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Quest Means Business

Wall Street Tumbles As Retailers Warn Of Inflation's Bite; Biden And Putin Mark One Year Of War With Dueling Speeches; Space Technologies Helping In Climate Change Fight; Microsoft To Bring Call Of Duty Game To Nintendo; Ireland Central Bank Defends Legitimacy Of Growth; Dash To The Bell. Aired 3-4p ET

Aired February 21, 2023 - 15:00   ET

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

[15:00:16]

RICHARD QUEST, CNN INTERNATIONAL HOST: An hour of trading left. When you see the numbers you might be wishing it was ever sooner rather than that.

We're just about at the bottom of the day. Who knows what could happen in the last hour because that's when the books squaring goes on, but the

market is down sharply and we'll get to the reasons why.

And these are the main events of the day to bring to your attention: Two US retail giants are warning of a slowdown ahead.

Russia is pulling out of the last remaining nuclear arms control agreement with the United States.

And tonight, the Microsoft President is with me from Brussels, where he is trying to sell the EU on a $69 billion deal.

We are live in New York on Tuesday. It's February the 21st. I'm Richard Quest, I mean business.

Good evening.

We start tonight with the alarm bells on Wall Street. Investors perhaps preparing for the grim new economic reality as further interest rate hikes

are on the cards. The Dow is on track for its biggest one-day drop in over a month.

There have been gloomy guidance from two of the biggest US retailers, and that has raised concerns about inflation. The S&P is headed for the worst

day of the year so far, with signs of business growth in the US and Europe, fueling anxiety that interest rates could stay higher for longer.

The two companies involved, Walmart and Home Depot sparked the selloff. They cautioned investors for a difficult year. Now, why Walmart might be up

when Home Depot is down is obviously Walmart does rather well as a discount seller or a bulk seller in times of recession. So that way, you might see a

bit of a disparity.

Rahel is with me.

This is really, as I described it, the chickens coming home to roost. There is a reality now that higher for longer.

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Well, Richard, you know, it is interesting, because not long ago, the conversation dominating Wall Street

was at what point do we see a pivot? And there was sort of a growing consensus, at least amongst some that 2023 would be the year that the Fed

starts to cut interest rates? No, no, no, the conversation now is how much higher will they go.

And so, it has really been quite a drastic change over the last few weeks and what has happened over the last few weeks. Of course, we've got retail

sales that came in much stronger than many people were expecting. We got that January Jobs Report, that was almost three times what economists were

expecting in terms of job growth, more than 500,000 jobs being added, unemployment ticking to a fresh 50-year low.

And of course, Richard, as you know, it is not just the tight labor market here in the US, but many major economies around the world are also working

with a very tight labor market. It is part of the reason why Home Depot, which as you mentioned earlier, Richard, said today in its earnings report

that it will be adding another billion dollars to wages for both starting wages and people who are currently with the company. Great news for Home

Depot workers, maybe not so good news, if you're the Fed, and you're trying to prevent a wage price spiral.

So it is still a very tight labor market. It's also part of the reason why we're seeing services inflation, and part of the reason why the Dow is

currently off 626 points.

QUEST: All right, but look at the luxury stocks, we've chosen a selection of them, which, not surprisingly, if things are going to get tough then the

luxury stocks are also going to be difficult.

You've got places like Coach, you've got some of the airlines, they are all lower at the moment, and I guess this is going to be the story of the day

or the story of the next few weeks.

SOLOMON: Well, look, I mean, I think you absolutely have a tale of two consumers, right? I mean, yes, they are all sort of lower now being swept

up in the larger, broader market day, but you do sort of have a tale of two consumers, right?

I mean, when you talk to any luxury CEO, and I have talked to several over the last few weeks, Lamborghini, for example, and others, they are not

seeing a slowdown in spending, right? So --

QUEST: No, there is a difference. There's a difference, Rahel.

The Lamborghini purchaser is not going to be as affected. The Lamborghini - -

SOLOMON: Right there.

QUEST: Somebody who is going to shell out 300K on a car, but these companies go for that sort of middle, upper middle class that will be

affected I would argue.

SOLOMON: Well, it will be interesting to see. American Airlines lines have the airlines tell it and they're still seeing really strong demand and

that's because services is still really strong, which by the way, we've heard from some of the CEOs today.

[15:05:08]

So American Airlines, take it out of the mix. Nordstrom, perhaps because maybe you have more of a mix between the middle income and the higher

income earners, but you are absolutely seeing that people who are at the lower income spectrum, I spoke to Diane Swonk, the Chief Economist at KPMG,

about this recently, people who are at the lower income spectrum, even in middle class, they've blown through their savings. We've seen that in data.

They're tapping their credit cards, we've seen that in data.

And so they are definitely being impacted. However, Richard, if you own your home, you're sitting on equity, you're probably still employed, you're

probably making decent money. Are you feeling this right now? Probably not.

QUEST: I suggest that the bulk of the economy is starting to feel it, and because you've just pointed out, they have blown through savings and all of

that money that they -- I don't think the whole two and a half trillion is gone, but it is dwindling, that they got during pandemic or they saved

during pandemic.

SOLOMON: No, absolutely. I mean, we can see that in the data. And I think it was the Walmart CEO who pointed to that very thing today, right? I mean,

we had been bolstered because we were sitting on pandemic savings. Our savings account were flush and healthy, but higher interest rates, higher

costs have certainly taken a toll.

QUEST: We'll talk about the pivot next time we speak. Thank you, Rahel Solomon.

Two very different views on the Ukraine war today from Presidents Putin and Biden. The leaders of Russia and the United States delivering defiant

speeches marking a year of war, and they spoke only hours apart, very different conflicting narratives on who is to blame and what is at stake.

President Putin spoke first and said Russia is suspending the last remaining nuclear arms treaty with the US, claiming the West started the

war and declared Russia cannot be defeated.

And then in Poland, hours later, President Biden said Kyiv stands strong, and the West is more united than it was a year ago. Its support for Ukraine

is unwavering, and directed this message to the Russian people.

(BEGIN VIDEO CLIP)

JOE BIDEN, PRESIDENT OF THE UNITED STATES: The United States and the nations of Europe do not seek to control or destroy Russia. The West was

not plotting to attack Russia as Putin said today, and millions of Russian citizens only want to live in peace with their neighbors are not the enemy.

This war was never a necessity. It's a tragedy.

(END VIDEO CLIP)

QUEST: Now, in the wake of that meeting, Poland has announced it will deliver 14 Leopard 2 tanks to Kyiv in the coming weeks.

Michal Sznajder is the anchor for CNN's Polish affiliate, TVN. He is with me from Warsaw tonight.

So I also heard the Polish President speak, and I think that there's an element isn't there, that whatever, you know, we will go the cause, but are

other Polish people still fully behind it?

MICHAL SZNAJDER, ANCHOR, TVN: Good afternoon. Good evening, Richard.

Well, most certainly, if you have a look, even at the opinion polls, some 80 percent of the Polish people are still supporting the idea of providing

Ukraine with weapons. The narrative in the past year is that Ukraine has proved that it is fighting for their life. Once they are given the

necessary weapons, the necessary equipment, they know what to do with it.

Quite recently, the Polish President said that helping Ukraine is not only the good thing to do, but we are also in a way helping ourselves because

Russia simply needs to be stopped at all costs, and the best way to stop Russia, to stop the ambitions of the Russian dictator is to simply help

Ukraine.

QUEST: Is there any -- is there any resentment or anxiety about Hungary's position in the EU? Where Hungary seems to be closer, or at least -- I

mean, to be fair to Hungary, it supported all the sanctions packages, but Viktor Orban, who is an ally of Poland in many battles against the EU, but

maybe on the other side in this particular one.

SZNAJDER: Well, whenever there are pictures, whenever there is footage of the Hungarian Minister of Foreign Affairs, Peter Szijjarto speaking for

example, with either Russian or Belarusians, of course in Poland, that leaves a very bitter taste in Polish mouths, because this is something that

is extremely difficult to understand.

Now the question is, why is Hungary doing it and there have been situations that in fact, the only time at least that I can remember, the main reason

for any sort of disagreement or Perhaps even the conflict between Hungary, the Hungarian government and the Polish government was in fact the matter

of Russia.

[15:10:05]

There was a time where even it was signaled from Warsaw that there -- this is a time of perhaps reaching a crossroads, but as you pointed out,

Richard, very correctly that Poland and Hungary on the European arena are as close as it can get, and whenever one country is in trouble, for

example, for attacking the rule of law, of destroying European democratic values, the other country, the other partner always shows up at their aid.

QUEST: Michal, good to see you. Michal Sznajder, thank you, as always, to have your expertise with us tonight on QUEST MEANS BUSINESS. I'm grateful.

Now, when President Putin sent the Russian troops into Ukraine, he launched a propaganda campaign at home. It was to justify his war and he has painted

NATO in the West as the aggressor. We heard that again today.

(BEGIN VIDEO CLIP)

VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): The elite of the West do not conceal their ambitions, which is to strategically defeat

Russia, finish us off, once and for all.

(END VIDEO CLIP)

QUEST: Now, when I heard all this this morning, I sort of had a moment's thought.

Has he got a point? Do we need to take a closer look at the case that Putin is making? After all, he has made some very strong statements, which are

the exact opposite of what Western leaders are saying.

So today, Putin said Russia had done "everything possible. Everything, everything possible to resolve this problem peacefully, very patient,

painstaking negotiations to win this difficult situation now, but a new scenario has been unleashed, and peace initiatives have been completely

subverted by lies and hypocrisy."

Nathan Hodge is with me, former CNN Moscow Bureau Chief. He is in London.

Now, how do we -- let's be cynical and skeptical on both sides. How do we square that circle when you have what Putin says, and there are many people

around the world, I came across some when I was on my travels, who do believe that NATO is being the aggressor here?

NATHAN HODGE, CNN FORMER MOSCOW BUREAU CHIEF: Well, Richard, first of all, it's important to point out that Putin is reading from the same sheet

of music that he was playing from exactly a year ago, when he laid out the case for and then addressed the Russian people, and made his case for the

war and why Ukraine needed to be invaded and why he had launched this so- called special military operation.

The only difference now being that he has not delivered a short, victorious war; his military has taken a hammering; he claims to have annexed or is

trying to annex territories that Russian military doesn't even fully control. So basically, you know, as far as the Russian public is concerned,

he is putting lipstick on a pig today with this speech.

Now, the Russian people are not the only audience for this. He is also trying to reach out to another key audience in the Global South, for

instance. We've seen in recent days, for instance, the Russians, who -- you know, they are very assiduously courting support around the world, and what

they want to play on is this idea of, you know, this tradition of Western interference in the domestic affairs of other countries, ergo, you know,

look at what's happening in Ukraine.

But the irony here is, and I'll just interrupt one more thing, which is, it is Russia that is waging the imperial war here of conquest.

QUEST: Where, he talked again, didn't he, there were hints of that in the speech today, talking about empires and Austria and Poland, Hungary, and

all of these. These are lands that he believes are rightfully his, but he can't get it.

HODGE: Well, Richard, you can always count on Putin for sort of a long- winded explanation, rehash of history, your Austro-Hungarian history and what the Bolsheviks did and, you know, what Khrushchev gave away. Look, all

of this basically, is just a rehash of a lot of longstanding historical grievances, but what he needs to do today, when the Russian population and

you look at all of those ashen faces in the room, listening to this speech, and you have to wonder, you know, what are they really thinking?

Because, obviously, you know, they have to show loyalty, and they can do nothing but stand up and applaud, but Russians are worried about, you know,

would he have announced a fresh mobilization? Will the borders close? What's the next sort of thing that's coming down the pike here -- Richard.

QUEST: Okay, so this is so naive a question, but in a sense, why do they follow Him? If the truth is as obvious to you and me, then how -- and I

imagine a lot of the people in that room and in the higher echelons of the Kremlin are very intelligent people, and they know what the real situation

is. Why has nobody -- and I understand they want to keep their heads and they don't want to be sent off to Siberia, but why hasn't anybody quietly

gone up to him and said, actually, Mr. President, we're losing. It's time to get out.

HODGE: Well, Richard, if that kind of conversation were actually to have taken place, we probably wouldn't know about it.

[15:15:07]

The Kremlin is notoriously opaque when it comes to what the internal decision making processes are there, and it is sort of -- to get to the

bigger point is, you know, Russians, you know, they are commonsense people, and a lot of them, hundreds of thousands of them have voted with their feet

and left the country --Richard.

QUEST: Nathan, how excellent to have you with us tonight. I'm very grateful. Thank you, sir.

The European Union Ambassador to the United States, Stavros Lambrinidis joins me now. The Ambassador believes Russia is trying to break the will of

the West. There he is. You'll hear him after the break.

(COMMERCIAL BREAK)

QUEST: President Biden on Tuesday in Poland declared Ukraine will never be a victory for Russia. He was marking one-year anniversary of Moscow's

invasion and he announced that the US will host next year's NATO Summit.

Stavros Lambrinidis is EU Ambassador to the US and he joins me now from Washington.

Ambassador, I think that -- I mean, we've now heard everybody say unwavering support as long as it takes, whatever it takes. But the reality

is, there is still a gap between what Ukraine is asking militarily, and what the allies are providing.

STAVROS LAMBRINIDIS, EU AMBASSADOR TO THE US: Well, from the beginning of this war, in some ways, there has been a gap.

The Ukrainians have been predicting and looking on the ground what they would need, and the fact of matter is, they have received massive amounts

of military support and economic support that has allowed them, even though not perfect up to now, to push back on the Russian aggression. The Russians

are getting pummeled militarily, and that is a combination of remarkable heroism of the Ukrainians and the support they're getting from Europeans

and Americans.

So -- and this support now has been announced to increase dramatically, with much more advanced weapons as well. I think Ukraine is in a good place

to keep pushing Russia back.

Putin expected really the world when he attacked, he thought in a few days he will take over the country. He has been pushed back. He was convinced he

would win the energy war against Europe, he has lost that dramatically for him.

He was convinced he was going to kill the spirit of the Ukrainian people by bombing their infrastructure as he does now and hoping that he will create

a hell of a winter for them and he has failed, or that he would send them over as migrants in Europe, and they would collapse there, and he has

failed.

I have no problem with the support we are offering to the Ukrainian people. It is as strong as it is going to be and strong in the future.

[15:20:19]

QUEST: Do you worry from the EU's point that, as the US now moves into a much more aggressive political cycle, and that, you know, obviously, there

is already the conservatives who are demanding more checks and balances on what is being sent, that Ukraine becomes, God forbid a political football

within the US political system.

LAMBRINIDIS: I am not, because I've been talking to Republicans and Democrats in the House every day, and I see a bipartisan commitment that is

ironclad.

Now, but I do see, and I do know that after a year of war, we are approaching the year mark, the one year mark, you know, there could be

people who say I'm tired of this, this is bad news. I don't want to hear about it all the time. And I can tell you right now, this is exactly what

Putin is betting on.

He is trying to prove in his speech today in the Duma makes it very clear that we are just a corrupt, weak set of democracies, that we don't have the

stomach like he does, to see violence through and he is hoping that he will see cracks in this Alliance, whether in the US or in Europe, or in our

relationship.

And I assure you, I have not seen the slightest sign that he will win that bet. He will lose that one, I'm pretty sure about this, the same way he has

lost every other one up to now.

QUEST: Other issues that are on the EU-US agenda and since you have your, sir. The Inflation Reduction Act slightly took the Europeans by surprise

and arguably, creates an unlevel playing field in terms of sustainability, technology and investment.

Now, the EU is coming back with its own proposals, which I believe as I understand it, when you come up with them, you believe will level the field

again.

LAMBRINIDIS: Well, there are two or three things that we are discussing with our American friends as we speak, and a special task force we set up.

The one thing is the implementation of the Inflation Reduction Act in a way that does not discriminate against the biggest allies, economic allies of

the US, the Europeans.

The second thing is transparency in the subsidies that both Americans and Europeans will be giving for the huge economic transformation that our

economies need, the green transition, so that we avoid subsidy wars. The last thing that we need is that.

The third thing is the realization that frankly, although we, in Europe, would like to un-source everything that we can, and the US would like to do

this as well, the fact of the matter is that we can't and we economically speaking probably shouldn't.

So the question really is, in the next few years, who will we be importing from? Who are going to be our supply chains? Who are going to be our

allies. And I submit to you, Americans or Europeans, the biggest supply chain in the world always have been are economies of the two biggest free

open economies in the world and they always will be, that's where we should be.

QUEST: Right. And the sort of tensions that we saw in the last administration, which have clearly been unwound again. But there is still

always the issue with I mean, President Biden himself has admitted European leaders turn around and say yes, but what happens if?

LAMBRINIDIS: Well, I think and maybe the war in Ukraine has been an inflection point for that as well that whatever it is that we consider to

be huge issues in the past, dwarf in comparison to the strength of this alliance when we go to the future, and we realize this now. It is the

strength of our economies that have brought the Russian economy and its possibility to grow in the future to its knees, it is the strength of our

economies, collectively, Americans and Europeans that has made sure now that Putin is making half the money he was before the war, from selling

energy to the world, that is a huge hit to his economy.

It's a third of our economies, frankly, that is allowing Ukraine today to be able to function as a country, just as Russia is trying to bomb it down.

So I am not concerned about the future of the transatlantic partnership. We will always have to work on differences, but what unites us, boy, oh, boy,

it doesn't even compared to what divides us.

QUEST: Ambassador, thank you. I think it might be the first time we've had a chance to talk to you on QUEST MEANS BUSINESS or at least you and I

have.

LAMBRINIDIS: I hope we can do this more.

QUEST: I was just about to say, let's at least agree it won't be the last one, Ambassador. Thank you very much indeed, I appreciate it. Thank you.

[15:25:06]

QUEST MEANS BUSINESS tonight, a state of art NASA instrument is sending crucial information back to Earth, and it could help the fight against

global warming.

It's a new series, "Transformers," and CNN meteorologist Allison Chinchar meets the scientists working with NASA on the project.

(BEGIN VIDEOTAPE)

ALLISON CHINCHAR, CNN METEOROLOGIST (voice over): In July 2022, this SpaceX rocket launched with a new NASA instrument called EMIT onboard.

NATALIE M. MAHOWALD, PROFESSOR OF ATMOSPHERIC SCIENCE, CORNELL UNIVERSITY: Well, EMIT is going to revolutionize what we can do. So it's just going to

provide such amazing new data to help us understand the surface and the atmosphere.

CHINCHAR (voice over): Now, over 250 miles above the Earth attached to the International Space Station, its purpose is to shed light on an

important weather phenomenon -- dust.

MAHOWALD: Desert dust or mineral aerosols is a mineral soil particle that is suspended in the atmosphere, and so these come out mostly from desert

regions that are dry and unvegetated with strong winds.

CHINCHAR (voice over): For over two decades, climate scientist, Natalie Mahowald has been tracking dust across the globe, and how it impacts

climate change.

MAHOWALD: I love looking at the globe and thinking about how dust is getting from one place to another.

CHINCHAR (voice over): She's been working with NASA on this new instrument to find out how different colors of dust in the atmosphere can

heat or cool the planet.

MAHOWALD: So different soils actually have really different colors. So the light ones reflect incoming solar radiation and the red ones and the

dark ones absorb it. And so one of the problems we have an understanding the impact of desert dust is we don't know the composition very well.

CHINCHAR (voice over): Using a device called an Imaging Spectrometer, EMIT scans the Earth's arid regions to detect different colored soils,

creating a mineral map.

MAHOWALD: Already, EMIT has taken millions or billions of observations of what's going on in the arid regions in terms of the composition, and then

we can use that to put into our models to better understand what actually the impact of the desert dust is.

CHINCHAR (voice over): Dust and sandstorms have dramatically increased in recent years due to climate change, land degradation, and drought according

to the UN.

These storms are causing respiratory illnesses, damaging livestock, disrupting transport, and even melting Arctic ice.

MAHOWALD: We've also watched dust plumes really just travel across oceans and be deposited in Greenland or even in the Alps.

CHINCHAR (voice over): EMIT can also detect another factor impacting climate change, methane, a potent greenhouse gas. It has detected 50 super-

emitters across the world, mostly coming from fossil fuel, landfill, and agricultural facilities.

NASA hopes this knowledge can help countries stem the emissions and shine a spotlight on how our planet is changing.

MAHOWALD: So you can think of the EMIT project as really testing the waters and really showing what is possible.

(END VIDEOTAPE)

QUEST: Coming up, Microsoft says gamers will be able to play "Call of Duty" on Nintendo and NVIDIA platforms if its merger with Activision goes

through.

You're going to hear Microsoft's President, Brad Smith on his program, next.

(COMMERCIAL BREAK)

[15:30:00]

(MUSIC PLAYING)

QUEST: Microsoft has struck a deal with Nintendo to make Call of Duty available on their game rig platforms. The deal effectively will take

effect once Microsoft buys Activision. The developer of the ecology franchise has earned Activision more than 30 billion in revenue. You heard

that right the first time. 30 billion. Antitrust officials are concerned about the merger. Microsoft and Activision executives met the regulators in

Brussels today. Microsoft president told me that deals with Nintendo and Nvidia or game-changers. Brad Smith spoke to me from Brussels and he said

that was still stands in the way of completing the 69 billion dollar merger.

I think the argument since this deal was announced a few months ago has been the same but a lot changed today. Today, Microsoft announced two

agreements that together will bring Call of Duty, the game that everyone has been talking about, to 150 million more people on Nintendo devices and

through invidious clouds streaming service. The big concern that people have expressed is that if we acquire Activision, Call of Duty will be less

available than it is today. We have shown with these new 10 year binding agreements that it will be more available instead.

The outliers, those that still won't reach an agreement from you, they are the largest or at least very sizable, they are still objecting.

We are really down to one principal company that is objecting to the steel. That is Sony. We have made clear that we are happy to enter into a 10-year

agreement with Sony. We are prepared to enter into regulatory applications as well, whether it is in Brussels, London, Washington. In addition to a

contract, we would have a duty under the law. I think at some point, I'm hoping that Sony will see that this is a better path for the consumers who

rely on it and PlayStation, just like the others.

I'm guessing, I know the answer to this before I even ask it but I will give you a go at it. I guess losing Call of Duty is a nonstarter?

We don't see a viable path to south call duty to someone else, another company for example. Some have suggested that is one way to solve this

problem. But even if it were possible, does it make any sense?

What we are talking about here is having a company like Microsoft invest in making quite Call of Duty more and more innovative every year, making it

more broadly available than it has ever been before. That is good for competition, it is good for consumers.

We are both old enough to remember antitrust in the early part of the 90s. Microsoft is very experienced in antitrust matters, isn't it?

In terms of dealing with them. Have changed since those days?

I think we have built up a track record as a company over the last 15 years. We know how to work with regulators who regulate in a manner that

solves problems. It ruins peoples confidence. We have had an undertaking here in Brussels since 2009 that covers a wide variety of our products. And

yet, there's never been any controversy. I think part of the question is whether people feel that regulators can impose the right kind of

guardrails. I think they can.

You can hear more from the interview with Brad Smith on toward program, including his thoughts on the unusual response is coming from Microsoft new

AI Chatbot. Storm clouds over the economy could be clearing, business activity in the Eurozone rose faster than expected this month. Those

companies in the block reporting growth from January. High consumer confidence in the Eurozone was hardly responsible for the growth. Optimism

is the highest it is been this year. Thanks to easing of the energy crisis and improved outlook for the economy. The euro president is with me from

Dublin. First, congratulations on being reappointed as euro crew president, even though you're not finance minister of Ireland. Congratulations on

keeping the job. Now you've got to sort of monitor the winds of slow down. He now believe that recession is off the cards?

I believe that the significant recession that was forecast for 2023 for the euro area is currently not a likely scenario. But if we've learned

anything, Richard, over the last number of years, it is the care with which we need to make forecasts. We are so aware of the economic consequences of

this awful war. But even with that recognition of uncertainty, it is still the case that the euro area and the economy of the European Union has shown

its resilience in 2022 and 2023. There is a growth outlook this year which is strong given the uncertainty and security environment that we are

navigating our way through.

Their latest numbers duration concerns. Within G7 and within E.U. France and Germany doing reasonably well. But they are not the engines that will

pull everybody else up.

Yes. Again, that points to the need to be confident about making the case that the euro area can navigate its way through these challenges. But also,

recognizing that we still do have challenges that will require a policy response. We are seeing other countries make significant performance to the

performance of the euro area. We are seeing economies like the Greek, Spanish and Portuguese and the Irish economy all make an important

contribution to Europe in economic growth. We need to harness the different engines of economic growth and our strong lateral but ways of employment to

wake our way through the year.

There is going to come a point when the question is asked, what is the right rate of inflation moving forward?

The low hanging fruit has been cut if you will. It is going to come to a point where the 2 percent remains, particularly when you get 4 percent. As

president of the euro group, I know before you say they set interest rates but you do have a view and you are obviously seeing it from a political

side versus purely economic side. Would you be more in favor of a pivot, three 4 percent?

No, I very much support the mandate and the target that they have in relation to 2 percent. The reason why I do is, I believe in maintaining a

level of inflation like that which will still be a challenge, it is also roughly where we need to be to have a right level of economic growth within

the euro area that is also sustainable and capable of keeping the jobs that we have developed since the pandemic. I do believe 2 percent is the right

target. I am encouraged by the fact that the era of peak inflation, there are signs that it is behind us in 2022 and even though a forecast of 6

percent inflation for the year is obviously far too high, it is lower than where we were last year.

Every foreign, at the end, I see the central bank governor has -- your 12 percent growth in Ireland was a mirage set up by Americans and service

providers and IP. Actually, nope, Ireland really did go by that amount.

Yes, the point he was making which is correct, is that there is substance in Ireland that is driving this economic performance. He also said, a point

that I've made for many years, the traditional measurement of growth and domestic product is not something that is, at times, best metric for the

economic performance of our economy given the large FBI community that we have. Our economy is growing, unemployment has never been lower, the budget

surplus in Ireland we're committed to the process. And delivering the minute of effective tax rate. A core point that we made is that substance

in Ireland is driving our economic performance, that is correct.

And I look forward over the next 2.5 years, you and I will talk many more times as we go through whatever economic or heavy waters we will have to

face. I'm grateful as always, thank you. That's QUEST MEANS BUSINESS, I will have the dash for the closing bell. It is not going to be pretty, the

market is down sharply. Hopefully we'll get some respect.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

I am Richard Quest. Together, we have a dash to the closing bell and we are just two minutes away.

So the worst day of the year for U.S. stocks -- middle of February. But the Dow is now off over 650 points, -- down 700 when it's over. And the guests,

some of them on air -- markets Weiner after mystic and it now seems like some sort of reality, perhaps a set in. That's the Dow.

The triple stack also shows sharp losses, up 2 percent, 2 percent and 2.5 percent for the Nasdaq, which, of course, goes in another direction.

Looking at the Dow component, Walmart leads on its earnings, beating it but it's up half a percent. Merck is avoiding the worst of the day.

China is going to import some of Merck's drugs. Microsoft is off over 2 percent. You heard from the president of Microsoft about his activation

merger. And Home Depot is over 7 percent lower on its rising labor costs and dismal outlook.

In the contrasting point, of course, is Home Depot and Walmart at either end of the spectrum, one of which, both have warned but one of which is up,

the other is down.

That's the dash for the bell. I'm Richard Quest. Whatever you are up to in the hours ahead, I hope it is profitable. The closing bell is ringing. "THE

LEAD WITH JAKE TAPPER" begins now.

END