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Quest Means Business

S&P 500 Falls Further Into Bear Market; U.K. Fish And Chips Merchants Battle Rising Commodity Costs; Biden To Visit Saudi Arabia After Vowing To Make Kingdom Pariah; Coinbase Lays Off 18 Percent Of Workforce As Cryptos Plunge; K-Pop's BTS Announce Hiatus; Dash To The Bell. Aired 3-4p ET

Aired June 14, 2022 - 15:00   ET



ALISON KOSIK, CNN BUSINESS HOST: After yesterday's bear market close, a mixed day for stock.

Investors all waiting, of course for that key meeting tomorrow from the Federal Reserve.

Those are the markets and these are the main events: Will the Fed take drastic measures? Investors on edge to see how far the Central Bank will go

to combat inflation.

President Biden plans to visit Saudi Arabia, a reversal of his campaign pledge to make the kingdom a pariah.

And K-pop band BTS announcing they will take a break to pursue solo projects.

Live from the New York Stock Exchange, it is Tuesday, June 14th. I'm Alison Kosik. I'm in for Richard Quest, and this is QUEST MEANS BUSINESS.

Good evening.

Tonight, the S&P 500 is falling further into a bear market. It is down about three quarters of a percent as investors prepare for tomorrow's

interest rate decision from the U.S. Federal Reserve.

The Dow was about 250 points lower. It has been going from gains to losses all day. The NASDAQ, that just turned negative as well. Markets are

increasingly anxious about rising inflation after a key indicator showed prices remained uncomfortably high.

The Producer Price Index, which measures wholesale prices was up more than 10 percent in in May year-over-year.

President Biden said earlier he knows inflation is hurting working families even as he highlighted strong jobs numbers. Speaking earlier to a crowd of

union supporters, Mr. Biden blamed the opposition in Congress for lack of action and said his administration is not done trying to solve the issue.


JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: The problem is Republicans in Congress are doing everything they can to stop my plans to bring down

costs on ordinary families.

That's why my plan is not finished, and why the results aren't finished either. Jobs are back, but prices are still too high. COVID is down, but

gas prices are up.

Our work isn't done.


KOSIK: And CNN is Rahel Solomon is with us. Now, Rahel, great to see you. You know, at this point, the way stocks are going, they've lost all the

gains they made since President Biden was sworn in.

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Hi, Alison, good to be with you. Yes, as one CFA - Certified Financial Analyst told me this morning,

there is still more to go, which is sort of a painful thought, but there looks like we have not hit a bottom.

So let's talk about sort of some of the sentiment weighing on investors that haven't really improved. And you can understand why there is a feeling

that there is more to go, right, you still, of course have the war in Ukraine and its impact on commodity markets. You still of course, have

inflation, which after last Friday's report, and even today's PPI report, Producer Price Index report, showing no signs of inflation slowing, in fact

showing a sign of that inflation may be accelerating. So you have that sort of hovering.

And now you have the Fed clearly becoming more aggressive as it tries to fight inflation. We're hearing now that 75 basis points may be on the table

for tomorrow after last meeting about six weeks ago, we heard from Jay Powell that they weren't actively considering more than a half a percent.

So we know the Fed is likely going to have to be more aggressive and raise rates a bit faster than expected and that is creating some unease and some

tension in the markets as well.

KOSIK: So there is this strong possibility that the Fed will go ahead and raise rates, tomorrow's rate by 75 basis points, three-quarters of a

percent. What about the number of rates? What do you expect to see there? And how do you expect the market to react? If Jay Powell goes ahead and

goes for 75 basis points, something he said was off the table in May?

SOLOMON: Well, I mean, I think in terms of how many rates I think the Fed, and Jay Powell will have said all along that they will be data dependent,

right? So I think how this all plays out will sort of depend on how inflation shapes up in the months to come, perhaps even longer.

But we do now, even according to the Feds own projections, they see elevation in inflation remaining elevated until about 2024. So, I think

we're going to be on this path for quite some time in terms of how many rate hikes we see. I think that will really be data dependent, as Jay

Powell will have said.

In terms of, you know, what else we might see tomorrow? I think, look, it is unclear at this point, what it would take to make the markets happy. You

know, I mean, there are some and I talked to investment advisors and portfolio managers quite a bit, but there are some who feel like look at

this point you've got to come in strong, you've got to raise rates and just sort of, you know take the medicine now as it is explained.


And there are others however who feel like the Fed may be overshooting, it may be doing too much, it may crush demand, and so there are two camps out

there, hard to say you know what the markets want to see tomorrow, Alison, there is so much noise in the markets.

KOSIK: And we will all be watching it very closely. Rahel Solomon, thanks so much.

Most investors are now expecting the Fed will raise interest rates, 75 basis points on Wednesday. Several banks including Goldman Sachs, JPMorgan

and Barclays updated their predictions, after reports that higher inflation is forcing the Fed to move faster.

Former New York Fed President Bill Dudley spoke to Julia Chatterley earlier, he said he thinks the Fed did not want to fall further behind on

inflation. Listen.


WILLIAM DUDLEY, FORMER NEW YORK FEDERAL RESERVE PRESIDENT: I think this was choreographed by the Federal Reserve. I think they wanted to make sure

that they were not falling further behind the curve, and so they had some conversations with some key journalists, and it is priced in now. So

definitely, we are going to see 75 basis points at this meeting.

JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: It's called Fed whispering. There was some whispering in the ears of people just to prepare

everybody, they don't want to have surprises. Now, there's no surprise because everyone is predicting it.

DUDLEY: Yes, the big surprise would be now if it went back to 50 basis points.

CHATTERLEY: Right. What about July?

DUDLEY: July, I think, it's still up in the air. But you're absolutely right, if you do 75 in June, 75 in July has to be on the table, and I think

the reason why they're moving faster is two things.

One, the inflation data is worse, stay higher for longer. In June, we saw some figures on inflation expectations that were not as benign as the ones

we've seen earlier. So, I think the Fed was worried about their credibility.

So I think the 75 basis points is really about ensuring that the Fed has credibility as an inflation fighter, so then inflation expectations don't

get further unlinked.

CHATTERLEY: Do you think they have it now under control?

DUDLEY: Feels a bit like a lurch to me, but at the end of the day, I think they do need to show a tighter monetary policy passed, and I think what's

going to be very interesting in the meeting is what they show in terms of their economic projections.

The economic projections they've had for both the last two times, December and March were sort of "Alice in Wonderland." Inflation just magically

melted away, even though monetary policy wasn't made very tight, and the unemployment rate didn't rise. So, I think we're going to have to show a

much more credible forecast.


KOSIK: Gillian Tett is the Chair of Editorial Board and editor-at-large at "The Financial Times," and she joins us now. Great to have you with us



KOSIK: So we are less than 24 hours away from this rate hike decision. I can just feel the tension here at the New York Stock Exchange. What do you

think the Fed should do? Should it go ahead and raise three quarters of a percentage point, something that Jay Powell said was off the table? What do

you think is going to happen tomorrow?

TETT: Well, it shouldn't be starting from the position it's in right now because it was a big mistake not to start earlier, but certainly the

position of the Fed in the last couple of weeks has changed quite significantly in terms of its signaling. You know, really, just a couple of

months ago, Fed officials were signaling that they expected to have 250 basis point hikes, and then to pause and see how things were going.

Now, there's a real sense of scrambling, the catch-up mode, and the markets, as you've heard have priced in already 75 basis points tomorrow.

But it is worth stressing that there's an awful lot of uncertainty and fog around what the Fed is trying to do, because most of its models about how

the economy is supposed to work are essentially colliding with the fact that there are huge dislocations in the economy right now around supply

chains, as a result of the COVID lockdown, and then the opening up, as a result of the Russian invasion of Ukraine and it is very hard to actually

work out exactly how the economy will respond to interest rate hikes.

It's a bit like someone tried to fly a plane through a storm when the radar stopped working, or was only partly working, and you're kind of remaking

and rebuilding the plane you go along. And that's sort of the position the Fed is in right now.

So the idea that they are able to give very much certainty going forward, as you've just heard from the interview with Bill Dudley, it's going to be

very hard because they've tried to make projections about where we're going, and they just don't know, and nor do the rest of us.

KOSIK: Yes, and besides not knowing, it winds up being a real delicate dance for the Fed. Do you think that it should slam on the brakes to

control inflation and the risk of recession or do you just tap on the brakes and risk of recession lasting much longer? What is the better move?

TETT: Well, it is unlikely that 75 basis points in itself is going to trigger a recession, although of course, the last time this happened was

back in 1994, and that ended pretty badly. And in many ways, a bigger risk right now is that markets may not have positioned themselves for it because

you have an entire generation of investors and traders who have never seen sharply rising rates in their careers or inflation.


And they basically constructed portfolios in the last 10 years on the presumption that rates would look remain low forever and we wouldn't ever

see inflation coming back. And so one of the big open questions in people's minds is just how much have markets repositioned themselves for potentially

significantly higher rates going forward? Or are we going to see a replay of what happened in 1994, which was people being caught very short, all

kinds of derivative contracts, suddenly being triggered, et cetera et cetera.

Now, the Fed knows its history, and it's done its absolute best to signal as fast -- as far as it can, where we are going to give people time to


But in many ways, that's one of the more immediate questions aside from the question of what it actually does to the real economy.

KOSIK: Do you think that the Fed will get this right? Will it succeed in getting control of inflation through interest rate hikes? Is it even


TETT: Well, the ghastly thing for the Fed is that the tools at its disposal only deal with part of the problem. So you know, what's happening

inside warehouses with supply chains, what's happening in the roots of the labor market, what's happening with international energy prices, because of

the invasion of Ukraine, what's happening to food prices, all of that is kind of out of its control, and only some of that can be altered by trying

to suppress demand, which is a classic, you know, tool that the Fed uses.

The supply side reforms that are needed, the supply side problems are kind of out of its control. And on top of that, you have this very important

political dimension. I mean, I've just come from a debate at the Council on Foreign Relations about the psychology of inflation and the way that

consumers are very, very distorted in how they perceive it, and they tend to gravitate on to whatever number they see directly in front of their

eyes, and extrapolate that to everything else.

So right now, you have this really dangerous, pernicious psychology where people are seeing the $5.00 to $6.00 a gallon gas prices at the forecourt

and they're going, wow, that's dramatically twice it was couple of years ago, so everything I'm buying must be twice as high.

So the psychology is absolutely not in the Fed's corner right now at all, in terms of the way it has tried to calm and manage the situation. And of

course, nor are the politics because the more we see these bright obvious signals of inflation flashing in front of voters' eyes, the more we're

going to see the kind of political backlash and the pressure on the White House.

KOSIK: All right, Gillian Tett the Chair of the Editorial Board and editor-at-large at "The Financial Times." Thanks for being with us.

TETT: Thank you.

KOSIK: The war in Ukraine is contributing to the U.K.'s highest inflation since the 80s, the price of staples is surging. It's even putting the

national dish at risk.

Anna Stewart reports.


ANNA STEWART, CNN REPORTER (voice over) People flock to the seaside town of Whitstable for this, a peaceful day out on these pebbly shores. It feels

far removed from the war in Ukraine, but its impact is still reaching the U.K. shores and Britain's unofficial national dish.

STEWART (on camera): This is delicious. You actually just can't beat eating fish and chips right by the seaside. Now, this traditionally was

considered quite a cheap meal, but everything you see here is shooting up in price from the white fish and the batter used to cook it, the potatoes

and the cooking oil, the mushy peas even the packaging.

(voice over): Since last year, vegetable oil is nearly 50 percent, more expensive globally, wheat prices are up even more. And the price of

fertilizers made in the U.K. are up nearly 180 percent, which pushes up the cost of vegetables like potatoes, all key ingredients for fish and chips,

and all of that largely a result of the war in Ukraine, one of the world's biggest producers of food commodities.

(on camera): Thank you very much.

(voice over): VC Jones is a family-run business.

(on camera): So how long has this been in your family?


STEWART: Sixty years.


STEWART (voice over): The last two years have seen it battered by these rising costs.

UNIDENTIFIED MALE: See the horror going on in Ukraine. Brexit had an impacts. Prices of fish, everything has gone through the roof.

STEWART (on camera): So much of the white fish that you get in fish and chip shops is actually caught in Russian waters and that's got more

expensive as a result of tariffs.

UNIDENTIFIED MALE: Seeing the price of cod increase week on week to 60 percent so far, it's directly linked to the sanctions.

STEWART: your profit margins must be really squeezed.

UNIDENTIFIED MALE: The profit margins are literally evaporating.

STEWART (voice over): Down at the harbor, local fishermen are bringing up shellfish, their main catch for this seaside town.

CHRIS ATTENBOROUGH, FISHERMAN: Oil prices affects us all, for us, the fuel. My diesel bill has doubled. It is only a little boat, at the end of

the day, but you know, it is a big cost.


STEWART (voice over): For these fishermen and the U.K.'s chippies, the problem doesn't stop there. Not only have prices gone up, but customers

have less money to spend.

UNIDENTIFIED MALE: Energy bills have gone up, petrol has gone up as well. Yes, I definitely will be more conscious, I think, when I go out.

UNIDENTIFIED MALE: I think you definitely twice before we decide to go out.

UNIDENTIFIED MALE: It's a bit off, I'm looking for the cheapest place to have my food because I used to go in the restaurant, but don't really go

there now, it is horrible. The price is nearly double.

STEWART (voice over): For now, fish and chips still appears to be in hot demand here, but as the cost of living continues to bite, tucking into this

traditional seaside dish may become less palatable.

Anna Stewart, CNN, Whitstable, U.K.


KOSIK: Up next, Coinbase warns of a crypto winter as it lays off workers, the latest on the crypto crash.

And U.S. President Joe Biden will visit with Saudi Arabia's Crown Prince next month, a figure he swore his administration would shun. More on the

foreign policy trade off, next.


KOSIK: Welcome back. I'm Alison Kosik.

Oil prices may finally be falling victim to recession fears, down just over two percent in the last couple of hours. Crude has mostly climbed higher in

recent weeks, though, with traders betting that tight supplies will continue into the foreseeable future.

Sanctions on Russian energy means less oil on the markets and other OPEC producers are struggling to meet their own production quotas.

U.S. President Joe Biden is headed to Saudi Arabia next month, saying the oil rich nation is an important partner as U.S. gasoline prices hit record

highs. The visit signals a sharp reversal from his campaign promise to make the kingdom a pariah following the killing of journalist, Jamal Khashoggi.

Mr. Biden is expected to meet with Crown Prince Mohammed bin Salman, a figure he wants promised to shun.

This is what candidate Joe Biden said while running for office in 2019.


JOE BIDEN (D), THEN CANDIDATE FOR PRESIDENT OF THE UNITED STATES: I said at the time, Khashoggi was in fact, murdered and dismembered and I believe

in the order of the Crown Prince and I would make it very clear, we were not going to in fact sell more weapons to them. We were going to in fact

make them pay the price and make them in fact the pariah that they are.

There is very little social redeeming value in the present government in Saudi Arabia.



KOSIK: And Nic Robertson joins us live now. Nic, good to see you.

So, you know, Biden had previously called the kingdom a pariah for its role in Mr. Khashoggi's death in 2018. How is the administration -- the Biden

administration balancing its need to kind of roll back what it said or is it even doing that and trying to actually do business in Saudi Arabia?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Well, we don't know what's going on -- all the details of what's going on behind the scenes.

The administration is saying this is not all about energy. This is, you know, energy stability and security, that there are other concerns that

there will be other nations there when they go to Jeddah in Saudi Arabia in the middle of July, Kuwait will be there, UAE will be there. Bahrain,

Qatar, the Jordanians, some other nations as well.

So, it is being framed as not all about Khashoggi and not all about MBS and not all about Saudi Arabia's human rights record, despite the fact that

President Biden has put so much stock in holding Saudi Arabia to account on those.

The reality is a lot has changed since President Biden came to office. The Saudis were -- listened to that campaign rhetoric, and they knew that there

was going to be a period where there would be a tough time with the Biden administration, they didn't expect it to get this tough. They didn't expect

it to last this long.

They have been working behind the scenes to try to get back on track with United States. And this does seem to recognize the fact that they are

coming together, but again, we don't know the concessions that are being made behind the scenes, but Saudi Arabia is a swing oil producer, it has

wanted to see high oil prices, because it knows it needs -- the higher the oil prices, the better. It can fund its own budgets at home, which are

hugely ambitious for some of the big infrastructure projects that it is considering.

You know, now they're contemplating it would seem potentially increasing oil production, as you were just saying there, a potential downturn in the

call from markets for oil because of a potential recession. So they will be balancing all these things as well.

But perhaps the biggest thing that that the Saudis are looking for, and this will be from the Crown Prince, is this face to face meeting with

President Biden, that's important for him. It's important for his stature, it is important for him as he sets himself up, you know, as the future

ruler of the most powerful Gulf nation for decades to come. That's significant.

KOSIK: Okay, Nic, I want you to stay with me and I want to bring in our chief White House correspondent Kaitlan Collins. Kaitlan, what more are you

learning about President Biden's trip to Saudi Arabia next month?

KAITLAN COLLINS, CNN CHIEF WHITE HOUSE CORRESPONDENT: It seems clear why the President is going. You saw the speech he delivered this morning,

talking about how high gas prices are in the United States now that the average has gone over $5.00 a gallon on average across the United States.

That's a big issue for this White House. Of course, it is consuming President Biden's political agenda. It is threatening his party's control

of Congress on Capitol Hill in the upcoming midterm elections. And so the White House says this visit is about more than just oil, it is about

national security interest.

But clearly oil is a big underlying reason why President Biden is going to be visiting there next month and the reason that this is causing so many

questions for the White House is not because it's not unusual for a U.S. President to have this complicated relationship with Saudi Arabia.

Many before President Biden have had this, many likely will afterward, but President Biden was the one who on the campaign trail vowed repeatedly to

make Saudi Arabia this pariah state. He said that they were obviously culpable in the murder of the journalist, Jamal Khashoggi. He talked about

the fact that people like former President Trump should not be giving the Crown Prince the benefit of the doubt, as we saw former President Trump do

so many times and the White House has pushed back saying that they have been tough on Saudi Arabia.

They released the underlying intelligence report that said the Crown Prince had approved the murder of Khashoggi, but they did not directly penalize

him at the time. They went after some lower level officials, but not the Crown Prince himself, even though the Intelligence report had concluded he

himself had authorized the reporter's murder.

And so that is why it is raising so many questions for the White House, but they are saying they are trying to basically balance national security

interest with this trip, but also with moral values that President Biden has put at the forefront of his campaign promises.

KOSIK: And Nic, over to you one more question for you, Secretary of State Antony Blinken told CNN and Espanol on Wednesday, that the U.S. would

continue to, quote, "Make sure that human rights is fully reflected in our foreign policy." How is that really carried out knowing that the Biden

administration is going back on its own word?


ROBERTSON: I think it has carried out more quietly behind the scenes, and if you look at what's happened in Saudi Arabia over the past, let's say six

months, eight months, perhaps a little bit longer, some of the female activists had been arrested and jailed, had been released from jail. Okay,

they're not free to leave the country, but they're out of jail.

Some other rights activists that have been jailed have been released. It's not all by any stretch of the imagination. And indeed, just a couple of

months ago, the Saudi leadership executed several dozen prisoners, they still have capital punishment in Saudi Arabia.

So I think, you know, there is -- there are behind the scenes efforts to try to persuade this out, you know, not to come down to in such a heavy

handed way on, you know, on human rights activists, on political activists, on opponents of the leadership in Saudi Arabia.

It does seem to have a little and small effect. The Saudis don't like to be told this. They certainly don't want to hear about it publicly, but we do

see the result publicly a little bit. So, you know, I think you can look at that part of the relationship and see that things do happen behind the


KOSIK: My thanks to Kaitlan Collins and Nic Robertson, thanks very much.

Russia called on Ukraine's fighters in Severodonetsk to lay down their arms and surrender. The city is at the heart of Ukraine's battle to keep its

foothold in the Donbas region.

On Monday, Russia seized control of the city's center.

Kyiv says three key bridges into the city are now impassable. Supplies cannot get in and civilians cannot get out. President Zelenskyy called the

fight for the Donbas one of the most brutal battles in Europe. He reiterated his plea for more weapons.

As Russian troops advance, ordinary Ukrainians are left with an agonizing choice to abandon their homes and try and find safety or stay where they

are in harm's way.


BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): The City of Slovyansk may be half empty, but the Church of the Holy Spirit is almost

full. The city is perilously close to the frontlines, but with faith and stubbornness, the few stay put, while others have come back.

Luba (ph) and her family left shortly after the outbreak of war, staying with relatives in Western Ukraine. She returned a month ago. For now home

sweet home is a dark, damp basement shared with other building residents.

Having lived through the fighting here in 2014, she left because she didn't want to go through it all over again.

(LUBA speaking in foreign language.)

WEDEMAN (voice over): "I was scared for my son and my grandson," she says. "Yet hospitality had its limits, and homesickness took a toll."

"We felt our relatives were sick of us," she says. "They have their own lives. You can put up with your relatives for a while, but we decided it

was time to go back."

The basement is far from comfortable, but it's better than upstairs when the bombs and missiles fall at night. Her 14-year-old grandson, Bogdan (ph)

prefers it here.

(BOGDAN speaking in foreign language.)

WEDEMAN (voice over): "Even if you can go to a safer place elsewhere," he says, "It's better to be at home even if you have to sleep in the


(on camera): The longer this war goes on, the cooler the welcome becomes for those who have fled to safer ground and as dangerous as it may be here,

there is no place like home.

(voice over): With no cooking gas to be had, the kitchen has moved to the yard. The city water supply was knocked out, it now must be pumped by hand.

Gone are the comforts and conveniences of modern life, but at least, it is home.

Ben Wedeman CNN, Slovyansk, Eastern Ukraine.


KOSIK: Bye-bye BTS. The massively famous K-pop members say they're taking an indefinite hiatus.

After the break, we will look at what's next for the boy band and their billion dollar empire.




KOSIK: Here on Wall Street trading has been choppy today after stocks plunged into a bear market Monday. The Dow now trading lower as investors

await Wednesday's Federal Reserve decision.

It's down over 1 percent, talking about the Dow. So, too, is S&P 500. It's dropping deeper into bear market territory. The Nasdaq sitting about flat.

Looking at crypto, the cryptocurrency plunge continues, as investors turn their backs on riskier assets. Bitcoin is below $23,000 after sliding 15

percent on Monday. It was its biggest drop since March of 2020.

Bitcoin has now lost over 20 percent of its value since Friday. The world's biggest crypto exchange warning of a crypto winter as it lays off nearly a

fifth of its workers. Talking about Coinbase, it's preparing for the worst.

It's anticipated an extended bear market for crypto. I want to bring in Paul La Monica to get some analysis on what's going on with crypto.

It seems like the crypto market is cratering in all areas.

What's going on?

PAUL LA MONICA, CNNMONEY DIGITAL CORRESPONDENT: Yes, Alison. I think that investors have learned the hard way that bitcoin and other cryptocurrencies

are not the safe haven, digital gold type of asset they were hoping it would be.

In times of turmoil, it appears investors are fleeing crypto in the same way that they are rushing for the exits in tech stocks and other

speculative growth things right now.

Unfortunately, for Coinbase employees, this is leading to about 1,000 workers that are probably going to lose their jobs, 18 percent of the

workforce. The CEO, Brian Armstrong, in addition to labeling it a crypto winter, admitted that they probably overly hired. They ramped up their

hiring too much to meet demand that just obviously isn't there right now.


KOSIK: So is this a new trading range for bitcoin specifically that we are seeing?

It had been hovering at that 30,000 level. And now it's gone below.

Is this the new bitcoin trade?

Or can it go even lower?

LA MONICA: Anything is possible. Obviously, it could go lower, Alison. I think right now, people are looking at whether or not it can hold 21,000,

perhaps 20,000. If it goes below that, I think that will send more alarm bells throughout the crypto investing landscape. People will be very

worried about what support levels could be next.

Obviously, Coinbase is not just a company where you can buy and sell bitcoin. Ethereum and other cryptos have become increasingly popular on the

platform as well.

But guess what?

They are plunging also. In some cases, they've lost even more value than bitcoin.

KOSIK: Crypto enthusiasts, they are going after those on Twitter, who are saying this is the end for crypto. We've got all this swirling talk.

Is this the beginning of the end for crypto or is that too fatalist to say?

LA MONICA: That probably is a little too fatalist. I think it's important to note that cryptocurrencies is a very -- they are a new asset class. With

that comes volatility. We have been through this before, in some respects.

You've had cryptocurrencies plunge from their highs, only to come roaring back. I think what might be different this time around is that, when

cryptocurrencies plunge and then eventually rebounded, you have a lot of institutional investors that had yet to dip their toes into


They validated the market by getting in. We are now at a point where, I think, most of the Wall Street firms that want to dabble in crypto have

already made such announcements. So I'm not sure what the next catalyst will be for bitcoin.

KOSIK: Big sigh for those investors. Paul La Monica, thank you so much for all that great analysis.

BTS broke the internet in some parts today. The Korean pop group announcing an indefinite hiatus. BTS not only put K-Pop music on the map, they

completely overtook global charts.

The group is the world's top selling act across all genres for two years in a row. And now, BTS' seven members say they will explore solo careers. They

shared the news and their apologies to fans in a YouTube video.


RM, BTS MEMBER (through translator): Right now, we have lost our direction. I just want to take some time to think and then return. But that

just feels rude to our fans and like I am letting down their expectations.


KOSIK: In the last decade, BTS built a multinational empire and transformed the way musicians do business. The group's label boldly IPO'd

in 2020 and the listing became South Korea's biggest in over three years, elevating all seven members to multimillionaire status.

BTS aren't just a band; they are a brand, one so successful that BTS adds an estimated $5 billion to South Korea's economy each year. We want to

bring in our entertainment reporter, Chloe Melas. She joins us now.

I mean, I can see it. Everybody is taking out their handkerchiefs at this news -- I want to get your opinion on this. I know you have interviewed

these guys.

Are they making a mistake going solo and trying to go out on their own and reinvent themselves?

CHLOE MELAS, CNN CORRESPONDENT: That's a really hard question to answer. You have seen so many successful bands, from the Spice Girls, The Beatles,

Destiny's Child, where you see the leads deciding to break off.

*NSYNC and become major stars. Harry Styles with One Direction, Beyonce. You had members of the Spice Girls who had solo careers, Justin Timberlake

with *NSYNC. The list goes on and on. John Lennon. It's hard to say.

You could see several members of BTS getting emotional and kind of crying during the announcement. Perhaps some of them are excited about this;

others maybe not so much.


MELAS (voice-over): They have been working like a machine for years. They said that they need a moment, right?

It's been a lot of work. When I interviewed them, they even alluded to that it is a lot. The K-Pop machine that's bringing in so much revenue for South

Korea, really putting South Korea on the map and in the music industry, and let's talk about their incredible fan base, the BTS army, which is so


And really, I believe, so important to the success of this K-Pop group. Really, BTS was at the forefront of Korean pop music.


This comes as a shock to some people. Some people say the writing was on the wall. All along they knew they were going to press pause. I did speak

to the band's representatives, who said to me today this is not a hiatus. That's what they said.

So it's more of a pause for them to explore other opportunities. But call it what you will, they are taking a break, right?

Will we see them get back together again?

The band says yes, that we will.

But isn't that what One Direction said?

And I don't know about you but I don't think we have seen them get back together yet.

KOSIK: You know this group very. Well I'll ask you this, who do you think is going to be the most successful solo -- we've got about 40 seconds?

MELAS: Oh, my gosh. That's a hard question to answer. I don't want the BTS army to come after me. I think J-Hope is somebody who has a very big career

ahead of him. But everybody who is a fan of this group has their favorite.

So I think they are all equally talented. I will give you the PC answer, which is that maybe they all could have solo careers. Who knows?

KOSIK: Love your answer. Thanks so much.

And that's QUEST MEANS BUSINESS. I'm Alison Kosik. I'll be back at the top of the hour, as we make a dash for the closing bell. Up next, "AFRICA







KOSIK: Hello, I'm Alison Kosik, it's the dash to the closing bell here at the New York stock exchange. We are two minutes away. U.S. stocks

recovering some losses in late trading and set to close flattish after plunging into a bear market Monday.

Investors are holding fire ahead of Wednesday's Federal Reserve interest rate decision. The Dow is well off the lows of today, down 150 points. The

S&P 500 is lower as well. Nasdaq is trying to hold on to a slight gain in the final minutes of the trading day.

Investors are anxiously awaiting the Fed's are decision, with some now predicting a three quarter point hike. Earlier we heard from Gillian Tett,

the chair of the "Financial Times" editorial board. She liking the Fed's current predicament to flying a plane with no instruments.


GILLIAN TETT, CHAIR, "FINANCIAL TIMES" EDITORIAL BOARD: It was a big mistake not to start earlier. But certainly, the position of the Fed in the

last couple of weeks has changed quite significantly in terms of its signaling.

Just a couple months ago, the Fed officials were signaling they expected to have two (INAUDIBLE) point hikes and then to pause and see how things were

going. Now there is a real sense of scrambling, in catch-up mode.

And the markets, as you have heard, have priced in already 75 basis points tomorrow.


KOSIK: There you have it, that's the closing bell.