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Quest Means Business
Trump: We're Not Looking for an Iran-Israel Ceasefire; Federal Reserve Holds Benchmark Rate Steady; Netanyahu Thanks Trump for Support in Fight Against Iran; Concern Hangs Over Critical Strait of Hormuz Waterways; Israel-Iran Conflict Drives Up Insurance Costs; OpenAI CEO Says Meta Offering $100 Million to Poach His Staff; Aired 4-5p ET
Aired June 18, 2025 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS": Closing bell ringing on Wall Street. There is the bell. There is the market. The gains,
the good gains that we had earlier in the day evaporated. We are just slightly down a bit. And that's of course, because of the way the Fed has
reacted and what the Fed has said and what we heard in the press conference.
Come along, let's have a gavel. Oh dear. That is -- oh that's better. Well, getting better. Anyway, you see what they had. But we are in the -- we are
negative. Not much but I think look at that comment. Whatever happened around about 3:00, well, it was the Fed speaking and those are the markets,
we will get some detail on why, how, what, and when and these are the main events of the day.
Donald Trump says he may or may not strike Iran in the coming days.
The Fed holds rates steady for the fourth straight meeting, signals rate cut is on the horizon, could be.
And OpenAI's chief executive claims that Meta is trying to poach his employees with signing bonuses of $100 million.
Good evening.
Live from London on Wednesday. It is June the 18th. I am Richard Quest, in London, as elsewhere, I mean business.
Good evening.
We will get to the business agenda and the Fed and all about the Middle East in a moment, but we want to start with the hardening rhetoric in
Tehran itself and Washington, as the U.S. is considering whether to join Israeli strikes on Iran.
President Trump says he is not pushing for talks and he said he told the Israeli Prime Minister to keep going with the military campaign. In the
last hour, he also told reporters, calls for a ceasefire are premature.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES OF AMERICA: We are long beyond ceasefire. And I said, why do you say that? Why would you say
ceasefire? It is a bad term to use because a ceasefire means like everything is going swimmingly. We will take a little time off. It is not.
We are not looking for a ceasefire. We are looking for a total, complete victory. Again, you know what the victory is? No nuclear weapon.
(END VIDEO CLIP)
QUEST: Meanwhile, the Iranian Supreme Leader has rejected the President's call for unconditional surrender. In a prerecorded message when the
Ayatollah criticized Israel for launching a military campaign while it was holding talks on it -- well, Iran, that is, was holding talks on its
nuclear program.
And the Ayatollah warned the U.S. there would be consequences if it does get involved in the conflict.
(BEGIN VIDEO CLIP)
AYATOLLAH ALI KHAMENEI, SUPREME LEADER OF IRAN (through translator): The Americans' involvement in this matter will 100 percent be at their loss.
The loss they receive will probably be much more than the damage Iran will bear. If America have a military presence on the ground, without a doubt,
it will be an irreparable loss.
(END VIDEO CLIP)
QUEST: Nic Robertson, there you see him. He is in Haifa, in Northern Israel. Kevin Liptak is at the White House.
I want to start, I think let's start with you, Nic, if we may, just to bring me up to date with the situation that we have -- is the feeling,
regardless of what may be in reality, but is the feeling in Israel that the Americans are going to join in?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: I think there is an increasing sense that that could be the case. But, you know, speaking to a
couple of former intelligence officials here, one of them are very senior official at Mossad who is handling Iran issues, and, you know, even they
can't really figure it out. They see what President Trump is trying to do. They think that his rhetoric perhaps, is even pushing the Iranians into or
the Iranian leadership into a sort of a deeper corner, if you will, a corner, because just yesterday, President Trump was calling for an
unconditional surrender and we've heard the Iranian leader, Ayatollah Ali Khamenei say that, you know, they are not going to surrender.
I think the sense is, is that Trump's language is pushing the Iranians in one direction. And I think the sense, therefore, is that this is language
that would tend to support Israel. But you know, nobody really -- politicians wants to second guess Donald Trump. And, and even these
intelligence experts, I asked both of them, what do you think is going to happen? And they both came to the same conclusion. They can't predict. It
is impossible.
QUEST: So Kevin, Kevin at the White House. We've got this statement, they are looking for a complete surrender without really explaining what that
means. But at the same time, today, he did say what it means. It means no nuclear. So I am trying to square that circle as to what the administration
actually believes a satisfactory end game is.
KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Well, when you listen to Donald Trump and he was asked pretty specifically out on the South Lawn
earlier today, what unconditional surrender meant and his definition of it, was that Iran would say, stop, stop. We've had enough and that after that,
we and he used the word, we, would go in and bomb all of their nuclear sites.
[16:05:10]
And so, according to Donald Trump, unconditional surrender means giving up all of their nuclear facilities, which we know Tehran has said is a red
line. And I think just in listening to Trump and in listening to his advisers, it is becoming pretty evident here that they are trying to find
some sort of solution to this, that one will allow the President to take some credit for ending the Iranian nuclear program, but two, won't embroil
the U.S. in some sort of decades' long conflict that he promised he wouldn't get involved in when he was a candidate.
I think it is an open question of whether or not that solution exists, but I think it is evident as the President sort of warms to this idea of
joining Israel in these strikes, that that is kind of the balance he is trying to strike here. He just said he hasn't made a decision. He is
meeting with his advisers right now. And so I think that's sort of the place that he is trying to get to.
QUEST: Nic Robertson, what is the likely effect if the U.S. joins in? And I mean, there is a lot of shouting and noise about, oh, it could lead to an
escalation or it could lead to this or it could lead to that. But in reality, who is going to go against the U.S.? In reality, what is likely to
happen if the U.S. joins in on this?
ROBERTSON: I think a lot of that depends on how compromised the Iranian military is at the moment, their communications, their ability to transmit
orders. They have a lot of proxies left in the region, particularly Iraq, and they could, if you will, some of those proxies could then try to attack
U.S. military bases in Iraq and Syria, potentially, there would be that outcome and President Trump has sort of tried to mitigate against that.
And then there is the thing that the Iranians threatened about late last year where they said if they were attacked, they would attack countries in
the gulf, the UAE, Saudi Arabia, their oil facilities, and that, they know is something that is a trigger and a concern in Saudi Arabia and the UAE.
And if you go back to 2019, when Iran was cornered on something else, it did strike and hit to Saudi oil facilities. And then at that moment, it
looked like the United States, President Trump at the time was going to strike back, and then he didn't.
So Iran is taken seriously on an average day that it could do these things. The question is, how hard would they be hit right now if the United States
was to come in? How much damage that would do additionally? And how compromised Iran's military is?
It is just worth spelling out here for a brief second, the number of military commanders that Israel has taken out. They've even taken out some
of the replacement commanders. They've taken out so many nuclear physicists, they've taken out so many of the military headquarters. There
can only be a certain amount of redundancy and the Iranian leader himself has lost a lot of trusted partners and people around him. He is in a more
difficult position to make decisions.
And as the intelligence officials told me today, in the conflict, when you get to this stage, you can start to have behind-the-scenes competition
between the military, the IRGC, the Iranian Supreme Leader and others.
So we can't predict that and the effect that it will have on the Iranian leadership and the way that it may have weakened their ability to hit in
the Gulf.
QUEST: Both of you, Nic and Kevin, I am grateful. Thank you. We will watch closely because also, the issue of what is happening in the Middle East was
referred to at the Federal Reserve meeting.
The Federal Reserve Chair, Jerome Powell, says the U.S. tariffs will increase prices and certainly is causing uncertainty. The Central Bank held
rates steady for the fourth straight month. The targets were between four- and-a-quarter and 4.5 percent. The Chair said the Fed needs more clarity, particularly as surrounds tariffs before it lowers rates further.
(BEGIN VIDEO CLIP)
JEROME POWELL, U.S. FEDERAL RESERVE CHAIRMAN: So what it will take is, is confidence that inflation is coming down. Now, I would say without tariffs
that confidence would be building because if you see what is happening with non-housing services and housing services, which are the other two big
pieces other than goods, those are coming down really nicely now.
So I think we have to learn a little more about tariffs. I don't know -- I don't know what the right way for us to react will be. I think it is hard
to know with any confidence how we should react until we see really the size of the effects, and then we can start to make a better judgment.
(END VIDEO CLIP)
QUEST: But the overarching tone was certainly one of more certainty, or rather less uncertainty on a wider level. And as a result, the Fed's latest
dot-plot shows a slightly hawkish turn, if you will.
Most committee members still anticipate two quarter point rises this year, and two are expecting rates will actually come down just a quarter of one
point. So seven expects rates to stay pretty much where they are throughout the course of the year with just -- the interesting question is these two
that are expecting rates to just go up before the end of the year.
[16:10:10]
Now, back in March, only four participants expected no rate cuts this year.
Matt Egan is in New York.
Matt, I will start with your question to Powell, because I -- first of all, I was -- you know, I was surprised and almost shocked when he said --
because you asked about oil prices and you asked about the effect of that. And basically Powell sort of said they'd go up and they come down with
these sort of crises. Were you surprised?
MATT EGAN, CNN REPORTER: Richard, I was surprised, first of all, that the question didn't get asked earlier in the press conference, but secondly, I
was surprised about his answer about them coming up and down, because let's not forget, it was just three years ago that we learned the hard way how a
conflict in another part of the world can cause an oil price shock. That really dramatically lifts inflation. And that's what happened after Russia
invaded Ukraine in 2022.
But take a listen to what Powell said when I asked him about how concerned he is about the situation in the Middle East.
(BEGIN VIDEO CLIP)
POWELL: You know, possible that that we will see higher energy prices. What's tended to happen is when there is turmoil in the Middle East, you
may see a spike in energy prices, but it tends to come down.
Those things don't generally tend to have lasting effects on inflation, although, of course, in the 1970s, they famously did because you had a
series of very, very large shocks. But we haven't seen anything like that now.
The U.S. economy is far less dependent on foreign oil than it was back in the 1970s.
(END VIDEO CLIP)
EGAN: And Powell is right, of course, that the U.S. is not nearly as dependent on foreign oil or oil from the Middle East. But again, we did
learn just three years ago that we can have an oil price shock, that really changes the whole outlook. And so this just complicates -- further
complicates Powell's job here. Right? He is trying to navigate through the fog of this confusing trade war. And now, they have got to start thinking
about a potential actual war in the Middle East -- Richard.
QUEST: Right. Now there was an interesting also aspect again on this tariffs point where he said, we don't know the effects. I mean, we've not
seen this before and we need to be humble about what we don't know. But I am going to do a classic economist here, on the one hand he says that, but
on the other hand, Matt Egan, he says we are well positioned for whichever policy direction we need to take.
And I think from my point of view, that's what I took away from it, that, you know, like the old policeman says, you know, keep along, move along
now, nothing to see here, nothing to see here. Well positioned.
EGAN: Right, to your point, how can you be confident that you're well positioned if you don't have confidence in where the outlook is? And he is
right that we need to be humble about how all this plays out, right? I mean, there is no playbook for what happens to a modern economy when you
spike tariffs to the highest level in a hundred years, right? I mean, we just don't know what's going to happen.
But what's really interesting is there is at least two different camps here. Right? There is Trump officials and some economists who support Trump
who argue that the fact that we've had these relatively tame inflation readings suggests that tariffs are not going to be inflationary.
I think Powell made clear today he is not in that camp. Right? He is in the camp of many economists that I talked to say, which is that this is the
calm before the storm and that in all likelihood, tariffs are going to eventually drive up the inflation rate. But there is a lot of uncertainty
over how high inflation will go and for how long it will stay there.
QUEST: So last question, I don't think either of us knows the answer to this, we had an excellent live blogging during the conference of which we
were all taking part, but which one of us won the sweepstakes on how many times he said the word "uncertainty"? I can't remember how many times it
was. I don't think I won.
EGAN: I don't know who won that. But listen, I think it is so telling that we were even taking friendly bets on just how many times he would have to
say "uncertain." But he is right, I mean, that is the moment that we are in. And I do think, Richard, at the end of the day, that does explain why
the Fed isn't doing anything right now, because they don't know exactly what move they should make right now, so they are kind of staying where
they are.
QUEST: Right, Matt, I am grateful. Thank you. Safe journey back to New York. Thank you.
As always, the Chair said the Fed's path will depend on the data. There are some storm clouds this week. We learned retail sales were nearly a full
percentage point lower in May, and residential housing construction has dipped to a five-year low and weekly jobless claims are elevated,
consistent with a slowdown, as Matt and I just discussed, the Chair says, there is so much that is not known.
[16:15:10]
(BEGIN VIDEO CLIP)
POWELL: And I think what you see people doing is looking ahead at a time of very high uncertainty and writing down what they think the most likely case
is. No one holds these rate paths with a great deal of conviction, and everyone would agree that they are all going to be data dependent, and that
you can make a case for any of the rate paths I think that you see in the SEP.
(END VIDEO CLIP)
QUEST: Vanguard senior U.S. economist, Josh Hirt is with me.
I don't think I've ever heard the Fed basically tell us it is a load of old nonsense what is in the dot-plot and the rate curves. But that's
essentially what he was saying. Pick any one you like.
How did you take today? It was a lot of uncertainty, he says. But he does sound relatively optimistic. What's your take?
JOSH HIRT, VANGUARD SENIOR U.S. ECONOMIST: That's right. Thank you, Richard.
I mean, I think we largely agree. I mean, there is no question that uncertainty was a pretty key theme. You know, just listening to the
conversation before this biggest takeaway is that, you know, this -- not only the press conference that you got from Powell today, as well as the
SEP projections. There is no question that uncertainty continues to remain really high and they would like to see a little bit more data, you know,
macro data as well as trade development and tariff data throughout the summer before they commit to anything, you know, say more substantial in
terms of guidance. I think that was one really big takeaway that we had.
The other thing is that positioned for optionality here. So, you know, there is definitely a degree of inertia that you saw in todays, you know,
language as well as the SEP forecasts, particularly around the rate projections, I think for this year.
QUEST: What's the fear? What is the fear? Because at the end of the day, inflation is relatively well-tamed. It is relatively anchored, and
unemployment is sort of a solid in a sense. So why would you not buy yourself a little bit of insurance with a rate cut now?
HIRT: That's right. I think there was a really good question in the press conference really related to that and I think you just want to be humble,
as Powell mentioned, and have some deference to the inflationary impacts that could result from tariffs. I think you're right that we largely have
inflation that has come to a very decent place at this moment, but we are also coming from a last number of years where inflation, as well as
inflation expectations were pretty elevated.
And I think that the Fed is just really anchoring on that mandate as Powell talked about today, to really, you know, hone in on the inflation mandate,
on inflation expectations, and you just want to be humble about that.
QUEST: So Josh, I always think that we can get so tied up to the data, if you will. We can be so concerned with the trees that we miss out of the
wood or whatever that phrase is. And I realize how fragile do you think the U.S. economy is in terms of its strength to weather these storms? Because
the Chair seems to suggest it is really robust.
HIRT: Yes, I think, we would largely agree with some of those sentiments expressed by Chair Powell today. I mean, just think about what the economy
has weathered the last number of years. And I would even just point to some of what we were already seeing early this year in terms of resiliency
around some of the front running of imports, some of the rerouting of supply chains and we are starting to see that the inflationary impact is a
little more muted than perhaps would have been expected. A lot of that is because of the resiliency and the dynamism of the economy that's really
reacting to conditions on the ground.
And so I think we largely agree with that. The economy -- the U.S. economy is in a good place at the moment. We are seeing that there are not a lot of
imbalances or cracks that are forming in our view and I think you do have to consider the resiliency, which we often tend to discount.
QUEST: At the end of the day, the political pressure will still be intense. We saw it. We got a little bit of a hint of it when he was asked, is he
going to stay on if he is no longer Chair? And he said he didn't give anything away on that. He said that the policies will survive him leaving
or taking -- whoever takes over.
Do you get the impression that -- is the market in any shape or form, thinking that he is being pressurized too much and that actually he is
going to buckle?
HIRT: I don't think so. Yes, I don't think so. I think he has done a very effective job at really, you know, calming down some of those sentiments. I
mean, I think his responses in the press conference, which is largely where were able to get a lot of his reaction to these, have been pretty firm,
pretty direct and pretty clear.
There is no question that in the backdrop that is going to be a facet that is at play. But I think they've certainly convinced, you know, the market.
And I think we share this view that the Fed is going to continue to really be focused on its dual mandates.
[16:20:11]
QUEST: I am grateful, sir. We will talk more. We've got a long year ahead of us, particularly as these tariffs really start to have an effect on the
economy. And I will be grateful for your interpretation and analysis. Thank you.
It is QUEST MEANS BUSINESS tonight live from London.
The U.S. military is building up its assets in the Middle East. President Trump is deciding what to do. Alex Vatanka is a senior fellow at the Middle
East Institute and will be with me after the break. There you see him and hopefully he will still be there on the other side of this break.
(COMMERCIAL BREAK)
QUEST: The Israeli Prime Minister is thanking President Trump for his support in the fight against Iran. Mr. Netanyahu says he is in regular
contact with President Trump, and that the two had a warm conversation on Tuesday night. Specifically, he thanked the U.S. for helping Israel defend
its skies.
Christiane Amanpour spoke to Iran's Deputy Foreign Minister, who accused the west of shielding Israel as it breaks international law.
(BEGIN VIDEO CLIP)
MAJID TAKHT-RAVANCHI, IRANIAN DEPUTY FOREIGN MINISTER: We were about to start new rounds -- new round of talks with the Americans on Sunday, that
was 15th of June. And two days before, we were attacked by the Israelis in the middle of the night.
They attacked residential areas. They attacked paramedics. They attacked you know, citizens who are just sleeping in their homes.
They have been involved in an act of aggression, and they have, you know, mortared our military people as well. You know, along with many, many
Iranian citizens and they have no boundaries. They attacked everywhere.
So you mentioned the attacking against our nuclear facilities. These are safeguarded places. It is a crime in accordance with international law, to
attack, you know, a place which is safeguarded under IAEA rules. So unfortunately, the Americans and some Europeans have shielded the Israeli
regime not to be criticized at the board meeting, the board of governors, IAEA board of governors meeting and also the U.N. Security Council.
[16:25:08]
So it is a shame to all those who are protecting this regime.
(END VIDEO CLIP)
QUEST: Now, the experts are warning that U.S. involvement could drag it into an extended conflict and inflame the region. Hamas and Hezbollah may
have been downgraded, but Tehran does have allies in Iraq and Yemen who could harm American interests and those proxies have directly attacked U.S.
servicemen and disrupted international shipping.
Alex Vatanka is a senior fellow at the Middle East Institute, also the author of "Battle of the Ayatollahs in Iran." He is with me now, and Alex
is with me.
Alex, so what is gut feeling of what President Trump is likely to do?
ALEX VATANKA, SENIOR FELLOW, MIDDLE EAST INSTITUTE, "BATTLE OF THE AYATOLLAHS IN IRAN" AUTHOR: Oh, Richard, I wish I knew. I mean, you know,
over the last one week, we've gone from diplomacy to yesterday, the President of the United States in -- you know, basically saying he might go
after the Supreme Leader of Iran, Ali Khamenei. So it is really difficult to sort of predict where we are going to go from here. The obvious ones
that one can point to in terms of realities is the country, the United States, from what I can tell, speaking to you from Washington, D.C. area is
not really on board. They don't see this as America's war.
Yes. Let's help Israel, but getting dragged into a war is not something, from what I can tell that a vast majority of people want. And then you've
got the region. Increasingly, I am hearing from the region like, what is it? What does it mean for us? The Gulf States, they're asking, what does it
mean for our future? For their relationship with the United States going forward?
So lots of questions here.
QUEST: Okay, so let's -- just for the purposes of these questions -- assume America, the U.S. does go in with its B-2s and its bunker-busting bombs.
Who is rushing to Iran's support and rescue? I mean, on the day after? On the day after the U.S. has done it, what happens? What is the effect? Is
there any? Is this just a case of a lot of noise? But actually everybody carries on.
VATANKA: That could well be the case. I mean, look, when we are talking about what the U.S. is going to hit, at this point, the Israelis have done
a pretty effective job in taking out so much of Iran's military capabilities, including hitting nuclear sites. So the question is, what is
the U.S. going to hit? Everything is, you know, that we've been talking about the last few days is that one enrichment facility in a mountain in
Fordow, let's say the U.S. takes that out. Is that the end of it?
Well, if the regime is still in Tehran, isn't it just a question mark before they come back and rebuild? They still have friends. The Russians
are the Chinese are not running to Iran's assistance right now, but that doesn't mean they might not play a role in this regime if it stays in power
to rebuild.
So really, the problem here is not the nuclear capabilities of Iran. It is the political nature of the Islamic Republic that has to change.
QUEST: Right. But that's regime change and that is a bigger issue. Let's assume -- because I am reading everybody talking about regime change. Let's
assume that the goal is more modest, and pardon the phrase, the goal is whack-a-mole. We just -- we destroy -- or they destroy the assets, the
nuclear assets. And yes, to your point, if they have to do it again in three years' time, you do it again in three years' time.
VATANKA: Right. Yes, well, that might -- again, that might be the way that Prime Minister Netanyahu sold it to President Trump. I don't know, but we
do know the Israelis after October 7th basically came to the conclusion that whack-a-mole is not the way forward, that they can't afford to sit
there and have Iran, what they call the mothership, and its proxies, get closer and closer.
So strategy on the part of Israel is to basically get rid of the Islamic Republic. That's increasingly where they are going. The question is, will
President Trump go along with Bibi Netanyahu? I mean, that is the big question that nobody can really figure out.
But let me also say this, if it is about political transition to something else in Iran, we have seen zero signs of the United States getting ready
for that. Absolutely zero sign. When you compare it to what the U.S. did prior to invading Iraq in 2003, it took more a year of preparing the ground
for that invasion and occupation. Nothing like that is happening right now here.
So really, the idea of regime change seems to be more of a wishful thinking on the part of some than being reality put into actions here.
QUEST: Right. Alex, I am grateful for you, sir. Robust discussion. I am thanking you. Thank you, sir.
Now, let's stay there though. The situation on the ground is certainly more complicated for people living in Iran where the strikes continue to rain
down the country and a near complete internet blackout is making communications very difficult.
The tensions have no end in sight, and people are making decisions simply to flee. And who can blame them?
CNN's Nick Paton Walsh reports.
(BEGIN VIDEOTAPE)
PATON WALSH: Hospitals overflowing. People living in tents by the roadside, one doctor told CNN. Everyone who can is leaving with a suitcase, they
said, empty-handed, or carrying their babies.
On the way out temperatures in the 90s, cold water passed around. Government advice given to those caught in strikes while driving out reads,
"If you can get out, seek refuge and turn your back to the blast. If you're stuck in the gridlock, unbuckle, recline the chair back. Cover your head
with your hands."
This baker's brother died in the strikes. He learned 20 minutes before this video was shot. His response to keep working.
UNIDENTIFIED MALE (through text translation): There's no reason for me to go. Don't people need bread? What crime have the people committed? My duty
is right here.
PATON WALSH: In the north, where most have fled, the flour ration has been raised owing to bread shortages, official media said.
What they left behind is a world upturned. This yellow building slant, a taste of ordinary lives bent beyond recognition.
In Tehran, where two days ago screamed echoed. Now the streets quieter, vacant. What are made so by Netanyahu and Trump's warning for the capital
to evacuate all the constant blasts overhead and around.
Night after night, these barrages continue. Israel and Trump now saying they control the skies. And Iran strikes against Israel seem lesser.
Families crammed underground. Normal here gone, tomorrow panicked and unknowing.
Nick Paton Walsh, CNN, London.
(END VIDEOTAPE)
RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Now the concern is that the conflict with Iran could disrupt shipping in one of the world's most
important waterways for oil and gas.
Anna Stewart is going to be with me after the break. The Strait of Hormuz and how it's being affected.
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[16:35:17]
QUEST: Hello, I'm Richard Quest.
Together we've got more QUEST MEANS BUSINESS. We're going to look at the Strait of Hormuz and whether Iran could close the waterway to oil and
tanker traffic. And the head of OpenAI says Meta is offering huge signing bonuses to lure his employees. We'll get to all of that only after the
headlines, because this is CNN and here are the news always comes first.
President Trump says he's not looking for a ceasefire between Israel and Iran, calling today -- for today Tehran's unconditional surrender. And he
says he's not yet made a final decision on U.S. military involvement. Iran's supreme leader has warned that any military action by the U.S. will
be met with, in his words, irreparable damage.
The U.S. Federal Reserve has put interest rates on hold and steady. The announcement came earlier today. The range has been between 4.25 percent
and 4.5 percent since January. The Fed has been apprehensive about huge rate cuts. It believes that moves inflation from the present target of 2
percent.
The U.S. Supreme Court is upholding a Tennessee law that bans minors from getting gender affirming care, like puberty blockers and hormone therapy.
There are 26 states where this kind of care has been banned for minors.
Concern is growing that the conflict with Iran could disrupt shipping in one of the world's most important waterways for oil and gas. It is, of
course, the Strait of Hormuz. Now, oil prices have been sharply up. They've come back a bit, but you get the point. Brent has gained more than 16
percent in the last month.
Anna is with me to explain with charts, graphics and all manner of things. Go ahead.
ANNA STEWART, CNN CORRESPONDENT: Well, of course. While we keep talking about the Strait of Hormuz, I thought it would be a good idea just to look
at why this is so significant when we're talking about oil disruption.
QUEST: Right.
STEWART: Now, this is a very, very narrow strip of water. At one point it is just 21 miles across. So really this is a choke point and it has an
outsized role when it comes to global oil. Saudi Arabia, one of the biggest oil producers, exports almost all of its oil through this little tiny,
narrow strait. You also have Kuwait, Bahrain, we have Qatar here. All of that oil goes through this waterway. And for Iraq, it's about 85 percent.
So you can see that there is a huge amount of oil to get through a very small area.
QUEST: Right. But the difficulty, of course, is, or the question is how easy is it for Iran to essentially choke it off?
STEWART: So would Iran choke it off or would there be enough attacks in that area potentially, if there was an escalation, that tankers wouldn't
feel safe to transit?
QUEST: Exactly.
STEWART: These are the two issues we're talking about. And then you have to consider what would the impact be? Well, a quarter of the world's crude oil
is going through the strait. And actually it's not just oil. It's also LNG. This is liquefied natural gas. Also a quarter of gas, Richard.
QUEST: So that's a -- that is, even the threat of that disruption is sufficient to cause the disruption that will hit economies.
STEWART: Which is why we're seeing with investors any kind of new news about the conflict, any risk of escalation, it has some worried.
Now, here we have a broader picture.
QUEST: Right.
STEWART: We see the Strait of Hormuz and we have to question, OK, who are the big players here? Clearly, as we mentioned, we have the Gulf countries
here. They are the ones that are really reliant on it. The oil producers.
QUEST: Right. But there's two sides to that equation. It's where it's going from and?
STEWART: Where it's going to.
QUEST: Exactly.
STEWART: So for China, major, major customer for the Gulf region and particularly for Iran, actually. Almost Iran's only customer given
sanctions. We also have India, Japan, South Korea. So these are the countries that would directly be impacted by any kind of issue closure in
the strait. Then you have oil prices. Then you have the knock-on effect of inflation. And what do you have after that? It's very timely today. The
impact on interest rate decisions.
QUEST: So this is, this all pulls it together. And yet the Fed chair was not that concerned. I mean he may not be concerned at the moment I suppose.
STEWART: Well, you know what, we can look at the impact that we've seen from oil price shocks in the last 10 years. The one that is really, really
noticeable here, of course, is here. The invasion of Ukraine. We saw oil prices surge to nearly $120 a barrel.
QUEST: So we're quite a long way off.
STEWART: We are quite. Deutsche Bank says if there was a sustained closure of the strait, you'd see oil prices going above this, maybe $150. Other,
you know, you may remember the pandemic, huge crash and then the sustained climb, and there's a tiny one that's really hard to see, which I'm going to
draw it just there. 2019. This is where there were attacks on some Saudi Arabian oil facilities.
QUEST: I remember.
[16:40:01]
STEWART: Houthi rebels claimed responsibility. America said it was Iran and it was a 20 percent. It doesn't look like it. It was a 20 percent surge in
oil prices. It was short lived. And this is what the chair's point was today. Jay Powell said these things are short lived, apart from if you look
back to the '70s.
QUEST: Which I remember.
STEWART: So it depends how sustained conflict and escalation is.
QUEST: Yes. Lovely to be here. It's often, not often that we are here together in person. But I have to ask.
STEWART: I mean, I was wondering if anyone could see the wall behind my bum.
QUEST: But how long?
STEWART: I've still got another five or six weeks. It's the longest production I've ever been involved in. It feels like it's going on forever.
QUEST: Oh, well. Right. We'll have more on the Strait of Hormuz when we come back. I'll talk to the global head of marine and cargo at Marsh
McLennan about the threat to tankers and the cost to insure them.
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
QUEST: So the conflict between Israel and Iran is raising insurance costs for ships traveling through the Strait of Hormuz. The firm, Marsh McLennan,
says that rates have soared up 60 percent since last week, and some agencies are advising ships to avoid Iranian waters near the strait. Iran
in the past threatened to close the key shipping lanes.
And Marcus Baker is the global head of marine and cargo at Marsh McLennan.
Give me an up some. How these rates going up? This is for the ships themselves.
MARCUS BAKER, GLOBAL HEAD OF MARINE AND CARGO, MARSH MCLENNAN: Correct. Yes. So, look, I think, you know, the first thing I would say is that
insurance is an extraordinary enabler when we look at maritime trade and clearly without war risk insurance, many of these ships wouldn't want to
trade into those regions. What we are seeing is heightened risk, heightened concern about what's going on in the region. So, yes, there's been an
uptick in rates.
QUEST: But how does this -- on a daily basis, how does this transmit itself? Because, you know, the ship is insured for a year on a long term
contract. So where does it suddenly, if I suddenly want to send my ship through the strait, do you suddenly require an extra -- have to get me an
extra policy?
BAKER: So, so, yes, in simple terms. The --
QUEST: Yes.
BAKER: The insurers themselves, they take advice from a number of agencies to say, look, these areas have become heightened risk. You need to think
about what you're going to do in terms of charging the appropriate premium to recognize that enhanced risk.
QUEST: So that's an enhanced premium for the risk over a ship that's already insured.
BAKER: Correct.
QUEST: And what would it be now? Give me some sort of idea.
[16:45:01]
BAKER: So, so, if we look at what's going on in the Arabian Gulf or Persian Gulf, whatever you'd like to call it, you know, those rates are moving from
about 0.125 percent on the value of the ship up to about 2.2 percent. Well, I know you say, wow, but if we put that into context straight away after
Russia took on Ukraine, those rates went up to 5 percent. So grain ships moving out of Ukraine into Ukraine to move that grain out were being
charged 5 percent.
QUEST: But if I understand this situation and what you're saying, it would at the moment, Iran hasn't really been bellicose about the strait. If they
were to sort of flex the military muscle on those ships, even just rockets overhead or whatever, those rates would rocket, wouldn't they?
BAKER: Well, probably. I think what we have to look at --
QUEST: But at the moment, you've got the promise of a threat and you haven't even got the threat yet.
BAKER: Yes. So, look, I mean, the only the only sort of recent recognition I can give you is around Russia-Ukraine. OK.
QUEST: Yes.
BAKER: So if we look at that, we take that as an example. Look, the Russians admitted that what they were targeting was infrastructure. So once
the market started to learn and understand that actually ships were trading in and out of there relatively safely, there were 18 that were actually
damaged, those rates came down. Those rates came down, down to just under 1 percent.
QUEST: Do you think we'll get to the point where companies won't even send their ships through the Strait of Hormuz?
BAKER: Well, of course, I'd ask you the question is you can tell me what's going to happen next week, I'd probably be able to give you an accurate
answer. Look, as I said, I think insurance is an incredible enabler. And I think without it, we wouldn't get to where we are with so much of trade. So
at the end of the day, I think unless things get really, really dangerous out there, and by the way, one other thing I should talk about here is
crew.
You know, now we're talking about people's livelihoods. And I think that ship owners have become very, very cognizant of the fact they have to look
after their crew.
QUEST: We saw that, of course. We've seen that time and again where crew have been stranded. Happened during the pandemic. It's happened during
Ukraine where ship -- so let's just talk about the other area, of course, which is the Red Sea up to the Suez Canal. Well, the Suez Canal is
crucially important for the Egyptian economy. And is -- what's the level of traffic now going through the canal?
BAKER: So I don't think that's changed predominantly in the last year and a half.
QUEST: It is down, though.
BAKER: It is. It is down certainly. If you look at when, when the Houthis really started to get active, let's call that a year ago, then traffic was
going around the Cape because they didn't want to expose their crew to some of the dangers that they felt were there because of the Houthis. If the
Houthis start to reactivate things, I think we could see ourselves in a slightly different situation with Suez Canal as well.
QUEST: So you'll forgive me since I've got you here, I'm going to take you around the world.
BAKER: OK.
QUEST: I mean, all -- so you've got, the main choke points, you've got the Panama Canal, of course.
BAKER: Right. Yes.
QUEST: Which may be getting a bit dry. And anyway, who owns it? You've got the Suez Canal where you've got the problem, because you've now got the
Straits of Hormuz. I mean, the your -- your day is busy dealing with whichever crisis du jour.
BAKER: But that's why insurance is such an interesting part of the financial services sector. And, you know, like I said --
QUEST: Did you just say insurance was interesting?
BAKER: I did say insurance was interesting. Yes, I did. But I mean, look.
QUEST: How much -- give me an idea of an insurance cost of a big tanker. Now you're going to say how big a tanker. What is big tankers? Are we
talking millions?
BAKER: Yes, probably, but it depends. It depends so much on the ship owner. How big the ship is, their loss record, how they perform, their risk
management, their deductibles. I could throw a whole load of things at you, so it wouldn't be appropriate for me to just give you a number because it
wouldn't be right. But look, it is -- this for me, this particular world is so fascinating.
Now, look at what we did at Marsh McLennan, we're instrumental in helping the Ukrainians get grain out of Ukraine. We did an extraordinarily
complicated process with the Ukrainian government.
QUEST: I remember. I remember.
BAKER: And it was phenomenal because we actually, we actually -- insurance saved lives.
QUEST: Yes.
BAKER: And I don't want to make too big of a thing about it. But, you know, people in West Africa are able to get grain when they didn't expect it.
QUEST: When you were able to get that grain out of there with that extremely complicated deal on insurance, that was a benchmark.
BAKER: Yes.
QUEST: So congratulations. So thank you very much, and thank you for coming to talk. We'll talk more about it.
BAKER: It's a pleasure.
QUEST: Thank you very much. Thank you.
The chief executive of OpenAI says Meta is trying to poach his employees and the money involved is just silly money. We'll talk about it after the
break.
(COMMERCIAL BREAK)
[16:52:14]
QUEST: OpenAI's chief exec says that Meta is trying to poach his employees.
(BEGIN VIDEO CLIP)
SAM ALTMAN, CEO, OPENAI: They started making these like giant offers to, you know, a lot of people on our team. You know, like $100 million signing
bonuses. I'm really happy that at least so far, none of our best people have decided to take them up on that.
(END VIDEO CLIP)
QUEST: Sam Altman made the complaint on his brother's podcast. Meta's declined to comment. Bloomberg recently reported that CEO Mark Zuckerberg
has been personally recruiting a team to work on superintelligence.
Claire is with me. Clare Duffy.
Have they offered you anything?
CLARE DUFFY, CNN BUSINESS WRITER: They have not offered me anything. No, Richard.
QUEST: Me neither. Me neither.
DUFFY: Not even one of these $100 million signing bonuses.
QUEST: Is this $100 million? Is this $100 million for one person or for a team?
DUFFY: This is -- if I'm understanding Sam Altman correctly here, this is a $100 million signing bonus, not total compensation. Signing bonus for an
individual person. And we know that this is not just OpenAI employees that Meta is after here. Just last week, Meta invested $14.3 billion in Scale
A.I. and A.I. startup, and that investment came with the Scale CEO Alexander Wang decamping to Meta, along with some of Scale's top employees.
So Meta is really throwing money at this problem of trying to become one of the leaders in this A.I. space, which of course we know is so competitive.
And Meta actually just recently had to pause the rollout of its largest and most powerful Llama A.I. model because its folks internally were worried
that it just wasn't enough of an improvement on the previous version.
QUEST: So -- so I'm just fascinated by this. This battle, is it for, at the consumer level, in a sense, for consumer pro type A.I., ChatGPT, et cetera,
or is this first for much more professional, much higher end commercial use stuff that people are really going for?
DUFFY: I think it's a bit of both that we're seeing. I mean, I think what Mark Zuckerberg is really competing to do, along with some of the other top
A.I. labs, OpenAI is in this competition as well, is to create what they're calling superintelligence or artificial general intelligence. This A.I.
system that could do any task better than any human on the planet. You know, there's varying definitions, but that's basically the understanding.
And that's something that could be used for these consumer chatbots, but also deployed to enterprise customers who hopefully are going to make all
of these investments in A.I. worthwhile for these big companies. But I will say Mark Zuckerberg especially seems to have a bit of a chip on his
shoulder ever since Facebook was slow to the mobile wave.
QUEST: Right.
DUFFY: It's the same reason he rebranded the company to Meta to focus on the Metaverse four years ago. He really wants to be the leader in whatever
the next technology wave is going to be, and he seems willing to shell out billions of dollars to do it.
[16:55:02]
QUEST: Can I ask you? Amazon CEO is warning the staff that A.I. will reduce the human workforce. Arguably, as we would say in Britain, that's a
statement of the bleeding obvious. We sort of know that. But it's sort of crystallizing into a reality.
DUFFY: Yes, I think that's right. And it's sort of remarkable how similar. This morning we heard from Amazon CEO Andy Jassy today or yesterday I
should say is to the warning that we heard from Anthropic CEO Dario Amodei just a few weeks ago that half of entry level white-collar jobs could be
wiped out. Andy Jassy was less specific about what types of jobs or the timeline, but he did essentially say that A.I. is going to make workers
more productive.
It's going to allow them to work less on rote, repetitive tasks and more on complex strategic thinking. And that sounds a lot like wiping out entry
level white-collar jobs. My question is, how do you build a workforce over time if you don't have entry level workers that get to start somewhere?
QUEST: A very good point. And it brings the whole thing full circle.
Grateful, Claire, as always, thank you.
I want to take you for a quick look at the markets and how we ended, bearing in mind what did happen during the course of the day. Down on the
Dow, a bit of a weird sort of day. Once the Fed, once the decision and the conference and the press conference, you see how it all happened. It was
all a bit weird. Down just a tad overall.
We'll take a "Profitable Moment" after the break.
(COMMERCIAL BREAK)
QUEST: Tonight's "Profitable Moment," I think the markets missed the point today when it
s talking about the Fed and how it views it. The market chose to focus on Chair Powell talking about tariffs and not understanding tariffs. Not
seeing the full effects of tariffs. If you look at the way the market traded, you see that sort of 3:00 area where it falls very sharply.
Well, I think they missed the point. They were so focused on tariffs they missed the point where he goes on to say that the Fed is well positioned
with all optionality whatever happens. The Fed is well positioned on policy. Again and again and again, he reinforced the Fed is well-
positioned. In other words well-positioned to wait. And instead everybody is getting excited about tariffs on what might come next.
Now, look, I realize Chair Powell is always a bit like the policeman. Keep moving. Nothing to see here. Keep moving. Don't look. But today was
particularly calm and collected. And I left today's press conference with him saying, look, we're humble. We're not quite sure what's going on, but
whatever happens, we've got it under control. That what will tell us in the fullness of time.
And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in London. Whatever you're up to in the hours ahead, I hope it is profitable. I'll see
you tomorrow.
END
