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Quest Means Business
Federal Reserve Signals Multiple Rate Hikes in 2022; U.K. Reports Record Number of Daily Cases; U.S. Senators Question Airline Execs about Federal Aid; U.S. Retail Sales Slower than Expected; Goodyear CEO Says Cost Increases "Will Stick with Us"; Last A380 Leaves a Message in the Sky; Dash to the Bell. Aired 3-4p ET
Aired December 15, 2021 - 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 BUSINESS ANCHOR: You could time it like a Swiss clock. The Dow turned green almost on the stroke of 2:00 PM Eastern Time and the
market has rallied sharply.
If you want to know the reason why, look no further than the Fed. They are the main events of the day. The Fed predicts three rate rises next year, as
it toughens up its taper plans.
The U.K. is reporting a record number of daily COVID cases. How serious is this?
And airline bosses, they are on Capitol Hill. They're facing questions over their bailouts.
We are live tonight from London. It is midweek, Wednesday, December the 15th. Mid-month. I'm Richard Quest and in London, of course, I mean,
business.
Good evening. Tonight, the U.S. Federal Reserve pivots to fighting inflation. But it does so in a sense with a plan to end its stimulus and
start raising interest rates next year. At the same time, of course, it maintains its priority on unemployment.
The major averages shot up on the latest Fed summary, which said the U.S. economy and jobs markets are continuing to strengthen. The Fed said it is
reducing its pace of asset purchases speeding up the tapering, that will all be finished by next March. And then it will focus on the price
stability portion once labor markets hit maximum employment.
This was the interesting three-card trick, if you will, the conundrum that the Fed Reserve Chair Jerome Powell, who said the Central Bank was still
taking a cautious approach to the speeding up of tapering.
(BEGIN VIDEO CLIP)
JEROME POWELL, U.S. FEDERAL RESERVE CHAIRMAN: We've learned that in dealing with balance sheet issues, we've learned that it is best to take a careful
sort of methodical approach to make adjustments.
Markets can be sensitive to it, and we thought that this was -- this was a doubling of the speed. We are basically two meetings away now from
finishing the taper, and we thought that was the appropriate way to go. So we announced it and that's what will happen.
(END VIDEO CLIP)
QUEST: Now, as to what happens after the tapering is over. Well, the dot-plot tells the tale of what will happen and how the Fed has grown more
hawkish. The dot-plot shows where the Committee believes the mid-rate will be and the graphs come out quarterly and indicate where the policymakers
think interest rates are heading.
The higher the dots, the higher the rates. The more dots there are, the more members of the Committee, the further to the left, the sooner they'll
rise.
Before the pandemic, they saw rates staying at around two percent. Now those dots plummeted, when the pandemic hit. You can see the line, it's
right at the bottom. That shows where the individual Committee members believe things are, and it stayed there right the way through last year.
However, starting in March, the dots started to creep up towards the left. You can see there. In the latest dot-plot, all 18 policymakers see Fed
rates above one percent by 2023.
Matt Egan joins us now. Matt, I want to take this slowly and surely, bit by bit. Let's do first of all, the taper increasing, the taper going faster.
That is because inflation is no longer transitory, and as he said, he's only got two months to go.
MATT EGAN, CNN REPORTER: Richard, they are speeding up the taper because it doesn't really make any sense to be buying tens of billions of bonds every
single month. You know, the Fed launched this quantitative easing program in March of 2020 when the world was falling apart. This was their effort to
rescue the economy and financial markets. But it's a totally different place right now.
Right now, unemployment is very low, and inflation is very high. And so that is why the Fed is saying look, we're going to wrap up this QE program,
most likely around mid-March, and the goal here is to, you know, take some pressure off of inflation because QE is actually further inflating the
economy and markets.
And also Richard, and this is important, to set the Fed up to finally raise interest rates off of rock bottom levels.
QUEST: Right. Now, let's talk about that gap between when they finished tapering and when they start increasing rates. Now, if they finish tapering
in March and the prognosis -- not prognosis, but the forecast is for three rate rises next year by the consensus of the majority or the most. How --
when do they start raising rates? Almost immediately one of sort of April, May or June?
[15:05:16]
EGAN: Yes, I think you could see June, September, and December. Something around there, and also, you know, it depends on how the economy
is evolving and, of course, how COVID is evolving.
But you know, what is really different here is, the last time the Fed went from tapering to raising interest rates, you know, they promised that there
would be a considerable amount of time in between those two steps where interest rates would stay at zero, and they wouldn't move them higher this
time.
And Jerome Powell was asked about this during the press conference, and he said, look, we're in a totally different place right now. The economy is
much stronger today than it was the last time we were moving towards lift off. Inflation is much harder today than it was last time.
And so, it doesn't seem as though the Fed is going to be all that patient with waiting before it raises interest rates, because I don't really think
it's going to have a choice, they're going to have to react to inflation.
QUEST: Matt Egan is in New York watching that. Thank you, Matt.
The Fed's move to catch up on inflation, instead of pre-empting it, it is something that we have seen before over the years. The idea is, it hasn't
happened since the 1980s. This is a chart showing the Fed funds rate compared to inflation over the last 40 years.
Now remember, Core CPI is the orange, Fed funds is the blue. The idea is that the blue is ahead of the orange.
In other words, you spot what's happening, and you deal with it accordingly. However, on this particular time, inflation is rising faster
as you can see on the right of the screen, Core CPI is much higher than Fed funds, which would suggest, Diane Swonk, Chief Economist at Grant Thornton,
with me from Chicago -- Diane, that suggests, and I'm shameless here. I read your note. I'm shameless. I'm just wearing your views, but they're
behind the curve.
DIANE SWONK, CHIEF ECONOMIST, GRANT THORNTON: Well, this is the Fed's first time that they're chasing down inflation. They do expect inflation to
abate. The math on inflation is there, but not abate enough to be cool enough for the overall economy in the second half of the year, and I think
that's a very important pivot.
This is the first time, as you mentioned since the 1980s that the Fed has actually been in this game, and there is no muscle memory for the Fed doing
this. I think that's a very different part of this world.
I think this time is different on so many fronts. One thing we did not learn about is how rapidly does the Fed expect to actually shrink the size
of their balance sheet, which would be more of an act of actually, instead of lifting their foot off the accelerator, which is what they did today,
not adding to the inflation, but actually hitting the brakes along with rate hikes.
And I think it's important too that we saw the Fed acknowledge that inflation is a global issue. We saw the inflation numbers come out from the
U.K., accelerating there as well and that the U.S. is playing a huge role an outsized role in pushing inflation up globally as well.
It is a very hard position for the Fed Chairman to be that he is chasing inflation down. That's the first time since the 1980s, but also how do we
move from being patient on inflation, which the Fed had been to now we could see them panic.
QUEST: So, the underlying tone, of course, here is also, even though the Fed says -- it no longer says that the inflation is transitory. They do
also say that if I read what he says, supply and demand imbalances related to the reopening continue to contribute to elevated levels of inflation.
Unless this becomes inflationary expectations and feeds through to higher wage demands, which there is some evidence of, is there a possibility that
inflation along with these measures does come down of its own?
SWONK: Inflation, I think will come down, I just don't think it will come down fast enough. We really do have some entrenched inflation that is going
to persist longer and be hotter, most notably in shelter costs. The housing market is on fire, and I think we're still going to see very strong gains
next year adding to rents and the owner's equivalent rent component, that's a third of the CPI.
I think that is something the Fed is starting to come to terms with, also, the number of firms who say they are planning on putting some kind of
expectation about inflation into their wage setting contracts for next year. That's something that worries the Fed because it gets this idea of a
more entrenched, more persistent inflation, even as it cools.
And the knee jerk reaction, you know, I think having the Fed move, as you noted, from not all being in 2022 to everyone being on the page of at least
one rate hike in 2022. That's a huge move by the Fed and it really suggests that they feel there is some unease, to put it mildly, within the Fed about
inflation and being behind the curve.
[15:10:15]
QUEST: In your view, why did the market like it so much? I mean, we went from very heavily down to now being up 160 to 170 points. The market has
basically been told that the punchbowl is going to be taken away, and it will be taken away faster than they had thought. So, what's this rally
about?
SWONK: You know, this has been one of the hardest issues, is how complacent the financial markets have been about the risks out there. The risk is
really much more of a boom bust cycle. We are in a boom side with heat right now in the United States that is causing heat elsewhere in the global
economy. That's not a bad thing. That's a good thing. It's good that we're healing faster than we thought. That's all good.
That said, I think there is a real misunderstanding about an economy that constantly grew at a glacial pace over the last several decades, an economy
where the Fed was preempting, a non-existent inflation and raising rates and then having to back off them very quickly.
That kind of scenario without having the singe of inflation is a very different scenario than what we face today, and I don't think financial
markets have fully embraced that reality.
QUEST: Diane, always good to speak to you. Thank you for joining us.
Now, Diane was talking there about inflation. In the United Kingdom, it is not the only number out of the U.K. that has given serious cause for
concern. Ominous warnings in Britain, but the numbers of COVID cases, absolutely in the wrong direction.
On Wednesday, the country recorded more than 78,000 new cases of COVID, its highest number since the pandemic began.
Health officials call it the omicron variant, the most significant threat of this nearly two-year health crisis.
(BEGIN VIDEO CLIP)
CHRIS WHITTY, CHIEF MEDICAL OFFICER FOR ENGLAND: This is a really serious threat at the moment. How big a threat? There are several things we don't
know, but all the things that we do know are bad.
(END VIDEO CLIP)
QUEST: Nina dos Santos is with me. We know that the health risk for those with boosters isn't as great. We also know that the real worry here
is just the sheer numbers, even if only a small fraction require hospital treatment types of problem.
NINA DOS SANTOS, CNN CORRESPONDENT: Yes, exactly. That's what Chris Whitty was just saying in that press conference. You heard a snippet of earlier
essentially that this could be twice as big as previous variants like the delta variant that was replicating once every seven days; this time, the
cases are doubling with the omicron variant once in every 48 hours.
So what they are concerned about is the speed of the transmission and the scale of this transmission. And that means that even if it is less
detrimental to your health, it could still mean that the same amount of people are in hospital. It also could mean, Richard, that a lot of people
who work in the National Health System in the U.K. are going to be having to isolate themselves or might get sick themselves.
So there is this real concern of this coming at a time when of course, we've got the festive season and there are a lot of people in hospital and
the seasonal flu.
QUEST: So, the number is about 90 percent single jab in Britain, roughly 80 something percent with double jab and 42 percent or 41 percent or lower,
the long lines of people trying to get the booster jab.
So the U.K. is going into this in a better situation than many other countries.
DOS SANTOS: It is. That's true, but one thing that they are not quite sure of is whether or not these vaccinations actually work on the omicron
strain, and they have been saying that they are also concerned about this messaging coming from South Africa that it might be a milder form of COVID-
19.
They don't yet say that there is room for any complacency on making those kinds of assumptions, Richard. When you're saying, yes, 42 to 45 percent,
they are desperate to get the remaining portion of people vaccinated before they head home for the Holidays, which could happen in about three days'
time.
QUEST: Okay, so now, if we take this out of just the U.K. and we put it into the wider context of Europe, more countries introducing more measures.
No one yet going for full lockdown. I mean, they are in full lockdown for unvaccinated in some cases, but you know, we haven't seen yet the more
extreme measures. Are we likely to?
DOS SANTOS: We don't yet know, but remember, they've got a lot more in their toolbox than they had this time last year, or the years before.
They've got vaccine passports, which have really stoked the ire of certain parts of Boris Johnson's own party, but those are already up and running in
places like Austria and also Italy. People who aren't vaccinated are essentially marginalized from some parts of society on the European
continent.
And now in the U.K., if you go into nightclubs or large scale venues, football matches and so on and so forth, from very soon, you're going to
have to be showing those coronavirus passports.
They've got vaccinations. They've got more tests as well.
One of the reasons why today's figures, 78,610 infections, Richard, was the record is also because people weren't able to test in previous waves of the
pandemic on quite the same scale.
[15:15:11]
QUEST: Although, I did have to say, yesterday I did wait an hour and 22 minutes for a timed appointment because the lines of day two.
DOS SANTOS: For your booster?
QUEST: No, no, no. Booster was done fine. For the Day 2 arrival thing all over London. Good to see you.
DOS SANTOS: You, too.
QUEST: Be well. Thank you.
QUEST MEANS BUSINESS tonight live from London.
Top U.S. airline executives, they are all on Capitol Hill. They are discussing how Federal aid helped them stay afloat at a time of
unprecedented challenges.
(COMMERCIAL BREAK)
QUEST: Top executives from the four largest U.S. airlines are facing senators right now on Capitol Hill fielding questions about mass flight
cancellations during the autumn despite getting some $50 billion in Federal aid.
The American, United, Delta, and Southwest top chiefs are also all at the hearing. Our aviation correspondent Pete Muntean is in Washington.
Stripping it down to its basics, what are they being browbeaten about this time?
PETE MUNTEAN, CNN AVIATION CORRESPONDENT: Well, you know, Richard airlines accepted $50 billion in aid from the Federal government, but the
central part of this argument is that there were still massive cancellations, scheduling meltdowns at Spirit, American, and Southwest over
the last few months because of staffing shortages.
So now, airlines are really going to have to answer to why that is when they were given so much money to keep people on the job.
Testifying right now, our executives from American, United, Southwest, and Delta. And Doug Parker, the CEO of American Airlines just said, well, sure,
those issues did happen as there was a huge onslaught of demand as people rushed back to air travel here in the United States. That was the exception
and not the norm.
I spoke to Senator Maria Cantwell, who is the Chairwoman of this Oversight Committee, and she said the point here is to prove that the Payroll Support
Program, the official title of that Federal aid actually worked and not to beat up on a battered industry because it made it better off to deal with
this rebound as it came back around.
Here is what she said.
(BEGIN VIDEO CLIP)
SEN. MARIA CANTWELL (D-WA): The flexibility of keeping the workforce so they didn't have to be retrained and re-skilled was a smart idea. It
allowed us to capture more economic return probably more than other sectors of our economy and now, they are well-poised to expand their businesses and
higher.
(END VIDEO CLIP)
[15:20:10]
QUEST: Pete, the only thing I can say on this is, I'd like the senators to see how the industry would have been -- would have been -- if they
hadn't gotten the $50 billion. It was a lot of money, but it's a huge industry. And if they hadn't got the money, you'd be lucky if anybody was
flying at all.
MUNTEAN: They point to this statistic, Richard, that the airlines support about five percent of the gross domestic product here in the United States.
And because of this Federal aid, we were better able to catch this rebound of travelers than places like Europe and Asia where that has struggled a
little bit.
We've been able to see a rebound of about 80 to 90 percent of normal air travel. In fact, just this past Sunday, about two million people passed
through security at America's airports. That wasn't even a holiday. We're getting pretty close to numbers from what they wore back over the
Thanksgiving weekend, which were pretty big, 2.45 million people passed through security at America's airports and that's the pandemic era record.
So the point here is to try and prove that that money did work, although we'll see if these airline executives face much pushback on that. They
really point to the schedule that we saw in the fall and in the summertime.
QUEST: Pete Muntean on Capitol Hill. Pete, thank you.
Australia is now letting fully vaccinated travelers from Japan and South Korea enter the country without going into quarantine. It is despite South
Korea getting a recent record of new COVID cases, omicron outbreak in Australian state of New South Wales which of course is where Sydney is.
Australia's Chief Medical Officer says international border bans are no longer a proportionate or effective means to contain the spread of omicron.
Israel is now expected to expand its Red List on Friday. The U.K. and Denmark are amongst the countries to be added. Authorities will also have
increased powers to track people during the quarantine.
Geoff Ballotti is the Chief Executive of Wyndham Hotels. It has 9,000 hotels in the franchise worldwide. He joins us from the company's
headquarters in New Jersey. Good to see you, sir. Grateful that you are with us.
How difficult is it now with omicron coming along and travel plans changing? Are you having to rethink your strategy for the next few months?
GEOFF BALLOTTI, CHIEF EXECUTIVE, WYNDHAM HOTELS: As your last reporter was just saying, Richard, leisure travel is back. Americans are traveling in
record numbers.
We believe that the return of the great American Road Trip is really here to stay and our drive to hotels are clearly benefiting from the demand that
as you were just reporting is out there.
We had a great start to the Holiday season. Thanksgiving RevPAR here in the United States was up 20 percent, not the last year, but to 2019. And look,
as the world's largest franchise or the best economy brands out there are Days In and Super Eight, we're continuing to see demand run well ahead,
significantly ahead. Again, not last year, but 2019.
QUEST: Right.
BALLOTTI: So people are traveling. People want to get out and we're seeing record occupancies and RevPARs right now here in the U.S., so it's not
having a measurable impact or effect.
QUEST: I guess my -- you know, I don't want to be the Grinch that stole Christmas, but if there's one thing we've learned is the chance -- the word
to tack on to your last answer is yet. It's not being seen yet. And I'm worried -- and I'm wondering, are you worried? Certainly, if you look at
the international situation, there are countries that are restricting rather than opening at the moment.
BALLOTTI: Sure, and look, we love seeing that that Canadian border opened up and things began to pick up. Each week, I mean, really, if you go all
the way back to delta that folks thought things might slow down. And each week since omicron has been reported, we continue to see a pick up.
Here in the United States, in the last two weeks have had seen no slowdown. The question is yet, and we'll continue to keep our eye on that. But
clearly people are focused on the demand and as we're seeing in record drive to numbers in airports, that demand is still there.
QUEST: So what do people -- in terms of the development of Wyndham, I know you've got some -- during the pandemic, you've actually created some
new brands. Of the 22, what is it now that needs to change you think? What is it that people want from the brands besides safety and a feeling of
confidence and cleanliness and sanitization? You know, that's a given across all. Now, in a more leisure oriented business, what do people want?
BALLOTTI: I think people are looking for places to get away that are aspirational. We launched as you said in the midst of this pandemic, our
22nd brand, the Wyndham altered brand which is focused on the all-inclusive market.
And right now, what people are looking forward to your question is the ease of planning. Simplicity, knowing that I am going to go someplace to your
point that is safe and secure and well-sanitized.
[15:25:19]
But that's easy to plan, easy to book, no hidden charges, no hidden surprises, and I'm going to take my family away for a great vacation this
holiday season to Cancun or Riviera Maya, our latest two Wyndham Ultra Cancun and Riviera Maya resorts that just opened this past weekend.
The demand to travel is there. People are looking for places to go. We're also seeing an increase in our occupancy on Thursday night and on Sunday
nights. Those are the two fastest growing nights back to 2019 in terms of the demand variances because of what you've been reporting all along in
your show this month that work from anywhere, work from a work, work from a resort, work from an aspirational resort like our Wyndham Ultra's in
Cancun.
That's what I think folks are looking for.
QUEST: And on this question finally of mandates -- vaccination mandates, which is I understand, it is politically difficult. I know the Federal
government has spoken on it in the hospitality industry. It is not an easy solution. Where do you stand?
BALLOTTI: Not an easy solution at all. We stand here in our world headquarters, which last week, "Newsweek" Magazine selected as among the
most responsible companies in America. We require our employees to either be vaccinated or to be tested weekly. That's where we stand and we stand
that way as well in our hotels.
QUEST: Good to see you, sir. I wish you a good peaceful Holiday season with your family, sir. It is nice to talk to you. At least, the hotels are
open.
BALLOTTI: Happy Holidays, Richard.
QUEST: Thank you. Thank you, sir. I appreciate it.
It is QUEST MEANS BUSINESS tonight live from London.
The Chairman of the Federal Reserve, Jerome Powell is warning supply chain issues are still contributing to inflation. The CEO of Goodyear on his
company and how it is handling the supply chain issues, coming up next.
QUEST MEANS BUSINESS.
(COMMERCIAL BREAK)
[15:30:00]
(MUSIC PLAYING)
QUEST: Talk on inflation, U.S. retail sales actually grew slower than expected last month even though supply worries (INAUDIBLE) get an early
start on the shopping season.
In October, retail sales were up 1.8 percent from the previous. Wherever you look, the supply chains' issues are hitting all sides of the economy.
Richard Kramer is with me, CEO of Goodyear, joins us from Akron, Ohio.
(CROSSTALK)
Your company is one of those bellwethers. You have tentacles in every aspect of the economy, from commodities, to trucking, obviously, to retail.
So these supply chain problems, are you seeing and are you hitting?
RICH KRAMER, CEO, GOODYEAR: Well, Richard, we certainly are. And I tell you, we came off the third quarter having a tremendous quarter, sales up 40
percent, volume up 30, gained share, best price mix in a decade.
But to your point, we saw about a 15 percent headwind in raw material costs, increase in labor costs and certainly in transportation and supply
chain costs as you mentioned and maybe let me give you a quick example.
At about any point in time, we've got about 1,000 containers on the water. And to just bring it home here in the U.S., we've got about say, more than
half of that coming into the West Coast ports in L.A. and Long Beach.
And, as you know, they've seen about a 15 percent increase in volume coming in. We're getting only about 50 percent of those on time at the moment.
We've got over 10 that are 30 days late. And these are sort of the disruptions that we're seeing.
I will say, Richard, our people are doing a tremendous job, acting with resiliency and agility to make sure our plants are running such that we
don't have disruption. But it's a challenge.
QUEST: And those thousand containers, even with long-term contracts, you've had to pay more shipping costs per container.
Can you hold much of this increased cost within your margin on the final goods or are you going to have to pass some of it on?
KRAMER: Well, Richard, we have been pricing and, as we've said publicly, had about five price increases over the course of the last, call it 15
months or so. And as we look at our raw material costs alone, you know, we projected a significant increase in the fourth quarter. I think it's about
a 30 percent.
And to your point, we see these costs increasing in the first half of the year as well. These costs are going to stick with us as we move ahead. So
some of those certainly we will work to offset internally.
We're always focused on our cost structure, we're always focused on finding the efficiencies in our business and we'll have to do more of that. But as
we think about not only supply chain but wage increases, energy increases, transportation increases, transportation costs, they are at a level we'll
have and will continue to evaluate pricing as we incur those.
QUEST: And what about what you now need, because you manufacture globally, you are the whim (ph) in a sense of all governments, in all politics and
all economies, so what is it you now need?
And I'm thinking particularly of things like sustainability, where companies like yours require, obviously, decent emission trading systems
but also an element of certainty of target.
KRAMER: Well, Richard, in general, I would say what we're always looking for is an even playing field around the world and that's really important
to us, because we generally make most of the product in the geographies we sell them. So we appreciate that even playing field, fair playing field out
there.
I think that's integral for us to operate successfully. I will tell you, around sustainability, I think you're absolutely right to mention it. This
is a top priority of our company and we're putting a lot of energy into it from replacing petrochems in our petrochemicals in our tires, with things
like rice husk ash and soybean oil.
[15:35:00]
In fact, that's in our bestselling weather ready product and giving a better performance.
We've actually put a target out to have a tire made of all sustainable materials by 2030. You may have read we've announced a collaboration with
Monolith to change carbon black that's more petrol based to more methane based. That's about 15-20 percent of the weight.
The weight of a tire is carbon black. So a lot of initiatives in place, very difficult to do but we're a company of innovation and we feel
confident that we're up to the challenge to do the right things for our environment.
QUEST: And we'll talk about it. Richard, good to have you, I'm grateful tonight, sir, thank you.
In this week's "CONNECTING AFRICA," one group in Rwanda looking to do precisely that, Small Africa wants to build up the continent's digital
infrastructure. In doing so, hoping Africa's booming fintech sector will reap the benefits.
(BEGIN VIDEOTAPE)
LACINA KONE, DIRECTOR GENERAL, SMART AFRICA: I'm Lacina Kone, the director general of Smart Africa. I'm helping Africa to retransform into a single
digital market by 2030.
(MUSIC PLAYING)
KONE (voice-over): Today, Africa stands for 39.8 percent of population connected, average around the world on the planet is about 53 percent, that
is one of our biggest challenge.
Number two key objective is to promote and facilitate doing business in Africa.
(MUSIC PLAYING)
KONE: The regulatory environment has to be adaptive. Smart Africa today being in 32 countries, every country has a flexure (ph) project. So
basically we've taken the user (ph) transformation. We've broken it down into pieces, every country will be championing one specific project.
So this approach in harmonized way it ensure that no nations is left behind and we learn from each other.
(MUSIC PLAYING)
If you combine together in the planet all the suppliers of the fiberoptic connectivity, it covers 95 percent of the world populations.
So why connectivity still being (ph) an issue?
It goes back to regulation for development. The regulation is very important. Ease of the regulations to be able to attract the private sector
to come and invest in infrastructure, particularly in Africa, where we have close to 60 percent of our populations living in a rural area.
However affordability is an issue and again it takes me back to the second challenges which is access to smart devices, which is very important. Once
we have internet affordable in those regions, of course, there will be a booming.
(END VIDEOTAPE)
QUEST: When we come back after the break, how does the plane nicknamed The Whale send a thank you to its fans?
This A380, the last out of -- to be manufactured found a way -- in a moment.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
(MUSIC PLAYING)
QUEST: Officially she's known as MSN 272 and the A380, the last one to be built by Airbus, which took off after going on to its final fittings.
[15:40:00]
You can feel the love on the final Airbus 380 test flight. Now it took off and flew. It flew over northern Germany from the Hamburg facility. But
then (INAUDIBLE) to Emirates 380 obviously.
The model is no longer being built but it's only when you look at the chart or the -- from flight radar that you see exactly what happened; 14 years
after the first one was delivered, the last one was built and flown. And the pilot drew a heart in the sky. It drew a special route. This is how it
looked.
And that's QUEST MEANS BUSINESS for the moment, back at the top of the hour. Please be with us, because the market is on a tear and we need to see
how far it will go up. "AFRICA AVANT-GARDE" is next.
(MUSIC PLAYING)
(COMMERCIAL BREAK)
[15:58:00]
(MUSIC PLAYING)
QUEST: Hello, I'm Richard Quest. Together, a dash to the closing bell, we are just two minutes away. Markets are soaring on the Fed's plans for
winding down stimulus and tackle inflation. Not sure why this is good for the market, higher rates are usually bad. But the market gained over 300
points.
The economy is improving, good; inflation sticking around for now, bad. Central bank says it will wind down bond buying and then start raising
rates, three rate rises expected next year.
All the major averages set to close at near session highs after the flat morning. The Fed warns supply chain issues continuing. Earlier Goodyear
chief executive Rich Kramer quantified his company's challenges and explained the supply crunch.
(BEGIN VIDEO CLIP)
KRAMER: We saw about a 15 percent headwind in raw material costs, increase in labor cost and certainly in transportation and supply chain costs as you
mentioned and maybe, let me give you a quick example.
At about any point in time, we've got about 1,000 containers on the water. And to just bring it home here in the U.S., we've got about say, more than
half of that coming into the West Coast ports in L.A. and Long Beach.
And, as you know, they've seen about a 15 percent increase in volume coming in. We're getting only about 50 percent of those on time at the moment.
We've got over 10 that are 30 days late. And these are sort of the disruptions that we're seeing.
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QUEST: And a look at the Dow components; as you can see, a sea of green. Cisco the best of the day. Nike the worst. The banks are off slightly
there. But even there a bit of a discrepancy. Goldman is up a bit. The banks, obviously, not do as well because of the high interest rates which,
again, is somewhat counterintuitive.
And that is the market, with the markets roaring ahead. I'm Richard Quest, your dash to the bell. Whatever you're up to the hours ahead, I'm hope it's
profitable. There's the closing bell.
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