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First Move with Julia Chatterley
Ukraine Foreign Minister: We Will Not Accept Concessions To Russia; Pentagon: Russia Showing No Signs Of De-Escalating; London Police Investigating Downing Street Lockdown Parties; IMF Lowers Global Growth Outlook For 2022; Global Tensions Mount As Biden Tested At Critical Moment; Second Life Founder Returns To Take On The Metaverse; Flying Car Gets Certificate To Fly In Slovakia. Aired 9-10a ET
Aired January 25, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JULIA CHATTERLEY, CNN ANCHOR: Live from New York, I'm Julia Chatterley. This is FIRST MOVE. And here's your need to know.
Troop tensions. NATO puts extra forces on standby over the Ukraine crisis.
Police probe. The UK government is facing fresh party gate scandal scrutiny.
And turbulent Tuesday. Markets remain volatile as the IMF cuts global growth forecast.
It's Tuesday. Let's make a move.
A warm welcome to FIRST MOVE.
Tensions over Ukraine show no sign of de-escalation. In fact, quite the opposite. With 8,500 U.S. troops on standby for deployment to Eastern
Europe as Russian troops amass on Ukraine's border.
And NATO beefing up its presence with weapons, ships and fighter jets.
In the last few moments, British Prime Minister Boris Johnson said the UK would not hesitate to toughen sanctions on Russia. The Ukrainian foreign
minister spoke with our Clarissa Ward exclusively a short time ago. He rejects giving Russia any concessions.
(BEGIN VIDEO CLIP)
DMYTRO KULEBA, UKRAINIAN FOREIGN MINISTER: If anyone makes a concession on Ukraine, behind Ukraine's back, first, we will not accept that. We will not
be in the position of the country that picks up the phone, hears the instruction of the big power and follows it. No.
We paid a lot - including 15,000 lives of our citizens to secure the right to decide our own future, our own destiny. And we will not allow anyone to
impose any concessions on us.
(END VIDEO CLIP)
CHATTERLEY: Sam Kiley is in Kyiv for us and Nic Robertson in Moscow.
Sam, we'll come to you first. The foreign minister there, I think, cutting to the core of Ukraine's fears that they're cut out of any real
negotiations that take place here. Are they also reassured by what they're seeing elsewhere?
SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: I don't think they're reassured at all by the behavior of foreign diplomats here, indeed. The
President Zelensky and a number of ministers here have all been rushing to reassure their own local population, the Ukrainians, that there isn't, in
their view, an imminent danger of Russian invasion and to remain calm. And the reason for that is that the U.S., UK, Germany and Australia have begun
to order the evacuation of their so-called nonessential staff and families from the embassies here.
Now, that is being seen as something of a bad sign in terms of the morale of the Ukrainian population. but on the other hand, they are getting a
military boost in the morale, as you say, by those reassuring statements coming from the United States, from Boris Johnson and more importantly
perhaps the delivery of some more foreign military aid coming from the United States.
Among the new consignment due to arrive any second now here in Kyiv is the large amount of weaponry including javelin antitank missiles, which really
in the sort of battlefields likely to unfold here an almost strategic weapon. That's on top of the short-range similar sorts of weapons, smaller
weapons though that the British have been supplying a week or so ago.
So, Julia, there are militarily reassurance but politically and diplomatically not so much. A very important statement there also being
made by the Ukrainian foreign minister with Clarissa Ward. He's saying that you can't go behind our backs and make any deals. What he's saying there is
he's aware of little frictions, little fractions, little fractures, emerging between the United States and a number of European partners.
Possibly Germany refusing to supply weapons to Ukraine. And he's making sure that there isn't going to be from the Ukrainian perspective any kind
of wobbling among the allies. Julia?
Nic, come in here because I think the message as well from the Ukrainian president to the people yesterday was don't panic. I mean you get the sense
when a president is telling you not to panic, that that's exactly what's going on.
How is Moscow viewing all the moves that are being made here whether it's troops, whether it's deployment of weapons and support or again, to Sam's
point that the talks behind the scenes?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yeah. I mean, Russia is willing to play up any kind of division that it sees because that's you
know part of its tactical toolbox. It's created a tension. It's created a narrative for talks. It's got the talks, so it continues to apply the
psychological pressure of building forces for it says training exercises on the border with Ukraine.
The Kremlin's spokesman said that President Biden's consideration of potentially sending 8,500 U.S. troops to the eastern flanks of NATO and
eastern side of Europe considers that adding to that tension. Russia's narrative through all of this has been that it's the west that's trying to
sort of create some kind of provocative action according to the Kremlin.
It is the Ukrainian government that's driving up tensions along the border with Ukraine by amassing troops and military equipment close to that
separatist region in the east of Ukraine around Donbas. So, you know, the Kremlin sees this as through that perspective. But undoubtedly and we heard
this last night from the Foreign Ministry spokeswoman, they pick up on points like just that that you mentioned, that the Ukrainian government and
leadership is trying to settle the nerves of its population indeed.
The head of the Defense Council said that there was - and this was the quote coming from Ministry spokeswoman here, saying they didn't see -- the
Ukrainians didn't see any imminent all-out invasion by Russia and then countering that with a quote by the Pentagon spokesman saying that the
United States sees no de-escalation and saying that the United States is trying to undermine the morale of the Ukrainians.
This is sort of a classic tactic of seeing those small chunks of daylight, those small gaps, those small divisions and just pry them open a little bit
more. No concessions given, no movement down the diplomatic track, no movement overtly across Ukraine's borders yet exploiting those differences
CHATTERLEY: Yeah, and implication of the inconsistencies.
Sam, very quickly, because I wanted to ask Nic this too. It's tough to see Russia backing down without some kind of concession from NATO and their
allies. Is there anything that you could see that can keep all parties happy here whether it's NATO and the allies, the United States, Russia and
Ukraine given the concerns that they're voicing.
KILEY: Not from the Ukrainian perspective, no. This is an issue of national sovereignty. NATO have dug in along that line very firmly insisting that
there can or will be no discussion over NATO or indeed Europe without either of those two parties with the United States. That, as Nic was
saying, is a schism that the Russians trying to exploit by trying to do bilateral talks with the United States trying to prize the U.S. away from
other NATO partners and indeed not just NATO partners but the European nations. This affects people who are not part of NATO. Not necessarily in
part of the European Union but they're in Europe.
So, these are all areas where they can exploit those sorts of frictions. But at the same time, there is a much wider principle at work here, which
is that if there is any kind of opportunity taken by the Russians, the extent to which the response would be strong enough to sort of win the
argument longer term. If the Russians sliced off a little bit more of Ukrainian land would that satisfy Putin in the short-term, would it
undermine the Ukrainian capacity to operate as a freestanding economic entity, or could he effectively cut the Achilles' heel of the economy here
and leave it as a sort of vassal state?
That might well be an end game. It's precisely avoiding that sort of an outcome that's so important for Europe and NATO. And that is where those
frictions and schisms potentially lie, Julia.
CHATTERLEY: I mean, slicing up a piece, though, at least in some parts perhaps unites allies where there's plenty more that Russia could do that
wouldn't. And with so, further division.
Nic, your view? Any concession here that could perhaps appease, please all parties?
ROBERTSON: Yeah. We just heard Boris Johnson in parliament saying that Putin shouldn't think that he can salami slice off any piece of Ukraine,
that any incursion is going to incur those very, very tough penalties.
You know, where there has been -- you know, where there has been any hope on the NATO side of getting Russia to any sort of agreement, and Russia has
not really picked up on this at all yet, and that's the idea that you can have some kind of reciprocity of force disposition on NATO's side and on
Russia's side. And training exercises would be sort of more telegraphed in advance. There would be more openness on that. There could be bigger,
longer lasting missile controls that have sort of fallen by the wayside over the past few years. But that's a possibility.
But Russia's demands have been so maximalist and so public. And when you put them in writing and hand them separately to NATO and the U.S. as they
did, it seems hard that kind of off-ramp is said. But look, what Russia is capable of doing. It is saying that these massive troop deployments whether
it's the - whether it's the Navy training right now in the Baltic Sea with training against submarines, against aircraft, against mines, whether it's
that massive troop deployment is building up in Belarus just not far from the capital Kyiv in Ukraine, whether it's the forces on the east of Ukraine
that already are the 100,000 or so Russian forces.
You know, Russia says these are all there for training. It is in Russia's scope to build them up and keep them there and maintain the pressure and
keep the pressure on and keep the pressure on and keep the pressure on. And then when they feel there's a little bit of something, then they can say to
their own population, well, we're done with those military exercises. We can dial them - we can dial them back. And the narrative that they've
pushed domestically isn't as maximalist as the one that they've pushed internationally.
So, is there a room for maneuver for a climb down? Is there room for that diplomatic offer amped to work? There is, but the tensions are escalating
right now. And no one is on that off-ramp.
CHATTERLEY: And very important points.
Sam, Nic, great to have you. Thank you.
OK. Lockdown parties are under investigation. London's Metropolitan Police are looking into alleged Downing Street events including Boris Johnson's
birthday bash in 2020.
(BEGIN VIDEO CLIP)
CRESSIDA DICK, METROPOLITAN POLICE COMMISSIONER: As a result, firstly of the information provided by the Cabinet Office Inquiry Team and second in
my officer's own assessment, I can confirm that the Met is now investigating a number of events that took place at Downing Street and
Whitehall in the last two years in relation to potential breaches of COVID- 19 regulations.
(END VIDEO CLIP)
CHATTERLEY: Scott McLean is live in London with the latest.
Scott, so now a police investigation into some of these parties. We're not clear, I don't believe at this stage on which specific events are being
investigated. But this is also going to have consequences surely for the independent investigation that was being carried out into these two.
SCOTT MCLEAN, CNN CORRESPONDENT: Exactly, Julia. So, not to get too far into the weeds but basically this civil service investigation that was
taking place and expected to have a report generated this week.
Well, the parts that have been turned over to the police have essentially been put on pause. Sue Gray, that senior civil servant leading the
investigation, continues to look into other things. But what's not is clear is when we might actually know what the results of her investigation or the
police investigation might be. Things got a lot more complicated here.
And what's really interesting is listening to Cressida Dick, the head of the London Metropolitan Police, is in her criteria for justifying this
investigation, they do not look good for Boris Johnson. Two of these things include evidence that people knew that what they were doing was an offense,
obviously Boris Johnson and his staff, they were the ones involved in writing the rules. And also, that there was clearly no reasonable defense,
not a good sign, again.
Now, the prime minister insists that he never broke the law, but he says that he is supportive of the police investigation. The prime minister is
trying to shrug this off, but of course headlines like this, Julia, prime minister's No10 birthday bash in lockdown not helping. Not technically
lockdown, but there were severe restrictions at that time. Indoor gatherings were banned. So, indoor social gatherings were banned. And
outdoor ones were limited to just six people. Or this headline also not helping. You can't have your birthday cake and eat it, Boris.
So, this morning, the Transportation secretary was sent out onto all of the morning television shows in this country to try to defend the prime
minister. And what his argument was essentially, is that look, it wasn't Boris Johnson who baked the cake or who brought it to work or who organized
this party. These were factors outside of his control. I think others would probably argue that look, you're the prime minister, you're setting the
rules, you also need to set the tone.
The reality here, Julia, is that it's not legal jeopardy necessarily that Boris Johnson needs to worry about. The result of any police investigation
would be at worst likely a fine, maybe a series of fines depending on how many investigations are going on into how many incidents.
The issue is, if the police are to find that Boris Johnson did break the law, well, that tells every MP that he clearly broke the law. The laws that
he himself was writing and that may provide some ammunition for them to vote against the confidence of their leader sparking more political turmoil
for the Conservative Party and perhaps a new leader.
The Labour Party in parliament today was framing this as potential criminality and truly damning. They're also potentially seeming to take aim
at one of Boris Johnson's potential leadership successors, the Chancellor Rishi Sunak, he's Boris Johnson's neighbor. Angela Rayner, the deputy
opposition leader was asking about what he knew about this and whether or not police have asked him about this. And this is a pretty good time for
the opposition parties to pounce, Julia, because of course Boris Johnson is trailing, his Conservative Party is trailing in national polls. And even
his personal brand has taken a real hit here as well. Even the vast majority of conservatives according to a new poll believe that he's not
been so honest throughout all of this.
CHATTERLEY: Yeah. To your point, the bigger point here, he's not going to court as a result of any accusations here and police findings, but the
court of public opinion is far more important perhaps in this case.
Scott McLean, thank you for that.
MCLEAN: You bet.
CHATTERLEY: OK. Onto the global market volatility. This Tuesday, U.S. futures pointing to another sharply lower open. All this as the
international monetary fund lowers its global growth target by half a percentage point this year to 4.4 percent.
Christine Romans joins us now.
Christine, we'll talk about the IMF afterwards but let's talk about what we're seeing in financial markets. Because you and I, we're talking about
this before Christmas. We're going through a regime change - a fundamental regime change --
CHATTERLEY: -- in the approach now from the Federal Reserve, and actually it's something that we've not seen for -- investors have not seen for the
best part of two decades.
ROMANS: Completely new territory here, right? I mean, it's just 2022 is going to be a very different and potentially volatile year with lots of
headline risk. You know, I've been saying that if - most of 2020 and 2021 was downhill skiing for investors. 2022 is an obstacle course.
In fact, the chief of the IMF this week said the global economy will face an obstacle course in 2022. So, if the Fed that will start raising interest
rates, at the very same time earnings have been so, so good, right, the last year and a half. We'll probably have -- could have more mixed results
and more headwinds. Inflation still a big problem in the U.S. And again, on that Fed risk, I mean the Fed risk, I mean, the Fed has to thread this
needle absolutely perfectly here and telegraph, I think, to markets, right, and the public exactly what it's doing and when.
CHATTERLEY: Yes. We are welly and truly off piece to use your ski analogy I think here. The IMF is interesting to me because they are saying, look,
actually the United States is slowing more. To your point about being very precise about how the Federal Reserve responds here and calibrating three
things at once, stopping asset purchases, raising interest rates and reducing the Fed balance sheet.
CHATTERLEY: We are in well and truly uncharted waters, but there's a lot of other things investors to deal with. To your point, earnings, geopolitical
risk, potential risk that high oil prices create some kind of greater slowdown in Europe. There is a lot to deal with at this moment. You've got
to expect volatility.
ROMANS: I think so. And really, I mean, also volatility, but in perspective. I mean the past two years -
ROMANS: -- have been exceptional for -- for investors, right? I mean really exceptional returns for investors the past couple of years. And when you do
look at earnings, companies have managed very, very well through COVID, but the supply chain issues still persist. Inflation, there's a worry maybe the
Fed is a bit behind the curve on inflation. How aggressive will the Fed be, Goldman Sachs' four rate hikes this year? We're not expecting one this
And you know, Julia, a lot of people have been asking me if I think that the Fed could have a surprise rate hike this week. I think Jerome Powell --
and correct me if you disagree, I think that they're going to try to be very, very straightforward about what they're doing and when so as not to
really royal markets, right? And do anything that catches anybody off- guard, right?
CHATTERLEY: When do I ever disagree with you, Christine Romans, despite my best efforts it would be pointless to shock people at this stage that
CHATTERLEY: -- interest rate hikes, -
CHATTERLEY: -- you can see tensions being created. Clear telegraphing is the way forward here as best they come.
CHATTERLEY: Christine Romans, thank you.
ROMANS: Let's go - really go skiing for real next time.
CHATTERLEY: Why not? You and me, carefully. Thank you.
We're back after this. Stay with us.
CHATTERLEY: Welcome back to FIRST MOVE. And returning to our top story.
Escalating global tensions and the Biden administration's biggest test yet. On an 80-minute call President Biden and European leaders discussed
preparations to impose severe economic costs in response to Russia's military buildup on the Ukrainian border. The sanctions threat has just
been echoed by British Prime Minister Boris Johnson. And as many as 8,500 U.S. troops are on heightened alert for possible deployment to Eastern
Europe. According to the Defense Department, they will be prepared for any "contingencies," quote. Clearly, we're all wondering is this wider conflict
Ian Bremmer is president and founder of Eurasia Group and GZERO Media and joins us now.
Ian, always great to have you on the show and Happy New Year.
The conversation around Russia's options seems very binary at times, and perhaps that's just me and the media, but it's sort of invasion or de-
escalation. And you point out, there's a whole spectrum of options in between, and some of those actually far more likely than the worst-case
scenario here. Just walk us through this.
IAN BREMMER, PRESIDENT AND FOUNDER, EURASIA GROUP: Well, some of those we've already been doing. Two weeks ago, we saw some low level, but still
significant Russian cyberattacks against Ukraine. Ukrainian government websites and servers. That is asymmetric warfare. And, I think, you know
they can certainly escalate that kind of activity and I expect they would as diplomacy doesn't work out. There are also all sorts of military steps
the Russians can take that fall well short of a full-on invasion of Ukraine and an overthrow of the Ukrainian government.
For example, the Russians presently informally occupy the Ukrainian territory of Donbas. But they have never done it officially with Russian
troops. In fact, they say that Russian passport holders in the Donbas are being threatened, acts of genocide, they say falsely are being committed
against them by the Ukrainian government. So, one natural thing that they might do would be to send troops, roll tanks into the Donbas.
Now, the Americans would consider that an invasion. Would that trigger the same kind of response that thousands of Ukrainians dead and the end of the
Ukrainian democracy? Well of course it wouldn't. So, I think one thing to be very clear is that Putin is not likely to try to make it easy for the
Americans and the Europeans to respond strongly and collectively. And that's how we should be thinking from his perspective of what kind of
options he has going forward.
CHATTERLEY: So, this is such an important point because to your point, with the Donbas region, and we've already seen that. The problem bubbles along
and the calibration of response between the United States, NATO allies, Europe, for example, would differ perhaps to different degrees other than a
direct invasion which would unite them and to your point Russia knows this.
BREMMER: That's right. And I think that President Biden has been doing a lot of work radically different than say the withdrawal from Afghanistan
where the allies were informed basically after decisions were made. Here they really want this to be multilateral. And one of the reasons you have
these announcements of 8,500 troops being put on alert, and then just yesterday you saw a number of NATO allies sending weapons systems, forward
deployments to the Baltic States, to Lithuania, to Bulgaria, to Romania, closer to Russia.
That wasn't just the Americans. That was the French, that was the Danes, that was the Spaniards. They were all participating in that. The Biden
administration really wants to try to show that Russians that even in the case of lower-level incursion as he said in his press conference last week,
that the cost that the Russians are going to have to pay will be unacceptable. It's not worth it. And that's a harder message for the
Americans to deliver especially given the level of economic dependence that so many Europeans have for continued good relations with Russia.
CHATTERLEY: Yeah. You know, it's hard. And we've talked about this already on the show today. It's hard to see Russia backing down without some kind
of concession from NATO and their allies. What might that concession be? Is there such a concession that everybody can walk away here saying, we've got
something out of this whether it was de-escalation or whatever it is that Russia wants? Is there some compromise here that works for all?
BREMMER: Well, we're going to find out. I mean one of the reasons why diplomacy has been going so far without negotiations is because the
Americans don't yet have a real strong sense of exactly what Putin's red lines are, what the priorities are, the public statements that were made by
the Kremlin were a grab bag of demands that many of which were inconceivable for the United States to effectively respond to. But, I mean,
it is true that NATO has been working more closely with the Ukrainians in recent years.
It's true that they've been sending the more weapons. It's true that they've had more trainers on the ground, soldiers on the ground engaging in
training, more cyber coordination, more joint exercises. All of those things are areas where the Americans and NATO could have negotiations that
could be constructive in response for a Russian de-escalation.
You could even potentially have with Ukraine's agreement a period of time where Ukraine would not join NATO. It could be like an Iranian nuclear
deal, say five years. In return, the Russians would have to provide some significant security guarantees. Both sides could walk away from that and
then the deal would be broken.
I'm not saying that both sides can get to yes. In fact, President Biden in his press conference last week said on balance he thinks the Russians are
going to go in. That doesn't mean he wants them to. But I don't think - I mean, even though that both sides are right now engaged in diplomacy, it
doesn't look like we're heading towards a diplomatic breakthrough as it stands right now.
CHATTERLEY: What about timing on any real significant adjustment to Russia's position here with the troop buildup? I'm just trying to imagine
the conversation, the phone call between President Putin and President Xi, if anything happened prior to the Beijing Olympics or even during the
Beijing Olympics or even during the Beijing Olympics.
BREMMER: Well, first of all, the big activities that are happening, the military exercises in Belarus, I believe don't start until February 3rd.
And that is a significant additional buildup of military forces that the Russians would clearly want in place before they took significant measures.
Secondly, with President Putin going to Beijing for the Olympics opening, I do believe it's hard to imagine that the Russians would want to put the
Chinese in a position where they'd have to say something about it and also where the world attention would be distracted away from President Xi's you
know sort of big celebration even with COVID protocols being what they are. I think that that would damage the most important strategic Russia
BREMMER: -- they have globally right now which is with Beijing.
So, I think we still have some time. But I also, again, expect that if we're talking about incremental ratcheting up for pressure, it's not that
the Olympics are over and suddenly there's an invasion. For example, Julia, one thing that's coming up soon next month is that the Belarusian
government is going to change their Constitution with a referendum that says they're no longer neutral and they're no longer nonnuclear.
So, I could easily see after that referendum the Belarusian government announce that there's going to be a permanent Russian deployment with
nuclear weapons and a lot of those are going to be right on the Ukrainian border. Increases pressure but doesn't invade Ukraine. I think that you're
more likely to see steps like that than you are suddenly to see the Russians with hundreds of tanks rolling into Ukrainian territory.
CHATTERLEY: Yeah. The sequencing here is quite fascinating, the timing has always with these kinds of strategic moves that Putin makes.
I want to bring in another leader here embattled in his own right but obviously was out this morning being very forthright about his potential
response, the UK's potential response to any further aggression and sanctions. And I'm talking about Boris Johnson. Perhaps no surprise given
his troubles at home.
Ian, what do you make of what's going on in the UK and on Boris' future?
BREMMER: Yeah, he's holding on by a few threads to power right now as prime minister. And clearly one of those threads is the actions going on in
Ukraine. He wants to be seen as steadfast ally of the United States and NATO. It was his foreign secretary that over the weekend released the
intelligence documents that they had of a potential Russian plan to remove the Ukrainian prime minister and bring a new government in.
I mean, you know, very sort of salacious headline type details that I'm sure do reflect a scenario.
I mean, if Putin says to his intelligence organizations, I want a plan for what I could do to invade Ukraine and overthrow their government. They're
going to give him a plan. It doesn't mean he's going to do it. But it's interesting that the Americans had the same information, the Brits really
wanted to leak it, why?
Because Boris Johnson is just trying to stay Boris Johnson at this point and he's not succeeding. The investigations continue to expand around his
personal behavior on several occasions breaching COVID protocols and lying to the public about it. It does seem like he's hemorrhaging support from
his own Conservative MPs every day. Hard to imagine he's going to be there for much longer.
CHATTERLEY: Yes. Ian, always great to chat to you. Thank you.
Ian Bremmer, president and founder of Eurasia Group and GZERO Media. Great to chat to you as always.
The market opens next. Stay with us.
CHATTERLEY: Welcome back to FIRST MOVE.
U.S. stocks are beginning today's session weaker as expected. A continuation after pretty wild global market swings over the past 24 hours.
Volatility and trading volume hitting recent peaks, a reflection of market fear and uncertainty over what the Federal Reserve does and when. And that
it will no longer ride to the rescue of falling markets, what's better known as the Fed put.
Tomorrow's Fed policy statement could be a hawkish one reflecting its growing inflationary concerns. The Fed put as it's known may be in trouble.
But is this still a profit put, aka, are companies going to ride to the rescue to some degree with juicy profits?
Well, Microsoft reporting profits after the markets closed. IBM already out with encouraging Q4 sales growth numbers, tech ball. Dan Ives, a regular on
this program says this tech profit season will be the most important in a decade. We'll discuss in a moment.
One market positive, bitcoin, just hanging on in the green there. Lots to talk about how closely correlated the leading crypto currency is to stock
David Bailin joins us now, he's the chief investment officer at Citi Global Wealth.
David, Happy New Year and great to have you with us. This kind of market action tends to lead to lots of client phone calls saying what on earth is
going on. What are people asking you and how are you responding?
DAVID BAILIN, CHIEF INVESTMENT OFFICER, CITI GLOBAL WEALTH: Terrific question and that's exactly what's going on. So, what most people are
wondering is why was there such great volatility and what is going on with the Fed? And should we be fearing what the Fed is going to do?
And I think what we're seeing is this realignment in the stock market some of which is fundamental but some of which is really associated with retail
traders. And what I mean by that is that we're seeing technology shares get hit in particular. They're highly speculative. Their sensitive changes
rate. And that makes sense to us.
But the idea somehow that the Federal Reserve is going to take action that is going to cause the economy to slow markedly in an attempt to stem
inflation that is really due to a pandemic and is highly unusual seems kind of odd to us. So, a lot of our conversations with our clients is about
needing to stay firm and to understand that this transition, right, to a Fed that is going to not provide support is different than one that is
going to actually try to tamp down economic activity.
CHATTERLEY: So, what you're saying is there is an element of panic that we see going on in the markets here and the goods being sold with some of the
relatively bad, let's say or the overpriced and these moves have perhaps gone too far?
BAILIN: That is exactly correct. I can't say they've gone too far, but I'll tell you this. If you take a look at the put call volumes, right, and the
amount of activity, right, from retail investors especially those investors that are new in the market, we're seeing you know I would describe as a
somewhat of a panic behavior and speculative behavior on their part. And we're definitely seeing companies that are profitless and really have you
know exposure just a pure you know what it is worth today type of valuations. Those are the ones that are getting hit hardest.
Well, what's different about yesterday is that the panic moved into traditional shares. And as it moved into traditional shares, professional
investors, right, and traders stepped in and bought these shares when we saw valuations go down. And that to me is indicative right of a market in
transition, one for the last two years that has been rife with speculation, rife with small trades of companies that don't necessarily make sense to a
market that is good and transition to fundamental valuations and as you said fundamental earnings. Those companies that can earn, that can pay
dividends, that do buy backs, that have growth for potential -- above average growth potential. Those are going to be highly valued over the next
two years and we think markets are going to be higher over the next years than they've been as a result.
CHATTERLEY: And what you're already saying is that people are being more discerning. They're recognizing that there's indiscriminate selling to some
degree here and there's already opportunities to buy. Where do you go in this kind of market where there is this degree of confusion perhaps and
concern about the Federal Reserve overresponding to some of the risks out there? Where are the - I think it's a tough word to use at this moment --
but the relative -- let's call it that -- safe havens.
BAILIN: So, yeah, I'm not sure that safety is all it's cracked up to be.
BAILIN: But look at where it has great value.
CHATTERLEY: Caught in the storm. Better.
BAILIN: Right, exactly.
So, look particularly at consumer staple stocks, right? So, as shipping costs comes down, as the cost of inputs for goods, goes down these
companies are going to benefit, right, and the supply opens up. And we're seeing all of those things happen right now. Those companies, the consumer
staples companies not only will see earnings go but they're also going to see increasing dividends. And there are some of the largest dividend payers
out there. That's a great section of the market.
Health care shares especially large pharma and other areas that give us moderate growth but have dividends of 4 or 5 percent or more are terrific.
Imagine if you get paid 5 percent in dividends and the stock goes up 5 or 10 percent, great turnover, right?
BAILIN: Fin tech is another area. Everyone is saying, well that's going to get hammered. But if you take a look at those companies that are generating
cash flow and you just project out for a year or year and a half 15 or 20 percent growth in their top line, which is what they're saying they're
going to do. You know, that to me presents an area where those companies become very normal valued.
And then cyber security another area again that has been hit a great deal in value because it's a technology stock. On the other hand, cyber is a
major area with five-year growth rates out there of 20 plus percent. So, you combine these new areas, right? This tilt towards dividends, toward
health care, toward consumer staples with an increased exposure to selectively those technology shares that are going to benefit from really
unstoppable trends. That to us is a good portfolio right now.
CHATTERLEY: Yeah. And it's a more medium to long-term portfolio too, which is important.
David, I have about 30 seconds. Crypto, bitcoin, these have all taken a real hammering. What are your clients doing here, those that are in?
BAILIN: Well, it's interesting. You know, first of all we don't consider them a portfolio, but for anyone watching, right, if you take a look at how
crypto behaves in the last couple of days looked a whole lot like tech shares and a whole lot like speculative trading, right, and not a lot like
an asset that you would think of it as a core holding given how it's behaving right now.
And I think there's a lesson here, right? Which is that market is in the process of maturing, but to call it a core holding given how it's behaving,
to me, is actually premature.
CHATTERLEY: So, buyer beware.
BAILIN: That's what I think.
And I think we have to be very careful that we look at our core assets, those that we are trying to grow for the long-term and think about 85
percent or 95 percent of our clients' assets in core and only 10 or 15 percent in speculative and not the other way around.
CHATTERLEY: David, great to chat to you. David Bailin, chief investment officer at Citi Global Wealth. Sir, thank you so much for that.
BAILIN: Pleasure. Have a good day.
CHATTERLEY: You, too.
Going back to the future of the metaverse. We speak to the founder of Second Life who's creating a virtual world to a Mark Zuckerberg was still
at high school. His perspective next.
CHATTERLEY: Welcome back to FIRST MOVE.
And welcome to one of the earliest virtual worlds. Second Life is a foreigner of the digital reality worlds that are now referred to as the
metaverse. It's an online multimedia platform that allows people to create an avatar for themselves and have a Second Life in a virtual space. 1
million people are still active in Second Life spending nearly $1 billion a year, and its creator is now returning to the company to take on the
Joining us now is Philip Rosedale, the creator of Second Life and he's the founder and strategic advisor of Linden Lab. And co-founder of High
Philip, great to have you on the show.
PHILIP ROSEDALE, FOUNDER AND STRATEGIC ADVISER, LINDEN LAB: Thanks for having me.
CHATTERLEY: You're back but you left in 2010. Welcome. And if I chart your course since then you've been in the same concepts and the same themes
which is creating sort of an Internet connected virtual world. What's the appeal?
ROSEDALE: You know, I thought a lot about that over all the years I've been working on this stuff. I think for me the excitement of the Internet from
the very beginning was the idea that you might be able to get people together in a shared space where they could make things and they could
communicate and they could do business with each other and just sort of, you know, recreate another world. I was fascinated with seeing if I could
CHATTERLEY: Why is that better than what we can do in real life or picking up a phone or an e-mail?
ROSEDALE: It isn't necessarily. I think that's one of the cautionary things for us all to think about as we build these types of worlds. But it is
better because you do feel like you're talking to somebody face-to-face, which even over Zoom as we all know in these last couple of years doesn't
And so, the allure of standing next to someone in a virtual world as an avatar instead of a person has a lot of appeal. And of course, you know
even more right now with COVID having happened.
CHATTERLEY: You know, how does Facebook's vision of meta differ from what perhaps you envisioned for better or for worse? And how does it compare, I
think, to the social media platforms and the amount of time that we spend on those today and how they work versus the metaverse? Do you anticipate us
spending some more time in the metaverse even than we have done on social media? Because there's costs and benefits there, too.
ROSEDALE: There certainly are. And I think what we've learned about social media particularly in these last say 10 years has taught us a lot. I think
one of the most important distinctions that can be made as we build virtual worlds is to change the business model just as we're seeing in social media
to be something that is never harmful to people. The business model of advertising and targeting and influencing peoples' behavior and surveying
their activity which is prominent in social media is something that we can't bring to the metaverse. The good news is we don't have to. Second
Life makes a great business today and it doesn't do ads. It does feeds instead.
CHATTERLEY: But would you argue you could have a better business by targeting? Because that's the risk, isn't it in the metaverse is this same
kind of play book.
ROSEDALE: I think if we get into these tight loops where companies are optimizing to make money around behavioral modification, we are going to
see some very dark outcomes such as those predicted by science fiction. But it doesn't have to be that way.
In fact, Second Life has a business per person makes more money than either YouTube or Facebook per person per year, say, and its basic access is free.
So, it doesn't necessarily have to be the case. But there certainly as you say is a strong argument for you know pursuing advertising as a dominant
model given how much impact it's had on the tech industry.
CHATTERLEY: Is it - I mean, that's a fascinating point. Is it scalable? Can you maintain that monetization per person scaling up to the kind of number
of users that the likes of Facebook or YouTube have? Because it makes sense to me when you've only got a million users, but if you scale it up then by
definition the fraction changes.
ROSEDALE: I think that's true, and we will have to find out. And I hope to be one of the people continuing to help guide that process. But I do think
that larger services say you know media service like Netflix, or you know a provider that's you know charging a sort of fixed fee and giving you access
to a library is some evidence that we can do it, that virtual worlds cannot harm people as they're increasingly widely deployed.
CHATTERLEY: What about the motivation of content, too? I mean, I actually do love the idea of being able to engage with different people and engage
with people all over the world in this kind of alternative universe, but you're never quite sure when you're engaging with. There are dark corners
that can be found in any kind of Internet community. How do you moderate that kind of behavior?
ROSEDALE: I think moderation at scale is going to be a big challenge and one that as you say we've seen a lot of experiments. I don't think we've
seen the right way of moderating for a virtual world. I think what we've learned from Second Life is that enabling people to have the right amount
of strength so that they can work out their own tensions between each other is a fundamental thing that is of course true in the real world and should
be true in virtual worlds as well. But that's quite different than what's been moderation say in chat rooms. And I think we can't do the same thing
in the virtual world that we could do there.
CHATTERLEY: What are you going to do at Second Life? What's the game plan from here on out, Philip, and how do you compete? How do you take the race
of some of the bigger competitors that are only just starting out in the metaverse and you guys have a lot of experience?
ROSEDALE: Well, I think the way you compete -- or the way you scale, just getting a lot of people in the same place is one of the technical
challenges. It can be achieved. We're definitely getting closer. We're seeing larger events online, but we're still not at the place you can have
1,000 people standing and listening to a music concert at the same time.
I think that you know, learning -- taking what we know and scaling it up, building something that is based on a basic environment where people can,
you know, do things the way they want to and do things in a way that's different in every community, that's what we have to do. There's a lot --
there's a lot of work to be done to, you know, go from a million to a billion. We're not there. There's more hype out there in this space right
now than there is capacity, but, you know, I think we're going to see something in software in the next five years that will be pretty amazing.
CHATTERLEY: Yeah. I mean, even Internet capacity, bandwidth in order to be able to sustain more people during this given what we've seen with Zoom
calls and WebEx users around the world. Who pays? Who should pay for this infrastructure, I guess is one of my questions? Telco's, the users, or the
builders of this. And should someone be in control, Philip?
ROSEDALE: As I said earlier, I think that we can build a metaverse-type virtual world environment where people bear the right share of, you know,
hosting it in the same way we might think about putting up a website and paying fees to that today. I think as we touched on earlier, it's super
important that we do that and not resort to advertisement because of that risk for harm.
ROSEDALE: You know I think it's possible. And then as to whether anyone should control it, I think the simple answer is no. This is the sort of
thing to both to scale and to be safe as with the Internet itself, it has to be something that is built in parallel by you know probably millions of
different people and again, we have got to build the standards and the protocols to make that possible.
CHATTERLEY: I remember having these conversations about the early days of Internet and asked the same questions about control, and the response I
would get was you know users, ultimately has to be self-policed and my head would explode. And I think my head just partially exploded.
Philip, we'll continue the conversation.
Philip Rosedale, founder and strategic adviser of Linden Lab and co-founder of High Fidelity. Great to have you on the show. Sir, thank you.
OK. Coming up. Fancy a flying future. A trip like this may be just 12 months away. That story next.
CHATTERLEY: Welcome back to FIRST MOVE.
And finally, is it a bird, is it a plane. No and it's not superman. It is a flying car. Yes, science fiction fans are setting their sights on the skies
over Slovakia where regulators have approved a so-called AirCar as air worthy. On this particular flight, it landed in the Slovakian capital. It
transformed into a car and drove downtown.
Anna Supergirl Stewart joins us now to discuss. Anna, if you ever get the chance to drive one of these, I'm going to have to fight you for the
opportunity. What do we make of this?
ANNA STEWART, CNN REPORTER: I'd like to be the flying car correspondent. Unfortunately, I'm at wings -
CHATTERLEY: I know.
STEWART: -- so, I'm just going to take you out of my ear for a moment, Julia.
Yeah, this sounds pretty dreamy, doesn't it, imagine being stuck in traffic, you press a button, you grow some wings and off you fly. And this
is exactly what has happened in the test flights that this company has done. This is a Slovakian company. It is 70 hours of test flights. It had
200 take offs and landings and it has received a certificate of air worthiness from Slovakia's Transport Authority.
As you say, has shown it can fly from one airport to another, touched down, transformed into a car. And then, travel into a city. Pretty cool.
Now, there are a few different flying cars on the market or at least in concept stage. And Julia, I was lucky enough to actually get a go in one.
At least I got to sit in one Pal V.
It was at good words the festival of speed. And actually, you are seeing these flying cars as a regular sight now at tech shows also auto shows
around the world.
Urban Mobility is a hot topic. And this is clearly where some investors see the future. Now the problem is the reason I didn't fly is because while
some of these cars are getting licenses to fly around Europe, for instance, you need a license yourself. You need a pilot's license to fly these, and I
haven't found actually a single flying car that you could take off from a public road, which of course is the ultimate dream to escape the traffic.
Most of them are still in concept stage.
Clearly this one is nearing something that could come on the to market. They are hoping that could be happening in around 12 months' time. Dreams
don't become a reality overnight. What I want to know, though, is how much will it cost.
STEWART: Because the last one I saw was entry level $400,000.
CHATTERLEY: What a bargain. I was literally just Googling flight to Slovakia because that's where we need to go clearly to go and drive one of
these things. And I saw top speed of 186 miles per hour. Ana, you are a pro with the earpiece. Good job.
STEWART: In and out.
CHATTERLEY: Thank you, I saw. I saw.
Anna Stewart, thank you for that.
OK. That's it for the show. Stay safe.
"CONNECT THE WORLD" with Becky Anderson is up next. We'll see you tomorrow.