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Quest Means Business
Bed, Bath And Beyond Shares Surge Amid Reddit Buzz; More Americans Move To Mexico Seeking Lower Cost Of Living; China's Sichuan Factories Ordered To Close For Six Days; Russian Ammo Depot In Crimea Explodes; Biden Signs Landmark Inflation Reduction Act Into Law; Biden To Sign Landmark Inflation Reduction Act Into Law; Jewelry Brand, Pandora Posts Disappointing Q2 Results; Scania CEO On Drive To Electrify Haulage In Europe. Aired 3-4p ET
Aired August 16, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:25]
RICHARD QUEST, CNN BUSINESS ANCHOR: An hour before the closing bell rings and the rally continues. It is a strong day. It will be the fifth straight
day of gains for the Dow. And as you can tell, a little bit of a dip there, but it is a good solid movement from the Dow, over 34,100. The markets and
the main events, which are indeed today driving the markets:
President Biden in this hour will sign one of the biggest economic packages in US history. He will sign it into law. You'll see it on this program.
And the reasons blockbuster earnings from the bellwether retailers are easing fears of an imminent recession.
And meme stock mania is back. Reddit investors are selling Bed Bath and Beyond, BBB. Their share is up as much as 80 percent, even on a day with
retailers doing well. We'll talk about it.
It's live from New York, Tuesday, August the 16th. I'm Richard Quest, I mean business.
Good evening, in a few moments' time, President Biden will sign into law, an economic bill that his party says will reshape the US economy. The $750
billion Inflation Reduction Act includes major changes to healthcare and climate policy. It will reduce the deficit by introducing new taxes,
particularly at corporation level.
House Democrats approved the bill on Friday, and it follows a series of legislative achievements for the President.
MJ Lee is at the White House.
He didn't get all what he wanted, but he got more than he'd hoped for and there were moments when it looked like it wasn't going to happen. So, I
guess he is entitled to take a victory lap.
MJ LEE, CNN WHITE HOUSE CORRESPONDENT: Yes. You know, it isn't difficult to see why Democrats and President Biden and top officials here at the
White House have already been running those victory laps, because this bill is about to be signed into law, and you're absolutely right, but even
though the President didn't end up getting everything that he initially wanted, he did get some major achievements that Democrats can now run on in
the midterm election.
So just some of the top lines so that our viewers are aware, this will end up making the biggest investment to fight climate change that the US has
ever seen. It also will lower prescription drug prices for consumers by allowing Medicare for the first time to negotiate directly with drug
companies. This is something that Democrats have wanted for years and years, but couldn't get done.
It will also expand Affordable Care Act healthcare subsidies for a number of years, and all by taxing large corporations, which the bill writers have
said would help to reduce the deficit.
Now this bill didn't end up getting any Republican support. But you're absolutely right, Richard, that we have seen some bipartisan legislative
wins for this President during his one-and-a-half years in the presidency and in office, including two bills that were signed into law just last
week, right, the Semiconductor Bill and the Burn Pits Law that will help veterans. And then of course, last year, there was that huge infrastructure
investment package that was a big bipartisan win for this White House.
So no question that we already know, the White House, including the President and everyone on down, we're going to see a lot of travel, we're
going to see a lot of folks getting out there on the road to tout all of these accomplishments. And this is going to be a big one, particularly on
the climate change front.
And you're right, as you noted before, it's almost sort of a nice surprise for this White House because there were so many moments when this bill
seems absolutely dead on Capitol Hill.
QUEST: MJ Lee at the White House. Thank you.
The law will help green energy and industry immensely. It includes infusion of $70 billion to reduce carbon emissions. It provides tax incentives for
electric vehicles and billions of dollars towards clean energy manufacturing.
It allows Medicare which is for the elderly, to negotiate the price of some drugs, it will be a growing move, and it imposes a 15 percent minimum tax
on large corporations.
Gillian Tett is chair of the Editorial Board at "The Financial Times." Gillian is with me now.
So look, I mean, let's do this -- it is a big bill, but does -- let us clear one thing up. Does it have any inflation beating requirements or
attributes within it?
GILLIAN TETT, CHAIR OF THE EDITORIAL BOARD, "THE FINANCIAL TIMES": Well, I think if this was a brand I think some of the regulators would say this is
slightly misleading consumers because the reality is it's called the Inflation Reduction Act, inflation actually is very likely to come down in
the coming months.
[15:05:10]
And in fact, it's already coming down a bit, but for reasons that don't actually have a lot to do with this bill, because things that are inside
this bill could cut household expenditures in the future, but it is going to take quite a long time to come through. These are things like giving
households tax credits, if they install, say, heat pumps, and other environmentally friendly measures in their houses. Yes, that will cut the
expenditures. Yes, it's good for consumers. But it's not going to suddenly yank down inflation right now.
But the irony is that inflation actually is falling already anyway, and likely to keep falling to a certain degree. And you're certainly going to
see the White House taking credit for that, even if, strictly speaking, this bill isn't at the core of that.
QUEST: Okay, so the climate change, we know, it's all -- it's the most that the US has ever done. We know all of these aspects to it. If you look
at it from an economic point of view across the whole economy, does this give a stimulus in some shape or form because in a sense that the last
thing the economy needs?
TETT: Yes. Absolutely. And in fact, there is an awful lot of hand wringing about the last stimulus packages, and Richard, that probably overstimulated
everything. You really can't have too much of good thing, it's a bit like giving endless cookies and ice cream to a toddler. They'll keep liking it
until suddenly, they feel sick. And that's kind of what happened last time around.
So what this really is more about is trying to shift the US economy onto a more sustainable path in terms of energy consumption. There are things in
this bill, which will actually be helping to boost the oil sector a bit. Don't expect to hear the progressives talking much about that. Instead, the
focus is very much on having green energy measures introduced.
But politically, one very important thing to think about is that, because America now has these measures for fighting climate change, it can go to
the so-called COP 27 meetings in Egypt later this year. That's a big gathering of global heads of state talking about how the world collectively
can fight climate change. America can now go to that with a certain degree of moral high ground, and try to get other governments to actually ramp up
their commitments to go green as well, and that matters economically, much more widely.
QUEST: I was reading some of your views on debt lately, and the sheer amount of debt that there is in the system. The issue of debt, of course,
is it is fine when interest rates are low, but there is a lot of people now in countries as well, who are uncomfortable.
I mean, I was talking to Scania, one company, who we'll hear from later in the program who said, you know, they are refinancing the debt as it just
becomes due and it is to get much, much higher levels?
TETT: Yes, it is one of the crazy things that most people have ignored, which is that we had a crisis in 2008, the great financial crisis triggered
by way too much debt. And after that, everyone said, well, one lesson is that we should collectively cut debt.
So what happened? Debt dramatically increased. And debt today as a proportion of global GDP, is pretty much near record levels. It has been
going up and up and up. And in the US, as we all know, the Federal debt has been swelling inexorably.
Now it's a bit like that Wile E. Coyote cartoon where that character goes off a cliff and as long as they don't look down, they just keep pedaling
furiously, and stay up in the air. And as long as the markets don't really start asking hard questions about whether that debt can ever be repaid,
it's kind of fine, because investors keep buying government bonds, and the yields stay relatively low, and so it's all fine and thus, living costs
have been quite low.
The big question now, though, is if inflation is going up and the Fed is jacking up rates, what is going to happen to that debt pile in the future?
And will that Wile E. Coyote character, investors who are sort of ignoring the math actually start looking down and panic?
QUEST: Good to see you, Gillian. I think you're going to be with us, hopefully, when we have the President a little bit later, if you can stick
around. So we look forward to that. Thank you.
Now, surprisingly good retail earnings from Walmart and Home Depot, are driving gains in the US markets. The Dow is seeing the best of it. The S&P
is pretty flat. In fact, it is totally flat and the NASDAQ is slightly lower.
So we have the old cash register here to show you exactly what has been going on. Walmart and Home Depot are lifting the entire retail sector. Both
shares are up more than five percent. Macy's and Wayfair is rallying the most at the moment.
Macy is up more than eight percent as you can see. Wayfair is up similarly, but very strong performance by all readout. This is a case of the rising
tide, lifting all boats, giving investors reasons to be optimistic.
[15:10:17]
The receipts, let's go first of all to Walmart and Walmart's second quarter. So if you look at what Walmart did in the second quarter, it sells
up six and a half percent; net income of $5 billion dollars and expectations were low. Walmart lowered its outlook in July.
Now that's Walmart. Thank you.
Now let's do Home Depot, which is, of course the major hardware retailer. It's also reported similar success. So we put quarter two at $430 million,
same store growth beat expectations by nine percent and investors are hoping the strength will continue for the moment and endure that. Look at
that. You get a very strong results indeed.
The earnings tomorrow come from Lowe's and from Target.
Matt Egan is in New York.
Matt, the reality is, retailers have been the dogs of the market. Now, they are the flavor de jure.
MATT EGAN, CNN REPORTER: Hey, Richard, and I'm happy to say that the supply chain issues, I guess have not made it hard for you to get your
hands on a cash register, which is great. But I think the message from Walmart and from Target and from Home Depot is really an economy that is in
transition. It's not falling off a cliff.
I mean, if there was a recession, someone forgot to tell Home Depot. They've reported $44 billion in quarterly sales; that is an all-time
company record. And they said there is really strong demand for home improvement.
The number of transactions, the transactions actually fell, but the ticket size on average went up. And so Home Depot sounded pretty upbeat about
things, and Walmart, too. I mean, obviously, Walmart had issued this rare profit warning last month, but they came out today, they reported better
than expected results. And they do point out some shifts in consumer habits, which I think are telling and really point to kind of the economic
moment that we're in right now.
Walmart said that high income and middle income shoppers are transitioning to their store, they're buying more of their stuff, because they're looking
for bargains on stuff. And they also said that shoppers are buying less of some of the more expensive items. And particularly they called out deli
meat. Instead, they said that people are buying hotdogs, they're buying chicken.
And so I think if you put this together, it shows that consumers are still spending money. They're spending it differently. But the fact that they're
still spending, I think bodes well for the economy.
QUEST: Okay, so if they are spending and one of the reasons we showed that list of stores because you need to pass the number -- you need to pass them
to members, don't you in a sense. Is it upper end? Is it middle? Is it lower? Is everybody -- is big box like Macy's enjoying the same growth as
for example -- just look at that, you've got Walmart at a more discount and along with Home Depot and Target. But then you've also got Amazon, which is
down today. But it has been up so sharply and Wayfair, which is quasi-meme.
EGAN: Right. I mean, I think that all of these companies are being hit by this situation differently, but there was a fear just a few months ago that
consumers were totally tapped out, right? That high gas prices and high food prices meant that people just didn't have the money to spend it.
To some extent, I think there is some truth to that. Gas prices have come down, there is some hope that maybe food prices are cooling off, too. But
what you're hearing from these bellwethers in Walmart and in Home Depot is that people are still spending, but because they're spending differently
that has caused these problems, right?
Walmart has said that their inventory levels have really piled up. They have too much stuff that people no longer need. We know that Target and
Best Buy and others have faced a similar situation. So this is a situation that is difficult for even the savviest retailers to navigate.
But I do think that investors overall, those who are worried about an imminent recession have to sort of breathe a sigh of relief that consumers
are still spending
QUEST: Matt Egan, sir, thank you.
Coming up next, from Marilyn Monroe Rosario Dawson. Here, diamonds have a long spelt glamour and luxury. In economic challenges though, it can be
hard to keep up.
So for instance, lab grown diamonds which are now coming to the United States in large number, we'll be speaking to the Chief Executive of
Pandora, the world's largest, if you like, retailer of jewels, and it would be after the break.
(COMMERCIAL BREAK)
[15:17:31]
QUEST: Pandora is the world's largest mass market jeweler, and the company's second quarter sales grew 10 percent from the year before. There
are struggles though in the United States and China. Pandora's shares were sharply lower in Copenhagen, where the company is based. It has blamed a 12
percent drop in US growth on the end of the COVID era stimulus.
So one of the things it is doing, of course is luring American shoppers back into the North American launch of its lab grown diamonds like these.
Last year the company said it will stop selling mined diamond for environmental and ethical reasons. It did so in the UK. Now, it is saying
that these lab-grown diamonds will be sold in the United States.
Alexander Lacik is the chief executive of Pandora and joins me now.
Good to see you, sir. Kind of you to give us your time tonight.
Look, what are diamonds -- your shares were down very sharply, which I agree sort of on any given day, that's neither one thing nor the other. But
it happens on a day when retail shares are very strong in the US. Why is this, do you think?
ALEXANDER LACIK, CEO, PANDORA: Well, it's kind of weird. I get this question once in a while and my typical answer is, my job is to run the
company as well as I can and then of course, the market will then decide how they value us.
Having said that, though, we just announced today the third record quarter in a row in quite difficult circumstances with the war and COVID and
inflationary pressures, what have you, so, you know, on a personal note, probably not the greatest experience with the share price going that way.
But the company is very healthy and we are turning out -- we're delivering the numbers which we said to the market we would deliver. So that's kind of
what we see.
QUEST: But, on this point, you must be encouraged today by what the numbers on retailing in the United States that we've seen from say Walmart
and Home Depot and others because it does suggest the US consumer is still strong and with your lab grown diamonds, you could do quite well.
LACIK: I would hope so. I mean, there's a lot of talk on how this inflation and of course, there has been price rises across a number of
categories in the recent past, but in fact when we look into our metrics we don't really see that. That's not to say that they couldn't come in the
future. But on your point, you know, the retail in the US continues to be strong is a good sign, of course, it's a good sign.
[15:20:17]
QUEST: And let's talk about lab grown. I guess, however, you know, you're making a massive play on lab grown, versus mined on the grounds of ethics
and environmental. But at the end of the day, there is an argument that says, properly mined diamonds does not harm the environment and/or can be
good for the economies of those countries, and I emphasize strongly properly mined.
LACIK: So the reason we are bringing it to the market is not first and foremost, the fact that there's an argument around them being, you know,
having less CO2 emissions. The reason we bring it to the market is because it is a technology leap that that's actually happened in this space. And
therefore you can produce diamonds at a much, much lower cost, which is kind of interesting for us, because we play in the mass market, we don't
play in the lower end of the jewelry market, neither do we strive for playing in the high end of the market.
Pandora is firmly a brand for the masses, let's say.
QUEST: Right.
LACIK: And with this technology transformation, it actually allows us to bring diamonds to many more people. And that's the kind of the underlying
reason why we entered this space.
On top of that, of course, they come with a quite interesting sustainability profile and what we focus on is the emission profile more
than any anything else really.
QUEST: So let's just talk about this idea of being able, I mean, if you accept that one of the things about diamonds is scarcity, Rarity and value.
And I see where you're going with your -- you want to bring it to the masses. Do you have to, in a sense, create the brand of the lab-grown
diamond, and you have to make that as desirable.
LACIK: So let's take a step back. I mean, the birth of diamonds being popular was done by DeBeers, you know, when they coined this idea that
"Diamonds are forever," which was kind of a manifestation of, you know, typically a man getting on his knee and kind of explaining his eternal
love, and that was kind of the way this category was created, and it has been so for many years and is thriving and is working very well.
Now, when you speak to younger generations, maybe then the beliefs of this eternal love, are a little bit less than possibly our parents had. So there
is some kind of undercurrent going on there. So we've kind of dug a little bit deeper on that idea.
And then, on top of that, we also see that kind of women actually don't have to wait for the guy, typically to turn up with the diamond ring, with
our proposition and the concept that we're building our brand proposition around is for women, they can purchase this themselves in order to
manifest, you know, great things in their life, successes that they want to kind of celebrate and such.
So we're actually pegging us slightly differently from the traditional diamond market and that's how we're trying to build the Pandora way of
thinking about diamond.
QUEST: Just thinking that some of these diamonds would look very nice as cufflinks. Thank you very much, sir. I'm grateful for you for joining us
tonight. I appreciate it. Thank you.
Proving that QUEST MEANS BUSINESS is like no other business program, we're going to go from, sort of if you like the beauty and the rarity of the
diamonds, to the grunt and the, if you like, machismo of a big tractor trailer truck.
The head of one of the world's top truck makers says he is betting the whole company on going electric. The chief executive of Scania, Christian
Levin told me what stands in the way of Europe's electric truck advent? And he even let me drive one.
(BEGIN VIDEOTAPE)
QUEST: Wow. Now, we're talking trucking.
CHRISTIAN LEVIN, CEO, SCANIA: And it's on.
QUEST: All right.
LEVIN: I think it's on. It's on.
QUEST: Yes. There we go.
LEVIN: It tells you something.
QUEST: No, no, no. It's moving.
LEVIN: Go maximum.
QUEST: Let's look at the company itself in terms of the product line, this shift to electric vehicles, it is happening and it's costing you a lot of
money in R&D.
LEVIN: Yes, but it is deliberate. I mean, we decided way back to say that we are going to be the company that is going to lead the transition in our
end industry, so we even changed our kind of mission statement to say, I mean, "Our purpose is to drive the shift towards sustainable transport
system." What does that mean?
[15:25:07]
Well, it means massive investments in R&D, because you have to find a way. And that's what we've been doing. We decided we will cut our own emissions
50 percent by 2025. We're ahead of that curve. And then we took the big bet, which is the difficult one to say, we're going to make sure that the
entire rolling population of Scania vehicles in 2025 are going to emit 20 percent less, all of it, not just new vehicles. That could be fixed easily.
But the entire rolling population, eventually, we believe that the full electric truck is the best solution to all it.
QUEST: Your competitors are all doing similar.
LEVIN: Well, that's great, isn't it? They're all following. So I'm really happy that we are showing the way and I'm also happy that the legislator is
waking up and are giving us a target.
So 2025, we all need to take 15 percent CO2 out from our new vehicles, but that is not going to be the big challenge.
QUEST: Do you need more help, if you will, from government?
LEVIN: Certainly.
QUEST: To incentivize fleet owners.
LEVIN: Right.
QUEST: To make the shift, because otherwise, the risk is they wait until the last possible moment.
LEVIN: You're right. Demand is not there. Why is that? You know, why is that? Well, as a transporter logistic company, what is the first question
you ask? Well, is it a good business case to change to electric?
Well, the cost of the vehicle is two to three times higher. You know, what is the electricity price going to be? Is there predictability? Certainly
not. You know, it is fluctuating a lot. You know, can I hedge that somewhere? This is the type of conversation you'll come into. That's
question number one.
Question number two, is the charging infrastructure. Am I going to be able to charge when I need it? Or, you know, am I going to be standing along the
highway? And of course, question number three, which is really a political issue is, well, is there green electricity available? Or else the whole
exercise doesn't make sense?
This is where they need to open. You ask about the incentives, that could help the business case. Yes. And that's why you see so many city bus
operators changing over because there are incentives there.
Okay, so here is where you typically would find the fuel tanks. And instead, you have two solid boxes here of batteries. So typically, you have
around a hundred-kilowatt hours in one of these and that is if you take a passenger car, that's what you have in a complete car, right? Or not even,
you have less than that.
And here, we fit four of these. So this vehicle, which gives us a range for this type of vehicle, 28-ton at around 250 to 300 kilometers.
QUEST: How much more difficult is it to get batteries of size that's going to drive something like this?
LEVIN: I think we are already there now. So what we are right now -- not this vehicle, but what we are launching and starting to sell right in this
autumn is a 40-ton typical European tractor unit with a semitrailer. That is the backbone of all European transport.
That thing with the battery technology of today is going to drive four-and- a-half hours without charging, 40-ton. And then the problem is solved because basically the driver -- I mean, the driver, according to European
and British drive time regulations, they have to stop and make a break, 45 five minutes and there comes the challenge.
QUEST: Now, you've got to get the infrastructure.
LEVIN: Right.
QUEST: Because --
LEVIN: So that you can actually charge in 45 minutes.
QUEST: Right.
Have you bet the company on electric?
LEVIN: Yes, we have. You can say we have. We have committed to delivering half of our production in 2030 and we are setting up a complete battery
factory here South Italia that's billions in investments. We're changing the whole product program. That's more than half of our R&D efforts.
We are collaborating and we've went into Northvolt. We are together with Volvo and Daimler setting up a charging infrastructure throughout Europe,
500 billion -- 500 million euros, sorry, we are subtly committing the company and if we fail, we will be in big trouble.
QUEST: And where are we going to park?
LEVIN: I think you can park here where they -- just here.
QUEST: The one thing -- the one I want to drive --
LEVIN: Yes.
QUEST: The biggest you've got.
Oh my goodness. Oh my God, this is huge.
(END VIDEOTAPE)
QUEST: Yes, that was me at the wheel, and since I'm here now, well, actually, there was one moment when he said to me, don't worry if you tip
it over. It's happened before, which wasn't terribly, like confidence giving, but we didn't tip over and I'm here to tell the tale.
It's QUEST MEANS BUSINESS tonight from New York. Perhaps Quest Memes Business.
Shares in a struggling American retailer are being transformed by the meme stock phenomenon, Bed, Bath and Beyond. In a moment.
(COMMERCIAL BREAK)
[15:33:03]
QUEST: Bed, Bath and Beyond expectations shares in the struggling home retail stores are skyrocketing. They're up. You can see there. They're up a
great deal more earlier. They're now up at 16 percent. Now they'll be up 17 percent.
It's a meme stock. It's a meme stock madness. It's traders on platforms like Reddit and influential Wall Street bets are pumping up Bed, Bath and
Beyond, BBB, after a new endorsement from GameStop's chairman.
Paul La Monica, Paul, what justifies it?
PAUL LA MONICA, CNN MONEY CORRESPONDENT: I'm not really sure anything justifies this move, Richard. You are talking about a retailer that's still
struggling. They recently lost their CEO because of the problems that the company is facing. They're not profitable. What Bed, Bath and Beyond has
going for, though, as you pointed out, Richard, meme investors love it because of the association with Ryan Cohen, the ex-Chewy founder who then
has gone on to become the chairman at GameStop, the biggest investor there.
His firm also taking a big stake in Bed, Bath and Beyond. And I think there are investors that hope that the magic that he is working with GameStop to
try and turn them around could rub off on Bed, Bath and Beyond as well.
QUEST: Right. So how much of this share price boom is designed for speculation versus no, we believe that there is a medium to long term
future for BBB?
LA MONICA: Yes. I think it's a combination of both. Clearly there are the, quote-unquote, "apes" on Reddit that are just trying to pop this stock
higher because it's heavily shorted as well. A lot of hedge funds are betting against companies like Bed, Bath and Beyond, GameStop, and AMC as
well. And the Reddit apes, if you will, kind of take pride in squeezing those short sellers, making them hurt by driving the price higher, which
increases losses for anyone betting against these stocks.
[15:35:05]
That said, I do think it is worth noting that Ryan Cohen, very successful at Chewy, a company that when toe-to-toe with Amazon is still around,
trying to turn around GameStop. They're moving more with NFTs and other crypto type assets, to try and, you know, capture growing momentum there.
Can Bed, Bath and Beyond, which, you know, has a lot of competition, Amazon of course and other traditional retailers?
QUEST: Right.
LA MONICA: Not sure that Cohen's magic will wear off on them, but that's what investors are hoping.
QUEST: Well, I'm a regular shopper at Bed, Bath and Beyond. There's one near where I live. I'm always popping in there to buy something. But it's
the sort of thing that you buy that you don't get terribly excited about. Something for the kitchen or the bathroom.
Thank you, Paul. That's why it's called Bed, Bath and Beyond. Paul La Monica, thank you.
The video conferencing platform Zoom is (INAUDIBLE), down more than 4 percent. Over the pandemic, millions of people opened Zoom accounts, for
remote meetings. The stock was up sharply, skyrocketing. Now we're back in the office. And Zoom is off 80 percent from its October 2020 high of near
$600.
All at the same time, though, as we are still working remotely. Because the work from home boom has driven many people in the U.S. to seek warmer and
cheaper clients. There are a number of Americans are making Mexico their new home as inflation bites and some Mexicans say this influx makes life
too expensive for them.
David Culver with more.
(BEGIN VIDEOTAPE)
DAVID CULVER, CNN INTERNATIONAL CORRESPONDENT (voice-over): Look past the charming cafes, scenic parks, flashy apartments and you'll see this capital
city for what it's becoming, a refuge for migrants.
UNIDENTIFIED FEMALE: I grew up in New York.
UNIDENTIFIED FEMALE: L.A.
UNIDENTIFIED FEMALE: Out way in Atlanta, Georgia.
CULVER: Perhaps not the border crossing you expected. Americans leasing pricey U.S. cities heading south to work from home in Mexico City.
ERIK RODRIGUEZ, U.S. EXPATRIATE IN MEXICO CITY: It is starting to feel like home. I've been here for several months already.
CULVER: Born and raised in the U.S., Erik Rodriguez hardly speaks Spanish, and admits he's not here to rediscover his Mexican roots, so much as to
save money.
RODRIGUEZ: In San Diego, my apartment was probably $2500.
CULVER (on-camera): For one bedroom?
RODRIGUEZ: For a studio.
CULVER: For a studio.
RODRIGUEZ: Here, I have a one-bedroom and I pay $800 a month.
CULVER (on-camera): The State Department says 1.6 million U.S. citizens live in Mexico. But they don't tell you how many are living and working
there on tourist visas. The Mexican government does not track that data either. But they recorded more than 5.3 million American tourists flying in
during just the first five months of this year. Nearly a million more than that same period in 2019. Pre-pandemic.
Rodriguez is among the unrecorded by undeniably present so-called digital nomads, here officially as tourists, most working remotely for U.S.
companies, still getting paid in U.S. dollars, allowing for a far more affordable life in Mexico.
RODRIGUEZ: I think there was a sense of we want people to come here to stimulate the economy, thank you for being here. But I know that recently
there's been complaints from locals about the effect that expats living here has had on their own lifestyles.
CULVER: Sandra Ortiz is one of them.
(On-camera): The prices are going up high. And she said it's difficult because a lot of these foreigners come, and they have a bunch of money to
be able to spend on some of these apartments and rents.
(Voice-over): For more than 50 years, Ortiz and her four siblings run a restaurant popular with locals on a prime corner in the increasingly
desirable Roma neighborhood. But as prices climbed, Ortiz says it became unaffordable for the family. And in February, she says they were evicted.
All their belongings piled on to the sidewalk.
(On-camera): You have five minutes to get everything out and move it out of the business.
(Voice-over): So where did the locals go? That's what we need to be asking ourselves, Fernando Bustos Gorozpe tells me. The pandemic, coupled with the
global inflation, have made matters worse leaving locals in fear of a culture clash.
This is part of the problem, he says. The expats move here because it's cheap, not because they want to truly immerse in the local culture.
Families like the Ortizes feel they're getting pushed out. Sandra and two of her siblings now working at another restaurant, no longer the owners.
The thought of visiting their old restaurant too painful. We went by. Renovations already underway. High end apartments, coming soon.
David Culver, CNN, Mexico City.
(END VIDEOTAPE)
QUEST: And of course many of the similar places where this is happening, we hear them in Lisbon in Portugal and the like. And the digital nomads in the
post-pandemic era.
Now after the break, we're waiting for the president, President Biden, who's going to start speaking.
[15:40:03]
There are a variety of speakers before we get to him. It's all about him signing the new act, the inflation act, the Inflation Reduction Act, along
with climate control. We will be with him. You will hear it when it happens.
(COMMERCIAL BREAK)
QUEST: Severe heatwaves creating economic havoc for China's largest provinces and the consequences can be felt far and wide.
CNN's Selina Wang in Beijing.
(BEGIN VIDEOTAPE)
SELINA WANG, CNN CORRESPONDENT: China's Sichuan Province has ordered all factories to shut down for six days. It's in order to ease a power shortage
in the region as China deals with its worst heatwave in 60 years. Now this could have major knock-on effects not just on China's economy but
potentially the global economy because Sichuan is rich in minerals like lithium and polysilicon. It's a key manufacturing location for the
semiconductor and solar panel industries.
This power rationing will hit factories from giant companies like Apple, Foxconn and Intel. Chinese battery giant that supplies to Tesla also has a
factory in the region. Now analysts say that shutting down factories for the week could tighten the supply of polysilicon and lithium and push
prices higher. Officials said the decision was made to make sure that there's enough power for residential use.
During this extreme heatwave with temperatures above 104 degrees Fahrenheit in dozens of cities, this heat means that there's a jump in demand for air-
conditioning, which puts pressure on the power grid. Making things even worse is that the drought has depleted river water levels, reducing the
amount of electricity produced at hydro power plants.
The extreme weather has also added inflationary pressures. The extreme heat has killed crops in the south. And in the north, heavy rain and flooding
has also led to crop failures. Now officials say that the extreme weather has pushed up the prices of fresh vegetables, prices rising nearly 13
percent year on year, significantly higher the previous year.
Meanwhile in Chongqing in southwest China, the heatwave has been breaking records with temperatures over 104 degrees Fahrenheit for over a week, and
temperatures expected to hit 113 degrees Fahrenheit in the coming days.
On social media videos are going viral showing just how hot it is. One viral video shows massive exposed river beds in one of the city's main
rivers. And the water is so hot in swimming pools that videos have gone viral showing people throwing joint ice cubes into the pool.
[15:45:06]
All of this just highlights how unrelenting the heatwave in China has been this year.
Selina Wang, CNN, Beijing.
(END VIDEOTAPE)
QUEST: For the second time in a week explosions have rocked the Russian military facility outside Crimea. Inside Crimea, it was an ammunition gun.
The sounds of explosions ricocheting and heavy black smoke rising. Russia says it was sabotage. Ukraine isn't claiming responsibility. Yet a senior
official calls the blast demilitarization in action.
In Kyiv, CNN's David McKenzie with the details.
(BEGIN VIDEOTAPE)
DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT (voice-over): Explosions peppering the horizon in Russian occupied Crimea. Just a few miles away,
commuters reacting in shock, filming the blast with their mobile phones. Even the buses moving, they say, six kilometers away, the bus is shaking.
The blast at an ammunition depot in northern Crimea, causing damage to powerlines, a power plant, railway tracks, and residential buildings.
Branded sabotage by Russia's military. Kyiv has not claimed responsibility for the incident but a Ukrainian presidential adviser called it
demilitarization in action.
It's the second major security incident in Crimea in just one week. Last Tuesday, massive explosions at a Russian airbase on Crimea's west coast,
close to beach-going tourists. A major psychological blow. The Russian Defense Ministry blaming it on accidental detonation of ammunition.
On the southern battlefield, inspectors from the Atomic Energy Agency still unable to get into the massive Zaporizhzhia power plant to ensure its
safety. Russian officials blaming the U.N. for that delay. The U.N. denies that, saying it's ready to provide security and logistics.
Russia and Ukraine blame each other for dangerous strikes near the plant which has continued to operate. President Volodymyr Zelenskyy Monday
calling on the world to introduce tough sanctions as a response to Russia's, quote, "nuclear blackmail."
VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT (through translator): The provocative shelling of the territory of the plant continues. Undercover of
the plant, the invaders are shelling nearby towns and communities. The Russian military hides munitions and equipment at the facilities of the
plant.
(END VIDEOTAPE)
QUEST: So to the White House now, where President Biden is about to sign the Inflation Reduction Act. It's got climate control, and all sorts of
things there. You've got the Senate majority leader Chuck Schumer who's introducing the president.
What's interesting of course is it was Chuck Schumer in his negotiations, particularly with Joe Manchin, the Democrat senator who he absolutely had
to have on board. Bearing in mind it's 50-50 in the Senate. So he had to have Joe Manchin on board. And after two years of Manchin saying he would
not do a stimulus package, or he would not get involved in anything like this, finally, Chuck Schumer managed to pull together that deal with that
Arizona senator. And they were able to get this passed.
So now it is for a president who has had a few electoral -- sorry. A few legislative victories of late and who is facing a midterm that's going to
be brutal in just a few weeks' time, this is a welcome break. The president of the United States.
(APPLAUSE)
JOE BIDEN, PRESIDENT OF THE UNITED STATES: Thank you. Please be seated. Thank you. Thank you. Thank you. Please.
Thank you, Majority Leader Schumer. Chuck, you've been a good friend a long, long time.
And Joe, I never had a doubt.
(LAUGHTER)
BIDEN: Joe had an operation on his shoulder. I just want you to know it wasn't because of anything we did. He's in great shape. And our whip, Mr.
Clyburn, you're amazing. And I am reminded often by my staff, were not for you, your wife telling you to endorse me, I wouldn't be standing here. But
thank you very, very much.
[15:50:06]
And also, Congresswoman Castor and my good friend Frank Pallone. Congressman Pallone, thank you for your leadership.
You know, while they couldn't be here, I especially want to thank Nancy Pelosi, who was instrumental in this law, and Vice President Harris for the
incredible work she did. And I'm about to sign the Inflation Reduction Act into law. One of the most significant laws in our history. Let me say, from
the start, with this law, the American people won and the special interests lost.
The American people won and the special interest lost. We're in a session of -- for a while, people doubted whether any of that was going to happen,
but we are in a season of substance. This administration began amid a dark time in America. As Jim said, a once in a century pandemic. Devastating
joblessness. Clear and present threats to democracy and the rule of law. Doubts about America's future itself.
And yet we've not wavered, we've not flinched, and we've not given in. Instead, we're delivering results for the American people. We didn't tear
it down, we build up. We didn't look back, we look forward. And today, today offers further proof that the soul of America is vibrant, the future
of America is bright, and the promise of America is real and just beginning.
(APPLAUSE)
Look, the bill I'm about to sign is not just about today. It's about tomorrow. It's about delivering progress and prosperity to American
families. It's about showing the American and the American people that democracy still works in America. Notwithstanding all the talk of its
demise. Not just for the privileged few, but for all of us.
You know, I swore an oath of office to you and to God, to faithfully execute the duties of this sacred office. To me, the critical duty, the
critical duty of the president is to defend what is best about America. That's not hyperbole. Defend what's best about America. To pursue justice,
to ensure fairness, to deliver results that create possibilities, possibilities that all of us, all of us can live a life of consequence and
prosperity in a nation that is safe and secure.
That is the job. Fulfilling that pledge to you guides me every single hour of every single day in this job. No, presidents should be judged not only
by our words, but by our deeds. Not by our rhetoric, but by our actions. Not by our promise, but by reality. And today is part of an extraordinary
story that's being written by this administration and our brave allies in the Congress.
This law, this law that I'm about to sign finally delivers on a promise that Washington has made for decades to the American people. I got here as
a 29-year-old kid. We were promising to make sure that Medicare would have the power to negotiate lower drug prices back then. Back then, prescription
drug prices. But guess what? We are giving Medicare the power to negotiate those prices now.
This means seniors are going to pay less for their prescription drugs. While we're changing circumstances for people in Medicare by putting a cap,
a cap of a maximum of $2,000 a year on the prescription drug costs. No matter what the reason for those prescriptions are. That means if you're on
Medicare, you'll never have to pay more than $2,000 a year, no matter how many prescriptions you have. Whether it's for cancer or any other disease.
No more than $2,000 a year. But you all know it because a lot of you come from families that need this. This is a godsend. And this is a godsend to
many families. And so, so long overdue.
The Inflation Reduction Act locks in place lower health care premiums for millions of families who get their coverage under the Affordable Care Act.
Last year, a family of four saved on average $2,400 through the American Rescue Plan that I signed into law, that the Congress voted in place. In
the years ahead, thanks to the Inflation Reduction Act, 13 million people are going to continue to save an average of $800 a year on health
insurance.
The Inflation Reduction Act invests $369 billion to take the most aggressive action ever, ever, ever, ever in confronting the climate crisis
and strengthening our energy security. It's going to offer working families thousands of dollars in savings by providing them rebates to buy new and
efficient appliances, weatherize their home, get tax credit for purchasing heat pumps and rooftop solar, electric stoves, ovens, dryers.
[15:55:12]
It gives consumers a tax credit to buy electric vehicles or fuel cell vehicles new or used. And it gives them a credit, a tax credit of up to
$7,500 if those vehicles were made in America.
American auto companies, along with American labor, are committing their treasure and their talent, billions of dollars in investment to make
electric vehicles and battery and electric charging stations all across America. Made in America. All of it made in America.
This new law also provides tax credits that's going to create tens of thousands of good-paying jobs, clean energy manufacturing jobs. Solar
factories in the Midwest and the south. Wind farms across the plains and off our shores. Clean hydrogen projects and more, all across America. Every
part of America.
This bill is the biggest step forward on climate ever, ever. And it's going to allow us to boldly take additional steps toward meeting all of my
climate goals, the ones we set out when we ran. It includes ensuring that we create clean opportunities in front line and fence line communities that
have been smothered, smothered by the legacy of pollution, and fight environmental injustice that's been going on for so long.
There's another win for the American people. In addition to cutting the deficit by $350 billion last year, my first year in office, and cutting it
$1.7 trillion this year, this fiscal year, we are going to cut the deficit I point out by another $300 billion with the Inflation Reduction Act over
the next decade.
We're cutting deficit to fight inflation by having the wealthy and big corporations finally begin to pay part of their fair share. Big
corporations will now pay a minimum 15 percent tax instead of 55 of them got away with paying zero dollars in federal income tax on $40 billion in
profit. And I'm keeping my campaign commitment. No one -- let me emphasize, no one earning less than $400,000 a year will pay a penny more in federal
taxes.
(APPLAUSE)
Folks, the Inflation Reduction Act does so many things that, for so many years, so many of us have fought to make happen. And let's be clear. In
this historic moment, Democrats sided with the American people and every single Republican in the Congress sided with the special interests in this
vote. Every single one. In fact, the big drug companies spent nearly $100 million to defeat this bill. $100 million. And remember, every single
Republican in Congress voted against this bill.
Every single Republican in Congress voted against lowering healthcare cost, against a fairer tax system. Every single Republican, every single one,
voted against tackling the climate crisis, against lowering our energy costs, against creating good-paying jobs.
My fellow Americans, that's the choice we face. We can protect the already- powerful or show the courage to build a future where everybody has an even shot. That's the America I believe in.
(APPLAUSE)
BIDEN: That's what I believe in. And today, and today, we've come a step closer to making that America real. Today, too often we confuse noise with
substance. Too often we confuse setbacks with defeat. Too often we hand the biggest microphones to the critics and the cynics who delight in declaring
failure while those committed to making real progress do the hard work of governing.
Making progress in this country is as big and complicated as ours clearly is not easy. It's never been easy. But with unwavering conviction,
commitment, and patience, progress does come. Your dad was right. And when it does, like today, people's lives are made better and the future becomes
brighter, and a nation can be transformed.
That's what's happening now. From the American Rescue Plan that helped create nearly 10 million new jobs, to a once-in-a-generation infrastructure
law that will rebuild America's roads, bridges, ports, deliver clean water, high-speed Internet to every American, to the first meaningful gun safety
law in 30 years, and if I have anything to do with it, we're still going to have an assault weapons ban, but that's another story.
END
