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Quest Means Business
EU Countries Agree To Reduce Gas Demand By 15 Percent; Fighting Along Front Lines In Southern Ukraine; IMF Downgrades Economic Forecast Again; Russia's To Withdraw From ISS Partnership; Jellyfish Cover Israel's Coast; Quest's World Of Wonder. Aired 3-4p ET
Aired July 26, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:35]
ELENI GIOKOS, CNN INTERNATIONAL HOST: Recession fears are weighing on stocks this Tuesday to take a look to see what the Dow Jones is doing right
now. It is in negative territory, down 228 points. Bad economic data, bad forecasts and companies all weighing on markets. Now, those are the numbers
and these are the main events.
The price of a deal: The EU agrees to cut its gas use, but grant some major exemptions.
The IMF sees dark clouds ahead as it downgrades its economic forecast. Its chief economist is live with me.
And the world's largest retailer warns high prices are starting to weigh on US consumers.
Live from Dubai, it is Tuesday, July 26th. I'm Eleni Giokos, I'm in for Richard Quest and this is QUEST MEANS BUSINESS.
And a very good evening to all of you, welcome to the show.
And tonight, the European Union has agreed to reduce its use of natural gas in case Russia decides to cut it off completely. EU leaders agreed to lower
demand by 15 percent starting next week.
Now, there is a catch. The cuts are voluntary.
Several EU members are exempt from the 15 percent target. Now Europe's Energy Chief, Kadri Simson says the plan should still be strong enough to
prevent a supply shock.
Clare Sebastian reports. Let's take a listen.
(BEGIN VIDEOTAPE)
KADRI SIMSON, EUROPEAN COMMISSIONER FOR ENERGY: We have a plan that takes us safely through next winter towards some true energy independence.
CLARE SEBASTIAN, CNN CORRESPONDENT (voice over): It was yet another test for European unity. The EU agreeing to work together to avoid winter
natural gas shortages and defend themselves against what Ukraine's President Volodymyr Zelenskyy calls Russia's overt gas war on Europe.
JOZEF SIKELA, CZECH MINISTER OF INDUSTRY AND TRADE: The negotiations were not easy.
SEBASTIAN (voice over): Not easy, but increasingly urgent.
Russia tightened the screws again Monday, announcing the gas flowing through the Nord Stream 1 pipeline would be cut in half from Wednesday,
taking what was Europe's biggest gas supply route from Russia to just 20 percent capacity.
SIMSON: There is no technical reason to do so. This is a politically motivated step.
SEBASTIAN (voice over): Russia denies this. Once a symbol of Russia-EU integration, Gazprom had already slashed supplies through the Nord Stream
pipeline in June, blaming delays in the return of a turbine being repaired in Canada because of sanctions.
Now, it says another turbine needs repairs
MARIA SHAGINA, RESEARCH FELLOW, INTERNATIONAL INSTITUTE FOR STRATEGIC STUDIES: It will trigger inflation. It will throw countries into a
recession. Germany has already announced stage two of its three stages in terms of gas rationing, it will be very precarious situation economically.
SEBASTIAN (voice over): Energy consultancy, Wood Mackenzie says with Nord Stream pumping at 20 percent, the EU should still be able to fill its gas
storage to 75 to 80 percent ahead of winter, which should leave a small amount leftover in the spring.
That is unless it's an unusually cold winter.
In the end, getting this deal done meant compromising if the EU does have to trigger an alert and make the voluntary cuts mandatory, some countries
will be exempted or be given lower targets.
JOZEF SIKELA, CZECH MINISTER OF INDUSTRY AND TRADE: Firstly, there is a derogation for Baltic States, whose electricity system is synchronized with
Russia, a derogation for islands, member states who are filling their gas storages for critical industries, states with limited interconnections,
temporary increased consumption of gas in electricity production.
SEBASTIAN (voice over): Cracks in the deal are already appearing, Hungary calling the agreement completely unacceptable, and even with these
measures, Europe is now at the mercy of Mother Nature, praying for a mild winter.
Clare Sebastian CNN, London.
(END VIDEOTAPE)
GIOKOS: All right, so the deal comes amid a spike in energy prices. Natural gas costs up almost 20 percent in the past week.
The EU says its biggest fears have come true as Russia's cuts supplies to Europe.
[15:05:10]
Shortages, they are likely to push global prices even higher.
Now the EU Energy Commissioner says the Baltics, Ireland, and Malta is still intending to reduce demand, even though they are exempt from the
plan.
Becky Anderson spoke to Malta's Energy Minister Miriam Dalli's country isn't connected to EU gas networks and relies heavily on gas to generate
electricity, but she says the EU is sending a strong message of unity despite these exemptions.
(BEGIN VIDEO CLIP)
MIRIAM DALLI, MALTA'S ENERGY MINISTER: It wasn't easy, but as you mentioned earlier, and that, as was mentioned earlier, this was a decision
that was taken in around six days, which reflects and shows also the urgency of the matter.
It's all about preparedness. The situation is what it is, and when you are faced with such a challenging situation, I believe that the options in
front of us are either to actually be prepared for what might happen or let things be and then you find the situation, which is in your hands, which
might be major and more massive than you would have actually been able to cater for.
And I think what the 27 EU member states realized that and I believe that what we managed to achieve also on this Council was that we are sending a
strong signal as the EU, as a whole, that we're acting together, even though there are exemptions as you mentioned earlier, but such exemptions
take into consideration the different specificities of the different member states.
But it is showing that the EU is preparing itself for any eventualities, even considering also that the next months are definitely not going to be
easy.
(END VIDEO CLIP)
GIOKOS: So Turkey says the Joint Coordination Center for Ukrainian grain exports in Istanbul will begin its work on Wednesday, but new Russian
missile strikes near the City of Odessa are again casting doubt on a U.S. backed agreement to allow grain shipments to safely leave Black Sea ports.
Ukraine's President Volodymyr Zelenskyy posted video of the aftermath of the attack, calling Zatoka an ordinary village where there are no bases and
no troops.
CNN's Ivan Watson has traveled along the southern front to find out more about the current conditions for Ukrainian fighters.
(BEGIN VIDEOTAPE)
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Scenes from Ukraine's Southern Front during the first months of the war. Footage
shared exclusively with CNN shows Ukrainian Senior Lieutenant Andrii Pidlisnyi hiding in shell craters, flying a drone to call in artillery
strikes on Russian positions.
But the team of spotters also narrowly escapes long range fire from the Russian military.
Months after filming these videos, Pidlisnyi is still fighting on the southern front, where he commands a company of around a hundred soldiers.
WATSON (on camera): Were the Russians in this village before?
ANDRII PIDLISNYI, UKRAINIAN SENIOR LIEUTENANT: Yes.
WATSON (voice over): The Ukrainian military is fighting to claw back territory seized by what this Commander describes as well prepared
Russians.
PIDLISNYI: It is very slow the process to take back all our territories, but step by step and with the help of Western guns, vehicles, and so on
artillery systems, we do that.
WATSON (voice over): This month, my team and I traveled the length of the southern front from the critical ports of Odessa to the edge of the Donbas
region.
I spoke to people willing to risk their lives to defend their country against the Russian war machine.
In the City of Kryvyi Rih, Ukrainian forces stormed a building. It's actually a training exercise to prepare these men for one of the most
dangerous forms of modern warfare.
(on camera): In this simulation, you see how treacherous urban combat is. There are people firing through windows of neighboring buildings, grenades
going off, and attackers trying to storm up the stairs.
(voice over): The Commander here was gravely wounded pushing Russian- backed separatists out of cities in the eastern Donbass region in 2014.
Eight years later, there is even more at stake.
(COL. OLEKSANDR PIKSUN, UKRAINIAN NATIONAL GUARD speaking in foreign language.)
WATSON (voice over): "We have a duty to liberate our territories," he says. "This is our land and we will not give it to anyone. It's only a
question of time."
That confidence shared by a regiment of frontline troops in Eastern Ukraine. They show off recently arrived British-made Landrovers and this
armored personnel carrier.
[15:10:12]
(on camera): I just noticed something. Take a look over here at this tire. "Made in Russia."
This was Russian.
CODENAME VILNYI, AZOV KYIV REGIMENT: It was a Russian car, but our soldiers fight him and take this car to take to us.
WATSON: You captured it.
(voice over): But the war is taking a dreadful toll here.
Day and night, Russian rockets pound the frontline city of Mykolaiv and more appear to be on the way. Ukrainian resistance groups shared this
exclusive footage with CNN taken just days ago, showing the arrival of a train full of S300 surface-to-air missiles in the occupied southern Kherson
region, later confirmed by these satellite images provided to CNN by Maxar.
Ukrainian officials accused the Russians of repurposing these weapons to hit Mykolaiv. But with the help of US long-range rockets known as HIMARS,
Ukraine has been targeting Russian ammunition depots Senior Lieutenant Pidlisnyi says, he noticed a difference on the frontlines.
PIDLISNYI: We had about two or three weeks when they haven't enough ammunition to fight us with their artillery rackets and so on. So ...
WATSON (voice over): Still, he predicts it will take a long time for Ukraine to liberate an occupied southern city like Kherson.
PIDLISNYI: I'm not sure that we will win until end of this year. Maybe until the end of next year, I think.
WATSON (voice over): Before I go Pidlisnyi shows me captured Russian passports and driver's licenses.
WATSON (on camera): When did you capture these?
PIDLISNYI: About some weeks ago.
WATSON (voice over): Russian men ranging from 22 to 41 years old who Pidlisnyi speculates are now dead.
WATSON (on camera): They look like you.
PIDLISNYI: Yes, they look like me.
WATSON: They have similar names.
PIDLISNYI: Yes. But they're our enemies because I'm still in my territory and they came to me to capture our territory, to kill me, to kill maybe my
parents.
WATSON (voice over): This is what Ukrainians are fighting for.
(END VIDEOTAPE)
GIOKOS: That was Ivan Watson there for us.
Forecasts for the global economy are growing gloomier by the day. The Chief Economist at the IMF talks us through the latest outlook, next.
(COMMERCIAL BREAK)
[15:15:14]
GIOKOS: Welcome back.
Now, the International Monetary Fund has slashed its global economic forecast once again. It is now saying the world economy will grow just 3.2
percent this year, that's down by almost half a percent from the previous estimate back in April.
Now, it is calling the outlook for this year gloomy and a lot more uncertain, putting the blame on a range of shocks. And we know those
shocks, we've been seeing them playing out over the past few months -- high inflation around the globe, which is, of course, triggering tight economic
conditions, a worse than expected slowdown in China as repeated lockdowns hamper growth, and the war in Ukraine impacting economies right across the
world.
And as you can see, covering that sun -- that sunny outlook that we were hoping to get after the global pandemic.
Pierre-Olivier Gourinchas is the Chief Economist at the IMF. He now joins me from Washington, DC.
Sir, really good to see you. Thank you so very much for joining us.
Look, the GDP outlook is not looking very good, and I was looking at what we had in 2021 versus now. We saw 6.1 percent growth. We are now sitting at
3.2 percent growth in 2022. That's of course, hitting down half of what we saw last year.
But I guess the question is: How bad is it still going to get because in your report, you say that a global recession is four times more likely than
what we see in normal conditions, and mostly the big concern is within the G7 nations.
PIERRE-OLIVIER GOURINCHAS, CHIEF ECONOMIST, INTERNATIONAL MONETARY FUND: Yes. And thank you for having me, and sorry to be the bearer of bad news
here.
Basically, what we're having right now is the three largest economies in the world -- the US, China and the Euro area -- are stalling and they have
significantly revised downwards for the reasons you mentioned, inflation, China's outbreaks of COVID-19 and lockdowns, and then the war in Ukraine
that is having an impact on energy and gas markets.
Now, we are seeing growth rate at 2.9 percent in 2023. This is still not a global recession, by far. Actually 2.9 percent, we had that growth rate in
2019. No one was talking about a global recession then.
But we're emphasizing also a number of downside risks that we think are quite plausible. So things like for instance, a full shutdown of Russian
gas flows to Europe or a tightening of financial conditions beyond what we've seen so far, or inflation pushing up above where it is right now.
And in that scenario, then things could get even worse pretty quickly, and in a number of countries already, we're seeing some very slow growth going
into 2023.
GIOKOS: Yes, and exactly, and those risks, we know is just so uncertain, because we see Russia, you know, it is halting gas supplies through Nord
Stream 1. So we know that we just don't know what will happen in the next few months.
But during these uncertain times, you know, global strong economies were able to stimulate their way out of problems, something that they can't
really do right now, because of the inflationary impact that that might have.
If you're saying that there is still a huge probability of recession, that's according to your report, what kind of tools would they be available
to try and minimize those risks? Because in in the past, and I'm thinking back to past recessions, we would see so much quantitative easing and
stimulus, something that we can't actually experience at the moment.
GOURINCHAS: No, and the big difference between, you know, some earlier episodes, and now is precisely that inflation in many advanced economies,
and also in many emerging market economies, is pushing at levels that we haven't seen in decades.
And so here really, very clearly, the monetary conditions have to be very different. All the monetary easing that was done during the pandemic 2020-
2021 has to be reeled back, and in fact, Central Banks around the world have to position themselves, really, so that inflation in the near term,
maybe within a year, a year and a half is going to be coming down back to Central Bank targets.
So we can't hope to have that level of support. In fact, that level of support would probably work against the objective of trying to bring down
inflation pressures in the near term.
GIOKOS: Yes, and you also say that, you know, tightening monetary policy is actually something that needs to happen and it cannot be delayed. But
there's a tradeoff and that is GDP and output.
Do you think it's happening aggressively and quickly enough in order to temper the inflationary scenarios that we're seeing right now?
[15:20:01]
GOURINCHAS: Well, we think that a number of Central Banks, the Federal Reserve certainly, the Bank of England, the European Central Bank, many of
the advanced economies' Central Banks, many of the emerging market economies' Central Banks have already started to tighten monetary policy
and this is the right course of action.
We are actually recommending that they stay the course in other words, that they keep their eyes on inflation, and make sure that they can bring back
inflation within a reasonable level, that will be slowing down economic activity, as you pointed out, that will be having some impact and will
inflict some pain.
It doesn't necessarily mean that it will lead to a recession, because in some countries, we're starting from a situation where, for instance, labor
markets are doing quite well. That's the situation in the US, but it will certainly soften things going forward.
Now, why is it important to do that? Well, because low and stable inflation is really a bedrock for future macroeconomic stability and so, we really
have to invest in our own macroeconomic future here, making sure that we come back to this low and stable inflation in as many countries as
possible.
GIOKOS: Give me a sense of whether the US is going to head into a recession? That's the big question right now. And of course, Germany as
well, there's a big concern there.
GOURINCHAS: Under our baseline projection, we are seeing a narrowing path for the US. We're not seeing a recession necessarily for the US economy,
but for instance, we're projecting that the Q4 and Q4 growth rate for 2023 for the US, will be around 0.6 percent.
Now, that's a low number, it basically means that the realization of any downside risk could be enough to knock off the US economy of its growth
trajectory and into a recession.
So we see the path is narrowing, not necessarily one where a recession becomes part of the baseline, but the realization of risks could certainly
take us there.
In the European context, you're asking about Germany. We see something quite similar. We've had significant downgrade for a country like Germany,
especially in 2023. We're basically bringing their projected growth to 0.8 percent. That's sort of on an annual basis and we're thinking that they
could be very vulnerable to some of the risks I mentioned.
For instance, a full shutdown of Russian gas flows to Europe would have an impact on a number of European countries, including Germany.
GIOKOS: All right, sir, thank you very much for joining us. Good to have you on.
I hope next time I see you, you have better news for us. Much appreciated for your time.
GOURINCHAS: I hope so, too. Thank you, Eleni.
GIOKOS: All right, sir. Thank you.
US consumers are also growing more pessimistic about the economy. The Consumer Confidence Index slipped for the third month in a row. The gloom
is reflected on Wall Street. The Dow right now is as you can see down seven-tenths of a percent and the S&P 500 also taking a knock just over one
percent, in the red the NASDAQ also having the worst day -- worst point of the day down almost two percent.
So we've got read across the board.
Now, Walmart's latest profit warning set the mood for investors. The company says rising prices are hurting retail demand. It says its annual
profit could fall as much as 13 percent. Now Walmart shares are down on the day as well, almost eight percent as you can see.
Other retailers like Target and Costco are also taking a really big knock today, sharply lower as well. Allianz Chief Economic Adviser, Mohamed El-
Erian says the business cycle seems to be turning and he spoke about it earlier today on "New Day."
(BEGIN VIDEO CLIP)
MOHAMED EL-ERIAN, ADVISER, ALLIANZ AND GRAMERCY FUNDS MANAGEMENT: Prices go up. Demand gets destroyed. Companies suffer not only on the cost side,
their costs going up over inflation, but their revenue side starts coming down and they start losing sales.
So what do they do? They cut prices. That's why I think we've reached the peak of inflation for now and the issue is going to shift very quickly to
the recession risk as opposed to the inflation risk that we've been dealing with.
GIOKOS: All right, Rahel Solomon is in New York for us.
Rahel, we said we're going to be talking a lot this week. Unfortunately, it's not for good news. Look, Walmart is one of those barometers, right?
And it's a really interesting gauge to see what consumers are thinking and feeling and if Walmart is taking a knock, and it's basically counter
cyclical in so many ways that means this trouble on the horizon.
RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: It's a great point, right? Walmart is certainly a bellwether, because it is the largest US retailer
with a footprint in many countries around the world.
So when Walmart makes an announcement like this when it's not earnings season, it really raises a lot of eyebrows, and I can't remember the last
time the company made this type of announcement that it expects for operating income to fall 11 to 13 percent for the fiscal year, that it
expects profits to fall 11 to 13 percent more than expected for a full year.
And it sort of the same thing that Mohamed El-Erian was just talking about, it is blaming a higher cost in terms of higher fuel costs, higher food
costs.
[15:25:08]
The company is saying that consumers are shifting their spending to more essential categories like food and fuel and that is leaving less
discretionary income for things like apparel. Apparel is a higher margin category for Walmart, right? So Walmart makes greater profits on apparel.
It makes less profit on things like essentials.
So you're seeing that sort of impacted and sort of its bottom line, right, in terms of earnings. But by the way, Walmart is also facing higher cost.
One retail analysts putting it like this in a note, "All of this is allied with a higher cost of doing business with transportation costs, with labor
costs, and a whole host of other overhead shooting up over the past 12 months," saying "Walmart has not passed these costs on in full, which has
impact on its profitability."
We know of course, that the reason why Walmart has not is because its whole brand is centered around being a low-cost retailer. So it's getting hit on
the business side of it. But Eleni, it's not just that, because what happens at Walmart tells us a lot about what's happening in terms of the
consumer.
And again, we're seeing another data point, we've seen it in the retail sales data that people were shifting more of their income to essentials,
but now we're seeing it in Walmart.
And so it really begs the question, what are we going to hear from Target? Target already had a profit warning a few months ago in terms of excess
inventory. So what are we going to start hearing from these other retailers? What are we going to hear from Amazon? What are we going to hear
from Costco?
So it really starts to beg the question, what are the other retailers sort of dealing with at Walmart? The largest US retailer is dealing with this.
So it is a big concern.
I should say to Mohamed El-Erian's point, Walmart and others now sort of raising the prospect of discounts for consumers, because we're seeing this
demand destruction and because they have excess inventory.
GIOKOS: Yes. Exactly. It is two points, right, to have higher input costs, because it's just becoming so much more expensive, and of course, the
demand destruction that you mentioned, but Americans are simply not happy right now. It is looking at the Consumer Confidence Index.
And I think we're sitting at COVID lows, which is pretty phenomenal that the consumer is feeling as low as they were during the pandemic.
SOLOMON: Yes, so we got consumer confidence today, which tells us three things. It tells us how people are feeling right now about the present
state of business conditions, how people were feeling about conditions six months in the future, their sort of outlook, and how that might impact
their personal finance decisions, right? How that might impact their purchasing decisions.
How people are feeling right now, Eleni might be hard to believe, but it's still not terrible. But what's really dragging down that top line number is
people's expectations about the future six months in the future. That was quite low. And that is sort of dragging down that headline number, as you
pointed out.
Also really important in getting attention today is that consumers are saying that they expect to pull back on major purchases, we're seeing a
very low number there.
So perhaps unsurprisingly, with inflation being what it is, we're seeing it in reports like this from Walmart that the American public is starting to
rethink major purchasing decisions because they have to. The Fed of course knows that and it is trying to get a handle on that. We will likely hear a
lot more about that tomorrow, when we hear from Chairman Jerome Powell of the US Federal Reserve when they announced their next interest rate
decision, which we expect to be three quarters of a percent.
GIOKOS: And we'll be catching up on that point as well, Rahel tomorrow. Looking forward to seeing you. Thank you so much.
All right, so coming up, in the midst of a recovery for tourism, Israel finds it has got unwanted visitors on its hands. Stay with us.
(COMMERCIAL BREAK)
[15:30:00]
(MUSIC PLAYING)
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Five, four, three, two, one.
GIOKOS (voice-over): A partnership that came to symbolize post-Cold War cooperation could be coming to an end. Russia says it will quit the
International Space Station in 2024 after it fulfills its current commitments.
The ISS was started in 1998, when 15 countries agreed to operate it together. It allowed international crews to conduct research and live
together in orbit.
But tensions back on Earth have spilled into space. Russia says its next step is to create a station of its own. The U.S. State Department in the
meantime says the decision took them by surprise, in fact. They haven't actually heard a full announcement from NASA as yet.
Miles O'Brien is CNN's aerospace analyst, joins me now from Florida.
Miles, really good to see you. The big question that's been swirling around is whether this is a chess move in order for Moscow to see how the rest of
the members will be responding.
Or should we be taking this seriously?
MILES O'BRIEN, CNN AEROSPACE ANALYST: It's hard to know for sure, of course. Like all things with the Kremlin, is it bluster or is it real?
It's possible it's a little bit of both. It's worth pointing out that the Russians have always said, at 2024, they were going to leave the
partnership and start their own space station. So they are kind of stating something that they have been saying for a long time.
The United States and the other partners would like to keep the station going until 2030. So maybe there was some hope that the Russians would go
along for the ride until 2030.
But that seems to be what is not happening now, as Russia has announced it's out after 2024. That said, what we have had so far is a press event.
The new leader of the Russian space agency, meeting with Vladimir Putin, indicating this was the case.
But there has not been any formal notification of NASA or the other international partners on the space station that, in fact, Russia is
leaving the partnership. So it could be a combination of reality and a little bit of posturing and bluster for the rest of the world.
GIOKOS: Absolutely. I'm curious to find out how the space station actually works. From my understanding, it consists of two sections; one is
controlled by NASA, the other by Russia. I also know that there was hardware the Russians installed about a year ago.
Does that mean they just abandon their efforts on the ISS?
O'BRIEN: It could be; these modules are intertwined and extremely -- it's a very complex thing to walk back. It's not like you just unscrew four or
five bolts and float away.
There are cables and connectors that require multiple spacewalks to remove the Russian side of things. And many of the modules are very old. As a
matter of fact, the first module to arrive for the International Space Station, back in 1998, Zarya.
[15:35:00]
It is the oldest piece of the space station. Incidentally, it was bought and paid for by the U.S. The U.S. actually owns that module, even though
the Russians built it, further complicating things.
However, they have a few newer pieces, which maybe they might be enticed to float away with. But I think the complexities of all that may outweigh the
idea of just starting fresh.
But the real key thing here is the Russians have relied for years on Western money to keep the space program afloat. They have not gotten the
money from the Russian duma or from the Kremlin.
If it were not for Western money, there probably wouldn't be much of a Russian space program. So now that they have cut off their nose here,
potentially, to spite their space, if you will, you have to wonder how much viability there will be for any new plans for the Russians in space.
GIOKOS: Yes. Yes, Miles, a really good metaphor there. And there could be talking to China, I think that's a conversation we need to reignite at some
point, as it develops. Always good to see you. Thank you so much.
All right, Lufthansa says it is canceling almost all of its flights in Germany on Wednesday. That's due to a planned strike. The cancellations
will affect 154,000 passengers set to travel at the peak of Europe's holiday season.
Ground crews are planning a one-day strike. That's expected to paralyze Lufthansa's hubs in Frankfurt and Munich. Fred Pleitgen reports, let's take
a listen.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: This strike certainly hits Lufthansa at an extremely difficult time anyway. The
airline, Germany's flagship carrier, it's really been struggling for the entire summer already.
It has already had to cancel thousands of flights in the summer months due to staff shortages. Now that is set to get even worse, with these walkouts
set to take place on Wednesday.
Lufthansa has said it will have to cancel almost 700 flights at its main hub in Frankfurt and around 350 at a secondary hub in Munich. That's a lot
of flights this airline is canceling on one day alone.
Of course, something that could really dive Germany into travel chaos, not just on Wednesday, Lufthansa says, but possibly carrying over into Thursday
and possibly even Friday as well.
What's essentially going on is that the ground staff is set to go on a walkout. The union that represents them is called ver.di, it's the German
trade union. They say that the staff there wants 9.5 percent more money. Lufthansa has said talks were ongoing.
They believe that this walkout is something that is way too harsh for the stage that these talks have been in. However, the union obviously playing
hardball. They are with Lufthansa and really hitting Germany's flagship carrier at a very, very difficult time that the airline is going through
anyway -- Fred Pleitgen, CNN, Berlin.
(END VIDEOTAPE)
GIOKOS: Unwelcome visitors are hurting Israeli tourism, as the country recovers from its pandemic slump.
Jellyfish are swarming in the seas off Israel's coast. Authorities say tourism revenue is down by $10 million a year because of the jellyfish not
to mention the problems of clogged fishing nets as well as blocked desalination plants. Hadas Gold looks at what brought them there and where
they might appear next.
(BEGIN VIDEOTAPE)
HADAS GOLD, CNN INTERNATIONAL CORRESPONDENT (voice-over): White specks dot the turquoise waters off the coast of Israel, each one, a translucent,
pulsating jellyfish, hundreds of millions of them.
Eye-catching but venomous, swarming the Mediterranean sea. While the region has always had a jellyfish season in the warm summer months, this year
rising water temperatures have caused an explosion in numbers.
Normally these beaches would be packed full of locals and tourists. But the lifeguards here tell me that the crowds are staying away because of the
jellyfish.
UNIDENTIFIED FEMALE: I am afraid because it's very dangerous.
UNIDENTIFIED MALE: One of my sons was stung the other day.
UNIDENTIFIED FEMALE: But mostly they're moving with currents.
GOLD (voice-over): Dr. Bella Galil is one of Israel's top jellyfish experts. She says the species is not native to the Mediterranean but in
recent years entered from the Red Sea through the Suez Canal. As the canal has expanded and waters continue to warm as part of climate change, she
warns that they can spread even further.
DR. BELLA GALIL, STEINHARDT MUSEUM OF NATURAL HISTORY: Since the sea kept warming, it spread with the warming sea and it now reaches Tunisia, Malta
and Sicily. And with the expected continued warming, it might reach the European coast.
[15:40:00]
GOLD (voice-over): Their sting is more painful than that of many jellyfish native to the Mediterranean, Galil says. In some cases, it can cause people
to go into anaphylactic shock and coma. But it's not just the harm that they can do to beachgoers that is a cause for concern.
GALIL: The most important is having a swarm, a juggernaut of very efficient predators, predators going through the sea and eating up the
local biota, that other species are at a loss.
GOLD (voice-over): Galil says short term solutions, like creating salt water barriers in the Suez Canal could help stem the numbers.
And within a week, this current wave is expected to subside. But as climate change continues to push temperatures upwards, these hauntingly beautiful
yet dangerous creatures will keep coming -- Hadas Gold, CNN, Tel Aviv.
(END VIDEOTAPE)
GIOKOS: All right, that's it for QUEST MEANS BUSINESS. I will be back at the top of the hour as we make a dash for the closing bell. Up next,
"QUEST'S WORLD OF WONDER."
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RICHARD QUEST, CNN HOST (voice-over): it is early spring and Western Turkiye is coming alive after its winter slumbers.
In a few months, these trees will be heaving with fruit. And the area will be bustling with tourists. It's lovely to be here at this time of the year
when there's a real air of possibility and opportunity.
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QUEST (voice-over): The picturesque village of Sirince is about an hour south of Izmir.
[15:45:00]
It is a gorgeous drive that one should not miss.
Today, I am a guest of Mujde Tonbekici, who runs a hotel here when she's not growing crops and making her own olive oil. Mujde fizzes with energy
and life. She first came here from Istanbul, back in the early '80s. She saw something special and she has never left.
QUEST: We cannot discuss anything until we have tea.
MUJDE TONBEKICI, HOTELIER AND OLIVE GROWER: Exactly, in the traditional Turkish way. It's a samovar technique. And so, you have the dark tea, the
black tea here. And then, you put over this, the water. And that makes it fantastic.
I came when I was a student, when I came here, 40 years ago. I was a student in Izmir, took the train from Izmir and I came and I fell in love.
I said, this is my paradise. I should spend my life here.
QUEST: What was it that you saw here?
TONBEKICI: A, the nature; then, the village. The houses, these pretty whitewashed houses, that's so nice. And the people, the people living here
will a laugh or a smile on their faces and I fell in love with them.
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QUEST (voice-over): Over here, what am I looking at?
TONBEKICI (voice-over): Look, it's so greenish, because the sun is fantastic, the early spring sun. And there, we have in this blue gray
color, the trees of olives. We have a lot of orchards, only olives around us. This village named Sirince, which means almost pretty, is, in the
tradition, a olive producting (sic) village.
QUEST: What happens inside Mujde?
What happens inside you, when you sit and you look at that?
TONBEKICI: Still, the peace like it was when I came 40 years ago. In each, each season in Izmir, it's a wonderful joy of life. That's maybe the
meaning of this village for me, the joy of life.
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QUEST (voice-over): Mujde isn't content to allow my eyes to feast on the scenery. She insists my stomach feasts on her cooking, which is renowned.
TONBEKICI (voice-over): We are cooking stew in a clay plot, in the real village style. Everything should be very, very quick in the village. We
have to do it in 10 minutes and then go to work.
Would you like to cut up something?
QUEST: I don't mind doing a little bit of cutting.
TONBEKICI (voice-over): Look, it's (INAUDIBLE). This is the best olive oil that you can find.
Would you like to smell that?
QUEST: Ah!
TONBEKICI: It is nice.
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TONBEKICI (voice-over): Look how that looks (ph).
Can you listen?
The bubbling.
QUEST (voice-over): The bubbling.
TONBEKICI (voice-over): Yes, and the smell.
I think we're ready.
Then this is Mila (ph).
Smell (INAUDIBLE).
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QUEST (voice-over): Mujde has many talents and amongst them, giving me a tour of the reason I came here in the first place, Ephesus. This is an
ancient city, only a stone's throw from her village, where tourists from around the world visit to marvel at archaeological wonders.
Mujde is mother, Arsen is son. She is the tour guide. He is the ancient historian. He'll give me the facts. She'll give me the feelings.
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QUEST (voice-over): And like a well rehearsed double act, they go back and forth, enhancing each other's stories and enriching my visit.
ARSEN NISANYAN, HISTORIAN (voice-over): Ephesus was a major city of the Roman empire. It's one of the wealthiest cities in the eastern
Mediterranean.
TONBEKICI: Marble, you can see everywhere marble and mosaics and wonderful sculptures.
NISANYAN (voice-over): Right now, we're in the center of the city. The facade that you see over there is the facade of an ancient library, it is
called the Celsus Library. It was built by one of the most important citizens in this, living in this city.
TONBEKICI: Can you imagine, you enter in a marble place, in this library, full of columns and nice ladies. And you are in another world.
NISANYAN: This was called the Curetes Street. The Curetes were the nobility in Ephesus. So the streets were lined with these statues.
TONBEKICI: It gives you the feeling of luxury, the luxury and the richness of a town, which is fantastic built.
[15:50:00]
QUEST: If I can tap you on the shoulder and send you back there, what's the one thing you would like to see?
NISANYAN: I would want to walk the streets of Ephesus, because we are told that the people dressed here so lavishly, so luxuriously. I would want to
see that pageantry going on.
TONBEKICI: I'm a cook and the smells are so important. And in the ancient time, there was a food, fast food restaurant named Thermopylae. I would
like so much to go there, pay a penny and eat whatever they cooked.
QUEST (voice-over): In one day here, I have gorged on wonderful views.
She says if I dropped a coin, you can hear -- did you hear that?
And enriched my mind and soul with ancient civilizations.
Don't worry, I'll be here all week. And I haven't finished yet.
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QUEST (voice-over): It is hard to miss Izmir and Ephesus. But just a little way, there is a town that is becoming a big hit with visitors:
Alacati. Turkish tourists are flocking here for the perfect getaway. And the rest of us are just discovering this hidden gem.
Shining sun, crisp air and people visiting from far and wide for the local herb festival.
I'm not ensure what or why I'm wearing this garland. But when in Rome...
Perihan Akbulut knows every nook and cranny. And he's going to show me around.
PERIHAN AKBULUT, ALACATI HOTELIER (voice-over): This is what we call labada. But it in Latin language it is rumex. We can roast it. We can cook
it. We can boil it.
QUEST (voice-over): They're quite open here. They want tourists and more of them.
AKBULUT (voice-over): This is the most precious herb, what we call sevketibostan.
QUEST (voice-over): What you do with it?
AKBULUT (voice-over): You can roast it. You can serve it for your kidney and prostate.
The men prefer (INAUDIBLE).
QUEST (voice-over): Well, that should be looking like that.
Aniseed. Ahh, licorice.
AKBULUT (voice-over): Yes, you can eat it.
Sure?
UNIDENTIFIED MALE (voice-over): You can eat it.
AKBULUT (voice-over): You can eat it.
QUEST (voice-over): He's not having me on?
I'm still in one piece.
AKBULUT (voice-over): This is Cesme lemon, very famous all over Turkiye.
QUEST (voice-over): Ohh. Oh, that is -- it is sweet.
AKBULUT (voice-over): Yes, sweet.
QUEST (voice-over): I would never have thought just to enjoy sucking a lemon.
AKBULUT (voice-over): Enjoy it.
QUEST (voice-over): Everyone here is keen to point out the beauty of this place.
Hello, how are you?
(CROSSTALK)
The mayor of Alacati.
MAYOR EKREM ORAN, CESME, TURKIYE: We call this place the heaven on Earth.
QUEST (voice-over): Ahh!
A few hours drive from Alacati are the heavenly thermal pools of Pamukkale. The name literally translates in English to "cotton castle," because they
can be mistaken for angelic clouds if you're looking at the right angle.
[15:55:00]
It is the site of ancient travertines that tourists have flocked to for centuries.
Oop, there we go.
I think I'll dip me toes.
Is this water is warm?
Oh, it's very slippery, though. It's very slippery. It's got disaster written all over it. Oh, look at that. Ooh, ooh, ooh.
It's good fun, this, it's very good fun. Simple.
My visit to Izmir and the west has given me a fresh perspective on Turkiye. Wherever I've gone, I have experienced unexpected enchantments. And there
is a word that pulls it all together and I think it is delightful.
Because like the eponymous sweets and the ever-present tea, there are delights wherever I've gone. And you'll want to come here and experience
these delights for yourself, Izmir and the West, delightfully part of our world of wonder.
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GIOKOS: Hello, I'm Eleni Giokos. It's the dash to the closing bell. And we are just two minutes away.
Story of the day: the Dow is set to finish lower, as you can see, 0.7 percent. Walmart is largely to blame. Its shares are down sharply. Now the
S&P also lower and the tech heavy Nasdaq is down the most. Alphabet and Microsoft report after the bell as well. We are looking for those numbers.
As you can see this is written across the board. The IMF says rising inflation is cutting into global growth. It says the outlook for the world
economy is gloomy and uncertain. Its chief economist explained to us why. Take a listen.
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PIERRE-OLIVIER GOURINCHAS, CHIEF ECONOMIST, INTERNATIONAL MONETARY FUND: Inflation in many advanced economies, and also in many emerging market
economies, is pushing at levels that we haven't seen in decades.
And so here, really, very clearly, the monetary conditions have to be very different. All the monetary easing that was done during the pandemic --
2020, 2021 -- has to be reeled back.
And in fact, the central banks around the world have to position themselves really so that inflation, in the near term, maybe within a year or 1.5
years, will be coming back down to central bank targets.
(END VIDEO CLIP)
GIOKOS: All right. Let's take a look at the Dow components.
END
