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Quest Means Business
US Inflation Falls Slightly To 6.4 Percent, Above Fed's Target; Delta CEO: Strong Demand Helping Offset Higher Costs; NATO Allies Vows To Arm Ukraine For Likely Spring Offensive; February's Busiest Airport Was Dubai; Tech Stocks Gain On Volatile Wall Street; Verity Teaches Kids Financial Literacy. Aired 3-4p ET
Aired February 14, 2023 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:34]
RICHARD QUEST, CNN INTERNATIONAL HOST: There is an hour left to trade on Wall Street.
Once again, we are here in Dubai.
The markets are interesting on the grounds of economic numbers. And as you can see sharp losses, a bit of green and now paring those losses as the day
moves on.
I need to explain all with the markets and the main events of the day.
US inflation is easing, but not as quickly as some had hoped, rates will go higher up.
Delta's chief executive tonight, Ed Bastian, tells me prices are increasing every class of costs you can imagine, and so fares are, too.
And the chief executive of Dubai Airports is here. DXP is crowned the world's busiest hub for international flights. There is a busy summer
ahead.
We are again live in Dubai where the clocks just struck midnight. For most of you though, it is still Tuesday, February the 14th, it is still
Valentine's Day.
I'm Richard Quest, spend your Valentine's Day with me as I mean business.
Good evening tonight from Dubai, where it is Day Two of the World Government Summit, which has just wrapped up. Today, attendees heard from
the UN Secretary-General, there was also the head of the World Health Organization, all of whom who spoke out on a glorious, if you will winter
summer's day where the temperature was getting a bit toasty, but not too hot. Tesla's chief executive, Elon Musk will be here tomorrow.
Back on Wall Street, there was only one story on everyone's mind, US inflation, which is slowing, but not fast enough and that seems to be the
consensus on Wall Street.
That dose of reality, as markets fell following the latest numbers this morning. CPI was up 6.4 on an annualized basis, in the 12 months to
January, slightly lower than the previous month, and arguably higher than many economists had expected. And the reason of course, the concern,
housing or shelter is one of the contributing issues. It is a so-called sticky categories, transport as well, and these sticky categories pose a
particular problem for Central Banks.
This graph, I want you to take a look, from the Atlanta Fed compares flexible prices, which react quickly to market conditions and sticky ones,
which are slow to change.
If you look at that graph, you see, the sticky inflation has not yet cooled off. Sticky inflation or entrenched inflation, embedded inflation, these
are all words that the Central Bank really loathes and doesn't want to sing.
Diane Swonk is the chief economist at KPMG. Diane is with me now.
This is the worst scenario in a sense because you can get rid of the cyclical stuff, and you can lower a certain amount of transitory stuff, but
the fear of Central Bankers is always sticky inflation, even wage inflation.
DIANE SWONK, CHIEF ECONOMIST, KPMG: Exactly, and I think what you have to really -- the markets are absorbing now is what the Fed has worried about,
and that is that battling inflation is a marathon not a sprint, it was easy to get from 9.1 percent inflation down to about six and a half, then move
down to getting it to be no longer distorting our behaviors and down to a little above two percent on the CPI. That is a much harder battle. We have
yet to hit the hardest mile of that marathon.
And history is just littered with Central Banks who failed to cross the finish line on that and left for a more persistent and corrosive bout of
inflation and that is something the Fed wants to avoid.
QUEST: Okay, but the 450-odd basis points of tightening we've already seen, what do you believe would be the rate of inflation that can take us
down to, let's say you get another two to two quarter point increases over the next couple of months. Is that sufficient to bring it down to target?
[15:05:17]
SWONK: I think it's going to be a tough call. my guess is they're going to have to have more rate hikes on a table, and when you see their March
forecast, the Fed will have actually more a trajectory of higher rate hikes with actually lower unemployment rate because unemployment has been
incredibly low.
I think what you're going to see is the Fed is really trying to hammer home the point of not just raising rates, but holding them there for much
longer, so at least five and a quarter percent on short term rates, probably five and a half percent, if not a little bit higher than that.
And through your end, because as inflation cools, that will further tighten financial conditions that real rates as we call them, will actually go up
and that is what the Fed needs to see is more of a cooling economy.
Of course, they'd rather not see a chill, but right now, we've got something like a simmering boil, which is still too hot, obviously for the
Fed or for anyone else out there.
QUEST: Now on this program last night, Kristalina Georgieva of the IMF said that the markets were not listening to when Chair Powell or Christine
Lagarde says we're going to do more. They only heard the good bits, they only saw numbers that suggested that it wasn't as bad as we thought.
Do you see a dose of reality arriving in the markets anytime soon?
SWONK: That's a great question, and absolutely, in fact, I wrote a piece called "Lost in Translation," because there was what Chairman Powell said,
and the one word the markets actually focused on, and that was disinflation, the word disinflation.
And I think you know, what disinflation means in economics term is that inflation is coming down, it doesn't mean that we've won the battle. And
that's what markets had heard was that the Fed had won the battle. And they might not even have to go as far as the Fed had thought, nor leave rates as
high as long as the Fed had thought, when exactly the opposite was true, that this part of the marathon has yet to be run, and we have yet to hit
that hardest now and we need to be able to get through it and cross the finish line.
QUEST: So does two things before we get to that last mile, first of all, doesn't unemployment have to rise in the US, because that gives you the
weakness, if you will, the slack in the labor market.
And secondly, if financial markets continue to rally, that negates some of the effects or they have to fall, too.
SWONK: Exactly, and that's the hardest part is that the Fed has been very clear, there has to be some pain, what they mean when they say some pain is
a rise in the unemployment rate. And we're at 3.4 percent unemployment rate today. That is terrific. That's great news.
But if it erodes living standards over time, and causes a more sticky, a more prolonged inflation, that's not good news. And that's what the Fed is
fighting against. And without other policies, like changes in immigration policy, more legal immigration, that's not going to be cured in any way.
Also increases in productivity growth could help that, but it's not going to be cured without those other things.
So I think it's very important to remember that the Fed has a very blunt tool, and that's hammering demand to meet a supply constrained world.
QUEST: Diane Swonk, Chief Economist at KPMG, I'm very grateful. Thank you.
The Chief Executive of Delta Air Lines a short time ago told me that Delta is seeing an extraordinary rebound. Strong travel is allowing them to raise
fares, and that helps offset higher costs across the structure.
The company, Delta, just announced a five percent raise for all its workers on Valentine's Day. Ed Bastian joined me and told me Delta employees
deserve to be rewarded.
(BEGIN VIDEOTAPE)
ED BASTIAN, CEO, DELTA AIR LINES: Our people are the ones that got us through this challenging time. It was an incredible year of creating
stability in the US air travel system, and now we're moving more globally as we end the year and going into 2023.
Cost pressures are considerable. There are cost pressures across every class of cost you could imagine, particularly commodity costs with fuel
prices, still meaningfully above anything that we were dealing with pre pandemic.
And as a result of that, we need to continue to be more efficient. We need to continue to ensure those costs of production make their way into
pricing, and they do. At the present time, the demand has also been strong. So to some extent, they are connected.
The inflationary pressures are partly due to the amount of money that is out there in the in the system that consumers are sitting with, which
enables us to continue to advance our revenues in terms of having price and keep up with those inflationary costs.
QUEST: You clearly do have pricing ability. You have the ability to recoup some of the higher costs of operations through the fares.
BASTIAN: Well, we need to, we need to. We can't justify growing our business, if we're not able to cover the cost of that growth and of that
business. We are seeing, as you know, an amazing rebound in demand on the consumer front. The demand we are seeing here in the US is unlike anything
I've ever seen in my 25 years in this business, and fares continue to be quite healthy because of that combined with the fact that it's also
difficult relative to capacity, the OEM challenges of getting new planes, the training requirements to get pilot staff properly.
So as a result of that, we're in a kind of a great equilibrium between supply and demand, which enables us to pass through those cost pressures in
terms of pricing.
QUEST: You were blunt, in your criticism of both bureaucracy in air traffic and navigation, and air traffic control from the bureaucratic side,
over the ATC failures. And at the same time, the infrastructure snafus that just prevent the US aviation industry from growing as perhaps it would like
to.
BASTIAN: The system is fragile. By the way, it's not just in the US, it's in Europe, it's in other parts of the world as well. Anytime you take a
system as complex and as large as the air traffic system globally, and essentially shut it down for the better part of a year and a half, and then
start to bring it back up again. It's hard.
It is hard on your people, it's hard on your customers, it's hard on the authorities, the regulators, so I think there is an element of -- we all
need to be understanding.
That said, we need to get the investments for the long term to improve the infrastructure. We're doing it with respect to our business model, we need
our government partners to be doing it with respect to infrastructure that we right on the backs of.
QUEST: If you look at your expansion, you've got the domestic network really up and running quite nicely now, and your main trunk routes, and
your main internationals are solid. So what do you grow? Which part of the world you like the look of?
BASTIAN: Well, the growth that we are implementing this year is to Europe. The Transatlantic, interestingly, despite some of the economic
challenges in Europe, we are seeing the greatest demand. Again, we've never seen even stronger demand to Europe than within the United States itself.
We'll be operating this summer, probably at 20 percent greater amount of capacity or supply across the Transatlantic than we did pre pandemic, so
you can see the significance of that.
The next thing clearly is China. We are all watching to see what is going to happen there. We know when China really does open up, there is going to
be an enormous amount of demand, both into and out of China and we are going to do our very best to be prepared for that.
QUEST: How have you done it, Ed? I mean, how have you managed to have these investment JVs, or smaller investments, merits in Mexico, or Virgin
which is a long one, and you've managed to make them work, and I'm not being unduly flattering to you, but you have managed to make them work,
whereas anybody who studied this industry knows that the history of one airline, buying a minority stake or an investment in the other usually
means you lose your shirt.
BASTIAN: Well, the investments that we made are not to invest in airlines for the sake of airlines. If that was the case, we would buy more of our
own airline and grow Delta.
We know international travel is the future. We know long term, the US marketplace is going to get fairly constrained over the next decade. There
are not new places to fly within the US or new markets. We're building bigger airplanes and maybe bigger airports, but the air traffic, the
congestion in the sky is going to restrict how much additional growth we can have.
But the world at large, that's our oyster. That's our opportunity. And by investing in our partners, we have a seat at the table inside the
boardroom, inside the management team of these companies to ensure that we are doing the right thing for our joint customers.
(END VIDEOTAPE)
QUEST: That's Ed Bastian, the Chief Executive of Delta Air Lines.
QUEST MEANS BUSINESS tonight coming from Dubai. As we continue, dwindling Ukrainian weapon stockpiles are cause of concerns says NATO as Russia
intensifies fighting across the frontline.
Now the Western Allies are in Brussels, and they are deciding and working out how much more to give Kyiv.
(COMMERCIAL BREAK)
[15:17:52]
QUEST: To Ukraine now where there has been intense fighting all day along the frontlines in the east of the country, particularly in the besieged
city over Bakhmut.
US officials now say the Russian assaults are making small gains. NATO says the Kremlin's latest push is only the prelude to a likely spring offensive.
And so to Brussels where the Western Allies discuss sending more military aid to Kyiv. This is the US Joint Chiefs Chairman Gen. Mark Milley.
(BEGIN VIDEO CLIP)
GEN. MARK MILLEY, UNITED STATES CHAIRMAN OF THE JOINT CHIEFS OF STAFF: Russia has lost. They've lost strategically, operationally, and tactically
and they are paying an enormous price on the battlefield.
But until Putin ends his war of choice, the international community will continue to support Ukraine with the equipment and capabilities it needs to
defend itself.
(END VIDEO CLIP)
QUEST: Today, Norway agreed to send eight German made Leopard 2 tanks to Ukraine, and it follows Germany expressing frustration with its EU partners
for dragging their feet on tank deliveries to Kyiv after months of pressure on Berlin to allow them to do so.
Aside from Germany and now Norway, only Poland has committed a substantial number of their Leopard 2s.
Our international diplomatic editor is Nic Robertson. He, tonight for us is in Warsaw. The underlying tone I hear is that Russia is making small
progress, but progress nonetheless.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: And what we are hearing from the Joint Chiefs, Mark Milley, who you mentioned just before
is send reinforcements if you will, we are going to advance. The Ukrainians also want to go on their offensive. Milley said the nations now,
contributing allies, 11 nations contributing tanks now, he said. Twenty two contributing fighting vehicles, 16 contributing ammunition artillery, and
other nine nations contributing air defense systems.
The key now is integrating all of that. Integrating their defenses, integrating training and it's that training that we went to see here in
Poland.
[15:20:10]
(BEGIN VIDEOTAPE)
ROBERTSON (voice over): After just a week of training, Ukrainian tank crew show off their new skills on a Polish gun range. The first time their
Leopard 2 training has been put on display.
The crews pulled direct from Ukraine's eastern battlefront.
(UNIDENTIFIED MALE speaking in foreign language.)
ROBERTSON (voice over): "Too soon to say what's best about the Leopard 2," Ukraine's tank trainer says, "But the machine is good quality and what
is most important, my soldiers like it a lot."
Their training fast-tracked, 12 hours a day, six days a week compared to the Polish standard, eight hours a day, five days a week.
Polish instructors say the Ukrainians will be ready in a month.
(UNIDENTIFIED MALE speaking in foreign language.)
ROBERTSON (voice over): "Most of them have some tank skills already," the Polish Brigadier in charge says. "They are so keen to learn, you have to
hold them back."
ROBERTSON (on camera): In peacetime, it is rare if ever that tank crews race through their training like this. It's a sign of how much they need it
at the frontlines that they're being accelerated through their Leopard 2 apprenticeship.
ROBERTSON (voice over): Poland's President who has been at the vanguard of pushing NATO allies to give Ukraine modern battle tanks and is sending
14 of Poland's came to meet the Ukrainian crews and see their progress.
His visit providing big publicity for Poland's commitment to Ukraine, and a flavor of what US President Joe Biden will hear when he visits next week, a
pitch for a Joint Tank Brigade.
ANDRZEJ DUDA, POLISH PRESIDENT (through translator): I hope that soon, the brigades will be ready for Ukraine and also includes American Abrams
tanks so that Ukraine can counter the Russian offensive.
ROBERTSON (voice over): The tanks and the training, only part of readying this new force for war.
MARIUSZ BLASZCZAK, POLISH DEFENSE MINISTER (through translator): The biggest challenge now is spare parts for these tanks. We are setting this
task to the German Defense Industry.
ROBERTSON (voice over): For the Ukrainian tank crews patiently parked up and waiting through most of the Polish President's visit, priority is
getting back to the war, even if that means the training is sped up.
(UNIDENTIFIED MALE speaking in foreign language.)
ROBERTSON (voice over): "I think that the training time will be enough for us to get to grips with the technology," he says. "We are lacking a lot
of heavy armor like this. If we get it, it will be much better."
On this training ground, perhaps more profound than tank skills honed, history in the making the foundations of a fully modernized NATO compatible
Ukrainian Army being laid.
(END VIDEOTAPE)
QUEST: Nic is with me. Now, Nic, the reality though, this hand wringing in Europe, first weeks of debate over tanks. Now Germany, if you will has
the chutzpah to criticize the others for not actually getting the tanks there when Germany delayed the whole thing in the first place. This has got
all the hallmarks of typical Euro indecision.
ROBERTSON: It has and this is I think what the Joint Chiefs of Staff Mark Milley and the US Secretary of Defense, Lloyd Austin were wrestling with,
this importance of getting everyone on the same page, this importance of integrating everything and working it together.
Richard, this is a work in progress, like Europe hasn't had had to handle in decades. They've got a war on their border. They're trying to stir up
and rally up all the fighting equipment needed. Their defense industries are sclerotic. They were never properly integrated. They were only ever
discussing that, and that was a years' long process in of itself. So this is the result.
Now you've got to make it work. So yes, it does seem that there is some bickering on the sides, but they're getting on with it. The Germans
committed to more ammunition which is again, which is a sort of a clarion call at the moment, send more ammunition because Ukrainians aren't getting
enough of it because NATO doesn't make enough of it.
QUEST: Nic Robertson in Warsaw tonight for us. Thank you.
I felt my next guest bristle as I suggested it was European indecision. Arancha Gonzalez Laya is the former Spanish Foreign Minister, and I could -
- you didn't have to say a word. As I said it, I could just feel it, but the reality is they are dithering. Yes, they are sending more but, they
need even more planes, tanks yesterday.
ARANCHA GONZALEZ LAYA, FORMER SPANISH FOREIGN MINISTER: Well, look Richard. Let's not get distracted, okay? A year ago, we said that we would
be there as allies together, the entire NATO family, from Turkey to the US, from Germany to Poland, Spain, Portugal, that we would all be there for as
long as it took.
[15:25:19]
LAYA: And a year later, we are there for as long as it takes.
Now, we decided at the very beginning that we would be at war, but we would not fight this war, and we knew that and we made this conscious choice.
QUEST: That is only the most impossible position to be in, because the escalation and the slippery slope argument drags you ever closer to
fighting it yourself.
LAYA: No, I think we are being true to that, but we also -- so when we know that we have a responsibility for not starting a big World War that we
couldn't stop, we know that we will be responsible. We will behave in a responsible manner, no matter how irresponsibly Putin is behaving, we will
do this responsibly.
But we'd also be responsible in supporting Ukraine for as long as it takes every step of the way, which is what we are doing, Richard.
QUEST: We are running out of ammunition, they can't manufacture it fast enough, because the rate at which the Ukrainians are going through it. The
tanks still not have arrived. Russia has such scant care for human life, it will just continue feeding the meat grinder, God forbid to the front.
LAYA: It is terrible.
QUEST: And they will make incremental gains, until eventually they overwhelm.
LAYA: Well, look, I mean, I'm not in the business of prediction, so I will not make a prediction, Richard. All I can say is that what I see is a
very clear and determined support from allies to Ukraine every step of the way and they are doing this in a responsible manner, and that they are
doing this to keep the country going and to help on the military front Ukraine win this war.
Now I know -- I know, it's very easy to say, oh, well, you know, they could do this and they could do that. I think we are doing this in a conscious
manner. We are doing this together, and more importantly, we are doing this together with Ukraine.
QUEST: Okay, but would it not benefit us and Ukraine to take a quantum leap? Instead of waiting for this incremental send-us-more-of-these-
missiles, now, we need these missiles, and now we would like those tanks. Why not just take an incremental route and sort of -- to choose a phrase --
knock it on their head. Let us sort of show we mean business?
LAYA: Yes, but look --
QUEST: That's nuclear weapons.
LAYA: Let us be clear also that we have a responsibility to make sure that we win this war without creating another World War, and you know,
maybe in Europe which has been the home of two World Wars, we will be more sensitive to this and maybe we understand that even in a war, you've got to
behave in a responsible manner.
Again, not been -- being there every step of the way with Ukraine, and yes, I mean, you know, we can get distracted by who said this and when would
this happen -- we are and this is the object of today's discussion, pushing all our equipment, ammunition, capacity to work, to churn as fast as we
can.
QUEST: Isn't this effectively turning into a proxy war? Because let's face it, Ukraine would not even be -- would not be in the position it is in
now if it wasn't for NATO support. So de facto, it is a proxy war?
LAYA: Well, look what we know, Richard, and let's also always go back to fundamentals is that there is a war that is there because Putin has taken a
decision to keep on going. The moment he will say he stops the war, this war stops, but he wants to keep on going, so we are all obliged to support
Ukraine, because the Ukrainian's war is also our war.
QUEST: The best -- I mean, we're talking about awful things, but the best part about that to discuss that is I'm sitting next to you, and not down
the line, with us interrupting each other because we couldn't get it because of a delay or whatever. It's lovely to see you. Thank you so much.
LAYA: Thank you, Richard. Thank you.
QUEST: And thank you always for being so generous with your time on QUEST MEANS BUSINESS. Thank you.
You heard earlier in tonight's program, the Delta Chief Executive said China's reopening is fueling optimism in the travel industry.
Dubai's International Airport, it cannot wait for more access in the reopening of China. How do I know? We will hear from the Chief Executive of
the airport in just a moment.
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[15:30:00]
QUEST: Hello, I am Richard Quest, we've got a lot more QUEST MEANS BUSINESS to bring you this evening.
The chief executive of Dubai airports will be with me. And I'll put my investing knowhow to the test with the CEO of financial literacy app Verity
will also be there. That could be a dangerous occupation for my wealth.
This is CNN and here on this network, the news always comes first. I'll update you now.
(MUSIC PLAYING)
QUEST (voice-over): A number of people have died in last week's earthquake in Syria and Turkiye is now beyond 41,000. The Turkish president Recep
Tayyip Erdogan says that the initial quake and its aftershocks were as big as atomic bombs. Hundreds of buildings in Turkiye have been damaged.
President Biden says that the U.S. must act to stop gun violence from ripping communities apart. He was speaking following a gunman killing three
students and hurting five at the Michigan State University. By one count, is the 67th mass shooting in United States this year.
Washington's former ambassador to the United Nations is now running for president. It's Nikki Haley and she's competing with her former boss,
Donald Trump, for the Republican nomination in the next presidential election. She says it's time for a new generation of leadership.
She was South Carolina's governor from 2011 to 2017.
U.S. officials say they have arrested four men connected to the 2021 assassination of the Haitian president Jovenel Moise. Three of the suspects
were accused of supporting a conspiracy to kill or kidnap him.
His death left Haiti in a power vacuum, allowing powerful gangs to expand territory and plunging much of the country into violence.
The oldest U.S. senator has announced she will retire when that term expires next year. Dianne Feinstein is a Democrat from California. She's 89
years old. She entered politics in the 1970s and was first elected to U.S. Senate in 1992.
[15:35:00]
(MUSIC PLAYING)
QUEST: 2023 is off to a flying start for the travel industry, Marriott shares jumped to an eight month high, as earnings beat expectations in Q4.
Marriott says the demand for leisure travel is surging. It's seeing more strength ahead and continues to rebound travel out of China.
Events like the World Governments Summit have been making the Dubai airport one of the most busiest. In January, it had the most international arrivals
and takeoffs as counted by airplane seats. Dubai is a major destination and an important stopover. It's a crosswords between Asia, Europe and the
beyond.
And it could be facing new competition. India just ordered 470 planes from Airbus and Boeing, one of its largest, intending to take on the powerhouse
Gulf Airlines. They've got a new CEO and he's looking obviously to make his mark.
Paul Griffiths is the CEO of DXB and does not look fazed in the slightest.
PAUL GRIFFITHS, CEO, DUBAI AIRPORTS: I'm not, Richard, good to be with you here as always.
QUEST: You've got everything back up and running, the pickup has been faster than expected.
But China's still not a player for you here?
GRIFFITHS: Well, it's coming back actually, they're now 25 flights a week to seven cities in China with five airlines. We are quite optimistic that
the rebound will be equally dramatic from China as it has been the rest of the world up to now.
A few other sluggish markets in East Asia but we're very comfortable. We are over the 6 million mark a month in terms of passenger traffic. I think
that we should be back to pre-pandemic levels before the end of the year, more than 7.4 million passengers a month.
QUEST: And the breakdown, of course, is interesting between those that are coming here and those going on and you need, to some extent, you need that
transfer traffic in order to pick up again. At the end of the day, Dubai has become a destination in its own right. The airport, though, is still
very much geared to a hub and spoke.
GRIFFITHS: The interesting thing is the point to point market, this is for arrivals and departures here, has grown as rapidly as the transfer markets.
Now what we're seeing is a slight shift toward the point to point market, where about 60 percent going to point, 40 percent transfer.
Whereas normally, we're about 50-50. And actually, in December, we've had 111 percent of the pre-pandemic direct point to point numbers that we have
had in the past. So it's actually recovered incredibly rapidly.
QUEST: The old argument, to build a new airport because DXB is landlocked essentially. Really, there's nowhere else for you to go. So your capacity
can only increase by new technology, mixed mode, all those sorts of things, which you do.
GRIFFITHS: Indeed we do.
QUEST: Is the new airport still important for you?
GRIFFITHS: Absolutely. And it will be the longer term solution that we need for growth. But I think the current DXB airport will currently be able
to accommodate about 110 million passengers. So there's still a bit of headroom for growth.
And as you rightly say, Richard, new technologies are playing a major role in increasing the flow through the airport, which of, course increases
capacity.
QUEST: What about the duopoly of DWC?
Making both -- I mean, the old idea, let's shovel the low-cost up the road to Dubai, is that still a viable, feasible policy?
GRIFFITHS: It is in the short to medium term. Because we're something like 93 percent full in terms of slot use --
(CROSSTALK)
GRIFFITHS: -- at DXB. So at some stage, if airlines want to expand, they will have to start using DWC. But in the longer term, we do need a new hub
for a long term expansion. And DWC is the way to go.
QUEST: Looking at the competitors in the region, I've said that the nature of aviation has changed. The center of gravity, if you will, has moved to
this part of the world.
But you have got hamat (ph) in Qatar, you have got Abu Dhabi and you're going to have a stronger react in the next five years, 10 years. And
they've got money to spend like the rest of us can't even imagine.
Are you worried yet?
GRIFFITHS: I think this thing is there's no room for complacency but I think the thing is, over the last 30 years, the actual shift toward
creating a hub in the Middle East was pioneered by Dubai. We've been the largest international airport in the world for the eighth year running now.
And we're determined to keep that number one place.
QUEST: AI has been talked of here greatly. AI Is very much at the forefront of the way airports in the future will operate.
How are you incorporating it, what more do you want to incorporate?
[15:40:00]
GRIFFITHS: I think the thing is, airlines and airports are plagued with legacy technology. We want to put all of that in the bin and create one
single process that does your immigration, baggage, check-in, ticket purchase, all of the other ancillaries.
And if we can put that into a single seamless process, you have done two things. You've improved customer service and increased capacity and
passenger convenience.
QUEST: I noticed in my weekend reading that the CEO job at London Heathrow has come up. Now it might not be the busiest in the world anymore, it might
not be this, that and the other, but it is still one of the great airports of the world.
So are you interested?
Straight answer, are you interested in becoming -- will you be applying to become the CEO of Heathrow Airport?
GRIFFITHS: I've already run an airport in the U.K. and, as much as I absolutely loved that job, when I got the opportunity to come to Dubai and
build the world's biggest airport, it was something that I still relish. So the answer, is I don't think so.
QUEST: All right. Thank, you sir, I appreciate it. Thank you.
We will be putting my financial knowledge to the test, my investment skills, if you will, Anna Stewart after the break. QUEST MEANS BUSINESS.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: Love me now, love me not, investors are indecisive this Valentine's Day. They were having a bit of a -- I won't say love affair -- but when the
market opened, the Dow did rise above the parapet and then it fell. Then it had a break open and came back together again, sort of.
Talking about inflation, the triple stack shows exactly the love me, love me not way of life at the moment. You have two are up, with a pretty strong
day on the Nasdaq. The Dow 30 is down.
Higher interest rates and the dawn of AI ushering in a new era. Anna Stewart is here. She's been talking to the tech and the CEOs at the World
Governments Summit.
What are they telling you?
You are so modern.
ANNA STEWART, CNN CORRESPONDENT: Well, I just like that my tablet is bigger than yours, Richard.
Size matters.
(LAUGHTER)
(CROSSTALK)
[15:45:00]
QUEST: It is Valentine's Day after all.
Try and raise the tone.
STEWART: Yes.
It's been great here, it's my first time at World Governments Summit. The panel discussions have been riveting, really very inspiring. Unlike many
summits, I think it's all about the panels here, both in the panels and outside, everyone is talking about AI.
Everybody is talking about what they are going to do with some of the latest tech, what are they going to do with data and regulation?
It's been pretty inspiring, I would say.
QUEST: But what have they said to you that inspired you as such?
STEWART: I think the most interesting panel I had today was about the future of Silicon Valley, which has taken a lot of airtime in terms of
share prices falling last, year huge job cuts this year. It's in a moment of transition.
I had a panel which had Stan Chudnovsky; until recently, Meta vice president of messaging. We had Jeff Harbach, Kauffman Fellows, and then we
had Gil Amelio.
Do you remember who he is?
He's about to turn 80 and he's the man, a pioneer of Silicon Valley, who turned Apple around. He's the man that brought Steve Jobs back.
QUEST: And what is he thinking about AI?
STEWART: He thinks it's definitely the future but his thoughts from Silicon Valley and where it is at right now.
QUEST: OK, but where it's at right now, people like you have made a huge noise about the number of job losses.
STEWART: Tens of thousands.
QUEST: But these are the same companies that employed hundreds of thousands extra staff at the beginning of the pandemic. I don't want to
make light of job losses but it has to be seen in that perspective.
STEWART: Well, whether or not there is too high of a valuation and I asked with their venture capital, Kauffman Fellows, representing that area, was
that at fault?
Did valuations get frothy?
Did they hire too many people?
I think the main message from what is the future of Silicon Valley's it's retrenching, it is not being repeated around the world. But Silicon Valley
is a concept, not a place. I think that's the best nugget that I got from Gil Amelio, when you look back at where it was, where it's going.
And that's the beauty of these panels, you get 20 minutes to delve into it.
Listen to what he said.
(BEGIN VIDEO CLIP)
GIL AMELIO, SAFE DYNAMICS; FORMER APPLE CEO: Silicon Valley is more of a concept than it is a geographical place. And it's time for that concept to
go global.
Everyone ought to have, every major sovereign nation ought to have their own Silicon Valley. And they should follow -- the history of what the real
Silicon Valley, the original did in the same ways of being cooperative, open, yet nonetheless competing at the end of the day for -- in an economic
sense.
(END VIDEO CLIP)
QUEST: Now I'm going to be talking about financial literacy.
STEWART: Ha-ha, the producer has --
QUEST: There's an app for children about financial literacy.
Go on.
STEWART: Your next guest is going to talk about, this. We've set a little test for you, Richard.
QUEST: Go on. We've got humiliation coming up.
STEWART: Question number one, what is the 50-30-20 rule?
QUEST: This is the percentage of your investment that you have in different things.
STEWART: Yes.
QUEST: But I can't remember what.
(CROSSTALK)
QUEST: 50 percent stocks, 30 percent bond, 20 percent cash.
STEWART: Interesting; 50 percent for your needs, 30 percent your wants, 20 percent to savings.
QUEST: Ah, budgeting.
(CROSSTALK)
STEWART: But I like what you are going with that.
(CROSSTALK)
STEWART: What happens to bond prices when interest rates rise?
QUEST: Oh, I'm trying to think. It goes the other way but there's a name for it. It's not inverted --
(CROSSTALK)
QUEST: -- the upside down way.
STEWART: I'm going to give you half a point.
(LAUGHTER)
QUEST: No. Don't give me -- inverse; it's inverse. Prices go up, yield go down, I will explain why someday when you and I have a very long time.
STEWART: What is the time value of money?
What is the time value?
QUEST: It is the cost of doing it versus the returns against it.
STEWART: You definitely score a point. Money today is worth more than money later on because money can be invested today. Well done.
QUEST: I'll be back after the break. I'm being conned here, conned.
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[15:50:00]
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QUEST: When I was growing up, the financial advice one got from parents was to look after the pennies and the pounds will take care of themselves.
Penny wise, pound foolish or things like that, put it under the mattress.
Well, that simply won't cut the mustard today. Now youngsters need to learn a lot more about the complexities of finance and only because it's so much
more available. So the Verity app is now an important way to teach children, especially on things like inflation.
The app, not the first but the latest, designed to help children learn how to manage their money and the importance of making smart financial
decisions on concepts like investments.
Omar Al Sharif is the co-founder of Verity.
Good to see you, sir.
Plenty of them, what's different about this?
OMAR AL SHARIF, CO-FOUNDER, VERITY: There are several things that are different. One, it's localized so it's from the region. So we have content
that speaks to the region and children from the region.
We are catering to children starting at the age of 8 up to 18 and the app itself caters for the whole family so we're trying to teach the children
but also help parents in understanding where this spending is happening and help them in teaching their children about savings, earning and all the
financial concepts that their children would need in the digital world today.
QUEST: What do you think is lacking?
I was joking, look after the pennies and the pounds will take care of themselves.
What is different today?
SHARIF: So we started at the time of the pandemic because a lot of the people around us basically didn't save and they were in financial trouble.
So we wanted to make sure that the children of tomorrow actually learn these concepts early on for them to be better adults later on.
So our motto is teach your children today what you have learned late.
QUEST: Learned late or never learned at all.
SHARIF: Exactly.
(CROSSTALK)
SHARIF: So we're trying our best to give them those concepts early on and teach them via the app basically which is an experiential.
QUEST: And how do you deal with things like interest, things like that?
Of course, those are different in this part of the world when they conform to Islamic banking, things like that.
SHARIF: We did introduce interest so far. What we want to do is to teach them the early basics, such as the difference between needs and wants.
[15:55:00]
QUEST: As I heard. We are -- I am busy constructing an investment wall for you and you're basically saying 50-30-20, needs, wants --
SHARIF: Needs, wants and savings.
QUEST: Needs, wants and savings, 50-30-20.
SHARIF: Yes. I learned it recently, so we're in the same boat.
QUEST: What's the biggest surprise you've discovered as a result of this process, the learning process of what children know and what they need to
know?
SHARIF: We thought that a lot of people would not know what we are learning is a lot of people actually want the product, they are using it
avidly, to creating saving goals and parents understand the importance of it.
We were overwhelmed by the amount of people on the app we have launched five months ago. Several thousand families are on the app.
QUEST: It is local, it was designed locally and it's been constructed recently.
SHARIF: The other thing is that it's very simplified and so when a child goes into the app, it's pretty easy for them to use. It's not a typical
banking that you have for adults and so children can actually navigate this easily.
QUEST: I think I might need the help of the simplicity myself, thank you.
The markets are down but that's because of inflation and worries about what's happening in that. We will explain that and after the break, we will
take a "Profitable Moment." QUEST MEANS BUSINESS. We are in Dubai.
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QUEST: Tonight's "Profitable Moment," you heard tonight Paul Griffiths of the airport and also heard about the tourism growth here in Dubai.
One of the fascinating parts about tourism is the way in which it has recovered. But there is so much more to be done. You'll have a feeling of
that recovery and the need to improve the tourism, the totality of it when you talk to the experts.
Tourism is going to be growing across the world but it can't get to its natural growth strength without China. China is still not a full player.
And then you have the environmental question, sustainability, flight shaming if you will, all the reasons that, again, people are questioning
whether they should go back on the road.
The beauty of an event like World Governments Summit here in Dubai is that nothing is off limits. We've been able to discuss these big issues of
tourism, of government, of AI, the limitations of AI, the issues of privacy and how it's being used. These are all matters which are real, relevant and
being discussed.
Dubai and the authorities here decided to start World Governments Summits 10 years ago. It's our last day broadcasting from it here. It was a bold
decision then and that has paid dividends ever since.
The market is down and that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in Dubai. Whatever you're up to in the hours ahead, I hope it's
profitable.
END
