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First Move with Julia Chatterley
Musk Reverses Course on Twitter amid Litigation; British PM Liz Truss Doubles Down on Tax cut Plans; British PM's Priority: "Growth, Growth and Growth"; Musk U-Turn as he and Twitter Prepared for Court Case; All Eyes on OPEC Plus ahead of Key Decision on Oil output; Berluti CEO Discusses LVMH Group's Legacy. Aired 9-10a ET
Aired October 05, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ELENI GIOKOS, CNN HOST, FIRST MOVE: Live in Abu Dhabi, I'm Eleni Giokos, I'm in for Julia Chatterley, welcome to "First Move". Now Vladimir Putin
signing laws to claim the annexation of four Ukrainian regions into Russia even as Ukrainian forces retake more of the territory that he's claiming
live reports from Kyiv in just a moment.
On Wall Street, U.S. stock futures are low right now. And that's after a big 2-day rally. So you can see the DOW Jones down around 1 percent. The
DOW actually jumped nearly 3 percent yesterday, closing above 30,000. It's risen more than 1500 points this week alone. It's the best 2-day
performance we've seen since April of 2020. Now European stocks all in the red as well today giving back some of the gains that they made on Tuesday.
But our top story a 22 percent rally for Twitter yesterday after Elon Musk's abrupt, abrupt $44 billion U-turn. Let's remind ourselves how we got
here to buy or not to buy, or just go back to the beginning. Elon Musk spent months trying to buy Twitter and then try to get out of the deal. Now
it looks like he's back in, in a major reversal. Tuesday, the Tesla CEO revived his proposal to buy the company at the original price of $54.20 per
share. The two sides were heading to court over Musk's attempt to terminate the buy. Not a Twitter spokesperson tells CNN that it will close the deal
provided that the lawsuit is dropped.
Donie O'Sullivan joins me now with more details. Donie, I tell you I saw this tweet. And I was like, oh, no, not again. But we shouldn't actually be
surprised. There's one thing that the Tesla CEO is good at is just flip flopping around changing his mind and basically shocking the markets. But
is there a sense that this is a perhaps running away from court proceedings?
DONIE O'SULLIVAN, CNN CORRESPONDENT: Yes, I mean, I think it's those core proceedings that play into all of this, Twitter and Musk, of course, were
due to go to trial in Delaware in about two weeks' time so this all coming for that. But you know, really, it's this kind of will they won't day on
again off again, scenario out where we're seeing Musk saying he wants to do it, then fighting for months to get out of it.
And now saying that he wants to be back in again, how it's all going to play out, it really comes down to a lot of it is going to be on how the
deal works out. But of course how this court in Delaware, what the judge says about this case, Twitter, for its part has said that they want to go
ahead with the deal. They want Musk to take over the company.
Aside from you know, just the business side of this, this could have huge, of course political ramifications and not least here in the United States.
Everybody knows, of course, that Former President Donald Trump has been permanently or at least we thought permanently banned from Twitter. But
here, take a listen to what Elon Musk had to say about that back in May.
(BEGIN VIDEO CLIP)
ELON MUSK, CEO OF TESLA: I do think that it was not correct to ban Donald Trump. I think that was a mistake. I would reverse the - ban.
(END VIDEO CLIP)
O'SULLIVAN: So he says that if he were to take over Twitter, which he very well, might, that he would let Trump back on the platform. And of course,
he also said there that he's against what is called permanent bans entirely in most cases, meaning that, you know, fingers around the world,
particularly many on the right side of the right wing side of the political spectrum, may find themselves back with access to their accounts.
All of this for Twitter employees, many of whom some of whom I spoke to yesterday. I think they're really tired. This has been a real roller
coaster. I want to show you a tweet from our one employee who posted yesterday. Living the plot of succession is effing exhausting. And I think
that really sums up you know, a lot of concern within the company about watch. All of this will mean of course, for some people Musk supporters.
Its good news, they want to see what he could do with the company. He tweeted last night saying that this is on his way to building the X app,
which is his vision of a type of WeChat app in for the West which you know where people can do everything a one stop app for all products and
GIOKOS: Yes and you rightly said this on, off again relationship that we've been witnessing seems really unhealthy. But I wonder if it's going to be
the marriage that both sides expect. I mean, I think the markets are excited seeing what the Tesla with the Twitter share price was doing as
well. Donie always good to speak to you thank you so very much for joining us! That was Donie O'Sullivan.
And we head to Ukraine now Vladimir Putin signed laws earlier claiming to annex four regions of Ukraine into Russia. And the Kremlin says that
processes will move forward, even though its army keeps retreating. The Ukrainian leader in one region Luhansk says the de-occupation has begun.
President Vladimir Zelenskyy says Ukrainian troops are making a fast and powerful advance in the South.
CNN's Fred Pleitgen is live in Kyiv. Fred, really good to see you! We're hearing that Ukraine is able to take back some of the territories. Could
you give me a sense of what the frontlines are looking like in the newly annexed regions? And how the frontlines perhaps are shifting, changing? And
are we seeing a change in dynamics?
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: I think we're seeing a big change dynamic, Eleni. I think one of the things that are
really remarkable about all this is that, you know, for the past couple of months or so we were talking about the Ukrainians possibly launching
smaller counter offensives against the Russians.
But what you're seeing right now is really large scale counter offensives by the Ukrainians in several areas of the front line you have in the East
of the country around that area of the strategic town of Lyman, which the Ukrainians of course took a couple of days ago.
They've continued to advance from there and are threatening some of the big Russian strongholds that are sort of behind Lyman, including some of the
logistics areas that are extremely important for the Russians to keep those areas are under their control. So the Russians certainly acknowledging that
they're on the back foot.
Of course, Luhansk, which that Ukrainian governor was talking about that's one of those areas that the Ukrainians really want to get into because the
Russians obviously have had what they call that referendum they say that that's now an area of Russia. If the Ukrainians could continue to get a
foothold in Luhansk district, that certainly would be a big blow to the Kremlin as well.
And then you have the South. And thereby, I think even the Ukrainians are pretty surprised at the rate that they've been able to take territory back
from the Russians. They're obviously trying to get to the main town there, which is called Kherson. It's one of the first areas that the Russians were
able to take when they invaded Ukraine in February.
And the Ukrainians really are making a lot of headway in trying to do that they're sort of moving in from the administrative district of Kherson, the
Northern part of it, and trying to move south. And just in the latter part of yesterday, they said that they take advantage to take several very
important towns and villages in their quest to try and win back as much of that territory as they can.
And I think one of the really interesting things that we've been noticing is obviously we're hearing a lot from the Ukrainian side, Eleni. But we're
also hearing a lot from the Russian side as well about them being quite downbeat, about the way things are going, especially Kremlin controlled
media, where you do have some frontline journalists there in Ukraine for Russian media.
But also some commentators very openly speaking about the fact that the Russians are in retreat that they believe the mobilization that they're
conducting right now will not happen in time to fend off some of these offensive.
So really, quite a gloomy mood as you look at it in Moscow, even as the Kremlin tries to project the strength and tries to continue to say that
they are going to take back some of the territory that they're losing right now. Certainly, at the moment, it really seems as though momentum is very
firmly on the Ukrainian side, Eleni.
GIOKOS: All right, Fred Pleitgen thank you very much for that updates. Now taking a look at the oil market now, prices higher this session ahead of a
key meeting of oil Ministers. Brent crude is trading at around $92 a barrel OPEC and its allies, including Russia needs in Vienna today to discuss
slashing production to boost prices.
Anna Stewart joins me now. Anna, I have to tell you, you know, when we were talking about oil deficits, and who would be filling in that gap, there was
sort of a scramble a few months ago now OPEC Plus countries are saying they want to cut production. What is the thinking behind this? And if we look at
the oil price, where is that sweet spot where it kind of makes sense for producers?
ANNA STEWART, CNN REPORTER: When in terms of the simplest answer to what's going on and why OPEC Plus are looking to cut output already after, as you
say months of trying to increase it. Well just look at the prices from June where they weren't $120 a barrel.
They've slipped considerably and they are high on the expectation that there will be a big output cut, I think expectation between 1 and 2 million
barrels per day. So over 1 percent of the oil consumed around the world. I think we also have to consider the political moves going on behind the
scenes as well.
STEWART: Particularly if you consider that in December G7 countries want to impose a price cap on Russian oil you've also got the EU who wants to ban
seaborne oil imports from Russia as well that's happening again in December. And for OPEC and its allies it's really threatened by the fact
that someone's trying to take away the power of controlling oil prices. So we can see that political move there as well.
Now, Russia's Deputy Prime Minister Alexander Novak has arrived at the meeting in Vienna that is now underway. And I think what will be so
interesting is what we get out of this meeting, in terms of the lines that are leaked, as well as the actual output cut announcement.
Another thing to remember is actually how much OPEC Plus members are able to produce because if I can show you a chart from the output targets, they
set themselves and actually what they have been producing, you can see that they are under shooting it. You can see in blue there the Production that
they've got, but actually the quota they're in red.
And according to Reuters, who cite sources, OPEC, and its allies missed output targets by 3.5 million barrels a day back in August. So if we do get
a big output cost of 1 to 2 million barrels per day, you got a question. What does that actually mean in real terms, considering that undershooting
that target already?
GIOKOS: Yes and there's quite a gap seeing that graph. Anna Stewart thank you so very much. Right on Wall Street, U.S. futures falling ahead of the
opening bell after big 2-day rallies in ns. Marc Stewart joins me now from New York. Marc, great to see you!
I have to say that what we've seen, we take notes when there is a mini rally within sort of a down market, the best days that we've seen since
2020. Do you think this is a fluke? What are people saying? Or do are we expecting more upside at some stage?
MARC STEWART, CNN CORRESPONDENT: Eleni, it very well could be a fluke, I was just looking back over the last two days as to what was happening that
would give the markets a lift. But there wasn't one single moment, but rather a collection of moments that may have contributed to this boost,
including some data that suggests that the U.S. Federal Reserve may not have to be as aggressive or forceful in future interest rate hikes. Earlier
today on CNN, we did hear from a financial planner who pointed out these types of rallies are very common during bear markets.
They happen they give the market lift. But then we here we are today, some of the same problems that existed before high inflation concern over the
war in Ukraine. The list goes on and on. Those concerns very much remained. But markets open in about 20 minutes and the storyline for today still very
much to be written.
GIOKOS: Yes, look, the driving force, we know has been sticky inflation, what the Federal Reserve is going to be doing and a plethora of other data
points, but for this week, specifically, what would we say the drivers have been?
M. STEWART: Well, I think there have been some individual stock growths we saw micron sees him rise because of its investment in chips in the United
States. Obviously, you're talking about Twitter; Credit Suisse saw a boost earlier because of some of the fears of risk and its financial health,
those who have subsided.
I am going to be very curious about Friday with the jobs report here in the United States. It's one of many thermometers to measure the temperature of
the economy. Wall Street certainly is going to pay attention to it and likely the Federal Reserve.
GIOKOS: Right, Marc, great to see you, thank you very much for that updates coming up on "First Move".
(BEGIN VIDEO CLIP)
LIZ TRUSS, PRIME MINISTER OF BRITISH: We will lower our tax burden, and the Conservative Party will always be the party of low taxes.
(END VIDEO CLIP)
GIOKOS: The British Prime Minister doubling down and tax cuts as she defends her economic policy the details next.
GIOKOS: British Prime Minister Liz truss speaking at the Conservative Party conference just two days after a stunning U-turn over to tax cut for the
wealthy. Truss warned of stormy days ahead and said her plans with stoke the U.K. economy, listen in.
(BEGIN VIDEO CLIP)
TRUSS: I have three priorities for our economy, growth, growth and growth. The fact is that the abolition of the 45p tax rate became a distraction
from the major parts of our growth plan. That is why we're no longer proceeding with it. I get it and I have listened.
(END VIDEO CLIP)
GIOKOS: CNN's Bianca Nobilo is covering the conference. She joins us now live from Birmingham. Did Liz Truss, Bianca get the reception that she
wanted? Bianca, are you there? All right, I think we've lost Bianca. But we're going to try and get her back. And we'll check in with her in just a
All right, joining me now though is Former Bank of England policymaker Martin Weale. He's also a professor at King's business school, Martin
Weale, thank you very much for joining us. Great to have you! I have to ask you, there's been so much talking to and fro about this 45 percent tax cuts
Kwasi Kwarteng made it clear that perhaps it wasn't the right timing. We heard from Liz Truss as well. What do you make of this flip flop?
MARTIN WEALE, FORMER BANK OF ENGLAND POLICYMAKER: Well, there seems to me quite an element of uncertainty about what the government wants and very
much an element of uncertainty about its political judgment. I'm an economist.
And I suppose I just can't imagine that cutting the top rate of tax from 45p to 40p is going to do very much to stimulate economic growth, it will
make people who have high incomes better off. And of course, the problem the government ran into was that it was doing that at the same time when so
many people are struggling with the cost of fuel and the effects of inflation.
So certainly the political judgment was very poor. And in economics, I mean, it's difficult to say what the top tax rate ought to be. But it was
reduced from 50p to 45p, because the Treasury concluded several years ago, that could be done without having an adverse effect on revenue and labor
GIOKOS: As a Former Monetary Policy Committee member, I wonder, you know, watching on from the sidelines, seeing this disconnect with the Bank of
England with economic policy coming through. Do you get the sense that the BOE was shocked with this announcement, like everyone else was and then had
to come in, and basically use monetary policy tools to deal with the consequences?
WEALE: Well, I think they would say that they were providing liquidity to pension funds. And that, though, in conceptual terms isn't quite the same
thing as providing a monetary stimulus. On the other hand, it did look very much like a revival of quantitative easing, less than a week after they had
said they wanted to embark on quantitative tightening. So it certainly looks as though the Bank of England was taken by surprise, as indeed, a lot
of other people were.
GIOKOS: Yes, exactly when you're trying to tighten quantitative easing is of course counterproductive in that scenario. Look, Liz Truss says that,
you know, her economic policy is going to be a part growth, growth, growth. They've said they want 2.5 percent GDP. Do you think they'll be able to
There are concerns that the first policy they came up with, could perhaps cause stickier inflationary environment, it could increase debt
dramatically, and of course, mean that the BOE would have to be out of sync with what other central banks globally are doing?
WEALE: Well, it seems to me perfectly possible, although tensions in financial markets have eased in the last week, it nevertheless seems to me
that we're going to have interest rates higher in the longer term than would otherwise have been the case because though the government is
regarded with some suspicion by people investing or thinking of investing in government debt.
And in those circumstances, it's unlikely that you would get more growth, you might well get less growth, of course, that says, we haven't seen
actually seen what the government's supply side packages are going to be. But experience from other countries that have tried things like this
doesn't point to the idea that you can get a sharper and semi-permanent acceleration in the rate of economic growth.
And of course, in the short term, it looks as though the government is trying to add to demand to get the economy growing at a time when the labor
market is very tight, vacancies are very high. And the Bank of England has been trying to take demand out of the economy in order to bring inflation
down. So that tension will have to be resolved one way or another.
GIOKOS: I have to ask you what you think of the overall economic policy that was put on the table and while the 45 percent tax cuts been put on the
back burner for now. What do you think of the overall policy that is on the table? And I have to say that when we saw the markets responding so
aggressively, do you believe that there's going to be a longer term consequence to this decision and sort of the policy that they've come up
WEALE: Well, as I say, I do expect that in the medium to longer term for quite a while, at least the government is going to have to pay a higher
interest rate on its borrowing than it would have without the episode of the last two weeks.
I mean, I should also say that now if it does get the rate of economic growth going, if it does get it up to 2.5 percent, then the high levels of
government spending will be quite easily affordable. But between now and the release of the OPR report, we will presume, or certainly once the OPR
report comes out, we will presumably get some sense of the other side of the equation, how the government expects the tax cuts to be paid for. And
it seems to me very unlikely that the OPR will accept the argument that they can be paid for by faster growth.
GIOKOS: Were you shocked that the IMF weighed in on this decision? And the fact that many analysts said listen, the pound has got sort of acting a bit
like an emerging market currency even though we know fundamentally, it's a lot stronger? Were you surprised by the narrative around what happened?
WEALE: Well, I was a bit surprised that the IMF intervened in the way that it did that. Not to say that I disagree with their comment. But it was of
course, as people noted, very unusual.
GIOKOS: Right, Martin Weale, thank you very much for joining us really good to see you. There was Former Bank of England policymaker joining us. And
we've got Bianca Nobilo, back for us.
Joining us to talk all things Liz Truss at the Conservative Party Conference Bianca, you know, Liz Truss came out with a very powerful
message about economic growth is what's going to define her and her party whether she can achieve that, of course, there's going to be a big
question, because we've seen how the markets have responded to their messaging, but did she receive the reception that she wanted at the party
BIANCA NOBILO, CNN CORRESPONDENT: From her supporters, she did Eleni, and it's interesting that you note how she is essentially hedging everything on
the economy. Even her diehard supporters that I spoke to after the speech acknowledged that this party and its electoral fortunes and Truss's
leadership will live or die by what happens to the economy next.
It was a workman like speech, which is what we've come to expect from the Prime Minister a stronger performance than what we've seen in recent media
interviews. But that bar is indeed very low. She said many times during the leadership contest and at other points, but she's not a particularly strong
She doesn't focus on having charisma. It's not a skill that she was really famous for. That being said she had more energy and I was told by some in
the room that she was inspiring and that there was a bit of electricity.
NOBILO: But the key point is so many of her own MPs weren't even at the conference and plenty that I spoke to earlier on WhatsApp and on the phone
said that they weren't even going to watch the speech. So I feel that she's done so much damage that for many, this doesn't go any way to undoing the
loss of confidence and loss of trust in her leadership.
And first impressions do stick and this first month of her premiership has been plagued with so many issues. And even though she did inherit poison
Chalice, economically, circumstantially, with the passing of Queen Elizabeth, the second war on the European continent. Generally, she's not
considered to have played those cards particularly well. And there's a series of unforced errors, which we've seen play out this week.
So Eleni, she needs to do a lot more to convince her party that she is the right person for the job right now, one of the key factors, sustaining her
and stabilizing her is the fact that the Conservatives are well aware that they don't want to have five Tory leaders in six years. Clearly, that
doesn't convey a party that's well organized and united to the electorate.
GIOKOS: Yes, and look, a loss of trust is a very big issue for any politician and when it has to do with the economy, that can of course,
erode confidence. But Bianca, is there a sense from the people that you speak to that you say, are not there that did not attend? Is there any way
that she and Kwasi Kwarteng can find a way to get people to change their sentiment, their perception of their abilities to deliver on their economic
NOBILO: That was a very peculiar tone at conference, Eleni. Because, of course, you would expect a political party to always have hope, and however
frustrated and angry they are, willing, their leader and the government to succeed.
And of course, that's present and that's there. But overall, the sentiment reminded me of a government's in their last days in office, you know,
similar to the downfall of Boris Johnson politically. When the party was in disarray, there was so much infighting, open, rousing between members of
the Cabinet MPs breaking rank showing no party discipline and criticizing the Prime Minister, often, many not attending.
So you know, that suggests the party that in some ways is resigned to this difficult political position that doesn't really believe that they're going
to win the next election. The general consensus is they need to give the Prime Minister until Christmas to see what the economy does, to see how she
handles these next few months, whether she's learned the lessons, or the disasters of the last week in terms of communicating better to the markets
to the public at large, taking a more conciliatory approach and approaching the party and embracing the fact that it's the broad church.
If she shows progress on those aspects, then I think there could be hope. But tomorrow, Eleni, the Prime Minister is traveling to Prague to for the
inaugural meeting of the European political community, which is a grouping of European nations to discuss how to counter Putin's aggression.
She also wants to talk about the issue of migration in Britain, among others. Now, that means that she's going into that meeting of European
heads of state so deeply weakened with members of her own party questioning how long she can last just a month into the job. So the next few weeks will
be a test of whether or not she is another prime minister, who is in post, but not really in power.
GIOKOS: All right, Bianca Nobilo, always good to see you. Thank you so very much. And still to come on "First Move". Could the Twitter, Musk soap
opera, finally be coming to an end? I'll be speaking with Dan Ives about the billionaires' major buffets after the break, stay with CNN.
GIOKOS: Welcome back to "First Move", I'm Eleni Giokos in Abu Dhabi. Now U.S. stocks opening lower today and this Wednesday following a huge two day
rally. Shares of Twitter also down right now after surging 22 percent yesterday. Elon Musk has offered to close a deal to buy the company after
the price he originally agreed to. The surprise move comes after he spent months trying to get out of the $44 billion deal.
And joining me now to discuss this further we have Dan Ives, Managing Director at Wedbush Securities. Dan, I have to say I've got a bit of
whiplash on the story. There's sort of to and fro from Elon Musk when we you know, saw the excitement around the initial offer and then taking a
step back and really being vehemently opposed to a buyout. Do you get the sense that he's feeling the pressure about the court proceedings that's
made him rethink this move?
DAN IVES, MANAGING DIRECTOR AND ANALYST, WEDBUSH SECURITIES: Oh, definitely. I mean, the writing was in the wall going into Delaware, in
that game of thrones battle, which would have been long and ugly court battle, he would have off, I mean, he really had minimal legs to stand on.
So this is really I think, his view path of least resistance, go ahead with the deal, because the irony is coming out of Delaware, he would end up in
the same position, but the judge would have forced him to ultimately own Twitter at that same price.
GIOKOS: Well, keeping with the Game of Thrones analogy, is winter coming for Twitter? What will the Twitter look like under Elon Musk?
IVES: Well, winter has already been here for Twitter. And you could argue it's been here for the last five years. And I think that's part of the
problem is for Musk, 44 billion was just a ridiculous price.
I think he got cold feet, use the bots as a scapegoat. And now the easy part was buying Twitter, the hard part's going to be fixing it. And I think
there's an uphill battle here in terms of how do you monetize it engagement?
Social media has been a third tier player, these are going to be all the transformations in terms of how much tries to take Twitter, as he just bet
big in terms of this $44 billion purchase.
GIOKOS: Yes, so I know the bots were the one big issue for him. I want to also talk about the fact that he's been very vocal about undoing the bans
on people like Donald Trump or not allowing bans in the future.
Is that going to be an issue do you think from market participants watching sort of how Twitter will evolve under Elon Musk's leadership?
IVES: Yes, I think there's a laser focus if he lets Trump back on, because it's not just about Trump, that that cascade and what that means for the
Twitter platform in terms of as Musk originally the way it started with free speech.
But ultimately this could really cascade and have a ripple effect that could really taint the Twitter platform that he just spending 44 billion
on. And I think this started as something that as an initiative, but ultimately I think as Musk dug more into it.
He did get buyer's remorse, but once you sign those documents legally he has done and now he essentially owns a house that he doesn't want.
GIOKOS: Yes. OK. I want to talk about what the Twitter share price going to has been doing. We saw a 22 percent spike yesterday, its down slightly
today, it seems that market participants want this deal to go through.
IVES: Yes, now it's all about Twitter board, do they ultimately remove their lawsuit in Delaware? And let this go ahead because this could get
done potentially by next week. There's some worries about the financing, just give him a tap in the debt markets.
But ultimately, it's more the banks problem than Musk problem. I believe, potentially, by next week, that Musk will own Twitter.
GIOKOS: I mean, look, and if I'm looking at the share price, its $50 a share, 50.84. And he'd be paying more than what the share price is right
now. Do you think he's going to be overpaying?
IVES: Well, I think he's overpaying because the 44 billion I think the fair value of Twitter is probably closer to 25 to 30 billion. So he's
essentially in terms of selling his Tesla stock to buy Twitter.
It's like he's basically taking - buying today $2 slices of pizza in Twitter. That's always why there was no other bidder. And that's going to
be the big gargantuan problem for Musk going forward turning this around.
Dorsey and others have had major difficulty. I think that's really going to be the question from the Twitter but ultimately, he's going to have to buy
this 54, 20 potential by next week.
GIOKOS: Yes. I mean, is that a good time to buy Twitter would you say if you're watching on, anticipating that this is going to finally come to a
IVES: Yes, I mean, that's our view. Our view here there's an - spread somewhere that the deal could fall apart or there could be another sort of
shoe to drop that we believe this is ultimately a stock that will be at 54,20 you know, as it goes into next week.
And now it really comes down to everyone's waiting for Twitter board to accept because their sneak bit. This is not exactly a candlelight dinner
between Twitter and Musk in terms of what you expect. So I think they're going through everything to make sure that this is real.
GIOKOS: I think no candles in this dinner meeting. Thank you so very much, Dan Ives.
IVES: Thank you.
GIOKOS: Always good to see you, Managing Director and Analyst at Wedbush Securities. Right, coming up after the break higher gas prices are not a
good look for the Biden Administration as it heads into the midterm elections.
The American Petroleum Institute says there's plenty more the president could and should be doing, that's coming up next.
GIOKOS: Returning to today's big OPEC Plus meeting where ministers will discuss cutting production that would be a setup confrontation with the
United States and others who wants to see supplies increase and not decrease.
The American Petroleum Institute wants the Biden Administration to come up with ways to address the imbalance between growing demand and constrained
supply. The API says that would erode OPEC's impact on the market.
Mike Sommers is the group's President and CEO and joins me now. Mike, thank you so much. I want to just talk about literally are we on the cusp of OPEC
Plus countries cutting supply.
And I think that, you know when we've seen this enormous roller coaster of what supply and demand dynamics would look like taking Russia out of the
equation, it has been difficult to figure out where we actually stand minus the speculation and minus the volatility.
MIKE SOMMERS, PRESIDENT & CEO, AMERICAN PETROLEUM INSTITUTE: Yes, I do think every consumer should be concerned about what OPEC announced today.
But at the same time, we should be focused on ensuring that the United States can produce as much oil and gas as possible. We have a choice.
We can do that here in the United States if we get the policies right. And we've put forward a plan at the American Petroleum Institute to do just
GIOKOS: Let's talk about the impact of a decision with OPEC plus countries and what that would mean for the American consumer directly. I mean, that
would need higher crude prices. But what would the feed through be?
SOMMERS: Well, I think the concern is, is that they're going to take about 2 million barrels of oil off the world market. We have to remember that the
world consumes about 100 million barrels of oil every single day; the United States is currently producing about a million barrels less than we
did pre pandemic.
And a lot of that is because of some policy choices that the Biden Administration has made. In fact, right now, they're actually considering
stopping development of the United States Gulf of Mexico for oil and gas development.
That should be a huge concern to every American voter and world consumers as well, because we pay world prices for our oil and gas. So the concern
that we have is that if we don't get the policies right here in the United States, world consumers are going to continue to suffer from high energy
GIOKOS: Because you've said that you want the Biden Administration to come up with other ways to deal with the imbalance. Would you say that money
flowing into big mega projects is one of those solutions despite the climate change agenda, which is also just as important?
SOMMERS: Well, we know from multiple studies that we are under investing in oil and gas right now, by more than $100 billion to meet future demand for
energy. Almost every independent source suggests that we're going to be using a lot of oil and gas into the future.
In fact, even the International Energy Agency suggests that 50 percent of our energy needs are going to come from oil and gas, even if every country
meets its goals under the Paris Climate Accords.
So this industry needs to continue to get investments so that we can supply the energy that the world needs, we want to make sure that that investment
continues. But we have to get the policies right here in the United States, because we have the resources here to supply the world with the energy that
And again, dependency on foreign regimes for American energy is a choice. And it's a choice that we don't have to make if we get the policies right.
GIOKOS: OK, I want to talk about the current situation because you know; the future projects and investing in future projects will have an impact
down the line on oil and gas prices. It's not a today, you know, for impact. What would you expect today for the Biden Administration to do to
ease the impact of higher gas prices?
SOMMERS: Well, first of all, they could signal to American producers and American consumers that they're going to continue development of the Gulf
of Mexico, which is an important resource and provides almost 20 percent of American oil and gas.
GIOKOS: Do you think that's going to have a direct impacts on prices today, like what kind of impact would you say that will have on gas prices today,
should that announcement be made?
SOMMERS: What I would say is, is that it is it is a signal to Wall Street and Investors that this is a resource that we're going to continue to
invest in, and that's important. The other thing that we've done here at the American Petroleum Institute is we put together a plan.
It's called the tenant 22 plan that your viewers can find at tenant22.org. And that plan essentially says that there are 10 policies that we can
implement now to ensure American energy security and to lower costs for American Consumers.
SOMMERS: Some of those things are about permitting reform. There's been a big debate in the United States Senate over the course the last few weeks
about how to get permitting reform, right, not just for oil and gas, but also for renewables, which are going to need federal permitting reform if
they're going to get that renewable buildup done.
So we want to work with all sources of energy to supply the energy that the world needs. But we need to get pipelines built in this country in
particular to get the energy from where it is to where it needs to be to be refined.
GIOKOS: Yes. Alright, Mike Sommers, thank you very much for taking the time today, much appreciate it, President and CEO of the American Petroleum
Institute. And still to come and you look at LVMH after dark, we'll hear from Antoine Arnault, the son of the Founder and the CEO of the Berluti
brand, on efforts to save energy.
GIOKOS: Welcome back. In a global energy crisis soaring costs for fuel continue to put pressure on both households and businesses. Last month,
luxury group LVMH announced its plan to cut energy consumption in its stores.
Julia Chatterley spoke with the LVMH's Communications Director and the CEO of Berluti, Antoine about the firm's commitment to sustainability and some
ambitious goals for the future.
ANTOINE ARNAULT, CEO, BERLUTI: Our stores used to stay open at least the windows; I'm sorry of our stores used to stay open and the lights to stay
open all night. We thought it was beautiful it's represents you know it's in France, in Paris, it represents beauty, fashion.
It's in the city of lights, it's important to, it was important to continue to show that you know our brands, our - are alive. But recent events made
us change our minds and decide to shut those down at 10 pm.
And in terms of temperature in the stores to increase by one degree or decrease by one degree, whether it's summer or winter and heating or air
conditioning and it makes one degree seems like a little step but it's actually in terms of energy savings.
It's actually a little bit more than 10 percent of our energy that's going to be saved. It's not to save money from our side but more to save energy
and to try to be a little bit more compliant and responsible considering what's going on in Europe.
Just one quick word about how we see sustainability. First of all, it's not a topic that's been new to us; it's in 1992 that's my father Bernard
Arnault decided to create a sustainability department in LVMH when that topic at the time was really definitely not in the headlines.
JULIA CHATTERLEY, CNN CORRESPONDENT: I read today, the group uses 100 percent green electricity in France, 39 percent renewable energy globally.
And you're saying that you want to achieve 100 percent supply of renewable or low carbon energy for all sites.
We're talking workshops, stores and offices by 2026. I mean, you're a wealthy company, you're a private company, to your point, you don't have to
make any disclosures you choose to.
These are ambitious targets. They are ambitious targets. But can you be more ambitious; I'm always going to push.
ARNAULT: You can always be more ambitious. It's really a question of finding the right balance. You know, you also want to continue to motivate
your troops and, and not make them think that we suddenly became activists.
And my role is a little bit in that field. And I'm walking that, that thin line, where I try to, as a CEO, push my employees at Berluti to always do
more trying to find the right ideas, but at the same time be responsible for not for them.
Maybe you've seen also that LVMH and my family have made a significant donation. When the Amazonian forests started burning, we were there as well
and partnered with UNESCO to try to reforest. I mean, we're not humanitarians, and we're businessmen, but we try to be present.
GIOKOS: Right. With a portfolio of 75 brands from Dior, Louis Vuitton, to Moet & Chandon and Tiffany's and over 5500 stores via LVMH is a world
leader in luxury, at the home is Chairman and CEO Bernard Arnault.
He created the group back in the 1980s and has been adding to the portfolio ever since Antoine Arnault told Julia, about the values his father
instilled in him and his siblings, and the legacy his family is creating.
ARNAULT: It's really not a matter of wealth. I mean, we were educated with very strong and strict education and strong values around the, of course,
the value of working the value of things you buy.
And not at all with an education that you could, you know, imagine people who do have this sort of wealth live, it's very important, and I educate my
children in the same way and, and so does, so does my wife, it's essential.
So what we do see and how we feel about it, is that we need to continue doing what we do best, which is developing companies. That's what I think
we do very well. That's what my father has done in the past a little bit more than 40 years with incredible success.
And, and we are, you know, super, super proud of that, and, and also proud that he enables us to have this little bit of a journey with him.
CHATTERLEY: He may have been doing it for 40 years, but he's, he's still very young. And you've led me on to the question now, which obviously, I
was going to have to ask, which succession is.
And if I know, any founders, like your father of their age, do the word retirement is most definitely not in their vocabulary. But I just wondered
whether you as a family because you're all doing your own thing within the businesses to. Do you ever discuss it? Is it important at this moment in
time? I know a lot of people around the scenes discuss it, but do you guys?
ARNAULT: No. I mean, no, yes and no, of course we understand the level of responsibility that is ours. And that will one day be ours in a hopefully
very distant future. However, the way we see things is that my father is super healthy.
He's 73 and going to work 10, 15, 20, 25 years, who knows we have a very good friend who's 94 and who runs his company in France like he's a young
man. So if that happens, that would be great.
And what we are doing right now is we're working all together. His five children are now working together in different parts of the group, but
we're very close to him and very close together as a family.
So you know, it's a long journey also ahead, but the longer will be with him helping him and making him and being proud and making him proud of what
he's done and continuing to make LVMH so great. It will be a fun one.
CHATTERLEY: I'm sure he says you guys are likely to retire before I do. Antoine, great!
ARNAULT: Yes, maybe.
GIOKOS: All right, and finally on "First Move" if all does go well, NASA will make history today by sending the very first Native American person
into the Earth's orbit.
Former Marine Nicole Mann is also set to become the very first woman to command a SpaceX flight, the Falcon 9 rocket will blast off from Florida's
Kennedy Space Center in about two hours' time, the crew of four heading to the International Space Station for a five month stay. Well that's it for
the show. I'm Eleni Giokos in Abu Dhabi, thank you so very much for watching. "Connect the World" is up next, take care.