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Quest Means Business

U.S. Stocks on Track for Worst Day of the Year; BOE Governor: Russian Invasion, China COVID are Threatening Growth; Azovstal Commander Says Russia Violated Evacuation Ceasefire; Dow Plummets as Fed Doubts Grow; Call to Earth: Indochinese Tigers; Kellogg's Lifts Outlook after Increasing Prices. Aired 3-4p ET

Aired May 05, 2022 - 15:00   ET

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

[15:00:32]

RICHARD QUEST, CNN BUSINESS HOST: There is an hour to go of trading on Wall Street, and I wish I had better news to bring you as we start together. But

there you are, we're just about the lows of the day. We're off over a thousand points, 1,100. We had to be down 1,200 points at the moment.

The triple stack shows an even worse situation for the NASDAQ, which is off five and a quarter percent.

This is the worst day of the year, and probably since 2020, and it is for entirely different reasons. But as you can see, it is a sharp, sustained

fall on the market.

The economic reality is dawning on investors. We're heading for a long, brutal fight against inflation. The Bank of England is warning inflation to

go as high as 10 percent this year, and the U.K. will face recession.

And the U.N. Secretary-General has been briefing countries on his visit to Russia and Ukraine.

We are live in New York. It's Thursday. It's May the fifth. I'm Richard Quest and yes, I mean business.

Good evening. The rot is setting in on Wall Street as U.S. stocks suffer their worst day of the year. We're off over 1,100 points, three and a third

percent. That brief rally that we experienced yesterday is completely erased and the Dow has now lost that and more.

The heavy selling has been fueled by the same old fears -- soaring inflation, rising interest rates, higher energy costs, and a potential

economic recession. Losses are heaviest on the NASDAQ, the tech stocks, the so-called growth stocks are getting absolutely pummeled. A five percent

drop, it's the worst day for the NASDAQ since the pandemic began.

And so, Meta or Facebook, Alphabet, Amazon Apple, they're all down five, six, seven percent, and if we look at the Dow 30, you don't see this very

often, not a single stock in the green. Every sector hit by high selling and what I want you to notice is even those stocks that are showing the

best performance: Coca-Cola, Amgen, Merck, Chevron -- they are still down by more than one percent, with the real laggards Microsoft, Apple,

Salesforce down five, six, seven percent.

Our coverage is team, and it is comprehensive. Rahel Solomon is at the New York Stock Exchange. Paul La Monica is with me for analysis here in New

York.

Start with you, Rahel. The mood on the floor, what's happening?

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: The mood is anxiety. I spoke to traders down here on the New York Stock Exchange, and they told me they're

not panicked, and they're not getting panicked phone calls, but there is some anxiety. There is some jitteriness, because there are many moving

parts. Richard, as you know, one of which of course, is surging inflation.

One trader also telling me, look, the party clearly is coming to an end. That party being soaring stock prices, clearly coming to an end as the Fed

pulls money out of the market. So not panic necessarily, I don't know how much better that makes you feel if you look at your 401(k) or your

retirement plan, and you look at it today, but definitely not panic, but jitteriness and anxiety, according to some of the traders that I spoke to

here on the floor.

QUEST: Paul La Monica, what changed? Forget yesterday, that was an aberration, but what has changed in the mood of investors?

PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think, Richard, that investors are not happy to see bond yields rising again. The 10-year back

above three percent. That means, it is going to be more expensive for consumers to get mortgages and other types of loans, for businesses to take

out loans as well

And don't dismiss earnings, also, Richard, I think we had some poor earnings reports from pandemic winners like eBay, Etsy, Shopify, Wayfair,

all those high-flying tech stocks that benefited from people sitting at home and buying stuff on their phones and laptop. That trend seems to be

coming to an end.

And even though consumers are still spending for now, we do have worries about what's going to happen in the job market. A big job report tomorrow,

unemployment, you know, jobless claims this week still relatively low, but they did tick up from a week ago.

[15:05:05]

QUEST: And Rahel, the expectation on the floor, the expectation of investors, is it one of recession? Are they buckling down and preparing?

SOLOMON: Well, you know, what they told me really across the board is they are buckling down for more volatility, which, by the way is good for some

of these folks. But they're saying that, look, we've been seeing it for months now and the volatility is here to say, and when I said, well, when

do we think that the volatility will start to ease and we can expect some calm, and one of the traders I spoke to said, until things start to settle,

until we start to get a better picture of some of these macro factors that are weighing on the economy.

So in terms of expectations, you know, I haven't heard the "R" word down here just yet, "recession." But volatility definitely appears here to stay.

QUEST: Rahel Solomon at the exchange. Rahel, thank you. But Paul La Monica, lastly to you, you talked about bond yields going up to over three percent,

but that should be expected if the Fed is raising the cost of money at the short end, then both of the short and long provided, you don't get an

inversion, you would expect that to go up as well.

LA MONICA: Oh, of course, and it already has gone up dramatically, which begs the question of how much further will rates rise? Long term yields

have nearly doubled so far this year. They started 2020 to around 1.5 percent on the 10-year. We're now around three percent.

So I think for a lot of investors and consumers for that matter, it is not necessarily that rates have all sudden gotten prohibitively high. They are

just much higher than we have been accustomed to over the past couple of years and it is starting to make people wonder: Hey, I didn't refinance my

mortgage yet. Is it too late? I didn't buy a house when I was saving to do so, is it now too late to do that?

And that fear that maybe people have missed out on those post pandemic boom times as the economy starts to naturally slow, that's definitely making

investors very nervous also.

QUEST: Paul La Monica, thank you.

On both sides of the Atlantic, it is a sorry story. In the U.K., the Bank of England says it now expects the U.K. economy to fall into recession.

Even so, the bank still raised interest rates for the fourth time since December to fight inflation.

The BoE is warning British inflation could hit 10 percent by the end of the year because of higher energy prices. Sterling was down sharply. It is a

two-year low against the dollar after the announcement, and the Governor of the Bank, Andrew Bailey warned growth is under threat.

(BEGIN VIDEO CLIP)

ANDREW BAILEY, GOVERNOR, BANK OF ENGLAND: Global inflationary pressures have intensified sharply in the build up to and following the invasion.

This has led to a material deterioration in the outlook for world growth.

Concerns about further supply chain disruption have also risen, both due to the invasion and to COVID developments within China. These developments

have exacerbated greatly the challenges already facing the U.K. and many other economies.

(END VIDEO CLIP)

QUEST: Stephen King is with me, the senior economic adviser at HSBC. He is with me from London. The irony of all of this, Stephen, is that the

medicine Central Banks are administering. I mean, this is exactly what it is intended to do, slow things down, take the pressure out of asset prices,

puncture that bubble, if you will, but it is going to be very brutal, as it is now becoming clear.

STEPHEN KING, SENIOR ECONOMIC ADVISER, HSBC: You're absolutely right, Richard.

So the big problem, frankly, is inflation, not so much the recession. The inflationary numbers on either side of the Atlantic have been, frankly, far

worse than any of the Central Banks had expected. They all have their excuses for why inflation is so high, whether it's Russia-Ukraine, whether

it is shortages associated with the pandemic.

But I think the reality is that they themselves have left monetary policy too loose for too long. They hoped to stoke up demand to build back better

or whatever they wanted to do. But when supply itself is heavily constrained, you're likely to end up with a bit of an inflationary problem.

So the inflation numbers are so incredibly high now compared with anything we've been used to over the last 20 or 30 years. And in these

circumstances, there is a danger that Central Banks have got behind the curve, so to speak, that they haven't done enough.

So the kind of -- you know, in one sense, afraid of a recession coming along, but also fearing, perhaps a recession might eventually be necessary

to get that inflation problem back under control, but it certainly isn't under control at the moment.

QUEST: So you not only have higher interest rates, which will cause people to pay more on credit cards, loans, and mortgages for example, you also

have higher inflation which raises the weekly shopping bill, but you also have the wealth effect going into reverse, don't you?

People seeing tonight, I'm X poorer on my portfolio or on my pension or whatever, and therefore they stopped spending, and that feeds into this

downward spiral.

[15:10:23]

KING: That's absolutely true, but there is one catch to this, which is, of course, that stock markets in particular did incredibly well during the

pandemic. I mean, the remarkable feature the pandemic was that we had collapsing economic activity in many parts of the world because of

lockdowns, but at the same time, simultaneously, you had these very, very strong gains in the stock market.

So although they've weakened a bit this year, the reality is an awful lot of people are quite a lot richer financially than they would have been two

years ago.

And also, it is worth stressing that labor markets are actually still pretty tight, unemployment rates are very low, vacancy levels in the U.K.

are incredibly high. So I suspect what we're also going to see that hasn't been talked about quite so much up until now is that yes, prices will be

going up, and that will squeeze people's incomes.

But at the same time, I think in some cases, wages also will be rising, then when you've got wages and prices rising simultaneously, that again

suggests that perhaps monetary policy isn't tight enough.

So we're going to have to take quite a lot more of this rather unpleasant monetary medicine before this whole process is really under control, I

fear.

QUEST: There is a million and one sort of too clever by half questions that I could ask you, but I guess, just trying to imagine what our dear viewer

wants to know tonight: How long is it going to last? How long before there will either be a reduction in inflation? Because we do know how to get rid

of inflation. I mean, it's not some great magic trick. We know what needs to be done.

But how long before you would expect to see inflation coming down?

KING: Well, first of all, it's worth stressing that inflation has been a lot higher than people had expected and consistently so even before Russia-

Ukraine. Even before the latest increase in energy prices, inflation was rising more than people have thought.

As far as the future is concerned, I think there's an inconsistency in markets currently. You've got some people saying, well, you know, small

amounts of rate increases will do the trick, we will get inflation back down to where we'd like it to be. But I suspect relative to that kind of

expectation, either interest rates will have to rise a lot further to get inflation back to the kind of two percent numbers we have been used to, or

alternatively, interest rates won't go up that much.

But in that case, we're likely to end up with inflation persisting for far longer. So this combination of small rate increases and big effects on

inflation, that I think might be too optimistic at this stage.

QUEST: Is it likely -- I give you a range of options, maybe, possibly, probably likely -- that we are going to see a coordinated recession by

accident between the Eurozone, the U.K., and the U.S.?

KING: Well, it's worth stressing, and I may be a little bit vague here, I'm afraid, Richard, but it's worth stressing that Europe, in particular,

Europe and the U.K. are facing a bigger problem than the U.S. because they are much more exposed to what's going on in Russia and Ukraine,

particularly in terms of energy prices and gas prices, in particular.

So in terms of recessionary risks, they are probably greater in the U.K. and in the Eurozone than they are in the U.S., and to be fair, today, the

Bank of England effectively has admitted that by saying there's a danger of the economy shrinking at some point over the course of the next few

quarters.

But overall, history would suggest that when you've got inflation up, so close to double digits or at double digits, and you've got tighter labor

markets coming through, then the kind of monetary tightening you're going to require may well increase the risks of recession, uncomfortably so, I

would suggest over the next few quarters.

QUEST: Stephen, thank you, sir. Lovely to have you on tonight's program in a difficult day. Thank you.

Stephen was talking there about the supply chain inflation that we are now seeing in the economies, and because it is not only rising interest rates

that's impacting the economy, those supply chain issues from Ukraine is sending prices higher at the supermarkets. How long that lasts, is of

course, the question.

Clare Sebastian has been speaking to one CEO about how he is changing the way he does business because of it.

(BEGIN VIDEOTAPE)

RICHARD WALKER, MANAGING DIRECTOR, ICELAND: The national flower of Ukraine is the sunflower and 80 percent of production actually comes out of

Ukraine, that has stopped, so we're having to limit stocks now and shut down our supplies of the five liter oils and move into two liter oils, but

actually the bigger impact is on our pre-prepared ready meals.

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Some of that? I can see it. Chicken korma.

WALKER: Yes, there you go. I'll have something in it.

SEBASTIAN: Take that one as well. It has got rapeseed oil.

WALKER: Rapeseed oil. Yes, okay, there you go.

So the price of rapeseed oil is going up about 500 percent, but the price of sunflower oil is going up a thousand percent, where it is available, but

really it's a lack of availability.

[15:15:11]

SEBASTIAN (voice over): Iceland is a 50-year-old chain of over a thousand U.K. supermarkets known for its low prices. It's not alone in rationing

cooking oil. We found several other British supermarkets doing the same, and that's not the only difficult decision they've had to make.

WALKER: We took a stance and boycotted palm oil. We were the first retailer in the world to do that, and we reformulated 450 of our own label frozen

products and we actually swapped palm oil with sunflower oil.

So now, there is no sunflower oil. We're obviously prioritizing other oils to use instead, like rapeseed oil, olive oil, et cetera. But unfortunately,

I never thought I'd say this, we are now having to move back into to palm oil in some products.

SEBASTIAN: Were you surprised by how many products were affected by this conflict?

WALKER: Yes, I mean, vegetable oils are used in up to 50 percent of all supermarket products, everything from ice cream to pies and pastries, even

lipstick, and I didn't realize this, but apparently those noodles come out of Ukraine, and that is why there is only one left on the shelf now.

SEBASTIAN (voice over): Nestle confirmed the instant noodles were manufactured at their factory in Kharkiv, a city under Russian bombardment

since the very start of the conflict. That factory has stopped all production, and Nestle says it donated all remaining supplies locally when

the war started.

SEBASTIAN (on camera): Obviously, it's not just Ukraine that is contributing to the price raises that you're having to swallow.

WALKER: Yes, I mean, obviously, the oil price has shot up and that is affecting the base commodity price of everything. We're having quite a lot

of cost pressure from our suppliers.

They're also having a shortage for example of things like fertilizer, because a lot of fertilizer is derived from potash mines in Russia. So in

the U.K., we have a national minimum wage increase, which is the right thing to do, but it's going up to nine pound 50 and that will add 20

million pounds of cost onto our business this year.

Our electricity bill is very large, anyway. Last year, it was about 65 million. But this this year coming because of where energy prices are, it

will be many times more than that.

SEBASTIAN: Are you going to make any money this year?

WALKER: We will certainly make less money than last year, that's for sure and we won't be taking any dividends. Any profit that we have is reinvested

in the business. I think that's the right thing to do because we need to make sure that -- you know, it's in my interest that we're here for another

50 years.

(END VIDEOTAPE)

QUEST: The reality of the situation there, Clare Sebastian, that's Iceland, in the U.K. The markets are at the low points of the day by about around

down 1,300 points. In fact, I think that is the lowest of the day. We'll watch closely.

It's always a difficult last half hour or so because that's when you get some book squaring going on, and it is a question of whether you want to be

long going in on the overnight.

We'll talk about it later, in a moment.

QUEST MEANS BUSINESS.

(COMMERCIAL BREAK)

[15:20:35]

QUEST: Russian attacks on the Azovstal steel plant are showing no signs of stopping. Still, the U.N. says it hopes to get another convoy to the

facility tomorrow and rescue some of the civilians still trapped inside.

Russia said it would open evacuation corridors from Azovstal today, but the Ukrainian Commander inside the plant said the Russian forces broke that

pledge with more attacks. Civilians have left the plant since Sunday.

Scott McLean is in Lviv in Ukraine. What needs to happen now for this -- for the evacuations to continue?

SCOTT MCLEAN, CNN INTERNATIONAL CORRESPONDENT: A ceasefire, Richard, that's the bottom line that is so desperately needed in this situation. We have

gotten confirmation just now from the military governor of the local region, who says that this evacuation effort has officially begun. Wouldn't

say more than that, he doesn't want to jeopardize the success of the operation, which is a similar thing that we saw the last time there was a

successful operation to get people out of the steel plant, which is on Sunday.

He said that this is an operation with the U.N. and the Red Cross like it was the first time around, but he said he does not envy those organizations

considering that they're working with the Russians who continue to change the rules and change the conditions to actually get people out of the

plant.

You mentioned the Russians extended an olive branch offering people to get out of the plant not just today but also tomorrow and Saturday, the

Ukrainians say that they have not honored that pledge, they have not actually ceased fire.

The Ukrainians say that the Russians are now trying to storm the plant from the ground. This is something that the Russians deny though. The Ukrainians

would very much like to get not only the civilians out of there, they say that there are some 30 children, but they would also like to get the

wounded soldiers out who they say are starting to die in agony.

Richard, before I leave you, I cannot leave you without giving you a little bit of good news because there are so little from this country, and that is

a couple that I met just yesterday.

Oksana and Viktor are from a city in the eastern part of the country called Lysychansk. Now, in late March, Oksana stepped on a landmine there and lost

both of her legs and four fingers on her left hand. It was just a little over a week ago that they were in a hospital in Lviv and they got married.

They had a civil ceremony at the Courthouse and then they came back to the room for an impromptu wedding reception when their first dance was caught

on tape and it went absolutely viral, and you can understand why he's holding her up, she has no legs.

But he said that he wanted to marry her to make sure that she knew that he was committed to her, no matter what happens. There was also a practical

reason to get married though and that so that he can accompany her to get fitted for prosthetics in Germany in the coming week or so because of

course military age men cannot leave the country at all.

What's remarkable here, Richard, is that she says that when she realized that her legs had been blown off in this explosion, she said she didn't

want to live. But now that she realizes she can get prosthetics, now that she realizes that her husband is whom she has two kids with, by the way, is

there with her for the long term, she is pretty optimistic about life from here on out.

QUEST: Scott McLean, we will take from you any and all bits of encouraging or enthusiastic or good news, good news, what news can be good in this

situation, but at least some of them might at least give us a better hope. Thank you, sir, in Lviv tonight.

To Israel now where officials there say at least three people have been killed and four hurt in what the police are calling a suspected terror

attack. It's in the town of Elad, and there were two suspected attackers, one armed with a rifle, another with an axe or a knife.

Of course, Israel is in the middle of celebrating its Independence Day.

Hadas Gold is with me on the phone.

Hadas, is this part of the trend we've been seeing. Is this another -- the word to use there -- another of those cases, or is this something

different?

HADAS GOLD, CNN CORRESPONDENT (via phone): Well, it definitely feels so far, and we are, I should warn you, you know in the first two hours or so

after this attack took place, it does feel as though it is part of what the Prime Minister has called a new wave of terrorism in Israel.

What we know, so far is that about two hours ago, local, in a town called Elad, this is a mostly orthodox town small town east of Tel Aviv The attack

took place as you noted, we say there were two suspected attackers, one with a rifle, one with an axe or a knife.

[15:25:14]

GOLD: Three people were killed, four people were injured, and actually, they are still searching for the attackers. The police say they have a

manhunt. The town's mayor has asked everybody to stay in their homes and keep their doors and their porches locked.

Now, no militant group has taken responsibility yet for this attack. Although, Hamas, the militant group that runs Gaza put out a statement

pretty quickly praising the attack.

As you noted, today is Israeli Independence Day, but it has been a tense few months. This is now the sixth attack targeting Israelis since late

March. The death toll now stands at 18 people killed in these attacks, the first of which took place in March.

So it's been a rather tense few months of attacks. The Israeli military has stepped up its, they say counterterrorism raids in the West Bank as a

result. We've also seen ongoing clashes in Jerusalem in the old city of the Al-Aqsa Mosque compound also known as the Temple Mount, a place so holy to

both Jews and Muslims.

And so while there was a hope that as the end of Ramadan approached that things would calm down, and really officials I spoke to said that they knew

that there were still a tense few weeks ahead, because of it day like Israeli Independence Day and because next week, Richard, is a one-year

anniversary of that 11-Day War last year between Hamas militants in Gaza and the Israeli Army.

QUEST: Hadas Gold, thank you.

We continue tonight. Wall Street isn't buying into hawkish Fed comments. The markets are down sharply. We're off the almost the worst of the day.

We'll have details. We're going to talk more to the Chief strategist at LPL Financials, in a moment.

(COMMERCIAL BREAK)

QUEST: I am Richard Quest, we'll have a lot more QUEST MEANS BUSINESS. I'm going to tell you and I'll update you with the U.S. markets which are

having their worst day of the year. We are talking to a trader on the wall on Wall Street, on the floor about what's driving the volatility.

[15:30:08]

(MUSIC PLAYING)

QUEST: I'm Richard Quest, together we will have a lot more QUEST MEANS BUSINESS. I'm going to tell you about, all day with the U.S. market having

the worst day of the year. We're talking trade here on Wall Street on the floor, about what's driving the volatility.

The Kellogg CEO is with me in a moment or two. And the supply chain issues, we'll talk about that. But it's only after the news headlines, because this

is CNN. And on this network, the news always comes first.

(MUSIC PLAYING)

QUEST (voice-over): Authorities in Fiji have now seized a $300 million luxury yacht at the request of the United States. The Amadea belongs to the

Russian oligarch Suleiman Kerimov. It was seized as part of U.S. sanctions on those close to President Putin.

U.S. intelligence officials say North Korea may be ready to test a nuclear weapon this month, based on signs of activity in one of the country's

underground test sites. It's unclear if nuclear materials have been taken there.

A German prosecutor says there is new evidence in the case of Madeleine McCann, the British toddler who vanished 15 years ago this month. The

prosecutor says he's sure he's found her killer. The suspect, Christian Bruckner, is a convicted rapist and is currently in jail in Germany on

charges related to drug trafficking.

(MUSIC PLAYING)

QUEST: And so, to the selloff on Wall Street, where the Dow has been down off over 1,300 points. Now it's at the worst of the day, 1,359. It's not

quite panic selling but there needs to be a good understanding of why it is off 4 percent, the sharpest fall for the Dow since 2020, where at least we

could see the reasons why.

The S&P and the Nasdaq are down again. The Nasdaq now off 6 percent.

Quincy Krosby is the chief strategist at LPL Financial, with me from Virginia.

I think you'd agree, Quincy, that we are moving -- forget yesterday's dead cat bounce or whatever you want to call it. We're moving into a new sphere,

an air of reality that the higher interest rates are going to slow the economy and hit companies' profits.

QUINCY KROSBY, CHIEF STRATEGIST, LPL FINANCIAL: Yes, no, absolutely. I think it's the market coming to that realization, that the Fed may not be

able to engineer a softish landing. And that the higher rates, and we saw above 3 percent today, are going to move higher.

And the Fed is going to get what it wants, it's going to slow down the economy.

But the point is, at what cost?

And the market is fighting back equilibrium at this point. That's what it's doing. It's recalibrating. It's finding the multiple that equates to a

higher interest rate environment and probably slower earnings, not necessarily a recession but just the recalibration.

It's never fun, it's never nice to see that. But the thing is that, at the end of this, investors are coming in, perhaps even before it ends because

so much is going on sale. You know, at the end of the day, the housing market isn't collapsing completely.

We still need cloud, we still need cybersecurity. Semiconductors are still important. We go out to eat, we go traveling.

But the issue is, at what multiple?

And that's what the market is searching for right now.

QUEST: How far -- I know, I know this is the "how long is a piece of string" question.

How far are we into that process?

Because I thought that the market had priced in over the last six months, as the Fed had talked about raising rates and we'd seen the dot plot. I'd

sort of assumed we'd priced in these raises not to see this sort of reaction today.

KROSBY: No, you're quite right. That is exactly the case. However, I think that -- Chairman Powell made the comment, we're not going to have 75 basis

points; for the time being we're going to have 50 basis points. If we need 75 basis points, we're not hesitating, we'll do it.

I think the market is worried that perhaps the Fed actually is not being aggressive enough at this point and, because of that, that perhaps they're

going to have to be more aggressive down the road. You always want them to front load it. He's got a healthy labor market at this point.

Why not front load it and really try to rein in inflation?

Particularly if the Fed believes that we're getting closer and closer to peak inflation.

[15:35:00]

KROSBY: So I think the market is basically saying, we don't think right now that your plausible, softish landing is actually going to happen without

more aggressive -- believe that or not -- more aggressive action on the part of the FOMC.

(CROSSTALK)

QUEST: Bill Dudley, former head of the Fed, New York Fed, said of course, asset prices have to fall, we're seeing, that and I suspect when we will

eventually see it in the housing market.

But he also said unemployment has to rise. And there're are tight labor markets at the moment on both sides of the Atlantic.

Do we need to see, as part of a reduction in wage demands, also an increase in unemployment, do you think?

KROSBY: Well, that's the question because, the fact of the matter is, when wages keep rising at the rate that they're rising. In the U.S., we don't

have more folks coming into the labor market to provide supply.

That's not having to give signing bonuses and higher wages. The worry is that you start to see the effects of a wage price spiral. We're nowhere

where it was in the late '70s but you're starting to see that.

And there's one thing: once you give higher wages, it's awfully hard to pull them back unless a recession hits. And then workers are happy to have

a job. But remember, too, the Fed has a dual mandate: price stability and a full unemployment.

QUEST: Quincy, for those of us in the market, stuck there, now seeing the losses, what is it, sit and wait it out, one year, three years, five years,

don't sell into this market?

KROSBY: I mean, unless you have to raise cash, unless you get a call this afternoon and it's a margin call, you'll be forced to sell. If you don't

have to sell, it usually helps to wait it out.

The reason for that is, if the Fed breaks something, that's what we call, it breaks something, they're prepared to change course. Even if nothing

breaks and the economy really slows and we don't get a soft landing, pretty soon the Fed will start lowering interest rates. That's the pattern. And

the market knows that before anybody else.

You know, the market gets the news first. So today, the market is sending the signal. It got the news yesterday from the Fed. And today it's saying,

maybe, just maybe, we don't agree with you.

QUEST: Quincy Krosby, very glad to have you on tonight's program. Just the person, to be here tonight.

It's QUEST MEANS BUSINESS. Poached for their fur and used in traditional medicine, the rare type of tiger that's been driven to the brink of

extinction. But park rangers are working to keep them safe and protect other indigenous species. It's "Call to Earth."

(MUSIC PLAYING)

(COMMERCIAL BREAK)

[15:40:00]

(MUSIC PLAYING)

QUEST: Call to Earth: a century ago there were 100,000 tigers worldwide, 100,000. Now according to estimates, fewer than 4,000 remain. At one

wildlife sanctuary in northwest Thailand, tiger numbers are on the rise.

It's today's "Call to Earth" and it's Kristie Lu Stout who looks at how rangers are successfully protecting tigers from poachers.

(BEGIN VIDEOTAPE)

(MUSIC PLAYING)

KRISTIE LU STOUT, CNN ANCHOR AND CORRESPONDENT (voice-over): This lush, tropical forest in northwest Thailand is hiding a rare endangered species.

It's one of the last bastions for the Indochinese tiger.

Poached to the brink of extinction for their fur and use in traditional medicine, this iconic species has all but disappeared from much of its

range. Almost everywhere, in fact except for here.

Huai Kha Khaeng wildlife sanctuary is part of Thailand's western forest complex with almost 7,000 square miles of protected jungle, it forms the

largest intact forest block in mainland Southeast Asia, fertile ground for tigers. And Pornkamol Jornburom is on their tail.

PORNKAMOL JORNBUROM, WILDLIFE CONSERVATION SOCIETY: This is the tiger track, so I'm doing the measurement to make sure this is real tiger tracks.

I would say this is a healthy one adult tiger.

STOUT (voice-over): Another way to track them, follow your nose.

JORNBUROM: This is the tiger spray. So basically, tiger will spray to mark their territories, to tell other tiger, this is their home.

STOUT (voice-over): Jornburom works for the Wildlife Conservation Society. The nonprofit is partnered with the Thai Department of National Parks,

Wildlife and Plant Conservation and the project training park rangers to reduce poaching here since 2005.

Together, they developed a smart patrol system, a combination of boots on the ground, camera traps and data collection to monitor signs of wildlife

and potential threats.

Armed and trained in self-defense, these park rangers are prepared for encounters with poachers. And unlike other protected areas in Thailand,

there have been no incidents of poaching here since 2013, according to the Wildlife Conservation Society.

By using 250 camera traps across the forest, they found that tiger numbers have more than doubled here over the past 15 years to over 60.

UNIDENTIFIED MALE: Yesterday.

UNIDENTIFIED FEMALE: Yesterday?

STOUT (voice-over): And this watering hole, deep in the forest, has become a day spa for tigers, somewhere to rest, relax and rendezvous until they

eventually make room for some other forest residents, like the Asiatic black bear, Asian elephant and wild boar.

JORNBUROM: Tiger is the top predator of the food chain in ecosystem. So if we are successful in conserving tiger, that means we can protect many other

endangered species.

STOUT (voice-over): And as Jornburom says, big cats need big food. Large mammals like gaur, banteng and sambar deer are all on the menu here.

JORNBUROM: For one adult tiger, it eats at least 50 sambar deers (sic) a year to feed them.

STOUT (voice-over): 2022 is the Lunar Year of the Tiger, marking a deadline set in 2010 by 13 countries to double their wild tiger populations. So far,

evidence suggests global tiger numbers are on the rise. But their range has continued to decline.

Jornburom is hopeful for Thailand's tigers.

JORNBUROM: For example, Huai Kha Khaeng right now, we are the biggest home of Indochinese tiger population.

STOUT (voice-over): So while tigers worldwide face an uncertain future, these tigers can relax.

[15:45:00]

STOUT (voice-over): At least for now.

(END VIDEOTAPE)

QUEST: Ohh. I want one.

Let us know what you are doing as we look to Call to Earth, the hashtag is #CallToEarth. And I think those pictures were just absolutely remarkable.

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QUEST: Well, as you might have guessed, considering we have a whole host of Kellogg's different cereals, Special K, we will be talking to Kellogg's and

speaking to the CEO of Kellogg's.

The company says its snacks and cereals are still selling, despite higher prices. Kellogg's shares are up after the company raised its 2022 outlook

in a remarkable agreement in today's market.

And it told investors that profits from higher food prices is outweighing the disruptions caused from the war in Ukraine. Many key ingredients in

packaged foods are in short supply, some of them are skyrocketing in price, as we have said earlier in the program.

The company said that the conflict will hurt supplies of products like these later in the year. So some of these, for example, have wheat of one

sort or another, some have almonds, wheat brand and so forth. This is the one that has the most of the relevant ones.

Steve Cahillane is the chief executive of Kellogg's, he joins me from Battle Creek, Michigan.

We contributed to your profits today, sir, by going out to the supermarket and buying these.

A quick point, I know that specifically you are not affected by, say, the wheats and the grains from Ukraine per se, I realize that.

But as the rising price have lifted all markets, so in other markets, too, you must be having to pay more for raw materials?

STEVE CAHILLANE, CEO, KELLOGG'S: That's right, Richard. And thanks for going out and buying that product. I appreciate it.

You are correct. It is all interrelated. So the removal of supply coming out of the tragedy in Ukraine and the sanctions in Russia, it clearly

affects pricing and availability around the world.

We do source some wheat actually from Russia -- we did -- from Russia and certainly some product from Ukraine, mostly for our African business. We

have had to look for different alternative sources for that, which we have been able to do.

[15:50:00]

CAHILLANE: But you're quite right. It puts pressure on the global supply chain to be sure.

QUEST: And as that pressure, you have got it coming from all sides. It is coming from labor, which is demanding higher wages, because inflation is

generally higher. It is coming from your borrowing costs. I mean, I assume you are well refinanced at the lowest possible.

But now, refinancing again is going to be more expensive. And it's coming on energy costs as well. It's quite energy -- however efficient you are, it

requires a lot of energy to make these things.

What can you do as a CEO facing these inflationary pressures?

CAHILLANE: Yes, it is pervasive across all of business, as you say. We have to tackle one of these issues one at a time. We talk about supply and the

cost of supply and the first thing is actually securing the supply because even if you are willing to pay the price, it doesn't mean you can actually

get it.

So our procurement department is working extremely hard to go out as far as possible to secure available supply and then obviously work on productivity

plans to take as much cost out of our entire system as we can.

But as you say, there's a lot of friction in the system, whether that is freight or labor and so forth. So it's looking for offsets in productivity

and then obviously we have to look toward prices and revenue growth management and everything that we can possibly do to cover our margins and

protect our margins in this most challenging time.

Finally, just continuing to work with our customers to put the most affordable and best selling brands in front of consumers each and every

day, so that we can keep our sales at high levels.

QUEST: Is this one of the most challenging times that you can recall?

CAHILLANE: Richard, it is the most challenging time. I've been around quite a while and, starting with the pandemic, the through the tragedy that is

unfolding in Eastern Europe, obviously just the rapid inflationary environment, it is a host of challenges that have come together to create,

I think, one of the tumultuous business environments that I've certainly ever operated in.

QUEST: Steve, thank you sir. We will talk more as this all goes on. But at least you will be gracing my breakfast table tomorrow morning. Thank you

very much.

As for the other boxes, well, we will giving them to a food bank of course and making appropriate use of them.

The last two minutes of trade on Wall Street, investors are glad we have pulled back a bit. We are just off the lows. Nasdaq is down more than 5

percent, the worst day since 2020.

Tim is with me, he is from the New York stock exchange.

It's been a while, Tim, but I am glad that we are back together. Tim, I know the reasons behind the fall today and the worries behind it.

But how deep is this going to go?

How long have we got of this, do you think?

TIM ANDERSON, MANAGING DIRECTOR, TJM INVESTMENT: im Well, I tell you, the day is almost certain to be a 90 percent down volume day. That means that

down volume will be 90 percent of total volume.

We haven't had one of those yet, despite the fact that, the last two Fridays, the Dow is down 1,000 points. It's almost certainly going to hit

that threshold today. That typically is maybe the first indication that we are getting close to a buyable level for the markets.

We could easily have a few more down days. I'm not saying that that means today's numbers are going to mean the low is in. But it means that we are

getting closer.

QUEST: Why do you say that?

Why do you say that?

ANDERSON: Well, clearly, when we get a 90 percent down volume day, that is a sign of some capitulation in the market. Now, clearly, there has been a

lot of selling in the market. We've had a lot of days where sometimes the market will go up very sharply in response to maybe something that the Fed

says or some other economic indicator, some feeling of inflation. We've hit peak inflation. We don't know that yet.

Then it will go down the next day just as much as it went up the day before. That is what we are experiencing right now. Some investors might be

a little bit spooked that tomorrow is Friday and the last two Fridays the market went down, the Dow went down 1,000 points.

I think you'd like to see the market go down another 1,000 points tomorrow because then you'd be much closer to the bottom.

QUEST: Tim, you talk -- you use the word that we'll talk about a lot over the next few weeks on this program, capitulation. That is the moment when,

basically, collectively, the market says, we're done. We are as low as we are going to go. And now, we are going to build this bottom to build it

back up again.

ANDERSON: That was March 23rd, 2020, in the depths of the pandemic. That was the capitulation day, March 23, 2020. The Dow got down to below 19,000.

QUEST: Will -- OK --

ANDERSON: That's why I say we are not there yet.

QUEST: We are not there yet.

ANDERSON: We are not going down that far.

[15:55:00]

ANDERSON: But the number that I would look at would be the pre-pandemic high, the pre-pandemic high or the closing high for the Dow Jones

industrials, just below 30,000, about 29,500. That is the number that I would look at if we have a couple more sharp down days.

QUEST: We will talk more, Tim. In fact, we will talk a lot more.

ANDERSON: It's so great to be on with you, Richard, despite the fact that we are down.

QUEST: It is. There is a bright light, a bright silver lining in this misery. It is talking to you, sir, thank you very much.

Tim Anderson joining me.

We will have a -- I was going to say a "Profitable Moment." We will have a moment --

(LAUGHTER)

QUEST: -- after the break.

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QUEST: Tonight's "Profitable Moment": I am not being rude, I'm just looking at my phone to give you a definition of capitulation. It is the act of

capitulating, to give up resistance, to surrender unconditionally.

That is the phrase we use in the market when, basically, the selling is over and the buying starts. Now that is not the same as buying on the dips.

Capitulation means the market says we're done. We have fallen. We can go no further down because we have reached the price upon which we think it is

there.

And as Tim was saying, we are not there yet.

What will the price of capitulation be?

I don't know it could be 30,000, could be 29,000, 31,000. And of course, that could change, depending on when we get more information on oil prices,

inflation, the war in Ukraine.

But we are looking for capitulation, that moment when the market says, we are done, because even though it might not rally back up again, it creates

a base at the bottom. And it is from that that you build the next bull market, such as it is.

There will be many debates about whether the bear market has happened, the bull market died. It doesn't really matter. You are showing your losses,

you're waiting to see. You are not buying on the dips. And you are preparing for that moment when the tide turns.

They call it capitulation, but you know what I mean. And that's QUEST MEANS BUSINESS for tonight. I'm Richard Quest in New York. Whatever you are up to

in the hours ahead, well, I doubt it was profitable if it was financial. But I hope it was good anyway.

END