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Quest Means Business
U.S. and NATO Warn of a Long, Drawn Out War in Ukraine; U.S. Revives WW2 Lend-Lease Program to Help Ukraine; Grim Amazon and Apple Outlooks Drag Down NASDAQ. Aired 3-4p ET
Aired April 29, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:15]
RICHARD QUEST, CNN BUSINESS HOST: An hour to the end of trading and I wish I came to you at this hour with better news on the market, but the NASDAQ
is on pace for its worst month since 2008. We're off over three percent on the NASDAQ, a sharp -- well, I mean, stating the obvious here.
The Dow is down very sharply. Amazon is pulling the markets down, but Amazon's off more than 15 percent. We will go into the details, but as the
Friday goes, this is simply horrible.
We have another hour of trading to go, the markets and the main events of the day: A long protracted war. Global leaders are preparing for a drawn
out conflict in Ukraine.
The U.S. is reaching back into the history books and reviving a landmark Lend-Lease Program, this time for Ukraine.
And a journey into Fortress China, Selina Wang entering the world's strictest COVID restrictions.
Live from New York. It is a Friday, well at least, that's the good part in a sense, but the markets are horrible. It is April the 29th, end of the
month, I'm Richard Quest, and I mean business.
Good evening. We begin tonight with the preparations underway for a war in Ukraine that is now expected to be longer, costlier, and deadlier than
first feared. U.S. military officers are now warning of slow and uneven progress by the Russians even as the Ukrainians dig in.
The White House is now asked to provide Ukraine with more than $33 billion of military and economic aid. It more than doubles the amount approved so
far.
Over the course of the hour, we are going to show you how the prospective and the nuance has changed in the last few days. The fighting is growing
more brutal, and the economic damage in Europe is deepening.
We start though of course in Ukraine itself where Commanders in the Mariupol steel plant are telling us relentless attacks, and they're calling
for safe passage of civilians.
Hundreds of people have been stuck in that plant for weeks. One of the Commanders telling us the situation is dire.
(BEGIN VIDEO CLIP)
SERHIY VOLYNA, COMMANDER, UKRAINE'S 36th SEPARATE MARINE BRIGADE (through translator): The situation is critical. It is beyond a humanitarian
catastrophe. These are hundreds of people and they have dozens of children with them. The youngest is four months old.
We cannot tell you for sure how long we can hold on for. We -- that all depends on the enemy movements and also on luck.
(END VIDEO CLIP)
QUEST: Russia has now confirmed that the country did indeed fire on Kyiv while the U.N. Secretary-General was visiting the city. It says it struck
military targets with high precision weapons.
Ukraine says this apartment building was hit and it killed a journalist who worked for Radio Liberty.
Nick Paton Walsh is in Southern Ukraine.
Wherever I look tonight, Nick, with these comments about Mariupol, in Donetsk, it in what's happening in Kyiv, there is this feeling that this is
going to last a long time, and everyone is digging in.
NICK PATON WALSH, CNN INTERNATIONAL SECURITY EDITOR: I think that's been the fear really ever since the notion originally put out there by Western
Intelligence this would be a swift Russian victory, it was brought to its knees by the incompetence, frankly, and the lack of preparedness of Russian
forces.
Actually just since you started talking to me, air raid sirens have gone off here in Kryvyi Rih, not abnormal at all, but I just want to explain to
you, that's noise you're hearing in the background.
And this city itself, the hometown President Volodymyr Zelenskyy is essentially a new part of Russia's offensive here. It has not been hit in
any substantial way since the early days of the war, but it is potentially in the crosshairs of the offensive we're seeing to the south.
And so looking across the country here, while Kyiv has had a momentary respite despite that baldly rude symbolism of striking the city while the
U.N. Secretary-General was there, in fact, the explosions were heard during his meeting with Ukrainian Prime Minister. They appeared, the Russians, to
have lost around Kyiv, to be concentrating on the east where the vast majority of Ukraine's armor and defense is at place, slow possible progress
there, U.S. officials have suggested that's backed up by Ukrainian military statements, too.
And in the south here, this sort of surprise push by forces to try and take the side of the Dnieper River, the line kind of stood on here in Kryvyi Rih
to provide, I think some assessment, a better position for Russia if it chooses to pause, regroup, and begin a next wave of this invasion.
This is rumbling on in ways that many feared would be the case, and I think the initial shock the world felt that this was simply even happening with
the scale, frankly, of revolting brutality we've seen, visited on the peaceful Ukrainian population by unprovoked Russian forces, that is
beginning to become something the world is used to, along with the sanctions or something that Russia is getting used to, and so we're into a
long haul, as you suggest -- Richard.
QUEST: Well, and this rumble now -- the U.S. asking for $33 billion more. We're going to be explaining the mechanisms of what they're doing in just a
second, but the significance of the increased military hardware being sent there. And I would say not only the sheer quantity, but the quality. The
more sophisticated equipment that is now arriving. How do you gauge that?
PATON WALSH: Yes, look, I mean, $33 billion worth of American hardware coming into Ukraine is a startling amount. I mean, it is a vast investment
in Ukraine's ability to defend itself, and if you look at the amount of money which Russia has spent on its Armed Forces versus what we've actually
seen on the ground here, in terms of the quality of what they've been able to deploy, there are questions being asked surely in Russia about where
that money all went and what those expensive yachts being impounded around Europe that seem to belong to people connected with the Russian state,
actually, were paid with.
And so yes, there will, I think, definitely be an improvement in Ukraine's capabilities. The essential question will be when that improvement comes
into the field, has Russia gained enough territory? Is Russia capable of defending the territory it has gained that Ukrainian forces can
successfully push them back with this better equipment? Wars are won on the strength of the gear that soldiers have on the ground and the morale of the
troops fighting. Ukraine's will always be higher. The question is, are they going to have the gear to keep the Russians out of further advances --
Richard.
QUEST: Nick Paton Walsh with the military assessment on the current situation and to that equipment. Thank you, sir.
Ukraine's allies are showing their readiness for this protracted war, by what they're sending. The U.K. is sending 8,000 soldiers to Eastern Europe.
Now notice that Eastern Europe, not Ukraine. It's a part of the largest NATO exercise since the Cold War, and the $33 billion that President Biden
has asked for in aid for Ukraine, too.
John Kirby, the Pentagon Press Secretary told John Berman, the Americans support through these measures is unwavering.
(BEGIN VIDEO CLIP)
REAR ADMIRAL JOHN KIRBY (RET.) PENTAGON PRESS SECRETARY: President Biden has made it a priority to continue to help Ukraine defend itself. You've
seen that just in the last several weeks, and now with, this supplemental request, which gives the -- would give the Defense Department $16 billion
to continue to provide weapons and assistance to Ukraine over weeks and months ahead. We're committed to this.
The President has been clear. We're going to help Ukraine as much as we can, as fast as we can. And John, the material that we're seeing over there
is literally sometimes getting into Ukrainian hands within days of the President signing it off.
So I mean, we are working this very, very hard.
(END VIDEO CLIP)
QUEST: Now, to make all of this possible is S-3522, an act of Congress that revives the world war policy known as Lend-Lease. A simple idea. It started
in 1941 when President Roosevelt wanted to provide Great Britain with military equipment without getting involved in the war. After the war, the
U.K. paid or was meant to give it back.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Assembled Congress, here is the President and his promise to all people fighting aggression.
FRANKLIN D. ROOSEVELT, FORMER PRESIDENT OF THE UNITED STATES: We shall send you in ever increasing numbers, ships, planes, tanks, guns. That is our
purpose and our pledge.
(END VIDEO CLIP)
QUEST: And now today, the U.S. is proposing exactly the same thing, Lend- Lease for Ukraine. In doing so, billions of dollars in military equipment. The plan is for Ukraine to pay for it or give it back in some shape or
form.
Adam Tooze is the History Professor at Columbia University. He joins me from New York.
In the 1940s, the idea was, you know Lend-Lease got around isolationism. Why are they using this method this time around? Is it sort of similarly a
satisfactory fig leaf to get the stuff moving?
ADAM TOOZE, HISTORY PROFESSOR, COLUMBIA UNIVERSITY: Yes. The idea in 1941 was to avoid the embarrassment of loans, which had gone really sour after
World War One and so what you wanted to do was to create a mechanism that at all costs avoided that, and I think this time around as well, this is a
congressional initiative.
[15:10:08]
TOOZE: It in fact goes back to January before the Russian invasion, and I think the idea as much as anything is symbolic. It is to revive the famous,
the legendary 1941 Program. And then essentially, the idea here is, I think, to make it as easy as possible, so that basically you deliver the
equipment to Ukraine, and then figure out how it is repaid, if it is repaid at all, afterwards. That was -- that is in spirit, really, the continuity
also with the 1941 moment.
QUEST: And indeed, the act that's just been passed says: "The President shall establish expedited procedures for the delivery of any defense
articles loaned or leased."
So, there is an urgency here, but as you say, this symbolic message of using Lend-Lease was not lost on anybody.
TOOZE: No, it was dramatic even at the time. In fact, they had to invent a new term, because in 1941, earlier in the year, of course, the United
States was not in the war against Germany, and the war with Japan hadn't even really begun. And so, America was taking sides.
So neutrality never really described America's position. They invented a new term, which was non-belligerents, and it is not even clear to me
whether in this war in 2022, that adequately describes what's going on, because in a sense, America is party to this, and this is Roosevelt's
language, by all means short of war.
Everything necessary to support Ukraine, short term American boots on the ground, NATO troops directly confronting the Russians. It's hugely
provocative.
QUEST: In your view, where does that line end? Because I asked the NATO Secretary-General, I couldn't believe I was even mentioning this sort of
idea, but in the event, for example, God forbid, of a short range nuclear weapon being used where fallout was to go across to a NATO country, Poland,
or any of the --
TOOZE: A totally unexplored territory, we've not really been in a situation before where the military opened spectacular public defeat of Russia or the
Soviet Union was really the goal. In Afghanistan where we bled the Soviets dry, it was done much more discreetly.
In this case, it is really a very direct engagement. And what we do know from history is that a regime that is prone to paranoia, prone to
conspiracy theories, like the Nazi regime was used Lend-Lease. It was part of the casus belli ultimately that justified in Hitler's mind the decision
to enter into war with the United States.
In the broader picture of World War Two that, of course, in some sense, was a Godsend, but that would definitely not be I think, our interpretation of
the current moment.
We are certainly treading a very fine line here, and the Biden administration will be acting very circumspectly. I think, in the details
on the ground, the rhetoric is very clear. But on the ground, they're going to be very careful.
QUEST: So we end up again, how lucky we are to have your interpretation -- we end up with this also very difficult position on sanctions, for example,
where, you know, the countries involved have to go along with President Putin's cockamamie scheme of two accounts -- rubles, shares and transfers -
- but nobody is prepared to say whether it is legal or not because that creates difficulties in its own right to keep the gas and oil flowing.
TOOZE: It just goes to show how deep our entanglement with Russia really was, right? This is not the Cold War of old, where we could easily pull
ourselves away, where the entanglements were much, much, much less.
We are engaged now in some weird hybrid of Cold War, World War Two, off the back of, in the wake of unprecedented globalization. And so that is going
to create these kinds of gray zones when no one really knows how to act, and indeed, in Europe. There is going to be a lot of lawyering going on, a
lot of PR that is going to be needed to manage this gray zone.
And it depends very much on both sides; if the Russians want to turn the screw, if the Europeans, if the Americans want to, you can turn a foggy
situation into one that's very black and white very quickly, if you are so minded.
QUEST: Adam, have a good weekend, sir, after what we've talking about. But have a good weekend, regardless, sir, it is good to see you. I'm grateful.
While Adam was talking to me there, we could just see the way the market is down. We are down 777. So we are falling on the Dow Jones and the others
are as well.
And one of the key reasons of course, Amazon is now down 15 percent. The company is warning of slower growth. I'll say that again, look at that, 15
percent off.
(COMMERCIAL BREAK)
[15:17:42]
QUEST: Well, everyone knows people who likes to tipple on a Friday evening at the end of a long and hard week will need more than a tipple, so I
suggest you charge your glass.
The last day of April and U.S., this is horrible. Look at the numbers. They'll tell their own story. Roughly over three and a half percent for the
NASDAQ and Amazon's the reason why and I'll tell you that.
Now the Dow is off 750 points. All the markets are way off. So, the NASDAQ and the S&P is the worst month since March that we've seen. Amazon is
reporting a $4 billion Q1 loss with slow growth and Apple has got problems.
Apple we can see a little bit more clearly because Apple is as a result of China's slowdown as a result of the lockdowns in China.
Clare is with me.
Clare, before you tell me all about Amazon, I just want to go through these numbers. I mean, you know, we got a NASDAQ down 22 percent since its all-
time highs, so it is well and truly a bear. The S&P is down 13 percent. That's a bear. No, that's a correction. It's a correction heading worse.
The Dow hasn't quite reached correction. I'm guessing, there is one or two weird stocks in there that is holding it up.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Richard, like I think, you know, we're seeing the earnings. We're in the middle of earnings season
and there is a lot of sort of pandemic-era froth coming off the top, those really strong growth stocks, the tech stocks in our reporting. They are the
real reason why we saw such a surge in the markets as things returned gradually after the pandemic and such a strong 2021.
And now, we're seeing a repricing of that because of the slowing growth, because of inflation, because of supply constraints. None of these
companies are immune from that. And I mean, I've covered Amazon for a long time, as you know, Richard, not long enough to have seen a day where it was
down 15 percent as we head towards the -- it is pretty shocking.
QUEST: So, I want to talk about Amazon because the one thing I've always noticed about Amazon's share price is its ability to recover. It goes down
with the market, it sometimes gets whacked, but here looking -- I mean, let's take -- forget AWS for a moment. We talk about the Amazon that you
and I know where you buy things from.
They said that that actually fell in a sense. The numbers are difficult to comprehend, but it suggests we're not buying as much and there may have
been a shift in trend.
[15:20:03]
SEBASTIAN: Yes, so Amazon and U.S. e-commerce sales grew about two percent compared to the same period last year; international actually made less
money than it did in the same period last year. AWS, you told me to strip that out, but it is really hard to strip that out, because it is such a big
boost to the company. That grew 37 percent, Richard, in the quarter.
So you can see where the trend is. We bought a lot during the pandemic. We are still buying, but just not as much because people are going back out
and I don't know about you, but you know, if I go into a store nowadays, I do have an emphasis to buy simply because we couldn't during the pandemic.
So that is what we're seeing at play here on Amazon, but it is not just a demand issue. It's an expense issue as well. Amazon is facing some of the
same costs that everyone is facing, things like fuel costs, shipping, wage pressure, because of labor shortages and some of their own costs as well.
I just want to show you some of their employee numbers. This is really important, Richard, because they doubled their workforce in the last two
years. I think you'd have to look at those numbers to really understand this situation.
Not only did they double their workforce, but they doubled the size of their fulfillment network in the space of 24 months, and now the demand is
coming off that. They have spare capacity that is leading to higher costs because of a drop in productivity.
QUEST: And Apple? I mean, Apple, we've chosen Apple because that's another good example of a stock that when it falls, it tends -- tends to recover
quite quickly. Now, the principal problem here seems to be China and the lockdown.
SEBASTIAN: Yes, the problem with Apple wasn't so much this quarter. I mean, it was pretty strong, nine percent sales growth. We've seen services
particularly struggling. They now make almost double what they make from their iPhones, from services. So you can see how the business has shifted.
But it was the guidance that was really the issue here with Apple. They're saying that in the next quarter, they could take a $4 billion to $8 billion
hit because of supply constraints, many of them because of China, the chip shortages that the whole industry is seeing.
But the COVID lockdowns in China could feature supply issues that are more important, but there could also be demand issues as well from China and
China is almost 20 percent of Apple sales -- Richard.
QUEST: Right. So look, as we come to the end of this week -- sorry, the beginning of this week, the end of this week. There are those watching who
just wonder, myself included, where does it go? I mean, we don't have an answer. I realize we don't have an answer, nor do we really know is it
going to get worse before it gets better? But what does your gut tell you?
SEBASTIAN: I think another -- at least another quarter that looks fairly similar, and then potentially improvement, Richard, but it is so hard to
predict because of the variables out is driven by, you know, the supply constraints we're seeing, the likes of China, the war in Ukraine is driving
inflation. And look, I say it, again, none of these companies, however strong they are, however strong they have been over the last two years are
immune from that.
So I definitely think, look at the guidance from today from Amazon, and from Apple, that tells you a little bit about the economy as well and where
it is headed, and I think at least another quarter that's pretty similar to this.
QUEST: Clare Sebastian, thank you.
China has defended its Zero COVID strategy as a magic weapon, and of course, it is the very strategy that's caused a lockdowns, that's caused
Apple problems and others.
And there are now mounting criticisms within China over those very lockdowns which seem to last weeks.
(VIDEO CLIP PLAYS)
QUEST: A traditional symbolic way of protesting on Thursday, Shanghai residents banging pots to protest against the lack of supplies during the
weeks and weeks.
So how does it stand at the moment? Twenty-seven Chinese cities including the economic engines of Shanghai and Beijing are under full or partial
lockdowns. That's up to 180 million people affected at the moment, and why? Well 15,000 infections were reported on Thursday.
Selina Wang is one of those who is caught up in it now tells us her own experience navigating the country's strict COVID rules.
(BEGIN VIDEOTAPE)
SELINA WANG, CNN CORRESPONDENT (voice over): Traveling into China is like entering a fortress. The country has been virtually sealed off since the
start of the pandemic, guarded by strict border controls and the world's harshest quarantine.
My journey to get in started with three PCR tests in Tokyo.
WANG (on camera): Seven days out from my flight, just got my first COVID test.
WANG (voice over): Back at home, I track my daily temperature and pack a suitcase full of snacks to prepare for 21 days in quarantine.
Within 48 hours of boarding, China requires PCR tests at two different government approved clinics.
WANG (on camera): This is possibly the most paperwork I've ever needed to board an airplane.
WANG (voice over): I say goodbye to Tokyo, my home for the past one and a half years, checking in at the airport, relatively smooth.
WANG (on camera): Still checking my documents. I finally have my boarding pass. I'm at the gate. I'm going to China.
WANT (voice over): Most people on my flight are Chinese citizens, foreigners can only enter under very limited conditions. It's even harder
for American journalists because of U.S.-China tensions.
[15:25:08]
WANG (voice over): All the flight attendants in full protective gear.
WANG (on camera): Getting ready for takeoff. There we go.
WANG (voice over): Flights into China, especially Beijing are extremely limited, even though I'll be based in the capital, first, I'm flying to
Yunnan Province.
After landing, I get another COVID test. A bus eventually takes us to the quarantine location. No one can choose where they will be locked in for the
next 21 days.
Hours later, we arrive. I count myself lucky. It's a hot spring resort converted into a quarantine site. It's my first time here, but I'll have to
enjoy the view from the window.
I can't step out onto the balcony or open my door except for health checkups and food pickup.
Two temperature checks a day, regular COVID tests, sometimes even twice a day.
Food delivery isn't allowed, but breakfast, lunch, and dinner are part of the quarantine fees. These restrictions are all part of China's Zero COVID
policy.
Across China, tens of millions are sealed inside their homes. Since mid- December, Chinese average new daily case count has surged from double digits to more than 20,000. Any positive case and close contact has to go
to government quarantine. Entire metropolises brought to a standstill.
Most of Shanghai's 25 million residents have been locked in for weeks, many struggling to get enough food and medical care.
In Year Three of the pandemic, most of the world is learning to live with COVID, but in China, no case is tolerated no matter the emotional and
economic cost.
Selina Wang, CNN, Kunming, China.
(END VIDEOTAPE)
QUEST: And as Selina told me earlier, she is on Day Seven of her 21 days. I am not sure how I can send her something to cheer her up between now and
the end, but we'll try and find out from you. We'll try and send her something to cheer her up.
Now, as we continue tonight on QUEST MEANS BUSINESS, we all need a bit of cheering up. The Eurozone economy is slowing down and the analysts are
warning stagflation is either afoot or here. The chief economist at ING Germany will be with me after the break.
(COMMERCIAL BREAK)
[15:30:00]
QUEST: Hello, I'm Richard Quest. A lot more QUEST MEANS BUSINESS. In a moment, I'll be talking with European economic growth, which has slowed in
the first quarter. ING's top economist on the risks of recession.
And the former top tennis player Boris Becker has been sentenced to jail. We'll have those details (INAUDIBLE) happened after the headlines because
this is CNN and on this network the news always comes first.
Vladimir Putin says he will attend the G20 Summit in Bali this November. Indonesia's President Joko Widodo has also invited Volodymy Zelenskyy of
Ukraine. Ukrainian leader has not yet indicated whether he will go. And then he said, Indonesia wants to unite the G20.
The Taliban says an explosion at a Kabul mosque killed at least 10 people of the Friday prayers. Witnesses say 50 die from the blast. No one has
claimed responsibility. Similar attacks in the last few weeks have been claimed by the Taliban's rival ISIS-K.
The premier of the British Virgin Islands faced drug smuggling charges today before a U.S. court. He was arrested in Miami, Florida yesterday. A
separate U.K. inquiry has concluded the territory should be temporarily restored to full British rule because of misgovernance.
Europe's economy is slowing down. It's official. Analysts say the Eurozone is likely in the throes of stagflation. GDP grew a mere 0.2 percent across
countries that use the euro. At the same time, Russia Central Bank says it expects the Russian economy to shrink by eight to 10 percent this year. By
the way, the IMF thinks it'll be 14 percent. 23 percent is the high forecast for inflation in Russia.
The Central Bank says the recovering ruble is helping to ease prices. Carsten Brzeski is the chief economist at ING. Joins me from Frankfurt.
Good evening, sir. I'm grateful to you for staying late and interrupting your Friday evening. So look, we know the slowdown is happening. It doesn't
matter where we looked at the evidence. I guess the question is, how bad do you expect it to be?
CARSTEN BRZESKI, CHIEF ECONOMIST, ING: Well, that's a very good question, Richard. I really think it's going to be bad. We had open two percent
growth in the Eurozone in the first quarter. That was OK, that was reasonable. We still benefited from strong two months, the January,
February. And what we will now see is that the entire economic business model of the Eurozone is under pressure.
Namely, we are depending on export, we are depending on the industry, and we are energy dependent. And all these three pillars of the growth model
are at risk and under pressure. So, I really think that the Eurozone economy is going to stagnate this year. And we're going to have very high
inflation. We might even see double-digit inflation. So, this is stagflation, in the purest meaning of the word.
QUEST: So, if that happens, is there still the necessity? I suppose the inflation is there. It doesn't matter where it's come from. The inflation
is there. But does the -- does the natural slowdown in growth because of that sufficient or does the ECB still have to act and probably sooner
rather than later when you're expecting them to raise?
BRZESKI: Well, I think the ECB has to act not in order to bring down inflation, but there's very little the ECB can do to bring down inflation,
which is driven by energy prices, commodity prices, shortages in microchips and the war in Ukraine. And what the ECB should do now is normalize
monetary policy. Don't forget, the ECB is still buying assets. We still have negative interest rates in the Eurozone.
And this era has to stop. And I think they will stop this now before the summer. We will see an end to the net asset purchases by the end of June.
And now we will see the first right -- the first rate hike either in July or September.
QUEST: The issue with oil and gas particularly for Russia now, Germany is now -- from Russia. Germany is now saying that it will be able to cope
without Russian oil. Different state of affairs, if it -- with gas. But how prepared economically if Germany loses Russian oil and gas. What happens to
everybody else?
[15:35:07]
BRZESKI: Well, if we lose Russian oil and gas, the German Central Bank, the Bundesbank estimated that this would bring down economic growth by six
percentage points. While we have something like 1.5 to two percent growth this year in Germany, hopefully shave off six percentage points, and you're
really in the midst of a very severe recession. Obviously, it all depends on how the government will react.
Because that is what we also saw during the pandemic, severe impact on the economy, but because not only the German government, but also European
government supported corporates and households, the damage was not really felt by households and the corporates.
QUEST: Finally, I just want to look at the -- U.S. markets are in a terrible mood today, shocking, all sorts of reasons. Amazon earnings, war,
you name it. There's all sorts of reasons for these very sharp falls. And Europe is similarly a very unhappy. But how long do you think this last?
Are we in a completely new economic environment, the likes of which people like myself and yourself haven't seen since the 1970s and 80s?
BRZESKI: We definitely are. We are in the new era for the U.S. And actually, this is a better era than for the Eurozone. For the U.S., it is
high inflation, overheating economy and our central bank which will hit the interest rate breaks. But for Europe, it's going to be worse. For Europe,
this war, the implications of the war are a game changer. I think that it will change the economic model of Europe much more than COVID has done over
the last two years.
We will really see green transition has to be accelerated. We need to get energy dependence, we will probably see supply chains which have to be
completely built from scratch. So, this is enormous for the European economy. And I'm a bit afraid that Europe will lose out in the first years,
losing international competitiveness. And hopefully, after a couple of years will lift off again.
QUEST: Carsten, very grateful. Thank you, sir. Have a good evening. The rest of your evening in Frankfort tonight. Excellent. Thank you. President
Biden wants to give Ukraine more than $33 billion. We were talking about it earlier. Ukraine would not only be the beneficiary. Also, the defense
industries would also gain. Our CNN's Alex Marquardt explains.
(BEGIN VIDEOTAPE)
ALEX MARQUARDT, CNN SENIOR NATIONAL CORRESPONDENT (voice over): As Russian troops poured across Ukraine's border kicking off the Russian invasion in
late February, something else was happening at the same time in New York. The stock prices of the biggest U.S. weapons manufacturers spiked. Many
eventually climbing to their highest point in years.
MICHAEL O'HANLON, SENIOR FELLOW AND DIRECTOR OF RESEARCH IN FOREIGN POLICY, BROOKINGS INSTITUTION: War is good business for parts of the economy.
Historically, it doesn't mean that defense contractors cynically want it. I know a lot of people in these companies and they're as heartbroken by the
war in Ukraine as the next person. But yes, war is good business for certain parts of the economy.
MARQUARDT: The latest American weapons shipments to Ukraine include systems like scores of 155 millimeter howitzers that haven't been sent before.
Switchblade and those drones, hundreds of armored personnel carriers joining the now well-known and brutally effective Javelins and Stingers on
Ukraine's battlefields.
JOE BIDEN, PRESIDENT OF THE UNITED STATES: Sometimes we will speak softly and carry a large Javelin because we're sending a lot of those in as well.
MARQUARDT: Javelins are made in part by Raytheon. CEO said last month, they do expect to benefit from the need to replenish U.S. stocks.
GREGORY HAYNES, CHIEF EXECUTIVE OFFICER, RAYTHEON: We don't apologize for making these systems, making these weapons. The fact is they are incredibly
effective in deterring and dealing with the threat that the Ukrainians are seeing today. Eventually, we'll have to replenish it and we will see a
benefit to the business over the next coming years.
MARQUARDT: Raytheon along with seven other weapons companies, including Lockheed Martin, Boeing and Northrop Grumman met earlier this month with
top Pentagon brass and a classified meeting about not just supplying Ukraine, but replenishing U.S. and allied inventories.
O'HANLON: I'm not going to deny that these kinds of conflicts can help certain companies. It's the reality of the situation. But we should also be
glad to the extent we want to help Ukraine, we should be glad we have this industrial base that's capable of producing this stuff on short notice with
such high quality.
MARQUARDT: The Biden administration alone has contributed almost 3-1/2 billion dollars of military aid to Ukraine in the two months of Russia's
war. Compared to the Pentagon's 2023 requested budget for weapons, that's just 1.2 percent. Critics say the Pentagon and contractors could use the
Ukraine conflict to justify bigger budgets and more weapons sales.
WILLIAM HARTUNG, SENIOR RESEARCH FELLOW, QUINCY INSTITUTE FOR RESPONSIBLE STATECRAFT: My concern is when those weapons are replaced finished, will it
be at a reasonable cost, will the contractors gouge the taxpayer.
[15:40:06]
HARTUNG: And also, will there be ancillary changes in our military spending that don't really relate to Ukraine but are used because of the fear
related to the Russian invasion to spend on things that they really don't have to do with the defense of Europe.
MARQUARDT: There are also concerns about where the billions of dollars of weapons are going. Once they crossed the border into Ukraine. Officials say
the U.S. has no way to track the weapons, nor of course, where they end up in the long run.
JOHN KIRBY, PRESS SECRETARY, PENTAGON: Once it gets into Ukrainian hands, it's up to the Ukrainian Armed Forces to decide where it goes, what unit
gets it, when, where it's stored, if it's stored at all temporarily. That is up to the Ukrainians to decide not the United States.
(END VIDEOTAPE)
MARQUARDT: In the $33 billion of Ukraine funding that President Joe Biden requested on Thursday, more than a third of it, 11.4 billion would be
allocated towards replenishing the U.S. weapons inventory and money for Ukraine to buy more weapons. That's where the new business for these
weapons companies will come from. And there will be more. So a major concern now is making sure that weapons companies don't take advantage of
this crisis of this moment to raise their prices. Alex Marquardt, CNN, Washington.
QUEST: In a moment, one of the most famous tennis players in the world is going to prison. Boris Becker will serve 2-1/2 years in jail related to his
bankruptcy. I'll explain in a moment.
(COMMERCIAL BREAK)
QUEST: Boris Becker is tonight in a British jail after being convicted of hiding assets during his bankruptcy case. He was sentenced to 2-1/2 years
in prison with the judge telling him that Becker had not shown any remorse or guilt. Apparently he hid more than $2-1/2 million worth of assets and
loans following his declaration of bankruptcy in 2017. Patrick Snell is with us. World Sport's Patrick Snell.
This is -- I mean, it's very -- it's a grubby sort of case but what happened here? At the end of the day he's going to prison.
PATRICK SNELL, CNN CORRESPONDENT: Richard, yes. Boris Becker. This is hard to put into context really, it's just a massive name in the history of the
sport. A six-time Grand Slam champion, one of the most famous, Richard, you know this well. One of the biggest names in the history of the sport will
serve half his sentence. The Judge Deborah Taylor earlier this Friday also adding while I accept your humiliation as part of the proceedings, there's
been no humility.
[15:45:06]
SNELL: Let's get into the video from Becker arriving at court early earlier on Friday. This is really significant to me. Becker and his partner there,
Becker wearing a gray suit, the white shirt there and the tie -- the tie, Richard caught my eye, the famed Wimbledon colors of green and purple. But
what is it the crux of this case you ask? Well, to reset for our viewers, Becker declared bankrupt as you said at the top. June of 2017.
Now that meant he was legally obliged to disclose all of his assets. The assets he concealed, including around $450,000 which was transferred to
several third parties. Among them, including a property in his homeland, Germany 75,000 shares as well. That according to the U.K. Insolvency
Service when it suited him, Becker and made full disclosure when it didn't, he didn't. The words of one prosecutor on Friday who urged the judge to
pass a custodial sentence.
That according to Reuters. Becker also accused of concealing and transferring assets to private creditors of more than two million pounds or
around $2-1/2 two and a half million in assets. What is the 54-year-old lawyer saying, Jonathan Laidlaw Friday according to the Press Association,
Richard, telling the court "The proceedings have destroyed his career entirely and ruin any further prospect of earning an income, his reputation
is in tatters. He will not be able to find work and we'll have to rely on the charity but others if he is to survive."
Richard, I remember watching Boris Becker when his first Wimbledon as a 17- year-old at Wimbledon in 1985. Boy, what a story that was beginning then. The first of three Wimbledon titles in four calendar years, Richard.
QUEST: Right. But he has history here, doesn't he? He has history in terms of being convicted before in Germany of some tax evasion issues. So Boris
Becker has always -- his private life is -- public life is this life. It's always had a touch of the titillation about it.
SNELL: There's been so much scrutiny, you are spot on, as always, Richard. Becker making tennis history as I said, when he -- imagine winning
Wimbledon as a 17-year-old putting his hometown of Leiman in Germany on the map. The global scrutiny, Richard, from that day on second to none. What
did he go and do the following year? He wins Wimbledon again that huge. I remember the commentators at the time, Richard, at the time, boom, boom,
Boris Becker, boom, boom, served three Wimbledon titles, four calendar years.
The overnight global stardom, the first unseated male to win the Wimbledon singles title. A global world number one as well. The scrutiny, the
notorious British tabloids on his private life like second to none, of course, then he goes and sets up home in the U.K. as well.
QUEST: Now, the one thing I will say though about Boris (INAUDIBLE) I've met him many times. There is a sort of -- I don't use -- I mean, he has
been convicted and he's been convicted a couple of times (INAUDIBLE) there's a lovable rogue about him in a sense. He's very personable, isn't
he? When you meet him, he's extremely charming. The best description is, you know, he's just the person you hope to sit next to a dinner.
SNELL: Exactly spot on. Yes. I've interviewed him myself over the years. Very generous with his time. Very engaging, and never shy as well of giving
an opinion as well. That is something we've always been able to tap into. But look, he's been a larger than life presence as well, Richard, beyond
his playing career. He never won the French Open, but he did win two Australian Open titles in the U.S. Open in New York as well.
But look, taking on the big -- the big profile, right? In media circles, as well, as I said, very generous with his time and a distinguished former
coach as well. Giving back to the game coach to among others, Novak Djokovic, as well.
QUEST: Patrick Snell, thank you, sir. Patrick Snell joining us. I want to show you the markets before we take a short break because slightly as
predicted, and it gives me no pleasure of course. 33,000 is now looking dodgy. The markets down 818 points. We're off over 2-1/2 percent. What's
happening now of course is people are squaring out. That's it people. The computers are squaring out. And this is where the humans get involved.
The humans now start to decide how do they want to go into the weekend. The traders, the big traders, the big investment bankers, they're all deciding
how they want to go into the weekend. And as a result we're seeing the NASDAQ is now nearly -- is off sharply heading down to four percent. The
S&P similarly. The Dow is coming off the top. We'll update you all for you before the end and the closing bell.
(COMMERCIAL BREAK)
[15:52:24]
QUEST: I'm looking a little picky and tired for you today. It could be that the markets had just exhausted me or that I presented three programs this
morning from "FIRST MOVE" to "TONIGHT." But none of that's the real reason. I was late. I was up celebrating with the Prince's Trust. A chance to raise
money to help young people develop their futures. I was in good company.
(BEGIN VIDEOTAPE)
QUEST (voice over): A touch of stardust was sprinkled on Thursday night as the celebrities came out for the Prince's Trust global Gala in New York
City. It's all to benefit the Prince of Wales charity, which is dedicated to helping young people build their futures. At a time when the pandemic
has pushed youth unemployment to crisis levels.
MARTINA MILBURN, GROUP CHIEF EXECUTIVE, THE PRINCE'S TRUST: We are a bridge that helps them get jobs and helps them with training and education and enterprise.
QUEST: The trust launched in the United States last year, and now it operates in 20 countries around the world.
EMMA WADE-SMITH, BRITISH COUNCIL GENERAL IN NEW YORK: I think this is a terrific time for them to come to America, get the support here to really
help disadvantaged and underrepresented communities.
EDWARD ENNINFUL, PRINCE'S TRUST, GLOBAL AMBASSADOR: Whether you're in London, whether in Africa, you still face the same challenges. You need a
helping hand when you come from a background where they say you can't do it.
QUEST: The singer Lionel Richie is a global ambassador.
QUEST (on camera): Why are you involved with this?
LIONEL RICHIE, THE PRINCE'S TRUST GLOBAL AMBASSADOR: You know, what I found something years ago I've known -- I've known Prince Charles now for a long
time. And so, what makes it so fabulous is when we first met, I discovered two things. One, we're the same age. And secondly, most importantly, we
have the same heart. He was so fascinated in kids and what can we do to help kids. Since then, he has asked me to be the global ambassador.
QUEST: What makes the princess trust fly better in a sense?
RICHIE: I'm so happy you said. Not only will you be mentored, but the mentor will help you establish your job or give you a job. Figure out how
banking is done. How to set up your business and watch you fly.
QUEST: Alongside the celebrities, there was the trust own success stories, the best advert for the trust success.
DYLAN ENGLAND, TEACHER: I've done a course with the Prince's Trust and it just gave me the confidence to policy myself worth.
SHANA EDWARDS, REAL ESTATE EXECUTIVE AND JEWELRY DESIGNER: It literally changed my life forever. I've made a career. I started a business and I
have (INAUDIBLE) the Prince's Trust.
QUEST: Their personal stories receiving the night's biggest round of applause.
Richard Quest, CNN, New York.
(END VIDEOTAPE)
[15:55:08]
QUEST: And by way, Shaun Edwards there makes (INAUDIBLE) there's the Dow. Look at that. Well, we have got two. I mean, there are two that are up
there on individual reasons. The losses, 3.7 for -- 3.7 percent for Apple. Microsoft, four percent, great earnings. Verizon, even the bellwether,
Verizon which should be up in these environments, Disney. Anyway, the NASDAQ is on pace for the worst month since 2008.
We're now over four percent off on the NASDAQ. The key will be is this it, is this capitulation. Well, with the Dow of 1000 points. And I seem to
recall, we're off 1000 points. And earlier we go last week, I can't remember the exact date. But it gives you an idea. Amazon -- finally going
to show you Amazon. Found 15 percent on reporting the slowest growth in earnings. So, this is a truly miserable, horrible day when you talk about
the markets.
Whatever it is, we will have a profitable moment. And I'll do that after the break
(COMMERCIAL BREAK)
QUEST: Tonight's profitable moment, it's only really now becoming clear just the extent of economic woes that we've all got to face. As you heard
from Adam Tuss earlier in the program. This is a different Cold War because now Russia was so integrated in the global economy. After decades of
globalization, we never thought this would happen. So, to extract Russia and China with lockdowns and all these things from the global economy, it's
not surprising that we're seeing this awfulness.
There was always going to be a downturn post-pandemic, but this and the market dislocation is so serious. So, I'll leave you with this thought
tonight. If you're like me, and you've looked at your pension or you've looked at your portfolio, and you've thought, good grief, what's next, and
what's going to happen? Well, take out. One assumes and one hopes that you've been investing for the longer term.
The three or the five-year horizon. And that you've adjusted accordingly as necessary. If that is the way then this of course, too will come to an end.
There will be a restructuring. There will be a change. There will be new evaluations. And guess what, you and I will be back together again on
Monday, Tuesday and Wednesday of next week.
END
