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First Move with Julia Chatterley
FAANGs, Cryptos and Tesla Face a Second Day of Losses; Australia Agrees to a Deal to Unblock News Sharing on Facebook; The Senate Investigates the Massive SolarWinds Cyberattack. Aired 9-10a ET
Aired February 23, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here's your need to know.
Tech tumble. FAANGs, cryptos and Tesla face a second day of losses.
Friending Facebook. Australia agrees to a deal to unblock news sharing.
And hack hearing. The Senate investigates the massive SolarWinds cyberattack.
It's Tuesday. Let's make a move.
Welcome, once again to FIRST MOVE. Thank you, as always for joining us as we mark a very sad, new milestone in the ongoing COVID pandemic.
The United States death toll surpassing 500,000 lives. That's a fifth of all of those lives lost around the world.
President Biden imploring people not to become numb to this sorrow, and that applies wherever you are in the world.
And we agree, but we, also, point out that more than 63 million people have now recovered and amid that heartbreak comes hope.
New U.S. cases of COVID are down 74 percent from peak this year. And U.K. Prime Minister Boris Johnson sees England out of lockdown by this summer.
And vaccinations, now, are beginning this week in Australia and in South Korea. There is good news among the heartbreak.
For global investors, though, well, they have long since jumped ahead and are now wondering when support might be curtailed if inflation might
finally rise and how central banks around the world will respond.
Step forward Fed Chair Jay Powell, testifying before Congress in the next hour, and likely, I think, to be very careful to avoid fueling fears of
support withdrawal even at the cost of fueling future inflation and I will say it, potential bubbles, too, in asset prices.
Tech stocks in the interim feeling some of the pressure. Apple, Microsoft, Amazon, and Tesla have pulled back, sharply; Tesla, in fact, now, in bear
market territory, down-some 20 percent from the recent peak. Bitcoin, actually, has lost an eye-watering 16 percent over the last 24 hours.
If you remember, the one thing I did promise you with this was volatility. Just a bit of context, though. Bitcoin, up around 400 percent in the past
12 months. Tesla, up almost 300 percent and that's the difference between investing and day trading in these markets. It's key.
All right. Let's get to the drivers. Paul La Monica joins us now. Paul, stock market is fine. We are seeing a shakedown here for some of the tech
stocks, but remain at or around record highs. The bond market shifts, though, really, I think have investors alerted.
And into this middle of this, Jay Powell has to manage the nervousness about the future, with the work that still has to be done in the real
PAUL LA MONICA, CNN BUSINESS REPORTER: Clearly, I think, if Powell says anything during his congressional testimony, either today or tomorrow, that
suggests that the Fed is more worried about inflation and may start taking away the proverbial punch bowl, that will alarm investors.
I think you are going to see that Powell will continue to stress the bed- party line, and now, also, Treasury Secretary Janet Yellen's mantra as well that we need stimulus for the economy.
It is still a fragile recovery. Yes, people are getting vaccinated. Yes, we're starting to see businesses reopen, but that does not mean that it is
time to put up that proverbial, mission-accomplished banner and say we have won the fight against COVID. It's all over. That's not going to be the
I think, Powell is going to be very, very measured in his language and try and do his best to not signal that the Fed is more worried about inflation,
which is still a future threat, not a present threat.
CHATTERLEY: Yes. He's got to be very careful with the language, here. But to the point I made, earlier, and you are making it, too, I think. I think
they are okay with a bit of inflation here and as we heard on the show, from the San Francisco Fed, we are not going to pull back on stimulus here,
even if we see asset prices rising because there are people at the lower end of the economy, that still need a great deal of support.
What we also saw and you mentioned here was the Treasury Secretary Janet Yellen, she called Bitcoin an inefficient way of conducting transactions.
She also called it highly speculative.
CHATTERLEY: She also raised questions actually about the energy intensity of mining Bitcoin, which we know, actually, is quite phenomenal, even
relative to some of the other digital assets. What do we make of her comments on Bitcoin?
LA MONICA: Yes. Bitcoin prices are tumbling a bit, in -- as a result of her comments. There are, also, some bearish comments from Bill Gates, as
well. He actually said in a Bloomberg interview that you know, that unless you are as wealthy as Elon Musk, then Bitcoin is probably not a good bet
And, you know, let's point out that, not even Bill Gates, anymore, is as wealthy as Elon Musk. So, it is telling that he made these comments.
But here are a couple of things that, for the Bitcoin bulls out there to point out. Gates, like Warren Buffett has been wrong in the past about
being uber skeptical of Bitcoin. It's obviously continued to rise even though it's been volatile.
And, you know, I think Janet Yellen has also made some comments about the validity of digital stable coins. So, I think that people will find some
bullish things in what Yellen has to say about cryptocurrencies, writ large even though, Bitcoin, like many other assets has probably gone too far, too
And you could say the same thing with tech stocks, Julia. I think it's notable that, when you look right now, Alphabet is the only member of the
FAANGs that is actually still up this year and that's probably because they have lagged the rest of the FAANGs for a long time.
So, Facebook, Amazon, Apple, and Netflix, they are all down, now in the red this year while the value stock that's Google has actually continued to
rally. We might see that shift into value during these volatile times.
CHATTERLEY: Yes. It's such a great point. Short, medium term, and longer term, a bit of consolidation here makes a great deal of sense to me, given
what we have seen irrespective of what the future path of regulation, investing, the economy looks like.
Paul La Monica, thank you so much for that.
Now, speaking of Facebook. Friends again with Australia in the row about making Big Tech pay for journalism appears to be settled there. A deal has
been struck with the government to amend a draft law about paying news outlets for stories.
(BEGIN VIDEO CLIP)
JOSH FRYDENBERG, AUSTRALIAN TREASURER: Well, Facebook has re-friended Australia, and Australia news will be restored to the Facebook platform.
And Facebook has committed to entering into good-faith negotiations with Australian news media businesses, in seeking to reach agreements to pay for
This follows a series of intensive negotiations with Facebook.
(END VIDEO CLIP)
CHATTERLEY: Selina Wang joins us now. Selina, Facebook said the whole way along, look, we are not the same as Google in the way that we operate
platforms, the way that news media is shared. We need to have some carve- outs here and acknowledgment of the difference. Did they get that in this deal?
SELINA WANG, CNN CORRESPONDENT: Well, Julia, essentially, this amendment now to this proposed law is going to allow Facebook to retain a bit more
control. And really, at the core here, why this is so important, Julia? It is because of the precedent it sets in not only the future of the news
industry, but also, in monetization in other countries.
Regulators are, of course, watching this incredibly closely. Now, under that initial proposed law, that would have allowed publishing companies, as
well as these tech giants, to bargain with -- over this -- the value of their news content, and essentially enter these binding arbitrations, if
they could not come to an agreement.
Now, Facebook took great issue with this arbitration clause. So now, under this change, that arbitration is going to be a last resort after a period
of good-faith mediation.
Facebook now, also, gets more time to reach these deals with these publishers.
Now, I want you to take a listen to what Campbell Brown, Facebook's VP of Global News Partnerships had to say.
Now, he said, quote: "After further discussions with the Australian government, we have come to an agreement that will allow us to support the
publishers we choose to, including small and local publishers. The government has clarified, we will retain the ability to decide if news
appears on Facebook so that we will not automatically be subject to a forced negotiation."
And, Julia, of course, Facebook was harshly criticized for its reaction to this proposed legislation and blocking new sites in Australia, which led to
more misinformation, which is already a massive problem on Facebook to fill that void without reputable news content.
CHATTERLEY: Yes. It's fascinating, isn't it? Did -- was some of the backlash that they received as a result of this renegotiation of the
legislation worth it here? I mean, it's become a proxy battle, I think, for the world looking to tackle Big Tech and looking to protect, in some way,
local media and then, news articles that get shared on social-media platforms.
Selina, what do we think? Who won this battle? Did the consumer and those that consume news and local news win this?
WANG: Well, the Australian government certainly thinks that's the case. Now, some say that this is, basically, a clarification and that Facebook
is, essentially, just getting more time to do what Google has already done.
Now, Facebook and Google, of course, both balked at this initial proposal, but Google took such a dramatically different approach. And in recent
weeks, we've seen them strike these deals with big media companies including News Corp. and Reuters, the "Financial Times" but others say that
this amendment is going to allow Facebook to basically circumvent some of the most stringent parts of the law.
Now, what's interesting here is that, Facebook, of course, this entire time, has been arguing that the entire proposition of the initial proposal
was wrong. And that, Facebook is actually providing these news content websites an important value by directing traffic to their sites, that
wouldn't have been there before.
And, of course, publishers have been arguing that, no, for years, this is actually destroying and disrupting their business model and it's been
extremely detrimental and harmful ripping apart their business models.
Now, this is all being very, very closely watched around the world, Julia. I still think it's too early to say who exactly is going to win. But
fundamentally, under this law, it does mean that Facebook is going to have to pay publishers for news.
So, a very, very important change when it comes to the future of news journalism and monetization of this business.
CHATTERLEY: A hundred percent agree and we'll look who else around the world looks to adopt similar, if not the same framework and then, we will
show for sure.
Selina Wang, thank you so much for that update there.
To Washington now and the powerful Senate Intelligence Committee set to hold a hearing on the massive SolarWinds hack that took place at the back
end of last year.
Hackers got access to thousands of companies and government offices worldwide. Just to give you a sense of the scale, that map shows you where
this hack touched.
The U.S. says Russia was likely behind the devastating, cyberattack. Alex Marquardt joins us now with more.
Alex, this sort of got lost in the politics of whatever else was going on with election fallout and spillover, but attention needs to be placed on
simply what happened here and what response needs to happen in light of the findings. What do we hear today?
ALEX MARQUARDT, CNN SENIOR NATIONAL SECURITY CORRESPONDENT: Well, and those are the questions, what needs to be done, in particular, that are
going to be put to the heads of these private companies in the Senate Intelligence Committee.
Julia, this is the first open hearing that the Senate Intelligence Committee has been -- is holding in the wake of this unprecedented hack.
They have held other classified hearings behind closed doors with the Intelligence Committee -- with the Intelligence Community, Intelligence
Agencies, which they have criticized as being disjointed and disorganized. So this will be out in the open.
Julia, you will remember that back in December, it was the private sector. It was the cybersecurity company, FireEye, that actually alerted the world
to this incredibly sophisticated hack that is now being blamed on Russia.
And so, today, we will be hearing not only from FireEye but, also from another cybersecurity form, CrowdStrike. The heads of Microsoft and of
SolarWinds, which, of course is at the center of this saga because it was a SolarWinds product, by and large, mostly, that delivered this -- the
Russians into these systems.
We are now hearing from the Biden administration, in a way that indicates that they are taking this much more seriously than the Trump
They have appointed the most senior cyber official ever in a White House. Her name is Anne Neuberger and she spoke to the press last week saying that
because of the scale, the scope, the sophistication of this attack that she says was months in the making, it is going to take several months for the
Biden administration to complete their investigation.
She did put a bit of a finer point on the number of entities that were compromised. She said that it was nine Federal agencies and around 100
But now, the question becomes, Julia, how to respond? And this is a fierce debate in the cyber community and the national security community as to
whether this was just an act of espionage by Russia, the kind of cyberespionage that the U.S. engages in around the world and would like to
engage in or whether this was an attack that demands a response.
The Biden administration has said there will be some sort of response. The national security adviser, Jake Sullivan, told our Christiane Amanpour
several days ago that it is just a matter of weeks before we see a series of steps to address this attack by Russia.
Sullivan made the point that the past administration, the Trump administration, said that this was likely -- likely Russia that carried out
this hack and he says that they are ready to go farther than that -- Julia.
CHATTERLEY: Yes, Alex, three things for me. The first is how does the private sector ensure its defenses are stronger? Same for the government,
given that they were penetrated. And then, the response on the perpetrators of this. We shall see.
Great to have you with us. Thank you so much for that context there.
MARQUARDT: Thank you.
CHATTERLEY: All right, the latest now on the dramatic engine failure of a United Airlines plane over Denver, Colorado.
Dan Simon is live at Denver International Airport with the latest. Dan, what can you tell us?
DAN SIMON, CNN CORRESPONDENT: Hi, Julia. The question going forward: was this an isolated incident or does this speak to a more chronic issue with
this particular airline? The 777 and the Pratt & Whitney engine that powered it.
What I can tell you is that American regulators, they have determined that the engine blade which caused this engine to essentially explode showed
signs of metal fatigue and it is going to be examined under a microscope at the Pratt & Whitney laboratory.
Regulators also want to determine why the engine continued to spit out flames despite the fact that the fuel line going to it had essentially been
But we should point out, Julia that there is no danger to the flying public. All these airliners have been grounded, while officials look to see
what kind of guidance they can give. Do they need to go in and repair some of these engine blades? Do some swapping out et cetera?
But we should point out, it's an important issue to point out that nobody should really be concerned about it -- Julia.
CHATTERLEY: Yes. Still shocking images and we will wait for that full investigation, too. Dan Simon, great to have you with us. Thank you.
All right, still to come here on FIRST MOVE, another bite out of Big Tech's revenues? The State of Maryland launching the first ever U.S. tax on
And message from Mars, NASA releases the first recording of audio captured on the Red Planet. Stay with us.
CHATTERLEY: Welcome back to FIRST MOVE live from New York where U.S. stocks are softer premarket as we await testimony from Fed Chair Jay Powell
in the next hour.
Interest rate sensitive tech stocks look set for a second straight day of sharp declines on fears over rising bond yields.
Bond investors worried that firm economic growth and, of course, the massive new stimulus bill making its way through Congress will likely, at
some point lift inflation.
This is interesting, too. In a recent tweet, bond market investor Jeff Gundlach said, quote: "Lots of liquid poured into a funnel creates a
torrent. Bitcoin maybe the stimulus asset. Doesn't look like gold is."
Lots to discuss. Joining us now is Kyle Bass, founder and Chief Investment Officer at Hayman Capital Management.
Kyle, fantastic to have you on the show this morning. You know, most investors got bored or tired waiting for inflation to rise or spike at
least, over the last decade. But bond markets are now starting to react.
What's your sense of where we're headed and how worried are you?
KYLE BASS, FOUNDER AND CHIEF INVESTMENT OFFICER, HAYMAN CAPITAL MANAGEMENT: Well, you know, number one, first of all, Julia, great to be here.
Secondly, I think that when you look at the way that inflation is calculated, specifically, 40 percent or so of the inflation calculation is
very -- is focused on the U.S., basically rents and they call it owners' equivalent and housing.
But as we just saw on the Case-Shiller print, you saw housing prices year- over-year nationwide were up 10 percent. And yet, the housing component of inflation is way down, holding inflation down and you have to scratch your
head, and say, what's going on?
And what's really going on, Julia, is, it's the fact that in the mismanaged states in the U.S., i.e., call it New York, California, you are seeing
rents collapse and the price at which people are willing to rent things on the coast is affecting the way that inflation is calculated.
For those of us in the rest of the United States, we are seeing already substantial inflation. Look at copper. Copper has doubled last year. Lumber
price is doubling.
The price to build things is doubling, year-over-year, Julia. We're not talking about a one percent decline in inflation or a flat number, we are
talking about a doubling in many areas of your life.
And so, I think, inflation is already here and everybody knows it. And the size of this stimulus, you know, we are talking about another trillion nine
of a COVID Relief Bill. And right behind that, I believe, you're going to see something close to $3 3 trillion of infrastructure announced
immediately after this COVID Relief Bill goes through.
So, Julia, we are going to see another $5 trillion printed or beginning to be printed this year. So, I think people need to be thinking longer term
about what they want to own.
CHATTERLEY: What do you buy? And to Jeff Gundlach's point, which is why I raised it, do you see digital assets, Bitcoin, for example, as a stimulus
BASS: You know, I think there -- I think there are a couple of -- I like the concept of the blockchain and digital assets recorded on the
blockchain. i.e., call it chain of title for real estate. There are many practical applications.
Look, Bitcoin is a trading asset. And I think, it has captured the attention of many people around the world. I just -- I can't imagine, over
the long run that Bitcoin's success doesn't become its failure or its structural impediment.
Meaning, the G-20, if I were a G-20 Finance Minister, I'm not going to basically cede my fiscal sovereignty to some digital asset created by a
bunch of tech people.
Now, what that doesn't mean, I think it's probably going to trade up a lot. So, don't get me wrong as far as the trading prices.
But I think, in the long run, it's just an asset like art, like precious metals, like anything that people trade at a price. I think the digital
assets of the future are things that will be linked to the blockchain that are more tangible and real.
CHATTERLEY: Or stable coins that are issued by Central Banks.
BASS: Yes. So, you know, there are probably 35 Central Banks at some stage of issuance of what they call Central Bank Digital Currency, C.B.D.C. and
that's something that from a national security perspective, our country and the rest of the developed world that have spent a lot of time on focusing
on how these things are going to be programmed, what kind of knowledge they're going to have, i.e., what kind of artificial intelligence will be
embedded in some of these C.B.D.C.s?
And what that does, when we all think about this, is it gives governments even more, call it, totalitarian control over their populations and places
like China will be able to export their digital authoritarianism if they are able to pull this off.
So, this is something that I think you and the rest of the media will be covering a lot more in 2022.
CHATTERLEY: The irony is that that's the entire proposition or a substantial part of it for having these decentralized digital currencies.
It is the fact that they want to get away from that Central Bank power because they think that they have printed so much currency here that they
are devaluing the prospect of fiat currencies or ordinary currencies.
So it's kind of a circular argument here.
BASS: You're exactly right. I mean, you know, what's going on in Bitcoin and the rest of the private crypto market is basically a rage against the
machine, right? It is a rage against Central Banks, right?
BASS: Right? But in the end, Julia, our taxes will be paid in what our country deem to be legal tender and so will the rest of the G-20. And you
know, the fact that all the cryptocurrencies are denominated in dollars is a little bit of a head scratcher, as well, right?
We never quote them, really, in their own terms. It's always in dollars.
So, look, the dollar is here to stay. The question is, you know, how important will the dollar be five years from now? Ten years from now as far
as the globe is concerned? And that's something that U.S. Treasury and the Fed better spend a lot of time thinking about.
CHATTERLEY: I couldn't agree more. Very quickly, and then I want to move on. You said it doesn't mean that digital assets like Bitcoin can't go up a
lot. Are you willing to define what a lot is, very quickly?
BASS: I mean, look, the sky is the limit. The beauty of the story is, you know, there are only 21 million of these things out there and a lot of
people believe that scarcity equals value.
And if you look back to all the speculative manias that have kind of existed around the world, you know, back to tulip mania, the price of one
tulip bulb at the peak of Holland's tulip mania traded for the price of an average house in Holland.
So, look at that from that price, we have a long way to go if we are going to reach that zenith. But, look, in the end, I think that there's so many
smart people, people much smarter than I trading these things.
And I think that -- I don't believe we are at the top. I think we are going to see a surge much higher in the near future. But then again, it's just a
CHATTERLEY: You know, it would be remiss of me to have you on the show and not talk to you about China and Hong Kong and you have long expressed your
views in a very poignant, I think, and forceful manner over what you are seeing.
And I just -- I wanted to get your views on the comments made by China's Foreign Minister yesterday. He said Xinjiang, Tibet and other areas where
ethnic minorities live are even more important examples of human rights progress in China. I mean, he went on to make other points.
But in light of -- how sensitive a subject this is amongst everything else and the tension points between China and the West, your views on what we
are seeing here?
BASS: I mean, that's like calling Jeffrey Epstein's island house a sanctuary for pedophilia research. I mean, this is crazy for them to say
things like this.
If you look at their -- we haven't minced words here in the United States starting with Secretary Pompeo and continuing on with Secretary of State
We have said and designated the areas of Xinjiang, Tibet, Mongolia, and China -- China's government as committing crimes against humanity and
genocide. China is using its own reach and advertising dollars.
Hell, I don't know if you saw, yesterday, Julia, but they were using the Times Square media assets in New York City to talk about the origin of the
I mean, you can't even make up the dystopian craziness that's going on between the U.S. and China. They are an evil regime. They are the largest,
existential threat to U.S. democracy and they keep exploiting our openness and the cracks in our society.
I mean, for them to say that they are -- that -- I literally can't believe that that Foreign Minister said that. But then again, it's China. You know,
they act as the victim, at all times when they're the perpetrator, so I think --
CHATTERLEY: Kyle, I have one minute. I have one more minute. What would you have President Biden do?
BASS: Just -- I mean, look at the facts and stick to protecting the United States' national security. Don't listen to China.
You know, there's a schism today, Julia. You have the scenario where our own State Department is saying the Chinese government commits genocide and
crimes against humanity and our Wall Street can't wait to invest another dollar in China, Julia.
I actually don't know how you square that circle. And it needs to be talked a about more because Wall Street can't wait to speculate more and invest in
China, while our own Department of State is telling the world that they are committing genocide and crimes against humanity.
BASS: I mean, I know we said never again after World War II, but maybe that should have had an asterisk next to it. Never again, unless we think
we can make some money off of it.
CHATTERLEY: Yes. Follow the money and you find the answers even if you don't like what you get, when you get there.
Kyle Bass, always great to have you on the show. Thank you, founder and Chief Investment Officer at Hayman Capital Management. We'll speak soon,
All right. The market opens next. Stay with us.
CHATTERLEY: Welcome back to FIRST MOVE and U.S. stock markets are open for business this Tuesday.
The tech selloff continues in early trading. The NASDAQ is now down around six percent from record highs it hit just last week on fears of the effect
of higher borrowing cost.
Shares, meanwhile of Home Depot falling after pulling guidance for the year. The home improvement retailer has been benefitted from lockdown
purchases, but its sales outlook is uncertain as those economic restrictions lift.
Meanwhile, AMC should be a big winner when normal life resumes or some sense of normal life. Shares rallying on word that New York City cinemas
will reopen with limited capacity next week.
Economic reopening will help the financial sector, as well. Shares of banking giant, HSBC lower by what you can see, 1.3 percent in London after
it posted a 34 percent profit drop compared with the same time last year. But in a hopeful sign for the future, it will pay an interim dividend.
The U.K.-based bank, also, announcing an accelerated push into Asia, including India. Anna Stewart joins us now.
And, Anna, I know you have been pouring over all the details here. An interim dividend, so a good sign for the future, but what I liked about it
was the refocusing on areas of growth like Asia and again, looking at some of the less profitable businesses and saying, perhaps it's time to really
look at spinning them off.
ANNA STEWART, CNN REPORTER: Exactly. And it's really a continuation of that strategy that you and I, Julia was speaking about only a year ago. It
feels like a lifetime ago, but the huge restructuring plan for HSBC unveiled this time last year was all about shedding 35,000 jobs and
pivoting to Asia.
Really, what we are seeing today in terms of the strategy is just a continuation of that. And that's hardly surprising, given the pandemic has
only brought interest rates even lower for even longer. Europe, the U.S. looking much less profitable even than they were perhaps a year ago.
So we have a $6 billion investment in Asia. Most of that money is going to be put into wealth management in Hong Kong and Singapore and India.
In terms of cost cutting, we saw a lot of that already last year. So, although they are doing a few things, they are looking to sell their retail
banking unit in France. They are exploring options for their U.S. division.
We didn't actually get a lot of detail on that, which has disappointed a few analysts. But I think the bigger takeaway for the shareholders is
certainly, hurrah, a return of the dividend. Only 15 cents a share, though, and it's just an interim payout, quarterly dividends not returning to next
year. Share buybacks are possible, but not in the near future --Julia.
CHATTERLEY: Yes, you've got to work out whether you can do something else with that cash before you start buying back your shares and I think
everybody is very sensitive to it.
Interesting part, I think, of what we heard in the press, Anna and it goes back to the 35,000 job cuts that we were talking about and it feels like 10
years ago, not one.
The amount of people that are going to be, perhaps, working from home going forward. And how much of a reduction that equates to, in terms of office
space. This is a stunning figure. Anna, talk us through this.
STEWART: This was a lovely little nugget in the press conference brought up by the COO. HSBC is planning to reduce their real estate footprint by 40
percent. We don't have a timeframe for that and we don't know what that really translates to in terms of how many employees will be working from
home or flexibly working in the future.
And of course, you would expect that 30,000 job cut announced last year to beat into it. But they have said as a result of the pandemic, as a result
of flexible working, and the fact that 85 percent of their staff are now capable of working from home, that is why they are going to look to reduce
the office footprint.
They are going to keep Canary Wharf as their headquarters, but they are going to let some of those leases go on other offices as they come up. And
I find this fascinating, Julia, because I think this is something that we are going to see in the earnings reports coming up in the next few months
As the pandemic looks to end, as restrictions are lifted, companies are going to have to think about this. How much real estate do you really need
in the future? And my goodness, Julia, what are these cities going to look like when we return?
So many high street stores in London have gone bust. The hospitality sector is on its knees, and perhaps, not everyone will be returning to those
cities when we are out the other end -- Julia.
CHATTERLEY: Full credit to you for spotting this. This, an eye-opening figure. And to your point, exactly, something we have to keep looking out
for from these big companies just to give us a sense of what cities of the future, at least in the short-term perhaps, post-COVID are going to look
like and that spells trouble.
Anna Stewart, thank you so much for that.
All right, coming up. Unlawful, unfair, and unconstitutional. Big Tech lobbyists firing on all cylinders against a digital attack in Maryland. The
Senator pushing it is on the other side of this break.
CHATTERLEY: Welcome back to FIRST MOVE. Earlier in the show, we heard how policymakers in Australia are tightening the screw on Big Tech revenues.
Well, 16,000 kilometers away in Maryland, the challenge of a different kind has begun. It's the first state in America to impose a tax on digital
advertising and lobbying groups, backed by Amazon, Facebook, and Google, are, of course, trying to stop it.
Maryland wants a slice of global advertising revenues to pay for education. For Facebook, by the way that was $84 billion last year and Google brought
in a whopping $147 billion.
Bill Ferguson is the President of the Maryland Senate and the main driver of the bill.
Senator Ferguson, fantastic to have you on the show. Can I just ask what your message is to Big Tech here? From my understanding and for my
audience, the message is if you are looking to be a social media platform that hosts an ad that someone in Maryland sees on any kind of device, then,
you have to pay for that right?
BILL FERGUSON, MARYLAND STATE SENATE PRESIDENT: So, thank you, Julia. It's a pleasure to be here with you. And thank you for your interest.
I would add an important caveat that you would have to be a business that has over $100 million in annual revenue, from digital advertisements. And
you would have to have received a million dollars in revenue from advertising in the State of Maryland.
So, we aren't talking about anybody that just wants to advertise in the State of Maryland. It is large platforms that consistently and regularly
avail themselves of the privileges of the State of Maryland and benefit from the investments that we've made over time.
CHATTERLEY: So you are trying to capture the externalities here and your caveat is a very important one. This is not a spray tax. This is very
targeted to those that benefit.
FERGUSON: Precisely. And I think, you know, as the economy has changed dramatically over the last 20 years. You know, if you think about it, a
number of these companies that would qualify under these revenue limits are companies that almost didn't even exist 20 years ago. So, our economy has
changed rapidly. In the meantime, state taxation models have not.
And so, what we are trying to do is modernize our Tax Code, so that we are all able to ensure that companies that benefit from past investments that
States have made in public health, in public safety, and most importantly, in public education, when they avail themselves of those privileges, they
have to pay their fair share.
And so, we think that this is a matter of basic tax fairness and efficiency, and instead of the burden being on Marylanders, it is spread
across those who are benefitting from our investments.
CHATTERLEY: How do you calculate it though, Senator Ferguson. I mean, I just mentioned $84 billion of advertising revenue for Facebook. Google,
$147 billion. How do you do and what calculation are you applying to say, this chunk of that money is ours?
FERGUSON: Sure, so look, this is a hard question and admittedly, this is going to be the most complicated aspect of this because it is so -- this
industry sector is very complicated.
Ultimately, we are relying on self-reporting, which is what we generally do for taxes. We assume that companies are going to be honest with the State
in their taxation. And then, of course, we audit to make sure.
FERGUSON: And so, there is a level of self-reporting. These are sophisticated companies. They make over $100 million in digital advertising
revenue per year. I'm sure they have teams of accountants that can -- that certainly will be able to provide honest assessments.
What we are really getting at it is, digital advertisements that are served up in the State of Maryland on any device. So, be it through geo-locating,
through IP addresses. There are a number of different ways.
And admittedly, this is not a simple calculation. This is something that would have to be developed over time just as we have done with the Tax Code
for many other areas.
When we think about corporate income, it's very complicated. And over time, we have had to make adjustments. And this is modernizing our Tax Code to
ensure that everyone is paying their fair sure.
CHATTERLEY: I mean, the various trade bodies and I mentioned a couple of the companies here are saying look, you are violating the Federal Internet
Tax Freedom Act which prohibits discrimination against electronic commerce, as well as other Federal laws, of course.
I guess, you could look at this and say, how does this fit with people who advertise on billboards or in newspapers, for example? And I guess, you
have already answered the question.
Digitization has moved on. The industry, the market, the way people advertise has moved on and the laws simply haven't. Is that your response?
FERGUSON: I would say, that is the premise. I'd also say that the Federal statute that a number of these companies are relying upon was passed in
1996. In 1996, a number of these platforms did not exist.
So I think we are in a very different world now in 2021. And so, what we have also seen over the last 10 years here in the States is a case called
South Dakota versus Wayfair, in which the same -- a number of the same companies made the very same arguments and the State of South Dakota stood
up and said, out-of-state sellers, just because you are out of state still owe -- you availed yourself to the privileges of South Dakota and so, you
must pay the sales tax if you are shipping goods into the State of South Dakota.
For 10 years, that same battle was fought. Finally, the Supreme Court stepped in. Said, nope, if you avail yourselves to the privileges of a
state who has made investments in broadband, in public education, then you owe a duty to that state.
This is the same concept, and it's the same, tired arguments being brought this time around digital advertising services.
Fundamentally, I think a number of states across this country and countries across the globe are going to be having this very same conversation because
it just simply does not work that companies can grow exponentially by being free riders on state's public investments and then contribute nothing back
for the ongoing success of those communities.
You're focused on building a world class -- sorry, please.
CHATTERLEY: I think, everybody -- yes, to your point, everybody is grappling with how best to do this and we have seen the example with -- and
it's a different example but it's very much tied in what happened in Australia with Facebook, and at least temporarily, Facebook turned off news
And obviously, the Australian government were like, you know, you're powerful, but you're not that powerful and we'll fight and finally, they
have settled. What do your voters think? What do your small businesses that advertise on these platforms say, Senator?
And are they prepared for these big internet giants to go, you know what, we won't operate in your state. We'll switch off Facebook. You can't search
on Google, anymore. Are you prepared for that?
FERGUSON: You know, look, if I were the leader of some of these companies, I would look in the mirror in the morning and say, is this really the fight
that I want to have? Is this really the image that I want to broadcast?
Or should I be thinking critically about how we can ensure states are investing in public education to ensure that we have a discerning populous
that's well-educated and can participate in a global economy?
You know, I think that this is a really existential question for a number of the leaders of these organizations. This is not a punishment. Taxation
is not a punishment. We have to invest in our public education system to make sure that the kids and families in Maryland have access to a world
If that's something they want to fight and say they don't believe that, despite all of the benefits that they have inured over these many years, in
order to grow, that they owe no duty to help ensure the future. You know, that's not a very strong business case to make, I think, in the long run.
And so, we'll see how this plays out. I think, what happened in Australia, you know, we're seeing -- it sort of seems like a David and Goliath story.
You know, we'll be over here, finding the right little pebble.
Because at the end of the day, this is -- this is a conversation we have to have.
CHATTERLEY: I was going to say who is David and who is Goliath, quite frankly when we are talking about nation states and Big Tech companies, but
I take your point and I think the line is taxation is not a punishment, it is a duty and a service to those that utilize on how you operate.
FERGUSON: And it is a privilege.
CHATTERLEY: Yes. It is a privilege. Sir, great to have you on. We will get you back when we see further developments. Senator Bill Ferguson there, of
FERGUSON: Thank you so much. Stay safe.
CHATTERLEY: Thank you. You, too.
You're watching FIRST MOVE. More to come.
CHATTERLEY: Welcome back to FIRST MOVE. Wind power now generating more than half the renewable energy produced in South Africa. Eleni Giokos
explores the country's commitment to expanding the use of wind power in today's "Connecting Africa."
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT (voice over): The World Bank invested more than $11.5 billion into renewable energy projects in
Africa between 2014 and 2018 as electrification is seen as key in driving economic growth on the continent.
NTOMBIFUTHI NTULI, CEO, SOUTH AFRICAN WIND ENERGY ASSOCIATION: We have got 34 wind farm projects spread across the country, mostly, in the Eastern
Cape and the Northern Cape. And then, also, in the Western Cape.
So, there is a lot of untapped potential not just in South Africa, but in the whole continent.
FLORIAN KROEBER, MANAGING DIRECTOR, 3ENERGY: The advantages of renewables are obviously, broad. But what we value most, the fact that you can install
renewables over a continent, in multiple locations, rather than us burning coal, where you want to have your power plant close to the mine.
So, we can empower communities, not just in one concentrated area, but we can go broad over a continent.
GIOKOS (voice over): In South Africa, the program that allows independent power producers to submit competitive bids to design, develop, and operate
large or small scale renewable energy power plants has been an enormous success.
NTULI: We are headed for a huge growth phase in the industry. There is going to be lots of opportunities for players across the value chain,
whether development, whether construction, operation and maintenance to actually get involved in the sector and contribute and benefit.
GIOKOS (voice over): Since its launch in 2011, the public-private partnership program has attracted over $13 billion in private-sector
investments and has created around 38,000 jobs predominantly in local communities.
GIOKOS (on camera): So, how many houses can you light up from this farm?
DANIE DU PLESSIS, CHIEF EXECUTIVE OFFICER, CENNERGI PTY LTD: This is probably about 100,000 houses. So, we generate around 320 gigawatt hours of
electricity per year.
GIOKOS: Do you think we are going to see a lot more of these projects in the next few years? And how much do you think it can actually contribute to
the national grid?
PLESSIS: Governments brought out the integrated resource plan 2019 which give us an idea of the renewable -- well, the energy mix up to 2030.
We are looking at around 500 average-sized turbines that needs to be commissioned every year to reach that target. We really are in for a
CHATTERLEY: All right. Now, as we wrap up the show, one more check of what we are seeing in terms of price action.
The selloff in tech stocks deepening here. You can see, the NASDAQ now down just over three percent. Tesla, one of the big losers, dragging us lower
Now, off -- around 10 percent. I wonder whether sentiment there tied to what we are seeing in Bitcoin, as well given, $1.5 billion is on the
All of this as we await Fed Chair Jay Powell's congressional testimony on the state of the U.S. economy beginning in a few minutes in Washington.
Watch the comments on stimulus and watch the comments on inflation.
And finally, from SolarWinds to Martian winds. Turn up your TV because this is what Mars sounds like.
[VIDEO CLIP PLAYS]
CHATTERLEY: Yes, that was the sound of Mars. It actually sounds like static. NASA's Perseverance rover capturing winds on the Red Planet in the
first of a kind recording.
The rover beamed back high-quality video as it descended and landed last week. These images show the rover being released as it approaches its
Wow. These images are incredible.
That's it for the show. If you missed any of our interviews today, they will be on Twitter and Instagram later. Search for @jchatterleyCNN.
And for now, stay safe. "Connect the World" with Becky Anderson is next and I will see you tomorrow.