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First Move with Julia Chatterley
Israel Moves to Improve Relations with Palestinians; Approves Six Housing Projects for Palestinians in West Bank; Ukraine Reports Intense Shelling, Airstrikes in Donetsk; U.S. Futures Tumble after Hotter than Expected CPI Report; Dollar Rises amid Expectations of more Aggressive Rate Hikes; NASA Releases First Images from Webb Space Telescope. Aired 9-10a ET
Aired July 13, 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]
JULIA CHATTERLEY, CNN HOST, FIRST MOVE: A warm welcome to "First Move". Great to have you with us this Wednesday! And we begin with breaking
economic numbers from the United States and what can only be called some highly worrisome new reads on U.S. consumer price inflation.
The U.S. announcing just a short time ago, prices rising at a much hotter than expected 9.1 percent year-over-year rate last month that's higher than
the 8.8 percent that was expected by many analysts the core rate of that CPI number that excludes volatile food and energy prices also coming in
higher than expected too.
Now if there's any consolation here it's that today's numbers are relatively backward looking at recent enough to catch the significant drop
that we've seen in U.S. petrol prices over the past few weeks. That said, all the recent talk that we may be nearing inflationary top in the United
States appears premature, yet again.
As you would imagine the negative response from U.S. investors pre market futures are pointing to a much lower open on Wall Street tech stocks seeing
the biggest drop with the NASDAQ sector for more than 2 percent. As you can see below that line, there were softer picture over in Europe as well.
Much later in the show we'll talk about this. First let's move to what we're seeing in the Middle Eastern? President Biden's mission in the Middle
East after being greeted in Tel Aviv by the new Prime Minister Yair Lapid a short time ago the President had this to say.
(BEGIN VIDEO CLIP)
JOE BIDEN, PRESIDENT OF THE UNITED STATES OF AMERICA: Yair Lapid it's an honor, once again, stands with his friends and visit the independent Jewish
State of Israel. President Nixon was the first American President to visit Israel in 1974.
I was actually my first visit was, as you mentioned, as a young United States Senator from Delaware, in 1973. Just a few weeks before the Yom
Kippur War, I had the privilege of spending time with Prime Minister Golda Meir. I'll never forget, I was sitting next to a gentleman on my right when
there are aides, his name was Rabin. I look back on it all now. And I realized that I had the great honor of living part of the great history of
this.
And I did say, and I say again, you need not be a Jew to be a Zionist. The fact is that, since then, I've known every single Prime Minister and it's
been an honor for him strong work relations with each of them. And now, this is my 10th visit.
(END VIDEO CLIP)
CHATTERLEY: And later this hour, he'll meet the Israeli Defense Minister before going to Jerusalem to pay his respects at the Holocaust Memorial.
His trip, of course, also includes a visit to the West Bank and Saudi Arabia later this week.
Hadas Gold is following events from Jerusalem for us. Hadas his first time first visit to the Middle East as President, as he was saying there has
been many times he's expected to embrace the Trump era Abraham Accords that of course that normalize relations between Israel and many of the Arab
nations. How does he plan to expand upon that during this trip? What's to come?
HADAS GOLD, CNN CORRESPONDENT: Well Julia, that's really top of mind for the Israeli is expanding upon these regional alliances, especially with
this direct travel. He's taking from Tel Aviv to Jeddah, Saudi Arabia really being seen as a symbol as what a lot of this trip is about.
Now normalizing relations between Israel and Saudi Arabia for the Israelis would be the jewel in the crown of the Israeli Arab normalization. But I
should caution nobody's expecting that to suddenly be assigned or on Saturday, he's going to announce some new normalization agreement. But the
Israelis do say that they are expecting small you could call them baby steps in that direction.
These are going to be things that might seem small, but would have been unthinkable just a few years ago, things like allowing all flights to and
from Israel to just fly over Saudi airspace. That's not something that's possible right now for all flights that will cut off flight times for
people going to places like India and Asia. Those will be important steps.
There will also be discussions about forming the sort of regional air defense alliance. President Biden right now is expected to actually tour
some of these defense mechanisms, the iron dome that the U.S. already supports with a billion dollars in funding just recently but also a new
Iron beam.
This is a laser defense system that's supposed to be able to shoot things like drones out of the air with lasers. The Israelis will be trying to show
it off to the Americans to try to get some supporting tried to get some funding for it and all of this regional alliance building Julia, it's all
being done of course with an eye towards Iran.
This is a shared concern between all of these countries and as we see these talks about returning to a nuclear agreement seemingly falling apart
[09:05:00]
GOLD: Another priority for the Israelis on this trip will be once again pushing the Americans away from returning to an Iranian nuclear deal even
though the Americans even though President Biden still says that they prefer diplomacy. The Israelis will be trying to push President Biden on a
coherent strategy a coherent plan B on how they plan to counter a possible nuclear Iran, and also Iran's regional activities.
Israel often says that Iran is behind terrorist organizations that harm Israel's security. They will want to hear from the American support about
that. And the Israelis do say that Biden and new Prime Minister Yair Lapid will sign what's been called the Jerusalem Declaration.
This will be a memorandum they call it a blueprint on the bilateral relationship over the next few years. And in that memorandum, they say that
it will include an American commitment to never allow Iran to obtain nuclear weapons and acknowledging that Israel will defend itself by itself.
But Julia, one thing we won't hear a lot about on this trip is any sort of real steps towards a peace process with the Palestinians. Yes, President
Biden will be visiting Bethlehem will be meeting with the Palestinian Authority leadership on Friday, but they're not expecting even said this in
his speech, any sort of big moves towards an actual two state solution.
Instead, there's going to be small steps confidence building measures that Israel has already announced, just because there doesn't seem to be the
political will both internally, Israelis and Palestinians, their political systems right now are a bit calcified. And the White House doesn't really
seem to have the will itself to try and put it out there and try to move forward on any sort of real peace process, Julia.
CHATTERLEY: Focused on achievable goals I think that's the message for better or worse, Hadas Gold, thank you for that. OK, now to the escalating
crisis in Sri Lanka, where the Speaker of Parliament says he's still waiting for the President to submit a formal letter of resignation.
They have spoken by phone I believe. President Rajapaksa fled to the Maldives earlier today. His last act, though, was to make the Prime
Minister the Acting President and move being opposed by angry protesters who broke into the Prime Minister's office.
Will Ripley joins us now. Will, no surprise, given what we've been talking about over the last day or so that people is protesting this. They wanted
to be rid of both the President and the Prime Minister and now they've got the Prime Minister, it seems as acting President.
WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: And still no formal resignation letter from President Rajapaksa himself who, you know. Look,
this is something that has been building up in Sri Lanka for so many months, when you had your living expenses, triple because of inflation,
people can no longer afford to eat three, or even sometimes two meals a day people are trying to survive on one meal a day, because that's all they can
afford.
They can't get medicine. They certainly can't get fuel because there are such short supplies inside the country itself. And so people who've been
taken to the streets, people who stormed the President's Palace, people who are occupying the palace to this day, and have now stormed the Prime
Minister's office and even stormed the state TV broadcasting center.
These are people who are desperate and who are angry and who demanded that the Prime Minister and the President step down. Now they have the President
who took a military jet to the Maldives, where it's essentially he's kind of waiting things out on an island paradise as people on the ground in
Colombo are suffering and struggling, not just Colombo all over Sri Lanka.
And in Colombo, you have it an almost anarchy kind of thing that's developing in the streets with people so angry that they're once again
starting to clash with the police and protesters.
Now there was a state of emergency that has now been called off. But there's a military council that the Acting President Wickremesinghe has
appointed that is with the intent of restoring law and order, as they put it. And they'll be issuing commands directly to the police in the military.
This could really lead to a one a few things; it could lead to the establishment of this all party government that the Acting President has
been promising. The Parliament could theoretically go ahead with its plan to elect a new President as soon as next week.
But it could also lead to a very real suppression of the protests and violence against the protests, much of like what was seen in the Arab
Spring and other, you know, democracy uprisings that have then been really, really crushed.
So the future of Sri Lanka's democracy is really hanging by a thread here. And what's going to be very crucial as to watch what happens with the
President's resignation. Will the Prime Minister Follow suit the acting President now will he follow suit and resign? Who's going to be selected to
lead this country out of the worst financial crisis in more than 70 years? 51 or so billion dollars in debt, so much debt, they can't even start to
pay off their creditors.
The IMF isn't talking to Sri Lanka much about a bailout because there doesn't really a credible solution in terms of paying back any of this
debt. And you have all of these people 22 million people in Sri Lanka, many of them who were living comfortably on an income that now can barely afford
the basic necessities of life.
There's no hot water because there's no fuel and barely getting enough food. You can't you know get medicine for a loved one if they're sick? It's
a desperate situation. And will this new government be able to be put into place? Can they turn things around? Are these protesters essentially going
to be violently suppressed? Could we see more injuries?
[09:10:00]
RIPLEY: Could we see more clashes and violence on the streets of Colombo and other areas in Sri Lanka, Julia? And we have to - we really all - as
the world need to watch very closely what's going to be happening in Sri Lanka in the coming hours, days and weeks ahead.
CHATTERLEY: You're asking all the right questions. This kind of transition of power tends to be messy. One of the questions I was going to ask you,
and you're sort of asking the question yourself, it's actually unclear at this stage that exactly is in charge?
And when we're looking at scenes like this, and we can show our viewers again, that the protests that we saw earlier today, it's important to
understand who the military sides with going forward?
RIPLEY: And that, right, yes, you're right, Julia. They side with the Rajapaksa brothers because they, in particularly the President, who's now
in exile, he was under his brother when his brother was President, he was in charge of the defense.
And they were the ones who really violently brought about an end just for long because decades long civil war giving them great popularity and
loyalty within the ranks of the military. And as long as they have the protection of the military, they've been able to be shielded from the anger
of the people that was, you know, they were put on a naval vessel and whisked away when the President's Palace was being raided.
And it was a military aircraft actually flew President Rajapaksa to the Maldives, along with his wife and perhaps other family members, because
they couldn't get on a commercial flight because the immigration officers at the airport wouldn't process their passports without them being in the
queue with regular folks.
And when other members of the family had been in the queue there were actually, you know, clashes and scuffles that took place. That's how real
the anger is right now.
So with the protection of the military, if this current government wants to stay in place, and that includes the Acting President, who was the Prime
Minister under President, Rajapaksa, then this could potentially mean that the military could suppress the actions that are happening in the streets
if they remain loyal to this family and these two brothers who ruled the country for the better part of two decades, Julia?
CHATTERLEY: Will, continue to watch it very closely. Will great to get your context, thank you. Will Ripley there. OK, from escalation to rising
inflation, U.S. consumer prices rising at a 9.1 annualized rate in June. That's more than analysts expected.
Even the core reading that strips out food and fuel coming in hotter than expected too concerning news for the Federal Reserve and of course,
consumers too. Rahel Solomon joins us now with all the details. Rahel just poring over the port report quickly there in the break and food, fuel and
shelter but it's pretty broad based all prices rising.
RAHEL SOLOMON, CNN CORRESPONDENT: It is broad based sort of validating what a lot of Americans already know that inflation is rampant. So yes, 9.1
percent, which is a fresh pandemic high a fresh 40 year high, certainly not a number that the Fed wants to see, as you pointed out, and I might add the
White House wants to see 1.3 percent month over month, so still rising there.
Even when we strip out volatile categories, Julia, I think we can pull this up for you even when we strip out more volatile categories, like energy,
food prices, core inflation, 5.9 percent year over year, and monthly, this is really important monthly core inflation increasing seven tenths of a
percent and June Julia.
This is the number that Federal Reserve Chairman Jay Powell has said wants to see come down I'm sure he would like to see all of the numbers come
down. But he has said he wants to see the month to month core inflation decelerate, we're not seeing that just yet the gains.
As you've mentioned, were broad based from gasoline, shelter, food, and I want to point out shelter especially of course, a lot of us we see gasoline
prices every day we deal with food prices every day at the grocery store, but shelter 5.6 percent compared to a year ago, Julia, economists have been
watching this and talking about this for quite some time, there's some real concern about affordability issues because of the increase in cost of
shelter.
And even when you look below the hood of shelter, the rent index rose 0.8 percent eight tenths of a percent that is the highest increase since 1986.
So these numbers are alarming, I'm sure to the Federal Reserve, but really a validation for Americans of what we already know which is that inflation
is rampant and it is broad based we know the Federal Reserve will be meeting in two weeks likely going to be talking about this report quite a
bit.
And the question was will we see half a percent of an increase when they meet when we see three quarters of a percent when you get numbers like this
and reports like this? It appears that three quarters of a percent is just about guaranteed.
And they have their work cut out for them, Julia, it is a very difficult path for the Fed at this point, especially when we get numbers like this
that show inflation is still red hot.
CHATTERLEY: Yes, it almost makes the decision easier for them quite frankly, that they have to do more but that's not good for the economy and
for the slowdown and that the broader challenges that they face.
Yes, I never really understood the core reading when for low income individuals its food and fuel that are a huge part of what they're spending
on and I think most of them would argue, Rahel, as you well know, I think that prices go even higher than this huge challenges.
[09:15:00]
CHATTERLEY: Rahel Solomon, thank you. OK, let me bring you up to speed now with some of the other stories making headlines around the world. Ukraine
sees heavy fighting is taking place in the Eastern region of Donetsk, with Russian forces carrying out airstrikes and an intense shelling campaign.
But in the south where Kyiv claims its troops are on the offensive. The military says it's destroyed a Russian arms depot in the occupied Kherson
area. CNN's Scott McLean joins us now live from Kyiv. Scott, I know you're outside the court and I want to talk to you about that. Of course what we
saw back in May was the first war criminal being jailed sentenced to life. I know his appeal hearing is taking place today. What more can you tell us
on that first?
SCOTT MCLEAN, CNN CORRESPONDENT: Yes, Julia, it actually just wrapped up a couple of minutes ago, we just saw the 21 year old convicted war criminal,
Vadim Shishimarin walk past and he'll be sent back to prison.
So the arguments were heard in this case, it got going mid-afternoon and then was quickly actually paused because there were air raid sirens in the
city that pause things for about an hour when it resumed, he went back into his prisoners box, and he listened through a translator for the judge to
recount exactly what happened you recall that he just four days into the war was part of a column of Russian troops that was fired on by Ukrainian
shelling.
He and four other soldiers ended up stealing a car driving into a nearby town where they came across a senior citizen riding a bicycle on his phone;
they shot him and killed him in the head.
The argument is defense argument initially was that look, he was ordered by a superior to shoot and to kill this man. Ultimately, though, he ended up
being given the harshest sentence that you can get in Ukraine, which is life in prison, no possibility of parole.
Now, though, the argument that his lawyer is making on this appeal is that the sentence was too harsh that they didn't take into account the fact that
he was ordered to shoot that he essentially denied the request to shoot several times before ultimately, relenting and pulling the trigger. He
said, look, he only fired one shot.
And ultimately, when the Ukrainian soldiers detained him, he went voluntarily. So they said, look, his intent was never to kill a person that
day, it was just the circumstances, and the fact that he was scared and in a new environment that ultimately led to this tragic outcome. I did have a
chance, though, to interview the prosecutor in this case.
And look, he has no sympathy for this 21 year old Russian soldier at all, he said that this ought to be an example for other Russians who are coming
to this country, and may well commit war crimes. And I have to tell you, Julia, the one thing that really struck me and being inside the courtroom
is just how young this soldier is, I keep calling him a kid only because he looks like a child.
He looks so, so young. He's 21, but he looks a lot younger than that. We won't have any ruling in this until a couple of weeks from now the three
panel judges will have to take this back and go through the arguments.
We may hear more arguments in a couple of weeks, and we won't have any decision. But the hope is that the hope from this Russian soldier is that
his sentence would be lessened the harshest sentence you can get in Ukraine in terms of years, is 15 years. There's nothing between 15 years and life
which he's currently been sentenced to.
CHATTERLEY: Yes, I mean, there's so many comments to make about all of that, quite frankly, the idea that he's even had the right to a trial and
to an appeal at a time when the war continues. And it's just interesting to understand what the public's response to all of this is as well, but a
statement clearly being made.
Scott, I want to ask you briefly about comments as well in the broader offensive for the Ukrainians at this moment. President Zelenskyy making the
point that I think NATO provided weaponry now is proving potent in their fight back in defense. What more can you tell us about that?
MCLEAN: Yes, you'll remember that the battle for Luhansk, Julia. The Ukrainians had said look, we made the decision to reluctantly withdraw
because we were simply outgunned and outmanned emphasis on the Elgin depart because they said that they simply lacked the artillery.
If you spoke to soldiers along the front lines, they would tell you look for every one heavy shot we're firing the Russians are firing 10 or 20.
Back in our direction it simply was no contest now though, as Ukraine is in the last couple of weeks, getting more and more foreign weaponry actually
being delivered, particularly the U.S. artillery system, the HIMARS system.
Things seem to be shifting at least the attitude seems to be shifting particularly in the Southern part of the country where they are launching a
counter offensive. Just the other day they hit what they said was a cache of ammunition not far from the City of Kherson.
[09:20:00]
MCLEAN: And while President Zelenskyy didn't explicitly say that cache of weapons was or ammunition was hit with the HIMARS system, he sure hinted at
it listen.
(BEGIN VIDEO CLIP)
VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT: The occupiers have already felt very well what modern artillery is, and they will not have a safe rear
anywhere on our land which they occupy. They have felt that the operations of our reconnaissance officers to protect their homeland are much more
powerful than any of their special operations, Russian soldiers, and we know this from interceptions of their conversations is truly afraid of our
armed forces.
(END VIDEO CLIP)
MCLEAN: And Julia, one other thing to mention, and that is that the Ukrainian foreign minister was asked by CNN today about the possibility of
any kind of a peace deal or even the prospect of peace talks and the answer that we got was well, at this point, there's really nothing to discuss,
Julia.
CHATTERLEY: Scott, great to have you with us. Thank you, Scott McLean, from Kyiv back after this stay with CNN.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move" where U.S. futures are pointing to a weaker open on Wall Street's after yet another shockingly high read on
U.S. inflation numbers. Although I will point out we're a bit off the lows of the pre-market session earlier prices on the consumer level rising 9.1
percent last month on a year over year basis.
That's higher than pretty much every Wall Street estimate going into this release. It's the fastest CPI rise since 1981. Prices up by a greater than
expected 1.3 percent month over month to all this reflected in the action the U.S. bond markets to the yield on the benchmark 10 year treasury
surging to over 3 percent in anticipation of further aggressive action by the Federal Reserve to raise interest rates as it bites a so far losing
battle to tame prices.
Traders have already fully priced in an aggressive three quarters of a percent rate hike at the next FOMC meeting later this month investors
bracing for further tests this week as well. U.S. banks began reporting second quarter results tomorrow therefore the guidance and their thoughts
about global recessionary and inflationary threats will also be key.
[09:25:00]
CHATTERLEY: And pleased to say we're joined by Jason Furman He's former Chairman of the U.S. Council of the Economic Advisors and currently a
professor at Harvard University's John F Kennedy School of Government. Jason, Great to have you with us. Ouch is all I can say it's a horrible
data release?
JASON FURMAN, FORMER CHAIRMANAN, COUNCIL OF ECONOMIC ADVISERS: Absolutely, you know, look, I was prepared for an outdated increase in gasoline prices,
because the numbers don't capture the recent declines. I was not prepared for the big acceleration in core inflation, with just increases spread
throughout very few special stories you can tell to, you know, ignore today's number.
CHATTERLEY: You gave the one little silver lining there, which is that that petrol gas prices in the United States have come down since this measure
was collected. But it's tough to argue that any of the other measures can be controlled in any other way. But more aggressive rate hikes. And that I
think will be the takeaway for the Federal Reserve today to looking at these numbers.
FURMAN: Yes, absolutely, Look, I think they can and will stick with the 75 basis points at the next meeting, what they need to be clear about is that
they're going to be watching the data. And if there's no relief on this, they're going to continue to increase rates at a fast pace in the fall into
next year. I think also, this should push Congress to act and pass deficit reducing legislation as well.
CHATTERLEY: What more can they do, Jason because they have been sort of scratching around trying to come up with options, some better than others,
potential fuel tax rises, all sorts of things. What would be the most beneficial here? What about removing of tariffs on China? Is that going to
move the needle?
FURMAN: Look, that would help a little bit we should do it. There are a lot of reasons we should do it. But Congress could pass a law that reduces
prescription drug spending, that raises some taxes, reinvest some of the money in things like climate change and health care, but on balance, cuts
the deficit by a substantial amount. That's, there's still time for Congress to do that this year. And I'd like to see that happen.
CHATTERLEY: A targeted build back better spending plan, Jason, how bad an idea would this be at this moment?
FURMAN: Right, that's basically what I'm talking about. I mean, I don't know what name you want to attach to it. But something like instead of the
large original one, you take something else, you save, let's say, a trillion dollars, you reinvest half of that money in things like climate
change. The other half is for deficit reduction, helps cool the economy, slow down inflation. This is mainly the Feds job. But Congress can help a
little bit.
CHATTERLEY: How concerned are you by the opposite to this in that people will take fright at these numbers. They know how much they're paying that
the Federal Reserve now has a pretty firm mandate to continue to hike aggressively in order to control this.
At some point, the economy does slow. And I know you've already said look prices, we have to accept the prices are going to remain high this year and
perhaps into next year as well. There is a balance to be found there somewhere. Is it just too early to be talking about it?
FURMAN: No, I think it's never too early to talk about how to get that balance, right. And that's why I think the Fed doesn't need to do more than
75 basis points.
Look, if all I knew was today's data release, I would be completely panicked. But I also know that last week, we saw that nominal wage growth
slowed. I also know that a lot of contraction is already in the system in the housing sector and in consumer spending. So those tools the Fed has
deployed are just starting to work.
They're working in the labor market. I think price growth will slow. Because of that, I'm not sure. But there's enough other data out there that
says 75 is fine. This is not the only information we have about the economy.
CHATTERLEY: Yes, but it goes back to your point about watching the detailed data so closely now. I want to talk to you about jobs because I've been
confused by jobs. I'll be honest, for the last two years, quite frankly, really since the pandemic began. And the data is really puzzling.
But we arguably were in a contraction the first quarter perhaps in the second quarter in this country too. And yet, when you look at the jobs
data, it's diametrically opposed to that.
Can you explain whether it's holding by people because they don't want to let workers go because they think they'll struggle to rehire them, or they
might have to hide them back at higher wages? Do you think the jobs market slows to meet the other data or the other data perhaps will be revised
higher because I'm very confused?
FURMAN: Look, I'm very confused too Julia, I wish I make answers to that question. I think part of it is yes, employers were scarred last year by
being unable to hire so they're getting people and they can. They also need to make up for shortages.
They went into the spring with sort of their existing workforce run ragged because everyone was doing two jobs for the person they couldn't hire. So
they needed to basically do that backfilling. Jobs growth certainly well, not certainly very likely will slow. But you know the other thing I'd say
is that it's possible some of the economic growth slowing that we're seeing is itself transitory.
[09:30:00]
FURMAN: Its things like inventories that are very volatile. And so businesses think they'll get decent revenue growth over the next year or so
why not hire.
CHATTERLEY: Full confidence in the Fed Jason very quickly?
FURMAN: I think they've caught up. They got behind the curve, but they've really caught up now and I think they're in a good place in their policy.
CHATTERLEY: OK, great to chat to you. Thank you for your wisdom and we'll watch this space. I'm glad we're both confused and that you're willing to
admit it. Professor at Harvard University's John F. Kennedy School of Government and Former Chairman of the Council of Economic Advisers, great
to chat as always.
OK after the break, see you in court Elon Musk possible motives for pulling him out of his deal to buy Twitter forensic analysis with Dan Ives next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move". With steep losses force U.S. stocks in early trade today after that stronger than expected read on U.S.
price inflation. Prices as we've been discussing throughout the show rising at a much higher than expected 9.1 percent rates over the past 12 months.
Today's inflation read reflected in Euro dollar the exchange rate price action with the European currency and the U.S. dollar near parity. Once
again as you can see dollar higher because it's anticipating more real rate hikes far more than the European Central Bank can do and therefore Euro
dollar lower a signal that investors believe the Fed will have to be even more aggressive in its policy tightening in the coming months.
The Euro weakness also of course reflecting the tough spot that the European Central Bank is in as it tries to raise interest rates while at
the same time anticipating a possible complete cut off of Russian gas supplies later this year that could tip Europe into further and deeper
recession.
Now Twitter stock is higher as we speak as long as for the stock of social media giant prepare for a showdown in court with Elon Musk. They were to
force him to follow through with his $44 billion takeover deal the lawsuit was filed in Delaware on Tuesday after Musk said late last week that he was
walking away claiming Twitter had breached their agreement.
[09:35:00]
CHATTERLEY: He's accusing the company of withholding data on the real number of bots on the platform. Dan Ives is Managing Director and Analyst
at Wedbush Securities and has been following this story for years now for months. Dan, great to have you on you calls it Code Red for Twitter. They
have no choice. No the buyer options. The best option in this case, and then is to sue?
DAN IVES, MANAGING DIRECTOR AND ANALYST, WEDBUSH SECURITIES: Well Twitter, it's been a fiasco and pulling no punches. I mean, they're going into court
no to looking to enforce that deal. And Musk, I think it's a black guy. And ultimately for Twitter, I think the view of the street it's almost an iron
fist type of upper standing going in to court versus where Musk said so I think Twitter feels good in terms of going into Delaware.
CAHTTERLEY: Part of the Pandora's Box of this moment. And admittedly there are many Pandora's boxes associated with this whole shenanigan I think is
that the question mark over bots remains? And surely twitter needs to address that question as much of them as for the deal with Elon Musk,
whether or not this takes place. It's sort of or without him, everyone needs to be confident about the level of bots involved with Twitter?
IVES: Well, that's why it's really been a nightmare for Twitter, because you can't put the genie back in the bottle. And as that all gets sort of,
you know, exposed or really focused on in terms of the court over the coming months, potentially a year.
Look, I think right now, that's why it's been headwinds. Almost quarter Category Five, Storm, not just from employees, advertisers in Wall Street,
because there's skepticism now about the metrics about the company and the monetization.
And that's why Twitter backs against the wall. And it's really almost a Game of Thrones battle going into Delaware versus Musk, who obviously you
know this has been a soap opera since it started in April.
CHATTERLEY: You think fair value is for Twitter is what $25 to $30 without this deal, and we can share the share price where it was when Musk made the
original offer. And obviously, what we have to bear in mind is the entire tech sector has taken a pummeling since then, but you have to ask the
question, was this thing ever worth $55? Clearly the price was there. But that really was it ever?
IVES: Look, I mean, this was a complete head scratcher from the beginning and what he was paying in terms of 54.20 that was miles away from what I've
used fair value, as well as any other better. So now, when you look at the stock, I mean, we think core fair value, $30 hours, worst case 25.
But ultimately, it's going to be viewed as damaged goods in terms of any potential buyer. And now Twitter, you know, really is going to go through
some dark days ahead, because you said you said there's a legal proceeding along an open court battle, but then day to day navigating which truly
unprecedented challenges, you know which are now starting to build up.
CHATTERLEY: Yes, the price you're willing to pay for perceived power? Because there does seem to be a gap here who wins Dan? What are you telling
investors?
IVES: Look, first of all, I don't think there's a winner. I think it's really ultimately losers in terms of when it comes to Musk and Twitter. I
think going into court, it likely ends in some sort of negotiated settlement.
I think that's the view you know, depending on how ultimately Delaware if the enforced deal for Musk and I think for Tesla, it's been overhang. And I
think right now, Twitter, we view is sort of a fair values story at ours.
There could be incremental in terms of what they get is a cash payment. But this is going to be getting out the popcorn. This is going to be loud
twists and turns ahead and ultimately Twitter never thought they'd be facing Musk in Delaware court come you know the fall.
CHATTERLEY: Dan great to chat to you. I think I agree with you. There are no winners here.
IVES: Thanks.
CHATTERLEY: Dan Ives, Managing Director at Wedbush thank you! OK, let me return to a President Biden's trip to the Middle East which started a short
time ago. He's meeting with the Israeli Defense Minister for a briefing on the Iron Dome Defense System. You can see pictures of them chatting there.
It's designed to intercept and destroy short range rockets and artillery shells.
OK, ancient galaxies, emerging stars and a distant Exoplanets releases the first sight captured by the world's most powerful space telescope. NASA's
new James Webb Telescope is offering an unparalleled look into our university's history and its work has only just begun a look at some of
those dazzling images with CNN's Rachel Crane.
(BEGIN VIDEOTAPE)
RACHEAL CRANE, CNN INNOVATION AND SPACE CORRESPONDENT (voice over): A portal to our universe 13 billion years ago, colliding galaxies giving
birth to new star formation Stellar and Planetary Nebula in all their glory and the first glimpse inside the cloudy atmosphere of an Exoplanet.
[09:40:00]
CRANE: An extraordinary milestone for the James Webb Space Telescope as NASA finally revealed the breathtaking first set of images, including the
deepest and sharpest infrared image of the universe to date?
ERIC SMITH, PROGRAM SCIENTIST JAMES WEBB SPACE TELESCOPE PROGRAM: We're making discoveries, and we really haven't even started trying yet. So the
promise of this telescope is amazing.
CRANE (voice over): More than two decades in the making, and a result of a $10 billion investment Webb is the largest and most advanced telescope ever
to orbit the sun, and sends back its groundbreaking data from 1 million miles away.
BIL NELSON, NASA ADMINISTRATOR: Every image is a new discovery, and each will give humanity a view of the universe that we've never seen before.
CRANE (voice over): But it's more than just a telescope. It's a time machine?
THOMAS ZURBUCHEN, ASSOCIATE ADMINISTRATOR, NASA SCIENCE MISSION DIRECTORATE: The way I think about it is a portal to the ancient times of
the universe. The telescope is way more than just a way to look at nature. It's a way to unlock nature in new ways.
CRANE (voice over): Launched on Christmas Day of 2021 James Webb is 100 times more powerful than its predecessor, Hubble and makes the mysteries of
the universe observable, using new technologies never before launched into space. Webb transforms the invisible infrared light of the cosmos into
something the human eye can see, study and investigate.
ZURBUCHEN: It's really our Apollo moment in science, it's we bet everything on it and we got there.
CRANE (voice over): Scientists see a once in a generation chance to chase the big questions about our existence. How did we get here and are we
alone? And while we don't yet have the answers as it's just the beginning, scientists are already blown away by the results.
UNIDENTIFIED FEMALE: This is going to be revolutionary. These are incredible capabilities that we've never had before.
CRANE (voice over): Rachel Crane, CNN, New York.
(END VIDEOTAPE)
CHATTERLEY: Wow! 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. For now Marketplace Asia is up next. Stay with us.
(COMMERCIAL BREAK)
[09:45:00]
(BEGIN VIDEOTAPE)
RIPLEY (voice over): Canceled flights and travel bans restrictions that became synonymous with the global pandemic as countries shut their borders
in hopes of shutting the virus out. The tourism and travel industries were among the worst hit international airports around the world, virtually
empty.
And Singapore, once home to strict pandemic prompted travel restrictions was among the first in the region to open its borders, with vaccinated
travelers free to enter as of April. Now, scenes at its international airport looks like this. Travelers bustling in and out of the city, as air
travel returns to a new normal.
RIPLEY (on camera): I'm Will Ripley in this month for my colleagues Kristie Lu Stout and Selina Wang. And we're here in Singapore to talk about how
it's reopening is impacting the future of tourism and aviation? Plus, we go inside Singapore's homegrown, Super App - to talk about post pandemic
future new E technologies and plans for growth all that and more on Marketplace Asia.
RIPLEY (voice over): Group gatherings, markets and restaurants busy as ever, and masks no longer required outdoors. The streets of Singapore are
buzzing with people. Changi Singapore's International Airport saw more than 1 million travelers in March 2022 hitting that mark for the first time
since the pandemic forced travel to a halt in 2020.
It's still a far cry from the airport's pre pandemic nerves. More than 68 million passengers pass through the airport in 2019 and more than 65
million in 2018. But airport officials say travel is on the rise. The number of passengers was at 15 percent of pre pandemic levels in February
this year and reached 40 percent just three months later.
CHING KIAT LIM, MANAGING DIRECTOR, AIRHUB DEVELOPMENT, CHANGI AIRPORT GROUP: So especially in the early days of the pandemic, we were affected
very adversely overnight within a few weeks, we saw almost all our traffic disappeared within a very short time. The future's seems to be I hate to
use the word cautiously optimistic, but it seems that we are getting back onto the trajectory of pre COVID levels.
RIPLEY (voice over): Two years of the pandemic directly impacted the aviation industry, including jobs globally 44.6 million aviation jobs were
at risk as of September 2021, with the Asia Pacific region being the hardest hit.
In April 2020 flagship carrier Singapore Airlines was operating about 4 percent capacity, facing losses of hundreds of millions a month with pay
cuts and other job implications for staff. As more Flights resumed in Q1 of this year, the Singapore Airlines Group reported it was functioning at 54.5
percent of pre pandemic passenger capacity levels in March 2022, the highest since the onset of COVID-19.
While Changi Airport says it is recruiting for thousands of jobs with plans to return to full functionality by reopening airport terminals that have
long been shut due to the pandemic.
LIM: We are just making sure now on the reverse that we have enough capacity and manpower to deliver an acceptable level of service as the
travelers return. I think we are busy recruiting every month so the numbers are climbing very fast.
RIPLEY (voice over): But this revival could involve a bumpy ride. Industry experts note as flight demands go up so too will prices.
PHILLIP GOH, REGIONAL VICE PRESIDENT ASIA PACIFIC INTERNATIONAL AIR TRANSPORT ASSOCIATION: This is part of supply and demand actually we know
when capacity is short and solid demand prices to go up when things shut down like this your revenue is gone and your cost to cash burn you know
still happening. So how do you sustain your business?
RIPLEY (voice over): And while travel in Asia may be on its way to recovery. The region is still behind much of the world, reaching just 17
percent of pre pandemic levels in March 2022. That's compared with a global average of 42 percent.
Many places across Asia are increasingly opening borders to tourists, others remain firmly shut. Japan and Taiwan remain only partially open
while, Hong Kong and mainland China maintain strict limits on entry. Situation experts are keeping a close eye on.
VOLODYMYR BILOTRACH, ASSOCIATE PROFESSOR, AIR TRANSPORT MANAGEMENT SINGAPORE INSTITUTE OF TECHNOLOGY: Recovery is only possible when
restrictions are relaxed on both ends. The fact that China, Hong Kong, Taiwan and Japan are still restricted this weighs down is quite - down
quite substantial on the travel in the region so for instance some countries in the region relied heavily on tourists from China for instance
Thailand, Vietnam right?
[09:50:00]
BILOTRACH: That is not recovering. China is unlikely to give up on its zero COVID strategy this year. But my understanding is that businesses still
bank on China eventually abandoning the zero COVID strategy and not in the too distant future.
RIPLEY (voice over): A government report says there were more than 3.6 million visitors to Singapore from Mainland China in 2019. That number
dropped just 88,000 in 2021. Industry experts remain hopeful suggesting trends already emerging here in Singapore could be indicative of wider
regional recovery.
LIM: I have to say that Singapore has also kind of led the recovery for things aviation, when it comes back will roll back very strongly. In Asia
will regain its place as the largest aviation market in the world. There's a lot to catch up. But Asia will catch up.
(END VIDEOTAPE)
(COMMERCIAL BREAK)
(BEGIN VIDEOTAPE)
RIPLEY (voice over): A swipe a tap on your phone and a press of a button to hail a ride. Within minutes, you can be anywhere in Singapore.
RIPLEY (on camera): Singapore's homegrown tech giant Grab started out just like this, a ride hailing app that connects users with drivers all across
the city. But today as a super app, it's so much more from food delivery to FinTech. The company says they are developing exciting new technology.
RIPLEY (voice over): You may be familiar with Uber or Loft. But if you've ever spent time in Southeast Asia, chances are you've come across this
little green square logo Grab based out of Singapore the 10 year old company is one of the dominant super apps in Southeast Asia, even acquiring
Uber's Southeast Asian operations in 2018. Grab said almost 31 million users completed transactions on the app each month in the first quarter of
this year.
And the company serves 480 cities across eight Southeast Asian markets. When COVID-19 restrictions were first imposed in Singapore, limiting social
interactions and encouraging the public to stay home Grab says demand for rideshare services took a hit, prompting the company to pivot and booths
other app services.
Now, as Singapore has lifted social distancing restrictions, and is emerging from the worst of the COVID-19 pandemic. The company has also
unveiled new technology Grab Maps; software specifically built to navigate the small back streets of Southeast Asia. It won't be used by consumers,
instead designed for use by its own drivers in a bid to make pickups and deliveries more efficient.
[09:55:00]
HOOI LING TAN, CO-FOUNDER AND DIRECTOR, GRAB: Grab Maps is a propriety owned software and hardware infrastructure that enables us to currently
actually run all of our businesses on our own proprietary data.
We realized very early on in our journey that the existing third party solutions that we were leveraging, and leaning on we're not designed for
Southeast Asia where roads can appear and change overnight and where a lot of small back alleyways are critical in maintaining the health of our two
week motorbike fleet, oftentimes, alleyways that were not met by other platforms, because cars can't drive through them.
We're able to effectively do that is because we're able to effectively route our driver partners that are closest and was most effective for the
Marketplace using our very unique mapping capabilities.
RIPLEY (voice over): The Company has also commercialized this technology, and is now pilot testing with partner companies in the region.
TAN: What we've realized is our mapping needs are not unique to Grab even though we're a relatively newcomer to the space, we invest a lot into
enabling that capability. And ultimately, we see our role as you know, playing a part and being at the forefront of that change, and helping to
drive awareness and increase excitement and built for the region.
RIPLEY (voice over): It's all part of the company's plans to grow locally rather than globally. But this is not without challenges. In December 2021,
company went public on the U.S. stock market as part of a special purpose acquisition.
Becoming the largest listing by a Southeast Asian company valued at almost $40 billion at the time, within three months of its initial listing, stock
prices tumbled after a disappointing earnings report, and are now down 64 percent since the start of the year.
RIPLEY (on camera): What was that like what was going on in here when that was happening?
TAN: For me personally, I've never, you know, value, the value that we're creating based on whatever valuation the company has short term long term.
What's more important to me is division.
I think that growth has been a reflection of how quickly the region has grown, and also how fortunate we are to be able the forefront of that
growth, driving technological innovation in a very hyper local way for Southeast Asia.
Going forward, I think we all know that the border market is going through difficult times and it's not unique to Grab and ultimately as long as we
continue focusing on executing on the long term strategy and opportunities that we all see and know I can feel as you have experienced here day to
day. I'm very, very excited and optimistic about future.
RIPLEY (voice over): Competence competition is also rising in the region. Malaysian Airline Capital A unveiled its Air Asia Super App in October
2020. Well, Indonesian multiservice platform GoJek which, after a merger with Tech Company took a PDN 2021 went public as go to group in April this
year. For Grab the next hurdle will be achieving profitability? They started first with cutting losses.
The company reported a $666 million loss in Q1 last year, compared to 435 million this year. Tan says unveiling Grab Maps is a major milestone in
their business strategy, giving the company more autonomy over their technology, and products.
(END VIDEOTAPE)
RIPELY: For more on the stories, you can check out our website cnn.com/marketplaceasia, I'm Will Ripley here in Singapore. Thanks for
watching.
(COMMERCIAL BREAK)
[10:00:00]
END
