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First Move with Julia Chatterley

Airstrikes and Rocket Launches and Ongoing Violence between Israel and Gaza; Fears over Rising Prices Weigh on Investors; Panic Buying Causes Fuel Shortages Following the U.S. Pipeline Cyber Hack. Aired 9-10a ET

Aired May 12, 2021 - 09:00   ET



JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is what your need to know.

Deadly escalation. Airstrikes and rocket launches and ongoing violence between Israel and Gaza.

Inflation increase. Fears over rising prices weigh on investors.

And gas guzzlers. Panic buying causes fuel shortages following the U.S. pipeline cyber hack.

It's Wednesday. Let's make a move.

A warm welcome once again to FIRST MOVE." And we begin with breaking news once again from Israel.

Fears of all-out war grow as fighting escalates between Palestinian militants and Israel. The death toll is rising as Hamas continues to fire

rockets from Gaza and the Israeli military carries out airstrikes.

Protests are being held in cities around the world as the international community calls for the violence to stop.

Hadas Gold is live in Jerusalem for us and with the international reaction, Nic Robertson joins us from London, too.

Hadas, I'll begin with you. We saw you yesterday running in and out throughout the day to bomb shelter safety. Talk us through what you've seen

in the last few hours this morning?

HADAS GOLD, CNN CORRESPONDENT: Well, the air raid sirens have continued to wail across Southern Israel warning of incoming rocket fire and just in the

past few hours, we've seen those air raid sirens rockets go off in places like Beersheba which had not been targeted yet, as well as Ashdod, a city

north of where we were yesterday, it is along the coast.

The Israeli military says, more than 1,000 rockets have thus far been fired from Gaza into Israel, including overnight last night when they were

targeting Tel Aviv, which is a very serious escalation for the Israeli military sees it as a very, very serious escalation when those rockets

target Tel Aviv.

The Israeli military says it is continuing to strike militant targets in Gaza saying just today that they have targeted rocket launchers, drone

launchers and the anti-tank missile squad and recently, they just announced that they killed a number of senior Hamas commanders, they say, including

those close to Mohammed Deif, the head of the Hamas armed wing.

In the last few hours as well, an anti-tank missile was launched from Gaza into Israel, wounding three Israelis, one of them potentially fatally.

As it stands right now and keep in mind, this is a very fluid and fast moving situation, the Palestinian Ministry of Health in Gaza says that at

least 48 people have been killed, including 13 children. The Israeli military says they are investigating any reports of civilian casualties,

which they say they take very seriously.

Israel says they have killed at least 20 militants. In Israel, at least five people have been killed by those rockets, those people were killed in

Ashkelon, in a city outside of Tel Aviv and in the City of Lod, wherein Israeli Arab father and daughter were killed. Lod actually has also become

another flash point in all of this.

It has been torn apart by violence recently between the Arab and Jewish residents there. It is what is known as a mixed city between Jewish and

Arab residents. An Arab-Israeli man was shot by a Jewish-Israeli man, two synagogues were burned.

The CNN crew that was there earlier said that the city currently looks almost like a war zone, rocks strewn all about, cars burned out. The

government has declared a state of emergency for Lod, not actually for the rockets, but because of the unrest that they have seen there. That just

goes to show you that these tensions that started in Jerusalem around East Jerusalem, around the Al-Aqsa Compound, around the situation in the Sheikh

Jarrah neighborhood where Palestinian families faced eviction.

It then went south towards Gaza and we started seeing those rocket fires and the Israeli military responding. It is now spreading. This tension,

this unrest is now spreading to other parts of the region as well.

CHATTERLEY: Hadas, stay right there for me for a second, Nic, because I want to bring you in. We've seen in the last hour, Turkey, Russia adding

their calls for calm to the United States and to the E.U., too, hoping for a de-escalation here, but it doesn't sound like -- to what Hadas is saying,

it is resonating with either the Palestinians or the Israelis. What more can be done?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Now, when Putin and Erdogan speak, they are speaking to each other, they're not exactly issuing

a joint letter, it appears or calling up anyone to offer direct guidance.

They are saying, they are reiterating -- Erdogan saying that the two-state solution is the only solution. So that's that position, and it doesn't sort

of -- it doesn't put a brake on the conflict. Boris Johnson, the British Prime Minister has called for a restraint of both sides to sort of pull

back from the brink. The British Foreign Secretary, Dominic Raab has called his opposite number in Israel, Gabi Ashkenazi, again saying the same thing

to try to deescalate the tension, condemning the rockets fired by Hamas from Gaza into Israel.

Charles Michel, the President of the European Council has also added his voice, calling for the calm.

You know, but what is absent here, and it may be happening behind the scenes, it may be beginning to happen slowly, but what is absent is a sort

of direct diplomatic intervention, is anyone sending envoys?


ROBERTSON: In the past, Egypt and Qatar have helped broker ceasefires in situations like this. Is Egypt sending somebody to Gaza to help? There, is

the State Department potentially sending an official to engage with both sides in Israel.

The situation that we've seen with the Biden administration calling for restraint, saying that Israel has the right to respond to rockets fired by

Hamas and other militants from Gaza and calling for restraints on both sides, but it was noticeable that President Biden, when he came to office,

didn't call the parties in Israel or the Palestinian authority, either.

He was very slow to have a phone call with Benjamin Netanyahu. It is clear that this was not an issue that he particularly wanted to engage and of

course, now, it's taking up some of his attention.

What leverage now, quickly, is he going to have if he chooses to? It is certainly going to take some political and diplomatic capital, but it's not

clear what he is putting on the line at the moment.

CHATTERLEY: Yes, and a greater focus of influence, perhaps, as well. Hadas, what are people in Jerusalem saying to you? Are they preparing for

this to be ongoing engagement, perhaps to even worsen?

GOLD: Well, the Israeli military says that it is prepared for a lengthy operation. They have not specified how long they said that this will go on

for, but they say, they are prepared for it to go on for some time, and they've actually been calling up thousands of reserve troops to assist in a

possible operation.

So far, we haven't seen any sort of ground operation of any sort of indication that there could be a ground operation into Gaza, it has all

mostly been airstrikes, planes flying over.

This is actually something we heard yesterday in Ashkelon. We heard planes buzzing overhead. We'd hear some explosions in the distance and then after

a few minutes later, we would hear the air raid sirens, meaning that rockets were incoming, and it was sort of this back and forth all day long.

But as of right now, the Israeli military says that it is targeting specifically some senior Hamas leaders. Yesterday, they demolished a

building that they said hosted important offices for Hamas Intelligence operations as well as for their rocket operations. They completely leveled

that building. We've seen some really dramatic video of that building known as the Hanadi Towers. It's about 13 floors coming down.

And they said that they will continue targeting any sort of militant locations that they say threatened Israeli citizens specifically, and

especially rocket launching pads, drone launching pads, anti-tank missile units. They see this as -- they see the rockets launched towards here in

Jerusalem which happened on Monday as well as to Tel Aviv as just an unacceptable escalation, they will respond.

And then of course, in Gaza, the militants there said that they will respond in force for what they say are unacceptable military airstrikes on

their cities, on their people.

CHATTERLEY: Hadas, thank you for your perspective. Hadas Gold and Nic Robertson there. Thank you both. We will come back to you throughout the

day on CNN with further developments.

Okay, let's turn now to our business stories. It is another day of inflation fixation on global markets where concerns over soaring commodity

prices, parts and labor shortages and the ongoing effects of the Colonial Pipeline's cyberattack continue to weigh on sentiment.

The United States reporting within the past hour that consumer prices rose by a much hotter than expected 0.8 percent month-over-month in April and

that's a 4.2 percent jump year-over-year. It's the biggest price rise in well over a decade.

Now, one month, as I always say, does not a trend make, but it is worrying news for investors. All the details on this coming up very shortly.

Today's data comes as the Colonial Pipeline outage pushes U.S. fuel prices to a six-year high, with gas lines in the U.S. growing. Many stations

running short as the pipeline owners grapple to get operations fully back on line. What does this all mean? Well, it means the U.S. futures are soft

amid the pricing and petrol perturbation.

The Dow suffering its worst day since February on Tuesday while the NASDAQ ended unchanged recovering earlier, two percent losses.

Asia meanwhile, there is a hive of inflationary sounding activity, too. The Nikkei hit by a 10 percent drop in Nissan Motors. Nissan is saying it won't

return to profitability this year due to chip shortages and raw material price hikes, stark contrast though with Toyota who issued upbeat guidance

due in part to stockpiled chips. Making all the difference there.

And in Europe, E.U. officials raising their 2021 growth forecast by half a percent to 4.3 percent. They see inflation contained to under two percent

this year. No such luxury for the United States. Inflation once again our top focus there.

Christine Romans joins me now. Wow, is all I can say. I mean, the comparables admittedly with a year ago are important, too, but what was

driving this, Christine? Used cars, a real eye opener.


CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Yes, that was 10 percent gain in used cars. In another report, we know, had shown this

week that used car prices in this country are above $25,000.00 for the first time ever. So we know that there is a shortage there that is driving

up those prices.

We know even when you strip out food and energy, when we look at the so- called core inflation, that monthly number increased nine-tenths of a percent. That's the hottest core monthly rate since 1982. I don't remember

1982, actually, I don't really remember 1982, but I know in economics what it means when you talk about the '70s and '80s and some of those really hot

months of inflation in those years.

When you go down the line, I mean, we've seen everything from chicken to gas to home prices, to wall board to steel to used car prices, just about

everything going up.

And it is not only going up because of the reopenings and the hot economy, Julia, right, it is going up because we have got these weird bottlenecks

and supply shortages that are driving things up. And the Fed is so far and the Treasury Secretary have said these are temporary price increases, but

we just won't know for sure. Only time will tell that.

CHATTERLEY: $25,000.00 average price of a used car. What's the average income in the United States?

ROMANS: Isn't it something, the household income is in the low 60s, I think, in the U.S., so yes, I mean that just shows you how distorted

everything is as we're coming out of the COVID collapse.

I wonder, though, about these numbers, and I'm interested in your thoughts, because we've been talking about prices rising for everything for several

weeks now. The stock markets had a couple of freak-outs over it.

Is there anything in here really that is new, or does this confirm what we've all been thinking about what the economy is looking like post-COVID?

CHATTERLEY: So, we had this conversation with Paul Krugman on the show last week, Nobel laureate, and he said, it depends on the speed of un-

working some of these kinks, and actually compared to the past where far more efficient unblocking some of these supply chain blockages, and

actually that will relieve some of the pricing pressures that we are seeing. Maybe that works on the supply side with goods. What about labor?

What about labor supply?

ROMANS: And that has been the big debate, hasn't it? And it is becoming an increasingly vigorous debate and really heartfelt debate among some people

because you have this notion that there is a free lunch in America, $300.00 extra a week in this unemployment benefits, and that's keeping people home

on their couches rather than going out and doing their patriotic duty of taking their jobs back that they had before the pandemic struck.

And it is just not as simple as that. We have schools that are not fully open. We have elderly relatives and family members who we are still trying

to protect against infections that are still happening in this country, and we have jobs that are open that may not match the skills of people who are

going back into the workforce.

We have people in frontline hospitality jobs, frankly, who are retraining for tech and finance because frankly, they don't want to go back to the job

that they used to have. So less about the unemployment benefits as being some sort of free lunch, they are free loaders, and I would say, you're

having a real reawakening in the American labor market, and a readjustment in the labor market, and it took maybe COVID to do that.

CHATTERLEY: Reallocation friction, I think is the technical term for this where people are simply going, you know what, I don't want to go do that

job anymore, I want to retrain and do something else, and now they have bought some time to do it.

Fascinating. Christine Romans, thank you for that.

ROMANS: Nice to see you.

CHATTERLEY: All right, let me bring you up to speed now with some of the stories making headlines around the world.

This hour, U.S. House Republicans are set to topple their third highest ranking member. Liz Cheney continues to publicly reject former President

Donald Trump's lie that he won the 2020 election.

Ahead of the meeting, Cheney defended her position. She told the Republicans she would lead the fight to restore their party once she is

ousted. The Republicans are expected to replace Cheney with New York Representative Elise Stefanik, an outspoken defender of Donald Trump.

Almost every state and territory in India has now imposed COVID restrictions to try and contain the country's outbreak. The Prime Minister

is still refusing to implement a full national lockdown even in the midst of rising death toll.

On Wednesday, India reported its highest number of new fatalities with more than 4,200 people losing their lives to the pandemic.

COVID cases are also rising across South and Southeast Asia. Laos recorded its first coronavirus death on Sunday amid skyrocketing infections.

Thailand may consider halting more international flights since detecting two cases of the COVID variant first identified in India. Meanwhile, Nepal

extended a lockdown in Katmandu through May 27th after reporting a record number of COVID deaths on Tuesday.

Okay, we are going to take a break here on FIRST MOVE, but still to come, former New York Fed President Bill Dudley warns the markets are in for a

rate rise surprise. He joins us right after this.

And America's energy CEOs need to wake up to the ransomware risk says a top Federal energy regulator. We will discuss what needs to be done. Stay with




CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks look set to pull back for a third straight session after a much hotter than expected read on U.S.


Rate sensitive tech stocks set to take the hardest hit down some one percent as you can see there for the NASDAQ futures.

Let me give you the numbers. Consumer prices rising 0.8 percent last month and 4.2 percent year-over-year. It is the biggest rise in well over a

decade. Prices for hot commodities like U.S. crude, lumber, steel continue also to move higher today. Red hot copper pulling back slightly there from

record highs.

Commodity price hike reflected in yesterday's almost seven percent year- over-year rise in Chinese producer price rise, too. It is not just a U.S. story.

Former New York Federal Reserve President Bill Dudley is out with a sobering assessment of the current inflationary environment. He says,

higher prices will be part of what forces the Fed to raise rates faster than investors currently anticipate.

And now to some breaking news, U.S. House Republicans have voted to remove Liz Cheney from the party's leadership. Cheney has clashed with some in her

party over her criticism of former President Donald Trump.

She publicly rejected his claim that the 2020 election was stolen from him. Cheney held the party's third highest ranking post and she will be replaced

by Elise Stefanik, an outspoken defender of Trump, so that simply happening in the last few moments.

Okay, as I was saying, Bill Dudley joins us now after that warning on future rate rises happening far faster than at least the market is


Bill, fantastic to have you with us.

Former being the operative word now because you can actually tell us what you really think as opposed to being restricted when you're an F.O.M.C.


I do want to talk to you about raising rates, but I just want to get your view on that inflation print this morning. What do you make of it?


BILL DUDLEY, FORMER PRESIDENT OF FEDERAL RESERVE BANK OF NEW YORK: Well, I was actually anticipating that we were going to see some bad inflation news

for a while, for two reasons.

Number one, we are throwing out very low readings from a year ago, and number two, as we start to reopen the economy, there is going to be a lot

of frictional cost to reallocating resources where they are needed.

Now, that said, this is even worse than I imagined.

I started writing about this in December; that this would be an emerging risk for markets, but it has actually turned out to be more powerful than I

had anticipated.

CHATTERLEY: I mean, the Fed is halfway to its two percent annual target in just one month by these numbers.

DUDLEY: Yes, the Feds are going to look at this as transitory, and they've said that. I mean, what they are focused on is the labor market. There is

about eight million people still unemployed because of the COVID pandemic, and the Fed is focused on getting those people back to work.

As long as there is that degree of excess labor in the U.S. economy, the Fed is going to look through these higher inflation numbers, so the real

question is, how fast does the U.S. economy normalize? How fast do we get those people to work? And that will determine the pace by which the Fed

finally decides to tighten monetary policy.

CHATTERLEY: On the labor point, I wanted to get your take on a recent "Washington Post" article by Heather Long. She, in quite inflammatory terms

said, this is not a labor shortage, it's a reassessment of work in America. We're seeing reallocation friction where we know that certain jobs have

shifted and won't come back.

But others, and it is for the workers reassessing what they want to do. They want to retrain and go and do different things. They don't want to

work in restaurants and risk themselves and get lower pay.

Do you see that happening? What's your sense?

DUDLEY: Well, I think there is a risk that we actually can't go back to where we were, that 3.5 percent unemployment rate that we had in February

2020, and it may be that the misallocation of labor means that the employment rate, consistent with two percent inflation, is going to be a

little higher than what it was in the past, and so we're going to find that out over the next 24 months.

The Fed is basically running basically a little bit of an experiment right now. They basically are going to run the economy hot. They want inflation

to rise. In fact, they want inflation to rise above two percent on a sustained basis.

What that means is they're going to be slow to tighten, but once they finally have to start to tighten, they are going to have to tighten pretty

rapidly to catch up.

CHATTERLEY: But you are saying and have written two quite potent op-eds in the last week or so saying, look, at this stage the market is suggesting

that even when the Fed raises rates, interest rates are only going to two percent and they're going to stay there. You think that's too low.

You've also said the U.S. 10-year rate, which is an underpinning really for the global financial system and currently at around 1.6 percent is also

going to have to be significantly higher than people realize. Just talk us through why.

DUDLEY: Well, in the short-term rates, it's all about the Feds being slow and letting inflation climb above two percent. So if the Fed let inflation

climb above two percent, short term rates have to be higher as a consequence of the higher inflation and it also has to be higher because

the Fed is actually going to have to make monetary policy tight to keep inflation from continuing to go up.

So that is it on short term rates. The short terms this cycle will probably peak somewhere cycle between three to four and a half percent. Long term

rates, it is really about what kind of risk premium do people pay to invest in long duration assets.

CHATTERLEY: Bill, I'm going to have to interrupt you there because Liz Cheney is speaking and we have to take her.

DUDLEY: Okay, sure.

CHATTERLEY: Bear with me.

REP. LIZ CHENEY (R-WY): We cannot both embrace the big lie and embrace the Constitution.

And going forward, the nation needs it, the nation needs a strong Republican Party. The nation needs a party that is based upon fundamental

principles of conservatism, and I am committed and dedicated to ensuring that that's how this party goes forward, and I plan to lead the fight to do


QUESTION: How concerned are you that former President Trump might end up back in the Oval Office and are you prepared for that?

CHENEY: I will do everything I can to ensure that the former President never again gets anywhere near the Oval Office. We have seen the danger

that he continues to provoke with his language. We have seen his lack of commitment and dedication to the Constitution, and I think it's very

important that we make sure whomever we elect is somebody who will be faithful to the Constitution.

QUESTION: Congresswoman, do you feel betrayed by today's vote?

CHENEY: I do not. I think that it is an indication of where the Republican Party is, and I think that the party is in a place that we've got to bring

it back from, and we've got to get back to a position where we are a party that can fight for conservative principles, that can fight for substance.

We cannot be dragged backward by the very dangerous lies of a former President. Thank you.

JIM SCIUTTO, CNN ANCHOR: Liz Cheney very straightforward there as she has been these last several days. Jamie Gangel though, back to my question, if

you don't mind, the quintessential spinelessness of refusing not even to count names, name names, but count numbers in this vote. What does that



JAMIE GANGEL, CNN SPECIAL CORRESPONDENT: I think Kevin McCarthy was scared of what those numbers were. I am not suggesting in any way that Liz Cheney

was going to win this vote or that it wasn't going to be lopsided.

But I think Kevin McCarthy did not want those numbers out there, and maybe there were other G.O.P. members who did not want to have to go on the

record. Plain and simple. Because we had been hearing for a week now about a secret ballot that would give us numbers. Kevin McCarthy did not want

that. That was a political decision.

I just want to add one thing. Liz Cheney just said, "I will do everything I can to make sure the former President never gets anywhere near the Oval

Office." That is her long game. And as she said, she plans to, quote, "lead the fight."

She is now unleashed. She can say whatever she wants about Donald Trump, she can say whatever she wants about her colleagues, but her goal now is to

see if she can wrestle the Republican Party back.


POPPY HARLOW, CNN ANCHOR: Manu, the words that Jamie just reiterated is exactly what struck me most from Cheney's remarks, right -- from Liz

Cheney's remarks and Jamie's reporting yesterday was like, this is the beginning of the war for Liz Cheney. So, how does that practically play out

in the Halls of Congress?

MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: You know, she is still decidedly the minority of the minority of the House Republican Conference

about this very issue. She will be an outspoken voice. She'll get a lot of attention when she speaks, but there are just so few members of the House

Republican Conference or Senate Republican Conference, for that matter, who are going up against Donald Trump, even the ones who are uncomfortable

about the former President. They recognize his power with the Republican base.

So, she has a significant challenge ahead if she was going to try to use this in a way to bring -- to try to prevent the former President from

reemerging in the political scene given the support within the Republican Conference.

One reason why even perhaps both sides didn't want to have the voice vote today -- or the secret ballot vote today, even if she did -- the reporting

that I've done the last several days in talking to a wide array of members that a lot of the members who voted for her last time were unlikely to do

so again because they recognize just how tense things have become within the Republican leadership, that this was just a situation that they needed

to move on from and she was expected to lose that vote on a pretty overwhelming basis, so a quick voice vote essentially avoided any pain that

might be felt by both sides and forcing members to actually take a position.

So it made the things a little bit easier just to rip the Band-Aid off quickly and move on.

And what happened inside the room, according to multiple sources who I've been texting with is that Virginia Foxx offered a motion to kick her out of

the conference. This came after Liz Cheney initially made those remarks which we talked about where she defended what she had done, which is warn

her party not to follow the path of Donald Trump. Then came that motion by Virginia Foxx.

Kevin McCarthy spoke briefly, said it was time to unify and then that's when that voice vote happened, so, so quick, within 20 minutes despite what

we saw in February, hours-long debate over Liz Cheney's future.

She staved off that fight, that challenge, but not this time, guys.

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: Can I just add one thing to Manu and Jamie's great reporting? And that is, it is maybe obvious, but it

is worth stating.

She is not in the leadership anymore, but she is still a Member of Congress. And she is still an at-large Member of Congress from the State of

Wyoming, and people I've talked to around Liz Cheney see her primary fight, which is not for over a year, August of 2022, as potential to be ground

zero for the fight for the heart and soul of the G.O.P.

Why is that? Because she has had tremendous support in her re-election, close to 70 percent. It is also a state where Donald Trump had one of the

biggest, if not the biggest, I believe, the biggest margin of victory in 2020.

So it is going to be a real battle to see what happens, because he is obviously going to go in with guns blazing trying to get rid of her and

trying to oust her -- will try to oust her from the Congress altogether.

HARLOW: It's a great point, I think, Donald Trump got 70 percent of the vote there in Wyoming. Liz Cheney got 69 percent, and now, it is like

people are going to have to decide there which camp are they in?

Jamie Gangel, final thoughts from someone who has reported so deeply like Dana and Manu on this and spoken to Liz Cheney?


GANGEL: Someone asked me yesterday if I thought she plan to run for President. I don't know the answer, but I think it's a possibility. I think

that her words today about, I will do everything to make sure that the former President never gets close to the Oval Office, that's the battle


SCIUTTO: Yes, yes, I mean, the question is, does everything include running against him, right? And can she effectively given the way the

primaries are set up by the Republican Party.

Dana Bash, Jamie Gangel, Manu Raju, thanks so much to all of you.

HARLOW: Still to come, more breaking news, at the top of the next hour and tied to what we just saw happen by the way, former members of the Trump

administration leaders there will testify on Capitol Hill.

The former Acting Defense Secretary is set to explain why he was reluctant to send troops to the Capitol during the insurrection on January 6th.

Details ahead.

SCIUTTO: Plus, the cyberattack on a major pipeline has sparked fears of a gas shortage, a number of gas stations now out of fuel. I mean, is this a

result of actual shortages or are they being created by that fear?

We're going to have the latest.


CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks are up and running this Wednesday and as expected, we've got a lower open for the U.S. majors

with the Dow extending the sharp 1.3 percent loss suffered during Tuesday's session.

Rate sensitive tech stocks are seeing the biggest losses as 10-year bond yields push higher. Yields on the rise after a surprise reading on consumer

price inflation.

The U.S. CPI rising at a much higher than expected annual rate of 4.2 percent last month. A big 10-year bond auction on tap, too, for later

today, $41 billion in new supply set to hit the market.

And a reminder of our top story. There are growing fears of all-out war after a deadly exchange of fire between the Israeli military and

Palestinian militants in the Gaza Strip.

Israel says its forces have carried out an unprecedented operation to simultaneously kill several senior Hamas commanders.

At least 10 Palestinians were killed and 75 injured after the airstrikes on Gaza this morning according to the Palestinian Health Ministry.

Ben Wedeman is in Jerusalem for us.

Ben, I think many people have been caught off guard by just how quickly this has escalated between strikes and counterstrikes.

I remember vividly, you were there in 2014. How does this compare? What do you make of what you're seeing?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, this escalation has been something the likes we haven't seen in quite some time. Certainly,

2014, there was a much longer buildup to it, keeping in mind, Julia, that really, the first major action in terms of missile fire and Israeli strikes

in Gaza happened on Monday evening. Since then the death toll on the Palestinian side is over 50, including 14 children, according to the

Palestinian Health Ministry and five Israelis as well.

At this point, we know that the Israeli Army has called up some of its reserves. It is deploying heavy armor in the Gaza area. We got a statement

from the military wing of Hamas saying that they had launched this afternoon four separate barrages within Israel as well as an offshore oil



WEDEMAN: Now, we don't have confirmation that those missiles actually hit that particular target, but certainly, in terms of the speed at which

events have been happening is something unprecedented.

But keeping in mind, of course, that this is part of the cycle that is normal. You will have a major outbreak of hostilities like we saw in 2014.

And now seven years later, we seem to be back where we were back then.

But the fundamental fact is that as long as the struggle over this land continues, between the Palestinians and the Israelis, and the fact that it

has not been resolved, and there doesn't seem to be any serious effort by anyone to actually resolve it that this cyclical return of war seems in a

sense, inevitable -- Julia.

CHATTERLEY: Ben, we were talking earlier on the show with Nic Robertson about the calls for calm, the response from the international community and

those saying that is there a path to de-escalation in some form here. Can the international community help, Ben, or is to your point, the risk here

that we see a further worsening of this situation, rather than calm?

WEDEMAN: Definitely, the international community can help but the international community isn't necessarily united at the moment.

Now, in the past, Egypt has played a critical role, because of course, Egypt borders the Gaza Strip, and has a lot of influence in Gaza. They have

the ability to convince the factions in Gaza to be quiet.

Now, of course, you have a different dynamic on the Israeli side where you have an embattled Prime Minister Benjamin Netanyahu is who -- the country

has been through a series of inconclusive elections, and therefore, politically, perhaps he sees it to his advantage to continue this


The United States, for instance, the most important provider of weapons and diplomatic support to Israel was relatively quiet in the build up to this

escalation when there was serious unrest here in Jerusalem over the question of forced evictions of Palestinians from their homes, over

frictions about denying access to the Old City or making it difficult for Palestinians, the United States was largely quiet.

It is only when the fighting begins that the United States becomes involved, and we'll have to see if they are willing to throw their full

might behind some sort of effort to return to what will have inevitably be in a temporary calm -- Julia.

CHATTERLEY: Yes, and your point about the domestic politics here as well, vital. Ben Wedeman in Jerusalem. Thank you for that.

Okay, more FIRST MOVE after the break. Stay with us.



CHATTERLEY: Welcome back to FIRST MOVE. In the United States, the petrol pumps are under pressure. Fuel shortages are rising and gas prices climbing

after a critical pipeline was hacked. Along the East Coast, in Georgia and Virginia, more than 15 percent of gas stations are now dry, 25 percent are

empty in North Carolina.

Sources tell CNN, administration officials are privately frustrated with Colonial Pipeline's weak cyber security. Colonial says, it has been in

regular touch with the F.B.I. and the White House since the attack. But in timely testimony to the Senate, top cyber officials say they need more

information to safeguard the country against future threats.


BRANDON WALES, ACTING DIRECTOR, CYBERSECURITY AND INFORMATION SECURITY AGENCY: Cyberattacks in our nation's infrastructure are growing more

sophisticated, frequent and aggressive. Malicious cyber actors today are dedicating time and resources towards researching, stealing and exploiting

vulnerabilities, using more complex attacks to avoid detection and developing new techniques to target information and communications

technology supply chains.


CHATTERLEY: Joining us now Neil Chatterjee, he is head of the Federal Energy Regulatory Commission. Neil, great to have you on the show. You said

that this latest attack is a wake-up call. But then you've been warning about cyber risks for at least the last three years. What do we need to

realize about this moment?

NEIL CHATTERJEE, COMMISSIONER, FEDERAL ENERGY REGULATORY COMMISSION: It is the new reality that we have to contend with that warfare in the 21st

Century has evolved to a place where now private sector companies find themselves on the frontlines. And this is a real wake-up call and I think

all Americans need to take notice of it.

If a missile had taken this pipeline out, we would clearly recognize it as an act of war or terrorism. A cyberattack that takes this critical pipeline

out of service has the same economic and national security impact and we all need to be cognizant of that. And at the Federal government level, at

the highest levels working with industry, we've got to ensure that this does -- that we're ahead of this things in the future.

CHATTERLEY: What role does the Federal government ultimately play here? Because I get your point that Federal government isn't reacting swiftly

enough or aggressively enough. But then I look at some of the stats and we were just playing it on the screen here, 85 percent of the U.S.

infrastructure including power grids, communication networks, and water treatment plants are controlled by private firms.

So it's the private sector that needs to be beefing up its cybersecurity measures, surely, as well as any response from the Federal government.

CHATTERJEE: It's both. So, we, at the Federal Energy Regulatory Commission, we regulate the security of the nation's electricity system.

And while we evaluate applications for natural gas pipelines, the responsibility for regulating the national -- the nation's pipeline system

actually falls to T.S.A., the Transportation Security Administration.

So the agency responsible for aviation safety, railroad safety, road safety, also is responsible for pipeline safety. But in 2017, T.S.A.

confirmed that it had just six full time employees tasked with securing more than 2.7 million miles of natural gas, oil and hazardous liquid

pipelines that traverse the country.

We put pressure on T.S.A. a couple of years ago, they stepped up. They have expanded their pipeline security program and strengthened their guidelines

recently, but clearly there's more work that needs to be done.


CHATTERLEY: I defined that it is complete insanity. I mean, you wrote an op-ed about this for AXIOS in 2018, six full time employees looking after

2.7 million miles of natural gas, oil and hazardous liquid pipelines.

What does stepping up look like in this case? And this brings it back to a government response required now, because we have discussions going on

within the U.S. government, but Neil, you know, when I look at what they're doing, it's not enough when we're talking about the scale of the threat.

We're seeing it playing out.

CHATTERJEE: There's no doubt about it, and I've called for this for a couple of days now. Every CEO in the energy sector, and especially pipeline

CEOs should immediately, immediately convene their incident management teams to do a deep dive review of their security posture and protocols.

I think that it is incumbent upon the U.S. government, at its highest levels, to be firm and clear that we will not tolerate nation states like

Russia, that harbor ransomware teams, and that we're going to defend our national interests, we've got to step up. So you ask what stepping up

means? Example, where companies don't have multifactor authentication measures in place, you may need to bring in outside cybersecurity experts

to perform a deep top to bottom review. Do that and do that now.

CHATTERLEY: Why isn't there more alarm? I loved your analogy at the beginning of this conversation where you said if a rocket would have hit

those facilities, there would be outrage, they'd be alarmed. Do you think actually public pressure as we watch gas prices rise in the United States

perhaps creates some of the urgency that you and I are talking about here, because I think we recognize the threat this represents.

I mean, the number of attacks, I believe in 2020 was up 300 percent. We're sitting ducks, particularly when people are working from home.

CHATTERJEE: So this is new to us in the energy sector, and there are gaps that we are identifying and trying to fill. Just as a simple example, I had

a pipeline CEO a couple of years ago tell me that he had been briefed by O.D.N.I. that his system was vulnerable. But no one in his company had a

security clearance high enough to even get briefed to know where to make investments to protect their system.

I think it is high time that folks recognize that the energy sector and energy companies are at the frontlines and we need to do everything we can

to share information to ensure that they're briefed and are prepared because as you pointed out, these attacks have been coming and let's not be

naive, they're going to continue to come.

CHATTERLEY: I was literally going to ask you that. Is that the assumption that you're making now is that we are going to see vital infrastructure in

the United States if not around the world, because it is a global story, but in the United States specifically attacked again?

CHATTERJEE: I think that our adversaries are sophisticated. I think they will continually adapt. This is why I have been sampling short of calling

for mandatory standards, because I think standards are the floor. We have to go much above standards. We have to be as sophisticated as our

adversaries, as coordinated as our adversaries across the Federal government, state government, industry, to stay ahead of these evolving


CHATTERLEY: Now, Neil, you're also a proponent of alternative energy sources as well, as I was looking through some of the comments that you've

made over recent years. And I can't help but look at the queues at pumps and the shortages that we're talking about and think that this is probably

the best advert for electric vehicles out there. What do you think of that? It's a tangent, but it's an important point, too.

CHATTERJEE: Well, I'm a big proponent of electric vehicles and renewable energy. But what this incident shows is that, you know, we're still

dependent on our critical energy infrastructure. And until we can get to a future where the grid and our transportation fleet are electrified, we've

got to still lean on and depend on our existing infrastructure, and this incident shows how critical it is and why we've got to protect it.

CHATTERLEY: Yes, there are no immediate alternatives. We have to protect what we have.

Neil, great to have you with us. Thank you for sounding the alarm. Neil Chatterjee there, Commissioner of the Federal Energy Regulatory Commission.

Thank you.

All right, coming up after the break. It has been wowing art lovers for centuries. Now, the Renaissance masterpiece has been recreated with the

latest technology. Meet Digital David, next.



CHATTERLEY: Welcome back to FIRST MOVE. Expos or World Fairs are known for showcasing the latest in technology and innovation.

At this year's Expo 2020 in Dubai, Italy will present an exact copy of the famous statue of David by Michelangelo, made by a 3D printer. Anna Stewart

shows us the Digital David in today's Road to Expo.


ANNA STEWART, CNN REPORTER (voice over): For more than 500 years, it stood in the Italian city of Florence as a symbol of strength and youthful

beauty. Michelangelo's David, the heroic biblical figure in the act of confronting the giant Goliath.

Over the last year, state of the art technology was used to make the most authentic replica ever made. High resolution cameras scan the 17-foot

marble statue for all its minute characteristics and details, then the world's largest 3D printer set to work.

GRAZIA TUCCI, HEAD OF DAVID REPRODUCTION PROJECT, UNIVERSITY OF FLORENCE: It was really a great challenge. We decided that to use the technology of

the future that is 3D printer. That's why it was difficult to find a printer able to bring the big pieces and in the end, we divided in 14

pieces and we had to reassemble them together.

STEWART (voice over): At a cost of over $360,000.00, the result is a 17- foot replica, complete with cracks, staining, abrasions, and even marble dust. Made from acrylic resin. It weighs 10 times less than the original.

Last month, the new Digital David traveled more than 4,000 kilometers to Dubai. Unveiled as the centerpiece of the Italian Pavilion for Expo 2020.

PAOLO GLISENTI, ?COMMISSARIO GENERALE DELL'ITALIA, EXPO 2020 DUBAI: Expo is a broader chain. It is a place in the world where the New World post-

pandemic will start. It is a perfect point in the world to show the vision for the Renaissance to recovery to this new startups of our life.

STEWART (voice over): His presence is taking on greater significance for Florence whose tourism sector has been battered by the pandemic.

DARIO NARDELLA, MAYOR OF FLORENCE: Millions of people that are coming here at Expo Dubai 2020, I'm sure they would like immediately to visit Florence

to know the real history of David.

STEWART (voice over): Digital David will stand before the public during Expo 2020 for six months from October. Its fate afterwards is as yet


Anna Stewart, CNN.


CHATTERLEY: Wow. All right one last look at the markets. U.S. majors are softer in early trade, but off session lows amid growing U.S. inflationary

fears. The U.S. reporting that consumer prices spiked at a year-over-year rate of 4.2 percent last month. That's twice as high as most estimates.


CHATTERLEY: This is the second big economic surprise of the markets in a week after Friday's disappointing jobs report. High prices for used cars,

hotels and airfare all led to last month's CPI advance.

And finally, let's just sit here and appreciate something beautiful. No, not me, take a look at this. Talk amongst yourselves while I admire this

purple pink diamond which is expected to sell for nearly $40 million at a Hong Kong auction next week.

The nearly 16-carat Sakura diamond is named after the Japanese word for cherry blossom. Christy's says it is the largest flawless diamond of its

kind ever to be sold at auction.

Wow. That's very pretty.

Okay, that's it for the show. If you've missed any of my 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.