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Quest Means Business
Euro Falls To Near Parity With U.S. Dollar; Twitter Shares Drop After Musk Says Takeover Is Off; Sri Lanka Rocked By Protests Amid Economic Collapse; Global Inflation Sparks Political And Economic Unrest; Soaring Prices Dampen Eid al-Adha For Muslims In Turkey; Russian Blockade Drives Food Crisis In North Africa. Aired 3-4p ET
Aired July 11, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
PAULA NEWTON, CNN INTERNATIONAL HOST: Stocks starting off the week in the red. Let's take a look at that Big Board now, not much to write home about,
as you see down almost a half a percent. The NASDAQ off almost two percent now. We will get to that later. What's worrying investors? They are waiting
on bank earnings later this week. We will bring you those markets later.
Those are the markets, these are the main events: Sri Lankan protesters have forced the resignation of the President and Prime Minister, still the
struggle for basic necessities goes on.
(BEGIN VIDEO CLIP)
PETER SMITH, ITN: How long have you been waiting for petrol?
UNIDENTIFIED MALE: For or five days.
SMITH: Five days?
UNIDENTIFIED MALE: Yes.
(END VIDEO CLIP)
NEWTON: Tunisia races to prevent a food crisis created by the war in Ukraine.
And Twitter shares tank as the company prepares for a drawn out legal battle against Elon Musk.
Live from New York, it is Monday, July 11th. I'm Paula Newton, in for Richard Quest and this is QUEST MEANS BUSINESS.
Tonight, rising prices right around the world have triggered the worst cost of living crisis in decades. People are paying more for everything from
food to fuel, and that is leading to economic and even political instability.
In Sri Lanka, protesters have forced the President to resign amid a nationwide shortage of fuel. In Turkey, inflation has hit nearly 80 percent
cutting into people's spending during the Eid holiday. And in Tunisia, a wheat shortage caused by the war in Ukraine is making bread and other items
much more expensive.
But we begin tonight in Sri Lanka where protesters stormed the Presidential Palace and forced the President and Prime Minister to announce their
Dramatic video shows some of the uninvited guests, you see them there, swimming in the President's pool. I believe I saw cannonballs and using his
exercise equipment, luxuries that very few Sri Lankans can actually afford.
Now people are angry about power cuts and a major lack of fuel, which has led to shortages of food and medicine.
ITN's Peter Smith found out how hard it has been for people to get hold of those basic goods.
SMITH (voice over): In Sri Lanka, the queue for petrol no longer lasts for hours. The wait is now measured in days.
This is what it looks like when the country runs out of fuel and money, and this is what happens when the people run out of patience.
SMITH (on camera): How long have you been waiting for petrol?
UNIDENTIFIED MALE: Four or five days.
SMITH: Five days?
UNIDENTIFIED MALE: Yes.
SMITH (voice over): Protesters have stormed the gates of the Presidential Palace, and from what we saw today, they have now taken over.
UNIDENTIFIED MALE: We will win because people are united.
SMITH (on camera): This President is not coming back here.
UNIDENTIFIED MALE: No. He will never come. If he come here, our people will kick out him.
SMITH (voice over): The writing is now on the wall for the Sri Lankan regime. The Black Flag of the protesters now flies here.
The new occupants experienced the luxury of a presidential bed and there have been queues to take a dip in the President's pool.
SMITH (on camera): The fact we, along with these people can walk through this Palace at our leisure tells us power in Sri Lanka no longer lies in
the hands of the President, but it's not yet in the hands of the people because the military still surrounds this place. Heavily armed guards are
overseeing this delicate revolution.
SMITH (voice over): Police have already fired teargas on protesters. The guns haven't gone away, but people here telling me they are simply no
UNIDENTIFIED MALE: I'm dying for my country. I'm proud for that thing.
SMITH (on camera): So the fear has gone away for you.
UNIDENTIFIED MALE: Yes, sure. Definitely. Otherwise, why I'm not here.
SMITH (voice over): Sheer desperation has driven this. With no gas for stoves, people in Sri Lanka now buy wood to cook in the streets. Community
kitchens feed those without fuel or food.
Disala Rodrigo has been camped outside this Palace since April, now, she is inside the President's old gym.
DISALA RODRIGO, PROTESTER: We don't have gasoline to cook. Even if we have induction electric cookers, we don't have electricity, there is a power cut
going on every day. So, that's the main reason why I'm here.
SMITH (on camera): Is this the end?
RODRIGO: No this is not the end, waiting until they leave officially. Unless they leave, we are going to stay, we are going to stay here and
SMITH (voice over): Sri Lanka's President is now in hiding and has briefed that he'll resign on Wednesday. The people say they will to believe it when
they see it. Until then, the stay put and hold on to hope.
NEWTON: Incredible images there from ITN's Peter Smith, who was in Colombo, Sri Lanka was in economic trouble even before Russia invaded
The country in fact is nearly bankrupt. The value of the Sri Lankan rupee has plunged making imported goods much more expensive. People have had to
line up as you just heard from that report for everything, the basics, right? Food and gas, and sometimes clashing with police as they wait.
Ali Sabry was Sri Lanka's Finance Minister until just a few weeks ago. He joins me now from the capital. I have to say those images must be as
striking for you as they are for us.
You just stepped away from this government just weeks ago. Did you foresee this and as captivating as all of these images are, and the fact that this
may actually be a civilian uprising against corruption and failed governance, all good reasons, what will it take for Sri Lanka to get out of
ALI SABRY, FORMER SRI LANKA FINANCE MINISTER: I mean, thank you. Thank you for having me.
Of course, it is heartbreaking to see what is happening in Sri Lanka. None of us want to see this. All Sri Lankans are worried. Everybody is affected
across the board, including family and everyone and friends and family, neighbors and all.
So the way out of this is immediately have -- restore some sort of governance, probably a whole party governance, so that they have the
consensus on that and quickly get our debts restructured by getting the IMF on board and restore the supply chain so that day-to-day life would be
established, but it is a long way away.
I understand people are frustrated, and we are very, very sorry about it and there are reasons for it. But the times are going to be even difficult
before it gets better.
NEWTON: So time is even more difficult. You talked about the restructuring of that debt. You were in charge that up until just a few weeks ago. The
country has already had its first essential debt default, really since independence. You were with the IMF to try and get the country out of this,
is that kind of restructuring really the only thing that's going to work for now? And will that protect livelihoods?
You were negotiating this up until a few weeks ago. You must have been concerned about what austerity would do to an already very fragile
SABRY: Definitely, that's the reality. Right now, the problem is that we are running out of the bridging finance. So immediately, even if we have
the debt restructured, the reality is that we are about five to six months away -- five to six months away from an EFF facility.
So until such time, what are we going to do with our day-to-day life? As you very correctly pointed out, as our people had been really agitating
about the supply chain, oil crisis, the gas, the food, the medicine, all are huge issues and the depreciation of the rupees.
So the only way out of it is for us to immediately get some sort of bridging finance from our friends and the family. And importantly, for Sri
Lankans all over the world should send their money through the proper channels, so that the other remittances which have cut down by 50 percent
compared to the last year, if we get those things in to the country, we will have enough dollars and foreign currency to import our most essential
issues such as the fuel, the gas, and then we can restore the 24 hours electricity.
So these are the problems that we have right now, and realistically, the issue is how to get those Forex in as soon as possible.
NEWTON: You know, what you say sounds very straightforward. And yet, I have to ask you, given the chaos that you see, I mean, are you afraid for
yourself, for your family, for your country at this point, because what you're outlining will not be easy?
SABRY: Definitely, yes. I am scared for myself and I'll stay here. I'll do whatever it takes to protect my country, do what a citizen should do. But
the reality is that, so there is huge euphoria here right now, and definitely all over the world that is the case when reality hits you hard,
and then you immediately want somebody out, but there won't be any immediate solution just because of a regime change, but that probably will
provide a momentum or a new area or some sort of relief or a new approach for the whole thing.
So other than that, I understand, I think I'm afraid the road ahead is not going to be that easy. It's going to be very, very challenging. I hope our
friends in the region And in the world will provide us some sort of support so that Sri Lanka could get back on track and all parties in the
Parliament, irrespective of their political differences will get together and form all-party governance to have an interim regime so that there is
wider consensus amongst the people, and a little bit of support from the public, a little bit of patience for us to get back on track.
NEWTON: The patience is something not a lot of people in the streets in Sri Lanka really seem to have right now. I mean, you walked away from the
government. Why do you think nothing was able to get done in the last few weeks?
SABRY: Actually, what happened about a couple of months, there were, you know, the first round of protests and there was violence on that. And the
demand was that they want a new government and new people to run it. So we thought that we should give it and that is how the new Prime Minister,
Ranil Wickremesinghe was sworn in. So it is just barely two months since he has taken over.
So as you very correctly pointed out, patience is running out, and only issue is even somebody takes on, still that same, the challenges ahead as
to how we are going to fund these imports, so there are no short-term solutions to that. It might take a little bit of time.
So the problem was, we knew this was coming, and unfortunately, I just took over the Minister of Finance in April, but the team which was involved and
in charge of the economy couldn't foresee this, and we could have done so many things different.
NEWTON: And part of that comes from the family roots of governance there and the problem there. We'll wait to see how this unfolds in the coming
hours and days and we will continue to check in with you.
Thank you so much for your time. Appreciate it.
SABRY: Thank you very much for having us. Thank you.
NEWTON: Now rising prices are forcing many Muslims to scale back their Eid al-Adha celebrations. In Turkey wages can't keep up with record inflation
and that's making things especially grim this holiday season.
Our Jomana Karadsheh has more now from Istanbul.
JOMANA KARADSHEH, CNN CORRESPONDENT (voice over): After two years of pandemic restrictions, this sacrificial livestock market in Istanbul is
coming back to life.
It's Eid al-Adha, the Muslim Feast of Sacrifice, a time when Muslims traditionally buy and slaughter sheep and cattle and share the meat with
those in need. It's a lively scene with buyers and sellers haggling and cutting deals.
Despite the jubilation, the state of Turkey's economy is making it hard to celebrate. With skyrocketing inflation, sellers say they are struggling to
(UNIDENTIFIED MALE speaking in foreign language.)
KARADSHEH (voice over): "Feeding them is expensive," he says. "The cost of medicine, trucks to come here are expensive, and there is the rent we pay
for this place. Business is getting harder," he says.
KARADSHEH (on camera): The cost of an average sheep this year is about 4,000 Turkish Lira, that's about $230.00 in a country where the minimum
wage is equivalent to just over $300.00, making this something many can't afford this year.
KARADSHEH (voice over): Erdogan Gok (ph) is here with his grandchildren to buy a sheep. It's a tradition he wants to keep alive, but he says this
isn't a pleasant Eid.
Rising costs left him no choice but to shutter his business last week and layoff his 20 employees.
(ERDOGAN GOK speaking in foreign language.)
KARADSHEH (voice over): "Over the past 26 years in my business, I witnessed every crisis," he says, "But nothing like this. It's like a fire
That fire is Turkey's worst inflation in more than 20 years. The official rate hit nearly 80 percent in June, but many believe in reality, it is much
higher than that.
The government has raised the minimum wage twice since December, but with the cost of pretty much everything continuing to rise, people say it is
impossible to keep up. The cost of food, everyday staples has nearly doubled in a year, making the traditional sweet delights of Eid out of
reach for many.
Sharifa Bayregdarza (ph) says her family will have to give up the traditional tray of baklava this year. They can barely afford the
necessities these days.
This couple tells us high costs have taken away the joy of Eid shopping. No new clothes for the children this year, just the basics. But the hardest
part for these devout Muslims is not being able to afford a sheep to sacrifice.
Rising global energy costs, the war in Ukraine, and the Turkish Lira losing about half its value in the past year all contributed to the soaring
inflation. But economist blame much of this on the Turkish President's unorthodox economic policies. Erdogan refuses to raise interest rates to
fight inflation. He has even vowed to cut them further.
This 29-year-old tells us, he only has enough to buy second hand shoes for Eid.
(UNIDENTIFIED MALE speaking in foreign language.)
KARADSHEH: "A loaf of bread is five lira, tomorrow it will be six," he says. "Who is responsible? Let's not talk about that."
Few will talk about who they blame. They would likely take their grievances to the polls next year, and that could cause the President. But for now,
it's ordinary Turks who will continue to bear the brunt of this troubled economy.
Jomana Karadsheh, CNN, Istanbul.
NEWTON: Now, rising inflation and low wages are just part of the problem. The war in Ukraine is driving up food prices worldwide. The harvest is just
getting underway, but crops in many places -- you can see it there -- are being destroyed by fire.
Ukrainian officials say the fields are being deliberately set alight by the Russians, starting blazes that are nearly impossible to put out because
water supplies have also been disrupted.
Now, shortages of grain are costly for people not just inside of Ukraine, but in countries that rely on Ukrainian crops.
CNN's David McKenzie has more now from Tunisia.
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT (voice over): Racing to feed the nation in the closing days of Tunisia's as summer harvest.
Russia's cynical ploy to hold hostage more than 20 million tons of Ukrainian grain is leading to a food crisis here in Tunisia and much of
MCKENZIE (on camera): Are you worried it will have a long-term impact on Tunisia?
HABIB MRABET, REGIONAL DELEGATE, TUNISIAN AGRICULTURE MINISTRY (through translator): The war has really impacted both the consumer and our
agricultural productions. Right now, every country must become self- reliant. If that's not possible, things are going to get very difficult.
MCKENZIE (voice over): They are scrambling to increase that production and change consumer habits. In sunbaked Tunisia, farmers grow hard wheat to
make pasta and couscous.
MCKENZIE (on camera): But for soft wheat, the wheat that makes bread, Tunisia gets around 60 percent of it from Ukraine and Russia, and an
official told me that they'll never be able to make up that number here; not in five years, not even in 10.
MCKENZIE (voice over): That spells trouble says Shukria Mudi (ph).
(SHUKRIA MUDI speaking in foreign language.)
MCKENZIE (voice over): "We can only sell what the government gives us," he says. The baguettes are subsidized by a government heavily in debt. Tunisia
can barely afford imported flour from outside of Ukraine.
(SHUKRIA MUDI speaking in foreign language.)
MCKENZIE: "It's about daily survival. When the people are hungry, they rebel," he says.
Here, they are just recovering from a crushing COVID pandemic and a decade of political uncertainty. The impact of the war in Ukraine could not have
come at a worst time. Even retired professionals like Houria Bousad and her husband can only afford a few luxuries.
HOURIA BOUSAD, RETIRED TEACHER: The prices of all of the things are going up.
MCKENZIE (on camera): And what does that mean for you and your family?
BOUSAD: The young people they cannot marry now. They don't have enough money to live, they cannot have a family.
(NASIV TOMAMI speaking in foreign language.)
MCKENZIE (voice over): "I've sold nothing today," says Nasiv Tomami (ph), "Absolutely nothing. This place should be jam-packed before the Eid
holiday," he says, "But nobody can afford meat."
On the roadside, farmers like Waleed (ph) are struggling to sell their sheep for Eid celebrations. The sheep don't seem to mind.
(WALEED speaking in foreign language.)
MCKENZIE (voice over): "Animal feed prices are doubled because of Ukraine. It's a chain reaction that's bad enough now," he says.
(WALEED speaking in foreign language.)
MCKENZIE (voice over): But the effect of the war is really going to be felt next year.
David McKenzie, CNN, Tunis.
NEWTON: Okay, still ahead for us, saying goodbye to an influential leader. How people in Japan are honoring Shinzo Abe's life as authorities continue
to investigate his death.
NEWTON: Japan is saying its final goodbyes to former Prime Minister Shinzo Abe days after his assassination stunned the country.
Now from local residents to foreign diplomats, thousands of people attended Abe's wake on Monday that was ahead of his funeral tomorrow.
Many laid flowers at this temple in Tokyo, some paused, pray and bow, and others shared heartfelt messages about the former Premier calling him a
visionary leader and a good friend.
CNN's Kyung Lah has more now on the ceremonies in Tokyo, as well as the investigation into the assassination.
KYUNG LAH, CNN SENIOR NATIONAL CORRESPONDENT (voice over): At a Buddhist temple in the heart of Tokyo, the body of former Prime Minister Shinzo Abe
arrived for a two-day funeral ceremony.
A line of mourners with flowers, pause and pray. The Japanese public to whom gun violence is almost unheard of struggles to comprehend.
(HIDEKI KAKINUMA speaking in foreign language.)
LAH (voice over): "I'm still so shocked," says Hideki Kakinuma (ph), "Why did this happen to Japan?"
Answering the why begins with the alleged assassin Tetsuya Yamagami. Police say the 41-year-old Yamagami planned for weeks ahead of the shooting.
Police recovered multiple handmade pistols from Yamagami's home. Crude weapons made from iron pipe and adhesive tape. NHK reports Yamagami told
police he built them by watching YouTube videos.
Days ahead of the murder, NHK citing police sources say Yamagami practiced shooting in the mountains. Officers also recovered wooden boards with
bullet holes in the suspect's car. The day before, police say he practiced shooting against a building in Nara.
(SHINZO ABE speaking in foreign language.)
LAH (voice over): As Abe began his speech on the street, a news camera caught Yamagami standing with the crowd, listening. The next time we see
Yamagami, two shots were fired.
Officers tackled Yamagami to the ground armed with his homemade gun. Police say Yamagami held a grudge against a group he believe the former Prime
Minister had ties to, the group has not been named by police to CNN, but Japanese local media report the suspect told police his mother was involved
with the group.
But the Family Federation for World Peace and Unification widely known as the Unification Church held a news conference telling reporters that the
church did have a tie to the suspect's mother. She was a member of their church.
(UNIDENTIFIED MALE speaking in foreign language.)
LAH (voice over): "We struggle to understand why the suspect killed former Prime Minister Abe due to any resentment toward our organization," says the
He acknowledged that he was aware that the suspect's mother had financial difficulties around 2002, but he didn't know why or the impact on the
family. The church pledged to cooperate with police.
Among the mourners gathering in Japan's capital, US Secretary of State Antony Blinken.
ANTONY BLINKEN, U.S. SECRETARY OF STATE: We saw in him something rare, a man of a vision -- who has had the ability to realize that vision.
LAH (voice over): A towering political figure globally and at home, a country begins to bid farewell.
Kyung Lah, CNN, Tokyo.
NEWTON: Now, there is just over 30 minutes to trade there on Wall Street, US stocks all lower today. The Dow is near session lows. You see it down
there, down almost 200 points.
Investors are preparing for the start of earnings season later this week. I don't have to tell you, some are expecting some bleak guidance. Here is the
thing though, the NASDAQ is actually down more than two percent at this hour.
NEWTON: It is set to close lower for the first time this month, investors again reevaluating those multiples on those tech stocks, and we'll have the
update on the markets for you, of course, in about a half an hour from now.
We want to now bring you to a story. You remember them, right? I do at least. The 1970s and the US State of Wyoming and that did a type of
corporate structure that revolutionized the way the world does business.
The Limited Liability Company got off to a slow start, but now LLCs reign supreme. And more than 40 years later, Wyoming is doing it again. It is now
the first in the world to recognize a new corporate entity known as a Decentralized Autonomous Organization.
And as Anna Stewart has found out, the idea is spreading.
UNIDENTIFIED MALE: It's another amazing day here in downtown Dubai.
ANNA STEWART, CNN REPORTER (voice over): Anas Bhurtun and Danosch Zahedi started their crypto podcast show in 2021.
ANAS BHURTON, CO-FOUNDER, ARTS DAO: So tell us a little bit about the "DAO" that you guys have put in place.
STEWART (voice over): This term, "DAO" stands for a Decentralized Autonomous Organization. It's been a hot topic lately garnering attention
on this podcast and around the world.
They are described as a group of people who come together, usually online with a common goal and no centralized leader.
BHURTON: Think about DAOs as a new way to organize a company, you know, traditional companies have shareholders management and then employees. The
idea behind a DAO is instead to empower all members of that organization to have a say.
STEWART (voice over): The two podcasters loved the concept so much that they went from talking about DAOs to starting their own.
DANOSCH ZAHEDI, CO-FOUNDER, ARTS DAO: We believe in the hive mind. We believe that the community, they have the best interest of the organization
in mind. People are seeing the value that DAOs bring to the table.
STEWART (voice over): They say they've raised over one and a half million dollars this year when they launched their company ARTS DAO, an
organization that curates NFT art.
Individuals hold a stake in their organization by owning a virtual token, and these tokens offer voting rights on company decisions.
As an alternative to traditional companies, experts say DAOs offer more transparency, participation, and trust among investors.
ADEL BELCAID, LEAD PARTNER, TECHNOLOGY AND MEDIA, KEARNEY: The business rules are clear. Once smart contracts are published on the blockchain, they
are irreversible, nobody can change them. And this basically gives a high level of trust to stakeholders to basically work with the concept and do
business with the concepts.
STEWART (voice over): Anas and Danosch are not alone. DAOs are popping up around the world. Some are charities fighting against climate change, while
others are opening up fast food franchises. One even pooled together $14 million to bid on a copy of the US Constitution.
Experts are seeing a growing interest in DAOs recently, but caution that the concept still needs time to mature.
BELCAID: I think the jury is still out. So for now, it is niche applications. There are very clear use cases in crowd funding and asset
management that DAOs lend themselves particularly well to.
STEWART (voice over): It's still early days for this new corporate structure, but Anas and Danosch are not waiting around. The two believe
DAOs will revolutionize the business landscape, and that's why they're building now and spreading the word.
Anna Stewart, CNN.
NEWTON: Coming up, the US dollar is stronger than it has been in years and that could mean trouble for emerging market economies. We will have more
after the break.
NEWTON: So, the U.S. dollar is worth about as much as a euro for the first time in 20 years. The Euro is down one percent today, bringing the two
currencies very close to parity. In fact, you could probably call it even at this point. Now the value of the euro has fallen against the dollar in
recent months, rising U.S. interest rates and fears of European recession are all affecting the rate.
Now a stronger dollar has worldwide consequences. Of course, goods that are traded in dollars become more expensive. And that includes everything from
oil, to gold, to wheat, many other commodities. Emerging markets, which are more sensitive to the prices of food and fuel will face the brunt of this
Elsa Lignos is the global head of FX strategy at RBC and she joins me now from London. Thanks so much for weighing in here. The U.S. dollar strength
underpinning many financial shocks that we see right now around the world. Why has it strengthened so much? And can we -- can we expect it to
ELSA LIGNOS, GLOBAL HEAD OF F.X. STRATEGY, RBC CAPITAL MARKETS: So, I think it's a combination of factors. But you touched on a few of them right
there. The fact that the Federal Reserve is raising interest rates, the fact that the U.S. economy is actually cyclically a lot stronger than the
rest of the world, particularly Europe. The fact that if you look at energy prices in particular, gas prices in Europe have been skyrocketing.
And so, even though gas prices in the U.S. are rising, it's nowhere near as much as they're rising in Europe. And I think you've put all that together.
And it creates this perfect storm, if you will, for dollar strength which is clearly creating the downward pressure on the euro as well.
NEWTON: And I want to talk about the euro for a second. And then I want to get to the global implications. In terms of the euro, we're basically even
now. Do you expect that, you know, I've seen some analysts say that the Euro could even go to 92, 93 against the dollar.
LIGNOS: It's not unreasonable. We actually started the year expecting the euro to trade at parity against the dollar. And that was before the
invasion of Ukraine. It was before a lot of the turbulence we've seen in energy markets. So, given what we're seeing at the moment, it's not at all
unreasonable that the euro would trade that weakly. Of course, investors are heavily positioned. You know, a lot of people are very long of U.S.
dollars and short years.
It wouldn't take a lot of good news for the euro area to prompt a rally in the euro. But as things stand at the moment, our call is for us to break
parity and trade down to those kinds of 90 something levels.
NEWTON: Wow. Incredible when you think about when it launched at parity as so long ago. How does that U.S. dollar strength though deepen the financial
crisis that we're already seeing in developing countries? Are we at a dangerous tipping point here with a lot of those vulnerable currencies
right around the world?
LIGNOS: Yes, I think with -- quite idiosyncratic in that. We've seen emerging market crisis before where there was a lot of borrowing and
foreign currency, mainly dollars, and then it came to pay it back, the dollar was strengthening, it made it very, very hard. Now I think emerging
markets have been a little bit more selective. There are certainly those out there that have been borrowing in foreign currency, they're coming
under a lot of pressure.
But the other thing that's creating a lot of pressure is this inflation, energy price, inflation, food price inflation, it creates a lot of
political pressure as well, we're seeing that payout, really extremely in some areas of the world.
NEWTON: Yes, absolutely. When we talk about the global impact here, I mean, even some of the United States do not like the strong dollar. When we talk
about things like the Fed, it doesn't have much room to maneuver, as you said, just given the scope of inflation right now, central bank
coordination, it's certainly we saw it during the 20 -- 2008 financial crisis, of course, during the pandemic.
But are we really equipped to see any of that if we do have a currency crisis here? I mean, at this point, we'd be more likely to see some type of
a currency war, right?
LIGNOS: So, what's really interesting about the current environment is we've gone from a world where every central bank wanted to weaken their
currency or favor to weaker currency, to one, we're actually having a strong currency as a benefit because you reduce some of those imported
inflationary pressures. In that regard, the U.S. is actually in a pretty sweet spot. It may not feel like it at the moment, it certainly creates a
lot of problems and the rest of the world.
But at the very least, it doesn't mean you're importing inflation the way a lot of other countries are doing at the moment. I think when it comes to
the central bank reaction function, they are in a very difficult position. We've not been in this environment before central banks have both weakening
equity markets, weakening economies, and also high inflation. But for a lot of the central banks, their primary mandate is inflation.
And I do think that means they will hike further and faster even than some markets expect at the moment.
NEWTON: Yes. Which means more pain for everyone else. But I hear you, their main goal is to keep inflation down. We've gotten through a lot. I
appreciate it. Appreciate your time. Thanks so much.
Now, Twitter shares are taking a beating after Elon Musk said he's not going to buy that company. After all, the stock, you could see it there.
Oh, now it's down better than 10 percent. That's kind of the lows of the day there. On the first day of trading since Musk said, that is the first
day of trading since Musk said like I'm pulling out of this $44 billion deal. Now he says the company refused to share meaningful data on how many
user accounts are -- how many user accounts are actually fakes, right or bots.
Twitter says it will sue to force him to go ahead with the takeover. And this morning Musk, yes, took to Twitter to mock the company for trying to
compel him to buy it. Rahel Solomon has been following all of it. OK. Bottom line, can Twitter really or a court we should say really force Elon
Musk to buy Twitter?
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Well, I think a court certainly can. In fact, we have seen this in the past. I mean, look, the scenarios of
what could happen here are pretty -- are -- the reality or the range rather, is pretty significant from and perhaps a billion dollar breakup fee
to perhaps having to go through with a $44 billion deal. In terms of what might happen, we know that there's likely going to be a lengthy and
expensive court trial in Delaware, as you pointed out.
One of the most sophisticated sort of civil courts in the U.S. because of their history dealing with cases like this. Elon Musk will likely have to
testify. But we will likely also get information about how many bots there are on Twitter. I mean, Twitter has said about five percent of its total
user base, Elon Musk clearly doesn't believe that and has said that the board hasn't been transparent or honest with them.
So we can -- we can bet that throughout this process, through discovery, we're going to learn a lot more about the bots. But in terms of what we
could see in terms of Elon Musk, well, it is likely going to be expensive, one way or the other. It could be perhaps the $1 billion breakup fee. And
some have said that's a more optimistic rosy scenario or it could be perhaps even forcing him to go through with the deal, which we have seen in
NEWTON: Yes. And remember going through with the deal at a huge premium, I don't have a lot of time here. But certainly a lot of people going through
what was Elon Musk getting at in the first place with this deal? Because he had to know that there were a lot of fake accounts out there. He knows
SOLOMON: Yes. I mean, there have been so many questions about what his motivation was to begin with. And from the very beginning, folks were sort
of scratching their head and sort of wondering, does he really want to do this? Is he just trying to negotiate for a lower deal? Hard to say what the
motivation of Elon Musk was. We do know that there are billionaires that own, you know, major publication, Jeff Bezos in The Washington Post.
So, it wouldn't certainly be sort of out of the realm of what we have seen. But there were a lot of questions about does he even have the bandwidth in
terms of running Tesla and some of his other companies to run Twitter. And so, it always was really sort of an odd thing for a lot of people watching
but we'll have to see if this actually plays out. And Paula, you have to wonder too, if he has made it clear now that he doesn't want to own
SOLOMON: And a -- and a judge and a court sort of forces him to go through what would that operationally look like for the employees in terms of, you
know, running the company. It could get really messy.
NEWTON: Yes. And this is already a company that's suffering with employees looking for the exits. Rahel, thanks so much. I'm sure we'll continue
talking about this. Appreciate it.
And that is QUEST MEANS BUSINESS. I'll be back at the top of the hour as we of course make the dash to the closing bell. Up next for us, Connecting
NEWTON: Hello. I'm Paula Newton and this is the dash to the closing bell. We are a couple of minutes away from the markets closing and markets are
set to close lower. You see it there. The Dow off close to session lows there almost 200 points down about point-six percent. As you see though,
all the indices are down. The S&P off better than one percent. And the NASDAQ largely because of Twitter, down about two percent.
Remember that Twitter alone is down more than 10 percent at this hour and that as Elon Musk tries to back out of his offer for that company.
Now a cost of living crisis meantime, Sri Lanka is causing political chaos. Protesters stormed the empty houses of the president and prime minister.
Both leaders are expected to resign. Now former Sri Lankan Finance Minister Ali Sabry spoke with me earlier. Listen.
(BEGIN VIDEO CLIP)
ALI SABRY, FORMER SRI LANKAN FINANCE MINISTER: I am scared for myself and I'll stay here. I'll do whatever it takes to protect my country. Do what is
a citizen should do. But the reality is that. So there is huge euphoria here right now. And definitely all over the world. That is the case when
reality hits your hard and then you immediately want somebody out. But there won't be any immediate solution just because of regime change.
But that probably will provide a momentum or a new area or some sort of relief over a new approach for the whole thing.
(END VIDEO CLIP)
NEWTON: Now, look at that Dow 30, as you see there, Merck, Visa, all the winners for the day. CAT even, Nike among the losers. Nike near the bottom
in fact. Now it's among the companies that has said that of course that strong U.S. dollar will affect its Q2 earnings. So, another down day there
at the market. We'll continue to keep an eye on it for you. That's all for me today. I'm Paula Newton live from New York.
NEWTON: The closing bell ringing on Wall Street. Right after that, "THE LEAD WITH JAKE TAPPER" starts right now.