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Quest Means Business

Biden To Tout $40 Billion Investment By TSMC In US Plant; Morocco Stuns Spain To Book Spot In Quarterfinals; Airlines Expected To Return To Profit In 2023; Critics Say Indonesia Criminal Code Threatens Human Rights; U.S. Shares Tumble As Recession Fears Mount; Georgia Voters Head To Polls In Crucial Senate Runoff. Aired 3-4p ET

Aired December 06, 2022 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[15:00:25]

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: A second day of sharp falls for the Dow. The Dow is off about 500 points, a little less than that right

now, 475 points or 1.4 percent. Those are the markets and these are the main events.

President Biden put his focus on the chip wars as TSMC triples a plant investments in the US.

Morocco shocking Spain securing a spot in the quarterfinals, and jubilation is in the air.

And the global airlines industry looks to return to profit in 2023.

Live from New York, it is Tuesday, December 6th. I'm Rahel Solomon, in for Richard Quest and I too, mean business.

Good evening.

Tonight, the world's top computer chipmaker has announced a major new investment in the US. President Joe Biden is heading to a TMSC plant under

construction in Phoenix, Arizona. He is set to meet with tech executives and also tout the benefits of the Chips Act passed earlier this year.

TSMC started building its Arizona plant last year. Now it says, it is tripling its investment there to $40 billion. Mr. Biden's visit comes amid

rising concerns over chip supply, including tensions between China and Taiwan.

CNN's Jeremy Diamond is in Phoenix as is the President. So Jeremy, what more are we expecting to hear from the President?

JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT: Well, Rahel, what we are getting here from President Biden is touting these investments and tying

them directly, of course, to this Chips and Science Act, which has resulted already, we've seen in billions of dollars in planned investments from a

whole slew of companies -- everyone from Intel to Micron to TSMC, where we are today -- all of them announcing billions of dollars in investments,

hoping to get some of those $52 billion in subsidies aimed at incentivizing semiconductor chip manufacturing production here in the United States.

And this plant is very much part of that effort, not only because of the amount of money that is being invested, but also because TSMC announced

today that it plans to manufacture more advanced chips here in the United States.

We just had Apple CEO Tim Cook here talking about this, and clearly this is being driven by National Security concerns related to Taiwan, but also the

fact that we saw over this COVID pandemic, these supply chain issues with semiconductor chips, and so companies like Apple, for example, would like

to see more production here in the United States to avoid those snags in the future. And also, of course, to avoid potential National Security

issues getting in the way of them getting their chips for their products.

So you'll hear President Biden touting these investments, talking about it, not only from an economic perspective, but also from a national security

perspective. And then, of course, more broadly talking about his economic agenda, talking about investments that have happened here, thanks to the

bipartisan infrastructure law as well.

So a lot for the President to discuss here in Phoenix -- Rahel.

SOLOMON: And Jeremy, I imagine we'll also hear the President touting that he is bringing manufacturing back to the US. I mean, we know that, of

course, has been a pillar of his agenda. Is that something we also expect him to really lean into today?

DIAMOND: Yes. No doubt about it. I mean, this is a State that President Biden, you know, won in the last presidential election. He is coming off of

a couple of victories here in terms of Democrats winning the Senate and also winning the governorship. He'll be alongside of those recent winners

today.

And of course, we know that he is in the process right now deciding whether or not he will run for 2024, and certainly Arizona will be key to those

ambitions.

SOLOMON: Jeremy Diamond, good to have you.

The new investment will help ease supply chain uncertainty, and that will help companies like GM and Apple, both of which faced a chip shortage last

year. Still, though, Taiwan accounts for more than half of the world's semiconductor output.

Marc Stewart is with me now.

So Marc, again, as we said, Taiwan, number one here, and I don't think anyone expects this new plant or these new plants to supplant that, but

help me understand how significant this new investment will be in terms of reducing supply chain vulnerabilities.

MARC STEWART, CNN CORRESPONDENT: All right, Rahel. This could help in the sense that not everyone can produce these kinds of chips. It is very

expensive. It takes a lot of technical expertise, and this is a process that Taiwan Semiconductor really has created a niche in doing so.

In fact, if you look at some of these more technically advanced chips, these high-tech chips. Taiwan Semiconductor is responsible for about 90% of

that production so that's why companies like Qualcomm, like Apple depend on its expertise. So it can help in the sense that it makes a very complicated

process a little bit more accessible to a broader market, and in this case, the United States -- Rahel.

[15:05:23]

SOLOMON: And Marc, just sort of walk us through. I mean, you said advanced chips, but what types of chips are we actually talking about? For people at

home, might that be the chips in your iPhone? Or might that be something different? I mean, what are we talking about here exactly?

STEWART: Right. I've been getting a real education today myself on chips, and it's not one size fits all. I mean, think about batteries, for example.

We use smaller batteries for our watches, we have bigger devices that use AAA batteries.

Well, it's kind of the same approach with chips. There are different chips for different products. The chips that you would maybe need for an Apple

product, maybe a little bit more sophisticated than the one that you would use for your refrigerator, for other home appliances.

So this facility that we're talking about in Arizona, at first is going to produce something a little bit more simple, starting in 2024, then looking

at 2026, it's going to produce some of these more sophisticated chips that are categorized as N3 in the chips-sphere.

But that is why there is so much excitement from CEOs like Tim Cook, who are there who could potentially benefit from this presence of a plant in

the United States for high-tech products like Apple just for an example.

SOLOMON: Apple absolutely stands to benefit, it sounds like. But Marc, also walk me through -- there is a bit of skepticism, I think in the business

community today about what we will see moving forward in terms of how much of its supply chain does Taiwan actually divert to Arizona.

Walk me through just some of the skepticism that's out there in terms of moving forward what we will see in terms of supply chains?

STEWART: Well, I think the real question is, is this relationship between the US and Taiwan. It is very complicated right now. China is a big factor

in all of this.

So I think the skepticism is perhaps if things get a little dicey, or even more so dicey with the United States and Taiwan, will that inhibit this

kind of relationship moving forward? But as we have seen taking politics out of it, supply chain issues are really broad. I mean, there are so many

different pieces in the pie. This is just one sliver in a larger issue about accessibility and the moving of products from Point A to Point B, but

there is a lot of symbolism by having this US presence -- Rahel.

SOLOMON: And also by having key executives like Tim Cook beside him there.

STEWART: Absolutely.

SOLOMON: Marc Stewart, good to have you. Thank you.

STEWART: You bet.

SOLOMON: And turning to sports, I mean, the upsets just keep on coming at the World Cup. Morocco stunning Spain a short time ago, winning in a

penalty shootout to break a scoreless tie.

The victory sparking jubilation in Doha, and I would argue perhaps around the world. Fans celebrating their team's first ever trip to the

quarterfinals. And back home, the party has started -- the streets filling up with people.

There is one more spot up for grabs in the final eight, and Portugal and Switzerland are right now battling it out. All eyes are on Portugal's

Cristiano Ronaldo, one of the game's greats and what is likely his last World Cup tournament was left out of the starting lineup.

Let's go to Doha where Don Riddell is following every moment.

Don, I want to start with Morocco. I mean, help me understand. Did they just play a better game? Or did Spain disappoint? Help me understand what

happened here?

DON RIDDELL, CNN WORLD SPORT HOST: Well, I mean, they all had different tactics. Spain absolutely dominated possession, Rahel. They made 1,019

passes during the game, which by the way, is not even the most amount of passes they've made in a game at this World Cup, but that's an awful lot.

They could never really do anything with it.

Morocco had some chances during the game, but I think they were absolutely thrilled that it went to penalties at the end, and just look at how it went

down because Spain to be fair, completely choked.

That's Pablo Sarabia who actually came on at the end to take a penalty and he hit the post. Then Carlos Soler made a pretty tame kick and that was

easily saved and then Sergio Busquets, another really tame kick that was easily saved. Full credit to the goalkeeper, though.

And then the story of the night really, the man who scored the winner. He was born in Spain. He had his childhood in Spain, Hakimi, and now he is a

hero for Morocco, knocking Spain out of the World Cup, absolutely extraordinary scenes.

And it is just so wonderful for the region because of course, this is the first World Cup in the Middle East, the first World Cup in an Arab country.

We've now got an Arab country through to the quarterfinals and Morocco are only the fourth African country ever to make it this far in the World Cup.

It has been a tournament of upsets, as we know, we've been discussing that throughout the last couple of weeks. But this round of 16 is starting to

look rather predictable until that, and Morocco now, when the celebrations have calmed down, we'll be awaiting either Portugal or Switzerland, but I

think it's going to be Portugal that they are playing next.

[15:10:13]

SOLOMON: Well walk me through that, Don. So what what's going on with Portugal and Switzerland right now? What's the game looking like?

RIDDELL: Well, literally as I was describing what happened with the Morocco penalty shootout, Portugal scored again, so they are now winning by three

goals to nil, just five minutes into the second half.

So you would expect from this position that Portugal will go on and book their place in the last state. What's really interesting about this game,

though, is that they're so far doing it without Cristiano Ronaldo. First knockout match that Portugal have played in the last 20 years, where CR7

hasn't been in the starting 11.

He has been watching on the bench, and of course, we all know how Ronaldo feels about being relegated to the bench. It's what led to his departure

from Manchester United, his club team just a few weeks ago.

Really, really interesting to watch the goals go in and gauge how excited he was. So it was actually the man that replaced him in the starting 11

that scored the opening goal, but by the time it was two nil, Ronaldo was off the bench and he was celebrating with the team. So, he seems to be

enjoying it now.

But it's a very difficult experience, I would imagine for Cristiano Ronaldo to be watching his team do so well at the World Cup, and to not be a part

of it.

Of course, he has played in the group stages. It's not like he hasn't contributed until this point. But a weird experience for him I would

imagine and it is going to give the coach something to think about in the next round: Does he bench Ronaldo again? Because some people think that

Portugal played better without him.

It was kind of the same argument that Manchester United, they actually played better when he wasn't in the team. So this is going to be an

interesting narrative to follow as the tournament continues.

SOLOMON: Yes. That's a tough position to be in for Ronaldo to see your team doing so well without you. But Don Riddell, great to have you and just

really incredible that Morocco win. I think as you said, really a lot of symbolism there for Arab fans watching and African fans watching around the

world.

Don Riddell in Doha. Thank you.

RIDDELL: All right.

SOLOMON: Well, unmarried couples may have to think twice before booking a trip to Indonesia. We'll talk about the new criminal code that makes

premarital sex illegal for residents and tourists and why human rights advocates are alarmed.

(COMMERCIAL BREAK)

[15:15:00]

SOLOMON: Welcome back. Global airlines say they expect to start making money again next year.

The International Air Transportation Association projects that the industry will turn a profit of $4.7 billion. Now, that would be a huge turnaround

from this year as expected losses of $7 billion, and it would give airlines the first profitable year since the pandemic.

Airlines CEO say they are defying gloomy economic trends. Listen.

(BEGIN VIDEO CLIP)

SEAN DOYLE, CEO, BRITISH AIRWAYS: You will see airlines very focused on restoring capacity next year and building backup operations, and that is

certainly the sentiment that we see. You know, within British Airways and across the industry.

ED BASTIAN, CEO, DELTA AIR LINES: There are certainly technology companies are having some challenges. We're just the opposite. We're hiring and we're

still hiring a lot.

GHAITH AL GHAITH, CEO, FLYDUBAI: Larger than we were before the pandemic, and we are still growing very fast.

(END VIDEO CLIP)

SOLOMON: Marie Owens Thompson is IATA's as Chief Economist, and she joins me now from Geneva. Wonderful to have you, Marie.

So help me understand. Is this just all increased bookings? Or is this cost control? What's really leading or factoring into the profitability

forecast?

MARIE OWENS THOMPSON, CHIEF ECONOMIST, IATA: I think, obviously, both are very important contributors to this outcome and traffic, it still has room

to grow. We do not forecast traffic to return to the 2019 level until 2024. So, there should be better results beyond this year and next to be

expected.

SOLOMON: With profits razor thin as your report points out, what's the biggest risk to the downside moving forward?

THOMPSON: Well, they obviously multiply given indeed, as you say, this very narrow margin that we are anticipating. That margin actually divided by the

number of passengers that we think will be flying amounts to actually a dollar of profit for airlines per passenger. So certainly, I'm in Geneva,

you can only buy like a quarter cup of coffee for that kind of money. So that's certainly illustrates the vulnerability and that means that you

know, the situation could change from many sources.

Our largest cost items, of course, in aviation are the energy costs, and also the labor costs. But with such slim margins, every item becomes

important. Payment, costs, insurance costs -- many of these smaller share cost items could indeed upend our forecast.

SOLOMON: I wonder what is the most volatile, however, of those factors? Is it oil? I mean, we just talked about yesterday, the EU oil price cap and

the risk of that perhaps upending the oil market next year? Is it labor? I mean, what is more volatile do you think according to your projections?

THOMPSON: Well, clearly the oil prices is by its inherent nature, very volatile. It is a market that responds with great impact to very small

variations in supply and demand.

So indeed, we would expect multiple spikes in the oil price next year, perhaps, notably in February, when there will be an embargo on Russian

energy exports in Europe. And other reasons too can cause this volatility.

But I must say also that airlines are used to dealing with high energy prices and have been profitable, more profitable than what we are

forecasting now, previously, with similarly high oil prices, notably between 2011 and 2019.

So, it's not -- it doesn't necessarily mean that we cannot deliver a profit. The interesting thing is, of course, that we have an unusually high

spread between the jet fuel that airlines use and the crude oil prices. So that's an additional handicap for airlines at this junction that this

spread represents a third of the old price that airlines pay.

SOLOMON: Speaking of labor costs, how concerning is it? Just yesterday, I think it was, we learned that Delta Air Lines and the pilots reached a deal

to pay pilots more than 30 percent over a four-year period.

Clearly, I mean, there are plenty of stories when it comes to the pilot shortage, the backlog of necessary pilots. I mean, do you think that the

news that we got from Delta could set a precedent in terms of other airlines and that airlines will have to accommodate higher wages for

pilots?

THOMPSON: So, I think this is a particular issue for the US. We do see signs of it elsewhere as well, but not to the same extent, and of course,

it's also a global issue because we now have arguably one of the tightest global labor markets that we have seen that I can recall.

[15:20:05]

So we are sort of near full employment in the global economy in a way which is very unusual. So it shifts of course as some bargaining power in to of

course, the hands of labor and for the global economy, this is a good thing because the fact that people have jobs is more positive for the global

economy and for our industry than the negative impact of inflation on the purchasing power, on those wages that people are earning.

So it has to be a net positive that people are working.

SOLOMON: I wonder, we talked about strong bookings. I wonder when do you or when does the industry expect bookings to start to normalize. We talk a lot

about the pent up demand of travel because of the pandemic, and I understand that it is geographic, right? I mean, we can argue that in

certain Asian markets, they haven't started to see that pent up demand come back because of COVID lockdowns.

But when does the industry expect the pent up demand of travel to normalize in the larger North American markets, for example?

THOMPSON: Yes, yes. I think for sure that this phenomenon exists and that people have been curtailed in their various activities, be its business or

leisure for a number of years. And now there is a need to catch up and certainly for business travelers to develop new markets, and so on.

So that catch up phenomenon, I think, might have some more legs, but the unusual thing that we have also observed is a very seemingly low price

sensitivity of this demand.

So people are prepared to pay the price, and we haven't really seen any dampening effect, stemming from the higher ticket prices, which are, of

course, related to the higher oil prices.

But this price sensitivity can be expected to come back progressively into the market again, and I would put that around the labor market again, that

as long as we have these phenomenal job creation numbers, and these low unemployment rates, people can get away with not being very price

sensitive.

But when that trend changes, I would assume that a greater price sensitivity in our demand for air transport is going to return probably

somewhere towards -- during the second half of next year, it could be the time when those things start to shift.

SOLOMON: That's an interesting forecast, because that's also when some of the forecast in the US foresee and expect the US unemployment rate to start

going up. So, it's an interesting parallel there.

Marie Owens Thompson, good to have you. Thank you.

THOMPSON: Thank you very much.

SOLOMON: Unmarried couples may have to start booking separate rooms when they visit Indonesia. CNN's Anna Coren has more on the country's new laws,

and why they're making some people there nervous.

(BEGIN VIDEOTAPE)

ANNA COREN, CNN INTERNATIONAL CORRESPONDENT: The Indonesian Parliament has made sweeping changes to its Criminal Code, which critics fear could harm

democratic freedoms and police morality in the world's third largest democracy.

Offenses that will now be criminalized in what has been a predominantly moderate Islamic country include sex outside of marriage. The law will

apply not only to Indonesian citizens, but also foreigners living in the country, as well as tourists. Those found guilty could face a year in

prison.

Other jailable offenses under this new Penal Code, a cohabitation among unmarried and LGBTQ couples, blasphemy, apostasy, as well as criticizing

the President, the government or other State institutions.

Human Rights groups say they are very concerned about the direction that Indonesia is heading with the rise of ultra-conservative Islam in the

nation's politics, as it adopts what they say as Sharia-inspired laws, fearing that minority groups will be targeted.

Critics are calling these new laws troublesome and counterproductive and say they could impact tourism, especially for the island of Bali, which

relies heavily on Western tourists for its economy.

While it's unknown how this new Criminal Code will be enforced, the Indonesian Justice Minister says there will be intensive outreach to

police, prosecutors, lawyers, and advocates and that the laws will come into place in three years' time.

Anna Coren, CNN, Hong Kong

(END VIDEOTAPE)

SOLOMON: Indonesia isn't the only country to criminalize premarital sex. Other countries, including some popular tourist destinations, also outlaw

it. The list includes World Cup host country, Qatar, Saudi Arabia, which is one of the most popular Middle East destinations and it is also illegal in

Pakistan and the UAE although the UAE did decriminalize the practice in 2020.

Vasuki Shastry is an Associate Fellow at Chatham House and he joins me from Dubai.

[15:25:08]

Vasuki, wonderful to have you. What's your top line reaction to this? I know it's not necessarily new. It was sort of years in the making, but what

is your top line reaction to this?

VASUKI SHASTRY, ASSOCIATE FELLOW, CHATHAM HOUSE: You've got to recognize that Indonesia may be politically liberal, but it is increasingly becoming

a socially conservative country. But I think even within that framework, lawmakers may have misread the public mood, so this is a regressive piece

of legislation.

I think amending the Criminal Code, we know really dates back to the Dutch colonial era was badly needed, but lawmakers appear to have gone through

this in an erratic fashion without too much public consultation. And I think the only silver lining here as one can see it is it is going to be

implemented in three years' time, a midpoint of the three years in 2024, Indonesia will have Parliamentary and Presidential elections.

So ultimately, the voters may have the way in expressing their views, and as things stand, this looks on implementable. But at the same time, if you

give too much of power to law enforcement authorities, it does signal a worrisome retreat from democracy.

SOLOMON: But what does it signal to you, as you just pointed out that it will take three years to be enforced and the next presidential elections

are in 2024? So does that suggest to you that perhaps, there are some questions about whether it would actually ever come to be at all?

SHASTRY: You know, that's -- I mean, that's the hopeful way of looking at it, but at the same time, you know, one factor, which really gives me

comfort is, you know, youth. I mean, the majority of Indonesia's population is young. So there is a demographic bulge, many of them actually go and

vote in elections. So they may well have their say in 2024.

If that does not materialize, one can take some comfort in the fact that the implementation capacity of Indonesian laws has been mixed. So (AUDIO

GAP) across this very, very large, archipelagic nation.

And at the same time, a lot of power has devolved to the provinces in the last two decades. So you may well see this very, very erratic, eccentric

implementation of the law, but the message to outsiders, the message to foreign investors, the message to those who wish to visit Indonesia is

very, very clear that there is a risk however negligible that risks may be that a person can get captured under these very, very regressive laws.

SOLOMON: I think there are a lot of questions about how this will ultimately be enforced. What has the public reaction and the business

reaction been like to this? Because I think of Bali, a place that I've been, a place that I love, a place that is home to tourists and reliant on

tourists, what has the public and business reaction been like to this, because you could argue that this could have really chilling effects, not

just a public speech, but also tourism?

SHASTRY: When this came together, really, I mean, this law has been debated for several years, but the lawmakers appear to be acting in really unseemly

haste over the past two weeks in pushing through this piece of legislation, which received an overwhelming majority from Parliament.

At the moment, what you've seen is very negative reaction from local NGOs. You've seen some reaction from the tourism industry, who are really alarmed

that you know, Indonesia is just emerging from three years of difficult times due to the pandemic, and Indonesia indeed, had its coming out party

last month, with the G20 Leaders' Summit at Bali, which placed the country on the world map.

So business reaction is developing. I'm sure, there is going to be a lot of concern that this is going to have a chilling impact on foreign investment.

Indonesia is already trailing behind Vietnam, in attracting foreign investment. It desperately needs that to not only sustain economic growth,

but to accelerate it.

And if foreign investors believe that this legislation really risks their staff in the country, then you know, I mean, Indonesia has been growing at

five percent for the past decade, it needs to grow faster, and that may well be jeopardized.

SOLOMON: A lot more to come. We will see.

Vasuki Shastry, great to have you. Thank you.

SHASTRY: Thank you.

SOLOMON: Coming up, a growing number of American CEOs are warning of a recession next year and that is taking down the market. The Dow is off more

than 400 points. You can see the Dow is off about 1.5 percent, the S&P almost two percent, and look at the NASDAQ, the worse among them, two-and-

a-half percent. We will have much more on the other side of this break.

(COMMERCIAL BREAK)

[15:30:21]

(MUSIC PLAYING)

SOLOMON: Coming up, a growing number of American CEOs are warning of a recession. The Dow is off more than 400 points, about 1.5 percent. The S&P

almost 2 percent. Look at the Nasdaq, the worst among them. 2.5 percent. We will have much more on the other side of this break.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

SOLOMON: Welcome back.

U.S. markets are extending losses as a growing number of America's top CEOs warning of a recession next year. The Dow has dropped to 524, off about 430

points, about 1.3 percent.

Bank stocks leading the losses. Morgan Stanley shares slumping on reports it's cutting its workforce about 2 percent. Wall Street appears to be

getting its house in order ahead of a rocky 2023. Global oil prices below $80 barrel for the first time since January.

(BEGIN VIDEO CLIP)

DAVID SOLOMON, CEO, GOLDMAN SACHS: At this point, when I talk to most CEOs, I'm not talking to clients. Most CEOs are cautious about how they're

operating their business, they're looking through the lens and saying, hey, I don't know.

Certainly we are in tight economic conditions. I would rather prepare for that more difficult environment and be a little bit more cautious right

now.

Of course, that creates that negative cycle. People slow down their planning, they hold back on some spending. They start trimming labor. They

want to be a little bit tighter so they have more protective room because it is a more difficult scenario.

(END VIDEO CLIP)

R. SOLOMON: Matt Egan joins me from New York.

Earlier in the show, we talked about how airline businesses are booming, the bank CEOs say they're preparing for a recession.

What is moving the markets, do you think?

Because clearly investors don't like it.

[15:35:00]

MATT EGAN, CNN BUSINESS SENIOR WRITER: It was not even a week ago that markets were in total celebration mode after Fed chair Jerome Powell, he

seemed to endorse the idea of slower interest rate hikes from the Fed.

But now, it looks like that celebration from markets was premature. In the last few days, we've gotten a series of economic reports that raise

emphasis on some of the other parts of Powell's message. The Fed still has a lot more work to do here.

Friday's jobs report was a lot hotter than expected, especially on wages. Numbers that were out yesterday showed that factory orders increased by

more than expected. U.S. service sector activity is holding up and obviously holiday shopping has been pretty resilient.

All of that is speaking to the idea that the Fed probably has to keep raising interest rates, not just at next week's meeting but going into next

year, maybe going to 5 percent or even higher.

That is where you get this recession concern, that the Fed is going to end up overdoing it and slowing the economy right into a downturn. You layer on

top of that these cautious words from CEOs and it is a another bad day for the stock market, giving back all of those gains from last week after

Jerome Powell spoke.

R. SOLOMON: It is interesting, Matt, you want a resilient economy to weather whatever is on its way. But you want a cooling economy as well to

handle inflation.

Matt, why are oil prices lower?

We got that news yesterday about the E.U. oil cap and yet oil prices are solidly lower.

EGAN: It is amazing what we are seeing in the oil market. If you told me six months ago that the war in Ukraine would be going on for almost a year

now, that Europe was going to be banning most Russian oil and the G7 was going to impose this price cap on Russian oil, I would've said oil prices

are not just at 100 but well above $100 a barrel.

Instead, they keep going lower. U.S. oil prices just closed below $75 a barrel for the first time since just before Christmas. They are down by

more than 40 percent from that peak in March, above $103 a barrel briefly.

So it has been really incredible. I think that a lot of this has to do with why the market is down, why the stock market is down. People are concerned

about a recession and a recession, of course, would hurt demand for energy.

Right now, these concerns about the health of the economy, these concerns about an aggressive Fed, that is overshadowing anything that is happening

in terms of punishing Russia.

Another point here is that, for now, Russian oil keeps flowing. A lot of people were concerned that there would be these major supply chain

disruptions due to the war in Ukraine, due to sanctions on Russia.

For the most part, that really hasn't happened. That means that we've had a situation where supply has been able to keep up and catch up with demand.

We have seen energy prices come down, gasoline prices in the United States down really sharply, back to pre-invasion levels.

That, of course, is good news for consumers. It is also good news for central bankers who are battling inflation because gas prices have come

down, inflation expectations have cooled off. So that is certainly helping a bit here.

R. SOLOMON: You think about the funnel effect of lower oil prices that funnels into all sorts of consumer prices that we as consumers pay. Matt

Egan in New York, good to have you, thank you.

Let's go to Georgia now, voting is underway in the U.S. state of Georgia, where senator Raphael Warnock, a Democrat, is facing Republican Herschel

Walker. The runoff was required after neither won more than 50 percent of the vote last month.

Democrats have already secured control of the Senate. But a Democratic win would mean that they do not need to rely on the vice president to break a

50-50 tie. Dianne Gallagher is with us now, she is in Atlanta.

Set the scene for us.

Even though the Democrats have necessarily the majority that they need, why are the stakes so high?

DIANNE GALLAGHER, CNN CORRESPONDENT: It is twofold. First of all, for people in Georgia, this is their senator, the person that they will elect

today is going to represent the millions of people in the state in Washington, D.C.

That is important to these individual voters. But from a broader standpoint, having a true majority, 51 versus just 50-50 with the vice

president breaking the tie, means that they can have a majority on committees instead of being split evenly on committees.

That gives them more power on those committees. It also means that the Democrats wouldn't necessarily have to hinge every decision on say senator

Joe Manchin or Kyrsten Sinema, who have caused certain legislation to be written differently or even threatened to kill certain legislation.

They are a bit more conservative than perhaps the rest of the world. They have different feelings about what the priority should be.

[15:40:00]

So for Democrats, this is considered a must-win state for them to be able to get some of their agenda out there.

Now Raphael Warnock has already been in office for two years. He was serving a partial term. He is now running for a full term. He has been

essentially trying to lean on his Senate record right now but also tell voters that he doesn't feel like he is done. There is still more for him to

complete in the Senate.

He has talked about health care and attempting to put a cap on insulin for private insurance as well. He is talking about reproductive rights and

abortion access. There is those type of topic when he visits voters here, specifically talking to young people in the state of Georgia to encourage

them to come and vote. This is what he is hitting. On

But he has also been on the attack against his opponent, Herschel Walker, who is a football legend in the state. He won the Heisman trophy in

college. He won a national championship with his college football team, the University of Georgia, back in the 1980s. He really is a sports icon in the

Peach State.

So he has been resting a lot on that. He talks about his backstory in his campaign speeches. And then he attacks Raphael Warnock. He doesn't do a

whole lot of policy discussion.

But he is advertising himself, especially to Republicans, as someone that can put a check on President Biden. That is his main point, the more

Republicans they have in the Senate, the less President Biden can accomplish.

Look, for a lot of Republicans, that works. That is something that is a main priority to them. I've spoken with voters, who have said, I may not

really be a fan of Herschel Walker and all the scandal and issues that seem to surround him.

But they want a Republican in office. Now look, we had more than 1.89 million early votes, more than 800,000 people have already voted today on

Election Day. Secretary of state's office says that is likely a conservative estimate. And we still have several hours to go.

R. SOLOMON: Record turnout, Dianne Gallagher, good to have you, thank you.

That is QUEST MEANS BUSINESS, I will be back at the top of the hour as we make a dash for the closing bell.

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R. SOLOMON: I'm Rahel Solomon and it is the dash to the closing bell. And we are just 30 seconds away between inflation and rate hikes, Wall Street

just can't shake its recession fears. The Dow has climbed 12 session lows. It is down nearly 350 points, headed for a second straight losing session.

Steeper losses on the other averages as you can see. The Nasdaq is off 2 percent. That is the dash to the bell, I am Rahel Solomon.

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