Return to Transcripts main page
Quest Means Business
Palestinians: 10 Killed, 55 Injured By Israeli Strikes; Stocks Fall After US Strong US Jobs Report; Little Island Breathes New Life Into A Waterfront Space; Russia Shells Mykolaiv As Ukraine Mounts Counteroffensive; U.S. Economy Adds 528K Jons In Kuly, Smashing Estimates. Aired 3-4p ET
Aired August 05, 2022 - 15:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:40]
ANNOUNCER: This is CNN Breaking News.
ISA SOARES, CNN HOST: Welcome to the show, everyone. In the last hour and a bit, we have been seeing is really airstrikes on Gaza with Palestinian
officials telling CNN that at least 10 people have been killed, 55 injured. This was just hours ago.
The Israeli Army says that there was a preemptive strike and it was against the Commander of Islamic Jihad, one of the two main militant groups in
Gaza.
Journalist, Neri Zilber joins me now live from Jerusalem.
Neri, just bring us up to date with the latest because I know that sirens were sounding in Central Israel that basically indicates of course, that
incoming rocket fire as we heard there in the last what -- 45 minutes or so.
Neri, I'm not sure if you're still with -- if you're with us at all, but if you can bring us up to date on what the situation is where you are, because
of course when you and I last spoke, there was siren sounding, of course in Israel.
NERI ZILBER, JOURNALIST: That's right, Isa.
Over the past hour, Islamic Jihad has responded to the Israeli airstrikes from earlier this afternoon, launching almost about a hundred rockets, it
is estimated, at Southern Israel primarily, but also at Central Israel and the southern outskirts of Tel Aviv, to the cities of Bat Yam and Rishon
LeZion.
As of now, we have no reports of impacts on the ground or any casualties or injuries on the Israeli side. Some of the rockets were likely intercepted
by the Iron Dome Aerial Defense System, that's on the Israeli side.
As you mentioned at the top, the Israeli airstrikes against Islamic Jihad targets began earlier this afternoon, and have continued in recent hours.
One senior Islamic Jihad Commander was killed in the initial attacks. Israel also claimed that it hit a few antitank missile crews that were
according to Israel, attempting to at least launch attacks cross border against Israeli targets, whether civilians or soldiers, and overall, what
we're expecting is continued escalation rocket fire from the Gaza Strip into Israel and Israeli airstrikes into Gaza as well.
SOARES: And Neri, just put this into context for our viewers who may just have been watching us just right now. We heard from the Israeli side saying
that the strikes came, of course as a response to an imminent threat.
Talk to us about this imminent threat and whether you have heard anything from the Gaza side regarding these casualties.
ZILBER: That's right, Isa. The Israeli side, as it has done over the past week, has said that it is preparing its public and its military forces for
an imminent attack by Islamic Jihad against Israeli targets in southern Israel. The reason for those potential Islamic Jihad attacks were an
Israeli arrest operation in the West Bank, not Gaza, but the West Bank this past Monday.
They arrested a senior Islamic Jihad Commander in the West Bank, and so Islamic Jihad had vowed to retaliate in some form or fashion, and that's
why parts of southern Israel near the Gaza Strip were put on heightened alert over the past few four days.
At a certain point, the Israeli government led by Prime Minister Yair Lapid, as well as the Israeli military essentially ran out of patience and
wanted to preempt that potential Islamic Jihad attack.
And as for the casualties inside the Gaza Strip, as mentioned earlier, 10 confirmed killed including a five-year-old girl, the one senior Islamic
Jihad commander also killed. The Israeli military is claiming that at least 15 Palestinian Islamic Jihad militants were killed, but that as of yet,
unconfirmed.
SOARES: Neri, do keep us up to date with all the latest developments. Neri, is over there for us in Jerusalem.
For now, that is the Breaking News. Of course, we'll keep you on top of the breaking news as it develops.
But for now, I want to send it back to Richard Quest in New York -- Richard.
RICHARD QUEST, CNN BUSINESS ANCHOR: And a very good afternoon to you. Thank you, Isa.
As there are further developments in Israel with that breaking news, we will of course bring them to you.
But tonight, we are in Little Island, which is out on the western side of Manhattan. It's all part of QUEST MEANS BUSINESS and our "Summer Fridays"
Series.
[15:05:04]
We believe that come summer, in these difficult days, it's nice to be celebrating something a little bit different. And so "Summer Fridays" is
where we will be, out and about. For example, here we are, we've still got later in the season, we're going to be in Grand Central Station, we're
going to be right in other places that you'll find out on our "Summer Fridays."
As the Little Island, this magnificent new oasis, it was the brainchild of the creator, the philanthropic genius of Barry Diller, and you will hear
from Barry Diller, the man whose money made it possible in a moment or three above the Hudson River.
Tonight, though, let's start with the job numbers and the US job numbers that smashed expectations. The numbers were much better than had been
expected. It's a double-edged sword, because of course, as you can see, they're low numbers of June 398,000, but this 528,000, the best that we've
seen since February, and what it means is the unemployment rate is down to three and a half percent. It matches the lowest rate in half a century.
For the market, we'll show you the market, stocks are off the lows of the day. There was an initial tumble after the jobs report, of course, because
of the fear that this could lead to more Fed action, but that even has reversed.
We're now seeing the market do pretty much Even Stevens on the Dow, the NASDAQ eking out a loss, but it had been much worse.
Julia Coronado is with me, the Economist of Macro Policy Perspectives, and a Finance Professor at the University of Texas.
Now, Julia, it's really a case of, in your view, is the cup half full, or the cup half empty? Because whilst it means no recession, or less likely
recession, it does predicate that the Fed is going to have to do more earlier, faster and harder.
JULIA CORONADO, ECONOMIST, MACRO POLICY PERSPECTIVES: Well, I think it's very hard for me to look at a job market like this and not think that it's
good news at the end of the day. If the economy has greater underlying strength, then that means the Fed might tighten policy a little bit more
that is still net good news.
We have suffered a lot of headwinds from rising inflation and the war in Ukraine. And yet, we are still chugging along, powering along really, and
anybody who wants a job can find a job and they are still getting some very solid wage gains, even though they're not quite keeping up with inflation,
it's still a pretty healthy flow of money into consumer pockets.
So even a soft landing, Richard, requires resiliency in the labor market. So I don't think this report tells us one way or another whether the Fed
can engineer a soft landing. But I do think it tells us that the US economy has better underlying momentum.
QUEST: Right. But the whole purpose of the tightening of monetary policy is to slow down economic activity. And that --
CORONADO: Yes.
QUEST: I mean, pretty much in traditional sense, means raising unemployment, albeit you hope not that much, and certainly cooling the
labor market.
If you have a labor market this strong. That's in contradiction to the Fed's policy.
CORONADO: Right. Well, I will say there are some details in the report that do suggest there is some shifting going on that might mean the job
numbers are a little bit overstated.
We've seen hiring in the survey that underpins the unemployment rate, the household surveys slow more than payroll numbers and the difference between
those is self-employed and independent workers.
So self-employed people and then like home workers, like nannies, and housekeepers. And what we're seeing is a shift from independent or self-
employment into formal employment and that might reflect actually some tightening in policy, some squeeze on purchasing power from higher
inflation that is leading people to choose more formal employment than the sort of gig economy jobs that they were doing before.
So that might actually at the end of the day, be an indication of some softening in the economy and some squeeze on consumers, and we have seen
consumer spending slow
So it may be that the payroll numbers, yes, the blockbuster number, there might be just a little bit of overstatement in that number and you know
it's not a precise science for the Fed, whether or not they really have to drive unemployment higher to get a cooling and inflation, well, that's the
Phillips Curve, right? That's the relationship we talked about.
[15:10:20]
But that's very imprecise. It may be that just the removal of some of the fiscal and monetary support that has driven markets and consumer spending
over the last couple of years is enough to make consumers a bit more price sensitive as they spend out of only their own labor income, and not all of
this sort of bubbly financial market access or fiscal support, they might pick and choose a little more carefully and cautiously and so we could see
inflation cool.
QUEST: So this, interesting question, and I guess, at one level, it's academic and another level, it's moot. And it certainly doesn't really help
us greatly whether the US economy is in a technical recession. The NBER will decide that in its wisdom in the future.
The reality though, is if this is a recession, it's a bloody odd one.
CORONADO: I would go so far as to say we are definitely not in a recession. A recession does involve rising unemployment and usually job
losses alongside weakening GDP growth. We know GDP growth is subject to massive revisions over time.
So the Q1 number was clearly odd. The Q2 numbers have some more, you know, fundamental underpinnings. We do know the economy has slowed, that spending
has slowed. But with a job market this strong, even accounting for any of that kind of overstatement I suggested, the unemployment rate is the
unemployment rate. It's at a cycle low.
If it's still nudging down, we're not in a recession, pure and simple. No NBER is ever going to call it one.
QUEST: Oh, all right, Julia Coronado --
CORONADO: It is good news. It is good news.
QUEST: No recession on the horizon at the moment.
Let's take a break, when we come back, we will be on -- we're here at Little Island. It's the most imaginative, it is the most beautiful, it is a
true genius of the man who came up with it, a man called Barry Diller. We will talk to him, we will meet him after the break.
QUEST MEANS BUSINESS tonight from Little Island.
(COMMERCIAL BREAK)
[15:15:17]
QUEST: When they said they were going to repurpose one of the piers and build a garden, a hardened New Yorker said "Well, what utter nonsense. What
a rubbish. It will cost billions, it'll be a waste of money and it'll never happen in my lifetime." They were wrong.
Manhattan in New York has this most beautiful, wonderful new, I think in the true Victorian sense, it is a folly, and it is called Little Island
located on the West Side of Manhattan on the Hudson River.
It is bringing life to a derelict, destitute, and rather depressing part of Manhattan.
(BEGIN VIDEOTAPE)
QUEST (voice over): It hangs off the western edge of Manhattan. This is little island, the playful new attraction that is charming both tourists
and hardened New Yorkers.
At 2.7 acres, the park has welcomed more than a million visitors since it opened in May of last year. Lured by Thomas Heatherwick's whimsical design
and the tremendous skyline views.
The historic site, seen here in photos from New York's Public Library was once Pier 54, home of Britain's Cunard White Star Line. Between 1910 and
1935, this is where you'd embark on an ocean liner for a grand transatlantic voyage.
Titanic was meant to dock here. Survivors from the disaster disembarked from the Carpathia here in 1912.
After Pier 54 was badly damaged, in 2012's Hurricane Sandy, the media executive, Barry Diller stepped in. He envisioned an architecturally
ambitious park that could become a New York City icon.
Building Little Island, Diller and his wife, the fashion designer Diane von Furstenberg, donated $260 million for the project. But there were years of
lawsuits, and much political wrangling.
Finally, it was done. It opened in the midst of COVID-19, it provided weary New Yorkers and visitors alike with a place to take a little breath. It may
be called Little Island, but it has very big ambitions in heart.
(END VIDEOTAPE)
QUEST: Extraordinary. Throughout the summer, we're going to be out and about with our "Summer Fridays." We've already been to the edge. We've got
locations all around, the TWA hotel, out at Kennedy Airport, we will be out there as well for our "Summer Fridays." We're going to be at the
Metropolitan Museum of Art, and Grand Central Terminal -- the Grand Central Station here in Manhattan.
They are the icons of the city and that is that's where we will be with Little Island -- with our "Summer Fridays."
The man behind Little Island is the philanthropist Barry Diller and his wife, Diane von Furstenberg. They put up the money, New York allowed them
to do it. There were tremendous legal difficulties about actually protected eels. You name it, they faced it.
And there were times when they thought they weren't going to bother doing it. But even so, Barry Diller, he persevered and I was delighted when he
joined me here on Little Island.
(BEGIN VIDEO CLIP)
BARRY DILLER, CHAIRMAN, IAC: I thought, why do piers have to be rectilinear? When, of course, boats aren't going -- I mean, they were built
for boats to go on either side, boats aren't going on either side anymore.
So I called them up and I said, could we be architecturally ambitious? Build something that's kind of iconic, at least, hopefully, an icon of the
city. And that started an iteration process of wild ideas of what to build.
Some of them were so dazzling, but truly unbuildable, then this came along, which by the way, when you think about putting 186 piles in the Hudson
River, and these tulips to hold it up, that's all so insane.
But we actually found out we could build it, and that's how it happened.
QUEST: The growing pains of doing it, I mean you just said to me earlier, do you remember? Does one ever remember the pain?
DILLER: Well, I just did, so there it is -- there's the affirmation.
[15:20:08]
QUEST: Was it -- you never gave up, but you sort of paused.
DILLER: Oh, yes. At one point, my family said to me, we're ordering you, go where you're wanted. We've been sued by one horrible developer in New
York and it went on for several years. But it got to a point where we had ordered, we had, I don't know, $120 million of cement sitting someplace and
I thought, "What am I going to do with all this cement?" And my family said, "Just -- you know, ship it somewhere. Let it sink," et cetera, et
cetera.
And in the end, I came back to it and we did finish it.
QUEST: And of course, what I love about this place, is, it's so -- besides the imagination and the beauty and all of that, but it's philanthropy that
truly adds to the environment of the city. It's almost, you know, Edwardian, Victorian in the sense of, we're going to build something that
is beautiful in a modern sense for the times, and it is going to be something for the future.
DILLER: Yes, I don't want to be at all -- I mean, pretentious about the thing, but the reason I love public projects is anytime I see something
that's a hundred years old or I see Central Park or Columbus Circle or I see this or that, and I say, at one point, usually, someone said, I'm going
to do this. And it usually takes that kind of will and then you get something that over the test of time becomes something that pleases so many
people.
It isn't curing cancer, but it gives pleasure. And if my family is lucky enough that we can do that, that's what we're going to be doing.
QUEST: When you see people here, what do you think? What happens inside Barry Diller?
DILLER: Honestly, just joy and happiness. Nothing that I've ever done, and I've, you know, done lots of stuff has given just that kind of visceral
pleasure of seeing people happy, because there is something we were able to do, just pleased with wandering or as you say, in an embrace or taking a
number, I think we've out done selfie-dom in the world.
So yes, it does do that.
QUEST: Final question.
DILLER: Sure.
QUEST: When you look at this, you are obviously -- it is mission accomplished up to a point.
DILLER: Yes. It's here. It's just -- it's now maintaining and making it better, but we're already on the way. We're on the way to our next one.
QUEST: It's a case of, "So what have you done for me lately?"
DILLER: Yes, well -- okay.
QUEST: What's next?
DILLER: In Los Angeles, there is a place called Franklin Park.
QUEST: I'm familiar with it.
DILLER: You know where it is.
QUEST: Yes.
DILLER: Okay. Well, we just bought 80 acres on the top of Franklin Canyon and we're going to build a park and we're probably going to do it with
Frank Gehry.
So he came up with us, 93 years old, better hiker than I am, but he came up 10 days, two weeks ago, and we all stood around and thought, okay, we have
this now beautiful land. We're going to make a park. We think what to do, and Frank said, "That's the joy. We don't know what to do." But in a month
or so we're going to sit around and cook it up.
(END VIDEOTAPE)
QUEST: Barry Diller, to meet the man and to meet him on the position and the place where he started, this magnificent Little Island.
He is a good strong, as I say, Yiddish, but actually, Yiddish-Jewish word for today here, shvitzing. We are shvitzing out here. It's so beautifully
hot.
And the man to shvitz with is Fred Dixon, who is head of New York, NYC & Co., which is the main tourist organization.
Before we talk to Fred, let me give you the numbers. For New Yorkers making a good progress on its come back. It's had 80 percent hotel occupancy, in
six out of the last eight weeks. It has forecast 57 million visitors towards the end of the year with international tourism projected to triple.
Fred is with me now.
Fred, good to see you, sir.
FRED DIXON, PRESIDENT AND CEO, NYC & COMPANY: Good to see you, Richard.
QUEST: We were at the top of the Empire State Building somewhere over there last time.
DIXON: We were.
QUEST: And now, we're out here. How is it going?
DIXON: Really well. You know, it's so great. I mean, just walking over here today feeling the energy in the streets of New York. The weather is
warm, but it's beautiful. There's no time like summer in the city.
QUEST: So, how are you doing like getting the numbers back?
DIXON: You know, we're really pleased with the way New York has responded and we were fortunate to start early with our promotions late last year. We
got some great funding and support from the mayor and what we've seen is that the travelers are responding.
[15:25:10]
So people are anxious to get back to what they know and they love, and we found the jewels like New York, places that they're acquainted with, places
that give them energy and excitement are really drawing the numbers back.
So we're very pleased, we're on track.
QUEST: What do you need more of? Because I'm also concerned, for example, let's take monkeypox.
DIXON: Yes.
QUEST: Because that is -- New York is one of the centers where the numbers are rising. Are you concerned?
DIXON: No. I'm glad to see the Federal response by the way. I think it's really important.
QUEST: And an emergency.
DIXON: Yes, an emergency declaration this week, and of course, the city and the State have done the same, but we've seen no bearing on travel or
the willingness to travel. And of course, you know, vaccinations are now available and I think people are heeding the advice.
So no, we're not we're not concerned about it the way we were with COVID.
QUEST: And inflation? This city is expensive to start with. You've got a very strong dollar, which is at parity with the euro, just about. So you
would expect to see perhaps a tail off of European visitors.
DIXON: Yes, it's something we've watched very closely over the years and there has often been a correlation. But what we're seeing now is we're
still riding this wave of pent up demand. So many people booked early, particularly the international market. So the forward bookings going into
the fall actually are quite strong.
So what we think will happen is that we'll see an impact on spending, instead of buying four pairs of shoes, you'll buy two, but we don't see any
impact right now in terms of turn back particular with international.
QUEST: And, okay, you're going to have a reasonably good summer.
DIXON: Yes. It should be a good summer.
QUEST: But if I know you, you're looking at Christmas. I know that sounds really strange, we are talking about Christmas.
DIXON: No, you're right.
QUEST: You're looking at Christmas.
DIXON: We are.
QUEST: What plans do you have?
DIXON: Yes, so we've already started promoting for the holidays earlier this year.
QUEST: That's Thanksgiving.
DIXON: Yes, from Thanksgiving, right through New Year's.
QUEST: Yes.
DIXON: It's huge for us. You know, we're on the cusp of the US Open, of course, coming Fashion Week, then, of course, we'll go right into the
United Nations General Assembly, which is a very strong time for us and we expect that to be great.
The marathon is back at full speed this year and we expect the holidays to be very strong in New York.
QUEST: Two things: I live here, but I think you know that I'm a fan as well. Yes. Two things. Issues of crime.
DIXON: Yes.
QUEST: I know what the Commissioner said. I know what she said I know the policies in place. But the reality is the perception is that crime is high
and it is going -- and it's stubbornly high. And I'll be honest with you, Fred, the streets are dirty. The streets are dirty in major tourist areas
when they should be clean.
DIXON: Yes, it's something that the mayor is laser focused on. Everyone recognizes the need to connect safety and cleanliness. He's put more police
on the streets, there is, of course, more social services in the subway and there is a real effort to make sure that the streets are clean for visitors
to New York.
And the fact remains, New York is still the safest big city in America. What we're seeing in these terms is not just unique to New York, but it is
still the safest big city in America and everyone should feel confident in coming here.
QUEST: You must be relieved.
DIXON: I am relieved. It feels really good to be back and to see this attraction.
QUEST: I mean, this is just extraordinary. Barry Diller's creation is just extraordinary.
DIXON: He had such an amazing vision and for this gift to the city of New York is incredible. We've also seen infrastructure upgrades. If you've been
in Moynihan Station.
QUEST: It's wonderful.
DIXON: It's incredible.
QUEST: But there's no seats.
DIXON: Well, they weren't any seats.
QUEST: There are no seats in the Main Hall. LaGuardia, which I think for that, then Vice President described it as a developing world Airport.
LaGuardia is absolutely stunning with that fountain in the middle of it.
DIXON: It's a huge point of pride for us. And you know, Newark, of course, the new terminal is opening now.
QUEST: Oh, it is over there.
DIXON: Yes, it's coming online, the JFK re-envisioning. So the infrastructure is there. You know, the hospitality is back. The energy is
back and it's going to be a good year in New York.
QUEST: "Summer Fridays," we're glad to have you with us, sir.
DIXON: Good to see you, my friend. Thank you.
QUEST: Thank you very much, indeed.
DIXON: Thank you.
QUEST: Thank you.
Now, normally, QUEST MEANS BUSINESS comes from just over there. You can't really see very clearly, it is Hudson Yards. Well, from over there, you can
now see me looking back in theory, because the camera up there, you should be able to see quite clearly where we are in the middle of the -- well, we
are not in the middle, we are on the western side of the Hudson, the eastern side of the western side of Manhattan to be absolutely -- For those
of you who are patents on this subject, you'll want to know -- QUEST MEANS BUSINESS.
We're delighted that you're with us tonight in the glorious sunshine of a summer Friday.
"Summer Fridays." Thank you.
(COMMERCIAL BREAK)
[15:32:30]
QUEST: Welcome back. QUEST MEANS BUSINESS live from Middle Island. Summer Friday, on Friday's all things -- all bets are off, enjoying the beautiful
weather. We'll have in just a moment the question of hospitality and the New York job numbers, how they are progressing and what that's likely to
happen. Rahel will be with me. Brian Stelter is also going to be here talking about the major reversal for Warner Brothers Discovery.
Now apparently it's all about the article. While its multi platform, it's all about seeing it on any platform that you're like. We'll talk about that
own company, always a dodgy thing, but this time, it's Brian who's putting his neck on the block. It all comes after the news headlines, because this
is CNN and on this network I promise you, the news always comes first.
The militant group Islamic Jihad is vowing to retaliate after a series of Israeli airstrikes in Gaza. This is the latest video into rockets being
fired from Gaza into Israel. The Palestinian health ministry says at least 10 people were killed in the Israeli airstrike including a five-year-old
girl. Israel's defense minister has authorized the call up of 25,000 reservists.
Ukraine says heavy Russian shelling has caused the death and destruction in Mykolaiv. The city is just outside the important (INAUDIBLE) region where
Ukraine is trying to mount counter offensive. Officials in Mykolaiv have ordered a weekend curfew to try to root out potential Russian informants.
Also Ukraine's agrarian minister says the country can ship up to five million tons of grain a month. If exports agreements with Russia hold
Mykola Solskyi says the amount is large but common for Ukrainian business. And he says hitting that estimate requires a stable military situation near
the Black Sea.
So, to our top story, which is of course the jobs numbers and the booming economy, and what's interesting about the numbers that we saw this morning,
more than half a million new jobs created is that he was in hospitality, tourism. This was the area that saw the best gains. Almost 100,000 jobs
were added in leisure and hospitality. Still lower than pre-pandemic levels. Down seven percent from February in 2020.
[15:35:08]
But overall the job numbers were strong. It beat estimates and investors are still digesting the impact on rates. The Dow as a result has been
choppy. And not surprisingly because you factor in two things with the Dow. Higher interest rates quicker, balanced against the less likelihood of a
recession because of strong economic growth. President Biden's been speaking about all of this. He says the U.S. economy has now recovered all
the jobs that it lost during the pandemic.
And talk of a recession we already know he says simply isn't right.
(BEGIN VIDEO CLIP)
JOE BIDEN, PRESIDENT OF THE UNITED STATES: I know people will hear today's extraordinary jobs report and say they don't see it. They don't feel it
their own lives. I know how hard it is. I know it's hard to feel good about job creation, when you already have a job. And you're dealing with rising
prices, food and gas and so much more. I get it. I literally can remember sitting in my mom and dad's dining room table and watching them choose
which bills are going to pay this next that month because there wasn't enough money to pay all the bills. I get it. That's why I'm doing
everything in my power to lower the cost for families.
(END VIDEO CLIP)
QUEST: Rahel is with me. Gorgeous day, isn't it? Sorry. You're --
(CROSSTALK)
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Never been better.
QUEST: You're looking into the sun. I'm so sorry. The -- this dichotomy between the strong job numbers versus negative GDP. All right. So we're not
in a recession, maybe practically. But the fact that we're not in a recession or technically we may be. How do you square this circle again?
SOLOMON: Well, look, Bank of America just put out a note about 30 minutes ago that I think captures it perfectly. It's a double-edged sword, Richard.
So maybe we're not in a recession right now. But it increases the likelihood of a harder landing in the future. And there are a lot of ways
you can parse this, right? I mean, if you are a job seeker, well, you're feeling pretty good. There are so 1.8 open jobs for every one person
looking.
If you are a policymaker, if you are a business leader and executive trying to figure out what to do with your business right now, it's all very
puzzling.
QUEST: If you're a mom or a dad trying to put food on the table for your family, even if you've got a job with these numbers, you can't make ends
meet.
SOLOMON: Well, that's the problem, right? Because even we saw wage growth increase about 5.2 percent over the last year we know inflation has
outpaced that for practically every sector, except to retail and hospitality and leisure. And the reason why they've seen such increased
gains, it's good to think about where they're coming from.
QUEST: Right. The Fed is -- as indeed, Governor Bailey at the Bank of England in his press conference today said they are determined that
inflation shall not become entrenched.
SOLOMON: Yes.
QUEST: Al; right? And by that, you know, five percent inflation -- five percent wage growth, you start to embed in and if inflation stays at nine
or 10 percent, your five percent becomes eight percent next time around,
SOLOMON: Well, we're already starting to see it, right? And that is the concern. We're starting to see that wage price spiral, right? I mean, if
you expect inflation to continue to persist, it becomes entrenched, you start making decisions based on that. And then you start demanding more,
right? And companies may pay you more, especially right now, because demand for workers is so strong.
But if they're paying more for labor costs, you better believe they're going to pass that down at a higher cost. Therein lies the problem. It is
quite puzzling right now the job market being so strong but one thing we know for sure is a report like this, numbers like this makes the job of the
Fed fighting inflation much harder.
QUEST: Right. Because -- I even saw it today, a three-quarter percent rise perhaps for a third time.
SOLOMON: Well, I don't even want to think about 100-basis points for September. But what I think is really interesting about that is we've all
become very accustomed to 75 basis points.
QUEST: No. No, we haven't.
SOLOMON: No, we -- no, but we have, right?
QUEST: No.
SOLOMON: Just in terms of the financial media, yourself included, myself included, 75 basis points, three quarters of a percent before these last
few meetings. We hadn't seen that since 1994. It really just says a lot about the environment that we are in. We are in very strange times with a
very aggressive bet.
QUEST: Have you been here before talking about the environment?
SOLOMON: I haven't. It's very beautiful. It's quite hot. You know, the job market is the only thing that's red hot today. I'll say that.
QUEST: You're wearing a nice blouse over the top. Try wearing a woolen jacket.
SOLOMON: I cannot imagine. I cannot imagine.
QUEST: I would take my (INAUDIBLE)
SOLOMON: Too professional.
GUTFELD: Good to see you. Have a lovely weekend. All right, as we continue after the break, the reality is that Warner Brothers Discovery, our parent
company came out with this policy when it was Warner Media that it was going to send movies to streaming first.
[15:40:07]
QUEST: Our new CEO says not so fast. In fact, more than not so fast, he says no. Brian Stelter is with me after the break.
(COMMERCIAL BREAK)
QUEST: At the start of the week we were terrified that it was going to rain and thunderstorms here at Little Island. And as the week went on, it became
clear not only was it not going to rain or thunderstorm, it might do later, it's going to be (INAUDIBLE) it is but beautiful to be out and about. Now,
one of the great career limiting events is broadcasting about your own company. It's only to be done with strong disinfectant and a strong pair of
rubber gloves.
Which is why talking about Warner Brothers Discovery's whopping great big loss, I'm going to get the number right. $3.4 billion. As the company says
it's going to stream -- it's going to -- it's going to bring together its streaming services. And he also made one or two disparaging comments about
the numbers that they had been told by -- or at least they said that the numbers that they'd seen now that they got the books and could actually
kick the tires and look into the hood.
We're not that good. They made it clear that the idea of big expensive movies going to streaming first was wrong. Our CEO Zaslav says he rejects
spend, spend, spend on streaming, saying linear T.V. ads theatrical releases instead, it makes for the perfect cross platform. We got it all.
Brian Stelter is here to tell me what he got. Were you surprised?
BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: I am not surprised. But I'm struck by the long-term thinking is, you know, yes, the quarterly results
had some disappointments. The stock is down quite a bit today. But Zaslav was talking about the long term. Talking three, five even 10 years from
now. He says he wants a roadmap for the future of film that involves movie theaters. Look, Richard, not every day is as beautiful as this. There's
lots of days where you want to be inside the theater the old fashioned way.
QUEST: Right. But he did also say a theatrical release has to look like a theatrical release.
STELTER: Right, right.
QUEST: In other words, no $80 million stuff that go on streaming, spend the money, make you look good and release it in the theaters.
STELTER: That's right. He wants big tentpole event films. I'm trying to do my best. Tom Cruise impression from Top Gun: Maverick with the glasses.
[15:45:00]
That is the idea Topcon brought people back to the theaters you wanted to see it on the biggest brightest screen possible. Zaslav clearly is a
believer in that model and it's a huge reversal as you said from the prior administration of Warner Media, which was all about streaming. However,
that narrative two years ago, it was in the teeth of the pandemic, when everybody was at home, I think we're going to see some of this change
happen anyway. Now we're seeing a dramatic change back to the theater.
QUEST: But probably the only company with -- minus the theme parks that really is size and scale to compete with this thing.
STELTER: I think that's true. That's the pitch. There are some investors that are skittish to this entire sector. That's why shares of Netflix and
Disney and all of them are down so much this year, but there are only a few giants and Warner Brothers Discovery is one of them.
QUEST: So what do you make of all of the plan for the future?
STELTER: Well, you know, look, this is Barry Diller's Little Island. He has said many times that streaming is not the end all be all that, you know,
betting on just streaming, all trying to chase Netflix is not going to accomplish what is wanted. I think what we're hearing now from Warner
Brothers Discovery is a little bit of everything. Linear cable and satellite, theatrical, and yes, streaming as well.
And frankly, as someone who's only been to the movies about three times this year, I would love more reasons to go to the movies that have a night
of it. I think a lot of people feel that way. They don't want to see theaters go out of business. Zaslav is saying he'll be their best friend.
QUEST: I'm watching HBO Max. HBO Max and Discovery Plus free.
STELTER: All -- we are?
QUEST: I'm actually thinking about it as well.
(CROSSTALK)
STELTER: Oh, well, as employees.
QUEST: As employees.
STELTER: Yes, yes. Sorry for everybody else. But yes, for employees. I think it might cost 115 bucks for everybody else. We'll see next year. Nice
to see you.
(CROSSTALK)
QUEST: Be the first. Other companies trying to charge its own employees. Good to see you, sir. Thank you.
Adam Aron is with me. The CEO of AMC Theaters. He joins me now. When you heard Zaslav's comments last night, you must have said yes. Victory. I knew
it was right all along.
ADAM ARON, CHIEF EXECUTIVE OFFICER, AMC THEATERS: Well, yes. And in fact, his comments came the same day that AMC released earnings, and our
attendance was up 168 percent. In the second quarter of this year over the second quarter last year. Our EBITDA was up more than a quarter of a
billion dollars, quarter to quarter year over year. So, it's not just that David Zaslav said it yesterday, look what Tom Cruise did for us.
Memorial Day weekend. $1.3 billion of global box office for Top Gun: Maverick. We had 59 million people visit AMC theaters in the second
quarter. Movie theaters are coming back. It is true the pandemic put us on our knees. But boy, are we coming back strong.
QUEST: Right.
ARON: And we certainly welcome every Hollywood studio that wants to give us major product going forward.
QUEST: And what's interesting is this idea that there is clearly a theatrical quality that requires a theatrical release.
ARON: Well, look, you know, filmmakers have spent a century making great movies. They do it very well. Not always. But because it's a creative
business. And sometimes there are misses. But basically Hollywood does a great job of making movies with broad appeal. And that's what AMC has been
showing in our theaters since 1920. Movie theaters are at the center of the cultural fabric of the United States, internationally.
In 2019, just before the pandemic, globally, people bought $43 billion worth of movie theater tickets that year. And as I said, we're on our way
back. And boy when you -- Richard, when you see the movies that are coming out in the fourth quarter of this year, and in 2023 it's going to be one
hit after another. Let me just give you two movies to tease you about the sequel to Black Panther 2.
How about Avatar 2. Avatar is only the most successful movie of all time inflation adjusted. It's been decades since we've seen what James Cameron
can show us from the Planet of Pandora. And we're going to get it again at Christmas. There's a lot -- there's lots of good films about to come out.
QUEST: Seems like you and I need to see this together with some popcorn, which I've already said that I'll pay for. Finally, as you look back on
that whole meme stock era, quarter time, can you make rational sense of it in your mind?
ARON: I can. Because we -- like every other company in the New York Stock Exchange, we were 80 percent institutionally owned. And a year and a half
ago retail investors descended on AMC and they bought control of our company.
[15:50:04]
Retail investors own somewhere between 80 and 90 percent of our shares now. And they do it for -- they own it for a variety of reasons. Some of them
just want to make money, some of the theories about how stocks will trade but so many of them are in our stock because they love the idea that movie
theaters should thrive. And AMC is the largest most successful movie theater company in the world.
We have our Odeon Cinemas Group operating under eight brand names in Europe and Middle East. We're the largest in Europe as well. And our (INAUDIBLE)
love theaters, they love seeing movies in theaters. We're lucky to have them and literally just yesterday, we announced we're creating a whole new
class of stock, preferred stock that they can invest in going forward which deeply and fundamentally strengthens our company as a business. So, these
are good times for AMC. Our future's bright.
QUEST: And your stock is up sharply. Good to see you, Aron. Thank you. I look forward to that popcorn when we go to the movies together. As we come
back after the break. China is now restricting many of its contacts with United States including over climate cooperation. It all follows Nancy
Pelosi's visit.
And walking up. Look at this.
BILL WEIR, CNN CHIEF CLIMATE CORRESPONDENT: (INAUDIBLE)
QUEST: Look at this. Bill Weir. Good to see you.
WEIR: How are you, sir?
QUEST: I'll be with you after the break. Magnificent.
(CROSSTALK)
QUEST: Yes.
(COMMERCIAL BREAK)
QUEST: Breaking news to bring you an update on the situation in Israel. Rocket sirens have been sounding in Israel. And the Saudi Israeli media
says many rockets that are incoming to the country has been intercepted by the country's Iron Dome system. The Israeli army is continuing to strike
Islamic Jihad targets in Gaza. The Palestinian health ministry says at least 10 people have been killed. And amongst that 10 is a five-year-old
girl.
So, we'll get more details of that in the hours ahead. Not only the reasons why the operation, the depth and constraints of outage, and of course the
response. Hamas' response and the response of the missiles going back in towards Israel.
Well, whether it's one step forward, two steps back or the other way around who really knows when it comes to climate change? And the decision by China
to withdraw its cooperation with the United States on climate change agreements. It follows Nancy Pelosi's visit of course to Taiwan. It's one
way that the Chinese are showing their deep displeasure with the visit and thereby the United States.
[15:55:06]
Bill Weir is with me. How serious is this? I mean was there great cooperation and exchange between the two world's largest polluters?
WEIR: There was symbolically, Richard. That was that cooperation back in 2014, '15 that set the table for Paris. It was in Glasgow. The Glasgow
statement between the U.S. and in China that they would work together on methane reduction, which is something that maybe China didn't want to agree
to with the rest of the world, but they would do something just with the -- with the other world leader and pollution.
And then there was the technology side of it. They have so much to offer, in terms of understanding how to blow up clean energy fast on scale. And so
we don't know if it's going to affect supply chain.
QUEST: But the reality is, you're shooting yourself in the foot.
WEIR: Absolutely.
QUEST: If you don't cooperate with United States, where is your inherent gain if everybody suffers?
WEIR: There are so many intertwined relationships with universities, with corporations, factories. Yes, it doesn't do anybody any good. It's the same
way. Nobody wins a nuclear war, a hot one. No one wins a Climate War when no one does anything. And the two biggest leaders can't talk to each other.
QUEST: Do you get the feeling this is -- this has got legs, this is going to stick or -- you're shaking your hands you had already?
WEIR: I don't know. I don't pretend to understand, you know, the Asian politics and the sino-relations and what this means in the grand picture
things. I think the momentum right now is so strong, especially which is if the Democrats can get this mansion, Schumer bill done, Inflation Reduction
Act done. That is the starting gun for a technological race to the future.
QUEST: Now as our chief climate, Europe is on fire.
WEIR: Yes.
QUEST: The United States large parts on fire. Australia last year, we know that. We -- I think everybody pretty much accepts the climate change
reasoning behind it. The day is beautiful here today. But it's probably hotter than it should be today.
WEIR: Exactly.
QUEST: What's happening?
WEIR: Well, that's it. It's these little degrees that we adjust to. We normalize the horrible. Look at the last couple of years when it came to a
pandemic. It is -- it is happening so much faster than it even was anybody predicted even a decade ago. Munich Re, the big giant reinsurance company
just say the first half of this year, $65 billion worldwide on natural disaster. Record set in Australia, 3-1/2 billion dollar disaster.
At a certain point, the risk is going to trickle down to the homeowner and then people will get it.
QUEST: Then we'll get it. We'll get it. Thank you, sir.
WEIR: Thank you, Richard.
QUEST: Joining me here in the sun. We'll have a profitable moment. After the profitable moment, well, we enjoy the sun. QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment from Little Island. Really delighted to be here for our summer Friday for one simple reason, the philanthropy that
made it possible. Barry Diller who you heard earlier, but unlike Carnegie or Vanderbilt, or all the other places where they shoved their name on.
Diller insisted it's wasn't going to be Diller island. It was going to be Little Island.
[16:00:03]
And a result you, me, the city, our children's children's children's children now have this magnificent resource for the future. And that's
QUEST MEANS BUSINESS summer Friday from Little Island for tonight. I'm Richard Quest on Little Island. Next week we're in Stockholm in Sweden.
Until then. Whatever you're up to in the hours ahead, I hope it's profitable. I'll see you next week.
END
