Return to Transcripts main page
First Move with Julia Chatterley
Mexico Elects Its First Female President; Biden To Unveil Immigration Order; Israel Insistent On Return Of Hostages And Elimination Of Hamas; Far-Right Members Of Netanyahu To Bring Down Government If He Signs Any Deal; Israeli Military Says Four Hostages Confirmed Dead; Hunter Biden In Trial; Qantas Customer Service Improvements; NVIDIA And AMD's New Generation Of A.I. Chips; New A.I. Warning; IMF Warns About A.I.'s Dark Side; Japan's Controversial Whale Hunt. Aired 6-7p ET
Aired June 03, 2024 - 18:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(COMMERCIAL BREAK)
[18:00:31]
JULIA CHATTERLEY, CNN INTERNATIONAL HOST: It's 6:00 a.m. in Taipei, 7:00 a.m. in Tokyo, and 6:00 p.m. here in New York. I'm Julia Chatterley. And
wherever you are in the world, this is your "First Move."
And welcome to "First Move" as always. And here's today's need to know. Sheinbaum shines. Mexico electing its first female president. The Morena
Party gets the super majority in Congress and investors take fright.
Trial tension. Hunter Biden in court on felony gun charges. The first time in history that the son of a sitting president faces a jury.
And a new warning about the use of A.I. and one you probably haven't heard about before. Could A.I. help deepen and prolong economic downturns in the
future? We'll discuss how and why, and most importantly, how we can stop it. That conversation and plenty more coming up.
But first, Mexico has elected its first female president. Claudia Sheinbaum will also become the nation's first Jewish president. Leaders across the
North and South America are offering their congratulations, with U.S. President Joe Biden saying he looks forward to working with her. It's a
high priority relationship for President Biden. Mexico is America's top trading partner.
Markets, however, were a bit less optimistic about Sheinbaum's presidency. The peso slipped nearly 4 percent against the U.S. dollar on Monday, while
Mexico's main stock index fell nearly 6 percent. For more, we're joined by Gustavo Valdes in Mexico City. Gustavo, great to have you with us. It's a
record win for a president, as I mentioned, so congratulations to her.
The key challenge I think she has, first and foremost, when you combine that with the super majority in Congress is perhaps calming people that
that strength and power won't be used to undermine the private sector, financial markets and erode the institutional fabric. She sort of made a
start at talking about those things.
GUSTAVO VALDES, CNN CORRESPONDENT: That is correct. And the fear we saw today in the Bolsa de Valores, the stock exchange here in Mexico, was
precisely that. They knew that she had a possibility, that she was the favorite to win the presidency, but they didn't expect the margins. And
even the president, Andres Manuel Lopez Obrador, celebrated that as a personal victory because he sees this as an indication that the Mexicans
are happy with his policies.
He said that he is not going to interfere with the transitions, but he made it clear that he would like to talk to her about changing some aspects of
the constitution, and that's where the investors might be a little worried because Lopez Obrador has not always been good to private investment.
Either way, Mexicans celebrated the election of their first female president, and that is not the only first that she brings in October.
(BEGIN VIDEOTAPE)
VALDES (voice-over): Mexico is making history. Claudia Sheinbaum's landslide victory will make her the country's first female president and
the first Jewish person to ascend to its highest office. A significant achievement in a mostly Catholic country known for his deeply patriarchal
culture.
CLAUDIA SHEINBAUM, MEXICAN PRESIDENT-ELECT (through translator): This triumph of the Mexican people is a triumph of a revolution of minds.
VALDES (voice-over): She's known as La Doctora for her PhD in energy engineering. Sheinbaum is a climate scientist working before politics to
find solutions to the extreme climate events we are facing. She's the former mayor of one of the world's most populous cities, Mexico City. Now,
on the verge of running out of water.
Amongst her biggest challenges, lead the country to safer days as Mexico's homicide rate ranks among the highest in the world.
SHEINBAUM (through translator): We will take Mexico along the path of peace and security. Duty is and will always be to look after each Mexican without
distinction.
VALDES (voice-over): The U.S. closely monitoring Sunday's results for the country's relations and how key issues are handled. From trade to cracking
down on drug trafficking to their shared border. The U.S. has relied heavily in Mexico to step up immigration enforcement and help stem the flow
off migrants.
[18:05:00]
As a candidate, she mentioned the need to work with the United States and Canada to push for legal migration. Because according to Sheinbaum, those
countries need workers. But for a long-term solution, Sheinbaum has said Central American nations where most of migrants come from need investment
from wealthier countries to reduce the incentives to leave. It will be much more economical than building the wall and fences, she said last March.
Women in Mexico did not enjoy universal suffrage until 1953, more than three decades after women gained the right to do so in the U.S. Sheinbaum
will be thrown in just a month before Americans head to the polls in November.
(END VIDEOTAPE)
VALDES (on camera): The economy aside the priority for voters that we spoke to, they told us the security public safety is their number one priority.
So, they are really looking forward to hear what she has to say and what plans she has to try to bring down the violence Mexico has seen in the
recent years.
And also, maybe tomorrow, could be the first time we hear from her on what her plan for the relationship with the United States will be. We're
expecting this announcement from the White House that might affect migration into the United States. Obviously, she doesn't take over until
October, but this might be an opportunity for her to express an opinion and tell the world what she's all about.
CHATTERLEY: Yes, and critical for how she shapes policy going forward. Gustavo Valdes in Mexico City for us there. Thank you so much for that
report.
Now, as Gustavo was saying there, while the trading relationship between the U.S. and Mexico, one could argue is stronger than ever, the border
between the two nations remains a challenge.
Now, President Joe Biden is set to announce an executive order on immigration. Under the order, most migrants crossing the U.S.-Mexico border
illegally would be forced be deported without being able to apply for asylum. However, those crossing legally could still try to begin the
process. MJ Lee joins us now from the White House.
MJ, help me understand this. How different is this from the efforts made by the former administration, the Trump administration, and I think it was
back in 2018, where they came up with a proposal that was then blocked by a federal court for violating asylum laws that grants people the right to ask
for humanitarian protection. How is this going to be crafted or shaped to make it different from that that was then rejected?
MJ LEE, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, look, there's no question that this issue of border security is one of the most politically
fraught issues here in Washington. And what sources briefed on this executive order has told CNN is that this is an announcement that could
come as early as tomorrow. And essentially what it would allow the administration to do is shut down the U.S.-Mexico border to asylum seekers
if the number of daily crossing surpasses a certain threshold.
Now, importantly, we are told that unaccompanied children are expected to be exempt from this, but that would be very worrisome to a lot of
immigration advocates who would argue that that actually would have the effect of incentivizing and encouraging some desperate families to actually
send their children to travel to the border on their own.
Now, you were asking about how exactly this would work. Well, the president would be using an authority that is known as the 212(f) section. This is a
regulation, you might recall, was one that was used by Former President Donald Trump during his administration and at the time was widely
criticized, including by a lot of Democrats. So, it is not hard to imagine President Biden being criticized for being hypocritical for leaning on this
very authority.
And of course, you really can't ignore the politics that are at play here. Border security is one of the issues that has been the toughest for
President Biden and for Democrats to navigate. And they certainly have gotten a lot of pressure from all sides to do more, to get a better handle
on the situation at the border. And the timing is, of course, really significant as well, given that we are in the middle of a presidential
election, and we are only three and a half weeks away from that first presidential debate between President Biden and former President Trump.
Now, the White House is not confirming that this announcement is coming tomorrow, but a spokesperson saying in a statement to CNN, as we have said
before, the administration continues to explore a series of policy options, and we remain committed to taking action to address a broken immigration
system.
Now, the caveat that I should mention is that, of course the text could be changed, the final text before tomorrow, but we do know that when it does
come, it is going to be a sweeping announcement from the president. He is certain to get a lot of backlash. But of course, he is hoping that he can
also get some political points by making this announcement.
CHATTERLEY: Yes, and that's the key. The politics of the moment determine action or at least looking like you're doing something to address this
problem. MJ Lee, thank you for that.
[18:10:00]
Now, push back and pressure. Israeli Prime Minister Benjamin Netanyahu saying his government is "insistent" about both the return of hostages and
the elimination of Hamas. This comes after U.S. President Joe Biden announced on Friday that Israel had offered Hamas a three-phase ceasefire
and hostage release deal. Though the path ahead is clearly complicated.
Far-right members of Netanyahu's coalition are threatening to bring down the government if he signs any deal that could end the war without removing
Hamas. In Tel Aviv Monday, supporters of the proposal gathered outside the U.S. embassy. The Israeli military says four more hostages have been
confirmed dead on Monday too.
Jeremy Diamond joins us now on this. There seems to be some serious confusion over quite what Israel is willing to agree to and whether or not
the threat that they see Hamas poses can be neutralized if this deal is agreed to and holds. It puts Netanyahu in a further corner and that's even
before Hamas respond to this deal.
JEREMY DIAMOND, CNN CORRESPONDENT: Yes, there's no question about it. The Israeli prime minister is juggling a lot as he contemplates a choice that
he may very well have to make -- a decision that he may have to make, and that is choosing between the survival of his government or this ceasefire
and hostage deal, which was indeed crafted by his own government.
And the reason for why he may have to make that choice is because we've watched over the course of the last couple of days since President Biden
laid out the Israeli proposal an uproar from the far-right members of Netanyahu's governing coalition, namely Finance Minister Bezalel Smotrich
and National Security Minister Itamar Ben-Gvir. Both of them threatening to bolt from the government, to force its collapse should the Israeli prime
minister move forward with this deal because they believe that it will lead to an end of the war.
And that is indeed how President Biden framed this deal in his remarks on Friday. And that's why we've watched the Israeli prime minister, over the
last couple of days, trying to reframe this agreement, insisting that Hamas will be destroyed before Israel agrees to any permanent ceasefire, it's
difficult to see how that can happen if, indeed, the Israeli government does enter this deal.
Because while it is not agreeing to a permanent ceasefire up front, you are effectively talking about going from a six-week ceasefire, one that could
be prolonged for several weeks or even months, as long as negotiations are ongoing to enter a second stage where that permanent ceasefire would go
into effect, and effectively makes it very hard for the war to start up again, which is what the Americans are banking on.
And so, the Israeli prime minister has been downplaying this notion of ending the war. But in doing so, not only has he not been successful in
convincing the far-right members of his government to support this deal, but at the same time, I'm now hearing from two Israeli sources familiar
with the matter that there are concerns now in the Israeli government that the Israeli prime minister is effectively undermining this deal,
undermining the way in which it's being sold to Hamas the ambiguity in the text about potentially leading to an end to the war by making these
repeated public statements, insisting that he has not agreed to a long-term permanent ceasefire.
And so, amid all of that, of course, the question now is whether or not Hamas will indeed agree to this proposal. We know that there is efforts
being made by the United States, by Qatar, by the Egyptians to try and convince Hamas to take this deal. We will see whether or not it happens and
then whether or not the Israeli government, the Israeli prime minister, stick with the proposal that they themselves put on the table. Julia.
CHATTERLEY: Jeremy Diamond. Thank you for that. OK. Onto fresh legal drama here in the United States, just days after the conviction of Former
President Donald Trump. This time, President Joe Biden's son, Hunter Biden, is in a federal courtroom. A jury was selected just hours ago, and opening
statements are now scheduled for Tuesday.
Hunter Biden is accused of illegally purchasing and possessing a gun while abusing or being addicted to drugs. President Biden issued a statement
saying, "I have boundless love for my son, confidence in him and respect for his strength." And First Lady Jill Biden attended the trial on her 73rd
birthday. Paula Reid has more.
(BEGIN VIDEOTAPE)
PAULA REID, CNN CHIEF LEGAL AFFAIRS CORRESPONDENT (voice-over): Hunter Biden entering federal court in Wilmington, Delaware today, the first child
of a sitting president to face criminal prosecution. The jury now seated in his trial on multiple gun charges.
First Lady Jill Biden, Hunter's stepmother, attended court Monday in the latest show of support from his family.
JILL BIDEN, U.S. FIRST LADY: I love Hunter and I'll support him. And I -- in any way I can.
REID (voice-over): Even in the middle of a close presidential race, President Biden has been unwavering in his support for his only living son.
[18:15:00]
JOE BIDEN, U.S. PRESIDENT: I'm very proud of my son.
REID (voice-over): The two seen at a state dinner last month, at church together last week, and riding bicycles in Rehoboth Beach over the weekend.
In a statement today, he said, I am the president but I am also a dad. Jill and I love our son and we are so proud of the man he is today.
Hunter has been charged in part with lying on this ATF form when he purchased a firearm. Prosecutors allege he failed to reveal he was a drug
addict and using at the time. Hunter has entered a plea of not guilty although he has been open about his struggles with addiction.
HUNTER BIDEN, SON OF U.S. PRESIDENT JOE BIDEN: I went one time for 13 days without sleeping. And smoking crack and drinking vodka exclusively
throughout that entire time.
REID (voice-over): Potential jurors were asked questions about people they knew dealing with substance abuse. Some were excused after saying they
couldn't be impartial over their political views, one with a very negative view of the Biden family and another, saying that after the Trump trial in
New York, he believed prosecutors charged cases based on politics. Another dismissed because he played squash with Beau Biden.
H. BIDEN: I've made mistakes in my life and wasted opportunities and privileges I was afforded. For that, I'm responsible.
REID (voice-over): Hunter was expected to resolve his gun charges as part of a plea deal, but that fell apart last year.
ABBE LOWELL, HUNTER BIDEN'S ATTORNEY: Hunter owned an unloaded gun for 11 days. There will never have been a charge like this brought in the United
States.
REID (voice-over): As he fights two criminal cases, he has also taken a more aggressive strategy towards dealing with Republican led investigations
on Capitol Hill.
UNIDENTIFIED FEMALE: Hunter Biden should be arrested right here right now and go straight to jail.
UNIDENTIFIED FEMALE: Thank you, Mr. Chairman. Excuse me, Hunter, apparently, you're afraid of my words.
REID (voice-over): His second criminal trial on tax charges is scheduled to begin in September in Los Angeles.
(END VIDEOTAPE)
CHATTERLEY: Never a dull moment. OK. Plenty more to come here on "First Move"s. Stay with us.
(COMMERCIAL BREAK)
[18:20:02]
CHATTERLEY: And welcome back to "First Move," where U.S. investors were not quite over the moon on the first trading day of June. All that and more
tops today's "Money Move." And it was a volatile start to the new trading month on Wall Street. The Dow softer after new data showed U.S.
manufacturing activity contracting last month. But the S&P and the Nasdaq chalked up gains. Oil fell sharply on where that OPEC plus member nations
will begin phasing out those voluntary production cuts and begin adding more barrels back to the market later this year.
It was another meme stock Monday on Wall Street, too, with GameStop shares on a wild ride, rising some 70 percent intraday after the investor known as
Roaring Kitty said he's built up more than $110 million stake in the firm. GameStop shares finished well off their best levels, closing up 21 percent.
I'd be interested to see if he took profit at any point as a result of those rises.
Now, a mostly higher start to the trading month in Asia, Japan, Hong Kong, and South Korea saw gains of well over 1 percent, as you can see that.
India's stock market also rose more than 3 percent to record highs as exit polls showed a decisive victory for Prime Minister Narendra Modi's BJP
Party in the nation's just concluded national elections.
And the airline, known as the Spirit of Australia, is promising an overhaul to win back customers with a new CEO at the helm. Qantas has faced
sustained complaints over delays, cancelled flights, slow call handling times, and substandard inflight services. CEO Vanessa Hudson also promised
that the long-awaited Project Sunrise flights linking Australia with New York and London will become a reality.
She joined a host of aviation leaders at the annual general meeting of the International Air Transport Association, or IATA, held this year in Dubai.
Hudson spoke to our Richard Quest about reputational repair.
(BEGIN VIDEOTAPE)
VANESSA HUDSON, CEO, QANTAS: Not only did we let our customers down, we let our people down. And I think, given that, stepping into the role as CEO, I
spent a lot of time listening. And actually, less time talking. Listening to customers in focus groups, in focus groups with customers who are
detractors, listening to our people, our pilots, cabin crew, engineers. And I think that that's actually a really important part to make sure that we
focus on the things that matter. And our people and our customers know what matters. And if you listen, that's the most important part.
RICHARD QUEST, CNN INTERNATIONAL HOST: Right. So, you've listened, you've heard if you -- what they want you to do, can you do it?
HUDSON: Absolutely. And we started. We're investing hundreds of millions, $230 million this year, and that's really focused on four paying points.
One, fixing on time performance. And I can say that we have that with lifting both Jetstar and Qantas. This month actually saw Qantas Airlines
deliver over 80 percent on time performance.
And we know for Jetstar and also Qantas, that directly relates to customer satisfaction. So, we've seen our customer satisfaction rebound.
(END VIDEOTAPE)
CHATTERLEY: I'm not quite sure what happened there, but I apologize for that. In the meantime, we'll move on. No matter where you might fly this
summer, you can likely expect some extreme weather. The Atlantic hurricane season officially kicked off over the weekend. Though in much of the world,
the big concern right now is heat.
For more on this, I'm joined by Chad Myers. Chad, I always freeze in air conditioning. So, fortunately for me, I love the warm weather. But extreme
isn't good in any respect.
CHAD MYERS, CNN METEOROLOGIST: No. When you're over 40 degrees, you've got right to the point of, you know, your body temperature going up. And we've
had these temperatures here in India for the past 22 days straight. In fact, we did get up to 49.9, which is 122 degrees Fahrenheit here.
Another hot weekend here for India because we are waiting on the rain. We are waiting on the monsoon and it is not here yet. It is in southern parts
of India and even into Sri Lanka, but temperature is obviously still going to be brutally hot up here to the north, where the monsoon is at least
another 20 days away. That's how long it's going to take for that air to cool down. The rain comes in, the clouds come in, then it doesn't get up
into the middle and upper 40s.
There could be a couple storms here across parts of the central part of the United States today. The bigger story, though, by the middle of the week is
how hot it is going to get in the desert southwest of the U.S., also including parts of Texas with dangerous heat indexes throughout the
afternoon. Things are going to feel like 125 in places there across parts of Texas.
Even Phoenix on the thermometer going to 112. Vegas to 111. I was in Vegas about three weeks ago and it was 98 and I thought that was hot. I can't
imagine what walking around outside at 111 in the sunshine will feel like there. That's going to be a brutal couple days. Julia.
[18:25:00]
CHATTERLEY: Yes, you have to walk to the nearest pool or bucket of water, quite frankly.
MYERS: trying to find shade.
CHATTERLEY: Oh, my God.
MYERS: That one tree.
CHATTERLEY: Yes, exactly. Everyone, be very careful and keep hydrated. Chad Myers, thank you for that.
MYERS: You're welcome.
CHATTERLEY: And we'll be right back. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move." NVIDIA is the undisputed chip king with a 70 percent market share in A.I. chips. And the king of the A.I.
chip does not want to let its crown slip. Over the weekend, the company made a surprise announcement at a tech trade show in Taipei. CEO Jensen
Huang saying the firm is hard at work on a powerful new platform.
(BEGIN VIDEO CLIP)
JENSENG HUANG, CEO, NVIDIA: We have code names in our company and we try to keep them very secret. Oftentimes most of the employees don't even know,
but our next generation platform is called Rubin. All of these chips that I'm showing you here are all in full development, 100 percent of them. And
the rhythm is one year at the limits of technology, all 100 percent architecturally compatible.
(END VIDEO CLIP)
CHATTERLEY: NVIDIA, who shares a now up 138 percent year-to-date, cannot rest easy however. Competitor AMD is ready to rumble with Rubin with its
very own next generation chip. Will Ripley joins us now.
Will, screen though of all of those chips that they had in production I think was a way to make your competitors shudder. What he revealed, I
think, is that they've got a road map, new chips every year, each more powerful than the last.
WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: And chips that consume less energy. So, even though the chip is named Rubin, if it was a Rubin
sandwich, it'd be like packing in all these extra delicious ingredients, but lowering the calories drastically. Wouldn't that be great? That is
essentially where we are in the technology space.
[18:30:00]
Companies like NVIDIA and AMD are putting so much tech into these chips that are going to be capable of performing really miraculous A.I. functions
that even a year ago, when we were talking about ChatGPT, you would have needed to, you know, have a cloud kind of -- you know, handle all of these
now. These chips are going to be in people's devices.
And so, every device that you use, they're saying eventually and in the not too distant future is going to have A.I. in it, which is going to transform
your computer, your phone, from a simple tool to almost like an assistant that can learn with you and carry out these really complex tasks.
You heard Jensen Huang. Talking about A.I., accelerated computing, redefining the future. His cousin, the AMD CEO, Lisa Su, also here in
Taipei, and she said that A.I. is that company's number one priority as they nip at the heels of NVIDIA. Take a look.
(BEGIN VIDEO CLIP)
LISA SU, CEO, AMD: We launched at MI300X last year with leadership inference performance, memory size and compute capabilities, and we have
now expanded our road map. So, it's on an annual cadence. That means a new product family every year. Later this year, we plan to launch at MI325X
with faster and more memory.
(END VIDEO CLIP)
RIPLEY: I asked Lisa Su at a press conference after that talk that she gave, which was the keynote of the Computex here in Taipei. I asked her
about the importance of making these announcements and being here in Taipei.
And she really emphasized that while nearly all of the world's advanced semiconductors, the chips that technology relies on these days, all of our
vital tech, nearly 90 percent of them are made here in Taiwan, she wanted to emphasize that the supply chain really is global, and these chips are
traveling -- they're being designed in the United States, in many cases, manufactured here in Taiwan, and then they travel all around the world
through this assembly process that during COVID, as we saw, is particularly vulnerable.
And it's also noteworthy, Julia, that this major, you know, tech conference happened just days after China held large-scale military drills off of this
island. But they're not talking about supply chain disruption. They're talking about tech, full speed ahead. Probably the biggest factor that
they're worried about, frankly, is energy consumption.
So, they're trying to get these chips to be as energy efficient as possible because the technology is moving and advancing so quickly that what could
really limit growth, they say, is not enough energy to actually power these supercomputers that are being developed.
CHATTERLEY: Yes, all these data centers that are required all over the world and we have to do it in a renewable way rather than using dirty
energy or in many respects, it defeats the purpose of other activities that we're doing to try and clean the air. Will, I just loved your analogy, the
Rubin sandwich, lots of layers, additional layers, which is the sort of added bells and whistles and then you've got the less calorie count, which
is hopefully the less energy consumption, which I am -- I really love. Good job. We like food analogies on this show, for anything.
RIPLEY: We only wish. We only wish it was true in the real world that we could eat more and gain less weight.
CHATTERLEY: I know.
RIPLEY: But in tech, it's happening. Dreams coming true.
CHATTERLEY: Exactly. We have to rely on our avatars, our A.I. avatars for that.
RIPLEY: Right.
CHATTERLEY: Well, that's a whole another conversation. Will Ripley, thank you. Have a great day.
All right. Coming up after the break, tackling the darker side of A.I. The International Monetary Fund's second in command, telling me about the risk
to jobs, financial services, and supply chains, and say now is the time to lay down this kind of economic A.I. guardrails. That's next.
(COMMERCIAL BREAK)
[18:36:16]
CHATTERLEY: Welcome back to "First Move." Now, you'll probably hear a lot on this show about how generative A.I. can help society. We also discuss a
lot its uncertainty and the potential risks like misinformation, ethics, privacy. Well, the International Monetary Fund is now highlighting
different kind of A.I. risk that gets far less attention, if any, in fact.
It's the risk that A.I. could exacerbate economic crises. How? Well, by creating large-scale disruptions to labor markets through automation,
financial markets through robo advisers, and to supply chains that rely on algorithms using potentially obsolete or dated data. My next guest says to
protect against an A.I. amplified downturn guardrails should be in place for decisions based on artificial intelligence. And incentives are needed
to too protect the global human workforce. We'll explain.
Gita Gopinath is the first deputy managing director at the IMF. She delivered her warning in a speech to the A.I. for Good Global Summit and
joins us now. Welcome to the show. Thank you so much for your time.
And it was a fascinating speech. I want to hone in on the labor market portion in particular, because plenty of the headlines about A.I. talk
about coming for people's jobs, but they never really talk about the mechanism. And what you say in this speech was that when times are good,
businesses do invest in automation technology, but they tend to keep their workers. Then a downturn hits. Businesses let the workers go and that's
when you actually see the impact of automation. This is key.
GITA GOPINATH, FIRST DEPUTY MANAGING DIRECTOR, IMF: Hi, Julia. It's a pleasure to join you. What we've seen from previous waves of automation is
that the time that you actually see automation related job losses is in the first year of recessions.
So, around 90 percent of automation related job losses since the mid-1980s has been literally in the first 12 months following a recession. And it is
because, you know, of what you just said, which is that when the times are good and profits are high, firms invest in automation, including as they
are doing right now in terms of artificial intelligence, and they hold on to workers because even if their value added is low, profits are good and
they hold on to workers.
But then you hit a downturn, and that's when they get going to cost cutting mode and lay off workers. And we saw that, the great financial crisis was
an example of that. We saw one of the most severe forms of jobless recoveries that came after the great financial crisis, both in the U.S. and
in Western Europe.
Given that the scale of the job market that's now potentially exposed to A.I., including high skilled cognitive jobs, I think this is something we
should be watchful of in terms of what might happen in another future downturn.
CHATTERLEY: Yes, it's interesting that you said in some ways we saw that to a certain extent after the financial crisis, but we've never really tested
in light of the accelerated investment and innovation of A.I. with automation in a sort of downturn scenario. I'm not sure the pandemic, which
I believe is the last time we spoke about this kind of thing, counts actually. We've not really tested the impact to any great extent.
GOPINATH: We are now in the -- you know, the beginning stages of the adoption of the modern forms of A.I. And we've seen very fast growth in the
last year. So, the question is, how does this adoption play out in the next few years and all the different industries and sectors? It's a general-
purpose technology. So, it has great potential, positive benefits, too.
But at the same time, it certainly affects a much larger share of the workforce. And our numbers are that around 30 percent of workers in
advanced economies are in jobs that are at high risk of displacement from A.I. And if you go down to low-income countries, it's 18 percent.
[18:40:00]
But these are large numbers. And we have to be mindful. We have to -- you know, it's very important for governments and authorities around the world
to track very closely how A.I. is being adopted, how it's being used in different sectors, because otherwise we could be flying blind in the next
recession.
CHATTERLEY: The other thing that caught my attention in this speech was the impact of A.I. and the overlay in financial models and what happens in
financial markets, particularly if we have outside events, and we've seen them relatively frequently in recent years. The worry is that the models
don't necessarily react in a human way, they all react in a similar way, and you get a herd mentality out of risky assets into safer assets, which
sort of creates a greater oscillation, perhaps in some of the volatility that we see.
This certainly caught my attention, particularly given we're seeing more and more money pushed into these model funds.
GOPINATH: If you look at the -- for example, the financial industry, algorithmic training, machine learning has been around for a while, and
it's being used. However, what you are seeing is the use of much more sophisticated models. In fact, the sophistication is even -- surprises
experts in terms of how it delivers predictions and delivers advice and where to invest. There's also much more client focused use of A.I. We have
robo advisers that are now expected to manage a very large amount of assets.
Now, again, in normal times, all of this is good. It can increase market efficiency, it can lead to better predictions, it can have greater
financial inclusion, and all of that is great. But then you hit a downturn. And one thing we know is that no two downturns are the same and you can
have very unusual patterns of reactions in the economy.
And what we do know is that these A.I. models have been shown to perform poorly in the face of events like no other or events that they have not
been trained on, and humans do much better in those circumstances. So, if we don't have the right checks and balances, we could see, you know, a big
shift in asset trade moving towards more safe assets, you know, we could see a hurting away from riskier assets, asset price collapses that go along
with it.
And given that there is a huge black box nature to this technology, you know, it could be difficult to comprehend what is taking place at a very
rapid speed.
CHATTERLEY: What response have you had from regulators, from policymakers when you've spoken to them about some of these risks and taking action?
Because again, we've seen groups of nations come together to take action on A.I. and at least having the conversation. But I don't think they're having
this conversation about -- even in the shorter-term, the economic consequences of what an A.I. overlay to the world might create.
GOPINATH: We absolutely need to an international effort, you know, parallel to what's happening with issues of privacy and bias and ethics and
misinformation. We need something parallel that's happening on economic issues, on financial issues.
This is a way governments around the world are doing scenario planning for what could happen if, for example, there's an existential risk arising from
A.I. It is important also for them to do scenario planning to look at how A.I. is being developed, how it's being adopted, what the implications are
for employment, for price setting, for supply chains, for financial markets, and depending upon these different scenarios, taking the necessary
policy actions. I mean, that's going to be critical.
And we do see that. I mean, the G7 is coming together, working on A.I., and they are doing that keenly interested on the economic issues.
CHATTERLEY: Yes, and one of the things you mentioned in the speech is sort of greater protections or tax incentives for labor rather than capital,
which we don't often see even in some of the biggest nations of the world, or at least not enough.
I'm conscious of time, so I do want to ask you about China because you recently raised at the IMF the growth forecast that you're expecting for
China in 2024 to 5 percent. And I know you spent some time there as well assessing. Just give me a sense of what's driving that optimism and is your
prescription actually that they still need to do more particularly in the property sector.
GOPINATH: So, we just upgraded their forecast. It was 4.6 percent that we had previously for 2024, we raised it to 5 percent. Two factors drive
there, the first is that the first quarter GDP data came in stronger than expected. And secondly, they have put newer policy measures in place.
[18:45:00]
Now, that said, it's still an economy where demand is -- has not fully recovered. Consumption has not fully recovered, and this is an area where a
lot of attention is required in terms of building back demand. To do that, the -- one area that requires attention is the property sector. The
authorities have put new measures in place. But more will be needed. Otherwise, we could end up with weakness in the property sector, basically
affecting consumer confidence, affecting private sector investment as a whole.
So, addressing the property sector is going to be absolutely critical, reinvigorating demand in the economy is going to be absolutely critical for
them to be able to continue to grow and recover.
CHATTERLEY: You know, I wanted to ask you about trade tariffs and rising protectionism, but I'm going to save it for our next conversation. So,
please, you have to come back very soon and we'll continue the conversation. Great to chat to you and fascinating speech. We'll talk about
it more on the show. Thanks to you. The first deputy managing director of the IMF, Gita Gopinath. Great to have you on the show. Thank you.
OK. If you've missed any of our interviews today, they'll be on my X and Instagram pages. You can search for @jchatterleyCNN.
In the meantime, coming up on "First Move," a nearly $50 million vessel to hunt the world's largest mammals. Why Japan is so determined to keep
whaling, next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move" with a look at more of today's international headlines. Exit polls in India suggest a decisive election
win for Prime Minister Narendra Modi and his ruling party. Official results are expected Tuesday following the country's six-week long polls. India's
election commission says more than 640 million people voted this year.
Meanwhile, nearly 80 people, including dozens of poll workers, lost their lives in the past 10 days due to extreme heat across the nation.
South Africa's ANC party has lost its absolute majority for the first time in three decades. It's the nation's biggest political shift since the end
of apartheid. The party of Nelson Mandela has been marred by years of corruption, scandals and economic mismanagement. The ANC will now have to
create a coalition government.
And Donald Trump's hush money trial appears to have helped his campaign fundraising effort. The campaign saying it and the National Republican
Committee bought in $141 million last month. That includes $53 million in the 24 hours after Trump's conviction. The numbers represent a dramatic
fundraising boost compared to April.
Now, look at these spectacular whales. Hard to believe that three nations in the world, Norway, Iceland Japan still hunt them, whether for
ecological, cultural, or commercial reasons. It's long been a controversial subject in Japan, but the fisheries agency there wants to re-energize the
industry, saying the number of whales has increased in its waters. As a result, one company has just launched a massive new $48 million vessel
built for the purpose of targeting the world's largest mammals. Claiming we need to them to keep the balance of the ecosystem.
[18:50:00]
Hanako Montgomery joins us now. Hanako, this was fascinating as I was reading more details about this and I was trying to get a sense of what
demand for things like whale watching might be relative to demand for whale products. What have you discovered?
HANAKO MONTGOMERY, CNN CORRESPONDENT: Hi, Julia. It's good to see you. So, whale watching in Japan, like you said, is actually quite popular across
the country, and you see domestic tourists looking at these whales, you see international tourists as well, whereas whale meat, the meat that you eat,
of course, is not very popular. In fact, consumption is at an all-time low.
The fisheries agency in Japan estimates that only about a third of the world's fish 1,000 to 2,000 tons of well meat are eaten each year. And of
course, after World War II, whale meat was a very popular source of protein due to the scarcity of food resources. But since then, popularity has
really, really dipped because, of course, we eat chicken, we eat beef, we eat other sources of protein, not whale meat.
And as you mentioned, internationally speaking, whaling has long been a controversial issue and Japan has been criticized for its long practice of
whaling. But like you mentioned, the industry is trying to revitalize itself with the help of the Japanese government. I spoke to some industry
insiders about how they were looking to boost consumption and change popular opinion.
(BEGIN VIDEOTAPE)
MONTGOMERY (voice-over): Marvels of the deep-blue are to others a meal. Whaling in Japan is poised for a major comeback with the launch of this
vessel.
MONTGOMERY: This vast, new whaling mothership, the Kangei Maru, cost nearly $50 million to make. And it just goes to show how Japan is not only
continuing to hunt whales, but also is trying to revitalize this shrinking industry in a very, very a big way.
MONTGOMERY (voice-over): We get a tour of the ship led by Hideki Tokoro, the president of Kyodo Senpaku, the whaling company that made it, who
doesn't hide his fondness for whale meat and rejects the idea of changing his business model.
HIDEKI TOKORO, PRESIDENT, KYODO SENPAKU (through translator): We will not switch to whale watching unless it is eating whale while whale watching,
which sounds very chic.
MONTGOMERY (voice-over): This ship hunts whales in Japan's territorial waters before getting served in the country's supermarkets, school lunches,
food carts, and vending machines. But public appetite for whale meat just 1 percent of its former peak according to government data. It's still far
from satisfactory for Tokoro.
And with the launch of this expensive new boat, Tokoro says bills are piling up. But even if the new boat sinks him into bankruptcy Tokoro
insists there is no Plan B.
Internationally, whaling is criticized as a brutal and unsustainable practice that once pushed many of these mammals to the brink of extinction
due to centuries of over hunting. And may still carry environmental consequences today.
UNIDENTIFIED MALE: The things that we're learning about whales is that they're not just consumers in this ecosystem, but by the fact of them
consuming so much food, they recycle a ton of nutrients into the environment that actually helps to stimulate plant life growth.
MONTGOMERY (voice-over): But Japan's Fisheries Agency says there's nothing wrong with whaling. They claimed Japan should continue whaling because
their research shows it sustainable and whale populations in Japanese waters are increasing allowing them to hunt even endangered species, even
as whale meat's declining popularity is a regrettable trend for the agency.
TAKAAKI SAKAMOTO, WHALING AFFAIRS OFFICE (through translator): Since we are promoting increased consumption of marine products, I think it is
unfortunate that consumption is decreasing.
MONTGOMERY (voice-over): Japan's whaling industry attempting to revive its shrinking business, betting on a future that may never materialize.
(END VIDEOTAPE)
MONTGOMERY (on camera): So, you heard from the horse's mouth there, Julia, there is absolutely no plan to switch to the far more popular whale
watching. Now, I also asked the Japanese government about any plans to return to the Southern Ocean, which is, of course, home to a very large
sanctuary, given the fact that this new boat actually has the capacity to travel these long distances.
Now, the government assured me that there were no plans to currently whale in the Southern Ocean. But of course, activists are very hesitant to
believe Japan, given its poor track record when it comes to protecting these mammals. Julia,
CHATTERLEY: Hanako Montgomery there. Thank you so much for that report. Fascinating.
[18:55:00]
All right. And finally, on "First Move," it's the battle of the beverages, while Coca-Cola remains king as the number one source of soda brand in
America, with a whopping 19 percent share by volume. What's going on with second place is far more interesting.
Now, Pepsi used to sit comfortably as number two, but after years of decline, it's now been overtaken by none other than Dr Pepper, which has
been steadily gaining in popularity. Now, after that came Sprite and Diet Coke, my formerly favorite tipple. Yes, I admit it. The peppery soda, which
is apparently a blend of 23 flavors has been growing in popularity, offering a spicy alternative to traditional cola.
Now, I'm still doing cold turkey with Diet Coke. I've completely banned it. I'm not sure if I'm a kind of peppery style person, but I will swap the
order. I've got these cans on my desk. So, I'm just going to swap them into order so that we've got them there.
Now, I better stop talking in case I get canned myself. See what I did there. And that just about wraps up the show.
Thank you for joining us. I'll see you tomorrow. I'm just going to open it and smell it, but I don't drink it anymore. I really don't. Smells good
though. I'll see you tomorrow.
(COMMERCIAL BREAK)
END
