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First Move with Julia Chatterley

Airbnb Shares are Down 27 Percent this year; Video Shows Russian Soldiers Shooting Civilians in the Back; Global Stocks Fall Again, New Inflation Data in Focus; Natural Gas Prices Rise in Europe after Russia Sanctions; Purcari Opens Doors to more than 5,000 Refugees; Company Unveils Expanded Lineup of new Products. Aired 09-10a ET

Aired May 12, 2022 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[09:00:00]

(COMMECIAL BREAK)

RICHARD QUEST, CNN HOST, FIRST MOVE: A good day to you. You're watching CNN. I'm Richard Quest in New York. I'll have the latest on the war in

Ukraine in just a moment.

This morning, though, I want to start with what's happening in the financial markets and the weakness that we are seeing at the moment. U.S.

Futures are lower and the significance of course is also on the NASDAQ where you can see a loss of 1.5 percent forecast.

But this follows a very sharp fall on the highly valued tech stocks that were hammered in the Wednesday session. Now Wednesday the NASDAQ fell more

than 3 percent that is being reflected across European markets, which as you can see there on the market Paris off two and a half, Frankfurt down

two and a fifth. London is off 2 percent.

It is a massive re-pricing of risk on global stock markets as investors are slashing expectations for profitability in a world of slower growth and

rising inflation. That's what we're talking about at the moment rising inflation.

We've got numbers on PPI, which are producer prices wholesale. What we used to say is the price at the factory gate, Rahel is with me, well, what did

the numbers show this morning?

RAHEL SOLOMON, CNN INTERNATIONAL CORRESPONDENT: Well, Richard, if markets were looking for some good news, I hate to say it, but they didn't find it

here. So PPI year-over-year came in at 11 percent. That was slightly cooler than the figure we saw the month prior 11.2 percent.

But prices still rose half a percent-over-month, as one analyst told me as one economist told me yesterday about the CPI report. No upside to what

we're seeing here. DOW Futures were up about or lower by about 200 points before the numbers crossed Richard. They then settled around 150 after

these numbers crossed.

So not great news in terms of this high inflation that we're seeing we saw it yesterday with the CPI and we know that what we tend to see in PPI, the

Producer Price Index, it tends to trickle down into consumer prices a few months later. So no good news to be had here, Richard.

QUEST: That maybe we shouldn't necessarily expect because the underlying fundamentals haven't changed. For example, the interest rates from the Fed

haven't had a chance to work through and we haven't had the most of them yet. Secondly, the war in Ukraine continues. Thirdly, energy prices remain

still elevated. So companies are saying what?

SOLOMON: Well, that's the other thing. So Disney reported yesterday, right? Disney considered a top of the line best in class American company. And the

numbers were strong. It was a strong addition to subscribers that came in at 137.7 million subscribers.

Other parks business was strong. But here's what investors may be keying into. The CFO reported that slowing growth may be on its way for streaming

in the second half. Richard, it is this warning about slowing growth that we are hearing more of?

It almost feels like a whisper that's growing louder. And that be of a put out some research that said the mentions of weaker demand from companies is

the most it's been since Q2 of 2020. You have higher inflation.

And now you have companies starting to forecast and signal that demand may be softening later this year. It's not a great recipe, Richard. In fact, it

could spell out a lot more pain.

QUEST: I too know. We're just looking there at the price. Disney's share price was 180 back in May of last year and the back of Disney Plus now at

105. That more than - and Rahel thank you. That graph that chart very much tells the story Rahel, we'll talk later.

Because widely held stocks, particularly tech stocks have plunged since the start of this year. It's a reassessment of risk. You see it very clearly

Amazon has now lost almost all its gains since the pandemic. Apple which tends to buck the trend in a sense down 17 percent 5 percent alone went off

the price on Wednesday.

It's no longer the world's most valuable company that now becomes Saudi Aramco. Perhaps not surprisingly, it's an oil companies worth two and a

half trillion with a market cap of 2.4. They'll battle that one backwards and forwards for the foreseeable future. Shares of Airbnb are down more

than 25 percent in the last month, which is interesting bearing in mind.

We're coming up to the summer, and it's when people start planning and actually bookings are strong. So I spoke to the Chief Executive and asked

him about the volatility.

(BEGIN VIDEO CLIP)

BRAIN CHESKY, CEO, AIRBNB: There's an old saying by late economist I think his name was Benjamin Graham. He said in the short run a stock price is a

voting machine a long run it's a weighing machine.

[09:05:00]

CHESKY: It goes ups, it goes down. If you hold the stock long enough, the great companies will go up. But right now it's a mood. And right now the

mood has soured. So I think that's the way it is right now.

I think the highest growth companies were also sometimes the more speculative ones. And people don't want to take a lot of risk right now.

And so I think that's what's happening in the market. But ultimately, as a CEO, I try to focus on things I can control. I certainly can't control the

stock market, I can control the performance of the company. And that's what we're focused on.

QUEST: Right. But when, for example, UBER CEO, you may have seen the letter that you wrote to the staff, basically saying that the times are going to

get tough, we've got to make money, there's got to be a return on capital. And I'm old enough to remember the old days of path to profitability of the

1990's. Do you have to think the same things there has to be a better business case?

CHESKY: We already went through all that. In 2020 we lost 80 percent of our business in eight weeks we had to make painful decisions. We did a layoff.

We restructured our company. We rebuilt the company from the ground up, and then we took a public.

In Q1 we did $1.2 billion of free cash flow in Q1 is our low season most people aren't traveling between January and March. So though I can't

speculate on what Q2, Q3 will be you can look at last year's financials to get a sense of what's going to happen.

So we are lean. We have 6000 employees. We were very profitable from a free cash flow standpoint in Q1. We're feeling really good and we are not

pulling on the on the brakes. We're stepping on the gas.

(END VIDEO CLIP)

QUEST: So how does he step on the gas you'll see the whole interview "Quest means Business" later today. That's at three o'clock Eastern of course

eight o'clock, UK 9 on the continent.

Our attention now we turn to Russia's war in Ukraine. The Leaders of Finland say that country must apply for NATO membership without delay. The

Kremlin Spokesman Dmitry Peskov has denounced the move.

He said Finland joining NATO would be a threat to Russia. The U.S., UK and other NATO allies have expressed support for Finland's potential membership

it's traditionally tried to stay neutral. The war has dramatically changed the country's view on Moscow and soldier new gigantic drone and satellite

images showing the Ukrainian forces blowing up pontoon bridges in Luhansk.

They did it twice in a 24 hour period the goal to keep Russians from crossing a key river. But Ukraine says Russian troops are making slow but

steady advances in some areas of the East. And Ukraine is offering to release Russian prisoners of war in exchange it would be for the safe

evacuation of the wounded Ukrainian soldiers at the bombed Azovstal Steel Plant in Mariupol.

It follows the UN's warning that the civilian death toll in Mariupol is expected to be in the thousands a lot there to digest. This morning, though

the main event in a sense is Finland's further moves towards NATO membership, our International Diplomatic Editor is Nic Robertson. He's in

the Finnish Capital he is in Helsinki this morning.

So Nic, I guess at one level, it's not a surprise that the leadership has said this. Parliament will obviously now debate and vote. But essentially,

it's when not if?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: It's a done deal. There is already a groundswell of public support about 75 percent of the

population estimated according to local news organizations. And I spoke to that support NATO membership.

And I spoke to a member of the Prime Minister's party a parliamentarian of some standing here just yesterday, and he said, look, when it comes to a

vote of 200 parliamentarians, we're expecting in excess of 180 to vote yes in favor of joining NATO.

So this direction that's been set and given by the Prime Minister and the President in a joint statement that NATO will improve Finland security,

Finland will help strengthen NATO that they should move without delay.

This is the signal. They didn't want to have the debate be too long. They didn't want this period to be protracted because they don't want and are

worried about threats from Russia and an escalation in tensions by Russia. But absolutely, today marks the day when we're just a couple of tiny steps

away from Finland, making it official.

QUEST: Now Russia has said that there will be consequences. If we take a look again at the map that shows this very long border that the country has

with Russia. We know that one of the aspects could be - from the Russian side, boosting up the number of troops that it keeps on that border.

[09:10:00]

QUEST: But of course, if it does that, it will have to come at the expense of elsewhere. What's the latest thinking, Nic, on what Russia's response

will be?

ROBERTSON: Yes, there are two thoughts on that. One is the need to move fast now is because Russia does have its troops distracted and deployed in

Ukraine and not along that border. Russia has said that it will monitor what Finland does.

If it builds, if Finland builds more troops more military facilities along the border, then they will reciprocate. So that's the way they're framing

it at the moment. They have threatened to put nuclear weapons on the edge of the Baltic Sea.

That will be - the assessment is Russia has them there already. The view from here is that this is about and the president said this just yesterday,

this is about Finland's security.

QUEST: Right.

ROBERTSON: They don't feel secure with Russia right now that this is not about an aggressive move against Russia. So the view from here is that they

hope that Russia doesn't make escalatory moves.

QUEST: OK, but Nic -

ROBERTSON: And quite simply, they can't trust it not to.

QUEST: But Nic isn't this exactly what Russia said, the West did post 97 when all the other countries joined, thus creating what in Russia's view

was an instability and then insecurity. And whilst we could go backwards and forwards in a schoolboy argument, when you started it, no, you started

at first you start, the reality is Russia will regard this as being an unstable and insecure.

ROBERTSON: Yes, they're going to regard it that way. And the question therefore becomes, what will Russia do about it, and part of the

international message to Russia has been that your actions are triggering an equal and opposite reaction on the ground.

You don't want NATO to come close. You attacked Ukraine. And NATO puts more people on its border in the East because it's concerned about security,

because of your Russia's actions. And that's what's occurring here.

And it is that message that it is hoped that this incumbent of the Presidency of Russia gets the message, if not a future generations of

Russian leaders will understand that the kind of actions they're going through right now have reactions whether or not they want it, irrespective

of who made the first move. This is where things stand. This is geopolitics, it's really that simple. That's the message.

QUEST: Nic Robertson in Helsinki, sir thank you. Ukraine's top prosecutors announced the indictment of a Russian Military Commander for the killing of

an unarmed Ukrainian civilian.

The soldier is to be the first to stand trial for a war crime committed in Ukraine. CNN's Senior National Correspondent Sara Sidner is with me from

the Capital Kyiv and takes up the tail.

SARA SIDNER, CNN SENIOR U.S. CORRESPONDENT: Yes, so we have obtained some video that shows murderous actions by soldiers against two unarmed

civilians. I want to warn you that the video you are about to see is disturbing. But this video is now being used as a part of an investigation

into war crimes.

(BEGIN VIDEOTAPE)

SIDNER (voice over): This is a stark example of a potential war crime perpetrated by Russian forces and example the world has not yet seen

Russian soldiers shooting two civilians in the back seat. CNN obtains the surveillance video taken from this vehicle dealership that sits along the

main highway to Kyiv.

The video is from the beginning as Russians tried and failed to shell their way to the Capital, the fight along this road was clearly fierce. But what

happened outside this business was not a battle between soldiers or even soldiers and armed civilians. It was a cowardly, cold blooded killing of

unarmed men by Russian forces.

The soldiers show up and begin breaking in inside of a guard shack two Ukrainian men prepare to meet them. We tracked down the men's identities.

One is the owner of the business whose family did not want him named. The other was hired to guard it.

UNIDENTIFIED FEMALE: My father's name is Leonid.

SIDNER (voice over): His daughter Yulia wanted the world to know his name and what the Russians did to him. Both civilians both unarmed. We know this

because the video shows them greeting and getting frisked by the Russian soldiers and then casually walking away.

Neither seemed to suspect what was about to happen that is when a member of the civilian fighting force who talked to the man a couple of days before

the attack told CNN he did not want to be identified for security reasons.

UNIDENTIFIED MALE: We came there earlier we warned people to leave that place. We also hope for the humanity of Russian soldiers but unfortunately

they have no humanity.

[09:15:00]

SIDNER (voice over): You see the two men walking in the shadows toward the camera behind them the soldiers they were just talking to emerge. A few

more steps and their bodies dropped to the ground. Dust shoots up from the bullets hitting the pavement.

The soldiers have opened fire. Minutes later, the guard Leonid gets up limping but alive. He manages to get inside the guard booth to make a call

to the local guys for help. This is one of those guys. A Ukrainian truck driver turns civilian soldier.

UNIDENTIFIED MALE: First of all, we felt a big responsibility. We knew we should go there because a man needed our help. He was still alive.

SIDNER (voice over): He's the commander of a ragtag team of civilians who took up arms to fight for Ukraine and tried to save the men. When the guard

called them he explained what transpired with the soldiers.

He said the soldiers asked who they were and asked for cigarettes then let them go before shooting them in the back. When his men finally got to

Leonid, he had lost massive amounts of blood.

UNIDENTIFIED MALE: One man from our group went there and the guy was still alive. He gave him bandages, tried to perform first aid, but the Russian

started shooting.

SIDNER (voice over): They tried to fight back but were unsuccessful. They didn't have the firepower to save their countrymen.

SIDNER (on camera): Yulia, have you seen the video?

YULIA PIYATS, FATHER KILLED BY RUSSIANS: I can't watch it now. I will save it to the crowd and leave it for my grandchildren and children. They should

know about this crime and always run into who our neighbors are.

SIDNER (voice over): Her neighbors to the north, these Russian soldiers show just how callous they are drinking, toasting one another and looting

the place minutes after slaying the two men?

SIDNER (on camera): What were the last words that you remember he said to you?

YULIA: Bye! Bye! Kisses, say hello to your boys.

SIDNER (voice over): Her boys will be left with a terrible lasting memory the death of their grandfather now being investigated as a war crime by

prosecutors.

(END VIDEOTAPE)

QUEST: Sara we know that war brings appalling things. I have a one question, having watched that video and listened closely to your report why

would they do it?

SIDNER: You know there can be a lot of speculation. But as we heard, all that they were asked is could they bump some cigarettes from these two

civilians who they came upon and tried to take over their building.

The civilians did not try to fight back they did not have weapons on them. And the answer to why is a question and answer I don't have but I will say

this, it appears that there was just an absolute disdain for human life. And they just decided that they were going to take it that day for no good

reason at all, Richard.

QUEST: Sara Sidner thank you in the awfulness of war, we can become very immune to these things, but it's important we don't. The stories making

headlines around the world, I want to bring to your attention. China's dismissing criticism from Western leaders after Hong Kong Police arrested a

90 year old Former Bishop, who was an outspoken critic of China's Communist Party, Cardinal Joseph Zen and three other well-known pro-democracy

activists were arrested with him. They're out on bail. They're charged with colluding with foreign forces. If convicted, they could face life in

prison.

Thousands of people turned out in Ramallah to remember the Al-Jazeera Journalist Shireen Abu Akleh, who was shot and killed whilst covering an

Israeli military operation in the West Bank City of Jenin. The Palestinian Authority has rejected an Israeli offer for a joint investigation into the

killing, saying it will investigate alone and share its findings with the international community.

North Korea has publicly confirmed an outbreak of COVID-19 for the first time. Officials say they've detected the Omicron variant in Pyongyang after

dubiously claiming for two years they were COVID free. North Korean Leader Kim Jong-Un has ordered a strict nationwide lockdown with the distribution

of medical supplies.

Coming up soaring inflation, market sell offs and now fears of an all art recession. Professor Rogoff will be with us. The Harvard Economics

Professor joins me to try and put some interpretation into all of this. And later on an unlikely place of refuge I'll be talking to the possible winery

in Moldova that's welcoming thousands of refugees from Ukraine.

(COMMERCIAL BREAK)

[09:20:00]

QUEST: So, welcome back. The markets will open in about eight minutes from now. And the futures are pointing to a lower open. I don't really think we

need to worry about the Dow or the S&P as much as the NASDAQ, because that's showing a loss of one and a half percent, and the index is down 27

percent.

So far this year, we've got numbers on inflation, which have come out the factory gate wholesale inflation, still at record highs year on year 11

percent gain. So it's down just a tad from 11.2 percent.

The issue, of course is how much of that 11 percent passes on to consumers or we know CPI is around eight and a half percent, which means both

consumers are paying more and producers are having to eat in the margins of their profitability as well.

All of this is global concerns on the growth. The UK is reporting its economy contracted last month, the BOE the Bank of England has already said

that Britain is on track for a recession.

Ken Rogoff, with me, Professor of Economics and Public Policy at Harvard, now Ken, we can have a sort of an academic discussion over whether or not

there will be a technical recession in the United States or not. But that ignores the reality that we are in an environment of stagflation.

KEN ROGOFF, PROFESSOR OF ECONOMICS & PUBLIC POLICY, HARVARD UNIVERSITY: It's extremely difficult global situation. Richard, I was talking to a

bunch of professional forecasters the other day, and one after another said they can't remember an environment where it was this uncertain.

The lock downs in China on top of an already fragile economy, war in Europe, galloping inflation in the United States, you have the makings of a

perfect storm, global recession. It's a risk. It's not a certainty, but it's a pretty scary risk.

QUEST: OK, now, into this maelstrom, we have the markets falling sharply, which in itself make sense, because, you know, they were overvalued so you

had froth off the top, but we actually have a major re-pricing of risk at the moment.

ROGOFF: Right, no question about that, particularly with the tech stocks in the United States, which are exceptionally sensitive to interest rates.

They've actually benefited incredibly from the trend decline in interest rates, then steadily been going down for decades.

On the way up, they're going to really hurt. So yes, markets are, they should be thinking about risk. China was something everyone counted on;

they didn't even have a recession during the financial crisis. Even during COVID in the first year they grew. But now we've learned they haven't grown

out of it

[09:25:00]

QUEST: So policymakers are focusing on inflation. I mean, we again, we're going to have an academic argument of whether they are behind the curve and

should have started moving late last year.

But that's a done deal now. In your view, is the right at the moment, is the right focus to squeeze inflation out of the system, regardless of the

collateral damage that's going to happen elsewhere.

ROGOFF: Absolutely not. I mean, and I think in the end, they're going to pull up short. It's true, that if they wanted to really just wring

inflation out of the system. And here we're talking, especially about the United States, where particularly the last year, year and a half, has just

had too much stimulus too late.

The inflation is way too high, it's not getting under control, it would be nice to have it under control. But just how big a recession do you want to

tolerate on top of so many other things, I suspect that they'll end up in two years, having raised interest rates to three or three and a half

percent.

But the point is, it won't have been enough to stop inflation, it'll cool it off. But they won't want to, you know, have an APEC - recession. I'm not

even sure they can pull that off.

QUEST: OK, but let's just take that. It's a - I mean, two, three and a half to three and a quarter, three and a half percent. And inflation is tamed.

So we get it down to five, four and a half 5 percent. What do you do then? Do you continue pertinaciously for your asymmetric 2 percent? Or do you

basically say we'll live with this for the foreseeable?

ROGOFF: Well, I mean, if it's still up at 5 percent, they're in deep, deep trouble. I think it'll be a little close to three and a half, 4 percent.

And I think what they're going to start saying is, well, we see it's going to be down at 2 percent, in another couple of years.

And we don't want to rush in and they'll, you know, just push things back. It's a very difficult situation frankly, when if China keeps throwing out

problem after problem, it's not easy to dig our way out of this.

QUEST: That we said at the time, that the low interest rates were going to cause problems in the future, because there wouldn't be any bullets left to

fight if we got into a recession.

We're not sort of in that situation, are we? We're actually about to have not a demand led recession, or even a supply. We're about to have a

manufactured recession by higher interest rates.

ROGOFF: Well, it isn't just that, I mean, you know, it's what's going on everywhere. There's both a supply problem and a demand problem. Let's

understand that when the Biden Administration came in, no one knew what to do. I'm not saying you know we know what should have been done.

It's not clear. But now we know they were pouring buckets of fuel on the fire with these the inflation fire with this massive stimulus. And that's

really the situation we're in, in the United States. And it just takes time to dig your way out.

QUEST: Professor, I'm grateful for you Sir, thank you very much, always good to see you. I keep yourself well, thank you.

ROGOFF: Great to see you, Richard.

QUEST: It is CNN, there is a great deal more the market opens just about upon us in a moment.

(COMMERCIAL BREAK)

[09:30:00]

QUEST: The horses are out of the gate and are underway. As they say we are well under 32,000 now in the market route continues rough half a percent

141 or so on the early numbers a minute 40 - and let's see how the trend develops.

It'll be the sixth straight day of losses. But that doesn't really tell you the tale is the size of the losses. That's disconcerting disease a major

drag, it's warning of slower growth ahead its shares are down by around 3 percent.

And over on the NASDAQ, the NASDAQ is falling more than 1 percent. The NASDAQ had been off 3 percent on Wednesday. So the triple stack will show

that unevenness would easily even as I'm talking that you can see the losses are developing.

The natural gas prices are jumping in Europe after Russia imposed sanctions on some energy companies. Ukraine has also stopped transporting Russian gas

through a major pipeline.

And oil is trading above $100 a barrel as the EU tries to ban Russian oil imports. Anna is with me in London. Anna Stewart, there are so many

undercurrents here, that it's difficult to know where to prioritize, because you have as I see it, China buying less because of lockdown, Russia

interfering and gas supplies.

But at the same time, what?

ANNA STEWART, CNN REPORTER: Well, at this point, having just got off the phone to Bruegel it's a really worrying situation where we're seeing lots

of little bits of disruption in different points.

So whether it's the transit point suspended in Ukraine, due to alleged Russian interference, whether it's the fact that Russia has issued some

counter sanctions overnight, no gas now going through a polar section of the Yemen pipeline, although it wasn't big news much anyway, because they

cut Poland off from Russian gas, whether it is this counter sanctions on German subsidiaries of Gazprom.

That represents around 3 percent of Germany's Russian gas. They're looking for alternative suppliers. But Richard the big concern, speaking to Bruegel

isn't what's already happened is what's potentially coming next.

And that is those gas payments in rubles. Bulgaria, Poland refused to pay Russia rubles for gas, they got cut off next week. And then next week after

that, that is when other European countries have to pay up.

And on this question of sanctions, listen to what Thierry Breton, European Commissioner for the Internal Market, but obviously stringer very much on

the pulse of what's happening, because I suggested to him that Europe was divided on the question of introducing sanctions for Russian oil.

(BEGIN VIDEO CLIP)

THIERRY BRETON, EU COMMISSIONER FOR THE INTERNAL MARKET: It's true that today for all, we are very close, but again, we did this, we are a

continent, you know, like the U.S. and we have to take care of everyone. And it's true that we have two countries, which are 100 percent dependent

on oil, - oil, so we have to take care of them. In other words, if we make if we apply the sanctions we have also to propose alternative solutions to

the one we need it.

(END VIDEO CLIP)

[09:35:00]

QUEST: At the end of the day, I always come back to this basic fact Anna. At the end of the day, a billion a day is going to Russia.

STEWART: 450 million Euros every day from the EU going into Russian coffers, that's just for oil. Add another 400 million plus for gas as well.

Everyone knows the EU knows it's got to cut its reliance bit fit.

Countries like Hungary and there are divisions in the union matter what Mr. Brettell says they need to be compensated they need better infrastructure,

they need to know exactly where the oil and gas will come from, how it will get to them.

And right now those solutions aren't there. But Richard, I think these countries whether or not they issue an embargo, they have to prepare right

now as if they are in an emergency as if Russian energy has been cut off.

And frankly that might at this stage mean that people need to consume less energy so they have more for winter in case they you know, there is a big

shortage a big fall out.

QUEST: Make hay while the sun shines however that phrase is, Anna Stewart, grateful. Thank you. The Japanese tech investor Softbank says its funds

racked up record losses last year more than $27 billion. Paul R. La Monica is with me, how'd you lose that much money?

PAUL R. LA MONICA, CNN REPORTER: Yes, disaster for Softbank Richard, but you can lose that much money when you have bets on a lot of tech stocks

that have imploded particularly Asian tech stocks.

You look at the disastrous market debut of DD, which was a big holding for Softbank, the Chinese ride hailing firm really struggling going to be

moving off of Wall Street exchanges, you have losses in companies like Grab and Coupang.

And even larger, more established companies in China like Alibaba have really struggled this year in light of renewed worries about a COVID

outbreak in China. And just a broader meltdown in tech stock valuations, investors are reevaluating how much these major tech companies even the

profitable ones, how much they really should be worth.

QUEST: Alright, so just looking this morning, the market is open the NASDAQ is sharply lower, it's down 1 percent. I see apples off 3 percent; Amazon's

done another one and a half percent a DD for what it's worth. I mean, you mentioned DD?

It's barely $1.50 worth now, but it's still off 2 percent which is that where the thinking on where this ends is.

MONICA: I don't know necessarily Richard, if we have reached the endpoint of the selling yet people talk about capitulation, you know, proverbial

blood in the streets. And as bad as these market drops have been for Big Tech, you don't get the sense that the selling is going to end anytime

soon.

Especially when you look at how investors are rotating their money, they're taking profits from these Big Tech investments over the past decade. And

they are seemingly putting it in cyclical areas of the market like oil.

I mean, the energy sector has been by far the biggest winner on Wall Street this year. And it seems like that's where the trend is right now Celltech

by energy.

QUEST: Crypto. I mean, the numbers are back there then, particularly I'd say Bitcoin we've been taught with the idea that Bitcoin is somehow a hedge

against inflation seems to have gone out the window.

MONICA: Yes, Bitcoin clearly Richard is not turning out to be digital gold. Gold is still the real thing, if you will. And the dollar has been spiking

this year that has hurt Bitcoin in.

I think at the end of the day, people realize that Bitcoin is a highly skeptical as highly, you know, asset that is a very risky. And I think

people are skeptical of this notion that it can be digital gold, it doesn't really correlate with gold and other commodities as much as it does with

tech stocks.

And we've seen what's happened obviously with the NASDAQ and Bitcoin Etherium; other Cryptos are plunging as well. And what's really more

alarming is that you have all of these stable coins so called stable coins that are pegged to the U.S. dollar that have also been starting to drop.

You've seen this problem with a currency called TERRA. My colleague, Allison Mara has a great explainer up on CNN Business right now about the

problems with these stable coins.

So there is a lot of turmoil in crypto right now and I don't know where we hit bottom.

QUEST: Paul R. LA Monica, grateful sir. Thank you. As we continue, you're not finding sanctuary where you might not expect it. A winery in Moldova is

opening distraught Ukrainian refugees in a moment.

(COMMERCIAL BREAK)

[09:40:00]

QUEST: 6 million people have been forced from Ukraine since the beginning of the war. Many have headed to Poland of course, other neighboring

countries, such as Moldova, and that's where thousands have been able to take refuge in beautiful at an unlikely place a winery.

The Purcari wineries is only a few miles from the border with Ukraine, it's opened its doors to more than 5000 refugees since the invasion began.

The shutter has been producing wine for almost 200 years. It's won major medals from decanter and other international bodies. And it has produced

what it calls a freedom blend following Russia's invasion of Ukraine in 2014, mixed great varieties from Ukraine, Moldova, and Georgia.

The chief operating officer says it's his duty to help the people of Ukraine calling them heroes. He's Eugen Comendant. He's joining me now from

Moldova. So let's start with the efforts that you're doing to help people to house refugees. How is it going?

EUGEN COMENDANT, CHIEF OPERATING OFFICER, PURCARI WINERIES: Hi, Richard, and thanks for having me. Well, of course from you know, the morning of the

24th of February when all this situation started in Ukraine, all of us here in Moldova, we woke up looking at our phones, and we realize that there's a

war in Ukraine right across the border.

We the team at Purcari, of course, we had an emergency meeting very early in the morning. And when we put the risk of the Russian troops invading

Moldova aside and we knew straightaway that we had to focus on helping the Ukrainian refugees that are fleeing this war.

Chateau Purcari is right next to the border, as you said, in fact, from the vineyards of Chateau Purcari, you can see the hills and valleys of Ukraine

so positioned very close to the border. We knew that we had to help.

So straightaway, we made a decision and we made it public through various Ukrainian social media channels, that the doors of Chateau Purkari are open

to any refugee that seeks shelter and accommodation.

However, you know, I hope everyone realizes that we were within an hour, the Chateau was fully booked. In fact, within a few hours we were already

improvising beds in the restaurant area and the conference room.

[09:45:00]

QUEST: Right. So you had these thousands of refugees, and to the extent that you're able and not because of the refugees and talked about just the

situation generally, you talked about the Russian risk of invasion of Moldova.

We know that there is already agitation by Russia; they're meddling, rambled ever, do you fear that there will be that Moldova's next?

COMENDANT: We cannot exclude the risk completely. But I personally do not fear and so does the management and most of the people here in Moldova,

because if you look at the Moldovan population, there hasn't been an emigration from the country so far.

And there's a few reasons why we believe you so, the neutrality of Moldova has been included in the Constitution in 1994. So in fact, Moldova would

not, would not be there to join any large alliance such as NATO.

Then if we were to look, even at the narrative that the Russian regime has used to invade Ukraine, it was the De-nitrification and demilitarization.

Well, we don't have any Nazi parties in Moldova.

And we may have some amazing wines, but we definitely do not have any tanks or heavy military equipment. So from that perspective, we believe that

there shouldn't be a platform for Russia to enter Moldova.

That was eastern region that is something else, because Transnistria has been the territory with Russian troops on it since 1992. And you mentioned,

you mentioned the Purcari freedom, bland wine that we've launched in 2014 after three countries, the post Soviet Union countries have had to endure

Russian aggression. It was Moldova in 1992 in Transnistria, and then in 2008, it was Georgia yes, and then in 2014, Crimea and Ukraine again in

2022.

QUEST: Right, so I just want to talk about your wine. Because obviously, your ability to help others is dependent on your ability to sell your

splendid wines, we've been reading about them, and they are well known and much loved.

So do you expect with everything that's going on? Will you get a good crop? And will you be making a good wine this year?

COMENDANT: Well Purcari has been making great wines since 1827. In fact, already in 1878, one of the flagships - Purcari, won the gold medal in

Paris. So that was quite some time ago.

We are certainly on the quality of the wine that we make. But I want to make clear that our support to the Ukrainian refugees is completely

unconditional. So we were clear from the start that we do not want to put any commercial aspect into the humanitarian issue.

So everything that we do for the Ukrainian refugees is totally unconditional, we are in the process of creating the Purcari foundation,

which will help because we are a company for profit, we're in fact, a publicly listed company listed on the Bucharest stock exchange.

So it will help a company like us to channel funds because we have many donors and many parties that are willing to donate. And they've seen

everything that we've done for this crisis for helping the Ukrainian refugees and that Purcari foundation will help us in doing that.

QUEST: Excellent. Well, we look forward to getting a bottle or so of the wine. And we will have a lovely taste of it. Thank you very much for

joining us and for the excellent work that you're doing.

And for bringing us up to date. I appreciate your time this morning. Thank you.

The markets are open. The news is not particularly good and the economic news in the United States on inflation. That's not good either. We'll talk

about it after the break.

(COMMERCIAL BREAK)

[09:50:00]

QUEST: Welcome back, I need to check the markets with you if you will. We are bouncing off the lows of the session, the NASDAQ still off around 1

percent. The trading is volatile. The reason of course is the numbers on inflation.

This time it was wholesale inflation factory gate. And that's rising at a rate of 11 percent year over year, last month. So the headlines marginally

expect - than expected, it's close to record levels.

It follows on from, of course, the CPI number, which again, uncomfortably high will be the best phrase which is what the markets are reacting to this

morning. It means that interest rates are going up and they're going to go up harder and faster than perhaps they had feared or hoped.

You've heard a lot about inflation this morning. Prices are driven up; small businesses with tight margins will find themselves on the thin edge

of the wedge. Core inflation in the U.S. is at a 40 year high.

And there's rising costs along with a shortage of skilled workers could spell disaster. Vanessa Yurkevich has been looking into it.

(BEGIN VIDEOTAPE)

VANESSA YURKEVICH, CNN REPORTER (voice over): What is a French fry without a side of ketchup? For Clodagh Lawless, owner of the Dearborn Restaurant in

Chicago, it's a huge cost savings.

CLODAGH LAWLESS, OWNER, THE DEARBORN: Let's say we do 200 covers and 100 of them want an extra ketchup, that's 20, 25 cents, which doesn't seem like a

lot and multiply that by a week, by a year.

YURKEVICH (voice over): Ketchup and nearly every other ingredient used at the Dearborn has become more expensive in the last year. Inflation is

pushing meat prices up 13.9 percent, butter up 16 percent and eggs up a whopping 22.6 percent, big increases for small businesses.

LAWLESS: I thought at this stage that we would be in a better position financially. But it's been very difficult mainly because of where we're at

right now with inflation.

YURKEVICH (voice over): But some good news perhaps prices rose just point 3 percent last month, and food prices rose less than 1 percent with energy

dropping 2.7 percent. But an 8.3 percent year over year inflation still stings.

LAWLESS: We're still reeling financially, to be honest from the effects of being closed for on and off for two years during COVID.

YURKEVICH (voice over): And despite a strong jobs report adding 420,000 jobs in April, small businesses lost 120,000 jobs. Even with restaurant

tours like lawless raising wages, it's often still not enough in the fierce competition for workers.

LAWLESS: We are seeing a lot of people starting with us for two or three days and then going somewhere else where they can get two or $3 more an

hour.

YURKEVICH (voice over): Salon owner Michaella Blissett-Williams isn't losing employees, but she can't find more. She's also trying not to pass

her increased cost to customers just yet.

YURKEVICH (on camera): What are you experiencing price increases on here as it relates to the salons?

MICHAELLA BLISSETT-WILLIAMS, OWNER, SALON 718: Oh, everything from gloves to foils, things that we need to do the service have definitely gone up and

now just with inflation, it's just some products are double digit.

YURKEVICH (on camera): What does that mean for your bottom line?

BLISSETT-WILLIAMS: That's profitability. It's a catch 22; it's either less profitability or lose business.

YURKEVICH (voice over): She's banking on inflation continuing to cool especially as she renovates two of her salons. Construction costs are up

11.7 percent on average in the last year.

BLISSETT-WILLIAMS: Doubling the price of a renovation, not doing price increases it eventually adds up and that's when it feels very overwhelming.

YURKEVICH (voice over): Back in Chicago Lawless says she's waiting to turn a profit again with already slim margins; higher costs have made that

impossibility.

LAWLESS: I thought there was a little bit of light at the end of the tunnel and really it just depends on how long that tunnel is. (END VIDEOTAPE)

[09:55:00]

QUEST: Earlier I told you Apple had been overtaken as the world's most valuable company that Saudi Aramco that's now become that. But Apple is now

facing an onslaught from its rival Google.

And it's unveiled a slew of Google's slew - products. You didn't really even know I needed. There are three new smartphones, including two flagship

devices, which are out later this year.

Google also plans to roll out its first ever smart watch, as well as a new tablet. Now assuming all things go according to plan, and you like the

look, there are just 227 shopping days to Christmas.

Yes, I was the first person to mention Christmas, and how many days we've got to go. But we've still got to get through the summer and of course, a

pretty awful market correction. That's it for the moment. "Connect the World" is next. I of course will have "Quest Means Business" five hours

from now, stay with CNN, because the news never stops.

(COMMERCIAL BREAK)

END