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First Move with Julia Chatterley
FinTech Giants Global Payments And Total System Services Tying Up In A $21 Billion Deal; Alibaba Reportedly Looking At A Second Mega IPO, But This Time, A Little Closer To Home; Facebook CEO Mark Zuckerberg, Set To Defy A Parliamentary Call To Testify On Privacy In Canada. Aired: 9-10a ET
Aired May 28, 2019 - 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 ANCHOR, FIRST MOVE: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE. And here's
your needs to know.
Payment made. FinTech giants Global Payments and Total System Services tying up in a $21 billion deal. When one's just not quite enough, Alibaba
reportedly looking at a second mega IPO, but this time, a little closer to home. And a faceoff with Canada, Facebook CEO Mark Zuckerberg, set to defy
a Parliamentary call to testify on privacy. It's Tuesday. Let's make a move.
Welcome once again to FIRST MOVE. Back in action here at the New York Stock Exchange following the long weekend holiday. We are of course in the
final week of May. Now if you sold in May, and went away then you certainly called the price action. The big question for investors I think
now is do we continue to see the selling pressure hitting in June?
Let me give you a look at the futures right now. The message is no. Actually, we're pretty fat. But we did lose ground last week. So some
consolidation perhaps makes sense, particularly, of course, seeing pressure in the tech sector and those chip names. The Dow currently facing its
worst losing streak since 2011, down for five weeks in a row now.
It's difficult to make a case here with stocks being oversold with so much uncertainty on trade remaining. We'll debate that later in the show.
Maybe it's worth having a look at the message that the bond markets are selling us right now.
We closed out the week last week with 10-year bond yields in the United States at their lowest level since 2017. That was after some pretty weak
U.S. manufacturing data, if you remember the survey data coming in weaker.
But now, take a look at what's going on as well, because we've got U.S. yields down in the session again today. It's going to be important, I
think to see if that flight to safety, the flight to quality that we've seen in bond yields continues this week. Key economic data to watch, the
second reading on GDP for the first quarter in the United States and inflation on Friday. A couple of key indicators.
For now, let me give you a look of what we're seeing in Europe. If you remember, we were talking about Italy yesterday in light of the Italian
results in the E.U. referendum, the E.U. elections -- my apologies. What we're seeing right now is the Italian stocks down more than 1 percent.
Bond yields also higher.
The Deputy Prime Minister Matteo Salvini of the League Party had success in that election. He is now raising fears of another spending showdown in the
E.U. He confirmed that Italy faces a 3 billion euro fine for overspending. Salvini has said that he is not concerned about breaking those deficit
spending targets.
Former Italian Prime Minister Mario Monti said to me yesterday that investors need to watch the action rather than the rhetoric. Pragmatism
will perhaps play out here in a deal making with the E.U. We shall see. For now, let's get to the drivers because we've got some other deal making
going on, and this time in the FinTech space.
FinTech giant, Global Payments making a pretty large payment of its own acquiring Total System Services for more than $20 billion. Matt Egan joins
us now and has been pouring over the details.
In an increasingly cashless society, we continue to see these big FinTech deals. Talk us through this one. What does this create? The type of
these two?
MATT EGAN, CNN BUSINESS LEAD WRITER: There's no doubt there's been a flurry of deal making in the payment space as a result of all of this
innovation and disruption that the industry is facing.
So the latest deal was announced this morning, Global Payments is acquiring rival Total System Services for $21.5 billion. So it's an all-stock deal
and it values Total System at about 20 percent premium to where the company was trading last week before. Some of the speculation about a possible
deal started to leak out.
The deal will create a really big company in this payment space. It will service up to 3.5 million merchants in 100 countries, 1,300 financial
institutions, and it's going to handle 50 billion transactions a year.
Now, the two companies are billing this as a merger of equals, and it's pretty close to that. But technically, what's going to happen is 52
percent of the new company will be led by Global Payments, the new company will keep the global payments name and it will be led by the Global
Payments CEO, Jeff Sloan.
So it really is a takeover. Bigger picture. You know, I think that it's clear that there's a bit of an arms race going on in this space right now.
As companies adapt to all of this innovation to competition from the likes of Square and PayPal and the fact that you know many people, including many
millennials, really just don't have much cash on hand these days.
[09:05:13] EGAN: So in January, there was a big deal where FinTech company, Fiserv went out and acquired First Data for $22 billion, then we
have Fidelity National Information Services, it went out and acquired World Pay and a takeover valued at $43 billion, including debt.
So clearly, all of this consolidation just shows that there's a lot of disruption and no one wants to be left behind.
CHATTERLEY: Yes, and size matters to your point, if you're tackling some of those established names in this sector, the likes of Square, the likes
of PayPal, then this consolidation makes sense.
You know, one of the other things I was looking at here, Matt, is the sheer quantity and the increase of venture capital money that's being pumped into
this space, too. It's so hot right now, do we see more in this sector?
EGAN: That's right. We really have seen just an enormous amount of money from Silicon Valley come into this space, because I think that just
companies realized there's a lot of potential here.
You know, everyone does so much of their shopping these days online, when they go to stores. They're not using cash. They're using their cards.
And so what's happening is we're seeing some of these established players, they suddenly are dealing with all of this competition from the likes of
Square, where they're using technology backed by all this venture capital money, and they are providing real competition to some of the establishment
players here.
CHATTERLEY: Yes, fascinating. Matt Egan, thank you so much for that. And later on today, I'll be speaking to the Global Payments CEO, Jeff Sloan, so
you can catch that interview on "The Express" all the details, and more of what the company's plans are going to be.
All right, let's move on to our next driver. China's e-commerce giant, Alibaba planning a $20 billion Hong Kong listing. It gives domestic
mainland investors access the company as the trade tensions continue, and that could be the key here.
Clare Sebastian is on this story for us. More funding, a diversification of funding. But interesting timing for me here, Clare and the choice to go
to Hong Kong here, too.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia, I think it's a practical decision in part. Alibaba share price, which had been really on
quite a nice upward trajectory since its massive IPO in New York. It has been really buffeted by the trade war. It's down about 13 percent since
its record high last year, so it may want to provide a cushion to that.
It may also want to fundraise in a market where people are familiar with its products. And of course, Hong Kong has also relaxed the rule that
stopped Alibaba listing there in the first place that allows founders and other important individuals to hold preferential voting rights when it
comes to shares.
But I think you're right. I think there may be politics at play here as well, especially given the current tensions between the U.S. and China.
Don't forget Jack Ma, Alibaba's founder was recently outed last year as a member of the Chinese Communist Party. So this may be about the company
trying to show a bit of loyalty, a bit of patriotism there by listing not necessarily on the mainland, but in Hong Kong.
But $20 billion, Julia, I just want to give you a bit of context on that. This is going to be, if it does do this, a huge IPO compared to some of the
other IPOs we've seen in New York last year, it really does dwarf them even over $8.1 billion. So a massive undertaking here.
CHATTERLEY: Yes, it's a huge boon for Hong Kong as well, as you said to win such a large IPO and had the rules been different, perhaps, they would
have reconsidered the Hong Kong initially rather than coming to the United States here, too.
But to your point, Jack Ma was one of the first CEOs that came out and was very bearish about the trade war and said this could be a multi-decade
problem that we see here. Do we need to make a distinction between the likes of Shanghai, of Beijing because China is trying to develop its own
hub in Shanghai to encourage tech companies to IPO there, because there is a difference between Hong Kong and domestic China for these companies, too.
SEBASTIAN: Absolutely, I think for the moment, despite the fact that China is trying to launch its own, what's been called the Chinese NASDAQ, a new
tech board at the Shanghai Stock Exchange, it is not really ready yet to accommodate an IPO of this size.
You just saw its relative size compared to some of the biggest in the U.S. last year. Hong Kong has been attracting some big tech IPOs, the likes of
Xiaomi, which raised about $4 billion last year. So it's much more of an option when it comes to liquidity for this kind of IPO.
But you're right, Jack Ma has been extremely vocal on the score of the trade war. He called it something that could last 20 years. Last year, he
said it, it was stupid. He has admitted it. It's been hurting Alibaba business that relies on cross border flows of products.
So I think, you know, the question is, is he now by doing this, is the company you know -- is this a tacit admission that there might be a kind of
a decoupling of the U.S. and Chinese tech sectors going forward? That this is going to be a protracted battle?
CHATTERLEY: Yes, it's one to watch. I mean, China's largest semiconductor firm said it was withdrawing its U.S. listing just this week, so it's
definitely a story to follow. Clare Sebastian, thank you so much for that.
[09:10:07] CHATTERLEY: All right, moving on to our next driver now. General Motors teaming up with Bechtel to build thousands of electrical
vehicle charging stations here in the United States.
Peter Valdes-Dapena builders to Bina have this exclusive report. Peter, you and I have talked often about the challenge of electric vehicles and
the fear of drivers that you run out of battery somewhere in the country and have no charging facilities. GM looking to tackle it here.
PETER VALDES-DAPENA, CNN BUSINESS SENIOR AUTO WRITER: Yes, this is a big concern for them. General Motors is going to come out with 20 or more zero
emission vehicles over the next few years by 2023. So they have a big interest in making sure that people feel comfortable buying these kinds of
cars.
Now this network is not going to be restricted to GM vehicles, people will be able to charge most, maybe not Tesla, but most other electric vehicles
at these stations. But it's certainly a smart move for them.
One thing though, is there we're looking for outside investors. GM and Bechtel are looking for outside investors to put money into building out
this network, but they're both pretty confident that they can find that.
CHATTERLEY: That's quite fascinating. So the two companies that coming together. They're going to do this, but they're not going to pay to do it.
The argument to your point, I guess, Peter is that everyone needs this technology. They don't need it just located on highways, it needs to be
far broader than that. So everyone that's producing electrical vehicles here has an incentive to invest.
DAPENA: Certainly, other companies, certainly other car companies might have an incentive to invest, power companies might have an incentive to
invest. I'm just figuring because they're selling their product coming out the other end.
There are companies that make money running charger networks in America, and some of those companies might want to invest. And again, I'm just
spinning off ideas here, but maybe even convenience store companies because people are going to need to buy Cokes, Pepsis and hotdogs and stuff while
they're waiting to get their car charged. There could be some opportunities there.
But anyway, these companies are fairly competent, they'll be able to line up the investment to do this. And they're going to start by the end of
this year putting these charges on the ground.
CHATTERLEY: Wow, I hope GM is listening. Fantastic sales job there. I think it's some brilliant ideas. Peter Valdes-Dapena, thank you so much
for that.
And that full and exclusive report is on the CNN Business website. So go take a look. It's a fascinating story. Great job, Peter. Thank you.
All right, let's move on to annex driver. Can a state hold a company responsible for its opioid crisis? That's the question at the heart of a
historical trial kicking off right now in Oklahoma. We were talking to you about this set yesterday.
Johnson & Johnson accused of acting as a drug kingpin. Johnson & Johnson denying those charges, of course. Jean Casarez is joining us now from
Norman, Oklahoma. What we've seen, of course, in this trial already is Teva Pharmaceutical, Purdue Pharma also settling here, Johnson & Johnson
now very much in the firing line and in the hot seat here. Why are they still going to trial?
JEAN CASAREZ, CNN CORRESPONDENT: Well, you know, it's interesting. Johnson & Johnson did give CNN a statement saying that they are prepared,
they're ready for trial. Opening statements begin very shortly. But they also said that they are very open to a resolution before the trial or
during the trial, because there is the uncertainty of what the outcome may be. And then also the cost of litigation.
So I think anything is possible. But Johnson & Johnson is saying that these allegations are baseless, but the state of Oklahoma is saying that
they have been and are in the midst of an opioid crisis, and that Johnson & Johnson is responsible for that crisis because they procured the raw
ingredients, the narcotics that they then sold to the companies that manufacture the opioid medications.
That Johnson & Johnson and its subsidiaries also marketed an extended-use opioid tablet along with a fentanyl patch. And they say that their
branding and their publicity, their marketing was misleading, that it did not note the risks of opioids to medical professionals, to the public at
large, but they touted unsubstantiated benefits of the medication.
Johnson & Johnson says that this is FDA monitored and they have complied constantly with the FDA. And remember, in 2016, Johnson & Johnson got out
of the opioid business. They sold off some of their subsidiaries, and they say that they now actually help in trying to alleviate and conquer the
problem of opioid abuse.
CHATTERLEY: Yes, and 1,900 other lawsuits around the country. So important, it seems to it to continue to fight this. Jean, thank you so
much for that. Jean Casarez there in Norman, Oklahoma watching that story for us.
All right, let me bring you up to speed now with some of the other stories that we are following around the world. European leaders are in Brussels
for meetings in the wake of Parliamentary elections this weekend on the agenda of filling the top jobs at key institutions including the European
Central Bank.
They also need to decide who will run the bloc's executive for the next five years.
[09:15:10] CHATTERLEY: The current European Commission President, Jean- Claude Juncker's term expires this year.
Germany welcomes American companies with open arms. That was the message from German Chancellor Angela Merkel. In her first in depth exclusive
interview with an American network, Mrs. Merkel spoke to Christian Amanpour about a wide range of topics, including the U.S. President's threat to
impose tariffs on E.U. cars.
(BEGIN VIDEO CLIP)
CHRISTIANE AMANPOUR, CNN ANCHOR: What's your reaction to German cause being considered a national security threat to the United States?
ANGELA MERKEL, GERMAN CHANCELLOR (through translator): Well, I take note of this, then of course, we build our case. I think it's right and good
that we have a mandate from the European Union for trade talks with the American government.
Germany will hold these talks very seriously. And my argument, of course, is that German cars are not built only in Germany. That for example, with
the BMW, their biggest plant is in South Carolina. This means Germany has much more direct investments taken out by German companies in America than
the reverse, American companies investing here.
So I think we should look at these issues together. That namely American jobs at American places of training have to be secured as well. And then
goods can be transported from there to the rest of the world.
Further, I think we should underline that also from the German side, we are open to all American companies, maybe many SMEs don't know that you can
trade with us as well. So I invite all American businesses to take a closer look at German markets. We are open and welcoming everyone with
open arms.
(END VIDEO CLIP)
CHATTERLEY: And you can see the full interview with German Chancellor Angela Merkel coming up on "Amanpour" that is tonight at 6:00 p.m. in
London, 1:00 p.m. here in New York, only on CNN.
In Japan, two people including a 12-year-old girl had been killed in a stabbing. The country's Prime Minister has called it heartbreaking.
Sixteen all the children were injured when a man attacked a crowd near a park in the city of Kawasaki. Police say the attacker was detained, but
died from a self-inflicted wound.
Another climber has died on Mount Everest, bringing this year's death toll to 11. The latest to be confirmed is an American lawyer who was an
experienced climber. The alarming number of deaths has raised concerns that the mountain is overcrowded and that too many adventurers aren't
properly prepared for the hardship of climbing up and down the world's highest peak.
All right, we're going to take a quick break here on FIRST MOVE, but still to come, throwing the book at Mark Zuckerberg. Why Facebook's two biggest
names will be challenged with contempt over in Canada.
And taking robotics up a step, Ford unveils, Digit, the delivery robot that can physically climb stairs. We'll have all the details. Stay with us on
FIRST MOVE.
(COMMERCIAL BREAK)
[09:21:08] CHATTERLEY: Welcome back to FIRST MOVE from the floor of the New York Stock Exchange. A very cautious start this morning, remember,
following the long weekend, a lot of dates to come later on in the week. Inflation, of course and the second reading of U.S. GDP, so we'll watch and
wait for that.
Stocks are on track though for their first losing month for 2019. But losses have not been all that major in aggregate since the trade talks
broke down. Just to give you some perspective, the Dow off 3.5 percent, the S&P down four; the NASDAQ, the tech sector and those stocks are most
sensitive of course to China, down some 6.5 percent.
Also keeping an eye on the auto sector again. The shares of Renault and Fiat-Chrysler adding to Monday's gains over in the European session. The
companies are in merger talks and we're talking a $35 billion deal that will create the world's third largest car company.
All right, let's talk through what we're seeing right now and thinking, Phil Camporeale is an asset allocation strategist at JPMorgan Asset
Management, and he joins us now. Phil?
PHIL CAMPOREALE, ASSET ALLOCATION STRATEGIST, JPMORGAN ASSET MANAGEMENT: Good morning. Happy summer.
CHATTERLEY: Happy summer. Can investors be happy this summer, though in light of border trade uncertainty here? There's hopes for a trade deal,
and now kind of --
CAMPOREALE: Yes, it's been dashed a little bit. So they were really happy on May 3rd, because everything was priced to perfection. You had a really
nice double shift in the Fed earlier this year. You had a march towards trade. And you had a really a market that was short.
So people were kind of coming back into the market. It wasn't -- the pain trade was really higher for the markets. If you take trade out. That
doesn't mean everything goes back to flat. It just means you pull back by three to five percent. That's what we're seeing in May.
Here's a couple of big picture themes we're looking at. First off, we believe this is a really strong political issue for the Trump
administration. The second that it starts to slip into an economic issue where the consumer pulls back, where GDP rates get close to zero. I don't
think Trump going to have a strong of a hand as he does right now because he's got economics on his side.
CHATTERLEY: It's a great point to make. I mean, we've got consumer confidence right now 15-year highs according to the data, we also have a
really strong in terms of magnitude, Q1 GDP reading. We can caution whether that was a net export effect and an inventory bill which perhaps
could filter away, but you're kind of arguing that the data here emboldened the President to take the stance he did.
CAMPOREALE: That's right and that's exactly what happened the middle of last year when trade started to pick up. We had a four percent GDP rate in
the second quarter, three percent the third quarter and trade became an issue. The big difference now though, Julia? Feds.
CHATTERLEY: Yes.
CAMPOREALE: So in December -- in December, there was trade peace. Okay, and the equity market from December 1st to Christmas Eve, as we all know,
sold off by 15 percent because of the Fed. So that's the big difference this year.
CHATTERLEY: So you're arguing, actually, that for now, for investors, the Federal Reserve and their patience status is actually way more important
than trade battles.
CAMPOREALE: Than trade, that's right. Because I think the Fed drives the American psyche, the 10-year Treasury a lot more than trade does.
Trade is headline and it is really sensational to talk about, we believe it's more of a political and economic one, and the really high bar for the
Fed to do anything is in really encouraging financial condition environment, to take some risks, not only in equities, but also in high
yielding securities as investors kind of wait and see what happens next. You want to get paid to wait.
CHATTERLEY: So you said you know, 3.5 percent, 4 percent. For the NASDAQ, we're talking some 6 percent, 6.5 percent, so within that, some of those
individual names have been pretty heavily hammered like the chip stocks and those most sensitive to China.
You're saying the bad news is in the price and actually if we do manage to see some kind of peace agreed on the trade front then actually, that's a
reason for investors to get back in --
CAMPOREALE: Sure. I think if that were to happen, Julia, and we're not counting on it. We're not holding our breath for it but if that were to
happen, yes, the semiconductor and tech which has been ground zero in the past couple of weeks is going to see the sharpest snapback.
But that's not something that we're really counting on. What we're counting on here is accommodate the financial conditions, the ability to
take risk in U.S. large cap and then go get paid to wait in things like high yield credit.
CHATTERLEY: What is the bond market telling me right now?
CAMPOREALE: Our bond market, if you look at it -- if you're a pessimist or an optimist, right? If you're an optimist, that's telling you the
financial conditions are really easy.
[09:25:11] CHATTERLEY: Yes.
CAMPOREALE: Mortgage rates are incredibly accommodative. The housing market has done really well this year versus last year when people were
calling for 4 percent 10-year note, we're at 2.3 this morning.
The pessimist is going to say that it is really flat and the bond market is telling you something sinister, but it's not a recessionary predictor right
now, because the consumer is just so healthy.
CHATTERLEY: Okay, so you made a call on emerging markets and you were underweight and you went neutral. What are you thinking right now in
aggregate? Where should investors be putting money and how are you viewing emerging markets given all those factors and considerations?
CAMPOREALE: So we're not as overweight as we were earlier in the year, okay, when we had really accommodative financial conditions everywhere,
however, we're not panicking, okay. There's no panic setting in an emerging market. We are not taking our exposure to zero.
We have an index waiting in our portfolio and the secret there is China also has stimulus, right? So total social financing. There's no
requirement ratios. They have what it takes to keep their economy afloat. And we don't think a global recession is looming.
So in that environment, you keep an index waiting in EM. Don't panic in EM, but we're not as overweight as we were a little earlier --
CHATTERLEY: So you're a voice of calm.
CAMPOREALE: Trying to be, Julia.
CHATTERLEY: A deal of uncertainty here.
CAMPOREALE: Yes, trying to be.
CHATTERLEY: All right, very quickly here. Are investors nervous here or are they sort of listening and absorbing what you're saying?
CAMPOREALE: So investors are behaviorally nervous all the time. But the big difference between this year and last, they're not as long in the
equity market as they were. Remember, last year, everybody was coming in super nice, coordinated global growth. That wasn't the theme this year.
Coming in this year, everyone was all the way cash. So very, very different from positioning. So less nervous from that perspective.
CHATTERLEY: My first boss in financial markets used to say to me, whenever you get comfortable, panic. Something to remember, Phil. Great to have
you on, as always, Phil Camporeale there.
We're counting down to the market open this morning. Plenty more to come on FIRST MOVE. Stay with us. You're with CNN.
(COMMERCIAL BREAK)
[09:30:17] CHATTERLEY: I don't think I've ever heard a double ring of the opening bell here at the New York Stock Exchange. There's certainly some
enthusiasm here this morning. What we are seeing though is a pretty flat open this morning on this holiday shortened trading week. It is a Tuesday
of course. Seeing a bit of a bounce for tech stocks here, too.
Those, as we've been discussing on the show coming under most pressure in the last couple of weeks or so of trading. Key economic data to watch as
well, U.S. inflation and that second read of U.S. GDP, also coming this week, so plenty to watch.
Also, we're keeping an eye of course on net trade headlines and the U.S. dollar trading against the Chinese yuan of course. The Chinese state media
is quoting, the head of the People's Bank of China saying that he is confident that he can keep that exchange rates stable. But of course we're
watching that cross, that currency pair pushing ever closer to at $7.00, a level critical seen as a line in the sand here in terms of the talks, most
particularly the U.S. very sensitive to that level.
Also, China injecting fresh liquidity into the banking system. This after the government's first bank takeover in more than two decades on what
they've cited as credit risk concerns. That's going to be something to watch and we'll talk about that over the next several sessions, too, I'm
sure.
But for now, let me give you a look at some of the global movers that we are watching in the session today. As we've discussed already, Global
Payments and Total System Services in focus. Global Payments buying their rival, Total System Services for $21.5 billion. The third big takeover in
this industry, the FinTech industry this year.
The combined company worth roughly $40 billion. So they're describing this deal as a merger of equals. The deal expected to close by the end of 2019.
Also keeping an eye on Johnson & Johnson. The U.S. state of Oklahoma accusing the drug maker of fueling the opioid epidemic. They're set to
face trial in a multibillion dollar lawsuit. The state is alleging that Johnson and Johnson as well as other big pharmaceutical names downplayed
the addictive risks of opioid drugs. Johnson & Johnson deny any wrongdoing. As we've discussed already on the show, we will continue to
watch that trial as it develops.
Fiat-Chrysler also being a focus today. Fiat-Chrysler to pursue the $35 billion merger with Renault, the combined company would be capable of
producing nearly nine million vehicles a year. They are also aiming for more than $5 billion in annual savings. It would be the world's third
largest in the global auto industry behind Japan's Toyota and Germany's Volkswagen, right now up some 8 percent.
All right, let's talk about Facebook now because the Facebook's Mark Zuckerberg and Sheryl Sandberg, of course, the COO risk being held in
contempt of the Canadian Parliament, the site confirming that they plan to defy a subpoena to testify at a privacy hearing this week.
Paula Newton joins us now on this story. Paula, based in Canada, of course and the Canadian Parliament, but there's other nations represented there,
some 450 million people in terms of population, actually bigger than the United States and yet they're not turning up.
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: They are not turning up, and remember this all started in London when this committee had its first
hearings, they heard, Julia, from another Facebook executive and look, the Chair of this Committee telling me, "Look, it wasn't good enough." We all
know how -- these are his words -- "Facebook is micromanaged from the top." And that's why they want to hear from Mr. Zuckerberg and Miss Sandberg
themselves. They are, CNN has learned going to be a no-show. They are sending Canadian representative. But that's just not good enough for this
committee.
At issue here, as the Chair told me, Julia, it's not about dragging off these executives to Canada and putting them in handcuffs. But it is them
blowing off yet one more government committee and they're saying, "Look, how do you intend to make changes at the top with this platform to make
sure that election interference doesn't happen again, and crucially, that data collection, what are the Privacy Practices in place that are going to
protect consumers?"
And Julia, I have to tell you, as I know, you keep an eye on morning out for investors to see what's going on here. Remember, this is material to
investors. It has to do with the kind of legislation that we may see in several countries, and fines, of course, and what impact that will have on
Facebook's business going forward.
CHATTERLEY: You raise a great point, Paula and it's about the U.K. It's about Canada. It's about other nations. And the idea that the more we see
this perhaps and the more actually that Facebook executives don't turn up, the more likelihood the risk of seeing greater coordination and regulation
because you get the sense that one country doing this alone is not good enough. But if everybody came together and said how do we tackle this as
an issue going forward? Then perhaps Facebook has to be more targeted about their response here?
[09:35:17] NEWTON: Absolutely. And I think they feel Facebook that they're being quite deft in the sense that they're handling it from within
and understanding what their response should be.
I have to say they have been proactive here in Canada, Julia. We have an election, the Federal election in the fall. They've already come up with a
template, which could be used in other countries, perhaps to go forward and say, "Look, we will proactively look at coordination between these actors
on our social media platform. We will look for things that are inauthentic, we will report it."
But you know, we're back at square one, Julia. The Committee chair saying to me that from Mr. Zuckerberg himself, we have heard so many promises and
we have not seen yet the action that we need. And that's at the very heart of this. And it's something that investors should look for as well,
because that will mean it will shape the character of the legislation to come in the month that we're going to continue to cover these hearings and
cover the different laws around the globe.
CHATTERLEY: If regulators don't act, nothing will change because users aren't changing their behavior and advertisers aren't changing their
behavior. But I won't go down that rabbit hole, Paula, because I talked about this too much. Paula Newton, thank you so much for that.
All right, let's move on to actually my favorite story of the day. MacKenzie Bezos donating half her nearly $37 billion fortune to charity
after signing the Giving Pledge. It comes just month after finalizing a divorce, of course, from Jeff Bezos, the Amazon boss.
Notably Jeff, not signing the pledge so far. Anna Stewart joins me now. Anna, I love this story. But I also love the justification that she gave
for why she is doing this. Tell us more.
ANNA STEWART, CNN REPORTER: It's a statement, a lesson that's really going to resonate with so many people. As you said, she is freshly minted as a
billionaire and I'll just read you a little extract of what she said. She said, "We each come by the gifts we have to offer by an infinite series of
influences and lucky breaks we can never fully understand. In addition to whatever assets life has nurtured in me, I have a disproportionate amount
of money to share."
And she certainly does, as you said, we value her around $37 billion. She's now newly become the 22nd richest person on the Bloomberg
Billionaires Index. And of course, very recently, as well now as opposed - - as this pledge how it works.
There are about over 200 individuals and families who have signed up to this, they pledged to give away half or over half of their fortunes,
sometime either during their life or after. It could be in their will. They can give to any causes they like. There's no set charity or anything,
it can be to any cause as they see fit to. And it has gained many big names like Mark Zuckerberg, like Bill Gates, of course, not her ex-husband,
Jeff Bezos, who is the world's richest man.
CHATTERLEY: Dun-dun-dun. You've brought the gauntlet down. Jeff Bezos, the ball in your court, my friend.
STEWART: Yes, but you know, I will give him a break here. He does give to charities. For instance, he's got the One Day Fund which helps homeless
people. He has already pledged $2 billion to that, but he hasn't signed this pledge. And I think that's what lots of people will be questioning
today.
But it's interesting, Julia, lots of other people on this list and I like to see it as a nice little barometer of where the money is. Plenty of
investors, I say this list of the new names that were added today, mostly founders of big investment firms. But we also -- interesting -- have two
co-founders of Bitcoin exchanges or digital currency exchanges, and three co-founders of digital startups -- Twilio, Pinterest and WhatsApp. So
there you go, kids, that's what you should be doing with your careers.
CHATTERLEY: Anna, my mother would call that a kick up the bottom and a pat on the head at the same time. Thank you for that. Anna Stewart there.
Thank you for that. All right, coming up on FIRST MOVE, don't panic. Robots could be coming to your doorstep soon. Helper robots, thanks to
Ford. We've got the details next.
(COMMERCIAL BREAK)
[09:42:14] CHATTERLEY: Welcome back to FIRST MOVE with a look at today's "Boardroom Brief." The "Sports Illustrated" brand has been sold by
Meredith Corporation to Authentic Brands Group for $110 million. However, in an unusual arrangement, Meredith Corporation will continue to publish
the iconic magazine and website. Meanwhile, Authentic Brands will handle things like marketing and business development.
Coming to a home near you soon, Ford is experimenting with a package carrying robot. The automakers say it is testing the walking robot to
carry deliveries from its self-driving cars to customer's doorsteps. The robot called Digit can reportedly climb steps and walk on uneven terrain.
Dr. Ken Washington is the Chief Technology Officer at Ford and he join us now from the hump company's headquarters in Dearborn, Michigan. Great to
have you with us there, Ken. Fantastic.
CNN did a feature on this and I was pretty mesmerized. Talk to me about the work that you're doing on Digit and how it fits with your broader
autonomous technology development.
KEN WASHINGTON, CHIEF TECHNOLOGY OFFICER, FORD: Well, it's great to be here. We are really enjoying the work that we're doing with Agility
Robotics. This is a research project to help us understand how might we pair a robot with our self-driving car, so that we can complete the task
that the customer has requested, which is to have their package delivered to their doorstep.
A vehicle can only get to the curb, our self-driving vehicle will finish the job by handing it off to the robot and the robot would carry the
package to the door. There's a lot to do between now and the time when we realize that vision. That's why we're doing this research.
CHATTERLEY: That was going to be my next question. How far away are we from actually seeing this kind of technology in use on a day to day basis?
WASHINGTON: Well, it's a little hard to guess, but we don't think it is very far. But there's still a lot of unanswered questions starting with
how would the robot interact with the vehicle? That's why the first thing that we tackled in our research with Agility Robotics was to develop a
deploy mechanism so the robot can store itself in the back of the vehicle.
And then when the self-driving vehicle arrives, they can deploy itself safely onto the street and then move to the next task, which is carrying
the package. But there's still a lot to do. We're hoping to move this research forward so that by 2021, we might have a good chance of deploying
it with that vehicle. But it's just too soon to say that that's going to be the timeline.
CHATTERLEY: I mean, that's quite fascinating for me when you're saying dates like 2021, you've made comments in the past that we have to be very
careful when we're talking about autonomous vehicle technology.
There's a difference between technology that backs and supports a driver and operating a car and makes their life easier versus operating in an
autonomous vehicle technology ecosystem where cars, vehicles, things are all talking to each other.
[09:45:13] CHATTERLEY: And I know you're doing work on that in places like Miami and Washington D.C., just explain the difference for me here, because
I do think this is incredibly important for our viewers to understand.
WASHINGTON: That's right, the SAE International has defined five levels of autonomy. And we have made it very clear that levels one, two, and three
involve a driver that is responsible for the driving task. That driver in levels, one, two, and three can be assisted by technology and we're
deploying better and better and more capable assistance technology to the vehicles that our customers buy today and will buy tomorrow.
The next two levels, four and five are full autonomy. Self-driving cars, as we call them, our levels four, and maybe one day level five. Level four
being in a controlled region when there is no driver. That car is its own driver. That's why we call it self-driving.
Digit and our self-driving cars are designed to work for the level four and level five self-driving vehicle, because there's no driver, there's no
driver to hop out and come around and carry the package to the door. We're hoping that that can be done by a robot.
CHATTERLEY: And you're saying that that kind of technology could be on the road by 2021.
WASHINGTON: It's a possibility. We're not making a commitment at this time to say that, but that's why we're doing the research. You know, if
you could wind the clock back five years, and the vehicle that we're going to deploy in 2021 was a research project at Ford. And now it's a
production product.
So this is the same kind of thing. We do the research now so that later it can go into production when it's ready, but only when it's ready, which is
why the research is so important to do to answer those questions that we need to answer because safety is job one here. You want to be able to
deliver a package safely, efficiently, and you want it to be able to solve a real problem.
You don't want to just deploy robots and other technology for technology's sake, you want to be able to do it in a way that is actually helping
someone meet a need that they have. And so we're testing out, will this meet a need? And will it be more efficient than some other mechanism for
delivering packages?
CHATTERLEY: And very quickly, technologies, just one side regulation and regulations being willing to accept this kind of technology on the streets,
to your point about safety is the other. What kind of conversations are you having both at the state and at the Federal level about regulation and
their comfort level with seeing this in the next two to three years?
WASHINGTON: Well, it is very early in the robotic delivery space. So the conversations with policymakers and regulators that haven't even begun yet.
But you've made a really great point, which is, that has to be part of the research as well, just like the vehicle part.
The self-driving car that we're scheduled to deploy in 2021 in certain regions has a very active project to work with regulators and policymakers
in partnership with our technical partners, so that we can know that when we deploy this vehicle in the cities that we deploy it that we're doing it
in a way that meets regulation and that meets policy.
CHATTERLEY: It's so exciting. You're going to come back and talk to us soon, please. Dr. Ken Washington, Chief Technology Officer at Ford. Thank
you so much for joining us on FIRST MOVE.
All right, we're going to take a quick break, but up next, from electric currents to ocean currents, how IBM's latest venture is making waves in the
shipping industry. We will speak to IBM's head of blockchain to understand how they're putting that technology to great use. Stay with us.
(COMMERCIAL BREAK)
[09:51:11] CHATTERLEY: Welcome back to FIRST MOVE. Blockchain the word conjures up dark alleys, room and cryptocurrency miners, not the open seas
of global commerce. But now it's time to update that image.
Blockchain is behind the IBM platform developed with the likes of Maersk that tracks 90 percent of global commerce. That's after two more shipping
companies joined the venture just today.
Joining me now is Bridget van Kralingen. She is the charge of everything blockchain at IBM. And she is Senior Vice President of IBM Global
Industries, Clients, Platforms and Blockchain. Wow, that's a title. But great to have you on the show. Explain what TradeLens is.
BRIDGET VAN KRALINGEN, SENIOR VICE PRESIDENT, IBM GLOBAL INDUSTRIES, CLIENTS, PLATFORMS AND BLOCKCHAIN: So Julia, thanks for having me here
today. I'm so excited that CMA and MSC have joined TradeLens and TradeLens is a platform for the entire shipping supply chain and what it allows them
to happen is that any participant in the ecosystem, whether you are a shipper, a carrier or a freight forwarder, they can put the shipping
records and data on the blockchain and share it immutably.
So we take a complex supply chain, and we have shared crusted data. The significance of this is quite huge. At the moment, the World Economic
Forum reckons that 20 percent of the cost of shipping is in document exchange. And what we do is we completely reduce that by having it shared
in one's doc.
CHATTERLEY: Twenty percent of the cost is simply down to documentation, filling up paperwork, and you're basically stripping that back and saying
it would effectively no longer be needed.
For me, one of the huge statistics that you brought out, 90 percent of the estimated $16 trillion in global goods that are moving around the world is
done by shipping, 90 percent. So you're tackling an industry here, not only bringing down but also hugely vital to global trade here, too.
VAN KRALINGEN: Correct, correct. That's exactly right. Ninety percent of what you use every day is actually shipped. So the implication of being
able to make it with more efficiency and more inclusive is huge for global trade.
The World Economic Forum thinks that around 15 percent more efficiency can arise by tackling the cost issues from paper documentation and manual work
for that.
CHATTERLEY: One of the things that we were tracking when the trade war between China and the United States began was how quickly ships could get
to China and if they could do it before the tariffs hit. And it was something that we were watching very closely on the show.
This also allows you to track exactly where things are and when at a given point in time. So it also facilitates just understanding where ships are
at any given moment, is that right?
VAN KRALINGEN: That's absolutely correct. It reduces wait times in ports, wait times for immigration clearances, because everybody's got the correct
and right document and knows where it is at a point in time because of the complex number of participants.
And the beauty of this, it's an example of openness that it's good for the whole industry. It is an example of how blockchain is moving beyond the
tourism phase to dealing with real complex networks.
So this kind of scaling that we're seeing in TradeLens for the shipping industry, we're seeing the same thing for food and food safety and food
provenance and food trust. We're seeing the same complex systems that becomes simple and transparent.
CHATTERLEY: So it's something that you can map to other industries and you're doing it with food as well as you mentioned.
VAN KRALINGEN: Yes, one of the reasons IBM invested so early on in creating the number one now enterprise blockchain network and technology is
because we realized that complex supply chains, where there are multiple parties who need to trust each other and have permissions, secure an
immutable way have loads of room for efficiency improvement.
So you can think about cross border finance, food trust where we have millions and millions of SKUs for food, sustainability, provenance and
safety. Diamonds on a blockchain, conflict minerals and metals on the blockchain, all of which the supply chains are made more efficient, more
trusted and more economically viable and better for the consumer. It also shows that the provenance of whatever you've got.
[09:55:20] CHATTERLEY: I mean, I know one of the things you looked at was food poisoning, you could track back to the fish that was originally
causing the food poisoning and where it had been shipped to. I mean, that the technology here is so vital --
VAN KRALINGEN: Block chain with the food industry ecosystem, which involves firms like Walmart, Albertsons, Nestle, you name it and why
they're so excited about it is food recall for something that is bad. Like romaine lettuce in New York City. Best in class today is Walmart and it
takes them six days and 18 hours.
With blockchain, we've run multiple goods whether it's pork or mangos and we can recall them in two seconds. Think about the impact for that.
CHATTERLEY: Already. Never mind crypto, it is all about blockchain. You've sold me. Thank you.
VAN KRALINGEN: ... food poisoning ever yet. We're going to stop there.
CHATTERLEY: That's it for the show. You've been watching FIRST MOVE. Time to go make yours. Thanks for watching.
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