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Quest Means Business
Key Inflation Measure Hits 39-Year High; Biden Addresses Need to Repair Infrastructure; U.S. General Says Russian Invasion would be Horrific; British Police Ask For Parts Of Partygate Report To Be Left Out; New Images Of U.S. Navy Stealth Fighter Crashing Into The Sea; Blizzard Warning Issued For 10 U.S. States. Aired 3-4p ET
Aired January 28, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALISON KOSIK, CNN BUSINESS HOST: After a long week, stocks just barely squeaking out some gains. The S&P 500 and the NASDAQ are slightly higher.
Those are the markets, and these are the main events.
An Apple a day drives the economic blues away. Stellar tech earnings raise questions about the market panic.
A top U.S. General strongly encourages Russia to stand down saying there is still time for diplomacy.
He's still rockin' just not on Spotify. Apple Music takes its moment to welcome Neil Young fans.
Live from New York. It's Friday, January 28th. I'm Alison Kosik, in for Richard Quest, and I mean business.
Good evening. Tonight, U.S. stocks are closing out their worst month in almost two years as a key measure of inflation in the U.S. hits a 40-year
The personal Consumption Expenditure Index rose last month to nearly six percent year-over-year. Energy prices last month were up nearly 30 percent
from a year ago. Food was up 5.7 percent. The core PCE index excluding those two categories, that was up 4.9 percent.
The Dow opened lower on this latest measure of inflation. It has since recovered in another roller coaster day of trading. All the major averages
are capping off a volatile week in the green.
Earnings season is helping to put some balance in the markets. Apple is up more than five percent after a beating estimates on revenue and earnings
per share. The company posted record sales in the holiday quarter despite supply chain constraints.
CEO Tim Cook told investors he expects the company's supply chain issues to improve this quarter.
Matt Egan joins us now. Matt, great to see you.
You know, it's good to see you on a day where I see green arrows and you know, thinking we might actually end in the green. Does this mean all the
turbulence was for nothing?
MATT EGAN, CNN REPORTER: Yes, I don't know, Alison. I think the turbulence was really about these concerns about high inflation and the Federal
Reserve's plans to attack inflation. And I think we got more confirmation today of just the size and scale of that inflation problem.
I mean, the fact that the Fed's preferred inflation metric is up by 5.8 percent in December, that's no big surprise to the market, but it is a
really important metric. And as you can see, it's getting worse. I mean, it was 4.2 percent in August. Now, it is almost six percent.
Remember, the Fed's goal is two percent. We're nowhere near that, and there is just so many different items that are getting more expensive. I'll just
give you a few examples. Baby food and dry cleaning, prices up by around eight percent from a year ago; oranges 10 percent; steak 21 percent; and
rental cars, 36 percent.
This is largely driven by COVID and the supply chain problems, worker shortage, and really strong demand. Now, it's up to the Federal Reserve to
try to cool off inflation. But it's not an easy job here because if they raise interest rates too little, too timidly then inflation could get
If they raise rates too much, then they could short circuit this recovery and possibly freak out the financial markets and that is the delicate
balance facing the Fed and that investors are worried about right now -- Alison.
KOSIK: Yes, no one is doubting that the Federal Reserve has a super challenge on its hand. But you know, we get this inflation milestone today
at a time when we're also hearing from analysts, from banks warning of growth slowing here in the U.S.
EGAN: Yes, that's true. So Bank of America warning clients today that the first quarter is not going to look as good as they thought. They were
expecting GDP growth at an annual rate of four percent for the first three months of this year, but because of omicron disruptions, because of the
fact that the government is not going to be spending as much money, Bank of America is now calling for growth of just one percent, and Bank of America
is also warning of a significant risk, that there's negative growth.
That would be a very big deal, of course, because there's been six straight quarters of growth since this economic recovery began in the summer of
2020, and it is not a crazy idea what Bank of America is saying here because we do know that COVID omicron has as caused a lot of disruptions
and the Atlanta Fed has their GDP now model of forecasting, and that just came out today and it is indicating growth of 0.1 percent, so essentially
EGAN: Now, it's early in the quarter and we know that these forecasts can bounce around, but it is pretty telling that, you know, one of the leading
banks is now saying, you know, watch out we could have a quarter, not a whole year, not back-to-back quarters, but a quarter at least of negative
growth -- Alison.
KOSIK: All right, Matt Egan, thanks so much for breaking all of that down for us.
KOSIK: This week's market jitters come despite stellar earnings from some tech heavyweights. Before Apple, we also heard from Microsoft and Tesla,
those two companies also beat expectations. Tesla reported record revenue and earnings. Microsoft just had its most profitable quarter ever. And yet,
both indexes they dominate, the S&P 500 and the NASDAQ are having a miserable month.
Dan Niles is the founder and portfolio manager for the Satori Fund, which invests mainly in U.S. tech firms and he joins us live from San Francisco.
Great to have you on the show.
DAN NILES, FOUNDER AND PORTFOLIO MANAGER, SATORI FUND: My pleasure, Alison.
KOSIK: And I'm sure as much as investors want, the reality is Apple alone probably cannot hold up tech stocks, cannot hold up the NASDAQ as a whole.
The thing is, with many of these big tech companies, there's nothing wrong with the fundamentals is there, but there is this shakeout happening in the
tech sector because of their lofty valuations.
So as we see, tech is getting slammed in the NASDAQ in a correction. I want to know, is this the end of tech investing as we know it?
NILES: Well, it is a good question, Alison. I think it's obviously not the end of tech investing as we know it, but I think the way you need to think
about it is you had $5.5 trillion of government stimulus come out since the pandemic. You had $4.7 trillion in Fed balance sheet expansion since the
pandemic, and so you add those two numbers together, that's over $10 trillion coming into the market versus U.S. GDP at $21 trillion.
And some of that money went into buying stocks, others into buying cars, others into buying crypto. And now what you're seeing is all that money was
chasing goods, but you didn't have 50 percent more goods, and so that drove massive inflation, which is what the Fed is trying to deal with.
And now, all those valuations need to come lower as the Fed is starting to deal with inflation at 40-year highs, which they didn't see coming, made a
big policy mistake last year. And so the valuations have to come down for all these names that got highly inflated.
KOSIK: Okay, so this is about valuations. So how are you valuing stocks? The push now is, it seems to be to sell, you know, anything that's
unprofitable. But if you've got a long term view, and there are high growth rates in unprofitable companies, even in the tech world, isn't there a tug
of war between innovation and profitability at this point?
NILES: Yes, I mean, I think -- let me give you this analogy. If you go back to 2000, when you know, the Internet was first starting up, you had this
company called Amazon, and it was trading at $106.00 a share in 1999. And from 1999 to 2001, the revenues went from $1.6 billion to $3.1 billion in
revenues. The stock went from $106.00 to six. So the stock went down 95 percent, even though revenues doubled. And that gets back to the fact that
valuations were too high to start with, not that ecommerce wasn't real.
And if you look at things today, it's a similar situation where if you take the market cap of the entire stock market, and you divide it by U.S. GDP,
you're sitting at about 1.8 times. The average over 50 years is 0.8, and this just goes back to the fact you had all of this stimulus, which was
nearly 50 percent of GDP, driving up assets all over the world, including stocks, and now that the Fed is pulling that back, you're going to get the
exact reverse where valuations will go back to normal.
KOSIK: As you see it, what should be the number one concern for investors this year?
NILES: Well, I think -- and we've written about this on our website, it is the combination of high inflation and aggressive Fed and slowing growth,
and that is the exact combination you got in the 1970s, and we have some great charts on this, where you had to have the market multiple go from
about 20 times on the S&P, it contracted all the way down to seven times and this offset 20 percent earnings growth over a two-year period of time
from 1972 to 1974.
And unfortunately, I think that's what you're dealing with. And on top of it, you had growth slow in the 1970s from very fast growth and that is
again what you're seeing especially with energy prices and wages and rents as high as they are, which aren't probably going to go down anytime soon.
KOSIK: Okay, Dan Niles, founder and portfolio manager of the Satori Fund. Thanks so much for all of your great analysis.
NILES: Thank you, Alison.
KOSIK: The U.S. President is talking up his plans to improve America's aging roads, airports, and bridges. Joe Biden is set to speak in
Pittsburgh, Pennsylvania, where a bridge collapsed just a few hours earlier.
Mr. Biden's infrastructure talk was already planned, but the collapse coincidentally enough helped prove his point. He toured the scene a short
time ago. Several people were hurt in the collapse, but there are no reports of anyone being killed. Authorities are still trying to figure out
why this happened.
Mr. Biden is urging Congress to make America more competitive by investing in research and development, and by strengthening the supply chain. CNN's
John Harwood is in Pittsburgh with more details.
John, great to see you. Talk with us more about what you're expecting to hear from the President.
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Well, the President is going to make the case that one of the legislative elements that they have
delivered, a lot of attention in the last couple of months for things they haven't, but one that they have is this $1 trillion Infrastructure Bill,
and you couldn't have a more dramatic argument for why that is necessary than the collapse of this bridge.
President Biden toured the bridge about an hour or so ago. He talked about how Pittsburgh has more bridges than any city in the world and said that
every one of them would have its security insured by -- soundness and security insured by the money in this infrastructure bill, $1.6 trillion,
excuse me -- $1.6 billion will go to the State of Pennsylvania.
This is a part of the President's broader effort, Alison, to make the case that there are some things going right in his administration. His ratings
are down. People are upset about the economy. Of course, we've got very strong growth numbers yesterday. People are still concerned about
inflation, but there are -- the Federal Reserve is moving to take steps there. He is trying to work on supply chains and he is making the case that
his Build Back Better agenda, which hasn't passed yet, is going to have a long term lifting effect on the productive capacity of the economy.
KOSIK: Okay. CNN's John Harwood, thanks very much.
Next on QUEST MEANS BUSINESS, why Ukraine's President says dire warnings of a Russian invasion are harming his country. Stay with us.
KOSIK: America's top General is strongly urging Russia to stand down at the Ukraine border and pursue diplomacy. The Chairman of the Joint Chiefs of
Staff, General Mark Milley said a Russian invasion will be horrific and that Ukrainian civilians will suffer immensely.
President Biden has warned Ukraine's President that Russia could take military action as early as next month. The Ukrainian leader downplayed
that warning at a news conference today saying the Russian threat was something Ukraine had learned to live with, and that talk of an imminent
invasion was doing more harm than good.
(BEGIN VIDEO CLIP)
VOLODYMYR ZELENSKY, UKRAINIAN PRESIDENT (through translator): I spoke to the President and told him I started talking to the leaders of the
countries and to explain to them that we need to stabilize the economy. They are saying tomorrow is the war. This means panic. Calm the market
panic in the financial sector.
(END VIDEO CLIP)
KOSIK: Joining me now CNN's Nic Robertson from Moscow and Barbara Starr is at The Pentagon.
Nic, let me start with you, after hearing from the Ukrainian President kind of tried to get world leaders to tone down their rhetoric, there really
does seem to be a very different picture coming from the Ukrainian President versus what President Biden is saying and seeing in this
situation with Russia and Ukraine.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, what he is essentially saying is that his Intelligence Services on the ground have a
longer history of sort of understanding what Russian military maneuvers on their border look like, and the way that they can appear to be something
that they're not, empty tents, I think was something that he referenced at one point during that press conference and that therefore, you know, the
ground assessment that he has is a more accurate one.
And again, he is framing it this way that they've been living with this since Russia invaded Ukraine and annexed Crimea in 2014, and they are used
to this sort of tempo of external pressure. And the way that they handle it is to try to get on with life normally not scare the population, and
particularly in this case, not scare the international markets, and this is his real concern.
This tension can go on for a while, it could go on for weeks, it could go on for months. It may not be done now. It might pick up again in the
summer. You know, this is the sort of analysis that he is living with day by day, and if the West way of handling this is less subtle than his at
home or is less nuanced internationally, that's going to have a financial impact on his country and that is exactly what the Russians would like to
see. They would like to see his country stressed, the people stressed, mistakes made, tensions build. From his view, giving Russia an opportunity
on excuse if it sees it to take advantage.
KOSIK: So is President Biden then doing exactly what Putin wants?
ROBERTSON: What Zelensky is saying is, don't do exactly what he wants. Putin would like to see. And we heard this from his Foreign Minister today,
he wants to see President Biden put lots of pressure on President Zelensky. And one of the things that the Matthew Chance's source told him last night
was that one of the comments from President Biden was look, you know -- and we know this, because this is what's going to happen if there's an
invasion. There will be massive sanctions on Russia.
But there will be troops coming into Ukraine, and this is part of President Biden's message to Zelensky. So it is -- you know, there is a pressure on
Zelensky here as well, from the United States. And that it seems, and that is something, at least by the Ukrainian telling of it. That is something
that President Putin would definitely like to see, because he wants to see the U.S. pressure Ukraine to make concessions, give a long term legally
binding guarantee that it won't go -- that it won't join NATO.
And that was a nuanced line, a new line we heard from the from the readout of the phone call between President Putin and President Macron of France
today, this guarantee -- long term guarantee rather than a permanent guarantee.
KOSIK: Okay, Barbara, let me bring you in. As we watched earlier this afternoon, two of America's top military advisers, speaking in very stark
language, what did they say and why was this news conference at The Pentagon so significant today, do you think?
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Well, Alison, I think it was significant because they both came out in public and neither of these men
are big fans of appearing in front of TV news cameras. They clearly felt it was time to speak out publicly and General Milley, the Chairman of the
Joint Chiefs, was very dire in what he thought could happen if Russia were to invade. He talked about mass casualties. He talked about it being
horrific and terrible. We know that there could be massive refugee flows if it came down to that.
STARR: Secretary Austin warning that nobody really knows still what Putin may be thinking, what he really wants to do. But nonetheless, the U.S.
keeping about 8,000 troops on heightened alert here in the U.S. and they could move.
From here, they could move from their current positions into Europe, into Eastern Europe to try and reassure allies live up to NATO commitments if
Russia makes a move, maybe live up to those commitments even before Russia makes move. The Secretary being very clear. Right now, his priority is to
reassure Europe that the U.S. is there for them -- Alison.
KOSIK: Barbara, there is a U.N. Security Council meeting happening on Monday. How much do you think this would be an opportunity to defuse the
situation between Russia and Ukraine, though, there has already been a lot of talking, a lot of diplomacy, and we seem to be going in circles.
STARR: Yes, I mean, it's important that the U.N. talks about this, that Russia takes its leading role in those discussions. But I don't think
anybody thinks there will be a diplomatic full breakthrough at the United Nations, perhaps some talks on the sidelines, perhaps some movement ahead.
But diplomacy at the moment, there does not appear to be signs of some imminent breakthrough -- Alison.
KOSIK: Okay, Barbara Starr and Nic Robertson, thanks so much.
Germany's Foreign Minister pledged strong support for Ukraine today. She also urged Russia to deescalate and pursue diplomacy. But Germany's allies
are wondering whether they can count on Berlin for military support as CNN's Fred Pleitgen reports.
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): As Russia continues amassing troops at Ukraine's borders, the U.S. and its
allies have stepped up deliveries of defensive weapons to Kyiv, including armor piercing anti-tank missiles.
Notably missing though, NATO partner, Germany. The Germans only offering 5,000 helmets for the Ukrainians facing Russian tanks.
CHRISTINE LAMBRECHT, GERMAN DEFENSE MINISTER (through translator): The German government has said very clearly that we will not send any lethal
weapons or arms deliveries to conflict areas because we do not want to fuel these conflicts further.
PLEITGEN (voice over): But Germany is coming off a record year for arms exports, top client, Egypt despite its difficult human rights track record.
Ukraine's Ambassador to Berlin says his country is not happy.
ANDRIY MELNYK, UKRAINIAN AMBASSADOR TO GERMANY: I think that they have to reconsider and they have really start helping us with the weapons of a
defensive type, which we need right now.
PLEITGEN (voice over): Some NATO countries are questioning just how reliable an ally Berlin is when it comes to confronting Russian aggression,
especially after the head of the German Navy recently had to resign after saying Vladimir Putin deserves respect.
When dealing with Russia, Germany is still haunted by its past says Sudha David-Wilp from the German Marshall Fund in Berlin.
SUDHA DAVID-WILP, GERMAN MARSHALL FUND: They're afraid of sending weapons to Ukraine and those weapons being used against Russians given the number
of Russians that were killed during World War II. But let's be honest, there were huge amounts of Ukrainians that were victims as well during
World War II.
PLEITGEN (voice over): Millions of Ukrainians were killed as Hitler's army overran what was then the Ukrainian part of the Soviet Union. Nearly the
entire Jewish population there, wiped out.
But Germany also has hard economic reasons for going soft on Russia, its dependence on Russian gas and the Nord Stream 2 pipeline, $11 billion
undersea link between the two countries.
While Berlin recently claimed the pipeline was a purely economic project, at least now the government says a Russian invasion of Ukraine would have
ANNALENA BAERBOCK, GERMAN FOREIGN MINISTER (through translator): If there is renewed aggression, we have the full bandwidth of measures, including
Nord Stream 2.
PLEITGEN (voice over): The U.S. has long urged Berlin to use Nord Stream 2, which is not yet certified for gas transit as leverage to deter Moscow.
Now, the State Department says if Russia invades, the project is dead.
VICTORIA NULAND, U.S. UNDER SECRETARY OF STATE: If Russia invades Ukraine, one way or another, Nord Stream 2 will not move forward.
PLEITGEN (on camera): But currently, the Germans are still very much moving forward with Nord Stream 2. In fact, a German subsidiary was just found to
try and speed up certification here in Europe. All this, as Berlin says it remains firmly in the U.S.'s corner and says that it will support massive
sanctions against Russia if there is a further invasion of Ukraine.
Fred Pleitgen, CNN, Berlin.
KOSIK: Germany says its wave of omicron infections is well under control despite a record surge in cases this week. The Health Minister insists the
numbers are lower than expected and if they under control, the country could lift restrictions in a few weeks as Kim Brunhuber reports, other
European nations are already starting to ease their own measures.
KIM BRUNHUBER, CNN CORRESPONDENT (voice over): In Dutch, this blackboard reads, "We're back open," welcoming diners for the first time in 2022.
Restaurant staff are resuming their usual duties this week as the Netherlands relaxes COVID restrictions. Business owners hope, this time
it's for good.
FRANK TOERING, OWNER, STROOM RESTAURANT: So I hope this is a last time and we have the freedom to work and to undertake fun thing, so I really,
really, really hope this is last time.
BRUNHUBER: The Netherlands is among several European nations now easing rules imposed to control the spread of the omicron variant. Mask
requirements and limited business hours will soon be lifted in Denmark as the country aims to end remaining COVID measures by next week after they
were initially loosened two weeks ago.
In Austria, a so-called lockdown on the unvaccinated is coming to an end.
On Wednesday, the country's Chancellor said the pressure on hospitals is eased, and he promised an end to all restrictions if infection rates
In England, and end to most coronavirus measures began Thursday. Prime Minister Boris Johnson said omicron appears less severe than previous
variants and encouraged booster shots and the use of antiviral drugs over restrictions to fight the virus.
Still, COVID numbers remain high throughout Europe. Denmark, the Netherlands and Austria are all seeing rising infections which may only
increase as restrictions relax.
The Czech Republic, Hungary, and Poland all reporting record daily new cases this week. That's also the case in Germany, where Parliament is set
the debate proposals to require some residents get vaccinated.
Russia also reporting record numbers this week, but hospital officials say patients seem to be exhibiting less severe symptoms.
As the variant spreads at record speed, restrictions are lifting in what may be a pandemic first. Officials and residents across Europe perhaps
choosing to carry on with COVID-19.
Kim Brunhuber, CNN.
KOSIK: Still ahead on QUEST MEANS BUSINESS, COVID has made travel hard enough, but the difficulties could get even worse due to a shortage of
pilots. How some airlines are scrambling to fill the cockpits?
KOSIK: Welcome back. I'm Alison Kosik. There's more quest means business in a moment when the hottest market trend of 2021 seems to be falling out of
favor. We'll chart the rise and fall of the SPAC.
And Spotify's competitors are looking to capitalize on the streaming services feud with artists Neil Young. Before that the news headlines this
We may not be seeing any conclusions about Boris Johnson's Partygate scandal anytime soon. It appears the British Cabinet Office report could be
delayed further. That's because the Metropolitan Police asked for matters they're investigating to be largely left out to avoid compromising their
probe. They're investigating whether the alleged parties breached COVID regulations.
New images have emerged of a U.S. stealth fighter crashing into the South China Sea. The F-35C contains some of the Navy's most advanced technology.
Six sailors and the pilot were injured when the war plane crash landed on an aircraft carrier then fell into the sea on Monday. An investigation is
Seventy-five million people in the U.S. are preparing for what may be a dangerous snowstorm over the weekend. 10 states have issued blizzard
warnings ahead of a nor'easter expected to dump heavy snow from Virginia to New England. Meteorologists say the storm will make it difficult to
impossible to travel.
That snowstorm in the U.S. is just one problem facing travelers another could affect their plans long after the snow melts. There are not enough
pilots to fly the planes. CNN's Pete Muntean is in Arizona and he shows us how airlines are scrambling to train pilots before the situation gets
PETE MUNTEAN, CNN AVIATION CORRESPONDENT: This is the new idea from United Airlines opening its own pilot academy. The official ribbon cutting just
happened here, that's 60 students in this inaugural class and this is the Cirrus training plan that they will be using on their way to becoming
MUNTEAN (voice over): In the Arizona desert, United Airlines is growing pilots. Student pilot Adela Gallegos had no flying experience only last
month. Now she has her sights set on her first solo flight on the way to the pilot seat of a United jet.
ADELA GALLEGOS, STUDENT PILOT: I like the control. I like the freedom, I like being in there.
MUNTEAN: This is United's new aviator academy, the only flight school owned by a major U.S. airline. It is the newest fix for an industry wide problem.
Airlines that got smaller during the pandemic are now looking to hire again. American Airlines wants to add 2000 pilots this year, Delta Airlines
plans to hire as many as 200 a month. United Airlines CEO Scott Kirby says the goal here is to train 500 pilots annually.
SCOTT KIRBY, CHIEF EXECUTIVE OFFICER, UNITED AIRLINES: The pilot shortage is real. We can hire pilots at United Airlines but the regional airlines
and smaller airlines are have a real pilot shortage and are having real challenges.
MUNTEAN: Over the holidays. Airlines canceled more than 18,000 flights in the U.S. coronavirus sick calls compounded crew shortages. Faye Malarkey
Black heads the Regional Airline Association.
FAYE MALARKEY BLACK, PRESIDENT AND CEO, U.S. REGIONAL AIRLINES ASSOCIATION: I think a mistake we would make is to treat this like it's temporary. This
is a problem that's real, it's present. It's already affected air service. And it's going to get worse if we don't intervene now and give people real
path into this career.
MUNTEAN: The latest estimate that airlines worldwide will need at least 34,000 new pilots by 2025. But entry-level flying jobs require 1500 hours
KIRBY: The problem is the barriers to entry. This is the model really about creating that economic opportunity to let people come in who don't have
$100,000 to spend on their certification but have great potential, great ability.
MUNTEAN: Tuition here is $71,000. When they graduate students could get hired by a United partner company. First as a flight instructor then at a
regional airline and ultimately with United.
MUNTEAN: The airline says 80 percent of all students here are women or people of color.
UNIDENTIFIED MALE: We definitely need more people of color and more women in the industry lined up nicely. Adela's instructor Marcel Kimbrel was a
United flight attendant. Now he's earning his hours by teaching and he says there's never been a better time to learn to fly.
MARCEL KIMBREL, FLIGHT INSTRUCTOR, UNITED AIRLINES: You know, if I can do it, you can do it. You really just have to step out of there and really
took a chance on your dreams.
MUNTEAN: One more note about changing the face of flying about 90 percent of all commercial pilots in the United States are white men that number a
bit better at United Airlines about 80 percent clearly still a long way to go. And United says a program like this is just the start. Pete Muntean,
CNN, Goodyear, Arizona.
KOSIK: A standoff in Europe could be spilling into space. How the Ukraine crisis is threatening U.S. and Russian cooperation aboard the International
Space Station. That's next.
KOSIK: Could tensions between Russia and the U.S. spill over to the International Space Station? The ISS has so far been insulated from this
situation on Ukraine's border. But some former NASA astronomers are concerned that it could poison the U.S.-Russian partnership in space. If
so, it would be difficult for the station to continue its mission given the country's mutual dependence.
CNN's Space and Defense Correspondent Kristin Fisher joins me now. Christine, great to see you. You know, when I saw this headline, I thought,
gosh, Russia and the U.S. They've been space partners for decades now. And they've had their issues between, you know, cybersecurity, cyber attacks,
sanctions, and there's that relationship continued. So why would this current conflict mark a turning point?
KRISTIN FISHER, CNN SPACE AND DEFENSE CORRESPONDENT: Well, you're absolutely right. The U.S. and Russia have been partners in space since
1975. And they've been partners on the International Space Station for more than 20 years. I spoke to about a half dozen astronauts, former astronauts,
Alison, who say that they're worried that this current conflict could be different.
Garrett Reisman, a former NASA astronaut, who spent about 95 days on the station said he's worried that If this does become an actual shooting
FISHER: That it would just be hard for the operations onboard the space station to go on uninterrupted which is what it has done remarkably, for
the last 20 years. I spoke with the two NASA astronauts who were onboard the space station, the last time that Russia invaded Ukraine. And Alison,
they told me that, at no point in time, did anybody on the ground and Houston's Mission Control or Moscow's Mission Control ever once even
mentioned, the ongoing tensions back then.
That's historically how isolated those astronauts up there and cosmonauts really are. But the concern this time around is that politically, it's much
more tense, but also the space station is nearing the end of its lifespan. Now, the Biden administration has just announced plans to extend it to
2030. But so far, Russia Space Agency, Roscosmos has not explicitly committed to that extension.
I talked to NASA Administrator Bill Nelson last week about it. He said, he's confident that what happens up in space on the space station, that
partnership, decades long partnership is going to continue no matter what happens on the ground in Ukraine. But this certainly is a very tense moment
for this U.S.-Russian partnership in space. And, you know, one more thing, Alison, part of the reason the Space Station has been so successful is it
has been this beacon of international cooperation.
And this very unique and rare sort of partnership, because cosmonauts and astronauts have to work so closely together, the Russian segment. It has
the propulsion on the station, the American side has all of the electricity. But then there's just kind of this more intimate sharing of
things between the cosmonauts and astronauts, and it's a bond that just very difficult to replicate on Earth.
They share the dinner table, they share exercise equipment, sometimes they share sleeping quarters, they even share a water supply. And Alison, that
means I was talking to one former astronaut up there during the 2014 Ukraine crisis. And he told me, yes, we would actually float over to the
Russian segment and ask the cosmonauts if we could borrow a tank of their urine so that we could then recycle it and drink it.
So it's that level of intimacy, that type of bond that's difficult to replicate here on Earth.
KOSIK: Yes, it's called friendship and trust. Yes, between the Americans and Russia. I said it. Kristin Fisher. Thanks so much.
FISHER: You bet.
KOSIK: Meantime, in private sector space efforts, space transport and services company D-Orbit is going public with a SPAC or special purpose
acquisition company. D-Orbit provides last mile satellite delivery services. The Italian firm will merge with Breeze Holdings, in a deal
valued at $1.4 billion. The deal is expected to close by the third quarter. A decade ago there were just a handful of SPAC IPOs going public every
SPACs hit a record in 2021 with 613 companies raising more than $160 billion as they went public. But in the last week, four SPACs looking to
raise more than $600 million reportedly pulled the plug on their IPOs. 23 SPACS did IPO this year so far, raising more than $5 billion. Securities
and Exchange Commissioner, the chair Gary Gensler has set the agency's sights on the investment vehicle.
Earlier this month, he suggested tougher disclosure, marketing and liability rules for SPACS. Let's bring in Aswath Damodaran. Professor of
Finance at New York University. And who to speak with, who -- can you certainly know your stuff here because you teach on this subject. SPACs. I
want to get your opinion about this IPO that I just talked about. Do you think it's a smart move when we've heard of several SPACs in the past 24
hours pulling the plug on their deals in, you know, because this is the latest sign that the SPAC market is losing steam.
ASWATH DAMODARAN, PROFESSOR OF FINANCE, NEW YORK UNIVERSITY: I mean, I think the first thing to recognize is SPACs are not new. They've been
around a long time, but they've come and gone, they've been abused in the past. So they've kind of gone away. So in the newest iteration SPACs were
created with downside protection which is investors in SPACs could pull their money out if they felt uncomfortable.
They could pull it out before the deal got done. They could even pull it out if they didn't like the way they were was structured. So that was the
protection investors are often. The only problem with the SPAC is you're outsourcing, you're thinking and you're choosing as an investor. You're
letting a celebrity, a big investor make your choices for you. And in return, that investor takes 20 percent of the funds raise.
That 20 percent is the killer. When you leave 20 percent of the table it's very difficult in investing to actually walk away a winner. And I think the
markets catching up with SPACs and I think what you're seeing here is a recognition that this -- that slice is way too large for SPACs to survive.
KOSIK: And now you've got some people blaming SPACs for the week's sell off that we've seen of late. You know, basically putting the blame on these
SPACs. Do you think that SPACs are a big reason for taking down the stock market?
DAMODARAN: Absolutely not. I mean, this is like blaming a wave for creating a tsunami. I mean, so the SPACs are a tiny, tiny part of the market. The
subset of the market where they are, has been affected but it's been affected because tech companies went through a rocky couple of weeks. So I
think to blame SPACs for what's going on in the market is completely missing the mark.
KOSIK: Do you think this is the end of the SPAC, then?
DAMODARAN: I think it's the beginning of the reorientation of the SPAC. As I said, you could design a spec that actually makes sense. The sponsor
who's the person putting this back together can take 20 percent. The deals I think have to be -- I mean, investors have to think for themselves, they
can't just dump money to SPACs and expect them to find great deals.
And as the market gets tighter as deals dry up, SPACs are going to dry up as well, not because they don't work, but because there aren't enough deals
to be done.
KOSIK: I want to move to the idea of valuations here, because we're seeing the Russell 2000 index, that's the index of small companies, it's fallen
into a bear market. 20 percent down from its record close in November. Have investors lost their appetite for stocks of unprofitable companies which I
think a third of the Russell 2000 are -- though companies are unprofitable. But isn't that the very thing that makes the stock market go round? Is
that, you know, the idea of risk and looking at growth of a company?
DAMODARAN: I think we need to take a longer-term perspective. It's true. The last couple of months have been tough. But you step back and look at
what your portfolio's done if have you had a young growth companies over the last five years, the last decade, you've had a really good run. And the
history of markets is when you make money that easily you got to give up money that easily as well.
So think some of this is the correction towards back -- towards what I think is a more reasonable number. I think it's too soon to pass judgment
and say investors have lost their faith in Young Money losing companies, because it's -- you're not seeing a flight of investors into nice safe, you
know, utilities or cash flow generating companies. So I think it's less of a rotation and overall market correction that you see.
KOSIK: OK. Aswath Damodaran, finance professor at New York University. Great getting your perspective today.
DAMODARAN: Thank you for having me.
KOSIK: Neil Young versus Joe Rogan, a legendary singer versus up pop -- a star podcaster. Spotify has made a choice that's heating up streaming wars.
We'll explain next.
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KOSIK: Babe, Can You Hear Me Now sang Neil Young. But if you're a Spotify user, the answer will leave you helpless. The streaming platform has agreed
to remove the singer's entire catalogue after he gave the company a choice. Stop allowing vaccine misinformation or delete my music. Young called out
the host of a highly popular podcast Joe Rogan for spreading COVID misinformation.
Now Apple Music is capitalizing on Spotify's move by calling itself the home of Neil Young. Sirius XM is even reviving a Neil Young radio channel.
Paula Newton joins us now from Ottawa. So great to see you. First of all, Paula, why is Apple Music, you know, laying out the red carpet for Neil
Young and showing this rock star or this rock legend so much love?
PAULA NEWTON, CORRESPONDENT: Yes. And it is the love that Neil Young decided he could do without that, would be the cash. You know, this started
with Neil Young being very upset about what he calls misinformation that Joe Rogan on Spotify was he says disseminating about vaccines. And he said
he just could not take it anymore. You know, reportedly, Alison, he was giving up 60 percent of his music revenue by demanding that, you know,
Spotify choose, right?
Neil Young or Joe Rogan? Well, Spotify chose Joe Rogan. It's no wonder why he is by far the most popular artist, even though he's a podcaster on
Spotify. He has at least 10 million subscribers on that, you know, on that service, if not more. He is really an ad-buying behemoth. I mean, people
really pay -- reportedly hundreds of thousands of dollars just to get one spot on that show.
So this is basically a battle between Neil Young and Spotify. But Apple is hoping to turn into more and, you know, even on social media, Alison, there
has been certainly some support for this. On Twitter, delete Spotify has been trending. And also musicians like Peter Frampton have been saying,
hey, I'll stick with Apple as well. What's key here, though, Allison, is that in terms of any misinformation that is on Spotify or Joe Rogan's show,
I mean, unless you start to get some heavy hitter artists, people like Taylor Swift who, you know, really join the so-called ultimatum to Spotify.
There is little here that will be done. You know, it was interesting just to even watch the whole back and forth on social media. Alison, I know, you
know who Neil Young is. Some people were on, you know, social media saying who is Neil Young? So they knew who Joe Rogan was, but didn't know who Neil
Young was. So that is also a point to be made throughout this entire argument.
And other people to take this lyric so far and Neil Young rocking in the free world, some people determined that was a bit ironic because at the end
of the day, censorship is not something anyone should pull for and that people should be allowed to listen to what they want to listen to. Whether
it's a podcast or music. Alison?
KOSIK: I kind of wanted to hear you sing that line, Paula. But I won't put you on the spot here.
NEWTON: No, you don't. I know. I take that you're happy to see me, Alison, but no, you do not want me singing.
KOSIK: Well, I am happy to see you, Paula. Great to talk with you as well.
The U.S. military is scrambling to recover an F-35 stealth fighter that crashed into the South China Sea on Monday. It is the most sophisticated
war plane the U.S. has and the U.S. fears China may try to reach the wreckage first. CNN's Ivan Watson reports.
IVAN WATSON, SENIOR INTERNATIONAL CORRESPONDENT (voice over): The final approach of an F-35C stealth fighter jet seconds before it crashed lands
into the flight deck of a U.S. aircraft carrier. Images circulated on social media confirmed by the U.S. Navy show the plane moments later in the
ocean, canopy opened after its pilot escaped.
The cause of the crash which injured the pilot and six sailors still under investigation. The Navy now has the difficult task of recovering the
wreckage of a $100 million jet from the bottom of the ocean.
To make sure defense experts say that it's classified technology doesn't fall into the wrong hands.
PETER LAYTON, MILITARY AVIATION EXPERT, GRIFFITHS UNIVERSITY: The Chinese have a have a long history of being able to borrow something from overseas
and reverse engineering so that this would certainly be a goldmine as far as that goes.
WATSON (on camera): The crash occurred here in the South China Sea. A heavily-trafficked body of water that Beijing claims almost all for itself.
And this is where two American aircraft carriers are currently operating, accompanied by more than 100 warplanes in at least 10 other warships and
unmistakable demonstration of U.S. naval power to both allies and rivals in Asia.
ALESSIO PATALANO, PROFESSOR OF WAR AND STRATEGY, EAST, ASIA, KING'S COLLEGE LONDON: That is a powerful reminder that the Indo Pacific is a central
strategic importance to the Biden administration. It's about signaling to other competitors in the region (INAUDIBLE) China that the United States
credibility should not be taken lightly.
WATSON (voice over): The Chinese Foreign Ministry says it's not interested in the crashed plane. A spokesman urged the U.S. to contribute more to
regional peace rather than flexing for sit and return. But Chinese state media did some gloating, saying the crash exposed U.S. exhaustion at
It's not the first time the U.S. Navy has had an accident while asserting what Washington says is its right to conduct freedom of navigation
operations in these contested waters. Last October, a U.S. Navy attack submarine crashed into an undersea mountain in the South China Sea,
prompting the firing of its commanding officers. Meanwhile, the versatile F-35 war plane developed years behind schedule and way over budget has had
its own setbacks of late.
A British F-35 crashed into the Mediterranean Sea in November. In 2019, a Japanese F-35 crashed into the Pacific Ocean killing the pilot. The jet
impacted at such high speed that salvage teams never recovered most of the aircraft
LAYTON: Flying from aircraft carriers is a high-risk business. And occasionally problems will happen. While it's unfortunate, it is to be
expected when you start flying hundreds of sorties.
WATSON: Experts predict it will take several weeks for the U.S. Navy to recover. This expensive wreck from the bottom of the sea. Ivan Watson, CNN,
KOSIK: There are just moments left to trade on Wall Street. We'll have the final numbers and the closing bell right after this.
KOSIK: Let's take a final look at the markets. It's the final trading day of a dismal month for U.S. stocks. The Dow as you can see is now firmly in
the green. After seesaw in between gains and losses throughout the day. Investors have been weighing the threat of galloping inflation and higher
rates against strong earnings. Let's look at the Dow components. No surprise here. Apple's sitting at the top after reporting record revenue in
the last quarter.
Visa also surging following better than expected results that it posted on Thursday. The company said the use of its crypto-linked cards is on the
And that's a QUEST MEANS BUSINESS for today. Follow me on Instagram and Twitter @AlisonKosik.