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FIRST MOVE WITH JULIA CHATTERLEY
TikTok has done a Deal, Oracle has Won; NVIDIA Buying ARM Holdings in a Massive Deal; OPEC is 60 Years Old. Aired 9-10a ET
Aired September 14, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RICHARD QUEST, CNN BUSINESS ANCHOR: Live from London, a good Monday to you. I'm Richard Quest, sitting in for Julia Chatterley. As we start the
new week, this is your need-to-know.
TikTok has done a deal. Oracle has won. We need to look at what they actually got out of the deal against Microsoft who seemed to have
There is a tech takeover, NVIDIA is buying ARM Holdings. It's a massive deal. We need to look at the implications.
OPEC's anniversary. OPEC is 60 years old. We have an exclusive interview with the Secretary General on the relevance of the oil organization.
It is Monday, I'm Richard Quest. Time for FIRST MOVE.
A warm welcome to FIRST MOVE. Julia is off today. I'm Richard Quest at the helm. The way the markets are looking and the way things are trading as we
go into a new week, a certain amount of uncertainty following on from what we saw last week.
The futures are solidly higher. Tech is in the lead. Two straight weeks of declines, but there is encouraging vaccination news and multibillion dollar
deals and those are two reasons why the NASDAQ and S&P are powering ahead.
NVIDIA is buying SoftBank's chip giant, the designer unit, ARM for $40 billion. The biotech giant, Gilead is buying Immunomedics. That's a deal
worth $21 billion, so two deals well and truly getting us out of the blocks.
And the big names like Apple, Tesla and Amazon are all up in the premarket and they all fell sharply last week, four percent or more. Now, they are
putting back some of the ground again.
Another important week for investors, the Fed holds its final meeting before the U.S. elections.
Apple has a product launch set for tomorrow, as the U.S. releases new retail sales numbers on Wednesday.
Europe is mostly higher. The best gains are seen in Paris with the Eurozone industrial production slowed down in July. IAG shares are down nearly 30
percent in London and Madrid.
And it's a positive day in Asia. SoftBank shares is nine percent on the news of its chip deal with NVIDIA. Japan is higher, too. Yoshihide Suga set
to become the next Prime Minister. The details of all of these and the drivers.
Microsoft, it appears, has lost out to Oracle in a bid to buy TikTok. When I say buy TikTok, it's not exactly clear what deal Oracle has done, whether
it's some sort of alliance, some sort of franchise. Who knows?
Selina Wang is in Hong Kong and has been looking into it. Firstly, before we look at what Oracle got, how did we get to where we are?
SELINA WANG, CNN CORRESPONDENT: Well, Richard, this comes as quite a surprise. Microsoft had been the first to publicly say it was is interested
in courting TikTok. It had been seen as a frontrunner and for many, it was seen as a more logical partner or bidder since it has deeper pockets than
Oracle, it also has more experience when it comes to consumer technology.
Yet Microsoft saying that ByteDance has rejected its bid, leaving Oracle as the main one here, and a source has told me that TikTok, ByteDance will be
entering some sort of partnership with Oracle. My source said that it would not be seen as complete control of it. It wouldn't be seen as a regular
It would be a sort of technology partnership with Oracle providing Cloud computing services and other technology services. So this seems to be
ByteDance's best attempt to appease the Trump administration, as well as China.
QUEST: Trump had said the administration set a deal by September 20th and China, this morning, as you and I have seen had comments accusing the U.S.
of wanting it both ways and bullying Chinese companies. But where does this lead? Is this the sort of arrangement that will require approval, probably,
from both administrations?
WANG: Well, experts have told me that it's not even clear if this deal would appease the Trump administration, since Trump has said that he wants
a sale of the company or it will be banned.
What we're seeing here is some sort of partnership. It would also likely have to clear the Committee on Foreign Investments in the U.S., which would
likely require ByteDance to make some sort of mitigations to secure the national security of it.
For instance, it could require some vetted Americans to be on the Board. It could also require some sort of firewall put in place between ByteDance and
TikTok. Then you have the Chinese side.
Unclear how much leverage Beijing will have here, but recently, China did update its export rules, which would ban the export of certain
technologies. So, there are two sides they have to appease and it's unclear if this partnership really reaches the mark on either side.
QUEST: I guess at the end of the day, Selina, do the experts -- does the gut say this is going to happen, that the Oracle deal, be it halfway or not
even that house is going to find some way to pass muster?
WANG: Well, Richard, let's put it this way. We should expect further twists and turns in this saga. I spoke to a former member of CFIUS who said
that even if this Oracle deal with partnership, with ByteDance and TikTok goes through, it's still going to be incredibly complicated.
We can look at previous instances where national security has been an issue as a sort of template, for instance, with Sprint and SoftBank back in 2013,
but experts tell me this is really quite unprecedented in terms of the geopolitical nature of it, the fact that Trump, the President have directly
been involved in this.
But I do want to point out, Richard, we don't know how much politics played into this, but Oracle and Larry Ellison, the founder, have had close
relationships with Trump. Oracle is one of the few Silicon Valley companies to publicly support Trump. Larry Ellison, the founder, had hosted a
fundraiser for Trump.
The CEO had also served on Trump's transition team. So that could potentially play into this, but we don't know. And I also want to mention
that Walmart would have been working with Microsoft in this bid for ByteDance. Walmart is now telling us that they are still interested in
investing in ByteDance and that it is still in discussions with the company.
QUEST: My guess is that the Trump aspect, that Trump alliance or whatever you want to call it --- friendship -- plays big in the end of this. Selina,
thank you, I appreciate it. Selina Wang in Hong Kong.
Selina talked about SoftBank, another deal, this time SoftBank on the selling side, selling its chip-making division, ARM to NVIDIA of the United
States. $40 billion is the price.
Anna Stewart is watching this one. ARM Holdings, now SoftBank only bought it a few years ago, so it's already making a sizable profit. But why are
they selling it to NVIDIA?
ANNA STEWART, CNN REPORTER: To be quite frank, it has to do with cash. SoftBank outlined in March that it needed cash. It is going to make $41
billion worth of disposals. It sold down stakes in Alibaba, T-Mobile U.S.A. This, however, has surprised some, given as you said, they only bought this
four years ago.
It will at the end of the deal, it is a stock and cash deal, if it all goes through, and we can talk about the competition concerns, but it will get a
stake in NVIDIA, which it had a stake in last year, but sold it, and Richard, NVIDIA's share price has over doubled this year. It's one of the
great winners of the pandemic.
NVIDIA, they make the chips that go into gaming consoles. They are doing, as you can tell, rather well. They want to get into smartphones, clearly
and integrate that technology. So, it makes sense to both those parties. The big question is, does it make sense for ARM Holdings that's been
tussled between the two of them?
QUEST: Anna Stewart. Anna, we will leave it there for the moment. Thank you, Anna.
The E.U. and China are having discussions and talking about trade and climate issues. Coronavirus and human rights is also expected to be on the
agenda in what could be extremely hard talks.
CNN's David Culver is in Beijing.
DAVID CULVER, CNN CORRESPONDENT: Hey, there, Richard. Yes, this talk between the E.U. members, and particularly Germany's Chancellor Merkel and
President Xi Jinping here is rooted essentially in trying to counter any anti-China sentiment, I should say what is growing anti-China sentiment,
mostly because of the outbreak.
And of course the U.S. has spearheaded a lot of this in the international realm, but there have been other western countries that have come out and
been obviously deeply impacted and deeply concerned with the early mishandling and alleged cover ups of the coronavirus here in China.
However, what you're looking at now is part of a concerted effort and it is only involving the President Xi Jinping, but just a couple of weeks ago he
sent out his Foreign Minister, Wang Yi who went to several European nations to try again to bring into the fold some support and some understanding and
perhaps, as they put it, some cooperation.
The question, Richard, going forward is how effective is this going to be, because you've got several issues at play here.
You've got market access, you've got data security, you've got Huawei, you've got human rights, as you mentioned, and of course the Chinese now
have themselves in this position in which they and the U.S. are almost competing to win over the European nations to try to sway them to realize
which one they should side with.
The Chinese in this effort right now have what seems to be the uphill climb in that the outbreak, obviously, is something that sits on a lot of minds
and is continuing to impact a lot of countries -- Richard.
QUEST: Does anything come of these things, David?
CULVER: As of now, it seems like it has not been too effective and I speak specifically to Wang Yi's visit just a couple of weeks ago. State media of
course portrays that they believe European nations are going to be swayed and they're going to find cooperation and that perhaps China will win them
over. But as of now, it does not seem to be effective, at least in the public sphere of rhetoric.
We'll see what action comes out of this. We know that the European Council is meeting later this month to decide how essentially to come forward with
an agreed-upon approach to China as they have put it.
Meantime, the U.S. is going out whether Secretary of State, Mike Pompeo and going on a tour, essentially, Richard, to portray the China threat. So it's
this back and forth.
And of course, the U.S. now coming up on their presidential election, we'll see if that has any impact in how the rest of the world, particularly
Europe, is going to take China and really change the image of China for them.
QUEST: David, thank you. David Culver reporting from Beijing.
And so to vaccines and coronavirus. The CEO of Pfizer says that they should know if their vaccine works by October, and speaking to CBS, he also
discussed the mechanisms of vaccine funding.
(BEGIN VIDEO CLIP)
ALBERT BOURLA, CEO, PFIZER: I wanted to liberate our scientists from bureaucracy. When you get money from someone that always comes with
I didn't want any of that. I wanted them -- basically, I gave them an open checkbook so they can worry only about scientific challenges, not anything
(END VIDEO CLIP)
QUEST: All right, Elizabeth Cohen is with me. We have much to attend to, Ms. Cohen on our vaccine agenda. Firstly, this idea that -- I mean, we
build a picture. First the vaccine manufacturers all say in a joint letter, science first. Now, Pfizer is saying likely to be ready by the end of
October. That suggests, put me right if you need be, that suggests that they're ruling out an October surprise before the U.S. election.
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Yes, it's really hard to tell what he means. It's also hard to tell why Mr. Boula keeps repeating
these predictions. There's no public health reason to be making predictions. There must be some other reason, why in the world would you
make predictions? What exactly did his words mean?
Does he mean that he is going to be ready to go to the F.D.A. and other regulatory authorities in other countries and say, please, give us
approval, give us an authorization to put this on the market? Or is he saying, we'll know in our own heads whether or not it works?
It is so hard to tell and it is unclear to me. And Richard, you're the business guy, so maybe you can illuminate on this, why would he keep making
these pronouncements? It is unclear to me.
QUEST: To keep faith, to keep the faithful going. But you're right, it is extremely unusual. But we have more developments that we must chew over.
AstraZeneca now is saying that the Oxford trial will resume. So I guess that they are comfortable, either they found out the reason that the
patient who fell ill, I believe who is in the U.K., it is not -- the illness is not related to the vaccine.
COHEN: If they are going back and resuming their trials, yes, that would mean that there was some kind of investigation and it was decided that it
was unrelated to the vaccine.
It is unfortunate that we don't know the details of that. We're the ones who are going to have to literally roll up our sleeves and take a vaccine.
Not have to, but choose to. We're the ones who are going to have to say, do we want to take a vaccine or not? Do we want to take this vaccine?
So we know that there were two illnesses that caused a pause, one in July and one more recently. It would be nice to know, what were the details
behind that? What exactly did they have?
We know for one of them, we don't know for the other one, but what exactly were the findings? Why do you think it's unrelated? This is tough stuff.
This gets very nuanced. Someone is involved in a vaccine trial, gets an illness. You want to know, is it related? There's an investigation. Why not
tell us the results of that investigation?
You don't have to violate the patient's privacy because that's the first thing pharmaceutical companies say. It is, "Can't do it. It violates
privacy." That is simply patently not true.
You can say what the results were and what the investigation entailed without violating privacy. They're not doing that. People already don't
trust this vaccine. Many people already have said, "Uh-uh. I'm not getting it." And when you hide these details, it engenders more mistrust.
QUEST: Elizabeth Cohen, on fine form for us this morning. Elizabeth, thank you.
Now, some other news. The news making news around the world.
President Trump is going to California this morning in the coming hours. The massive wildfires, quite extraordinary and worrying and downright
upsetting, pictures that we're seeing. It's continuing to burn up and down the West Coast, three states affected, Washington, Oregon, and California.
The fires have killed at least 35 people in those states. The firefighters are racing to save lives and property. California's governor and the Mayor
of Los Angeles both say climate change fuels the fire.
For the first time in nearly eight years, Japan has a new Prime Minister, Yoshihide Suga was the overwhelming choice of the ruling Liberal Democratic
Party. Mr. Suga was the right hand man of Shinzo Abe. He is stepping down as PM for health reasons.
CNN's Will Ripley with this report from Hong Kong.
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Japanese lawmakers took a crucial step on Monday towards choosing the next Prime Minister of the
country by electing Yoshihide Suga, the Chief Cabinet Secretary under Shinzo Abe, as the ruler of the ruling LDP, the Liberal Democratic Party.
On Wednesday, the full Parliament will vote and Suga is widely seen as a shoe-in for the Prime Minister's job.
Now, when it comes to policy, there are not a lot of differences between Suga and Abe, probably because Suga has been Abe's right-hand man for his
entire second term as Prime Minister, a record-setting almost eight years in office.
And so, Suga knows Abe's views on the economy, on the COVID-19 pandemic, on taking Japan away from its pacifist Constitution and trying to redefine its
role on a global stage, making it more assertive in this part of the world.
And then of course also what's going to happen with the Olympics, which was one of Abe's prized projects.
So Suga now inherits all of that and he knows what Abe's approach has been, but where the two men differ dramatically is in their personal story and
some have said their star power. If Abe was born to be the Prime Minister, being the son of an elite political dynasty, a third-generation Prime
Minister, Suga comes from very humble roots.
He was the son of a farmer and a school teacher. He has worked a lot of odd jobs, including at a cardboard factory and a fish market as he worked his
way up through Japanese politics.
So he has that every-man-approach that Abe lacked and in fact, Abe was accused at times of being out of touch with the regular lives of everyday
Japanese. But Suga also does not have the international cachet that Abe has built. He's been able to build relationships with world leaders from Donald
Trump to Xi Jinping, and Suga is an unknown quantity.
So he goes into the job having to start from scratch on a global stage, but well prepared he says to take on the domestic challenges that Japan is
struggling with right now during this pandemic.
I'm Will Ripley reporting in Hong Kong.
QUEST: In Hong Kong, there's Will. Thank you.
Coming up, despite the pandemic, there's a slew of technology companies that are coming to the market, the IPOs that we should expect. Valuations
are frothy. It seems like a good time, but there's so much uncertainty.
And OPEC is 60, an exclusive interview with the Secretary General in a moment.
QUEST: And a warm welcome back. It is FIRST MOVE. I'm Richard Quest in for Julia Chatterley, live today from London. The futures, take a look. We're
just about nine minutes -- eight minutes away from the market's open and it is a solid open with the best being the NASDAQ.
Tech is bouncing back. Admittedly, it lost four percent last week. Also watching closely the House is back in session in Washington. The Speaker
wants an emergency aid bill passed before the November elections and Oracle is likely to rise seven percent.
Oracle is to partner with -- sorry, TikTok is to partner with Oracle. Microsoft is flat after losing the bidding.
Greg Valliere is with us, Chief U.S. Policy Strategist at AGF Investments. Greg beautifully brings us together the business, the markets and the
So Oracle has done a deal with TikTok, bearing in mind, and I'm not suggesting nothing untoward, believe me, but bearing in mind the friendship
between Donald Trump and Larry Ellis of Oracle, one would imagine that Oracle gets the deal.
GREG VALLIERE, CHIEF U.S. POLICY STRATEGIST, AGF INVESTMENTS: I think that's a safe assumption, Richard. There could still be a snag, but I think
that Ellison will get it, yes.
QUEST: So where is the politics in all of this in terms of Capitol Hill? In terms of the way in which politicians are viewing what is happening in
tech, particularly as we have a series of IPOs and a series of deals being done?
VALLIERE: Well, I think that the Trump administration has issues with several of the tech companies. I think Kamala Harris is an interesting
player. She's got a lot of friends in Silicon Valley. They have supported her campaigns and I think she is not inclined to take any harsh action. She
certainly is not inclined to break up the tech industry.
QUEST: Greg, the other thing is this latest attempt by the Speaker to get some form of -- I won't even call it stimulus, I would call it holding-on
money for those who are out of work and haven't got much.
Is she going to be successful? The last one failed in the Senate. Will there be an opportunity to get a deal done before November?
VALLIERE: Right now, Richard, it looks unlikely. It's very frustrating. People are starting to worry about bankruptcy and evictions. Small
businesses aren't doing particularly well. There's a real need for more assistance.
I think we'll hear that from Jerome Powell at the Fed's press conference later this week. Yet, at the same time, the Democrats have dug in their
heels. They want $2 billion or $3 billion and they're not going to get it.
QUEST: I assume that's your fire alarm going off in the background or they're testing it in some shape or form. Just briefly, Greg, as we look to
this week with the Fed, no move likely. But it is going to be the Fed we're watching, what they tell us is necessary for the economy.
VALLIERE: Well, they're certainly going to tell us they want more inflation. They'll gradually tolerate more inflation. I don't quite know
how we get there, but I think that's going to be a big part of their statement. And I also think they'll talk about more assistance for the
economy, which needs some right now.
QUEST: Greg Valliere joining us from Washington. Greg, we're grateful for that.
The sirens seem to have stopped just as we have finished as well. So, I'm guessing it was the fire alarm.
We are going to look at the markets and see how they are trading. The futures and how they look at the moment. The futures are looking strong
across all the major indices. The NASDAQ is up, it will be up by 1.5 percent. The S&P up, similarly, and the Dow futures also up.
We'll take a short break. This is FIRST MOVE.
QUEST: All right, it is just coming up to 9:30 on Monday, the start of a new week, 9:30 on the Eastern Coast of the United States, which means the
day of trading is about to begin on Wall Street. It is going to be a bullish start to the session, with all the futures pointing upwards. The
best being seen on the NASDAQ.
Not surprisingly, there are deals galore, it seems multibillion deals, multi-multi billion-billion dollars and if you look at the ARM Holdings and
then you look at TikTok and a variety of IPOs that we are expecting throughout the course of the week.
The trading gets under way shortly. Solid gains, a loss of 4.5 percent last week on the NASDAQ. That is now going to be reversed to some shape, form or
The applause from those on the floor, let us join the New York Stock Exchange. It's the opening bell for a Monday, the start of a new week.
QUEST: The backdrop there, of course, is a thank you to the firefighters across the United States, particularly on the western seaboard of
California, Oregon, and Washington State, which of course are heavily under fires at the moment.
And so trading begins on Wall Street. The trading week is under way, and stocks are higher. Look at that, out of the gate, the best part of 200
points, nearly three-quarters of one percent on the Dow Jones Industrials.
Multibillion dollar deals are being done so far this morning. TikTok is buying. Biotech sectors buying. Goldman Sachs and Deutsche Bank say the
worst of the tech selloff may be over. Pfizer says COVID-19 vaccine likely before the end of the year.
But not so fast for traditional businesses. The parent company of New York Sports Club and other fitness centers has announced today it is filing for
bankruptcy, and it is a busy day for tech IPOs, big names include the gaming tech firm Unity Software, telemedicine's company Amwell and the
Cloud firm, Snowflake. Warren Buffett is a Snowflake investors. Airbnb's deal could come later this year.
Let's talk about that. You see the three of them, the three big ones. Kathleen Smith joins me, the chair and co-founder of Renaissance Capital,
an IPO investment and research firm.
Kathleen, it is always great to have you, always good to have you.
So, we've got an interesting agenda for IPOs, despite the tech, I would say hiccup of recent weeks, the appetite to IPO is still there. Which of those
that are currently going do you like the look of?
KATHLEEN SMITH, CHAIR AND CO-FOUNDER, RENAISSANCE CAPITAL: Well, certainly the point about the hiccup, it was barely a hiccup because investors seemed
to have put aside those worries and are continuing to chase these high- growth tech companies.
And this September, we have about $12 billion worth of IPOs that are hoping to get out the door, which would make it the most active, most highly
valued amount of money raised compared to 2014. Half of the product coming out the door for September are software companies, and the rest are
healthcare and a few others.
So software is just leading the charge and that's because investors are chasing growth.
QUEST: Is it a foolish chase, do you think, at the moment, the uncertainty is so great, but I guess software can be used by everyone, pandemic or not.
But I wonder whether this chase to push up valuations in high-tech companies eventually comes to grief.
SMITH: Well, you have to be concerned about the valuations and they're so high because interest rates are so low, and if investors can find a growth
company anywhere that has much more value in a low interest rate environment.
And we're also seeing, you know, an interest in the acceleration of turning the economy into all things digital. So these software companies are
helping other companies offer products and services in the virtual world and being able to be more efficient.
We have to worry because valuations are very high.
QUEST: Right. So let's look at your top five holdings that you sent us in the disclosures. Zoom and Uber are in there, which of course -- Zoom, I
sort of understand in terms of its run-up, I mean, year-to-date of 462.
Do you know what annoys me about Zoom, Kathleen? Each time I've looked at that stock, I thought it's overpriced, I'm not going to buy it. And of
course, as I've thought that, it's gone up another 100 percent, another 100 percent and so on. It's classic. Classic. Even Uber.
But of those five, what is it about them that you find particularly attractive? Is there a common theme?
SMITH: Basically, there are about new ways of doing business and it did help for Zoom to be part of the whole work from home category of equities.
But Zoom in particular is expanding more than you would think.
It's not just a videoconferencing company. It's offering workplace interaction, telephone. You know, it is trying to capture all digital work.
And so there's a lot of expansion of this company in addition to the fact that more and more communication is being done by video.
SMITH: When they first came out, I was surprised they had wonderful financials and I thought how could a company with these great financials be
in the videoconferencing business? Didn't we see this already with Skype and others?
But this company has figured out -- they came from WebEx and they figured out how to make a really useful product and they keep beating the market's
QUEST: But this is on a more general point, a more general investment philosophical point, this is an example of looking at a share price, seeing
it having risen and thinking this can't go further, there's not more to give.
As I say, I looked at it back in April, I looked at it back in May, I looked at it back in June, and I kept thinking this is bust. The gains are
there. There's no more room on the upside.
And I'm wondering what your advice to investors is, without a note on a particular stock, but as a matter of philosophy. When you see a stock
that's run up, at what point do you say, I still think it's time to buy?
SMITH: I think these are very hard decisions. We're talking about actually doing a lot of homework to figure out valuations, expected growth rates.
So, you know, our approach to this is we created indexes that our ETFs run on, and the way that the U.S. IPO ETF works is it's a buy and hold basket
of the largest companies that have gone public over the last two years, and it rebalances every quarter. And after two years, we move on.
So that is a rules based product. We're not talking about active management here, but being able to capture the returns on these hard to value new
names that enter the marketplace as IPOs. So there is performance that investors can get.
If you're an active manager, this is a lot of hard work and you would pay an active manager for the work of analyzing and knowing a lot about the
company, such as Zoom, can it achieve the growth rate? Because the multiples look very high if you don't have some model for what you think
the future growth will be.
So this is very hard for investors, which is why for individual investors, we say take the emotion out. You can own a product that's a basket of these
names, so some aren't always going to work so you have a little bit of diversity in that basket.
I will say the orientation these days, the largest and most liquid IPOs have been a lot of tech and software companies and some healthcare. So it
is weighted to those sectors that are pretty popular right now.
Ideally, it's better to be involved in these companies when there's a lot of fear in the market. That's for anything. So the best time to buy in the
stock market is when there's a lot of fear. I don't see fear around right now, so maybe it's a good time to sit back a little bit.
That dip we had for tech might have been a little bit of notice to maybe if you wanted to add something. But I would say, without seeing fear, you have
to be worried about how much momentum there is in this market and we see multiples are extremely high.
QUEST: Ultimately, of course, it's the speed with which the market got back to where it was, I think, that concerns us. I look at that with a
certain amount of puzzlement.
When Main Street, Kathleen, and the pandemic is still rife and I see a market that has recovered to such levels, I cannot square that circle. Can
SMITH: Well, I think basically the stock market is really a discounting mechanism of the future and this market is looking at a recovery from the
pandemic that will benefit certain industries. So that's the only way to square this.
There's a lot of enthusiasm -- I do want to highlight that this week because there's so many companies coming public. I'll call it a blizzard of
IPOs and leading the pack are Snowflake, which has just raised its range. It's trying to raise $3 billion at a market cap of $37 billion for this
company. And that represents something like 80 times trailing sales.
I don't know if I'll live that long to see the company justify that huge multiple. But there's so much interest in this Cloud company, even Warren
Buffett who has given up on value investing, is getting shares on this IPO, which tells you that, I guess, if we follow Warren Buffett, and I think
there's a lot of enthusiasm for Snowflake, there's going to be just -- it will be hard to contain that company when it comes out, and I caution
investors, I think, if you can get shares on the IPO, that's great. But it's very hard to justify $37 billion. That is the most highly valued
software company we've seen ever.
QUEST: Kathleen, it is good to have you. Thank you. I appreciate the bluntness and the frank speak as we look at those IPOs and we'll follow
them, of course, as we go.
Now, in the moment, 60 years of OPEC. It's a cartel. Cartels are normally bad, in fact, in some cases, they are illegal. But OPEC has lasted for 60
years. We ask the Secretary General whether this cartel is still relevant. An exclusive interview, next.
QUEST: As OPEC celebrates its 60th Anniversary, it has been a torrid year for the price of oil, of course. On Wednesday, the futures market even
going negative, but that doesn't stop the OPEC Secretary General from being bullish on the future demand for oil and the future of the cartel. He spoke
exclusively to John Defterios.
MOHAMMED BARKINDO, OPEC SECRETARY GENERAL: The global economy continue to witness some anemic recovery, if you like. What we are witnessing, despite
the unprecedented amount of stimulus packages around the world, north of $20 trillion, about a fifth of the global economy, the economic recovery is
not at the pace that we projected.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Would you say, Secretary General that it will take until 2023 to get back up to where we
were in 2019? That's the word I got from the shale producers in the Permian Basin.
BARKINDO: We are not that pessimistic here in OPEC. We foresee a strong rebound in 2021, in the first half of 2021 with numbers ranging around
seven million to eight million barrels a day, hinged on the GDP growth rate of about 4.7 going higher.
DEFTERIOS: On this year's 60th Anniversary, many are asking the question, what is the relevance of OPEC? Now, just let's just take the last five
years if you were not at play during three major corrections.
BARKINDO: As an organization, we had survived 60 years of highs and lows, we have our own good and bad times, but what we are witnessing in the last
five years, including the current one were totally unprecedented.
However, we have proven again, once again, that the world needs this organization and we have seen in 2016 December when we reached out to our
partners in the non-OPEC who came onboard to sign the Declaration of Cooperation that was historic.
The mechanism of the Declaration of Cooperation with all the partners on board rose to the challenge in April and in June to respond to the impact
of this virus on the global economy.
DEFTERIOS: As you know, many people have written off OPEC in the past and it didn't play out the way they were thinking. But in this energy
transition, can you get to a hundred years old and survive with all the investment that's going into renewables today? It's about half of global
investment in energy.
BARKINDO: You're quite right that we were written off as an organization, not once, in the last 60 years, and we proved to the contrary. And going
forward, yes, we acknowledged in our outlook that renewables will continue to attract investments, it will continue to grow.
But in our latest outlook to 2045, the alternative energy sources, the renewables will account for less than 20 percent. Oil and gas will continue
to dominate this energy basket.
QUEST: John Defterios is with me now. John, you know, BP this week is going to be giving its presentation to the market about how it is moving
away from fossils and towards renewable, what the long-term strategy is. If you take that onboard, is OPEC essentially a dodo waiting for its own
DEFTERIOS: Well, there's a big gap on what the future looks like, Richard. I think COVID-19 is serving as an inflection point here and BP tends to
In fact, they've put out their energy outlook for 2020 and then forecasting to 2050, which is not easy to do. Let's take a quick look at the chart.
And I just took the mid-range predictions by BP here. We hit over a hundred million barrels of daily demand last year. OPEC admitted that's dropping to
90 million this year. The first contraction in modern history. But look at the blue line there from BP with oil demand in 2050 dropping to 55 million
If you follow the Paris Climate Agreement targets, that needs to go to 30 million barrels. So this is going to be a radical, rapid change, according
to BP. They say renewables will make up 60 percent of the market by 2050. The Secretary General, as you saw, Richard, was saying that will be 20
So I say, mind the gap and follow the money. The money right now is rapidly shifting to the renewable sector. Oil investment by the way dropped a
trillion dollars according to the IEA in 2020 as a result of this.
QUEST: Okay, but John, the other problem with OPEC, of course, is not just that the members cheat, but they don't like each other very much in certain
cases and there are internal rivalries.
America, which is not OPEC, of course, is now the world's largest producer, which begs the question about OPEC's ability to maintain discipline. I
mean, it's no longer the swing producer. Can it maintain discipline?
DEFTERIOS: Well, Richard, their role now is trying to shore up the excess capacity in the world, and they are cutting production, to your point,
until 2022, not at the level they had to do in April, May and June, but still the fact they're extending it through the first quarter of 2022 says
something right now.
You're talking about the rivalries within OPEC Plus, Saudi Arabia and Russia had that dispute and it was Donald Trump that leaned on them to come
together to cut production, but the correction in the shale basin, by the way, is quite radical. It is three million barrels a day, so you have
Russia, Saudi Arabia and the U.S. almost running at level peg.
DEFTERIOS: What we could see here playing out over the next 25 to 30 years, Richard, is the last man standing scenario where the Middle East
producers, particularly those here on the Arabian Peninsula where I'm sitting are the low-cost producers of the world.
So you have a scenario where the demand is only 30 million to 55 million barrels a day. The market share will rest here, not in the United States,
it is a threat to Russia, places like Nigeria, Iraq, and Venezuela. Right?
So, this could have wide-ranging geopolitical considerations as a result of the energy transition, which is being triggered right now by COVID-19.
QUEST: John Defterios looking well and joining us from Abu Dhabi. John, thank you.
Nikola is fighting back. A short seller has accused the electronic truck manufacturer of fraud. We'll have the details on Nikola's rebuttal next.
QUEST: Nikola is denying allegations of fraud that are being made by a short seller in the market. You'll recall that Nikola's EV -- electric
vehicle trucks -- they IPO'ed was last week and the company did extremely well. There have now been allegations which Trevor Milton, the CEO,
We spoke to Milton last week before the allegations were made.
(BEGIN VIDEO CLIP)
TREVOR MILTON, CEO, NIKOLA MOTORS: I would say most of the core IP is all Nikola and all the design, the interiors, the controls, over the year
updating, the infotainment system, all of that stuff is Nikola's IP, and so GM is just helping us build it and they are helping us drive down our
(END VIDEO CLIP)
QUEST: So Nikola, with GM's help, and GM says it is concerned about what's being said. Paul La Monica is with me.
Paul, so these allegations by a short seller, one of course immediately says short sellers have a vested interest in pushing the price down. But
does the market generally think that there might be at least a whiff of something or is this all smoke?
PAUL LA MONICA, CNN BUSINESS REPORTER: No, I think the market is definitely very concerned, Richard because Nikola's shares have tumbled
since these allegations by Hindenburg, one of the most damning ones is that the prototype for one of its electric cars, the Nikola 1, basically was
brought to a top of a hill and rolled down instead of using its own technology to drive the car, and Nikola has denied some of the allegations,
but they did kind of concede that they never were really trying to showcase the full scale of its electric technology in that Nikola 1 prototype, which
has been abandoned and they've moved to the Nikola 2.
LA MONICA: But, I think that Trevor Milton, he spoke to you, there are some legitimate gripes that he has with Hindenburg, short sellers clearly
like to try and profit from stocks that have risen up dramatically and Nikola's shares did go pretty crazy after the GM investment -- GM taking
about an 11 percent stake -- well, it has some pretty impressive partners as well, customers planning to buy, preordering these trucks.
You've got public services, garbage collectors buying electric garbage trucks and Anheuser Bush also placing an order.
LA MONICA: Yes, sir.
QUEST: We will have to leave it there. Paul La Monica, thank you -- that is on Nikola share price.
That is our program for today. I'm Richard Quest. Julia Chatterley is back with you tomorrow.
I leave you with the markets that are strong and looking good and that's a great start to a Monday.
As always, whatever you're up to, I hope it's profitable.
I'll be back with "Quest Means Business."