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Quest Means Business
William Ruto Declared President-Elect; China Cuts Rates Amid COVID Lockdowns, Property Slump; US Stocks Recover After Chinese Economic Data Disappoints; Pinterest CEO: Growth Continues, Despite Headwinds; U.S. Stocks Overcome Fears Of China Slowdown; Hunt: China Slowdown Could Ease U.S. Inflation. Aired 3-4p ET
Aired August 15, 2022 - 15:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:29]
RICHARD QUEST, CNN BUSINESS ANCHOR: We are all together for the start of a new trading week and it is a promising start. The Dow down at the
beginning, but four weeks of gains, starts promisingly. Half a percentage point up.
The markets are up and the main events. Well, this is what we're looking at today to bring to your attention.
Kenya's Deputy President declared the winner of the country's cliffhanger election with the results already being challenged by his opponent.
China's Central Bank is cutting rates. It's the COVID lockdowns that have taken a dramatic toll.
And a year after the US withdrawal from Afghanistan, the country's economy just goes from bad to worse, to terrible to disaster.
We are live in New York. Today is Monday, August the 15th. My goodness, where did August go?
I'm Richard Quest in August, I mean business.
Good evening.
We start in Kenya where within the last few hours, William Ruto has been declared the winner of Kenya's election. His opponent is already
challenging the result. It took almost a week of vote counting when Ruto has been declared the winner of East Africa's largest economy. And he comes
to the top job having been the country's former Deputy President. He beat the veteran opposition leader, Raila Odinga in a race that was tight and
heated.
Now fighting broke out at the election center in the run up to the announcement. Odinga's teams rejects the results along with four election
officials. A Court challenge is very likely on the way.
Larry Madowo is in the port city of Kisumu, Odinga's home town. Larry is with me now.
So we've got this result. It's a little depressing that there's a result, and already the opposition or the losing candidate says it's a fix. Was
this a free and fair election?
LARRY MADOWO, CNN CORRESPONDENT: It wasn't largely free and fair election. The four commissioners were contesting the outcome of the election say they
have issues with the final phase of this verification process that led to William Ruto, the Deputy President being declared the next President of the
country.
He has said that he is going to rule a fair country for everyone, but Raila Odinga, his challenger's coalition has already contested that outcome. They
say this was an opaque process that they could not trust because they were not allowed to see the final results before they were announced.
William Ruto is a youthful man by Kenyan standards, 55. He has promised a bottom up approach. It's an economic model that he says will have a
multiplier effect on the sectors of the economy that will employ the most amount of people and it essentially degenerated into high drama after what
was a week of peaceful election and post-election season, but it came down to this spectacle, this confusion, and this pandemonium, Richard. Watch.
(BEGIN VIDEOTAPE)
MADOWO (voice over): Angry scenes inside Kenya's vote tallying center. Soldiers forced to use batons to bring fighting under control.
UNIDENTIFIED MALE: Hereby declares that Ruto William Samoei has been duly elected as the President.
[CHEERING AND APPLAUSE]
MADOWO (voice over): Moments later, Deputy President William Ruto was declared the country's next leader, succeeding term limited, Uhuru
Kenyatta.
A nervous six-day wait for Kenya's election winner finally over, but a narrow lead contested by candidate, Raila Odinga's coalition, before it was
even announced.
SAITABAO OLE KANCHORY, RAILA ODINGA'S CHIEF AGENT: Once we see them, we would want to verify them. Once we verify them, we will be able to know and
to tell the Kenyan people because a result that is not verifiable is not a result.
MADOWO (voice over): Four election commissioners also disowned the anticipated results moments before the chaos descended at the national
tallying center.
MADOWO (on camera): Kenyans went to the polls at a critical time for East Africa's largest economy, soaring food and fuel prices, high unemployment
and post-pandemic stagnation. It was a bitter battle between the friends and foes and friends and foes again, ending in this. Odinga supporters
violently rejecting Ruto's win.
[15:05:05]
(voice over): Both campaigns accused the other of corruption, but Ruto now promising to work with his rival.
WILLIAM RUTO, KENYAN PRESIDENT-ELECT: I will run a transparent, open, democratic government, and I will work with the opposition to the extent
that they provide oversight over my administration.
[CHEERING AND APPLAUSE]
MADOWO (voice over): Cheers of jubilation in his hometown, but a fierce contest of the results could come next.
(END VIDEOTAPE)
QUEST: All right, so let's assume for the purposes of this question, that the results stands that Ruto takes over the presidency. Will the opposition
sort of go along with it? Can Kenya, which has had such troubled economic times look forward to at least a period of stability?
MADOWO: It is highly unlikely, Richard, is the short answer. The reason is because this is such a deeply, closely contested election that the
difference in votes, according to those IBC numbers is just 233,000 votes. That's the difference between William Ruto and Raila Odinga.
It's very likely that they will in fact contest this outcome in Court, as they did in 2017, Raila Odinga contested and had the Supreme Court of Kenya
annul an election, which is the first time in Africa.
And yet the stability that you talk about is so important because economic political stability here in Kenya is important in the Eastern African
region for the Horn of Africa, because it's been this beacon of peace, this beacon of stability in a very dangerous neighborhood. And yet, it looks
like Kenya is going down this path again of a contested election and months of wrangling, like happened after the 2017 election.
QUEST: Larry in Kenya, thank you, sir. Let us know when there is more on this one to bring our viewers' attention.
Now, the markets in the United States have shrugged off signs that China's economy is slowing.
We started badly, but the day has progressed rather nicely. Half a percentage point up and that gain is holding. There is not much bouncing
around, which does suggest there's an underpinning under there that will hold for the rest of the session.
The NASDAQ and the S&P 500, the broader market and the techs, they are doing well, too.
In China, they were lower on economic numbers from Beijing. The country's industrial output slipped in July. Retail sales were disappointing. And as
a result, the Central Bank is now responding by lowering its key rates by a 10th of a percentage point, not a huge amount, but it's the signal that it
is giving because after all, the Bank of China had been resisting the move because of worries of debts, inflation, and the pressures all the while,
this makes it worse.
So it's symbolic to an extent as Selina Wang now tells us the headwinds blowing off China's economy seriously, of course.
(BEGIN VIDEOTAPE)
SELINA WANG, CNN CORRESPONDENT: China reported economic data for July that was much worse than expectations and the outlook is just as bleak.
Economists are describing the data as alarming, that it reflects an economy crushed under the weight of Zero COVID and that it shows a crisis of
confidence among Chinese businesses and households in pretty much every category.
The numbers were worse than forecasts. Retail sales growing just 2.7 percent in July from a year ago. Industrial productions growth slowing, and
youth unemployment hit a new record, 19.9 percent.
And the real estate slump has gotten worse. Property investment by developers contracted more than six percent in the first seven months of
the year. Now, this is a big deal because the property sector accounts for as much as 30 percent of China's GDP. So, troubles in this sector puts
major pressure on the economy overall.
The real estate market has been dealing with a liquidity crisis. On top of that, angry homebuyers across China have threatened to stop paying their
mortgages on unfinished homes and in China, homes are often sold before they're done being built.
Now in response to this economic downturn, China's Central Bank unexpectedly cut two key interest rates, but the economic damage from
lockdowns and the hit to confidence because of the threat of them cannot be easily solved with monetary policy.
What we're seeing now is that Chinese strategy of lockdowns, mass testing, and quarantines is struggling to keep up with the highly contagious new
COVID subvariant.
There have been more scenes of chaos in Zero COVID China. For instance, in Shanghai, an IKEA store went into lockdown after a close contact of a
COVID-19 case was traced to the store. The video shows residents running out, screaming, trying to escape. You can see security trying to close the
doors while shoppers try to push the doors open.
Now the people who did not manage to escape the store in time were transferred to two days of government quarantine and then they have to go
through five days of health surveillance at home.
Shanghai residents, they know how punishing lockdowns can be. The city of 25 million people had been sealed in their homes for two months earlier
this year in a citywide have lockdown.
[15:10:00]
WANG: This chaos at the IKEA store reflects anxieties that people deal with every day in China. It is a country that takes extreme measures over
every single COVID case, so any outing can easily turn into a nightmare.
Just last week, more than 80,000 tourists were stranded in the resort island of Hainan after a snap lockdown.
Selina Wang, CNN, Beijing.
(END VIDEOTAPE)
QUEST: Now, China's economic slowdown has complicated the rest of the world's fight against inflation. You've got oil prices because of lower
demand, now that should ease inflation in the West. But you've got the Zero COVID lockdowns that cause supply chain disruptions, and that worsens
inflation, which is why we're lucky David Hunt is with us, the President and CEO of PGIM, the asset management arm of Prudential Financial.
This is s-- look, I understand it's not easy, but we've got contradictory signals. So for instance, the lower oil price comes because of the COVID
and the slowdown, but the supply chain issues puts up our inflation overseas.
The Central Bank is lowering rates, while everybody else is raising them. Square the circle, David?
DAVID HUNT, PRESIDENT AND CEO, PGIM: Well, Richard, I think it's not an easy circle to get through the square at all. It's actually very
complicated. And after many years, where a lot of countries were operating with very similar economic conditions, we now find a wide variety of
situations as we look around the globe.
They may have inflation and recession as themes, but they're actually very different. In Europe, you have inflation that's driven for the most part by
high energy, and you actually have countries that are now in or soon going into a recession.
In China, as you pointed out, growth is slowing, but we actually believe it will continue to slow from where it is. But that will be a dampener on
demand, but unlikely to go into an actual recession.
QUEST: Right.
HUNT: And here in the US, we have an even more complicated situation.
QUEST: Oh, go on.
HUNT: Yes, well, last week, you saw the best example that we've seen as the market wants to believe, they want to believe we are going to have a
soft landing. And last week, when we had the inflation numbers come in below expectations. So there was some real hope that things were actually
looking better, you saw risk assets around the world really beginning to rally.
But at the same time, if you look out at the forward curves, and you say, "Do we really think that the Fed is going to be reducing interest rates by
March of next year?" Which is what the markets are telling you right now. Personally, I don't believe that.
The US economy is actually very strong, whether you look at employment or whether or not you look at consumer or --
QUEST: But David --
HUNT: Yes, go ahead.
QUEST: I want to disturb there, but all right, so let's say that there is an entire generation of people who have never seen a real recession, and
who don't realize that monetary tightening takes at least a year to 18 months to do its proper business, particularly from these very elevated
levels.
HUNT: Right.
QUEST: But, you could still have a return to a sort of a bull market if the prognosis is one of solid growth ahead.
HUNT: You absolutely could, but I don't think that that's at least certainly not our initial planning view at all. We actually think that even
as we go through this over the next 18 months as long term investors, that actually we will go back to a fairly low productivity, low growth, low
rates environment, as we look out over the next couple of years.
We haven't seen anything that once we get through the disruptions of the pandemic that's changed our view on the fundamentals of productivity, which
at the end of the day is the only thing that can really change in the long term the outlook on growth.
So for the US, we think that the soft landing is possible, but not likely, and we absolutely see a soft recession coming through toward the end of
'23, as the Fed continues to have to hike rates in order to get inflation back under control.
QUEST: Now, by this recession at the end of next year, which is very similar to what's now starting to become a consensus. You were ahead of the
game on that one, when you came up with that earlier on.
But as we head towards that, the technical recession, and that's my words, that we just had two negative quarters, you're really talking about a real
recession, where you've got a loss of jobs, you've got rising unemployment, and you've got negative GDP.
HUNT: Absolutely. I would not read too much into the GDP quarterly flash figures that we see. I know there are people like the kind of rule of thumb
of two consecutive quarters, but the reality of when we're actually in a recession will be a much more balanced view of what is happening to wages,
what's happening to jobs, what's happening to inflation, and what's happening to output all together, and I don't think you can make a case
right now that the US is even close to being in a recession.
[15:15:00]
QUEST: Can we enjoy growth without China? Is China now such an integral part of the global economy that without China pulling everybody up, there
will be problems?
HUNT: Well, as you said, it is complicated because on the one hand, we need the demand from China. On the other hand, if China slows, it actually
makes getting inflation under control somewhat easier.
In particular, I would point out energy prices where you've already seen this week some reaction to that, and I think you'll continue to see that.
So in the short term, actually, having China slow, we would argue is a bit helpful for the economic condition in the US.
QUEST: Do you see a crisis in the Eurozone over bonds? Now I know the ECB has come up with its unique system of buying the bonds of the country that
are in the tail of the wagon, so to speak, but you know, the speed with which they did that suggests that they are seriously worried about a debt
crisis?
HUNT: Well, I think that, they certainly saw the movie from a couple of years ago, where we saw particularly Italian bonds really gap out versus
German, and I think they've learned the lessons from that. So they wanted to get ahead of it this time.
That said, I think you're right to point it out as clearly a risk. I do think the Eurozone overall will be in recession probably is now and will be
shortly, and so you're going to see increased pressure, without a doubt, both on sovereigns and on some of the corporate debt there as well.
QUEST: Right. Okay, asset management time and I'll emphasize that, you know, we don't give advice as such on this program. But everybody looks at
their portfolio and says, things are cheap. Things are relatively cheap -- stocks -- I mean, even if they were overvalued before and if I'm taking a
long-term horizon of five years, is now the time to be nibbling?
HUNT: So Richard, as one of the largest asset managers in the world, we obviously do take that long-term view and I would re-emphasize that risk is
not the same as volatility. And many times actually, volatility provides an opportunity to actually get in and to buy assets at prices that you
couldn't do otherwise.
Our view is that when history is written of the next 18 months, this will be some of the best time to be actually putting money to work, probably
quite a bit better than it was one year ago from now.
So I really think that we're not there yet. We want to see inflation beginning to come down before we take that step into risk assets, but once
that inflation does clearly begin to come down, we will and I think that actually, you will see this as quite a good time for investing.
QUEST: Brilliant to have you on the program, David. Thank you so much.
HUNT: Thank you, Richard.
QUEST: Thank you.
HUNT: Nice to see you.
QUEST: Appreciate it. Thank you, sir.
It's QUEST MEANS BUSINESS. A year after the Taliban took over Afghanistan, the country's economy is just about done and dusted.
We're live in Kabul to assess the pictures firsthand and what's happening.
QUEST MEANS BUSINESS. Good evening to you.
(COMMERCIAL BREAK)
[15:20:49]
QUEST: Okay, Taliban fighters in Kabul have been celebrating the years since they came back to power. The government declared August 15th a public
holiday as the economy remains in a truly dreadful situation. There is very little reason for anyone to have real rejoicing. The UN says nearly half
the country faces acute hunger, 25 million people are in poverty.
And the Taliban has returned deprive the country of foreign aid. The World Bank expects capita income this year to be a third of 2020 and soaring
unemployment, soaring inflation, and $9 billion of assets frozen overseas.
A former Governor of the Central Bank says people are growing desperate.
(BEGIN VIDEO CLIP)
AJMAL AHMADY, FORMER GOVERNOR, CENTRAL BANK OF AFGHANISTAN: I'm in contact with colleagues, former colleagues who are still there in the country. And
what they're telling me is that unemployment is high. They're having difficulty finding jobs. They're having difficulty making payments for
basic goods. And it's becoming a worst humanitarian crisis by the day.
(END VIDEO CLIP)
QUEST: Clarissa Ward is in Kabul, joins me now. Clarissa, it is good to see you there. Obviously, for our interests on this program, it is very
much a case of what -- how bad is it when you see people on the streets, when you see them trying to buy food? When you hear that stories of
economic woe, how bad is it?
CLARISSA WARD, CNN CHIEF INTERNATIONAL CORRESPONDENT: It's pretty horrendous, Richard. I mean, I've been coming to Afghanistan for many
years, Afghanistan is no stranger to poverty, but you are seeing a marked downward spiral in terms of the humanitarian situation.
We spent some time at a bakery now, where women come from across outside the capital, some of the more impoverished areas up in the hills. They walk
three hours to go and sit outside one of these bakeries for many hours on end, potentially just hoping that someone who is going to buy their bread
will give them a piece or two of bread.
And often, that whole day is spent will only end up in terms of tangible food in two or three pieces of bread. But they don't have any choice,
because their husbands don't have any work. Because the prices in the markets and it is surreal, Richard, you walk around, there's lots of food
in the markets, but nobody can afford that food.
We spoke to one vendor who told us the price of flour has doubled, the price of cooking oil has more than doubled, and the very real fear here is
and if you talk to aid organizations and economists, the situation is only going to get worse.
This winter, there was a sort of cash injection, some liquidity into the market and there was a massive effort by humanitarian actors to avert a
famine. But looking ahead to the coming winter and with the war in Ukraine grinding on the food crisis, inflation soaring, food prices soaring, there
is a very real fear that it is going to be an abject disaster here -- Richard.
QUEST: So the difficult issue is whether or not the foreign aid should be restored, whether or not the frozen bank accounts should be unlocked so
that the money can go back in again and that's the geopolitical problem. Do governments give the Taliban the necessary financial resources to continue
the oppression that they are inflicting on certain members of their own people?
WARD: And this is a real dilemma that is confronting both the US government, but also some of the US' allies that have also frozen assets.
If you talk to economists, if you talk to aid workers, many of them will say you've got to unfreeze those funds.
But we also spoke to the US Envoy to Afghanistan, Tom West, who said that realistically in the short term, there is no plan to recapitalize
Afghanistan Central Bank because of several issues, most prominently the killing by a US drone of al-Qaeda leader, Ayman al-Zawahiri just over two
weeks ago here in Central Kabul, which was in direct contravention of promises that the Taliban had made during the Doha Agreements about giving
safe haven to terrorists groups or to terrorist leaders.
[15:25:07]
WARD: But also very real concerns about issues with women's rights here, about girls' education, girls not being able to go to school after sixth
grade.
Interestingly, the one aid worker we spoke to said, listen, they are using -- women here are starving to death in the name of feminist policies in the
West, which I thought was sort of an interesting way of looking at it. And for most people here in Afghanistan, the pressing issue right now is not
even some of the more egregious abuse rights that we see, but it is simply a question of trying to put food on the table to feed their families --
Richard.
QUEST: Clarissa, thank you. Clarissa Ward is in Kabul for us tonight. I'm grateful. Thank you.
QUEST MEANS BUSINESS tonight from New York. Bill Ready is Pinterest's interests new CEO.
After the break, we're going to talk to him about the pandemic popularity. And at the end of the day, now, you really have to get on with business,
because how do you stand out in the social media world, where you are work at work in some shape or form.
QUEST MEANS BUSINESS. Good evening to you.
(COMMERCIAL BREAK)
QUEST: Our top story today of course, COVID lockdowns in China is wreaking havoc on the country's economy and a strain on the global supply chains.
Last week, of course, we were in Scandinavia. We were in Sweden, where I went to the Swedish truck maker, Scania, and I learned how vulnerable the
company is to supply chain shocks.
It is China and elsewhere around the world.
I spoke to the chief executive, Christian Levin. He told me that Scania is adapting to the unprecedented economic challenges, but it's hard.
(BEGIN VIDEO CLIP)
CHRISTIAN LEVIN, CHIEF EXECUTIVE, SCANIA: Well, it actually got worse before it got better. So very lately in the last quarter, we have finally
seen light at the end of the tunnel, but what I told you then was completely wrong.
I really thought that we were through, we were ready to really go back to maximum capacity and we spoke about how demand was so strong, which was
kind of the paradox of the situation and everyone was coming back. We had full manning. Everyone was prepared and then we did not get semiconductors
for our main control systems on the vehicles.
[15:30:21]
And of course, we've been through big, big difficulties ever since to try to get the whole supply chain in shape again.
QUEST: And you never found out why it's so difficult to get the semiconductors. I mean, you get COVID still from Asia?
LEVIN: I think COVID has continued to play a role. I think -- and of course, there was in our case, there was a winter storm in Texas, there was
an earthquake in Japan hitting big suppliers of semiconductors. There was this block channel with a big ship standing, if you remember.
QUEST: Suez Canal.
LEVIN: In the Suez Canal. All of that just made the situation worse. But I think also a lot of companies such as our own, have started also to try to
secure supplies and speculate. So to build up extra stock and that is coming on top of the crisis. So, you have kind of a snowball effect. And I
think now finally, during the spring, we've started to see the end of that, and some kind of stabilization between supply and demand.
QUEST: So, if supply is coming back, you're now being hit with economic slowdown in key markets, along with inflation. And inflation is hitting you
both ways.
LEVIN: You're right.
QUEST: From what you buy and what you're selling. Are you putting the price up of the trucks?
LEVIN: Well, certainly we do. And that was also the -- always the strength of Scania because we were the price leader. So as soon as we -- as we felt
that, OK, there's more requests than we can supply, meaning we are, obviously supply more value. We were pricing up. So far, my gross margins
are kept intact or has even increased. But you're right, we're hit by inflation, which is unpredictable.
And when you have a long order book such as we have, then we had, that is an additional problem. So, we actually did the dramatic thing. We decided
to limit the order book. So we said beyond 12 months, we don't take orders. So we released and therefore the mark is very surprising, oh, you're
losing, you're not taking orders. Well, that's deliberate. So, we release one month at a time, so that we have some kind of control over what is the
product costs going to be down there.
And so, that we also can commit to a price, to the customer and a quantity.
QUEST: Wow, this is huge.
LEVIN: And that is a new -- that is huge. And that's something I never thought I would have to do.
QUEST: So, you're not committing to orders more than 12 months.
LEVIN: Right.
QUEST: Not because of supply chain issues. But because you don't want to lose any of margin. If the price goes up for making the truck in the end.
LEVIN: And we want to be able to stick to our commitment to the customer and not come back and say sorry, you know, we had such high extra raw
materials, we have short your extra. So yes, we're creating some kind of visibility for ourselves, but also for the customers, which means that
every dealership out there, they just get a certain quota. And then they have to do the priority and say, OK, customer X you get to and customer Y
you get three, you know, because we can sit centrally into that job, that will be the biggest mistake.
But that's how we run it. Right or wrong, of course, I'd love to quickly come back to three months predictable delivery times where we can always
deliver. That's the history we're coming from. But this -- all of this situation, including the war in Ukraine has put us here. And it is awful.
QUEST: I don't want to pile on the misery. But you've now got an exchange rate issue as well.
LEVIN: So we are quite dependent on the Euro, we're dependent on the reais in Brazil. We're quite dependent on the pound, the British pound we are the
leader in Britain. But as the Swedish krona is getting weaker, right now we actually make more kronas. So it's actually right now helping us. But on
the supply side, it's the opposite.
So everything is becoming double more expensive, because the krona is weaker. So -- but this is a game we're used to in small economy of Sweden.
And, you know, it's kind of something we've learned to handle, I would say but they have -- the inflation is new to us.
QUEST: Where did you see the inflation?
LEVIN: We saw the inflation coming with steel prices. And that happened kind of post-COVID when that process industry had a hard time to ramp up
because demand came back faster than everyone anticipated. And then came other metals. And then came rubber. And they came, you know, strange
things. Suddenly, we couldn't get hold of blue paint, you know, because there was some chemical in there that was unavailable.
And then came the real big crisis, which for us, at least, which was I think the whole industry, which was the semiconductors. Starting to limit
us in terms of functionality on the vehicle. And that's where we have been in the last three quarters actually.
(END VIDEOTAPE)
QUEST: Now growth stocks are leading the major U.S. averages higher. Here's the triple stack. You can see we are just right at session highs across the
board. That was sort of there and we're not moving far off. The NASDAQ -- the S&P, sorry, it's nicely over 4300 by a smidgen or two. But the markets
are moving away from the bear market capacities but we're still some way off. The gains are the good news.
[15:35:08]
Tech stocks like Pinterest which saw a difficult second quarter. The company has a weak advertising markets to blame for the loss of more than
$43 million. A five percent drop in monthly users, although revenues were up. The shares are down more than two-thirds from pandemic highs, as indeed
everybody else. And the company's new CEO has been there since late June. He's hoping to turn things round.
Bill Ready is that new CEO. He joins me from San Francisco. Bill, my guess is that, you know, you've not been there that long, but it already feels
like a long time in the -- in the way the markets are -- and the way trading has been. I was looking at a quote from one analyst who says you
are the right CEO. Why are you the right CEO? Now you've been there for three months? What have you discovered?
BILL READY, CHIEF EXECUTIVE OFFICER, PINTEREST: Well, thanks for having me on, Richard. I really appreciate it. And, you know, I think the opportunity
of Pinterest is immense. Pinterest is at this really unique intersection between social search and commerce and really creating a positive place on
the internet for users. And so I think there's an opportunity to really accelerate that, both in terms of how we continue to provide this great
experience for users.
This great positive place on the internet but also to make it a really great place for advertisers to connect with users. And I think you see that
coming through. And our numbers were, as you noted, were continuing to grow. And even as the market -- go ahead, sorry.
QUEST: No. I just -- I want to pick you up on this because, you know, I can see your point. And it's a great site and it's great. I guess the issue is
how you continue to remain relevant, when obviously we're not going back to the old share prices of the previous era. But you're not really concerned
about that. You're much more concerned about just being relevant that some -- that you keep updating what you're offering.
READY: Yes. Well, a couple things, I'd say, you know, Pinterest has a couple of superpowers that, I think is why users keep coming back to us. I
think one is that we're at this intersection between inspiration and intent. So yes, people are coming to Pinterest to be inspired and discover
and find new things. But they're coming here with a purpose. They're not coming here in a leanback mode.
They're coming here with a purpose, whether it's looking for a great outfit to put together, redesigning a room, planning a party. They're coming here
with intent, not just to sort of sit back and pass the time. And I think that's a very sticky activity both for users and for advertisers. And so, I
think you see that, again, reflected in the numbers both and that, you know, even though we're lapping, you know, significant activity from when
people were locked in their homes, we're still seeing really great growth from our advertisers.
Ten percent year-on-year revenue growth on a constant currency basis, you know, which, you know, coming off a large denominator is quite significant.
And our users, one of the things we talk about is our global mobile app users which comprise 80 percent plus of our revenue and our engagement,
they're growing quite nicely.
QUEST: This is all good to the - midst -- a grist to the mill. I'm wondering, you've got, of course, an activist investor, Elliott Management
and we're here today, the Disney share price is up quite sharply, because of an activist investor that's involved. What's it like having an activist
investor? I mean, are they activist? I mean, do you get daily calls? Do you -- do you feel the hot breath on your neck of an activist investor?
READY: So, you know, we've had a number of really great and engaging dialogue, great engage in conversations with Elliott. And I think, you
know, as with any investor, of course, they want to see a return. But I think, you know, it's been great to see that they share our conviction for
the business. They share our optimism for where Pinterest can go. And you see us taking action on that.
And I think, you know, Elliot and I both commented on this during our earnings that, you know, there's a lot of good alignment for how we see the
business going forward, and how we can do more to bring users to the platform, make it a place, you know, that's a must buy for advertisers and
create a lot of growth from that. And so, again, it's been a really great dialogue. And, you know, having a smart, well-informed investor that has
conviction in your business and wants to put money in your business I think is a fantastic thing.
QUEST: How difficult are the times? How different -- I was reading in the - - over the weekend about all the founders that are, you know, bailing out of the companies that they funded because they'd wish they'd done it at a
much higher share price, but that's a different matter. But how actually different is it to run a business, a new business, sort of an internet,
tech type business, social media-based business now than it was, say, 18 months, two, three years ago, at its height?
READY: Well, I think, you know, I think it's a great time because you're going to see differentiation more at play. I've led businesses through
multiple cycles in the past, and I think you know, when you hit a tougher part of the cycle, I think differentiation just shines through more.
[15:40:03]
So I think for us, you know, we're a business that has, you know, generated cash and generated margins over time. So, I think, you know, we're in a
great place from a financial perspective. I think when you look at how we differentiate for users and advertisers, I think we're differentiated there
as well, that we're positive place on the internet for users, a place where they go to feel uplifted.
It's not a place for people to shout at their neighbors about their politics or those kinds of things. It's a place where people go for
inspiration and to be lifted up. And for advertisers, you know, advertisers are being asked to do more with less just like everybody else. And
oftentimes, they face this difficult tradeoff between upper funnel or brand advertising or performance marketing.
And Pinterest gives both of those things. It's performance-based marketing. That still lets the advertiser tell their brand story. And so we're at this
sort of magic moment in the funnel with the user where the user is coming to us with intent, but still hasn't decided what they want to buy. That is
the magic moment for an advertiser to engage and again, I think makes us a must buy for advertisers as they're shifting.
So again, differentiation I think, shines through more and more in a tough cycle. And I think you're seeing that from us.
QUEST: Good to see you. But I love that phrase, inspiration or intent. Absolutely wonderful way to think about it. Thank you, sir, for joining us
tonight.
READY: Good to see as well. Thanks for having me.
QUEST: And that is QUEST MEANS BUSINESS. I'll have the dash to the closing bell. And that's in about three minutes. African Voices Changemakers is
next.
(COMMERCIAL BREAK)
[15:58:59]
QUEST: Hello. I'm Richard Quest. Together let's have a dash to the closing bell. We're just a minute and a half away. The stocks in America shaking up
worries on the state of China's economy. Beijing's Central Bank's cut interest rates. And the markets now up 150 points on the Dow which is out
the red. So miserable morning. But things have picked up quite nicely today. The same for the triple stack. The S&P 500 both lower and now
actually near session highs over -- oh, now, look at that. The Dow did go over 30 -- 3,900.
And but the S&P slipped back a bit. It's China's economic growth, which might have some benefits elsewhere in the world. David Hunt is the chief
executive of PGIM says it could help tame U.S. inflation.
(BEGIN VIDEO CLIP)
DAVID HUNT, PRESIDENT AND CEO, PGIM: On the one hand, we need the demand from China. On the other hand, if China slows it actually makes getting
inflation under control somewhat easier. In particular, I would point out energy prices where you've already seen this week some reaction to that.
And I think you'll continue to see that. So in the short term actually having China's slow, we would argue is a bit helpful for the economic
condition in the U.S.
(END VIDEO CLIP)
[16:00:07]
QUEST: The way the day looks. Richard Quest. Whatever you're up to in the hours ahead, I hope it's profitable. The closing bell is ringing on Wall
Street. "THE LEAD WITH JAKE TAPPER" is next. The market is up.
END
