Return to Transcripts main page
Quest Means Business
FOX News Parts Ways With Host, Tucker Carlson; Russia' Top Diplomat Chairs U.N. Security Council; Russia Using Shadowy New Shipping Scheme To Export Oil; Foreign Countries Race To Evacuate Citizens And Diplomats; BlackRock: Investors Need New Approach To 60-40 Portfolio; Fighting Between Rival Factions Now In Tenth Day. Aired 3-4p ET
Aired April 24, 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: We start a new week together and the markets are doing very little. I'm going to show you. There you go. Just up
The earnings season is underway. Markets are waiting for Fed direction, and with the summer nearly upon us, maybe a bit of nice weather. It all means
very little, really that is taking place at the moment.
The main events that we are watching: FOX News parts ways with its right- wing firebrand, Tucker Carlson, days after settling the huge defamation case.
Customers continuing to pull money out of Credit Suisse.
When it comes to the right mix for your portfolio, the earth is flat. BlackRock argues the old rules no longer apply.
We are live in New York, as you might expect, together, Monday, April the 24th. I'm Richard Quest back in New York, and I mean business.
There was an earthquake in the cable world today when FOX News announced Tucker Carlson is out. He was the network's top rated primetime host. FOX
News said the decision was mutual, and that Friday, that's last Friday was his final show. A source tells CNN Carlson was informed of the decision
Of course, last week, FOX News settled a defamation case with Dominion Voting that cost FOX $787 million, and Tucker Carlson was a key figure in
that. FOX shares were negative after the announcement for good reason, he was their number one anchor. They were down as much as five percent.
They've now leveled off roughly about three-and-a-half percent down.
Carlson attracted millions of viewers to FOX News. His primetime show often led US cable ratings. The right-wing host was known for embracing
conspiracy theories and extreme stances.
(BEGIN VIDEO CLIP)
TUCKER CARLSON, FORMER FOX NEWS CHANNEL HOST: Your response when you see children wearing masks as they play should be no different from your
response to seeing someone beat a kid in Walmart.
Neither Lisa Eisenhart nor her son damaged any property to the Capitol or committed any violence, they just walked in to what we used to refer to as
the People's House.
The Democratic Party is trying to replace the current electorate, the voters now casting ballots with new people, more obedient voters from the
third world, but they become hysterical because that's what's happening actually.
(END VIDEO CLIP)
QUEST: Sara Fischer is in Washington. So, we don't really know how tied this was to the defamation case, but he is a very big whale to be sort of
SARA FISCHER, CNN MEDIA ANALYST: He's a huge whale. He is not only the highest rated host on FOX News, but he's also one of the highest rated
hosts in all of cable television, and the important thing to remember about Tucker Carlson is that, even though you know, we had that settlement occur
last week, this is happening so close to when that settlement happened, it is hard to think that, you know, what happened with Dominion is not
absolutely linked to this.
A couple things to note, though. One is that there are still lawsuits that are pending with FOX News. Smartmatic has a $2.7 billion lawsuit against
the network, but then two, FOX is entangled in a legal brawl with one of its former producers, and she has said that there is outstanding tapes that
allege some of the guests that they put on their programming knew that what they were saying about Dominion Voting Systems was wrong.
And so, there could be other shoes to drop and I think that may have influenced why Tucker Carlson was fired abruptly today.
QUEST: Right. Now, it says it was by mutual consent, or at least he has agreed to go, which does suggest he has been paid off.
FISCHER: Well, you would assume so. He is one of their highest paid anchors, so I'm sure he negotiated some sort of a deal. But think about it,
from FOX's perspective, it makes sense, even if it was a costly payoff. They've got, as I mentioned, these other lawsuits on the way and you don't
really know what other shoes are coming.
You know, there are some parts of the materials that came up during the pretrial discovery period that might be redacted and they might show other
damning information coming out.
You have this pending lawsuit, and so it makes sense, if they did, in fact pay Tucker Carlson on his way out the door, which it makes sense that they
would, that the network would go that route. But one thing I want to know is that, this is not happening in a silo.
You know we've had a lot of reckonings in cable news in the past 24 hours. You had NBCUniversal CEO, Jeff Shell get fired abruptly after admitting to
an inappropriate relationship with a co-worker. You had Don Lemon of CNN, who was abruptly fired on Monday as well. And so it feels like this entire
industry is going through a huge reckoning at the moment.
QUEST: Right, but there is no -- and let's talk about Don Lemon for a second. It was a shock to everybody here when it was announced, and a bit
like Tucker Carlson, in a sense, neither of them have been given any warning.
I mean, Tucker Carlson said, I'll see you on Monday, and he never came back. Don Lemon sort of did the show this morning, and that's that. Well,
what's behind the Lemon?
FISCHER: Well, CNN is pushing back on sort of the abruptness of it. You know, they're saying that the way that he has portrayed it being so sudden
is not exactly accurate. But my sources are telling me is that, you know, the network and Lemon had agreed on something mutually, and that, you know,
he kind of came out with a statement earlier this morning that made it seem a little bit more abrupt.
But you bring up a good point. I mean, neither of these big anchors have been able to sign off to their audiences and tell them exactly what
happened, and I think part of that is because these were very rushed, and unexpected firings, generally speaking, regardless of whether or not one
anchor had more heads up than another and that puts both networks in a precarious position.
CNN has not announced a replacement for Don Lemon on its morning show. Of course, FOX News has not announced a replacement for Tucker Carlson in the
QUEST: For both of these cases, the replacements -- I mean, these anchors didn't have minor jobs. Their roles in their airtime were tent poles in a
network's daily schedule.
Now CNN already has sort of had issues in the later hours. Now, it's got an issue at the beginning -- in the beginning of the day. FOX has got an issue
now at 8:00 PM, I believe so, so what happens?
FISCHER: Well, for CNN, it's a little bit easier, because there are still two co-hosts. You have Poppy Harlow and Kaitlan Collins, who can continue
to carry the show. They have rapport with producers, et cetera, so that transition will go a little bit more smoothly.
For FOX, this is going to be a difficult hole to fill. I mean, that was one of their biggest primetime shows, one of their biggest shows, and I think
without Tucker Carlson, they're going to have to figure out how they can come up with something that's going to be just as popular.
QUEST: So what do you make of it all? I mean, you'd be looking at this, and you saw -- it's been like the old joke, you know, no big story comes along
and then three come along in a day. What do you make of it all?
FISCHER: This is a very difficult time for cable news and cable shows in general, because streaming has really eaten into people's ability and
willingness to pay for cable packages. And so what you're seeing now is, there is this weight of accountability that's being held across all of
these top dogs at these networks, and it is happening at a time when these companies are very pressed financially, from a business perspective.
That pressure combined means that this industry is going through a reckoning right now, and I think what to watch in the next few months and
few years is, we already know there's a lot of consolidation between networks, but if you're pulling out some of the big bosses and some of the
big hosts, that complicates some of these next steps even further.
QUEST: Excellent to have you with us on a difficult day. Sara, thank you very much.
FISCHER: Thank you.
QUEST: Now, Russia, a country that invaded its neighbor is now in charge of the UN Security Council for the month, it is a rotating position, and it is
Today, Russia used the post to slam the West and call for a new global order.
It was the Kremlin's top diplomat, the Foreign Minister Sergey Lavrov, who vented Russian grievances at the council's meeting in New York and he
claimed Moscow has upheld the UN's ideals.
(BEGIN VIDEO CLIP)
SERGEY LAVROV, RUSSIAN FOREIGN MINISTER (through translator): As was the case in the Cold War, we have reached the dangerous, possibly even more
dangerous threshold, the situation has worsened with the loss of trust in multilateralism, when the financial economic aggression of the West is
destroying the benefits of globalization, when the United States and its allies are abandoning diplomacy and demanding clarification of relations on
And this is all done in the halls of the United Nations, which was created to prevent the horrors of war.
(END VIDEO CLIP)
QUEST: Richard Roth is at the United Nations, and Richard, you've spent more years than is honest or decent at the United Nations.
This must have been surreal. You've seen some strange things in your time there, but this must have been very odd.
RICHARD ROTH, CNN SENIOR UN CORRESPONDENT: Yes, it seems to be an odd day everywhere in the world, Richard, today.
The Russian ambassador is the foreign minister. He was here for more than a decade, so he is quite comfortable even being very isolated at that
Security Council table.
In response to his remarks, some of which we've just heard US Ambassador Linda Thomas-Greenfield held up the United Nations Charter, which the
organization was established under and denounced Russia for its cruelty to the Ukrainian people and also to those Americans who are being held.
(BEGIN VIDEO CLIP)
LINDA THOMAS-GREENFIELD, US AMBASSADOR TO THE UNITED NATIONS: It has violated international law that includes the wrongful detention of American
citizens -- Paul Whelan, Trevor Reed, Brittney Griner, and now Evan Gershkovich.
Trevor and Brittney are now thankfully home safe and sound, but Russia has imprisoned Paul Whelan and now detaining Evan Gershkovich to use as
political bargaining chips, human pawns.
Paul was simply in the wrong place at the wrong time. Evan is a journalist, he was just doing his job.
(END VIDEO CLIP)
ROTH: Paul Whelan's sister, Elizabeth spoke to the press corps outside the Security Council chamber, she did go into the meeting, she may have some
phone contacts or in-person meetings set up with Lavrov. It is unlikely, but Lavrov is here for an additional day.
He is chairing the Security Council meeting and says president in front of his name, and they still play by their old traditional rules here.
QUEST: So does anything get done at the council during -- I mean, I mean, I realize, it does get done, but was there any temptation to boycott it or
not to take part in it? Or how else does -- do the other countries register their protest at this?
ROTH: They've all done them. The Russians led by Vladimir Putin just really ignore them, don't think they're worth responding to.
Lavrov would like to presumably continue this grain deal with Ukraine and the United Nations as a broker, that'll be the subject of a meeting that
went on today between the Secretary-General and Russia.
But as your point is, it is sort of a bewilderment here of how Russia is the president of the Security Council, which is designed and set up to
protect safety and security in the world.
QUEST: Richard Roth at the United Nations. Sir, grateful.
Western sanctions are forcing Russia to change how it exports its energy. Oil that would normally go to Europe is going to Asian markets much further
away, and getting it to Asia, along with sanctions and all the other restrictions that are now in place means Russia has assembled a fleet of
so-called grey tankers.
CNN's Clare Sebastian has been looking at them.
CLARE SEBASTIAN, CNN CORRESPONDENT (voice over): This calm blue sea of Southern Greece now a new hub for Russia's oil trade. Taken in mid-March,
this satellite image shows oil tankers arranged in pairs. Experts say most of them involved in a cargo transfer.
Data shows transactions like these have surged in recent months. This year on average, five times more per month, dotting the picturesque waters near
Greece's Kalamata Port compared to 2021 according to cargo tracking firm, Kpler.
MATTHEW WRIGHT, SENIOR FREIGHT ANALYST, KPLER: It has sort of become a ship-to-ship hub, where smaller vessels come in from Russian ports, they
transfer the cargos onto larger vessels, and then those larger vessels will head off through to Asia.
SEBASTIAN: Matthew Wright says the rise in ship-to-ship transfers is part of a big shift in shipping patterns.
A European Union ban on most seaborne Russian crude oil and refined products means Russian exports now travel much longer distances to reach
Asian customers, and he says while smaller vessels are better for docking at Russian ports, they're not ideal for long-haul voyages.
WRIGHT: You can see the fact that it has loaded HSFO, which is fuel oil.
SEBASTIAN: Those sanctions have also given rise to what Wright calls the grey fleet tankers sold since Russia's invasion of Ukraine, and his data
shows exclusively now transporting Russian oil or refined products as some Western shippers started to avoid it.
SEBASTIAN (on camera): Using tracking data and corroborating with experts, we were able to pinpoint one of those grey fleet ships in this image. Here
it is, that larger vessel, and we traced this apparent transaction back in time.
The smaller vessel docking in St. Petersburg in late February where according to Kpler, it picked up a cargo of fuel oil, then we tracked it
all around Western Europe and back here to the Mediterranean, the Greek Coast at which point Kpler data shows it unloaded its cargo onto that
larger grey tagged ship.
SEBASTIAN (voice over): That ship then transited the Suez Canal, apparently enroute to Asia.
WRIGHT: It is not illegal what they're doing. It's essentially a story of the transfer of ownership.
SEBASTIAN: Oil tanker sales have surged in the past year and among them, Kpler says that same tanker. Here it is again tracked to the Russian port
of Novorossiysk in December.
Think tank, VesselsValue, estimates 105 tankers of a similar size changed hands in 2022, double the volume of the previous year.
It also says around a third of sales this year were to newly formed companies or undisclosed buyers.
At the International Maritime Organization in London, that shift in ownership, reinforcing safety concerns around ship-to-ship transfers.
FREDERICK KENNEY, INTERNATIONAL MARITIME ORGANIZATION; We are unable to determine the level of compliance with the IMO safety and environmental
The worst case scenario would be a casualty where a transfer line breaks and you have a major spill or you have an explosion and fire.
There is a myriad things that can go wrong in a ship-to-ship transfer.
SEBASTIAN (voice over): It's a situation that's not going away as Russia's war redraws the global energy map, creating a new logistics system
increasingly controlled by lesser known players and loaded with potential risks.
SEBASTIAN (on camera): This is not something that's happening on a small scale. The estimate from Kpler right now is that the grey fleet numbers
around 400 vessels. Russia according to one international shipbroker to CNN needs four times the amount of shipping capacity now than it did before the
war to cover those longer distances to Asia.
So this is new players coming in spying a commercial opportunity in this tighter market. Now right now, experts are telling us they're not seeing a
lot of evidence of so-called dark activity that may accompany sanctions evasion, things like ships turning off their transponders, things like
that, and that may be because the price of most of Russian oil has largely stayed for any some of the past few months below the G7 price cap.
Of course, if oil prices go higher, that could change -- Richard.
QUEST: Clare Sebastian in London.
As we continue tonight, Bed Bath & Beyond, a staple of the High Street. Well, investors snapped up the stock during the meme craze, now, it's gone
bankrupt. The shares are nearly worthless, but will Bed Bath & Beyond continue to survive after Chapter 11, in a moment.
QUEST: Bed Bath & Beyond, the staple of the retailing sector in the US is now trading at 20 cents a share following its filing for Chapter 11 this
weekend, a rough ride for investors.
Now here is the stock since its IPO 30 years ago. Shares peaked at $70.00 and before falling steadily, it has enjoyed a bit of a resurgence as a meme
stock, if you will, but those gains didn't last as you can tell.
And some of you may remember, Bed Bath & Beyond from the Adam Sandler film in 2006, "Click," where he suddenly gets a remote that lets him skip
Bed Bath & Beyond shareholders might want exactly the same thing today.
Rahel Solomon is with me.
I have got so many things in my kitchen and my bathroom, and indeed across the apartment that I have bought at Bed Bath & Beyond. Are they likely to
survive Chapter 11?
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: It's unlikely, and if they do, they will likely be a shell of themselves. I mean, analysts have said today
that they could perhaps emerge as an online only operator.
But Richard, as you know, where there is weakness, there is also strength. So this will also benefit some other retailers, the Walmarts of the world,
the Targets of the world, and of course, their shareholders.
There are also retailers who stand to benefit from the retail space that we are likely to see come on to the market. So it is certainly the end of an
era, and I should also say that I too have lots of bedding, lots of towels, pretty much everything under the sun from Bed Bath & Beyond, so it is the
end of an era.
QUEST: It is, and you talk about the retailing. Now, there's one just around the corner from me where I live in downtown Manhattan, it's a quite
a large store. They spent a lot of money two years ago renovating it, but it's a huge footprint and I wonder when that's gone, who fills those sorts
SOLOMON: Well, actually, what I understand is that they've already lined up tenants, right? Because what we've actually seen is after the financial
crisis of 2008, developers were slow to build up massive commercial real estate. So, there's not a ton of supply right now.
And yet, for companies like Planet Fitness, for companies like TJ Maxx, which is also a similar retailer, for our international audience, for other
companies who are attempting to do quite well right now, it actually presents a bit of an opportunity.
So in that retail space around the corner from your apartment, Richard, you might see a Home Goods, for example; you might see a Planet Fitness, for
example. And so there certainly seems to be some winners who might take advantage of the fact that suddenly there is this commercial real estate at
a time when perhaps it was harder to find.
QUEST: Rahel, thank you.
US markets are flat ahead of key earnings this week. You've got Microsoft, you've got Alphabet, which of course is Google's parent company. I still
can't get used to that one. And they are announcing results tomorrow. Meta, which is Facebook, (foreign language) will follow on Wednesday, and Amazon
which is still Amazon for now, they haven't changed their name, on Thursday.
First Republic stock is up 10 percent ahead of its earnings, and the bank shares lost more than 85 percent of its value since last month's banking
Credit Suisse says people are still taking money from the bank, despite its pending takeover by UBS. Well, maybe it's -- but probably its last earnings
report, Credit Suisse says customers withdrew more than $75 billion in deposits during Q1. Outflows have since stabilized, but they're still
And another struggling bank, First Republic is set to announce after the closing bell. Deposits had to be shored up by some of the largest U.S.
banks, you'll remember, they all invested.
Our global economic analyst, Rana, she is with me now.
Rana, so now look, Credit Suisse, when I see the numbers, it becomes absolutely clear. What is it, I can see. I've got to find here.
The amount of money $68 billion in Q1. You can't -- no bank, no bank and on top of $121 billion in the last Q of '22. No one can -- no bank can
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: No. I mean, you know, UBS, which of course bought Credit Suisse on the cheap is probably scratching
its head and thinking, boy, what are we going to do with this?
And it reminds me a bit, Richard of JPMorgan acquiring Bear Stearns for a deal, you know, back post-2008, and then having to deal with years of
problems and integration of that bank.
You know, I mean the FT actually reported that, I think the majority of lawsuits that JPMorgan deals with are still from Bear Stearns. So, this
Credit Suisse situation just says that, you don't trust what bank executives say in the middle of a crisis. They said that the losses were
stemmed back in December, they weren't.
I think it is going to be very, very hard to turn this lemon into lemonade.
QUEST: Right, now grande elegante, I move from your views on Credit Suisse to your latest article in today's paper, which is about Apple.
Now, you're dancing around here because you make it clear that Apple is not wanting to be a proper bank per se, but it is getting as close as possible
with an entire range of banking, I mean Bank of Apple?
FOROOHAR: Well yes, and I mean, Richard, years ago, I had an interesting conversation with Carl Icahn, where he had said -- this is when he's still
owned the stock and was saying, you know, Apple should be a bank, it's got so much cash on the balance sheet.
The point that I was making in my article is, yes, it does have a lot of cash on the balance sheet. Still, even though it's been decreasing in
recent quarters, relative to any bank, if you think about the banking business model, it is essentially to take deposits, which we now know can
come and go much more quickly than we like to believe, and to use those to lend out.
And bank CEOs often make the mistake of thinking about those deposits as permanent assets on their balance sheet. They can go, that's what we saw
with Silicon Valley. That's what we just saw with Credit Suisse in the wealth management division, and Apple is in a different position.
Now whether it will stay in that position or keep running down its cash balance and look more and more and more like a bank doing more leveraged
deals remains to be seen. But right now think about it. I mean, all that convenience in your phone, pretty good deal for a banking customer.
QUEST: And of course, as you moored now, the trust bit, the times we touch our phones and therefore, but there's a difference, Rana, between what I
would describe as good old fashioned banking, taking deposits, making small loans, the mom and pop stuff banks.
FOROOHAR: Does that exist anymore? Not sure it does.
QUEST: Well --
FOROOHAR: I don't know who is doing it.
QUEST: No, but that's essentially what happened. You know, it is when they start doing leverage.
QUEST: Mezzanine finance.
QUEST: When they start going into the bigger stuff, that's when they get into trouble.
FOROOHAR: Well, yes. But yes and no, I mean, I feel like one of the lessons I've taken from Silicon Valley is okay, this, this bank made some bad bets
about where interest rates were going to go, but it also counted on its depositors to be there and that's not necessarily some kind of, you know,
trading in wild derivatives, that's just a bad assumption that a lot of banks make.
And I still think that banks should be better capitalized than they are. I mean, I really think that we should go back to the era of, you know, the 15
percent cash and cash equivalents on the balance sheets not you know, six, seven, eight percent. That's a whole another discussion, but you know, I'm
from the Midwest, Richard, I'm a bit conservative.
QUEST: I've got to finish. There is too much there for me to just go at. We will have to do it -- the Bank of Rana, there we go the Bank of Rana. Start
FOROOHAR: Yes, "It's A Wonderful Life," Richard.
QUEST: Talking of that, by the way, I was watching that movie on a plane, the Bank of Dave -- what was it? The bank of --
Anyway, I'll think it before the end of the program. It's a very good -- it is a good film.
Now, somebody is going to tweet me and tell me what the name was. Thank you, sir. Bank of Dave. Bank of Dave.
FOROOHAR: Bank of Dave. Yes.
QUEST: Bank of Dave, it's about a bank in the UK, which literally did that, would take money in, will lend it out to local people.
Look, I've digressed --
FOROOHAR: What an idea. Yes. All right. Well --
QUEST: There is something novel. I have no doubt somebody will manage to screw it up.
FOROOHAR: You know, you may be right, which is why you need more cash on the balance sheet.
QUEST: Oh, no. Not look to Basel again. All right, thank you Rana. Bye- bye.
Coming up. Whether you've got cash or not, BlackRock says the traditional investing approaches may not serve us so well. We will get key earnings
this week, in a moment.
QUEST: International Exodus is now underway in Sudan, as one of Africa's largest countries descends deeper into violence. Fighters is raging 10 days
now in the army and a powerful paramilitary force. There is no end in sight. So, countries are racing to bring home their own citizens.
David McKenzie is in Johannesburg. David, the position in the country is very dangerous. But it seems like the Exodus and the evacuations are also
DAVE MCKENZIE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Richard, I think they're definitely chaotic. If you come from a wealthy nation like the
U.S., if you're a diplomat of that nation, you have SEAL teams and experts coming in, in choppers to spirit you out. If you're an American who doesn't
fit into that category, you're still likely waiting to try and get out of the country. There have been attempts by multiple rich nations to get
And other nations and the U.N. has gotten out at least 700 staff dependents, Richard and also international NGO members leaving their local
staff largely behind. Despite that the U.N. Secretary General says they are not abandoning Sudan. Take a listen.
(BEGIN VIDEO CLIP)
ANTONIO GUTERRES, U.N. SECRETARY GENERAL: Let me be clear, the United Nations is not leaving Sudan. Our commitment is to the Sudanese people in
support of their wishes for a peaceful and secure future. We stand with them at this terrible time. We must all do everything within our power to
pull Sudan back from the edge of the abyss.
(END VIDEO CLIP)
MCKENZIE: And that pressure on the generals that you mentioned, Richard doesn't seem to be having any effect at this point. There's still been
extensive bombardments and fighting in the Capitol and elsewhere just today. Richard?
QUEST: So, the U.N. Secretary General has called for peace. The Pope over the weekend, referred and called for peace. Is there any broker who can get
these two sides to stop fighting be -- I mean, that the place is hardly, you know, I mean, it's not exactly luxurious to begin with. And now it's
literally being destroyed into rubble. Is there anyone who has the power to stop them?
MCKENZIE: Well, I think that -- I mean, it's stating the obvious, but the generals have the power to stop it, Richard, and the issues that led to
this very intense and tragic fighting on the eve of handing over power to a civilian government or civilian transition. Those issues still remain. The
big sticking point in negotiations was how to fold in the rapid support forces and the general leadership of Hemedti as he's known into the
That issue was kind of pushed aside or set aside while other issues were ironed out. Some are criticizing the U.S. and U.K. and other mediators kind
of moving along without that major issue being figured out. Ultimately, it's up to these generals to stop the fighting. But as you know, once the
actual fighting starts, it makes clawing back from that even more difficult. And the power how hungry military elite in that country, we have
a great deal to lose both financially and politically by transitioning to the civilian government rarely seem to just want to fight it out to see who
And in the meantime, the country could be destroyed. Richard?
QUEST: David McKenzie, Grateful to you. So, thank you.
Now, I've got some bad news for you. The world is not round, it's flat. Well, the financial world is because that's sort of the effect after
BlackRock said, investors need a new approach to how they build their portfolios. The traditional 60-40 portfolio, 60 percent stocks and 40
percent bonds. Well, we've all been brought up with that. And you've all been told to rebalance as you get older. Now, historically, a stock prices
would fall bond prices rise.
It's a natural hedge that took place. BlackRock believes today, Central Bank's raise rates and keep them higher that relationship is breaking down.
Jean Boivin is the head of Blackrock Investment Institute. He joins me now. Sir, this is -- this is an earth -- this is an earthquake that you're
suggesting. 60-40 is no longer the way forward. What do we do instead?
JEAN BOIVIN, HEAD, BLACKROCK INVESTMENT INSTITUTE: Thanks for -- thanks for having me, Richard. Great to be here. So, first thing, I mean, yes, we need
a new playbook in this environment. We don't think that the last 40 years prior to 2020 will be a good guide for what's ahead of us. That said, it
doesn't mean that the 40 allocation to balance and 60 is broadly wrong.
What we really mean by this is that the simplistic approach of simply like, you know, getting an allocation broadly to a broad index of that bonds and
a broad index of equities and sitting there, you know, setting and forgetting will likely not be working as much as well as it has in the
past. And so, we need to -- we need to approach that differently going forward.
QUEST: So, the -- you're -- the idea of just 60-40 in a broad -- a broad- based index fund on both sides. But now you're saying we need to prefer more granular digging into sectors like energy and healthcare, selecting
those, you know, cashflow that better whether recessions. You want a portfolio that favors income, but at the same time, gets into the nitty
gritty of underneath it. How do you do that?
BOIVIN: Yes. So, you know, if you look at after the global financial crisis, whatever you did, basically, like you could have been 40-60, 70-30,
80-20, you know, you cannot get really wrong. I mean, you couldn't go wrong really. I mean, they were all delivering quite good returns overall. And
the reality is that we're in a world where everything was, you know, we had a market and everything during that period.
And whenever things were getting a bit sour, then you could count on central banks to come and to the rescue. And so, that prevent -- provided a
very favorable environment for a simple simplistic allocation like 60-40, again, in this simplistic form -- simplest form. But we're talking about
now going forward is that might not be a crazy starting point. But you will have to do more than that to be able to generate return.
We need to be more granular. So that means you need to not simply look at broad market exposure, you need to think a bit harder about thematic
sectors, countries and so on will be more important searching for relative value will be more important going forward. And moreover, you will need to
also be more nimble, you know, it will change more quickly. And again, you know, setting and forgetting is not likely to be a recipe like it has been
over the last (INAUDIBLE)
QUEST: So, I can -- I can have the dear viewer watching saying this is all great stuff. Glad to know about this. How do I do it? Because, you know, I
would normally go and, you know, I mean, I realized at the professional level, it's very different -- it's very easy in the sense of, you know, you
have the facilities but for the person who's now got to manage a 401(k) or retirement defined contribution pension. What are they do?
BOIVIN: So, one of the things that's going to be required in our view is that, you know, when you think about an allocation for next five years,
you're going to need to go back and revisit your allocation more frequently than you would have had in the past. You need to think about relative value
opportunities that arise. So, right now we think, you know, if you think about inflation, which is a very significant story of this moment, it leads
to some more granular view between like inflation index bond versus nominal bonds.
And something you didn't have to really worry. For now (INAUDIBLE)
QUEST: I just want to jump in because before we finish to us, you also got another report I read you, the variety of assets that one should include.
Now, there's always been this idea, I'll put four or five percent in gold because of balanced portfolio. But I imagine as a 60-40 goes, then you are
looking at crypto gold, even commodities to sort of balance out the portfolio.
BOIVIN: Yes. I think one thing that, you know is a massive story right now is that you just think about cash. Cash is yielding, you know, four or five
percent depending on how you implement this. Something that, you know, for the last 15 years before there was more like, you know, zero. So, that is
already making the bar for your certification much higher. You can already generate that kind of income just by sitting on cash.
And now you need to think about much harder about how you redeploy the rest. And that's another game changer in this environment. That's why we
favor like short duration bonds. And this juncture needs to think about other asset class across the spectrum. That's simply just the broad, you
know, equity and interest and bond allocations.
QUEST: Very interesting. Thank you, sir. Glad that you --
BOIVIN: Thank you very much.
QUEST: -- talked about that. Very appreciated. I'm going to show you the markets and how they are trading at the moment. We're down -- well, we're
up 42 points. And that's QUEST MEANS BUSINESS. I'll be back at the top of the hour. We'll make a dash for the closing bell. World of Wonder is next.
QUEST: Hello. I'm Richard Quest. Together we're going to have a dash to the closing bell. It's just about a minute and a half from now. Investors
appear to be waiting and seeing because there's so many major tech earnings. The Dow is going to be almost the best of the day but it's up
really 62, 63 points. As for the triple stack, you're talking about essentially flood except the NASDAQ but that is only off a third of a
The reason of course the wait and see Alphabet, Amazon, Meta, Microsoft all reporting over the course of the next few days. Looking at the Dow
components and you have Chevron which is at the top. Don't see that too often. 1-1-3 percent. Caterpillar is actually leading and that's on of
course infrastructure and in do to report on Thursday.
Disney's little change as it begins a new round of layoffs. And the techs are weighing heavily on the market. You can see them at the bottom end of
that. IBM, Microsoft, Intel, all lower. Salesforce is of just over two percent. You get the idea of the market. It's very much wait and see small
movements that will change though in the days ahead as we get those result.
That's the dash to the bell. The closing bell on Wall Street is just about to ring. I'm Richard Quest. Whatever you're up to in the hours ahead, I
hope it's profitable. That closing bell is ringing. "THE LEAD" with Jake Tapper begins now.