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First Move with Julia Chatterley
Blinken: U.S. Committed to "Swift Response" to Further Russian Aggression Towards Ukraine; At Least 60 Killed in Airstrike in Yemen; IOC: COVID-19 Cases Detected in Beijing Olympic Visitors; Call Service Partly Restored in Tonga After Volcanic Eruption; "Bat Out of Hell" Singer Meat Loaf Dies at 74; World Bank Forecasts "Very Grim" Rise in Rich Versus Poor Gap; A Hard Time for Pandemic Winners; Twitter Rolling Out Verified NFT Profile Pictures; Netflix, Peloton Shares Under Heavy Pressure; Reinsurance Industry Set for a Strong 2022; Raise A Glass to Record Champagne Sales. Aired 9-10a ET
Aired January 21, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[08:59:45]
ANNOUNCER: This is CNN breaking news.
JULIA CHATTERLEY, CNN ANCHOR: Hello, I'm Julia Chatterley. And we've got two breaking stories for you this hour.
We've just learned an airstrike hit a detention center in Northern Yemen, killing at least 60 people. We'll have a live report and all the details on
that in just a moment's time.
But first, to the diplomacy ongoing aimed at deescalating the situation at the Ukraine-Russian border. A united, swift and severe response, a promise
from the U.S. secretary of state if there is any Russian aggression towards Ukraine, further aggression. Talks between Antony Blinken and his Russian
counterpart Sergey Lavrov ended a short time ago in Geneva. Blinken promised to share his concerns in writing next week adding Russia must
choose its path, diplomacy or conflict.
(BEGIN VIDEO CLIP)
ANTONY BLINKEN, U.S. SECRETARY OF STATE: This was not a negotiation, but a candid exchange of concerns and ideas. I made clear to Minister Lavrov that
there are certain issues and fundamental principles that the United States and our partners and allies are committed to defend. That includes those
that would impede the sovereign right of the Ukrainian people to right their own future. There is no trade space there. None.
(END VIDEO CLIP)
CHATTERLEY: Nic Robertson is in Moscow for us.
Nic, great to have you here.
A steadfast, I think, response there from Antony Blinken. Two things to that to me. One, that discussions would continue. And second, that there
will be a written exchange in response to Russia's initial demands going into these meetings that we've seen over the past week and a half. And
concerns also shared, not just by the United States but by the Europeans and by NATO allies, too. Where does that leave us?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: I think it gives Russia what it's been asking for, which is the written response. It's been saying
that's the sort of entry to the next round of negotiations, which Sergey Lavrov indicated was there. Which is you know for all involved, it means
the diplomacy has a chance to continue. Both sides indicating that.
The difficulty here, I think, is that Russia knows pretty much full well because it's been told what those written answers are going to be. Which is
no compromise and no giving in, if you will, to Russia's demand that Ukraine be denied entry to NATO. That NATO will back its borders to 1997.
So, Russia knows the answers that are coming. Yet it appears willing, and Sergey Lavrov said, push on getting that written response, which Blinken
said will come, and I'm sort of caveating everything here because this is the way these two men handled it.
That the response will go in and that there will be a continuation. At ministerial level and the possibly the presidents Putin and Biden can be
bought in at some point down the road. But not there yet.
You know, I think it's as clear as unclear when we went into this meeting as when these two foreign ministers have come out. It's still that unclear.
CHATTERLEY: It was interesting because Secretary of State Antony Blinken was asked, what does the Kremlin want in that press conference? And he
seemed to laugh. His response has perhaps should have been, you can ask the Kremlin that, you should ask Sergey Lavrov. But are we delaying the
inevitable? Because certainly, if we go back and look again at what President Joe Biden said early this week, he suggests that there was an
inevitability about greater escalation here, conflict perhaps. Are we delaying the inevitable, Nic?
ROBERTSON: Again, it's so hard to answer this - this question because that's the big question. Does Russia really want to execute military action
in Ukraine? And they say categorically, no. Actually, Lavrov wasn't quite categorical going into the meeting. He said, I don't think so, when he was
asked that question.
But it's so hard to know. I mean, analysts will look at the situation right now. Particularly military analysts, you know, who - who count the number
of tanks and count the number of troops and understand where fuel depos are. And we have the Ukrainians saying that you know over the past few
weeks, Russia has brought into the -- that - that area of Ukraine that's controlled by Russian - pro-Russian separatists that bought in 7,000 tons
of fuel.
So, military analysts will look at this. Look at this diplomatic narrative that is going on. That it's continuing. Russia agreeing to wait for a
written response when it knows what that written response is precisely going to be and look at this and say that Russia is sort of ticking down
the clock here while it gets the military pieces in to be ready for this potential invasion that they say they're not going to have. The moved today
the first pieces of a complex and sophisticated missile defensive system into Belarus, where there's going to be very big joint military exercises
there between the Russians and Belarus military, which puts it very close to the capital of Ukraine. It's very hard not to see this as a clock
ticking exercise. Yet, it is also a path to potential diplomacy.
CHATTERLEY: Yeah. Diplomacy is certainly not dead. But we have to wait to see what happens after next week.
Nic Robertson, thank you for that.
[09:05:01]
And later in the show, we will be speaking to the former State Department's Special Envoy to Ukraine Kurt Volker, Ambassador Kurt Volker.
OK. Back to our other breaking news story this morning. There are dozens dead after an airstrike hits a detention center in Yemen. That according to
the International Committee of the Red Cross.
Sam Kiley is live in Abu Dhabi for us and he's across this story.
Sam, what more details do we have?
SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, the International Committee of the Red Cross is saying that since the Saudi-led coalition
increased the pace and extent of airstrikes conducted against Houthi positions and others it would appear in Houthi territory following the
Monday attack against here in Abu Dhabi, against the Emirati capital conducted by the Houthis. 100 people have been killed, that's a figure
being used by the International Committee of the Red Cross.
The Save the Children organization has said that as of Friday, they know of 60 deaths, among them, three children. The Yemen is also reporting to be
suffering from an Internet blackout following allegations of an airstrike against the telecoms' installation in the important strategic border of
Hodeidah.
The Saudis have confirmed that they did conduct airstrikes of what they call the criminals and pirates of the Houthis operating out of Hodeidah.
Hodeidah is the port by which the Houthis import absolutely everything, particularly much-needed fuel and food aid.
So, this is a very significant escalation following these airstrikes rather missile strikes against Abu Dhabi, which both the Emiratis and the Houthis
agree involve cruise missiles and ballistic missiles. Although, what actually got through and struck here in Abu Dhabi is still being
investigated, Julia.
CHATTERLEY: Yeah. Let's just - we'll tell our audience here. You're not looking at live pictures. But these are the latest pictures that we have,
that you were just seeing there.
Sam, as you said, we have seen a ramp-up in airstrikes by the Saudi-led coalition following the attack in Abu Dhabi on Monday. What's next? What do
we expect? Do we have to assume there's going to be further escalation more from here?
KILEY: Well, it's a very difficult situation, indeed. For both sides in a sense. They both climbed up trees. Now, the Houthis argue that the attacks
against Abu Dhabi on Monday, Julia, were provoked, they say, by a return to the battlefield in some form or other by the Emiratis in support
particularly of an organization called the Giants Brigade.
The Giants Brigade suddenly started enjoying battlefield successes. That took the Houthis away from their main campaign against the town of Marib,
which is very much under the control of the Saudi elements that are back there. And they started to lose or at least not win at the pace that they
had been enjoying.
And as a result, they attacked the Emirates. Now, the Emirates have pulled out militarily back in 2020. So, if they did have covert operations, and
there seems to be significant independent confirmation that they did in support of the Saudi coalition there. Then this is beginning to suck them
back into a war which they thought they had extricated themselves from, and equally from the Houthi perspective, if there is a 100 dead in that
territory as a result of this airstrikes, a counter, counterattack if you like is almost inevitable. Julia?
CHATTERLEY: Yeah. And very unfortunate, but well put.
Sam Kiley, thank you so much for that.
And we will continue to cover this developing story throughout programing today, of course.
OK. Let's move on. Bubble burst or COVID capture. China has identified COVID cases in recent arrivals for the Beijing Olympics. The International
Olympic Committee says around 1.5 percent of tests conducted upon arrival have been positive so far. This as Beijing reports 12 new cases today.
Ivan Watson joins us with more.
Ivan, we were discussing yesterday, this is the most ambitious COVID quarantine in the world. And the big question is, will it work. The
positive here I guess is that they are identifying cases. But it also illustrates the problem.
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yeah. I mean, what they're calling this for the Beijing Winter Olympics, two weeks away, is a
closed loop. So, they're creating kind of a parallel dimension in Beijing for some 11,000 visitors. The athletes and kind of accompanying journalists
and coaches and all that, where they're going to be in hotels and going to venues behind high walls separated from the rest of the population of
Beijing. And the idea is that you try to keep any COVID that might get there separated from the rest of the Chinese general population.
As you pointed out, Beijing 2022 has already announced that they're getting a 1.5 positivity rate among the new arrivals. They also go on to say that
there is a .02 percent positivity rate after people have arrived.
[09:10:05]
But they insist this is not COVID that it has been passed within this closed loop, that they're people who must have contracted it on the flight
in and then it wasn't detected until a couple days after they've landed.
Now, we have some details that have been shared about how isolation will work. If you are an athlete, for example, or accompanying staff and you
test positive. In Beijing, you will be sent into isolation. And the guidelines say that quote, "The rooms are larger than 20 meters squared.
The staff are helpful and supportive." Again, this is Beijing 2022's words. "And Wi-Fi is available."
They also say that there have been issues regarding cleanliness in some of the isolation rooms. And those are now being addressed. There have also
been issues with the menu and food provision. And those are now being addressed.
So, if you test positive, you are going into isolation. There are also all these guidelines about daily testing that will take place of people,
particularly if you are considered to be a close contact of someone who furthermore tests positive. Some of these echoes, the summer Olympics that
were just held in Tokyo, but it sounds like the enforcement is going to be much, much stronger in China.
There is another wrinkle to this, Julia. And that is that China is also wrestling with outbreaks of COVID within its general population while the
national numbers have diminished over the course of this last week. They are growing in Beijing. 12 new cases on Friday. In most countries, that
would be cause for celebration. But in China, you lockdown entire buildings and neighborhoods and you test people by the hundreds of thousands if not
millions when you start getting any tests any cases being identified positively. Julia?
CHATTERLEY: Yeah. And as we have learned elsewhere in the world, when you've got x number of cases, it generally means you've got a lot more. But
of course, the reaction function in China is so different to trying and contain it. What a challenge.
Ivan Watson, thank you so much for that.
OK. Let me bring you up to speed now with some of the other stories making headlines around the world.
Phone service has been restored in parts of Tonga following last weekend's devastating volcanic eruption and tsunami. It could take weeks for full
Internet service to resume tens of thousands of people still have no means of communicating with the outside world. Australia, New Zealand and other
nations are sending humanitarian aid.
The American singer Meat Loaf famous for his operatic rock anthems. He's died aged 74. In a statement on his Facebook page, it says he passed away
Thursday surrounded by loved ones. The cause of death has not been shared as yet. The Grammy Award winner is being remembered for his bestselling
album "Bat Out of Hell" as well as roles in TV and film.
As Paul Vercammen reports.
(BEGIN VIDEOTAPE)
MEAT LOAF, SINGER (singing): Oh, I would do anything for love, but I won't do that.
PAUL VERCAMMEN, CNN REPORTER (voice-over): Meat Loaf performed sweet suburban melodies with dramatic flair, unleashing the lyrics of composer
Jim Steinman.
MEAT LOAF: And I go out on the stage as if it's the last thing I'll ever do. I will -- and that's what I've always said, if I'm going to -- if I'm
going out, I'm going out on the stage.
VERCAMMEN: Meat Loaf. Where did that name come from?
MEAT LOAF: There real story is, there is no story. The real story is that kids -- I was about eight years old. I've been called Meat Loaf since I was
about eight.
VERCAMMEN: Meat Loaf, or Meat for short, was born Michael Lee Aday in Dallas, Texas. But even Texas was not big enough to coral his talents. Meat
Loaf would go on to sell more than 80 million records worldwide. One of the top selling musicians ever. His three "Bat Out of Hell" albums became
staples in college dorms.
MEAT LOAF (singing): Like a bat out of hell, I'll be gone when the morning comes.
VERCAMMEN: The first one selling 43 million copies.
MEAT LOAF: "Bat Out of Hell" one I was not ready for. I had a nervous breakdown. I went to a psychologist and psychiatrist for two years. And I
went with them to deal with the word "star."
VERCAMMEN: Meat got a hold of his demons. He starred on stage and screen, known for "The Rocky Horror Picture Show," and Bob Paulson in "Fight Club."
MEAT LOAF: The first rule is, I'm not supposed to talk about it.
And the second rule is, I'm not supposed to talk about it. And the third rule is --
UNIDENTIFIED MALE: Bob, Bob, I'm a member.
VERCAMMEN: Off-screen he married twice, became a father to two daughters. And Meat Loaf entered reality TV. Donald Trump's "Celebrity Apprentice." In
an infamous episode, he blistered Gary Busey.
MEAT LOAF: You look in my eyes. I am the last person in the (EXPLETIVE DELETED) world you ever (EXPLETIVE DELETED) want to (EXPLETIVE DELETED)
with.
VERCAMMEN: Such harsh yelling, a stark contrast to what launched Meat Loaf to international adoration, that operatic voice.
MEAT LOAF: Oh, I would do anything for love, but I won't do that. No, no, I won't do that.
(END VIDEOTAPE)
[09:17:56]
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "FIRST MOVE."
In that Friday feeling on Wall Street with the tech set to extend this week's sharp losses. The Nasdaq has now followed the wider Nasdaq composite
into correction territory.
The S&P is on track for its third straight weekly loss. It's currently down some 7 percent from recent highs.
Softer global bond yields could ultimately lend some support to equities. However, U.S. yields pulling back for a third straight session in safe
haven trading.
Oil also falling from seven-year highs.
A significant amount riding, of course, on what the Federal Reserve might say next week on its monetary tightening path.
Policy makers meeting for the first time this year and less Fed support for the U.S. economy has widespread implications for the entire investment
world, including, of course, for emerging markets.
And the World Bank warns the huge economic gap between poorer and richer nations keeps widening. Its new forecast paints a quote, "very grim"
picture the impact of COVID-19, rising inflation, debt and income equality increased the risk of a quote, "hard landing" in emerging and developing
nations. The World Bank also says rich nation's fiscal and monetary policies are making the situation worse.
Much to discuss. And David Malpass is the president of the World Bank Group and joins us now.
David, Happy New Year. I wish we were talking in happier circumstances. It's your quote, "very grim" reading, a yawning gap between richer and
poorer nations, rising inequality per capita, hard landing a greater risk.
DAVID MALPASS, PRESIDENT, WORLD BANK GROUP: Hi, Julia. Yeah, I wish -- Happy New Year, but I wish it were a good outlook.
And the problem is, there is not enough growth total in the world for - for everybody. That's clear. And then so the goal of development is to - is to
have people at the bottom do better and better each year. And unfortunately, the capital allocation of the world is going mostly to the
advanced economies and even to the upper incomes of those advanced economies. It's a very narrow progress being made in the world.
[09:20:07]
CHATTERLEY: You point out something vitally important. And you and I have discussed it before. But I think the problem is more acute today than ever.
And it's the fiscal response, the monetary response of governments, too, that is exacerbating the situation.
And if we look at the higher spending to support economies in which in nations, they're sucking up a lot of the investment, they're spending, but
they're borrowing money out there. And it's effectively crowding out the borrowing, the essential borrowing, that poorer nations need to do. And
it's making their ability to raise money more costly as well.
MALPASS: That's -- I guess that's right. And that's a - that's a grave concern. So, if you think about who has done well in this advancement in
the recovery, it's people who issue bonds and especially big bond issuers, that means the U.S. government, that means the European government, and
also the big corporations. They issue debt buyback stock.
And so, you've got this system where Wall Street and financial centers around the world are issuing bonds on behalf of the rich, of the corporate
sector, of governments in order to put more money into those sectors. And that really doesn't get us to the end result that we want, which is less
poverty, more shared prosperity in the world. And inflation and higher interest rates is hurting that mix or making it worse this year.
CHATTERLEY: The other point here, I think, is on the monetary policy side, David. How convinced are you that inflation, particularly if the bulk of it
is driven by supply chain issues and blockages can be solved by raising interest rates by the Federal Reserve, for example, or reducing asset
purchases?
MALPASS: It's a big challenge. The major Central Banks are buying bonds, which gets capital to the people that sell bonds. And so, you've got a
capital allocation into the sector that -- sectors that already are very well funded.
What we need to have is capital going into small businesses, into the supply chain, into -- for example, truck drivers that buy their own trucks.
And which is, you know a lot of the way things move around the world. And so, it's working capital that's needed, but the system is setup to do the
opposite. The Central Banks are -- the major Central Banks are borrowing from the banking system and then buying bonds, which doesn't make sense in
the current capital allocation environment. We need more capital to go to small businesses. And that's not what the Central Banks are doing at all.
CHATTERLEY: I think this is so important for my audience to understand. When you raise interest rates, you make the cost of credit, the cost of
borrowing for everybody more expensive. But it's proportionately more expensive for smaller businesses. And I think your point that you are
making is that these smaller businesses that are going to help address some of the bottlenecks out there be they the truck drivers or small logistic
companies. They will eventually help the problem but not if they come borrowing money and support their own businesses and survive in this kind
of environment.
MALPASS: That's right. And in many ways, developing countries are like small businesses.
CHATTERLEY: Right.
MALPASS: That's where the growth can come. But the capital goes to the - goes to the big businesses through the current system and that's just not
the way to really fix the supply chain problem or the inflation problem or to get growth in jobs.
A huge portion of the job growth has to come from small businesses that give people their first start and give women a chance to work. And that's
true around the world, but they're starved of capital.
CHATTERLEY: I think it's also a problem with regulation. The banks are forced to lend to what we call better credits. And that forces money away
from the smaller and more riskier businesses too. But David, you made some comments recently that I want to pick up on. The focus on this sort of
misallocation of capital and of resources. And you looked at the purchase of the gaming company, Activision Blizzard by Microsoft and it was - what
it's earned $65 billion. And you compared it to the $23.5 billion that the richer nations are making in cash contributions to help the World Bank fund
some of the poorest nations in the world. It's an average of what, $8 billion over three years. There is sort of mismatch here in where capital
is flowing and being allocated is for want of a better word, I think, heart breaking.
MALPASS: It is. I really wasn't criticizing Microsoft.
CHATTERLEY: It wasn't personal, yeah.
MALPASS: It wasn't personal. What I am observing is a system that allows, that gets you to the point where you make a cash purchase of $65 billion or
more. I don't know what they'll come up to. But -- and then all of the governments of the world are only allocating $8 billion per year for three
years to the poorest countries.
[09:25:04]
That was -- that's the biggest. You know the World Bank was very successful in that operation, but success is measured in single billions of dollars.
The major contributor -- the biggest contributors are governments that were put in a billion - a billion dollars a year. We welcomed that. We are
grateful for the governments that are doing that.
But compared to what's going on in the - in the bond market segments of the economy, the major funds. And remember, this long-term, short-term is
really important. If you are well-to-do you have been able to lock in a mortgage or a bond and issue a lot of it.
And so, as interest rates go up, you may not then need to issue more. You've gotten your capital. But - and so, the rise in interest rates puts
pressure on the shortened of the curve, which is where new businesses need to find money.
CHATTERLEY: You know I was on a panel this week with the deputy head of the World Health Organization, the head of Gavi, the Vaccine Alliance, the head
of Oxfam international. I think they agreed the biggest failure of 2021 was the inequity in vaccines and the failure to produce enough supplies to help
with that last mile of distribution too. And I think it's all tied in terms of where resources and cash are being allocated at the right moment in
time.
David, what is the fix here from the World Bank's perspective? We need to continue to have this conversation about debt reduction and free up money
to do the things that emerging markets, in particular, need to be doing?
MALPASS: Yes. For vaccines, I think, their - their -- a challenge is to get through the hesitancy and have countries have contracts for deliveries of
vaccines that have shelf life. That way they can go into rural areas. So, we work very hard on that. We are up to nearly 70 -- I think we're at 70
countries where we have financing relationships where the countries then have a schedule that will - that will allow them to deploy. And we are
doing that also with therapeutics.
So, that -- we want to build that effort. We think that's effective and helps also with the preparedness for future crises. It strengthens the
health systems of the countries. You also mentioned that that challenge, which is huge for either countries, that's the poorest, the low income 75
countries that we - that we provide primarily grants and zero-interest rate loans to. Those countries are going to be paying in 2022 in this year $35
billion of debt service, principal and interest.
CHATTERLEY: Wow.
MALPASS: Primarily for well-to-do predators. And there is no mechanism right now for the world to - to allow them to delay those payments or to
forgive those payments, so they can put it into vaccines, climate, health and education. All of those things that are getting underfunded.
CHATTERLEY: Wow, $35 billion.
David, I want to finish by talking to you about Afghanistan. The United Nations launched their biggest campaign ever asking for just over $5
billion to help support the Afghanistan people and the economy, including unfreezing of frozen assets and jump starting the banking system. I know
you directly disbursed $280 million at the World Bank, direct to UNICEF and the World Food Programme. Is more being discussed? Can more be done to help
address this crisis?
MALPASS: Yes. And we are working as fast as we can on it to clarify, it wasn't World Bank funding that went to those, but it was the trust fund
that the World Bank manages for the donors.
CHATTERLEY: Yes.
MALPASS: So, we're working closely with the donors. Many of them are NATO or Western or European and U.S. governments who have already put money into
that trust fund to redirect it at their -- to allow them to redirect it. So, I really want to be clear.
It's difficult for the World Bank to put its own -- our own money into Afghanistan now given the situation with the government, with the way the
women are treated, their clinics that are having difficulty in those areas.
But what we want to do is facilitate the donors so that they can be putting in money as they choose into this very grave situation. We have worked very
fast on that. I was happy with the $280 million we were able to free up. I think it's some of the biggest and first aid going into Afghanistan through
the donors, themselves, the governments that have put the money in.
CHATTERLEY: Yeah. An important clarification.
David, thank you. And thank you for your time this morning as well. It's always great to chat to you. Again, Happy New Year. And we hope for better
this year.
[09:30:04]
MALPASS: Thanks.
CHATTERLEY: David Malpass, thank you. President of the World Bank there.
OK. Straight ahead on "FIRST MOVE."
More on today's crucial talks on Ukraine as the U.S. urges Russia to stay the diplomatic course.
We get the view of Washington's former special envoy to Ukraine. Ambassador Kurt Volker joins us next.
(COMMERCIAL BREAK)
CHATTERLEY: Returning to our top story today.
High level talks between the United States and Russia to find a way forward over Ukraine. For talks lasting an hour-and-a-half. The U.S. Secretary of
State Antony Blinken told his counterpart, Sergey Lavrov, Russia must choose between a path of diplomacy or a path of conflict.
Just take a listen to this question to Foreign Minister Lavrov before the talks began.
(BEGIN VIDEO CLIP)
QUESTION: Is an invasion likely, as President Bident suggested?
SERGEY LAVROV, RUSSIAN FOREIGN MINISTER: Unless the United States doesn't go to bed with Ukraine, I don't so.
(END VIDEO CLIP)
CHATTERLEY: Ambassador Kurt Volker is a distinguished fellow at the Center for European Policy Analysis. He was U.S. special representative for
Ukrainian negotiations from 2017 into 2019. And the U.S. ambassador to NATO from 2008 to 2009.
Ambassador Volker, great to have you with us on the show once more.
I am sure you were watching both of those press conferences. In your mind, are we closer to or further from conflict following these talks?
AMBASSADOR KURT VOLKER, U.S. AMBASSADOR TO NATO 2008-2009: Honestly, I don't think that today's meeting made much of a dent in that. I think the
Russians really are running out the clock. They have announced military exercises in Belarus around February 9th. They're moving ships to the Black
Sea that would arrive there in early February as well. So, I think they are using this period of time to just keep the diplomacy as an activity, but I
don't believe that they have any intention really of stepping down.
CHATTERLEY: What's he buying time for, in your mind? Because you said earlier and you were speaking -- oh, please, go.
[09:35:00]
VOLKER: As I was just saying, military preparations. I think you want to have some additional forces in different places so that they - if they do
decide at the last moment then to say, OK, we will have the military incursion, they can do it on multiple fronts simultaneously.
CHATTERLEY: What we heard from President Biden earlier this week for better or worse suggested that
particularly the Americans are very aware of not only troop movements but the inevitability perhaps of what's going to take place here. How should
the United States respond even if it is just a buying time exercise? Because they can't move troops or adjust their military response without
the world seeing?
VOLKER: Right. Well, I think the U.S. and NATO allies should be using the time as well. I think we should be putting in place capabilities to assist
Ukraine and to try to deter Russia.
Remember, I think Russia still has the opportunity to step down. I wouldn't say it's inevitable. I think it's unfortunate President Biden indicated
that he thought that the Russians would invade. Because I think we still have an opportunity to prevent that.
We should be shipping arms to Ukraine. We should be training them. We should be putting some preventative deployments in the Baltic states. We
should be applying sanctions now. There is a lot we can do that would signal to Russia that the costs are going to be too high.
CHATTERLEY: The last time you were on the show, we discussed bolstering military aid to Ukraine. And we saw Antony Blinken, the secretary of state,
confirmed that they were doing that. What about humanitarian aid too, Ambassador, because if something does happen and to your point, we hope it
is not an inevitability to this and it can be a de-escalation. But it could be too late if humanitarian aid isn't provided early on, too?
VOLKER: Well, I certainly agree that if Russia does invade, there will be substantial refugees. There would probably some injured civilians as well.
And there will be a need for support for Ukraine. And we should absolutely do that.
I think the urgency right now is on preventing this. I think that's where the attention should be.
CHATTERLEY: Does diplomacy do that or when you have someone like President Putin, do you have to show strength and force and might in order to create
that de-escalation rather than perhaps words?
VOLKER: Exactly. So, they go hand-in-hand. Diplomacy without strength behind it is just empty words. Strength that shows the facts on the ground
that is factored into leader's calculations then give an opportunity for diplomats to figure out, what would the solution be that everyone can
accept? But in a situation where there's no such bounds and one side believe it has a military advantage and will use it. Diplomacy won't change
that.
CHATTERLEY: What happens in the next week and a half? Because the Russians confirmed and Secretary Blinken also added to it that there would be a
written response to Russia's demands, which is what the Russians have, for days now, been saying they wanted. There would also be an addressing of the
concerns that both the United States, Europe and the allies have with regard to Russia's demands. What happens when the Russians get hold of that
paper?
VOLKER: Well, I think we can be fairly certain that that paper will not give the Russians what they are asking for. What the Russians are asking
for is a guarantee of no further NATO enlargement and removal of NATO military forces even from current allies in Central and Eastern Europe. And
essentially recognition that Russia has a sphere and influence over countries in the East. That's not going to happen.
Prime Minister Lavrov said something interesting in his press opener today, which was the indivisibility security and no building security at the
expense of another state. He's referring to the Helsinki Accords. And those are two of the principles in there.
But there is no threat to Russia. There is no diminution of Russian security. And yet Russia is violating fundamental principles of the
Helsinki Accords by making these demands.
So, this will be rejected. The Russians will claim that they tried and that their offer has been rejected. And I think it will run out the clock for
the Russians to then decide, do they really want to use military force?
CHATTERLEY: So, the timeline for a decision in your mind? Because you quite rightly said, nothing on that paper is going to provide anything that the
Russians don't already know. They have just been given it verbally rather than on a written piece of paper.
VOLKER: Exactly.
CHATTERLEY: Right. So, at that point then?
VOLKER: I think we are looking -
CHATTERLEY: Yeah.
VOLKER: Yeah. I think we are looking at the first couple of weeks of February as a time period when -- if the Russians do finally decide to
launch a military attack, that that would be the time for it.
CHATTERLEY: Wow. Ambassador, great to get your insights as always. Ambassador Kurt Volker there. Sir, thank you.
VOLKER: Thank you.
CHATTERLEY: A word of advice for Netflix investors today, don't look up. The share price up next. Why pandemic winners like Netflix and Peloton are
not in good shape right now.
(COMMERCIAL BREAK)
[09:42:18]
CHATTERLEY: Welcome back to "FIRST MOVE."
U.S. stock markets are up and running this Friday. Discouraging news about streaming and spinning, aka Netflix and Peloton putting further pressure on
the Nasdaq in early trade. But softer bond yields and lower oil prices are market positives in the works of a late great rocker Meat Loaf, two out of
three ain't bad.
There is cuff trade reflected in crypto prices today. Bitcoin currently down some 6 percent and some 20 percent lower so far this year just to give
you a sense. Not exactly paradise by the bitcoin trading screen light.
Paul La Monica joins us with more. Oh, poor Meat Loaf.
Let's talk about crypto.
PAUL LA MONICA, CNN BUSINESS REPORTER: It's what you'll find out in my mouth, so to speak.
(LAUGHTER)
CHATTERLEY: Nice. Yes.
LA MONICA: I was going to say I'd do anything for love, but I won't do that. But my wife might get jealous.
CHATTERLEY: Yeah. But we love your wife, too. So, there is lots of love here on this show. And of course, on Meat Loaf too.
We better talk about crypto. Because there's less love there. What's going on in crypto? We have to blame the Russians, I think, a little bit this as
well.
LA MONICA: In this week, it does appear that you know increased tensions with regards to Russia and the U.S., the whole Ukraine situation, concerns
about a crackdown on bitcoin mining there. That is definitely having an impact on not just bitcoin but other large cryptocurrencies such as
Ethereum.
And, Julia, remember that we already have worries about political turmoil in Kazakhstan, which has quickly become world's second largest bitcoin
mining mark after the U.S. That has had an impact on bitcoin prices as well. Because China has already taken steps to really put the kibosh on a
lot of bitcoin mining activity that had been one of the biggest markets in the world for crypto.
So, all of a sudden, it's looking like the U.S. might be the only favorable bitcoin mining market. And there are questions about you know U.S. stance
on bitcoin as well given you know concerns about regulations on cryptocurrencies here coming and you know possible stable coins that you
know the Federal Reserve could launch.
CHATTERLEY: Yeah, the Fed publishing a white paper on that. Of course, this week, plenty of criticisms, no stance actually taken but you just get a
sense that regulators all around the world are going, we see the threat here of at least losing some power over monetary policy in the future if
we're not very careful. Hmm.
Now, staying in the crypto sphere, Twitter allowing some users to set their profile pictures as NFTs, these non-fungible tokens and digital art.
Paul, what do you make of this?
[09:45:00]
LA MONICA: Yeah, I think you know Twitter is a company that obviously is, you know, dependent on trends, of course. And NFTs are a very hot trend in
the collectible's world and the financial world right now as well. So, it kind of makes sense that they're doing this.
But what I find interesting, Julia, is that none other than Elon Musk, the Tesla and SpaceX CEO, who is pretty fond of writing controversial tweets.
He blasted the company for tabling these moves, saying it is kind of silly for Twitter to be doing this, especially since as he noted there are a lot
of crypto scammers that are prevalent on Twitter.
CHATTERLEY: You know, that's a very interesting point. I also hear the dull sounds of the IRS cheering this move as well because you not only have to
confirm your identity. But you link your wallet where you keep some of these digital investments to. That's a law of regulation that the crypto
community weren't quite expecting or if Twitter get to say tax deduction for doing it. There's something else in there that I kind of found quite
fascinating and one of the consequences perhaps - unintended consequences. Hmm. Paul La Monica --
LA MONICA: Yes. We will see whether or not Jack Dorsey has a bit of a different tax bill for Twitter --
CHATTERLEY: So, I could hear someone saying delay pay taxes. Yes.
Paul La Monica, thank you so much for that.
Now, not just crypto taking a beating.
Pandemic stock winners in trouble too. Two in particular. Netflix and Peloton have seen their shares plummet.
Peloton is recovering some of its huge losses suffered on Thursday when the price fell by nearly a quarter. It's down around 80 percent in a year.
Meanwhile, Netflix is suffering its own day of doom and gloom. Today, the stock is down more than 21 percent.
Anna Stewart is following their fortune.
Some of those connects both of these is that in the midst of challenges to demand, they're raising prices, which you can do for a while. I'm not sure
how well that works. Netflix, let's go with that.
ANNA STEWART, CNN REPORTER: Yes.
CHATTERLEY: What do we make of their numbers?
STEWART: The stay-at-home stock run does appear to be over, doesn't it? And raising prices in the tier markets where its struggling to grow that user
base. Well, investors clearly not very keen on that not the least given, they're not adding nearly as many subscribers as people would like.
So, disappointing on the last quarter. They added 8.2 million users. They wanted to add 8.5. That was their prediction. But far worse is this
quarter. For the first quarter of this year, Netflix says they're only going to add 2.5 million. Which is really disappointing. Why? Here's what
Reed Hastings has to say.
(BEGIN VIDEO CLIP)
REED HASTINGS, CEO, NETFLIX: There is a number of you know potential explanations in COVID. But then we worry about hanging too much on that.
You know, there is more competition than there has ever been. But you know we have had Hulu and Amazon for 14 years. So, it doesn't feel like any
qualitative change there. And overall, confidence in streaming becomes all of entertainment, you know linear, dissipates over you know the next 10 to
20 years, very high confidence in that, because everyone is coming into streaming.
(END VIDEO CLIP)
STEWART: He mentioned the two C's there, COVID and competition. I don't think anyone expected the likes of Netflix to retain the sort of growth
that had in 2020. In the depths of the pandemic, people are able to go out and do more. They're not stuck at home as they were.
But also, it's the competition. They're not just competing with streamers. They're competing for consumption, Julia.
Of course, all sorts of different sectors as people are going out and about. Going back to their daily lives. On competition is slightly glossed
over. The competition is out there, mentioning I think Amazon and Hulu in the earnings call.
But actually, if you consider it, how many new entrances there are onto the market. The saturation or potentially seeing. Lots of traditional media
companies like even our own parent company Warner Media, and HBO Max, like Disney Plus, like Paramount Plus, you know, you name it. So, there are more
- there's more there on the market and they're fighting for those users. And as you mentioned, Netflix raising prices, is this the right time?
Perhaps not.
CHATTERLEY: Yeah. Peak subscription alert. And speaking of peak subscription alert, Peloton, it's not climb is breaking out a sweat on that
exercise bike of treadmill. Its investors breaking out a sweat on this one as well. And I saw the CEO is denying reports of production halts but says
he's considering all options including layoffs and production halts, as he put it.
STEWART: Yeah. I'm not sure his defense of the story that came out yesterday has necessarily helped the stock, although it's slightly further
up today.
Let's put it into context. Peloton in 2020, its share price increased by 434 percent. Clearly, sales were going to take a dive once the pandemic
eased, and clearly so was the share price as well. The media reports yesterday that suggests as you say that Peloton was going to pause
production of certain bikes and its treads.
It cited internal documents which CNN have not seen. It was interesting the CEO felt forced to come out and defend that story when the stock price just
plummeted yesterday. He said the information obtained by that media report was incomplete, out of context. He says they know who the leaker is and
they're going to take legal actions. So, watch that space. But he couldn't deny the challenges. And he did say that they're considering all options,
including layoffs and production cuts. Julia?
[09:50:05]
CHATTERLEY: A little leaker. We shall see what happens there. Challenging times.
Anna Stewart, thank you so much for that. Stay with "FIRST MOVE." There is more to come.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "FIRST MOVE." The reinsurance industry is set for a strong 2022 as the global economy recovers in losses from the
pandemic received. That's according to ratings agency Fitch. One area being seen with that for growth is Africa.
And "Connecting Africa" spoke to one of the biggest companies operating in the region.
(BEGIN VIDEOTAPE)
LAWRENCE NAZARE, GROUP MANAGING DIRECTOR, CONTINENTAL REINSURANCE: Reinsurance in a nutshell is really insurance for insurance companies. It
is really the second level of insurance after the insurance company insures it direct client. The reinsurer takes whatever risk the insurance company
cannot cover on the balance sheet. That's really what reinsurance is about.
We all have our capacity to do things dependent upon our financial resources.
TEXT: What is you vision for you company?
NAZARE: The key thing that we have always talked about in business is building a sustainable business model. Sustainable for the long term. Not
only for our shareholders but for our people, our clients.
And also, I think, building a business that's not only premised or anchored on the profit motive but on purpose. We would like to build a great
enterprise that's premised on both profit and purpose. You need a profit for you to be able to still enjoy the benefit of shareholders capital. But
you also need a purpose for you to be able to execute successfully.
TEXT: What are the challenges and opportunities that come with running a Pan-African business?
NAZARE: I think African regulation has been quite fermented and you know from one country one region to another, you've got to navigate fairly
complex different regulatory frameworks. That has proved to be quite difficult.
Africa continent of free trade area is an absolute imperative. I think for our business, it's very exciting. Because of the promises that you have
seen, one of which primary is a promise of 11 playing field, they have more knowledge to regulatory framework. No barriers to trade. Free movement -
free movement of labor absolutely important.
TEXT: What is your hope for businesses in Africa?
NAZARE: I think the script for Africa's future success story must be written by greater African businesses and dubbed. Our markets are small
individually. Those great African businesses must be allowed to spread their wings, take advantages of opportunities across the continent.
(END VIDEOTAPE)
[09:55:08]
CHATTERLEY: And to a frizzy and finally on "FIRST MOVE" this Friday.
(NICKELBACK MUSIC VIDEO PLAYING)
CHATTERLEY: Having fun or drowning sorrows? Whatever the reason, there were plenty of empty bottles in 2021. And I'm talking champagne bottles because
sales truly popped last year.
France exported a record 118 million bottles in 2021. That's up 38 percent and global sales hit a record $6.2 billion.
Wow! Says one trade association described the rebound as a welcome surprise after a difficult 2020 with more people finding reasons to celebrate at
home. And what do we say? We say cheers to that.
And that's it for show. Cheers to you. And if you missed any of our interviews today, they will be on our Twitter and Instagram pages. You can
search for @jchatterleycnn.
In the meantime, stay safe. "Connect the World" with Larry Madowo is up next. And we'll see you next week.
(COMMERCIAL BREAK)
[10:00:00]
END
