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First Move with Julia Chatterley
E.U. and U.S. Settle the Airbus Dispute after 17 Years; President Biden Heads to Geneva for His Showdown with Vladimir Putin; The Fed Meeting Starts as Jamie Dimon Warns on Rising Prices. Aired 9-10a ET
Aired June 15, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:22]
PAULA NEWTON, CNN INTERNATIONAL ANCHOR: Live from New York. I'm Paula Newton, in for Julia Chatterley and this is FIRST MOVE and here is what you
need to know.
Trade touchdown. E.U. and U.S. settle the Airbus dispute after 17 years.
Diplomacy taking off. President Biden heads to Geneva for his showdown with Vladimir Putin.
And inflation turbulence. The Fed meeting starts as Jamie Dimon warns on rising prices.
It's Tuesday. Let's make a move.
And a warm welcome to everyone. This is FIRST MOVE and we are live from the New York Stock Exchange where U.S. stocks are sitting at fresh record highs
and investors are pouring over important new economic data just out in the last few minutes. It was disappointing data though all around.
The U.S. reporting within the past hour that U.S. retail sales fell a greater than expected 1.3 percent last month, and prices at the factory
level now, the closely watched PPI rose by a hotter than expected 0.8 percent in May, that's one month alone and a record 6.6 percent year-over-
year. Now, that follows a stronger than expected spike in consumer prices during that same period.
JPMorgan CEO Jamie Dimon saying yesterday that there is quote, "a very good chance that inflation is here to stay." Now, the Fed begins two days of
meetings today to discuss its response to the rise in pricing pressures. U.S. futures weakened a bit after the release of today's data. But I've got
to tell you, they are kind of meandering.
It looks like a mostly flat open. Both the S&P 500 and the NASDAQ closed at fresh records yesterday. Yes, you blinked and you missed that. Meantime,
European stocks are up for the eighth straight session. The U.K. reporting its strongest month of job gains ever last month -- that's ever -- a rise
of almost 200,000. But still some half a million jobs below pre-pandemic levels.
It is though a mixed day in Asia with Chinese shares falling almost one percent that's after the public holiday, a reaction perhaps to that sharp
tone, right, that we heard yesterday from G7 leaders. They took a sharp tone at both G7, but also NATO in their recent meetings.
We want to head straight to those drivers, the U.S. and the E.U. have settled the longest running trade dispute in world trade history, the
conflict over government and subsidies for Boeing and Airbus is ending after 17 years. Anna Stewart is on top of this. She has been watching this
develop throughout the day here.
It is an impressive start to perhaps a renewed U.S.-E.U. relationship, but I was struck by the fact that they will -- you know, define what exactly
constituted a subsidy. I mean, this is really the crux of the matter here. And yet, the two sides seem to be giving each other lots of latitude.
ANNA STEWART, CNN REPORTER: Yes, Paula, what is in that small print? They talked about how they've agreed on quote, "acceptable support for aircraft
makers," but they don't really go into much more detail beyond that.
You are right, though, this is generally good news. I mean, this ends a spat that has been going on for the best part of two decades. I haven't
just been watching it all day long, Paula, I have been watching it for years, as have we all.
Now, tariffs on both sides are now suspended for five years. They were actually already suspended back in March, which was to give both sides a
little bit of breathing space for these negotiations to take place. There were great hopes that the Biden administration would see this happen and it
has. Very good news, not just of course for the plane makers, but all of those products from Europe and the U.S., which were at one stage subject to
tariffs.
So, we're talking about Parmesan cheese, French wine, American made suitcases, you name it, it was a very long list. Now, the U.S. trade rep
has said that this settlement resolves a long standing trade irritant in the U.S.-Europe relationship. Instead of fighting with one of our closest
allies, we are finally coming together against a common threat.
And she went on, Paula, to talk about how the U.S. and the E.U. can work closely together to combat some of the trade challenges posed by China,
particularly on their nonmarket practices and economic abuses. So, good news there and it gives you a little hint of maybe what more could happen
as the year progresses -- Paula.
NEWTON: Yes, it is certainly a message certainly to countries like China that look, we have a united front here and yet, those trade disputes get
very heated, especially when they start to bring in to focus the local disputes, right, if you've got a local MP or if you've got a local
congressman who is dealing with these trade disputes up close and personal.
I still am a bit skeptical that this is really going to be as smooth sailing as they want to think it is after the Summit.
[09:05:07]
STEWART: Particularly if we start to think, of course, about the tariffs on European aluminum and steel, the steel makers are a very powerful lobby
in the United States. However, part of the reason there are tariffs on European steel, of course, are because China's cheaper steel floods the
market.
So, the idea that these talks are discussing how to combat the challenges raised by China hints that perhaps that is something that could be solved
in the future. But yes, politically, very difficult for President Biden.
Also not resolved today, of course, the digital tax issue between the E.U. and the U.S. Those have now been wrapped up into much bigger international
talks around corporate taxation. But tariffs could potentially loom there as well in the future, if no agreement is reached.
We are told that the U.S. and the E.U. will be holding a Joint Council though today to address trade and technology issues. So, perhaps we get a
little more hint on that as well. But Paula, you're right, lots hasn't been resolved at this meeting.
NEWTON: Yes. And what's going to be interesting as well is just how industrial policy unfolds over the next few months, because that is what
they have to come to terms with, because each side disputes that industrial policy as absolutely necessary.
Anna Stewart, thanks so much, really appreciate you staying on top of this.
Now, NATO leaders concluded Monday's Summit by vowing to stand together against the challenges as we were just talking about -- posed by not just
China, but also of course, Russia. President Biden accused both of them of trying to put America's ties with Europe under strain.
(BEGIN VIDEO CLIP)
JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: The democratic values that undergird our alliance are under increasing pressure, both internally and
externally. Russia and China are both seeking to drive a wedge in our transatlantic solidarity. We're seeing an increase in malicious cyber
activity.
But our alliance is a strong foundation on which we can -- our collective security and our shared prosperity can continue to be built.
(END VIDEO CLIP)
NEWTON: Those words coming just a day before Mr. Biden meets Russia's Vladimir Putin in Switzerland. CNN's Moscow correspondent, Matthew Chance
is there. He joins me now live from Geneva.
Yes, suffice it to say, Matthew, you have done your fair share of these Summits. One thing that I think gets missed is the fact that by confronting
the West, this really plays to Putin's strengths, and especially plays to his strength at home.
Putting that aside for a minute, what do you think could be an economic incentive that the U.S. could dangle at this point in time that Putin might
actually be receptive to?
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, I mean, it's a tough one, isn't it? I mean, you know, look, I suppose that the U.S.
could hold out some kind of promise for increased trade in the future. But I mean, in terms of economics, what the Kremlin really wants is that they
want the raft of sanctions -- raft upon raft of sanctions that have been imposed on Russia for its malign activity around the world to be lifted.
But of course, you know, it's hard to imagine, isn't it, that Joe Biden, the U.S. President is going to walk into that meeting with President Putin
and say to him, look, we're going to lift sanctions on you, you know, what we imposed on you for specific reasons, while Russia isn't prepared to back
down on any of those issues.
For instance, on cyber warfare, it's continuing to do that, despite sanctions; its military threat against Ukraine, its annexation of Crimea,
that's not going to be reversed. And until it is, those sanctions are not going to come off.
The crackdown on dissidents, the poisoning and the imprisonment of Alexei Navalny is just the latest iteration of that. And, you know, there's no way
no matter what Biden says or thinks or wants that Congress is going to be lifting sanctions on Russia, until and unless it changes its activity.
And I mean, frankly, going into this Summit from the Russian side, I don't see any sign at all that the Russians and that Putin is prepared to do
that.
NEWTON: Yes, interesting. And I know you spoke with Dmitry Peskov in the last few days, he is as close as anyone to Vladimir Putin. And at this
point in time, when you're telling me that there doesn't seem to be much on the table. Clearly, when it comes to things like cyber security, Joe Biden
is saying he has a specific message rhetorically. NATO took a very strong stand the other day as well.
Is there any sign that Putin may budge a bit on that? It has become a potent rear flank for him and his contentions against the West.
CHANCE: Yes, it has and I think that probably behind closed doors, the Russians are congratulating themselves that they are so potent in in
cyberspace, and they are causing the disruption that they are causing. But of course, you know, the notion that President Putin is going to capitulate
on Russian activities in cyberspace is a nonsense because, you know, they don't even admit they engage in that activity.
You're not going to, you know, have President Putin, you know, kind of fess up to President Biden and saying, you know, yes, okay, we've done it in the
past, we will lay off in the future, they categorically deny that any kind of election meddling through cyberspace, any kind of cyber espionage that
had been blamed on the Russian secret services, any kind of ransomware attacks carried out by criminal gangs that get harbor inside Russia, as
part of the deal that they have.
[09:10:33]
CHANCE: You know, Putin denies that happens, that that exists. And so, you know, I guess time will only tell whether they ease back on their cyber
activities, but we're certainly not going to be seeing that as a concrete concession on the Russian side coming out of this Summit.
NEWTON: Right. And you make a good point. There has been a pronounced escalation in that in recent months, so perhaps you might pull back even a
little bit. Matthew Chance, glad to have you there for us. Appreciate it.
Now, retail sales fell 1.3 percent last month in the United States, that is more than analysts expected. The numbers showing that Americans upped their
spending on services, but spent less on physical goods maybe because they couldn't get their hands on them.
Christine Romans joins us now for the details. These numbers were a hot mess, Christine, as far as I'm concerned, I'm looking at the markets now.
They are not really moving in any way. This is still an inflation story. Still a Fed story, right?
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: It really is. You talked about maybe they couldn't get their hands on the goods, and I
think that's a really good point to make. I think we really need to be aware that the supply change snafus around the world are playing in all of
these numbers.
In many cases, you still have products that are stuck because of the Suez Canal clogging, right? You still have products that can't get to the
factories to get in the device to be made to be sold. So in some cases, a lot of this both on the price front and on just the retail sales front, is
that supply chain mess up.
Also, don't forget, at the end of March, that's when the latest stimulus checks were winding down. So, we saw April retail sales numbers revised up
as people were spending the last of their stimulus checks, and then you saw that decline after that.
So, a lot of different things around here. Hot mess is a very technical way to put it, I would say. You've got base effects that are going on, supply
chain woes, and you've got an economy reopening, a booming economy reopening, and all of the pipelines aren't just miraculously coming back
the way they were when we shut them down. It's just taking some time.
NEWTON: Yes, I'm glad you appreciate my expert technical analysis there, Christine. Jamie Dimon, this really floored me, okay. He is the head of
JPMorgan putting his money where his mouth is.
Christine, a half trillion dollars in cash. He is effectively saying he is stockpiling cash waiting for more opportunities to invest because he's
looking at the yield curve. He's looking at bonds and he's thinking the Fed has nowhere to go but up.
ROMANS: Yes. And higher interest rates will be more opportunities for the bank and you know, he said that. Look, it is also his job to be prepared
for what maybe is the outside risk that could happen, you still have the Fed calling things transitory, although, we'll see if that maybe changes
this week.
But Jamie Dimon is saying that he is concerned about the inflation story here. I will say, I'm going to say this again. I'm not going to contradict
the good Jamie Dimon here. He is entitled to put his money where he thinks it should go, but we've never seen something like this. There is no
blueprint for the supply hiccups that we're seeing, more than just hiccups around the world.
And there are a lot of people debating right now, if this is not inflation, this is just restarting that we're seeing here. Prices -- look at lumber,
for example. Lumber prices are coming down now. There was some kind of a bubble that happened there because of supply hiccups. And now it's more
normal, returning back to more normal levels. And maybe we'll see that and a lot of other things, too, including, you know, the auto industry where
you couldn't get the chips to build the cars, and so that's also distorting these numbers.
NEWTON: Yes, as usual, Christine, your analysis sharp as ever. It is good to see you.
ROMANS: Good to see you.
NEWTON: First time I am seeing you post pandemic.
ROMANS: I know.
NEWTON: So, take care, and we'll wait to see more of those numbers come through. Thanks so much, Christine.
Now, these are the stories meantime making headlines around the world. Olympic Games organizers in Tokyo just announced that every sports
delegation arriving in Japan will have a COVID liaison officer. It is one small piece of the latest Olympics playbook designed to try and control
COVID-19.
The Games are still set to start in about five weeks despite an immense pressure campaign for the event to be canceled. CNN correspondent Selina
Wang joins me now from Tokyo.
Long awaited, this playbook. How stringent have you seen these as they've unfolded? Because again, this has been a moving target over the last few
months, especially now that they're looking at the delta variant which is actually adding another sense of worry to these Games.
SELINA WANG, CNN CORRESPONDENT: Hey, Paula. Yes, this is the third and final playbook and what is clear here is that for participants and
athletes, it's going to be a major logistical challenge, a lot of bureaucratic hurdles are going to have to get across.
Now, when it comes to athletes, they are going to be tested twice within 96 hours before leaving for Japan, once when they arrive at the airport,
they'll be tested again, and then tested daily.
[09:15:10]
WANG: In addition to that, they are going to be asked to wear masks as much as possible, avoid public transport, only go to designated locations,
and Paula, it's not going to be the usual mixing, mingling, and partying for these athletes. There's even an entire section dedicated to eating at
the Olympic Village. They are asked to eat as quickly as possible and leave the venue for eating as soon as they can.
But what's really notable in this playbook is the punishment that these athletes will receive if they break these rules, and they range from
warnings to disqualifications, even to financial sanctions.
But Paula, despite all of these restrictions I've laid out, there are still major concern for the medical community. "The Lancet" medical journal, in
fact, just wrote an op-ed saying that there is still a risk these Games could see new outbreaks not just in Japan, but around the world when these
participants return to their home countries, not to mention the fact that just about five percent of the population here in Japan is fully
vaccinated.
And while the officials here in Japan say they aim to get to one million doses per day, even at that fast rate, it still means the majority of the
Japanese population will not be vaccinated with these Games begin.
NEWTON: Yes, and there is no requirement that even the athletes are vaccinated, right? I mean, in terms of an outbreak, there is a serious risk
here.
WANG: Paula, that's right. There is no requirement for participants to be vaccinated, still major questions here around what that rate of vaccination
is going to be. Officials said, before that, they expect more than 80 percent of the Olympic Village to be vaccinated.
And when it comes to an outbreak, it says that if an athlete tests positive for COVID-19, they have to test again to make sure that it is not a false
positive. It is in fact positive, they then have to take a designated vehicle to an isolation facility outside of the Olympic Village. That
athlete unfortunately, will not be able to compete in the Games.
Now, close contacts will also be tested and monitored. But there's a lot here in the playbook where it says things will be determined on a case by
case basis. Now in addition to this though, athletes and participants they are going to be contact traced and GPS will be used retroactively in the
case of a positive case that's been confirmed.
But Paula, still major questions here in addition to the vaccination rate, we still don't know if there's going to be any spectators there. Local
spectators are the only option here as foreign spectators have already been banned.
NEWTON: Yes, it's still so much to work out. Again though, it looks like these Games will go on and Selina, I am glad you're there to be covering
them. Appreciate it.
Selina Wang there live for us in Tokyo.
Meantime, Danish footballer Christian Eriksen says he is feeling okay after collapsing during the match on Saturday. You'll remember these frightening
pictures though. In his first social media post since suffering a cardiac arrest, the midfielder said he still has to undergo more medical checks,
but he is doing fine under the circumstances.
He thanked all those who wished him well, and said he would cheer on his Danish team, of course, at the Euro championships.
Still to come here on FIRST MOVE, the U.K. strikes its first post Brexit trade deal. British industry group, CBI, on what the Australia agreement
means for business.
And NATO says from now on, a cyberattack could be treated as seriously as an armed attack. We will speak to IBM's head of cybersecurity.
(COMMERCIAL BREAK)
[09:21:08]
NEWTON: And welcome back to FIRST MOVE live from the New York Stock Exchange. U.S. markets remain on track for a mostly flat open after the
release of weaker than expected retail sales data and factory inflation data that was stronger than expected. That, in case you're wondering is not
a good combination.
That said, let's remember this. The S&P and the NASDAQ begin today's session at record highs. The NASDAQ closed yesterday at its first all-time
high since April. Now, stocks holding up well despite new concerns that supply chain disruptions, which are pushing inflation up are not going away
anytime soon.
The National Retail Federation is calling on President Biden to help ease ongoing log jams at U.S. shipping ports that are impacting inventories.
Meantime, fresh COVID restrictions in Southern China could slow down Chinese exports even more and raise already high global shipping costs.
Meantime, the U.K. and Australia have struck a free trade deal. It is the U.K.'s first since Brexit that doesn't just replicate existing agreements
that had already been negotiated by the E.U. British farmers and other food and drink producers have expressed concern about the speed of the
negotiations, as well as the prospect of cheap imports from Australia.
The deal comes a day after the U.K. Government delayed the final lifting of COVID-19 restrictions in England due to an increase in cases driven by the
delta variant. That was the one first detected in India.
Karan Bilimoria is the President of the CBI, the Confederation of British Industry and he joins me now live from London. Good to have you with us.
Trade certainly headlining the day. You know, we discussed earlier in the show the E.U.-U.S. deal between Boeing and Airbus, certainly significant.
We move now to this trade deal with the U.K. and Australia. Perhaps it's not the largest, but it certainly does highlight the challenge, right,
going forward for the U.K. government.
KARAN BILIMORIA, PRESIDENT, CONFEDERATION OF BRITISH INDUSTRY: This is extremely good news. When we left the European Union, we had to transfer
over 60 bilateral trade deals the European Union had with other countries, such as Canada, such as Japan, and Mexico, and we did that before the 31st
of December.
We're now beginning to bespoke those trade deals between the U.K. and those countries individually and then, there was the prospect of new deals with
new countries, and the first one is Australia. This is wonderful news.
Trade with Australia is over 20 billion pounds in goods and services bilaterally. So, it's not a small size. I mean, it's a similar sort of size
to the bilateral trade we have with India and with Canada. And with the Australian deal, it is going to be great news, it should be a win-win
overall for the U.K. and Australia.
It includes for example, the first time in a trade deal, innovation, included in a trade deal, digital and AI. This is going to be free digital
transfer between the U.K. and Australia. And when it comes to services, this is covered in the deal.
It's very important for the U.K. because we are the second largest services exporter in the world, and it is worth billions of pounds to us, services
exports and the future potential with Australia.
And of course, it removes tariffs on things like Scotch whisky, Australia is a very big market for the U.K. Scotch whisky producers and the tariffs
will be reduced, and as well as automobiles, which are exported to Australia.
So overall, this should be very good news. And of course, a very important aspect of it is this is the stepping stone for us to the CPTPP, the Trans-
Pacific trade deal and Australia has said very clearly that in meetings with Minister Tehan, the Australian Trade Minister, that they want to be
Britain's champion to again engage with the CPTPP for us to join 11 countries that is worth 110 billion pounds of trade to the U.K.
So, all in all, excellent news.
[09:25:06]
NEWTON: Still though, this will be difficult to kind of square this, certainly with some of the local interest. I know you're hoping that this
could serve as a blueprint.
I do want to talk a little bit though about the situation in the U.K. right now. You know, the U.K. has delayed its reopening further because of that
delta variant. Do you see this as quite worrying? You know, given your history in the business that you come from, there's certainly lots of
industry owners in the U.K. that are concerned.
But do you see something larger at work here as well? That we are not done with this pandemic yet, or at least the pandemic is not done with us, and
that the next year is still going to be quite challenging on many fronts.
BILIMORIA: Absolutely. And we've got to make sure that the Australian trade deal, for example, that our farming community that they are well
looked after, and looking ahead and protected. It should be a win-win for all sectors of our U.K. economy, including our farmers, which have the
highest standards, the highest of bearable standards, and we must make sure in the future, that that is the case.
And when it comes to the opening up of the economy, the government has decided to delay it by four weeks because of the rise in the Delta variant.
And they had four tests, and one of the tests was clearly not passed; another one as well, possibly not passed. So, to play it safe, they've had
to delay.
Well, this is terrible news for the hospitality industry, as you say, for my own business. For Cobra Beer, we supply thousands of restaurants.
They've suffered so much. The live events have suffered. The large weddings, the entertainment industry. Theaters can only fill half the
theaters, they cannot be viable on that basis.
Restaurants are only able to operate about two-thirds capacity, they're barely struggling. Some of them haven't been able to open up. So, this is
not good news for them. We can't wait to open up the economy as soon as possible, safely and fully.
And we've been assured that this is an irreversible road we're going down, and when it comes to the 19th of July, that word "terminus" has been used
that this should be the full opening up of the economy there.
NEWTON: Yes, unfortunately, the pandemic may have other ideas. Thanks so much for going through all of this with us. Appreciate it.
And we will be right back here on FIRST MOVE with the opening bell.
(COMMERCIAL BREAK)
[09:30:20]
NEWTON: And the bell has rung here at the New York Stock Exchange. I want to welcome you back to FIRST MOVE, live, of course here from the New York
Stock Exchange where you just saw there, Defiance ETFs was ringing that bell.
And as expected, it is mainly as you can see there, a flat open, but still on the positive side here as U.S. stocks and investors weigh a greater than
expected 1.3 percent fall in retail sales last month. U.S. producer prices soaring to record levels year-over-year.
Now, financial shares trying to bounce after a weak session Monday. Shares slumped after JPMorgan had Jamie Dimon warned of a sharp drop in trading
revenues this quarter. Dimon also saying he believes inflation may be here to stay.
Meantime, the U.S. Federal Reserve begins and all-important two-day policy meeting as it weighs the U.S. inflation and growth outlook and the future
for stimulus. Now, one potential inflation plus for the Fed has been a pullback in some commodity prices. You see them there. Copper and lumber --
look at the copper there. It has fallen to a seven-week low. Lumber is down some 18 percent in the last week alone, down 40 percent since hitting, we
should say, some crazy records last month.
Now, oil is the outlier here. Brent is rising for a fourth straight session as chances fade for a quick end to Iranian oil sanctions. Kristina Hooper
joins me now. She is the Chief Global Market Strategist at Invesco. I find this to be a real inflection point for the market and the Fed. Am I wrong?
KRISTINA HOOPER, CHIEF GLOBAL MARKET STRATEGIST, INVESCO: Well, I don't know if it's one inflection point or one of many inflection points we'll
see this year. I mean, clearly what has happened is we've seen a strong reopening begin.
But now, we're seeing a shift in consumer preferences. Right? Consumers had been spending on goods. It now looks like they're going to be spending more
on services. I suspect that we are going to see an inflection point that this is something of an inflection point when it comes to Treasuries that
we may have seen the bottom in terms of Treasury yields, and that from here, we're going to see them rise. We've already seen an increase in the
last day. And I suspect that by the time we get to the end of the year, we'll be close to two percent in terms of the 10-year Treasury yield. So,
an inflection point there, I do believe.
NEWTON: Yes, that's quite a high marker to get to at this point in time when the Fed just continues to say that look, inflation is temporary, and
we are here to help.
In terms of just previewing that Fed meeting for us. I mean, many people are saying that look, whether they do something or they don't, what they
communicate is going to be the most important thing.
HOOPER: Paula, you're absolutely right. Jay Powell has to walk a fine line. He certainly wants to be transparent. He certainly wants to prepare
markets for the inevitable, which is the start of tapering, but he doesn't want to come across as too hawkish.
Now, this meeting is complicated by the fact that this is the one in which the dot plots get released. And so we want to pay close attention to that
as well. Any kind of more aggressive prescription -- policy prescription for rate hikes might also cause concern among market participants. But
let's face it, the reality is that we need to start normalizing and soon, so we're probably going to get an announcement at Jackson Hole that
tapering will begin in the fall and tapering will in fact, begin in the fall.
NEWTON: Yes, which is likely something they'll want to see, especially given some of the numbers that we looked at today. Having said that, you
know, I'm fairly old, Kristina, not only can I remember the days when communication by the Fed was -- how shall we say -- a little bit more
parsed, A, and B, Jay Powell is not like that. But B, I also remember this issue about inflation. I am actually old enough to remember when inflation
really eroded the value of assets.
One thing I want to talk to you about is this give and take between fiscal and monetary policy. You know, we've had so many years now when it's really
been all about monetary policy. At this point in time, it is a lot about fiscal policy. How closely do you think the Fed has to watch that now,
especially when there is the possibility that the U.S. could actually strike an infrastructure deal?
HOOPER: Well, Paula, I think you've hit a really good point here because in the wake of the global financial crisis, we had a paltry amount of
fiscal stimulus. It was, I think, an anemic recovery because we didn't get adequate fiscal stimulus.
[09:35:02]
HOOPER: This time around is quite different, which is why I think fears about inflation have been pronounced because we actually do have policies
that are helping Main Street. So, the question becomes, what happens if we get even more fiscal stimulus like the infrastructure spending plan?
Now, the good news is infrastructure spending takes time to make it into the system. That's why in fact, we saw very little impact from the last
"shovel ready" infrastructure plan. So, this is a situation that should be a positive for the economy over the longer run, but I don't think it's
going to have any kind of big impact on inflation in the shorter run.
NEWTON: And, Kristina, while I have you here, this is not a popular topic, but I do think people need to be talking about it, you know, whether it is
government or corporate debt, is that completely in the rearview mirror? Is this going to become an issue, do you feel in the months and the years to
come? Because let me tell you, the tops are flowing.
HOOPER: It has to become an issue because it is at such a high level. And what we know from history is that typically, when governments take on more
debt, they tend to have lower economic growth because a portion of their resources go to servicing bad debt.
So, I think that's one reason why we are going to see rates remain relatively low, because otherwise, servicing bad debt becomes an incredible
burden.
NEWTON: And yet, they've always hinged, right, on the fact that governments are counting again on those low interest rates in order to take
the edge off of that. I just -- I'm wondering how much more fiscal stimulus is there to come not just from the United States, but even when you look at
places like Europe and Asia still struggling, really, because the pandemic has gone on so long?
HOOPER: Oh, absolutely. This is -- we're going to look back on this period as a situation in which government spending was a necessary evil to get out
of a crisis, but it's one that does create long term burdens.
We know that in World War II and post-World War II, we had a very high level of debt in the U.S. relative to GDP, and it took decades to work that
down. And a lot of it had to do with inflation in the 1970s eroding debt as a percentage of GDP. I don't think that's where we want to go, but there
are very few options once you take on a lot of debt. It will be a problem that we have to deal with for years to come.
NEWTON: Yeah, a good preview, really, of the Fed meeting to come in the next couple of days because you know, they are watching all of that.
Kristina Hooper, the Chief Global Market Strategist at Invesco. Thanks so much for joining us. Appreciate it.
Now, a new study shows that, of course, the delta variant first found in India carries about double the risk of hospitalization compared with the
alpha variant first found in the U.K. Researchers also found though that the Pfizer and AstraZeneca vaccines are protective against that delta
variant.
CNN senior correspondent Elizabeth Cohen has details for us now.
Elizabeth, thank God, you're here. I have to say it's been a year and a half now that we've been parsing all of these different variants with you,
and this is closely tied to really these economies getting back on their feet. What is different about this variant that makes it so worrying?
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Paula, that is so true. All of this is so closely tied together, and that's why they're watching
these variants so quickly. This delta variant is the variant first spotted in India, does appear to be problematic, more problematic than some of the
variants that preceded it.
Let's take a look at what has people so worried. So first of all, the findings of that it is about 40 percent more transmissible. In other words,
it spreads more easily; also, and we think it might even possibly be more than that based on the study that you talked about earlier. But right now
with Public Health England is saying 40 percent more transmissible.
Also, early findings show that there are increased hospitalizations. In other words, this variant seems to make people sicker. So, this is all the
more reason why get vaccinated. It's so important, so important for people to get vaccinated when they can and for the distribution of vaccines
worldwide to be more equitable -- Paula.
NEWTON: It is the issue, right, Elizabeth? Only so many of us are lucky enough to have the vaccine, so many countries where it hasn't shown up and
yet, if they can get that rollout going around the world. Do you see in the studies that we have now and they are so preliminary, that the vaccines do
work against this variant?
COHEN: They do work against this variant for sure. Do they work as well as against the so-called sort of original variant that was circulating in the
summer of last year? Not quite as well, but still quite well. Let's take a look at the specific numbers.
So, Pfizer has been found to be 88 percent effective against the delta variant; against other variants, it is more like 95 percent effective.
AstraZeneca 60 percent against the delta variant, also lower than what you expected or what we found with the previous variants.
[09:40:10]
COHEN: Now, I want to say two things about these numbers. One, these numbers are so good. Those are still good vaccines, 88 percent efficacy,
we'll take it. That is still good. Also, the vaccines were very, very effective against preventing disease that was so bad, people got so sick
that they ended up in the hospital.
So, many of the people who did get sick, who are getting sick despite the vaccine, they will probably only get mildly ill, they won't end up in the
hospital, so that's a win for sure -- Paula.
NEWTON: Yes, which is really key to what so many people like you have told us is that this disease may end up being or this virus, pardon me, may end
up being endemic and as long as it doesn't make people severely ill that that's definitely a win.
Elizabeth Cohen for us, appreciate it.
Up next here on FIRST MOVE, NATO warns it could respond to cyberattacks the way it attacks -- the way it responds to armed attacks. We speak to IBM's
cybersecurity head.
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[09:43:45]
NEWTON: So cyberattacks on NATO members are as serious as armed attacks and could result in the same level of retaliation. That was the warning
from the 30 NATO leaders. They noted that current cyber-threats to the Alliance are quote, "complex, destructive, coercive and becoming ever more
frequent."
Joining me is Charles Henderson. He is Global Managing Partner and head of X-Force at IBM Security. None of what I said comes as a surprise to you,
I'm sure. You know, you said on this show two years ago, we hack everything to secure everything. My point to you is, these do not seem to be your
grandmother's cyberattacks anymore. Is what you guys are doing even working anymore? And I think that is really the worry among many right now.
CHARLES HENDERSON, GLOBAL MANAGING PARTNER AND HEAD OF X-FORCE AT IBM SECURITY: So, it only works if you do it. And fundamentally, the pandemic
exposed a major fragility in supply chain and criminals took note of that.
When the pandemic caused shortages in meats and toilet paper and all the goods and things that you wanted, criminals saw an opportunity to make
money. And, you know, the fear here is that that realization of the supply chain problems may outlast the pandemic.
[09:45:15]
NEWTON: You talk certainly about the criminal, so-called criminals involved and have used these ransomware attacks. I do want to go back to
this issue, though, of state sponsored hackers at this point in time.
You know, when the Colonial Pipeline attack happened and we covered it on this show, you had all of these shortages of gasoline. I mean, real world
impacts here, some of them could have been critical. I found all of that completely chilling, should I have interpreted it that way? You know, the
F.B.I. Director, you know, saying he is elevating this kind of cyber threat, really to the threat that 9/11 posed at one point in time?
HENDERSON: Well, you know, I think businesses have a civic duty to upkeep their information security interests. I mean, it isn't. You know, I talked
about the broadening of the concept of critical infrastructure.
Most businesses today, in light of these changes by criminals, nation states, whatever the attacker is, it has broadened that definition of
critical infrastructure. And with that, businesses have an obligation to maintain security, not just to their employees, clients, investors,
consumers, what have you, but actually to the people of the nation that they inhabit.
NEWTON: You know, we're going to get to what, you know, you believe consumers should be doing, certainly, businesses should be doing but even
consumers should be doing. But before we get there, I want to ask you, how much more sophisticated are these attacks getting in terms of the playbook
that you have seen them use and doesn't worry you?
HENDERSON: Well, you know, you think about that shift in the digital divide -- the digital shift that occurred during the pandemic. Criminals
got a pretty good jump on businesses and were able to take note of world events much faster. And as a result, they got a head start. Businesses
certainly need to catch up.
And while the sophistication is growing and they're getting more polished, they're also getting more rehearsed. And it's much like a sports team that
has plenty of chance to practice. And that's why it's important for businesses to adopt strategies like zero trust framework where they are
constantly verifying any activity that goes on and they break down the trust relationships that criminals leverage to really exploit and laterally
move through an organization.
NEWTON: And let's get to what I call cyber hygiene here, guilty as charged. By the way, I am certainly not as strict as I should be. I was
fascinated by the survey, and not just the fact -- I was just fascinated by the fact that so many people use so many of the same passwords across so
many accounts now, that I think anecdotally we know, the issue is how much damage you believe that's doing to the system as a whole to the entire
ecosystem.
HENDERSON: Well, you've got to think about the scale. Over the course of the pandemic, the average consumer created 15 additional accounts, and 80
percent of consumers acknowledged that they were reusing the same passwords.
And that 15 sounds like a small number until you realize that that's about 80 billion worldwide. So it's a massive problem. And it's one that's fairly
easily solvable by consumers. But they need to take that first step.
One of the things that I recommend is a password manager, and one of the reasons for that is a lot of the password managers now highlight reuse
passwords or compromised passwords. Now, of course, the consumer needs to take action on that highlight when they get that notification, they need to
make sure that they change that password.
But, you know, if they start managing their passwords with a simple Password Manager, they can take care of a lot of this problem. Really,
change starts at home, and now is a great time to adopt a password manager at home.
NEWTON: Yes, I guess some people don't -- do not make that connection, right, Charles? They do not make the connection between them, you know,
having different passwords or having a password manager, and the fact that Colonial Pipeline or the meat processing plant just had to shut down
because of a ransomware attack.
HENDERSON: You know, we talk a lot about businesses having a civic duty to uphold their security postures. Consumers do, too. This is going to be a
group effort if we're going to change behavior. I mean, certainly, the information security industry has been warning for decades that passwords
are really a bad idea, but here we are, 2021, we're still using them. They're not dead yet.
So, that being the case, it's a great time to at least make it more difficult for criminals to leverage bad passwords.
[09:50:14]
HENDERSON: One final thing on that front, too, is that it's important to enable advanced security settings in these types of applications. You think
about multi-factor authentication, two-factor authentication, those options are often there, but they don't really help if you're not using them.
NEWTON: Understood. Yes, we all have to activate those. And we are hoping for more sophisticated tools, obviously, whether it is fingerprints or
retina scans, or whatever. But right now, to point out, we're still using those passwords.
Charles Henderson, Global Managing Partner and Head of X-Force at IBM Security. Thanks so much for coming back on with us here on FIRST MOVE.
Appreciate it.
HENDERSON: Hey, thanks for having me.
NEWTON: Now, coming up on FIRST MOVE, how weed is becoming a new meme stock favorite. That's coming up.
(COMMERCIAL BREAK)
NEWTON: Shares of AMC on the rise again after jumping more than 15 percent yesterday. AMC is up -- get this -- 2,500 percent this year and the roller
coaster trading for meme stocks continues.
Paul La Monica joins us with more and Paul is going to tell us. Paul, don't even debate this, meme stocks are here to stay. So, is this the Reddit army
what's behind this latest move?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, you have once again a lot of people in the Reddit community are eager to squeeze the short sellers that
are betting against AMC, as well as some other high profile stocks out there, GameStop, of course, being one of them.
But in the case of AMC, it really I think is a simple matter of there are so many short sellers that are out there betting against this company and
the Reddit fans want to squeeze them, force them to lose money by pushing the stock higher. It doesn't really seem to be a fundamentally good reason
right now, Paula, because when you look at the Box Office over the weekend, all the stories were about how disappointing the debut was for "In the
Heights" and you look at other movie theater chains, Cinemark went down yesterday, Marcus went down yesterday, IMAX went down, but AMC Of course
defies logic and continues to surge although there is a certain logic to it because it is squeezing those shorts as I said.
NEWTON: Yes, and I get that from a technical analysis still, and really extraordinary. And we're off to the races with more, right? Cannabis seems
to be the next hit here. Tilray is taking off.
You know, weed, cannabis. This is already a very speculative play. What's at work here?
LA MONICA: Yes, with Tilray, which is now, you know, a giant because of its merger with Aphria. This is a company that also has a fair amount of
people betting against it, and I think that is one of the reasons why Tilray stock has more than doubled this year, has done so much better than
competitors like Canopy Growth and Cronos.
[09:55:08]
LA MONICA: So, I think again, it is a case of meme investors don't care about sectors, per se. They are really looking for heavily shorted stocks
that they can push higher and they think they've found one with Tilray. Obviously, there is a lot of hope about legalization of cannabis
potentially at a Federal level down the road even though that's probably still many, many years away.
NEWTON: Right. Exactly. That's been an issue for a long time. Paul, thanks for that wrap up. Appreciate it.
And finally for us, Germany is in a pre-match panic over Yashoda, the psychic pachyderm, stay with me on this one, now a 41-year-old elephant
pulled the French flag out of the box yesterday, oh my god, with fanfare -- an ominous sign apparently perhaps that Germany will lose today's big euro
2020 football match with France.
We will update the story, of course. Germans hoping that Yashoda is less psychic than Paul, the octopus, who if you remember correctly, I have not
remembered, predicted a startling amount of World Cup matches back in 2010.
Yes, prolific, aren't they?
That's it for the show today. Thanks for joining us. "Connect the World" is next with Becky Anderson.
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[10:00:00]
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