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First Move with Julia Chatterley
President Biden Plans Over $2 Trillion of Infrastructure Spending; France Heads into a Third Lockdown as COVID Cases Soar; World's Largest Chipmaker Investing $100 Billion to Ensure Supplies. Aired 9-10a ET
Aired April 01, 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 is your need to know.
Builder Biden. The President plans over $2 trillion of infrastructure spending.
Macron's move. France heads into a third lockdown as COVID cases soar.
And semiconductor splurge. The world's largest chipmaker investing $100 billion to ensure supplies.
It's Thursday. Let's make a move.
Welcome once again to FIRST MOVE. Great to be back with you. The first day of a new month and a new quarter. Now it maybe April 1st, but this is no
Q1 was filled with speculative stock surges, digital NFT splurges and SPAC merger urgers. Enough already.
It was also a profitable one for investors driven by massive stimulus support and reopening hopes resulting in record highs for stocks, rising
bond yields, and fears of both inflation and froth. Well, we will be speaking to St. Louis Fed President Jim Bullard later in the show about
Federal Reserve policy. Can Chair Jerome Powell remain patient as the U.S. enters a historic new period of economic activism and what might force them
to act sooner rather than later? We will discuss.
For now, Wall Street is green premarket. Investors digest these stunning $2.3 trillion worth of reflation revelations from President Biden.
Henceforth, as we have described known as Biden, the Builder. There is massive spending on infrastructure, green energy, and R&D, along with
support programs for the poorest in the nation. The question remains of course, what can actually get done, and how will it ultimately be financed.
We will discuss.
Spending support in the United States, of course, supports the world, too, and that's apparent already in the record pace of E.U. manufacturing growth
last month fueled by a surge in orders from China and the United States.
Asia stocks were firmer in today's session, too. Japan's Tankan Survey shows business leaders are optimistic about the future for the first time
in over a year. There's clearly a multispeed recovery going on, but for the United States, the question remains, can the nation build back better?
Let's get to the drivers. Christine Romans joins me now. Christine, great to have you with us.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Hi. Welcome back.
CHATTERLEY: Thank you. I'm back. Big Government is back, of course, seemingly according to President Biden, too. I mean, let's be clear. This
is a massive expansion of what we're defining as infrastructure, too. $400 billion in senior care. I'm not judging. I'm observing here.
Now, the debate I think is ranging whether this is targeted enough, what is productive in terms of economic growth, and of course, how we pay for it --
ROMANS: And this is a starting point, too. We have been hearing from members of the White House for several days. They're open to negotiations
with some Democrats by the way, and Republicans on where we should go from here, and how we should pay for it.
The Treasury Secretary Janet Yellen just in the past hour or so issuing this statement explaining that this is the biggest chance in 80 years -- 80
years of work can be done to fix America's infrastructure and move forward in a way that we haven't done before.
The President yesterday saying this is not tinkering around the edges. Make no mistake. This is big and bold by design. In fact, Julia, I think if you
really think about it, since the days of Ronald Reagan in the United States, that's when you really had the dawn of this idea that don't expect
government to work for you, government works against you.
This is, I think, for the first time a very clear signal that this administration is trying to say, no. Public investment is a good thing and
can work for you. There are two parts of American infrastructure. There's the step we drive on, there's the technology backbone of America, but there
is also the human infrastructure, and both of those things go together.
So really, a new way of thinking about government and public investment here. The pay-for part of it, I think is fascinating. You know, companies
and the Big Business lobbies and trade groups are grumbling about raising taxes, the White House has a chance here to really be clear.
This is about taking back some of the Trump era tax cuts. Not all of them, and leaving corporate tax rates still below where they were in 2016. I
think that's the framing you're going to see in the days ahead.
CHATTERLEY: Yes, and we'll talk about that framing no doubt, but I like your point about human capital and human infrastructure because we have to
quantify some of the good will and the fluffy stuff here too, and recognize that that can be added to an economy as well, it is essential for an
Christine, great to have you with us. Thank you.
ROMANS: Thank you.
CHATTERLEY: Christine Romans there.
To Europe now, new cases of COVID-19 are rising so fast that France is going into its third national lockdown on Saturday. The French President
says new COVID variants have created an epidemic within an epidemic.
Melissa Bell joins us now. Melissa, it was tough reading this morning, tough for people in France, like yourself. Talk us through the details of
this latest lockdown.
MELISSA BELL, CNN PARIS CORRESPONDENT: It was also, I think, Julia, a tough announcement for Emmanuel Macron to make. He has been resisting this
for weeks and weeks.
In the end, buckling under the pressure of those figures. As you say, those rises in new cases, that faster spreading new variant, and in particular,
the one first identified in the United Kingdom, it now represents nearly 90 percent of new cases in Germany. It's by far the vast majority of cases
here in France and Italy and elsewhere.
And of course, it spreads faster, and that of course, forced Emmanuel Macron to make that speech that he had been resisting so much so far. So
for the next month, France under another partial lockdown, but there are fears, of course, about what that will mean for ICUs going forward.
Because, of course, as the Health Minister reminded us this morning, the epidemic, they could peak in the next eight to 10 days, the figures here in
And there is of course, a two-week gap with entries into ICUs already under such pressure in so many parts of France -- Julia.
CHATTERLEY: Yes. And what makes this so hard to bear, of course, is the slow pace of vaccine rollout, and the World Health Organization actually
referred to this today in quite astonishing manner. It called it unacceptably slow.
BELL: Unacceptably slow and reminding also, Julia, that, essentially it is any delay in the vaccine process simply prolongs the epidemic. And then of
course, there's the associated risks of variants then spread -- begin to spread more quickly, which is exactly what has happened.
Still questions of supply, Emmanuel Macron vowing last night in his speech to get the vaccination program up and running, but the ambitious targets
that Europeans have set themselves do seem a long way off with supply issues in many parts of the European Union still; the Johnson & Johnson
vaccine, those delivery should begin at some point in April and should help.
But they've got a lot more people to vaccinate a lot more quickly if they are going to get ahead of this particular curve -- Julia.
CHATTERLEY: Yes. Melissa Bell, thank you so much for that update there. All right now to the fight for democracy in Hong Kong, a court has
convicted nine prominent activists, including media tycoon, Jimmy Lai over his role in the 2019 protests. Will Ripley has the details.
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: It is surreal and almost chilling to be standing here outside the West Kowloon Court Building where
it is dead quiet after court proceedings have wrapped up and compare that with the protests that led media mogul, Jimmy Lai, and eight others to this
A protest in August of 2019, hundreds of thousands of people packing into Victoria Park for a legal demonstration that became an unauthorized
assembly when those people decided to leave the park and march towards Central.
Hong Kong Police decided that Jimmy Lai and the other defendants were responsible for that march by leading the protesters, and they had so much
evidence -- video, text messages -- anything that you can think of that they could find was brought out here in court over a 20-day trial.
And now, all nine of these men, guilty of unauthorized assembly with a maximum of five years in prison.
We saw Martin Lee considered the Father of Hong Kong Democracy silent as he walked past the row of cameras. Lee Cheuk-yan did stand in front of the
cameras, and he had a message.
LEE CHEUK-YAN, PRO-DEMOCRACY ACTIVIST: And we are sentenced to jail in the future for this case, or many other cases that are following, it is our
badge of honor to be in jail for walking together with the people of Hong Kong.
RIPLEY: Lee Cheuk-yan also thanked his supporters who came here to court and he urged them to keep up the fight for democracy here in Hong Kong. A
fight that is becoming increasingly dangerous for anyone who dares to speak about freedom in a place firmly under Beijing's control.
Will Ripley, CNN, Hong Kong.
CHATTERLEY: Okay, let me bring you up to speed with some of the other stories making headlines around the world.
George Floyd's family is quote, "suffering" as they watch video of his death being played at the trial of Derek Chauvin. A lawyer for the family
told CNN it is hard for them to watch the newly released footage which comes from body cams worn by Chauvin and other officers. His trial for
murder resumes in the next hour.
On Wednesday, emotions ran high in the courtroom as jurors saw that new body cam footage and heard firsthand testimony from those who witnessed
George Floyd's death.
Here's the latest from CNN's Josh Campbell.
JOSH CAMPBELL, CNN CORRESPONDENT (voice over): More emotional testimony in the Derek Chauvin trial Wednesday from eyewitnesses who are just feet away
from the final moments of George Floyd's life, like 61 year old Charles McMillian, who took the stand and broke down in tears as the prosecution
played this body cam video.
VOICE OF GEORGE FLOYD, VICTIM: Mama. Mama.
CHARLES MCMILLIAN, WITNESS: I feel helpless. I don't have a mama either. I understand him.
CAMPBELL (voice over): McMillian who frequently walks in that Minneapolis neighborhood happened upon the scene and testified he saw officers
arresting Floyd. He is heard urging Floyd to cooperate with police as they tried to get him in a squad car.
MCMILLIAN: You can't win.
FLOYD: I am not trying to win.
QUESTION: So were you trying to just help him to --
MCMILLIAN: Make the situation easy.
CAMPBELL (voice over): On Wednesday, the jury was presented body cam footage from all four officers, much of it had never before been made
public. The prosecution presented nearly every moment of interaction between the four officers and Floyd from several angles, including the
initial moment when two officers approached Floyd while he was inside his car.
Officer Lane draws a gun on Floyd.
THOMAS LANE, FORMER MINNEAPOLIS POLICE OFFICER: Put your hands up right now.
CAMPBELL (voice over): Officers then removed him from his vehicle.
UNIDENTIFIED MALE: Step out and face away.
FLOYD: Please, don't shoot me, Mr. Officer. Please. Don't shoot me, man.
CAMPBELL (voice over): Floyd is cuffed and walk to the police car.
FLOYD: I'm claustrophobic.
CAMPBELL (voice over): Chauvin's body cam footage shows his first interaction with Floyd before his body camera falls to the ground. A
struggle ensues between Floyd and the officers.
FLOYD: Can I sit in the front?
UNIDENTIFIED MALE: No, you're not going to sit in the front.
FLOYD: Please, I'm claustrophobic, so I have to sit --
UNIDENTIFIED MALE: Get in the car.
CAMPBELL (voice over): Chauvin, the man wearing black gloves places his hands around Floyd's neck as another officer tries to restrain him. You
hear Chauvin's voice for the first time.
DEREK CHAUVIN, FORMER MINNEAPOLIS POLICE OFFICER: Got to control this guy because he is a sizable guy.
UNIDENTIFIED MALE: Yes, and I saw him get in the car --
CHAUVIN: And it looks like he is probably on something.
CAMPBELL (voice over): It takes several minutes before you hear an officer raise concerns.
LANE: Should we roll him on his side?
UNIDENTIFIED MALE: No (inaudible).
LANE: I just worry about the excited delirium or whatever.
UNIDENTIFIED MALE: That's why we have an ambulance coming.
CAMPBELL (voice over): The jury also saw surveillance video from inside the Cup Foods showing George Floyd shortly before he was detained. Floyd
was suspected of paying for cigarettes with a counterfeit $20.00 bill.
CHRISTOPHER MARTIN, CONVENIENCE STORE CLERK: When I saw the bill, I noticed that it had a blue pigment to it, kind of how $100.00 bill have and
I found that odd, so I assumed that it was fake.
CAMPBELL (voice over): The cashier, 19-year-old Christopher Martin told his manager his suspicions and they tried unsuccessfully to bring Floyd
back into the store.
When that failed, one of his coworkers called the police. Martin testified he feels guilty about what happened that day. A common theme felt by many
of the eyewitnesses this week.
QUESTION: Why guilt?
MARTIN: If I would have just not taken the bill, this could have been avoided.
CHATTERLEY: The lawyer for Myanmar's deposed leader says Aung San Suu Kyi faces a fifth charge of violating the country's Official Secrets Act. Suu
Kyi appeared via a video link in court earlier today two months after she was ousted in a military coup.
Her lawyers said she appeared to be in good physical condition, and she demanded the right to meet with them privately.
The Chairman of the Suez Canal says losses from the blockage of the Canal by a ship, Ever Given could amount to a billion dollars. He says
authorities are working around the clock to get shipping through the waterway after it was blocked for six days, and all ships that were delayed
should get through by Friday or Saturday.
All right, still to come here on FIRST MOVE, chip challenge, Taiwanese Apple supplier, TSMC investing $100 billion to meet a global chip shortage.
And the Federal Reserve's James Bullard sees the U.S. making a strong recovery from COVID-19. He joins us next.
CHATTERLEY: Welcome back to FIRST MOVE where U.S. stocks are set for a positive start to the second quarter of the year. Tech building on
yesterday's one and a half percent advance as bond yields steady. There's also plenty of talk about the effect that President Biden's $2.3 trillion
spending proposal would have on an already strengthening U.S. economy, assuming it gets done.
A robust U.S. jobs report also expected tomorrow with some predicting a gain of as many as one million jobs for the month of March. That said, too
many Americans still need assistance, 719,000 filing for first time claims last week, some 18 million Americans still collecting some form of jobless
The Federal Reserve's, James Bullard, among those predicting a strong rebound for the U.S. economy. He sees unemployment falling to four and a
half percent. GDP growing by six and a half percent this year, and expects inflation to pick up two and a half percent.
Joining us now is James Bullard, President and CEO of the Federal Reserve Bank of St. Louis. President Bullard, Jim, great to have you on the show
once again, optimistic on the U.S. recovery. Just talk us through where we are today and what you see going forward.
JAMES BULLARD, PRESIDENT AND CEO, FEDERAL RESERVE BANK OF ST. LOUIS: Well, I think the data on the pandemic in the U.S. suggests that the pandemic is
coming to a close. There continue to be risks out there, but it's certainly very encouraging.
We've got a vaccine rollout that has gained steam, and if you look at the data that looks very good. And that suggests that the U.S. economy is
poised to boom in the year ahead here.
As you said, I've got six and a half percent growth for the U.S. economy that's very, very strong growth for this economy, possibly faster than
China this year. And I think labor markets will improve dramatically from where they are right now.
But we have to get the pandemic under better control than what we have today. But we're moving in the right direction. So I am pretty optimistic
that we can get this boom to occur. We can bring this episode to a close for the U.S.
CHATTERLEY: When we're talking about and using words like boom, it makes me think we're out of the crisis. Are we out of the crisis, Jim, at this
BULLARD: No, I think we're still in the crisis because, you know, we still have cases. If you look at -- there is a lot of human tragedy here. You've
got the fatalities per day per million still somewhat elevated, but declining and predicted to continue to decline as we go through April and
And so that's the sense in which we're going to be able to bring this under control. We've got more and more people getting vaccinated every day and
that looks set to continue.
Also we're vaccinating, you know, on average, the more vulnerable parts of the population that should help bring fatalities down dramatically and
increase confidence in the economy and allow us to get the rest of production up and running and allow people to go back to work.
So there are a lot of good things happening. There are risks. It is a crisis. You're never sure what might lie just around the corner, and we're
certainly aware of that, we're tracking the data every day.
CHATTERLEY: Jim, you refer to the data, and I do think this is important, because certainly for bond market investors, they're looking at the data,
they're predicting ahead and jumping ahead, as they always do, and sort of assuming that the Fed must be talking about tighter policy in some form
Jay Powell, obviously made his comments about the bond market, you're keeping an eye on it. You're not worried by the level of yields. But is
there any level upon which bond yields even in an orderly manner could move to that the Fed would go, we are uncomfortable with this?
BULLARD: Yes, I would say the run up in the 100-year yield, since the -- you know, in recent months has been in reaction to better forecast for the
U.S. economy and higher inflation expectations, that the TIPS market is suggesting that inflation expectations have moved up quite a bit from where
they were earlier.
And so it makes sense that you'd have somewhat higher, longer term yields with this kind of outlook. And, so I think that part is a good sign. It is
healthy -- a healthy part of the economy.
You know, could this run away from us and actually damage the economy? I don't think we're close to that. Right now, the levels are at just now at
the pre-pandemic level, and those were kind of low compared to where they've been historically.
So I think, you know, I think we like the market signal from the 10-year on the effectiveness of our policies and the reading on inflation expectations
that we can get from it.
CHATTERLEY: Is the message to the market from the Federal Reserve, though, to your point, we won't let this get away from us?
BULLARD: Well, we're certainly committed to our inflation target of two percent, but we've missed our inflation target of two percent on the low
side ever since we said we had an inflation target.
So the first thing that happened, you know, we started in 2012, and we're right at two percent, and then inflation has basically been running below
that, certainly, on average since that time.
So what we want to do here, I think, is as the boom occurs and the pandemic comes to a close, hopefully, we'll get more inflation than we're used to
and we'll allow some of that to flow through to inflation expectations, re- center inflation expectations at the two percent target, and this will improve credibility that we really mean it when we say we're going to hit
two percent inflation, and we really are going to hit that on average over time.
So we'll probably let inflation run above target for some time, and then only after all that happens we'll look at policy normalization.
CHATTERLEY: Yes, so you wrote a great blog on this explaining some of the drivers of inflation and what they're indicating right now. And I think the
conclusion to your point was, look, we actually would, on average, over a period of time, actually, we would like to hit our target.
So you're comfortable if inflation goes above two percent and stays there for a period of time, in fact, you'd welcome that.
BULLARD: Yes, the new framework does suggest that we will be looking for inflation to run above target for a time to, you know, in some sense make
up for the past misses. We're vague about exactly how much that would be, but the spirit of it is definitely that we want inflation to run above
And even when it does that, we will allow that to occur for some time, and then, hopefully, this will re-center inflation expectations and get us on a
better footing with respect to our inflation target than we've been on in the last decade.
CHATTERLEY: Jim, there was also a post from the St. Louis Fed and you were looking at the mental and physical impact of evictions, and it ties to what
you were saying earlier about the humanitarian crisis that the country has been through and remains in.
How is the Federal Reserve perhaps in a different way than we've ever looked at policy, monetary policy in the past pricing that in, when you're
looking at changes and adjustments to policy? Because the emotional, the physical impact of what we've been through with this pandemic and is still
going through also has to play in how you calibrate policy going forward. The question is, how? Does it just make you slow to adjust?
BULLARD: Yes, I think that blog on evictions by faith weekly you know, was fact based and it talked about the tragedy of any eviction. I think you're
talking about, you know, a family can't make the payments. Everybody is upset. The person that owns the building is upset. They've got a nonpaying
So usually, associated with some kind of, you know, problem inside the family, unemployment or more serious problems. So we'd certainly like to
see those kinds of things better handled than they are in the society today.
We don't have any direct mandate on that. We're more about the macro economy and the big picture, but to the extent we can get a smoothly
working economy, we will hopefully have less of this type of problem than we would otherwise have.
CHATTERLEY: Yes, it's tough for the Federal Reserve because as you point out, it's not part of your mandate, but it's all part of the sort of bigger
economic picture, infrastructure spending.
Jim, what do you think of the $2.3 trillion? What's that going to mean for the economy? Can you even guesstimate how much gets done and how it gets
paid for and factor into predictions at this stage? Or you just stay well away until it happens? Sigh.
BULLARD: Yes, I think -- I haven't seen the -- I haven't seen the details of the proposal, so you know, we're wading through all of that, and we'll
get -- we'll get briefed on it. There'll be plenty of time because this kind of thing takes a long time to move through the Congress.
I will say in the big picture that the notion of infrastructure and really a capital budget for the U.S., the U.S. doesn't have a capital budget as
far as I know. You know, this is something that should be done annually. You should be updating and investing in your public capital all the time.
And to some extent, the Federal government does this.
A lot of infrastructure is also local. So that's just a factor to keep in mind. So if you if you do too much at the Federal level, then you just get
less spending at the local level, and it all kind of washes out.
So it's unclear in our Federal system like how much should be at the State level and the local level, and how much should be paid for at the national
These things are harder to get through Congress than you'd imagine. You would think you could put something in every district and everyone would
sign on. But it doesn't seem to work out that way. It's more contentious than that.
And so we'll see what happens this time around and whether -- but from a macro economist's point of view, you know, this is spending that goes out
over 10 years, and so this isn't really the same as the previous fiscal interventions, which were very much geared toward current spending and what
I would call the keep-people-whole policy through the pandemic; that was quite successful, I would say.
This is a different kettle of fish where you're talking about the long run productive capacity of the economy and of the nation. How much public
capital should we have? Do we have the right amount? Do we have it in the right places? Those are great questions and great things to debate.
CHATTERLEY: Yes, and should be debated. Great to have you with us, Jim, as always. Jim Bullard there, the President and CEO of the Federal Reserve
Bank of St. Louis. Great to have you with us.
BULLARD: Thank you.
CHATTERLEY: All right, after the break, who said blockchain was boring? Ripples' first quarter have lawsuits, couplings and de-couplings. The CEO
of follows the opening bell. Stay with us.
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks are up and running this Thursday, the first day of the month and the last trading day of the
shortened week. Of course, we're seeing gains across the board led by tech, the S&P 500 hitting the 4,000 point milestone. Look, we're just a couple of
points below that as we speak.
Stocks weathered the number of challenges in the first quarter including the blow up last week of investment fund, Archegos Capital. Treasury
Secretary Janet Yellen now pledging to reestablish U.S. oversight of hedge funds saying leveraged up funds are a threat to the financial system.
Higher oil prices could one day pressure the global recovery, too. Oil on the rise as we await the outcome of today's OPEC Plus meeting. No
significant change in production is expected. The U.S. today stressing to Saudi Arabia the importance of quote "affordable energy." Oil up some 20
Okay, it's been a busy quarter for the blockchain based payment network, Ripple. It is fighting a lawsuit with the United States regulators over
whether the digital token XRP used to facilitate payments is a security rather than an asset. A security of course faces greater regulation.
It's parted ways with remittance giant, MoneyGram, but left the door open to a future relationship and it is signing deals in Asia with the stake in
a cross border payment hub. Brad Garlinghouse is the CEO of Ripple and joins us now.
Wow, Brad, you've been busy. Let's talk about the lawsuit first. You've been very vocal about fighting this. Why you see it as an attack on the
industry rather than just on Ripple. But let's talk contingency plans. What happens if this lawsuit is lost by Ripple and yourselves? What will it mean
for the network?
BRAD GARLINGHOUSE, CEO, RIPPLE: Well, good morning, Julia, and Happy April Fool's Day. But as you've already pointed out in your show this morning,
topics like these are definitely not a joke.
You know, we take this suit very seriously. The good news has been that people like Mary Jo White, the former chair of the S.E.C. has come out and
said that she views us as dead wrong. I guess, the S.E.C. is wrong on the facts. They're wrong on the law. I think we will prevail. But as you say,
you know, there is a chance, of course that the court system does not go that direction.
The good news for Ripple is we've continued to sign customers. We've signed over 20 new financial institutions around the world as customers since the
S.E.C. filed their lawsuit, and I think we'll continue to see the network grow very rapidly in non U.S. customers.
The challenges is this drives blockchain innovation and crypto activity outside the U.S., which I don't think is in the interest of the United
States in any way.
CHATTERLEY: Can you operate going forward though without XRP? I mean, you and I have discussed in the past using alternatives being operable with
alternatives. Is that the solution in the United States if necessary?
GARLINGHOUSE: That certainly could be part of the solution. You know, I think there is a certain strangeness that the S.E.C. has kind of picked
winners here. It said that Bitcoin is not a security. It said that Ether is not a security.
But really everything else I think is kind of at risk, particularly given what they have done filing the lawsuit against Ripple. But yes, we could do
that. We've always thought about our product as how do we solve a customer's problem first and foremost, and I think that has served our
growth and it's the reason why we have seen so much activity now, billions and billions of dollars of transactions across RippleNet, our network for
CHATTERLEY: You know, a lot of the XRP holders that I've spoken to are upset about the personal aspect of this claim, too, and that the S.E.C.
says you sold millions of dollars' worth of XRP while making ambitious statements about Ripples progress.
Brad, how do you respond to those allegations? Could you have been more transparent? It's okay to diversify holdings into other things, you just
need to be more transparent.
GARLINGHOUSE: You know, I'm really looking forward to the facts coming out in the court case. You know, this is something I haven't commented on
publicly because the wheels of justice kind of moves slowly. I think it's important that we get the facts out.
We've heard one side of the story from the S.E.C. In fact, I think as the facts come out, what we'll find is that we have been -- Ripple and I have
been as more transparent than anyone else in the crypto industry about our activity, about what we're doing.
And so again, I find a certain irony that the S.E.C. would bring a lawsuit against us, particularly personally, because what they're saying is that
not just that we should have known and we should -- we've acted in bad faith. I mean, the S.E.C. themselves haven't really said, well, they know
for sure that XRP is a security. In their own court filings, they've said that the court will determine that, which of course brings a contradiction
that if the court is going to turn that, how could I personally have known that the S.E.C. would view XRP as a security.
CHATTERLEY: So you're saying I have nothing to hide. Ripple has nothing to hide, effectively, bring it on?
GARLINGHOUSE: Absolutely, Julia, I mean, as you know, you and I have spoken a number of times, given your expertise in this segment, and Ripple
has, for years been incredibly transparent with our quarterly markets report, about what we're doing with our XRP, and we've really asked the
industry as a whole.
I mean, if the crypto industry as a whole wants to be mature, I think that level of transparency is needed.
CHATTERLEY: You know, the painful part of this is the lack of clarity, the lack of regulatory clarity that you have now in the United States even as
you're doing things in other countries.
Do you think in this period, there's a risk that the progress that's being made in places like decentralized finance, or a global stable coin, perhaps
as a window of opportunity to overtake what you're trying to do with your payment network -- is that a risk, to your point about suppressing certain
parts of the market and innovation?
GARLINGHOUSE: Yes, you're absolutely right that the lack of clarity and lack of certainty affects the whole industry. And I think that what Ripple
is experiencing and the SEC filed another lawsuit earlier this week, and so I think, here in the United States, the industry has the risk of falling
behind. But I don't think -- you know, what Ripple is solving is cross border payments problem. And we are working with some of, and certainly
speaking to many Central Banks around the world about some of the stable coin initiatives for Central Bank issued digital currencies.
We actually think that's actually helpful to what Ripple is doing in solving a cross border payments problem.
Ultimately, we saw the Obama administration be clear that XRP is viewed as a currency, and we think we'll actually end up there and hopefully, as a
new administration comes into the S.E.C.
CHATTERLEY: Let's talk more broadly about the future of regulation, Brad, and a lot of media discussion is focusing in on Bitcoin. We can't hide from
the fact that this is the one that people are focusing on at this moment in time in particular.
Someone in the industry said to me this week, Bitcoin is too big to fail. The regulators can come in and mount an attack, but they'll fail. But where
they perhaps could create waves is that they can take regulated businesses and say, you can't mess with this anymore. You have to separate yourselves.
How do you see this playing out? Do you think mounting an attack from regulators is likely? And if so, why would it come?
GARLINGHOUSE: You know, I think Bitcoin is certainly here to stay. I mean, you're now talking about the crypto industry, which you and I probably
first started talking about the crypto industry together when it was maybe $100 billion to $200 billion market. Today, it is 10x that, probably $2
And whether we characterize it as too big to fail or not, I think at the end of the day, we should focus on, are we solving real problems with these
technologies? If it's just speculation and just speculative hype, that will not sustain?
But you know, Bitcoin is solving a real problem, there's no question about that, and that's a store of value. Now, Bitcoin has not served what some
thought might be the case in solving a payments problem. When you use proof of work or mining to validate transactions, that consumes a massive amount
Bill Gates was recently quoted as saying that Bitcoin transactions are the least efficient payment transaction that man has ever created. It doesn't
mean that Bitcoin goes away. In fact, I believe Bitcoin will be very successful.
It is the reason why we, at Ripple are using XRP. It's about a hundred thousand times more efficient on a per transaction basis in terms of energy
cost, speed of transaction. It is much more efficient for something like a payment.
CHATTERLEY: It's interesting because people are just starting to talk about this and recognize the sustainability questions, particularly as
companies like Tesla for example, PayPal companies that have huge or relative degrees of commitment to sustainability are investing in something
that's considered you know, environmentally incredibly costly.
My interest in this sort of portends to the role that these individual currencies play, whether it's Bitcoin or Ether or XRP in the sort of future
developments and changes that we see in the in the financial sector. Do these issues like the environmental costs and the relative costs hold these
digital assets back?
GARLINGHOUSE: The way I think about this is the industry needs to come together, and I think that if we want to see these technologies have the
impact we think they can have and really revolutionizing how the financial systems work, not just in payments, but in maybe insurance or security
settlement. There's a whole bunch of transactions that blockchain can make more efficient for consumers and for businesses.
But I think we need to acknowledge that sometimes, version one of technologies need to be iterated, and certainly the power consumption
associated proof of work as a validation. And I think it is -- I give credit to the Ethereum community, which has been putting a lot of effort
into transitioning off of a proof of work into what you, I'm sure, very familiar with, proof of stake.
So I think things like that will allow those technologies to scale into the future and to serve customers effectively, but not acknowledging that power
and carbon footprint are real issues, I think, could limit the success of these technologies.
CHATTERLEY: Yes, don't be a denier, accept it and work out how we raise efficiency or what the utility value is relative to the cost.
Brad, very quickly. I know you are a Bitcoin investor. Do you think Bitcoin is too big to fail?
GARLINGHOUSE: I think Bitcoin is not going away. That is for sure. The whole crypto industry is not going away.
CHATTERLEY: So yes, the answer is yes.
CHATTERLEY: Brad, great to chat with you. Keep us posted, please.
GARLINGHOUSE: Great to be on, Julia.
CHATTERLEY: Brad Garlinghouse, the CEO of Ripple there. Thank you.
All right, coming up on the show, a pan-African project to stop the spread of the Sahara Desert. That's next, stay with us.
CHATTERLEY: Now, to today's Call to Earth, where we look at desertification, 40 percent of lands on our planet are at risk of
desertification and it's only getting worse.
According to the United Nations, by 2030, at least 50 million people will have to leave their homes if trends are not reversed. That's why Rolex
Awards Laureate, Sarah Toumi is drawing a line in the sand.
UNIDENTIFIED FEMALE (voice over): The Sahara Desert, remote, romantic. It's also a threat.
SARAH TOUMI, ROLEX AWARDS LAUREATE: What I love about the desert is it is very peaceful, but in the same time it's very scary because when desert
enters the houses of people, pushing them to live because they have no more livelihoods in their communities. It is scaring me.
UNIDENTIFIED FEMALE (voice over): Desertification is a process which transforms once arable land into a barren environment. It's something that
Sarah Toumi witnessed firsthand.
TOUMI: My grandparents, they were growing olives and under the olive trees, they are growing beautiful gardens with vegetables and other crops.
Now, let's say 25 years after, they don't grow anymore, the foods, they have to buy food from the shops and I think it's very sad.
UNIDENTIFIED FEMALE (voice over): Desertification can be reversed. Toumi's project "Acacias for All" has cultivated almost 700,000 deep rooted trees
in the region improving soil structure and allowing for other trees and crops to be planted nearby.
TOUMI: It's very easy to plant a tree. It's not easy to grow a tree and that's what I learned in Tunisia from just planting acacia trees into
growing agro-ecological ecosystems with communities creating value chains for sustaining the ecosystem.
UNIDENTIFIED FEMALE (voice over): Toumi's impact in Tunisia led her to want to do more. She has been invited to join a program of epic
TEXT: Get up, stand up, the Great Green Wall has arrived.
MONIQUE BARBUT, FORMER EXECUTIVE SECRETARY, UNITED NATIONS CONVENTION TO COMBAT DESERTIFICATION: Great Green Wall is about giving life back to the
desert to the soil.
UNIDENTIFIED FEMALE (voice over): The Great Green Wall is a patchwork of restored lands across the entire continent expected to stretch 8,000
kilometers by 2030 covering 100 million hectares of land across 11 countries.
The aim is to create a natural shield against desertification.
BARBUT: Up to now, the Great Green Wall initiative has filled up about 18 percent of the objective, so yes, you have another 80 percent to go.
I am optimistic. It's a question of making sure that that part of Africa gets the attention it deserves.
UNIDENTIFIED FEMALE (voice over): The Great Green Wall has the goal of creating up to 10 million new jobs, securing people's income as part of the
TOUMI: They need to eat. They need to improve their livelihoods and then they will think about their ecosystem.
UNIDENTIFIED FEMALE (voice over): In January 2021, the initiative received a boost of $14 billion in funding. Toumi is advising on how that money is
allocated on the ground.
BARBUT: Sarah Toumi has as a tremendous experience in Tunisia working with grassroots organizations. She perfectly understands what the needs are, but
also which are needed to make the project come to reality.
UNIDENTIFIED FEMALE (voice over): For Toumi, desertification is a threat that affects us all and the work is urgent.
TOUMI: If we don't do it now, we will never have the opportunity to do it again after. We are all on the same planet. We are all concerned by the
same problem because when during the summer in Paris, we have temperatures like 40 degrees or we have sand of Sahara that is covering the eyes, we've
seen concretely directly the impact that desertification can have on all of us.
CHATTERLEY: We will continue showing inspirational stories like this as part of the initiative at CNN and let us know what you're doing to answer
the call with the hashtag #CallToEarth.
More to come.
CHATTERLEY: Answering the global semiconductor shortage, the world's biggest contract chip maker is pouring in more money to keep up with
demand. Taiwan's TSMC has already said it would spend around $28 billion on chips this year. Now, they're saying they will spend $100 billion over
Clare Sebastian is following the story. Just walk you through the details because this is a monster amount to spend, but it's also a monster
challenge at a time of great digitization and use of technology.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, I think that you know, it's clear from this announcement just how acute the increase in demand has
been that we've seen over the course of the last year, Julia.
The pandemic has accelerated digital trends. It is something that TSMC has pointed out, things like remote work have massively increased demand for
things like computers, smartphones, you know, laptops, tablets, TVs -- all of these things that are intensive in their use of semiconductors, of
microchips, so this is why TSMC is having to do this.
They say that they need to increase capacity to keep up with demand, so you know really this is part of the race that we're seeing in the global
The backdrop of course, you know, multiple industries have been affected by this, you know, but the worst of all is the automakers. We've seen many
having to even shut down production as they wait for more chips to come in.
Now, look, this is an industry with long lead times. Don't expect to see those bottlenecks resolved overnight, but clearly the race is on between
the chip makers to get as big of a market share of this new demand as they possibly can.
CHATTERLEY: Yes, the race is on. We spoke to the new Intel CEO when they made that monster announcement about $20 billion and it was exactly what I
asked him. Is $20 billion enough when the Taiwanese are going to be spending $28 billion? And now they've come back with something five times
the size of Intel.
This is worrying. This should be worrying, I think for the other players.
SEBASTIAN: Yes, I think this certainly puts down the gauntlet. Intel's announcement was pretty big and of course, it also was part of a slight
shift in strategy. They are now moving into what's called the foundry business as well, which is what TSMC does, essentially contract
They don't design their own chips, they just manufacture for other people. So Intel is going to start doing that as well, putting it in direct
competition with the Taiwanese company, TSMC.
But look, Intel and others are banking not just on their own private money. They want government investment as well particularly in the United States.
Biden's infrastructure plan unveiled yesterday includes, you know, about $50 billion most of which could go to the semiconductor industry. So it's
clear that government is sort of invested in this as well and that's because it's not just important increasing capacity, Julia, it's about
where the capacity is.
This is an intensely vulnerable supply chain for microchips. A statistic for you, just quickly, according to the Semiconductor Industry Association,
there are more than 50 points across the value chain where one region holds more than 65 percent of global market share. That makes the supply chain
intensely vulnerable and it'll take a long time and a lot have money to build in extra sort of redundancy into that supply chain.
CHATTERLEY: Yes. And such a great point, Clare, because that's what I was going to ask you next. If the U.S. government wants to be premier in this
sphere, then they have to invest, too, so that $50 billion is a critical add on, but even then, still not matching what one company in Taiwan is
Clare Sebastian, thank you so much for that.
All right, one last look at the market. A new quarter on Wall Street, of course, and a fresh record high for the S&P 500 pushing above the 4,000
level for the first time. Just a touch below that right now. The question is, can we close above 4,000 at the end of the session today?
Stocks, of course higher, as President Biden proposes $2.3 trillion in additional U.S. spending for infrastructure projects, green energy and
social programs among other things over the next 10 years, of course.
The new spending, if passed, would give a further boost to an already strengthening U.S. economy. President Biden calling his plan a once in a
generation investment in the future of America.
And that's it for the show. If you've missed any of our interviews today, they will be on my Twitter and Instagram pages. Search for @jchatterleyCNN.
In the meantime, stay safe. "Connect the World" with Becky Anderson is next.
And we'll be back tomorrow.