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First Move with Julia Chatterley
The Long and the Short of the Reddit Revolution; Alibaba Sales Surge even as Crackdown in China Intensifies; Biden and 10 Republican Senators Hold COVID Relief Talks. Aired 9-10a ET
Aired February 02, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:22]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
GameStop stops? The Reddit rally on hold, the shares slump once again.
Similar standoff: Democrats could go it alone with no breakthrough in bipartisan talks.
And Baba boost. Single's Day lifts to Alibaba earnings, but giant Ant questions remain.
It's Tuesday, let's make a move.
Welcome once again to FIRST MOVE as Wall Street deals with two winter wallops: Monday's massive snowstorm, as well as the ongoing Reddit retail
storm. Reddit darlings, GameStop, AMC, BlackBerry, et cetera all down sharply premarket after losses yesterday.
As you can see in the steep losses, GameStop fell some 31 percent on Monday. I'm showing you premarket there, different market, but similar
moves. Silver touching an eight-year high in the trading session on Monday. This is a much bigger market than just a single stock, and the forces at
play here are very different and very global, let's be clear.
But officials acting in similar ways raising margin requirements, aka, if you want to bet on silver, you have to put more cash up front, so higher
margin requirements. Now, given the dramatic rallies, you'd expect some consolidation here. But the question now is whether we're at an inflection
point, and is this speculative tide that we've seen now turning? Buyer beware, especially if you bought at incredibly high levels.
Now, Robinhood also remains vigilant for self-preservation's sake, they insist. The trading app is still limiting the number of shares investors
can buy of the popular Reddit names like GameStop, but they are increasing those numbers as the company raises more cash.
In the meantime, new numbers show hedge funds lost more than $12 billion betting against GameStop overall last month, but we can be sure other hedge
funds gained on the way up, too, and they don't hang around when things turn. Much more on all of this throughout today's show.
In the meantime, global stocks are higher. U.S. futures looking to add to their best day of the year on Monday. The focus now though, on stimulus
perhaps versus speculation. Democrats, as I mentioned looks set to go it alone on Biden's new near $2 trillion spending proposal. The Republicans
more targeted counter proposal leaves a lot of Americans behind. We'll discuss that shortly, too.
For now, let's get to the drivers. We begin with the Reddit rally slowing down. GameStop shares trading lower, silver prices are also lower. Paul La
Monica joins me now.
Paul, I have it on wisdom that bubbles -- discussion of bubbles or boomer mentality for our regular viewers, that's what I was told last week. But I
have to say, I look at some of the price action once again and I wonder whether this monster rally that we've seen is over?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think we need to first and foremost stop with the boomers versus millennials, especially since I'm one
of the few Gen Xers that are actually out there. You know, we matter as well.
But putting all of those jokes aside, what we have, obviously right now is the unwinding of whether or not it was a bubble or not, we can definitely
say it was a speculative frenzy that lifted GameStop shares, and a lot of that had to do with this epic short squeeze that to their credit, the
Reddit community was able to engineer pushing a lot of hedge funds into a world of pain because they had to cover their GameStop positions.
Now it appears though, that most of the shorts have probably abandoned that trade. You don't have as much of a need to squeeze them anymore, and I
think investors in the Reddit community may be finding other targets and GameStop shares are now plunging. A lot of people, I think probably locked
in some pretty impressive gains.
But unfortunately, there are probably a lot of people as well that are left holding the bag for GameStop a couple of days ago, they may not be able to
sell it for a profit anytime soon, unless the stock rallies again.
CHATTERLEY: That's such a great point. Buyer, beware. If you bought this at really high levels, you could already be underwater with the drops that
we've seen yesterday and premarket today.
What do you think, Paul, more broadly about the business model here, we've talked about the democratization of finance and what people like,
businesses like Robinhood offered in terms of free access, no commission access to financial markets, but the price was paid effectively by giving
these trades off to some of these market makers who paid the money for it. Do you think there's going to be a reckoning here where they go, perhaps
we're going to have to charge.
[09:05:21]
LA MONICA: I'm not so sure that we're going to see that because you know, once you decided to tell people that, hey, we're going to have this world
of free trading, which Robinhood pioneered and then you saw Schwab and ETrade and all the others follow suit, stuffing that back into the bottle
or into the toothpaste tube, if you will, and saying, hey, guess what, this was a mistake. We need to start charging commissions, again, not so sure
people will tolerate that.
So, I don't know if that's the case, but what I find interesting here is you talk about Robinhood and their relationship obviously with Citadel,
it's going to be interesting to see how silver now plays out because, I think a lot of people on the Reddit community have recognized that that big
silver ETF, Citadel is a large investor in that.
So I'm not so sure the Redditors are looking to, you know, squeeze silver. They want to hurt the big companies that own silver.
CHATTERLEY: You know, it's fascinating, and again, you mentioned Citadel, so I'll just pick up Citadel Securities, which is the market maker here. I
looked at some of the S.E.C. data over the weekend, market makers provided more than $3.1 billion in price improvement for retail traders, retail
investors in 2021, $1.3 billion of that was Citadel, so many questions to ask about that the role that they play, and actually the improvement that
they give on pricing for retailers, irrespective of what else hedge funds are doing in this market.
Paul, we'll talk again. Paul La Monica, thank you for that.
All right, Chinese e-commerce giant, Alibaba reporting a big quarter boosted by strong Single's Day sales. The company's quarterly revenue
jumped 37 percent from a year ago. This comes as a regulatory crackdown by being Beijing on tech companies intensifies.
Selina Wang joins us now with all the details. Single's Day, it was 11 days this year, but it all plays into what we've seen with the pandemic, Selina,
but the big elephant in the room of course, Ant Group. Talk us through what we saw.
SELINA WANG, CNN CORRESPONDENT: Well, Julia, as you mentioned, these earnings were actually better than what analysts had expected. That 37
percent revenue jump, partially driven by the recovering economy in China, as well as more people turning to online shopping during the pandemic and
also the massive Single's Day sales Bonanza they had last year.
Another interesting point to point out is that their Cloud computing division posted growth, profitability for the first time and that is
critical because many investors see the Cloud computing division as a key driver for its future growth.
But Julia, we all know the elephant in the room, these strong earnings and even Jack Ma's brief reappearance last month in that one minute video do
not completely calm down investor concerns.
Alibaba, Jack Ma and Ant Financial are arguably facing the biggest crises they have since these companies were founded. Of course, you have Ant
Financial right now being ordered to restructure its business. Alibaba is dealing with a probe from regulators into alleged monopolistic practices.
So why does the crackdown on Ant matter for Alibaba? Well, Ant of course, is Alibaba's financial affiliate. It's also one-third owned by Alibaba, so
it contributes some significant profits to Alibaba. It also provides some of the consumer loans to Alibaba shoppers.
But we didn't learn much new on that earnings call. Executives said that at this point, they cannot give a fair assessment as to what impact Ant's
restructuring is going to have on Alibaba's business.
CHATTERLEY: Yes, no sense of timing about when and if they may finally get back to that IPO. Selina Wang, great to have you with us. Thank you for
that.
Cordial, but not coming together: that's how a U.S. Republican senator described a meeting with President Joe Biden, she and nine other
Republicans held on Monday. They discussed their widely different proposals for new COVID relief.
Jeremy Diamond is in Washington for us. Jeremy, great to have you with us. Mind the gap comes to mind. Once again, the Republicans coming in with a
much, much smaller package than the near $2 trillion for Joe Biden, and the Democrats aren't having any of it.
JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT: Yes, that's right. Look, there's more than a trillion dollars that still separate these two sides,
and so while you saw President Biden meeting with those 10 Republican senators yesterday in the Oval Office at the White House, certainly you saw
the potential for bipartisanship, but you also saw the very clear limits of that bipartisan approach.
The White House in the wake of this meeting, making clear that while there were areas of agreement between the two sides, President Biden reiterated
in this meeting that he is certainly not going to compromise more than he believes is necessary to reach a deal, and that he is not going to
compromise on the elements of this package that he believes are necessary to help the American economy recover.
And so that is where the rub is here, because, you know, Republicans are proposing a third of the price tag of what Joe Biden is talking about here
and it's not really clear whether they can actually meet in the middle here; not clear that the Republicans will want to meet in the middle and
not clear that Joe Biden will want to either.
The White House making clear that President Biden is willing to move forward with this budget reconciliation process, which would allow Senate
Democrats to pass Biden's legislation with just a simple majority, not requiring that 60-person or 60-senator vote in order to overcome a
filibuster. So that is kind of the technical nuance of this here.
But the bottom line is that the White House is stressing, not just compromise and unity, but also stressing the urgency of getting this aid
passed and getting it passed to the extent that this White House believes is necessary in the wake of this meeting -- Julia.
CHATTERLEY: Yes, for more now, faster recovery later. That seems to be the message. Jeremy Diamond is in Washington there for us -- a very snowy
Washington. Thank you so much for joining us on that.
All right, let me bring him up to speed now with some of the other stories making headlines around the world. A verdict could come at any moment in
the trial of the Kremlin's top critic during a contentious court hearing.
Alexei Navalny called the Russian President, "Putin the poisoner," and he demanded to know how he could have fulfilled the terms of his probation
while in a coma.
CNN's Fred Pleitgen joins us now from Moscow. Fred, I mean, you look at some of the transcripts here and this is the point, isn't it? He is now
being criticized for not being clear about where he was and his message was, Alexei Navalny, look, I was in a coma. The President said I was okay
going to Germany. What else was I supposed to do?
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, that's exactly what he said and it really was and is a very remarkable hearing
that's actually going on in the court that I'm standing right in front of, Julia, which is highly secured by a lot of Russian Security Forces, by a
lot of riot cops as well.
But of course, the main thing that's going on is inside there, and one of the most remarkable things that we've heard all day was about a quarter of
an hour long tirade of by Alexei Navalny ripping into not only the court ripping into what he believes, of course, is a politicized trial, but also
ripping into the Russian President, ripping into Vladimir Putin.
Some of the things that he said shocked the Judge, so much that the Judge tried to get him to stop saying this isn't a statement. And Navalny said,
look, I don't need you to tell me this, he just continued on.
Some of the things he said is that he called Vladimir Putin, the little man in the bunker. He said he believed that the reason why he is there, why he
is on trial is that Putin is angry because Alexei Navalny survived the poisoning, not just survived the poisoning, but as Alexei Navalny put it
himself said that he also investigated his own poisoning.
Of course, that referencing to an investigation that was done by CNN and by the organization Bellingcat that essentially found that the FSB, the
Russian Intelligence Service was part of the poisoning of Alexei Navalny. That's what Alexei Navalny said himself as well.
He said Vladimir Putin is angry because it was found out that the poisoning was ordered, as he put it, by Vladimir Putin and his Intelligence Service,
the FSB. Of course, the Kremlin does continue to deny that.
And then he said that remarkable sentence that you were just referencing there, he said that Vladimir Putin, as he put it believed that he was a big
geo-politician, but now he will be known as "Putin, the poisoner." And Navalny is saying he believes that is one of the reasons why Vladimir Putin
is angry at him.
There's one quote that really stuck out to me. He said, quote, "There was Alexander the Liberator, Yaroslav the Wise, and there will be Vladimir, the
poisoner of Underpants," as he put it, of course, that's a reference to the fact that apparently this poisoning was conducted by rubbing the chemical
nerve agent Novichok onto blue underpants of Alexei Navalny, that he put on the day that he was poisoned.
Alexei Navalny also saying that he believes that there are a lot of good people in Russia, and that he said that not all of those people can be
jailed. And someday he believed, he said, that people will find that out and that the authorities won't be able to hold them back.
So really, some very strong statements coming from Alexei Navalny. Once again, this is something that certainly shocked the Judge. I'm told that
right now in that hearing, Alexei Navalny is squaring off with the prosecutor and they are ripping into each other there.
We already referenced a little bit of that with the prosecution saying that he didn't check in and Alexei Navalny essentially said, look, he was in a
coma. He was poisoned by Novichok and he couldn't even walk. And so it would be kind of difficult for him to attend any hearings.
One of the interesting things that we had earlier today, Julia, is that we also asked the Kremlin about this in the Kremlin said that Vladimir Putin
would not be paying any attention to the trial that is going on here today in the courthouse here behind me, but again, some pretty remarkable things
that were said in the hearing in there by Alexei Navalny, and we are of course still waiting to see when that verdict is going to take place.
As I just said, apparently right now, it's Alexei Navalny and the prosecutor facing off. There's still a few more other people who are going
to speak, but it won't take very long and then we will see whether or not Alexei Navalny is going to face that extended period in prison that of
course, he is threatened with in this trial, 3.5 years is what the prosecution is asking for.
It is a suspended sentence where he was convicted that the prosecution says they now believe should be turned into a real jail sentence -- Julia.
[09:15:34]
CHATTERLEY: Wow. We will await that verdict and Fred, yes, I stumbled over it myself, "Putin the Poisoner," according to Alexei Navalny there.
Astonishing scenes. Fred Pleitgen, thank you so much for that update there.
All right, still to come on FIRST MOVE, trial data shows Russia's Sputnik V vaccine is highly effective. I speak to the head of the Russian Direct
Investment Fund.
From vaccines to Volocopter, the CEO of the company that's preparing to launch all electric flying taxis. That's all coming up. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to you FIRST MOVE live from New York where futures are higher up by more than three quarters of one percent there as
you can see across the board.
Wall Street, I think would clearly love to switch the focus from froth to the fundamentals and easier job of course, once vaccine rollouts gain pace.
New numbers show more than 26 million doses have been administered in the United States so far, that's a higher number than if tested positive since
the start of the COVID crisis. It feels like a marker point.
Let's get to Russia now for another marker where Russia's Sputnik V vaccine is 91.6 percent effective at preventing COVID-19. That's according to
interim data from clinical trials published in "The Lancet" today.
The vaccine has already been approved in 16 nations and in some of those, the first doses are being administered this week.
Joining us now to discuss Kirill Dmitriev, CEO of the Russian Direct Investment Fund. Kirill, great to have you on the show once again. Great
news.
KIRILL DMITRIEV, CEO, RUSSIAN DIRECT INVESTMENT FUND: Thanks, Julia.
CHATTERLEY: Great news to have it all published now in "The Lancet" as well and we have to compare the cheaper relative cost I think, too, and the
ease of transportation, given that this can be refrigerated. Took us through it, you must be pleased.
[09:20:13]
DMITRIEV: Yes, exactly. We are very pleased. I think it's a great accomplishment of Russian scientists and also of Russian cooperation with
the world, you know, because it need to be a humankind vaccine, because not only is it one of the three vaccines in the world with efficacy more than
90 percent, but it can also be supported plus two, plus eight Centigrade, which is very easy to transport. Also, it's one of the most affordable
vaccines in the world.
So if you look at this combination -- safety, efficacy, price, and logistics, availability -- we believe that it will be one of the most
demanded vaccines in the world, and we're also working in partnership with AstraZeneca and other vaccine manufacturers to work jointly in some areas.
CHATTERLEY: We like that cooperation. I mean, one of the big questions that we're asking here, Kirill, is whether or not you can still carry the
virus, even once you've been vaccinated, and therefore potentially infect others. Have you guys managed to collect any data or done any kind of
analysis over whether you believe people, even once they've been vaccinated can still be a carrier of the virus?
DMITRIEV: Yes. Well, first of all, you know, Sputnik V protects hundred percent against severe cases. But indeed, some of the people can get
impacted in the less than 10 percent, and what we have observed is that basically in two days or three days, the virus disappears.
But within those two days, it's possible that they can carry the virus and we've seen some of the low viral doses. But so far, there was no any long
term or severe case of COVID for anybody who received the Sputnik V vaccine, and we are talking about millions of people right now.
CHATTERLEY: And you've also suggested that you can make up to 1.4 billion doses, I believe, this year. Can you just talk me through potential
supplies and just how many nations you're expecting in the coming weeks to sign off on using this vaccine?
DMITRIEV: Sure, so 50 nations came to us and asked us to supply Sputnik V. We are already registered in 60 nations in Latin America, Africa, Middle
East, Europe, Asia, and we will be registered in 25 by the end of next week.
We have built production capacity in India, Brazil, China, Korea, so we'll be able to supply around 700 million people doses, which translates into
1.4 billion doses of the vaccine and we are cooperating with many nations and with other vaccine manufacturers such as AstraZeneca.
And I think vaccines should be above and beyond politics and we will show that at least in vaccines, we can live and cooperative even with the U.S.
CHATTERLEY: I want to talk about Germany, actually specifically. The Bavarian Premier said that he wants Europe to consider using either the
Chinese or the Russian vaccine, potentially. Obviously, we know the E.U. is struggling with its own supplies of vaccines wherever they're coming from
in the world. Have you heard from either the Bavarians or the German government specifically?
DMITRIEV: Sure, so first of all, half of the E.U. embassies in Moscow are vaccinated already with Sputnik, and it's registered in Hungary, which is
an E.U. member.
And actually, Chancellor Merkel publicly said that she is supportive of working with us on E.U. registration and she gave us this Ehrlich
Institute, which is a top institute in Germany that is working with us and we have submitted documents to the EMA already.
So definitely, we are not going to be the dominant vaccine in Europe, but we hope to be one of the vaccines and we are willing to supply to Europe in
Q3, you know, up to 50 million people doses if they would like, but again, we are not -- we want to make sure if Europe wants something like this and
we are working with Hungary, some other individual E.U. nations also approached us directly.
CHATTERLEY: But just to be clear, if E.U. nations were going to get this vaccine, they would be behind the queue of potentially the other 25 nations
that have agreed this and already signed deals depending on who has.
DMITRIEV: Well, again, we will finish mass vaccination in Russia in June, and then we'll be able to give a big part of Russian capacity to the world
as well. So once again, we need to have a portfolio of different vaccines. Some vaccines have efficacy issues, other vaccines get supply issues.
It's very important each country has as many vaccines in their portfolio as possible, ad Sputnik V definitely can be a part of this vaccine portfolio.
CHATTERLEY: I understand. Very quickly, you said, you'll end the mass vaccinations this summer, early summer in in Russia. What percentage of the
population will you have vaccinated? I saw an Ipsos poll suggesting that just 46 percent of Russians were actually willing to take this vaccine. How
many in terms of percent do you think you can get done by then?
DMITRIEV: So we believe that everybody who wants to get vaccinated can be vaccinated by June. It's basically somewhere between 40 to 60 percent of
the population. Once people see this data coming out of "Lancet" and sees their friends being protected by the vaccine, these Ipsos numbers are
changing real time, and we are sure many people would want to get vaccinated, but it's only voluntarily and we believe 40 to 60 percent of
the population will get vaccinated.
[09:25:21]
CHATTERLEY: And it's early days. Kirill, I want to move on and talk to you about current events.
We were just talking on the show about what's going on with Alexei Navalny. Clearly, it's created comments around the world. The Europeans have waded
in. You've been condemned, Russia is being condemned for the actions in his arrest since arriving back in Russia.
The French are even talking about perhaps pushing the Germans to try and suspend the Nord Stream 2 pipeline development. Kirill, just how bad would
this all be for Russia?
DMITRIEV: Julia, I am not going to politics because we are so busy with the vaccine, and frankly, we believe vaccine is our, hopefully island of
peace where we can have cooperation with other nations. So I will not, unfortunately, address any political issues because we are so busy that we
are like, working with vaccines, shipping it to, you know, 20 different nations, et cetera, et cetera.
So I will stay away from politics and we'll focus on partnerships that we are building with the vaccine. I think understanding and communication
between people in countries is very important. And I think different countries have different perspective.
It's very important there is good dialogue with Russia. And this dialogue, you know, should continue and the answer to all of the main issues is
through dialogue.
CHATTERLEY: I hundred percent know what you say -- I understand what you're saying, but unfortunately, politics does bleed into economics. Are
you concerned that the economics, the relationship, the economic relationships between E.U. nations and between Russia will be damaged by
this?
We're also going through a transition, a new government here in the United States. Do you think we can have more positive relations going forward? Or
does this situation trouble that?
DMITRIEV: Well, I think we should have definitely positive relations with Europe, with the U.S., and you know, they are so low at this point, it's
actually not difficult to make them better. I think our people deserves this and this is very important.
So it's very easy to try to, you know, focus on isolating, focus on containing Russia. We know we've seen lots of people trying to contain our
vaccines in the beginning, really not let our vaccine to be understood and respected and attacked. And now we see it was a wrong approach, the vaccine
works.
So I think, again, we need to work on a better relationship with the E.U., with the U.S. It needs to be a two-way street. We can address so many more
issues together through vaccines, through anti-terrorism fighting, through economic actions, and that track needs to continue.
CHATTERLEY: I understand. Kirill, very quickly. How's your family doing? The last time you were on with me? You told me that your parents had had
the vaccine. You'd had the vaccine, how are they all doing?
DMITRIEV: They're doing great. And my dad was instrumental to having UAE buy the vaccine because they actually drew his blood. So 10 level IgG for a
74-year-old man, seven months after vaccination and decided to have clinical trials and go forward.
So my family is great and thank you -- thank you for asking, Julia. We all want to make sure all of our families are great.
CHATTERLEY: Yes, we do. Kirill, great to have you on the show. Thank you, Kirill Dmitriev, the CEO of the Russian Direct Investment Fund. Thank you,
sir.
The market opens next.
(COMMERCIAL BREAK)
[09:31:34]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks are up and running on this snowy Tuesday in New York, also Groundhog Day. The groundhog not
likely to see his or her shadow in an overcast New York, but at least, we have a sunny a start for stocks today with tech up more than one percent as
you can see.
Oil giant, Exxon, also one of the big gainers despite posting its first yearly loss in decades as expected given the past year that we've been
through. The GameStop game, meanwhile, that's buffeted markets last week has subsided, at least for now, not for its investors. As you can see
GameStop shares are down more than 33 percent in early trading, along with some of those other speculative names.
In the meantime, the rally in silver that caught markets by surprise yesterday also cooling as regulators made it harder to borrow the precious
metal on margin. You have to put more money up initially if you want to invest.
Bitcoin, meanwhile, the perennial speculative asset is higher this morning, up almost three percent. Elon Musk now saying that crypto is on the verge
of quote, "broad acceptance."
Scott Minnerd joins us now. He is Global Chief Investment Officer at Guggenheim Partners. Scott, great to have you with us.
Wow, we've got a lot to discuss. What do you make of what we've seen in the last, particularly the last week or so?
SCOTT MINNERD, GLOBAL CHIEF INVESTMENT OFFICER, GUGGENHEIM PARTNERS: Well, Julia, I've got to tell you that all of -- everything that's going on here,
I think is a symptom of aggressive monetary policy globally, and against the backdrop of more stimulus.
So, you know, when you start to see these kind of, I refer to them as crazy moves in stocks and other speculative assets, it is starting to tell you
that, you know, it is getting late in the party.
And so, now in the old days, the policy of the Federal Reserve was to take the punchbowl away, just as the party is getting interesting. At this
point, you know, they are basically spiking the punchbowl. And, you know, we're just -- you know, I think we're in a speculative bubble that could go
on for quite a while.
CHATTERLEY: I was told last week that bubbles are a boomer mentality, Scott. That frightens me.
MINNERD: Well, it's -- you know, certainly, I can't argue with that. I think, you know, one of the things about bubbles is that they often go on
longer than people expect and they often go to extremes much higher than people would expect.
CHATTERLEY: Yes. And if people don't expect the bubbles to pop, they keep buying. Is it the role, and to your point about the fact that you would
normally in normal times, and this clearly isn't and actually we haven't been in normal times for what -- more than a decade, central bankers would
take that punchbowl away, or at least they try and reduce the amount of liquid or liquidity in there, but we're not seeing that.
Do you think there's a role for regulators in what we're seeing whether it's making sure that margin requirements are there, whether they have
cooling off periods in individual stock names that get lofty? We've also got the angle here of the social media driven frenzy in certain names, too.
I do think there's a lot perhaps to investigate even if they take no action ultimately.
MINNERD: Well, I think there is a lot to be looked into here, Julia. I mean, first off, to just go back to margin requirements, at least in our
country, in the United States. That's the business of the Central Bank, of the Federal Reserve.
[09:35:06]
MINNERD: The Federal Reserve hasn't changed margin requirements in over 20 years. They seem hesitant to want to do it, because I think they're afraid
they'll get blamed for something like, you know, somehow hurting the small guy.
CHATTERLEY: You mean exactly what's happened here.
MINNERD: Exactly. Right. And when you look at, you know, what's going on right now, with a lot of these bubbles, or stocks, or squeezes or shorts,
however you want to talk about it, you find that there's a lack of sophistication by the players, and there's two things that are disturbing.
If we take the GameStop episode, professional investors who are shorting a stock that has, you know, where the short is 130 percent of its total flow
is just sounds kind of stupid today. Nevertheless, you know, when you turn it around, and you get these retail investors in who have very little
experience and they can squeeze the short, of course, they can make a lot of money.
But now they translate that into, well, let's go after silver. Well, silver is a different beast. I mean, the market cap of silver is huge compared to
what the market cap of GameStop was prior to, you know, taking on the shorts.
CHATTERLEY: Yes, and I mentioned that at the top of my show. This is an entirely different beast, the fundamentals, the size of this market when
you're looking at shorts, or longs globally, you have to look at the picture and not just in one location as well, here, Scott. Where do you see
it ending?
MINNERD: Well, you know, the old -- yes, well, it will end eventually. The old line is, you know, this will end in tears. Eventually, a lot of the
people who have participated in the GameStop rally are going to discover that they can't get out of their positions, and the market just gaps lower
on them and they are going to lose a lot of money.
Of course, that will be another event that leads to regulators wanting to take a hard look at what's gone on here. But, you know, as I mentioned
earlier, Julia, I still think we're fairly early in this game. And, you know, this liquidity bubble certainly could go on well, until the end of
the first quarter, and perhaps, you know, maybe even into next year.
CHATTERLEY: Where does that leave Bitcoin, Scott? And do you see this as part of the same thing, because the speculative frenzy as you called it
right at the beginning of this interview sort of began with the dramatic rally that we saw in Bitcoin and it sort of moved on to other assets and
stock -- individual stock names, as we've mentioned. Is Bitcoin part of this? And what are your views on that at this moment?
MINNERD: Well, you know, it's very interesting, Julia, because we've been looking at Bitcoin for almost 10 years and the size of the market just
wasn't big enough to justify institutional money.
As the total market cap of Bitcoin got bigger, you know, around 10,000, it started to look very interesting. And, you know, my view is, you know, we
did a lot of fundamental research and if you consider the supply of Bitcoin relative, let's say, to the supply of gold in the world, and what the total
value of gold is, if Bitcoin were to go to those kinds of numbers, you'd be talking about $400,000.00 to $600,000.00 per Bitcoin.
Now, you know, I'm not saying we will ultimately get there, but that's an indication of what might be a measure of fair value. That gives you a lot
of room to run. But then when you consider that within a course of a month, we went from $20,000.00 to $40,000.00 on Bitcoin that smacks of short term
speculation.
And so I agree with you, the speculation sort of got started there. Now the -- you know, the error is coming out of that speculative run, and so the
money is migrating into other places. And, you know, as I indicated recently, I don't really see the institutional support today, which is just
coming online from the likes of people like BlackRock and Guggenheim and other large institutional investors being big enough to support the
valuation at its current levels.
So you know, Bitcoin has had a lot of times where it has had setbacks of 50 percent from its highs, I wouldn't be surprised to see that happen again,
but I do want to say one thing: your comment about Elon Musk before we got started.
You know, Elon has definitely proven himself to be a visionary, and I think that cryptocurrency has come into the realm of respectability and will
continue to become more and more important in the global economy.
[09:40:01]
CHATTERLEY: I just wonder whether the perceived interference in what we've seen for things like GameStop, perhaps the lack of success in moving a
market like silver pushes that money and that interest back into something where there is less interference in something like Bitcoin, or at least the
perception of it.
MINNERD: You know, it's interesting, there's a lot of potential targets out there for speculative activity. You know, among those, of course,
people have been talking about SPACs you know, Special Purpose Acquisition Companies. There's been a huge surge in the amount of SPAC issuance.
So you know, this money will find another home and they will find another speculative asset to push up and I think it is going to be something that's
got to be thinly traded. It can't be something like gold or silver, where you have large amounts of it, and it is traded every day.
CHATTERLEY: Yes, and I think your point about the gap risk here where things can spike really quickly can drop really quickly and in large size
is a very important one for those that are invested in these products.
Scott, great to have your wisdom. Thank you. Scott Minnerd there, the Global Chief Investment Officer at Guggenheim Partners.
All right, coming up after the break, tired of traffic jams? Flying taxis could soon be coming to a city near you. The CEO of Volocopter is up next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Fancy a lift, both literally and metaphorically. Volocopter is a German startup that makes all electric
flying taxis. And after testing them in Singapore, the company is now hoping for approval in the United States and the European Union.
Some of the big names backing Volocopter include Daimler and Intel. Florian Reuter is the CEO of Volocopter, and he joins us now. Florian, fantastic to
have you on the show. Just explain what makes the Volocopter different from an ordinary helicopter and why you expect and want to see the US and Europe
sign off on getting these in cities.
[09:45:08]
FLORIAN REUTER, CEO, VOLOCOPTER: Yes, good morning. So great to be with you.
Volocopter is different to a traditional helicopter in numerous ways, right? There had been several technological advances that now enable us to
build aircraft that weren't possible in the past.
A Volocopter is electrically powered. We have a battery as the main energy source. We have 18 independent rotors, so we have a huge redundancy in our
electric propulsion train, meaning that if a critical component fails, we can still compensate for it and continue our safe -- our flight safely,
ultimately, resulting in unprecedented safety levels, which is what really triggered the interest of the regulators all around the world, you know,
acknowledging that now we can build vehicles that are much safer, quiet, and emission free.
CHATTERLEY: I mean, this is classic, because that was going to be my next question. Within New York City, we used to have helicopters flying around
all over the place, there were safety concerns that locked it down. So it's the safety aspect that's interested cities. This is very important, too.
Okay, autonomous or not? Because I've looked at pictures of this and I'm sure our beady-eyed viewers will be looking and trying to understand
whether it's being flown or how it's operated. Walk us through that.
REUTER: So as you rightly said, you know, certification is the key, and in order to be certified, you need to validate and verify, you know, how safe
you are.
The E.A.S.A., the European Aviation Safety Agency has set out a whole new regulatory framework for these types of novel aircraft, and they demand us
to be as safe as a commercial airliner. So think of the flight and volocopter as being as safe as a flight, a United Airlines flight.
We now talk about the introduction. You know, in cities, it's all about implementing the full ecosystem, to then not only have a safe aircraft, but
to also operate them safely, and all of those boxes we can tick.
When talking to, you know, the European Union versus F.A.A. and in the U.S. and the rest of the world, historically, it's been that Airbus and Boeing,
you know, F.A.A. and the E.A.S.A. have led the field in terms of regulatory framework. In this case, the European Union has stepped forward. We are
based in Germany, so we are, you know, eyeing to get fully commercially certified with E.A.S.A first.
But now, very recently, we have agreed with F.A.A. that F.A.A. is accepting the European Union safety standards, which offers the opportunity to do a
concurrent validation, meaning we don't have to run through a separate certification process in the U.S. We will actually have to just simply hand
in the documents that we're providing in Europe, and that allows us to be able to -- you know, get the approval to fly in the U.S. about three to six
months later than we will in Europe.
And for Europe, we are about to start as early as within the next two years.
CHATTERLEY: Wow, it's fascinating. Again, we're just showing some video, and you can't fail but notice the Marina Bay Sands in Singapore, that
hotel, clearly very legendary.
I know you did test flights there, the talk is that within three years, you can have these Volocopters up and running. And you're selling test flights,
I think as well, or at least the early flights for $360.00 for 15 minutes. Talk to me about what this is going to cost because that still feels really
expensive.
And with all the hype surrounding autonomous vehicles that they were promised in a few years, we're still waiting. Can you really get these
things up in the sky in Singapore at the very least within three years?
REUTER: Absolutely, we can. And I think the footage that you just commented on, you know, his proof point to that, right? We have a
tremendous track record of public demonstrations, always with full approval of the respective authorities. We will have flown autonomously in Dubai as
early as 2017. We received our first approval to participate in the German Airspace back in 2016. That's almost five years from now. So we have a
tremendous track record of that.
When we now look at, you know, the deployment in Singapore, as I mentioned earlier, E.A.S.A. and the F.A.A. historically have led the way in terms of
introducing new types of technologies. But clearly here, the huge market opportunity lies, you know, in the mega cities in Asia, and that's why we
have a very strong focus in Asia. We make sure that the regulators, you know underground, familiarize themselves with our technology. They are
onboard with our, you know, certification process in Europe. That goes all the way to for example, with the Civil Aviation Authority in Singapore.
We have same day certification as in Europe, meaning we're opening up these markets from a regulatory perspective as we move forward to complete our
certification process in Europe.
In terms of pricing, you know, we will be able to offer flights in the order of between 200 and 300 euros from the start, two to three hundred
bucks, depending on currency from the start. Of course, our intention is to move to much lower price points as we scale our manufacturing and also as
we scale our operations.
We believe our price point in the range of today's taxi is attainable, but I would suggest that's about five years out there.
[09:50:06]
CHATTERLEY: Oh, Florian, come back and talk to us soon. I want to track your progress.
REUTER: The price point.
CHATTERLEY: I want to nominate myself if you ever want to test these in New York or allowed to. I'm here. It looks amazing.
REUTER: Absolutely.
CHATTERLEY: Florian Reuter, CEO of Volocopter. Sir, thank you so much.
All right, coming up. No Brexit promises: why many fishermen in the U.K. are feeling, well, betrayed? That's next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. The Brexit deal disappointing U.K.'s fishermen. The industry in turmoil from collapsing prices to copious
amounts of paperwork to rotting seafood as Anna Stewart reports.
(BEGIN VIDEOTAPE)
ANNA STEWART, CNN REPORTER (voice over): This is Bob Teviotdale weekly haul.
BOB TEVIOTDALE, FISHERMAN: These have just come from Fort Myers off the coast this morning.
STEWART (voice over): A relief for the fourth generation fishermen who last week had to stay at home.
New export delays following Brexit are putting off his European customers.
TEVIOTDALE: Ninety percent of what we catch goes to these markets, so yes, it is absolutely corrupt when any expense incurred obviously with any link
in the chain, obviously, it comes back to us and this -- basically, the stuff is worthless.
STEWART (voice over): These brown crabs, lively now, risk arriving in Europe dead. A problem for exporters like AM Shellfish.
ALAIN MILLER, OWNER AM SHELLFISH LTD.: We are loading 24 hours earlier than normal now, just in order to get it before it got back for a lot of
even.
STEWART (on camera): A lot of fishermen voted for Brexit. Do you think they regret that now?
MILLER: I never voted for it. But at the moment, it doesn't matter who voted for what. We are here and we have to get solutions to go forward.
STEWART (voice over): These fishermen won't benefit from catch quotas renegotiated in the post Brexit trade deal. Quotas don't apply to most
shellfish.
STEWART (on camera): Well, this is the very last brown crab load up into this lorry, ready to go to Europe. It is being quick work. They have
collected shellfish from individual fishermen and small businesses right across the area. For the next stop for these guys, it is going to take
longer.
STEWART (voice over): The log jam starts here.
UNIDENTIFIED MALE: No, no. So, then we've got to go into the catch certificates. So that's also another certificate.
STEWART (on camera): Okay, another certificate. The export certificate, the catch certificate.
UNIDENTIFIED MALE: Yes, and then you've got your health certificate, then we've got our delivery note on them. We've got commercial invoice, then
we've also got security documents and we've also got import entries from the French side as well.
STEWART: Before Brexit, what paperwork needed to be done? Just that.
UNIDENTIFIED MALE: Just how it normally --
STEWART (voice over): Staying up all night to do paperwork isn't the only problem. These documents cost nearly $5,000.00 a lorry.
UNIDENTIFIED MALE: We have issues, serious issues, and if they are not solved going forward, businesses won't be here. Plus the fact, live
shellfish, it doesn't wait. There is no sell by date on it. It is alive or dead.
STEWART (voice over): For the haulier, arriving at customs is daunting.
[09:55:06]
PIP ANDREW, DRIVER, AM SHELLFISH, LTD.: Lots of customs queues that we are dealing with and getting away as it is, due to the paperwork. And then it
depends how long they hold you.
STEWART (on camera): Pip, do you think it's going to get better or is it going to get worse?
ANDREW: You know there's going to be problems before we even get there.
STEWART (voice over): The U.K. government has announced a $30 million compensation package for fishing businesses impacted by Brexit, short term
relief. But Miller says, it's not enough to stem the carnage.
The survival of shellfish hangs in the balance, as does the future of fishing communities in the U.K.
Anna Stewart, CNN, Peterhead, Scotland.
(END VIDEOTAPE)
CHATTERLEY: All right, a final look at those closely watched speculative stocks this Tuesday and we are seeing pretty big losses for names including
GameStop and AMC. As you can see GameStop has now fallen more than 60 percent over the past few days, right now down some 47 percent. Trading in
its shares were briefly halted on the NYSC, the New York Stock Exchange earlier this session.
That's it for the show. I'm Julia Chatterley, stay safe. "Connect the World" with Becky Anderson is next.
(COMMERCIAL BREAK)
[10:00:00]
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