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Quest Means Business

Meta Reports $64 Billion in Q3 Revenue; U.S. Economy, K-Shaped or E- Shaped; Chinese Automakers Flood This Year's Paris Auto Show. Starlink Episode Raises Questions About Musk's Power; Russia Frees 74-Year-Old American, Stephen Hubbard; Ramaswamy Ad with Rival Estranged Mom Roils Ohio Governor Race. Aired 4p-5p ET

Aired October 21, 2026 - 16:00   ET

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

[16:00:12]

PAULA NEWTON, CNN INTERNATIONAL HOST: So you see there a very decent day on the markets, but the real story over on the NASDAQ despite fears about

A.I., the NASDAQ closes at another record high or just shy of it. We will let you know what the official note is in a few moments. Those are the

markets, and these are the main events.

Elon Musk is laying the groundwork for his most audacious deal yet, a plan to merge SpaceX and Tesla.

Meta hit with a $25 billion fine over the Cambridge Analytica scandal. Investors should get an update on that in the earnings call, which will

happen just moments from now.

And European automakers are battling stiff competition from Chinese rivals. We will take you to the Paris Auto Show.

Live from New York. It is Wednesday, October 21st. I am Paula Newton, in for Richard Quest and this is QUEST MEANS BUSINESS.

And good evening, tonight, shares in SpaceX and Tesla soaring after Elon Musk said he was exploring the idea of merging the companies. Now, Musk

called a merger a "good idea" during the earnings call yesterday for SpaceX, which closed today's session, more than seven percent higher. Tesla

will report any moment now. its shares finished up about three percent.

Now if Musk follows through, he would be combining two massive companies. SpaceX's market capitalization well above $2 trillion. Tesla is at about

$1.5 trillion. During the earnings call yesterday, Musk said, "I feel like I am tap dancing through a minefield. But I do think there is a lot of

merit to combining the companies.

A merger would combine Tesla's E.V. capabilities with SpaceX's rocket and A.I. resources. It would also certainly raise regulatory concerns.

Allison Morrow has been following the story carefully from New York. I mean, look, one of the reasons the NASDAQ finished at that record is the

exuberance over this kind of a marriage. I mean, Musk kind of said it himself, right? A lot of investors want this to happen. But what are some

of the hurdles?

ALLISON MORROW, CNN BUSINESS SENIOR EDITOR: Yes, exactly. I think for Wall Street, this was just sort of an excuse to send the stock higher. You know

SpaceX had really strong earnings as you noted, and then this kind of wink- wink nudge-nudge from Elon was certainly icing on the cake.

You know, I think a merger between Tesla and SpaceX has been a bit of a foregone conclusion on Wall Street. And certainly investors are excited

about all the "synergies" and yes, I think, you know, there are going to be lawmakers and regulators who raise objections because this is the world's

richest man controlling two of the world's most valuable companies and SpaceX is a U.S. defense contractor. It does a lot of work with the U.S.

government, and tesla has massive operations in China, which has its own regulators that Elon will have to navigate.

There is going to be a lot of kind of geopolitical concern about those two companies overlapping and being able to kind of, you know, see each other's

business all the time.

NEWTON: To what point, though, does this merger really, you know, mask the fact that Elon Musk hasn't been that excited about the Tesla brand in

several years?

MORROW: Yes, you know, that's been a real head scratcher. He had a very successful or has a very successful electric vehicle maker. One of the top

ones in the world, but China started kind of eating Tesla's lunch a few years ago. And since then, Elon said, oh, no, actually we are an A.I. and

robotics company. So, you know, the revenue is still coming from selling cars, but he is kind of in his trademark way, shifting investors' focus to

the future in robotics. And he has, you know, all of these grand ambitions for A.I. and flying cars and robotaxis.

So, he is always trying to keep that focus on the future and not dwell on when, you know, E.V. sales take a hit.

NEWTON: Yes, and what is interesting is that while the Starlink business is part of SpaceX is doing so well, I mean, there are definitely questions

about things like the A.I. and the robotics within that SpaceX portfolio.

Allison, thanks so much. Appreciate it.

MORROW: Thank you.

NEWTON: Now, "The Wall Street Journal" reports that Elon Musk ordered the slowdown of a military grade version of Starlink used by Ukraine. Musk did

not address the report during the SpaceX's earnings call. "The Journal's" story was based on unnamed sources familiar with the matter. CNN could not

independently report that.

Having said that, Kyiv relies on the system to launch drone attacks and to defend against them. It was blindsided by the slower service.

[16:05:10]

Musk had suggested that The Pentagon and The White House were to blame; for the Trump administration in the meantime, though, has denied

responsibility.

Jim Sciutto joins me now live from Washington.

Jim, listen to the first part of this, right, in terms of who is responsible for what, when -- what more are you learning? Because I was

interested in actually the way Marco Rubio had reacted to this, because he kind of suggested, I mean, look, we can't just stop a private company from

doing what they want to do. And I am like, that's just wrong. Of course, you can, and countries have because of national security reasons.

JIM SCIUTTO CNN ANCHOR AND CHIEF NATIONAL SECURITY CORRESPONDENT: Yes. Listen, either explanation is troubling because if the U.S. government

ordered Starlink to slow down these services, intending to pressure Ukraine in some way, it certainly impacted Ukraine because I've spoken to Ukrainian

officials who have described how this has hampered their ability to intercept incoming Russian drones, and people have died as a result.

So it is troubling if the U.S. government ordered or pressured Elon Musk to do so. It is arguably equally troubling if Elon Musk, the head of a private

company, unilaterally made a decision that has enormous national security impact, certainly for Ukraine and arguably for U.S. interests as well.

And I would argue that the combination of Musk, Rubio, the President -- their answers has been less than clear, I think you could say with

confidence, right? Because, you know, initially you had U.S. officials say, oh, this isn't true. There has been no slowdown, but the Ukrainians have

said quite clearly that it is, and they have suffered the consequences. Then you have U.S. officials say, well, if it did happen, we didn't order

it. And by the way, this might be something to do with the Terms of Service under Starlink, you heard Pete Hegseth say that. So you've had something of

a mealy-mouthed response from the administration.

What I've heard with conviction from Ukrainian officials and European officials is that the effect has been real, that those speeds did slow

down, and that had a direct impact on Ukraine's ability to defend itself from incoming Russian drones. And to be clear, this took place at the same

time as another pressure, one might say, from the U.S., which is the suspension of intelligence sharing with Ukraine. European officials told me

they did not get the same warnings from the U.S. side about incoming Russian ballistic missiles.

So you look at those two things together and you see a connection there. And I would just add one more thing, Paula, not to go on and on, but we

reported last weekend that the U.S. had warned Ukraine that if it continued to strike Russian energy, that it would suspend intelligence sharing, and

then all this has followed.

So connect the dots.

NEWTON: Yes, connect the dots further, J.D. Vance himself, you know, warned Zelenskyy to stop this weeks ago. So you kind of see the repercussions if

that's indeed what we are looking at.

So more news out of St. Petersburg this time with Stephen Hubbard, who is, you know, a former teacher, American released by Vladimir Putin at the

behest of the Trump administration. I want you to listen now to Steve Witkoff in St. Petersburg. Listen.

(BEGIN VIDEO CLIP)

STEVE WITKOFF, U.S. SPECIAL ENVOY: He is a 75-year-old man and you talk so much about my president, President Trump being a humanitarian. You are a

humanitarian also, sir. I salute that. I commend you, and I thank you again.

(END VIDEO CLIP)

NEWTON: Jim, a great humanitarian?

SCIUTTO: Listen, you've seen the reaction, right? You know, begin with Republican lawmakers here. You've had senators like Thom Tillis and others,

Republican senators say, no, he is not a humanitarian. Vladimir Putin is not our friend.

But let me say that the reaction from Ukrainians, for instance, yesterday I spoke to the Ukrainian Nobel Laureate who won the Nobel Peace Prize in 2022

for documenting Russian war crimes, and she said to me yesterday, based on Trump's earlier comments, that the Trump administration has lost the

ability -- I am quoting her -- "to distinguish between good and evil."

And then today, she made arguably an even stronger public statement to say, to call him a humanitarian in effect, it just defies the facts of what we

know. Listen, no one begrudges Steve Witkoff's efforts to free an American, an elderly American, no question. Does he have to say something like that

as thanks to perhaps, you know, grease the wheels for the next release? Maybe. But the trouble is that this is not isolated, right?

President Trump, just a few days before said that Russia has been "fine on Ukraine" in the midst of expanding attacks on civilians. On the very same

day, a Russian strike killed civilians, including a one-year-old baby, right?

[16:10:10]

So, you know, it is not -- that humanitarian comment is not isolated, it is part and parcel of the way this president and this administration has

approached Vladimir Putin, kowtowed to Putin and described him in a way that just defies the facts on the ground.

NEWTON: Yes, and Steve Witkoff himself has been quite complimentary and deferential at any point in time when we see him publicly in the room with

Vladimir Putin, perhaps he says something else behind closed doors, but this is what they are releasing to the public.

Jim Sciutto always grateful for your insight.

SCIUTTO: Thank you.

NEWTON: Appreciate it.

Now, as we were just talking as well about Elon Musk, we are asking the question, does Elon Musk and his companies have too much power? Musk spent

nearly $300 million to help Donald Trump and Republicans get elected two years ago. Now, he spent nearly as much just in these upcoming midterm

races. He has also dabbled in European politics, giving notable support to Germany's far right AFD Party.

And as we noted, Musk reportedly decided to slow down Ukraine's access to Starlink. European leaders are pushing back against Musk's enormous reach.

Last week, the Polish Foreign Minister posted, "Hey, Elon Musk, Big Man, are you playing politics with your products again? As your European

customers, we are watching you." Earlier today, the Spanish Foreign Minister spoke to CNN about Starlink. Listen.

(BEGIN VIDEO CLIP)

JOSE MANUEL ALBARES BUENO, SPANISH FOREIGN MINISTER: It is high time that Europe make a step forward for their own sovereignty, and our American

friends are inviting us to do it both in trade and when it comes to our own security and our security goes through having more and more aware

deterrence in our own hands, and also to creating our own digital market for both commercial and also for security purpose.

(END VIDEO CLIP)

NEWTON: Sofie Eriksson is a Swedish member of the European Parliament, and she joins us now from Strasbourg, France. Really good to have you on the

program as we continue to parse what European reaction is to this.

You have called for a full security threat assessment of the Starlink satellite system. Will that happen soon and if so, what do you hope it

investigates?

SOFIE ERIKSSON, SWEDISH MEMBER OF THE EUROPEAN PARLIAMENT: Well, we hope that it would investigate that what security issues could we have in Europe

concerning the Starlink expansion in our continent. We need a proper European security assessment of this infrastructure because we need to

understand who can restrict the services, under what conditions and what would happen if essential services and access to it is suddenly reduced?

It is obvious that we cannot implement this technology without a careful security assessment, and that we also must make sure that that assessment

leads to practical decisions. Where we identify serious risks, we also need safeguards, alternatives and where necessary, restrictions on its use

because I think it is really important that European governments have a responsibility to ask these questions before a crisis happens to our

countries.

NEWTON: So let's talk about the -- I will talk about the alternatives in a minute, but I do want to talk about some of the restrictions and I am sure

you've been following, like everyone, what happened with Ukraine and Starlink or Starshield, the military component of it?

ERIKSSON: Yes.

NEWTON: How much of a liability has this advanced communications architecture of Starlink or Starshield, controlled by one man? How much of

a liability do you believe that's become for Europe?

ERIKSSON: Well, of course it could be a liability. It could be a risk if that one billionaire is a maniac. I think it is so important that we keep

in mind that Ukraine is right now at a very critical point in defending its territory. It is the brink of yet another hard, long and painful winter,

both for the ones on the battlefront and for all the civilian population.

And for me as a Swede, it is so obvious that the war in Ukraine is also a matter of European security, and it is so important to recognize that

Europe's security cannot depend on decisions of one single billionaire.

The reporting that you just referred to confirms that Musk ordered the Starlink slowdown and that blindsided Ukraine and this is something, of

course, that actually has been on the radar for us for quite a while now. One single person, one single billionaire is capable of posing a threat to

our European common security. And that is, of course, absolutely unacceptable.

[16:15:04]

NEWTON: Understood. And you have noted, along with your European counterparts, that this is a risk. If we look to a new European system to

replace it, it is IRIS. Youve been at this for several years in terms of Europe as an entity. How soon do you believe it can contribute to the

digital and communication sovereignty that, you know, we just heard the Spanish Foreign Minister, right, he says that Europe needs this.

ERIKSSON: Yes, we need this and we need it as quickly as possible. I think its three things that we need to do now from the E.U. side, it is of

course, first of all, we need to do act -- we need to act very quickly. First of all, we need to launch our own satellite system, as you mentioned,

the IRIS2 that it is called. But until that is in place, we urgently need to secure that Ukraine gets access to the satellite capacity already

available in the E.U. member states.

And finally, I think -- I want to come back to that we need to have a security assessment of our own use of Elon Musk's satellite system so we

don't build ourselves into a dependency that could hurt our security.

NEWTON: Yes, and certainly you do have investigative powers. That doesn't mean that the results will be fully disclosed, but certainly Europe does

have some cards to play here.

Really grateful for you coming on the program. We learned a lot about this communications architecture that will develop in the years to come.

Appreciate it.

ERIKSSON: Thank you.

NEWTON: Now, Ohio's Republican candidate for governor has launched a controversial attack ad against his opponent. It is raising questions about

messaging strategies ahead of the U.S. midterms. You'll want to stick around for this conversation.

(COMMERCIAL BREAK)

NEWTON: U.S. Vice President J.D. Vance is warning Republicans to "stop whining" about a controversial political attack ad put out by the Ohio

Republican nominee for governor.

Vivek Ramaswamy, his ad is drawing fierce criticism from both sides of the political aisle for featuring his opponent's estranged mother. Listen.

(BEGIN VIDEO CLIP)

DONNA ARTHUR, AMY ACTON'S MOTHER: It is not easy for a mother to say this, but Amy has a serious problem. She is a liar.

(END VIDEO CLIP)

NEWTON: Democratic nominee, Amy Acton says she has not even seen her mother since she was about 12 years old when she was abused by a man her mother

married. Her stepfather was in fact arrested for rape.

Acton's campaign and brother have condemned Ramaswamy's ad.

[16:20:10 ]

It is raising questions, though, about messaging strategies ahead of the U.S. midterms.

Fred Davis is the founder of advertising firm, Strategic Perception. He is also a Republican media strategist and was a creative director of the 2008

GOP Convention.

I am glad to have you on our show, because so many people have been inundated with these ads, and they are trying to understand exactly what

their effect might be. I want to get to your reaction specifically to both types of ads, right?

We've got the negative one, but we've also had examples, clear examples of positive ads like James Talarico in Texas talking about hope. Now, I want

to point out that both the Republicans and the Democrats go positive or negative. It is not a partisan thing, they are equal opportunity

strategists.

But what do you think? Does going negative work almost every time and that's why we see so much of it?

FRED DAVIS, FOUNDER, STRATEGIC PERCEPTION: Going negative is sadly essential in politics so you won't see it going away anytime soon. I

thought Vivek's ad was really good. Now I know a lot of people think it is not, but I am going to turn the volume down here, so maybe I not hear

feedback.

So, I think that if you run an ad in politics, it takes a lot of effort to raise the money and it costs a lot of money to run the ads and if nobody is

talking about it and nobody is, you know, having a conversation, good or bad, around it, it just -- you've wasted your time and your effort.

I did an ad years ago called "Demon Sheep" for Carly Fiorina running for the Senate in California and it was in the primary and I got just the same

kind of pushback that my friends in Ohio are getting now. And yet, it was tremendously successful and she won that primary hands down and it is still

talked about today.

So I think it is pretty essential.

NEWTON: It is essential, but then when we are talking about something as serious as sexual assault like I am wondering if you're a Republican woman

at this point in time, this is definitely a serious issue among women in all political parties, and to have a woman that the candidate hasn't even

spoken to in decades.

DAVIS: Yes, but it is her mother. And what are people going to remember? That's what you want to concentrate on. I always like to say we are talking

to the Walmart greeters, probably not the people that watch your show, Paula, you have an intellectual-ish, you know, crowd.

But the average guy on the street is going to remember a mother saying, "My daughter is a liar" and, you know, getting into all of the details, they're

not going to get on the web. They are not going to dig into those details. That's what they are going to remember.

So I am sure some won't agree with me, but it works.

NEWTON: Okay. Noted. And again, we will see how this race turns out, but you are a veteran. You have the bruises to prove it. So let's see how this

works out.

I do want to get to this issue of Musk having spent more than a quarter billion dollars already. In some races, the Democrats have the money edge;

in others, though, I mean, Musk is really pulling up the ante.

Does money always work? Does spending the money always work in the campaign? Because I think the research shows that it is mixed, right?

DAVIS: It is mixed. I always say you have to have enough gas in the tank. You don't have -- it doesn't have to be full. You don't have to have as

much gas as the next guy, but you do have to have a substantial portion in order to get your message out.

Then if you use something like Vivek's strategy or Carly Fiorina's strategy, you can spend one-tenth of what the other person spends as long

as you have the guts to run it and the realization that some people will balk, but the vast majority of people will remember whatever it is your

message you were trying to get across.

NEWTON: So, Fred, just because, you know some of your comments, there have been a bit counterintuitive, I want to run the James Talarico ad because it

is completely different from what Ramaswamy had up there. Listen.

(BEGIN VIDEO CLIP)

JAMES TALARICO (D), TEXAS SENATORIAL CANDIDATE (voice over): We are taking our state back, not with anger, not with fear, not with division, but with

the hope that built this state.

(END VIDEO CLIP)

NEWTON: Fred, so to challenge you a little bit, what if Ramaswamy had gone positive?

DAVIS: Well, I am sure he did positive, lots of positive things, and because, you know, he knew this was going to be a risky venture. So my -- I

don't know this, but my guess is his polls were either really tight or trending in the wrong direction.

[16:25:11]

And being like in Vegas, they rolled the dice to see if this happened to do the trick.

Now Talarico, on most polls you see is leading in Texas. For the record, I am a longtime friend of John Cornyn who did not win the primary, Ken Paxton

did in Texas, and I did his races -- Cornyn's races for a long time, I didn't do this one, but I think what Talarico --

How Talarico has been painted is kind of a crazy left-wing, real bizarro religious feelings sort of guy, and for him to say something that solid and

stayed and normal is to me exactly what he has to do.

NEWTON: Right, Fred, listen, I have only literally have 10 seconds left, but you're in Kansas. What do you think? The Republicans are taking that

Senate seat? You don't think there is any danger?

DAVIS: I am not sure. It is certainly possible that Rogers is in some trouble and I am shocked to see it. This is a really, really tough cycle

for Republicans, as everyone knows.

NEWTON: All right --

DAVIS: That would be a big upset!

NEWTON: You gave us a headline right there, Fred. Thanks so much. Always an interesting conversation. Thanks for being with us.

DAVIS: Thanks, Paula.

NEWTON: Now coming up for us, we will have Meta earnings. Stay tuned.

(COMMERCIAL BREAK)

NEWTON: Meta investors with a lot to muse over. A New Mexico judge has ordered Facebook's parent company to pay $25 billion for misleading

consumers about data privacy. The case is tied to President Trump's 2016 campaign.

Meantime, Meta also just out with its earnings. The social media giant delivering $64 billion in revenue, up 26 percent from last year. It also

reported nearly $35 billion in capital expenditures. This after launching a bunch of new A.I. products which Wall Street really looked upon favorably.

Yes, that was Muse, which I think the last time I looked had over 10 million downloads.

[16:30:22]

As you see there, for now, Meta stock up almost 3 percent, in fact.

Clare Duffy has been following all of this for us.

I think we're still waiting for more to come out of the call, if I'm not mistaken. But in terms of the top line numbers, what are we seeing?

CLARE DUFFY, CNN TECH CORRESPONDENT: Yes, Paula. I mean, this was a strong quarter for Meta. You had sales beating analyst expectations up 25 percent,

26 percent year on year. Now the net income profits did not exceed analyst expectations. But Meta is attributing that to lower than expected -- that

those lower than expected profits to the $18 billion multistate settlement that it agreed to in August.

The company says that it took a charge of $9.8 billion in the quarter because of that legal challenge. And I think we're starting to see between

that and the $25 billion penalty that the New Mexico court awarded today. We're starting to see these legal challenges really pile up for this

company.

But you see the stock in the green there, Paula. I think that is Wall Street reacting to these A.I. products that Meta has rolled out, which are

really going to be the focus for investors in this quarter. And there are strong results in those respects. Meta, as you said, rolled out its Muse

personal A.I. agent this quarter, which has become really one of the most popular apps on the App Store. One of Meta's most popular launches in

years.

And so I think there are going to be questions about what these legal challenges mean for Meta's business. But I think Muse is offering a

roadmap. And the company talked about the fact that its investments in A.I. are already also contributing to its core advertising business, which of

course has been Meta's core business for some time now. So it'll be interesting to hear how the company talks about these two things during the

call. But overall, positive results for Meta during this quarter.

NEWTON: Clare, before we let you go, are they going to discuss this A.I. buildout? They still have a lot of capex on this, right, that they're going

to have to put on the books?

DUFFY: That's exactly right, Paula. The company's capex during this quarter you mentioned it's nearly $35 billion. That's up 80 percent year on year.

And so it is going to be interesting to hear how they talk about their capex spending plans for the upcoming quarter and especially the coming

year. But it does seem like investors are starting to give them some slack on that front. We have seen in the cases of some other tech companies,

investors asking really tough questions about when companies will see payoff from that capex.

But in this case, we're starting to see, you know, Meta's very popular Muse A.I. agent. It's rolling out -- it just rolled out a new foundation model

called Muse Wonder. Investors I think starting to see that Meta's investments in A.I. infrastructure are paying off in terms of these popular

products.

NEWTON: Clare Duffy, for us, always getting the job done on a busy earnings season. Thanks so much. Really appreciate it.

DUFFY: Thanks.

NEWTON: Now I want you to park your empathy now. A super yacht boom is making it increasingly difficult for owners to get a docking slot. Yes,

marinas are struggling to keep up with demand thanks to regulatory barriers and supply constraints.

Now, the problem is an example of what many are calling the K-shaped economy, right? The U.S., wealthy on the top arm. Do you see there? Keep

making the money, those middle classes, lower classes, they're on the bottom of the K there and they get hit by inflation and slip further down

that K.

Now my next guest says the economy may be more of an E-shape. Robert Armstrong says there is inequality in the United States, but by most

metrics it has hardly increased over the last few years. Robert Armstrong is the U.S. financial commentator at the "Financial Times."

And yes, the letters are a good tool because, you know, we talk about the top tier, the middle tier, the low -- the bottom tier. And it's helpful for

us to understand those income groups. But listen, you say it's not as bad as we think. So, yes, prove it to me.

ROBERT ARMSTONG, U.S. FINANCIAL COMMENTATOR, FINANCIAL TIMES: Well, the data on the kind of stratification or range of different households' wealth

is quite hard to pull together. But one of the best sources we have is a study or a survey from the Fed called the Consumer Finances Survey. And the

most interesting thing about that survey, thinking now about wealth, not income, is that since around 2013, what we've seen is that families in the

middle of the wealth distribution are actually growing their net worth at the same rate or even better than the families at the top of the

distribution.

[16:35:06]

So the idea that the wealthiest families are roaring away from middle class families isn't quite true. That is not to say that America isn't an

exceptionally unequal society. It's just that in the last decade, decade and a half, the trend hasn't been towards making that worse.

NEWTON: So, Robert, how does that translate, though, into real terms, especially when we have this inflationary environment which has been

sticking around for quite a long time post COVID, and now you've had this energy crisis.

ARMSTRONG: Well, I think you cannot overstate the emotional impact that inflation has on families. People talk about, oh, the rate of inflation is

5 percent and so on. But we all know that prices are about a third higher than they were just five or six years ago. And we all feel that every time

we go out to dinner with our kids, every time we make a big purchase for our family, we feel that.

But what has also happened and which we don't notice as much is that our retirement account has grown very nicely. The value of our house, the

equity we have in our house has grown very nicely, and we've also received raises over that time. We just don't always notice those things with the

same vividness that we notice the price of that meal out with the family.

NEWTON: Now, you have certainly noticed it. And when we talk about wealth, the people, the equity they have in their homes, you actually say that,

look, it is your mortgage that is a problem. You're going to explain that to us, but I'd be willing to bet your mortgage is not the 7.4 percent

posted on the 30-year just this week.

ARMSTRONG: I think that one of the stories of the last 10 or 15 years is that home ownership is really quite spread in America through the upper and

the middle, and even into the working class. And there has been this great value appreciation story for people in the middle and in the working

classes. The main investment is the house and houses is done pretty well. Will that story continue for the next 10 years when mortgage rates are much

higher?

It might not. So the good news about inequality for the last 10 or 15 years might not continue. And I think housing will be right at the center of that

story.

NEWTON: And getting to your original, you know, thesis here, again, the data is in the rear view mirror. And I think some people are also looking

at these older generations. You know, we had that survey recently just saying that 75 percent of American income is really concentrated in that

older demographic. I'm wondering what you see going forward because, yes, it is in that older demographic, but again, there will be a great wealth

transfer as well.

ARMSTRONG: Well, there will be a great wealth transfer. And we all love our parents and grandparents, but we all also at the same time hope that we

will someday have an inheritance from them. And that's natural. I think, you know, younger -- the younger generation, especially in the middle and

the working classes, they are feeling real pressure. And I don't want to deny that. And the question is, will their experience as they move through

middle age into old age look like the experience of their parents and grandparents' generations?

So, for example, the story of the stock market in the last 10 or 15 years has just been incredible. Incredible in terms of compounding returns. Is

this generation, someone who's, say, in their early 30s now and just starting to save, are they going to experience a run in markets as good as

their parents did? I hate to say it, but the chances aren't high. So part of what we are seeing is that we've had an awfully good run here in America

for the last 10 or 15 years. And, you know, we'd be awfully lucky if we repeated that experience in the next 10 or 15 years.

NEWTON: Yes, sobering. Robert, we always appreciate the deep dive on the data because at the end of the day, that's -- it's not a feeling that is

going to actually give us a good barometer of what the economy is doing.

Robert Armstrong, for us, thanks so much. Appreciate it.

ARMSTRONG: Correct.

NEWTON: Thanks.

ARMSTRONG: Cheers.

NEWTON: Now, Tesla just released its quarterly results, reporting $28 billion in revenue. Revenue from car sales, however, fell 3 percent from a

year earlier.

[16:40:04]

Shares right now up a little bit there, a percentage and a half in after- hours trading. But I'd be willing to bet most investors are still excited about the potential tie up between SpaceX and Tesla.

Now Tesla is facing more and more competition from Chinese EV makers, particularly in Europe. That's a big part of the story at this year's Paris

Auto Show.

Melissa Bell has more on that.

(BEGIN VIDEOTAPE)

MELISSA BELL, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice-over): It was first marketed to farmers. The "deux chevaux" was the car to help you get

your eggs to market unbroken. Now the iconic ride is back and even equipped with egg storage.

UNIDENTIFIED MALE: This car is 100 percent electric, so you're charging the car and meanwhile you can take the basket. You can do a picnic.

BELL: There is a lot of nostalgia on show at this year's Paris Auto Show. Take this 1974 Ford Escort. Just one example, but also many reminders of

the new reality. It isn't simply that there are twice as many Chinese exhibitors at this year's event as there were last year, but the Chinese

imports now represent 10 percent of Europe's car market.

LOTHAR SCHUPET, CEO, ZEEKR: We are ready for more than a decade invested in Europe with a global design center sitting in Europe, with R&D centers in

Germany, U.K. and Sweden. So that is what makes also the expertise of the entire team very clearly focused on Europeans. And we adapt the cars to the

European taste.

BELL (voice-over): The trouble for European carmakers is how quickly Chinese brands have flooded the market even at its luxury end.

So really all the comfort that you'd find in a European made car, so much room, and definitely something from the future to keep the kids quiet.

(Voice-over): Chinese brands have also adapted to E.U. tariffs, which only apply to battery electric vehicles. Hence the announcement this week by

Brussels of a cap on Chinese hybrid cars to 350,000 a year.

EMMANUEL MACRON, FRENCH PRESIDENT (through translator): This is the result of several years of work, as you know, during which we have sought to

restore fair competition between European and non-European manufacturers in cases of excessive subsidies or unfair competition.

BELL (voice-over): But will it be too little, too late for European carmakers who are facing more than just pressure from China?

SIGRID DE VRIES, GENERAL DIRECTOR, ACEA: We're competing in a very difficult environment today with the geopolitical tensions, with high

inflation, with high energy costs. And there, we need policy makers to play their role. We need the regulation to incentivize rather than to hinder.

BELL (voice-over): Meanwhile, Chinese carmakers have proven remarkably agile in staying ahead of tariffs and caps, and neither will apply to

quadricycles like this one.

We're going to get to test drive one of these little Chinese cars to see how idiot-proof this car really is. Let's see if we can get out of the car

park. I'll do my best not to crash it.

Out on the streets these protesting students are exactly the age group that might drive this kind of car. It's been marketed not even in China. It

won't be sold there at all. The idea, say its makers, that it's been built entirely for European streets.

(Voice-over): Melissa Bell, CNN, Paris.

(END VIDEOTAPE)

NEWTON: And that is QUEST MEANS BUSINESS. I'm Paula Newton. "MARKETPLACE EUROPE" is next.

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