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First Move with Julia Chatterley
South Korean Coronavirus Cases Almost Double In Just One Day; E.U. Leaders Battle To Fill The Brexit Budget Hole; The CEO Of Virgin Cruises Talks About Their New Launch At A Challenging Time For The Industry. Aired 9-10a ET
Aired February 21, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from the New York Stock Exchange. I'm Julia Chatterley. This is FIRST MOVE and here is your need to
know.
Infections spike: South Korean coronavirus cases almost double in just one day.
Mind the gap. E.U. leaders battle to fill the Brexit budget hole.
And sailing away. The CEO of Virgin Cruises talks about their new launch at a challenging time for the industry.
It's Friday. Let's make a move.
Welcome to the show on another FIRST MOVE Friday. Fri-yay. Almost the weekend and not a moment too soon, I think given the volatility on global
markets seen over the past 24 hours.
Right now, U.S. futures set to open lower as you can see, adding to the losses that we saw yesterday. We actually saw big price swings in
yesterday's session with stocks hitting an air pocket around midday; though, I should point out we did close off the session lows.
It feels a little lazy at this stage to blame coronavirus jitters, but it's clearly adding significant levels of uncertainty around the globe.
Take a look at the bond markets, too. Their pricing that uncertainty. Ten- year yields and now below one and a half percent. Investors predicting two further cuts from the U.S. Federal Reserve this year. That's the message
from the bond markets right now.
Meanwhile, safe haven gold is on track for its best week in over a month and hitting seven-year highs. Goldman Sachs analysts out this morning
saying they see more upside of up to 13 percent in fact, while warning of significant downside risks to commodity prices, too, going forward.
The data during the Asia session also a worry here. Japanese stocks falling some four tenths of one percent on word that factory activity there
contracted at its fastest pace in more than seven years.
And in South Korea, shares there slumping one and a half percent as coronavirus cases jumped quite significantly as well.
In fact, the KOSPI was one of the worst performers of all the Asian majors this week, falling some three and a half percent and actually, South Korea
is where we're going to begin today's drivers.
To the coronavirus outbreak and China is reporting nearly 900 new cases Friday including over 200 from prisons in Hubei Province.
There are now more than 76,000 confirmed cases worldwide, at least 2,200 people have lost their lives so far.
And in South Korea, cases spiked from 28 just a week ago to more than 200 today. Paula Hancocks is live in Seoul with more.
Paula, we have to be a bit careful here, I think that perhaps the fear overtakes the numbers here than anything else, but the two particular
regions there. The Prime Minister said they're in an emergency situation. Talk us through what we're seeing.
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Well, Julia, we've just come back from the City of Daegu, this is about a three-hour drive south of
Seoul, and this is where the vast majority of cases over the past few days have been occurring, and they're all linked to one religious group.
Now, this is a group called Shincheonji and it has one particular building where there were religious services, one infected member went to those
services according to officials, and that's where they believe many of the linkages come to that religious group.
So 204 confirmed cases; 131 associated just with that group itself. Now, it was a city that was certainly concerned, shall we say, it's a city of two
and a half million people. I've been there many times before and it is always bustling. It is always busy.
But I was there Friday evening, and there was not many people on the streets. Those that I did speak to, did say that they were worried, they
were concerned about what was happening and they didn't know where it was going to end yet.
So they certainly are concerned and this is obviously based on the fact that they know that there has been a significant spike in a very short
period of time in their city.
Now just about a mile or a kilometer and a half away from this religious group building is a U.S. military base. I went to speak to the Commander of
that Daegu base and he said that they are restricting movement on and off the base there.
[09:05:10]
HANCOCKS: They're prohibiting all non-essential travel from US military personnel to Daegu itself, and when it comes to the South Korean military,
they have concerns of their own. Three South Korean military personnel have been confirmed with the novel coronavirus at this point, all in different
provinces around the country, but all focused and have links to this one particular city, Daegu. That is a city you're going to hear a lot about in
the coming days -- Julia.
CHATTERLEY: Yes, it's the sheer degree of uncertainty, I think that's also part of the problem here, to your point. Have there been any official
measures put in place similar to what we've seen in in China with the quarantine measures in particular, or is this just people simply staying
off the streets because they're afraid here?
HANCOCKS: Well, in this particular area, we understand from health officials that the congregation of this one religious group in particular
was over a thousand people.
They are trying to contact them or they say they still haven't managed to do that even days into this cluster becoming apparent. They say more than
50 people simply aren't picking up the phone at this point, which is a concern to them, of course.
They say that there are many who have been self-quarantined because they believe they have symptoms, and there are 131 associated with this group
that have tested positive.
So when it comes to the U.S. military and the South Korean military -- because this area is heavily militarized in Daegu -- they are having
mandatory quarantines of those who have had any kind of contact with this particular area.
And of course, the self-imposed quarantines when they believe that they have symptoms until they are tested. But much of what we're seeing within
the country at this point is self-quarantine, for the 14 days that we're seeing elsewhere in the world as well.
They believe that this 14 days will encompass any potential incubation of this virus, but what we're seeing now over the past couple of days is not
just pockets in certain areas. This is north, south, east and west in South Korea.
There are provinces all across the country now that have had at least one case.
CHATTERLEY: And the challenges of that quarantine even if it's self- imposed. Paula Hancocks, great to have you with us. Thank you so much for that.
Now, the quarantine measures clearly having an impact in China, too. Chinese auto and the global airlines sector are impacted as the outbreak
hits demand.
Chinese car sales plummeted 92 percent on an annualized basis in the first half of February. The airline industry also warning that the outbreak could
cut global traffic by five percent costing it over $29 billion this year.
Clare Sebastian joins us now on this story. I mean that's a significant fall in an already impacted market over with the Chinese autos, of course,
but to be expected given a lot of people aren't going out and the quarantine measures in place, Clare. Talk us through what we know here.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia. This is a demand story when it comes to orders. It's also a supply story. We're hearing that
from the Chinese Car Passenger Association that for the first 16 days in February, so this is high frequency data here. They're seeing a 92 percent
drop in sales. They expect for the full month that will be about 70 percent.
So that is a big drop and we are hearing also from individual companies about what they're facing. Nissan saying today that they are expected to
delay the reopening of some of their factories in China.
Volvo also saying that they're going to see sort of a staggered, reopening starting next week. We heard from the CEO of Jaguar Land Rover, they are
flying parts out of China. So that's the supply story.
They also say that the dealerships are struggling to get back up and running. There are no sales in China at the moment.
So this is something that car makers are really they're really grappling with. Don't forget that China is the world's biggest passenger car market.
So it's heavily exposing all of these different car makers and again, airlines as well.
This was the front line, the first industry really that we looked at when this crisis broke. They now say the cost will be north of $29 billion.
Now, if we look at the comparison to SARS, that cost the global airline industry $7 billion in lost revenue. This likely now to be more than four
times that, although I will say most of that concentrated in Asia-Pacific, about $28 billion of that lost revenue among Asia-Pacific airlines --
Julia.
CHATTERLEY: Yes, I mean, it's key to look at -- and we're going to continue to look at this as the data comes through just to get a sense. And
to your point, this is at least short term, high frequency data in the auto sector. So we get a pretty fair sense.
We've had survey data from industry all over the world today, and actually the one that caught my eye here; Japan, incredibly weak there. We're
talking about a huge economy in the world, flirting with recession here.
SEBASTIAN: Right. So we now have, you know, China at a standstill. That's the second largest economy in the world. Japan, the third largest economy
in the world. We've got their Purchasing Managers Index Survey today, which shows that manufacturing business activity is at its lowest point in almost
six years. It expanded its slowest pace.
Now, Japan, don't forget that economy has contracted in the last quarter at 6.3 percent on an annual basis, so this really reinforces the sense that
that economy might not be able to avoid a recession. You know, that's two quarters of straight contraction.
And it wasn't all bad news, Julia. We got some slight expansion in Germany and in Europe, the U.K. as well, not as bad as expected, but there are
cracks emerging if you look closely at those reports, as well, both in the U.K. and Germany.
[09:10:31]
SEBASTIAN: The manufacturing and private sector businesses reporting that there was sort of a slowdown in inputs and parts available for
manufacturing, a slowdown in delivery times. All of that linked to the coronavirus.
So I think, we are just getting, you know yet another sense of just how intertwined these economies are with China and how this impact will be felt
through global supply chains.
CHATTERLEY: Yes, we talk about the United States here a lot on this show, but to your point, Asia-Pacific, Europe far more leverage to China and slow
down there than in other parts of the world.
Clare Sebastian, great to have you with us. Thank you for that.
Now, the latest from the European Union, deadlocked over their next budget. Denmark, Austria, Sweden and the Netherlands, the so-called Frugal Four say
they can't pay more to make up for the U.K.'s lost fees following Brexit.
Anna Stewart joins me now. And also, the chickens come home to roost here, Anna. But if those guys aren't going to pay up, who is?
ANNA STEWART, CNN REPORTER: There are E.U. budget battles every seven years. They are always fairly epic. And they really lay bare the
fundamental challenges and flaws I guess, of the E.U. Not all countries and economies are created equally. I mean, they have to play by the same rules
and pay into the same budget.
So on the one hand, we have as he said the Frugal Four, Austria, the Netherlands, Sweden and Denmark, led by Germany, the big arch hawk.
On the other side, we have 15 members, the poorer states like Poland, Hungary, actually led by France, which is a net payer as opposed to a net
beneficiary, but have a very powerful farming union.
And this big battle of course has got worse this time around as you said due to Brexit. There's an $80 billion budget hole left by the U.K. leaving
over the next seven years.
Now, the big battle here and the reason why the talks that started yesterday have yet to end, they may not end through the weekend. Firstly,
those, the Frugal Four and Germany, they want to keep their rebates. That is something that has been discussed to be scrapped.
They also want to cap the budget to one percent of GDP, whereas France and the big, big spenders let's say, they want to see more spending on the
E.I.B. That's the European Investment Bank and also lots more cohesion spending in the region.
So honestly, it seems to be not much compromise so far. But these E.U. Summits and these discussions do go on and on and on as you well know.
There could be some compromise, but we are waiting to find out what that would be -- Julia.
CHATTERLEY: Yes, I'm sure there are a few people in the British government that are laughing at this moment. So I will just make out the point that it
is non-chlorinated chickens coming home to roost, at least for now.
Anna Stewart. Naughty. But it is Friday. Thank you so much for that.
All right. Let me bring you up to speed now, with some of the other stories making headlines around the world.
The U.S. says a deal with the Taliban to reduce violence is due to take effect at midnight, Afghan time. It calls for Taliban fighters, Afghan
troops and international forces to refrain from attacking each other for a week.
If successful, Taliban says it will sign a comprehensive agreement with the United States on February 29th.
Top U.S. Intelligence officers are warning that Russia is looking to interfere in the 2020 presidential election. Sources tell CNN that the
officials warned lawmakers that Moscow is taking steps to ensure President Donald Trump wins a second term.
CNN's Nathan Hodge joins us from Moscow. So I mean, I want to roll my eyes. This takes us back to 2016 where Intelligence officials said that the
Russians interfered. Now, it seems they are looking to do the same again. What are the Russians saying about this and tell us more.
NATHAN HODGE, CNN MOSCOW BUREAU CHIEF: Julia, yes, it looks like Russiagate 2.0. You know, the Russians today, the Kremlin spokesperson
Dmitry Peskov told reporters that the reports about this briefing warning that the Russians were intending to interfere once again in 2020 elections
were paranoid messages.
Now, this isn't straying very far from the standard Russian script. Russian President Vladimir Putin has said since the 2016 elections that Russia does
not, has not and will not meddle in the elections of other countries.
Nonetheless, the conclusions of the Mueller report and the sweeping conclusions of the U.S. Intelligence Community have all pointed to Russia
as waging a campaign -- an information campaign -- to interfere, put the finger on the scales of American democracy in the 2016 election, and the
fear here is that that could be repeated.
Now, we are seeing some blow out, some blowback over the briefing last week by Intelligence officials, the classified briefing given to Members of
Congress earlier this week.
President Trump announced that he was naming Rick Grenell, the Ambassador to Germany as his acting Director of National Intelligence.
Now, this is all part of the fallout over Trump's dissatisfaction with this this briefing, in which members of Congress, in which lawmakers were told
that the Russians would seek once again to tip the election in his favor. I think he sees this as something that could be yet another asterisk over his
presidency, should he win again.
[09:15:44]
HODGE: Certainly, the Russians have continued their denials. But it's always been interesting to see that the President with his criticisms of
his own Defense and Intelligence establishment is often mirrored what the Russians have said as well -- Julia.
CHATTERLEY: Yes, I have to say authorities haven't done enough to protect against this, quite frankly in the past three and a half years, but I think
it's the last thing Trump needs either to have this association perhaps that the Russians are pushing for his win.
Nathan, great to have you with us. Nathan Hodge.
All right, the Democratic Nevada Caucus set for Saturday. Bernie Sanders is surging in the polls after emerging unscathed from a scorched earth debate
in Las Vegas.
President Trump holding a rally in Las Vegas today. It will be the third time he has rallied in a state where Democrats are about to vote.
All right, still to come on FIRST MOVE, the boat that rocked. Virgin Voyages is bringing rock star cruising to the new generation of adult only
sailors. We will speak to the CEO.
And a table for two, for a bargain price of just four and a half million dollars. Meet the entrepreneur paying for lunch with Warren Buffett. Stay
with us we're back after this.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE where John Petrides, Portfolio Manager at Tocqueville Asset Management joins us now. John, great to have
you with us.
JOHN PETRIDES, PORTFOLIO MANAGER, TOCQUEVILLE ASSET MANAGEMENT: Thanks for having me.
CHATTERLEY: You were saying to me earlier that you think the market is looking for a reason here to selloff. Why? Why gives you that view?
[09:20:09]
PETRIDES: We had a huge year last year that's rolled into 2020. If you think of all the events that have happened, you know, conflict in the
Middle East, coronavirus, trade wars with China, global slowdown, Central Banks printing money. You know, we're trying to artificially grow --
inflate our way to growth. But yet stocks continue to rise higher.
The valuations -- we are not cheap, really across the board. If you look at a price to earnings, price to sales. I mean, we're near higher levels that
we haven't seen in quite some time.
So I think that investors are looking for something to pare back on.
CHATTERLEY: We get people on here saying actually there's a fear of missing out still, even with these markets, and actually underlying the
economies of the world aren't doing so badly.
The real concern factor here is coronavirus and what economic impact that has, but you think actually some of the weakness here is political.
PETRIDES: Yes, I think the last two days, you know following Wednesday night's debate, and, you know, if you look at Democratic candidates, in my
opinion, I think Bloomberg and Biden are definitely the most neutral. Maybe Buttigieg is a neutral and is a moderate as well. But Sanders and Warren
are clearly more extreme.
And if you look at how -- this isn't a political statement, it's how the market identifies each candidate. There's the economic candidate and the
social candidate, and regardless of what people may feel about President Trump on the social side, he is clearly very pro-business, and Bernie
Sanders is picking up in the polls, and he is not pro-business.
I mean, he is talking about raising taxes and spending more and taxing the wealthy. That's not good for the market. So that's why you're seeing I
think, a bit of a pullback there.
CHATTERLEY: You know, and this is what makes markets because we've also had the conversation on this show about the idea that actually a Bernie
Sanders rise and candidacy for the Democratic Party will likely make it more likely that Donald Trump wins and therefore is positive for markets.
PETRIDES: I think that's right.
CHATTERLEY: It's funny, isn't it?
PETRIDES: You can think about it in two ways. Right? Again, there's the economic track and the social track, and until the social track derails the
economic track, and we've come pretty close under President Trump, you know, the markets are going to continue to go higher.
I mean, isn't it the irony that four years ago leading into the election, anyone that -- the market fear was, oh, my God, if Trump wins. I'm going to
cash, gold and Treasuries.
And here we are with a significantly higher stock market, and now we're seeing the opposite about the Democratic candidate. It's just an amazing
turn of events.
CHATTERLEY: Yes, don't listen to people who make judgment calls about political impacts on markets. But what is important? And I agree with you
on this is, despite the fact that we keep talking about fresh record highs, within that leadership is coming from fewer and fewer stocks.
I mean, half -- half of the NASDAQ in bear market here.
PETRIDES: Yes, I think when investors buy a passive index fund of the S&P 500 Index Fund, they have to look under the hood and see what they're
actually buying.
Because the index fund is market cap weighted, meaning the more that a stock goes up, the higher the value of their company is, the larger the
weight within the index. And right now, we haven't seen this type of stock in such a concentration, really since the dot com bubble.
I mean, the top five holdings which are you know, we all know them, the Microsoft, Apple, Google, Facebook of the world make up about 18 percent of
the entire index.
And if you look at Tech and Consumer Services, which is Google and Facebook, those two sectors constitute about 35 percent of the S&P 500.
So, you know, as an active manager, you know, one thing that our fiduciary responsibility is to diversify our clients assets, to spread out their
bets, and not provide concentration with much sector concentration, because, you know, things revert to the mean, they go to the average.
Things sell off and if all of our bets are placed in one basket, you know, that's not enjoyable.
CHATTERLEY: You're in trouble.
PETRIDES: But people buy the market, the index. So yes, they are on the market without understanding the underlying concentration. It's a concern.
CHATTERLEY: Very quickly, are we at risk of a correction here? Goldman Sachs suggested we were. Do you think we are?
PETRIDES: I mean, people have been waiting for a correction for a long time. But, you know, is there a sell off with the Fed? You know, on hold.
The global central banks continuing to print money, I think any short term sell off is going to be met quickly with buyers because where are you
going?
CHATTERLEY: Yes.
PETRIDES: You know, we're at all-time high. We're approaching record highs with gold. Yields on, you know, in developed markets around the world, you
cannot buy a long dated bond with a yield of under two percent, with over two percent.
CHATTERLEY: And that's the challenge.
PETRIDES: So where are you going?
CHATTERLEY: Yes/
PETRIDES: So it's forcing -- it's forcing people to equities.
CHATTERLEY: John, fantastic to have you with us. John Petrides there, Tocqueville Asset Management.
Now, as we've been discussing, as the coronavirus outbreak kicks global trade, Maersk, the world's largest container shipping company remains
undeterred in their quest to reduce their carbon footprint. I spoke to the CEO about the company's efforts. Listen in.
(BEGIN VIDEOTAPE)
SOREN SKOU, CEO, MAERSK: We have had for more than a decade now quite an agenda to become more fuel efficient with our fleet. And since 2008, we
have reduced our fuel consumption per container that we ship by more than 40 percent.
What that means is that we have decoupled our volume growth from our fuel consumption.
In the last more than a decade, our business has also grown 40 percent and we are emitting more or less the same CO2. We are using more or less the
same amount of fuel as we did 12 years ago.
We also believe that we can continue down the road of becoming more fuel efficient about two percentage points per year, so that we can grow in line
with the market without using more fuel for the next decade.
We're working hard also on trying to figure out how we actually get to a net carbon neutral position in in 2050. We, we articulated that target in
2018. And, during 2019, we identified, you know, at least three different types of fuels that that can help us get to net zero neutral.
[09:25:49]
CHATTERLEY: Can you do it quicker? I feel like given the push that we're seeing behind the scenes right now, it needs to happen quicker than 2050.
Would you agree?
SKOU: Yes. Well, I think that what we need to do in global shipping, we need to define what is the fuel of the future? And, hopefully we can find a
fuel that we can produce in the quantity quality that we need, but also one that is carbon neutral.
We believe there's a good reason to think that we can do that. And then the fuel has to be produced -- actually produced at scale -- and we need the
regulatory environment to be in place to mandate global shipping to use that fuel.
Thankfully, we have, you know, we are an industry which is regulated globally by the United Nations I.M.O. and that means that we can actually
demand or regulate there. We have to use a certain kind of fuel.
So that I think, is something that gives us hope that we can achieve our goal of 2050 or earlier.
(END VIDEOTAPE)
CHATTERLEY: Interesting. The market opens next. Stay with us.
(COMMERCIAL BREAK)
[09:30:06]
CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange. That was at the opening bell this morning. And as expected, we've
got a lower open across the board for U.S. stocks. A weak tone globally today, too.
Procter & Gamble and Coke are the latest U.S. multinationals to warn on the coronavirus outbreak. The week began, if you remember with Apple's big
revenue warning, as a result of the impact.
I want to give you a look at what we're seeing in the Treasury market again. Ten-year yields tumbling below that 1.45 percent, the lowest level
in fact, since September of last year. Thirty-year yields were at record lows. Investors at predicting two further cuts from the U.S. Federal
Reserve this year.
The St. Louis Fed President, James Bullard said today that he still doesn't think cuts will be necessary.
Now, it's not clear how the coronavirus outbreak will hit the cruise industry this year though, it is a glowing sector. Passenger numbers have
almost doubled in the past decade to a forecast 32 million people this year.
More than 50 cruise lines are currently operating around the world. And today, Scarlett Lady, the first of four new cruise ships from Virgin
Voyages, is making its debut in Dover, England.
President and CEO of Virgin Voyages, Tom McAlpin joins us now. Tom, great to have you with us. And I do want to talk about what you're doing with
Virgin Voyages here. But first, I do want to talk about the impact of the coronavirus and what we've seen, particularly off the coast of Japan. Is it
having any kind of impact on sentiment and on bookings for your voyages here?
TOM MCALPIN, CEO, VIRGIN VOYAGES: Well, thank you for having me. Good afternoon. Today is a very exciting day. We're here in Dover as we launched
the Scarlet Lady on what I would call a showcase tour and take her to multiple places to Liverpool to New York to Miami to showcase the world.
So we're very excited about creating something very different and very unique in the industry. Hopefully, I have a chance to talk about that.
I understand your question on the coronavirus. And look, you know, the health and safety of our sailors and our crew are paramount to us. So we
take extra precautions to make sure that we're doing all the proper screening, to make sure that we don't have any type of incidents on our
ship.
I have to say that we are -- we will be operating out of Miami in the Caribbean where the coronavirus is not a problem. So we do not think this
is something that will hurt us. Certainly, not in the long term.
You know, there's been a lot of speculation out there. But I think it's important to put things into perspective. There are more than 300 ships out
there and cruise ships operating around the world. We have one incident in one ship.
So, you know we don't think this is a problem and we certainly don't think it's a long term problem.
CHATTERLEY: Yes, you make a great point. One about the scale of what we're talking about here and the number of cruises that are in operation right
now and geographically, you're in the Caribbean as well.
Just final point on this, will you operate a screening process as passengers come aboard just to be extra cautious?
MCALPIN: Yes, so I want to just tell you a little bit about what the Scarlet Lady is and our product. We are about creating something very
different. It's a new experience. The cruise industry has been very successful. It is a very fantastic industry.
We are about creating a new way to cruise. We say set sail the Virgin way and that is all about being different. It's about our name. It say a little
bit more about the transformational type of experience that we want to create.
It is about the size of the ship which is a mid-sized ship. It is the look and feel of the ship. So we want a ship that can be unique and interesting
and be recognized anywhere around the world.
So we took inspiration from Super Yachts. And when you go on board this is you know, a fantastic experience built around six magnificent restaurants.
Restaurants that you would want to go at sea with fantastic wine menus. And more than that, it's an immersive entertainment experience with a theater
that transforms into three different configurations.
We did something very different in order to create this kind of boat boutique lifestyle at sea and that is we've created this for the adult
market. And that means only 18 and above allowed on board the ship and that allows us to create an elevated, a more sophisticated experience.
We take you to the unique places. We're taking you to Bimini and we've created a fantastic Virgin Voyages Beach Club at Bimini for our exclusive
use and think of this as kind Talu meets Ibiza and create these fantastic high end experiences for our sailors.
CHATTERLEY: It's quite fascinating actually, the growth in this industry surprised me, more than doubling of passengers over the last decade. It's
reported what? $150 billion industry. But to your point, you're trying to cater to a younger, cooler -- if I'm allowed to say -- audience here. Talk
to you about the use of technology here. Wearable technology in particular.
I believe there's a separate way of being identified. Champagne being brought to you, for example, getting into your cabin here. There is a
technology element I think that's also critical for people to understand.
[09:35:30]
MCALPIN: Yes, so we looked for ways of trying to use technology and again, trying to differentiate across the board. So we will use technology in
unique ways.
You know, we have an app and we have a feature called Shake for Champagne, where you can shake the app and order champagne and be delivered right to
you in just minutes.
We use technology to understand where people are and help with wayfinding, and it is throughout. We've actually created our state rooms and our cabins
that transform so during the day it makes up into a sofa so you can entertain, but at night, the beds come together and it creates this very,
very special sleep experience.
So it is about using technology in different ways throughout and to enhance the experience and make it better. You know we want to use technology to
communicate with our sailors. We want our sailors to be communicating back home. We use it to push information to reduce paper and to reduce waste.
CHATTERLEY: Yes, I like the sustainable aspect as well. Just quickly. Where are you?
MCALPIN: Say again?
CHATTERLEY: What is the room that you're in? Where are you?
MCALPIN: Oh, I am in -- I'm on the Scarlet lady. We're on deck seven. We are in a champagne lounge called Sip and I have to say that there are some
fantastic bottles of champagne alongside and I just can't wait to go over there and indulge a little bit, but I'll finish this interview first.
CHATTERLEY: Not while you're doing interviews. Tom McAlpin, President and CEO of Virgin Voyages. Good luck with it, sir. Thank you for joining us.
All right time now for look at our Global Movers. Shares of Deere are up after the company reported better than expected quarterly results. The
equipment maker says it sees signs of stabilization in the U.S. farm industry.
And Sprint also in focus. The stock rallying this morning after it agreed with T-Mobile to tweak their proposed merger. The change would give T-
Mobile's parent company, Deutsche Telekom more control of the combined group.
And shares of Dropbox are jumping after its quarterly earnings report beat estimates. Wow. Look at that. Up some 22 percent. Dropbox also raising its
profit margin outlook.
All right, we're going to take a quick break here on FIRST MOVE, but still ahead. Warren Buffett goes crypto crazy. I'm not so sure about that. The
founder of TRON talk to us about his lunch with the oracle of Omaha. Did Justin make Buffett a Bitcoin believer? All of that more. Next.
(COMMERCIAL BREAK)
[09:41:02]
CHATTERLEY: To some, he is a controversial figure, but tech entrepreneur, Justin Sun says the way most of his download content is for the last
century.
Sun is the founder and CEO of the Singapore based TRON Foundation. TRON is a blockchain network and Sun has developed what he calls a next generation
operating system to allow easy and more cost effective sharing of digital content. He says the TRON platform is great for buyers and sellers alike.
Take a listen.
(BEGIN VIDEOTAPE)
JUSTIN SUN, FOUNDER AND CEO, TRON: Basically, like everybody today, we have a smartphone, Samsung, Google, all the companies are using Android and
Apple of course, they use iOS.
So for old operating system in the world, there's a lot of developers, they develop like applications for the operating system. So you can check out
like the App Store, you can see lots of the games, lots of the content, and lots of the other applications on the phone.
So you download those applications. So TRON is more like iOS and the Android. So we are like an operating system. And the developers, they will
contribute their code and their application into the system.
So actually, the users, they can play the game, come to the platform like everything on top -- building on top of TRON.
CHATTERLEY: But explain the blockchain, the decentralized nature of what you've created here, because I think for most people, when you're talking
about an operating system, they go, yes, yes, yes, I get it. But what makes you unique? Explain why this is unique.
SUN: First of all, the privacy of user is not controlled by a decentralized operating system.
CHATTERLEY: Right.
SUN: So today, like for example, Apple, Google, Facebook, and all the large companies, they control users' data and users' privacy. They can
choose suspend, like users account or release the users' privacy to other people.
But in decentralized ecosystem, so we are just the system builders. We don't control like any user data. Privacy is all preserved by users
themselves.
For example, also the digital assets user have -- our account system is also preserved by themselves. It's not like preserved by the system.
So I believe this is a more democratic system. So its benefits the internet a lot by advocating this kind of a decentralized infrastructure.
(END VIDEOTAPE)
CHATTERLEY: We often talk about utility value here. People pay for the content using the TRON cryptocurrency or coin called Tronix, TRX. But Sun
says he wasn't satisfied with just building a cutting edge content sharing platform in his view.
His company also bought the file sharing service BitTorrent. Sun talked to me about why and what the benefits are.
(BEGIN VIDEO CLIP)
SUN: BitTorrent is the world's first, like a decentralized File Transfer Protocol. Now, only in the world, over a hundred million people use these
to transfer the files every day. A lot of the big companies like Facebook, Blazor and U.S. government is also using BitTorrent as a protocol to
transfer their data. So this is like the first largest decentralized protocol.
CHATTERLEY: So how do you fit with other platforms, other data sharing providing platforms like Twitter, like Facebook? How do you see the
evolution of them compared to what you're creating here?
SUN: I believe right now, the large company eventually will be evolved to like, even more centralized structure, because in the centralized
structure, it is easy for the company to monetize the data and also recommend that to their clients.
So that's why I believe the majority of the centralized company they will come to our end to be like an even more centralized platform.
(END VIDEO CLIP)
[09:45:13]
CHATTERLEY: It's interesting, who owns the data? Who controls the data? And who can use the data? Now, Sun not only helped create the altcoin, the
alternative coin, Tronix, he also says he invests in other digital currencies and recently got the chance to introduce one of the most famous
investors in the world to all things crypto, I'm talking Warren Buffett.
But first, here's a view on where he thinks crypto goes from here.
(BEGIN VIDEO CLIP)
SUN: Basically, I'm like a crypto believer, so I cover like all my assets in 2013. So these days, I only exchange the crypto to fiat if I need to
spend money in my daily life.
CHATTERLEY: Of course. Do you own other digital assets like XRP for example, or Etherium? Are you diversified within your portfolio?
SUN: Yes, definitely. I own a lot of the XRP, and the Etherium, too. I'm like a long term believer of the crypto. So I want like all the crypto
assets to succeed. So that's why I own a lot of the other different crypto as well.
CHATTERLEY: Price predictions on some of these by the end of -- I don't know, 2025?
SUN: Sure. Wow.
CHATTERLEY: You can tell me what you want to predict? I am in stock.
SUN: Yes, sure.
CHATTERLEY: Go ahead, do 2021.
SUN: Yes, sure, sure. I can do some of the prediction because I'm like a long term like a believer of blockchain. I definitely believe Bitcoin will
pass 100K in 2025. I believe this price, maybe even we can achieve this price before like 2025.
At the same time, I think a lot of the other cryptocurrency projects like TRON, Etherium, like XRP, I believe all the projects will also get into a
bull market as well.
CHATTERLEY: Did you say this to Warren Buffett, by the way? Did you tell him that you thought that he probably recognized Bitcoin perhaps more than
anything else at this moment? Did you tell him that you thought it could be $100,000.00 by 2025? And if you did, what did he say?
SUN: I haven't said to him because I want him to more understand the fundamental parts of the blockchain and also crypto.
CHATTERLEY: I get it.
SUN: Yes. So that's why I showed him like how do you transfer TRX and why blockchain? It's just takes like a second. And also like how like TRX
integrate with Samsung phone so it is easier to transfer the tokens between two phones.
I also tell him like crypto is the money for the next generation. It is the money for the internet. So I think right now, Warren Buffett, he was
curious to see, like what's going to happen in the next five to 10 years.
CHATTERLEY: Whether it's investing or beyond? What advice did he give you?
SUN: Warren Buffett tells me if you want to survive in the capital market for over 60 years, you need to be very cautious. You need to always pray
for certainty over uncertainty.
That's why when we talked about a lot of the investment opportunity, that's the thing he tells me. We always need to focus on the certainty. And we
need to know like, for the next five to 10 years, what's like the most certainty in the world and bet a huge chunk of the money on the certainty.
CHATTERLEY: It's interesting advice. I mean, did you manage to convince him of the merits of investing in digital assets or blockchain technology
because for most of these people that's something otherworldly.
SUN: Yes, first of all, I believe Warren Buffett was very open to new technology and the crypto and the blockchain. That's why he accepted my
first Bitcoin and the TRX I sent to him. So basically Warren Buffet is a Bitcoin holder now.
(END VIDEO CLIP)
CHATTERLEY: Justin Sun there. Warren Buffett though perhaps not quite a true believer, yet but at least open to new technologies. We will know for
sure this weekend when he publishes his yearly letter to shareholders.
Investors want to know if the oracle of Omaha is closer to putting any of these war chests of more than $120 billion in cash to work. Paul La Monica
joins is on this story.
Paul, we can talk about his crypto ambitions or not.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I don't think he is going to buy $120 billion worth in Bitcoin or Ripple.
CHATTERLEY: No. No.
LA MONICA: He got a gift though. Justin did give him a gift apparently.
Probably, we'd would rather talk about Apple as an investment he would about investments like Heinz, I have to say.
LA MONICA: I would think so. I mean, Apple has been a huge success for Berkshire Hathaway. Clearly, he timed that investment really well. You
know, even though Apple has come back a little bit lately on some of the concerns about, you know, China demand and supply chain issues because the
coronavirus, but still, Apple has been a big hit for Berkshire Hathaway.
[09:50:18]
LA MONICA: And it's interesting because he's had an aversion to tech in the past. He used to be a big shareholder in IBM, but given IBM's troubles,
he's now out of that. And Apple is the largest holding by far for Berkshire Hathaway.
CHATTERLEY: At least 14 percent now, isn't it, of their market cap?
LA MONICA: Yes, it's a gigantic holding for the company. It dwarfs pretty much all the other investments. But the interesting thing is that, you
know, Berkshire Hathaway has still lagged the broader market lately because even though they have a big bet on Apple, who doesn't have a big bet on
Apple?
This passive world we live in right now, everyone is in the FAANGs. He has just a small stake in Amazon and he doesn't own any of the other Big Tech.
So you look at some of the other portfolio holdings, Wells Fargo has struggled. Delta struggled. And then Kraft Heinz. Oof. That's all we can
say about that.
It's been a disaster, and it seems like there's no end in sight to the problems that that company as investors are shunning the stock because
consumers are shunning their food.
CHATTERLEY: Yes. And you make such a great point there as well about this shift of passive investing and the sheer quantity, the rise of money and
the huge proportion of the market that's now being shifted into these kind of momentum stocks.
For him as a value investor looking for value in these markets is increasingly tough.
LA MONICA: Yes, it has been difficult and that is why this company continues to amass a larger war chest of cash, you know, nearly $130
billion. He has talked about wanting to do another gigantic deal, but the valuations don't seem to make sense.
There were reports and Buffett confirmed it to the FT a few weeks ago that Berkshire was approached by Tiffany when Tiffany was up for sale. And
Berkshire turned it down even though Berkshire Hathaway owns a bunch of jewelers in its portfolio, you know, as operating companies. So you then
wound up having LVMH run by Arnault, one of the few people on the planet wealthier than Warren Buffett coming in and buying Tiffany instead. So it's
tough for Buffett to find value.
CHATTERLEY: Yes or no, Paul, because we only have about 20 seconds. Probability of Warren Buffett buying Bloomberg LP if we saw Michael
Bloomberg winning the presidential election? $60 billion dollars that would make a splash.
LA MONICA: No.
CHATTERLEY: No?
LA MONICA: No, he just got out of the newspaper business. I don't really wants to go into media new or old or what have you.
CHATTERLEY: There is power in data though. Paul La Monica, we will reconvene on this conversation perhaps.
All right, Paul La Monica, thank you. Now, after the break, a supreme victory in getting us hyped up about cookies by putting one brand on top of
another is making us all say, crumbs, in a very British way. We are back after this.
(COMMERCIAL BREAK)
[09:55:05
CHATTERLEY: Welcome back to FIRST MOVE where we are losing a little bit more ground here. As you can see, markets at this moment down just over 1.3
percent for the NASDAQ since the tech stocks did a pulling back hereto. We'll keep an eye on it. We're back with "The Express" in a couple of
hours' time.
But now, a couple of stories to bring to you before we go. Taking the biscuit. Streetwear brands Supreme is teaming up with Oreo to create the
Supreme Oreo.
While a pack usually costs $3.50, the Supreme Oreo is $8.00 for three cookies. Wow.
Taking the biscuit. But that may still be a bargain. One pack is selling for $17,000.00 on eBay. Crazy.
And we like burgers on this show. McDonald's puts it spin on dinner by candlelight. The fast food chain is releasing candles that smell like
Quarter Pounder ingredients. From ketchup to cheese, the candles come in six flavors and celebrate the burger's nearly 50-year run. Eww.
That just about wraps up the show. I'm Julia Chatterley. You've been watching FIRST MOVE. Time to go make yours. Have a great weekend.
(COMMERCIAL BREAK)
[10:00:00]
END
