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Quest Means Business
World Bank Warns Of Sharp, Persistent Economic Slowdown; Russia Makes Strategic Push In Eastern Ukraine; Macron Pushes To Raise The Retirement Age In France; Orangetheory Workout; Dash To The Bell. Aired 3- 4p ET
Aired January 10, 2023 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:14]
RICHARD QUEST, CNN INTERNATIONAL HOST: It is a Tuesday. The markets are open and doing business for one more hour in the US. This is the way
they're looking at the moment. As you can see very little has been done. That's because the Fed, of course, in the next couple of weeks, and
everybody is waiting and watching, waiting for more data on what is likely to be the forward direction for interest rates, but very small movements
today.
The markets and the main events of the day. Global growth is slowing sharply says the World Bank and warns the economy is teetering on the edge.
In France, they are protesting as Emmanuel Macron tries to raise the retirement age.
And keeping fit in the new year. The chief executive of Orangetheory joins me in the studio while I was busy on the rowing machine, the floor and the
treadmill. I wasn't that red in the face when I was doing it, it is the lights.
(BEGIN VIDEO CLIP)
QUEST: Okay, it's quite clear, I am the oldest person in the class by some years, but that doesn't really matter because he adapts to account for
my arthritic knees.
(END VIDEO CLIP)
QUEST: Every twinge, every bump, and every movement.
Live from New York, Tuesday, January the 10th. Together, I'm Richard Quest and I mean business.
The storm clouds gather as the World Bank warns of a sharp and long lasting economic slowdown. It will be the developing world that will be hit the
hardest.
The bank is now projecting global economic growth of only 1.7 percent, down from a forecast of three percent only months ago, and the World Bank says,
any further negative shocks could force the world into its second recession in a decade and that hasn't happened in 80 years.
The World Bank lowered its growth forecast for nearly all advanced economies and 70 percent of emerging markets. It says the US will grow by
barely half a percent, its weakest since 1970. The Eurozone won't grow at all, and Sub-Saharan Africa is expected to grow just over one percent.
With the bank warning that growth will lead to rising poverty.
Rahel Solomon is with me.
We've had successive warnings from the World Bank, the IMF, the OECD, and the like, what makes this one more serious?
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Well, it is a pretty significant downturn as you pointed out, Richard. The World Bank describing
economic conditions as fragile, saying that we are perilously close to falling into a recession.
The fact of the matter is the factors are not new. They are the factors that we talk about a lot on this program. Elevated inflation remaining with
us for quite some time, higher interest rates, and more aggressive central bankers. Also Russia's invasion of Ukraine. So it's the same old factors,
but essentially downgrading its forecast as inflation remains elevated for quite some time.
QUEST: And what of course, is the role of the World Bank is the developing agenda or the agenda of the developing world, and how they can
help.
So in that respect, this warning, I'm just going back to again, you know, the weakest expansion and the emerging markets, the developing world being
hit hardest, this is going to hit the poorest who can least affect it.
SOLOMON: Right. Because think about what rising interest rates does, right? Certainly, then you start to have capital inflows moving toward where you
can get a relatively safe investment, right? In the US, in the Eurozone, in a relatively decent rate.
David Malpass, the President saying emerging and developing countries are facing a multiyear period of slow growth, driven by heavy debt burdens and
weak investment, as global capital, as I said, is absorbed by advanced economies faced with extremely high government debt levels and rising
interest rates.
So the question of whether we experience a recession, of course, that is still debatable. Goldman Sachs, I should say, just putting out a new note
today saying it actually expects the Eurozone to be able to avoid a recession, that coming after its forecast, that the US might also be able
to avoid a recession.
But the question about whether in fact, we experience a recession is one thing, Richard, but the second part of it is, how deeply will that be felt
and that will change depending on what type of nation you are in. If you are in a developed nation or a developing nation, that could look very
different.
QUEST: Rahel Solomon. Rahel, thank you.
This report highlights the challenges facing the Central Bankers. Slowing economies feel the effect of those rising prices that Rahel was talking
about.
The Chairman of the Fed, Jerome Powell addressed this issue when he said raising rates is essential, if not popular.
[15:05:00 ]
(BEGIN VIDEO CLIP)
JEROME POWELL, US FEDERAL RESERVE CHAIRMAN: Price stability is the bedrock of a healthy economy and provides the public with immeasurable benefits
over time.
But restoring price stability when inflation is high, can require measures that are not popular in the short term as we raise interest rates to slow
the economy.
(END VIDEO CLIP)
QUEST: Mark Zandi is with me, Chief Economist at Moody's Analytics.
Mark, so let's take first of all the Fed Chair's -- I mean, it's a statement of the obvious in a sense. No one likes it when rates are going
up and there will be further rate rises to come. But you still think the US will avoid recession?
MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Yes, I think we have a fighting chance, Richard. You know, under any scenario, it is going to be a
tough year when you have high inflation and the Federal Reserve raising rates as fast as they are, recession risks are high.
But having said that, you know, I think we have a lot of strength. The US economy has a lot of underlying strengths, leverage is low. Generally,
across households, businesses, real estate markets are under built. Typically, before recessions they are over built. The banking system is in
great shape. State and local governments are flush.
You know, I can go on. You know, the kind of the typical imbalances that prevailed prior to a recession just don't today and that, I think means
that the US has a fighting chance to get through the next year without actually suffering a recession.
QUEST: The slowdown that will take place will have its effects. Unemployment will rise, but if this warning from the World Bank that the
developing world is going to be hit hardest, that is worrisome in its own right.
ZANDI: Yes. I mean, obviously the developing world is more highly levered, and taking on a lot more debt -- government debt, corporate debt.
Households are more indebted in a higher rate environment, like what prevails that is reeling now, and it is even higher in many of these
developing emerging economies. You know, that adds to the debt service burden, and they do have problems servicing that and that makes this a lot
more difficult for them to stay out of an economic downturn or a recession.
So they are just much more vulnerable than a country like the United States, certainly at this point in time.
QUEST: Right. But the Fed, the ECB, whilst not immune to the effects elsewhere, really will stay the course for their own economy's base. I
mean, Jay Powell has said, look, I'm very sorry about all of this, however, we do need to do what we're going to do.
ZANDI: Yes. I mean, at the end of the day, the Federal Reserve, the ECB, the Bank of England are going to continue to raise rates, slow growth, to
get inflation back and it is just a question of how high they have to take rates and for how long?
And, you know, it depends on the country. The US is different than the British that is different than the German economy. But, you know, I do
think all these economies are, you know, at risk of recession in that kind of environment.
The US probably is in the best position to navigate through that actually going into recession. British economy, probably the most vulnerable,
they're probably already in. But all these countries are grappling with the with the inflation and higher interest rates, and you know, it's going to
be a tough time getting through the period.
QUEST: I mean, that's really the point. Whether you grow by 1.2, or contract by 0.4 to a technical recession, it really doesn't make a jot a
difference, other than, you know, the right to say we had a recession or we didn't. Unemployment is going to rise, it's going to feel pretty bad.
ZANDI: Yes. Well, I don't know. I'd like to avoid one, Richard. I just need a context, you know. If we suffer in the United States the typical
recession, and there has been 12 of them since World War Two, just take the average, you know, we're going to lose four million jobs. The unemployment
rate, which is now three and a half percent, 50-year low is going to go to six percent. We want to avoid that. We just don't want that to happen.
So you know, I prefer not to go in recession, technical or not. But I get your point. I mean, everyone is going to struggle here in 2023.
QUEST: Mark Zandi, good to talk to you, sir. We will follow this, you and I, turn by turn as the year moves on. I'm grateful to you, sir. Thank
you.
The crypto firm, Coinbase, says it will lay off 20 percent of its staff. I think maybe a thousand workers. It is the company's third round of layoffs
since last June. The crypto industry has been struggling as the price of Bitcoin and other currencies have been falling. Bitcoin remains down around
60 percent over the last year.
Paul La Monica is with me. We shouldn't be surprised. Crypto is a dirty word at the moment.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, it has been a very troublesome time to put it mildly, Richard, for cryptocurrency trading companies like
Coinbase in light of the fact that FTX has filed for bankruptcy in such spectacular fashion.
You know, now that you have the criminal charges levied against SBF, Sam Bankman-Fried, the founder of FTX, but even before FTX imploding, Bitcoin
and many other cryptocurrencies were tumbling last year and that led to that first round of Coinbase layoffs in the summer where they cut about 18
percent of the workforce. So this is a very difficult time for Coinbase and the rest of the industry.
[15:10:17]
QUEST: So what's the issue here? Is it people just aren't investing in crypto, therefore, there is not the trading revenues?
I mean, a lot of these places that are cutting staff, they are exchanges, they are platforms. So how did they get affected by the falling price of
the coin?
LA MONICA: Yes. They have been affected because I think there has just been, Richard, this genuine distrust of crypto among many individual
investors who might have been dabbling in it before and now, all of a sudden, have decided that they really don't want to be associated with an
asset that's this volatile.
There is also the issue, which always happens during boom times and crypto is not the only industry that this takes place. You ramp up aggressively,
because times are great and things look awesome. You put out Super Bowl ads, you spend a lot of money to attract talent, you don't think the good
times will ever end.
Guess what? They do, Richard. You and I both know that. And when they do, if you wound up hiring too many people, you unfortunately have to let some
of them go. And I think Coinbase is being applauded on Wall Street, perversely enough for making these moves, as painful as they are because at
least it's a recognition that they can't go on with this same level of staff, they have to right size, and that's why Coinbase is actually up
eight percent today on this admittedly pretty bad news.
QUEST: Paul, stay with me, because I want to get your view on Virgin Orbit. They had a failed launch last night and the stock is also down
sharply.
Last night Cosmic Girl, which is the 747 from under which they were going to launch took off without issue, the rocket, which was slung underneath.
That was the problem at the second stage. As you watch, the systems engineering director, Christopher Relf explains.
(BEGIN VIDEO CLIP)
CHRISTOPHER RELF, SYSTEMS ENGINEERING DIRECTOR, VIRGIN ORBIT: It appears that launcher one has suffered an anomaly which will prevent us from making
orbit for this mission. We are looking at the information and data that we have gotten.
(END VIDEO CLIP)
QUEST: So Paul, it didn't make it into orbit. The stock is down 16 percent. They are going to investigate. They're going to find out what
happens. Is this an overreaction by the market?
LA MONICA: I don't think so, Richard. This is a highly speculative company and I think investors obviously have to look at news events like this as
something that they can measure success or failure with the company because it is not a firm that's mature enough where you're going to be having
recurring revenue and profit that comes in at a predictable type of level that Wall Street can judge.
So this company much like, you know, the sister firm, Virgin Galactic SPCE, ticker symbol, you know, they're going to be judged based on what they can
get into orbit, not on more fundamental, traditional metrics like you would with a bank and oil stock or even a Big Tech firm like Apple.
QUEST: Paul La Monica, sir, thank you.
We're just receiving news that Trump Organization's former Chief Financial Officer has been sentenced to five months in prison.
Allen Weisselberg has been convicted or was convicted for his role in a decade long tax fraud scheme. He's expected to report to the New York City
Jail and begin his sentence immediately.
Our Kara Scannell is in New York.
We knew, obviously he was guilty. That was some time ago. This sentence of five months, is this what was expected?
KARA SCANNELL, CNN CORRESPONDENT: So Allen Weisselberg had agreed to plead guilty in August and under the terms of that agreement, the Judge said he
would sentence him to five months in jail and five years of supervised release.
Today, though, Weisselberg's attorney had asked for a lighter sentence saying that he had cooperated. He had no criminal history. But the Judge
said that if there were not this deal, in fact, he would have sent him to a stiffer sentence.
The Judge said based on the testimony at trial and the evidence, he thought that Weisselberg deserve a stiffer sentence because he said, one of the
most offensive pieces of evidence that came in was that Weisselberg had had the Trump Organization entities pay his wife $6,000.00 so she could get
Social Security benefits.
The Judge said that was pure greed. He said Weisselberg made more than a million dollars a year at the company and there was no need for his wife to
receive Social Security benefits. He said it was so offensive because so many Americans work so hard to get those types of benefits.
Now, we also learned according to a source familiar with the matter is that Weisselberg who has been with the Trump organization, with the Trump family
since 1973, is no longer with the company as of today.
Now, this source says that they worked out some kind of severance deal and that the Trump Organization was generous to Weisselberg, but this is a
significant development because Weisselberg had testified at the trial. He had walked this fine line of helping the prosecution prove their case by
admitting the fault that he had done, saying that he cooperated with or conspired, I should say with members of the Trump Organization.
[15:10:22]
But he stopped short of implicating any members of the Trump family. At the time, Weisselberg also admitted on the stand that he was due to receive a
big bonus at the end of this year, and he had been on paid leave with the company while these investigations had been swirling around them.
And the Manhattan District Attorney's office continues to investigate the Trump Organization and Weisselberg is now no longer an employee -- Richard.
QUEST: Kara Scannell, thank you.
As we continue tonight, if President Macron has his way, people in France will have to put off retirement for some years as part of his new plan to
update the country's pension system. The work is on tap. We will be in Paris next.
(COMMERCIAL BREAK)
[15:18:38]
QUEST: Russia may be close to capturing the town of Soledar in Eastern Ukraine. It will be the first major battlefield gain for Russia in months.
It's mercenaries from the Wagner Group that have led four days of advances. The Russian backed head of the Donetsk region says the salt mining town is
close to liberation. The authorities in Ukraine deny this.
Seizing the town is key as you can see from the map to gaining an upper hand in the battle for Bakhmut.
Scott McLean is in Kyiv, joins me now. So where do we stand at the moment?
SCOTT MCLEAN, CNN CORRESPONDENT: Hey, Richard.
Yes, this is absolutely fascinating what's happening there in Soledar at the moment. So as you mentioned, the Russians claim that they are getting
very close to claiming this city, the Ukrainian says, hold on a second, not so fast. They say that the situation there is under control, though the
military said earlier that they also don't rule out the possibility of potentially withdrawing from Soledar.
Obviously, it is a strategic town that the Russians have thrown a heck of a lot of manpower, a heck of a lot of weaponry at trying to capture because
as you said, it would give them potentially an easier route toward attempting to capture Bakhmut, a place that they had been trying to capture
for the last six months or so.
And we are getting some very fascinating insight from one particular soldier who is on the frontline, a Ukrainian soldier who spoke directly to
CNN by phone not long ago and he said that the situation is difficult at the moment he said that, frankly, no one knows exactly where the frontline
is at the moment.
[15:20:16]
The reality is that there is a very large gray area in the town that both sides are claiming to hold. He said that we are holding on to the end, but
even sometimes steel gets tired. He also said that there are so many new people that the Ukrainians have brought into the frontlines that they
haven't even had time to learn each other's call signs.
And just to give you a sense of how deadly, how bloody this battle is, potentially one of the most consequential battles of this war. He said
this, he said: "In Soledar, no one counts the dead, those who remain alive are lucky" -- Richard.
QUEST: I mean, where does it take us in the bigger picture?
MCLEAN: Yes, so I think as you said, this would be one of Russia's few major victories for months and months. So perhaps this would give the
Russians a bit of a morale boost that they so desperately need at this point.
But the Ukrainians are also saying that look, even if we manage to pull out of this area, even if we have to withdraw, they are going to go back and
they are going to try to retake this territory. Also consider that the Ukrainians have done remarkably well at holding their own considering that
the Russians, the Wagner private mercenary group, is focusing all of its attention on taking Soledar. So perhaps this is a sign of where we are in
this war and the fact that the Ukrainians continue to get stronger. even if this does become one setback for them. It seems like this will be a chance
for them to regroup and come back stronger in the next few weeks or the next few months.
QUEST: Scott McLean in Kyiv. Thank you, sir.
To France now where President Macron presented his long expected plan for the retirement age rising in France. The latest proposal raises the age of
retirement, two years, to 64. It would happen over the next seven years in 2030.
When fully in place, the government says it will raise $19 billion. The protesters don't like it. They're already taken to the streets. The polls
show almost 70 percent of people in France are against raising the retirement age.
With households already dealing with inflation and the slowing economy, the fear is this proposal could add to the chances of social unrest.
Melissa Bell is in Paris. You've got years to go before you're even close to these deadlines. Miss Bell, so it won't affect you for many years.
However, for those of us who are being close, why is Macron having another bash at this?
MELISSA BELL, CNN CORRESPONDENT: Well, you described this so long expected. That's exactly what it is, Richard.
This was announced by Emmanuel Macron, it is part of his electoral pledge back in 2017, when he was a candidate hoping to become the President.
This was one of his key battlefields, it had been the pension reform. I remember that when he came in, he took on taxes. He took on a number of
other reforms, the famously rigid labor laws here in France, things that he managed to reform.
The one sacred cow of the French economy, that social pact that binds France together, as the French see it, the pensions that was a thing he had
announced back in 2017, that he still hasn't managed to tackle. Why? Because there was COVID, because there were the yellow vests, you'll
remember, that took on those reforms, because when he tried to bring them back in at the end of 2019, they were met by such fierce resistance from
the streets, that he had to put them on hold.
This time, he has vowed, in fact, he said so at Year's Eve, this will be the year of France's pension reform. Hence, what Elisabeth Borne, the
French Prime Minister announced in the Parliament today. Here is what she had to say.
(BEGIN VIDEO CLIP)
ELISABETH BORNE, FRENCH PRIME MINISTER (through translator): We want to project that finances, pensions, and nothing but pensions. We refuse to
increase labor costs or taxes. We refuse to lower pensions. On the contrary, we want to increase them.
(END VIDEO CLIP)
QUEST: Now, Melissa, the -- okay, it's a modest rise by two years to 64. Many countries are already looking at 67. Some are even thinking 68 to 69.
Why are the unions against 64 when in other countries, of course, the retirement age in the olden days, remember was, 65.
BELL: You're right, Richard. When you look around the rest of Europe, Germany, Spain, you're looking at 65 to 67. It is not unusual or surprising
that the French would be trying to do this, especially a reformist President like Emmanuel Macron. What he is facing though is a system that
is built upon years and decades of privileges and deals that were made within unions and within particular, different categories of workers about
how long and when retirement came.
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And he is taking on a system and trying to harmonize it and raise it what seems to the rest of the world like a reasonable age in which to retire.
But that means taking on all kinds of vested interests.
The problem he has also, Richard is that he lost the Parliamentary majority, don't forget last year in the Parliamentary elections back in
April, and it's going to make him very difficult to push these particular reforms through.
And yet, this reform, getting through this is what he has pitched for the next few years on, will mean that you either have a lame duck President
between them the next French election, or one that is proved that he could come in as a reforming President and succeed where all his predecessors
failed.
QUEST: Fascinating. You're right, thank you. We'll talk more as we will see how it goes. Thank you.
Now 10 days into the New Year, and are you sticking to your resolution to get or keep fit? In New York as indeed where you are, there are plenty of
options to do. However, there's one that I wanted to try out. Orangetheory, it seems to be rather popular.
The chief executive will join me from Orangetheory in just a moment, after I've exhausted myself.
(COMMERCIAL BREAK)
QUEST: It's January the 10th. How are you doing at keeping your New Year's resolution of getting or keeping fit?
Today, there is no shortage of exercise options to choose from. The problem is which to choose.
Orangetheory is one that is growing fast. The Chief Executive of Orangetheory Fitness Studios is with me.
And with the pandemic behind us, we are going to be talking more things in personal training. Sir, I'll be with you in just a moment.
First though, I need to understand Orangetheory and how it works.
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(JOINED IN PROGRESS)
(MUSIC PLAYING)
UNIDENTIFIED MALE (voice-over): This is going to go around your left arm, right around here. And you'll be tracking what your heart rate is doing
throughout today's workout.
Let's party.
QUEST: I cannot hide at Orangetheory. Each beat of my heart is being tracked and is on display. A handy guide for me and my coach, a fellow
Richard.
So we know how hard I'm working, how far I can be pushed to get my heart rate up into the sought-after orange zone.
Our class is split in half. And we make the rounds -- the treadmills, the rowing machines and the weight floor. The idea is to keep the heart rate in
the orange zone as long as possible. It is the sweet spot of aerobic exercise.
One thing rapidly becomes clear: I am the oldest person in the class by some years. But that doesn't really matter because the class and the tutor
does adapt to account for those of us with, for example, dodgy knees.
UNIDENTIFIED FEMALE: You're getting a little cardio. You are getting a little strength. And you're also getting a little power. And I think it
just benefits you in all areas of life. It is very functional.
UNIDENTIFIED MALE: Yesterday was our benchmark.
(END VIDEOTAPE)
QUEST: More from my effort in a moment. Dave Long is with me, the Orangetheory CEO. Joins us from Jackson, Wyoming.
Everybody is basically -- the science is known of when we have aerobic workouts, we get into this so-called orange zone.
So are you seeing people coming to you new or switching from others?
DAVE LONG, CEO, ORANGETHEORY FITNESS: That's a great question. I think it's a little bit of both. Even though the science of heart rate training
and what we do is becoming more well-known, I'd say most people still probably don't know about it.
And it is very difficult to recreate what we do in a class on your own, which really drives people to take great interest and get hooked on it when
they try it.
QUEST: Your problem is, the competition, in a sense, besides your own. Just look at a map of gyms in New York City within a few blocks of where I
visited you. Now just within a few blocks, you've got The Fort, you've got CompleteBody, you've got (INAUDIBLE). You've got Orangetheory, of course,
Barry's. There are loads of opportunities. Rumble, the whole lot.
So how do you raise yourself above that in a sense?
LONG: It is simply really focusing on what we do well, is providing such a unique science-backed workout that is inspired by the coaching. I think
there is a big part of the community, the accountability and the motivation that is showing up at your timeslot like you did, having the coach motivate
you, push you just hard enough to get into that orange zone and get really the best results.
And when you look at the industry and consumers, most are not getting enough exercise. So even though there's a lot of options, there's still
kind of a blue ocean of people who really need more exercise.
New York City in particular, we are opening multiple new locations this year just to keep up with demand in that market.
QUEST: Let's go back to my workout and my training. By now it is about 30- 35 minutes in.
How am I doing?
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: Here we go.
QUEST (voice-over): As our workout picked up pace, I finally got the hang of it. Now the treadmill, I'm pretty good at because, in the spring and
summer, I do this all the time, try to look a little better on the beach.
In the race for my beach body, I soon pushed into the zone that we are all chasing.
Well, there we go, finally I've made it into the orange zone.
Once deep in the orange, I began to feel the burn. Indeed, sweating and starting to push my limits until perhaps, mercifully, our time was up.
Well, I finally managed to get it into the red zone for not very long. It is a good workout, it is exhausting but not annihilating. Maybe that just
means I didn't push hard enough.
(END VIDEOTAPE)
QUEST: The key here is keeping people coming back, isn't it, keeping it different, keeping the interest level so people see gains and are able to
improve.
LONG: You know, absolutely.
[15:35:00]
There are core tenets in the workout to get you the best results but keeping it fresh, changing it every day is super important. And we run
these challenges and benchmarks throughout the year that also provide a twist.
There are multiple every single month. So there is also something new to not only keep it interesting and keep members motivated but to give them
things to strive for. So over time, they are seeing improvements, whether be on the treadmill or the rower, even the weight floor, it is all
measured.
QUEST: But Dave, we are going into recession in many parts of the world. And I know you are in lots of countries, so pricing will become relevant.
And even in the U.S., where we are seeing discretionary spend going to come under pressure, how are you going to tackle that?
LONG: Yes, I think we are fortunate in that fitness in general has really shown nothing is recession proof. But it's shown over the last number of
recessionary periods to be very recession resistant and has grown through recessions.
So we really think with the, you know, consumers focusing more on health and wellness more really than ever before coming out of the pandemic,
they're really prioritizing spending on this type of product above other things that they might pull back a little bit on.
QUEST: You are expanding elsewhere in the world, in different parts of the world, not only in my district.
LONG: We are already in 25 countries. A lot of the international markets have already fully recovered from the pandemic and are opening new
locations. So this year alone we aim to add more than 100 new locations globally.
QUEST: Dave, when you are in New York, we will do another workout, I promise you I will do better this time. I will get into the orange zone
quicker. I might even make the red a bit longer and you won't be calling for an ambulance afterwards. I wish you well sir, thank you.
LONG: Thanks, take care.
QUEST: Schools in Seattle say social media is making children anxious and depressed. So now they are suing major tech companies. Donie O'Sullivan is
with me.
Who is suing what and why?
DONIE O'SULLIVAN, CNN TECH CORRESPONDENT: Yes, so we are seeing the Seattle school district in Washington State, Richard, suing major social
media platforms, all the big names -- TikTok, Meta, Facebook -- and saying that essentially they have designed these platforms to be addictive and
they are harmful to children, to teenagers' mental health.
Look, we have seen some previous cases like this before, with families and whatnot. It is notoriously difficult to prove because the research is going
to take time. But certainly, this is going to create a national, international discussion.
QUEST: So what do they want the tech companies to do?
They are not going to suddenly fold their tents and say, gosh, you are right, how awful, we are terrible. We are going home immediately.
So what do they want?
O'SULLIVAN: Well, they are not asking for a specified number of damages or anything like that. Look, not to speak too much of the ambitions or the
intent of the people behind this, the school board.
I certainly think what we have seen over the past few years, particularly if you remember that Facebook whistleblower about 1.5 years ago, Frances
Haugen. She leaked those documents, internal documents at Facebook, that showed the research it had done itself into the harms of Instagram,
particularly on young people.
I think, if this goes through the legal process and goes to trial, some of that information coming out and discovering more of what these platforms
are doing or what they are not doing and what they really know about the harm they may or may not be having on teenagers or young people. I think it
would be illuminating.
QUEST: So give me an assessment. You have been covering social media, you hear this.
Do you look at this and think, nothing is going to happen with this or it might have legs?
O'SULLIVAN: Look, it depends on how you judge success here. I think there is clearly a mental health crisis in the U.S. and other parts of the world,
by whatever metric you want to look at.
Is social media playing a part in that?
We have seen, yes.
To what degree?
I think it is arguable. Look, I don't feel great when I am doom scrolling through Instagram all day and seeing everybody else having a good time and
I'm not.
So just imagine the impact that might have on a young person's frame. But what we have heard from the experts and psychologists and others in this
field, Richard, is that we don't really know the impact that this might have long term on kids yet, because it is still relatively new phenomena,
that we are stuck onto our phones all day.
QUEST: Donie, thank you, fascinating, come back and tell us more when there's more to report.
For the moment, that is QUEST MEANS BUSINESS. In around 20 minutes at the top of the hour, together, we will make a dash for the closing bell. As we
continue at the moment, coming up next, "CONNECTING AFRICA," the market is putting on a bit of weight, not a huge amount but we are probably at the
best of the day so far, almost.
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QUEST: Hello, I'm Richard Quest. Together let's have a dash to the closing bell, just over two minutes from now.
The chairman of the Federal Reserve, Jay Powell, says it will take some unpopular measures to bring down inflation. The market shrugged off the
comments. But the Dow is now over 194 points. If you look at the last few moments, it's roared up.
Having been between red and green all morning long and, then in the afternoon, it's put on some real weight. The S&P, the triple stack and the
Nasdaq all struggled to stick to the trend.
But as you can see, now the Nasdaq is up 1 percent. So the day is ending up to the good overall.
Many people are joining gyms this year to make good on New Year's resolutions. Gym owners are happy with it. After working out at
Orangetheory, I spoke to chief executive, Dave Long, on whether the fitness industry can handle a recession.
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LONG: I think we are fortunate in that fitness, in general, has really shown nothing is recession proof. But it's shown over the last number of
recessionary periods to be very recession resistant and has grown through recessions.
So we really think with the, you know, consumers focusing more on health and wellness more really than ever before coming out of the pandemic,
they're really prioritizing spending on this type of product above other things that they might pull back a little bit on.
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QUEST: And the Dow components, there were no big movers in any direction. Visa was near the top, it was at 1.5 percent. Now that's gone to Dow
Chemicals, up 2.2 percent. American Express is up and it's all because KeyBank says, credit card stocks will keep doing well, as people use them
in a slowing economy.
Bottom there you've got Coke and Boeing, that is the way the markets are closed. I'm Richard Quest in New York. Whatever you are up to in the hours
ahead, I hope it's profitable. The closing bell is ringing on Wall Street. "THE LEAD" with Jake Tapper starts right now.
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