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Quest Means Business
Markets Extend Slide on Recession Fears; European Commission Warns Elon Musk of Sanctions; COVID Cases Surge as China Dismantles Zero-COVID Policy; A Missing U.S. Student Calls Home For Spain; Tourists Stranded In Machu Picchu As rail Line Suspended; Build-A-Bear Expects Record Profits As Retailers Struggle. Aired 3-4p ET
Aired December 16, 2022 - 15:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST: It is a miserable day weather-wise in New York, but the welcome is warm, and we are at the Plaza Hotel here in
New York City. The market is off 350 odd points, over one percent.
But remember, it's been down all day. This is a sort of a sentiment, if you will, that goes back to events earlier in the week.
The market is down, we are here and the events of the day that we are following. The global selloff continues, and this is because investors are
bracing for a difficult interest rate high year ahead.
Twitter has suspended prominent tech journalists and the move has sparked international backlash.
And on this program tonight, not only the General Manager, the Managing Director here at the Plaza.
But we're going to build a bear with the Chief Executive of Build-a-Bear on its sales and the Holiday season.
We are live at The Plaza in New York. It's Friday, it's December the 16th. I'm Richard Quest and yes, at the Plaza, I mean business.
We've been out and about all through the year and we decided that with this being my last program before Christmas, where better than the Plaza Hotel,
who kindly allowed me to interlope and take over parts of the lobby. It is one of the most famous hotels, of course, in the world. It is at the corner
of two important landmarks, Fifth Avenue and Central Park, and you'll hear more about that as the program moves on as we look to the iconic Holiday
Unfortunately, whatever the welcome and the warmth here, the markets are not nearly so pretty. The stock slide that we talked about yesterday is
continuing today. The Dow is off more than one percent. The reason is really simple. Rates are going higher, economies are slowing, recessions
are more likely.
I've summed it up in a nutshell. You can see Goldman Sachs says that it is going to -- it is down 1.3 percent. It is reporting a perhaps workforce cut
of eight percent.
Look at the triple sack, all the indices are down. Interestingly, they're pretty much all the same. We're not seeing a tech heavy selloff, but we've
also got options expiring, not triple, but $2.6 trillion worth tonight that creates volatility.
Europe is very similar. It just misery, basically, as everybody saw what was happening in Europe, and you'll see that the FTSE is down one-and-a-
quarter percent, the worst of the markets.
Matt Egan in New York. And Matt, we know the reasons why. I guess there is an element of the sort of the settling in for the long, hard slog.
MATT EGAN, CNN REPORTER: Right, Richard.
I mean, this selloff really got started at 2:00 PM Eastern on Wednesday, when the Fed announced this decision, this decision itself was basically as
expected. But you know, that statement was unchanged, even though inflation has cooled off substantially in recent months.
The Fed press conference was interpreted as pretty tough sounding, and then we had these weaker than expected economic reports -- manufacturing, retail
sales -- all of them suggesting that this real economy is showing some real weakness that cracks are forming, and so put that together and you do have
a situation where markets are pricing in a greater risk of a recession.
But Richard, I would note that you know, some of the investors I'm talking to they think that this selloff, may be getting out of hand. I talked to
Art Hogan, the veteran market strategist and he said that he thinks it is just too early to be sounding the recession alarm and he thinks that the
market could end up bouncing back next week.
QUEST: Now, the point, Art Hogan of course knows his onions, and therefore we take that seriously. But to a certain extent, there is a of
comfort in this selloff. I'll explain, because when we can see the reason why and you know the medicine that's working, you can start to look ahead
and say when this turns around, be it middle to late next year, therefore a solid base has been created.
EGAN: I think that's right, and I could even take it a step further. I think that Jerome Powell and the Fed, they are probably just fine with this
I mean their inflation fighting campaign relies on tighter financial conditions, they don't want the markets to boom, they know they can use the
bully pulpit of the Fed press conference to talk a tough game on inflation, to warn about higher interest rates, and that that can help cool off the
If the market was up since that Fed decision, I don't think that the Fed would be all that happy, and then you could see the Fed come out and sort
of make some hawkish comments.
So I think that you're right, though, that the fact that this is not a mysterious selloff, that we can really understand the reasons behind it, it
does feel a little better. But you know what, Richard? It doesn't feel good that the US market is on track for its worst year, easily its worst year
since 2008, and this latest selloff today is not helping matters.
QUEST: Matt Egan, that may be a sad note upon which to say thank you, but it won't stop me from wishing you and your family a very happy festive
season since this is the last time we will speak before Christmas, sir.
EGAN: Same to you. Thank you, Richard.
QUEST: The European Commission and Twitter. Well, now the EC is warning Elon Musk of potential sanctions ahead. The reasons are multifarious, but
the big one at the moment, Musk has banned prominent tech journalists.
The German Foreign Office is also slamming him. Musk has falsely accused reporters of sharing assassination coordinates on him. Now, one of the
banned journalists is our own Donie O'Sullivan, frequently on this program. He is absolutely clear. Donie did not share Musk's whereabouts, and so as a
result, he says Musk is sending out mixed messages.
(BEGIN VIDEO CLIP)
DONIE O' SULLIVAN, CNN CORRESPONDENT: Of course, it is entirely hypocritical of him to claim to be this kind of First Amendment free speech
warrior, and then turn around and take down content he doesn't like and shut down the accounts of journalists who cover him.
(END VIDEO CLIP)
QUEST: And CNN's Press Department went into overtime. Twitter's increasing instability and volatility should be of incredible concern for
everyone who uses the platform.
Vivian Schiller is with me, the executive director of Aspen Digital. We've talked to Vivian before and for good reason. She is a former Global Chair
of news at Twitter.
Good to see you. Thank you. Very grateful.
Now look, it is really simple as he's done this, and no one knows why.
VIVIAN SCHILLER, EXECUTIVE DIRECTOR, ASPEN DIGITAL: Well, look, a single individual owns one of the most important powerful platforms on earth. He
gets to make the decisions, and his decisions, as erratic as they are his alone to make, sort of speaks to a broader problem about tech platforms.
But yes, erratic is certainly putting it mildly.
QUEST: Now, would you have a different view of say, Jeff Bezos and "The Washington Post," just -- this is a hypothetical. I mean, this is not a
slur against Mr. Bezos in any way. What I'm saying is, the proprietor who owns the distribution can basically decide what to do and how to do it. Why
is it different with Musk?
SCHILLER: Because of his behavior. If (Elon Musk) was calling up the editor-in-chief of "The Washington Post" and spiking stories and trying to
direct coverage, I would have the same complaint, but Elon Musk is making erratic, irrational decisions that seem based rooted mostly on who he
And furthermore, Twitter is a more global, more powerful platform, I'm sorry to say than any individual newspaper, although possibly not for much
QUEST: What do you want anybody to do about this? There's no board. There's no oversight. They're all regulated up to a point, but not really,
in this case. So you're good. There's no investors? There's no shareholders. I mean, the man is prosecutor, defense, judge, jury,
executioner, what do you want to be done about it?
SCHILLER: Yes, that's exactly right.
I mean, there are investors keep in mind, I think there are investors and, you know, well, you're more expert than I on this, but watch the risks to
I think the only -- there is very little anybody can do about it, I suppose, you know, advertisers who are already fleeing Twitter could
continue to flee. Maybe that would put some pressure on him. Maybe it wouldn't.
Yes, regulation only to a point certainly in the United States, the First Amendment protects Elon Musk's decisions on his own platform. We may not
agree with it, we may not agree with them, but the First Amendment protects them.
He can ban whoever he wants. So for many of us who really have, you know, relied on Twitter in so many ways, it is incredibly frustrating and
disheartening. It's such an important platform.
QUEST: And I think that's sort of the point. We don't want to be sort of philosophical and esoteric here. The reality is Twitter is a major means of
communication, one run now and owns it and he is being capricious and mendacious in the way he exercises his power, but there is no obvious
SCHILLER: Yes, well, you know, as you as you mentioned in the lead in, you know, the European Commission has a different view. We'll see what happens.
There may be -- there's a consent decree in the United States, you know, so there are some concerns there, but there is not a First Amendment issue.
QUEST: Very glad to have you with us. Thank you.
There we go. Didn't need to show you, just when everything was going so well, and the things -- but I think we got the point of what Vivian was
talking about, and certainly, it's a story we will continue to follow very closely, if for no other reason than our own colleague has been deeply
affected by this.
And so to COVID and China. Well, now China is canceling vacation for health workers, for the very simple reason that since they've started to open up
the country, the number of COVID cases has gone through the roof and we don't really know exactly how many.
The resurgence of COVID was arguably inevitable once restrictions had been taken off. There isn't the same level of vaccination. The vaccine that's
being used is not as efficacious. But as Selina Wang now reports from Beijing, it is creating a monumental problem in China.
SELINA WANG, CNN INTERNATIONAL CORRESPONDENT: As COVID rapidly spreads throughout China, the Chinese government spin is that everything is fine,
that China's COVID policy was a success and is still a success.
Propaganda has taken a complete U-turn from declaring an all-out people's war on COVID to suddenly now telling people your health is in your own
There is a lot of state media headlines like this. In "The People's Daily," the headline reads: "Start by wearing a mask and be the first person
responsible for your own health."
In Xinhua, the headline reads: "In the fight against the epidemic, everyone is the first person responsible for their own health."
Other articles are praising the last three years of Zero COVID and hailing this pivot as an achievement, including this commentary from "The People's
Daily" that has gone viral. The key lines are: "The virus has weakened, but we have become stronger. Chairman Xi's insightful judgment, scientific and
firm decisions shows his reliability as a people's leader. It pointed out and provided crucial guidance for us to win this people's battle, total
battle, and precise battle against COVID."
A lot of people online, they are furious over that article. Some are calling it a lie that completely ignores the devastating impact of zero
COVID over the last three years, the trauma and pain that people faced during lockdowns. No apology or no admitting that the government has ever
made a mistake.
State media has instead focused on how the government is responding. The government said it will train volunteers and retired health workers to
boost manpower. The government is increasing the number of fever clinics.
This social media video shows people waiting inside a Beijing stadium that's been converted into a makeshift fever clinic. You can see some lines
forming and people waiting on benches.
We're already seeing hospitals under strain here in the capital, but the really big concern is what happens when people go back home for the
upcoming Chinese New Year and COVID starts to spread more rapidly in the rural parts of China with weaker health infrastructure.
Selina Wang, CNN, Beijing.
QUEST: It is QUEST MEANS BUSINESS live from New York.
You know, they always say that eventually your teddy bear starts to look like you. I don't know about that.
We will have the CEO of Build Your Own Bear later on the program and this magnificent tree, all of these wonderful decorations here at The Plaza.
We'll have the Managing Director who will tell us all about this iconic hotel, who owned it and the sort of things and history that's been here.
QUEST MEANS BUSINESS from The Plaza.
Yes, yes, I understand.
QUEST: Even in the rain on a cold December day, New York has managed to look glorious at this time of the year at Christmas, it really knows how to
put on the sparkle and make things look a little bit festive, well, very festive.
Here at The Plaza Hotel, for decades, they have been welcoming people and we decided this was a very fitting place to end our out and about and the
last program before, for me anyway, at least before Christmas.
This is a hotel once owned by former President Trump. Kings, Queens, dignitaries, celebrities, even me has stayed here in the past. There's a
lot of history at The Plaza.
QUEST: It is a hotel for the rich and famous. It has found its way into the hearts of many, an iconic part of New York City. But it should be, it
is on the corner of Fifth Avenue at Central Park. It doesn't get more central than this.
It has been providing food and drink and a place to rest one's weary head to the world's A-listers for 115 years.
The Plaza is a living landmark.
Since it opened, the ownership has passed between some of the most famous names in hospitality and real estate. Conrad Hilton owned it.
DONALD TRUMP, FORMER OWNER OF THE PLAZA HOTEL: We've worked together --
QUEST: And so did Donald Trump.
It's hosted some of the most elaborate parties in the world.
Here, Truman Capote held his legendary Little Mask Ball in the hotel's Grand Ballroom in 1966. Hundreds gathered wearing black and white and
countless celebrities have tied the knot right here.
The Plaza has sparked imagination for decades. Its most famous resident of course, Eloise at the Plaza. The fictional character from Kay Thompson's
(CLIP FROM "NORTH BY NORTHWEST.")
QUEST: Here, Cary Grant got kidnapped in the hotel's oak bar in Alfred Hitchcock's classic "North by Northwest."
(CLIP FROM "HOME ALONE 2.")
QUEST: And The Plaza and "Home Alone 2," poor Kevin McAllister, you can't have Christmas without it.
(CLIP FROM "HOME ALONE 2.")
QUEST: During the Holidays, this lobby becomes a Winter Wonderland. The Plaza is that icon of New York City whose sparkle resonates way far beyond.
QUEST: The Plaza though, is also a business. It's a hotel that has to make money and there have been some very difficult times, of course, since
the pandemic and now with the forthcoming recession or likely recession, my words, that could take place.
It is a hotel That charges a dollar or two to stay here, which is why when I sat down with Luigi Romaniello, who is the managing director, the general
manager, if you will, of this fine establishment, I wanted to know what were the expectations for next year, bearing in mind, visitors are coming
back to New York in very large numbers.
QUEST: The Plaza. Mine host.
LUIGI ROMANIELLO, MANAGING DIRECTOR, THE PLAZA HOTEL: Hello, Richard. It's so great to have you with us.
QUEST: It is good to be here.
ROMANIELLO: I am Luigi Romaniello. I am the Managing Director here. I'm so happy to have you.
QUEST: The Plaza.
ROMANIELLO: Yes, we are here. You have arrived.
QUEST: Am I allowed in?
ROMANIELLO: Oh, of course. Let's go. I want to show you inside this beautiful hotel. Please.
QUEST: This is an amazing hotel. It doesn't need any sort of advertising or promotion, in a sense. It is the famous Plaza Hotel. But of all its
history, what do you find most interesting?
ROMANIELLO: You know, I think, of course, you know, as the legacy you know, what it represents in the city. You know, it's amazing to me that
since 1907, no matter what the economic or social political changes were in the USA, The Plaza always maintain the kind of relationship to New York
QUEST: You've been here a few months, but you've looked at the numbers. How is it coming back post pandemic? Because certainly, it's at the upper
end of the market in terms of costs, it's way up there. So how is it coming back?
ROMANIELLO: You know, I have to say, we have had 2022, they really exceeded our expectations. And, and actually, as we close the year, we're
getting very close to the 2019 performance.
QUEST: Now I remember when The Plaza closed for the renovation, it was closed for quite a long time, while the apartments were put in and the
hotel was put in and everybody wondered, would the new Plaza still be The Plaza?
ROMANIELLO: But you know, The Plaza will always be The Plaza, you know.
QUEST: But what is The Plaza?
ROMANIELLO: It is the heart of New York. This is the heart of the community. It is what it represents, to the timeless of even in industry,
because the hospitality is always something about, you know, bringing back everything to the essence, you know, to the historical elements, you know,
over greeting someone, who was there, who was the celebrity at the time?
The Plaza is such a layer of the story of all of this that as a hotelier, to me, for example, it was one of the reasons why I joined them.
QUEST: So who stays at The Plaza these days?
ROMANIELLO: I mean, if you look at the past, you know, Presidents, Kings, actors of all stages, you know. If you look at the present,
basically who is who globally, I mean, from financial to celebrities.
QUEST: But are you a business hotel? Are you a leisure hotel? You're certainly a landmark hotel.
ROMANIELLO: You know, it's funny you say that because even though The Plaza is a city hotel, we're in the heart of New York City. We are at the
Central Park and the Fifth Avenue with the shopping. We're actually like a bleisure hotel, which means that someone can come in for a business, but
then tack on a couple of days and bring in the family become leisure as well.
QUEST: Okay, I think bleisure is often spoken of and not rarely seen. Are you actually seeing it?
ROMANIELLO: I'm seeing it very much, and it is actually one of our segmentation for next year. We are tracking the bleisure business as well,
because we feel like it's an emerging markets for The Plaza.
QUEST: Oh, my goodness. So what have we go here?
ROMANIELLO: Well, I'll tell you, Richard, I wanted to take you here because, you know, The Palm Court, of course, you know, it's been here
since 1907, since the beginning of The Plaza. And you know, I know it's historic and I love that, but it's still very relevant to this day because
the community comes in, and the one I enjoy, a piece of The Plaza, it just resonates.
QUEST: Traditionally, this was the heart if you will.
ROMANIELLO: It was. It was called the Tea Room at the beginning.
ROMANIELLO: And then it became The Palm Court, but all along has been like the New York living room really, truly.
ROMANIELLO: I know, I know. Richard, I'd be remiss if I didn't take you here to show you the evergreen longer lasting, I mean --
ROMANIELLO: Eloise -- Eloise at The Plaza.
QUEST: At The Plaza. You can't buy that publicity.
ROMANIELLO: No. But you know, this thing has been here since 1964.
QUEST: How aware are you that you've been -- you've been handed an institution?
ROMANIELLO: Well, you know, Richard, I have to say this. It is a humbling experience. I just saw so many wonderful hotels in my career, but
there is something about The Plaza.
This one really hits me in my heart, because, you know, you know, when I see the colleagues every day, I do want to speak to them, you're talking
about people that made a lifetime commitment.
QUEST: The Managing Director of The Plaza showing me around. I'm just looking at the time, it is coming up to half past three. Now, of course,
for an Englishman in New York, that means tea time.
And you heard us talking about bleisure. I have to say, I always think this idea of business and leisure, I've never managed to successfully do it
Business and I'm going to have one of these little fancies, have a chocolate or sandwich? Why not have both. QUEST MEANS BUSINESS.
QUEST: Welcome back.
Hello, I'm Richard Quest. There is more QUEST MEANS BUSINESS in just a moment.
As we continue tonight, tourists in Pero that are stranded amid political instability. We'll talk about that and bring you up to date, and we're
going to build a bear. Well, the Build-A-Bear CEO will be with us on the program, a lot of Holiday retail sales, and just how this is all managing.
Bearing in mind, the numbers look good, but what comes next? That seems to be --
It all happens after the news headlines because this is CNN and on this network, the news always comes first.
Ukraine says it shot down 60 of the 76 missiles that Russia launched on Friday, which was one of the largest attacks since the war began. Ukrainian
officials are reporting damage to key civilian and energy infrastructure across the country. It's leaving what they call a serious shortage in the
The family of the American student who disappeared two weeks ago in France says he has called home and is alive and safe in Spain.
Kenny Deland Jr.'s disappearance triggered an international search.
The U.S. women's basketball star Brittney Griner has left a medical military facility in Texas eight days after the Russian prisoner swap. She
spoke out for the first time since her release, posting on Instagram. It feels so good to be home. The last 10 months have been a battle at every
At least 20 people have been killed in Peru amidst the continuing violence and political unrest taking place in the country. According to the Ministry
of Health, it follows the arrest of President Pedro Castillo and he's accused of illegally trying to dissolve congress. Curfews in eight regions
is a state of emergency across the country. It's left tourists stranded in places like Machu Picchu, the rail line from the city has been suspended.
Rafael Romo is watching events. He's at the CNN Center. He joins me now. The tourists that are stranded all day. Do we know if they are -- I suppose
well and in good health? I mean, is it just a case of they can't get out or are they in danger?
RAFAEL ROMO, CNN CORRESPONDENT: Hi, Richard. The ones that I've been able to talk to say that their basic needs aren't being met but there are
others, we hear reports of others that are having trouble getting water and food and are desperate to get out of there. And Richard, it's not only rail
lines, like the one you mentioned connecting Machu Picchu, the world-famous Inca citadel. It's also multiple regional airports that have been shut down
and it's not hard to figure out why.
A group of protesters tried to violently take the airport in the city of Ayacucho. On Thursday, they clashed with police and at least seven people
died according to authorities. The death toll as you mentioned before now stands at 20 after more than a week of violent protest. Authorities there
are at least 40 injured but the figure has been steadily increasing in spite of the fact that a state of emergency was declared Wednesday.
And now eight regions are under curfew. Earlier today. I spoke with Michael Reiner. He's an American tourist from Washington, D.C. who told me he's
part of a group of eight Americans mainly college buddies who -- and other friends, other mutual friends I should say who are now stuck in Peru. This
is how he described their situation speaking to us from Cusco.
(BEGIN VIDEO CLIP)
MICHAEL REINER, TOURIST STUCK IN PERU: It's surreal to be a tourist in a country where there's political unrest taking place before our eyes is a
whole new way of experiencing a country. I think understanding the circumstances and what's at stake for Peru makes it we like the context for
that for us is there's something bigger happening here than just our travel experience.
(END VIDEO CLIP)
ROMO: And Richard, President Dina Boluarte who was the vice president who ousted former President Pedro Castillo published a statement in reaction to
deadly protests in Ayacucho where a seven people die saying that she mourns with the mothers of those who died and feels the pain of families
throughout the country. Once again, she reiterated her call for peace. And just to give you an idea real quick before I go back to you, Richard, about
how popular Peru is with foreign tourists.
According to government figures, more than half a million foreign tourists visited the country in the first five months of the year. Now back to you.
QUEST: Rafael Romo at the CNN Center. Thank you, sir. In a moment, what would you like for Christmas? How about teddy bear? Well, go build your
own. The chief executive of that company on the program joining me next.
QUEST: Welcome back to QUEST MEANS BUSINESS. Maybe Quest Means Christmas because (INAUDIBLE) before the holiday season. It's a time to take stock.
Literally figuratively, however you want. Investors have had a horrible time this year with the inflation fight and the way markets have been down.
Look at the numbers on the averages. The U.S. averages have been --the Dow is down -- that's part of 10 percent. The S&P, 19 percent. The NASDAQ 31
Same -- it's not much better in Europe. The global markets are all sharp (INAUDIBLE) Hong Kong -- the Hong Kong Hang Seng is down 16, the DAX is
down and if any sort of way, arguably, the FTSE is off the least. But that's because it's probably not as performed the best in the good times.
Julian texted me editor at large of the Financial Times. Season's greetings.
GILLIAN TETT, EDITOR-AT-LARGE, FINANCIAL TIMES: Seasons greeting to you. And I'm afraid Scrooge is definitely here this Christmas for investors.
QUEST: How how's it gone so badly so quickly?
TETT: Well, it's not very surprising because the reality is that we've had an incredible bubble pumped up in recent years by all the Federal Reserve
and other central banks, super loose monetary policy. Plus, of course, we had this massive fiscal boost during COVID. And after that, we've been
grappling with supply chain problems, and the inevitable pricking of a bubble of all the super loose monetary policy.
QUEST: The problem is, it seems like -- it seems like the market has just woken up to the potential of a recession.
TETT: Absolutely. I mean, one of the fascinating things is that economists have been warning for a long time that a recession was likely the market,
essentially in the first half this year, with pricing in the end of loose monetary policy which we've seen the Fed have been raising rates. And the
second half of the year, or really the last few months is the (INAUDIBLE) price in the fact that corporate earnings are being hit by the slowdown
In many ways that's not surprising. But the really nasty thing that should make everyone worry about Christmas Scrooge is that going forward we've got
so engrossed potential recession and still high prices and inflation.
QUEST: So, is there a -- is there a possibility that all of a sudden, all the interest rate hikes, the effect rules in and just at the worst possible
moment, next year, when inflation remains high?
TETT: Well, anybody who's having a family supper around the holiday tree this year, should ask anyone over the age of 50, or 60, if they remember
the 1970s because that is kind of where we are. We've got high inflation, slowing growth, and this horrible likelihood that higher rates are going to
slow growth even more.
QUEST: Right. But I remember the 70s (INAUDIBLE)
TETT: Have you still got the flares? That's what I want to know.
QUEST: The flares have gone. But I do remember the inflation of the 70s. And I remember Paul Volcker in the 80s, which begs the question what -- the
medicine has to be taken.
TETT: Well --
QUEST: And that interest rate, by the way, that just has gone up and up and up like a vertical line.
TETT: Yes. There's actually a raging debate right now about how much further they have to go. And a lot of it depends on whether you think the
Fed is still committed to two percent or whether they are de facto sliding towards saying four percent Inflation is kind of OK. Now, a lot of people
say four percent is OK and we've got so many debts we have to infect them away. A lot of people say if you start talking that kind of language,
you're going to have an inflationary spiral.
But what you have right now is the Fed having come out and said that rates are going above five percent, that's higher than they were expecting until
quite recently. And that is going to be a shock for a lot of people in 2023.
QUEST: Do you -- are you -- where do you stand on this idea? Will they flinch? Will they flinch in the final analysis?
TETT: Here is the big issue. Already, we're seeing goods price inflation starting to slow. So, the kind of stuff you're going to have in your
stocking around the tree, that is not growing up quite so fast in prices. But the really nasty thing is that wage inflation doesn't show much sign of
slowing down, nor the service sector inflation. And as long as you've got those last two components, I don't think the Fed's going to flinch too.
Sorry to be such a scrooge.
QUEST: No. You're telling it as it is.
QUEST: And I think I'm -- I think what's -- I'm not saying shocked or surprised. But what got me is this, the way in which it's the markets have
suddenly realized. I mean, even now, there are still some people questioning whether we're going to have a recession next year. Deutsche
Bank was saying there'll be a U.S. recession way, way, way back at the beginning.
TETT: You know what, the rationale is that -- of recessions always slippery. It's going to be slower growth anyway, it may be negative, who
knows? The one good thing that American investment think about is that if you think it's getting gloomy here, it's a lot worse in the U.K. and much
QUEST: I'm going -- I'm going to the U.K. tomorrow. Thank you for that. And if you -- if you were to have a present under the tree, but it's such a big
tree, I can't find the presence. What would you want for this year?
TETT: I would probably want lots of cheap energy and solar panels to get over the -- over wind turbine, renewable energy to get around this nasty
living crisis with fossil fuels.
QUEST: Solar energy, somewhere on this thing, there are loads of solar panels. Thank you very much.
TETT: Thank you.
QUEST: And let me also just thank you for always being so kind and considerate with your time and joining us on QUEST MEANS BUSSINESS.
TETT: Oh, it's great to be on the show. And listen, Happy Christmas to you. And I hope you get to the U.K. OK. Prepare for the lots of strikes.
QUEST: Thank you. She's not -- she's not wrong actually. I've already been trying to work out how I'm going to get from the airport. Thank you. When
we come back, we will have the Build-A-Bear CEO, a bear economy. I'm always quite funny. Thank you.
(BEGIN VIDEO CLIP)
JOEL EDGERTON, AUSTRALIAN ACTOR: I have made a small investigation into your affairs. You're one of Meyer Wolfsheims bunch.
AMANDA SEYFRIED, AMERICAN ACTRESS: Please, let's go home.
EDGERTON: See, he and this Wolfsheim, they bought a lot of drugstores and sold bootleg alcohol over the counter.
LEONARDO DICAPRIO, AMERICAN ACTOR: What about it, Old Sport?
EDGERTON: Don't you call me Old Sport.
(END VIDEO CLIP)
QUEST: Even if you're not saying it, it's a popular filming spot and you can tell from people who's standing outside the front door on the plaza,
taking photographs of it being here. Those movies there. The way -- so, just in case you remember the way we were Sleepless in Seattle, The Great
Gatsby, and of course, you know, Home Alone 2 which we showed you earlier. Now, I also showed you the market earlier.
And it became clear that we are in at least as far as the NASDAQ and the S&P 500 we're in a bear market. Did you say bear? Yes. Well, there's one
bad that is not in a market of such like types. This particular bear, Build-A-Bear. Build-A-Bear share prices up -- the stock is up some 22
percent year to date. It's the global retailer, that is basically you stuffed your own toys, customers build plush friends on track, the most
popular year ever, for the second year in a row.
Sharon Price John, is the chief executive of Build-A-Bear joins me from St. Louis, Missouri. Thank you, first of all, for sending the bear that looks
like me. Retailing is going to go through a very difficult time. But I need to understand what you as a retailer, or as at least a manufacturer can do
SHARON PRICE JOHN, CHIEF EXECUTIVE OFFICER, BUILD-A-BEAR WORKSHOP: Yes. So, thank you so much for having us here. We're excited to be a part of, you
know, the Christmas season, the holiday season, the holiday shopping time period. We love the part that we play and having families and come together
to make their own stuffed animals. But to your question, first of all, we are much, much more than a retailer.
We're a multidimensional company that not only has nearly 500 stores, franchise and company owned scattered around the world, but also a vibrant
digital dot, you know, dot com business and outbound licensing business and building entertainment arm. So, we are -- have a lot of revenue streams.
But at the same time, you know, I think that even when there are some of these still some conflicting information, you know, they're clearly you
know, we're seeing some interest rate tides, clearly there is inflation. Clearly there are some supply chain challenges.
JOHN: But, you know, there are some -- there are some folks that are, you know, in some companies and some brands that are still relevant. We've seen
increased traffic, yes.
QUEST: Right. Let me -- let me jump in there if I may because the -- I want to unpick a little few things. You know, as inflation hits and interest
rates go up, I guess that requires you to start managing things, arguably, in a different way because -- besides -- I mean, the pandemic was on board
on its own but now we're facing an economic environment that few have traded in before.
JOHN: That's hard, clearly to predict with specificity, but Build-A-Bear has shown quite a bit of flexibility and alacrity. You know, our entire
turnaround process was through a number of different economic events with fainting names like the retail apocalypse and Brexit and COVID. You know, a
global pandemic and then post-pandemic, if we can call it that yet. Clearly, we've also managed supply chain challenges and increases in
And we have a lot of latitude in the way we can price our products and we don't do that -- we don't -- we don't raise the prices on a -- across the
board. We have latitude on some of our 175 licenses that are older consumers tend to like. So, you might be interested that 40 percent of our
sales are teens and adults.
QUEST: So, as I -- I got a couple of bears here, you can't see me, I can see you. I got some of the beds here.
QUEST: Which is the most expensive bit of it? Besides the bear itself. Yes, indeed. I'm talking about how expensive. Would you, you know, is it the
filling? Is it the - what -- with supply chain issues which is the hardest part he asked?
JOHN: So, what's the most expensive part? Well, that's an interesting question because there's different, you know, value in what we offer. It,
you know, it's so much of what we do and what we're about is the experience itself is going through the process. And one of the things that's important
to us is to have a wide variety of price points for different socioeconomic strata to be able to have their own furry friends.
So, we have something called a birthday treat there that you can come in your birthday month, and pay your age for the bear. So, if you're returning
one, you can pay $1.00 for the bear. So, there's -- I think there's some opportunity in stratified pricing that allows brands to stay relevant and
accessible. And yet, we do have to offer some, you know, more exclusive types of products. Like our Swarovski crystal, the collection. That is, you
QUEST: So, you very kindly sent my bear for which I'm very grateful. And I will be getting in touch because I'm going to keep it by the way, just in
case anybody thinks it's going back. It's not. And I will, of course, be making a suitable donation to a -- to a charity of your choice, build-a-
bear choice. You can let me know afterwards so that I can keep this after that. I take the opportunity to wish you a very, very happy new year and a
very good Christmas. And thank you for bringing a little bit of bear market in a good way. Thank you.
JOHN: Thank you. And I would suggest the Build-A-Bear Foundation
QUEST: You've got it. Build-A-Bear Foundation as they say. The money is on its way. Now every year, I'm going to put you down. Every year we on the
QUEST MEANS BUSINESS and have done for the last -- goodness knows, how many years. We always tell you about the PNC 12 Days of Christmas. How much does
Christmas really cost? And of course, the switchable music. Now 12 Days of Christmas is pretty much like the real world as well.
Costs have been soaring. So, if you buy all 12 gifts, in the 12 days of Christmas, it will cost you $45,523. Last year or this year, it's up 10-1/2
percent. However, you will remember you have to buy some gifts more than once. So, the true costs, including repetitions, 364 gifts, $197,000 to buy
the whole thing. Five gold rings. So, which was the big movers? The pear tree up 26 percent. Fertilizer makes sense if energy costs.
Nine ladies dancing. There's your embedded inflation up 24 percent hiring a ballet company. And the biggest 39 percent increase. Which is it? Five gold
rings. It's most expensive in the whole thing. So, there you have 197,000, you can buy the entire 12 Days of Christmas. With me of course is the man
who really knows all about Christmas. Santa Claus.
SANTA CLAUS: Good afternoon. Merry Christmas to you.
QUEST: And to you, sir.
SANTA CLAUS: Thank you, sir.
QUEST: I know we're a little early but, you know --
SANTA CLAUS: Oh, it's --
QUEST: - early than late.
SANTA CLAUS: For me, it's always Christmas. Every day is Christmas.
QUEST: We've been talking on tonight's program about inflation. There's a lot of it's about. But how's it affecting -- will you find it difficult to
get around the world this year?
SANTA CLAUS: Well, the inflation has hit my reindeer costs because I have to pay more now for the fee. It's also impacted my toy production. Because
supplies now are a little bit more limited. And that much more expensive.
QUEST: Really. Even Santa's effective. What about energy costs? Because you go round the world up and down, around the world. You know, what powers
them? Because if it's -- because of its gasoline or of it's -- no, of course, you'll be sustainable, wouldn't you? You're sustainable reindeers.
SANTA CLAUS: Everything we have is sustainable in the North Pole. But I have this that helps power my sleigh. A little bit of magic dust the pores
on the reindeer as they take off. And when they get a little tired. I just dump a little bit more on top of them. And we just take off some more.
QUEST: Does it work?
SANTA CLAUS: Did you get your present last year?
QUEST: I think.
SANTA CLAUS: Its works then.
QUEST: Can I borrow it for my heating at home?
SANTA CLAUS: I don't think so. I'd love to help you but I can't help you with that.
QUEST: No. I don't need it. OK. What's the biggest present people want this year?
SANTA CLAUS: Interesting. Boys are looking at Pokemon cards, slime. Girls are looking at American Girl dolls.
QUEST: Say it again.
SANTA CLAUS: American Girl dolls.
SANTA CLAUS: Yes. That's a big one from the young ladies.
QUEST: How have you seen that change over the years?
SANTA CLAUS: I see less technology now.
QUEST: Yes. Good.
SANTA CLAUS: The passport. Yes. And going back to games. But the other thing is I don't deliver a lot of technology. I would prefer to give
manipulative games and things that the kids can play with and interact with each other with rather than having their heads in a -- an iPad or whatever.
QUEST: Absolutely. I can't (INAUDIBLE) them anyway.
SANTA CLAUS: Neither can I. That's why I've elves.
QUEST: Of course. But careful of what you're paying. What the elves cost, I mean, it's really could all be difficult next year.
SANTA CLAUS: Well, the cost there has gone up because of the cost of making cookies. I live on cookies. You know what flower costs now? Oh, my
QUEST: Santa, it has been an honor and a pleasure --
SANTA CLAUS: No. It's been my honor. My pleasure. You have a very Merry Christmas and a Happy New Year and a prosperous New Year.
QUEST: Thank you very much.
SANTA CLAUS: Thank you.
QUEST: Good luck on your round the world --
SANTA CLAUS: Thank you.
QUEST: And we will have a profitable moment after the break.
QUEST: Tonight's profitable moment. This is my last QUEST MEANS BUSINESS before Christmas. And indeed, probably the last time I'll be with your live
before the New Year. So, it's an opportunity to just basically say, thank you. Thank you for giving me your time. Thank you for giving me the
privilege of being with you to be able to have a little chitchat over what's happening in the business world, the economic.
Have a bit of fun on the way and try and make sense of it all. The only thing I can tell you about next year, Gillian Tett basically summed it up.
It's going to be a difficult year economically, but we will get through it. We've done it before. Those of us of a certain age can remember worse
economic times. And with a bit of goodwill and a following wind and a bit of kindness to all. We should indeed managed to get through it OK.
I'm not saying it's going to be easy, but I am saying it'll be all right. And in fact, is an old friend used to say to me when people say don't
worry, it'll be alright. Used to look at me and say, Richard, it already is. And that's QUEST MEANS BUSSINESS for this Friday night. I'm Richard
Quest at the Plaza in New York.
Whatever you're up to in the hours ahead, thank you, Santa. I hope it's profitable. I'll see you next year.