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Quest Means Business

Dow Jumps 700 Points After Closing September In Bear Market; Reports: Musk Changes Mind, Plans To Close Twitter Deal; Upper House Of Russian Parliament Approves Annexation; Saudi Aramco Chief Warning On Global Oil Capacity; Bridgewater's Ray Dalio Steps Down; Dash To The Bell. Aired 3-4p ET

Aired October 04, 2022 - 15:00   ET

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

[15:00:26]

ALISON KOSIK, CNN BUSINESS HOST: Wall Street surges for a second day, strong green arrows across the board. Those are the markets and these are

the main events: A surprise twist in the Twitter saga. Elon Musk now reportedly wants to go forward with the deal.

Ninety one percent of US CEOs expect a recession in the next 12 months.

And infighting within Britain's ruling Conservative Party touches new heights.

Live from the New York Stock Exchange, it is Tuesday, October 4th. I'm Alison Kosik, in for Richard Quest, and this is QUEST MEANS BUSINESS.

Tonight, US stocks are roaring back from their lows of the year. The Dow is up more than 700 points at the moment building on Monday's sharp games. It

all comes after Wall Street finished September in a bear market.

The broader indices are having an even better day. The S&P 500 is up 2.9 percent, on track for its best two day gain in two years, and the tech

heavy NASDAQ is up almost three percent.

More on the markets in just a bit, but first, a shocking reversal. There are reports Elon Musk now plans to proceed with his Twitter takeover. This

comes after a spell of buyer's remorse. Musk tried to get out of the deal he struck in April claiming the platform was infested by bots. Twitter took

him to Court to force him to go through with it.

Shares of the social media giant bounced on today's news, but shortly after the stock was halted. Matt Egan is in New York with the latest on this

story. We have seen shares for hours now halted. This, you know, feels like it happened really fast, Matt, considering the trial Musk was going to be

involved in, that was happening this month. He was supposed to be deposed this week. How did all this come about?

MATT EGAN, CNN REPORTER: Yes, Alison. This really is quite the twist in this corporate drama and only Elon Musk could deliver this latest surprise.

We do see that Twitter shares are still halted, up around 13 percent. We're waiting for some sort of official confirmation from Elon Musk or from

Twitter. Now, remember this battle was actually scheduled to go to trial in just two weeks and I think what is important here is to remember that Elon

Musk really faced an uphill battle in Court.

He was seen as the heavy underdog in his efforts to try to get out of this Twitter deal. I mean, he had a signed contract. He was trying to walk away

because of concerns about bots. At least, that's what he said his concern was, but you know, you can't just rip up a contract.

And so who knows? Maybe Elon Musk decided that he saw the writing on the wall, rather than lose big in Court, he decided to just go ahead and end

this on his own terms. I think, what is interesting, Alison, is that according to reports, he is going to go ahead and try to finalize this deal

at the originally proposed $54.20.

Now that deal was viewed by many analysts at the time, three months ago, as rich and I think it only looks richer now given the fact that markets have

come down pretty significantly. Tech stock valuations have gone down. So, it's a little bit puzzling that he didn't try to negotiate for a lower

price here -- Alison.

KOSIK: Yes, I noticed that as well with the share price. I do want to ask you, because this is on a lot of people's minds that if he does wind up

taking over Twitter, what does this mean about a former President Donald Trump? Will he get his account back? We did see Elon Musk talk about this

in recent times.

EGAN: Yes, that's right, Alison. I mean, if this gets done, and it could get done very quickly, we could have a situation where the world's richest

person owns one of the most important social media platforms and that does raise all of these questions about misinformation and freedom of speech and

really, democracy broadly.

And one of those big questions does pertain to the former President Donald Trump, who was banned from Twitter and Elon Musk has been pretty clear on

this. He said that he thought it was a mistake and that he is in favor of former President Trump coming back to Twitter and that is something that

maybe we wouldn't see if Twitter was still a publicly traded company, maybe they would decide that they don't want to deal with the headaches of that.

But Elon Musk has a different approach when it comes to freedom of speech, he seems to want to remove some of these guardrails that social media

companies have put up and so, yes, that could mean that former President Trump would be able if he wanted to go back on Twitter soon.

[15:05:10]

KOSIK: And this deal with Elon Musk and Twitter, I'm talking about, could close as soon as Friday-Monday?

EGAN: Well, what you have to remember is that regulators have already signed off on this and shareholders have signed up. This was the last

remaining obstacle, albeit it was a big one. But if Twitter takes this apparent offer from Elon Musk at face value, then they could try to move to

get -- you know, end their lawsuit and say they have this new agreement.

And, you know, if I were Twitter, I would want to move as fast as I could, because you never know. You don't want Elon Musk to change his mind again.

KOSIK: I hear you. All right, Matt Egan. Thanks so much.

EGAN: Thank you.

KOSIK: Investors around the world showed a little more optimism on Tuesday. The major indices in Germany, France and Japan all finished up

almost three percent or more. Hong Kong and Shanghai closed slightly lower.

A new CEO survey painting a more ominous picture. The consulting firm, KPMG asking business leaders about their outlook. In the US, 91 percent said

they are expecting a recession in the next year. Only a third of them think it will be mild and short. Half of them are considering job cuts in

response.

I want to bring in Marc Stewart. He joins us now.

Great to have you with us.

MARC STEWART, CNN CORRESPONDENT: Good to see you, Alison.

KOSIK: First time to have you on the show, at least with me. I'm excited to talk with you.

STEWART: It's great to be with you.

KOSIK: Before we get to this CEO survey though, I want to talk to you about the markets because this is -- two days seeing the Dow up more than a

thousand points. Is this the bottom? Have we seen the bottom and that's it?

STEWART: Sure. Well, I think a lot of people are hoping that things will rise and get back to where they were before we saw this dip.

Sometimes we see one single moment that can move the markets, but I think over the last 48 hours, there have been many different moments. We saw some

of the concerns about Credit Suisse and the strength of its health and the risk subside. We have seen Micron announced that it is going to invest in

chipmaking in New York State. And then there is some data about manufacturing, which suggests maybe the Fed doesn't need to be as

aggressive at interest rates.

All of those reasons combined may have given the market a lift that so many traders have just been waiting for.

KOSIK: Okay, to that CEO survey. Not a huge surprise that the thinking is there won't be a soft landing or an avoidance of a recession. What can we

take away from this the CEO survey?

STEWART: Well, as you know, from talking to CEOs, they like a roadmap for the future. They want things to be laid out, but there are a lot of

obstacles right now.

The war in Ukraine is impacting energy prices. That impacts fuel prices and moving goods from point A to point B and makes things more expensive. We've

seen Central Banks from around the world raise interest rates, that makes business more expensive. And then we have COVID concerns and supply chain

concerns.

For all of those reasons, it is hard for CEOs to feel good about the future. Those are all signs, all indicators of a possible global recession,

or at least in the United States. So, that's why that number is so high, but it's something as you know, has been talked about now, for weeks, if

not months.

KOSIK: It has been, and you know, this survey looked at big businesses, but small businesses aren't immune either. Right?

STEWART: This is across the board. In fact, there is a recent report from Marcum LLP and Hofstra University and it showed that medium-sized companies

also share those concerns. And that's important because medium and especially small businesses, they are really the engine of the American

economy. They don't have necessarily the backing that a big box retailer would have. So that is why that fear is there, perhaps even more intense.

KOSIK: Unfortunately, it becomes a self-fulfilling prophecy in many situations.

STEWART: Right. Right.

KOSIK: All right, Marc Stewart, thanks so much for coming on the show.

STEWART: Good to see you.

KOSIK: Good to see you as well.

STEWART: Thanks.

KOSIK: Australia's Central Bank raised interest rates by less than expected. That is fueling optimism that other Central Banks will also rein

in the pace of rate rises.

Still, Mary Daly, the President of the San Francisco Fed says major risks remain.

CNN's Poppy Harlow spoke to her earlier. She asked her if she is concerned that raising rates too quickly would tip the economy into recession.

(BEGIN VIDEO CLIP)

MARY DALY, PRESIDENT, SAN FRANCISCO FEDERAL RESERVE: There is criticism coming to the Fed from both sides. So on one side, they are saying we're

not raising quickly enough because inflation will seep into the psychology. On the other side, people are saying maybe we're raising too fast. We don't

want to throw millions of Americans out of work.

I want to say this to all your listeners. We have a dual mandate that Congress gave us of full employment and price stability. We are clearly

meeting our full employment goal. We have an historically low unemployment rate. Anyone who wants a job can get several of them. But people only have

24 hours a day to work and seven days a week to do it in and what people are really struggling with is, even with that work, even when it is so-

called a great time for workers, they are losing value every time they go to the store. Their purchasing power is falling.

Some little known statistic that I think is really worth bringing up, real wages adjusted for inflation, average worker in America has lost than nine

percent over the course of the last two years.

POPPY HARLOW, CNN ANCHOR: Yes, that's right.

DALY: That is not a good time to be a worker. Right now, things are out of balance and we are committed to bringing them back in balance.

[15:10:12]

HARLOW: You gave what was a reassuring speech, I thought last week in Boise, Idaho explaining why you think this isn't the 70s, why it is not

going to happen and be as painful. What though is, in your mind, the biggest outlying risk to the US economy right now, that's going to hurt

people at home, hurt families that we're not talking about enough?

DALY: I think the real thing that is true right now is there is a lot of uncertainty. There is the war in Ukraine, which continues to rage on and

that -- and look at the energy supplies, look at Europe. You know, they have a hard winter, a cold winter, they're already constrained in energy.

That would push up the global price of energy.

We have China that is still struggling through lockdowns, because they haven't beaten back COVID fully. So, these things are all risks to the

global economy, plus Central Banks across the world are tightening simultaneously to bring back down inflation.

So I think the real risk that all of us are grappling with is how do we work in this global situation while we need to work on getting domestic

inflation down, and the commitment that we have is to do our very best.

We have a narrow path for a softer landing, but the path is not closed, and we are committed to trying our best to achieve it.

(END VIDEO CLIP)

KOSIK: Sonia Meskin is head of US Macro at BNY Mellon Investment Management and she joins us now.

Great to have you on the show.

SONIA MESKIN, HEAD OF US MACRO, BNY MELLON: Thank you so much for having me.

KOSIK: So I have to ask you about the amazing show that the markets have the past couple of days. The Dow up almost -- over a thousand points. Is

this the end? Is this the bottom? Or is this just sort of one of those bear market bounces?

MESKIN: We wish. You know, I think markets have experienced the relief rally. And the reason being is part of course is short covering. But

partly, the data has been quite encouraging in the last couple of days.

The reason ironically, that it has been encouraging is actually it has been a bit weaker than in the past, say a couple of months and that means that

the Fed might indeed scale back the pace of hiking. We don't believe so, but I think that's what the markets are rallying off of.

KOSIK: So you don't think that the Fed, let us say, the manufacturing data, for instance, showing it is slowing a little more? Do you think that

inflation has peaked?

MESKIN: Well, I think that the question really is how long does the inflation stay strong? And I think that the manufacturing sector, for

example, while being hugely important, is not the biggest proportion of the US economy. We did see some slowing in manufacturing prices. We also saw

some slowing in the labor component of the ISM numbers, but what this really means is that while that is happening in manufacturing, it has

strong exposure to the stronger dollar, which is what it is suffering from, but the US domestic economy is potentially also hugely exposed to services,

which are not slowing just yet.

KOSIK: You know, this market bounce that we are seeing maybe attributed to the weaker data that we've seen here in the US; also, as I said, the

Reserve Bank of Australia didn't raise rates as much. So, there maybe this hope in the market, that the Fed may pause. But you don't think the Fed

will pause as you said.

MESKIN: I don't.

KOSIK: Do you think they are making a mistake by not pausing?

MESKIN: Well, the Fed is in a very difficult position, because they have a still strong labor market. We had the Jolts data today, and that we saw

the job openings are declining, but still very marginally, job openings are still very high relative to the number of workers that are looking for jobs

out there.

So in a sense, the Fed has to continue raising rates until inflation meaningfully slows, and that depends on wage pressures and that depends on

the activity in the services sector.

KOSIK: How long of sort of showing does the economy have to exhibit to the Fed so the Fed does pull back a little bit on its aggressive rate

hiking policy?

MESKIN: That is a really, really big question and while I wouldn't throw out an exact number, I would say much more than we're seeing today, which

is why again, I think today, what we're witnessing is a brief relief rally.

We're going to have the job numbers again this Friday for the previous month, for the month of September, and it's probably going to be pretty

strong.

KOSIK: You know, the big worry here is that the Fed is looking at data that is in the rears. It is already behind us and that that it is basing

its rate hiking strategy on. How concerned are you that the Fed is going to overcorrect here and it is going to be too late and roll things the other

way?

MESKIN: The potential for error here is very high and the Fed knows that, and they have in fact, acknowledged that in some of their -- maybe not

explicitly, but implicitly, in some of their pronouncements. They are saying that we are going to suffer some pain as an economy as a result of

them raising rates to bring down inflation.

KOSIK: Yes, but at the same time, I mean, can the Fed just go ahead and just, you know, reverse course immediately or does it have to sort of build

up to that? You know, does it go from a 75-basis-point hike to cutting? Is that how we envision it could happen?

MESKIN: Well, anything could happen, but I think the chances of that happening are not particularly high.

[15:15:02]

I don't think the data in the last couple of days changes much for 2022 for the Federal Reserve. Maybe to some extent, if this sustains for 2023. If

job openings continue to come down gradually, if price pressures slow gradually, the Fed will be very happy. And yes, at that point, it could

relent.

The chances of that happening without breaking the labor market are not all that high.

KOSIK: What should investors be doing right now? We were seeing a huge market rally for two days, but you're guessing this isn't going to last

forever? How do you play this kind of market?

MESKIN: I think when you look for value, both across equities and high rated debt that is really the way to go now. I would be very cautious. I

wouldn't be making big directional macro bets. But there's still some, you know, active managers can still find some very good deals out there.

KOSIK: Okay. All right. Sonia, thanks so much for your time.

MESKIN: Thank you for having me.

KOSIK: Trouble for Russia. Vladimir Putin is trying to annex Ukrainian territories that are outside his control.

Next, a live report from Ukraine about the shifting battlefield.

(COMMERCIAL BREAK)

KOSIK: Russian President Vladimir Putin is poised to sign legislation formalizing the annexation of territory in Ukraine in flagrant violation of

international law, but Moscow still doesn't have full control of the four regions, a fact pointed out by a Russian lawmaker while the Upper House was

rubber stamping the bills. Even the Kremlin admits it has not established borders for the so-called incorporated areas.

Meanwhile, Ukraine's military continues to reclaim more land in the south and east. Today, Ukrainian forces pushed into the Luhansk region, one of

the areas now claimed by Russia.

Nick Paton Walsh is in Ukraine for us.

Nick, great to see you. So, Putin is making all of these moves in recent days, but the reality is Ukraine continues to keep their momentum.

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, look. I mean, these moves in Moscow are all on paper. They have no real relation to

the reality on the ground in Ukraine and so while I think Moscow are keen to have repeated internationally this narrative of them formalizing their

annexation, simply isn't happening.

Their control of the areas they now claim incorrectly are actually Russia. Well, they are being increasingly controlled by Ukrainian forces and the

scale of the changes even admitted to by Russia's own military in the last 24 hours, their map of the areas which they show at a daily press

conference showing the areas on the western side of the Dnipro River in the Kherson area near where I'm standing in the South.

[15:20:10]

Well, that showed a significant chunk of it going back to Ukrainian control. Now, to tell you how incredibly rare it is for people to even

deliver bad news in these Russian Ministry of Defense press conferences where their map is suddenly saying that maybe a quarter or a third of that

territory has been taken back by Ukraine in just a day.

And so there has been a lot of focus on the east, certainly where we worked the weekend to see how Ukrainian pressure caused the Russian retreat from

Lyman, a strategic hub for the Russian occupation of Donetsk and Luhansk and that is causing knock on effects towards Russia's position on its own

border.

But here in the south, which many have argued is a more commercially important area for Russia to control, the access to the sea, they are

losing at a very fast rate and many analysts have pointed out how isolated a lot of the forces Russia is trying to maintain on the western side, but

that Dnipro River are, they are cut off by that river from the rest of Russian forces and Russia by land itself.

And it appears that Ukraine has successfully waited until a moment where they can most successfully apply pressure on those forces and the results

appear today to be if this is indeed correct, and both Russia and Ukraine appear to agree that a bridge has fallen in a significant part of that area

has fallen, too, to Ukraine, and that is extraordinary, and would essentially mark the third part of the frontline here wherein just a month,

we are seeing Russia's positions begin to collapse.

Important not to get too carried away with this, but it is still extraordinary to see these military changes happen in such a small period

of time.

KOSIK: Nick, Russia announced today that Ukrainians in the four illegally annexed regions now have one month to change their citizenship. Talk us

through why this deadline and what happens to those who don't change their citizenship?

WALSH: I think it is t's important to phrase things that Russia has been saying about its invasion of Ukraine with a dose of reality. It likes to

give out the signals saying yes, we have annex parts of Ukraine. Yes, within a month, you have to declare your Russian citizenship, but at the

same time, as it is making these processes, it is losing control of parts of those areas. And so yes, I'm sure there will be pressure upon those

living in occupied areas who don't want to be closer to Russia in their lives, to perhaps get different documentation.

But the greater pressure in all of this is the changing hands of territory in these areas. That is what's dominating people's lives in the areas where

we have been that have recently been liberated and that is certainly going to be dominating the lives of people who are living in areas that are still

controlled by Russia and Ukraine.

This is a consistent concern of individuals as to when do we find people controlling our territory change yet again, and particularly for those who

want Ukraine to regain sovereignty in its own parts of the country. They may even be in favor of that.

So, it is interesting to continually hear these messages from Russia about citizenship, about formal annexation while we are actually seeing the

opposite occurring in reality.

It just speaks to the paradoxical world Moscow is trying to conjure where it is able to speak of something that doesn't actually exist consistently,

and the more they talk about it, the more it doesn't become reality, it is startling.

KOSIK: All right, Nick Paton Walsh, thanks for all of that great context.

The British Home Secretary is accusing fellow Tories of staging a coup. Suella Braverman called their lack of support for the Prime Minister and

her fiscal plan unprofessional. She blamed them for yesterday's U-turn on cutting the top income tax rate.

Party tensions are now heating up over whether welfare benefits should keep up with inflation and confusion over when the government should release its

plan to cut debt.

Bianca Nobilo is in Birmingham, England and joins us live.

Bianca, there is so much here to talk about not to mention the tremendous pressure that is on Liz Truss at the moment as the Tory Party is in such

disarray, and then we've got the Home Secretary talking about a coup within the party.

Talk us through this this coup first of all. What's going on there?

BIANCA NOBILO, CNN INTERNATIONAL CORRESPONDENT: Well, first of all, I should underline how unusual this is for a party conference. Generally,

you'd expect the tone to be celebratory. This is when the party faithful come together, people who genuinely agree and they rally behind the Prime

Minister. They think about how to win the next election and they focus on usually what unites them more than what divides them.

But the theme so far of this party conference has been all about divisions, fractious difficulties within the party. That coup that the Home Secretary

was referring to is the fact that the Prime Minister and her Chancellor were pressured into making this U-turn in this radical economic policy that

they had to cut the top rate of tax for the wealthiest earners in the United Kingdom.

[15:20:03]

Now, the Home Secretary is no stranger to a punchy turn of phrase, but even hearing the notion that there would be a coup within the Prime Minister's

own party at Party Conference is borderline unprecedented. This is highly unusual.

Members of the Prime Minister's own Cabinet have come out against her, against her policies, as have delegates here that I've been speaking to and

the Prime Minister took to the airwaves this morning in a media blitz to try and shore up support, and perhaps compensate for what people have

criticized was a lack of communication last week. Let's take a listen.

(BEGIN VIDEO CLIP)

LIZ TRUSS, BRITISH PRIME MINISTER: I took the decision very rapidly on the 45 P rate that it was becoming a distraction from the core policies we

were delivering, core policies on the energy price guarantee, on keeping taxes low during the economic slowdown. Those were the priorities. Frankly,

the 45 P wasn't a priority policy and I listened to people, and I think there is absolutely no shame, Beth, in a leader listening to people and

responding.

(END VIDEO CLIP)

NOBILO: Alison, it is notable that the Prime Minister says that there is no shame in her changing her mind about this 45 P tax rate, because her

supporters have claimed for some time that one of Liz Truss' strengths is her flexibility, and they point to the fact that she used to belong to a

different political party. She initially was against Brexit. Now, she is in support of it and she has changed her mind historically on policies, and

they say that's a good thing. She listens to people.

But her detractors would say that's flip flopping. We don't really know what she thinks about anything, and how can we trust that we will see

consistency from her?

So again, those comments intended to try and quell concern and heal divisions will be received differently by different parts of the party.

KOSIK: And while she is going to have -- Liz Truss is going to have more time to talk, I understand she is giving a speech tomorrow. I'm curious how

important this speech will be for her future? And what is the reality here with this speech? I mean, will it do anything to win back her credibility?

NOBILO: Yes, preparations are underway at the moment for that keynote speech tomorrow at Party Conference. That's the last thing that happens

here and then everyone deserts the place, although I must say this year, it's happened earlier, because lots of MPs that I've spoken to aren't

actually bothering to show up for the Prime Minister tomorrow.

But the preparations are underway. The lectern is going out and they are surveying the room. It's a very important moment, but conference speeches

aren't usually times where you hear a lot of policy from the Prime Minister, you generally hear sweeping statements that everyone can get on

board with about growing the economy, increasing opportunity for people and championing Britain's values is Truss isn't known as a strong communicator.

She isn't considered to be particularly charismatic. So, it might be a very difficult moment for her. Her media performances over this last week have

been largely panned. So, she is really going to need to do a lot in order to move the dial here and make her party think, actually, you know what?

Let's give her a chance. We may have, you know, judged her too soon.

I don't think it's likely to offset much of the damage, but it needs to be successful enough not to cause her any more problems.

KOSIK: Bianca Nobilo, thanks so much for all of your fantastic reporting on this.

A new warning on oil supplies, the head of Saudi Aramco says the world should be worried. There might not be enough to go around, that's next.

(COMMERCIAL BREAK)

[15:30:00]

(MUSIC PLAYING)

KOSIK: U.S. markets are building on Monday's strong gains as talks attempt a comeback from the year's lows. The Dow is up almost 2 percent. That is up

more than 1,000 points this week. Talking about two days.

The S&P 500 in a similar spot. The Nasdaq gains are even better, as you can see.

Oil is seeing a nice gain ahead of tomorrow's OPEC+ meeting, Brent crude up more than 3 percent. WTI is up even more.

A new energy warning from the world's biggest oil producer. The head of Saudi Aramco says the world should be worried about oil supplies. Amin

Nasser says people are too focused on the impact of a recession and should be more concerned about limited oil supplies.

The warning comes ahead of tomorrow's OPEC+ meeting. CNN's Anna Stewart has more.

(BEGIN VIDEOTAPE)

ANNA STEWART, CNN CORRESPONDENT: There is an expectation that OPEC and its allies will announce an output cut on Wednesday when they meet in Vienna. A

global recession looms large over the demand outlet.

Here at a forum in the opening remarks, the energy intelligence present says they expect that output cut to come in at 1-1.5 million barrels per

day. That is really significant. That is 1 percent or more of the world's consumption of oil.

Now any cuts will draw (INAUDIBLE) from some likely corners, like the U.S. administration. They would like to see OPEC pumping more oil, not less.

They want to keep prices low or actually get prices even lower.

They want to reduce inflationary pressure. Interestingly, it also drew some criticism from a less likely corner, the CEO of Saudi Aramco. Nasser warned

about reducing global oil supplies and he said this.

"When you erode that spare capacity, the world should be worried because there will not be any buffer for any hiccup or any interruption or

unforeseen events anywhere in the world."

And there could be further strains on this market, just within this year. If you look at the supply side, the tightening Western sanctions on Russian

oil in December, the G7 plans to impose a price cap on Russian oil.

At the same time, the E.U. plans to ban imports of Russian seaborne oil as well. Then, you look at the demand side. If China were to relax its COVID-

19 restrictions, we could see a big increase in demand.

The oil market is already tight and we know what that means, higher prices and, of course, more inflationary pressure. This market could get tighter

still -- Anna Stewart from the Energy Intelligence Forum in London.

(END VIDEOTAPE)

KOSIK: The head of the carmaker Citroen says the company is pursuing all possible ways to reduce its energy consumption. They said inflation and the

cost of energy, labor and logistics is all adding up. Richard Quest spoke to Vincent Cobee earlier and he asked him how the company is mitigating

those extra costs.

(BEGIN VIDEOTAPE)

VINCENT COBEE, CEO, CITROEN: Let's be very clear. For the last three years, we have weathering a series of crises. It has been the pandemic,

then the chip shortage; now, we are facing the rising cost of raw materials and energy.

We also have a transportation shortage. So there is no good answer to your question. The fact is, we have developed a very high level of agility. We

are trying to deal with the problems we have in front of us.

[15:30:00]

We're trying to mitigate the impact of rising energy costs and rising raw material costs.

How do we do this?

Of course, as a consumer, we lower the temperature in the plants, the offices. We are trying to rearrange the shifts to minimize our energy

consumption. We are considering changing energy sources from gas to natural gas, from gas to electricity.

We are also trying to generate energy mostly for the (INAUDIBLE) energy. So we are trying to find all possible solutions as a consumer.

Now, when it looks to our customers and the price of acorns (ph) we have a variety of subjects to address. Rising costs from the parts of the

manufacturing, for logistics. At the same time, where we have a very long order bank and the delivery deadlines, which have been extending because of

short street (ph) supplies.

So it's a bit of a hectic industry we are facing, to be honest.

RICHARD QUEST, CNN HOST: And of course that does not include the fact that you are going to have wage claims because of higher inflation that you are

going to have to -- I mean, anybody asking now for inflation plus wage claims, that will have a serious effect on your balance sheet.

COBEE: Very clearly so. I mean, raw material inflation, logistics cost inflation, energy cost inflation and now wage claims, all of that adds up

to a very substantial risk of increasing prices and cost.

And I think either a balance sheet over retain prices, what we are trying to do is, for each of those cost categories, the first reaction is how do

we mitigate?

How do we contain?

The last thing we want to do is to have to pass this cost increase to our customers. Sorry, on energy, I was expressing myself. We are also trying to

improve efficiency. We're trying to have a responsible discussion with our unions. That's -- we have a wide array of actions. But to be clear, there

no civil (INAUDIBLE) problem.

QUEST: And at the same time, you have to remain at the forefront both in R&D, new development and EVS. Because, you know, you dare not be left

behind as your competitors are spending very large sums.

So how does a smaller player and a relatively smaller player manage to square that circle with EVS?

COBEE: So the great news for the brand is that we are part of a very broad group. It is third or fourth largest total players in the world and, as

such, we have the technology, the skills and the financial resources to invest into the energy transition but also all the technological

development we need to do to face the customer demands of tomorrow.

So I am backed by a very stable, financially sound and capable group. And I have at the same time as a brand, the freedom to innovate from a product

but also from a social engagement point of view, which is what we're doing today.

QUEST: What do you most need now from regulators/government?

The auto industry is one of the most heavily regulated in the world. You have elegantly and eloquently given us a good idea of the problems you

face, not least of which, the cost of capital going up.

So what do you need from decision-makers?

COBEE: I think the first thing we always need from decision makers is stability and predictability. Because we are in an industry that invests on

very long cycles. Five years is short time for us. Ten years, 15 years are very short traditional investment cycles.

So we need to anticipate and predict legislation. The second thing, obviously, is we need pragmatism. It's very clear that the last three years

have been very hectic. The pandemic was foreseen by no one obviously. The chip shortage wasn't and, to be very clear, the geopolitical tension we are

living today are beyond the natural course of the economy.

So all of this is creating massive tensions on groups like us to satisfy the demands of the regulators. So we need stability and, ideally, we would

love to get pragmatism at the same time.

(END VIDEOTAPE)

KOSIK: The founder of Bridgewater Associates, Ray Dalio, has given up control of the hedge fund that he started nearly 50 years ago. It is not a

surprise move though. The handover of control from Dalio to the firm's board started in February.

It has grown into the world's biggest hedge fond, managing $150 billion in assets. Back in May, he joined QUEST MEETS BUSINESS, telling Richard what

he thought was needed to achieve global stability. Listen.

[15:40:00]

RAY DALIO, FOUNDER, BRIDGEWATER ASSOCIATES: We have the capacity to have the best living standards that we have had if we can work well with each

other.

The world is richer than it is. It's been more inventive. Life expectancy is greater and so on. The capacity to be inventive, if we can be

harmonious, if we can work well together, there is a great capacity to do things.

What is the likelihood of this?

That is the question?

QUEST: Yes.

DALIO: I think unfortunately, it is not -- if you read history and you look at what is happening, it will be more difficult before it gets better.

(END VIDEO CLIP)

KOSIK: And finally, just in to CNN, Twitter is now confirming that Elon Musk will proceed with his takeover of the company. The stock was halted

earlier as reports of that news emerged. Musk has offered to buy the company for just over $4 a share.

He had tried to back out of the deal for what he said were concerns over the number of spam accounts.

And that is QUEST MEANS BUSINESS. I'm Alison Kosik. I'll be back at the top of the hour as we make a dash for the closing bell. Up next, "CONNECTING

AFRICA." I will see you in a bit.

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[15:58:30]

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KOSIK: Hello. I am Alison Kosik. It is the dash to the closing bell and we are just two minutes away. It's been a strong two days for the Dow. Look at

this. It's up around 1,500 points so far this week after entering a bear market this month.

Keep in mind this week has only been two days. The S&P 500 was up about 3 percent, on top for its best two-day gain in two years. And the Nasdaq is

up over 3 percent with Twitter shares soaring.

Twitter has now confirmed that Elon Musk is following through on his offer to buy the company. It says the intention is to close the deal at $54.20

cents a share. Markets rallied today despite signs of an economic slowdown in the U.S.

Investors are hoping that it might mean that the Fed could ease up on its rate hikes. This analyst told me that it is not that simple.

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UNIDENTIFIED FEMALE: We are in a very difficult position because they have a still strong labor market with heavy jobs data today and that we saw the

job openings are declining. But still, very marginally.

Job openings are still very high relative to the number of workers that are looking for jobs out there. So in a sense, the Fed has to continue raising

rates until inflation meaningfully slows. And that depends on wage pressures and activity in the services sector (ph).

(END VIDEO CLIP)

KOSIK: Looking at the Dow 30 right now -- it is entirely on the green. (INAUDIBLE) up nearly 5 percent or more.

That is your dash to the bell. I am Alison Kosik.

END