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First Move with Julia Chatterley
Tough Words for Beijing as the NATO Summit Gets Under Way; Musk Moves, Bitcoin Surges; Freedom Day Delayed in England. Aired 9-10a ET
Aired June 14, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:09]
PAULA NEWTON, CNN INTERNATIONAL ANCHOR: Live from New York, I'm Paula Newton, in for Julia Chatterley. This is FIRST MOVE. Here is what you need
to know.
Confronting China. Tough words for Beijing as the NATO Summit gets under way.
Musk moves, Bitcoin surges as Tesla offers, yes, it is a crypto U-turn.
And freedom day delayed in England, which is set to announce an extension to lockdown restrictions.
It's Monday. Let's make a move.
And welcome once again to FIRST MOVE. Great to have you with us this Monday as we are live as you can see here from the New York Stock Exchange. Okay,
a busy week ahead for global diplomacy with Russian President Vladimir Putin and U.S. President Biden getting ready for their all-important summit
on Wednesday.
Now, as I was saying, an important week here not just for diplomacy, but for the financial markets as well.
The U.S. Federal Reserve begins its closely watched two-day policy meeting tomorrow. Ahead of all the action, U.S. stocks are like, eh, nah. It's kind
of on track to be incredibly flat. There doesn't seem to be anything moving this market, but the S&P though, a reminder, they are at record highs on
that index and they are coming off their third straight week of gains.
Now, European stocks meantime, beginning the week at records, too. Investors so far shaking off hotter than expected inflationary numbers
pretty much right across the globe.
Now, markets still believing that -- get this -- the Newtonian theory of physics will apply at some point, yes, you all remember, it is what comes
up must go down or in Fed Speak, the recent price hikes are nearly transitory -- that means temporary for you and I.
The Fed likely to stick close to its inflation script at the beginning of this week. Investors, however, will be on the lookout for any sign, any at
all, that the Fed is you know, thinking about -- thinking about cutting back its unprecedented support for the U.S. economy, any so-called taper
talk could in fact rattle the market.
We want to get right to those drivers now. Beijing is firing back after the world's wealthiest nations issued some of the strongest criticism of China
in decades. Beijing accused the G7 of quote, "deliberate slanders" after the group confronted it on human rights, South China Sea and clarifying the
origins of COVID-19.
The G7's tough line on China is likely to be echoed today as world leaders gather in Brussels for the NATO Summit. NATO Chief, Jens Stoltenberg set
the tone as he arrived there this morning.
(BEGIN VIDEO CLIP)
JENS STOLTENBERG, SECRETARY GENERAL, NATO: We also know that China does not share our values. We see how they cracked down on democratic protests
in Hong Kong and also persecute minorities in their own country and use modern technology, social media, facial recognition to monitor and
surveillance their own population the way we've never seen before.
All of this matters for our security; and no country and no continent can manage and deal with this alone. So, therefore, we need to respond together
as an alliance, as NATO.
(END VIDEO CLIP)
NEWTON: The message to China there clear. Ivan Watson joins me now from Hong Kong and Melissa Bell is at NATO headquarters in Brussels.
We go first to you, Ivan, and of course, China firing back as it would very pointed remarks saying look, these comments from the Group of 7 were
slanderous. Okay, so the rhetoric is sharper, but substantively, is China expecting anything different?
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, that is a big question. There's a new American President and China is trying to see how
this unfolds. You know, it is a national holiday here, so Beijing was relatively quiet, the Central Chinese government, but the spokesperson for
the Chinese Embassy in London was busy this weekend putting out statements, taking shots at the G7.
Here is an excerpt from one of them saying, "The days when global decisions were dictated by a small group of countries are long gone." Going on to
criticize the so-called system and order advocated by a handful of countries.
In a subsequent statement, as you mentioned, accusing the G7 in its final communique of slander against China, talking about sinister intentions of a
few countries such as the United States. And then a point by point rebuttal of the criticisms that were put into writing in that G7 final communique
such as a call for China to respect human rights and freedoms not only in its Xinjian region where it is accused of genocidal policies and mass
incarceration of ethnic minorities, but also here in Hong Kong with the removal of democratic freedoms and autonomy enshrined in international
treaties.
[09:05:04]
WATSON: China rejecting a fresh call from the G7 for an investigation of the source of the coronavirus, first detected in the Chinese City of Wuhan
in the end of 2019. And also, you know, there was another kind of contradiction pointed out here that President Biden coming to this Summit,
saying that he wanted to talk tough on China was also bringing to the table an idea of a big infrastructure project that he is calling Build Back
Better the World, trying to help finance infrastructure in poorer countries.
Of course, that's a program that China has done for years under its Belt and Road Initiative. Biden's message was that democracies -- wealthy
democracies -- have to step up their game against autocracies. Take a listen -- Paula.
(BEGIN VIDEO CLIP)
JOE BIDEN (D), PRESIDENT OF THE UNITED STATES: I think we're in a contest, not with China per se, but a context with autocrats, autocratic governments
around the world as to whether or not democracies can compete with them in a rapidly changing 21st Century.
(END VIDEO CLIP)
WATSON: So, I can anticipate on Tuesday, when China goes back to work, some tough statements coming from Chinese government officials. It is
nothing new hearing Washington and Beijing snipe at each other. What's different here is that you have a new American President, who is not going
it alone in a trade war against China. He is getting allies who have deep economic interests with the world's second largest economy, getting them to
agree in writing to challenge China, which is no small feat and something that China hasn't really faced during the past four years of the Trump
administration.
NEWTON: Yes, for sure. And what again will be interesting is whether or not substantively anything will change.
And, Melissa, to you now, we heard the NATO Secretary General, obviously talking about China, but you know, obviously, China doesn't have a seat at
these tables. The person that does have a seat at the table is, of course, the leader of Turkey at NATO, and no doubt that will be really a
substantive issue going forward for NATO in the next few hours.
MELISSA BELL, CNN CORRESPONDENT: That's right, Paula. You just heard the American President there talk about his concern about autocratic regimes.
And of course, that goes to the heart of what is likely to be a fairly fraught and frosty meeting when he has a bilateral meeting later on with
the Turkish President. First of all, because there is tension between Washington and Ankara over the purchase these last few years by Ankara of
Russian missiles, but also because Joe Biden has recognized the Armenian genocide that is an extremely touchy subject for the Turkish President.
There was also another tense meeting with Erdogan this morning, this time with Emmanuel Macron. The two men's relationship had deteriorated recently,
to such an extent, Paula, that they were down to trading verbal abuse with Erdogan describing Macron as potentially mentally unstable. That's how bad
things have gone.
In the end, they had a 45-minute meeting and went on for longer than it should have and touched on all the points that divide them. And let's be
clear, these two NATO allies could not have been more divided on the substantive geopolitical issues in the last few years than they have, and
I'm talking here about Syria, Libya, and the Eastern Mediterranean.
And of course, there's also the very thorny question of the French government and Emmanuel Macron's in particular, his defense of the French
press is right to depict images of the Prophet Muhammad, of course, Erdogan had been incensed by this and called for the Muslim world to stand up
against Emmanuel Macron.
We, here, spent a good deal of time explaining France's position. This is not against Islam, it is against radical Islam and that is France's battle.
It is not what the Muslim world, but it with its extremist elements.
So, those are two important meetings with that Turkish President, the only Muslim leader, of course, within NATO, and a crucial ally, but one that has
been at odds with his allies for a number of years and over a number of issues. But of course, as you say, that question of China dominating.
We've had a chance to have a quick look at the final communique and that wording that we were just hearing about Ivan from at the G7, how is it
going to be here at NATO where a greater proportion of E.U. countries are represented, E.U. countries much softer on China than Joe Biden would wish
them to be because of this important economic ties? Will we see the outline of it in that final communique, should it be adopted is in fact something
that would see Russia as the threat -- and China on the other hand, as a challenge, a sort of wording that will allow both Europeans keen on a
softer approach and Americans determined for a harder one to find some kind of common ground here -- Paula.
NEWTON: Yes, there is certainly a dichotomy there. And I'm glad you pointed it out, it wasn't just with China, but with Russia as well in terms
of what goes on around the table at NATO.
Melissa Bell, good to have you there. Appreciate it, and our thanks to Ivan Watson as well for us from Hong Kong.
Now, the Elon Musk effect moving Bitcoin once again, it surged as much as 12.5 percent Sunday after the Tesla CEO opened the door again on accepting
the cryptocurrency as payment.
[09:10:10]
NEWTON: Clare Sebastian has more on this. Investors, you know, they've got to be getting sick at this point, Clare of this love-hate relationship that
Elon Musk has with Bitcoin?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: You know, Paula, that's an interesting question because he does really seem to move this market. It is
hard to tell how investors actually feel about it. But it's clear that they are glued to his tweets, Bitcoin has just gone over $40,000.00 for the
first time in June.
So clearly, there is an effect here. Clearly, this rally seems to be holding and that is because Elon Musk is seen as sort of the poster child,
and really the catalyst for widespread mainstream adoption of Bitcoin. When he tweeted back in May that Tesla was going to be suspending accepting
payments in Bitcoin for its cars, the price plummeted. It was back at about $56,000.00, and so it's got nowhere near back to those levels, but it is
still holding today.
And it's interesting, because, in actual fact, if you look at what he said, his tweet, we didn't really learn too much that was new. We knew that
Bitcoin had sold 10 percent of their holdings in the first quarter. We knew that the reason was to sort of test the liquidity of the market.
One thing that was new was that we didn't know the threshold for how he was going to determine when they came back into accepting Bitcoin. He said that
that is around 50 percent of clean energy usage. So, that is significant.
And of course, this sort of operates as a confirmation to the market that this was a suspension, not a cancellation, but there's a bigger question in
this, Paula, and that is, how will he actually determine that 50 percent is from clean energy? It's very difficult to audit the energy usage of
Bitcoin.
NEWTON: Yes, and that's been a debate going back and forth, depending on who you speak to, right, in terms of is this really real? Are you
calculating it properly? And how do you calculate it?
SEBASTIAN: Right, exactly. The best estimate that we seem to have at the moment is from the Cambridge Center for Alternative Finance. They say,
according to their survey this year that 39 percent of Bitcoin mining comes from renewable sources.
So that's, you know, sort of not too far off 50 percent, but they say that that's pretty much the same as what they saw when they did the survey back
in 2018. And it is very difficult to know for sure, because you have certain miners who will use both, who will use, you know, for example, in
China, they'll use hydropower and coal.
Now, of course Elon Musk is, you know, trying to find a better way for this as is his way in life. He has signed up to an idea called the Bitcoin
Mining Council, which would sort of encourage more transparency from Bitcoin miners to report their energy usage and help with knowing when he
gets to that threshold, but that is controversial in the Bitcoin community, Paula, because, of course, any kind of sort of authority overarching power
is an antithesis to the decentralized philosophy here.
NEWTON: Yes, still so many interesting points there on a nascent currency.
Clare Sebastian, thanks so much. Really appreciate it.
And these are the stories making headlines around the world. CNN has learned that the U.S. government is assessing reports of a possible leak of
a Chinese nuclear power plant. Now, this after the French company that part owns and operates it warned of quote, "an imminent radiological threat."
CNN's David Culver is live for us in Shanghai right now, and obviously just looking at that quote, how worrying are these developments?
DAVID CULVER, CNN CORRESPONDENT: It sounds terrifying and quite frightening, right, Paula, when you hear imminent radiological threat. Now,
we should put this in context because sources that have spoken to our team in Washington along with those who are U.S. officials based here in China
that I've spoken with, have stressed, yes, this has the potential to be extremely dangerous, very serious, but it also could be resolved rather
quickly and smoothly and be a nonissue going forward.
Here's what we know. That French company that you mentioned that co- operates that nuclear power plant, Taishan Nuclear Power Plant located in Guangdong, that's southern China reached out late last month to the U.S.
Department of Energy. And they did that to request a waiver of assistance, a waiver that is in place, because of the relation between the U.S. and
China. It requires those companies to be issued that type of waiver, so as to have permission to then get the technical knowhow so to speak, to then
move forward with resolving a fix like this.
They put forward that waiver and then they followed up with two more requests, one as recently as late last week, and the requests that was most
recent suggested that this was an imminent radiological threat and they are referring specifically to a leaking fusion gas, which is a byproduct that
naturally comes with nuclear reactors.
The concern is the level of the radiological gas that's being emitted here, and they asked the U.S. for that assistance and they also cited and accused
the Chinese of raising the limit so as to essentially allow the plant to continue operating and potentially go outside of the safety parameters.
Now, we have heard since from the nuclear power plant along with Framatome, the company that co-operates it with the Chinese. They have suggested that
this is all within the safety parameters. They don't specify what exactly those safety parameters are, but they suggest that this is under control,
that it's a performance issue as they've worded it, and that they hope to resolve it quickly.
[09:15:21]
CULVER: They stopped short there. I think the real concern, though, Paula, going forward is the question of transparency, particularly from the
Chinese government. We've reached out to the Foreign Ministry, and you heard Ivan there mention, this is a national holiday weekend. So, we have
not yet gotten a response to our inquiry.
We've also reached out to Guangdong authorities, the province in Southern China that's got this plant and is dealing with this issue and wanted to
hear if they have any response. They have yet to get back to us. But you've got to put this in context as far as what that province is all about.
It's got 126 million people. The town with which this nuclear power plant is located has about a million in of itself. This is about 80 miles from
Hong Kong. So, it's a very congested area, and you've got a lot of folks who could potentially face risk if this were to be elevated to a real
serious issue.
Now, the Biden administration has claimed that this is not at crisis level just yet, that according to sources who have spoken with CNN, however, they
are assessing this and continuing to monitor it. And going forward, we also are curious if they were going to make mass movements of folks who live in
that area, some of the residents.
You might think that if it is an imminent threat, that they try to get people out of there, especially how congested it is. The sources that I've
spoken with who are based here in China, U.S. officials have suggested to me that they have seen no such movement, so no indication that the Chinese
are making any plans to perhaps indicate that this is a greater risk, something that we're watching very closely, and it is obviously something
that's going to be very sensitive on part of the Chinese as they're going to address this, we expect, tomorrow when they are back to business here --
Paula.
NEWTON: Yes, for sure. And as you said, transparency key here and this is really a global concern, not to mention to the millions who are literally
so close to this facility. CNN's David Culver for us live from Shanghai, appreciate it.
Still to come here on FIRST MOVE, liberated for Independence Day, demand for rooms over America's July 4th holiday roaring back says hotel chain,
Hyatt, but the CEO warns the rest of the world is lagging behind.
And repackaging Boxed, the online retailer goes public via SPAC. The CEO on why he is joining the latest listing craze.
(COMMERCIAL BREAK)
[09:20:08]
NEWTON: And welcome back to FIRST MOVE live from the New York Stock Exchange where the major averages are still on track for a pretty flat open
as you can see there, the S&P 500 will struggle to hit fresh all-time highs in early trading. The NASDAQ meantime, I didn't really realize this, it is
just a half percent away from record levels. But when you see those markets, I mean, I'm here, are the markets even going to show up today? My
goodness.
Meantime, shares of biotech firm, Novavax, is rallying more than seven percent premarket. The company says its COVID-19 vaccine is 90 percent
effective in late stage trials, and is highly effective -- this is good news -- against new variants.
Novavax hopes to send its data to the U.S. regulators soon. Its vaccine would be the fourth to be approved by the United States for emergency use
that would be so far right now, in terms of everything that's in the pipeline.
Japan's Prime Minister meantime saying he wants support from all G7 leaders for going ahead with the Tokyo Olympics next month despite concern over a
fourth wave of COVID-19 in that country. Following the Summit, Yoshihide Suga said that, "I feel very encouraged to receive the support and we'll do
whatever it takes to make the Tokyo Games a successful event."
Meantime, the pandemic has magnified Japan's so-called loneliness problem. Blake Essig is live for us in Tokyo with the details.
Blake, this continues to be a problem in Japan, but has obviously become so much more pronounced during this pandemic.
BLAKE ESSIG, CNN INTERNATIONAL CORRESPONDENT: Yes, Paula, it's a really sad situation and Japan is trying to find a solution. Earlier this year,
the government appointed a Minister of Loneliness to tackle the country's mental health crisis assumingly mount, excuse me, monumental task.
Now even before the pandemic hit, Japan had a serious problem with loneliness, social isolation, and suicide. These are issues affecting the
entire population, but in different ways.
(BEGIN VIDEOTAPE)
ESSIG (voice over): For the third time this week, Masatomi Yokoo and his team enter a home to clean. A simple job, but nothing about it is easy.
MASATOMI YOKOO, PRESIDENT, MEMORIES COMPANY (through translator): He probably died here. I don't know the shape because the body fluid has
soaked into the tummy so much. But I think probably here.
ESSIG (voice over): Yoko, President of Memories Company has been in the cleaning business for about 13 years. But recently, he says cleaning up
after lonely deaths, where people die alone and remain undiscovered for long periods of time, has sadly turned into big business.
YOKOO (through translator): We do this kind of work every day. This scene is that we always witness. We can see that his life is getting rough, and
that he is issuing an SOS. This is an ordinary scene for us.
ESSIG (voice over): The 79 year old man who lived here died alone. The cause of death is unknown. Police say his body was found about a month
after he died.
ESSIG (on camera): Walking through this apartment, it is as if time has stood still. There's still food and drinks on the counter, mayo on the
floor and if you take a look around this apartment, there is garbage and clothes scattered everywhere.
It's a heartbreaking scene. It is all too common here in Japan.
ESSIG (voice over): Michiko Ueda is an Associate Professor at Waseda University who studies loneliness. While she says Japan's aging population
is at great risk of isolation, it is actually the young that suffer most. Her research analyzing the public's mental health found 40 percent of the
entire Japanese population feels loneliness. For those under 40, that number is 50 percent.
MICHIKO UEDA, ASSOCIATE PROFESSOR, WASEDA UNIVERSITY: They have high suicidal ideation. They want to kill themselves very often. And then, also,
they feel that they are useless because they have no meaning in life.
So, the psychological effect of loneliness on individuals is very, very high.
ESSIG (voice over): A psychological effect likely impacting more people as a result of the pandemic. In 2020, for the first time in 11 years, the
suicide rate in Japan increased from the previous year and changed.
UEDA: What typically happen is during there is an economic crisis, the middle aged men die by suicide. But now, it's the young women. So,
definitely it is something different that is going on.
ESSIG (voice over): And the numbers show, it is getting worse. According to the National Police Agency, the suicide rate in the month of April
increased more than 19 percent compared to last April. While the pandemic has claimed more than 10,000 lives in Japan during that time, more than
23,000 people have taken their own life.
For Nanako Takayama, those numbers are personal. She experienced loneliness, depression, and contemplated suicide when she was 30 years old
shortly after giving birth to her first child.
NANAKO TAKAYAMA, COUNSELOR, A PLACE FOR YOU (through translator): I wanted to disappear. I didn't know how to handle my feelings and it was too
painful to think about what to do.
[09:25:08]
ESSIG (voice over): About a decade later, Takayama studied Psychology and as a counselor Anata No Ibasho, A Place for You, which is a 24-hour chat
service for those who just need someone to listen. At times, she interacts with four to five people a day. She uses her own struggle with loneliness
to help others.
TAKAYAMA (through translator): I want to say that you are not alone. We seriously want to listen to your story. Voicing your concern is never a bad
thing. It doesn't mean that you're running away from the problem or you're weak.
ESSIG (on camera); Experts say about 30,000 people here in Japan die lonely deaths each year, and when that happens, this is the result.
Cleaners asked to come in to pick up the pieces of a life lost.
YOKOO (through translator): I can't get used to this forever. Time has stopped here. I can feel what kind of life he was having here right away.
Honestly speaking, my heart aches.
(END VIDEOTAPE)
ESSIG (on camera): Tetsushi Sakamoto is Japan's new Minister of Loneliness. He says his first task is to identify those who are isolated,
lonely, and at risk of being cut out from society. Now, Japan isn't the first country to appoint a Minister of Loneliness, the United Kingdom did
so back in 2018, largely focused on loneliness experienced by the elderly. Of course, in Japan, the issue isn't limited to one demographic, and here
Paula, it affects boys, girls, men and women of all ages.
NEWTON: Yes, a sad but important story there, Blake. Thanks for bringing it to us and loneliness, social isolation and suicide as we've been saying
are not issues unique to Japan.
For support right around the world, the International Association for Suicide Prevention keeps a worldwide directory of resources and hotlines.
You can also turn to Befrienders Worldwide, and you can see their web addresses right there for you on your screen.
We will be right back with the opening bell here live from the New York Stock Exchange.
(COMMERCIAL BREAK)
[09:30:05]
NEWTON: Welcome back to FIRST MOVE. The firm, Global Payments, you see them there have opened. They have rang the bell and they've opened here on
what is a bit of a lackluster day. Now, the company has just added -- been added to the Fortune 500 and is celebrating its 20th anniversary as a
public company.
Now, as you can see there, U.S. stocks little change in early trading with tech seeing some early session gains. This one snuck up on me a little bit.
Tech stocks are actually the big winners last week, rising almost two percent.
The NASDAQ now less than half a percent away from all-time highs. Tech getting a boost from the eerily quiet bond markets, and that is also
surprising, I think, 10-year yields are ticking a bit higher today, but still near three-month lows despite last week's hotter than expected
inflation data.
The U.S. releases its latest look on producer prices and retail sales tomorrow.
Meantime, shares of electric vehicle firm, Lordstown Motors are tumbling in early trading on news that its CEO and CFO are now leaving the company.
Lordstown warned last week that it had quote, "substantial doubt about whether it could continue operations." The company's Board is looking into
charges that executives may have misled investors about the preorder demand for its main product, an electric pickup truck that has yet to even begin
production.
The S.E.C. has begun an investigation into the matter.
From the financial woes at Lordstown and the financial outlook to the Fed. Fed policymakers are set to announce their latest economic forecast later
this week. We are keeping an eye, as is Paula Monica, as you see him there on those housing numbers that suggests the U.S. economy may be losing a bit
of strength.
Paul, I am a bit skeptical about this. What say you on this all important week when the Fed begins its two-day meeting tomorrow?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, clearly, Paula, there is going to be a lot of focus. You already mentioned retail sales and PPI coming out
tomorrow. We have May numbers for housing starts also. The Fed is squarely focused right now on two things, making sure that the economic recovery
that has been incredibly robust, you know, surprisingly, so since last March and April, the depths of the COVID recession, they want to keep that
sustained, even if it means inflation picking up a little bit more than some might otherwise like.
And that's going to be I think the key question, to see what the Fed's inflation outlook looks like when they give their latest projections. What
Jerome Powell says about that during the press conference and what he is asked about inflation and how hot the Fed will let it run. Those, I think
are the things that investors are really going to be paying close attention to.
NEWTON: Yes, and in terms of paying close attention when we see these indicators this week, there could be a moment here where the economy does
have to take a pause. Is there a sense of that? Because there are labor shortages? There are material shortages. Do you think the Fed is starting
to see that in their data?
LA MONICA: Yes, I think the Fed is cognizant of -- to use Jerome Powell's favorite word -- some of the transitory impacts that have been lifting
inflation recently. And part of that is obviously wage increases due to those labor shortages that you just mentioned, Paula.
So, the Fed is not going to I think, err on the side of overreacting with a kind of knee jerk to any inflation data that appears to look as if prices
are running amok, because I think the Fed realizes that because some of these short term disruptions to the supply chain and the labor market that
things might settle down over the next couple of months, and you could have a nice steady couple of months of jobs growth where you don't wind up
having very big inflationary pressures and that will justify the Fed keeping rates near zero for a while longer.
NEWTON: What is interesting here is, do you sense that there is debate around that Fed table right now? Because sometimes we have seen that
happen, especially with this issue, which is difficult to get any experts to agree.
LA MONICA: Yes, I think you know, expecting when you see the dot plots in the latest Fed projections, that it will show a bit of a variety with
regards to when some members think that rates need to go up and there are obviously some on the Fed who are more hawkish than Jerome Powell. But even
though the Fed needs to vote on all of these matters, we know that Jerome Powell is clearly steering the Fed ship, and will be doing so at least
until February of next year.
You know, Joe Biden does have to announce fairly soon if you wants to re- nominate Powell for a second term or go with someone else, but I think that even if there are some who dissent on the Fed who think that they need to
start thinking about rate hikes a little bit sooner, the majority of Fed members are probably going to be in Powell's camp.
[09:35:15]
NEWTON: Yes, it would be interesting. That's good for teeing up that renewal of that job for Jay Powell because that is coming up, perhaps, how
he handles this whole inflation thing will play a part in that.
A fresh face, Paul La Monica, does it mean anything, Paul? Anything? Any market direction for you shaving? No?
LA MONICA: No, it has nothing to do with the market. It is all about the temperature and the humidity in New York. I just got tired of it.
NEWTON: All right, all right, all good to know, just checking. All good to know, especially on a day like this when the markets are meandering. Thank
you, Paul La Monica. Appreciate it.
Now, the share price increases are concentrated in sectors most affected by the pandemic, such as hotels, of course. This, as Hyatt Hotels, as bookings
in the United States are back to 2019 levels from this summer. But the company says European travel -- and this is key here -- may not fully
return until September. And Asia, of course, is also behind 2019 levels.
Joining us now is President and CEO of Hyatt Hotels, Mark Hoplamazian, and thank you so much for joining us. How travel has changed. I cannot believe
the year and a half that you must have had. What are you learning now from how things have changed? How was Hyatt responding to, you know, the
changing demands from guests really, and a very changed economy.
MARK HOPLAMAZIAN, PRESIDENT AND CEO, HYATT HOTELS: Paula, thanks for having me this morning.
Yes, we've learned a lot over this past year, and what I will say right away is that many of the predictions that were made earlier in the pandemic
are proving not to be reliable. And I think that's not surprising because trying to predict the future in the middle of crisis is a tough thing to do
and probably not advisable.
What I see is massive pent up demand across the globe, and that is resulting in a lot of domestic -- intra-domestic travel, meaning market by
market around the world, people are traveling within country. Primarily at this point, because traveling internationally is still challenging, the
E.U. just signed into law today, the legislation that will implement vaccine passports that will become effective on July 1st, which should open
up travel in and amongst E.U. countries, and hopefully, eventually to the E.U. from places like the United States.
But I would say some of the key learnings are that corporate customers are looking to get their people back together. They need help in creating a
hybrid platform, so we've focused our attention on launching a new hybrid platform called Together by Hyatt to integrate a digital channel into an
in-person experience.
And on the leisure side, people are desperate to get out and be with friends and family and reconnect. So that drive to human connection has
never been stronger.
NEWTON: When we talk about conventional wisdom, we had heard one thing during the pandemic that look, business travel wasn't going to return for a
long time. This is all about leisure travel. Have you seen that?
HOPLAMAZIAN: Yes. So, I think that was absolutely the narrative, and first of all, leisure travel has returned. We are running well ahead of 2019
levels in our bookings over say that upcoming July 4th holiday in the United States. Our bookings into our resorts are up variously between 30
and even 60 percent, if you go to Mexico and look at the resorts there.
So, the demand is really, really strong for leisure, especially over the holiday periods.
I think the prediction about the decline or death of business travel and large group convenings was very, very greatly exaggerated. So, what we're
seeing is corporations who are keen to get people -- their own people back together. So, among other things that came out over the course of the
pandemic, a lot of companies said, yes, we won't actually spend money on travel with respect to internal meetings, and that's already being
disproven.
So, we've got a lot of corporations coming to us for the end of this year, fourth quarter of this year, trying to put meetings together so that they
can reconvene their own people. And our first two large scale group meetings for corporations are two pharma companies that are launching new
products because, as you know, these new development platforms that have come to light over the past year and a half are going to be highly
productive, and there's going to be a lot of new drug development that's unfolding over time. So, we're seeing that come back.
NEWTON: It is fascinating just that the conventional wisdom as far as you're seeing anyway, in your industry did not hold up on that.
Let's talk about that inflationary pressure. It's the talk of the week, the month, possibly the year, what are you seeing in terms of inflation,
whether it has to do with your supply chains or your staff?
[09:40:03]
HOPLAMAZIAN: Yes, so we're seeing inflation on three different dimensions. The first is construction materials inflation. That's been problematic in
terms of having new developments, new hotel developments begin. I think that's temporal, but it is with us right now, especially things like lumber
which have increased enormously.
We're seeing factor costs inflation in terms of operating a hotel, including wage rate inflation. And we do think that there will be a wage
rate inflation. It is almost impossible that it won't take hold, because we're still having a very hard time finding people to come back into our
hotels.
The final piece of inflation that we're seeing is rate inflation. We're running at rates, I'm talking about average daily rates in our hotels,
especially in our resorts that are well ahead of 2019 levels.
So, over the Memorial Day weekend, these are somewhat -- these are individual examples, and maybe you cannot extrapolate from them, but they
are interesting data points.
Our resorts in the United States ran an average daily rate that was over 30 percent higher than 2019 levels. So, our industry, inflation actually is
usually a positive from a profitability and a flow-through perspective, because while costs are going up, rates are going up as well. We get to re-
price our inventory with them.
NEWTON: Yes, that is so insightful just to know that, just to actually put, you know, put an actual 30 percent marker on that. So, people are
actually seeing that. Clearly, the demand for your resorts was there and the prices reflected that.
Mark, thanks so much for coming in. Really appreciate it. Good insights there for all of us.
HOPLAMAZIAN: My pleasure, Paula. Thank you.
NEWTON: Up next here on FIRST MOVE, unpacking the Boxed listing. We talk to the retailer CEO as the company prepares to go public.
(COMMERCIAL BREAK)
NEWTON: We have breaking market news. Online retailer Boxed is going public. The company announced a SPAC merger listing this morning. The deal
values in it almost $900 million. Boxed may be the wholesale grocer of choice for millennials, but it sells more than just food.
[09:45:07]
NEWTON: Earlier this year, Boxed signed a deal that gives it one of Asia's biggest retailers' use of its software.
Joining me now is Chieh Huang. He is CEO of Boxed and apparently you are joining me from the place it all started. This must be momentous for you to
be sitting, I believe in your parent's garage, as you announce that you are now going public.
CHIEH HUANG, CEO, BOXED: That's correct, Paula. Thanks for having me. So that is, you know, you rewind eight years, this is where we shipped our
first ever package and here I am again today. So, I guess it just shows the trajectory we've been on to the momentous day today, but hopefully that
will continue into the years to come.
NEWTON: Why a SPAC? Why now? And how do you feel about the valuation?
HUANG: Yeah, I think SPAC has a few really great things. For us as a company, you know, it's unique for everyone and everyone's position. But
for us, it was three main things. One was really the quantum of capital that we can provide so -- or that we can raise, so Seven Oaks, the SPAC
that we're merging with has $260 million in trust. We bolster that with $120 million pipe, so that quantum of capital is really much larger than
you would get in a traditional IPO.
I think, two, a lot of folks don't know that we have a really sizable B2B business that got absolutely hammered last year because of COVID. But as we
come out of that, as we are reopening here in America, we can tell that story, as well as that story that you just mentioned about really beginning
to sell our technology overseas, and first to Aeon.
And then third, of course, for us to be able to bring our company public in a very momentous, unique and expedited way, is a third reason. So, all
those reasons really forced us to pick a SPAC over a traditional IPO.
NEWTON: And I know that gave you a lot more flexibility and freedom. And I will get back to the point that your company, what you're trying to model
here is a tech company not just this kind of a wholesale business.
I do want to turn to the wholesale though, in a second. You know, we were just on talking about all the inflationary pressure. What are you seeing
right now? Because I would think in terms of supply chain issues, this is not a great time for people buying in bulk in terms of price pressure, what
is going on?
HUANG: Yes, it's -- well, I would argue that it is the best time to buy in bulk because you're still capturing those savings. But to that point,
you're exactly right, you're seeing price pressures all across the board and supply chain pressures all across the board, nothing new for us.
So during the pandemic, you saw that initial surge of toilet paper, then it moved to different pockets. The pockets are more sporadic these days, but
there still are supply chain challenges up and down the supply chain across all different industries. So, you're starting to see input prices go up for
these manufacturers, and some of it is starting to come downstream for us.
We've always focused on trying to provide value to customers all around America. And so we're going to try to keep those prices low for as long as
possible.
NEWTON: Yes, it's a value proposition, though, that I wonder about going forward, especially in a company like yours. I do want to turn to that B2B
business though. As someone who I'm going to call out my country, Canada, it is pathetic, online shopping. And so when I see a company like yours
doing that, that integral B2B service for retailers, just explain a little bit about why a such a large chain in Japan would have turned to you for
this B2B service.
HUANG: Yes, so when you think about kind of what we do and how we do it, we sell potato chips, then we began to sell advertising to sell the potato
chips. And then now we sell the software that sells the advertising that sells the potato chips. And so that end-to-end infrastructure, that end-to-
end technology is really important, and allows folks like Aeon to really leapfrog their competition with one call. So, it's really white labeling
all the technology we built here, all the software and placing it on top of a very gigantic business.
You know, Aeon is an $80-plus billion company, we're going to start with Malaysia with them first, so hopefully investors out there will see that.
We not only have U.S. kind of tailwinds in the reopening of America, but also we can capture the momentum in Asia and Southeast Asia in particular,
as they get better and exit the COVID crisis.
NEWTON: Okay, I've got to get out of here, but three rapid fire questions. One: do you see a percentage difference between what we think of you as
Boxed and then your B2B? Fifty-fifty? Forty-sixty?
HUANG: Yes, traditionally, 75-25 last year, because B2B had so much headwinds. At 90-10. So you're going to see that recover.
NEWTON: Okay, rapid fire one. One word takeaway from the pandemic. What did you learn?
HUANG: Toilet paper? I wish I had a different one. But toilet paper was it.
NEWTON: I've stumped you. There you go. And last question. What's the one thing that your parents really want you to get out of the goddamn garage?
HUANG: Probably me, so don't come to the garage door. I've got an important meeting, mom. Just don't open that door and she has no idea
what's going on here, so she'll see the clip later and the background will look familiar.
[09:50:10]
NEWTON: I love it because my parents are still nagging me to get the stuff out of the garage, and I am much older than you, I can tell you that.
Thanks so much for playing ball here on FIRST MOVE and we'll wait to see what happens with that all important IPO. Thanks so much.
Now, it was billed as Freedom Day by some of the U.K. media, but now they're saying the official easing of all remaining COVID restrictions in
England is set to be delayed. We will tell you why. Coming up.
(COMMERCIAL BREAK)
NEWTON: The final easing of COVID-19 restrictions appears to be slipping back in England. The government was set to remove all limits on social
contact in a week. The media reports say the Prime Minister is likely to announce a delay in the coming hours. Scott McLean is in Downing Street
now. He has been following all of this for us.
And you know I've been obsessive about watching those numbers of the cases go up and the hospitalizations go up ever so slightly in the U.K. as well.
This is really quite a setback.
SCOTT MCLEAN, CNN CORRESPONDENT: It is, and a lot of countries, Paula, ought to be watching the U.K. to see how they managed to handle this influx
of the delta variant, the one that was first discovered in India, especially the United States where that variant is showing up in about 10
percent of all new cases.
Here in the U.K., one week from today was supposed to be Britain's Freedom Day where all of the remaining COVID restrictions were set to be lifted.
This would allow things like sporting venues at full capacity, theaters at full capacity, and nightclubs to finally reopen after well over a year of
being closed.
Now, the British press is reporting that that's all set to be delayed by about four weeks to give the government a little bit more time to figure
out what's what and maybe to get a few more vaccines in people's arms. And it's all because of this delta variant.
And I want to show you an animation that really shows just how quickly this variant has spread across the country. On that map you see there, the
darker the color, the higher the proportion of the Delta variant. It spreads according to the British government, 64 percent faster than the
previously dominant strain, the U.K. variant or the alpha variant. And right now, it is showing up in more than 90 percent of all new cases.
The government has even called in the Army to help with door to door testing, but those efforts to really contain this variant seem to have
failed so far. And so the U.K., in order to prevent, you know, the healthcare system from being overwhelmed and from deaths from getting out
of control is really down to their last line of defense, which of course is the vaccination program.
Most adults in this country have had two doses of the vaccine. But we know from British scientists that one dose isn't going to do you that much good.
That's because this strain of the virus, the vaccine isn't quite as effective. So, if you've only got one shot against the alpha variant,
Paula, you'd expect it to about to be about 50 percent effective.
[09:55:09]
MCLEAN: With this delta variant, it is only about 33 percent. There is also a slight drop-off even for people who are fully vaccinated from 88
down to 81, so this four-week delays seems to buy the government a little bit more time to get some older people a second shot and to get some
younger people who right now, by the way, most of them don't have any immunity at all, at least some level of protection -- Paula.
NEWTON: Yes, that is the issue, right, this variant, the delta variant and the fact that you need more protection that you needed from the other
variants. Scott McLean, you'll be watching it all in the coming hours. Thank you very much.
And finally for us, it was a hot and spicy end to this year's Westminster Kennel Club Dog Show. Meet Wasabi, the Pekingese. Oh so cute.
This year's Best in Show, the 3-year-old pooch took home awards on Sunday for Best in Breed and Best in the Toy Dog Group. This year's competition
was held outside for the first time in more than 100 years because of the pandemic, of course.
Wasabi's breeder promised to give the pup of filet mignon -- can you believe it -- but not sushi in order to celebrate the win.
That is it for us today on FIRST MOVE. "Connect the World" with Becky Anderson is next.
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[10:00:00]
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