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First Move with Julia Chatterley
U.S. Stimulus and Vaccine Delivery Lift the I.M.F.'s Global Growth Outlook; Credit Suisse Says the Archegos Capital Collapse will Cost $4.7 Billion; Japan Lockdown Restrictions Tightened just Four Months from the Olympics. Aired 9-10a ET
Aired April 06, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:30]
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.
Roaring recovery. U.S. stimulus and vaccine delivery lift the I.M.F.'s global growth outlook.
Hedge fund hit. Credit Suisse says the Archegos Capital collapse will cost $4.7 billion.
And Japan's jam. Lockdown restrictions tightened just four months from the Olympics.
It's Tuesday, let's make a move.
Welcome once again to all of our First Movers around the globe. Great to be with you and to deliver good news on growth from the I.M.F. as I mentioned
raising their 2021 global growth forecast to six percent buoyed by a robust U.S. recovery where reflation intoxication has taken hold and a third of
adults have had at least one vaccine dose to date.
The U.S. actually is vaccinating at five times the rate of the rest of the world, but that's also the sobering part of the news today. The World Bank
warning that Africa alone needs $12 billion in aid to help supply and distribute vaccines, never mind other nations across the developing world.
Just to be clear, India reported more than 100,000 new COVID cases in a single day yesterday. It's a reminder that no one is truly safe until we
are all safe.
Well, let's take a look at the markets. A subdued tone to U.S. stocks premarket today. Consolidation after record closes for the Dow and for the
S&P 500. Both economic reopening stocks and rate sensitive tech stocks did well as bond yields held steady. That was in the session yesterday.
Green in Europe today, too, as stocks trade after the Easter break. U.S. stocks leading the pack boosted by details of lockdown easing. That
information from yesterday's trading session, too.
Credit Suisse shares higher after announcing a high level shake up following the hedge fund debacle at Archegos as I mentioned earlier.
Details next.
But as Mohamed El-Erian told us yesterday, loose monetary policy encourages excessive risk taking and we could see more accidents like this in the
future.
China, I think also recognizing the risks, apparently looking at ways to limit credit growth, leading to some softness in Asia shares in today's
session, too. The dichotomy of course of essential support for the consumer driven economy, fueling risks in the financial economy, and that will
continue.
Let's get to the drivers. As I mentioned, the I.M.F. raising its 2021 growth forecast significantly during its annual spring meetings today. The
U.S. projected to be the main driver of growth, even as many economies was being left behind.
Clare Sebastian joins me now. The strongest pace of growth -- and great to have you with us, Clare -- since 1984, I believe in the United States, and
there will be beneficial spillover effects.
Just talk us through the headlines of this growth upgrade.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia, a big upgrade for the U.S. They're now projected to grow 6.4 percent this year. That's versus
a projection from the I.M.F. in January of 5.1 percent.
So, a significant difference in just a couple of months. Now, why is that? Well, you mentioned it. Stimulus is a big thing, not only the stimulus that
they've already passed, but looking forward to Biden's almost $2 trillion infrastructure plan. The I.M.F. says that will have positive spillover
effects for trading partners.
So this isn't just a stimulus for the U.S., it could impact the rest of the world as well. And of course, most importantly of all, the vaccine rollout,
the race between the virus and the vaccine, as the I.M.F. puts it, is now tilting a little bit, at least in developing economies -- developed
economies towards the vaccine.
So they do say a way out of this crisis is increasingly visible after that historic contraction last year, Julia of down 3.3 percent for the world in
output.
But there are serious risks that remain. This is a multispeed recovery, as the I.M.F. puts it, unlike the financial crisis in 2008, which really hit
advanced economies the most. This is hitting the most vulnerable, emerging markets, developing economies, and within those, the most vulnerable
groups: women, young people, people with low skilled, low income jobs are bearing the brunt of this.
So they say there is more policy action that's needed. This is not a time to rest on your laurels, and they are calling on countries in particular,
to look at the vaccine distribution and how they can be more equitable with that because that is of course, the key to this recovery.
CHATTERLEY: And I mentioned that as one of the top billion dollars for Africa, but of course, developing nations are far broader than that, and if
the developed economies don't come together and provide more support and ensure that vaccines are distributed more equitably, before 2022 to 2023 as
was mentioned in the report today, then it's the developed nations that are also going to suffer, because global growth will be restrained, and
already, if you compare 2020 to 2021 and 2022, growth falls off again next year.
[09:05:24]
SEBASTIAN: Yes, absolutely. I mean, this is something that everyone has to care about. This, of course, this virus that we've all been battling, as
you said, no one is safe until everyone is safe.
The phrase the I.M.F. continues to use is scarring. The U.S. is expected -- is going to be the only economy they say to surpass the level of GDP it was
expected to have in 2022, even without the pandemic, I think that's very striking.
Other developing economies are expected to reach that level in just a couple of years on from that, but for developing economies, it could take
much longer. They've been bearing the brunt in terms of days out of education, in terms of business bankruptcies, all of these things that lead
to this sort of medium and long term scarring that could really impact them going forward.
So I think that is why -- that is sort of the tone of the spring meetings from the I.M.F. this week, a call to arms to try and make this a more
equitable recovery.
CHATTERLEY: Yes, limit the scarring. Clare Sebastian, thank you so much for that.
All right onward, Credit Suisse is counting the cost following the collapse of the U.S. hedge fund Archegos Capital. It's a hit of nearly $4.7 billion,
and now heads are rolling at the bank, too.
Anna Stewart joins us now, Anna, great to be with you. It's a nightmare scenario. They're having to suspend their buyback program. They've cut the
dividend by two thirds, and a whopping great write down as well.
ANNA STEWART, CNN REPORTER: Yes, this has been pretty costly, hasn't it? It has pretty much wiped out all profit for the first quarter for Credit
Suisse despite a fairly good performance from other divisions.
Now, this hedge fund, Archegos, had built up huge positions in certain stocks, including ViacomCBS and Discovery. Now, hoped, of course that the
share price would go up in some of these investments. It went down. It was unable to pay back many of its lenders and one of the biggest ones was of
course, Credit Suisse.
Now, as you mentioned, we've had two very high profile exits announced today. Lara Warner, who is the Chief Risk and Compliance Officer; Brian
Chen, who is the Head of the Investment Bank, both set to leave. No bonuses for anyone on the Board for the financial year just ended. There is a
reputational damage.
And speaking to analysts today, there's of course, the costs that the investor is going to have to pay as well. No share buybacks that has been
suspended and the dividend cut by two-thirds -- Julia.
CHATTERLEY: Anna, it doesn't surprise me that people lost their jobs in this debacle. I mean, this is bad enough, but you have to ask where the
risk management here was when it follows a whole host of issues.
I mean, they were caught up in the frauds, the alleged frauds, Wirecard of course, the German payments company, Luckin Coffee in China. And then there
was some other potential losses to clients coming as well via investments in Greensill Capital, which was also a huge fail.
Anna, what was going on there? Did they tackle that today?
STEWART: Well, when you list it like that, Julia, it is pretty shocking, isn't it? And you can see all of this reflected in the share price down
over 10 percent, this year-to-date. We can bring you all of those very costly and perhaps mistaken investments.
As you said, Luckin Coffee, that was around this time last year and this was Credit Suisse who actually underwrote the IPO for them. It was a big
accounting scandal. A little further on, a month later, you and I were talking about this last year, the big Wirecard scandal, they get embroiled
in that. York Capital write down that was more recent, $450 million and Greensill Capital, which, Julia is still raging on. They don't know how
much that will cost them.
The collapse of that -- of that sort of supply chain finance firm, it could be in the billions of pounds. So yes, two very high profile exits today.
Yes, they've taken on some costs from the collapse of Archegos, but honestly, I think that could be the tip of the iceberg, particularly for
risk management for Credit Suisse.
CHATTERLEY: Yes, Titanic feeling about this. Anna Stewart, thank you so much for that.
All right, to Japan now. Three prefectures are tightening COVID-19 restrictions as new cases spike. Osaka alone reporting a single day record
of 719 infections today, less than four months before the Olympic Games are due to start.
Will Ripley joins us now. Will, Osaka important because they were expected to hold the torch relay, I believe on April 14th. How are they handling
that and how long are these border restrictions set to last, do we know?
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Well, it's going to depend on the case numbers, Julia, and remember these targeted lockdowns are still
basically suggestions by the government, although there are some changes that are now being put into place that will allow local governments to
enforce these measures a bit more to have businesses close earlier for example, or limit their capacity, but it has been a challenge for Japan.
I was there this time last year when the numbers were starting to tick up and a lot of people were still out crowding the subways, going to work.
And in terms of the Olympics, when you have 108 days and so you're preparing to welcome athletes, thousands of them from 200-plus countries,
and you have a variant in Japan that is now believed to be more contagious, and potentially resistant to vaccines. There are epidemiologists who are
warning, Julia, that the July 23rd Olympics that go through until August 8th, could be a super spreader event, when you put all those things
together.
[09:10:33]
RIPLEY: Some Olympic qualifiers are being canceled. They've had to make adjustments to the torch relay. This is certainly not the kind of direction
that the Japanese government wants to be going in with this little time before this event, which has already been postponed by a year.
CHATTERLEY: And many nations clearly around the world looking at this and saying, is it safe to send our Olympic athletes in there? I'm sure the
athletes themselves are questioning this, too. North Korea, the first to say we're not coming.
RIPLEY: Yes, they were the first to shut down their borders at the beginning of COVID-19, and now, they are the first to say that they're not
going to Tokyo.
It's interesting. I mean, North Korea has not missed a Summer Olympics since they boycotted the 1988 Seoul Games, and it was the 1984 Games in Los
Angeles they also boycotted, but ever since, North Korea started participating.
The Summer Olympics have been one of their strong suits. They've had 16 gold medals and usually in like weightlifting and gymnastics, boxing and
judo and they take a lot of pride. I've seen the North Korean Olympians training and they train hard. They devote themselves to this because they
want to come back and give their leader Kim Jong-un a victory.
So this decision not to go probably not taken lightly by the North Korean government. But look, they are prioritizing the safety of the people who
live in North Korea over pretty much everything else. Their economy has taken a hit because they've shut down their borders. But they know that
they have a dilapidated healthcare system that could not handle an outbreak inside the country.
Now, this is a huge setback for South Korea's President Moon Jae-in. The Olympics do offer that rare opportunity for some face-to-face conversation,
some sports diplomacy, and that's not going to happen and that has to be a huge disappointment for him given that, you know, his term will be coming
to an end. They're holding elections in South Korea in 2022.
CHATTERLEY: Of course. Safety though, above all. Will Ripley, thank you so much for that.
RIPLEY: Yes.
CHATTERLEY: All right, let me bring up to speed now with some of the other stories making headlines around the world.
The Kremlin says jailed opposition leader, Alexei Navalny will not receive any quote, "special treatment." Navalny is vowing to keep up a hunger
strike aimed at forcing prison authorities to give him proper medical care. He says he is now suffering from a high temperature and a bad cough as well
as severe back and leg pain.
An Iranian government spokesman says Tehran is neither optimistic nor pessimistic about nuclear talks underway in Vienna. It comes three years
after former U.S. President Trump abandoned the deal. Five other countries all part of the original accord will meet with Iran.
The U.S. and Iran will not speak directly.
The trial of Former Police Officer Derek Chauvin will continue this hour. In Monday's testimony, the Minneapolis Police Chief testified against his
own former officer saying Chauvin, quote, "absolutely violated policy" when he knelt on the neck of George Floyd last year.
CNN's Josh Campbell has more.
(BEGIN VIDEOTAPE)
CHIEF MEDARIA ARRADONDO, MINNEAPOLIS POLICE DEPARTMENT: Once Mr. Floyd had stopped resisting, and certainly once he was in distress and trying to
verbalize that -- that that should have stopped.
JOSH CAMPBELL, CNN CORRESPONDENT (voice over): Minneapolis Police Chief Medaria Arradondo testified Monday that he believed former officer Derek
Chauvin did use excessive force when arresting George Floyd last May.
UNIDENTIFIED MALE: What is the officer supposed to do to a person in crisis?
ARRADONDO: Attempt to de-escalate that -- that situation.
CAMPBELL (voice over): Arradondo who fired Chauvin and the three other officers involved the day after Floyd's death, says that Chauvin violated
the department's neck restraint policy, and that Floyd's alleged crime did not require that amount of force.
ARRADONDO: To continue to apply that level of force to a person, proned out, handcuffed behind their back, that that in no way, shape or form is
anything that is by policy, it is not part of our training, and it is certainly not part of our ethics or values.
CAMPBELL (voice over): The Police Chief agreed during cross examination by Chauvin's attorney, Eric Nelson, that force is sometimes necessary to de-
escalate a situation and handcuffed suspects can inflict harm.
Nelson quoted the reasonable use of force standard defined in a 1989 Supreme Court decision.
ERIC NELSON, DEFENSE ATTORNEY: Police officers are often forced to make split second judgments in circumstances that are tense, uncertain and
rapidly evolving about the amount of force that is necessary in a particular situation, right?
ARRADONDO: Yes.
[09:15:12]
CAMPBELL (voice over): MPD Inspector, Katie Blackwell was in charge of police training last May and testified Chauvin was taught defensive tactics
and proper use of force. Her response to seeing Chauvin kneeling on Floyd's neck.
KATIE BLACKWELL, INSPECTOR, MINNEAPOLIS POLICE DEPARTMENT: I don't know what kind of improvised position that is. So that's not what we train.
CAMPBELL: The emergency room doctor who treated Floyd, Dr. Bradford Langenfeld testified that he believed Floyd's cardiac arrest was likely due
to a lack of oxygen or hypoxia.
DR. BRADFORD WANKHEDE LANGENFELD, EMERGENCY ROOM PHYSICIAN WHO TREATED GEORGE FLOYD: Any amount of time that a patient spends in cardiac arrest
without immediate CPR markedly decreases the chance of a good outcome.
CAMPBELL (voice over): Langenfeld tried to revive Floyd for about 30 minutes before pronouncing him dead.
THE prosecution argues that the hypoxia was a result of Chauvin's knee on Floyd's neck for more than nine minutes. The defense argues it was caused
by Floyd's drug use.
NELSON: Certain drugs can cause hypoxia, agreed?
LANGENFELD: Yes.
NELSON: Specifically, fentanyl?
LANGENFELD: That's correct.
NELSON: How about methamphetamine?
LANGENFELD: It can.
NELSON: The combination of the two?
LANGENFELD: Yes.
CAMPBELL (voice over): In response, the prosecution dismissed the defense's claims.
JERRY BLACKWELL, PROSECUTOR: Did they say to you for purposes of carrying or giving treatment to Mr. Floyd that they felt he had suffered a drug
overdose?
LANGENFELD: Not in the information they gave, no.
(END VIDEOTAPE)
CHATTERLEY: All right, still to come here on FIRST MOVE, the chip crunch as the global shortage hits car makers, phones, microwave producers and
more. We speak to the CEO of the biggest U.S. foundry.
And vaccine verification, IBM working with New York, Singapore and Germany on blockchain based health certificates. We explore the technology next.
(COMMERCIAL BREAK)
[09:20:00]
CHATTERLEY: Welcome back to FIRST MOVE, live from New York where U.S. majors are taking a bit of a breather after Monday's robust rally driven in
part by news that activity in the U.S. services sector is finally on the rebound, too.
Reopening stocks like airlines and cruise lines all rallied yesterday and are up once again premarket. Norwegian Cruises caught my eye this morning.
They're now asking the U.S. to allow them to sail again by July 4th, saying it will require vaccinations for all passengers and crew. It says it will
sail at only 60 percent capacity at the start if it gets the greenlight, so watch this space.
In the meantime, Taiwan's TSMC and Samsung Electronics are the world's biggest semiconductor foundries. The third biggest is U.S. based and its
GlobalFoundries. The private company has factories in Singapore, the United States and Germany, and counts Qualcomm and Broadcom among its many
customers.
It's also the only manufacturer of the U.S. military's most sensitive chips.
Joining us now is Thomas Caulfield. He's the CEO of GlobalFoundries.
Thomas, fantastic to have you on the show. Thank you for making time because I know you and your team are incredibly busy at this moment.
THOMAS CAULFIELD, CEO, GLOBALFOUNDRIES: Thank you, Julia.
CHATTERLEY: Just explain to our audience, please -- welcome. Just explain to our audience precisely what chips and for what kind of technology you
and your team manufacture.
CAULFIELD: We make a broad range of chips for almost every market segment, from data centers to internet of things to almost any electronic device.
In fact, if you looked around your studio, maybe the audience looked around their home and looked at almost every electronic device in their house,
there is a high probability there's a GlobalFoundries chip that we manufacture for one of our 250 customers around the world.
CHATTERLEY: So I think a lot of people watching this and certainly myself are aware of the chips shortage that we keep hearing about. And we've seen
a number of the big automakers warning about production, but I'm not sure if people actually understand where the shortage is coming from and perhaps
how easily that can be addressed simply by ramping up investment.
Can you just explain where actually the shortage is coming from and how we tackle it?
CAULFIELD: Yes, it's a great question. If you think about two inflection points that really happened in our industry, the first about 15 years ago,
with the advent of the smartphone, we were an industry that was compute- centric. It was about PCs, laptops, data centers, and the smartphone brought feature rich capability and work use cases to the industry.
Think about your smartphone today. It has a camera. It has secure pay transaction features. It has audio chips. It has power management chips for
battery life. It has chips that allow touch display.
And once that use case of about 1.3 to 1.5 billion handsets a year exploded, the industry shifted from semiconductor being so focused on
compute-centric, to pervasive deployment of semiconductors. And that led to every device wanted touchscreens and features. And so this demand has been
growing at a very brisk rate.
Then we come across 2020 and the unfortunate pandemic. And for me, it felt like a decade and a year that technology was adopted one year that would
have taken a decade. And this intersection of the change of pervasive semiconductor deployment accelerated by the COVID situation has created
this unprecedented demand and it is structural.
It's not just a blip, and what happens now is that all semiconductor manufacturers and there's not many of us left in the world have to
accelerate creating capacity for our customers and this is not an easy an easy thing to do.
By the time you decide you want to add capacity to the time you can actually create new products for your customer, it is about a year to order
equipment, install equipment, qualify the equipment and actually produce a quality product on that equipment.
CHATTERLEY: How long is the shortage going to be here for if you're talking about 12 months between simply making the announcement that you're
going to invest in increase CapEx in order to produce greater manufacturing capabilities, to the point where you actually can achieve it. We're looking
at more than a year.
CAULFIELD: I think it will last well into 2022. It'll get into balance, and then it'll grow at a normal rate demand and supply will be much more
closely together.
But I think to get caught up, it is at least a year to a year and a half from now.
CHATTERLEY: How much does it cost to build a foundry? I've seen some estimates that say somewhere between $10 billion and $15 billion. I mean,
I'm sure it depends on where you are in the world, but just as a gauge.
CAULFIELD: Oh, I think this is an industry most industries talk in, you know, tens of hundreds of millions of dollars. Capacity in our industry
always starts with a B and if it is adding capacity to existing facility, it is a couple of Bs, right? If it's putting a shovel in the ground and
starting with the new capacity, it starts probably with $5 billion and higher.
So this is -- this is very complex technology, very difficult technology to master. It takes companies decades to get good at this and the capital
deployment to create globally competitive scale is large numbers like we just spoke about.
[09:25:12]
CHATTERLEY: Yes, I mean, I know, and you've been pushing the administration, the U.S. administration to say, look, we have to invest in
this. It can't just be about the private sector, the public sector has to step up.
But just -- and you know, we've talked about this on the show recently. Taiwanese semiconductor investing $100 billion over the next three years.
We know China is ramping up capacity.
Just putting the U.S. government's proposed plan for $50 billion into perspective here, Thomas, even if we add in the private sector investment,
like Intel, for example, is it enough? Is $50 billion from the government enough?
CAULFIELD: Well, first, let's talk about the problem that is trying to be solved. U.S. headquartered companies participate in roughly 50 percent of
the market opportunity of the semi industry, which is roughly a half a billion dollars, but only 12 percent of semiconductors are manufactured in
the U.S., and this is the imbalance the U.S. government is trying to fix.
And so the fact of the matter is, industrial policy that creates globally competitive manufacturing is what the U.S. government is trying to achieve.
Let's give co-investments similar to what other regions of the world do to make sure that the economics work for companies to make manufacturing
possible in the U.S.
And so, I don't think this is a one and done. I think this is a policy that will be timeless and a policy that will continually adapt to being globally
competitive.
And look, I don't think $50 billion is something we would say is too little at this time, I think $50 billion is a great start. Let's get that -- those
co-investments going. GF is ready to do its part and accelerate its expansion in the U.S. once we can be part of that that opportunity.
CHATTERLEY: I think that was a diplomatic way of saying more is required. What are the consequences of insufficiency? Is it suppression of innovation
or in a very competitive field and to your point, an acceleration of the use of technology, that's not going to stop, it's only going to accelerate,
likely in the coming years? The United States gets left behind?
CAULFIELD: Well, first, you know, the United States invented the transistor in the semiconductor industry, and they have great leadership on
this.
I think what's at stake, and maybe it's this chip shortage that's created such a high level of awareness of how pervasive semiconductor is in the
world economy. You know, it's at the heart of $85 trillion to $91 trillion world economy.
And so the importance of semiconductor not only for national security reasons, but for economic reasons, is key. And I think when you talk about
technology leadership, it's not enough just to have R&D, that's where it begins. You have to learn how to manufacture it and make something out of
it. And part of the whole innovation process is not just to develop new technology, but to learn how to do the innovation of bringing it to
manufacturing, in a way that it is profitable, and that's why you need to have the entire technology chain from design to design tools to R&D to
manufacturing. That's how you can have a leadership position in the technology of any sort, especially in semiconductors.
CHATTERLEY: You own the supply chain, or at least you have full control of it. Thomas, very quickly, with regards to GlobalFoundries ambitions. An IPO
this year?
CAULFIELD: Well, as you know, we've talked about the timetable before and the timetable is always based on GlobalFoundries achieving certain
financial and performance targets. And we talked about an intercepting point sometime in 2022.
You know, I know you're not going to like this answer, but for now, we're just laser focused on driving manufacturing output, expanding our capacity
to meet our customer needs. We have a job to do here and it's to get this imbalance closer to neutral.
CHATTERLEY: Yes, I really like that answer. We'll let you get back to work. Thomas Caulfield great to have you on the show, sir. Thank you so
much.
CAULFIELD: Thank you.
CHATTERLEY: The CEO of GlobalFoundries there. Thank you for your time.
All right, the market opens next. Stay with us.
(COMMERCIAL BREAK)
[09:32:12]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stock markets are open this Tuesday and as expected, we are a bit softer in the early price action. As
you can see, the Dow and the S&P, however, still very close to those all- time highs hit yesterday. The United States truly the star of the show at the I.M.F. spring meetings today, too.
The I.M.F. officials saying America will be the main driver of global growth this year with the growth rising at its fastest pace since 1984 due
to massive U.S. stimulus that will spill over and help lift all boats.
Also crucial to the recovery, too, vaccine passports, health credentials, call it what you will, but proof of vaccination, or at least a negative
test result could be crucial to getting the world back to some semblance of normality.
The problem is, in many countries, you're handed a squiggle on a bit of card, which is easy to copy, and the same goes for a screenshot of a test
result. And to IBM saying it has a solution which can't be forged or faked. Its digital health pass utilizes blockchain technology that's a
decentralized ledger as opposed to a hackable database of health information. It can live in a digital wallet on your phone.
Faced with a major global problem, IBM is just one of many competing solution and that arguably, is a problem in itself.
Here to discuss, Jason Kelley is General Manager of Blockchain at IBM. Jason, fantastic to have you with us. I know New York is actually trialing
and using this technology, but just explain how it all works and I think the clue, as I've mentioned is the component of your title, which is the
fact that blockchain technology is being used here.
JASON KELLEY, GENERAL MANAGER OF BLOCKCHAIN, IBM: Hey, Julia, thanks. Glad to be with you, and I think you did a fabulous job of describing just what
this health credential, as you call it is, you know, what it does and what it does in the market. It simply is something that's created to allow
consumers such as yourself, to give your health status. That's what you want to be able to do, I would guess, when you receive either A, a full set
of the vaccines, or that you've had a negative COVID test.
And with that, you can, by way of downloading an app from iOS or Android, you can have that on your phone. You go in, you get tested. And with that
test result or the vaccine, you then are given a QR code that sits on your phone digitally and it resides in the blockchain as well as you call out
the blockchain. I'll use the B word because you used the B word, and that allows it to sit there with trust and security because it can't be changed.
If it is changed, you know who has changed it. And if it tries to be used in a fraudulent way, you are aware of that as well. So it's secure.
[09:35:08]
KELLEY: And it's also something that is very intuitive to us. It's in a couple languages, multiple languages now as we continue to take this
globally, and most of all, it allows you, as the consumer, to maintain your privacy.
So this is your data that you can hold, and the only thing you have on your phone is that encrypted QR code.
CHATTERLEY: I have to say, we're very comfortable with the B word on this show. And I just wanted to go over the point that I mentioned about the
decentralized nature of this because this is crucial to the point you made about privacy and the protection of data.
The beauty of what blockchain technology allows is that there doesn't have to be this central database where all the information on everybody and
their health certificates, whether they've got a recent test result, the vaccine information, their date of birth, there isn't that that needs to
exist in order to draw information from. And that, of course, is what would be alluring to hackers.
KELLEY: Absolutely, that database doesn't have to be that centralized. In fact, it allows for you, as a consumer to share what you want to share how
you want to share it. So in this case, it's a QR code. Or if you do not have a digital device, you're able to print that same QR code and use it
instead.
CHATTERLEY: Now, the problem is, and this all works very well in practice, and obviously, the State of New York is already using it. And I know you're
talking to other states and nations around the world.
But it seems like everybody is going off in different directions. I mean, I know, IBM itself part of the vaccine credential initiative, a whole host of
different companies looking at how we do this. How easy is it for the solution that you've come up with to be adopted by nation states, for
example, or even other states in the United States.
KELLEY: Being able to use it in multiple states in the U.S. is something that we're definitely hoping for, as New York was the first state to roll
this out. We're also using this globally in Europe, and also in Asia- Pacific.
So this is something that's already being worked with, as a global solution. And I'll call out something that you said, Julia. You said that,
you know, there's competing apps. We thought about this well before the pandemic because that's when this capability, this credential was created.
And one of the tenets was to make sure that what we are creating and have created here is that it is open, and that it is accessible by all.
So that sort of competing for us is not really what we're after here. We want collaboration. We want to make sure that all of these different types
of health passes can work on this one open platform, so that in fact, as you said, you're not just going to travel in one state or one city, you
want to travel around the world in many cases, and you want to have that access and that capability.
CHATTERLEY: How likely is it that we end up in a situation where you can travel internationally, and you can use the same kind of QR code to swipe
into a movie cinema, for example, or a big event in, I went to London versus doing something at Madison Square Garden here in New York? How
likely is it that we get to that point, Jason?
KELLEY: Julia, I believe it's very likely. No different than we have one capability across the internet with multiple protocols. We use that same
cell phone these days to go and travel where we want. And those that don't have it, you have this capability where you say, well, if I can print that
QR code and it's recognized on an open platform, I can do that as well.
So this thought of getting back into public life post pandemic is a reality and we see that as the opportunity here in an optional way, because I think
everyone here, you know, everyone is not going to say, I want to use this one app. They will come up with different things that they want to use and
we want to make sure that it's open and configurable for those needs and wants.
CHATTERLEY: Yes, makes perfect sense. Jason, I have 10,000 other questions for you about what we're seeing more broadly in the crypto space and
blockchain technology, but I've run out of time, so please come back soon and chat with us again, and good luck with this mission.
KELLEY: Sure, thank you. Thank you very much.
CHATTERLEY: Thank you, Jason Kelley, General Manager of Blockchain at IBM there.
Okay. I just want to make you aware there's an important hearing happening in the trial of former Minneapolis police officer, Derek Chauvin. He is
accused of killing George Floyd by kneeling on his neck last summer.
Now the friend who was in the car with Floyd at the time is appearing before the judge this morning. Morries Hall's lawyer has just said he will
invoke his constitutional right against self-incrimination and will refuse to testify.
Now, the Judge must decide if he will compel Hall to testify about what he experienced on that fateful day. So that going on right now and we will
bring you full coverage of the trial with testimony set to begin in the next hour.
[09:40:11]
CHATTERLEY: All right, coming up, motoring our way to a cleaner planets. The company that's developing cutting edge technology backed by Iron Man,
yes, Robert Downey, Jr. and the company hoping to save the planet one motor at a time.
That's next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. It is estimated that more than 40 percent of the electricity generated in the world is used to drive motors,
and the problem with that is motors still rely on century old technology.
Well, California based Turntide Technologies wants to replace those motors with its smart motors, saying they can slash carbon emissions as well as
energy bills.
The company is backed by Amazon, Bill Gates and "Iron Man" actor, Robert Downey Jr. And joining us now, Turntide Chairman and CEO Ryan Morris.
Ryan, great to have you on the show. Thank you for joining us. Just explain the Turntide mission and the technology behind your smart motors, please.
RYAN MORRIS, CHAIRMAN AND CEO, TURNTIDE TECHNOLOGIES: Yes, good morning from San Francisco. Thanks for having me. So ...
CHATTERLEY: Early morning.
MORRIS: As you pointed out, about half of the electricity of the entire world, it is actually closer to 50 percent now is consumed -- all of the
electricity is consumed by electric motors. You think if you've ever walked up a flight of 50 stories, you know, in a skyscraper that's the amount of
energy that the water has to do just to get to the tap of the faucet, you know, when you go to the restroom or something like that in the skyscraper.
So there's a huge amount of energy required to really move civilization and motors are what do that, turning of electricity into motion.
So our mission as a company is ultimately to upgrade all of the motors in the world to what we call optimal motor systems, which means an efficient
electric machine which is a physics concept that we have over a hundred patents for and then it has to be part of an intelligent system so that
it's using energy purposely to serve humanity as opposed to you know, just running a motor for kind of reason, and that whole combination is what --
has only really recently become possible thanks to advances in computing technology.
[09:45:20]
CHATTERLEY: to how much of a reduction in motor energy consumption are we talking about here? Whether it's reduced heating or reduced cooling?
MORRIS: So if you're looking at existing buildings, the biggest footprint for your energy bill is typically HVAC, and your air conditioning.
CHATTERLEY: Yes.
MORRIS: So what we find is that we, in the real world, this is not in the lab, in the real world, we have an average of about 64 percent energy
reduction in the main part of the HVAC system that moves the air. So that's maybe about 50 percent, overall, for the whole HVAC system.
So it's pretty remarkable. It's about a two-year payback. So it's actually usually a faster payback than the LED lighting upgrades, which there's been
tens of billions of dollars of upgrades over the last five years or so. It's another one of these rare examples where it's both better for the
planet and climate, and it also pays for itself very quickly. So it's just kind of a double bottom line thing.
If you're in a much more advanced application, like an electric vehicle where they are using, you know, cutting edge, rare earth magnet driven
permanent magnet motors, you might -- you could probably still get about a five to 10 percent benefit.
But you also avoid the whole rare earth issue in your supply chain. And, you know, if you're in a battery driven vehicle and that saves five to 10
percent of the battery, which is just quite a significant savings.
CHATTERLEY: Wow. But for an HVAC motor, if you're talking about a two-year payback, just give us a sense, what's the upfront cost of one of these
motors?
MORRIS: Well, it depends on the size of the motor, but ballpark, about $2,000.00 per unit. And then that'll save about $1,000.00 a year of
electricity and lasts for 10 or 15 years.
We also have a whole building management system that comes with the motor system that's for small buildings. So 90 percent of the buildings that are
kind of under 200K square feet, larger buildings.
The smaller buildings really don't have building automation systems today, and that's an important component of this optimal system idea that we have.
CHATTERLEY: Yes, so it's not just about buying the motor. It's about investing in the entire infrastructure that surrounds it as well. But Ryan,
that you have got these out there. People have invested. We have buildings that are using these now.
MORRIS: Oh, yes. Yes, we have thousands. I think today, we have 6,000 motors out there running in the field. You know, it was a few hundred a
year ago, and you know, by the end of the year, we're targeting about 50,000 installations. So we're kind of right at that real scaling point,
that inflection point.
This is a very long journey. This technology is in development for about 14 years, I worked on vehicle technology prior to this, and I joined Turntide
to create it as it is today about four years ago.
But the original R&D team spun out of university back in 2007. So, this is incredibly hard physics. It is very hard tech. People have been talking
about making switch reluctance, the dominant form or main form of electric motor technology for decades. And it's really the first time this has been
taken over the finish line.
CHATTERLEY: Yes, switched reluctance motor, SRM technology. I was Googling that last night.
You said something recently, and it sort of ties to the investment required to make sure that we start to see people doing this and saving energy and
reducing our carbon footprint.
The venture capital world was burned and scarred by Clean Tech One. In the last six months, the capital markets have really woken up to the
opportunities of Clean Tech Two.
What does this mean, Ryan? And in terms of you're going out there and trying to raise money and boost investment in your product. What did you
mean by venture capitalists being burned by one and now they're ready for two?
MORRIS: Yes, so the most predictable thing in human development is this exponential price performance dynamic of information technologies. It's why
your phone today has like a thousand times more storage and high definition video than the one fifteen years ago.
So this, you know, since fire extinguishers were invented a few 1000 years ago, information only increases. You know, Alexandria Library, being a sort
of historical rare exception. But if you think of what was possible, you know, 2008 when Clean Tech 1.0 kind of happened and there was a lot of
money put after, you know, biofuels and other technologies, they unfortunately, relied on a lot of government subsidy and they didn't pay
for themselves. So they weren't an economic decision. It was people making a decision to you know, help the planet, but it was going to cost them like
twice as much money.
And there's still applications where you need that, but there's really in the last several years of us, us being one of the examples that it's now
just cheaper and better.
CHATTERLEY: Right.
MORRIS: So it's not -- it's not a trade-off decision anymore, and you know, you're sort of able to harness a lot of the incredible power of free
market capitalism to drive scaling of deployment of these technologies that was not economically feasible before because the cost hadn't come down.
So for the same reason why, you know, Tesla is successful now and the GM EV-1 was not successful 20 years ago with, you know, heavy lead acid
battery. It's really figuring out how to make technologies and then make companies actually and this is where company culture is critical, how to
harness these exponential tailwinds as I call them, and company culture is a big deal for that as well because, you know, in a sense, if you think the
20th century, you know, Frederick Taylor was all about how do we treat, you know, the human as a machine? Well, now we have actual intelligent
machines, so we need to treat people more like people.
[09:50:38]
CHATTERLEY: Yes, but to your point, unquantifiable positive economics in tackling climate change is exactly what we need -- with what's needed, and
to your point, this is now what -- at least your technology and what you're saying is being offered and this is vital.
Ryan, come back and talk to us soon, please, and great to have you on. Ryan Morris, Chairman and CEO of Turntide there, thank you.
All right, up next, to summer holidays abroad, on or off? That's the key question for the U.K. airline industry and its lockdown weary population,
as the Prime Minister's reopening plans cause a little confusion. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE.
To the U.K. now where the CEO of Heathrow and others in the airline industry are calling for clarity on the restart of international travel.
The government unveiled its roadmap for reopening on Monday, but set no date for the return of foreign holidays.
Salma Abdelaziz joins us now. Salma, great to have you with us. So we were talking about this yesterday, the front pages of two of the papers
admittedly, different positions, "Johnson pledges return to a semblance of normality," quote, "No end in sight as Johnson says normal is some way
off."
I think that says it all. Salma, can you give us any clarity on what the plans are?
SALMA ABDELAZIZ, CNN REPORTER: It's really a glass half full glass half empty situation depending on how you want to see it, Julia.
We were expecting for a firm date, for a firm announcement from the Prime Minister as to when international travel will resume. Instead, what we got
was a much more cautious approach.
The Prime Minister is generally saying that the authorities need to be realistic. That there are outbreaks happening in neighboring countries in
Europe and that it's still too early to tell.
But what you're going to be hearing over and over and over again from CEOs from the airline industry is that they need clarity. They need answers now.
May 17 is not that far off. I just want to read you a quote from one airline industry head here just to kind of give you a sense of the feeling.
"While we support the establishment of a framework for restarting international travel and welcome the removal of self-isolation for arrivals
from green countries, today's announcement does not provide the clarity we were seeking on the roadmap back towards normality." And you're going to
hear that word over and over again, "clarity."
[09:55:11]
ABDELAZIZ: Transparency. Why are they worried? Why are they concerned?
You might remember last summer, when travel rules were changing almost by the hour it felt like and you had long queues of people waiting in airports
across Europe, trying to figure out how to come home. That kind of chaos, it can't happen again, especially when the industry is simply trying to
recover from last year. They need that clarity. They need an answer -- Julia.
CHATTERLEY: Yes, the risk is it does so, because you have to base it on the prevailing conditions at the time. That is the pandemic.
Salma, great to have you with us. Thank you for that. Salma Abdelaziz there.
All right, that is it for the show. If you've missed any of our interviews today, they will be on my Twitter and Instagram pages in the coming hours.
You can search for @jchatterleyCNN.
In the meantime, we'll see you tomorrow. Stay safe and "Connect the World" with Becky Anderson is next.
(COMMERCIAL BREAK)
[10:00:00]
END
