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First Move with Julia Chatterley
Thomas Cook Collapses Triggering The U.K.'s Largest Peacetime Rescue Efforts; Speculation Mounting That WeWork's Biggest Shareholder, Softbank, Might Push For Fresh Management; The First Bitcoin Futures Exchange Launching Today. Aired 9-10a ET
Aired September 23, 2019 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:05]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE and here's your need to
know. Operation: Matterhorn. The holiday operator, Thomas Cook collapses triggering the U.K.'s largest peacetime rescue efforts. WeWork's new man.
Speculation mounting that the firm's biggest shareholder, Softbank, might push for fresh management. And Back to the Future. The first Bitcoin
futures exchange launching today. It's Monday. Let's make a move.
Welcome to FIRST MOVE once again this Monday and a very special guest kicking off trading this week. We've got First Lady Melania Trump ringing
the opening bell later on this morning promoting her Be Best initiative for kids. So that's actually quite exciting here at the New York Stock
Exchange. Of course, I have to say those stocks not being their best this morning premarket. Take a look at what we're seeing for futures right now.
We begin the first -- sorry, the final full trading week of Q3. I'll get my teeth in gear at some point now, the majors falling some one percent
last week, the Dow in fact, easing some one percent. Though it's worth watching the cyclical stocks again this week. I think energy, the banks of
course. They've been with weak performance in recent weeks as bond yields have risen. I mean, the opposite. They've been the outperformers of
course.
Now, we're still about one percent of record highs as a mark, I call cool that relative resilience given the levels of that new uncertainty. Talks
on the Saudi explosions of course, tensions with Iran ratcheting up and China trade talks, too. We've also got earnings season just around the
corner and Goldman Sachs warning that this could be another volatile October.
It's already been a volatile September. Hong Kong stocks falling overnight for a sixth straight session after another weekend of protests. Chinese
stocks also falling some one percent, perhaps not helped by President Trump's comments Friday, when he said he is not in favor of a partial trade
deal. That could prove tough going forward.
What about Europe's markets, too? A sea of red. I can tell you, data there showing business activity stalled again this month. Euro area
manufacturing sentiment falling, too, to an 83-month low and Germany posting its worst reading in a decade. Ouch.
We'll be talking more about Europe later in the show. But for now, I have to say sentiment in the U.K. isn't much better on the news that the world's
oldest travel company, Thomas Cook has collapsed and that's what we're going to start the drivers.
Thomas Cook collapsing, 600,000 of its customers currently on holiday and therefore stranded. The U.K.'s the largest peacetime repatriation effort
ever has been launched. John Defterios and Melissa Bell joining us on this story.
Melissa, I'm going to come to you because we can talk about the financials for the company, but not just for U.K. travelers, but international
travelers, too stranded all around the world. Talk us through this.
MELISSA BELL, CNN PARIS CORRESPONDENT: That's right, it is that human dimension to this story, Julia that is perhaps the most troubling all of
those stories, 600,000 of them abroad who woke up this morning to find that they were stranded and had no way of knowing how they were going to get
back from their holidays or indeed how are they going to pay the hotels they were in with Thomas Cook's collapse.
Then there are also one of those very many tourists who are planning to leave today or in the next few days, Julia, here at Gatwick. We've met a
few of them this morning who hadn't had the alert or who had decided to come along anyway to figure out how they were going to get their money
back, or how they were going to get on a flight.
We spoke to a couple of Canadian students who said, look, we need you to go to Malta this morning and all we're being told is that we need to make
alternative travel arrangements that we're going to have to pay for ourselves.
And I think it's important to bear in mind kind of tourism that Thomas Cook developed and catered to. These are not necessarily the wealthiest
travelers. These are people who booked often inexpensive package holidays, who then find themselves either stranded abroad or out of pocket at home.
So a great deal of anger, and as a result of this collapse overnight, it was also, Julia, the suddenness of it. It wasn't that we didn't know that
Thomas Cook was facing financial trouble, we did.
We knew that it was involved in talks of a rescue package, but it was the collapse of those talks overnight that led the CEO to make this
announcement.
(BEGIN VIDEO CLIP)
PATER FANKHAUSER, CEO, THOMAS COOK: Despite huge efforts over a number of months and further intense negotiations in recent days, we have not been
able to secure a deal to save our business.
It has been my privilege to lead Thomas Cook. It is deeply distressing to me that it has not been possible to save one of the most loved brands in
travel.
(END VIDEO CLIP)
[09:05:24]
CHATTERLEY: But to your point here, the whole reason why people book these package holidays in the U.K. is because there are protections. There's a
backup mechanism here if indeed this kind of situation happens.
John, come in here and explain what happened because again, Melissa pointed out, this is not new news. It was just an ultimate collapse and no rescue
being achieved for this company over the weekend.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Yes, they went down to the wire as you know, Julia, to try to get a rescue package and that
didn't happen.
They were looking at the largest shareholder of Thomas Cook, Fosun, the Shanghai based company, which has 18 percent, but didn't want to throw good
money after bad in this situation.
I thought the Tourism Association for Operators in the island of Crete in Greece hit the nail right on the head saying this was like a 7.0 on the
Richter scale earthquake, which may turn into a tsunami because on that island alone, they have just 20,000 -- just 20,000 on one island, stranded
there looking to try to get back to their home bases, and they get a half a million customers a year.
Then there's that other ripple effect question mark. Do the tourist companies in Crete get their money from Thomas Cook from the August and
September bookings? That's a huge question mark.
The cash injection they were looking at was nearly $300 million. But the government said at the end of the day, Thomas Cook needed a billion
dollars. So we're hearing grumblings about whether the government should have stepped in and rescued Thomas Cook because of the history here going
back before travel of flight here, right? Because they proceeded that going back 178 years after the bailout of RBS going back to the 2008, 2009
and 2010 financial crisis.
This Conservative government clearly did not want to be in the travel business going forward. We have a precedent here with Monarch Airlines
going back to two years ago, October 2017, leaving a hundred thousand passengers stranded and they, too, did not get a bailout.
I would have been very surprised despite the political situation here in the U.K., if the government would have said, here's the checkbook, here's a
billion dollars, let's keep you operating.
CHATTERLEY: Yes, I mean, that sets a huge precedent here, and to your point about Crete, it's a great one, the likes of Greece, Turkey, Spain,
all the tourism industries rely here, to a large extent on Thomas Cook, and I do want to reiterate that point.
Melissa, I just want to go back to you because there are workers involved here, too, 21,000 workers here for Thomas Cook, and I saw actually Unite
Union coming forward and saying this was economic terrorism here. Vandalism, my apologies -- economic vandalism here, to John's point there,
I mean, at what point do you draw the line here and say that a government has to step in and support workers, particularly given the broader brock
chop with the challenges of Brexit already? It's a tough question.
BELL: It's a tough question, and it is exactly that it. Because John was just explaining, in the end those bailout talks hit a snag, hit a glitch
when the company needed to find an extra 200 million contingency fund, it reached out to the British government and was told no.
And of course, the British government have answered those criticisms from the trade unions that accusation of economic vandalism, those that talk
about the 21,000 people who very brutally found themselves unemployed overnight.
The British government has said, look, essentially, if we had bailed them out this time, if you provided the money, it was simply putting off a
collapse. It would have been inevitable at some point.
Anyway, this is simply a model -- an economic model -- that was no longer fit for the 21st Century -- Julia.
CHATTERLEY: Yes, it's a tough one. Melissa Bell there and John Defterios, guys, thank you so much for that and we'll come back to this story later on
in the show.
For now, let's move on to our next driver, which is WeWork and speculation mounting that we could see some kind of boardroom reshuffle, including
removal perhaps of the CEO, Adam Neumann.
Softbank is in focus here as the largest shareholder and of course, pumping lots of money into this company. Clare Sebastian joins me here at the
stock exchange. How exciting. Great to have you with us. What do we know about this because what we're talking about here is Adam Neumann. He may
just be the CEO, but he's also a huge shareholder and very influential hereto.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Right. This is a potential revolt within the Board at WeWork.
CHATTERLEY: It's a war.
SEBASTIAN: Right, exactly. This is a report from "The Wall Street Journal" at the moment. We haven't independently confirmed it. But
basically what they're saying is the Board could meet as soon as this week and several members including those with ties to Softbank, as you say is
hugely influential, the largest shareholder in the company are seeking to remove Adam Neumann as CEO and potentially create a new position of him as
a non-executive director, which would keep him tied to the company he founded but would remove his power of the day-to-day running of the
company.
This of course, follows months -- well, actually just over a month of turmoil after they filed paperwork to go public. Huge questions around the
governance, around the business model, around the mounting losses and indeed around the personal contacts of Adam Neumann himself.
[09:10:07]
SEBASTIAN: It was reported again by "The Wall Street Journal" that he boarded an international flight with marijuana. So huge questions around
him, and it seems that there are those on the Board who feel that there will be better placed to go forward with an IPO without him at the helm.
CHATTERLEY: It is interesting, isn't it? It's got odes of Uber as well, and actually, we've seen how well that IPO went, quite frankly. But he
does have the power to say, you know what, I'm going to fire the entire Board. The problem is and you've hit the nail on the head here with the
sheer amount of losses that this company has right now.
They need Softbank, arguably, Softbank's money for the future. So his hand are tied.
SEBASTIAN: It is interesting because on the one hand, this is a gamble by those directors. We don't know who they are, who wants to oust him,
because he still will have a lot of power. He is the biggest shareholder. He will still have the power to fire the entire Board.
It's just staggering if you think about it, but on the other hand, they do need money. That's why they are still saying they want to do this IPO by
the end of the year. That's why they need to keep Softbank on the side.
And as you say the losses are staggering, almost $2 billion is what they lost last year; almost more than $900 million in the first six months of
this year and their lease obligations and all their other liabilities are quite frankly unnerving to investors.
CHATTERLEY: Yeah, civil war potentially. We have to see how this plays out. So Clare Sebastian, thank you so much for that.
All right, let's move on now. I'm going to bring you up to speed now with some of the other stories that we are following here around the world.
U.S. President Donald Trump admits he talked about Joe Biden on a call with the president of Ukraine, but insists there was nothing wrong with that
conversation. President Trump has been fending off questions about whether he pressed the foreign leader for material that could damage a political
rival. The U.S. and Ukrainian Presidents are among the world's leaders in gathering at the United Nations meetings this week, ahead of the U.N.
General Assembly.
Ukraine's Volodymyr Zelensky tweeted a message promoting an anti-corruption hotline, saying, "We will never overcome corruption if we close our eyes to
it." Mr. Zelensky's previous career was as a comedian. No connection to those two sentences.
Iran's President will also be at the big gathering in New York, but President Trump says he has no intention of meeting with Hassan Rouhani.
Last week, Iran denied it was involved in attacks on Saudi Arabia's oil industry and the U.S. announced fresh sanctions against Iran.
Now the U.N.'s opening event this year is a Summit to address the overheating world climate change, of course. President Trump says he is
skipping that some will hold his own session on religious persecution.
Our Nic Robertson is there and joins us live. Nic, great to have you with us. In any other circumstances, if the events of the last week hadn't
happened, we would be talking about I think the importance of climate change. But the risk here is what happens with Iran, whether the two
Presidents meet or not what comes next perhaps overshadows everything here.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Sure, look, I mean, I think if President Trump was to go against what we've heard him say already
that he will not meet with President Rouhani, that of course, just a week ago was a possibility. They've sort of grown out of the G7, if you like,
where the French President who was hosting the G7 brought in the Iranian Foreign Minister, this was really sort of signaling that something was
happening in fact with diplomatic channels. But of course, Saudi Arabia was hit by those missiles last weekend.
And now the position here at the U.N. G.A., many, many topics and meetings to be had. But in the background, really, from a Saudi-Emirati
perspective, the real concern that President Trump sticks with what he is saying at the moment that he doesn't meet with President Rouhani because
there's a real sense from the Saudi perspective and the Emirati perspective, that if President Trump at this moment appears weak on Iran,
then there could be more strikes of scale and perhaps worse, that we saw just nine days ago in Saudi Arabia.
So that's clearly something to sort of watch. The back channels for here, if you will, the Saudis on a very strong mission here to try and bring
international support for their position, bring U.N. investigators -- international investigators -- towards their position.
We've heard movements from the British government saying that they believe a high degree of probability that the attacks were launched from Iranian
soil. The French and the Germans a little more skeptical, but the Saudis bringing them into the process of the investigation.
And if they can bring them along diplomatically, then that can sort of strengthen perhaps the resolve and positioning of President Trump on this.
But the real concern is they don't know from one day to the next, what President Trump's position towards Iran is going to be -- Julia.
CHATTERLEY: Absolutely and of course, it promotes the Saudis argument here that it needs to be an international coalition or group that protects these
assets, given the importance of them globally at this stage.
Nic, I do want to bring the conversation though back to the importance of climate change. A huge skeptic of course, in President Trump not even
going to be part of the conversation here about climate change, in fact, going to be talking about other things. What concrete action can we see
here, particularly as business leaders, politicians and the like all meet in one place this week to talk about this?
[09:15:10]
ROBERTSON: Yes, Antonio Guterres, the U.N. Secretary General has said that what he wants to hear, you know, the speeches that he wants to hear today
from leaders are sort of concrete steps and commitments about how they can and the planet can reduce the growing -- the climbing temperatures. That's
the real concern.
Ninety one heads of state here, of course, significantly, President Putin. President Xi of China is not here. President Trump not engaging in the
climate change debate. Emmanuel Macron who has a passion about this issue, of course will be speaking today. So that is a speech to be listening to
very carefully.
But what is hopes that can be achieved out of this, are countries laying out platforms and agendas and investments significantly, investment and
that's what the German Chancellor, Angela Merkel has been talking about as well, very significant investment in trying to reduce the effects of
climate change and mitigate against the rising sea levels.
And of course, here you will have a representation from Amazonian tribes, the Brazilian President also expected to be here as well, and of course,
the Amazon rainforest, which we all saw those images of so much of it burning just a couple of weeks ago part of the conversation.
But it is those concrete investments and substantial real acts that will be hoped for at least, there is the discussion, at least here at the U.N.
CHATTERLEY: Such a great point. Action speak louder than words particularly at this moment. Nic Robertson, thank you so much for that
update there.
And coming up on the show, we will be speaking to the Dutch Bank ING about the efforts that that bank and the broader financial sector is taking to do
that.
But for now, we're going to take a break here on the FIRST MOVE. Coming up, the First Lady ringing at the opening bell here this morning and
I.C.E., International Continental Exchange going crypto crazy, a crypto futures platform launching today and it's backed by some big names like
Microsoft and Starbucks. All the details coming up. Stay with CNN.
(COMMERCIAL BREAK)
[09:20:15]
CHATTERLEY: Welcome back to FIRST MOVE. We have Jeffrey Kleintop. He is Senior Vice President and Chief Investment Strategist at Charles Schwab.
Great to have you with us, sir. And Happy Monday morning. Big week. Of course, we've been talking about it on the show for the U.N. also, trade of
course, too.
And I'm not talking U.S.-China, this time around which our viewers will probably be relieved about, the potential for U.S.-Japan trade deal. Talk
me through this because I think we should keep a focus on this, too.
JEFFREY KLEINTOP, SENIOR VICE PRESIDENT AND CHIEF INVESTMENT STRATEGIST, CHARLES SCHWAB: This is potentially a pretty big deal. Japan is the third
largest economy in the world, and one of the U.S.'s major trading partners. So establishing a deal between the U.S. and Japan is pretty big.
This is a deal that would involve no new auto tariffs, that's a relief to auto manufacturers on both sides. Remember, the auto supply chains
crisscross so many borders. This would be a huge cost to reconfigure those supply chains for businesses.
So this is a bit of a relief, and it follows a deal earlier in the year with South Korea and maybe we'll get to sign those deals with Canada and
Mexico. That would make four of the U.S.'s largest six or seven trading partners having established a deal this year. That's a better trade news
that hasn't been getting through with the U.S.-China headlines.
CHATTERLEY: Okay, so this is really important. It could also surely, therefore be perhaps a prelude if we manage to see a U.S.-Europe trade deal
here because I can't help feeling that the threat of auto tariffs on European automakers, this also had a sort of dampening effect on sentiment
in Europe, too. Would you agree or disagree?
KLEINTOP: Absolutely. I would agree with that. I think you're right on the mark. Autos are key here and look at what's happened with Germany.
This morning, we get the PMI data showing how weak Germany's economy is tied to manufacturing, which is of course, tied to auto production.
So if we could see some clarity on the outlook for what auto demand outside of Germany might look like, I think that would certainly lead to some,
perhaps stabilization in the manufacturing sector, so critical to the direction of the European economy right now.
CHATTERLEY: You know, it's quite fascinating. You point out as well that the European Central Bank's decision to restart QE, to further lower rates
was actually the most pivotal Central Bank decision that we've had over the last couple of weeks. And you looked at the performance of European stock
markets into QE back in 2005. They rallied then and then they stagnated. What do you think happens this time around? What's different potentially?
KLEINTOP: What is potentially different this time is that in addition to restarting QE, the European Central Bank is attempting to shield the banks
from some of the negative consequences of a further drop in policy rates.
So of course, we know that a decline in short term interest rates is a drag on the profitability of banks, and because of course, they have to pay out
some type of income for profits for depositors, but of course, where are they getting that money from with negative interest rates.
And so the consequence this time may be different in that they're not sort of bleeding to the same degree on paying out on those deposits, and that
may shield them from some of the negative consequences on their income statement, whereas the QE would help them on the balance sheet as well.
So that combination has helped with European bank stocks, so far 11 percent this month, that's a nice rally. We'll see if that has any legs.
CHATTERLEY: Do you think there's more room to go there because you stand out to me as someone who often comes on the show and says, look, don't just
look at the United States; look elsewhere, there is value and the sort of the noise on an international basis, perhaps is suppressing some of the
valuations there and there are opportunities. Do you continue to believe that despite everything else that's going on?
KLEINTOP: Yes, it is a little harder this morning with the very disappointing news there in the manufacturing sector. But you know, we
haven't gotten the U.S. PMI yet. That'll be coming out of course in 15 or 20 minutes or so and could also sow a similar disappointment.
So yes, I do think broader diversification particularly into an area like Europe where maybe we're starting to see a rotation where some of the value
sectors, the banks may establish some new leadership, something we haven't seen in a while that could maybe refresh the market performance, the
earnings backdrop that could lead the European markets to actually outperform.
We've seen some of that so far in the month of September, though a bit of that wiped out this morning.
CHATTERLEY: Brilliant. Jeffrey, great to have you on the show. Thank you so much. And you hang on in there with your views. Go the Europeans.
Jeffrey Kleintop there, the Senior Vice President and Chief Investment Strategist at Charles Schwab. Great to have you on the show, sir.
All right, we've been talking about it, and then what you heard the clapping behind me, there's some excitement here at the New York Stock
Exchange. Washington coming to Wall Street as I've mentioned with Melania Trump ringing the opening bell.
Clare Sebastian joins us more. Clare, be your best this morning and tell me what we can expect.
SEBASTIAN: Right. Well, we can see the President just down there now.
CHATTERLEY: Oh, great.
SEBASTIAN: She has just been signing the book of distinguished visitors, which is what you do before you bring the opening bell.
CHATTERLEY: Fantastic.
SEBASTIAN: And she is joined by some children from the U.N. International School and she basically -- there's a lot of buzz down there. We can see a
lot of photographers. There's been a lot of security, extra security, but basically, she's promoting this initiative, Be Best. You can see all the
signage there.
This is about educating children on issues affecting them, be it wellbeing, opioid abuse, online safety, something that she has faced some criticism
for given the performance of her husband on Twitter.
But this is something that she has been doing now for over a year and this is, you know, a big deal for her, ringing the bell at the New York Stock
Exchange is pretty historic.
One trader told me this morning, they can't remember in over the last 40 years that a First Lady has done the opening bell. We know Laura Bush did
the closing bell in 2006, but this is a big deal for her.
CHATTERLEY: Yes, this early morning get up can be quite painful, quite frankly. You're looking at live pictures now as Melania makes the way
around the New York Stock Exchange.
It is an exciting moment, but to your point as well, there has been some criticism that perhaps the mandate of Be Best is too broad and too
challenging here. How do you tackle all of these things? And that's not to say they aren't all vital critical issues.
SEBASTIAN: Yes, it's clearly a really good cause, championing the issues affecting children and particularly opioid abuse but she has been doing
this now since May of 2008. She broadens two of her pillars in May of this year.
Opioid abuse was originally focused on neonatal abstinence syndrome and social media was originally the focus, now it's online safety, in general,
but yes, there's been some criticism that there's not a lot that's actually been done, it's just been fact finding so far.
CHATTERLEY: Yes, we're always our best on FIRST MOVE. Be Best and Melania Trump, the First Lady will be ringing the opening bell after this. Stay
with us.
(COMMERCIAL BREAK)
[09:30:51]
CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange and a very exciting ringing of the opening bell this morning by
the American First Lady, Melania Trump ringing the bell to promote her children's charity, Be Best, of course. And as you can see there, joined
by members of the U.N. International School as well. Lots of smiling faces. Clare Sebastian is back with us. Talk us through it. This is
great.
SEBASTIAN: Right. Well, this is a historic moment. This is a very good forum for her to promote this initiative. Obviously, a lot of people ring
the opening bell for different reasons. Be it an IPO, some other big event for a company.
It's a really good way just to draw attention to something and this is something that she is really focused on, the Be Best initiative. As I
said, three pillars; it is wellbeing for children, online safety, and opioid abuse.
Now, there has been a little bit of controversy. The children from the U.N. International School, the school published a letter from its Executive
Director to parents online where he said they considered the potential sensitivity of this visit, and the fact that there might be some
opposition, but they decided to go ahead, because you know, the whole point of the U.N. is to give voice to different opinions.
And they said, the children who are here, it's all voluntary. They had -- they were oversubscribed. So very enthusiastic, I think nine and 10-year-
olds.
CHATTERLEY: I'd like to say these parents -- the parents of these children are also very excited to get this because it's a historic moment, quite
frankly. And actually, I note that the opening bell seemed to ring for less time this morning, otherwise, we should have been wearing earmuffs
because it's actually quite loud as well hereto.
SEBASTIAN: Right and she is in town, obviously for the United Nation's General Assembly and this is slightly unusual this year. We're told that
unlike previous years, the last two years where she has hosted a luncheon with spouses of U.N. leaders, she is not doing that this year, according to
her office. She is just doing this event.
So this really is you know, a big chance for her to get out her signage all across the New York Stock Exchange, a really big moment for this initiative
that has been criticized as I said, to be a little short on substance, a little short on action, although obviously some very lofty and very, very
big ideas.
CHATTERLEY: And she has done a lot of travel around the world. I remember her being in Africa and talking to -- going to schools there and promoting
this. It's not even just an American initiative. It's wide in scope and scale, in particular. Do we know what she is wearing? I am going to turn
around now.
SEBASTIAN: Well, we haven't had word on who the designer is. It is a very somber looking black dress, very appropriate.
CHATTERLEY: Conservative.
SEBASTIAN: Very conservative for the New York Stock Exchange.
CHATTERLEY: Fantastic. Clare, thank you so for that. We will continue to watch the First Lady as she progresses around at the New York Stock
Exchange, but an exciting moment here as Clare mentioned, the First Lady ringing the opening bell in aid of Be Best, her own, the First Lady's
initiative.
All right, let me walk you through what we're seeing so far this morning. Stocks are modestly lower this morning in early trading. The last full
week of trading for the third quarter. Actually, in fact, stocks falling for the first time in four weeks.
Last week was still in aggregate a bit low for the S&P 500, just one percent away from recent record highs. Hopes for upcoming U.S.-China trade
talks of course, next month, potential boost of sentiment, I say that with half an eyebrow raised at least.
Interesting gauge on market sentiment this week as well. The money using exercise bike company, Peloton set to go public so we'll be watching that
as well.
Let me walk you through the global movers this morning, too. GM shares under a bit of pressure here. The UAW strike entering it's eighth day
today. Both sides meeting over the weekend for fresh contract talks, but no progress reported. Forty thousand auto workers on the picket line as a
result here.
What about Alibaba? Well, their ADR is also under pressure. The company holding Day 2 of their Investor Day over in China. The company's CEO and
new chairman set to brief investors on things like revenue guidance in particular.
Also, Roku shares are rising. The company's stock though plunged some 19 percent on Friday after a pivotal research analyst initiated coverage with
a sell rating. Oppenheimer weighing in on Friday saying it was keeping its outperform rating citing Roku's market dominance in streaming devices.
And Apple, finally, shares in focus. The company says Oprah Winfrey's exclusive book club interviews will begin streaming on Apple TV beginning
in November. Oh, the streaming wars.
All right, let's bring it back to our top story now and the world's oldest travel company, Thomas Cook collapsing over the weekend. Thomas Cook CEO
says the outcome is quote, "devastating."
Melissa Bell, at London Gatwick Airport for us. It is devastating, of course, too for the travelers, hundreds of thousands of them that are
caught around the world on holiday and now need effective rescue. Talk us through it -- Melissa.
BELL: That's right. Essentially the collapse of this company, in a sense. There had been warning about it, Julia, since it had announced just a few
months ago, one and a half billion pounds. Last, we knew they were talks to try and find some kind of rescue package with the Chinese from, Fosun, a
900 million pound package that would have helped it stay afloat.
In the end that package, that deal hinged upon an extra 250 million pounds contingency fund. The company look towards the British government to get.
Those talks collapse dramatically last night; that hope of a deal collapsed with it.
And of course, with that, the terrible news for the 600,000 people who find themselves overnight stranded in various parts of the world who had their
holidays booked through Thomas Cook or their flights home booked for Thomas Cook.
And then the countless people who are planning on going on holiday today or in the next few days, Julia. We've been seeing a few of them come through
the here, who perhaps hadn't seen the headlines or were hoping nonetheless that some solution might be found, telling us that they simply didn't have
the means to book any other traveling.
They were desperately hoping that they would get the compensation that they were due. Finally, there is of course the question of the 21,000 people
who found themselves overnight facing redundancy.
The Head of the Unite Union that represents a good proportion of them has called it economic vandalism blaming the British government for not
rescuing the world's oldest travel company -- Julia.
CHATTERLEY: Devastating all around. Melissa Bell, thank you so much for that update there. All right. We're going to take a quick break here on
FIRST MOVE, but coming up, what did I say earlier? Actions speak louder than words? Well, I can tell you one bank ING, putting its portfolio
behind the Paris Climate Agreement. We've got to CEO with all the latest. Stay with us, we're back in two.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. The United Nations General Assembly kicks off this week with a Summit on climate change and in a bid
to turn the words into action, some of the world's biggest lenders say they've agreed to a new set of principles for managing their money.
[09:40:01]
CHATTERLEY: Firms representing a third of the global banking industry by assets signed a U.N. pledge to align their businesses with the goals of the
Paris Climate Accord. One of them is the Dutch lender, ING, that's evolved its own approach, which it calls terror, to ensure it lines up to its $600
billion portfolio with those Paris goals.
Joining us now, the Chief Executive of ING, Ralph Hamers, fantastic to have you on the show. As always.
That's huge. A third of banking assets now saying look, we're going to take this approach.
RALPH HAMERS, CHIEF EXECUTIVE, ING: Exactly.
CHATTERLEY: What does it mean, in practice, though?
HAMERS: What it means to practice is first that, for years we've been discussing, so how do you calculate that? How do you get your hands around
those principles for responsible banking? And how do you manage your indirect footprint, because this is what it's all about.
Banks can't really contribute through their direct footprint, but we are very powerful in doing it through our clients. So what it means in
practice is that you get into a dialogue with your customer in specific sectors, and you have the dialogue.
So whether they can bring back their footprint and bring it down in line with the Paris Climate Agreement that's important.
CHATTERLEY: I mean, you and I have talked about this in the past, and this idea that you looked at your loan portfolio, you looked at where you were
lending and said, okay, we have a high energy weight, and a lot of it is to oil and gas companies.
And you did this years ago as a bank and said, actually, we need to think about this and we need to look at this and say, we're contributing to a
carbon footprint, because we're giving money to companies that also need to be perhaps addressing and looking at new technologies and looking at
different avenues.
HAMERS: Yes.
CHATTERLEY: You've been doing this for years.
HAMERS: Yes.
CHATTERLEY: Is the risk at some point you have lending to companies like this; that find themselves on the wrong side of regulation. Is there smart
business sense hereto?
HAMERS: Oh, absolutely.
CHATTERLEY: As opposed to just protecting the climate.
HAMERS: Absolutely.
CHATTERLEY: Is this important?
HAMERS: It starts with protecting the climate, right? And it's not limited to the energy sector. It's also the cement sector, it's
automotive, it's real estate, all of those, that are highly -- that have a high footprint. And there's technology available to manage that down.
And if there's technology available, we want our clients to really invest in that technology and manage it down. If they don't do it, we may exclude
them. We may quit our relationship.
CHATTERLEY: Wow. To a point where you'd go, you know what, I'm not going to lend you money because you're not responsible enough.
HAMERS: Absolutely.
CHATTERLEY: Does that make business sense? Because you know, as great it is to have a third of banking assets, two-thirds of banking assets aren't
doing this and something inside me says, perhaps, they say, well, you know what, if ING is not lending, I will.
HAMERS: I know. But you know, you've got to start somewhere. Just a year ago, we were the only one. Now, the Katowice Convention, we got four more
banks to join us. Now, we are 131. So this is fairly -- so we have one third of the banking assets now and we will continue to inspire my
colleagues to join us as well. Because if we do it all together, and we address these issues through our client base, we can really make a
difference. That's sure.
CHATTERLEY: The shareholders reward this kind of approach, because one of the big questions for any company not just you as a bank is how do you
align shareholder interest as a profit maximizers, ultimately with environmental and climate goals? Because that's the big question here.
HAMERS: Well, there's two perspectives from a shareholder perspective. The first one is more and more shareholders. One has to do this, because
they have their own kind of KPIs or their own ambitions around this.
The second one is, if you're not leading in it, you may be stuck with stranded assets.
CHATTERLEY: Right.
HAMERS: You've got to write them off. So from a return perspective, you don't want to be the last bank lending into coal, for example. It's just
not good for your business.
CHATTERLEY: They could become bad debt at some point in the future.
HAMERS: Exactly.
CHATTERLEY: Yes, it's quite fascinating to see. Very quickly, what's your message to the eight out of 10 largest banks in the world that didn't sign
up to this? Just too intended. Get on with it.
HAMERS: Okay, well, guys, you know, we're here in New York. Yesterday, we had a session with 131 of your colleagues that are signing for -- signing
the Principles for Responsible banking. Come and join us and make this a real worldwide movement.
CHATTERLEY: Yes, I like it. All right, I want to talk to you about negative interest rates from the European Central Bank, more stimulus.
What do you make of it? Because you've long argued --
HAMERS: Well, the point is that, you know, first, is there really a need for stimulus? There was no credit demand and the answer there is no -- we
actually see savings going up in Europe. So there was absolutely no need for it. That's one.
Secondly, is there's so much uncertainty in the world around trade wars, around Brexit, geopolitical uncertainty that whatever policy change you
make, it's not falling on fertile ground. So from that perspective, it is absolutely not effective. It's not.
And from a savers perspective, people basically have less and less return on their savings and actually, they see their pensions being eroded. They
start to save even more, because they're uncertain about their own future. So the psychology is reversed.
CHATTERLEY: Some would argue as well, and we know this, it makes it more difficult for banks to earn money, too. Does it make you more reticent to
lend as well? Because, you know, in the end, you have to balance the books.
[09:45:28]
HAMERS: Well, clearly. But we rather, you know, take some loss with negative rates than do the wrong things. You can't go after business
opportunities that just don't make sense, just because the money is so cheap, we shouldn't do that. I mean, we should stay sound bankers, and
from that perspective, the tiering of the deposits did help a little bit, that is what we came out with in order to reward and push in a little bit
of the effect. But overall, it just won't help.
CHATTERLEY: Is the risk care that perhaps action that's long been called for by the European Central Bank for nation states, for governments to take
the reforms that would unlock growth, labor market reforms, actually get prevented for even longer or put back even longer because the Central Bank
keeps stimulating?
HAMERS: Absolutely, I mean, this is just buying time for governments who find it very difficult to push through these reforms, which politically I
understand. Don't get me wrong. This has got to stop somewhere. This is just buying more time. It is not helping.
CHATTERLEY: Now, sir, great to have you on. Thank you so much for talking to us.
HAMERS: You're welcome.
CHATTERLEY: Good up the work. The ING CEO there, Ralph Hamers. All right, we're going to take a break. Still had, new kids on the block
chain, a new crypto service just launched, one backed by the owner of the New York Stock Exchange, we speak to its COO understand the first Bitcoin
futures exchange launching today. Stay with us. We're back in two.
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CHATTERLEY: Welcome back to FIRST MOVE. Now, the First Lady is not the only one making her Wall Street debut today. The long awaited crypto
platform, Bakkt launches today offering the first physically delivered Bitcoin futures contract ever traded on a federally regulated exchange.
Wow, that was a mouthful. Joining me is Adam White, the Chief Operating Officer of Bakkt. Congratulations.
ADAM WHITE, CHIEF OPERATING OFFICER, BAKKT: Thank you very much.
CHATTERLEY: Just explain in English what this means.
WHITE: What this means. This is a big day we think not just for Backt and for the Intercontinental Exchange, but for the whole space because for the
first time ever, you have an end to end regulated marketplace for the price discovery of Bitcoin.
So this new emerging asset class you can now store in a federally regulated custodian, trade on an exchange and clear in a clearinghouse.
CHATTERLEY: Okay, so retail participation, institutional. So we're talking bigger money, most sophisticated arguably money coming on board.
Is that what we're looking at here?
WHITE: Bakkt is really here design for the institutional trader, so this is a futures contract. That said we expect this futures contract to trade
the retail brokerages as well. So retail customers can trade this contract.
[09:50:10]
CHATTERLEY: So when we're talking about a futures contract, you're offering a daily contract, you're also offering a monthly contract, which
means to your point about price discovery, we could get a sense of where people think the price is going over the next 12 months.
WHITE: That's exactly right. So our monthly contract goes 12 months out, so what we expect to see happen is that the traders will begin to look at
the forward price curve to say, where do they think the price of Bitcoin is going to go? And that's really important, not just for the speculators,
the actual businesses that rely on using Bitcoin. So the miners are the companies that mine Bitcoin, and in doing so want to hedge and manage their
risk, we think this contracts a natural fit for them.
CHATTERLEY: And it will be the first place where we actually see a sort of clearing price for Bitcoin as well, because we've got so many exchanges
right now that trade cryptocurrency, it's tough to get a sense of it. And I use this word very carefully in this space, a centralized price discovery
mechanism.
WHITE: That's right. Yes, we hope the Bakkt daily and monthly futures contracts lead price discovery.
CHATTERLEY: Yes.
WHITE: Because we're going to bring with it the on ramp for institutional capital that's been waiting on the sidelines to have that end to end
regulated marketplace, this is that opportunity to come in. And we expect that price discovery process to happen through our contracts.
CHATTERLEY: You know, we see all sorts of reports on this, that the price has been inflated, the volumes are inflated. I mean, I think Bitwise did a
study recently said 95 percent of the trades on exchanges are fraudulent, they inflate. I mean, you can use as many different adjectives to describe
this.
How important is what you are presenting today to perhaps tackle some of the perceptions and the concerns out there about fraud and about not
understanding what the volumes are?
WHITE: We think it's massively important. And this is why Bakkt and I.C.E. have been working on this product for over two years. So from the
ground up, we had to build a crypto custodian to safely store and safeguard our customers' Bitcoin.
By doing that you can then allow a physically delivered contract, which has no reliance on any of the outside unregulated spot markets. That price
discovery happens fully within our ecosystem. So we think it's really important.
CHATTERLEY: Talk about the custody arrangement, because I think this is also important. One of the big push backs I get in this space from people
perhaps who don't know all that much is, it's not safe, exchanges could be hacked. Talk about this situation.
WHITE: Bakkt is here to start changing that opinion. So earlier this summer, we got regulated by the New York Department of Financial Services
as a trust, and that's really important because that makes Bakkt a qualified custodian of Bitcoin.
So institutions that want to trade and have asset exposure to Bitcoin, oftentimes are required to not only trade on regulated markets, but to
store their assets in a qualified custodian. That's what we're offering.
CHATTERLEY: Talk to me about having halving. Because we've talked about this on the show, and there are optimists who believe that this will have a
positive impact on the price.
If you're talking about being able to show what people believe the price of Bitcoin will be 12 months out, then if there is going to be a price
increase as a result of the halving, your futures contract should show you that.
WHITE: Possibly, yes. So the halving is an event in the Bitcoin network about every four years, the amount of Bitcoin that's created every 10
minutes drops in half. With that, you see, you know, a diminishing supply. If the demand stays the same, oftentimes, we'll see the price increase.
We think this is an important part of the futures contract to help businesses kind of discover what the fair market value of Bitcoin is going
to be through events like that.
CHATTERLEY: Why Bitcoin? And will you introduce everyone else? I mean, I know Bitcoin has by far the largest market share at this moment, but there
are plenty of other cryptocurrencies out there. We have some XRP enthusiasts out there that I know watch the show. What about these?
WHITE: We are starting with Bitcoin because we talked to our customers, and that's they want to trade. We also see real utility happening on the
Bitcoin network commerce. So there are many thousands of businesses that accept Bitcoin as a form of payment.
So starting with our marketplace, that's not our end goal. That's the place to allow the fair efficient price discovery process to happen. From
there, Bakkt is doing a lot of work to help provide real utility and value to Bitcoin, and we expect that to happen on the payment side.
CHATTERLEY: There's also competition coming potentially, Seed CX, trueDigital, ErisX -- I could name a whole load of them. Afraid?
WHITE: Competition is a good thing. One, it makes us a better company and two, this is not necessarily going to be a winner take all market. We are
in the very early days. We don't look at it as zero sum. We hope to be additive to the space.
CHATTERLEY: Mainstream adoption potentially in the in the future.
WHITE: That's right.
CHATTERLEY: For these cryptocurrencies. Great to have you on.
WHITE: Thank you.
CHATTERLEY: We will track your progress. It is going to be interesting to see how it goes.
All right, that just about wraps it up for the show. I want to give you a look at what we're seeing for the markets right now. We are seeing --
well, we're relatively unchanged, look at that. That's deeply unexciting right now, but we've got a whole week ahead of us.
[09:55:03]
CHATTERLEY: We have though, just had the U.S. Manufacturing PMI coming out to 51. So that's an expansionary territory, a stronger reading for August
it seems. Remember manufacturing is very much a focus at this stage in the United States. Some recessionary feel coming from that sector in
particular.
Of course, we know that the consumer is by far the giant share of the economy in the United States, but getting a better sense of what's going on
in the manufacturing sector is going to be very important in the coming weeks and months.
Can I give you a look at some of the global movers that we are watching in the show as well? I talked you through them earlier on in the session. I
can just pull those up now if we can get those. There you go.
As you can see GM, one of the stocks that we continue to watch in the session; right now, down some three tenths of one percent. The strike
there entering its eighth day-to-day, 49,000 auto workers on the picket line. So watch for headlines, in particular on that one. And Alibaba as
you can see, off some two percent, too.
All right, you've been watching FIRST MOVE. Time to go and make yours. Have a great Monday.
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