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First Move with Julia Chatterley
The U.S. Senate Moves Closer to a $1 Trillion Plus Infrastructure Deal; Angela Merkel Says COVID-19 Delta Variant Puts Europe on Thin Ice; Suez Canal Clears, the Ship and Cargo still Stranded. Aired 9-10a ET
Aired June 24, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:13]
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.
Infrastructure imminent. The U.S. Senate moves closer to a $1 trillion plus deal.
Delta danger. Angela Merkel says the variant puts Europe on quote, "thin ice."
And stuck in the Suez. The canal clears, the ship and cargo still stranded.
It's Thursday. Let's make a move.
A warm welcome once again to FIRST MOVE on a Thursday full of cheers with stocks at record, fears as warnings about the delta variant grow louder,
and tears. Hong Kong's "Apple Daily" is no more. We've got all the latest on these top stories coming right up.
For now though, we are green on the screen. Investors encouraged, I think, by apparent progress over an infrastructure spending deal in D.C., big
enough to create jobs, not so large, though it would require tax rises or big borrowing in the bond market. Perhaps, we'll get the latest on all
those negotiations from Washington, too.
All this though, amid new data showing growth in U.S. manufacturing at its highest pace on record this month, with businesses warning of widening
parts shortages forcing prices higher, too. The big question, of course, and we've been asking it is whether the Federal Reserve will be forced to
act late and faster than it imagined to tame inflation and destabilize the recovery in the protest process.
We'll discuss with Mohamed El-Erian of Allianz coming up shortly, but for now, the broader global picture, too.
Strong gains in Europe. The Bank of England today also debating the timing of stimulus withdrawal, but holding steady for now. Cautious trading in
Asia, too, as investors eye a solar flare up in U.S.-China relations, the White House blacklisting five Chinese solar power firms due to alleged
human rights abuses in China's Xinjiang region.
Let's get to the drivers. A bipartisan breakthrough on the infrastructure talks. President Biden is expected to meet with senators today after an
apparent agreement with White House officials. The total cost $1.2 trillion over eight years, around half of that in new spending.
John Harwood joins us now with the latest.
John, great to have you with us. A lot less, I think than what some of the Democrats were hoping several months ago in terms of infrastructure
spending. But this of course, a bipartisan agreement would be far better than the Democrats surely trying to go it alone. How close are we in
practice?
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: I think we're pretty close, Julia. And I think this is a highly significant breakthrough, not just on
its own terms, but for what it unlocks later.
The White House calculates that the agreement that they've proposed provides just under two-thirds of what President Biden proposed for
physical infrastructure.
In a negotiation with Republicans, that means the President ended up getting more than half of what he wanted, but it also means that you can go
through the Democrats only process for the other elements of his plan, the human infrastructure, the educational benefits, the childcare benefits, the
tax credits, the subsidies for Obamacare. You won't get all of those either in that plan, but you could get a significant amount of them.
So, this is a very big breakthrough for the administration. It is what President Biden had been hoping for all year. The reason you need the
bipartisan deal is you have some moderate Democrats who insist on that step, and now that they appear to have gotten that step; that suggests that
the moderates are going to likely support the larger package that comes later.
So, it's a two-step process. This is the first one.
CHATTERLEY: What about potential timing on this, John? I mean, they have to draft the bill. We're going on a two-week recess now, in terms of the
Senate. I have spoken to people behind the scenes that say look, every day allows resistance to build on this, and still questions being asked or not
whether or not they'll have the votes. You think it's pretty close?
HARWOOD: I think it is close. Look, the history of Congress shows that things can fall apart at any time. There's no question about that. Very
difficult to get that last mile to the finish line.
However, they have laid out a tentative roadmap for trying to enact this bipartisan deal in the summer before you get to the August recess;
simultaneously laying the groundwork for that Democrats only package that would pass in the fall. You need to take some budgetary steps this summer
in tandem with the bipartisan field to get there.
So, it's ambitious. It's difficult. Things can fall apart in Congress. But they do have a tentative roadmap for action in two steps. Some this summer,
in July; some in the fall once they come back from the August recess.
[09:05:27]
CHATTERLEY: Yes. And to your point, it would mark an incredibly successful left first year, I think for the Biden administration, if they can get this
done. John Harwood, great to have you with us, as always. Thank you.
HARWOOD: You bet.
CHATTERLEY: "On thin ice," a warning from Germany's Chancellor Angela Merkel as Europe faces rising cases of the new delta variant. She wants
greater restrictions on travelers from nations where the variant is widespread, such as the U.K. Meanwhile, Britain is expected to greenlight
more countries for travel.
Cyril Vanier joins us now on all of this. Now, Germany has been long pushing for greater coordination among European nations regarding nations
traveling from places where the variant is prevalent. The question is, does she ultimately get it? But Cyril for now, what's the U.K. going to do in
terms of their announcement today over perhaps greenlighting more travel?
CYRIL VANIER, CNN CORRESPONDENT: Well, Julia, we are expecting an announcement this afternoon and we are expecting the British government to
ease their travel restrictions. You know, they review the list of countries that Britons can travel to without having to quarantine upon their return.
They review that list every three weeks.
The world for us, U.K. residents here is really divided into three colors - - green, amber, and red. Green are the ones you can travel to quarantine free; amber, you have to quarantine upon your return; red, you have to not
only quarantine, but actually pay for that quarantine to happen in a government hotel. So, really nobody goes to the red countries if they can
help it.
There are very few options on that green list for the moment. I mean, yes, there is Australia, New Zealand. A couple other countries, Israel as well,
but the popular Mediterranean countries that Britons like to holiday in over the summer, most of them, in fact all of them are not on that green
list. Portugal was for a hot second, and then it was removed.
So, it is expected today that the green list could be expanded. We don't know what countries although there has been speculation in the U.K. media
that perhaps Malta could be added to the list, as well as some Caribbean Islands and the Balearic Islands. That's interesting, because that includes
Ibiza, which is a popular tourist destination for Britain.
It is also interesting, Julia, the Prime Minister Boris Johnson hinting this morning, the real change could come not so much from what countries on
what list, but from the rules for the rules that apply to fully vaccinated U.K. travelers of whom, there are -- sorry, let me rephrase that -- 60
percent of U.K. adults have now been fully vaccinated, so that is a significant chunk of U.K. travelers.
It is possible --again, it's only speculation at this point, but there have been hints -- it is possible those people will be able to travel to amber
list countries that includes France, Italy, Greece, Spain, all those countries they like to go to during the summer and not have to quarantine
upon their return -- Julia.
CHATTERLEY: Yes, this would be a huge breakthrough. Because there are other nations around the world that are saying, look, we have to relax some
of these quarantine arrangements and guidelines for people that have been fully vaccinated. Otherwise, we're never going to get to some semblance of
normality.
What about the push from Germany, though, to the point that I was making earlier about the need perhaps to have greater coordination across European
nations for countries that have got a high prevalence of variants like the delta variant? Is there going to be greater coordination or individual
nations are going to continue to go it alone?
VANIER: It's a great question, because it takes two to tango, doesn't it, Julia?
CHATTERLEY: Yes.
VANIER: And even as the U.K. travelers may see easing of -- unilateral easing of travel restrictions on their end, if the countries they want to
go to are imposing a quarantine, then that may actually not change that much to their traveling fortunes.
So, you're right, in Europe, already a number of countries are imposing strict quarantines on U.K. travelers that includes Germany, it includes
Italy, the quarantine can be anywhere from five to 14 days, depending on the country. And Angela Merkel wants other European countries to do the
same.
There is -- she is going to spend her afternoon trying to convince European leaders that they need that coordinated, strict approach. But there's one
big, big difference between her position and that of say, France, Italy, Greece, Germany, which is that those are the countries British travelers
want to go to, right?
So, Angela Merkel and her economy are not missing out on all that much if they say that they're quarantining U.K. travelers, but those Mediterranean
countries have a lot more to lose, so they might not be fully receptive to Angela Merkel's argument.
CHATTERLEY: Yes, the tourism sensitive nations bound to be exactly that and the ruling over those that have been vaccinated I think is going to be
the key thing to watch today. Cyril, great to chat with you.
Cyril Vanier, thank you again for that.
All right to East Asia now where Taiwan faces a growing military intimidation from China. In an exclusive interview with CNN, Taiwan's
Foreign Minister says the island needs to prepare itself for possible conflict with Beijing.
[09:10:10]
(BEGIN VIDEOTAPE)
JOSEPH WU, TAIWAN'S FOREIGN MINISTER: Taiwan has some very good capability in dealing with cyberattacks, and that is because of our long experience
dealing with the cyber activities initiated by the Chinese side toward Taiwan.
They use cyber warfare. They use cognitive warfare, disinformation campaign, and military intimidation to create a lot of anxiety among the
Taiwanese people.
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Why is Beijing doing this now? Why are they stepping things up now?
J. WU: They might have a territorial ambition over Taiwan for sure, because they've been talking about that. But I think they are also trying
to expand their sphere of influence over the East China Sea, over the South China Sea, or beyond the first island chain into the White Pacific. So,
this is not just Taiwan's problem, and we certainly hope that the international community will continue to look at the peace and stability in
this region with attention and continue to support Taiwan.
RIPLEY: How much do the actions of the United States and Western democracies lead to those measures, the intimidation by China?
J. WU: If you look at the Chinese long planned military actions in Taiwan, it has started before the G7 meeting, it has started before the Senate is
arriving in Taiwan by a C-17. But sometimes the Chinese would like to use excuses.
RIPLEY: Do you believe that China has the intent of unification by force or preventing separation by force?
J. WU: I think the Chinese are trying to unify Taiwan through peaceful means, if possible, but they want to use force, if necessary. So, we need
to prepare ourselves for a possible conflict.
RIPLEY: What is the likelihood in your view of an all-out military confrontation between Beijing and Taipei?
J. WU: we hope it doesn't happen. A war between Taiwan and China is in nobody's interest. The important thing is that Taiwan is a democracy, and
Taiwan is the highest symbol of democracy at the time when China is trying to expand its authoritarian influence. Taiwan is on the frontline.
RIPLEY: You have also been a target of the Mainland government. They have accused you have being separatist and threatened to take whatever legal
actions they can if they get their hands on you. What is that like to be a target of the Mainland government?
J. WU: I would continue to say what is right, and I will continue to advocate what is good for the people here in Taiwan. What I say is only the
truth, they cannot tolerate truth. And if they continue to say that they want to pursue me for the rest of my life, I don't really -- I'm not really
concerned about that. So, for that, I think it's an honor to be targeted by the Chinese government.
(END VIDEOTAPE)
CHATTERLEY: Okay, let's move on. An investigation is underway into the death of a controversial antivirus software pioneer, John McAfee. He was
found in a prison near Barcelona, Wednesday. It follows a Spanish court ruling that paved the way for his extradition to the United States on tax
evasion charges.
Al Goodman joins us now from Madrid. Al, great to have you with us. He was a colorful character in life. What more do we know about his death?
AL GOODMAN, CNN MADRID CORRESPONDENT: Hi, Julia. Well, his death on Wednesday evening, local time in Barcelona came about 24 hours after the
court notified lawyers for both sides in the extradition hearing that the judges had ruled for extradition.
Medical personnel rushed and tried to save him, they could not. According to officials, he did have a cellmate, but the cellmate was not in the cell
at the time of his death, a prison official told CNN and that official adding that the official was not aware that there were any sort of special
monitoring measures on him.
Now clearly, he had been arrested in October at the Barcelona Airport last October. The extradition hearing was earlier this month. The United States
attorneys argue that he had made millions of dollars in recent years and not pay taxes by promoting cryptocurrencies consulting, even selling his
life story for a documentary.
McAfee testified virtually by video from the jail with the judges here in Madrid, according to the Associated Press and said this was all politically
motivated, but the judges did rule, Julia, that he could be returned to the United States to face charges of alleged tax fraud for the years 2016,
2017, and 2018 -- Julia.
CHATTERLEY: I mean, the circumstances surrounding this man are quite fascinating. You mentioned the documentary about his life. It was on
Showtime, "Gringo: The Dangerous Life of John McAfee." The final two decades of his life were just quite frankly bizarre. He was living in
Belize. He disappeared.
Police tried to question him on the death of his neighbor. He denied any involvement. Then he was living in Guatemala, I mean, for someone who was
such a pioneer and a powerhouse, I think, in terms of internet software security, particularly in light of what we're seeing today, particularly
the last two decades, just, quite frankly, mind boggling.
[09:15:16]
GOODMAN: It is just incredible, but you have to go all the way back to 1987, which is when he founded the company that would come McAfee in a
garage in California, a legendary type tale. But he was out of it by about eight years later, and so then he had a fortune. It was up and down and up
and down.
He ran for President in 2016 as a libertarian. He said that he had a new security product to introduce to save the internet that he said would be a
game changer. But clearly after this is all said and done, the company that he founded, the antivirus company, McAfee is still one of the very most
widely used in the world -- Julia.
CHATTERLEY: Yes, what a tale of highs and lows, and then a very sorry end. Al Goodman in Madrid. Thank you for reporting on that story.
Okay, let me bring you up to speed with some of the other stories making headlines around the world. A massive search and rescue operation has been
underway this morning in a beachside community in Florida, after a residential building partially collapsed. It happened in Surfside about
seven miles north of Miami Beach.
The mayor of the city confirmed to CNN that at least one person has lost their life and there are fears that many more may be trapped beneath the
rubble.
Pop star Britney Spears has asked a judge to end a legal order that allows her father to manage her life. She called the conservatorship abuse and
said she has been compelled to work and use medication against her will.
She also told the Judge, she is quote, "traumatized" and just wants her life back.
Buckingham Palace has admitted it must do more to increase diversity among its staff. In an annual financial reports, The Palace revealed that only
eight percent of its employees are from ethnic minorities. The Royals have been criticized for the way they deal with race ever since the Duke and
Duchess of Sussex accused an unidentified member of the family of making a racist comment.
Okay, still to come here on first move, Hong Kong's national security law kills off its biggest pro-democracy paper. What lessons can Hong Kong's
businesses draw?
And investors greenlight crypto exchange, Amber. The CEO and its fresh and billion dollar valuation and doing business in China's shadow. All that
coming up. Stay with us.
(COMMERCIAL BREAK)
[09:20:15]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks are set to rise to fresh records in early trade after the NASDAQ chalked up its 16th record
close of the year yesterday. Investors are also applauding progress perhaps on a new U.S. infrastructure bill and numbers showing a record growth rate
in U.S. factory activity this month.
The Atlanta Fed now predicting more than 10 percent GDP growth annualized in the current quarter. Atlanta Fed President, Raphael Bostic joining St.
Louis Fed President, James Bullard in calling for rate hikes to begin next year rather than in 2023.
Joining us now is Mohamed El-Erian, the Chief Economic Adviser at Allianz. Mohamed, fantastic to have you on the show. As always, I could ask you lots
of hypothetical questions about the rate hike timing in 2022 or 2023, or when tapering of bond purchases should or would begin, but is the message
for stock market investors today sort of keep calm and carry on, ride the wave?
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: It is absolutely that, and thank you for having me, Julia.
I think investors have got confirmation of three things that results in this very comfortable situation. One is that growth remains strong,
especially in Europe, and we saw this from the Bank of England. Two, is that the belief amongst Central Banks is that inflation will be transitory,
meaning it will not persist. And finally, that Central Banks will remain incredibly supportive.
So, as long as investors believe in these three things as they do today, markets will go higher.
CHATTERLEY: Angela Merkel also warning about the risks that the delta variant presents, even as we see, whether in Europe or elsewhere an
accelerating pace of the proportion of people who haven't been vaccinated or doubly vaccinated. Is that just another reason to keep Central Banks
providing the liquidity and on the back foot as far as reducing support is concerned?
EL-ERIAN: It is certainly worrisome, and I'm in the U.K., and we've seen a significant increase in cases based on the delta. The delta now dominates
completely. But wonderfully so far, it hasn't translated into worries in hospitalizations and deaths.
CHATTERLEY: Right.
EL-ERIAN: And if this stays as is, then the economic impact will be limited, and it's not a reason for Central Banks not to start tightening
monetary policy.
CHATTERLEY: I mean, if I look at the anecdotal evidence and bring it back here to the United States, from the real world, we've got -- what -- a two-
decade high quit rate, people leaving their jobs, eight million job openings that companies are struggling to fill. Airlines canceling flights
despite mass reopenings because they simply can't find the staff in certain cases; bonus incentives.
The real world pricing pressures are accelerating, and they are significant.
EL-ERIAN: Oh, yes. And it used to be eight million record openings. Now, it's nine million record openings. We are seeing it across the board.
I certainly scratched my head, I don't understand where this confidence comes from that inflation will be transitory. I would prefer central
bankers to have a more open mind. But they are absolutely convinced, but like you, when I look at the data, the on the ground data and when I talk
to people, there isn't that much transitory in some of the stuff -- workers earnings. What we're seeing in supply chain, what we're seeing in inventory
management, transportation, I could go on and on.
And the case you argued about American Airline is fascinating, because American Airline is facing supply disruption, so what did they do? They
reduce supply even more, which means that the inflationary pressure is stronger.
CHATTERLEY: Yes, I mean, that, for me was one of the sort of most eye opening pieces of news that we've had in in recent weeks. As a result of
what I think you and I agree on here in terms of what we're seeing from the real world, are there asset classes, perhaps that you wouldn't touch
because you can sense trouble brewing.
EL-ERIAN: So, I do think that you're starting to see not just excessive risk taking, but irresponsible risk taking right. Having said that, you
summarized the situation really well at the beginning of the interview when you said the right thing right now is to tactically ride the wave.
If there is this massive liquidity wave going on and investors are confident it will persist, then you will reluctantly participate. There is
this notion that Leon Cooperman, a hedge fund manager said, "I am a fully invested bear." So, he is bearish and he is fully invested for now.
[09:25:03]
CHATTERLEY: You know, we had a CEO on the show yesterday from StockX and we were talking about investing in sneakers or trainers in my world, in a
piece of a trader, and he was saying the performance of these as assets are outperforming things like stocks. And, you know, I was very interested. And
then I sort of thought about it afterwards. And I was like, to your point about excessive risk taking, and where are we in terms of risk appetite,
and the things that we're seeing currently in this market. That sort of feels peaky to me, or maybe I'm out of date.
EL-ERIAN: You know, and the other thing that is sucking in more and more people. So, my older daughter showed me a website where you can follow a
particular sneaker, it trades, there is a bit of offer spread, you can see it over time.
CHATTERLEY: This is that.
EL-ERIAN: We've seen this with the meme stocks. It is amazing.
Now, the good news, some will argue that we are widening market participation. That's a good thing. But the whole issues of suitability,
there's a lot of margin that is being encouraged in certain markets. We've seen already three near accidents this year, and we were lucky that there
were just near accidents.
So, you know, when we look back on this period, I would be very surprised if we don't wonder how it is that the system ended up taking so much risk.
CHATTERLEY: Yes. I want to get your view on China, because I think you understand better than anybody the challenges that China is faced with in
the past with financial market liberalization with concerns over excess risk taking and the decisions that they make to try and balance that and
contain that.
Is that what you see going on with the measures that they're taking with things like Bitcoin mining and controlling what they're seeing in terms of
crypto? I know they are establishing their own Central Bank digital coin, but what do you see in both the actions that they're taking, and also the
response more broadly, for investors in things like digital assets?
EL-ERIAN: So, I think they are reacting for two reasons. One, is common to other countries, other governments; the other one is very specific.
The one common to other countries is this notion that you could have a private sector currency and that currency can allow all sorts of payments
that you're worried about. And in addition, it can cause financial volatility. So, that's one concern
But China has another concern, which is they want to create space for a Central Bank digital currency. So, they don't want to compete with a
private sector supply digital currency. The broader issue, once you go beyond China, is that this tug of war, Julia, between on the one hand
governments being resistant, they don't want Bitcoin to become a global currency for all sorts of reasons.
And on the other hand, private sector adoption, and we see this incredible daily and weekly volatility depending on which side of this tug of war is
winning.
So, whenever you hear Elon Musk saying Tesla will now accept payments, suddenly adoption goes up. And then when he had second thoughts, the
adoption thesis comes down. Similarly, when you see with government, so it's going to continue being incredibly volatile.
CHATTERLEY: Yes, if you're trading the volatility on this, then you're making money either way, but most people aren't for better or for worse.
Based on the institutional interests that you and I have talked about in the past, is this still a reason here to have a small chunk, whether it's
one percent or two percent of our portfolio in an alternative asset like this, despite everything that we've seen in recent weeks?
EL-ERIAN: I think so. Small is important as part of a bigger allocation to nontraditional assets. And let me explain why. One of the things that
professional investors are struggling with is both the risk taking side, return generation and the risk mitigation side protection are stretched.
They are both stretched.
So, when you can no longer rely on the negative correlation between things that are supposed to provide you the benefits of diversification, you look
for something else. And what we've seen is sophisticated investors saying, I will create a basket out here -- gold, crypto, nontraditional assets --
that allows me some lower correlation with what are very stretched traditional asset classes. And that's why it is creeping into asset
allocations on such a consistent basis.
CHATTERLEY: Yes, a brilliant explanation of how traditionally you go about building a portfolio that protects you in crazy times. Perhaps not this
crazy, but then, here we are.
I always love our conversation because I never know where we're going to go. We never anticipated talking about sneakers and then trainers, and
hello to your daughter, Mohamed. Great to hear that she is educating you as well as vice versa.
Mohamed El-Erian, the Chief Economic Adviser at Allianz. Great to see you, sir. As always.
EL-ERIAN: Thank you, Julia.
CHATTERLEY: The market opens next. We're back after this.
(COMMERCIAL BREAK)
[09:33:24]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stock markets are open for business this Thursday. The bulls, well and truly on the loose on Wall
Street with the Dow and the NASDAQ hitting fresh record highs there as you can see.
Tesla, a big tech gainer in early trade, too, building on a strong five percent rally yesterday. Its shares up more than eight percent so far this
month. Reflation, recovery stocks also rallying, too. Banks, as you can see there are higher across the board as we await the latest round of the
Federal Reserve's stress test results after the closing bell today.
Solid results could lead to higher dividends and a new round of stock repurchases, too.
Amazon, also in focus in early trade. Higher by some three-tenths of one percent. New numbers showed strong sales during its annual Prime Day
extravaganza. Adobe Digital reporting that total U.S. online sales rose more than six percent on Monday and Tuesday compared to this time last
year, but challenges also lurk at Amazon, too.
The Teamsters Union voting today on a resolution that would jumpstart efforts to unionize Amazon warehouse workers and drivers in the United
States.
Now, it's the end of an era in Hong Kong where the last edition of the region's largest and loudest pro-democracy newspaper has hit the shelves.
"Apple Daily" is shutting down after 26 years of victim of Hong Kong's strict new national security law in the past year. The people's offices
have been raided twice, its founders and editors arrested and its assets have been frozen.
Many say that people's demise is yet another sign that Hong Kong's freedoms are at risk as China tightens its grip.
[09:35:14]
CHATTERLEY: Joining us now is Tara Joseph, President of the American Chamber of Commerce in Hong Kong. Tara, great to see you and to have you on
the show as always.
TARA JOSEPH, PRESIDENT, AMERICAN CHAMBER OF COMMERCE IN HONG KONG: Thank you.
CHATTERLEY: You've described this as a sad day for Hong Kong. You also said it's a wake-up call, a wake-up call for what?
JOSEPH: Well, from a pure business perspective, well, today is the end of an era and a very visible sign. The business community has been wrestling
and watching changes taking place in Hong Kong for a while now. We have our feet firmly in the new normal and the question for us is risk versus
reward.
There's a lot of reward to be had by living and working in Hong Kong. The question is, is the risk rising? And that's what we're really watching with
issues like "Apple Daily" and other visible signs of change.
CHATTERLEY: I mean, the risks are clearly rising. Some would say stratospherically here, in this case, people were arrested, the assets of
this business were frozen. It closed down, ultimately, because it couldn't afford to continue going.
Tara, for any business that operates in this environment now, where you're looking at a situation where the media is arguably no longer free at all,
how do you operate? How do you choose to operate and weigh up the risk rewards in this kind of environment?
JOSEPH: Well, here's the question. If you come from the media sector, obviously, this is something that's very, very difficult to swallow. If
you're from academia, if you're an independent researcher, the question is, can you have a major financial center like a London or a New York or the
old Hong Kong, and still do that without free flow of information and data? And this is something where the jury is still out.
But for other sectors that are very large in Hong Kong -- financial services, real estate, logistics and other service industries around that,
there is still a lot of opportunity to be had in Hong Kong. China wants to make sure that Hong Kong is an excellent financial services hub. So, a lot
of businesses are looking around and saying yes, there is risk. But is it worth the reward? And from what we're seeing, there are a lot of people
sticking it through. They are going to wait and watch to see how different the new normal is, and how much risk can actually continue to rise.
CHATTERLEY: Yes, Tara, what are they telling you all their red lines, businesses, whether it's --
JOSEPH: Well, that's the situation. Yes, I mean, red lines, which are really -- let me try to explain what red lines are. It is where you can no
longer feel comfortable existing in the new normal or in Hong Kong China, so to speak.
I think real important considerations beyond the national security law are free flow of information, the internet is open here. Can that continue? And
will it continue to exist? And importantly, very importantly, is rule of law. Commercial contracts are so crucial to what makes Hong Kong a very
important place to do business.
So, is rule of law really intact? Or are we starting to see chips around the edges? Will the internet be patrolled in a different way than it has
been? Right now, people here feel relatively comfortable going on to Google, writing and posting whatever they want, going to court, building up
contracts. But if that also shows signs of change, then that could add to the issues that again start to pile on the risk.
CHATTERLEY: Very quickly, Tara, because I have about 30 seconds. I speak to business leaders who say they operate their businesses there on the
assumption that they would operate a business if they were in Beijing. Do you hear the same that?
JOSEPH: I think that sounds very fair. And again, remember many of us who are based here and live here have been based in China, understand doing
business in China. And it is a reset to remember that when you're operating in Hong Kong, well, we do have one country two systems. It now feels much
closer to operating in China.
CHATTERLEY: Yes. And I think that's the key. Tara Joseph, great to have you with us. Thank you. The President of the American Chamber of Commerce
there in Hong Kong, thank you.
Okay, still to come here on FIRST MOVE, thriving on crypto volatility. This Hong Kong based startup does well when others fret over price swings. The
CEO of Amber Group, next.
(COMMERCIAL BREAK)
[09:42:30]
CHATTERLEY: Welcome back to FIRST MOVE. The price of Bitcoin may be relatively stable today, but it's been anything but in recent days. It's
trading higher at around $34,000.00 after dropping below $30,000.00 earlier in the week. That kind of volatility has been profitable to a Hong Kong
based startup, Amber Group.
It's a cryptocurrency trading firm that serves more than 500 institutional clients, but last year launched an app to cater to retail investors, too. A
new round of funding earlier this week put its valuation at $1 billion.
Michael Wu is the CEO of Amber Group, and joins us now from Hong Kong. Michael, fantastic to have you on the show, and congratulations on the
funding round. I've had a look at the mobile app, you'll be pleased to know, I didn't accidentally buy anything, but just give us a sense more
broadly of what you offer your clients and customers.
MICHAEL WU, CEO, AMBER GROUP: Thank you, Julia. Thank you for having me here. Amber Group is an integrated crypto finance platform. So, you can
understand us, the platform, you can go there and have one stop crypto financial services.
You can buy and sell crypto here. You can park your cryptos and stable coins here with stable yields. You can restructure products, you can do
borrow and lending. You can do payments, pretty much everything under the sun in terms of crypto finance, you'll find it was Amber Group.
CHATTERLEY: So, I read that about 70 percent of your revenues are generated from hedge funds, from corporations, which I found quite
fascinating, particularly given your location in Hong Kong. Can you give us a sense of what proportion of your clients are from China?
M. WU: So, actually, this is very interesting. On the institutional end, almost none over there. Actually, the majority of our institutional and
especially on the hedge funds, on the VCs, on the corporates, on the companies, actually, you know are from where you are, from the United
States. And I think they picked up an Asian firm like Amber Group to provide services because we do provide a different perspective, different
flow dynamics and you know, different exposure to a crypto market, which is global, but also has a large percentage of its activities in Asia.
CHATTERLEY: And of course, trades all the time as well. What have you seen in the rise that we saw and I'll use Bitcoin as an example but you of
course and my viewers know there are many more digital currencies and assets out there. What did you see those clients doing in the rise that we
saw to $60,000.00 in Bitcoin and then the pullback right down to $30,000.00?
Just give us a sense of what they were seeing and how they've been buying on the way down?
[09:45:14]
WU: This is actually a wonderful question. Actually, we see very interesting patterns from different categories of clients. On the
institution side, I think, you know, a lot of them power linked since last year, and, you know, all the way, they've been buying, you know. We
received a lot of those product, key work orders, which are time weighted average price orders. They will give us, you know, hundreds of millions of
dollars and basically buy Bitcoin at an average pace or, you know, at a smooth pace consistently, over time.
And that happened all the way from, I guess, from 20K, last year, all the way up to, you know, as high as I think near the peak of 60K.
But activity did start to slow down on the institutional front, where we kind of stalled around the peak. And, you know, a lot of the -- all tokens,
which are you know, the smaller market cap tokens started to rally even more than the Bitcoin. And, you know, in the last month or so, before, the
kind of the selloff or the crash, we actually started to see a lot of what we call the animal coins, or the zoo coins, all kinds of, you know, coins,
named after different dogs, different animals to rally for no reasons.
And that's where we see, you know, retail speculations really took off, and the economic institutions took a step back, because you know, it was -- if
you're around in the market for a while, you started to have a bad feeling about this kind of market condition. And on over the last four to six
weeks, on the selloff, actually, we started to see, you know, those more sophisticated institutional investors, family offices, a lot of the high
net worth individuals started to get into crypto again, because they find this as a much more reasonable price for them to put some asset allocation
into crypto.
CHATTERLEY: Yes, it is funny hearing you speak, it explains the price action that we've seen incredibly well.
Michael, just from where you sit and the conversations that you're having, and we've been talking about this already on the show, China. China
cracking down on Bitcoin mining, which is a significant chunk of this. And we know that they're creating their own Central Bank digital coin, which is
something separate, too. But why should China's behavior towards Bitcoin, which arguably is restricting supply, not increasing it have such a
negative action on the price action of some of the big crypto names? What do you make of what's going on? And what are people saying to you?
M. WU: I think that's a great angle to look at it. I mean, you know, first, as I said, I think even before the China news, and all the
regulatory action started to come out, you know, Bitcoin prices or crypto prices in general have already started falling. Right?
So I think, you know, the market already kind of peaked even before this news came out, so it was already on the way down. But you know, all this
China news and all the regulatory negativity, actually across a few countries other than China as well, I think really affected the short term
sentiments, and you know, markets being markets, people like to overreact and the price therefore overshoots.
So, if -- you know, the market, if the prices are already going down and you start to see negative news, the natural instinct, I guess, the animal
instinct of ours is to flee and run. So, before you really rationalize, what's the long term impact and all of that?
To me, actually, you know, nothing changed to follow the long term of Bitcoin or the long term crypto finance. I'm still extremely optimistic
about its future, about how much more upside it has. But in the short term, you know, market sentiment is cautious, is negative, and the people will be
more cautious in buying versus, you know, there will be more panic when they are selling.
CHATTERLEY: Yes, I mean, so he says the CEO of Amber Group there who benefits from people transacting in cryptocurrencies, we should make that
point, but it is great to chat with you. Thank you for being honest about the flows that you're seeing because this is really important, I think, for
us to understand and good luck.
I know you've been profitable, I think since day one. So, you're having some fun there. Michael Wu, the CEO of Amber Group. Great to have you with
us and we'll talk to you again soon.
M. WU: Thank you.
CHATTERLEY: Thank you. Okay, up next, bikes on board. The freed Suez ship remains stuck in murky legal waters. Will its cargo ever see dry land
again? We meet a man key to make it happen. Stay with us, that's next.
(COMMERCIAL BREAK)
[09:51:41]
CHATTERLEY: Welcome back to FIRST MOV. A legal storm over the cargo ship that blocked the Suez Canal may be coming to an end. The Ever Given has
been held by Egyptian officials since March and jammed up in a compensation dispute.
Negotiators now say they've reached an agreement that would free the vessel, but even that is no guarantee of smooth sailing ahead for all those
involved, as Anna Stewart explains.
(BEGIN VIDEOTAPE)
ANNA STEWART, CNN REPORTER (voice over): For six days, it blocked the Suez Canal, one of the world's biggest arteries for trade. Finally freed, the
Ever Given was then impounded as a legal battle over costs raged on.
The Suez Canal Authority originally demanded over $900 million from the ship's Japanese owner.
JAI SHARMA, PARTNER, CLYDE & CO.: I almost fell off my chair, frankly. About $300 million of that was a so-called loss of reputation claim, which
was really unprecedented and unexpected, and I've never seen a calculation supporting that figure.
Then, the majority of the rest of it related to a claim for salvage plus an extra $300 million bonus.
STEWART (on camera): A bonus?
STEWART (voice over): Law firm Clyde & Co. represent companies and insurers with over $100 million of cargo on board. Their goods are delayed
by months, and they may have to pay to get them back.
SHARMA: What we would expect is that there'll be an arrangement between the owners and the Suez Canal Authority for them to make payment. And then
subsequently, the ship owners may try and recover some of their expenses.
STEWART (voice over): Businesses around the world are waiting, including the bike maker, Pearson, which has bike frames stuck on board.
WILLIAM PEARSON, CO-DIRECTOR, PEARSON 1860: They are obviously the main component part for our bikes as any bike would be. So without those, we
can't build the bikes. So, we had quite a few orders that were already destined for customers.
It's been a real difficult time. We've been kept in the dark, we really have. Nobody really seems to know exactly what's happening. There seems to
be a lot of wrangling legally. So, at this point, we know that our goods are insured. How insured they are? We're not quite sure as to whether we
have to pay anything else and we're hoping not.
STEWART (on camera): If you are asked to pay a lot of money, what are you going to do? What are your next steps?
PEARSON: I'm not sure, really. I think we probably have to take legal advice as to what we do. But ideally, we could do with the stock as opposed
to any insurance money and if we have to pay more than depending on what it is to get the stock, then we may do.
STEWART (voice over): Even with an agreement, the Ever Given may need repairs, and it could still take weeks before Pearson get their frames.
It's been a story worthy of a blockbuster movie, as you can see by this triumphant video from the Suez Canal Authority following its refloating.
Unfortunately, that wasn't the ending, which is far from happy for many of the businesses involved.
Anna Stewart, CNN, London.
(END VIDEOTAPE)
CHATTERLEY: Now, can't afford a rocket ride to space, how about taking a balloon?
[09:55:00]
CHATTERLEY: A Florida company is now taking reservations on its spaceship, Neptune, for flights in 2024. Neptune is a high tech hot air balloon with a
pilot and up to eight passengers. Wow.
The trip starts with a two-hour ascent to reach an altitude of 100,000 feet and from there, you can enjoy the 360-degree views for two hours before
floating back down to Earth.
Wow, I sound like I'm selling it. And the price, a stratospheric $125,000.00. Well, that's cheap.
Hold on, do you want to get a moon bid with Jeff Bezos. Didn't that seat go for $28 million? I like the balloon.
All right, and finally, this. Ikea is launching a new water bottle after football superstar Cristiano Ronaldo publicly snubbed Coca-Cola. The bottle
is called "Cristiano."
The Portuguese player made headlines last week by removing two bottles of Coca-Cola as he sat down to take questions at a news conference and held up
a bottle of water, Agua, instead.
Nice one, Ikea.
That's it for the show. If you've missed any of our interviews today, they will be on my Twitter and Instagram pages. You can search for
@jchatterleyCNN.
IN the meantime, stay safe, as always. "Connect the World" with Becky Anderson is next, and we'll see you tomorrow. Bye.
(COMMERCIAL BREAK)
[10:00:00]
END
