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Quest Means Business

U.S. Puts New Sanction On Russian Banks, Putin's Daughters; E.U. Working To Approve New Sanctions Very Quickly; W.T.O. Has NO Single Response To Russia; NATO Chief: War Could Last For Years; Fed Minutes Spark Volatility On Wall Street; JetBlue May Derail Spirit's Deal With Frontier; Turkey's Oldest Spice Shop Survives Pandemic. Aired 3-4p ET

Aired April 06, 2022 - 15:00   ET



RICHARD QUEST, CNN BUSINESS ANCHOR: Extremely busy day on the markets and as we come to an hour to trade before the close, well, there you have the

tell. I'm going to take you through the day as we go through the program, but we had a sharp fall after the Fed Minutes came out just after two

o'clock, but then the rally is back on again, and we have erased all those losses.

So something spooked the market, but further reflection has decided it's not as bad as it looks. We will get to it, as we discuss, but we need the

main events of the day.

Enormous economic repercussions are the words of the Treasury Secretary Janet Yellen, on the impacts of Russia's invasion of Ukraine. They'll be

felt far and wide.

Tonight, Ngozi Iweala, head of the W.T.O. on this program, calls for member countries to sell surplus grain to avert our hunger crisis.

And then there's that strange jetBlue surprise offer for Spirit Airlines. What is it all about? Why would jetBlue come back at the last moment and

try and disrupt Spirit and Frontier?

Yes, we are live in New York, Wednesday, April the 6th, I am Richard Quest and yes, I mean business.

Good evening. We begin tonight with a sharp warning from the U.S. Treasury Secretary that Russia's invasion of Ukraine will have global costs.

Janet Yellen told U.S. lawmakers that the sanctions are meant to inflict maximum pain on Russia and cause minimum harm to America and its partners.

Still, she said economic damage won't be possible to contain.


JANET YELLEN, U.S. TREASURY SECRETARY: Russia's actions including the atrocities committed against the innocent Ukrainians in Bucha are

reprehensible, represent an unacceptable affront to the rules based global order and will have enormous economic repercussions in Ukraine and beyond.


QUEST: Enormous repercussions and those repercussions got even stronger today as the U.S. hit Russian banks and Vladimir's daughters with fresh

sanctions. The State Department announced it is banning all new investment in Russia. President Biden said the U.S. will continue to raise the cost to

Putin and Russian actions and Ukraine are nothing less than war crimes.


JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: Civilians executed in cold blood, bodies dumped into mass graves. The sense of brutality and

inhumanity left for all the world to see, unapologetically.

There is nothing less happening than major war crimes, responsible nations have to come together to hold these perpetrators accountable, and together

with our allies and our partners, we are going to keep raising the economic cost and ratchet up the pain for Putin and further increase Russia's

economic isolation.


QUEST: And evidence of that now, Russia's invasion and isolation, and the retaliatory sanctions and costs are going up, as Janet Yellen said,

impossible to avoid.

Look at them, oil prices are now seven percent higher than they were before the invasion. And that only allows for, of course, the turmoil, that

doesn't show actually the volatility that we've seen.

A bushel of wheat, they still sell them by bushels, is up 12 percent, and the countries that are most affected are those that can least afford to

bear that extra costs. You'll hear Ngozi see later in the program. Global inflation, 8.6 percent, and that's threatening the global economic


David Rubenstein is the co-founder and co-chair of the Carlyle Group, one of the largest investment firms. He joins me now from New York.

David, it is good to see you.

You heard what she said and read what Janet Yellen said, all enormous economic repercussions that will spill over. Deutsche Bank is now calling

for a recession in the United States, probably back end of next year. Do you think that's valid?

DAVID RUBENSTEIN, CO-FOUNDER AND CO-CHAIR, CARLYLE GROUP: I think predicting recessions is a fool's errand. Nobody really can predict when a

recession is going to happen, certainly not that far out. The truth is the U.S. economy is actually doing quite well relative to the European economy

and relative to the Chinese economy. We will have positive growth this year in the US economy. I'm not sure that's true in Europe.

I don't think a recession is in the offing, but it's clear that the era of free money is over, and it is clear that the war in Ukraine is having an

effect on the global economy much more than people expected.

QUEST: We've seen the minutes from the Fed which it released this afternoon and bizarre market activity. They read about the fact that the

balance sheet is going to be reduced by up to $90 billion and they saw the potential for half points, and the market fell sharply in the immediate

half hour, and now it seems recovered. What's going on?


RUBENSTEIN: Well, of course, nobody really knows how the markets react on an hour to hour basis. But I think initially, I think there was some

surprise that the Fed was going to be so bullish on two things or so direct on two things. One is that they're going to be $95 billion of purchases, in

effect not being done each month. As a result, we're going to have $95 billion more in circulation of Federal Treasuries and corporate bonds.

And secondly, it's very likely reading the Minutes that will go to a 50- basis point increase the next time when the F.O.M.C. meets in May.

So I think the Fed may have surprised people a little bit, but after a bit of reflection, I think the market recognized that this was a sensible


QUEST: If we take that, the sort of the macro-economic, which was not brilliant, but improving. Now we have the war in Ukraine on top of it, it

leaves investors wondering what the best strategy should be.

RUBENSTEIN: Well, there is no clear end to the war yet. I think that the investors generally had the view that this would be a one, two, three,

four-week war, it's clear that it might go on for a few months at this pace, and therefore we don't know what the end is. And therefore, it's not

clear what the best strategy is.

It's also clear that energy prices are going to stay high for a while, and food prices are going to get even higher than they are now. So I am not

clear what the best strategy is, but I think people should be prepared for a longer war than we once thought for higher food prices than we once

thought and for longer term, higher energy prices than we once thought.

QUEST: And that feeds through to the entire economic cycle. I wonder whether many of us had convinced ourselves that the war would not have such

a damaging effect on the rest of the world. But what we're now seeing is, as Janet Yellen said, that's simply not true.

RUBENSTEIN: Well, 30 percent of the wheat exports in the world come from Russia and Ukraine. And right now, it's very difficult to know whether

those exports from Ukraine are going to occur at all in any meaningful level. So it is clear that the global economy has one gigantic supply chain

and food chain, and everything is interdependent and you can't have a war in one part of the world of any consequence without affecting the rest of

the world.

And it's also not even clear how you get out of this economically, because once the war is over, and there will be some truce, every war eventually

ends. What happens to the sanctions? Do the sanctions go away? What happens to the oligarchs' yachts? Do they stay in the hands of the governments or

they get returned? Nobody really knows yet.

QUEST: Later on this program Ngozi Iweala who you know is the head of the World Trade Organization, she says, and she'll tell us that bilateralism --

that the multilateralism has taken a knock and needs to be revised. But when it comes to trade, we can't go back to bilateral protectionism?

RUBENSTEIN: Well, I think the concern is that in the end, you can't have a few countries being so dominant. And I think, you know, I can understand

that perspective. But generally right now, I think the U.S. economy is still the dominant economy with respect to trade, and I don't think that's

going to change anytime soon and I think the two next most important players, China and Western Europe are still going to remain the two most

important next players the United States in trade, I don't think you're going to see a lot of new trade agreements, though. The U.S. government now

has no interest that I can see in negotiating new trade agreements anywhere.

QUEST: Absent a completely exogenous event where Ukraine is concerned, what is the one thing that we should keep our eye on in the weeks and

months ahead? Or is it -- I mean, is that a nonsense question because Ukraine is the exogenous event.

RUBENSTEIN: Well, the things that I think people should focus on, at least global investors are, number one, how high are the energy prices going to

go? Are we going to be able to produce enough supply out of people releasing their strategic petroleum reserves? Secondly, are the markets

going to calm down as they realize that Europe is not going to ban Russian exports to oil and gas to Europe, and I think that that's a big factor,

that's not likely to happen.

I also think that eventually, people are going to have to recognize that there is going to be more interest in, I'd say carbon energy than people

thought. People thought it was going away, but people recognize that carbon energy is not going away as quickly as people thought it was. We're now

very dependent on it still, and to be able to go into renewables is going to take some time.

I also think you're going to see a bigger interest in cryptocurrencies, because a lot of people are looking at this and saying: Wait. Wait a

second, you can take away my assets, you can take away my assets, I want to have assets that cannot be taken away by governments and I think that'll

fuel the interest in cryptocurrencies.


QUEST: David Rubenstein, it is lovely to have you on the program. Thank you, sir. Joining us from Carlyle Group.

So, as we continue, we're talking about the sanctions and David was mentioning them there. The E.U. is still working out their next round of

sanctions. They are divided on Russian energy.

The Commission proposed a ban on Russian coal. We talked about that in last night's program, and the Foreign Policy Chief says they need to move

quickly. At current prices are funding the money -- the oil that is being purchased, every day is funding Russia.


JOSEP BORRELL, E.U. HIGH REPRESENTATIVE FOR FOREIGN AFFAIRS (through translator): We have given Ukraine, one billion euros. It might seem a

lot, but one billion euros is what we pay Putin everyday for the energy he provides us. Since the beginning of the war, we have given him 35 billion

euros, compare that to the one billion euros that we have given to Ukraine in arms and weapons.


QUEST: Nic Robertson is at NATO headquarters. Nic, I mean, he makes a valid point. The billion a day to Putin versus the billion to Ukraine. But

there is no appetite for major countries like Italy, Germany, the Netherlands, to sanction and give up the oil.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: And you even have political outliers in the European Union like Viktor Orban in Hungary, who

has just come through elections quite handily, and his feeling that he doesn't really need to kowtow to the E.U. pressure and opposition pressure

in his country, who is saying I will go against the European Union directive.

And if President Putin, as he has said that I can buy gas in rubles, only in rubles, I'm prepared to do that. That's Orban's position. And

remembering that Orban visited Putin just before the war, and Putin reminded him how much cheap gas he was getting from Russia.

So you have, you know, people, governments and countries like Germany, as you say, like Italy, who just have this fundamental dependency on Russian

gas that they cannot get off of, and then you have the political outliers, like Viktor Orban who is close to President Putin, who is a potential

spoiler as the E.U. tries to do the best that it can as we heard Josep Borrell speaking about there.

So you know, it just isn't easy. You have the Baltic States, for example, you know, small feel, very threatened by what Russia is doing in Ukraine.

Lithuania says, yes, we're going to be with the first to cut off gas supplies from Russia, but Latvia can't do that. It doesn't have -- you had

the conversation with the Lithuanian officials, the President just the other night. Latvia just doesn't have that latitude.

This is a very, very tough place for the European Union, but it's real politic. And we'd be foolish if we didn't recognize and realize as I think

the politicians do that Putin built this into his calculations. He needs to grab territory on the ground right now, and before Europe can cut its

energy dependence on him, he reckons he can meet the land grabs that he wants in Ukraine sufficient for the fall back not being able to get the

capital Kyiv in the short term. This is Putin's calculation all along.

QUEST: All right. Let's talk about Viktor Orban because you raised that. In the early part of the crisis, Orban was very keen to seem to toe the

line. Unity was all.

As you rightly say, emboldened by his fourth election victory or elected for a fourth term, I should say, is it likely -- I mean, will they just

ignore him thinking that's victory as usual nonsense, or will he threaten truly the unity of the E.U.?

ROBERTSON: Well, he is singling out President Zelenskyy in Ukraine as an opposition, because Zelenskyy has criticized him for Hungary not allowing

weapons supplies to Ukraine to transit Hungary. That's a problem for Ukraine because they need multiple routes, because they need to be able to

defeat any attacks on those supply lines as they come in -- as they come into Ukraine. So that's a problem for Zelenskyy and Orban is making that an


Yet at the same time, he is willing to accept a new NATO battle group on his territory as part of NATO shoring up its Eastern states, Eastern

nations defenses. So that is -- in a way it is a double game. You're playing one side, you're having NATO give you the security guarantee that

you think you might need, but at the same time, you're not doing what the rest of NATO is doing, which is giving maximum assistance possible to the



Orban's position, you know, is very much focused on his own political survival at home. He has secured that, so he has somebody now that the

European Union will have to treat carefully to a degree, and that going to be a bitter pill to swallow because normally, the pressure is on Orban to


But now, you know, the European Union needs his support in a different way, and deeply complicated is perhaps the best way to put it, and Orban plays

that to his advantage completely.

QUEST: Nic Robertson, thank you.

Coming up next, a war in Ukraine that turbocharges fuel prices, the consequences around the world. Protests in Peru, the Members of Congress

are grilling Big Oil.


QUEST: Out of the World Trade Organization, it says the war in Ukraine has damaged global trade. The latest numbers show it fell almost three percent,

world trade, that is from February to March. I asked Ngozi Okonjo-Iweala how the W.T.O. has responded to Russia's invasion.


NGOZI OKONJO-IWEALA, DIRECTOR GENERAL, WORLD TRADE ORGANIZATION: There are members who have indeed imposed some trade restrictions on Russian trade

and suspended most favored nation status, which means they can charge higher tariffs on Russian goods or they will charge than they charge to

other members.

But there are those who have not imposed any restriction. So there is no one -- no one answer from W.T.O. There are a variety of answers to that


QUEST: As international bodies either suspend or penalize or in some cases, for example, the U.N. W.T.O. is looking to suspend the choice of

organization, Russia, would you be in favor of officially suspending Russia or in some way taking some form of action?

OKONJO-IWEALA: We don't have any mechanisms for suspension of a member, so it is something that would be extremely difficult and I think this is why

members have taken the kinds of measures they've taken suspending mostly favored nation status, as I said, this is an instrument we don't normally

encourage because it discriminates against, among members. But there is for security reasons, a member can invoke this.


So some members have decided to do that and others have not, we don't have any mechanism for suspension or asking a member to leave.

QUEST: And in terms of the food crisis, as a result of this, the inflation that we are seeing as a result of this. There is a realization that the

effects are going to be far greater and far more widely felt than we perhaps -- that many had perhaps originally either had led to believe or

wish to believe, but it is going to be worse than that, isn't it?

OKONJO-IWEALA: I really fear so, Richard. Let's say first and foremost that we must think of the impact on Ukraine, and Ukrainians themselves, not

being able to -- not having enough to eat, having to be displaced from their home, so the primary impact is on them. But beyond that, the fact

that the Black Sea region, even though Ukraine and Russia, for example, are less than three percent of global merchandise trade, they look very large

in certain sectors, especially the food sectors.

So you find that three 30 percent of the world's wheat comes out of these two countries, 15 percent of maize, barley, you know, so many items,

sunflower oil, 73 percent. I could go on. That means that what happens in these two countries is really material globally, with respect to food and

impact on certain regions as well, like Africa, 35 out of 55 countries have trade with Ukraine and Russia.

QUEST: So what are you calling for within the framework that you have, what do you believe can be done?

OKONJO-IWEALA: Is that we are calling for -- I'm trying to do at the W.T.O. One is, members who have surplus stocks of grains or even

substitutes to put them on the market, because this will help to bring the price of goods of food down. And you think particularly of poor countries,

you know, where prices are rising very rapidly, as you mentioned, Richard. In Africa, some several African countries prices have risen 20 to 50

percent. So if we put more food stocks out on the market that will help.

The second is to avoid putting on export restrictions and prohibitions so that food trade can flow freely with respect to a major food items. And I

think these are two things that we are members can are look in at and can take some immediate action on.

Let me say something else, Richard, I think we also need to find a way that Ukraine will be able to plant this spring -- plant this spring. Harvest its

winter crop in July and be able to plant its next winter crop in September. So if those three actions can be taken so that Ukraine can get this going,

I think that will help very much. Otherwise, we'll have problems next year.

QUEST: A final question really on a much bigger question. How are you going to repair the damage to the international trading system, network, if

you will, because we don't fully know the ramifications? I mean, obviously vis-a-vis, Russia is one thing, but free trade relations are being frayed

because of this across the board, and we are in danger of going into reverse if we haven't already.

OKONJO-IWEALA: Yes, it is true, Richard, that there is damage and there's a lot of talk of decoupling in two or three trading spheres, and the damage

is real. However, I think we should not draw the wrong conclusion from what has happened and retreat from multilateralism.

I think, this is the time to actually support the multilateral trading system. It has delivered all these years, lifted a lot of people out of

poverty, integrated countries. I think we need to look at a new type of multilateralism, not to reject multilateralism.

So decoupling, no. Greater support for the multilateral trading system, yes.


QUEST: That's Ngozi Iweala of the W.T.O., the World Trade Organization.

On Capitol Hill, oil executives were grilled about rising fuel prices. Now lawmakers want to know why gas prices haven't come down as oil prices have

come off their recent highs. You can see the graphs that has just how fast they have come up and they have come down but that's not being reflected in

the views of lawmakers and the price at the pump.


ExxonMobil's Chief Exec said his company was not gouging drivers.


DARREN WOODS, CEO, EXXONMOBIL: No single company sets the price of oil or gasoline. The market establishes the price based on available supply, and

the demand for that supply. Continued investments in new production is the only way to achieve balanced markets and more affordable prices that bring

real relief at the pump.


QUEST: So, Peru offers a stark glimpse of what can happen when prices soar. The country has been gripped by protests over spiraling food and fuel

costs. Inflation worsened by the war in Ukraine hit a 26-year high in March and the government has now put in place a curfew to end the unrest, which

of course made things worse.

Stefano Pozzebon is with me to put this into perspective. Why now in Peru there have been -- the undercurrents and political unrest has been there

for some months, if not years, what tipped it?

STEFANO POZZEBON, JOURNALIST: Yes, Richard. We know that the situation has been there for months, Peru is definitely not new to political unrest, as

you said. But what exacerbated it is these dramatic inflationary wave that is hitting the southern world in particular, because of the war in in


The segment that has grown the most out of that 26 years high is exactly the fuel and food segment, which in Peru is high, it is 9.54 percent with

respect to last year, and that is particularly damaging for President Castillo because he won the election last year on a very thin margin on a

working class base.

The people who are now taking onto the streets to protest against the rising fuel prices and the rising inflation rates are the ones that put him

in the job, the one who voted for him last year.

So that erodes his base of support, and of course, there is not much he can do because he has already promised a cut for taxes. So right now he's

really running out of option -- Richard.

QUEST: It's not just Peru, is it? I mean, I was in Argentina, as you know, and the inflation rate in Argentina is appalling. Now, admittedly Argentina

benefits because it does have oil and gas, and therefore it can offset that. But wherever we look in the region, Argentina, Brazil, Peru, Chile,

Costa Rica, all the countries are going -- which are politically fragile in many cases are going to be facing dramatic inflation, weakened currencies,

and greater instability.

POZZEBON: Yes, exactly, Richard, and these are governments that do not normally have neither the political capacity nor the financial capacity to

launch widespread reforms, to act on the market to try stem these inflationary wave.

And on top of that, we know that some of these countries and I'm thinking in particular, out of Brazil, they are key importers of key exports of

Russia. I'm talking about fertilizer, Brazil exports a lot of food, but all of its food industry requires Russian fertilizers to keep the agricultural

machine going.

So we've really seen, let's call it if you want a butterfly effect, that the effects of the war in Ukraine are deeply felt in in South America, in

Latin America, probably one of the worst cases could be maybe Venezuela, where 60 percent of its exports go through the Russian financial markets,

and we sanction all the Russian financial markets, the Venezuelan economy is set to suffer even more -- Richard.

QUEST: Thank you, Stefano with that part of the story. Interesting. Thank you, Stefano. Interesting. It sort of reinforces what we'd heard from Janet

Yellen today about the enormous repercussions. Who would have thought, for example, that what would be happening in Russia and Ukraine would affect

the fertilizer necessary in Brazil or Venezuela.

I suppose when you think about it and set it all down, then it becomes obvious, but that's why Yellen's point is so important tonight.

And as we continue, of course, the real story remains on the ground. The bustling town in Ukraine that was, the picture speak for themselves today.




QUEST (voice-over): Hello I'm Richard Quest, we have more QUEST MEANS BUSINESS.

We'll bring you a planned tie-up between U.S. carrier Southwest (sic) and Frontier is up in the air, after a takeover bid from JetBlue.

And a Voice of the Crisis revisited: I'll visit a 150-year-old spice shop in Istanbul to learn how they've recovered from the COVID pandemic.

It's after the news headlines, which always come first here.


QUEST (voice-over): Pope Francis joined a host of world leaders who are condemning the killings of Ukrainian town of Bucha. He held up a Ukrainian

flag, which he said held from the martyred city and called for an end of atrocities. The pope kissed the flag, reiterating a call for the war to be

brought to an end.

Shanghai's easing a COVID policy that so affected children separated from their families. After public outcry, parents will now be allowed to

accompany their children into quarantine under certain circumstances.

The city's reporting record infection numbers and, as a result, is carrying out mass testing.

France's air safety agency is opening an investigation into a serious incident involving an Air France Boeing 777. The plane was attempting to

land in Paris. In an audio recording from the incident, a pilot tells air traffic control the plane was just kind of out of control.


QUEST: I just want to correct one thing in the news headlines there. I was talking about the JetBlue getting involved in the takeover, interfering if

you like, joining in the takeover. It is, of course, Frontier and Spirit that are the two airlines that are involved in that, not Southwest and

Spirit. My apologies.

The head of NATO is warning that the war in Ukraine could last for years.


Jens Stoltenberg says there's no indication Putin has given up gaining control of the entire country, even if he's focused now on its east. He was

meeting NATO's foreign ministers. And Stoltenberg said Ukraine is counting on the alliance for weapons.


JENS STOLTENBERG, NATO SECRETARY GENERAL: Ukraine has an urgent need for military support. And that's the reason why it is so important that NATO

allies agree to further support Ukraine, with many different types of military equipment, both heavier equipment but also light weapons systems.

And we are seeing that this support is actually having an effect every day. We can see just the pictures of all the destroyed Russian armor.


QUEST: We talk about the sanctions and the economic war that's underway but we have to always remember what's underneath it all, what's behind it

all, the raison d'etre, if you will.

CNN's visited one Ukrainian town, completely destroyed. Borodyanka is northwest of Kyiv, about 13,000 people living there at one time, it was a

beautiful place. Most of them fled when the war began. Christiane Amanpour went to see what's left.


CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT (voice-over): "Welcome to Sasha's restaurant," it says.

Only Sasha's is no more. Nor are any of the apartments in this block above. A dining table and chairs, a jacket blowing in the wind still intact, the

only visible reminders of the families who lived here.

The crows call above the city of Borodyanka; perhaps they sense the death here. It is clear that the heavy destruction is mostly along the main

streets. It appears the Russian armored columns simply opened up with heavy machine guns and artillery as they rumbled through town.

Brick by brick, today the digging starts, trying to find civilians -- or their bodies -- buried beneath the rubble, when even their basement

shelters were turned into graveyards.

"On this corner, they're looking for at least four missing from this block alone," says Victoria Ruban (ph), who is with the rescue team.

"We have never seen anything like this. It is very difficult for us," she says, "and not only for us but for the residents of Borodyanka. It is a

great tragedy because of an ill-disciplined force with a license to kill."

AMANPOUR: So this is what Vladimir Putin calls liberating a fraternal brotherly nation. So either he's done all this because he loves Ukrainians

or, as most people think now, because he's motivated by a rising hatred and vengeance, motivated by Ukrainians' westward leaning democracy, by their

resistance and by their refusal to come under Russian control.

AMANPOUR (voice-over): And as an afterthought, a bullet to the head of Ukraine's cultural hero, the great poet Taras Shevchenko. Not even statues

are immune.

Amid all this destruction, the summary executions, the Ukrainian flag flies proudly in the central square. For good measure, these Ukrainian soldiers

are pulling out a captured Russian tank that was dug in.

They say they'll use this and anything else the invaders have left behind to fight them in the villages, in the towns, in the fields and all the way

back to the Russian border.


QUEST: Christiane Amanpour reporting. This is QUEST MEANS BUSINESS.





QUEST: Weird day. Look at the markets and I'll show you exactly what happened.

A mid session tumble after the Federal Reserve released the minutes from the recent meeting. Nasdaq is still down 2 percent. But it was a lot


Two things from the Fed, a half-point rate rise entirely possible and outlining plans of shrinking the balance sheet by $95 billion a month.

That's with Matt Egan.

Why did the $95 billion spook the markets?

The half-points we know about, what was it about the $95 billion that initially sent them running for the hills?

MATT EGAN, CNN BUSINESS SENIOR WRITER: I think these minutes paint the picture of the Federal Reserve that is not tapping the brakes on the

economy. They're not going to let the car coast and slow down on their own. Fed officials are simply going to hit the brakes pretty hard here.

And that is not what they wanted to do but it's what they feel they need to do to try to tame inflation. And to your point about the balance sheet, so

they're signaling that they're going to set this $95 billion cap on shrinking the balance sheet and phase that in over three months.

Now the context around $95 billion, that is higher than the $80 billion some on Wall Street, like Morgan Stanley, were expecting. It also compares

to what the Fed did last time they had to shrink the balance sheet.

During the last experiment, the Fed set their monthly cap at just $10 billion initially, then it took a full year before they got up to $50

billion. Now they're doing $95 billion in just three months. And I think this is all further evidence that the Fed is late to inflation and they

know it.

QUEST: Matt Egan, thank you, sir.

JetBlue shares are down sharply over a deal now up in the air, if you will. JetBlue made a last minute multibillion-dollar offer for another budget

airline, Spirit. Now Spirit was in the final stages of merging with Frontier Airlines.

JetBlue's offer, around a third higher, threw the deal into disarray. Analysts offering their take on the drama.

"A head scratcher," says UBS.

"Wait, what?" said MKM Partners, while Bank of America says it's struggling to see the benefits.

Paul La Monica, why does JetBlue want to get involved in this one?

PAUL LA MONICA, CNNMONEY DIGITAL CORRESPONDENT: Yes, I think JetBlue recognizes, Richard, that, as far as carriers go, it is a little bit

smaller, of course, than all the major carriers that are out there and it risks getting further behind if you wind up having Frontier and Spirit

merge and potentially leapfrogging it.

So that is clearly an issue.

The question is, is this too little too late for them?

QUEST: OK, but JetBlue, a low cost carrier, in the true definition, referring to the airline's cost, not the product, if you will, very

different to these other two.

Is there any indication -- well, first of all, any indication they're likely to be successful, are shareholders likely to go for this?

And second, what would they do with it?

LA MONICA: That's a great question, Richard. I think when you look at how the stocks are doing today, Wall Street and investors clearly suggesting

they don't think the deal is going through. Even Spirit's stock which has the ticker of save is down. Frontier is tumbling, JetBlue is tumbling.

I think there is a sense that this deal, if JetBlue wanted to make a contrarian sort of counterbid, they should have done it a lot earlier in

the stages of this merger and not waiting until the proverbial last minute.


So I think -- you point out that JetBlue is a low cost carrier. That may be compared to some of the legacy carriers. But Spirit and Frontier are ultra

low-cost carriers. They are, you know, known for not really offering a lot of the types of perks that people get when they fly on other airlines.

And for that reason, JetBlue, even as a low fare carrier, their cost drops are significantly higher. If they were to do a deal, they would probably

have to pay Spirit pilots higher to bring them in line with what JetBlue pilots make.

And that's I think why analysts are scratching their heads, wondering why this deal would happen because the economics just may not make sense.

QUEST: Paul La Monica, thank you, sir, we'll watch to see what happens there.

Back in April 2020, I spoke to the owner of Turkey's oldest spice shop in Istanbul, about the pandemic affecting business. Maintaining and keeping my

promises, I went to the spice bazaar in Istanbul to find out how he is doing -- all spice after the break.




QUEST: Janet Yellen's warning today makes it absolutely clear, the world is in for yet another economic shock -- we're probably already in the

middle of it -- and all this, as we've barely recovered from the last one.

Think about it, we had the great financial crisis, then we went straight to the pandemic. And during the pandemic, we spoke many times on this program

to a spice trader in Turkey, part of our "Voices of the Crisis" who we spoke to.

These are the people whose businesses were struggling to survive. Last week I was in Istanbul, part of my trip to Turkey for "World of Wonder," which

you'll see in a few months.

But while there, remembering we have this long spreadsheet of promises I made and visits I need to do, well, Josh reminded me, there was our spice

trader. I paid him a visit to find out what he had learned from the last crisis that will help him in the next.



QUEST (voice-over): And there's my spice shop.


Good to see you, right, I'm here. These are the spices.

And over here?

AHMET KADIOGLU, HAYFENE SPICES: We have teas and tea blends.

QUEST: And, of course, you have the norties (ph).

KADIOGLU: The norties (ph) are especially for the bazaar.


QUEST: Ah, Turkish delight. There are one, two, three, four, five, six, seven, there are eight of you.


QUEST: All selling essentially the same things.

KADIOGLU: Yes. Actually in the bazaar, there are so many shops who sell similar stuff. What makes us different is that we produce our own products.

Our shop is 126 years old, fifth generation spice store. We are the oldest in Turkey.

QUEST: Really?


QUEST: Is this a Turkish claim or is it true?

KADIOGLU: It is a definitely worldwide known claim.

QUEST: You're the oldest spice store in Turkey?



QUEST (voice-over): When I last spoke to Ahmet in April 2020, he was determined to keep the family business going, despite the fact he had lost

75 percent of his business.

KADIOGLU: Out of all this, to keep all of our staff and employees with us, because they are our most important things, like they are very important to


And we are hoping that, when it's all over, we will be open again with everyone, just like the crisis started.


KADIOGLU: It was one of the most difficult things that I have done in my life. And we were taking huge risks, because it was either press on the gas

right out of the forum (ph) or lose everything.

QUEST: And did you see people here lose everything?

KADIOGLU: Luckily, not. A lot of people -- but they, like, got through with their employees. They downsized. If you remember from our first

interview, our main goal was to keep everyone employed.

And we managed that. And to make it possible, we needed to grow the business. We needed to put something else in the place of the business we

lost here. So we managed that.

We actually told our employees, we'll work in the bazaar. We will keep the factory open. If you want, you can go work at the factory to keep your

paychecks coming.

QUEST: What was the key to your success?

KADIOGLU: We started with exports. We started doing wholesale more. And exports and online sales helped us greatly. We were starting to lead in

Turkey only in terms of online sales. We are now shipping internationally as well.

QUEST: How important was the history of the company?

Because you're saying that you did, you looked for exports and for online markets. I mean I can hear everybody saying that.

KADIOGLU: The significance of the history of the company was important within the company, for people making sacrifices, helping selflessly. The

employees, like we became more a close-knit family during the pandemic, because we were all aware that we were doing this for each other.


QUEST: What always happens in Turkey?

KADIOGLU: (INAUDIBLE) or just for fun?

You drink some tea.

QUEST: There is always tea.

Oh, it's nice.

KADIOGLU: (INAUDIBLE) come in and try this.

Taste it.


KADIOGLU: It's flavorful, it's not (INAUDIBLE), it's not very strong.

QUEST: What is this?

KADIOGLU: That one has like --



QUEST: Oh, that is very good.

As for the help you got from government, now, you obviously -- the help was there by way of loans as opposed to grants or forgiven loans.

Did you have to take on much debt?

KADIOGLU: We took some. And in the beginning of the pandemic, they were keeping us in newer things. We were possibilities. But it stop at a certain

point and we were expecting more to stay afloat. And after a couple of months, we were kind of on our own.

QUEST: Really, did it feel like that?

KADIOGLU: It kind of felt like that.

QUEST: Did you have a doubt?

KADIOGLU: First six months, every single day.

QUEST: Really?

KADIOGLU: Yes. After that, I was like, OK, I can do this, we can do this .

QUEST: You have an MBA from a prestigious U.S. university. Two questions here.

One, did it help the -- what you learned as an MBA, did it help you survive?

And two, with hindsight, was it worth the money, the MBA?

KADIOGLU: Not particularly things I learned in the MBA but the mindset it gave me helped me greatly, definitely.


KADIOGLU: I mean dealing with the crisis, finding alternative ways, different ways of thinking, looking for alternatives, looking for other

industries, for example. The mindset helped me greatly and the money, yes, it was worth it, I guess.

QUEST: Yes, because it worked.

KADIOGLU: It definitely did work.

QUEST: The very reason that you went to get it, it didn't help you become a billionaire but it saved your business.

KADIOGLU: Yes, exactly. We just worked more than billions to me. I was like I could have followed another path in my life to maybe earn more



But nothing would be more satisfying than that keeping a 120-plus-year-old company going forward another 120 years-plus, hopefully.



I had promised you that we would revisit all these "Voices of the Crisis," (INAUDIBLE) years and we'll have a few more crises to talk about. But we

will get to them all.

Last few minutes of trade on Wall Street, I want to show you the day. We're well off the lows. We now have discussed, shown you why the Fed minutes

came out, the two things doubling down, a half-percent rate hikes, et cetera, and the balance sheet.

Then it recovers and it comes down again. And I think what you're looking at is just a market that is unhappy. The triple stack shows a bigger

picture in terms of the Nasdaq, the growth stocks.

And actually if you look at the Dow 30, it's absolutely clear, you have the growth stocks, Microsoft, Salesforce, at the bottom. You have at the top

this defensive, Johnsons, Walmart, P&G, Merck and the like, health care, all at the top. They did the best of the day.

We'll have a "Profitable Moment" from Istanbul after the break.




QUEST: Tonight's "Profitable Moment" from the spice market in Istanbul.

It's been a real treat and a pleasure to be able to come here and, yes, keep a promise and visit Ahmet, one of our "Voices of the Crisis," who

managed to keep his spice business of over 134 years, he managed to keep it going and, he would say, has put it on a firmer footing for the future.

And what I'm hearing from Ahmet and other VOCs is that, when it comes to crisis, it relies on personal integrity, experience, education and knowing

to do the right thing. And the one thing that they've all discovered is that crises will happen in many shapes and guises, whether it's the great

financial crisis or the pandemic or the war in Ukraine.

You don't know which way the crisis is going to come at you. You know it will affect you; it's how you respond that is crucial. It's about doing the

right thing. And if you do that, you end up like Ahmet, with your business on a solid, firm footing for the future.

And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in the spice market of Istanbul. Whatever you're up to in the next 24 hours, I hope it's