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First Move with Julia Chatterley
From Singapore to Russia to the U.K., COVID Numbers Surge; Evergrande Multibillion Dollar Deal Collapses as Debt Deadlines Loom; PayPal Said to be Planning a Multibillion Dollar Bid on Pinterest. Aired 9- 10a ET
Aired October 21, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE, and here is your need-to-know.
Cases climb. From Singapore to Russia to the U.K., COVID numbers surge.
Evergrande ever closer. Multibillion dollar deal collapses as debt deadlines loom.
And Pinterest interest. PayPal said to be planning a multibillion dollar bid.
It's Thursday, let's make a move.
A warm welcome once again to FIRST MOVE. Fantastic to have you with us on this autumn in New York edition of the program and nip in the air already
on Wall Street, too, and a brisk market mood. B stands for Bitcoin at all- time highs and up more than 120 percent year-to-date. R for record stocks. The Dow hitting all-time highs yesterday and the S&P approaching it. I for
IPO fever. A full bounty of new listings set to launch on Wall Street today including blast from the past WeWork, it looks a bit different today.
S is for scintillating profits. Tesla reporting a third straight record quarter and K for king size deals, as I mentioned, PayPal may have interest
in Pinterest in a potential $40 billion plus deal. But of course with brisk comes risk.
U.S. futures a touch lower after yesterday's record Dow rise. More softness in the technology sector, too, and some blustery weather across Asia and
European stock markets, too. Bonds to blame, well, 10-year U.S. government yields are sitting at five-month highs. European yields windswept, too,
amid fresh pricing pressures.
Yes, inflation is still a flame. Consumer products giant, Unilever, hiking prices, they say by some four percent. They see no quick fix on prices
either and supply chain challenges compounding trade tensions.
Later on in the show, we'll discuss all of these issues with U.S. Trade Representative Ambassador Katherine Tai, but for now, old story, new
concerns. Let's talk COVID.
And a COVID comeback in the U.K., health experts are warning a winter crisis may be on the way. Britain registered almost 50,000 new cases on
Monday. That's more than France, Germany, Italy and Spain combined.
Fred Pleitgen joins us now. Fred, the numbers sound alarming, but what does the data tell us because if you test more, you're going to find more and I
think this is at least a critical part of this story.
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it certainly is part of this story, but I do think that both the Health
Secretary and also the N.H.S. and also the British Medical Association, all of them are very alarmed by these numbers. And the testing here in the
United Kingdom, maybe a little higher than in some European countries.
But if you look for instance, at Germany, they certainly are testing a lot as well. And I think one of the numbers that really has a lot of people
alarmed is the fact that it wasn't just those, as you mentioned almost 50,000 cases on Monday, but that the U.K. has been above 40,000 cases per
day for the past seven days running.
And yesterday, when we had the Health Secretary, Sajid Javid, at his press conference, he said he fears that the numbers could go up to 100,000 cases
per day, as we get closer to the winter, as the winter itself then progresses. So certainly, those are alarming signs.
Now the government says -- the Health Secretary says that right now, as of this point, the U.K. is not going to initiate what they call that Plan B,
that obviously would include, for instance, public mask mandates, social distancing mandates -- things of that nature that at this point in time is
not going to be put into place. But they do say that the government is remaining vigilant.
Now, you have a lot of criticism of that, like for instance, from the British Medical Association, also from the heads of the N.H.S. -- the heads
of the N.H.S. who are saying that they believe that this Plan B needs to be initiated now. They say, there is already a lot of strain on medical
facilities, there is already a lot of strain on the National Health Service and they fear that that could only get worse and that that term that you
were just using is one that they've been using as well.
They are saying that they fear that there could be a winter of crisis if the government doesn't act quickly, and doesn't act as strongly as well --
CHATTERLEY: Yes. I mean, there are so many things to consider here and you've made the point as well about not only do you have to look at cases,
but you have to look at those that are being hospitalized as a result, and of course, how the death rates are adjusting as well. And then if you're
talking about government action, it's the relative prevalence of mask wearing or not in the U.K. versus some of the liberalization of
restrictions that we've seen. The other thing that comes to mind as well as the timing of vaccines, and the belief -- and I've looked at a couple of
studies actually this morning that suggests that those that began vaccinating more early perhaps are seeing some of that protection warning
as we get five, six, seven, eight months out.
PLEITGEN: Yes, I think you're absolutely right. And I think that that could be one of the factors as well. And of course, one of the things that
really all of Europe marveled at and a lot of the world marveled at was the success of the U.K. vaccination campaign, especially in the early stages.
You know, the first regulator to actually allow the BioNTech-Pfizer vaccine to be able to use that in emergency use, but then also a very fast
vaccination campaign to begin with. That vaccination campaign has been somewhat stuttering, but if you look at what the government is saying, they
are saying that they believe that vaccinations for them are the way out of it, not necessarily mandating wearing masks and social distancing, but
getting vaccinations going faster.
Now, of course, there is still a proportion of people in this country who have not been vaccinated. Yesterday, the U.K. Health Secretary said, he
believes those people should get vaccinated as fast as possible. He wants to entice them to do that.
But then there's the point that you made, which is absolutely key here in this country, and that is booster shots. And they certainly want to make
booster shots available to the people who are eligible as fast as possible.
And then finally, and this is also of course, it is very important, as we've seen some of the effects that COVID is also having on children as
well is getting those single jabs to kids as young as 12. They also want to be able to do that as fast as possible.
So really, if you look at the government, they want to vaccinate more, vaccinate as fast as possible. They said in the end, all of this is a race
between the virus and the vaccine. They believe they're still ahead, but they see that the gap is narrowing.
Again, though, the medical association here in this country does believe that stronger measures like for instance, mask mandates is something that
should happen -- Julia.
CHATTERLEY: Yes. I've got a sensation of deja vu here with the government saying it's going to be okay. It's going to be okay and we've got a handle
on this and then questions get asked, severe ones later.
We'll see. Fred Pleitgen, thank you for that update there.
Asia too seeing a resurgence of COVID-19 cases. China reported 21 new cases on Wednesday. Yes, you heard me right, but those figures do not include
asymptomatic patients. Meanwhile, Singapore is extending its coronavirus curbs. Wednesday brought the country's highest COVID death toll for a
single day. It's just four months since Singapore reversed its zero COVID policy in favor of a new plan to try and live with the virus as Manisha
MANISHA TANK, JOURNALIST: It's a sad fact that living with COVID-19, as is the policy here in Singapore has led to an increased number of fatalities
as a result of the disease. Many of those who are developing serious complications are still unvaccinated or have underlying health conditions.
A vast majority of the cases that are circling locally are in fact recuperating at home and are only developing a mild form of the disease,
and that is showing that vaccinations are working. Eighty four percent of the population here are vaccinated and now, more are being encouraged to
get boosters as well.
The government has extended restrictions on movements around Singapore for another month to help curb the spread of the disease further, but it's also
acknowledged that most cases are local. They are not imported, and that's one of the reasons why it's now added eight countries to its vaccinated
traveling list, including the United States. Although interestingly this week, the United States has issued a travel advisory about Singapore
related to COVID-19 defining it as high risk in terms of a destination.
All of that, said there does seem to be light at the end of the tunnel with more people returning to Singapore shores that could bring in some really
important business for an economy that has been battered over the last two years due to the severe restrictions to control the spread of this disease.
But none of that takes away from the sadness that many not just here in Singapore, but around the world feel for those who are being lost.
Manisha Tank for CNN in Singapore.
CHATTERLEY: Okay, let's move on. Evergrande ever challenged. Shares in Chinese real estate giant down over 12 percent after a deal to sell part of
its property management unit collapsed. Evergrande faces another interest payment deadline on Saturday.
Selina Wang joins me now. Selina, great to have you with us. I mean, this was vitally needed cash. I think they were hoping to raise as much as $2.6
billion. Do we know if this was a buyer issue or a seller issue? Or both? What more can you tell us?
SELINA WANG, CNN CORRESPONDENT: Things have certainly gone from bad to worse for Evergrande, and in various filings, both parties were blaming
each other for why this deal fell apart. But in short, what is clear is that they were unable to agree to the terms of the deal, and investors were
expecting and waiting while Evergrande shares were halted that Hopson Development, another Chinese real estate firm was going to buy a
controlling stake in Evergrande's Property Services Unit for about $2.6 billion.
And now, as you say without this much needed cash injection, the question is where does Evergrande go from here and how does it sort through this
mountain of $300 billion in liabilities.
WANG: Now, when I talked to analysts, they say that they ultimately think that the government is going to bail out Evergrande in a way that makes it
look like the property, the private sector did it even though the government was pulling the strings behind the scenes, and that's because,
Julia, the stakes here are so hard to overstate here.
Evergrande's troubles are already fueling fears of contagion throughout China's property market, you have several other property developers also
indicating that they are struggling to pay off their debts as well, and property in China has fueled, has supercharged the country's rapid economic
growth over the past several decades growing to account for as much as 30 percent of China's GDP, and about three quarters of China's household
wealth is tied up in property. So, the stakes here are incredibly high -- Julia.
CHATTERLEY: Yes, I mean, those that push back and say, look, it's not going to be a systemic problem point out that obviously, the banking
systems between -- the differences between the systems say in the United States versus China is vast, because China's Central Bank can step in and
force the banks to lend.
But your point about the scale, and the size, and the importance of this sector is huge. Talk to me about this payment that's due on -- or at the
weekend on Saturday, we believe. It has already been extended by 30 days, and I also believe it's an international bond payment and they have drawn a
distinction between domestic bond repayments and international bond repayments, and whether or not they pay this could be very important.
WANG: Exactly. From Evergrande's action so far, it appears to be that its priorities are to work and pay off these domestic lenders first, if they're
able to pay them off at all. As you mentioned, this coming Saturday, there is this dollar bond deadline that has already been extended. This is the
deadline for this grace period, and if they don't make that payment, it could tip the company into a formal default.
That means that on Monday, this could trigger shockwaves throughout the global financial system. Some analysts say that this could trigger a cross
default on other debt instruments that could then allow some other of Evergrande's creditors to demand their money back.
And speaking of Beijing's priorities here, we talked about Evergrande trying to pay back these domestic lenders first, and Beijing's priority
really, is to make sure that people in China who have bought these unfinished homes, that they are protected, as well as local construction
workers, suppliers, and these small investors. They're also concerned here about social stability
But Beijing is really in a tricky position in terms of how they unwind all of this. Most analysts agree that this isn't China's Lehman moment, that
they're going to prevent a complete collapse of this company, but the question is how they do that, while still sending a strong signal to the
rest of these property developers that they still want those companies to rein in their massive amounts of debt, sending the signal about moral
And Julia, importantly here also is that we are seeing an end to this high economic growth model in China that was fueled by big amounts of debt, that
was fueled by the property sector, Beijing is trying to change that and pull it back.
CHATTERLEY: Yes, and what replaces it is the big question here. Selina -- and also accidents happen. Selina Wang there. Great context. Thank you so
much for that.
Okay, let's move on. PayPal putting a pin in Pinterest, the Fintech giant reportedly looking at a purchase valuing Pinterest at around $40 billion.
It will be the biggest acquisition of a social media company ever.
Paul La Monica joins me with what we know. Paul, it would be the biggest tech deal of the year if it goes through and would move PayPal further
towards its ambitions of being some kind of super app, a one-stop shop for payments and goods. What do we think?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, it's fascinating, Julia. Right now we do not have any confirmation as of yet from either party. PayPal and
Pinterest not commenting to CNN about the speculation that this deal might be in the works.
But to your point, Julia, if PayPal were to buy Pinterest, it would make the company that super app, the content and commerce that would be somewhat
akin to what we've seen in China and other Asian companies as well. You think of something like Alipay, you think of WeChat. These are companies
that really mix the social and the spending together.
So if you had PayPal merging with Pinterest, then all of a sudden you think of all of those goods that Pinterest users are posting about and
bookmarking, you then have through PayPal and Venmo an easy way to potentially purchase some of these items that people are posting on their
CHATTERLEY: Yes, and the scale up potential here for PayPal is huge. I mean Pinterest, 318 million monthly active users who use the app 37 times a
month. Compared with 18 million users for PayPal who actively use it eight to nine times a month, that's from Bloomberg numbers.
CHATTERLEY: The problem is, when you are a payments company and you buy a social media platform, like Pinterest, you inherit all the issues that
we've long been talking about for a social media platform -- content moderation is a great example of an advertiser business model. You just
have to be careful what you wish for when you scale up and in this direction.
LA MONICA: It would be potentially problematic, Julia, for PayPal, if they were to do this acquisition. I don't think necessarily that PayPal wants to
be a content moderator per se. They see the synergies of having Venmo users buy things on Pinterest, where they have to draw the line is Pinterest has
to its credit, not been as problematic as some of the more toxic issues we're seeing on social media.
I don't think anyone would say that Pinterest is as negative a place to be on social media as say, Twitter, or Facebook, or other sites right now, but
Pinterest does have some problems. There has been a gender discrimination lawsuit that has been in the news. There's also been concerns about some of
the content on Pinterest regarding weight loss and whether or not people were promoting unhealthy lifestyles and body shaming, so that's obviously
an issue as well that Pinterest is not immune to, but make no mistake, I don't think anyone in their right mind thinks that Pinterest has as many
problems as say, Facebook and Instagram or Twitter.
CHATTERLEY: Yes, but you know, that's interesting that you mentioned that because I have some comparisons made to potentially an Instagram-type
vehicle where you can actually make purchases direct, and it's very easy to do that. So it's sort of -- if they go ahead with this, it has the
potential for that, and of course, as we've described, it may not have the issues or comparatively the same level of issues now, but doesn't mean they
can't in the future.
Paul La Monica, thank you for that.
Still to come here on FIRST MOVE, a relationship reset. I speak to the U.S. Trade Representative as she rebuilds the transatlantic partnership with a
tour of Europe.
And Santa may not be coming to town. Toys caught up in the shipping crisis could make anything but a silent night this holiday season. Cue the
complaints. Stay with us, still coming up.
CHATTERLEY: Welcome back to FIRST MOVE. On Wall Street, a thinner Thursday on tap after the first record high for the Dow in two months. The tech
sector set to fall for a second straight day as you see before you.
IBM helping pressure the blue chips, the tech giant set to fall some five percent after missing on its top line weakness in its cloud business.
Clients pulling back on spending, too. Will that be an industry wide concerned or specific to IBM? We shall see.
Now, from big blue to Bitcoin, the crypto king pulling back from record highs after breaking through the $66,000.00 barrel yesterday. Members of
Team Bitcoin is striking while the iron is hot, too, including Stronghold Digital Mining, which rose 52 percent on its first day of trade yesterday.
It's a U.S. firm that mines Bitcoin from waste coal. Waste coal? Does that make it clean? I'm not sure about that.
It's another banner day for U.S. listings today, too. In addition, WeWork's $9 billion SPAC launch, we have IPOs for coconut water firm, Vita Coco,
online Wine Club, Winc, and many others. That's a great name.
Tantalizing results meanwhile, from electric carmaker Tesla. Net income rose at $1.6 billion for the third quarter. For comparison, that was $330
million a year ago. Its automotive revenue rose to $12 billion and despite chip shortages and supply chain challenges, they confirmed a prior guidance
of an average of 50 percent annual growth in vehicle deliveries over the coming years.
Joining us now to discuss, Dan Ives, the Managing Director of Equity Research at Wedbush Securities.
Dan, great to have you with us, as always. I mean, we can pull over the individual numbers, but the first thing that caught my eye was the margins,
their profitability is beefing up.
DAN IVES, MANAGING DIRECTOR OF EQUITY RESEARCH, WEDBUSH SECURITIES: Well, that's the key. I mean, their EBITDA, their adjusted EBITDA run rate, it's
close to what GM is on 10 percent of the scale. I think this just shows a much more profitable asset going forward to next leg of the story that's
starting to take hold, and we're starting to see despite chip shortage, they continue to own the EV market going into the next few years.
CHATTERLEY: And it was funny, as I was looking through these numbers, I was thinking to myself, how would they have looked without the supply chain
bottlenecks and some of the chip shortages, and if you look at the wait time for the Model Y, which was what fueled much of the deliveries that we
saw in the quarter, that's now pushing into next spring.
So one question was people are clearly happy to wait for these things, but it also throws the spotlight on their manufacturing capacity in Shanghai,
in Berlin, in Austin that's going to come online because this is going to be critical to the story surely going forward?
IVES: Well, that's the game changer. With Austin and Berlin coming on board, you could have now capacity into the million. Because right now,
Tesla, they don't have a demand problem, they have a supply problem. Demand is outstripping supply by about 30,000 to 40,000 vehicles because you're
starting to see this next stage of the green tidal wave takeover. And I think right now, you go into next year with the margin story and that's the
one-two punch why we believe bull cases now $1,500.00 for the stock.
CHATTERLEY: Oh, so you've raised your price target. I mean, you know, you've been saying to us for a long time look in 2022, forty percent of the
demand is coming from China. So, that's also another critical piece of the jigsaw puzzle, and when I look at what we're seeing here in terms of
demand, far less worries than we had three, six months ago there to.
IVES: Well, China, as you know, so well go back to earlier this year, headwinds and regulatory PR issues. Now, those were telling because what
we're seeing in China, 40 percent deliveries for next year, but also now with Europe and the U.S. starting to catch up. Now listen, the EV
landscape, it is Tesla's world, everyone else is paying rent.
CHATTERLEY: I want to move on and talk Facebook. Rebrand efforts? Dan, what do you make of this in light of recent challenges? Does it make any
difference to the share price for investors?
IVES: It really does. I mean, obviously, it's similar to the holding structure of Alphabet - Google. For Facebook. I think this is something
they paid a lot of people a lot of money in a room and that was the decision, but it doesn't change the model. It doesn't change how investors
view it and really that bull - bear debate.
It all comes down to monetization and advertising, and at least for right now, investors are viewing that as a contained risk. But for Facebook, they
continue to do this sort of PR Rubik's Cube that's part of the story as Zuckerberg and company try to move on.
CHATTERLEY: Yes, a Rubik's Cube that doesn't feel like there is ever a solution that you can get to and it doesn't matter, which I think is so the
important point there.
AirPods, Apple -- I never expected this to be such a huge chunk of their revenues, but this has become and can become a huge part of the business.
IVES: Yes, I mean this is going to be six percent to seven percent of revenues into next year. You will get AirPods 3 despite chip shortage that
obviously got released this week. I mean, there could be 100 million units into next year and it just speaks to our thesis. Many see the innovation of
Cupertino is in the rearview mirror, but that's how Apple in our opinion is a $3 trillion dollar cap into next year and an unparalleled golden install
base, and look at the innovation on the chips. They're being intel with their own game on M1.
CHATTERLEY: Share price target there?
IVES: $185.00, bull case, $225.00. I think the bar is worse than buying in terms of chip shortage for Apple, it is a demand right now. iPhone 13, the
super cycle continues to play out.
CHATTERLEY: Thirty seconds on Microsoft.
IVES: I mean, right now that continues -- even though it continues to be at record highs, I think, there is still a lot more gasoline in the tank.
$375.00 price target. This continues to be the Cloud play with that renaissance of growth that Nadella is leading in Microsoft, also gain more
and more traction versus AWS, expect strength next week when they report.
CHATTERLEY: Yes, I think that answers my question on the IBM idiosyncratic or systemic issue in Cloud demand.
Dan Ives, Managing Director of Equity Research at Wedbush Securities.
IVES: Thank you.
CHATTERLEY: Great to chat with you, as always.
The market opens next.
CHATTERLEY: Welcome back to FIRST MOVE and the members of WeWork there, listing today and clapping vigorously. No sign of founder of course, Adam
Neumann, a very different WeWork going public than we've discussed in the past. We'll see how it trades today.
In the meantime, U.S. stocks are up and running this Thursday, a pullback from record highs for the Dow. The S&P on track, too, for its first drop in
Emerging markets in the news, meanwhile, the Turkish lira tumbling to an all-time low against the U.S. dollar after its Central Bank cut rates by a
full 200 basis points, that's two percent to 16 percent, a much deeper cut than expected.
The Central Bank pressured by President Erdogan to ease borrowing costs despite soaring inflation that the Central Bank insisted today is, you
guessed it, transitory. Put some money in that cookie jar.
In the meantime, the U.S. Trade Representative say she is making good progress in her mission to forge a better partnership with the E.U.
Ambassador Katherine Tai's sharp diplomacy is aimed at repairing and rebuilding ties and that includes the relationship with France, which was
furious when it was elbowed out of a submarine deal with Australia.
Speaking to me exclusively from Brussels a short time ago, she told me her aim is to reconnect.
KATHERINE TAI, U.S. TRADE REPRESENTATIVE: Let me just say that the transatlantic relationship writ large, which certainly includes the U.S.-
French relationship is at the forefront of our priorities in the Biden administration, including in trade policy, in terms of rebuilding the
relationship, but not just to where it was a couple of years ago, but really building the relationship and injecting it with momentum forward
movement for collaboration in confronting and addressing the challenges that we share.
In fact, that's why I'm here in Brussels on this trip, which is primarily to connect with stakeholders here in Europe. Part of what I'm doing at home
is getting myself out of Washington, connecting with Americans where they live, where they work, in their communities, and understanding what they
need from trade policy at this point in our economic moment.
And it's also critically important for me, to connect with workers, environmental organization, stakeholders here in Europe, so that we can be
a better partner with Europe, and really understand all the parameters for collaboration and opportunities that we have right now.
CHATTERLEY: And I think the Europeans certainly benefit and welcome your presence, and as you said, you've been there many times, even just in the
last few weeks. Have things improved with France -- just to tackle that directly?
TAI: I think so. What I want to say is this, you know, governments like our economies, we are comprised of people, and none of us is perfect, as
people. But we're also not perfect in our relationships. The key, the test of any strong relationship is not whether or not you can avoid having
issues crop up. It's what you do when those issues crop up.
And I think that the intensification of communication, consultation, collaboration that you see, not just from me, but across the Biden
administration is really indicative of the strength of the relationship and the potential for how strong we can build it.
CHATTERLEY: It makes perfect sense to me, the heart of diplomacy. One of the ways I think that they would immediately follow to your response there
would be a bone of contention as far as metal tariffs are concerned on imports of E.U. metals into the United States. How close are we to seeing
the United States remove those metal tariffs?
TAI: Well, let me put this in context as well. This is something that we've been working on since June in the U.S.-E.U. Summit when the President
came to Brussels, but certainly an area where our interactions and engagement have intensified over the last couple months, and certainly
these last couple of weeks.
And what I would say is that I feel a very focused energy from both sides to take the trade measures that are between us right now, and really focus
on the big picture. How do we take down the temperature between the U.S. and E.U. economies where we are ideally -- we are ideally going to be
aligned in terms of the challenges that we share in facing a global overcapacity that is distorting the market, not just for the workers and
businesses in the U.S., but also here in the E.U.
TAI: How do we take down the temperature and how do we start to build the trust between us and build the relationship and collaboration again, so
that we can be working together, we can be connecting our economies as a more powerful force in pushing back on a global overcapacity that is
distorting the market for all of us.
CHATTERLEY: That sounds to me like it's not happening anytime soon.
TAI: Oh, if you're taking that from it. No, no. I just want to focus us on what the goals are, and how important -- how important it is for us to
reach these goals. So, what I would say is we're working very hard and I think that we are making very good progress.
CHATTERLEY: That sounds more positive. Another, and it's been described as a pivot point, actually, in the relationship between the E.U. and the
United States when we spoke to the French Finance Minister this week, and he said, it's on China. And there's a difference of opinions and approach
that the perception in Europe is that America wants to confront and challenge China, whereas Europe wants to engage.
Do you agree that China effectively wins if the U.S. and the E.U. are at odds with this relationship? And how to tackle the issues with China?
TAI: Well, let me take a step back. I think that a lot of this talk has come from comments that Minister Le Maire made, and I wanted to give the
Minister the fair shake that he deserves, and I went back and looked at his comments, and I don't think that they're as pointed or as sharp as the
reporting seems to make it.
And let me say, I think that we are very much aligned from the U.S. and E.U. perspectives, and also, from my own conversations with the Minister.
The U.S. and French perspectives in terms of the fact that we share really considerable competitive challenges right now, but also, in terms of the
values that we share as societies, as economies in terms of our political philosophies.
So what I would say is that we have so much potential here for aligning U.S.-E.U., and in terms of our approaches to China, actually, in the
conversations that I've been having and I assure you, I have been having a lot of these conversations. I don't feel that there are gaps, I think that
there is just a lot of potential for how we coordinate our approaches.
CHATTERLEY: Yes, communication is key. And actually, when he spoke to us, he did say that the resolution of the issues over Boeing and Airbus was one
area where perhaps it was allowing China to have a greater head start than they perhaps needed or should have had and the resolution of that actually
solved one of those issues.
So I would agree with you certainly on some of that points. There are ways where the two areas can agree and improve things.
China, you've described it as a complex relationship. You've also suggested that there is some slippage on the Phase 1 deal that the United States and
China struck in particular. I'm sure that's been addressed with the Chinese. Was there any remedial action specifically discussed?
TAI: So in the speech that I gave, that you've referenced, I did indicate that I intended to connect with my counterpart in Beijing and we have had a
phone call. In fact, it was I think -- I gave my speech at the beginning of the week, and I ended that week, it was an appropriate bookend to that week
with a phone call with the Vice Premier, and we've started the conversation.
So you know, I think, appropriate to the complexity in the relationship, and also the conversation that we need to have around China's performance
under the Phase 1 Agreement, also longstanding and continuing U.S. concerns with respect to the impacts of Chinese industrial policy on the American
economy and our workers. This is a conversation that one doesn't solve in one meeting or one phone call. We will continue this engagement from the
perspective of needing to defend our economic interests and requiring as you put it, really good communication between the two largest economies in
the world, to make sure that we are really clear with each other, so that we can find a way to compete intensively, but also to coexist without
tearing down the structures of the world economy around us.
CHATTERLEY: Do you reserve the right to use more tariffs, if they don't comply?
TAI: I reserve -- I reserve the right to use any of our available tools and I reserve the opportunity to work on developing new tools for trade
enforcement, for defending our economic interests, including in collaboration with our close allies and partners in order to be able to
defend our interests.
TAI: I think that we have to be very clear-eyed about the lessons we have learned from the past 20 to 30 years, both in terms of areas where the
system has not operated in the way that we wanted it to. But also in areas where we did not equip ourselves with the kinds of tools that we need to
meet the challenges of the 21st Century.
CHATTERLEY: You know, somewhere, and we've talked about it -- values align between the E.U. and the United States in particular is on forced labor,
particularly forced labor in the Xinjiang Province. When will the G7, perhaps even more broadly, other members of the G20, even the World Trade
Organization, be prepared to act on this? Because when the discussion, it seems takes place with China, the messages for want of a better word, butt
out and sort your own problems out first. When will nations like the G7 be ready to tackle this directly?
TAI: Well, let me just say that forced labor is problem wherever you find it. And obviously, there's been a lot of focus on China and in particular
practices in the Xinjiang area. But the concerns around forced labor have been long standing and are not just in one part of the world. So let me say
The second part is that we have been talking about forced labor in all of our forms, including the W.T.O., and I'm encouraged by the fact that even
at the W.T.O., where we have such a diversified and large membership, not a single Trade Minister that I've met has told me that forced labor is a
practice that they endorse, or that we should allow for in the global economy.
To your specific question with respect to the G7 members, I think it was earlier in this year that G7 Trade Ministers came out with a joint
statement aligning ourselves, unifying ourselves against the practice of forced labor. And many of us have measures either that we have in place, we
in the U.S. have a complete import ban on goods that are produced in whole or in part by forced labor.
And I know that here in the E.U., there is a lot of activity and energy around developing due diligence mechanisms to ensure that supply chains are
clear of practices like forced labor.
So, I will be meeting with my counterparts from the G7. I think, actually, later tonight and tomorrow. And I'm sure that this will, in fact, I know
because I've seen the agenda, this will be on our agenda and we will be continuing the conversation in our work.
CHATTERLEY: That's a very -- thank you and Ambassador, very quickly, because I know I have to let you go, too. On your point about supply
chains. And it is again, pivotal to this relationship and to more broadly, what we're seeing and ties directly to the economic performance of the
United States and beyond. Semiconductors, $52 billion has been announced by the administration so far, and yet I look around the world and the Chinese
in particular, the Taiwanese, they're spending multiple times this, never mind the private sector investment.
Does more need to come from the government in the United States to shore up independence in this regard?
TAI: Let me just say this, we started by talking about steel and aluminum. I like to talk about solar as well, because it's so relevant to a lot of
the challenges that we're facing today. Semiconductors, your example is also excellent.
In sector after sector, we in the United States, but also here in Europe, we need to be acting smarter, we need to be investing more in ourselves. We
need to be collaborating with each other more so that we don't need to -- if we're creating a wheel, we don't need to be reinventing it each for
ourselves. We should be capitalizing on synergies between our economies and others.
And yes, absolutely, we need to be doing so much more in terms of ensuring that we are prepared for the intense competition that we are in and that
will only get more intense over these next few years.
CHATTERLEY: Yes, no reinventing the wheel where a good wheel exists. I think that's great advice. Ambassador, fantastic to chat with you. Thank
you so much, and I look forward to continuing the conversation.
TAI: Thank you very much.
CHATTERLEY: Ambassador Katherine Tai there. Now coming up, winter is coming. Will the Russian bear sleep or stir? A key question for a year
running low on energy. Richard Quest is up next reporting from Russia.
CHATTERLEY: Welcome back to FIRST MOVE. The seemingly relentless energy rally is taking a bit of a pause so far this Thursday. Oil and natural gas
prices are all lower after huge run ups this year, but still lots of concern over whether Europe can stay warm this winter as supplies run low.
Russia increasingly holds the key. It's an energy rich country dealing with many pressing domestic challenges, too, as Richard Quest reports.
RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS (voice over): Winter is just about here. And as the mercury drops, so Russia has a
decision to make. The cold weather means Europe is in need of natural gas and that is something with which Moscow may be able to help. The question
is whether Russia can and will do the job.
HELIMA CROFT, GLOBAL HEAD OF COMMODITY STRATEGY, RBC CAPITAL MARKETS: Russia, the main supplier of gas into Europe, they have struggled to meet
the demand in Europe as well. If you have a very cold winter, you could see this power crisis accelerate, a real pressure on consumers.
QUEST (voice over): The I.E.A., the International Energy Agency wants Russia to send more gas and prove themselves to be a reliable supplier.
President Vladimir Putin says that it is Europe who needs to get their house in order.
VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): We can see where unbalanced decisions, unbalanced actions, and abrupt movements can bring
us. Today, as I said before, we can clearly see it on European energy markets.
QUEST (voice over): As the nights get longer and the temperatures drop, so energy prices go higher, and the need for a deal becomes pressing.
Approval for the Nord Stream 2 pipeline which would send Russian gas straight to the E.U. is likely to become a bargaining chip.
The French Finance Minister says Europe has allowed itself to get into a vulnerable position.
BRUNO LE MAIRE, FRENCH FINANCE MINISTER: We are too much dependent on Russia. We are too much dependent on foreign countries as far as energy is
QUEST (voice over): Despite his leverage over Europe, this will not be an easy winter either for Mr. Putin or for Russia. New restrictions have come
in this week. Daily COVID cases are at record levels, around a thousand people are dying per day. So Moscow has introduced a new four-month
lockdown for any over 60s unvaccinated.
And yet, despite being the first to approve a vaccine, Russia's vaccination rate lags behind other countries. Now President Putin is urging his
countrymen to step things up.
PUTIN (through translator): We need to increase its pace. I ask you to take an active part in this activity.
QUEST (voice over): Vladimir Putin in Russia as winter is all about decisions, about whether to help keep the lights on in Europe and COVID
under control at home.
CHATTERLEY: Coming up after the break, we've got a tweet story for you, an epic tale of supply shortages and the fight to save Christmas.
CHATTERLEY: Welcome back to FIRST MOVE. Will we see less toys and louder tantrums this Christmas? The global supply shortage has retailers sounding
the alarm two months out from the big day, as Clare Sebastian reports.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT (voice over): Staff at this New York City toy store had no idea they'd be getting this delivery of
books and toys today, or that all of the orders would be incomplete.
CHRISTINA CLARK, OWNER, KIDDING AROUND NYC: We're placing orders every day constantly. As many as we can think of. One of my bigger companies, I
ordered a huge order in February, and it just shipped a couple of weeks ago. So, it's so hard to determine when and if things are going to come.
SEBASTIAN (voice over): The enticing displays here mask an unprecedented inventory problem. Many items running out.
CLARK: I have three of these. There is no more downstairs. I have three of these. There's no more downstairs.
SEBASTIAN (voice over): Others in oversupply.
CLARK: I've got about 20 times that in my basement.
SEBASTIAN (voice over): And behind the scenes.
CLARK: This is what my very messy office looks like, with shipping out to be done and shipping into process.
SEBASTIAN (voice over): Christina Clark says she was warned by suppliers to stockpile ahead of the holidays. Eighty five percent of all toys sold in
the U.S. are imported according to the Toy Association, and right now, the ships that carry them mostly from Asia are stuck in a giant maritime
traffic jam. The result of surging demand as economies recover ongoing COVID related disruptions.
SEBASTIAN (on camera): But it's not just a shipping crisis affecting the toy supply chain, there is also port congestion piling on and a shortage of
truck drivers to get them to their destination.
STEVE PASIERB, PRESIDENT AND CEO, THE TOY ASSOCIATION: That combination of online shopping, COVID shutdowns, and resupplying things that were out of
stock, and the Holidays together have all combined into what, you know, really is a crisis of shipping and a crisis of consumer products.
SEBASTIAN (voice over): And it is sending costs skyrocketing.
PASIERB: The average shipping container has gone from somewhere right around $3,000.00 to around $24,000.00 on the spot market.
SEBASTIAN (voice over): Christina Clark says many of her suppliers have raised prices twice this year and some and are now tacking on a shipping
surcharge, most of which she isn't passing on to her customers.
SEBASTIAN (on camera): Financially, how is this affecting you?
CLARK: We just have a lot of debt. I have a huge amount of debt, and hope -- hope that it will be covered.
SEBASTIAN (voice over): Her message to customers, start your Holiday shopping now. This is not be over by Christmas.
Clare Sebastian, CNN, New York.
CHATTERLEY: Lots of stuffed toys there, I saw.
Okay, and finally on FIRST MOVE. South Korea joins the space race with a test flight of the country's first domestically produced rocket. While
liftoff seemed to go well, it failed to deliver a dummy payload. Still, President Moon Jae-in called it an excellent accomplishment.
And that's it for the show. If you've missed any of our interviews today, they will be on my Twitter and Instagram pages. You can search for
As always, stay safe. "Connect the World" with Becky Anderson is next, and I'll see you tomorrow.