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First Move with Julia Chatterley
Oil Bounces after Sharp 10 percent Loss Tuesday; Investors Fear Recession could Crimp Demand for Oil; Key Members of British Prime Minister's Inner Circle Resigning; U.S. Stocks Open Little Changed after Volatile Tuesday; FTX goes Beyond Bitcoin; Johnson Vows to Carry on after Wave of Registrations. Aired 9-10a ET
Aired July 06, 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)
JULIA CHATTERLEY, CNN HOST, FIRST MOVE: Hello, welcome to "First Move" great to be with you this Wednesday! Today's show jam packed with Boris
Johnson's government getting whacked. The British Prime Minister could be losing his grip with key cabinet members jumping ship and MPs in parliament
today seriously letting rip the.
The PM vows to fight on but the question is for how long? The British Pound the weakest in two years just one of global investors current fears and it
was fear of a recession that lay at the core of Tuesdays' cross asset volatility. Take a look at this.
For now U.S. stock futures remain unsettled but we are tilting to the top side. We're trying to see a bounce early on in pre-market trade today. The
S&P 500 though tumbling 2 percent at the lows yesterday only to bounce back later on in the day the NASDAQ doing a similar thing staging a strong
reversal to close up as you can see there 1.7 percent.
The key underperformers were the oil stocks mirroring the sell-off across the energy complex yesterday both Brent and U.S. Crude fell from 10 percent
on Tuesday to below $100 a barrel there recapturing a touch of those losses today as you can see.
What began as a fear of supply shortages in Europe tied to strikes in Norwegian oil fields actually was drowned out by worries over slowing
growth. Copper this is a classic economic bellwether that tumbled more than 4 percent Tuesday to a 19 month low that's sending you a key signal very
much tied to all of this in the commodity space.
The U.S. Dollar continues to strengthen and a classic flight to safety trade. We're giving back a little bit today hitting a 20 year high though
yesterday against the Euro with Euro dollar parity. So that's one for one very close insight what's far harder to see though, in the shorter term is
the future of the British government then that is where we begin today's show Boris Johnson fighting for survival yet again, a defiant British Prime
Minister vowing to stay in office after a wave of resignations from his government, including two of his most senior colleagues.
(BEGIN VIDEO CLIP)
BORIS JOHNSON, BRITISH PRIME MINISTER: Frankly, Mr. Speaker, the job of a Prime Minister in difficult circumstances, when he's been handed a colossal
mandate is to keep going. And that's what I'm going to do.
KEIR STARMER, LEADER, UK LABOUR PARTY: Anyone quitting now, after defending all that hasn't got a shred of integrity. Mr. Speaker, isn't this the first
recorded case of the sinking ships fleeing the rats?
(END VIDEO CLIP)
CHATTERLEY: Max Foster joins us on this. It was a punchy Prime Minister's questions that yet again Max with a Boris - Prime Minister Boris Johnson
showing clear bravado. But these were two of his most competent I call not only senior ministers that left. How long can he remain?
MAX FOSTER, CNN LONDON CORRESPONDENT: Well, he isn't resigning. He made that pretty clear in those sound bites that you were just playing and
unbelievably defiant performance, as you were saying he's not going anywhere. So therefore you have to look at the mechanism for the party to
get rid of him.
And that's pretty complicated. You remember recently there was a confidence vote; he won that confidence vote under the current rules. There can't be
another one for a year. So now all those backbench MPs who probably, you know, took that vote sooner rather than they should have done if you're a
rebel, at least, they're trying to look into the mechanics of changing the system. So that can be another confidence vote.
There are more votes within the party around that. So I think they're going to be the developments you're going to see, but ultimately, he can just
squat effectively in Downing Street, even if the rest of the cabinet resigns as long as he wants to.
I think we're over 20 resignations in the last 24 hours. And I think you know, in our experience of covering politics, we can pretty much say that
no other Tory Leader would probably be in power at this point that we're talking about a very different Tory leader aren't we?
CHATTERLEY: Do you think he understands the gravity of this situation Max to your point about squatting that doesn't necessarily even need to be more
resignations if the mood of the party is against him unless the 1922 committee as you quite rightly pointed out there decided look, we're going
to change the rules and we're going to try and oust him sooner than that. He can remain in place.
FOSTER: He does seem to believe. As you look at what he says in what he's doing and his supporters even now will say there are more important matters
at stake here.
[09:05:00]
FOSTER: There's a war in Europe. There's also a cost of living crisis. So those are the priorities and he wants to see my head and see those policies
put into place. And actually, because he's such a great PR, he's trying to turn this around into a situation where, you know, the previous chancellor
didn't want to reduce taxes because he wanted to pay off debt.
Boris Johnson now having got rid of him is able to reduce taxes, which is something the backbenchers want. This is something that he was telling
backbenchers last night, you can never write him off, you may be able to convince them that he is the best person to lead. And we are in this
situation, aren't we that we don't know who would replace him?
Who's a credible leader, not just the leader of the party, but someone who could win elections? We've still got that big gap there. And we don't have
any other names. We haven't put them forward yet apart from Jeremy Hunt, and it's pretty clear the party won't back him.
CHATTERLEY: Yes, the most likely candidates remain by his side. I think and that's part of what's difficult to decipher here. Max, great to have you
with us! We shall see what happens and we're talking about this more in the show to thank you for your time now.
Now another day of ups and downs in financial markets around the world, the main catalyst recession fears those fears dragged crude oil prices below
$100 a barrel Tuesday, for the first time since early May traders concerned a slowdown will crimp demand for oil.
Clare Sebastian joins us on this. Clare, what's fascinating is the early catalysts for the sell off yesterday was supply fears as you and I were
talking about these strikes in some of the Norwegian oil fields, and it sort of became a broader catalyst for spiking prices, means less demand
means high recessionary risk, our central bank is going to overstep over tighten, it sort of cut to the core of all the challenges and questions I
think that consumers and investors are asking at this moment.
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, I think this sort of push pull, perhaps you could even say pull, pull in the situation of supply demand
that's going on in the oil market at the moment that makes it immensely difficult to predict Julia.
What is going to come next? You know, I think a lot of analysts, including the International Energy Agency actually think that supply issues are the
most salient here that because supply is likely to tighten as the EU oil embargo comes in. That will offset the worries over lower demand, depending
of course on how bad recessions are if they do hit in some of the developed economies.
So that's sort of part of it I think, the Norwegian situation you know, the government stepped in to resolve this. They say they don't usually do
things like that. But it was an emergency. They were warning of imminent shortages of gas in Europe, I think that revealed the fragility of the
situation really sort of exemplifying the various forces at play in this economy.
And in particular, inflation, obviously, the energy industry benefiting from inflation, raking in record profits, but clearly not immune from what
we're seeing across a variety of industries. And that is worker unrest, as you see inflation rates going up, and wages not keeping pace. So it's so
much fragility out there.
And Europe, of course, really, sort of in the middle of all this, if you lose your plan A, when it comes to energy, which is Russia, then what
happens if your Plan B someone like Norway is under threat as well, I think that really brought things home yesterday.
CHATTERLEY: Yes, security paramount. And to look at the bigger picture, suddenly bonds. Traditionally, the safe haven became the safe haven
yesterday, bonds were being bought that brought interest rates down a classic measure of inflationary concerns in markets, something called break
evens and even they started to come down, which suggests growth slowed down that tempers inflation of its own volition.
And suddenly equities turned around, because you've got that to your point, again, the push me pull you of buy bonds, buying rates are coming down, and
then we perhaps can dip into stocks again.
SEBASTIAN: You know, yes, I think every day brings a different view of what exactly a safe haven is in this - in this economy Julia. And meanwhile, you
know, we've got this extraordinary situation here in Europe, where the Euro is practically at parity with the dollar because of course, you're also
working with something of a disparity around the world with how economies are doing.
I think what that shows is, Europe is doing a little bit worse, it's more under threat from the war in Ukraine, and inflation. And you're also
talking about disparity between what central banks are doing as well, because of course, in the U.S., the Fed has acted quite aggressively
recently, because three interest rate rises this year in increasing increments, whereas the ECB has yet to act at all.
And even if it does hike rates aggressively this month, that will only get it to zero. So that's what's causing these moves and exchange rates. And I
think that's also sort of upsetting the balance in terms of, of where people think is the right place to put their money at this point,
especially in middle of these recession fears.
CHATTERLEY: It's such a great point. Is it a measure of dollar strength or of Euro weakness?
[09:10:00]
CHATTERLEY: I tell you what on a day when you have further calamities than the UK government and the exchange rate between the Euro and the pound
doesn't budge because the Euro is already so beaten up, it can't strengthen against the pound, it tells you something very interesting about their
fears out there beyond the politics for growth too Clare to have you with us thank you Clare Sebastian!
All right, let's move on China's COVID recovery curbed again Xi'An the city of 30 million people facing a seven day lockdown after officials logged
cases of the fast spreading Omicron sub variant. Residents also in parts of Shanghai and Beijing have been ordered to undergo further tests following
new case discoveries there too. It's all raising fears of a broader return to life under lockdown. Will Ripley joins us now. Will, I can't help but
say it here we go again, perhaps.
WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: But I need to put this in context Julia. We're talking about a nation of 1.4 billion people. And
380 or so new cases reported yesterday. So just think about that 1.4 billion 380 and yet, you - and most of those cases, by the way,
asymptomatic, and yet you have millions of people who are being affected by these lockdowns, there's two counties with residents, 2 million people
living there, they're locking down.
You mentioned Xi'An with more than 13 million people in a partial lockdown, which means schools are closed again; gyms libraries dine in suspended for
another week. So businesses are going to continue to struggle. And the reason why China is doing this is they're very concerned about this new BA5
Omicron sub variant that supposedly can actually infect people who have recently been infected with Omicron.
So like, you know, people who might have gotten sick a month or two ago who thought they had antibody protection, plus their you know, three shots.
That might not be the case. And given that China Julia has a large, elderly population that is remains unvaccinated. That is one of the reasons
presumably white Chinese President Xi Jinping is insisting on this zero COVID policy.
You know, in there - you're talking about out of like 27 million samples, they find 29 positive cases, and you have millions of people whose lives
are up ended. And if they don't have a green QR code on their phone, they can't even run simple errands, like going to get their medicine for their
elderly loved ones.
It's really raising a lot of debate inside China about whether this is actually backed up by science, which the answer is no. Or if this is
politically motivated because of the Chinese President Xi Jinping's insistence on zero COVID, pretty much at any cost. So you know how the
economy's been really taking a beating as well.
CHATTERLEY: Yes, a huge cost to the economy as we've been talking about regularly on the show. You reminded me the sheer scale of the population in
China of 1.4 billion people. I want to get your take on a story that I read overnight, as well.
Up to 1 billion people's data available and accessible on the internet, it only came to light, I believe, when an anonymous user and a hacker forum
tried to sell the data and it was brought to wider attention. We were talking what 70 percent of the Chinese population's data out there for
anyone--
RIPLEY: 70 percent. Yes, that's right. You know, a huge number of people when you're talking about a billion people in China whose personal
information has been compromised, that that hacker that anonymous user was offering to sell the data of 70 percent of China's population for $200,000
or 10 Bitcoin at 23 terabytes of data, who knows what you could do with that data with people's, you know, identification numbers with their bank
account information. And this is apparently it's been online by Shanghai police and unsecure, publicly accessible for more than a year since at
least April of 2021.
So in a sense, this hacker who is trying to sell the info also perhaps did a public service by raising to light the fact that you have all of these
people's personal data, essentially on display on the internet waiting to be discovered, which is, which is shocking a country like China Julia,
where the authorities certainly can, you know, can go and access anybody's personal information, but they keep all of their all of their
investigations and everything on the web pretty tightly locked.
So there's certainly an investigation now into how this could have happened? How could the police have had that much personal information in
this massive online database publicly accessible?
CHATTERLEY: Yes, and I guess a sense of who may have access the data over the past year? And just for our viewers so that they know of course 10
Bitcoin around $200,000 for access to data for 70 percent of the total population.
RIPLEY: Yes, you're right.
CHATTERLEY: I think it was--
RIPLEY: I should have bought Bitcoin Julia--
CHATTERLEY: Yes.
RIPLEY: --really, I knew it back then--
CHATTERLEY: The moral of the story is there are many morals here. Will, great to have you. Thank you. Will Ripley there. OK, let me bring you up to
speed on some of the other stories making headlines around the world.
The 21 year old accused of carrying out a mass shooting during a July 4th Parade in Illinois on July 4, will make his first court appearance later
today. Robert Crimo faces seven counts of first degree murder. Officials are still trying to figure out how he was legally able to acquire the gun
used in the shooting?
[09:15:00]
CHATTERLEY: Civilians still remaining in Ukraine's Donetsk region are being urged to leave as fighting intensifies. Military officials say about
340,000 civilians are clinging on out of a population of 1.6 million before the war began. Ukrainian railway sees it will operate longer trains to help
move people out of the area.
And the Secretary General of OPEC has died just a few weeks before he was due to step down from the role. Mohammad Barkindo from Nigeria had been at
the Head of the Oil Exporters Cartel for six years through tumultuous events including the COVID-19 pandemic and Russia's invasion of Ukraine. He
was 63 years old.
OK, still ahead on "First Move" where we turn to London and look at the British Prime Minister's political future as pressure continues to mount,
plus bold moves big deal tales from one of the world's largest crypto exchanges coming up.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move". In a whipsaw Wednesday in the U.S. stocks pre market futures little changed as you can see, but it's been
a volatile pre market session already a continuation of the unsettled market picture that has carried over into the new month and new quarter as
investors trying to gauge how slowing growth will impact profits as well as Fed policy and prices.
Investors increasingly questioning whether the U.S. Central Bank can raise rates high enough to truly tame inflation if economies fall into recession,
maybe the economy will do the work for it? Some investors in fact now pricing in rate cuts next year.
The minutes of the Federal Reserve's latest policy meeting will be released later today and could give us new clues into where central bankers see
their tightening campaign headed? Meanwhile, the FTSE higher today despite growing uncertainty over the future of Boris Johnson's Conservative
Government, UK's stocks perhaps getting a boost from a weakening British pound too a fresh two year lows against the U.S. dollar that of course
makes UK exports cheaper abroad. For the year the FTSE is down a mere 3 percent compare and contrast that with the S&P 500 which has lost 20
percent since January.
OK, let's return to the House of Commons in London and Britain's embattled prime minister refusing to step down after a series of resignations from
his government, including that of Health Secretary Sajid Javid.
(BEGIN VIDEO CLIP)
SAJID JAVID, FORMER UK HEALTH SECRETARY: Treading the tightrope between loyalty and integrity has become impossible in recent months. And Mr.
Speaker I will never risk losing my integrity.
[09:20:00]
JAVID: I also believe a team is as good as its team captain. And then a captain is as good as his or her team. So loyalty must go both ways. The
events of recent months have made it increasingly difficult to be in that team.
(END VIDEO CLIP)
CHATTERLEY: Joining us now Conservative MP Peter Bone. Sir, great to have you on the show you remain in the Prime Minister's team you're continuing
to back him sir why?
PETER BONE, BRITISH CONSERVATIVE MP: Well, good morning. Yes, I am. I think the majority of Conservative MPs are supporting him because he's got all
the big issues, right, if you like. You know, he got Brexit done. He got the first vaccination in Western Europe was gone to billions of people
across the world.
We've now got the lowest unemployment for 50 years, I mean, lowest unemployment for 50 years is amazing. Boris is dealing with the illegal
migration from Europe; it's trying to stop that. And he's led Europe's response to the terrible, terrible war in Ukraine. And today, that this
very day, we've got the biggest tax cut for decades so all those things seem to me are pretty important and popular with the voters. So that's why
I support him.
CHATTERLEY: We can debate the relative success or failure of policy, which I agree with you, is actually vitally important in this moment, and
actually what we shouldn't be talking about. But I wanted to get back to what the Former Health Secretary said there, which was about this choice
between loyalty and integrity, and that he simply didn't feel like there was integrity.
Do - can we question that in light of the Prime Minister's behavior of the behavior of some of the other members of this government too perhaps?
BONE: Well I don't think - I don't agree with the Former Health Secretary on this. He's resigned. It's not the first time he's resigned from a
government. And we've got a very good new health secretary, and we've got a very good new chancellor.
So I mean, if it's like a soccer match, you know, it's - that a lot of people can't tackle the ball because if those are policies, and, and they
can't touch those, because they're good policies, so they're actually tackling the player. And I don't think that's the way forward at all.
Let's, by all means discuss policies, but not individuals.
CHATTERLEY: I do like your analogy there, because I do think some could look at the Prime Minister's behavior and say he's scored several own
goals, particularly over the past several months.
BONE: Well, I wouldn't agree with you. But I certainly agree that some of the things that are the operation inside number 10, the way the media
outlet works and that sort of thing, have not been up to scratch. And of course, the Prime Minister has changed many of those people.
So hopefully, that will improve. The trouble is I find slightly difficult talking to you about soccer, when I actually I head up the old
parliamentary group in the parliament for American football, so I probably shouldn't use American football.
CHATTERLEY: We'll do that next time sir. Let's talk about the 1922 Committee because there aren't those that are suggesting now that behind
the scenes, there is work being done to perhaps change the rules to oust the Prime Minister. Do you think he's still has the confidence of the
majority of those required to oust him, even if those rules can be changed?
BONE: Well, I do think he has the support the majority, there's some misconception about what the 1922 Committee is? Actually, the 1922
Committee is all members of the conservative party in parliament, who are not part of the government. So it's not a sort of small committee. It's a
huge body of people.
And I - Sir Graham Brady, who chairs the Committee, has said that we won't change the rules, because the rules are there for a reason you can't have a
ballot every third Wednesday on whether you want to change the party leader? Once you've had the ballot, it's that you can't change the game for
you. So I think all that is, well, what we'd call here Westminster bubble talk?
CHATTERLEY: Is the Prime Minister a liability sir?
BONE: That's a very good question, because if you were in the corridors of power, you might think that is the case. But if you come to my constituency
in Wellingborough which is in the Midlands, I was out campaigning on Saturday.
I was in the Hatton part of my constituency, the Russian part and the - part. People were coming up to me saying how well the Prime Minister is
doing and get on delivering what they want. Not a single one of them came up and mentioned the Prime Minister and they wanted to get rid of him. So I
think there's a difference with what's been discussed down here. And what people in the country are actually thinking.
CHATTERLEY: What about the parts of the country those are turning away from the conservatives and actually looking at labor as an alternative option
now because actually they've lost confidence in the government.
[09:25:00]
CHATTERLEY: I mean your constituency is one thing but what about the broader country? Did they still have faith in this leader?
BONE: Well, I think so we had two bi-elections recently to parliamentary by elections, which one was won by the liberals and one was won by labor. But
if you had the votes together, both those by elections, so conservatives actually got more votes than labor more votes and liberal democrats.
So if that was actually a general election, were all the constituents that you would expect us to win. And the opinion polls say we're three 4
percent, behind in the polls, midterm in the United Kingdom, that's a very good position to be in if you're the government.
I mean, David Cameron, a previous Prime Minister was 20 points behind midterms still went on to win the general election. So I think from that
point of view, things look good for the Conservative Party, too.
CHATTERLEY: Two very senior resignations is used discuss the Former Chancellor and the Former Health Secretary, do you see that as strategic
and that they are perhaps making a move against the prime minister for their own interests rather than the interests of the country?
BONE: Well, I certainly they're making a move against the Prime Minister. There's no question about that. It does appear that they may well have been
coordinated. I actually think we finished up with a better chancellor and a better health secretary, by what's happened.
So it might be to the benefit of the country. We had a chancellor before who was putting taxes up; we've got a new chancellor who believes in
cutting taxes. That's what I believe in too, and I know the health secretary will do an excellent job of running this massive National Health
Service that we have in the United Kingdom.
CHATTERLEY: Peter, is there anything very quickly that this prime minister could do to lose your loyalty?
BONE: Well, I'm a parliamentarian. Now, if the Prime Minister has knowingly lied to Parliament at any stage, then he has to resign. All ministers have
to resign if they do that. There's a committee called the "Privileges Committee" that is looking into that at the moment. I don't think he has
lied to bail them deliberately. But if they find he has and he would have to resign.
CHATTERLEY: And you'll call for that that moment.
BONE: Oh, well, it would be like night Father's Day if that was the case. Yes.
CHATTERLEY: Peter, great to chat to you. We'll reconvene on the American football. Thanks chat.
BONE: Yes, let's do that, which will be fun.
CHATTERLEY: Peter Bone Conservative MP sir thank you. OK, coming up, crypto crash or just a bump in the road I speak to the CEO of FTX about the
industry's future and more stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move"! U.S. stocks are up and running this Wednesday and it's an unsettled market picture. That's prevailing the
major averages that little change but tilted to the top side. The DOW trying to break a two session losing streak key market tests are coming
here in the United States of the U.S. investors including Friday's U.S. jobs report.
A big question is whether U.S. employment can remain a pillar of strength? If companies pull back on hiring plans as higher prices bite in American
sour on the economic prospects, Friday's report is expected to show gains of less than 300,000 new jobs that would represent the slowest pace of job
creation in over a year but hey, that would still be positive.
OK, Bitcoin today holding steady and still above testing that key 20,000 level per Bitcoin. My next guest is CEO of Crypto Exchange FTX is managing
to navigate the crypto turmoil and offer a lifeline to players who are struggling, founded in 2019.
FTX is one of the largest crypto exchanges in the world, allowing users to invest and trading crypto currencies and derivatives but FTX also going far
beyond Bitcoin. They've invested in a stock clearing company and ventured into the payments world with products like FTX pay.
It's a widget that allows you to accept crypto and Fiat payments and the FTX card, a debit card that's connected to an FTX account and it's accepted
anywhere that Visa cards are and unlike some of their closest competitors FTX says its profitable, giving them a muscle to ride to the rescue of
other crypto players.
Sam Bankman-Fried CEO of Cryptocurrency Exchange FTX joins us now. Oh, boy, Sam, you have been incredibly busy at a very volatile and I think
challenging time for the broader sector? As painful as it is, is what we're seeing, in some way healthy too?
SAM BANKMAN-FRIED, CEO OF FTX: I think what we've seen so far might be healthy. You know, to the extent that what it's doing is flushing out some
of the leverage that had to get flushed out flushing out some of the players that just were not capitalized well enough. You know, I think that
that could ultimately end up being moderately healthy for markets.
Now, at some point, you start to see reasonably well capitalized players have issues. And at that point, I think it stops being healthy, and starts
being, you know, bad for the ecosystem long term. But I don't think we've reached that point.
CHATTERLEY: Are we seeing some of that, because that sort of goes to the point of some of the investments that you're making, and I'm sure your
doors being knocked on a daily basis with people saying, hey, do you want to invest in change? Can you give us money, and you then have to try and
cherry pick and sort the weaker and the unprofitable and perhaps the insolvent ones out from the viable businesses? That's tough.
BANKMAN-FRIED: Yes, it is. And I think that, that you kind of hit the nail on the head of like, what we're trying to do here, which is, it's not sort
of bailout every business that we can find, you know, some of them are just in a position where they have to go under, and that's the right thing to
happen.
But I think, you know, the sort of key types of players that were looking for to extend credit too are ones who have built a good business, once you
have customers that need protecting, where we're trying to stop contagion from spreading through the ecosystem, and where there is a long term
sustainable pathway forward there, you know, as long as there is a short to medium term, you know, pathway for liquidity.
CHATTERLEY: OK, so then we have to address some of the recent investments and some of the rumors because I feel like every time you do an interview,
or you open your mouth, it's pounced on now by the industry as a potential. So the first one, I think, and I've seen you try and clarify this on
Twitter, and the rumors keeps spreading Bitcoin miners, Sam, how interested are you investing in Bitcoin miners?
BANKMAN-FRIED: Yes, it's interesting that that's been the one that's gotten play, because that was one of the few sectors of crypto where, you know, I
basically said, look, we don't particularly have interest in that sector. Already doesn't check some of the major boxes. It's not really a customer
protection area.
And it's not as much of a sort of contagion or systemic risk area given that anyone can come in to fill the hash rate gap. And so, you know, why
says look, we're willing to talk to any companies in the industry. You know, we don't have sort of a prohibition on it. But it's not an area that
we think is sort of like a high priority area. And it's not an area you know, for liquidity and it's not now rate that we're actively looking into.
[09:35:00]
CHATTERLEY: Yes, it's fascinating, isn't it? By not saying no we're not interested, you leave open the crack in the door and fly through it really
fast. But that's--
BANKMAN-FRIED: Exactly.
CHATTERLEY: --the part of the evolution of the role that you're now playing in this market, which is fascinating. You've also taken investment in Robin
Hood, another rumor that's popped up, I guess we could make the point that you might never get it cheaper, can we rule it out?
BANKMAN-FRIED: You know, I don't think you can ever rule anything out. And, you know, I think that, like there are ways, who is excited to partner with
them? Look, I think there are ways in which, you know, we would be excited to work with them ways in which our products could be synergistic.
And I think it's, as you said, you might never get it cheaper, you know, I think it respects it's sort of like A, your represents an attractive
investment. And, you know, I really, really respect that the, you know, the company and brand and, you know, scope that I that Vlad and the team have
sort of, you know, built this out too.
That being said, there's no sort of active discussions there, you know around M&A or anything like that, it's primarily more of investment and
always excited to talk to them about potential partnership opportunities.
CHATTERLEY: I also think with these things, you have to work out what you can build organically yourself? I mean, I saw that you--
BANKMAN-FRIED: Yes.
CHATTERLEY: I have just bought a stock clearing company, embedded financial technologies, FTX stocks, what perhaps, could call this? So, when you're
looking at an acquisition, its how quickly do you want to scale up versus building something yourself? And you sort of have those options? I guess we
could throw Coinbase in here as well, again, another company that you may or may not ever get cheaper Coinbase? And they won't draw a line under
this?
BANKMAN-FRIED: Yes, I mean - at the risk of starting rumors, I don't intend to start. I think what I would say is look at his similar answer to that,
right? Of like, are there potential ways we could work together absolutely, always excited to do that.
You know, could it be an attractive investment here, I don't want to give bad investment advice. But like, you know, it would not shock me if this
were a time when this was a potentially attractive investment given sort of the revenue base that they built up. But you know and - lack - talks beyond
anything like that there.
And to your point of filter by, like by default with most things RNC is look, we're going to build this out, right? We're going to build out what
we think is important for our product. And, you know, we're always open to looking for opportunities, where, you know, it might make sense for us to
do an acquisition instead.
But that's sort of on the side. And that's always in some sense not what we have to plan for. We always have to plan for building out everything that
we're going to want ourselves.
CHATTERLEY: And that makes sense to me. I mean, the business model to me, it's also interesting, just to use Coinbase, as an example. I mean, they
lost, what $430 million in the first quarter, were you in the exchange business, profitable throughout this period of volatility, because I think
this is also a period of separating, perhaps the good from the U.K?
And the bad is how profitable these companies are? You have said that you're profitable and have been now for many quarters? Did you make money
in this period?
BANKMAN-FRIED: Yes, we did. We made money, you know, every quarter for a number in a row that that includes the most recent ones. And, you know, I
think the way that I think about it is I sort of like always, by default, want to be running a profitable business.
And, you know, I'm not saying there couldn't come at time when strategically, it would make sense to make a different decision. But it's a
risky decision to make. It's putting yourself in a position of weakness in a lot of ways. And it's not what, by default, we want to be doing here.
And so, you know, we have been profitable that's the answer the whole time and, you know, sort of intend to remain profitable, unless I - unless there
is a really active opportunity that we find to - to invest in a particular way, but I sort of don't anticipate that because, you know, I think they
should be a business model that is profitable at its real core.
And I think that, you know, it's a high margin business. And that's how we've been running it. But a big piece of this is when you look at the
workforce like that is I think, the key differentiating factor here. And it's an interesting point is it's not that some businesses are spending,
you know, billions a year on marketing, and others aren't.
There's some marketing spend difference. But by far, the bigger factor here is actually when you look at the headcount, you know, we have about 300
employees globally today. And that is a small fraction of the number that a number of other players have, and I think that is a key thing that's led to
these differences.
[09:40:00]
CHATTERLEY: OK. Yes, I was going to try and disagree but I can't so I'm going to move on. I'm willing to admit it. Let's talk about the other parts
of the business as well, because I've spent a lot of time talking about exchanges and purchases and M&A. But you also have a venture capital part
of your business.
BANKMAN-FRIED: Yes.
CHATTERLEY: You also have this growing and I mentioned it in the introduction payments part of the business. How big do you see that going?
BANKMAN-FRIED: Yes.
CHATTERLEY: Because that, I mean, for me, that's what's so exciting about this sector, irrespective of the volatility is how transformative
particularly for things like remittances, this part of the business, and this technology can be? Talk to me about that, and the growth that you're
seeing there and the opportunity?
BANKMAN-FRIED: Yes, absolutely. And I think it absolutely could be transformative. And I think that would be, you know, really exciting to
see. And you at its core, I think one of the biggest use cases for crypto is on the payment side, because when you look at traditional payments,
they're broken in so many ways, right?
And people talk sometimes about the remittance use case, which I do think is a big one. You know, the fact that if you want to send money overseas
right now, that is a massive hassle, you might be spending 10, 20 percent on fees, it might take you a week to get there.
And if you're not careful, it might get stolen by some nefarious player somewhere along the way, that's a massive problem. And it's a problem that
you do not want to be facing when you're trying to support family members back home.
But you know, even outside of the remittance use case here, right? I think that, you know, you look at even domestic payments in the United States
where, you know, frankly, people are spending 1, 2 percent on, you know, every payment, in order to paper over the fact that the actual payments
that works are fundamentally kind of broken.
And this isn't even like credit cards, gouging profits or anything. This comes sort of like, beneath that and really is just at the layer of like,
actually trying to use the underlying ACH and wire transfer systems, which are somewhat broken. So I think there's a huge, huge opportunity, really to
revolutionize what payments look like to save huge amounts for consumers, for people doing remittances. And I'm pretty excited about that.
CHATTERLEY: Yes, I mean, this has the ability to be so transformative. However we do this whether we work with central banks, commercial banks,
governments, the private sector, I think there's opportunity for everybody to work together.
BANKMAN-FRIED: Yes.
CHATTERLEY: Final quick question Sam, because I'm running out of time. And the last time we talked, you were talking about philanthropy. And I know
you set up working with the Ukrainian government ways to use crypto to raise money for the government.
I just wanted to ask you quickly, because obviously, they've also changed the rules, concerns about sort of spillover effects and substitution away
from their currency.
BANKMAN-FRIED: Yes.
CHATTERLEY: How much money did you raise? And what do you think about this is a tool for the governments but also the risks associated with it, too?
BANKMAN-FRIED: Yes, absolutely. And I think that gets to the point that this can be a great thing for the world. I think it can also be a really
messy thing. But I think that at its core, you know, we've seen millions of dollars go through, you know, the systems we've given.
I think something close to a million ourselves as well, just to support humanitarian aid and growth rate in Ukraine. And I think when you think
about what it would take to get by, you know, to get funds, both to the government there where we do have a relationship with the Ukrainian
government, for raising capital for them using Cryptocurrencies that runs through FTX.
You know, whether it's getting money to the government, or whether it's getting money to individuals that are in need, you know, there are
literally tanks outside of the banks. And then - and this gets to, I think, one of the, you know, places where it can be really important to have a
fully digital banking system.
And I, you know, fully digital way of handling payments. I think that's, you know, an international one. That's the core of what we've been, you
know, helping to support in Ukraine.
CHATTERLEY: Yes, I think it's a healthy conversation to be having away from some of the noise of digital assets and Cryptocurrencies yourselves that
the work goes on beneath. Sam, great to chat to you come back soon please because I have a million more questions for you but as always, not enough
time.
BANKMAN-FRIED: Well did.
CHATTERLEY: Great to chat thank you Sam Bankman-Fried there CEO of FTX.
BANKMAN-FRIED: Thank you.
CHATTERLEY: OK, after the break we're live in London is British Prime Minister Boris Johnson continues to fight his political future. Stay with
us.
(COMMERCIAL BREAK)
[09:45:00]
CHATTERLEY: OK back to our top story. British Prime Minister Boris Johnson facing his biggest storm yet a wave of ministers quitting as questions
mount to how Johnson responded to allegations of sexual misconduct by a member of his government? Here what the opposition Labor Leader had to say.
(BEGIN VIDEO CLIP)
STARMER: The middle of a crisis doesn't the country deserve better for me - less cast of nodding dogs.
(END VIDEO CLIP)
CHATTERLEY: Joining us now is Conservative MP Tim Loughton. Tim, great to have you with us! You agree with Kier Starmer time for Boris to go?
TIM LOUGHTON, BRITISH CONSERVATIVE MP: I really agree with Kier Starmer, but I've been saying for some months that I'm afraid the Prime Minister's
position has become untenable and that he needs to resign and nothing has changed that over recent months indeed, it's gone the other way. So I'm
afraid the writing's on the wall. The game is up and he'd no needs to stand down.
CHATTERLEY: But he's looking like he won't.
LOUGHTON: That's Boris. I mean, you have to take your hat off to him his irrepressible positivity and bullish there's even when you know everything
is going wrong around him at the moment and ministers are leaving the government. But I think it's a great shame.
And this is a real tragedy because I think Boris has actually done a lot of good things in his premiership starting off the story on Brexit through the
pandemic and his great leadership on Ukraine. But we cannot have a Prime Minister who has lost so much trust and confidence of not only
parliamentary colleagues, but the British public.
Because all of these recent incidents, I'm afraid all the roads lead back to number 10. And that's why now, we can only bring this to a resolution by
having a new leader and the new Prime Minister and we need to start that leadership contest as soon as possible.
CHATTERLEY: Tim, who should that leader, is?
LOUGHTON: Well, I'm the worst person to ask. I've been on the leadership campaigns of the losing candidates all the way back to William Hague. So
I'm not going to make any predictions. But what I will say is that I could really offer name a list of 6, 7 and 8 names of good credible candidates
who will step up to any competition who would make a good decent Prime Minister in a very different way to Boris with different characteristics.
But that doesn't mean there'll be any less good. But I just hope the Prime Minister realizes that writing is on the wall now and resigned to his own
accord with his own agenda and hands over the baton as soon as possible.
CHATTERLEY: Did one or two of those candidates resign yesterday, potential future leaders?
LOUGHTON: I'm sure there are potential future leaders amongst those candidates who already resigned--
[09:50:00]
CHATTERLEY: I'm talking about the Former Chancellor and the Former Health Secretary.
LOUGHTON: But they are both strong candidates. And I wouldn't be surprised to see one or both of them put their names forward at the appropriate time.
But that leadership contest hasn't started yet, because Boris is now showing no signs of getting his own record, which I think will be a great
shame. But there'll be others too add to that list didn't come and do so I'm sure.
CHATTERLEY: Tim, what's in the best interest of the country and the British people at this moment? Is it to continue to try and form policy? Or is it
to engage in a leadership contest or - potential election, who knows at some point in the foreseeable future? Aren't there enough issues to deal
with in the United Kingdom and beyond?
LOUGHTON: There are a lot of issues--
CHATTERLEY: Right.
LOUGHTON: There are a lot of issues to deal with, starting with the cost of living crisis, which is happening in the UK and around the world, with
Ukraine with so many other things. And yet, those things which should have been the top item on the news, every day over the last few months, has been
knocked off by constant trickle of stories about number 10 Downing Street, and the person whose name is over the door.
And that has been a distraction from the government being able to get on with the job of governing, which we all desperately need to see happen. And
that's why we need a quick leadership contest. A new person in sorting in Downing Street and the government can get back to being completely focused
on the subject of governing and doing the stuff that all of our constituents want to see us doing.
CHATTERLEY: Yes, winning in the country. Tim, great to chat to you sir, thank you! More "First Move" after this!
(COMMERCIAL BREAK)
CHATTERLEY: OK, welcome back to "First Move"! With the final look at a volatile session unfolding on Wall Street once again the S&P 500 and NASDAQ
turning lower after early session gains energy remains lower for a second straight day.
Global investors will be closely watching the political drama that continues to unfold in the U.K. through today's session too. Prime Minister
Boris Johnson remains under intense pressure to resign as you were just hearing after the loss of key cabinet members.
Boris Johnson hoping the latest scandal he survives unlike another number 10 resident he does seem to have 9 political lives but even beloved "Larry"
appears to be showing his claws to Larry the Cat" parody account on Twitter saying "I can no longer in good conscience, live with this Prime Minister
either he goes, or I do". "Larry the Cat" the final word on the show today and that's it for the show. If you've missed any of our interviews today,
they will be on my Twitter and Instagram pages you can search for @jchatterleycnn. "Connect the World" is up next in the meantime, having a
perfect today see you tomorrow.
(COMMERCIAL BREAK)
END
