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Quest Means Business
Truss Reverses Course; Major Averages Rally To Kick Off October Trading; SEC Fines Kim Kardashian; Kwarteng: We Need To Move Forward; U.S. Stocks Rally After Dreadful September; U.S. Stocks Soar, Energy Makes Biggest Jump. Aired 3-4p ET
Aired October 03, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:33]
RICHARD QUEST, CNN INTERNATIONAL HOST, "QUEST MEANS BUSINESS.": What a difference a quarter makes. New quarter, new optimism on Wall Street, very
sharp rise all the way up and holding. We could see a thousand Before all is said and done, not saying we will, we could. The triple stack is also
highly encouraging over what's happening, not as much as the Dow. We will look at the Dow 30 a little bit later.
The markets are up and the events of the day are anything but.
Liz Truss' U-turn. The British Prime Minister scraps a planned tax cuts for the rich. Her Chancellor defends the rest of the economic strategy.
(BEGIN VIDEO CLIP)
KWASI KWARTENG, UK FINANCE MINISTER: We couldn't just cross our fingers and hope for the best. The price of inaction would have been far greater
than the cost of the steam.
(END VIDEO CLIP)
QUEST: Energy shares surge after reports of OPEC+ is considering a major production cut.
And Kim Kardashian fined more than a million dollars for tweeting about crypto.
We're live in London, exactly the place we need to be on Monday, October 3rd. I'm Richard Quest and I mean business.
Good evening.
It was as swift as extraordinary. Today, the British government backed down from a planned tax cut that had been widely condemned as unsound, but which
the Prime Minister had said as recently as yesterday would not change. Now, it's a different tune.
Liz Truss and her Finance Minister, Kwasi Kwarteng say they will no longer look to lower the top rate of income tax from 45 to 40 percent. The
Chancellor said the measure had become a distraction from the overall fiscal plan.
Their U-turn reduces the plans cost by only $2 billion overall -- $45 billion -- sorry, 45 billion pounds, I beg your pardon of tax cuts remain.
The pound has risen since the announcement. It built on the gains after last week's intervention by the Bank of England.
The Chancellor spoke to Conservative Party members earlier telling them the government needs to do things differently. He said they are listening to
feedback.
(BEGIN VIDEO CLIP)
KWARTENG: But I can be frank, I know the plan put forward only 10 days ago has caused a little turbulence. I get it. I get it.
We are listening and have listened. And now, I want to focus on delivering the major parts of our growth package.
(END VIDEO CLIP)
QUEST: Bianca Nobilo is at the Conservative Party Conference in Birmingham. She is with me now.
Bianca, two aspects, economic and political, let's do the political. How -- did it make a difference? Have they done what they needed to do?
BIANCA NOBILO, CNN INTERNATIONAL CORRESPONDENT: It hasn't helped because the U-turn came this morning, but it came too late. This was 10 days since
that package announcement, which was received with fury from the general public and you saw spiraling from the market. The way it was handled, the
fact that the Prime Minister has put the blame squarely on the Chancellor, that hasn't been received particularly well.
And then the Chancellor's speech didn't really capitalize on that U-turn because he didn't address it. He spoke of it as a distraction at the very
beginning, but then doubled down on the principles of what he has just U- turned on.
He also didn't extend an olive branch and wasn't conciliatory to the other wings of the party, which have real concerns about this. So, that hasn't
really allayed fears, and actually, that soundbite that you just played really is oxymoronic because to say, "I get it," but then to describe the
last week as little turbulence, well, it doesn't sound like you're fully getting it.
QUEST: Bianca, even if what he said made sense. The reality is this-- he didn't put it to the OBR. He didn't put any external forecasts at the same
time. This was a major step. It wasn't a minor bit of housekeeping around taxation, and he hasn't quite neither of them have justified making such a
major step in such a way.
[15:05:07]
NOBILO: No, and it is the handling, as well as the policy. As we know, in Liz Truss' campaign, she promised tax cuts. She said, you can't tax your
way to growth, we have to expand the entire economy to spread the opportunity across the country. Some of that was expected and an element of
it was priced in, but these tax cuts for people who are earning 150,000 pounds and above and the removal of a cap on bankers' bonuses, which was an
EU measure was not expected. And I think the party is quite shocked, by and large, that they would be put forward at this time.
Yes, it was only $2 billion worth -- sorry, two billion pounds worth of a much larger package. But it is the optics, it is the conveying a lack of
empathy and it is feeding into that Tory Party narrative that the party is out for itself and for the wealthiest and for bankers, rather than ordinary
people. I'm not saying that there is truth to that. I'm saying that is the narrative that is most pernicious for the party, and it plays directly into
it.
So there is a lot of surprise and shock and frustration. I've been speaking to plenty of MPs, and people who are Conservative Party loyalists that
don't want to associate themselves with this at all and want to wash their hands of it. That's why the mood here is terrible.
People don't want to stay more than a day. Everyone I've spoken to doesn't really want to be here for the Prime Minister's speech on Wednesday. It's a
very odd mood. People want to plot, they want things to get better, but nobody really knows how exactly.
QUEST: Bianca, you'll be with us later. Thank you, Bianca Nobilo.
The damage has been consequential and might not be as easily reversed. As of last week, the British banks had pulled more than 40 percent of their
mortgage products off the market. The pound, you know we talked about it, it fell to an all-time low against the dollar. It has recovered somewhat.
But emergency measures were needed to protect pension funds and the Bank of England responded by basically printing money once again.
Martin Wolf is the chief economics commentator at "The Financial Times."
Martin, have you ever seen anything like it?
MARTIN WOLF, CHIEF ECONOMICS COMMENTATOR, "THE FINANCIAL TIMES:" No.
QUEST: You said in a tweet today -- and your tweet today is by the way, becoming the tweet du jour for everybody. You described the Prime Minister
and the Chancellor as ". mad, bad and dangerous. They have to go."
WOLF: Yes, that is exactly what I feel. I think they have demonstrated this very clearly.
I disagree with the plan, the fundamental way they think about it, both economically and politically. But in addition to this fundamental problem,
I don't think it's a plan for growth. I don't think the spending cuts they will have to go through with are tolerable and they won't be acceptable,
either.
But I think in addition to that, the way they've handled this is just unbelievably irresponsible and incompetent, just breathtaking.
QUEST: Does the U-turn today put -- I mean, it's only a couple of billion that they are off to borrowing that we required, but does it give breathing
space?
WOLF: This is a political judgment and I don't know, but I really would be surprised.
QUEST: But for markets and economics.
WOLF: I know from an economics point of view, all this would show I think to anyone is that they are weak as well as silly. They can't -- it has no
substance to it, this withdrawal.
They realize that it is very, very unpopular, which shows they're very, very silly, but the fundamental point is, the program is still what -- 43
billion pounds of permanent tax cuts. Nobody knows, nobody has calculated, but at least 150 billion on the energy plan, which might be much more. So,
it's a huge blank check that people are being asked to fund and Britain has a huge current account deficit. It means it's going to be have to be funded
from abroad. And foreigners are looking at this and they're saying, is this really a G7 government?
QUEST: The idea that this was put forward without the OBR is bad enough, but when the Prime Minister admitted yesterday, that it had been put
forward without Cabinet -- that I find remarkable.
WOLF: Well, I would if I didn't know something about these people. I mean, I think they are zealots. I think they believe that they are absolutely
right. I think they believe that they've got into this position, and they're allowed to do whatever they want and who else? Nobody else matters.
QUEST: Why are they different from Thatcher, because Thatcher did lots of tax cuts?
WOLF: Well, in many ways. First of all, she ran her Cabinet in her -- she was a real disciplinarian, but she had split, but she got more really
strong supporters. Second, she really cared about budgetary prudence and they raised taxes to close the budget deficit famously in the early 80s to
fix the deficit problem. She was very concerned that they might become hostage to market forces.
[15:10:17]
WOLF: And Mrs. Thatcher had very clear goals and aims, but she was really quite prudent and she would never, I'm absolutely convinced of this, have
done anything like this.
QUEST: What do you make of it? I mean, to not get any recommendations, to go beyond the back of Cabinet, to put out a deal that Treasury or I know --
WOLF: They didn't talk to the Treasury.
QUEST: But the Treasury people must have said, if you do this, the Bank of England and by the way, we've got the former Deputy Director of the Bank of
England, former Deputy Governor of the Bank of England on the program in a moment or three, they must have -- they must have got advice that the bank
will have to sterilize it for inflation, the bank will have to do this, the bank will have to that.
WOLF: I don't know what advice they got, because I'm not sure they asked anybody for it and I am not quite clear who they would have asked. We don't
know, we simply don't know.
But they have not gone as far as I can see through any standard official channels. You're asking, why not? Well, my answer has to be they are
zealots and they are very ignorant and they don't think they have anything to learn from anybody else.
QUEST: I've studied your articles over many years and your writings. You don't use those words lightly.
WOLF: No.
QUEST: I mean, you have seen pretty much every budget crisis --
WOLF: I have never written --
QUEST: For how long?
WOLF: I've been done this job for a quarter of a century. I have never written about any Prime Minister of government of a country like this in
this way in my life.
QUEST: It tells us all we need to know.
WOLF: It is not -- there is no precedent in my experience for something like this. I would expect it in Argentina.
QUEST: Is it recoverable?
WOLF: Not for these people, in my view, but that's a big judgment. I think they have lost trust and it is very difficult to get trust back. That's one
thing we all know as people and as politicians.
QUEST: Martin, it is lovely to be actually in London and to be able to see you. Thank you.
WOLF: It is a great pleasure.
QUEST: Thank you, sir. Very grateful. Thank you.
Now US markets are starting the month with a rally. Oil prices are also rising. A report from OPEC might cut production. We did see 900 on the Dow.
We might see it again and I still think we've got 40 minutes to go.
QUEST MEANS BUSINESS live from London.
(COMMERCIAL BREAK)
[15:150:10]
QUEST: Dismal September. Been and gone, and now, we are into cheerful October, which is unusual because October is not normally one of the best
months in the market. All three major indices are up roughly three percent on bullish gains, and over the next few days, we'll see if that actually
holds.
OPEC might have a role in all of that. Oil prices have been falling since June on fears of a recession and the petrocracies, of course, are worried
about their income. And so now OPEC+ is planning its biggest cut in production since 2020.
WTI and Brent are reacting accordingly. Marc Stewart is in New York.
Let's do OPEC first, Marc.
Their big fear is that the price collapses either because of recession and as they had a few years ago, when the price went down under a hundred.
MARC STEWART, CNN CORRESPONDENT: Right. And I think Richard, you know, we think of OPEC as this consortium of countries that produce oil and of
course that is, but I mean, at the end of the day, it has to act and behave like a business and that is exactly what it is doing.
I mean, as you pointed out, the economists that I have talked to you today have pointed out that it wants to keep profits high when demand appears to
be slumping. So, it is raising its prices.
We'll get the specifics on Wednesday when there's that OPEC meeting, but let's also remember, this is not unprecedented. I mean, OPEC does react to
what is happening in the world. Look back to 2020 when the pandemic hit, it cut production, for obvious reasons. We just weren't moving as much.
QUEST: Now, the markets today, there is no reason any more than there was a reason for sharp falls other than the general, the God forbid the war,
the economic malaise, the potential for recession. I mean, there's no real reason for three percent today.
STEWART: Well, look, I think traders always have -- are always looking for things to worry about or things to celebrate. And so, I guess for this
moment, they are looking for things to celebrate.
I was talking there to a portfolio manager just before we went on the air, and he pointed out three things to me, which I think makes sense. One, it's
a new quarter. So, the sales pressure that we saw from earlier in the year is gone, at least for the moment. There has been a lot of discussion where
you are right now in Europe, about Credit Suisse, and just the health of banks in Europe.
Credit Suisse stocks and stock prices actually up last time I checked, perhaps investors weren't as concerned about some of the dire situations it
was facing. And then finally, if you look here to the US, we saw the manufacturing data actually show a decline. This may be a situation where
bad is good, and perhaps Richard, as we look ahead to the Fed's next meeting, maybe this will be assigned to Chairman Powell, you don't need to
raise interest rates so much.
QUEST: Too soon to say, I guess.
STEWART: Absolutely.
QUEST: If you're data dependent. I do worry and wonder though, that, you know, the traditional buy on the dips. People -- that's not the mantra
today, but there is a wall of money, both institutional and retail waiting for the moment to come in the market.
STEWART: And perhaps we are seeing some testing of that today. I mean, we still have another 40 minutes of trading. But I think we cannot dismiss
some of those points that you brought on before. The war in Ukraine right now is still so volatile, every word matters, and especially in the energy
sector.
So, I think we have to go along with what the Fed Chair said. These are going to be moment by moment data decisions. We are still, you know, very
well off before the next Fed meeting. But if you're an investor, perhaps this is giving you an excuse and license to buy.
QUEST: Marc, may I just on a personal note, welcome you. You're new with us at CNN and I could not be more delighted to have such an esteemed
colleague join us, sir.
Welcome on board.
STEWART: Thank you, Richard. It's good to call you colleague.
QUEST: Now, Kim Kardashian has agreed to pay a $1.3 million fine for illegally promoting a currency. She is worth $1.8 billion, so it's not
exactly going to be a huge amount for her.
However, it is the principle that counts. She is a lawyer.
Kardashian shared this message about EthereumMax with her vast Instagram following of several hundred million.
US regulators say the reality TV star didn't make it clear she was paid a quarter of a million dollars for the post. Her lawyer says she is pleased
to resolve the matter. The SEC Chair, Gary Gensler said the case is a reminder to take celebrity endorsements with a grain of salt.
[15:20:05]
QUEST: Matt Egan is in New York.
We really don't know, Matt Egan. I mean, who is to blame? She was told this you being paid this. Should she have known? I mean, should her legal
instincts have told us she might be a bit dodgy on this one? Even so, it is embarrassing more than serious criminality.
MATT EGAN, CNN REPORTER: Well, Richard, I think this is a shot across the bow of the whole influencer industry here. I mean, the SEC is really
sending a warning to celebrities that if you're going to go out and you're going to pump up crypto assets or other investments, and you don't disclose
that you're getting paid for promoting this stuff on Instagram, then you could be next.
I mean, the SEC says that Kim Kardashian is cooperating in an ongoing investigation, which suggests that more charges could be coming, and I also
think that the SEC is really trying to warn the public here, trying to tell everyone that, listen, just because someone who is famous is touting
something on social media, it doesn't mean that A, that person knows what they are talking about, or B, that this is a legitimate investment product.
The SEC is saying you really have to do your own homework.
QUEST: You know, I was also fascinated, admittedly, Kim Kardashian is the absolute A-list when it comes to influencers, $250,000.00 for a post.
EGAN: Yes, it is amazing that just by posting about this crypto asset, she was able to make $250,000.00. Now, of course, she has to return that money.
That is going back, and she has to actually forfeit it, plus interest and she is also paying this million dollar fine.'
And as part of the settlement, Kim Kardashian has agreed not to tout any crypto assets for three years. You know, what better way, Richard for the
SEC to get this message across, than by going after one of the most famous people on the planet really sending the message that they are trying to get
some law and order into what is really a Wild, Wild West of crypto assets and influencers.
QUEST: Sir, thank you. Matt Egan, I'll give you two pound fifty for one of yours. Well, at the current rate of exchange, that's not a bad, not bad.
I'd take it and run it over you.
The British Pound is up one percent against the dollar today after the government abandoned part of its fiscal plan. The announcement came -- of
course, the original announcement came 10 days ago. It led to a sharp drop in Sterling, it hit a record low against the US currency before the Bank of
England intervened.
And then, of course, the backlash came at the worst possible time for the bank.
So, how to think of it. This is inflation. It is roaring in all major economies. It is absolute.
It's not out of control, but that is getting difficult to bring it back under control. Inflation burns at people's savings, it burns at incomes, it
burns at lifestyles. However, Liz Truss' plan merely added more fuel to these flames and up they went like a rocket. It created the most serious
increase in interest rates for some time.
The tax cuts stoked inflation, which of course led to the Bank of England, which came in and then had to dampen it all down with its own version of
the fire extinguisher. It's not finished off yet, but it said it will buy whatever debt is necessary. Government gilt to scale this back and it is
the estimate cost is at least say 65 billion. And that's before they may have to put up rates because of the tens of billions of unfunded tax cuts
that Martin Wolf was talking about earlier.
Sir Charlie Bean is with me, Deputy Governor for Monetary Policy at the Bank of England, Professor at the LSE now.
So, firstly, the announcement on the -- and it is only the small part, but the announcement on the 45 pence, the tax rate, does it make any difference
to the economics?
SIR CHARLIE, FORMER DEPUTY GOVERNOR FOR MONETARY POLICY AT THE BANK OF ENGLAND: No. The politics, yes. The economics, no. The big question that's
unresolved is how those -- well, it is now 43 billion of income tax cuts, the National Insurance contributions, corporate income taxes that Mr. Sunak
had could put in place to finance extra NHS spending. They're not going through now.
Liz Truss thought there was 30 billion available pretty much to pay for those. That was the headroom that the OBR had in their March forecast, but
that's pretty much been wiped out given the deterioration since March.
[15:25:09]
QUEST: Right.
BEAN: So essentially there is this sort of 50 billion hole in the public finances in the medium term, which is going to need filling in the
Chancellor's November statement.
QUEST: Have you ever seen anything like it? I mean, you were -- how long were you at the bank?
BEAN: I was 14 years at the bank, but I go a long way back. I started in the Treasury in 1975. So, I saw us going to the IMF in 1976. I saw the
early days of Mrs. Thatcher before I became an Academic.
QUEST: Black Monday.
BEAN: Black Wednesday, all of those.
I have never seen anything like this, because it is self-inflicted.
QUEST: Which bit of it that frustrates you the most of what we did? Is it the actual policy? Is it the fact that it wasn't sent to the OBR for
forecasts? Or is it the presentation that the markets have been taken by surprise?
BEAN: Well, there is a mix of things and that the meetings have made such Horlicks of it if all they had done 10 days ago was do the energy price
guarantee, spell out the growth plan. There are some good things in there. There are some other things in there, which, you know, personally, I don't
find that convincing. And, you know, Martin Wolf earlier on was saying, find some of what is in there.
But not doing the income tax cuts and say, well, you know, we'll come back to them at a future date with an OBR forecast and a story about how it all
fits together. The problem was, they didn't have that convincing story. That's why the markets took fright and it was compounded by the fact that
they've been slagging off the bank, firing the Treasury Permanent Secretary on the Chancellor's first day, sidelining the OBR for this fiscal event,
all gives the impression of degrading the institutional framework, which surrounds economic policymaking.
QUEST: The bank that -- by that we are talking about the Bank of England, the bank moved quickly. First of all, putting out a statement, basically, a
version of we will do whatever it takes, and then it did the next day, by announcing it was printing money again. QE was back on the cards.
Do you think they will have to do more QE or will the 65 billion be sufficient? And at what point will they have to raise rates to account for
the greater expenditure?
BEAN: Okay, it's worth saying, first of all, they haven't spent anything - - well, and the action here is a short term liquidity action to support gilt prices, to stop pension funds having to make fire sales to meet margin
calls.
The hope is that that is just a temporary problem that pension funds can sell some other assets, get a balance sheet in order. There is going to be
a crunch point on October the 14th, when the current support facility comes to an end. And the question is, if the support is removed, are we going to
see those bond yields shoot up again?
QUEST: On the macroeconomic of monetary policy, do you envisage the bank having to raise rates substantially more than they would previously have
done because of this?
BEAN: Certainly, as it is at the moment and essentially the bank have already said that. There was discussion about whether there should be an
emergency meeting after the budget and given the turmoil and so forth. They didn't go for that. The line was, you know, we'll meet in November as
scheduled.
But Huw Pill, the chief economist in a very clear statement said that the mini budget will have a substantial monetary consequence, which I think
means at least 75 or 100 basis points.
QUEST: Really?
BEAN: Yes. Yes. Anything less than that, it would look -- it wouldn't look that substantial, frankly.
QUEST: We talk about a tug of war between monetary and fiscal policy. Now, in a recession, there is always an element of that because the bank is
raising rates and governments are doing targeted expenditures. This tug of war is Olympic size at the moment.
BEAN: Yes, again, I think it is useful with the fiscal side of it to separate the energy price guarantee part of it.
QUEST: Right.
BEAN: Which obviously has some effect of boosting demand.
QUEST: But that is classic. That is classic support.
BEAN: Because it holds the price down, it actually helps to reduce the risk of so-called second round effects where people push for compensatory
pay increases and businesses pushing extra cost for enterprises.
So, that bit is not the contentious bit. It was the other stuff, the income tax reduction, to which a clear demand boosting, which the bank then has to
completely offset by raising interest rates more.
[15:30:25]
QUEST: As you say, never seen anything like it.
BEAN: Absolutely.
QUEST: So Charlie, your first time with QUEST MEANS BUSINESS. Very grateful that you came in tonight. Thank you, sir.
BEAN: I get to see you.
QUEST: Thank you, sir. Thank you very much indeed.
Coming up, business leaders say they need more clarity from the government. So, Martin Sorrell will be with me as Britain's finance minister says
everything is clear going forward.
(BEGIN VIDEO CLIP)
KWASI KWARTENG, CHANCELLOR OF THE EXCHEQUER: We need to move forward. No more distractions, we have a plan and we need to get on and deliver it.
(END VIDEO CLIP)
(COMMERCIAL BREAK)
QUEST: The conservative party applauded Kwasi Kwarteng's defense of the fiscal plan. Despite the chancellor's admission earlier in the day, a
little turbulence he described, though some might say that the pound hitting record lows, shares and gilts tanking and pensions threatened with
collapse. How he came to call it a little turbulence is somewhat surprising. However, he told party members it's time to look to the future.
(BEGIN VIDEO CLIP)
KWARTENG: What a day. It has been tough, but we need to focus on the job in hand. We need to move forward. No more distractions. We have a plan and we
need to get on and deliver it. That's what the public -- that's what the public expects. That's what the --
(END VIDEO CLIP)
QUEST: They applauded in the hall. But on the streets of Birmingham, it wasn't quite so warm.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: What did (INAUDIBLE) when I'm putting my taxes on? Putting bills off, not helping me. Working people can't get the extra
support what everyone else is getting but we still fought in hard times. So what about us?
[15:35:07]
UNIDENTIFIED MALE: It is simple as the rich are getting richer and the poor are getting poorer and the divide in this country is getting larger. So, we
just wanted to come and show our -- just our anger at what's going on.
UNIDENTIFIED FEMALE: I find it hard to get on board with the things that she's brought in, in terms, especially of taxes to the well -- more well
off. And that resulted in cuts to my kid's education when they start cutting things like my kids education NHS. We find that difficult
to deal with.
(END VIDEO CLIP)
QUEST: We're a business program. So let's put in a business context. Some business leaders say Liz Truss is actually discouraging investment in
growth. So Martin Sorrell is with me. He led the world's largest advertising P.R. group for more than 30 years. Now he is the founder,
executive chairman of S4 Capital. And his warning, there's a black hole of communication. He says businesses will go on strike. So Martin's with me.
What do you mean by that?
MARTIN SORRELL, FOUNDER, EXECUTIVE CHAIRMAN, S4 CAPITAL: Well, what determines investment, Richard, is not tax rates purely. I mean, tax rates
do improve the discounted present value of a project is true. What businesses looking for is certainty. And we have extreme uncertainty, as
you heard from your other guests, Martin Wolf and Charlie Bean. It really - - what the government has done or what the chancellor has done with this fiscal event was called a mini budget, whatever they called it.
It's create greater uncertainty and that discourages investment doesn't bend it down. I have to preface it by saying that I welcome the chances
that we have to move forward. I wouldn't want him to move backwards. But the plan for growth, the idea of a plan for growth is absolutely critical.
Implementation is the key. We haven't -- we've had very poor implementation so far.
QUEST: So, the unfunded tax cuts. Is that what worries you?
SORRELL: Well, there's no plan, right? There's no deal --
(CROSSTALK)
QUEST: Oh, you'll get it in November.
SORRELL: I mean, we -- we've shafted -- the government shafted the B.V. during the campaign, they shafted the Treasury, they've shafted the OBR. I
mean, every institution that has been laying the ground, the prime minister on the weekend said, the -- she admitted that they hadn't laid the ground
properly. Well, those institutions have been laying on the ground for other fiscal maneuvers and monetary policy maneuvers for years. And yet they were
totally ignored.
So it was quite bizarre the way that it was implemented. The idea of having a plan is something that business would welcome. We're now having to wait
until November the 23rd we're told until the chancellor and the Treasury have got their act together with the OBR to find out what the plan actually
is.
QUEST: The pounds sort of is at 113 now but it's --
SORRELL: Still below where it was when --
QUEST: Does that affect your decision making? I mean, when you look at -- you're sort of --
SORRELL: But we're a global business.
QUEST: Right. But just that -- exactly. You're a global business. So do you think you're never going to abandon Britain but do you think --
(CROSSTALK)
SORRELL: -- the relative attractiveness of North and South America which I think is still remains very attractive, despite some of the bumpiness
there, the Middle East because of energy prices, maybe perhaps parts of Africa and then Asia Pacific, maybe China big question about U.S.-China
relationships and what happens to our clients given their already extreme exposure, but basically India, Indonesia, Vietnam, the Philippines,
Malaysia, Singapore, Emir as we call it, forget about the mere, the EBIT, the Euro a bit difficult.
France, Germany, Spain and the U.K. all difficult. And the relative attractiveness of the U.K. has been damaged by what's happened in the last
few weeks.
QUEST: Now you're a modern man who --
SORRELL: Old and modern.
QUEST: Well, none of us are getting any younger. And would you have retweeted Martin Wolf's -- they're mad, bad, dangerous, they've got to go?
SORRELL: Martin was very extreme. I mean, I would admit to being in the Rishi camp when I listened to Liz Truss and Rishi Sunak debate. I'm not a
member of the Conservative Party. But I listened to about three or four debates. I thought Rishi was absolutely crystal clear on the need to get
the plan in place as Liz Truss would but to do it with fiscal responsibility and to lay out a detailed plan to balance the books before
we went off on the growth plan.
QUEST: So finally, do you think as a business leader, they, I.E., the current prime minister and chancellor can regain credibility from this?
SORRELL: It's a hard job. This is like a CEO and a CFO going to shareholders say my revenues are down, my costs are up, and I have no
detailed plan. Even the chancellor's speech today at a conference, it sounded good. It made the right noises but where's the beef? Where's the
details? So we have to wait until now -- I don't think we will have to wait until November 23rd. I think it will have to come earlier.
QUEST: I'm old enough to remember where the beef comes from as well. Good to see you, Martin.
SORRELL: Thank you, Richard.
[15:40:04]
QUEST: Thank you very much indeed. So, Martin Sorrell, the founder and executive chairman of S4 Capital. That's QUEST MEANS BUSINESS for the
moment. At the top of the hour, you and I will join a dash for the closing bell. That will be a good one today. The market is up sharply. After,
Connecting Africa.
[15:58:11]
QUEST: Hello, I'm Richard Quest. The dash to the closing bell, two minutes to go. I thought 1000 or so but now it's gone the other way. The major
indices are still set there for a strong finish after closing sharply lower in September. The new quarter, the Dow is up just over 2-1/2 points. It's
the best four day in months. Originally it was at more than 900. The S&P and the NASDAQ, the triple stack shows this.
The net -- the Dow is still the number one but the other two have had good gains. They've been higher all throughout the course of the day. The
British prime minister is walking back tax cuts for top earners. Liz Truss roundly criticized for her fiscal plan. The Financial Times chief economics
commentator Martin Wolf said it's damaged her government's credibility.
(BEGIN VIDEO CLIP)
MARTIN WOLF, CHIEF ECONOMICS COMMENTATOR, FINANCIAL TIMES: From an economics point of view, all this would show I think to anyone is that
they're weak as well as silly. They can't -- it has no substance to it than this is withdrawal. They realize that it's very, very unpopular, which
shows they're very, very silly. But the fundamental point is the program is still 43 billion pounds a permanent tax cuts.
(END VIDEO CLIP)
QUEST: The Dow component shows today only one at the bottom. J&J, Chevron on oil prices. At the top green across the board and Chevron's leaving
because OPEC is considering production cuts which will push the price up. Caterpillar and Boeing closely behind. Disney is up. The best part of three
percent as cable provider dishes Disney back on their dish. The only one that is off, as I say is Johnson and Johnson.
A strong start to the last quarter of the month with the Dow up sharply, the NASDAQ, the S&P but we still have of course many moves before the end
of the year.
[16:00:03]
And that is the dash to the bell. I'm Richard Quest at the stock exchange. The closing bell is ringing now. Whatever you're up to in the hours ahead,
try that again. "THE LEAD WITH JAKE TAPPER" starts now.
END
