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Quest Means Business
US Stocks Rise On Strong Earnings Report; Corporate America Prepares For Upcoming Recession; Europe's Energy Crisis; Bank Earnings Boost Wall Street On Tuesday; Pandemic Pressures Easing, Labor Market Tight; Putin Yet To Confirm G20 Attendance; Dash To The Bell. Aired 3-4p ET
Aired October 18, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ISA SOARES, CNN INTERNATIONAL HOST: The rally on Wall Street continues. Have a look at this. Markets all green arrows across the board. The NASDAQ
though down slightly from almost two percent ending the day. If I showed the big board, also relatively good compared to what we have seen in the
last two days.
Strong corporate earnings are boosting the mood among investors after a rough August, as well as September. Those in the markets and these are the
An economic flashback: Fitch ratings predicts the US is headed for a 1990's style recession.
French workers hit the streets to protest rising prices.
And China's faltering economy leaves some questioning the leadership of Xi Jinping.
Live from London, it is Tuesday, October 18th. I'm Isa Soares, in for Richard Quest, and I too, mean business.
Tonight, investors on Wall Street are shaking off concerns about an upcoming recession. The Dow surge at the open bells, it has now come back
down a bit as we were telling. The S&P up more than two-thirds of one percent. Strong earnings reports from companies like Johnson & Johnson and
Lockheed Martin are helping fuel really this optimism.
The ratings company, Fitch, is also offering hope -- some possible hope, I think it is fair to say, it said the expected downturn might not be as bad
as earlier scenarios.
But first, a potential energy crisis have economists warning of a 1970's- style recession, then rising inflation prompt and fears of an '80s-type recession. Now, economists say the potential downturn looks more like this
era, if you remember it.
(CLIP FROM NEW KIDS ON THE BLOCK "STEP BY STEP.")
SOARES: The year was 1990, New Kids on the Block, that's them there were top of the Billboard chart with their hit "Step by Step." West Germany had
just taken home the Italian 1990 World Cup, and in July, the US officially dipped into recession.
It was a brief recession and unemployment rose slightly followed by a decade of uninterrupted economic growth.
Matt Egan is with me.
Matt, I'm not sure if your child of the 90s like I am, I remember that song very well. I don't remember the recession. So talk us through what kind of
recession we're expecting. Is it going to be mild? Is it going to be sharper? What is Fitch saying here?
MATT EGAN, CNN REPORTER: Well, Isa, I don't remember that recession either, but Fitch is basically calling for a mild recession. They don't see an
economic meltdown, like the one that we saw in 2020 or in 2008. So, that means that the unemployment rate would rise but it wouldn't skyrocket.
Fitch sees the unemployment rate topping out at 5.4 percent in 2024, that's almost two percentage points above current levels.
But you know, the last few economic downturns and you can see it right there on your screen. We saw far larger increases in the unemployment rate
with that eye-popping 11.2 percentage point increase during the COVID recession. Again, Fitch is calling for a less than two percentage point
increase this time.
Now, we don't want to minimize the pain to real people here. Any job loss, of course, is painful, but we obviously would prefer a mild recession to a
meltdown and there are some reasons why Fitch is cautiously optimistic here.
One, it's that the jobs market in the United States is really hot right now. That helps. Consumer finances are pretty solid. They have less debt,
relatively speaking than in past crises. The housing market is slowing down, but it is not imploding; and banks, because of regulation, they are a
lot stronger than they used to be.
It is a little bit crazy that we've been talking about a recession, though. I mean, it's only been two-and-a-half years since the last recession
started. The last two economic expansions lasted around a decade, this one could be a lot shorter and that is really because of high inflation.
Consumer prices are going up rapidly and that is forcing the Fed to slam the brakes on the economy. And not only that, but we have the war in
Ukraine and that is of course driving up energy prices in Europe and causing perhaps an even deeper recession in Europe.
SOARES: Yes, and what you're basically telling us, look, it's bad news, but it is kind of good news. It's bad that there is a recession, it's bad it's
not as -- it's good that is not as bad as some may have expected.
Stock markets, we were showing our viewers there, stock markets seem to be reading different reports because the second big day of gains, the Dow up
500 points, I think it was yesterday. What's driving this optimism? Is it earnings here?
EGAN: Yes, I think earnings definitely helping. Listen, yesterday was Bank of America; today, Goldman Sachs, both of them reporting stronger than
expected results. Banks are on the frontlines of this economy, and if banks are doing better than feared, that is certainly good news.
Also, some of these Fed worries have started to ease a bit because Treasury yields have stopped going straight up. They have stabilized. The US dollar
has stabilized a bit as well, that is helping. But we do have to put all of this in context. Yes, markets are big today, up way bigger yesterday. But
it has been a terrible year for the US stock market. The S&P 500 is still on track for its worst year since 2008. So, a bit more optimism on Wall
Street, but you know, that's in the midst of a whole lot of pessimism.
SOARES: Matt, you giveth and you taketh away. Thank you, nevertheless.
Matt Egan there for us in New York.
Well, most US business leaders now expect a downturn. The CEO of Goldman Sachs was saying there is no exception. The bank announced a reorganization
along with its latest earnings. Its shares are up on better than expected profits. It also said, it will combine its trading and investment banking
divisions into one unit, and that is what it is doing, too -- just over two percent. That would help the reported income as deal making slows down.
Meanwhile, a new survey from The Conference Board found an overwhelming consensus among CEOs, 98 percent, as you can see there in your screen,
expect a recession in the US; 99 percent expect one in the Euro area.
Dana Peterson is the Chief Economist of The Conference Board, and she joins me now.
Dana, great to have you on the show.
Look, let me pick up on that story of Goldman really battening down the hatches and preparing for a recession. Just explain how does a company
prepare for a recession?
DANA PETERSON, CHIEF ECONOMIST, THE CONFERENCE BOARD: Sure, well, lots of companies will look to dial down unnecessary expenses or things that are
extraneous to the business, but certainly many businesses may also look to shed workers.
However, our own survey of CEOs out of the US suggests that even though 98 percent of them expect that there is a recession coming in the US, very few
of them are looking to actually cut the number of employees they have, only about 16 percent. Most businesses are expecting to actually make no changes
to their labor forces and some are even looking to expand their labor forces.
SOARES: And on what you -- on the survey in terms of CEO confidence, just explain to our viewers what you are hearing. We show that the figures of
what expectation is for a recession in the US and the EU area, but what are they worried -- what are CEOs worried about here?
PETERSON: Well, I mean, number one, CEOs are going to be worried about loss of profits. And certainly many CEOs and businesses have already been hit by
very elevated inflation through their supply chains also as wages are rising, especially in the US given labor shortages. And so, they are very
concerned about those hits to profit margins.
They are also concerned about how much inflation pressures they can push through to customers, certainly as customers are coming under strain,
certainly as Central Banks, both in Europe and the US are raising interest rates to combat inflation, and especially in Europe, energy price
So, I think there are a lot of things on the minds of CEOs right now and they are also very concerned about geopolitics and how geopolitics play
into disrupting supply chains and manufacturing of key goods like food and energy and metals that go into the products that they're producing.
SOARES: Yes and I'm not sure if you heard Matt Egan just before you came on there, and he was talking about Fitch ratings, basically saying -- it is
expecting a 1990's-style recession. So, milder than what we have seen. What are CEOs expecting? A mild recession? A deeper recession? What are you
PETERSON: Sure, well, 85 percent of CEOs expect that the recession in the US is going to be mild, brief, and it won't have global spillovers, only a
very small percentage expect that it is going to be worse, certainly, in comparison to recent recessions we've seen back in 2008, and of course,
with a pandemic.
0But certainly when they're looking at Europe, they overwhelmingly expect that Europe is going to experience a deep and lengthy recession, again
linked back to energy prices rising as Russia has basically cut off supplies of natural gas in response to sanctions, in response to the war on
SOARES: Given then this level of pessimism, be it in Europe, be it in the US, does it raise concerns now that a recession could be a self-fulfilling
prophecy here, whereby slowing investment and preparing for a recession, CEOs end up causing a recession?
PETERSON: I don't think so, and that is mainly because the reason why interest rates are rising very aggressively is due to inflation and
inflation, reflects both supply drivers, geopolitics, and also demand and really, Central Banks can only kind of tackle the demand aspects.
So I think, you know, as interest rates are rising very quickly and Central Banks are trying to slow down that demand, part of that is to get
businesses to shift gears and to, yes, prepare for a recession.
So I don't think it's necessarily a self-fulfilling prophecy, where CEOs are talking themselves into a recession. They are just looking at the tea
leaves and looking at rising inflation, rising rates and higher cost of capital, and so in that environment, it makes sense that they're going to
batten down the hatches and pull back somewhat.
SOARES: Very quickly, I mean, any bright spots in the economy?
PETERSON: Well, certainly in the US, when we look at consumer confidence, consumers right now, according to our own measure, are still pretty
sanguine and a big reason is that most of them are still working. The labor market is quite robust in the US, we're still seeing job openings at 10
million, and many businesses are still hiring. And so all of that suggests that consumers are seeing higher wages, and also income come in.
The only problem is that a lot of that income is being eroded by inflation, but certainly the strong labor market is a bright spot in the US economy.
SOARES: That's very good news and we will be talking labor market in about 20 minutes or so right here on the show.
Dana Peterson really appreciate you taking time to speak to us here. Thank you.
Well, the European Commission says there is power in numbers. The governing body is proposing that EU nations unite to form a gas purchasing union that
could help with supply and pricing.
How exactly would that work? Clare Sebastian joins me.
SOARES: Ukraine's President says Russian airstrikes have knocked out a third of its power plants. Volodymyr Zelenskyy called the move "terrorism."
He said on Twitter: "There's no space left to negotiate with the Kremlin."
Missile attacks on Ukraine have escalated in recent weeks as we've shown you. The Mayor of Kyiv said a strike today killed three people.
Massive blackouts have been reported right across the country including in parts of Kyiv. One official said that Ukraine's power outages are becoming
Meanwhile, the EU is ramping up efforts to ensure Europe's energy supply is safe. The European Commission is proposing the creation of an Energy Union
saying it could help solidify gas supplies as well as stabilize prices.
Under the proposal, member states will be required to meet at least 15 percent of their storage targets through the system. The bloc is stopping
short with an immediate cap on natural gas prices, calling it a last resort measure. European Commission President Ursula von der Leyen had this to
say. Have a listen.
(BEGIN VIDEO CLIP)
URSULA VON DER LEYEN, EUROPEAN COMMISSION PRESIDENT: e know that Europe's energy demand is very large, so it is logical that instead of
outbidding each other, the member states and the energy companies should leverage their joint purchasing power, and for that, we propose today legal
tools for pooling energy demand at European level.
(END VIDEO CLIP)
SOARES: Clare Sebastian is with me on this.
Clare, just explain how exactly this Energy Union will work? Because from what I understand, you and I were on this, normally it is companies, right?
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes.
SOARES: That purchase, the energy, the gas and so forth. So, how is this exactly going to work with all of these member states?
SEBASTIAN: Yes, so it is a bit of a rethink for the market. What the European Commission says it will do is use a sort of a third-party service
provider to pool, aggregate if there is any demand from the EU, bring that together, go to the market and try to secure a price for everyone. The
idea, of course, is to stop countries going and trying to outbid each other, pushing up prices. So they think that as a bloc, they have that kind
of purchasing power, that will bring down prices.
But as I said, it is a fairly radical rethink. They have been talking about this for a while. They spent the last month -- the last few months really
focusing on building up their storage and their gas storage supplies. Now, they're moving on to these sort of longer term solutions to the problem,
essentially, that the gas market, the energy market as a whole was designed for a time when both supply and prices were stable, and we're not in that
SOARES: And so in terms of the Energy Union, a majority of the countries within the EU, they agree on this principle?
SEBASTIAN: So look, clearly, they've managed to secure enough consensus to bring these proposals together, but they need to still put it to the member
states and get them to agree. There is a Leaders Summit on Friday where this will be discussed further.
But we know that, for example, there was a Slovenian official going into the meeting today. He said, we want a gas price cap now. So, they are
likely to be disappointed that it didn't go that far, whereas Germany has opposed a gas price cap in the past, saying that it could just cause
suppliers to go elsewhere and get higher prices, that they are essentially pricing themselves out of the market that way. So, I think there's still
some way to go to get agreement here.
SOARES: Where are we -- you and I were talking several weeks ago about Nord Stream, the EU countries saying it was sabotage.
SOARES: Where are we on the investigation as to who was behind this?
SEBASTIAN: So we've now had preliminary results from both Sweden, which was just under two weeks ago, and Denmark today essentially reaching similar
conclusions, saying that there were significant explosions and significant damage caused. But this is crucial to this today, we got these first
underwater pictures that were filmed in the Swedish Exclusive Economic Zone by a Swedish news outlet, and you can really seem, it's pretty jarring to
see the destruction.
SOARES: A huge hole, isn't it? Yes.
SEBASTIAN: The jagged edge of the gas pipeline. The Danes are saying that they formed an investigative team to continue to investigate this. We know
that the Swedes pulled out several things. We don't know what from the scene and continuing to look into it. No one is pointing the finger at
anyone yet. Russia, though continuing to express outrage. The Kremlin spokesman today, saying that essentially this investigation is rigged
against Russia calling it absurd.
SOARES: Right. And I know we'll wait for that full investigation to come to light.
I want to go back to the gas and the Energy Union. In terms of -- you mentioned there the storage, Europe preparing for this in terms of storage.
Where are we in terms of percentage of storage, in terms of gas, EU and the UK here? How prepared are we?
SEBASTIAN: Yes, I mean, the EU is doing really well in terms of storage. They've filled their storage up to 92 percent. The target they set
themselves back in June was for 80 percent by November 1st. So, they're doing really well.
Germany, which is the biggest consumer, of course of gas is at 96 percent. Part of this of course, fueled by record levels of LNG coming into the
continent. But this does not mean they're out of the woods. Of course, they're not just using storage gas over the winter, they still have to
import it. And of course, what those pictures of Nord Stream reveal is that they're not going to get their biggest Russian artery back in any
meaningful way at all this winter.
As for the UK, it doesn't actually have gas storage. It usually relies on bringing gas back from the continent during the winter ad this is why we've
seen the National Grid warning of potential blackouts ahead of the National Grid warning this week. They could happen in January and February, in
particularly cold evenings between 4:00 PM and 7:00 PM, so peak times.
But we have to point out that is still their extreme scenario. Their worst case scenario, the base case is that they still think that the UK can get
through the winter without shortages.
SOARES: But just listening to that, that will rattle of course many families.
Thanks very much, Clare Sebastian there.
Well, strikes across France -- health, education, energy -- as workers are asking for higher pay to keep up with inflation. Residents have also faced
the stress of a fuel shortages in some parts of the country.
Our Melissa Bell has more from the picket lines in Paris for you.
MELISSA BELL, CNN CORRESPONDENT: The context of today's march right here in Paris, but in other French cities as well, was, of course, those queues
we've seen at petrol stations, the strikes in refinery that have led to such problems these last few weeks. Today, it was a different strike, one
about the cost of living, inflation, and the impact that is having on ordinary workers.
So, this was a strike and a march that was called by four unions and it is just coming to an end here now at Les Invalides.
The thing was the number of people they managed to get onto the streets today. The strike itself not as gripping as the unions would have liked,
but a lot of people on the streets and it had been a couple of years since we'd seen that many people out on the streets of Paris.
COVID, of course, but of course also ever since the yellow vests had run out of steam in 2019, we hadn't seen this kind of social protest. The
trouble for Emmanuel Macron now is having to get through his 2023 budget by bypassing a Parliamentary vote. So fragile is his Parliamentary majority
and behind that still hoping to get through his controversial pension reform.
Given the anger on the streets today, it is looking set to be for him a complicated autumn with threats from the unions that they're going to try
and put in place a rolling strike.
SOARES: Melissa Bell there in Paris for us.
Well, the French cement company, Lafarge, has pleaded guilty and had been fined $778 million for paying off terrorist groups in Syria. An
investigation several years ago found the firm had paid ISIS, as well as the Al Nusra Front to keep operations running as violence escalated in that
Kara Scannell is monitoring all this for us.
And Kara, just explain to our viewers right around the world how long this company was paying or dealing with these terrorist groups?
KARA SCANNELL, CNN CORRESPONDENT: Yes, Isa, so Federal prosecutors say that Lafarge was paying ISIS and the other terrorist groups for about 14 months
beginning in August of 2013 and continuing through October of 2014.
Now, Lafarge pleaded guilty today to this and admitted in Court that they had paid them initially as a form of protection, to protect their employees
at the cement company that they operated in Syria, but then that quickly turned into them engaging in a revenue sharing agreement. In fact,
authority says once Lafarge had left Syria because of the Civil War, that ISIS members there took over their plant and began selling the cement that
was left behind.
So in total, ISIS made about $10 million from this arrangement that they had with Lafarge and prosecutors say that this was unprecedented in its
prosecution, they have never before charged a company with providing material support to a terrorist organization.
Lafarge pleading guilty today and taking responsibility for that, agreeing to pay nearly $778 million in forfeiture and fines. One of the prosecutors
that announced the charges, the US Attorney Breon Peace who is for the Eastern District of New York here in Brooklyn where I am, he said that
Lafarge had made a deal with the devil, and through all the millions of dollars that ISIS had made, they were able to recruit individuals, they
were able to wage war and to terrorize countries including American citizens -- Isa.
SOARES: Kara Scannell there for us in New York. Thanks very much, Kara.
Well, China has delayed the release of key economic data, including third quarter GDP growth amid the country's most consequential meeting in
decades. China's elites are gathered for the twice decade National Congress, where the Party's leader, Xi Jinping, is expected to do away with
convention and receive a third term.
But the move comes at a delicate moment with intense COVID lockdowns, a property crisis, and high unemployment weighing on the world's second
Selina Wang has a story for you.
SELINA WANG, CNN CORRESPONDENT (voice over): Migrant workers like Mr. Hu move from Chinese villages to Beijing in search for better job prospects.
On a lucky day, he can make the equivalent of a few dozen US dollars from construction work. Anything leftover, he sends home to his kids in the
(MR. HU speaking in foreign language.)
WANG (voice over): He says, the pandemic has made it harder to find work and China's economy is in bad shape because of all the COVID restrictions.
The world's growth engine is sputtering. After decades of unstoppable growth, China's economy is cracking.
Constant COVID lockdowns, wrecking businesses and lives. He shows us his rental home in Beijing, just four square meters. "It's really small," he
Since Chinese leader Xi Jinping took power in 2012, he has pledged to reduce income inequality, but workers like HU aren't seeing the benefit. He
says, "I don't think it's a good idea for him to continue to serve."
SUSAN SHIRK, CHAIR, 21st CENTURY CHINA CENTER: I think there are a lot of people in China who have lost confidence in the pragmatic judgment of
their leader, it could become a big challenge to Xi Jinping.
WANG (voice over): Unemployment is skyrocketing, not just because of the pandemic.
China's once vibrant private sector, suffocating under Xi Jinping's crackdown to bring companies under tighter Communist Party control. Beijing
insists the moves protect consumers and reduce economic inequality. But instead, mass layoffs are sending youth unemployment to a record high of
nearly 20 percent.
Protests also erupted this summer in Central China. Thousands of depositors lost access to their savings at several banks in the region. As police
violently quashed the protesters, Beijing arrested hundreds of suspects allegedly involved in the scandal and promised that depositors would start
to get their money back, but many still have not.
(UNIDENTIFIED MALE speaking in foreign language.)
WANG (voice over): "This is my family's hard earned money over the last 20 years," he says. "Our lives depend on it."
WANG (on camera): How has this whole experience changed your perception of your country of China's leaders?
(UNIDENTIFIED MALE speaking in foreign language.)
WANG: "I'm like an ant that they can trample on. I have no hope," he says.
Another crisis is unfolding in China's all important property sector. Giant developers have defaulted. Home sales are dropping. Home buyers across the
country are boycotting mortgage payments on unfinished homes, fearful that their properties will never get built.
These protesters chant, "Evil developer. Give back my property."
KERRY BROWN, LAU CHINA INSTITUTE DIRECTOR, KING'S COLLEGE LONDON: So the Chinese property market is probably the world's greatest economic asset,
single economic asset. If it does collapse, then we have a full blown recession, maybe even depression.
WANG (voice over): Xi Jinping is preparing to be ruler for life, claiming that his brand of authoritarianism will realize the China Dream of strength
But for people like Hu, all he wants is to make ends meet, and even that is a dream out of reach.
Selina Wang, CNN, Hong Kong.
SOARES: Well, despite looming recession fears, there are positive signs the global labor market will stay strong for the rest of the year. We'll
SOARES: Solid earnings reports from some of the big banks have helped Wall Street extend its rally. Goldman Sachs rose after eating expectations.
ManpowerGroup is having a pretty strong day. Its latest employment survey has found the global labor market remains resilient despite the economic
headwinds that we have been telling you about.
Employers reporting a net employment outlook of 30 percent for the fourth quarter, down slightly from Q3. Hiring intentions are strongest in Asia
Pacific and South and Central America. Employers in Canada and U.S. reporting moderate decreases compared to last year.
Jonas Prising is the CEO of ManpowerGroup and he joins me now from Milwaukee.
It is great to have you on the show. Throughout the hour, what we have been telling our viewers is, we have heard from fixed ratings predicting a 1990
style recession. The CEOs preparing for inevitable recession.
Yet your service suggests that labor market is very strong.
Why is that?
JONAS PRISING, CEO, MANPOWERGROUP: That is right. We are seeing labor markets really being a bastion of strength in these turbulent times. That
is really true globally.
Now we should all know, we are all aware that labor markets are a lagging indicator to the economy. So all of the concerns that we are seeing around
the economy could well translate into a slowing market. Frankly, that is what central bankers are hoping for as many labor markets are very tight
Our survey clearly shows that labor markets are strong and employers still have strong hiring tensions as well, be that in the U.S., in Europe, Latin
America and in Asia. So that is good news for workers globally.
SOARES: I saw that you interviewed more than 40,000 employers in 41 countries, whether they intend to reduce or increase their head count in Q4
in 2022. Issues like the pandemic, issues as we all talked about, such as access to the best talent, is that beginning to resolve here?
PRISING: I think what we are living through is a post pandemic era, where the supply chain shocks that the labor markets experienced and the
employers experienced are starting to sort themselves out.
But as you can tell from the unemployment rates, the U.S. has moved from very tight to tight. If you look at the September labor market report, if
you look at Europe, employment is well below pre pandemic levels. We are still benefiting, if you can call it that, from the post pandemic recovery.
But it is likely that we could see some softening. But the labor markets are so strong right now that it is difficult to think about this as a --
unless it's a very severe recession, that it would have a severe impact on labor markets and unemployment rates.
SOARES: What industries are struggling when it comes to filling rolls?
What are companies now doing to try to land skilled workers?
What are you hearing?
PRISING: Clearly, employers are working as hard as they can to retain the workers that they attracted over the past couple of years following the
pandemic. Whether that's training, development.
We ourselves, one of our brands with Cisco have launched a networking academy; initiative, training people as a way of attracting them to the
I think that is what employers are doing, making sure that they pay wages that retain, making sure they provide the benefits as well as the ability
to upscale and rescale the individuals that have joined their company.
That is something that we really believe employers will continue to do moving forward as well, because the advent of digital transformation,
globalization, really drives a need for higher skilled talent not only through the cycle but more of a structural need over time in labor markets
SOARES: Let me ask you this, I'm sure you know, I'm here in the U.K. We have seen unemployment really falling to the lowest level since 1974. This
is not necessarily meant higher wages, especially when inflation, of course, is factored in here.
Is this something that you are hearing and seeing around the world?
PRISING: As you have been covering in your segment earlier today, you have seen some of the protests in France. You are seeing workers really starting
to want to see their wages move higher due to the inflationary pressures, especially through energy and food.
Employers so far have been quite moderate in the increasing wages on average. They have been below the core inflation by and large across the
world. Clearly, you are starting to see the pressure coming from employees, saying that, OK, we thought this was temporary.
We know we have been through a pandemic but these energy and food prices are really starting to hurt us. And we would like to see our wages rise
more in line with inflation.
SOARES: I speak for U.K. and Europe, that sentiment that you just painted there, I think that is expected to grow as the cost of living crisis grows
as well. Inflation will continue to soar. Jonas, really appreciate you taking the time to take the time to speak to us.
Indonesia called for a global policy coordination to confront a perfect storm of economic conditions as it hosted a final meeting last week ahead
of the G20 summit in Bali.
Indonesia has been weathering the economic storm pretty well of late. Inflation reached a seven-year high in September, one of the lowest rates
in the world. The Jakarta composite is also the best performing Asia- Pacific stock.
Richard Quest spoke with the country's finance minister last week. He asked her about the challenges the world's financial leaders are facing.
SRI MULYAN INDRAWATI, INDONESIA FINANCE MINISTER: It is not a very easy time for all of us, so we are discussing about the most dynamic, both
geopolitical change that is also creating the food and energy crisis, inflation, tightening of the monetary policy, interest rate. It is
threatening the economy so it is becoming so entrenched in the market.
RICHARD QUEST, CNN HOST: That's the problem. The reality is now that inflation is entrenched. As rates go up in the U.S., E.U., U.K., elsewhere,
you are going to get hit.
INDRAWATI: Yes, even if we try to do our best and protect ourselves, because of the global economic environment and geopolitical as well as the
policy, they need to be adopted and executed. It will have spillover.
QUEST: I often think of that word spillover effect, it kind of makes it sound like spilled milk. The reality is, here, I don't know, the severity
of the effects could be quite huge for countries like yours.
What are you going to do about it?
INDRAWATI: Indonesia is in a good position with the growth rate. It is now still above 5 percent. It is lower than the global standard in this case.
But Indonesia is not representing the average country or developing country.
It is now very vulnerable because of so many shocks they now suffer. Yes, definitively, it will create a debt distress to so many countries which is
already in a very good position after the pandemic (ph). It is also creating, not only economic problems but social problems.
QUEST: When you have the G20 heads of government and leaders, when you have that meeting, what do you hope comes out of it?
First of all, the question of Russia, how are you going to -- I asked you this before at the spring meeting.
What are you going to do?
INDRAWATI: Whether all the heads of states are coming, which is most likely yes because they are promising or informing our president. But then
the question is what they're going to discuss.
Part of the discussion is, of course, about the war in the geopolitical space. We do hope this can be ended so the (INAUDIBLE) meeting in which
there's a possibility to end the war. That would be a very great result. And then, everything else is going to be much better.
QUEST: Yes, but I'm not surprised you say that, we all hope that. The reality is, you could have leaders saying they're not going to sit in the
same room as Vladimir Putin.
INDRAWATI: Well, we are having a meeting. They are going to be in the same room, whether you're not going to talk to each other. But we are hosting.
And I think this is what also happened under the finance minister the central bank of the U.K. It can always express different issues. But we are
in the same room and we are going to discuss the situation and the risk, which is so real for people all over of the world.
(END VIDEO CLIP)
SOARES: And that is QUEST MEANS BUSINESS, I'll be back to the top of the hour as we make a dash for the closing bell.
SOARES: Hello, I'm Isa Soares. The dash to the closing bell is about two minutes away. The Dow is set to close higher for a second straight day. Up
1 percent right now. We've seen solid earnings from Goldman Sachs for some opening momentum. The Dow now up 300 points, a relatively good day.
The last few good days this week so far. The S&P and the Nasdaq as you can see, the S&P closing up almost m1 percent. Similar picture with the Nasdaq,
almost 1 percent higher.
Green hours right across the board. A strong couple of days on Wall Street. Doesn't necessarily affect the mood of CEOs. The Conference Board's chief
economist Dana Peterson said they are preparing for a recession. Have a listen.
(BEGIN VIDEO CLIP)
DANA PETERSON, CHIEF ECONOMIST, THE CONFERENCE BOARD: Many CEOs and businesses have already been hit by a very elevated inflation through their
supply chains. Also as wages are rising, especially in the U.S., there's labor shortages.
They're very concerned about the hits to profit margins. They're also concerned about how much inflation pressures they can push through to
customers. Certainly, as customers are coming under strain; both central banks in Europe and the U.S. are raising interest rates to combat inflation
and, especially in Europe, energy crisis inflation.
So I think there are a lot of things on the minds of CEOs right now.
(END VIDEO CLIP)
SOARES: Well, now let me bring you the Dow. As you can see, Salesforce is on top at 4 percent, just over 4 percent. Activist investor just revealed a
major stake. If I show you Goldman Sachs, up 2.75 percent, better than expected earnings.
Microsoft is up half a percent, the last time I looked at it.
Where is Microsoft?
(INAUDIBLE) laid out some workers and Intel, some of the ones losing out, here Johnson & Johnson, down, Intel down just over 2 percent. That is your
dash to the bell. I'm Isa Soares. The closing bell is about to ring on Wall Street.