a political comment, but it is a political issue. The United States post
Paris left, then they came back, possibility bearing in mind the midterms, et cetera, et cetera, et cetera. They could leave again.
The reality is, business is getting the last thing it needs, which is lack of certainty. Everybody wants to know where their marching orders are. And
I am saying, that's simply not happening.
CARNEY: Well, look, it's not helpful if there is uncertainty about certainly the overall direction. It's healthy to have a debate about how to
get there, what policies are necessary to get there. There is no one simple policy that's going to get any country to sustainable economy get to net
zero.
But you're right, if it is 180 degrees in either direction, it's not helpful. It's not helpful for the competitiveness of a U.S. business or the
United States to have that. I will observe though that U.S. business and U.S. financial institutions are innovating rapidly around these issues and
they're helping to lead, so -- and they would be that much further in front with a greater policy clarity, yes,
[15:10:11]
QUEST: Larry Fink wrote an article, and you would have seen it a couple of weeks ago, basically saying the sums involved are greater than anybody can
imagine. It's going to take a public-private partnership. It's going to take the private sector, basically doing, you know -- the government --
governments can't really do it themselves. They're going to need the private sector, it's time for everybody to get on the same boat.
LARRY FINK, CEO AND CHAIRMAN, BLACKROCK: We're not focusing on long-term solutions. We're not trying to change the world in a granular basis. We
have these visions. We could go from a brown world and we could wake up tomorrow to be a green world.
That is not going to happen. We don't have long-term planning by most governments to effectuate these long term problems.
QUEST: Do you feel, Mark -- do you feel a sea change difference in perspective?
CARNEY: Well, I do. I'll be candid, I don't say this lightly, I do feel a sea change difference. Certainly, a sea change of different leadership,
people like Larry Fink, Jane Fraser, James Gorman, and many others. Sorry, I shouldn't have started that list because I will be taking the rest of our
time.
But their leadership in shifting this to center stage and being part of the solution, helping their clients move forward. And look, we met yesterday
morning, a number of us including Jane and Larry and others, with the leading Finance Ministers from around the world, and I mean around the
world, not just G7 to discuss this, and there is really a meeting of minds in terms of how clear and predictable policy or more predictable policy can
really accelerate with this wall of money. This is an almost unimaginable amount of money that is dedicated to the transition to net zero.
There is an enormous, enormous opportunity for politicians to -- you know, the more they have their act together, the better the people around the
world are going to be served.
(END VIDEOTAPE)
QUEST: Mark Carney. More later.
OPEC and its allies have decided not to ramp up oil production. Despite international pressure. President Biden had called on OPEC to ease the
global energy crunch even as diplomats working in Glasgow get the world off fossil fuels.
At its virtual meeting in Vienna, OPEC agreed -- the OPEC+ it was -- to stick to its plan. It will increase production next month by just 400,000
barrels a day.
Eleni Giokos is in Dubai. Why would they not do more bearing in mind the current situation of the supply problems?
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: Look, you know, we are having this conversation at a time where global leaders are talking about
transitioning away from oil, transitioning away from fossil fuels. So we're talking to these leaders, and we're telling them look, this is a sunset
industry, your revenues are going to dry up in a few decades' time.
Don't forget Richard, those -- you know, during the height of the pandemic, where you had oil prices hitting below zero. There was a huge demand
destruction scenario that played out and these countries have lost enormous amounts of revenue. Now, you've got oil prices sitting back at seven-year
highs. They're recouping revenue. They are saying that these levels make sense.
I want you to take a listen to what the Saudi Energy Minister had to say and basically rejecting calls by the U.S. President to increase production
and add more oil into the market. Listen to this.
(BEGIN VIDEO CLIP)
PRINCE ABDUL AZIZ BIN SALMAN, CHAIRMAN, OPEC AND NON-OPEC MINISTERIAL MEETING: With regard to the U.S., yes, we've been having discussions at
all levels, and we still believe that we are -- what we are doing is the right job, and the most convenient job.
(END VIDEO CLIP)
GIOKOS: Yes, okay, so the most convenient job. Here is the reality that these levels right now is something that's beneficial to all producing
nations despite the fact that it's causing huge inflationary problems and risks of derailing the current economic recovery scenarios, energy crises
in the U.S., energy crises in Europe as well. You've got gas prices that have spiked as well.
And the reality here, Richard, is that we are still reliant on oil. Despite the commitments, despite the move to transition away from fossil fuels,
here is the huge dichotomy between what we're doing at COP 26 and how OPEC is dealing with this reality.
The U.S. might tap into its Strategic Petroleum Reserves to try and alleviate the pressure in the United States, but Richard, you know, as you
were saying with your previous guest, great that this money is being put onto the table, but it's still very much medium and long term realities
before we can get ourselves weaned off oil.
QUEST: Hang on, Eleni. Are we not talking here about two different things? The temporary supply issue being dealt with, by you know, supply issues and
OPEC, and the longer term which will be five, 10, 15 years and there I suppose the Saudis and the Qataris and Abu Dhabi would say that they are
slowly, but surely making the transitional effort.
[15:15:20]
GIOKOS: Well, you're basically telling them that your bread and butter industry is basically going to come to an end. So, elevated prices kind of
makes sense, firstly, because it helps fund other industries, so you can diversify your economy in 10 to 15 years' time. You can't do that
overnight. We know what that means, if you turn the taps off.
Then it also basically means that these economies have to be able to have very strong industries that will replace the revenue that will be lost. And
I think that it's interesting, you're saying these are two very separate issues, but they actually do converge and it is about money. It is about
making sure that these countries remain strong, and they have something to replace oil and gas revenues with down the line, and it's not going to come
in the next five or 10 years. It's going to take decades.
QUEST: It is leisure night, Eleni. Time for you to wrap up the day for yourself. You'll have a busy day tomorrow. Eleni Giokos joining us from
Dubai, quarter past 11 at night if you're watching this in Dubai -- delighted to have you with us.
It's a scramble in Glasgow for climate change solutions. But tonight on the program, we're looking at the specifics. Get away from the generalities.
No, Greta, blah, blah, blah on this program.
The W.T.O. Director General Ngozi Okonjo-Iweala and Mark Carney focusing on a plan that's gaining momentum. It's about carbon pricing. It may sound
dry, but it is the answer.
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: The U.S., Canada, and 18 other countries at COP 26 have pledged to stop the public financing of fossil fuels abroad by the end of next year.
The W.T.O. Director General Ngozi Okonjo-Iweala says carbon pricing is essential if we're going to meet emissions targets. How does it work?
The 101. Carbon pricing is a tax levied on the emission of greenhouse gases across various industries. It captures the external costs of those
emissions, like damaging of crops and loss of property and flooding and other effects of climate change. It's becoming more popular because if you
add in an emissions trading scheme on top of carbon pricing, well you start to see how it works. Carbon pricing now covers around 22 percent or a fifth
or so of global emissions.
The Director General of the World Trade Organization joins me now back in Geneva after COP 26.
[20:20:10]
Mark Carney said he felt a sea change at COP 26 from leaders and from business. Did you feel that same change or is it more of the same and
similar?
NGOZI OKONJO-IWEALA, DIRECTOR GENERAL, WORLD TRADE ORGANIZATION: Well, I have to agree somewhat with Mark that yes, the atmosphere certainly
conveyed a sea change, the realization that this is serious, and we're all in it together, I think my only worry is implementation and how we monitor
that.
So a lot of pledges were made, which are very good, ending deforestation by 2030, and about two $20 billion was raised. Many leaders promised to plant
millions of trees, not only to end deforestation, but actually to reform our standards. Wonderful.
I think the issue is how to monitor these commitments and make sure they are implemented.
QUEST: Let's talk on supply chains, if we may. When we spoke before, you said that there would be an easing up of supply chain difficulties. Are you
seeing any easing up? Some people are suggesting this could go well into next year.
OKONJO-IWEALA: I agree with those who say that it could go well into next year, Richard, because, you know, with the boom in demand and the Holiday
season coming up in many countries, especially in the United States, you know, there's this demand surge. At the same time, you will recall that on
the supply side, I had said that shippers and others had cut down because they thought maybe that given the pandemic, the demand wasn't going to be
that significant.
So we have a cut on the supply side, containers in the wrong places. You have a surge on the demand side, and that mismatch will, I think, continue
for some time. Remember also that businesses are also accumulating inventory as a risk management strategy and that adds on to the demand.
QUEST: Is there anything that the W.T.O. can be looking at and doing on supply chain bearing in mind Christmas is around the corner? Or is your
work -- I mean, it's long term, and by the time the W.T.O. has done anything, it'll all be over?
OKONJO-IWEALA: Well, what we can be doing is making sure now we have these difficulties, the last thing we need, you know, any measures that will make
it even more difficult for goods to come in. So encouraging our members to take trade facilitation measures, making sure no red tape, no bureaucracies
holding goods up at the ports once they are offloaded. I think those are the kinds of things that members can do. And so that's what we're
encouraging in the short term.
QUEST: But to climate change. Where do you see the role of something like the W.T.O. in the terms of policies that you can advance? Because, you
know, again, there's this $130 trillion that Carney says will be spent. But businesses, individual businesses doing trade will have to change the way
they do business, won't they?
OKONJO-IWEALA: Well, Richard I always say that the future of trade is digital, and the future of trade is green. So I think that where the W.T.O.
rules and where trade can help is in helping to diffuse the new technologies, taking them from where they are made to places where they
need to be adopted, and trade can be very, very important in that.
Trade can also be important in lowering the cost of these goods. So you can have lower tariffs on goods and services, that are climate friendly.
Renewables, for instance. We find that in many countries, the tariffs on solar panels and other goods are still quite high, and we need to lower
those.
In Africa, it's about 10 percent, even going up to 50 percent in some countries. So, if we lower the barriers on these goods and services that
are climate change friendly, then that is a contribution that trade can make.
I always say that trade can be part of the solution of this climate crisis. Then you also have something you referred to before, the issue of carbon
pricing and how do we do that? This is an area where if we don't handle it carefully, it could result in trade frictions.
So I've been advocating that we need to move towards a global carbon price instead of the 69 different systems we have now. You know, each country,
each jurisdiction is affected --
[15:25:14]
QUEST: Hang on. Hang on. A global -- a global pricing system. Sounds good.
OKONJO-IWEALA: Yes.
QUEST: Director General, but it gives the larger countries and arguably the larger polluters, does it not -- will that not be more difficult for
developing and emerging markets?
OKONJO-IWEALA: Well, you know, there is an approach and in fact, the I.M.F. is going along this path of looking at a price floor for different
levels of income so that those who are poorer would be facing a lower price, those in the middle, maybe somewhat higher and the rich countries, a
higher price. So it's a system that you can establish that would still recognize the fact that those who are more polluters will pay more.
Yes. So that's the kind of system I'm thinking -- I think we should be adopting.
QUEST: We'll talk about this over the weeks and months ahead. It is good to see your Director General, as always. Thank you for taking time tonight
to talk to us.
Now, we were talking about carbon pricing and the Director General was giving examples of how it can work in terms of different countries. Now,
Mark Carney gives specific policies that could help bring about a net zero carbon.
(BEGIN VIDEOTAPE)
CARNEY: Well, the type of policies that work are clear policies, ideally, set out either a path or a date certain when a policy is going to come into
play. So let me give you -- I'll give you two examples. The first is that in the United Kingdom and in some European countries, actually in Canada as
well, you can no longer sell, you'll no longer be able to sell new internal combustion engine vehicles, gasoline powered vehicles from 2030 in the
U.K., 2035 in Canada and some European countries.
So that tells the auto industry today, okay, I've got maybe one more model run on a gas powered car, but I need electric vehicles to be produced going
forward. And what we're seeing, no surprise, in the U.K. and Canada particularly is a lot of investment in new plant equipment for electric
vehicles.
So that clarity and a date that's far enough in the future, that you can do something about it, but close enough that you have to do something about
it. That's incredibly powerful. Other examples would be, you know, hydrogen fuel blends in maritime transport or aviation, fuel, et cetera.
The other big class of policies that are very effective are pricing carbon. And you know, it's much talked about. It covers -- currently, carbon prices
cover about 25 percent of emissions globally. That number is going up as China rolls out its so called ETS carbon pricing scheme.
But I'll give a good example, and I happen to be Canadian, I didn't have anything to do with this going into place. But in Canada, the price today
is $30.00 a ton. But it's legislated to go up to $170.00 a ton by 2030.
I know from conversations with Canadian businesses, that basically they use the $170.00 a ton in their calculations for their investments today.
You know, the current price is interesting. The other one is decisive. And it's that sort of approach that can really drive investment and combined
with the capital that we've got on the table now through Glasgow can make the impact.
QUEST: So on that the price, say Europe is whatever 50 to 60 a ton or whatever, does it need to double? Is that the bet -- along with these other
policies, but is the pricing of carbon the best stick and carrot arguably, to hit this thing with?
CARNEY: It is -- it's one of the best policies. I am not one who thinks that we can just price carbon and then everything will solve itself. But
it's for countries that don't price carbon. They're leaving out one of the most powerful instruments, one of the best signals to the markets and look,
you know, the various estimates of where that carbon price needs to be, they tend to settle in the $75.00 to $100.00 a ton by 2030. Right? So it
doesn't have to be at that level today. It happens to be at that level today in Europe, which -- the extent to which they go through the
adjustment is going to give them a competitive advantage in the future.
You know we should be -- there is more of a consensus on the need to do this I would say amongst politicians. Not yet the confidence to put that in
front of voters.
(END VIDEOTAPE)
QUEST: Mark Carney -- nice thought about politicians.
The Bank of England said it would hold interest rates steady for now. The FTSE finished up despite a cut in GDP forecast and a warning of five
percent inflation. Maybe it was up because the bank of England did something that nobody expected. We'll discuss after the break.
[15:30:15]
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(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: Hello. I am Richard Quest. Welcome to QUEST MEANS BUSINESS as we continue.
Two of the world's top central banks charted a new course for monetary policy this week. BNY Mellon's chief economist about the BOE and the Fed
decisions.
The U.S. is preparing to lift restrictions for international travelers. The CEO of Brazil's GOL Airlines joins me.
All after we look at the headlines. This is CNN and on this network, the facts always come first.
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QUEST (voice-over): Rebel groups say they're about 150 kilometers from the Ethiopian capital and continuing to advance. A spokesman for fighters says
it could be weeks to months before they reach Addis Ababa. Ethiopia is under a six-month state of emergency.
Germany marked the highest number of daily COVID cases since the pandemic began, nearly 34,000 in 24 hours. The regional director of the World Health
Organization says Europe is again the epicenter of the pandemic and blames the spike on insufficient vaccination rates and relaxed public health
measures.
The U.S. says more than 100 million workers need to be vaccinated by January 4th or be tested for the virus each week. The new rules apply to
workers at large companies as well as some health care facilities and cover two-thirds of the country's workforce.
(MUSIC PLAYING)
QUEST: The Bank of England caught investors by surprise when they decided in the Monetary Policy Committee not to raise interest rates as had been
expected.
[15:35:00]
Markets had expected the rate hike. The pound has fallen 1.5 percent against the dollar on the back of it. The bank in its forecast of GDP
growth had warned inflation could hit 5 percent.
Shamik Dhar is the chief economist at BNY Mellon, former chief economist at the British foreign office.
Good to have you, sir. You join me from -- now let's take this bit by bit. Central bankers, unless they want to surprise the market, they're not
supposed to do so. And they have telegraphed in many ways that a rate rise was in the cards.
So was it a foul move not to do so?
SHAMIK DHAR, CHIEF ECONOMIST, BNY MELLON: I tell you, it wasn't their finest hour, communications wise, and I am sure Governor Bailey will be
looking carefully at what he said and trying not to make the same mistake again.
What central banks don't want to do is induce volatility into the markets.
Having said that, I think the bigger issue is, why are they quite so sanguine about inflation going forward?
That's what concerns me most.
QUEST: On that point, if they didn't raise rates, regardless of whether they suggested they would or not or should they have raised rates, in your
view, even as a symbolic symbol, let's face it a quarter point is neither here or there one way or t'other, would you have preferred a quarter point
on rates?
DHAR: I mean, they'll say the timing doesn't matter too much and it is clear they will raise in December. But I think actually you're onto a point
there. I think it was symbolically important to do something now.
Why?
I think the risks to inflation are skewed to the up side. If I had been on the MPC, noticed we raised our inflation forecast for end of 2022 by 1
percent, I would certainly think of raising rates in those circumstances.
QUEST: The problem is that central banks have missed their targets for so many years that the target has become almost a laughing symbol. So when you
say they raised target by 1 percent next year, I guess it doesn't take as much -- it is not as significant. But at 5 percent, it starts to get
significant.
DHAR: Yes, what they've done is raise their forecast, not their target; it remains 2 percent. The forecast is 3.5 percent by end of 2022. And they're
up 5 percent for April. Inflation may well fall relatively precipitously next year. But I certainly think the risks are clearly skewed to the
upside.
Why?
Demand could be strong; two, supply could be weak. Both those things for that not to have come through in today's decision I think is really quite
surprising.
Have a listen to what Larry Summers, former U.S. Treasury Secretary, told us about state of the U.S. economy. After that, we'll talk.
(BEGIN VIDEO CLIP)
LARRY SUMMERS, FORMER U.S. TREASURY SECRETARY: Inflation is a serious problem. I think if we can resolve the stimulus and Recovery Act, Build
Back Better debate quickly, pass legislation oriented to increasing supply, it's paid for in what it does, I think those are going to be the best ways
forward.
I think the Fed is still not fully recognizing the gravity of the situation.
(END VIDEO CLIP)
QUEST: So he thinks the Fed isn't getting the gravity of the situation. I'm hearing you maybe not suggesting the same of the Bank of England.
Do you think the Fed decision on tapering, too little, too late?
DHAR: Well, at least the Fed didn't miscommunicate in the way the bank did. So give him a little tick for that. I think I have sympathy with what
Larry Summers says, though.
Again, the way I would express this is that, even if you think it is more likely than not inflation will fall next year back toward target, where do
you think the risks lie?
It seems to me for the first time in 20, 25 years the risk really clearly lies to the upside. So even a small precautionary move would make sense. I
think the Fed will be moving in that direction maybe early next year into Q2, a bit earlier than the markets currently expect.
QUEST: It is good to have you, sir. We'll talk many more times with you now on rate rises as they come and as we follow the cycle through. Good to
have you, sir, I am grateful.
DHAR: Thank you.
QUEST: Moderna says it is struggling to meet global demand for its COVID vaccine.
[15:40:00]
Shares are down sharply after it missed sales and profit targets for Q3, down nearly 20 percent. It says vaccine shipments could fall short by 300
million doses. That's up 1,600 percent in the last 2.5 years. Paul La Monica is here.
How do you miss?
You've known for months, if not years, so what's gone wrong?
PAUL LA MONICA, CNNMONEY DIGITAL CORRESPONDENT: I think, Richard, that Moderna is clearly having some growing pains. This is not the first time
that the company has reported challenges with its vaccine production.
Early this year, you recall, there was an issue they were making enough vaccine but couldn't get enough vials. I think there really is just a case
of -- Moderna is, mainly had been an R&D shop before COVID-19.
And this vaccine really transported them into one of the more valuable biotechs in the world. Contrast that with Pfizer, which is a big pharma
giant, a history of making medications for a very long time.
While they had supply chain issues like every company has lately, of course, it hasn't been as extreme as Moderna. Pfizer reported really solid
earnings not that long ago.
QUEST: But here's the issue. At the end of the day, Moderna, Pfizer, J&J, AstraZeneca, in terms of the big Western-based that are acceptable to most.
How can you lose out on this?
LA MONICA: Yes, I don't think Moderna, obviously, this was their strategy, of course, Richard. They don't want to be losing to Pfizer, given that the
Pfizer vaccine and the Moderna vaccine are similar. There're going to be potential issues with people as they get boosters. Maybe they if they had
gotten Moderna, they would get Pfizer BioNTech instead.
It is not a good bit of news. Moderna, that's why the stock is plunging as much as it has today. As you also point out earlier, Moderna's stock has
been on a tear in the past 1.5 years or so.
Even with this setback, when you look at the longer term chart, it is kind of a minor blip. Make no mistake, Moderna needs to fix these supply chain
issues, partly ones of its own making, not global ones. Or it is going to lose more round to Pfizer BioNTech and J&J and AstraZeneca and potentially
maybe even the Merck pill we have been talking about for the U.K.
QUEST: Glad you reminded me about that. Thank you.
Travel restrictions on foreign visitors will loosen for the United States. The head of the Brazilian airline, GOL, is he ready to meet the demand for
seats?
QUEST MEANS BUSINESS.
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[15:45:00]
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QUEST: Starting Monday, the U.S. will allow fully vaccinated travelers into the country, including people from Brazil. The Brazilian airline GOL
is preparing to ramp up flights. We'll be talking to the CEO in just a moment.
Greece has just reported its highest ever number of daily COVID cases. More than 6,800 cases were reported Thursday. New restrictions are coming in for
unvaccinated workers. Earlier, the Greek tourism minister said it would take a radical change in COVID situation to stop the recovery.
Vassilis Kikilias, who was previously the health minister, says Greece will be open year-round next year.
(BEGIN VIDEO CLIP)
VASSILIS KIKILIAS, GREEK TOURISM MINISTER: We're not going to close. We're going to be around here, available for everybody to come. I see tour
operators, travel agents, airline companies here from the United Kingdom, USA, France; they want to come, they want to come early, March, April.
QUEST: Do you think it will be a good year 2022 for you?
KIKILIAS: Yes, if we don't see something very radical with the pandemic, it will be a very good year, not because it is happening randomly but
because we fight for it, because we earn every traveler, because we offer a new touristic experience. We put the spotlight on new destinations, more
islands, smaller islands, larger islands, mainland, city break (ph), we are there for everybody.
QUEST: But how do you prevent the overtourism that we have seen in so many places?
We don't want to go back to the bad old days. And nobody really has a solution. You either use economics to price people or you use regulation to
determine who goes and who doesn't.
KIKILIAS: Thank you for the question. There's no magical answer. So what you do, is you strengthen infrastructure. We have 320 million from our RF
(ph) fund, the European resilience fund, to put into infrastructures, to build better infrastructures, to help small islands deal with that.
And I told you before and I'm honest about it, they're not just three or four or five broad (ph) locations in Greece, there could be 100 locations
in Greece. So let's spread travel to tourist all over the place, around the country, north and south.
QUEST: But are we heading to a scenario where eventually you are going to have to say enough?
KIKILIAS: I don't like enough. I want more. I want quality. I want better income, better jobs, better paid, higher paid. And I have no problem, we
have no problem with volume.
Since we have so many beautiful places in Greece, not everybody can visit. It doesn't only have to be the two or three branded places where people
found out about it back in the '50s and the '60s.
How many more beautiful places do you think the Brits (ph) can find out if they travel to Greece this year or the Americans or the French? Many, many
more.
(END VIDEO CLIP)
QUEST: Before we go to break, I just want to -- the minister wanted me to explain, the reason he was wearing a mask, not that he needs a reason of
course in these days, but because he has a 10-month-old baby at home. And there at WTM, there was going to be many thousands of people. He was taking
the -- wisely taking the extra precautions.
QUEST MEANS BUSINESS.
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[15:50:00]
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QUEST: On Monday, the U.S. opens to fully vaccinated travelers, including people coming from Brazil. The airline GOL said it's preparing to ramp up
their flight schedule as travel increases in Latin America, foreseeing a bumper end to the year with increased services to neighboring Argentina.
Paulo Kakinoff is the chief executive of GOL and joins me now from Sao Paulo.
Good to see you. Last night on this program, a couple days ago, Alan Joyce is expecting a massive 2022 at Qantas.
What word would you say for next year?
PAULO KAKINOFF, CEO, GOL AIRLINES: Richard, thank you for having me again. Actually we are quite positive about next year, the demand is resuming
comparably to the prepandemic levels. At the moment we are operating at 8 percent and do we believe by December or January, we will be operating
close to 2019 high season levels.
The biggest question mark is pretty much related to the business travelers. We think a portion of there is a specific passenger, will not resume their
old habits but might be also replaced with more leisure travelers, keen to find new places.
QUEST: How does an airline like you negotiate around the idea of premium leisure, extracting -- sure, you can fill the plane at the back end.
But if you want to extract revenue and ancillaries will only take you so far, what do you do?
KAKINOFF: Hopefully, incentive wise, the mix between business, travel and leisure is igniting the market at the moment. We can see more and more
people combining those two things.
That is only the fares ahead of being -- we are anticipating the fare recovery process that we are projecting to get just by the end of the first
quarter next year. So there is, I wouldn't say, a kind of boom but the results are catching up.
QUEST: So you announced, in August, 28 additional 737 MAX aircraft. Ryanair's CEO says the negative development on aircraft in recent months,
in his words, was Boeing's attempt to increase prices for follow-on MAX 10 orders.
He says we don't know what Boeing are up to; we think they are deluded, particularly when we walked away from negotiations.
You bought.
Would you buy more?
KAKINOFF: Yes, definitely, Richard. We are now holding negotiations with Boeing in order to anticipate our order deliveries. I think we have,
already as mentioned, more than 20 planes in operations.
You remember, we were the first airline resuming 77 MAX operations after grounding and have already transported 2 million passengers since then. So
this is a fantastic machine.
[15:55:00]
And we are at the moment 100 percent decided to speed the fleet transition (ph) process up as much as we can.
QUEST: Finally, the reopening the international routes, the United States, the international routes, growing the network, you want to do it because
you don't want to lose out. But you want to do it safely -- safely in terms of I don't mean physical safety; I mean in terms of profitability.
KAKINOFF: Yes. I mean, for us, the borders are open. We are going to see the international routes catching up on demand (ph). This is not 100
percent the case right now because even having countries announcing that they will be open to get foreigners -- and this is not that simple.
You know, there are still processes to be defined (ph) and to make this travel experience clear to every passenger. So we do believe that's going
to take more time until everybody will feel comfortable to fly international again.
QUEST: Paulo, we'll talk more, we'll have you live. We'll talk together face to face. Thank you, I appreciate it.
On travel and tourism, as the reopening takes place on Monday, we'll be marking the return to travelers, a special QUEST MEANS BUSINESS comes to
you live, from top of the Empire State Building in New York Monday, 8:00 pm in London, 3:00 in New York. "Profitable Moment" after the tease.
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QUEST: Tonight's "Profitable Moment": we deliberately went deep into carbon pricing and the various mechanisms for climate change because we
know many of you are in business. And the reality is, once the good words have been said and net zero, this, that and the other, it's real policy
that will make the difference and carbon pricing will be way up there.
In your business, you're already dealing with it, working out what the implications are. There's only two ways for business: regulation or
economics, i.e. carbon pricing, emissions, trading.
And those are two things we'll continue to watch closely because, as I said, when all is said and done, it is the transition, it is the stranded
assets and it is the way forward we need to keep a very close eye on.
And that's QUEST MEANS BUSINESS for tonight. I am Richard Quest in New York. Whatever you're up to in the hours ahead, I hope it is profitable.
The closing bell on Wall Street is ringing. We pulled back a heck of a way (INAUDIBLE).
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END
