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First Move with Julia Chatterley
Storm Hilary Tears Through U.S. Southwest; Chinese Property Sector Weakening Further; Central Bank Trims Rates, Disappointing Investors; Tropical Storm Hilary Slams Southwest U.S.; Nvidia Reports Profits On Wednesday; Spain World Champions After 1-0 Win Over England. Aired 9-10a ET
Aired August 21, 2023 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JULIA CHATTERLEY, CNN INTERNATIONAL HOST: A warm welcome to all our "First Movers" around the globe. Great to have you with us for a momentum filled
Monday on the program. Just ahead, this hour Hilary's fury, the fierce storm weakening overnight but still bringing record rainfall to the parched
Millions remain under flash flood warnings. One person has lost their life in Mexico where the storm made landfall on Sunday. The very latest on
Hilary's expected path coming up. Plus Russia's warning Moscow says Denmark and the Netherlands risk escalating the Ukraine conflict with their
promises to send F-16 fighter jets to Kyiv Ukraine's President Zelenskyy hailing the move as historic "During a visit to Denmark" a live report
ahead from Ukraine.
And Beijing's blues; the Chinese Central Bank making another underwhelming cut in interest rates far smaller than investors hoped given the increasing
challenges facing the country's property sector. And the steady drumbeat of weak economic data too, that disappointment reflected in the performance of
Chinese stocks during Monday's session.
As you can see there the HANG SENG dropping almost 2 percent steep losses for the Shanghai Composite as well, we'll take a closer look at China's
credit and growth crisis and the ways to address it later in the program with Peking University Finance Professor Michael Pettis.
A brighter picture in the meantime in the United States and Europe Wall Street sector bounce after a losing week the third in fact straight week of
losses for the S&P and the NASDAQ as raising bond yields hurt sentiment European shares, though as you can see for now in the green a lot riding
once again on Powell's pronouncements.
The U.S. Central Bank Chair delivering a closely watched policy address on Friday at the Fed's Annual Symposium in Jackson Hole, Wyoming. Lots to get
to as always this Monday but we do begin in the U.S. Southwest and tropical storm Hillary turning desert towns into rivers as it brings historic rain
levels across the region.
Even though the storm has weakened as I mentioned to a post tropical cyclone the threat far from over. Forecasters warning there could be more
mudslides and life threatening floods throughout the day as Stephanie Elam reports.
STEPHANIE ELAM, CNN CORRESPONDENT (voice-over): This morning Palm Springs is under a local emergency order as heavy rain from Hilary is causing
dangerous flood conditions and prompting at least three swift water rescues.
UNIDENTIFIED FEMALE: We're asking residents to stay inside stay where they are.
ELAM (voice-over): The Mayor's warning is because of the situation like this. Pickup trucks stuck in the middle of a street surrounded by deep
rushing floodwaters. The driver was not injured. But the California Highway Patrol closed the road to prevent others from crossing.
Those floodwaters so powerful a refrigerator was seen floating away in them, this drone video taken over a nearby neighborhood where the flooding
has nearly covered an entire golf course. One homeowner says he's never seen anything like it in the Coachella Valley
BRUCE THOMAS, HOMEOWNER: Within 24 hours it's turned into a torrential storm between whole number 13 and whole number 16. It's virtually six feet
ELAM (voice-over): The conditions there also create a dangerous situation for drivers, including a fire truck forced to turn around due to rising
waters. Ahead of the storm the Palm Springs Mayor says the city prepared and distributed 60,000 sandbags as well as cleared storm drains.
UNIDENTIFIED FEMALE: Even an inch or two of rain in the desert can cause damage.
ELAM (voice-over): Alright, take a look at this the road totally covered up but it's also completely socked in on this other side of the road. I mean
look oh, we're barely touching the bottom there. State officials say some desert regions like Palm Springs could double their yearly amount of water
in just one day from Hilary.
Overnight officials in Ventura County search by helicopter and on the ground for a couple of people believed to be trapped by floodwaters from
the Santa Clara River. Two people eventually walked out of the flooded area, assisted by crew's officials urging everyone to stay out of river
bottoms and canals.
And this was the scene Sunday in Wrightwood, about 77 miles Northeast of Los Angeles huge gushes of water forcing their way through a wash, carrying
large logs, rocks and muddy debris. Exactly the type of thing the Governor wants people to be on alert for.
UNIDENTIFIED MALE: Take seriously debris flows and floods, flash floods lightning possibility of tornadoes.
CHATTERLEY: Moscow denouncing Denmark's plans to provide F-16 jets to Ukraine calling the action an "Escalation". It comes as Ukraine's President
Volodymyr Zelenskyy addresses the Danish Parliament to thank the nation for their support.
It's a major boost coming as the Netherlands also vowed to deliver dozens of F-16s to Ukraine too. Nick Paton Walsh joins us now from Zaporizhzhia,
Ukraine. Nick, the truth is these are still going to take time. I was looking at hopefully the timetable from Denmark six by the end of the year,
eight next years, and then a further five they've been a long time coming. And the wait will continue a while longer.
NICK PATON WALSH, CNN CHIEF INTERNATIONAL SECURITY CORRESPONDENT: Yes, look, I mean it's important to point out that this has been a request
Ukraine has had for months to enable them to increase their defenses in the air. Now it's also important to point out they've had patriot systems,
those were considered a long shot when they were first requested.
And now it seems to be the tempo of how Ukraine gets stuff after increased pressure. And it's fair to say here losses on the front line in the counter
offensive that is not moving as fast as anybody had hoped in Ukraine's favor. They do appear now to be seeing a public flurry of activity to get
The Danish sending 19, the Dutch saying well, we've got 42 some of those are going to need to be used in training we'll probably send quite a lot of
the rest. I'm paraphrasing there. But this clearly a swift move after Ukraine's public statements last week that they weren't going to see
anything this year at all.
And possibly reflection too of certainly European anxiety that if we don't see a change in the front lines here, at some point in the months ahead,
the Russians could dig in over the winter. And the boundaries we're seeing right now of occupied Ukraine could remain that way, potentially, for
years. So these F-16s, Ukraine says would make a significant difference in the skies.
I think it's fair to say from what we've seen on the grounds that would be the case, the biggest challenge now for Ukrainian troops is Russian air
superiority, their abilities are up half metric ton bombs at will F-16s could challenge that and could too deliver similar blows to Russian front
lines as well.
But it isn't going to happen fast enough, because there's been a complex scheme suggested as to how this delivery could occur. The U.S. doesn't
really seem to want its hands on it directly. It would happen through European allies those European allies would do training in their nation
countries. Some seems to be happening in the UK, Sweden, possibly maybe Romania down the line, Denmark, Netherlands involve now too.
And then the supply of jets would be approved by the United States. Indeed, they've already said they will. It's a lengthy process, potentially four or
five months' worth of training of Ukrainian pilots. And then the ultimate question too if indeed, these planes get into the skies of Ukraine, who
services them? It should be Ukraine, but its complex. It's a huge lift for the Ukrainian Air Force, certainly.
And there is the possibility during that if they're going to keep the tempo up; they need to make a difference. NATO may get more involved in servicing
and training. That's my speculation. But that may be also one of the reasons why we've seen NATO move relatively slowly on this.
But once again, when the pressure is there, and too frankly at the recognition of how important Ukraine superseding, sorry, succeeding in this
war is for NATO security, that we see a public change whether this had been long planned, we may never know. But it's certainly now publicly moving at
a pace of over a certainty that we didn't see last week, Julia.
CHATTERLEY: Certainly. And, Nick, it's great insight, still, too many questions really to answer. Nick Paton Walsh there from Zaporizhzhia,
Ukraine! Now North Korea has released new images of a cruise missile launched overseen by the country's Leader Kim Jong-Un while state media has
not specified when this test took place. The release of the pictures comes just as the U.S. and South Korea begins 10 days of joint military drills.
Paula Hancocks has more from Seoul.
PAULA HANCOCKS, CNN CORRESPONDENT: As U.S. South Korea and joint military drills kick off this Monday until the end of the month North Korea has been
carrying out drills of its own. State run media KCNA showed this Monday pictures of Kim Jong-Un the North Korean Leader overseeing what it called a
drill of launching strategic cruise missiles from a Navy patrol ship.
Now according to state run media, that was a successful drill. And he was said to be pleased that they are able to react to any sudden situation. Now
JCS, the Joint Chiefs of Staff here have raised some doubts as to whether that report was in fact exaggerated.
But the fact that it was broadcast today on the day that the U.S. and South Korea carry out these military drills is probably no accident. North Korea
has consistently been angered by the joint military drills between the two allies that they have said in Pyongyang that they believe it's a dress
rehearsal to an invasion, something the U.S. and South Korea have denied.
Now, what we also heard over the weekend on Sunday, South Korean police say that there had been an attempt to hack domestic companies who were involved
in the drills itself between the U.S. and South Korea. They say back in February malicious email attacks were attempted. But they say that security
systems kicked in and they were unable to access any military related information.
They say that they believe this was Kimsuky, which is a well-known North Korean hacking group that was behind it. And there has been another hacking
attempt just last month surrounding these exercises that they are investigating. But yet again, a show that North Korea does not want to be
seeing these joint military drills.
Now we could well see more reaction from Pyongyang in the coming days. Just at the end of last week the intelligence agency here in South Korea said
that they saw what they believe to be activities suggesting there may be an ICBM launch an Intercontinental Ballistic Missile launch. They say they saw
vehicle movements outside the production facilities for missiles so that is something that they are watching very closely. Paula Hancocks, CNN Seoul.
CHATTERLEY: Now it was being touted as a space race between India and Russia with both nations' launchings missions to the moon in recent months.
Well, now the race is over. Russia's first lunar mission in almost 50 years has failed.
Its unmanned Lunar 25 Spacecraft crashed into the moon surface over the weekend. Fred Pleitgen joins us now with the latest. Fred actually Russia's
vessel took such a trajectory that it overtook India's Lunar Lander, I believe at one point as well, do we know actually what happened here with
the attempted landing?
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, so the Russians are saying Julia, there are certain things that succeeded actually
on this mission. But then, of course, as we saw with that Lunar module crashing, there were also other things that obviously didn't.
Essentially what the Russians managed to do is very quickly they managed to shoot up a rocket with the Lunar Lander in it, and then they actually
managed to get that Lunar Lander into the moon's orbit. So it was doing circles around the moon.
However, in order to then land on the moon, it had to go into an elliptical orbit. And that seems to be where the error took place, either something
with the boosters of the Lunar Lander or possibly some other miscalculation.
Essentially, what the Russians say is that then that elliptical orbit that it had led it to crash into the moon itself, if you read the press release
from the Russians, actually quite interesting. They say that the Lunar Lander ceased to exist when it crashed into the moon's surface.
And you're absolutely right, right now it's not a race anymore at least it's a one horse race, if you will, with the Indians hoping to land their
Lunar module unmanned, of course, on the moon's South Pole. That's the big thing about this because they hope to possibly find water on the moon's
South Pole, which is of course the area of the moon that is in darkness all the time really a fascinating scientific progress, a process there.
But the Russians no longer part of it. So for them, obviously a pretty big setback as they really wanted to use moon exploration to kind of gets back
on the map really, of space exploration as well, Julia.
CHATTERLEY: Yes, we'll see how well the Indians do with their attempt and when the Russians can re-launch? Fred thank you, Fred Pleitgen there!
OK, coming up here on "First Move", China's challenge the world's second largest economy struggling under a growing property crisis. Do officials
have the tools and the needed urgency to bring back stability, expert perspective, coming up?
CHATTERLEY: Welcome back to "First Move". Call it the summer of China's economic discontent; the Chinese Central Bank today cutting interest rates
for the second time in three months though only slightly. Officials also unexpectedly keeping five year interest rates unchanged.
There the peg the most mortgages in the country markets were expecting Beijing to offer more support for the property sector which makes up around
a quarter of the economy confidence suffering repeated blows. The giant developer Evergrande filed for bankruptcy protection last week.
A smaller developer Country Garden has just weeks to make critical debt payments. And the state owned firms Sino Ocean reporting debt troubles too.
Then the pretense seems played out last week outside of Chinese shadow bank, investors demanding money said that they are owed. Shadow banks have
been large investors in real estate and have enticed investors with high rates of interest return.
Now to our next guest, these are just symptoms of China's investment led savings driven economy. And he says it's struggling to find productive ways
to grow without ramping up debt. Michael Pettis joins us now from Beijing. He's a Professor of Finance at Peking University and a Senior Fellow at the
Carnegie Endowment for International Peace.
Professor Pettis Michael, great to have you on the show as always! We were just saying in the break, I don't think you're surprised by what we're
seeing. It's perhaps the biggest surprise for those that read your research is that we haven't seen this sooner. What are we seeing in China in your
MICHAEL PETTIS, FINANCE PROFESSOR, PEKING UNIVERSITY: Well, we're seeing a once very successful growth model that had become obsolete around 10 or 15
years ago. But as has always been the case in countries that have followed this model, it's been very hard to shift into the new correct model,
whatever that is.
And as a result, we've seen significant imbalances build up. We've seen that particularly in the area of debt, but more and more non-productive
investment, weaker domestic demand, et cetera. And that couldn't go on forever. At some point, we had to reach the limit.
Either Beijing would decide to adjust the model, or would be forced to adjust the model it's through the changes in the economy. So that's
starting to happen that started to happen two or three years ago, and we are continuing to see that happen.
CHATTERLEY: I think some of the statistics for China are pretty mind blowing. I think one that stands out is the fact that 45 percent of GDP is
led by investment. And that would perhaps be to some degree less frightening if it was productive investment if it was boosting the growth
of the economy.
But what you're saying is actually a lot of the investment and we've seen it in the property sector in particular, it's unproductive. And actually it
costs more in terms of dollars of investment than the dollar of GDP growth that it creates. And that's where the wheels start to come off.
PETTIS: Yes, and I'm glad you brought that up. I think not enough people realize how extraordinary that investment number is typically in a high
investing country in a normal high investing country investment might reach 31, 32, 33 percent of GDP.
In China, it's around 44 or 45 percent. And that's down from its peak of 47 -- years ago it's an incredibly high investment, right? Now, this made a
lot of sense, so 30 years ago, when China was hugely under invested. But as investment grew so rapidly, it eventually reached about as much investment
as it could productively absorbed.
And unfortunately, it's kept that very high level of investment. So as you mentioned, a larger and larger share has been going into property, into
infrastructure spending, stuff that's basically not productive for the economy.
CHATTERLEY: I mean, there are unlimited ways really to grow an economy, you can invest, as we've been talking about, you can boost consumption and let
consumers drive growth, as we see in the United States, or you can run trade surpluses and sort of trade your way into growth.
Why for China? Are we getting to a situation and you know, you're saying, look, it's been building now, for many years? Why are we getting to the
point where actually, you can't continue to invest beyond the numbers? Why can't China continue to expand its debt levels, particularly when a lot of
It's not internationally owned, there are those out there that make that argument that look, China can get away with this, it can continue to do
PETTIS: Yes, those are people who I think don't really understand that you'll often hear people say that external debt is a problem. Internal debt
isn't a problem. But if you look at the two biggest debt problems of the last 100 years, the United States at the end of the 1920s, and Japan at the
end of the 1980s, it was all internal debt, there was no external debt.
The problem is not so much the debt itself, the problem is to be very technical, you're capitalizing what should be expensed. So you take $100,
and you invest it in something that creates maybe $60 worth of value. So you should take a $40 loss. But instead of taking that loss, you treat it
as $40 asset.
And these sorts of false assets have been continuing to build, or to put it in a different way. Local governments have billions of dollars on their
books of assets backing those billions of dollars of debt. But the assets aren't worth billions of dollars they're worth much, much less.
So there's a gap between the income coming from those assets, and the need to continue servicing that debt. And that gap has to be met somewhere
somebody has to take the loss. And the problem in China is there hasn't yet been a decision as to how that loss is going to be allocated. But one way
or another, it will be allocated.
CHATTERLEY: I mean this is part of the challenge. You wrote a great piece about a year ago, looking at the five options that China has the first was
just keep going and allowing the debt to continue to expand too. The second thing was replaced the non-productive investment with productive
investment, AI, technology, climate finance, we're seeing it to some degree.
You could replace it with consumption, build up the consumer, replace it with traders we've discussed or do nothing and let grow dramatically slow.
Is the technology sector that we're seeing and we obviously are seeing a lot of productive investment? I think, big enough to switch from what
they've done in terms of the property sector and the expansion they're into that at least yet to meet doesn't seem big enough.
PETTIS: It clearly isn't that's where that 44 or 45 percent number is very useful. Because if China were a rapidly normal, rapidly growing economy
with a very high investment level, in technology, and in lots of other productive stuff, its investments share of GDP would be at best in the low
And the fact that it's so much higher means that there's an awful lot of investment going into areas that simply make no sense. The technology
sector, even in a country like the United States, is probably no more than 9 percent of GDP given pretty generous definitions.
And in China, it's going to be much less than that. So you have to take a 10 to 15 percentage points of GDP from the infrastructure sector and funnel
it into the high tech or into productive sectors. And not only is that very difficult in and of itself, but these sectors already are flooded with
So it's not clear that adding even more investment is necessarily going to create any more productivity. Every country says that it will do that and
no one has ever been able to do that. And China's been talking about doing it for years and clearly it's quite difficult to do.
CHATTERLEY: I was about to say, they're saying the same about trying to be consumption and that requires letting workers and citizens keep more of
what they earn and what they produce? And I fear that sort of vested interest political vested interests and economic sort of stand in the way
Michael, to your point about what happened to America in the 1920s and to what happened in in Japan in the sort of 80s and 90s is the only real
option for China actually, just to do nothing here and watch growth dramatically slow. And what are the consequences of that, if so?
PETTIS: In every one of the historical precedents, that's what happened, either you had a very brutal contraction like the U.S. in the 1930s, brutal
but quick or you had a very long slow contraction like Japan after 1990, 1991. Probably the latter is worse economically, but the former is worse,
socially and politically.
Now, there is something else China could do. In theory, no one's ever done it, but at least it's theoretically possible. And that is if they were to
transfer, about 1.5 percentage points of GDP every year, from local governments and local governments own a lot of assets to the household
Then in theory, we could get growth at around 4 percent and household income growing even faster than that. And many Chinese are now starting to
talk about that. The problem is they're talking about one side of the transfer, transferring money to the household sector nobody's going to say
But they're not talking about the other side of the transfer, which is transferring from some sector, in this case, probably local governments.
And that's really the hard part. But that's not the part that we're discussing yet. We're simply discussing the transfer to part until we start
discussing how those transfers are going to be funded then it seems to me that it's still not very serious.
CHATTERLEY: Wow! And what happens in the interim, Michael?
PETTIS: I think, slower growth, you know, the growth rates in China, the sustainable growth rates in China are probably not much above 2 to 3
percent. As long as the government has targets well, above that, as you know, this year, the target was 5 percent, then the only way to get there
is by allowing debt at the local government level to build up and using that to fund you know, more bridges.
There was very interesting articles in the Wall Street Journal yesterday that discuss some of the infrastructure that Guizhou, one of the poorest
provinces in China has. They have more airports than many of the richest provinces in China. It's hard to justify that. But it was an attempt to
sort of spend your way out of poverty.
And one of the results is that Guizhou was probably the first province basically to go bankrupt. And so it's clearly not a sustainable policy. You
can't simply spend your way to higher growth rates unless you have infinite debt capacity. And clearly, no one has infinite debt capacity.
CHATTERLEY: Yes. And the other thing you do is stop reporting the statistics when they don't work for you like youth unemployment. Michael,
we will continue this conversation, great to have you on the show. Thank you so much for your wisdom.
PETTIS: Thanks Julia, Bye! Bye!
CHATTERLEY: Michael Pettis, Professor of Finance at Peking University, sir thank you and Senior Fellow at the Carnegie Endowment for International
Peace. Thank you once again. OK, still to come here on "First Move", investing in the fight to reduce wildfires. I'll speak to the Founder of
the firm putting its money behind fire tech startups, next.
CHATTERLEY: Welcome back to "First Move", Southern California is reeling from catastrophic flooding and record shattering rain from tropical storm,
Hilary. More than 25 million people from Southern California northward to Northern Idaho under flood watches in his Hilary triggered flood warnings
across Los Angeles.
A 5.1 magnitude earthquake shook the area on Sunday afternoon too. Meteorologist Derek Van Dam joins us now. Derek, wow, what more can we
expect from this?
DEREK VAN DAM, CNN METEOROLOGIST: The video is just incredible.
CHATTERLEY: I know.
DAM: To imagine, thinking that an earthquake at the same time as a tropical storm that's something right.
DAM: Look, let's highlight some of the best video because I want to show you what's going on here. This is a mudslide and you've seen this time and
time again. But I have to highlight why these are so dangerous and how they actually form? Look at that debris that's being rushed down the
I mean, sometimes these things which by the way can travel over 50 kilometers per hour, they pick up bricks, they pick up boulders, they can
pick up homes, vehicles, refrigerators, you name it, anything in the path of the mudslide can get swept away and it can easily outrun an individual
who is trying to evacuate the area.
So that is why they are so dangerous. And it's all stems from recent burn scars, right? So this is a problem that is a major concern in Southern
California considering the fire activity over the past years. The rainfall actually isn't absorbed into the ground like it normally is with a burn
So the burn scar creates this almost a water repellent on the surface of the earth and so it's easily for that water to slide off the top surface
similar to when rain falls on pavement. This is the latest from tropical storm Hilary. Well, it's not post tropical losing its tropical
But one thing for sure it's produced a lot of rainfall and a look at some of these totals. I mean these are mind boggling now they're in high
elevations, but that's what makes this area so susceptible to the mudslides and the debris flows that I showed you just a moment ago.
We still have several 100,000 people under some sort of flash flood warning even though the rain is subsiding for the greater Los Angeles area and into
San Bernardino County where some of the worst debris flows and mudslides into the San Bernardino County region were just a few hours ago.
Now the storm system being swept by and to the north by a ridge of high pressure that's creating the heat or the central parts of the U.S., so we
still have several hours of rain to go but this stretches all the way from the border of the U.S.-Mexico region all the way to the U.S.-Canadian
border. So this is where we're anticipating more rainfall today.
And you can see that the bulk of it is coming to an end across Southern California but any additional light showers could add more misery to the
pain they're already experienced. And Julia, you got to see we are entering the peak of the hurricane season and you can see just how active it is
across the Atlantic basin. So we have to focus on this going forward.
CHATTERLEY: Yes, just getting warmed up and actually your point about the Earth's inability to absorb some of the water is critical to our next
conversation too. So thank you very much for your wisdom.
DAM: Alright Julia.
CHATTERLEY: Derek Van Dam there. And as Hilary continues to move through the Southwestern United States, President Biden and the First Lady are
heading to Maui to meet with survivors, first responders and officials and see firsthand the devastation after the deadliest U.S. wildfires in the
The Mayor of Maui says at least 114 people now have lost their lives. Another 850 people are still unaccounted for. And recovery crews are
expected to find more victims as they search what's left of hundreds of destroyed homes. Officials say now 85 percent of the disaster area has been
And one company that knows a lot about wildfires is San Francisco based convective capital launched in 2022. The company is the first venture
capital firm to focus solely on so called Firetech startups, from drones and AI to innovative software for fire departments.
And the need for finding solutions is more important perhaps than ever before. California's 10 largest wildfires of all happened in the past
decade. And in 2020, 4.3 million acres of land were burned. And as the trees burned, they released as much CO2 as 24 million cars.
Joining us now to discuss this Bill Clerico, he's the Founder of Convective Capital. Bill, fantastic to have you on the show, there's a clear
financial, human and environmental cost to these wildfires. And I think your messages technology can help address all of these things.
BILL CLERICO, FOUNDER OF CONVECTIVE CAPITAL: Absolutely, I think technology has a big role to play in addressing this crisis. Certainly, we need a
concerted effort across forestry, first responders, utilities, insurance, but I think of technology as an accelerator on all of those things. And
we're excited to be early stage investors in technology companies that can help solve this crisis.
CHATTERLEY: Yes, there's a number of different ways as well, there's different stages here isn't there? There's the mitigation of fires in the
first place is trying to tackle the fires and recognizing them once they start and then even taking action to help provide support to first
responders, I can see you this sort of investments that you're looking at are across the board.
CLERICO: Absolutely, you know, we look at our investments in three themes. The first is how can we restore landscapes to a healthier, more resilient
condition? The second is how can we build towns and communities that are fire adapted that can coexist with fire in a safe way?
And then the third is how do we prevent ignitions and safely and quickly respond to them? And our portfolio companies, you know, operate across
those themes. We have aircraft companies that can help put out fires quickly. We have companies that help utility companies reduce technicians.
We have inspection software for fire departments. So really, technology can be a layer on many of these efforts, no matter what category they're in.
CHATTERLEY: OK, so we're showing some video now which is, labeled BurnBot, talk to me, about BurnBot, specifically, because we're showing our audience
now some of the examples of the investments that you've made in these startups.
CLERICO: Sure, so BurnBot is a fantastic company based in the Bay Area. They're using automation and robotics to help do what's called prescribed
burning. So one of the best tools we have in the fight against extreme wildfire is actually fire. So we can ended well, in advance of catastrophic
high wind days, under safe conditions, we can conduct burning to remove fuel from the landscape.
And so BurnBot has a robotic device that can actually remove that fuel safely in a highly controlled way, on a variety of days. And so it makes
this process of prescribed burning, much safer, much more efficient, and much more predictable. So it's a really important tool, you know, in the
fight against wildfire.
CHATTERLEY: We often talk about drones on this show in various different guises. But this was one of your other investments that caught my
attention, rain, because these guise are actually looking at using drones to get to the fires, even before the fire crews can to try and put those
early flames out, which seems critical to me too and helpful.
CLERICO: Yes, and in a high wind fire, the fire actually grows exponentially. And so every minute really counts, particularly at the
beginning phase of a fire.
So you could see a future where autonomous drones could respond within minutes to a new ignition and containing that fire when it's a quarter of
an acre or half an acre as opposed to getting aircraft to it when it's already maybe hundreds of acres or thousands of acres. And so that ability
to catch it quickly is a really big source of leverage that can reduce fire risk.
CHATTERLEY: And they can even get out there, when there are high winds that doesn't sort of incapacitate them or limit their ability to get out there
because I guess that would be one of my first questions, if I was asked him a company ahead of investing.
CLERICO: Yes, sure so you know I think like any technology starts with basic capabilities and it gets better and better over time. So, you know,
the initial version of their aircraft, you know, has certain wind limitations, and as they continue to grow and to improve, you know, they'll
be able to operate in higher and higher wind conditions.
And so I think, you know, we look at this technology journey as a 5 to 10 year journey, and how do we back these companies at the earliest stages,
help them improve and grow to where they can address the totality of the problem.
CHATTERLEY: Yes, I mean, I was going to be my next question. How long before some of these solutions are scalable, never mind profitable you're
looking at it? Are you over, as you said, a sort of 5 to 10 year horizon? How many of these things do you think will fall by the wayside in terms of
your investments, you are at the very earliest stages of providing funding?
CLERICO: Absolutely, so we're a $35 million Venture Capital Fund, we invest 1 to $2 million at a time, at the very earliest stages of these company'
inceptions. And so, you know, many of our companies ultimately won't prove out or succeed, but many will. And so I think that's the nature of venture
And, you know, given that we're a private investor, we can take, you know, a bunch of risk in a bunch of different categories, and try a bunch of
things, knowing that some is going to work and some won't. And, you know, we're excited to be able to bring that to the ecosystem.
CHATTERLEY: Yes, I mean, when I was prepping for this, I read a study. And I don't even know that it's been peer reviewed. But it was looking at the
California 2020 wildfires. And it basically said that the fires in terms of their carbon emissions erased all the gains that the state has made in
industrial emissions or limiting industrial emissions since 2003.
I mean, the environmental impact of what we're seeing here is so profound. Does a message like that help you raise money for this fun? Do you think
there's been a sort of mind change in terms of climate tech and climate investment in particular, given all the environmental concerns?
CLERICO: Absolutely. The carbon impact of wildfires is astounding, you know, the California statistics he cited are dead on. But also in Canada
this year, there's research that's predicting that the emissions from wildfires will be double the rest of the country for this entire year.
So you think about our work to decarbonize, to electrify, to reduce emissions in sort of the industrial sector, if we could just stop extreme
wildfire, it would have a massive and fast impact on our overall global carbon emissions, which I think is a huge opportunity.
To your point, I think that creates economic opportunities for companies to think about carbon reduction and the business of carbon reduction, and
therefore helps you know, folks like us raise capital to back that.
CHATTERLEY: Yes, and stuff like that truly blow my mind, all the effort, all the investment, all the oxygen that's expended talking about trying to
reduce emissions, and something like this, which puts lives at risk, in particular is wiping out those gains in certain countries.
But bring it back to the United States and the Inflation Reduction Act inappropriately named climate bill that the United States struck. Was there
enough in that in your mind to promote investment in this sphere specifically?
CLERICO: Yes, the Inflation Reduction Act in a bipartisan infrastructure framework did pass significant sums and historic sums of money for wildfire
resilience, which is great. And those are starting to work their way through the system. You know, as we've studied those bills, we think that
they're a massive step in the right direction.
And yet, there's still a lot more to go, we think it might be as much as five times the amount of money in those bills is actually what's needed to
really treat the landscape at the scale that needs to be treated. That being said, these were historic first steps in the right direction.
And, you know, those bills are benefiting our companies and the various agencies that are tasked with solving this problem.
CHATTERLEY: Yes, diplomatic, I was waiting for the bot five times more in terms of investment required. Bill, you're doing your part, we'll talk to
some of these companies too. And don't get the lowdown from them individually. We appreciate you and your time. Thank you.
CLERICO: Thank you.
CHATTERLEY: Bill Clerico, the Founder of Convective Capital. OK, still ahead, America's loss, Denmark's gain. I'm talking about weight loss thanks
to the so called wonder drug Ozempic and what impact is having on the Danish economy, next?
CHATTERLEY: Welcome back to "First Move", and the first day this week of U.S. stock market trade is in play and we've got a mostly higher open as
the bulls tried to bounce back from last week's losses no Monday malaise for tech stocks. They are outperforming as you can see in early trade the
NASDAQ up eight tenths of 1 percent.
We've got more high profile tech earnings coming up later this week, artificial intelligence chip maker in video reporting on Wednesday, those
shares are up almost 200 percent so far this year, driven by hopes that AI will become a major economic growth engine.
And speaking of growth engines, the booming success of weight loss medication in the United States is having a major impact on Denmark's
economy. Surging sales of the so called wonder drug Ozempic is leading to lower interest rates and a strengthening currency.
The Danish pharma giant Novo Nordisk, which produces the drug has seen its stock market valuation skyrocket as a result of its sales. Anna Stewart
joins us now America's desire to be thinner is meaning that Novo Nordisk profit is significantly fatter, which is good news for them, but it's so
huge. It's having an economic impact on the entire nation.
ANNA STEWART, CNN REPORTER: It is absolutely extraordinary. This drug is selling like hotcakes slipping the last results it grew in terms of sales
of this specific drug grew 49 percent in the first half of the year. And it means that this drugs company is even more dominant and it already was in
the Danish economy.
And if we look at the market cap of Novo Nordisk, and the competitors, the other big companies in Denmark, you can see that I mean, it is more than 10
times bigger than the second biggest company. And actually if you add those four companies, you see blow it together, that's still less than a third of
the market cap of Novo Nordisk.
Now, it has been big for a long time, but the drug that we're talking about has really boosted what we're seeing here. Hugely successful and so many of
those sales of course, are overseas, particularly in the United States, and that means a lot of U.S. dollars being converted back into kroner.
Now, a note from -- Bank last week was really interesting, it was saying essentially, this is pushing up the value of the kroner versus the euro,
but the two currencies are pegged. So, this feeds into interest rate decisions for the Central Bank and actually looking at the Danish Central
Bank, the main interest rate is around half a percent lower than the ECB. I'm sure many Danes are happy about that. I know well, I would rather have
a mortgage right now.
CHATTERLEY: I was about to say if you're a borrower, that's really great news. One word or maybe two, Nokia, Finland, we've seen how this story can
STEWART: Having all your eggs are one massive egg in your economic basket isn't always a good thing. Finland's economy very much rose and fell with
the fortunes of Nokia. So there is a risk than just taking those interest rates. For example, do you want to see a company have a turn of fortune and
then suddenly you might have to pay more for your mortgage?
I would say though, with Novo Nordisk, it's not a one trick pony. This is a company with hugely successful drugs in the past plenty more in the
So even if a competitor does come out, with a rival drug that's even more successful and dent sales I don't think we'll see a huge reversal in terms
of the fortunes of this particular company it's been dominant in the Danish economy for ages. In fact, in December Julia, it will be turning 100 years
CHATTERLEY: Wow! I was about to say I was just looking at some of the revenues there $6 billion for its weight loss drug and a collection of
analysts on FactSet think that revenue figures surges to around $15 billion annually by 2027. So I'm sure there's competitors with other options coming
But still, Anna Stewart, thank you for that. OK, still ahead from terminal to title winners, Spain overcomes all the hurdles and the odds to win their
first Women's World Cup, how they triumph over England, in the final?
CHATTERLEY: History in the making Spain celebrating winning the Women's World Cup for the first time ever. It was a 1-0 victory in the final on
Sunday over the reigning European champions, England. And it was a hard fought win for Spain who overcame internal disputes and a lack of playoff
None of that mattered. Amanda Davies joins us now from Sydney where the final was played boo for England, Amanda, but I cannot take anything away
from Spain. They deserved this win a mixture I think of success and sadness too for some of these players.
AMANDA DAVIES, CNN WORLD SPORT: Yes, very much, Julia, and it's a victory that I think a lot of people feel is absolutely deserved for the players
and the fans. They were very much the best team Sarina Wiegman the England coach said that after the match amidst her disappointment.
Of course of having been beaten in a World Cup final twice in a row after having led the Netherlands there in 2019. We know that these players are
some of the most talented in world football. It was by Mattie who was named player of the tournament. They have a two time Ballon d'Or winner Alexia
Putellas, 19 year old Salma Paralluelo, who really wrote so many headlines over the course of this campaign.
And they did what they needed to do when it mattered on the biggest stage of all. But the fact that they have won this tournament does not stop the
questions being asked about some of the management practices and the support that is offered to the players by the Spanish Federation,
particularly if the players continue to ask those questions.
You might remember it was a few months ago ahead of the tournament that 15 players wrote a letter to the Spanish Federation complaining about the
treatment they felt they were being subjected to.
But the Federation stood by their coach Jorge Vilda and he is the man who has led them to this Women's World Cup success. Alexia Putellas though
today has said perhaps FIFA needs to stop and listen because there are many different Federation's in world football with issues going on at the moment
And it feels to me like this final was really telling point in where we are with this women's game. England and Spain have set a new benchmark this was
the most competitive Women's World Cup today. The football has been fantastic the records it has broken have been spectacular.
It's the first women's world cup to break even $570 million in revenue is the figure that is being talked about. But for everything they've done,
there are still the issues that need to be resolved. England with the commercial payments and bonus payments, the dispute with the Football
Association, Spain with the coaching issues.
There is still a long way to go, but I think there's a whole lot more people on board after the last few weeks.
CHATTERLEY: Yes, and hopefully they're more powerful now to fight for the things that they deserve and need. And Amanda, I believe you're now done. I
hope there's a glass of wine and a bed and a long sleep and safe travels home in your future. You've been amazing over this tournament. Thank you
for joining us today, Amanda Davies there from Sydney. And that's it for show. "Connect the World" is up next. I'll see you tomorrow.