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First Move with Julia Chatterley
U.S. Futures Soar Premarket As October Hiring Data Beats Expectations; China Switching On The World's Largest 5G Network; Some Pretty KULR Innovation: The Firm Keeping Lithium Batteries Cool In Space And Beyond. Aired 9-10a ET
Aired November 01, 2019 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:37]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE. And here's your need
to know.
Jobs-tastic. U.S. futures soar premarket as October hiring data beats.
5G-eepers. China switching on the world's largest 5G network.
And some pretty KULR innovation. We speak to the firm keeping lithium batteries cool in space and beyond.
It's Friday. Let's make a move.
Welcome once again to FIRST MOVE. A very Happy Friday to you all and a particularly happy Friday to U.S. workers. Let me explain why because the
October non-farm payroll report showing stronger than expected jobs growth at 128,000 jobs added in fact, versus an expected rise of around 89,000
jobs. This despite the drag of the just concluded GM strike, which also, we also saw a big upward revisions to August and September, too.
We did see the unemployment rate tick up a little bit and wage growth is perhaps a little more modest than expected, but pretty strong jobs number,
I have to say. All the details and more analysis coming right up. The question for now though is what do investors think of it?
Well, I can tell you, they like it. Right now features are higher premarket for the final session of the week. It's not the only good news
that we're focusing on though. Chinese data, I think also are helping sentiment here providing some encouraging factory data, the private factory
survey showing activity at a-32 month high, firmly in expansion mode. Now, that's a marked contrast to the official Chinese PMI survey data yesterday.
Now that tends to cover larger firms. It's geographically different, too. And that showed continued weakness.
Interesting one. Standby for more factory data here in the United States, too, at 10:00 a.m. Eastern.
Yesterday's session, though ending in the red; not helped, and this is also important by a Midwest manufacturing survey that showed a big drop in new
orders. As we keep reiterating here on FIRST MOVE, manufacturing making up just 11 percent of the U.S. economy. It's the lowest proportion of the
U.S. economy since the 1940s, in fact. The key is not taking your eye off the U.S. consumer and today, it is good news.
Let's get to the drivers because we're going to talk through those jobs statistics. Clare Sebastian joins us on this. Great jobs number for
October, better jobs numbers for the prior two months, Clare, some might even call it Trump-tastic.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Right and perhaps the Fed Chair, Jerome Powell knew something we didn't when he said the economy is
on a strong footing. Hiring is strong and now might be the time to stop cutting rates for the moment. Yes, Julia, this was extremely strong,
around 85,000 was what was expected; 128,000 was what came in and that indicates that the drag from the GM strike wasn't quite as bad as people
were expecting.
The cuts to motor vehicle and parts jobs that declined 42,000. Overall, manufacturing was down 36,000 and that of course though, in large part a
temporary factor because of course the GM strike has ended. There was also another temporary drag from temporary workers employed to do the U.S.
Census. But that, of course, will be over by the next month as well.
So overall, very, very strong. One of the strongest areas was food services and drinking places - that was up 48,000. We talk about the
strength of the U.S. consumer. Clearly, people are still out eating and drinking.
But one slightly negative note, if you look now over the course of the year, the average for monthly gains and jobs is 167,000 that is
significantly lower than what we saw last year, Julia, at 223,000 in 2018.
So we are still see a deceleration when it comes to hiring, but overall, not quite as bad as some had feared.
CHATTERLEY: I know. I was just digging into the numbers here before the show. The pool of available labor falling to its lowest level since
December of 2000. At some point, when you've got so many jobs out there and admittedly people working a number of jobs, it gets harder and harder
and harder to find workers. What you would expect then is they have to pay a bit more, but now, I am looking at this wage data, and that's not so
sparkly.
[09:05:03]
SEBASTIAN: No, it's baffling, Julia, because literally every business that I speak to nowadays for a variety of different reasons, not even just this,
they say that one of their biggest challenges is finding the right skilled workers. The tight labor market is a real challenge for businesses, but
still wage growth was fairly flat at three percent year-on-year, ticked up six cents month-on-month, which was slightly faster than we saw the last
month.
But this has still not really kept pace with the tightness of the labor market. So that is a real conundrum going forward. But look, overall, I
think this is a sign of strength that wage growth at three percent is still probably above inflation. So, still a lot of positive signs here.
CHATTERLEY: I have to say, though, given what we've talked about over the past few weeks -- recession concerns, the importance of the reliance on the
U.S. consumer -- and to your point about Jay Powell and what the Federal Reserve is seeing here, I started by saying it was Trump-tastic and we do
have a tweet from the President. "Wow. A blow out jobs number just out, adjusted for revisions and the General Motors strike, 303,000. This is far
greater than expectations. USA rocks."
Hard to take it away here. The economy remains on an aggregate basis, pretty strong here -- Clare.
SEBASTIAN: pretty strong. I think another key number, Julia that we're going to get today is the ISM Manufacturing data that's out at 10 o'clock.
There continues to be a disconnect between business confidence in spending and the manufacturing sector, which has showed consistent weakness over the
past few months off the back, ironically, of the President's own policy at his trade dispute with China and the strength of the U.S. consumers.
So far that disconnect continues. It will be interesting to see if we see another decline in manufacturing activity, and I think many economists are
wondering how long that divergence can continue? How long can businesses see declining spending until it spills over into hiring and then by
extension into the consumer?
But overall, this economy seems to be ticking along nicely and that very much reinforces what the Fed Chair said this week.
CHATTERLEY: Yes. Right to pause, for now. Clare Sebastian, thank you so much for that. Next driver, China turbo charging its bid to become a tech
superpower with the launch of the world's largest 5G network.
David Culver is in Beijing for us and tracking this story. We've seen the United States and South Korea flirting with this, but this is well and
truly China out in front. Talk us through what was said switched on today -- David.
DAVID CULVER, CNN CORRESPONDENT: To your point, too, Julia, you've got the U.S. doing it in some parts; South Korea, Australia, but this here in
China, it is all about scale. And you know how things are done here in China. It is done on a massive scale.
They estimate -- state media here -- that they have some 850 million people who surf the internet using their mobile smartphones. So when they're
rolling out this now, 5G, this Fifth Generation, which they say could be up to 100 times faster than the current 4G, they're going to be giving access
to a lot of folks here. Millions of people.
Let me give you some of the ideas, as far as the scale of what cities we are talking about. They say some 50 cities are going to be rolling out.
Here in Beijing, you've got some 21 million people; Shanghai, some 24,000,001. Guangzhou, you've got 12.5 million, and then Shenzhen, you've
got 11 million -- all of those more than what we see in New York and London. So that tells you just how many millions of people will eventually
have access to this.
So speed is one thing, connectivity as far as a lower latency, if you will, so the delay from transmitting from one phone to another, and that's going
to all play into, for example, smart cars and self-driving cars, something that they're testing here in China so that these cars can actually have a
more instantaneous reaction with one another and that would enhance technology.
They're also talking about these smart Band-Aids, things that could perhaps detect your healing and track them as you go through that healing progress,
smartphone type of toothbrushes that can tell you if you're sick. I mean, all sorts of things.
So the reality is though, these are going to take it a couple of years. I know, it's all over the place, but it's going to take a few years. So the
folks here are not going to see that right away because it takes the applications a while to come up to speed with what the full advantages are
of this 5G network.
CHATTERLEY: Yes, but it's such a huge accelerant to your point here. I mean, I was looking at some of the stats. Analysts at Jefferies predicting
China will have 110 million 5G users, we're talking seven percent of the population by 2020. I mean, that is astronomical in terms of progression
and growth here, David, but talk to me about companies.
We talk a lot about Huawei, but it's not just about Huawei's, pivotal as they are. I noticed other names -- Nokia, Ericsson -- that are being used
by China hereto. Fascinating.
CULVER: Absolutely, and to your point here, okay, so having the 5G network is one thing, but you need the product that can actually access that
network and that's where the phones themselves come into play.
So, Huawei is a huge one and that is to put it in perspective, the majority of folks who have smartphones here rely on Huawei, some 42 percent of
people compared with Apple products, for example, the iPhone, where it's like five percent here.
[09:10:17]
CULVER: So Huawei is a massive one. Huawei obviously has been something you and I have been talking about a great deal because that's the company
that has been really targeted by U.S. politicians and the Trump administration citing national security concerns worried that this 5G
network -- there are even, you know, according to the state media, here politicizing it, fearing that it could be a National Security issue and
risks spying.
So all of this is kind of tied in together with the U.S.-China trade war as well. But Huawei has rolled out as of today, a new smartphone that will be
equipped to run this 5G network and several other companies are going to be relying on that, too.
Now China's state media points out that this will benefit U.S. companies. They point out Qualcomm for example, and Intel, some of the companies that
make chips for other smartphones here will be seeing a boost economically because of this 5G network.
CHATTERLEY: That's such a great point, David, but I was just looking down the list as well. ZTE, Ericsson, Nokia, Huawei -- no U.S. companies
involved in the kind of infrastructure that we're talking about, keeping the chipmakers aside here. There's a reason why the U.S. is that upset
here, I think.
David, great to have you with us. Thank you so much and Happy Friday evening.
All right. Let's move on to our next driver. Enter Apple. Tune in for a thrilling new episode of the streaming wars. The tech giant joining the
fray, a little bit late to the fray with the launch of Apple TV Plus.
Hadas Gold joins us on this story. Late to the party, I have to say. Cue price, whopping ecosystem here, short on content, perhaps, Hadas. What do
we think here?
HADAS GOLD, CNN BUSINESS REPORTER: Yes, late to the party, but something that analysts are paying close attention to. So this new Apple TV Plus
streaming service launches today in more than 100 countries. It's available for $4.99 a month, but if you buy a new iPhone or a new Apple
product, you will get it free for one year.
Now, as you know, this new service is short, let's say on content, it's not like Netflix where you can seemingly scroll forever through all of these
different types of options. There's only going to be around nine original shows, but where they might lack on a content library, Apple is making up
for with these huge names that are behind the shows.
Of course, we've all seen those big advertisements for the "Morning Show" starring Jennifer Aniston, Reese Witherspoon and Steve Carell. But other
names like Oprah Winfrey and Steven Spielberg are also backing some of these nine original shows.
Now why is Apple doing this now? Well, it's because of slumping iPhone sales and Apple needing to really pivot towards these more services.
They're trying to attract people through this TV streaming service.
Now, they don't necessarily need to get tons and tons of people on board like Netflix does, but this is a pivotal moment for Apple. It's a pivotal
moment for Tim Cook.
If you could, I don't know, look at the Steve Jobs era and think about the iPhone as a pivotal moment for him, this could be the pivotal moment, the
change moment for Apple right now under Tim Cook.
And the one question that I wonder, Julia, is how long this price will stay at $4.99 a month, because right now, it is I think, the cheapest option of
all the streaming services out there. I'm not sure how long it will stay at $4.99.
Tim Cook was asked just the other week by reporters, whether that price will change and when it will change and he didn't indicate for sure that
it's going to stay at $4.99. He said it is something they will continue to look at.
CHATTERLEY: Content -- they've got to come up with their content goods surely because even if it's $4.99, and relatively cheap compared to some of
the other guys, when you're looking at the likes of Amazon, of Netflix, even if they're a little bit more expensive, the sheer library content that
they've got is whopping. Do you agree?
GOLD: Yes, but what Apple is banking on are these names. They are banking that people are going to look at the price, say, okay, $4.99 that's how
much you might pay to rent a movie on some other services. I'll pay $4.99 to get these nine shows, especially if I love Oprah and also, I think other
shows like "Sesame Street" are going to be on there as well.
And these shows, there's a lot of money around and Apple is reportedly spending something like $6 billion on some of these shows. They're
spending as much money as other shows like "The Walking Dead" have spent. So these are really high production value. Huge, huge names, huge stars,
and that's what Apple is banking on right now.
CHATTERLEY: Deep pockets is definitely one thing that Apple has. Hadas, great to have you with us. Hadas Gold there on that story.
All right, we're going to take a quick break here on FIRST MOVE. Plenty more to come. Stay with us.
(COMMERCIAL BREAK)
[09:17:45]
CHATTERLEY: Welcome back to FIRST MOVE, live from the New York Stock Exchange. We are looking at a stronger open for the final session of this
week.
As anticipated, a stronger U.S. non-farm payroll report helping sentiment here, 128,000 jobs created last month, well above expectations. Higher
revisions for the prior two months, too. This despite the effects of the 40-day GM strike.
We did see the unemployment rate ticking a touch higher here though, too. Keep an eye, because I spy some M&A activity. Fitbit, remember we were
talking about this earlier this week? Google now confirming that it's buying the fitness tracker company for $2.1 billion. Fitbit shares adding
a further 16 percentage points premarket this morning. Google getting in on the wearables business.
Now, let's move on and talk about energy, too, because this is another sector to keep in focus. It's a sector that's lagged the broader market
and an ETF that tracks energy shares finish modestly lower in October. It's down 11 percent in fact, over the past six months. To give you a
comparison, the S&P 500 has risen four percent over that time.
Now key earnings in the sector today, Big Oil reporting big drops in earnings, a revenue miss for both Exxon and Chevron. Exxon did beat
expectations on earnings boosted by a big surge in shale production and yet profits have halved.
Let's talk this through. Rob Thummel is Managing Director at Tortoise Capital Advisors and he joins us now. Rob, great to have you with us as
always, as I pointed out there, energies had a tough time this year. It's underperformed the broader sector.
For Chevron and Exxon, they've both been in the bottom half of the S&P 500. What do you make of these earnings and are we starting to see value perhaps
in the stock prices?
ROB THUMMEL, MANAGING DIRECTOR, TORTOISE CAPITAL ADVISORS: Yes, well, at Tortoise, we do think the energy sector is undervalued, Julia. If you look
at just a sector broadly, it trades at half the enterprise value to EBITDA multiple relative to the S&P 500 stocks.
The dividend yield actually is what we think is most compelling and the dividend yield on the energy sector is probably one and a half times the
S&P 500 and in this environment of a low 10-year Treasury and investors just starving for dividend yields, you know, the energy sector is a good
place to come to get some dividend yield.
[09:20:10]
THUMMEL: Exxon and Chevron are two companies also that offers significant dividend yields -- four or five percent dividend yields. They reported
results today, kind of a mixed bag from both of those.
CHATTERLEY: What are investors looking at here, Rob, when they're watching these big oil names? Because we have seen it lag, the shifts that we've
seen in oil prices overall. The energy sector itself, so there are fears about oil demand going forward. The broader slowdown, China trade -- what
specifically are investors looking for? Does it just come down to capital discipline here?
THUMMEL: Yes, that's a good question, Julia. So big picture right now. The biggest driver right now is the U.S.-China trade war because investors
just globally are concerned about global energy demand.
Now, what investors forget about is 35 out of last 36 years, global energy demand has increased, and we expect global energy demand to continue to
increase. Sources supply will probably change over time, but global energy demands is going to increase.
So at this point, from an energy perspective, specific to some oil producers, what investors are trying to sort out is, are these good
businesses? And how do they prove that they're good businesses? Well, they generate a lot of free cash flow. And we think that over the next
several years, you're going to see a mountain of cash flow being built up by the energy sector. That proves that these are really good businesses.
Investors will be rewarded by that cash flows through the form of higher dividends or in addition to that, share buybacks and so we think those two
factors make this sector very compelling to get into right now, and like I said, you get a really good dividend yield right now investing in the
sector.
CHATTERLEY: Relatively compared to the stock market here overall, the S&P 500 and bonds right now. Super juicy the kind of levels of activities that
we're talking about.
Just talk to me about OPEC in December. What are you expecting from them? Is that going to give further support to oil prices, and therefore perhaps
the energy names hereto?
THUMMEL: Yes, and Julia, that's a very good point. That's the next catalyst, I guess, for the energy sector. December 5th, there's the annual
or the semi-annual OPEC meeting, a regularly scheduled meeting. The question will be what will OPEC do? Will they cut production? Will they
increase production?
The expectation is right now that it's quite possible that they will actually lower their production again. They'll cut production across OPEC
once again. The reason why is because OPEC still wants to see oil prices higher. They don't want to see oil inventories increasing.
And so as a result of that, they may need to cut production once again to keep oil prices from falling, and so we expect them to potentially do that
when we have a resolution in the U.S.-China trade war combined with the OPEC production cut, next year, the oil inventories will probably decline a
little bit globally and that will be a positive boosting of oil prices or at least keeping them stable, which is really the key, stable oil prices is
what OPEC wants and what U.S. producers want as well.
CHATTERLEY: And we've got around 30 seconds here, so I'm going to put you on the spot. Saudi Aramco, do we get an IPO this year?
THUMMEL: Yes, well, 30 seconds. You know, Saudi Aramco, obviously, there are ways for it to IPO and will likely IPO somewhere in some exchange.
We've got a lot of exchanges around the world these days.
You know, for us at Tortoise, we consider environmental, social and governance issues and take them very seriously. There are some social and
some governance issues associated with Saudi Aramco. I think a lot of investors will have concerns around that.
And so as a result of that, you know, obviously, we don't think that obviously, they are going to have a New York Stock Exchange listing. But
for us at Tortoise, we watch it. It's the cheapest, one of the best -- it has some of the best assets, oil assets in the world, but it also has some
social and governance issues that are very high on our priority list and probably keeps us on the sidelines as a result of that.
CHATTERLEY: Rob, fantastic to have you with us, as always. Rob Thummel of Tortoise there. Look forward to chatting to you again soon.
All right, let me bring you up to speed now with some of the other stories that that we're following around the world.
The Impeachment Inquiry into U.S. President Donald Trump could go public very soon after the U.S. House passed a resolution detailing how the
investigation will now proceed.
Though it was largely along party lines with two Democrats joining Republicans in opposition, the White House condemned the resolution as
unconstitutional.
CNN Washington correspondent Joe Johns joins us now. Joe, fantastic to have you with us. You know, when I look at polling here, the country is
split down the middle on this impeachment vote. Obviously, the parties, the Democrats and the Republicans are split down the middle. What
difference will making these hearings public make do we think to that view?
[09:25:06]
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Well, the Democrats have always said that they would like to see a majority of Americans in favor of
moving forward with the Impeachment Inquiry, the Articles and impeachment itself. And they don't have that right now.
In fact, if you look at the recent ABC News poll, it shows Americans split right down the middle with the yeas and the nays at 49 to 47 percent. So
that's really close. And Democrats would like to have hearings in order to get the American public on their side. Now, it is certainly a big question
because right now, a lot of -- all of what has gone on recently has been behind closed doors.
So that and the fact that this inquiry could take a lot longer than people expect could go well down into December before they even get Articles. It
seems like a potential problem for the Democrats trying to unite the country -- Julia.
CHATTERLEY: I things stand though, Joe, and we've got to be quick with this, the Republicans in the Senate are not going to vote for impeachment.
So even if the House does, Donald Trump is going nowhere unless he is voted out in 2020, is that right?
JOHNS: That certainly seems to be the case. Right now, the Republicans appear united against the President -- against impeachment, and the fact of
the matter is, a number of Democrats would have to join Republicans in order to do anything like removing this President from office, you're
absolutely right at this stage, at least the way we read the tea leaves if you will -- Julia.
CHATTERLEY: Yes, some more mudslinging, or tea leaves slinging in the meantime. Joe Johns, fantastic to have you with us. The market open is
next. Stay with us. More to come.
(COMMERCIAL BREAK)
[09:30:00]
CHATTERLEY: Welcome back to FIRST MOVE. That was the opening bell this morning. Lots of clapping and smiling people. As expected, we've got a
higher open for U.S. stocks after today's better than expected U.S. jobs report. Just to reiterate 128,000 jobs added. That despite the GM strike.
We saw strong upward revisions to the prior two months, too.
Stock certainly liking it, as you can see up more than five tenths of one percent across the board here. We're beginning a new month on Wall Street.
If you remember stocks had a real weak start to October, but the month turned out to have more treats than tricks for investors. Yes, we're still
going with the Halloween theme. All the major averages are closing higher with the best gains in fact coming from the technology sector as you can
see, up some 3.6 percent for October.
It was also a good month for the pound as well. The U.K. pound posting its biggest games in around a decade as no-deal Brexit fears eased, at least
for some.
All right, let me walk you through the Global Movers here. Fitbit is rallying. Google saying they're going to be buying the fitness tracking
company for around $2.1 billion. Fitbit shares rose 41 percent earlier this week on speculation that Google was in fact interested and now they
are confirming that interest. Fitbit as you can see trading above $7.20 a share right now. They got it cheap.
Pinterest. Wow. Down 22 percent in early trading. The company reporting a slight profit, but investors were expecting a loss of revenues and this
is the key, missing forecast. The company also lowering its 2019 outlook. The investors clearly very disappointed there going further below its IPO
price.
ExxonMobil higher by 1.6 percent. Profits fell by almost 50 percent on weak oil prices. That said, results for the world's largest publicly
traded oil company came in well above forecasts. Sales beat, too.
All right, shares of Avis budget car rental tumbling. The company's earnings fell 11 percent below estimate revenues also missed. They also
lowered their full year guidance. Car rental services have been hit hard by the rise in ride sharing apps like Uber and Lyft.
So, that's a look at your Global Movers.
All right. Let's bring it back to Brexit. The Brexit Party leaders' message to the British Prime Minister earlier today. Listen in.
(BEGIN VIDEO CLIP)
NIGEL FARAGE, BREXIT PARTY LEADER: I'm going to say this to Boris Johnson. Drop the deal. Drop the deal because it's not Brexit. Drop the deal
because as these weeks go by, and people discover what it is that you've signed up to, they will not like it.
(END VIDEO CLIP)
CHATTERLEY: That was Nigel Farage kicking off the Brexit Party campaign ahead of December's election. As you heard there, Nigel Farage saying we
will contest every seat. Boris Johnson should drop his deal.
So John Curtice is Senior Research Fellow at Independent Social Research Company. Now, he is also a Politics Professor at Strathclyde University.
Great to have you with us, Sir John, fantastic to have you with us on the show.
We'll come back to the Brexit Party and the impact that they could perhaps have, but I just wanted to get your gauge at this moment. If the election
was held today, what should we expect according to the polls?
JOHN CURTICE, SENIOR RESEARCH FELLOW, NATCEN: Well, if the election were today, we should expect Boris Johnson to win with perhaps a majority of
around 50 or so. He is currently enjoying a 13-point lead over Labour in the polls because the Labour Party is only running at about 24 percent.
He'd lose some seats to both Liberal Democrats who are resurgent, and in Scotland to the SNP, but at the moment, the gains he might expect to pick
up from Labour around 50 or so will be more than enough to compensate for those likely losses.
So this is not entirely straightforward for him. But if the polls are at all like at the moment, then he ought to be heading for a bigger position
to be able to get Brexit done, basically.
CHATTERLEY: Yes, well, you know what's quite fascinating to me in that Boris Johnson shouldn't rest on his laurels here is one, how many people
change their minds in terms of how they vote between 2015 and 2017? But also, Theresa May seemed to have an advantage in 2017 and then that all
disappeared and she actually lost seats in the election of 2017. Why all the volatility?
CURTICE: Yes, well, you're quite right. The action is potentially volatile, actually almost a half of voters voted differently in 2017 from
2015, not at least indeed because of the collapse of UKIP in 2017. Nigel Farage's previous party.
And during the 2017 campaign itself, you're right we started off with a 16- point Conservative lead. We ended up with a two and a half point one.
[09:35:10]
CURTICE: Now, this volatility is there and perhaps also it is explained by the fact that voters are actually very stable when it comes to the issue of
Brexit itself. Around 86 percent or so of people in the polls say they would vote remain again and around 86 percent of leave voters say they'd
vote leave again.
But of course, when it comes to how they're going to vote in the election, on both sides of the argument, they have a choice. They have a choice on
the remain side between Labour and the Democrats, and one of the reasons why the polls look very different now for the Democrats, and it was the
case back in 2017, is they taken a lot of votes of remain voters away from the Labour Party.
Equally on the other side with Nigel Farage today making an offer to Boris Johnson that Boris Johnson can't possibly accept, we now have to presume
the Brexit Party will indeed fight this election on a broad spectrum and leave voters will have a choice -- do they back Boris Johnson's deal or do
they back Nigel Farage's clean break?
And we saw in the European Parliament election back in May that even though there isn't much movement of voters across the remain/leave divide, because
they've got the choice as to how to operate within that divide, then there's plenty of volatility and particularly within recent weeks and
months, what we have seen is the Conservative Party gaining ground amongst leave voters, essentially at the expense of the Brexit Party.
And the question now will be now that Nigel Farage is indicating he is entering the fray in a serious way is whether or not he can erode the gains
that the Conservatives have made, which will put us back potentially towards hung Parliament territory, or whether Boris Johnson is able to
squeeze the Brexit Party vote further, and therefore really does end up with a comfortable victory.
And that in a sense, is one of the absolutely crucial battles now in this election.
CHATTERLEY: Yes, to your point and that was going to be my next question, did the probability of a hung Parliament just rise as a result of Nigel
Farage's offer this morning and your point, you're saying yes.
CURTICE: It rose, but it's still not there because essentially, the polls that have been conducted so far have been conducted on the basis that the
Brexit party we're going to fight every seat.
I think the truth is probably the converse is more important. If the Brexit Party had announced this morning that they weren't going to fight
very many seats, then that would have been good news to Boris Johnson, and his lead in the polls will probably expand. He is just not going to get
that possible bonus, and he is left still therefore fighting for the support of leave voters with Nigel Farage.
Now, maybe Mr. Johnson can win that. I mean, there are contradictory pointers. On the one hand, very few new voters seem to blame the Prime
Minister for the failure to deliver Brexit by yesterday's deadline, but on the other hand, there is still a substantial body of leave voters, maybe a
plurality even who still think that leaving without a deal is better than Boris Johnson's deal.
And of course you heard how Nigel Farage is making on that issue. So it depends on how leave voters decide to pan out. So far Mr. Johnson has been
winning, but there's another six weeks to go.
CHATTERLEY: I mean, could Nigel Farage be blamed here for splitting the leave vote in whatever form it looks like here and preventing once again
Brexit happening? Because that's arguably the fallout here and the risk.
CURTICE: Well, that's the risk that certainly many of us think he is taking. Of course, Mr. Farage is arguing, now, I think I take more votes
of Labour than I do off the Conservatives.
However, the polling evidence is that basically for every vote he is taking off Labour and he is taking some about seven percent of the Labour vote, he
is taking two off the Conservatives and therefore probably the net effect of him standing is disadvantageous to the Conservatives, even if we can't
necessarily assume that all those voters will switch from Labour to the Brexit Party would necessarily vote for Labour in the absence of the Brexit
Party standing.
But it costs, you know, Boris Johnson's ability to win this election in the first place. It also rests on a split on the other side of the Brexit
divide. The fact that the Liberal Democrats are now sharing out the remain vote with the Labour Party is what explains why Labour are so far behind
and why the Conservatives can think about winning when it comes to majority even though they're standing in the polls at around 36 to 37 percent. It
is not particularly strong.
It's the split in the remain vote that is the other crucial foundation of Boris Johnson's election chances. He has to hope that it is sustained and
that Jeremy Corbyn isn't successful in squeezing back some of that Liberal Democratic vote.
All we can say on that is that whereas Mr. Johnson has demonstrated some successes squeezing the Brexit Party vote, so far, Jeremy Corbyn has shown
no ability at all at squeezing back the Liberal Democrat vote amongst remainers.
CHATTERLEY: Oh my goodness, is the probability of another election after December's election higher than Brexit happening here? And I am asking in
a naughty manner.
[09:40:00]
CURTICE: No, I think that's slightly the wrong question. The truth is, either Boris Johnson is going to win this election and the U.K. is going to
leave the European Union along the lines he proposes or we're going to go to a hung Parliament. And in a hung Parliament, I think what you should
anticipate to happen is that even if Labour have fewer seats than the conservatives, the SNP and the Liberal Democrats will want to support or at
least to keep in office, a minority Labour administration on the condition that that administration then goes for a second E.U. referendum.
That will mean another extension, it will mean another vote, but at the end of that, one way or another, the U.K. would have finally made a decision
about Brexit.
CHATTERLEY: Watch this space. Sir, John Curtice, fantastic to have you on the show, sir. Thank you so much for that.
All right, after the break, keeping batteries cool. We are in the "Chatt Room" with KULR, a tech firm developing technology to reduce the fire risk
in your phones, laptops and electric vehicles and more. That's next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to the show. Batteries are a multi-billion dollar industry that the lithium ion battery is so useful in our laptops
and phones and electric vehicles and space technology essential in fact. It comes with a warning, too.
There's a danger that they could overheat and we've seen cases where they burst into flames. Enter KULR Technology. They've developed a wrap for
these batteries which combats that risk.
In the "Chat Room," Michael Mo, the CEO who is going to see his protective devices fly all the way into space.
(BEGIN VIDEOTAPE)
MICHAEL MO, CEO, KULR TECHNOLOGY: This is the core material. It is a vertically aligned carbon fiber. We make it here in in the U.S., we make
it in down in San Diego. That's where our company is based out of and this is the core material and then we make these thermal runaway shield products
that you know, that we call it and put into -- we work with the largest car companies in the world for the next generation, you know, the EV vehicles.
CHATTERLEY: Can I touch it?
MO: Yes, please. Yes.
[09:45:08]
CHATTERLEY: It feels like a fur coat.
MO: It's like velvet.
CHATTERLEY: Velvet.
MO: It's velvet, yes. It is velvet yes. The heat is contained. It's a carbon fiber material. We have some enclosures around that with some
liquid. So when the battery catch fire, then the liquid start evaporating. So it's a phase change. So that takes away all the energy of a single
burning cell.
(END VIDEOTAPE)
CHATTERLEY: Michael Mo says when you think of the sheer numbers of lithium ion batteries in use today, the scalability of his business is huge and he
is taking steps to ensure he stays ahead of his rivals like collaborating with NASA, for instance. Listen in.
(BEGIN VIDEOTAPE)
MO: Every time you sit down, you have your laptop, tablet and phone at the same time and something else. So that translates to about 2.3 billion
lithium ion battery devices on passenger planes alone just in the U.S.
CHATTERLEY: Wow. Every day.
MO: Every year. That does not include cargo. Amazon, the biggest e- commerce company in the world shipping their batteries. All the battery has to go back, your iPhone gets -- you know, gets sent back and so forth.
So the market is enormous. The world produces something like seven billion lithium ion batteries every year, seven billion. So that's the population
of, of the entire planet. And that's growing at a pretty, pretty high, high rate as well. So --
CHATTERLEY: What about competition here?
MO: Everybody is chasing after the Holy Grail, which is the battery safety.
CHATTERLEY: Yes.
MO: We believe that we have the most efficient material just because what we build here is going to be launched on the International Space Station on
Saturday. So we're part of the NG-12 program on it. We provide a containment solution to keep laptop batteries safe on the International
Space Station.
So obviously that's the most expensive real estate in the world in the space, so they want to keep that containment as compact as possible and in
case if a battery were to go to thermal runaway and have fire, nothing comes out of the bag.
Because the last thing you can afford on the International Space Station is fire, so you definitely want to contain that, contain the fire, contain the
smoke, contain the explosion.
So we're working with NASA and a company called Leidos, which is a good partner of ours since beginning of this year, and then now the solution is
totally qualified. It is part of the program, the mission to be on the International Space Station to be launched this Saturday actually.
(END VIDEOTAPE)
CHATTERLEY: It's incredibly light. It also costs right now less than 10 percent of the lithium battery which is clearly a huge expense in the
technology that we're talking about here.
He says the job now is to bring that cost down further. The company itself, KULR, not yet profitable. They're investing a lot of money clearly
in the technology. They went public by direct listing last year. And he is upbeat about investor potential here and positive about combating things
like piracy and protecting crucial intellectual property rights. Listen in.
(BEGIN VIDEOTAPE)
MO: We believe that the big growth phase for us is ahead of us. So now we're on the public platform, average investor can participate. So
hopefully we can -- everybody can enjoy the growth with us.
CHATTERLEY: Final question and it goes to the U.S.-China trade deals situation and the difficulties of agreeing patent protections, technology
protections for intellectual property like your own. How important is it as an entrepreneur that's developing something so unique to have those
protections?
MO: Yes, I think protection is important, you know, in every part of the world, right?
CHATTERLEY: Yes.
MO: So to just -- we've been very focused on the U.S. market year, you know, so far. I think a hundred percent of our customer base has been U.S.
and European customers. Because you know, the scale and the cost point is at that point right now.
But I think that you are going into these emerging markets, patent protection is very, very important. It's also very important to work with
the right partner for that local market. Because I think every local market, the pricing is different. The economics is different, the
distribution is different. And the user behavior is different.
CHATTERLEY: There is a huge electric vehicle opportunity in China.
MO: Yes.
CHATTERLEY: Are you talking to Chinese companies, too?
MO: Yes, we are working with partners for that distribution. I believe that you have to find the right partner for that. Going there alone is
very challenging. It's a huge market. And the design time is long, right? So you've got to work with the right partner, with a discussion with the
right partner to get into the right business model to support them.
CHATTERLEY: Do you feel safe taking your technology to China?
[09:50:00]
MO: I think just like everything else, you know, build the right protection, work with the right people, make the economics work.
CHATTERLEY: Right.
MO: Right? The key is to make the economics work. I think you know, even back in the day when you have music sharing, and so forth, and then so
Apples of the world, Spotify of the world made it more expensive to steal the music than just to buy a subscription.
So if you can create a business model, this is what I believe in. You have to create a business model where it's going to be more costly for people to
steal from you than to partner with you and that will become a much longer sustainable business model over time because everything has become a
service model now.
Everything is IP service, recurring revenue. Even as a hardware company, we create IP, but it's very important to develop ecosystems so that you can
license to somebody, you can partner with somebody to lower the costs for the entire market, increase the demand and then build economics around your
system.
CHATTERLEY: Do you have that model yet?
MO: We have been communicating to our shareholders that that's the direction that we're going.
CHATTERLEY: Yes, it's smart.
MO: Yes. Thank you.
CHATTERLEY: That's just how you make it happen.
MO: Yes. So we hope that we will be announcing something soon into the market. It's a lot of things in the works right now. But we hope we can
announce something publicly in the near future so that we can --
CHATTERLEY: Come back and talk to us when you do.
MO: Okay, thank you so much. Appreciate it.
(END VIDEOTAPE)
CHATTERLEY: Make it more profitable to work together than technology theft. Smart ideas, how it works in practice.
All right, still to come on FIRST MOVE, the Rugby World Cup is entering the final phase. We will head live to Japan where excitement is well and truly
hitting fever pitch. Go England. We're back in two.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE with a look at today's "Boardroom Brief." Alibaba stock one percent higher off to the Chinese e-commerce
giant beat estimates with a 40 percent increase in quarterly revenues. The e-commerce and Cloud computing growth also helping boost the numbers here.
Now we're a day away from the Rugby World Cup final between England -- yay -- and South Africa in Yokohama, Japan while New Zealand have just beaten
Wales in their third place match.
CNN's Christina MacFarlane has been in Japan for the knockout stages and joins us now from Tokyo. So excited about this match tomorrow. I can
barely talk about it, Christina, talk me through what we've seen and does the rugby fever that we've seen in Japan carry on, do you think after this
finishes?
CHRISTINA MACFARLANE, CNN WORLD SPORTS: Well, we certainly hope so, Julia. What a performance we've seen from the home side here and there was a real
feeling. I was speaking to the CEO, Brett Gosper of World Rugby today that they want to capitalize on this moment, so I think this is not the end for
Japanese rugby.
But for this final tomorrow, goodness me, we have pound for pound two of the biggest and most powerful teams in World Rugby about to lock on here in
Tokyo and there's definitely a buzz in the air tonight in the city.
[09:55:08]
MACFARLANE: We know that we have two honored guests flying in especially for the occasion tomorrow Royalty no less, His Royal Highness, The Duke of
Sussex Prince Harry will be coming into Tokyo tomorrow morning. He is of course, the patron of the governing body at the RFU and he was actually in
the stadium in 2007, twelve years ago and these two teams last faced off. So we want to see a different result here tomorrow.
And for South Africa, we know that Cyril Ramaphosa arrived early this morning. He has been WhatsApp-ing and Facetime-ing with the players all
week.
But you know, the real general feeling is that England are the strong favorites. We saw how they dismantled New Zealand in that semifinal. They
were absolutely fearless and Eddie Jones the Captain says that this team have been building up to this moment for four years, but I tell you, South
Africa are not going to be a pushover.
CHATTERLEY: No, but you and I, Christina are completely bias. We think England can do it. Enjoy. Christina MacFarlane there in Tokyo. Thank you
for joining us.
All right, before we leave you, we wrap up the show, let me give you a look at what we're seeing. Stocks rallying after today's strong jobs report.
We've got the S&P and the NASDAQ hitting record territory.
That's it for the show. You've been watching FIRST MOVE. Time go make yours. Have a great weekend.
(COMMERCIAL BREAK)
[10:00:00]
END
