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Quest Means Business
Protests In China Send Global Stocks Lower; Investors Concerned Over Anti-Lockdown Protests In China; Sales Expected To Remain Strong Through Cyber Monday; British P.M. Condemns China's Treatment Of Protesters; Brazil Defeat Switzerland 1-0 Without Star Neymar; Crypto Lender BlockFi Collapse Into Bankruptcy. Aired 3-4p ET
Aired November 28, 2022 - 15:0000 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALISON KOSIK, CNN BUSINESS HOST: With an hour left in the trading day, the Dow is at session lows. The Dow currently down over 400 points, almost
500 there. Those are the markets and these are the main events.
Defiant protests across China's major cities. Thousands risk arrests to demand an end to Zero COVID.
Recession fears don't deter US shoppers in a record setting Black Friday.
And tumultuous times for crypto. Lender, BlockFi filing for bankruptcy.
Live from New York, it is Monday, November 28th. I'm Alison Kosik. I'm in for Richard Quest, and this is QUEST MEANS BUSINESS.
Tonight, widespread protests in China are sending shivers through markets worldwide. Major averages in Asia and Europe closed sharply lower on
Monday. US indexes are heading lower as well.
The unrest erupted this weekend against China's Zero-COVID policies. Protesters gathered in at least 11 cities despite the threat of government
In the country's financial hub, Shanghai people chanted slogans calling for free speech and democracy. The streets were quieter Monday after police set
up crowd-control barricades.
The protests began in Xinjiang province after a deadly fire. That tragedy has struck a chord across China as Selina Wang reports
SELINA WANG, CNN INTERNATIONAL CORRESPONDENT (voice over): They chant "Xi Jinping, step down," an extraordinary show of defiance in China.
In Shanghai, they chant for freedom, democracy and end to COVID lockdowns, even targeting the Communist Party and the Supreme Leader himself.
Unprecedented protests are erupting across China from major metropolises to elite college campuses, even far flung cities. Searing nationwide anger
triggered by a deadly fire in China's far West Xinjiang region. Water unable to actually reach the fire blazing from the high floor of the
Videos indicate COVID restrictions prevented fire trucks from getting close enough. Apparently blocked by fences and metal barriers normally used
(UNIDENTIFIED FEMALE speaking in foreign language.)
WANG (voice over): In the building's chat group, a mother pleads, "Help us. My kids are dying. We don't have enough oxygen." At least 10 people died.
The nation grieving the deaths of victims that likely spent the last months of their lives trapped in that building.
Most of Xinjiang has been locked down for more than a hundred days. The protests even spilling into the capital.
They're chanting that they don't want COVID tests, they want freedom.
And many people are also holding white papers in their hands, which is a sign of solidarity against censorship.
They sing and cheer, shout to be unsealed, and some even break down into tears.
(UNIDENTIFIED MALE speaking in foreign language.)
WANG (voice over): A man with a loudspeaker shouts, "We always support the Communist Party, but we want democracy and freedom."
(SELINA WANG speaking in foreign language.)
WANG (voice over): I asked a protester how he was feeling, "Overwhelmed," he said.
(UNIDENTIFIED MALE speaking in foreign language.)
WANG (voice over): "All conscientious Chinese people should come here and stand together."
(SELINA WANG speaking in foreign language.)
WANG (voice over): I said, "You realize there's a risk being here."
"Of course, there is," he responded.
And if we just turn the camera around, you'll see there is a row of police.
Hours later, masses of police filed in pushing the protesters back. Demonstrators shout towards the authorities, "We are not your enemy. We are
in this together."
These are unbelievable scenes in China where public criticism of the party can lead to prison time or even worse.
In Shanghai, police arrested, roughed up protesters, violently dragging them into cars.
No protests of this scale demanding political reforms have been seen since the Tiananmen pro-democracy protests in 1989 that led to a massacre of
(CROWD chanting in foreign language.)
WANG (voice over): These demonstrators know what they're risking, but they're determined to make their voices heard.
Selina Wang, CNN, Beijing.
KOSIK: The economic fallout of the protests hit stocks in China. Hong Kong's Hang Seng Index was down one and a half percent. Investors are
concerned that unrest could prolong Zero COVID and the country is seeing an uptick in cases despite lockdown measures.
Zero COVID is having economic effects far beyond China. A violent revolt among workers at Foxconn is threatening Apple's supply chain after rising
COVID cases at its factory and a revolt there over pay. Analysts say the measures could lead to a shortage of iPhones this Holiday season and cost
the company over $1 billion a week.
Marc Stewart joins us now.
Marc, so we did see declines in markets around the world. First, I want to focus though on the US. What is it about China that has US investors so
MARC STEWART, CNN CORRESPONDENT: Indeed, Alison. In this final hour of trading, it certainly has been rough. We've seen declines all day long.
Look, whether you are in New York, or London or Hong Kong, there is this universal feeling, this universal agreement among investors that stability
and certainty will bring good results.
But right now, these images that we are seeing out of China do not exude any of that and that is why things are so rocky.
In fact, the Dow right now, oh, wow, down close to 500 points, it actually went down to the last few minutes since I last looked.
I was talking to a portfolio manager today about the situation in China and what investors are going to want to see to bring some kind of stability and
there are really two narratives that are at play, two narratives that are conflicting each other.
It was just weeks ago that we had some hints and overtures from the Chinese government, that the Zero-COVID policy would perhaps relax a little bit,
would wane away, people will be able to move. But now when we see protests like this, and we hear the discussion about more of a stringent Zero-COVID
Policy once again, it's a very hard thing to reconcile.
So until investors hear some kind of clear roadmap, at least from the Chinese government, we may see some turbulent days ahead -- Alison.
KOSIK: Yes, China, obviously a big manufacturing hub, in particular, it is where Apple makes its iPhones. Do you think the supply of iPhones is in
STEWART: Well, if you listen to the analysts, that is certainly a concern and if we look at what Americans have been purchasing, especially on the
Cyber Monday, it is electronics and iPhones have always been a go to staple. And the financial ramifications of this are very significant.
I was looking at some data from the US investment bank, Jefferies. Its analysts estimate that these disruptions at that plant in Central China,
the Foxconn plant could result in $1 billion in lost revenue per week. So any kind of disruption to the manufacturing process certainly can be
Also, real quickly. I also want to point out that Apple stock today has suffered. It was down. It has been down throughout the day and that is
distressing, certainly because of what's happening with the Foxconn situation, but this is a staple of many people's investment portfolios.
It's often seen as a blue chip stock. So, it also hits close to home to Americans, especially as they look at their retirement account.
So, the situation at Foxconn has implications on many different fronts -- Alison.
KOSIK: We will be watching these protests very closely in China for many, many reasons. Marc Stewart, thanks so much.
Bill Lee is the Chief Economist at the Milken Institute and he joins me now from Los Angeles.
Bill, great to have you on the show.
WILLIAM LEE, CHIEF ECONOMIST, MILKEN INSTITUTE: Thanks for having me.
KOSIK: So talk with me about how these protests are different from the ones that that you know are more localized, that we have seen recur over
the past two decades. So, these are now big and national. But I'm curious if these current ones pose a genuine threat to the Chinese government.
LEE: These protests, the fact that they're so widespread, spontaneous, and have all resulted from this absolute discontent about the COVID policies is
very different than what we've seen before, and I think one thing that spurred is the fact that the Chinese population in watching the World Cup
saw that the rest of the world was open and they are still telling us how terrible COVID is and whereas everyone else in the world is enjoying the
World Cup games.
So, I think that was a shot in the arm to waken the Chinese population about the world, it is very different than the way the Chinese Communist
Party has told us it is, in particular Xi Jinping, they have gone overboard in closing us down, and that's really the source of a lot of these
protests, it is the lying that they're catching Xi has been telling.
KOSIK: Okay, so what is the answer here? Does Xi have an answer here? His Zero-COVID rule, it has failed to control the virus. You know, nearly
three years into the pandemic, as you say, the rest of the world moves on, does he have a response other than suppression?
LEE: Actually, we're going to expect to see Xi Jinping come up with even more suppression because the one thing that he cannot tolerate, and the
lesson learned from the fall of the Soviet Union is that you cannot let domestic protests get out of hand.
Domestic security was the highest priority, put on the agenda from the very minute Xi Jinping arrived on the scene. Look at how he handled Hong Kong.
Even there, there are more localized protests, it was completely clamped down the minute it started to be persistent and get out of hand.
So I would expect to see a huge crackdown put in place by Xi Jinping. Now, he may do it in a very sly sort of way. He can blame it on the local
authorities and say, well, I was about to lift up the COVID, but the overzealous local authorities have gone crazy in implementing policies in a
way that I didn't anticipate.
So that might be his face-saving way of backing out of COVID and at the same time, tamping down on the protesters to say, you guys are just
misunderstanding the way the central government wants it implemented, and the way it is being implemented at the local level.
KOSIK: Could these protests mean a moment of real change in China? Do they have that kind of power?
LEE: I would love to say that this may be the beginning of another fall of the Soviet Union type event, but it is way too soon to say that and China
has learned its lessons from the fall of the Soviet Union, and I know that the highest priority that Xi Jinping and his colleagues have placed on
domestic security will find some way of staying in power without the protests getting out of hand.
Now, one of the things that Western investors are going to have to do is to reassess whether it is still worthwhile to do business in China now that
operational costs have skyrocketed as well as geopolitical risks.
KOSIK: Now, you wrote that China faces increasingly severe economic and political headwinds at this point. Talk us through more of your opinion on
what you see happening here.
LEE: Well, the latest data from China has shown us that the big behemoth that China we thought was going to be may not be as big and as fast growing
as we previously thought. The population itself is starting to shrink pretty dramatically, and the one way that China will be able to maintain
its growth that it had in the past is through productivity and investment.
But Xi Jinping in his latest speeches have said, innovation will be done in the interest of the central government. In other words, centrally directed
innovation, that's an oxymoron. You cannot direct innovation.
Innovation happens by the incentives of the marketplace, and every country that has tried to do state control investment incentives fails in finding
the best investment. So the kind of productivity growth that China needs to grow the way it did before is somewhat in question and the population
growth that gave its tailwinds in the past is also not there.
So those are the kind of headwinds that we think will keep China in a very difficult position going forward. And again, one of the reasons why Western
investors are going to have to reassess whether or not they really want to be in the China market that is not growing as fast as they thought in the
KOSIK: You know, earlier this month, China announced what appeared to be significant easing of COVID restrictions. Why do you think this plan
ultimately wasn't implemented?
LEE: Well, China has convinced the population that the worst of every possible eventuality is to have COVID breakout in the country, and so the
policies have demonized COVID to the point where any kind of relaxation that results in a jump in the number of cases will be regarded as a
personal failure for Xi Jinping.
So again, he is going to have to figure out a way to ease back on the COVID restrictions in a way that allows more personal freedom, but at the same
time control the number of outbreaks and that's an almost impossible task, given the fact that their vaccines are not as efficacious as the Western
Moderna and Pfizer vaccines.
KOSIK: All right, Bill Lee, Chief Economist at the Milken Institute. Great to have you on.
LEE: Thanks for having me.
KOSIK: It's Cyber Monday and momentum from a record setting weekend in spending continues. How US consumers spent more than $9 billion online on
Black Friday, and what it means for retailers, next.
KOSIK: Welcome back, I'm Alison Kosik.
Today's Cyber Monday sales continue a weekend of record online shopping here in the US. Analysts at Adobe Analytics say today could surpass a new
record set on Black Friday, which saw more than $9 billion in sales. That's more than two percent higher than last year.
Higher prices are responsible for some of that growth and they are taking a toll. Retail analysts say Americans are dipping into their savings and
going into debt to make their purchases. Buy now pay later orders skyrocketed 68 percent last week.
I want to bring in Matt Egan to talk more about this.
Matt, great to see you. So one thing that came to mind here when I saw these latest numbers of the online spend is right before we got to Holiday
shopping, we were talking about the Federal Reserve raising interest rates, a possible recession, and consumers not feeling so great about the economy.
This is a huge conflicting signal here when we're seeing consumers spend. Can you explain this?
MATT EGAN, CNN REPORTER: Well, that's right, Alison. I mean, I think if there is a recession coming, consumers did not get that memo. Adobe
Analytics is projecting that today, Cyber Monday, people are going to spend $11.6 billion online, that would be an all-time record and up by a healthy
8.5 percent from last year. This is on top of that record that you mentioned, that $9.1 billion spent online Black Friday.
Now, it is worth noting that these figures are not adjusted for inflation, but Adobe says online prices have actually been coming down. So that means,
if you do adjust for inflation, this does appear to be real growth. And this is surprising in some ways for the reasons that you mentioned.
Consumer confidence is low, inflation is high. People are worried about a potential recession, but I think history shows it is never a good idea to
bet against American consumers. And this is good news, the fact that people are still spending because consumer spending is the main engine of this
You know, it is when people stop spending, that's when you have to really worry. I think the bad news here is how they are paying for all of these
Holiday shopping gifts. Because industry experts they do expect people to dip into savings and to lean on credit cards.
Now that is a concern because credit card rates have surged to record highs as the Fed tries to fight inflation by raising borrowing costs, store
branded credit card rates in some cases have topped 30 percent.
Alison, there is never a good time to carry a credit card balance, but this is arguably the worst time to do that.
KOSIK: Yes, that debt gets very, very expensive. Pay off that balance right away, when you get it, right? So I mean, you talked about the
downside to all of this spending that you know, people are dipping into savings and charging their purchases and things like that. What about how
the Fed may view what's happening here?
The Fed wants to see the economy slow down. Isn't this going in the opposite direction, though, especially since consumer spending makes up the
lion's share of economic activity?
EGAN: That's a great point.
Listen, the Federal Reserve is raising interest rates to try to get inflation under control. They're trying to cool off demand to give supply a
chance to catch up. Now, to the extent that today's numbers and Black Friday's numbers show that people are actually ramping up spending, ramping
it up more than anticipated, I think that would be a cause for concern if you're sitting at the Federal Reserve, and it would give them another
reason to, you know, continue to raise interest rates.
People are expecting the Fed is going to slow the pace of rate hikes, go from 75 basis points, the last four meetings in a row to 50 basis points in
the meeting coming up in about three weeks, but we'll hear more from Fed officials including on Wednesday, Alison, Jay Powell is scheduled to give a
big speech where perhaps he will drop some hints about what the Fed is going to do next, and maybe he'll weigh in even on some of these consumer
KOSIK: I will be listening to that. Matt Egan, thanks so much.
Okay, many US retailers started their Holiday sales earlier this season. In October, Amazon, Walmart, and Target held competing savings events that
helped bring online prices down to 0.7 percent from last year. Those heavy discounts stand to eat away at profits, though. And that's not the only
problem for retailers, they are also dealing with excess inventory from supply chain problems and wavering demand, decades high inflation, which
impacts consumer spending and product costs and higher competition from experiences that weren't available during the height of the pandemic, like
dining out, and concerts.
Michelle Meyer is the Chief US Economist at MasterCard and she joins us from New York.
Great to see you.
MICHELLE MEYER, CHIEF US ECONOMIST, MASTERCARD: Thank you. Good to see you.
KOSIK: So let's talk about what's weighing on retailers. I listed a bunch of them right there, and then one of them I didn't mention is the
uncertainty that's coming next year for the economy, the uncertainty about a possible recession. There is a lot weighing on retailers, are they going
to be able to at least break even?
MEYER: Look, I think right now retailers are all in on the Holiday shopping season as you just talked about with your prior guest. They are trying to
balance their inventories. They are trying to make sure they are meeting consumer needs and demands, which are changing, which are evolving and are
doing so in a pretty fast pace given that, you know, we're still kind of figuring out what the economy and the consumer looks like coming out of the
So are consumers still interested in buying these large durable goods related to housing? Much less so than they were prior to the pandemic. Are
they interested in more of the items that you might need to enjoy new experiences? It seems that's the trend at the moment. So, I think that's
the main challenge for retailers, it is to try to figure out how to accommodate these changing demands of the consumer and doing so in an
environment where yes, as you noted, the macro environment is also changing pretty rapidly.
KOSIK: The MasterCard SpendingPulse puts out -- I know that you all track spending, what have you learned so far about the Holiday shopping
MEYER: So you were just about to reference MasterCard's SpendingPulse Data, which is a real time measurement of spending trends in the economy, and it
was pretty strong for this Holiday period so far.
If you look at just Black Friday relative to last year, our SpendingPulse Data for retail says ex auto was up 12 percent on the year. Now part of
that represents the fact that restaurants is in that aggregate, gasoline is also in that aggregate. It is a pretty large kind of comprehensive figure
of spending during the Holiday season.
But what it tells you is that the consumer is still out there spending and that I think is, at the end of the day, really quite critical when you
think about path forward for the economy.
KOSIK: So you say it's critical for the economy, but the way they are spending can be a little eye popping, when you hear that they are dipping
into their savings, they are relying on credit cards, I would assume like MasterCard, to charge their purchases and then of course, most likely not
pay off each balance as they get it. That could cause consumers to run into issues that then creates a domino effect into the economy.
You know, what are your thoughts about how consumers are spending all of this money to buy these gifts.
MEYER: So, I think the easiest way to break it down is to think about the three main sources of purchasing power for the consumer. The first one is
wages, which comes from labor, market, and job creation and we know that the labor market is still expanding, we'll get the next report on Friday.
The consensus is looking for another 200,000 jobs to be created. So, income is still flowing in. That's a critical part of what drives spending.
The second source or as you mentioned, these pandemic savings, which there is still a large outstanding stock of pandemic savings, but by our
estimates, consumers have worked off in the US maybe a third to a fourth of the pandemic savings. And obviously, that differs depending on different
income cohorts and demographic groups.
And then the third one is credit cards and after a period following the pandemic, where consumers pay down their debt and did not actively use
their credit cards, instead, really actively used their debit cards, that has changed and there is more credit card usage when you look at the data
from the Federal Reserve's monthly report.
But I think it is those three sources of purchasing power that we need to pay attention to that are all helping to fuel consumer spending. Now, they
are going to shift as we look forward into the year ahead.
We know that the Federal Reserve is trying to moderate growth and slow down job creation and wage growth, so that dynamic is going to change. We know
that some of the pandemic savings are being used up and even credit conditions could potentially change.
But these resources are still very powerful right now for the consumer.
KOSIK: Okay, Michelle Meyer, Chief US Economist with MasterCard. Thanks so much for your perspective.
MEYER: You got it. Thank you for having me.
KOSIK: When we come back the downfall of FTX has shaken confidence in the crypto industry. Now, a major lender BlockFi is filing for bankruptcy.
KOSIK: Later this hour, British Prime Minister Rishi Sunak is set to outline his approach to China in his first major foreign policy speech
since becoming leader. It comes amid outrage in Britain over this video showing the arrest of a BBC journalist in Shanghai. The network says he was
beaten and kicked by police before being released.
Mr. Sunak's comments come as the Chinese President Xi Jinping faces one of the biggest challenges to his rule.
Fury and frustration over China's relentless zero-COVID policy has sparked widespread protests. There's been at least 16 rallies. Some violent as
protesters demand freedom, not just from COVID restrictions, but from the government's grip on all aspects of life.
In Hong Kong, protesters gathered and though they were small in number, their show of dissent is a big deal. CNN's Ivan Watson was there.
(BEGIN VIDEO CLIP)
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: The white sheets of paper that have become a symbol of the protests in mainland China has
spread here to Hong Kong, where you can see small groups of demonstrators have gathered for a vigil for what they say are the victims of China's
zero-COVID policy. Now we've heard these groups separating into groups of 12. And the reason is because in Hong Kong's own COVID, regulations, groups
of more than 12 gathering are banned right now.
Now this gathering is being closely watched by police, who are urging people to move on who are trying to create a space for this. Opposition
protests, opposition political parties, independent news media have largely been crushed in this city in the last several years. So a gathering like
this is very, very rare, and it gives you a sense of how potent the demonstrations are right now in mainland China, and how they seem to be
inspiring reactions in other territories.
(END VIDEO CLIP)
KOSIK: Now to Qatar, where a World Cup source says Iranian players are being threatened by their government. The security source says if the
players don't behave, their families face imprisonment, and torture. Iranian players did not sing their national anthem before their opening
match in an apparent show of solidarity for protesters back home. They did sing the anthem before their second match.
Iran takes on the United States tomorrow in a crucial clash for both countries. In today's matches, Brazil has booked its place in the knockout
stages with a one-zero win over Switzerland. Portugal's Cristiano Ronaldo is right now on the field taking on Uruguay.
Don Riddell is in Doha and joins me now. Don, go through all the football action we've seen today.
DON RIDDELL, CNN WORLD SPORT ANCHOR: Yes, it's been another full day. And as you say, very important day for Brazil booking their place in the next
round along with the reigning and defending champions, France. It was a slender win against Switzerland, you've just shown the Gulf from casimero.
Very, very well taken seven minutes before the end of the game. And I think the Brazilian side will be happy to have made it through two games so far.
They haven't conceded a goal. And, you know, in the last 20 or so years, European sites have been a bit of an Achilles heel for them, but not this
year, or at least not so far. They've beaten Serbia and Switzerland and they are well and truly up and running. As you mentioned, Portugal are
playing Uruguay as we speak. There's about 15 minutes left in that game. Portugal are winning against Uruguay.
It looked as though Cristiano Ronaldo had scored the goal to put the Portuguese side ahead, but it's now been credited to his former Manchester
United teammate, Bruno Fernandes. Ronaldo went up for a header but the more and more we looked at the replay, the less it looked as though he actually
got even one of his hair strands on the ball. So, looks like it's Fernandes' goal but I guess they would really be complaining Portugal
leading that game. And if it stays like that, there'll be through to the next round as well.
KOSIK: All right. Switching gears to something more serious. Politics clearly missing with the sport here as the U.S. prepares to face Iran and a
must-win match up. But now there's all this politics wrapped up in it as well. I'm curious if you can tell us what we're going to see, how you think
this is going to play out?
RIDDELL: Well, I think it's going to be pretty intense and the buildup was already fairly intense. And it's now only just been ramped up with the flag
issue and what the former U.S. coach Jurgen Klinsmann said about the culture of the team implying that the Iranian team cheats. And so, you
know, in the last kind of 24 hours or so we have seen the players of both sides, but in particular, the American players, they've had to be dealing
with a lot of questions about politics, which they really rather wouldn't have been.
The young American Captain Tyler Adams was asked to explain how he feels about the fact that basically the United States isn't perfect either.
They've got a gun violence epidemic, racism is rampant in the United States. And Adams had to deal with that. But first, he was asked if he
understood how to pronounce the name of their country, Iran, it's not Iran, as many people say in the States. It's Iran. So this is what Adams have to
(BEGIN VIDEO CLIP)
TYLER ADAMS, UNITED STATES CAPTAIN: My apologies on the mispronunciation of your country. Yes, that being said, you know, there's discrimination
everywhere you go. You know, one thing that I've learned, especially from living abroad in the past years and having to fit in in different cultures
and kind of assimilate into different cultures is that in the U.S. we're continuing to make progress every single day.
(END VIDEO CLIP)
RIDDELL: Alison, this is a winner takes all game and it is a must-win game for the United States. If they don't win, they are out. Iran can afford to
draw this one. And it is a repeat of the epic clash at the World Cup in France back in 1998, when Iran won two-one and sent the Americans home.
Team USA, absolutely hoping that history does not repeat itself.
KOSIK: OK. Don Riddell live for us in Doha. Thanks very much.
BlockFi is the latest crypto company to fall as the contagion from FTX's collapse grips the digital assets market. The crypto lender filed for
bankruptcy on Monday owing money to more than -- more than 100,000 creditors. Bitcoin has now lost more than 22 percent of its value since the
demise of FTX began earlier this month. I want to bring in Paul La Monica for the latest on all this. Gosh, you know, every day, it seems like
there's a new horrific headline, this one now affecting so many creditors. We knew this contagion could happen and now it's really happening.
PAUL LA MONICA, CNN DIGITAL CORRESPONDENT: Yes, it really is stunning, Alison. And you mentioned FTX, the crypto firm that went belly up. They are
in fact one of the companies that BlockFi owes money to because remember before FTX ran in trouble -- ran into trouble Sam Bankman-Fried was trying
to prop up the struggling floundering crypto industry with loans and FTX made a loan to BlockFi.
So BlockFi now owes FTX $275 million. That makes FTX, the second largest creditor in this bankruptcy filing. There's another group of investors that
collectively are owed more than $700 million. Even the SEC is owed money because I'm not sure if you remember, Alison. BlockFi was fined by the SEC
about $100 million. They've only paid so far about 30 million or so of that. So, the SEC is also a creditor in this case waiting in line to see if
they'll ever get the full amount of money that they find BlockFi in the first place.
KOSIK: You know, some may say with so much contagion is this -- is this really the end of crypto? I mean, can confidence be? Re -- can be re
instilled in digital assets again, after all that's happening. This feels like a house of cards.
LA MONICA: Yes, it's understandable why some people would feel that way, Alison. And I do think that there are going to be legitimate concerns and
more scrutiny going forward of any future deals in the crypto space. That being said, I think that there are still many large institutions that feel
that blockchain technology and Bitcoin and Ethereum and other legitimate cryptocurrencies despite their stunning plunge in value, they still are
And you do have companies out there like Binance, which was a -- which was thinking about trying to rescue FTX and then changed its mind. These are
still companies that have pretty high valuations, whether or not they are ever going to be worth what the promise was a few months ago. That remains
to be seen, but I don't think that cryptocurrencies and blockchain finance goes away entirely.
Much like the Internet revolution of you know, more than 20 years ago, there was a lot of froth and speculation. Amazon is obviously now a
legitimate company just took a long time to grow into its valuation.
KOSIK: Paul, stay there. There is about 20 minutes left to go before the closing bell rings. The U.S. markets are at session lows. We are seeing the
Dow down over 500 points, the growing unrest in China, that spooking U.S. investors. The Dow opened lower, kept slipping throughout the day, Paul,
what do you think -- do you think this kind of reaction is something that will continue?
I mean, listen, the markets have actually turned the corner over the past week or so. And now we've got this huge global event happening in China
impacting the U.S. markets.
LA MONICA: Yes, I think it's very important to point out, Alison, that what is going on in China is clearly very concerning. But you have to take a
step back. Go to mid-October, we had a stunning rally from the lows that began for stocks. October was the best month for the Dow in nearly a half
century, stocks are still up pretty sharply in November. We've had a really nice rebound in these past two months.
So, even with this pullback today, we are well above the lows for mid- October. The Dow amazingly enough is now only down about 67 percent this year. It's not out of the realm of possibility, it could go positive by the
end of 2022, may not be likely, but it could happen. S&P 500 and NASDAQ, they have a deeper hole to climb out of.
KOSIK: Big picture. That's the way we have to look at this. Paul LA Monica. Thanks so much. And that's QUEST MEANS BUSINESS. I'm Alison Kosik. And I'll
be back at the top of the hour as we make a dash before the closing bell. Up next, QUEST WORLD OF WONDER.
KOSIK: Hello. I'm Alison Kosik. It's the dash to the closing bell. And we're just two minutes away. The growing unrest in China is spooking U.S.
investors. The Dow opened lower and kept slipping throughout the day. It's now down almost 500 points. Same story for the other U.S. averages. The S&P
500 is off its lows of the day though and the NASDAQ is off more than 1-1/2 percent.
China has stood by its zero-COVID policy since the pandemic began. Milken Institute chief economist William Lee says the protests are unlikely to
(BEGIN VIDEO CLIP)
WILLIAM LEE, MILKEN INSTITUTE CHIEF ECONOMIST: Actually, we're going to expect to see Xi Jinping come up with even more suppression because the one
thing that he cannot tolerate, and the lesson learned from the fall of the Soviet Union is that you cannot let domestic protests get out of hand.
Domestic security was the highest priority put on the agenda from the very minute Xi Jinping arrived on the scene.
Look at how we handle Hong Kong. Even there are more localized protests was completely clamped down to meet it and start to be persistent and get out
(END VIDEO CLIP)
KOSIK: And that's your dash to the closing bell. I'm Alison Kosik and the closing bell is ringing on Wall Street. "THE LEAD WITH JAKE TAPPER", that
starts right now. I'll see you tomorrow.