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Quest Means Business
U.S. Inflation Slows To 3.5 Percent In June As Energy Prices Ease; U.S. Strikes Iran For Third Night After Tehran Attacks Gulf Nations; U.S.- Iran War Puts Military Readiness In Focus; Big U.S. Banks Smash Expectations With Record Profits; "Funflation" Hit Entertainment Options At Home; Taking On The 72-Ounce Steak Challenge In Texas; France versus Spain In World Cup Semifinal. Aired 4p-5p ET
Aired July 14, 2026 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:19]
PAULA NEWTON, CNN INTERNATIONAL HOST: So the Dow is close to flat really on a day of some pretty optimistic news on the energy front, but also those
big banks just blowing investors away. There you have it. The markets still very close to a record high. Those are the markets and these are the main
events: U.S. inflation easing. The new Fed Chair says that doesn't mean mission accomplished.
President Trump is abandoning his plan for tolls in the Strait of Hormuz as the U.S. blockade takes effect. We will speak to the head of the
International Maritime Organization.
And we will catch up with Richard's road trip along Route 66. He is in Texas -- get this -- trying to eat a 72-ounce steak. Ill-advised, I say.
But I am live in New York and it is Tuesday, July 14th. I am Paula Newton, in for Richard Quest and this is QUEST MEANS BUSINESS.
And good evening.
Tonight, U.S. consumers caught a break from soaring prices last month, but the relief may not last long. The annual inflation rate slowed to 3.5
percent in June. On a monthly basis, prices actually fell 0.4 percent from May. The drop was due in part to energy prices.
An agreement between the U.S. and Iran brought oil prices down sharply, but don't blink here, that did help bring down headline inflation, but now the
war appears to have restarted.
This is the moment that a U.S. blockade of Iranian ports is set to begin, right now, at this hour and the U.S. Military said a short time ago that it
carried out new strikes against Iran.
We want to go straight to CNN's David Goldman.
One month, not a trend, especially when we've had quite an increase in energy futures just in the last few days. But I have to say, David, this
number impressed me, and it did the markets as well. They really are in a holding pattern now.
DAVID GOLDMAN, CNN BUSINESS SENIOR REPORTER: It is really an impressive number. It was surprising because remember we grew 3.5 percent over the
past year. This number was supposed to be, according to economists, 3.8. That's a pretty sizable difference.
Now, we did expect inflation to fall over the month. This was the first time that that had happened in six years, but not by that much. So this is
certainly a very, very positive report.
Now, as you mentioned, this is mostly an energy story, right, 5.7 percent decline in energy over the course of the month. Now, it is still up 16
percent from where it was, but it is coming down. That's good news.
Well, at least it was coming down, but as you alluded to, energy prices are now up again because of everything that's going on in the Strait of Hormuz,
$85.00 a barrel today. That is up from $71.00 to start the month, a $14.00 increase and if you do the math, that's around 21 percent just this month.
Gas futures are up 12 percent, and I think we are going to start paying a little bit more at the pump if that continues.
So there is a lot to be concerned about as we are looking ahead, even if we are happy that we were looking back, but one more thing that we've got to
discuss is what is going on if you strip out those volatile energy prices, well, you get 2.6 percent for core. That is significantly lower than the
2.9 percent that we had last month. That was what we had expected to get in June.
So certainly some positive energy coming from there. Of course, we are higher than that two percent Fed target. And as Fed Chair Kevin Warsh said
today in testimony on the Hill, we are not making one month a trend. I don't believe that we are there yet. We are going to continue the fight --
Paula.
NEWTON: Yes, but it is stunning just to see again how well the U.S. economy responded when those energy prices did come down and you keep harping,
though, on those gas futures and we will continue to keep an eye on that.
David Goldman for us. Appreciate it.
Now, the U.S. Federal Reserve Chair is vowing to finally bring inflation back to that target that David was just talking about, the two percent
target.
[16:05:00]
Kevin Warsh testified today in front of the House Financial Services Committee. He told lawmakers that years of rising prices had taken a toll
on the American people. Warsh said that in order to bring inflation back to normal, the Fed will have to chart a new course.
(BEGIN VIDEO CLIP)
KEVIN WARSH, U.S. FEDERAL RESERVE CHAIRMAN: If we get policy right, and I can assure you we will, the inflation surge of the last five years will be
a thing of the past.
The 63 months of inflation above target has been an unfair burden and has been a tax on the American people and businesses. We plan on getting rid of
that tax, that means we need a regime change in policy --
(END VIDEO CLIP)
NEWTON: Regime change in policy.
Jason Furman is a former Chairman of the Council of Economic Advisers. He is now a Professor at Harvard University, and he joins us from Cambridge,
Massachusetts.
Good to see you, Jason. I appreciate it on this day we are trying to parse so much financial news. I will put money on the fact that the inflation
numbers made Warsh's day as he was heading to Capitol Hill. It means, right, that he doesn't really have to raise rates, at least for now.
So what do you make of his pledge to make inflation, at least at anything above target, a thing of the past?
JASON FURMAN, PRACTICE OF ECONOMIC POLICY PROFESSOR, HARVARD UNIVERSITY, FORMER CHAIRMAN, COUNCIL OF ECONOMIC ADVISERS: Yes, so first of all, who
doesn't like lower prices? I think everyone cheers when they see that and probably put a little bit of pep in the Fed Chair's step as well.
We are still running inflation you know well above three percent. They want it to be at two percent. I am actually cautiously optimistic that this time
around it may actually be transitory. That word was much mocked last time around. I did not believe it was transitory last time around. But now labor
markets are cooler, wage growth is slowing, a lot of things in the economy look, you know, moderate in that respect.
So I do think the Fed can and will afford to wait a couple of months to see where things are going before they have to make the rates moving.
NEWTON: And the renewed price shock to energy futures, do you think it also, again, might be short lived?
FURMAN: I mean, that price shock is still way below where we were a few months ago. So you know, what we are talking about is gasoline prices are
going to continue to come down. Are they going to come down as much as we were hoping, or a bit less than we were hoping? We are not talking about
gas prices moving back up again.
NEWTON: Gotcha!
Many are applauding Kevin Warsh. He has promised to reform the Fed. There are task forces underway. What will change if you believe he gets the
reforms that he wants?
FURMAN: Kevin Warsh is a smart guy; in many ways, a terrific choice. But he had been a really big critic of everything the Fed did, but never really
explained exactly what he would do differently. And so I am glad that he is hitting the pause button. He is not walking in and changing everything on
day one, but instead he picked a set of people to give him advice. The task forces are staffed with a bunch of really, really terrific economists with
global experience.
And so right now, he is not really giving a lot of specificity. I don't want to hear specificity from him, I want to hear an open mind and then,
you know, some time and then to come out of that with more specificity.
NEWTON: Right, but the Fed Chair will have to ensure that certainly all the Fed governors are specific about rising interest rates, right? I mean, what
do you think their posture is after today? I mean, we are -- we were at nearly -- yesterday, we were at 43 percent chance of a rate hike in July.
Now I think it is back down to 10 or 12 percent. What do you think?
FURMAN: I never thought we were going to have a rate hike in July. There are enough mixed messages going on in the economy right now that the Fed
will probably want a few more months for that data to sort itself out, but I do think it will be a split vote at the next meeting. He had that
honeymoon first meeting with a unanimous FOMC. I don't think we are going to see a whole lot of unanimous meetings going forward.
NEWTON: Right. Interesting, in terms of trying to keep those divergent opinions together there.
GDP in the U.S. will hover around two percent, give or take, for several quarters to come, at least that's what the predictions are. Is that enough,
Jason? I mean, given the rate at which Washington is spending money, you know, do you think this growth really needs to be closer to three percent?
And if it does need to be closer to three percent, how do you get there?
FURMAN: You know, the news is pretty good. It is pretty good compared to other countries --
NEWTON: You know, they do, because the Treasury Secretary says two is not good enough. He says they need to get to three.
FURMAN: Three is better than two. But the Treasury Secretary doesn't get to decide the growth rate. He gets to decide some policies that have some
input on it. But most of the growth rate is decided by American businesses, American consumers and the decentralized decisions of the American economy.
This is all going to depend on productivity growth.
Right now, A.I. is helping a lot on the demand side of the economy. It is not showing up in a big way on the supply side of the economy. I hope it
does. I think it will, but we are not there yet.
NEWTON: Going back to this issue of interest rates and the economy, trying to get close to two percent, mortgage rates are still stubbornly high.
[16:10:10]
Jason, do you really think that's what was needed to throw this economy into another gear?
FURMAN: The problem is, unless we expand supply, if you cut interest rates, that gives you in the short run demand. You're building a lot of houses,
eventually that helps the housing stock and supply, but you get the demand before you get the supply. That's inflationary.
So for mortgage rates to come down, we need to take some of the inflationary pressures out of the economy, maybe waiting a couple of months
will do that. Maybe the Fed is going to need to do something, but unfortunately I don't see much mortgage relief coming anytime soon.
NEWTON: Yes, which is not good news for so many Americans. Better for American savers, though, I guess, given the kind of yields they are looking
at.
Jason Furman, we will take note. It is a goldilocks economy for you for now -- for now! Thanks. It is good to see you.
FURMAN: Thanks. Good to see you.
NEWTON: Now President Donald Trump now says the U.S. will not charge ships passing through the Strait of Hormuz. He says he has been offered an
alternative plan. We will try and explain, just ahead.
(COMMERCIAL BREAK)
NEWTON: President trump has apparently dropped his plan to charge ships a 20 percent fee to pass through the Strait of Hormuz. Speaking at The White
House a short time ago, Mr. Trump said Persian Gulf nations asked him to scrap the toll. He said they offered to replace it by investing billions in
the United States.
The President announced the fee yesterday, saying it would reimburse the U.S. for providing the security in the Gulf. He also ordered the U.S. to
resume a blockade of Iranian ports, starting right now.
Also in the last hour, U.S. Central Command confirmed new strikes on Iran for a third night in a row. That's ahead of that blockade.
Kevin Liptak joins us now from The White House with more.
Kevin, I mean, look, even his Secretary of State had said that, look, they didn't ever want to see tolls on the Strait. That wasn't the point of this.
he has walked it back.
But how much is he counting on the blockade now to really do the work of bringing Iran to the negotiating table once and for all?
KEVIN LIPTAK, CNN SENIOR WHITE HOUSE REPORTER: Well, it seems to be sort of the latest move that the President hopes will exert pressure on Iran, but
it is not really clear why the blockade will work in doing that now, when it did not work in doing that over the two months it was in place earlier
in the course of this conflict. And I think both the blockade and the reversal that we saw on that 20 percent fee really show how the President
is kind of casting about, looking for ideas that will break loose a resolution to this conflict.
[16:15:10]
You know, he has tried the carrots in the form of sanctions relief and incentives. He is now back to trying the sticks in the form of nightly
strikes and the naval blockade, neither of them seem to be working and I think that is causing a real conundrum for the President. He is at
something of a strategic impasse.
When you talk to officials here at The White House, they say they still detect this split inside of Tehran and inside the regime between moderates
who do want to strike a deal with the U.S. and hardliners, including in the IRGC, who are trying to undermine any diplomatic opening with the U.S. and
it is leading to a degree of pessimism that any sort of grand deal with Iran can be reached at all.
Now, when it comes to the fees that the President was proposing, that did cause a real scramble, both here at The White House but also in the region.
You know, the President had floated this idea before in public, but he had never followed through, in part because American advisors told him, one, it
could cause pressure on energy prices and by extension, political pressure on Republicans ahead of the midterm elections, but also that it could
essentially validate Iran's own fees, that it was threatening to charge in the Strait.
And so the President had not followed through on that until Monday, when he kind of abruptly announced this on social media. It led to a scramble
behind the scenes here at The White House to try and figure out who exactly would be charged this fee, and who exactly would be tasked with collecting
it. But it also led to, in the President's own telling that "kings and emirs" to call him up and try and dissuade him from this.
Now, this new proposal, this alternative arrangement that they have come up with in terms of investments in the United States that would act as
reimbursement, it is not really clear whether that's new investments. By the President's own telling, these countries had already invested or
committed to investing $2 trillion. He announced that during his tour of the Middle East very early in his term.
And so I think altogether, this paints a portrait of a President who is struggling to come up with ideas to get out of this war, who is trying to
find a way to proclaim victory, even if the evidence on the ground in the region seems to contradict that. Where this all goes from here, I think,
remains to be seen, but certainly that blockade now in effect as of 4:00 P.M. Eastern time, certainly in the President's mind, hoping that that will
shake something loose that hasn't been shaken loose so far in this war.
NEWTON: Yes, and we will see how that blockade unfolds again, with so much military hardware in the Strait of Hormuz right now.
Kevin Liptak for us, thanks so much.
Now, Iran says ships have been working with its Persian Gulf Strait Authority to pass through the Strait of Hormuz. The Authority posted on
social media "More than 200 non-Iranian vessels coordinated with the PGSI and the majority of them obtain passage permits and insurance."
CNN cannot independently verify Iran's claim. The U.N.'s International Maritime Organization, meantime, says ships should be allowed to pass
through the Strait without paying tolls or fees. It says, "The right of transit passage through Straits used for international navigation should
not be threatened, impeded, denied, hampered, impaired or suspended."
The Secretary General of the International Maritime Organization, Arsenio Dominguez joins us now, and it is good to see you again, especially at such
a critical time in the Strait.
Listen, you've been resolute, say, free, free passage in every way through the Strait is non-negotiable. Do you have confidence now that the issue of
tolls, whether it is coming from Iran or coming from the United States, is over? It is done!
ARSENIO DOMINGUEZ, SECRETARY GENERAL, INTERNATIONAL MARITIME ORGANIZATION: It is becoming clearer and clearer, the more that this topic is raised, the
more that through the IMO and through all the countries and entities it is underlined that in accordance to international law and the well-established
practices, there is no country that can introduce a fee or a toll for ships transiting on Straits for international navigation, the more that we see
that this is actually something that it will be retained.
In just last week, the Council of the International Maritime Organization adopted a resolution in accordance to this international law rule in order
to uphold that principle and that is something that I am not going to change the position of the organization with the message that all the 176
member states continue to call upon.
NEWTON: And what about the claim from Iran that they have established the fact that 200 have gone through in speaking to them, that they have allowed
for it.
DOMINGUEZ: When we introduced together with Oman and after conversations with several countries in the region, including Oman, an evacuation
corridor through the southern part of the Strait of Hormuz, I made it very clear that in this temporary circumstances, we can use both the routes, the
northern route that is being offered by Iran and the southern route offered by Oman.
[16:20:18]
There are a number of vessels that actually transited during that time, and we managed to evacuate around 3,000 seafarers. Still, 6,000 seafarers
remain trapped there since the beginning of the conflict. We are still verifying some of the information of the transit, but in the last few days,
since the conflict kind of reignited, we've seen a single number of vessels transiting on either side, the northern or the southern route. So there is
still a lot of information that we need to verify in order to make sure that the numbers that have been provided are actually the factual ones.
NEWTON: Right. But it does look like so much of the progress that you had hoped to make by now has dissipated, that it is stalled. So now we go to
this U.S. enforced blockade.
What effect will this have on your efforts to try and get the traffic through the Strait moving again? I mean, like I said, when you spoke to us
a little more than two weeks ago, you really hoped that there would be a normalizing of the traffic through the Strait by now?
DOMINGUEZ: Yes. For me, it is taking it step by step. The normalization at that time was as close as possible to start evacuating. Back then, the
11,000 seafarers that we have trapped in the region since the beginning of the conflict.
There is a setback right now. I will not deny it. But for me, it is also looking into the positives that we can gain from here. The parties are
talking. There mediators are still engaged, and there is still a Memorandum of Understanding that can continue to be the basis for these conversations.
It is a priority for me and for the organization to resume the evacuation of the seafarers as soon as possible. Next step will be, of course, the
demining of the traffic separation scheme. And then bit by bit, resume the transit in the Strait of Hormuz.
We can verify new routes and adopt them in accordance with the procedures of IMO, but right now is the de-escalation and calling on the parties back
onto the table in order to continue the negotiations, allow the evacuation of the innocent seafarers, allow trade to start resuming, and then
hopefully in the near future, we can go back as close as possible to where we were before the conflict started.
NEWTON: Yes, I hear you that you say this is a setback, but this also looks to be perhaps more severe escalation. I mean, do you worry that you could
be right back where you were just a few months ago? Especially when we talk about demining, right. There hadn't been much progress made on that, as I
understand.
DOMINGUEZ: No. That's correct. We haven't had the progress on demining. That was always stage two in the priority when it comes from the
International Maritime Organization. First, it was the evacuation of the seafarers. But of course, for as long as we still have this tension at the
level that were having it right now, it is going to be difficult to move forward towards de-mining, either by the parties that have signed up the
MOU or by receiving assistance and assets from other countries that have offered to do so.
But the reality is that the conversations can continue. There are still parties engaged in these negotiations. I want to look forward into what we
can gain from all the small steps that have been taken and whenever we have a setback, there is still the engagement with all the countries. We haven't
stopped talking to all the countries in the region, as well as the countries in the conflict.
NEWTON: And, Mr. Dominguez, I don't have a lot of time left, but I do want to mention that you released a statement about the state of attacks on the
Sea of Azov and the Black Sea. Again, given the conflict between Ukraine and Russia, how concerned are you about what is going on there right now?
DOMINGUEZ: It is a global concern that I have. For many years, recently now, since after the COVID pandemic, shipping has been used as a weapon in
this international geopolitical conflicts, is the war in Ukraine, it was a situation with the Houthis in the Red Sea.
And now, of course, around the Strait of Hormuz and I don't want some people to just forget what is happening in other regions. We have several
attacks and innocent seafarers continues to be affected in the Sea of Azov. So that is why it is important to also keep a reminder that for as much as
we are having a difficult situation for international shipping and innocent seafarers in the Persian Gulf and around the Strait of Hormuz, we still
don't have a full solution when it comes to the Sea of Azov.
NEWTON: You certainly are a man who has a lot on your plate right now. I hear your optimism, but we will wait to see if hopefully there isn't an
escalation the way Iran and the United States seem to be going on right now and if there is some resolution in the Sea of Azov as well.
Arsenio Dominguez, appreciate your time once again, thanks so much.
DOMINGUEZ: Thank you.
[16:25:00]
NEWTON: Now, the U.S. Navy's ability to enforce a blockade depends on the readiness of its fleet. Gecko Robotics is helping with that effort through
its wall climbing robots, drones and sensors.
I asked the CEO, Jake Loosararian about the company's $71 million contract to try and reduce the Navy's maintenance time. Listen.
(BEGIN VIDEOTAPE)
JAKE LOOSARARIAN, CEO, GECKO ROBOTICS: What we do at Gecko, is we make robots and A.I.-enabled software to diagnose and understand what sorts of
things on ships and vessels or aircraft is damaged and needs replacement, fixed and take processes that would typically take about three to four
months and do them in about two days. That's what we do at Gecko in arming our warfighters with information to get assets back in the fight.
NEWTON: It is incredible in terms of the timeline and how much time you can take out of what it takes to get them ready for sea. I do want to talk
about the robots for a minute, because this is more like our vacuum cleaners in our home, right? These aren't humanoid robots, but they are
scaling these ships.
LOOSARARIAN: Yes, that's right, but then Gecko obviously, wall climbing, but the robots do a lot more than just climb walls. They are gathering
information and data sets that the CTO of the Navy has been on record saying, it is 17,000 percent ROI for them. Now, all of that information is
digitizing things that are critical to understanding how to get these vessels or these aircraft back in the fight for the Navy.
We announced a $71 million contract vehicle earlier in the year, and that is completely dedicated to ensuring that we get deployed across as many
vessels as we possibly can these robots and the software to help evaluate and understand what is wrong, how to get things fixed and you know, what is
interesting is how many nations outside of the U.S. are taking notice and are clamoring for the same thing?
NEWTON: Yes and how many are there? I mean, are you dealing with dozens here? And most of them are NATO countries or beyond that?
LOOSARARIAN: Yes. I can't speak too much to the groups we serve, but what I will say is we are active in the Middle East right now and we don't just do
things on the defense side, but we do things on the commercial side, too.
You know, companies like at ADNOC, you know, we are very involved in the Middle East and in Abu Dhabi in particular, we have an office location
there serving our energy customers with same sorts of problems. They have critical assets. They need to understand what is wrong and how to make sure
that they are working efficiently and even getting humans out of harms' way. And, you know, that's something that just applies to the defense work,
but also applies to the commercial sector too.
And these kind of dual-use technologies that are showing so much impact is really showing the power that A.I. can have for the everyday worker.
NEWTON: Yes and we have been really interested on that here just in trying to see how this is applied. And given that, I mean, you've really shortened
the cycle here dramatically. You're talking a reduction of 80 to 90 percent and how long this would take. So I am wondering, what is the next frontier
here for your company and even your competitors? Where do you see this going?
LOOSARARIAN: So the big thing to understand with robotics and A.I., you talk about physical intelligence, artificial intelligence, robotics is all
about understanding and gathering information that prepares the way, just like gathering information and data sets on the internet, pave the way for
A.I. to be as impactful as it is today.
And so that's what the best companies in the world understand and are doing, and are doing so by leading the charge. And this is why the Navy --
the U.S. Navy is leading the charge as it relates to deploying that technology in the robotics and A.I. side to pave the way so that autonomy
systems and being able to have superior intelligence to make decisions around how to make sure assets stay in the fight and not in dry docks or in
a repair cycle, but are actually being armed with the best technology in the world that paves the way for automation, paves the way for getting
humans out of harm's way and arming folks with technology and tools that they've never seen before and haven't really been available to them.
So whether it is on the commercial side or the defense side, this kind of technology, it is one of those technology stacks that if you don't adopt
it, you're going to get left behind.
(END VIDEOTAPE)
NEWTON: Now, the big U.S. banks posted second quarter earnings. This was just blockbuster. No other word for it! We will have that after the break.
(COMMERCIAL BREAK)
[16:32:18]
NEWTON: Hello, I'm Paula Newton, and there's more QUEST MEANS BUSINESS in a moment when inflation isn't just hitting the essentials. We'll discuss
"funflation" and how it's making entertainment more expensive.
Perhaps the two most talented teams in the World Cup are playing for a spot in the final. We will bring you the very latest on Spain versus France.
Before that, though, the headlines this hour.
U.S. President Donald Trump is walking back his plans to charge a 20 percent fee for cargo traveling through the Strait of Hormuz. He says Gulf
states will instead make investment deals with the United States. For months, administration officials have said an Iranian proposal to charge
tolls in the strait would be a violation of international law.
Inflation in the United States fell sharply last month. Prices rose 3.5 percent in June, which is a lower number than economists were expecting.
Falling gas prices helped keep inflation in check as Washington and Tehran work towards a ceasefire. Now prices are back on the rise now that those
strikes have resumed.
The semifinals have kicked off in the Men's World Cup. First up in Texas, Spain versus France and superstar Kylian Mbappe, who's currently leading
the golden boot race. On Wednesday, we remind you the Three Lions of England will face off against the reigning champions, Argentina. Right now,
Spain leading France.
Wall Street has reported record-breaking second quarter results. The five biggest banks in the U.S., JPMorgan Chase, Bank of America, Citigroup,
Wells Fargo and Goldman Sachs all beat expectations and how. Goldman Sachs shares in particular absolutely popped and for good reason. JPMorgan posted
the largest quarterly profit ever by a U.S. bank. All five banks benefited from a boost in trading revenue and that corporate dealmaking, which just
goes on and on.
Alison Morrow has been across this for us in New York.
Yes, eye-popping indeed. I just couldn't believe how much money they actually made on margin, meaning, yes, their revenue expanded, but
certainly their profits expanded as well.
ALLISON MORROW, CNN BUSINESS SENIOR WRITER: Yes, I mean, it's kind of silly to talk about, you know, Wall Street banks figure out how to make money.
That's what they do. But what's really interesting about this quarter is how they made money despite everything. We have high inflation in the
United States. We have a war going on. We have an affordability crisis. Consumers are struggling.
You know, it's a real moment for that K-shaped economy that we've talked about, where the upper rung of the K is doing really well.
[16:35:04]
Wealthy people are doing well, banks are doing well, and regular people are struggling a bit. But all of this is tied to the banks' stock trading
operations. You know, deals were back in a big way. As you mentioned, Goldman Sachs had a huge profit increase. Stock was up something like 8
percent earlier today. And that was all because it -- partly because it led the SpaceX IPO earlier this year. It's also led on Google's equity deal
earlier this year.
So it's just had a lot going on in the kind of high level finance, that corporate finance that is separate from, you know, what regular people deal
with.
NEWTON: Yes. And you see two of the banks were down, but the expectations were quite high. So I wouldn't feel sorry for even any of those stock
holders right now.
We had this shock, though, from IBM and it wasn't so much the results, but it was the guidance that they gave as well.
What happened there because the stock was down 25 percent and stayed there?
MORROW: Yes. So this is kind of the flip side of the A.I. fervor that was really great for banks and for hyper-scalers. You know, tech earnings are
coming in next week so we'll have to check in with them. But by most accounts they're going to be just fine. IBM, though, is not part of that
A.I. core group. And it was -- the CEO came out today and was very frank, saying, we screwed up. Their customers are pulling back spending.
Their customers are primarily businesses with IT budgets. And those budgets are finite. You know, they are switching to buying up A.I. infrastructure,
building out memory chips, and spending less on IBM software and hardware. And then they're also ramping up their IT budgets to fight off A.I. based
cyberattacks. That was another part of the report that didn't get as much attention, but there's kind of A.I. buffeting them on both sides, and they
really underestimated the pullback that they would see in sales.
NEWTON: Yes. More interesting to watch that stock. Some people are saying it's a buying opportunity right now. Not down that much actually from its
low just a few months ago.
Allison Morrow, thanks for wrapping that for us. Appreciate it.
MORROW: Thank you.
NEWTON: Now U.S. inflation cooled to 3.5 percent last month thanks to a drop in energy costs. Even so, many Americans, and Allison was just talking
about it, are still feeling the squeeze when they go out. It's what PNC Bank calls "funflation." For example, the price of tickets to a sporting
event has gone up more than 10 percent on average since 2019. Over the same time, the cost of movies, theaters, and concerts have gone up by nearly a
third.
So you might think it'd be fine. I'll just stay home. Right? I'll have fun at home. Well, that's gotten more expensive as well. Video games prices
have soared 52 percent and cable TV and streaming have risen 28 percent. And I know many people have noticed that increase. And then there are all
those ancillary costs. The internet, electricity. I could go on.
But instead, Brian LeBlanc, from the head -- he is the head of Economic Analysis at PNC Economics Research, and he will go on. He is a senior
economist and managing director at PNC.
All right, Brian, "funflation." So many of us are listening very closely right now because, you know, it's a fun moniker, right? "Funflation." But
we actually do feel it. How did we get here? When did the costs of experiences get so high?
BRIAN LEBLANC, HEAD OF ECONOMIC ANALYSIS, PNC ECONOMICS RESEARCH: And thank you very much for having me. It's a great question. You know, "funflation"
kind of first reared its ugly head in 2023. I think we got a little bit of a reprieve from it over the past couple of years. But it's very much back
in 2026. You pointed out a lot of the things. We're seeing, too, flight prices up 25 percent over the past year. Sporting event prices up 6 percent
just over the past year.
So we're seeing it very much increase in 2026 and it's turning into a meaningful driver of inflation overall.
NEWTON: Not our imagination. Right, Brian? It's real. The pain is real.
LEBLANC: Yes.
NEWTON: Now the inflationary spike post-pandemic seemed to be easing somewhat in the last couple of years. But now we're back into it. It can't
just be rising energy costs, right? I mean, what's going on? There is clearly more demand and people, companies are taking advantage of that.
LEBLANC: That's exactly right. I would say it is becoming much more expensive to travel. You know, flight prices are up whether you're driving
or flying. It's gotten more expensive to do some of these leisure and entertainment, sort of fun activities. But like you said, there's also a
significant amount of demand still out there, especially with upper and middle income households. There's a lot of discretionary income still at
play. And we're still seeing very healthy balance sheets, particularly in those upper part of the K for sure.
NEWTON: Yes. And we have a chart up right now showing leisure inflation as compared to core PCE.
[16:40:02]
But you actually say that this is hitting generations differently, right? As you said, middle and high income households usually are older, right? So
what's happening to Gen Z out there right now?
LEBLANC: It's a good question. So Gen Z and to a lesser extent millennials, they spend a larger portion of their incomes on these fun activities,
whether it's travel, entertainment, concerts. And they're also kind of sharing harnessing a disproportionate share of the price increases as well.
So where we are seeing more of an impact is some evidence to pull back with lower, sorry, excuse me, younger households/
We're not really seeing any evidence of them spending less dollars, but they are kind of pulling back on volume. So they're kind of going to fewer
concerts, traveling somewhat less. It's on the margin, but it's showing up and it's showing up for the first time in 2026.
NEWTON: Yes. And I think you've talked to younger people showing up with them as well in their household budgets. They want to do more. It's the age
they should be doing more, but they can't afford it given their salaries.
Before I let you go, Brian, is there a remedy here, do you think? Do you see things changing in the next year or two?
LEBLANC: You know, I think part of the story in 2026 is you've got the World Cup kind of bringing folks out. Households did receive bigger tax
refunds. I think some people put that to vacations. So some of this might be a little bit of a temporary demand boost that will fade in the second
half of the year. But more broadly, services inflation has just been incredibly persistent, despite weakening labor force, despite kind of
continued weakening in wage growth. So it's going to continue to be a problem. And I think that the Fed has noticed that.
NEWTON: Interesting. Brian LeBlanc, thank you very much for making a fine point of it, that it is not our imagination. "Funflation" is real. Thanks
so much. Appreciate it.
LEBLANC: Thanks.
NEWTON: All right. Coming up for us, Richard Quest on the road. He's taking a classic American trip -- Richard is always a classic -- across Route 66
and conquering an even more classic American meal.
Richard, are you up for it?
RICHARD QUEST, CNN BUSINESS EDITOR-AT-LARGE: I am. Well, you'll find out. We are in Texas now. Coming up after the break, the Big Texan. We'll be
talking to the co-owner, finding out about economics, finding out about how business is doing, but more importantly, can I eat the 72-ounce steak in
one hour? Find out after the break.
(COMMERCIAL BREAK)
[16:45:30]
NEWTON: All right, inflation has been the hot topic for this program. Beef prices, I'll remind you, are up more than 11 percent in the past year. So
imagine how much a 72-ounce steak costs. Well, at the Big Texan Steak Ranch on Route 66, it's free, but only if you can finish it in one hour.
Richard Quest, challenge accepted. And he joins us live from Route 66.
Richard, I want to remind you, I am holding my computer. A 72-ounce steak is a pound and a half heavier than my whole computer.
QUEST: It's vast. And not only do you have to eat the steak, you have to eat the fixings, the baked potato, the biscuit, the salad, and the shrimp.
But listen, the whole thing here, this is one of the institutions of America, the Big Texan. We are now roughly halfway, give or take, along
Route 66, Amarillo, in Texas. And with me is Bobby Lee, who is the co- founder, the current co-founder, owner of this.
Bobby, thank you for letting us -- join us. We're talking about affordability. We'll talk about how I fared with the steak in a moment. How
are you finding things at the moment?
BOBBY LEE, CO-OWNER, BIG TEXAN STEAK RANCH AND BREWERY: You know, in the restaurant business, you're always challenged. In 66 years of doing this,
we've been up and down on price and seen that. The hardest thing is trying to keep the prices here competitive for the travel and family to come
through here. We do enough volume that we can sharpen our pencils a little bit more than most restaurants can, but it's always a challenge.
QUEST: So in the last year, which has been the bigger issue? Has it been the price of gas? Has it been the price of beef? We were just talking about
what that's going to -- how would you say?
LEE: It's the price of beef. That's the biggest challenge right now because with the gas, it's between flying or driving. And that's an easy choice in
America because the price of flying is outrageous. So they are on the road doing the great American road trip. And with the 250th anniversary and the
Route 66 100th year anniversary, it's perfect.
QUEST: Are you noticing an increase of people doing it, people like me?
LEE: Absolutely. And what's so nice is the World Cup. There's so many people that are down in Dallas watching the game, going to Denver, coming
through here. Delightful, fun. The people from Mexico are absolutely insane. We love it because they want to stand on the tables and drink
tequila and dance. Let them do it. Let them do it.
QUEST: What about your biggest challenge? I think we were talking earlier. It's about obviously labor. Everybody needs a workforce.
LEE: It is. And you know, this is an isolated part of the country, Amarillo. It's kind of like the middle of nowhere. So the workforce, it's
challenging here. It really is. I mean, to get people, good people, to come in and do exactly what you want. It takes a lot. But thank God we've been
pretty successful so far.
QUEST: All right, let's talk about the 72-ounce challenge that I did. All right. I'll admit now. What's the technique for doing it?
LEE: The thing is, is you've got to think of it as just a nice steak. You're sitting down. It's not a contest. Don't fall in love with the state
and eat it, have fun eating it. Drink a glass of wine. Relax a little bit.
QUEST: How -- of the people who do it, how many succeed?
LEE: Well, it's about one out of every 10 men that'll do it. Women, it's one out of every two because they don't have the egos that are competing
for that.
QUEST: Talking of egos, the cameraman, my PGA Beau, we tried it.
Beau, did we succeed? Did you succeed? We did not. I ate 34 ounces. But here's the point. It was after 20 minutes, I just couldn't eat any more.
LEE: Because your stomach was doing your system a favor, telling your brain enough is enough. If you don't have half of it down by 20 minutes, you
might as well ask for it to go box because you're not going to get there, baby. You're not going to get there.
QUEST: Have you done it?
LEE: Absolutely, absolutely. I used to love doing it. I would do it for my dad. He'd call and say, he's got some journalists in town and we have the
chance to do that. So it was always great. I would love to do it all the time.
QUEST: And do you still love running this after all these years?
LEE: I do, because the people that come here --
QUEST: All over the world.
LEE: All over the world, 28 percent of our business comes from all over the world. And we get to show them what Texas is really all about. And that's
so much fun.
QUEST: This is known as the loser's T-shirt.
[16:50:02]
LEE: It's the loser's T-shirt.
QUEST: Thank you very much indeed.
LEE: Thank you, Richard. Thank you.
QUEST: Good to see you. Thank you very much.
So there we are. That's where we are in Amarillo.
We go back on the road, Paula. There is our trusty vehicle, Big Bertha. Big Bertha will be leading us on from Amarillo. We go on to -- is it New Mexico
or Arizona? Which is it? New Mexico or Arizona next?
UNIDENTIFIED FEMALE: New Mexico. Tucumcari.
QUEST: What?
UNIDENTIFIED FEMALE: Tucumcari.
QUEST: Tucumcari. Tucumcari is Next.
Paula, I wish you were with us. I promise you, I'll send you a steak.
NEWTON: I'm disappointed neither of you made -- you know, I had my, I would have had my money on Beau Malloy. I'm telling you, I would have had -- not
on you, Richard, sad to say, but I'll take -- I'm waiting for that loser T- shirt to come here in studio. There you go.
Richard, have a great time on the road. We are loving it. And we'll see you tomorrow.
Now, we will soon know one of the teams that will play in the World Cup final. France and Spain battling it out in the semifinal in Texas. An
update on the match and how fans around the world are watching. That's just ahead.
(COMMERCIAL BREAK)
NEWTON: The first semifinal of this World Cup is almost over in Texas. France and Spain are vying for the right to face the winner of tomorrow's
Argentina-England match. Now this is the last contest of the men's tournament. Right now, Spain lead France two-nil. Fan zones around the
world are packed with people watching the match.
CNN's Pau Mosquera is in Madrid. Our Melissa Bell is at a fan zone in Paris.
Pau, we will start with you. We've got less than six minutes left now. What is the mood there?
PAU MOSQUERA, CNN CORRESPONDENT: Well, here people, Paula, are anxiously awaiting to the referee whistle, the last blow. Have a look around, what is
the atmosphere here right now. They are all with the eyes riveted to the giant screen that Spain's Royal Soccer Federation has set here in downtown
Madrid, in Plaza Colon. And let me tell you that during most of this match, it felt like the square with glass because all the people that you see here
so concentrated on the screen.
They were jumping up and down celebrating the two goals. And this went crazy. And I bet that if the result gets like that to the end of the match,
it will get even worse that we have seen until now, Paula.
[16:55:06]
But what most of them were telling me during the match is that Spain's national team has made the impossible. They felt like they were
unstoppable. So right now the world is awaiting, anxiously awaiting, until the referee blow the last whistle -- Paula.
NEWTON: I see you watching the screens as well looking for the last few minutes.
Melissa Bell in Paris, they must be hoping for a miracle of miracles right now.
MELISSA BELL, CNN SENIOR INTERNATIONAL CORRESPONDENT: It would actually take a miracle at this stage, Paula. And it seemed that way for some time.
And you've seen the crowd, even though they've kept chanting and cheering and hoping for the best, slowly let sink in the fact that this particular
team that they had believed in so much, they've done so well, they had hope tonight that they would get through to their third final in a row. That
doesn't look like it at this stage.
And little by little, we've seen the sort of enthusiasm deflate and it is such a disappointment. This team, Kylian Mbappe, all the kind of
solidarity, the unity they managed to create in the team, all of their successes on the field to end up like this, beaten if things stay as they
are. Three-nil, that is a very disappointing to go. Two-nil. It was not what they'd hoped for.
And all along the Seine River you have these viewing parties and a very, a very many, very disappointed Parisians tonight. They had believed that
their team at time would return. They'd followed them throughout. And from the beginning of the match, really, France has seemed to have dominated by
Spain. And slowly, slowly, the French have dampened their expectations. It would have been their third time. They had believed it could happen and
they are not.
NEWTON: On Bastille Day, no less. Add insult to injury there, Melissa --
BELL: No less.
NEWTON: No less. I do want to point out, though, Melissa, everyone should follow Norway's lead. You know, these men should be received as heroes when
they return home. And I hope France is listening. They entertained us all. This was fantastic.
Melissa, I have to leave it there. Pau is in Madrid, where we expect a major celebration in just moments from now because we just have a little
bit less than three minutes left.
To both of you, thank you very much. Our Pau Mosquera in Madrid getting ready to party or get drenched with something in a moment. And Melissa Bell
in Paris, thanks so much.
Now, Wall Street, we remind you, ended slightly higher, buoyed by those big bank earnings and lower inflation numbers. The Dow ended up just about 10
points there. We want to look at some Dow components. The IBM tanked the components. In fact down 25 percent given their earnings drop. It was the
worst one-day drop since 1987's Black Monday crash. That is for IBM.
And that's it for QUEST MEANS BUSINESS. "THE LEAD WITH JAKE TAPPER" starts now.
(COMMERCIAL BREAK)
END
