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First Move with Julia Chatterley
President Trump Suggests A Minor Recession Is A Price Worth Paying To Challenge China; Retail Giant, Target With Stock Soaring Premarket As One-Day Delivery Boost Numbers; Hong Kong Reportedly Losing Another Alibaba IPO, Once Again. Aired 9-10a ET
Aired August 21, 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
here's your need to know. What's the cost? President Trump suggests a minor recession is a price worth paying to challenge China. Hitting the
Target: The retail giant stock soaring premarket as one-day delivery boost numbers. And second time unlucky. Hong Kong reportedly losing another
Alibaba IPO, once again. It's Wednesday. Let's make a move.
Welcome to FIRST MOVE once again where insurance is the theme of the day. I'm talking potential tax cuts. I'm talking potential interest rate cuts
as well. Though I have to say looking at the retail earnings that we've had this morning, I'm not sure either is needed right now. That's helping
lift U.S. stock market futures.
Take a look at what we're seeing right now because we are in the green. We did break a three day win streak yesterday though in trading. I think we
just have to expect choppiness here ahead of the Minutes today and the speech of course, by Fed Chair Jay Powell on Friday at Jackson Hole. We'll
call it a kind of Jackson Hole-ding holding pattern. Sorry, yes, naughty. Anyway, carry on.
What investors really want here is clarity on future rate cuts. So the risk here, I think, a bit of disappointment is high. Remember what former
Minneapolis Fed President Narayana Kocherlakotas said to us yesterday, Central Banks are simply out of ammunition to fight a really big recession
here. The best way therefore to fight a company downturn is simply to make sure you don't fall into a serious one in the first place. Take out
insurance.
What about over in Europe? Well, stocks are in the green. Italian stocks outperforming despite the Prime Minister resigning yesterday. We've got
bond yields over in Italy falling to the lowest levels since 2016. Political uncertainty over there seemingly tranquilized by the hope of
fresh stimulus coming from the European Central Bank come September.
What about over in Asia, too? Chinese stocks up more than two and a half percent in fact, over the past five sessions. That fits with recent
measures to support the economy that we've seen here like boosting corporate borrowing or lowering borrowing costs. Timely, too of course, in
light of what I just mentioned there. President Trump's comments yesterday, suggesting he is willing to pay a high price to confront China
here.
Let's get to the drivers on this. To be clear, President Trump says, it is quote, "irrelevant if the trade war dents the economy in the short term."
Listen to what he had to say.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: I am doing this whether it's good or bad for your statement about "Oh, will we fall into a
recession for two months," okay. The fact is somebody had to take China on. My life would be a lot easier if I didn't take China on, but I like
doing it because I have to do it. And we're getting great results.
(END VIDEO CLIP)
CHATTERLEY: Cristina Alesci joins us now. I watched the whole presser actually Cristina, and I know you did, too, yesterday. There are one or
two or several thousand inconsistencies here, we have to be clear, but interesting point to make here. He is willing to sacrifice economic growth
in the short term in order to confront China here. That suggests a potential trade deal remains a way off, at least for now.
CRISTINA ALESCI, CNN BUSINESS POLITICS AND BUSINESS CORRESPONDENT: Yes, he seemed to minimize the negative impact on the U.S. economy of this
protracted trade war, and farmers and manufacturers beg to differ here in the U.S. They're still waiting for this great deal. Where is the great
deal? Because this is a President who also said that trade wars would be easy.
So he is now predicting a recession would only be two months and sort of shrugging it off as not having a large impact. Look, you talk about
contradictions. He is also calling for rate and tax cuts, at the same time that he is saying the economy is strong.
Well, if the economy is strong, then it doesn't need a rate cut or a tax cut. And then finally, he floated this idea of cutting taxes on capital
gains. Well, two things on that. One, it's very questionable what kind of economic boost the U.S. would get out of that. Some estimates I saw this
morning show that growth would only come up about 0.1 percent with a capital gains tax cut.
And secondarily, he is going to be criticized politically because the benefits of that kind of tax cut would overwhelmingly flow to the wealthy
and he is already under fire from the Democrats for that huge corporate tax cut, which didn't seem to sustain economic growth for the long term and
benefit the average worker, although we are seeing wages come up. So that's something that we do have to give him credit for.
[09:05:11] CHATTERLEY: Yes, absolutely. And I think he has a habit of floating ideas, even if behind the scenes, perhaps the feasibility of
enacting things like tax cuts or payroll tax cuts, is rather more difficult than just talking about them at this stage.
But it really is quite interesting, I think, it goes back to this idea of insurance here, this idea of perhaps not allowing a broader slowdown to
take place here, perhaps pep up the economy, perhaps cut rates in the short term to prevent a more sustained downturn. There's a valid point here,
arguably.
ALESCI: Arguably, yes, Julia, but you know, this better than most people, right? If you use all your ammunition now and you cut, let's say, the
hundred basis points that Trump wants and really, quote unquote, "boost economic activity." What am I munition does the Fed have, if we do, in
fact head into a slowdown and a recession, which by the way, is kind of inevitable?
So I think the concern here, and it's this balance between the short term risks and the long term risks, but I think the concern here over the long
term is what ammunition do we have in case we do hit a recession if you're going to cut rates to zero?
It sounded like he -- you know, Trump was really, really pressuring the Fed to make a hundred basis point cut. Most investors I spoke to said that
actually, if done too quickly, could spook the markets into thinking that the Fed thinks there's a recession coming, and that's the issue here.
CHATTERLEY: Yes, it's a big game of poker. You really have to spend those chips wisely. Cristina Alesci, thank you so much for that. Again, Jay
Powell on Friday. It is going to be quite fascinating to watch.
All right, let's move on to our second driver here and Alibaba, of course, China's e-commerce giant delaying its Hong Kong IPO that according to
sources, it follows obviously weeks of those protests in the City of Hong Kong. Will Ripley joins us on this story.
Second time, unlucky, potentially here, Will, but I have to say it doesn't really matter what company it is. When you're looking at the stock market
that's at seven--month lows when I look at the Hang Seng, any company perhaps will be looking at a situation like this and going, "Is now the
right time for a second or even an initial IPO here?" It's a valid question, I think.
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: I think you hit the nail on the head, Julia. This summer of discontent, if it's not bad for business,
it's certainly very uncertain times for businesses here in Hong Kong at the moment.
The latest development, China's biggest e-commerce company Alibaba Group, reportedly, according to Reuters, citing two anonymous sources delaying up
to $15 billion listing. This is the disappointment because Hang Seng is trying to compete with its New York rivals, and it just goes to show that
as of now, in certain areas, at least Hong Kong is a bit untouchable. Certainly businesses that rely on Mainland China or that are based in
mainland China.
Now, there's no new timetable set. Reuters are saying that as soon as October, this could happen again, if Beijing becomes more comfortable with
the political situation here in Hong Kong, but this is a city that's trying to lure Chinese tech giants. And as you mentioned, the Hang Seng hit
seven-month lows just last week.
And so this is a really an uncertain time right now with all of the protests that have been ongoing for 11 consecutive weeks.
CHATTERLEY: Yes, I mean, we also can't escape the politics here or the risk here that perhaps Alibaba by taking its second IPO to Hong Kong looks
like it's rewarding bad behavior to some degree.
I mean, we've seen what happened with the leadership of Cathay Pacific and the challenge that managing the business interests in China presented and
obviously, we've seen the CEO leave here. It's a very delicate moment, I think as far as the business community is concerned and the message that
gets sent here also very delicate.
RIPLEY: Very sensitive time. I mean, the fact that Chinese civil aviation authorities told Cathay Pacific that any air crew taking part in Hong Kong
protests were essentially banned from operating China flights. I mean, Cathay not only flies in and out of the mainland, but they fly through
Chinese airspace to service routes in the United States and Europe.
So what we're seeing with Cathay being perhaps the most high profile example as of late is China using its economic leverage to push its
political agenda and that puts Cathay, a Hong Kong based carrier in a really tricky situation.
You know, they have their CEO and Chief Commercial Officer resign last week. That was stunning. They've had to threaten to fire any staff
members who took part in the protest. Reportedly, there were two pilots fired for that very reason just last week.
And so in the area of transportation, this is hitting home, but also retail, real estate, hospitality. I mean, basically, a lot of these
industries are taking a hit right now either directly because of the protest shutting down business or because of the fact that one country two
systems, which is supposed to afford political and legal freedoms that don't exist in the Mainland is really up in the air right now whether
that's going to continue.
[09:10:06] RIPLEY: I mean a lot of businesses watching very closely, does Hong Kong keep its status as a financial hub and a safe place for foreign
companies to do business in what's been ranked consistently as the freest market in the world? Or are things changing? And is this city becoming
more like all the other Mainland cities?
CHATTERLEY: Yes, it's such a great point, the medium and the longer term considerations here and in the short term, quite frankly, if you don't need
to raise money, don't do it. I think that's the message. Will Ripley, thank you so much for joining us on the show today.
All right. Let's move on to our next driver. Two big retailers surging here in the United States premarket target and Lowe's posting bumper
earnings. Clare Sebastian joins us on this. Target, I think could open at a record high when we kick off later on this morning, Clare. Talk me
through these earnings, because online sales look really great, and their one-day fulfillment as well boosting the numbers here.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, that's the key, Julia. Target started on this journey -- digital and kind of store transformation
about two and a half years ago. They said at the time that the $7 billion they were committing to that would start to bear fruit this year. It does
seem that they have been proved right.
This was a very good earnings report, particularly when it comes to digital. Digital sales have rolled up 34 percent. That's almost as good
as Walmart's 37 percent, and they of course, started that transformation much earlier.
And I think the key statistic, which you touched on there is that of the 3.4 percent same store sales growth, same day fulfillment options, pick up,
drive up and Shipt, which is a startup that Target invested in in 2017, they contributed 1.5 percent overall to that number. So that's coming up
for half.
The same day fulfillment is proving very successful for them. They say that it is also one of the most profitable parts of their fulfillment
strategies, so really strong. But I think you know, you can't ignore that share price move, Julia. This is a huge wave of euphoria from the markets.
This is going to add billions of dollars to their market cap when it opens and as you say, will it will be a record high.
CHATTERLEY: Absolutely. And we will continue to watch that. Let's quickly talk about Lowe's also here, a real distinction being made here
between the Home Depot results that we got last week and new management and what they're managing to do here, too. Talk us through these numbers.
SEBASTIAN: Yes, right. Just like Target, this is another turnaround strategy that is starting to look like it's working. Of course, Marvin
Ellison, who used to work at Lowe's came back as CEO last year. He has been aggressively cutting costs. He announced thousands of layoffs in
stores. He has been closing some stores.
And you can see from that chart, they fell off a cliff at the last earnings report. I think at the open today, they are set to climb back up that
cliff. Same store sales in the U.S. up 3.2 percent. That's a little ahead of the number we got from Home Depot and unlike Home Depot, Lowe's is
reaffirming their earnings guidance for the year. Home Depot, of course, cut theirs and Lowe's is operating in the same climate with lumber price
deflation, with potential weakness in the housing market and with tariffs.
So I think, the fact that they can do that despite of all that shows their efficiency measures are working here.
CHATTERLEY: Absolutely, Clare Sebastian. Thank you so much for that wrap there. All right. Let me bring you up to speed now with some of the other
stories that we are following around the world.
President Trump has called off a visit to Denmark after the Danish Prime Minister called his interest in buying Greenland "absurd," quote. The
postponement comes just two weeks before President Trump was due to fly to Copenhagen and Anna Stewart joins us there -- from there now.
Anna, I didn't even know where to begin with this. It's a royal snub, and I mean it. It was meant to be a State Visit. He was meant to be meeting
the Queen of Denmark. He said buying Greenland wasn't such a big deal. He made a joke on Twitter, and now he is not going. Wow.
ANNA STEWART, CNN REPORTER: Yes, you can't really underestimate what a big deal this is. It is a State Visit. The President was invited by Her
Majesty, the Queen of Denmark Margaret II. This was a big deal.
A lot of preparations got into it and landing here in Copenhagen this morning, because this tweet from the President came out overnight where he
said he wasn't going to be coming after all. The reaction here is one of absolute incredulity.
There was already some bewilderment about the fact that he thought he would be buying Greenland when Greenland doesn't want to be bought. It is not
for sale and that Denmark says, it is an autonomous region that they cannot sell anyway.
Today, a lot of offense being caused. People thinking that the U.S. has offended here, not just the Danish people, but the government and Her
Majesty, the Queen.
We had a spokesperson, actually from the Palace who said that this has never happened before. And they have nothing else to say. They are just
practically surprise.
It's interesting speaking to local journalists, of course on the ground, because they say this has actually reunified people from across the
political spectrum's feeling of offense over this whole spat and the trip and the fact that it has been postponed.
But also, I think there's an idea that what happens next to this relationship, Julia? It is so important to Denmark. The U.S. is the
biggest trading partner outside the E.U. They are hugely important for security. They've often fought together in wars. They've got a great,
very long standing military alliance.
And we're actually waiting right now for the Prime Minister to come out and make a statement and I think it'll be very interesting to see what she
says. She has to take on board the sentiments of the country, but she also has to walk that very fine diplomatic line to make sure she doesn't let
what is a terrible diplomatic spat go any further -- Julia.
CHATTERLEY: Yes, the balance of politics and economics. Anna Stewart, delicately put there. Thank you. All right. Let's move on. British
Prime Minister Boris Johnson is heading to Berlin today to speak to German Chancellor, Angela Merkel. He said he expects E.U. leaders to revise the
Brexit agreements they reached with his predecessor, Theresa May.
So far, they've consistently said they won't do that. With Chancellor Angela Merkel saying ahead of their meeting that there is quote, "No need
to reopen the deal." Speaking of delicate diplomacy.
All right, we're going to take a quick move. But coming up on the FIRST MOVE, the Italian job. What comes next following the resignation of Prime
Minister Giuseppe Conte, and when ultrasound goes mobile. I speak to the CEO of Butterfly Network about their revolution in medical imaging
technology. That's all coming up. Stay with CNN.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. We're counting down to the market open this morning. I had just been looking at the futures and we are still
in positive territory this morning.
Now, I have to say stocks still struggling to regain the what? 2.7 percent losses suffered this month following the announcement of course of
additional tariffs by President Trump on Chinese exports. Only 10 more days until partial tariffs take effect of course, September 1st.
Also keeping an eye on what's going on over in Italy as well. Demand for Italian bonds remaining robust despite the political crisis going on there.
The latest political crisis, let's call it, 10-year yields are falling again today. Bond prices higher 1.32 percent there. It's a multi-year
low. Italy's President though is meeting all political parties today ahead to try and attempt to end the country's political stalemate.
[09:20:12] CHATTERLEY: The Prime Minister, Giuseppe Conte because he resigned on Tuesday, following the collapse of the governing coalition.
Barbie Nadeau joins us from Rome once again. Barbie, what can we expect from the discussions today? You and I were discussing this yesterday, too.
Are there hopes for a renewed fresh coalition here? Or is the likelihood we head to fresh elections?
BARBIE NADEAU, CNN CONTRIBUTOR: Well, you know, we're going to know a lot more tomorrow. Right now, the President is just going to be starting in
the next hour or so these important consultations. We are working, though, with the results of an election that was very contentious about a year and
a half ago. And he still got those pieces of the puzzle to try to fit together.
And as he goes forward, he is going to have to see if there's any sort of majority, but you've got to remember that a year ago, this coalition was
the best compromise they could find, and it seemed an impossibility that there was any other way to form a government, but they were strange
bedfellows from day one.
A lot of people never thought the coalition would last as long as it did. So it's up to the President now to try to pick up the pieces or call early
elections, and it is looking increasingly like that might be the only option -- Julia.
CHATTERLEY: Absolutely. So what do we have to do now? We just wait for the discussions to take place today, we get a better sense? Because the
talk behind the scenes has been perhaps, and we discussed this yesterday that the Democratic Party there, the center-left could perhaps tie up with
a Five Star Movement, would that be a more cohesive coalition than at least what we've seen for the last year and a half? Because both feel pretty
uncomfortable, quite frankly, and have clearly been very challenged?
NADEAU: No, absolutely. And you know, they've spent the last 14 months saying nothing but terrible things about each other. So it's going to be
hard to see how they can reconcile some of them. And a year ago, there was no way these two parties could have worked together.
But it's really now all about Matteo Salvini. That's the Interior Minister far right leader of the League, whether they will hand him essentially a
possible win with early elections, or if they will form a coalition government that just exists only to keep him out of power. He still is at
the center of this government crisis.
And right now, Sergio Mattarella is meeting with these parties. And each time a party leader comes out, they tell the press what they think should
happen -- Julia.
CHATTERLEY: Yes, absolutely. And whether or not he gets punished at the polls for pushing the country to the brink of political crisis again.
Barbie, great to have you with us. We'll watch this closely. Barbie Nadeau speaking there.
All right, just one of the risks, obviously, that investors have to keep an eye on at this moment. Let's talk about how you play this. Victoria
Fernandez joins us now. She is Chief Market Strategist at Crossmark Global Investments. Victoria, fantastic to have you on the show.
Political crisis in Italy, Brexit negotiations, recession risks here in the United States, trade deals or not, you name it. Have you adjusted your
portfolio in any way over the last couple of weeks? How do you view the global markets at this stage and the risks that are upcoming?
VICTORIA FERNANDEZ, CHIEF MARKET STRATEGIST, CROSSMARK GLOBAL INVESTMENT: You know, Julia, we're long term investors. So we haven't made any
strategy shifts just based on headline news that's come out. And I think a lot of the uncertainties that we're seeing right now are headline based.
Like you mentioned, we have Brexit coming. We had Argentina last week, we have the Italian news that you were just speaking about. Obviously, the
trade war is a little bit longer lasting, but it does generate those headlines and have volatility going day-to-day.
With that, however, we're trying to find ways to take advantage of the volatility in the market. So maybe using options, we have covered call
products that we try to capture some of that volatility, use dividend paying stocks in our global equity product in order to have a little bit of
a buffer for volatility and just stay a little more conservative, so looking within the staples sector.
But I do think you have to take a longer term outlook and kind of avoid some of the headline trades.
CHATTERLEY: Yes, I think that's such an important message because if you try and trade on the sheer volume of noise that we're seeing right now, the
risk here is that you lose money and materially lose money.
Talk to me about your focus on consumer facing stocks, too, particularly retail earnings today because whether it's Lowe's or whether it's Target,
the stocks have pre market are pretty strong.
FERNANDEZ: They really are and you know, we have been talking all year with our clients telling them that really the consumer is the key to this
economy right now. We know that we've had industrial production and some of the manufacturing numbers come down because of slowing global growth.
But the consumer really remains strong. And we had good keys come out of that last week with Walmart and Alibaba had strong earnings; today,
obviously with Target and with Lowe's, even Home Depot. And Kohl's yesterday was better than expected even though it wasn't great. Still
better than expected.
I think it's showing the consumer really is driving this economy giving us kind of a floor to work off of and I think we'll see the market continue to
trend higher, as long as that consumer stays strong, and these stocks are showing positive movement today.
[09:25:15] CHATTERLEY: What specifically are you watching here? Because I saw a fascinating statistic today that said, 60 percent of the time as we
enter recessions into the United States, we don't see a weakening of consumer spending. That seems to kick in later. So what would give you a
sense, a pause for thought here to go, "Okay, perhaps we do need to be a little bit more cautious here."
FERNANDEZ: Well, I think when you look at the consumer, we can't just look at the retail sales numbers, right? And you do have a lot of coincident
indicators going on.
Right now, industrial production is down. That's one of those, but we look at the labor market, look at the payroll numbers, look at business sales,
look at income -- all of these things are staying pretty strong, and these are coincident indicators as well.
So you have to watch multiple factors to see where it's going, but also look at the household balance sheets of consumers, not just their spending,
those levels are really strong as well, savings numbers are higher. That's a good cushion for the consumer to have if things start to go a little bit
south on the spending side.
So there's many factors to watch with the consumer to show their strength is still continuing.
CHATTERLEY: Yes, it is such a great point. Victoria, fantastic to have you on the show. Thank you so much. And we'll get you back soon.
Victoria Fernandez, Chief Market Strategist at Crossmark Global Investors.
All right, we are counting down to the market open this morning. Plenty more to come on the show. New technologies in imaging and medical
diagnostics. And of course, a shift to how these retailers shape up some really strong earnings from Target this morning could open at a record
high. We are back in two. The market open is next.
(COMMERCIAL BREAK)
[09:30:00] CHATTERLEY: Welcome back to FIRST MOVE and the opening bell here at the New York Stock Exchange for the third session this week. A
higher start for stocks, as anticipated helped along by some strong retails earnings as we've been talking about already. The likes of Target and
Lowe's beating expectations on the top and the bottom line.
We've also got the Federal Reserve Minutes perhaps outdated and superseded, no doubt by Jay Powell speaking at Jackson Hole tomorrow. A lot of
investors clearly awaiting what we get there.
The President is also awaiting that, too. He has been tweeting this morning saying, "We're doing great with China and other trade deals. The
only problem we have is Jay Powell and the Fed. He is like a golfer who can't putt. He has no touch. Big U.S. growth if he does the right thing,
big cut." Remember he has asked for one percentage point cut from the Federal Reserve.
"But don't count on him so far. He has called it wrong, and only let us down. We are competing with many countries that have far lower interest
rates. We should be lower than them yesterday the highest dollar in U.S. history. No inflation. Wake up Federal Reserve. Such growth potential
almost like never before."
Okay, stocks also rallying as bond yields are well supported here as well. One fifty eight the level on the U.S. 10-year. Remember we've talked a lot
about how stock markets have been following bond yields in particular, so a solid open across the board this morning, and no doubt the President will
continue to tweet as we await Jay Powell on Friday.
For now, let me talk you through the global movers. Target higher this morning. We've discussed it already. Q2 sales and earnings beating
expectations. We saw a profit jump at 17 percent, and they raised their full-year profit outlook up double digits this morning premarket. Also
Lowe's, not premarket, it's now open. We're up in the session. Lowe's also higher jumping as earnings and revenues beat expectations.
We've got U.S. sales up more than three percent outpacing the sales that we saw for Home Depot, if you remember, right now also up double digits.
Keep an eye on Alibaba as well. We've discussed this, too. Reports that China's biggest e-commerce firm is delaying its Hong Kong share sale, a
second IPO for the company. It comes amid weeks of pro-democracy protests in the city, of course.
Now, in line with that, China's information wars could be targeting the United States. Tweeter took down nearly 1,000 accounts, it said with ties
to Beijing, most attacked protesters in Hong Kong. One though, was different. Donie O'Sullivan, joins us on this story.
So we have this whole list, Donie. You went over them and one in particular was found to be targeting America. Now, how sure are we that
that address was linked to China, given that Twitter has thrown accusations in the past, and they have been wrong? Talk us through your investigations
here.
DONIE O'SULLIVAN, CNN BUSINESS REPORTER: Yes, Julia. I mean, this is a very tough balancing act for Twitter. Twitter and Facebook and the other
social media platforms have been under huge scrutiny since 2016 when Russia ran this, you know, elaborate social media campaign targeting the United
States.
Now since then, they have built teams to try and you know, find these covert social media campaigns, which sometimes can lead to real world
events. You know, get real people out on the streets.
In the case of China, Twitter, and Facebook alleged earlier this week that Beijing was running a campaign with about a thousand accounts on Twitter
that were designed to look like independent news sites and independent individuals, you know, trying to undermine Hong Kong demonstrators.
Now, we went through the list of accounts that Twitter released, and you know, many of them were targeting Hong Kong. But one account did stick out
in particular, and it was called Liberty Lion News, and it wasn't tweeting about Hong Kong. In fact, it was sort of posing as a pro-Trump supporter
was pushing the queue and non-conspiracy and claim to be a First and Second U.S. Amendment advocate.
We dug in a little bit into that account, and what we actually found that the account had been around for 10 years, but prior to being Liberty Lion
News, it was actually promoting nightclub events in New Mexico here in the U.S.
We contacted and tracked down the guy who ran that account, and he was surprised when he got a call from CNN, and we had told him that an account
he used to run had been implicated by Twitter, supposedly run by the Chinese.
He said back in June of this year, he had gotten an e-mail from Twitter saying that his password had been changed, sort of the long story short,
his account has essentially been totally hacked and had been taken over, and he no longer had any access to it.
Twitter did not help him at the time, and since then, it sort of took on this whole new life of its own. Now, what's important here is that if
indeed this account is truly run by Beijing, it would point to a sort of escalation. It's certainly an expansion in how China targets the U.S. for
propaganda.
[09:35:23] O'SULLIVAN: We've seen Russia before posing as activists and news organizations and individuals in the U.S., but we've never really seen
China do that, at least not in a way that's been disclosed in this fashion.
But the big disclaimer here is and this is the real -- I guess, for -- and a challenge for Twitter as a public company in calling out these nation
states, Twitter, I have made mistakes before.
Previously, when they were trying to be transparent about what Russia was doing in the U.S., they had misidentified some real Americans as Russians
posing to be American. So we don't know if this account is truly Chinese, but it does, nonetheless point to a sort of very interesting case of, you
know, how an account can get taken over from a business owner in New Mexico and take on this whole new persona as a political actor.
CHATTERLEY: Yes, still being used as a weapon here to spread misinformation. But to your point in particular, we're going to be very
careful at pointing the finger perhaps at China when it's far more similar to what we've seen from Russia in the past. So yes, we would be very
careful with this story. Donie, great work. Donie O'Sullivan there. Thank you so much.
All right. We're going to take a quick break here on FIRST MOVE, but coming up, things are heating up at Walmart, not in a good way. It's going
to court over a series of store fires, saying Tesla is to blame. We'll explain after that. Stay with us.
(COMMERCIAL BREAK)
[09:40:00] CHATTERLEY: Welcome back to FIRST MOVE. Walmart is suing Tesla saying several fires have been caused by solar panels, the electric car
maker installed on Walmart's store roofs. Matt Egan joins us on this story.
Matt, I believe 240 different stores have these solar panels systems installed. This is pretty painful. Talk us through the details of this.
What's going on?
MATT EGAN, CNN BUSINESS LEAD WRITER: Julia, when you're a solar company, it is never good for business when one of your biggest customers blames you
for roofs lighting on fire. And that is exactly what Walmart is alleging in this explosive lawsuit that was filed yesterday.
Walmart detailed fires at seven stores across the country that allegedly began in Tesla solar panels, and what Walmart is saying here is they are
putting the blame on a rushed approach to the installation process.
Walmart is alleging a breach of contract and it is seeking to recover millions of dollars in damages and have Tesla remove the systems. And
Julia, I want to read an amazing line in this lawsuit, Walmart said quote, "To state the obvious, properly designed, installed, inspected and
maintained solar systems do not spontaneously combust. And the occurrence of multiple fires involving Tesla's solar system is but one unmistakable
sign of negligence by Tesla."
So Tesla did not respond to multiple requests for comment. But clearly, this is not going to help Tesla's solar reputation. And it's also another
reminder of that controversial 2016 takeover of Solar City.
Now, you'll recall that a lot of analysts at the time, they criticized the deal as a bit of a bailout for Solar City because the company has a lot --
had a lot of debt, and the company was run and founded by two of Elon Musk's cousins, and the deal really has not worked out for Tesla, it has
turned out to be a bit of a bust. And clearly this lawsuit from Walmart will not help that view.
CHATTERLEY: Yes, that deal has just been a headache, I think from start to finish, quite frankly. But these two companies have been working for years
on clean energy initiatives. I believe that Walmart has also preordered 45 of the Tesla semis as well. Awkward? Better settle this ASAP.
EGAN: Definitely awkward, because as you mentioned, Walmart has bought dozens of these clean semi-trucks from Tesla. It has also, you know,
installed all of these solar panels and Walmart is, you know, it's not just the biggest retailer in the United States. It's also one of the biggest
users of renewable energy in corporate America.
So clearly, Tesla and Walmart are not on the same page here. And it's only in Tesla's best interest to try to get this issue resolved as quickly as
possible -- Julia.
CHATTERLEY: Yes. Settle ASAP. My advice. Matt Egan, thank you so much for joining us on that story. All right. Let me bring you up to speed now
with today's "Boardroom Brief."
An investigation commissioned by Facebook says the science and efforts to counter misinformation have silenced some conservative voices. It includes
some of the people Facebook relies on for fact checking are regarded by conservatives as left leaning. It also says a Facebook policy to bar
sensationalist adverts may have restricted anti-abortion campaigners from sharing their views.
Sony Pictures and Disney's Marvel has failed to reach an agreement on the future of Spider Man, meaning that Spidey himself will not be starring in
any of the Marvel's movies for the time being. Sony, which owns the movie rights to the superhero says it is disappointed that the talks fell
through.
Prepare to enter the matrix one more time, 20 years after the original film debuted, the movie franchise is making a comeback. It stars Keanu Reeves
and Carrie Anne Moss confirming they will appear in the fourth film. Wow.
All right up next, meet the company turning your smartphone into an ultrasound scanner. We will be speaking to the Butterfly Network. Stay
with us.
(COMMERCIAL BREAK)
[09:46:20] CHATTERLEY: Welcome back to FIRST MOVE. Beyond Meat back on the menu at least at JPMorgan. The broker upgrading the fake meat makers
stock to overweight. It says the shares are appealing again after shedding around 40 percent in the last month, even so they're still trading six
times the price they fetched it IPO back in May. Our Dr. Sanjay Gupta got behind the facts behind fake meat.
(BEGIN VIDEOTAPE)
SANJAY GUPTA, CNN MEDICAL CORRESPONDENT (voice over): I've come to the Beyond Meat headquarters in El Segundo California to see the substance and
the science behind this movement.
(BEGIN VIDEO CLIP)
ETHAN BROWN, FOUNDER AND CEO, BEYOND MEAT: Today, we're sitting in the Manhattan Beach Project. We wanted to evoke that sense of urgency and
scale of the Manhattan Project, the Second World War with inner Chicago, where they brought together the very best scientists, the best engineers
and the best managers to solve something that was really important at the time to beat the Germans to the bomb. We have to solve this protein issue
if we're going to have a sustainable planet, if we're going to have a healthy population.
GUPTA (on camera): It's a pretty audacious way of looking at things.
BROWN: You know, 95 percent -- 93 percent of Americans are consuming animal protein. I don't think that's going to go away. But can we shift
the consumer from an animal based meat to a plant based meat?
GUPTA: Thank you very much for having me. Thank you.
BROWN: About 95 percent of our employees on the research team came out of biomedical training or biomedical work. And I know they want to be and I
want them to be that group of people that separates meat from animals. You know, there's pride in that. And so we're working furiously to make sure
that we deliver that.
(END VIDEO CLIP)
GUPTA (voice over): The growing beef with beef, especially factory farming is partly because research shows it is severely damaging to the
environment.
According to the UN, beef alone is responsible for 41 percent of livestock greenhouse gas emissions, such as methane and nitrous oxide. Those
livestock emissions make up 14.5 percent of total global emissions.
In Redwood City, California, Impossible Foods is another U.S. company at the forefront of the plant based meat revolution.
(BEGIN VIDEO CLIP)
PAT BROWN, FOUNDER IMPOSSIBLE FOODS: Our mission is very simple. It's to completely replace animals as a food technology by 2035 globally.
(END VIDEO CLIP)
GUPTA (voice over): Pat Brown, a doctor and a former biochemist, founded the company in 2011. Impossible says its products are available at more
than 10,000 restaurants in the United States --
(BEGIN VIDEO CLIP)
ANNOUNCER: The Impossible Whopper only at Burger King.
(END VIDEO CLIP)
GUPTA (voice over): And have also launched in multiple locations in Asia, including Hong Kong, a huge traditional meat eating market.
(BEGIN VIDEO CLIP)
P. BROWN: People are not wedded to the idea that meat has to come from animals, they're very wary of the idea that they've got to have meat.
(END VIDEO CLIP)
GUPTA (voice over): But is the Impossible Burger good for you?
(BEGIN VIDEO CLIP)
P. BROWN: We make our product as healthy as we can, which isn't to say that you should base your whole diet on giant stacks of Impossible Burgers.
It's a healthy component of a healthy diverse diet.
(END VIDEOTAPE)
CHATTERLEY: All right, let's move on. Butterfly iQ, a beautiful name and a very apt one for a device that transforms the smartphone into an
ultrasound scanner. The tool was created by the digital unicorn, Butterfly Network, and it's backed by the Bill and Melinda Gates Foundation among
others.
For more on the potential here, I'm joined in the "Chatt Room" by Jonathan Rothberg, founder and CEO of the Butterfly Network. Jonathan, fantastic to
have you with us. Just explain why this device is so revolutionary and for many reasons here. Talk me through exactly what it does.
JONATHAN ROTHBERG, FOUNDER AND CEO, BUTTERFLY NETWORK: All of our lives were transformed when people put a computer on a chip and people put a
camera on a chip. I was involved in putting DNA sequencing on a chip.
[09:50:10] ROTHBERG: When you put something on a chip it democratizes it - - democratizes it. So I decided to put an ultrasound on a chip, because my daughter needed constant scans and they were hard to use and expensive, and
now anybody can use it, and it is inexpensive. So everywhere in the world, we can democratize a window into the human body.
CHATTERLEY: Talk to me about this chip, because this was very different technology from what we've seen from ultrasounds in the past. And that
just made them so much more expensive than what you've managed to create -- even, and we've been doing ultrasound using smartphones for a while, but
even the cost there was several thousands, you've got the cost down to one around $2,000.00 -- critical.
ROTHBERG: So for the last 50 years, people used these crystals and carts, and you had one probe for one body part.
CHATTERLEY: Yes.
ROTHBERG: this is the world's first and only whole body scanner, and with a smartphone, it's easy to use. And we use Augmented Reality so anybody
can pick it up and save a life.
CHATTERLEY: I mean, we've got images of it. And it's really quite simple. It directs you. It says look a bit closer, a bit further to the left, go
to the right. So actually using this out in the field, in medical situations is again significantly easier perhaps than it has been in the
past.
ROTHBERG: Absolutely. A stethoscope, which has been given to doctors for 200 years is difficult to use. The UC Irvine class this year at their
White Coat Ceremony instead of giving them a stethoscope gave them a Butterfly iQ. And now every single medical school students is being
trained right from the start to have this window into the human body.
CHATTERLEY: So talk to me about some of the practical implications because I think, two for me what stood out; one, is unborn children and being able
to give women a view on their unborn child, but also treating pneumonia. You are doing work in Uganda as well -- two critical issues.
ROTHBERG: Absolutely. Right now, two thirds of the world has no access to medical imaging. So when you pick up a Butterfly iQ in New York City, a
cardiologist can use it. And that's great. But how about for the rest of the world.
So with the Bill and Melinda Gates Foundation, we developed applications that allow them to diagnose childhood pneumonia, which used to kill 2,400
children a day. We gave them an application to stage babies, so a mother can get to a safe place when she is going to have a baby.
Right now, every 90 seconds, a child dies during birth, and our goal is to change that. I created the Butterfly iQ because of my daughter, for
someone I love. Now, I want to make sure the whole world has it when somebody they love needs it. So it has to be there, it has to be
inexpensive, it has to be easy to use. And our goal is to make sure everybody in the world has access to a window into the human body that can
save a life when someone you love needs saving.
CHATTERLEY: I mean, the medical imaging, as far as pneumonia is an interesting one for me, too, because traditionally, it was a guesswork. So
you just blanket give antibiotics, got a cold, got a fever, whatever it is, you blanket antibiotics, particularly in places where they're becoming more
and more resistant to drugs, too.
So there is a Butterfly Effect here, a benefit here in other ways as well in providing this technology.
ROTHBERG: People are calling it the Butterfly Effect. So when we were in Africa, and we were running up these clinics now, sure, in an hour's time,
24 kids will come in, but only half of them really have childhood pneumonia, and we give the right drug to the right person, it puts
personalized medicine in your hand around the globe.
CHATTERLEY: Okay, so how many different countries? How many doctors? How many non-doctors actually are using these and what next? How do you spread
the word here because the price here, I think we have to reiterate again, critical $50,000.00 to $100,000.00 for a traditional ultrasound system,
you've got the price down, smartphone connected to $2,000.00.
ROTHBERG: $2,000.00 and we're just starting. So our goal is pretty simple. Last 50 years, they sold 500,000 of those carts. Our goal is to
put in the next 18 months, as many ultrasounds in as many people's hands as the rest of the industry did cumulatively in the last 50 years. And that's
just what you saw with camera phones. That's just what you saw with computers. When you put something on a chip, it democratizes it.
CHATTERLEY: You're raising money. You've already raised money. I guess you're on the lookout for more money. Is that what you need? Is that what
we actually need in order to spread the word and take this more broadly and actually grow the company?
ROTHBERG: Talent first, money second. So we have money in the bank, and we're hiring the smartest people in the world and the people that care the
most in the world. Because as you mentioned, we are now global. Every 15 days, we're opening another country.
CHATTERLEY: Wow. Fantastic.
ROTHBERG: Thank you.
CHATTERLEY: Yes, you're doing great work. Yes. And your daughter's okay.
ROTHBERG: God is great.
CHATTERLEY: Fantastic. How long did it take to develop by the way?
ROTHBERG: Five years.
[09:55:09] CHATTERLEY: Was it? Five years. And still a work in progress. Fantastic to have you on the show. We'll watch your progress.
ROTHBERG: Thank you.
CHATTERLEY: Certainly, the Butterfly Effect. Jonathan, thank you. Jonathan Rothberg there. All right. Let me give you a look at what we're
seeing right now for the markets, plenty going on, of course, and we're counting down to speech from Jay Powell of course tomorrow, the Federal
Reserve Chief. What on Earth is he going to say in light of pressure?
We've had the President of course tweeting once again, reiterating that the economy is strong, but it would still like to see more QE and rate cuts.
And of course, we've been discussing the potential for tax cuts, too. Stimulus is the watchword; insurance is another word as I've used
throughout the show, but right now, we are seeing gains for the stock market. The retail sector most definitely adding support here, too.
We'll be back in a couple of hours' time to follow the thread on all of these stories. But for now, you've been watching FIRST MOVE, time to go
make yours. Have a great Wednesday.
(COMMERCIAL BREAK)
[10:00:00]
END
