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First Move with Julia Chatterley
Sustainability Takes Center Stage At The World Economic Forum Ahead Of President Donald Trump's Arrival; Huawei's CFO Is Back In Court This Week To Find Out If She Will Be Sent To The United States; President Donald Trump's Legal Team Is Expected To Respond To The Impeachment Articles. Aired 9-10a ET
Aired January 20, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:17]
ZAIN ASHER, CNN INTERNATIONAL ANCHOR: Coming to you live from New York, I'm Zain Asher. You are watching FIRST MOVE and here is what you need to
know.
Dominating Davos. Sustainability takes center stage at the World Economic Forum ahead of President Donald Trump's arrival.
And fighting extradition. Huawei's CFO is back in court this week to find out if she will be sent to the United States.
And the deadline is getting close. President Donald Trump's legal team is expected to respond to the Impeachment Articles.
It is Monday, my friends and this is FIRST MOVE.
All right, welcome to FIRST MOVE. I'm Zain Asher. So good to have you with us on this Monday morning. We'll be following all the action from the World
Economic Forum in Davos, Switzerland throughout the week.
Julia Chatterley is going to be joining us live in just a couple of minutes from Davos. First, let's give you a quick look at the markets. U.S. stocks
are closed for Martin Luther King Day, a holiday.
European stocks however are up and running. They are trading mostly low right now after touching record highs on Friday. Asia finished Monday
session mixed. Meantime, crude is trading at its highest levels in a week. Unrest has forced to shut down on oil production in Libya. Security
concerns in Iraq are also helping drive prices higher as well.
Let's get right to the drivers though in our very first day of coverage this year from Davos, 3,000 of the world's most powerful, wealthy and
influential people are gathering in the Swiss town of Davos for the 50th World Economic Forum. So far, so familiar, but this week, there is
something new on the agenda, and that is where we find our very own Julia Chatterley where the climate crisis, Julia, is really taking center stage
there.
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Absolutely. Shooting to the top of the agenda this year around, Zain, thank you so much for that.
Welcome, everybody to a beautiful sunny Davos here where the World Economic Forum is meeting for the 50th time. Yes, it's the 50th anniversary.
Sustainability, the climate crisis among some of the key topics. The beautiful backdrop, belying the tough talk, I think that's going to take
place over the coming few days.
Now, if we're talking climate crisis, of course, who better to slug it out, or should I say scowl it out, perhaps than some of our key headliners. I'm
talking U.S. President Donald Trump of course and the 17-year-old activist, Greta Thunberg. They will be here tomorrow. That's going to be the thing to
watch.
But of course today, the preparations take place and we are just getting warmed up. Of course, the big issues: Monetary policy, economic growth,
what's going on in emerging markets, inequality, too. Oxfam coming out today with the mind blowing statistic that the world's richest 22 men have
more wealth than all of Africa's women. We're talking 326 million women. I'll just let that sink in for a second. But that's one of the key things
that gets discussed.
The question is, do we get the follow through? Now, I've talked about some of the headliners here. For now, though, the two headliners are myself and
Richard Quest who is about to join me any moment. Richard Quest, come in here, please.
RICHARD QUEST, CNN BUSINESS ANCHOR: I shall be with you.
CHATTERLEY: He doesn't even have a microphone on yet. You're going to hold that thing.
QUEST: No, not in the slightest. I thought you were -- I thought I was being a bit previous.
CHATTERLEY: Oh sorry. I didn't give him enough of a warning.
QUEST: Now, look at us. I am glad you mentioned about this mountainside because the reality is, this mountainside hasn't got nearly as much snow on
as it should have had.
When we came up on the train, green fields until you really got just halfway up and then you got snow, but this should be up to here. And now
it's just sort of down there.
CHATTERLEY: Speaking of sustainability efforts, you did come on the train. You did come on the train. I didn't come on the train.
QUEST: I wasn't going to say that. I was not going to say that. No.
CHATTERLEY: I knew what you were thinking.
QUEST: No.
CHATTERLEY: I knew what you were doing there.
QUEST: No, no, no.
CHATTERLEY: Anyway, it's an emergency and it's a crisis.
QUEST: ... in the train.
CHATTERLEY: Potentially. I'm being told off now. Let's talk about Klaus Schwab, please.
QUEST: The tie is Klaus Schwab.
CHATTERLEY: It's an emergency.
QUEST: Look, Klaus Schwab has been holding this conference for 50 years. But this is the first time I ever heard him speak in such forthright terms
about the state of the world.
(BEGIN VIDEO CLIP)
KLAUS SCHWAB, EXECUTIVE DIRECTOR, WORLD ECONOMIC FORUM: That's what we have seen, but I think doing this meeting, we may have some influence
because we discuss, we bring it on the table the whole issue of environment.
[09:05:06]
QUEST: It is an annual sport, this time of the year to question whether Davos is worth it. The articles are everywhere, you know, is it worth the
elites going up to the top of the mountain? But not just this year, look back on 50 years and look forward. Is it worth it?
SCHWAB: It's not only worth it, it's necessary. Look, what we have in the world to avoid the disintegration of our world. We need a platform which
brings people together from all walks of life and sets what -- the U.N. is a really great partner of ours, and we work together with everybody.
But you need everybody into the boat. You need a dialogue and you need solutions which are jointly developed.
(END VIDEO CLIP)
QUEST: Now, to be fair, the issue of the environment is one that's been raised here many, many times. Gro Harlem Brundtland raised it in the late
70s, but this is the first time I think it's actually taken precedence, and that might be because the economic issues are not as great as they have
been in the past. It's all very nuanced about growth versus jobs versus this versus that, interest rate -- it is not really a burning issue.
CHATTERLEY: Extreme weather, the last 12 months. This has been something that we've watched all the way around the world.
QUEST: But the questions to be asked here, for instance, Australia oppose many of the proposals in the recent COP talks, and yet Australia is the
country that's being hit hardest at the moment. I think that the -- I think the most important development most important was BlackRock by far and
away, which I think you're going to be --
CHATTERLEY: I am.
QUEST: I know you are. And I think that BlackRock development to divest of fossil fuel investments and concentrate on sustainable investments, I think
that was taken everybody by an absolute storm and set the agenda.
CHATTERLEY: I agree. That was the headliner coming in here and these guys saying, look, we manage $7 trillion worth of assets. Going forward, we're
going to make sure that one percent is ESG funds, ultimately.
I spoke to the Vice Chair, Philipp Hildebrand earlier today just to get a sense of what they're doing here. Listen in.
(BEGIN VIDEO CLIP)
PHILIPP HILDEBRAND, VICE CHAIRMAN, BLOCKROCK: I think we've been building up to this for a long time. We knew this was a big deal for us, for the
industry. And I can tell you, the morning of the Town Hall internally, the excitement I saw on the faces of our employees, particularly the younger
ones, was perhaps the most thrilling piece of this announcement for us.
So you can tell it resonates. People want us to do this. Our clients have been asking for it, so we are responding to the clients.
(END VIDEO CLIP)
CHATTERLEY: They call it capitalism. That's what's key I think about this decision, but what's also interesting, we will say this later on in the
show with the conversation that we will continue to play, Vanguard, other big asset managers saying it's not our job to tell corporates what to do.
We're not going to sign Climate Action 100 plus. Huge distinction here.
QUEST: But you've got those like Microsoft, love them or hate them, this idea of being carbon negative by 2030.
CHATTERLEY: 2030.
QUEST: You've got IAG. You've got all the airlines coming on board and this concept of stakeholder capitalism, we've heard it before. Klaus Schwab
talked about this in the interview we show tonight on "Quest Means Business." This idea that we're all in it together, but it's going -- the
issue is, is it going fast enough? Greta will say no. Others will say you get what you're given.
CHATTERLEY: Somewhere in the middle, we need to accelerate, but perhaps not full cutting out fossil fuels. There's always a balance. Richard Quest,
great to have you with us.
QUEST: Thank you.
CHATTERLEY: Thank you. Zain, I'll hand back to you.
ASHER: All right, Julia. Thank you so much. Huawei's Chief Financial Officer is heading to a Canadian courtroom. The daughter of Huawei's CEO,
she is facing extradition to the United States. It is a critical moment for the company which has become emblematic of U.S.-China tensions.
Clare Sebastian is joining us live now. So Clare, just walk us through what is at stake here, and also what will be Meng's line of defense that her
lawyers will put forward?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Zain, much more at stake here than the fate of this one woman, but this is you say, is a critical
moment for her. She has been under sort of house arrest, wearing an ankle bracelet for more than a year now since she was arrested in Vancouver,
Canada in December 2018 at the behest of the United States.
She is accused by the United States of misleading four international banks, including HSBC about Huawei's business dealings in Iran in order to obtain
financial services in violation of U.S. sanctions. She denies that. China has called this case politically motivated.
So she is now going to head to court in her own defense. This will be the first time she gets to testify in an extradition process that could take
many, many months. We are unlikely to get a resolution this week, but still a very big moment and she will be arguing that the standard that you have
to meet in Canada in order to obtain extradition to the U.S. is double criminality, i.e. the conduct that she's accused of under U.S. law is also
a criminal conduct in Canada.
[09:10:13]
SEBASTIAN: She will try to argue that because the sanctions are enshrined in U.S. law, not in Canadian law that it doesn't meet that standard.
She will also argue that this case is politically motivated. Don't forget, in the days after she was arrested in December 2018, President Trump went
on an interview and refused to rule out that he could intervene in this case, if it became helpful in the U.S.-China trade war.
She has also, Zain, accused Canadian border authorities of violating her rights when she was arrested in December 2018. So this will all play out
against the backdrop of an ongoing sort of trade dispute. They have reached a Phase 1 deal, but they still have to negotiate Phase 2 and this is
certainly going to continue to be something that will be watched in that arena.
ASHER: All right, Clare Sebastian live for us there. Thank you so much.
All right now to the impeachment trial in Washington. President Trump is set to submit his first detailed defense today. His lawyers have until
noon, to file a brief outlining about arguments.
Joe Johns is live for us at the White House. So Joe, here is the thing, one of the most contentious issues at stake here is really the issue of whether
or not to call witnesses. How unprecedented is it not to have witnesses at an impeachment trial?
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: It'd be very unusual not to have witnesses. In fact, there were some witnesses back during the
impeachment of Bill Clinton and remember, impeachments in the United States are not just for the President and the Vice President of United States;
also for judges, for example, and other high officers of the U.S. government and many of those cases have had witnesses. So it'd be very
unusual for them not to go there.
And the question, of course, is whether the Democrats are going to be able to get the four votes from Republicans in order to call the witnesses they
say they think are important in this trial, to also prolong the trial, which is something a lot of people don't love, especially since the
President's State of the Union address is coming up in very early February, and they don't want this impeachment trial to bump up on his day up there
in the House chamber -- Zain.
ASHER: All right, Joe Johns, live for us there in Washington. Thank you so much.
Okay, so these are the stories making headlines around the world. The clashes between security forces and demonstrators in Iraq have left at
least one person dead and dozens wounded. Protesters are out in force demanding a new interim Prime Minister and they say Monday is the deadline
for choosing one. Prime Minister Adil Abdul-Mahdi resigned last year, he remains in office as a caretaker.
China has confirmed 139 new cases of the SARS-like coronavirus over the weekend, including another death. This brings the total number of
fatalities to three. The outbreak has spread domestically to Beijing, and Shenzhen from the city of Wuhan where it was first identified.
And Prince Harry has spoken in the wake of the Buckingham Palace announcement that he and his wife, Meghan, Duchess of Sussex, will no
longer be working members of the Royal Family. He expressed great sadness over the decision at a charity event on Sunday, but said there really was
no other option, but to step back.
We'll be live for you from Buckingham Palace -- not in Buckingham Palace -- later on in the show.
All right, still to come here more from the World Economic Forum in Davos, Switzerland where the biggest names in business are hoping for foster
global growth. The outline for the stocks and the global economy, next.
Plus, auto sales in reverse. The CEO and founder of Dubai based W Motors surveys the road ahead for luxury vehicles as car sales slump. That story,
next.
(COMMERCIAL BREAK)
[09:16:54]
ASHER: All right, welcome back to FIRST MOVE live today from New York and the World Economic Forum in Davos, Switzerland. It's a market holiday here
in the United States as the nation celebrates Dr. Martin Luther King, Jr.
Wall Street is back in action though tomorrow with all the major averages out fresh all-time highs. It's going to be another key earnings week with
Netflix, IBM, Intel and many other companies that report as well.
European stocks are trading mostly lower after touching record highs on Friday, although we are seeing slight gains in Germany.
Chris Watling, joins us live now. He is CEO and Chief Market Strategist at Longview Economics. Chris, thank you so much for being with us.
So I just want to take a broad view because obviously the markets are closed today here in the United States, but just given that we are
experiencing the longest bull-run in the U.S. in history, we've had 10 straight years of continued economic expansion in this country. What is
your major concern going into 2020 for the next six months?
CHRIS WATLING, CEO AND CHIEF MARKET STRATEGIST, LONGVIEW ECONOMICS: Well, I mean, I certainly have concerns although, up front, I would say we're
very positive on equities for the year for 2020, and I think that can surprise to the upside.
But there of course risks associated with that, and I think one of those is probably that the Fed stops this repo program too early. I think, you know,
one of the key -- or for the wrong reasons, or it stops it in a bad way, if you like.
I mean, one of the key drivers of this market has undoubtedly been liquidity and interest rate cuts, and the repo program is a part of that.
It's getting liquidity into the system, helping inflate asset prices, and has been a key part behind this latest bull-run over recent weeks.
So I think if the Fed stops that for the right reasons, it gets it right, it gets its timing right and it's sort of a lovely hand over to sort of
reacceleration of economic growth globally, which we're starting to see. If the Fed gets that right, then I don't think we need to worry about the end
of the repo program.
But I'm worried it ends it prematurely or it doesn't end it well. I think that's probably perhaps the biggest risk or certainly one of the biggest
risks out there for 2020.
ASHER: And speaking of global growth, the IMF just ahead of Davos came up with a report saying that they believe that economic growth is actually
slowing down globally. They trimmed their forecast ever so slightly. How do you see that factor playing into equities?
WATLING: Well, I mean, no disrespect to the IMF, but they have a habit of coming at the end of the slowdown and revising down their forecasts. It is
slightly backward looking.
I mean, I think the reality is the global economy starting to accelerate. Just look at some of the U.S. housing data we've had out in the last couple
of months, housing starts and permits having gone sideways for two years are really starting to break to the upside, and we had another data point
on starts on that last weekend.
And generally, sort of rule of thumb where housing in the states goes, so goes the economic cycle and actually, I feel quite optimistic about
European growth reaccelerating and so on.
So you know, I think we're in a mini cycle. It was a mini cycle slowdown in 2019, starting at the end of 2018. And I think we're now going to be the
theme for this year as a mini cycle global reacceleration, really led by the States and backed up by Europe.
So China is kind of the weak one of the three major economic regions of the world, but I think mini cycle economic reacceleration is the theme for
2020.
[09:20:10]
ASHER: And speaking of which, a lot of people sort of looked at 2019 and saw sort of earnings performance in 2019 as somewhat lackluster. How
hopeful are you that that would completely turn around going into 2020?
WATLING: Well, it should turn around and what you find is earnings forecasts and earnings estimates tend to follow, you know, what the global
economy does, and what bond yields do. Bond yields is a good leading indicator where earnings estimates move to.
And the other thing I would say is, you know, bizarrely this may sound strange, but there's absolutely zero correlation between earnings
expectations for the year and the actual performance of the S&P 500 or global stock markets in that year.
In other words, earnings matter, but they don't matter on a 12-month view. The market is much more about liquidity and it anticipates earnings
acceleration, so I'd be very surprised if earnings weren't sort of okay this year, but I think the market can do better than just what earnings
might give us.
I think we can get a bit more upward rerating because there's so much liquidity around and a momentum I think will support the market throughout
the year.
ASHER: And I want to touch on commodities quickly because obviously gold rose at the beginning of the year, when Mid East tensions between U.S. and
Iran was slightly higher or significantly higher, I should say. That ended up calming down -- just I mean, where do you see gold going this year? Do
you see gold being worth shorting perhaps, if things end up staying much calmer?
WATLING: Yes, I mean. I go short gold here. I think gold has had a good run. I think in the next three to six months, gold will underperform. It
has priced in a lot of loosening of monetary policy. And as the global economy starts to accelerate, I think some of that remaining bit that's
price in will be priced out and even by the end of the year, we might be talking about the Fed thinking about raising rates in 2021.
So you know, gold doesn't like high interest rates. Gold likes it when we're pricing in more and more rate cuts or when tips yields are falling or
when the dollar is weak, that tends to be what drives gold higher.
I just don't think you're going to get that combination this year. I think we've had the best of it, it is behind us. So actually, I'd be short gold
as I think bond yields would be rising for most of 2020.
ASHER: All right. Chris Watling, live for us, thank you so much. Appreciate it. All right. Here's today's Boardroom Brief. Shares in high-
end tonic make, Fever Tree fell 20 percent in London trading. The company issued its second revenue warning in three months after disappointing
Christmas sales in the U.K.
And Samsung has appointed a new executive to head up its mobile unit. Roh Tae-moon is 51 years old and the company's youngest ever President. He is
coming on board amid increased competition from smartphones made by China's Huawei and other firms as well.
The global auto industry plunged even deeper into recession in 2019. Sales dropping more than four percent as demand in China and India plummeted. The
slump is lightly continuing this year with big ramifications for the global economy. So how does the auto industry adapt to survive?
Ralph Debbas is CEO and founder of W Motors. He joins us live now. Ralph, thank you so much for being with us. So the big theme at Davos this year is
the climate crisis. Just talk to us about how the rising popularity of electric cars and the role the environment is playing in the auto sector
and how that is changing the landscape.
RALPH DEBBAS, CEO AND FOUNDER, W MOTORS: Sure, I mean, today we're living in an automotive revolution. That's what we are calling it. Everybody is
fighting to become the leader in electric mobility and future mobility as we call it today.
However, things are not as easy as we think. It's not about only making cars, but building the whole infrastructure that comes with it, the
charging stations and everything that's related to building a complete ecosystem for autonomous and electric vehicles, and I believe China was a
leader at some point. The U.S. are also leaders and the Middle East is growing today to try to become leaders in their own way for electric cars
and the future mobility.
ASHER: One of the biggest challenges right now is this slowdown we are seeing in the global auto sector because of the slowdown in China and also
trouble in India as well. How is that also affecting the landscape?
DEBBAS: It is affecting it, I mean, drastically. A few years ago, we used to see a big boom when it comes to electric cars and we saw a lot of
countries aligning together, a lot of companies aligned together as well to develop technologies in the best way and a cheaper way as well.
But today with what's happening politically around the world, it's not as easy as we think. Geographically, it is not as easy to adapt, you know,
different factories and different locations, to have companies allied together to try to develop new technologies. So there are challenges when
it comes to that.
And that's why you have small players coming out. We are one of them to try to develop technologies in a different way and try to adapt a neutral
platform that can be positioned in every single country, in every single government that can utilize it in the best possible way, but it's not as
easy as we think.
ASHER: So one of the sort of key technologies in terms of the future of the car sectors, of course, self-driving cars, the technology already
exists. It's here with us now, but how long do you think it will take for the car industry around the world to fully adapt to autonomous vehicles?
[09:25:16]
DEBBAS: We will be surprised. I mean, technology is way more advanced than we think when it comes to autonomous driving. The technology is there, and
it's been there for many years, however, the regulation is still being in the works. The infrastructures being in the words, 5G is a big factor
today, which is thanks to 5G, it is going to accelerate the development much faster.
But I believe we have another two to three years of testing before we start seeing autonomous cars driving on the road. In the next seven years, we're
going to start seeing zones and sectors being adapted for autonomous driving.
And hopefully by 2030, we're going to see a big chunk of autonomous cars driving on the roads for the public and for different services. And I do
believe in it. I think the future is autonomous driving and we're getting there much faster than we think.
ASHER: Okay, so until that, W Motors more specifically, you're opening a new manufacturing plant in Dubai. Just talk to us about your company's
strategy here and what sort of capacity we're looking at with this plant.
DEBBAS: Well, we are the first brand of cars coming from the Middle East that's positioned as luxury brands, supercars and hybrid cars that we
started in 2007 and we launched the car in 2012.
But we adapted with the change that the region is having and the whole world is having when it comes to smart mobility and future technologies.
So the company shifted towards being a traditional automotive manufacturer to a more electric vehicle, a division and the autonomous driving and
government cars as well.
So the fact that we opened, we just recently did the groundbreaking a few weeks ago, and it is actually the first full fledge automotive facility in
the whole region, and we're proud to say that it is going to be based in Dubai to develop technology not only for normal vehicles, but also for
government cars, technologies when it comes to autonomous driving, electric cars, et cetera.
Now, we have a capacity of around 200 vehicles was a year only. But we're using it more of an R&D Center for behind the scenes to start developing
technologies for the governments and start releasing it to the world. That's for the Phase 1.
And Phase 2 is going to have a full fledge academy where we're going to be training people for the first time in the automotive sector. The whole goal
was to build it automotive industry, to build the ecosystem, the supply chain and I believe, somebody had to start it somehow, and we're proud to
be the first to do it.
We believe that within the next few years, many will follow us and many will start using this region to start developing their technologies and
exporting their talents and the products to the world.
ASHER: Ralph Debbas live for us. Thank you so much.
All right, when we come back, we will take you to a picturesque Swiss village where thousands of the world's richest and elite and most powerful
are gathering right now. That's next.
(COMMERCIAL BREAK)
[09:30:48]
CHATTERLEY: Welcome back to FIRST MOVE live from a beautifully sunny Davos here in Switzerland where the World Economic Forum is celebrating its 50th
anniversary. Some things have changed. Many things haven't changed all that much at all. Take a look at 50 years of the World Economic Forum in Davos
in 50 seconds.
(VIDEO CLIP PLAYS)
CHATTERLEY: There was a lot of graceful aging there, John, in that package. The Davos legend, he is John Defterios, he joins us here. And
you're celebrating a huge anniversary hereto, 30 years.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: 1990. It was two months after the fall of the Berlin Wall, and hence why it was significant.
It was a punt, and there's only 250 participants back then. So it's changed radically because we're looking at 3,000 participants overall.
CHATTERLEY: I mean, you and I were talking about this earlier and that you were not even sure what you were going to at that point, but it really did
feel like a meeting point, a debate point for the world's biggest influence. It was a critical moment there for me.
DEFTERIOS: You know, I was thinking about it because we had a chat before -- right place right time -- but I think the right people, because it was
two months after the fall of the Berlin Wall.
The discussion in Europe at the time is can you keep Humpty Dumpty, you know, pull it back together again or the European Union would disintegrate.
They had Helmut Kohl of Germany, his counterpart from East Germany Modrow, Margaret Thatcher, Francois Mitterrand, Jacques Delors from the European
Union, George Schultz, James Baker from the United States.
But it was different then. You know, now we have this disruption, social media on top of the shouting and the populace tree. You did feel at the
time that it would all stay very much glued together. But -- and there's some debate about this here in Davos, no doubt about it -- that's what put
the World Economic Forum on --
CHATTERLEY: On the map.
DEFTERIOS: No, without question because it was three years after they had changed their name from the European Symposium to the World Economic Forum
and voila, like what happened here?
CHATTERLEY: I feel like there, they were leading; now, it's about catch up, to your point social media, technological disruption, geopolitical
tensions around the world and at the heart of what we're debating here, sustainability, a climate change emergency here and I think the whole world
watching and saying, come on guys, you need to do more whether you're political leaders or whether you're business leaders here, and this is the
place to have that debate.
DEFTERIOS: Oh, it's a great point that you're bringing up because early on, the World Economic Forum embraced globalization, the opening up of
China, India -- by the way, it happened very much here because that's their first entree into the world stage, it was through the World Economic Forum.
CHATTERLEY: Such a great point, China.
DEFTERIOS: Yes. Oh, absolutely. Li Peng came in the 1990s. I had a chance to cover it. It was extraordinary. They embraced that, but nobody and this
is the fault, not just of the Forum, but I think of the West, not looking at the implications of it, the backlash to it, the carbon footprint.
China and India consume two thirds of the world's coal today and you have to be careful because of the wealth gap today and the report from Oxfam,
some 2,000 individuals controlling more wealth than 60 percent of the world's population. They can't be seen to be numb or slow reacting to the
environment.
If you don't think this is in 2020, the most important issue you are tone deaf to what's going on in the world today. But Greta Thunberg, I think
will change that narrative and perhaps, Julia, she is someone that challenges Donald Trump, right, because the Europeans hadn't stood up to
Donald Trump on the environment.
[09:35:05]
DEFTERIOS: I think she will. It is going to be a very interesting debate. Two hours after he speaks, she takes the stage.
CHATTERLEY: You raise such a great point, I think with that. The U.S. President is celebrated, but many of his views here, particularly things
like climate change, we're talking about an emergency here, and yet President Trump sort of throws it off and says this is not a big issue,
it's a challenge.
DEFTERIOS: He is a climate denier.
CHATTERLEY: A denier. Challenge, I think is the important word that you mentioned here, and perhaps the 17-year-old is the only one that's up to
doing it here or at least scowling at him, like I said earlier on in the show.
DEFTERIOS: The European Union now is acting. You know, it's putting a trillion dollars forward for this transition, the energy transition taking
place. The U.K. is putting zero at 2050 as a policy right now, but will they have a strong backbone?
They were very flexible the last time Donald Trump was here. Well, the challenge is -- come on, you can't really show up in the global community.
Oil and gas companies recognize the transition. They're investing in renewables. You can't come here and say this is not a crisis after what we
witnessed in Australia and disasters that we've seen around the world.
CHATTERLEY: U.S. companies are doing it, despite what the government is saying here. John, you raise some great points. One company that came into
the World Economic Forum, BlackRock, of course, with their huge announcement about sustainability and the shift that they're going to make
in this $7 trillion portfolio.
You had a little taste of the interview earlier. Here's the full thing and the discussion that we had. We talked about why actually, it makes sense
for investors, it makes sense for the economy and the environment clearly; but also why for them, it was exciting for their employees, too. The heart
of stakeholder capitalism here. Listen in.
(BEGIN VIDEOTAPE)
HILDEBRAND: Fundamentally, this is the big shift that's happened in the last couple of years. We now know from data, from empirical studies and
academia and the industry, that actually it improves your risk adjusted performance.
So it's no longer about you have to do this because of social reasons. That may well be a reason you engage. But ultimately, you do it in order to
optimize risk-adjusted performance and to eliminate risks.
Don't forget, climate already is in the prices today. It is a risk that has manifested itself whether it's in flooding, in fires, in future regulatory
change, tax changes, all these things are going to affect financial assets prices, and that's why I believe we're going to see a much bigger shift in
capital than we currently anticipate.
CHATTERLEY: Have you thrown the gauntlet down for other big money managers? Vanguard is the obvious one. They're saying at this stage, look,
we've got no plans to join Climate Action 100 Plus in the way that you guys did. It's not our job to tell corporates how to behave. Is that -- is that
enough at this moment? You have huge leverage. Big funds like you guys.
HILDEBRAND: Well, we hope. We're responding to this because we believe that it's in the interest of our clients. As a fiduciary, we're doing this.
We also hope that we can be an amplifier, an accelerant in the industry in this transformation of Finance.
At the end of the day, every company is going to have to decide what they do. You know, we firmly believe that this is within our fiduciary
responsibility, because it will improve outcomes for our clients, it will improve risk adjusted returns, and it will eliminate certain risks that
could be very significant if you ignore climate change.
CHATTERLEY: You've also said -- and I think this is a really important point about the resilience, adding resilience to a portfolio. We've talked
about it being or providing superior returns, potentially as well for a portfolio. It comes at a time of all sorts of risks that you guys isolate,
geopolitical risk, protests that we're seeing all around the world as a result of inequality.
Returns still difficult to find around the world and for all the stimulus that we're adding in here, bond yields in particular aren't responding.
That's a problem for long term investors.
HILDEBRAND: It is, absolutely and it makes difficult to get the outcomes that investors require. Remember that we have an aging society. We're going
to have to -- we're going to live much longer, so we have to build up retirement savings. That's much harder to do with low returns.
This is the principal challenge in a way of the asset management industry to help the clients find a way to deal with longevity, to get the returns
that you need as we all live longer. This is a -- it's a difficult challenge.
What we can hope for is that at some point, the global economy comes back. We see a normalization of rates. As long as we're trapped in this extreme
low rate environment, the challenge for us and for our clients is very significant.
CHATTERLEY: You ever look at stock markets, though? We've got protests all around the world. Fears about inequality to your point, climate change and
the impact that has and yet we've got markets at record highs.
HILDEBRAND: Yes, the problem -- I mean, one of the issues is of course inequality, not just in the sense of income or wealth, but also in the kind
of wealth.
[09:40:03]
HILDEBRAND: You know, most people that are suffering do not have equity savings, so they have not benefited from this very strong stock market
these last few years, and I think this has been one of the sources of the aggravation and the frustration and one of the driving forces behind
populism that the returns in a sense in financial markets have been biased towards the wealthy.
CHATTERLEY: The divide is accelerating.
HILDEBRAND: It is. It is. As long as we only have wealth gains through financial assets, it punishes those who rely on an income, and so I think
this has been one of them, we believe that this has been one of the driving forces behind populism.
CHATTERLEY: Big risk in 2020. What's your message here at Davos?
HILDEBRAND: I think that -- look, we have 63 Central Banks that eased monetary policy last year, so this is the big story of '19. It was a big
pivot towards easing. That should lead to gross edging up in 2020.
The big risk is that something derails it coming from the geopolitical side, from the trade side, and there of course, if that were to happen, we
have limited ammunition to respond to it. So the key really is to avoid an accident and let this growth come back as a result of the financial easing
in 2019.
CHATTERLEY: Are you calmer about trade in light of the Phase 1 trade deal? Or do you think particularly far as technology is concerned, there is still
going to be tensions?
HILDEBRAND: No, we're better off than we were a couple of weeks ago, not just because of this, but also Brexit is off the table. At least the hard
Brexit for now is off the table.
We have clarity. We have -- we know where this is going to go more or less. But I would say, you know, the big worry for me is that the very limited
room to maneuver we would have if we were to fall into a recession.
So the key really, is to avoid it because we have interest rates. We've used up interest rates. We've used up the monetary instruments, at least
traditional ones. So it would be very difficult to respond to renewed downturn.
(END VIDEOTAPE)
CHATTERLEY: The Vice Chairman of BlackRock speaking to me earlier. We're going to take a quick break here on FIRST MOVE.
But speaking of risks for 2020, we're going to be talking about one of the key risks and that's the threat of cybersecurity attacks. Stay with us.
We're going to be speaking to the CEO of CloudFlare after this.
(COMMERCIAL BREAK)
[09:45:18]
CHATTERLEY: Welcome back to the World Economic Forum here in Davos, where cybersecurity is right at the top of the agenda, and I'm pleased to say
we're joined by the Cloudflare CEO, Matthew Prince, a huge cyber security giant. Great to have you with us.
You are at the intersection I think of everything being discussed. Trust in technology, policing of content, whether you like it or not, ultimately,
the efficiency gains of Cloud technology. What's your message here?
MATTHEW PRINCE, CEO, CLOUDFLARE: You know, I think when we started coming to the World Economic Forum, cybersecurity was not on anyone's mind. And
you know, with every day when we see another company hacked, one after another after another. Now, it's top of mind for boardrooms around the
world.
And so when we're here, we're talking about how companies can stay safe, whether they are some of the giants that are attending Davos here down to
small businesses, and even individual political campaigns, because everyone's job now is a cybersecurity company.
CHATTERLEY: You know, I saw a statistic from 2018 that estimated that five to ten percent of the world's internet traffic flows through you guys. It's
actually far higher than that.
PRINCE: So we have about 12 percent of all websites sit behind Cloudflare's network, which means that we see an enormous amount of what's
going on online, and our job is to make sure that the internet just works, that it's fast, that it's reliable, most importantly, that it's secure. And
that's the business that we're in.
CHATTERLEY: So along with that you've seen -- just give me a sense of the cyber threats that you see on a daily basis, 72 billion.
PRINCE: Yes. And that's just against our customers, and so when we see those attacks, we're using the data from all of our customers in order to
keep them all safe. And so we're regularly seeing attacks that are launched by yes, nation states, but also just individual hackers that are trying to
disrupt a business or cause various problems.
And what's powerful about Cloudflare is we act almost like a community watch, where attack against any one of our customers instantly benefits all
the other customers, and that's part of how we've been able to grow as fast we have.
CHATTERLEY: You know, you see the good and you see the bad and in even you have come to blows over the website 8chan that our viewers, I think will be
familiar with here and your instant response was, look, we're not here to police content on the internet.
But then you've got people like the Microsoft President saying there has to be a Geneva Convention where private sector companies have to take greater
roles here. Where do you stand on this?
PRINCE: Well, I think that it is the responsibility of all technology companies to think about how they play a role in the overall debate, and I
think the responsibility depends on where you are.'
If you're publishing content directly, if you're making editorial choices, then you have an editorial job to make sure that content is responsible.
If you're an underlying infrastructure company, I think what we see ourselves as, it's maybe not the first line of defense, but sometimes the
last line of defense, and that's a little bit uncomfortable for us because if we're just pulling the rug out from under our customers without -- while
they're trying to do the right thing that doesn't feel right.
On the other hand, if our customers are set up from the beginning to be lawless, then we don't really want them as our customers.
CHATTERLEY: If somebody came to you and said, look, there are a set of guidelines here. These guys are lawless, pull the plug. Does that make it
easy for you? I guess I'm asking where the responsibility of the private sector begins or ends and where government regulation has to start because
precision regulation is one of the key themes here too. And it's who plays what role here, because right now we're behind the curve.
PRINCE: I think that's -- I think what we've actually seen is what went from sort of a chaotic regulatory environment to one which is shaping up to
be actually a fairly thoughtful, regulatory environment.
I think we can go through some transition, but you know, we're not a democratically elected organization. We have no political legitimacy to say
this is good and this is bad. And so we would be much more comfortable looking to governments around the world to say, you set the rules and then
we're happy to follow them.
CHATTERLEY: Very quickly. I want you to talk about what you're doing in the United States of America ahead of the 2020 election. In certain cases,
you're providing free cybersecurity services to U.S. candidates for the House and for the Senate too. Vitally important. Talk about why.
PRINCE: Well, when we saw what happened in 2016 where foreign actors meddled with the U.S. election, and we saw technology companies being used
to actually make democracy less secure, we said that we had to do something.
And so we started out by saying we'll protect state, local and Federal officials that are actually administering elections. But we wanted to do
more than that. We wanted to give our services even to campaigns.
The challenge was that could be considered a political donation, and so we worked with the Defending Digital Campaigns Organization who applied to the
F.E.C., the Federal Election Commission to say cybersecurity is such a risk that we need an exception to these rules.
[09:50:02]
PRINCE: In April, they granted that and we're really proud to -- if you're in an election today, we offer our services at no cost to make sure the
democracy works. We could never have built Cloudflare without a stable government and so we want to do what we can to protect it.
CHATTERLEY: Yes, absolutely. And of course, 2020 coming up really fast here. Matthew, fantastic to have you with us. Come back when you're in New
York and join us again. There is much to discuss. Matthew Prince there, the CEO of Cloudflare.
Zain, from Davos in Switzerland, I'm going to hand back to you.
ASHER: All right, Julia, thank you so much. All right, still to come here on FIRST MOVE, Prince Harry is speaking out as he prepares to step back
from British Royalty. We dig into what he is saying after the break.
(COMMERCIAL BREAK)
ASHER: Welcome back. Prince Harry has been holding an announced meeting today with British Prime Minister Boris Johnson at the U.K.-African
Investment Summit in London where he also held a number of other private meetings as well.
This follows his heartfelt speech Sunday night at a charity event where the Prince spoke of his great sadness at stepping back from the British Royal
Family.
The Duke of Sussex says that he and his wife, Meghan had no choice but to cut world ties. Anna Stewart is joining us live now.
So Anna, in this speech, he also sort of to change the narrative that it was Megan Markle behind this decision, that it was her idea to sort of seek
financial independence. He is saying, clearly that that was not the case, that it actually was his idea.
ANNA STEWART, CNN REPORTER: Yes, there's a lot to dig into really, in this speech. It was extraordinarily heartfelt and honest, and you're right, he
said this was his decision, really putting end to any of the tabloid narrative that this was all to do with #Megxit and it was Meghan, Duchess
of Sussex call to leave the U.K. and to want to reform a sort of new role in the future.
He also spoke about his great sadness, though about the agreement. It was very interesting to find out that this is not necessarily what he and
Meghan wanted. Take a listen.
(BEGIN VIDEO CLIP)
PRINCE HARRY, DUKE OF SUSSEX: The decision that I have made for my wife and I to step back is not one I made lightly. There was so many months of
talks after so many years of challenges, and I know I haven't always gotten it right, but as far as this goes, there really was no other option.
What I want to make clear is, we're not walking away, and we certainly aren't walking away from you. Our hope was to continue serving the Queen,
the Commonwealth and my military associations, but without public funding. Unfortunately, that wasn't possible.
(END VIDEO CLIP)
STEWART: This decision to step back entirely as working members of the Royal Family isn't what the couple wanted, and we know from a previous
statement from the Queen that she wanted the couple to very much remain part of the working Royals and the family. So no winners here, really.
But as he said earlier, Prince Harry said that he very much felt he had to do this. This was the only option and a lot of blame, I think being laid at
the media's feet in that speech as well. He said they were a powerful force -- Zain.
ASHER: Anna, just based on that, what can we learn from all of this about what the experience for these two has been like living under the glare of
the British media?
STEWART: Well, Prince Harry also said in the speech, but this comes after years of challenges and months of talk. So while the marriage -- his
marriage to Meghan in the last couple of years, kind of perhaps raised the profile and added more tabloid interest in the couple, this is something he
has felt through his whole lifetime.
[09:55:34]
STEWART: He has in the past said he considered stepping back from the firm, from the Royal Family. So this is really nothing entirely new to
Prince Harry. He has struggled under the media glare for many years. He sees the media as responsible, in part for the death of his mother,
Princess Diana.
It'll be interesting to see how this changes going forward. As new independent members of the Royal Family, he wants to forge a new role with
the media, but of course there will always be tabloid interest in whatever they do -- Zain.
ASHER: All right, Anna Stewart live for us there. We wish them all the best.
That's it for the show. You've been watching FIRST MOVE. "CONNECT THE WORLD" starts after this short break. You're watching CNN.
(COMMERCIAL BREAK)
[10:00:00]
END
