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First Move with Julia Chatterley
U.S. Senate Passes Key Bill on Climate, Health Care, Tax; Lockdown Strands 80,000 Tourists on Chinese Island; U.S. Stocks set to Rise Ahead of This Week's Key Inflation Data; SoftBank Posts Record $23B Loss Amid Global Sell-Off; Detecting Contaminated Ammunition in the Sea; "Renaissance" Marks Beyonce's Seventh Solo Album. Aired 9-10a ET
Aired August 08, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
(COMMERCIAL BREAK)
ALISON KOSIK, CNNI HOST: A warm welcome to "First Move", I'm Alison Kosik. Great to have you with us on the show today! Biden's big win; the U.S.
Senate passes the $750 billion climate change and health care bill. Will it help bring down inflation though as promised?
SoftBanks' tech mess, its vision fund posting a more than $20 billion quarterly loss due to the poor performance of growth stocks and China's
military might, it's extending live fire drills around Taiwan its biggest show of force in the area in decades all that and more.
But first look at global markets a positive picture overall for stocks. Wall Street looks like its set for a higher open after the S&P 500's 3rd
straight week of gains Europe in the green too, after a mixed Asian handover.
U.S. markets coming off a volatile day of trade on Friday though after the blockbuster July jobs report lessen the chances of a dovish Fed policy
pivot anytime soon. New numbers out later this week could show inflation easing from 40 year highs but Fed members say they need to see sustained
improvements in the data before they eat up on rate hikes.
Alright, let's get right to "The Drivers", a major win for the White House the U.S. Senate passing a massive $750 billion bill called the inflation
Reduction Act. It includes spending of about $370 billion to reduce emissions that contribute to climate change. The house is expected to
approve the bill before sending it to President Biden's desk.
John Harwood is live for us at the White House. John, great to see you! I know that this bill has a lot in it. I want you to walk us through what's
in it. I know there were some late sorts of last minute changes. There was a little drama at the end of all this.
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Well, that's right, Alison, you've got about $339 billion of investment over 10 years in renewable
energy incentives for consumers, incentives for producers to switch to power sources like wind and solar and away from fossil fuels. That is a
very major step for the American economy a major step for the global effort to fight climate change, because the United States is trying to lead that
effort.
And if you're trying to lead the effort, you've got to do it yourself. In addition to that, it's gotten money to extend the subsidies to make
Obamacare health care coverage. Cheaper millions and millions of people have signed up for Obamacare in the last couple of years now more than have
ever been signed up under the Affordable Care Act.
And this makes it cheaper for many of them, including many middle class people. It also has a cap on out of pocket costs for Medicare recipients
for prescription drugs. And the promise of negotiated prescription drug price reductions in future years. That's all paid for by a minimum tax on
corporations, very large corporations that have benefited from a lot of deductions, and more money for the IRS to crack down on some of those
wealthy tax evaders who benefited from the lack of IRS enforcement over the years.
All in all, this was a major victory for the priorities of the Democratic Party the priorities of President Biden, so they're celebrating today.
KOSIK: Yes, Democrats clearly voting for it, republicans not voting for it. What are they saying? What are Republicans say?
HARWOOD: Republicans are saying these are tax increases that will harm the economy. They're say the spending and the bill will make inflation worse.
That's not true; it's not going to make inflation worse. But it's also not true that the bills going to make inflation much better. Democrats call it
the inflation Reduction Act. That is a PR marketing slogan, meant to get Joe Manchin, who had been concerned about inflation on board.
What you can say about this legislation is that to the extent it affects inflation over a number of years; it might be a small reduction in
inflation, but nothing anytime soon, nothing that people will see. And that's one of the quirks of politics is that sometimes you call something
one thing in order to get it passed, and it's not really about that?
KOSIK: Alright, John Harwood live for us at the White House, thanks so much. So it was a victory for Democrats. But as you heard Republicans say
the bill would hurt job creation and push prices even higher. Can the inflation Reduction Act live up to its name?
Christine, Romans is going to dig deeper on this. Christine, great to see you!
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Hi.
KOSIK: Yes, this is called the inflation Reduction Act. But are we going to see a reduction in inflation something that's real we've been nagging at
President Biden's approval rating?
[09:05:00]
ROMANS: Well, because of this in particular, not tomorrow. I mean, you talk to economists and they say longer term, it may be moves the needle slightly
in the right direction. And I agree with John Harwood. It's more about branding here in the near term, calling it the inflation Reduction Act.
This is about investments in the economy, and in healthcare, right in the climate, that will have long term benefits for people.
And when you talk about, you know, what somebody's paying for things right now, health care, for example, what they're paying out of pocket for their
premiums for Obamacare, what they're paying for drugs for people who are in Medicare, a cap on what they would pay every month for insulin at $35. That
is a real tangible thing that families will feel.
So I think it's important to remind people that one piece of legislation or one move even from the White House, there isn't some magic switch, right,
they can control an economy in terms of gas prices, or inflation overall. I do think though, Alison, the backdrop of this biting 40-year high of
inflation is something that colors, every kind of conversation we're having here.
And it just wanted to bring up that gas prices, energy prices have actually been tumbling of late, the most recent AAA, national average $4.06 a
gallon, look how much that's down from a month ago, still above where it was a year ago. But you've seen a swift decline in energy prices; it will
be interesting to see if that somehow, you know, fuel fills into the overall inflation debate. We get an inflation number on Wednesday.
KOSIK: Yes. And there's lower gas prices, by the way had nothing to do with this bill at all.
ROMANS: Right.
KOSIK: Good point you make there. I'm curious if any of this will pay off at the polls in November for midterm elections talking about the bill?
ROMANS: That is the political question of the day, isn't it? Because it's not just this bill is a series of wins that this White House has had that
Chips act is actually sort of a complement to this whole climate and health care piece moving forward kind of pivoting the U.S. economy in a more
sustainable way?
Those are long term benefits that are meant to be felt by the U.S. economy will they be felt by November, I guess it depends on how well the messaging
goes from this White House, whether Democrats are able to explain to people very clearly what they will feel from this legislation that will help their
daily lives and help their pocketbooks.
I mean, I've been trying to boil this down is from the breaker box in your attic or basement, right to the car, in your driveway, to the drugs in your
medicine cabinet to what you're paying. If you're on Obamacare, there are real world implications for just about everyone here and a real pivot
toward electricity and sustainable living that that you will notice.
I mean, you will be noticing advertisements for these tax breaks for new windows and for solar panels and for a new heating and cooling systems for
your home. So there are tangible aspects here that people are going to begin to notice. Will that tip the scales in November?
That's the big question. You know this economy. We'll see Friday, what consumer sentiment looks like for the University of Michigan survey. But no
matter what happens, mostly it has been a dour impression that people have of the economy two and a half years after the beginning of a pandemic, you
can see why?
KOSIK: Yes, thanks to inflation, a lot of that Christine Romans, thanks for all that great context.
ROMANS: Yes.
KOSIK: For a fifth day, today China conducted military drills in waters and airspace around Taiwan. The exercises began last week after U.S. House
Speaker Nancy Pelosi visited the self-governing Island. Taiwan says China is deliberately creating a crisis. CNNs Will Ripley spoke to Taiwan's
Foreign Minister about the growing tension.
WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Taiwanese officials only received confirmation when Nancy Pelosi would visit at the very last
minute and they didn't have any input about the timing of the trip, which was postponed after Speaker Pelosi came down with COVID back in April.
Now the timing was crucial because it came just months before a sensitive political gathering in Beijing. China is blaming the timing of the visit on
their military drills that have been ongoing ever since.
But Taiwan's Foreign Minister says he doesn't buy it. He says this is just part of a Chinese campaign to intimidate Taiwan and isolate them on a
global stage.
(BEGIN VIDEOTAPE)
RIPLEY (voice over): As Taiwan was lighting up landmarks for U.S. House Speaker Nancy Pelosi. China was lighting up the skies and seas around the
self-governing democracy a democracy in danger of a Chinese takeover, if Beijing's communist rulers get their way. Pelosi was in Taiwan, less than
24 hours leaving behind a crisis, some say she helped create.
RIPLEY (on camera): Was there any concern here in Taipei about the timing of this and whether it might provoke some sort of reaction from China?
JOSEPH WU, TAIWAN FOREIGN MINISTER: We knew that China always reacted badly. Whenever we have good friends coming to visit us the Chinese
government cannot dictate who can come and who cannot come and they cannot dictate Taiwan who can be our friends or who we should make friends with.
RIPLEY (on camera): But what if China goes further as a result of this visit or using this visit as an excuse to the benefits outweigh the risks
for Taiwan.
[09:10:00]
WU: One is what China is doing is unwarranted. And what it is doing is upsetting the peace and stability in the Western Pacific and is something
that should not be welcomed by the international community.
RIPLEY (voice over): Taiwan's Foreign Minister Joseph Wu, tells CNN, China's war games are aimed at isolating this island Pelosi, the most
powerful politician to visit in 25 years.
RIPLEY (on camera): Is Taiwan in more danger today than it was before Nancy Pelosi's visit.
WU: China has always been attracted in Taiwan for years, and it's getting more serious in the last few years. And it's always been that way whether
Speaker Pelosi visit Taiwan or not. The Chinese military threat against Taiwan has always been there.
RIPLEY (on camera): What do you believe China's motivation is and do you think that their timeline has changed?
WU: China's motivation, as I said a little bit earlier, it's not going to end a Taiwan. They claim East China Sea the claim South China Sea they work
very hard to go into the Pacific. Their influence in South Asia and Africa, even in Latin America is unprecedented these days, and therefore he has a
global ambition.
RIPLEY (voice over): Ambition driven by China's most powerful leader since Mao, Xi Jinping on track to become President for life with a burning desire
to unify with Taiwan by force, if necessary.
RIPLEY (on camera): Has Taiwan's democratic system ever been in more danger than it is today?
WU: I can tell you that Taiwan is more resilient than before. Look at Taiwan these days. You know, China is trying to impose trade sanctions
against Taiwan trying to attack Taiwan from monetary or non-monetary aspect. But the way goes; the life goes on here in Taiwan.
RIPLEY (on camera): Should people in Taiwan to be more worrying?
WU: If you ask me, I worry a little bit.
RIPLEY (on camera): What do you worry about?
WU: I worry that China may really launch a war against Taiwan. But what it's doing right now is trying to scare us. And the best way to deal with
it to show to China that we are not scared.
(END VIDEO TAPE)
RIPLEY: China is defending its actions around the island of Taiwan saying that they're justified; they are legitimate, because they continue to claim
that this island is part of China, even though the communist rulers in Beijing have never controlled it.
China says that the visiting Nancy Pelosi is going to have a severe impact on the political foundation of China-U.S. relations. And they've said that
it could gravely undermine the peace and stability of the Taiwan Strait.
But here in Taiwan, they say it's China. That's really the undermining of peace and stability and they need to bring in friends from around the world
to see this situation here and help Taiwan. If the time comes, Will Ripley, CNN Taipei.
KOSIK: In Hong Kong, the government is reducing the COVID quarantine period for international travelers from 7 days to just 3 days. Chief Executive
John Lee saying "We need to balance between people's livelihood and the competitiveness of Hong Kong" meanwhile, tens of thousands of tourists are
stranded on the popular Chinese Island of Sanya, after a sudden COVID locked down.
Selina Wang joins us live from Beijing. Selina, what more can you tell us first about the reduction in quarantine rules in Hong Kong?
SELINA WANG, CNN CORRESPONDENT: So Alison, this means that arrivals into Hong Kong from overseas excluding those from mainland China will now be
allowed to spend just three days in hotel quarantine then followed by four days under home medical surveillance that is down originally from 7 days
and a government designated hotel.
Now during that home quarantine however, they have to test negative for COVID every single day. Now the mainland Chinese arrivals, they still have
to do 7 days of quarantine, either at home or in a government designated hotel but official saying they're in discussions with mainland officials on
opening its border with Hong Kong.
Now all of this Alison, it is just an incrementally positive step for the Hong Kong economy. It is far looser than the requirements for people
entering Mainland China from overseas. But Hong Kong's requirements are still far stricter than most of the world that's moved on from the
pandemics. So many business leaders say this still doesn't go far enough and encouraging more people to travel into Hong Kong which is such a
critical financial global business hub Alison.
KOSIK: Now to all the people stuck on Sanya what led to the lockdown at this tourist hotspot?
WANG: Well, Alison the reality now is that just trying to take a summer vacation can become a nightmare experience in zero COVID China. Right now
there are 80,000 tourists trapped in a sudden lockdown in the City of Sanya. This is a popular vacation destination on China's tropical Hainan
Island. This is often called the Hawaii of China. And this current outbreak it is driven by the highly infectious over contra-variant and it's infected
more than 1200 people in Sanya since August 1st.
And in China where they're still adhering to zero COVID, this counts as a major outbreak. In China right now even one or a handful of cases can send
entire communities or even cities into hard lockdown. So Sanya's entire city of some 1 million people is now under lockdown since Saturday.
[09:15:00]
WANG: That means public transportation has been suspended people can only move around for emergency services. More than 80 percent of flights leaving
the city were canceled. That's left complete chaos at the airport. There have even been some videos shared online with crowds of people chanting
that they want to go home.
Now authorities here they're saying that tourists can leave after 7 days. But that could be extended if cases don't come down. So people are
extremely stressed out right now about can they continue to afford their hotels do they continue to have accommodations?
Now the government has said that people with canceled flights can book discounted hotel rooms. But for some families that's still not affordable.
A viral piece of news from State News reported that a family of 13 said they'd have to pay more than 26,000. This is U.S. dollars for just an extra
week at their hotel in Dallas.
And the backdrop here is that Sanya, for many tourists there this was supposed to be their long awaited escape after finally being willing to
travel during COVID. Many of the tourists stuck there actually were from Shanghai, who were there to rest and relax after going through that brutal
two-month lockdown in Shanghai earlier this year.
We spoke to one tourists stuck in Sanya from Shanghai who said it feels like Russian roulette when you're traveling in China. You're always taking
a gamble that your destination might just get locked down, Alison.
KOSIK: Trapped on vacation, who would ever think that could ever happen? Selina Wang thanks so much. And these are the stories making headlines
around the world as ceasefire between Israel and Palestinian militants appears to be holding after three days of fighting.
Fuel supplies have reentered Gaza to power a plant that was shut down during the conflict. Israel says it launched its military operation Friday
to target the Islamic Jihad group. Palestinian says at least 44 people including 15 children were killed.
CNN's Hadas Gold joins us now with more. Hadas, good to see you, talk with us more about what you're seeing on the ground there.
HADAS GOLD, CNN CORRESPONDENT: Well, listen, I'm in Sderot. This is an Israeli town not far from the border with Gaza. And up until last night,
this is one of the Israeli communities that was under pretty regular rocket fire.
But now as you can see, at the shopping center, life is carefully coming back to normal and it's really sort of stunning to see this shopping center
24 or 48 hours ago was empty. People were mostly staying home and every seemed like few minutes half an hour needing to run into a bomb shelter as
Israeli planes overhead were flying towards Gaza to carry out their airstrikes against Palestinian Islamic Jihad targets.
But as of last night at 11:30, there was an Egyptian brokered ceasefire that does seem to be holding so far that's coming much to the relief for so
many both here in Israel and also in Gaza, where they are now able to assess the damage and what happened over these 3 days of violence.
The Israeli military saying that it was targeting Islamic Jihad targets they said that they carried out these preemptive strikes, especially
against the Islamic Jihad leaders. They said that they targeted 140 areas including things like rocket launchers and tunnels. And the Palestinian
Ministry of Health saying 44 people were killed in operation 300 More than 300 injured, and among those killed 15 children.
Now Israel insists that most of those killed were militants and said some of the people killed some of the civilians killed were due to rockets that
misfire. But still it's a high death toll and it's many injured and there's quite a bit of damage in Gaza.
Israel also says that more than 1100 rockets were launched from Gaza towards Israel, but at least 96 percent of those were intercepted by the
Iron Dome and we have no reports of deaths. There are some several minor injuries in Israel, but no major injuries to be reported.
And importantly, as you noted, the border between Israel and Gaza had been shut during this conflict and the already precarious humanitarian situation
in Gaza reached a critical point because there are only power plants was running out of fuel. And that meant things like hospitals didn't have
enough electricity to do what they needed to do to help the people.
But as of this morning, that border crossing is now open the fuel trucks. Our fuel trucks are now going through to provide fuel to that power plant.
Now, the question of course, is the ceasefire going to hold for much longer? As of right now the ceasefire is holding most interestingly,
though, Alison is what didn't happen and that's Hamas.
Hamas, which is the militant group that really runs Gaza Islamic Jihad, is a much smaller military group. They didn't get involved, although they
expressed support for what the Islamic Jihad group was doing.
They didn't activate they're much larger, much more powerful arsenal of rockets and that likely helps keep this conflict from turning into
something much bigger more akin to what we saw in that 11-day war last May, Alison.
[09:20:00]
KOSIK: OK, Hadas Gold, thanks so much for all of your great reporting. The U.S. Secretary General has said shelling around Ukraine's nuclear power
plant is suicidal, and he's calling on the IAEA to be given access to the site. Zaporizhzhia is Europe's largest nuclear plant and has been operating
at reduced capacity since Russian forces captured it in early March.
New York police are offering a $3,500 reward for information leading to an arrest and a brazen jewelry heist. Three masked gunmen used a hammer to
smash their way into display cases and steal more than $2 million worth of jewelry. While a fourth man stood at the door and appear to be a lookout.
All four men fled on foot.
Straight ahead tech trouble Softbank reports it's biggest ever loss as the sell-off shreds, stock valuations. And mapping munitions, the company using
artificial intelligence to demine the North Sea
(COMMERCIAL BREAK)
KOSIK: Welcome back to "First Move", I'm Alison Kosik. U.S. stocks are on track for high a higher open this Monday, as investors brace for another
busy week of economic data. The U.S. releases the July consumer inflation report that comes on Friday of that comes on Wednesday. Actually wholesale
inflation numbers they come out this week too.
I was thinking of consumer sentiment on Friday. Friday's blog jobs report though, easing fears that the U.S. has entered an official recession
despite two straight quarters of economic contraction, but a robust U.S. jobs market means the Fed is likely to be in rate hike mode for longer as
it tries to bring down prices.
Corporations remain a relative bright spot for markets. Some 75 percent of companies have reported earnings beat so far this profit season a bit below
the five-year average. 70 percent of firms are reporting better than expected sales. Alessio De Longis joins us now he is the Senior Portfolio
Manager at Invesco. Alessio, glad you can join us!
ALESSIO DE LONGIS, SENIOR PORTFOLIO MANAGER, INVESCO: Thank you for having me.
KOSIK: All right, so I am seeing some conflicting trends emerge here in the data that we're getting and in the economy itself for example the job
market we found out on Friday's super resilient.
[09:25:00]
KOSIK: So you know that's inflationary, but then we've got the inflation narrative going the other way, showing signs of easing, at least if you're
at the gas station. I'm curious what your thoughts are here about how these trends are emerging and what you expect to come out? Or are we going to see
any changes with this week's inflation data is the CPI specifically?
DE LONGIS: Yes, Alison, I mean, it's a very confusing picture, I think the blow job report, which was absolutely fantastic. In terms of a pulse, a
temperature check on the economy today reveals that the economy is a lot stronger than even consensus forecasts anticipated.
But as you pointed out, with that record low unemployment rate and record job creation, what came with it was also raising wages much more than
expected. So we are in a situation where strong demand and strongly labor markets are adding additional pressure on inflation on top of the well-
known concerns around global supply chain.
So that job report is not a forecast, however, because as you pointed out, that only means that the Fed will have to do an even more aggressive job in
trying to slow down demand to bring down prices, because the fed only controls the demand side, not the supply side. Therefore, what can we
expect? The Federal Reserve has a particularly different job because monetary policy is a very powerful tool, but it's not a precision
instrument, the economy will react to the fed with a delay with many quarters of a delay. So the Federal Reserve finds itself now having to
increase the hawkish rhetoric and step up rate increases, without really having a pulse on the economy today, with respect to the impact that it's
having.
KOSIK: Alessio, what about the Feds likelihood of overcorrecting here? I mean, we just had talked last week that the U.S. is in a recession or at
least headed for a recession. What are your thoughts on that?
DE LONGIS: The U.S. printed what we call a technical recession, two consecutive quarters of negative growth. But when you look at the details,
it was due to the most volatile and less reliable aspects of the GDP report, a large correction in inventories in the second quarter and a large
increase in imports in the SEC in the first quarter, which is actually a sign of strong demand. What we didn't see why we don't call it a recession?
And why the Federal Reserve doesn't believe? We are in a recession is that final sales, final consumer demand was still very, very strong, slowly, but
still strong. So what we need to see it, we think that there is a risk, an increasingly highly probability risk that the Federal Reserve will need to
go into restrictive territory.
And we'll need to strike this tough balance between growing below trend and causing a mild recession. It's a very difficult experiment. Bottom line,
the Federal Reserve needs to see the unemployment rate rise and that no matter how we cut it, its bad news for the economy. But we need to see as a
result of that prices come down inflation number one concern at the moment.
KOSIK: How should investors be positioned right now in this environment, where were opportunities?
DE LONGIS: Well, it's an environment where we recommend being cautious especially now past July, July, we had an absolutely fantastic month for
risky assets such as equities, or risky credit markets, it was a very impressive rally.
We think that it gives investors an opportunity to rebalance the portfolios a little bit more defensively a little bit closer to neutral, so to speak,
to be a little bit closer to their current risk comfort zone. Because if we arrived at the Federal Reserve needs to go into restricted territory to
cure the inflation problem, and the unemployment needs to raise that in our mind comes with deteriorating earnings growth, deteriorating earnings
forecasts, and lower prices for risky assets.
KOSIK: All right, our thanks to Alessio de Longis the Senior Portfolio Manager at Invesco, thanks for your perspective.
DE LONGIS: Thank you.
KOSIK: Stay with CNN, the Market Open is next.
(COMMERCIAL BREAK)
[09:30:00]
KOSIK: Moments go on his way to see flood damage in the state of Kentucky; U.S. President Joe Biden was asked if he's worried about China's reaction
to Speaker Nancy Pelosi's trip to Taiwan. Listen.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: You've a bit of a grid around the whole island now.
JOE BIDEN, PRESIDENT OF THE UNITED STATES OF AMERICA: I am not worried. But I'm concerned that they're moving as much as they are. But I don't think
they're going to do anything more.
UNIDENTIFIED FEMALE: But is there a - speaker to go to Taiwan?
BIDEN: It's a hard decision. Thank you.
(END VIDEO CLIP)
KOSIK: China has held large scale military drills off the coast of Taiwan since Pelosi left the island. This is the first time we've heard from
President Biden since he came out of COVID isolation for the second time.
U.S. stocks are up and running for the first time this week and we've got a higher open with blue chip stocks in the lead. The Clean Energy sector also
gaining after the U.S. Senate passed the Inflation Reduction Act that includes $370 billion worth of incentives to prod consumers and companies
to go green and help slow global warming.
In the tech sector, the NASDAQ pairing some of its pre-market gains after a second quarter revenue warning from chip giant NVIDIA. The company's shares
tumbling after warning of weaker results from its gaming chips division.
SoftBank reported a record $23 billion loss last quarter with stock markets falling sharply in 2022. Its tech investments have plunged in value.
SoftBank vision Investment Fund, sold stakes in Uber and open door to raise cash and wrote off its stakes in some startups. The CEO is now suggesting
there will be job cuts. Clare Sebastian joins us live now, Clare, great to see you. What more are you learning about this record loss for SoftBank?
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, it was interesting because in many ways, this is an embodiment of really everything that we're seeing in the
tech sector. Just 15 months ago, SoftBank posted the biggest ever annual profit for a Japanese company.
And now we see this in reverse a record quarterly loss driven in part by losses at the vision funds as you say driven by these market losses, also
because of the drop in the Japanese yen a lot of SoftBank's debt is denominated in dollars.
So they took a foreign currency hit because of that, that blaming a couple of things, Alison. One, obviously those forces that are outside of their
control, we're talking about the market forces, the yen.
[09:35:00]
SEBASTIAN: There's also the Chinese regulatory crackdown which hit fairly significantly, one of their holdings, Didi, which actually delisted from
the New York Stock Exchange in June, just about a year or less than a year after it listed. So there's all those factors outside of their control.
But this is also part of what we're seeing now with SoftBank in new directions was a somber, more chastened, Masayoshi Son, the visionary, who
is, who founded that fund and has led it and taking a lot of risks, and Gamble's he is now taking a new direction.
He's going to be more conservative. He says the company is in defense mode. Case in point by the way, they approved, apparently, according to the
filings today $600,000 worth of new investments in this quarter compared to 1.6 billion in the same quarter last year, so much more conservative and
much less risk taking that we're going to see from them going forward. Although he did say, as the market rebounds, they are going to see more
opportunities.
KOSIK: All right, Clare Sebastian thanks so much for your reporting. Tech stocks have rebounded from their lows after quarterly results that show
resilience to economic headwinds, Amazon and Apple beat Wall Street expectations.
Google parent Alphabet made up for an ad slowdown with a strong performance from its cloud unit. Microsoft is even predicting double digit revenue
growth this year. Joining me now is Dan Ives. He's the Managing Director and Analyst at Wedbush, glad to have you back on the show.
DAN IVES, MANAGING DIRECTOR & ANALYST, WEDBUSH: Great to be here.
KOSIK: So despite all the headwinds of a slowing global economy, rising interest rates, high inflation, better than expected mega cap tech earnings
that helped the NASDAQ climb back more than 12 percent for July.
A question I have for you, though, is the recent run sustainable of high inflation sticks around even longer than expected.
IVES: Look, I think that's been a debate. But ultimately, when you look at Apple, Microsoft, big tech stalwarts, you really seen demand hold up
specifically in the enterprise on Cloud, even digital advertising, better than heard.
I believe in second half, you know, in terms of the forecast, I think the decks been cleared, where now tech stocks can move higher. You're going to
have one offs, like in the video, you know, in terms of what we're seeing across tech. But I believe a bifurcated tech, tech stocks rip, second half
of the year.
KOSIK: Supply chain issues are a huge issue, a heavy weight for tech companies. You know, we saw supply chain issues affect Apple and Tesla.
Where do companies like that stand with China and supply chain issues?
IVES: Yes, it's a great question, especially in light of some of the geopolitical tensions you're seeing with Taiwan and China. I would say the
supply chain situation is moderating.
And I think that's something that came out earnings from Tesla, from Apple, and even from some of the chip makers, that's important, because that's
really been what I've used the black cloud over the tech sector.
You combine that with fundamentals that at least look better than feared, especially in the second half of the year. And I think that could be the
one cheap punch and ultimately move tech stocks higher, despite what I'll call white knuckle backdrop. KOSIK: OK, I want to stick with Apple for a
second, I realized that Apple beat on revenue and profit is expects its growth, to accelerate despite what it calls pockets of softness, which is
what sort of was a red flag for me. The other red flag was Apple didn't provide formal guidance for the quarter. How should we all read that?
IVES: Yes, in terms of the guidance right now, I think because of the supply chain, especially because the China, some of the zero COVID
shutdowns that we saw, I think was prudent not to provide guidance we've seen at the last few quarters.
I think the key with Apple is iPhone 14, I mean, that's going to roll out right now in September. You got 225 million iPhones based on our estimates
that have not upgraded in three and a half years, combined with the services business, you know, that continues to be a Rock of Gibraltar
stock.
And that's why when you talk about these earnings, these are most important earning season for tech, probably in the last six years, because when you
hear from cook Nadella, those are the key data points investors want to hear, especially in what's really been very nerve racking year.
KOSIK: No tech stock conversation would be complete without mentioning Elon Musk. So let's talk about him for a minute. And it's been what only two
days since Elon Musk accused Twitter of fraud.
Now Musk is challenging Twitter CEO, Parag Agarwal to a public debate about the percentage of bots on his platform. What's behind this stunt?
IVES: So this continues to be a twilight zone, the circus show in terms of how this is all played out. You know, I think for Musk clearly backs
against the wall going to Delaware courts.
I think the street really recognizes that assigning a very high probability and much who's going to have to pay a significant settlement to Twitter or
potentially still own Twitter in terms of what comes out of the Delaware court.
But this is must be must; the annex had been frustrating for investors. But I do think you're starting to see a decoupling of Tesla stock from some of
the Musk antics and sideshow.
[09:40:00]
KOSIK: Yes, but in the meantime, we've got Tesla reporting mixed second quarter earnings last month, beating expectations, three for one stock
split, which could obviously open up the stock to more investors.
Critics though they're saying Tesla's shares are overpriced and could plunge more than 50 percent that its valuation remains challenging.
IVES: Look, I mean, split adjusted stocks gone from 100 to 5000, right. And so it's always going to be a divisive name, the haters will continue to
hate on Tesla. You know, my view is that you cannot treat it as a car company treat as a disruptive technology player.
It's all about China and we're starting to see China rebound into the second half of the year. And when you look at EVs you know, that's really
the focus as we go in 2023, but clearly wood to chop for Tesla lack competition come from all angles. Spotlight is going to be on - front and
center in next few quarters.
KOSIK: All right, Dan Ives is Managing Director and Analyst at Wedbush.
IVES: Thank you.
KOSIK: Always love talking with you, thank you for your time. Still to come leftover bombs from World War II litter the seabed around European shores,
and they're holding up construction of Germany's new gas terminals. Meet the CEO of a company that's working on a solution after the break.
(COMMERCIAL BREAK)
KOSIK: Welcome back. I'm Alison Kosik. Germany is working on reducing its reliance on Russian gas by building new terminals for natural gas tankers
and offshore wind farms. But there's a potentially deadly issue here.
Over a million tons of war time bombs and weapons are rusting at the bottom of the sea. Not only are they holding up construction of new
infrastructure, they're also a threat to the environment.
One tech company North.io has been working to map munitions on the ocean floor, creating a database of dangerous items and generate suggestions on
how to deal with them such as recovery and destruction. Jann Wendt is the CEO of North.io and he joins us live now. Welcome to the show.
JANN WENDT, CEO, NORTH.IO: Welcome, nice to be here.
KOSIK: So are you in essence professional bomb hunters? You know, what does it mean to actually map and digitize the sea? And why is it important to
know what lies deep in the ocean?
[09:45:00]
WENDT: No, fortunately, I'm not one of the guys who have to dive down there and to dismantle this kind of bombs. I'm actually myself, I'm a geographer.
So coming from the perspective of geo data of spatial information, and I had the chance actually to do some kind of an internship in the bomb
disposal unit of our governmental services.
And yes, there I realized how big the problem of ammunition in our ocean really, really is. And we started with a company to build a catastrophe
system for mapping this problem of ammunition in our oceans worldwide.
KOSIK: With Berlin planning to build liquefied natural gas terminals, are you finding that there's now an urgency to clear our oceans and seas of
these munitions and urgency that maybe you haven't seen before?
WENDT: I mean this urgency is already there for a long time. It's just the point that we are now realizing what the amount of the problem is. There
are several different kinds of perspectives on the issue.
I mean, now we're talking about the energy transition, for sure, also the problem of the gas supply here in Europe. But in general, our energy
transformation going into especially also offshore wind going to renewables is affected by the militia.
So there's a delay in building our system of renewable energies here, especially in the terms of off shoring, because amunition is simply on the
way when you want to construct different kinds of machines, that infrastructure in our oceans.
In other threat is actually coming from amunition is the fact that there is an environmental effect. But I can explain this a bit more detail as well.
KOSIK: Yes, please do. Because, you know, we've got, you know, there are lots of problems that come with having unexploded munitions sitting at the
bottom of our oceans and seas.
There's, as you said, the environment, you know, ecosystems, there's also economies and shipping issues as well, walk us through that.
WENDT: For sure, I mean, the environmental problem, that's something we understood in the last 10 years. Yes, so there was different kinds of
research activities conducted now, especially also in the European waters, where we try to understand what's the effect of corroding amunition to the
environment.
How does the effect our flora and fauna are the effect of fissures and muscles. And different kinds of studies actually have shown that this
rusting amunition is releasing TNT.
So TNT is actually measured now in our water column, where even experiments carried out here in front of our city of Kiel, in the water, where there
was an effect that you can measure TNT compounds in muscles, so even fish showed remnants of TNT.
And several other studies were showing that there is amount of TNT a very, very small amount that's out of question. But there is an amount more or
less everywhere in the water and the German North Sea and the German Baltic Sea.
So this is a huge effect actually going or having ammunition has on our environment. And this effect is probably getting worse, because we expect
that the big amount of ammunition is going to grow in the next 30 years.
KOSIK: And why do you say that? Why do you think that will grow?
WENDT: I mean, there's a huge amount, we are talking just in the German waters, about 1.6 million tons. And I think it's important to understand
what 1.6 million tones means. It's a train that's two and a half 1000 kilometers long.
It was mostly done after the Second World War into our oceans. So there are huge dumping sites, so whether partly you've lined up to 100,000 tons in
one place. But there's also lots of dispersed ammunition, which was brought into the environment by MC battles for fights, for example.
And we see now when we map this ammunition, with autonomous systems with ships, that there is an increase in the corrosion. So the ammunition is
corroding more and more, and the scientists expect that we are facing the corrosion peak, actually in around 30 years.
So that's why we also expect that there is the peak of TNT that goes into our water column in around 30 to 35 years.
KOSIK: I'm curious if there was now starting now a conservative effort to clear our waters of these musicians. How long would it take?
WENDT: Oh, that's a very good question. I mean, if you do it with today's technology, it will probably last over 100 years. But we are facing more
and more technological developments also in autonomic systems for example.
[09:50:00]
WENDT: And from our perspective, from my perspective, it's the most important that we start. As soon as we get some kind of money into the
system getting money into businesses that are cleaning up on large scale, this ammunition as well, technological developments will take place.
So autonomous systems will overtake hopefully in the future quite some of the tedious work and still done with divers. And this will also then make
us faster in our energy transition, because everywhere really every piece where you want to build infrastructure in the sea surface you have to check
for ammunition compounds.
There was even though the case that in the states where you started to build offshore industry also in front of New York, seven ammunition pieces
were found in this offshore --.
KOSIK: 100 years that's a long time but you got to start somewhere and you are Jann Wendt, CEO of North.io. Thanks so much for coming on the show.
WENDT: You're welcome.
KOSIK: Coming up after the break, Queen Bee reigns supreme, Beyonce's Renaissance is topping the charts, details next.
(COMMERCIAL BREAK)
KOSIK: Beyonce isn't breaking our souls, but she is breaking the charts. Her love letter to dance at house music has been flying high ever since its
release. Renaissance, the singer's seventh studio album debuted at number one on the Billboard 200 Albums Chart, making it the year's biggest debut
by a woman.
Rahel Solomon joins me now to talk more about this. Rahel, great to see you from what I'm seeing, am I right here all seven of her solo albums have hit
number one. Woof. Now that's queen bee.
RAHEL SOLOMON, CNN CORRESPONDENT: She is the queen reigning supreme, as you pointed out, Alison yes, you were exactly right. This is her seventh solo
album. And the seventh time she has reached this milestone. It's also the largest streaming week for her of her career.
So she is clearly giving energy and all my Beyonce fans. You know what I'm saying here, look, the album is very inclusive, right? I mean, it pays
tribute to dozens of black women icons in the music industry from Gil Scott from my hometown of Philadelphia to Erykah Badu to --, so it's very
inclusive.
It also shows a lot of love to the LGBTQ community. So it's clearly resonating. And it's interesting. I mean, I think that it's very upbeat
album to make sure you want to go to the gym, but it has something for everything musically, lyrically, in terms of how it's produced.
So yes, it's a huge album for her only second to Harry Styles this year in terms of album sales. And Alison not to be a tease here, but this is just
act one. I mean, we're expecting an act two, and the sort of release we're expecting an act three so we might be talking about Beyonce a lot this
year.
KOSIK: She's already done so much, what are her other acts?
SOLOMON: Well, that's the thing we don't really know what will it be a visual album like lemonade was will it be something entirely different.
Because we know she is a true creative right?
[09:55:00]
SOLOMON: So it can be any sort of thing and she has her hands in so many pots of course, with Ivy Park and just really her own production company,
so it could mean a lot of different things. And that's why I think we're all sort of on the edges of our seats are sort of on our toes.
And if there is one thing Beyonce does is certainly keep people on their toes in terms of what to expect.
KOSIK: Well, we'll be watching and waiting along with you, Rahel Solomon thanks so much. And that's it for the show. I'm Alison Kosik. Follow me on
Instagram and Twitter @alisonkosik. Thanks for joining us. "Connect the World" with Becky Anderson is next.
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[10:00:00]
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