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Quest Means Business
U.S. House Holding Second Speaker Vote After McCarthy Loss; Markets Lower To Start 2023 Trading; FTX Founder, Sam Bankman-Fried Pleads Not Guilty; German Inflation Eases On Energy Price Drops; Record High Wage Gain For Workers Staying Put; Shopify Does Away With Most Internal Meetings; China Criticizes Restrictions Imposed Against Its Travelers. Aired 3-4p ET
Aired January 03, 2023 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST: I think the best way to describe it is a sour start to the New York year. If you look at the Dow, we did have a
pocket of green in the morning, and then there was some economic numbers and other political factors and the market was down, slight recovery this
afternoon, but it is all pretty miserable for the start of a rainy day in New York.
The main events that is driving everything: Division and disarray in Washington. The U.S. Congress has failed to elect a Speaker on the initial
ballot. It is the first time that's happened in a century.
The FTX founder, Sam Bankman-Fried has pleaded not guilty to fraud and conspiracy charges in a New York Court.
And Shopify CEO is pulling the plug on its Reddit group meeting, and companies are likely to follow suit.
We are live in New York, Tuesday, it is January 3rd.
I'm Richard Quest, I mean business.
A once in a century defeat in the U.S. Congress is adding more uncertainty to the markets and puts the dysfunction of U.S. politics on full display.
Right now, the House of Representatives is casting a second ballot to choose its Speaker. It is the first time since 1923 that the vote has not
been resolved on the first go round.
Republican Jim Jordan a short while ago took to the podium to nominate Kevin McCarthy, who was the Republican leading member of the House for the
speakership. Now, this should have been a straightforward, here is the man, we've got the votes, elect him as Speaker.
Jordan urged colleagues to come back to the party-fold and work together against the opposition, Democrat, policies.
(BEGIN VIDEO CLIP)
REP. JIM JORDAN (R-OH): The differences between Joyce and Jordan or Biggs and Bacon, they pale in comparison to the differences between us and the
left, which now unfortunately controls the other party.
So, we had better -- we had better come together and fight for these key things, these three things. That's what the people want us to do, and I
think Kevin McCarthy is the right guy to lead us. I really do, I wouldn't be standing up here giving this speech.
(END VIDEO CLIP)
QUEST: In an irony of ironies, one of the dissenters then went on to nominate Jordan to be the Speaker having Jordan just nominated McCarthy.
Lauren Fox is with me. What a mess. This is dysfunction writ large.
LAUREN FOX, CNN CONGRESSIONAL CORRESPONDENT: Yes. I mean, exactly, Richard. There is not a Speaker right now and there is no clarity about whether or
not there could be one candidate who could garner the votes, the 218 votes needed to become the next Speaker. That is really the crux of the problem
right now for Republicans.
You have Jim Jordan, who went out there defending Kevin McCarthy, saying that he believed that Kevin McCarthy was the right guy for the job. And
yet, what you have is members of the conservative Freedom Caucus voting around Jim Jordan who doesn't even want the job. It just shows you how
quickly this has all devolved.
We should also note that they can't move on to any other House business, Richard, until they have a Speaker. They can't have a rules package. They
can't establish Committees. They can't ensure staff is paid until they have a Speaker of the House. So that shows you what a critical mess this is
right now on the floor.
QUEST: We also saw the perversion of the party that lost in the election, got fewer seats, the Democrats. But of course, because of the electoral
machinations in the House, Jeffries actually got more individual votes than McCarthy.
But of course, it's the way the thing is calculated. It means he doesn't become Speaker.
FOX: Yes, I mean, that's exactly right. Here in the United States, you need to have a majority plus one. Today, that number is 218 votes. Kevin
McCarthy doesn't have it. Like you noted. Hakeem Jeffries did get unity among Democrats, he got all the Democrats to vote for him. It still doesn't
matter. It's still not enough even though he did get more votes for the Speaker.
We should note, you could change the rules to make that a different outcome, but right now, you would need 218 votes to change the rules,
something else that Kevin McCarthy doesn't have.
QUEST: Lauren, thank you.
Scott Jennings was Special Assistant to former President George Bush. He is with me now.
Well, this does not look good for the Republicans. This is the moment when you anoint -- you've won, you anoint, you Chair. I mean, can McCarthy get
this in the end? The feeling seems to be not.
SCOTT JENNINGS, CNN POLITICAL COMMENTATOR: Yes, well, I'm keeping an eye on the second ballot, which we're in right now. On the first one, he lost 19
votes; on this one which is still ongoing, he has lost 18 votes, so there hasn't been any movement towards Kevin McCarthy after two ballots.
JENNINGS: Now he says, he is going to stay for as many ballots as it takes, but if you keep going on and on and on, and people don't move your
direction, I assume it can't go on forever, although I guess, it could go on for several days. This is highly unprecedented, it hasn't happened in a
hundred years, and you talk to Republicans who were on the floor today, they really, really don't know how it's going to end.
QUEST: If it was just a simple majority, not an absolute majority, then of course, the Democrats would have won.
JENNINGS: That's right. You need 218 votes and the Republicans elected out of 435 seats, 222. So McCarthy can only lose four to become the Speaker if
he gets only Republican votes. He's lost 19 on the first, 18 on this one. So, he is a long way.
I mean, I'm only moderately good at math, but there is a big gulf between 19 and four. He's got a lot of votes to pick up and it is just not clear,
Richard, what he can give these people to reel them in and how intransigent they want to be, and for how long?
QUEST: It's embarrassing for your party, isn't it, in a sense that this is, if you can't even elect your own Speaker, there is an element of
dysfunction within the Republican Caucus that will make it very difficult. I mean, we thought it was bad enough with Manchin in the Senate with one
vote; here, there are loads of them.
JENNINGS: Yes, the most embarrassing thing is Republicans actually won the national popular vote in the House races, so over 51 percent of Americans
voted for Republicans. They won the majority and they can't get out of the starting gate here.
Failure to elect a Speaker means failure to get anything going, such as investigations or any legislation that you might want to move. The other
problem with all this, as I see it, is that it really speaks to the fact that there is a handful of Republicans at the top rungs of this party who
do not believe in majorities.
The House is a majoritarian institution. Over 85 percent of Republicans in their conference want McCarthy, 51 percent of Americans want Republicans,
Republicans won 222 seats. So you see the majorities here from McCarthy and his party, and there is like five to 20 people who think they and not the
majority should rule the House, or at least plunge it into chaos.
This sort of anti-majoritarian, anti-democratic strain is really problematic for the Republican Party.
QUEST: Now, it's not just the Republican Party as well. The Democrats have exactly the same problem. Arguably, what you have articulated is the
problem of extreme politics, where you are prepared to hold your own party hostage, despite them being the majority for your own individual, often
JENNINGS: Yes. I think that you've got people who don't want to respect the will of a group of people, whether that's the voters at large, your own
conference, or whatever. I mean, if you don't want to respect the will of the majority; naturally antithetical to most of how American, not all, but
most of how American political systems operate and you can see the results of that today -- utter chaos.
QUEST: Scott, I don't want to depress you any more than this must be already. However, in 1923, the last time this happened, it wasn't decided
until the ninth ballot. But if we go back to 1869, there were -- you ready for this? Sixty ballots over two months.
JENNINGS: Yes, that would be an unprecedented amount of chaos. And by the way, this is not without consequences, the United States will reach its
debt limit, very soon, that has to be dealt with. There are other governing procedures that have to be dealt with. And right now, we're stuck on basic
procedural stuff when we've got major governing issues coming down the line.
If you think about what this might portend for 2024, the Republican Party, after Donald Trump's term is going to ask the American people for more
governing responsibility. If this is the way it's going to be, what average swing or Independent voter is going to look at this and say, "Oh, these
people seem like they have their act together." I'd say not very many.
QUEST: Good to talk to you, sir. We'll talk more as this progresses. Thank you very much.
QUEST: Now, I think Scott makes the point elegantly about the turmoil and the prospects. Well, not surprisingly, Wall Street has been watching as
well. And as a result, U.S. markets are down on a shaky note.
They opened higher, but now, we're off a third of a percent. It coincided with PMI data, which showed a third straight month of declines in
All the indices have given up early gains, and the S&P is down more than half a percent.
Rahel is with me. I know we don't want to overstate it, in a sense. There was this bad economic news, and we know that the economy and the recession,
there is the notification from the -- warning from the IMF yesterday, but the politics is playing in.
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: All right, well you have two things sort of at play here, Richard. You have the politics, which you just
discussed there with Lauren and Scott, which show a new level of division or dysfunction, as you might argue this level of division, not just within
U.S. politics, we're used to that, we are used to that sort of gridlock.
But this level of division within one party, within the Republican Party, setting that aside for a moment, you also have the economics which remain
We've got that manufacturing data around 10:00 AM Eastern today, Richard, which showed manufacturing activity here in the U.S. contracting at a
level, the steepest pace, since the beginning of the pandemic, about May of 2020. That being cited on weak demand, that being cited on recession fears.
So in some ways, Richard, you could argue, it is a New Year with the same old problems.
QUEST: Right. But if they don't get a Speaker, as Scott and Lauren was saying, there is an entire raft of things that can't get done, not least of
which the debt, but I think they will sort that out one way or another.
SOLOMON: Right. I mean, it adds to the sort of uncertainty, the turmoil, right? But you could also argue that markets like a certain level of
division, because it sort of prevents major spending bills from getting passed between the two parties.
So yes, there is that uncertainty and I would argue there will be much more uncertainty, even sort of putting the politics aside because you have sort
of certain things still hanging over the market, right?
You have when the Fed finally stops with its interest rate hikes, you have the impact to the labor market, which by the way, we're going to get a slew
of data on the labor front here in the U.S.. We've got the JOLTS data tomorrow. We get weekly unemployment claims on Thursday, and then we get
the all-important Jobs Report on Friday.
And then of course, the concern hanging over everyone is, will we actually enter a recession here in the U.S.? So, sort of lots of things to sort of
wait to see, but I think what that means for sure, is at least a decent amount of uncertainty and volatility in the markets as we've seen already
But, Richard, it is only Day One. First impression sometimes can be misleading. There is a whole lot of year left for the market.
QUEST: There's a truth in that statement. Absolutely. I'm not sure how -- well, we will find out. You and I will have a great, great enjoyment but it
might be enjoyment, it'll be important things that we'll be talking about as the year moves on.
SOLOMON: Thank you.
QUEST: Thank you very much.
Now, a stock, a particularly bad stock, Tesla, the stock is down 12 percent q4, well below expectations even though Tesla is offering discounts last
month to U.S. buyers. The shares are coming off their worst year ever.
Paul La Monica is with me in New York.
Paul, how much of this is Tesla's issue, having Elon Musk as its mascot, if you will, or as its frontman? Is this -- I mean, is Tesla no longer cool,
because Elon Musk seems to throw in a wobbly?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes. I'm not so sure I'd go that far, Richard. I think the issue is not necessarily is Tesla no longer cool
because of Elon Musk? I think it is Tesla a still functional company because of Elon Musk?
And there are obviously legitimate worries about all the time that Musk has to spend at Twitter, not to mention SpaceX and Neuralink and The Boring
Company and all of these other ventures that he runs.
But make no mistake, it really has been since Musk took over Twitter that Tesla's freefall has accelerated. Now, to be fair, Tesla is still posting
strong levels of growth, 40 percent in growth for deliveries is phenomenal. It's just that growth is slowing, competition is increasing. Electric
vehicles are no longer a niche market. All the major global auto manufacturers are getting into that market as well.
So this is not a time for Elon Musk to be distracted. If he is going to be sleeping anywhere, it should be a Tesla, not at Twitter. So I think that's
a big concern right now for many investors, all of this focus on that little social media company instead of the giant electric vehicle company.
QUEST: But hang on a second. All those challenges were already there for Tesla, does Tesla actually have any problems that he needs to solve? Other
than -- I mean, you know, obviously, the competitive challenge has always been there. So taking him away from that -- far from the company -- how
does that actually impact it?
LA MONICA: Well, here is the thing. I mean, you mentioned that the competitive challenges have always been there, that's true, but they are
increasing. That's one thing that Musk has to contend with now. It used to be the case that Tesla really dominated this market, and I don't think that
is as evident anymore.
You also have a lot of worries about the slowdown in the global economy. The "R" word, everyone talking about a recession later this year and even
Tesla has seemingly acknowledged softness in the market by offering some rebates and discounts on some of its models.
LA MONICA: Remember, if Tesla was supposed to be this luxury high end automotive company that only catered to the affluent on the coasts, then
you don't really need to lure buyers with bargains and discounts. If you're cutting prices, that is a concern and I think it just shows Tesla is trying
to go more mass market, it needs to, and Wall Street is worried that this may not be a good time to do that with everyone talking about a recession.
You throw in all of Musk's Twitter distractions and it just doesn't help.
QUEST: Good to see you, sir. Grateful that you came on to talk to us today. Thank you, Paul La Monica.
Not guilty, says SBF to the charges of wire fraud and conspiracy. The disgraced founder of the collapsed crypto exchange, FTX was in Court in
Manhattan a short while ago and we will be there, next.
QUEST: Sam Bankman-Fried has pleaded not guilty to Federal fraud charges in a Manhattan Court. The founder of the crypto exchange, FTX is accused of
using customer funds to cover loans to invest in other companies and make political donations. He is free on a $250 million bail package.
Kara Scannell was there -- is there. How did it go?
KARA SCANNELL, CNN CORRESPONDENT: Well, Richard, it was about a 30-minute Court hearing and Bankman-Fried entered the courtroom, he was looking
around at all the spectators. It was packed. Some of the-in house press were sitting in the jury box and he seemed to be taking a lot of interest
in looking at them.
But in this very brief hearing, you know, he didn't speak at all once. But the Judge did ask his attorney how Bankman-Fried would plead to these
charges, these eight Federal counts of wire fraud and conspiracy and his lawyer said that Bankman-Fried would plead not guilty to all counts.
Then the Judge set a trial date. He said that this case would go to trial on October 2nd of this year. The prosecution said they would need about
four weeks to put on their case the defense said that they would want two to three weeks to put on their case.
Now in addition, the prosecution also raised questions and concerns about some assets that may have been transferred out of accounts at FTX and the
sister hedge fund, Alameda Research. They asked the Judge to impose an additional bail condition that $250 million bond as you mentioned, they
wanted the Judge to prohibit Bankman-Fried from accessing or transferring any assets held in accounts or wallets at FTX or Alameda, including
transferring or accessing any cryptocurrency accounts.
SCANNELL: So the Judge said that he would grant that motion. Now, the prosecution said they had no evidence at this point that Bankman-Fried had
made the transfers from these accounts, but they said it is something that they're investigating. The attorney for Bankman-Fried said that he did not
make these transfers.
You know, in this court hearing, Bankman-Fried didn't speak, although my colleague, Nikki Brown was inside the courtroom and she said that after it
was over, he walked over to the courtroom sketch artist and looked at the drawings that they had made of the proceeding, telling them it's a lot
better than I can do, that's for sure -- Richard.
QUEST: Kara Scannell at the Court in New York. Thank you.
Elie Honig is with me.
From what you've seen of this case and what you've heard, is there anything particular -- I mean, the evidence may have lots of documentation and
transfers and this, that and the other, but is there anything complex about this? Is this a complex fraud? Or is this basic good old fashioned theft?
ELIE HONIG, CNN SENIOR LEGAL ANALYST: Well, it is complex, Richard. There is no such thing as a simple case federally, and I think anyone who tells
you anything is a slam dunk case or a smoking gun doesn't really have the experience that I've had in Federal Court.
This is my former office, the Southern District of New York. Now, that said, that office is very, very careful about what cases it charges, and
the real line of demarcation here is was this fraud or was this just incompetence? If it's incompetence, we're not going to have a conviction.
So the SDNY, the Southern District of New York believes that it can prove actual fraud, and if you look at the indictment, the gist of the case is he
misled people who put money into FTX, and he essentially embezzled that money for his own use.
QUEST: Right. But this doesn't appear to have been an Enron-type of environment where there were multiple different entities and money was
moved or maybe it is like that. This seems to be much more like the money came in the front door, and the money went out the back.
HONIG: Yes, look, every case sort of stands on its own. There is no way this case is going to be as complex and as papered over as Enron, but yes,
sometimes frauds are fairly straightforward and the theory here is he took customer money, money that customers had put into FTX, the crypto trading
platform on the promise from Sam Bankman-Fried and others, we are not going to touch your money and then he essentially took it out the back door, as
you say, used it for his own investments, use it to fund his own lifestyle, use it to make what the government contends are illegal political
So sometimes a fraud can be massive, but also not all that complex.
QUEST: Right. Getting it to a jury. This is one of the old case stories, isn't it, of whether or not -- you know, those countries, Germany, for
example, who try financial fraud cases, with a Judge alone, getting a jury to understand these cases is very, very complicated and difficult.
HONIG: It is, and it is important to understand, Richard, in the American criminal justice system, you need a unanimous jury in order to convict, you
need a unanimous jury in order to find not guilty. So that's either 12-zero one way or 12-zero the other.
Sometimes you get a jury that gets stuck somewhere in the middle, whether it's six-six or 11 to one, that's a mistrial. That means you can retry the
case, but that's a loss for prosecutors. And you're right, the challenge is to boil down the case without dumbing it down, but to boil it down in a way
that normal people, your 12 jurors, or just average citizens drawn at random can understand and can understand not only that this was
mismanagement, but this was fraud.
QUEST: When they come to select the jury, again, it is an oddity of the U.S. jury system, the voir dire where you can question the jurors a great
length, not too many countries have that.
Would you imagine, if you were prosecuting this or defending, you're a counsel, would you want anybody on the jury that has invested in crypto?
HONIG: That's a great question. So first of all, when you're choosing a jury in a high profile case like this, the job is not to find 12 people
who've never heard of Sam Bankman-Fried, that may be hard to do. But we've tried bigger higher profile people's than Sam Bankman-Fried.
You want people who say and you believe can put aside any preconceived notions and decide the case based solely on the evidence and the facts
here. I think if I'm prosecuting this case, I do want people who have invested in crypto because they're essentially the victims as the
allegations go here. So you want people who are going to see this conduct and be angry, and I think if I'm the defense lawyer, I would I would want
the exact opposite.
QUEST: And is there a danger that SBF becomes the poster child, becomes the symbol? I mean, I'm sure this is what the defense is going to say that
you're basically doing nothing more than holding up this man as being the great Satan of crypto.
HONIG: Yes, I think it is likely that you will see the defense make an argument along the lines of, you don't need to make an example of my
client, of Sam Bankman-Fried. The defense will argue this is about these specific facts, and your job here is not to send a message to all of the
crypto world or to all of Wall Street.
And I think the prosecutors will probably say we agree and he doesn't get any special treatment by the way because he is wealthy or well-known and
just focus on the facts and the evidence in the case. So, that's a very common push-pull yet you will see at American trials.
QUEST: Looking forward to the trial. I'm looking forward to you helping us understand what is happening, sir. Very grateful.
HONIG: All right, thanks, Richard.
QUEST: As we continue QUEST MEANS BUSINESS, the pandemic sparked The Great Resignation; now, some workers who stuck around and getting record pay
awards, maintaining consistency is key to companies who are keen on retaining employees.
QUEST: Hello, I'm Richard Quest, a lot more QUEST MEANS BUSINESS in a moment (AUDIO ISSUES) as higher costs chip away at their spending power.
Also clear your calendars, Shopify says it is banning its workers from pointless meetings. We'll get to all of that only after the news headlines
because this is CNN, and on this network, the news always comes first.
Ukrainian officials say Russia is focused on taking full control of Donetsk and Luhansk. Ukraine's top military chief says there is fierce fighting on
the front with his troops holding off Russian advances near Luhansk. He thanked his U.S. counterpart on Tuesday for delivery of anti-aircraft
The sports world is expressing support for NFL player, Damar Hamlin after he went into cardiac arrest during a game last night. Fellow players like
Tom Brady said he was praying for Hamlin and thanked medical staff. The NFL says it has not yet rescheduled the game between the Cincinnati Bengals and
Hamlin's Buffalo Bills and the Cincinnati Bengals.
If you want your money safe, put it in a Danish bank. The number of bank robberies in Denmark fell to zero last year. Increased security, reduced
cash are major reasons why. And only 20 bank branches in the country have cashiers as most customers use ATMs.
QUEST: German inflation eased more than expected in December, 9.6 percent, still eye-wateringly high but down from the extremely painful 11.3 percent
previously. The drop is due to one-off government energy subsidy informing energy prices.
It's for that reason that economists are warning this downward trend may not last. Prices could go up again next month. With high inflation hitting
economies around the world, the expectations of workers who is we could have more pay in their annual pay negotiations.
"The Wall Street Journal" says that U.S. workers who stayed in their jobs, are now getting their best raises in decades. That is inflationary in its
own right. Being driven by those switching jobs.
You can see the yellow line, those have changed jobs, seeing wage gains of 7.7 percent. Those who stayed got 5.5 percent. Shouldn't be surprised, they
were enticed with higher wages.
But it's the biggest annual growth for a quarter of a century. And employers are prepared to offer bigger checks. Betsey Stevenson, the former
U.S. Labor Department chief economist, now professor of public policy and economics at University of Michigan.
Good to see you. This is fascinating. Two aspects; let's do the money side. First we have had this ongoing battle with governments and central banks
saying, don't pay to much and workers saying, we need more money.
BETSEY STEVENSON, FORMER U.S. LABOR DEPARTMENT CHIEF ECONOMIST: I think what you are hearing is central banks want to make sure that we are not
seeing wage increases driving further inflation. Because then it won't be doing any good.
I don't think governments and central banks are saying we don't want to see workers getting a better share of the pie but what they are saying is, we
want to make sure that we don't see inflation starting to spiral through so everybody pays more for anything.
That is kind of a mess. And what that can come from is, if you don't have enough workers, there are four businesses and there is only one worker
available, getting a bidding war with each other, it's just inflationary.
QUEST: Do you believe that the wage increases that we have seen so far are essentially OK or inflationary?
STEVENSON: I think that the wage increases we have seen so far have been OK. I don't think wages have been driving inflation. I do think if you look
around the globe, what you see is very tight labor markets in a large number of countries.
So the question then is, if businesses are trying to hire and there are workers available then what are they going to do?
And what we don't want to see is them just outbidding each other, trying to hire the same set of workers. So hopefully, if these wage increases can
entice some more people back into the labor market and can expand the number of people available for jobs, then that can be quite helpful.
And if prices start coming down for other reasons, workers can catch up without necessarily triggering another set of inflationary increases.
QUEST: Where did the workers go?
As I have traveled the world over the past few months, everyone says, oh, shortage of workers, everyone left during COVID-19.
If everyone left and went somewhere else, nobody seems to be saying, we have plenty of workers.
Where did they all go?
STEVENSON: Right, where are they hiding?
It's funny, I was taking a look at labor force participation rates earlier today and some are quite high like Australia.
STEVENSON: But in the United States they haven't quite caught up. And I think, the truth is, in a country like the United States, some of them
died. We had a lot of death through COVID. Those workers are gone.
Some of them have just decided, it's too dangerous to work. They were tired and they don't want to come back to the labor force. What we are seeing in
particular in the U.S. is older workers not coming back.
There may be some of that going on in other countries. We also know that immigration really slowed in a way that means that people are not working
where they may have been working, if we hadn't had COVID-19.
And so it could be a misallocation of workers around the globe. I think that process is still starting to unfold. We are seeing labor force
precipitation rates rise and I think these workers will return, at least the younger workers will return. But it has been a process to heal from
this great pandemic.
QUEST: Looking at inflation and the interest rate rises and the necessity for that, when do you believe this thing will turn?
Inflation is coming down.
But when do you think we will be in a position of things are looking better?
STEVENSON: I think things are already looking better. One of the things that probably helped cause inflation but also helped prevent a number of
countries from going into recession already is the fact that people really cut back their spending in 2020 and even a bit in 2021, until they had
built up a lot of savings.
And what happened is late in 2021 and 2022, they started spending down that savings. But now, people are seeing the excess they accumulated is starting
to disappear. And people are starting to cut back their spending even more.
Cutting back spending will put downward pressure on prices. And what we want is for them to hit the sweet spot, which is cutting back spending
enough that price increases slow without triggering a recession. This is delicate balance. But I think we are seeing the improvements we need to see
QUEST: Which side of the fence?
Come off the fence.
Do you see a recession in the U.S.?
STEVENSON: I do not but I am an optimist inherently. And I think the thing to say is, it's quite possible that we don't. But it's also quite possible
that we do have a recession. And a lot of people describe it as a fence because I think we are teetering on a fence right now and I hope we fall to
the grass is green side and not the recessionary side.
QUEST: On that question of where and how the economy -- the U.S. is still the cleanest dirty shirt in the laundry, in the sense that China is slowing
down, COVID issues; Europe, who knows what will happen with the E.U.
But the U.S. does seem to be able to get its act together economically.
STEVENSON: The U.S. has had a pretty good year, we have seen a lot of job growth, without the job growth itself contributing to inflation. We have
seen consumer spending stay pretty robust in a way that -- it is causing a little heartache to the central bank.
But at the same time, it's what has prevented us from slipping into a recession so far. And we are seeing the industries that were most hurt by
the pandemic, leisure and hospitality, health services, education services, those are the ones that lost the most jobs.
They are coming back slowly. They are like "The Little Engine That Could." Every month after month, they're a little bit more, doing a little bit
better. And I think that the improvements in those two sectors will continue through 2023.
And as long as there is improvements that are bigger than the contractions we see and things like the goods producing sector, where we may very well
see contractions, as long as it's expansions and the recovery sectors are bigger than contractions, we will stay out of a recession.
QUEST: I am looking forward to talking to you more as the year progresses. Thank you for joining us. Grateful to have you on the program today. Thank
How many meetings have you had today?
How many meetings have you wish you hadn't gone to today?
(BEGIN VIDEO CLIP)
QUEST: Quiet. Oh, for goodness' sake, this meeting has been going on long enough.
Coming up after the break, (INAUDIBLE). The company that has decided long meetings. In fact, most meetings are a thing of the past.
(END VIDEO CLIP)
QUEST: The e-commerce firm Shopify says it is doing away with most meetings. It's calling it a calendar purge.
Imagine this is my calendar. If I followed Shopify's new policies, the first rule, no recurring meetings with more than two people.
And biweekly writers meeting can go as well.
Next, no meetings on a Wednesday. There goes two more.
And finally, meetings of 50 plus, those can only happen on Thursdays, within a six hour window and limited to one a week. It went from 15
meetings to four and I get to have lunch most of the time.
Steven Fogelberg is a professor at the University of North Carolina/Charlotte, joining me from North Carolina.
What do you make of this?
I know what the misery -- the mischief was meant to be cured.
But does it do it?
STEVEN FOGELBERG, UNC CHARLOTTE: That's a great question. I liken it to a New Year's resolution. If you have a New Year's resolution, I will stop
eating meat, there could be a host of unintended consequences associated with that action.
That is one detraction from just a wholesale removal of meetings. Furthermore, what I would rather teach people is how to have a healthy
lifestyle, because that type of change sustains itself over time.
The same thing can happen with meetings. We can change organizational cultures and leadership behaviors, so that meetings truly work; not only
work but serve to engage employees, include employees and actually promote productivity --
QUEST: The problem is --
FOGELBERG: -- return on investment.
QUEST: -- the problem is many people who are calling the meetings or leading the meetings are incompetent.
FOGELBERG: That's exactly right. And that is what this problem, this solution doesn't solve. We need to level up leadership skills when it comes
to meetings. The research shows only about 20 percent of leaders ever receive any training on meetings. That's pretty crazy when you think about
how much time is spent in this activity.
QUEST: I have a rule which I trying to follow and often following it in the breach. Pretty much no meeting lasts more than 20 minutes.
QUEST: If it's lasting more than 20 minutes, then something has gone wrong.
FOGELBERG: I love that idea. I love the idea of tight meetings, especially because of something called Parkinson's law, the idea that work expands to
fill whatever time is allotted to it. If a meeting scheduled for an hour, it will take an hour. But if the meeting is scheduled for 20 minutes, it
will take 20 minutes.
QUEST: So how do you tell people, let's say you are in a meeting and you need to telegraph to the fellow participants that this isn't going down
very well, it's a boring load of old nonsense. And we have all got better things to do.
How would you say that?
FOGELBERG: That's a tough challenge for an attendee. What I would rather have is meeting leaders start to state that, instead of expecting attendees
to do that. This is where leaders receiving training -- but ultimately meetings exist within a broader echo system.
We can start changing conversations around meetings, asking leaders to meet with their teams and have conversations such as, what meetings are actually
We could have conversations about who really needs to attend various meetings, conversations around how long meetings should be and what types
of norms we want to have.
Meetings are collective experiences. So therefore, let's engage the team and having these conversations as opposed to top-down initiatives that
don't fundamentally change that ecosystem.
QUEST: The other thing I always remember about meetings is that most of the attendees, particularly in a meeting about anywhere between 7 to 15 people,
they will hunt in a pack, find out which way the wind is blowing from the boss in the big chair and follow slavishly.
They will spot who is the weak person, the person being beaten up, the person who is the best boy or girl in town?
FOGELBERG: That can certainly happen. But a lot of that can be prevented by leaders expressing a set of values around what they are truly hoping to
have happen in a meeting and what they hope to avoid.
Right now, while we have millions and millions of meetings a day, there is no conversation really around how we want to have these meetings, what are
our collective expectations. And there are a lot of ways that we can diversify our meetings to make them more effective and get more voices and
For example -- I'm sorry.
QUEST: Don't we have to be careful, that we don't have meetings about meetings, to discuss meetings?
FOGELBERG: I want to have a little bit of time, where people discuss meetings as a process and a system and a communication vehicle. So, yes, I
don't want to institute a whole bunch of meetings about meetings.
But I want to take all the energy that exists, all the discomfort that people have and I want to translate that to positive energy on how we can
make these things better.
After all, meetings are actually an evolution from what we used to have during the Industrial Revolution which was just command and control
processes. Meetings are essential for communication, cooperation, coordination, consensus decision-making.
If organizational democracy takes place, so we do not want to eliminate organizational democracy. We just want to make it work for us. And that is
where the science can really kick in.
QUEST: I'm so glad to have you on the program today, sir, we will talk more about this as the air moves on. Thank you for giving us your time, thank
FOGELBERG: My pleasure.
QUEST: Now breaking news. More chaos in Congress, House of Representatives is going to take a third shot at choosing a speaker. As Republican Kevin
McCarthy should have easily won this. He lost on the first ballot. And he lost on the second. Definitively lost the first round and now seems to have
suffered a second round defeat.
It's 1923 that the last time this happened. Just remember the 1800s, though, then they had 60 votes before they were able to. Now if there are
holdouts and they are not going to be budging here, my words, not for anybody else, but essentially these votes are a waste of time.
We will be back in a moment.
QUEST: The E.U. looks poised to impose new restrictions on Chinese tourists. The health commission says the bloc is working on a coordinated
approach on COVID-19, with reduced travel from China. The recent surge of China COVID-19 cases has raised worldwide concerns.
As Ivan Watson reports from Hong Kong, the idea is outraging Beijing.
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: We are seeing a growing backlash against the growing number of governments that are
opposing restrictions on travelers from China due to concerns over the scale of the COVID outbreak on the Chinese mainland. Take a listen to what
the spokesperson for the Chinese foreign ministry had to say.
(BEGIN VIDEO CLIP)
MAO NING, SPOKESPERSON, CHINESE FOREIGN MINISTRY (through translator): We are willing to strengthen communication with the international community
and work hard together to overcome the epidemic.
In the meantime, we believe that some countries have taken inter (ph) restrictions targeting China. This lacks scientific basis and some
practices are unacceptable.
We firmly oppose any attempts to manipulate epidemic prevention measures in order to achieve political goals. We will take countermeasures, based on
the principle of reciprocity.
(END VIDEO CLIP)
WATSON: And we still don't know what those reciprocal measures right be. Some Chinese state media have gone further, accusing governments like the
U.S. and Japan of using the COVID pandemic to try to smear China, as that newspaper puts it.
But take a look at this map that CNN has compiled. It shows you the growing number of countries that are trying to put the brakes on some of the travel
from China to their territories.
Most like the U.S. are saying that travelers need to get a negative COVID test within 48 hours of departure. South Korea's requiring new arrivals to
get COVID tests at the airport.
And on the first day of this new measure, this was Monday, the authorities in Korea say that, out of 309 new arrivals, they tested 61 positive cases.
They are restricting some flights until at least the end of the month, trying to reduce the amount of travel coming in.
Morocco going one step further, completely prohibiting any travel from China to its soil for the time being. There have been some studies put out.
One Chinese health journal says, in the main cities they believe that the peak of the outbreak has already been reached according to mathematical
But they predict that the outbreak and infections will likely peak in rural areas in the center and west of the country from the middle to the end of
WATSON: And the infections will probably bloom, as the study puts, it due to the travel around the spring festival and the Lunar New Year. Other
studies that have been out there have predicted that China could lose more than 1 million people due to COVID. Amid this outbreak -- Ivan Watson, CNN,
QUEST: Let me update you quickly on the House Republicans, who can't seem to elect a leader and how it is affecting Wall Street.
The Dow is essentially coming back quite a bit since the early shenanigans of the day. It is now, in the last five minutes, it has clawed its way
back. The S&P still down much heavier, which leads me to suggest there is a Dow component somewhere that is dragging the Dow back up again while not
having a fuller effect on the broader market of the 500 and the Nasdaq. The Nasdaq down more than half a percent.
So a Profitable Moment after the break.
QUEST: Tonight's "Profitable Moment," Shopify is now going to cut back dramatically the number of meetings. I suspect this is one of those things
where the CEO has taken an absolute position, knowing that it will have to roll back over the couple of months when it become clear some meeting have
to take place. But the idea is a good one.
Let's just take QUEST MEANS BUSINESS. As the main CNN news meeting in the morning, without that, no one knows what they are doing. There is the show
meeting. Without that, no one knows what they are doing.
But thereafter, you could probably do away with most of the meetings. I had a meeting this morning about when we are in Davos in two weeks. There will
be other meetings with different people about this, that and the other. Probably could have done away with it.
The issue here is that meetings per se are not the great evil. They are the way they are conducted, by people who don't know how to conduct meetings,
for purposes that really don't make sense, which is why the next time you are invited to a meeting, I suggest you say, quite simply, do we really
need to have this meeting?
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable.