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First Move with Julia Chatterley
The Fed Chair Set to Address Economic Overheating Fears; OPEC Members Meet to Discuss Oil Output; Facebook Re-friends U.S. Political Ads. Aired 9-10a ET
Aired March 04, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:06]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I am Julia Chatterley. This is FIRST MOVE and here is your need to know.
Powell placates. The Fed Chair set to address economic overheating fears.
Crude considerations. OPEC members meet to discuss oil output.
And adverts allowed. Facebook re-friends U.S. political ads.
It's Thursday, let's make a move.
A warm welcome once again to our First Movers around the globe. Great to have you with us this Thursday as we march forth with another jam packed
show, and it is a very special day for me, too, because it's my Mother's birthday, so happy birthday, mum. You are loved and adored and missed very
much. A huge kiss to you.
All right, let's move on. U.S. majors are marching in place as it happens. Futures holding steady after that 2.7 percent selloff in tech yesterday.
Asia tech suffering, too, in the overnight session with their shares there down some two percent as you can see.
Now after Wednesday's slide, the NASDAQ here in the United States, less than three percentage points in fact from falling into a 10 percent
correction territory. But I have to say, big pandemic winners like Tesla, Apple and Amazon are slightly higher as you can see premarket after that
two percent plus loss yesterday. So we shall see what happens in the session.
The big fear remains of course that economic growth will be strong enough and inflation will be high enough to prompt the Federal Reserve to tighten
policy or lift rates sooner than they've said that they will.
To illustrate that point, U.S. yields spiked higher once again yesterday, but we are holding steady, 1.48 percent on that 10-year bond.
Today, Fed Chair Jay Powell speaks later Thursday, and there is clearly going to be a lot riding on his ability to calm investors. He is likely to
stress that while it is recovering, the economy still needs help.
That is also likely, too, that the bond market will continue to call his bluff. Tough for them to do that today though on the news that a further
745,000 Americans filed for first time claims last week. Some 18 million Americans are still getting some sort of employment assistance.
Let's get more on this in our drivers. We are joined by John Harwood. John, great to have you with us.
There is no evidence of an overheating economy and these jobless numbers once again in the past week, only evidence perhaps that longer support is
going to be required.
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Well, and that's what Jerome Powell's message so far has very consistently. We now have almost a full
year, I think 50 weeks now of jobless claims higher than the previous record before the pandemic.
That shows you the continuing softness in the labor market that fuels the argument that Joe Biden is making for his COVID relief package, $1.9
trillion, which the Senate is taking up today. The Senate is likely to pass, despite a lot of delaying tactics by Republicans on a party line vote
just as it passed on a party line vote in the House.
Now, there are some Democratic economists as you know, Larry Summers who have warned about the potential for overheating, the potential for driving
up inflation more than is beneficial to the economy.
Jerome Powell has not evinced that fear so far, but that's why everybody is going to be watching his speech today.
CHATTERLEY: I mean, it's a fine line to walk as well because if he says, look, we're going to hang in there, the economy needs support, the lowest
waged workers in this country are still struggling and millions of people are still out of jobs, more than 10 million people since the pandemic
began.
The problem is, John, investors call his bluff and say we simply don't buy it. So in some way, he has to acknowledge the recovery that we are seeing,
while also saying, we're recovering but there is still work to be done.
HARWOOD: That's right, and also, make the case for why even if inflation spikes above that two percent target that the Fed has set, that this is a
transitory phenomenon. That's what Jay Powell has said so far.
Yes, it could be that we see inflation rise above the benchmark that we've set, but if so, that's likely to be a short-term phenomenon. We still have
long term softness within the economy. He has made that case consistently, does he make it again today?
CHATTERLEY: Yes, there are still alarm bells going off in the U.S. economy and behind you, John, well-handled, I believe they've stopped now. So thank
you so much for that, John Harwood. Great to be with you.
All right, as we speak, the major oil producers, OPEC Plus meeting to review record supply cuts put in place during the pandemic. Recovering
demand has pushed oil prices back to pre-pandemic levels leading some to call for a reversal of the cuts.
John Defterios joins me now. Talking of tough decisions and tough maneuverings going on, John, you are the man in the know as far as OPEC and
OPEC-Plus is concerned.
What are you hearing about the discussions in this meeting?
[09:05:13]
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, it is hard to hear anything, Julia. This is like a poker game, because the Ministers are
keeping the cards very close to their vest this time around.
Usually, you get conversations ahead of time with a lot of guidance, that's not the case right now. We saw a wide variance of predictions.
Three days ago, I saw this, we will add 1.5 million barrels a day. This was bank reports coming out of Wall Street. I thought that's very high.
And the latest indication is perhaps adding half a million barrels a day overall, that's coming from the Russia's Deputy Minister of Energy at the
same time, so let's get everybody up to date. What are we talking about? What's this poker table -- have on the table?
Seven million barrels a day collectively by the OPEC-Plus 23 and then Saudi Arabia kind of doubled down and added another million barrels a day off the
market, announced it in January, and in place February and March. Now, it is very important that those two see eye to eye.
The Russian Deputy Prime Minister, Alexander Novak and the Minister of Energy, Abdulaziz bin Salman because if you look back over the last year,
when they didn't see eye to eye, we are at $51.00 a barrel that was at the OPEC meeting in March of 2020 and we collapsed at $19.00 because they had a
price war.
Saudi Arabia is saying the pandemic was going to be awful. Nobody really believed in the data that they were showing. They turned out to be correct
and then they started cutting in May.
And then, when they announced this additional cut in January, look at the end of that chart, Julia, we added $18.00 from the end of January through
the first week of March because the vaccines are rolling out and this additional oil is off the market right now, and in the first five minutes
of meeting, which started about 30 minutes ago, the Saudi Minister made it very clear what he is thinking. At this stage, he says, let's be cautious
and vigilant.
We're seeing the light at the end of the tunnel. It may be a freight train coming in our direction if the recovery is not for real, so they have to
kind of find this Goldilocks scenario, not too hot on prices, not too cold, keep the markets supplied. But don't start adding oil too early is the
message from the Saudis.
CHATTERLEY: It is what makes this market so fascinating not only the economics for the individual nations involved, the horse play behind the
scenes, the trading the investors look at in terms of what's right for oil prices, and all the players involved here, not to mention the economic
growth outlook, John, but it's the geopolitics that is also fascinating at this meeting, particularly in light of what we have seen between the United
States and Saudi Arabia coming into this meeting.
DEFTERIOS: Yes, you hit the nail right on the head here. Let's start with the economic pressures, though, Julia, because the import fees for some of
the developing countries are severe, and I am just going to lay out one example, and that's India.
The Minister of Petroleum who I know well, Minister Pradhan told CERAWeek in the last 12 hours, he said, look, you know, OPEC-Plus promised price
stability and supplies, this is not normal supplies, you know, taking eight million barrels a day off the market, they need a break. This is too high
for them.
And that the number three importer in the world, big client of Saudi Arabia, the UAE and Russia, so he does have a voice.
And you talked about the geopolitics. There is a reset under way by Joe Biden with Saudi Arabia. So they are very cognizant. They want to be the
good global citizen and always be that swing producer, that stabilizes the market.
Well, that's this window of time, Julia, because if you get to $80.00 to $85.00 per barrel like some of those on Wall Street are suggesting right
now, it could stave off the economy in the second half of 2021, and Saudi doesn't want to point any finger and say, well, you did that, right?
Also remember 2008, when prices spiraled up to $140.00 a barrel, they collapsed to $30.00 because it killed off demand. So it is that Goldilocks
scenario. Can we find the middle ground here? Maybe add up to a million barrels back on to the market, no more than though. I'd be surprised if it
was.
CHATTERLEY: A delicate balancing act. John, great to have you with us. Thank you. John Defterios there.
All right, on to Hong Kong where a court has ruled that 32 pro-democracy leaders including Joshua Wong will remain in jail until their next hearing
in May. They were all arrested under China's national security law.
Will Ripley is live in Hong Kong for us. Will, and we have seen sporadic protests throughout the week as we awaited this outcome. Just give us all
the details and the reaction there.
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: I was at the courthouse earlier this week. Yes, the crowd was larger than what we are used to
seeing in COVID times, but still, much smaller than the protests in the summer of 2019 and much -- certainly much smaller than the scores of voters
who turned out to vote for these pro-democracy candidates and local elections, winning overwhelmingly in local elections.
And then when they tried to stand in this primary which was delayed because of this pandemic, they were disqualified. And now, they are being accused
of violating the national security law.
So in other words, all the people who were running for office are now charged. And you mentioned 32 of them are going to have to stay behind bars
to give prosecutors time to go through their phones and their financial records until the end of May, almost three months.
Normally the way it works with the judiciary here in Hong Kong, you have to prove to the judge why you don't need bail, but it works differently with
the national security law.
With the national security law, they kind of take it as a given that you're going to put someone in custody unless they go through all of these
different things and agree to all of these things in order to get bail.
[09:10:34]
RIPLEY: That's why out of the 47 charged, just 15 were granted bail and already, prosecutors have immediately appealed that, so the 15 people who
are hopefully going to get bail, they have another court case on Saturday that they have to go to.
There's also something happening in Beijing. We're on the eve of the National People's Congress and there have been a lot of reports that one of
the things on their agenda is to improve from the Beijing perspective, the Hong Kong election system.
There have been reports that Beijing is going to only allow patriots to run for office.
So in the past, where you had kind of a spirited back and forth even though the government was already kind of stacked in Beijing's favor with the
number of seats allocated to pro-Beijing parties, now you may have a situation where there may not be anybody in the government here in Hong
Kong actually representing the pro-democracy viewpoint.
In fact, all of those people could be in jail.
CHATTERLEY: We await and see what happens later on, this weekend and beyond. Will Ripley, thank you for that update there.
All right breaking news coming into CNN, a 6.9 magnitude earthquake has hit near New Zealand's north island, just over 200 kilometers east of Gisborne.
According to the United States Geological Survey, a tsunami threat has been issued by the Pacific Tsunami Warning Center. No reports of injuries or
damage or injuries as yet, but we will bring you more on this the moment we get it.
All right, let me bring you up to speed now with some of the other stories making headlines around the world.
Britain's Prince Philip is resting after undergoing a procedure for a heart condition on Wednesday. That is according to Buckingham Palace.
The Palace says the 99-year-old Duke of Edinburgh will remain in the hospital for a number of days and that's not the only Royal news this
morning.
Max Foster joins us now. Max, but arguably, the most important, what more do we know about Prince Philip's health?
MAX FOSTER, CNN ROYAL CORRESPONDENT: Well, only that he has had this procedure. Is it an operation? We don't really know. We know that a few
years ago, he had a stent fitted, so maybe they were looking at that, but he has had this treatment in this specialist hospital and he needs more
treatment as well over the coming days.
So it is a watch really. The Palace aren't giving a running commentary, so we tend to find out about these things after the event.
But he is recovering. He has responded well to that treatment so far so that's good news, so far at least -- Julia.
CHATTERLEY: And we keep our fingers crossed for his ongoing recovery here, Max, but I did make the point it's not the only news. What we have also
heard in the last 24 hours is that Buckingham Palace is investigating claims of bullying of staff against the Duchess of Sussex, of course,
Meghan, not to be outdone we've had the ongoing teasers for Oprah Winfrey's interview with both Harry and Meghan.
And we got another teaser last night and claims of bullying by the Royal Family in the other direction. Just, let me play this for our viewers.
(BEGIN VIDEO CLIP)
OPRAH WINFREY, TALK SHOW HOST: How do you feel about the Palace hearing you speak your truth today?
MEGHAN MARKLE, DUCHESS OF SUSSEX: I don't know how they could expect that after all of this time we would still just be silent if there's an active
role that the firm is playing in perpetuating falsehoods about us. And if that comes with risk of losing things, I mean, I've -- there's a lot that's
been lost already.
(END VIDEO CLIP)
CHATTERLEY: Max, what a mess. A mess in terms of timing, quite frankly with what is going on with Prince Philip, but just a mess in general, a
soap opera -- a Royal soap opera.
FOSTER: Yes, but some serious allegations behind them, and what Meghan is saying here is that the Palace was working against her, but actually, Oprah
puts the Palace into question and Meghan responds with the term "the firm," which is actually, a reference to the Royal Family. She is suggesting they
were working against her.
We need to find the full context here, because it is a two-hour interview, but what I think she is suggesting, if I go on what she has been talking
about in the past is that, you know, the tabloid media was attacking her, they were lying about her, but the Palace then didn't step in and defend
her against a lot of those lies.
And this goes back to their no-comment policy which Meghan has had a problem with throughout. They don't comment on speculative stories as a
protocol that's set in over decades. They would argue that that is because they can't respond to everything, otherwise, they would be responding to
everything nonstop all the time. There is so much coverage of the family.
But she, I think that that's what she is suggesting. But she is taking it up a level here, referencing it to the family, but also suggesting they are
working against her.
So it is incendiary and then, you know, obviously, this was recorded a couple of weeks ago, but it was released in relation to these bullying
allegations that were in "The Times," suggestions from unnamed sources in "The Times" that she forced out two personal assistants and undermined the
confidence of a third member of her staff.
[09:15:32]
FOSTER: That's now being investigated by the Human Resources Department at the Buckingham Palace, because the allegation is that they didn't follow up
on this at the time.
So, it is getting very messy, and I think we can certainly confirm it is now a rift and it has broken out as well into the public.
CHATTERLEY: Yes, I called it a teaser, didn't I earlier? And obviously, that interview again will air this weekend and we will get the context that
you talked about.
Max, great to have you with us. Thank you. Max Foster, thanks for that report.
All right, the Human Rights chief says the police and military in Myanmar have killed at least 54 people since the coup on February 1st. She is
calling on security forces to halt their crackdown on peaceful protesters and immediately release hundreds of people who have been arbitrarily
detained.
European Union regulators have begun reviewing Russia's coronavirus vaccine. They say they are starting data to see if the benefits of Sputnik
V outweigh the risks.
Russia says it could provide the E.U. with enough vaccines to inoculate 50 million with distribution starting in June.
All right, still to come on FIRST MOVE -- speaking of vaccines, vaccine fraud with legitimate doses in short supply, swindlers are scamming keen
buyers with nonexistent vaccine offers with billions of dollars. We've got the details.
And the even bigger business of buy now, pay later. How Sweden shopping app, Klarna, netted a $31 billion valuation.
That's all coming up. Stay with us.
(COMMERCIAL BREAK)
[09:20:04]
CHATTERLEY: Welcome back to FIRST MOVE where we continue to monitor the trouble in tech land. The NASDAQ futures under pressure once again after
yesterday's fall. The tech tizzy taking a bite out of the most closely watched growth Exchange Traded Fund or ETF, ARK Innovation.
It's run by star fund manager, Cathie Wood who has been on the show a number of times. The fund which holds large positions in things like Tesla,
Roku and Square has fallen into a 20 percent bear market. For context, you can see on the chart there, it's still up 130 percent over the past year.
All right, a major new warning now about COVID vaccine scams across Europe, the European Anti-Fraud Office also known as OLAF is saying scammers have
offered governments around one billion nonexistent vaccine doses worth more than $16 billion.
Joining us now is Ville Itala. He is Director General of the European Anti- Fraud Office. Sir, fantastic to have you on the show. I believe you were only a week or so into this investigation and you were so alarmed by what
you saw you decided to go public. These numbers are huge. Just talk about your decision to announce what you were already seeing.
VILLE ITALA, DIRECTOR GENERAL, EUROPEAN ANTI-FRAUD OFFICE: Yes, you are right. We normally don't go to public in our investigations, but this is
really exceptional situation, and we have seen, unfortunately, the growing numbers of the scams and fake offers related to vaccines. And -- yes.
CHATTERLEY: No, please carry on.
ITALA: Yes, we get this information from national governmental sources. These fraudulent people go and offer these false, fake vaccines to
governments, and everyone knows the pressure to get the vaccines. So it was important to inform the governments don't go there in hasty reaction.
CHATTERLEY: So just because you've sent us some charts, just to give us a sense of how these approaches are being made and to your point, you're
saying they're going direct to European governments. Sometimes it's a phone call, sometimes it's an e-mail. Sometimes they go to national authorities.
Sometimes they go to regional authorities.
I mean, who is doing this? And how professional is it? Whether it's an e- mail or a phone call? Is it tough for those that are receiving these to recognize and identify a scam?
ITALA: Yes, it's quite difficult. And they mainly send e-mails, there are letters, there are phone calls, too, but mainly e-mails, and mainly for the
governmental level. But also, local level, too.
But they are normally, these offers, we find a long chain of companies and the main company, the operational company is normally in third country. So
it's more difficult to identify and investigate.
CHATTERLEY: So we're thinking that it's coming from sources outside of the E.U. Have you managed to do any due diligence and identify precisely where
they're coming from?
ITALA: Yes, that's the work that we do with the national authorities, and we have recognized and identified some persons and what we have found out
is also that it's criminal gangs, quite often behind these offers.
CHATTERLEY: Do you think this situation has been made worse by the lack of vaccine availability in Europe? We've all seen the news headlines with
countries worried, the fights between big pharmaceuticals and nation states in Europe saying we thought we were going to get vaccines sooner. We
thought we were going to have more.
Individuals and these citizens in these nations are very sensitive to it. That's also a green flag to scammers out there to say, look, we can try it
on with these governments because we know they're fearful and they are desperate for vaccines.
ITALA: Yes, absolutely. It's important that when we have so huge pressure, also political pressure, everyone wants to have the vaccine. These
fraudulent people, they are always very creative and they always have money flows.
CHATTERLEY: Has anyone fallen for a scam? Or they literally just flag it to you immediately and say, look, we need to investigate it. What actions
are you taking currently, again, it's early days. We appreciate that.
[09:25:00]
ITALA: Yes, that's -- what we give as advice for the national authorities and we help them to identify these fraud attempts. And this is really
preventive work from our side.
And so far, we have been lucky. And as we know, none of these governments has taken these offers.
CHATTERLEY: You know, my biggest fear here is that we have people who are already nervous about taking vaccines, anti-vaxxers. It is certainly
prevalent in the United States, but it's all around the world, too.
And if this in some way undermines the trust of ordinary people to be willing to go and get a vaccine, because they're afraid about the source.
That's another critical element here and something that we have to be very careful about surely.
ITALA: Yes, I think that's the main issue here. And that's the main reason we came out with this information.
Luckily, we have succeeded. The scams have not been successful. So it's not only the financial consequences, which can happen. I think the main issue
here is the trust.
Now, when we have succeeded, then the people and citizens can trust when they take the vaccine. It's a real vaccine.
CHATTERLEY: Yes, and actually, just in terms of the numbers that you were seeing, and the ramp up in, who was asking, and the rate upon which they
were asking you, the amount of money that they were asking, it's been ramping up since really the third week of February.
Have you seen any shift in the last two weeks or so? Has it come down at all? Just because you've gone out there and said, look, guys, we know
you're doing this, we're on to you.
ITALA: Yes, first, the numbers were really high up in two weeks' time. But now when we have revealed these and come to the public, we have seen in the
last two, three days, they are coming down. So I think it's -- luckily, it's working.
CHATTERLEY: And that's why we're talking about it. Sir, great to have you on. Sending a stern message to those out there that are trying to undermine
trust. We're on to you.
The Director General of the European Anti-Fraud Office. Sir, thank you for your update there.
All right, the market opens next. We are back after this.
(COMMERCIAL BREAK)
[09:30:38]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks are up and running this Thursday, and as expected, we are seeing more pressure on tech, down
some three-tenths of one percent there.
The NASDAQ falling to two-month lows in Wednesday's session with the Wall Street majors, and today is of course TBD, the price action in tech and
bonds is going to continue to be the focus in Fed Chair Jay Powell's discourse on the economy, all up for debate for investors today.
T also stands for trade and a big win for Britain. The U.S. today suspending steep 25 percent tariffs on a wide range of U.K. goods for four
months, so the two sides can come to an agreement on government subsidies for jet makers Airbus and Boeing.
This means Americans will not see big price hikes for U.K. imports like single malt Scotch, cashmere and clotted cream. The U.K. suspended tariffs
on U.S. goods last month.
All right breaking news now coming to us at CNN and an update. A 6.9 magnitude earthquake has hit New Zealand's North Island, just over 200
kilometers east of Gisborne.
According to the United States Geological Survey, a tsunami threat has been issued by the Pacific Tsunami Warning Center. And as I mentioned earlier,
no reports of injuries or damage as yet. We will bring you more as we get it in terms of updates.
But for now, let's bring in CNN meteorologist Chad Myers. Chad, clearly the tsunami warning the big concern here. What more can you tell us?
CHAD MYERS, CNN METEOROLOGIST: Julia, we know that a tsunami was generated because we know it has already hit East Cape, New Zealand at about 0.3
meters, so about one foot in height.
But there -- actually the tsunami advisory is saying this could be 0.3 meters all the way to one meter. So it was a 6.9.
Now earlier, if you were watching or even listening or seeing it on maybe on your phone, it was a 7.3. And that happens a lot where they have to see
what it truly is and it takes a few minutes to get all of the information put into the computer.
So we do know that a tsunami was generated. This is not a widespread Pacific-wide tsunami. This is a localized tsunami thinking somewhere
between around the epicenter likely at 300 kilometers or less. And after that, the waves will have dissipated.
Now, the first wave is not always the biggest wave. And if you're along this coast, you need to be moving away from land and they're saying walk
run or ride a bike. Do not get into a car and make a congestion.
Now, a one meter wave isn't going to go very far inland. But if you're on the shore, you certainly need to get away -- Julia.
CHATTERLEY: Chad, fantastic to have you with us. Great context and great advice there. Thank you.
And we will update you throughout the show and all day here on CNN as we get it.
Stay with us. We're back after this.
(COMMERCIAL BREAK)
[09:36:36]
CHATTERLEY: Welcome back to the show. Buy now, pay later shopping app, Klarna has just completed a fresh funding round which tripled its valuation
to an estimated $31 billion. That makes it more valuable than Germany's biggest lender, Deutsche Bank and comparable with giant European banks like
Barclays and Credit Suisse.
Perhaps unsurprisingly, it also makes it Europe's most valuable startup.
Joining us now, Sebastian Siemiatkowski. He is the CEO of Klarna. Sebastian, congratulations. I think this redefines the term challenger
bank, quite frankly. How does it feel to be the second largest Fintech in the world?
SEBASTIAN SIEMIATKOWSKI, CEO, KLARNA: It's kind of unreal when you say it like that, I mean, it certainly does.
But, I mean, I must -- I must hope that it's some kind of, you know, result of people believing in our ambition in what we are trying to accomplish
here. So I hope that's the way to see it.
CHATTERLEY: Just explain that and the ambition, actually, because you have the buy now, pay later option, and you're growing at a rapid rate,
including here in the United States, where I believe you now have around 50 million customers, but you're also pushing into retail banking, at home and
in Germany, as well.
So in terms of vision, you have a lot going on, and you're expanding really fast. Where are you headed?
SIEMIATKOWSKI: Sure. I think that's like, I mean, when we started the company, you know, when I was like, 23 years old back then. So you know, at
least -- I don't know about you, but I know, I hadn't figured out the world back then, and --
CHATTERLEY: Even now.
SIEMIATKOWSKI: So really starting Klarna for us -- but you know -- but I know at least what's that's like. So you know, for us starting a company
wasn't -- we were just trying to go off the beaten path. All our friends wanted to work at Goldman Sachs and Morgan Stanley, and we want to do
something different.
You know, back then nobody wanted to start a company. It was like seven percent of students in Stockholm, now, it is 70. Right?
So we saw this opportunity to kind of provide a better digital service, a better payment service online. But I think as we as we grow now, you know,
16 years have passed, we realized that, you know, if we really want to change this retail banking industry, just digitalizing it is not going to
be enough. This is unfortunately an industry that, you know, has suffered from not being customer friendly from a lot of like OPAC terms.
And we read it in the press all day, whether it's pension funds, or IPOs, or whether it's retail products for consumers where, you know, people get
hooked on some kind of product, and then they are pushed into 29 percent interest revolving type of credit loans, it is just not a great industry.
So we've come to a point where we said, look, it's not going to be only about digitalization, it's going to be about trying to fundamentally change
how these businesses work and how the business model works.
And the key there is the buy now pay later, because differently from your credit card that basically, you know gives you 30 days interest free credit
and a lot of loyalty points, none of us are asking yourselves, like who is paying for that?
Unfortunately, there's a subset of customers, usually low income that are revolving in 29 percent interest and that money is then transferred to
people with more money, which is just not a great model.
And younger consumers, millennials are really seeing that. Buy now, pay later offers everyone four interest-free installments, no interest, no fees
for the consumer, and the merchant is paying it because they're being rewarded by consumers with higher spend. So it's a better model that we
think has the future for it.
You know, people are using more debit than credit, using debit cards to a higher degree which is already happening, and then occasionally using
things like this.
And so we think this really has the potential to transform the industry which is super exciting.
CHATTERLEY: I guess, the push back though for those that would look at this and say hang on a second, but it's the same thing. You could still
have people that try and do this and they are never going to make the four installments. They maybe make a couple of them and then they can't afford
them either.
And actually, you're encouraging people who don't have money to spend in the same way that a credit card is. Why is this different, Sebastian?
Because I do think this cuts to the core of what you're saying here, beyond everything else about digitization, which I agree with you, by the way.
Explain that?
[09:40:20]
SIEMIATKOWSKI: Well, I think first and foremost, it is different because the business model isn't built on, you know, the better off customer
getting it for free, because the worst off customers are paying high interest rates.
So it is equal for everyone. Everyone gets the four interest-free installments, and it's the merchant who negotiates the rate recliner, and
pays for that. So that's one improvement, right?
The second improvement to your point is about how careful are you on the underwriting perspective? And I sincerely believe that you know, a credit
card starts with you applying for it and then getting a limit of let's say, you know, $1,000.00, or $2,000.00, and then there's no stock to that,
right?
The way a buy now pay later service like Klarna works is that, we give somebody $100.00 to spend, and then we give them $200.00, and if they
showcase that they can manage this credit in a responsible way, then we improve -- we increase that credit line. So those are fundamentally
different.
Now, if you are entirely against credit as a concept, while you know, I'm not going to win the argument, I do believe credit has a role to play in
society. I do think it contributes to society. But I think there's a better way, and there's an opportunity to provide lower cost credit that is more
affordable to consumers, and that's what we are trying to accomplish.
CHATTERLEY: Yes, and you prove what you're capable of as you go along, rather than to your point, being given a massive, great limit, and then
getting into trouble instantly.
SIEMIATKOWSKI: Right.
CHATTERLEY: So I brought up the idea of profitability, because it's sort of loss making, but you're in expansion phase. With my team earlier, and
they told me it is boomer mentality and I've been accused of that actually, in the past or complemented with it.
I know, you're sort of talking about an IPO perhaps this year, maybe next year, but also in the process of raising money. Is the conversation about
timing profitability, when will you be profitable even being had at this stage, Sebastian, and can you give us any clarity on it? Does it matter for
you at this moment?
SIEMIATKOWSKI: No, I do think about it, and as I said, you know, again, when we were 23 and started a company actually, you know, those would have
been before -- or at least to us, there wasn't a concept of like, we can just run a company unprofitable for multiple years.
So Klarna actually became -- you know, we raised our first fundraise, it was $60,000.00. We spent half of it before we became profitable.
And so we've been profitable for the first 15 years. The business model works. It is profitable. What's happened in the last one or two years is,
we came to a conclusion that, you know, we looked at the industry, and we said, you know what, the Tesla moment that happened to the car industry is
about to happen in the banking industry. This is going to be the time when that massive shift is coming.
And if I want to maximize our shareholders returns, now is the time to invest. Now is the opportunity to go and transform this industry. And so as
a consequence, we started, you know, massively increasing our investments and that has then resulted in a more -- in a loss making from that
perspective. But the underlying business model is profitable today.
And so that's just a question of our ambition. We just see that, you know, this is a trillion dollar industry, this retail banking and it's really
been protected by regulatory, it's been protected by scale, it has been protected by all these barriers of entry.
And now, we want to go in and try to make some change here.
CHATTERLEY: So you're the Tesla of Finance.
SIEMIATKOWSKI: Well, you said it. I hope -- but think, I may have led you there, but I think there is a -- I think there is an opportunity to play a
similar role. Yes, I do believe and I hope it -- you know, I hope there is going to be more companies than Klarna obviously who can do that because it
is an industry that needs -- that is right for that change, right?
It's not an industry that has kept customers' best interests at heart and it has to have actually fairly, not great functioning competition.
CHATTERLEY: Sebastian, it has been amazing to chat to you. I'm getting told off now because I meant to ask about some very pointed comments you
mentioned about Bitcoin, in a different interview. So you're going to have to promise to come back on soon and talk to me about that, because I think
your perspective here is pretty interesting, too.
SIEMIATKOWSKI: Yes.
CHATTERLEY: But we don't have time, so you have to come back soon. Sebastian, great to have you on.
SIEMIATKOWSKI: I will. Thank you so much for having me on.
CHATTERLEY: The CEO of Klarna. Can you promise now? Thank you.
All right, next up on FIRST MOVE, on another level, an electric flying taxi startup wants to take flight in just three years. Details on the other side
of this break. Don't move a muscle.
(COMMERCIAL BREAK)
[09:46:40]
CHATTERLEY: Welcome back to FIRST MOVE. Plans for flying cars and taxis make regular appearances on FIRST MOVE, but what do United Airlines know
that we don't because they've just ordered 200 electric flying taxis in a billion dollar partnership.
The company making them. Archer says they will shuttle passengers from Manhattan to JFK Airport in seven minutes, all for the cost of an Uber X,
and all we have to show you are some futuristic stills.
Brad Adcock is cofounder and co-CEO of Archer. Brett, you have had a monster month raising money, the deal with United, does the thing and the
image that we can see behind you actually fly.
BRAD ADCOCK, COFOUNDER AND CO-CEO, ARCHER: Hi, Julia. Thanks for having me on.
So maybe we can take a step back and talk about a little bit --
CHATTERLEY: You may.
ADCOCK: So here at Archer, we're building an electric vertical takeoff and landing aircraft used for urban air mobility.
So over the last 20 years, it has been an incredible step change as electric power systems have gotten better. You've seen -- you know, we've
seen electrification now on the ground, and that's now moving to the air.
When building electric aircraft, there are three big benefits here that are enabling us to build what we think is a next generation mobility business.
One is like lower costs to operate. Two is higher safety, and three is lower noise.
And obviously we're doing all this with zero emissions. This will give away to a new industry called urban air mobility that will help move passengers
and goods in and around city and beyond.
And as you mentioned, we're really thankful to be partnered with United Airlines this quarter. They bought a billion dollars of aircraft, and we'll
be starting deliveries on those in three years.
The aircraft behind me is going through final assembly in our lab right now and we will be flying the aircraft this year. And it's our full scale,
electric vertical takeoff and landing aircraft called Maker.
CHATTERLEY: Wow. You are going to have an incredible three years. That's all I can say.
One of the other things, and it goes to the point of manufacturing, I think you've mentioned it with safety and with efficiency, you're actually going
to manufacture your own batteries for this, too.
Talk me through that decision, because arguably, you could buy those in and save yourself some effort over the next three years.
ADCOCK: Yes, I mean, the batteries are really one of the key enabling technologies for us over the next several years. They're really important
for a few reasons.
One is, we need a certain level of performance of aircraft, certain power requirements in both takeoff and landing and also for emergency reserves,
and also we have to adhere to a really strict safety standards from the F.A.A. as we certify the aircraft and bring it into production.
And that has pushed us to basically vertically integrating almost all the battery technologies here. We think we do it, you know best in class and we
have a lot of intellectual property that we've developed in the last several years.
And it is, you know, a key IP area for us in development and manufacturing area over the next several years.
CHATTERLEY: Yes. Where are you with the regulators? Because you raise a great point there.
ADCOCK: Yes, so we chose to certify here in the United States, and governed federally in the airspace with the F.A.A., so we are currently in
process with the F.A.A. of certifying our electric vehicle, so we can enter operations in 2024.
We currently have around 50 people at the F.A.A. working on our project every day. We feel really great about our progress at the F.A.A. so far and
you know, we're ultimately working with the F.A.A. in tandem to make sure we certify our aircraft to the safest levels of commercial aviation
performance, which will be important here as we roll out our operations, you know, first here in the U.S. and globally.
[09:50:24]
CHATTERLEY: And just explain who is going to be in that? Is the pilot going to be in there and then how many passengers can you take?
ADCOCK: Sure. We are certifying a piloted four-passenger aircraft. The pilot in here is really important as we get going, I think for a few
reasons. But, you know, we are going to enter operations in 2024 and will be using existing infrastructure on the ground like helipads, airports,
retrofitted parking garages, and then we will be using traditional air traffic control, piloted aircraft control.
And so I think about this as we -- we have urban air mobility today, it's just helicopters. They take people around in a lot of cities in the U.S.
today. Helicopters are just too -- they are just too expensive. They're not very safe, and they're very noisy.
So a lot of cities in the U.S. have even banned helicopters and the use of them for passengers.
Here, that is completely different for electric aircrafts. They are really affordable to operate as you move to electric powertrain. You have like a
lot fewer your maintenance, no fuel. They are low noise, like our aircraft is inaudible overflight as we're flying at 2,000 feet above ground level.
And we're certifying the aircraft with the standards as you've seen in commercial airliners today, which is one of the safest forms of
transportation we take.
CHATTERLEY: And I'm really going to be able to do this for less than half the cost of getting a helicopter between Manhattan and JFK at this moment,
because to your point, you believe this could disrupt ride sharing.
ADCOCK: I mean, way more than half the cost. A traditional helicopter today is very expensive. We think the operating costs of these aircraft
entering service will be an order of magnitude or one-tenth the cost of operating a helicopter.
I mean, when you move to electric, you have this incredible step change where you remove 70 or 80 percent of the parts. We have no critical
components on the aircraft, which means they have no single point of failure in which helicopters have hundreds of.
We have far fewer maintenance because of all that, and we have no fuel. So we will operate the aircraft's level scene and maybe like ride sharing on
the ground today. And then over time, we'll push prices down to the cost of car ownership with aerial ride sharing and the ability to manufacture at
scale.
So yes, the goal here is to build an affordable service for the masses to get around. And you know, we have a lot of folks stuck on the ground and
traffic driving 30 minutes to an hour, an hour and a half to places and we want to send that right into the air where we can travel at 150 miles an
hour point to point.
As you mentioned in the opener, you know, JFK to Manhattan, you can do that in 10 minutes. We can do 40 trips a day per aircraft.
And you know, we are really excited about entering a lot of the bigger cities here in the U.S. in the next three years.
CHATTERLEY: Yes, I should point out, I mentioned I was talking about sort of ride-sharing helicopters as opposed to our ordinary ones.
But wow, Brett, if I can do JFK to Manhattan in 10 minutes, sign me up. You just have to get the thing flying, please. So you've got a busy few years
coming up.
Brett Adcock, great to have you with us. Keep in touch, please. Cofounder and co-CEO of Archer> Great to have you with us.
All right. On the day threats of new violence in Washington echo around social media, Facebook, is lifting its ban on U.S. political advertising.
Google actually did the same thing last week with some caveats.
Both companies are trying to balance free speech against public safety.
Brian Stelter joins us now. Brian, great to have you on the show. There's a whole lot of things we can throw at this.
The timing of the decision with what's going on in D.C. today, quite frankly, but the fact that Democratic strategists are like, hang on a
second, you're penalizing us, you're confusing us with your decisions. And actually, if you just controlled content better, we wouldn't need to do
this.
BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: Yes, in the ad world, there is a lot of confusion about Facebook's moves. The ban last fall, the
resumption of ads now, not just political ads, but social issue ads as well.
So when they banned all these politicians, like President Trump last November -- last October -- that also impacted a lot of advocacy groups
that run ads on Facebook, trying to get people to sign up for campaigns, donate money, et cetera. So this was something that was sweeping and
happened very suddenly and caused a lot of chaos.
Now Facebook is turning the option back on. Politicians can start to run ads again starting today. But the company does say we're going to look at
how these ads work to see what other further changes may be merited. That raises the question about what's going to happen during the midterm
election cycle in the United States. And what's going to happen during races in other countries. How is Facebook going to handle political
advertising?
I think it's very strange, Julia, that Facebook decided to do this today. They could have done it yesterday. They could do it on a Friday. Everybody
in the country knows that March 4th, unfortunately has been circled on the calendar by these lunatic conspiracy theorists who claim that somehow
President Trump could be re-installed and President Biden booted out of the White House. This ludicrous theory has called such security concerns in
D.C.
So Facebook to do this today of all days, you know, you can imagine the ridiculous conspiracy theories that would come out of Facebook taking
action on political ads today, of all days.
[09:55:13]
STELTER: It just shows that Facebook seems tone deaf sometimes to this misinformation war world.
CHATTERLEY: Or a cynic might say, it just ensured we all talked about it, Brian, but then I am the least cynical person I know.
STELTER: I sure hope that's not true.
CHATTERLEY: It is not true.
STELTER: Facebook, you know, oftentimes, they can't get out of their own way. Right? And it feels like one of those examples.
But in this case, as you said, they are following Google. They are or Google did start to put political ads back online recently. Facebook now
doing the same, and a lot of ad strategists are going to be thrilled about this.
You know, so many campaigns, so many wars are waged on Facebook these days. So it is a big deal for the political world.
CHATTERLEY: Yes. And to be clear, Google is doing it, but they have changed the policy that they won't target based on browsing history, so
less able to target people and that's a critical difference, I think for data privacy, too.
But Brian, we're out of time. We will reconvene, my friend. Brian Stelter, thank you for that.
And that's it for the show. Stay safe. "Connect the World" with Becky Anderson is next, and we'll be back tomorrow.
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[10:00:00]
END
