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First Move with Julia Chatterley
U.S. Consumer Prices Rise Faster than Expected Year-Over-Year; Rescuers say Voices still being Heard Under the Rubble; Petrides: Earnings Underwhelming this Season; Chocolate Maker Godiva looks to the Future; Ukrainian Troops Training with Leopard Tanks in Poland; U.S. Defense Secretary Speaking at NATO Summit. Aired 9-10a ET
Aired February 14, 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: A warm welcome to "First Move", I'm Rahel Solomon in today for Julia Chatterley. And ahead on today's program, miraculous
rescues in Turkey and Syria more than one week after the region's devastating earthquake officials, they fear that time to save trapped
victims is running out and yet voices still being heard in the rubble.
We are live in Turkey with the latest. Ukrainian troops began training on advanced Leopard 2 tanks in Poland amid fears of an upcoming Russian
military offensive. NATO Secretary General saying that Ukraine must get the weapons it needs to, "win this war".
Plus, the U.S. just out with new important economic numbers the first look at the state of consumer inflation in 2023. Consumer prices easing now for
the seventh straight month, year over year up by 6.4 percent that is the smallest annual rise since October 2021.
Those numbers however, were a bit higher than expected on a month over month basis. However, prices rose an expected half a percent. Take a look
at U.S. stocks you can see they're volatile pre market as Investors really tried to get their heads around this data Wall Street coming off a strong
day of trade on Monday with all the major averages up by more than 1 percent.
Let's take a look at Europe; Europe also appears higher across the board as well. It's a busy show. As always, let's begin with today's inflation
number. Paul La Monica is here with me now. So Paul, when you look at this report, I have it here. What are you seeing in terms of where inflation is
cooling? And perhaps more importantly, where it isn't?
PAUL R. LA MONICA, CNN REPORTER: Yes, what's very interesting Rahel, is it doesn't seem as of yet that inflation is cooling all that much in the
housing market. If you look at the shelter component of CPI, that definitely contributed a big portion of that increase. So I think that
there may be some Investors that will take a little bit of heart from that fact.
And notice that other areas of the economy, we are starting to see, disinflation kick in a slowdown in the level of price increases. But make
no mistake, this is still a high enough number, that it will likely justify the Fed raising rates, again, by a quarter of a point, at least one time,
and maybe a couple of more times.
I think a lot of people are going to look very closely now, at the retail sales numbers that come out tomorrow, if the consumer still looks strong,
then it's another example of this economy continuing to be hot, and the Fed is going to try and pull that off.
SOLOMON: Paul, I think it's a great point in terms of retail sales, and what this tells us about the consumer, because one of the things that we've
also seen that it's also troubling in terms of the health of the consumer is when you look at inflation, where it's still rising the most.
It's categories that aren't necessities, shelter, as you mentioned, food, electricity, apparel, vehicle insurance, and all of those things. And so
when you think about the health of the consumer, we know the consumer has remained resilient. But you look at numbers and categories like this, and
you wonder for how long?
MONICA: Yes, exactly. I mean, I think that the consumer strength has been a pleasant surprise. And of course, a lot of that has to do with the fact
that the job market remains strong, we have job gains at a pretty healthy clip. The unemployment rate is near a half century low jobless claims are
very low.
There has been some high profile, layoff announcements, and a lot of media and tech companies. But despite that, the National job market is still
pretty strong. Wages are growing up. Excuse me. So that's why consumers continue to spend.
SOLOMON: Paul, as you know, when we heard from Chair Powell last week, he said that 2023 will be a year of significant declines. To be fair, this is
only the January report. There is a lot of 2023 left. But do you think that this report is the beginning of what looks like significant declines, but
because I think some would argue inflation is not decelerating nearly as quickly enough as it should be?
MONICA: No, it definitely is not. And I think that is one of the issues that a lot of market skeptics have been pointing out for some time,
inflation remains sticky and this goal that the Fed has of getting inflation down to 2 percent on an annualized basis.
That may eventually happen, but that's going to take a pretty long time, and maybe more interest rate hikes to get there. You know, there are hopes
that maybe we get to the threes, but even a 3 percent handle for annualized prices seems like a long time away when we're still in the sixes.
SOLOMON: It's a great point. Paul R LA Monica, good to have you on the program today, thank you. On today's inflation number really showing the
challenges facing the economy and policymakers prices is cooling off, though not as much as some were hoping.
[09:05:00]
SOLOMON: It mirrors recent forecasts from the IMF. Growth is looking bad Other than previously predicted but Kristalina Georgieva told Richard Quest
at the World Government Summit, it's nothing to celebrate.
(BEGIN VIDEOTAPE)
KRISTALINA GEORGIEVA, IMF MANAGING DIRECTOR: I am not an English native speaker, but what we project is less bad, not good. So we are still in a
difficult time. Why because growth this year, is slowing down visibly the previous year from 3.4 percent to 2.9 and because inflation has not quite
evaporated yet.
Why we are more positive? We are more positive for three reasons. One, because in the United States and in the EU, labor markets are remarkably
resilient people have jobs. When people have jobs, even if prices are high, they still spent.
Two, China has finally opened up and their economy sparking contributing to global growth. Three, because we have seen surprisingly good results of
Central Banks tightening up financial conditions and inflation finally, trimming down although the fight is not yet one.
RICHARD QUEST, CNN HOST: Oh, it's far from one you say it is trimming down. The problem is traditional economics requires that to be an increase in
unemployment, if you're going to bring inflation down to target. I don't like saying it, but that's the reality.
GEORGIEVA: What we would see is, some increase in unemployment, but from an incredibly low.
QUEST: But we're not seeing that weakness in labor market, which suggests that there's going to have to be a good few more doses of monetary
tightening.
GEORGIEVA: We will see monetary tightening graders this year, but not any more we are projecting this tightening to continue way into 24 and let me
stress that. We have markets that are in love with good news. And they do not keep their ears open for the newer nuanced message they're getting from
the Fed, from the European Central Bank.
So what is happening is Chair Powell says we are seeing headline inflation moderating. And then he says but the job is not yet done. Markets hear the
first part of the sentence they don't the second.
(END VIDEOTAPE)
SOLOMON: Meantime back here in the U.S. we are learning more about one of the Flying Objects shot down by the military over the weekend. The Pentagon
memo says that the mysterious object taken down over Canada on Saturday was a "Small Metallic Balloon".
Meanwhile, the U.S. Navy has released these new images showing the suspected Chinese spy balloon that was shot down off the coast of South
Carolina. Oren Liebermann joins us now with more. Oren, is the Pentagon saying much more about at least these three most recent objects where they
originated from and what we know about their purpose?
OREN LIEBERMANN, CNN PENTAGON CORRESPONDENT: No, still no more information on that front. They're not even describing them as anything more than
objects. They haven't gone on to say balloons, sizes except for much smaller than the Chinese surveillance balloon. The first one shut down this
past Friday was described as about the size of a small car.
But there are still a tremendous number of questions about where they came from? What their purpose was? Where they were heading? Frankly, speed and
capabilities the U.S. has said and the National Security Council have said that it appears they didn't have the technology or capability to surveil or
maneuverability.
But that still leaves a tremendous amount of questions here on frankly, what these objects were? Or again, what their intent was? We do have basic
information of these objects shot down three days on Friday, Saturday, and Sunday. The object shot down over Alaska was described by U.S. officials as
metallic in nature.
The object shot down over the Yukon Territory Northwest Canada on Saturday was described as a metallic balloon with a payload some sort of weight
hanging underneath it. And then the object is shot down on Sunday over Lake Huron was described as octagonal in nature.
[09:10:00]
LIEBERMANN: So simply an eight sided object of some sort that has now sunk in incredibly deep water in Lake Huron. We have also learned that in the
attempt to shoot down that object ever look Lake Huron on Sunday, the most recent downed object. The F-16 that took that shot with a heat seeking
missed the first shot, and they were forced to take a second shot.
We learned that last night. Now on the ongoing recovery efforts, it seems these efforts on the Chinese balloon shot down over the coast of South
Carolina and the other balloons are very much going in different directions. We have learned from Defense Official that with the Chinese
surveillance balloon.
They have recovered a quote significant portion of that, including electronics and the structure. So the FBI will begin analyzing that to see
what can be learned. On the other balloons, a Senior Administration Official raised the possibility this morning that they may not be able to
recover those objects, or rather objects, not balloons, simply because of where they were shot down.
10 miles off the coast of Northern Alaska in a very remote part of the Yukon Territory in Canada, and then in very deep water in the Great Lakes
so there is the possibility now that they won't be able to find or recover these objects, which makes them even more difficult to figure out what
really was going on here, Rahel?
SOLOMON: And Oren also a possibility. I imagine that will likely be speaking much more about these objects because I believe it was Kirby who
said that they essentially widen their aperture right? They're looking for more and so essentially, they're finding more?
LIEBERMANN: Essentially, yes, there are Radars, NORAD Radars that look for objects coming into U.S. skies and NORAD airspace. Traditionally, these
were set to look at larger, faster moving objects such as, for example, a Russian bomber testing U.S. response time.
They've refined how these Radars search to make them look for slower moving objects and smaller moving objects, which is why in rapid succession, they
found three more objects. A Defense Official tells CNN they're still trying to refine this process to really hone in on what these Radars are searching
for?
So that you can find anything that is truly a national security threat without finding smaller objects or birds in the sky that force you to
scramble NORAD fighters, so that process of refining the Radars is still ongoing at this point.
SOLOMON: And ongoing many more questions. Oren Liebermann, thanks for helping us understand that a bit more. We will have more "First Move" after
the break.
(COMMERCIAL BREAK)
SOLOMON: Welcome back to "First Move", to Turkey and Syria now were rescuers say they can still hear voices of those trapped beneath the
rubble.
[09:15:00]
SOLOMON: The death toll approaching 38,000 people and yet there have been phenomenal stories of survival like the second of two brothers rescued 198
hours after the earthquake hit. It's a desperate search in frigid temperatures to try and reach anyone still alive. The devastating
earthquake reduced some towns and cities to little more than piles of concrete and twisted metal. Jomana Karadsheh has this report.
NADA BASHIR, CNN REPORTER: Well, eight days own since Turkey was struck by a devastating earthquake and rescue teams say they are still hearing voices
from beneath the rubble. A 10-year-old girl in the early hours of Tuesday morning was pulled out and finally rescued. But the window for finding
survivors is closing very, very quickly.
And this is now shifting from more of a rescue effort to more of a recovery effort. And the focus really now is on providing aid and support to those
impacted by the earthquake. Thousands of people left homeless as a result and we've been visiting some of the donation centers here in Istanbul.
Volunteer that one center, working around the clock to sort through these aid donations including blankets, clothes, toiletries, medication and
electric heaters because of course it is so cold in the Southeastern part of the country. But the message that we're hearing from coordinators is
that they need more support, more donations, more aid, not only for the Turkish government but also from the international community.
But it has to be said that the aid program here in Southeastern Turkey and across the country has proven far more robust than the aid entering
Northwest Syria. The U.N., according to a statement has now reached an agreement with Syrian President Bashar al-Assad to open a further two
crossings from Turkey into Northwestern Syria in order to allow aid to get across.
But there is still the question of cross line aid transfers that is aid that has been sent to Damascus which is under government control being
transferred onwards to the Northwest rebel-held territories of Syria. Now, the government says and claims that they will allow aid to be transferred
through this route.
However, that hasn't happened yet in aid group say they haven't been offered a timeline or any routes that they may be able to use and they are
in desperate need of this aid. More than 4 million people in Northwest Syria were already heavily dependent on humanitarian assistance as a result
of years and years of war at the hands of President Bashar al-Assad.
And now their lives have been completely devastated once again, but the message from the White Helmets who have been leading on that search and
rescue effort is that this is simply too little, too late Nada Bashir in Istanbul.
SOLOMON: And I want to bring in now Jomana Karadsheh, she joins me live from Antakya, Turkey. Well, Jomana, rescue efforts are ongoing. Walk me
through what you're still seeing there on the ground and at what point authorities call off the rescue?
JOMANA KARADSHEH, CNN CORRESPONDENT: Well, Rahel, just to explain to you where we are? We just drove into high tide one of the hardest hit provinces
in this earthquake and the level of destruction here is just stunning. I have never seen anything like this before. I mean, we had one man coming up
to us describing this as a war zone but there were no bombs that this is what it - looks like. And it's really very hard to find a single building
here that hasn't --.
SOLOMON: Are things such Jomana Karadsheh there of course signals are very difficult there in Turkey understandably. Jomana thank you. Well, I want to
turn down to U.S. stocks not getting much love on this Valentine's Day on Wall Street. Let's take a look at the major averages.
We're on track for a lower open still our you can see the DOW, NASDAQ and S&P still off about half a percent for the NASDAQ but markets haven't
opened yet so, we'll see. But that's after mostly in line report on U.S. inflation consumer prices, easing a bit year over year in January, but
prices coming in higher on a month over month basis.
Prices for shelter showing no signs of slowing down either to earnings now our earnings reports show a continued resilient consumer Hotel giant
Marriott beating on earnings and also revenue and giving a positive outlook on consumer demand Coca Cola reporting higher than expected revenues.
Coke saying that consumers remain resilient even with higher prices corporate layoffs, however, still making headlines, Ford announcing that it
will cut some 3,800 jobs in Europe as it doubles down on a transition to EV, electric vehicles. That comes out to some 11 percent of its European
workforce.
John Petrides joins me now. He is the Portfolio Manager at Tocqueville Asset Management. John, good to have you on the program today!
JOHN PETRIDES, PORTFOLIO MANAGER AT TOCQUEVILLE ASSET MANAGEMENT: Thanks for having me on.
SOLOMON: So what more do you make of this report today largely coming in line with expectations but I have to wonder is inflation accelerating
quickly enough?
PETRIDES: Well, I think the issue is that investors are getting and the stock market are getting a little too complacent, expecting the Fed to get
ease.
[09:20:00]
PETRIDES: Or maybe cut more than what the Fed is indicating by year end and I think that's what's propelled the stock market rally out of the gate this
year. And this CPI report does not confirm that thesis at all. In fact, if you turn your attention to the bond market, the bond market is heavily
inversion of the yield curve, meaning you can get near 5 percent yield on a six-month treasury bill, yet only 3.7 percent on a 10-year treasury note a
treasury bond.
So the bond market is really upside down expecting that rates are going to stay higher in the short term and come down longer term as the economy
slows. So it seems very, very divergent reactions to what's going on with the CPI number.
SOLOMON: Yes, and that's something that banks certainly don't like to see. John, can I ask when you get a report like this inflation cooling still,
but the job growth still robots? 500,000 jobs in the last month, the unemployment rate ticking to a new 50-year low of 3.4 percent? What do you
make sense of that, if you're the Fed? How do you make sense of that?
PETRIDES: Yes, well, I think not only the Fed also market perception. You know, three months ago, the world was pretty convinced, at least from an
investor standpoint, that we were heading for stagflation, that we were heading into a high inflationary environment and the probability for a
recession was significantly higher.
Now, that's completely been turned upside down, because the job report, as you pointed out, does not signal recession at all, because the labor market
is strong. And look, if you are unfortunately laid off from your job. For every one person unemployed, there are about two job openings.
So you can find work if you want it and with a job report with an inflation report like this, where inflation numbers are coming down, that clearly
does not signal stagflation. So you're a Fed official, you're thinking that, hey, you know what, we may be sticking the landing here on a soft
landing and in terms of engineering, a soft landing. So I think the Fed is probably pretty happy today from where they sat, you know, maybe called two
or three months ago.
SOLOMON: Well, John, I'm glad you mentioned soft landing, because now we're hearing a new term sort of come into the vernacular and that's no landing
essentially, for our viewers. That's growth that doesn't slow inflation remaining above the target and the Fed, essentially having to hike rates
and keep them there for longer. Where do you stand on the debate?
PETRIDES: Well, growth is definitely going to slow. You remember we're not even one year to the point that the Fed started raising interest rates. I
mean, there was a massive time lag of call it you know 12 to 15 months that interest rates need to marinate in the economy to slow, so think about
that.
This time, last year, the Federal Reserve were still at 0 percent interest rates and the Fed funds rate, and now they're at 5 percent. So, you know,
you've had this massive, really sharp rise in interest rates, and that still is just taking hold into the broader economy. So you know, as that
marinates longer in the economy, you know, you will see the underlying economy slow more, which is what the Fed wants, because ultimately, that's
going to help bring in inflation now lower.
SOLOMON: John, it's a great point, because it seems like we've done so much and so long, in fact, they have, right I mean, we've seen the Fed funds
rate go up about 500 basis points and a little less than a year, as you pointed out. So when we look at the markets, they're down now in pre-
market, but so far, it's been a relatively stronger start to the year. Do you think that the markets are reacting to this idea of a Fed pivot? Or are
we seeing any fundamentals at play here?
PETRIDES: I think the majority of the market reaction is based on the Fed pivot, company fundamentals are mixed and that's probably being too polite.
You have about 68, 69 percent of companies that reported so far had beaten Wall Street Analyst expectations, earnings expectations are coming down.
Yet the stock market continues to go higher, which means that valuations are becoming more expensive relative to fundamentals. So what you're hoping
though is call it three to six months from now we're at a position where profit margins have trough, earnings have come down and the Fed has started
talking and inflation has come down enough where the Fed could talk seriously about easing monetary policy in 2024.
So then you really have a nice setup where you get import with the Fed is coming down yet earnings are turning around. So the question is how much
has the stock market priced in today? And probably a bit too much ahead of itself so, you know, we're definitely in the camp of expecting more
volatility in the near term.
SOLOMON: In terms of industries that are already feeling the profit margin squeezes and perhaps have more to go. What industries are you looking at
that are likely to continue to feel a squeeze?
PETRIDES: Yes, you're clearly seeing on technology. You're seeing it on the consumer end, technologies really feeling the pinch on wage growth.
[09:25:00]
PETRIDES: To why you're seeing you know technology companies got fat dumb and happy for lack of a better phrase during the pandemic, and they over
hired and they over expanded. And now that's coming home to roost. So now you're seeing that's the majority of the layoffs that you're seeing working
through the system.
And at the same time, you're seeing labor expense there is probably too high. It's going to be interesting to see how the consumer staples. You
know, the stuff that we buy in the grocery store, how they're reacting, because they've aggressively risen pricing last year.
And this year, where he's seeing some pushback on certain consumer staples names that they're not going to be able to raise pricing as much as maybe
the market had expected. And yet, listen, they have to do figure out how to do more with less.
So you're feeling the commodity or the cost pressure throughout the entire system, wage labor, Inflation is what's really now filtering through last
year was more of a commodity price increase, who should get some ease on commodity prices? Look, oil has been around $75, $80 now for quite some
time.
You know, this year, this time a year ago, we're on the brink of Russia's war with Ukraine where oil spiked to, you know, close to $135 a barrel. So
you're lacking easier comps on the commodity side, but now you're catching the pressure on wage labor, inflation.
SOLOMON: And that's likely to remain for quite some time. John, unfortunately, I only have about 30 seconds left, but what names do you
like for you, for your clients, for other portfolio managers? What names look good to you?
PETRIDES: Yes, so it definitely depends. You could really, for the first time in a long time; investors are probably getting paid to be diversified.
You're finding yield, if you're in the bond market on short term treasury bills and short term bonds, you're finding value in the energy space if you
want some dividend income.
And you know, despite the run in tech, there is value to be had on the growth side of things as well. So for the first time in a long time, or
last year, if you owned anything but cash you got, you took it on the chin this year. So far, it seems quite the opposite. That being in cash is
probably the last place you want to be you could spread it out across mobile assets and pick up good returns for presumably for 2023.
SOLOMON: Put that cash to work. John Petrides, great to have you today, thank you.
PETRIDES: Thanks for having me on.
SOLOMON: And so to come on "First Move", I speak with the CEO of Global Chocolate Maker Godiva about how it's providing aid to those who need it
most in Turkey. That's coming up next.
(COMMERCIAL BREAK)
[09:30:00]
SOLOMON: Welcome back! And it's Valentine's Day and normally we would spend this day talking to a company like Godiva about chocolate. But the Turkish
owned firm like thousands across the region has also been affected by the deadly earthquake is now stepping into help providing more than $10 million
of aid through shipments of supplies and financial donations as well as specially produced products for the regions impacted by the disaster.
Joining me now is Nurtac Afridi. She is the CEO of the Godiva. Nurtac thanks for being on the program today!
NURTAC AFRIDI, CEO, GODIVA: Thank you for having me and Happy Valentine's Day!
SOLOMON: Happy Valentine's Day! So as we said Godiva is Belgian but your parent company is Turkish help us understand some of what you're trying to
do to help the people of Turkey who clearly needed so much right now?
AFRIDI: Thank you. Thank you for all the prayers and support all over the world. Of course, it's a very difficult time for me and for my country for
my people. And we feel very sad about this big disaster. Something that gives us a little bit of comfort is that immediately after we heard that
news, my parent company - Holding and all the Godiva Chocolatiers around the world united to provide support to the impacted people.
We provided volunteered to team members also provided a lot of food supply, groceries but also our retail stores provided materials, supplies as well
as warm food from different companies that are owned by my parent company. We feel very sorry for the ones that lost their loved ones, their relatives
during this unfortunate event. And we will continue to support until the people recover and come back to their normal lives.
SOLOMON: Nurtac, I do want to touch on Godiva's business in just a moment. But as I understand it, you yourself are Turkish. I mean, how were you
feeling watching these images? I mean, it is horrifying and devastating to watch day after day, what the people are going through there?
AFRIDI: I feel deeply sad. And you can understand that it is extremely difficult being away from my home country and from my loved ones. I'm
watching the news, which makes me very sad. The one thing that supports me and the team members who are also Turkish is the company that our global
Godiva employees volunteered to support the people impacted during this earthquake.
SOLOMON: Nurtac, I do want to touch a bit on Godiva's business. Look, this is a time still a very high inflation. How is inflation and how are prices
for some of the inputs for chocolate doing for Godiva? I mean last I checked, Cocoa was still up, I mean, how are prices for you?
AFRIDI: During downturns, but also during good times Chocolate is a very interesting category. People consume chocolate when they are sad when they
are stressed when they are happy. It's a very resilient category. And during COVID we have seen lots of consumers looked for a mean moment a
moment to reward themselves and look for a quality chocolate product. Today this trend continues especially when the self-care trend is growing. People
rather look for quality download prices.
SOLOMON: Look, I can certainly attest to eating chocolate both on good days and on bad days that much I can say. But I do wonder sort of in terms of
how you're dealing with higher prices are your margins being pressured at all or have you sort of maneuver at this high inflationary period?
AFRIDI: We have seen also increases in input materials in logistics cost in packaging materials. The first we do is to look into our operations to find
opportunities to reduce our cost levels without compromising from our quality.
One thing that we will not change that we will not compromise will be the quality of our ingredients the quality of our processes and the artistry of
our packaging. We would like to continue doing so, of course at times of inflation's in order not to impact the quality you need in increase prices
which we had to do last year.
[09:35:00]
SOLOMON: And so, have you found that consumers are willing to continue to pay? I know you said that chocolate can be recession proof. Are you finding
that consumers are willing to pay and if so, are you seeing any signs of a softening consumer?
AFRIDI: We see that the consumers shop in more locations for more consumption occasions than before. And therefore we introduced a larger
variety of products from entry levels to high and premium price points. You can buy Godiva chocolate for $2, but also for $200. What we offer to our
consumers are different options in different purchase points and for different purposes. We made Godiva relevant for more purposes.
SOLOMON: Nurtac Afridi, good to have you. She is the CEO of the Godiva. Thank you.
AFRIDI: Thank you.
SOLOMON: And stay with CNN. Coming up, NATO Chief Jens Stoltenberg wants to get Ukraine the weapons it needs but our allies ready to give more. We have
the latest from the NATO Defense Ministers meeting in Brussels coming up.
(COMMERCIAL BREAK)
SOLOMON: Welcome back! NATO Defense Ministers are gathering in Brussels for two meeting. On the agenda continued support and more firepower for
Ukraine. Earlier NATO Secretary General Jens Stoltenberg saying that allies must deliver Ukraine the weapons it needs take a listen.
(BEGIN VIDEO CLIP)
JENS STOLTENBERG, NATO SECRETARY GENERAL: We need to ensure that Ukraine gets the weapons it needs to be able to retake territory, liberate the
lands and win this war and prevail as a sovereign independent nation.
(END VIDEO CLIP)
SOLOMON: CNN International Diplomatic Editor Nic Robertson is following events. He joins us live from Warsaw. So Nic, these new pledges of course
come at a time when Ukraine says they urgently needed what type of support are they offering up here?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Well, what we've heard from the German Defense Minister today as a commitment for more ammunition
and that's been key that gets to that core point that Jens Stoltenberg NATO Secretary General was raising.
Essentially Ukraine is using ammunition faster than its NATO allies and partners are making it and that's a problem because this is a war of
attrition Russia has deep stockpiles and NATO wants Ukraine to win.
[09:40:00]
ROBERTSON: Therefore, they have to increase ammunition production. So that does seem to be part of what's happening. But of course, production of
ammunition crosses many platforms. It's not just for tanks that Germany has recently said, like Poland that it will provide.
But also, that includes air defense missile systems that will include the U.S. made high mars system that will include all the rifles that the
frontline troops have. So many different pieces of equipment and this is a big project.
And this is why you have these very frequent contact group meetings. So that all NATO members, allies, partners, supporters of Ukraine, can figure
out how best to do it together. So the message we're getting today seems to be fighter jet, this is what Ukraine wants.
Yes, that's recognized, but not now. Important to get the air defense, the ammunition, the spare parts, the tanks, the fighting vehicles to do what
the Secretary General said there, which was let Ukraine take territory without all of these pieces that's just not going to happen.
SOLOMON: And Nic, you also had access to the training of Ukrainian troops, and those Leopard Tanks where you are in Poland. Tell us a bit more about
that because from my perspective, it seems like a quite an accelerated timeline. It wasn't long ago that those tanks were finally approved to be
sent from Germany, and yet now they're already training?
ROBERTSON: Huge, it's a huge deal that they are finally training. It was a huge deal that the tanks were announced the tanks themselves should begin
to arrive in Ukraine by the end of next month. So that accelerated timeline that we're hearing about for the training that should just about get these
first troops we've seen in their training just about getting them ready for the delivery of those first tanks.
(BEGIN VIDEOTAPE)
ROBERTSON (voice over): After just a week of training, Ukrainian tank crew show off their new skills on a Polish gun range. The first time their
Leopard 2 training has been put on display. The crews pulled direct from Ukraine's Eastern battlefront.
Too soon to say what's best about the Leopard 2 Ukraine's tank trainer says but the machine is good quality. And what is most important my soldiers
like it a lot. Their training fast tracked 12 hours a day six days a week compared to the Polish standard. Eight hours a day five days a week.
Polish instructors say the Ukrainians will be ready in a month. Most of them have some tank skills already the Polish Brigadier in charge says
they're so keen to learn. We have to hold them back.
ROBERTSON (on camera): Increased time is rare if ever that tank crew's race through their training like this. It's a sign of how much they needed at
the frontlines that they're being accelerated through their Leopard 2 apprenticeships.
ROBERTSON (voice over): Poland's President who has been at the vanguard of pushing NATO allies to give Ukraine modern battle tanks and it is sending
14 of Poland's came to meet the Ukrainian crews and see their progress. His visit providing big publicity for Poland's commitment to Ukraine, and a
flavor of what U.S. President Joe Biden was here when he visits next week a pitch for join tank brigade.
ANDRZEJ DUDA, POLISH PRESIDENT: I hope that soon the brigades will be ready for Ukraine and also includes American Abrams Tanks so that Ukraine can
counter the Russian offensive.
ROBERTSON (voice over): The tanks and the training, only part of readying this new force from war.
MARIUSZ BLASZCZAK, POLISH DEFENSE MINISTER: The biggest challenge now is spare parts for these tanks. We are setting this task to the German defense
industry.
ROBERTSON (voice over): For the Ukrainian tank crews patiently parked up and waiting through most of the Polish President's visit, priority is
getting back to the war, even if that means the training is sped up.
VADYM KHODAK, MAJOR 4TH TANK BRIGADE UKRAINE: I think that the training time will be enough for us to get to grips with the technology he says. We
are lacking a lot of heavy armor like this if we get it will be much better.
ROBERTSON (voice over): On this training ground, perhaps more profound and tank skills honed history in the making the foundations of a fully
modernized NATO compatible Ukrainian army being laid.
(END VIDEOTAPE)
[09:45:00]
ROBERTSON: And Poland does have real skin in this fight, if you will. They're not just training these crews but for them the war that's going on
literally right on their border is very, very real. Generations here in Poland have witnessed Russians marauding their lands even at one time
taking away their land.
Many Polish have ancestors who have been scattered across the former Soviet Union. So the real threat here posed by Russia and its war in Ukraine is
felt very strongly here. And that's something that the President Duda certainly plays upon in his narrative.
But just look at today for example, two Dutch fighter jets, F-35s based here for NATO inside Poland for NATO was scrambled to intercept or fly
close to three Russian planes that were flying close to Poland's border in the north. This is very, very real for the Poles here so their help in
training the Ukrainians it means a lot and that's one of the things we're picking up on here.
SOLOMON: That's a good point Nic. It's the - here and now of course of the war, but also the potential future threat there for Polish people. Nic
Robertson thanks for joining us. Amid calls for further military support for Ukraine chaotic scenes recorded by Ukrainian military drones in
Donetsk. Many signal problems to come for Russian forces. CNN's David McKenzie has the details, and a warning his report does contain some
disturbing images.
(BEGIN VIDEOTAPE)
DAVID MCKENZIE, CNN SENIOR INTENATIONAL CORRESPONDENT (voice over): Russian units pushing forward again and again, only to be obliterated by Ukrainian
artillery mines and drones. CNN analysis of multiple videos taken over the past fortnight show the Russians lost at least 30 tanks and armored
personnel carriers in this area alone.
And it seems several hundred soldiers. These units seem without leadership or tactics, as Russian soldiers scrambled to take cover they are
mercilessly cut down. Russian tanks and fighting vehicles Korean straight into well placed minefields.
At one point, the lifeless body of a Russian soldier gets entangled in tank tracks. These satellite images provided to CNN show the intense bombardment
of the tree lines where Russian army tried and failed to take cover and the landscape littered with destroyed machines.
President Putin's earlier comment on the fighting here, the Marine infantry I'm intending the operation just fine he says. This very moment they are
fighting heroically. The UK says that Russians are losing soldiers at their highest rate since the start of the war.
Even Russian military bloggers are venting their anger at the tactics and commanders. Only morons attack head on the same heavily fortified place
writes one, another demanding the general in charge are put on trial.
MCKENZIE (on camera): If you see the tactics the Russians are using, does it look like they know what they're doing in that particular part of the
front?
KATERYNA STEPANENKO, RUSSIA ANALYST, INSTITUTE FOR THE STUDY OF WAR: It really doesn't. It's absolutely absurd that they've committed and they've
tried to - in a mechanized column that makes it a very vulnerable target.
MCKENZIE (voice over): Still, its part of an offensive that NATO Secretary General thinks is now getting underway in earnest.
STOLTENBURG: Because we see what Russia does now President Putin do now is to send in thousands of thousands more troops accepting a very high rate of
casualty taking big losses, but putting pressure on the Ukrainians.
MCKENZIE (voice over): In - Ukraine's defenses are standing firm, even as Russia resorted to using what appear to be thermo baric weapons. But there
are growing concerns that Ukrainian units are running critically short of arterial ammunition.
STOLTENBURG: The current rate of Ukraine's ammunition expenditure is many times higher than our current rate of production. This puts our defense
industries under strain.
MCKENZIE (voice over): Now another problem for the Ukrainians, Elon Musk's SpaceX, restricting use of Starlink satellite technology in their key drone
program. Musk saying on Twitter, we will not enable escalation of conflict that may lead to World War III.
The Ukrainians use of drones has given them an important edge in this conflict, an edge that's badly needed as Russians make up for what they
lack in quality through raw overwhelming force. David McKenzie, CNN Kyiv Ukraine.
(END VIDEOTAPE)
SOLOMON: And we'll have more "First Move" after the break.
(COMMERCIAL BREAK)
[09:50:00]
SOLOMON: Welcome back to "First Move"! Taking another look at the action on Wall Street as you can see the DOW is off about two tenths of 1 percent
let's call it 70 points right now. U.S. stocks mostly flat in early trading although slightly lower way off however of their lows of the session.
You can see the NASDAQ is also lower just about flat the S&P is off about 1/10 of 1 percent. That said the latest U.S. inflation numbers doing little
to ease fears that the Federal Reserve I have to raise interest rates by a greater than expected amount this year. Food and energy prices all heading
higher month-over-month in January although U.S. inflation did ease a bit overall year-over-year.
And now to what was a scare in the - United Airlines Flight nose-diving thousands of feet after takeoff, dropping to within 800 feet of the Pacific
Ocean before recovering. CNN's Gabe Cohen takes a closer look at what happened?
(BEGIN VIDEOTAPE)
GABE COHEN, CNN CORRESPONDENT (voice over): Another alarming incident in U.S. aviation, a United 777 diving toward the ocean just after takeoff.
UNIDENTIFIED MALE: It certainly felt like a roller coaster.
COHEN (voice over): Rod Williams was traveling home from vacation with his family.
UNIDENTIFIED MALE: It's one of the things where you start counting your blessings you start asking yourself is this the last time you're going to
see your family?
COHEN (voice over): The flight takes off from Maui December 18th climbs 2200 feet, then suddenly plunges 1400 feet toward the ocean falling for 21
seconds, reaching just 775 feet above sea level before abruptly leveling out and rapidly ascending once again. The plane which can carry more than
300 passengers was mostly full according to Williams.
(END VIDEOTAPE)
SOLOMON: And I actually want to take you live now to that press conference that we mentioned earlier. As you can see, you can see Secretary of Defense
Lloyd Austin and Chairman of the Joint Chiefs of Staff General Mark Milley in Brussels. Let's listen now to what they're saying?
UNIDENTIFIED MALE: --Chiefs of Staff General Mark Milley. Secretary Austin will begin with some brief comments followed by General Milley. I will call
on the reporter's and due to time constraints, I would ask you to please limit your follow ups. With that I turn it over to the Secretary Austin.
LLYOD AUSTIN, U.S. SECRETARY OF DEFENSE: Well, thanks Patrick. Good afternoon, everyone. And thanks for joining us today. We've just concluded
our ninth meeting of the Ukraine Defense contact group.
I'd like to thank Ukrainian Minister of Defense Reznikov and his team for once again joining us today. Now, next week, the world will mark a grim
milestone. It will have been a year since Russia invaded its peaceful neighbor, Ukraine.
Our hearts are with the families of all the Ukrainian soldiers killed and wounded, fighting to defend their country, their sovereignty and their
fellow citizens. And we mourn alongside Ukrainian civilians who have lost children and parents and loved ones as Russia has deliberately attacked
civilian targets.
[09:55:00]
AUSTIN: Russia has inflicted a year of tragedy and terror on Ukraine. But the people of Ukraine have inspired the world. We deeply admire the
resilience of the Ukrainian people, and their determination to defend their territory, their sovereignty, and their freedom.
And nations of goodwill have rallied together to reject Putin's vision of a world chaos where tyrants can trample borders and conquer their peaceful
neighbors and break the rules of war. And that's what this contact group represents.
Together, we have made clear that we will support Ukraine's self-defense for the long haul. And we will move out with the urgency at the moment
demands. Earlier this month, the United States announced another round of security assistance for Ukraine.
The presidential drawdown announcement included more ammunition for High Mars. It included 190 heavy machine guns to counter unmanned aerial systems
from Russia or Iran 181 m-wrapped vehicles in more than 2000 anti-tank munitions and other key capabilities.
We also added $1.75 billion in Ukraine Security Assistance Initiative Funds for critical air defense capabilities including Canada, U.S. systems and
more. And at today's contact group, we joined again with our valued allies and partners to make sure that Ukraine has what it needs and when it needs.
We continue to work together to provide Ukraine with full combat credible capabilities, and not just equipment. And that's why we discussed
synchronizing our donations into an integrated training plan. And you can see the importance of our coordination in our common efforts to meet
Ukraine's needs for armor.
Among the members of this contact group, we have given Ukraine's defenders more than eight combat brigades. This includes major contributions from the
United States of strikers in Bradley's and Abrams Tanks, and includes the UK's donation of Challenger Tanks, and the contribution of Senator armored
personnel carriers that Canada announced last month.
It also includes the refurbished T-72 tanks that the United States the Netherlands and the Czech Republic, are in the process of delivering, as
well as Poland's latest donation of 272s. And it includes the important steps from Germany, Poland, Canada, Portugal, Spain, Norway, Denmark and
the Netherlands on Leopard battle tanks.
Now we also heard today about significant new air defense donations. That includes Italy and France, which jointly announced that they will provide
Ukraine with the Sump-T air defense system. France also announced that it will work with Australia to ramp up 155 millimeter ammunition production to
support Ukraine.
And finally, let me also thank Norway, which just announced that it will provide 7.5 billion Euros in military and civilian assistance to Ukraine
over the coming five years. That's a very significant commitment.
Now all of these capabilities will continue to be important for Ukraine's success on the battlefield. But as I said last month in Ramstein, this
isn't about one single capability. It's about delivering all the capabilities that we promised. It's about integrating all of these systems
together and it's about working with the Ukrainians to help them fight for their freedom.
Now, we also had an important discussion today on our ongoing work on accountability. It's a priority for me and my contact group colleagues to
ensure that our donations continue to be used as intended, and that we move proactively to prevent arms proliferation.
And we will keep working with our Ukrainian partners to ensure that all of the equipment that we're providing continues to reach the brave groups on
the front lines. Now a year ago Putin assumed that Ukraine was an easy target.
[10:00:00]
END
