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First Move with Julia Chatterley
Stoltenberg: Our Madrid NATO Summit will be "Transformative"; Stoltenberg: Russia's War against Ukraine Poses the Biggest Threat to our Security in Decades; LEGO to Raise Prices on Some Sets this Summer; U.S. Defense Secretary Speaks about Ukraine; U.S. Stocks Tumble, Reversing Wednesday's Post-Fed Rally; Elon Musk to Speak to Twitter Employees Today. Aired 9-10a ET
Aired June 16, 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 HOST, FIRST MOVE: I'm Julia Chatterley in New York. Welcome to "First Move". As always, it's great to be with you this Thursday
as we digest what the U.S. Fed said plus some short lived ECB messaging, Swizz rate hike guarantee and the view is post Jubilee decree.
I tell you what British celebrations now long forgotten with the Bank of England following the Feds king-sized hike with a queen-sized quarter point
rise in interest rates today that's a fifth hike in succession. I tell you what too, the market price action over the last 24 hours best described as
a royal ruckus.
Also U.S. stocks rallied after the Fed's three quarter point move. You can take your pick on why confirmation perhaps that the Fed is now serious
about tackling soaring prices come what may or even a relief rally after Jay Powell hinted that the next hike might not be so large, though, it
still might be because he ruled nothing out.
And I think that's part of what we're seeing play out in financial markets today. I have an excuse for everything sentiment has turned sharply lower.
Just take a look at this Wall Street's set to give back much of yesterday's gains, if not more.
Europe, also dropping in sympathy too, stocks in Switzerland, joining the sell off after their central bank hike rates by a surprise half a
percentage point too. What we're looking at now is a global tightening campaign with central bankers everywhere blindsided by soaring inflation.
And the message from Jay Powell, it seems is the Fed won't stop tightening anytime soon.
(BEGIN VIDEO CLIP)
JEROME POWELL, CHAIRMAN OF FEDERAL RESERVE: Ultimately, we're not going to declare victory until we see a series of these, you know really see
convincing evidence compelling evidence that inflation is coming down. And that's what I mean by that's what it would take for us to say, OK, we think
this job is done.
(END VIDEO CLIP)
CHATTERLEY: Christine Romans joins me now. And we were clearly nowhere near that at this stage Christine. I was sort of puzzled by the market reaction,
which is why we're sort of arguing it all different ways. But the bottom line is the messaging yesterday, very different from the Federal Reserve, a
lot of those old forecasts completely ripped up. And now it seems they're coming to grips with the challenge they face.
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Yes, and no playbook and data dependent. And, you know, maybe we won't have big moves like this
again, but maybe not, you know, we just don't know exactly, and I think the market is grappling with that a little bit. Also, you know, Jack Lew, the
Former Treasury Secretary--
CHATTERLEY: NATO Secretary General is speaking in Brussels; I'm going to take you live there just listen in to him. We'll come back to you.
JENS STOLTENBERG, NATO SECRETARY GENERAL: --for the NATO Summit in Madrid in two weeks from now. Russia's war against Ukraine poses the biggest
threat to our security in decades. So we must set out NATO's response for the longer term.
At the Summit, we will take decisions to make NATO even stronger and more agile in a world that is more dangerous and more competitive. I'm confident
that the Madrid Summit will be a transformative summit, with important decisions not least in five key areas, significantly stronger deterrence
and defense, sustained support for Ukraine and other partners at risk.
And I'm pleased that President Zelenskyy will participate in our Summit. We will also decide on a new NATO strategic concept, setting out our position
on Russia on emerging challenges, and for the first time on China. And in this context, I welcome that the leaders our Asia Pacific partners will
take part in our summit for the first time.
Last but not least, better burden sharing and resourcing all our alliances and the historic applications for membership by Finland and Sweden. At this
ministerial in Brussels yesterday and today, we have made progress on many of these areas.
Last night, we met with Ukrainian Defense Minister Reznikov. We addressed the imperative need for our continued support, as Russia conducts a
relentless war of attrition against Ukraine. NATO allies and partners have been providing Ukraine unprecedented support so that it can defend itself
against Moscow's aggression. Allies have announced additional assistance, including much needed heavy weapons and long range systems. We also discuss
plans to support the country for the longer term.
STOLTENBERG: We are putting together NATO comprehensive assistance package for Ukraine, helping Ukraine improve interoperability with NATO transition
from Soviet era to more than NATO equipment and further strengthening security institutions.
Yesterday over 40 nations NATO allies and partners took part in the meeting of the Ukraine support contact group, led by the United States and
committed to continue to uphold Ukraine's right to self-defense.
Georgia, Finland, Sweden and the European Union also joined the meeting of NATO Defence Ministers. We made clear that all countries have the right to
choose their own path with the without outside interference. Russia's aggression is a game changer. So NATO must maintain credible deterrence and
Today, ministers addressed this scale and the sign or future posture, and how we can step up across all domains, with substantial strengthening our
presence, capabilities and readiness. This will mean more NATO forward deployed combat formations to strengthen our battle groups in the eastern
part of the alliance, more air, sea and cyber defenses, as well as pre- positioned equipment and weapons stockpiles.
And a new force model with more forces at higher hardness and specific forces pre assigned to the defense of specific allies to enable much faster
reinforcement. A number of allies have committed to contribute to our stronger presence in the Eastern part of our alliance.
But we still have some work to do. As we look to the summit. We're expecting further announcements. The substantial strengthening our
deterrence and defense is necessary for our security. But it doesn't come for free. So ministers also discussed the importance of resourcing our
We have seen seven consecutive years are raising defense investment across Europe and Canada. Allies are also contributing to NATO deployments and
exercises, and investing in high end capabilities, including fifth generation aircraft and emerging technologies.
Now is the time to keep up the momentum so we can continue to preserve peace, prevent conflict and protect our people. And with that, I'm ready to
take your questions.
UNIDENTFIED FEMALE: --in the last row.
UNIDENTIFEID MALE: Thanks a lot. And - Secretary General the Pope has made a few remarks on NATO's possible contribution to the war in Ukraine. He
said that we don't know the whole drama unfolding behind this war, which was and I quote him somehow either provoked or not prevented. We all know
the Pope can claim in infallibility for his remarks. Maybe not for this one, but I'd be keen to hear your reply. Thanks.
STOLTENBERG: So NATO is a defensive alliance and the war in Ukraine is President Putin's war. This is a war that he has decided to conduct against
the independent sovereign nation. And what NATO has been doing for many years is to support the sovereign independent nation in Europe, Ukraine
assistance advise an equip the Ukrainian Armed Forces. That is what NATO allies and NATO have done for many years.
This is not a threat to anyone. This is not a provocation. And, that is what we continue to do. So it is President Putin and Moscow that is
responsible for this brutal aggression against that independent country, Ukraine.
UNIDENTIFIED FEMALE: And we move to the National News Agency of Ukraine.
UNIDENTIFIED MALE: (Inaudible) - expectations in Ukraine because of a big three visiting Ukraine, I mean, Leaders of France, Germany and Italy are
just curious if they consulted NATO before coming to Kyiv from the security and military point of view.
UNIDENTIFIED MALE: And how that visit could be influencing the future cooperation in military field between the NATO and Ukraine. And short
follow up, if I may, if Ukraine now is fighting for NATO values using the NATO weaponry, is it a right time to raise a question or consider the
future membership of Ukraine in NATO? Thank you.
STOLTENBERG: I welcome the leaders of NATO allied countries, go to Kyiv and visit Ukraine and meet with the political leadership meet with President
Zelenskyy and also see the atrocities the result of the brutal aggression by Moscow and President Putin in Ukraine. I think that it's important to
demonstrate solidarity, to convey a clear political message and also, of course, to have that opportunity to consult with the political leadership
We are also, of course, consulting with the political leadership in Kyiv. Here in Brussels in different NATO capitals. We have the Defence Minister
Reznikov participating in the meeting yesterday. And of course, we also consult among ourselves between NATO allies, as we also did yesterday, in
the dinner, where we had the European Union, Finland and Sweden, together with Minister Reznikov, and all 30 NATO allies discussing their way forward
in our support to Ukraine.
And also, we have the meeting of the U.S. led support group here at NATO. Yesterday, more than 40 NATO allies and partners participated in that
meeting consulting discussing how to sustain an unprecedented level of support to Ukraine?
And also, in that context, welcome the announcement by the United States yesterday to further increase support $1 billion U.S. extra for military
aid, including artillery, and also long range fires. So this is part of our ongoing process, where allies are consulting and working together in many
different ways to provide support to Ukraine.
Our focus now is on support to Ukraine to provide military support, lethal and non-lethal support from allies and from NATO, and also on capacity
building. And this helped to modernize more for the longer term, the defense and security institutions of Ukraine.
And now one more thing, and that is that NATO allies have provided support Ukraine since 2014, training tens of thousands of Ukrainian soldiers, and
also help to equip and strengthen the Ukrainian Armed Forces.
It's first and foremost, the bravery, the courage of the Ukrainian Armed Forces that are now able to fight back against the invading Russia forces.
But NATO support for many years is also making a huge difference on the battleground every day.
UNIDENTIFIED FEMALE: OK, we go to POLITICO.
UNIDENTIFIED FEMALE: Thank you very much - from POLITICO. I have two questions. The first is on the new air model, which you described on our
pre assigned forces. Did any new countries offer troops today for the Eastern flank under this new model and if so, how many and for which
And my second question is having you made any progress today on the tricky question of more common funding for the alliance? Thank you.
STOLTENBERG: First, on the new air force model. We made significant progress both on agreeing the exact modalities elements of the new force
model, but also we heard several allies indicating that they will provide new national announcements to contribute to the new force model.
I think is a bit wrong if I now start to announce on behalf of those allies, I'm certain that they will make the announcements well ahead of the
NATO Summit in two weeks' time. But we know that all of the Germany has been out there announcing readiness to provide extra support and also
specific pre assigned forces for Ukraine now and also seen announcements earlier from the United Kingdom.
And then of course, we also see other allies like France playing a leading role in Romania leading the battle group there and also France
participating in many other for instance, also with some more presence in Estonia and an air policing.
STOLTENBERG: So by the summit, I'm confident that we have both agreed the force model, which is the framework, but also that we have more forces, pre
assigned and delivered by a NATO allies to underpin this new air force model.
Then, on a common funding well, that's part of what we are preparing for the summit. We made a decision at the summit last year, to invest more
together. We have received requirements from our military commanders, and now we're working on that. And again, I'm confident that within two weeks
by the summit, we will have more concrete decisions.
CHATTERLEY: OK, we're going to leave an animated NATO Secretary General there wrapping up two days of talks between NATO and their allies. He made
the statement similar, as he's made before that Russia's war against Ukraine poses the biggest threat to our security in decades. The message I
think, from these today talks is more NATO in many ways ahead of that NATO Summit in two weeks' time, stronger deterrence and defense, new concepts
and approach will be defined to nations like Russia, China and other challenges.
Asia Pacific partners will also be present at that meeting, I think was an important point and of course, to the point about more NATO the fact that
Georgia, Finland and Sweden were also represented in addition to Ukraine at these meetings. Nic Robertson joins us now Nic, my takeaway there more NATO
in various guises two weeks out from this meeting any whose positioning ahead of that, what was your takeaway?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, it's going to be a stronger, more nimble, more ready, more responsive, more reactive, more of
exactly what President Putin didn't want when he went to war in Ukraine.
He said that essentially, NATO was getting closer and the NATO's response now has been to defend and deter and to do that we heard from Secretary
General Stoltenberg there talking about this concept of, you know, pre assigned forces to specific nations, pre located military equipment in
places in these nations on the Eastern Flank of NATO the most we're being told, the sort of heaviest pre-positioning pre planning since the Cold War.
So what this means, in essence, is that specific NATO nations and he hinted there at France, in Romania, we know the French have a commitment there
already. We know that other nations like Britain, in the Baltics, and United States and Poland already have sort of deep commitments and
connections with forces there.
But the way that NATO has had its forces deployed there until the past six months has been on a rotational basis, this is going much more solid,
locking them in bigger numbers, equipment there. So this is a response really, to Russia. This is the long term response and planning.
And as well, I think the other important thing there was this really strong commitment. It's been, it was ad hoc in the beginning, it's beginning to
take stronger shape. We know that the Ukrainians have wanted more heavy military equipment, the talk there about the heavy weapons that were being
supplied now the longer range missile systems, but the reality is that the troops on the ground are running out of the old stocks of ammunition that
fit the old equipment.
So Secretary General there speaking very specifically, we've heard about it before, but part of the plan to transition Ukrainian forces in totality
seems to be his implication, away from the Soviet era weaponry into NATO era and style of weaponry, because there is the equipment and the
ammunition to resupply the need, obviously, to train Ukrainian forces.
But these are very, very substantive ways that we expect to get locked in at the NATO Leaders' Summit in Madrid in two weeks, very substantive ways.
The NATO is responding to Russia's aggression. And it's exactly the opposite response that President Putin had wanted more NATO and not only
that, the Ukrainian forces with more sophisticated NATO equipment.
CHATTERLEY: Yes, they are in for the long haul. I think he couldn't have reiterated that more how to sustain unprecedented support for Ukraine?
We're not going anywhere. Nic Robertson, great to have you with us, thank you! OK, straight ahead living the LEGO life we are with the CEO and what
can only be described as "Toy Heaven" and we'll break down the company's plan, piece by piece.
CHATTERLEY: Welcome back to "First Move"! Even the world's largest toy maker can't afford it pricing pressures. LEGO says it will raise the cost
of some of its LEGO sets to offset rising raw material and operation costs.
The company saw its profits jumped by a third last year thanks to an array of new products. And of course, it was a pandemic winner as families found
fresh ways to entertain themselves during lockdown. Now LEGO is working on building a better future piece by piece with a $1 billion carbon neutral
factory in Virginia.
The new plant is set to open in 2025. Plenty to discuss now and I'm pleased to say joining us is Niels Christiansen he's the CEO of the LEGO Group.
Niels it is always fantastic to get you on the show. Much to discuss let's talk about the decision to raise prices. What led to that? What kind of
price rises are we talking about? I know it's a tough decision at any point. But decisions have to be made.
NIELS B. CHRISTIANSEN, CEO OF THE LEGO GROUP: Yes, know, you're right. It's like I mean, all over the world right now we do see inflationary cost
pressures on everything from trade to energy to material cost. And of course, we've had the same.
We've actually been trying for a period to absorb that not to having to leave that on. But we will do some I would say limited price increases
right now on parts of our portfolio this autumn. And we're still trying to - we're still trying to protect as much as we can.
Because you know, our basic mission is getting the LEGO play experience and our LEGO sets to as many kids as possible throughout the world and allows
them to indulge themselves into playing. So we are we're trying to do this in the best possible way. But of course have to make sure that we that we
somehow compensate also what's happening all around us. So that's what's happening right now.
CHATTERLEY: The beauty of LEGO is the various price points. So if you perhaps can't afford one of the more expensive pieces, you can trade down
and get smaller pieces and still have fun. Are you seeing some of the substitution effect perhaps of the pricing pressure already happening for
consumers? And if so, can you give us a sense of where in the world?
CHRISTIANSEN: No, I wouldn't say a lot of things are happening like that. We are of course trying to the extent possible, protect the sets that are
primarily positioned for younger kids so that we don't impact that much but we're - all in all I think we're doing less than most so it's actually
we're doing it pretty late. In that sense, I think we are trying to protect consumers the most we can. So I haven't seen much of that impact and I'm
not expecting to see a lot of that.
CHRISTIANSEN: I think we are actually relatively seen pretty well positioned I think also on pricing.
CHATTERLEY: Your calm voice amid, I think huge concerns globally, which is very welcome. Does any of what you're seeing in the broader backdrop,
change your investment plans? And I mentioned the Virginia plant, and you can talk about that.
But I watched you rapidly opening stores last year, I mean, I believe it was 165 new LEGO stores 150 new bricks and mortar stores planned this year,
is that still the plan? Nothing's changed about that.
CHRISTIANSEN: No, nothing has changed around that. That's really, I mean, we have - we've seen that over the last couple of years. We have a great
momentum behind our brand, and our portfolio, and our ability actually to get really exciting stuff to kids all over the world. And we were driving
And we're continuing along those lines of as you said, we've opened a lot of stores. I'm right now in the New York City flagship store that we opened
within the last year. So it's really, really exciting. And it is a great way now to allow kids to come in and experience everything we do and really
get the brand under the skin.
And I think that excitement is super important. So we're continuing along those lines will continue to open stores. And as you said we're also tried
to follow that search in demand by providing the capacity and it's only half a year ago, we announced to build a factory in Vietnam. And yesterday,
we announced to build a huge factory in Virginia, U.S. and I'm super excited about that.
CHATTERLEY: Yes. I mean, this is part of the plan to shore up supply chains in light, in particular of what we've seen over the last two years, you try
and produce as much as you can near where the client or the customer bases that you're producing for?
CHRISTIANSEN: Yes exactly, I think there are several elements of that, that's been our strategy for quite a while. And with the - I mean, we had a
great success in the Americans there are so many American kids that are really falling in love with the brand and wanting to play.
So we just want to make sure we have the supply chain to support that. And that needs to be a localized supply chain, both from our ability to react
very quickly to what is actually in demand and what they want and what they need.
But also, in our mind, sustainability is really, really important. So it doesn't make much sense to have a supply chain where we will be shipping
LEGO elements all over the world. We would much rather produce those packages very close to where the consumer actually is to react quickly and
to have an effective efficient supply chain but most of all, very also - our sustainability efficient supply chain and that is what we're getting, I
think by establishing ourselves in Virginia.
CHATTERLEY: I believe more than a third of your LEGO stores worldwide now, of course in China as well. And there's a dual story there, which I want to
talk to you about which is this blending of the physical and the digital for LEGO and what that means for the future, but also the challenges that
we've seen of in lockdown in China specifically.
Have you seen the same kind of pandemic bump effect that you saw there with people trying to entertain themselves at home? Just give us a flavor of
what you're seeing there in particular and the importance of digital growth too?
CHRISTIANSEN: Yes. No I actually - I know a lot of journalists have been writing about the fact that it's been super positive that there was - that
we have seen demand searching from COVID lockdowns that, I think is a - there are two effects actually, it's been quite negative when we've had our
factories closed, and we've had stores closed and people could not get in.
So on the contrary, we've actually seen quite a bit of new demand and excitement coming when stores would reopen. So right now, when you point to
China and the lockdown, that's a net negative, you cannot get people into stores, you can actually not get product to people.
So in that sense, it is looking better now that they're actually opening up again. And we've seen that throughout the world that as COVID eased as we
all got back on the street into stores into offices out of our homes, that has actually been accelerated the wish and for kids to come into the brand.
And so we've seen that as an increasing momentum and not the opposite actually.
CHATTERLEY: Yes, it seems such important clarification as well. In the end, this is a physical product that requires making somewhere in those
warehouses and things have to be open, as do the stores never mind the growth that you see in in digital.
OK, let's talk about that blending of the digital and physical in terms of where children play? I believe you're talking to Epic, the maker of
fortnight to work out how LEGO plays into the metaverse and what role you can play in building that and a safe one too? Niels because I think for
parents out there in particular too we know a lot of young children too young perhaps one could argue a playing fortnight. How do you create a fun
friendly safe environment in the metaverse?
CHATTERLEY: What's the game plan?
CHRISTIANSEN: It's a super question because I mean, that is exactly the mission we're setting out to do. We believe actually by blending, Epic,
that probably has the strongest technology performance within the entire metaverse creation with a brand like the LEGO brand that really is trusted
by parents and kids for being safe to making sure we look after kids in the best possible way.
Combining that we set out with this mission, as you say, to really create also digitally, a super safe space where kids can actually be and they can
be safe. But it needs to be fun. It needs to be creative, and imaginative and create everything give the same experience as when you run into a store
like the one I'm sitting in, and you see these big LEGO builds, and you get super excited about that we need to create also in a digital environment.
And what we know is really that the kids can seamlessly jump from one to the other. They don't think about now I'm playing digitally and now I'm
playing physically, they really like when they can see something that is digitally.
They can move to the physical world, they can actually do something and they can move around. And then they're back into digital and do stuff. And
I think we are as a company super precise--
CHATTERLEY: No small challenge.
CHRISTIANSEN: --to be the ones to build that right?
CHRISTIANSEN: But it's not a small challenge. And I was actually down in North Carolina on Tuesday to work on exactly the mission that you - I think
you put out really well on how we solve for that.
CHATTERELY: Come back and talk to us.
CHRISTIANSEN: --little more time into next year.
CHATTERLEY: Yes, come back and talk to us when you're ready to do. I know there's a little LEGO Niels watching you firmly from the camera so you can
get marks out of 10 for your performance.
CHATTERLEY: Niels it is great to chat to you. Niels Christiansen there, the CEO of LEGO Group. Great to chat as always sir, thank you. We're back after
CHATTERELY: Welcome back to "First Move". The U.S. Defense Secretary Lloyd Austin is speaking I'm going to take you right there and we'll listen in to
what he has to say.
UNIDIENTIFIED MALE: Good afternoon, everyone! After Secretary Austin makes a few remarks, we'll turn it over to some questions. Secretary Austin?
LLOYD AUSTIN, U.S. DEFENSE SECRETARY: Well, good afternoon, everyone! It's always good to be back at NATO. I'd like to thank Secretary General
Stoltenberg for hosting this Defense Ministerial and for his tremendous leadership during this critical time.
You know, back in 1949, President Truman said that NATO's task would be to build "The structure of peace". And he said, what me - what we must work
patiently he said that we must work patiently and carefully advancing with practical, realistic steps in the light of circumstances and events as they
And that's just what this alliance has done. Since Russia's indefensible invasion of Ukraine, and we have had to face events that we all hope would
never come to pass. And this alliance has met the challenge with determination with resolve, and, above all, with unity.
Together, we have responded swiftly and decisively, to Russia's baseless and lawless and reckless invasion of Ukraine. NATO has shown the world that
it remains the essential forum for consultation, decision, and action on Transatlantic Security.
We're all proud to stand with the brave people of Ukraine as they defend themselves in their democracy and their sovereignty. And during this
enormous crisis in European security, we're proud to stand together to strengthen the rules based international order that protects us all.
Our work together is indispensable. And these ministerials are invaluable. It's an opportunity to consult with one another, and to share ideas and to
ensure that the alliance is prepared to face the challenges of today and tomorrow.
Together, we have risen to the challenge of Putin's war of choice, and Russia's assault on transatlantic security. Our allies have activated
NATO's defense plans. They've deployed elements of the NATO Response Force.
And they've placed tens of thousands of troops in the eastern areas of the alliance, along with significant air and naval assets, under the direct
command of NATO and supported by allies national deployments, and NATO is also making plans to strengthen its deterrence and defense posture for the
longer term, especially along the eastern flank.
Over two highly productive days, this ministerial has laid the groundwork for important discussions and decisions at the NATO Summit in Madrid later
this month. Now, NATO is also close to welcoming to new members to the alliance. Finland and Sweden have made the historic decisions to apply for
And that reflects the appeal of NATO's core values. The values that unite us as an alliance remain strong and timeless, and so does our shared vision
of a stronger rules based international order in a more peaceful world.
I am deeply proud of the progress that we've made over the past several months. And now the good work must continue. And during our time together,
I've encouraged my fellow ministers to do even more. We all share the responsibility to procure, prepare and provide ready capabilities and
forces to prepare this alliance for the challenges to come.
NATO's preeminent task has not changed to defend each and every ally's sovereignty, territorial integrity and independence and that's why
America's commitment to NATO into Article Five remains ironclad. Thank you for being here today and I'm happy to take a couple of questions?
UNIDENTIFIED MALE: (Inaudible).
UNIDENTIFIED MALE: Thanks a lot. Mr. Secretary, the reinforcement that NATO allies are considering regarding the eastern flank seems to be along the
concept of scalable brigades. So this means that NATO member states will rely heavily on their ability to quickly move forces to theater when it's
We all know about shortcomings in logistics, and weapons supplies over the previous years. And I'm just wondering how confident are you that NATO
member states will be up to the task and will in fact be able to fulfill this requirement if need be? Thank you.
AUSTIN: Well, thanks. I am confident. I have confidence in the process and the ability of our allies to build the capabilities that we agreed to, that
we all need. You know, when I looked around the room and in our meetings there, and I saw the commitment and the energy in that room. And, you know,
I was - it was heartening. It was encouraging.
As you heard the Secretary General mentioned earlier, there are things that we can do and will do to make sure that it's a lot easier to rapidly deploy
forces forward. Some of those things include pre-positioning of equipment, putting forces at station on higher levels of alert, streamlining command
and control so that it's easier to fall in on a formation.
So recognizing the challenges of the past, I think you know all of our allies have learned from any shortcomings that we may have experienced in
the past. And they'll build to ensure that they have the right capabilities to provide flexible and responsible and combat credible forces when the
CHATTERLEY: OK, we're going to leave the U.S. Defense Secretary speaking there after those NATO meetings. In many ways, reiterating what we heard
from the NATO Secretary General saying that NATO had swiftly and decisively responded to Russia's baseless, lawless and reckless invasion.
He pointed out this was about groundwork ahead of that Madrid Summit in two weeks' time. He was asked a question about reinforcing the eastern flank
and of course, the NATO Secretary General also talked about this and said look, he didn't want to pre announce ahead of what nation states are going
to come up with here.
But he was saying, we can preposition equipment, we can streamline command and control and learn from previous challenges. We'll be back with more
after this stay with CNN.
CHATTERLEY: Welcome back to "First Move". Another day of global central bankers brandishing their inflation fighting bazookas as we were trying to
tell you earlier the U.S. Fed the Bank of England and even the Swiss Central Bank rising rates over the past 24 hours. The first rate hike by
the Swiss National Bank in 15 years.
The European Central Bank also saying it will work to contain higher sovereign yields as they raise borrowing costs all this triggering fresh
pressure on global stock markets with U.S. stocks giving back all of yesterday's strong gains in early trade.
Look that's the picture there. The DOW now falling below the 30,000 level the S&P falling further into bear market territory too and Fed Chair Jay
Powell saying in his press conference Wednesday that he's not trying to induce a recession by continuing aggressive rate hikes.
He says the U.S. economy is strong enough to handle rising rates and the consumer is still in good shape. But the latest GDP now reading by the
Atlanta Federal Reserve shows the U.S. recessionary threat has only grown in recent weeks.
Its latest real GDP survey shows zero economic growth this quarter, after a 1.5 percent point drop in GDP in the first quarter. And it just released a
data point now shows the U.S. housing stocks plunging more than 14 percent in May a soft landing for the economy or something a whole lot bumpier
Well, joining us now Kristina Hooper, the Chief Global Market Strategist at INVESCO. Kristina, great to have you with that, I hope you have a crystal
ball. Because I do feel like we still need it. The Federal Reserve Jerome Powell--
KRISTINA HOOPER, THE CHIEF GLOBAL MARKET STRATEGIST AT INVESCO: I don't think--
CHATTERLEY: I know you're looking for it yep, not there. They're closer to reality, though, surely, in terms of what they're recognizing as the
challenges to the economy and how they have to act?
HOOPER: Oh, absolutely. The Fed was, I think, very surprised not so much by the inflation print, which was higher than expected. But by the move up in
longer term inflation expectations.
They've really been resting their laurels on the fact that the Michigan consumer survey showed that longer term inflation expectations had really
flat lined over the last few months, they were certainly elevated, but they seemed relatively well anchored.
That changed with the June estimate. And that I think had a lot to do with the Fed's decision to go for 75 basis points. They clearly feel they need
to rein in inflation expectations. And that's more important than the economy because the economy appears to be on pretty solid footing.
CHATTERLEY: We say that, and yet I just mentioned that point that GDP now reading, which suggests perhaps we could see zero growth in the current
quarter. Kristina, how resilient is the consumer? Because I think whether you're a business, or you're an individual, one of the key questions is, at
what point do we get to the tipping point where consumers go, OK, this feels really worrying?
And I'm going to rein in spending, and I'm going to be incredibly cautious about the economy and how I behave going forward, because that's the
challenge, particularly as you point out, when inflation expectations start to adjust when people fear rising prices, for longer.
HOOPER: Well, thus far, the consumer has been very resilient. And I think that's really been a function of the labor market, that we've seen such a
tight labor market, such low unemployment, and really solid, quite significant wage growth in a lot of industries.
So that has created a fairly strong consumer, but what the Fed is doing by tightening financial conditions this quickly, could of course, up end that
resilient, strong consumer rather quickly, we're already seeing signs of layoffs.
The goal would be, of course, if the Fed were too able to manage a soft landing that results in a big drop in job openings, but not so much in the
way of layoffs. I think that's how we get to an environment in which the consumer stays relatively strong.
CHATTERELY: And they were saying they're expecting now an unemployment rate of 4.1 percent by year end of 2024. So they're accepting that there are
going to be some job losses as a result of that the tightening there we're seeing. Do you think they can manage this Kristina a soft landing?
HOOPER: I think it's getting harder to manage the soft landing. But when we look back on this moment, we might say that the 75 basis point hike, while
it was pretty extraordinary, hasn't happened in decades, which actually helped by front loading the slowing of the economy, helping to control
So that really is the best case scenario. It is getting harder, though, admittedly, because as Jay Powell admitted yesterday, there are some really
significant inflationary pressures that the Fed can control for. It can only slow demand. It can't end the Russia/Ukraine crisis. It can't end
COVID shutdowns in China. So it's really all about cooling demand, but not too much.
CHATTERLEY: Yes, we'll come back to this conversation. A short, sharp shock or shocking or was that the turning point? We'll come back to it. Kristina
Hooper, the chief Global Market Strategist at INVESCO great to chat to you and thank you!
OK, coming up after the break, it's a must go meeting for the staff at Twitter. The Tesla boss goes head to head with employees and I'm sure
they've got one or two questions, some tough ones don't go away.
CHATTERLEY: Welcome back to the "First Move". As staff meetings go this is one that Twitter employees are likely to remember, Elon Musk who offered to
buy Twitter for $44 billion will speak to the social Media's Company Workforce today.
He's likely to discuss his future plans and may clarify some controversial comments he made recently about working from home. Among others Paul R. La
Monica joins us now to discuss. I mean, there are many things that he could discuss and talk about, but the first and foremost question is you really
going to be the boss?
PAUL R.LA MONICA, CNN REPORTER: Yes, exactly Julie. I was gonna joke, you know, the "Who Song: Meet the new boss". But this may actually not be the
new boss if he threatens again to walk away. But by all accounts, it sounds like Musk is going to get some of the data on fake accounts and spam that
he wants to see. And I think that will help guide this decision if he's going to stick with the deal or not.
And even if he decides to walk away, you know, there's a sign deal Twitter might go have some legal recourse in order to force him to do this deal. I
mean, there's been a lot of speculation is Musk just posturing to try and get a lower price because of the market meltdown we've seen for all stocks,
but particularly social media lately.
CHATTERELY: Yes, I mean, this is a sign of commitment. Let's be clear, to your point, whether it's easy or really hard. It's sort of moving towards
happening. The workforce as you pointed out there are challenges more broadly in the tech sector.
We've seen it. We've seen hiring freezes at Twitter beyond hiring cuts. If you don't show up, we will assume you have resigned. That was the message
from Elon Musk to those that work perhaps hoping to work from home tough love?
MONICA: Yes, I think Twitter employees will rightfully have legitimate questions for Elon Musk. And they might be able to make the argument
whether or not they persuade Musk or not, if he does take over the company remains to be seen?
But there's a big difference between a programmer or other white collar tech job at Twitter, and someone who really needs to be in a manufacturing
facility like Tesla. So Twitter employees could make the case that much like you know, other office jobs, you can work from home and have fewer
You're able to work longer hours because you don't have a commute. Will Musk hold everyone's feet to the fire, though, and much like he's doing
with Tesla, say, show up at Twitter offices, wherever they are because if we - if you're not there, we're going to assume you don't want a job here
CHATTERLEY: Yes and he has got more people--
MONICA: And there could be layoffs anyway, just because of what's going on in the macro economy. So it could be an excuse to prune people.
CHATTERLEY: Paul R. La Monica, watch this space, great to have you with us. Thank you. That's it for the show. If you've missed any of our interviews,
today, they'll be on my Twitter and Instagram pages you can search for at @jchatterleycnn. "Connect the World" with Becky Anderson is up next.