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First Move with Julia Chatterley
Janet Yellen Predicts Full Employment Next Year with Biden's Bill; SoftBank Says it is Laying Golden Eggs as Profits Surge; Bitcoin, the Digital Asset Hits Record Highs on News Tesla is Buying. Aired 9-10a ET
Aired February 08, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:15]
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.
Selling stimulus. Janet Yellen predicts full employment next year with Biden's bill.
Golden goose. SoftBank says it is laying golden eggs as profits surge.
And Bitcoin bonanza. The digital asset hits record highs on news Tesla is buying.
It's Monday. Let's make a move.
Welcome once again to FIRST MOVE. It's the day after the Super Bowl and ageless wonder, Tom Brady's seventh -- yes, seventh championship title. The
bees are truly all the buzz today. We have got Brady and his team, the Buccaneers, and not forgetting the bulls with U.S. stocks beginning the
week at all-time highs.
Now speaking of ageless wonders, the bull market remains resilient. U.S. futures are all green with 30 minutes to go until the open. The S&P set to
rise for a sixth straight session in fact as hopes for stimulus support outweigh fears of new virus variants, at least for now.
Both Europe and Asia are also higher as you can see. Italian stocks, the out-performers, up over seven percent this month alone as key political
parties back the former E.C.B. Chief, Mario Draghi's attempt to form a new government.
What about Asia, meanwhile? Kia and Hyundai were an eye disappointment they say, they're not working with Apple on a new self-driving car as had been
reported last week. Kia shares as you can see down some near 15 percent.
No disappointment however for Wall Street after a surprisingly good Q4 earnings season or muted expectations after last year's COVID-induced
slump. The stock markets are not the economy and Wall Street will continue to watch the Washington aid negotiations closely far more, of course and I
think they'll care about the political theater there as lawmakers engage in the second impeachment trial of former President Donald Trump this week.
Why? Well, the outcome appears preordained. The votes are just not there to convict him. Senate Republicans this weekend calling the trial a waste of
time and a dangerous precedent.
(BEGIN VIDEO CLIP)
SEN. LINDSEY GRAHAM (R-SC): If you believe he committed a crime, he can be prosecuted like any other citizen. Impeachment is a political process.
We've never impeached a President once they are out of office. I think this is a bad idea.
SEN. RAND PAUL (R-KY): Zero chance of conviction. Forty five Republicans have said it's not even a legitimate proceeding, so it is really over
before it starts.
(END VIDEO CLIP)
CHATTERLEY: Stay tuned to CNN all this week for complete live coverage of this historic impeachment proceedings.
Let's get to the drivers. Full employment in the U.S. by next year. Janet Yellen says the labor market could be healthy again in 2022 if Congress
passes President Biden's stimulus package.
The Treasury Secretary told CNN how she sees the outlook for the United States as it emerges from the pandemic.
(BEGIN VIDEO CLIP)
JANET YELLEN, U.S. TREASURY SECRETARY: There is absolutely no reason why we should suffer through a long, slow recovery.
JAKE TAPPER, CNN HOST: Do you have a timeline though for a full reemployment?
YELLEN: Well, I would expect that if this package is passed that we would get back to full employment next year.
(END VIDEO CLIP)
CHATTERLEY: Christine Romans joins us now. Christine, good morning. That would be an incredible recovery. Jason Furman, the former head of the
Council of Economic Advisers said to us we could do even do it with this bill in six to nine months assuming you can match demand with supply. All
these people want to get back to work, but can you get them in the jobs quick enough? This is crucial no matter what happens with this bill.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: It really is, and this bill is a fiscal firehose, right, and she is saying that the fire
is burning so badly that you need to get the relief out there quickly.
But it is a different kind of a crisis because it's not the kind of thing where you can stimulate demand and the economy is better. We have a virus
that is artificially on top of all of this.
So, get the virus under control. Get vaccines widely accepted and widely used and then you can start talking about matching people back with jobs
again.
One thing that I am concerned about are the number of people who are long- term unemployed, it is almost 40 percent now. That's a real trouble sign here for matching people, again, when we get on the other side of this.
So you want to see -- many of those people, granted, economists say are probably in leisure and hospitality. They work at bars and restaurants, and
hopefully, when the depression of COVID is taken off of this, those people can be matched back with that work, but we just won't know until we get
there.
[09:05:02]
CHATTERLEY: Yes, we won't. Christine, fascinating to see former Treasury Secretary, Larry Summers writing an op-ed last week pushing back on the
size of this program, saying look, you're risking fueling inflation, you're perhaps not doing longer-term investments, that could add to the
inequality.
These feel like -- and I am choosing my words carefully here, first-class problems in the face of all the challenges we just mentioned.
ROMANS: You know, people have been asking about this all weekend, and I keep saying, you can't worry about the cost of the water when the house is
burning down and you need to get it out of the fire hose, right?
And what the White House is saying is that not only do they have to put the fire out, but then they have to rebuild the house after that. There will be
likely another phase of spending, probably the infrastructure kind of phase after this. So more spending they hope will be coming.
You know, when you talk to insiders and you talk to people who have been in the crisis 12 years ago, they kind of like tilt their head a bit why Larry
Summers is weighing in on this. It's not helpful for the Democrats cause when you have Republicans, who, so many of them who say, you know, they are
worried about deficit spending or they don't want to hand Joe Biden this democratic unity win right out of the gate.
So I think it's been an unhelpful diversion, but I don't think it has held back on the Democrats unity at this point very much.
CHATTERLEY: Yes, and I agree that we do need to think about the long-term and the restructuring of what the economy looks like and bringing up the
bottom end, but choose your timing. Christine --
ROMANS: To be worried about inflation, I mean, everybody who has been worried about inflation for 10 years has been dead wrong.
CHATTERLEY: Yes, still waiting.
ROMANS: So, at some point somebody is going to be right, but it is just probably not right now.
CHATTERLEY: Still waiting. Yes. Christine Romans, thank you very much for that.
All right, Japan's SoftBank posting a profit of $8 billion from its Vision Fund in the latest quarter thanks to things like Uber and DoorDash
investments, but performance wasn't always so good at its asset management unit. That's where the options are struck.
Selina Wang is live in Tokyo with more. Selina, this is a monster business. It is not just about the Vision Fund. There are lots of things going on. So
just walk us through the net result of what we saw because it was a strong quarter.
SELINA WANG, CNN CORRESPONDENT: Absolutely. The sentiment very much is that the Vision Fund is back after being criticized for backing troubled
start-ups, Masayoshi Son is very much back on track in his transformation of this business into telecoms, and into investing in tech giant seems to
be paying off.
So you saw SoftBank Vision Fund really being boosted by these frothy markets that boosted its value in companies like Uber, as well as this IPO
boom of companies like Open Door and DoorDash.
So some stats here. SoftBank invested about $680 billion into DoorDash for a stake that's worth about $9 billion. Its 7.7 billion investment in Uber
is now worth more than $11 billion.
Now, Son brushed off concerns about the bubble and said that he is still bullish about artificial intelligence saying the important thing is that
the AI revolution has just begun, and it is an opportunity if the markets go up and it is not a peak, it's an opportunity if the markets go down,
Julia, and it is not a peak if it goes up.
But you mentioned the trading business, it's not doing so well. SoftBank wiped out a significant chunk of gains with that controversial trading in
derivatives, in fact, posted a 285 billion yen derivative loss in the period. He did say on the call, however that this asset management business
is in a test drive mode -- Julia.
CHATTERLEY: Yes, is that a hedge fund business therefore that's doing badly in options trading or is there a hedge to some of the other products?
We won't know, but fascinating to see.
They had a few what have been called by the media, rotten eggs; WeWork and that investment was an example, but Masayoshi Son did talk about
reproducing this era of golden era of eggs. Talk to us about what he was saying there because I think there were even diagrams shown.
WANG: Yes, Julia, it was a very memorable moment in this earnings presentation. He actually went on for quite a long time with images and
even playing music at one point to back up his golden eggs metaphor.
He said quote, "We are finally in the harvesting stage since the Vision Fund launched. The number of golden eggs is in accelerating mode." And the
data does seem to back that. Son said that Vision Fund 1 and 2 have invested in a total of 131 companies, some 15 companies in the Vision Fund
have gone public so far and he says SoftBank may see between 10 and 20 companies go public a year across its fund.
And analysts say that the timing is good right now that it could continue to see an IPO windfall for this year. IPO fatigue has not set in yet.
There's still a lot of liquidity out there. I also want to mention that SoftBank's biggest asset is Alibaba.
Shares plunged last quarter because of the antitrust probe that's happening in China. There are also concerns about Jack Ma's whereabouts, even though
he has resurfaced and Son said he has been in touch with Ma. He didn't go into details.
He also said that the scrutiny from regulators in China is part of the natural evolution of the technology industry there and that it shouldn't be
seen as any different from the regulations that we see in the U.S. and the U.K.
[09:10:15]
CHATTERLEY: Yes, fascinating and obviously, that performance in spite of the share price fall of Alibaba that we saw, of course, in the quarter.
Selina, great point. Thank you, as always, for your analysis.
Let's parallel with this next driver to the price of Bitcoin surging after Tesla revealed it bought $1.5 billion worth of the cryptocurrency, Tesla
also saying it may start accepting Bitcoin as a payment method for their cars.
Paul La Monica joins us with the details. Paul, there are two stories here. There is one which is the corporate and the greater institutional interest
in Bitcoin as potentially with utility function as a payment function, but also the fact that Tesla itself is perhaps now not only a car company, but
also a hedge fund, too.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I mean, I'm not so sure I'd would go that far. I think that Tesla would argue that Elon Musk would
argue that he is using his company's cash, investing it in an asset that could generate more returns than the dollar, which obviously doesn't do all
that much.
You know, you can argue whether or not that's a hedge fund-like behavior, but clearly Tesla is following the lead of another software company, Micro
Strategy, and their CEO, Michael Saylor who has been very bullish on cryptocurrencies and he was the first major executive to have his firm
invest corporate cash into cryptocurrency.
So he already has sent a congratulatory tweet to Tesla this morning saying that this is good news for Tesla and for Bitcoin, and you know, the
cryptocurrency industry writ large. It means that it helps validate the investment in Bitcoin that Micro Strategy has made, and I think that there
could be others, you know, in the future that might adopt this model as well.
CHATTERLEY: First car company to do it, to your point, but perhaps we see more and more corporates getting involved in doing this, too. But to your
point, Paul, and I'll push back a little bit. You have to get Board approval to do this. I fully appreciate, in a world of zero interest rates
having lots of cash on the balance sheet is quite painful, quite frankly, if you can't do anything with it.
This is a risky bet. You could burn cash, lose money if you're investing some of the cash that you have on your balance sheet, and I was just doing
the math and I think this is around seven percent -- six to seven percent of the cash that they hold right now dumped in a volatile risky asset like
Bitcoin.
It is a bet, it's a risky bet.
LA MONICA: Yes, it is a significant chunk of change. Bitcoin prices are very volatile. Bitcoin surging today on this news. It is interesting that,
you know, Elon Musk despite some of his public affection for Dogecoin and other cryptocurrencies that he is talking about on Twitter lately that he
is choosing obviously to go with Bitcoin since it is by and large the largest and most dominant cryptocurrency.
So you know, this doesn't mean that Tesla may not invest in Ether and Dogecoin and others down the road, but I think right now, it's mainly
Bitcoin. But you're right, Julia, Bitcoin continues to be a very volatile asset. It doesn't behave like a currency, and some would argue it doesn't
even behave like a commodity. It behaves more like a stock that day traders can love and hate, and right now, it's definitely love, but we've seen what
can happen when Bitcoin prices plunge. That happened last year before they rallied back really sharply.
CHATTERLEY: Absolutely, and Elon can invest in Dogecoin because obviously, he tweets about this a lot and gets people fired up, but with Tesla and
with investors' money, too, yes, you have to be a little bit more selective about your choices perhaps. Paul La Monica, thank you very much for that.
LA MONICA: Yes, but to be honest here, when you are investing in Tesla, you have to invest in Tesla -- if you're investing in Tesla, it's because
you trust Elon.
CHATTERLEY: Yes.
LA MONICA: You're not investing in Tesla because someone else might be calling the shots and made you something different. It's a love affair with
Elon, make no mistake.
CHATTERLEY: And now, you're investing in crypto, too. Paul La Monica, thank you very much for that.
All right, here are some of the other stories making headlines around the world.
Rescuers are searching for at least 177 people who are still missing in Northern India after an avalanche of water, dust and rocks burst through a
dam. Twenty people have been confirmed to have lost their life. Part of a Himalayan glacier fell into a river on Sunday causing the avalanche. Most
of those missing were working on two hydroelectric projects in the area.
For a third day in a row, pro-democracy protesters were out in force in Myanmar. They are demanding an end to the military coup that last week took
down the government of Aung San Suu Kyi. The protest in the capital city was broken up after police threatened to open fire on demonstrators.
[09:15:03]
CHATTERLEY: The Australian tennis open is under way, and both Serena and Venus Williams started out with victories.
Venus is 40 years old, Serena 39, but age does not seem to be slowing these ladies down.
They are still youngsters though compared to the 43-year-old Tom Brady who won his seventh Super Bowl on Sunday. Brady didn't just lead Tampa Bay to
victory, he was the game's MVP, Most Valuable Player.
CNN World Sport's Coy Wire is in Tampa with the latest. So great to be there and so great to have you with us.
Just talk us through the game, because really, I watched most of it, and it felt very one-sided quite frankly.
COY WIRE, CNN WORLD SPORT: It was. It was all Tom Brady's side and the Tampa Bay Buccaneers. They were playing in a Super Bowl in their home
stadium for the first time ever in NFL history. It never happened before.
But what's so impressive about Brady is you cannot buy a super team in the NFL like you can in the NBA where two or three stars will get you to the
playoffs. A football roster is huge, 11 guys on offense, 11 more on defense. An entire special teams unit and they all have to click at a high
level.
Well, that's why it is so impressive what Brady's teams have done over the last two decades. He is the type of player that brings out the best in
everybody, Julia. He has an incorrigible work ethic. He sacrifices family time.
His family left and had the entire house to himself for 12 days before this game in order to have supreme focus. His family on hand with him to
celebrate on the field after the win, and he told reporters, Julia, just a bit ago about an unusual night when he got back home. Listen to this.
(BEGIN VIDEO CLIP)
TOM BRADY, QUARTERBACK, TAMPA BAY BUCCANEERS: I actually spent the night in my daughter's bed because I had five of my nephews and nieces in my bed,
so that was pretty unique. It was probably about two hours of sleep, so I'm going to be trying to get some extra sleep today.
(END VIDEO CLIP)
COY: Payback for him getting the entire house to himself for 12 days before the game, all the family, all the love.
You know, Julia, I sat behind Stephanie Jensen, wife of Bucs' center, Ryan Jensen who snaps the ball to Brady on every play, and she told me that her
husband and the entire team has been lifted by Brady since his arrival here this season.
He has held everyone accountable, not just to doing their job, but doing it at a higher level than they ever thought they could. And the work, she
said, is never done as far as Brady is concerned, and it has paid off now.
CHATTERLEY: Wow. Twelve days alone. Just that. He is a legend to me. That's fantastic. Coy Wire, great to have you with us at the Super Bowl
there in Tampa. Thank you.
All right, still to come on FIRST MOVE, a critical week in Washington, the Democratic Party stands united on the second impeachment of Donald Trump,
but divided on the details of the stimulus deal.
And vaccine versus variant. South Africa halts its rollout of the AstraZeneca vaccine. We have got the latest, next.
(COMMERCIAL BREAK)
[09:20:54]
CHATTERLEY: Welcome back to FIRST MOVE live from New York where U.S. stocks look set to rise to records once again in early trading. Investors
changing the focus on the Reddit trade to the reflation traders as Congress gears up to pass a massive Biden-led emergency aid plan within the next few
weeks.
Oil stocks actually were the strongest S&P gainers last week on hopes that fresh fiscal aid and a smoother vaccine rollout will help boost economic
demand. Just take a look at Brent today touching $60.00 a barrel. That's for the first time since the start of the pandemic.
Elsewhere, U.S. ten-year Treasury yields are nearing one-year highs, too, amid renewed economic growth optimism. Some fearing that the stimulus bill
might boost inflation, too, as we were discussing earlier with Christine Romans, but stimulus will take a back seat to the spectacle in Washington
this week as the second impeachment trial of former President Trump gets under way.
Greg Valliere joins us now. He is the Chief U.S. Policy Strategist at AGF Investments. Greg, great to have you with us. It may take a back seat in
investors' terms quite frankly, because I don't think they really care about what happens with this impeachment trial because I think they think
the end result here is a given.
But Greg, what should we be watching politically this week?
GREG VALLIERE, CHIEF U.S. POLICY STRATEGIST, AGF INVESTMENTS: Well, I do think there's going to be new video of the horrible events of January 6th,
maybe new testimony. I'm sure it will be very emotional, but it won't change the outcome.
CHATTERLEY: So shorter, punchier, more visual than the first time around when we saw the first impeachment, at least in the House and then the
Senate, but the result will be the same. Does it move the dial on the needle for Trump supporters, for Republicans as they are looking at the
future of the party -- the future of their politics really and where Donald Trump fits?
VALLIERE: Well, I think we're going to be reminded again in the next several days of how dysfunctional the Republican Party is. They don't have
their act together. They have way too many anti-Semites, white supremacists who they are tied to.
So my sense is that this probably helps Biden a little. Biden is on a roll. I do think that he has a very good chance of getting his stimulus bill done
by early March. It may not be $1.9 trillion, Julia, it might be $1.5 trillion, but they haven't spent most of the $900 billion we got a few
weeks ago.
So there's going to be an enormous infusion of money into the economy, over $2 trillion in the next few months.
CHATTERLEY: I was just doing the math there quickly, $2.4 trillion if you're right on the $1.5 billion having agreed at this point. I mean, that
has huge implications for the economy, it also has huge implications for the markets, too.
VALLIERE: Absolutely. I think it is good for stocks. Stocks are looking at an economy that could pick up a little more quickly than everyone expected,
but the big story in my opinion is for the bond market.
We've seen just this morning, yields have raised even higher. I think the threat is that the Treasury ten-year bond yield will break through 1.25. It
might start heading to 1.50. And that at some point will become an irritant, especially for the Federal Reserve.
CHATTERLEY: An irritant for the Federal Reserve. It is also going to have profound implications for the real economy, too. Things like mortgages, for
example, the housing market has been incredibly strong. One of the most supportive elements actually throughout this crisis.
VALLIERE: Oh, you look at so many areas now, Julia. You look at stocks. You look at, obviously, as you point out, housing. You look at
manufacturing getting better. You look at shipping. Ports, harbors are clogged right now with goods.
So I think we're starting to see not everywhere -- I mean, obviously, the labor market is not fully healed and we do need more medicine. But as I
say, more medicine, yes, but we don't want an overdose.
CHATTERLEY: Is $1.5 trillion an overdose, Greg? Because this is part of the debate that is being had out there now, and among the Democrats, let's
be clear.
VALLIERE: Well, I think Janet Yellen would say no and Joe Biden would say no.
But a very important player raised concerns late last week, and that of course was Lawrence Summers, center-left Democrat, former Treasury
Secretary who said, yes, it is too much and it might lead to inflation, and I think importantly, there are many people in the market who are happy to
see stocks go up, but also worry that we could overheat.
[09:25:25]
CHATTERLEY: I want to circle back and bring it back to impeachment because this is what the media certainly is going to be focusing on this week, even
if investors certainly aren't.
I remember you and I having a discussion during the first impeachment process, and Donald Trump's popularity actually gained throughout that
process. Clearly, he is not President anymore and that is perhaps what the defense will argue, what are we doing now? He is not President. He's just
an ordinary person.
Do you think his popularity will rise again as a result of what we see this week, Greg?
VALLIERE: I'm not so sure this time. I think people will see films of what happened on that horrible day. I think people will listen to his rhetoric
and conclude that he obviously played a role in instigating this mob that ransacked the Capitol.
So, I think as people are reminded of this more, you know, the idea that constitutionally, he is no longer in office and we can't try him, I think
the more potent story is what happened on the 6th.
CHATTERLEY: For what reason?
VALLIERE: Oh, just the fact that they literally ransacked the Capitol, went into Nancy Pelosi's office, five people died. It was a violent end.
When these people were interviewed as they were leaving, many of them said they went because they felt Donald Trump told them to.
CHATTERLEY: And this is going to be the overriding memory that people take away from this week whether you're a Republican or you're a Democrat.
VALLIERE: I think so, and I think for Joe Biden, it's an opportunity for him to keep his distance and focus on the stimulus bill that I think he
will get in a few weeks.
CHATTERLEY: Yes. Greg Valliere, great to have you with us, as always, the Chief U.S. Policy Strategist at AGF Investments. Thank you for that.
The opening bell is next.
(COMMERCIAL BREAK)
[09:30:24]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks are up and running this Monday and start at record highs as the Wall Street bulls come off
their best week since November. Lots of earnings to watch, as well, this week, from the likes of GM, Coke, Pepsi, Disney and Twitter.
But as we've been discussing, the bigger picture in Washington that's going to be the overwhelming sentiment driver, unprecedented new fiscal stimulus
is coming in the United States. What that means for the global economy, jobs, but also interest rates remains the big unknown.
What about for other assets, too? Another look now at Bitcoin. The digital asset up more than 12 percent, sitting at record highs on word of a $1.5
billion investment from Tesla. Tesla may soon take payments in Bitcoin, too.
What about Amazon as well, another giant tech name? Little changed in early trading as it braces for a challenging week on the labor front. Warehouse
workers at a plant in Alabama begins voting today on whether to unionize. The first ever attempt by hourly Amazon workers to do so, and clearly, an
important test case to be sure.
Alicia Levine is Chief Strategist at BNY Mellon Investment Management and she joins us now. Alicia, great to have you on the show. Good morning.
There are a whole host of reasons to be optimistic: improved vaccine rollouts, that wall of more stimulus money potentially coming, too.
Earnings seasons are better than expected. What's in the price for stocks?
ALICIA LEVINE, CHIEF STRATEGIST, BNY MELLON INVESTMENT MANAGEMENT: Good morning. Great to see you.
Look, a lot is already in the price, Julia. And I think that, you know, the increased pace of vaccination here in the U.S. is really critical to that.
The U.K. is doing quite well as you know. The U.S. kind of stumbled out of the gate, but now, in the last few days, we're up to two million
vaccinations a day.
And I think when J&J comes on the market, we'll be up to three million vaccinations a day, really important to getting to some form of protection
for the country.
$earnings season has been spectacular. We're up 10 percent from when earnings season started on an earnings basis. That's actually historic. You
normally don't get that kind of bump, and that means that 2021 and 2022 earnings are only going higher. So there is a lot of support here for the
market. We like it.
CHATTERLEY: Expectations were seriously beaten down. So when you see a beat like that, you sort of look at the expectations and go, did they get
it wrong? You called this an-everything rally. What do you mean by an- everything rally?
LEVINE: That's right. So, I mean it in the equity sense. This is an- everything rally because everything is working, and that's actually really unusual. I mean, this is one of the broadest markets in 70 years.
Ninety one percent of the S&P 500, 91 percent is trading above the respective 200-day moving averages.
CHATTERLEY: Wow.
LEVINE: Right, and for the Russell 2000, that's 92 percent above the 200- day moving averages, and what that means is that value is working and tech is working and growth is working and deep cyclical is working.
I think the only thing I would stay away from here is staples just because that's the stay-at-home play that had a huge spike in the spring and
probably growth will not continue on the same path. But everything on the equity side really is rallying.
And most importantly, if you're getting scared about that is that you don't get tops in the market when you have such a broad participation the way we
have now.
CHATTERLEY: It gets thinner and thinner and thinner, and a smaller number of stocks normally are holding the whole thing up, and then, when you lose
that support, you see a pull back. That's such a great point to consider.
Something else actually caught my attention was how you described the energy sector, sort of the bellwether. If this one is rallying, and I just
mentioned that Brent price is at $60.00 for the first time in a year. If this can rally, it is also a good sign. Why?
LEVINE: Right, because it's really very counterintuitive. We have the most environmentally conscious administration, which of course isn't saying a
lot for the U.S., but it's a change for the U.S.
We are going to restrict on the regulatory side drilling for the energy side that has the perverse effect of raising oil prices and therefore,
strengthening oil companies. And the reason I say it is counterintuitive is because I think the investor base is drying up, right?
So you're seeing, it's really a generational shift to investors who simply will not invest in fossil fuels as part of their overall allocation. If
this sector can rally and go from 2.5 percent of the S&P, which may not be painful if you're not in it, to let's say five percent of the S&P, then
that tells you the rally is sustainable because it's a hated sector, under owned by the investor class and moving any way.
So I think this is the sector to keep an eye on.
[09:35:35]
CHATTERLEY: Let's talk about rising bond yields because we are seeing rising bond yields around the world. When does that become a problem?
Simply because they offer relatively decent amount of return for the first time in a long time, versus stocks.
LEVINE: That's right. Of course compared to the rest of the world, the sovereign debt here in the U.S. is becoming more attractive. Look, it's a
magic number. You know, we always get asked the magic number question. I think it's the rate of change question.
I think the market can absorb, let's call it, seven to 10 basis points of improvement monthly on the ten-year. What's concerning will be the spiking
and the kind of tantrum that could happen with all the stimulus, and that's really the risk to the market here that we have inflation expectations
moving much faster than growth expectations, and then that's what could really put a convulsion into the market. I would be looking at bond yields
and the rate of change where that's happening.
The $1.9 trillion from the Biden administration, and part of the reason that yields moved so quickly last week is that most of us thought that
number was going to get whittled down to about $1.1 trillion to maybe $1.2 trillion, either because of a reconciliation or because of working with the
Republicans.
It's very clear that the Democrats are all in on this number. There may be some negotiation, but now, our new baseline is $1.5 trillion to $1.6
trillion in stimulus, in an economy that already has 15 percent of GDP last year, so, you know, there's a lot coming at the economy, and you will see
yields moving higher.
CHATTERLEY: Yes. It's like $5 trillion. When you think about it, it's just a mesmerizing amount of money. It's no surprise that the market was like,
wow, is this really happening?
Alicia, speaking of, wow, is this really happening? Bitcoin at record highs. How many questions do you get from potential investors saying should
I be in this? Have I missed the boat? Talk to me about your thoughts on this.
LEVINE: It's a daily question, and I think that some of the most telling conversations for me is when I have 85-year-olds who are interested in
buying Bitcoin because they think it's better than holding cash, and this is not -- I'm not making this up. This is a true conversation. Market savvy
participants thinking cash is a losing bet and that Bitcoin is the way to go.
Look, it's clearly an alternative store of value. I think that the ease with which it can be purchased compared to three years ago when the first
attention came to it on a broader basis is part of what is driving this. It's much easier to purchase, and now, you have an institutional investor
base.
I think this will attract regulators, make no mistake about it. This is out there. Very clear to me that Central Banks, who regulate fiat currency will
not be interested in having something out of their control.
So I think that's a big risk here, but it's getting broadly disseminated as an alternative to cash, and I think we can't ignore it as an asset class.
CHATTERLEY: Yes, I think your point about ease of access here is vitally important, too. It is phenomenally more easy than it was two, even one year
ago. Never mind the institutional interest.
LEVINE: That's right.
CHATTERLEY: Alicia Levine, great to have you with us as always. Chief Strategist at the BNY Mellon Investment Management. Stay safe and great to
have you here.
LEVINE: Thanks, Julia. Thank you.
CHATTERLEY: Thank you. All right, up next, AstraZeneca's vaccine rollout paused in South Africa amid concerns that a key variant may evade it. All
the details, next.
(COMMERCIAL BREAK)
[09:42:14]
CHATTERLEY: Welcome back to FIRST MOVE. South Africa is pausing its rollout of the Oxford-AstraZeneca vaccine. A recent study showed it offered
only minimal protection against the variant that was first identified there.
Elizabeth Cohen joins me now. Elizabeth, what more do we know and what do you make of this decision?
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Julia, it is interesting what the South African authorities have decided to do. They say
that there enough evidence that they want to put a pause on this because this variant has now become really quite common in South Africa. It went
from being just a few cases found on the Eastern Cape to something which has really, in some ways become quite dominant in many parts of the
country.
So, let's take a look at the study that was released just in the past couple of days that sort of -- that inspired or should I say directed the
South African officials to make this decision.
So it was only 2,000 people. That is a small study, and what it found was that there was minimal protection against mild to moderate COVID-19. Now,
this is important. They don't know what the efficacy is against severe COVID-19 because they didn't assess that, and that is really important
because if it does turn out that this vaccine does work against severe COVID-19, that may make them say, you know what, we do want to use this. It
really depends on sort of what they find when they look at severe COVID-19 caused by this variant.
But Julia, you know, it is very interesting because the authors of this research, which has not been published and had not been peer reviewed say
in their press release, look, there were theoretical observations that people who were vaccinated could still catch this variant and could still
spread it, and they said this early data appears to confirm that that is true; that people can catch it and they can spread it.
So, I guess that's why they're saying let's put a pause on this because why do we want to vaccinate, use this vaccine if, indeed, people can still
catch it and still spread it -- Julia?
CHATTERLEY: Yes, and they will push forward with the Pfizer-BioNTech and with J&J in the interim, I guess. But Elizabeth, this is not the only
variant first identified in South Africa. We've also got a variant first identified in Brazil. We obviously got a similar story with the U.K.
variant as well. What are the vaccine makers doing about potentially creating booster shots or trying to help protect against these variants in
the future?
COHEN: So the companies have said that they are working on booster shots that will address these individual variants. They are now looking at the
genetics of them, what can they do to change their shots so that it will include protection against these variants?
Interestingly, it's not that hard to do. I mean, what scientists tell me is, you just rejigger, reprogram and you can come up with a booster
relatively easily.
But, Julia, look at the difficulty we have had with the vaccine rollout. You and your guest were just talking about the difficulties in the U.S.
This takes a while.
[09:45:10]
COHEN: So to tell people, oh, you need to get this shot and then this shot and, now, there is a third shot you're going to need to get later, I mean,
that is definitely -- it is quite a production.
CHATTERLEY: Yes, I mean, just incredible, the science that they are able to tweak this, but to your point, yes, it has confidence implications and
it has logistical implications, too.
Elizabeth, great to have you with us and your wisdom, as always. Elizabeth Cohen there.
COHEN: Thanks.
CHATTERLEY: In Malawi, the COVID-19 variant first identified in South Africa driving a surge in cases and pushing hospitals to breaking points.
David McKenzie joins us now from the East African nation. David, great to have you with us. What more can you tell us?
DAVID MCKENZIE, CNN CORRESPONDENT: Well, I'm here at the Queen's University Hospital, the teaching hospital, and behind me, you see the
tents where they have put up tents to deal with the surge of this virus, as you said, because of this variant discovered in South Africa late last
year.
Now, we went inside the COVID ward here to see just how they are struggling with this wave.
(BEGIN VIDEOTAPE)
MCKENZIE (voice over): Here to, COVID-19 is inflicting its most painful toll.
UNIDENTIFIED FEMALE: It went up, so they started treating it with -- okay.
DR. TAMARA PHIRI, QUEEN ELIZABETH CENTRAL HOSPITAL: The emotions are very blurred. You don't know when to be the doctor that's lost patients and then
to be the family member or friend that's lost people and you're very bereaved.
MCKENZIE (voice over): Dr. Tamara Phiri has a simple message for those who thinks COVID-19 is only severe in the northern hemisphere or that vaccines
are only urgently needed in Europe and the United States.
PHIRI: Now, we're on to the second wave, which is a lot harder, so I think it's going to be a long year.
MCKENZIE (voice over): Followed her on a round in Southern Malawi's largest hospital where shifts are measured in days, not hours.
PHIRI: This tent here is used to disinfect the dead bodies, and I think that's one of the most traumatic things. We see people die all the time,
but not like this, not at this rate, not this many people who were well just a week or two ago. So it can get quite brutal.
MCKENZIE (voice over): In the last available space outside, plastic tents are being erected to handle this and future waves. These are the few extra
resources.
PHIRI: We have basics. We don't have fancy treatment. We can't ventilate our patients. We don't have the capacity to ventilate.
MCKENZIE (voice over): And there is no one else to step into the wards, just Dr. Phiri and her fellow Malawian doctors who for months have battled
the virus that now because of a new South African variant is only getting worse.
PHIRI: I don't remember feeling like this in the first wave.
I'll just feel your pulse here.
MCKENZIE: Doctors without Borders is fighting to get vaccines to Malawi and at the least, into the arms of healthcare workers like Phiri, one of
just three remaining specialists covering four full COVID wards, the other five, all out sick with the virus.
PHIRI: The country is bleeding and people are dying, and like, all the systems are like really strained with this particular wave.
MCKENZIE (on camera): Some countries have ordered many times the number of vaccines than the size of their population, what impact could that have?
MARION PECHAYRE, HEAD OF MISSION, MEDECINS SANS FRONTIERES: The issue right now is more a time issue than a quantity issue. The health system
falls apart, it's not only people dying from COVID that we are going to have here, we are going to have excess mortality related to other diseases.
MCKENZIE (voice over): Hope is still being kept alive if only because of Dr. Phiri and the nurses and the workers constantly delivering precious
oxygen tanks to the wards. But Phiri says, to survive as a doctor at Queen's also means being a realist.
PHIRI: We have to accept that our situation is a bit different. You have to come in mentally prepared and you have to tell yourself that I'm going
to be well, and I'm going to look after myself, and we'll deal with what we have, but we'll do our best.
MCKENZIE (voice over): After all, her skills as a doctor are honed by the years of never carrying a full arsenal of weapons.
MCKENZIE (on camera): Twenty year olds in Europe might get vaccines before you get a vaccine.
PHIRI: Sure.
MCKENZIE: How does that make you feel?
PHIRI: It is brutal, but it is reality.
MCKENZIE (voice over): Why would this moment be any different?
(END VIDEOTAPE)
MCKENZIE (on camera): Well, at the Queen Elizabeth Hospital, they really want those vaccines soon. These tents that you see behind me could be here
for some time because they expect another wave and then another wave if they don't get population immunity through a vaccine.
But in the immediate future, what they are asking for and what Doctors without Borders is pushing for is some 40,000 vaccine doses, that's it,
Julia. They say that could come into the country and help those frontline workers keep safe and stop their health system from buckling entirely --
Julia.
[09:50:10]
CHATTERLEY: It is important that you're telling this story, David, 40,000 vaccines and that point about a 20-year-old in the west getting it versus a
healthcare worker that just vitally needs it there to save and protect people.
David, thank you. Thank you so much for that, David McKenzie.
All right, coming up on FIRST MOVE, the rise and rise of the machines, where drone technology might take us literally. That's up next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Whether they're talked about in ads during the Super Bowl or being embraced as the future of delivery,
drones have helped revolutionize the business model of companies around the world.
Now, the airborne tech is being used to help an industry that is usually focused on the ground, agriculture. Eleni Giokos has more.
(BEGIN VIDEOTAPE)
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT (voice over): From 3-D mapping to deliveries, construction site management to rescue operations,
the commercial use of drones is soaring around the world.
But as drones take to our skies, entrepreneur, Rabih Bou Rashid believes their biggest potential is on land.
RABIH BOU RASHID, CEO, FALCON EYE DRONES SERVICES (FEDS) GROUP HOLDINGS: The next big idea is to improve on many aspects of the agriculture phase.
GIOKOS (voice over): In Dubai, Bou Rashid runs one of the world's top drone service providers, operating drones for the construction, mining,
infrastructure and oil and gas industries.
But he is now shifting his focus to agriculture, betting drones can make the sector sustainable.
BOU RASHID: We are making sure that we're not wasting water, we're not wasting feed, we are not wasting things. So that's what the drone brings in
to the table.
GIOKOS (voice over): By using smart sensors, 3-D mapping systems and thermal cameras, Bou Rashid says drones can check the precise amount of
water crops need, detect early diseases and feed plants without wasting fertilizer.
BOU RASHID: When you use drowns, you can calculate what exactly is to be fed, what exactly doesn't need to be fed and precisely just, you know, take
care of these plants. You can easily increase your profit by let's say five to 10 percent when you're using drones for only protection.
GIOKOS (voice over): The agriculture drone market could be worth as much as $5.7 billion by 2025 according to research by Markets and Markets.
While the use of drones in the sector is still niche, Bou Rashid believes as the technology becomes more advanced and efficient, farmers will adopt
more readily.
BOU RASHID: You could see that there is going to be demand for sustainable waste to go forward. What the drone does is bring this to marginal farmers,
bring this technology to everyone.
[09:55:10]
GIOKOS (voice over): More drones may soon glide over cities and make deliveries at our doorsteps, and with continuing advances in technology, it
could also make a positive difference in the lives of farmers around the world.
Eleni Giokos, CNN.
(END VIDEOTAPE)
CHATTERLEY: That's pretty awesome. Okay, one final look at Bitcoin as we wrap up the show, still trading at record highs at $43,700.00 as you can
see there, up almost 12.5 percent. It's up 50 percent so far this year, just to give you a bit of perspective.
The news, of course, the S.E.C. filing that Tesla has invested $1.5 billion of cash on their balance sheet in to Bitcoin. We know that Elon Musk is a
crypto fan. He is fueling today's rise. More institutional interest in that digital asset.
All right, that's it for the show. I'm Julia Chatterley. Stay safe and we'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
