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First Move with Julia Chatterley
JPMorgan, Wells Fargo And Goldman Sachs All Beating Earnings Expectations With Caveats; Facebook Set To Face A Grilling Over New Cryptocurrency, Libra; President Trump Tackling The Squad On Twitter This Morning As Party Pressure Mounts. Aired 9-10a ET
Aired July 16, 2019 - 09:00 ET
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JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR, FIRST MOVE: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE and here's
your need to know.
The banking beat: JPMorgan, Wells Fargo and Goldman Sachs all beating earnings expectations with caveats. Pit on the Hill. Facebook set to face
a grilling over new cryptocurrency, Libra. And not backing down. President Trump tackling the squad on Twitter this morning as party
pressure mounts. It's only Tuesday, let's make a move.
Welcome once again to FIRST MOVE. It is a banking bonanza session this week, of course and we are looking at all three banking earnings this
morning. Wells Fargo, JPMorgan, and Goldman Sachs like I said, a mixed bag and we'll dig through the details very shortly.
But first, let me give you a look at what we're seeing for futures right now. A very modest positive start to the session we're looking at right
now after a low volume micro mini gain during the session yesterday. But it was enough though, to see fresh record highs for the U.S. majors.
Now it's all about Fed Speak this week, of course, and earnings season. Ten percent of the S&P 500 companies, as I reminded you yesterday,
reporting this week, but let's not forget the economic data. U.S. retail sales rising this morning some 0.4 percent on last month, twice the level
of expected and the fourth straight month of gains.
The index, the consumer in the United States remain strong. It follows better than expected factory data on Monday, too. So it's going to be
interesting to get the Feds take this week. But right now, I don't think any amount of good news derails the Fed rate cut in July.
What about what's going on in Europe? Though a positive day overall, despite some gloomy numbers from Germany, investor sentiment plunging yet
again last month with the German export sector continuing to feel the trade war pain. A lesson for the Fed there too, perhaps that lower rates,
negative rates, in fact, doesn't necessarily mean more growth.
But today, the question we're asking is whether low rates will help or hinder the banks and more importantly, lending, of course, to the real
economy, because that's where we begin today's drivers. And Matt Egan joins us now.
The headline here, Matt, I think from all of these results, the U.S. consumer remains strong, but the trading desks are still a challenge.
Though Goldman Sachs, let's start there seemed to buck the trend here of weaker trading revenues. Talk us through their results.
MATT EGAN, CNN BUSINESS LEAD WRITER: That's right, Julia. So, I think you mentioned this, a little bit of a mixed bag. But there are some common
themes between the earnings that we've seen so far this week from the big banks.
Now, you mentioned the trading situation. Goldman Sachs really did buck the trend here. They were able to report increases in trading revenue.
But that's the outlier. Really, we're seeing pressure from the other big banks.
And I think what that is, is it's a reflection of the fact that volatility has come down in capital markets. And while that's a great thing for the
average investor, it means potentially higher correlations and lower trading volume, and so other than Goldman Sachs, we are seeing pressure
there.
On the broader economy, though, as you mentioned, this slowdown that the Federal Reserve is responding to has not arrived in the American household.
JPMorgan CEO Jamie Dimon was talking about how he sees positive momentum from U.S. consumers. They reported double digit increases in credit card
sales, in merchant volume, and their deposits were up as well. We saw similar positive numbers from Citigroup as well.
And you know, the other point, though, and it goes back to the Fed is that bank profitability is under pressure from the yield curve and all these
swings in interest rates.
And so JP Morgan, the reason why that stock is down, at last check about one and a half percent premarket is because they actually cut their outlook
for net interest income, which is the difference that banks make on what they charge on loans and what they make on deposits.
And so, you know, that is an issue that I think we're going to continue to see going forward -- Julia.
CHATTERLEY: Yes, and this is exactly the point and we heard exactly the same from Wells Fargo, too. A warning here that that bank profitability,
to your point, the amount that they can charge to allow people to borrow from them is going to go down. The question is does that impact the real
economy hereto, because they simply a willing to lend less?
EGAN: That's right. I mean, that is something that we need to watch out for. Wells Fargo's net interest income was down during the quarter.
Citigroup's margins in this area disappointed yesterday. And the interesting thing is that JPMorgan sort of signaled that its outlook may
have to come down even further if the Fed cuts interest rates as many times as the market thinks.
So that's something that we'll have to watch. One other major driver -- one common theme here is that buybacks are really padding the bottom line
here.
[09:05:08] EGAN: Wells Fargo said that it repurchased about $5 billion worth of stock during the second quarter. That was nearly double what it
did the year before. But what's interesting is that you know, KDW put out a report yesterday and they said that if you take away buybacks, bank EPS
growth would really vanish.
So that's something that we will need to monitor to see whether or not banks are able to continue to return capital.
CHATTERLEY: Such a great point, Matt, and I know some people over in D.C. who will be eagerly watching those buyback numbers as well, because that's
what we have next. Matt Egan, great job. Thank you for that.
All right. Two big hearings on Capitol Hill today. In the next hour, Facebook set to face questions over there new cryptocurrency, Libra and at
2:00 p.m. Eastern Time, Big Tech executives will be grilled on whether or not they simply have too much market power, so called antitrust issues.
Brian Fung and Claire Sebastian are joining us on both of those stories. Clare, I'll start with you because Facebook faces the grilling first, lots
of negative commentary, including former Secretary of the Treasury, of course, Stephen Mnuchin saying he has serious concerns about
cryptocurrency, what can Facebook say today to allay some of those concerns, if anything?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia, they face a bipartisan show of skepticism, a barrage of criticism, as you say, going
into this. We've had the Fed Chair saying there are serious concerns. We've had the President tweeting that he's not in favor of
cryptocurrencies, that he sees Libra is lacking dependability. And all this culminated, as you say, yesterday in a hastily arranged press
conference by the Treasury Secretary Steven Mnuchin, where he really laid it on quite thick with his criticism of Libra and Facebook, take a listen
to what he had to say.
(BEGIN VIDEO CLIP)
STEVEN MNUCHIN, U.S. TREASURY SECRETARY: To the extent that Facebook can do this correctly, and can have a payment system, you know, correctly with
proper MAL, that's fine. They've got a lot of work to do to convince us to get to that place.
(END VIDEO CLIP)
SEBASTIAN: So in response to that, Julia, what we're going to see today, from David Marcus, he is the head of Calibra, which is Facebook's unit
that's going to build applications to use Libra. It's a show of really qualified humility. He says that he is going to wait for regulatory
approval to launch the project. He says that they will be very sure that they comply with anti-money laundering regulations, and all of that, but
he's also going to urge Congress not to overreact.
I want to pull up a quote from the prepared remarks that we've got from him. He says, "I believe that if America does not lead in innovation in
the digital currency and payments area, others will. If we fail to act, we could soon see a digital currency controlled by others whose values are
dramatically different."
So he is basically saying, if we don't do it, someone else will and the U.S. needs to lead and this I think the implication being perhaps better
the devil, you know, there.
CHATTERLEY: Yes, and I completely agree. The remittances business needs disrupting and prices, rates need to come down. I'm simply not sure
Facebook is the right company to do it. But we shall see. Clare, thank you for that.
Brian, come in here, too, because one of the big questions, of course, is going to be asked if the likes of Apple and Amazon, Google, do they simply
have too much market power? Now, this hearing comes after I believe, months and months of investigation. So hopefully, the questions today
aren't going to be as lame as perhaps they have been in the past. Am I allowed to say that? Yes, I did. Brian, what can we expect?
BRIAN FUNG, CNN TECH REPORTER: Well, I think that's the hope here. We're seeing here a hearing and then compared to the last hearing in the series,
it tackles a much bigger question, which is, you know, just how much power do these tech platforms have in terms of potentially stifling competition
and strangling startups?
You know, the last hearing in this series was very narrowly focused on the technology sector's impact on local journalism. This is a much bigger set
of questions here that lawmakers are going to try and get the tech companies to answer and you have, you know, Apple, and Amazon, sending
members of their legal teams to testify. You have Facebook and Google sending members of their policy teams.
In addition to that, you know, you've got a number of outside academics, industry experts and former government officials who are all going to be
weighing in providing context to this question. So it's going to be very interesting to see this issue outlined in much broader strokes than you
know, perhaps we've seen in previous hearings in this series.
What we're going to see today is a much bigger reckoning for Silicon Valley, as it grapples with this massive question about what government
lawmakers should do in terms of regulation, or new policies or perhaps even a breakup of some of these companies.
CHATTERLEY: Yes, it's a huge question. The question comes, ultimately, is the consumer harmed by this because if you want to take antitrust action,
that's what you have to prove. And it believes it will take years. Thank you very much there to Clare Sebastian and Brian Fung, of course, and we
will continue to talk about this all throughout the day on TV.
But we've also got you covered it on the digital side, too. You can go to cnn.com/businesstowatch. Both hearings live if you want to do that. So
we've got you covered on all aspects.
[09:10:10] CHATTERLEY: And now though, let's move on and talk about some of the other stories that are making headlines around the world.
Donald Trump has taken to Twitter yet again to renew his attacks on four Congresswomen. This morning he accused him of making statements that are
anti-Israel, anti-USA and pro-terrorist. He also questioned why the House isn't voting to rebuke what he called quote, "the filthy and hate laced
things they have said," alluding to an expected vote in the House over whether to condemn the President's recent tweets.
Joe John joins us once again from Washington. Oh, Joe, I don't even know what to say about this at this stage. What we saw yesterday was the squad
of course, these four Congresswoman fighting back in a press conference last night, but the President of course, continuing to tweet this morning.
What about this vote? Where do you think this goes next?
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Well, we do know the House of Representatives is controlled by Democrats. And these are Democrats
who've been attacked by the President and reading through that resolution, well, certainly it's going to be nonbinding and not enforceable or
actionable.
It quotes a variety of Presidents, Founding Fathers of the United States, and then it sort of gets down to the meat of the language at the very
bottom referring to President Trump's racist comments, and saying he has increased fear and hatred of new Americans and people of color by saying
our fellow Americans who are immigrants and those who may look like immigrants, the President says should go back to other countries.
So strong language there from them and that is obviously about the only thing they can do because this President has repeatedly said stuff like
this, though, these words are probably some of the most fierce partly because he is now President of the United States, partly because of course,
these are duly elected Members of Congress he is talking about.
I think, the overlay, if you will, of course, as presidential politics has been just about a month since the President made his official announcement
for his reelection campaign and all of that indicates is that we're likely to see this kind of thing more in the future -- Julia.
CHATTERLEY: Yes, Joe it's a great point. It's the prison that we have to look through this rhetoric in order to understand really what's going on
here.
But you know, when I look at all the commentary that's coming out from whoever here, no one -- no one represents the whole here, how do we move
away from this and get back to policy and talk about things like the looming debt ceiling, which is, you know, another big issue that the White
House and that Congress here needs to tackle?
JOHNS: Right, there are a whole variety of very serious issues that the President and the Congress needs to deal with and rather quickly as a
matter of fact, but we also know that the August recess for the United States Congress is coming up pretty fast as well. So it's not that likely
that they're going to get a whole lot done before August.
And the debt ceiling obviously is one of those things that has to be dealt with. But all this language does is make it a little bit harder for the
President and the Democrats on the House side to get together to accomplish anything productive, so you can say that it has probably made it worse.
CHATTERLEY: Yes, my head is shaking. Joe Johns, thank you so much for joining us once again. All right, let's move on. Floods and landslides
have killed more than 100 people in Nepal, India and Bangladesh. As you see here, villagers are inundated with water. Hundreds of thousands of
people have been displaced and six million people impacted after torrential monsoon rains began to over the weekend and triggered flooding.
A rescue operation is underway in Mumbai after a four-story building collapsed leaving up to 25 people trapped in the rubble. We are told at
least four people are dead, nine people have been rescued so far. The cause of the collapse is not yet known. Mumbai and surrounding areas faced
devastating floods just a week ago as we were mentioning there.
The E.U. Parliament will vote later today on approving the new European Commission President. If Ursula von der Leyen prevails, she will become
the first woman to hold the job which oversees the body that shapes E.U. policy. Von der Leyen is Germany's outgoing Defense Minister.
All right, we're going to take a quick break here on FIRST MOVE. But still to come, from low budget to perhaps no budget, RyanAir cutting capacity in
the wake of the Boeing jet crisis. And as Facebook feel the heat on the Hill, one tech Titan tells us point blank, Libra is a mistake. That's
coming up on First Move. Stay with CNN.
(COMMERCIAL BREAK)
[09:18:03] CHATTERLEY: Welcome back to FIRST MOVE. We're looking at a slightly positive open for U.S. stocks this morning. We didn't see much
gains yesterday, but we did manage to eke out fresh record highs.
We've also had stronger retail sales data than expected from the United States this morning, and the major banks of course reporting, as we've been
discussing, beating earnings as far as the headline numbers are concerned. But as we saw and discussed earlier, the trading desk, of course, still
pressured. And they have to tackle the low rate environment right now.
Interesting that we spend a lot of time talking about the $12 trillion worth of sovereign debt that has negative yields. What about $600 billion
worth of corporate debt that has negative yields, mostly in Europe?
Lots to discuss here. Joining us now, Alicia Levine, she is Chief Strategist at BNY Mellon Investment Management. Always great to have you
on the show.
ALICIA LEVINE, CHIEF STRATEGIST AT BNY MELLON INVESTMENT MANAGEMENT: Thanks for having me back.
CHATTERLEY: You've been writing lists, and I love them. What's in the price here for investors and what isn't? Talk me through what's in the
price? Because there's a lot of expectations, high expectations about rate cuts, about no inflation ever again and earnings upgrades, too?
LEVINE: That's right. So I like making lists because it's a good way of keeping yourself honest, when you think about valuations in the market.
And when you think about putting in fresh capital on a particular day, what is it that you're actually buying?
So right now investors are buying for rate cuts through the end of 2020. They are buying all the earnings power for 2019 coming in that fourth
quarter. They're buying in 11 percent earnings increase for 2020. And they're buying a trade deal sometime in the autumn. And they're not buying
no trade deal, right? So they're buying some trade deal.
They're buying inflation will never spike again, we will have low inflation forever. It's gone forever. And you know, so you have to ask yourself is
all the good news in the market? And the other thing that's really not being priced in that a particular sector is pricing in is a more leftist
government being voted in 2020.
So I'm not going to name names here, because we don't do that.
[09:20:05] CHATTERLEY: I do. Bernie Sanders or Elizabeth Warren potentially and we know this just by the rhetoric that they say.
LEVINE: That's right.
CHATTERLEY: We can ignore that and move on.
LEVINE: So Corporate America should be worried about this. So the healthcare sector has already priced this in, and the healthcare sector has
been underperforming, but the rest of the market has not. And so you have to ask the question like, how likely is it that we get a Democratic
candidate that is more leftist than what this country has normally been used to? And what that means for corporate earnings and for corporate
America?
CHATTERLEY: I mean, I just love that you're pinpointing all of these things and it's not just about the politics, it's a hugely important one.
But as you were pointing out there, there is a lot of good news baked into the cake or assumed at this stage.
Let's talk about rate cuts then, how likely is it that the Fed -- and I think everyone now expects them to cut in July. What's the likelihood or
the probability that they only cut rate once, because that's rare.
LEVINE: It is very rare. So I do see a second rate cut by September because the pricing -- the inflation issue really is pretty low. I mean,
we just had import prices this morning and they were pretty low. So I do think there's a second rate cut, you rarely get one cut.
But you know, the issue is, then you're taking some of your dry powder away for in case there is a recession one day. I do think it's the right move
that rate of increase in December was probably a mistake. So they've got to take that one back.
CHATTERLEY: Does it help at the margin? Because we've been talking about the banks and whether or not actually lowering rates at this stage will
mean that the banks end up lending less? I mean, Germany news, this is a great example of where negative rates actually doesn't necessarily
stimulate the economy enough.
LEVINE: That's right. So Germany is a great example, and Europe overall is a great example of the lowest rates you could possibly have. It has not
really been able to simulate the real economy nor have they been able to increase the multiples that investors pay, you know, for the equity
markets.
So you have to ask the question like that one to one correspondence that we all make, what is the transmission mechanism actually that low rates are
going to consume this market and that we are expected to stabilize the economy?
CHATTERLEY: I mean, the transition rates in Europe are very different, that the structure of the banking sector is very different to the United
States. But do you think on the margin, it helps banks and it helps lending here in the United States? Because the President arguably is
someone who really believes that lower rates here will help.
LEVINE: So he is right about one thing, the Fed needs to cut to steepen the yield curve. The Fed must get rid of that inversion on the front end
and cutting rates will do that. And ultimately, that will be positive for the banks.
In the short term, you've seen with some of the earnings that the net interest margins are coming down by $500 million. It should not be a
surprise, though. This is not a surprise. But you've got to get -- the Fed has to get rid of the inversion. Two rate cuts will do it. Three
actually would be better.
CHATTERLEY: What's going to surprise us in earnings season, do you think? Where is the value when you look either around the world or you look at
perhaps where investors should be looking at this moment?
LEVINE: Look, I think the U.S. consumer, we had data as you pointed out this morning. Look the Americans like to shop. Your audience knows, our
people like to shop and the consumers, 70 percent of the U.S. economy, and that is going to prop up the economy.
And the question is, can the strength in the consumer side and make up for the weakness in the industrial side and the weakness globally on the
industrial side? My bet is yes.
CHATTERLEY: Yes.
LEVINE: My bet is yes. Do you see that the global data stabilizing?
CHATTERLEY: If my shopping habits are anything to go by, I'd say yes, too.
LEVINE: We're supporting the economy here.
CHATTERLEY: Exactly. Single handedly. Alicia Levine, always a pleasure. Thank you for that.
LEVINE: Thanks, Julia.
CHATTERLEY: All right, let's move on now and look at the airline sector. Ryanair specifically feeling the pain from the MAX 737 jets grounding. It
is saying it has to trim its 2020 growth plans. Investors though seemingly unfazed, which is interesting, the shares in Dublin some two percent higher
almost. Anna Stewart joins me now.
Interesting, Anna, when a company says look, we're having a real problem. We have to cut capacity here and investors go, "Oh, great. That might help
in the performance." Interesting.
ANNA STEWART, CNN REPORTER: Yes, but this program wasn't really surprise, was it? The Boeing 737 MAX delays is so well forecast and actually I think
investors are quite relieved at how conservative Ryanair are being here. They were meant to have 58 delivered in time for the summer schedule next
year. Now they only expect 30. That's because the FAA has to go through the certification. Did I say that right, Julia? They need to go through
the whole process.
They expect some in September, it could take the end of the year. They don't expect their planes to be delivered until the beginning of next year.
They've cut the growth forecast some 73 percent, but that was no surprise, but what was, Julia was when they said that they might cut back operations
at some airports and abandon others entirely.
CHATTERLEY: Yes, it's an interesting one for me. I mean, we know that there is no substitute here for the Boeing 737 MAX, but the idea that you
cut capacity to such an extent. Interesting for negotiations going forward if you try and add them back, what else?
We've also got United Airlines here in the United States reporting and this is another airline that's had to cut capacity, canceled flights as a result
of the MAX jet crisis. What should we expect from these guys, Anna, because I know you've been looking at these numbers, too?
STEWART: Well, generally, Julia, we're expecting quite strong robust earnings later today that should make up for any issues around the 737 MAX.
It's actually a very small proportion of the overall fleet, around two percent. So, they're not nearly as impacted as the likes of American or
Southwest. So we get those out after the bell.
In terms of Europe, looking at all the sector for aviation prices up today, it is really interesting how they are all really pleased with what Ryanair
said, essentially reducing capacity in Europe means that ticket prices are likely going to go up, not just at Ryanair, but for the rivals as well.
And if you want to be really cynical with today's news from Ryanair, you could also look at the fact that announcing that they're going to
renegotiate contracts or have discussions with airports that are underperforming and suggest that they might be trying to get some better
deals.
CHATTERLEY: Or even raise ticket prices perhaps, Anna, as well but we would never be skeptical, would we? Ever. Anna Stewart, thank you so much
for that.
All right, we are counting down to the market open this morning. The banks very much front and center. Goldman Sachs looks set for a bit of a pop
here. JPMorgan, under a little pressure premarket. We will have the open for you in just a few moments' time and plenty more to come on the show.
You're watching FIRST MOVE. Stay with CNN.
(COMMERCIAL BREAK)
[09:30:00] CHATTERLEY: Lots more smiling faces here on Tuesday at the New York Stock Exchange and that was the opening bell. We were expecting a
pretty flat start to the trading session today. Remember, anything in the plus column today means a fresh record high for these U.S. majors. So keep
that in mind as we see this session progress.
We also had some strong retail sales numbers out from the United States, as we were talking through with Alicia there. The U.S. consumer remains
strong, up some 0.4 percent in June. Numbers are better even if you strip out the gas component there.
You could even see a boost to Q2 growth estimates here in the United States, to also on the inflation front, U.S. import prices falling almost
one percent last month. What's the Fed going to make this? Well, it clears the way again, for that rate cut in July, of course, and we're
gearing up for plenty of Fed Speak, including Jay Powell, of course today speaking on monetary policy before that quiet period begins this weekend.
All right, so let's take a look at some of our global movers in the session today. Alphabet shares in focus falling on a tweet from President Trump
this morning saying his administration will look into the billionaire tech investor Peter Thiel's claim that Google committed quote, "treason."
Thiel accused the search engine of working with China. You remember, we talked about that story on the show yesterday. Well, Alphabet in focus
now.
JPMorgan, also under a bit of pressure here. The bank posting a record Q2 profits, $6.9 billion. That was a 16 percent jump year-on-year. However,
it also posted a fourth straight drop in fixed income trading revenue, and it warned that lending income will fall in the second half of this year.
And that was the key I think, for what investors are reacting to today.
Domino's Pizza, the pizza chain. Same store sales growth missed estimates. They've been adding stores in order to achieve faster delivery. They added
nearly 200 stores during the quarter. Skeptics are arguing over the tactics are hurting the same store sale growth. Are they cannibalizing
purchases from existing stores? It's an interesting question.
Johnson & Johnson profits jumping some 42 percent in the second quarter, all of the three business units beating expectations here, of course, but
it does come as the company is facing a handful of legal issues and we've discussed those, of course on the show before.
All right. Let's move on here. She's a former presidential candidates. The first woman ever in fact to lead a Fortune 50 company and is an author
of three books. Carly Fiorina is our next guest.
Fiorina is best known for her six-year tenure as the CEO of tech company, Hewlett Packard. Her term began in 1999, a year after Google, in fact was
founded. It then ended in 2005, just 12 months after Mark Zuckerberg launched Facebook.
So as Congress begins two days of hearings on antitrust issues in the tech sector and Facebook's cryptocurrency, Libra. I asked Fiorina for her take
on the industry since her time and for what she thinks of Facebook's latest venture into cryptocurrencies. Listen in.
(BEGIN VIDEO CLIP)
CARLY FIORINA, AUTHOR: I have long known that power concentrated is power abused, it's always true. If you concentrate too much power in too few
hands that power will be abused.
It's true in politics, and it's true in business. And so when I look at the tech sector, what I see now is too much power concentrated into few
hands.
The power that companies like Amazon, Facebook and Google have over our lives, over information, the concentration that they have achieved, in many
cases by gobbling up others, in many cases by not earning a profit in the stock market letting that go on for years and years and years because the
market focused only on growth. They have amassed enormous power.
And so it's not enough for a founder or a CEO like Mark Zuckerberg to say, "Trust me, I have good intentions. It's simply not enough. And so I do
think we've come to the point now where there has to be some transparency and accountability over all that concentrated power.
And that can only come through some level of regulation and requirement. I believe one regulates to a floor not to a ceiling. And what I mean by that
is a minimum set of expectations need to be regulated. Expectations about how information is treated, expectations about information that is
provided, expectations about the power that a consumer will always have and the accountability that they can demand from these companies.
CHATTERLEY: How many years does that take if we be honest to yourselves, and as you said, business is tied to politics, the lobby power is so huge.
How many years does it take?
[09:35:14] FIORINA: Yes, well, it is enormous power concentrated in the tech sector. And of course, the tech sector has been very smart about
providing enormous dollars, principally over time to the Democratic Party who normally would be pushing for regulation and who has not and don't
think it's a coincidence.
And of course, Republicans have been wanting to get money from the tech sector. So it does take a long time, and what I think it takes is wisdom.
And that's not always true in politics, either.
What I actually would recommend is that these companies step forward and provide some guidance, instead of just saying, "No, no, no," is to get
engaged in the problem solving process. Because if they don't engage in it, something will happen to them.
CHATTERLEY: When you look at Facebook and they step forward, and they announced at this moment that they're going to launch their own
cryptocurrency. I mean, there's a huge irony here. What do you think when Facebook announces something so huge, is this, so pivotal, potentially is
this?
FIORINA: Well, first, I think over the long run, it will be a mistake. Now that's a bold statement to make. It the short run, it may be hugely
successful, but in the long run, I think what it will do is continue to raise concerns and it will continue to make people uncomfortable.
My goodness, now without any banks involved, without any information, they're suddenly getting into money as well? I think over time, this is
going to be a problem for them.
(END VIDEO CLIP)
CHATTERLEY: Increased scrutiny as a result of a foray into cryptocurrency for Facebook. It's an interesting point. Now, cast your mind back to 2016
and Carly Fiorina ran for the Republican presidential nomination.
If you remember, it was the same election that saw Hillary Clinton make history as the first woman ever to be nominated as a presidential
candidate. I spoke to Carly before the recent controversy over comments made by the U.S. President Donald Trump about four nonwhite U.S.
Congresswomen, which of course many have condemned is racist.
But what she had to say about running as a woman and differences in politics and the treatment, I think of women versus men, seems pretty
pertinent, in light of what we've seen. Listen in.
(BEGIN VIDEO CLIP)
FIORINA: When you're different, it's different. It's always true. When you're different, it's different. The scrutiny is different. The
criticism is different, the expectations are different, the commentary is different.
I think the women who are running in this cycle, are doing a very good job of getting their voices heard. Their voices are getting a lot of attention
and that is a very good thing. And yet, it will be a different experience for them than it will be for the men.
This is something I've dealt with all my life, people used to ask me, "Aren't you nervous being the only woman on the debate stages?" And you
know, honestly, it's the story of my life. I've usually been the only woman in the room.
But it's true that when I left the debate stage, sometimes people would ask my team, what shoes I was wearing, or the designer of my dress. I don't
think they asked the male candidates that.
CHATTERLEY: Yes, you don't need to talk to me about that. I understand that completely. Do you think -- do you think a woman like Kamala Harris
could actually take the Democratic nomination and ultimately win the presidency? Do you think we could see that?
FIORINA: I think we can see a woman President, I think it's possible that a woman will win the Democratic nomination. I think the issue is going to
be when we get to the general and we have a long way to go and many things can happen.
I think in the end, what it will come down to on the general election is the positions of each side. And so I think if the Democrats continue to
list further and further to the left, and are actually advocating the elimination of private health insurance or the opening of all of our
borders, I think those are going to be losing positions.
But is the country ready for a woman President if she espouses the right positions? Yes, I think they are.
(END VIDEO CLIP)
CHATTERLEY: Carly has written three books. Her latest is called "Find Your Way: Unleash Your Power and Highest Potential." I also what her years
at the top of business and her experience with politics has taught her about leadership.
(BEGIN VIDEO CLIP)
FIORINA: I've learned more than anything that leadership is not about position or title. We tend to call people leaders because they've achieved
a big position and they hold a big title. But the truth is, that's not what makes them a leader, and there are a lot of people with titles who
don't lead.
Leadership in the end is about problem solving. It's about seeing possibilities. It's in particular about unlocking potential in other
people so that they can help change the order of things for the better. The purpose of leadership is problem solving in fact.
(BEGIN VIDEO CLIP)
CHATTERLEY: Carly Fiorina there. All right, we're going to take a quick break again here on FIRST MOVE, but coming up the journey from tweets to
Uber Eats. We speak to Twitter's cofounder about his latest company and its partnership with the ride hailing firm. Stay with CNN.
CARLSON:
CHATTERLEY: "Skip the line," that's the slogan of Olo, a platform that integrates online orders into the workflow of a busy restaurant kitchen.
The company works with 250 restaurant brands and has recently skipped the line to partner with Uber Eats.
Joining us in the chat room is the company's cofounder and CEO Noah Glass. Noah, fantastic to have you with us. I mean you worked with a lot of these
guys. Postmates, Caviar, DoorDash, but it does feel like Uber Eats is a pretty big swinger in this area.
NOAH GLASS, COFOUNDER AND CEO, OLO: It is, yes. Uber Eats is part of a cohort of companies that are helping restaurants to get into the world of
delivery where they don't have delivery capacity in-house. So the restaurants able to just prepare the food, have it ready and waiting for
the driver. The driver picks it up and then takes it directly from the restaurant to the consumer that's opening up this on demand experience to
consumers all across the United States.
CHATTERLEY: So what is Olo? Tell me about what the technology is and what your platform provides to these guys that, as you said, are providing a
sort of conduit to restaurants and to consumers that basically can't be bothered to go to a restaurant or wants to see food delivered.
GLASS: That's right. Well, we're the -- Olo is the leading digital ordering platform and delivery enablement platform for restaurant brands
all across the country. There are now over 70,000 restaurants that use the Olo platform to allow their consumers to order ahead, pay ahead and get
their food faster at the restaurant or now get it delivered to them.
So these are brands like Wing Stop and Shake Shack and Sweet Green, brands you probably order from every day. We're not a consumer brands, so it's
our technology that's powering that experience, and really enabling restaurants to play in this world of on-demand, the smartphone as the
remote control for buying things around you and meet the needs of that consumer who now doesn't want to go to the restaurant sometimes, but wants
the food to come to them.
CHATTERLEY: I mean, you've seen huge growth in the number of orders that you're processing. I saw a great statistic, 100 million orders in the 12
and a half years to last year when you doubled that last year. So I mean, the exponential growth that you're seeing here is phenomenal.
GLASS: Yes, yes, we saw a hundred million transactions last year across our platform, a hundred million, again, the first six months of this year.
So the exponential growth just continues.
We've been around for 14 years. We were actually founded June 1, 2005. Trivia, 25 years to the day after CNN was founded. But the company has
been doubling every year, and we see that continuing as part of the seismic shift towards digital ordering and delivery and really off premise food
consumption.
CHATTERLEY: Who pays? Do you get a cut of the orders that are put through, because when you mentioned Shake Shack, Sweet Green, McDonald's is
another one, I'm sure, I mean, the power that these guys have to perhaps push back on how much they pay you is far greater than an individual
restaurant would be able to do, but would still like to be able to use your services.
GLASS: Well, our platform is not a commission based platform. It's not a 20 to 30 percent commission on every order. Rather, it's a software
platform. And that's in the software as a service mold. So the brands are paying a flat fee per store per month, out of the corporate stores or the
franchisees and there's a small transaction fee associated with the delivery transactions that come across our platform and that's what's
really growing quickly.
CHATTERLEY: What does the future hold? What's the most exciting thing to you? Is it possibility of perhaps one of these big companies taking you
in-house like an Uber Eat and letting everybody else use your platform? Or do you intend to stay independent and doing your thing?
GLASS: So I've been doing this for 14 years, we've been a company for 14 years, we want to stay independent for the long term. We think we're in
the very early innings of what is a massive shift in the way that consumers like to eat. And it's really incumbent on us to stay independent and to be
an open platform and to work with all the restaurants that want to use the platform, all the point of sale companies, all the delivery companies,
everybody using Olo as a common carrier is really our vision of the status quo and also the future.
CHATTERLEY: Very quickly. Are you profitable?
GLASS: We don't cover those financials publicly. I should say that we're in a very strong position with a very strong balance sheet. We did a
funding round at the end of last year, but it wasn't for funds for the company. It was just for long term early employees in the company. And
the company didn't take any money.
This is a round that we did with Tiger Global, which has been a great investor in the tech space, but the food tech space, specifically.
CHATTERLEY: The hint from that is that you're definitely more than breaking even if you didn't need it for the operating of the business,
Noah. We'll get you back because I want to talk autonomous technology and what impact that going to happen forward, too. Noah Glass, thank you so
much for that.
GLASS: Thank you.
CHATTERLEY: All right, South Korea maybe one of the most high tech countries on Earth, but when it comes to energy, it's still very much stuck
in the past. Fascinating. Look at this.
As John Defterios explains the gears of change is slowly grinding paving the way for renewable energy in South Korea. Listen in.
(BEGIN VIDEO CLIP)
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: If you think about it, South Korea is a victim of its own success. Growth has been driven by
making autos, computer chips, mobile phones, telecommunications equipment, even steel, but the common link here is they're all energy intensive.
DEFTERIOS (voice over): It's no locally as the Han River Dynasty, South Korea's six-decade long Industrial Revolution.
From the ashes of the Korean War to Asian economic tiger. But in the land of Kpop sensations and all things high tech, South Korea remains very 20th
Century when it comes to energy.
(BEGIN VIDEO CLIP)
DEFTERIOS (on camera): Why was it slow adapting to the renewable energy market would you say?
KIM DONG-SEOP, CEO, RENEWABLE ENERGY DEPARTMENT, SHINSUNG E&G: Korean people enjoyed low price of electricity due to coal generation and the
nuclear generation, but because of the social issues like air pollution, the people start to appreciate the value of renewable energy.
(END VIDEO CLIP)
DEFTERIOS (voice over): Shinsung makes cutting edge solar cells they say can boost average output by 25 percent. After a dozen years of sluggish
growth due to intense competition from China, these shipments are destined for the United States and Canada as demand rises.
(BEGIN VIDEO CLIP)
SEOP: Six hundred thirty kilowatt solar panels on the roof top.
(END VIDEO CLIP)
DEFTERIOS (voice over): CEO Kim shows me how the sun powers 40 percent of their own operational needs. But that is certainly not the norm in the
country. The government's goal is to more than triple solar and wind energy by 2030. John Defterios, CNN, Seoul.
[09:52:20] CHATTERLEY: Welcome back to FIRST MOVE on a look at today's at "Boardroom Brief." A U.S. federal judges slashed the damages Bayer is to
pay out in a case relating to the weed killer, Roundup.
The German firm had been ordered to pay more than $80 million to a California man who claimed it caused his cancer. However the judge reduced
the award to just over $25 million. Bayer says it's still plans to appeal.
Burberry's new chief designer, Riccardo Tisci is providing bumper booster sales. Revenue is up by four percent in the three months to the end of
June, double what was expected. Burberry's latest collection under him are proving popular in China, which accounts for up to four 40 percent of
sales.
Tesla shares are falling after the company announced yet another tweak of the pricing models, it is down some -- what? Nine tenths of one percent.
Peter Valdes-Dapena joins me now.
Peter, I was trying to pour into the details of this. I think the base now price for the Model S and the X is significantly more expensive. But for
the Model 3, the standard is a bit lower. Do I have that right?
PETER VALDES-DAPENA, CNN BUSINESS SENIOR AUTO WRITER: That sounds about right. Clearly, Tesla's Model 3 is the driving force these days behind
Tesla sales. So what Tesla is trying to do here really is simplify its lineup of Model S and X cars which are getting less popular.
But at the same time, you know, they're moving towards the longer -- long range versions of those cars, which are going to be the base model, which
makes sense because the long range version really doesn't have a bigger battery pack than the standard versions. It just had more efficient parts.
So it makes sense, I think to drop that less efficient version from the lineup, maybe push the Model X and S up market which I think is what
they're doing, concentrate more on the Model 3 and the upcoming Model Y crossover SUV.
In all, they're just trying to make their manufacturing job I think a bit easier.
CHATTERLEY: You know, I looked at the crew in one car magazine, and one analyst was saying, quote, "Tesla's chaotic pricing strategy is kind of a
running joke at this point." Peter, do you agree with that? I mean, if you were a consumer going into a car lot and haggling with a salesperson or
shifting around and trying to do these things in a way that Tesla doesn't, because it doesn't have a sort of marketing, a broader spend on marketing
strategy, this would be happening. Tesla just does it up front. Do you agree with that?
VALDES-DAPENA: I certainly agree with that. Tesla does have upfront pricing, but it almost depends on whether I go buy a car this week or next
week what the available option packages are. The confusing thing is somewhat as Tesla, unlike pretty much every other auto manufacturer doesn't
use a model year system.
[09:55:02] VALDES-DAPENA: Tesla doesn't say the 2019 Model X is different from the 2018 Model X and here are the differences and here is the pricing.
Every other automaker does that on a year-by-year basis.
Tesla kind of makes these changes to the lineup and the technology on a running basis. I think, I've actually said before, I think it might be a
good idea for Tesla to follow the auto industry model here and start doing this on an annual basis so customers understand year by year. This is what
I'm getting with this vehicle. This is what the price is, we're not going to have another big pricing change until the next model year.
CHATTERLEY: Yes, we're on the same page. Peter Valdes-Dapena, however, how I paid $20,000.00 to get that ludicrous package thrown in, I might have
a problem because that now gets thrown in for free, but we shall see. Peter, it's great to have you with us.
All right quick look at the markets as we head towards the end of the show. I make that fresh record highs, positive territory any gain today, for the
Dow, not for the S&P 500. Watch this space.
That was it the FIRST MOVE. Time to go make yours.
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