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Quest Means Business
US Stocks Fall To Start Historically Difficult Month; Cathay Pacific to Inspect its Airbus A350 Fleet; Russian Strike Kills 51 People at Military Educational Facility; Judge Orders Trump to Stop Using Song "Hold On, I'm Coming"; Oasis Fans Outraged Over Dynamic Ticket Pricing; Michael Lewis Details Upcoming Book on Sam Bankman-Fried; U.S. Justice Department Charge Hamas Leaders Over October 7th Attack. Aired 4-5p ET
Aired September 03, 2024 - 16:00 ET
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RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": Closing bell ringing on Wall Street. There is an irony of Vanguard and NST, Northern
Star and these indexes ringing the closing bell.
Look at the markets and you'll see how heavily and sharply lower they are, so bring us out -- close out our miseries, sir.
Ring the bell and hit the gavel. Oh, they don't know where the gavel is. There we go, yes, a bit later, one-two-three, well, there we are. That's a
gavel worthy of a day when we are off one-and-a-half percent. We are under 41,000. The markets, you see the NASDAQ down three-and-a-quarter percent,
all of which requires detailed understanding and explanation.
The markets and the events.
The end of the summer could spell bad news as you see, September has a track record for getting under investors' skin.
Cathay Pacific is inspecting it entire A350 fleet after finding problems with the engines made by Rolls Royce.
Michael Lewis joins me in the C-suite in the sky. Why he still has some sympathy for SBF, Sam Bankman-Fried, the convicted founder of the crypto
exchange, FTX.
Live from New York on Tuesday, September the 3rd. I am Richard Quest, bell- less, but I still mean business.
Good evening.
We begin tonight, US stocks have taken a hit as Wall Street enters a historically difficult month for traders.
All the three major indices have closed sharply lower. It is the worst day for the S&P since the market route at the beginning of August.
All sorts of reasons: A business survey showing a slowdown last month in manufacturing activity helped fuel what we are seeing, and we are still a
month away from October and Halloween, which seems to have come early for investors.
Thank you. The September scaries are back.
The month of October, historically the worst for stock market returns. On average, the S&P 500 drops 1.2 percent in September, according to Dow Jones
data going back to the 1920s.
The last four years have been particularly difficult and with an election only adding to this year's uncertainty, you can see this September we could
have some way to go.
Paul La Monica. Guru La Monica is the senior markets analyst writer of "Barron's." Paul is with me.
All right, is there a specific reason that you can trace why on a random Tuesday in September, the markets should fall so sharply.
Paul, can you hear me? No. We are having difficulty hearing Paul, Paul is not hearing me. Paul, one more time. Paul La Monica, do you hear me? No. We
will try and reestablish a connection to Paul La Monica.
I will show you the markets just very briefly. Let's have a look again at the Dow and the S&P and the triple stack to give you a perspective on what
is happening and why things are moving as they are.
The Dow is off one-and-a-half percent at the close of business and close of trade today down off the lows, but still sharply down. Hopefully, Guru La
Monica has reconnected to us. You can hear me now, Paul.
PAUL R. LA MONICA, SENIOR MARKET ANALYST WRITER, BARRON'S: I can hear you loud and clear, Richard. Nice to talk to you --
QUEST: Excellent.
LA MONICA: Although, I wish it was happier day than this.
QUEST: Well, that is my question. Is there a valid reason or that we can pin our -- that we can hang on coat on why on this random Tuesday in
September, the market should fall so sharply?
LA MONICA: Yes, a day after Labor Day, people coming back from the long weekend, the kind of unofficial end to summer. Remember, September is
notoriously a difficult month for the markets and we are seeing that really clearly today.
I am not so sure whether or not there was a catalyst. There are for concerns about a slowdown in China and obviously, that would impact
semiconductors, the chips sector, broader tech sector extremely, you know, they are very sensitive to any moves out of China. But I think NVIDIA
earnings while they were good last week, they weren't as great as we are accustomed to and investors are trying to grapple with -- are these
valuations reasonable?
The Magnificent Seven traded a very lofty premium to the rest of the market. So, I think we might have this period of time where investors have
to just figure out what is the true fair value for companies like NVIDIA, Alphabet, Meta, et cetera.
[16:05:05]
QUEST: So that is a classic, if you will, repricing of risk within individual categories and genres and segments -- sectors.
LA MONICA: Yes, definitely. And if you look at what happened today, Richard, we did have a bit of a rotation. It fizzled out at the end of the
day. I guess, it was a really gruesome close. But at one point, we were looking at utilities and staples and real estate all higher. It looks like
only staples and real estate finished the day higher, utilities a little bit lower, but these are the classic bond proxies, big dividend payers. It
is a flight to safety.
You know, you look even at the NASDAQ 100, I found them amusing that Pepsi and Keurig Dr. Pepper are two stocks in the NASDAQ 100, decidedly not big
tech, they were up today while the rest of the market in town was down sharply.
QUEST: I am looking at the Dow 30 and our old friends Verizon, P&G, J&J, Coca-Cola, they are the only bits of green in the market. And that is what
one would expect to see and not only if you will, on a flight to safety, but a sectoral revaluing of risk to safer harbors.
LA MONICA: Exactly investors realize that a company like NVIDIA to be fair, does pay a dividend, but its tiny. A lot of other big tech companies pay
very small dividends. If you want yield, you really have to go in those safe haven staple companies that have steady earnings growth and Berkshire
Hathaway, let's remember there, doesn't pay a dividend famously, but owns a lot of stocks that do, including Coke.
Berkshire Hathaway hit another record high today. Warren Buffett's company is still worth more than a trillion and getting bigger by the day.
QUEST: Final quick thought. It would be perverse though bearing in mind economic growth, the improving situation, the Fed about to cut rate, it
would be perverse to interpret these movements as a potential collapse of the market or anything like that, would it?
LA MONICA: I think it would be. You know, we didn't have and don't seem to have any inklings of a Lehman like event, heaven forbid to go back to 2008
for those who remember. We don't even really see the type of stress that would be akin to what happened with regional banks that failed in the
spring of last year and happened again earlier this year with NYC, you know, New York Community Bank.
Right now, I think investors are just trying to rationalize what they should be paying for stocks like NVIDIA. There doesn't seem to be a crisis
looming. Hopefully, the jobs numbers that we get on Friday will show stable jobs gains, maybe not gangbusters, maybe a slowdown in wages, which would
mean less pressure on inflation and that gives the Fed the greenlight for that quarter-point rate cut you in a couple of weeks.
QUEST: Guru, delighted. Thank you, sir. Thank you.
Cathay Pacific has canceled dozens of flights on Monday after one of its Airbus A350 planes had an engine issue. The problem was discovered shortly
after the flight took off from Hong Kong. The plane returned to the city about an hour later.
Cathay is inspecting its entire fleet of aid A350s. Unnamed sources telling Reuters and others that the problem is with the fuel nozzle and with fuel
lines within the engine.
Cathay says it is in touch with both Airbus, which makes the plane and the engine maker, Rolls Royce.
Now, the engine involved, it is called a Trent XWB97. Ninety-seven stands for 97,000 pounds of thrust and it powers the A350-1000 which is the
largest of the 350 variants.
Airbus has a backlog of 211 of 1,000 versions of the aircraft. Rolls Royce is the sole designated engine supplier for the A350 and so, if this is a
problem, then it is going to arguably be across more planes if it is a problem.
Engine manufacturers are having a host of difficulties that is giving woes to airlines. The Boeing 787 has a separate and different problem this time
with the Rolls Royce Trent engine, Pratt & Whitney is facing issues with its engines. Many airlines have an AOG, aircraft-on-ground because the
engines require more maintenance, they don't have enough spare parts or spare engines and the manufacturers have a full backlog on their hands.
[16:10:01]
Several carriers have grounded -- Cathay, JetBlue, Spirit, Wizz Air. In fact, Wizz Air's chief executive told me of his frustrations earlier this
year about engine problems.
(BEGIN VIDEO CLIP)
JOZSEF VARADI, CEO, WIZZ AIR: We just have to go through the cycle. It is usually annoying. It is irritating. It is very inefficient, but as we say,
we get financial compensation and we are very focused on getting over with this operationally and as soon as possible, get the fleet back in the air.
(END VIDEO CLIP)
QUEST: Brian Sumers is with me, the editor of "The Airline Observer," and it has always good to have you, Brian.
To some extent, we know all about Airbus and Boeing's problems of supplies, et cetera, et cetera. But this engine bit is the unspoken part, but you and
I when we speak to CEOs, they're spitting feathers that the amount of time that the engines on the wing is getting less and less.
BRIAN SUMERS, EDITOR, "THE AIRLINE OBSERVER": Literally, I was talking with a senior airline executive last week and he said the same thing. He said,
Brian, everybody worries so much about Boeing. It is the engine manufacturers, they can't deliver the engines on time. Sometimes the
engines are faulty, sometimes they need to be repaired or replaced much sooner than they need to be.
And I think people forget, they think that this is just some component. Richard, these engines are extraordinarily expensive, tens of million
dollars per engine. And as you mentioned there, if you want to buy an Airbus a350, you have one choice. You go to Rolls Royce. I mean, how many
other things that we buy and we only have one choice of where we can buy them.
QUEST: Now, that of course has been a relatively recent trend for even the smaller aircrafts, which will have one choice of engine. And the argument
goes, sometimes its Rolls that gets it, sometimes its GE that gets it.
SUMERS: Yes. You know, this is where the engine manufacturers push back a little bit. Airlines didn't want to buy brand new what they call clean
sheet airplanes from airbus and Boeing. It is why we are still flying lying the 737, that's 50 years old. But they wanted brand new engines. And as you
know, it is extremely expensive to build an engine from scratch with the latest technology.
And if you have three or four engine choices, how is Rolls Royce going to recoup its money back for building this amazing engine if airlines can just
bid out to the lowest bidder.
And so we are getting much, much better technology, that is something that is very important. These airlines -- these airplanes sip a lot less fuel
than the airplanes that came before and it is all about the engine.
QUEST: In fact, all -- in fact, when we talk about the Neo option on the 330 or the 320, the 320 Neo, that stands for new engine option.
I wonder though, we don't know the seriousness. I mean, Cathay says, it will have the fleet back in the air by the weekend and it is a fuel nozzle
or fuel line problem.
But the ability of the engine manufacturers to keep coming up with new engines that are reliable and sustainable is just -- it is almost
impossible.
SUMERS: It is very impossible. And as airline executives tell us, Richard, it depends on where in the world you are.
So Tim Clark, the president of Emirates, has a problem with this exact engine and that was before what just happened happen.
Tim Clark's issue with the engine is that it is not reliable enough for an airline that flies hot routes, far distances from the desert. He said that
in order for them to fly, this airplane, the A350-1000, it is going to have so much time in maintenance that it is not worth it for them.
So I do think that the engine manufacturers have to figure this out. There is a bit of a blame game depending on who you talk to, right, Richard.
If we talk to the aircraft manufacturers, they say it is the airlines' fault. Airlines say it is the manufacturers. Hard to tell exactly who is at
fault here, but we are kind of burying the lead, right, Richard?
I mean, Rolls Royce is doing an okay job here. Pratt & Whitney in the United States building A320 Neo family engines. That company is not doing
so well.
QUEST: It is doing a terrible job.
The AOGs, aircraft-on-the-grounds for the 320 on the Pratt & Whitney, I am horrified when I hear CEOs telling me, oh yes, we've got 30 planes on the
ground waiting for a replacement engine or a new serviced engine and the compensation they get really doesn't cover the cost of the aircraft, not
generating revenue for the -- it is one thing if you don't get the plane at all, it is another if you've scheduled your budget on the basis of the
plane and you can't use it.
SUMERS: Absolutely. During its last earnings call, JetBlue said it was going to defer, I think 44 airplanes from now-ish until 2030 because they
couldn't take the pain of taking an aircraft, paying for it and then sitting it on the ground.
[16:15:11]
So they're going to try again after 2030.
QUEST: Always good to have you. You're just the man we need on these stories. Very grateful. Thank you very much indeed.
It is QUEST MEANS BUSINESS. Tonight, protesters in the street for the third day in Israel. The prime minister remains defiant about finding a ceasefire
agreement.
(COMMERCIAL BREAK)
QUEST: A Russian strike against a military academy in Central Ukraine has killed 51 people. It is one of the single deadliest missile attack since
Russia began its full-scale invasion.
President Zelenskyy says it underscores the need for more air defense systems.
CNN's Fred Pleitgen reports.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Parts of the military educational facility almost completely destroyed,
dozens killed here that Ukrainians say when two Russian ballistic missiles struck, leaving those on the ground with no time to get to bomb shelters.
More than 200 were also wounded and a nearby hospital damaged, Ukraine's president irate.
VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT (through translator): The Russian scum will undoubtedly be held accountable for this strike. And once again,
we urge everyone in the world who has the power to stop this terror, air defense systems and missiles are needed in Ukraine, not in a warehouse
somewhere, long-range strikes that can defend against Russian terror are needed now, not sometime later.
PLEITGEN (voice over): Russia has been accelerating its aerial bombardment of Ukraine's cities and infrastructure.
A massive barrage aiming for the capital, Kyiv early Monday, just as children were gearing up for the first day of school after summer break.
One of the places damaged, a management college.
UNIDENTIFIED FEMALE (through translator): We got up and it had already started to boom. We ran out into the yard near the dormitory. We heard
something flying and something being shot down.
PLEITGEN (voice over): On Sunday, more 40 people injured after Russian airstrikes on the north eastern city of Kharkiv. Responders desperately
trying to save the victims.
"There is an ambulance on the other side," the photographer says, "We won't be able to carry him there," she answers.
While Ukraine's air defenses often take down Russian missiles, the consequences can be devastating when they don't. The strikes on Poltava
were one of the deadliest single attacks since the start of the war.
[16:20:08]
We were on hand when a ballistic missile annihilated a funeral wake in Eastern Ukraine in October of last year, killing 59 people and 46 were
killed were killed in Dnipro in January 2023 when a heavy cruise missile blew a giant hole into an apartment block.
PLEITGEN (on camera): The Ukrainians say the reason why the damage here is so extensive is that this building was hit with a cruise missile called the
KH22. That is designed to destroy aircraft carrier strike groups. And obviously, when it hit the building, it completely annihilated it, burying
dozens of people underneath.
PLEITGEN (voice over): Now, yet another mass casualty strike leaving Ukraine's leadership angry and vowing revenge.
(END VIDEOTAPE)
QUEST: Fred Pleitgen is with me in Kyiv.
Fred, has the -- with all of this and the increase from Russia, has the mood changed? I am hearing that there is a greater pessimism. Is that what
you're hearing and seeing too?
PLEITGEN: Well, I would say to a certain extent there is a greater pessimism than there was before. One of the things that we have to keep in
mind is that what happened today, obviously also, of course, plays into a very difficult military situation for the Ukrainians, Richard.
On the one hand, they do have their incursion that they started into the Kursk Region of Russia, where they are apparently still moving forward a
little bit, but that has also slowed down.
However, for the Ukrainians on the eastern front, the situation remains very difficult and certainly is getting a lot more difficult with the
Russians pushing closer to the very important town of Pokrovsk.
But one of the main issues in all of that is that the Ukrainians are suffering from a severe manpower shortage. So one of the things that they
have vowed is to protect their personnel and clearly they are now acknowledging something went wrong as far as that is concerned. In fact,
that Ukrainians have launched an investigation into the strike that happened today to see how measures to protect their personnel at facilities
like the one that was struck today, can be improved -- Richard.
QUEST: Fred Pleitgen in Kyiv. Thank you, sir.
Israeli protesters have returned to the streets on the third day of pressuring the government to reach a ceasefire that would free the
hostages. Some of the hostage relatives' families of hostages have demonstrated outside of Israel's military headquarters.
Prime Minister Benjamin Netanyahu has said, Israel will continue to apply military pressure on Hamas. At the same time, Hamas is warning, more
hostages will die unless Israel agrees to a deal.
Nic Robertson is in Tel Aviv.
It was always going to be difficult, dangerous, and just downright horrible, but now, it is clear -- the obviousness, Hamas basically saying
if it looks like you're going to rescue hostages or otherwise, we will murder them. That's the real situation now.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, that was the object lesson that they served over the weekend with the bodies of the six
hostages. It is absolutely very clear where their mindset is and they have no compunction from doing it and they have no compunction from making these
people, forcing them into recording messages before they are killed.
So at every single level, Hamas is manipulating the situation and they are doing it because they know, we know that because this is becoming clear by
the evidence of what they are doing clear because we know Hamas' leader what he thinks. They are trying to put these divisions into Israeli society
and try to get people on the street to put pressure on the prime minister.
We were down there are right where those protests we are just showing on the screen there. We were down there earlier on today, and I talked so some
of the protesters about the prime minister's position, about what they think about that, about his pushback and refusal to do what they say to get
the hostages back.
This is what they told me.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: He is a liar. That's it. All fraud. I don't believe one word he says.
ROBERTSON: And how long will you keep protesting?
UNIDENTIFIED FEMALE: As long as it takes.
UNIDENTIFIED MALE: As long as the hostages are in Gaza, normal life in this country and normal governing of this country will not be allowed to happen.
(END VIDEO CLIP)
QUEST: Nic, the British government announced a sort of limited restriction on selling arms, it is not going to have any practical effect, the new
Labour government, but the prime minister of Israel, Netanyahu has been seething about it.
Is it going to have any difference?
ROBERTSON: Look, he is not happy with this particular British government because this government hasn't offered a legal opinion to the ICC over the
request for arrest warrants to a committee or a panel of judges at the ICC including Prime Minister Netanyahu.
So the British government has not, as some have it appears, tried to block that and now, they've said okay, 30 of these licenses, export licenses for
weapons that we think might -- for items that might be used in weapons, that might be used in conditions that break international law, we are not
going to send them. That is 30 out of 350.
[16:25:12]
Interestingly, the British Defense minister today was laboring the point, not to coin a pun intentionally, but laboring the point that this wouldn't
have an impact on Israel's military ability, but it is a warning signal. It is a sign of an effort to say to Prime Minister Netanyahu in diplomatic and
clear and loud and public terms, we disapprove of some of the things you're doing and now, we are going to make some modifications to the way we
interact with you.
QUEST: Nic Robertson in Tel Aviv, grateful, sir. Thank you.
Bruce Springsteen, Beyonce and The Rolling Stones, they all have the same gripe. They say Donald Trump has used their music at his rallies without
their permission and they are not the only ones.
The artists are pushing back against the politicians, coming up in a moment.
(COMMERCIAL BREAK)
QUEST: There are officially nine weeks until the US election. On Wednesday, Donald Trump will hold a town hall in the battleground state of
Pennsylvania.
The former president often closes out his events for the popular song and indeed, it has got him in to trouble several times.
"Hold oh, I'm Coming" by the late Isaac Hayes at a Trump rally last month. A federal judge has ordered the Trump campaign to stop using the song at
its events as the estate has sought an emergency injunction to stop it being played arguing the campaign does not have approval.
[16:30:19]
Objections to Trump's music choices are not unusual. Ever since he first entered politics, the slew of artists or their families have objected.
You've got Beyonce, Rihanna, Abba and Queen are just some of them.
Ryan Young is in Atlanta and joins me now.
And the argument goes they put the song out there therefore people should be entitled to use it. But it's not as simple as that, is it? You need
copyright permission if it's going to be a public performance of the song, which is what would it would be if it's in a stadium.
RYAN YOUNG, CNN NATIONAL CORRESPONDENT: Well, exactly. And first of all, you've got to protect the artists. But, Richard, when you think about it,
we're in Atlanta. That's the home for so much music across the world. People come and listen to the soundtrack of life from some of the artists
here, from the city of Atlanta.
But to put this in perspective, the Isaac Hayes family has been asking Donald Trump for months now and for years to stop playing the song,
especially because they feel like they did not have the rights, the intellectual property to play the music, and they were not paying to use
the song.
So it's all about branding these days, Richard Quest. We know that firsthand because everybody wants to have a brand to be able to market. The
family has not had control of the song for some 50 years and they got that copyright rights back recently and they wanted to make sure that all that
money that they have lost for all these years could be recouped.
But if someone is playing it and still played it even after they told them to stop it infringes upon that brand as they move forward. Donald Trump,
for his part, and his lawyer say not so fast, they felt like it was murky. Take a listen to his lawyer this afternoon.
(BEGIN VIDEO CLIP)
RONALD COLEMAN, TRUMP CAMPAIGN ATTORNEY: He did order a partial injunction with respect to future use of the song, which we had already agreed we
would not be making. The campaign doesn't -- has no interest in annoying or hurting anyone. If the Hayes family feels that it hurts or annoys them,
that's why we're not going to force the issue.
(END VIDEO CLIP)
YOUNG: So let's be clear here also. The family wanted Donald Trump also to take all the videos now from the Web site where the song was playing in the
background. The judge sort of stopped that for right now. But Isaac Hayes III, the family is very happy how this moves forward because their whole
point here is, one, Donald Trump and his campaign should be paying to use the song if they want to use it, and two, after the family decided to
request them to stop playing it, no one ever listened to them.
Take a listen to Isaac Hayes III speaking on the steps right after Trump's attorney.
(BEGIN VIDEO CLIP)
ISAAC HAYES III, SON OF MUSICIAN ISAAC HAYES: I always want to make sure that we are able to protect my father's legacy. My father lost the rights
to his music a year before I was born. That music started to come back so after 56 years, the last thing that we were going to do is sell our
copyright.
He wrote songs that were the soundtrack of the '60s and the Civil Rights Movement. "Hold On, I'm Coming," the "Soul Man," those records were part of
that and that's extremely important.
(END VIDEO CLIP)
YOUNG: Such style and reverence for this man in this city.
QUEST: Right.
YOUNG: And especially with those lyrics in the song.
Richard, when that song comes on, you can even see the former president, he can't help himself, he wants to dance to it. The whole idea is not whether
it's political or not, it's whether or not you get to pay to play.
This is not all over. We got to hold on because this court case will continue. The family does plan to sue for the money for the times that
Donald Trump's campaign has played the song over and over and over, even after they were asked to stop playing the song.
QUEST: I suppose if they tried to license it, A, it would be very expensive and B, the license would be refused.
YOUNG: And BMI is involved in this and so that is a part of the process.
QUEST: Ah.
YOUNG: Trump's attorney basically is trying to say there was some murky waters when it came to licensing.
QUEST: Yes. Yes.
YOUNG: So I'm glad you picked up on that. That was all that legal speak, but guess what? They do have that certificate that said that it belongs to
the family. So this back-and-forth will play out in court. It seems like maybe down the line the Trump campaign may have to pay to play.
QUEST: Grateful. Thank you, sir. Thank you very much.
Oasis fans -- staying with music -- are so angry over the ticket prices for the band's upcoming reunion tour that the U.K. government launched a
review. Officials are going to look into the practice of dynamic ticket pricing, which lets ticket sellers adjust prices according to real-time
demand. So the reunion tour for Oasis were advertised at $195. Demand was so high some fans had to pay $460.
[16:35:03]
Hadas Gold is with us to talk about this.
I am conflicted here, Hadas. I am going -- and indeed you should be, too, as a business journalist because on the one hand free market. If that's
what people will pay, dynamic pricing, it works for airline seats. It work for -- or am I just being a miserable old git?
HADAS GOLD, CNN CORRESPONDENT: Well, listen, and there is an argument being made that's been made by some big artists like Bruce Springsteen, who has
actually said, listen, you know, this is a way to get more money in the pocket of the artists because otherwise scalpers would be just buying up
all these tickets and selling them for these prices anyway on secondary resell value.
So why don't we get the money into the actual artist of the people, as he said, on stage, who are sweating for three hours and get this money to
them? And of course, the industry has changed. The artists don't make as much money from things like album sales as they do now from concerts.
But the issue I think for a lot of these fans for Oasis, for other bands, is the whole transparency of it because what some of these fans were saying
is that they would be logging in en masse to try to get these tickets. They're very excited. This is a reunion tour. Oasis broke up in 2009
acrimoniously. This is a big deal for them coming back.
But these fans are saying they logged in, they had to wait hours in a virtual queue before they could even buy their tickets, and some of them
are saying, I would put a ticket in my basket that was for the face value normal price only to see it shoot up once it was in my basket up to these
hundreds of dollars, making it completely out of reach. So they're saying that it's a transparency issue for them. And as you noted --
QUEST: What's the solution, though? What is the solution bearing in mind you've got, you know, you have demand vastly outstripping supply? In the
case that you've just given, I mean, they didn't really have it in the basket. What they actually had was if it's available, I'd like to buy that
seat.
GOLD: I mean, perhaps then the answer then is even greater transparency or a change in how these sort of virtual queues work.
QUEST: Right.
GOLD: That it's very clear what you are lining up for and what you might be able to get because for a lot of these fans, they were waiting for six
hours or longer with what they thought was a more regular face value ticket only to have it shoot up so high up that they just couldn't afford it. But
regardless of how you think this should go, the U.K. government is looking into this now. The Prime Minister Keir Starmer even saying this is just not
fair, it's pricing people out of the market.
And the Cultural Secretary Lisa Nandy saying very explicitly that they're going to be consulting on secondary ticketing, how to deal with what they
call ticket touts. They're going to look at dynamic pricing and specifically she said the transparency around it. So you can kind of get
from that. It's not necessarily going to outlie it, but, you know, let people know, make it more explicit what they are getting themselves into.
And I should also note the E.U. Commission, according to "The Guardian," is also going to be looking into this as well.
QUEST: Oh, I guarantee you, Hadas, you can take this to the bank. When all is said and done, there'll be no change. This has been a problem for as
long as I can remember. And nobody has managed to -- but first of all, the initial sale and then the question of secondary pricing, secondary
reselling, giving back tickets against -- you'll watch it.
Did you get a ticket yourself? Did you manage to get one?
GOLD: No. I'm a big -- I like Oasis, but I'm not as big of a super fan to wait six hours in a virtual queue.
QUEST: And they're not -- and then have to pay three times the price.
GOLD: Yes. Exactly.
QUEST: Exactly. All right. Hadas, great to see you. Thank you very much. Nice to have you back on this side of the Atlantic.
This is QUEST MEANS BUSINESS where there's a lot more as you and I continue our Tuesday together.
(COMMERCIAL BREAK)
[16:41:11]
QUEST: It's been nearly two years since the so-called crypto winter and the downfall of FTX, the price of bitcoin, on the path not surprisingly has
recovered. FTX, and its former chief exec Sam Bankman-Fried certainly not. He is currently serving a 25-year sentence in a federal prison.
The author, Michael Lewis, spent plenty of time with SBF before everything went down the drain and certainly got a chance to look at the
considerations. This is the book, it's "Going Infinite," it's called, and it paints the portrait of an ambitious, unfocused, and well, eventually
dishonest man.
Lewis joined me in the C-suite in the Sky. I've always enjoyed Michael Lewis' books so having him talking about SBF was a real treat and he told
me all about the felon once considered to be the crypto king.
(BEGIN VIDEOTAPE)
MICHAEL LEWIS, AUTHOR, "GOING INFINITE: THE RISE AND FALL OF A NEW TYCOON": One of the curious things about the whole FTX fiasco is that nobody, like
zero people, actually said what the problem was or predicted it. With most like Madoff-like scandals, there's someone out there who's detected a
problem. And in this case, the problem was really simple that $10 billion of customer deposits were not in FTX, but in Sam Bankman-Fried's private
little hedge fund trading firm.
And no one knew it. And so it was -- and I didn't know. I was shocked when it all went down. I did have a sense in the year I spent reporting before I
wrote the book, and before it collapsed, that this is a chaotic situation and anything could happen. But I didn't know what anything was.
QUEST: Let's talk about him. When he's having a conversation with Anna Wintour, inadvertently signing himself up to sponsor if not pay for the Met
Gala, but he's playing a video game --
LEWIS: "Storybook Brawl" it's called.
QUEST: Right.
LEWIS: And tweeting and answering e-mails, and all -- so I was in a hotel room with him while he was doing it. He was Zooming with her. And I just --
we've been walking down the hotel all the way I said, what are you doing, I got to do a Zoom with someone who I don't really know who she is. What's
her name? Anna something, Anna Wintour. And I said, you don't know who she is?
He goes, no, I don't even know what she wants. So I said, can I just come watch this? And he -- this is the way he went through life. If you go look
at some of his TV appearances, you will see Sam Bankman-Fried's eyes going like this the whole time when he's on TV and you think, oh, he's just
someone whose eyes don't -- he can't control. No, his eyes are going to the video game he's playing, while he's on live television. He just -- he was
constantly distracted, constantly doing more than one thing at a time.
QUEST: I always think one of the attributes of somebody when you meet them, the test I always is, would I like to sit next to them at dinner?
LEWIS: No, you want to sit next to him at dinner. You'd be -- so in his prime when there'll be a gathering of, say, Wall Street dignitaries,
there'll be eight people, all of them either heads of banks or heads of hedge funds, or whatever, Sam would be the one everybody would end up
listening to. Lots of interesting stuff came out of his mouth.
He has no ability to have a normal dinner party conversation like, you would come away from the dinner feeling like, I just learned an awful lot.
He didn't ask me a single question about myself. He knows as little about me as when he sat down.
QUEST: So the commingling, the criminal commingling.
LEWIS: Right.
QUEST: Of FTX with Alameda Research Money, do you think he -- did he know it was wrong? Did anybody -- I mean, I know there's lots of evidence.
LEWIS: So the two red lines. Right?
QUEST: Yes.
LEWIS: It was the initial commingling. It starts that way, right. I mean, he didn't even want to start a crypto exchange.
[16:45:00]
He tried to get other people to start it so he could trade on it and no one would start it so he started it himself. In the very beginning FTX had no
bank accounts. So if you wired money in, it had to go to an Alameda bank account. And one of the peculiar twists to the story is the people who
wired money in the beginning, these were not widows and orphans. This was like Jump Trading and Jane Street and Hudson River.
The most sophisticated traders in the world knew that they were wiring money in the wrong place because it said Alameda Research on the wire
instructions and why nobody has pointed this out, I don't know. But in the beginning, they all thought, well, he's got to use Alameda bank accounts
for FTX and so it's in the wrong place, but it doesn't matter very much.
What matters is when he starts using that money for his own purposes. And the trial revealed when he did that. It was June of 2022 and at that point,
do I think he knew that, yes, he was effectively using customer deposits to repay crypto loans and he was putting customer deposits at risk, I don't
see how you could not have known.
QUEST: This is a tough one. Do you have any sympathy for him?
LEWIS: Yes. I feel -- when I think about the story about how I feel about the main character, it's not anger exactly. It is a kind of tragic
inevitability to what happen. He should never have been allowed to be in this situation, that his attitude towards risk was quixotic. The grown-up
world had a chance to constrain him -- hundred and something venture capitalists threw more billions at him without asking how this place ran. I
feel like he should have been kind of parented by the world a bit better.
QUEST: You just said quixotic. What if you're Don Quixote, did he -- because he has all the --
LEWIS: Yes. Yes.
QUEST: He has all these grandiose ambitions.
LEWIS: Yes. When I met him, people are telling him he's going to be the world's first trillionaire, and that he can -- and of course he can prevent
the next pandemic and all that. So I think he's -- so I think his motives mixed, but there was good stuff there. His character is mixed. There's good
stuff there. I feel really sad for him. You know, he's in jail for 25 years. He's not going to -- there's no parole. So it's -- I do feel that --
I do feel it's -- it feels like a tragedy.
(END VIDEOTAPE)
QUEST: And you can read about the tragedy. Michael Lewis, "Going Infinite: The Rise and Fall of a New Tycoon" is his new book. And we'll talk more
about the actual role of crypto and Michael's view on the role of crypto. And my dear friend and colleague Julia Chatterley tomorrow will give us her
opinion on Michael Lewis' opinion on crypto. You'll want that.
QUEST MEANS BUSINESS, it's been a horrible day on the market. Truly awful. And we're only at the beginning of September, which could be part of the
reason why.
(COMMERCIAL BREAK)
[16:50:34]
QUEST: Breaking news to bring to your attention. The U.S. Justice Department has indicted senior Hamas leaders over the October 7th attacks.
It's the first criminal step to hold people accountable for the attack.
Nic Robertson is in Tel Aviv.
Nic, who, how, where, all the usual. What do we know?
ROBERTSON: Yes, we're still getting the details in, Richard. As you said, several senior commanders. Look, I think we can assume that one of them is
going to be Yahya Sinwar, the architect of the October 7th brutal attack, killing more than 1200 Israelis and taking close to 250 hostage and still
holding them.
So I think we can pretty safely assume that, but we shouldn't assume until we see it in writing and we're still looking at the writing and trying to
go through it right now. But there will be other senior figures, his military commander behind that attack is already dead, but there are other
senior figures in Hamas.
What sort of impact is this going to have? Well, look, the ICC has already -- the International Criminal Court has already said it wants to put out an
arrest warrant. It hasn't put out an arrest warrant, they want to put out an arrest warrant for Yahya Sinwar and, you know, he's sitting in a tunnel
in Gaza right now. So he's not likely to end up at the Hague facing the ICC and is not likely to end up in a court in New York or anywhere else to face
what we're beginning to hear from the Department of Justice.
That said, these things are serious and this will have an impact. Quite what that impact will be at the moment, we won't know until we get the full
readout of this indictment. But from the few details we have at the moment, as you say, this is the first criminal --
(MISSING AUDIO)
[16:55:57]
QUEST: -- point there may be the opportunity to apprehend some of those who are indicted? Do you think the U.S. will consider that a priority and will
push other regional countries to help them enforce it?
MICHAEL MOORE, CNN LEGAL ANALYST: I think it's likely that they will. I mean, and we've seen in the past and we've had other, you know, foreign
actors who have done things, they've charged ultimately with crime in the U.S. You know, whether it's cooperation with the countries where they may
be hiding, or whether it is the -- you know, concerted effort by other members of NATO and other, you know, there could be a movement and this is
actually an indication to me at least that those discussions have probably been happening. These types of indictments are likely not done in a vacuum.
QUEST: Right.
MOORE: And so it's probably the case. Some of these discussions about how do we actually retrieve the defendants and how do we secure custody of the
defendants at some point so they could face trial, that those discussions have already been had.
QUEST: Michael, I'm grateful for your time at such short notice. Thank you.
Kylie is with me, Kylie Atwood at the State Department.
Give me a feeling for what were the undercurrents that Justice, obviously in cooperation with others, and State decided now was the time. Does it
relate to the murder or the most recent murder of a U.S. citizen?
KYLIE ATWOOD, CNN NATIONAL SECURITY CORRESPONDENT: I don't think so. I think that when it comes to the Justice Department putting together
indictments like this, rolling out such a significant legal decision here, what it amounts to is months of work, and what we see in this indictment
that the Department of Justice has just released is that it is a reflection of what happened, what Hamas did on October 7th.
This has nothing to do with what happened over the weekend, though, we have heard of course U.S. officials, the White House say in recent days that
Hamas will be held accountable for the deaths of those hostages over the weekend, including that American citizen who was part of that.
QUEST: Kylie, if this isn't to be -- and Nic, bring in Nic as well. You're both joining me now.
If this is not just to be empty actions, which would indeed to some extent, it would sort of demoralize and lower, if you will, the importance, at some
point, somebody has to go and get these people or not.
Start with you, Kylie, then, Nic, you pick up.
ATWOOD: Well, that's right. You know, these indictments are largely symbolic at this moment in time as we're looking at them.
QUEST: Right.
ATWOOD: Yahya Sinwar, who is the leader of Hamas, who is listed as one of the Hamas leaders, you know, facing these new indictments, he as we've well
reported is in the tunnels under Gaza right now. His whereabouts is unknown to U.S. officials. So even if he were in a place where the United States
knew where he was, they would even, in that situation, have to rely on foreign governments to potentially, you know, actually get him.
QUEST: OK.
ATWOOD: It has to do with extradition treaties and the like.
QUEST: All right. Nic, this will be well and welcomed by the Israeli government, I assume, briefly.
ROBERTSON: Hugely. I mean, this -- briefly it backs their position, but it doesn't, you know, it's not an endorsement of their failure to get to do a
deal to bring the hostages out. You know, let's not confuse it with that. This is what Netanyahu wants but the United States is not rolling over and,
you know, giving him a free hand. He's still under huge pressure to get a deal to get the hostages actually out.
QUEST: Very grateful. Very grateful, Kylie and Nic. Thank you very much, both of you.
The coverage of this will obviously continue. "THE LEAD" is coming up next week with Jake Tapper, and I'll be back with you tomorrow. Until then,
whatever you're up to, as always, I don't know what that is, but I'll see you tomorrow.
JAKE TAPPER, CNN ANCHOR: Appear to be sleeping on the L train in Chicago. All of them were killed.
(END)
