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First Move with Julia Chatterley
Coinbase Becomes the First Crypto Firm to List on the U.S. Market; JPMorgan, Goldman Sachs and Wells Fargo Q1 Earnings Soar; The CEO of Luxury Car Maker, Bentley, Discusses its Best Year Ever. Aired 9-10a ET
Aired April 14, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
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.
Crypto crescendo. Coinbase becomes the first crypto firm to list on the U.S. market.
Billion dollar beat. JPMorgan and Goldman Sachs and Wells Fargo Q1 earnings soar.
And pandemic performance. The CEO of luxury car maker, Bentley discusses its best year ever.
It's Wednesday, let's make a move.
Welcome one again to all our First Movers around the globe. Great to have you with us this Wednesday. An important day for both established and
perhaps future finance, too. Established financial heavyweights JPMorgan, Goldman Sachs and Wells Fargo providing their Q1 results beating already
robust profit expectations and releasing billions of dollars' worth of loan provisions.
Great trading results, too. But a little bit of caution feeding in on future growth opportunities. We'll go through all the details shortly.
All this as Coinbase, the trail-blazing cryptocurrency exchange goes public in a NASDAQ direct listing, coming up on the show, Coinbase's CFO, Alesia
Haas on the widening global user base and perhaps how quickly their profits will also attract competition.
Plus venture capitalist, Bradley Tusk an early Coinbase investor will join us to give us his take, too. So lots of crypto catalysts in.
Bitcoin trading at fresh records rising above the $64,000.00 mark. Alternatives Ethereum, XRP and Litecoin all on a tear, too. I'll tell you
what, equities dull by comparison, the S&P 500 starting the session at record highs, though sentiment of course still riding on further news
regarding the Johnson & Johnson COVID vaccine suspension.
U.S. health officials will meet today to discuss the way forward. Pfizer though helping to ease supply concerns saying it will ramp up further its
own vaccine production.
What about in Europe? Strong earnings from luxury goods maker, LVMH and German software giant, SAP are helping gains there. Chinese tech firms also
remain in the spotlight with giants like Baidu and jd.com rallying after those firms pledged to follow Beijing's new antitrust guidelines.
Wow. There's lots to discuss and we begin with Wall Street's Coinbase embrace. Clare Sebastian joins us now. Clare, it could have been so good.
This is a landmark listing. Just talk us through what we need to understand about Coinbase. Yes, got it right that time.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, so Julia, Coinbase is the biggest U.S. exchange for cryptocurrencies. It is basically a middleman
that allows you to sort of bridge the gap between fiat currency and cryptocurrency.
The mission was to sort of allow anyone to get a piece of this growing pie. It is a nine-year-old company.
The interesting thing about Coinbase is it has created this sort of trusted brand within the crypto space which is seen by many as being quite murky.
I've seen it described as a clean and well-lit room within that space and that trusted brand has allowed them to charge quite high fees for what they
do for the sort of brokerage and custody of people's crypto assets.
That means that they are very profitable. Their profits went from around $300 million last year. They expect that this -- that the March quarter
alone will be between $730 million and $800 million so that's more than dull the whole of last year.
So they are growing exponentially there about 11 percent now in terms of assets of the entire crypto market, so this is a really big player within
crypto.
But of course, the risk here is that they have risen with the value of Bitcoin more than double this year. It is up about 700 percent in the last
12 months. I think we can show you a chart of that. That is the risk for this company is that they rise and fall with this very volatile market.
CHATTERLEY: You mentioned so many great points there, and this comes to the core of what happens today and where we see this thing trading when it
actually does get going -- it is valuation. With these new technologies, how on earth do you use the old ways of valuing companies and shares in
order to get any sense of what's valuable here or what's overpriced?
This could be a company that gets northwards according to some estimates of $100 billion. And just to be clear, three-quarters of their revenues of the
NASDAQ equivalent are based on just two percent of the volumes. I mean the competition is going to come flying in here to try and reduce those margins
down, Clare. How do we judge valuation here?
SEBASTIAN: Yes, as they sort of -- if they hit $100 billion, Julia, that's about four times the market cap of the NASDAQ, which is the exchange they
are listing on. So the valuation numbers that we're seeing out there are extraordinary.
I think part of it is clearly a leap of faith. It's about whether you believe in the future of crypto. People are talking about it like the early
days of the internet, so that many people believe if you get in now at whatever price, it will still be a good investment.
Other people see it as sort of crypto light, a way to invest in cryptocurrencies without actually buying cryptocurrencies. But of course,
it is a matter as well of the mainstream adoption that we've also been seeing, the sort of acceptance of cryptocurrencies by some of the banks, by
Mastercard, by PayPal, Tesla buying up cryptocurrencies and saying that you can pay for a Tesla using Bitcoin.
[09:05:32]
SEBASTIAN: There is a sort of drum beat of increasing adoption around cryptocurrencies, and this clearly is what Coinbase is trying to capitalize
on today with a direct listing which of course doesn't issue new shares but allows insiders to cash out.
So it's very hard to value it, Julia, but I think with the hype that's going on around cryptocurrencies now, it is pretty likely that we will see
the numbers go up at the start of trading.
CHATTERLEY: And we've got Bradley Tusk, a Coinbase investor coming up to discuss some of these themes and we'll get his take, too. Clare, great work
there. Thank you, Clare Sebastian.
All right, from crypto market innovators to earning season curtain raises. Financial titans, JPMorgan, Goldman Sachs and Wells Fargo are out with Q1
results. Good numbers overall, but some concerns over loan growth going forward.
Paul La Monica joins me now. Paul, let's talk about the good news here which is monster earnings, records in some cases, billion dollar beats in
some businesses, including the M&A and the investment banking divisions. Talk us through the good news and then we'll talk about the concerns.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, exactly, Julia. I mean, when you look at Goldman Sachs and JPMorgan Chase in particular, these are
companies that clearly were benefitting from the market boom that we've had so far this year because that has come alongside a surge in demand for
IPOs, for SPAC deals and that has helped the investment banking businesses.
Goldman Sachs reporting big gains there thanks to equity underwriting fees, but also as well trading because of what's happened within the stock and
bond markets with a little bit of volatility, too. You had surging trading revenues for JPMorgan Chase and Goldman Sachs, you know, and then the
housing market remains strong as well, which it has throughout the pandemic and that's good news for Wells Fargo, which has a very big mortgage lending
business.
CHATTERLEY: Let's talk about lending then, because this has been one of the concerns, and if you look at the Federal Reserve data, the pickup or
the lack of pickup that we're seeing in consumer borrowing, even in business borrowing here has caught some attention and that was one of the
themes that we saw play out particularly for the consumer-driven banks like JPMorgan today.
LA MONICA: Exactly, and I think that is going to be a concern going forward, Julia. On the one hand, you obviously have an economy that is
roaring back to life, as we have people getting vaccinated, there are people going back to work. We are starting to see maybe the Zoom economy
maybe not fizzle exactly, but not be as prevalent as people venture out and do things again, both for leisure and for corporate travel.
But I think what's going to be noteworthy is that at the same time, you have all of this happening, good news for the economy, the bond market has
noticed that as well. That's why long-term rates spiked in the first quarter, and I think that is a concern for loan growth if all of a sudden
taking out a loan is not as cheap as it was a year ago.
Jamie Dimon has said that he hopes this is a goldilocks type economy so it may not be that big of a concern, but everyone is going to be watching
where bond yields go. If they stabilize at these levels, then I think you'll still see a pickup in lending activity.
Mortgages stay strong and maybe you'll start to see auto and credit card loans, and small business loans, too. But if bond yields start surging
because everyone is worried about inflation and the Fed may be getting away from it and not being able to tackle it effectively, then all of a sudden
you're going to start to see loan demand probably go down as bond yields and interest rates head higher.
CHATTERLEY: Yes, it's such a great point. I mean, the banks will say it's a demand problem and people aren't asking for these loans and they are
consumers and the businesses will say it's a supply problem because conditions have tightened and they're afraid of being charged more perhaps
than they would like. The ongoing debate.
Paul La Monica, thank you so much for that.
Okay, let's head to South Africa now where the Health Ministry has announced they are temporarily suspending use of the Johnson & Johnson
COVID vaccine. This after U.S. regulators announced a rollout pause citing rare blood clot concerns on Tuesday.
David McKenzie joins us live from Johannesburg. David, great to have you with us. South Africa of course, heavily dependent on the J&J vaccine, what
are the health authorities saying there about how long this pause might last?
DAVID MCKENZIE, CNN CORRESPONDENT: Well, they are hoping, Julia, that it will only last a few days. That's the best case scenario, but of course,
this is just a stumbling block after many stumbling blocks for South Africa in terms of accessing and distributing COVID-19 vaccines.
[09:10:03]
MCKENZIE: This country has been hit worse than any country on the African continent. Now, they took the cue from the F.D.A. that those very rare
instances of blood clots could be an issue that needs to be looked into.
No signs or evidence of that with the large-scale trial that has been put out by South Africa for more than 290,000 healthcare workers. South Africa
hasn't really started its major vaccine rollout. But they are sticking with Johnson & Johnson and this vaccine, which in fact will be manufactured by a
local pharmaceutical here in South Africa.
And so 31 million doses at least of the vaccine have been ordered. Those orders can't be sent back, so they're hoping that this will all be cleared
up in the next few days.
I mean this vaccine is something that is appealing to South African authorities because it is one shot and it can be stored in warmer
temperatures than the very cold temperatures of Pfizer and Moderna vaccines. But you'll recall that already South Africa abandoned the use of
the Oxford-AstraZeneca vaccine after ordering a million of those vaccines because it was seen to be not effective against mild and moderate versions
of the variant of COVID that dominates here.
So the current issue in the next 24 hours is when and if they release this pause on the Johnson & Johnson vaccine. The bigger issue within South
Africa is actually the large-scale vaccine rollout, which needs to happen and needs to happen soon in the minds of many citizens of this country --
Julia.
CHATTERLEY: David, very quickly, what's vaccine hesitancy like there?
MCKENZIE: Well, in general -- in general, there isn't a huge amount of vaccine hesitancy, and it also -- you know, one has to be careful to kind
of postulate on this because COVID-19 is very much something that none of us really, most people haven't dealt with in their lifetime.
South Africa has mandatory vaccines for children. There has been a little bit of hesitancy within the medical community for those receiving this as
part of a trial, but I think that was more because some people felt maybe that they were guinea pigs, not in fact part of the large-scale trial.
So we have to wait and see. Obviously, that's something people are aware of, but I think the need right now for vaccines given the impact of COVID-
19 is so huge that there will be a lot of people, more people than in fact vaccines are available right now who would love to get that shot or any
other approved shot in their arms as soon as possible.
CHATTERLEY: Yes. Difficult balance to find. David, great to have you with us, thank you. David McKenzie there.
The COVID vaccine rollout also a major issue in Japan with just 100 days until the Tokyo Olympics. Coronavirus cases there are surging, but so far,
less than half a percent of Japan's population has been fully vaccinated. That according to Johns Hopkins University.
Selina Wang is live in Tokyo with more. Selina, this is a bit of a conundrum to me. It looks like Japan is battling and facing the risk of a
fourth wave. They have got incredibly low rates relatively in terms of vaccine delivery and yet, authorities still pushing ahead with the
Olympics. How do we sort of square that circle?
SELINA WANG, CNN CORRESPONDENT: Julia, that's exactly right. If you listen to the official statements from Japanese government officials, from the
International Olympic Committee, it is complete confidence and excitement that these games are going to go ahead successfully and safely.
But here on the ground, the situation is problematic. As you say, you have coronavirus cases rising across Japan. You have major cities, including the
host city here in Tokyo, retightening COVID restrictions, and experts are concerned that this fourth wave is driven by more contagious new COVID
variants.
They tell me that the risks of this Olympic Game becoming a super spreader event is only increasing and not just becoming a super spreader event in
Japan, but the risk of these new variants being spread around the world is increasing.
And on top of that, you have less than half the percentage of the Japanese population fully vaccinated. So despite this public optimism, there is no
surprise that hosting these games still remains deeply unpopular among the public here. There is a sentiment among the locals that these games at this
point are a wasteful expenditure that is putting people's health at risk -- Julia.
CHATTERLEY: Yes, it is again a huge challenge. What are people saying and what do the Olympics look like at this stage? Because I've certainly seen
talk on social media of volunteers saying, we are being told at this stage that we are not going to be vaccinated, but we're still expected to turn
up, help out and interact with people who may get the vaccine if they're an Olympic athlete.
WANG: Julia, you bring up a really interesting point there on the volunteers because they aren't talked about that often. But these games
include tens of thousands of volunteers. They will likely be not tested as much, not vaccinated by the time these games are held.
They are going to be traveling to and from their homes and the venues and they will inevitably come into contact with those athletes. Those athletes,
by the way, which there are going to be more than 11,000 coming from more than 200 countries, they are not required to be vaccinated nor do they need
to be quarantined when they arrive in Japan, though they will be tested regularly.
[09:15:25]
WANG: And just to kind of reinforce how challenging hosting these games are, I want to show some of the video from the torch relay that is
happening in Osaka. This torch relay has run into huge problems.
The Governor of Osaka had originally called for the torch relay to be cancelled through Osaka where they have been dealing with an unprecedented
surge in COVID cases. They are continuing to reach daily new highs, new restrictions in Osaka.
As you can see from the video, there is none of the normal festivities you would see. This torch relay ended up being held in a park without any
spectators.
So long story short, it's still unclear, we are a hundred days out, how the Olympics are going to keep the athletes, participants, volunteers and the
Japanese public safe at this point -- Julia.
CHATTERLEY: Yes, huge, huge questions. Selina Wang, thank you for being on top of it for us.
Okay, let me bring you up to speed now with some of the other stories making headlines around the world. U.S. President Joe Biden expected to
announce on Wednesday that American troops will soon withdraw from Afghanistan. A senior official says they will be out by September 11th,
twenty years after the terror attacks that drew America into its longest war. NATO troops stationed in the country are also expected to leave by
that date.
Police and protesters clashed Tuesday night in Oregon and Minnesota. Near Minneapolis, crowds gathered for the third straight night following the
killing of Daunte Wright, a black man, by a police officer. Some protesters hurled bottles and other objects. Police responded with pepper spray and
flash bombs. Officers arrested around 60 people.
Egypt to seize that giant container ship that got stuck in the Suez Canal for six days last month and is now demanding more than $900 million.
Egyptian media say a court has ordered the Ever Given's owners to pay for lost business and the cost of freeing the ship. The Ever Given's U.K.
insurer say they are quote, "disappointed" by the decision to seize the vessel.
All right, still to come here on FIRST MOVE, getaway car luxury brand, Bentley sees record sales in the pandemic as the wealthy dream of the open
road.
And Coinbase's IPO proves crypto is here to stay. So says early investor, Bradley Tusk, he is up next. Stay with us.
(COMMERCIAL BREAK)
[09:20:21]
CHATTERLEY: Welcome back to FIRST MOVE. Wall Street majors searching for direction premarket after a record-setting day for the S&P 500. On Tuesday,
investors holding firm amid the latest uncertainties over vaccines. We're hoping to hear more from the U.S. health officials on the safety of Johnson
& Johnson's vaccine as soon as today as Denmark becomes the first E.U. country to outright stop using the AstraZeneca vaccine. Blood clotting
concerns front and center for both vaccines.
In the meantime, banking giants, JPMorgan Chase, Goldman Sachs and Wells Fargo mixed premarket trade after kicking off Q1 earnings season. Strong
results overall, but concerns over future loan demand. Good news -- lots of good news in the price already here given the performance so far this year.
That's crucial to remember.
All right, let's get back to the Coinbase IPO and here are some food for thought. According to the NASDAQ, the reference price of Coinbase is
$250.00 a share. So that could value the company at around $65 billion. And if there's strong demand, it pushes the stock higher, some estimates
suggest we could be looking at a $100 billion valuation or more.
Now, compare that to the market cap of the New York Stock Exchange owner, Intercontinental Exchange, well, that's $67 billion and you'd be right to
look closer at what drives these valuations forward, especially when a lot of it has been fueled so far at least by soaring crypto prices.
Let's get the take of Bradley Tusk, the founder and CEO of Tusk Holdings and he is a venture capitalist, a political strategist and a Coinbase
investor. Wow. I'm surprised I didn't stumble over those titles.
Bradley, great to have you on the show.
BRADLEY TUSK, FOUNDER AND CEO, TUSK HOLDINGS: You've got them all right.
CHATTERLEY: Thank you. Congratulations on another unique and interesting investment. You say this is vindication that crypto is here to stay.
Explain.
TUSK: Yes, I do. I mean, I think that ultimately when crypto first started, you know, everyone first thought, okay, it's this kind of bunch of
weird people investing in this thing called Bitcoin. We don't understand what it's all about. And then over time, it started to gain more
popularity, kind of more credibility. And when you have an IPO going out at $65 billion today with people at least guessing that it will go up to $100
billion pretty soon, there's not much better validation than that.
So the question of, is crypto here to stay, yes, it absolutely is.
CHATTERLEY: But just give me a sense if we are having an honest conversation here about a $100 billion valuation, and I've done my best so
far in the show just to give people a sense of what we're seeing from this company.
I mean, 75 percent of the revenues of the NASDAQ on two percent of the volumes that the NASDAQ is doing. The margins that they're achieving at
this stage as being the front-runner in this market are huge. Competition is surely going to come in.
Bradley, how do we even value a company like this even when we're talking about $100 billion?
TUSK: Yes, Right. So it's a little tricky. Look, let's just be honest, all valuations are some part math, some part pixie dust, and kind of the more
exciting a company is, the more pixie dust gets thrown into the mix and Coinbase at the moment is a really exciting company, so it's a little bit
of both.
Look, as you said, Coinbase has really, really high volume. People are very excited right now about trading Bitcoin and other cryptocurrency and their
cost of running the business are not that high, so as a result, it's a really high margin business. It's really profitable, and you mentioned the
point of other people coming on to compete with them.
There are other exchanges and some of them are very good, but Coinbase has a big head start and all the money they're going to raise today will get
them a lot of capital to keep building that moat.
CHATTERLEY: Do you think this brings in a new base of investors while those that might not want to directly invest in digital assets,
cryptocurrencies themselves, but they do invest in stocks and they go actually, this is the way now I take exposure, we will get exposure to
crypto via stock?
TUSK: Yes. Absolutely. Look, that's why we invested in Coinbase in the first place. We don't buy currency. I'm not a trader, I have no idea at any
given moment if Bitcoin will go up or down, but my sense, you know, much earlier on was Coinbase is a company who by being a platform makes money on
the transactions, no matter what action the price goes in and that to me was logical exposure and something that I felt like merited my fund and my
LP's investment.
So I think that if an individual retail investor reaches the same conclusion, yes, I totally get it.
CHATTERLEY: So part stock, part pixie dust, to quote you. Are you going to remain an investor in this?
[09:25:10]
TUSK: Yes, for a while at least. Interestingly, because this is a direct listing, normally when our portfolio companies go public, we have a six-
month locked up period where we can't sell. So that actually sort of locks in how long we'll be in the company for.
Here, there is no lock-up, so we could sell today if we wanted to. But yes, I think that Coinbase is a really well-run company. I think that there's
going to probably going to be pretty good appreciation from the valuation this morning at $250.00 a share to something higher, so we're hanging on
for the ride.
CHATTERLEY: Is speculation a big risk? We've had Janet Yellen, we've had Jay Powell warning about some of the risks on digital assets which again to
our earlier conversation is different from this, but it remains a risk particularly for the underlying assets, which this is trading on, too.
TUSK: Yes, it's an excellent question, right, because there are two ways to look at crypto and they are kind of both true. You can look at it as an
asset class, in which case the regulatory framework doesn't exist yet, but it's not that complicated to figure out what to do with it, or you look at
it as a currency and that's very, very different, right?
And I think that if crypto is regulated as an asset class, they'll figure out how to do it. I would imagine that at least the E.U. and U.S.
regulations will be relatively consistent with each other and that should be just fine for a company like Coinbase.
If crypto is treated like a currency that people are actually trying to use to buy and sell laptops and coffee and socks, then it gets a lot more
complicated. But, you know, we really haven't seen that much movement of crypto being used by people for everyday purchases.
So as long as it is mainly an asset class, I think we will be fine.
CHATTERLEY: Did you invest because you saw interest in this or did you invest also because you see the power of the underlying blockchain
technology to have transformative impact? Because I think this is one of the other things that those that are skeptical still about this market say
the utility value here is deeply unclear to me.
What did you say to your investors when you said we think this has potential?
TUSK: Yes. There's the obvious great founder of this well-run company, all of the things that you always look for as an early stage venture investor.
CHATTERLEY: Right.
TUSK: But then after that, one, to your point earlier, it was I thought a good way to have exposure to crypto without requiring us to engage in day-
to-day trading that we don't really know anything about. Two, even more so than the blockchain, although we do, do a lot of work on blockchain
generally, because I think we know it reasonably well and believe it in, I also personally believe in the underlying argument for cryptocurrency
overall, which is people have less trust in institutions than they used to, whether it's government, the media, the church, Wall Street, any of these
giant institutions around the world.
If you look at their credibility ratings and look at their approval ratings, they're just much, much lower than they have ever been.
And when there's a vacuum of trust, it needs to go somewhere. And to me, what was kind of beautiful in a way about crypto was people said, look, we
don't necessarily agree with how our government conducts its currency or how our Federal bank regulates it, but we kind of agree with each other and
we'd like to find a community of like-minded people who don't necessarily trust big institutions, but want to be able to interact and do business
with each other and we're going to create this new type of currency called Bitcoin or Ethereum or whatever you want.
To do that, I kind of find that to be very lovely in a way and so, that's not really what has materialized so far. It is not really used as a
currency in that way. But I still think that there is an ideology to it that is really unique and interesting.
CHATTERLEY: There's definitely broken trust in the world, if that's a reason to buy, then we see it.
I hope regulators think about that when they choose how they are going to regulate going forward, too. Bradley, great to have you with us, thank you.
TUSK: Thank you.
CHATTERLEY: Yes. Bradley Tusk, founder and CEO of Tusk Holdings.
TUSK: Thanks, Julia.
CHATTERLEY: All right, more Coinbase after the market open, we will hear from the CFO, don't go away.
(COMMERCIAL BREAK)
[09:31:53]
CHATTERLEY: Welcome back to FIRST MOVE where U.S. stocks have a cautious feel this morning despite a pretty strong start to U.S. earnings season
based on modest expectations though, let's be clear, Goldman Sachs reporting record earnings as trading revenues surged. JPMorgan Chase
releasing more than $5 billion from its loan loss reserve set aside during the height of the pandemic. Wells Fargo releasing more than $1 billion from
its loan reserves, too.
Technology stocks in the meantime pushing higher, led by strength in the big FAANG names. The FAANG index rising for a 12th straight session
yesterday. Its longest winning streak ever. A reminder that the pandemic isn't over yet.
It's a day for the history books though for crypto fans as Coinbase goes public on the NASDAQ. Ahead of the listing, the Chief Financial Officer
told me while crypto is volatile, these are very early days. I started by asking what this moment feels like as Coinbase makes stock market history.
(BEGIN VIDEOTAPE)
ALESIA HAAS, CFO, COINBASE: We are thrilled to be able to introduce crypto to the world. This was a wonderful inflection point not only for Coinbase
but for the industry to provide the transparency into the crypto economy and introduce crypto to hopefully, millions of new users around the world.
CHATTERLEY: Do you see yourselves as that bridge between traditional finance, traditional investment and a brewing excitement and growth, I
think interest in the crypto world?
HAAS: We definitely view ourselves as the on-ramp to the crypto economy and providing education to millions of users with the ability for them to
learn and engage with crypto, whether they're buying, selling and now increasingly spending and earning and receiving and borrowing and lending
and using crypto in new and exciting ways.
So, yes, we do consider ourselves that bridge between fiat and crypto and we're excited for its continued evolution of bringing people into the
crypto economy.
CHATTERLEY: You know, I looked into some of the -- just analysis of potential competition in the space because it's not just about Coinbase,
others are trying to dip their toes into this space and I think as prices rise, more and more competition will come in, and one of the best ways I
saw it described was Coinbase is generating the equivalent of three- quarters of the NASDAQ's trading revenues, which is around $1.5 billion versus $2 billion on just two percent of the volumes.
You have some whopping great margins at this moment. Do you expect to see those depleted as more players enter the space?
HAAS: I think it's really important to understand that trading in crypto is different than trading in a traditional security or traditional bond.
Embedded in our retail fee side is the custody of those assets, and crypto represents very similar attributes to a bear instrument, which is that if
you lose your private key, you lose access to your asset.
And so we're providing cold storage and custody of that asset and we're charging that embedded in our transaction fee. So we don't look at our
trading fees as similar to retail brokerage for securities as the starting point.
Two, we don't believe that it is a commoditized product to be able to buy and sell crypto and the vast number of crypto assets that we provide on our
platform today in the trusted manner that we provide a compliant, regulated and with the security.
[09:35:09]
HAAS: So today, we believe that our fees represent the product that we're selling. Those are transparent fees that we share with our customers. There
is no other embedded or hidden fees. We're not monetizing through any back end mechanisms.
And over the long term, it is very possible that we start to see decompression as we've seen that in all other asset classes over time and
as things become more available through more competition, through more commoditization, I do believe it is typically natural to see decompression,
but we don't believe that's a near term phenomenon.
CHATTERLEY: Just talk to me very briefly about who is using the platform because I think this is important, too, for the growth that we see, whether
it's ordinary retail investors, money managers, corporations.
Just give me a sense of who actually is using the platform.
HAAS: I'm happy to say that that group of users diversifies every single day. So we obviously have a number of retail users in the U.S., Europe, and
we're growing in other international jurisdictions. Those retail users span multiple geographies, multiple age groups, multiple demographics, and on
the institutional side, we've seen over the last year, really a burgeoning of the types of institutions that are engaged in our platform and what used
to be smaller crypto-only hedge funds has expanded into large hedge funds, asset managers, insurance companies, endowments, pensions and increasingly
corporates, which you've seen some of those in the headlines.
But behind that, there are multiple other corporates who are exploring the use of putting crypto on their balance sheets.
CHATTERLEY: Fast forward five years. Where is Coinbase?
HAAS: Coinbase will continue to grow to become hopefully the primary financial account in the crypto economy for millions and millions of users,
whether those are retail users, businesses, institutions that we just spoke about and many more who want to transact and use tools in our ecosystem
partners' portfolio of products.
Now, we're looking to be able to be the way that people learn and engage in all forms of crypto and all types of crypto assets on our platform across
the world.
CHATTERLEY: And to those that say, and I have a quote, and it goes back to our earlier conversation, "Coinbase is the epitome of a meme stock that
trades without regard to the fundamentals." Coinbase's response is?
HAAS: We are a long-term investment. As we shared on our earnings call and we shared in our prospectus, this is a volatile industry. It is also very
early days.
We believe we have a huge long-term growth opportunity ahead of us and we believe that we will be able to grow our users on our platform the assets,
the number of products in our revenues over the long term. However, it could be bumpy in the short term, and so we are looking for investors who
are believing in the growth of the crypto economy and looking for the opportunity to invest in Coinbase and take that journey with us.
CHATTERLEY: So buckle up.
HAAS: Well said.
(END VIDEOTAPE)
CHATTERLEY: Bitcoin surged to a new record high Tuesday, ahead of the today's NASDAQ debut for shares of the cryptocurrency exchange, Coinbase as
you were hearing there.
The digital currency craze is making some people very rich, but it comes with a high cost to the environment. As CNN's Clare Sebastian reports.
(BEGIN VIDEOTAPE)
DREW VOSK, FOUNDER, VOSKCOIN: People are getting rich mining cryptocurrency.
SEBASTIAN (voice over): Drew Vosk is so passionate about Bitcoin, he's let it take over his house.
YouTube and full time crypto miner, he has spent the past few years filling his Virginia home with these mining computers, custom designed to both
unearth new Bitcoins by performing endless mathematical calculations and to support the network by approving transactions.
VOSK: I've exhausted my electric setup in my garage mining farm. My friends and my neighbor next door, I am like, hey, man, I'm going to add
some electricity to your basement.
SEBASTIAN (voice over): Once you pay off your equipment, electricity is the biggest cost. Vosk's monthly bill is about $1,000.00. Right now, with
Bitcoin's price up 700 percent in a year, he says it's worth it.
VOSK: I'm making about $200.00 a day mining cryptocurrency, and it is with hardware that was previously maybe making like say like $50.00, $60.00 a
day.
SEBASTIAN (voice over): Bitcoin has always been energy intensive. You can see the power of the miners at this Russian Bitcoin farm I visited in late
2017.
SEBASTIAN (on camera): It's very noisy in here. Very windy.
SEBASTIAN (voice over): And as the price of Bitcoin has risen exponentially since then, it has become more and more profitable to mine
and that means more energy consumption.
Digiconomist, a website that tracks Bitcoin's energy usage estimates it now uses more than Belgium in a year.
ALEX DE VRIES, FOUNDER, DIGICONOMIST: You have a network that is already consuming half a percent of global electricity consumption. We can expect
that number to double while it's still not capable of serving even the tiniest bit of the world's population. It can only do five transactions per
second.
SEBASTIAN (voice over): Visa's payment network by contrast can handle more than 65,000 transactions per second, a discrepancy noted by Treasury
Secretary Janet Yellen at a recent "New York Times" event.
[09:40:05]
JANET YELLEN, U.S. TREASURY SECRETARY: It's an extremely inefficient way of conducting transactions and the amount of energy that's consumed in
processing those transactions is staggering.
SEBASTIAN (voice over): Research shows that most of that energy is fossil fuels. According to the Cambridge Center for Alternative Finance, this
month, 65 percent of Bitcoin mining is happening in China, dominated by coal.
And yet, as mining companies search the globe for the cheapest power, some are hitting on renewable sources, like the Canadian province of Quebec,
almost entirely powered by hydroelectric dams.
JONATHAN COTE, SPOKESMAN, HYDRO-QUEBEC: There was this kind of a gold rush where we had in 2018, about 300 companies that phoned us or wrote to us
wanting to get power.
SEBASTIAN (voice over): In response, the region's government put a moratorium on new crypto mining projects and introduced a selection
process.
In Virginia, Drew Vosk is also looking to renewables. His goal to eventually run his entire mining operation using his own solar panels.
VOSK: You slap some solar panels on your roof, you can mine for free.
SEBASTIAN (voice over): Decentralized energy for decentralized money, a sustainable solution to Bitcoin's growing energy problem.
Clare Sebastian, CNN, New York.
(END VIDEOTAPE)
CHATTERLEY: Up next, a banner year for Bentley as lockdowns go hand in hand with booming sales. We speak to the CEO. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. It turns out selling very, very expensive cars is a great way to ride out a pandemic. British luxury brand,
Bentley, sold more in 2020 than ever before, thanks in part to strong demand in China and that looks set to continue into this year.
The Bentley auto book overall at the start of 2021, up 50 percent from a year earlier.
Joining us now is Adrian Hallmark, Chairman and CEO of Bentley Motors. Adrian, great to have you on and congratulations to you and your team.
Just talk us through the challenges and what you saw in 2020. China clearly a huge bright spot.
[09:45:10]
ADRIAN HALLMARK, CHAIRMAN AND CEO, BENTLEY MOTORS: Yes, thank you, Julia. Two things really. COVID certainly hit us hard. As you may have picked up,
we were closed for seven weeks, and then finally restarted the company, but could only run at 50 percent capacity so that was a difficulty to say the
least.
Plus, we were getting ready for Brexit, so by the end of the year, we were going to leave the European Union, so we had to make massive plans.
To just give you one simple fact, we went from two days of production parts in stock up to '21 in order to protect ourselves and give us a buffer in
case of shocks to the supply system.
So to achieve a sales record against that backdrop is something that we're very pleased with, to say the least.
CHATTERLEY: I mean, it points to great management, to your point, in terms of wrestling with some of the giant challenges that all companies faced,
including lockdowns and social distancing, Adrian, but I think it also points to the fact and we've talked about this on the show many times is
that for some of the wealthiest in the world, they actually got wealthier throughout last year.
To what extent do you think that also played into the demand that you saw?
HALLMARK: I think the acquisition of Bentley to our customers doesn't really require them to be more wealthy than they already are.
CHATTERLEY: No, it doesn't make sense.
HALLMARK: And they tend to be financially independent. But for sure, there is no question that people had more time on their hands last year.
It was definitely a time of reflection for many people about your priorities in life. We launched the Bacaral which is a 1.5 million pound
pretax car, only 12 of them, and we spoke to each of those customers multiple times during the year by video and they all said the same thing.
The crisis is the crisis, but I can afford this. And post the crisis, I'd rather live my life with a collection of cars with this in it than without
it.
I think that's true for normal cars, too, so that's partly why we've seen this boom. Plus, people may be not traveling so much internationally,
they're not going to restaurants, so there's more disposable income for sure.
CHATTERLEY: Too much time on one's hands, I think perhaps as well, or in a good way. Adrian, what about new customers then? To your point these are
existing clients in many cases, they already own super wealthy cars. The money doesn't really make a difference.
How many new customers did you see this year that have never bought a Bentley before?
HALLMARK: So, last year and as we look into this year, the first quarter, which is again 40 percent up on last year, which is incredible, we did
expect 25 percent approximately. But we've seen even better demand than we thought.
The reasons for that are twofold. Number one, we've refreshed the whole product range. So over the past two years, every one of our four products
is brand new in the marketplace from the ground up and we are now seeing about 45 percent of our sales coming from new customers that we've not met
before.
And the loyalty continues to be as strong as it was, hence we are getting this step-changing performance which we are very, very pleased with.
CHATTERLEY: That's huge. If just under half of the sales that you're making now are new customers, that to your point, points to the innovation
of the company as well and attracting new people. Forty eight percent growth in China. Let's look at that specifically.
What do you see going on in China, and is that kind of growth sustainable?
HALLMARK: I think there are two things and there are some short-term effects. First of all, China as a country didn't close down. Europe as a
region did, every country, every city, whereas in China, it is much more regional.
So you didn't have this immediate shutdown of the economic activity like we did in the U.K., Germany, et cetera.
And the second point is that China, we are very strong with sedans in China. And in the past two years, we've had no new sedans to sell. We only
launched the Flying Spur, the sedan, middle of last year. And so what we're seeing now is the ramp-up of the sedan and that has accounted for a lot of
that China increase.
But having said that, we're still seeing good demand, 30 plus percent order intake, higher than normal, for the rest of the range, too. So it's an
additional product that we've missed for a couple of years plus organic growth across the rest of the range, which is fantastic.
CHATTERLEY: Yes, some catch-up there too, which is a fascinating point as well. Talk to me about electrification. I know, you've said, all new cars
by 2030 will be electric.
You know, when I think of Bentley, I think of super luxury cars, but I also think of your racing heritage and the desire to hear a revving engine and a
combustion engine at that.
Is there a balance to be found? And do you have some customers that go, I like electric, but I want my luxury supercar to growl?
[09:50:01]
HALLMARK: I think the evidence is proving itself out, isn't it? Because if we're seeing this level of demand and this level of record sales and we've
confirmed we're going electric, it means people still want those exotic and high-tech and the lowest emission engines that we've ever built. So I think
it's both, both aspects work together.
So our beyond 100 strategy is bold, but it's because we don't want to lag the competition or the trends in the marketplace. We fully embrace
electrification.
And as well as the racing, which is a small part of Bentley, but very important for this history, the rest of it is about effortless performance,
silent progress. W.O. Bentley's mission was to build the silent 100 miles per hour car in 1930, which he achieved.
Back then, noise was not at the core of our brand, like some of the sports car brands. So, yes, the engines are important and we'll continue to sell
them in nine years as we've planned, plus where possible, maybe a little longer.
You know that the acclimatization of our engines will start in 2023. All models will be hybridized with plug-ins. The first electric car by 2025,
early 2026 and then all cars by 2030. So we have a very progressive transformation program. It is not a step change, it's progressive over the
next five to ten years and we are fully committed. Factories are already carbon neutral. The product range is next.
CHATTERLEY: All in. Adrian, great to chat with you. Thank you for joining us today, Adrian Hallmark there, Chairman and CEO of Bentley Motors.
You're watching FIRST MOVE. More to come.
(COMMERCIAL BREAK)
CHATTERLEY: New Zealand's Prime Minister sees this year's World's Expo in Dubai as a launching pad for countries to connect with international
markets. Many are spending tens of millions of dollars on their Pavilion used to showcase the latest innovation and technology.
(BEGIN VIDEOTAPE)
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR (voice over): From New Zealand's indigenous Maori inspired pavilion to France's light beam
structure, with six months to go, construction work for Expo 2020 is well under way.
More than 190 country pavilions are being finalized and some are being unveiled.
Among the latest is France, a $30 million investment that will showcase French innovation and technology. Other countries are spending similar
amounts, an expensive investment as the world grapples with an economic downturn.
FRANCK RIESTER, FRENCH MINISTER FOR FOREIGN TRADE AND ECONOMIC ATTRACTIVENESS: I think the investment as regard to the results is not so
important because we are sure that this specific period after the COVID-19 crisis, we will have the opportunity to do some networking, to show our
talents, our products, our services, our innovations.
[09:55:06]
DEFTERIOS (voice over): Expo, or world fair, is one of the oldest events in the world. In its heyday, it brought us inventions like the sewing
machine, the wireless telephone and even ketchup.
But is it still relevant today?
RIESTER: Yes, because we have forged this pavilion as a sustainable one and it's for us, a way to show what France is able to do at its best and
it's one of the objectives of the Expo, how all the countries can contribute to this new sustainable and fair world.
DEFTERIOS (voice over): Expo 2020 is a $7 billion bet by Dubai that the event will boost tourism and business interests. It's why New Zealand has
invested more than $40 million in its pavilion.
JACINDA ARDERN, NEW ZEALAND PRIME MINISTER: This in a post-COVID world will be a chance for New Zealand to reconnect with the world. We've done
very well with some of our export markets, but now is a chance to make sure that we are entering new spaces and really lifting our profile.
DEFTERIOS (voice over): More than 25 million visitors were expected to attend Expo 2020, but those numbers potentially in doubt because of the
global pandemic.
Participating countries like the French remain hopeful that there will be plenty of opportunities to drive global business and trade.
John Defterios, CNN, Dubai.
(END VIDEOTAPE)
CHATTERLEY: And that wraps up FIRST MOVE for today.
Stay safe.
"Connect the World" with Becky Anderson is next.
(COMMERCIAL BREAK)
[10:00:00]
END
