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First Move with Julia Chatterley

Reports Say The White House May Reduce Levies On Chinese Goods In Order To Get A Trade Deal; Uber Stocks Decline Following Their Q3 Earnings; Home Device Hacker: Study That Says Alexa And Siri Can Be Hacked With Lasers. Aired 9-10a ET

Aired November 05, 2019 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[09:00:14]

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.

Tariff tweets. Reports say White House may reduce levies on Chinese goods in order to get a trade deal.

Zero stars: Uber stocks decline following their Q3 earnings.

Home Device Hacker. The study that says Alexa and Siri can be hacked with lasers.

It's Tuesday. Let's make it move.

A warm welcome once again to FIRST MOVE from a pretty chilly New York, I can tell you where the market bears though seem ready for hibernation. All

three U.S. stock markets hitting fresh record highs yesterday and look at futures right now, set to add to that in this session. Why? Well, I've

already mentioned it -- trade headlines.

There are reports that the White House is considering reversing tariffs on some Chinese goods in order to seal a trade deal with Beijing. December's

tariffs could also be taken off the table to be fair. This is something China has been demanding all along and if the U.S. agrees to it, the big

question then becomes, what does the U.S. then use perhaps as leverage to ensure the Chinese follow through on their promises? That's been the

conundrum all the way along. Perhaps.

Slowing growth, however, is enough incentive for both nations at this moment. Fresh data today shows China's services sector, still in expansion

mode, but growing at the weakest level in eight months. And as if cue, the Chinese Central Bank adding fresh stimulus today, this time in the form of

lower rates.

They cut rates on one of their loan rates for the first time, in fact, since 2016, making it cheaper to borrow money, but it's not just China, the

head of the Japanese Central Bank, also saying overnight that they could provide fresh support soon, too. The effect, of all the stimulus talk

stimulation for global markets. And we're green right now across the board.

Let's get to the drivers because Christina Romans joins us on this. Interesting, Christine, to see perhaps the White House here recognizing

that they've got to incentivize the Chinese here by perhaps removing the threat of further tariffs in December, perhaps even going a bit further

hereto, something that the Chinese have been asking for all along.

CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS: Yes, since day one, they've been saying we don't think that tariffs are the right way to have this

conversation, and the President has called himself tariff man and has put on round after round of tariffs. It will be fascinating to see if the

President reverses course on that strategy and starts to take them off.

Of course, December 15th is the big, big date. That is the time when a bunch of consumer goods are going to be taxed in the U.S. Something that

Mark Zandi said will be like a big tax increase for Americans next year to the tune of $100 billion. But that December deadline, the feeling is on

both sides that if you can get some kind of a mini deal here, then the December deadline, those tariffs go away.

They were already October 15, a bunch of tariffs that were cancelled. So this was a sign of goodwill to try to get this mini deal started. And

there are these tariffs that went into effect September 1st, and what I'm hearing this morning is the Chinese would like the Americans to take those

off right away, to reverse those tariffs as well.

So that would be the President really stepping back from that tariff man moniker to get this mini deal in the hopes that there's a bigger deal for

thornier issues sometime next year.

But I'll tell you what the feeling is in the trade world right now, it is that both sides are feeling the effects of the trade war. Both sides want

a mini deal and right now, they are just haggling over what kind of tariffs to take off and what kind of intellectual property protections to put in.

CHATTERLEY: Oh, so many good points there, Christine, to the point you and I have discussed so many times here, it is U.S. companies that pay these

tariffs.

ROMANS: Yes.

CHATTERLEY: So as much as it hurts demand over on the Chinese side, it is U.S. companies that would arguably benefit from not having to deal with

this heading into the Christmas season, but you do keep calling it a mini deal. And the thorny issues remain untackled at this stage as far as we

know. Intellectual property -- all the critical elements ultimately do need tackling, and we agree on that point.

ROMANS: There's still this tech Cold War as well. Right? I mean, the President has also used some of these concerns about National Security in

tech land as another kind of tool in this process. We'll have to see if any of that is incorporated into any of this.

But I do think it is fascinating here that the President who has used tariffs so consistently that the White House is at least thinking about the

tariff regime and whether to take something off.

There's also a feeling that maybe aides on both sides have decided that it's time to pause this thing and pull some of these tariffs off, but the

President ultimately decides not to or he does and he tries to rebrand this mini deal as something bigger than it really is.

At any rate, Wall Street and companies would like to see those tariffs reverse for sure.

[09:05:19]

CHATTERLEY: No. He'd never do something like that, Christine.

ROMANS: He is a masterful brander. He is.

CHATTERLEY: Christine Romans, thank you so much for that. Next driver, another profit pothole for ride hailing app Uber.

Uber shares are set to drop some seven percent in early trading this morning after the firm reported a more than $1 billion worth of losses for

their Q3 earnings report.

Uber says it's finally on the road to profitability though, Clare Sebastian has been treading that road and looking through these numbers, 2021, I'll

tell you what? A lot can happen in 18 months for this company, Clare, you've got to get under the bonnet here and look at the numbers. It's not

so sparkly.

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: It's a little giddy, Julia and I certainly think you can see that doubt translated in the premarket

movement in the stock there. And I wonder exactly what the CEO, Dara Khosrowshahi said about that path to profitability.

He actually said, "Our current target with a ton of hard work from all of our teams is to get the total company EBITDA profitability for the full

year 2021." So it's hardly definitive.

But there was some good news from this report, even though they made a loss of $1.16 billion. Revenue growth did accelerate 30 percent, and if you

look at the segments, Julia, the rides businesses, that revenue growth increased at 19 percent.

But where we really see faster growth in Eats and in the freight business as well. Having said that though, those businesses are the ones that are

proving a drag on earnings. Rides, which is 75 percent of revenue for the company that actually showed a bit more strength in this quarter. They

even crossed a billion dollars in gross weekly bookings, but Uber Eats saw it loss widen to more than 300 million. Uber Freight made a loss of $81

million on an adjusted basis.

So these are the parts of the business that are now in investment phase and are really kind of dragging down those earnings. But if you talk to

analysts, they do say they see that that 2021 target could be credible. So some people are pretty bullish on that stock.

CHATTERLEY: Yes, it's interesting. It's interesting to hear Dara talking about capital discipline, spending discipline on the call when some of the

early investors are saying he lacks the visionary sense, actually, that Uber needs at this moment. So I see a bit of a dichotomy there.

But even in the short term, Clare, one of the challenges that investors have to overcome is the fact that multiple more shares are going to be

coming available and will be on the market tomorrow as the lockup period ends. And what does that mean, do we think for the share price here?

SEBASTIAN: This could mean some serious volatility, Julia. They were asked about this on the call and the CFO Nelson Chai, he said, we don't

actually know what's going to happen. They have apparently been talking to some of the biggest shareholders about this, but they still couldn't

provide any clarity on what that could mean.

Of course, we've seen a bit of trouble for the stock since the IPO. It is still down about 30 percent even before it opens today on that potential

seven percent last beyond that, it could be a record low.

But in terms of the fundamentals, there are some positive signs from this earnings report, so perhaps that will play in to a little bit more

stability in the stock.

CHATTERLEY: Yes, it might be a good buying opportunity. Who knows? Clare Sebastian, thank you so much for that.

Next driver, OPEC says don't count oil out just yet despite broad calls for more renewable energy; burning oil, it seems is here to stay. That's

according to the World Oil Outlook just released by the organization of oil exporting nations.

John Defterios is at the OPEC headquarters in Vienna. John, that was the longer term. In the shorter term, there are some pretty big challenges.

U.S. shale output continues to surprise them. They recognize they need to cut capacity here that's uncomfortable at a time when they're already

trying to restrict output to keep prices up. Ouchies.

JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Yeah, I think it's good to have a healthy debate between the two of us that's not about the

oil price today or whether OPEC cuts at the December meeting right, Julia? It's nice to take a zoom out and look at the issue.

You are a hundred percent correct between now and 2025, the shale patch continues to expand if you will, U.S. overall production 12 million barrels

a day, number one. Of that 12, eight is with the shale patch.

Get this number for 2025 according to OPEC, there is going to be 20 million barrels a day of production for the United States. But they think there's

going to be a fade after that because of the high cost of production vis-a- vis the fittest producers within OPEC themselves -- Saudi Arabia with Saudi Aramco, the UAE with ADNOC, Kuwait Petroleum in Kuwait, of course. They're

the low cost producers at $2.00 to $4.00 a barrel.

The other thing that stood out for me in this report is that the market share for oil and gas doesn't collapse during the energy transition.

They're saying by 2040, it'll hold steady around 53 percent and I couldn't leave out the topic of the IPO of Saudi Aramco and how it influences this

organization, OPEC in the future and the OPEC Plus Agreement. Here's the Secretary General of OPEC.

[09:10:14]

(BEGIN VIDEOTAPE)

MOHAMMED BARKINDO, SECRETARY GENERAL, OPEC: The Kingdom of Saudi Arabia has reiterated times without number its continued commitment, not only to

OPEC, but in providing the leadership to this organization. And we have also heard from the highest levels of government in the Kingdom that the

IPO will not in any way impact on their membership or the leadership role that they provide within OPEC.

DEFTERIOS: The World Oil Outlook that you put out here still shows market share for oil and gas by 2040 at 53 percent, just dropping one percent.

What makes you believe in an energy transition you can hold on to that level of market share?

BARKINDO: These are the facts. These are the hard data that go into these projections. And we are not alone in these projections. If you look at

the IAEA in Paris or the EIA in Washington, and other reputable institutions, oil and gas will continue to dominate the energy mix to 2040.

DEFTERIOS: In this scenario, at the end of the day, you're suggesting, though that OPEC goes total liquids with crude production from 36 million

barrels a day now to 44 million barrels a day by 2040.

It's not the shale producers that went out, but the OPEC producers who have a lower base?

BARKINDO: OPEC will continue to serve as the base load for global energy requirements. The shale producers, and particularly in the United States

have done extremely well in the last several years to revolutionize this industry, and we are beginning to see a deceleration as we go into the

medium term.

I think it's a growing consensus that going beyond the medium term, the world will revert back to the conventional oil. The producers mainly in

OPEC who account for over 80 percent of global proven reserves.

(END VIDEOTAPE)

DEFTERIOS: The fittest survive, Julia. That's the detail here of the OPEC oil outlook report with market share for OPEC going to 44 million barrels a

day by 2040.

As you said, they've been cutting the crude alone, below 30 to accommodate for shale, so this could turn in the next 10 years.

CHATTERLEY: Yes, absolutely. And in the short term, they've got the December meeting to worry about, too. So keeping busy. John Defterios

from OPEC in Vienna there. Thank you so much for that.

All right. Let me bring you up to speed now with some of the other stories making headlines around the world. We've reached the public phase of the

Impeachment Inquiry with transcripts now being released from the closed- door interviews with former U.S. Ambassador to Ukraine Marie Yovanovitch and State Department adviser, Michael McKinley.

Phil Mattingly is in D.C. and joins us now. Phil, great to have you with us. The other one that I'm watching for here is the transcript from Gordon

Sondland, of course, the U.S. Ambassador to the E.U.

For our international audience here, what do we have to watch for in these transcripts? What's going to move the dial here?

PHIL MATTINGLY, CNN U.S. CONGRESSIONAL CORRESPONDENT: Yes, Julia, I think what's interesting, so you can kind of separate yesterday's transcription

from the ones were expecting today.

Yesterday's transcripts were kind of an intimate inside look on kind of a shadow Ukraine policy. The almost surreal word for word account of

watching a U.S. Ambassador to the Ukraine have her legs cut out from underneath her because entities aligned with the current President didn't

like how she was operating in Ukraine.

Today is going to be different. Today is less about how that occurred, and more about the allegations at the center of the impeachment probe, these

quote-unquote "quid pro quo" whether or not the administration deliberately withheld nearly $400 million in U.S. aid to Ukraine in order to try and get

political favors and why these two depositions matter.

Kurt Volker, the former Special Representative to Ukraine, Gordon Sondland, the Ambassador to the E.U. -- it was these two individuals who were

intimately involved in these discussions both on the irregular channel as Bill Taylor, the Ambassador called it and on the official channel as well.

You mentioned Gordon Sondland. Here is why he is so important and why this deposition, the hours' long deposition, and the transcripts that's going to

come out is of such interest to really both parties.

Sondland was in the middle of everything. He was texting with people -- Kurt Volker, Bill Taylor -- about the idea of withholding aid. He was

talking directly to the President about this idea as well. What he -- how he recounts what occurred is going to be very interesting as people try and

piece together everything we've heard in bits and pieces out of these close-door depositions in the last couple of weeks.

Here is also why it matters. Both Republicans and Democrats have said since they've come out of the room in those closed door depositions that

they believe Sondland either wasn't entirely truthful in his testimony or had a series of misstatements. That based on witnesses that came and

testified after the fact, after Sondland testified where they were very clear contradictions, where they were very clear areas where Sondland

either didn't remember something or remembered it very different than multiple people who testified in the wake of that.

[09:15:15]

MATTINGLY: Why that matters is this. Due to Sondland's kind of central role in everything that we've seen over the last couple of weeks and the

idea that perhaps he misspoke, or perhaps he didn't -- he wasn't entirely truthful about his recollections, there's a very real chance Democrats try

and call him back and not just call him back in a closed door deposition, but call him back in a public forum.

So that's why everybody is going to be reading this very closely. I also think it matters because, Julia, there's been a lot of back and forth

between Republicans and Democrats about the process. Frustrations from Republicans that this has been closed door. It's now firmly moving into

the open phase.

When you get these transcripts, you can read the questions and the strategies Republicans have for these witnesses. You get insight into how

they're attempting to defend the President, why they think there are problems with specific things. All that is stuff we have not gotten

because this has been closed door, now we're getting a view into that. I think that's going to be a great entree into what we're going to see in

those public hearings when they occur in the weeks ahead.

CHATTERLEY: Yes, that is such a great point. The approach here, the defense effectively from the Republican side. Great point there. Phil

Mattingly, great to have you with us. Thank you so much for that.

Let's move on. Turkey has captured the sister of Abu Bakr Al Baghdadi, a senior Turkish official has told CNN. She was detained with her husband,

daughter-in-law and five children in the northern Syrian City of Azaz. Turkey called the arrest and intelligence gold mine.

Authorities in India are trying to protect one of the wonders of the world from hazardous smog. Air purifiers were deployed to try to rid the air

around the Taj Mahal of toxic particles. Smog in India's biggest cities has risen to levels that are threats to public health, a local report said

is also turning the nearly 400-year-old Taj from white to yellow.

All right, we're going to take a quick break here on FIRST MOVE, but still to come that LinkedIn launches a product fit for the gig economy. I speak

to the company's cofounder about the changing world of work.

And dazzling Alexa, the hack attack that uses lasers to hijack your smart speakers. All the details coming up. Stay with us.

(COMMERCIAL BREAK)

[09:20:21]

CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange this Tuesday morning. U.S. stocks on track to rise to fresh

records in early trading this morning.

New trade headlines fueling gains across global markets as you could see, a sea of green there. European stocks hitting 21-month highs in fact.

Reports say the United States make cut tariffs, removing tariffs perhaps to seal a deal, a Phase 1 trade deal with China. China also joining the rate

cutting party, too, as we mentioned earlier on the show, trimming one of its lending rates for the first time in three years in fact.

Let's just take a look at the S&P up-to-date, year-to-date. We're up some 22 percent on track, in fact, for its best performance since 2013. That

should keep your eyes closed as far as December was concerned of last year, if you remember, because that was incredibly painful, but we're still

trailing many global markets year-to-date.

Let's explore this. Lisa Shalett joins me now. She is Chief Investment Officer at Morgan Stanley Wealth Management. Great to have you on the

show, and we're color coordinated. We like that today.

LISA SHALETT, CHIEF INVESTMENT OFFICER, MORGAN STANLEY WEALTH MANAGEMENT: Hi, Julia. Good morning.

CHATTERLEY: Markets clearly feeling happier about phase one trade deal what we're seeing right now, you're saying, hang on a second, guys. Let's

look at earnings and earnings expectations as we push out, and then we come to a bit of a sticky stopping point. Talk us through it.

SHALETT: Yes, sure. So, you know, I think one of the first things that we try to remind everybody about, there's been a lot of enthusiasm about beat

rates and the numbers --

CHATTERLEY: As always.

SHALETT: The numbers in the third quarter and the earnings that were reported are so much better. But what we remind people about is that

coming into the third quarter, profit estimates were really cut pretty severely. And in fact, we're going to be down -- forecast would be down

about six or seven percent versus a year ago.

Where we've ended up is probably down about two or three percent, and that's the big expectation.

CHATTERLEY: Good management expectations.

SHALETT: Yes, exactly. So that's the big surprise, but we're focusing on reminding people, those earnings are still negative.

Now, the implication of that is in a world where the stock markets are roaring to all-time new highs, what it really means is that price earnings

ratio or the valuation, right, how much price we're putting on that earnings, price is really driving all of the gains that we've seen because

earnings themselves are flat.

And so that suggests to us that markets are starting to get pricey. The price earnings ratio right now is about 18.7 times forward expectations are

what we're expecting for 2020. That's really at the high end of the range of what is normal, which is closer to 15 to 16 times.

So we think that this is a market right now that's running a little bit on enthusiasm and sentiment, and maybe getting ahead of the actual profits.

CHATTERLEY: I mean, others could look at this and say, but some of that's driven by -- we've got 60 percent now of the world stimulating to some

degree, that's fueling a degree of enthusiasm. And I guess the other pushback would be look, in a battle of the uglies, the United States still

wins. Your point is hang on a second, you need to look a bit broader than just the United States.

SHALETT: Exactly. So really, the U.S. has meaningfully outperformed almost all other regional markets for 10 years. And so if the wager that

people want to make is in fact that all central banks have engineered a global soft landing, and we're going to enter a new phase of the cycle, our

view has been okay, then invest in those markets that are, you know, much cheaper, that have much more leverage to this pickup.

And so we've said that's going to include rest of world markets, like emerging markets, like Europe, like Japan. You know, other sectors within

that small caps, financials, industrials, have been kind of left behind and they really have leverage to a true pickup and growth.

CHATTERLEY: To what extent do we need to see a China trade deal, even if it's just Phase 1 or even a stabilization in some of the Chinese data?

Because there's real cautiousness around that, particularly when you're talking about perhaps investing in emerging markets and particularly Asian

markets I'm talking about now, admittedly, they've been pretty beaten up.

SHALETT: They have been in and I think that's an area where we would absolutely agree with you. China has become central to the global trade

story. They are the world's largest trading partner with virtually every country and so stabilization in China and the rate cuts that they're doing,

the fiscal stimulus that they've been doing for the past year are really important factors that should -- you know, we believe lead to a rebound and

global growth.

[09:25:13]

CHATTERLEY: But as far as you're concerned, and I was asking this on the show yesterday, a Santa Claus rally here in the United States, your message

is, guys, you've kind of had it, the stockings full. Take some chips off the table.

SHALETT: We are definitely in that camp because we think, again, so much optimism is now priced in. We think that the market is pricing not only,

you know, that the Fed remains accommodative. And we're like, look, we think they're on pause.

And all of this is, you know, all the low rates have been discounted, and we're not really sure the Fed is going to be able to do a lot more and

they've kind of signaled that and it's very important, I believe, for their independence, that they're going to -- it's going to take a very high bar

for them to act in an election year. That's something to consider.

CHATTERLEY: How interesting to look politically independent, they are going to have to sit on their hands here.

SHALETT: I think so.

CHATTERLEY: And actually that gets more likely if we see a Phase 1 trade deal because of the need for further stimulus is lessened.

SHALETT: That's exactly right. Yes. Exactly.

CHATTERLEY: Wow. It's going to be interesting to watch.

SHALETT: It will be.

CHATTERLEY: Look outside the United States.

SHALETT: Absolutely.

CHATTERLEY: That's the bottom line message, there is opportunity.

SHALETT: Absolutely.

CHATTERLEY: Lisa Shalett, great to have you on the show. Thank you so much.

SHALETT: Thank you, Julia.

CHATTERLEY: Chief Investment Officer at Morgan Stanley Wealth Management. Well, I'll give you a quick look because we had stores the market open this

morning. We are seeing green across the board right now. Fresh record highs. You heard it here, guys. You've had the juice and the excitement

this year. You've got to look somewhere else. Plenty more to come on the show. Stay with us. You're watching FIRST MOVE.

(COMMERCIAL BREAK)

[09:30:00]

CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange and the opening bell this morning. What can I tell you? Well,

the bulls are on the loose here once again on Wall Street and a duck, I think some college basketball mascots there. All the major averages

hitting fresh record highs out of the starting gate this morning after rising to record levels on Monday, too. Just two tenths of a percent. So

we'll see how this session shapes up, but we have got trade optimism that's driving broader sentiment.

Reports suggest we may see lower tariffs or at least the threat of December tariffs removed in order for the U.S. and China to strike a Phase 1 trade

deal here.

Bond yields also on the rise globally, as sentiment improves hereto. We've got the U.S. 10-year yield currently above 1.8 percent. The German 10-year

yield actually, at four-month highs. French 10-year are also closing -- close to clawing their way out of negative territory. We might be able to

show you that in just a moment. But it fits with the conversation we were just having with Lisa Shalett there, seeing improving sentiment for stocks

and seeing bond yields higher over in Europe in particular.

All right, let's take a look at our Global Movers this morning. Uber is under some pressure after reporting their Q3 earnings, right now down some

seven percent. The ride-hailing app posting a smaller loss than expected, but it was still more than a billion dollars. Uber says it has a roadmap

to profitability in 2021. The problem is that road could be full of potholes.

Shake Shack also under pressure this morning down over 17 percent. The burger chain saying that stores sales growth disappointed. Also bear in

mind, shares are up 89 percent year-to-date, so you can see a bit of steam losing without losing that monster gains this year.

Tapestry is higher by some 1.7 percent. The owner of Kate Spade and Coach brands reported earnings that big estimates but we did see a week of

performance at Kate Spade, which dented overall sales, right now higher by some 1.7 percent.

All right back in 2013, the former N.S.A. contractor Edward Snowden unveiled a global U.S. surveillance program. Well now, he is warning that

Google, Facebook and Amazon are complicit in government spying. He accused big tech of a Faustian bargain to exploit and pass on personal data. He

was speaking at the Lisbon Web Summit.

Hadas Gold is there. That's an interesting guest, Hadas, to open up the Lisbon Web Summit and a warning here once again, to us as users of social

media that our data is up for grabs here and we're not protecting it well enough.

HADAS GOLD, CNN BUSINESS REPORTER: Yes, Julia. It is definitely a different -- interesting way to launch what is the largest tech conference

in Europe with Edward Snowden. He appeared via video link from somewhere in Russia and he warned that despite people -- despite the fact that people

are catching on to what he warned about in those leaks from 2013, that people are getting mad at the right people, but for the wrong reasons.

He actually also criticized some of the efforts here in Europe, like GDPR and says it's not about data protection, it is actually about how data is

collected. Take a listen to what he had to say.

(BEGIN VIDEO CLIP)

EDWARD SNOWDEN, FORMER N.S.A. CONTRACTOR: ... stake that it makes is actually in the name, the General Data Protection Regulation misplaces the

problem. The problem isn't data protection, the problem is data collection.

Regulating the protection of data presumes that the collection of data in the first place was proper, that it was appropriate, that it doesn't

represent a threat or a danger, that it's okay to spy on everybody all the time, whether they're your customers or whether they're your citizens, so

long as it never leaks, so long as only you are in control of what it is that you've sort of stolen from everybody. And I would say --

(END VIDEO CLIP)

GOLD: And Julia, what's really interesting is that he said, he pretty much -- he feels as though you cannot trust anybody in the system, and that we

have to redesign the entire area of connectivity.

Of course, the way we regulate tech, the way we hold these internet companies accountable is a big theme here at Web Summit. And it's an

interesting conference that it brings together both people from the tech side and from the regulator side, and I will actually be posing a lot of

those questions tomorrow on the stage behind me with former Prime Minister Tony Blair, and Congressman Ro Khanna as we approach some really important

elections coming up where tech is, of course, playing a big part -- Julia.

CHATTERLEY: Yes, my favorite quote from him, "The most powerful institutions of society have become the least accountable to society." And

you and I, Hadas have discussed enough. It's not about regulation. It's about us protecting our own data and being more conscious of what we're

giving up. Hadas Gold, thank you so much for that. We look forward to more from the Web Summit.

[09:40:14]

CHATTERLEY: All right, let's move on. Networking site, LinkedIn has a new product. It's called Open for Business and it aims to connect freelancers

and small businesses with clients, and it launched Monday over in Dubai.

Allen Blue, co-founder and VP of Product Strategy at LinkedIn joins us from there. Allen, fantastic to have you with us. Just start by explaining

what Open for Business aims to do.

ALLEN BLUE, CO-FOUNDER AND VP OF PRODUCT STRATEGY, LINKEDIN: Open for Business provides a few key features for small businesses and for

freelancers, allowing them to represent their small businesses on LinkedIn and do what is most important for small business and that's find new

clients, grow their clients.

It also helps individuals who are using LinkedIn to find those people more easily.

CHATTERLEY: Yes, because most businesses, like small and medium sized enterprises, it's word of mouth that helps drive their business ultimately.

So any way that you can facilitate that or digitize that helps them.

Why Dubai? I just spent a couple of weeks there talking to startups and small businesses and talking about the opportunities there. Why did you

choose to launch in Dubai?

BLUE: Well, we did the same thing as a matter of fact. So last year, we came to Dubai, it was one of the places in the world that we chose to come

talk to entrepreneurs and freelancers about what they needed, and how to make word of mouth work for them on LinkedIn.

So when it came time to do our worldwide launch, Dubai was one of the places we looked at and decided we wanted to do it here because the entire

region is so supportive and focused on the growth of small and medium enterprises. It just seemed like the right fit.

CHATTERLEY: You mean, from a government perspective?

BLUE: I mean, from a government perspective, and I also mean from -- look, I guess, I would just say that the entire region is growing and changing

very quickly. Some of that is driven by very large companies, but a lot of it is driven by small and medium sized businesses.

I've had an opportunity while I've been here to speak to young entrepreneurs and youth are really driving the future of the MENA region,

and many of them want to set off on their own, create their own businesses and set up the next future.

CHATTERLEY: Yes, I discovered the same. It's a fascinating time to be there. One of the beauties of LinkedIn is how much data you collect. You

have an economic graph of what some 600 million users plus which gives you a sense of what's going on, what shifts, what patterns are taking place

around the world.

And one of the things that I like talking about on this show is the skills gap and the evolution of the skills gap. What is your data telling you at

this moment?

BLUE: Well, it's telling us a few things for sure. So the first is that there's actually more than one skills gap. Skill gaps are regional, and

they're very specific to the local economies.

So we know for instance, that in some places, the skill gaps are abroad and technology skills are the most in demand. But if we look at a lot of other

places, we actually are looking at soft skills, the things which make it possible for people to do all kinds of work.

The second thing is we see brand new roles emerging around the world to take the place of roles which are in decline. So whether it's blockchain

or whether it's new frontiers of artificial intelligence and machine learning, there are brands and new roles which didn't even exist three or

four years ago, which are now some of the fastest growing jobs in the world.

And I guess, in this case of artificial intelligence, we also know that artificial intelligence is such a new field, but it's one where we really

need to think about the diversity of the people who work in that field.

I mean, artificial intelligence is all around us. But the people who do artificial intelligence are largely, for instance, men. So one of the

things when we were measuring gender gaps in our data, we were looking for ways to bring a broader and more diverse group of engineers to come work on

these products which have become part of our daily lives.

CHATTERLEY: You see, this is fascinating. As far as artificial intelligence is concerned, it's one of the big fears that actually

exacerbate the gaps like gender gaps. I've got another question and it ties to what you were just saying there about, actually given the speed at

which innovation is taking place and technological changes taking place. It is soft skills that people need, it is leadership, it is flexibility and

oral communication.

[09:40:10]

CHATTERLEY: Is that the case particularly when we look at areas where technology is moving quickest, actually, the risk here is if we don't adopt

these kinds of skills, the skills gap will accelerate.

BLUE: So, the skills gap absolutely is typified by gaps around what we normally call soft skills. So as you say, oral communication and the

ability to work with other people to collaborate, to make analytic decisions. These things are important for almost every kind of business.

And we find that if you have a good grounding in soft skills, one of the things you can do is you can take on new technical skills very easily.

So in many ways, if you can keep a way to future proof your career, then thinking about soft skills and thinking about curiosity and the ability to

learn new things is going to serve you very well in the coming years.

CHATTERLEY: Yes, it's such a great point. Soft skills facilitate technical skill adoption. Allen Blue, cofounder of LinkedIn, great to have

you with us and we look forward to chatting again.

All right, we're going to take a quick break here on the FIRST MOVE, but coming up, finding people in crowded places or remote locations is never

all that easy.

After the break that company that's mapping the world three-words at a time. Stay with FIRST MOVE.

(COMMERCIAL BREAK)

CHATTERLEY: Welcome back to the show. We're all used to typing in addresses to find locations, but they're not a foolproof way of getting

anywhere. Here's the problem, street addresses often aren't unique. They can be useless at large locations, too.

Let's say you're trying to find the good entrance turns to a sports stadium for example, and while the zip code or postcode format varies around the

world, much of the planet is actually without an address.

[09:45:10]

CHATTERLEY: What3Words has covered the globe with a grid of small squares? Each square is they're named with three random words so it's easy to

remember the GPS coordinates for example. So to give you an example, the Empire State Building is heaves, wipes, clay; and the Statue of Liberty,

well, that's planet, inches, most. Get the idea?

The CEO of What3Words, Chris Sheldrick says it's all about keeping things simple.

(BEGIN VIDEOTAPE)

CHRIS SHELDRICK, CEO, WHAT3WORDS: So we definitely want What3Words to be a global standard. So wherever you are in the world, you see the three-words

and you just know exactly where you can use them and what to do.

In fact, the first country we got to adopt it was Mongolia. I went there, they've got a huge problem, huge country, not many addresses. And so the

Mongolian Postal Service was the first government department in the world to actually accept it.

You can write a letter to Mongolia, you can just put the three-words and it will get to where you want it to go. And since then, as you say, "Lonely

Planet" have now put it throughout to have their guidebooks where they really struggle to tell people where the things are. You just have the

three-words written down in the guidebook.

Even Mercedes Benz have now adopted it. So you get into any new Mercedes, you just speak the three-words, and it's going to navigate you with the in-

car nav to that three meter square, which is totally awesome.

I think we're now seeing like e-commerce sites on the checkout page, you can just add your three-words if you're one of those people who lives in

the middle of nowhere, like I do, the delivery drivers get lost, well, now you can start to add your three-words.

So just so many ways around the world and just places that don't have very good address systems outside of the kind of towns and cities in the West.

Actually, most of the world has a really bad experience with addresses.

(END VIDEOTAPE)

CHATTERLEY: What3Words is finding a home in places like emerging markets, which struggle with old fashioned street addresses, in particular India and

China, where growth is also being driven right now by the needs of the gig economy. Chris Sheldrick says profitability will then come from big

companies using the system and adopting it in those regions.

(BEGIN VIDEOTAPE)

SHELDRICK: So for consumers, the app is totally free. You can just download What3Words. You can find out what the three-words that we've

named the front door of your house are, your front door has got three- words, your back door has got three-words, totally fixed, and you can't change them.

When we work with businesses, then we charge them to use the service just like they pay for addresses today. So if you're using a ride hailing app,

and you put in a street address that ride-hailing app will pay for that service to understand where that location is. Similarly, they pay us.

So Mercedes Benz now pay us a license fee to have What3Words in their cars and that's exactly how we do it. But for consumers, it is totally free to

use the What3Words through app or the website anywhere in the world.

Beyond Mercedes Benz, we've actually just signed Tata Motors, which is India's biggest car company. All of them are trying to have a navigation

system and a voice interaction system that just works.

So many people are just annoyed with their cars voice system and just say it doesn't work. So they stick their smartphone on the windscreen.

So all of the car companies in the world are now trying to change that. So we've actually got about three or four more announcements coming up very

soon about other cars where you'll be able to put the three-words in, and then it just sort of escalates into what you just expect that your car will

support What3Words.

We want to expect that your e-commerce checkout page will have a box there, to put in your three-words. We want more guidebooks, more governments like

Mongolia, even the U.N. have put it into one of their disaster recovery apps because in so many places when you've got an international disaster,

addresses just sort of disappear if you've got floods and all sorts of things.

So I think that's it. It's just really powerful if we can get everybody to become What3Words enabled if you like.

(END VIDEOTAPE)

CHATTERLEY: They are also raising money. The company tells me Sony, Intel, Daimler and Deutsche Bahn are all board as global brands investing

in three-word addresses.

(BEGIN VIDEOTAPE)

SHELDRICK: All of these companies believe in our vision, but this is not a small feature that we're adding. We are saying the What3Words and three-

word addresses will become a global standard, and all of these companies we talked to about that vision, and they work out how they can help us.

So for example, Sony just launched a taxi service in Japan called S.Ride. They put What3Words straight into that, so it's the first Japanese taxi

company to support three-word addresses.

All of them are trying to help us get there. But they know that this doesn't happen overnight. They know that we're going to be a couple of

years away from getting this ubiquitous. They want to help us transition so we can be in all of the voice assistance.

We can be part of drone software, and all of these trends which are kind of just about coming and getting there. They're going to support us through

that.

[09:50:00]

SHELDRICK: So we're really lucky with the investors that we have.

CHATTERLEY: Talk to me about profitability. Are you profitable as a company?

SHELDRICK: So we're still growing. So, profitability will come very soon. We are active in about 10 countries at the moment. So, lots to do, and the

licenses are starting to come. So all of the car companies coming shortly, the e-commerce vendors who are now paying and signing up, I think we're

going on a pretty good trajectory to really build a very sustainable solid business very shortly.

(END VIDEOTAPE)

CHATTERLEY: Also some Emergency Services are using it as well to help locate distressed people and it's free to consumers as well, an interesting

one to watch. What3Words.

All right coming up after the break. Home assistants are back in the spotlight, we shine a light on how to hack, Alexa, literally. Stay with

us. We're back in two.

(COMMERCIAL BREAK)

CHATTERLEY: Welcome back to the show with a look at today's "Boardroom Brief." Shares in Rakuten closed higher despite the fact that the fact

that the Japanese e-commerce firm says it expected to take a loss of almost $915 million dollars on its investment in the American rideshare company,

Lyft this quarter.

Rakuten is Lyft's biggest shareholder in fact and Lyft shares are down 40 percent since its March IPO.

Adidas is partnering with the International Space Station to test products in space. The company has delivered footballs to the ISS to test how they

behave in microgravity conditions. Conditions in which people or objects appear to be weightless. Adidas says the results could help it develop new

products.

Austin Powers' nemesis, Dr. Evil would be proud of this one. Researchers have hacked Amazon's Alexa Google's home and Siri's voice assistance by

laser. Dr. Evil explains.

(BEGIN VIDEO CLIP)

DR. EVIL, FICTIONAL CHARACTER, AUSTIN POWERS MOVIE: In essence a sophisticated heat beam which we call a laser.

(END VIDEO CLIP)

CHATTERLEY: Makes perfect sense to me. It seems the laser can be flashed into the device in order to take control, I couldn't help myself. Anna

Stewart, explain because I have to say I'm still a little bit confused here. How does it work?

ANNA STEWART, CNN REPORTER: Dr. Evil doesn't explain it all, does he? Well, here the research suggests that if you point a laser beam at a the

microphone or have a voice activated smart gadget in someone's home, this is up to 110 meters away, by the way, it can be fooled into thinking it's a

voice command at the specific frequencies.

It moves the diaphragm, find the microphone and that sends all the electrical signals to the device. And this is fun if you're thinking about

neighborhood pranks, you could mess with someone's music in their home. You could change their thermostat.

More worrying if you think about the potential though for malicious hacks given voice activated gadgets can open up a garage. They can unlock a car,

you can go shopping on Amazon.

So we have been reaching out to all the big tech giants, yet another problem for them. Google says they're reviewing the research. No comment

yet from Apple or Amazon -- Julia.

CHATTERLEY: Yes, I'm sure they've seriously tried to work out what exactly is going on here and ultimately what the fix is, but I guess in the

interim, the moral of the story is keep your home devices away from windows because I mean the laser have to actually get into them and be in the right

position in order to be able to get to the little microphones. Agree?

[09:55:21]

STEWART: Yes, it's not the easiest way. I mean, this is not an easy security issue for people to get around really. First, you need direct

line of sight as you said, a smart gadget through a window. Yes, you need to be able to see it, so just put it out the way.

Also, you've got to think about the fact that some gadgets do require extra authentication for instance, your iPhone, you need to put in a code, a

touch ID, facial ID. You need a gadget that doesn't require all of that.

And thirdly, you know what? The equipment that would be required to do this would set you back about $400.00, a laser pointer, a laser driver, and

a sound amplifier. Simple option. Just keep it out of sight. You can prevent Dr. Evil from hacking you, very simply.

CHATTERLEY: Yes, you've got to really want to open some of this garage or something in order to get involved in this. Quick Anna, Dr. Evil

impression both of us. This is a photo opportunity. Too much hair, too much hair. It is not working. That's it for the show.

You've been watching FIRST MOVE, time to make yours. See you tomorrow.

(COMMERCIAL BREAK)

[10:00:00]

END