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Quest Means Business

Russia's Invasion Nears Dangerous Moment As Sham Referenda Results Roll In; EU Officials Warn Of Sabotage To Russian Gas Pipes; US Stocks Try To Snap Five-Day Losing Streak; U.K. Finance Minister Says He Is "Confident" Policies Will Work; World Bank Slashes Growth Forecast For China; World Of Wonder: Sweden; Dash To The Bell. Aired 3-4p ET

Aired September 27, 2022 - 15:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[15:00:09]

ELENI GIOKOS, CNN INTERNATIONAL HOST: Wall Street is flat today. The Dow clawing back losses and the NASDAQ has just snuck back into the green. The

Dow Jones as you can see, down two-tenths of a percent. Those are the markets and these are the main events.

Possible acts of sabotage. Officials try to find out what caused leaks in the Nord Stream pipelines from Russia.

A key US economist warns that a UK currency crisis could have global consequences.

And the scandal that has everyone talking about chess.

Live from Dubai, it is Tuesday, September 27th. I'm Eleni Giokos. I am in for Richard Quest and this is QUEST MEANS BUSINESS.

It's a very good evening. Russia's war in Ukraine may be nearing its most dangerous moment following the results of staged referendums in occupied

regions.

Russian state media reporting huge majorities in favor of joining Russia. The outcome was never in doubt with the votes effectively being carried out

at gunpoint.

This video allegedly shows occupying soldiers carrying ballot boxes directly to people's homes in Zaporizhzhia. The Kremlin will likely declare

the results as a reason to annex the four regions and escalate its war.

NATO is rejecting the votes. Its Chief, Jens Stoltenberg tweeted: "The referendums are a blatant violation of international law."

And here is the US Secretary of State, Antony Blinken.

(Begin VT)

ANTONY BLINKEN, US SECRETARY OF STATE: We, and many other countries have already been crystal clear. We will not, indeed, we will never recognize

the annexation of Ukrainian territory by Russia, and I've also been equally clear that Ukraine has the absolute right to defend itself throughout its

territory, including to take back the territory that has been illegally seized one way or another by Russia.

(END VIDEO CLIP)

GIOKOS: All right. Joining us now is Nick Paton Walsh in Kramatorsk in Eastern Ukraine.

Nick, what we've heard from Jens Stoltenberg, a blatant violation of international law. But we know that that is not going to stop Russia

embarking on these referendums. I mean, is it a matter of when and not if they're going to be claiming these territories?

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: No, it always has been. And it also seems to be honest, at this stage to be discussing

the concept of international law when Russia has barged its way in in an unprovoked invasion over the past six or seven months to be slightly out of

the picture.

I mean, yes, these are places which have been invaded and occupied, and then in which our men have gone around and asked local residents whether or

not they want to be part of Russia.

And while there may be a tiny number of them who perhaps do, the circumstances under which these referenda, so to speak, have been staged is

obviously far from democratic. It doesn't present anything like the mandate that we're going to see Russia claim it has in the days ahead.

These results, we're beginning to see the partial parts of initially, was always going to be in the high 90s in favor, that's just simply how

referenda function in Russian-held territories, frankly, in terms of 22 years of seeing the Putin regime run them.

And so I think it's very likely we'll see Russia take these results, and begin the well-choreographed process of formalizing what they think is

their control over these areas. We're already hearing some of the installed leaders by Moscow in Luhansk and other areas, saying they're on their way

to Moscow to begin that process from happening.

So, there's even suggestions indeed, from British Ministry of Defense that there may even be a speech by Vladimir Putin on Friday to Parliament, which

he may use to talk about or even accept the annexation of these territories.

So, that process is simply a matter of time in the days and possibly week ahead. What we don't know is quite how Russia will use this claim to these

territories being part of its territorial hole to alter its presence on the battlefield. Will it bring in parts of its arsenal that it hasn't used yet?

Will it possibly bring in the parts of its arsenal that the whole world would hope would never even been discussed, of being used and that's its

nuclear arsenal?

We know the United States has already said that it will use economic sanctions when that formalization of Russia's expanded territory happens.

So the stakes are going to rise day by day here.

Kyiv and Washington have said they simply aren't accepting any change in territorial status. Ukraine will continue to push forward on the

battlefield, that's happening here now and indeed the territory Russia is going to claim as its own is getting smaller day by day.

[15:05:11]

WALSH: But we're into a very perilous few days here because it's clear that Vladimir Putin's conventional army is faltering. This partial

mobilization isn't going to get it back on its feet again, fast enough to stop the sort of slow collapse of its hold on territory around here, and so

the question is, what can the Kremlin do to reverse their troubles here? And that's got everybody worried about whether this nuclear rhetoric is as

the Kremlin keep saying, not a bluff -- Eleni.

GIOKOS: And this is the thing, I mean, look, Antony Blinken even said, once Russia starts claiming Ukrainian territory as its own, how does that

change the calculus when it comes to the nuclear threat that Putin has very much said that if any Russian territory is attacked, that would create more

of a reason for him to think about using nuclear weapons. Is that the prognosis at this point?

WALSH: When Putin talked about the use of weapons of mass destruction, he refers to whether Russia was attacked or threatened by nuclear weapons by

NATO, which is nonsense, because NATO has never threatened in this conflict Russia with nuclear weapons, but he is always phrased in the recent

comments, the threat against Russia as being a nuclear one from NATO, that Russia would have to respond to.

Some of these officials have been quite direct about how they would simply use nuclear weapons to defend occupied areas here. We simply don't know

exactly when this crosses the line from things that sounds scary that Moscow wants to project strength with and things they're actually willing

to do.

There are a lot of risks for Russia doing this simply internally. They may find that the weapons they choose to use don't function the way they want,

malfunction, or their chain of command doesn't function. Antony Blinken was clear to suggest that in a recent interview.

So, that's not without risk for Russia, and then we also have the known risk, which is if nuclear weapons are used, we are certainly, it seems

going to see some sort of US or NATO response, it's likely to not be economic.

So huge risks for frankly, life on the planet, I hate to say it in the days or weeks ahead if Moscow chooses to make good on its suggestions about not

bluffing, but everyone hopes that isn't the case and we are simply just seeing an escalation in tone, not a change in what's happening on the

battlefield here -- Eleni.

GIOKOS: Yes, a stark warning. Nick Paton Walsh, thank you so much.

Now, Denmark's Defense Command has released a video of what it says a gas leaks on to Russian pipelines in the Baltic Sea. Sweden says powerful

blasts were detected in the area on Monday. The Nord Stream 1 and 2 pipelines sits at the center of the energy crisis between Russia and

Europe. Officials in the EU and Moscow say sabotage cannot be ruled out.

Here is Poland's Prime Minister.

(BEGIN VIDEO CLIP)

MATEUSZ MORAWIECKI, POLISH PRIME MINISTER (through translator): Today, we face an act of sabotage. We don't know yet all the details of what

happened, but we see clearly that this is an act of sabotage, an act which likely means a further step of escalation of the situation in Ukraine.

(END VIDEO CLIP)

GIOKOS: Right, so natural gas prices jumped on the back of this news of the damage. It is putting an end to a recent pullback over Europe filling

its storage tanks faster than expected and you can see that rise on the graph.

We've got Nic Robertson joining me now from London. This is all happening on the cusp of winter, let's be honest. The question first is how

detrimental are these leaks? And importantly, the blast that were felt, unprecedented and that is why sabotage is on the table.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, 2.3 on the Richter scale for the blast at 2:00 AM, Monday morning and 2.1 on the

Richter scale for the blast at 7:00 PM Monday evening, local time, of course, there just off the coast of Sweden.

In terms of what impact does this have on energy supplies, nothing in the short term. The Nord Stream 2 wasn't being used, Nord Stream 1 that the

Russians have throttled it back. Europeans weren't buying it.

But implicit in this, because let's face it, there are now three holes in these pipelines in a very small area that happened in a very short space of

time. And according to Nord Stream, a rupture of this kind is a one in a hundred-thousand-year event. You have three of them in a couple of hours,

in almost the same location. So yes, sabotage.

It obviously affects and concerns the energy market because this implies potential other -- hitting of other pipelines possibly. And Poland of

course, would feel very close to that because it was inaugurating a new pipeline today right through the same area in the Baltic Sea linking Poland

to Norway so that's a concern.

But as soon as you start talking about underwater cables, it's not just pipelines it's the fibers that bind the global Internet together. It is

subsea cabling of any description, it is now clearly, it appears on the table for some sort of attack.

I'm saying attack, the details aren't there. We don't know precisely what caused these holes yet. But the finger is very clearly being pointed

towards President Putin at the moment. And it was the Swedish Foreign Minister, who was asked the question, do you expect more of these types of

incidents? And in her answer, she points the finger at Putin.

(BEGIN VIDEO CLIP)

ANN LINDE, SWEDISH MINISTER OF FOREIGN AFFAIRS (through translator): We need to be prepared for it. Putin has shown that he is desperate right now

because Ukraine has shown with the support of the West, an incredible ability of endurance, and has shown that it isn't as easy as Putin thinks,

and therefore, we need to be prepared that he will act irrationally and cruelly.

(END VIDEO CLIP)

ROBERTSON: So it does seem that conclusion at least of some European leaders, as this really is an escalation of the tensions with the West and

the sabotage was perpetrated by the Kremlin.

GIOKOS: Nic Robertson, thank you so much. Good to see you.

Now, last year, Russia supplied Europe with 40 percent of its gas consumption. It is a different story now. Moscow will likely supply around

half that this year, and that is due to its own cuts to supply. Norway has taken the lead. It is on track to provide 25 percent of Europe's demands

and Norway boosted that position today switching on the Baltic pipe, which connects it to Denmark and Poland.

Daniel Yergin is the Vice Chairman of S&P Global. He is also the author of "The New Map: Energy, Climate, and the Clash of Nations." He joins me now

from Washington, DC.

Daniel, really good to see you.

I want you to give me a sense of what you -- you know, your initial response when you heard of these blasts that were felt, and we're seeing

leaks on these two pipelines. It seems that sabotage is a big probability here. And let's be honest, we've seen many of the pipelines being, you

know, cut, because of what the Kremlin has been calling maintenance issues. You know, it is really interesting to see it happening at this juncture.

DANIEL YERGIN, VICE CHAIRMAN OF S&P GLOBAL: Well, Eleni, I think this does reflect an escalation in the second front in the war in Ukraine and that's

an energy war in Europe, where Putin is clearly using energy, particularly natural gas to try and create economic chaos and undermine the coalition.

I mean, I guess there are really two -- obviously, this is not a coincidence, if you had three of these. Whether the Russians did it, and if

they did, then it's a message that your energy infrastructure is vulnerable. But it is also very bizarre if they did it, because if they

ever thought there would be a stabilization in the relationship, and they would resume the gas relationship with Europe, instead of saying shooting

themselves in their own foot, they shot themselves in their own pipeline.

But we still will take probably a few days to figure out who did this, but clearly, somebody did this.

GIOKOS: Look, we know that energy has been used as a tool, whether it's sanctions to hurt Russia, or whether it's Putin, as you've just said to

cause chaos in Europe through our energy security crisis. Who do you think is winning this fight?

YERGIN: Well, I think it's still -- we're going towards the finish line and the finish line is called winter. But the Europeans have moved fast to

actually fill their storage, which gives them -- gets them at least through this winter, and demand is down. So, if the weather is not -- it's not, if

it is not a tough winter, if it is not a really cold winter, I think Europe gets through this, but it gets through it with still pretty high prices.

Even today, the price of natural gas in Europe is equivalent to $400.00 a barrel oil, so it's still going to put a lot of pressure on consumers and a

lot of pressure on governments to provide subsidies and protect their consumers.

GIOKOS: Do you think Putin is going to succeed, as you said, to you know, sow chaos in Europe, eventually you'd see the rise of populist movements. I

guess, that is the big fear that could be spurred by this energy crisis. And it's important to take a step back and look at the macro picture here.

YERGIN: Well, it is I mean, well, we've just seen that in Italy and we know that the national rally of the right-wing party in France, increased

its seats tenfold in the French Assembly. So that is his strategy. He said it publicly, he said economic hardship will bring populist parties to power

and he looks to those parties to break the coalition.

So far, it hasn't worked and even the new putative Prime Minister of Italy has said that they'll -- that Italy will stick with the coalition, but he

is going to continue to put the pressure on because I think as Nic Robertson or one of your reporters said, he is desperate and we've moved

from stalemate to something that seems to be moving more towards some kind of climax.

[15:15:16]

GIOKOS: So, let's look at the supply demand scenarios that are playing out globally, and given that you've covered these kinds of crises before and

you frankly, predicted that Ukraine would sort of be the big turning point between Russia and the West.

How do you think this is going to end? Do you think that the West and Europe in particular have the tools at their disposal to try and avert a

full blown crisis?

YERGIN: Well, I think in terms of energy, they have scrambled. I think we've seen the Germans have been particularly flexible in realizing they

made a mistake by not necessarily being over dependent on Russian gas, but not building energy security in to it, and they're really pivoted, really

towards the United States and we see US LNG -- liquefied natural gas -- almost becoming sort of the bait for European energy security when it comes

to gas, replacing Russian gas.

So, I think that we've seen a surprisingly high degree of cooperation and an ability to change, but we do see that, you know, these governments are

under pressure, and it's going to cost them a lot of money to get through this.

But I think that they have demonstrated that they can be flexible, and I think the US and other suppliers have stepped up. But it is -- let's put --

unless you have an economic downturn, markets are going to be tight, not only for this winter, but next winter for Europe.

GIOKOS: Yes. Let's just look at the oil and gas price market right now. Are you predicting more volatility? I mean, I guess so much uncertainty

right now has been reflected in the numbers and many say, you know, the real demand supply dynamics are not sort of, you know, evident in the

numbers. And here is the thing, it is spurring inflation globally, the most vulnerable nations are coming under significant pressure.

YERGIN: Well, yes, I mean, while Europe is under pressure, sit means that for instance, LNG, liquefied natural gas, that was going to go to Asian

developing countries, emerging markets isn't going there and they are either burning more coal or they're having blackouts or brownouts.

So, I think that, you know, that the overall -- right now, commodity prices have come down somewhat and it is really in response to what the Central

Banks are doing, the expectation of recession. But one of the other things to note is that China has not been playing its normal role in energy

markets because of the COVID lockdowns. So that bounced back, and I'll just say, I mean, you said it, it's uncertain.

And coming December, when Europe puts its ban on the import of Russian crude oil, I think that's going to be a very decisive moment.

GIOKOS: Yes, and you rightly mentioned, if China really gets back on track, that is going to be very important, I think, in terms of what we see

on the demand scenario.

Daniel Yergin, thank you very much for joining us today. It was great to have you on the show.

All right, so as Europe faces an unprecedented energy crisis, Richard Quest will be covering it all from Poland. He will be hosting a special QUEST

MEANS BUSINESS live on Thursday from our sister network, TVN 24 in Warsaw, so tune in to QUEST MEANS BUSINESS tomorrow and that is Thursday.

All right, we are going to a very short break.

In a bit, as stocks on Wall Street, of course, taking a bit of a knock today. We'll be bringing you those numbers in a short while.

Stay with CNN.

(COMMERCIAL BREAK)

[15:21:19]

GIOKOS: All right. Stocks on Wall Street are struggling to snap a five-day losing streak. The Dow and the S&P both hit nearly two-year lows earlier.

As you can see the Dow is down around three-tenths of a percent. S&P also taking a bit of a knock there and so do -- the NASDAQ is actually up a

quarter of a percent. They have been since trying to close even on the day.

The pound in the meantime is setting after hitting a record low against the dollar on Monday. A short while ago, the Bank of England's Chief Economist

said the government's tax cuts will require "a significant policy response."

Now, the former US Treasury Secretary, Larry Summers is blasting the UK government for what he calls utterly irresponsible plans. He says London

has lost credibility in the markets and that its position as a financial center is at risk. He predicts the pound will fall below parity with the

dollar and the euro with unpredictable results.

A currency crisis in a reserve currency could well have global consequences. He said, "I am surprised that we have heard nothing from the

IMF."

Rahel Solomon joins me now.

Rahel, Larry Summers here talking contagion and it is perhaps a harbinger of what's to come. And he rightly says, you know, a crisis in a reserve

currency could have dire consequences globally.

RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Yes, and Eleni, look, you don't have to go far even beyond Larry Summers to find economists who are

vehemently opposed to this plan from the UK. I just want to read you one more comment to really drive home the point how anti this policy, Larry

Summers is. These comments going to Bloomberg TV.

Larry Summers saying: "I think Britain will be remembered for having pursued the worst economic -- macroeconomic policies of any major country

in a long time." And to add to that just yesterday, Mohamed El-Erian talking to our colleague, Becky Anderson saying, really head scratching,

why cut the income tax rate for the richest? What does that bring you in terms of growth? That was question number one.

Question number two was, is this the time to cut taxes in general? Shouldn't we sequence this more cautiously? So look, the criticisms about

this policy essentially, Eleni, you have a push and pull, right? You have these policies which seek to add money into the economy at the very same

time, the Central Bank is trying to pull money from the economy.

So, it would sort of be as if you're driving and your foot on the accelerator and the brake at the same time, and of course, happening at the

same time, you have these Central Banks around the world raising rates.

Here in the US, you had the Federal Reserve last week raising rates three- quarters of a percent, the Bank of England half a percent, Sweden a full percentage point, Norway half a percent and Switzerland, three quarters of

a percent.

So look, Eleni, you have these Central Banks racing to put a lid on inflation. Presumably many of whom were late, right? Certainly Larry

Summers would say the same and Mohamed El-Erian has been very vocal about that. But at the same time, you have interest rates going up, you have

borrowing costs going up.

So you have a problem, certainly very easy to find and critics would argue, now you have this UK policy, which only adds fuel to the fire.

GIOKOS: Yes, and it is such a good point, right? Because they're very -- it is counterintuitive in terms of what other, you know, big Central Banks

are up to. What is the prognosis in terms of it having a significant impact on for example, US markets, because we're talking about a currency

contagion here, which makes sense because the big worry is that the pound falls below the US dollar.

SOLOMON: Right, which is something that I don't think we've ever seen, right? So, on the one hand, you have to think about the impact to major US

corporations, which now all of a sudden their products become more expensive abroad. At the same time, you have to think about for folks in

the UK suddenly really essential items like food and energy, they become more expensive because commodities are traded in US dollars.

[15:25:13]

SOLOMON: And so you have all of these sort of headwinds being perhaps a consequence of policies like this. The only group perhaps that would

benefit from something like this is an American traveler who is in the UK.

I mean, I remember when I traveled abroad. I won't say how many years ago when I was in college, it certainly was not at parity, it was very

expensive to travel abroad. So, that is perhaps the only group that benefits from what we're seeing in the pound right now.

GIOKOS: Yes, and the exporter is right because they would become suddenly a lot more attractive.

Rahel Solomon, always good to see you. Thank you so very much.

So UK markets have lost $500 billion in value since Liz Truss took off. That's according to Bloomberg. Stocks and bonds have plunged since she took

office just three weeks ago. Markets are now treating UK bonds like Greek and Italian debt.

The opposition leader says her government has lost control of the UK economy. He warned of higher interest rates, higher inflation, and higher

borrowing.

Joining me now to unpack this, Mark Makepeace, CEO of Wilshire and former CEO of the FTSE Russell.

Really good to see you, $500 billion the UK markets have lost. That is absolutely phenomenal. I actually was reading, but you know, some people

are saying this kind of behavior of markets and currencies is what we see during an emerging market crisis. Do you think that BoE should be

intervening?

MARK MAKEPEACE, CEO, WILSHIRE: I think, they've started to intervene, haven't they? And at least they are now coordinated with the Chancellor.

They are talking together and they've started the process of talking to the market.

I think the market will expect more. I don't think they're doing enough. I think they've stopped the fall for now. But the Sterling looks weak and I

think it will continue to look weak until they can see what the plans are from the Chancellor, in terms of how he is going to pay for this in debt,

and also from the Bank of England, where they want the bank to take a stronger position in terms of rates to control inflation.

GIOKOS: I was looking at the credit default swaps, and we know that those have risen sharply, even though the probability and let's make that clear,

of default remains low. Isn't that quite significant in terms of the trajectory that you know, what the messaging is here like, "Hey, listen, we

are worried about what the state is going to look like, how we are rating your debt and whether you'll be able to pull yourself out of the hole that

you've dug yourself into?"

MAKEPEACE: Yes. That's absolutely right. I mean, the market is saying they are worried, and they are saying they want to see the plans for how the

government is going to deal with the debt situation.

It has taken on a lot of debt to try and stimulate growth and the market is a little bit cynical about that growth, whether that growth will be

achieved soon enough, and how the government is going to fund this debt now.

I mean, we're talking about a debt level, which is almost a hundred percent of GDP. I mean, so, it's very high levels.

There are some countries which are higher, but not many.

GIOKOS: Mark, do you think this is a good time to actually go in and buy UK stocks? Do you think that this has just been an aggressive knee-jerk

reaction that isn't warranted?

MAKEPEACE: I think the market has been surprised. You've got a new Prime Minister and a new Chancellor, and they've had a mini budget, and this has

been anything but mini. And I think they've surprised the market. Therefore you've seen this reaction from the market and markets do not like

surprises.

So, you've seen a strong reaction from the market and the market is now in a very clear --

GIOKOS: Only good surprises, Mark.

MAKEPEACE: . so that it wants to see the plans. Only good surprises. Yes. This wasn't a good surprise.

GIOKOS: Yes, so let me let me ask you this. Do you think I mean, can they backtrack on this? Is this done and dusted? I mean, you know, let's put it

simply. We're talking about energy subsidies, for example, we're talking about tax cuts. Can they say, well, listen, you guys are not taking this

very well, maybe we should backtrack. Can they? Would they?

MAKEPEACE: I think that's unlikely. I think that's unlikely. I think what's more likely is the Bank of England will have to respond, and I think

the markets are looking for a clear message from the Bank of England.

At the moment, they are hearing the right language, but I think the market will want to see action. They will want to see rates rise and rates rise

significantly.

[15:30:10]

GIOKOS: I don't want to be a central banker right now. It sounds like there's a lot of contagion, at least according to Larry Summers.

Mark, really good to see you, thanks so very much for joining me today. Much appreciated.

MAKEPEACE: Thank you.

GIOKOS: Moving on, scandal in the chess community, one of the best and wealthiest players claims he was beat by a cheater. More on the accusations

from that coming up next.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

(MUSIC PLAYING)

GIOKOS: Welcome back.

The World Bank has slashed its economic forecast with China. It says growth there will lag the rest of Asia for the first time in decades. The head of

the World Trade Organization warned that the latest forecast suggests that a global recession is on the way. Ngozi Okonjo-Iweala spoke to Richard

Quest at a forum in Geneva, let's take a listen.

(BEGIN VIDEO CLIP)

NGOZI OKONJO-IWEALA, DIRECTOR-GENERAL, WORLD TRADE ORGANIZATION: But now we have to weather what looks like an oncoming recession. Trade numbers, we

are right in the middle of our new forecast. But the indicators are not looking too good.

Global growth forecasts have been downgraded by both the World Bank and the IMF. So as we enter the recession, if we're --

(CROSSTALK)

RICHARD QUEST, CNN HOST: So you -- do you believe there will be a -- let's -- we will pass this down to a recession in the developed or a global

recession or both?

OKONJO-IWEALA: I think a global recession.

QUEST: Why?

OKONJO-IWEALA: That's what I think we are edging toward. But at the same time, we have to start thinking of the recovery. We have to restore growth,

it is too important, especially for foreign members at the WTO. We have to think of what we need to do.

[15:35:00]

OKONJO-IWEALA: What policies we need to pursue to restore growth.

QUEST: Do you agree with the increase in interest rates, the tightening of monetary policy taking place in the major developed economies?

OKONJO-IWEALA: It is very tough on economies in a way to answer this question.

QUEST: Why am I not surprised?

(LAUGHTER)

OKONJO-IWEALA: First of all, with the inflationary pressures we have in the world, in some emerging markets and developing countries, we're talking

double digit numbers. In some developed countries, it is high single digits.

So do what you do?

Central banks don't really have too much of a choice but to tighten and increase interest rates. But the repercussions on emerging markets and

developing countries is quite severe because they, too, are tightening and increasing interest rates.

But what happens in the developed countries affects their debt burdens. It affects what they have to pay to service debt. It affects flight capital,

the flight of capital from their economies back into the developed countries.

So it is pretty difficult to say. But right now I think there is no choice but for central banks to act, because inflation really hits at the poor

very badly.

(END VIDEO CLIP)

(SPORTS)

[15:40:00]

GIOKOS: That is it for QUEST MEANS BUSINESS. I will be back at the top of the hour as we make a dash for the closing bell. Up next, "QUEST'S WORLD OF

WONDER." Don't go away.

(MUSIC PLAYING)

(COMMERCIAL BREAK)

[15:45:00]

(MUSIC PLAYING)

(BEGIN VIDEOTAPE)

QUEST (voice-over): With Sweden's winters being brutal, here, they cherish the summer. It is like this every night in the summer. Because it is short

and beautiful, the Swedes take advantage.

And in Stockholm, that means getting out to the vast archipelago that stretches from the city. So every chance people get, they want to be on, in

or around water.

This is the way to sea.

Where are you?

Oh, there you are.

Captain Mathilda Wilhelmsson (ph) is my connection to Stockholm's summer playground.

Can I have your seat?

CAPTAIN MATHILDA WILHELMSSON (PH): Of course. That's why I'm standing here.

QUEST: (INAUDIBLE).

WILHELMSSON (PH): OK, thank you.

QUEST: Just in case.

WILHELMSSON (PH): Yes. You are like my watch guy. I like that. You should come here more often.

QUEST: If I'm the watch guy, then we are in trouble.

(MUSIC PLAYING)

QUEST: What is it about this you love?

WILHELMSSON (PH): It is because we have so much different environments. I mean, first of all, we have a lot of sea. And I'm born and raised there.

But I like the contrast between luxury, parties, dinners, friends, the pulse of the city. But if I want I don't need to go so far away out into

nature.

QUEST (voice-over): Captain Matilda is an adrenaline junkie. She is driving her luxury cruiser at slow speed but has an eye on the wild roller

coasters nearby.

WILHELMSSON (PH): That is the most funnest (sic) one actually because --

QUEST: Oh, no, no, no.

WILHELMSSON (PH): It feels like you are dying all the time. You're just turning around everywhere.

QUEST (voice-over): As glorious an evening as it was, here are two people at opposite ends of the summer adrenaline spectrum.

Captain Matilda, up for any life-threatening experience, and me, content remaining comfortably seated on the bridge of a boat.

It is literally just going around and around in circles.

She won, I lost.

It turns out that the captain's idea of a day out on the islands comes with full throttle wind in your hair at spine tingling speeds, exhilarating and

terrifying.

My heart racing trip brought me to this wonderful island lodge. Swedes love their summer homes out here. Some more luxurious than others.

UNIDENTIFIED MALE: Hey, guys.

Oh my goodness. (INAUDIBLE).

QUEST: I knew there would be herring.

UNIDENTIFIED MALE: It's a Swedish classic.

QUEST (voice-over): Here, whilst enjoying superb food, I learned to appreciate the nature of the islands.

When you look at all of that, what happens inside you when you see it?

WILHELMSSON (PH): I feel always calm and at home because this is how I have grown up.

QUEST: That calmness comes from where?

WILHELMSSON (PH): I think it is a combination between the sea and the nature of Sweden. Everything that you can see here around.

QUEST: You feel at home?

WILHELMSSON (PH): Yes, very much actually.

QUEST (voice-over): Back on land and in Stockholm, Matilda is balancing that calm with a roaring night on the town. This time of the year, there is

crayfish and plenty of revelers. Stockholm in the summer. And, of course, oh, yes, it wouldn't be Sweden if there wasn't ABBA.

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[15:50:00]

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QUEST (voice-over): Before I leave Stockholm, there is a show I need to see. I've been invited by Bjorn Ulvaeus to watch "Pippi in the Circus." It

is his latest offering based on Astrid Lindgren's beloved children's book series, "Pippi Longstocking."

Forty years may separate Bjorn from performing in front of packed remits with ABBA but he still enjoys making audiences sing and smile.

BJORN ULVAEUS, ABBA: I look around and I see those smiling faces and I see them attentive, looking at something that I have been co-creating. And it

is such a beautiful feeling, you cannot imagine.

QUEST: It is the ability to entertain.

ULVAEUS: It is and the aspiration to move people, to make people feel something.

QUEST (voice-over): Like many of the projects with which he is involved, his constant output appears to be an extension of that Swedish work ethic,

trying to create something good for the good of all.

Let's look at ABBA. The way it was put together, the way it was, done the way you broke up, the way you all still became friends, the way you then

got back together, it all feels very Swedish.

ULVAEUS: Now that you mention it, yes. It does seem Swedish. I mean, equality between men and women and the way we compromised, the way we came

to decisions, all very Swedish or Scandinavian.

QUEST: Right, consensus --

(CROSSTALK)

QUEST: -- reasonable, compromise.

ULVAEUS: Yes, absolutely. They are in the Swedish DNA.

QUEST (voice-over): If Pippi's show was a gift to Sweden, his recent ventures have been much more high-wire.

Last year's "Voyage" album, and the accompanying show, a completely digital experiment performed not by the band but by avatar likenesses. Doing this

put the band's musical reputation squarely on the line.

QUEST: You don't just wake up one Tuesday morning in October and think, you know, I think we're going to get back together again. Or maybe you do.

ULVAEUS: It wasn't like that. We asked the ladies, would they be up to just trying and seeing whether we could come into the studio and sing

again?

We started singing and it was ABBA.

QUEST: It was risky.

ULVAEUS: Risky --

QUEST: Reputation.

ULVAEUS: -- in a way. We might have really something that people thought, well, they shouldn't have done this.

QUEST: Why did you do it?

You didn't need the money.

ULVAEUS: But it was a creative process, we had fun. We thought it was great. And we were proud of it and that is the way we had always worked.

QUEST (voice-over): There it is again, that humble commitment to the collective good. And having the time of your life while you do it.

QUEST: Now there is a gramophone over there.

Can I put a record on?

ULVAEUS: Yes, sure.

QUEST (voice-over): If ABBA has taught me anything, when you get the chance, you take it.

I have to say, this is quite a moment to actually be about to play, for me, it's my favorite.

With you.

ULVAEUS: Let's see what your favorite is, how exciting.

Well, I understand this is the favorite with most people I think.

QUEST: Is it?

ULVAEUS: Yes, it is.

(CROSSTALK)

[15:55:00]

QUEST (voice-over): This is every staff party, every bar mitzvah, every wedding.

ULVAEUS: Lots of people have memories with this one I suppose. First kiss, first time something.

QUEST: Your knees going, your arthritis is flaring up.

ULVAEUS: So many times now.

QUEST: You're in the mood for a dance.

ULVAEUS: Ah, I don't know about that.

QUEST: The longer I've been here, the more I realize that Sweden, Stockholm and ABBA were very much born on the same thing. They have word

for it, it means balanced. Reasonable if you will.

Well, I think the word that best describes Stockholm is ABBA, optimistic, enthusiastic, makes you feel good, have a good time. You will want to come

here and experience this ABBA for yourself. Stockholm, without doubt, part of our world of wonder.

(END VIDEOTAPE)

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GIOKOS: Hello, I'm Eleni Giokos, it is the dash to the closing bell. We are just two minutes away. U.S. stocks have given up today's gains and are

set to close lower as you can see. The Dow Jones is down a half percent, nearly a two-year low, falling deeper into bear market territory.

It was a volatile day for all the major indices which are now also coming under pressure as you can see. S&P also taking a knock, the Nasdaq is up a

quarter of a percent. Another day of board losses for the Dow components as well.

Only a few winners, Apple and Home Depot. McDonald's is on the bottom. Analysts warn the strong U.S. dollar threatens its sales overseas and, of

course, Disney is down over 2 percent as well. Intel is now off nearly 50 percent on the year.

That is your dash to the bell, I'm Eleni Giokos. The closing bell is ringing right now on Wall Street. "THE LEAD WITH JAKE TAPPER" starts now,

take care.

END