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First Move with Julia Chatterley
The Amazon CEO Says Business Should Pay More Tax to Finance Infrastructure, E.U. Regulators Set to Release Their Full AstraZeneca- Oxford Review; Samsung Profits Jump Despite Chip Supply Problems. Aired 9- 10a ET
Aired April 07, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:01:08]
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.
Bezos backing. The Amazon CEO says business should pay more tax to finance infrastructure.
Vaccine verdict. The E.U. regulators set to release their full AstraZeneca- Oxford review.
And smartphone success. Samsung profits jump despite chip supply problems.
It's Wednesday. Let's make a move.
Once again, welcome to FIRST MOVE. Great to have you with us this Wednesday as we talk taxation time for global corporations, vaccination timetables in
the United States and E.U.; and hopes for a summer relaxation time. Yes, please.
We have the CEO of Bookings Holdings, the parent company of Priceline and booking.com joining us to discuss what they are seeing on whether vaccine
passports will be an improvement or perhaps an impediment.
And speaking of travel, U.S. majors are going nowhere fast once again, a breather after record gains, but there's more upside potential if JPMorgan
CEO Jamie Dimon proves right. He is arguing that the U.S. economy could see continued growth into 2023 and therefore providing support for higher
valuations even as he warns of the risks of quote, "inept" public policy and broad government dysfunction.
Shorter term though, he credits spending and vaccine proliferation and there's good news there for the United States, too. President Biden
widening vaccine eligibility to everyone over 16 years old from April 19th.
In the meantime, E.U. officials also optimistic that they will have enough supplies for all E.U. citizens by the end of June. Now, that would be a
huge turnaround and welcome news, of course, to nations like France and Italy currently in lockdown with Germany still weighing calls for further
restrictions.
The U.K. has announced reopening plans, see their stock market as the relative outperformer, as you can see there today as a result this week.
In Asia, Japan ticking higher amid reports that Toshiba is eyeing a $20 billion deal to go private; Samsung meanwhile, dipping despite projecting a
healthy Q1 profit rise of more than 40 percent as it successfully navigates the global chip shortage.
Oh boy, it's a busy Wednesday. Let's get right to the drivers.
The White House plan to potentially raise corporation taxes has a surprising support, of perhaps, Amazon's outgoing CEO, Jeff Bezos, as I
mentioned.
Clare Sebastian has more on this. Clare, great to have you with us. The White House, of course, talking about raising rates for the first time in
25 years. Some might say, Jeff Bezos can say he'd pay more tax because Amazon doesn't pay the corporation tax rate as it is at 21 percent already,
but set the skeptics aside, what more did he have to say?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, it was a -- it was a short statement, Julia, and he basically said now is the right time to
invest in infrastructure and Amazon is supportive of that. And he understands that this will take concessions from both sides. And sort of
buried in there in brackets, he said, "We're supportive of a rise in the corporate tax rate."
So that's sort of unexpected given that Amazon has really been the poster child for a company that manages to get around the headline corporate tax
rate.
President Biden has mentioned them on a number of occasions as a company that does not pay the sort of the full whack of corporate taxes. So
interestingly, he came out. He didn't mention though what size of a corporate tax increase he would support. He didn't mention it in the other
parts of the Biden plan, which involves closing some loopholes that have allowed Big Tech companies to pay less tax, but have a look, because you
say that Amazon doesn't pay the full -- the full whack. That is absolutely true.
Let's have a look at the last couple of years. Last year, they paid 9.4 percent effective Federal income tax rate, before that it was 1.2 percent
in 2019, and before that, they didn't pay any tax at all. There was actually a negative tax rate.
[09:05:12]
SEBASTIAN: So the taxes the company pays have been going up, but still nowhere near the scale of the sort of headline corporate tax rate. So I
think, a cynic could say that Amazon can say this because they don't pay anywhere near that rate anyway.
And of course, look at the timing as well. Amazon is facing a union drive in Alabama that if successful, could spread. They're facing the prospect of
tighter regulation. You could argue that this is a way for them to generate goodwill at a time when people are really looking to big companies to be
part of the solution here when it comes to the recovery from COVID-19.
CHATTERLEY: We're talking about a positive headline to perhaps offset some of the more negative headlines that they've seen in recent days.
Timing, as they say, is everything, Clare, and of course, to your point, they are paying a lot more tax perhaps in 2020 than they paid in the past.
But oh heck, they had a massive bump in pre-tax profits or income in 2020, thanks to the pandemic.
And it's interesting, Marc Benioff, Salesforce said he sort of broadly supports the idea of corporations paying higher tax rates, but you've got
to look at it in the context of the tax rates being paid by corporations all around the world because if you put American companies at a
disadvantage, perhaps suppress innovation. That's not the answer, either.
And it's quite interesting, in light of what Janet Yellen has been proposing in terms of broader tax rates and the I.M.F. today proposing a
solidarity tax on pandemic winners, too. The movement, the momentum is here.
SEBASTIAN: Yes, accelerated by the pandemic, Julia, which as we have discussed has magnified inequality. So I think like Janet Yellen, is
getting broad support. European governments, Germany and France have come out and said they would support this.
The O.E.C.D. has been working on something similar, a global minimum corporate tax for years, but it's just never managed to actually implement
it.
This would basically allow companies to set their own corporate tax rate, but they would be allowed to top up the taxes on companies who pay a lower
tax somewhere else.
So it would reduce the incentive to do that, reduce this sort of offshoring effect that we've seen that the U.S. in particular has been really vocal
against because of the impact it has had on the national tax base. So a lot of momentum there.
The solidarity tax is an interesting one. That would allow countries to temporarily -- the I.M.F. is calling for this to temporarily raise taxes on
higher earners, and companies who have profited from the pandemic. No one more so perhaps, than the likes of Amazon.
I reached out to them this morning for a comment on that. I have not heard back yet. But it'll be interesting to see how they approach that and other
temporary tax burden on them.
CHATTERLEY: Yes, keep chasing. Clare Sebastian, thank you for your wisdom on this.
All right, let's move on. Oxford University pausing a trial of the AstraZeneca COVID-19 vaccine in children. The university says it's waiting
for results of a U.K. review into possible links to blood clots.
Meanwhile, the European regulator releases updated findings on the vaccine in an hour's time. Melissa Bell joins me now and has been looking at this.
This is the European Medicines regulator.
Melissa, you and I spoke about this before. Their initial assessment on this vaccine was look, the benefits outweigh the costs. Are we expecting
anything different today?
MELISSA BELL, CNN CORRESPONDENT: Well, this time we should get, Julia, compared to what you mentioned then, which was back in March, you'll
remember amid this crisis where country after country had paused the rollout of the AstraZeneca vaccine. The European Medicines Agency had
announced in a press conference also that in fact, as you say, it was better to carry on giving it. The risk were outweighed by the benefits.
This time, we're going to get the actual conclusion of their investigation into these cases of blood clots in some patients who have been inoculated
with the AstraZeneca vaccine to give an idea of what they think should not happen whether or not there is actually a link. That is what we're
expecting to hear.
After that, European ministers -- health ministers will meet to discuss what they should then be doing once that verdict is given in terms of the
AstraZeneca vaccine. But already what we're seeing, Julia, is countries looking really elsewhere.
The State of Bavaria in Germany announcing today that it will buy 2.5 million doses of the Sputnik vaccine, should it be approved by the European
Medicines Agency and is currently being considered and this by the month of July.
So this question of supply very much being looked at by European countries. The European Commission believes that 360 million doses overall, in terms
of contracts already signed should be arriving in the second quarter, and what they hope is that that should help.
CHATTERLEY: Wow. I mean, Melissa, let's talk about this as well, because obviously the talk in Europe has been how, on a relative basis far behind
they are nations like the United States, the countries that are doing well, European nations have gone elsewhere to the likes of the Russian and in
certain cases, the Chinese. How are they going to achieve this? How are they going to manage to assign and have supplies available by June a safe
set for every E.U. nation or every citizen should they want them?
[09:10:02]
BELL: Well for a start, you're seeing these increasingly imaginative attempts to try and get people vaccinated here in France. The Sud de France
has been turned, Julia, this week into an entire vaccination center 10,000 injections given out every week in Venice. They have a vaporetto trying to
get to older people who might be more isolated.
So they're trying to get beyond those failed targets for the E.U. So far, what they had hoped is that in the E.U., 80 percent of frontline workers
and elderly people would now be vaccinated by the end of March. Only five countries out of 27 have managed that. So that gives you an idea of how far
behind they are behind their own targets, Julia.
But now, of course, clearly just a matter of supplies and getting enough doses into enough European countries that these vaccination programs should
get up and off the ground, especially given the dangers of these new variants and the increased restrictions that we're tending to see across
Europe -- Julia.
CHATTERLEY: Yes. Melissa Bell, thank you so much for that. And we wait for that press conference at 10:00 a.m. Eastern Time today.
To South Korea now, Samsung forecasting a big jump in first quarter profit despite chip supply issues. The company says it's likely made around $8.3
billion in the quarter largely driven by strong global sales of smartphones. That's a 44 percent jump from a year ago.
Paul La Monica joins us with more. Paul, that is a whopping great drop in ties to the demand that we've seen throughout the pandemic. What more did
they have to say?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, Samsung didn't really say all that much, Julia, because this is a preliminary report. They don't give
detailed guidance about each individual business unit.
But overall revenue, they said up more than 15 percent, and as you pointed out, there have been notable supply chain issues regarding Samsung's chip
business, not just because the weather disruptions in Austin, Texas with the unusually cold weather there, but a global, you know, supply problem
for chips writ large.
So I think a lot of analysts are expecting that due to the chip issues, Samsung probably had a great quarter with its new smartphones, the S-21
launch, and also TVs, appliances, other electronics.
This is good news for Samsung and probably a reflection of the healthy rebound in consumer spending around the globe as COVID-19 hopefully
continues to fade away as a big economic concern.
CHATTERLEY: It's fascinating, isn't it? Counterpoint Research believes that they've now got around 23 percent in terms of market share during this
quarter with cheaper than usual pricing for its premium devices.
If you compare to the prior quarter, they have about 16 percent, but the challenge there was Apple, of course in the announcing and the release of
the iPhone 12.
It's fascinating, too, in light of what LG announced this week and said, look, we're getting out of the smartphone game. Just in the United States
alone, Apple and Samsung have over 80 percent market share. It's a two- horse race and no one else really can compete.
LA MONICA: No, not at all. It is a duopoly. Samsung is the de facto standard for Android devices, obviously, and then you have Apple with its
own system iOS.
LG, though you note that, Julia, that they're pulling out of the global smartphone race. It's interesting because their earnings yesterday were
also very strong and it was because of things like appliances and TVs as well.
So I think a lot of electronics companies recognize that there's not much money being made in smartphones right now, unless you're named Apple or
Samsung. But if you can make flat screen TVs and refrigerators and still make a lot of coin from doing that.
CHATTERLEY: You certainly can, and if that's going to be your focus going forward, it's good to have good results there already. Paul La Monica,
thank you so much for that.
All right, let me bring you up to speed now with some of the stories making headlines around the world.
Both Iran and the United States are calling the first day of talks to resurrect a treaty on Iran's nuclear program, quote, "constructive." While
powers are in Vienna looking to rescue the 2015 deal that President -- former President Donald Trump abandoned several years ago, Iran and the
U.S. is speaking through intermediaries.
Negotiations resume on Friday. CNN's Fred Pleitgen is live in Vienna for us.
Fred, great to have you on the show. I think there's no real sense that anything concrete can happen before the Iranian elections on June, the
18th. But perhaps a period of quiet here in terms of tensions in relations ahead of that.
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, and I think that it's actually right to say that the first day certainly seems to
have been quite constructive. It's the Iranian saying that. It is the U.S. that's saying that. It is also the E.U. that's really leading the
intermediary effort to try and bring these two sides together.
So it's all those sides who are saying that the first day was constructive, and at least, at the very least, they're moving forward.
However, there are certainly still some obstacles. The U.S. came out yesterday and said, look, there's not going to be any unilateral sanctions
relief and a unilateral action on the part of the U.S. to try and entice Iran to get back into full compliance with the Iran Nuclear Agreement.
But the Iranians, for their part are also saying look, they want full sanctions relief immediately from the United States in order for the U.S.
to get back into the deal.
In fact, the Iranian chief negotiator who is also the country's Deputy Prime Minister, Abbas Araqchi, he came out and he said he believed that
Iran was the only reason why the deal is still alive in the first place. Let's listen in.
(BEGIN VIDEO CLIP)
ABBAS ARAQCHI, IRANIAN DEPUTY PRIME MINISTER: We are quite serious, nobody can question Iran's goodwill. The JCPOA is alive because of Iran, and we
have paid a heavy price for that. Our people have suffered from the sanctions imposed by the United States. And now if they want to revive
JCPOA, if they want to come back to the JCPOA, they should lift all sanctions at once.
(END VIDEO CLIP)
PLEITGEN: Of course, those sanctions he is talking about is that maximum pressure campaign that we've seen for the Trump administration over the
past couple of years, and really the way that the negotiators, those intermediaries are approaching this as they're trying to compartmentalize
all of this.
They've founded two main working groups, one that deals with sanctions, first and foremost dealing with the United States asking them what
sanctions would you be willing to drop and which period of time? What do you expect from the Iranians in return? And then the other working group is
dealing with the Iranians on nuclear issues, how to get back into compliance, especially with some of the uranium that they've been enriching
and some of the research that the Iranians have been doing as well.
In an ideal world, Julia, those two positions would come to a conclusion and then be merged and then everything would happen simultaneously. The
U.S. would get back into the deal, Iran would get back into compliance.
But of course, we are still pretty far away from that point and it is still very early stages, but at very least, both sides have said they want the
deal to survive -- Julia.
CHATTERLEY: Yes, that's the hope and we keep our fingers crossed. Fred, are you dealing with sideways snow there?
PLEITGEN: Yes, I am. I'm thinking of getting my sled if this continues.
CHATTERLEY: Well, start of April. Fantastic. Well handled.
Fred Pleitgen there in Vienna. Thank you.
All right, let's move on more. Law enforcement professionals testified Tuesday in the trial of Derek Chauvin, the former Minneapolis police
officer charged with murder in the death of George Floyd.
The force expert from the Minneapolis police testified that Chauvin's kneeling on Floyd's neck is not a restraint tactic used in training.
Testimonies set to resume in the next hour.
New video shows the dramatic rescue of crew members aboard a Dutch cargo ship. The ship lost power during a storm in the North Sea, particularly in
danger of capsizing and also posing a potential environmental hazard.
We're told all 12 people on board were rescued safely.
All right, still to come here on FIRST MOVE. Travel trends. Business trips are out. Staycations are in. And prices are up. The CEO of Booking Holdings
on post pandemic travel.
And the UAE goes nuclear. Firing up the Arab world's first nuclear power station. That's all coming up. Stay with FIRST MOVE.
(COMMERCIAL BREAK)
[09:20:55]
CHATTERLEY: Welcome back to FIRST MOVE where U.S. majors are hovering at near records. Deutsche Bank though adding a note of caution here projecting
a market pullback of as much as 10 percent near term and seeing today's booming economy leveling off by the fall.
JPMorgan CEO Jamie Dimon while bullish on the U.S. economy overall, also cautious over the longer term. In his more than 60-page letter to
investors, Dimon warns on the U.S. debt burden and how rising inflation might impact Federal Reserve policy.
He notes that there is quote, "some froth" and speculation in the market as we saw recently with the collapse of Archegos Capital. Dimon's big worry is
what happens in the next big downturn. What can the Fed and Congress possibly do for encores? An important question.
Joining us now Scott Minerd, the cofounder and Global Chief Investment Officer at Guggenheim Partners. Scott, always great to have you on the
show.
Warnings there about froth in the market coming at the same time as the I.M.F. is upgrading U.S. growth forecasts and the data, much of the data
coming in strong. What's your assessment of where we are for the U.S. economy?
SCOTT MINERD, COFOUNDER AND GLOBAL CHIEF INVESTMENT OFFICER, GUGGENHEIM PARTNERS: Well, for the U.S. economy, I think, Julia, things are actually
stronger than the I.M.F. is expecting.
I would imagine that growth this year will be somewhere between eight and 10 percent, which would be the highest growth that the U.S. has experienced
since 1983, after we came out of the Reagan recession.
So I'm pretty bullish on the economy, and I do see pockets of risk overseas in the emerging markets and in Europe. But hopefully, the U.S. economy at
that kind of strength will be a locomotive and pull the entire world with it.
CHATTERLEY: Let's talk about eight million jobs to recapture, more than eight million in the United States. We had the President of the St. Louis
Fed on last week, and he said we're still in crisis mode.
Does a growth forecast of between eight and ten percent for 2020 crisis mode in terms of the jobs market? Justify the Federal Reserve where they
are in terms of policy today at the end of the year?
MINERD: Well, I think that you know, the Fed at the zero bound right now is probably the appropriate policy setting. The more disturbing issue here,
Julia, is the forward guidance.
The Fed has pretty much married itself to a zero interest rate in short term rates through 2023. Of course, the market thinks that because the Fed
has been so aggressive with its forward guidance that if inflation starts to take off, that bonds are going to be vulnerable to a hard selloff,
meaning a significant rise in long term rates, and we don't have stocks like tech stocks priced at levels that can sustain meaningfully higher long
term interest rates.
CHATTERLEY: So when does the marriage suffer a breakup, if not a divorce?
MINERD: Well, I actually have a bit of a different view than most people. And that is, the forward data that we see is telling us that actually
inflation is going to be moderating and the rate of inflation will probably be falling in the second half of the year.
This pricing which the market has in the bond market anticipates a surge in inflation over the course of the next three years, and if that expectation
starts to be disappointed, then we could actually see interest rates come down quite a bit, which could sustain the bull market in stocks for a
number of years.
Of course, what is the catalyst for that, and in the near term, very well could be another experience like we've had in the hedge fund world or the
private family office world in the last few weeks. Whether it was with Hwang or with the Estill, so I think you know were -- or Greensill, I'm
sorry, that we -- that you know, there could be another bolt out of the blue, and could change people's risk assessment and have them decide that
it's maybe better to reduce their stock risk in coming months and bonds might be a safe haven.
And I think that is a catalyst that could very well lead to the scenario that I'm thinking of.
[09:25:29]
CHATTERLEY: Probability of that, Scott? Because the last time you were on we were talking about GameStop and what that represented in terms of
perhaps the degree of excess risk sentiment. Now to your point, too, another event that the market cope with, but it's a warning sign.
MINERD: Yes, I think so. I mean, look, there's a famous statement by Baron Rothschild, when asked the secret of his great wealth, he said, I sold
early. You know, even though I think right now, for the next month or so, there's a lot of tailwinds.
You know, Julia, I wouldn't be surprised if we had a sudden setback. So, you know, equity investors have really had a great 12-month performance
since March of 2020. You know, it might be time to take some chips off the table and see if there's a better entry point later in the year.
CHATTERLEY: Is that what you're telling investors today?
MINERD: Yes, and we've actually adjusted for that. We were at max risk, meaning, you know, all the things that we thought would go up in price like
stocks, high yield bonds, corporate bonds, ever since March the 23rd of last year, and it was just in the last week or so that we actually started
to reduce the risk for the first time since the height of the pandemic crisis.
CHATTERLEY: So now, here's a question, because you and I have discussed in the past about crypto and you made the comment about, and I'll be specific
about Bitcoin, the relative scarcity, valuation compared to gold, and it was an eye opener. It was a valuation of $400,000.00, which caught the
attention of the crypto community, as I'm sure our viewers can imagine.
In a scenario where we do see some kind of pullback and risk event driven or not. What happens do you think, to that space, given the enthusiasm that
we see today?
MINERD: Sure, I mean, you know, it's interesting, Julia. When I made the $400,000.00 statement, you know, I'm looking at it over a period of 10 to
20 years.
Of course, the market took off. You know, I started -- I first started looking at buying crypto at $10,000.00 -- Bitcoin at $10,000.00. Today,
we're -- I don't know where we are anymore. It's become so rich so fast, maybe around $50,000.00.
But, you know, it clearly has gotten caught up in the speculative bubble that GameStop got into, and a number of these other stocks. And so, you
know, I think when we get a risk off moment, we could be seeing Bitcoin pullback to somewhere between $20,000.00 and $30,000.00.
But I think for long term investors, that would be a great entry point.
CHATTERLEY: Yes, but the point here is, I guess, it's not diversification, at least short term diversification, even if you ever buy and hold and hold
for many years type of investor.
MINERD: Well, you had a pretty good return from $10,000.00.
CHATTERLEY: I was about to say. $400,000.00 was leapt on because it was parabolic. I guess, you're right. Anything is possible.
MINERD: It's a great statement, because parabolic markets can't -- aren't sustainable. And that's one of the reasons why I think Bitcoin has gotten a
little bit ahead of itself in its long term trend.
But yes, we've got a lot of markets that are going parabolic. So you know, it is hard to get short though, a dangerous game.
CHATTERLEY: Yes. Scott, great to get your insight and your wisdom this morning. Thank you.
Scott Minerd, the Global Chief Investment Officer at Guggenheim Partners there. We will speak soon.
The market opens next. Stay with us.
(COMMERCIAL BREAK)
[09:32:27]
CHATTERLEY: Welcome back to FIRST MOVE and U.S. stock markets are up and running this Wednesday with virtually unchanged in early trade. As you can
see, a continuation of the tight trading ranges that we saw in play yesterday.
Cruise stocks bucking the trend, opening higher. Reports say the U.S. government under intense industry pressure could allow ships to sail again
as soon as July of this year under some conditions. Carnival threatening to pull it ships from U.S. ports if the government doesn't shift policy soon.
Reopenings, meanwhile, gathering steam elsewhere. California is set to lift most COVID restrictions by mid-June if virus cases don't flare and U.S. job
openings now at two-year highs with recharged restaurants reportedly desperate to find help.
The vaccine rollout crucial for the travel industry, 71 percent of Americans say the initial success makes them feel optimistic about
traveling this year. It's according to a Booking Holdings survey. But some signs of caution remain, 70 percent of Americans say they prefer travel
close to home for the foreseeable future. With the majority opting for lots of shorter breaks over one long one.
Giving us perspective now is Glenn Fogel, he is the CEO and President of Booking Holdings. Great to have you on the show, Glenn, your latest travel
survey shows greater optimism among travelers as we see more vaccine delivery. But is that translating to actual bookings? What can you tell us?
GLENN FOGEL, CEO AND PRESIDENT, BOOKING HOLDINGS: Oh, thanks for having me, Julia. And there's definitely a correlation. As the vaccines have been
rolled out, the interest in trials increased and we're definitely beginning to see an increase in people searching, looking for where they want to go
in the summer. And that's why we've come out with an incentive to really get people over the line, start booking.
We know how much the industry needs recovery. So we're offering all Americans a $50.00 post stay credit to go to our booking.com app, find a
place to stay, book it, and we'll give you $50.00 after you stay to get you going the second time because we don't want it to just be one and done. We
want to have a sustainable momentum in this industry.
CHATTERLEY: And you are seeing shorter trips being booked and more local than those in perhaps other states or international which is still a
struggle.
FOGEL: Yes, international is definitely a struggle. A lot of places will not let you travel for a holiday to another country. We see some incredible
statistics looking back a year. When the lockdowns finally got lifted last spring in many parts of the world, you could see people begin to book
travel, but it was very, very close to home. Very short car travel distances.
But as things have gotten better and safer, we see the area, the average distance that someone would go for a trip, extending and extending farther
and farther afield. It's almost I can almost correlate between the safety feeling people are getting, and the further they're willing to go.
[09:35:19]
CHATTERLEY: Wow. So to your point, again, the greater the proliferation of vaccines, wherever it is in the world, the greater competence people have
to go further away from home.
FOGEL: That is exactly what it is and that's what we know is really necessary to get the whole travel industry worldwide back on its feet. So
much of the money is made in international travel, so until we get those vaccines everywhere, international travel is going to be greatly repressed.
CHATTERLEY: Vaccine passport technology, an improvement or a potential impediment. Glenn, what's your take?
FOGEL: No, I am absolutely in favor of anything that will help encourage people to go travel safely, internationally and many countries are
thinking, well, we don't want anybody to come. We only want people who are safe, meaning that they don't have the virus, ensure you can get a test
three days before you're going to travel and that's somewhat helpful.
But also, it'd be a lot easier if I could show up and say, hey, I'm a safe traveler. I've gotten my vaccines and have a country say, sure, come on in.
So it's a really great improvement.
And I know there's some concern about privacy. There's some concern about fairness and all of that, but the industry, the travel industry needs
travel. And what we need to do is get people going if they're safe to travel, let them travel, I say. If technology can help make it easier for
us to find out who is safe, that's fine.
CHATTERLEY: Do you think quarantine restrictions and in certain cases, perhaps excessive quarantine restrictions in some quarters is still the
greater impediment here to travel than confidence and the fear of perhaps catching COVID?
FOGEL: Well, the whole idea of these quarantines is definitely a problem, because who is going to go on a trip if you have to spend two weeks in a
hotel first? The only person who is going to do that is if you go into a place permanently.
So certainly, the idea of getting a vaccine, proving that you're safe, no need for a quarantine. That's really helpful. And I know that Prime
Minister Johnson, for example in the U.K. talking about not needing quarantine for people who prove all to be safe, when they open up
international travel next month, hopefully, lots of areas where we don't need quarantines for somebody who proves that they're not going to be
carrying the virus.
CHATTERLEY: Yes. The other thing I wanted to ask you, obviously, you are starting to see tourism pick up on people dipping their toe with bookings
there. What about business travel? I read recently, it was a software provider, Trondent that said, 12 percent of air travel is business travel,
but it makes up 75 percent of the profits of the industry. It's a critical piece of financing. The airline industry in particular, Glenn. What are you
seeing in terms of business travel pick up?
FOGEL: Well, Julia, you're so right. This is such an interesting thing. And unfortunate for the airline people and the hotels in the high end. It's
going to be a big problem, because so many -- so much of the profits were made, they say at the front of the bus, of course, the front of the plane,
those fares in business class and those fares for first class tickets, those are very, very rich, and they provide a lot of profits.
Now people in business are saying, wait a minute, do I need my person to go on a trip for, you know, all day traveling somewhere for a two-hour
meeting?
Look, you and I are doing this great conversation right now using video technology. A lot of business people are saying, we don't need to spend so
much money on business travel and that's going to hurt the travel industry somewhat and the airlines and the high end hotels are going to have to make
some changes.
CHATTERLEY: And that's the permanent shift, Glenn, do you think, to some degree?
FOGEL: Well, I think, yes, I think permanent -- it is a permanent shift and people are not going to spend as much money on business travel as they
did in the past, so as a share of total travel, I think business travel will be lower than it was in the past.
That being said, the GDPs are continuing to expand. We love the fact that the economies are growing. So at some time, they'll be more business travel
in total, but there will still be a smaller share than the overall total travel.
CHATTERLEY: I would argue, ticket prices have to rise to compensate. Glenn, great to have you on. Thank you for your wisdom. Glenn Fogel, the
CEO and President of Booking Holdings.
All right, let's move on.
FOGEL: Thank you, Julia.
CHATTERLEY: Thank you. Could you be going on your next holiday in an autonomous plane? Now, that's a question. Look closely, you won't see a
pilot in this one. It might just be a test flight, but a tech startup is working on making this experiment a real life scenario. The CEO of Reliable
Robot, next.
(COMMERCIAL BREAK)
[09:42:54]
CHATTERLEY: Welcome back to FIRST MOVE. Would you get on a plane that has no pilot? Well, that's the future envisioned by the autonomous aircraft
startup, Reliable Robotics. It is developing technology that could eventually see planes fly with no one in the cockpit.
The company has two experimental aircraft that it wants to use to carry cargo in remote areas first, and according to a management consulting firm,
Oliver Wyman, replacing single pilot operations with autonomous planes could save airlines as much as $60 billion a year.
Robert Rose is the CEO of Reliable Robotics, and he joins us now. That's a lucrative opportunity for the airlines, but the premise of the company is
aircraft should be able to fly themselves and that's what you're working on.
ROBERT ROSE, CEO, RELIABLE ROBOTICS: That's correct. Yes, we started Reliable Robotics almost four years ago. The idea is to create a new type
of airline, an airline where instead of having pilots in the cockpit, you have pilots in control centers.
One of the inspirations as well as just personally, I've had family that is located in parts of Oregon that are difficult to reach with commercial air
travel. And with autonomous aircraft, we can move people from local municipal airports directly to other places in the country that they want
to go. Because the network today, the way we've constructed it with pilots in the planes, it's largely hub and spoke.
We only use about a hundred or so airports today in the commercial airspace for in the United States, but we have over 5,000 airports available for
public use.
And with autonomy, we can move people directly from where they are to the airports nearest to where they want to go.
CHATTERLEY: I mean, you're still in the experimental phase. So we should be clear that you have pilots on board, but you have also demonstrated
unmanned operations across populated areas in the United States. Just talk us through that.
ROSE: So right after we started the company, we set out to prove to ourselves that we could actually automate a plane end to end, gate to gate
meaning from time parking spot two parking spot.
Aircraft today are largely only automated for the en route phases of flight and occasionally landing if you have the right infrastructure available at
the airport, but nobody has yet automated taxi operations as well as takeoff.
So far, we've demonstrated fully unmanned operation on a small passenger aircraft, the Cessna 172, and we've have since also demonstrated fully
automated operation of a Cessna 208 Caravan. We actually remotely operated that from our control center in Mountain View about 50 miles away.
CHATTERLEY: I mean, it's quite incredible.
ROSE: Mountain View, California, I should say.
CHATTERLEY: I mean, most people will be looking at this and saying, you know, a plane flying itself, you would turn that around and say, look, it's
a complex task as it is. You know, is it better to try and eliminate human error? How much of this is down to challenging the technology that you're
producing and dealing with emergency situations, making sure that an autonomous plane can deal with any kind of emergency because that requires
data collection.
ROSE: That is exactly the key. Automation systems today that we have an aircraft largely rely on the human being there present to respond in the
event of something going wrong.
A key reason we're not yet able to move the pilot into a control center is you need to break down all of these potential issues that could cause
problems methodically and develop mitigations that you can place on board the aircraft.
I should say though, that there's always going to be cases where you're going to want a human being involved in the resolution of an issue and
that's a key reason why we have pilots stationed in our control centers.
An example here would be in an emergency condition where you need to execute an emergency landing, that type of operation is going to be tightly
coordinated with air traffic control, because A.T.C. or folks that are in the airport environment may have knowledge of what's going on at the
airport, which runway may be acceptable to execute an emergency landing.
And for me, personally, I would want someone involved in making that decision.
CHATTERLEY: Yes, that makes sense to me, I think everybody would. You just -- you want somebody in control here who has a stake in the game, quite
frankly, in an emergency situation.
How long before we could see these used, even just to transport cargo? And then you can tell me how long perhaps it takes to transport passengers?
ROSE: Well, cargo is the key. You hit it. So that's why we're focusing on cargo first because it's going to be much more straightforward to bring
this technology to market, especially on smaller cargo planes like the Cessna Caravan.
When we started the company, we were joking that it would probably be five years from the time we started to when we would actually be able to operate
for revenue. I think we're going to be close. I think it's going to be a little over that. So I think we still have a few years before we're going
to be able to operate for revenue with cargo.
Passenger travel, I'm optimistic that we'll start to see autonomous planes by the end of the decade.
CHATTERLEY: Do you think the timetable has shifted in light of the regulators, the F.A.A. dealing with what happened with Boeing? And the
reputational hit, I think, they took as a result of that. And I think just for ordinary people, this idea that a pilot was struggling with a system, a
computer system and failed in those tragic cases. Do you think the F.A.A. is going to be perhaps more reticent to approve things like this,
technology like this? And I'm including, you know, autonomous helicopters, and we've had a lot of this on the show and we've talked about it, simply
because of what happened there. They can't make a mistake.
ROSE: Well, these incidents have definitely caused the F.A.A. to step back, at least that's what we've seen at our working level. We have
however, seen in our interactions with the F.A.A., there is a strong desire to bring about more automated systems because every time you automate more
and more of an aircraft, operations tend to get safer.
The F.A.A., from our experience, has wanted to see a great deal of innovation in this space. But as you hit on it here, the key is doing this
in a manner that is safe and methodical.
I think that's one of the reasons this type of process takes time and that's what we're working through now with the F.A.A.
CHATTERLEY: Yes. All about the data, to your point, making it safer and for public sentiment, I think, too. Robert, great to have you on. Come back
and talk to us soon, please, and keep us updated on your progress.
Robert Rose there, the CEO of Reliable Robotics.
ROSE: Thank you.
CHATTERLEY: Great to chat.
All right, coming up, an oil rich country in the Middle East to planning on a low emission future, the first and only nuclear power plant in the
region, up next.
(COMMERCIAL BREAK)
[09:52:09]
CHATTERLEY: The UAE, a nation that floats on oil starting commercial operations of its nuclear power plant, sending cleaner energy into the
homes and businesses of the nation.
Our John Defterios got exclusive access to the nuclear power plant.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR (voice over): A graphic rendering depicting Abu Dhabi by drone at night. The image captures
the scale of energy needed to power the capital.
DEFTERIOS (on camera): What's unique here is that the UAE is the first Arab country to generate light from its own nuclear power.
MOHAMED AL HAMMADI, CHIEF EXECUTIVE OFFICER, EMIRATES NUCLEAR ENERGY CORPORATION: In this building, we have the single biggest generator in the
Middle East.
DEFTERIOS (voice over): Mohammed Al Hammadi has been involved since day one, taking a working model seen here to the launch of commercial
operations.
AL HAMMADI: We are commercially connected to the grid, and we are making revenue, but also dispatching clean, reliable, safe, secure, physically,
that grid and these lights, as you see right now has also some part of that nuclear power plant.
DEFTERIOS (voice over): It's all generated here at the Barakah Nuclear Facility, about 300 kilometers southwest from Abu Dhabi, near the borders
of Saudi Arabia and Qatar.
DEFTERIOS (on camera): This facility has four reactors, number one is now fully operational. Number two is loaded with fuel, and three and four will
come online over the next few years. When it's all said and done, Barakah will provide about 25 percent of the nation's electricity.
AL HAMMADI: Four units of nuclear power plants will avoid roughly around 21 million tons of CO2 emissions in annual basis. Let's put it in
perspective for the audience. That's around 3.2 million cars off the road.
DEFTERIOS (voice over): The UAE took a big leap into this arena, setting the policy framework back in 2008 and spending $24 billion to develop the
sector.
More than 3,000 workers are on site. Sixty percent are UAE nationals like Elham Alnuaimi, who took her degree five years ago in Nuclear Engineering.
ELHAM ALNUAIMI, NUCLEAR ENGINEER AND REACTOR OPERATOR IN TRAINING: It is unique. It's new to the UAE and I wanted to be part of this new project
that is significant.
MOHAMMAD AL SHEHHI, HEALTH, SAFETY AND ENVIRONMENT MANAGER: When I went to university, this plant didn't exist. So once I graduated, this job offered
me a big exposure in all aspects of environment.
DEFTERIOS (on camera): This is an exclusive look inside the turbine building in the protected area. I was here in 2017 and it was silent
because it was not operational. That clearly has changed. And I can feel the heat with the steam running right into that turbine behind me.
DEFTERIOS (voice over): The temperature rose to 47 degrees Centigrade or 116 degrees Fahrenheit as the facility crossed the threshold into
commercial operations.
DEFTERIOS (on camera): Most people think of the UAE as an oil and gas producer, heavy on hydrocarbons. Does this change the narrative coming
online commercially?
AL HAMMADI: I would definitely agree with you, and the key point here is that the UAE is diversifying its economy and diversifying its resources of
energy.
Electrification will be one of the key pillars for de-carbonization, and also will be a key pillar for the economic growth of the world.
DEFTERIOS (voice over): As the demand for data and artificial intelligence grows, so too will electrification and the need to meet that growth with
fewer fossil fuels driven by splitting the atom.
John Defterios, CNN, Abu Dhabi.
CHATTERLEY: John Defterios there. My teeth are back in.
That's it for the show. If you missed any of our interviews today, they will be on my Twitter and Instagram pages. You can search for
@jchatterleyCNN. In the meantime, we'll be back tomorrow.
Stay safe. "Connect the World" with Becky Anderson up next.
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[10:00:00]
END
