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Quest Means Business
Biden Goes On Defensive As Inflation Woes Sap Sentiment; High Food And Energy Prices Fueling Inflation; E.U. Commission Recommends Candidate Status For Ukraine; U.K. Government Approves Assange's Extradition To U.S.; Boris Johnson Meet Zelenskyy To Discuss Support For Ukraine; Putin Gives Combative Speech At Russian Economic Forum. Aired 3-4p ET
Aired June 17, 2022 - 15:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[15:00:10]
ALISON KOSIK, CNN BUSINESS HOST: Oh, a little bit of Friday relief across Wall Street after a bruising week. You're looking at the Dow, up a hundred
points. Those are the markets and these are the main events.
In a new survey, 76 percent of global CEOs say they either expect a recession or believe it's already here.
President Putin calls the sanctions against Russia crazy and reckless.
And Colombia prepares for an uncertain presidential election.
Live from New York, it's Friday, June 17th. I'm Alison Kosik, in for Richard Quest and this is QUEST MEANS BUSINESS.
Tonight, it is the end of a miserable week for markets as global inflation worries intensify. The major U.S. indices have seesawed throughout the day.
The Dow and the S&P 500, they are mostly flat, though it's nice to see those green arrows.
The NASDAQ is clawing back some of this week's losses, but it's got a lot to make up for. The S&P 500 is on track for one of its worst weeks since
2020. It is now down almost 23 percent from the beginning of the year.
Despite what's happening on Wall Street, the U.S. President says he is confident about America's economy. Joe Biden told The Associated Press that
the U.S. is in a stronger position than any other nation to overcome inflation.
Mr. Biden addressed rising fuel costs at an energy forum this morning. Listen.
(BEGIN VIDEO CLIP)
JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: In the United States, I'm using every lever available to me to bring down prices for the American
people, and our nations are working together to stabilize global energy markets, including coordinating the largest release from the global reserve
-- from global oil reserves in history.
(END VIDEO CLIP)
KOSIK: Okay, so that's the President's take, corporate America is less optimistic than the President. Six out of 10 CEOs told the Conference Board
they expect a recession in their region, 15 percent say a recession has already begun.
I want to bring in Catherine Rampell. She is live for us in New York.
Catherine, great to see you.
So President Biden saying a recession is not inevitable. He actually rejects the notion that COVID stimulus caused inflation. Is he right?
CATHERINE RAMPELL, CNN POLITICAL COMMENTATOR: Well, I don't think a recession on any particular timeframe is inevitable, per se. I mean, we
will have a business cycle turn at some point. That's why it's called a cycle, it goes up, it goes down.
I do think that recessionary risks have increased significantly in the past few months, and that's a function of the fact that inflation has come in
much hotter than expected. We've had a lot of unlucky shocks, things like a war, disrupting energy and food markets and avian flu, lockdowns in China,
et cetera. Those have all juiced inflation. And as a result, Central Banks, including the Federal Reserve will have to raise interest rates more to
deal with inflation, which raises the risk that they will overshoot and tip us into recession.
So it's gotten more likely, I think, but, you know, it could always turn around. I don't know how likely that is, but I worry that it can become
somewhat of a self-fulfilling prophecy if everybody assumes the recession is coming, and they pull back their spending, and they lay off their
workers, you get a recession.
So I think that the President is trying in those remarks to walk this fine line between acknowledging people's pain, not appearing tone deaf about the
real suffering that is going on, the real risks out there, but also giving a little bit of a pep talk so that our gloom doesn't become self-
fulfilling.
KOSIK: He is also rejecting the notion that COVID caused -- that the COVID stimulus caused inflation. Do you agree with that? Is that a right
assessment? I mean, couldn't it have contributed a little bit? Many analysts say yes.
RAMPELL: Yes, I think the debate right now is how much it contributed to current levels of inflation, not whether it did or did not. Period.
Obviously, inflation is a global problem at this point, and not all countries passed the American Rescue Plan, Biden's signature achievement
last year. That's because there are continued supply chain problems persisting around the world.
But up until recently, inflation was a bigger problem here in the United States, at least up until the war in Ukraine disrupted energy markets and
the European countries are much more affected by that. So, I think it's reasonable to say that probably this expansionary fiscal policy and
monetary policy for that matter did juice demand at a time when supply was really constrained and that probably contributed to inflation.
[15:05:10]
And in fact, if you look at, for example, a panel of economists surveyed by the University of Chicago's Business School, the IGM Panel, it's called,
when they were surveyed last fall about whether fiscal and monetary policy were contributing to inflation, they said yes. Most people said yes, to
some extent.
Again, it doesn't mean it's the primary driver, but it is almost certainly, if you look at the opinions of most economists, a possible factor, a likely
factor.
KOSIK: And "The Washington Post" reported this morning that administration officials were looking at sending out millions of rebate cards for
Americans to use towards gas. CNN is reporting, it is unlikely. Do you know where this stands? And do you think, it's a good idea.
RAMPELL: I hope this is not on the table. I just don't think this is going to be effective. I'm sure it'll be popular. But the problem right now is
that demand for gasoline exceeds the available supply.
If you give people more money to spend on gasoline, that's going to drive the mismatch between demand and supply to become even worse. So, I don't
think this will be helpful.
Again, part of the reason why we have these inflationary pressures right now is that demand is really strong, it is much stronger than supply is
able to accommodate. That's true for gasoline. That's true for most goods and services right now. That's why you see prices getting pushed upward.
Giving people more cash more broadly probably is going to make things a little bit worse. Now, maybe you could do something more targeted to very
low income people, give them some money, because they're suffering the most and you could hope that you calibrate it such that it won't make inflation
worse, but something relatively broad based particularly going to subsidize gasoline purchases is unlikely to be helpful and may even be harmful.
KOSIK: All right, Catherine Rampell, thanks so much for all your analysis.
RAMPELL: Thank you.
KOSIK: Think the Federal Reserve Chair is preparing to lay out his plan for the U.S. economy to Congress next week. In a written report, the Fed
Chair promised an unconditional commitment to taking down inflation.
The Fed is moving more aggressively as it stares down the highest inflation in 40 years. It instituted its highest rate rise since 1994. That happened
earlier this week.
JoAnne Feeney is a partner and portfolio manager at Advisors Capital Management, and she joins us live now from Ridgewood, New Jersey.
Great to see you and glad to have you with us.
JOANNE FEENEY, PARTNER AND PORTFOLIO MANAGER, ADVISORS CAPITAL MANAGEMENT: Hey, Alison. Good to be here with you.
KOSIK: All right. So we had the Fed making the 75-basis point move, another rate hike like it probably on the way for July. How concerned are
you that the Federal Reserve will overdo it, kind of overcorrect as it follows this inflation data, that's actually a lagging indicator because it
looks at the prior month's data.
FEENEY: Yes, it is a really hard challenge that the Fed has right now because as has been widely discussed, the core source of the inflation
problem is not enough stuff. Constraints on production that emerged during the pandemic, in its aftermath, the China lockdowns, as was mentioned
earlier, and obviously the war in Ukraine. So there's nothing the Fed can do about shortages. So it is trying to work on the demand side.
And the concern is that it raises rates so much in order to pull demand lower that demand falls to a point where firms end up saying, okay , we're
actually going to fire people and production falls, which is really counter to the overall goal, because we need supply to keep rising.
And so I think that's why the Biden administration is saying, hey, there's a path through this, where we get to keep the incentives in place for
supply to continue to rise and we have a very tight labor market in the U.S. Firms really still are trying to fill those seats.
So we do have visibility. The production is going to keep increasing, but we're starting to see signs of that cracking with weaker orders coming in
among the various surveys of manufacturers.
KOSIK: Do you think that the Federal Reserve kept rates too low for too long, and do you feel like the Fed is making -- is in the process of making
a mistake here?
FEENEY: Yes, you know, it's always hard -- I don't envy the people at the Fed right now because, you know, I think what they learned after the great
financial crisis was it took too long for employment to recover. It took 10 years, and I think they wanted to not make that same mistake, and so they
kept monetary policy very accommodative. And so we ended up with demand being very strong. Lots of people got hired, which is tremendous.
But now we're in this, you know, ongoing situation where demand is still too strong relative to supply. And now, they do have to try to change
interest rates in a way that will dissuade consumers from spending so much now and we're starting to see that.
People are recognizing that high car prices now mean, you know, wait a year. If you really don't need a car, just wait a year. If you don't need a
house right now, just wait a year.
Prices are likely to come down, so it is very challenging for the Fed at this point because they can only really operate on one side of this
problem.
[15:10:10]
KOSIK: So at least six Central Banks raised rates in tandem around the world. Stock valuations are tumbling, interest rates obviously are spiking.
What are the hidden outcomes here that maybe we're not thinking about? Is there a credit crisis waiting in the wings here? Is there a debt issue that
we need to know about?
FEENEY: Yes. You know, all of those things you mentioned, Alison, are I think some of the fears that the market is now embodying. These sharp sell
offs, we have seen stocks at good companies get thrown out and beaten up along with stocks of weaker companies.
And some of that is, you know, concerns about whether we'll face a credit crisis, where the liquidity will be really denied good companies. And so I
think a lot of that is happening. I think what investors need to recognize, though, is that, you know, if you're investing in equities, you should be
doing it for the longer term.
And so they need to look, you know, beyond the current crisis, to build a portfolio that's going to work for them, not just in the next six months,
where we may hit a recession six months, 12 months, but really, where can you go to get returns that are really attractive for the next couple of
years. And there's a lot of that still out there, especially as valuations have come down.
KOSIK: All right. Our thanks to JoAnne Feeney, partner and portfolio manager at Advisors Capital Management. Thanks so much for being with us.
FEENEY: You bet.
KOSIK: The Fed's rate hikes could worsen the cost of living crisis in the developing world. That's according to the First Deputy Managing Director of
the IMF, Gita Gopinath. She warned of a cocktail of risks that could lead to yet another downgrade of the global growth outlook in July.
She spoke with CNN's Becky Anderson earlier.
(BEGIN VIDEO CLIP)
GITA GOPINATH, FIRST DEPUTY MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: Increased by the Fed and by several other major Central Banks, when we're
seeing this global tightening of monetary policy is going to raise borrowing costs around the world, without a doubt. I mean, that is part of
what is needed to bring down inflation not just in the U.S., but globally, so that is going to be a consequence of it, which is rising borrowing
costs.
And if you are a country that imports commodities, which means that you are paying the higher commodity prices, and therefore having costly fiscal
issues to deal with. And if you're a country that's borrowed heavily in dollar terms in a foreign currency, then you are particularly vulnerable to
the current period of rising interest rates.
These are very challenging times, and we are getting hit by crisis on crisis, the pandemic which is not fully over, and we have now the war in
Ukraine. And importantly, for people around the world, this is a major cost of living crisis for them.
And especially in the developing world where food makes up close to 40 percent of their consumption basket, the rise in prices that we're seeing
is just being felt everywhere. Gas prices going up, energy prices going up is being felt by households all over the world.
So if you look at, for instance, global consumer sentiment, I mean, it is I would describe that as being in a depressed state. People are very worried
about what is to come, but also having to deal with these extremely high prices in a very uncertain environment.
(END VIDEO CLIP)
KOSIK: The E.U. Commission says it wants Ukraine to live the European Dream. We will discuss the long road to membership, still ahead.
(COMMERCIAL BREAK)
[15:16:17]
KOSIK: Ukraine is one step closer to joining the European Union. The European Commission is recommending the country for candidate status.
Now, it's up to the E.U.'s 27 member states to decide if they agree. The Commission also gave its blessing to Moldova another ex-Soviet nation.
Commission Chief Ursula von der Leyen announced the news wearing the colors of Ukraine's flag.
(BEGIN VIDEO CLIP)
URSULA VON DER LEYEN, EUROPEAN COMMISSION PRESIDENT: We all know that Ukrainians are ready to die for the European perspective. We want them to
live with us the European Dream.
(END VIDEO CLIP)
KOSIK: Nadia Bashir joins us now with more on this developing story. So Nadia, the head of the E.U. Commission saying she recommends Ukraine to be
formally considered as a candidate, and Ukraine's Defense Minister says NATO allies have told him that Ukraine is considered a quote "de facto"
member of NATO.
Is all these words or is there also symbolism here that has value because this is going to be a prolonged process?
NADA BASHIR, CNN REPORTER: Absolutely, this is a lengthy process. This is just the first step. We expect the European Council to meet next week where
European leaders will be able to vote on that decision. But of course, there is a pretty stringent criteria that Ukraine has to meet as well.
But as you said, there are some clear symbols and signals being sent by European leaders with the French President Emmanuel Macron, along with his
Italian and German counterparts visiting Ukraine, U.K. Prime Minister Boris Johnson, currently in Kyiv meeting with President Zelenskyy.
So there is clearly in terms of the optics, we are seeing European leaders bolstering their support on that front on the diplomatic front, indeed.
But you know, Ukraine has long called for this. This has been a key message from President Zelenskyy since the beginning of this conflict, calling for
those all-important security guarantees and assurances that E.U. membership offers.
He has often said that those on the frontline in Ukraine are not only fighting against the Russian forces for Ukraine, but for the security of
Europe as a whole. So this will come as very welcome news for officials in Ukraine and for the Ukrainian people.
But the question is, when will this happen? President Zelenskyy has called for this process to be fast tracked to help Ukraine counter the threat of
Russian aggression. But as we heard from the European Commission President Ursula von der Leyen earlier today, there is a pretty stringent criteria
that Ukraine has to meet. Take a listen.
(BEGIN VIDEO CLIP)
VON DER LEYEN: Yes, Ukraine deserves European perspective. Yes, Ukraine should be welcomed as a candidate country. This is on the understanding
that good work has been done, but important work also remains to be done. The entire process is merits based.
(END VIDEO CLIP)
BASHIR: The key areas that the European Union will be focusing on include a reforming Ukraine's economy. This will of course have to be integrated
into the E.U.'s single market. Ukraine will have to strengthen the rule of law in line with European law and also of course, tackling issues like
corruption.
But Ukraine and President Zelenskyy have expressed their willingness to work on these reforms, these improvements in order to reach that standard
that the E.U. will accept.
Of course, there are also questions around what this means for the future of the conflict in terms of Russia's actions and how this will influence
the decisions the Kremlin is taking in terms of its presence in Ukraine currently now.
We heard from a Kremlin spokesperson earlier today saying that this matter warrants increased attention by Moscow, but we also heard from President
Putin speaking earlier today at the St. Petersburg International Economic Forum and he said that Russia has nothing against Ukraine joining the
European Union.
[15:20:16]
He mentioned the prospect perhaps, Ukraine joining NATO saying this was a political military -- this was a political military organization, and
therefore that was seen as a threat to Moscow.
He has previously said that the expansion of NATO along Russia's borders would be seen as an existential threat and security threat to Russia, but
the fact that the European Union in his eyes is in economic association, it was not seen as a similar threat.
So, it will be interesting to see how Moscow reacts to this over the coming weeks -- Alison.
KOSIK: All right, Nadia Bashir, thanks so much for all of your reporting.
Ukraine still has a long way to go through this process, it can take years. The E.U. says Ukraine still need ambitious structural reforms. The European
Commission President says the country has met just 70 percent of the requirements to join the bloc.
Ursula von der Leyen underlined that Ukraine needs to address corruption and the influence of oligarchs. Transparency International says Ukraine was
the most corrupt country in Europe after Russia in 2021.
DTEK is Ukraine's biggest private energy company. Since the Russian invasion, it has been racing to reconnect households to the grid, even as
its plants come under attack. So far, power has been restored to over two million homes.
Joining me now is Maxim Timchenko, the CEO of DTEK. Thanks so much for joining us.
MAXIM TIMCHENKO, CEO, DTEK: Thank you, Alison. Thank you for taking us.
KOSIK: And I'm hoping that you just heard our report on the E.U. recommending Ukraine for E.U. candidate status. So as a leading CEO in the
country, I'm curious what did this mean to you and your business?
TIMCHENKO: I think it is an extremely important decision and making very significant step toward political integration of Ukraine into European
Union, but three months ago, we had such a huge step in energy integration. From 16th of March, Ukrainian electricity grid is connected to European and
it opens great prospects for Ukraine to develop our energy industry, but also for European countries.
I think that after 24th of February, geopolitical energy order changed dramatically. And now energy security of Europe, energy independence of
Europe is critically important for the future development of our continent, and Ukraine can play a very important role in this.
KOSIK: You mentioned that, you know, Ukraine has integrated its power grid with Europe, but I'm curious if there's any kind of frustration for you to
be up against still big players in the European market who are still paying Russia for energy.
TIMCHENKO: Of course, I think that, and I hope that Europe can learn all the lessons being so dependent on Russia. Forty five percent Russian gas in
energy mix of Europe, 45 percent Russian coal, 27 percent Russian oil, and now we all see consequences of such over dependence and what we are
offering as a country now is to be part of solution.
And what we offer him, the largest gas storage in Europe, the largest gas deposit in Europe. The enormous opportunities to develop solar and wind and
become the major supplier of green electricity to Europe and green being one of the major partner in developing green hydrogen. This is what Ukraine
can do for Europe and this is how Ukraine can play a role in future energy security landscape in Europe.
KOSIK: After three months of war, what's the condition of Ukraine's power, infrastructure, and electricity supply?
TIMCHENKO: Today, as the consequences of this war, we have drop of consumption by 35 percent. We have dramatic destruction of infrastructure
in warzone territories. But at the same time, we managed to keep our energy system stable.
As I already said, we manage to accelerate synchronization with the European grid from 16th of March and from that moment, we will work in
stable in stable position with the European grid. Moreover, we are offering electricity to start export to Europe, because we have already capacity. We
maintain stable operations of our coal mines and gas fields and we have over capacity and we are offering much cheaper electricity supplied to
European countries, helping them to stop consuming Russian energy.
KOSIK: What's been the financial toll that this war has had on your company on DTEK? What's the scale of financial loss that your company is
incurring?
[15:25:04]
TIMCHENKO: Unfortunately, we are suffering of this war from the first days, one of our power stations, we attacked first days and occupied on
fourth day of invasion. We had a lot of destruction of our power grids in three regions on the eastern border of Ukraine. It counts tens of billions
cost for us.
But we, as I said, maintain stable operation. We provide enough coal to the country, enough gas, and we are confident that despite of all of this
dramatic events happening in the eastern part of south part of Ukraine, we will keep working as it was for the last three months.
KOSIK: Well, we wish your company well and strength there, we know you're obviously providing a valuable service, Maxim Timchenko with DTEK, thanks
so much.
TIMCHENKO: Thank you very much.
KOSIK: The war in Ukraine, high inflation, and climate change are all raising fears about food insecurity in Africa, a continent where 80 percent
of all food has to be imported.
The head of a major Nigerian conglomerate says the solution to create Africa's own food value chain. Eleni Giokos spoke to him in today's
"Connecting Africa."
(BEGIN VIDEOTAPE)
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: We've spoken during the pandemic, and I know you were one of the voices, you know, pushing the
opportunities for Africa, because of so many vulnerabilities and inequalities came to the fore.
ABDUL SAMAD RABIU, CEO, BUA GROUP: So, now we're getting onto a path of recovering. We're feeling like we're kind of getting there and then boom,
geopolitical issues. What did you think when that happened?
You know, it was quite a shock. You know, because the world, a lot of issues, and for us, in Africa, this kind of issues, actually, Africa
suffers most in anything, you know, like this.
GIOKOS: Like inflation, food insecurity.
RABIU: The inflation and high price and food insecurity -- all of that.
GIOKOS: Importation of energy.
RABIU: Exactly. So for us, it is a big issue. And as I said, again, you know, I mean, with the world, really from the COVID-19, and just coming out
of it, and then this, so at the end of the day, it is a big issue.
GIOKOS: So what are you going to do to solve some of these issues because I know you're a problem solver, and you're across many industries?
RABIU: Part of the problem really, Eleni is the fact that Africa, we import most of what we consume, especially food. Africa imports almost 80
percent of what we consume, and some of these inputs are food items, you know.
Africa imported over 55 million tons of wheat, for example, last year. So we have seen a situation where the price of food, for example, got up from
say, average of $250.00 per ton to almost $600 per ton, meaning that it has doubled. And Africa, you know, relies heavily on Ukrainian and Russian
wheat. We import about 40 percent.
GIOKOS: So what does that do to your business then? How is your inputs, because now your inputs have increased domestically?
RABIU: Yes, it is an issue, you know, because the problem is one, we import this items, which means, you know, we have to source for the foreign
exchange, prices have doubled and then the purchasing power, because if we import and the price is double, what do you do? We have to increase our
prices. So, inflation, and a lot of the people cannot really afford that.
So, we are seeing a decrease in terms of production, you know, processing, and also consumption and that is a big issue. That is why I keep saying
that, you know, we have to look onwards. We have to really do as much as we can to add value to what we have, we will have to increase, you know
production for food security, for the food security of the continent.
(END VIDEOTAPE)
KOSIK: In a defiant speech, Vladimir Putin says Russia is overcoming Western sanctions. His address at an economic conference offers rare
insight into his thinking.
More on his comments after the break.
(COMMERCIAL BREAK)
[15:32:24]
KOSIK: Hello. I'm Alison Kosik. There's more QUEST MEANS BUSINESS in a moment when Vladimir Putin says the western blitzkrieg of economic
sanctions has failed to damage Russia. A report from St. Petersburg.
And Colombians are preparing to cast their vote in a pivotal election where inflation and the food crisis have become key issues.
Before that the news headlines this hour. U.K. has agreed to extradite Julian Assange to the U.S. after years of court battles. The WikiLeaks
founder faces espionage charges there for publishing thousands of classified documents and diplomatic cables in 2010. WikiLeaks called it a
dark day for press freedom and announced it plans to appeal.
The British prime minister has met with Ukraine's president during an unannounced trip to Kyiv. Boris Johnson and Volodymyr Zelenskyy spoke about
Ukraine's military needs as it tries to fend off Russia. Downing Street says Mr. Johnson offered a new training program that would help Ukrainian
troops change the equation of the war.
People in parts of Western Europe are dealing with dangerous heat. In the U.K., a level three heat health warning is in effect, as temperatures soar
above 34 degrees Celsius in some areas. It's also hotter than usual across France and Spain. The current heatwave comes on the heels of Europe's
hottest summer on record just last year.
Vladimir Putin says western efforts to crush the Russian economy have failed. The Russian president was speaking at the St. Petersburg
International Economic Forum. During his address Putin attack to the United States, its allies at what he called stupid sanctions.
(BEGIN VIDEO CLIP)
VLADIMIR PUTIN, PRESIDENT OF RUSSIA (through translator): The calculation was clear to crush the Russian economy with a swoop due to the destruction
of business chains, the force withdrawal of western companies from the Russian market to hit industry, finance and the standard of living of
people by freezing domestic assets. It did not work out, obviously --
(CROSSTALK)
KOSIK (voice over): Russia's economic forum is typically a showcase for foreign investors. This year, the event looked much different. It was
boycotted by Western firms. Some of the attendees reportedly there include Belarusian leader Lukashenko, pro-separatist Ukrainians, and Taliban
representatives.
Fred Pleitgen is in St. Petersburg where Vladimir Putin delivered his defiant remarks.
[15:35:04]
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Alison, I think what we heard and saw here today was a Russian president
who was extremely combative, extremely forced in his speech, and certainly if anybody would have thought that maybe Vladimir Putin was on the cusp of
possibly changing course in Ukraine, that certainly does not at all seem to be the case.
In fact, Vladimir Putin was saying that Russia will stay the course that will continue what it calls its special military operation, obviously, the
invasion of Ukraine until all of Russia's military objectives are met. It was quite interesting because he kept talking about the operation in Donbas
which is, of course, first and foremost, the east of that country, but it really is unclear where Vladimir Putin plans to stop.
Now, he also blamed a lot of the economic woes that have essentially sprung up since the special military operations started in Western nations, the
inflation, high gas prices and the like. You blame that on Western nations. First and foremost, here's what he had to say.
(BEGIN VIDEO CLIP)
PUTIN: Russia's actions in Donbas, to liberate Donbas have nothing to do with it. Today's price rises, problems with gasoline and inflation are a
result of systemic mistakes by the current U.S. administration and European bureaucracy. That's what the causes are. Only that. I will mention that
operation, yes, did play a role, but the root causes are in their erroneous economic policy.
(END VIDEO CLIP)
PLEITGEN: Now, of course, Alison, this speech took place at the St. Petersburg International Economic Forum. And so large parts of Vladimir
Putin's speech focused on Russia's economy and the future of Russia's economy. It's no secret of Vladimir Putin admitted this that these are very
difficult times for Russia's economy with those sanctions. He did, however, say that he believed that the sanctions were essentially economic
blitzkrieg by the west and that they had failed.
However, Russia's economy is certainly in need of reorientation he said. And he said that reorientation is going to take place towards the east,
more towards Asia and towards other countries. He essentially said that he believes that Russia is too big to isolate and he is going to bring Russia
on a new economic course whether or not that's going to work. It's obviously a completely different matter.
But he's certainly seemed as though from his speech today, he was very sure of the course that he's currently taking, Alison.
KOSIK: All right. Our thanks to Frederik Pleitgen for that.
Soaring energy costs at a currency crisis are creating a perfect economic storm in Turkey. Goldman Sachs says it now expects annual inflation there
to reach almost 80 percent before easing off.
Jomana Karadsheh is in Istanbul with more on how people's lives are being affected.
JOMANA KARADSHEH, CNN INTERNATIONAL CORRESPONDENT There is one thing that dominates conversations here and that is the state of the economy. While so
many countries around the world are facing rising inflation. Turkey is facing its worst inflation in more than 20 years. According to government
figures, inflation rate hit 73.5 percent in May. Gas, that is more than 70 percent. And many believe that in reality, it is much higher than that.
People are struggling to keep up with this continuously rising inflation rates. The cost of pretty much everything has gone up. Transport has gone
up by more than 107 percent in May compared to the previous year. Household goods, furniture more than 82 percent. But the one that has hit so many, so
hard is the cost of foods. Everyday staples that have gone up by more than 90 percent.
(BEGIN VIDEOTAPE)
KARADSHEH (voice over): Restaurant owner Baris (ph) says with prices going up several times a month they can't have fixed prices anymore. Costs are
going up, but they can't keep raising their prices he tells us. We used to see some customers four or five times a month. Now we see them once a month
if at all, he says.
It's an economic crisis as business owner Begoun (ph). We used to talk about people in Russia buying one tomato at a time. Now that's our
situation. We are in the same boat.
Restaurant worker Furhant (ph) says he's struggling to make ends meet and is drowning in debt. It's like we work for nothing. Our work goes down the
drain he tells us. Every day we sink lower and lower he says.
The war in Ukraine rising global energy prices in the local currency. The Turkish Lira, losing about half of its value over the past year have all
contributed to this situation. But many economists play much of this on President Erdogan unorthodox economic policies. Turkey has been facing
double digit inflation for years now. And many countries to fight inflation would raise the borrowing costs but not in Turkey.
KARADSHEH (on camera): The president is a staunch opponent of interest rates that he describes as an evil that makes the rich richer and the poor
poorer.
[15:40:07]
And he's recently doubled down on that and said that Turkey will continue to cut interest rates. He believes that a depreciated currency, lower
interest rates will boost production, jobs, exports and tourism. But experts have been questioning the president's plan and warning that it will
backfire and that it is the Turkish population that will continue to bear the brunt of this.
Jomana Karadsheh, CNN, Istanbul.
KOSIK: Coming up. Columbia's magical rural environment inspires efforts to conserve Andean wax palms.
KOSIK: Over the catchy tunes of the movie Encanto, you may have seen an animated version of tall palms and Colombia's colonial architecture.
Today's Call to Earth features the endangered wax palm and the people bringing conservation awareness as they tried to preserve Columbia's rural
ecosystems.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE (voice over): It's hard to believe this tranquil cloud forest in western Columbia was once under siege. Much of Colombia's
tropical forests served as a refuge to armed groups for decades. Now with some stability in the region, this forest has become more accessible over
the past 10 years, offering scientists a new perspective into the world's tallest palm.
UNIDENTIFIED FEMALE (voice over): Wax palms are incredible organisms because they can grow to be very tall, but they're not trees. So they don't
have wood in their stems.
UNIDENTIFIED MALE: These giant plants can grow to over 60 meters tall.
UNIDENTIFIED FEMALE: When we think of palms, I'm sure most people think of beaches and very warm conditions, wax palm is like cooler environments,
cloudforest on slopes and high elevation systems.
UNIDENTIFIED MALE: They have evolved on slopes across the Andes but nowhere as plentiful as here.
UNIDENTIFIED FEMALE: This is where you will find the largest populations that occur worldwide basically because they're endemic from the tropical
Andes so they don't grow anywhere else in the world
[15:45:09]
UNIDENTIFIED MALE: Part of a team of Colombian button is Maria Sanin (ph) and her colleagues discovered in 2018 that some wax palms in (INAUDIBLE)
had changed sex for the first time ever recorded. They suspect this rare phenomenon is a survival mechanism against deforestation another
predominant human activities in the area like raising cattle.
UNIDENTIFIED FEMALE: The main conservation problem for wax palms is that they don't have places to grow in like they need forests, they need forest
cover. The problem now is that many of these forests have been transformed or have been cut down and transformed into pastures. And this is what is
worrying us right now is that many of their populations are smaller and smaller.
While Sanin and her team are pushing for wax palm ecosystems to be protected. They're also helping local landowners take conservation into
their hands.
UNIDENTIFIED FEMALE: Many people have become aware of this problem and have adult individuals growing in their properties. So they're collecting the
fruits and germinating the fruits under shade, taking care of the juveniles while they're most vulnerable to herbivores and to sunlight, and then
bringing these palms to different systems where they can be protected.
UNIDENTIFIED MALE: Protecting them could offer new opportunities for sustainable tourism and helping make conservation a national priority Sanin
says
UNIDENTIFIED FEMALE (on camera): We need incentives for people to see this as an economic opportunity as well. Not just in Cocora because the palms of
Cocora are growing older and older and we will tend to die in this century. But I think the potential for this to grow is there but it hasn't been
developed yet.
UNIDENTIFIED MALE: Above all, Sanin hopes her fellow Colombia's will grow to love this national symbol as much as she does.
UNIDENTIFIED FEMALE: I think as Colombians, we grow hearing, we're overhearing sometimes that Colombia is a very biodiverse country. And I
think the wax palms generate this unique environment and landscape that could help us define what we are and what we have to offer. These enormous
wax palms that completely alter the slope silhouette is a fascinating view.
(END VIDEOTAPE)
KOSIK: Let us know what you're doing to answer the call with the #calltoEarth.
(COMMERCIAL BREAK)
[15:50:09]
KOSIK: The economy is top of the agenda as Colombians prepare to head to the polls for this weekend's run off presidential election. Two men with
two very different visions on how to revive Columbia's economy will go head to head on Sunday. Left-wing candidate Gustavo Petro says he'll renegotiate
the country's free trade deal with the U.S. to extend it beyond coal and oil. While populist Rodolfo Hernandez who's been compared to Donald Trump
is promising to use his business experience to run the country.
Journalist Stefano Pozzebon joins us from Bogota with the details. Great to see you. So this is an interesting election in the process here because
these two men have very interesting characteristics. Something that everybody's talking about especially since Rodolfo Hernandez came to the
forefront and thanks to TikTok. But there are serious issues with the economy in this country.
STEFANO POZZEBON, JOURNALIST: Yes, exactly. I think Colombia is a perfect case of the disparity between macro economics and everyday's economics and
everyday's finance. This is a country that for the last 20 years had seen some spectacular rates of growth, economic growth. I'm talking about in
terms of GDP and the expansion of the economy. Of course, we got out of a turbulent Civil War conflict with peace agreement of 2016. That brought a
lot of investment.
And on the face of it, on a, you know, on a -- on a superficial analysis, the Colombian economy is healthier than elsewhere in South America, for
example. But if you go deep, you understand that the rates of inequality are very, very high. And that the benefits of this rush to investments over
the last five years have not been equally shared with the population. And this is causing extreme economic trouble for the worse off. Take a listen.
(BEGIN VIDEO CLIP)
POZZEBON (voice over): Niober Siagama and his extended family leaving two rooms in a cheap hotel in Bogota. At nighttime 12 people squeezing two bunk
beds, and on the floor, sleeping wherever there is some space. It wasn't always like this. Last year, this group of indigenous people lived in a
house in another part of town. But in January, rent became too pricey. They had to leave.
Now they must pay for the rooms every night to have a roof over their heads and money is very tight. Everything got more expensive, says Siagama. Who
told us he sometimes skips his meal to let his two children eat a little more.
NIOBER SAGAMA, FATHER OF TWO: I know I can make it. I have faith in myself. And I know with my work I can get through this. But sometimes the system
plays against you.
POZZEBON: Their situation is not unique. Millions of Colombians are increasingly struggling to make ends meet and food insecurity is on the
rise. According to the World Food Programme, Colombia's food prices have increased the most across Latin America since the start of the year, in
part as a consequence of the war in Ukraine.
YURITH SUAREZ, BUTCHER: I'd say it started about five or six months ago that prices have really gone off.
POZZEBON: It sounds like a paradox after 10 years of solid economic growth. But three out of five Colombians responding to a late April poll said young
people will be worse off than their parents. The things are set to change.
After decades of the same economic recipe Colombians have voted for change. Today's (INAUDIBLE) have progressed to the second round of the presidential
election on Sunday, each with his own plan to fix the country's economy. But even within change throughout different trends, in which one of the two
will come up on top.
Left-wing candidate Gustavo Petro, he said his third attempt to win the presidency. Laying out his proposal in an interview with CNN. He sets his
eyes on household income.
GUSTAVO PETRO, PRESIDENTIAL CANDIDATE (through translator): There's a gap between how much the salaries grew little and how much food prices grew a
lot. And that has caused rising levels of hunger. And that's where you have the crisis.
POZZEBON: Petro plans a radical rethinking of Colombia's economy, doing away with exporting fossil fuels and focusing on food production supported
by public spending. That will include renegotiating a free trade agreement with the United States. His opponent Rodolfo Hernandez, instead is in favor
of free enterprise and lower taxes on basic goods to help everyday's Colombians. Running on a campaign against corruption he pledges to lead a
government of austerity.
[15:55:01]
RODOLFO HERNANDEZ, PRESIDENTIAL CANDIDATE (through translator): I'm going to rule by example. Let's start there. Taking away all the privileges of
the politicians that have no justification are no good to the common people.
POZZEBON: The two candidates are neck and neck. And Sianaga is still undecided. He hopes, however, that whoever prevails will be able to open a
new chapter for Colombia. What we have now he's unbearable he says,
(END VIDEOTAPE)
POZZEBON: He's perhaps, Alison, the perennial question on how to make the economy better for the for most people because Gustavo Petro wants to
create a progressive revolution here in Colombia. He has called on a support of economists such as Thomas Piketty, for example, to assist him in
spreading the goods. Spreading the benefits of these investment Russia while instead, Rodolfo Hernandez is of course a supporter of trickledown
economics and leaner state.
Whoever wins though, Colombia is set for a bumpy ride because it's the first time that an outsider from the traditional circles of power will
become the president of Colombia. And the markets are, by the way, taking notice of that with the credit swaps or for Colombian depth been
increasingly and steadily rising since the first round in May. So, there is a lot of focus, a lot of attention. This is a country that at least
economically has had a steady course over the last 20 to 30 years, very close associated with the United States. Things are going to change,
Alison.
KOSIK: All right. Stefano Pozzebon. It's going to be interesting to see what happens in this election. Thanks very much.
There are just moments left to trade on Wall Street. We'll have the final numbers at the closing bell right after this.
(COMMERCIAL BREAK)
KOSIK: There are just moments left to trade on Wall Street. The Dow has been sliding in the final hour. It fell below 30,000 on Thursday and it's
trading at its lowest level in over a year. You're seeing it trade below 30,000. There recession fears and the Feds rate hikes drove this week's
sell off. The S&P 500 falling into a bear market. It is set to close out its worst week since January.
The NASDAQ was already in bear market territory and is set to close this week down over a percent. More than that.
Let's look at the Dow components American Express and Boeing leading the gains. Tech stocks, Apple and Microsoft, they are recovering slightly as
well. Take a look at energy and consumer discretionary companies. They are in the red.
[16:00:05]
And that's QUEST MEANS BUSINESS. I'm Alison Kosik in New York. Feel free to follow me on Instagram and Twitter @alisonkosik. Closing bell, you see it
there ringing on Wall Street. "THE LEAD WITH JAKE TAPPER" starts right now. Have a great weekend.
END
