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Quest Means Business
Elon Musk To Buy Twitter For $54.20 A Share; China COVID Concerns Weigh On Global Stocks; Russian Economy In Shambles Due To Sanctions Says Secretary Blinken; Elon Musk To Acquire Twitter And Take It Private; Macron First French President Win Re-election In 20 Years; Twitter Shares Higher After Elon Musk Deal. Aired 3-4p ET
Aired April 25, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ANNOUNCER: This is CNN Breaking News.
RICHARD QUEST, CNN BUSINESS ANCHOR: Good evening. I'm Richard Quest.
We start tonight with breaking news of the deal. Elon Musk will be buying Twitter for $54.20 a share. Twitter announced that just a few moments ago,
after the shares were halted in trading. The deal puts Twitter's value at around $44 billion.
The share price is up 38 percent premium on the trading on April 1st when Musk first announced his stake in the company. The shares were halted a few
moments ago ahead of the deal before the suspension. They were up over five percent.
Remember the deal is up $54.00. They are at $51.00, so the deal price and the market price are slowly coming together.
We'll talk about this. Joining, Rahel Solomon is with me. So if we look at what's happening here, Rahel, why did they suddenly change their mind?
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Well, Richard, I think a few things happened.
First of all, what a dramatic and incredible turnaround from a week ago. But yes, part of the reason why is because essentially, Musk show that he
was able to secure the financing.
On top of that, you have the fact that there weren't a ton of other bidders making serious offers. And so his bid, Elon Musk's bid seemed a lot more
credible and legitimate and we also have to expect that there was some shareholder pressure to accept $54.20. There are certainly questions about
if the stock can sort of hold at the levels it has been. It hasn't exactly been a great performer.
And so it seems like those were the three factors. One analyst telling me that especially the securing of the financing was the game changer.
QUEST: Right. So Morgan Stanley is providing the money, but I wanted to show you the timeline, because the timeline is instrumental in really
seeing just what a volt fast this has been.
You go back and you start from the beginning when Musk, first of all, made the offer, having made the offer that was roundly rejected by Twitter,
which then went on to put in a poison pill. And then suddenly, now the talk is in the deal.
Look at that, so April, the 4th, a 9.2 percent stake, gets a seat on the Board, decides he is not going to take it, makes the bid and then the
poison pill, all in a month.
SOLOMON: All in a month. In fact, it sort of went from what if Elon Musk on Twitter to you know, just an hour ago, we were talking about when are we
going to get the news. In fact, someone I spoke to earlier today essentially putting out five percent, maybe about a month ago or when these
-- when Elon Musk started to make his interest a little bit more clear to 95 percent today.
And so again, just a stunning reversal and a very short period of time, Richard, it has been an eventful few weeks and certainly an eventful day.
QUEST: I'm just looking at the tweet that he put out earlier in the day, Elon Musk. He said earlier in the day, this was before it was announced two
hours ago. "I hope that even my worst critics remain on Twitter, because that is what free speech means."
Now, the whole thing he said is basically, this is about free speech, but nobody is really sure how he translates $48 billion is a lot of money. How
do you get -- what do you buy with that in terms of free speech?
SOLOMON: Well, you know, it appears that you get more influence. I mean, he has said in S.E.C. filings that he wants to impact change, that he wants
to really make it much -- he wants to sort of impact more change for the company, and he wants to prioritize free speech and he said at least that
S.E.C. filing that he needed to make it private to do so.
What we're hearing is that it may turn into a paid subscription model, and so the question is, you know, he himself has 83.4 million followers, how
many people would actually pay a few dollars a month? That's at least the number that's being floated around right now to use Twitter, would you
Richard?
QUEST: That's a matter of opinion when I was looking at -- wondering what else I'm paying, but yes, I mean I'd think twice I suspect, except that it
is the major news source in one way.
[15:05:05]
Rahel, finally there are concerns that with SpaceX, with Tesla, with all the things that he has got, management attention, even a genius like Musk
will be depleted.
SOLOMON: Yes. And it's sort of similar concerns that we heard with Jack Dorsey of Twitter that, you know, once you sort of start leading more
companies, I mean, how can you effectively manage and focus any one particular company and we're hearing the same sort of concerns about Elon
Musk. In fact, I asked Dan Ives of Wedbush about this just a few hours ago. Take a listen.
(BEGIN VIDEO CLIP)
DAN IVES, MANAGING DIRECTOR OF EQUITY RESEARCH, WEDBUSH SECURITIES: Musk dedicates more time to Twitter, it is a balancing act. It's tough to juggle
all these balls in the air. Three core companies along with SpaceX, as well as he is pledging shares from Tesla.
And I think in the eyes of many, it's really -- he is you know, pledging caviar in terms of his Tesla stock for in what is really a pretzel on the
streets of New York in terms of Twitter.
(END VIDEO CLIP)
SOLOMON: So I mean, Richard, yes, even for a genius, a visionary like himself, as he has been called, it is a tall task to run so many companies.
I guess the question remains to be seen, will he be able to do it?
QUEST: Rahel, thank you, and also welcome -- welcome your first week here.
SOLOMON: Thank you.
QUEST: First time, you and I had a chance to talk with. We're delighted that you're now part of the CNN family. Welcome on board.
To AXIOS media reporter, Sara Fischer, who is with me. Well, now come on? Did you think he was going to do it? Did you think he was going to get it
in the end?
SARA FISCHER, AXIOS MEDIA REPORTER: I honestly wasn't sure what to make of it, in part because I didn't know how he was going to secure this from a
financial perspective. We got note that he had some -- secured some finances via Morgan Stanley some debt, but I didn't know if he was going to
bring other private equity firms on et cetera.
To be honest, I'm kind of shocked that it happened so soon over the weekend, but it also puts an end to so much speculation that was -- because
it was not just difficult for shareholders to navigate but the employees at Twitter, too.
QUEST: So what broke it for him? I mean, clearly, the offer had been around the poison pill. Twitter Board and management don't suddenly wake up
one day out of Damascus and say: Oh, we've seen the light. So what changed for the Board that they knew they had, firstly, no choice, but to speak to
him? And secondly, to accept the deal?
FISCHER: Well, I think last week, when Elon Musk submitted that S.E.C. filing, he said he would issue a shareholder tender offer, which
essentially says: Look, I will buy shares directly from the shareholders at a higher premium than what the stock is trading at today. I think that
freaked out the Board. And essentially, the Board instead of calling Elon's bluff, Elon called the Board's bluff. And he basically sat down with them
and negotiated a deal.
I think the other thing that the Board was worried about was potentially a proxy fight. You know, if they didn't take up his initial bid, Elon could
have worked with other shareholders to sort of vote out and make the board the way they wanted it and they didn't want that.
QUEST: The Board looks, I was going to say weak, but I was going for even worse than that, in a sense. I mean, they go through all this, we're never
going to talk to you. They even take a poison pill. They don't even say, we're going to put it to shareholders, or we'll have a proxy fight. They
actually actively work against it, and then they have to turn around and eat it.
FISCHER: Yes, and I think part of that actually has to do with Twitter's fundamentals. You know, they have been profitable, I think, from 2017 to
2018, and 2019. But they've struggled with profitability. They've invested a ton in headcount for things like safety and security. And I think what it
comes down to is that they're nervous, if they don't take this bid at $54.00 a share and the share price drops after earnings on Thursday, then
they are going to be sort of in breach of their fiduciary duties, and that could cause all sorts of headaches.
To me, this is a signal that we might have bad earnings on Thursday.
QUEST: Final quick thought, Sara, and I'm not asking you to gratuitously praise Musk. But is he a genius? I mean, he came into this, he took his
stake, he made his bid, he faced the Board down, he used every tool at his disposal in terms of PR.
FISCHER: I don't get why he wants it. So I can't say whether or not I think he is a genius. I mean, he's got his hands full. He's got three major
companies now.
I don't think -- what he realizes is that this is a full-time gig, and it has hard to do. So yes, he has done this smart corporate maneuver here to
get what he wants. I just actually don't understand why he really wants it.
QUEST: We'll need you to help us understand it as he is going through with it. Sara, good to talk to you. Thank you.
FISCHER: Thank you.
QUEST: And now to other breaking news. Now COVID outbreak in Beijing is raising the specter of China having a fresh blow to the global economy.
Stocks and commodities in the early part of the day they were very sharply lower.
[15:10:11]
Now, the U.S. markets recovered some ground. You can see now, we're off just a little tad or two. We had been up. NASDAQ is up. That's on the back
of Twitter.
But if you look elsewhere, the Shanghai down five percent. Hong Kong off three. A sea of red in Europe, with two percent losses around and about.
China's benchmark dropping to the lowest level since the COVID outbreak two years ago. Japan and Hong Kong down.
Brent crude is also lower by five percent. Now, why? Because obviously, China is not going to need as much oil. It fell below $100.00 a barrel on
fears off that weaker demand.
China and Beijing is now racing to track fresh COVID outbreaks that have been spreading undetected over the weekend, CNN's David Culver in lockdown
in Shanghai.
(BEGIN VIDEOTAPE)
DAVID CULVER, CNN INTERNATIONAL CORRESPONDENT: The determination to contain this virus leading to disturbing videos circulating on social media
here in Shanghai. They show crews installing steel fences inside residential compounds so as to prevent people in buildings with reported
positive cases from getting out, essentially caging them in. Many raising the obvious fire hazard concerns.
In other communities like mine, we've got a paper seal on the door, and there is now a community COVID guard on duty 24/7 to make sure we don't
wander out of our homes without permission.
On the streets here, workers also putting up blockades trying to keep people from traveling to other districts.
This latest omicron fueled surge has the city now reporting more than 500,000 cases since the start of this outbreak in early March. And there is
now concern growing outside of Shanghai especially up in Beijing, only double digit case numbers recorded so far, but it is concerning enough for
one of the capital city's largest districts to require its three million residents to get three rounds of PCR tests this week.
Authorities have also locked down dozens of residential compounds across eight districts in Beijing, where residents like us here in Shanghai are
banned from leaving their doors or their complexes.
Following the horror stories out of Shanghai and the challenges to get food here, Beijing officials are trying to reassure the public that the city has
enough supplies, but it did not stop the panic buying, many fearing that that city is going to go into a citywide lockdown like Shanghai and that
news causing global stocks and oil prices to fall Monday.
China's Shanghai Composite Index had its worst day since February 3rd, 2020 when the initial coronavirus outbreak first rocked the nation's stock
market.
The lockdown here in Shanghai has already forced many factories to suspend production and made shipping delays worse. In turn, placing more strain on
global supply chains.
This as officials stand by their zero COVID strategy.
David Culver, CNN, Shanghai.
(END VIDEOTAPE)
QUEST: Bill Lee is with me, the chief economist at the Milken Institute, at the I.M.F., he helped establish its Hong Kong office.
Well, this is a real mess, isn't it? I mean, they are trying to do the impossible. They're trying to control COVID and that is simply from the
evidence elsewhere, it is simply not possible. How much pain -- economic pain -- do you think they're prepared to take in this regard?
WILLIAM LEE, CHIEF ECONOMIST, MILKEN INSTITUTE: China's policymakers are facing a major inflection point right now about the integrity and efficacy
of their zero COVID tolerance policy and Xi Jinping had hoped to go into the October People's Congress, where they will be reappointed him to a
third term with a sense of great stability that he has brought to China.
He was going to tell everyone, "I care about Chinese lives. I've saved so many Chinese lives with our COVID policy." Now the question is, do you care
about Chinese livelihood? Do you care about that the economy is going to shut down to the point where everyone is going to suffer not be able to
live as they were supposed to?
QUEST: On a pure economic front, how much more do you expect to see China slow down? And related to that, what do you expect to see the spillover
effects?
LEE: All the pro-Chinese commentators are pointing to the 4.8 percent GDP growth that we saw in the first quarter. That is looking backwards. My
friends are given the private forecasts where they started with a three- handle for GDP next year. It is going to have severe domestic impact.
But it is also going to have huge global impact because China remains an integral part of the global supply chain, and as we shut down Shanghai, as
we shut down Shenzhen, we're going to see more and more brokenness in the global supply chain, and they will be prolonging the huge inflationary
surge that we've seen because of the lack of supply.
QUEST: Right, so we're going to suffer.
LEE: Oh, absolutely. There is no question that the rest of the world will suffer huge consequences from China's policies, but their domestic economy
is also going to suffer. The service sector has gone -- it has gone nowhere and the industrial production that was supposed to be at the poor
centerpiece of China's pride in being able to beat COVID, industrial policy is starting to shut down as well.
[15:15:00]
QUEST: Okay, but explain this to me or at least help me understand. How come the Chinese leaders don't look around the world and say, well, you
know something, the U.S. had to reopen and it is fine and pretty much back to normal.
Australia had to come to an accommodation with COVID and it is pretty much back to normal. Everywhere we look, countries that have opened up again,
are pretty much back to normal. I'm not minimizing the deaths and misery that there is in some places, but don't they look around the world and say,
well, hang on a second, what are they doing right that we're doing wrong?
LEE: China has not been able to adapt its COVID policy toward the changing variants of COVID itself. The initial deaths that came from COVID were very
severe, and China said, we were avoiding that where the rest of the world had their populations dying.
Now, we see that the Chinese vaccine efficacy is down, and also the most vulnerable part of the Chinese population has never been vaccinated. So we
see that China has failed to adapt to the less deadly variants of COVID in allowing more of the economic activity continue as the rest of the world
hats, and they've never learned to live with it.
QUEST: Right. Well, exactly. So, if we bear in mind that we have got higher rates in the developed world, pretty much all the major central
banks in the developed world will be raising rates. And at the same time, you've got this double whammy of China slowing down and not being an engine
of growth. Is this sufficient, do you think to push us into recession, be it ever so shallow a recession?
LEE: Well, we import a hell of a lot of stuff from China. And so, the cut off of our imports is going to remain because we still demand a lot of
Chinese products, but their ability to supply those, so their exports will truly fall off.
So it'll hurt the Chinese economy. Whether the U.S. economy falls into recession or not, that is going to depend more on the Fed and domestic
policy. For global supply chains, what impact we will see in the rest of the world, especially the United States is going to be inflation.
QUEST: Good to see you, sir. Very grateful to have you on the program tonight with a forthright look at what is there. Thank you.
LEE: Anytime.
QUEST: It is QUEST MEANS BUSINESS. The U.S. Secretary of State Antony Blinken says sanctions against Russia have its economy in disarray.
History shows those measures are not going away anytime soon. After the break.
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[15:20:02]
QUEST: The U.S. Secretary of State Antony Blinken says the Western sanctions have left Russia's economy in a shambles. Now, the Secretary of
State and the Defense Secretary Lloyd Austin, were in Kyiv on Sunday where of course, they met President Zelenskyy.
There, they discussed U.S. support for Ukraine and the return of American diplomats to the city.
Today in Poland, Blinken said Russia's invasion had been a failure for the Kremlin.
(BEGIN VIDEO CLIP)
ANTONY BLINKEN, U.S. SECRETARY OF STATE: Russia has sought as its principal aim to totally subjugate Ukraine to take away its sovereignty, to
take away its independence. That has failed.
It sought to assert the power of its military and its economy. We, of course, are seeing just the opposite. A military that is dramatically
underperforming, an economy as a result of sanctions, as a result of a mass exodus from Russia that is in shambles.
(END VIDEO CLIP)
QUEST: Now, the U.S. continually reminds us that the world has never seen sanctions this broad against an economy of Russia's size. History tells us
these sanctions are very quickly implemented, but equally, they will be slow to be lifted.
Just look at history: The U.S. first began sanctioning Cuba in 1963. You can see here in "The New York Times." It banned all financial transactions
is an attempt to isolate Fidel Castro. Those measures largely remain in place even after Castro's death. Other restrictions have been added.
The U.S. placed restrictions on Iran in 1979 after the famous seizing of its embassy. Iran now faces some of the harshest U.S. sanctions anywhere in
the world.
Venezuela has been sanctioned for more than a decade since the late Hugo Chavez was in power. Sanctions are put on, but quickly, they are not
removed.
Adam Smith used to be Senior Adviser to the Director of the U.S. Treasury's Office of Foreign Assets Control; now, a partner of Gibson, Dunn &
Crutcher, he is with me now.
Adam, I mean, it is a general principle, isn't it? The sanctions are much easier, in a sense, once you've made the political argument to put them on,
it's much easier than taking the political responsibility of removing them.
ADAM SMITH, FORMER SENIOR ADVISER TO THE DIRECTOR OF THE U.S. TREASURY'S OFFICE OF FOREIGN ASSETS CONTROL: That's exactly right. Sanctions are very
sticky policy tools, as you've said, between Cuba, Iran, and in fact, arguably dozens of other sanctions programs, they have remained on perhaps
long after they needed to.
QUEST: Why is that? Is it because politicians become a bit lily-livered and weak and they don't want to be the person who might actually have to
carry the gun for removing them?
SMITH: I think from a U.S. perspective, there are two issues. One is, as you just said, there are clear domestic political issues at play here that
speak to the Cuban sanctions, for example, the Venezuelan sanctions and others that they don't necessarily want us to take the heat from
demonstrating quote-unquote "weakness" with respect to jurisdictions and countries, the U.S. still doesn't really like.
The other piece is actually a legal one, and that is Congress has become more and more active when it comes to sanctions on places like Cuba, places
like Iran, and even threatening with Russia. In those cases, it's actually very difficult to remove sanctions because you need to change the law.
Right?
The executive can only move -- the President only moves so far.
QUEST: Right. So we had sanctions that were imposed on Russia, post- Crimea, in 2014. They are still there. There was never -- I mean, even between 2014 and now, there was never any serious mention of lifting them.
In your view, and I won't hold you to this, when we're -- assuming, you know, the war ends, how long before anybody would remove sanctions? Are we
talking years?
SMITH: I do think it is going to be some time. I think that the ability to even imagine what sort of sort of off ramp or de-escalation ladder looks
like at this juncture, after Bucha, potential war crimes, et cetera is very, very challenging to see.
So I definitely think that this is going to be a situation of months and perhaps even years.
QUEST: Right. But the other side of this coin, which I want to talk about, the way in which countries evade sanctions. Now, you know, whether it be
Iran with oil, and they do manage to get the oil out, and they do manage to sell it on the informal market; South Africa, which, of course, with
apartheid; Rhodesia and then Zimbabwe, which had sanctions. But again, in all those cases, there were ways in which they avoided them.
Do you think there's going to be ways that you can avoid the Russian sanctions?
SMITH: Without a doubt. Sanctions evasion is as old as sanctions. The Russians are very, very sophisticated players, as we've seen already and
how they've been handling these sanctions. It is obviously -- their economy is in disarray, but it is significantly less disarrayed that they were
perhaps less good at managing these sorts of measures.
Again, there have been sanctions, as you said since 2014. In many respects with respect to Russia, and they've managed to do arguably just fine. These
are different sorts of measures. It will be very challenging, but I am confident, unfortunately so, but confident that they will find ways around
with respect to willing intermediaries in different parts of the world, different sorts of structures, different sorts of strategies that I think
they will find ways around not to eliminate the impact of sanctions at all, but certainly to allow certain goods to continue to flow, certain finances
to flow, and it'll be up to the West to figure out how to stop that.
[15:25:17]
QUEST: Adam, an argument that you've met before, I'm sure, we heard from the Austrian Finance Minister on this program on Friday, at the I.M.F., he
basically said, the sanctions only work if they hurt them more than they hurt us. I'm sure you've heard this argument a gazillion times.
But there is a difference in hurt, isn't there, between Austria taking a political and economic hit and a minor recession and sanctioning oil and
gas that might destroy the Russian economy, which is what you want to do?
SMITH: That's right. That's right. And this is this is a real question, whose pain are we talking about? And how much pain are we willing to
withstand? Is it a two to five percent reduction in GDP in parts of Western Europe? Or is it real deprivation on behalf of Russians? That's really the
question.
And it is unclear as to whether or not President Putin and the Russian people are willing to suffer significantly for this sort of gain of sort of
the Russian sphere of influence, which, of course, is how Putin has demonstrated this, or whether there would be Europeans who would be willing
to sort of suffer economically.
QUEST: I'm just about out of time, but I want to ask you quickly, if you - - would you turn up the Bunsen burner now under those sanctions on Russia? Would you ratchet it up and time to sort of the oil gust a lot?
SMITH: I would think that that time is coming fairly soon. I mean, the war crimes issues, the atrocities, I think the time has come to sort of really
put significantly more pressure. I think we're at sort of still at a five or six out of 10. I think, there's still room to go.
QUEST: Sir, I'm very grateful. Thank you very much indeed.
SMITH: Thank you.
QUEST: QUEST MEANS BUSINESS tonight, start of a new week, what a busy day, it's only Monday.
President Emmanuel Macron has a second term in office. His win may not give him the power to reform the economy as he wishes, the challenges and the
country that now he faces.
(COMMERCIAL BREAK)
[15:30:14]
QUEST: The breaking news to bring you this hour. Elon Musk has reached a deal. The board has agreed to let him buy Twitter. It values the company of
$44 billion, approved unanimously by the board. In a press release, Musk says free speech is the bedrock of a functioning democracy. And Twitter is
the digital town square. It may well be that. Look at the price. It's slowly inching towards the $54. and change that he's offered.
So, one would expect it to arbitrage towards there over the next few days. I guess there's still uncertainty of it all falling apart but he has got
his financing for Morgan Stanley in place. Our chief media correspondent Brian Stelter is with us. There are two aspects that we need to talk about.
Firstly, the mere fact he won, he got it when everybody did a poison pill. Let's deal with that first and then we'll talk about what he wants to do
with it. Are you surprised?
BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: I am surprised, Richard. I think this was shocking that he was able to -- two weeks ago come through
and say, gey, I feel like buying Twitter today. It felt like he had woken up and he decided to, you know, buy a croissant instead of eggs for
breakfast. Like it seemed like a whim. It seemed like a billionaire's fairy tale. And he was not taken seriously.
And as you know, the markets did not take him seriously. This all changed last Thursday, though, when he announced he had secured financing. And the
board had to take this seriously. The board did not have any other bidders. Nobody else came through to save Twitter from Elon Musk's grip. And so, on
Sunday, this became very serious board meetings all day long into the night and that is what resulted here.
Is it surprising? Yes. It's surprising the richest person in the world now is going to own one of the most important communications platforms in the
world. But you know what? He got exactly what he wanted. He offered $54.20 a share. He said that was his best and final offer. He said take it or
leave it, and the board had to take it.
QUEST: So, what does he do with it now? This idea of the town square and the open for democracy. I'm not quite sure I fully understand this. I mean,
anybody can go on Twitter, and provided you're not being offensive or what, you can be vulgar. Provided you're not being illegal. You know, say what
you like.
STELTER: You can. But Twitter's current moderators might suspend you, they might block you, they might give you a timeout, they might perhaps diminish
your tweets and make them less visible to the public. There are all sorts of levers that Twitter does currently pull on, not to kick, you know, that
are some are short of kicking you out entirely. But he does seem to resist all of those moderation attempts.
And now he's going to find out why they really exist and whether he wants to keep them. And I think Elon Musk is in for an extraordinary education
about why Twitter is built the way it is, about what the average user actually wants out of Twitter. I guess it's possible he could make it a
complete free for all, allow anything short of hate speech and child pornography to pour in. But Richard, that's not a party most people want to
go to.
That's a party most people want to avoid, they want to leave. So, I'm really curious, this is going to be a fascinating ride. It's going to be
one of the best stories in the business world. What does Elon Musk actually do to Twitter? What are his politics actually? Yes, he's probably going to
bring Donald Trump and other politicians back onto the platform. Does that help those politicians? Does it hurt them?
Does Elon Musk like what Twitter becomes if he throws away all the rules? Or does he actually -- is he actually going to run this more like Jack
Dorsey did?
QUEST: Is Twitter that important? Is it that important that we -- I mean, it serves as a very nice fore for which stars can put out statements when
celebrities die or when politicians pass away, and people can make statements. But is it that crucial to the public debate?
STELTER: For a while Twitter felt like living in the future, and now increasingly affiliate living in the past, or at least in living like a
sewer, like you're living in a sewer. And that's going to be a challenge now for Elon Musk. That's what he decided to when he wants to buy. That's
what he wants to own. Twitter matters much more for communications purposes than as a business, right? It's struggle as a business.
So, if you say, is it that important? Well, no, it's not that important as a business. But as a communications platform, even in emergencies, as a way
for politicians and as you said, celebrities to communicate and get messages out. It is important, it is a utility in that way. But as I said,
it doesn't play the future anymore. It feels like something you're required to do. If you're in public life, it feels like a requirement rather than
something you enjoy, rather than a leisure activity.
Maybe Elon Musk can change all that. Now, I think if you're a Twitter user, you don't -- you don't go quit your account. You go and see what he does
next. It's going to be really, really interesting to see.
QUEST: And you'll be here to help us through it. Brian, always good to see you, sir. I'm grateful. Thank you.
[15:35:00]
President Macron is the first French president to win reelection in two decades. He defeated of course his far-right opponent Marine Le Pen. He got
59 percent of the vote, she got 41 percent. So, it was overwhelming. Much - - it was -- the winning margin was much greater than first thought. It was certainly better than the first encounter, which suggests France's middle
ground isn't as strong as it once was. And President Macron acknowledges much in his victory speech.
(BEGIN VIDEO CLIP)
EMMANUEL MACRON, PRESIDENT OF FRANCE (through translator): I know that for many of our compatriots who choose the extreme right today, their anger and
disagreements which led them to vote for this project but also find a response. And that will be my responsibility, and that of those around me.
(END VIDEO CLIP)
QUEST: A legislative election is just weeks away. And as my good friend ECB -- former ECB president Jean-Claude Trichet with us tonight. All right. So
Macron won, but does he win with a bloody nose?
JEAN-CLAUDE TRICHET, FORMER PRESIDENT, ECB: I think it's undoubtedly a very great success, Richard. When you think that -- as you said, just said it
was the first time second term was one without cohabitation. So it's a great success. I will also say he is only 44 years old. So, with the second
term is still four years younger than this guy who was the youngest French president. So, there is a lot to say on the -- I would say success of
Macron. But a lot of challenges are ahead, of course, of course.
QUEST: Now, the issue, of course of the economy, now I was talking to your successor, Christine Lagarde last week at the IMF. They're going to be
raising rates. It's -- I mean, it's moot whether it's in July or September or whatever. Rates are going out at a time was on this program, we've heard
China's slowing down, it's going to be very ugly economically.
TRICHET: I think you're right. It's a very, very difficult situation. Also, because we have a lot of debt, outstanding debt, public and private, that
had piled up over the last 10, 13 years. And now you have a change in monetary policy, interest rates, real and nominal, are likely to be much
higher. So, it's a very difficult period obviously, on top of that, we have the war. So, for all responsible I would say entities, it's very difficult,
certainly for the central banks, but also for governments.
And the ECB is in a situation where it has, you know, with the older skills, it can -- it can demonstrate to increase progressively rates and
have a policy which was -- which would be much less accommodative. It's clear that with interest rates up minus point .5 percent at the moment I'm
speaking, when you have an inflation which is very high, you cannot go on and continue as before.
QUEST: I guess a lot of us feel a little bit as if we've been cheated here. We were told last year that inflation was transitory. We were told that
everything would be fine, and it would all be under control. Even allowing for Ukraine, sir, even allowing for Ukraine. But what happened was central
bank has lost control of inflation.
TRICHET: I would say that it's true that the Fed said inflation will be transitory. And they had to recognize at the end of last year that it was
not considering. And now they are doing all what is necessary to regain control. I hope very much that they will regain control, taking into
account the influence of the United States in the world. As regards the ECB, they have to keep control at the very moment I'm speaking.
There is a lot of challenges, they cannot be complacent, they cannot remain, you know, silent and quiet. Still, inflation expectations are
significantly lower in Europe than in the U.S. So we are not exactly in the same world. But complacency should be taught to take totally eliminated.
That's clear. Both -- on both sides of the Atlantic.
QUEST: Jean-Claude Trichet, grateful that you joined us. Thank you very much. I'll be in France next month. So, hopefully we might have you --
we'll be able to meet up in Paris. That will be lovely. Jean-Claude Trichet, the former head of the ECB. I want to show you the markets because
what a day it's been. If we take a look actually, bearing in mind that we've had the Twitter announcement.
So -- I mean, does it -- the only reason that we're up now and we were down earlier, is honestly the Twitter announcement. We were down all throughout
the course of the day. Now the NASDAQ obviously is higher because Twitter is a major -- is a part of the NASDAQ composite. The S&P is up. So this has
turned the sentiment quite dramatically. It's Scotch mist. There's nothing fundamental that's changed.
[15:40:00]
Look at the Dow 30 and you'll get a better idea of where we stand and who are the winners and the losers. So, you've got a nice array when you see
Verizon down three percent, that's all on earnings and worries. You see all of that, you're -- you know what's going on. Even Disney is doing better
and bearing in mind the awfulness of the situation with they've got in Florida. So, financials are up, you've got tech that is up.
And you've got the cyclicals that are -- or rather the dividend stocks that are struggling. That's QUEST MEANS BUSINESS for the moment. We'll have a
dash for the closing bell at the top of the hour. And in a moment, I'll be back with you. We've got a World of Wonder.
(COMMERCIAL BREAK)
[15:58:03]
QUEST: Breaking news. Twitter is to be sold to Elon Musk for slightly over $54 a share. Exactly what he originally offered. The deal puts Twitter's
valued at $44 billion. It's a 38 percent premium on where they were trading on April the first when Musk first announced his nine percent stake in the
company. Shares are edging towards the offer price now. They're up some 5.8 percent.
Axios media reporter Sarah Fischer said the deal likely reflects Twitter's business performance and she told me Elon Musk's offer may be what's best
for Twitter shareholders.
(BEGIN VIDEO CLIP)
SARA FISCHER, MEDIA REPORTER, AXIOS: I think part of that actually has to do with Twitter's fundamentals. You know, they have been profitable. I
think from 2017 to 2018 and 2019. But they've struggled with profitability. They've invested a ton in headcount for things like safety and security.
And I think what it comes down to is that they're nervous if they don't take this bid at $54.00 a share and the share price drops after earnings on
Thursday, then they're going to be sort of in breach of their fiduciary duties.
And that could cause all sorts of headaches. Me, this is a signal that we might have bad earnings on Thursday.
(END VIDEO CLIP)
QUEST: And the earnings, of course will be later in the week. Markets are higher. They fell very sharply on Friday. They were down for most of the
session. But it was the Twitter announcement that created a rally that's lifted the Dow. It's now up 238 points, and the broader market is up
strongly too with the NASDAQ over 13,000, up 163 points. The triple stack, it gives you an idea of how all markets have recovered over the course.
And if you look at the Dow 30 we've got Johnson and Johnson up the top, up two 2-1/2 percent. Don't often see that (INAUDIBLE) Verizon down three
percent. Clearly the digitals, the high performing, they're slowly back in vogue, if only for today on the back of the Twitter news.
And that is the way the market is looking. It's up. Well, that's the dash to the closing bell. I'm Richard Quest.
[16:00:09]
END
