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Quest Means Business
Starbucks Taps Chipotle's Brian Niccol As Its New CEO; Annual Wholesale Inflation Slows To 2.2 Percent In July; Zelenskyy: 74 Russian Settlements Under Ukrainian Control; UAW Accuses Trump And Musk Of Threatening Workers; Harris To Deliver First Economic Policy Speech On Friday; Pandora Shares Rise As Brand Raises Growth Outlook Again; Quest Visits Coney Island's Wonder Wheel Amusement Park. Aired 4-5p ET
Aired August 13, 2024 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:15]
PAULA NEWTON, CNN INTERNATIONAL HOST: What a day for the markets, off the back of some wonky numbers. Producer price index, pleasing the markets
there. You can see the Dow, some of the highest for the day, up better than one percent. NASDAQ and the S&P even more impressive than that.
Those are the markets and these are the main events. Struggling Starbucks replaces its CEO with the man who turned around to pull it.
UAW files federal labor charges against Donald Trump and Elon Musk for threatening striking workers.
And a trip to the amusement park. Richard Quest finds out how Coney Island is trying to bring summer fun back to a new generation. That looks like
fun.
Live from New York. It is Tuesday, August 13th. I'm Paula Newton, in for Richard Quest and this is QUEST MEANS BUSINESS.
And good evening.
So, tonight, Starbucks' stock skyrocketed after the company named the former head of Chipotle, Brian Niccol, as its new CEO.
Now Starbucks closed up about 24 percent again on some of the highs of the day there. One of the largest one day percentage gains since it went public
in 1992.
Starbucks is balancing some big challenges as you can imagine and here they are. Let's start with consumers.
You all know it, right? Cutting back on the spending for things like this, those iced coffees, then there are the increased cost, whether its labor,
products, supply chain disruptions also affecting Starbucks.
This is the one that I find most intriguing though. I mean, look at this, bad store experience. I didn't know this before. Seventy percent of all the
orders from Starbucks or either on the app or in drive-thru, so that means people are looking for a place to just sit down aren't really finding it
when they need to.
There is all also though, the issue here about the -- in the dissatisfied customers and this is a huge issue. They tried to bring on new products
like Oleato. Remember that? Olive oil in coffee, that didn't work. So many other things didn't as well.
Now, Brian Niccol, he starts September 9th. I want to remind everyone that Starbucks' sales in North America are down since January, though back in
2021, he spoke to Richard Quest about his philosophy in running Chipotle and now what he might do at Starbucks.
Listen to this from 2021.
(BEGIN VIDEO CLIP)
BRIAN NICCOL, CEO, CHIPOTLE: We feel like we still provide tremendous body of food, food with integrity, customized exactly how you want and you know,
we are fortunate that were in that position where we've got the strong value proposition that allows us to invest in our people, invest in our
food, and then ultimately invest in the experience of our customer, and we do it in a way that we think is reasonably priced.
(END VIDEO CLIP)
NEWTON: Nathaniel Meyersohn has been following this story for us in New York. In fact, you follow those bad results that Starbucks had, but we want
to talk now about Brian Niccol. He has succeeded where Starbucks has failed.
In the first instance, many new products, right, that were a hit; secondly, though that digital focus, it really went viral at times with those who
counted which were those young customers also, of course, the advertising that was targeted and clever.
And this is the one that always amazes me, the improved operations, right? The efficiency in those locations right down to taking the pit out of the
avocado. The result, the stock up more, better than 700 percent in six-and- a-half years.
I will say though, Chipotle down last time I looked about seven or eight percent today. This is the reputational leverage of a proven CEO. Where
does he take it now?
NATHANIEL MEYERSOHN, CNN BUSINESS REPORTER: So Paula, you've really laid out both the challenges for Starbucks really well and the opportunity that
investors see with Brian Niccol coming on board.
I mean the stock move kind of tells it -- tells the whole story, doesn't it? Twenty-five percent increase for Starbucks with Chipotle down about
eight percent.
So investors are very pleased right now and the reason that Niccol is coming on is because that Starbucks is really struggling. People are not
paying five, six dollars for an iced coffee. On the other hand, they are paying $15.00 for a burrito bowl, and so it really shows that people don't
think that Starbucks is providing value as much, while Chipotle under Brian Niccol is.
[16:05:01]
So that's going to be a big part of the challenge, how to kind of restore the customer perception of Starbucks?
NEWTON: Yes, and it is an absolutely massive challenge given the economic environment we find ourselves in and what does it tell you about consumers
right now and their spending on fast food in a broader sense, right? Because everyone is looking for both value and affordability.
MEYERSOHN: Well, I think that it is telling that the Chipotle is one of the few fast food and restaurant industry companies to be doing very well right
now. Its sales were up 11 percent last quarter. Meanwhile, Starbucks sales down about three percent, so customers are been very discerning about where
they are going.
So even though Chipotle is more expensive, $15.00 compared to you know, five, six dollars, customers feel like it is a better value, a better way
to stretch their dollar.
And you know, you made an interesting point earlier about how Starbucks has really gone from being a sit-down cafe or a coffee shop to a place now that
is more like fast food. You order on the app, then you leave.
So Niccol is going to have some interesting challenges as well with trying to kind of recreate a better in-store experience. People are frustrated
with the long waits on the app. So this is just kind of a fascinating trend we are seeing right now.
Certainly, a surprise waking up to this this morning.
NEWTON: It really did shock investors, right? And we are not shocked all that often.
Nathaniel, before you go Chipotle? Starbucks? Neither or both?
MEYERSOHN: You know, I think that it is all about value, Paula. You know, people really feel like you're getting money, you're getting good value,
you're full when you go to Chipotle versus coffee kind of a commodity. You have so -- you can go to boutique coffee shops. You can make it at home.
You know, I am trying to save some money five, six dollars for an iced coffee. I don't even want to know how much your team spent on that -- all
of those drinks at Starbucks.
NEWTON: I am sure they figured out some point system or a discount, but yes, this sets you back. I won't say exactly how much because it is
different in every state and every location, but quite a bit.
Nathaniel, you are a smart man. We know that. Looking for the value. Thank you very much for following this breaking story for us.
Meantime, US wholesale inflation rose less than expected in July. The producer price index was up 2.2 percent on an annual basis, a slight
decrease compared to June. Now, it is sign that price pressures are easing for businesses.
The hope now though, is that those savings will be passed on to shoppers. The latest consumer price index comes out tomorrow. That is an all-
important report. Our Julia Chatterley will be following all of it.
And again, it is so much about this cup of iced coffee, isn't it? We really have seen that inflation has come down, but this really did quiet the
markets, these numbers. Do they really believe they are going to get what they want tomorrow with that all-important CPI number?
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR, "FIRST MOVE": You raise such an important point. Once again, one data point like this shouldn't have the
enormous positive reaction in the stock markets that we saw today, Paula, and you know that as well as I. But what this did seem to confirm to people
was that the disinflation, so slower rising prices trend that were seeing, whether it is at the factory gate or for consumers is still in trend.
And if you look at the bond markets today, they are still saying look, Federal Reserve certainly going to cut at least a quarter of a percentage
point in September, and really that is all the confirmation I think that certainly investors needed.
For consumer price inflation, we are not expecting to see the same kind of drop. But the hope is that again, that disinflationary trend is in play, a
three percent annualized rate is expected tomorrow. That is for the headline number. For the core number, if you strip out energy, you strip
out food prices, that is expected to come in at around 3.2 percent.
If that is what we got, Paula, you can expect, I think another huge rally in the stock markets, the expectation of course, reconfirmed once again,
even on one data point that the Federal Reserve is expected to cut in September.
But for ordinary consumers out there, I understand why they look at these numbers and they are like, tell me why I should care when prices are up --
what -- on average 20 percent over the last four years? I think we've got a chart that I want to just give you a look at, which looks at some of the
price rises for these things over the past two years.
Transportation costs up 18 percent, electricity costs up 10 percent; shelter, which is going to be the big thing that we watch tomorrow because
that is a third of the number, the hope is that that continues to come down.
But, hey, people are paying for mortgage or rent equivalent 13 percent more than they were paying two years ago.
Paula, that is super painful.
And took to finish where you sort of started there on the coffee thing. I would pay zero for olive oil coffee, whoever had that idea. I mean, really.
NEWTON: It really was an epic fail and I turned to my Italian --
CHATTERLEY: Epic.
[16:10:01]
NEWTON: I turned my Italian roots on this coffee, olive oil? No, not a thing, ever, and apparently they learned that the hard way.
Julia, we will be looking to see what that report tells us tomorrow as you continue to follow all of that. Appreciate it. Thanks so much.
NEWTON: Thank you.
NEWTON: Coming up for us, a live report from Tel Aviv as Hamas and Israel make a last-ditch effort to revive stalled negotiations.
(COMMERCIAL BREAK)
NEWTON: Ukrainian President Volodymyr Zelenskyy says Ukrainian troops are continuing to advance into Russian territory. He says they now control more
than 70 settlements in the Kursk Region after days of intense fighting. He also referenced their capture of Russian prisoners of war.
Russian President Vladimir Putin meantime is vowing to "kick the enemy out." The incursion is a first by foreign troops since World War II, and of
course, a major embarrassment for the Kremlin.
Fred Pleitgen is tracking this story for us and he joins us now live from Berlin.
Fred, you like me, I am sure are wondering, do we have a sense of what Putin's next move might be here given all that has transpired in the last
few days?
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, he has vowed massive retaliation, but I think one of the things that we are seeing
from the Russians is that they want to bring troops in place to try and hold the Ukrainians up first and foremost.
We just saw some of that video of apparently some Russian reinforcements that have been arriving. Apparently, a Ukrainian general said today that
they have been also observing on the southern front in Ukraine that some Russian the forces seem to be deployed from there to then move toward the
Kursk Region.
Now, the Ukrainians are saying it is not very many forces yet, and it is not going to cause the Russians to be any weaker on the southern front in
Ukraine, but it is certainly something that they have been noticing that the Russians seem to be trying, pulling forces away from certain areas to
try and strengthen or beef up their forces that they have in the Kursk Region.
As the Ukrainians really too many people surprised, do appear to still very much be on the move. The Russians today having to evacuate further regions
closer to the town, of course, which is, now, we pointed this out yesterday, Paula, a big military hub for the Russians at a logistics center
also for their war in Ukraine.
So, the Russians certainly seem to have some issues, and then the Ukrainians are wondering what could that retaliation look like? There is
one Ukrainian official who believes that it could be a massive missile barrage that could hit Ukrainian cities in the not-too-distant future, and
they believe that their air defenses could have serious problems with it, but they do believe that it will hold.
Now, all of this as the Russians are already saying they are trying to push the Ukrainians back, but it certainly seems to be difficult for them. Here
is what we are learning.
[16:15:10]
(BEGIN VIDEOTAPE)
PLEITGEN (voice over): A Russian attack gunship firing at Ukrainian forces from the air in the Kursk Region inside Russia, while on the ground, a
Russian soldier's bodycam records would appear to be several killed Ukrainians near their destroyed armored vehicle.
The Kremlin trying to show its forces are halting Ukraine's advances, but the reality is this, more Russian civilians having to evacuate their towns
and villages as Kyiv's troops press ahead.
(UNIDENTIFIED FEMALE speaking in foreign language.)
PLEITGEN (voice over): "We left the chickens at home," this woman says. We gave them two bags of grain, some water and left. Maybe there will be
nothing to return to.
What seemed to be Russian prisoners of war transported in a Ukrainian pickup as a Ukrainian soldier spray paints the Ukrainian spelling of a
towns name inside Russia.
Kyiv's lightning offensive caught not just its allies off guard, but Moscow as well. Russian President Vladimir Putin trying to publicly brush off
Ukraine's incursion, meeting with the head of the Palestinian Authority in Moscow after earlier berating his generals to oust Kyiv's troops from
Russian soil.
VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): The main task for the Ministry of Defense is, of course, to drive and squeeze the enemy out
of our territories.
PLEITGEN (voice over): Russia has vowed a massive retaliation and Kyiv fears Moscow could launch even larger missile strikes at Ukrainian cities,
but Ukraine's president vowing not to back down.
VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT (through translator): Russia needs to be forced into peace especially if Putin is so set on fighting.
PLEITGEN (voice over): And Vladimir Putin's grip on power may not be as strong as some believe, Russian opposition activist Vladimir Kara-Murza who
was recently released from a Russian jail in a prisoner swap said on CNN's "Out Front."
VLADIMIR KARA-MURZA, ACTIVIST: I don't only think, I don't only believe, I know that Russia will change that I will be back in my homeland and as I
told you, it is going to be much quicker than you ever think.
PLEITGEN (voice over): But for now, Moscow says it will bring more reinforcements to its southwestern regions to try and oust Ukraine's
invasion force before it can dig in.
(END VIDEOTAPE)
PLEITGEN (on camera): It is interesting, Paula, we also heard a little bit more from the Ukrainian President Volodymyr Zelenskyy. He said the
Ukrainians were conducting in the areas that they've taken from the Russian stabilization measures, which could mean keeping services up and running
for the people who actually remain there when the Ukrainian military moved in.
But he also said that Ukraine is preparing its next steps in that region as well. Unclear what that is. And one are those Ukrainian forces are going to
try and dig in and hold that area -- Paula.
NEWTON: Yes, every day, the developments on this continue to be startling.
Fred Pleitgen for us from Berlin. Thanks so much.
Now, we are seeing more fighting along the Israel-Lebanon border as the Middle East remains on edge. The Israeli military says the Air Force killed
two Hezbollah fighters who were in an observation post in Southern Lebanon. It also says Hamas fired two rockets towards Israel.
All of this comes as Gaza ceasefire talks are scheduled to resume Thursday and Israeli families hope to get their loved ones released finally by
Hamas.
(BEGIN VIDEO CLIP)
AVIVA SIEGEL, FORMER HOSTAGE OF HAMAS, HUSBAND STILL HELD: I'm begging the world, please let it happen. I am begging the world. I don't -- I can't
even imagine what will happen if it will fall apart because I will fall apart, and so many people who fall apart. We are waiting and waiting and
we've been waiting for so long.
(END VIDEO CLIP)
NEWTON: Joining us now from Tel Aviv is Nic Robertson.
Nic, I am so glad that we highlight whether its Gaza or the families of the hostages, because every time we talk about these ceasefire talks, sometimes
we need to continue to keep the attention on what hangs in the balance.
CNN is now learning from us officials that Iran hasn't decided yet whether or not to retaliate, how it will retaliate that coming from US officials
and yet President Biden himself, really being clear that he is trying to do two things here -- trying to get that ceasefire deal, but also perhaps
trying to ward off that retaliation from Iran.
I mean, where do you things stand now from what you've been learning?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: So that concern about what Iran may do in the coming days even before the talks or even after the
talks is really the sort of big issue that hangs over the talks. In the context of the talks themselves, they were initiated, the diplomatic drive
to have them was to try to get Iran to resist a retaliatory strike against Israel for the killing of Hamas chief, Ismail Haniyeh in Tehran.
[16:20:01]
But the talks are also a test and holding the talks about Gaza, because Ismail Haniyeh was a principal negotiator who, you know, who would meet
with the mediators in Doha and in Egypt, and now, he is gone. Hamas' initial response, according to diplomats was that they just weren't going
to get into negotiations for a long period of time.
So to kill Ismail Haniyeh and then have talks two weeks later would be something of a sign of hope that because it would start the talks, but
Hamas has been very clear about this so far.
Their engagement in these talks and remembering these are proximity talks, they are not in the same room as Israel, but their engagement is dependent
on Israel not treating this as a negotiation, but this is Hamas' position, not adding things to what President Biden, the framework that he outlined
in July that this would simply be implementing that framework and just putting some detail, additional detail on the framework. Israel of course,
is saying that it hasn't been adding additional items to that framework.
So even the context around the talks is fraught. Therefore, the diplomatic signal that it sends to Iran is not the ideal diplomatic signal because it
is not clear if the talks will have meaning, if they'll progress, if they will be any different to previous talks.
And therefore, Iran's own calculation about whether it should respond to Israel, they say killing Ismail Haniyeh, then for them, what's the point in
waiting for the talks if the talks are not going to provide peace in Gaza, which was the predicated concept that Israel -- that Iran might buy into.
It is so fraught, so many pressures, so complicated at the moment because this whole other layer has been added into this process.
NEWTON: Yes, and we continue to wait there hour by hour, minute, many wondering exactly what the next step will be here in both, whether or not
Iran will retaliate, and of course, those ceasefire talks.
Nic Robertson for us in Tel Aviv. Thanks so much.
Meantime, now the weather seems to be cooperating in Greece as firefighters continue to put down hotspots near Athens, but strong winds are expected
unfortunately to pick up again on Wednesday, on top of high temperatures and drought with no rain in sight.
At least one person was killed after wildfires broke out on Sunday. Thousands have had to leave their homes with one person saying, you just
couldn't see, you couldn't breathe.
There is now an international effort underway to help stamp out the flame. CNN correspondent, Eleni Giokos is near Athens. She has been on the ground
all day for us.
Eleni, good to have you.
I mean, look, these fires have been absolutely terrifying. I am glad to see that there was a break in the weather, but what is the challenge ahead for
those suburbs outside Athens?
ELENI GIOKOS, CNN CORRESPONDENT: Yes, I mean, it was such an incredible day today. I mean, just speaking to some of the people that have been impacted,
people that lost their homes, their businesses, the devastation and the pain and the trauma that comes with that, Paula, the inability for even us
as a team to breathe properly while we were on the ground. It is just literally from every perspective, really, really tough because this is the
aftermath.
This is sort of after the fact, off the wildfire. What is really good and you can see, I am outside and right now, you can see a view of Athens.
There is absolutely no wind and this is going to be absolutely important to ensure that no new fire breaks out.
They were able to get rid of all the active fires early this morning. There are no active fires right now. We saw so many firefighting trucks that were
trying to douse out potential risk areas. And as you know, when there are wildfires, the wood continues to burn and then if there is a pickup in
wind, that could then reignite into areas that have not been burned.
So that is what is being monitored right now. There is still a fire alerts are. Thousands of people have evacuated their homes. Some people were
allowed to return today and many people got back to just absolute devastation and so that's the scenario that we are dealing with.
I mean, what tomorrow will bring, firefighters and the fire department are very hopeful that it will remain this quiet in terms of what we see on the
wind front.
But if that does change, Paula, we are talking about other probabilities. We spoke to some people on the ground. Take a listen.
(BEGIN VIDEOTAPE)
GIOKOS (voice over): As morning breaks in Greece, a moment of reckoning, residents return to their homes, not knowing what they'd find.
Seventy-year-old, Sakis Morfis (ph) ran away taking only his beloved dogs. Everything else is now gone.
SAKIS MORFIS, LOST HOUSE IN FIRE (through translator): My house. It was utterly destroyed. Even the walls fell down.
[16:25:04]
GIOKOS (voice over): But Morfis lost more than his home. He also lost a colleague, a 65-year-old woman who went missing after the evacuation
orders.
GIOKOS (on camera): Her friends and colleagues say that they were looking for her. She went missing and eventually her body was found here at a place
of work.
She spent over 20 years of her life at this business and her co-workers are saying how she was talking about going back to her home country, back to
her daughters at the end of this year and sadly, they say she just didn't make it.
And today, we find a rose left here by someone that says will remember her dearly.
GIOKOS (voice over): More than 700 firefighters, almost 200 vehicles and 35 water bombing aircraft have now managed to control the blaze. But 100,000
acres of land were lost. The extent of the damage so great, it can be seen from space.
As scenario of destruction just a few miles from Athens. Experts say, the last few years of fires are drastically changing the city's climate. The
loss of trees making winds and temperatures rise along with the risk of fire. A tough challenge ahead, local officials are well aware of.
MAYOR VASILIS XYPOLITAS, KIFISIA : At some point, the fire was faster than the cars and the trucks, and they are trying to catch the fire. We must
find solutions in the way of evacuating and in being first at the time of a started fire.
GIOKOS (voice over): Miles of beautiful green virgin forests reduced to charred barren hills.
For residents like Sofia (ph), the feeling of loss is beyond words.
SOFIA, LOCAL RESIDENT: I feel terrible. I can't explain how I feel this morning. We had thought green oasis here. Now I don't know after how many
years it is going to be again. And if it be like before.
GIOKOS (voice over): Many like her now point the finger at the government, blaming the lack of prevention and care as part of the fuel feeding the
fire that spared nothing in its path.
(END VIDEOTAPE)
GIOKOS (on camera): And so many questions, some residents were saying, you know, how is it possible that a fire 40 kilometers away from Athens was
able to rip through various suburbs without any way to contain it? Some people blame the government, others say it is because of climate change and
the strong winds that we saw.
But a lot of questions, Paula, are being asked and I have to say, every year we cover these stories and I've been on the ground every single year
since 2021 covering wildfires. There is resentment and the big question is, could the government be doing more?
NEWTON: Yes, it does bring up the question, Eleni, about whether or not there needs to be rapid reaction forces, right? Clearly, throughout Europe
who can deal with this. As you've said, you have been there year after year and some harrowing images and again, so much trauma to contend with there.
Eleni Giokos for us, really appreciate you being there.
Now, the United Auto Workers has filed a labor complaint over Donald Trump's talk with Elon Musk on X last night. It alleges their anti-union
comments amount to worker intimidation. We will have that next.
(COMMERCIAL BREAK)
[16:31:53]
NEWTON: Hello, I'm Paula Newton. There's more QUEST MEANS BUSINESS in a moment when the jewelry giant Pandora posted strong quarterly results. We
will speak to the company's CEO. And yes, Richard escaped the city for the iconic Coney Island. He'll show us the famous Wonder Wheel. But before
that, the headlines this hour.
Thousands of doctors across India are on strike after the rape and murder of a trainee medic. They are demanding better protection for health care
workers. The woman killed was a doctor doing her residency at a hospital in Calcutta. Police have arrested one suspect and protesters are now calling
for a swift prosecution.
Tropical Storm Ernesto is gaining strength in the Caribbean and heading now towards Puerto Rico. The Leeward Islands in the Caribbean are expected to
get up to six inches or 15 centimeters of rain. Puerto Rico meantime could see up to 10 inches or 25 centimeters of rain by Thursday.
Boeing received more orders last month than its main competitor Airbus. The troubled U.S. plane-maker took in 72 gross orders in July. Airbus reported
59. Now on delivery, though, also another matter. Boeing says those are down 29 percent compared to the first half of last year.
The United Auto Workers is accusing Donald Trump and Elon Musk of trying to intimidate unions during their conversation on X. Now it filed federal
labor charges over comments like this one from the former president.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), U.S. PRESIDENTIAL CANDIDATE: You, you're the greatest cutter. I mean, I look at what you do. You walk in, you just say, you want
to quit? They go on strike. I won't mention the name of the company, but they go on strike, and you say, that's OK, you're all gone. You're all
gone. So everyone of your is gone.
(END VIDEO CLIP)
NEWTON: Now, to be clear, it's illegal for employers to fire striking workers in the United States. UAW president Shawn Fain called their
conversation, quote, "disgusting, illegal, and totally predictable." The union has now endorsed Kamala Harris for president.
Kristen Holmes is following this story for us.
Kristen, of all things that I expected to come out of this X conversation, this was not one of them. I mean, what is this about? And if the charges go
forward, what kind of punishment could we possibly see?
KRISTEN HOLMES, CNN NATIONAL CORRESPONDENT: Well, I do you want to give a little bit of context here, Paula, because it's not as though UAW and
Donald Trump had a good relationship before these comments. Not only had they endorsed President Joe Biden and now Kamala Harris, they have -- they
being Shawn Fain and Donald Trump -- have a pretty aggressively negative relationship.
Both of them have routinely lashed out at one another. So Donald Trump and not surprisingly his campaign has put out this statement in response to
that lawsuit. They say this frivolous lawsuit is a shameless political stunt intended to erode President Trump's overwhelming support among
American workers.
Then they go on and to say, Democrats' special interest bosses may lie and stoke fear to try and stop President Trump from creating the broadest
coalition of any candidate in history. But rank-and-file workers and their families know the truth.
[16:35:09]
The reason why this really matters in addition to obviously some kind of legal ramifications which we just aren't sure how this is going to play out
is the fact that Donald Trump really sees himself as someone who is able to court these rank-and-file union members. The actual working class. It's
actually part of the reason that he brought J.D. Vance onto his ticket.
Now, if you look at Donald Trump's record with labor, most labor experts say it's not really that great, but Donald Trump is reaching out to these
rank-and-file numbers on something different. It's not just about labor unions or labor in general. It's about the economy as a whole. Donald
Trump's team believes that they can reach out and touch these rank-and-file members by talking about inflation, by talking about the current state of
the economy, 401k's, grocery prices, gas prices.
And they have seen some movement there. We've even seen from leadership in some of these different unions admitting that a lot of the rank-and-file
members vote differently or break from the union when it comes to supporting Donald Trump. So these kind of comments which seemed to be
attacking the actual workers are not helpful for the former president, but it's unsurprising given the fact that Donald Trump was really in a
freewheeling two-hour conversation with Elon Musk where they talked about almost anything.
And the problem with this, when you talk to some of Donald Trump's allies, which I've spent the day doing, is that you're going to get comments like
these off-the-cuff comments that could be detrimental in the long run to Donald Trump's supporters and voters. The same people that he's trying to
reach.
NEWTON: Yes. And that's the whole thing that you've pointed out so well. Two things can be true at once. The leadership at war with Donald Trump,
but then he is with certain segments of the unionized labor movement quite popular.
Kristen Holmes, again, thank you so much. Really appreciate it.
Now, U.S. Vice President Kamala Harris is set to make her economic pitch at a North Carolina rally this Friday. Her campaign says it will center around
lowering costs and taking on corporate price gouging. Now, Harris spoke in favor of eliminating taxes on tips at a rally in Nevada last week. You will
remember former president Donald Trump had already proposed that in June and his campaign is accusing Harris of stealing his ideas.
CNN economics commentator Catherine Rampell calls it a terrible policy no matter who is proposing it. She says both parties need to stop bribing
voters with tax cuts. And Catherine joins us now to take on this question.
You know what I'm going to say to that. I'm like, they're trying to bribe voters. OK. Well, the sky is sometimes blue, but let's get down to the
actual details on this. And I think that a lot of people make good points when they say, if you are a warehouse worker for Amazon making $20,000 a
year you don't get any tips. You pay $2300 in federal taxes. If you make $20,000 a year and you make those tips, you can -- you don't have tax on
them, you might only owe 1,000 bucks on your taxes. It's not a fair policy by any measure.
CATHERINE RAMPELL, CNN ECONOMICS AND POLITICAL COMMENTATOR: Yes. I think one of the many concerns I have with this policy proposal is equity, that
there's nothing inherently more valuable to society, let's say, that comes from serving as a waitress versus as a bus driver or in your example, you
know, a warehouse worker. You know, these are all important, noble jobs, but that doesn't mean that some subset of them should essentially go
untaxed.
And that is one of the problems with this proposal. Another one that is easy to foresee is that it will lead to much more reclassification of
income as tips. You know I should be paid in tips, you should be paid in tips, and I'm sure a clever enough accountant could figure out a way to do
that and stay on the right side of the law, and thereby have our earnings exempt from income and payroll taxes, depending on which person is
proposing this idea.
So there are a lot of distortions here. There are many better ways to help people with low incomes, I'll put it that way, whatever profession they are
in than saying some subset of them don't have to pay taxes.
NEWTON: And when we talk about what's better obviously Kamala Harris trying to improve with voters on the economy. She's going to release this economic
policy. What are you looking for?
RAMPELL: I'll be looking for a few different things. In general I'm interested in her tax proposals beyond this idea to exempt tips from
taxation. Does she stick, for example, to Joe Biden's pledge to not raise taxes on anyone making under $400,000 since depending on how that is
interpreted, it does really limit the options for what might lie ahead.
[16:40:05]
There's going to be a huge food fight over the tax code next year when a large portion of it expires. So whether we're talking about individual tax
rates, corporate tax rates, very interested to see what she says on that. Republicans obviously want the corporate tax rates to go down. Democrats
are looking for it to go up. What is her proposal on that front, as well as things on tariffs.
Democrats and Republicans have had sort of mixed messages on the wisdom of protectionism. They don't like it when the other party does it but they're
more than happy to impose tariffs when they are in charge or to preserve tariffs for that matter when they are in charge. Biden and Harris has been
very critical of Trump's tariff policies and yet they kept almost all of his tariffs in place once Biden got into the White House.
So those things will be of interest to me. And also more generally, how does she talk about the economy. This has been really challenging for
Democrats today to figure out the right balance for celebrating the wins. And there are quite a few of them. Job market looks very strong and has
defied expectations, for example. How do they talk about that good news while not sounding tone deaf, given that American consumers and voters are
still obviously very grumpy about the economy and don't view it particularly good. So those are among the things that I will be paying
attention to.
NEWTON: Yes. And as you said, the messaging really does matter here in terms of what voters are going to hear. It is such a good point.
Catherine Rampell, we'll have you back once she comes out with that policy. Thanks so much. Appreciate it.
Now Pandora is defying a stagnant jewelry market, raising its outlook for the second time this year. The jeweler is benefiting from a wider range of
products. Pandora CEO Alexander Lacik joins me next.
(COMMERCIAL BREAK)
NEWTON: The CEO of Pandora says the jewelry market remains stagnant, but that didn't stop his company from reporting strong quarterly results. You
see the stock up there. Almost 3 percent after the jeweler raised its outlook for the second time this year. It's expecting to grow between 9
percent and 12 percent in 2024. CEO Alexander Lacik says Pandora is successfully becoming a full jewelry brand.
[16:45:01]
The company's broader range of products appear to have helped the bottom line, I'll say. Pandora CEO Alexander Lacik is with us now from London.
Thanks so much for being with us. You know, many want to know your secret here, right, in terms of the strategy because it clearly tends to be
working from what we can see from your results. And I want to point out, this is purely a discretionary spend. Perhaps you would argue differently,
but no one needs the charm or the bracelet or the necklace.
ALEXANDER LACIK, CEO, PANDORA: I mean, that is true. As much as I would love people to need to wear jewelry, that's probably not the case, so it is
a discretionary category. There's maybe one side to it where the jewelry category at large, not just Pandora, is also used for gifting. And people
kind of keep gifting on birthdays and other occasions. So that's probably the need aspect of it, but fundamentally, it is a discretionary category.
And I think one of the reasons Pandora has been doing well in the recent years, it's not just the last quarter, is that we keep investing in a great
experience with the brand. We have a clear positioning. We stand for something quite unique I think in the jewelry space. And more and more
consumers are realizing this and coming forth and interacting with us, and sort of fundamental driver of our success so far is essentially built on
getting more people engaged in the brand. So this is a traffic game for us.
NEWTON: It was quite a risk, though, when you think about expanding, especially that jewelry brand and getting into more and more types of
jewelry. You know, the other thing I found interesting here is that most of the sales happen in person. That can also be a tough sell. What does that
experience like or what are you trying to make that experience like for consumers?
LACIK: So if you take a step back and think about what the category does for consumers or the reasons why people buy or consume jewelry as it were,
you can simplify this by saying there are two main drivers of why you would entertain this category. One would be to use jewelry as a part of your
styling. So let's assume that you buy a new piece of clothing, a bag, or shoes and whatnot, and then you want to kind of add a little spark to that
with a styling accessory which would be jewelry in this case.
So that's one of the kind of reasons why you entered the category. The other reason would be when you're looking to commemorate something that's
really important for you. And we call that jewelry that has a particular meaning to you. Normally, I used my wedding ring as a great example. Of
course, not a particularly fanciful piece of jewelry but the affection I have to this is very high. So the emotional kind of connection I have with
this piece of jewelry is important to me.
Most brands are kind of positioned on the styling side of things whereas Pandora has chosen to play on jewelry with the meaning so we're a little
bit on our own in that space and this is incredibly important that you cannot try to own something that's unique about a brand because it is a
very, very fragmented market with lots of choice for consumers to stand out and do something that's important for consumers is an important thing for
any brand really.
And I think Pandora has managed to carve out a very nice position, which seems to resonate with many, many people across the globe.
NEWTON: Yes, you really, and especially when you point out things like a wedding ring and engagement ring, you're really pointing to the
sentimentality of it. And as you said, that lends to the experience at least your results prove that they do.
Can I talk to you more broadly about consumers? Consumers that may be looking for lower price points, more value? I mean, what has your company
been seeing?
LACIK: So let's say, so first of all, the last few years has really put all consumers to the test. And I'm now not talking about the ultra-rich people,
but you know, the middle of the market, which is the segment that we are focusing on, that's also where the largest volumes in the jewelry space are
being sold. So, you know, we've gone through the pandemic then we have interest rates and recession and inflation and all of those good things.
All of that has essentially put a pressure on the discretionary spend. And as we just said a minute ago, it is a discretionary category. So the pie
has somehow not been growing as it used to do. Pre-pandemic the jeweler category globally was kind of growing at 3 percent to 4 percent. So
essentially two times GDP as a kagar for the last 10 years or so.
Post the pandemic, what we see globally is essentially that on a good day, I would say that the jewelry category is flat. I think maybe it's new
trading a couple of points negative in the last two years, which I think is a sign that the discretionary spend in that cohort is under pressure.
[16:50:01]
So you have to work harder to essentially pull people into brands. And in these type of categories people simply have a little bit less money to
spend. So I do think that, you know, having a clear brand idea, offering great value when people are a little bit under pressure, those are
important aspects of any brand that is trying to succeed in this type of environment.
NEWTON: Well, they certainly are impressive results and we will continue to follow their progress.
Alexander Lacik, thanks so much. Really appreciate it.
And I do want to clarify that these share price that we put up earlier is the American depository receipts and not to the European share price.
Now, only a few weeks left to enjoy summer here in New York. So why not take a trip that Coney Island? He didn't take me. Can you imagine? Richard
Quest rode the famous Wonder Wheel with its owner. That's next.
(COMMERCIAL BREAK)
NEWTON: And there it is and all its glory, glorious day here I have to say. New York. There you have it, known for skyscrapers and of course some
crowded streets. It is busy, a busy afternoon, summer afternoon here in New York. When you go over to Brooklyn, though, Coney Island offers a bit of an
escape from all of this. It's home to one of the most famous boardwalks in the United States along with games, rides, and yes, wacky sideshows.
Wouldn't even know you're that close to New York. Look at that beautiful beach shot. It's also known for the Wonder Wheel, which was built more than
a century ago. Now the Vourderis family has owned the park for generations. Deno Vourderis is the latest to carry on that legacy and Richard Quest
joined him for a ride on his Wonder Wheel.
(BEGIN VIDEOTAPE)
DENO VOURDERIS, CO-OWNER, DENO'S WONDER WHEEL AMUSEMENT PARK: This is the jewel of Coney Island right here.
RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Right.
VOURDERIS: That's the Wonder Wheel. It's 104 years old, but it's not a Ferris Wheel. It's an eccentric Ferris Wheel because it's part Ferris
Wheel, part roller coaster. It's part of the whole Coney Island, United States ingenuity.
QUEST: What is the attraction to it, do you think?
VOURDERIS: I mean, it's full of history. It means -- what makes the Wonder Wheel so special is it means different things to different people. It could
be a first date. It could be a proposal. It could be an anniversary. It's the most romantic ride in the world. And in 1920 it was the most thrilling
ride in the world.
[16:55:01]
QUEST: Are you looking to a good summer this year? What's your gut telling you, Deno?
VOURDERIS: My gut is telling me that people need, not want, people need a place to unwind. I mean, we're always looking down on our devices. We're
not actually living anymore. So I think places like Coney Island are essential businesses.
QUEST: People meet here.
VOURDERIS: People meet here. My grandparents used to date right on the beach out here in 1948.
QUEST: And you sir, you sir, follow me around, tell me what your --- come in. What's your history?
UNIDENTIFIED MALE: My parents met here on the beach.
QUEST: Your parents met here on the beach?
UNIDENTIFIED MALE: They lived here in Brooklyn and they would take the train in. They came as two groups of friends and they met right here on
this beach.
VOURDERIS: 1920, we have the Coney Island's oldest attraction. When COVID came by, everybody was cutting and running, we doubled down. We opened
Coney Island's newest attraction because you either believe in what you're doing or you don't.
QUEST: OK.
VOURDERIS: And we believe in this place. We believe in its future.
QUEST: Right. Should we go on this?
VOURDERIS: I mean, I'm ready. Are you ready?
QUEST: I mean --
VOURDERIS: We haven't killed anybody. Let's go.
QUEST: OK. Let's go then.
VOURDERIS: You know about salt water corrosion. Yes. We're constantly repainting, we're constantly resurfacing, we're constantly x-raying all
these pieces of metal and make sure there's no cracks. That's some new stuff that's been around now, but the Wonder Wheel has definitely stood the
test of time. I'm not going to tell you when it's going to swing. We're just going to keep talking and we'll see what happens. You don't have to
hold on. Hands up.
QUEST: No. I --
VOURDERIS: You're not supposed to make that sound.
QUEST: Looks like the swinging -- oh. Whoa.
VOURDERIS: There you go. But here it is. This is Coney Island, guys.
QUEST: Right.
VOURDERIS: We have --
QUEST: What do you need?
VOURDERIS: What do we need here?
QUEST: Yes. What do you need? As you look around at it, what is it that you actually now need in Coney Island?
VOURDERIS: I think we could use a little more investment. I think people are still a little afraid. I think we need more people to not be afraid.
When COVID hit, we knew the future of this place. And that's what always kept Coney Island coming back is there was always somebody who knew this
place has potential. There was always somebody who believe in its future and honestly, I believe if we remember who we are, then our best days are
ahead of us. There's so much potential. Coney Island has always had that reputation of being a little, you know, old New York, right? Let's say old
New York.
QUEST: Joy in your face.
VOURDERIS: Joy in your face. And you know what, some of it is still is like that, and we don't want to lose everything that we are but we want to kind
of find that middle ground. And I think we're slowly getting there.
(END VIDEOTAPE)
NEWTON: Wasn't that fun? I wish Richard had taken me. Can you believe it just a few short rides, subway ride from the center of New York?
We will have the final numbers from Wall Street right after this.
(COMMERCIAL BREAK)
NEWTON: U.S. markets rallied after a wholesale inflation cooled more than expected. All three major indices finished at near record. Pardon me,
session highs. The Dow picked up 408 points.
END
