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First Move with Julia Chatterley
Germany's SPD Party Wins a Narrow Majority and Promises a Coalition before Christmas; Beijing's Efforts to Reduce Emissions Bring Blackouts and Forced Factory Closures; Driver Shortages in the U.K. Mean Fuel Pumps Run Dry. Aired 9-10a ET
Aired September 27, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:37]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE, and here is your need-to-know.
Scholz success. Germany's SPD Party wins a narrow majority and promises a coalition before Christmas.
China's carbon crackdown. Beijing's efforts to reduce emissions bring blackouts and forced factory closures.
And petrol panic. Driver shortages in the U.K. mean fuel pumps run dry.
It's Monday, let's make a move.
A warm welcome once again to FIRST MOVE. Great to be back with you after some time away. I honestly did miss you and wow, I also missed a lot of
news including a week filled with Beijing crypto bashing, Evergrande bondholders taking a thrashing, and plenty of Washington teeth gnashing as
Congress dithers over the debt ceiling and spending plans.
There's a lot coming up -- from political clashing to a rehashing, too of last week's volatile stock market action. Let's take a look at what we're
seeing, a mostly lower open for Wall Street on tap. Tech also getting hit the hardest as bond yields tick higher. That said, I consider this pretty
positive overall in the face of several global cliffhangers, let's call it that, including slower Chinese growth as Beijing tries to slow energy
consumption, that then poses a risk to the growth of other developing nations.
Deutsche Bank actually warning today that global supply shocks could get quote "very messy" in the weeks ahead. We'll be there to cover it. Already
messy for the U.K. as I've mentioned as fuel shortages bite. We've got all the latest on all of that coming up, including a post Merkel muddle in
Germany.
The German DAX is higher and now less than two percent in fact from record highs despite the uncertainty over who will lead the next coalition
government. We will discuss that, too.
Asia closing mostly lower as we remain ever ready to talk Evergrande. All signs point to the embattled Chinese property developer missing a crucial
debt payment meaning this crisis could get ever-grander. But it has a one- month grace period to pay up, so it's not all over yet.
Clearly, not a good time to try and raise cash either. No surprise that the company's electric car division canceled a secondary Shanghai listing, too.
Oh, there's lots to discuss. Let's get to the drivers.
A power shift in Germany. The Social Democratic Party scoring a narrow victory over Angela Merkel's party in the country's landmark election. The
leader of the left-leaning party says he wants to reach a deal to form a coalition government before Christmas.
Fred Pleitgen is live in Berlin with the latest. Fred, great to have you with us.
Before Christmas? I mean, that gives you a sense of the challenges of how long these talks are going to go on for. It is a victory, I think for Mr.
Scholz and also a huge disappointment for Angela Merkel's party, too. Walk us through this result.
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, I mean, first of all, I think you're absolutely right. It's definitely a big
disappointment for Angela Merkel's party, for the Christian Democratic Union and the candidate that it put into the race, Armin Laschet.
I mean, if you look at it, it is by far the worst ever results that they got in post-World War II Germany. And certainly, they lost about, I think
about nine percent of what they had in the last election. And keep in mind that the election in 2017 when Angela Merkel was still running, the results
there they had were so bad that that prompted Angela Merkel to say that she would not run for another term.
So that sort of gives you an indication at what point that party has now descended to and you're absolutely right also to point out that Olaf Scholz
does see himself as the winner of this election. Of course, his Social Democrats managed to get the most votes in the election.
He had a press conference earlier today where he said he feels that he should be Chancellor. He wants to form a coalition with the Green Party
that also had a lot of gains and also with the Liberal Democratic Party.
And I was able to ask him at that press conference, what all of this means, after 16 years of Angela Merkel, who was such a big figure on the
international stage, how he plans to try and take her place? Let's listen in.
(BEGIN VIDEO CLIP)
PLEITGEN: If you do manage to form a coalition and become the Chancellor, how do you intend to fill those big shoes?
OLAF SCHOLZ, SOCIAL DEMOCRATIC CANDIDATE FOR GERMAN CHANCELLOR: I think the first topic for German politics will be to form a stronger and more
sovereign European Union and making this happen will have an influence on the international strategy and the foreign policy of Germany.
[09:05:14]
PLEITGEN: What sort of a partner will Germany be for the United States, in NATO and on the international stage, especially as the Biden administration
continues to challenge China?
SCHOLZ: A transatlantic partnership is of essence for us in Germany, and for a government that will be led by me. And so you can rely on the
continuity in this question.
It is important that we understand ourselves as democracies, and that we see that in the world that becomes more dangerous, it is important that we
work together, even if we do have conflicts in one or the other question.
(END VIDEO CLIP)
PLEITGEN: So you have Olaf Scholz saying if he becomes Chancellor, that he wants to strengthen the European Union, wants Germany to remain strong in
NATO, and a strong partner to the United States as well.
Obviously, not all is said and done here in Germany, the Christian Democrats are continuing to say that possibly they could manage to form a
coalition, their main candidate, Armin Laschet, has acknowledged that this is a really bad showing, but also says he will still try to talk to the
Greens and the Liberals to see whether or not they might be willing to work with him.
But right now, it certainly seems as though Scholz is in the driver's seat -- Julia.
CHATTERLEY: Yes. But as you said, nothing is said and done here. And actually, the word that's popped out for me there was continuity. I mean,
we've had 16 years of relative stability despite periods of turbulence all around the world. Predictability, I think, as well, for Angela Merkel.
We can talk about domestic priorities, and I know there's all sorts of challenges that the next coalition government has to face, but actually,
it's the international stage, Frederik, that I want to ask you about, what's that going to bring? Whoever this next coalition government is, and
perhaps the greatest area of uncertainty that I can see, the relationship with China.
PLEITGEN: Yes, I think you're absolutely right, that's definitely hitting the nail on the head. I mean, on the one hand, every single one of the
parties that could be in a coalition government, whether it's the conservatives, the Social Democrats, the Greens, and also the Liberals, all
of them are very much pro-Europe.
So you're going to see Germany continue to play a strong role on the European stage. Obviously, someone like Olaf Scholz, or someone like Armin
Laschet is not going to be like Angela Merkel immediately, but Germany is always going to be strong and have a strong role in the European Union
simply because of its size, and also because of its economic power as well.
But the big shift that has happened here in Germany over the past couple of years under Angela Merkel is she has indeed moved Germany closer towards
China. If you look at the trade relations between Germany and China, you look at trade agreements between the European Union and China, those are
all things that in many ways are a legacy of Angela Merkel.
Now, of course, you have the Biden administration challenging China. And you know, as part of my question to Olaf Scholz how Germany would react to
that, if he does become Chancellor, and he didn't really give an exact answer, which probably is no surprise, since he is not -- hasn't even
formed a coalition yet.
But certainly, I do think that that is going to be one of the big things that a nation like Germany is going to have to deal with. If there's more
friction between the U.S. and China, where does Germany stand? And will Germany at some point, have to take a side on that.
Germany, its exports to China have risen a great deal over the past couple of years. Of course, Germany is an exporting economy. And so therefore,
that will be an absolutely fundamental question, if not the fundamental question for this country in a foreign policy sense, but in an economic
sense, as well -- Julia.
CHATTERLEY: Yes, I couldn't agree more. And there are many fundamental questions, and you were asking a lot of them there. And to your point, it
doesn't matter whether you're the leader or not, you have to have some of the answers because at some point, you're going to have to tackle them if
you end up in charge.
Fred, great job. Great to have you with us. Thank you. Fred Pleitgen there.
Now, we were just talking about China and we'll go to China now where homes and factories have been facing power blackouts. Apple and Tesla are among
some of the company's most recently affected.
Will Ripley is on the story for us. Will, great to have you with us. I think we should explain what's going on here. Some of the provinces trying
to limit power cuts in order to cut emissions in the country. But of course that has a knock-on effect. Just talk us through what we're seeing. It's a
crisis of their own creation once again.
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: And it's interesting to see it happening in Northeast China, Julia, after all, you know, all my trips
over the years, where in fact, in the old days, I'm talking about 2014 where I spent entire months and it was almost you know, the air pollution
was so heavy every single day because of all the coal burning factories.
But now there is really a concerted push to cut back on coal, to cut back on emissions, to meet China's climate goals. It's been struggling to do so
because their post COVID recovery has been largely industrial and manufacturing driven.
Those industries require more electricity and as a result, the supply just isn't there. Coal prices have really been surging, and you said it, yes,
Apple and Tesla, some of the big companies, the big names that have been hit, but you're talking about steel, aluminum, cement, and potentially in
the coming weeks, you know paper and glass all being affected by these power shortages, not to mention consumers themselves. There are shops and
malls in Northeast China according to Reuters, Julia, that are you know operating by candlelight during peak hours and some malls even have been
shutting down early.
[09:10:19]
RIPLEY: You have consumers being told to keep their thermostat at, you know, at a toasty 78 degrees Fahrenheit or 26 degrees Celsius. And of
course, in Northeast China as temperatures start to plummet, people have to worry is the electricity going to be on when they want to heat their homes?
You have people being told to avoid using high output energy appliances like microwaves and water heaters.
But what we're being told is part of this is, as you mentioned a crisis of China's own creation because these local officials are under a lot of
pressure to hit their quotas for the year, their KPI, their performance indicators including energy intensity, which China has vowed to cut by
three percent in 2021 as they push toward the very ambitious and some might say at the current rate you know very inconceivable goal of being net zero
carbon, net zero by 2060, hitting their peak of carbon emissions by 2030.
So, it is certainly a time of belt tightening when it comes to electric use, but frankly, Julia, this might be something that many other places
around the world start to see as countries really have to crack down on energy use. Even here in Taiwan over the summer, there were rolling
blackouts because the semiconductor industry and those factories use so much energy, you combine that with air conditioning demand and it's just
hard for some countries to generate enough.
CHATTERLEY: Yes, if you're going to rein in on your coal, gas, carbon emitting technologies, then you've got to be able to ramp up your renewable
resources and if the private sector is galvanized to do it, then you're going to have shortages and I couldn't agree more. We're going to see it
all over the world, and growth is going to pay the price.
Will Ripley, great to have you with us. Thank you.
Well, another story that very much ties to what we were just discussing there, the U.K. facing a fuel crisis after panic buying led to petrol
stations running out of gasoline and diesel. A shortage of truck drivers is straining supply chains across the nation. The government is promising
action, the question is what?
CNN Nina dos Santos is at a London petrol station where the pumps are dry. Nina, talk us through it. How are people reacting?
NINA DOS SANTOS, CNN CORRESPONDENT: Well, people as you can see have been panic buying and that is why petrol stations like these, they've got their
last consignment of petrol of Saturday morning, had to shut up early and they just keep having to turn people away, and just hands in the air
wondering when they're going to get the next supply.
Normally, this petrol station which is quite busy, even if it's small here in this part of Central London gets three deliveries of tankers full of
petrol every single week. Now, they need one at least once a day, the manager was telling me to try and keep things moving.
And so across the country, obviously the government and the fuel companies are busy saying that there is no national shortage of fuel, Julia, and that
they are working hard to try and restore supply rather that panic buying and that shortage of delivery drivers and truck drivers is the real
pressure point.
A government minister was on the airwaves earlier this morning saying he hoped it will all have died down by the end of this week. They're trying to
change the visa rules temporarily to tempt thousands of European workers back here to drive trucks, to train people up quickly. And also they've
suspended competition rules to make sure that fuel companies can talk to each other to divert fuel supplies, to empty petrol stations like this one
-- Julia.
CHATTERLEY: Yes, I mean, that's just one of the challenges they're facing. Obviously, there's going to be a price impact as well. I was reading this
weekend that there's going to be a significant increase in many household bills for energy costs, and it comes at the same time as for millions of
households, too, as some of those bumped up benefits are being reduced.
Again, Nina, net impact here. It's a crunch going into the colder months.
DOS SANTOS: Yes, I think people are really concerned about this point here because concomitantly to this fuel shortage that we're seeing that is
affecting motorists' ability to get to work and so on and so forth, after years of having to work from home recently, and we're also seeing a spike
in natural gas prices and a number of small independent gas retailers going bust and the government having to deal with that situation as well.
And the truck driver problem also, Julia, isn't just making itself felt. Hang on, let me just show you -- I'll ask our cameraman to pull out because
we finally are seeing the truck arrive. This is a moment that the man in that petrol station has been waiting for since Saturday morning.
You can bet locally people here will be arriving and queuing up because I can tell you over the course of Sunday, when I was here looking at this
petrol station, the queues were really around two blocks, Julia, so this is the type of thing across London people are actually looking for, keeping
their eyes peeled.
They are on apps like Next Door asking each other where the next petrol station is full is that they can go to. Some people say they've gone to 11
petrol stations to try and fill up the tank.
So just going back to what I was saying about the pressure points of inflation. It's not just fuel prices. It's not just gas prices. As you said
benefits of being cut. Also we've had tax rises in this country and there's real fears that as we head towards the next part of the year, and also
Christmas and beyond that this labor shortage, by the way, the U.K. has one million vacancies here. It is a huge labor shortage. This labor shortage
will continue to be a huge problem in supply chains for the U.K., but also beyond -- Julia.
[09:15:26]
CHATTERLEY: Of course, and it's quite funny because when I introduced you, I was wondering whether there would be queues there. But to your point,
people aren't going to queue if they know that the -- that it's empty, that there's nothing to get there.
But now of course, as you said, as we've literally just seen that supply truck appear, you can expect the drivers and the queues to begin as well.
Nina, thank you for joining us today.
Nina dos Santos there over in London.
Okay, let me bring you up to speed now with some of the other stories making headlines around the world. The U.S. is still processing more than
10,000 migrants who had traveled to the Texas border seeking protection.
The U.S. Secretary of Homeland Security says authorities will determine if they can remain in the U.S. or if they'll be expelled. Many have already
been sent back to Haiti where they face an uncertain future as CNN's Melissa Bell reports.
(BEGIN VIDEOTAPE)
MELISSA BELL, CNN CORRESPONDENT (voice over): Junior, his wife Elianne and their two-year-old were deported to Port-au-Prince on Tuesday, seven years
after the couple says they left in search of a better life.
They're now staying with friends. The three sharing a single bed, not much, but more comfort than they've known for several months.
When work dried up in Brazil in June where they'd been given asylum, the family headed north through 10 countries, some of it by bus, but much of it
on foot.
Elianne though says that the worst was arriving in the United States. As they arrived, she says everything they had, including toothpaste and soap
was taken, so that as they got into the prison, they had only the clothes on their backs.
She says that when they were called up, they thought they'd be freed. Instead she says, "We were shackled. Seeing my husband shackled was the
worst," she explains. "Then they handcuffed the women, and then they put us on the plane. My baby was crying, and I couldn't even hold him, and that
was what made me cry."
The family gives us a tour of the neighborhood they find themselves back in. Junior says the Port-au-Prince is worse now than when they left. I
asked him if it is the insecurity that has worsened. He laughs and tells me there is no security in Haiti.
Gang violence, the assassination of the country's President and the aftermath of a 7.2 earthquake in August, just some of the dismal conditions
forcing families to embark on the grueling trek to the U.S. border with Mexico.
BELL (on camera): And yet, the flights keep on coming seven in all arriving here in Haiti just this Friday, some here at Port-au-Prince,
others at the airport in Cap-Haitien in the very north of the country.
The logistics, almost impossible to deal with says the International Office for Migration given the sheer number of people being deported.
BELL (voice over): Back into place they desperately wanted to leave, the dream of finding a better life in America ends here, back on Haitian soil,
with a handout of $100.00, a hot meal and a ride to the bus station.
FRANKLY JEAN, DEPORTEE (through translator): People are going to suffer now. They are no jobs and there is nothing here. What are those people
going to do?
BELL (voice over): That's the dilemma facing thousands of migrants forced to return to a country the U.S. Special Envoy to Haiti called a collapsed
state before he resigned on Thursday.
A small group of people turned out in Port-au-Prince to protest the deportations, a show of dissent, but little help to the migrants still
being flown back to Haiti returning to the many problems they thought they'd left behind.
Melissa Bell, CNN, Port-au-Prince.
(END VIDEOTAPE)
CHATTERLEY: Residents along the eastern shore of Spain's La Palma Island are on lockdown as volcanic lava near the Atlantic Ocean that could cause
explosions and send toxic gases into the air.
It's the ninth consecutive day of eruptions. Thousands of people have been evacuated and hundreds of homes have been destroyed. Wow. Those pictures.
Russia's Foreign Minister says Mali plans to hire Russian mercenaries to help with national security. This comes months after France withdrew its
forces from the region. Mali's Prime Minister sees rampant terrorism and criminal violence are prompting the move.
Okay, we're going to take a break here on FIRST MOVE, but still to come, President Biden's make or break week. High stakes battles over spending
with the threat of a looming government shutdown to name just a couple of things.
And surgical robots. I speak to the CEO of startup Vicarious Surgical about his plans to combine next gen robots with virtual reality for the latest in
med-tech.
Stay with us, we're back after this.
(COMMERCIAL BREAK)
[09:22:38]
CHATTERLEY: Welcome back to FIRST MOVE. Cautious premarket action on Wall Street as we approach the end of the third quarter later this week. Gains
in energy and banking stocks are helping boost the blue chips, too.
That said, so many challenges await investors in the days ahead. The complexity of the ongoing fiscal fights in Washington are quite frankly
just mind numbing. The Evergrande crisis is raising fears about China's financial plumbing, and meanwhile, for imprisoned Huawei CFO Meng Wanzhou,
a homecoming.
She arrived back in China over the weekend after a diplomatic deal with the United States. Meng spent nearly three years under house arrest in Canada
on charges related to Huawei's business dealings with Iran. She pleaded not guilty to the charges.
State media pulled out all the stops, hailing her extradition as a big victory for China and calling her a national hero. Some saying, the move is
a potential positive for U.S.-China relations at a very crucial point in time.
Okay, let's bring it back to our top story now and Germany's left leaning Social Democratic Party will begin negotiations to form a coalition
government after narrowly defeating outgoing chancellor, Angela Merkel's Conservative Party.
(BEGIN VIDEO CLIP)
SCHOLZ (through translator): The electorate has spoken very clearly. It has said who should build the next government. This is a clear mandate the
citizens have expressed. These three should lead the government, and we have to say CDU, CSU have not only lost big, they've also gotten the
message from citizens to no longer govern, and to go into opposition.
(END VIDEO CLIP)
CHATTERLEY: The new government for Europe's largest economy is expected to face a number of challenges, including climate and energy policies for the
future.
Veronika Grimm is a member of the German Governance Council of Economic Experts, also known as the Five Sages.
Veronika, fantastic to have you on the show. I know it's tough to predict anything in terms of who is going to be the next Chancellor, and quite
frankly, what the next coalition government may look like. But let's talk about what the next coalition government needs to do to, I think what's
best called future proof Germany, where does it start?
VERONIKA GRIMM, MEMBER, GERMAN GOVERNANCE COUNCIL OF ECONOMIC EXPERTS: Yes, I think climate protection, digitization, as well as strengthening the
education system must be the top priorities of the coming legislative period.
[09:25:06]
GRIMM: This is a big endeavor for the forthcoming government. And I think, this will also be the topics that have been prominent in the electoral
campaign. And also, more general concern to people in Germany.
CHATTERLEY: Do you consider Germany behind? Whether it's the rest of Europe or at least the major economies in the in the developed world. I
mean, we've seen and we often talk about 16 years of great stability and predictability under the rule of Angela Merkel.
But the idea that Germany is behind in things like technological development in digitization, in groundwork, I think, to promote innovation.
How has this happened? And how do you change that today, going forward?
GRIMM: I think there are some challenges going forward. We are in a deep transformation, also, in our ambition to become one of the first climate
neutral countries worldwide. And the parties will have to combine several of things wisely, that they put at a focus in the electoral campaign.
The Green stands for ambitious climate protection. The Social Democrats wants a softly balanced transformation, the Free Democrats say they want to
rely on the forces of the social market economy and strengthen emission trading and reduce taxes. And the Christian Democrats have emphasized that
we should focus on becoming climate neutral, as a strong industrialized country.
I think we are in the middle of a very ambitious transformation. That includes, of course, getting better at clean tech at all the technologies
that enable us to have a climate neutral economy, and also in the area of digitization. And I think this is important to get further on, and get into
the making of it.
CHATTERLEY: I mean, we can focus on any one of a number of things here. But if we focus on energy, in particular, and when we talk about climate
neutrality, but I do believe over 70 percent of Germany's energy needs are imported as fossil fuels. And it comes at a time and I know this ship has
sailed, and it's not turning around anytime soon, if ever, this ramp down of nuclear energy, it's tough to try and transition economy to renewables
when you haven't got the private sector, which is the bulk of investment in Germany, in the right place.
GRIMM: Yes, I think we have to change our climate policy instead of a multitude of small scale measures, which are in place now, it need to be a
coherent overall climate policy concept with a CO2 pricing as the guiding instrument, and across all sectors at the European level, and the next
German government should work towards this. And this will enable the economies and in particular, the private firms to go in this direction, and
this will enable also the capital market to go in this direction of a sustainable economy.
In addition, we have to expand the infrastructure for energy transport and mobility across Europe, much faster than planned to date. And global
cooperation on climate protection must receive significantly more attention. You mentioned it, we import at the moment, 70 percent of our
primary energy in the form of fossil fuels, gas, oil, coal, and this has to change, and we need to foster global cooperation in order to make it going
to trade renewable energy in the form of electricity, and also in form of hydrogen and hydrogen based fossil fuels all over the world.
I think this will become a huge transformation also in the global energy trading system, which we are at the beginning of.
CHATTERLEY: I mean, I know this is something that you've researched in great detail, and I'm sure we're talking to the government about it, but to
your point there, this is not just about Germany, this has to be E.U.-wide. In fact, even beyond a collective effort in order to improve the situation
there.
Let's talk about digitization. I read over the weekend and have discussed it with a friend actually, who until recently was living in Germany that
COVID results are being shared by health authorities via fax machine.
I mean, again, what needs to be done at the government level, whether it's within the government or beyond to facilitate greater digitization and use
of technologies in the country because it's something that will be severely limiting for Germany, if not today in the next five to 10 years.
GRIMM: Yes, I think this is the big endeavor. It's not about digital infrastructure only. In some parts of Germany, we still have no access to a
mobile phone network.
[09:30:10]
GRIMM: And this is, of course, in a country that is very populated. This is something that we have to urgently change. But it's also about
education, and also about digitization of the administration.
As you mentioned it, we still use fax machines. And, for example, we have offices, and this has to change and digitization, especially in the
administration also makes the processes much faster, and this is very important in this transformation. We don't have much time in the
transformation in the area of digitization, as well as in the area of climate protection.
And so we have to become faster, we have to change -- digitize our administration, but this also means we have to enable the people and the
employees to do it, to be on that track and to accept also these changes.
And I think this is very important to also address it in the education system and also address it in further education in order to enable the
people to get along and promote it.
CHATTERLEY: A hundred percent. I mean, we need a coalition before Christmas. I think that's the bottom line and they need to get moving.
Veronika Grimm, great to have you with us. A member of the German Council of Economic Experts there. Thank you for joining us.
The market opens next. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE.
U.S. markets are up and running this Monday and it's a slightly sluggish open to start the trading week. Hey, it's a Monday morning. We get that
feeling.
Investors are grappling with fresh global growth concerns, as well as the fast approaching U.S. fiscal cliff. That said, the S&P 500 remains less
than four percent from record highs after bouncing off key technical levels last week. That was a positive sign for the chart watchers at least.
In the meantime, oil hitting fresh three-year highs on supply fears as Goldman Sachs raises its year and oil price target to $90.00 a barrel. I'm
just checking how far away from that we are right now. A fairway.
[09:35:15]
CHATTERLEY: Chalk a lot of that up to Hurricane Irene, which is still messing with American production, too. Tight oil supplies, just one of the
number of supply chain headaches facing the global economy. More than 20 percent of businesses surveyed by Oxford Economics expect supply
disruptions to continue into 2023, if not later.
Bitcoin, in the meantime, a bit volatile after last week's 10 percent plunge on China's new crypto transaction crack down. Bitcoin is down more
than 10 percent this month. Other major cryptos like XRP have fallen even further. But remember crypto watchers say Bitcoin tends to snap back after
Beijing driven pullbacks. They have been going on since 2013 by my calculation.
This week will be a critical one on Capitol Hill. President Biden's agenda is on the line with votes on two huge signature bills. But topping the to-
do list is averting a government shutdown. Lawmakers have just three days to reach a funding deal.
Christine Romans joins me now. Christine, great to have you with us, and great to see you.
So, U.S. Congress battling to fund itself beyond Friday, avoid a debt default as it bangs its head against the debt ceiling, I believe, of its
own creation and agreements to spending. What should we be worried most about -- if I can get my words out?
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Ending a pandemic.
CHATTERLEY: Oh, ending a pandemic. Got that.
ROMANS: Any one of these things is a deadline that we have toyed with and Congress has trifled with in the past, all of it together is a real doozy.
Greg Valliere who you know, called it migraine time and said we're in for maybe some weeks here of migraine headaches as we try to figure out the
process of this.
Look, the debt ceiling, the conventional wisdom is that that's going to have to be resolved, and the markets are acting as though it will somehow
get resolved. But it is really a dangerous game, playing with fire on the debt ceiling. There is no question about that.
In terms of funding the government, I mean, you could have a government shutdown as early as Friday morning, 12:01 after the stroke of midnight,
because you know, government funding runs out. And Democrats are fighting Democrats about the Biden agenda here, the spending agenda, and Republicans
are fighting Democrats about social spending.
The only thing anybody really agrees on is this bipartisan infrastructure bill, but that's all tied up in this other mess of process and chaos in
Washington. So it is a real -- it is a real tough nut to crack here this week.
CHATTERLEY: Yes, and it is politics at the core of it because no one wants to be blamed for increasing the debt ceiling or overspending or
overspending money, quite frankly, though, of course, you've got the Democrats can't agree what they're doing.
I was just giving you a doozy there as well, something outstanding or unique of its kind. And unfortunately, the debt ceiling debate isn't a
doozy because we've been here before so many times. And I think that's why the markets tend to snooze.
Now, if the idea that the richest nation in the world will actively choose to default on its debt, remember, not through bankruptcy, but just rather,
stupidity isn't the wackiest thing you've heard, then perhaps issuing a $1 trillion coin in order to solve the problem is, but it is possible. What
can you tell us about this?
ROMANS: So you know, the White House is saying this is not under consideration. But you know, a number of times we've talked about it simply
because this -- because it would be a gimmick, I guess it would solve your problem very quickly, a trillion dollar coin that the U.S. government could
mount, the administration could actually make this coin, and then you take a trillion dollars, you know, off the books, essentially.
But wouldn't that undermine sort of your faith in the U.S. currency? I mean, most serious economists think it's pretty gimmicky. Maybe it's
disruptive, and it's a way to solve a problem we keep butting our heads up against, but really what has to happen here is they have to raise --
Congress has to raise the debt ceiling, or they have to abolish the darn thing.
I mean, they've raised it 80 times. You can't pretend on one hand to be like, oh, we're going to have this limit from what we can spend, and then
bipartisan administrations always spend more, you know, this is just the way it has been for decades.
CHATTERLEY: Yes, I just -- it's this -- and I am smacking my forehead, I don't know whether you can see it, it is a debt ceiling of their own
creation. And I get the idea that you want to limit spending, or have some limits on future governments. But the idea that we keep coming to this and
risking not paying government workers as a result to me is just absolutely bonkers.
And again, they say the richest nation in the world, threatening to purposely default on its debt, not through bankruptcy, just through sheer
political stupidity, quite frankly, it's mind boggling.
ROMANS: It's just self-inflicted stupidity. To me, it is a simple intelligence test, right? And Congress fails it over and over and over
again.
CHATTERLEY: Failed.
ROMANS: And you know, what if there were a short -- a short default that was accidental? Right? What kind of message will that send to the rest of
the world? What could happen to markets?
You know, we know that it raises borrowing costs every time they get really close to this thing, it costs -- you know, for the sake of having an
argument about not spending more money, they make it more expensive to finance the money we've already borrowed. It's just ridiculous.
[09:40:20]
CHATTERLEY: Yes, it is ridiculous, also luxury of being able to be so stupid, quite frankly, because you are the richest nation in the world and
you have the biggest and deepest bond market, quite frankly that people don't have many other options and so you don't get the kind of volatility
that you could see if you were a smaller nation in this kind of political stupidity quite frankly.
ROMANS: Yes, I tell you, there's so much happening this week in Washington that you're going to hear a lot of process and a lot of sausage making. It
is going to be eyes glazed over stuff, all of it matters to the American family, right?
It all matters to healthcare costs, childcare costs, the ability to go back to work in the biggest labor market, in the biggest economy in the world.
So I mean, we have to keep going back to the core of it, which is we are talking about making life different for American working families. That's
what's at the core of all. This you're going to hear a lot of politics though this week.
CHATTERLEY: Yes. Enough D.C. dysfunction. Thank you next. Christine Romans, thanks for talking with us. We're so over it. Come on, guys.
ROMANS: I know.
CHATTERLEY: Okay. All right, next on FIRST MOVE. Is this the future of Medicine as we know it? We speak to the head of a company that's been
pioneering robotics to help with surgical procedures. That's next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE and to a company that's making innovative -- if I can get the word out -- First Moves in the medical
profession. Vicarious Surgical is using AI and robotics to develop the next generation of medical technology, and big investors like Bill Gates think
it has serious potential.
The firm also raising $220 million as it listed on the New York Stock Exchange just last week. Vicarious Surgical's CEO Adam Sachs joins us now.
Adam, great to have you with us. Congratulations on the listing, too. I think we should start there. You described that day as surreal. How does it
feel one week on?
ADAM SACHS, CEO, VICARIOUS SURGICAL: I mean, it's still an incredible feeling. It is very much a dream come true. We are not only a public
company and can share what we're doing with the world, but we have the capital we need to execute.
CHATTERLEY: Yes, I mean it is all about the capital. Let's make it clear. Explain the vision. What is Vicarious Surgical working on? And what makes
you different?
[09:45:07]
SACHS: So, most surgical procedure that is done today, or it is still done the same way they've been done for a long time, with large incisions,
opening up the patients, called open surgery. And they have almost 20 percent complication rates just from the incision.
So what we're doing, the small robot that's designed to operate from the inside out, it actually lets the surgeon essentially go inside the patient
and perform a procedure through a single small incision. And this is in contrast to what exists today, which are large industrial robotic systems
that operate across the abdominal wall, just incredibly challenging for surgeons to perform.
CHATTERLEY: Yes, just a one and a half centimeter incision. That's what you're talking about making and then you let the robot do the work. You
know, I used to talk to my father about this when I was a small child, and he said, the idea that we will have doctors using hands and doing it
themselves in a few years will be considered crazy and yet, sort of 20 years or so on, I feel like whether it's cost, whether it's the technology,
it's too much for the doctors to have to learn in different circumstances, it sort of just hasn't lived up to the promise.
It goes back to, I think what you were saying there, but why will this be different? Why is it easier for surgeons today to use this kind of
technology versus what others are working on?
SACHS: Yes, so the technology that's existed for the last 20 years or so is built on these large industrial robots. And then they have long slender
instruments that go through the abdominal wall and into the patient. And the challenge is, not only are these machines huge, and they cost millions
of dollars and require dedicated operating rooms.
But on top of all of that, the surgeon actually creates the kinematic profile of the robot, the motion profile for every procedure. Because it
pivots about the abdominal wall, that means that the motion is defined by the surgeon based on where they put the incisions and where they want to
operate.
So what we're designing is a system that allows everything to go in through one incision, we've invented these decoupled actuators that allow us to not
pivot about the abdominal wall, but actually have the motion from within. So our robot has nine degrees of freedom, it is designed to mimic the
wrists, elbows and shoulders of the surgeon naturally.
And then we're coupling that with a VR headset, so that the surgeon can literally look around and see as if they're inside of the patient. They can
move their arms and have them move with the motion of their own body. So, to the surgeon, it really feels like they've been shrunk down and placed
inside of the patient instead of controlling this giant machine.
CHATTERLEY: I mean, it sounds, quite frankly, otherworldly and like something that we would see in a sci-fi movie. Where do you see the
greatest difficulty in convincing and you can tell me what feedback you've had from the medical profession, convincing the doctors that this is
particularly using the virtual reality part of this simply like operating today, versus a patient knowing that you're just going to make this little
cut and let the robot do the rest of the work? I'm trying to work out how I feel about that.
SACHS: Yes, so I think one of the biggest things that we've always emphasized is that the doctor is still the one in control of the procedure.
We are, you know, adding a lot of guardrails around it, but similar to a self-driving car, the driver is still in control, the surgeon is still in
control, they still make all of the decisions. It's just a tool to make their jobs easier to make them be able to operate more safely and more
quickly, and we're really excited about the potential for our device to do all of these things.
CHATTERLEY: I mean, I know you've had positive feedback from the F.D.A. The industry seems to be very positive. Obviously, you've just listed and
raised money, too. Bill Gates, as I mentioned. So, there are a lot of people looking at this and saying, "Wow, we do think this is transformative
and it has potential."
Can you give us any stats on what you think in terms of -- and you mentioned it with the complication rate simply with the cut that's
traditionally made -- improved cost, perhaps, and recovery times from using this kind of technology versus what we do today?
SACHS: Yes, so I should definitely say the F.D.A. has granted us the first breakthrough designation in surgical robotics which means that they've
reviewed what we're doing in detail and they believe that we have a significant potential to have clinical benefit where nobody has succeeded.
And they provide a whole slew of benefits with that. You know, we're designing our system to go through this 15 millimeter, 1.5 centimeter
incision. Existing single incision systems have not only fewer degrees of freedom and joints, but they go through 2.5 centimeter incisions, which are
associated with complication rates of approaching 10 percent, starting to actually get back to open surgery.
Then from a cost perspective, our device is so much easier to build because it's no longer four gigantic industrial robotic arms. It's a small robot
inside of the patient and then a non-robotic support system outside of the patient.
So not only does that make it smaller, it makes it more portable, lower capital cost and easier for hospitals to acquire. It's really all of these
things together that solve all of these problems that makes us so excited about the potential of what we're doing.
CHATTERLEY: I know. I was -- I will have to admit, I was very excited. I'm supposed to not be biased about these things. Hopeful, let's call it that.
Very quickly, cost of one of these robots? And how long do you think before we could see this being used in hospitals, assuming all goes well.
[09:50:47]
SACHS: So we'll be filing for F.D.A. clearance in later 2023, and those clearances are typically turned around pretty fast by the F.D.A. We do get
prioritized review with that breakthrough designation.
So, we're hopeful that that pretty soon after that, we'll be able to commercially sell our device. We'll be selling it when we're initially on
market for an average selling price of $1.2 million.
CHATTERLEY: Good to know. Adam, we keep our fingers crossed. Keep in touch please. And actually I've just looking at the robot itself, I'd like a
little smiley, a little smile in between what looks like two eyes. A friendly robot, please. Just go for -- I am sorry. Adam, great to talk with
you.
SACHS: We will work on that.
CHATTERLEY: Thank you. Our piece in it. A little piece of it. Adam Sachs, great to have you with us, the CEO of Vicarious Surgical. Congratulations
once again and we'll speak soon.
SACHS: Thank you.
CHATTERLEY: More FIRST MOVE after the break.
(COMMERCIAL BREAK)
CHATTERLEY: Okay, welcome back to FIRST MOVE with a final check of the stock market action and U.S. stocks are beginning the week relatively
mixed. Blue chips are gaining as oil and bank stocks rise. Obviously, tied to interest rates rising, too. But tech is weaker for a second straight
session and it's all because of this -- rising bond yields.
U.S. 10-year yields touched one and a half percent a little while ago. That's the highest level that we've seen in four month, it is worth keeping
an eye on. Tech, of course, is highly interest rate sensitive.
In the meantime, Facebook's Instagram pauses its plans to build a version of the app for children under 13. The head of Instagram says, quote: "This
will give us time to work with parents, experts, policymakers, and regulators."
The decision comes as concerns rise over the negative impact of the photo sharing service on teen girls among others.
The U.S. Senate is also set to hold a hearing to discuss the problem later this week.
And the movie magic continues for Marvel's hit "Shang-Chi and the Legend of the 10 Rings." The action hit grabbed the number one spot for the fourth
weekend in a row at the North American box office. The film was grossed over $360 million globally.
It's now facing stiff competition though from Sony's comic book film, "Venom: Let there be Carnage" -- strange name -- and the "James Bond" movie
"No Time to Die." That one, I will watch.
[09:55:04]
CHATTERLEY: And finally, at a time when sauces seem to come thick and fast, Heinz has a solution to the problem of getting all of the sauce out
of the catsup sachet.
(BEGIN VIDEO CLIP)
ANNOUNCER: Say hello to the biggest thing to happen to sauce since packets. The Heinz packet roller. One hundred percent sauce extraction for
100 percent sauce satisfaction. Magically engineered to bring you every last drop.
(END VIDEO CLIP)
CHATTERLEY: I mean, really? Is that really real? Apparently, it is. Catsup packets are in heavy demand, thanks to a surge in takeout orders during the
pandemic. Heinz is increasing production by 25 percent to two billion sachets annually.
My first question when I saw this was if it's real, I want one for my toothpaste. Yes.
That's it for the show. Stay safe. Good to be back.
"Connect the World" with Becky Anderson is next. We'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00]
END
