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First Move with Julia Chatterley
ECB and Bank of England Hike Interest Rates by 0.5 Percent; Car Rental Revival; Central Banks Raise Interest Rates Again; Ukraine: Russia is Preparing "Maximum Escalation" of War; Sixt Rental Car Company Looks to Expand; Experts say AI will take Jobs and Create New ones. Aired 9-10a ET
Aired February 02, 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)
ZAIN ASHER, CNN HOST, FIRST MOVE: A warm welcome to "First Move", I'm Zain Asher in for my colleague Julia Chatterley. So good to have you with us
lots to get through on today's show including a flurry of interest rate decisions by a global Central Banks. In the past few hours, the European
Central Bank and the Bank of England have both raised rates by half a percentage point.
As follows the U.S. Federal Reserve's quarter percentage point hike on Wednesday, it is the smallest increase here in the U.S. in terms of
borrowing costs since last March. All three Central Banks warning that more hikes will still be needed before their inflation battle is complete. But
Fed Chair Jerome Powell stressed that progress on prices is being made you do not warn investors that investors are getting ahead of themselves by
anticipating an end to tightening.
Reaction on Wall Street was positive tech stocks, which would benefit from a rate hike pivot rally 2 percent on Wednesday. They're back on track for
another strong opens day helped along by solid results from Facebook's parent company Meta. European shares are suddenly higher too with U.K.
based Shell Oil reporting the best annual profits in it's over 100-year history.
We'll delve into that with our Paula Monica later on in the show. But first, the latest on the Fed, the U.S. Central Bank raising rates for the
eighth straight time on Wednesday as expected. Fed Chair Jerome Powell saying progress is being made in the fight against inflation, but it's too
soon to declare victory just yet.
(BEGIN VIDEO CLIP)
JEROME POWELL, U.S. FEDERAL RESERVE CHAIR: Inflation data received over the past three months show a welcome reduction in the monthly pace of
increases. And while recent developments are encouraging, we will need substantially more evidence to be confident that inflation is on a
sustained downward path.
(END VIDEO CLIP)
ASHER: For investors however, betting that a Fed rate hike pause is coming soon that optimism fueled by Powell's comments that financial conditions
have tightened as rates rise, when in fact many argue the exact opposite. Let's bring in Christine Romans to break all of this down with us.
So we are expecting some ongoing rate increases that Jerome Powell did sort of tried to temper expectations a bit just in terms of letting people know
like, look, inflation is down in this country, but we're not out of the words just yet.
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Yes, and a lot of people talk about this super core inflation, very recent, you know, three month
annualized inflation kind of numbers that are back to target and the Fed Chief was saying, look outside of there. There are other parts of the
economy where inflation is not coming down yet.
So we're seeing progress, but the job is not fully done and that was the message. He was really kind of hammering home there yesterday, but you can
see a shift however, you can see that the corner has been turned how much further we have to go remains to be seen. But a corner has been turned.
I mean, just look at all of those rate hikes beginning in March of last year. This is just really a historic kind of a moment, one after another of
these rate hikes. And it's interesting because the rate hikes have had a cooling effect in housing, no question. We've seen mortgage rates rise,
although they seem to have tapered off here.
They're just below the peak, but credit card interest rates are at record highs right now, and all other kinds of loans cost more money, including
auto loans. So for average Americans, average consumers in the U.S. and around the world, quite frankly. They have felt keenly the higher rates,
but they haven't felt the higher rates in savings accounts yet.
And I think that's an interesting part of this story that disconnects between all of those rate hikes that are happening. But still savers really
have to look hard to find online accounts that pay more than, you know, 1 percent or something. So there's still work to be done.
This is obviously an interesting moment, the beginning of 2023 for consumers who have amassed some funds through COVID and after. And now
we're starting to act a little more cautiously, which might be exactly what the Fed wants to see.
ASHER: Oh, Christine, you brought up a great point about the saving rates that despite the rate hikes that savers are not benefiting from it as much
as you'd anticipate. But Christine Romans have to leave it there, thank you so much.
ROMANS: Welcome.
ASHER: All right, as you've heard the European Central Bank and the Bank of England also raised rates by more than the Fed actually, that's despite
inflation in the U.K. easing in December to 10 of percent. But the Bank of England governor says it's premature to celebrate.
(BEGIN VIDEO CLIP)
ANDREW BAILEY, BANK OF ENGLAND GOVERNOR: The forecast suggests that inflation will come down and that it will fall quite sharply. But events
may not unfold in this way. With inflation currently above 10 percent we are in uncharted territory. Energy prices may not fall by as much as
currently expect in financial markets.
[09:05:00]
BAILEY: And even if they do this period of very high inflation could play enter price and wage setting in the U.K. economy to a greater extent than
we assume in our central projection.
(END VIDEO CLIP)
ASHER: Anna Stewart is following all the Central Bank drama from London. Let's start with the Bank of England there. So 50 basis points increase the
highest just in terms of interest rates the U.K. has seen since 2008. What was the tone? What sort of tone did Andrew Bailey give when it came to
future rate increases?
ANNA STEWART, CNN REPORTER: Well you had them; he spoke about uncharted territory in terms of inflation being over 10 percent. So while the outlook
is looking better, certainly a bit cautious there. I never liked to hear a Governor of a Central Bank saying we are in uncharted territory, but less
than another half a percentage point it was pretty much expected.
It does take rates though to 4 percent here in the U.K., that's the highest since 2008. Think about people's mortgages that are going to have given,
you know, track and mortgage rates are 3 or 4 percent higher than that. So that is going to be a problem for many people, I think with mortgages.
And I think that's why there was a division as usual on the committee that sets the rates, the MPC. Two people actually wouldn't want to keep rates
unchanged; it was less divided, though in recent months. The market is pricing in rates peaking at 4.5 percent this year that is better than was
expected.
We were looking at potentially pushing past 5 percent. And as you heard from Andrew Bailey, that the inflation outlook while it has been very grim
is looking better than they were expecting. They're expecting it to come down sharply, and while the U.K. will head into recession, and we've heard
that now from the IMF and all the indicators looking pretty miserable, but it will be a shallower recession than the bank originally thought, Zain.
ASHER: Certainly a modicum of good news there, that it's shallower than what people had been anticipating. Let's talk about the ECB raising
interest rates 50 basis points, as well, just in terms of economic growth in Eurozone; it does remain stagnant at this point. What will this mean,
this sort of basis point rise mean for economic growth more broadly, across the --? And just you know, given the cost of borrowing increasing here.
STEWART: Yes, the rate rise was, as expected, really, it's a trickier position in many ways that used to be given it looks up to 70 different
markets. And while we had some celebration earlier this week, that growth was much better than expected for the Eurozone. That was largely due to
stellar performance from Ireland, as you say economic growth for the Eurozone is really sluggish.
The rate is now at 2.5 percent. So it's actually early on in the rate cycle and many ways then the U.K. the peak for that's expected to be between
3.25, 3.5 percent by the summer. Christine Lagarde, the President of the ECB is actually speaking right now.
I thought it was very interesting that she said, going forward there will be raising rates significantly, she said at a steady pace and at levels
that are sufficiently restrictive. So while the outlook may be a little bit improved, while the Fed may be taking a slower pace to rate rises, coming
up.
I think the ECB is not going to be taking its foot off the gas. They do not want people to look at the improving outlook on inflation, for instance,
which has peaked in terms of headline inflation, and think that they're going to slow these rate rises, they're going to keep coming. And it's
actually the core inflation which is pretty sticky still in the Eurozone.
ASHER: Right, Anna Stewart live for us there, thank you so much. All right and later on in the show, we'll be hearing the view from Former ECB Vice
President Vitor Constancio that's about 15 minutes or so from now. Let's talk about Meta, Facebook's parent company their shares surging pre market
following its fourth quarter earnings report revenue was down 4 percent compared to a year ago, but topped Wall Street expectations.
The Facebook parent company also announced a $40 billion stock buyback. Clare Duffy has the details for us. So one of the things that Mark
Zuckerberg said that got everyone excited is this idea that 2023 for Meta is going to be the year of efficiency. And you think back to just a few
months ago when Meta lay off 11,000 employees. He sorts of intimated that there could be more layoffs coming. I mean, this is all about sort of
streamlining the company.
CLARE DUFFY, CNN TECH WRITER: That's right Zain; this is a big change in tone for Mark Zuckerberg, who for the past year has been talking about the
investments that he wants to make the potential for the future of the company, his plans to build the metaverse the future of the internet. And
so - was a big change in - him talking about this being the year of efficiency and the changes that they want to make just sort of rein the
business back in a little bit.
He talked about the fact that the company is planning to cut its capital expenditures over the next year. It's got a hiring freeze in place and it
sort of talked about the company's core business, the digital advertising business, which has been struggling in this sort of economic uncertainty
over the last couple of months.
I think that's exactly what Wall Street wanted to hear. They had been concerned. I think that that metaverse was a distraction for Meta. And so
hearing him come back and talk about the core business I think is exactly what Wall Street needed to hear.
[09:10:00]
ASHER: And has been so much talk just in terms of a conversation around Facebook being you know, sort of doom and gloom that users are declining
that people don't use Facebook anymore. It's for your grandparents, everybody's on sort of Instagram and other platforms. But really the
numbers actually tell a different story. They're reporting the daily users actually hit a staggering 2 billion in the fourth quarter for the first
time, talk to us about that.
DUFFY: That's right, 2 billion daily active users on Facebook around the world. It's a huge number and a really good sign for the company because
there had been concerns that especially TikTok was presenting a huge competition, especially for the crucial younger users and that Facebook had
become sort of the stagnant old platform that wasn't going to keep growing.
The company has made some changes to Facebook over the last year in a lot of ways, making it more like Instagram, introducing reels and more
recommended content. And it looks like that's paying off.
ASHER: Right, Clare Duffy live for us there, thank you so much, we appreciate it.
DUFFY: Thank you.
ASHER: Right the U.S. expanding its military access to four additional locations in the Philippines about 200 miles south of Taiwan. This has
concerns rise over China's aggression in the region. Beijing criticized U.S.'s move saying it endangers regional peace. Marc Stewart joins us now
from Hong Kong.
So Marc, just walk us through what's going on here just in terms of the U.S. trying to keep a much closer eye on what China is doing, especially in
the South China Sea.
MARC STEWART, CNN CORRESPONDENT: Indeed, Zain, this buildup in the Philippines is something that has been actually been going on since 2014.
The U.S. has always had a presence in the Philippines since then; this move now is basically adding its potential reach. And you showed that map
between Taiwan and the Philippines.
It perhaps gives U.S. troops a little bit more proximity, but again, we don't know exactly where they will be. But this fits into this broader
narrative of the U.S. really beefing up its presence in the Pacific region. We have recently heard the announcement about a new Marine base in Guam.
The U.S. Military has also expressed support for the Japanese islands through military detail there. So this all fits into this broader narrative
and no surprise China is less than thrilled by this new agreement with the Philippines. The response has been strong and has been sharp. Take a listen
to the Foreign Ministry Spokesperson.
(BEGIN VIDEO CLIP)
MAO NING, CHINESE FOREIGN AFFAIRS SPOKESPERSON: The U.S. which clings to a zero sum mentality continues to strengthen its military deployment in the
region out of its own interest. It is aggravating regional tension and jeopardizing regional peace and stability countries in the region should
stay alert and avoid being coerced by the U.S.
(END VIDEO CLIP)
STEWART: This phrase regional peace and stability. It is very firm and it is very emblematic about how China views this potential U.S. involvement in
perhaps a broader discussion about tension with Taiwan. It is interesting to note the timing of this. We saw Secretary Austin in the region.
And now sometime in the near future we are expecting a visit by Secretary of State Antony Blinken to Mainland, China itself. Of course, there will be
lots to discuss trade human rights, but also Taiwan and perhaps this new move by the U.S. Military with its presence in the Philippines. Zain, it
will be interesting to see how that shapes the conversation.
ASHER: And talk to us about the relationship that the U.S. has with the Philippines. I mean, obviously that their relationship prior to this was
obviously a colonial one; the U.S. has a long history of colonization in the Philippines. And so this move is certainly you know, triggering for
certain left wing groups within the country right now. But just talking to us about how the relationship between the U.S. and the Philippines is
changing.
STEWART: Well, if anything, it's not as it's basically affirming this alliance that, as you mentioned, dates back centuries, but there has been a
big shift in political leadership in the Philippines. And so this is a chance now for the U.S. to re-engage in the Philippines and to beef up its
presence.
It is interesting to note Zain that as far as the U.S. commitment to the Philippines, there's a treaty that binds the U.S. to the region. And so
that to perhaps supersede anything else the U.S. does, by treaty have to have a presence there and maintain an alliance in the Philippines.
ASHER: Right Marc Stewart, thank you so much. We appreciate it. Alright, still to come here. These Central Bank Governors are raising rates to get
inflation under control. I asked a Former ECB Vice President, is that enough? Plus, they didn't lose show meet Mr. Sixt, the Co-CEO of Car Rental
Giant is here talking about good service, electric fleets and growth in the United States. That story next.
[09:15:00]
(COMMERCIAL BREAK)
ASHER: Welcome back to "First Move", in India shares of Gautam Adani's business continues to fall in the wake of a short seller's fraud
allegations so far. Their sell off get this has wiped off about $100 billion of the value of his business empire today.
Adani abruptly canceled a $2.5 billion deal to sell rather new shares in his flagship company. Vedika Sud is live for us in New Delhi with the very
latest. So Vedika, Adani is working with bankers essentially to refund investors here. But just explain why they pulled this.
VEDIKA SUD, CNN REPORTER: Early in the days Zain, there was a statement issued by the Adani enterprise, where they call this situation
unprecedented. The statement also went on to talk about how the interest of investors is paramount. But clearly you've just spoken about the kind of
wealth that the business has lost.
We're talking about more than $100 billion and more than $50 billion dollars of personal wealth of Gautam Adani. Now, these are unprecedented
times for the company. Of course, as far as the Hindenburg report is concerned, it's led to Chaos in the Indian markets, the stocks have plunged
and that's the reason why Adani has decided to hold off on the offer of those 2.5 billion stock shares that he was selling to potential investors.
Now, Adani till about last week was the third or fourth richest man in the world, Zain. He was the richest Asian, but after the stocks have plunged,
he's not even in the top 10 richest person's list. According to Bloomberg, he has all that you want to know about this controversy that's raging on in
India and about the man in the midst of it.
(BEGIN VIDEOTAPE)
NIRMALA SITHARAMAN, MINISTER OF FINANCE AND CORPORATE AFFAIRS OF INDIA: Sustainable Cities for tomorrow.
SUD (voice over): Protests by opposition lawmakers in India's parliament on Wednesday highlighting concerns of the finances of an Indian billionaire.
On the same day, his conglomerate Adani enterprises called off its $2.5 billion share sale after a significant drop in share price.
GAUTAM ADANI, CHAIRPERSON OF ADANI GROUP: For me, the interest of my investor is paramount and everything is secondary.
[09:20:00]
SUD (voice over): Even a statement from Low Profile Businessman Gautam Adani wasn't enough to come India stock market. It all started after U.S.
research firm and short seller accused his business of fraud and stock manipulation. The Adani group has denounced the allegations as baseless and
malicious.
It called the report or calculated attack on India, the independence, integrity and quality of Indian institutions and the growth story and
ambition of India. The Adani group founded about 30 years ago controls power stations, ports and airports with huge stakes in the energy and
logistics sector has long been linked to the wider success of India.
TIM BUCKLEY, DIRECTOR OF CLIMATE ENERGY FINANCE: The Indian economy has been growing as one of the fastest growing emerging markets in the world
for a decade now. And that profound success story in India has certainly been a cornerstone of the Adani group because they are investing in
infrastructure in India.
SUD (voice over): At the start of the pandemic, Adani's net worth was estimated to be around $13 billion. Today, Forbes estimates it's around $75
billion. Now it's got this dizzying growth has often been flagged by detractors. Adani is seen as a close ally of Indian Prime Minister Narendra
Modi. Critics say Adani's rise rested heavily on crony capitalism, which Adani has repeatedly dismissed.
ADANI: See Prime Minister Modi and myself both have coming from State of Gujarat. And that makes me the easy target of such business allegations.
SUD (voice over): Analysts caution that the fallout of the report by Hindenburg research not only poses a risk to the Adani group, but to the
Indian economy.
UNIDENTIFIED MALE: In a normal case of events, the regulator would have stepped in and announced an investigation. But sadly, in this case, the
regulator at least for the public has chosen to remain silent.
SUD (voice over): The immediate impact has been obvious, more than $100 billion wiped off the value of his business empire. The wider challenge now
for India's market regulator and the Modi government will be to try and cap the market chaos and regain the trust of nervous investors.
(END VIDEOTAPE)
SUD: The pressure is growing Zain, both on the market regulator as well as the Indian Government to investigate these claims. This is the damning
report. And now all eyes will be on whether this really affects the Indian economy further, Zain.
ASHER: Right, Vedika Sud live for us there, thank you so much. All right, let's get back to those key decisions by Central Banks in the U.K. and the
EU as well. Andrew Bailey at the Bank of England and Christine Lagarde at the European Central Bank are both raising rates more than the Fed this
time around the hikes are intended to bring down inflation, of course.
But there are other consequences, especially on growth. Joining me live now is Vitor Constancio, a Former Vice President of the European Central Bank
and a Former Governor of the Bank of Portugal. Vitor, thank you so much for being with us! So the ECB raising rates by 50.
VITOR CONSTANCIO, FORMER ECB VICE PRESIDENT: Thank you, Zain.
ASHER: You're welcome by 50 basis points pretty much in line with what many of us had been anticipating, your thoughts about the --?
CONSTANCIO: Yes, indeed, everyone was expecting 50 basis points. And I think they were warranted. And I think also the adult dough this time, the
President of the ECB underline very much that now they are on a meeting by meeting approach and totally data dependent.
I think that they will do and should do another 50 basis points in March, and at most, in my view, at most another 25 basis points and stop there to
observe if indeed inflation, as I think will decline sharply according to the more conceptual forecasts that exist in the market. And that put
inflation in the euro area at 3 percent in December of this year, and then around 2 percent next year.
So already the level of rates that now after the hikes that I just mentioned, will be at a level of 3.25 for the deposit facility rate, which
as you know, is in real terms, the policy rates, the accounts in this phase of monetary policy, and that would be enough then to lead the inflation
rate to the levels I mention approaching therefore the target in 24.
[09:25:00]
CONSTANCIO: And I think that would be enough to go beyond that and to increase rates say beyond 3.5. I think all imply unnecessary risks in terms
of the deeper recession and possibly some financial instability.
ASHER: Yes, so they've committed to raising rates, for sure in March, and then after that you touched on this, it's going to be data dependent.
They're going to look at the data, and then they're going to decide. What do they need to see specifically? What are the key sorts of data points
that they would need to see that a guard would need to see before considering actually pausing rates?
CONSTANCIO: Well, I think that the, the important thing is the objective itself, which is the headline inflation, overall inflation. At ECB, we
never adopted from the start that core inflation objective as the Fed does. We looked into it at the beginning of monetary union.
And we saw that the so called core inflation in the euro area. It's not as reliable has not been historically a reliable predictor of future overall
inflation. So we didn't use core inflation in conducting monetary policy, but rather the headline inflation.
And headline inflation will go down very sharply, which is, by the way, implied even by the ECB projections published in December, that put
inflation in the last quarter of this year at 3.6, which by December will be around 3, but I think it will be slightly lower than their forecast,
which shows that indeed, inflation will be leading very quickly to levels around 2 percent, which is the medium term objective of the ECB monetary
policy.
As you know, monetary policy must be always forward looking, and then relying on what is coming and take a view on that. And it's unavoidable to
take a view, and not based on what are the act the present levels of inflation, but look to where they are adding. And if indeed, as I say, they
stopped at 3.25 the deposit facility rate and wait a few months to see if inflation is behaving according to the more conceptual forecasts, I think
it would be enough.
They are concerned, in my view too much with what they call core inflation, which is not the case of the ECB. And that creates the risk of --. They
doing too much, by the way, the Fed also I think, is going to do a bit too much. Taking some sort of risk management approach on the tightening side,
which has, of course, its own dangers?
And in the situation of Europe, where war is still going on and threatens to continue for long and with the uncertainty that creates and the impact
it has on animal spirits of economic agents. I think the ECB has to be careful being assured that inflation is indeed going down to the levels I
mentioned, which by 24 would be on target.
ASHER: Yes, the Fed as you touched on, I mean, although you say that they have there's a risk of them doing too much but they did only increase
interest rates by 25 basis points compared to ECB which is about 50 basis points or so interesting that you mentioned the different levers of
inflation.
Our core inflation you're saying is not as reliable there's also headline inflation also Eurozone inflation there's so many different levers to look
at. But yes, Constancio we appreciate you being with us. We are out of time so thank you so much. All right, still to come here on "First Move",
Kramatorsk under renewed Russian missile attacks the latest from there, after the break.
(COMMERCIAL BREAK)
[09:30:00]
ASHER: The Eastern Ukrainian City of Kramatorsk is under fire once again just hours after Russia's deadly missile attack on a residential
neighborhood. A local governor says that three people were killed and eight others wounded in Wednesday night's strike. A rescue operation is underway
right now for at least two others who may be buried beneath the rubble.
It comes ahead of the arrival of EU Leaders in Kyiv on Friday for war Summit. Well, those Ukrainian forces on the frontlines in the east the
intense battles have been constant with brutal winter conditions now making the fight even more difficult. CNN's Fred Pleitgen gives us a firsthand
look at what they're facing.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): All out winter warfare on the Eastern front. We're in a trench with Ukrainian
paratroopers. A fire on Russian positions using AKs and the U.S. supplied Browning heavy machine gun. They're searching for weak spots in our
positions say the Commander Callison Ghost (ph). They want to see if we fight back if we show strong resistance though they don't advance. And this
is what strong resistance looks like.
The Russians are only about 400 yards away, hidden in the snow and fog but constantly firing at the entrenched Ukrainian. The enemy uses all kinds of
weapons Bogdan says small arms heavy machine guns, artillery mortars, rocket launchers and aviation as well.
But so far, the Ukrainian say they haven't lost an inch of territory here. The Ukrainian says the situation here is reminiscent of some of the worst
times in World War II where they're not only fighting a strong adversary but the elements as well.
The snow, the mud and the cold make fighting here even tougher. And Ukraine's leadership believes the Russians will soon escalate even more
after mobilizing hundreds of thousands of men for a likely spring offensive.
But this gunner who goes by the name Deputy says the paratroopers are ready. It will be hard he says it will be tough but we will hold because we
stand and hear for our land if we don't do it nobody will. There's a visceral hatred towards Moscow's leaders among these men.
[09:35:00]
PLEITGEN (voice over): In Russia they have a terrorist dictatorial regime Bogdan says so now the civilized world is fighting against this wild made
evil dictatorship. As we prepare to leave, incoming grenades explode above. And this men say is a relatively quiet day. They expect much worse in the
months to come but their motto is, if not us, who else? Frederik Pleitgen, CNN Ukraine.
(END VIDEOTAPE)
ASHER: Oil giant Shell raked in more than double what it made in 2021 after oil and gas prices soared following Russia's invasion of Ukraine. Europe's
largest oil company by revenue reported a record profit of almost $40 billion last year, more than 40 percent of Shell's full year earnings came
from its integrated natural gas business, which includes its liquefied natural gas trading operations. Paul R LA Monica joins us live now.
So Paul, you know, a lot of people, especially the climate activists are going to be very unhappy about this. They're going to be triggered by this,
but also just when you think about what's happening around the globe the fact that the war in Ukraine has left millions of people displaced and also
millions more people food insecure, especially in the developing world. Meantime, you have oil and gas companies like Shell making out like bandits
just walks us through that?
PAUL R. LA. MONICA, CNN REPORTER: Yes, there obviously is a lot of criticism of the energy companies because of how they have been able to
profit from, as you point out Zain, this horrible war that's happening in Ukraine.
But I think what's even more troublesome for climate activists, when they look at this record profit from Shell and many other oil companies, is that
climate activists want to see the energy giants invest even more in renewable energy.
And they are doing as much I think, as climate activists would like. You know, so a company like Shell is still generating such a large percentage
of its profits and revenue from traditional fossil fuels, which, as we know, is having a deleterious effect on the climate and the planet.
So that is obviously a big problem. And then there are political issues in the U.S. too, with big energy giants like Exxon and Chevron, making big,
big profits and that's raising the ire of the White House.
ASHER: Yes, I mean, a lot of people are upset about it. And yes, I mean, as you point out, they will say that look, yes, we do invest in renewable
energy, but it's not quite as much as perhaps they could be investing. I think that's what setting a lot of people for them. Paul R LA Monica we
have to leave it there. Thank you so much.
All right, still to come here, challenging the rental car market; I speak with one of the CEOs of Global Rental Car giant Sixt about its plans for
growth in a bumper to bumper rental space that's next.
(COMMERCIAL BREAK)
[09:40:00]
ASHER: All right, welcome back to "First Move"! U.S. stocks are up and running on another important day for corporate profits and central bank
interest rate decisions. A mixed start to the session let's take a look here as investors weigh the trifecta of rate hikes from the Fed, the Bank
of England and the ECB.
But another strong advance the tech stocks after Wednesday's strong 2 percent rally the NASDAQ now up more than 15 percent so far this year in
hopes that the Fed will soon pause on rate increases. Tech also getting a bit of a boost here from the Facebook's parents company Meta. It shares up
let's see nearly 18 percent or just over 18 percent actually I should say in early trading after reporting strong revenues and user numbers.
Guidance coming in very market friendly too, Meta is also boosting it stock buybacks but a different reaction to earnings from two major U.S. drug
companies. Merck is out with weaker forward guidance. Eli Lilly is reporting revenue miss as well, shares of both firms beginning the session
lower.
Another critically important batch of corporate earnings set to release later today. I'm talking about Apple, Alphabet and Amazon all about to
report their results too soon as well and the market challenges do not end there.
The latest look at the health of the U.S. jobs market will be out this time tomorrow. So make sure you tune in this time tomorrow for that update. The
global rental car market is making a comeback after being stunted by the pandemic.
Data shows the industry is expected to surpass an estimated $145 billion by 2027 thanks to people traveling more. One company looking to take advantage
of all of that is Sixt founded more than hundred years ago, the German based rental car company already operates in over 2000 locations.
I was going to say 200 but actually 2000 locations with what it says is the largest fleets of premium cars worldwide. Sixt says it sees the potential
for even more growth in the United States launching its rent the car company or car campaign at the end of last year, challenging the A and rent
a car market.
Even with grand growth plans the company says it's not immune to inflation and potential recession. Joining me live now is Alexander Sixt. He's the
Co-CEO of Sixt Rent Car. Alexander, thank you so much for being with us.
And that's really you know what I want to touch on this idea of all the sort of different headwinds the U.S. is facing right now. You know, the
threat of a recession isn't as great as perhaps we anticipated last year, but it's still there. But obviously, you know, interest rate increases,
rising borrowing costs, the cost of living in this country inflation, there are a lot of pressures on the U.S. consumer right now. What does that mean
for Sixt?
ALEXANDER SIXT, CO CEO SIXT: Well, Zain thanks for having me. In fact, to be honest, we see a pretty positive momentum in the first couple of weeks
of 2023. Pricing has been pretty good, actually stable, if not increasing, rental days are picking up significantly.
I see we see the same effect in the airline capacity industries, where most of the airports are showing double digit growth rates where we operate in.
So we're pretty confident heading into 2023. But yes, we are not immune to the effects of inflation potential recessions.
However, you have a high degree of resilience. We have a highly diversified business in terms of customer groups and regions, a high portion of
variable cost and a very good equity based and obviously a large financial scope of action.
ASHER: So much pent up demand as a result of this sort of pandemic coming to - I don't want to say it's over, but it's as close to being over as it
possibly could be. And as a result, you know, after the pandemic there was a massive increase in demand in terms of airline tickets, massive increase
in the number of people wanting to rent cars, obviously, that led to a dramatic increase in prices are those prices here to stay?
SIXT: Well, to be honest, we do see a lot of pickup in demand, people stopped buying things that they want to buy experiences and that obviously
is true for anything that's related to travel in general. When it comes to pricing, we see a couple of effects.
First of all there was a global fleet shortage led to under supply vehicles then the demand recovery and thirdly the rental car industry has been
stagnating in terms of pricing development over the last 10 years.
[09:45:00]
SIXT: And what we saw in the last couple of years is going to be a catch up effect and pricing. We see continues rising prices over 2022. But we also
see an increase in pricing, especially in Europe, but also in United States for 2023. So we are pretty confident that pricing will remain stable, if
not even increasing in 2023.
ASHER: All right, so given those price increases, how do you separate yourself in terms of the customer experience? What I mean by that is I was
just having a conversation with one of our producers just before the show.
Who was saying that, look, the issue with renting cars is this idea of when you sort of leave the airport, you end up waiting in line for sometimes
ridiculously long amount of times, I've experienced that myself.
And then on top of that, you get hit with so many fees, I wrote down a few of them so many hidden fees, by the way. It's the airport fee, it's the
fuel charge is the collision damage waiver. It's the early return fee. It's the vehicle licensing fee.
And so you never feel that you're actually paying what is on the sticker price. And that can leave a lot of customers being - feeling like they've
been taken advantage of. How do you separate yourself from that in terms of the customer experience?
SIXT: Well Zain, I couldn't agree more. Our aspiration and the core element of our strategy has always been we want to be a premium car rental company.
We want to create experiences our customers just love.
We want to excite our customers with a premium experience along the whole customer journey. I'll give you two examples of them. One example we
increased our premium share of our vehicles to around 63 percent globally, that's about 5 percent up compared to 2019.
In United States, we have the highest premium share vehicles compared to any other major competitors. And to give you another example, leading to
your point, with our option for mobile checkout, customers don't have to wait in line anymore.
They can select their vehicles a couple of hours before their pick up in the app, bypass the calendar for speed and convenience. And obviously you
want to communicate that premium value proposition by our strong and bold brand that is something we have done in the decades of Europe.
And you were leading into that in the United States. We are still in the beginning for that. That's why we have recently launched our first
nationwide brand communicate exactly that value proposition.
And please allow me to share it one thing on a personal note, it makes me really, really proud to see our ads in Times Square these days. I wish my
grandfather could have seen this that started this business after the Second World War.
He provided vehicles for the American armed forces and we as a family and as a company we are though - we owe the American people a lot that makes me
really proud to give back by scaling our brand and creating jobs in America.
ASHER: Well, thank you so much. Alexander Sixt we have to leave it there. I am wondering if there is a way to sort of streamline the process and just
ensure that there aren't so many hidden fees just from a consumer experience. Obviously this is not just Sixt. It's every single car rental
company out there that is struggling with this. Alexander Sixt live for us there. Thank you so much, though.
SIXT: Zain, thank you so much for having me.
ASHER: Of course. All right, coming up after the break, we reveal whether artificial intelligence could indeed put your job at risk? We'll look at
the potential career changes facing millions of us and some potential new job opportunities ahead.
(COMMERCIAL BREAK)
[09:50:00]
ASHER: Recent innovations like ChatGPT and other artificial intelligence tools can sometimes appear to outshine their human counterparts. That means
some workers in certain roles will ultimately lose their jobs. But when the technology takes over when the technology takes over, rather, but experts
say it also opens up brand new employment opportunities as well.
Vanessa Yurkevich joins us live now. So Vanessa I would like to think, I would like to think that my job is protected. My job involves a little bit
of creativity, I guess some personality I think some empathy. Is my job on the chopping block? What are your thoughts?
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS CORRESPONDENT: Partly, yes, partly, no. But artificial intelligence has been with us for over a decade.
But the masses, America, people around the world are just starting to get introduced to artificial intelligence, particularly through something
called ChatGPT.
People have been mesmerized by what it can create. But that has quickly turned to a little bit of confusion and concern thinking hey can artificial
intelligence do my job better than me? That's the question that we asked.
(BEGIN VIDEOTAPE)
YURKEVICH (on camera): Which jobs is AI coming after first?
SHELLY PALMER, PROFESSOR OF ADVANCED MEDIA, SYRACUSE UNIVERSITY: If you're a middle manager, you're doomed. Any kind of commodity salesperson report
writers and journalists, accountants and bookkeepers, and oddly enough, doctors who are looking - who specialize in things like drug interactions.
YURKEVICH (on camera): Do you mean out of a job? Or you mean that part of your job?
PALMER: That part.
YURKEVICH (on camera): OK.
YURKEVICH (voice over): That's the relief a lot of Americans are looking for right now. The explosion of ChatGPT an AI platform showed us it could
do a lot of what we humans do at work, and faster.
YURKEVICH (on camera): Will it take my job?
PALMER: Yes and no. It's not going to replace you. Someone who knows how to use it well is going to take your job. And that's a guarantee.
YURKEVICH (voice over): By 2025 the World Economic Forum predicts that 85 million jobs will be displaced by automation and technology, but it will
also create 97 million new roles. We've seen it before in the auto industry.
PALMER: Well, the auto worker may be displaced because they are not as good at welding or as painting as the robot. There are probably 35 people that
have to be involved in the creation and maintenance of that device that welds better than a person.
YURKEVICH (voice over): And that's what happened at Carbon Robotics former auto workers now building an AI laser welder in Detroit for farms.
PAUL MIKESELL, FOUNDER AND CEO, CARBON ROBOTICS: It's a direct result of the history of auto manufacturing that we have that skill set available to
us all in one place.
YURKEVICH (voice over): The laser welder still operated by a human but run by AI can do the work of between 40 to 80 people says the CEO filling roles
that are hard to find humans for
MIKESHELL: Labor is harder and harder to find every year, particularly foreign labor, and an AI system like ours that can do that job
automatically saves a lot of time, money and effort.
YURKEVICH (voice over): This music is composed solely by artificial intelligence called Eva. It even has an album you can stream. AI Music is
more affordable. There's no producer, composer or artists to pay.
KARL FOWLKERS, ENTERTAINMENT AND BUSINESS ATTORNEY, THE FOWLKERS FIRM: It's taken away opportunity from songwriters, producers and artists, right? So
the people are trying to feed them their families.
YURKEVICH (voice over): Something similar is happening in the art world leading Artists Kara Ortiz and two others to file a class action lawsuit
against three AI art companies for copyright infringement. Ortiz claims they're using her name and art to train the AI.
KARA ORTIZ, ARTIST: Its feast and famine for most of us. We go job by job and what happens when there's a little bit less work to go around.
YURKEVICH (voice over): Stability AI one of the companies named says the suit misunderstands how AI and copyright law work, adding intends to
"Defend ourselves and the vast potential generative AI has to expand the creative power of humanity" the two other companies did not respond.
UNIDENTIFIED FEMALE: I never thought we'd be here. It's like straight out of a sci-fi movie.
UNIDENTIFIED MALE: My father tried to teach me human emotions.
PALMER: There's a wonderful scene in the movie I-Robot detective Spooner hates robots. He says.
UNIDENTIFIED MALE: Can a robot write a symphony? Can a robot turn a canvas into a beautiful masterpiece?
PALMER: And the robot looks up and goes.
UNIDENTIFIED MALE: Can you?
PALMER: Every one of us is not Mozart or Rembrandt or Picasso, or choose your super famous, amazing artist. We're just people. This is not coming to
kill us. It's coming to help us.
(END VIDEOTAPE)
[09:55:00]
YURKEVICH: And spoiler alert if you haven't seen I-Robot, what ends up happening is the artificial intelligence the robots and the humans end up
working together for the good of humanity? And that is actually what AI experts thinks the relationship will be between us and artificial
intelligent.
And Zain since like told in top in the piece what jobs are good to taken by artificial intelligent? First here the jobs that are going to be taken by
artificial intelligence last, preschool, elementary school teacher, profession athletes, politician, judges and mental health professionals
because all of those profession required an element a human nature, emotion, judgment.
At the end of the day a preschool teacher will want to give their students a hug and students want that. So ultimately yes some jobs may be are going
to be transacting out but there are still so many that need actually human like u and I Zain to do those jobs.
ASHER: OK. So that is I loved your piece by the way. I loved watching it.
YURKEVICH: Thank you.
ASHER: There is hope, there is hope. All right, Vanessa Yurkevich I have to leave it there. Thank you so much. And that's for the show. I am Zain
Asher, I will be back in a couple of hours we have "One World". "Connect the World" is next.
(COMMERCIAL BREAK)
END
