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Quest Means Business

U.S. And U.K. Leaders Say Countries Will Get Through COVID; The Rise And Fall Of A Tech Icon; Airline CEOs Worried About 5G Towers; Dow Extends Rally After Monday's Record High; Scott Galloway's 2022 Predictions; Dash To The Bell. Aired 3-4p ET

Aired January 04, 2022 - 15:00   ET



RICHARD QUEST, CNN BUSINESS ANCHOR: With an hour to go of trading on the second day of the year, more than a week since Christmas and gifts are

still being bought, the Dow is at a record. The final day will be the Santa Claus Rally. It's on the pace to be the best in more than a decade.

The markets as they are up strongly, and the reasons that were left behind.

Living with COVID ain't easy. Governments and employers are searching for a new normal amid omicron.

The youngest woman to become a self-made billionaire is now facing jail. Lessons for Silicon Valley from the downfall of Elizabeth Holmes.

And the debate over 5G being installed near airports as the newest threat for travel in the air. Telecoms in the U.S. delay the rollout as the

airlines cried out.

Well, we are live in New York, on Tuesday, January the 4th, monitoring on the way here, I am Richard Quest, and I mean business.

Good evening. It's the new normal for the New Year, the world living to live with COVID. We knew it was coming. Apparently, it is turning out to be

easier said than done.

Omicron now accounts for 95 percent of COVID cases in the United States, the rest are delta. Hospitalizations in the country are now higher than

they were during the delta wave and inching towards all-time highs.

Meanwhile, the Royal College of Nursing in Britain is warning staff absences in England have doubled over the last two weeks. President Biden

just told the United States it can get through COVID if Americans use the tools now available to them.


JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: I know we're all tired and frustrated about the pandemic. These coming weeks are going to be

challenging. Please wear your mask in public to protect yourself and others.

We're going to get through this. We're going to get through it together. We have the tools to protect people from severe illness due to omicron if

people choose to use the tools.

We have the medicines coming along that can save so many lives and dramatically reduce the impact that COVID has had on our country. There is

a lot of reason to be hopeful in 2020 (sic).


QUEST: Now, Kevin Liptak joins us from Washington, besides slightly misspeaking there, I think he meant to say 2022, but the reality is, Kevin,

that listening to the President, his message really came down to two things -- wear a mask, get boosted.

KEVIN LIPTAK, CNN WHITE HOUSE REPORTER: Yes, and essentially, the first four or five minutes of that whole speech were trying to convince people

not just to get boosted, but to get vaccinated, to get their first shot. And in a lot of ways that could have been a speech that he gave in June or

July of this year, when he was still trying to convince people to get vaccinated.

Those numbers still remain stubbornly low and it is part of what's driving the current surge is that, you know, a good percentage of the United States

still has not gotten one shot.

And now that the President did have a few things in there that were new, he said he was doubling the U.S. order for Pfizer's antiviral pill. They had

ordered 10 million courses, now they're ordering 20 million courses.

Pfizer's CEO says that those 20 million courses won't be fully available until the end of September. The chemistry of making them is quite

complicated. So that's more of a long-term strategy. In terms of a short- term strategy, you know, it was evident in that speech that the President doesn't really have a lot he can do at this point that is going to ease

this current spike in cases.

The U.S. recording a million cases in the last couple days, the President, you know, voicing his frustration that testing lines are still really long,

but he is still not providing, you know, any details of this new testing plan that he rolled out before the Christmas holiday. He's ordered 500

million at-home rapid tests.

QUEST: Kevin --

LIPTAK: Yes, Richard.

QUEST: Just looking back, just to turn around and get this. The 300,000 was the previous maximum. I'm sure somebody will correct me if I've got

that wrong. December of the year before 2020. We've got three times that number of cases and in the U.S. and now on a daily basis. And now the

hospitals systems are under pressure, the numbers of deaths are likely to rise.

LIPTAK: Right.

QUEST: This is related -- I mean, this is related to that low level of vaccination.


LIPTAK: Yes, of course and you know that numbers -- that number of cases is actually widely considered an undercount because so many people are

taking these at-home tests and not necessarily reporting to the government. And so while you do see these case, numbers spike, you know,

hospitalizations are up and some hospitalizations are seeing the strain, but it's certainly not rising at the same level.

And that's one of the things I think you're trying to -- you hear Biden trying to balance in his speeches. He's saying that yes, case counts are

high. Yes, the government is doing everything it can to try and mitigate that. But this is not March of 2020. This is not July of this year, when

the delta surge was happening.

We do have these tools to mitigate the effects of the virus, so you are starting to see the shift between with Biden and public health officials

trying to focus on the severity of these cases, and not necessarily the overall case count, trying to make the case that we can return to normal,

but you know, this virus isn't going anywhere anytime soon.

QUEST: Kevin, thank you. Kevin Liptak in Washington.

One note I just want to bring to your attention, I was looking at this, it's fascinating. The lowest level of deaths on a daily basis was on July

the 11th of last year, in the United States, there were 30 deaths in the U.S.

The latest numbers for January the 3rd, 1,600 deaths -- daily deaths and it's been an average of about 1,200 to 1,400 for the last three months or


Similar issue, at least in terms of number of cases, the U.K. has hit another record high. The Prime Minister Boris Johnson is striking a more

hopeful tone when he spoke in the press briefing a short while ago, acknowledging the weeks ahead will be challenging and that the U.K. should

expect service disruptions.

The Prime Minister suggested England is in a better position than a year ago to ride out the omicron wave without lockdowns, if people stick to the

current Plan B.


BORIS JOHNSON, BRITISH PRIME MINISTER: We have a chance to ride out this omicron wave without shutting down our country once again. You've got to

follow the guidance, you've got to make sure you wear a mask in confined spaces, on public transport.

You've got to make sure you get a test before you go to a venue where you're going to meet people that you don't normally meet. You've got to

make sure that you, for instance, do not take unnecessary risks.


QUEST: Scott McLean is with us. Plan B came in when omicron came along and the Prime Minister has pretty much stuck to the idea that there are no

greater measures needed, basically riding it out.

At the moment, if you look at hospital and deaths, is that position justified?

SCOTT MCLEAN, CNN CORRESPONDENT: Look, Richard, I think that the government's position at this point in time is that yes, they acknowledge

that hospitalizations are beginning to rise; deaths, not really. They're relatively stable at this stage of the game and the vast majority of people

who are in the hospital right now, certainly the vast majority of people who are in ICUs, right now are the unvaccinated or at the very least people

without the booster shot.

And so from the government's perspective, they're sitting here going, look, we've given you all of the tools in order to not end up hospitalized, do

not end up dead. You just have to take them.

That doesn't mean it's every man for himself. Obviously, those restrictions, those Plan B restrictions are still there for a reason, and

likely, they're doing at least something to slow down the really rapid spread of the omicron variant. But those hospitalizations that we're seeing

right now, even in London are still nowhere near the peaks that we saw previously.

Certainly, the deaths are not even close to the peaks that we saw previously. So the government feels like at some point, the economy has to

keep going, schools need to stay open. At some point we need to kind of get on from this, and now is that time.

QUEST: Right. But if the South African experience is anything to go by, where numbers of cases have already started to fall, and if the U.K. is a

few weeks out of the United States, is there a feeling that the worst, we're either in the middle of the worst or the worst is about -- has been

and gone?

MCLEAN: So the one sort of caveat that they had is that right now, a lot of the spread has been fueled by younger age groups. The expectation is

that those younger age groups are going to be spreading it to older age groups, and that is where you might end up with more problems with

hospitalization, but certainly they don't expect to see anything like they saw before.

And so yes, certainly the worst of the case counts might be starting to level off, hopefully, cross your fingers, touch wood. But hospitalizations,

they do expect to probably get a little bit worse.


But again, Boris Johnson's point today and the scientific advisers' point is that look, staff shortages are going to be a problem. They're not good

for the economy, they're certainly not good for the healthcare system, but they are a heck of a lot better than going back to lockdown.

QUEST: Scott McLean in London. Scott, thank you.

On last night's program, you'll have heard me talking to Elliott Gotkine when I sort of made a joke about when will Israel go to booster shot five,

six, and seven, since it's already doing more booster shots?

Well, now one of the creators of the Oxford-AstraZeneca vaccine has basically said, "We can't keep going on this way." Dr. Andrew Pollard has

warned against relying on regular boosters, quoting, "We can't vaccinate the planet every four to six months," he told "The Daily Telegraph."

"It is not sustainable or affordable. The focus should instead be on the most vulnerable."

Now, cases have been surging, looking at this two month chart of average of cases in the U.S., U.K. and France. And if you compare that to the rise in

hospitalizations, and there you see it. There you see, the comparison, let's see if we go backwards and forwards between the two, and you'll see

quite clearly the number of COVID patients, the number of cases rising sharply versus the number of people in hospitalization -- in hospital -- it

is nowhere near in the --

Carlos Del Rio joins us from Emory University in Atlanta. I'm not trying to make too much of this, but it does seem that this is significant. We know,

at least amongst the vaccinated and the treated, omicron is something to be careful of, but it's not going to kill you or highly, highly unlikely to.


I mean, I think we are learning more about this variant. The first thing we can say is that it is highly transmissible. So your chances are that you're

going to see it, this variant is going to find you.

But the second thing, and that's why you're seeing such a huge number of cases globally, but the second thing we learned is that while the variant

has ability to evade the immune system, if you're vaccinated, if you're booster, you are not going to get severely ill, you're not going to end up

in the hospital.

If you're vaccinated and boosted when you confront this virus, you're going to get a head cold, you're going to get a head cold, but not more than

that. The problem is, we still have a large number of the population unvaccinated both locally here in the U.S. and globally.

QUEST: Right. Well, let's put those people to one side since they seem to be at least, in the United States, I mean, the rest the world haven't got

the vaccines in enough numbers. But on this question of where next?

So the Pfizer guy, is basically saying we can't keep vaccinating. I mean, that's what we're doing. You know, we know that omicron defeated double

vaccine and the extra and the safety came from the booster, in a sense. We can't keep vaccinating or boosting the population of the world.

DEL RIO: Well, I agree with that. I think we are not going to beat this virus by boosting. We're going to beat this virus by vaccinating the world

and by using, as President Biden said, the other strategies.

This is not just vaccination. We have to use vaccination. We have to use masking and we have to use testing. It is really layer some mitigation that

are going to make a difference.

QUEST: But when you say make a difference, can you sketch for me what an end scenario looks like? Whether it be next year, the year after? Or 2030?

What does the end of COVID-19 look like?

DEL RIO: Well, it's been very hard to predict the future with this virus, Richard, but I would say that omicron may be the beginning of the end. So

many people are going to get infected that at some point in time, we're going to reach a certain level of immunity and protection from another


And unless it's a very different variant -- very, very different -- I think we're going to go through periods of the epidemic starting to slow down. I

am hopeful that over the next four to six weeks here in the United States, we're going to start seeing a peak and the peak may be very high, but when

then we're going to start coming down in infections.

And what happens after that really is going to depend on what happens globally and that is where we have the opportunities like the water is

receding. Before the next wave comes, we have to get out there and vaccinate the world to prevent another variant from emerging.

QUEST: Dr. Del Rio, the problem is we knew that last year and people like you came on programs like this and said exactly that, you know, no one is

safe until everybody is safe. We didn't really listen, or at least the policymakers didn't and we still have large parts of the world, the

developing world unvaccinated. That's where the next omicron is coming from.

DEL RIO: Yes, that's absolutely right, and need leadership and I'm hoping that the Biden administration will do something. We need global leadership

to really lead an effective global vaccination campaign.


We've done it previously with other diseases. We did it with smallpox. He did it with HIV, with PEPFAR. We have to do it with COVID.

QUEST: Well, briefly, Doctor, because we're just about out of time, but I'm getting weary of people telling me that masks don't work. You're an

expert in this. Do masks work?

DEL RIO: Absolutely, Richard. There is no doubt that masks work. But for masks to work, you have to use them, you have to wear them. I carry in my

pocket my mask, this is a KN95 mask. It is well fitted to me. And I recommend -- I carry it in my pocket, so when I go to places that there's a

lot of people like a grocery store, I can just pull it up and rapidly put it on.

QUEST: Good to have you, sir. Thank you. Thank you for taking the mask and the time to talk to me.

DEL RIO: Delighted to be with you.

QUEST: We'll be with you again soon. Thank you.

Now coming up, it is QUEST MEANS BUSINESS this evening. Theranos chief executive, Elizabeth Holmes has now been found guilty of investor fraud.

We're going to really get into the verdict and the impact on Silicon Valley startup culture.

And the market's positive note, and then there's a bubble, and it could be ready to pop.

The Business Professor, Scott Galloway.

No, we're not going to pour cold water on you yet. We're going to give you a dose of reality, well, something like that.


QUEST: Now, it was decidedly mixed, the verdict in the trial of former tech icon, Elizabeth Holmes and for lawyers, well, it raises the question

of the future of Silicon Valley startup culture.

So she was the founder and CEO of the blood-testing company, Theranos. You know that -- and she was found guilty of fraud. A cautionary tale say some.

Prosecutors say that Theranos overstated its financials. It misrepresented its work, used the media to spread lies and Holmes led the company to a

valuation of $9 billion. In doing so, raising nearly a billion from eager investors.

Camila Bernal has more on Holmes' fall from grace.


CAMILA BERNAL, CNN NATIONAL CORRESPONDENT (voice over): Elizabeth Holmes leaving a San Jose courtroom knowing she is likely headed to prison.

QUESTION: Anything you want to say?

BERNAL (voice over): The jury finding her guilty on three Federal counts of wire fraud and one count of conspiracy to commit wire fraud for lying to

investors about her blood testing technology, but the jury also found her not guilty on four additional charges in relation to patients.


Jurors did not reach an agreement on three other wire fraud charges pertaining to investors. She faces 20 years in prison for each charge, plus

fines, and restitution.

ALAN TURKHEIMER, JURY CONSULTANT: At some point in the deliberation, jurors on both sides in not guilty and guilty camps said something to the

effect of look, this is how I feel and you guys aren't going to convince me otherwise.

BERNAL (voice over): Prosecutors argued her company, Theranos, promised a wide range of blood tests using just a few drops of blood, but did not


ELIZABETH HOLMES, FOUNDER AND CEO, THERANOS: So this is the little tubes that we collect the samples in.

BERNAL (voice over): They argued that Holmes lied about the accuracy of the blood test, the capabilities of her technology, the company's

relationship with the military, and its validation from pharmaceutical companies.

SARA ASHLEY O'BRIEN, CNN BUSINESS REPORTER: So we saw kind of the charisma, the charm, the way in which she likely spoke to investors in her

meetings with them, you know, and when she was pitching the company.

BERNAL (voice over): She captured the attention and money of powerful and wealthy investors. Among them, former Secretaries of State Henry Kissinger

and George Shultz, former Secretary of Defense General Jim Mattis, the family of former Education Secretary Betsy DeVos, and media tycoon Rupert


O'BRIEN: She was hailed on the cover of magazines as the next Steve Jobs. She claimed to have revolutionized blood testing.

BERNAL (voice over): But the prosecution proved otherwise, and they are hoping to do it again in the trial of her longtime partner, and COO of

Theranos, Ramesh "Sunny" Balwani, who is potentially facing decades in prison for the same charges.

The trials were separated after Holmes made bombshell accusations of sexual and emotional abuse against Balwani. He has denied those allegations and

has pleaded not guilty to the Federal wire fraud and conspiracy charges.

And in the meantime, the darling of Silicon Valley with a vision of the future now facing the consequences of her past.

Camila Bernal, CNN, Los Angeles.


QUEST: CNN legal analyst, Elie Honig is with me. Good to see you, sir. Now, then, if we look at the charges and how they were disposed, Holmes was

found guilty on four charges of defrauding investors. But there were three not guilty of additional charges of defrauding patients, and the jury

returned no verdict on three of the charges concerning defrauding. Now, where the mistrial is expected.

Take those three, can you see a prosecutorial trend in there that the jury have followed through?

ELIE HONIG, CNN SENIOR LEGAL ANALYST: So Richard, I think if you just look at the surface and sort of count up the charges, this could look like a

split verdict, four guilty, four not guilty, three no verdict, and by the way, I think it's virtually impossible. -- not impossible, but I think

there's virtually no chance that prosecutors retry those three counts, I think they'll dismiss them.

But this is not some kind of tie game. This doesn't work like baseball or soccer where you go okay, four-four, it's tight. No, this is an outright

win for the prosecution. This is a crushing loss for Elizabeth Holmes because the way the sentence is calculated is the Judge will add up the

total loss amounts, and the total loss amounts on the counts of conviction is over $140 million.

The loss amounts on accounts that were found not guilty was just a few million dollars. So, it's very little solace to Elizabeth Holmes that she

got a few counts of not guilty.

QUEST: No, but for the industry. Looking at it, has she been convicted, if you like, of the bit that the industry -- any industry -- Silicon Valley,

tech industries, biotech -- will be looking at and saying her arguments that this is new technology, it's not considered -- is there anything the

industry will look out and say, well, we've got more out of that than we thought?

HONIG: I think this should be a stark warning to the industry because the real question here is, did Elizabeth Holmes cross the line between on the

one hand optimistic projections and salesmanship and hype that may not be illegal, but on the other hand, did she cross that line into fraud?

And in this case, the proof was clear that she had committed specific statements that were fraudulent about deals that she had with the military,

about deals that she had with pharmaceutical companies and other deals like that.

Now, the other thing that's really important to keep in mind here, Richard is, she was convicted on the counts that related to fraudulent statements

that she made to investors, to people who invested in tens or hundreds of millions of dollars with Elizabeth Holmes.

The count that she was found not guilty relate to her statements made to patients and to people in the medical industry, so I think there's a real

warning there for people in Wall Street, in Silicon Valley, or in the business world in general.


QUEST: Yesterday on this program, we had Raj Rajaratnam who you will be well familiar with, who is now out of prison and he is highly -- on the

show, he was highly critical of the prosecutorial way forward. I mean, without delving into his accusations, again, I'm sure you're very familiar

with them.

He basically says, it's just about impossible when the prosecutor decides to go for you, you are sunk.

HONIG: I do not sympathize or empathize with Raj Rajaratnam on that at all. By the way, my office prosecuted him. The guy is across the hall from

me, we are prosecuting him while I was across the hall prosecuting a murder case. So, I'm well familiar with that case.

The problem with Raj's statement there is he is not taking into account that maybe prosecutors get it right. Maybe prosecutors, Federal

prosecutors, in particular only charge you if they have specific evidence of fraud. That's why Raj was convicted. That's why Elizabeth Holmes was


I mean, Raj Rajaratnam is on tape committing insider trading. He did his time. God bless him. But I think he's wrong to say the prosecutors get it


This is a jury's decision. Let's remember that. And the jury here found Elizabeth Holmes had committed fraud -- specific fraudulent statements

worth over $140 million.

QUEST: The interesting thing is, on a wider issue, we know from Enron, where there were some convictions and we know from WorldCom and we know

certainly in the U.K., unrelated to the Ghislaine Maxwell case here, but in the U.K., of course, her brother was acquitted many years ago in the

Maxwell case.

We know prosecuting white collar fraud, insider trading and the like is notoriously difficult. Do you think the U.S. has found a way of doing it?

HONIG: Well, you're right that white collar fraud cases like this are notoriously difficult because there is so much gray area. There is so much

gray area involved in Wall Street salesmanship and puffing up in perhaps optimistic projections, and prosecutors are very much aware of that.

Prosecutors are not going to bring a case certainly out of the Southern District where I used to work if it's a close call, if it's gray area, if

there's arguments either way because we are always as prosecutors cognizant that it is our burden of proof. We have to prove our case to a jury beyond

a reasonable doubt. That's a very high burden. It has got to be unanimous and in this case -- yes.

QUEST: I was reading in your book, your excellent book -- I was reading in your book, though this point, is it win at any cost. There seems to be

sometimes a real feeling that the prosecutor is and you're right, you're supposed to be, do we have a case? And if not, he gets the -- he or she

gets the doubt.

But it does seem to be win at any cost.

HONIG: It's not win at any cost. I would say this. First of all, you don't charge a case unless you are convinced A, you have the proof. B, you are

going to win at trial and C, it's a righteous and necessary prosecution. So I'd start with that.

Second of all, it's not win at any cost because there are very specific and strict rules, rules of evidence, rules of ethics, of ways that you can and

cannot argue your case to a jury.

So no, it's not win at any cost. Once you charge a case, you have by that point, assessed the evidence, gathered the evidence, and you're convinced

that you have a righteous case, that should be won.

But there are very important limitations on prosecutors here in the United States.

QUEST: Gosh, I'm glad we had you today, Elie. Thank you for coming in and talking about that. I am much grateful. Thank you.

HONIG: Thanks, Richard.

QUEST: Two U.S. mobile carriers say they'll postpone 5G where it is getting rolled out near American airports.

Now, this is interesting. Who, where, what is the risk?

After the break.




QUEST: I'm Richard Quest, good day to you, more QUEST MEANS BUSINESS.

Airlines are worried 5G towers near airports could make planes unsafe.

And Scott Galloway is here with the new year's prediction, saying 2021 was the bubble and 2022 it will pop.

Here, at CNN, the facts always come first.


QUEST (voice-over): A lawyer for Prince Andrew asked a U.S. judge to dismiss a civil lawsuit, accusing the Duke of York of sexual assault.

Attorneys are arguing that accuser Virginia Giuffre signed an agreement with Jeffrey Epstein in 2009, which releases Andrew from legal action. The

judge says he will make a decision on the motion pretty soon.

A key suspect in the assassination of Haiti's president has been extradited to the United States from Panama. A Colombian national was scheduled to

appear in Florida court earlier today. He faces two charge on conspiracy to kidnap and kill a foreign leader.

U.S. transportation officials say they're trying to clear a serious traffic jam caused by a snowstorm. Drivers in Virginia have been stuck on a major

highway for almost a day. Emergency crews have been plowing through the snow, hoping to get people released by today.

The Australian Open champion Novak Djokovic will defend his 2021 title after being granted a medical exemption. There was some debate whether he

would participate in this month's tournament.


QUEST: A last-minute agreement has given U.S. regulators two weeks to try to settle a growing dispute over the rollout of 5G services, where the

equipment is near the airport. The dispute includes Verizon and AT&T, the parent company of CNN.

At its heart, a key piece of equipment on any aircraft, you can see it on your screen now, is the radar altimeter. It uses radio signals from the

ground to tell the pilots how far they are up and helps them land in low visibility.

They do so using a protected part of the frequency spectrum, granted to them by the telecoms company. However the telecoms company are using

adjacent space for 5G, which is the next generation of cell phone service.

Airline CEOs are very worried that the telephone frequency could interfere with that being used by the aircraft, since they are next to each other.


SCOTT KIRBY, CEO, UNITED AIRLINES: The passengers will be safe but it will be really damaging to customers. I mean 100,000 customers a day impacted by




QUEST: Telecoms saying 5G has been rolled out around the world without incident. Brian Fung broke this developing story.

We must go no further.

Who do we have here?

BRIAN FUNG, CNN CORRESPONDENT: This is my daughter, Chloe.

QUEST: Well, Chloe is going to make her first, maybe not first TV appearance but whilst Chloe hopefully remains with us -- and absolutely

beautiful she is, too, and we will not be distracted by her -- Brian, tell me about the idea of, how did we get this far?

How did we get to a rollout of 5G without this coming up and being dealt with?

FUNG: Well, you know, as you know, 5G is the successor to 4G LTE, supposed to provide faster speeds, can support new applications like virtual reality

and internet of things and the carriers of AT&T and Verizon had been planning to launch 5G service around airports on January 5th in the United


Now the aviation industry officials had expressed concerns about this plan because of the potential risk to, as you said, radar altimeters, which is a

technology pilots use to gauge altitude.

Now the plan agreed to late last night is that the tech companies, telecom companies will hold off on rolling out that service for two weeks while the

officials negotiate with the federal aviation authorities on regulations to limit the power of 5G around airports.

QUEST: Well, whatever else happens between now and the end of the year, you get four marks for telling us about 5G and airlines while Chloe, who

was magnificently behaved throughout all of that, now can go and wail herself privately. Thank you, Brian.

Now the airline industry was threatening to sue, to block 5G rollout. Mary Schiavo is the senior aviation analyst, former inspector general of the

U.S. Department of transportation.

Good to see you. I think you have it easier without any noise or distractions. But look, two questions first of all.

A, is it a real problem and, B, how did we get so far before somebody really said, "Oi?"

MARY SCHIAVO, CNN AVIATION ANALYST: Isn't that the greatest two questions to ask about a very important government function?

Well, you know, the problem is that it could be a real problem but the government didn't move fast enough. The government dropped the ball and

didn't get all the studies in place that needed to be done to ascertain whether it's going to be a real problem or it's not going to be a real


Boeing warned that these studies needed to be done; the airlines warned; the pilot unions warned and the DOT just kept on kicking the can on down

the street. And remember the Department of Transportation in the United States is a cabinet level agency.

The Federal Communications Commission, which auctioned off these 5G spectrum bands, is not. So for the Department of Transportation to say, oh,

oh, gosh, we were taken unawares, so we don't have the studies done when the FCC moved ahead, sounds a little disingenuous. So we're not sure if

it's going to be a problem.


QUEST: We aren't or we are, is there any reason other than the fact these two things are adjacent to each other in the spectrum?

Around the 4.2-4.4 megahertz, but is there any reason to believe that there could be a problem or is it just the case of we're just making sure there


Have there been cases suggesting there is an issue?

SCHIAVO: Well, I think France is probably the most prominent nation that said once they did their rollout and sold off some of the spectrum for cell

phone and other providers and they left a bigger buffer between what they sold off and their aviation uses, they did report some problems.

So what they did is what the Federal Aviation Administration has now done, which is put in place warnings and, at certain times, they may have to

limit operations. Now what the FAA did, literally, at the end of December, a couple days ago, is they're going to issue notices, NOTAMs, to operators

in the area where they have detected interference from commercial operations to aviation operations.

And then the airlines will have to cut back on their in those services in those areas while the interference is in place. But some manufacturers of

equipment say their equipment has enough shielding; it won't be affected.


SCHIAVO: There is one manufacturer of equipment of the radio altimeters, says we may have a problem but it remains to be seen. So there's an

emergency directive in place to deal with this and they'll have to sort it out as the days and months go on.


QUEST: But, Mary, this equipment is used routinely. It is also used, of course, when visibility is poor. You don't really want to be the aircraft

landing when the interference begins, before the NOTAM is issued, do you?

Someone will have to be the guinea pig, someone will have to be in the front to say, oh, by the way, air traffic control, there's interference.

SCHIAVO: That's exactly right. And I think that's what the airlines -- and kudos to the airlines. They're the ones that finally yelled loudly enough

that the FAA and the DOT took action.

But they're the ones that said, look, we're the ones up there flying and then we have a notice, you know, two problems; one, we get this NOTAM that

says we can't run our scheduled operations, we have to cut back.

Or two, our planes are up there and they're getting interference, we're worried, one, we don't know that we've gotten interference, because that's

an issue, too.

Or, two, we get the interference and all at once we're going around.

QUEST: Finally, just to be clear, this equipment, the radio altimeter, it's not a minor piece of equipment that they control from the cockpit,

like the coffee maker or electrics in the toilets.

SCHIAVO: Exactly. And this is the piece of equipment that gives pilots the warning, if they're too close to the ground or any terrain, this is the

equipment credited with saving thousands of lives over the past 2-3 decades, that literally gives you an audible warning.

It says terrain, terrain, pull up, pull up if you're too low: life-saving equipment that airlines worry may not work in some areas.

QUEST: We'll follow closely, grateful that we had you. Lovely to see you as always, all the best, happy new year to you and your family. Thank you.

SCHIAVO: Thank you, you, too.

QUEST: Now QUEST MEANS BUSINESS market predictions for the year, why one expert believes the bubble is brewing and could be ready to pop.




QUEST: Second trading session of the year is nearing an end on Wall Street and the Dow, well, it looks set to set another record after posting its

highest close on Monday.


So we are at records at the moment. The triple stack shows similarly strong gains across, except for the Nasdaq, which is off just over 1 percent. But

the market, if you look at the Dow 30, well, the Dow 30 is (INAUDIBLE) doing the best. Salesforce is doing the worst.

Scott Galloway is professor of marketing at NYU School of Business. He writes that 2021 is the year of the bubble, 2022 may be year of the pop.

He's with me from New York.

Everybody wants to know -- and I realize, that 5 o'clock, your predictions for this year, you'll be releasing them. You'll be releasing them in a

livestream and we will be showing where people can watch those, those predictions.

If you had to -- before we get to next year, if had you to gauge your successes from last year's predictions, what do you think?

SCOTT GALLOWAY, NYU SCHOOL OF BUSINESS: Better to be lucky than good. This year, things worked out. We predicted bitcoin would hit $50,000. We

predicted there would be -- that AT&T would divest assets, that CNN would go behind a paywall.

What we didn't get right, I thought Peloton would be acquired but I think we got seven of the 10 right. So last year we did all right, Richard.

QUEST: All right, this year, I see your main predictions are coming out shortly but basically saying, Zuckerberg, the biggest tech fall-out


GALLOWAY: So there are already several metaverses, Twitter, Fortnite, FIFA. One of the keys to a metaverse, a series of internet services

connected together by one operating system, that kind of permeates geographic boundaries, the key to it is a portal.

And that is entry into a different universe and the app store is entry into a bunch of different metaverses. And the reason I think the Facebook

metaverse or the Zuckerverse will fail is the oculus is selling between 3 million and 5 million units. There were 60 million pairs of Crocs sold last

year; there were 130 million AirPods sold.

Those are going to be portals to other universes. So I think the metaverse will be a big deal but I think it'll be the Appleverse not the Zuckerverse.

I think the oculus is more prophylactic in ensuring no one will get near you.

QUEST: Right. But the reality is that, if one looks at the market overall, and I've got a dozen people now on the program all saying there is

something smelly and it's going to go wrong next year. You talk about the bubble and the pop.

But what does that mean in reality?

For ordinary people, what does that mean?

GALLOWAY: That's a correct question, I want to be clear. Economists are predicted nine of the last three recessions and seven of the last three

corrections. The bottom line is I don't know. We know 2000 is coming.

The question is it 1997 or 1999?

I do think you're seeing a reattachment to fundamentals, especially among meme stocks, where people are deciding a theater chain probably isn't worth

more than many media companies, that GameStop probably isn't worth more than a lot of very profitable growing retailers.

So you'll probably see a reattachment to fundamentals, which, over the long haul or medium term, seem to rear their ugly head. Whether it happens this

quarter or in three quarters, you could argue it's already happening. Most facts are off their 50 weeks high. Over half of them are more than 50

percent off.

But it seems we're in the midst of a reattachment to fundamentals.

QUEST: One could argue, never mind the Dow is at a record today, if you look at the components, Nvidia, Microsoft, Twitter, they are down 30-40-50

percent. So there's a strong argument for saying, if this isn't the pop, I don't think I would want to see it when it happens.

GALLOWAY: Oh, yes, but I mean -- and I get a lot of grief for this -- but, Richard, keep in mind, Tesla could drop 80 percent and it would still be

worth more than General Motors and Ford combined.

The electric vehicle market, if you take Tesla, Rivian and Lucid, are worth more than I think the top eight automobile manufacturers -- and throw in

Boeing and Airbus.


So there's a lot of air that could still be let out of this balloon.

QUEST: How do you -- how do you, then, properly value these stocks, other than the old-fashioned way: earnings per share, future earnings stream,

all the things that are very unfashionable?

GALLOWAY: Again, this will sound like a Boomer comment, Richard, and I think you and I are about the same age. I think fundamentals over the long

term are going to rear their heads again.

What's typically happened, throughout the history of the Dow, most of the time, there's a difference between pricing and valuation. And the pricing

recently has been more a function of kind of 80 percent story and 20 percent fundamentals for most of these stocks.

And typically, through history, most companies have a set of peers and trade within a certain range, based on the kind of vision of the CEO. And

it's somewhat flipped. Now there's literally story stocks, where it's almost impossible -- I mean Rivian hasn't delivered a car yet. And it has

the value of General Motors.

So it's become all about story. So I wonder if we'll flip back to less about the story and more about the fundamentals. And also, stocks tend to

trade, the most vulnerable stocks, I believe, they usually trade on fundamentals or technicals or short squeeze, what have you.

But the new phenomenon of the mob squeeze, where they trade on movement. I wonder if the stocks driven by movements, if you will, or so-called

movements in 2021 are going to register the greatest pain.

QUEST: Well, we'll be watching closely., at 5:00 you'll have the predictions. I do like the way you have the predictions and

you're quite open about how well or badly you did -- by the way, the beauty of Google, no, I'm older than you Scott, I've got two years on you.

I'll be 60 this year. You'll merely be a young 58.

GALLOWAY: There you go, there you go. Can learn a lot from you, Richard. Happy birthday.

QUEST: I think it's the other way around, I'm under no delusions about that, Scott. Thank you, sir, good to have you with us.

The Dow is on pace for another record close, a final check of the markets, coming up next.





QUEST: So there are just a few more moments left to trading on Wall Street and it's new records for the new year on the Dow.

It is worth remembering that, unless you've got a Dow portfolio, you won't be seeing those sort of gains. Look at the other averages and you have a

better idea of what the broader market is doing.

The S&P is barely eking and the Nasdaq is heavily down. So if you're off tech stocks, you're going to be down on the day. The components of the Dow,

a quick look there and you will see a lot of green, some good gains, Caterpillar on infrastructure, Salesforce down at the other end of it.

That's the way the markets are looking.

We will take a short break and, afterwards, I give you a "Profitable Moment." Can't say fairer than that.




QUEST: Tonight's "Profitable Moment:" over the last two days, we've given you two different views on jurisprudence, if you will. Raj Rajaratnam, who

says prosecutors are zealous, win at all costs and, tonight, we had one of our analysts talking about the Theranos case, saying, no; they are not

winning at all costs. They make a proper judgment and go for it.

Look, as someone who trained as a lawyer, I have enormous faith in the judicial system and that also means good faith in the jury system.

Do I always think they get it right?

Well, probably not.

And do I like the thought of some of the people who may be on the jury, entrusting your fate to them?

Definitely not.

But the reality is the only other system that is trial by judge alone. And those countries that do have it do have mixed views on whether the

acquittal cases or rate is higher. Put another way, it depends where you're coming from.

If you're Raj Rajaratnam, you think it's all dreadful and you've been done up and turned over. If you're early on, make you think it's the system,

that you're doing your best to get them convicted and the guilty locked up.

In other words, you pays your money, you takes your choice. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever

you're up to the hours ahead, I hope it's profitable. "THE LEAD" -- that's the closing bell -- is next.