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Quest Means Business
FED, FDIC Release Reports On Bank Collapses; First Republic Stock Drops Amid Reports Of Rescue Talks; Amazon Trades Lower On Weak Cloud Outlook; BBC Chairman Resigns After Conflict Of Interest Review; U.S. Police Departments Use A.I. To Analyze Bodycam Video; Source: Mike Pence Testifies In Front Of Federal Grand Jury. Aired 3-4p ET
Aired April 28, 2023 - 15:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ELENI GIOKOS, CNN INTERNATIONAL HOST: The Dow Jones currently up almost 200 points where half a percent to the good and it looks like the Dow is going
to have its best month since January. We've got economic data that's come through, corporate earnings dominating investor sentiment. Of course, a lot
of worries in the banking sector still coming to the fore.
Well, those are the markets and these are the main events: The Fed finds fault in its own oversight of Silicon Valley Bank.
Amazon rattles investors with a warning about its cloud business.
And the BBC Chairman resigns after report says he breached impartiality rules.
Live from Abu Dhabi, it is Friday, April 28th. I'm Eleni Giokos. I'm in for Richard Quest, and this is QUEST MEANS BUSINESS.
A very good evening. Great of you to join us.
And tonight US regulators are blaming mismanagement and their own weak supervision for the recent collapse of two banks. The Federal Reserve and
the FDIC really separate reports on the failure of Silicon Valley and Signature Banks. The crisis rattled confidence in many regional and midsize
lenders and raised questions about the adequacy of US deposit insurance.
Now, the Fed reports and lists four main reasons for the collapse of Silicon Valley Bank. Let's go through them.
First, it says bank managers did not effectively mitigate risks. Second, it points the finger at itself saying Fed regulators did not fully understand
the extent of the bank's problems, and once they did, supervisors did not do enough to make sure the bank fix them.
And finally, the Fed blames Congress. It says loosening bank regulations in 2018 in the way of strong supervision. So these are the reasons that the
report states and this is going to be quite important in terms of ascertaining what this is going to do to the rest of the banking sector,
what rules and regulations we see being activated in place.
And Rahel Solomon is with me, perhaps you can give us a little bit of insight. I think what is quite important here and I think we've spoken
about this before, the loosening of the regulations playing a big role here, but it was a confluence of reasons, and one of those was the Fed not
doing enough when it saw that problems were looming.
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Absolutely. So that's certainly a part of this equation, right, Eleni, the Fed not acting quickly enough,
but the other part is the first line of this report, a textbook case of mismanagement.
This is the letter that accompanied the 118-page report. So, it was a very thorough report, and the conclusion was pretty scathing.
So the report saying from Michael Barr, the Federal Vice Chair of Supervision saying that, look, federal regulations were too low, federal
standards, federal regulatory standards were too low and federal supervisors were too slow to react to some of the problems.
And Eleni, as you pointed out. We have known this for quite some time. I mean, Federal Reserve Vice Chair of Supervision Barr has said in testimony
on Capitol Hill that Federal Reserve supervisors had been raising the alarm, or were at least aware of some of these problems at SVB from as far
back as I want to, say November of 2021.
So the question was, why didn't they do more? Why did we still see SVB fall the way it did? And the report saying, look, the firm grew too rapidly, but
it was a slow transition to heightened standards of scrutiny.
So, they are clearly going to be looking at that correlation moving forward. Moving forward, they also say they're going to be paying closer
attention to certain risk factors that SVB exhibited in terms of growing too rapidly, growing very quickly, a concentrated depositor base and also
new industries like FinTech and crypto.
In terms of what regulation or sort of how this process could look in the future, one expert told me this comment coming from Derek Tang, he is the
CEO and co-founder of Monetary Policy Analytics, and I think we can pull this quote up for you, Eleni. But what he told me is that, "I think they're
going to be looking a bit more holistic as to looking at broadening the scope of what they look at from financial measures, such as cash levels and
the composition of their deposits to more qualitative metrics about the character of the bank.
So there certainly is going to be a look in terms of regulation, but also looking at more qualitative metrics in terms of determining the real risk
of some of these banks -- Eleni.
GIOKOS: Yes, and look, let's talk about the loosening of those regulations, right, in terms of what was considered a big bank where certain rules would
apply. They changed that number and now, there is a sense that they have to relook that figure. And I guess the reality should lie somewhere in the
middle.
Was there any indication of what that magic number would be?
[15:05:17]
SOLOMON: Well, look, I mean, to your point, so that number currently is closer to about $250 billion in assets with which SVB had fallen just shy
of, and what it had been prior to the loosening of regulation was closer to $100 billion.
So yes, there was some acknowledgment that they clearly need to revisit some of the thresholds. Now, some of this will not be within completely
their control, obviously, right, but there are things that the Federal Reserve can do currently in terms of increasing scrutiny, in terms of sort
of jiggering some of the metrics that they look at in terms of qualifying some of these banks.
So there are certain things that the Fed can do right now, and there are certain things that will take regulators and will take lawmakers rather to
change. But yes, there is a big question about that $250 billion threshold, which is what's considered a systemically important bank.
And I think the question that clearly becomes a concern in this report is that the fall of SVB, the demise of SVB, was considered to create a
systemic risk. There was the potential of creating a systemic risk. Well, how can that be true, but it also not be considered a systemically
important bank? And that sort of -- that difference there is what's coming under scrutiny now because both things can't necessarily be true.
GIOKOS: Exactly. Major contradiction there.
Rahel Solomon, thank you so much. Always great to have you on the show.
Well, alarm bells are ringing over the First Republic as well. Its shares are down almost 14 percent on Friday. Reuters said US officials were trying
to coordinate rescue talks. CNBC then said the bank would likely go into receivership.
The White House told CNN that it has no new plans to save First Republic.
We've got Ken Rogoff, who was the chief economist at the IMF. He is now a professor of International Economics at Harvard University.
Sir, really great to have you on. I'm sure you're watching and thinking, you know, what is the next step here to ensure that we don't see contagion
within the banking system?
What are your thoughts initially on seeing what's happening with First Republic on the back of what happened with SVB?
KEN ROGOFF, FORMER CHIEF ECONOMIST AT THE INTERNATIONAL MONETARY FUND: Well, I think they're aware that they were very generous with SVB, to the
depositors that they were supposed to guarantee deposits of $250,000.00 and they were guaranteeing $3 billion and up, and that money, particularly the
big depositors tends to run faster.
And so if they don't guarantee it, there are a lot of banks, which would have problems quickly, but if they do guarantee it, you have to put some
parameters on it.
There are a lot of losses in the banking system still. There are other banks vulnerable, not just First Republic, and they know that whatever they
do with First Republic, it has got to set an example of what everyone else should expect.
GIOKOS: Sir, and if they step in to assist that also then I guess, sets a precedent.
CNBC reporting that First Republic would likely go into receivership. What is your view on this?
ROGOFF: Well, that seems like a distinct possibility. The problem when they put the bank into receivership, as opposed to getting another bank to buy
it as an ongoing concern, may be greased by some government money.
When it goes into receivership, it really falls apart. The depositors leave, the people who are depending on loans get orphaned. And so, there is
sort of a balance to strike.
I would also just like to say one thing about Silicon Valley Bank, if I may. It was lending to the startups. It was the most important lender to
the tech sector, to the most successful sector in the world. It is the pride and joy of the US economy that produced trillions of dollars in
returns.
And so there is a balance regulators have to think about between putting the financial system into a coma with its regulation, and at the same time,
not you know, being too generous with taxpayer money. It's not easy.
GIOKOS: Absolutely. It's not easy. Absolutely.
I mean, and seeing this report and basically a post mortem on what occurred, the Fed also saying, look, we could have done more. We knew there
were problems. When we found out there were, we should have stepped in a lot more aggressively.
What do you make of these findings?
ROGOFF: That's absolutely true. I think on the one hand, it grew so fast. The regulatory team, which was sort of not up to doing something so big was
sort of out of its depth quickly, but I think when they gave alarm bells to Washington, Washington really is partly at fault for not saying you've got
to crack down. These signals were coming. I mean, somebody was making the decisions.
It is the San Francisco Fed, not just the supervisor, but also the Washington Fed, so they're rightly, you know, saying we should take some of
the blame. Maybe they're not quite giving themselves enough of it.
[15:10:18]
GIOKOS: In terms of that $250 billion threshold, right, that number clearly saw -- we saw a loosening of regulations around what is considered
systemically important. To change that figure, to get more regulation in, I mean, it has got to go through the process of people signing off. It could
happen only in a while.
Do you think that's vital in terms of creating buffers within the US banking system?
ROGOFF: I don't think there is any question that they overshot when they went to $250 billion, it will be viewed as it had been a mistake.
But bear in mind that there are a lot of loans and a lot of financial activity that gets done outside the regulated banking sector, and the more
regulations they put on it, the more they push things outside of it, which aren't regulated, and they are also worried about that.
I think all of banking regulators, central bankers, are incredibly worried about what we call the shadow banking system, which has just grown as
regulations have grown.
So even if they fix the banking sector by shrinking it, what do they do with the shadow financial system, which they're expanding?
GIOKOS: That's a really good point. The last question I have for you, I guess, you know, the first thing is, what impact does the interest rate
hiking cycle have on banks? And then secondly, what are you thinking in terms of contagion, and concerns that this is not over yet; there is still
trouble brewing in the banking sector?
ROGOFF: Well, you know, they have these things called the stress tests, which were supposed to check to see if the banks could handle problems. But
they didn't check for raising interest rates really fast. They hadn't been looking at that, so they are going to fix that.
But they have raised interest rates a lot, and there are a lot of losses on the books of the banking sector. Given time, they can earn it back because
they pay a much lower interest rate to depositors than they get, but there will probably be more trouble to come.
Financial crises go in waves. They don't just happen all at once. They can be separated by months, years even. I don't think this is over.
GIOKOS: Yes, okay. Sir, great to have you on. Thank you so very much.
Ken Rogoff there for us.
ROGOFF: Thank you.
GIOKOS: All right, let's move on.
An Amazon CFO warned that its cloud-computing business will keep slowing. Shares are down well over three percent on that outlook. It was a different
story yesterday, before Brian Olsavsky's remarks, the stock popped 10 percent after hours when Amazon reported its strong first quarter results.
Microsoft faces the same issue with its cloud units, which also reported a slowdown in revenue.
Clare Duffy is in New York to break that down for us.
Look, Amazon shares had popped on the back of its results. Concerns coming through on what we're seeing on the cloud front. Take us through what the
major issues where shareholders are going wait, this is worrying for us.
CLARE DUFFY, CNN BUSINESS WRITER: Right, Eleni. It is kind of interesting, because leading up to this quarter, there were all of these concerns that
consumers might pull back their spending.
We are in this sort of tricky economic period. There is a lot of uncertainty. There are concerns about a recession, but what happened, in
fact, was that consumers seem to be spending, you know, steadily.
The net product sales for Amazon were up this quarter. Its revenue was up nine percent, which beat expectations, but what seems to be happening is
that actually, business customers are pulling back their spending and that is sort of a broader theme that's happening across the economy, but that is
what's weighing on the cloud growth, both in the current quarter and Amazon expects in the coming quarter, and so that's a real concern.
You know, the cloud is Amazon's major profit driver, and so if businesses are pulling back spending there, that's a big issue. But overall, it was an
okay quarter. Amazon went from in the year ago, quarter having a net loss of $3.8 billion to a profit of $3.2 billion in this first quarter of this
year, so not all bad news here.
GIOKOS: Yes, and I guess on the cloud computing front, the other concern here is it's the competition that we're seeing in the industry and
Microsoft, being one of those that Amazon needs to go head-to-head with.
DUFFY: Yes, it is an increasingly competitive industry. You have Microsoft, you also have players like Google and smaller players like Oracle. And so
this is a concern that as companies are potentially pulling back, they are spending, reconsidering their spending in this area. There is also all of
this competition and you know, maybe you start to see some sort of price competition happening in this area.
And so, you know, that is a concern. I also have questions about Amazon's advertising business. The advertising business grew strongly in the first
quarter, but again if these companies are starting to consider pulling back their spending in the face of these economic uncertainties, it seems like
advertising is another area where they could do that.
[15:15:10]
GIOKOS: Clare Duffy, great to have you on. Thank you so much.
Russia has unleashed a wave of missile attacks on Ukraine. One strike on an apartment block has killed at least 23 people. We are heading there, next.
(COMMERCIAL BREAK)
[15:18:07]
GIOKOS: Well, the US Federal Reserve is now admitting that its chair held a video chat with someone he thought was the Ukrainian president, instead it
was Russian pranksters.
During the January call, Jerome Powell discussed the economy and said a recession was likely. He has made similar statements publicly as well.
Chair Powell said he supports Ukraine, but that he is limited in ways that he can help.
(BEGIN VIDEO CLIP)
VOICE OF PRANKSTER VOVAN AND LEXUS: So how do you assess the policy of the Central Bank of Russia, for example? So they managed to save the ruble,
why?
JEROME POWELL, US FEDERAL RESERVE CHAIRMAN: Yes, so I should say that in our system, in our governmental system, it's really the administration
which is to say -- we're not part of the administration. We're an independent central bank.
(END VIDEO CLIP)
GIOKOS: All right, so a Fed spokesperson acknowledged Chair Powell had a conversation with someone who falsely claimed to be the Ukrainian
president. The spokesperson noted the clip had been edited and could not confirm its authenticity.
They also said no sensitive or confidential information was discussed and that the matter was referred to law enforcement.
Matthew Chance has more for us.
(BEGIN VIDEOTAPE)
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: This is something that these two Russian comedians, they do quite a lot. Vovan and Lexus is
what their sort of like show names are. It's what they call themselves, and they routinely pose as world leaders or prominent figures, and then call
other world leaders and other prominent figures and have these conversations which are not necessarily hilarious, but they are meant, I
think, to be a sort of an approximation of the kind of conversation you'd expect those two leaders to have, as a way of sort of getting into public
what otherwise you know, isn't made public.
And when it comes to Jerome Powell, the chairman of the US Federal Reserve, they were talking to him about the US economy, about the interest rate
rises in the country.
He was talking about how the economy could fall into recession, or at least experience very slow growth. They also tried to draw him on his assessment
of the Russian Central Bank, given how, you know, how many sanctions have been imposed against the country.
[15:20:28]
Now, to his credit, he didn't, in the clips that I've heard, actually say anything that was sort of, you know, particularly inappropriate or anything
like that. In fact, the Federal Reserve has released a statement saying that no sensitive or confidential information was discussed.
But nevertheless, you know, the fact that what Jerome Powell believed was a private conversation has now been made public. They are not going to be
happy about that.
Remember, every time this figure says anything in public, it could potentially move the markets. I don't think it has on this occasion. But,
you know, that's why he's so tight lipped about economic matters.
(END VIDEOTAPE)
GIOKOS: All right, so at least 23 people are dead after a Russian missile strike an apartment building in the Ukrainian city of Uman. Rescue crews
are still searching the rubble for any survivors.
It is thought to be the deadliest strike targeting civilians since a missile hit an apartment block in Dnipro in January.
Nic Robertson is there.
All right, Nic, great to see you. Sorry. I was just making sure you were there.
Nic, we spoke earlier. You were inside the apartment block that was struck and horrifying experiences for people in the apartment block and people
watching on the death toll since we spoke has risen.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: It has been. We know four of them are children, 23 people here now confirmed dead.
I'm just going to step back so David can take a look back up where we were when we talked to you live a couple of hours ago. Now, those firefighters
are up there. They said they were going to go up there. They are cutting away part of the building so that they can get down to that other debris
field and take a look inside there. Other people are believed to be buried there, a lot of people unaccounted for.
These rescue and recovery workers now have been at it since the early hours of the morning, about 18 hours now. They've been trying to find and recover
people in this mess.
(BEGIN VIDEOTAPE)
ROBERTSON (voice over): Residents asleep as a Russian missile ripped through their apartments. Rescuers in this small central Ukrainian city,
Uman, on the scene fast.
Serhyi was one of the first.
SERHYI ALEKSEEV, UMAN RESIDENT (through translator): There were terrible screams of children. The explosion was very powerful.
The houses started to shake in the nearby areas.
The first one we pulled out was a living woman who was put in the ambulance, but she died in hospital.
ROBERTSON (voice over): The death toll climbing through the day.
(ARINA MAZUR speaking in foreign language.)
ROBERTSON: This lady telling us, she heard the missile, put her kids in the bathtub and pillows over their heads and hope they'd live.
Fighting back tears, she said so many children live here.
A gaping concrete and rubble loomed where those innocent lives shattered, the first missile strike in Uman since March last year.
Families and friends desperately awaiting news of loved ones.
(UNIDENTIFIED FEMALE speaking in foreign language.)
ROBERTSON (voice over): This lady telling us her friend on the eighth floor survived, but the friend's two daughters, one 13 years old and the
other just seven are still missing.
A firefighter takes us up to see those top floors. Onto the roof, nine floors above the recovery teams --
ROBERTSON (on camera): You can see how the building has literally collapsed down here. There should be building right out here and the floors
pancaked down with the roof tipping over down there now.
ROBERTSON (voice over): From here, the damage even more devastating than below. More than half the building's 46 apartments destroyed.
ROBERTSON (on camera): So the firefighters will come up here and as they've been doing all day in this dangerous mission here, literally
putting themselves in danger to try to recover, to clear out the site to bring solace.
ROBERTSON (voice over): Ukrainian officials believe all this devastation caused by a single Russian KH-101 stealth cruise missile. It is the single
deadliest strike on civilians since January.
[15:25:06]
A hundred nine people registered living here. As night fell, many of them still unaccounted for.
(END VIDEOTAPE)
ROBERTSON (on camera): And of course, so many people in apartments here have lost everything, been forced out of their homes. Some of them are
being patched up. But there's a school just a few hundred yards from here. We were in there earlier on.
It is full of piles of clothes for people who lost everything in their apartments and lost it all, to go there and at least get something warm to
put on this evening. It's already getting cold. So it's going to be such a tough night for so many people here -- Eleni.
GIOKOS: It is heartbreaking. It is heartbreaking, Nic.
Look, this was after a barrage of missiles, most of them that were intercepted, specifically the ones that went over Kyiv, but just take us
through what Ukraine experienced in the past 24 hours from Russia.
ROBERTSON: So in Kyiv, officials there say there were 11 cruise missiles fired, two UAVs. They shot both of them down.
Across the whole country, they say there were 23 cruise missiles fired. They shot down 21 of them. This comes after a really quiet spell. It's not
clear what Russia is trying to do, but of course Ukraine is preparing for a potential counteroffensive, and Russia had that late last year, it had that
huge effort to take out Ukraine's energy infrastructure and vital infrastructure across the country.
They seem to have hit a pause button, but now, it appears as if they're trying to look for vulnerabilities, try to see where Ukraine's air defenses
are at their weakest.
Now, they didn't succeed over Kyiv, but they got two missiles through in this town. The other one hit a warehouse.
GIOKOS: Tragically so, Nic Robertson, thank you.
Okay, so coming up, one of the world's largest automakers rides a wave of strong demand. The CEO of Brunswick will be here when we come back.
And in the meantime, I want to take you to outer space.
We are seeing a spacewalk in progress right now. It is the first Emirati to do this, coming out of the International Space Station there as you can
see, doing their thing in space.
We will bring you more details on the amazing images you're seeing behind me.
Stay with CNN.
(COMMERCIAL BREAK)
[15:30:41]
GIOKOS: Hello. I'm Eleni Giokos. And there is more QUEST MEANS BUSINESS. In a moment, when -- we'll explain why the chairman of the BBC was forced to
resign over his ties to former Prime Minister Boris Johnson.
And U.S. police departments are using A.I. to analyze the body cam footage of officers to root out misconducts. Before that, the headlines this hour.
A source tells CNN that Mike Pence, the former U.S. Vice President spent five hours before a grand jury investigating Donald Trump and the January 6
riots. It would be the first time in modern U.S. history that a vice president was compelled to testify against the president he served.
Investigators want to know if Mr. Trump pressured Pence to block the results of the 2020 election.
Now, intense fighting around Khartoum is shredding yet another ceasefire deal between Sudan's warring factions. Heavy black smoke rose over the
capital on Friday in the airstrikes and artillery battles. The U.N. says fighting has also spread to the west Darfur region, killing nearly 100
people there this week alone.
James Corden has entered his eight-year run as host of The Late Late Show in the U.S. The Emmy winner's farewell speech special featured guests like
Harry Styles and Adele. Joe Biden even sent a video message thanking him for his work. Corden said he's leaving to spend more time with his family.
All right, guys. So, I want to show you amazing live pictures of a historic moment in space exploration happening right now. Emirati astronaut Sultan
Al Neyadi has just become the first ever Arab to conduct a spacewalk from the International Space Station. He's said to spend several months carrying
out experiments on the ISS, the first long-term mission specialist from the Arab world to do so.
Let's listen in.
SULTAN AL NEYADI, EMIRATI ASTRONAUT: We're going to start with a (INAUDIBLE) forward 30 centimeters.
GIOKOS: Exciting times. You're looking at pictures and hearing all the amazing things happening at the ISS just moments ago, all in outer space.
All right. So, some journalists are welcoming the resignation of BBC Chairman Richard Sharp. The U.K. is National Union of Journalists called
the move a relief. Sportscaster Gary Lineker, who had been suspended after criticizing government policy condemned the process for picking a BBC
Chairman. Sharp resigned this morning amid a scandal surrounding. Isa Soares has a story from London.
(BEGIN VIDEOTAPE)
ISA SOARES, CNN INTERNATIONAL ANCHOR (voice-over): The embattled chairman of the BBC said he was prioritizing the interests of the broadcaster as he
stepped down on Friday.
An official report found Sharp had failed to disclose his involvement in facilitating a loan of almost $1 million to former British Prime Minister
Boris Johnson, weeks before Johnson appointed him to head the British public broadcaster.
RICHARD SHARP, FORMER CHAIRMAN, BBC: I feel that this matter may well be a distraction from the corporation's good work were I to remain in post until
the end of my term. I have therefore, this morning, resigned as a BBC chair to the Secretary of State and to the board.
SOARES: Sharp has previously denied involvement or the existence of a conflict of interest, telling lawmakers in February --
SHARP: That I did not provide and have not provided the Prime Minister -- the former Prime Minister personal financial advice. And then nothing about
its affairs and never have done its financial affairs.
SOARES: But Friday's report found there was potential conflict of interest and risk of a perception that Mr. Sharp will not be independent from the
former Prime Minister if appointed. Sharp accepted the findings in his resignation but said any breach was unintentional.
SHARP: I've always maintained the breach was inadvertent and not material.
UNIDENTIFIED FEMALE: Did Mr. Sharp helped you with your loan? Do you know what the report will say today?
SOARES: Well, when questioned by reporters ahead of the reports release, Johnson said nothing.
[15:35:04]
Johnson did not respond to CNN's calls for comment. Asked about Sharp's resignation during a trip to Glasgow, current Prime Minister Rishi Sunak
said he hadn't seen the report, but said the right independent process had been followed. He also did not guarantee a nonpolitical figure would
replace Sharp as chairman.
UNIDENTIFIED MALE: That's not the answer to my question, Prime Minister. Should the next person be a nonpolitical appointment?
RISHI SUNAK, PRIME MINISTER OF BRITAIN: We're jumping ahead of it. There's an established appointments process for all these things.
SOARES: Isa Soares, CNN, London.
(END VIDEOTAPE)
GIOKOS: Well, U.S. markets are higher on a new batch of better-than- expected earnings, the Dow has risen about 200 points. The S&P is up over half a percent. As you can see the Dow is up half a percent at this stage
as well. The NASDAQ is set for a second straight day of gains as well. Now, we've had a lot of good corporate earnings. Investors focusing on those
numbers and what it could mean for the economy.
In the meantime, spirits are high on the high seas. Boat maker Brunswick reported a first quarter earnings that beats anchored in strong demand. And
they say high inflation did take some wind out of their sails. Brunswick is the biggest marine technology maker in the world. They say customers are
turning the tide towards upgrading their boats that they have rather than buying new ones.
David Foulkes is the CEO of Brunswick. And he joins me now from Illinois. Great to have you on. And this was going to be my first question. Are
people buying more boats, new boats or are they upgrading they -- the ones that they have right now? What are the trends that you're seeing?
DAVID FOULKES, CHIEF EXECUTIVE OFFICER, BRUNSWICK: Oh, thank you for having me, Eleni. Well, both really. People are buying boats, the market remains
pretty strong. It's not quite as high as it was when we had the real peak in COVID demand. But boats are remarkably resilient. They want to be part
of the boating lifestyle, the boating experience. So, they're still buying. So, boat sales is still pretty strong, especially considering the economic
backdrop.
But certainly, part of our business, a big part of it is also upgrading boats. As you said, with new technology, new electronics, you can have
value added features. And we can do that in a lot of ways. So, that part of the market is also very important and remains pretty strong for us.
GIOKOS: Yes. I'm really fascinated by what you're doing on the electronic front and the technology that you're bringing to the table. And I know that
earlier this year, you did launch the Veers. A boat brand for electric propulsion. I was reading into this and it's both from rotor model
polyethylene. Super fascinating to read about the structure. But, you know, how soon before you can get this to markets? And why would this be
different your existing models?
FOULKES: Well, Veer is really designed around electric propulsion, which is relatively new in the marine space. It's coming, but it's a little bit
behind what's going on passenger vehicles. But Veer is designed to pair up with our avatar electric outboard motor. And we've actually already begun
selling those. So, it's already in the market. The Veer boats is in the market. It's a kind of a multipurpose vessel for fishing, for general, you
know, on water experiences and it pairs up beautifully with that avatar electric outboard.
We launched the first model in that avatar series, which is coming from our Mercury Marine Division, one of the leading providers of marine propulsion
in the world. But we'll continue to launch additional models of the avatar series to meet consumer demand, particularly for smaller electric boats.
GIOKOS: Is that -- is that what people are after? Something smaller, more affordable, you know, what kind of boats do you think are going to dominate
in terms of the demand space?
FOULKES: Right now, I would say -- as in some other areas, you might have seen our premium products have very solid. Demand is very strong. More
value products are a little bit more under pressure. But we sell a whole spectrum. We have 18 brands. We have three of the four leading brands in
the industry. Sea Ray, Boston Whaler and Bayliner. So, we offer a full portfolio for everything from the entry boater to the really experienced
boater.
You might want a more premium product. But we do -- the majority of the boats we sell costs less than $50,000. An average customer is kind of a
upper middle-income customer. That's the heart of our market. But it -- so Veer fits in really nicely for us as we try to attract a new generation
into boats and we already -- we already have a lot of exciting added value products in that space.
But Veer is something new and different than is kind of interesting because of electrification perspective.
[15:40:03]
GIOKOS: Yes. I mean, I've just moved to the UAE. Everyone I know owns a boat or at least has teamed up with friends to purchase the boats. I'll
start saving up. Good to have you on the show. Thank you so much.
FOULKES: You are very welcome. Thank you.
GIOKOS: All right. So, let's move on and -- pleasure. ChatGPT is adding a new skill to its resume. It's not developing pizza recipes. We'll take you
to the restaurant putting the tool to work.
(COMMERCIAL BREAK)
GIOKOS: Well, from the industrial revolution to the present day. Advances in tech have transformed the way we live right now. The development that
has the whole world talking is ChatGPT. People from all walks of life have found innovative ways to use it including a pizza chef in Dubai, looking to
serve tasty new toppings.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: A pizzeria like this one in Dubai isn't usually the first place that comes to mind when you think of how artificial
intelligence is being used in businesses. But for Spartak Arutyunyan the brand chef of Dodo Pizza's A.I. technology is what's helping him think
outside the box.
SPARTAK ARUTYUNYAN, BRAND CHEF, DODO PIZZA: Customers really appreciate when you do something created instead of just developing a new taste, a new
flavor. The development itself can be creative and can be innovative.
UNIDENTIFIED FEMALE: As the restaurant opened its doors just a few months ago, Chef Spartak knew he was up against a lot of competition, but he saw
an opportunity to bring something different to the table with the help of ChatGPT.
ARUTYUNYAN: So, there you go. Two pizzas by ChatGPT both (INAUDIBLE) part of cultures and flavors and tastes. And it's really hard to combine it all
in one product and make it special. I realized that I'm not capable of getting all these cultural nuances and make them work just by myself.
UNIDENTIFIED FEMALE: Using the chatbot to create a unique recipe for customers in Dubai, this was the result a pizza representing a fusion of
Arabic and European flavors.
ARUTYUNYAN: Guess what, both of these pieces are the recipes are made by ChatGPT.
UNIDENTIFIED MALE: Oh my God.
ARUTYUNYAN: Yes.
UNIDENTIFIED FEMALE: And Chef Spartak isn't alone. According to investment firm UBS, more than 100 million people started using ChatGPT only two
months after its launch last year.
[15:45:00]
While the tool was developed to help with tasks that most would consider as time consuming like research and data analysis, businesses and all sorts of
industries are now using it to their advantage. Researchers at PwC say that by the year 2030, A.I. could contribute up to $15.7 trillion to the global
economy. That's more than the current output of China and India combined, according to PwC.
But like all new kinds of technologies, there's still some concerns.
BRYN JOLFSSON, SENIOR FELLOW, THE STANFORD INSTITUTE FOR HUMAN-CENTERED: By far the most common question I get is, am I going to lose my job because of
this technology? There will certainly be some jobs that disappear and they'll be other new jobs created. But by far the biggest category will be
jobs that are transformed, the key is going to be looking for ways to complement what you're doing rather than to substitute for it.
ChatGPT and the other large language models generate the answers on the fly and different times you use it, you'll generate different answers. But you
also have to be very careful that what it generates is not always completely factual.
UNIDENTIFIED FEMALE: That's why Spartak is taking most answers he's generated from ChatGPT with a pinch of salt. From optimizing operations to
delivering personalized customer experiences. Businesses in all kinds of industries around the world are continuing to take a slice out of the
proverbial A.I. pie just to stay ahead.
(END VIDEOTAPE)
SIOARES: I wonder what his view is on adding pineapple to pizza. I think I'm going to ask that question. And we'll get back to you. All right. When
we return, U.S. police departments are also embracing A.I. They're using it to analyze the body cam footage of officers to root out misconduct. Stay
with us.
(COMMERCIAL BREAK)
SIOARES: Police departments in the U.S. are turning to artificial intelligence to improve accountability. A.I. is being used to scan body cam
footage and determine whether an officer acted professionally. Some police chiefs think it could save lives as Vanessa Yurkevich reports.
(BEGIN VIDEOTAPE)
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Officer Dan Janeda is on patrol. He has all his tools for the day including his body
worn camera, which automatically captures videos of his encounters with civilians.
YURKEVICH (on camera): Safety first.
OFFICER DAN JANEDA, CASTLE SHANNON, PENNSYLVANIA POLICE: Absolutely.
YURKEVICH (voice-over): Twenty videos a day over 100 hours a week. His final invisible piece of equipment, artificial intelligence. A program
called Trulio which analyzes what he records.
[15:50:05]
YURKEVICH (on camera): Did you have fears about what it meant to have artificial intelligence tracking your day to day?
JANEDA: I did have apprehensions. It is A.I. Technology can sometimes have drawbacks. It's not perfect. But at the same time, I've seen things play
out enough where technology has helped us.
YURKEVICH (voice-over): And that is what Trulio's co-founder and CEO Anthony Tassone is aiming for.
ANTHONY TASSONE, COFOUNDER AND CEO, TRULIO: We've started Trulio after George Floyd was murdered in May of 2020. How do we prevent this from
happening again?
YURKEVICH (on camera): What percentage of body camera footage gets reviewed now?
TASSONE: A fraction of one percent.
YURKEVICH: And Trulio could look at what percentage of body cam video?
TASSONE: One hundred percent.
YURKEVICH (voice-over): The A.I. was trained by humans to detect five million key terms.
UNIDENTIFIED FEMALE: I got him in the yard.
YURKEVICH: Like profanity, noncompliance, as well as professional language or explanations. The goal is detecting early problematic police behavior
before it turns deadly.
KEN TRUVER, CHIEF OF POLICE, CASTLE SHANNON POLICE DEPARTMENT: I get an e- mail alert every day at 6:00.
YURKEVICH: Dan Janeda's chief Ken Truver of Castle Shannon P.D. in Pennsylvania has been using Trulio for a year. He's also an advisor.
YURKEVICH (on camera): These are keywords that you put in.
TRUVER: They are. So, stop resisting custody, arrest. Anything to do with a pursuit. I'm looking for high-risk things.
YURKEVICH (voice-over): Trulio transcribes entire encounters from body cameras, but pinpoints the exact moments that need review.
TRULIO: Stop resistance arrest. Just relax.
TRUVER: Not a whole lot of resistance, but it was giving me exactly what I was looking for.
YURKEVICH: And so, for you this is a good interaction with one of your officers in a civilian?
TRUVER: It is.
YURKEVICH: The Alameda Police Department in California has been using Tullio for a little over a year. It's seen a 36 percent drop in use of
force by officers, Tassone says. The A.I. pointed out risky interactions with civilians giving officers the chance to review and change their
behaviors.
YURKEVICH (on camera): What would truly his involvement have been in a situation like Tyree Nichols?
TASSONE: I feel very strongly that Trulio not only would have recognized obviously the event of the murder of Tyree Nichols, but the hundreds of
events that took place prior to that. I believe Trulio would have prevented the death of Tyree because it would have detected the deterioration in the
officer's behavior years prior.
YURKEVICH (voice-over): There are 18,000 police departments in the U.S. Just 20 are using Trulio with 20 more signing on this year, including
Aurora P.D. in Colorado.
CHIEF ART ACEVEDO, AURORA COLORADO POLICE: It will be an early warning system that will help save careers and ultimately maybe even save lives.
YURKEVICH: In 2019, three Aurora Police officers were charged with the death of Elijah McClain using excessive force during his arrest.
ACEVEDO: If we see just a little change in the officer's performance, we'll be able to actually intervene early on. Get them help, get them counseling,
get them training. Do whatever it takes to get back on the right track.
YURKEVICH: Back in Castle Shannon, Chief Truver says the technology has only proven what he already suspected about his officers.
YURKEVICH (on camera): What has this changed? Anything?
TRUVER: No. And I don't think that's a bad thing. I want to catch something before it happens. I don't want to be reactionary. We want to be looking
ahead to make sure that we stay ahead of the game -- ahead of any issues. And I don't think that's a bad thing.
YURKEVICH: Vanessa Yurkevich, CNN Castle Shannon, Pennsylvania.
(END VIDEOTAPE)
SIOARES: After a 20-year loan, the giant panda Yaya is back in Shanghai and she had been living in the U.S. at the Memphis Zoo. Her loan in 2003 was a
symbol of a positive relationship between China and the U.S.
But as CNN's Will Ripley explains her return is now a symbol of how far that relationship has fallen.
(BEGIN VIDEOTAPE)
WILL RIPLEY, CNN SENIOR INTENATIONAL CORRESPONDENT (voice-over): In China, a hero's welcome for Yaya, the panda. At the end of a 16-hour flight from
Memphis to Shanghai.
Crowds gathered outside the airport trying to catch just a glimpse of Yaya's crate. Her first moments back on Chinese soil.
She'll spend the next month in quarantine at the Shanghai Zoo where a media Feeding Frenzy is in full swing.
UNIDENTIFIED FEMALE: And many Chinese have been working closely and looking forward to Yaya's return.
RIPLEY: This geriatric giant panda is a household name in China for all the wrong reasons. When Yaya's panda playmate died of heart disease in
February, pictures of Yaya with scraggly fur and sagging skin sparked online pandemonium. A Chinese social media Frenzy fueled by false claims.
Rampant rumors denied by the zoo of panda abuse and they neglect in the U.S. Outrage amplified by anti-American sentiment.
[15:55:04]
UNIDENTIFIED MALE: Yaya, come back come.
RIPLEY: Bring Yaya home became a rallying cry for millions of Chinese. The pandas picture plastered on billboards from Beijing to the Big Apple. It's
true. Yaya was young and fluffy when she arrived at the Memphis Zoo 20 years ago. On a long-term, multimillion dollar lease from China. U.S. and
Chinese scientists say she has a genetic condition affecting her skin and fur. A condition that worsens with old age.
No impact on her quality of life, just her looks. They even issued a joint statement saying the fact is, Yaya had excellent care.
But facts don't always matter in a world full of fake news. Anti-American panda propaganda is filling the feeds of Chinese social media users. No
mention of the healthy pandas at two other American zoos, but plenty of pictures of an active and playful panda in Russia. A panda Chinese-state
media praises for improving bilateral ties. Yaya saga will end where it began. The Beijing Zoo where she'll live out her final years.
She just might be the world's most politicized panda. A beloved bear that brought the U.S. and China closer, now being used to divide.
Will Ripley, CNN, Taipei.
(END VIDEOTAPE)
SIOARES: We've got moments left to have trade on Wall Street and I'll have the final number for you at the closing bell right after the short break.
Stay with CNN.
(COMMERCIAL BREAK)
SIOARES: Some better-than-expected earnings are boosting U.S. markets. As you can see, the Dow is up 263 points. That's a gain of almost nought point
eight percent. All right. This is the highest level that we'll be seeing since January this month has been far better than we've seen over the past
couple of months. It was a strong day. We've got NASDAQ as you can see setting up nought point six percent. S&P, nought point eight percent to the
good.
The Dow also in positive territory. They finished the day in the green and generally we've been seeing earnings really coming through. It's the tech
stocks that have been boosting a lot of the sentiments. I want to take you through to what we're seeing on the Dow components. This is sort of a very
interesting picture.
[16:00:07]
The Intel stock is up around four percent. Its CEO told investors he sees green shoots in the company's recovery. Disney also sitting in the
positive.
Well, thank you so very much for joining us. That is it from QUEST MEANS BUSINESS. I'm Eleni Giokos. That is the sound of the closing bell on Wall
Street. "THE LEAD" with Jake Tapper starts right now.
END
