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First Move with Julia Chatterley
Truss now Traveling back to London, due to give Maiden Speech as Leader; Treasury's Yellen Weigh on Crypto Regulation Debate; The Future of Crypto Regulation; Liz Truss Visits Queen, Becomes UK Prime Minister; Liz Truss to deliver first speech as Prime Minister; Reports: IPO Could Value Porsche at $84 Billion. Aired 9-10a ET
Aired September 06, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
(COMMERCIAL BREAK)
JULIA CHATTERLEY, CNN HOST, FIRST MOVE: A warm welcome to "First Move", I'm Julia Chatterley great to be back with you for a special prime time in the
U.K. edition of the program.
Boris Johnson finally saying goodbye for Liz Truss the hour is well and truly high. Truss now officially Prime Minister after an audience with the
Queen at her majesty's Castle - in Scotland, she's set to make her first address to the nation in the coming hours.
Her plans for tackling the cost of living crisis in the United Kingdom will be a focus in the days ahead, particularly whether there's a freeze before
the freeze government helped to prevent soaring energy bills this winter in focus.
Reports say she's readying a plan to help households and businesses with their soaring bills. And as if on cue to illustrate the dire need European
gas futures soaring some 35 percent intraday, yesterday that just to give you a sense of five times higher than just a year ago or response to
Russia's decision to keep the Nord Stream I Pipeline shut indefinitely.
The new fear of course that Germany will be unable to hit its winter gas storage targets, with Berlin announcing a third aid package to assist with
soaring costs energy angst being felt in the United States too, with the State of California declaring a power grid emergency amid a record breaking
heatwave and now China too saying it suffered its hottest August ever.
The inflationary implications of this energy crisis and how central banks respond is already at one of the key financial market themes this fall.
It's been the case all year of course U.S. stocks trying to power up after the long holiday weekend on the back of three straight losing weeks amid
fears of yet steeper rate hikes Europe.
As you can see they're holding steady ahead of a crucial European Central Bank rate meeting this Thursday a bank of England official also warning
this week that more forceful action is going to be needed to tackle rising U.K. prices too. Plenty for Truss and us to discuss and Max is awaiting the
return of the new Prime Minister. He's outside at the Houses of Parliament Max, great to be with you today, its official.
MAX FOSTER, CNN CORRESPONDENT: It certainly is. Welcome to Westminster Liz Truss, the new Prime Minister preparing to give her maiden speech launch
her premiership. She is expected to lay out our priorities. They include addressing that crucial energy crisis in the U.K.
Earlier today, both the outgoing and the incoming Prime Ministers traveled up to Balmorals Castle in Scotland to see the Queen - it takes the monarch
invites the leader of the biggest party to form a government that is Liz Truss.
Now normally this takes place down the road here at Buckingham Palace, but it was moved to the Queen's Scottish home for health reasons. Both
audiences are held in private but we did get this photo released by the Press Association of Liz Truss. This is kissing of hands effectively, that
actually kiss hands. But this is the way the appointment traditionally works, they'll shake hands. And this is the Queen's 15th Prime Minister
would you believe Julia? Ahead of his meeting, Boris Johnson earlier on delivered his final address as Prime Minister.
(BEGIN VIDEO CLIP)
BORIS JOHNSON, OUTGOING BRITISH PRIME MINISTER: Thanks to you, the British people, to the voters for giving me the chance to serve all of you who
worked so tirelessly together to beat COVID to put us where we are today.
Together, we have laid foundations that will stand the test of time whether by taking back control of our loss, or putting in vital new infrastructure.
Great solid masonry on which we will continue to build together paving the path of prosperity now and for future generations and I will be supporting
Liz Truss and the new government every step of the way.
(END VIDEO CLIP)
FOSTER: Johnson was then embraced by his family staff members and supporters all of whom feel he was pushed out way too soon. By the end of
the day, he'll have moved out of Downing Street Liz Truss will be moving in as Britain's first or third rather female Prime Minister.
She is now heading back to London to give her speech we think in just over 2 hours, time but you know, as is the case in the U.K. it's all weather
dependent Nada waiting by for her arrival at Downing Street. Nada, we're going to speak to Anna just a moment about her big domestic priority which
is energy prices.
[09:05:00]
FOSTER: But can we talk a bit about what we know about Liz Truss on the international stage. She has been Foreign Secretary for some years now so
we have a sense of where she sees Britain's place in the world?
NADA BASHIR, CNN REPORTER: Well, absolutely. We have seen a Liz Truss taking on the role of Foreign Secretary, of course, during the war in
Ukraine, there have been some talk around her position as foreign secretary, in the media often people saying that she sort of resembles the
former Prime Minister Margaret Thatcher, something that she has actually often look to do herself.
And there is question around the sort of Prime Minister she will be? We've seen her of course, in pastures trade secretary as well during Brexit. So
there has been some exposure to Liz Truss in those positions of power in cabinet.
The question now was what sort of premiership she will lead? We're still expected to learn a little bit more about that. Today, of course, as I
mentioned that just over two hours, we are expected to give her first speech as Prime Minister here in 10 Downing Street.
And there are a number of challenges that lie ahead for of course, but there is question as well around the support that she has within her own
party. Now, of course, she was elected and saw that victory speech yesterday by a comfortable margin of just over 57 percent of course, it's
crucial to highlight that she was elected by conservative party members, that is a small sliver of society less than 1 percent of the overall
British electorate.
And we've already heard from the opposition party's questions around her mandate to lead the government as Prime Minister particularly when the
country is dealing with so many crises? How she will command that control of our party, particularly when we've already seen so much blue on blue
infighting if you like, over the last few weeks and months during the Tory leadership campaign.
And of course, that was something that Boris Johnson actually touched on in his farewell speech, and he touched on the divisions within the
conservative party, he joked that if Larry, the cat of Downing Street and his dog were able to see past their differences, and so to conservative
party members.
But these are deeply divisions that Liz Truss will have to overcome as she tries to form a new government today, of course, giving her first speech
because we'll also be looking to appoint her cabinet ministers, and of course, laying out the framework that will underpin her Premiership. We've
seen her approach as Foreign Secretary; we've seen her approach as the former trade secretary.
The question now was what sort of Prime Minister she will be and how she will tackle this crisis that is left behind by the former and outgoing
Prime Minister Boris Johnson.
FOSTER: Nada, thank you we never know how someone's going to perform as Prime Minister until they are Prime Minister Can they live up to that
promise? Liz Truss has many challenges ahead of her and that has been describing. One of the most pressing though, is domestic and it's that
rising cost of living.
The U.K. is enduring its highest inflation in 40 years as food and energy prices soar. Average household energy bills have risen 54 percent already
this year. And expenses go even higher next year, the new Prime Minister has promised to deliver a plan to address the crisis.
But as ever, gave no detail. For now, there's no official announcement on how any of this will work. Anna Stewart joins me now you're going to be
watching this first speech very keenly, aren't you because we've heard all of these promises about what she's going to do, but they're so generic.
ANNA STEWART, CNN REPORTER: They aren't, we've had hints now for weeks over this very long leadership contest. And it'll be interesting to see what
actually makes it into the big bold plan. We are promised that we expect to get that on Thursday.
But it has been widely reported that really the deal in terms of energy and how she's going to deal with households facing an 80 percent increase in
what is already very high energy bills just next month, is there's going to be a freeze and that the freeze will take place almost immediately it will
be capped for households in terms of energy bills, where it is right now.
And that will stay in place until the next general election, which of course is interesting timing Max, 2024 now that according to reports is
expected to cost 130 billion pounds. This is for the household protection.
But also reports suggested that perhaps there'll be a separate package for businesses facing high energy costs as well that could be costing around 40
billion pounds. Where is all the money coming from? Well, according to all the reports and we do need to wait for the actual big bowl plan to be
announced. But according to reports, it sounds like energy suppliers could take out government backed loans.
This is something of course we saw during the pandemic and effectively, this would mean that this loan would help them pay the difference between
the wholesale price which is so high, and where household energy bills are capped at and that would be repaid over maybe 10 to 20 years by adding a
subsidy onto customer's bills.
So households will pay it eventually just over a longer time period. On the one hand, I think everyone agrees something had to be done next month when
the next price cap rise comes into place the missing 8 percent increase in bills. It is estimated by charity National Energy Action that one in three
households in the U.K. will enter what is known as fuel poverty.
[09:10:00]
STEWART: Unable to adequately fuel and power their homes so something had to happen. I think the criticism at the moment of this energy price freeze
there are a few but what is - it's not very targeted. It doesn't really hit the lowest income people in society or the pensioners perhaps it could be
more focused. And how long can the U.K. afford to sort of kick the energy price increase down the road because there is no guarantee when or if
wholesale energy prices will fall?
Let's have a look at the British pound it was under huge pressure yesterday actually dipped to a low we've not seen since 1985. At one stage, I think
it is still dancing around the $1.50 mark. And also we're having gilts under pressure as well.
Yes, look at that $1.15 pretty much actually falling a little bit from where I last saw it gilts also under pressure Max, with investors a bit
worried I think about some of these plans you know, looming tax cuts increased fiscal spending, U.K. government bonds are hovering just around 3
percent for the 10 year.
FOSTER: I've lost the sound.
STEWART: We will also be getting Max in the coming hours we'll also be getting of course, and--
FOSTER: --the other thing we're watching for Julia after the speech later on today is the key appointments amongst them of course, Chancellor of the
Exchequer so we expect to get emails about that this evening U.K. time but that's going to be the first century really get to the cabinet that Liz
Truss is planning to forge ahead with.
CHATTERLEY: Max well handles there, the joys of live TV, thank you so much. It was a seamless transition and we will be back to you later on in the
show. And thanks to Anna there too. OK, we're going to take a quick break here. But coming up crypto regulation, yes, it's coming the question is
will new rules be met with chairs or GS? We'll chat with the man who laid out much of the current guidelines to get his take.
And automaker Porsche accelerating towards an IPO, amid current turbulence will it reach the finish line. We'll discuss stay with us plenty more to
come.
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CHATTERLEY: Welcome back to "First Move" call it a government order intended to ease disorder in the Cryptocurrency quarter perhaps. Treasury
Secretary Janet Yellen expected to send a government review to President Biden this week covering the future regulation of crypto assets and their
role in finance.
Now a growing debate is underway over whether regulatory oversight of crypto should be contained within the current banking system or left
outside.
[09:15:00]
CHATTERLEY: As the Democratic senators like Elizabeth Warren and Bernie Sanders have indicated, why does this matter? Well, it matters to
consumers, because some believe crypto technology could improve the efficiency of the financial system and offer consumers more choice.
Today, of course, the debate is all the more urgent following the crypto collapse this year that has sent Bitcoin tumbling more than 50 percent.
We've also seen the blow up stable coin terra dollar and the failure of crypto lender Celsius.
OK, so let's discuss this, Brian Brooks joins us now. He's the CEO of blockchain technology company Bitfury. He's also the former U.S. Acting
Comptroller of the Currency responsible for issuing initial guidelines for crypto in a previous life.
Brian, great to have you with us OK, let's start with the current banking system as it stands today, and I think you and I would agree, look, it's
not perfect. Nor is there what 2000 plus examiner's that oversee it today. But even under your time at the OCC, you dished out what more than a
billion dollars, worth of fines you caught risk management violations so something's working.
BRIAN BROOKS, CEO, BITFURY: Yes, that's right, Julia. I mean, the whole point of banking supervision is the idea that inherent in any lending
transaction. Inherent in any financial mediation is a certain amount of risk, right? Both sides are counting on the other side to comply with their
obligations and to meet their promises.
And usually that happens, but sometimes being humans, we encounter people who are greedy or negligent, or not that good at their jobs or committing
crimes. And we funnel that through a system of supervision so that we catch bad actors and stop them to the extent that we can. That's the point of
banking; it's puzzling why we would take a different view of other financial risks.
CHATTERLEY: Yes, it's hard to make the system safer, not completely risk less, but to de risk those pockets, as you pointed out. OK, along comes
crypto anywhere between on a daily valuation basis, what a 5th and a 15th, the size of the current $15 trillion banking system.
And for those that are believers, they think it can compete with savings, with payments, with lending and improve efficiency. It's got great
opportunity it also has potential risks too. Why would senators like Elizabeth Warren and Bernie Sanders, say supervision of crypto should be
outside the financial system, the current financial system?
BROOKS: Yes, this is a very, it's a very puzzling question. I've thought a lot about it. And I can only come up with two answers. One answer is a
belief that all of us have in childhood that if you ignore something, it'll go away.
And I think most of us know that that's not the way problems work. Generally, if you ignore something, they fester, they don't go away. So if
that's not their thinking, the only other possible explanation I can come up with Julia is the idea that crypto is fundamentally about creating a
more user controlled economy, it's about the idea that you can have lending and deposit taking that isn't intermediated by human beings, but is instead
controlled by the holders of the tokens themselves.
This is potentially a threat to people who believe that we need a different model for financial services in this country, a model in which the
government provides the financial services, whether they be loans in the form of for example, President Biden's recent loan forgiveness program,
whether it be payments, as for example, the Feds proposal for a central bank, digital currency, or other aspects of finance.
And so that's the great struggle, I think of today's financial debate. Do we want to move in favor of a user controlled system free from Central
dominance? Or do we believe that fairness requires that only the government provides financial services, this will be an increasingly major part of the
debate over the next four years?
CHATTERLEY: OK, I want to explore what a user controlled financial system means relative to I guess, more government control, because that would be
the alternative in this case. But before we do that, I want to take a step back and say, let's say we bought crypto regulation under the current rules
of regulation in the financial system.
Would things like the Celsius breakdown that the crypto lender that you and I have discussed on this show before? Would that have been caught and
prevented? And would the blow up of terra dollar the stable coin also has been prevented under existing regulations? Because I think these are
important questions to ask, and then we can go OK, then we're missing a trick and actually, there is better.
BROOKS: Yes, so listen, I wrote in a recent Wall Street Journal op-ed about this exact problem. And while you can't guarantee that every specific error
will be caught by bank regulators. Because regulators are no more flawless than the criminals are, right? We're all human beings. But what we do know
is there are some basic principles of banking regulations that apply to all financial transactions.
So for example, the concept of liquidity risk, where we make sure that there is sufficient liquidity inside of a system to meet obligations, or
the concept of concentration risk, where we manage somebody putting all of their chips on one number. And we force diversification to make sure that
if that number blows up; there are still investment assets in other places that are uncorrelated with that risk.
[09:20:00]
BROOKS: These are the kinds of things that banking regulation is all about making sure that there's adequate capital to bear losses, making sure that
risk management is in place to prevent these concentrations of risk.
And the kinds of things that happened in Celsius are the kinds of things that happen in terra, are precisely the kinds of risks that if they happen
inside of a bank would have been looked at by examiner's who would have been asking questions early on.
And even if there might have been some losses, they likely would have been much smaller. That's why the banking system is stable relative to the
unregulated parts of the economy. So I think the answer is mostly yes would have been a good thing to head up have eyes on these things before they
blew up.
CHATTERLEY: Yes, the other thing you could have said, and you mentioned it in your op-ed in the Wall Street Journal was when we had the London Whale
disaster incident that people might remember if JP Morgan, they didn't get thrown out of the financial system regulation.
As a result, yes, it wasn't a reason to push the boundaries a reason actually for more regulation. OK, so in a user controlled financial system,
we're talking about payments being settled on blockchain. We talk about this a lot on the show, we no longer use debit cards, use algorithms to
allocate how people get money and borrow money rather than perhaps a loan officer.
What does the system where the government has more control look like Brian because if we're not regulating crypto within the existing regulations,
then to your point, we're looking at more government control? What does that look like in practice?
BROOKS: Yes, well, so Julia, we have, unfortunately, a very current real world example of what it looks like coming not surprisingly, from China,
our major global competitor, who has built a central bank, digital currency platform, which is the model I fear for what's being built inside of our
Federal Reserve today.
So China's theory, as they have said, is that to build a central bank, digital currency will give them the power to do three important things. The
first thing is to have their own network that they control that is separate from the U.S. sanctions system, which is the way banks globally currently
operate. So once China builds their own system, it's closed off from the rest of the world and can be controlled by the central party there.
The second reason, of course, is it allows them to control inbound money in a way that no one can currently do that. So imagine a world where U.S.
investors who want to invest in emerging Chinese companies are required to make those investments in the Chinese central bank digital currency versus
in dollars as things currently work today. That has a major negative effect on the ongoing power of the dollar as the global reserve.
And finally, and maybe most frightening to individual Americans is the idea that when you have a centrally controlled financial system, the government
can decide which payments to authorize and which not to authorize so if you've read in the newspaper about Chinese protesters who weren't allowed
to buy train tickets to travel, the way that kind of social prohibition was administered was through the banking system.
And in a world where the money literally has to clear through the central bank, for every individual transaction, you now have the government
deciding who can buy luxury goods, who can take their families on vacation or who needs to be suppressed. Those aren't American values or Western
values. But once the ability to control those things has been built, it's only a matter of time before government officials will use them to the
China.
CHATTERLEY: It's a really extreme example, but it does give you an indication and it flies in the face and is the antithesis of everything
that anyone working in the crypto sector, and I'm talking the underlying technology here things are required or would like to see what it would
require, though, let's be clear, is legislation.
And I don't see any appetite for that on either side, despite what these senators are saying, which is perhaps why they're writing a letter now to
the current Comptroller of the Currency to say, Hey, this is the way we should be going. Brian, we have about a minute left. What do we need to
watch here? And what is required?
BROOKS: Well, what we need to watch is the risk that crypto continues to be a political issue versus a regulatory issue. I was gratified that the
letter to the OCC asking that my guidance be rescinded was only signed by four senators.
Now there were four very influential progressive senators. But other Democrats didn't join that call. I think what that means is that there's a
growing bipartisan group of people in our Congress, who recognize the future is coming for finance. Americans fundamentally want more control
over their financial lives, not less.
And at the end of the day, we'll get some nuts and bolts regulations, probably not before the election. But I think after the election, on some
basic issues, comprehensive regulation isn't something we do well in this country.
But the good news is only four out of 100 senators want this activity kicked out of the banking system that tells me that more normalcy might be
ahead and that's a rare bit of good news and an otherwise very difficult political climate.
CHATTERLEY: Yes, we'll keep talking about it. But your point is such an important one. This has to be about regulation, not about a political
football.
[09:25:00]
CHATTERLEY: As challenging and as volatile as this sector as it's been in it can be incredibly beneficial we hope technology and in the end it should
be about consumers and improving things for consumers. And we have to keep that in mind. Yes Brian, always a pleasure to chat to you, thank you. Brian
Brooks there the CEO of Bitfury we'll talk again soon sir thank you. We're back after this stay with us.
CHATTERLEY: Welcome back to "First Move" Ukrainian President Volodymyr Zelenskyy is set to deliver remarks virtually at the New York Stock
Exchange is also set to ring the opening bell. So we are what 90 seconds away from that and I believe he's speaking now let's listen in.
VOLODYMYR ZELENSKYY, PRESIDENT OF UKRAINE: --has different manifestations. But the most important for many is the ability to work for your benefit,
for the benefit of your children and the one of your country. In Ukraine, we're fighting for everything that you have.
We stand so that every Ukrainian would enjoy all their manifestations of freedom available to a free person in a democratic society. We have
achieved significant results. We have united the whole world around our struggle for freedom.
We are liberating Ukrainian territory from the Russian army. We have already started or innovated everything that was destroyed by the Russian
terror. We are rebuilding our economy. We are giving you and your companies the opportunity to work together with us.
For the benefit of all us, Ukraine is the story of a future victory and a chance for you to invest now in projects worth of hundreds of billions of
dollars to share the victory with us. Today we kick start a large scale promotional campaign to attract investors advantage Ukraine.
[09:30:00]
ZELENSKYY: Tell the world why you pray either place for as anti-national opportunities. I invite you to Ukraine invest in Ukraine. These will be
your victory and then you success story for your companies - start your work.
CHATTERLEY: President Zelenskyy speaking ahead of the opening bell at the New York Stock Exchange on this shortened week wearing a T-Shirt saying the
power of freedom and saying actually that the country's kicking off a two day campaign now advantage Ukraine to try and drum up investment in the
country. And clearly, I want to bring in Sam Kiley, now Sam investment in Ukraine, the rebuilding of Ukraine essential and needs to begin as soon as
possible.
SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, I mean, many investors will think that a little bit previous, I have to say, Julia, I
mean, there's a war on here. You wouldn't know it, frankly, here in central Odessa if you go down to the sea, though, we'll try to get to the sea will
be blocked by soldiers, because that's a strategic location.
And it has been shelled. And that's the point. Ukraine needs to be able to bring in not just foreign aid, but maintain its human capital here if you
think about somewhere like Kharkiv that was one of the major IT hubs, Tech hubs in the whole of Europe.
I spoke to entrepreneurs there that had subsidiaries in the United Kingdom rather than the other way round which is how people would see it. The human
capital here is very strong, it is robust, it needs bringing back it needs employment, and it needs to be rebuilt, but it is going to be tricky
decision for investors as to whether or not they want to invest now, or once this war is over.
But of course, there is the old adage that you buy - their blood is running in the streets, the blood is literally running in the streets in the east
of this country, during the southern counter offensive here not very far from Odessa. There is fierce combat, and that is not over and it's not
going to be over soon, Julia.
CHATTERLEY: No. And you raised so many great points there about the hopes they're digitizing the economy of the future. And we're obviously very
familiar with that remote work and people that have actually had to leave the country but are still trying to work and to support the economy too.
And certainly, with the conversations I've had with big investors to your point as well it's a case of let's get the war through and ended before we
start to invest.
And unfortunately, that leaves Ukraine in a very difficult position, not only with what's going on there at the moment? What can you tell us about
the nuclear power plant in Zaporizhzhia and the challenges they have, even with the cooling system now? What's the latest there?
KILEY: Well, there is repeated allegations from both sides of shelling as we now know only too well Julia, there are two UN inspectors in the
Zaporizhzhia nuclear power station that the sixth reactor was disconnected from the grid of the Ukrainian say in order to carry out repairs and put
out a fire that they blamed on the Russians.
The Russians have claimed that they've received incoming fire from across the river in Ukrainian territory. That is not something that has any kind
of evidential support that we've seen so far. It's an allegation that is made very, very frequently.
But the other day, the Ukrainians did admit that they were very using precision weapons had hit a handful of targets on the outer perimeter of
that area. And of course, in another the dormitory town for that nuclear power station, also being hit on a regular basis more reports that it has
been hit again today.
But that those the finger of blame for those attacks, is being used - being pointed in the west at any rate, mostly at Russia, but to the wider point
of investment too. When you've got things like that going on it does give people the judges but there is inevitably an obviously a massive amount of
reconstruction already going on here.
There is a huge amount that the Ukrainians do, in spite of something like the threat of a nuclear disaster with a potential meltdown of a nuclear
reactor there for the cooling system gets destroyed completely and the reactor goes into meltdown. Not that far away, though. You will see people
sweeping the streets or repairs to shelling to missile strikes are almost instantaneous here, Julia.
CHATTERLEY: Sam great to have you with us. Thank you. And as you mentioned, as well the International Atomic Energy Agency is set to release that
report on the security situation there as well. So we will bring that to our viewers that we get it. For now Sam great to have you with us thank
you.
OK, let's return now to our one of our top stories Liz Truss has taken the reins of the UK's third Female Prime Minister. Earlier today both Liz Truss
and Outgoing Prime Minister Boris Johnson traveled to Balmorals in Scotland to see the Queen. Normally this takes place at Buckingham Palace but it was
moved to the Queen's Scottish home for health reasons.
Both audiences are held in private later this week Prime Minister Truss is expected to lay out her government's priorities including a plan to address
the country's ongoing energy crisis.
[09:35:00]
CHATTERLEY: One major employer in Britain is talking about how it's planning to help staff deal with surging costs. The John Lewis Partnership,
which owns supermarkets and department stores across the United Kingdom, says it's offering free meals to all employees, including temporary staff
for three months from October.
John Lewis is the largest employee owned businesses in the UK about 78,000 permanent staff are partners, entitled to a share of the profits and a say
in how the company is run? The free food program comes as the retailer prepared to add 10,000 temporary workers ahead of the holiday season. And
it says it seems some customers already shopping for Christmas trees and decorations and it's only just September.
Joining us now is Andrew Murphy. He's Chief Operating Officer for the John Lewis Partnership. Andrew, fantastic to have you on the show with us! Let's
talk about the decision to provide food for your staff. It's a bold decision. Why did you feel it necessary?
ANDREW MURPHY, CHIEF OPERATING OFFICER, JOHN LEWIS PARTNERSHIP: Hi, Julia. Well, it's actually something that we first did during the COVID-19
pandemic and in fact, for most of that, that kind of period and the 18 months during which we were in sporadic lockdowns here in the UK, we found
that it was an excellent way to help our staff in a really practical way, and one that they really appreciated.
And so when we saw the shape of the cost of living crisis, emerging earlier this year, it was a natural place for us to go because its practical
support, it's really welcomed. And it's something that we're already fairly well set up to do for our staff.
CHATTERLEY: I think it's unique to you. But I think other companies should be looking at this and working out what they can do to support people too.
As I mentioned, you're in a unique position in many ways because you're employee owned, and your permanent staff members do get a say in how it's
run?
You've also made a decision to provide a 3 percent bonus and a 2 percent pay rise, I think. But when we look at the inflationary picture in the UK I
think for many employees, they have to realize that that actually their take home pays is worth a lot less in light of rising prices. There's only
so much you can do Andrew, I guess the question is can you do more?
MURPHY: Yes, that say, I mean, to be fair to all employers, we're not blessed with a crystal ball and so government forecasts and an indulgent,
broad economic forecast where we're so short of capturing what was happening - to happen to us this year.
That we're all playing catch up to a degree and even though in the UK, although we can see that the cost of energy is going to step up again in
October with a new government, it's possible that some maybe even all of that might be mitigated.
And so employers are really in a difficult position, but what's clear is that some significant help will be required. And in reality, government
probably won't be able to do everything that anybody would want. So earlier this year, we moved pay for our lowest paid partners up just over 7
percent.
And for everybody who had a pay rise, and in the recent past got at least 2 percent then a 3 percent annual salary bonus on top of that, and we've
created an 100,000 pound hardship fund to help partners through the cost of living crisis, which is double the number - the amount that we usually
provide in a normal year.
CHATTERLEY: Wow! So your employees can just apply to that if they're having financial difficulties. And I guess on a case by case basis, you provide
more support. And that's good to know. You mentioned the new government. And of course, new Prime Minister Liz Truss, how optimistic are you that
support will be provided?
There are obviously concerned about what the country can afford, at this moment in time to particularly whilst dealing with Brexit? What are you
hoping for from the government?
MURPHY: Yes, look, it's a very difficult situation. And I don't think we would want to give specific advice to the government, although we've
collaborated with, you know, governments over the years to try and help them understand the practical realities, either for business or for
employees. And we'll continue to do that.
I think it's clear that there's going to be some fairly major help provided, I think, there's always the challenge between trying to target
that in a smart way to minimize the bureaucracy that's attached to delivering that.
And then the fact that there's really very few people who are entirely untouched by the economic pressures that we're seeing, and it would be
wrong, I think we're reminding ourselves of this would be wrong to characterize this as a problem that's only affecting the lowest paid in
society.
Most people are on, you know, even if they're middle income, that income is fixed. And clearly the costs are not at the moment. And it's not easy for
people to make those adaptations. And so I hope there'll be a broad package of support from government that doesn't focus narrowly on any one group or
one means of delivery and although obviously most money should flow to those in most need.
[09:40:00]
CHATTERLEY: Yes, I want to talk about the business as well. I mean, I mentioned in the introduction, you're seeing people buying Christmas trees,
baubles for the Christmas tree, I think we could all do with some Christmas cheer, quite frankly, at any point in the year.
But I guess the concern I have in seeing that is perhaps that people are buying ahead, because they do anticipate prices rising. How are you
managing potential price rises into the Christmas period, as a business?
And I think, to your point, and it's a very important one about the risk of energy price rises further? Are you prepared in the case of the need for
blackouts, for example? And how are you operating as a business in light of the rising cost of energy too because it's crippling for some smaller
businesses in the UK? How are you managing?
MURPHY: Yes, as a big, relatively well funded business, we're in a fortunate position when it comes to energy prices, in that we have a team
of people who buy energy ahead of time, what's called hedging the cost. And so we're reasonably well protected on the majority of our energy needs.
Now, obviously, if there's disruption to the actual supply, that a different matter. And that, frankly, there's only so much that you can do
in terms of planning. And it's one of the things a pandemic taught us that it's great to have a plan, but really what your business needs to be most
of all, operationally is adaptable and agile.
And, you know, getting too caught up in the planning and multiple contingencies can sometimes be counterproductive. We'll stay very close to
government very close to the energy providers to make sure that we've got as good visibility of that as possible.
In terms of the consumer, I don't think the early purchasing of Christmas lines is necessarily an indication of spreading the cost. I think, the
desire to plan Christmas earlier, make it a bigger event has been something that we've seen really since before the pandemic.
And it really took hold as we were coming out of the pandemic. And I think it actually is just about there being key moments now that people value and
are prepared to plan for and invest and to deeper and greater extent than was maybe previously the case.
And in fact that really, our way of thinking about how the consumer behaves now is that they're very focused on these key moments in their own lives,
and particularly of celebration with friends and family.
CHATTERLEY: --out for lost time I think that's the message there. Andrew great to chat to you thank you so much for giving us your thoughts today.
And thank you for what you're doing for your employees. Like every little helps the Chief Operating Officer of the John Lewis partnership. Thank you,
sir. OK, after the break, we return to Westminster where Max Foster picks up reaction to Britain's new Prime Minister Liz Truss picks up the race at
Downing Street.
(COMMERCIAL BREAK)
[09:45:00]
FOSTER: Welcome back to London where we are awaiting the arrival of a new Prime Minister Liz Truss. She's somewhere in the air between Aberdeen in
Scotland and here. The formal procedural business of changing Prime Ministers has been taking place over 800 kilometers away near Aberdeen at
Balmorals Castle.
Earlier today, Boris Johnson visited the Queen's Scottish resident to tender his resignation. The Press Association reported that Mr. Johnson and
his wife Carrie spent about 40 minutes with Her Majesty, whose mobility issues ruled out a trip to London. A little later, the Queen greeted Liz
Truss asked her to form a new government.
Liz Truss is due back in London and will soon deliver her first speech as Prime Minister laying out her immediate priorities such as a plan to freeze
energy bills, which is the big domestic issue here. Let's talk about the international issues though.
Conservative MP, Tobias Ellwood joins me. We should set your - you were one of the main critics of Boris Johnson. He took the whip away from you as
it's called in Parliament, so opportunity for you to reset with a new leader as well?
TOBIAS ELLWOOD, BRITISH CONSERVATIVE MP: I hope that is the case. And we've got the constitutional housekeeping out the way now that Theresa May is the
Prime Minister to resume sorry - Liz Truss. I was just thinking of all the Prime Ministers that the Queen has seen going back to Churchill, which
includes obviously Boris Johnson, David Cameron, four in the last six years.
FOSTER: Four in the last six years, too many?
ELLWOOD: We need to settle down. We need to focus on what's required for the future? I'll be looking for the internationalist peace because much as
there's a focus on domestic matters, the challenges that face the British people, ultimately, there's an absence of international leadership I'm
afraid. We're not getting it from Germany. We're not getting a France. We're not getting the United States right now.
And Putin is taking advantage of that. Time for an international leader to step forward galvanize the international community to stand up to what
Russia is doing. We're not putting that fire out in Ukraine and it will spread unless, unless we're more vigorous.
FOSTER: Well, she's spoken very tough words in relation to Russia and China. Hasn't she taught that arguably, than Boris Johnson?
ELLWOOD: Absolutely, right. But then the talk on the campaign trail often doesn't necessarily manifest itself is when you get in to number 10 itself.
So I need to want to see a reinvigoration of that bond, that special relationship with the United States.
I'm afraid it's true that perhaps Boris Johnson got a bit too close to Donald Trump that affected Joe Biden's relationship with him time for that
to reset but as I say, stress to focus on what's going on the international scene? We're entering an era of change internationally. And we're not
really waking up to that yet.
FOSTER: How does she fix things with Joe Biden, because the other sensitive issue between the UK and the Biden Administration is the Northern Ireland
protocol, this idea that there's a border down the North Sea. In many people's views separating Northern Ireland from the rest of the UK. She
wants to get rid of that, as I understand it, Joe Biden's very concerned about the implications that might have on peace on the island of Ireland?
ELLWOOD: I do hope this has quietly dropped. The last thing we need with our economy where it is abundant fight with the EU, that doesn't help us at
all. So I do hope that we can get back to the talks get an agreement in place which we weren't that far off from.
But recognizing that the America has a stake in this given that they were the signatories and they were witnessed what was going on there with the
accord that took place there. But there are bigger things to focus on not least this axis as developing between Russia and China.
We heard Putin say the other day that the baton of international leadership must now be handed away from a Western nation, United States to a non-
western nation. If that isn't an indication as to where the world's going, we really do need to wake up.
FOSTER: A key ally is France. She criticized President Macron saying she didn't know whether he was friend or foe during the campaign. He was pretty
precipitous in his response as well. How she going to fix that? Because that's a vital relationship, too, isn't it?
ELLWOOD: Completely but you've been following this campaign trail, this distraction, I have to say over the last number of months this summer,
where our party have been taking chunks out of each other. I'm afraid that's part and parcel of the game.
We've got a curious relationship with a friendship that goes back a couple of millennia. I think that was for a particular audience. I'm sorry. She
said it. I have to say France is one of our closest security allies when it comes to Europe. And I keep stressing, you know what's going on in Eastern
Europe will spread unless we give greater attention to it.
FOSTER: Tobias Ellwood, appreciate your time. Thank you very much indeed. Now after the great Julia is back in the driving seat, not written by me
but by a brilliant writer, because Porsche confirming it's on the road to going public it was said to be a blockbuster IPO should have the details.
[09:50:00]
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move". U.S. stocks are up and running on the first trading day of the week and it's a volatile start to the session.
We are a touch lower as you can see the major averages heading into the round after posting gains in the first few minutes of trade.
The NASDAQ currently on track for its seven straight session loss on continued interest rate uncertainty. Stocks in the news today in the
meantime include Bed Bath and Beyond. It shares tumbling in early trade on news that the death of the company's CFO on Friday last week has been ruled
a suicide by police.
The horrible incident taking place after the firm announced a massive restructuring including layoffs and store closings. Bed Bath and beyond
shares which had been swept up in the meme trading crease to have seen wild price swings this year, but an hour down some 50 percent year to date as
you can see.
OK in the meantime, investors start your engines. Germany's iconic sports car brand Porsche is gearing up to go public despite recent stock market
and economic speed bumps. Volkswagen began considering a Porsche spin off back in February just as Russia's war in Ukraine began.
Report suggests the automaker could reach a valuation of up to $84 billion. Paula R LA Monica joins us now. This is a hugely profitable part of
Volkswagens' business, or at least they're interested in this business is how and when, what do we know?
PAULA R LA MONICA, CNN REPORTER: Yes, we're looking potentially in the next few months Julia, and in Frankfurt, probably not a U.S. listed stock debut.
But clearly, Porsche is a very profitable part of the Volkswagen Empire revenue up more than 8 percent in the first half of the year, operating
profits up more than 20 percent.
So it is doing better than the rest of Volkswagen. And by doing this share sale, it could free up Volkswagen to spend even more on electric vehicle
investments. So that's got to be something that Elon Musk and Tesla should be watching pretty closely.
CHATTERLEY: Yes, we're just going to look at this. They want to spend what nearly $90 billion over the next five years to develop an EV. So this is
welcome money, which perhaps one could argue is why they're pushing this by other IPO plans screech into a hole elsewhere in the world, and
particularly the U.S?
MONICA: Yes, there are concerns about the broader market volatility, the war between Russia and Ukraine, obviously, having an impact on the broader
IPO market, the Fed raising interest rates, there are a lot of concerns right now.
We have seen a slowdown with not that many "Unicorns" private startups going public, but I think there might be an appetite for a big brand name
like Porsche that is part of a larger global multinational. That is Volkswagen to potentially make it out into the public market even though
you may have companies like Instacart and other privately held U.S. firms that are going to potentially hold back on IPO plans and maybe wait until
2023.
[09:55:00]
CHATTERLEY: We should say, Paula R LA Monica where gone two weeks and the backdrops changed and your hair styles changed and everything I like it. I
just wanted to mention I get to. Paul R LA Monica always a pleasure. Thank you, sir.
OK, and finally, it's well known the Actor Tom Cruise likes to do his own stunts. But recently he took things to a whole new level the only setup you
need is that he's promoting Mission Impossible from a plane flying in South Africa just watch this.
All I want to do is scream? Tom is a legend. That's all we can say. And we salute you. That's it for the show. If you've missed any of our interviews
today, there will be on my Twitter and Instagram pages you can search for at @jchatterleycnn. "Connect the World" is up next and I'll see you
tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
