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First Move with Julia Chatterley
U.S. Regulators Call for a Suspension of Johnson & Johnson's COVID Vaccine; The Latest U.S. Data Shows Prices Heating Up; Grab, Southeast Asia's Ride Hailing and Delivery Giant Set to Go Public in a $40 Billion Deal. Aired 9-10a ET
Aired April 13, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:15]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE. And here is your need to know.
Clot concerns. U.S. regulators call for a suspension of Johnson & Johnson's COVID vaccine.
Inflation inflection. The latest U.S. data shows prices heating up.
And grabbing Grab. Southeast Asia's ride hailing and delivery giant set to go public in a $40 billion deal.
It's Tuesday. Let's make a move.
A warm welcome once again to FIRST MOVE this Tuesday and a jam-packed show coming up.
First of that breaking news this morning. U.S. regulators are recommending pausing the use of Johnson & Johnson's COVID-19 vaccine over concerns about
rare blood clots. Now, we are talking less than one blood clot event per million doses administered given here in the United States, but obviously
regulators are taking no chances.
We've got details and analysis on that coming right up. But as you can imagine, that news driving market sentiment this morning with investors
questioning what it will all mean for the speed of vaccine rollouts in the United States, but also beyond.
Dow futures are softer again this morning and shares eased back from record highs on Monday. The other big economic driver this morning, the latest
U.S. inflation data, too.
CPI in March was up some 2.6 percent from a year ago versus forecasts of 2.5 percent. The expectation has always been that inflation would spike
above the Fed's two percent-ish target this year. But with Jay Powell talking about an inflection point in the U.S. recovery, investors will
remain nervous, I think about just how temporary this spike will be.
Now for those that believe digital assets like Bitcoin are a hedge against inflation, today's data also pivotal. Bitcoin surging past $63,000.00 to an
all-time high just a day before crypto exchange, Coinbase Global is listing directly on the NASDAQ.
But that's not the only IPO we're going to be talking about today with Southeast Asia's tech superstar, the ride hailing and delivery giant, Grab
grabbing the opportunity to go public here in the United States, as I mentioned, a whopping $40 billion deal. All the details on that shortly.
Wow, that's a lot of naught.
Let's get to the drivers. Health officials in the United States calling for an immediate halt quote, "in using Johnson & Johnson's COVID-19 vaccine."
This comes after at least six women suffered blood clots after receiving the vaccine.
Dr. Peter Hotez is co-director of the Center for Vaccine Development at Texas Children's Hospital, and Dean of the National School of Tropical
Medicine at Baylor College of Medicine.
Dr. Hotez, always great to have you on the show. I mentioned there, less than one instance of a blood clot here in a million COVID vaccines
delivered, but the regulators here taking no chances. Talk us through what you see here.
DR. PETER HOTEZ, DEAN OF THE SCHOOL OF TROPICAL MEDICINE, BAYLOR COLLEGE OF MEDICINE: Yes, I mean, Julia, what's going on here is that the two major
vaccines that use the adenovirus vector platform, and that would be the J&J and the AstraZeneca vaccine have been halted, either in the U.S. in the
case of the J&J or in many European countries, in the case of AstraZeneca for the same reason, they both seem to be eliciting a rare event in which
they produce a certain type of antibody that activates platelets and then causes blood clots, and the blood clots are happening in the part of -- in
the veins that train the brain. They're called cerebral thrombosis.
And even though it's a very rare event, about one in a hundred thousand to one in two hundred thousand with the AstraZeneca vaccine, one in a million
with the J&J vaccine, it is giving people pause, particularly in countries that that have other options at this point.
CHATTERLEY: I think a lot of people will be looking at this and saying, why is it all women? It is women between the ages of 18 and 48. Obviously,
it's too early to speculate, and particularly when we're talking about such tiny numbers relative to the number of vaccine doses being administered
here, but Dr. Hotez what might be causing this in women specifically?
HOTEZ: Yes, and more likely, premenopausal women. So we need to do an investigation. There are a number of theories. Maybe it's because
oftentimes, premenopausal women have more robust immune responses in general, but you know, whether there were underlying factors that could
predispose to blood clots such as smoking or use of birth control, all of that is going to need to be investigated and that's going to be very
helpful because if we can, you know, do a surgical strike in terms of understanding specific risk factors, then we can continue those vaccines
for the rest of the general public and as worrisome as it is for the U.S. and Europe, it is absolutely catastrophic for African countries and Latin
American countries that are almost right now completely dependent on adenovirus vectored vaccines for COVID-19.
[09:05:31]
HOTEZ: They don't have access to the Pfizer and Moderna mRNA vaccines in a big way. Pretty much what they have is the J&J, the AstraZeneca and the
Gamaleya adenovirus vaccine from Russia, which we really don't know anything about, because it's not going through stringent regulatory
authorities, or the W.H.O. at this point.
So how we're going to fix that and provide alternatives for Africa and Latin America, if necessary, and so what you've got now are individual
countries that will need to assess risk versus benefit, given the fact that it is an extremely rare event and COVID-19 is so devastating.
And, complicating all of this, of course, is a very active anti-vaccine campaign from groups coming out of the U.S., and from the Putin Russian
government, which is launching this -- which has launched this whole system of weaponized health communication and specifically is working to discredit
Western COVID-19 vaccine.
So, you know, when you put all of that together, it's a very complicated mix that's going to take a lot of sorting out.
CHATTERLEY: And more work needs to be done, as you said to research exactly what's happening here and perhaps isolating as was done with the
AstraZeneca vaccine saying, look, if your probability here of getting a blood clot is higher than your probability of being hospitalized with
COVID, then fine, you don't take this vaccine.
But if the alternative probability is higher, then you still can and that's obviously what we've seen with AstraZeneca. We wait and watch what happens
with this vaccine.
Dr. Peter Hotez, there will be people who have just had the Johnson & Johnson vaccine, I actually have a female member of my family in the past
few days. What do we need to be telling them? What do they need to be watching for if they've had this vaccine over the coming days and weeks?
HOTEZ: Yes, well, first of all, Julia, and I have family members too who have gotten the J&J vaccines and friends and colleagues, a lot of people
have and so -- as well as the AstraZeneca vaccine, and what I tell them is, first of all, relax, it is an extremely rare event and it's highly
unlikely, but if you do start having severe headaches, which could be indicative of cerebral thrombosis, that are long lasting and not easily
relieved by painkillers, you may want to seek medical attention and have a plan for that.
But this is not a time to panic because it is an extremely rare event and it is highly unlikely this is going to happen, but you know, be thoughtful,
be mindful, and if around two weeks after your vaccine you start having odd symptoms, which can include clots in other places too, such as leg cramps
or shortness of breath and you think you're having chest pain or certainly severe headache, then go ahead and seek medical attention and get it looked
into.
CHATTERLEY: Essential context. As always, great to have you on the show, Dr. Peter Hotez there. Thank you, sir.
Okay, let's move on to our next driver. A key U.S. inflation report coming in stronger than expected, the Consumer Price Index in the United States
jumping 0.6 percent in March from the previous month as the economic recovery continues.
Christine Romans has all the analysis for us. Christine, it was the year- on-year comparison that I made earlier on in the show, because that number looks alarming, and certainly that number is what people are going to focus
on. I think 2.6 percent, clearly higher than what the Fed targets approximately around two percent. Does this number matter?
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Yes. Is it transitory or is it a new trend? And we don't know exactly yet.
CHATTERLEY: Right.
ROMANS: But we do know we have been expecting this number to show some of that signs of heat in the American economy for a couple of reasons here.
You've got an economy that's reopening, so you have more demand, more people out spending their money. You also have these supply glitches around
the world that seem to be part of the problem here, that could be temporary. That will work out eventually here.
So there is the reopening. There are these supply glitches. Unclear if these numbers are going to continue like this and that is what the Fed has
been really doing. Fed officials have been tamping down these expectations for sort of runaway inflation, what they see here as a transitory blip in
inflation that will maybe subside at the end of the summer. We just don't know for sure.
I saw gas prices in there. They were a big part of this driver, nine percent increase in gas prices. We'd seen gas prices rising. We knew that
gasoline prices rose even further because of the Suez Canal issue. So that might be in this number here and the monthly increase from March over
February. That was the biggest monthly increase at six tenths of a percent that we've seen since all the way back in 2012.
[09:10:06]
ROMANS: So it does show you the energy that is in the economy and how that is moving into prices in the pipeline all the way to consumers.
CHATTERLEY: Yes. How long transitory is in your book as well? The St. Louis Fed President said to us, it would welcome it above two percent
because we've been so rubbish at meeting a target in the past.
So yes, this is a Fed determined to look through it. And as a result, we shall too, but we will still talk about it.
Christine, great to have you with us. Thank you.
ROMANS: Nice to see you.
CHATTERLEY: Grab has been grabbed. Southeast Asia's ride hailing food and Fintech giant is merging with a U.S. firm in a record breaking deal valuing
Grab at nearly $40 billion. The deal then leading to an IPO.
Clare Sebastian joins me now. That was a very delicate and diplomatic way of talking about one of these back deals, Clare, you can do better. This is
a fascinating company, a Fintech in Southeast Asia, just talk us through what this company does. And wow, what evaluation potentially.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, so this, they call themselves, Julia, a super app. They're in sort of three key areas. They
want to be something that's used every day by lots of people that's really part of everyone's lifestyle, a bit like what Uber is doing here.
So they're in mobility. They do ride hailing, ride sharing, all of that. They're in food, food delivery and things like takeout, but also grocery
delivery. And their newest and probably sort of biggest growth area going forward is Fintech. They already have Grab Pay, which is an e-wallet. They
do consumer loans and insurance.
They just recently, in February got an $850 million cash injection from investors to grow that area of the business. So, this is a sort of very
wide ranging company and they've had huge growth during the pandemic.
They say that their gross merchandise volume in 2020 was about $12.5 billion that was double the level in 2018, just two years prior. So they've
been growing very fast, still not profitable, but what this does is allow investors in the U.S. to get access to not only the fast growth of mobile
and tech in general in the wake of the pandemic, but particularly in this Southeast Asian region where penetration is lower, so there is more
opportunity for growth in the future.
But $40 billion, a Special Purpose Acquisition Company, Altimeter, really sort of putting its weight behind this company and bringing it to market, a
SPAC boom, we continue to talk about it, Julia. It continues to be a very popular way to bring companies like this to the U.S. markets in particular.
CHATTERLEY: Yes. And the diversity of this business helping them throughout the COVID crisis. The ride hailing clearly suffered as we saw
all over the world, but I saw that the company was saying, the measure of sales that they use, gross merchandise valued $12.5 billion, more than
double that of 2018.
So a real pandemic winner here. Timing, as they say is everything and they are not the only one. There is a whole host of tech companies, burgeoning
tech companies in the region that are coming to market. Fascinating that this company also chose the United States rather than staying closer to
home in light of what we've been talking about recently with their Chinese tech scrutiny here, Clare, but what are the other ones that are coming to
market because they aren't alone.
SEBASTIAN: Yes, the march of the Indonesian unicorns, Julia, I think we can call it.
CHATTERLEY: Right.
SEBASTIAN: There are other players within a very similar space, Traveloka is an Indonesian company, which is according to Bloomberg, rumored to be in
talks with a SPAC sponsored by Peter Thiel, the former PayPal founder. So that could happen, it's not obviously confirmed just yet.
Another company called Gojek, which is a huge ride hailing company, really the biggest rival to Grab in Indonesia and the region is also rumored to be
looking at an IPO, not clear if that would also be a SPAC, but very interesting to see these, not only Southeast Asian companies, but mobile
driven companies trying to get to the market this year and there is a lot of buzz around this region -- Julia.
CHATTERLEY: Yes, fascinating. What a space to watch. Clare Sebastian, thank you for that.
All right, to our next driver now in China defending the efficacy of its vaccines after the country's top disease control officials said publicly
the levels of protection they give are not high.
China shipped millions of doses to countries including Indonesia, Thailand, Brazil, Mexico, Turkey, Somalia and Tunisia. Kristie Lu Stout has all the
details.
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN CORRESPONDENT: China is defending the efficacy of its homegrown vaccines after a top health official made a rare admission
about the relatively low protection rates of China's COVID-19 shots. His comments gained traction on social media and they were quickly censored in
China.
State media put out an interview with the official saying that reports about his admission were, quote, "a complete misunderstanding."
At a conference in Chengdu over the weekend, Gao Fu, Director of the Chinese Center for Disease Control and Prevention said that the protection
rates of existing vaccines are not high, and he listed a few options to solve the problem like increasing the number of doses or changing the
interval between shots and mixing different vaccines.
Now, there is little data to show what the impact would be from mixing different types of vaccines. The clinical trials have begun including here
in Hong Kong.
Now earlier, I spoke to Ivan Hung. He is a Clinical Professor at the Hong Kong University Department of Medicine. They are right now recruiting 100
subjects to receive the Pfizer by an intake mRNA vaccine first, and then four weeks later, they will receive the more traditional Sinovac vaccine.
Hung says that the trial is up to see if mixing vaccines would be more effective and more safe.
[09:15:24]
IVAN HUNG, CLINICAL PROFESSOR, HONG KONG UNIVERSITY DEPARTMENT OF MEDICINE: This could be rolled out of course, as one of the strategies especially to
tackle the variants problem and also to address the issue that some of the individuals who have received -- perhaps receiving the BioNTech or the
Sinovac vaccine, and then have allergy to that vaccine and would like to switch platform for the second dose.
(END VIDEO CLIP)
STOUT: Hung says that the trial results could be out August or September this year. Available data shows that Chinese vaccines have efficacy rates
lower than others, including Pfizer, BioNTech and Moderna, and new data from Brazil shows that the Sinovac vaccine has 50.7 percent efficacy that
is just above the W.H.O. recommended cutoff of 50 percent.
The study also revealed that Sinovac's efficacy rate can climb to 62.3 percent if there was a longer interval between doses.
Kristie Lu Stout, CNN, Hong Kong
(END VIDEOTAPE)
CHATTERLEY: Still to come here on FIRST MOVE, when the chips are down, the U.S. must step up says President Biden. We will get the latest from
Monday's semiconductor summit.
And not out of the woods yet, the G-20 presidency says pandemic aid must continue even as vaccinations accelerate.
Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Intel says it is in talks to supply U.S. automakers with the chips they desperately need.
Vehicle production has been delayed and factories idled amid a global shortage. The White House held a Summit on the crisis on Monday with
President Biden saying America must do better.
(BEGIN VIDEO CLIP)
JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: China and the rest of the world is not waiting and there is no reason why Americans should wait.
We're investing aggressively in areas like semiconductors and batteries. That's what they're doing and others, so must we.
For too long as a nation, we haven't been making the big bold investments we need to outpace our global competitors. We've been falling behind on
research and development and manufacturing.
And put it bluntly, we have to step up our game.
(BEGIN VIDEO CLIP)
[09:20:16]
CHATTERLEY: Joining us now, John Neuffer, President and CEO of the Semiconductor Industry Association. John, fantastic to have you on.
I want to talk about what the meeting generated in terms of an action plan, but can you just help us understand first, why has America's share of
global manufacturing reduced so much despite relatively consistent investment from the industry itself?
JOHN NEUFFER, PRESIDENT AND CEO, SEMICONDUCTOR INDUSTRY ASSOCIATION: Yes, so first of all, our share has been falling. In 1990, we produced roughly
37 percent of the world's semiconductors, now it's down to 12. And that's not because our manufacturing has decreased, it's actually increased slowly
in the U.S.
What's happened is a massive explosion of semiconductor manufacturing, particularly in Asia. Roughly 80 percent of the world's semiconductors are
now manufactured in Asia.
Competing governments for decades have been giving massive incentives for chip manufacturing. Our Federal government does not do that, and it has
showed up in the degradation of our chip manufacturing base.
So as President Biden said, it was music to our ears, we need to get in the game, and the Chips for America Act sets up roughly $50 billion to get us
on the right path.
CHATTERLEY: Is that enough? Because when I look at the amount of investment, even just back in 2019, sixteen percent of sales in the United
States, second only to the -- what -- 20 percent of sales in biotech and the pharma sector, you're saying it needs to be around 30 percent in order
to be able to catch up and really compete. Is $50 billion of investment enough to achieve that in your mind?
NEUFFER: So great question, Julia, and that $50 billion we consider to be a great start. And it must also be a multiyear effort. We are eyes wide
open about that. It will help make the U.S. one of the most attractive places in the world to build chip manufacturing facilities.
So we had Boston Consulting Group do a study and it found what we get for $50 billion is over the next 10 years or so, roughly 19 new fabs and create
roughly 400,000 new jobs. So that's a couple of details.
But the big thing here is that that's enough to turn the tide for our declining manufacturing base. It gets us on a better path. It doesn't get
us all the way there, but it certainly gets us started.
CHATTERLEY: You know, I saw a fascinating statistic and you can tell me if this was used in the meeting yesterday. The return on investment, one
dollar of investment, according to a report, joint report by you and Nathan Associates, adds $16.50 to U.S. GDP and it is tied, obviously to the amount
of jobs you can create. In terms of bang for buck, that's mesmerizing, if it's true.
NEUFFER: Yes, so that's on the research side of things and what this means is that we need to double down on our research investments.
So two Asian players have very impressively jumped in the lead in producing the highest end chips. So our industry invests heavily in R&D. I think you
know that. $40 billion a year, and that's one of the most R&D intensive industries in the world. That's about $1.00 out of $5.00 in our sales.
So yet others around the world lead and make maybe some of the most leading edge chips. So the U.S. government needs to do more to step into the breach
here.
President Biden seems like he is ready to do that. Our sector has a long history of close R&D collaboration with the U.S. government.
So Federal investments, as you say, in semiconductor research, offer an incredible ROI. Each additional dollar adds about $17.00 to the U.S. GDP.
CHATTERLEY: Yes, because there's two things here. There's the manufacturing capacity and the fabs that need to be created, but there's
also the R&D to produce more and more high powered chips in smaller size to put it very simply.
Let's talk about the supply chain vulnerabilities. And what happens if we don't achieve this over the coming years because to your point, now, 100%
of the most advanced chips are manufactured in South Korea and Taiwan.
NEUFFER: So actually, it's not a hundred percent, but it's the most advanced chips, which is below 10 nanometers. That is all done in Taiwan
and South Korea. Ninety two percent of it is done in Taiwan, eight percent of it is done in Korea.
So what's happening over the next 10 years is to meet the exploding demand of semiconductors. There is going to be a growth above 50 or 60 percent
growth in fab semiconductor plants, 56 percent growth in their -- 50 percent growth in construction of those fabs around the world.
So do we want those fabs to be in Asia? Or do we want them built here? And I think one of the lessons of this past terrible year of a pandemic is we
have to have stronger, more resilient supply chains, and I think that means we need to have more manufacturing here in the U.S.A.
[09:25:27]
CHATTERLEY: One of the points that you also made in the letter that was presented to the White House was making sure that America is competitive
with the rest of the world.
How is the sector going to compete if corporate tax rates go from 21 percent to 28 percent? Is that going to be a problem?
NEUFFER: Yes, that's correct. Yes, that's a great question. I think there's two things here. Whatever happens in tax, in terms of tax reform,
it really needs to be competitive internationally. That's a big deal for us.
Our sector is a global sector. Eighty percent of our consumers are overseas. So that's one thing.
And the other thing is, you know, this is great with the Chips for America Act to potentially $50 billion in incentives for manufacturing and
research. But we'd hate to see taxes climb in a way that would negate all the wonderful gains we could get out of the effort by the U.S. government
to incentivize manufacturing on U.S. shores.
CHATTERLEY: Yes, diplomatic way of putting it there. John, thank you for that.
We spoke to the GlobalFoundries CEO, I know, one of your members and he said, the shortages that we're seeing today are going to last into 2022. Is
that your assessment, too? And let's assume the best case scenario in terms of investment, the tax environment to the United States, how long does it
take to catch up even to the Intel CEOs point that we could go from 12 percent capacity here to around a third of semiconductor chips? How long
will that take?
NEUFFER: Yes. Just a couple of things on the discrete auto chip shortage. I just want to point out that beginning last year, we are actually selling
more chips in the auto sector than we were the previous year and that has continued this year.
So on the bigger picture, different analysts say different things. Some are saying that we'll be able to dig out of this hole generally, the general
chip shortage sometime at the end of this year and some as Tom Caulfield of the GlobalFoundries has said, it could spill into next year.
You know, we're hopeful that it will happen sooner than later, but there's a divergence of opinions on that.
CHATTERLEY: And assuming best case scenario, time to get to a third of all chips being manufactured in the United States versus 12 percent market
share today?
NEUFFER: Not going to make a guess on that, but it's going to be a multiyear project and it is going to take some audacious efforts by our
industry and our government to get there. I believe, we can do it, but it's going to take some real boldness and audacity.
CHATTERLEY: Audacity required. John Neuffer, great to have you with us, the President and CEO of the Semiconductor Industry Association. Great to
have you with us.
The market opens next. Stay with us.
(COMMERCIAL BREAK)
[09:31:05]
CHATTERLEY: Welcome back to FIRST MOVE. The U.S. markets are open for trade this Tuesday and some of the key drivers today of course, the
recommendation from U.S. regulators to pause vaccinations with the J&J COVID-19 vaccine due to clot concerns. That's clearly dragged recovery.
Stocks lower while boosting tech, which has done well throughout the pandemic. Johnson & Johnson itself trading lower in the session, too. A lot
of hope has been pinned on this vaccine as it only requires one dose, as you can see down some 2.7 percent in early trade.
We also had the latest U.S. inflation data, CPI in March was up 2.6 percent compared to a year ago, slightly higher than expected and very much watched
in terms of policy going forward.
Now, as vaccinations pick up pace in Europe and in the United States, the Italian presidency of the G-20 warning against over optimism. Ministers are
saying government support measures must remain in place. They are also warning that delays in getting vaccines to people around the world could
lead to a multi-speed economic recovery.
Joining us now is Ignazio Visco, Governor of the Bank of Italy. Governor Visco, fantastic to have you on the show. Just talk about concrete action
for me please from the G-20. What more can be done to support particularly those emerging nations that are struggling to receive vaccines early coming
out of this crisis?
IGNAZIO VISCO, GOVERNOR OF THE BANK OF ITALY: Well, first of all, really what we observe is the heterogeneity in response. There are certain areas
and countries which are doing pretty well, others are lagging behind. And therefore, really to accelerate the vaccination plans, it is absolutely
crucial.
We see the light out of the tunnel, but clearly as I say, we should accelerate the way we get out.
Now, there is certainly a situation, a difficulty in a number of countries and both on the liquidity and on the debt side., The liquidity side has
been dealt with, a number of decisions have been taken in both by multi development banks, which have provided the special loans for that and also
by the net suspension of debt service, a special initiative which has been agreed upon last week in the G-20.
That is crucial, but it's not enough. So we have also approved the proposal for the I.M.F. to increase the new issuance of special drawing rights,
which really has to be somehow provided with transparency avoiding really that could be used to repay all the debts, but to be used really to support
the new initiatives.
And there is also a special framework for considering actions on accumulated debts for those countries that are in major difficulties, and
these will be based on two main pillars. One, I.M.F. programs, as usual, which have to be, however, somehow tilted towards ensuring sustainability
and growth.
And the second is the participation of private sector besides the official one in these possible restructuring of debt.
CHATTERLEY: Debt repayment suspension is one thing, but for many of these nations, a lot of those that are looking at this situation and looking at
the financial backdrop say, actually, we should be talking about debt cancellation.
Where do these institutions, the I.M.F., the G-20 stand on debt cancellation for those nations that are suffering most and financially can
do little to support their countries because they have to worry about paying debt back to their creditors?
[09:35:04]
VISCO: Well, this is an issue that has to be discussed within these international financial bodies and also add to the G-20.
We have been touching upon in what I was mentioning before that this framework for dealing with the difficulties of countries, which are mostly
hit and who are mostly really poor is crucial. But as I was saying, this has to do both with official debt and debt from the private sector, and we
need to have these support on a comparable basis.
But I'm sure that initiatives will take place to help these countries. We have been somehow observing analysis and data, which have been provided by
the World Bank, for example, that say that 100 million of people may -- more than a hundred million people may move back in extreme poverty after
many, many years of improvements.
CHATTERLEY: Yes, we have to be having this conversation.
I want to bring it to Italy specifically now, and how confident you are of your growth forecast for this year. We recently spoke to the vaccine czar
in the E.U. and he was talking about the prospect of herd immunity in the E.U. by the middle of July.
Is that what you're factoring into your forecast? Or do we have to be more realistic? Will it take longer, particularly for Italy?
VISCO: Yes, there are two different points which I think have to be considered jointly. The first is that at the end, we are observing some
encouraging resilience of the Italian economy.
Certainly, there was a decrease in GDP in the last quarter of last year, but it was limited -- more limited than expected, and we are seeing the
people are learning and the businesses are learning to deal with lockdowns, except for those sectors which are most heavily hit and where social
distancing really is still particularly needed.
We are expecting from the data we have somehow, economic activity stabilizing now, and the recovery may start already in this quarter if the
vaccination plan that is being undertaken by the government really maintains its promise.
Now, the interesting thing is that the I.M.F. has come up with figures that put growth rate this year above four percent for the Italian economy. We
have looked at mechanical updates of our previous forecasts and we can confirm that this is a real possibility.
But at the same time, there are risks and the risks remain elevated. On one side, the cross country heterogeneity and the difficulties in vaccination
campaigns across the globe may really jeopardize perhaps or make it more difficult a global recovery like the one that has been anticipated.
On the other hand, there may remain scars and these scars in which basically are predicated on the expectation or the fear of a longer
duration of the health crisis may translate into permanently higher saving grace or difficulties in really going back to the usual modes of behavior.
So in this sense, this is why we really have to accelerate the vaccine campaign and make also improvements in health conditions in Italy and
Europe and I think it has to be a coordinated approach across the globe.
This is why we have established a high level committee that will produce to the G-20 report and suggest the way forward to finance improvements on
health systems around the world.
CHATTERLEY: Yes, certainly necessary. Governor, very quickly, I just want to ask you. I recently saw that Italy is managing to issue 50-year debt and
it is doing it more cheaply than America, the United States can issue 30- year debt and just in light of predictions of a 10 percent deficit, the extent of debt to GDP in Italy.
I just wonder, it's a great thing that Italy can raise money, but I wonder whether in terms of financial stability risks going forward, we should be
perhaps alarmed by what we're seeing.
VISCO: Well, first of all, really what matters here now is an insight to have policy measures in place to overcome these very, very difficult time.
The second is that sustainability is predicated on a number of things, certainly growth, certainly the size of the debt. Certainly, the interest
burden.
[09:40:13]
VISCO: And the interest burden now is absolutely very low, and the maturity of debt is very high, and it may be even higher if these policies
of issuing longer term debt succeed. And I think that they may succeed.
There are two reasons for their success. First, there is a supply and this is the time of our years in which there is a clear advantage in financing
debt by issuing a long term paper, something that has been emphasized, for example, also by Janet Yellen in her testimony in January to Senate, I
think.
The other is the demand side. Actually, there is demand for long term, very long term debt. Both -- there is even demand and not enough supply for
longevity debt.
The reason is that there are long term liability, somehow, liabilities have to match -- to be matched with long term assets, and this is the time of
our lives in which perhaps governments really can benefit from a very, very low, low interest rate.
CHATTERLEY: Yes.
VISCO: But I agree with you, we have to be very careful going forward as the emergency is over. We have really to reduce a number of transfers and
make them very, very selective and targeted.
CHATTERLEY: I think we agree. Sir, fantastic to have you on the show. Governor of the Bank of Italy there, Ignazio Visco. Fantastic to chat with
you. Thank you.
We are back after this. Stay with us.
(COMMERCIAL BREAK)
[09:45:00]
CHATTERLEY: Welcome back to FIRST MOVE. Exciting times for champions of crypto. Bitcoin at record high ahead of Wednesday's landmark IPO of
Coinbase on the NASDAQ. Ethereum or Ether, also breaking records, but it is the building blocks beneath, and how they can be used to disrupt and
improve existing infrastructure like payment systems and more that I think is critical to understand.
Now one such area is called DeFi or Decentralized Finance, basically using the Ethereum blockchain to cut out intermediaries or the middlemen from
financial contracts and creating a more efficient borderless financial system.
Now, traditional financial firms like MasterCard, UBS and JPMorgan are taking note. They and others have just invested $65 million in ConsenSys, a
major blockchain player in this space.
Here to explain all, Joseph Lubin. He is CEO of ConsenSys, and a co-founder of Ethereum.
Joe, fantastic to have you on the show, I think -- and congratulations on the deal, we have to start by explaining what DeFi is, what is the
potential of decentralized finance?
JOSEPH LUBIN, CEO, CONSENSYS: Thanks, Julia. So just as the internet and web protocols democratized access to information, whether it be published
information to build e-commerce or use e-commerce for -- or interact with social networks, decentralized finance is the democratization of the
financial industry, so it no longer will financial protocols be built as essentially siloed and behind closed doors.
Entrepreneurs and technologists are building it cooperatively out in the open and it is a revolution that is long overdue.
CHATTERLEY: Explain this revolution, because when I see people discussing what's already going on, and the growth behind the scenes is multibillion
dollars' worth of contracts already being signed.
They talk about this idea that we are seeing incredible growth, that it is seamless in terms of signing contracts between companies across borders, it
doesn't matter which country you're in, but also that it is self-policing.
And I think in light of recent hedge fund blow ups and, and big banks losing money as a result and a lack of transparency in the space, this idea
of self-policing is vitally important to understand as well. Can you explain it?
LUBIN: Yes, really, financial instrument or financial flow that you can imagine in the traditional financial system has been or will be replicated
in the decentralized finance space and many that you couldn't even imagine, things like flash loans.
So different projects are building proposals for lending, borrowing, insurance, decentralized trading of tokens. They are thought of as Lego
building blocks and that you can buy a company right now, I can build its own financial instruments without the need for intermediation and wire up
its own financial flows, the need for intermediation and can transact in real time anywhere across the world.
Compliance can be built into smart contracts. You can build the rules. The organization or the company is resonant into these contracts and in terms
of self-policing, some very collaborative ecosystem.
Everybody talks to everybody else. Everybody is trying to be interoperable. Other decentralized finance institutions and so, when there are issues and
there will be lots of issues as this new technology gets built out, these issues get fixed in real time --
CHATTERLEY: I am going to have interrupt you there, because we are having some connection issues. We are having connection issues with you. So I
don't want to keep you talking when people can't understand what you're saying.
We're going to try and deal with those connection issues. Take a quick break and hopefully get you back in a second.
You're watching FIRST MOVE. More to come. It's live TV. This happens. We'll try and fix it. Stay with us.
(COMMERCIAL BREAK)
[09:50:44]
CHATTERLEY: Welcome back to FIRST MOVE. The streaming war intensifies as people continue to spend more time at home during the pandemic.
Well, in today's "Think Big," Anna Stewart reported how Dubai-based Starz Play is betting big on original Arabic content in the battle against global
streaming giants. Listen in.
(BEGIN VIDEOTAPE)
ANNA STEWART, CNN REPORTER (voice over): Stuck at home with cinema shots, bingeing on TV series and movies has gotten many of us through the COVID-19
lockdowns. That's been a boon for global streaming services, and potentially, a major shakeup in home entertainment.
MAAZ SHEIKH, CEO AND COFOUNDER, STARZ PLAY: The next big idea is producing original Arabic content, specifically designed and meant for the web and
the younger audience.
STEWART (voice over): Dubai based streaming companies Starz Play is launching new Arabic movies and TV series for mobile consumption. Once the
preserve of multinationals with deep pockets like Netflix and Amazon Prime, Sheikh says the rising demand for original language content is an
opportunity for smaller players like Starz Play to carve out a niche for itself,
SHEIKH: We would like to focus on a short form content meant for the younger audience with the positive message overall.
STEWART (voice over): Starz play is already the top streaming company in the Middle East in terms of subscribers according to a 2019 report by IHS
market. It aims to reach two million users by the end of the year.
To strengthen that position, the CEO says, he is also investing in a new distribution model.
Starz Play is enabling both subscriptions and on-demand payments without the need of a credit card.
SHEIKH: The credit card penetration is very fragmented from one country to another. So we've essentially built payment solutions to accompany our
entertainment service.
STEWART (voice over): With COVID-19, opening new opportunities for streaming services, the competition with global players is also heating up.
Industry analysts say Netflix, Prime and China's QIY are boosting Arabic original content in the region. Sheikh believes the competition crunch is
the main risk facing the industry.
SHEIKH: The market will get more competitive and that's perhaps one of the reasons why we are scaling up and ramping up our own original Arabic
productions.
STEWART (voice over): Streaming platforms registered a record 1.1 billion subscribers last year according to the Motion Picture Association, a number
that's drawing more niche players to join the home entertainment shake up.
Anna Stewart, CNN.
(END VIDEOTAPE)
CHATTERLEY: For the first time in over 50 years, the Oscars won't be shown in Hong Kong. The city's leading broadcaster decided not to add the
ceremony later this month and perhaps no coincidence.
It comes as two of the nominees are being criticized in Mainland China. CNN's Will Ripley has more.
(BEGIN VIDEOTAPE)
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT (voice over): This year's Academy Awards off the air in Hong Kong. Hollywood's biggest night won't be
broadcast in the Chinese territory for the first time since 1968, more than half a century even with two Hong Kong films nominated.
The city's leading broadcaster, TVB tells CNN, the Oscar blackout is purely a business decision. Political scientist, Willy Lam believes it is much
bigger than business.
WILLY LAM, POLITICAL SCIENTIST, CHINESE UNIVERSITY OF HONG KONG: Well, the extent of censorship and self-censorship in Hong Kong for the past few
years has been stunning. They do not want to show anything which is conservatively politically incorrect. So that's why they would better err
on the side of caution.
RIPLEY (voice over): Caution he says over comments made by Beijing-born Director Chloe Zhao. Her film "Nomadland" nominated for six Oscars.
LAM: Director Zhao did an interview many years ago in which she expressed doubts about the censorship system in China.
[09:55:00]
RIPLEY (voice over): Lam believes Chinese media regulators are also wary of "Do Not Split," an Oscar nominated documentary about the 2019 Hong Kong
protests.
ANDERS HAMMER, DIRECTOR, "DO NOT SPLIT": I'm surprised how fast it's possible to change the city, and now you see all these examples of how
these basic human rights from my point of view are disappearing.
RIPLEY (voice over): Hong Kong has charged dozens of pro-democracy activists and former lawmakers under its draconian national security law
imposed by Beijing last year.
The City's Chief Executive, Carrie Lam says the law also applies to the Arts, potentially muzzling movie makers in a city once called Hollywood of
the East.
RIPLEY (on camera): This is the avenue of stars modeled after the Hollywood Walk of Fame and this is the statue for the Hong Kong Film
Awards, kind of like the Oscars, but only Hong Kong films.
This town's movie business peaked about three decades ago.
RIPLEY (voice over): Martial Arts legend, Bruce Lee received the Star of the Century Award from the Hong Kong Film Awards in 2005, more than 30
years after his untimely death at 32.
Lee set the stage for another Hong Kong star, Jackie Chan, who took home an Honorary Oscar five years ago.
And this year, the first Academy Award nomination for a Hong Kong born director for Derek Tsang's film, "Better Days."
The best days of Hong Kong cinema maybe over critics fear if creative freedom, like the Oscars, is silenced.
Will Ripley, CNN, Hong Kong.
(END VIDEOTAPE)
CHATTERLEY: And unfortunately, we were unable to re-establish our link with Joe Lubin from ConsenSys. We will be trying to provide you with a dose
of decentralized finance by getting him back later on in the week. I apologize for that.
And that's it for the show. Stay safe, as always.
"Connect the World" with Becky Anderson is next, and I'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
