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First Move with Julia Chatterley
IMF Raises 2023 Global Growth Forecast from 2.7 Percent to 2.96 Percent; Brother of Tyre Nichols Speaks on Ex-Officers; U.S. Federal Reserve Expected to Raise Rates by 0.25 percent; Spotify Subscribers Jump in Q4 2022; FM CFO Speaks about China and Supply Chain Challenges; Search Underway for Tiny, Radioactive in Australia. Aired 9-10a ET
Aired January 31, 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]
ANTONY BLINKEN, U.S. SECRETARY OF STATE: But then not re-establish, we built our relationship as I said with the Palestinian people--
UNIDENTIFIED FEMALE: No--
BLINKEN: And this will allow us to more effectively work toward the goal of Palestinians and Israelis enjoying equal measures of democracy, of
opportunity, of dignity in their lives.
UNIDENTIFIED FEMALE: Do--
ELENI GIOKOS, CNN HOST, FIRST MOVE: Right we've just been listening to U.S. Secretary of State Antony Blinken and Palestinian Authority President
Mahmoud Abbas. I'm Eleni Giokos in Dubai; I just want to bring in Nic Robertson, who is in Ramallah in the West Bank for us. Nic, we've just
heard from the Secretary of State Antony Blinken, as well as Mahmoud Abbas, I just want to go through some of the lines that we heard from Blinken.
And what was really interesting to me, saying it is important to describe right now that there's a shrinking horizon of hope, not an expanding one
for the Palestinians that really stood out and listening to Mahmoud Abbas, saying that he's willing to work with the U.S. and international community
to end the occupation of Palestine. What have you read into this meeting and the outcomes?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: I think that expectations here have been very low. There's a very low expectation on the
streets here in particular, that Mahmoud Abbas can deliver on what he says in principle, because he's lost the support of a lot of Palestinian people.
And part of the reason for that is because they perceive him as enabling the actions of the Israeli security forces inside of Palestinian towns, and
not being able to protect Palestinians.
And this is what we've heard here from Palestinian politicians, and from people on the street here. I think what Secretary Blinken is talking about,
this sort of parity of support for Israelis and the Palestinians of a parity of import rights. There's aspiration that Secretary Blinken says
that he wants to work towards is something that's absolutely not felt here at the moment at all.
The feeling is that United States support tips so heavily in favor of Israel, that they are not really a partner, who's going to support the
Palestinian position. That's what people here feel, because that's what they've seen in the past, it felt abandoned by the White House. And it to
me at least, and from what I've heard from people today, and in the past $50 million additional aid for a U.N. agency, the support to build a 4g
network here.
That's hardly going to sort of fulfill Palestinians desires and expectations. Remembering much of the rest of the world it's already moving
on to 5g and has it in many places. The fact that the discussion is about enabling a 4g service here really gives you an idea of how far people in
the West Bank feel left behind.
GIOKOS: All right, Nic Robertson, thank you very much for that analysis. Of course, it is a story that will be keeping a close watch on and will give
you more analysis on Antony Blinken's trip to the West Bank. Thank you very much, Nic, good to see you alright, moving on to the stories making
headlines.
We're focusing on the International Monetary Fund. And they have raised their global growth forecasts saying the economy is now expected to expand
2.9 percent this year, that's up from 2.7 percent in October. China is reopening, that's one of the reasons for the upgrade. Richard Quest spoke
to the IMF Chief Economist.
(BEGIN VIDEO CLIP)
PIERRE-OLIVIER GOURINCHAS, CHIEF ECONOMIST OF IMF: This year to the 2023 and next year, we're going to have relatively low growth numbers to start
with. So this year in particular 2.9 percent, this is not a super high number. But you're right, that this has been revised upwards and this is
the first time in quite a while that we've had sort of good news in that sense.
RICHARD QUEST, CNN ANCHOR, QUEST MEANS BUSINESS: Are you surprised that after so many interest rate hikes with such ferocity and speed that the
economies are withstanding the shock of the monetary tightening?
[09:05:00]
QUEST: I mean to have this level of tightening and still be registering this sort of growth is remarkable.
GOURINCHAS: The economy has been very resilient, not just in the U.S. also in other parts of the world and including the European economies, many of
them have been quite resilient. And you're right. So there's been this massive tightening. Now, why is it being so resilient with one point is
well, I've already mentioned the labor market with coming out of the pandemic and crisis of the last two years.
And there is an enormous demand for labor. And some of that demand is not yet met in the U.S. services; we still have very elevated levels of
vacancies. And then on top of that, households have accumulated a lot of savings through this last two years, thanks to policy and also thanks to
the, you know, precautionary behavior, and they're looking to spend some of that, so that's supporting the economy.
(END VIDEO CLIP)
GIOKOS: Right, so Christine Romans joins us now with more, Christine, I'm looking at these numbers.
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Yes.
GIOKOS: 2.7 percent, the October forecast 2.9 percent, creating so much. I guess excitement, because it was always a big question whether this was
going to be a hard landing or a soft landing. And this is perhaps the good news that we're headed to the best case, one of the best case scenarios.
ROMANS: Certainly it's less gloomy, Eleni. And that's something we haven't been able to say for a while. And I think it's really important that word
we keep hearing is resilience. In the second half of the year, economies like the United States, labor markets, like the United States, were really
resilient after a choppy first half of the year.
And also the China reopening is a positive for the global growth story. It remains to be seen what it means for the global inflation story, but it is
a positive for the global growth story. Couple of interesting things to note here, you have an upgrade of the condition for Russia as well.
Russia contracted last year for all the obvious reasons its self-imposed economic misery in Russia in terms of growth, the negative 2 percent, at
least because of its invasion of Ukraine. But the IMF is actually upgrading forecast for this year to 0.3 percent. So that's one interesting part of
the story here saying that Russia has been able to find other trading partners for its because of the sanctions, that is have kept it, I have
heard it from the West.
And also that it remains to be seen what happens with that global price cap of the G7 price cap of $60 for exports for crude oil. So Russia is one part
of the story and the U.K. is a different part of the story as well U.K. suffering more than the rest of the G7, higher interest rates, rising
interest rates, higher taxes, still dealing with how to implement Brexit and a surging cost of living there.
GIOKOS: Yes, I mean, it's a case of a glass half full as opposed to half empty. And it is interesting to look at some of these emerging market
metrics. And I guess this also speaks to what inflation is going to do. You spoke about China, for example, and opening a reopening of a mega economy
like that could frankly stoke more inflation. What are the things that we should look out for sort of the potential red flags that the IMF is
warning?
ROMANS: Yes, so it's interesting on that inflation story with China. If you reopen China, you're going to ease some of those supply bottlenecks and
supply chain problems that have been such a driver of inflation, but you could actually also provide more demand, which is the other side of the
inflation story.
So you're right, it is sort of interesting there, in terms of what the IMF is saying COVID snapback and China would be a problem, an escalation of the
Russia-Ukraine, crisis is still a problem. And again, higher interest rates may be causing problems for smaller debt laden economies; you always want
to worry about knock on effects there.
GIOKOS: Christine Romans always good to see you. Thank you so much for your time. Right, the City of love currently a city in gridlock. Protesters are
bringing Paris to a grinding halt for the second time this month staging a mass strike against the government's plan to raise the retirement age for
most workers.
Similar strikes are also being held across the country. We've got Melissa Bell standing by for us. Give us an update on what you're seeing on the
strike action and whether the message is hitting home to policymakers?
MELISSA BELL, CNN PARIS CORRESPONDENT: Well, first of all, on the strike action Eleni, very quickly, what we're seeing is that in schools, but also
we're hearing in transport networks as well. The strike action is not as big as it was on January 19. And bear in mind, the trade unions are walking
a tight balance here in France.
They're looking to keep the public behind them, that is not bring the country too much to a standstill over the course next few weeks. And yet
bring the government down to the negotiating table, in fact, get the government to back down and it's the first time Eleni, since 2010.
That we've seen the French unions this unified this determined to have the government back down then to it was about pension reform at the time,
Nicolas Sarkozy managed to raise it from 60 to 62 now Emmanuel Macron's that rise from 62 to 64, the retirement age.
[09:10:00]
BELL: But let me just show you how behind me what's happening Eleni. These are the trade unions keeping order amongst the people who've come out here
to demonstrate. One of the big questions is going to be how many people they managed to get in the streets.
By their accounts last time it was about 2 million by government estimates it was just over a million. They hope that the numbers this time will be
even greater than that their message to the government that they will have to compose with that anger on the streets if they want to get this reform
through, Eleni.
GIOKOS: Right Melissa Bell, thank you so much for that updates. Right moving on, it was deemed a test of investor faith. Indian billionaire
Gautam Adani has occurred enough bids for his $2.4 billion equity sale. Just days after a short seller report accuse Business Empire of decades of
fraud. CNN's Anna Stewart is with me. Anna, always good to have you on the show! I want to know who put in these bids do we know about who these
investors are?
ANNA STEWART, CNN REPORTER: I know quite extraordinary that we got as many as we did, because they did actually meet this sale. We know one of them
was Abu Dhabi's IHC an International Holding Company. We don't have the list of all of those, but that Abu Dhabi holding company actually put in
$400 million on top of investments they've already made in it.
This is extraordinary, if you just consider how we've seen investors really flee the group and all of their companies. Some $70 billion wiped off the
market cap in recent days, following these allegations from Hindenburg research, the short seller of brazen stock manipulation and fraud. And
we've had days now of back and forth between the two companies.
And yet they have managed as they plan with their FPO. This is the follow on public offer to rise over $2 billion. How? Why? Two key reasons I would
say and I think it's very interesting. We didn't see many retail investors in there. It was largely sort of big institutional and non-institutional
investors.
I'd say one reason is this company, the second biggest conglomerate in India, holds on to massive infrastructure companies. We're talking ports,
we're talking mines, we're talking energy. So in terms of the fundamentals, there are plenty of investors out there that want to be invested in that
story in India.
In addition to that, one of the big problems for the Adani group, and this actually really predates the Hindenburg research attack is its debt load.
And of course with FPO, it does help a little with that debt load. And it also dilutes the investment from the top group, largely Adani family
owners, Eleni.
GIOKOS: Yes, really fascinating and as you say, it's more about looking at the fundamentals and the acid base as opposed to looking at the person
themselves. But it is really illuminating to sort of break that down with this reports that sort of lifted the hood making these allegations. What
does that mean in the long term in terms of the viability of the businesses, what are you hearing?
STEWART: Well, honestly, if you read through the entire report, and it is very lengthy in terms of the accusations, they're pretty far ranging, and
they go really deep. So we're talking about allegations of multiple top leaders in the Adani group. Many family members allegedly holding offshore
companies that are used to money launder financing from the Adani group and their listed companies.
We are talking a huge range of allegations. Now at the moment those allegations are coming very much from this short seller. Adani have denied
all the allegations and actually pointed the finger back at them. I think the question now is what happens next in terms of the regulator and so far
the market regulator in India has been incredibly quiet. So we're waiting to really see whether anything official in terms of an investigation gets
launched.
GIOKOS: Anna Stewart thank you so very much for that update. All right now moving on the fallout from the deadly police beating of Tyre Nichols
continues to Memphis police officers are on leave and subjects of an internal investigation. One of them has been identified as Preston
Hemphill, who allegedly deployed his taser during the confrontation.
Hemphill was also a member of the now deactivated Scorpion police unit. A total of seven officers have now been relieved but so far only five are
facing murder charges. The city's fire department fired two EMTs and a lieutenant following an internal investigation. CNN's Don Lemon spoke to
Tyre's brother a short time ago and asked what he feels should happen to the ex-officers facing murder charges. Take a listen.
(BEGIN VIDEO CLIP)
JAMAL DUPREE, BROTHER OF TYRE NICHOLS: Hope they meet the same fate as my brother. That's just how I feel. You know, I mean, I don't know what the
laws is in Tennessee or whatnot. But for me, I believe they deserve the death penalty. If I was there, they would have to kill me too, because I
would have fought all over them.
[09:15:00]
DUPREE: My brother was trying to cooperate with them. I would have fought back with them.
(END VIDEO CLIP)
GIOKOS: Shelby County District Attorney Steven Mulroy says investigation is ongoing and more charges could be filed. Fighting is raging in Eastern
Ukraine as Russian forces battle for control villages and towns around the City of Bakhmut. The Ukrainian Military says it has repelled attacks but
describes the situation as difficult.
President Volodymyr Zelenskyy says it's no time for what he's calling continued reflections. He wants again urged Western allies to speed up
weapons deliveries. The United States is ramping up military assistance to the country in the form of artillery and tanks. But President Joe Biden
said flatly Monday he would not send American fighter jets to Ukraine.
Ukraine's Defense Minister says the country plans to spend about $545 million this year to purchase drones, which are playing a key role in the
battlefields. CNN's Fred Pleitgen shows us how they're being used.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Ukraine's entire Eastern front is now heating up. This is Russian infantry
in a massive firefight. In the forest near the town of Kreminna - spy, we're creeping through the same forest with a Ukrainian frontline drone
unit called Dnipro-1. And scouts out Russian positions and directs Ukrainian fire. Drone operator Ruslan says working in the forest is
extremely dangerous.
UNIDENTIFIED MALE: All time work in temps, a lot of artillery from different directions from Eastern from North.
PLEITGEN (voice over): But the team is often able to spot attempted Russian advances. Here Russian infantry are moving through the thick woodland, and
this tank leaves cover and opens fire towards Ukrainian positions. The Ukrainians liberated towns and villages in this area last autumn, but the
scars of battle are visible everywhere.
PLEITGEN (on camera): This village like many of the ones in this area was heavily damaged when the Ukrainians moved in here in fall. For a while it
was quiet but now all that is changing the fighting is coming back. And it's heavier than ever before.
PLEITGEN (voice over): The few people remaining those too poor or too old to flee. I asked Valentina if it's not too dangerous to stay here. Yes, it
is dangerous, she says but what can we do? Of course it's dangerous, but we endure sometimes we hide, but now it's too cold the basements.
The Russians have massively beefed up their forces around Kreminna. They believe they have to prevent the Ukrainians breaking through here to
sustain their own offensive against Bakhmut and are now also launching fresh attacks near Vuhledar further south. This video near Vuhledar shows
Russian armor getting hit by Ukraine's artillery.
The soldiers run away, a wounded comrade tries to crawl to safety. In all these places, drones are critical to detect and to destroy the enemy.
Dnipro-1 has its own drone workshop where NATO issue grenades are literally sawn and have to be carried on drone. Here you can manufacture drone
munitions in 20 minutes, and they've proven very effective in the conflict.
Drone operator is one of the most dangerous jobs the boss says as soon as they locate a drone operator. They use all kinds of weaponry, artillery,
MLRS tanks. We have a high rate of casualties among drone pilot. In the forest, Ruslan mission is now over. But he sees a long battle ahead in a
contest of wits and brute force.
UNIDENTIFIED MALE: Mostly last month our army goes state bugs last I think two weeks maybe we stop and Russians making counter attack.
PLEITGEN (voice over): And all the time drones will shape the way this war changes. Fred Pleitgen CNN, Zarichne, Ukraine.
(END VIDEOTAPE)
GIOKOS: Straight ahead the Powell pivot investors hoping for years, rate hike pause in the months ahead. Tomorrow's Fed statement will be key. We'll
discuss with Wall Street Veteran Sam Stovall. And Silverado superlatives General Motors out with record profits and solid guidance, my interview
with GM, CFO just ahead.
(COMMERCIAL BREAK)
[09:20:00]
GIOKOS: Welcome back to "First Move"! A higher open on tap for U.S. stocks on this last trading day of January. A strong month so far for the major
averages the best January in some three years, stocks getting a boost pre market, thanks to encouraging wage inflation news. And we've had tons of
corporate earnings released as well.
I can see the DOW Jones up 9.2 percent pre trade and S&P also looking good Pfizer and Caterpillar. I said to pull back in early trading after
reporting Q4 disappointments. McDonald's hereby reporting double digit international sales growth. GM is reporting its second straight year of
record profits.
Exxon Mobil reporting record profits of $56 billion last year as well. And that comes out to $6.3 million of profit per hour. Sam Stovall joins me he
is the Chief Investment Strategist at CFRA Research. Sam, great to see you! What a way to end the first month of the year.
I mean, this is the last trading day of January, and I'm just reflecting on what we've been seeing over the last few months. The IMF coming out with
sort of better than expected outlook for the year ahead it's still not looking as if we're exactly where we want it to go. But there are signs
that it's not all that bad.
SAM STOVALL, CHIEF INVESTMENT STRATEGIST OF CFRA RESEARCH: Oh, absolutely, typically what you find is that in the years following a sharp decline, as
we had in 2022, investors say things have to get better. And the market does tend to rise more frequently in that subsequent year. Also, you just
mentioned how well the market did in January.
There's something called the January barometer, as goes January, so goes the year and based on a positive return, that has favorable implications
for the remainder of this year. And certainly, whatever we hear from Fed Chair Powell tomorrow, as well as employment data on Friday. I think could
go a long way to retaining that trajectory.
GIOKOS: What are you pricing in terms of interest rates hikes going forward? I think the markets were sort of anticipating a 50 basis point
hike in February 0.25 percent in March. Do you think both have a softer outcome on that front as well, given that things are looking slightly
better? But of course, it's the real inflation that people are feeling that is very far removed from what we're seeing in the headline numbers?
STOVALL: Yes, I do. I actually think that the Fed will raise rates by 25 basis points or one quarter of 1 percent announcing that at tomorrow's the
end of tomorrows meeting.
[09:25:00]
STOVALL: And there's a good likelihood that they will then hit the pause button. I don't think that they're going to tell us that they're going to
do that they're still going to tell us that they will remain vigilant against inflation. They don't want to make the same mistakes, as the Fed
did in the 1970s.
And they will remain data dependent. But I am reminded by history that the Fed starts to think about lowering interest rates, only nine months after
the last rate hike. So I think that there could be a good chance that at least the Fed sort of tones down its hawkish rhetoric in the months ahead.
GIOKOS: And speaking of history, I was just looking at some of your tweets. And you referred back to the experience during World War Two how much the
markets are up since then? And what lessons we've learned because of those market drops and how far we've come? What is your prognosis, given the fact
that there is so much geopolitical tension that is having global ramifications?
STOVALL: Well, we've had to deal with these geopolitical tensions now for over a year and also, because we had such a sharp decline in the U.S. stock
market in 2022. I like to say that prices lead fundamentals they sell off last year really points to the earnings weakness that we are now beginning
to see and we'll likely continue to see for the first half of 2023.
But I think because the Fed is projected to pause, because earnings are expected to rise by more than 11 percent in 2024. I think we could end up
with a positive 2023 in terms of share price activity, as investors await and even better 24.
GIOKOS: Yes, and it's really a mixed bag of results. But just the earnings that we've seen today, we've seen some really fantastic numbers coming
through. What a corporate earnings telling you that perhaps would show us the picture that lies ahead.
STOVALL: Well, I think it is confirming that we are either in or are approaching what I think to be a mild recession. We expect to see earnings
declines for the fourth quarter of 2022, as well as the first two quarters of 2023. And typically, year on year declines in earnings over more than
two quarters point to an earnings recession.
And earnings recessions tend to be coincident with economic recessions. But since this has been anticipated for quite some time, I believe that this
earnings and GDP shortfall is already factored into share prices. So I think investors are going to look across the valley, look into the second
half of 2023 and into 24 to start to feel a bit more optimistic about stocks.
GIOKOS: Yes, I mean, I wonder during this time, and still we're sitting with a bit of uncertainty, despite some of the economic data sort of
pointing in a certain direction. What kind of positions would one take on - you know the companies that are looking expensive that have interesting
price to earnings ratios as well? Where would you be sitting on that timeline?
STOVALL: Well, interestingly enough, again, history offers some guidance. I like to say it's a great guide, but certainly never gospel. But after sharp
declines in the market, you want to rotate from first to worst. Meaning move out of the traditionally defensive areas of consumer staples.
Meaning food, beverage, and tobacco, out of healthcare and out of utilities, into those groups that were beaten up the most in particular
communication services, consumer discretionary, like autos, homebuilding, retailing, as well as technology they are likely to be market outperformers
come the end of this year.
GIOKOS: Yes, brilliant market philosophy from first to worst. Sam Stovall, great to see you thank you so much for joining us today. All right, we're
taking a short break and coming up as snag for Samsung and sweet subscriber's song for Spotify. We'll dive into the latest earnings reports
coming up next.
(COMMERCIAL BREAK)
[09:30:00]
GIOKOS: Welcome back to "First Move"! U.S. stocks are up and running on this last trading day of January and we've got a higher open across the
board. Markets getting a little boost over an hour ago after the release of investor friendly inflation data. The U.S. employment cost index easing a
bit in the fourth quarter.
And that's encouraging news for the Fed as it begins its two day policy meeting in Washington. DOW Jones, NASDAQ and S&P all in the green, tech
earnings are in full swing. But it's not all good news all around. Samsung's fourth quarter profit shifts, hits the lowest level in eight
years as customers snap up fewer cell phones and laptops.
The company said it expects to demand to slide again in the first quarter. But it was a sweeter song over at Spotify, the streaming music platform
reported strong monthly active user growth, beating expectations. Paul R LA Monica joins me now.
I want to get into the Samsung results with profit decline since 2014. And it seems to be a mismatch between supply and demand. Those chipmakers
having a tough time, it seems reading the markets.
PAUL R. LA. MONICA, CNN REPORTER: Yes, that is definitely the case. We've seen Eleni, you know, just last week, Intel, really sending a shiver down I
think the spine and many tech investors, you know, with exposure to PCs and Smartphone's, because there are concerns about demand really falling this
year.
And it's no surprise that Samsung which both makes chips, as well as actual devices is going to get doubly hit by this slowdown. So I think that there
are just many concerns right now about when demand will pick up.
There seems to be saturation for customers as well. I mean, I don't think there's as big of an urge or a need for many consumers to upgrade to the
latest Smartphones and laptops. They're sticking with older devices for longer, which is a problem for companies like Samsung and Apple obviously.
GIOKOS: Spotify was looking at the numbers here reporting 489 million monthly active users for the quarter up 20 percent year-over-year. People
might not be buying new devices but they certainly are listening to music.
It's really fascinating looking at these data points. I want you to take me through some of what's driving Spotify right now because it also announced
plans to cut 6 percent of its global workforce.
MONICA: Yes, Spotify is in a bit of a strange spot if you will. Another company that faces intense competition with Apple pretty much everyone in
tech does was. But with Spotify what's really interesting is that they are making a huge investment in podcasts and audio that goes beyond recorded
music.
[09:35:00]
MONICA: And that is clearly something that there is demand for. And I think we see that with the user growth numbers, but it's costly, and that is
hurting profitability for Spotify. But these losses that Spotify reported were not nearly as dire as Wall Street was expecting. Hence, the stock is
going up today. But as you point out, Eleni, it's clearly a tough time with the layoffs.
GIOKOS: All right, Paul R LA Monica, thank you so much. Good to see you. Well, we're taking a short break coming up, General Motors on a roll
America's largest automaker post stellar earnings despite stiff competition, my interview with the CFO is up next.
(COMMERCIAL BREAK)
GIOKOS: Shares in General Motors are surging, and that's following record breaking earnings and the automakers announcement of an equity stake in a
firm supplying lithium used in the batteries of its electric vehicles. As you can see, it's up 6.42 percent. And just before we went on, ask the CFO
Paul Jacobson for his take on 2022 and about the pressures on the cost side?
PAUL JACOBSON, EVP AND CFO, GENERAL MOTORS: I just want to start by saying how proud I am of the GM family and what they've accomplished in 2022 when
we first gave our guidance back at the beginning of the year.
We talked about over $2 billion of inflationary headwinds and cost increases. As the year progressed that kept getting higher, we ended up
overcoming over $5 billion in pressure to deliver the results that we've seen.
So while we've seen a little bit of pressure on the cost side through inflationary moves, the sales of the vehicles, the demand for our vehicles
and the strength of the consumer remains strong throughout all of 2022. And we've gotten off to a good start in 2023.
GIOKOS: I want to talk about the $2 billion cost cutting strategy that you'll be taking on in the next few years. Where are those savings going to
come from?
JACOBSON: Well, they're really going to come from all over. So as we looked at the year and we looked at some of the risks that are out on the horizon
again, the consumer for us has remained strong and you see that in our forward guidance.
[09:40:00]
JACOBSON: We thought it was prudent to you know reduce our costs and to change the trajectory that our expenses have been on so the $2 billion
program which will be completed in 2023, and 2024. We expect to get about 30 to 50 percent of that this year.
And it's really going to come from all sources, a lot of complexity reduction in our products, reductions in corporate overhead,
administration, other discretionary spend across the board. But I want to be crystal clear we're not contemplating any layoffs. And we believe that
we can get this accomplished without any.
GIOKOS: Because I'm trying to keep up with all the announcements on potential joint ventures on some that are on the go and general spending.
But I want to talk about supply chain. You are getting into a joint venture with Lithium Americas.
And you've said this is the third largest reserve of lithium in the world that production set to come online in 2026. At a time where we're seeing
competitiveness, squeezing I guess all players in the EV space, how is this going to alter your input costs?
JACOBSON: Well, we're no stranger to competition. We've been in the highly competitive auto business for over 100 years. And in the company has done
really well over that time period. So we think we're positioned to win.
And one of those reasons is our scale, and our size. And, you know, several months ago, and over the last 18 to 24 months, we've had teams that have
been laser focused on battery raw materials, lithium, nickel, cobalt, the entire gamut of materials across the board.
And this represents another chapter in that. We don't think it'll be our last. But we're really proud of what the team has done. We are proud to be
able to stand with Lithium America's on the factor past project, and think that this will be a great supply for us beyond 2026. We've already secured
all of the raw materials that we need to through 2025 to hit our volume targets. And we're working on longer term agreements and this is a great
example of one.
GIOKOS: You've had record sales in terms of the Chevy Bolt, EVs and EUVs in the second half of last year, really shooting the lights out. At the same
time in December, you announced a recall of these vehicles. And I just wonder whether this is going to put a dent in the momentum that you've
built, because of the fire hazard that's emerged and how you're dealing with this new scenario?
JACOBSON: Well, first and foremost, we're always 100 percent focused on safety for our consumers. And we've been able to manage through that. But
you know, the other piece of it is, is we're rapidly scaling up our Altium platform.
You know, we've announced that we're going to hit 400,000 EVs sold by the first half of 2024 ramping up to a million annually in 2025 and growing
from there. A lot of that is driven by our sell plants that are coming online as we're making our own cells with our Altium platform.
The first one opened in the fall and we're scaling that up pretty rapidly. So we think we're in a we're in a great position to win and to see a lot of
growth in our EV portfolio both in terms of volumes but also in the breath of our products.
GIOKOS: But have you seen a slump in Chevy Bolt sales because of this recall? And what does this do for you? And I say this because you've had
Ford marquees coming down in terms of price points. Tesla doing the same. So there's a squeeze in terms of the price point attractiveness that you
offered with a Chevy Bolt but now comes with this warning?
JACOBSON: So you know we've actually seen record sales between the bolt EV and the bolt, EUV and continuing to grow. In fact, we're increasing
production in 2023 for those models and we see demand for those continue to be strong as we do for our entire EV portfolio. So we think we're at the
right price at the right segments in the market to be able to be successful.
GIOKOS: I want to talk about the supply chain coming through from China and frankly, all auto makers experienced supply constraints specifically with
the chips. Zero COVID policy in China and now that being lifted how this change does your prognosis on what China means from you from a supply
perspective, but also demands?
JACOBSON: Well, you know, first of all more broadly on the supply chain. Our production was up 25 percent in 2022 over 2021, which is a testament to
the relationships that we have across the supply chain and the resiliency of our teams.
So we've seen improvements across the board. There are still some pockets from time to time that impact us. But overall I think we see much more
stability than we did a couple of years ago as it relates to China's specifically.
[09:45:00]
JACOBSON: Obviously they had a challenging year with the zero COVID and now with COVID cases increasing across the country. Our team there has done a
remarkable job, both in terms of taking care of our people, but also delivering on their commitments, both in the country as well as throughout
the globe. So they remain a really strong partner and our team there has done a great job.
GIOKOS: Very quickly on the V-8 combustion engines, the gas guzzling engines. You're investing over $900 million within the space. And I'm just
curious at a time where we're changing the way that we consume, we're changing the way we think about, you know, the automotive space. How does
this plug into your overall strategy?
JACOBSON: Well, you know, our internal combustion engine portfolio was really strong. In fact, it's funding the journey for our transformation to
EVs and when you look at the record levels of cash flow that we produced.
And the fact that we're able to use that cash, to reinvest back in the business and accelerate the transformation now we will be increasing our
capital expenditures to 11 to $13 billion in 2023, which will be a record for the company tells you the power of those internal combustion engines.
So the investment is making them more efficient. It's making them more emissions friendly, and continuing to drive that on our journey as we go to
all electric by 2035.
GIOKOS: Are you not worried about the inflationary space within you know what consumers are feeling right now, particularly in the U.S.?
JACOBSON: Well, we're certainly aware of those pressures and we're constantly looking at the consumer demand data in our portfolio as well as
what others are experiencing it. And, you know, we can't be naive about what a lot of companies are seeing right now.
But as we look at across our metrics, both in GM Financial with their credit portfolios, as well as the demand and the pricing for our vehicles,
demand still remains quite strong for us. We are being proactive about the $2 billion cost program that we've announced.
That is I would say mainly to keep us well positioned if we see any change in the data and make sure that we stay ahead of that. But right now all the
data indicates that there's strong demand for our products across the board and we're experiencing more stable production to be able to get those
vehicles into the hands of the consumers that want them.
GIOKOS: All right. Still to come, the search is on for radioactive capsule missing in Australia that could be a threat for centuries to come that's
coming up after the break.
(COMMERCIAL BREAK)
[09:50:00]
GIOKOS: Dust storms caused billions of dollars' worth of damage to economies across the Middle East and beyond and disrupt crucial solar power
supplies. In our new series transformers Allison Chinchar looks at how we can predict dust storms before they happen.
(BEGIN VIDEOTAPE)
ALLISON CHINCHAR, CNN TV PERSONALITY (voice over): Dianna Francis is an Atmospheric Scientist at Khalifa University in Abu Dhabi, and an expert on
a natural phenomenon dust storm.
DR. DIANA FRANCIS, ASSISTANT PROFESSOR/ KHALIFA UNIVERSITY: Dust storms are weather phenomena that are caused by high wind speed that are occurring
near the surface over the Trojan. They will lift small particles of sand, and these particles will be able to travel thousands of kilometers around
the globe.
CHINCHAR (voice over): In June 2020, a colossal dust storm nicknamed "Godzilla" crossed the Atlantic from the Sahara Desert, darkening skies
across the Caribbean. It was the biggest dust storm worldwide in 20 years according to NASA.
And one of a number recently wreaking havoc across the globe. In 2022 thousands of people were hospitalized across the Middle East with
respiratory problems due to a wave of deadly dust storms.
FRANCIS: In some cases, we have visibility that drops to 10 meters. And then people will feel difficulty to breathe. And we can do for example,
outside activities whenever dust storm occurs.
CHINCHAR (voice over): In 2016, the UN estimated this extreme weather will cost the Middle East and North Africa region's economy $13 billion a year
in damage to the environment, agriculture, transport, and infrastructure. It's a problem made worse by increasing heat waves and droughts due to
climate change, and alterations in land use, which create more sources of dust.
FRANCIS: I really wanted to know what's special about the Empty Quarter desert, what's happening in the atmosphere on the sand and the land?
CHINCHAR (voice over): The Empty Quarter Desert 250,000 square miles stretching across the Arabian Peninsula. It's the world's largest sand
desert. Francis and Khalifa University are conducting what she says is first of its kind research in the region to measure dust storms coming from
the Empty Quarter.
FRANCIS: So if you have a liturgical tower, on which you have several sensors at different level, so it allows us to have the vertical structure
of the atmosphere.
CHINCHAR (voice over): That data helps predict dust storms in the region and further afield. Her work on dust is even more important in a region
where solar power is emerging as a green energy source.
FRANCIS: We know that solar energy efficiency is impacted by dust storm and if we want to understand how much we can rely on these energy sources, we
need to be able to predict dust storms and their activity. The story about studying the weather is a new understory because there is always something
new something novel to discover.
(END VIDEOTAPE)
GIOKOS: It is tiny potentially deadly and authorities say it could remain a threat for the next 300 years. Australia's Nuclear Safety Agency has joined
the search for radioactive capsule along a vast stretch of highway in Western Australia longer than the length of California's coastline. CNN's
Marc Stewart has more for us.
(BEGIN VIDEOTAPE)
MARC STEWART, CNN INTERNATIONAL CORRESPONDENT (voice over): Authorities fuel the chance of finding this radioactive capsule is slim. First, it's no
bigger than a coin and then they believe it fell off a truck on a section of Australia's Great Northern Highway that's a distance longer than the
California coastline.
We're told the capsule was placed inside a package on a truck and was later discovered missing during an inspection. Nonetheless, a search is underway
using vehicles equipped with specialized radiation detection equipment traveling at a speed of 31 miles per hour, so the equipment has time to
detect the radiation.
The capsule contains a substance that can lead to serious health problems if humans come in contact with it. Skin burns, radiation sickness and
potentially deadly cancer risk, especially for those exposed unknowingly for long periods of time.
There is also concerned by authorities that the capsule may have been stuck in another trucks' tyre taking it further away. Even wild animals could
have moved it including birds, Marc Stewart CNN Hong Kong.
(END VIDEOTAPE)
[09:55:00]
GIOKOS: A Nigerian Artist is generating buzz with his computer generated works. Malik - used three different artificial intelligence programs to
create a series he calls fashion show for seniors. It depicts gray haired men and woman modeling on a catwalk, which is something the artist, said he
has never seen.
He did it to challenge perceptions around aging because he says many elderly people have been marginalized in society. The images have gotten
hundreds of thousands of likes on social media. The "Man in the Moon" has some competition the face of a bear on Mars. A circular fracture pattern on
the Martian surface shapes the head while two craters resemble eyes.
And a V-shaped structure creates the illusion of a nose. The University of Arizona shared that image last week. That looks really sweet. Well, that's
it for the show. I'm Eleni Giokos, thanks so much for joining us. "Connect the World" is up next.
(COMMERCIAL BREAK)
[10:00:00]
END
