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Quest Means Business

Dow Falls For Sixth Straight Day; Airbnb CEO: Mood Is Sour In Market Right Now; Finland's Prime Minister And President Call For NATO Membership; Natural Gas Soars In Europe As Russia Sanctions Suppliers; Call To Earth: Sea Lions; World's Largest Airline Alliance Celebrates 25 Years; Dash To The Bell. Aired 3-4p ET

Aired May 12, 2022 - 15:00   ET



RICHARD QUEST, CNN BUSINESS ANCHOR: There is an hour of trading left before we will -- I'm pretty certain going to have the sixth straight day

of losses for the Dow. We're at the worst of the day, give or take. I'm guessing it's not going to get much better and it could get a great deal

worse before we are finished.

The triple stack will show later when I show you exactly how things are trading with the NASDAQ, which is also sharply low, it is down nearly two


The markets as they are trading and the main events of what we're talking about today.

The tech route tests chief executives, that's Airbnb's Brian Chesky, who tells me how he's handling the company's collapsing share price.


BRIAN CHESKY, CEO, AIRBNB: As a CEO, I try to focus on things I can control. I certainly can't control the stock market, I can control that --

I can control the performance of the company and that's what we're focused on.


QUEST: Finland's leaders announced their support for joining NATO taking the country one step closer.

And originally there were five founding members of the Star Alliance. Today, there are 26. As the airline turns 25, the chief executive is with

me tonight.

We are live in New York. It is Thursday, May the 12th. Getting ahead of myself. Well, I am Richard Quest, and I do mean business.

Good evening.

There is no bottom in sight for Wall Street, it would seem. U.S. stocks are continuing to fall. The Dow is off its sixth straight day, we are nearly

600 points lower. And the triple stack, I promised you that, the triple stack has -- the S&P has hit a new low for the year. The NASDAQ is down

almost two percent, which takes it down to about 27 to 28 percent from its high back in December of last year. And today was inflation at the

wholesale level that was causing them the worries and the misfortune.

You've got inflation, the war in Ukraine and the ability of Central Bankers to engineer the soft landing.

In a sign of this sentiment, a tech giant has just been dethroned by an energy firm as the world's most valuable company. Saudi Aramco is now worth

$2.4 trillion. Now, that's hardly surprising bearing in mind A., you've got the rising price of fuel, which boosts their reserves and therefore their

income and B., it is the largest oil producer in the world.

Apple is worth 2.3, just slightly less. It was the most valuable tech company in the world.

Rahel Solomon is with me in New York. Another day, the day of falls. This time, it was all about inflation, again.

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: All about inflation. Yes, Richard, in fact, you pointed out all of the major averages being lower

about two percent right now, but what might be easy to miss today, unless you were staring at your computer screen is that all of the averages were

positive at one point.

The Dow was up 80 points before noon. The NASDAQ was up about 1.5 percent. I spoke to a trader today on the floor of the New York Stock Exchange,

essentially asking what gives and what he said is that, look, the market investors are looking for some glimmer of hope, some positive news.

We didn't get it in the PPI report today. Yes, there was a slight easing from the year over year number last month. We didn't get it from the

Consumer Price Index yesterday. So investors are looking for some sign of relief, Richard, and they have yet to get it.

Looking year-to-date at some of the most popular brands and American companies, Apple is off 21 percent year-to-date. Amazon is off 36 percent

year-to-date, and Uber has lost nearly half of its value just this year alone.

And Richard, I hate to be the bearer of bad news, but the economic calendar, the news release cycle is also looking very light for the next

few weeks. So not a ton of catalysts for positive news, either.

QUEST: But Rahel, if our starting point here is that these stocks were not just overvalued, but had valuations that could not be sustained, there was

a strong -- I mean, looking at PE ratios and all the usual EPS and things like that, there is a strong argument that says what we're seeing is way

over done. And therefore -- but you can't stop it, because the Fed is still raising rates and will be.

SOLOMON: Yes, and I don't know, Richard that you can make the argument that it is over done because there's also a chart that I want to show you.

When you look at the last time Amazon and Uber traded at these prices, it was an April of 2020. When was that? That was of course right after that

huge selloff we saw at the beginning of the pandemic.


QUEST: Interesting.

SOLOMON: So what we're seeing in these prices, as prices come back down to where they were before the inflation, before the pandemic-induced boom that

we saw so --

QUEST: So, but if you take -- they were overvalued then, so if you take that as your starting premise, there is the suggestion they've got further

to go to correct out of the pre-pandemic prices.

SOLOMON: Well, I mean, that's a whole another story, Richard. Yes, I guess it depends on who you're asking. But yes, in this environment of rising

interest rates, with sort of consumer behavior changing, right, we're starting to hear from companies the most mentions actually since Q2 of

2020, forecasting weaker demand. I guess, that argument can be made that if you have rising interest rates, tech companies, of course, extremely

sensitive to rising interest rates, and you perhaps have slowing demand.

It creates however, perhaps a recipe for lower valuations and perhaps that is exactly what we're seeing play out.

QUEST: And you'll be watching it right the way through. Glad to have you with us tonight. Thank you, Rahel Solomon.

The head of Airbnb says he is not fazed by the market turmoil. Like other tech companies, Airbnb shares are down sharply over the last six months.

They've dropped 45 percent.

At the same time, of course, pent up demand means more of us are going on a holiday, and we're wanting to get away, but he believes that the company

was prepared for these difficult conditions, particularly after the early days of the pandemic, when it lost 80 percent of its business.

Now, customers are coming back. There's a strong recovery and troubled demand.

I met Brian Chesky at an Airbnb here in New York. He spoke about changes coming to the platform, as well as why he's not concerned with short-term

stock movements.


CHESKY: You know, there's an old saying by a late economist, I think his name is Benjamin Graham, he said in the short run, a stock price is a

voting machine, a long run is a weighing machine. It goes up, it goes down. If you hold the stock long enough, the great companies will go up. But

right now, it's a mood, and right now the mood has soured.

So, I think that's the way it is right now. I think the highest growth companies are also sometimes the more speculative ones, and people don't

want to take a lot of risk right now, and so I think that's what's happening in the market.

But ultimately, as a CEO, I try to focus on things I can control. I certainly can't control the stock market. I can control that -- I can

control the performance of the company and that's what we're focused on.

QUEST: Right. But when, for example, Uber's CEO, you may have seen the letter that he wrote to the staff.

CHESKY: Yes, I saw it.

QUEST: Basically saying that, the times are going to get tough. We've got to make money. There's got to be a return on capital.

CHESKY: Right.

QUEST: And I'm old enough to remember the old days of path to profitability of the 1990s. Do you have to think the same things? There has

to be a better business case.

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

the layoff, restructure our company. We rebuilt the company from the ground up. Then we took it public.

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

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

So we are lean. We have 6,000 employees, we were very, very profitable from a free cash flow standpoint in Q1, we're feeling really good. And we are

not pulling on the brakes. We're stepping on the gas.

QUEST: Russia and Ukraine and Belarus, I follow closely what you've been doing there. And of course, there's a lot of misunderstandings over what

your policies are and where you are. Chance to clarify.

CHESKY: Well, we pulled out of Russia, we pulled out of Belarus, and that means we're in almost every country in the world but North Korea, Iran,

South Sudan, Russia, Belarus, maybe one or two others.

QUEST: You will stay out of those countries. And the reason I ask that is because there's a sort of a percolating view for many businesses that

you'll go back as quick as you can, so to speak.

CHESKY: Well, we're not going to make a business decision here, we'll make a principled decision. If it seems like the right thing to go back, we'll

go back. So long as the war, there's an invasion that won't end, we're not going to go back.

QUEST: All right, let's kind of look at this palatial residence.

CHESKY: Oh, yes. We're going to go upstairs.

QUEST: Who is this?

CHESKY: Yes. What are you doing? Are you eating this?

QUEST: Who is this?

CHESKY: This is -- this is Sophie supernova. The reason her last name is Supernova is because she has more energy than a collapsing star. She has a

nine-month-old golden retriever.

She travels everywhere with me and well, we only book Airbnbs that allow dogs and she comes with me and she has a good time.

QUEST: What makes a good Airbnb in your view?

CHESKY: I think the simplest way to describe it is a home that feels like home. So, it feels like home meaning, it's comfortable if you can live

there, not just for a night, but indefinitely.


CHESKY: What makes a home? Personal items, lots of different furniture. You know like a host that like kind of put things out with care. So places

to relax, like, you know, you go to a hotel room, there's really not a lot of places to sit. You can sit in the bed, you can sit in a little chair. At

a home, like there's like kind of unlimited places to relax.

QUEST: Do you think -- are you still fighting the battle against regulators in different cities? Or has that been gone or you won some, you

lost others?

CHESKY: I think we're kind of in a new chapter where we're actually much more partnering with cities than battling cities. We've collected $4

billion in hotel tax already. We have agreements with the vast majority of big cities we operate in.

So we're mostly in a partnership right now. And actually, when the pandemic happened, a lot of countries and cities and states reached out to us

because they had big tourism shortfalls.

So, it used to be cities reached out to us and it wasn't a good thing. Now, they reach out to us and it's, you know, better circumstances, at least for



QUEST: Turmoil in tech stocks pales in comparison with what's going on with cryptocurrencies. One price tracking website says that market lost

over $200 billion in a 24-hour period starting on Wednesday.

Bitcoin is down in another two percent today. Investors and policymakers are even concerned about so-called stable coins. Those are cryptos that are

supposedly tied to the value of stable assets, often currencies. For instance, Tether broke its peg to the U.S. dollar. Another called, TERA has


U.S. Treasury Secretary Janet Yellen said the collapse could be a broader risk.


JANET YELLEN, U.S. TREASURY SECRETARY: That simply illustrates that this is a rapidly growing product, and that there are risks to financial

stability and we need a framework that's appropriate.


QUEST: The CEO of the crypto exchange, Coinbase, is trying to calm customers after reporting earnings. The stock is down 80 percent so far

this year-to-date, and it is warning in a filing, customer holdings with the company could be at risk if it went bankrupt. Brian Armstrong took to

Twitter to assure people that that event is highly unlikely.

Kristin Smith is the Executive Director of the Blockchain Association. She's with me now from Washington, D.C. I'll preface our discussion with

the sort of the proviso, I'm not querying or quarrying over blockchain as a means of future production or smart contracts or anything like that. What

I'm questioning you now about today is whether the emperor's new close that crypto currency is a stable, reliable, backing is actually valid. We've

seen it for what it is.

KRISTIN SMITH, EXECUTIVE DIRECTOR, BLOCKCHAIN ASSOCIATION: Well, listen, I mean, I think there's a lot of things going on in the crypto markets right

now. I mean, as we were just discussing in the lead in here, there are a lot of macro factors, whether it be with inflation, or what the Fed is

going to do, or what's going on with Russia-Ukraine, supply chain issues. There's a lot going on in the world right now that has all investors a

little bit scary.

But I think in the crypto world specifically, yes, it is certainly been a very interesting week, as Secretary Yellen was saying the de-pegging of the

U.S. TERA stable coin has posed a lot of questions and has caused a lot of damage throughout the crypto ecosystem.

But I think overall, the underlying idea of a decentralized crypto network still remains incredibly important. This is a technology that is the

foundation for a new financial services system. It's the foundation of a new internet. It's what is going to give individual end users more

ownership over their art and their data. And so it's still good, but yes, certainly, certainly a rough week in the markets.

QUEST: It's good or arguably as an asset class, but not as a hedge. It doesn't act as a hedge against inflation, and it doesn't act as a currency.

SMITH: Well, listen, you have to look at what the individual cryptocurrency does. Bitcoin, there are many that think that over time,

that because there will only ever be 21 million Bitcoin, that that will act as a hedge against inflation, maybe not so much today, but down the future

is the thesis that many subscribe to.

But there are many other blockchains out there that had many different functions. A lot of them help to operate these smart contract platforms,

which are these super computers that allow developers to build on top of that. Other blockchains are related to specific financial services,

functionality, or others are dedicated towards the minting of NFTs, other sorts of digital assets. So, you know, it's hard to lump everything all in

one basket with cryptocurrencies.

Similarly stable coins that have been a focus today there are many different models there. Some are backed by dollars, some are backed by a

mix of dollars and a mix of other assets. Others are backed by other types of cryptocurrencies.


QUEST: Right.

SMITH: I think what's going on with the TARA situation is it was backed by nothing, and that sort of led to the problems that we have today. But it's

important for U.S. to continue to in good ways.

QUEST: Yes, I mean, yes, TARA was sort of backbone algorithm and was shown to be what it is, and, you know, but I take a look, because I take your

point fully that blockchain is not crypto. You know, blockchain is a much wider industrial development technology.

SMITH: For it to be a real, you can have blockchain without crypto.

QUEST: Exactly.

SMITH: But you can't do much with it. Crypto is a key part of a blockchain, and if you have a blockchain without crypto, then you have

permission nodes and there is a big aspect of centralization there.

What's very cool about crypto networks that are fueled by these cryptocurrencies is that they are decentralized, and there isn't a single

force, a single company, it is a network and they are very resilient.

QUEST: But if we are now moving into what arguably is one of the most difficult financial times in recent memory, and there seems to be a

consensus of that, what role do you see crypto legitimately playing instead of making a bad situation much worse?

SMITH: Yes, listen. I think that this is where the good projects, the good networks, the strong ones will survive. And you know, just like when we had

the dot-com bubble in the 90s, those ideas that are weaker, stronger, not as decentralized, you know, there may be some cleaning out and focus on and

shift over to the more quality assets and the quality projects.

I think that's a good thing and that's a healthy thing. You know, there was a big fundraising round that was conducted by venture capitalists over the

past year in this space, there's a lot of money right now that is looking to go to work and looking to build.

And so whereas the markets are very tough right now, I think in the long run, what we're going to see in the months and years ahead is a lot of

focus on quality on improving the blockchain that we have out there, on investing in new ideas that will take the ecosystem to the next level, and

so it's going to be a little bit rough for investors.

But I think in the long run, the fundamentals of crypto are strong, and that this is a low point, but in the future, like this is going to be a

space that's going to be really important for our economy, and so, the next couple of years of building is critical for that.

QUEST: You know, it does remind me so much what you're saying, listening to the dot-com boom and bust where the when the bust came, a lot of the

stuff that should never have got there in the first place was swept away to create a more solid base, which of course we benefited from for the next 30

odd years.

Thank you, Kristin. I'm very grateful. Thank you.

It's QUEST MEANS BUSINESS tonight from New York.

Finland's leaders say the country must join NATO. Russia threatens retaliation if it does. Our diplomatic editor is in Helsinki for us




QUEST: Finland's leaders say the country must join NATO without delay. Moscow said that will be a threat to Russia and warned it would retaliate.

Joining NATO will be a huge policy shift in Finland. It deliberately stayed out of the Alliance during the Cold War. The Finnish Foreign Minister now

says Russia's recent behavior has made Helsinki have to rethink its security.


PEKKA HAAVISTO, FINNISH FOREIGN MINISTER: Russia's invasion of Ukraine has altered the European and Finnish security environment. However, Finland is

not facing an immediate military threat. Maintaining national rule to maneuver and freedom of choice remain integral parts of Finland's foreign

security and defense policy.


QUEST: Now, there are huge benefits to NATO membership, both obviously militarily and in many cases, military ones as well. For instance, it

signals that the place is safe, and therefore investors can invest there with safety, implying lower risk of threats like nationalization.

When Slovakia was on track to join, foreign investment there jumped more than 300 percent. And foreign investments in the Czech Republic and Hungary

is twice as high since NATO expanded.

Nic Robertson is with me. How and when?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: The next step expected, the government to issue a white paper on Sunday. Things are

moving apace here and that white paper is going to recommend to the Parliament that they vote to join NATO and Parliament will meet Monday.

That's what's happening next.

But today really has been an absolutely momentous day.


ROBERTSON (voice over): In Helsinki, calm, as leaders move the nation ever closer to NATO membership. A momentous announcement delivered without

fanfare by Prime Minister and President, a two-paragraph joint statement.

"NATO membership will strengthen Finland. Finland would strengthen NATO. Finland must apply without delay."

On the eve of the historic announcement, Finland's President explaining why it is not a threat to Russia, but Russia is to blame.

SAULI NIINISTO, FINNISH PRESIDENT: We increase our security, and we do not take it away from anybody.

ROBERTSON (on camera): The Kremlin's response, this doesn't make the world any safer. Russia's Foreign Ministry doubling down saying they'll take

military action if their national security is under threat.

ROBERTSON (voice over): In Parliament where the historic vote will happen, routine business continues. But lest Russia escalate tensions, calls for


JOHANNES KOSKINEN, FINNISH PARLIAMENT MEMBER: Joining NATO should be as short as possible.

ROBERTSON (voice over): When the moment comes, likely early next week, Koskinen, a member of the PM's party is sure the vote to join will carry,


KOSKINEN: The results maybe -- maybe around 180 out of 200 in favor of membership.

ROBERTSON (voice over): Politicians and public now for the most part in lockstep wanting to join NATO.

UNIDENTIFIED MALE: People of course support -- support, especially when Russia have attacked Ukraine.

ROBERTSON (voice over): Not just the invasion of Ukraine, but a history of rocky relations with Russia spurring many here to reassess decades of


UNIDENTIFIED MALE: I have a very old father, he is 96. So he was here when we had our wars in Finland with Russia. And he's been talking about you

know, the Russians could come anytime, and as you know, my father, you are back in the 40s and take it easy and they're now, yes, you never know with

the Russians. They can always come.

I said take it easy, and now, I just have to say to him, well, you were right.


ROBERTSON (on camera): In a way, Finland has been preparing for this moment for more than a generation. They've been involved in plenty of NATO

and other international military operations, from Iraq to Afghanistan to Kosovo, Bosnia, Lebanon.

ROBERTSON (voice over): Just last week, British troops were training here with Finnish, American, and other NATO soldiers. Finland's accession is

expected to be fast tracked, nevertheless, the Nordic nation pressing its case with allies, mindful Russia is watching.

HAAVISTO: Finland holds solid democratic credentials that meet NATO's membership criteria, and has a strong and credible national defense that is

interoperable with NATO.

ROBERTSON (voice over): No panic here, and according to officials, no new Russian threat either. The starting gun, though, clearly fired in a massive

geopolitical shift.


ROBERTSON (on camera): And a sprint from here to the finish line it seems. The government really wanting this thing to be done very quickly, and it

does seem that the Parliament is very open to that -- Richard.

QUEST: So Nic, for all the reasons that your excellent report went into, the interoperability, very high combat command of English. They're already

integrated. Well, realistically, when could Finland be a member?

ROBERTSON: Normally, it would take a nation wanting to sign up to NATO requesting it several years. There is a lot of groundwork that's been done

in Brussels already behind the scenes, a lot of nations engaged with by the Finns, the Finns engaging directly with NATO a warm welcome as well. The

NATO Secretary General Jens Stoltenberg has said realistically, no one is actually putting a specific amount of time on it.

But I think the broad understanding is, a matter of months, but that's still a period of concern for the Finns, because that's the period where

they're worried that Russia could try to stir something up. But they do have security guarantees from the British, from other Nordic partners as


But in months, I think is what we're looking at -- Richard.

QUEST: Nic Robertson in Helsinki this evening. Nic, thank you.

As we continue together tonight, Russia is squeezing Europe's gas supplies even further. There are new sanctions on Europe's energy companies.




QUEST: Hello, I'm Richard Quest. We have a lot more QUEST MEANS BUSINESS to bring you tonight.

Natural gas prices are soaring in Europe. You don't need me to tell you that. As Russia is leveling new sanctions against E.U. energy companies.

And the chief executive of Star Alliance is with me, as the airline group celebrates its 25th anniversary. We will get to Star and all that after the

news headlines, because this is CNN and, on this network, the news always comes first.


QUEST: United Nations said today that more than 6 million people have fled Ukraine since Russia invaded the country in late February; 8 million people

have been internally displaced

U.N. said all parties are involved in the war to allow humanitarian staff to deliver aid across Ukraine.

The White House says roughly 1 million people in the U.S. have now died from COVID-19. President Biden called it a tragic milestone and said

Americans shouldn't grow numb to the sorrow. He honored those who have died by ordering flags to be lowered to half-staff.

In the West Bank, thousands of people attended a memorial procession for the Al Jazeera journalist, Shireen Abu Akleh. In a speech, the Palestinian

Authority president honored her life and blamed Israel for her death. She was fatally shot on Wednesday while covering an Israeli raid. Her funeral

will be held on Friday in Jerusalem.

We are getting our first look at a supermassive black hole in the center of our galaxy. Astronomers have unveiled this image of Sagittarius A* -- it's

a star -- at a ceremony in Washington. The photograph shows a ring of light bent by the gravity of the black hole, which is 4 million times more

massive than our sun.


QUEST: Europe's natural gas prices are soaring once again. Russia is turning down supplies. Moscow has unveiled new sanctions against European

energy companies. It's also knocked out a key pipeline carrying through Poland. It's the second Russia to Europe pipeline to go out of action this


Ukraine is blaming Russia for meddling and shutting down a Ukrainian pipeline two days ago. Anna Stewart is with me.


How high have they gone and how much further do they think they are going to go?

ANNA STEWART, CNN CORRESPONDENT: In terms of the gas prices today, we saw a spike around 14 percent.

In terms of European gas features, where do we go from here?

In terms of the disruption we've already seen, so, so far, Ukraine has suspended a major transit point in the east of its country due to alleged

Russian interference. That takes up about 2.3 percent of Europe's overall gas supply.

Today, or last night, rather, as a result of President Putin's decree, further gas is coming off as a result of certain companies being sanctioned

and also, the Yamal pipeline that runs through Poland being out of action. That takes off at least for Germany around 3 percent of their Russian gas.

So far, Richard, we are talking relatively about fairly small amounts. But the big concern is what will get disrupted next.

QUEST: And to that extent, I can sort of see where this goes, can't you?

You can sort of see, I mean, this is like the saber rattling before, to mix the metaphors, the saber-rattling before the storm, before, you know, the

hurricane. Eventually, something is going to give.

STEWART: Yes, and the big concern is next week and the week after. This is the big one for energy analysts that they are looking at, because this is

when many European nations within the E.U. and their gas suppliers have to pay their next sort of contract for Russian gas.

And obviously, the Kremlin would like them to do that in rubles and, at this stage, the E.U. still hasn't clarified whether or not they can do that

without breaching sanctions. We've seen from Poland and Bulgaria, who refused to pay in rubles, their gas supply was cut off. The E.U. will not

cope in that scenario.


QUEST: Right, but we know Hungary is going along with this, the Gazprom bank scheme. And it's a bit pathetic at this stage, Anna, that the E.U. has

not officially said, yes or no, you can or you can't.

STEWART: Absolutely, and I think there was a lot of fudgery going on, which is in typical E.U. form. We've heard from Mario Draghi, the Italian

prime minister this week, saying, he thinks it will be possible.

But we've also heard other noises from the E.U. and, at this stage, for investors, for energy analysts, they need an answer.

If there is some fudgery, what is it?

Is it that they allow Gazprom to set up their ruble account and they still pay in euros?

How does it work?

QUEST: OK, but at the end of the day, let's say we get to next week and there's still a lot of E.U. fudgery going on. All Russia has to do is stop

sending the gas. Now I agree it will have a highly detrimental effect on the Russian economy. But the effect on Europe will be tremendous.

STEWART: I mean, that hurts both sides and that has been pretty much all that has stopped a huge energy embargo from the E.U. on Russia and all that

has stopped Russia from major retaliation on Europe.

QUEST: Anna, Anna Stewart in London, thank you.

Put all this together, with the market, inflation, the energy issue and a former chief economist of the IMF says, a perfect storm is brewing for a

recession. Ken Rogoff told me earlier about a key part of that storm, which we talked about earlier in the program, U.S. inflation.


KEN ROGOFF, ECONOMIST, HARVARD UNIVERSITY: It's true that, if they wanted to really just wring inflation out of the system -- and here we are talking

especially about the United States, where the -- particularly the last year, 1.5 years, has just had too much stimulus too late.

The inflation is just way too high, it's not getting under control. It would be nice to have it under control.

But just how big a recession do you want to tolerate, on top of so many other things?

I suspect that they will end up, in two years, having raised interest rates to 3 percent or 3.5 percent. But the point is, it won't have been enough to

stop inflation. It will cool it off but they won't want to, you know, have an epic recession. I'm not even sure they can pull that off.

QUEST: OK, but let's just take that. Let's say rates go 2 percent, 3.5 percent, 3.25 percent to 3.5 percent. And inflation is tame. So we get it

down to 5 percent, 4.5 percent, 5 percent.

Is -- what do you do then?

Do you continue pertinaciously for your asymmetric 2 percent?

Or do you basically say, we will live with this for the foreseeable?

ROGOFF: Well, I mean, if it's still up at 5 percent, they are in deep, deep trouble. I think it will be a little close, 3.5 percent, 4 percent.

And I think what they are going to start saying is, well, we see it's going to be down at 2 percent in another couple years. And we don't want to rush.

And they will just push things back.

It's a very difficult situation. Frankly, if China keeps throwing out problem after problem, it's not easy to dig our way out of this.


QUEST: Professor Rogoff speaking to me earlier.

More than 100 years ago, New Zealand's sea lions disappeared from the coast. I've got a treat for you, they are slowly returning. Unfortunately,

is a much more crowded world.

Look at that, big yawn. I know how he feels. We will meet the people responsible for keeping these pups safe, as they yawn their way to sleep.





QUEST: Be prepared for lots of oohing and ahhing, as we bring you the good sort of news. And you see, of course, the sea lions, endangered sea lions,

are making a comeback on New Zealand's south island after an absence of more than a century.

Now they are turning up in unexpected places, like golf courses, swimming pools, even in your back yard. On today's "Call to Earth," we will show you

how humans are trying to live in harmony with these playful animals.


ANNA COREN, CNN ANCHOR AND CORRESPONDENT (voice-over): As a volunteer with New Zealand Sea Lion Trust, Hannah Yeardley is monitoring the sea lions

where she lives, near the Otago peninsula on the country's south island.

HANNAH YEARDLEY, VOLUNTEER, NEW ZEALAND SEA LION TRUST (voice-over): It was kind like babysitting, especially when they are pregnant or they have

pups. You kind of make sure that someone's at least saving them or checking up on them during the day.

There he is, having a little stretch.

COREN (voice-over): These pups are part of a new generation of sea lions that have returned to this coast after a long absence. Driven off the

mainland over a century ago by hunting, New Zealand's sea lions survived on sub-Antarctic islands, until one day in 1993.

JIM FYRE, NEW ZEALAND DEPARTMENT OF CONSERVATION: A female from the Auckland Islands had a pup here on the mainland. And she proceeded to have

11 pups. So essentially, this one female was responsible for bringing back a population of sea lions to Otago.

COREN (voice-over): That pivotal sea lion was named Mum. She left behind a dynasty of sea lions that continue to thrive on these coasts today. But

they don't just stick to these coastlines.

FYRE: They really push inland as far as they can and that usually puts them up against a road.

You take here around those roads and so, actually, one of the biggest threats are some of those motor transport.

COREN (voice-over): The sea lions have returned to a very different coastline to the one they left over 100 years ago, one with crowded

beaches. Keeping them safe is the job of biodiversity ranger, Jim Fyre.

FYRE: Humans love to go to the beach at summer. Sea lions like to breed on the beaches at summer.

The young sea lions are really curious and playful. They know that the surf is so they are having fun as well, so they want to join in there. You know,

they are social animals.

Our advice is that you just don't interact with them, just ignore them and get on with what you are doing.


COREN (voice-over): Despite their recovery here, New Zealand sea lions are one of the world's rarest sea lion species, facing threats from disease and

accidental capture in local fisheries. That makes protecting these burgeoning population even more important. And that is where local

residents come in.

FYRE (voice-over): Communities usually, once they start to learn about them, take a real interest in and are really protective of the sea lions

that are breeding in their communities.

(INAUDIBLE) there, come on.

People are just surprised to find these animals in their back yard.


COREN (voice-over): This year, 21 sea lion pups were born on the Otago Peninsula process (ph). It's the highest number since they returned to

these shores and will keep sea lion babysitters like Yeardley busy for years to come.

YEARDLEY (voice-over): It's very cool because you are going to get to see these new faces again. Once you get to know them, sea lions do have

personalities. It's just seeing them, enjoying them, while respecting their space, of course.

That's something I enjoy the most.


QUEST: If you got through that and you didn't do an ahh at least once, there's something wrong with you.

Well now, let us know what you are doing to answer the call. The hashtag -- usual one, you should know it by now, #CallToEarth.




QUEST: China now says it will strictly limit its residents from traveling abroad. It's a new step linked to its zero COVID policy. The majority

advises against foreign travel, movements also restricted, of course, within China, which is a further blow to airlines operating in Asia.

The Star Alliance turns 25 years old this Saturday. Star was the first global airline alliance. It launched in 1997. There were five members.

Quick test, which ones were they?

We will talk about them in a moment. This is the current list of Star and affiliated members that currently exist. It's the world largest. There are

26 members and I'm guessing you've flown one or two of them.

Its networks serve nearly every country with over 1,300 airports. Quick sort of note, I suppose for transparency, I have the highest membership

with Star because I fly Star carriers. So I am a member of Star Alliance.

Chief executive Jeffrey Goh is with me from Frankfurt.

Jeffrey, good to have you, sir. First of all, we do talk about Asia and, I mean, it's the last area where there has not been a reopening, a sizeable

reopening. And yet, your Star members, Thai, Singapore and the like, are slowly but surely coming back together.

JEFFREY GOH, CEO, STAR ALLIANCE: Yes, Richard. Thank you for having me again, good to see you. Absolutely, I think there has been a lot of

comments about Asia lagging behind the global recovery in their travel. But I think if we apply some forensic tests --


GOH: -- you know, many countries in Asia, Asia Pacific, are actually opening up and have opened: Australia, New Zealand, Singapore, Thailand,

even Vietnam and Cambodia.

Yes, of course, the attention is always on China and perhaps Japan and this large swath of the travel universe. But we have two members based in China,

Air China and Shenzhen Airlines and a connecting partner of Juneyao Airlines in Shanghai, where just as anxious as they are to get going again

in having China open up. And so, you know, contribute to better connectivity around the world.

QUEST: The alliance itself, I guess you've answered this a million times in different guises.

But what role do you see the alliance as having in the future?

The JVs, with particularly transatlantic and transflight JVs of airline groups have become so much more relevant and important, that the -- one

asks, what purpose the alliances will serve in the future?

GOH: Well, as you mentioned in your introduction, Richard, we are going to celebrate 25 years and that is a long way to have come from 1997. And in

many respects, we've gone from strength to strength.

But of course, along our journey, you know, we've had our detractors. But I think, with 25 years under our belt, we've been able to demonstrate the

value that we bring to the members.

But I think equally, through innovations and the seamless conveniences that we've been able to deliver to customers, particularly now with the digital

era, I think that global airline alliances have a unique proposition and place in addressing the intersections of a multi airline itinerary.

And as we navigate ourselves out of this COVID crisis, the biggest the industry has ever faced, there will be more partnerships and the

intersections that they create. And I think airline alliances have a great value proposition there as well as a lot of other synergy opportunities.

Whether this is, particularly now, as we are talking about sustainability, the opportunities to not only learn but also to jointly engage in

activities that will aspire toward our, you know, net zero carbon emissions.

QUEST: OK, but what do you think is the biggest improvement or change that you would like to see?

Yes, we've got recognition. You've got earn and burn on different airlines, although I have to say that, that is still a very complicated business,

where it is not exactly pari-passu. I get all of that.

But is there a big, new thing that you think Star Alliance should do for members and for passengers?

GOH: Well, there are many big, new things that we can deliver. But of course, we have to approach these in a calibrated manner. And I can say

that, in the course of the next few months, in our 25th anniversary year, there will be some major announcements that we will be making in terms of

new products, alliance first products, for example.

But I think one important topic for the industry as well as the alliance is obviously sustainability. And I think, you know, it is not just the

responsibility of airlines, the stakeholders and the air ecosystem all have a role to play.

And I think that is one big thing, one big sort of mindset we've got to address. You know, from government incentives to refineries and producers

of SAF, sustainable aviation fuels, to the aircraft manufacturers.

All of us have a role to play in airports to make sure that we deliver on our promise and our license to be able continue to fly.

QUEST: Do you foresee, are you comfortable now with the geographical spread?

I mean, you've got everything, yes.

But would you look to try and entice another airline to join?

GOH: Well, you know, Richard, we have been through two years of the deepest crisis for the industry. And, you know, what I would describe as

we're coming back, just about coming back from the wild, wild west.

And I think there is a lot that needs to be settled in the industry, particularly as airlines restructure their network, they reconfigure their

fleet. It's too early at the moment for us to say that we will bring in an airline for that matter.

But we are not closed for business. We will look for, you know, unique propositions and we will look for significant value add, as we consider on

a case by case basis.

QUEST: Good to see you, Jeffrey. I suspect we will talk again, since we will both be in Doha next month at the IATA conference. I am looking

forward to that. Thank you sir, I appreciate it.

I want to show you the markets and how they are trading on Wall Street --


QUEST: -- as we come to the -- it's ugly. It is ugly. We've pulled up a bit on the Dow, still heavily off. The Nasdaq and the S&P 500 are also

sharply lower. But those two have come back from the low points of where they were.

And it's pretty done. In fact, what we are looking at is essentially a bear market in the Nasdaq and correction heading on bear markets for the S&P

500. And indeed, tomorrow night on QUEST MEANS BUSINESS, that's what we will be looking at.

We are going to be talking about how you do actually negotiate your investment strategy in a bear market. Living with the bear is what we will

be talking about. We have some interesting thoughts from Ray Dalio, for example, about these undercurrents.

Because what you heard tonight from Ken Rogoff is this is going to last. This is not going to go away quickly. We are going to be in this

environment probably for maybe three, maybe five years, in some shape or form.

So tomorrow night on this program, we will be living with the bear. I will take a "Profitable Moment," such as it is, after the break.




QUEST: Tonight's "Profitable Moment": so the airline alliances, the big three, Star, Oneworld and SkyTeam each have their strengths and weaknesses

and, at any given time, one has been up while the other is down. One has been more popular -- for example, Star has the most members, Oneworld

probably has, it used to be said, the best airlines. SkyTeam had a great range, you get the idea.

But you have to ask what purpose do they serve?

Yes, you can earn and burn miles across the alliance. But there is no equality, in terms of how many miles you will earn if you are a Star member

versus your home carrier. The metal you fly is relevant.

And then you've got the question of the lounges, where, if you are in Frankfurt, the Lufthansa lounges are very busy. But then if you are in

Paris, it's the same for Air France and SkyTeam. And if you are in London, then the BA lounge is likewise.

Finally, do they still have a purpose, other than to allow you to earn miles?

The JVs, the joint ventures across the Atlantic and the Pacific have taken away much of the benefit of the alliances. I think in the industry, most

people say, yes, they have a role. But in the future, they're still working out exactly what that role should and will be.

And that's QUEST MEANS BUSINESS tonight, I'm Richard Quest in New York. Whatever you're up to in the hours ahead, the closing bell is ringing.