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First Move with Julia Chatterley
Sec. Blinken Accusing Hamas of Backtracking on Ceasefire Deal; Hostages and Missing Families Forum Calls for Captives' Release; CNN Speaks to Andrey Kozlov's Family; Biden Arrives for G7 Summit; G7 Leaders Agree to $50 Billion Loan to Ukraine; E.U. To Raise Tariffs on Chinese EVs; Tariff Move Raises Tension Says China; Federal Reserve Holding Interest Rate Steady; U.S. Inflation Eased Slightly in May; Former SpaceX Employees Sue Elon Musk and SpaceX; Tesla Investors to Vote on Musk's Pay Package; Russian Naval Ships in Cuba; Klarna's A.I. Push; Klarna's Buy Now Pay Later Expanding to U.S.; Bee Population Dwindling in Nepal; Basketball Legend Jerry West Dies at 86. Aired 6-7p ET
Aired June 12, 2024 - 18:00:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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JULIA CHATTERLEY, CNN HOST, FIRST MOVE: It's 6:00 a.m. in Beijing, 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 a warm welcome to "First Move." And here's today's need to know. Hamas' haggling. The U.S. secret of state, Antony Blinken, accusing the terror
group of backtracking on the Gaza ceasefire deal terms.
Unfrozen funds? President Biden lands in Italy as the G7 leaders agree to a $50 billion loan to Ukraine using Russian assets in the West, according to
sources.
Beijing backlash. The E.U. raises tariffs on Chinese electric vehicles. China says the move raises tensions.
And deep-water diplomacy. Russian Navy vessels and a nuclear-powered submarine arrive in Cuba. All that and plenty more coming up.
But first, to the Middle East, where a ceasefire and hostage deal is hanging in the balance.
Top U.S. diplomat Antony Blinken is in the region to push for an agreement on the Israeli proposal from almost two weeks ago. Speaking in Doha after
days of talks with key players, Blinken said it's time for the haggling to stop and a ceasefire to begin. He also questioned whether Hamas is acting
in good faith by requesting a number of changes to the proposal.
(BEGIN VIDEO CLIP)
ANTONY BLINKEN, U.S. SECRETARY OF STATE: A deal was on the table that was virtually identical to the proposal that Hamas put forward on May the 6th.
A deal that the entire world is behind, a deal Israel has accepted, and Hamas could have answered with a single word, yes.
Instead, Hamas waited nearly two weeks, and then proposed more changes, a number of which go beyond positions it had previously taken and accepted.
(END VIDEO CLIP)
CHATTERLEY: Kylie Atwood is in Doha for us. Kylie, I watched that press conference live and he couldn't have been more pointed about what he sees
as the ultimate hold up here. Though he did say in that press conference that the bridge now between the sides could be met and some kind of an
agreement reached. But of course, it's a challenge. Where are we at this moment?
KYLIE ATWOOD, CNN U.S. SECURITY CORRESPONDENT: Yes. So, he was quite clear in his frustrations there, but he was also trying to strike somewhat of a
hopeful tone, Julia, when he said that Hamas proposed multiple changes, but they proposed some that were workable and some that aren't, and he is
hoping that they can bridge the gaps between the two sides. He says he believes that's possible. But he also said that it's not inevitable. It's
not necessarily guaranteed that they're going to get there.
As you said in the intro there, frustrations about how Hamas has approached this round of negotiations were clear. It obviously took 12 days for them
to get back to this U.S.-backed and internationally-backed proposal that was on the table for them. And he questioned if their response demonstrates
that they are negotiating in good faith or not and spoke about the fact that some of what they come -- came back and said in response to this
actually went beyond previous positions that they have taken, effectively making the case that they're actually moving further away from Israel's
positions instead of closer to them.
And of course, they're going to need to get on the same page if they're going to be able to strike this ceasefire and this hostage release deal
that everyone has been pushing for. The region has been pushing Hamas to accept it.
So, tonight, we're going to watch to see what happens over the next few days. The secretary said there would need to be urgent conversations to
bridge these gaps. We don't know exactly what that's going to look like. And he also forecasted out to the future a little bit, saying that in the
coming weeks, the United States is going to release some proposals for the day after plans for Gaza. What reconstruction would look like there. What
governance could look like there. Some proposals to get people thinking about peace. Thinking about life beyond this war.
[18:05:00]
But of course, in order to get there, they're going to have to strike an agreement on the ceasefire and they are simply not there and it's not even
clear that they're closer now than they have been at previous points in this negotiating process.
CHATTERLEY: Yes, and that's a critical point. Everyone wants to see this gap bridged. The question is how, to your point. Kylie Atwood, thank you
for that report.
Now, as you can imagine, the Hostages and Missing Families Forum is urging mediators to do whatever they can to ensure their loved ones are brought
home from Gaza as soon as possible. It comes as we hear more from the four hostages rescued by Israeli forces last week.
Now, one of them is Andrey Kozlov. He was working as a security guard at the Nova Music Festival on October 7th when he was kidnapped by Hamas.
Paula Hancock spoke to his family about his rescue and also what his recovery will involve.
(BEGIN VIDEOTAPE)
PAULA HANCOCKS, CNN CORRESPONDENT (voice-over): When the Israeli military launched Saturday's rescue mission in Gaza, one of the hostages thought
they had come to kill him. Andrey Kozlov shouts his name in terror to the troops. His family says the Hamas guards told them for months, the sounds
of war they were hearing were Israel trying to target them as they were causing trouble for the state.
His brother, Dmitry, tells me he didn't understand why the IDF came. He was afraid they came to kill him. It took some time to realize they had come to
rescue him.
Psychological abuse coupled with frequent punishments marked Kozlov's captivity, according to his family.
They were trying not to leave marks, his brother says, because eventually it is their reputation, but they would still punish him this way or the
other. He has told us there are some moments he will never share with us, his father says, but one he did share is that at the hottest time of the
day, they would cover him in blankets. It's a difficult ordeal to be dehydrated through heat.
Kozlov, 27 years old, is a Russian citizen who moved to Israel almost two years ago. He was working as a security guard at the Nova Music Festival on
October 7th when he was kidnapped and taken into Gaza.
His parents flew from Russia Sunday for an emotional reunion, one they hadn't dared to hope for after eight long months.
This is the best scenario we could have hoped for, his father says, to see him alive, to feel his presence and to hug him. It is outstanding.
His mother says, we are infinitely happy to see him. He laughs, he jokes, he enjoys communicating with all of us. With his family, with doctors, with
the people who surround him.
His family says Kozlov was shocked when Israel's prime minister, Benjamin Netanyahu, came to visit him and the three other hostages rescued while in
hospital. As for those hostages still in Gaza, his father says, a deal or a rescue, whatever it takes to get them out.
Paula Hancocks, CNN, Tel Aviv.
(END VIDEOTAPE)
CHATTERLEY: Now, in the past couple of hours, the U.S. president arrived in Italy where he will take part in the G7 Summit. These are images of Air
Force One touching down on the southern part of the country close to where the talks will be held. We hear that the G7 nations have already agreed on
a $50 billion loan for Ukraine.
An Elysee Palace source says the money will be transferred to Kyiv by the end of the year, guaranteed by profits from Russian assets frozen by the
United -- by the European Union. The summit is starting in just hours from now. MJ Lee has more on what to expect.
(BEGIN VIDEOTAPE)
MJ LEE, CNN SENIOR WHITE HOUSE CORRESPONDENT (voice-over): Here in the coastal Puglia region of Southern Italy, the leaders of the so-called G7
nations set to convene on Thursday. U.S. President Joe Biden landing here late Wednesday night for the final G7 summit of his first term.
But questions loom large in the aftermath of his son Hunter's conviction on three federal gun charges, including whether the president would commute
his son's sentence. The White House on Wednesday would not rule it out. In a show of support for his son, Biden spent the previous night with Hunter
and other members of his family in Wilmington, Delaware.
In Italy, a myriad of weighty and urgent issues on the world leader's agenda. At the top of that list, the continuing Russian assault on Ukraine,
now in its third year. Biden, along with the heads of Italy, the U.K., France, Germany, Canada, and Japan, preparing to announce a series of
significant joint initiatives.
The president pushing for a $50 billion loan program for Ukraine, which would tap into the interest accrued from frozen Russian assets and a new
10-year U.S.-Ukraine security pact. The U.S. also expanding sanctions on Russia, targeting foreign financial institutions supporting the war and
Russia's access to critical I.T. Technology, software, and other equipment.
[18:10:00]
This year's gathering of world leaders kicking off almost exactly three years to the day after Biden's first G7 as president in Cornwall, England.
JOE BIDEN, U.S. PRESIDENT: The United States is back.
LEE (voice-over): Biden's unpredictable predecessor, Donald Trump, after alienating the U.S. in so many ways had been replaced by a familiar
American statesman pledging to restore and strengthen America's leadership on the world stage.
BIDEN: We need someone to take office this time around who on day one can stand on the world stage, command the respect of world leaders.
LEE (voice-over): But three years later, Biden confronting questions about just how much his big bet on repairing U.S. alliances abroad has paid off.
He and other European leaders confronting resistance at home from the far- right.
BIDEN: Some of our very conservative members were holding it up. But we got it done.
LEE (voice-over): The possibility of a second Trump term already setting off fresh anxiety in world capitals. Even as Biden insists that protecting
democracies across the world is a noble cause, no matter the cost.
BIDEN: Isolationism was not the answer eight years ago and is not the answer today.
(END VIDEOTAPE)
CHATTERLEY: E.V. could soon stand for more expensive vehicle in the European Union when it comes to buying an imported Chinese electric car.
The European Commission announced it is imposing additional tariffs of up to 38 percent on Chinese E.V.s. It comes after U.S. President Biden
quadrupled import duties in the United States.
Now, this chart is from the Atlantic Council, and it shows how important the European market has become for Chinese car exporters. E.V. exports grew
from under $1 billion just four years ago to $13 billion last year. Just to give you a sense, they have around a 9 percent market share of new car
purchases. So, as you'd expect, Beijing not happy at this provisional decision.
Hanako Montgomery joins us now. I think the word we're looking for here is retaliation or at least potential retaliation. I think it's no surprise
that Beijing not happy about this announcement.
HANAKO MONTGOMERY, CNN CORRESPONDENT: Yes, Julia, like you mentioned, China is not very happy with this announcement, and it certainly deals a
real blow to some Chinese automakers.
Now, just to put into context how significant E.V.s are to the Chinese economy, like how you outlined there, Julia, they are part of what's called
the new three, three exports that the Chinese economy is relying on to really develop the country, financially speaking. China has put a lot of
emphasis on this new three to develop the country's future. The other two include solar cells and lithium-ion batteries.
Now, this is particularly important for China right now, given the fact that it's seen a massive fallout from its property crisis and the Chinese
economy is not doing -- very well financially at the moment. And on top of that, as you kind of outlined there, Julia, the E.U. is the biggest export
market for Chinese E.V. So, again, this has dealt a real blow to some automakers in the country.
Now, in response to the use tariffs, China came out with a statement yesterday on, Wednesday evening, local time, and it said, and I quote, "The
E.U. has disregarded facts and WTO rules. Ignored China's repeated strong opposition and ignored the appeals and dissuades from many E.U. member
governments and industrial members, and has acted unilaterally. China is highly concerned and strongly dissatisfied with this, and the Chinese
industry is deeply disappointed and firmly opposed to this."
Again, a lot of frustration and anger about these new tariffs. And as you mentioned, there are concerns about retaliation. China has warned that it
could respond with some tariffs on E.U. products, on European products, for instance, luxury items, cognac, dairy products as well. And it could spell
the beginning of a full out trade war.
But experts tell me that even though these tariffs are quite significant to automakers in the country, they won't deal a massive, massive blow to some
of the domestic brands that are doing quite well, such as BYD. And the reasons for that are really threefold. The first because they rely on
cheaper labor in China, cheaper energy products and, of course, also they are government subsidized. So, even though these tariffs will certainly
make costs higher, they will be able to absorb much of those additional costs because they still enjoy that cost advantage.
[18:15:00]
Now, on the other hand, international brands that use China as an export hub, for instance, Tesla or BMW experts tell me that potentially we can see
them getting wiped out in China because it's just that much more expensive to make E.V.s in the country. Again, whether or not this spells the
beginning of a full out trade war is remains to be seen. But, Julia, we'll update you with any information that we get about those new tariffs.
CHATTERLEY: Yes, and we'll certainly bring that to our viewers. But you make such a great point there about the extent of -- to which they're
subsidized here. And even when we're talking about tariffs like this, it's perhaps still not enough to level the playing field. Fascinating. Hanako
Montgomery there. Thank you so much for that report.
Now, from Chinese E.V.s to key central bank decrees. The U.S. Federal Reserve holding interest rates steady as expected on Wednesday. The big
news though was their new projections for rate cuts later this year, or should we say the lack thereof.
Back in March, officials had been expecting three cuts to borrowing costs in 2024, while now the median outlook is for just one cut, with four
officials in fact seeing no cuts this year at all. Fed Chair Jerome Powell saying Wednesday that while inflation pressures have eased, the Fed wants
to see yet more progress. The key phrase remains, as always, data dependency.
(BEGIN VIDEO CLIP)
JEROME POWELL, CHAIR, FEDERAL RESERVE: We want to gain further confidence. Certainly, more good inflation readings will help with that. I'm not going
to be specific about how many because, you know, really, it's going to be not just the inflation readings, it's going to be the totality of the data.
What's happening in the labor market, what's happening with the balance of risks, what's happening with the forecast, what's happening with growth.
You look at all of that and you ask, are we confident? Have we reached an appropriate level of confidence that inflation is moving down sustainably
to 2 percent? Or alternatively, do we see really unexpected signs of weakness in the labor market that would call for a response?
(END VIDEO CLIP)
CHATTERLEY: Powell's comments coming after an encouraging new read on U.S. consumer inflation too. Annual price growth easing slightly to 3.3 percent
in May and prices coming in relatively unchanged or flat month over month, the first time that's happened in almost two years. Context of course is
everything. Inflation still remains firmly above the Fed's 2 percent target.
And we're now joined by Catherine Rampell to give us an explanation of what this all means. Catherine, for me, there's good news and there's bad news
all at the same time. The good news is the U.S. economy is incredibly resilient. The bad news is for the lowest income earners in the United
States and for American borrowers, the lack of rate cuts is a problem and will continue to be so.
CATHERINE RAMPELL, OPINION COLUMNIST, THE WASHINGTON POST: Yes, there are certainly winners and losers in this economy. If you look at the
traditional economic metrics on paper, they look quite strong, right?
Not too long ago, there were fears of recession, reasonably so, because we've had a lot of rate increases. And yet, month after month, we continue
to see very strong job growth, strong GDP growth as you pointed out today - - or on Wednesday, we had some data suggesting that inflation may have cooled. So, there are a number of metrics in which the economy looks quite
good.
But that has a flip side. If the economy is relatively strong, is still relatively hot, despite that most recent inflation print, that suggests
that the Fed may want to hold off on cutting interest rates. The economy doesn't need more stimulus, essentially. Maybe financial conditions are
already relatively lax. And so, it's not worth it. It's not wise, I guess I should say, for the Central Bank to have a little bit more stimulus there
by cutting rates.
And that means if you are a borrower, or if you are someone who wants to borrow money to buy a house, to buy a car, et cetera, or you carry a
balance on your credit card payment for a month to month, for example, that's unwelcome news, right? You are hoping that interest rates go down
and yet, the economy keeps defying those expectations and telling the Fed to hold off a little bit longer.
CHATTERLEY: Yes. High borrowing costs hurts, but high prices and inflation hurts too. And that's the balancing act that they're trying to find. One of
the questions that Jerome Powell was asked numerous times today was, what does it take for them to be in a position then where they're comfortable to
begin cutting rates? What do they want to see in the data?
Even between now, let's say in the end of the year, what's your sense on that as you look across the economy and assess all of these things, the job
market, housing, wages, for example, and of course, the pricing pressures that we see? What does it take, Catherine? I know it's a broad question.
RAMPELL: Well, earlier this year, we had a number of inflation prints that came in hotter than expected. That is inflation was higher even than market
analysts had been forecasting, and already their forecasts, of course, were above the Fed's long-term inflation target.
[18:20:00]
I think the Fed wants to see a few more months of those milder numbers, those cooler numbers, a long lines of -- along the lines of the one we just
saw from Consumer Price Index. They're hoping to see a few more prints that suggest disinflation, lower inflation is ongoing, that we are making
progress.
But I think it will also be interesting to see what happens with wage growth, for example. There has been some worry at the Fed and elsewhere
about the idea that you could eventually get sort of a wage price cycle, which we don't want. We don't seem to be in that situation right now. And
then, of course, they'll be looking at other metrics like what's happening to consumer spending, how strong is demand, which in turn can feed into
higher price growth, what's happening to job growth, et cetera.
The main focus will be on inflation, but all of those ancillary data points will inform their thinking as well.
CHATTERLEY: You could have said that in two words, data dependency. And that's where we are. We continue to --
RAMPELL: Powell's favorite term. Yes. Exactly.
CHATTERLEY: Yes. Catherine Rampell, great to have you on. Thank you so much for that.
RAMPELL: Thank you.
CHATTERLEY: All right. Straight ahead, you're up-to-the-minute weather forecast, as always.
Plus, payday D-Day for Elon Musk. Will investors pull the plug on his $51 billion pay package or will it be a compensation celebration? We'll
discuss.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move." A better U.S. inflation situation and Fed rate cut modification topping today's "Money Move." U.S.
stocks finishing with the S&P and the NASDAQ once again hitting fresh records. Stocks getting a boost from encouraging numbers on U.S. inflation,
as we were just discussing, and the Federal Reserve's acknowledgment that price pressures are easing, but not fast enough for rate cuts as yet. The
new Fed projections show that rates will stay higher for longer, with only one cut currently expected this year.
Oracle shares were historical today. They rallied more than 13 percent to all-time highs on news that the software giant has struck A.I. related
deals with Google and OpenAI. And speaking of them, Apple shares hit records for a second straight session, bullishness continuing after the
announcement of its new A.I. strategy on Monday.
[18:25:00]
Apple is now virtually tied with Microsoft as the most valuable company on Wall Street. Both firms ending Wednesday's U.S. session with market caps of
nearly $3.3. trillion.
And SpaceX and its CEO Elon Musk were sued on Wednesday by former employees of the company who said they were fired for raising concerns about gender
discrimination and sexual harassment inside the firm. The lawsuit was brought by eight employees who alleged that Musk wants to be the "leader to
the brave new world of space travel but runs his company in the dark ages."
SpaceX did not immediately respond to a request for comment. The challenges for Musk do not end there either. Tesla is set to announce the results of a
shareholder vote on Thursday on whether Musk gets to keep his contentious pay packet worth about $50 billion. The big question, what will Musk do if
the package is voted down? Let's ask Anna Stewart, who's got more.
(BEGIN VIDEOTAPE)
ANNA STEWART, CNN CORRESPONDENT (voice-over): It sounds like the trailer of a blockbuster movie, featuring fast cars and starring robots. Well, it's
not. It's a teaser for a corporate AGM. But given it involves Elon Musk, it's far from boring.
ELON MUSK, CEO, TESLA: At Tesla, we, we, we build our cars with love. Like, we really care.
STEWART (voice-over): This was Musk at the 2018 AGM after the board agreed an unusual compensation package that gave Musk no salary or cash bonuses or
equity that vests by the passage of time. Instead, Elon would get a 100 percent at-risk performance award. With a huge price tag now worth around
$50 billion in Tesla shares, if Musk hit a series of performance milestones, which he did.
But a few months ago, the payday was cancelled by a judge in Delaware.
DAN IVES, MANAGING DIRECTOR, WEDBUSH SECURITIES: This is a game of high stakes poker. It all started with the Delaware court ruling that
essentially voided must $56 billion pay package from 2018, but must hit all the issues, all the milestones that he needed to in taking Tesla above a
trillion dollars.
UNIDENTIFIED FEMALE: On June 13th, we will hold our annual shareholders meeting.
STEWART (voice-over): The Tesla board is now asking shareholders to reinstate Musk's pay package, and to move Tesla's incorporated home away
from Delaware to Texas.
IVES: Musk is Tesla, Tesla is Musk. Parts and loans. And ultimately, shareholders need Musk, and if Musk starts to spend less time at Tesla,
that's a bad thing for Tesla. And I think that's the issue right now at stake.
STEWART (voice-over): Musk has other companies he can focus on, like SpaceX, Neuralink, The Boring Company, and X, formerly known as Twitter.
And Tesla shareholders may want his attention if Tesla is to evolve from electric vehicles to humanoids, robo taxis, and artificial intelligence.
So, coming soon to an AGM Thursday.
UNIDENTIFIED FEMALE: Your vote decides the future of Tesla.
STEWART (voice-over): Anna Stewart, CNN, London.
(END VIDEOTAPE)
CHATTERLEY: Now, as we've already mentioned, global leaders are flocking to Italy for this week's G7 Summit. They may want to brace themselves for
some toasty temperatures. Southern Europe is facing an unseasonable heat wave, as Elisa Raffa reports.
ELISA RAFFA, CNN METEOROLOGIST: Julia, some of that extreme heat will continue in Eastern Europe as we go through the day on Thursday. It could
even bubble up some scattered showers and storms. We'll find a little bit of a pattern change as we get towards the weekend. A front tries to come in
from the Atlantic and that will start to slide that heat back down to the south.
So, you can see it doing that as we head towards the weekend, that heat starts to slide back to the south, getting those temperatures a little bit
closer to average over parts of Eastern Europe.
Athens has been sweltering in extreme temperatures. You'll do that again on Thursday, a temperature of 41 degrees, much, much above the average of 31
degrees, starting to slide a little bit closer to that average by Saturday with that high of 32 degrees. Same thing in Istanbul, temperature is much
above the average Thursday and Friday, getting closer to some June normals by Saturday.
The U.S. has also been sweltering in extreme heat. Las Vegas and Phoenix are still under excessive heat warnings after multiple days with
temperatures over 100 degrees. So, far, we're at 16 days in Phoenix with temperatures over 38 degrees. Both locations actually hit some of their
earliest 110-degree temperatures on record. So, really just incredible.
[18:30:00]
And some of this heat continues to build. It is early for this type of heat. Even this early in the season. So, we'll continue with some of the
extreme heat as we go into Wednesday and Thursday. Temperatures in the lower 40s in Las Vegas. Normal is 37 degrees. Phoenix as well, temperatures
in the low and middle 40s is above average for this time of year.
That heat starts to slide east as we go into Monday. Look at the extreme heat risk that gets painted in parts of the Midwest. We're looking at
temperatures climbing up towards 100 degrees in parts of the Midwest over here. Again, very hot for this early in the season. Julia.
CHATTERLEY: Our thanks to Elisa Raffa there. Now, coming up, Russian naval ships arriving in Cuba. We'll tell you why the Cubans are telling the
region not to worry. That's next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move" with a look at more of the international headlines this hour. U.S. House Republicans have voted to
hold the attorney general in contempt of Congress. At issue is Merrick Garland's refusal to turn over audio recordings of an interview with
President Joe Biden. The interview was part of an investigation into the president's handling of classified documents.
The president of the Democratic Republic of Congo calling for an investigation after a shipwreck killed more than 80 people. It happened on
a river near the country's western border. Deadly boat accidents are common in Congo. The nation has few paved roads making river traffic popular, and
ships are often loaded more than they can carry safely.
A group of Russian navy ships have arrived in Cuba, a sign the two Cold War allies are strengthening those ties. Russian forces fired a 21-gun salute
as they pulled into port.
It's the largest show of collective force for the two nations in years and it comes, of course, as G7 nations meet in Italy in order to agree new
measures to support Ukraine.
[18:35:00]
The Russian convoy also includes a nuclear-powered submarine, a U.S. official confirming Cuba's statement that it's not carrying nuclear
weapons. Cuba, of course, is less than 150 kilometers from Florida.
Patrick Oppmann joins us now from Cuba's Capital, Havana. Patrick, great to have you with us. Is that what we can see behind you, the two Russian
vessels? I think a ship there.
PATRICK OPPMANN, CNN CORRESPONDENT: Yes. And let's go to that.
CHATTERLEY: And I think I can see a sub. Yes.
OPPMANN: They're a lot closer than 150 kilometers. Let's -- let me get out of the way and show you what we are talking about here. You have, in front
of me, a Russian rescue tug and icebreaker, which does not have much use in the Caribbean. But behind it, that is the Kazan, that is a nuclear-powered
submarine, a modern Russian submarine, certainly a very powerful tool in Vladimir Putin's arsenal.
And then the other side of that, on the other side of the pier, is the Gorshkov, which is one of the most modern frigates that the Russian navy
can boast of, and it can fire hypersonic missiles. And if you don't know how fast it is, you're not alone. I had to look it up. And they are
incredibly fast, 7,000 miles an hour. And so, this is one of the most feared ships in the Russian navy.
I don't know if it's entirely comforting that they have said they left the nuclear warheads at home. Of course, no way to confirm that. We'll have to
just take them at their word. But throughout the day, we've been seeing comings and goings. Welcome ceremonies. The Russian ambassador and a
delegation from the Russian embassy came and welcomed their sailors. And we've heard the Russian anthem being sung. And then, starting tomorrow,
Cubans will actually have the opportunity to tour some of these ships, something that is not a common occurrence here.
And, you know, yes, there were lots of visits of this kind during the Cold War. But I was talking with many Cubans today, and they say they never
remember, in the height of the Cold War -- despite the constant presence of Russian military in those years, they never remember, Julia, a Russian sub
coming in out of the water so visible for everyone to see. And now, it is here docked behind me in one of the most central parts of Havana.
There are many, many military ports where they could hide these ships away if they wanted to keep them out of view. They're showing them off. And of
course, the question now is why.
CHATTERLEY: Yes. That comparison, absolutely stark, I think, Patrick. And on to the why, we will reconvene on that because I've run out of time. But
great to chat to you and we will no doubt talk about this again tomorrow. Patrick Oppmann in Havana for now. Thank you.
All right. Coming up after the break, the Swedish fintech planner banking on artificial intelligence and an appetite for buy now pay later deals in
the United States. Pretty interesting conversation with the CEO, next.
(COMMERCIAL BREAK)
[18:40:00]
CHATTERLEY: Welcome back to "First Move." Swedish fintech giant Klarna continues to see fast paced growth in the United States, offering its buy
now pay later credit facility to consumers who the firm argues are tired of traditional credit cards and the high interest costs.
They were also, interestingly, the first European firm to launch a ChatGPT plugin to help serve customers online, and say 90 percent of their staff
are now using A.I. in some form to help them do their jobs with a profound impact on the future of hiring at the firm. I started by asking Klarna's
CEO about the U.S. expansion.
(BEGIN VIDEOTAPE)
SEBASTIAN SIEMIATKOWSKI, CEO, KLARNA: If you look at the U.S. consumer right now, I was a little bit more concerned around Christmas. I felt that
there was a weakening in the consumption spend in the markets, and I felt that some of the Christmas sales were maybe discount driven by the
retailers. But since then, we have actually seen a positive pickup in our numbers and see pretty, you know, strong growth.
I think also, to some degree, obviously, interest rates keeping at a higher rate also means there are in interest free products like buying out pay
later that are entirely out of -- you know, no interest compared to credit cards are even more attractive. So, some of that may still be the shift
away from credit cards to buy and pay later. That is also helping accelerate our business.
CHATTERLEY: Yes, people are spreading the cost. So, actually, it might not necessarily be a sign of a stronger consumer or spending, it's simply how
they're choosing to pay for these things.
Just quickly, put those credit losses into perspective, though, is a proportion of the broader loan or borrowing effectively that you have. What
percent are they?
SIEMIATKOWSKI: So, I mean, our -- on a global basis, our losses are below 1 percent on our total volume, right? So, in general, you had about 20, 30
percent below credit cards default rates. And it's because they're underwriting. The way that buy now pay later model works is very different,
right? Our outstanding average balance is $100, $150 versus a credit card of 5,500.
We don't offer revolving. We don't try to have consumers build up big piles of debt and then charge 20, 30 percent on it. We ask people to pay down in
installments, and usually people pay down in about two months, all of the outstanding balances. So, as a consequence of that, you just have a
healthier and more healthier portfolio as well as you have an agility to move faster when macro economical shifts change, you can very quickly
change your underwriting that's happening real-time and adjust to new macro economical conditions. So, it is a more sustainable and more robust credit
model than the typical credit card.
CHATTERLEY: Yes, it's an important point. So, with that in mind, is a rate cut, or more than one rate cut from the Federal Reserve, good or bad for
your business? Because do people then shift back perhaps to credit cards if interest rates come down or once they see your product and like it, they
continue to use it? It's sort of a gauge of what an economic cycle does for your business, I guess, which is, you know, it's been tough to see over the
past few years.
SIEMIATKOWSKI: Indeed. I mean, now, we've been doing this business for 20 years and I've seen it in Europe over a few financial crises and so forth.
So, actually, the funny thing, it's been growing both when people said, you know, high interest rates are going to be bad for you, low interest rates
are going to be bad for you. And since then, it's still been growing.
Because I think it just speaks to there is an audience. There's a good McKinsey study based in the U.S. that show that about 20 percent of the
credit card users in the U.S. are what we call self-aware avoiders. People who are very unhappy and disappointed at some of the practices that credit
cards have applied to encourage people to put themselves into much debt, and they're looking for an alternative solution. And this kind of solution
is different, and I think it's that audience. So, it's more a shift of type of product than necessarily a consequence of interest rates per se.
CHATTERLEY: It's also ability to gauge credit risk, I think, which sort of brings the conversation round to A.I. I know you've been quoted as saying
over 90 percent of your staff now are using A.I. in some capacity, particularly in the sales and marketing department, where I know you've
been able to slash cost. Just give us a sense of where this is most useful and is in assessing credit quality of customers also, sort of, part of how
you're utilizing A.I. too?
SIEMIATKOWSKI: So, we're not using Gen A.I. right now in underwriting. We've used machine learning for a while in underwriting.
CHATTERLEY: Yes.
[18:45:00]
SIEMIATKOWSKI: But other areas where A.I. is -- I mean, it has a profound and very significant impact on our business. So, we announced in January
and February, we launched our customer service chat bot. It basically took over 70 percent of all customer service errands with higher satisfaction
score than human agents, which actually remove the equivalent of 700 full- time employees with the launch of that.
Now, in our case, we're outsourcing and the agencies that we use have hundreds of thousands of employees. So, these jobs -- these people simply
got jobs with other customers of theirs. But obviously, long-term this will have implications for those kinds of jobs.
We've also seen tremendous impact on our marketing expenditure, especially in like, you know, type of producing photos and marketing material and
stuff like that. Not the really high-quality creative stuff. We're more than kind of day-to-day usage.
And in general, actually, Klarna has not been hiring since September, October last year. So, we are, through natural attrition, shrinking by
about 20 percent on an annual basis. We're going to go from about 4,000 to 3,200 employees this year, and we're simply not hiring because we see that
due to these tools, we can do more with less and, you know, we're really leaning into this.
What I promised my employees, though, is that we're going to pay more per employee as a consequence of this. So, there's something in it for them.
CHATTERLEY: That was going to be my next question, my friend. Yes.
SIEMIATKOWSKI: Yes, exactly. The total cost of staff is going to go down, but per employee it's going to go up. So, there's -- you know, there's
something in for them as well. But like, I think that the -- it is tremendous and I think we are very, very optimistic in the coming 12
months, there will be continuous opportunities to apply the technology in a way that allows us to become even more fast moving and agile.
CHATTERLEY: I've got two questions in one now because I've been told I only have one more question. Very quickly, do you think you'll ever hire
more people as an entire business than you have today based on what you're saying about A.I. or do you think actually that's -- that sort of
replacement effect is something that will be sustained? And then the second cheeky question is IPO? Sebastian, what do you think of an IPO timing?
SIEMIATKOWSKI: I just was watching an internal project today where they had basically created an avatar of me so that we could contact all of our
large merchants with a personal message for myself. And so, I was like, OK, good. So, not only customer service, also CEOs that can start thinking
about what's going to happen eventually to their jobs.
I think that, unfortunately, you know, this technology has a profound potential impact. Now, I think we as society needs to consider what that
means, because as much as people have always said, you know, there will be new jobs, and potentially there will be if, you are a 55-year-old
translator, you may not retrain to become a YouTube influencer overnight, right?
So, I think, still, society should consider how do we support people that may be affected by these changes. But with that said, I don't believe that
we will ever become more people again.
(END VIDEOTAPE)
CHATTERLEY: The successful avoidance of the IPO question, but what a fascinating conversation. We'll be back after this.
(COMMERCIAL BREAK)
[18:50:00]
CHATTERLEY: A less than sweet story. Villagers in Nepal who earn money from the daring tradition of honey-hunting are worried about the number of
bees and hives this season. Elisa Raffa reports on how our changing climate is affecting this long-practiced tradition.
(BEGIN VIDEOTAPE)
ELISA RAFFA, CNN METEOROLOGIST (voice-over): In a remote, hillside village in Nepal, villagers prepare for honey-hunting season, a tradition passed
down for generations.
But over the years, villagers say the number of bees and hives has been declining.
Chandra Singh Gurung is a former honey hunter in the village building ropes and ladders in preparation for the season.
CHANDRA SINGH GURUNG, FORMER HONEY HUNTER (through translator): Honey- hunting begins mid-May every year. And we were happy that we would get some income. But we are all worried now because there are not many beehives this
time.
RAFFA (voice-over): The honey produced is sometimes called mad honey, a bittersweet, dark red honey made when these giant bees feed on rhododendron
nectar. In small doses, it is known for giving people a sense of calmness, euphoria and in some cases, hallucinations.
To get the precious liquid, the hunters use smoke to make the bees flee the hives. They climb cliffs with ladders and use the poles to knock down the
hives. Down below, they filter out the honey. It's a dangerous job but a way to make some money.
AITA PRASAD GURUNG, HONEY HUNTER (through translator): I have to climb down the rope ladder and it is fraught with danger of falling. One must
extract honey and remain safe at the same time. We get some income after selling it.
RAFFA (voice-over): One bee expert says climate change is affecting the production of this honey in multiple ways.
SURENDRA RAJ JOSHI, BEE EXPERT: Too much rain, too little rain, erratic and intense rain, long dry spells. Heat and cold, you know, all these
extreme weather condition, they put the stress on maintaining the hive strength and the honey stock of the colonies.
RAFFA (voice-over): Nepal recorded below-normal precipitation in January and February says the government of Nepal. However, it was above average in
March. The erratic weather changes crop growth that also affects the production of honey says the bee expert. And he says floods and landslides
disturbed the bee habitats causing habitat loss.
Now, villagers say they are worried and don't know what to do as honey hunting is a long-practiced tradition in the village.
Meteorologist Elisa Raffa, CNN.
(END VIDEOTAPE)
CHATTERLEY: Now to some sad news in sport, basketball legend Jerry West has died. He was 86. Now, if you don't know his name, you almost certainly
know his silhouette. An image of West has been used as the NBA logo since the 1970s. Andy Scholes has more on his life.
(BEGIN VIDEOTAPE)
ANDY SCHOLES, CNN SPORTS ANCHOR (voice-over): It's hard to write the history of the NBA without Jerry West. That's why he's the logo. The West
Virginia native was drafted by the Lakers. And for the next four decades, he became one of the most influential figures in franchise history. An All-
Star in all 14 seasons as a player, West was one of the best pure shooters to ever play the game.
Mr. Clutch seemed to always come through when his team needed it, including this sensational 60-foot shot that sent a 1970 NBA Finals game into
overtime.
UNIDENTIFIED MALE: West close it up. He makes it.
JERRY WEST, BASKETBALL LEGEND: Basketball brought me a sense of well- being. I had enough ability to help decide games and we had a fairy tale year one year, in 1972, when we won.
SCHOLES (voice-over): It was the Hall of Famers only title in his nine finals appearances as a player, but he more than made up for it after his
playing days. After brief stints as a coach and a scout, West became the Lakers general manager in 1982. His deals kept the showtime Lakers run of
five titles in the '80s going Then his acquisitions of Shaquille O'Neal and Kobe Bryant sparked a second Lakers dynasty in the early 2000s.
WEST: It's about having the best players. I would arguably say that we had, here in Los Angeles, the greatest basketball players ever assembled,
and I'm very proud of the fact that I was part of that.
SCHOLES (voice-over): West left the Lakers in 2002, but he didn't stop winning. He joined the Golden State Warriors as an executive in 2011,
helping spark their run to three titles in four years. West then returned to L.A. as a consultant, with the Clippers in 2017, helping to recruit
Kawhi Leonard to the team. West's impact was felt far beyond the court.
He contributed millions of dollars to charities in L.A. and his native West Virginia, and was a big contributor to military veterans. President Donald
Trump highlighted those accomplishments as he presented West with the nation's highest civilian honor, the Presidential Medal of Freedom in 2019.
WEST: I was a dreamer. My family didn't have much, but we have a clear view of the Appalachian Mountains and I like to sit alone on our front
porch and wonder if I ever make it to the top of that mountain, what will I see on the other side? Well, I did make it to the other side and my dreams
have come true.
(END VIDEOTAPE)
[18:55:00]
CHATTERLEY: A true sporting hero who helped so many others reach that mountain top too. May he rest in peace.
And finally, on "First Move," BTS is back, temporarily. Jin, the K-pop supergroup's oldest member, was discharged from South Korea's army after
completing his 18-month mandatory service. He was greeted by some of his bandmates who were also enlisted. They requested leave, we believe, to
celebrate according to local media and in true pop king, K-pop king style. Jin immediately went live on social media app, Weverse, to touch base with
fans and racked up more than 3 million views. A performance and fan event are planned for Thursday, too.
At the age of 31, Jin is the first member of BTS to finish military service, with the band expected to reunite next year once all members are
discharged. He looks very happy there. Congratulations, sir.
And that just about wraps up the show. Thank you for joining us. We'll see you tomorrow.
(COMMERCIAL BREAK)
[19:00:00]
END
