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First Move with Julia Chatterley
U.S. Inflation Surges in May; Business Leaders Demand Climate Action Ahead of the G7 Summit; Meat Giant, JBS Admits it Paid Cyber Attackers. Aired 9-10a ET
Aired June 10, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:08]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York. I am Julia Chatterley. This is FIRST MOVE and here is your need to know.
Too hot to handle. Not yet, but U.S. inflation surges in May.
G'd up. Business leaders demand climate action ahead of the G7 Summit.
And ransom regrets. Meat giant, JBS admits it paid cyber attackers, too.
It's Thursday, let's make a move.
A warm welcome once again to all our First Movers around the globe. Great to have you with us on a special C-suite edition of the program.
Today, we will be talking the cyber ransom menace with the CEO with of IT security firm, FireEye. Crunch time for couriers too, with the CEO of UPS,
and consumer clout with the CEO of legendary U.S. food chain, Stew Leonard. It is less consumer clout though this morning, more consumers clobbered.
U.S. consumer prices rising a whopping five percent year-over-year in May, that's the highest annual inflation rate in nearly 13 years. It is higher
than expected, too. If you strip out food and energy costs, core prices also rose to the highest level since 1992.
Now, investors have been waiting for this day all week, and here is the reaction. It is a yawn-like, whatever. The Dow on track for a higher start
though inflation sends the tech stocks, too, look, a touch softer there. I think investors ultimately still willing to believe any spike in crisis
will be short lived.
Compare and contrast, China's Central Bank Governor insisting today, too, that their country's inflation rate is quote, "basically under control."
Basically.
Add that to rapidly depleting hopes of a big U.S. infrastructure bill requiring more spending. You see bond yields, well, pretty well in check.
U.S. yields remain around three-month lows.
The story meanwhile in Asia emanated from the United States, too. The Biden administration ditching Trump-era efforts to ban China-owned apps like
TikTok and WeChat and the tech-heavy Chinext rising some two and a half percent on the news.
Some light relief ahead of what's expected to be tough talk on China at the G7 this week and let's get to the drivers on exactly that.
In the next hour, President Biden comes face-to-face with British Prime Minister, Boris Johnson in their first in-person event between G7 world
leaders since the pandemic began. They are expected to sign a new Atlantic Charter linking the two nations.
With more, Arlette Saenz is at the Summit in Falmouth, England, Cornwall for us. Arlette, great to have you on the show with us. I mean, there is a
whole host of things, whether it is COVID, climate change, the challenges of course of bringing these nations together in pandemic times even as they
are in person, talk to us through what we can expect today.
ARLETTE SAENZ, CNN WHITE HOUSE CORRESPONDENT: Well, Julia, we will see President Biden and British Prime Minister Boris Johnson meeting for the
first time face-to-face in just the next few hours, and President Biden has stressed that part of his goal on this trip is to re-enforce and emphasize
that special relationship between the United Kingdom and the United States.
But there are a host of issues that we are expecting the two leaders to address during their bilateral meeting. They will be signing that new
Atlantic Charter.
What administration officials are really saying is that this Charter is needed to address the threats facing the 21st Century. It has been over 80
years since the last one had been signed, so that is something that the two men will really be discussing today.
There are also other issues that are of interest to both the U.S. and the United Kingdom. President Biden taken a particular interest when it comes
to Northern Ireland, and he believes that Brexit potentially jeopardizes a peace agreement in Northern Ireland. That is an issue that he is expected
to bring up with the British Prime Minister, though officials say that he doesn't -- he tends to be confrontational as they discuss those matters.
But in addition to the substance, there is everything about that personal relationship between the two. Biden has spent many years cultivating
relationships with foreign leaders, but this is the first time he will be sitting down with Boris Johnson.
They have held a few phone calls since Biden has taken office and even before he had taken office, Biden recognized there is a warm relationship
between President Trump and Boris Johnson at one point, even saying that Johnson was the physical and emotional clone of the President, but we will
see if any of that types of those comments, I don't think that will be playing out in this meeting, but we will see what the two men are like
interacting as they are leading these two countries that have been closest of allies for so many years.
[09:05:00]
CHATTERLEY: Yes, body language at these things, always fascinating. Perhaps, less so than we've seen with recent administrations, but something
I am looking forward to as well.
Arlette Saenz, great to have you with us. Thank you.
And we'll have more live coverage of the Summit throughout the day here on CNN.
Now, as G7 leaders prepare to discuss the climate emergency, there is a double call for action coming from corporate America. Investors with more
than $40 trillion under management are telling world leaders to step up their climate game. In a separate letter urging the U.S. markets regulator
to mandate climate disclosures.
Clare Sebastian has all the details on this. Let's start with the first point first. This is a call by huge investment managers, businesses around
the world saying, look, and governments have to do more to tackle the climate emergency. Walk us through what they're saying.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia. This isn't the first time that we've had a call to arms like this from the investment
community. There was a similar letter, in fact, last July, but I think now that we head into the G7, we've got COP 26 in November, the U.S. is back in
the Paris Climate Accord, and in the wake of COVID-19, when countries are sort of rebuilding and retooling, the moment, it feels like it's being
seized to sort of rebuild in a different greener way.
So, what these institutions, everything from Swedish, Canadian pension funds, American pension funds, investment managers like PIMCO and Allianz,
they're all joining together, and they are basically saying that government targets don't go far enough at the moment. And if they aren't stepped up,
then these institutions with their trillions of dollars in capital to allocate won't be able to harness the opportunities of a greener economy.
I want to read you a quote, they say, "Our ability to properly allocate the trillions of dollars needed to support the net zero transition is limited
by the ambition gap between current government commitments and the emission reductions needed to limit global average temperature rise to 1.5 degrees
Celsius."
So, they want all countries, Julia, to commit to net zero emissions by 2050. They want them to stop subsidizing fossil fuels and to sort of
reinvest back in the greener economy, and they say that countries that lag behind in terms of targets will be at a competitive disadvantage when it
comes to investment.
So, leveraging the competitiveness between nations, and really huge swathes of the business and investment community getting behind this.
CHATTERLEY: Yes, whenever we talk about this now, I'm vividly reminded of the conversation I had with the International Energy Association's chief,
and he was saying, look, what we have to do today is no investment in new fossil fuel supply projects. No sales of internal combustion cars --
passenger cars by 2035. The electricity sector by 2040 has to be net zero in terms of emissions.
I mean, in order to achieve this, action needs to happen yesterday, and it has to happen in such huge scale, which is why it's also important when
you've got big companies like Uber, Salesforce, and Apple stepping up and saying, mandate this. Regulators need to have companies showing what
they're doing in order to address some of these challenges.
The U.S. Chamber of Commerce, less convinced -- Clare.
SEBASTIAN: Right. I think the point of the second letter that you refer to where, you know, 180 investors joined with 155 companies and nonprofit
agencies, they've got $2.7 trillion in assets, and they're saying that they can't make the right investment decisions unless they have transparency
into the climate risks that companies are exposed to. This can be everything, Julia, from physical risks to real assets from sort of
unexpected weather events triggered by climate change to what they call transition risks they say opposed by regulatory, technology, economic and
litigation changes in the shift to a net zero economy.
And their concern is not only the lack of transparency impacting investment decisions, but that these can have very unexpected effect on financial
markets and that could threaten financial stability. So, that is key. They want the S.E.C. to set industry specific metrics. They want regular
updates, regular reviews of the rules, and that they will increase transparency.
But Julia, going into the G7, leaders are, you know, under intense scrutiny. Boris Johnson is taking some flak on Twitter for tweeting a
picture showing him arriving in Cornwall by jet, which is obviously much more carbon intensive than arriving by train. He has justified this that he
has said, Julia, that -- he points out that the U.K. is actually in the lead in developing sustainable aviation fuel. He wants to get to jet zero
as well as net zero, but yes, a lot of scrutiny there.
CHATTERLEY: Yes, it's quicker than walking. I suppose you could have cycled aboard one of those Boris bikes, of course, when he was mayor. Yes.
Clare Sebastian, thank you so much for that.
Okay, back to our top economic story. U.S. consumer price inflation causing some agitation. Christine Romans is here. Christine, great to have you with
us. Prices in May rising at the fastest rate in what -- near 13 years. But oh boy, if you're buying a used car, it's costing you some money.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Unbelievable. Some of these categories, not just double digit gains, but really big, big
gains for some of these categories, and the government ticking through all of these things that rose -- used cars and trucks, household furnishings
and operation, apparel, airline fares, vehicles, really just stunning across the board gains.
[09:10:12]
ROMANS: It is really the story of the reopening, right? No question there. You've also had some supply hiccups that have caused problems in certain
categories. So, not only do you have increased demand, because of the reopening economy and the success of the reopening economy, but you also
have these supply hiccups from what was an unprecedented shutdown overall here.
When we look at that core rate, which strips out the volatile food and energy, the biggest increase since 1992, which was a roaring economy back
then. So, the superlatives for this report are all -- they are all there. The question is, is it temporary? Or is this something that is the
beginning of something more dangerous that hurts the economy and the recovery overall down the road?
At this point, you know, a lot of folks are hoping that this is just working out the kinks of a reopening economy and some of those supplies
snafus, but overall, doesn't turn into something more dangerous.
CHATTERLEY: Yes, I mean, that's the key question. At this moment, consumer demand is rebounding far more quickly than the economy can create supply to
meet it. The question is, how quickly do we deal with those bottlenecks? And does it sort of filter away over the coming months?
Christine, for that, to your point, you have to look at core. You have to look at things that are stickier -- rent, medical care services, things
that are less easy to adjust downwards once those prices are paid. What do we make of what we're seeing there -- wages is another one?
ROMANS: Well, you know, those are the ones that cause the concern, you're absolutely right, because they're not easily reversible and they have such
a -- sticky is a very good word to describe them -- so watching that core rate, really importantly here.
The core rate increase from April to May was seven-tenths of a percent. That is a big -- that's a big one-month move. You know, it really is. Is it
transitory or is it something that is longer lasting? There, you're looking at the overall not the core, but you know, that's what -- we just don't
know. There is no blueprint for this right, Julia? That's the thing that's so interesting to me, there is just no blueprint for this.
In labor numbers, you know, we saw the number of first time jobless claims decline or grow 376,000, but that is the weakest we've seen of the
pandemic. That's good. You're seeing the layoffs slow, and you're going to start to see people rolling off those unemployment benefits.
But so far, companies had to pay up with recurring bonuses and one-time signing bonuses and higher wages to get workers back in. That will be an
important inflation number to watch -- the wages.
CHATTERLEY: And we shall continue to do it. Christine Romans, thank you so much for that.
ROMANS: You're welcome.
CHATTERLEY: Okay, moving on. Meat supplier, JBS U.S.A. revealed it paid an $11 million ransom after a cyberattack shut down its entire U.S. beef
processing operation. The company CEO says it was a difficult decision, but it paid the ransom to protect customers.
Brian Fung joins me now.
Brian, a few details in this that are quite remarkable. They paid the money, they paid in Bitcoin, I believe. And they paid critically after most
of the facilities were back online because they were concerned about potential further threats, and this is the challenge.
BRIAN FUNG, CNN TECHNOLOGY REPORTER: Yes, Julia, this is just a tremendous amount of money we're talking about here, $11 million paid by, you know,
one of the largest U.S. meat processors in the country to these hackers that essentially held the company hostage.
And the CEO is saying that it had to -- he had to make this payment in order to ensure that his company continued to function and serve both
customers and shareholders here. What's really interesting about this is that when you think about the amount of ransom that Colonial Pipeline paid
to its hackers, just, you know, a number of weeks ago, $4.4 million, now compare that to the $11 million we're talking about today. That's more than
twice what Colonial paid.
So, this is truly just by all accounts, just a staggering amount of money, and when I talk to cybersecurity experts, they say this is the fundamental
problem for companies that are hit by ransomware. It's this calculation of, is it worth it to me to pay a little bit of money up front, a few million
upfront in order to forestall bigger, more troublesome headaches down the road if this ransomware problem spirals out of control?
And for many companies, that calculation is yes, it is worth it. And that is the problem that U.S. authorities and many cybersecurity experts say is
the biggest problem because ransomware is fundamentally a financially motivated crime. And so as long as companies are willing to pay up these
ransoms, the more it is going to encourage these hackers, and the problem is just going to get worse and worse.
[09:15:00]
FUNG: So, for JBS to be paying $11 million here to these REvil ransomware attackers, it really just highlights the scale of the problem and the
determination that the U.S. government is kind of up against here when it is trying to convince ...
CHATTERLEY: All governments.
FUNG: ... private businesses not to pay these ransoms.
CHATTERLEY: Absolutely, all governments, and as you say, paying this ransom is a green flag, but what do you do? It's a tough decision.
Brian, great to have you with us. Brian Fung, thank you for that.
And stay with FIRST MOVE for more on the ransomware risk. I'll be speaking to the CEO of cybersecurity firm FireEye, just a little later.
For now, let me bring you up to speed with some of the other stories making headlines around the world.
India has just recorded its highest single day COVID death toll after the State of Bihar revised its figures Wednesday. Today's death toll rose to
6,148. Bihar had underreported its death by nearly 4,000 people. India has the second highest number of new COVID cases in the world.
Singapore's Health Ministry says it will start easing its COVID restrictions next week, thanks to a drop in daily infections. It will allow
gatherings of up to five people starting Monday. Right now, just two people can gather. Restaurants can resume dine-in services the following Monday.
And Britain's Prince Edward is opening up to CNN about the pressures of Royal life. This follows his nephew, Prince Harry's denial of reports that
he had not consulted the Queen before naming his baby for her. The Earl of Wessex tells CNN every member of his family has dealt with such intrusions.
(BEGIN VIDEO CLIP)
PRINCE EDWARD, EARL OF WESSEX: It's very sad, and listen, we've all been there before. We've all had excessive intrusion and attention in our lives.
And we've all dealt with it in slightly different ways. And we wish them the very best of luck, it's a really hard decision.
Fantastic news about the baby. That's great. I hope they'll be very happy with that and you know, it's just -- families are families, aren't they,
really?
(END VIDEO CLIP)
CHATTERLEY: Still to come on FIRST MOVE, cyber scare, FireEye CEO on tackling the cyber criminals holding us all to ransom.
And customers hungry for a return to normalcy are forcing post-pandemic prices higher, says the CEO of Stew Leonard's, he joins us later, too. Stay
with us.
(COMMERCIAL BREAK)
[09:20:03]
CHATTERLEY: Welcome back to FIRST MOVE. Lots of buzzworthy stories this Thursday for you.
In the United States, the swarming cicada insects are attacking, consumer inflation is certainly not lacking, and transatlantic tourists may soon be
packing. The U.S. and the U.K. are trying to get flights up and running again, I can tell you my bags have been packed for months.
In the meantime, the U.S. wages now trying to take flight premarket. The Dow set to move higher after falling for three straight sessions. The
inflation sensitive NASDAQ also turning higher, too, despite today's hotter than expected read on consumer prices.
Plus, consumers may be ready to look past the sticker shock at the stores, though, the National Retail Federation seeing U.S. retail sales up as much
as 13.5 percent this year. That's more than double its previous forecast.
Now, the mantra, "better not bigger" is driving UPS, the world's largest package delivery company. Investors though slightly more cautious, perhaps
with Wednesday's Investor Day event. Their stock closed down some four percent. UPS is shifting further towards healthcare contracts and serving
small to medium sized businesses.
I've also noticed a carbon neutral target by 2050. There is lots to discuss.
Carol Tome, is the CEO of UPS and joins us now, and Carol, we have much to discuss and great to have you with us. But I can't help but notice your
uniform, and I'm assuming that's not a daily occurrence. What are you up to today?
CAROL TOME, CEO, UPS: Well, hello. It's so good to see you today. And no, it's not a daily occurrence, but I'm thrilled to be at our Roswell facility
in Atlanta, Georgia. I'm going out for a ride along today with one of our package car drivers, as is our entire executive leadership team.
You know, every day that we can spend a day in the field is the best day because we get to talk to our UPS-ers and our customers, and that's how we
can learn how we can be a better company, just by listening.
CHATTERLEY: This is quite interesting, because you know, you have hired tens of thousands of what's known I think at UPS as a PVDs -- personal
vehicle drivers -- and that has caused some tension with your uniformed internal drivers.
Just talk me through the balance of the economics, too, of using those that come in and drive their own vehicles to deliver packages and parcels for
you versus the ones that you have in-house and are hired.
TOME: Well, we have 540,000 UPS-ers around the world, and since COVID, we've been operating at peak like levels within our business. And then
every holiday, well, our business -- Christmas holiday -- our business really peaks up, and so during the Christmas holiday season, we do bring in
helpers or personal vehicle drivers to help during that very busy season.
But it's just for a short period of time within the company, and we are able to manage through that. We really are totally invested in our 540,000
UPS-ers every day helping them grow their careers.
CHATTERLEY: Yes, and you're wearing the uniform to share it today, Carol. I mean, the company has had an incredible 12 to 15 months during the
pandemic. It helps to be a logistics business in a world where e-commerce rises off the charts.
Just looking at the share price reaction to what you were talking about yesterday in terms of forecasts, do you think investors just got a little
bit ahead of themselves? Or are you being a little bit conservative in terms of things like margin forecasts and how much money you can make over
the coming years?
TOME: Well, you know, I've learned over the years, I've been doing this for a long, long time -- I've learned over the years not to react to a
day's performance in the markets. And I will call out that since I became the CEO about a year and 10 days ago, we've doubled the market cap of the
company. But as it relates to the guidance that we gave yesterday, I think it was a little bit of investors got ahead of themselves and we were a
little conservative.
And during our conference call, we did try to re reinforce how confident we are in the future of our company and our ability to deliver higher returns,
higher operating margin and higher return on capital.
CHATTERLEY: Talk to me about the opportunities for better not bigger because you are honing in on medical deliveries on the small and medium
sized businesses, as I mentioned. I think you're also doing a lot of work on the digitization and just making it far more accessible I know for
consumers as well in terms of getting where, getting their packages where they need to go and finding out that information.
Carol, how do you compete over the next two to three years as Amazon, for example? I know they are biggest customer for you, too, or one of the
biggest, it continues to raise their own delivery logistics operations as well. Is there enough room for all?
TOME: Well, if you look at the United States alone, the small package market is expected to grow from $138 billion last year to $195 billion by
2023. That's a lot of growth, a lot of opportunity for UPS to grow in the areas of the market that we want to grow.
Not every package is attractive to us, candidly. We are leaning into the areas of the market that we can serve best. That includes small and medium
sized businesses, as well as healthcare. And in order to serve those customers, we are investing in 16 customer journeys that make it simple and
helpful for those customers.
[09:25:17]
TOME: That's what they're looking for and what we find as we improve the experience, they stay with us. And then as it relates to healthcare, well,
we're proud to be part of this moment, of delivering vaccines around the world.
We've been in the healthcare logistics business for over 20 years, but we were able to mobilize. We started by delivering over 250 million COVID
testing kits, and because we were at the forefront of biologics, we were ready to deliver vaccines when the F.D.A. approved those. As of late May,
over 300 million vaccines. By the end of this year, we will have delivered over one billion vaccines.
CHATTERLEY: Yes, and I remember having a conversation with one of your executive team members about just the challenges involved in that. And I
believe over 99 percent have arrived in great form, proper temperature and ready for use, so huge credit to you and the team.
Carol, I should ask about cyber risks in light of what we've seen and the discussion going on. Given your importance in terms of logistics for not
only the United States, but beyond, how focused are you on mitigating those kinds of risks at UPS?
TOME: It's top of mind for us. Imagine, just the volume of packages that we deliver in 220 countries and territories around the world. We have 2,000
flights a day. So, we are at real risk for attack. And we have stood up, I would say best in class team that is putting a moat around us in terms of
protecting us for cyber risk.
But we can never take it for granted. We are religiously focused on making sure that we are secure because there are attacks that come in all the
time, but we are able to ward those attacks out.
We're investing hundreds of millions of dollars to protect our company, and it is top of our minds.
CHATTERLEY: Yes, it's good to hear and Carol, I do want to talk about your climate targets as well, because that's a huge topic, too. And what did
catch my eye was the target by 2023 for the 50 percent reduction in CO2 per package delivered. I mean, that's beyond anything else that you're
targeting. That is a huge -- hugely ambitious target, how are you going to achieve that? And is some part of this carbon offsets?
TOME: So, we are -- we think it's important, you know, part of who we are is making the planet a healthier planet. And, you know, we emit a lot of
greenhouse gas emissions, 37 million metric tons. So we're like, all right, we've got to take action to become carbon neutral, and we're doing it in a
very engineered, financially responsible way and this carbon density that you mentioned, reducing the CO2 per package by 50 percent by 2035, it is
not going to be easy, but we've got an engineering plan to do so.
CHATTERLEY: Carol, it's been great to have you on the show. Have a great day making that UPS outfit there look very chic. Have fun with your team.
TOME: Well, thank you very much and here I go to deliver packages. Great to see you.
CHATTERLEY: I know, on the job.
TOME: Thank you.
CHATTERLEY: Carol Tome there, thank you so much for your time. The CEO of UPS.
We are back after this. Stay with us.
(COMMERCIAL BREAK)
[09:31:29]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stock markets are open for business this Thursday and we've got a higher open for the Wall Street
majors. Call it perhaps some inflation rationalization going on.
The U.S. reporting that consumer prices rose by a greater than expected five percent year-over-year last month, but investors still believing it's
all transitory. Also today, U.S. jobless claims hitting yet another pre- pandemic low falling further below that 400,000 level.
Meme stocks, by the way, in the meantime mixed amid news from GameStop that the S.E.C., the Securities Exchange is looking into massive moves in it
shares. The video game retailer says it is ready to cooperate fully with regulators. More on the memes later on in the show.
In the meantime, Bitcoin, also higher despite fresh warnings from JPMorgan that it sees a bear market for Bitcoin, as well as ongoing regulatory
concerns stemming in part from Bitcoin's use as a preferred payment for cyber criminals.
And on that note, the CEO of top security firm, FireEye warns were being quote, "sucker punched" in cyberspace. The evidence for that? Well, it's
everywhere.
Hours ago, meat giant, JBS U.S.A. admitted paying $11 million after a ransomware attack. Last month, the crucial Colonial Pipeline was offline
for days when it was targeted by cyber criminals. Meanwhile, new CNN reporting found a doubling of cyberattacks in the E.U. over the past year,
with a frightening 47 percent increase in attacks on hospitals.
Joining us now, Kevin Mandia, the CEO of FireEye. Kevin, much to discuss and great to have you with us. I want to do a deep dive on what's going on
here. But my first question is simple: are we making it worse by paying these ransoms?
KEVIN MANDIA, CEO, FIREEYE: Well, you know, first off, nobody wants to pay a ransom, start with that one. And that's usually the default beginning for
all of these. But I think the calculus is different by industry, because you have to look at the risk. And that's why you just said, they are
targeting hospitals.
Because if you're a ransomware actor and you break into healthcare, you impact the devices that maintain human life, the risk calculus is going to
be very different in regards to payment of ransomware, than if you run another type of business.
So the bottom line, the ransomware actors are targeting specific industries and public companies recognizing that the likelihood of being paid is far
higher in those industries.
CHATTERLEY: And that's the key. They're going for critical infrastructure, things like hospitals, like food supply, like fuel supplies, for example.
Are you therefore in favor of banning these payments, take away the incentive to do another attack?
MANDIA: You know, it's tough, and you'd love to have a simple answer. And really, when you go to the extreme, obviously, Julia, if you pay ransoms,
you're propagating the challenge. But the reality is there are probably risk decisions that are made, where if you're a hospital, and ransomware
hits you, you may make the decision it is better to pay now and de-risk our patients than the risk of moving your patients out of the hospital.
So I think a ban is far more complicated, once you get below the surface and you really look at the issues. I mean, I've talked to the CEOs who have
to make these decisions, Julia, it's not simple. Nobody wants to pay it. Nobody wants to propagate the problem, but they also don't want to hurt
human life.
CHATTERLEY: Yes, I mean, in the last couple of days, we've heard from them that it is the toughest decision they've ever had to make in a leadership
position, and I couldn't agree more with that.
So, we can't be on the defensive. We can't and shouldn't be having to make these decisions. We should be on the offensive, Kevin. Let's explain why
this is happening and why we're seeing this huge acceleration, particularly in the last year and a half.
Is it about the fact that we're introducing vulnerabilities with greater digitization working from home? Or is it just that the software that allows
hackers to mount these attacks is more available?
[09:35:29]
MANDIA: Well, I think the biggest reason, Julia, these keep happening is we're only playing defense. The best defense in the world gives up
touchdowns. That'll be my football analogy for today, and that's all we're doing.
If you can commit a crime from 10,000 miles away in a safe harbor with no risk of repercussions, you're just going to keep taking shots, period,
indefinitely. And sooner or later, they're going to work.
If we don't find a way to impose risks or repercussions to those launching the ransomware attacks, over time, every company is going to have to deal
with one.
CHATTERLEY: Define repercussions, in this case, because what we've seen, particularly in the last couple of cases, we believe is that these attacks
aren't being done from the United States, they're being done from other countries, countries, where the leadership has pretty little incentive,
quite frankly, to do anything about these hack attacks or target the hackers themselves. So, how do we create repercussions?
MANDIA: Well, very simply, we're an international community, the internet has connected all of us. It's all -- you know, it's been around since the
1980s. We've got to figure out how we're going to work globally on this.
If you want to be part of the global economy, the bottom line is, I think there's rules you're going to have to follow and you cannot condone bad
actors that are stealing potentially billions of dollars from other nations.
So, I think the answer is not just technological, Julia, it's also going to be diplomacy, potential economic levers that you can pull, but it's going
to take nations banding together to figure out what are we going to do about this? Because most people will think it has crossed the line of
toleration. Status quo is no longer tolerable.
CHATTERLEY: Yes, there has to be economic and financial consequences as well. Talk about the impact of digital currencies because what we have
heard in recent weeks is that these payments aren't being demanded in U.S. dollars, digital currencies are being given as an option, and that's how
they're being paid.
MANDIA: Absolutely, Julia. That's been the progression. It used to be if you're an attacker, and you wanted to monetize your hacking capabilities,
you'd hack into computers and steal credit card data when you purchase things, or you'd hack and change applications, so you could fraudulent the
order things.
Now you break in, and you can deploy ransomware or you can steal documents and extort the fact that you're going to publicly release private
documents. Digital currencies are basically anonymous currencies. So, you add the anonymity of digital currency and now you can commit a total crime
from 10,000 miles away from the victim, be anonymous in cyberspace during your attack, and be anonymous in cyberspace collecting the payment via
digital currencies.
So, there's no question digital currency in its form today, how it is managed today does enable cybercrime.
CHATTERLEY: I mean, in the Colonial Pipeline case, and well, we can come back around to that, the payment was recovered for various reasons. There
has to be a protocol here.
And I think what we also heard in the past week was that, you know, these CEOs, they weren't quite sure what to do, they weren't sure of the
protocols. Fortunately, in both cases, they called the F.B.I., and we're like, guys, this is what's going on. What do we have to do?
Is the very basics here in terms of companies, and obviously, you advise many of them on how to tackle these things, that we need a protocol? This
is what you do. This is who you call. This is how the payment is made in order to try and be able to trace the money and recapture it quickly if we
can.
MANDIA: Well, Julia, you're describing the age old problem with every technological advancement, criminals figure out a way to use it, and a lot
of times, they're faster at innovating on how to use it to make money and enable their enterprise than the good guys.
So, there's no question we have to do a little catch up now and look at digital currency and figure out, how do we manage it in a way that's
meaningful and prevents all the fraud that's currently occurring with the enabling digital currencies?
CHATTERLEY: Okay, Kevin. Upshot? Are we winning this war or losing this war? And does it just mean more spending required both from the private
sector and the public?
MANDIA: Well, I think it's an ongoing effort. You know, you don't win the fight on crime overnight. Quite frankly, you're just always fighting it
every single day, Julia. So, just because you read the headlines, we're certainly getting better. We're certainly looking at ways for nations to
respond more cohesively, and that's been the dialogue in the United States. How do we respond not just as individual companies, but as a nation to the
cyber threat? So we're going to get better at this.
CHATTERLEY: And the international community, to your earlier point, and we're all in it together.
MANDIA: You bet.
[09:40:01]
CHATTERLEY: Kevin, fantastic to chat with you. Kevin Mandia, the CEO of FireEye. It's going to keep you busy, certainly. Thank you for that.
Okay, a big inflation number here in the United States. The cost of everything is up including food. The CEO of Stu Leonard's describes what it
means for him and his customers. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Inflation is jumping. U.S. consumer prices soaring five percent year-on-year in May. That's the
hottest pace since August of 2008. And prices are rising for everything including food at grocery stores and someone who understands a thing or two
about that is FIRST MOVE favorite, Stew Leonard, Jr., the CEO of supermarket chain, Stew Leonard's.
Stew, fantastic to have you on the show. Oh my goodness, I want to talk to you about rising food prices, but I can see you're injured. What have you
been doing?
STEW LEONARD, JR., CEO, STEW LEONARD'S: Well, I actually rising -- well, this from dealing with all of our suppliers trying to get better prices for
our --
CHATTERLEY: You've been wrestling.
LEONARD: No, but I just fell off my bike. I got a little injury, but I'm recovering right now.
CHATTERLEY: Okay, good.
LEONARD: Thank you.
CHATTERLEY: Basically, you've been holding back those customers that have been storming back after the relaxation as COVID rolls as well.
LEONARD: That's right.
CHATTERLEY: Exactly.
LEONARD: That's it. I think maybe, you need this at CNN, too.
CHATTERLEY: I know. I'll come and defend you next time. Talk to me about what you're seeing from suppliers in terms of prices, for consumers in
terms of demand and what you're seeing with prices, because that's what we want to know.
LEONARD: Well, you know, Julia, we've been -- I've been in the business 50 years now. I've started as a kid here and we have a retail, you know, seven
retail stores in the Metro New York area, and I've seen prices go up and down and all around over the years based upon supply, but I've never seen
anything quite like this before.
We've seen our meat prices probably go up to record high levels right now, especially the center cut steaks, the strip, the ribeye and the
porterhouse, because the demand is so strong with all our restaurants booming right now. So, there's been an unprecedented increase in especially
meat prices right now.
CHATTERLEY: What kind of jump are we talking about?
LEONARD: Well, sometimes, you're talking about two, three, four dollars a pound for this stuff. And you know what? Our suppliers are great people. We
have ranchers out West. We have shrimpers down in Florida. With New Bedford, they bring those scallops. These are all family farms that Stew
Leonard's buy from.
[09:45:09]
LEONARD: And they're just saying to me, Stew, look, I put a hundred gallons of gas in my tractor every day, and that price now has doubled for
diesel fuel. What can I tell the farmer who wants to pass along some of those expenses to us at Stew Leonard's?
I'm trying to absorb as much of it as we can right here. Like we have some great specials going on for Father's Day and even Fourth of July. So, we're
trying to absorb as much, but we can't absorb everything.
CHATTERLEY: Yes, and also, you made a great point. It's not just about food prices, it is fuel prices. It's all sorts of things that are
contributing to this. You raised a great point and you said, look, I've been watching this for, you know, 50 years. Do you have a sense of when
something is just temporary? Or when something is meaning, that it's going to be around for a while?
LEONARD: In other words, is it inflationary or is it just supply and demand right now?
CHATTERLEY: You've got it.
LEONARD: For right now, like our cold storage facilities are empty. You know, it's almost just in time right now. So capacity is still there. So,
demand is just so strong right now. I think that's driving a lot of prices. My fingers are crossed that prices will come back down again.
I think a little bit of this is going to be inflationary, but I think there's a lot of it right now that I'm noticing, you know, it's just hard
to get some items right now. You know, you have to beg our suppliers even get chicken wings right now. There is a chicken war.
Look at Burger King, look at McDonald's. Everybody has a chicken sandwich now. I mean, someone has got to make all that chicken for them. And there's
a shortage of product right now in certain areas. Once that gets filled in, I think we'll see prices come down.
CHATTERLEY: Yes, demand just come roaring back so quickly, as we were saying earlier on the show, it's just tough to adjust supply at the same
speed. What about hiring, Stew, because this is one of the other conversations that we keep having in the United States and the fact that
small, medium businesses in particular, even large ones are having to raise wages in order to get the workers that they need. What are you finding?
LEONARD: Well, that's another thing, Julia, that we're hearing is a lot of our suppliers and farmers, they only have about three quarters of the
people they need right now.
I think the stimulus is great as it is for the economy. It is also motivating people not to work. So, even at Stew Leonard's, we used to get
25,000 applications a year for a job. And right now, we're tracking about 10,000. So there's less people out there.
We could use chefs. We could use butchers. We could use fishmongers. We can use all sorts of people, we just can't find them in the market right now.
CHATTERLEY: That's 10,000 applications for how many jobs by the way?
LEONARD: Well, we'll be -- well, right now because of summer, and you know, we give really good benefits so there's going to be a lot of
vacations among our long term people. So, we'll probably need about 300 or 400 people.
CHATTERLEY: Wow. But that's a lot of demand for relatively few places. It must be a great place to work, Stew.
LEONARD: Well, we were Fortune 100's best company for 10 years in a row.
CHATTERLEY: I know you were.
LEONARD: Yes. Hey, Julia, you know, what I would just recommend to everybody who is watching is that there are specials going on at your
different food stores right now. Like, I'll give you an example. This is going to be like a rock star right in the summer, ground chuck. You can get
this right now for $2.99 a pound. That's really -- that's on special right now.
So what I would recommend for the customers right now, you can't dodge these naturally occurring increases and food costs. But you can shop here
and then freeze it. You know, let's learn what we learned in the pandemic. Everybody was panic buying and freezing. So, I would say right now you
don't have to panic buy because our shelves are full. Nobody should like, you know, freak out right now. There's plenty of food on the shelf.
It's more difficult to get, driving prices up a little bit, but there are specials. Get the specials and freeze it at home and you won't even notice
a price increase in food.
CHATTERLEY: Just one of the things we love about you. I vividly remember during the pandemic you were telling me you know, buy potatoes and pill
them yourself and don't buy the pre-cut ones to save money as well.
LEONARD: You bet.
CHATTERLEY: You see, Stew, you're full of great ideas. Feel better soon, please. We hope your arm recovers and great to chat with you, as always.
LEONARD: Thanks.
CHATTERLEY: Stew Leonard, Jr., the CEO of Stew Leonard's.
LEONARD: Thank you very much. Thank you.
CHATTERLEY: Thank you, sir.
Okay, let's move on. The game continues at GameStop, but a new player will be holding the controller, the darling of retail investors is changing its
leadership as losses deepen. That's next.
(COMMERCIAL BREAK)
[09:52:00]
CHATTERLEY: Welcome back to FIRST MOVE. A change in leadership and the stock trajectory perhaps at GameStop, the video game retailer tapping to
Amazon veterans to help turn around its business. The company also reported a bigger than expected loss in the latest earnings. Its fourth quarter in
the red in the last five.
Shares are trading lower after more than doubling in the past month. Paul La Monica joins us now. If in doubt, hire some Amazon workers, I mean to
run the place, not just to work there. What do we make of this -- Paul.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think it's a fascinating move, Julia. You have Matt Furlong and Mike Recupero coming in as the CEO
and CFO of GameStop. Furlong, most recently, was running Amazon's Australia business. Rucepero has various backgrounds, as you know, running -- being
the CFO of different Amazon subsidiaries.
I think what investors really want, though, that they didn't get yet is a strategy both from these two individuals coming in, as well as Ryan Cohen,
who is now officially the Chairman, the ex-Chewy CEO. People really want to hear what is the strategy?
It's great that GameStop is going on a hiring binge and hiring Amazon and ex-Chewy people, but what are they going to do to actually turn around the
fortunes of the firm? Because as you pointed out, they posted another loss. Revenue did top forecast which is nice, but they're still losing money and
they're planning to sell more stock as well cashing in on their meme notoriety that might be rubbing some investors the wrong way also, oh, and
by the way, there's an S.E.C. investigation.
CHATTERLEY: And that's where I was going to go next. But before that, I was going to say, Paul, the strategy is, what's the game plan, GameStop?
You missed that opportunity. But I do think it's an umm for memes when one of them says, look, we're talking to the S.E.C. They're asking us questions
and they kind of hint that they're talking to others, too.
LA MONICA: Yes, GameStop clearly said in an S.E.C. filing that the S.E.C. has contacted other companies as well. So what does that mean? Is it AMC?
Is it BlackBerry and Nokia? A group of companies now Blackberry, AMC, Nokia, GameStop, people are calling them the BANG stocks, a play on the
FAANG stocks of Big Tech fame.
I think a lot of investors, they have to figure out all of these meme stocks, it is great squeezing the shorts that may be unfairly punishing
some of these companies, but many of these firms, they need to really articulate what their turnaround strategy is going to be because most of
them have to figure out how to survive in a post-pandemic world.
CHATTERLEY: Yes, focus on the fundamentals and ASAP. Paul La Monica, thank you so much for that.
Okay, fancy some century old bubbles? Acker, the largest U.S. wine auction house is selling nearly 900 bottles of vintage champagne. It includes a
bottle of Brut Imperial from Moet & Chandon that dates back to 1911. The whole collection could fetch $10 million. Cheers to that.
[09:55:01]
CHATTERLEY: And finally, a sight to behold in the skies over parts of the Northern Hemisphere earlier today, when the moon partially blocked out the
sun in a partial solar eclipse. We had a good look, I couldn't see it.
Here is another view though from NASA. You can see why they call it the ring of fire. And if you missed it, the next eclipse takes place on
November 19th, but don't forget proper eye protection as my mother always warned me.
That's it for the show. If you've missed any of our interviews today, they will be on my Twitter and Instagram pages. You can search for
@jchatterleyCNN.
In the meantime, and as always, stay safe.
"Connect the World" with Becky Anderson is next.
We will see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
