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First Move with Julia Chatterley
China Companies Reopening But Restrictions Remain; Facing Up To Regulation, Mark Zuckerberg Says More Is Needed And Governments Must Set The Rules; The Car Giant, G.M., Winding Down Aussie Brand, Holden. Aired 9- 10a ET
Aired February 17, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:26]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
China's challenge. Companies reopening but restrictions remain.
Facing up to regulation. Mark Zuckerberg says more is needed and governments must set the rules.
And G.M. in reverse. The car giant winding down Aussie brand, Holden.
It's Monday. Let's make a move.
A warm welcome once again to all our FIRST MOVErs around the globe. Great to have you with us.
Here in the United States, stock markets are shut for the Presidents Day holiday, but who needs Wall Street today? Anyway, there's plenty of action
elsewhere. Let me talk you through it, including some pretty big moves in Asia.
Chinese stocks, in fact, as you can see, the Shanghai Composite there jumping over 2.2 percent. This as the Central Bank took fresh measures to
support the economy. The People's Bank of China lowering a key lending rate, and pumping more cash into the financial system to help lower
borrowing costs. Another round of tax cuts may also be on the cards.
Now with today's gains, Chinese stocks have recaptured most of the ground lost since the start of the coronavirus outbreak, a demonstration of the
power of central bankers here to steady and sure up confidence in markets. That move -- the stimulus move -- helped Europe, too. Gain from the
automakers there specifically with Chinese exposure helped push markets to record highs earlier on in the session.
But I have to say, the economic fallout continues. Firstly, export driven Singapore cutting its 2020 growth target today to include the possible risk
of recession.
In Japan, too, stocks fell there amid recessionary fears. The economy contracting over six percent year-on-year in the fourth quarter, the
biggest drop in some five years. All of this there before the coronavirus hit the region. Consumer spending falling at an 11 percent annual rate
after the big rise in consumption taxes kicked in there, too. So challenges all around the region.
Let's get to the drivers and the latest on the coronavirus. Two charter planes carrying more than 300 Americans from a quarantined cruise ship in
Japan have arrived in the United States. Among them, 14 people had already tested positive for the virus. They were permitted to board the planes in a
special isolation chamber.
Worldwide now, at least 1,700 people have died from coronavirus so far. In Shanghai, meanwhile, there's a push to get back to work as stringent health
checks become part of day-to-day life.
In the meantime, the International Monetary Fund stays coordinated economic action may be needed to mitigate the financial and economic fallout from
the coronavirus.
John Defterios has been talking to the IMF's Managing Director and joins me now. Coordinated or at least synchronized, John, talk us through that
discussion because there are clear concerns about the broad economic fallout here from the IMF.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Yes, I like the word you use there, Julia, synchronized. I think it was a dual message from the
IMF Managing Director right now, saying we need to be ready to leap into action on monetary policy, although there's a lot of rate cutting in 2019.
So you have to question how many tools are still left in that toolbox overall.
But also, not to take unilateral action when it comes to trade, I think that was a message for U.S. President Donald Trump, although she did
understand the fact that the W.T.O., the World Trade Organization, needs to be basically modernized. And she said indeed, it has to include e-commerce
in that calculation.
But I asked her straightforward on stage here at the Global Women's Forum, could China lose one percent of its GDP this year with the estimate from
the IMF of six percent. Here's her answer.
(BEGIN VIDEO CLIP)
KRISTALINA GEORGIEVA, MANAGING DIRECTOR, IMF: We don't get quite know what is the nature of this virus. We don't know how quickly China would be able
to contain it. We don't know whether it would spread to the rest of the world.
What we do know however, is that yes, indeed it is going to affect global value chains, already affecting some. It is affecting tourism. It is
affecting travel.
What we also know, if it is contained rapidly, there can be a sharp drop, and then a very rapid rebound, what is known as a V-curve and we are very
much hoping this is going to be the case.
(END VIDEO CLIP)
[09:05:13]
DEFTERIOS: And what's the saying, Julia? Hope springs eternal here. I think that's what the IMF Managing Director is suggesting. And the
benchmark for SARS was a drop of two percent, and then the V-shape recovery.
But the economy, Madam Georgieva was suggesting to me is very different. It was eight percent of total GDP in the world; China back in 2003, it's about
a fifth of global GDP. So we're very intertwined.
And to circle back to your original question at the top here of the program, she is suggesting that they're going to stick by the estimate for
another 10 days of 3.3 percent global growth and we could lose 0.1 to 0.2 percent throughout the year, depending on how fast China recovers.
CHATTERLEY: Yes, they're clearly thinking about recalibrating here, John. I just want to hone in specifically because the Centers for Disease Control
here in the United States said that this virus could be around beyond 2020. So we could be dealing with this challenge for many months, not just a
quarter or two quarters at this stage.
And to your point that the global economy was already dealing with trade tensions. We've seen specific policies going on in Japan, their consumption
tax hike that has already dented their economy quite specifically, it's a challenge not just in the region, but beyond.
DEFTERIOS: Well, of course, and Japan is the third largest economy in the world, and China is number two, so you can see the scenario you're painting
here for us.
They had a huge typhoon in 2019, as you suggested the consumption tax. And let's say the coronavirus could be the X factor for Japan in 2020. Because
those numbers don't factor in what we're seeing here in the first quarter and why there are concerns they could slip into a recession.
There's also that tourism that the IMF Managing Director was talking about from China, we had eight million visitors in 2018, up nearly 15 percent in
that year going to Japan, so they have strained government relations going back historically. But the Chinese love Japan and they love to spend money.
Their spending was up almost a third in 2018.
So this is one of those X factors that could play out for Japan in 2020 indeed. And going back to what Miss Georgieva told me on stage at the
Global Women's Forum, she was saying, look, we had 49 Central Banks cut interest rates 71 times in the last year, they did take coordinated action.
You have to wonder, Julia, if this carries on, how much more can you do at this stage to prop up the global economy? I think that is the biggest
concern. She wasn't alarmist about the growth. She was confident they could come back in the second quarter. But there's clearly a ripple effect.
CHATTERLEY: It's such a great point, two thirds of the world Central Banks already stimulating. What more can they do here to support the global
economy?
DEFTERIOS: Unbelievable.
CHATTERLEY: Yes, it's a great point. John Defterios, thank you so much for that.
All right, let's get to David Culver now who is in Shanghai. David, great to have you with us. I was mentioning earlier on the show that,
particularly in Shanghai where you are, companies are trying to get back to manufacturing, back to business, but they've got restrictions in place and
workers -- are workers actually able and willing to come into work here? Talk us through what you're seeing and hearing.
DAVID CULVER, CNN CORRESPONDENT: That's right, Julia. I heard you and John there talking about this desire to recover and to come back online. But
it's a struggle here and you start to realize that just walking the streets, I mean, even today, in the middle of what would normally be the
lunchtime rush in the heart of the financial area, it was empty.
I mean, that traffic circle had maybe one or two cars going around every 30 seconds or so, and there weren't many people walking around either. I mean,
it just seems that though this area is so subdued compared to where it's supposed to be right now and this is supposed to be the week where really
the Chinese are supposed to be coming back into the cities and start working again - that according to the government.
The government has said that 160 million will be traveling this post Lunar New Year, what was an extended Lunar New Year. So it's an act to keep
people congregating together, to keep them away from the mass congregation and traveling.
But instead, we're seeing that it's just slow as businesses are trying to come online.
Julia, you walk into a shop here, and you're oftentimes the only customer if that shop is open and the employees are just desperate to want to
interact with you.
CHATTERLEY: Yes, it's difficult, isn't it to know what's best, particularly under these kind of quarantine arrangements.
David, we were talking on the show last week about drone use to try and disinfect big counties in China. There's also been reports of trying to
clean money to restrict the germs that are perhaps being transferred, we are lacking detail on simply how this virus spreads.
But just talk us through the steps that the Chinese Central Bank and the government are taking here as far as money in circulation is concerned.
[09:10:02]
CULVER I think it's understanding that in context first, Julia this fear of contact whatsoever. Nobody obviously shakes hands, nobody is really
getting close to one another.
So then factor in cash and the desire to not want to handle something that was handled by several other people really. So what they're doing according
to the Central Bank is that there is -- particularly from the hospital, cash that comes in -- they're going to use ultraviolet light, disinfect
some of it. Some of it will not be recirculated back in, so it will be pulled out.
But it also tends to push what's already in place here and that is digital currency essentially. I mean, it's the WeChat Pay, if you will. It's still
through RMB, but that's how most people are paying for much of their products and that's continuing and obviously, it's going to be further push
forward as people don't want to be touching something that somebody else touched.
I mean, even when going to a restaurant, I can tell you, they sat down -- the customers -- we were one of them last night. First thing they hand you,
instead of an appetizer, a sanitizer asking you which kind you want. You pick your hand sanitizer, you touch the menu, you hand back the menu, and
then you clean your hands again.
CHATTERLEY: Yes, I mean, I'm comfortable with that, quite frankly. Just as clean as possible.
CULVER: Yes.
CHATTERLEY: David, thank you for being there and for giving us context on this story. David Culver. Great job. Thank you for that.
All right, let's move on to our next driver. Facebook's CEO, Mark Zuckerberg meeting with the E.U. Commissioners as we speak. It comes two
days before the European Union is set to present proposals to rein in the U.S. tech giant. Nina dos Santos is in Brussels for us.
And Mark Zuckerberg reiterating what he's already said, and that is, look, we do need regulation, but the governments have to step up and define the
lines here between Freedom of Information and harmful information here. Talk us through what some of the commissioners are saying at this stage --
Nina.
NINA DOS SANTOS, CNN EUROPE EDITOR: Well, Julia, that's a Herculean task when you're talking about 27 odd countries as we have in this institution
behind me, the European Commission, which is where Mark Zuckerberg currently is meeting with the three commissioners in charge of privacy,
antitrust and also governing the single market.
And what they want to hear from him is where he thinks this regulation will go, and also how strongly he will stick to the rules that they are likely
to impose later on in this year.
All of this comes just a couple of days before the E.U. is set to announce a white paper, a future legislation governing not just Facebook, but the
whole of the internet landscape. And Facebook's large presence on that landscape is significant.
I spoke to it Vera Jourova who essentially, as for want of a better word, the privacy czar here across the E.U., and she said that the issue Mark
Zuckerberg has to understand is that for the EU, this goes way beyond commercial considerations.
(BEGIN VIDEO CLIP)
VERA JOUROVA, E.U. VALUES AND TRANSPARENCY COMMISSIONER: I am sure that the business model Facebook uses for selling goods cannot be used for
selling the political ideas of political actors. That's why I also want to speak about the protection of elections.
I want to protect European voters against the mechanisms of algorithms which just chases them into the bubble, and do not give them the free
possibility to make a free choice.
(END VIDEO CLIP)
DOS SANTOS: Well, the E.U. has always inherently been very, very nervous about privacy of its data of its citizens. It introduced a year or so ago
stringent privacy laws that Facebook at one point thought might lead to a curtailment of the number of daily active users across this region. That
hasn't really happened actually, Julia in matter of fact.
Now the E.U. is taking on as you just heard from Vera Jourova there, this issue of how to balance free speech against the responsibility of some of
these platforms to eradicate hate speech, and also disinformation both in the public health sphere and also in politics as well.
But this is a conversation that Facebook and the E.U., both sides know they have to get right. If you take a look at the numbers, you get an idea of
what's at stake for each of them. The E.U. has just under 450 million citizens according to Facebook's end of year figures, at the end of last
year, 307 of those 450 million were daily active users of Facebook.
You can't just pull the plug on a service like that, as vital as it is across this region. But you can impose things like fines and punitive
sanctions.
Vera Jourova said that sanctions, if Facebook doesn't comply to new E.U. rules when eventually they are ruled out could well be on the table. The
question is, who will implement them? Will they be fines for antitrust or something else completely new? That's what we're looking at later on in the
week -- Julia.
CHATTERLEY: Yes, the scale of the task isn't justification of not to do something here. It's going to be fascinating to watch. Nina dos Santos in
Brussels, thank you so much for that.
All right, let's move on. Let me bring you up to speed with some of the other stories making headlines around the world.
Great Britain is beginning to recover from the fierce wind damage and rain brought on by Storm Dennis. Record flooding hit part of Wales and England
this weekend and disrupted traveled throughout the United Kingdom.
Hundreds of red alerts have been issued across the U.K. and more rain is expected.
[09:15:17]
CHATTERLEY: Democrats in Nevada are taking part in their first ever round of early caucus voting to choose who should run for President against
Donald Trump.
The party says more than 18,000 participated on Saturday. Early voting ends tomorrow, caucus day is this coming Saturday.
And more than a thousand former U.S. Justice Department officials have issued a rare statement calling on Attorney General William Barr to resign.
They say he did President Trump's personal bidding and that hurts the department's reputation for being nonpartisan.
Barr sparked outrage after intervening in Roger Stone's court case; Stone, one of President Trump's most loyal supporters.
All right, we're going to take a quick break here on FIRST MOVE, but coming up, Emerging Markets beware -- how the coronavirus is affecting commodity
prices? And what that means for economies in Western Africa?
And the end of the road for an iconic Australian brand. Carmaker, Holden bound for the scrap yard as G.M. cuts its losses. Stay with CNN. More to
come.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Wall Street is closed for the Presidents Day holiday, but we've got a positive tone across Europe and
parts of Asia today as the Chinese Central Bank announced fresh stimulus measures.
European stocks have touched all-time highs in fact, and as I mentioned earlier, Chinese stocks rallying over 2.2 percent.
In the meantime, new data shows investors dipping their toes into emerging markets stocks. Lipper says more than $700 million flowed into EM funds
over the past week.
The coronavirus outbreak has restricted the flow of trade and manufacturing across global economies. Among those worst eight, commodity exporting
countries in Africa. Take a look at the damage in commodity prices so far this year. We've got oil, energy down some 13 percent.
[15:20:10]
CHATTERLEY: Year-to-date iron ore down five percent. Copper, down six percent; nickel down at seven percent, too.
John Ashbourne joins us now. He is the Senior Emerging Markets Economist at Capital Economics. John, fantastic to have you with us. I want to hone in
on West Africa, specifically here because we're not talking tourism. We're not talking supply chain impact. We're simply talking that these are major
exporters of commodities to the Chinese economy.
And as a result of what we're seeing right now and the restrictions, they're suffering.
JOHN ASHBOURNE, SENIOR EMERGING MARKETS ECONOMIST, CAPITAL ECONOMICS: They really are, so the most obvious countries to be affected by this outbreak
are, of course, countries nearby to China, places with supply chain links in Vietnam, Thailand, of course, Japan, but in very distant places where
there are no cases -- no cases -- anywhere nearby even we're still seeing an effect.
So West Africa, within Africa is the worst affected. In Congo, Brazzaville and Angola. These are countries whose economy is very much geared to
providing oil or in some cases, iron to the Chinese economy. When that demand dries up, their economy really does face a serious blow.
CHATTERLEY: I mean, you're talking as well, the Republic of Congo, 50 percent of their GDP is exports to China.
ASHBOURNE: Yes, it's absolutely massive. You don't see that anywhere else in the world, really. And in the Congolese example, I mean, they're still
shipping oil, but they're now having to redirect that to new buyers.
I mean, demand in China is going to be down for oil about 10 percent, at least in this quarter compared to the same time last year. And that's
assuming that things get better, which isn't guaranteed.
So it's a really big shift, a really big disruption to the West African oil trade and that oil has to find a new buyer, and that will be tough for some
of these countries.
CHATTERLEY: I mean, we've already seen shipments from Angola being sold at a discount. Do you have any sense of what kind of discount this energy and
these oil cargo is being sold out because that will give us at least a sense of the damage that's being done in terms of the income for these
companies.
ASHBOURNE: It would. I mean, sadly, it's a bit of an opaque market at times. But it's worth remembering that there's two effects here. One is the
disruption of particular oil cargoes which are having to find a new buyer.
But even when that isn't the case, just the price of oil globally is down pretty substantially. So that's a pretty big hit. I mean, in Nigeria, a
fall in oil prices of about $10.00 a barrel that cuts their exports by half a billion dollars a month.
So you know, even in places where the oil wasn't going to China, it they're still accepting lower prices for it and that's going to be painful across
the region.
CHATTERLEY: Yes, and then we were talking earlier on the show about the possibility of a V-shaped recovery here, if you've already sold the goods
at the discount, you're not recovering that even if the business and the market sort of kicks back in in the second quarter or later than that. How
damaging is this, John? What are the repercussions whether it's on cost of borrowing, quite frankly, or debt repayments, how critical and for who,
even in the short term?
ASHBOURNE: Well, I think in the short term, you're looking mostly at smaller producers. So Congo comes up all the time, South Sudan, potentially
places where they don't have a lot of breathing space to roll over the payments they have to make. They need their oil to go out.
And as you say, even if things bounce back, which of course, God willing, they will, even if they bounced back in March, they will have lost revenue
during this period of time.
And actually to be fair, at Capital Economics and I think a lot of other places is quite optimistic with oil prices rising back to maybe $70.00 to
$75.00 a barrel at the end of this year. The fundamentals should be there for that.
But there will be a big loss potential for commodity producers because they just face capacity constraints. They can't produce a lot more oil later in
the year to make up this value. Whereas in other cases in China itself, for instance, it's very possible that you end up with disruptions that are made
back in later months, so it will be painful, particularly for the smaller producers.
CHATTERLEY: It's interesting your point about the pick up in oil prices here. What are your expectations about OPEC or OPEC Plus coming together
here, at least in the short term and doing something, perhaps, to shore up prices. Does your prediction include that?
ASHBOURNE: Yes, it does. And I mean, we've already seen actions by OPEC to try and come together. I mean, they're very worried about this. Clearly, I
mean, the full global oil consumption is much more I think that most people predicted back in January.
I mean, we're seeing a really big change, something even on a quarter-on- quarter fall, we haven't had that since the global financial crisis.
So the oil producers very much know that this is serious, and they know they need to do something and that combined with our belief that that the
economic impact of this virus is likely to be painful, but relatively brief, suggests that oil prices should have quite a bit of support. That
isn't the case for all commodities, but at least for oil, I think the end of this year should make up a lot of the losses.
CHATTERLEY: Yes, lots of repercussions here and a ripple effect. John, great to have you with us. John Ashbourne there, Senior Emerging Market
Economist at Capital Economics.
All right, let me bring you up to speed with today's Boardroom Brief.
Train manufacturing giant Alstom says it's in talks to buy the passenger train arm of Canada's Bombardier. The deal could be worth $7 billion.
Alstom based in France proposed merging last year with the rail business of German giant, Siemens, but European regulators ruled against it.
OYO Hotels and Homes, the Indian based hotel chain backed by Softbank has reported a six-fold increase in losses, a costly expansion into China saw
the annual loss grow from around $50 million to more than $330 million dollars. Just weeks ago, OYO laid off around 2,000 employees.
[09:25:36]
CHATTERLEY: And coming up on the show, winning over the regulators. We speak to the CEO who is eager to educate governments around the world on
the virtues of digital coins and cryptocurrencies. Stay with us, we're back after this.
(COMMERCIAL BREAK)
CHATTERLEY: Ripple is a company that utilizes blockchain technology to build an alternative global payment system. Those global payments are
facilitated by the cryptocurrency XRP.
The firm just raised $200 million from investors in a share sale valuing the company now at a cool $10 billion.
The company also hinting about going public in the near future. I spoke to the Ripple CEO Brad Garlinghouse who told me why 2020 is an important year
for the industry, and also their company.
(BEGIN VIDEOTAPE)
BRAD GARLINGHOUSE, CEO, RIPPLE: I think one of the reasons why 2020 will be very important is that regulatorily, that's a word -- the clarity is
getting better, you know, and I mean that globally. Countries like Singapore and Thailand and Switzerland and Japan.
I think the U.S. has still an opportunity to do more there, but I think we will probably see that in 2020 and I think that helps catapult the whole
industry.
I also think, you've gone from an industry that has been a little bit in the shadows in the history of crypto --
CHATTERLEY: Very much in the shadows.
[09:30:03]
GARLINGHOUSE: Yes, I remember actually, you and I were both at Davos and someone early on in my arrival there said, you know, crypto is still a bad
word here, and I was like --
CHATTERLEY: It's a misunderstood word.
GARLINGHOUSE: It is. And I think a lot of what I'm doing and what a lot of what I did in Davos is meeting with regulators, meeting with very senior
people at banks and explaining to them how crypto can be used specifically XRP can be used to solve a real problem.
Not to circumvent regulation, not to circumvent, you know, any government. And I think once people understand that, they very quickly become disarmed.
It's no longer a bad word.
CHATTERLEY: I was in Southeast Asia and the growth in digitization, in payments, particularly for the proportion of the unbanked population is so
huge. And I do feel like the regulators there are all stepping up.
China is another example with -- now, we're even talking about, you know, a Yuan digital coin here. Who is leading?
GARLINGHOUSE: Well, it depends a little bit how we talk about leading. I mean, China to your point, it's been fascinating to see.
I mean, they really -- the mining power control the Bitcoin blockchain, you know, you have four miners in China that represents something like 60 plus
percent of mining capacity and 80 percent of mining capacity is based in China for both Bitcoin and Ether.
So in many ways, I think China has been incredibly strategic about how they think about that. And I look at the U.S. and I say, hey, U.S., here we are
in downtown New York. We could and should, I think, do more for that clarity to allow for more investments.
But you see, I think a lot of countries around the world seeing that this is a technical wave. This is a major step and they want to invest in it.
They want to see companies continue to invest and I think that's good for the economy.
CHATTERLEY: Do you think we see at some point in the near future, a Chinese digital coin, a Fed coin?
GARLINGHOUSE: When I step back and I think about it macro, I think it's really healthy and constructive for the entire crypto blockchain community
to see Central Banks and central governments lean into what can these new technologies do to make our economy more efficient, our payment
infrastructure more efficient, any transaction more efficient. So at large, I think it's really positive.
Mnuchin was asked about this in Davos, and you know, he made a point, which I think has some validity, which is the Fed window in the United States. If
a bank goes to the Fed window, they're not getting a pallet, a crate of dollars, paper dollars, they're getting a digitized, centralized ledger
entry.
And so it's kind of like, what's the difference between if the Central Bank issues a centralized token versus what they do today? Like, how different
is that?
Now, there's some governments around the world that might, you could argue say, well, a Central Bank could go direct to consumers, and you could have
an account with the Central Bank.
I don't think in most of the Europe, U.S. they're going to circumvent the commercial banks. That doesn't make a lot of sense.
CHATTERLEY: But what about you, for Ripple, building a platform that could perhaps substitute XRP for a Fed coin one day or from other --
GARLINGHOUSE: We think of the XRP ledger as an open source technology. We think about how do we make it really useful for the customers we work with?
We also think about how do we make it extensible? And how do we participate in that open source community the way that makes it extensible to other
types of customers? But could Central Banks? Sure, they could aspects of it.
CHATTERLEY: Could it be more efficient what they create one day?
GARLINGHOUSE: Yes, and that, ultimately, is the underpinning I think we all focus on. How can we make this more efficient for our customers? And
right now the customers we focus on are commercial banks, payment providers.
We certainly are thinking about other types of customers we could serve. I have made the point -- I don't know if I've ever said it on air. But I've
made the point that in the earliest days of Amazon, it's called Amazon Books. It was a bookseller. It competed with Barnes and Noble. It competed
with Borders, and, you know, when I think about -- Ripple today is viewed as a cross border payments company.
We view ourselves as a blockchain infrastructure company. The first vertical we've done is cross border payments. We want to make sure we're
winning in cross border payments before we do another vertical, but we will certainly do other verticals leveraging these technologies.
CHATTERLEY: You said you're an investor in Bitcoin you own Bitcoin.
GARLINGHOUSE: Yes, we do own Bitcoin, yes.
CHATTERLEY: Yes. So XRP, is that a good investment?
GARLINGHOUSE: I have said very publicly, I think the value of any digital asset in the long term will be derived from the utility it delivers.
Bitcoin utility increasingly, I think is just viewed as -- it is digital gold.
The gold market is a multitrillion dollar market and Bitcoin today is I think we're at $150 billion, $160 billion.
CHATTERLEY: Yes.
GARLINGHOUSE: Do I think there's an opportunity for Bitcoin to appreciate as more people see it as a useful store of value? Yes, I think so. Do I
think there's going to be other digital assets that increasingly have utility for customers and therefore drive velocity, usage, people holding,
and it drives demand? Yes, I think that's likely.
CHATTERLEY: Will the utility value of XRP always outweigh the store of value reason for holding it in your mind?
GARLINGHOUSE: No, I mean, I think store of value is a dynamic in part. People want to hold assets that are highly liquid.
CHATTERLEY: You called it digital gold though. Bitcoin digital gold.
GARLINGHOUSE: I did.
CHATTERLEY: Does XRP have that potential?
GARLINGHOUSE: I think as XRP has utility through what Ripple is doing with what other people using XRP, and there's a bunch of other companies doing
very cool stuff.
I mean, a very innovative company called Coil doing interesting micro payments, particularly focused on media, very fascinating. And so when I
look at XRP, I look at the whole. I look at what Ripple is doing. I look at what Coil is doing. I look at what Forte is doing, it is a gaming company
using XRP.
[09:35:30]
GARLINGHOUSE: I look at the holistic. If there's a lot of utility, and people see value in that utility, then I don't worry about it.
I often have said, look, I don't think about the price of XRP on three days, three weeks to three months. Over the coming years, I think that we,
Ripple are focused on driving utility from this asset, and if we're successful with that, we think that's good for the liquidity of the whole
ecosystem.
CHATTERLEY: Talk to me about the raising of money and the $10 billion valuation. How do you feel about that?
GARLINGHOUSE: You know, I think anytime you have new investors come in, you are intimidated by the expectations that are set.
By the same token, you know, Ripple today, at today's XRP price owns something like $15 plus billion -- I think somewhere north of $15 billion
in the crypto. So in some ways those investors came in at a discount.
CHATTERLEY: Undervalued.
GARLINGHOUSE: We are in a very fortunate position. We have a very strong balance sheet. We're in a very fortunate position to have a lot of
customer, and I think it's because we've focused on solving real problems for real customers.
CHATTERLEY: So why IPO? Why go public to your point, if you have this money, you're raising money? What's the purpose of going public?
GARLINGHOUSE: Well, I don't think we've said we were going to go public.
CHATTERLEY: Of ringing the bell.
GARLINGHOUSE: I think what we've said -- what I said was, I think 2020 will likely have crypto kind of blockchain IPOs. And I think what I said
was, yes, I don't think Ripple will be the first, but we certainly don't want to be the last.
So I kind of kept it open ended. I think people heard something a little bit different than that. But look, the balance sheet flexibility we have
had has given us the ability to invest over $500 million across the blockchain ecosystem that includes within XRP world, but also beyond that,
because again, back to that I think all boats can rise.
So I think having bouncy flexibility gives us strength to do new things. The MoneyGram deal is a deal I know you're very familiar with where we
invested $50 million into MoneyGram.
And so we want to continue to have the flexibility to grow the business. You know, we have added, you know, well, hundred -- more than 150 employees
last year, at a time when I think others who have been less focused on solving real problems. There's been a bunch of layoffs in the crypto
community over the past even few weeks, and yes, we're going to continue to grow. We want to make sure we have that balance flexibility to do that.
CHATTERLEY: Also, at five years, where are you?
GARLINGHOUSE: Well, I think it overall crypto community will continue to grow at really impressive rates and five years from now, you know, I don't
know exactly how to think about that. But I think within crypto world, I think Ripple will continue to grow and take market share.
But that will probably be -- we are focused on cross border payments today, I think we'll look at other use cases as I kind of alluded earlier. And you
know, I hope that in five years we've got a -- we're not just Amazon Books, but we are Amazon.
(END VIDEOTAPE)
CHATTERLEY: Bold call. The whole discussion is on social media. I have tweeted it out if you want to watch more of that. Brad Garlinghouse there,
the Ripple CEO.
All right after the break, it started life as a saddle maker in Adelaide, South Australia. And now, it's ended after G.M. saw disastrous sales. The
iconic auto making brand, Holden has been written off. All the details, next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. It's the end of an era.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Australia, what's your favorite sport?
AUDIENCE: Football.
UNIDENTIFIED MALE: Snack?
AUDIENCE: Pies.
UNIDENTIFIED MALE: Animal?
AUDIENCE: Kangaroos.
UNIDENTIFIED MALE: And what's your favorite car, Australia?
AUDIENCE: Holden.
UNIDENTIFIED MALE: Let me see -- that's football, meatpie --
(END VIDEO CLIP)
CHATTERLEY: After 164 years in Australia and New Zealand, the Holden brand is being laid to rest; General Motors is ending operations amid falling
sales in the right-hand drive market.
Paul La Monica joins us on this story. A pretty iconic brand, Paul, but this is part of the far bigger restructuring that G.M. is doing right now
and focusing in on profitable businesses, and this one simply isn't and wasn't.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, unfortunately, this brand, the Holden brand was not one that G.M. was able to generate significant enough
returns for shareholders and that's why Mary Barra has had to make the unfortunate decision to pull back on this beloved brand in these two
markets.
G.M. really, I think is doubling down on the U.S. of course and China. They've already pulled back in Europe as well, and they need to be doing a
couple of things that they're not really doing in Australia and that's more electric cars, more autonomous cars and obviously, more SUVs.
The end of the sedan, we're not there yet, but G.M. obviously really trying to go all in on larger vehicles and you know, if they're electric all the
better.
CHATTERLEY: And this makes sense, it's about strategizing and refocusing on cars for the future. The Australian Prime Minister, though, Scott
Morrison not happy with this decision pointing out that one, they didn't know about it until they found out via G.M.'s announcement, but also, this
is a company that's taken $2 billion worth of Australian dollars in support.
We're talking taxpayers' money over the years and that's not the only car maker that's done that in the past, too. This is a challenge.
LA MONICA: Yes, clearly. I mean, G.M. has, you know, had to take government money not just in Australia, but many other nations. Obviously,
we've seen huge bailouts of large auto firms in the wake of the great recession and global credit crisis and I think that Australia has every
right to be frustrated by the fact that this is a beloved brand that is going away.
It's a retrenchment by G.M. in these markets. So they're, you know, likely will be job losses as well, unfortunately.
CHATTERLEY: Yes. And jobs were saved, admittedly, in the time when taxpayers' money was used. I have to say though, last year, the company
sold 43,000 cars apparently, according to the Australian automotive intelligence firm. That was 90,000 in 2017. People weren't buying the cars
and it comes down to that, quite frankly. Paul La Monica, thank you so much for that.
All right, as the global auto industry increasingly pivots to electric and autonomous vehicles, one company is hoping to capitalize. It is the U.K.
based, Arrival. It says electric vehicles can be as affordable as petrol and diesel alternatives.
It's also making waves in the autonomous market thanks to commercial deals with delivery companies such as UPS and Britain's Royal Mail.
Michael Ableson is the CEO of Arrival Automotive, North America and joins us now. Great to have you on the show with us.
You guys are trying to bring down the barriers to greater electric vehicle adoption here, and one of the ways you're doing it and made the point
briefly there was to try and make the cost comparable with diesel and petrol alternatives. How are you achieving that?
And I know it's not about bringing the price of the battery down, which most people talk about.
[09:45:22]
MICHAEL ABLESON, CEO, ARRIVAL AUTOMOTIVE NORTH AMERICA: Yes, so exactly to your point, Julia. Bringing the cost of the battery down is where a lot of
the industry is focused. But because we all buy cells from the same small number of companies, it's hard to build an advantage in that area.
So what Arrival has done is really started from a blank sheet of paper and looked at all the other parts of not just the vehicle itself, but the
manufacturing process as to how we can bring -- remove cost and bring the price of the electric vehicles down to the same as petrol or diesel
vehicles because we think that'll be a significant enabler to get more commercial EV vehicles and fleet.
CHATTERLEY: What is the cost of one of your vehicles here? And do you think we're at the point where big companies go, you know what, if the
upfront purchase price is equivalent, never mind the back end savings of not having to buy petrol or diesel or gas afterwards, that they'll switch?
Are we at that point for buyers here?
ABLESON: Well, that's the point that we will deliver at because exactly to your point, these people that run the large commercial fleets, they're very
sophisticated business people, they do the numbers, they understand that electric vehicles will deliver a lower cost of operation due to both the
lower cost of electricity versus gasoline, but also the lower maintenance.
So again, if you can supply vehicles at the same price that have a lower operating cost, it's going to be a win-win in the commercial vehicle space.
CHATTERLEY: One of your vehicles costs what? $40,000.00? About?
ABLESON: 40,000 pounds approximately, for one of the delivery vans. Now it's quite a range of different delivery vans. So it's more than one model,
of course.
CHATTERLEY: Yes, we have to get the currency right, though I should know better. Is the 300-mile range enough because that's one of the other
criticisms here -- charging facilities. It's not just about battery power, it's about simply the ability to keep these things going, particularly if
you're doing longer journeys. Are we there yet on that point, because for me, that's still a concern.
ABLESON: So we are and you bring up two more of the important points on why electric vehicles match with commercial vehicle fleets so well. One,
the commercial vehicle fleet operators, they know how many miles or kilometers their vehicles cover in the day, so they know exactly what
battery size and what range they need.
And then to your point about infrastructure, with commercial vehicle fleets. Many of them return to the depot at night, and so you're only
talking about installing charging infrastructure in a single location, in the depot and it's a much easier problem to solve than the general problem
of getting charging infrastructure everywhere for retail customers.
CHATTERLEY: You're taking over, very quickly, the U.S. market. What can you achieve here? And what differentiates Arrival compared to others that
are entering this space and perhaps could look at you and say we can bring costs down, too?
ABLESON: Well, we do -- we bring the cost down through a variety of methods. Some of it is proprietary materials technology. We're highly
vertically integrated and then we have a very different manufacturing process. We are going to manufacture in what we call micro factories.
So they are factory sized to deliver volumes that are far lower than a traditional OEM plants say in the range of a thousand to 10,000 vehicles a
year. And so through all these mechanisms, we think we're significantly changing the business around vehicle manufacturer were one of the driving
forces has always been the extremely high capital required to get into the automotive or vehicle manufacturing business.
CHATTERLEY: That scale critical. Michael, come back and talk to us. It's going to be fascinating to watch what you guys can do here. Michael Ableson
of Arrival Automotive. Thank you for that.
ABLESON: Thank you.
CHATTERLEY: All right, we're going to take a quick break here, but coming up, Hollywood might have a new address in the city that never sleeps.
Coming up next on FIRST MOVE.
(COMMERCIAL BREAK)
[09:51:22]
CHATTERLEY: It's lights, camera, action in New York City right now. The Big Apple is enjoying a content to production Renaissance thanks to tax
cuts and the ongoing streaming wars.
With apologies to William Shakespeare, you could say all of New York is a stage, a soundstage. Clare Sebastian has more.
(BEGIN VIDEOTAPE)
UNIDENTIFIED MALE: This building was used for "The Greatest Showman" and for something I can't tell you.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT (voice over): From "The Greatest Showman," to the "Marvelous Mrs. Maisel."
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: It is the best place to have your first nervous breakdown.
(END VIDEO CLIP)
SEBASTIAN (voice over): Steiner Studios is on the grounds of a 19th Century US Navy Yard has seen a lot of hits. Something that less than two
decades ago seemed impossible.
(BEGIN VIDEO CLIP)
DOUG STEINER, CHAIRMAN, STEINER STUDIOS: It almost broke me and almost was a colossal failure.
(END VIDEO CLIP)
SEBASTIAN (voice over): Despite New York's crew and talent base, the city was just too expensive.
(BEGIN VIDEO CLIP)
STEINER: About six months before we opened, I realized if we didn't have a tax credit, it wasn't going to be more business in New York and enough to
support us.
(END VIDEO CLIP)
SEBASTIAN (voice over): The tax credit now covers 30 percent of qualified production costs, putting it in tough competition with other states
battling for production dollars like Georgia and Illinois.
In 2010, fourteen TV productions applied for the credits in New York; last year, it was more than five times that.
The CBS star of "God Friended Me," one of the recipients. The show also airs on CBS's all access streaming platform.
Outside this old Naval Hospital featured in the series "Gotham."
SEBASTIAN (on camera): And if you're a fan of HBO's "Boardwalk Empire," you might even recognize this Chicago street scene.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: See you in a few hours.
STEINER: The explosion and content creation is great for us. Everybody wants to be a subscription service and the next HBO.
(END VIDEO CLIP)
SEBASTIAN (voice over): In the next 10 years, Steiner plans to almost double its square footage adding 15 more soundstages.
SEBASTIAN (on camera): Now, amid all the expansion there is one constant in New York's production scene and that is "Sesame Street" now filming its
51st Season in New York City.
SEBASTIAN (voice over): Across town at the century-old Kaufman Astoria Studios, the old guard is also getting a new lease of life. "Sesame Street"
is moving to CNN parent company Warner Media's HBO Max streaming service this year and is growing.
(BEGIN VIDEO CLIP)
BEN LEHMANN, EXECUTIVE PRODUCER, SESAME STREET: We recently completed production on a Sesame Street spin off called the "Not Too Late Show with
Elmo."
(END VIDEO CLIP)
SEBASTIAN (voice over): Kaufman's President, Hal Rosenbluth no longer has to run campaigns like this one selling New York to Hollywood producers.
SEBASTIAN (on camera): Oh, here we go.
UNIDENTIFIED MALE: There you go. One of the first shows of Netflix.
(END VIDEO CLIP)
SEBASTIAN (voice over): Kaufman is now expanding, adding 150,000 square feet. Netflix is also building its own production hub in New York.
(BEGIN VIDEO CLIP)
HAL ROSENBLUTH, CEO, KAUFMAN ASTORIA STUDIOS: New York is facing questions of capacity, which is a high quality problem.
(END VIDEO CLIP)
SEBASTIAN (voice over): A problem he says with huge economic benefits.
(BEGIN VIDEO CLIP)
ROSENBLUTH: State of the art stages have been built and created. We've seen equipment companies grow and the main thing is jobs. You know, it's
the old story, jobs, jobs, jobs.
(END VIDEO CLIP)
SEBASTIAN (voice over): An old story with what New York believes is a Hollywood ending. Clare Sebastian, CNN, New York.
(END VIDEOTAPE)
CHATTERLEY: Now, what could be the biggest construction snafu in recent times? A judge has ordered the developers of a new skyscraper in New York
City to remove several floors from the 52-storey building because it's too tall.
[09:55:09]
CHATTERLEY: Critics said the project at 200 Amsterdam Avenue exceeded zoning limits. Developers plan to appeal. But how much have you bought the
penthouse?
And finally, it's the Presidents Day holiday here in the United States. It's a good day to ask the question, therefore, which White House President
had the strongest Wall Street rally?
Well, the best Dow returns took place during the presidency of Calvin Coolidge in the roaring 20s. That roar of course came to a halt not long
after he left office. The stock market crash of 1929 led to the Great Depression.
Bill Clinton came in second with the Dow rising more than 220 percent during his two terms. FDR is third. The Dow rose almost 200 percent during
his 12 years as President. President Obama is fourth, followed by President Reagan.
President Trump is number eight. The Dow has risen 48 percent so far this year. We're a fountain of information.
You've been watching FIRST MOVE. Time to go make yours. Have a great day.
(COMMERCIAL BREAK)
[10:00:14]
END
