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First Move with Julia Chatterley
Huawei Manages To Post A Huge Sales Jump; Capital One Suffers A Huge Hack Attack; Beyond Meat Investors Have A Bit Of A Beef After Earnings Were Served; Donald Trump Speak To Reporters On His Way Out Of The White House. Aired 9-10a ET
Aired July 30, 2019 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR, FIRST MOVE: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE, and he is
your need to know. War? What's it good for? Absolutely nothing, yet, Huawei manages to post a huge sales jump. What's in your wallet? Well,
better check it. Capital One suffers a huge hack attack. And a mixed grill, Beyond Meat investors have a bit of a beef after earnings were
served. It's Tuesday. Let's make him move.
Welcome to Tuesday's FIRST MOVE where hopes of a Shanghai surprise amid the resumption of U.S. at China trade talks are rapidly dissipating. I can
tell you, prepare for some serious expectation management. Take a look at this. President Trump tweeting this morning, "China is doing very badly,
worst year in 27 -- was supposed to start buying our agricultural product now -- no signs they are doing so. That is the problem with China. They
just don't come through."
President Trump followed that with quote, "My team is negotiating with them now, but they always change the deal in the end to their benefit." He went
on to accuse China of ripping off the United States.
Later today, something else to watch. We've got Apple numbers, too. Watch the China shipments there. Perhaps no surprise, amid the noise already
this morning that features a softer here. The NASDAQ, the worst performer. It's also of course day one of that two-day Federal Reserve meeting.
The bottom line is, we've got a whole host of risk events, as we've been saying all week, seeing these markets pulling back a bit from record highs
make sense to me at this stage.
It's not just about the United States, of course this week, what about the Bank of Japan? I want to draw your attention to this, too. They cut their
inflation and their growth targets yet again overnight promising more stimulus if required.
Remember, the interest rates in Japan are already in negative territory, and the bank owns over 40 percent of all Japanese government bonds. There
is a cautionary tale there, I believe for the Federal Reserve, though given what I just said about the trade situation, you could argue that they have
a lack of choice hereto.
It's not all bad, though. It's just complicated. Let me explain. We'll get to the drivers. Trade war? What trade war? Huawei's revenue
rocketing up some 23 percent for the first half of 2019. Sales hitting nearly $60 billion. Sherisse Pham is in Shenzhen for us, the home of the
tech giant. Interesting of course, Sherisse and great to have you with us once again. This is a private company. They don't have to give us
information, but they're saying today, "Look, we're doing okay."
SHERISSE PHAM, CNN BUSINESS REPORTER: They don't have to give information, but they do want to show a strong front, right, in the face of
this U.S. trade blacklist, in the face of the U.S. curves against the company.
Huawei is coming out today saying we are still growing. We are still the leader in 5G technology, but they are acknowledging that there are a few
cracks showing. So, Chairman Liang Hua striking a bit of a defiant tone today. But also saying, "Look, we are fighting for our survival and there
will be challenges ahead." Have a listen to what he had to say.
(BEGIN VIDEO CLIP)
LIANG HUA, CHAIRMAN, HUAWEI (through translator): Our business results for the first half was quite good, and we achieved steady growth, but
objectively, we still face difficulty ahead; and for the second half and to next year, we will still face these difficulties.
(END VIDEO CLIP)
PHAM: So, There are going to be some difficult times in the second half and moving into the first -- into the next part of -- in to part of 2020,
and that does jive with what Ren Zhengfei, founder of Huawei said last month where he said that we are going to miss sales target by $30 billion
over the next two years.
But that's not the story that they were telling today. At today's earnings report, they were saying we've got $58 billion in sales revenue. We are up
23 percent over the year. We have seen a little bit of a drop in our overseas mobile sales, smartphone mobile units. But overall, we are still
strong and we are surviving and this is China's tech champion saying, we are going to keep growing in the face of this U.S. trade ban.
CHATTERLEY: Yes, I mean, there's a few things in here for me. To your point about the worst case scenario here that we could see if they see an
entire ban from the United States because we heard that fact from the Head of Security, too, and he said, "Look, it will be bad, but we can manage it
at this stage."
But I'm just looking at whatever else is going on here. Canalys issuing a report today saying that despite the six percent downturn more broadly in
the Chinese market here for smartphones, Huawei managed to grow market share to 38 percent. That was a 31 percent year-over-year increase. So,
even if we look -- and we forget the international business here, they're showing signs of strength amid a softening market in China, too, and
actually that feels important at this stage as well.
[09:05:02] PHAM: It is really important. The Chinese smartphone market is gigantic and Huawei has a massive portion of it. They were the only ones
to show, I believe double digit growth in the second quarter of this year when a lot of other major smartphone makers were posting declines in sales.
But Huawei's smartphones are going to be a lot less attractive to overseas buyers, if they're not going to have access to U.S. tech, namely, Google's
suite of services. If you don't have Android operating system, and you don't have Gmail, and you don't have Google Maps, it's very unlikely that a
smartphone buyer in London or in Spain is going to want to buy a Huawei smartphone.
And so even today, they said, "Yes, we are growing in China. We have taken a hit in our markets outside of China. And we would prefer, if possible to
continue using U.S. tech. And that means that we would continue -- we would really prefer to continue to have access to the Google ecosystem,"
but it will be up to the U.S. to decide whether that will be the case.
CHATTERLEY: Yes, it's such a great point. And they were only added to that entity list at the back end of May. So, it's only a tiny fraction
really, that they've had to deal with here, which is important for these numbers, too. Sherisse Pham, great to have you with us, as always and
great outfit, of course, we match once again. All meant.
Let's move on to our next driver, Capital One suffering a massive hack attack involving 100 million customers and credit card applicants, a 33-
year-old American woman has been arrested. Christine Romans joins us on this story. Christine, great to have you with us.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Hi.
CHATTERLEY: Fascinating story not only for the fact that Capital One suffered this breach, but for the woman involved and the fact that she was
a known hacker and actually made little effort to hide the fact.
ROMANS: Yes, a software engineer who at one point had been working for the Cloud service company that this company, that Capital One was using, and
look, at a court appearance yesterday, a local media station, put her head down on the on the desk in sort of in disbelief that the was happening
here.
But you're right, she was on social media talking about what she had harvested. That's what the complaint says here. And this is what we know
here. We know 140,100 -- 140,000 Social Security numbers, a million Canadian Social Insurance numbers, 80,000 bank account numbers and we know,
an undisclosed number of credit scores and account numbers and account balances that was what was harvested from this information.
This was information that Capital One apparently was moving on to the Cloud. You know, this is one way that you can do business faster, and you
can grow faster by moving so much of this data on to the Cloud. But then it raises these questions of security.
It was an ethical hacker apparently, who had sort of alerted the company that this was a problem and Capital One says it happened about March 22nd
or March 23rd. This is what the company says about the breach, "The largest category of information access was information on consumers and
small businesses as of the time they applied for one of our credit card products." So, imagine small businesses and regular Joe consumers from
2005 to early 2019.
So, this is another example of how your information is just out of your hands. I mean, I really think it's fair to assume, if you look at the
number here, this is one in three Americans would be exposed. Many Canadians as well.
You're talking about basically making the assumption that between Marriott, between Home Depot, between Target, between Equifax and between all of
these other names, your information is probably out there.
CHATTERLEY: Yes, and the worrying thing for me is this happened many months ago, as you said, this hack attack. I mean, this was a woman who
was listed on a social network called Meetup and she listed hacking and cracking as part of the interest of the group here, and that's how the
F.B.I. found her.
I mean, we're clearly not doing enough in terms of these big companies to protect data accurately and for Capital One specifically here, this is not
the first time.
ROMANS: You know, and the companies have not been punished on the market either for these. When you go back and you look at some of these companies
that have suffered really terrible hack attacks, they've raised the scrutiny of Congress, but their stocks are up over time. Pretty big time.
Now, right now, you're going to see Capital One get punished there. Its stock is down five percent right now in the premarket, in part because the
more we have these, you risk fatigue among consumers, but anger among lawmakers and more regulation.
I would just tell people, as we all have said, people who cover money you know, check your statements religiously. Don't rely on the company to
alert you if something is wrong, although Capital One says they will tell you if you have been breached here and what to do about it, they're going
to give free credit monitoring.
You can freeze your own credit at Equifax, Experian and Trans Union and most financial personal financial experts say, you should do that. Don't
trust these companies. They make money with your information. They make money -- they make money with your information and don't get punished
enough when something bad happens to it and change your passwords often. That's what -- that's the only thing you can do.
CHATTERLEY: Couldn't agree more. We have to police our own data because no one else will.
ROMANS: Yes.
[09:10:02] CHATTERLEY: Christine Romans, thank you so much for that. All right, let's move on to Beyond Meat because that is seeing a pretty meaty
tumble premarket despite reporting soaring sales in the second quarter and raising their forward guidance.
The stock did though close up some 788 percent, I believe since their May IPO. Clare Sebastian joins us on this story. This is interesting and the
shocker here, it seems to investors was the news that the company plans to sell shares of some three and a quarter million, three million of which are
current shareholders. Interesting timing.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, really isn't interesting, Julia, just three months after their IPO long before the end
of the lockup period, which ends at the end of October. This is an opportunity for existing stock holders to cash out, to take advantage
perhaps of that meteoric rise in the stock price that you've seen.
And among those cashing out, is the CEO and founder, Ethan Brown. He is offering about 39,000 shares, which at the current price will net him
anywhere, between seven to eight, even more, perhaps million dollars. So, certainly a bit of a windfall for him.
But this is why we see the stock fall. It is diluting existing shareholders although the company does say that it will use the proceeds of
the quarter of a million shares that it is offering as new shares to pay for things like building out its supply chain manufacturing capacity and
other working capital things.
So, that potentially a positive as we know that this company is on a real growth spurt. Its revenues we saw this quarter are up some 287 percent.
So, it does need the extra cash to keep up with that demand.
CHATTERLEY: Yes, they're just not raising that much because it's more about profit taking at this stage. But you know, my view on this actually
is given the meteoric rise that we've seen -- meteoric rise that we've seen, why not take a bit of money off the table. Shareholders have done
and those that have invested since the IPO have done well.
But controversial, as you can see, but I think if investors really cared, Clare, actually would see the shares down more, not 10 percent compared to
the 700 percent plus rise that we've seen since the IPO. Talk to me about the numbers though, because these were pretty good.
SEBASTIAN: Yes, pretty good. There's a lot to like, and it's good, Julia. As you said, revenues are up some 287 percent. They hit $67 million,
that's a lot more than was expected. They also raised their portfolio guidance. They had been expecting sales of $210 million, we're now up to
$240 million. Management also saying that was a flaw, that's a conservative estimate.
The loss they made was wider than expected, about $9.4 million in terms of a loss, that's up from $7.4 million in the same quarter a year earlier.
But you know, this company, again, is one of those high investment, high growth companies. They are expected to make a loss for a while, but they
did say on an annual basis, they expect their kind of operations before you factor in, you know, taxes and various other expenses to be profitable.
That is something that analysts were quite focused on.
But of course, the big question that we had on the call is how are they going to, you know, make sure their capacity keeps up with their demand.
They've got a lot different partnerships out there, a lot of big brands. Are they going to be able to keep up their production, and the CEO did say
that they expect perhaps some one time shortages, but nothing compared to what they've seen in the past.
CHATTERLEY: Yes, such a great point, particularly if they are trying to do a deal with someone like a McDonald's, you've got to ensure you've got the
network and the supply there. Clare Sebastian, thank you so much for that.
All right. Let me bring you up to speed now with some of the other stories that we're following around the world. In Northern Yemen, an airstrike on
a market has killed at least 14 civilians, including four children. A Houthi spokesman blames the attack on the Saudi-led coalition while the
Saudi-backed Yemeni government said the attack was the result of rockets fired by the Houthis.
We're learning new details about the vicious knife attack on an Italian police officer allegedly carried out by to U.S. teens. Authorities say he
did not have a weapon when he was stabbed. However, he would not have had time to use it even if he had have done. Police say the officer was
trailing the Americans after they allegedly stole a bag from a man they had approached about buying drugs.
Police in Brazil drop the rape charges against football star, Neymar, due to lack of evidence according to your Record TV. A Brazilian model alleges
Neymar attacked her in a Paris hotel room on May 15th. Neymar has consistently denied the accusations.
U.S. rapper ASAP Rocky has pleaded not guilty as he goes on trial for assault in Stockholm. He was detained following a fight in the Swedish
capital. The artist whose real name is Rakim Mayers claims he was acting in self-defense. His case has attracted wide celebrity support including
from President Donald Trump. The trial continues.
All right, we're going to take a quick break here on FIRST MOVE, but coming up, we unbox retail's latest disruptor. How the online bulk business could
mean big competition for e-commerce giants?
It's no longer man versus machine inside Microsoft's billion dollar bet on the company building secret human tech for good. That's coming up. Stay
with FIRST MOVE. You're watching CNN
(COMMERCIAL BREAK)
[09:18:04] CHATTERLEY: Welcome back to FIRST MOVE where we are looking at a slight pullback here in the U.S. markets as we open up for the second
session this week following the pullback that we saw, of course in Monday's session, too.
There is nervousness out there, so many risk events as we've discussed. Trade talks are kicking off in Shanghai, just one of those and the tweets
and the President is already dampening expectations. He said that China has not begun buying U.S. agricultural products despite promising to do so.
Chinese state media of course said they had, so a bit of a contradiction there.
Also, another big day for earnings as well. Shares of P&G, Merck and Eli Lilly, all higher premarket following earnings beat. Apple is going to be
the one to watch later on, after the bell; and of course, what happens with that stock here in tomorrow's session, too.
What about the currency markets? Because we're still seeing some pretty significant moves there for the U.K. pound falling further on increasing
fears of a no deal Brexit come October 31st. We're now sitting at a two- year low against the U.S. dollar hovering around that $1.21 level; also, in fact, losing some ground against the Euro, too, despite expectations of
further easing from the European Central Bank.
Anna Stewart is watching this for us. Anna, it's pretty simple here. The hard line stance that we're seeing from Boris Johnson as he moves around
the country is making investors sit up and recognize that perhaps we could be heading towards a higher probability here of a no deal exit.
ANNA STEWART, CNN REPORTER: Yes, we're certainly seeing the market adjusting, aren't we? It's down around two and a half percent against the
dollar. That is telling of course since Boris Johnson won that leadership contest last week, but it potentially has a lot more downside to go.
Speaking to Peter Dixon, an economist at Commerzbank this morning. He says the market has not adequately priced in a no deal risk. And that's despite
the fact that the E.U. remains absolutely intransigent about opening the withdrawal agreement, at least that's what they say publicly.
We were told yesterday by Downing Street that the Prime Minister won't even meet E.U. leaders unless they agree to reopen the withdrawal agreement and
remove the controversial Irish backstop.
So potentially, we have a lot further to go. Honestly, the bottom of the pound in a no deal scenario anywhere between $1.10 and parity with the
dollar.
[09:20:18] STEWART: And it's not just currency, Julia, also fixed income, we had 10-year yields, they fell to their lowest level on Monday since
2016. Plenty for Bank of England to mull over on Thursday.
CHATTERLEY: Yes, interesting. So, at least some significant downside to if this likelihood or the probability continues to be priced here. I mean,
just looking at the strategy. You've got to convince the E.U. that you really do mean it if you're going to try a no deal exit on October 31st.
Or he has to try and steal voters from the Brexit Party with a hard line stance if he is forced to call a general election because he can't get a
better deal. I guess that's the bottom line here.
STEWART: Yes, is that the ultimate strategy? Because, DUDE was the ultimate strategy last week. D - deliver on Brexit. U - unite the U.K. D
- defeat Jeremy Corbyn. E - energize the country. But maybe that last E was really for election.
Now, all the British media are reporting something of a Boris bounce in the polls. The Prime Minister said he doesn't want to call a general election
until he has delivered Brexit, but perhaps as you say, he is forced to, to push a no deal Brexit over the threshold -- Julia.
CHATTERLEY: Yes, Anna Stewart, thank you so much for that. All right, let's bring it back to Beyond Meat now because we were talking about this
earlier on. Shares down some 14 percent premarket at this moment. The plans to sell more stocks, spooking investors a little bit here.
But of course, they upped guidance and Q2 sales pretty strong, too. Santosh Rao is Head of Research at Manhattan Venture Partners, and joins us
now. Fantastic to have you on the show.
SANTOSH RAO, HEAD OF RESEARCH, MANHATTAN VENTURE PARTNERS: Thanks for having me.
CHATTERLEY: So you invest in companies pre-IPO?
RAO: Absolutely.
CHATTERLEY: You passed on Beyond Meat. We'll discuss why you chose to do that. But what do you think when you see a company before the lock-in
period has ended, deciding to sell more stock three months after IPOs?
RAO: That's totally normal.
CHATTERLEY: Is it?
RAO: Yes, it's not -- nothing wrong with that, you know because stocks run up 700 percent, so it's still entirely possible or good that they are
cashing out, they are getting some liquidity.
But that doesn't mean I think bad. I mean, it's like the stock -- the fact that it provides more supply. That's been the big problem with this stock,
the supply and demand imbalance, the scarcity factor, I think to the extent that this brings more stock to the market, that's good overall, in the end.
CHATTERLEY: But for those that are saying, you know, they should have done less than three million versus what? A hundred twenty five -- actually
fresh start, newly issued stock here. Because maybe they should be raising money that could be pumped back into the business. Is that a valid
argument here? Or people just bitter perhaps that they didn't invest in Beyond Meat after the IPO?
RAO: No, I don't think that's an argument. That's totally fine what they're doing. There will be more shares coming to market in October, when
the options expire, so that will provide more liquidity. So that's what we've seen with that with our portfolio companies with the IPO expiration,
with the lockup expiration happens, there's more supply, the stock pulls back, then it has to resettle and all of that.
So, I think, all this thing is totally fine. It's in line with what we expect with new companies, and the fact that this company is doing very
well. I think it takes away any negative factor about selling early. So, I think that's fine. These are the early investors that have been around.
So, providing some liquidity is totally fine.
CHATTERLEY: Yes. I'm kind of on your side. This is a 10-year-old company as well. For some of those that didn't actually cash in at the point where
it IPO'ed, this is about actually taking some profits here and taking some money out, perhaps buying a house or something. Why didn't you invest in
Beyond Meat?
RAO: Well, yes, I mean, we had so many other options and there was no visibility. We thought it's just a brand new area, very nascent. We
didn't know whether it was a fad or something that will catch on.
CHATTERLEY: Do you still know whether it's a fad or whether it will catch up because those that look at this and say it's completely overvalued argue
that it's still faddy, and it's not going to grow the same way as perhaps plant-based milk has become what? Ten percent of the market.
RAO: No, I think there is a market for this.
CHATTERLEY: Right.
RAO: It's a very small percentage of packaged meat right now. It's roughly two percent.
CHATTERLEY: Yes.
RAO: There's a huge market ahead. There are people who are -- that don't eat meat, they don't like meat. And there's a whole generation, the
millennial generation that are environmentally conscious. And they like health food and all that stuff.
So, this kind of plays into that market. So, I think overall, there is a market. But let's just see. I think valuation is way ahead of itself. It
needs to pull back. It needs to rationalize. And there's new competition coming in. So, the market is not factoring that in already. So, I think
all of that considered, I think the discount -- a little bit of pullback is warranted.
CHATTERLEY: When you say a little bit, what do you mean, because if I just put this into basic numbers, this is right now a market $2 billion to $3
billion? The market cap of this one company is $15 billion. Now, to me, that says, that's way more than a growth stock or a growth opportunity.
That's completely bonkers.
[09:25:07] RAO: Yes, it is.
CHATTERLEY: Define little pullback.
RAO: Well, the stock that's growing their revenues at 300 percent, okay, okay, you can give it middle premium right in the beginning, let them
execute, so far they have executed. So, I think the market will give them the benefit of doubt.
But trading at 30 times sales is not warranted, it needs to pull back to maybe like 15 to 20 times. So you're looking at, you know, roughly around
hundred, hundred and twenty bucks per share.
CHATTERLEY: Wow.
RAO: It would be -- that would be more rational. It can be justified. But then we've seen with these startups. You know they are -- they have
tremendous potential ahead. The market is betting on the future. And this company is the most public branded name out there, pure play.
I mean, the other guys are coming in.
CHATTERLEY: There is a lack of options.
RAO: Lack of options.
CHATTERLEY: For now.
RAO: I think that's what driving it. The scarcity factor and the fact that it's a premium company in a growing market. That's all coming into
play.
CHATTERLEY: What's the most exciting segment that you're investing in right now? Because you've invested in things like Spotify, Lyft, SpaceX.
I mean, it's a hugely exciting part of the market. What do you think right now -- and our valuations perhaps even before these companies get to market
too high?
RAO: Well, valuations are kind of rationalizing a little bit. Our next big thing is Airbnb. We are big in Postmates. We have a few other smaller
companies. There are a whole bunch of companies out there, niche companies, a lot of enterprise software companies, those are very -- they
are below the radar. People don't know about it, like unlike the B2C companies.
So there are tremendous opportunities out there. The valuations are rationalizing now. The market is more -- the bankers are more prudent.
They don't want to go ahead of themselves.
CHATTERLEY: Which I think is a good thing.
RAO: Which is a good thing. I think overall, I think this whole pullback is good.
CHATTERLEY: We're going to get you back to talk Airbnb, among others. Santosh, thank you.
RAO: Thank you.
CHATTERLEY: Thanks for coming on the show.
RAO: Thanks for having me.
CHATTERLEY: All right. Plenty more to come on the show. The market open his next.
(COMMERCIAL BREAK)
[09:30:00] CHATTERLEY: Welcome back to FIRST MOVE and the opening bell this Tuesday session. A lower open for U.S. stock markets as anticipated.
There's some concerns, of course over the refreshed trade talks today following a new series of presidential tweets criticizing China.
And of course, as we've mentioned many times, the beginning of the Fed's two-day policy meeting as well, that rate cut expected tomorrow, of course,
too.
We also had some fresh signs of tamer inflation, of course, important to point out. The closely watched PC Price Index here in the United States
rising just a tenth of a percent overall in June. It came unchanged year- over-year at 1.4 percent. That's a long way away from that two percent target.
We've got another key inflation number released, if you remember on Friday, showing prices still below that two percent Fed target that gives the
Federal Reserve ammunition to ease clearly.
All right, let me walk you through our global movers today as well. Capital One as we've already mentioned on the show. The credit card
company reporting a major hack. More than a hundred million customers and credit card applicants were affected. Social Security numbers and bank
account numbers were stolen, as well as addresses and phone numbers. The hacker in this case, a 33-year-old American woman has been arrested.
Under Armour also in focus. The apparel giant reporting a $17.3 million second quarter loss. Revenues also coming in below expectations and it
issued weak forward guidance for North American sales, too.
Procter & Gamble, better earnings and revenues for the consumer product giant, beating estimates here, raising its growth outlook for next year as
well. Investors liking what they're hearing there.
And Merck also higher. The drug giant reporting better than expected earnings and revenues. They raised their earnings and revenue guidance for
2019.
All right, let's move on because now we're going to talk about retail. A startup has managed to box up and ship one of Amazon's top executives. The
former Head of Amazon Business, Prentis Wilson has joined the wholesale retailer Boxed. He is the first President of the startup company, and he
joins us now.
Prentis, fantastic to have you on the show. You had a huge, huge success at Amazon building up their business area into a $10 billion business.
Tell me why now? Why shift to Boxed and what you see specifically here but presents an opportunity.
PRENTIS WILSON, PRESIDENT, BOXED: Yes, I think Boxed is an amazing spot. They are in an area that's just now starting disruption. And that's a huge
segment. When you think of consumables and the breadth of consumables.
And as I looked at the Boxed team and met them, they have a super strong technical team. And they're super well-positioned, and they've built an
amazing service.
And I think they are in a good spot to sort of drive a similar level of growth that we saw at Amazon.
CHATTERLEY: You know, we've had the CEO of Boxed on the show as well. And you know, he is brilliant, he is energetic. I think he is a great leader
as well, which is something that stood out.
But I think one of the key challenges and I asked him the question, too, is, you know, you've got people like Costco, Walmart, joining e-commerce
offering similar kinds of products. How do you continue to differentiate yourself?
WILSON: There's a lot of innovation going on right now. And it's about the innovation.
CHATTERLEY: It's not about the product necessarily.
WILSON: It's about the technical innovation, and then the product in terms of how do you make it great for the consumer? And how do you really focus
on that right experience. And I think Boxed has built something magical. Our customers love the experience.
When we see a lot of growth, we see a lot from our existing customers. And when I'm spending time in the fulfillment center, I see a really nice
basket building. You see a lot of boxes going through with lots of items. And that's hard to do through e-commerce. But the Boxed team has figured
it out.
CHATTERLEY: Do you see Amazon as a competitor now?
WILSON: You know, I think this segment is so large, there's a lot of different ways to approach it. And Boxed has sort of figured out its
niche, and we've been able to focus very clearly on that. And I think there's a long runway there.
CHATTERLEY: So we had the Treasury Secretary of the United States, Steve Mnuchin making some quite eye opening comments last week. He said that
Amazon has destroyed retail. As someone who has just left Amazon, and now working for someone else. Do you see Amazon as that kind of huge threat
and has created that kind of damage in the words of Steve Mnuchin? Because as a part of the whole retail market, it's still a tiny fraction, even if
it's huge as a part of the e-commerce market.
WILSON: Yes, I think just what you said, it's a very, very large market and there's a lot of opportunity. And I think technology has really
changed the way people buy. And Amazon just leverages that technology. And there's a lot of opportunities for companies to come in and innovate.
And we can look at things in a variety of ways and approach it different ways. And there's a huge opportunity both to support existing companies
that are out there trying to sell, as well as drive additional growth.
[09:35:06] CHATTERLEY: So this is a great point, does regulation of some of these big giants like Amazon, help you as a smaller player, do you think
in the end?
WILSON: You know, I just focus on our customers. My thinking is, the best way to help us is to focus on our customers and focus on getting their
experience right and supporting the brands that we sell through, and just scaling the business.
CHATTERLEY: So you have to be careful though to find a balance between regulating and not suppressing innovation, because every time I ask you a
question, you mentioned the innovative -- the innovative power of this company.
WILSON: That's right.
CHATTERLEY: So that's the balance.
WILSON: That's what it's about. And if you get the right team that can build something special, like the Boxed team has and you can continue to
innovate on behalf of customers in that way. That's all it's about. You do that well, and it just runs.
CHATTERLEY: It's an interesting time though to go from a huge powerful company to work for a small one, however exciting the opportunity is. What
made you decide that? So on a personal level what made you decide that now is the time?
WILSON: Yes. I built Amazon business from scratch to a $10 billion business and growing a team from just me as the first employee to scaling
it is super exciting. And I see an opportunity to do something similar at Boxed, and when I look at where Boxed is playing, the size of the segment
is so large. If we get it right and stay focused, we'll see a similar level of growth.
CHATTERLEY: I saw a quote from you, you said, "Amazon business is a rocket ship." So what is Boxed?
WILSON: I think it's a similar rocket ship. But one that turns a lot faster, I think, in some ways.
CHATTERLEY: Oh, really. A nimble rocket ship.
WILSON: In some ways, that's right.
CHATTERLEY: Oh, interesting. Prentis, fantastic to have you on the show.
WILSON: Thanks.
CHATTERLEY: Thank you so much. Prentis Wilson there of -- President of Boxed.
All right, so let's move on. Online retail sometimes means lower prices, but some shoppers are starting to worry also about the environmental costs,
like big delivery trucks that guzzle gasoline and add to carbon dioxide emissions.
Well, Daimler say that electric trucks that they build means it can be done in a sustainable way and be a sustainable business. John Defterios
investigates.
TEXT: The Global Energy Challenge.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: On this edition of "The Global Energy Challenge," German auto giant Daimler is revolutionizing
its truck division.
DEFTERIOS (voice over): This is Mercedes eActros. The woman at the helm believes this is the future.
(BEGIN VIDEO CLIP)
GESA REIMELT, HEAD OF E-MOBILITY GROUP, DAIMLER TRUCKS: CO2 emission is really zero. Now, if you look at the energy consumption, if the energy is
green energy that is charged into the battery, then it's zero as well. So this is huge.
(END VIDEO CLIP)
DEFTERIOS (voice over): This innovation from the world's biggest truck maker is made possible by changes under the hood.
(BEGIN VIDEO CLIP)
REIMELT: Development of electric tucks since around about five years, and we see a rapid development for the batteries.
(END VIDEO CLIP)
DEFTERIOS (voice over): Until the 2021 launch. What was created in the lab must be tested on the street. A potential customer, Arne Rigterink is
ready to do so.
(BEGIN VIDEO CLIP)
ARNE RIGTERINK, CEO, RIGTERINK LOGISTICS GROUP: From the production to the warehouse to the customer itself. Everything you need is logistics behind
that.
(END VIDEO CLIP)
DEFTERIOS (voice over): His company's drivers are on local roads every day, servicing the click, buy and arrive culture of today's shoppers.
German research house, Agora, says 38 percent of road emissions in Europe come from heavy duty vehicles. So, change is vital.
(BEGIN VIDEO CLIP)
RIGTERINK: As a logistic company, we have to think of ways where we can use the technology to help our natural environment.
(END VIDEO CLIP)
DEFTERIOS (voice over): But we're only at the beginning of the e-truck revolution. Longer distances will require a shift in policy.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: If society wants mobility and if they want it fast, we all need to contribute. So it would help if governments would invest
into infrastructure as well.
(END VIDEO CLIP)
DEFTERIOS (on camera): Daimler moving ahead with the e-trucking. More FIRST MOVE, just a head.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to the show, tweeting and speaking, President Trump on his way to Virginia this morning. But he did speak to reporters
on his way out of the White House. Let's listen in.
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: We're negotiating with China. We'll see what happens. We're either going to make a great deal or
we're not going to make a deal at all. But a lot of great things are happening, and including with China.
Our country has gone way up in terms of its differential. We're the number one economy in the world. It's picked up tremendously in the last three
years since I've been here. So, a lot of great things are happening. A lot of really great things are happening.
The economy is through the roof. I guess we'll hopefully get good decisions from certain branches of government. We'll see what happens.
But we have a lot of good things happening.
We were just speaking with the Department of Commerce, and we have interest in our country like we've never had before.
QUESTION: Mr. President, do you regret targeting Baltimore?
TRUMP: No. Baltimore has been very badly mishandled for many years. As you know, Congressman Cummings has been there for a long time. He's had a
very iron hand on it. It's a corrupt city; there's no question about it. All you have to do is look at the facts. The government has pumped in,
over the years, billions and billions of dollars to no avail -- to absolutely no avail.
Baltimore is a -- it's an example of what corrupt government leads to. Billions of dollars have been given, and I feel so sorry for the people of
Baltimore. And if they ask me, we will get involved.
But we're already involved from the standpoint that, over many years, billions and billions of dollars have been given to Baltimore. It's been
misspent. It's been missing. It's been stolen with a lot of corrupt government. And as you know, Cummings has been in charge.
Now, I will say this: I think that Representative Cummings should take his Oversight Committee and start doing oversight on Baltimore. He'd find out
some real things.
QUESTION: On China, how did the talks go today? And on the Fed, what should the rate cut be?
TRUMP: So, the talks are moving very well with China, but they were often with China. But China always makes a new deal at the end, or seems to.
We're taking in billions and billions of dollars from China in the form of tariffs.
Our people are not paying for it. China reduced their currency. They devalued their currency, and they're pumping money into the system in order
to pay for it.
They had the worst year in 27 years. They've had a terrible year because of the tariffs. A lot of companies are moving out of China. You've never
seen this before. The United States is doing phenomenally well and we're taking in tens of billions of dollars for -- from China.
We're giving some money to our farmers who have been really targeted by China to do a number on them, and -- because they like me. The farmers
like me and I love the farmers. And I will say that the farmers are very grateful. The most they've ever spent on agricultural product is $16
billion.
So, when they pulled out, I took just a small part of the money that China is paying us, and I gave it toward the farmers and the farmers are very
happy.
QUESTION: Is a quarter-point rate cut from the Fed enough for you, sir?
TRUMP: The Fed moved, in my opinion, far too early and far too severely. It puts me at a -- somewhat of a disadvantage. Fortunately, I've made the
economy so strong that nothing is going to stop us.
But the Fed could have made it a lot easier. I would like to see a large cut, and I'd like to see immediately the quantitative tightening stopped.
It should be stopped. For them to have done quantitative tightening and also higher interest rates simultaneously, I think, was a big mistake.
I also think that had they not done it -- as good as we've done, we've set a record, as you will tell, as you will say, in the stock market. We have
the all-time high in the history of the stock market. I think I would have been 10,000 points higher and I think we would have been in the fours with
GDP.
[09:45:11] TRUMP: President Obama had zero interest rates; we have normalized interest rates. With zero interest rates, anything happens.
And yet we still blew his economy away.
QUESTION: Was it a mistake not retaining Janet Yellen?
TRUMP: I don't talk about that. I just -- I'm very disappointed in the Fed. I think they acted too quickly by far. And I think I've been proven
right. People have said I was right; they were wrong. The Fed is often wrong. The Fed is often wrong.
QUESTION: What do you say to that "Washington Post" op-ed calling Mitch McConnell a "Russian asset."
TRUMP: "The Washington Post" called Mitch McConnell what?
QUESTION: A Russian asset.
TRUMP: I think the "Washington Post" is the Russian asset, by comparison. Mitch McConnell loves our country. He has done a great job. We're trying
to pass an Infrastructure Bill. It's being written up right now, as we speak, for our highways and our roadways.
Mitch McConnell has got more judges than probably any -- I mean, in all fairness, with my help. But as a combination, we've got up -- we're going
to be up very soon to 179 Federal judges. Nobody has ever seen anything like that.
And other than George Washington, we'll end up having the highest percentage of judges put on the court and it's going to be a legacy.
Mitch McConnell is a man that knows less about Russia and Russia's influence than even Donald Trump. And I know nothing.
So, I think it's a horrible thing when a paper -- which is really just a paper for the benefit of Amazon -- "The Washington Post" is fake news, just
like "The New York Times" is fake news. It's put there for the benefit -- "The Washington Post" of Amazon. That's my opinion. And I think it's a
disgrace.
And if they actually said that, I didn't read it. If they actually said that -- that Mitch McConnell is an asset of Russia -- they ought to be
ashamed of themselves and they ought to apologize.
QUESTION: Are you going to watch the Democratic debate tomorrow night? And do you have a sense yet, in your gut, as to who your likely opponent
will be in 2020?
TRUMP: Well, I think right now -- I am watching -- I think right now it will be Sleepy Joe. I think. I feel he'll limp across the line. That's
what I think.
So, what I think doesn't mean anything, but I know the other people. I know him. I think he is off his game by a lot, but I think -- personally,
I think it's going to be Sleepy Joe.
QUESTION: Mr. President, do you think you're alienating voters when you tweet at the Squad and at Congressman Cummings?
TRUMP: No, I think I'm helping myself because I'm pointing out the tremendous corruption that's taken place in Baltimore and other Democratic-
run cities. All you have to do is look at the past mayors in Baltimore and see what happened. No, I think I'm helping myself.
And I'll tell you what: The White House and myself -- in letters and e- mails and phone calls -- have received more phone calls than I think on any other subject, of people from Baltimore and other cities corruptly run by
Democrats, thanking me for getting involved. Those people are living in hell in Baltimore.
They're largely African-American. We have a large African-American population and they really appreciate what I'm doing and they've let me
know it. They really appreciate it.
And, by the way, the numbers just came out. Unemployment for African- Americans is the lowest it's been. The best numbers -- meaning, in the history of our country. The lowest in the history of our country.
But people have called from Baltimore thanking me so much, because all that money that's been spent over 20 years has been stolen and wasted by people
like Elijah Cummings.
QUESTION: Do you want a free trade agreement with Brazil?
TRUMP: Well, I have a great relationship with Brazil. I have a fantastic relationship with your President. And he's a great gentleman. He was
here, as you know. In fact, they say the "Trump of Brazil." I like that. That's a compliment.
And, by the way, I think he's doing a great job. It's a tough job, but I think your President is doing a fantastic job. He's a wonderful man with a
wonderful family.
QUESTION: And you will discuss free trade agreement?
TRUMP: Yes, we're going to work on a free trade agreement with Brazil. Brazil is a big trading partner. They charge us a lot of tariffs, but
other than that we love the relationship.
QUESTION: Are you concerned about the health of Russian opposition leader --
TRUMP: The what?
[09:50:04] QUESTION: The Russian opposition leader, Alexei Navalny, who apparently might've been poisoned while in prison. Have you heard about
that?
TRUMP: I don't -- I've heard about it. I don't know about it, but I'll find out about it. This is new. I heard about it last night.
QUESTION: Are you concerned more about the Ratcliffe nomination? You have Democrats and Republicans who say a Trump loyalist should not be in a
D.N.I. position?
TRUMP: Well, John Ratcliffe is a brilliant man. He is a wonderful person. I spoke to him long before about this -- long before, months ago. I spoke
to him long before the Mueller fiasco. That was a fiasco. I think probably nobody in the history of Capitol Hill has embarrassed themselves
like what Mueller did to himself and to the Democrats.
But John Ratcliffe -- I spoke to him about this for a long time. He's a very talented guy. He's a strong man. It's what we need in that position.
QUESTION: More and more people are calling you "racist." Does that bother you?
TRUMP: I am the least racist person there is anywhere in the world. When con men -- who I've known almost -- you know, almost all my business life,
because I had to deal with him, unfortunately, in New York. But I got along with him -- Al Sharpton. Now, he's a racist. He's a racist. But
when people -- when people --
QUESTION: Racist against who?
TRUMP: Let me explain it to you. What I've done for African-Americans in two and a half years, no President has been able to do anything like it.
Unemployment at the lowest level in the history of our country for African- Americans -- nobody can beat that. You look at poverty levels, they're doing better than they've ever done before. So many things: Opportunity
Zones, criminal justice reform. President Obama couldn't get it done. It was done.
Really, the biggest beneficiary, probably, is African-Americans. I got criminal justice reform done. President Obama couldn't get it done. No
other President was able to get it done. What I've done for African- Americans, no President, I would say, has done.
Now, I'll say this: They are so happy -- because I get the calls. They are so happy at what I have been able to do in Baltimore and other Democratic-
run, corrupt cities. The money has been stolen -- what they've done. It's been wasted and it's been stolen -- billions and billions of dollars. And
the African-American community is so thankful. They've called me and they said, "Finally, somebody is telling the truth."
QUESTION: Mr. President, do you think there will be a trade deal with China before November of 2020?
TRUMP: Well, I think the biggest problem to a trade deal is China would love to wait and just hope -- they hope it's not going to happen. I hope.
But they would just love if I got defeated so they could deal with somebody like Elizabeth Warren or Sleepy Joe Biden or any of these people because
then they'd be allowed and able to continue to rip off our country like they've been doing for the last 30 years.
China has been taking out hundreds of billions of dollars a year with our country. And now what I've done with the tariffs is -- number one, they
had the worst year they've had in 27 years, yesterday -- "The Wall Street Journal," the worst year in 27 years. Companies are leaving China by the
thousands, and their prices are coming down.
And I will tell you this: China is dying to make a deal with me. But whether or not I'll do it -- it's up to me; it's not up to them.
QUESTION: What can you get China to give you this week? Just this week, what do you think you can get China to give you in the negotiations?
TRUMP: Well, I think China is willing to give up a lot. But I --that doesn't mean I'm willing to accept it. I think if China had their wish,
they'd wait until after the election, they'll pray that Trump loses, and then they'll make a deal with a stiff -- somebody that doesn't know what
they're doing -- like Obama and Biden, like all of the Presidents before. Because what they've done is they've just picked our pockets as a nation.
That's not happening with Trump.
QUESTION: On Virginia -- the black Virginia lawmakers are boycotting your event today.
TRUMP: That's okay.
QUESTION: What do you say to them? I mean, they're offended by your remarks.
TRUMP: Well, I think if that's the case, I'd be shocked. But if that's the case, they're fighting against their people because the African-
American people have been calling the White House. They have never been so happy as what a President has done. Not only the lowest unemployment in
history for African-Americans; not only Opportunity Zones for -- really, the biggest beneficiary are the inner cities; and not only criminal justice
reform.
But they're so happy that I pointed out the corrupt politics of Baltimore. It's filthy dirty. It's so horrible. And they are happy as hell.
[09:55:02] TRUMP: So, you may have a couple of politicians boycott, but it's all a fix. It's all a fix. The fact is African-American people love
the job I'm doing because I'm working for them. I'm not working for the politicians.
QUESTION: Mr. President, do you believe that congressional oversight, is he unfair for your case?
TRUMP: Oh, absolutely. It's -- what he should do -- what Elijah Cummings should do is he should take his Oversight Committee, bring them down to
Baltimore, and invest all of it, and really study the billions and billions of dollars that's been stolen. It's been wasted; it's been stolen. They
ought to take that beautiful waste of an Oversight Committee, go down to Baltimore and other Democratic-run cities, and take a look. See if you can
find the billions that have been stolen.
QUESTION: Is your goal in North Korea simply containment -- just a status quo?
TRUMP: My relationship with Kim Jong-un is a very good one, as I'm sure you've seen.
We'll see what happens. I can't tell you what's going to happen. I know one thing: that if my opponent was President -- if she won -- you would be
in a major war right now with North Korea. And we are nowhere close.
So we'll see. I have a good relationship with him. I like him; he likes me. We'll see what happens.
QUESTION: Mr. President, are you willing to visit Baltimore to go see -- are you willing to visit Baltimore and go tour it today?
TRUMP: At the right time, I'll visit. But the people of Baltimore are very thankful. They have let us know by the thousands of people -- because
of the fact that finally somebody is pointing out how corrupt Baltimore is, how billions and billions of dollars have been stolen. And the ones that
like it the best what I'm doing are African-American voters. Those are the ones. Thank you.
CHATTERLEY: While a wide ranging briefing there from President Trump, the top line here is he was defending criticism of his tweets regarding
Baltimore and political corruption there, so not backing down.
He said China is dying to make a deal, but we'll have to wait and see whether they can. More analysis in the next hour. You've been watching
FIRST MOVE, time to go make yours.
(COMMERCIAL BREAK)
[10:00:00]
END
