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First Move with Julia Chatterley
GameStop Stocks Rise Premarket as Trading at Robin Hood Softens its Buying Ban; Lawmakers from the Left and Right Demanding Answers from Robin Hood; E.U. vaccine approval pending, but the row over supplies remains with AstraZeneca. Aired 9-10a ET
Aired January 29, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
GameStop game on: stocks rise premarket as trading at Robin Hood softens its buying ban.
Robin Hood rumbled: lawmakers from the left and right demanding answers.
And Astra approval: E.U. vaccine approval pending, but the row over supplies remains.
It's Friday. Let's make a move.
Welcome once again to FIRST MOVE. We've made it to Friday. It's also the last trading day of January and what a month it's been with markets jolted
by the Reddit retail trading revolution that's forcing us all I think in some way to question the integrity of the financial system.
Small traders gaming with the investment elite say their fears of a rigged system are being realized by trading curbs and restrictions on where they
can discuss markets. Just to make it clear, Robin Hood, the trading app yesterday decided to impose a buying limit on stocks like GameStop,
effectively creating artificial selling pressure because people panicked and inadvertently therefore pushing stock prices in a direction that
seemingly helped some of those hedge funds that had sold these stocks originally.
Now Robin Hood CEO, Vlad Tenev chatted with my colleague, Chris Cuomo last night, and he rejected the allegation that he was in some way out to
protect the big guys with those trading curbs.
(BEGIN VIDEO CLIP)
VLAD TENEV, CEO, ROBIN HOOD: I know that there's rumors around that, you know, we were directed by market makers or other market participants to do
this, and I want to be a hundred percent clear, this decision was not made on the direction of any market maker or other market participants.
(END VIDEO CLIP)
CHATTERLEY: Now should limits be perhaps put in place on stocks that are highly volatile and that people may be buying without actually having the
money in their trading accounts to buy, probably, but remember, this happens a lot, if nothing like this, however, the communication needs to be
better and the exchanges, the stock market exchanges and regulators need to be discussing cooling off periods to control the kind of feeding frenzy
that we've seen in these stocks.
Robin Hood was also clearly caught off guard here by this, too, I think buffeted by the very, very low revolution that it's helped spawn. It has
now raised over a billion dollars in new funding to shore up its cash position. The end results? Well, GameStop ended lower yesterday. But as
I've already mentioned, it's now up more than 80 percent premarket.
GameStop, game on, but there's a bigger question that needs an answer about what's driving this.
You know, smaller investors believe they've long missed out on the rewards others have accrued. And that in some way, this is a kind of payback. We've
seen refashioned stop this steal mantra taken from the U.S. election and just like Occupy Wall Street 10 years ago, they have found a way now to
make their voices heard, their anger, I fear in some way summed up by this Bernie Sanders tweet last night, "The business model of Wall Street is
fraud."
Now, that's Bernie Sanders. But Wall Street needs to be perhaps more transparent, and lawmakers smarter about addressing some of these concerns
and the regulatory risks posed or risk losing the trust of a new generation of investors.
Let's get to the drivers. Christine Romans joins me now.
Christine, we've got to remember -- and great to have you with us -- that Robin Hood is in its infancy, too. I look at the handling of that
interview. The handling and the mess they made of communicating what they were trying to do yesterday. And you know, it's all feeding into this lack
of trust that we've got going on here in the financial system.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: And remember, there were a couple of days on big market days in the past year or so when
the Robin Hood platform couldn't handle all the trades. Remember that? There were a couple of times that the small investor has missed out on big
moves, because the platform was overwhelmed.
So, you're right. It has democratized Wall Street.
Robin Hood is what caused Schwab and TD Ameritrade and all these other firms to drop their $7.99 or $10.99 brokerage fees, right? So, they really
are the ones who opened the door for anybody to sit there with a keyboard and a trading app and to be able to trade here.
It's so fascinating to me. This is like, you know, populism, you know, without the pitchfork, but with a trading app and a keyboard. It really is,
and there's this feeling that anybody can go in there and buy stocks.
My big question at this point is where do they go from here? At beginning of the year, GameStop shares were what -- $17.00 or $19.00 a share. They're
$350.00 now. I mean, that's just a remarkable rise not in line with the fundamentals of the company.
So where does this go from here in terms of regulation? In terms of the soul searching about what is fair and not fair on Wall Street? There's also
a side discussion here about just naked shorting -- the practice of shorting. Why is it okay for sophisticated investors? Why is that -- when
it's clearly not a hedge? When it is clearly the device of a company?
There's a big debate going on about that, you know, you saw Elon Musk tweet, you can't sell a house you don't own, you can't sell a car you don't
own. Why are these guys selling stocks they don't own? It's a scam.
[09:05:32]
CHATTERLEY: It's so true. And you know, if we try and grapple this back to the fundamentals, this is a company with debatable fundamentals and there
are reasons for those guys to think that the price of this stock should be lower, should we be encouraging people to be buying this stock and pushing
the price really high?
When we look at the underlying metrics of the company and go, that doesn't make sense. So there are so many questions to ask here, I guess, what you
and I, and the expertise that we have can bring to this is, you know, advice for buyers at this moment, if you want to get in on the game.
You know, when I got into finance, my first mentor said to me, greedy pigs make great bacon. Know when to take profit and go party. And I just feel
like if you're somebody who is investing in this, because you want to make money, and you can't actually afford to lose that money.
ROMANS: This isn't investing.
CHATTERLEY: Think twice.
ROMANS: This isn't investing. This is speculation, and this is a get rich, quick scheme. I mean, that's really what this is, right now. It's a game
and maybe it's a moral game to stick it to the man and the man is Wall Street and you know, the prop desks, and the hedge funds and high frequency
traders.
But mostly, this is being fueled by the elixir of a quick profit and that's what a lot of people have been talking about on these sites. You know,
there's also an old Wall Street phrase that we all learn early in our career is the market can remain irrational longer than you can remain
solvent, and that is true as well here.
If any, if you don't have the money to lose, you should not be playing in this dangerous game here with these stocks, I mean, you really shouldn't.
This is just -- I mean, this isn't even like an IPO, which I also caution against buying an IPO in the first year, you know, the normal person is not
getting an insider placement on that either. So just tread carefully here, buyer beware.
CHATTERLEY: I couldn't agree more and gravity, at least in history, gravity does kicking at some point.
You know, Christine, we had the founder of WallStreetBets, this forum, on yesterday. And I said to him, look, bubbles pop, and people get hurt and
people lose money. And, you know, he said to me, he said, bubbles are boomer mentality.
And you know, you'd be forgiven for thinking that when you look at the stock market over the last year, over the last 10 years, quite frankly,
that it can keep coming up and defying the fundamentals, particularly if the U.S. economy and Christine that, that sentiment terrifies me.
ROMANS: Yes, I mean, going back to what you said earlier about the trust of a new generation of investors. I think that's really important, too. I
mean, there's -- the trading is going to be different, right? I mean, there are all of these people who in some cases aren't buying homes right now.
I mean, it is not the homeownership rate growth that it used to be. There is disposable income in this young generation to be purchasing stocks, and
do they trust Robin Hood? Do they trust Wall Street?
Could they, you know, manipulate -- again, be very careful kind of the words you use here, legal, you know, legal reasons. But could they move a
stock around, you know, just for fun, or just for profit? Could it be like the old, you know, Long Island 1990s pump and dump schemes, but it's more
sophisticated and online? You know, that's scary, too.
How do you know that that's not what's happening in some corners of the internet as well? And how do you know that the big players don't have a 20-
year-old who is also on the Reddit Boards and is somehow learning how to profit on what the little guy is doing?
I mean. I'm a cynic. I'm a cynic. But that could happen, too.
CHATTERLEY: There is so much good in that. There's so many important points in that. I mean, hedge funds will make money on the way up here, too, let's
be clear. They weren't all sure. And they play both sides as well.
And I love a new generation and a new wave of people coming into this, but this is not a game.
ROMANS: No.
CHATTERLEY: And you can make money and you can lose money. And oh, boy, do those moments really hurt and they're humbling. Markets have a funny way of
humbling people. And, you know, you see what these lawmakers do if it was the other way around and people were losing money in this situation and
were not winning.
Christine, great to chat with you. Have a good weekend.
ROMANS: You, too.
CHATTERLEY: The GameStop saga is bringing a rare moment of political unity in the United States. There are bipartisan calls to investigate the Robin
Hood trading app for restricting trading. How often do you see Ted Cruz fully agree with AOC? Alexandria Ocasio-Cortez.
John Howard is in Washington, D.C. John to be fair to AOC, she was not pleased with being in agreement with the Ted Cruz and that played out on
Twitter as well. But there are important questions, whoever you are, whether you're a regulator, a law maker here or someone in the markets
about just what's going on here.
[09:10:08]
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Well, the one thing we know from lawmakers is they're not going to in a moment like this, stand up and
defend the hedge fund that's getting crushed by what's happening with GameStop. And so when the situation seems to be getting out of control, the
price is getting way disconnected from fundamentals, there's so much demand.
When Robin Hood began to restrict trades, people said, hey, wait a minute, who are you doing this for? Why are you stopping this you know, populist
trading movement that's going on?
I suspect that we won't see anything really happen in the Congress until, as you were just discussing with Christine, gravity reasserts itself. The
price goes down and a whole bunch of those small investors who've been thrilled by what's happened in the last couple of days themselves get
crushed. That's when you will get more of momentum in Congress for actually doing something.
CHATTERLEY: Yes, absolutely. And these guys need to be asking what's driving this inequality: it is anger, frustration, people feeling left out,
society and then we can go back and work out whether the market is rigged or not. There's huge questions about what's driving this, too.
John, great to have you with us. Thank you. John Harwood there.
All right, new developments in the coronavirus vaccines, Johnson & Johnson this time announcing its vaccine is 66 percent effective in preventing
infection but have a higher 85 percent effectiveness in stopping severe cases.
CNN senior medical correspondent Elizabeth Cohen joins us now. Elizabeth, I'm going to hand it over to you. What exactly did we hear from Johnson &
Johnson? Tell us more.
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Essentially, at the bottom line of what we heard is that Johnson & Johnson's vaccine is
effective. However, it is not as effective as the Pfizer and Moderna vaccines. So, if we're wondering, well, what does this mean for me, what
experts tell me is look if you can get a Pfizer or Moderna vaccine, do so. But if you can't, because in many parts of the world, you can't get it or
it's hard to find. And J&J does become available to you at some point, take the J&J vaccine, it is good, and you could also do that and still later get
Pfizer or Moderna.
So, let's take a look specifically at what Johnson & Johnson found. So, if you're looking at preventing moderate to severe cases of COVID-19, which is
one of the goals of the vaccine, Johnson & Johnson was 66 percent effective, but Moderna and Pfizer, however, those were each around 95
percent effective. That is a big difference.
Now, let's look at what's even more important. The vaccine preventing severe cases of COVID-19 keeping people out of the hospital, keeping people
out of the ICU, keeping them alive. Johnson & Johnson was 85 percent effective. That is really, really good. Moderna and Pfizer, however, were
even better at 100 percent or nearly 100 percent effective.
So again, the bottom line here is that the J&J vaccine is very good, and it has certain advantages. This is based on one dose. Moderna and Pfizer are
two doses paid placed -- done several weeks apart. That's a pain in the neck. One dose is much easier.
Also, J&J has a much easier -- a much easier storage and handling requirements, it makes it much easier to use -- Julia.
CHATTERLEY: Is that why we're seeing such a difference? Or at least part of the reason?
COHEN: So, there's -- right, so there's a couple of reasons why we're seeing a difference. And yes, you are right. The single dose is one of the
-- could be one of the reasons. If it gave -- you know experts I've talked to said look, there was a lot of pressure to make J&J a single dose because
obviously, it's way easier.
But if we gave two doses, then some experts think it will be just as good as Pfizer and Moderna. So that is one of the reasons it could be. Another
reason is that J&J did a bulk of its -- or part of its clinical trial in South Africa during the time when -- excuse me when the variants appeared
and that made it less effective.
So, Pfizer and Moderna did not do trials in South Africa during the time when the variant was rearing its ugly head. So that definitely puts J&J at
a disadvantage.
CHATTERLEY: Oh, this is such a great point. Thank you so much for explaining that, Elizabeth and time to get a cup of tea. I know you've been
incredibly busy this morning. So, thank you there for coping.
COHEN: Thanks.
CHATTERLEY: Thank you. All right. We're also expecting a decision from the European Union in the coming hours over approval of AstraZeneca's COVID-19
vaccine.
Earlier, the E.U. made its contract with the drug maker public in an escalating fight over delays to vaccine deliveries. Melissa Bell joins us
now.
Melissa, just getting signed off on this vaccine quite frankly, is one thing but I was amazed but not surprised when I saw the E.U. give this
redacted agreement with AstraZeneca over supplies, just everyone here trying to say look, it's not my fault that these delays are happening and
this is a terrible situation, just to, I think appease their population who are clearly desperate for a vaccine.
MELISSA BELL, CNN CORRESPONDENT: I think that's right. I think it's a measure really, Julia of the anger that's involved on both sides in this
row, really an indication of how desperately countries and institutions need this vaccine for their populations and a measure of how desperate
Europe is to get vaccines to these people.
Because remember that the shortage that we're seeing here in the European Union, Julia, the result, not of delays or the shortages that we've been
announced in terms of the AstraZeneca vaccine. We're waiting for that decision from the EMA, which has been delayed by about an hour.
It is because of shortages already. That's how desperately the European Union needed this new batch of vaccines. So beyond the question of that
approval by the European Medicines Agency, then comes the question of shortages and the E.U. has signaled that it is really intent on getting to
the bottom of this.
Publishing that contract, as you said, Julia, heavily redacted, but still showing, and this is what the E.U. wants to show that the agreement was
that those 400 million doses of the AstraZeneca vaccine that it had purchased, were to come from four different sites, one here in Belgium, one
in Netherlands, two in the United Kingdom, and that therefore, it should not be penalized in terms of receiving those deliveries.
We saw that inspection earlier this week at the Belgian site at the request of the E.U. to try and make sure that AstraZeneca's claim that the delays
to the E.U. would be down to production difficulties really was the case.
So the E.U. clearly making it plain that it will get to the bottom of this and ensure as E.U. official after E.U. officials repeated these last few
days that they will ensure that Big Pharma groups deliver the vaccines that they've signed up for.
CHATTERLEY: Yes, you can only deliver as many as you've manufactured, though, and this is the problem, and everybody is desperate here. It's a
huge challenge.
Melissa, very quickly, what about possible export restrictions from the E.U. if they simply can't reach some kind of agreement?
BELL: Well, this is part of again, their attitude of showing that they will not take this lying down. The idea that they're going to publish later
today, their plan for restricting vaccine exports, they want to make sure, Julia, that vaccines that are exported from the European Union to countries
like the United Kingdom, for instance, are not taking place when there are shortages in the E.U.
So we await the details of that and as I say, the decision from the European Medicines Agency about this AstraZeneca vaccine that the European
Union desperately needs if it's going to reach that target, Julia, of 70 percent of its population vaccinated by the summer. At the moment, we are
at about two percent.
CHATTERLEY: Yes, we will watch that. Melissa Bell, all eyes on those announcements later today. Great to have you with us.
All right, still to come here on FIRST MOVE, AOL co-founder Steve Case says it's time to reboot capitalism. He joins me with his playbook for doing
just that.
And the barstools are flying over the Robin Hood trading app, Dave Portnoy back with us to discuss the backlash. That's all next. Stay with us.
(COMMERCIAL BREAK)
[09:20:53]
CHATTERLEY: Welcome back to FIRST MOVE live from New York where U.S. stocks are lower premarket, still a bit of concern out there that the big Wall
Street players who have been game stopped -- can we call it that -- by retail investors could be forced to sell more into this volatile market, an
atmosphere that's pretty toxic, not only on Wall Street but in Washington, where Congress is gearing up for the impeachment trial of Donald Trump even
as President Biden tries to win Republican support for his near $2 trillion emergency aid package.
Wall Street is counting on new aid amid new signs this week of global economic weakness, it is part of the reason why our next guest's plans are
so vital. AOL founder and startup investor Steve Case sees the pandemic recovery plan as an opportunity to reboot capitalism.
He believes that the gains of the innovation economy can be spread by investing in startups outside of the coastal tech hubs. That's what he's
been doing since 2014 with his Rise of the Rest Seed Fund, and now he is calling on the U.S. government to help do the same.
His newly released "Rise of the Rest Ecosystem Playbook for 2021" is a roadmap for creating a thriving startup scene, even during a pandemic.
Joining us now is Steve Case, Chairman and CEO of Resolution, cofounder -- and former cofounder of AOL.
Steve, fantastic to have you on the show with us. I read the entire playbook and it's pretty thick. But I would say it's worth a read if you're
an investor or someone who is simply trying to help foster the ecosystem. Just explain why it's so important to get so much of the money that
concentrates in just three key areas outside of it.
STEVE CASE, CHAIRMAN AND CEO, REVOLUTION: Because the data is pretty compelling that new companies, startups are the big job creators, it's not
actually small businesses, not big business, it's new businesses.
So if we are not backing startups everywhere, we're not creating jobs everywhere and we'll have an even greater divide in terms of some people
and a part of the innovation economy doing really well, a lot of people feeling kind of left behind, and so just from a policy standpoint.
But from an investor standpoint, kind of an arbitrage that, you know, valuations maybe are a little high in Silicon Valley. But most parts of the
country where the entrepreneurs struggle to raise venture capital valuations tend to be lower.
So there's a lot of reasons to do this, but our hope is that we'll be able to level the playing field and create a more inclusive approach to
innovation and entrepreneurship.
CHATTERLEY: It's also 21st Century jobs. I mean, what we've seen throughout the pandemic is a shift and acceleration in digitization, a lot of people
looking at some of the jobs that exist today and saying, you know, we were worried that these jobs wouldn't exist in two, three, four, five years'
time and all that's actually been accelerated by what we've seen in the pandemic. So, it's jobs of the future that are being created by businesses
and startups today, too, surely.
CASE: Absolutely, and some of those industries of the future are going to build on the expertise of the past and healthcare, for example, the
technology, the coding aspect of it, of course, that's important. But partnering with major hospitals, major health plans, really understanding
how the healthcare system works, trying to figure out how to integrate your idea in terms of what nurses embrace and doctors embrace and hospitals will
integrate and health plans will pay for it and governments will allow it.
There's a broader effort here in order to be successful in a sector like that. Similarly, in food and agriculture or financial services. So that
expertise, that domain expertise in those major partnerships, many of the most important companies in those sectors, what I call the third wave of
the internet sectors are in the middle of country.
So, there is a real opportunity that wasn't there in the last 10 or 20 years when Silicon Valley dominated in part because it really was about
software; really, it was about apps on smartphones, things like Facebook and others.
In the third wave of the internet, when the internet kind of meets the real world, the expertise that exists in the middle of a country and a major
potential for partnerships and customers in the middle of country should fuel us, but only if we create more thriving startup communities, rising
cities all across the country. We create a boomerang of talent. A lot of people left in the last few decades to leave the middle of the country and
go to the coasts. How do you get them to return? And how do you get more capital flowing to those folks?
Last year, 75 percent of venture capital went to just three states in the United States. We need to spread it all around the country.
[09:25:04]
CHATTERLEY: This is so key, 75 percent of the money concentrated in Massachusetts, New York and California, so just as a result of the
pandemic, we've seen a lot of people just moving out to some of these cities anyway. We've now got a wave of even some of the big tech companies
saying, hey, we're leaving Silicon Valley, we're going to go to places like Dallas or Florida, perhaps.
These places are just more inclusive of fostering the innovation and provide an environment and ecosystem that's better for us. Steve, talk to
me about the playbook. How do these areas outside of those three main states nurture, foster, promote --
CASE: Well, this is the third playbook we've published and it's free, it is available, you go to the revolution.com site, you can download it, and it
talks about what's happening in seven or eight different cities: Tulsa, Miami, Colorado, Ohio, lessons learned in terms of how they have really
built the rising startup communities.
But you also touched on another important point, it's not just about places, 75 percent going to three states, it's also about people. Last
year, even though women represent 50 percent of the population in the United States, they got less than 10 percent of venture capital.
Last year, even though black Americans are 13 percent of the population, they got less than one percent of venture capital. So if you look at the
data, it kind of does matter where you live, it doesn't matter what you look like if you have an idea, you have access to the capital to start a
company, scale a company and really pursue the American Dream, and that's what we need to change.
It's not just spreading the capital around, it's also being more inclusive, having a more diverse mix of entrepreneurs that's going to be required if
the United States is going to continue to remain the most innovative entrepreneurial nation, it can't just be a few people in a few places, it
has to be everybody everywhere.
CHATTERLEY: Steve, you make it a three-step process. Some of it is about the funding. Some of it is about the navigation, what supports are out
there, like the PPP that paycheck protection scheme. But there's another part of this, which I really liked, which is founder support. And it's sort
of trying to recognize the sort of mental and emotional toll that people have gone through throughout the pandemic.
And to your point about minorities, to women who don't get this money, just even going out and having a conversation about getting money from people is
a tough one. How do you and how are you giving advice to people that perhaps want money, don't know how to ask properly, and those that are
dealing with mental issues as a result of what we've been through?
CASE: Well, it's been a tough year, obviously, in a lot of respects, and a terrible year really. But there is a little bit of a silver lining, I think
as it relates to the Rise of the Rest, and it ties in with what you mentioned earlier.
There have been people that have decided to shelter in place somewhere else, move temporarily someplace else, some of those people decided to stay
there, whether they be entrepreneurs or venture capitalists.
I think that bodes well for these rising cities. But these cities have to welcome them and need to be much more collaborative, need to focus not just
on the businesses that exist today, but the businesses that might be created tomorrow, and everybody needs to lead.
Of course, the entrepreneurs need to lead, the venture capitalists need to lead, the mayors and governors need to lead, the larger Fortune 500
companies need to lead. The universities in those cities need to lead.
If everybody steps up and says this is a moment, we can create a more inclusive innovation economy, we can kind of spread capital to more people
in more places, we can create more new companies that create more jobs. And they say this is a moment let's seize it and they work together
collaboratively. I think people will be surprised what might be possible over the next decade.
CHATTERLEY: What you're talking about, and we keep coming back to this idea of inequality and redressing that ties I think intrinsically to what we're
seeing at this moment in this sort of refashioned stop the steal that's being used tackling that the financial elite.
I mean, inequality in this country's never been worse. Steve, you've talked about solutions there that almost top down from mayors, state governors,
businesses within the states trying to do more. What about top down? What do you want to hear from President Biden and this new administration that
they can do very quickly, whether it is with Congress or without?
CASE: Well, President Biden did put a Build Back Better plan in place last summer when he was running for office, and a lot of it did deal with more
inclusive innovation and including some of the ideas around the Rise of the Rest, and there is legislation that, of course, now they just need to deal
with the COVID situation and stimulus related to that, and immigration or a bunch of things that need to be dealt with kind of first, and I understand
that.
But shifting as quickly as they can to support legislation, for example, that Senator Amy Klobuchar introduced, that would create more venture
capital going to more parts of the country. There are a lot of bills that have been introduced in Congress in the last year that will help here.
And so I hope the Biden administration really will make it a front and center issue in the coming months. I believe they will, because I think
they recognize and I think, the President himself how important it is to make sure we are really creating a bright future for everybody, which
requires creating jobs for everybody because that's part of the reason people are angry that they kind of feel left behind and they kind of were
left behind and we have to change that in the next decade and startups and venture capital and new companies are a key part of that.
CHATTERLEY: Yes, I couldn't agree more. They've got to multitask because these are all critical problems at this moment in time and it is all part
of how we recover and recover stronger and better.
Steve, fantastic to have you on the show. Thank you so much.
CASE: Thank you so much.
CHATTERLEY: Thank you so much for talking about your work and thank you for what you're doing.
Steve Case, Chairman and CEO of Revolution. Great to have you with us.
All right, the market opens next. Stay with us.
(COMMERCIAL BREAK)
[09:33:21]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. markets are up and running on the last trading day of the week, and it's another day when the broader
market is down and speculative stock values are up.
The various stock names, so popular with retail investors all on the rise after the Robin Hood trading platform lifted its highly controversial
restrictions on buying those stocks yesterday and then about turned.
Also soaring, shares of speculative cryptocurrency Dogecoin up from 400 percent yesterday, after Elon Musk tweeted out an apparent show of support.
He played a cameo performance in GameStop, I believe, too.
Now reports say Robin Hood is now restricting trading in crypto names due to quote "extraordinary market conditions." That said, Bitcoin, the
original anti-establishment financial product currently up double digits as you can see, and as the GameStop frenzy inspires, many retail investors to
shake up stock markets, the enthusiasm now spilling over even to China.
Selina Wang joins us now with the latest. Selina, I was thinking about this yesterday actually. A highly, highly regulated market versus the United
States or at least in comparison, but then there's 180 million individual investors in China. Now, that's power. What can you tell us?
SELINA WANG, CNN CORRESPONDENT: Julia, that's right. Retail investors in China do have major influence over the markets. There are some 177 retail
investors. That's 99 percent of the investor base in China and the investors in China are no stranger to frenzy trading and market volatility
and what we're seeing right now is Chinese social users calling on each other to band together, copy their American counterparts and push up the
stock prices of struggling companies.
[09:35:07]
WANG: GameStop has really inspired this outcry we are seeing among these small investors over what they see as the exploitation of the market by
these big institutional investors.
For instance, on Weibo, China's Twitter like platform, one user wrote, quote, "Market makers are trembling in front of retail investors who group
together. It will soon be China's turn."
Mom and pop investors will also refer to themselves as quote, "leeks," which is a common vegetable in China. One Weibo user said, "Leeks from all
over the world should all unite," calling the GameStop saga awesome.
And what this really shows, Julia, is that this GameStop sentiment what's behind it is really global. It really just shows what's possible with the
marketization of access to the financial markets and the power of the internet to upend yet another established institution.
But Julia, unclear at this point if an amateur investor revolution is possible in Mainland China at this point.
CHATTERLEY: Yes, it's fascinating, isn't it? There is this global feeling that the market is exploited by institutions, by hedge funds, and at least
up until this point, these small investors simply haven't had a look in.
Selina, what we've seen in the past is, the regulators are far quicker to act in China, for better or worse, certainly versus, again, the United
States. What is the likelihood that they step in here and go, we're going to protect whatever -- against whatever the activity is, because obviously,
the rules around short selling, for example, in China are far more stringent than they are in the U.S., too.
WANG: Right. Exactly. I was just going to start out with that and say, China Mainland markets are very different from New York. Short selling is
highly regulated. It is extremely rare.
And we have also seen the Chinese government intervene in the markets. It is known to do that. For instance, there is this national team in China,
which is a collection -- nicknamed "The National Team," a collection of state bodies that the government will lean on in times of extreme market
volatility.
We also, as you referenced see, the government swiftly cracked on in areas that they see as a risk to financial instability. What they've done with
Bitcoin and peer to peer lending are just a few examples of that.
And if we look at the possibility of something specific, like GameStop, GameStop being replicated in China, experts say that it theoretically is
possible, especially with some of these smaller cap stocks, but the risk is extremely high and attempt to organize big market swings, those people
attempting to do that face the risk of arrest should the government catch wind of what they're doing -- Julia.
CHATTERLEY: Wow. Imagine if lawmakers tried that in this country. Good gracious. Yes. It says everything. Selina Wang, thank you so much for that.
All right, after the break, Robin Hood robbing the opportunity to invest. Dave Portnoy, the founder of Barstool Sports isn't happy. It's a
conversation you won't want to miss. Stay with us.
(COMMERCIAL BREAK)
[09:41:38]
CHATTERLEY: Welcome back to FIRST MOVE. Western nations have taken the lead in buying up vaccine doses leaving fewer options to fight virus in other
parts of the world. CNN's Ivan Watson shows us what's it like on the frontlines in some of those areas.
(BEGIN VIDEOTAPE)
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): In Western countries, the first coronavirus vaccines arrived with great
fanfare generating excitement and hope. But in most of the world's poorer countries like Pakistan, vaccine distribution hasn't even begun. This
hospital in Karachi is so full there aren't enough beds for all the COVID- 19 patients.
NASHWA AHMAD, COORDINATOR, COVID-19 SERVICES, SOUTH CITY HOSPITAL: We are full, we have patients waiting, we have families who are suffering, we have
patients at home, sick patients at home, patients who are on oxygen who just don't have space in hospitals.
WATSON (voice-over): Dr. Nashwa Ahmad says she's discouraged at the lack of available vaccines.
AHMAD: The vaccine is not here in this country for the foreseeable future. That means our healthcare workers still have to continue to do their jobs,
endless hours, without the protection of the vaccine. It's very difficult.
WATSON (voice-over): Help is on the way. The COVAX facility is a global initiative established after the start of the pandemic. It has the
ambitious goal of distributing some two billion doses of vaccine by the end of 2021.
AURELIA NGUYEN, MANAGING DIRECTOR, COVAX: This is an unprecedented effort. We have never rolled out this number of vaccines in this short time.
WATSON (voice-over): Most of the doses are to be given to the world's 92 poorest countries for free.
NGUYEN: The COVAX facility is really built around fair and equitable access so that no country and no person who needs the vaccine is left behind
regardless of their economic status.
WATSON (voice-over): COVAX is a partnership of several international health organizations. It will distribute vaccines through UNICEF, which has
considerable experience leading vaccination campaigns against other diseases in the developing world.
But COVAX distribution isn't expected to start until February, in part due to the long wait for the World Health Organization to approve vaccines for
emergency use.
BENJAMIN SCHREIBER, DEPUTY CHIEF, GLOBAL IMMUNIZATION PROGRAM, UNICEF: Countries are looking at COVAX and don't see yet vaccines arriving, while
they see some countries are making bilateral deals and that creates kind of a panic.
WATSON (voice-over): Some wealthier countries have been scooping up limited supplies of COVID vaccine for themselves.
JEROME KIM, DIRECTOR GENERAL, INTERNATIONAL VACCINE INSTITUTE: Vaccine nationalism is the evil twin of COVAX. A lot of the countries that signed
up for COVAX, the high income countries in particular, hedge their bets by putting in pre-orders for COVID-19 vaccines.
WATSON (voice-over): The head of the W.H.O. denounces this practice.
TEDROS ADHANOM GHEBREYESUS, DIRECTOR GENERAL, WORLD HEALTH ORGANIZATION: I need to be blunt. The world is on the brink of catastrophic moral failure.
And the prize of this failure will be paid with lives and livelihoods in the world's poorest countries.
WATSON (voice-over): While it waits for COVAX, the Pakistani government expects to receive a welcome gift of half a million doses of Chinese's
Sinopharm vaccine in coming days, a drop in the bucket for a population of more than 200 million. Even when the vaccine rolls out, convincing a
skeptical public to take it may be an uphill battle.
[09:45:17]
UNIDENTIFIED FEMALE (through translator): Why would I get vaccinated? There's no such thing as corona. It's a lie.
WATSON (voice-over): Defeating the virus will also require fighting mistrust of government and the spread of disinformation.
Ivan Watson, CNN, Hong Kong.
(END VIDEO TAPE)
CHATTERLEY: So much work to be done. You're watching FIRST MOVE, more to come.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to the show. Let's check in on GameStop shares and where they are trading. It comes as Robin Hood resumes trading in stock, as
you can see up some 86 percent.
Overnight, the trading app raised $1 billion from existing investors and talking to Chris Cuomo last night, the app's CEO ruled out interference by
market makers when they decided to restrict trading in these stocks.
(BEGIN VIDEO CLIP)
TENEV: You know that there's rumors around that. You know, we were directed by market makers or other market participants to do this and I want to be a
hundred percent clear, this decision was not made on the direction of any market maker or other market participants.
(END VIDEO CLIP)
CHATTERLEY: Listening to that with us, Dave Portnoy, the founder of Barstool Sports. To say he has been a vocal opponent of Robin Hood's
actions is an understatement. But we like those, Dave, great to have you back with us. What angered you most about what happened yesterday?
DAVE PORTNOY, FOUNDER, BARSTOOL SPORTS: Well, I mean, basically, the name of the company is Robin Hood, steal from the rich, give to the poor and
they did the exact opposite. They stole from the poor and gave back to the rich, I unequivocally don't believe what he just said, Vlad. I think he's
lying about that.
There's just no rational explanation on why they would do what they did without outside pressure interference. They had to know what they did was
against all their clients, their clients are the ones who are making money and they basically cratered the stock on purpose.
So I just don't believe anything that guy says. I want you to take a cold shower after seeing him say that.
CHATTERLEY: The Robin Hood CEO is not here to defend himself and he has an open invite and long has to come on this show to defend himself and talk
about what happened.
What if the share price had been falling, though, Dave and people would have been losing money? Would you have been as angry?
PORTNOY: Well, I mean that's the risk that traders do and the stock market itself has triggers when there's unusual activity, it halts trading, but
the people who invest in this stock weren't doing it with their eyes shut, they know there's risk and I've asked this a lot.
You know, how many times when the hedge funds are making millions of dollars, billions of dollars -- there is an article that I saw Citadel made
$6.7 billion on volatility of the stock market. How often do they stop it and say hold on? No, it never happens that way.
[09:50:08]
PORTNOY: This is the first time I can ever remember where you can only sell a stock you couldn't buy it. If they were that concerned, they should have
frozen it and you can't sell or buy in the people want to liquidate at the price they had the stock. That's fair.
But to crater it, and again, I, in the history of the stock market don't ever hear the rich guys, the institutional firms, the hedge funds saying,
hold on, we're making too much money, you better protect us in case it goes the other way. This seemed like it was just the little guy was winning and
the rules changed on the fly.
CHATTERLEY: Yes, it seemed like panic, I think to everybody, it seemed like panic, they clearly had to raise a lot of money as well to shore up their
own position.
They are like a young company, though, as well. And they've had this swarm of new investors coming onto the platform, I guess you could make the
argument that they have to make sure that people have the money in their accounts to be able to buy these stocks.
But Dave, I think you raise a good point this stock is up 1,000 percent year-to-date. Action should have been taken surely earlier and should have
been communicated better.
PORTNOY: Yes, and I saw his interview on CNBC, Vlad, and this is a direct quote from him. He said it was not a liquidity issue and he said it was to
protect the people on Robin Hood. That's garbage.
How did that protect the people in Robin Hood? I'd like to find one person on Robin Hood who feels that they were protected. They literally
intentionally cratered the stock unless they're the dumbest people alive.
If you only let people sell and you can't buy, pretty obvious what's going to happen in the stock, and that's exactly what it did, it cratered it.
CHATTERLEY: And then they relaxed the rules, again, Robin Hood not here to defend themselves over what they were doing, whether it was to sure up
their own position, the artificially created selling pressure, because that's clearly what we saw in the market. I think to your point.
Dave, the access to these platforms is free. Part of the way they do that, the business model is they get all these orders from people and they give
them to a bigger company, this case, one of them is Citadel Securities, and you've mentioned the name. So I'm bringing it up, and they get paid for
that.
And that's also I think, what's created this sort of stinky sense that perhaps information on their positions was being shared with one of these
hedge funds, quite frankly. But that hedge fund says it's not.
Either you get democratization of finance, and you get free access, or perhaps you need to pay for it and you don't have those concerning
relationships going on. What's the answer -- do you get charged for using this platform? Or should it remain free?
PORTNOY: I have no problem with it remaining free. I just -- you can't change the rules midstream is my bigger thing. And I did bring up Citadel,
but it's well-known that Citadel gave money to Melvin who shorted GameStop and then you have Citadel who is involved with Robin Hood and there's a lot
of very interesting things, but essentially, it appears from my point of view that by cratering these stocks, they allowed these hedge funds to get
out of their shorts.
So that's what it looks like happened. And you know, these people can go in front and say things that if you are logically thinking about what they're
saying, Vlad and others, they don't make sense. They just don't.
It seems like we're being fed lines, and I just don't believe it.
CHATTERLEY: Dave, do you think the system is rigged?
PORTNOY: Yes. A hundred percent. There's not a doubt in my mind. I think the system is rigged. Wall Street, I think if you ask most Americans,
they'd say yes, it's a dirty game.
I said this yesterday, Julia, it takes a lot for AOC and Donald Trump, Jr. to be on the same side an issue, but they were yesterday. We haven't been
able to agree on anything and suddenly every one of us is like, wait a minute, these stinks. I mean that --
CHATTERLEY: And Ted Cruz. Dave, don't forget Ted Cruz because I know he argued about the agreement, quite frankly, so you can argue about -- yes,
you know, it's good to get --
PORTNOY: People argue about -- sorry.
CHATTERLEY: I think you represent -- no, no, it's -- I agree, I think you represent what's fueling this, the anger. I mean, the moniker, stop the
steal has been sort of refashioned for this too, and I think lawmakers have to listen to that too, as well as whatever you think is or isn't going on
in the market.
Dave, I could talk with you this for half an hour. But I want to talk about your fund. How are you doing? You've raised more money. Talk us through
that quickly?
PORTNOY: Yes, so I think you had me on when we were just getting it going. We're up over $33 million dollars now raised, continue to raise. Over 200
businesses, 200,000 people, we're still making the calls every day and making a difference. And it's a -- it's been quite something.
It really kind of took on a life of its own. So, it has been gratifying. And again, if you're a small business, we're trying to just help them get
through the pandemic. So, if you need help, then reach out barstoolfund.com and we will continue to help as many small businesses as we can.
CHATTERLEY: And I didn't ask you this before, but I wanted to, you're going to keep these guys going. You're going to keep raising money. Keep these
businesses that you're helping going until we get through the pandemic, that's the promise that you've made.
PORTNOY: Correct. So, it's not a one-time payment, if someone says we need $20,000.00 a month for rent, payroll, whatever, we give it to them,
obviously, we do all the back check to make sure it's legitimate.
And then each month, we reach out on the anniversary of basically us giving them money and find out what their needs are because every state is
different, every regulation is different and mostly small business owners. They don't want any more money than they need. They want to pay it forward,
actually.
So, we continue to support until they can go back to running their successful business.
[09:55:35]
CHATTERLEY: Paying it forward. Dave, great to have you on and your Twitter feed isn't half amusing, so keep going. Whether I agree with you or
disagree with you, it does keep me entertained.
Dave Portnoy founder of Barstool Sports. Thank you, sir, great to have you on.
All right. That's it for the show. You've been watching FIRST MOVE. I'm Julia Chatterley. Stay safe and have a great weekend.
We will see you next week.
(COMMERCIAL BREAK)
END
