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First Move with Julia Chatterley
Zelenskyy, G7 Ambassador At Port As Grain Exports Remain Blocked; Apple Revenue Rose Two Percent To $83 Billion In Q2; U.S. Futures Higher As July Trading Winds Down; Dutch Startup Light Year Unveils First Solar Car Model; Blockbusters Help Imax Q2 Earnings; Ducati CEO: Whole Supply System Is The Issue. Aired 9-10a ET
Aired July 29, 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]
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JULIA CHATTERLEY, CNN INTERNATIONAL HOST: A warm welcome to all our first movers, around the globe. TGIF or at the end of another long week COVID as
a Friday filled with more key data positive signs we do seek.
Strong earnings show big tech still got the technique then there's tonight's $1 billion lottery draw your chance of winning astonishingly
bleak. But you can see all your sorrows with Beyonce's new album critics say she's at her peak.
And speaking of peak U.S. stocks are on a streak a higher Wall Street open on tap this Friday strong results from Apple and Amazon the AA batteries of
tech boosting sentiment adding to a 1 percent rally across the board for the majors on Thursday. We are now in fact sitting near two month highs and
on track for a second week of gains.
Investors shaking off U.S. recession fears at least for now soothed in part perhaps that the Fed will slow the rate hike piece if the economy slows too
much further as well. That said Powell and company making it crystal clear this week that the inflation fighting mode and that's far from done.
No mystery as to why either the central bank's preferred measure of U.S. inflation, the core PCE Price Index, as it's called rising at 4.8 percent
in June, and that remains near 40 year highs. Hot prices still on the front burner across the Atlantic as well Eurozone inflation hitting a fresh
record of 8.9 percent this month, well above expectations of course, prices highly elevated even when factoring out energy costs.
The news is a little bit better; though on the growth front for them Euro's stocks raising his second quarter growth come in faster than expected. But
that report, of course is backward looking and conditions have worsened. It does worsen that since that data was collected.
Germany too, the manufacturing powerhouse of Europe delivered zero growth its exports spluttering due in part to supply disruptions driven by the
Ukraine crisis. And that's where we begin the show today.
President Zelenskyy and Ambassadors from the G7 nations met today at a port near the City of Odessa amid hopes that the first grain shipments could
leave as early as today. Ukraine says it's awaiting U.N. confirmation of agreed shipping routes. On Thursday, the U.N. said it was still working on
safe corridors.
Nic Robertson joins us now from Odessa, Nic, good to have you with us. The Infrastructure Minister in Ukraine said that 17 ships stand ready; they're
ready to go to export that grain. We know they're waiting for the U.N. side, if we read between the lines, does that mean they're waiting for
assurances from Russia that those ships can safely pass?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, it's very interesting. I think the Infrastructure Minister today was being very
diplomatic with his language, given the nature of the very tense and hostile relationship between Ukraine and Russia at the moment.
And really, I think perhaps in deference to the G7 diplomats who were accompanying him on the visit to Odessa perhaps in deference to the
sensitivities of the situation, and the fact that the U.N. is the middleman and broker in this.
The U.S. Ambassador and British Ambassador, who I spoke to separately, were unequivocal that this is very clear. The ball at the moment is absolutely
entirely in Russia's caught. A British Ambassador told me that both the Ukraine has put forward proposals on shipping routes for to the U.N., but
Russia has put forward other proposals.
But the United States and the U.K. both fully understand that Ukraine is ready to go. So when I asked the Infrastructure Minister, how soon could
this happen? And how ready was Ukraine? This is what he told me.
(BEGIN VIDEO CLIP)
MELINDA SIMMONS, BRITISH AMBASSADOR TO UKRAINE: Many countries are talking about the different ways in which you can achieve insurance, U.N.
humanitarian insurance, or commercial insurance. I actually think we were just talking about this at the last port, that if you can get these first
ships out, that's going to be quite confidence building.
So actually, the first step for all of us for those commercially engaged, those of governments who are supporting the deal is that we do what we can
to get this going, once we get this going. And there's confidence that route can be used. I think these issues can be resolved quite quickly.
(END VIDEO CLIP)
ROBERTSON: So that was that was actually the British ambassador there, of course, speaking to the issue of the concerns that are very alive in
Ukraine at the moment and particularly for the infrastructure minister and others around him that because you know just where that press conference
was held today, a few 100 meters away from there was just last weekend, that Russia hit it with two big cruise missiles.
The concern is that while these grain ships that are full can get out. The concern is that the perception that you Odessa is such a dangerous hotspot
at the moment that more international ships won't come in because they can't get insurance.
[09:05:00]
ROBERTSON: What the British ambassador was talking about there was the notion that the British government is looking at working with commercial
companies to see how they can sort of help that insurance burden that might fall across the shipping companies and then be, you know, essentially
render the value of Ukraine's grain lesser to the shippers and the farmers.
And a shipper, just a couple of days ago here told me, look, right now, the cost of insurance is about 10 percent, at the cost of the cargo so 25
million cargo insurance is $2.5 million. As he said, that's not viable for anyone at the moment.
CHATTERLEY: Well done for holding it together, Nic, even if we don't really do have to get our act together behind the scenes here. Precisely the point
that you and I discussed last week, it's OK, perhaps providing safe routes.
But if you can't get the insurance to protect people, never mind the precious grain. It's not viable at this stage. And perhaps as the
ambassador was saying their time, because if you can start to see these routes safely utilized, then perhaps the insurance costs will come down
very quickly, because I know you were visiting a farm as well.
And this is what it comes down too as well for these individual families. For these people that are running farms that are sitting on grain that
they've not been able to sell. It's vital for them to that this works.
ROBERTSON: Oh, absolutely, the farmer we went to had a modest farm but not insignificant, he employs 250 people; we saw a lot of them at work. He
managed to sell most of his last year's grain stock before the war, and most of it is now out of the country.
Normally, by now he would have sold this stock and pretty much have slots aboard cargo vessels, knowing when he was going to move it out of his silos
and warehouses. But he said right now I can't afford to sell it because the price is so low, until that confidence comes in. And those convoys of
shipments get going. That's what it's going to take to lift the price of the grain up to a point where it's profitable for him to sell it.
And he said, look, I sell little bits because I need to cover my overheads. But if I was to sell it all, it would be such a loss effectively put me out
of business, he said the best that I can hope for if I can't get it out of the country and can't sell it is just the keep selling bits, which will
mean I have to cut equipment, I have to cut staff and I won't be able to plant so much next year.
And he said, look, the reality of a scenario like that is it means the crops for next year will be less. So this year is a problem. But next year,
if it doesn't get fixed today now in the coming weeks, then next year is going to be an even bigger problem because the fields won't even be
planted. Never mind having the grain available to ship but not being able to ship it.
CHATTERLEY: Yes, the problem compounds, fingers crossed this works. And thank you once again for managing some of the technical difficulties Nic,
great to have you with us, thank you, Nic Robertson there.
Now one of the ways Vladimir Putin is beating Western sanctions is by plundering the resources of compliant nations. CNN's Nima Elbagir and her
team investigate Russia's involvement in Sudan's gold production and how it could be helping support Russia's war in Ukraine. Just take a listen.
(BEGIN VIDEOCLIP)
NIMA ELBAGIR, CNN CORRESPONDENT: Deep in Sudan's Gold Country, miners toil in the searing heat, barely surviving in what should be one of Africa's
richest countries. Providing gold for a war a continent away we investigate a force more powerful than Sudan's government controlling its gold.
Subverting Sudan's destiny, threatening me and our sources and 14 democracies to evade sanctions in Russia's war on Ukraine question managers
on his way they say we uncover the extent of Russia's grip on Sudan.
(END VIDEO CLIP)
CHATTERLEY: And then his full reports as in the next hour, only on CNN don't miss it. The Eurozone economy grew at an unexpectedly rapid clip last
quarter even as inflation hits record highs. Although the EU's biggest economy Germany showed zero growth that was offset by stronger than
expected numbers from Italy, Spain and France.
Anna Stewart joins us now, Anna, that's the good news. The bad news is multi fold it's backward looking. Germany of course stagnated it was before
the European Central Bank started raising rates and we've got a looming winter energy crisis supply crisis.
ANNA STEWART, CNN REPORTER: Yes, I was going to call pour cold water on this very happy nice little Friday story, but you did it all for me.
CHATTERLEY: Yes.
STEWART: Yes, so great news for Spain, for Italy, for France much better than expected Q2 numbers.
[09:10:00]
STEWART: But you have to take a little deeper on this one because you've got to consider that post Q1; we're actually looking at this post Omicron
surge services reopened. And that's what was so strong looking at these results.
Also, of course, finally, a proper summer of tourism and we've seen plenty of pent up demand playing out there, Nil growth for Germany, as you said,
no surprise, of course, if you get look at energy prices, and the fact that this economy is so driven by very energy intensive industry and factories,
which have also been hit by supply chain issues. I actually think the EU economic Commissioner summed it up rather well in a tweet this morning.
He said good news! Euro area economy outperforms expectations in Q2. Uncertainty remains high for the coming quarters need to maintain unity and
be ready to respond to an evolving situation as necessary.
And the coming quarters are definitely of concern, particularly with the threat of further reductions in gas from Russia. But also just looking at
the economics yesterday, we had the latest business and consumer confidence surveys they were published.
And listen, confidence in industry services, consumer retail construction, they are all pointing very much down. And actually it was interesting that
Spain was one of the bright spots today in terms of GDP, because that has the biggest drop in confidence over all we've also had that miserable
inflation reading out today. And economists I spoke to you today say they still expect Europe to head into a recession. This year is just now a
matter of how deep a recession it will be, Julia.
CHATTERLEY: Yes, got to get inflation under control bottom line. Anna Stewart thank you for that! Now the double A batteries of tech as we
mentioned Amazon and Apple higher premarket thanks to strong consumer demand even as other tech names stumble, citing, slowing, spending and
rising prices. Both stocks have before the opening bell after earnings came in above expectations.
Paul LA Monica joins us now on this. Paul, let's talk about Apple first; they did the estimate thanks to iPhone sales. They were a little weakness
on the Mac and the wearable sides. What was fascinating to me, though, was they're not forecast because I'm not giving them but their insights into
the future, which with a couple of caveats looks pretty strong too.
PAUL R. LA MONICA, CNN REPORTER: Yes, Apple, obviously Cognizant of the many concerns plaguing investors right now and in the global economy due to
inflation, raising interest rates and what have you. But Apple really had a solid quarter they sounded upbeat, even if they didn't give true guidance
percent. And you talk about iPhone sales.
What strikes me as you're really strong about Apple still is that services side of their business, growing like gangbusters so all of those
subscriptions really bring in a lot of money for Apple.
CHATTERLEY: Yes, and on Amazon, in order to get a sense of what's going on for the consumer for Amazon Web Services for the core retail business, you
had to drive past that whopping write down that tie to review. And of course, the electric truck makers. So once we've done that, what did we get
full?
MONICA: Yes, Amazon, obviously with that - investment that has been a bust. So far, it's why the company overall had a loss. But if you gloss over that
strong numbers from the core retail business to consumer at Amazon still seems to be spending in stark contrast to that warning we got from Walmart.
And Amazon Web Services continues to make money, the cloud unit, really strong revenue, growth and profits. So that is really helping to boost
Amazon. And I think that Investors recognize that, again, when you look at how poorly Maeda did and you know, a company like Netflix didn't do that
entire great.
You can't just slump all these companies in together as the fangs or mangs now. If Facebook's Maeda, you know, because they're obviously different
dynamics going on Apple and Amazon are doing extremely well even as Maeda struggles.
CHATTERLEY: Yes, a clear separation, I think in these results. I couldn't agree more with you very quickly. What did they both say about hiring
because this is one of the other sort of noises that we're hearing from the tech sector is suspended hiring less hiring, less aggressive hiring.
MONICA: Yes we are not seeing hiring freezes or cuts just get at these companies.
But Amazon did suggest that they may slow the pace a little bit in light of all the macro concerns.
And Apple CEO Tim Cook I believe the word he used on the conference call was that the company is going to be more deliberate. So I think the days of
- growth that anyone that wanted the job that had the qualifications could get one of these tech companies because it was all growth all the time.
That's on pause for the foreseeable future as we try and figure out where the economy is hiring.
CHATTERLEY: Yes, strategic hiring, that's the key. Paul La Monica, thank you.
OK, let me bring you up to speed now with some of the other stories that making headlines around the world. During a phone call on Thursday, Chinese
President Xi Jinping had a blunt warning for his U.S. counterpart Joe Biden.
[09:15:00]
CHATTERLEY: "If you play with fire you get burned", he said. It made him clear his anger over Washington's relations with Taiwan including a
possible trip to the self-governing island by U.S. House Speaker Nancy Pelosi. CNN's Will Ripley is in Taiwan with their reaction to the current
tensions.
(BEGIN VIDEO CLIP)
WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Taiwan trains for a Chinese attack, air raid sirens and Taipei. Fighter jets
scrambled helicopters hunt submarines, destroyers open fire. China's refusal to publicly condemned Russia's war on Ukraine, adding urgency to
the islands annual Military drills, fueling fears of a cross strait conflict.
Taiwan tensions dominated a more than two hour call Thursday, President Joe Biden and Chinese leader Xi Jinping trading warnings on Taiwan. Chinese
state media quoting sheet "Those who play with fire will perish by it". The ominous warning amid growing speculation tech the U.S. House Speaker Nancy
Pelosi may be planning a trip to Taiwan, a plan discouraged by Biden.
JOE BIDEN, PRESIDENT OF THE UNITED STATES OF AMERICA: But military thinks is not a good idea right now.
RIPLEY (voice over): Pelosi won't talk about her travel plans for security reasons. It will be the highest level U.S. visit in 25 years.
BRIAN HIOE, TAIWANESE-AMERICAN LIVING IN TAIPEI: There could have been more dialogue between Taiwan and the Biden Administration rather than have this
confusing mixed signals presented out there openly in the public in a way that now China has noticed and will respond in some way.
RIPLEY (voice over): A U.S. aircraft carrier strike group is back in the South China Sea citing routine operations ahead of Pelosi's possible visit.
HIOE: It would be caught in the crossfire of a conflict between the U.S. and China it would be Taiwan which is right there next to China.
RIPLEY (voice over): These young Beijing promises firm and resolute measures to safeguard national sovereignty. Chinese passports show Taiwan
as a mainland province, even though it has its own military and government for more than seven decades.
WANG TING-YU, TAIWAN MP, DEMOCRATIC PROGRESSIVE PARTY: Taiwan is our country. Taiwan is our home. We are not home of anyone, not Chinese, not
Americans.
RIPLEY (voice over): China considers U.S. Taiwan diplomacy a red line. Beijing won't rule out using force to prevent the islands' formal
independence.
UNIDENTIFIED MALE: We will show our waiting to defend ourselves.
RIPLEY (voice over): Defending against China's massive military would be a herculean task. Taiwan is counting on friends like the U.S. to defend their
democracy from what they call a growing threat.
(END VIDEO CLIP)
CHATTERLEY: At least 15 people have died in catastrophic flooding in the U.S. state of Kentucky. With more rain on the way this situation could
worsen. On Thursday, the governor activated the National Guard to help with rescues and recovery and declared an emergency to speed up deployment of
essential resources.
French President Emmanuel Macron welcomed Saudi Crown Prince Mohammed bin Salman to lease a palace with a handshake on Thursday. Macron is the latest
Western leader to quote Saudi leaders amid an energy crisis brought on by Russia's war in Ukraine. French officials say the two also touched on human
rights in Saudi Arabia.
And straight ahead where the sun meets the solar panel solar car startup light year unveils its offering we've got the CEO. Plus blockbuster
benefits from summer ticket sales for IMAX next.
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[09:20:00]
CHATTERLEY: Welcome back to "First Move" another frantic Friday for global data and earnings. A little bit of a frisky Friday to perhaps some weakness
for the DOW but the bulls are still on track to end the week and the month with a flourish. Stocks climbing a wall of worry as U.S. growth slows and
inflation raises the Feds preferred measure of inflation coming in hot once again in June the latest U.S. inflation and GDP data raising the specter of
stagflation.
But since its Friday let's focus on the positives. They include more strong earnings from corporate America great results from Apple and Amazon. With
both reporting positive consumer trends MasterCard, say it seeing "robust" consumer spending too. And new numbers out today show consumer spending
rising over 1 percent in June.
Also today shares of Exxon and Chevron sector rally after a putting a fresh set of record profits no surprise they're great for shareholders, perhaps
but not such a good look as the higher cost of energy eats into consumer spending power economists looking for a glimmer of hope on inflation might
want to pay attention to a new tweet from Elon Musk.
He says things are looking a bit better from his perspective saying, "inflation might be trending down", citing an easing of Tesla commodity
prices interesting to discuss this with us Torsten Slok; he's the Chief Economist at Apollo Global Management Torsten fantastic to have you on the
show. Your thoughts, please, let's start with inflation. Where are we? And how long before we start to see this trending down?
TORSTEN SLOK, CHIEF ECONOMIST, APOLLO GLOBAL MANAGEMENT: Yes, this is very important. I mean, in some ways, this is really simple. The Fed has an
inflation target, that inflation should be 2 percent. And the inflation data from the headline CPI at the moment is 9.1. So that means that when
you have a number, that's nine, that's supposed to be two, the Fed needs to do something.
And that's why the Fed, of course aggressively is raising interest rates.
And the data that we got this morning, also confirms this problem that inflation is just not coming down. And it's not coming down fast enough and
in particular, not as fast as the Fed would like.
So the bottom line to your question, Julia, is that, yes, the consensus expects inflation to go down partly because, as you just mentioned, because
commodity prices are down, in the price are down, you've also seen used car prices go down, you're actually also seeing airline ticket prices go down a
little bit in the last six, seven weeks.
But all that is still not showing up in the data. So the bottom line is that we're still standing at the top of the mountain in terms of inflation,
and we're waiting to get to the other side and get inflation to begin to come down. It should happen over the next six months. But it's just taking
a little bit more long time than what the Fed would like to see and what the consensus has expected.
CHATTERLEY: Yes, one of the things I love about you is how focused you are on individual patterns in data as well? And one of the things that we
actually don't often talk about, but it's key, we talk about the challenges for people trying to travel and to get around.
But the transportation costs, freight costs are coming down actually quite quickly. And for me, that's interesting for two reasons. One, is it's
simply that costs are coming down because supply chain kinks are easing out, or is it because there's less demand for goods? And that suggests a
slowing in the economy too. What do you make of what we're seeing there pivotal, really, for two reasons.
SLOK: That's really important and I think both reasons are exactly the explanation for why transportation costs are going down. If you look at
what the prices of transporting a container from China to the U.S. West Coast, at the peak last year, the trial price of transporting a 40 food
container was around $20,000. Today, that's around $7,000.
So we've seen a very dramatic decline, in particular in cost of transportation by containers. But also transportation by truck, by train
and by air have also started declining and exactly as you're highlighting. The good news is that a lot of the anecdotal evidence is pointing to that
the kinks in the supply chain are getting better. We're also seeing the flow of semiconductors pick up and that's also creating more car
production, which of course is also good for ultimately car prices coming lower.
[09:25:00]
SLOK: But it could also be as you're saying that there is a slowdown in demand. And as a slowdown in demand in particular in the good side of the
economy remembers goods make up 1/3 of total consumption, the remaining two thirds is consumer spending in services.
So the bottom line to your question is, I think both things that you're listing exactly, are the reasons why we should expect inflation to come
down, namely that we have seen some slowdown in aggregate demand in the economy and therefore slowing in consumer spending. But we also seeing all
the problems we had in the supply chain are really getting improved quite quickly.
So that all speaks exactly for inflation, to ultimately begin to come down so we may stand at the moment at the peak elevation in the data that we got
this morning, both from the PCE side, and also from the employment cost index. I mean the wage side.
CHATTERLEY: Yes, because this is key for me, how much of that is easing? How quickly is the economy really slowing? And what impact then does that
have on prices come down? So I'm asking you different questions, but they're all connected ultimately, at the end?
We've had an interesting debate, I think, in the media for economists and beyond about whether we're in recession, whether the data means we're in
recession, whether the idea of recession now is so politicized, that we can't talk about it, whether it is or it isn't.
What do you make of where the economy is overall? And do you think the idea of recession has been sort of overhyped politicized, but also by the media,
because it comes down to confidence too we can talk ourselves into these things?
SLOK: That's correct, and I think that the data we also got this week, very importantly, also shows that we actually now have had two quarters of
negative growth, which is the definition of a recession.
CHATTERLEY: Yes.
SLOK: But the chapter says that if you look at this from a Fed perspective, the Fed perspective would say that we should look at the dual mandate,
which is inflation, and full employment. And inflation at 9 percent is obviously not signaling that we're in recession. And if look at the
employment numbers, what's interesting is that as of course, next week, as we all know, we'll get the non-farm payrolls data.
And the consensus still expects the unemployment rate to remain essentially the lowest level in 50 years, and then we have 3.6, and also expects that
the consensus expects that we'll get 250,000 jobs created in July, that doesn't sound like a recession. So there is certainly a very different
debate, when you're just looking at the simple GDP statistics, relative to the Feds dual mandate of inflation has to be a 2 percent and it's not it's
much higher.
And the employment side of the Feds dual mandate, namely, we need to be full employment and with unemployment rate still at 3.6 is still simply
does not feel like a recession. What in terms of how we traditionally have thought about a dramatic slowdown in the economy.
So I would say the market is still and in particular, equity markets still have relatively elevated earnings growth for the next 12 months. So the S&P
500 is and consensus expectations are probably looking at this and saying, well, maybe there's a slowdown coming several quarters down the road, that
might be but this earnings season has not been bad.
And therefore equities are probably not, at the moment, at least pricing in a recession, because earnings last earnings season and this earnings season
that we've just been through, not really signaling that we're in recession. So that's why this debate that you're highlighting is so critical that it
says slowdown coming and how software the lending be or how hardware the lending be, and the debate will continue both on the inflation side.
And on the recession side and as you discuss so greatly on your show all the time. I mean, if we don't know if inflation is really going to come
down. And if we don't know, if we have a recession, then there's not really much we know in the macroeconomic space wind therefore, of course, for
markets. That is why everything is so uncertain at the moment.
CHATTERLEY: Yes, but it's interesting, what you say about the idea that actually acted is even at this stage and not pricing in recession. OK, so
I'm going to ask you probably what is the dumb question, but this is how my mind works. If inflation weren't at 9.1 percent, and you allowed that to be
somewhere near target, but you held everything else that we're seeing the same, even in terms of the changes that we're seeing and the softening that
we're seeing, would the Fed be cutting rates at this stage?
SLOK: I think that would be? Absolutely, they would be very, very different. Because the whole reason why the Fed this week, raised interest
rates 0.75, I mean, 75 basis points. That's a very, very significant increase in interest rates by historical standards.
The old reason why they are so worried is because inflation is at 9 percent. So to your question, Julia, this is really important if we had not
had all these supply chain problems, if we not had all these issues with inflation at these high levels, then we will certainly have had a very
different situation.
And to your question, this is why the very important thing that everyone in markets needs to think about is why did inflation go up in the first place?
And there was the San Francisco Fed working paper that said that only a third of the increase in inflation was because of demand, and two thirds
were because of supply and supply chain issues.
So if only 1/3 was because a very strong demand says stimulus checks and unemployment and fit bonuses, meaning all the things that were thrown at
the economy and since the fiscal stimulus.
[09:30:00]
SLOK: If that's only playing a role of a third of the increase in efficient, maybe all we need is time to even out all the problems all the
kinks on the supply chain side and therefore efficient could come down potentially faster to the 2 percent target. But that's why the debate
continues about what is the source of how we got here?
Why is inflation a 9 percent? And if it is demand that is playing a significant role, well, maybe then we need much more rate hikes from the
Fed. If it's just supply chain, well, maybe we don't need much in terms of rate hikes, because then all of these things will probably get sorted out
on their own as the supply chain issues improve themselves, literally as we speak at the moment.
CHATTERLEY: Yes, I mean, just so my viewers understand this is the key because you're hiking interest rates. And arguably, you have because they
were on a historical basis too low anyway to be able to cut rates if you need to in a real slowdown.
But if inflation demand isn't the cause of this, really the ultimate cause of this inflation then perhaps you should give it a bit more time and into
that the feds giving us less clarity not more brilliant, Torsten, we have to go. Good, keep you talking always sir.
SLOK: Thanks so much for having me.
CHATTERLEY: Great to have you with us. Torsten Slok, the Chief Economist at Apollo Global Management there. OK, coming up here on "First Move" it's
solar-powered it's got sleek design but does it have the speed the CEO a Lightyear, we'll discuss next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move". Park your EV solar cars are revving up, it's actually a combination Dutch startup Lightyear unveiling
its first model called the "Light Years Zero". The company says solar panels across the hood and roof can charge the battery up to 70 kilometers
or 43 miles of driving range a day.
And no sun no problem, Lightyear says you can plug it into any regular outlet to charge over 300 kilometers of range just overnight. It comes with
a hefty price tag though. Wait for it, more than $250,000. Joining us now Lightyear CEO and Co-Founder Lex Hoefsloot, Lex, we're going to have to
talk about the price, but we'll come to it.
[09:35:00]
CHATTERLEY: What caught my attention on this? And I mentioned it in the introduction was the idea of not having to charge if the conditions are
right, even for several months, just start with the vision of the company, because this is key.
LEX HOEFSLOOT, CEO & CO-FOUNDER, LIGHTYEAR: Yes, and we believe that we need to make the transition to electric cars easier, easier, not only for
customers, not having to find a charging point every time that they need one.
But also for governments just eliminating the hassle of putting charging points everywhere so having it by having a guard that can get the energy
directly from the sun, rather than needing charging point's means that you can basically start driving electric cars anywhere and make it a lot easier
for people and for government.
CHATTERLEY: OK, so let's talk about this. And you have to walk through the design to because it's not just about where the solar panels are, there's
aerodynamics, that are also key to the capabilities of the car.
And then you can tell me what kind of drip feed the solar panels provide in terms of battery power? Yes.
HOEFSLOOT: Yes, so in the end, it's all about, it's a mindset switch. So we have to go away from very heavy big electric cars and going to more and
more efficient, lightweight electric cars, which mean that the energy you get from the sun, can be used much more efficiently.
And therefore the trickle charging that the solar panel does throughout the day, and gives you this, the 70 kilometers of 45 mile range and that tops
up your battery every day. So you park your car outside of your office, and it will be charged again when you come back.
And that's how your battery will be topped up every day. And therefore you'd go months without charging.
CHATTERLEY: Yes, I was looking at this, if you live in Spain, or Portugal and drive less than 22 miles a day, you can effectively not have to plug
this thing in for what up to seven months.
If you go to the Netherlands, perhaps rather slightly less sun than it could be two months, then obviously the range is it is narrower, but this
is the key.
HOEFSLOOT: Yes, exactly. And, but it's not just about getting energy from the sun directly. It's also just providing a lot of battery range.
CHATTERLEY: Right. HOEFSLOOT: So we provide 319 miles of battery range. So if you look at what customers are looking for, they're not looking for more acceleration at
this point, it's about the six to seven thing they're looking for.
The first three things is range, charging, and golf. So if you work on those, we can get through this transition a lot quicker.
CHATTERLEY: OK, so what you're saying is we're sacrificing in many ways, speed and acceleration for range. And it's sort of been described as
sluggish, not to 100 in 10 seconds; its max speed is 100 miles per hour.
The type of person that's going to buy a car for $250,000, I sort of feel perhaps wants to take care of the planet, but they also want a bit of
speed. So you're going to have to explain the cost benefit analysis here.
HOEFSLOOT: Yes, exactly. So lightest area really is the first car and it's going, so it's the first car you can buy basically and can go seven months
without charging. And it's the technology demonstrators who demonstrated what is possible with today's technology.
And what is super exciting is that going forward for the next models that are going to be much more affordable starting at 30,000 Euros; it means
that so both the solar charge will improve as well as the acceleration. So this is just the start.
And we believe it Lightyear and there's a lot of people with us that believe this is the end game of electric cars, this is where we're heading,
not just making electric cars more efficient, but also bringing in energy directly from the sun.
CHATTERLEY: Yes, and to be clear Lightyear too, I believe by 2025 on the market. And that's when you start going mainstream with this sort of far
lower price point, and more accessible to up to a mainstream customer.
How many of these dice though, are you going to make? And what's your order book like?
HOEFSLOOT: Yes, so for the first car, we're only planning to make 250 cars for the first batch sort of means that this is a very exclusive car. The
next model will be producing hundreds of thousands.
But it's important to know that this is not something that's going to be happening in the future and the far future. So we're bringing the first
cars to customers in a couple of months. And then the mass market car will be there by two and a half to three years.
CHATTERLEY: Money, this is a cash burn business 250, its $250,000 brings in some money but you clearly spending it. How are you financing the company?
HOEFSLOOT: So we've got some strong Investors from both the Netherlands Europe. We just closed another investment round and that's it. It's a very
healthy well, its good commitment from them in these various - there's a financial downturn as well.
So we're very confident that the Investors that we have on board and we're going to bring on board there next year are going to get us to the next
model.
In the end it's all takes just a very good product to make sure that there will be Investors out there that are willing to invest very good products.
[09:40:00]
CHATTERLEY: There you go. The flags flying you've said it here come and talk to us again in November please, I want to drive on and see what it's
like. Obviously - done, you said it now.
Lex, it's great to chat to you, the CEO of Lightyear there. Sir, thank you. OK, I'll take a break. If you're still feeling the need to speed
blockbusters like top down boosted IMAX's revenue for the second quarter, I chat with the CEO about what the fantasy franchise is coming in the back
half of the year to mean for the company, that's next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move" and I hope you have your favorite movie snacks ready because the summer blockbuster is back. For the first
time in its history IMAX delivered three straight global openings of over $25 million with Dr. Strange in the "Multiverse of Madness" Top Gun
Maverick and Jurassic World Dominion.
Movie Madness leading to strong growth for the company with revenues rising to $74 million in the second quarter and with highly anticipated titles
like Black Panther are kind of forever coming in the second half of the year.
IMAX is hoping movie goers will keep flocking to the big screen. Investors will also be watching Harry openings in Asia impact the international box
office to. Rich Gelfond, the CEO of IMAX joins us now, Rich, always a pleasure.
Is this the proof that for IMAX customers, they're coming back for blockbusters? They are well and truly back.
RICH GELFOND, CEO, IMAX: Yes, there's no question Julia that customers are back. For example, if you looked at our domestic box office for the first
six months of the year, this year, they're only down 5 percent from 2019, which was the best year in the history of movie going.
Also, if you look at our market share on a global basis, it's up significantly from where it's been. And you look at the kind of movies so,
when Marvel movies came back people said, well, it's only Marvel and then Top gun came out and they said well, older people are starting to come back
and then animated movies minions. Well animated movies are coming back.
So it's hard for me to think of a class a movie that hasn't coming back. I mean, there's just no doubt the movies are bad.
CHATTERLEY: --there. I mean, I get your point but you are mentioning genres that are well known they're big franchises they may not be Marvel. But
they've got some history and they've got big stars.
[09:45:00]
GELFOND: I mean, that's fair, but you even look at other movies like - in North America. It opens in the rest of the world over the coming months.
And it did about $45 million.
IMAX did 12 percent of the domestic box office; Elvis has done over $200 million. So I don't think yes, there are blockbusters and IMAX as a company
benefits from blockbusters that were the way it was constructed. But I mean, Top Gun is a sequel, but it's a sequel 37 years later.
CHATTERLEY: You're right.
GELFOND: You know, I think, most of the people weren't born when at the time we came out.
CHATTERLEY: That's a good point well made. China, let's talk about that, because I remember having the conversation with you. It was last quarter
and we had what 65 percent I think of cinemas open, it has been a challenging time.
And just I think the uncertainty of when cinemas are going to be open or lockdowns are going to take place it, it must be tough to run a business
there. Majority now back open, how confident are you about the rest of the year?
GELFOND: So about 91 percent of our theater network is open now. But it's a complicated equation, getting people back to the movies and in the habit on
a regular basis.
So this weekend, there's a movie that's tracking extremely well in China opening called Moon Man, the service that tracks potential box offices for
casting about $500 million for that particular movie.
But there needs to be a pattern of movies coming out. And people have to be confident in the health situation. So while Julia, as you correctly pointed
out, more theaters are open now.
There hasn't been a lot of blockbuster content that's starting now, it can't be one off, it's got to get people back in the habit, which has
happened in the U.S. and the rest of the world. And I think you need that same sequence.
And China, we've seen it before in both 20 and 21, when the pandemic went down, and box office came back and China was the number one box office in
the world. But during this kind of COVID break lock down in some cities right now that they've lost that sequencing. So I think we're on the cost
of that happening now. And that's what needs to happen to create that pattern of movie going.
CHATTERLEY: Is that the key for IMAX being back to profitability in the current quarter because it has been a long road and you've been pulling
back on the losses even in the past quarter. Is China going to be the key?
And are you confident even enough at this stage, given everything else that's going on in the world that you can make profits this year, this
quarter, the current quarter?
GELFOND: We have positive EBITDA and positive cash flow for about two years now, every single quarter. So it depends how you mentioned, profitability.
The reason on a GAAP basis that we weren't didn't have a positive EPS this year is because of non-cash; kind of write downs that had to do with tax
valuation.
I'm not to be too boring to go into it, but remnants of the pandemic and the tail end. But by conventional measures, as I said, like EBITDA and free
cash flow and we've been making money for the last two years.
CHATTERLEY: I'm checking combine it all. Talk to me about the fact that your tickets, as you always say it's a quality experience, but they are at
the premium end of cinema tickets for affordability at a time when people are facing in greater constraints.
Are you concerned about the slowdown that we're seeing and what impact that might have wherever we look in the world to be honest? And is there any
sense that you'll go look, we have these big expansion plans. Maybe we'll just take a little bit longer to think about them. Are you still full speed
ahead?
GELFOND: Yes, I mean, we're full speed ahead depending on the prior question you just asked how quickly China opens up and stays there. But in
the rest of the world as I said, I mean box office is doing great market share is going up.
The movie business has traditionally been relatively recession resistant in the last seven recession's box offices gone up every year. And in 2008,
2009, the deepest recent recession box office has gone up a lot.
And the reason the movie business in general, but specifically, IMAX is really an affordable luxury. So if you need to cut back, are you worried
about costs, you might not go to a Broadway show, or you might not go on vacation or expensive restaurant.
But for the price of a movie ticket you know, where the movies can take you whether it's the middle of Jurassic World or whether it's you know flying
on a fighter jet with Tom Cruise.
[09:50:00]
GELFOND: It's a real escapist, great experience. And there's a lot of empirical data to show that neither inflation nor recession seems to have a
big impact.
CHATTERLEY: Yes, for me, second half of the year, it's all about Avatar. I can't wait. I can't wait, Rich, great to chat to you.
GELFOND: Yes, I'm just going to - back Julia when you enter the big movies, you love that Avatar, of course, the biggest movie of all time. And if you
ask me the biggest opportunity this year, it's Avatar.
CHATTERLEY: Can't wait, Rich, great to chat to you. Rich Gelfond, CEO of IMAX there, thank you.
GELFOND: Thanks, great seeing it, Julia.
CHATTERLEY: Always, back after this.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move". Italian motorcycle manufacturer Ducati accelerating to 2022 with record breaking sales, revenues for the
first six months jumped 5 percent to more than $550 million. That's its best first half results ever. CNN's Jonathan Hawkins spoke to the CEO.
(BEGIN VIDEO CLIP)
CLAUDIO DOMENICALI, CEO, DUCATI MOTOR HOLDING: 19 of July, this July was 10 year after VW to Cooper, Ducati. And I just made kind of some reflection on
that, you know, because it's 10 years kind of a period.
And, you know, 2021 have been the best ever year for the company. We sold almost 60,000 bikes, very rock solid financials 2022. We have a lot of
really disruption but we are doing good disruption in the supply chain, it's very difficult to get the components so we're fighting to get another
victory.
And actually we are really seeing the benefit of this last 10 years of continuous investment. I think it's a very interesting combination now
because it's this kind of very solid also German backup, and this forefront, very Italian very passionate, very - without lot of attention to
design beauty and in the middle of technology. So it's a nice mix.
Yes, the biggest challenge is kind of the whole system in which actually, you know, to assemble a motorcycle; you need the 1500 different components.
And then you send plans to supplier.
And there are a long time plan, you know, you see one year. And so you plan the supplier and you say how many of these components you want next month,
how many want in three months, you want one in six months.
And normally in normal life supply organize them. They buy the machine they prefer they build the capacity. They hire the people, they buy raw material
and they do the job.
And then 15 days before you need a component, the components arrive in the game. And then you put in warehouse and two days before you take from
warehouse and you put on the assembly line and then assemble the motorcycle. Actually that has kind of exploded almost.
[09:55:00]
DOMENICALI: So I would say 50 percent of the supplier in the last one and a half year they're not any more able to guarantee that actually deliver on
time.
(END VIDEO CLIP)
CHATTERLEY: Queen Bey is back and better than ever. That song "Alien Superstar" is just one of the 16 tracks on Beyonce's long awaited seventh
studio album, Renaissance. The project infused with R&B dance and house music honors industry Trailblazers like Donna Simon, whose "I feel love" is
sampled on the song Summer Renaissance. The album was leaked earlier this week after copies were reportedly sold early in Europe.
But one thing about the beehive they're going to stick by that Queen. Beyonce addressed the leak in a handwritten letter on Twitter and thanked
her fans for waiting for the proper release time to celebrate and enjoy together. And that's it for the show. "CONNECT THE WORLD" with Becky
Anderson is up next. We'll see you on Monday.
(COMMERCIAL BREAK)
END
