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Quest Means Business

US Inflation Edges Higher As Gas Prices Jump; Putin Hints At Military Cooperation With North Korea; Grounded In Greenland; Blackouts, Corruption Biggest Issues For South Africa; Birkenstock Heads For Wall Street; Dash To The Bell. Aired 3-4p ET

Aired September 13, 2023 - 15:00   ET



RICHARD QUEST, CNN INTERNATIONAL HOST: There is an hour left to trade on Wall Street and the markets are giving a good indication of what's on their

mind, and there you have it. We're going to be talking a lot about inflation, and that's the reason you're seeing the market behaving as it

is. This month tricky inflation data, it is like the proverbial pure of tech (ph), part of it of good.

A luxury cruise ship has run aground on a remote stretch of Greenland. There are 206 people on board. They are safe.

And the king of comfortable shoes, the Birkenstock decides to go public, and it's doing so in the United States.

We are live in New York on Wednesday, it's September the 13th. I am Richard Quest and I mean business.

Good evening.

We start tonight with troubling news for the US consumer as rising gas prices are fueling higher inflation. The CPI, the consumer price index rose

to 3.7 percent in August from a year earlier. The biggest driver by far was higher energy costs. Gas prices were up more than 10 percent from July to

August. Well up on shelter, it was one of the other big factors.

Core inflation, which is the one everybody looks at and excludes. Food and energy is still slowing on an annual basis, which is good news for the Fed

ahead of next week's meeting.

Matt Egan is with me.

Matt, if we look at these numbers, there is nothing I can see in them that would shift the general consensus that the Fed will sit on its hands.

MATT EGAN, CNN REPORTER: Well, Richard, I think that this report kind of has a little something for everyone. I mean, if you were worried about

inflation before today's report, there is plenty of reasons to still be concerned. I mean, headline inflation, which is the stuff that everyone

actually pays for every month, it is moving in the wrong direction, 3.7 percent. That is, again, largely because of gas prices.

Month over month, headline inflation actually tripled to 0.6 percent. That is the highest rate since June of 2022. Remember, that was really the peak

of this inflation crisis that was also driven by gas prices, but we all want to know where is inflation going next, and for that, we do look at

core inflation and the picture is moving in the right direction there.

So to your point, though, Richard, I don't really think that this report shifts the narrative at all. No, inflation has not been defeated; but it is

slowly moving in the right direction.

QUEST: Right. But it begs the question that the Fed is probably going to have to do more at some point.

EGAN: Well, the thinking right now is the Fed is not going to do anything next week, right? I mean, the odds in the market are more than 90 percent,

that the Fed just holds rate steady, but investors are pricing in basically a 50/50 chance that the Fed has to do at least one more rate hike.

And here is one of the problems for the Fed, it is that energy prices have actually gone higher since this data, right? This is August data. We know

that gasoline prices, oil prices have only gotten higher in the month of September, so that's going to cause some issues.

And I think the other problem here, Richard, is that this all speaks to how some of this is out of the control of Jerome Powell and the Fed, right? I

mean, he can't decide whether or not Saudi Arabia and Russia pump more oil or less, and at times, that is going to play a huge role in the inflation


QUEST: Which of course, is extremely worrying if, as is widely reported, Saudi wants $100.00 a barrel on oil.

EGAN: Right. And if Saudi Arabia and Russia decide that they want to keep supply steady, they don't want to do any favors to Jerome Powell or

President Biden, that is going to cause some problems, because it is going to lift inflation, and it is tricky because Powell doesn't want to

overreact to one area, but at the same time, what businesses and families spend on energy trickles down elsewhere, so he can't ignore it either.

I think this is just another reminder of how getting inflation back down to four percent or three percent. You know, that's one thing, getting it back

to the two percent target. I mean, that's going to be tricky.

QUEST: Matt Egan, thank you.

As core inflation continues to fall, as Matt was saying, inflation fire is dying down.

Now, this is the problem. This is what you need: A fire extinguisher.

The Dallas Fed president is warning when putting out campfires, embers must go gold, otherwise, you get sparks and then you fire. So the idea is that,

you want to make sure that those embers are truly extinguished which is the position we're in at the moment where the embers are glowing, threatening

to ignite again.


And of course, you have the accelerant of higher gas prices, literal and accelerant that would push on too much. The risk is using too much water

and snuffing out the economy; otherwise, if you don't do anything, and you don't get much benefit.

David Blanchflower used to serve on the Bank of England's Monetary Policy Committee. He's now a professor at Dartmouth College. He joins me now.

So are you seeing embers? Do you see as the Dallas Fed that the embers are glowing too sharply? Or are we not even at that stage yet?

DAVID BLANCHFLOWER, FORMER MEMBER, BANK OF ENGLAND'S MONETARY POLICY COMMITTEE: Well, I think that the analogy is probably not right. I mean,

the difficulty always here is knowing when to stop and monetary policy, higher interest rates takes a while to have an effect. And the question is,

is the solution, is the treatment worse than the problem?

Now I have an indicator actually of whether we're in recession, that indicator sparked last week. The indicator is: Has the unemployment rate

risen by 0.3 on the month? And that happened this month.

A couple of other things, Richard that actually are indicative. The labor market appears to be slowing, but there are some other indicators that may

suggest the Fed is right to take its foot off the pedal.

So delinquency rates for credit cards, and auto loans are rising. Student loan payments are restarting. People are running out of the excess savings

that they had, and banking sector loan growth has slowed. So there's a lot of indicators that the economy is slowing and we saw from our home country

of the UK, today, surprise on GDP growth, negative GDP growth, and manufacturing around the world is weakening, and so is China.

So the answer is, this all takes a wee while. The likelihood is the Fed, as usual, has done too much, not too little.

QUEST: Do you think that ultimately, we will manage to get out without a recession? Or have we been naive in that respect?

We haven't seen a big uptick in unemployment and there is a strong argument that says it is a sine qua non of dealing with inflation, that you do have

to slow down sufficiently to raise unemployment and arguably recession.

BLANCHFLOWER: Richard, of course, I think everybody was sort of surprised, including me, that the labor market didn't worsen more quickly. I think

the evidence is that it probably is. But maybe that there's things left from the pandemic that really were different than before.

I mean, this thing about households actually had quite a lot of savings. They could insulate themselves. So the fact that we haven't seen it yet was

the surprise. As I say, the fact that the unemployment rate went up by 0.3 on a single month is suggestive, but the danger --

Richard, let's just put this in context. Just let's understand that banks are run for bankers. Bankers care about inflation, but real people care

more about the unemployment rate. There's a lot of work done on it, it suggests that a one percentage point rise in unemployment makes people much

worse, about six times worse than a one percentage point rise in inflation.

So bankers want to do things to deal with the inflation rate, but real people care about the unemployment rate. Bankers are not going to get to be

unemployed, your listeners are. And I think that's the reality. The question is, is what the bankers are doing for the banks, the sensible

thing to do for your listeners? And it's okay, as long as the labor market doesn't collapse, but as soon as it doesn't, they don't really have many

tools to stop it.

QUEST: So in that scenario, what do you do now? You can tell -- I mean, I know of course, you see a similar situation in the UK, where the situation

arguably is worse. Their inflation remains stubbornly high. The BoE is very likely to have to do more. We saw numbers out of the UK showing home

mortgage arrears at a seven-year high, it extraordinary mortgages have doubled.

We are naive if we think we can have these massive rate rises and not have serious economic pain.

BLANCHFLOWER: Well, I think that's right. I mean, Catherine Mann, one of the MPC members said much the same as it is being said in the US, it says

that basically, we've got to keep on going.

But I think the argument that you probably have to look at in the UK where inflation is up around seven percent, the question is, well, if you raise

rates so much and inflation hasn't come down, maybe it's caused by something else and the word obviously in the UK as well probably it's about



I mean, one thing I was interested in this week, Richard, was looking at which country in Europe turns out to have done pretty well on inflation?

The answer is France. Why is that? Seventy percent of energy production in France is atomic. So they're not so influenced by the energy price shock.

And in some ways, think of what a Central Bank does. Okay, energy prices have risen. Is the appropriate strategy to come in and raise rates again?

Well, probably not, because that shock is probably going to dissipate itself.

But remember that, you know, yes, the treatment was very successful, sadly, the patient died. And that's the problem that we have. My view is what you

do is you sit very cautiously on pat and then you're prepared to turn in the direction, the opposite direction very quickly, as some people have

been voting for on the MPC already.

QUEST: Good to have you with us, David. It's been a while and we're delighted to see you again, sir. Thank you.


QUEST: Russia's Vladimir Putin is hinting at possible military cooperation with North Korea. He had a five-hour meeting with Kim Jong-un. Neither

leader was all that specific about what was discussed on their first day of talks.

Russian state media says President Putin described it as a productive meeting. They touched on agriculture, space exploration, and other

initiatives. It's the two countries military ties that have the West concerned.

Will Ripley is following the Summit from Taipei. When you looked at the speeches at the state dinner, they're all very grand and eloquent. No one

really said, except, arguably, Kim was a lot more anti-West. But this idea of a military alliance or a strengthened military contribution, how does it


WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Well, it would have been unthinkable before the war in Ukraine before Russia, and particularly

President Putin fell so drastically in status from the leader of a global superpower to now this outcast, right at the level of Kim Jong-un, who has

led his small rogue nation, but steadily, they've been getting stronger.

They've been growing their nuclear weapons arsenal. Of course, they've always had a large stockpile of conventional weapons and ammunition,

because North Korea is very rich in the minerals that you need to produce those things and they can help Russia, they can help resupply beleaguered

Russian troops in Ukraine with these weapons of which they have plenty.

And in exchange, Russia, which has decades of experience in building ballistic missiles can share some of that knowledge strategically with Kim

who is trying to get his nuclear program at a level which it will never be challenged by the United States or anybody, he will never be asked to

denuclearize and will have to be accepted as a nuclear power, that has been Kim's objective, pretty much since day one. And bit by bit, he's getting

closer to that.

And now, he is taking advantage of really Vladimir Putin's humiliating downfall to partner with him and use their combined powers to actually come

up with this plan, which is quite clever, that will allow them to use Russia's sanctions veto power, and Russia's access to certain components

and the North Korea's weapons to basically bypass these Western sanctions led by the United States that have prevented Russia from getting things

that it needs and preventing North Korea from getting parts and components that it needs.

So they have come up with this plan. They're executing it. And as you know, Richard, unlike democracies, which require consensus, Russia and North

Korea are dictatorships. And what Kim says and what Putin says, basically goes. So if these guys decide this is what they want to do, they're doing


QUEST: Which begs into the idea, as we just saw the comments that Kim wrote. He has firmly tied himself now to Putin. And it's, as you say, it's

an extraordinary relationship, when somebody -- "The glory of Russia, which gave birth to the first conquerors of space will be immortal." And then he

talks about later on "The victory that will come in the war" without actually mentioning Ukraine. Putin has got himself some rather unpleasant


RIPLEY: Yes. I mean, you know, this this friendship, though, with Kim Jong- un and Vladimir Putin actually makes more sense than that no limits partnership that President Xi of China announced shortly before Putin began

this invasion, this war that has now been essentially locked in this nightmare of never-ending conflict, bloodshed, people are dying and that

there are no lines that are changing.

President Xi, who, you know, allied himself with Putin has been a little more distant as of late, although still publicly he insists that the two of

them are the best of friends but Putin and Kim Jong Un as humiliating as it might be for Vladimir Putin to ask for help from someone like Kim Jong-un,

this is a partnership that can actually benefit both of them in tangible ways.


And it began reportedly with handwritten notes. Kim had this idea, gets out a pen and paper writes Putin a note. Of course, the Russian Defense

Minister was in Pyongyang back in July. So they start the conversation, they start talking and then Kim now gets on that green train, the green and

gold train, goes all the way up, you know, to Russia, and visits with the Russian president in a remote Space Center in the Far East.

Richard, it's the stuff that you would write up in a comic book plot, but in this bizarre New World Order, this is reality in 2023.

QUEST: A quick one, why does he travel on that train? I mean, why doesn't he just get on a plane?

RIPLEY: Security is one reason. You know, the train is heavily armored. He can bring his entire staff and entourage with him. He can bring cars. He

can bring anything that he needs, basically, on those 80 or so cars that are reinforced steel, even though they're Soviet-era cars, you know,

they're quite sturdy, but they also go very slow.

You're talking about less than 40 miles an hour on that train. No bullet trains in North Korea, ballistic missiles, yes, but no high speed rail.

Kim actually flies his own planes. But you know, that's a little more dangerous and North Korea's planes are getting older and older, even though

they're well maintained.

So the train seems to make the most sense, not to mention its tradition. His father and his grandfather always rode on that train. So it's very good

pictures for propaganda, which North Korea relies on to keep the leader's legitimacy and keep them front and center for the people.

QUEST: Thank you, Will.

Will Ripley in Taiwan. Thank you.

Grounded in Greenland, how a luxury cruise got stuck in a field. And now how on earth you get it free?


QUEST: Danish officials say the latest attempt to free a luxury cruise ship that ran aground in Greenland has failed today. A fish trawler tried to

pull the ship out during high tide on Wednesday, but the vessel couldn't get become dislodged.

There are 206 people on board and they're all reportedly in good condition and safe. It now seems more likely to be until Friday afternoon when a

Danish Navy vessel is set to arrive, and the crews can continue.

Anna Stewart is tracking this cruise.

I find it fascinating in this day and age that it's so difficult to know what's going on there.


ANNA STEWART, CNN REPORTER: Yes, so what we know is that this ship is stuck at the moment on sand and mud, but why it is stuck is really anyone's guess

at this stage. Clearly, it is unable to refloat itself at high tide. It was unable to get a tug from that research fishing vessel that you mentioned

today. So it's waiting now for this big naval ship to arrive.

And we're now told that's actually delayed due to bad weather. So that won't be arriving now until Friday evening.

They're all okay, and in the meantime, we're told there is a dog sled patrol, which has been on board the ship to check if everyone is okay. They

are about an hour-and-a-half away if there's an emergency.

QUEST: I mean, is the cruise continuing in a sense, I assume this is a luxury vessel. It's very expensive, whilst it is regrettable, they're not

exactly slumming it.

STEWART: Glad you said that. I know you're a fan of a cruise, I actually looked at what the cruise price would be for something like this with this

operator next year. It retails around $20,000.00. There's a bit of a discount at the moment, Richard and of course prices could drop after this.

But yes, it's an expensive trip. People will have some nice facilities on board like hot tubs and a library and a spa and there are several bars. But

how long are they going to be able to enjoy that and the views, which you can see in some of the photos there and will it be able to continue? I'm

not sure. It depends really on how much stock they have on board.

The staffing, of course, whether the staff on board are able to continue for much longer, and I imagine a lot of those passengers have places to be.

QUEST: Right. But what about damage to the ship? I suppose there also is going to have to be a thorough survey of the hull and the bottom bit, if

you will.

STEWART: So, the bottom bit -- there was a fly-past on Tuesday and there have been some surveys from the dog patrol unit. They took some photos, it

appears that the vessel is completely intact, and they don't think there's any damage. But I suspect until it's been refloated, and perhaps there are

divers who can really look at the hull in detail, perhaps they won't know that for sure. But at this stage, the vessel itself seems fine.

Surprisingly, this is actually not the ship that Aurora Expeditions, that organizer usually uses. Their usual boats is actually being repaired in

France and this is one from a bankrupt company earlier in the year that's been put in use.

It's very much like the normal boat they use though it's almost a twin.

QUEST: There's always another element, isn't there? There is always a wrinkle to when these things happen. It's not the usual boat.

Thank you, Anna Stewart.

So the most powerful leaders in tech are on Capitol Hill today. The chief executives of Tesla, Meta, and Alphabet and more were invited to discuss AI


The Democrat, Chuck Schumer, the Senate Majority Leader, organized the event and called it the start of a complex and vital undertaking. Elon Musk

said afterwards, the tech sector needed a referee and that the meeting went well.


ELON MUSK, CEO, TESLA: It was a very civilized discussion actually, among some of the smartest people in the world. So I thought Senator Schumer did

a great service to humanity here along with the support of the rest of the Senate. And I think we'll -- I think something good will come of this.


QUEST: Brian Fung is at Capitol Hill. He joins me now.

What do we make of this? The way in which -- they've been going backwards and forwards on this question of AI, and senators and congressmen often

show stunning lack of knowledge on this when they're put to it. But there does seem to be a wish to get to grips.

BRIAN FUNG, CNN TECHNOLOGY REPORTER: Yes, Richard. Well, it looks like, you know, most senators here came away, saying that they had learned quite a

bit, and that there was some high level agreement on the need for government to be involved in regulating AI.

Some of the big questions are still unresolved, you know, namely whether or not there should be a single new federal agency to regulate artificial

intelligence, and some of those specifics still need to be hammered out.

Senator Mike Rounds of South Dakota said, you know, a lot of those specific questions are going to be handled at the committee level, with individual

committees coming up with their own proposals. And this meeting, according to Schumer was more about educating lawmakers about the basics of AI. And

really trading perspectives about what priorities should go into regulation and what questions lawmakers should be asking as they think about the

regulatory process for this new technology.

And you had civil society groups making the case that you need inclusion from the least represented members of society weighing in on these

legislative proposals. You had writers group saying that intellectual property needs to be protected. And you also had, of course, tech

companies, including Microsoft, Google, and Meta making the case for their own technologies and the potential transformative nature of them.


Bill Gates according to Schumer said that AI could have the potential to end hunger around the world and others said that you need tens of billions

of dollars in potential federal investment in so-called transformative innovation that might unlock AI's potential.

But of course, all of that is still very much at a high level abstract basis, and it still remains to be seen how much of this goodwill can be

translated to actual legislation -- Richard.

QUEST: Thank you, Brian Fung.

Elon Musk's AI ambitions are covered in a new book biography by Walter Isaacson. The book made headlines before hitting the shelves on Tuesday,

when Isaacson wrote Musk shut down his Starlink system to thwart the Ukrainian drone attack in Crimea.

The author now says the Starlink network was already deactivated there. However, Musk says he denied Ukraine's request to reactivate it.

Christiane Amanpour spoke to Walter Isaacson earlier. He said Musk feels a need to inject himself into global issues.


CHRISTIANE AMANPOUR, CNN INTERNATIONAL ANCHOR: You did tell "New York" Magazine that he has an epic superhero savior complex.

WALTER ISAACSON, AUTHOR, "ELON MUSK": Ever since he was a kid, he read the comic books and he says it's weird. These comic book heroes are all trying

to save the planet, and they're wearing their underpants on the outside. They look ridiculous, but they are trying to save the planet.

And he is a child, he'd sit there in the corner of the bookstore for hours, reading these comics, and he has developed a role which is if Ukraine gets

invaded by Russia, I'm going to send stuff in, I'm going to come help. And there's, you know, a cave in Thailand that has kids stuck in, I'm going to

send in a submarine to help.

He likes this notion of helping humanity. In fact, he has more empathy for humanity in general than he often has for the 20 people around him.


QUEST: Walter Isaacson talking to Christiane. You can see the full interview with him on tomorrow's "Amanpour." It's at 1:00 PM in New York,

6:00 in London.

The Birkenstock has become fashionable footwear. Soon, we'll see if it's as much of a hit on Wall Street. Birkenstocks major IPO, that's coming up





QUEST: The South African rand continues to weaken against the dollar. Down almost 25 percent over the last two years. The decline is a sign of

weakness in the South African economy.

South Africa has been struggling with its electricity grid, high unemployment, et cetera. Fani Titi is the CEO of Investec and he joins me

from South Africa.

Good to see you as always. You're always smiling, even when the economic news is pretty dreadful.

FANI TITI, CEO, INVESTEC: Well, we have to keep our heads up and be helpful. It's good to be here.

QUEST: Right. So if we look at the way -- you obviously have two -- you're a lender and you're a fund manager. And obviously, as interest rates have

risen, that has complicated the -- if you will, investment choices that people have to make.

TITI: Yes, very much so. From a banking perspective, clearly banks have benefited from higher interest rates. But as interest rates continue to go

up, you get to a point where that they begin to affect clients negatively.

And you start to see clients getting into trouble and therefore impairments (ph) rising. On the investment side, the choices that investors have and

that our private lines have are obviously not wider. Generally there is a sense of risk within the overall market environment.

And people from time to time at this time would prefer to have their money in cash because they can earn some high rates on their cash and not have to

take the risk that they would be exposed to in the stock market.

QUEST: You see cash now can provide quite a decent return.

TITI: Absolutely. You remember that rates have gone up in the U.S. by more than 400 points. In South Africa, around the same. So the yield in cash is

quite attractive. Clearly you also have bond rates having gone up pretty significantly.

And because the economy has been under stress, the performance of corporates would generally be under strain as well.

QUEST: What worries you most now?

I mean, it's a difficult questions when you think about that for South Africa. So many things could potentially worry you, not least of which is

the electricity issue.

But what is the top of your worry list?

TITI: There are three critical issues we have to solve in the short term. The first obviously is the electricity problem because that constrains

growth pretty significantly.

Over the last three, four months we had lower levels of rotational power outages and we saw the economy grow at about 0.6 percent, which is higher

than what has been expected. It shows you what we can get if we do fix the problem.

So in the short term, we are getting involved as business try to help government solve their problem.

The second big problem in South Africa would be around logistics. We can't get goods to the ports to export. As you know, South Africa is a commodity

economy. So we are losing out on revenues that we otherwise could have had.

The third issue is obviously crime and corruption. And again, business is trying to help government in addressing these issues.

At a more microlevel, clearly the fact that interest rates are very high, economic growth is as slow as it is, means that clients may be under

pressure. So those would be some of the issues that would be concerning to me and to other business people in the country.

QUEST: Are you seeing increases in nonperforming loans?

Are you seeing evidence in the loan book that suggests there is something really nasty out there?

TITI: Look, we had indicated to the market, when we reported in May, that we would expect that clients would come under some pressure. But our

clients are in the top end of the market. And our clients are fairly robust and resilient corporates, on the corporate side. So while there is a level

of interest in stress --


TITI: -- we are not seeing the kind of levels that would worry us as Investec.

QUEST: How far can you take Investec out of South Africa?

Obviously you are out of South Africa. But if you look at your South African company, you are a South African rooted company but your best

opportunities may be elsewhere.

TITI: We have a number of growth opportunities in South Africa. We continue to grow our mid market penetration. We continue to grow private clients

penetration and we have seen significant growth in the corporate banking business, particularly in infrastructure and private finance.

Because these are the areas where the private sector can intervene to support growth. In addition to that, we do have a business that lends into

certain African clients, beyond our borders. Growth rates are much higher on the continent outside of South Africa.

So there is an opportunity there for us to grow. We obviously have a large business in the U.K. And that business has grown particularly strongly over

the last three, four years. And we continue to increase scale.

But we do see that contribution from our businesses outside of South Africa would be close to 50 percent and we reported it as such in May.

QUEST: Good to see you, sir. I look forward to catching up with you in South Africa. Thank you, sir.

TITI: Thank you, lovely talking to you.

QUEST: Birkenstock, the very word conjures up all sorts of images -- comfort, sensible sandals. The sort of thing you wear when you don't really

worry about how you look, you want to make sure you're comfortable and you get the job done.

Well, it is very popular now, Birkenstocks, and the company is gearing up for a listing on the New York stock exchange. As a result, Birkenstocks are



QUEST: A clip there from Barbie, which was made by CNN's parent company, Warner Bros. Discovery.

The "Financial Times" says that Birkenstocks float could value the shoe company up to $8 billion. The fact that it's taking its business to the New

York stock exchange is a snub to European exchanges.

It's part of a larger trend. The U.K. Based chip designer Arm will have the biggest IPO of the year on Nasdaq tomorrow. Allison Morrow is in New York

and joins me now.

I think you might even be wearing a pair, somebody suggested.

ALLISON MORROW, CNN BUSINESS SENIOR WRITER: I am. This is a serendipitous day because I wore my Birkenstocks to work today and didn't even know I

would be talking about it on TV.

QUEST: I assume you wore them because they are comfortable and they get the job done.

MORROW: Yes, and I think, beyond being comfortable and sensible and all the things they are associated with, in the last few years, kind of like Crocs,

Birkenstocks have become high fashion, more mainstream. The brand has done a lot of collaborations with luxury designers like valentine and Dior.

So you're seeing them on celebrities, on regular people and just on the streets.

QUEST: So why did they go for New York?

Why not Frankfurt, Paris and London?

MORROW: That is a common theme with European companies now and it basically boils down to the U.S. capital markets have a bigger capital pool, a deeper

capital pool. So there is a little bit more money to be made.

And there's a little bit more appetite for risk, in part because the Fed appears to be winding down its interest rate regime. Inflation is going

down a little bit faster than it is in Europe. And so that is making the European exchanges look a little bit more difficult because there is a lot

more volatility and less appetite for risk in the European markets.

QUEST: Right, but this is a very old German company who might have thought they were a little bit miffed back in Germany.

MORROW: That's a great question and I think it might just be the -- if you get -- if you are listing your shares, you want to raise cash, right?

So there's more cash to be had in New York.

QUEST: Absolutely.

We always forget that, don't we?

If you are raising money, it may be politically inexpedient; it may not be good but the goal is to raise as much as you can.

MORROW: Exactly and it is worth noting that the North American customer base for Birkenstock is actually its biggest customer base, despite it

being from Germany, so there is that, too.

QUEST: Thank you very much and- stay comfortable.


QUEST: And that's QUEST MEANS BUSINESS for the moment. I'll have the top of the hour, we'll make a dash for the closing bell together. In a moment,




QUEST: I'm Richard Quest. The dash to the closing bell is literally two minutes away. U.S. inflation rose for the second straight month. Most

investors still think the Fed will hold rates steady when they meet next week.

The Dow has not only given up its gains, it's gone down. The S&P is set to finish slightly lower. But the Nasdaq tech stocks are eking out gains.

Recent jobs data suggest the U.S. economy may be slowing. The Dartmouth professor David Blanchflower says he sees additional warning signs.


BLANCHFLOWER: Now I have an indicator actually of whether we're in recession. That indicator sparked last week. The indicator is, has the

unemployment rate risen by 0.3 on the month? And that happened this month.

A couple of other things, Richard, that actually are indicators. The labor market appears to be slowing but there are some other indicators that may

suggest that the Fed is right to take its foot off the pedal.

So delinquency rates are rising and student loan payments are restarting. People are running out of the excess savings that they had. And banking

sector loan growth has slowed.


QUEST: Now the Dow components, you don't often see Goldman at the top, 1.4 percent. Microsoft is near the top. The CEO was on Capitol Hill for an AI

summit. Bank and credit card stocks are higher. Walmart is up higher. Caterpillar off 2 percent. 3M shares have plummeted. Its CFO is warning of

a slow growth environment in 2024.

That, of course, if you think about it, that slow growth of 3M is also what's affecting Caterpillar and, indeed, all the traditional stocks, like,

for example, Boeing and the industrials.

And that's the dash. Whatever you are up to in the hours ahead, I hope it's profitable.