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Quest Means Business
Dow Jumps 700 Points In First Wall Street Rally Of The Year; 13th Speaker Voter After McCarthy Flips Some Holdouts; Southwest: Holiday Meltdown Will Cost As Much As $825 Million; Russia Accuses Ukraine Of Breaking Ceasefire It Didn't Agree To; Buffalo Bills: Hamlin's Breathing Tube Has Been Removed; Report: Prince Harry Says He Killed 25 Taliban Fighters. Aired 3-4p ET
Aired January 06, 2023 - 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: The end of the first trading week of the new year and this Friday, it was a day for the Dow on the back of a
strong jobs number.
As you can see, pretty much throughout the entire session, the Dow has been up very sharply, and I think we're at the best of the day. I'll confirm
that before we are all said and done -- the market.
And as for the main events of the day, don't hold your breath. However, Kevin McCarthy is getting closer to the House Speakership. He still has
major holdouts to convince but he has made progress. I'll tell you in a second.
Those jobs number two wage growth slowed last month, and that of course and the relationship to inflation is what is greatly encouraged the market.
And the CEO of Vue Entertainment of the movies like Avatar are bringing people back to the cinema.
Right. Of course, live in New York. Today. It's Friday, January the 6th. The first month is going already.
I'm Richard Quest, and in January, in New York, I mean business.
Good evening, there are two big stories that I bring into your attention tonight. It is the ongoing saga on Capitol Hill, where the operation to
choose a House Speaker and the votes continue, and Kevin McCarthy has won over a sizable number of Republican holdouts. We'll take you to the latest
vote in just a moment.
Although I do need to start on Wall Street because not that it is more important than the House, but this is the first market -- sizable market
rally of the year, and as you can see, across the board, the narrow, the broad, the tech, all are up over two percent.
And those gains began after the Jobs Report showed slowing wage growth. Service activities in the US went into decline, and that obviously means
there could be a furthering slowdown of inflation.
The chief US economist at BNP Paribas will be with us to put this in perspective. But I want to begin in Washington, where the resistance to
Kevin McCarthy took a dramatic turn.
As they're holding the 13th vote for the House Speakership, McCarthy is certainly headed for defeat again on the vote, but there was momentum. For
the first time in four days, he picked up more rebel holdouts. Time and again, they seem to be coming back to the McCarthy camp.
In the early vote, it was 14 who flipped to him. There are still six Republicans voting against him, and he needs three of them to drop their
Here is what the process is revealing. McCarthy was the first major GOP leader to embrace Donald Trump after -- Donald Trump and the January 6th
insurrection. And on the two-year anniversary of that attack, he is finding out how hard it is to contain the extreme far right of his party that he
helped push forward.
That chamber came under attack exactly two years ago by a mob of Trump supporters.
[VIDEO CLIP PLAYS]
QUEST: Now, memory of the insurrection is everywhere, and right now, down Pennsylvania Avenue, President Biden is remembering the assault at the
White House ceremony. He had this to say a moment or two ago.
(BEGIN VIDEO CLIP)
JOE BIDEN, PRESIDENT OF THE UNITED STATES: A violent mob of insurrections assaulted law enforcement, vandalized sacred halls, hunted down elected
officials, all for the purpose and attempt to overthrow the will of the people and usurp the peaceful transfer of power.
All of it, all of it was fueled by lies about the 2020 election.
But on this day, two years ago, our democracy held.
(END VIDEO CLIP)
QUEST: Now Jessica Dean is on Capitol Hill. We will deal with the insurrection in a moment. Let's just focus in: Two questions, McCarthy
managed to convince 14 or 15 to come back into his fold. Do we know what he promised them to do so?
JESSICA DEAN, CNN CORRESPONDENT: Well, it is a very long list, Richard, and it depends on who we are talking about.
Each one of these people wanting kind of different things. So it ranges from, you know, different kinds of oversight to bringing the threshold down
to just one person who can call for an ouster of a sitting Speaker. It used to be half the conference. They want to fund different investigations.
It depends on who the person is. We also know, and this is something we should all keep in mind, and I know you'll be watching this, they are going
to have to raise the debt limit at some point in the future. And there is some language about the debt limit.
These hardliners can get quite quickly about that, and there is deep concern about what kind of catastrophe -- financial catastrophe could be
awaiting us down the way if they will not vote to raise the debt limit.
So all -- it kind of runs the gamut, and he is going to still have to continue to promise other things as he tries to get these last three or
four members to come to his side.
QUEST: If we are down at the hardened Never Kevins, I mean, we are, if you like, down at the bedrock of those who oppose him. They have not been
bought off by anything else.
If he goes too far to buy that off, then of course, he will lose elsewhere.
DEAN: Right, and the moderates are concerned about what that ultimately means, like when this is all said and done, what will actually be in place?
And so he is having to serve kind of two ends of his party. He is really doing the splits here. And to your point, there are some -- Matt Gaetz,
Lauren Boebert -- they're never coming around. So they have essentially just tossed them to the side. They really don't think that they're ever
going to be able to move them because there is nothing that will move them. This is personal for them.
But there are a few -- Crane, Rosendale -- who they think they might be able to pick off, and we know that former President Trump has been deployed
to call some of them to try to kind of push them to that direction. So a lot of parts in motion right now. The ultimate question is, will it make a
difference? Can they close this deal today? Will it spill into the weekend?
QUEST: Jessica, thank you. Long weekend ahead, one way or the other.
Charlie Dent is with me, the former US Congressman from Pennsylvania, a CNN political commentator is with me from Allentown in Pennsylvania.
All right, so bearing in mind you managed to move the 14 or 15, do you now think he can pick off the last two or three, one, or two Never Kevins that
he needs to win?
CHARLIE DENT, CNN POLITICAL COMMENTATOR: Well, Richard, thank you for having me. And all I can say is that the last two or three are always the
hardest to move. You know, basically, you get your easiest votes first, and out of this 20, they are all difficult. But now the real hard ones get in
because it's just as you just said, the votes now are personal.
What I am really more concerned about is what concessions were made to appease this band of rebels? At some point, the more moderate and pragmatic
members are going to have to push back.
Again, we haven't seen all the demands, but we have heard or read what has been reported, some of which like taking the threshold down just to one
member to be able to vacate, move to vacate the Chair, to throw the Speaker out. Well, I thought that was a nonstarter, for one.
I've read that they want to put some of the members of the Freedom Caucus on the Rules Committee. The Speaker is supposed to control that. That's a
very big deal.
On the political side, a Super PAC associated with Kevin McCarthy aligned with him, you know, the demand was that they cannot intervene -- the Super
PAC could not intervene in open House races that were determined to be safe, whatever that means. But that's a way to keep the crazies from coming
to Washington. You want to you want to basically nominate more --
QUEST: Isn't this exactly the sort of backroom horse trading that the renegades, if you will say they are against. But it seems that they are
quite in favor of it when it's in their favor.
DENT: Well, of course they are. Look, I'm not naive. There's a lot of, you know, horse trading that goes on in Congress, that's just normal.
But for some folks who hang themselves out as purer than driven snow, well, this seems a little bit unseemly. I mean, some of these demands -- and I
was reading demands such as you know how much we're going to spend on Defense next year, and I was an appropriator.
The Appropriations Committee makes those decisions, then the full House and the Congress, and they're making demands that they want certain positions
on certain key Committees and Subcommittees.
Again, if I'm a rank and file member who voted for -- who is voting for Kevin McCarthy, I'm saying, hey, I'm starting to reassess my options. Oh,
here is my list. You know, what do I get?
QUEST: This business of the -- of only one person wanting to open up the Speakership, when I had always thought that that was off the table because
McCarthy himself had said it would make him a hostage to every renegade in the Republican Party.
But let's not get too much into the weeds, fascinating though it is for those of us. I want to know how damaging is this to American democracy in
DENT: Well, to a certain extent, this weakens the role of the Speaker of the House, and it is not necessarily what we're seeing here today, but when
we have a group of people who don't have any sense of governance, who may take the country to the brink, once again, on the debt ceiling. You know,
again, the United States government, we cannot default on the full faith and credit of the United States government.
There will be at least five, Richard, count them -- there will be at least five House Republicans who will be voting to increase the debt ceiling.
They must, it's their duty, and you have some of those folks who would just assume crashed through that debt ceiling with the consequences of being
And so that's what scares me about what is likely to occur, that we do have people who will take, you know, just outrageous risks that could do great
damage to our country.
QUEST: I promise you -- I promise you, I will not hold you to this. I will not play this shamelessly against you in the future. Do you think he
can do it? Do you think he'll get it?
DENT: I think right now, you bet that he does get there. You know, he has flipped all the hard ones. And I always -- I predicted a year ago that this
was a tight majority. He would have a hell of a tough time becoming Speaker, you know.
So I think right now the path is real narrow, but it seems like he's going to get there. They figured at least two of these folks might still flip.
You won't get Gaetz, you won't get Boebert, but you might get a couple of the others.
QUEST: Joining me from a great place, Allentown, Pennsylvania, a place I have been to many times, a wonderful place. Thank you, sir. Good to see.
Wis you a good weekend.
DENT: Thanks, Richard.
QUEST: Now, December's jobs numbers have been released in the United States, and they show hiring slowed from November. Now, that's a good
thing, and also wages were down, which is also a good thing.
I mean, I'll explain why in just a moment.
QUEST MEANS BUSINESS.
QUEST: Wall Street is extremely upbeat on the latest Jobs Report and signs that the US economy might be cooling down a bit. Look at the triple
stack. We're actually putting on weight over the last 15 minutes. We're up nearly 700. You can read the numbers for yourself.
I think it's -- I think the interesting thing here is the fact that all three are up roughly over two percent.
The reason: The US economy added 223,000 jobs in November, that's a strong number moderating from previous ones, but still robust. Wage growth was the
real star of the report. Annual wage growth had slowed to 4.6 percent and we all saw the power of purchasing managers, which also calmed fear of
inflation. The service sector contracted last month.
Paul La Monica is in New York. Dare I say, soft landing yet?
PAUL LA MONICA, CNN BUSINESS REPORTER: You can say it, Richard, whether or not it actually comes to fruition, of course, remains to be seen. But yes,
this market rally today is very robust, and you're seeing all sectors participate.
Clearly, investors are hoping that this type of data you mentioned, wage growth cooling, supply -- the ISM Services Index actually contracting. It's
the bad news is good news phenomenon returning to Wall Street. Investors hoping that the Fed can slow its pace of rate hikes. You know, we are
looking now at the next Fed meeting is early February and the expectations are for just a quarter point rate increase and eventual pause perhaps later
If that's the case, can the Fed pull off this soft landing? Still have to wait and see, but that's obviously what the market is rallying on today.
QUEST: Then looking behind it, I mean, the PMI, which is sort of somewhat esoteric, but it is quite important because it is the wholesale
prices. When that moderates, well, I guess what we're seeing is we're seeing from the factory to the manufacturing, we're seeing all the bits
that have to slow down before -- and employment -- before we get to consumers and spending.
LA MONICA: Yes, that's exactly the case, Richard, and we're going to get more data next week, probably the most important economic data point for
the coming weeks, maybe even more than this Jobs Report, CPI is next week, the Consumer Price Index.
If we see a further slowdown in the rate of increases for consumer prices, this rally could go even further, because that's what investors want to
see. They want to see evidence that what people are having to pay when they are shopping at stores or online, that those numbers are starting to come
If that is the case, then the Fed can be very congratulatory and say that, okay, these rate hikes, the aggressive rate hikes are cooling things off,
we can take our foot off the pedal a little bit, not be as aggressive and you know, that could lead to further increases in stock prices.
QUEST: Paul La Monica, have a good weekend, sir. Thank you.
Now the Fed's problem as Paul indicates is what to do next. Having raised rates at a record pace last year, the medicine appears to be working. Of
course, we don't know whether it's going to come on in a much more of a rush.
And so for the next couple of meetings, it's that balance, which becomes ever more crucial. Carl Riccadonna is the chief US economist at BNP
Paribas, joins me now from New York.
The bad news is the good news, and I'm guessing we should look to a Fed moving more slowly at the next meeting.
CARL RICCADONNA, CHIEF US ECONOMIST, BNP PARIBAS: Well, I'm not so sure they will be ready to slow down just at the next meeting. Again, as you
alluded to in the prior segment, we will have to watch what the CPI numbers or the inflation report looks like next week, but we are getting into for
the chess fans out there, the endgame for the Federal Reserve where it looks like they're getting close to being able to say mission accomplished.
QUEST: Okay. What are you looking for now? What for you are the signs -- I mean, if we look at the market, the market will tell us all sorts of
things and it is sort of almost childlike in its way. But economically, what are you looking for?
RICCADONNA: Well, economically, you mentioned soft landing in the prior segment as well and I'm a bit concerned that we have a lot of medicine, a
great deal of medicine still working its way through the system and we are not entirely sure how that's going to pan out.
And the best example is, for example, in the construction sector, we know what mortgage rates moving from two-and-a-half at the lows during the
pandemic up to seven percent is going to do for home sales and whatnot.
And we see the volumes of sales rolling over, we see prices starting to move lower. We have now not yet seen the layoffs in the construction
sector, so it does happen with a very long lag, so we're watching to see how that plays out and so we see the economy probably slowing below one
percent growth by the end of the year, it's a bit like a jumbo jet.
If it slows down too much, it really starts to fall out of the sky. And so the risk is that, you know, we have to watch these dynamics, the
underpinning of the economy to see how it is performing going into the first half of the year. That other report, you mentioned, the services, ISM
series, that's flashing a recession signal.
We saw a manufacturing ISM series earlier this week, a flashing recession. So I still remain concerned, the Fed thinks it has a bit more work to do.
And that will be tipping us into recession around midyear.
QUEST: Okay, but why does this employment number remain so strong? Obviously, we see in tech large numbers of layoffs and companies know that
business is going to get tighter and harder. Now I know, a quarter of a million jobs in the economy the size of the US is relatively small, but why
does employment remains strong?
RICCADONNA: Well, the tech sector is not the US economy. So we on the coast tend to sometimes not pay close enough attention to the manufacturing
jobs and the other types of service jobs that account for the vast bulk of employment in this country.
So, it is a matter of separating Wall Street and Silicon Valley from what we see on Main Street America and that really explains the difference at
What we see playing out in the labor market is really some labor hoarding that seems to be happening at the moment as businesses found it so
difficult to place employees over the course of 2021 and 2022, that now they are afraid to quickly pivot towards laying off or releasing those
We are seeing hints of that though. If we look at temporary workers, they've been declining for about five months running and the nosedive seems
to be intensifying.
We heard about big layoffs from Salesforce, from Amazon, from some other large firms. So there seems to be a little bit of a confidence problem
evolving among the hiring managers that seems to be taking on some additional momentum.
So things look good now, but the real question is, if it is going to hold up over the course of the next several months.
QUEST: Now, that's where I was going for my last question, because the markets rallied and less savvy investors watching are going, oh, we are
back to the races. But what you're saying and what I hear again and again, is that the real grind and trudge doesn't happen until Q2 at least.
RICCADONNA: We are still coming off of some of the stimulus highs of 2022. And most of it has expired, but consumers are still sitting on a very
substantial pile of savings, that is helping to provide some buffer amid these mounting economic headwinds, but that spending pile is continuing to
So it will be a trial much later this year when hiring managers are less sensitive to these labor hoarding issues, the difficulty placing employees
and whatnot and we see more of a two-sided story on the economic front, whether we're talking about the labor market, inflation, or Federal Reserve
And so, it is going to be a difficult environment. We can all talk about the good news of inflation coming down and that certainly is good news for
most households. But the other side of the coin, if inflation is coming down, that means compression of corporate margins, that means a more
challenging business environment and that is the type of environment where companies will be willing to cut costs and that means cut workers as well.
QUEST: Carl, very glad to have you with us. And of course, looking forward to a year ahead, where we will talk many times as you help us
navigate these choppy waters of the US economy.
Thank you, sir. Thank you.
Now, Southwest Airlines Christmas meltdown is likely to cost it up to a billion dollars in refunds and operating charges, and that is not including
any fines that may be levied by the Biden administration once the investigation is complete.
Almost 17,000 flights were canceled by Southwest last month as a massive storm hit portions of the US. The airline has pinned its failure on
Pete Muntean is with me. Let's just go through that number of how they quantify what it is going to cost.
PETE MUNTEAN, CNN AVIATION CORRESPONDENT: It's such a huge number, Richard. You know, think about the fact, 16,700 flight cancellations. They're about
140 to 150 people on each one of those flights that got canceled, so we're talking somewhere in the millions that people had flight canceled on them
by Southwest Airlines.
It really accounts for this huge number, this fourth quarter loss that Southwest Airlines is now reporting, $725 million to $825 million.
Think about what Southwest made in the first nine months of the year? That loss has pretty much wiped out all their earnings, year-to-date. It is a
pretty incredible number and we are talking about 10 times higher than what Southwest lost on its most recent meltdown, which just pales in comparison
to this one.
If you really break it down, Southwest really lost a lot of revenue. We're talking about $400 million in lost revenue, and then a lot in refunds, too.
So we'll see as that pans out, too.
QUEST: Okay, now, we know the reasons. The core issue is why Southwest was more heavily affected than most. And as I get it, there are really two.
One the systemic point to point is more difficult and they can't do too much about that. But it's this issue of failure to invest, and they admit
that their computer systems simply weren't fit for purpose.
MUNTEAN: Yes, I mean, the backend infrastructure here is the big question, right, Richard. And so we don't know, including that big cost that
Southwest incurred of all of this, through all this meltdown.
What they will have to do to invest in that backend infrastructure. We have heard initially from Southwest that they want to do that in the coming
months, that it is a priority for them, but the system that they use is very antiquated, and really outpaced by the fact that Southwest is a much
larger airline than when that system first went into place.
And also compounded by the fact and you made such a great point here is that Southwest is not a very hubbed airline. It's not hub and spokes, like
big hubs and flights going back and forth to the big hub or maybe in a triangle route.
The planes are used, they go from one point to another point and into the other place, maybe get some gas, switch crews and then keep going.
So that makes things really, really hard and Southwest simply just did not know where their crews and airplanes were, because their system is so
outdated and that's what caused these cascading cancellations.
I mean, when you think about that, 16,000 flights, it is a huge number. That is as many flights as Southwest canceled in the first nine months of
this year as well. So it's really staggering.
QUEST: Southwest Airlines. Thank you, sir. Pete Muntean in Washington.
Now, let's stay in Washington. We can see the numbers now. Kevin McCarthy, oh, and they are going to adjourn. This is a motion to adjourn.
So Kevin McCarthy has lost the 13th ballot to the House Speaker. He did gain some additional support. Now, they're debating -- they're going to get
this because looking at those numbers, there is already a majority to adjourn and reconvene at 10 o'clock tonight. That would be early morning
for you in Europe. You'll be able to join in and see what happens when it all gets underway again.
But for the time being, McCarthy has suffered the 13 defeat, but movement on numbers towards him.
QUEST MEANS BUSINESS: China is easing COVID restrictions and the cases there are surging. This weekend, it will drop the quarantine requirements
for international arrivals and people there who need to travel abroad.
QUEST: And a very good evening to you. I'm Richard Quest. Together we'll go through more QUEST MEANS BUSINESS. Las Vegas, we shall be there where we're
looking at new technology at CES. And the CEO of Vue Entertainment, and whether people are returning to the cinema and if they are, what are they
going to see. It all comes after news headlines because this is CNN and on this network the news always comes first.
The fighting in Ukraine continues despite President Putin's call for 36 hours ceasefire, which the Russian leader claims as for Orthodox Christmas,
Ukraine's rejected the move as a cynical ploy. President Zelenskyy says it's designed to cover Russian resupply.
The Buffalo Bills NFL team says Damar Hamlin's breathing tube has been removed overnight. He's recovering from the cardiac arrest which he
suffered on the field on Monday. The team says he's been able to speak to his family. NFL has planned a series of honors for Hamlin during the last
week of the regular season this weekend.
Prince Harry has reportedly claimed in his new book, he killed 25 Taliban fighters serving in Afghanistan. The Daily Telegraph says he refers to them
as chess pieces that had to be removed from the board. Military critics say those comments paint a callous picture of the British Army.
The U.S. Food and Drug Administration has granted accelerated approval for the new Alzheimer's drug where studies appear to show lecanemab show --
slows the progression of cognitive decline. Drug trials continue to confirm its medical benefits.
China is to drop quarantine requirements for international arrivals this Sunday, as the country moves further away from mass testing. Now those who
test positive will be able to get treatment at home. A foreign ministry spokesperson says the country's COVID situation is predictable and under
control in their words.
That's not the view from outside China where foreign governments remain skeptical. With Belgium now the latest country to require negative COVID
tests from those arriving from China.
In Hong Kong is our correspondent, Ivan Watson.
IVAN WATSON, CNN INTERNATIONAL CORRESPONDENT: The list of governments around the world that are imposing travel restrictions on people trying to
travel to their territory from China. That continues to grow with every passing day amid the massive COVID-19 outbreak in China. This map which CNN
updates regularly gets more and more red with Greece being one of the newest countries now demanding mandatory pre-flight COVID tests from
travelers trying to come to its soil.
The Chinese government does not like this. Take a listen.
(BEGIN VIDEO CLIP)
MAO NING, CHINESE FOREIGN MINISTRY SPOKESPERSON (through translator): There should be no discriminatory practices, let alone political manipulation. In
response to introduction of unreasonable practices by some countries. China will take corresponding measures in accordance with the principle of
(END VIDEO CLIP)
WATSON: But let me point out that anybody trying to travel to China today, they have to go into at least five days of mandatory government hotel
quarantine, followed by three days of home quarantine. That's been part of this self-imposed isolation that the Chinese government has had for years
that is being taken apart very quickly, even as the virus surges across the world's most populous country.
And the imminent return of inner National travel for all these Chinese people, there's a lot of pent-up demand.
Trip.com says that the number of the search interest for outbound flights from mainland China surged 83 percent over the last two weeks compared to
the previous two weeks that bookings for outbound travel have jumped nearly 60 percent. One of the concerns that governments around the world have a
growing number is of a lack of transparency critics claim from the Chinese government about the scale of the outbreak in China.
According to the Chinese Centers for Disease Control, only six people in the entire country died of COVID on Wednesday and Thursday of this week.
The World Health Organization, it believes, it says it believes that China is under representing the number of people who are dying from this deadly
virus. And that has added to skepticism and concern about people traveling around the world from the Chinese mainland.
Ivan Watson, CNN, Hong Kong.
QUEST: The issue of technology, it's everywhere. CES in Las Vegas continues. Now, the interesting thing about CES in Las Vegas. It has just
about every gadget, new idea that you can possibly think of. The last couple of years have made it very difficult to get all this technological
advancement out to the public. Now this year, it's full throttle. CN's Lynda Kinkade at CES.
LYNDA KINKADE, CNN INTERNATIONAL ANCHOR (voice over): Thousands of emerging startups and global brands are showcasing cutting edge gadgets and gizmos
designed to help solve some of the world's greatest challenges from the day to day to the lifesaving. Like taking the guesswork out of testing the
ripeness of an avocado. We're leaving anxiety with a therapeutic caterpillar that whacks.
SHUNSUKE AOKI, PRESIDENT AND CEO, YUKAI ENGINERING: The more you cuddle it the more excited.
KINKADE: Health Innovations are prominently featured, trying to brain scanning helmet that claims to detect early signs of dementia and
Parkinson's. Rest your head on a pillow designed to give a better night's sleep. And watch a demo of an ad hoc defibrillator. A device that the
company says saved 17 lives last year.
JOHANN KALCHMA, CHIEF EXECUTIVE OFFICER, LIFEAZ: But we have developed the first lifesaving defibrillator made for the home. So, anyone can have it at
home. It's extremely simple to use. It's portable, you can have it at home, you can have it in your backpack when you do the gym, when you go on
KINKADE: (INAUDIBLE) pass the booths on a remote-controlled pair of electric rollerblades that can go about 30 kilometers an hour. And check
out an autonomous wheelchair that hopes to soon transport travelers to the gate at the airport with a click of a button.
JUSTIN GAGNON, V.P. OF SALES AND MARKETING, WHILL: So, it's an autonomous wheelchair. If the passenger will get into the chair, select what gate
they're going to be going to and then the chair just takes them directly to that gate. They don't need to drive it. They don't need to tell it where it
needs to go. It'll just take them right there.
KINKADE: (INAUDIBLE) become a big part of CES with major automakers and others showcasing cutting edge advancements and nearly 300 exhibitors
expected. It will be one of the largest auto shows in the world. This year, they'll also be a lot of talk about web three and the metaverse. So, as
with most of what you'll find it will take a while before all these gadgets become widely available.
And before you rush out to buy your ticket, there is some bad news. This show will not open to the general public. It's only open to businesses. A
move that this event's president says it due to public health concerns.
GARY SHAPIRO, PRESIDENT, CONSUMER TECHNOLOGY ASSOCIATION: We've instituted a lot of different measures in terms of trying to make this a place where
we mitigate diseases. We have wider aisles, we have greeters at the door so people don't have to open some of the major doors. So we're encouraging
people to come but it is not open to consumers. It's only open to business.
KINKADE: Despite that, the show's organizers are expecting as many as 100,000 people to attend.
Lynda Kinkade, CNN.
QUEST: Movie theaters are hoping for more big blockbusters that will bring back audiences. In a moment, there he is. The CEO of one of Europe's
largest cinema chain Vue. After the break.
QUEST: It's Friday night. And tonight, at the view cinema in London. Well, every film every day, the -- looks like some bargains. Our viewers can see
Avatar or Black Panther or tillers, an entire popery of movies to be seen. The movie theaters themselves have been slow to recover from the pandemic.
With the CEO of Vue Entertainment says cinemas need more blockbusters to bring back their audiences.
Tim Richards is that CEO. He joins me now from London. You know, if I look at the numbers, revenue is down, say 30 percent. And content production
number of films is down 30 percent. And that's where you see your difference.
TIM RICHARDS, FOUNDER AND CEO, VUE ENTERTAINMENT (via Skype): We absolutely. First of all, welcome from London. But this is a supply issue.
This isn't a demand issue. We've proven that our audiences want to come out and see movies, we've broken records ever since we started the game back up
in the post pandemic world. But I think you need to look back on what happened pre-pandemic.
And 2019 was the third consecutive record-breaking year for box office globally. $43 billion. So, there was nothing wrong with the business when
the pandemic hit. We got hit hard. And as we came out of the pandemic now, last year 2022, movies were down 36 percent fewer films released than they
were in 2019. And the corresponding box office was down 30 percent.
QUEST: Do you see a shift? Obviously there has been a direct -- my own company, the own parent company of Warner Brothers and Warner Brothers
Discovery on this battle between streaming and theatrical release. Has that been resolved now do you think?
RICHARDS: Yes, I mean, absolutely, categorically. And I think with Warner Brothers, look, not just Warner Brothers, all the studios. All the studios
wanted to test and try new methods of business as new models. And the pandemic gave them that opportunity. And every studio released one or two
major blockbusters, universal were first their little blocks with trolls and then Disney with Mulan, and so forth. And everyone tried it.
And without exception, they've now all acknowledged that they've lost not tens of millions, but hundreds of millions of dollars doing that. Now with
Warner Brothers in particular Jason Kilar, who came in as CEO, his background was Hulu. And he said that in that particular year 2021, every
single film from Warner Brothers was going to be a day in date release. And then David Zaslav came in and he's really turned the clock back into the
slightly older model. A tweaked model, but one that works.
QUEST: Right. So, I was in London over Christmas and I did go to the cinema and I went to one of your competitors I have to confess but it was -- one
of the few mounted cinemas which -- but my point is, there is a shift in the way people want to go as well. Here there was a nice armchair or sofa,
food was being served at the chair.
Is this a way, a different way that you can see the ancillary revenue to be sure, but more of a theatre environment?
RICHARDS: Well, I think -- I mean, every company is trialing and testing new ways of doing business. And I don't think any industry can be
complacent. We tried that. We tried sofas and loveseats in 2005 to 2010 period. And for us, our focus is on experience when you're in the
auditorium. We want you to have the very best, most comfortable seats. We've got leather recliner seats.
We want you to see it in the best possible picture with laser projectors. And then the absolutely phenomenal Dolby Atmos sound. When you have a film
like Avatar, and you go in and see Avatar in 3D, it is a different experience, a completely different experience.
QUEST: So, as we've looked -- as we start the new year and for what you know, is in the pipeline, and coming your way, are you encouraged? Because
yes, blockbusters will fill to an extent, but you need a roster to create an entire schedule for a company as large as yours. Are you encouraged?
RICHARDS: Yes, I've been in the industry for 30 years, 10 years for the studios. And I don't think there's ever been a time where I'm more excited
about the future than I am today. It doesn't mean we're out of the woods yet. We still have a supply issue. I mentioned we are down 36 percent last
year. We're going to be down roughly 20 percent fewer films this year. But 24 looking at the commitment that the studios have made, the films that
have been greenlit, the films that have been actually financed, we're going to be looking at a more normalized market in '24.
And this is not just the big Marvel blockbuster films. This is a full range of movies from the black and white Belfast, which was extraordinary, right
on through to Avatar and everything in between.
QUEST: Sir, good to see you. We really need to come into QUEST MEANS BUSINESS from a view theater cinema in London. And I promise you, I will
buy the popcorn. I do. I know that the generosity knows no end. Thank you, sir. Have a good weekend.
U.S. markets are ending the weekend on a high note. There was a terrible week of economic news from the U.S., E.U., China. Rana is going to help
pull it all together. Make some sense (INAUDIBLE) hopefully we'll make some sense of it all. Yes, you will. That's what we want you to do. After this
short break, there's a lot to make sense of.
QUEST: The global economy was two steps forward, three steps back. U.S. job numbers encouraging and raising questions about the Fed's next move and
chaos in Washington with an inability to elect a house speaker.
Is there a reason for optimism? Well, the E.U. inflation softened. Thanks to lower energy prices. And that might be fleeting because of its own
energy prices. China's opening the border with Hong Kong at the same time as its COVID outbreak overwhelms hospitals and rages throughout the
Rana is with me. Associate editor for Financial Times. So, pull the week together for me. Which of the bit --
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Yes.
QUEST: You know, when we come to the end of the year, yes, the noise and fury of the congressional. But that might not be important in the big
picture. What for you is important this week?
FOROOHAR: Oh, boy. Well, we have to talk about congress in a minute. But in terms of what's important in the overall global headlines, it's about
trying to reach that Goldilocks level of inflation where gas prices, food prices, we want those to go down a little bit. But we want labor to still
be in a decent market at the same time that we don't want labor inflation to be really, really sticky and kind of create a runaway picture.
And this week, I think the reason that, you know, markets ended up kind of on a bright note is that they felt like OK, we're hitting that middle
point. Now, how long that's going to last? We don't know. But personally, you know, and I've written this, I'm OK with a little bit of wage
inflation, because I think people need money in their pocket to spend and keep the economy going right now.
QUEST: Hang on a second, not so fast. You've got -- you got the -- inflation came down in the E.U. this week. But at the -- and we saw the
numbers today on employment. But are we at risk of one swallow making a summer?
FOROOHAR: That's an interesting metaphor, Richard. I may have to steal that, it's very British. I you know, three's a trend. I think we are in a
really interesting balancing act right now. Because as you mentioned, Europe's got its own dynamics. China has its own dynamics, the U.S. is
still sort of the, you know, I'll use another -- my own metaphor, the cleanest dirty shirt, the prettiest house on an ugly block. But all those
things are moving around very, very quickly, right?
And, you know, you mentioned just craziness in the U.S. House Speaker bakeoff at which is, I'm kind of amazed to be honest with you that that
actually hasn't affected markets more because it is just such a sign of dysfunction. Now, it could be that markets are looking at this and saying,
well, all right, the republicans won't be able to govern, you know, the democrats won't be able to get much done, but we've already kind of baked
in the next two years.
Anyway, we've got the fiscal stimulus, it's all about where inflation is going to go now. Who knows? There's just too many vectors in play for me to
come up with a simple pat answer as to what to expect for the next, you know, few weeks or certainly next few months.
QUEST: All right. But if we do the juggling act, so we've got China, we've got Europe, inflation, we've got energy, we've got dysfunction in
Washington. Yes. You know, I think investors are looking at it. And saying last year was our first wheel bear market of many years. Will this year be
better? Now you and I can't say that at the beginning of January, because of the exogenous events that could knock the whole thing over.
FOROOHAR: I think that that's right. There's a bright spot, though. And we've talked about this. Balance sheets are still in better shape than they
have been in downturns past, right? And in particular, in the U.S. because of all the fiscal stimulus. Now, consumers have spent down some of that,
but it's not looking like they're going to go through their cash hoard until next fall, at least. So, I'm not --
FOROOHAR: As you say, there could be exogenous shocks. A lot happening geopolitically, but there's no question that both companies or consumers
are in a better spot in terms of cash than they have been in past.
QUEST: We lost you for a second there. I wondered if the Gremlins of -- the fiscal Gremlins had finally got us but no, you're back. And, you know, I
notice in your -- I -- don't take this the wrong way, Rana, but you're a lot more cheerful than usual.
FOROOHAR: We know, Richard, I've been predicting gloom for so long. I don't want to continue to be the Cassandra of the global economy into 2023. So,
there -- also timing is everything. You know, I mean, I think I mentioned to you, I sold a fair bit of equities in 2018 thinking that we were going
to really have that big correction in the everything bubble back then. And I got to say, I was wrong. Mea culpa. So, I've got a long-term horizon.
I'm only 52.
can hang in there for another couple decades. So, I'm going to try and be a little less gloomy in the year ahead.
QUEST: Right? Well, I'm 60. And I, unfortunately, didn't sell anything. And I've written the horse all the way down the hill. And I'm one of those
people who really is naively, naively saying that will come back someday even though it's showing losses of 80, 90 percent. But I'm going to stick.
FOROOHAR: It will. It will, Richard. Now, may not come back quickly. But you're pretty young 60.
QUEST: I'm 60, Rana. I'm 60 (INAUDIBLE) Rana, good to see you. Lovely to see you. We'll talk many times over the course of the year. Thank you.
We'll have a profitable moment after the break. QUEST MEANS BUSINESS.
QUEST: Simple question. Is it democracy or is it disaster? Is it tyranny of the minority or is this the way it's always been in some shape or form when
it comes to politics and high power? I don't have an answer. It's not particularly edifying to see the U.S. House of Representatives in ability
to even get a speaker. But by the same token, everybody sort of knows that they will. I think what troubles perhaps most about it, is the nihilistic
way in which the never Kevins won't take anything.
There's no spirit of compromise. Because at the end of the day, if enough is offered, or the right deal is put in place, or things are sorted, then
even the never Kevins should say we'll go along with it. It's nihilism to simply take the bus over the cliff just because you can. But maybe that's
what this is all about, as I say, I don't know.
And that's QUEST MEANS BUSSINESS for tonight and this week. I'm Richard Quest in New York. Whatever you're up to in the weekend ahead. I hope it's
profitable. I'll see you on Tuesday.
ANNNOUNCER: CNN Breaking News.
JAKE TAPPER, CNN ANCHOR: And welcome to "THE LEAD". I'm Jake Tapper.