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First Move with Julia Chatterley
Germany Agrees to Send Leopard 2 Tanks to Ukraine; Officials: U.S. Finalizing Plans to Send Abrams Tanks; Microsoft Quarterly Profit Down 12 Percent; U.S. Stocks Fall, Mixed Q4 Earnings Weigh; Zagorodnyuk: Other Nations Likely to Send Tanks Now; Justin Bieber Sells Music Catalog in $200 Million Deal. Aired 9-10a ET
Aired January 25, 2023 - 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)
RAHEL SOLOMON, CNN HOST, FIRST MOVE: A warm welcome to "First Move", I'm Rahel Solomon in today for Julia Chatterley. Great to have you with us and
I had on today's program tank triumph, a significant development and the Ukraine war, Berlin approving Leopard tank shipments to Ukraine. The U.S.
also reportedly reversing course and OK Abrams tank deliveries to Kyiv as well. We're going to have team coverage just ahead.
Plus, cloudy forecast Microsoft beating earnings expectations but also warning of a cloud computing slowdown, sales growth slowing as well. We'll
discuss what all of this means for big tech coming up and Microsoft's uncertain outlook weighing on the NASDAQ it is set to fall for a second
straight session.
Dow and S&P futures are lower as well and Europe is lower as you can see pretty much red arrows across the board. This as debate grows over where
stocks go from here after a strong 2023 start. A JP Morgan strategist says that U.S. stocks could drop 10 percent or more in the months ahead.
We will hear from Andrew Slimmon of Morgan Stanley Investment Management too has a bit more optimistic take we'll talk to him about that earnings
sure to play a crucial role in the market's direction going forward. Shares of the aerospace giant Boeing set to fall more than 2 percent about 2.5
percent right now after missing on both the top and bottom lines.
IBM and Tesla report their Q4 results later today. We'll have more on the markets later in the program but first the latest on the Ukraine war after
months of international squabbling. Germany has agreed to beef up Ukraine's Military capabilities by sending in tanks.
And two sources tell CNN that the United States is also ready to make a similar move. Germany's Defense Minister said that 14 Leopard 2 tanks will
arrive Ukraine in about three months. Chancellor Olaf Scholz telling lawmakers at the decision followed intensive talks with allies.
(BEGIN VIDEO CLIP)
OLAF SCHOLZ, GERMAN CHANCELLOR: This needed a very intensive consultation with our international partners and allies and by want to express that it
was correct. And it is correct that we didn't allow to get pushed, but that we continue and always insist on very close cooperation.
(END VIDEO CLIP)
SOLOMON: Russia meantime describing the German announcement as extremely dangerous and says that a "Moves the conflict to a new level of
confrontation". Salma Abdelaziz joins me now. Salma, what more can you tell us about ultimately what led to this decision from Germany?
Because on the one hand, you could argue finally, the German chancellor, they're bowing to international pressure. And yet on the other hand, you
could argue Germany got exactly what they had been asking for all along, which is the U.S. to step up its support as well. So what more can you tell
us about ultimately, what led to this decision?
SALMA ABDELAZIZ, CNN CORRESPONDENT: Look throughout this conflict, the European allies, the United States, the west that has backed Ukraine has
really been in lockstep. This is one of these moments where I wouldn't say we saw divisions, but maybe we saw a difference of opinion, a difference in
experience, a difference in procedure. And I think absolutely, the German Chancellor would disagree with any idea that he has bowed down to pressure.
What Germany says and what the Chancellor said in Parliament today when he addressed his own countrymen, but not just his own country, but also sent
kind of a message to his partners is, we did this in consultation with our partners. This is absolutely not a unilateral action. That was his message.
This is a break from decade's long traditions, but we are not doing it on our own. We are doing it with our friends, and do not be afraid that makes
it the correct decision, trust your government. Of course, this announcement welcomed by the United States by European allies, it does
begin to move forward, if you will, the modernization of Ukraine's war President Zelenskyy has been pleading for these weapons now for weeks for
months.
This is very much an infantry war on those frontlines it is inch by inch, it is foot soldiers fighting behind tanks and for Ukraine. So far, those
tanks have been Soviet era outdated pieces of machinery that are difficult to maintain. And now it seems there are the steps coming multiple European
countries, the United States as well, providing these tanks beginning to give the training as soon as possible in Germany on those new Leopard tanks
that could be on the front lines in as little as three months.
But again, don't expect this to change the outcome very quickly. In particular, the Abrams tanks from the United States that could require more
training, more time before they get to the frontlines and time is of the essence here.
What President Zelenskyy is preparing for? What the Ukrainian army is preparing for is a potential Spring Offensive from Russia that could come
in weeks? That means those tanks might not make a difference right then, but it does show a major geopolitical shift.
[09:05:00]
ABDELAZIZ: It does show a major strategy shift and it does show that Germany now can or German the German Chancellor now can say we've done this
on our own time in our own way with in alongside our partners.
SOLOMON: Salma, I think you make a great point. They're both about why these tanks are needed, according to the Ukrainians, but also how long it
will likely take, at least for the Abrams to actually be on the ground there easily months.
But I do wonder, do you think now that we have had this announcement from Germany a pretty significant shift? Does that open the floodgates, so to
speak so that other nations feel encouraged to also send tapes? And perhaps those are on the ground a bit sooner.
ABDELAZIZ: That's a very good question. That's a very good point. I do think throughout this conflict, we have seen times in which the Allies will
say, look, that's absolutely not on the table, something like tanks, something like wrong long range missiles, some certain types of air defense
systems.
And then the reality on the ground changes that, then the calculus on the ground makes that red line, if you will, those things that are off the
table suddenly brings them to the table. And Ukraine has been used to doing this throughout the conflict we've almost had a year now. And what happens
is over and over again Ukraine's Military.
President Zelenskyy, they assess what they need on the frontlines, they come back to their partners, and they plead and they ask, and they build a
wish list. So yes, you're going to hear from President Zelenskyy today, thank you. But he's also going to say, it's not enough. I need more tanks.
If you do the math, it's a few dozen tanks, potentially, that over the course of a few months might end up on those frontlines. President
Zelenskyy says he needs 300 tanks. We're nowhere near that number. He says those 300 tanks could replace some 3000 Soviet era tanks.
And the other calculus here absolutely, is that Ukraine feels that it is defending NATO, that it is defending democratic ideals that it is on the
front line of Russian aggression. And in some ways that shift has been made as well by European partners who in the past, were concerned, and we're
constantly making this calculus.
Balancing act between supporting Ukraine, giving it the weapons it needs, but at the same time, not trying to widen or deepen that conflict clearly
that calculus being made over the last over the course of the last few days in D.C. and Berlin. And the message here is clear. Ukraine needs more, and
we will give it more.
SOLOMON: Salma Abdelaziz great to have you today, thank you. And by the way, later in the show, we're going to hear the reaction of a Former
Ukrainian Defense Minister that's coming up in about 15 minutes stay with us. And CNN has also learned that the Biden administration is now
finalizing plans to send about 30 Abrams tanks to Ukraine.
Natasha Bertrand joins us with the latest. Natasha, good to have you on the program! So help me understand the timeline here. How soon before we
actually expect to get this announcement from the Biden administration?
NATASHA BERTRAND, CNN WHITE HOUSE REPORTER: Well Rahel, interestingly the White House actually just announced that the President will be giving
remarks at noon today about continued U.S. support to Ukraine. And as we reported yesterday, we have been expecting an announcement by the
administration this week about its decision to commit as many as 30 Abrams tanks to Ukraine, a complete 180.
I should note from where the administration was just last week, when they were briefing reporters very consistently about the fact that they believe
that the Abrams tanks are not necessarily what Ukraine needs at this moment. And that is because they were saying that these are very difficult
and complex systems to maintain, to operate.
And that the Ukrainians would require quite a bit of training to use them before they actually became operational on the ground there. But now we're
learning that after a number of conversations, very intense diplomatic discussions between U.S. and German officials over the last several days.
There has been somewhat of a breakthrough in this diplomatic standoff, because if you'll recall, Germany had said that they would not send their
leper tanks to Ukraine, if the United States did not also send its Abrams tanks.
So over the last several days, the U.S. has been trying to convince Germany to send their Leopard tanks. And now it appears that they have decided that
even despite all of those logistical issues, the very real possibility that these tanks will break down on the field in Ukraine, because they are very
complex and very difficult to maintain.
That they will take the step of committing these tanks, because they feel as though it is just a very necessary tool in the Ukrainians arsenal at
this moment to defend against a potential Russian offensive in the spring and of course launch their own counter offensive, because as Salma laid out
very well earlier, this is a very slow grinding kind of infantry war, that with Western tanks. The Ukrainians will be able to kind of take the fight
directly to the Russians and hopefully break through their defensive lines there, Rahel.
SOLOMON: Natasha, I think you laid out very well their sort of what was happening behind the scenes because I think some might have been sort of
scratching their head after this announcement from the U.S. or this expected announcement from the U.S., because of all of those reasons you
listed there why they initially said that they did not believe these.
These were the right tanks scratching their heads wondering, well, what happened? So what happens now let's assume at noon Eastern, we get the
announcement from the Biden administration. What happens next and how soon before these tanks are actually on the ground?
[09:10:00]
BERTRAND: That is still unclear so what we have been told by U.S. officials is that these tanks could take months to end up on the ground in Ukraine,
because they're difficult to transport. There are a number of logistical issues that the U.S. has to test to grapple with in terms of actually
getting them on the ground there before the U.S. can actually before the Ukrainians I should say, can actually operate them.
And importantly, the Ukrainians will have to undergo significant training before they're able to use these tanks effectively, because tank warfare,
as we've been told, by many military officials, is a very different style of fighting. These are systems that are very, very large, over 70 tons. And
they're extremely complicated; they also break down very easily.
So we're told that the U.S. is going to be sending along with these tanks, recovery vehicles that essentially tow these systems out of the battlefield
if they need to be repaired, thereby allowing the Ukrainians to put them back into action. But this is all going to be a very heavy lift, and it
could be as many as three months, if not more likely more before we see them actually in battle, Rahel.
SOLOMON: Will likely learn a lot more in about three hours when we expect to hear from the President. Natasha Bertrand, thank you. Straight to the
economy, a bit earnings season is in full swing, swing not quite a homerun though for Microsoft.
The tech giant saw revenue in the most recent quarter bryza, modest 2 percent from the year prior, but also posted a double digit percentage drop
in profit amid economic uncertainty and slowing demand for personal computers.
CNN's Chief Business Correspondent Christine Romans joins me now. Christine was just last week that we heard from the CEO Satya Nadella talking about
the normalizing demand for Microsoft and tech players. What else did we learn when the company reported?
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Look, we learned this was the slowest revenue growth since 2016. And you noted that profit
dropped so you can see sort of these headwinds, The CEO called it a macro economic uncertainty is starting to come at play here. And it was really
toward the very end of the quarter when the CFO started talking to analysts and said that deceleration could continue into the first quarter and moving
forward.
That's when overnight in premarket trading, the stock started to decline here. The company recently announced 10,000 layoffs; of course, we have
seen that technology has been the leading edge of layoffs. But I would point out that these are companies that have grown and profited handsomely,
during the COVID crisis.
And now you use the word normalizing. I think that's exactly right, starting to normalize, what demand is going to look like heading into next
year. There was a lot of discussion, the bull and bear camp having a big discussion this morning about the intelligent cloud business, which
includes that as your cloud computing unit, and that did well, right?
So watching that space, and even if they're slowing, they're going forward is still as a solid part of the business. But revenue deceleration is what
the big concern is moving forward here. So that's what we're watching the stock down 15 percent over the past year or so, big debate, bull bear
debate today about what those earnings mean, but again, the slowest sales growth since 2016, that's notable.
SOLOMON: And, Christine, I'd pop for you. I know you've mentioned it quickly they are pop for you to put a fine point on that, because on the
one hand, as you say you have some slowing of profit there. But also the cloud computing business was a bit of a bright spot for Microsoft.
ROMANS: It wasn't you look at profits there, or the overall cloud computing business, the intelligent cloud business grew 18 percent, that as your
segment grew 38 percent, and that beat analyst expectations. So I think that's why you saw first a pop in the stock and then now backing off a
little bit here.
So we'll see where it settles off, but this is a big company with a lot of moving parts here. And is kind of one of the first big names we've heard in
the reporting season, as so many people are concerned about these companies that did very, very well, during the pandemic.
These tech companies that did very, very well during the pandemic they hired, you know, on a hiring spree, and now we're starting to maybe unwind
a little bit of that. So this is sort of the first big name we've seen in that arena.
SOLOMON: And Christina, it's so interesting, because you could also argue that this is an industry, the tech industry that saw about a decade of
really strong growth, and this is now at least thus far starting to look like this could be a different phase. Christine Romans thank you.
ROMANS: Nice to see you.
SOLOMON: Likewise, still in a Tesla and other tech player, of course, the Tesla CEO Elon Musk in federal court, defending himself against a class
action lawsuit over his infamous funding secured tweet remember this in 2018? Well, investors claim that, that cost them millions of dollars acting
on that tweet cost them millions of dollars. After yesterday's hearing, Musk asked reporters what they thought of his testimony.
(BEGIN VIDEO CLIP)
ELON MUSK, CEO OF TESLA: But I'm curious, what do you guys think?--
(END VIDEO CLIP)
SOLOMON: Clare Duffy joins me now. Clare, it's not every day that the CEO asks. Reporters what they thought of his testimony, but we'll leave that
for another day. Help me understand what's at stake for Musk here?
[09:15:00]
CLARE DUFFY, CNN TECH WRITER: All right, so this is going to be a test, whether Musk can be held accountable for the response of his share price in
the face of a tweet. Musk is somebody who uses Twitter, religiously; he now owns Twitter and uses that much differently than most public companies,
CEOs.
And so what's at stake here? What the question in this lawsuit really is, can he be held accountable for the losses that shareholders experienced
after this tweet, Musk is arguing a couple of things. He's saying that his tweet doesn't necessarily cause the share price to go up or down.
There's no causal relationship between his tweet and Tesla share price. The other thing that he's saying is that he did have funding lined up for this
deal. You know, he's saying that he had conversations with the Saudi private wealth, public wealth fund, that they had sort of a handshake deal
to take Tesla private.
But typically, public companies, if they're going to go private, they go through a really significant process. You know, there's more than sort of a
handshake deal here. And so I think that's what the jury is going to have to decide is? Was that enough for him to be saying that funding was the
carrot in this tweet?
SOLOMON: Well, we know that Elon Musk certainly has his own way of usually doing things his own way of behaving. Clare, before I let you go to another
company that he owns, as you pointed out, Twitter it seems relatively quiet these days. At one point, Clare, it was a new headline every day, and yet
things seem to have settled, what are you learning?
DUFFY: It's true Rahel, you know, in terms of Twitter news, things do seem to have settled for quite a bit from the last couple of months when, you
know, headline every day, and maybe there was a headline every hour about what was going on there. It also seems like Musk himself has been a little
quieter, a little bit more subdued on the platform. And I think there are a couple things at play here.
I mean, I think that people on Twitter may have gotten tired of it being the Elon Musk show every day. It's a little boring when you log on and it's
the same conversation. It's Elon causing chaos on Twitter every single day. I think the other thing that's at play here is that tonight is the Tesla
earnings report, as you said earlier.
And it's a crucial report for this company; the stock is down more than 50 percent this year. There were disappointing sales earnings sales reports
earlier this month. And so I think that he may be trying to reassure his Tesla shareholders, that he's not distracted by Twitter by kind of toning
things down over the last couple of weeks.
SOLOMON: I think those shareholders would certainly appreciate that. Clare Duffy, we appreciate you, thank you.
DUFFY: Thank you.
SOLOMON: And straight ahead, we'll look at what earnings season can tell us about the risk of a recession. And you'd better believe it, the pop
superstar Justin Bieber according to the latest performer to sell off his entire back catalogue, how much would you pay for it? Find out the figure -
-.
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[09:20:00]
SOLOMON: Welcome back to "First Move" earnings angst weighing on Wall Street this Wednesday, disappointing results from the likes of Boeing and
Microsoft helping drag down U.S. futures. The NASDAQ set to fall more than 1.5 percent when the opening bell sounds a few minutes from now. All of
this ahead of key GDP numbers out on Thursday.
Growth concerns and forward earnings guidance shorted the key drivers of market sentiment in the days ahead. So let's take a look at the year so far
for the year, the NASDAQ is up more than 8 percent the S&P advancing 4.5 percent and the DOW up almost 2 percent.
Joining me now is Andrew Slimmon and he is the Senior Portfolio Manager at Morgan Stanley Investment Management. Andrew, good to have you on the
program!
ANDREW SLIMMON, SENIOR PORTFOLIO MANAGER OF MORGAN STANLEY INVESTMENT MANAGEMENT: Good morning.
SOLOMON: So let's start there with earnings. What are your thoughts so far? Because we've heard from the banks, they didn't buckle. So far, we've heard
from some of the tech players, it's a mixed bag, but Netflix outperformed Microsoft's cloud business did OK. What are you thinking when you see
earnings so far?
SLIMMON: Well, you know, I think about it in terms of expectations, the markets up almost 5 percent through last Friday, year to date, that's a big
move. And so as much as earnings might be OK, the expectation, you know, the stock market's a little overheated short term.
So it doesn't surprise me that you get news like Microsoft, and it's going to push the market lower. The reality is that I think there are high
expectations that earnings this year are going to come down. And a lot of that is already embedded in stock prices, because the market was down.
You know, so much last year, stocks, like Microsoft had a 30 percent decline. So even if they come in with weak earnings and that might be a
little weak, because they've had a big bounce here today. I doubt they're going to drop dramatically, because that's already embedded in stock
prices.
SOLOMON: I see, so you feel like they've already been beaten down so much. There is not much more room for them to go. And, you know, I hate to
remember 2022 because it was a rough year for the stocks. Does that mean you're expecting to see a rally in 2023? And if so, what does that look
like?
SLIMMON: Sure, so just to be clear, even though it was a tough last year, we've had a big bounce year to date. So I think we're going to give short
term, we're going to give back some of that gain over the next couple of weeks. But I suspect that this year will turn out to be a lot better than
what investors fear.
And I think it's all Rahel, it's all about unfortunately, as investors, we look in the rearview mirror to frame our views, but the stock market looks
forward. And again, we had a big decline with anticipated bad earnings this year.
We're going to at some point the markets going to say I get it bad this year. But buy things are going to turn up next year, the year over year
comparisons are going to get easier. And the market will look through this earnings trough and begin to rally long before it looks better for the
economy.
SOLOMON: I see and yet there are still expectations that we are in for a lower return JP Morgan's Marko Kolanovic saying this morning that he's
bracing for a 10 percent or more fall. And so I wonder what the short term looks like.
SLIMMON: I look that's very possible. I'm not a Strategist. I'm a Portfolio Manager who has to buy stocks. And I like to buy stocks when they're down
30 percent not when they're up 30 percent. So the opportunity set for someone like myself looking to buy low is a lot better today than it was a
year ago.
So short term, could we pull back? Absolutely, really pull back 10 percent near term. I think that's that would surprise me. But again, I do think
that the short term, we've had a very big bounce, especially the NASDAQ and there's a little bit more caution. But overall, the situation for investing
is better today than it was 12 months ago, because a lot of stocks, including Microsoft is down a lot from where it was a year ago.
SOLOMON: I take your point always good to find a bargain. So let's start there, Andrew, I mean, where are you shopping? What names do you like
heading into 2023?
SLIMMON: Sure, so one of the things you always have to think about in terms of the stock market is, where could the rate of change improve where things
look bad? Stocks do very well when things go from bad to less bad.
[09:25:00]
SLIMMON: Stock do very poorly when things go from great to only good. Where things are bad well the University of Michigan consumer sentiment index hit
a 45-year low. This fall as consumer sentiment very bad, understandable, higher food prices, higher gas prices. The result is that the consumer
discretionary sector dropped 37 percent last year.
So again, with the concept of where could things actually improve because there's so stretched, so bad right now? I think it's actually could be in
the consumer discretionary. So I think we're starting to see the home building stocks there. They've had a huge after a horrible last year,
they're starting to recover.
So think about that in terms of G, if home builders are starting to recover, that must mean mortgage rates are coming down. That must mean that
people spending on the home could improve.
So the next step after the bounce in the homebuilders, really home apparel, home furnishings, home retailing, those stocks have only started to
recover. And so again, if the concept of where could things go from bad to less bad, - we have pretty dour consumer sentiment right now.
SOLOMON: Absolutely consumer discretionary homebuilders as you pointed out, and it's the funniest thing Andrew, mortgage rates have started to pull
back a bit. So we'll have to wait and see what the year brings. That's Andrew Slimmon thank you for being with us.
He's the Senior Portfolio Manager at Morgan Stanley Investment Management and coming up on "First Move", Asia's richest man under fire allegations
from a major short selling firm against Gautam Adani, coming up next.
(COMMERCIAL BREAK)
[09:30:00]
SOLOMON: Welcome back to "First Move". U.S. stocks up and running as we can see and it's all about profits in today's session with the Dow actually
opening lower almost 1 percent or about 230 points we'll keep an eye on that.
Also, AT&T on the advanced after reporting market friendly results, but Microsoft shares are heading lower, they're off about 3 percent, AT&T is up
nicely 3 percent and Boeing also off almost 3 percent.
There Boeing clearly also a drag on the Dow component, that's after an earnings and revenue miss meantime, turning back to Ukraine. Ukraine's
military machine set to gain some serious traction with promises of tanks from Germany and the U.S.
On the left is a German made Leopard tank. On the right and Abrams and one tank from the U.S. Germany announcing its consent a few hours ago but the
tanks won't be operational in Ukraine for another three months. Ukraine is calling on other allies to send their leopards as well.
Meanwhile, two sources in the U.S. are telling CNN that it is finalizing plans to send 30 Abrams tanks. The Russian ambassador to Ukraine says that
if that happens, the Abrams will be destroyed along with all other NATO military equipment. Russia also says that no one should have illusions
about who was the real aggressor in the current conflict.
Andriy Zagorodnyuk was Ukraine's Defense Minister between 2019 and 2020. He now acts as an adviser to the government and as a Distinguished Fellow at
the Atlantic Council Andriy, wonderful to have you especially on a day like today. Welcome to the program.
ANDRIY ZAGORODNYUK, FORMER UKRAINIAN DEFENSE MINISTER: Thank you.
SOLOMON: Big news this morning for Ukraine, this news out of Germany and this news that we are expecting out of the U.S. at 12 p.m. eastern, what's
your reaction to it?
ZAGORODNYUK: It has been expected, there's been an immense pressure on German government from the other European governments because most analysts
and politicians are expecting Russia to start a new offensive in the springtime. And in order for Ukraine to keep up with this, we need to
remain to retain the initiative. And for that we needed the equipment such as tanks.
So, there's been a discussion for months about that. And it's been extremely intense in Europe during these months. And we're obviously
extremely happy that finally German government confirmed that.
SOLOMON: Yes. You mentioned the springtime offensive, I wonder with the expectation that it will take at least for these Abrams tanks, months
before they're on the ground, do you think that they will be there in enough time when time is clearly of the essence?
ZAGORODNYUK: They may, but most probably they may not. But from what we understood the supply of the Abrams was related to the Germans didn't want
to be alone in this in a tank sort of coalition. So, the first country which started to supply tanks was Britain, they announced the supply of
several challenger tanks.
But Germany still wanted some allies to join that coalition. And so, U.S. apparently is going to promise supply of Abrams. So, to be honest, it's
more like a long term. And it's more like a long-term political program rather than like a short-term help.
Short term, it should be the lower parts from Germany and several other countries, which have them but they couldn't supply without German consent.
So, everybody was waiting for German consent until now.
SOLOMON: Certainly, a major shift this morning and major news. And to that point, do you think now that we have finally gotten this approval and this
OK from Germany. Do you think that sort of opens the floodgates so that other nations also start to donate tanks where they can?
ZAGORODNYUK: Yes, exactly. And that was the whole plan. So, Germany itself are going to provide maybe like --Jana 20 tanks altogether. But we expect
over 100 and there are a number of lists. There's a whole list of countries of European countries, which already confirmed that they, as soon as they
get the approval, they're going to be supplying tanks.
SOLOMON: Andriy, can you put it into context you know, I believe Ukraine has said that they would like 300 tanks even with these announcements from
the UK, even with these Abrams tanks, even with these leopard tanks, it still sounds like Ukraine won't have as many tanks as they need. And we
know that Russia has so many more tanks. So, help me understand I mean, just what else is needed here?
ZAGORODNYUK: First of all, Ukraine has also tanks of itself. It's not that advanced as Abrams or - but still we do have. Secondly, of course, even 100
tanks is a huge addition to Ukrainian fleet. So, it will make a difference.
And of course, we will be working on more; we will be working on extending this program. But even the ones which we are already hearing from allies
that they're going to supply that will make a substantial difference. And yes, we expect Ukrainian armed forces will have enhanced capabilities due
to that.
SOLOMON: And what's the tanks now appearing to be on their way at least soon on their way? What else do you think Ukraine needs?
[09:35:00]
ZAGORODNYUK: We're still discussing the long-range rockets for the multiple rocket launch systems. We're still talking about the air defense; we're
still talking about a long-range firepower, such as artillery and ammunition for that. So, it's this war, is it mainly about artillery, most
of this war effort is applying artillery.
And so, most of the discussions are about the equipment of either jewelry union, so tanks or, or the armored vehicles or the multiple rocket
launchers. That's, that's the core of the discussion so far.
SOLOMON: And Andriy, you know, this news out of Germany this morning, already sparking some pretty strong comments from the Kremlin. If you might
react to some of this, the Kremlin saying that these tanks will only add to suffering and increase the conflict. We've certainly heard that type of
rhetoric before, but what's your reaction to that?
ZAGORODNYUK: To be honest, we're hearing this pretty much all the time. You know, the world, the democratic community doesn't want escalation. So,
there's, there are some escalation concerns. But we all understand that the escalation is happening when there is no strong reaction to the Russian
aggression. So that's actually what causes escalation.
But Russia is using that fear or desire to avoid escalation. And that's why they're sending this rhetoric threatening, or was this something bigger.
But in reality, we see the full speed with aggression, which is a full speed, was a war effort.
So that's why the only way to avoid that is to win and they only want to make them stop is to make them stop by force. Unfortunately, there is it
seems to be the only viable option. So that's why we keep on doing we keep on working with our allies. They work with us. And that's all we need to
do.
SOLOMON: And as you've pointed out in this interview up every tank matters and clearly more Andriy.
ZAGORODNYUK: Absolutely, absolutely.
SOLOMON: Thanks for your time today, sir. Yes, it's Andriy. He's the former Ukrainian Defense Minister. To Asia now and Asia's richest man is a little
less well off today. A prominent short selling firm is leveling serious fraud allegations against billionaire what - Gautam Adani's business empire
at an extremely sensitive time.
Adani officials wasting no time and blasting the report but shares in publicly traded firms that are under the - have already fallen pretty
sharply. Marc Stewart joins me now. So, Marc, look, this is someone whose profile has been rising. It's already been pretty high in Asia, but it is
rising internationally and his profile is growing. Bring us up to speed here.
MARC STEWART, CNN CORRESPONDENT: Indeed, Rahel, good to see you. Let me give you some context first. Gautam Adani is worth around $120 billion
dollars. And if you look at the billionaire's index that is issued by Bloomberg that puts him number four in the world. Of course, he's very well
known here in Asia.
In addition, he is a college dropout. So, he is a very prominent force in the global business scene. But now his flagship company is basically
pushing back against questions over its numbers as it tries to raise more money by issuing more shares. We're talking more than 2 billion in U.S.
dollars.
And at issue really are accusations by Hindenburg Research. It's an American based short selling firm that has gained prominence for targeting
companies that its founder feels are overvalued or had suspect financials. In a published report, it claims Adani sprawling conglomerate of stock
manipulation and accounting fraud over the course of decades.
The group also questions the valuations of Adani's firms adding their substantial debt puts the entire group on "A precarious financial footing".
As you can imagine, this is generating response the Adani group's chief financial officer said Hindenburg did not make any attempt to contact us or
verify the factual matrix, adding that the allegations made by the short seller are stale, baseless and discredited.
So, this is a story that's developing here in Asia, it's obviously going to prompt conversation around the world. We have a brand new write up right
now on cnn.com. It will give you some of the backstory here as well, Rahel.
SOLOMON: It's a good point Marc that that usually when Hindenburg puts out a report like this, it sparks at the very least conversation and oftentimes
more stories and oftentimes more research and hopefully more answers. Marc Stewart, thank you.
Never say never to selling your music catalog, Justin Bieber not sorry for making a $200 million deal for the rights to his publishing and artists
royalties. That's according to Billboard Rolling Stone saying it is the most lucrative sale by any artist of Bieber's generation. And I'm sure it
will buy a lot of peaches from Georgia.
You just got to be a Justin Bieber fan to understand all these references. CNN's Anna Stewart is with me now. Anna, so much fun we could have with
this but let's just start with putting this in context because it seems like other artists have been selling their catalogs too. So how does this
stack up?
[09:40:00]
ANNA STEWART, CNN REPORTER: Yes, you nailed the puns that by the way Rahel, congratulations to you. I think most of those ones that have gone right
over my head, you're clearly a believer. It's interesting, this deal. Now, this is very popular to sell your back catalogue. But it is interesting, I
think considering his age. That's really the big difference here.
It's kind of more common for aging rock stars to sell their back catalogue for a number of reasons. First of all, they've had years of earning
royalties and that's a great lump sum for your retirement. And for the people that buy those rights. Well, all of their best work is generally
behind them, and they got decades worth of work as well.
So, let's bring you the latest deals that we've seen just over the last two years really, Stevie Nicks $100 million. That was for 80 percent of her
back catalogue to primary way, we've got Justin Bieber, Bob Dylan $200 million as well. For 60 years' worth of music that one was to Sony Music.
David Berry, his estate recently sold his back catalogue for 250. And Bruce Springsteen absolutely wins the $550 million to Sony Music for 50 years'
worth of work. Now, clearly, Justin Bieber thinks he can get more out of a lump sum now that he can invest with whichever way he wants, then getting
royalties over many years over many decades. And of course, perhaps his biggest hit is yet to come.
That's the real difference between him and those other artists. It does, I think, raise the question of whether we have hit the sort of peak level of
music rights valuations; it feels maybe like this area has got a little bit frothy over the last couple of years.
SOLOMON: It's an interesting point. Anna, I liked that you say maybe his biggest hit is to come you're bullish on Justin Bieber, and I'm here for
you. Can I ask if you're a fan and what's your biggest song if you might?
STEWART: Oh, Rahel, you put me on the spot. I mean, I think you mentioned one called sorry, oh, go for that one. I'm so sorry, I am not a believer. I
could correct that. But maybe it's because it's better. It's not there yet. You know, I'm waiting.
SOLOMON: That's true. There's still time for you to be converted. I will say my favorite is roller coaster. I didn't know how to work that into the
script unless we're talking about the markets which certainly have been a roller coaster.
STEWART: And I did that.
SOLOMON: Anna Stewart, lovely to have you. Thank you. Definitely not too late to say sorry for all of the beeper puns but it was good fun
nonetheless. And that is it for the show. I'm Rahel Solomon. Great to be with you today Marketplace Europe is coming up next.
(COMMERCIAL BREAK)
[09:45:00]
RICHARD QUEST, CNN CORRESPONDENT, MARKETPLACE EUROPE: Hello, and welcome to Davos in the World Economic Forum. I've got good news for you and some not
so good. The good news is we are back up the mountain in winter with all the snow. The bad news is the state of the European economy and the very
real prospect of a global recession.
The crises are multiplied and the risk of recession remains. I'll speak to some of the biggest names in the banking sector to see if Europe is
prepared. Also staying the course on the climate crisis, executives warned, now's not the time to lose the momentum. I have all that done more on
Marketplace Europe.
Not since 2020 as Davos hosted the World Economic Forum in its usual January slot, yet three years on, and Europe is risking its second
recession in a decade. The real problem, of course, is there's a cocktail of crises that is swirling and mixing and not in a good way.
Of course, there's the war in Ukraine. And that's having an effect on energy prices rocketing higher, even though they've come down, they're
still causing problems. And then finally, interest rates to deal with the rising inflation rates have had to be ratcheted up far faster than anyone
thought.
The World Bank says the outlook is especially uncertain, while, banks are warning of a mild recession. There's even talk from Germany's Allianz of a
so called perma crisis. Its chief executive sees a year of challenges ahead.
OLIVER BATE, CEO, ALLIANZ: If you want to simplify a little bit, we had sort of three things going for us that we're betting on the last sort of 20
years, the first one America would pay for security, we dropped investment in our military already in 91 when the wall came down by like 70 percent.
America will pay for it, they pay for everybody.
The second thing is China would pay for our profits. And we have been the most important trading partner for us next to the U.S. have been China's
hugely beneficial for both sides. And the third one and that's very important. Russia will provide us with low cheap energy, right? And we know
that all three and not holding up anymore. So, we really need to reinvent our business model.
QUEST: So, for you to see yes, how do you do that? What are you doing?
BATE: Well, we do the same, we have to do for our company, we have to say, you know what? Who is the consumer? What does she really wanted the long
run? What does she want to pay for? And how do we retool the value chain for this to be successful?
QUEST: But how would you do that on a company, the side of Allianz with the trillion that you've got into asset management?
BATE: Two and a half.
QUEST: To ask me if I was looking through all numbers, two and a half, a trillion and still two and a half trillion, even at today's valuations?
BATE: Yes, they fluctuate and the last year was particularly challenging, but we've done very well.
QUEST: Do you think that the length of time it's going to take markets to get back up to where they were if indeed, they do in the short to medium
term that has a knock-on effect on pensions? It has a knock on effect on investment. The whole value chain and we haven't really seen that fully
come through.
BATE: Yes, yes, that's true. And so, we are there to manage this. So, if you're a client of Allianz, you say, what does Allianz stand for? We're
here to protect your most valuable assets. And they are not just your shares, or your equities or your pension; they may be your health. And when
you are traveling, as we've discussed, your safety, this is what we take care of.
And we need to manage through these cycles very carefully. Now, by the way, interest rates up are super beneficial for us. As for all financial
institutions, the transition and the very fast rise of interest rates, which were a problem but fundamentally, and you now see isn't our share
price, it's very, very positive. Because we can now really support the assets and the liabilities which much better return from credit, which
require a lot less risk than equities, for example.
QUEST: Hanging over this forum and the entire continent, the war in Ukraine. The EBRD the European Bank for Reconstruction and Development has
already committed billions of dollars to support the country and its neighbors who have been affected. Its president says Europe will not waver.
[09:50:00]
ODILE RENAUD-BASSO, PRESIDENT, EBRD: First of all, we upgraded we increased our financing to Ukraine and will support to Ukraine. And because of the
war, we do it with support of shareholders always guarantee we take 50 percent of the risk on our balance sheet. And I think up to now we are the
only MDB to do that.
But we get into some get some support to cover part of the risk. But also we increase our financing for, you know, energy security in a number of
countries of operation helping for example, Moldova, to buy gas to kind of liquidity emergency support we do not do in normal times, but we do now.
QUEST: If we look at the countries that you are now involved with, how has it changed? I mean, the European Bank for Reconstruction and Development, a
lot of those countries have been reconstructed and they've now been developed.
RENAUD-BASSO: I mean, some of them were very advanced, what we are some of our countries of operation are quite well advanced to Poland, Czech
Republic, Czech Republic, graduated from the EBRD now came back because of the crisis.
So now, like Baltic countries, for example, they were part of EBRD scope for operation. But these countries are well advanced. The fact is we
continue to help them in particular to weather this crisis, because the impact of Ukraine on this region has been very large, but also to help them
with green transition digitalization to anywhere new frontiers.
QUEST: But for those countries that are EU based, the EU has very big, deep pockets. Why isn't the EU doing that?
RENAUD-BASSO: Because the EU that are - finance the private sector. In those countries we do only private sector financing in Poland or so we are
not doing public sector but mainly private sector financing, and the EU doesn't have doesn't do that.
QUEST: OK. But then in those cases, like in Poland, which is an advanced economy, why should you be doing something in Poland that the private
sector won't do it? You're lending to the private sector, you're lending to the private sector. But if private finance won't do it, why should you do
it?
RENAUD-BASSO: But they're coming but for example, in Poland, what we are doing very useful is to help private equity to grow, because these are
relatively small market, private equity firms in asset managers are looking for very big tickets so private equity fund in Poland or in the region have
difficulties to raise money.
So, if we invest, we give confidence in the project, we give our - I mean support to these team, prior to the team - exactly, and then it attracts
private sector investors.
(COMMERCIAL BREAK)
QUEST: With everything going on in Europe, the World Economic Forum says it's worried that plans to fight the climate crisis have taken a backseat.
The worry now, Esther Baiget that this could all become a permanent problem she's the Chief Executive of Novozymes, and gave me an idea of the way
forward.
ESTHER BAIGET, PRESIDENT & CEO, NOVOZYMES: If you look at the needs of the society, the carbons of the future, the electrons of the future, the
protein of the future, they all are going to have a stronger component of biotechnology, it's all about cash allocation. It's all about
prioritization.
So that's a big portion of my time on how we are investing where we're investing and also how we're building the people, the culture and the
momentum within the organization to drive the change. It is about being market driven. It is about ensuring that you get the signals of the
industry that help you improve it is in the best and then it's about failing fast, and also commitment to continue to deliver growth.
QUEST: This might sound a really silly question.
BAIGET: OK, listening.
QUEST: But do you ever do worry that maybe your engineers and your scientists and you're not because they're not bad or they're not good. But
just Oh God, what if they can't find the next thing?
[09:55:00]
QUEST: What do I do, then? What if they can't come up with, you know, no matter how much I spend and give them in the lab, or if they can't come up
with a next thing.
BAIGET: No, I don't worry about that at all.
QUEST: Really?
BAIGET: I don't worry about that at all. Solutions exists, so many times solutions already nature, just not bringing them to scale. And that's what
we are extraordinary at. So, I'm not worried about that at all. It is if they have a worry, it is on how fast the rest of the value chain can move.
I'll give you an example bio fuels based on biomass. That's an area that we invested in the past, we had to post because the society and the industry
was not ready. It's rapidly scaling up at this moment, because the technology has improved. I worry about the regulation that is hindering the
spirit of penetration.
QUEST: I got a biotech company complaining about regulation.
BAIGET: Regulation that it's based on the past. If you look, it's not a creating the path, it's creating roadblocks that constrain the penetration
and the commercialization and unleashing the power of the solutions of the today and the future. Solutions exist to feed the world in the most
sustainable way.
If you will replace 10 percent of the protein demand needs of the society with plant-based protein, that's equivalent to freeing up 50 percent of the
European arable land like this. And that's possible that in Europe, we are facing a regulation that it's based on the past and is hindering the speed
of the penetration of those solutions.
If you look at sustainable agricultural, it takes eight years to register a new molecule because it has to go to a torturous path of the chemical
fossil-based alternatives.
QUEST: Something tells me that Brussels is well aware of your views.
BAIGET: Something tells me that also we companies have to work better with regulators to move faster on that space of win, win for everybody. It is
not only about complaining, it is also about bringing our voice and show how good can look like, it's a shared responsibility here.
QUEST: A perfect way for us to end this edition of Marketplace Europe. I'm Richard Quest of the World Economic Forum in Davos. You can follow up with
everything@cnn.com/MPE. Otherwise, whatever you're up to, I hope it's profitable.
(COMMERCIAL BREAK)
[10:00:00]
END
