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First Move with Julia Chatterley
EU Agrees on Law to Regulate Digital Assets; Brittney Griner's Drug Smuggling Trial Hearing ends for the Day; Investors Continue to Worry about Inflation; Amazon, Microsoft, Tesla Stocks Suffered in Second Quarter; Booking Rise in RV Rental Market, Despite High Gas Prices; Italy Experiencing Worst Drought in Decades. Aired 9-10a ET
Aired July 01, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
(COMMERCIAL BREAK)
ALISON KOSIK, CNN HOST, FIRST MOVE: Live from New York I'm Alison Kosik in for Julia Chatterley. This is "First Move", great to be with you to start
off July but it wasn't a great end to the month of June on Wall Street.
We begin with a look at the year to date as investors gear up for the second half. And it's been the worst start for the DOW since 1962. As for
the broader S&P 500, it racked up its biggest first half decline since 1970.
Right now, U.S. futures are pointing to another lower start as we get into the new month and investors continue to worry about the same issues rising
prices recession fears and Russia's war in Ukraine. Looking around the world European markets is mixed.
As new data show Eurozone inflation climbed to a record high of 8.6 percent in June, driven by soaring prices for energy and food. Over in Asia, Hong
Kong markets closed today as the city marked 25 years since the handover from Britain to China, markets in Japan and mainland China ended the day
lower.
Alright, let's get to the stories making headlines today. It may be a new month and a new quarter but investors around the world are still dealing
with the same problems. Markets hoping for a fresh start as we kick off July after a dismal second quarter will we see fireworks ahead of
Independence Day?
Who better to answer that is Rahel Solomon? She's joining me now. You look all happy wouldn't think about what we just went through in the first half
of the year? You know, if I was if I had a scorecard, the losses would be piling up. I'm curious what the expectations are for the second half of the
year.
RAHEL SOLOMON, CNN CORRESPONDENT: Yes, hard to say if investors these days are feeling as happy trying to bring some sunshine on a Friday, Alison,
good to be with you. Yes, it was such a tough first half of the year hard to predict for sure what to expect on the back half.
But a glimmer of hope as you mentioned 1970 at the beginning of the show, well, the last time stocks were as hard hit the S&P lost 21 percent, the
first half of 1970. But the second half actually rebounded 27 percent.
So that might make investors a bit happy, hard to say for sure what we will see this year because, as you have already mentioned, there are so many
headwinds for the markets, both here and abroad in terms of inflation, that, of course, is the main issue, the Fed trying to get a handle on
inflation and what it will have to do in terms of raising interest rates and curbing demand here in the U.S.
Also the war in Ukraine as it continues to drag on its outsize impact on commodities like food prices, energy prices. So there are still so many
overhangs and perhaps most importantly, Alison, there are no catalyst for growth right now. It's hard to see when we will get some good news. So
there's so much uncertainty, and lots of bad news that investors have been reacting to.
KOSIK: You know you talk about catalysts, you know, earnings season coming up, what do you think would be the next catalyst for investors to watch,
that could kind of change the direction that we're seeing Wall Street in at this point where this direction would be positive and it would actually
stick?
SOLOMON: Well, I think earnings season this time around is going to be very important because of course, up until this point, we have heard that the
consumer here in the U.S. has been very strong. We got some research out of Bank of America this month suggesting the same if we start to hear about a
real pullback from consumers, or if companies start to warn about real, a real change in consumer behavior, that would raise some alarms.
We're going to hear from the banks first. As you know, we always hear from the banks first in earning season. We're going to want to hear from some of
the retail banks in terms of checking accounts, savings accounts, how are consumers doing?
Do they still are they still flush with cash as they have been these last few years? Or are they are they starting to draw down because of inflation?
That's at 40 year highs? So I'm going to be watching very closely the banks and of course the retailers to see how are consumers doing in terms of
their financial health and are they still spending?
KOSIK: OK, Rahel Solomon thanks so much. As Cryptos price crash drags on the European Union has agreed Brett good to use some groundbreaking rules
to regulate crypto assets. The man who led the talks and regulation would bring order to the Wild West by setting clear rules for a harmonized
market.
Let's bring in Anna Stewart on the latest on this great to see you and so walk us through what these rules are. And I'm curious if any of this will
actually help prevent, you know, the wild spring swings and the mega losses that we've seen in the crypto space.
ANNA STEWART, CNN REPORTER: And we have seen some hefty losses Haven't we this first year is not being good for Cryptocurrency either looking at
Bitcoin, I think it's just closed out its worst quarter in a decade. And I don't think this legislation is really going to address any kind of big
investment trends.
[09:05:00]
STEWART: And let me introduce you how rude of me Alison has a name it's called Mica which stands for as an acronym as all EU things aren't markets
and crypto assets.
Now this legislation is however designed to perhaps prevent some of the wild up price swings that have entered the Wild West sort of moniker,
perhaps preventing some of the crashes we've seen in the last year. It's designed to really try and protect the investor to try and protect the
consumer and make crypto asset providers just that little bit more liable.
Now it's going to target wallets, exchanges, and issuers of coins. And there's a huge focus here, Alison on the so called stable coin, trying to
ensure that stable coins are actually covered in the event of mass withdrawals. Now we'd have to look back very far to remember Tara USD and
how that crash wiped 10s of billions of dollars off the market.
So that was sort of a bad situation, perhaps that this legislation could fix. Moreover, so called several coins will now be supervised that EU wants
it to be supervised by the European Banking Authority, the EBA and all other crypto assets, service providers will also need to operate within the
EU and get authorization now that could be from member states. If they're big enough, it will actually fall under that Asthma so European Securities
and Markets Authority.
So we're seeing a lot of different bodies getting involved here. It's not just about finances, either they're interested in the environmental
footprint, when it comes to crypto services, particularly we think, of course of crypto mining and just how energy intensive that is they want all
these providers provide their environmental and carbon or climate footprint, whether that then goes to try to limit it or see them offset it
to reach some sort of target. We're not sure this could be the beginning of that.
And finally, Alison, just a big interest here on money laundering and trying to ensure that Cryptocurrency isn't used for money laundering so
perhaps they're more transparency, less anonymity and cracking down I think from crypto coming from certain jurisdictions, Alison.
KOSIK: Anna thanks for going through all that. We'll see if this is even more wide reaching. If this goes you know, far beyond the EU. Thanks so
much for your reporting. Hong Kong is marking 25 years since the handover from British to Chinese control a day of ceremonies and speeches that
kicked off with a flag raising event.
Chinese President Xi Jinping is in the city to mark the occasion. He praised the city's response to COVID defended the controversial National
Security Law and talked about the importance of Beijing's policy of "One Country, Two Systems".
(BEGIN VIDEO CLIP)
XI JINPING, CHINESE PRESIDENT: To those who support "One Country, Two Systems" support being prosperity and stability of Hong Kong, whether
you're from Hong Kong or from overseas. Thank you.
(END VIDEO CLIP)
KOSIK: For more, let's bring in Selina Wang. She joins us live now from Beijing. Selina, great to see you! You know in his inaugural speech, Hong
Kong's new leader John Lee echoed what she said. I'm curious what some of the top priorities that Lee has lined up as he begins his new position.
SELINA WANG, CNN CORRESPONDENT: While I listen and answering this question, it's important to understand the context of whom John Lee is as a person.
He is known as Beijing loyalists, a hardline enforcer.
He's a former police officer who led the crackdown on the 2019 anti- government protesters and he's also the face of this sweeping National Security Law that critics say has crippled civil society has silenced
outspoken media, and has crushed the opposition movement in Hong Kong.
So the fact that he has ascended to become the leader of Hong Kong just speaks volumes about the direction of the city.
And of course, one of his top priorities is going to be stability, security, bringing Hong Kong closer to the mainland economically,
culturally, socially, the economy is also going to be a top priority, not just the integration piece with the mainland but also Hong Kong just as the
economy here has been battered by years of the pandemic and the harsh COVID restrictions.
So he needs to decide how to balance those COVID restrictions with the economy. He also has the tough task of dealing with the sky high
notoriously expensive property prices in Hong Kong that has left the property market out of reach for many residents.
On top of that, he's also got to deal with how to deal and explain with a lot of the opposition among the people in Hong Kong. Now for many critics,
they see Hong Kong is just a shell of its once former vibrant self but for John Lee for probing Jinping supporters and for Xi Jinping. They see this
as the rebirth of Hong Kong a new era of stability after an Era of Chaos. Take a listen here to what Xi Jinping said on his July 1 speech.
(BEGIN VIDEO CLIP)
JINPING: After going through a period of turbulence, we all deeply feel that Hong Kong cannot afford to be destabilized. And Hong Kong's
development cannot be further delayed we must eliminate all interference and focus on our development.
(END VIDEO CLIP)
[09:10:00]
WANG: Alright I am not hearing the speech.
KOSIK: Go ahead Selina. OK, we're obviously having some technical difficulties. That was Selina Wang though reporting for us from Beijing.
Let's turn now to the war in Ukraine and a deadly attack near the country's biggest seaport. Officials say at least 20 people were killed and dozens
wounded when Russian missiles slammed into a residential building and a recreation center in the Odessa region. CNN Salma Abdelaziz joins us live
now from Kyiv you know, this attack on Odessa was horrific. What more are you learning?
SALMA ABDELAZIZ, CNN REPORTER: Absolutely an appalling overnight strike three areas hit by three different missiles, of course, the first
residential building in Odessa, a nine storey apartment block where 150 people were believed to be living hit by a missile 16 people they're
killed. There still rescue operations ongoing but officials do not believe they will find anyone alive under that Rubble, the second missile hitting a
recreation center.
Essentially this is kind of a holiday area for killed there, among them, a child according to officials and a third missile landing in an empty area.
But what we're seeing here in recent days is dozens of these missiles being fired across Ukrainian towns and cities. Yes, you have that battle brewing
in the east, particularly in the Donbas a fight in which Ukraine is absolutely on the back foot ceding territory.
But there seems to be this second almost simultaneous war, a psychological war with these missiles raining down across Ukraine. And Russia claims it's
hitting military infrastructure, military targets that it's trying to destroy western weapons.
But we've seen that these are often landing in civilian areas, a mall in Kremenchuk, an apartment block here in Kyiv this apartment block in Odessa,
kindergarten. So these are really horrifying, appalling attack attacks on innocence. And they leave Ukrainians with this sense that there's nowhere
safe in the country.
But there's something more to read about this here as well. The type of missiles being used here or cage 22's, that's what was used on the mall.
That's what was being used in Odessa. They're fired by strategic bombers over the Black Sea. What you need to know why I'm mentioning all of this is
that these are usually missiles used to take out warships they carry 1000 kilogram warhead, and they're fired from outside Ukrainian territory.
So analysts are reading between the lines why would Russia use these types of weapons on the civilian infrastructures? It may be because they're
running out of the right types of precision weapons but they also don't have control of the sky. So they have to do this from a distance. That's
why that victory of Snake Island is really key really important here, Alison because it means that Russian forces are losing one more outpost
that they could have potentially used to harm civilians.
KOSIK: Salma Abdelaziz reporting live from Kyiv thanks very much. A momentous NATO summit wrapping up Thursday in Madrid Secretary General Jens
Stoltenberg telling CNN Christiane Amanpour this week represented a victory for the Alliance.
(BEGIN VIDEO CLIP)
JENS STOLTENBERG, NATO SECRETARY GENERAL: It is a victory for NATO that we once again have demonstrated our unity and our ability to change, adapt
when the world is changing. Now we live in a more dangerous world, and therefore we need a stronger and more even more united and NATO and that's
exactly what this summit has delivered.
CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL ANCHOR: Do you believe because you know, up until now, it's been a threat and a promise that if one square
inch of NATO territory was challenged by Putin or anybody else, that there would be a swift reaction. Do you believe that NATO countries are much
safer now than they were before this summit?
STOLTENBERG: They aren't safer in the more dangerous world. Because we live in a world where we see brutal use of force against a close neighbor of
NATO, a close partner of NATO Ukraine, and that's reason why we have significantly stepped up and further will step up our presence in Eastern
party lines to remove any room for miscalculation, or misunderstanding in Moscow, about our readiness to protect and defend all allies. This is
deterrence and the purpose of deterrence is to prevent conflict. And that's exactly what NATO has done for more than 70 years, prevent conflict and
preserve peace.
(END VIDEO CLIP)
KOSIK: These are the stories making headlines around the world. U.S. basketball star Brittney Griner is first at trial hearing has just ended
near Moscow. Authorities there arrested the two time Olympic gold medalist at an airport a week before Russia invaded Ukraine. They say she had
cannabis oil in her luggage.
She's facing up to 10 years in Prison CNN's Fred Pleitgen is live for us in Moscow Fred, good to see you I'm curious how the first day here went in
this trial hearing? But I'm especially curious if Griner is even able to get a fair trial.
[09:15:00]
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, certainly, the Kremlin this morning on a conference call was asked about that about
whether or not this trial was in any way political. They claimed that it was not political and also said that they wouldn't comment on the straw
because they say that it is a judicial matter.
Now, one of the things that we have to point out is we're standing outside the courtroom. We're actually not allowed inside the courtroom. There was
one media representative who was there, but there were representatives of the U.S. Embassy in the form of the Charge d'Affaires who came and who
observed this trial, obviously also wanted to be by Brittney Griner's side as you face to this trial.
The way this trial went on, or the first day went on, Alison, is that Brittney Griner was led in the charges were read the prosecutor made a
statement. And then there were two witnesses that were heard from today. So it didn't last long at all. I said about two, maybe two and a half hours
that was she that she was in the courtroom. Afterwards the Charge d'Affaires of the U.S. Embassy here in Moscow came out gave a statement I
want to listen to some of that.
(BEGIN VIDEO CLIP)
ELIZABETH ROOD, CHARGE D'AFFAIRES, U.S. EMBASSY MOSCOW: The U.S. Embassy the American government cares very deeply about this case, and about Miss
Griner's welfare as to millions of Americans, as well as we care about the welfare of all U.S. citizens in prison overseas. I did have the opportunity
to speak with Ms. Griner in the courtroom. She is doing as well as can be expected in these difficult circumstances. And she asked me to convey that
she is in good spirits and is keeping up the faith.
(END VIDEO CLIP)
PLEITGEN: So Brittney Griner as you hear they're in good spirits, according to the star shade affair, the U.S. Embassy here in Moscow, we did find out
a little bit more about what this trial is all about, though, Alison, the prosecution apparently saying that two cartridges apparently for vaping
were found in Brittney Griner's luggage in her hand luggage that one of them contained as they put it around a 0.25 of a gram of hash oil in them
and the other one around 0.5 of a gram of hashes.
So in total, we're talking about 0.7 of a gram and again, the maximum sentence that could be doled out here in this court is up to 10 years in
prison. So certainly some very difficult prospects therefore Brittney Griner if in case if indeed this trial goes badly for her, of course, one
of the things that we do have to say that in many cases, people are convicted here in Russia. I was able to speak to one of her lawyers
afterwards and he would not make a prediction about which way this trial might go, Alison.
KOSIK: Alright, CNN's Fred Pleitgen live for us in Moscow thanks very much. North Korea appears to be blaming its COVID outbreak on the south. It
claims that the virus at first spread when two residents touched unspecified objects near the Southern border.
And it suggests that the items were flown into the country on balloons, something that South Korean activists regularly used to send aid and
leaflets, Seoul is denying that it is at fault. After the break the latest market action after the worst first half were the Dow in more than 50
years. And later on the road again why recreational vehicles are booming despite soaring gas prices.
(COMMERCIAL BREAK)
[09:20:00]
KOSIK: Welcome back to "First Move". I'm Alison Kosik. Let's get another look at U.S. markets this Friday morning futures in July looking like they
will they will pick up where they left off in June. Right in the red all three of the major averages are pointing to a lower open as investors
continue to deal with a number of unfriendly headwinds. David Bailin joins me now he is the Chief Investment Officer at Citi Global Wealth. Great to
have you with us today, David!
DAVID BAILIN, CHIEF INVESTMENT OFFICER, CITI GLOBAL WEALTH: No, it's my pleasure. Thank you for being here.
KOSIK: So you know, we continue to see this constant drumbeat of recession expectations, the drumbeat is growing louder; we're seeing it play out in
the market with those red arrows. One of the questions here to start off with is Do you think that recession is priced enough into the market? And
if not, how much farther do you see the market falling?
BAILIN: Well, in many ways, you know, an economic slowdown, a considerable slowdown is being priced into the market. And really the only thing that
hasn't been priced into the market right now is an earnings revision that I think is forthcoming, as we see the second quarter earnings come out, I
think we're going to see that for you know, our consumer industry, their inventories are very large that sales are going to be slowing.
And that's going to have an impact there. I think business spending, on the other hand is going to be relatively sustained for the second half of the
year and that's going to be fun. So what's priced into the market, in my mind is a considerable slowdown. And it also could turn out by the way that
we will have had two negative quarters, the first and the second with negative GDP. What makes people uncertain is actually the definition of
recession.
And in order to have a recession, we need to see a material economic slowdown across much of our economy. And we need to see negative
employment, neither of which we've actually seen. And we probably are not likely to see over the course of the next quarter or two. So I think that
the markets have anticipated, you know, a recession.
But what really hasn't happened is the data has not confirmed that there in fact, is a recession. And it may never, in fact, get to you know, get to
that meet that definition.
KOSIK: So once we get through this earnings season, do you see the market falling? I'm talking about the S&P 500 another 15 percent, Is that Is that
what's on your radar?
BAILIN: That is not what's on our radar. So our base case right now is that markets could fall, you know, another 5 percent or so from where they are
assuming that the Fed does not continue to aggressively hike rates beyond what they've already told us.
The Feds do the forward curve for rates right now indicates right that the Fed expects rates to go up by the way another 150 basis points, the market
is digesting that. And that certainly is more than enough medicine to begin to bring down inflation at the end of this year and into next year.
That the question is will the Fed be patient if the Fed is patient, then markets may go down a little bit more stabilized and then ultimately
recover in the fourth quarter of next year. If the Fed goes unusually aggressively, they could cause a significant reduction in employment, which
would cause a much deeper recession and market reaction.
KOSIK: In this market environment, a lot of people they want to keep their money on the sidelines. But could there be a different way to protect your
money from inflation? Do you have a different strategy?
BAILIN: That is the most important question of the day. So I'm thrilled that you answered it, ask the question. And let me describe why? Right now,
if you're sitting on cash, if you have a dollars' worth of cash, you're going to have 90 cents worth of value in 24 months.
We know that because inflation even if it comes down is going to eat away at the value of your dollar. So the number one thing that you can do right
now is to actually go out and buy bonds, buy municipal bonds, buy investment grade bonds, but we're talking now about buying very high
quality bonds. Why is that? If today you can get a 4 or 5 percent yield on a good high quality bond and you do that over the next two years.
[09:25:00]
BAILIN: You'll actually offset whatever for inflation we're going to face over the course of that time so by leaving cash in the bank you're actually
diminishing the value of your portfolio. And by buying bonds, you are going to actually protect your portfolio. And for those of you who are worried
about the fact, oh my goodness, you know, I'm going to buy bonds, and they're going to go down in value.
We've already had the worst decline in battened bond valuations in the last 40 years occur, that's behind us. So with the Fed doing what it's doing,
and with the economy likely to slow, we probably are near peak rates now.
So if you do buy bonds, you're going to get the benefit of coupons and potentially some price appreciation. So we are telling every one of our
clients right now those bonds are back. And that's the very first thing they need to do with their money.
KOSIK: Very quickly, since you're pushing your clients to bonds, what would be the signal to get back in stocks?
BAILIN: Great, another great question! The answer really, is that once we know we've hit peak rates, and once the Fed has said, wait a minute, we've
done a lot already. And we shouldn't do any more once the Fed becomes concerned about the fact that their policy is very, very strong medicine
and it is having a profound effect.
Once they make that acknowledgement that they're going to potentially say that's enough. At that moment in time, we will know that six to nine months
out, earnings in the economy will be recovering because the Fed will pause. That pause to me is the indication that we should be moving back into
equities.
And the last thing that I just want to say is that clients should not be trying to time the market here. Investors who try to time the market and
determine when they get in and get out will miss the one or two days that really matter in the course of a year. So you keep your core portfolio
where it is. Move into bonds first, as I've discussed, and then rotate into equities whether it's two months or five months from now and add more into
the market that's good investment advice.
KOSIK: Alright, David Bailin Chief Investment Officer at Citi Global Wealth I enjoyed the conversation thank you. You're watching "First Move" the
market open us next.
(COMMERCIAL BREAK)
[09:30:00]
KOSIK: Welcome back to "First Move". I'm Alison Kosik and you're looking at the opening bell live at the New York Stock Exchange. Well, we are in the
second half of the year it is underway. The question now wills July be a repeat of June? So far, it looks like it could be. We're seeing red arrows
again, markets opening lower.
Investor's plates are full before the Fourth of July weekend with soaring inflation and a Federal Reserve trying to stamp out the flames with
aggressive rate hikes. Wall Street's certainly hoping to see the tide turn in the third quarter.
Big tech stocks like Tesla, Amazon and Microsoft have had a rough second quarter marred by their worst performance in years. Right now all eyes are
on Tesla, as the electric car giant announces its second quarter deliveries. I'm joined now by Dan Ives. He's the Managing Director and
Analyst for the Broker's Wedbush, welcome to the show.
DAN IVES, ANALYST MANAGING DIRECTOR, WEDBUSH SECURITIES: Great to be here.
KOSIK: So we are anxiously awaiting Tesla's delivery numbers. Of course, strong numbers will be good for the stock weak numbers won't if the numbers
come in weak what does that say about the trend do you think that Tesla is on?
IVES: This is really zero COVID issues in China took out about 70,000 vehicles for Tesla in the month of April in May. So you essentially had to
shut down street really wants to see that number called 250 to 255,000 vehicles.
We get that along with a second half ramp. I think Tesla stock has really started to bottom here. And look, this is a barometer across the industry
for what the supply chain industry looks like.
We saw GM today. It's not just Tesla it's broader. But we believe Tesla here is sort of overcorrected relative to what we're seeing from the demand
picture are still stable.
KOSIK: OK, but we're seeing Tesla with a number of headwinds here supply chain issues. Lock downs in China distracting Musk/Twitter deal. Musk's
returned to Office mandate in Fremont, California that's even distracting. There aren't enough desks, not the parking spots the WIFI apparently
doesn't work. These are all reports, of course and then of course, 10 percent of layoffs happening at Tesla. How is this company doing?
IVES: OK, I think everything you're talking about there have been a lot of black eyes situations from Musk. I think the Twitter situation has been a
circus show. The way he's handled things, I think with the employees has been very frustrating. And it just added to agitate and the overall black
cloud over the stock. And I think you guys separate the demand story for Tesla, which continues to be firm and production that's starting to ramp up
in China.
But no doubt, and I think some of the blooms come off the roads from Moscow in terms of how he's dealt with things over the last four to five months
and now to prove me situation. It all starts with this weekend with deliveries. This is the drum roll and the market will be watched.
KOSIK: It's the drum roll. Interestingly enough, we haven't heard from Musk on Twitter. Apparently it's been nine days. What do you think it is going
on with Elon Musk?
IVES: I think well, first off focused on getting deliveries into customer's hands. I mean, that's been a logistical nightmare, but also our views at
the Twitter deal. That's a renegotiation that we believe is happening and the stocks telling you that as well.
We think, you know, the chances of 54.20 happening I think that's sort of out the window. In our opinion that's what the streets down and right now
it's do you see a renegotiation because of the bot fake account issues 42 to $45 a share or does Musk then decide to walk pay the billion and then
ultimately by Twitter born in court, and that's why this continues to be a Twilight Zone situation, not just from Musk and Tesla investors, but of
course, Twitter investors, as well as employees. KOSIK: If we look at the broader tech sector, you know, of course, the NASDAQ down about 30 percent year-to-date. When do you think these higher
fed interest rates, you know, from the Fed are going to be priced into the tech sector? Is there nowhere to go for tech but up or is there more
downside potential and if so, then how much? And then another question to pile on here do you think stocks like Amazon, Tesla, Meta, Alphabet, will
they ever really recover?
IVES: Look great questions. I think there's a bifurcation in tech having or have not. I think enterprise software cybersecurity stalwarts like Apple,
Amazon and of course names like Microsoft.
I think those are stocks in our opinion here that I think they've started see the bottom put in, I think, overcorrected. I think stress test numbers
would come down to the five to seven percent.
But I think 2Q will ultimately actually be positive catalysts for some of those names but Meta clearly has headwinds on the horizon because of what
we're seeing in terms of their business model you saw the leaked memo being speaking to that.
[09:35:00]
IVES: I think add tax is going to be soft. And I think chip issues are going to continue to be there. But my view is that tech stocks after 2Q
start to rip higher, a lot baked in here. And we view this more as a positive catalyst into the second half, unless there's some black swan
event, which is why that's how we're navigating our investors to go through this category five storm.
KOSIK: I want to talk about Meta. I know Mark Zuckerberg through reports, he had an all hands meeting yesterday, telling Meta staff, he's going to be
turning up the heat on performance goals.
That's as he says, this may be one of the worst downturns that he have seen in recent history. And of course, then we have Meta pausing hiring because
of slowing revenue growth. What kind of future do you see here for Meta?
IVES: I think it's going to be choppy because they could change their name. But it doesn't change. It's a social media platform advertising right now,
because of the privacy issues with Apple. That's been a significant gut punch to the business model.
I think Sheryl going stage left I think that ultimately takes the co-pilot out. And that was really credibility for the street. And this is going to
be some dark days ahead for Meta. I think, not just this quarter, but next few stocks obviously corrected significantly, but I think you can still see
some more numbers cut.
And I think it just shows that, you know, really, Apple was able to do what you were not able to see in the beltway or Brussels really hurt the
business model because of the IOS issues in the privacy. And that's something things Zuckerberg and companies still don't have their arms
around.
KOSIK: And very quickly, when are these delivery numbers for Tesla coming out?
IVES: I think you'll probably be this weekend while many are barbeque or some hamburgers and hot dogs.
KOSIK: All right. Thanks very much. Dan Ives Wedbush Managing Director and Analyst--
IVES: Thank you.
KOSIK: --thanks so much for your perspective. Thanks for joining us, coming up after the break. Did you know Richard Quest loves a campervan vacation
hitting the road with an RV in a post pandemic trend for recreational vehicles? And I promise they're in a lot better shape than this one you see
here.
(COMMERCIAL BREAK)
KOSIK: Welcome back. I'm Alison Kosik. Here in the United States this July 4th weekend might just be the biggest day for air travel since before the
pandemic but bad weather and airline staffing issues are plaguing the industry with cancellations.
[09:40:00]
KOSIK: And that could turn the next few days into a holiday from hell, Pete Muntean reports from an airport in Virginia.
(BEGIN VIDEOTAPE)
PETE MUNTEAN, CNN CORRESPONDENT (voice over): And it's round the clock command center in Virginia, the Federal Aviation Administration is
preparing for what could be the biggest air travel weekend in years. The goal here reroute flights around bad weather overcrowded airspace even
space launches in hopes of avoiding flight cancellations that are plaguing airlines. The latest federal data shows airlines have canceled three and a
half percent of all flights so far this year, a 42 percent increase over 2019 before the pandemic.
UNIDENTIFIED FEMALE: They rebook us for flight for tomorrow. And now we're just trying to figure out if we want to go out for a hotel or just stay
here at the airport.
UNIDENTIFIED MALE: I was really panicking.
MUNTEAN (voice over): Transportation Secretary Pete Muntean judge is warning airlines that they must perform. Last weekend alone airlines
canceled 2200 flights nationwide the weekend before there were 3200 cancellations.
MUNTEAN (on camera): Secretary Buttigieg, what can be done to end these massive flight cancellations that keep happening?
PETE BUTTIGIEG, U.S. TRANSPORTATION SECRETARY: Well, I was especially concerned after what we saw with the Memorial Day travel weekend. Look, we
are counting on airlines to deliver for passengers and to be able to service the tickets that they sell.
UNIDENTIFIED FEMALE: We have a good representation of the airline's industry here right here at the command center on the floor with us.
MUNTEAN (voice over): Here FAA workers manage the flow of flights alongside representatives from airlines and industry groups. Airlines say they are
only partly to blame for cancellations and have called on the FAA to staff up on air traffic controllers. The agency insists it is shifting
controllers to delay and cancellation hotspots.
UNIDENTIFIED FEMALE: We do not work in a vacuum. So we collaboratively make decisions and strategies together to help mitigate those impacts that are
in the system.
MUNTEAN (voice over): Airline after airline has announced it is preemptively canceling summer flights. Delta Airlines is letting all
customers change their flights free of charge, saying operational challenges are expected this holiday weekend. This week Delta pilots
picketed at major hubs saying they are overworked.
MUNTEAN (on camera): So who is really to blame when it comes to these massive cancellations?
BUTTIGIEG: Well, let's be very clear the majority of delays and the majority of cancellations have not been caused by air traffic control
staffing issues. Bottom line here is that the airlines that are selling these tickets need to have the crews in the staff to backup those sales.
MUNTEAN (voice over): After passengers set a new pandemic era record the TSA thinks this weekend will be big. The question for travelers is will it
be smooth?
MUNTEAN (on camera): Is staffing an issue for TSA as well?
BUTTIGIEG: Well, staffing is still a challenge for I think for everybody. But for us it's not an issue that's going to impact wait times for
travelers.
MUNTEAN: Pete Muntean CNN, Virginia.
(END VIDEOTAPE)
KOSIK: So if the thought of an airport brings you out in a cold sweat pop out a driving holiday recreational vehicles have come a long way since
those cramped campervan vacations with mom and dad. Sales of modern RVShare up and so are rentals and that's despite spiraling gas prices here in the
U.S.
Bear in mind the average RV only manages 10 miles to the gallon. RVShare is the world's first and largest peer to peer RV rental market and it's
offering an incentive to offset those high gas prices. John Gray is the CEO and he joins us live great to have you on the show.
I'm going to get to the incentive in just a moment because I first want you to walk us through how RV share works?
JON GRAY, CEO, RVSHARE: So RVShare works exactly like a Robot or an Airbnb but for RVs. So if you're a group or a family who wants to go on an RV
trip, you come up to the site and you can find an RV from an owner who is listing their RV to turn it into a second source of income? So we're
basically a matchmaker that brings people together who wants to go on an RV trip with people who have an RV and want to turn it into a second source of
income.
KOSIK: Driver's license to operate one of these?
GRAY: So, if you have a regular driver's license, you can operate an RV. You know, we suggest that people if they're going on their first RV trip,
take a smaller RV just so they can get used to it and kind of get used to driving a bigger car. And so that's something we always recommend.
KOSIK: OK, talk us through maybe what the demographics are here? Who is actually renting these and how many people can actually fit into these
giant row cruisers?
GRAY: It really depends. There are campervans that comfortably sleep two up to what are called fifth wheels that can sleep you know 12. So there's a
big range on average it's usually somewhere in the four to five range.
[09:45:00]
GRAY: You know a class CRV is one that kind of looks like a U haul truck with a shell over the top. That's the kind of starter model that most
people use. They sleep four or five people and that's how most people get into the space.
KOSIK: So I know with these, you know, sky high gas prices that so many of us are paying. The first thing that comes to mind when they see RV's is
this is a gas guzzler. In fact, one couple said that it took to fill up their 150 gallon diesel gas tank it cost close to $900 to fill from empty.
So I'm curious how are your bookings being impacted because of gas prices and what's expected for July 4th as well?
GRAY: Yes, so high fuel prices certainly aren't good for the RV industry. But you know, $900 fill up is certainly also not the norm. So on average
this year, compared to last year, an average RV trip is about 325 miles.
You know, we believe that based on our data, the average RV gets about 15 miles to the gallon. So what that kind of results in is about $35 more
compared to last year for fuel cost. So we, you know, obviously fuel costs being high aren't good for us.
But we certainly think it's far more manageable than going in buying a flight or something like that, which is also seeing really big jumps in
pricing as well. For 4th of July, we're seeing you know, the business has grown about 40 percent. This year, we expect it to continue through 4th of
July. That's what we're seeing. And you know Fourth of July and Labor Day are the biggest booking times in the RV rental industry year after year.
That's the case this year we're having a huge Fourth of July.
KOSIK: And that gets your incentive, I know that your company is giving away hundreds of thousands of gift cards to customers this year to
compensate for increasing gas prices. Why are you doing this? Is this just a gimmick?
GRAY: Well, I think what we're trying to do is show - first show that fuel prices are something that is manageable, and two show that RVShare is a
great partner to you in renting an RV and that we will help shoulder some of the burden of the additional cost as well.
So that's what we're looking to do. And the way it works is after you come and stay on a trip with RVShare You come back in submit your state
information and then we'll send you a gift card based on the duration of your stay but it's usually around $50.
KOSIK: Let's talk about total wholesale RV shipments, where are they and how has the pandemic changed your company?
GRAY: So two very different things. In terms of wholesale RV shipments, they are still way up I think the number for May was plus three and a half
percent off of what was really big, May last year or two.
Ever since 2020 you know, in the pandemic, RV sales have been just on fire, there's been a tremendous amount of RV sales. How that impacts our business
is it means there's more supply of people who have an RV that they want to rent out.
So that's generally speaking been really good for our business. The pandemic kind of caused a lot of new people to come in to RV travel, be it
because they wanted more control over their space or they just you know, heard about it from a friend because so many people were going RV when you
know flying was less of an option during the early days of pandemic.
So, you know, our business grew tremendously during that time. We're you know, we're more than 10 times the size we were five years ago at this
point.
KOSIK: What do you think would be a dream trip in RV this holiday weekend?
GRAY: So my favorite is national parks with my family we took one out to Big Bend a couple years ago. And you know the thing that's great about an
RV trip is you're away from other people you're out under the stars, you really control your own schedule in your own area.
And you can just really build some experiences that are quite custom and are just you know tight around the group of people that you're with, which
is really exciting. You know, RV trips have a really high satisfaction rate. 95 percent of our reviews are five stars.
And that's partly because the RV is but it's partly because of people getting to spend time outside with their family and the people they care
about.
KOSIK: And not having to wait at the airport after your flight has been canceled. John Gray CEO of RVShare thanks so much for coming on the show.
GRAY: Thank you.
KOSIK: Coming up rivers are drying up as Italy is hit by a historic drought. We haven't - we have a special report.
(COMMERCIAL BREAK)
[09:50:00]
KOSIK: Welcome back! Italy is experiencing extreme weather conditions. The country is now in the middle of an historic drought with far reaching
impacts CNN's Barbie Nadeau reports.
(BEGIN VIDEOTAPE)
BARBIE NADEAU, CNN CORRESPONDENT (voice over): The River Po which runs from the Alps to the Adriatic Sea usually floods the land, but this year is far
below normal and dropping fast. The river is the longest in the country some 650 kilometers and whole regions rely on it for hydropower and
transport.
30 percent of Italy's food is produced on agricultural land that lies on either side of this river, and the area is suffering the worst drought in
more than 70 years. The situation is the same across Northern Italy, where some communities are already rationing water.
Here on Simone Minelli's dairy farm, things are dire. As he watches the water level of the Po River drop he worries about the future of this family
farm. He's fearful he will have to cut the size of his herd.
SIMONE MINELLI, FARMER: We'll see. We are living day by day. It's logical when you don't have enough feed for the animals you have to reduce.
NADEAU (voice over): The cattle or even sprayed with water to keep them cool in the stifling heat. He tells us that water is fundamental to his
operation, especially for the production of milk.
And the milk from these cattle needs to meet a very high standard to be awarded the seal of authentic Parmigiano Reggiano Parmesan cheese from this
region. All this sand used to be underwater.
Now Minnelli and his friends have to walk far to reach their boat. Further up the river this pump house supplies water to 150,000 people. Ada Giorgi
has been the President of this Local Water Consortium for the last 20 years.
Her customers still have water that she has never seen the pump in such distress. To keep the water pumping they have to move the riverbed away
from the intake. They have also had to add one meter of pipe to lower the pumps as the river drops. She blames climate change.
ADA GIORGI, PRESIDENT, WATER CONSORTIUM TERRE DEI GONZAGA: We are missing rain. There is no snow there are high temperatures. This creates the famous
perfect storm and we are in an extreme crisis.
NADEAU (voice over): And the forecast doesn't look good. For centuries people who lived along this mighty river feared it would destroy their
crops and homes. Now they fear it will disappear entirely. Barbie Latza Nadeau, CNN on the River Po Italy.
(END VIDEOTAPE)
[09:55:00]
KOSIK: And finally a Denver couple who are very big hockey fans. They got the surprise of their lives when a delivery van pulled up to their door and
gave them the coveted NHL Stanley Cup, really? But you guessed it was all a big mistake. Listen to this.
(BEGIN VIDEO CLIP)
DMITRI RUDENKO, NHL STANLEY CUP MISTAKENLY DELIVERED TO HIS HOME: The person opened the trunk and I saw the case. I recognize it but because we
watched the fight that the final games, everybody, we saw them breaking up to the eyes. Like jokingly said, is that a Stanley Cup? And he says yes.
(END VIDEO CLIP)
KOSIK: What are the chances they roll up to huge fans? Anyway, it is tradition for every member of the winning Stanley Cup team to spend a day
with the trophies so the cup was supposed to go to the team's captain's house that lives nearby.
The address get this was off by one digit. Oops. That's it for the show. I'm Alison Kosik. Feel free to follow me on Instagram and Twitter
@alisonkosik. Thanks for joining us. "Connect the World" with Becky Anderson is next. I'll see you Monday.
(COMMERCIAL BREAK)
END
