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First Move with Julia Chatterley
China's Growth Slows in the Second Quarter, but the Consumer Remains Strong; Protesters Reject Mandates in Europe as COVID Cases Surge; The U.S. Government Offers Cash to Catch Hackers. Aired 9-10a ET
Aired July 15, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:12]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is what you'll need to know.
Recovery resilience. China's growth slows in the second quarter, but the consumer remains strong.
Vaccine veto. Protesters reject mandates in Europe as COVID cases surge.
And ransomware rewards. The U.S. government offers cash to catch hackers.
It's Thursday. Let's make a move.
A warm welcome to FIRST MOVE this Thursday and plenty of news to get to, as always. Fed Chair Jay Powell not for turning, he says inflation numbers are
not yet concerning. Big Tech summer rally sees record highs returning and the debate over legalized pot keeps burning.
The CEO of Canopy Growth joins us to discuss moves by the Senate Democrats to legalize cannabis at the Federal level.
And from weed to speed, China's economic growth and economy growing at 7.9 percent year-over-year in the second quarter, it's actually a touch weaker
than expected and of course, far slower than the first quarter's torrid 18 percent spike as you can see there.
But remember, growth data is backward looking, and the most recent retail investment and industrial production data looks pretty solid, and I think
investors reacted to that mostly overnight.
China has virtually recovered from the COVID induced plunge last year and used far less stimulus than the United States in comparison to get there,
assuming of course, we trust the numbers. That said, China warning of a quote, "unbalanced recovery" and unemployment remains a key risk. Sound
familiar, Jay Powell?
Investors will once again hear from the perpetually patient Fed Chair today. He was grilled by alarmed lawmakers about the upside risks to prices
yesterday. He reiterated as expected that pressures will moderate in the Federal Reserve's view. At least for now, it seems investors in both stocks
and bonds believe him.
Here is a look at the U.S. and Europe. It's a softer picture with tech once again on top however, as you can see relatively unchanged for the NASDAQ.
China was the outperformer in broadly positive Asia session.
Let's get to our drivers and that data blast from Beijing. Kristie Lu Stout has all the details.
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN CORRESPONDENT: Amid the pandemic, China is maintaining economic growth, but the rate of recovery is slowing. Today,
China announced its economy has grown 7.9 percent in the April to June quarter compared to the same period one year ago. This is far lower than
the 18.3 percent year-on-year increase posted in the previous quarter that was when the Chinese economy bounced back from the initial shock of the
COVID-19 pandemic.
Economists say China's second quarter GDP growth was fueled by its services sector recovery, as well as strong exports, but the Chinese economic growth
story is slowing down.
JULIAN EVANS-PRITCHARD, SENIOR CHINA ECONOMIST, CAPITAL ECONOMICS: Because the Chinese economy recovered very rapidly from the COVID-19 downturn, it
has basically fully recovered. In fact, it's above its pre-virus trend.
There's just a lot less room for it to continue to grow rapidly. So, it is hitting against those constraints and that's why we're starting to see
those growth rates weaken quite considerably.
LU STOUT: Economists say China's economy is facing a number of speed bumps, surging commodity prices, supply chain disruptions, trade tension
with the U.S., but according to economist, Aidan Yao, the biggest challenge ahead is the coronavirus.
AIDAN YAO, SENIOR EMERGING ASIA ECONOMIST, AXA INVESTMENT MANAGERS: The virus represented the biggest short term growth risk. You mentioned the
virus outbreak at the beginning of the year, aligned with the Chinese New Year, more recently in Guangzhou. If you have these types of outbreaks that
are occurring on a periodic fashion, then that's certainly going to hold back the recovery of consumption recovering.
STOUT: Every additional outbreak in China weighs on household confidence and domestic consumption. It also affects the global supply chain.
Despite the challenges ahead, economists say the country is still on track to exceed its annual growth target this year of more than six percent.
Kristie Lu Stout, CNN, Hong Kong.
(END VIDEOTAPE)
CHATTERLEY: We'll talk more about this later on in the show, but for now to Europe, and alarm over both COVID-19 and measures to prevent it.
The U.K. has recorded more than 42,000 daily new cases for the first time since January. Hospitalizations are also beginning to increase for the
first time since that peak. Yet, in places such as France, there is ongoing anger over vaccine mandates. Thousands of people took to the streets with
police firing teargas at protests against health passport rules.
[09:05:09]
CHATTERLEY: And more than 5,000 people have rallied in Athens to oppose Greece's vaccination program, too.
Phil Black has more. Wow. Phil, there is a lot going on there. Let's just break it down and begin in the U.K. I mentioned 42,000 daily cases there.
Can you just give us a sense of where the hospitalization numbers compare to previous peaks, please, and what the government is saying about this?
PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: Yes, so this is a key point, Julia. Hospitalizations, deaths, they are not at a similar level to what
they were the last time we saw infection numbers around that point, which is as you make the point, that was back during the dark days (AUDIO GAP) in
January, and that really is the key context in which the U.K. government has decided to proceed with its plans to unlock personal freedoms here in
England from Monday, so-called Freedom Day.
It doesn't have the jubilant feel that many were hoping for, because there is still so much that is unknown. Indeed, the government's own scientific
advisers say they don't know how this is going to go, but it is such a significant step, and unprecedented experiment in many ways. No other
country has sought to do this to unlock society at a time when the population is still dealing with what is already a very big wave of delta
variant cases, one that is still accelerating.
You mentioned 42,000 cases in one day. The expectation, according to the government as we could see, 100,000 cases a day in just a few weeks. But
the hope is that the U.K. government will be able to tolerate high infection rates without seeing high levels of serious illness, and that is
because of the advanced nature of the vaccine program. But as I say, there is lot that is not known just yet, and there is no shortage of critics from
science and the medical community who are really quite angry and upset that the government has decided to proceed with this.
Many are calling it reckless, dangerous, unethical, and even from the government's point of view, this is a calculated gamble that they believe
that it is one that is worth taking -- Julia.
CHATTERLEY: Yes, they're just having to trust that the high rate of vaccination will hold those hospitalizations down, even if people are
getting sick to your point with the delta variant. I guess, the belief is that we're not going to eradicate COVID, we have to hope that we can live
with it.
So, let's talk about France quickly, because we are -- and we did see protests there. The government basically saying, look, it's okay if you've
not got a vaccine, you're just not going into restaurants and you're not going into bars as a result without testing. We did see a spike in people
booking those vaccinations. But at the same time, you've got people saying, hey, this isn't fair.
BLACK: Yes, this is a really big philosophical shift by the French. In a country that is defined culturally, historically, to a significant degree
by the concept of personal liberty, this idea of linking freedoms to essentially vaccination status or health status. This was dismissed as
unthinkable by French politicians not that long ago.
But earlier this week, the French President, Emmanuel Macron, decided that this is the way the country is going to go. He is going to link certain
freedoms and liberties to the ability to prove that you have been vaccinated or that you have natural immunity or that you have recently
undergone a negative test, and that includes, for example, access to cafes and restaurants.
And although, yes, somewhat predictably, this has upset people, thousands of people protesting on the streets, it turns out that the threatened
deprivation of good food to the French is something of a powerful motivator, because as you touched on, there has also been millions of
people in the last few days, going online and locking in their vaccinations, which was the purpose of all of this, really.
So in that sense, a significant and really dramatic tactical move by the French government, but one that is designed to get people more willing to
be vaccinated as quickly as possible as the Delta variant gains momentum, not just here in the U.K., but the Mainland Europe as well -- Julia.
CHATTERLEY: Yes, calculated bets. I think gambles wherever we look. Phil Black, thank you very much for that update there.
And from protests in France to protests in Cuba and an apparent concession. The Cuban government is lifting some customs restrictions allowing
travelers to bring in food, medicine, and other essential supplies duty free.
This comes after thousands of frustrated Cubans held unprecedented protests. Patrick Oppmann is live in Havana with the latest.
Patrick, this is just one element that you were describing to us yesterday is challenging individuals and the economy in Cuba. What difference will
this make in your mind?
[09:10:02]
PATRICK OPPMANN, CNN CORRESPONDENT: You know, practically, it is tough to see how it'll make a difference in the short term because, as you know
because of the pandemic, Cuba has been on lockdown.
There are very, very few flights coming in or out of this country. The last time I traveled, I had to wait months to travel because of flights on many
airlines are actually booked through the rest of the year.
Absolutely, once COVID is under control here, Cuba will be open and able to open to more flights, and this has been a major complaint of exiles
returning of Cubans that travel that go abroad on shopping trips, because the stores here are just so empty, that when they come back, they have to
pay these very high taxes upon landing here on items like medicine, food, even clothing, shoes. You know, you name it, there is a system to tax
people on the items they bring in.
So, this was something that really stuck in people's throats. They hated it. They complained about it. They felt their government was taking
advantage of them.
And the fact that it has been waived for the rest of the year is a small first step, but it is nowhere near enough because of course, most Cubans
are not able to travel, they are not able to pay the exorbitant fees that people who do travel, charged to bring these items in. And certainly in the
short term, while we have these very, very limited flight schedules, it probably won't make much of a difference.
The tone of the President last night was quite different, though, from other appearances where he called on revolutionaries to go into combat
against the protesters. Last night, he was somewhat more conciliatory. He said that many of the protesters had been vandals and criminals, but others
that he said they were just confused, or perhaps the people who'd been let down by the revolution, that they're from poor neighborhoods where the
government hadn't been able to do very much for them, and the government needed to do more outreach there.
So certainly, the government is not slowing down in its pursuit of these people, in its prosecution of many of these protesters. But the government
did last night, the President did last night seemed to take a more conciliatory tone, because I can tell you across this island, people who
have been watching these protests, you have artists, you have musicians, you have people who are very famous Cubans who influence what the public
thinks, and they've been horrified by the level of violence that we've seen and what they see as police just too aggressively cracking down on these
protesters.
CHATTERLEY: Yes, Patrick, great to have you with us and to get all the context there, too. Patrick Oppmann, thank you.
And for more on this, as well as the crisis in South Africa, Eurasia Group President, Ian Bremmer will join us in just a few moments time.
For now, let me bring you up to speed with some of the other stories making headlines around the world.
The development in the case of the assassination of the Haitian President, Jovenel Moise, the head of security at Haiti's presidential home was in
police custody overnight. A person close to Dimitri Herard says that investigators questioned Herard before placing him in jail.
Let's go to Port-au-Prince where CNN's Matt Rivers has more. Matt, and I believe the legal defense is saying this is politically motivated. What
more do we know?
MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: Yes, we know that Herard is one of three different heads of different agencies here in Port-au-Prince,
each agency tasked with protecting the President and/or the places where he lives. And we know that prosecutors here leading the investigation into the
assassination of President Jovenel Moise wanted to talk to all three of them.
The way the legal system works here is they can call you in for what is essentially voluntary questioning. It is not required that you show up and
the Haitian prosecutors asked all three of those leaders, including Dimitri Herard, the person that you just talked about, Julia, they asked all three
to show up for voluntary questioning, and none of the three showed up.
They said they did not want to do that, for varying reasons, including in the case of Dimitri Herard, he said that he is already being under
investigation by the Inspector General of the Haitian National Police, and therefore, he couldn't show up for questioning.
But we got in touch with a friend of Herard last night after he didn't show up for questioning, and he told us that even though there is no legal
requirement for prosecutors to punish people who don't show up because this is a willing or a voluntary questioning session, that he was told by Herard
that he was going to be kept in detention overnight at a police station not far from where we are right now here in Port-au-Prince.
So, it's not exactly clear where it goes from here, but the friend says this is politically motivated and Herard is completely innocent of any
suspicions, anything surrounding his name that this friend believes is politically motivated, but all of this is to say, Julia, that this
investigation very much ongoing at this point and exactly where prosecutors go from here who they want to talk to next, what charges they want to bring
against anyone, if any, that remains an open question.
CHATTERLEY: It certainly does. Matt Rivers, great to have you with us. Thank you for that.
[09:15:07]
CHATTERLEY: The hospital treating Jair Bolsonaro says the Brazilian President will not need emergency surgery. He tweeted this photo on
Wednesday from hospital where he was diagnosed with an intestinal obstruction.
Mr. Bolsonaro claims his current medical condition stems from a failed assassination attempt in 2018 when he was stabbed during a campaign rally.
"I want an investigation into my dad," quote. That's what pop star, Britney Spears told a judge in another stunning court hearing. Spears said she
wants to press charges against her father, Jamie Spears, and wants her 13- year conservatorship to end.
The singer will now get her choice of attorney after her court appointed attorney resigned.
You're watching FIRST MOVE, plenty more to come. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE, live from New York where U.S. features are looking softer. That said, Apple set for fresh records. Apple
up 12 percent this year on evidence of stronger demand for the upcoming iPhone upgrade. Microsoft also hit records yesterday, up 27 percent year-
to-date. A couple of real winners there.
Netflix is another fantastic stock. Investors biting on news that the lean mean streaming machine is getting into gaming development. Netflix hiring a
former Electronic Arts and Facebook executive to lead the charge. GameStop, which has plans for online gaming, too, falling on this news. Interesting
comparison there.
And from Fortnight to financials, Morgan Stanley today beating on the top and bottom line driven by strong investment banking activity, as well as
robust equity trading revenues.
Banks this week posting good results overall, I think, but profits have been pressured from subdued bond yields and concerns over softer loan
demand. Banks, of course, would benefit from higher interest rates, but Fed Chair Powell giving no hint during his congressional testimony this week
that a policy change is imminent, even as inflation continues to surprise to the upside.
Julian Emanuel joins us now. He is Managing Director and Chief Equity Derivatives Strategist at BTIG. Julian, great to have you with us.
The inflation numbers this week, I have to say were eye opening, but Jay Powell, holding the line here, steady as she goes or he goes -- there you
go.
JULIAN EMANUEL, MANAGING DIRECTOR AND CHIEF EQUITY DERIVATIVES STRATEGIST, BTIG: It's incredible, Julia. You know if in our careers we would have
thought that we would see inflation numbers, that one set would annualize over seven percent, the other almost 10 percent, and you told me that bond
yields would slip from 140 to 130 on the 10-year, I would just be throwing my hands up.
[09:20:20]
EMANUEL: What it tells you is that this combination of, you know, the repetition, and we're going to get it in 10 minutes' time, once again, from
Fed Chair Powell, of the word "transitory," along with the simple fact of this incredible wall of money, that besides pushing stocks up and pushing
commodities up, and pushing goods prices up, is also pushing bond prices up and yields down, just is a feedback loop that we've never seen before, and
it is certainly causing some strange occurrences. We wonder how much longer that can actually continue.
CHATTERLEY: Oh, there's so much in there, Julian. I mean, the mathematics of the base effects of the lockdown, the slowdown of the economy last year,
then when you look at year-on-year numbers, you see these massive spikes. That's sort of one thing.
I guess, the second question I would ask here, and this is to your point, with the bond market yields coming down, is that less about bond market
investors going look, we're pretty sanguine about the inflation numbers, and we think they are transitory versus, so much bond buying out there,
including, from, you know, the U.S. Treasury here lapping up all these bonds that actually, it has a sort of blurring effect on what the true view
is of investors.
EMANUEL: Well, we think it's a combination. When yields reached that 175 peak earlier this year, at the end of the first quarter, there was no
question about the fact and look, you've been talking about it all morning. There is turmoil in the world. There is a virus that's still very prevalent
in parts of the world, obviously, we've done a pretty good job in the U.S. in controlling it thus far. That created extreme value in the eyes of
international investors.
So you know, there was a rush of international investors into our bond market, and then that sort of fed on itself. But the combination of that
demand, and then obviously positioning because really coming into the end of the first quarter, the positioning in terms of macro funds, was really
almost record short in the bond market, really all snowballed into this wall of money that, as you rightly point out, is blurring the signals that
would normally be, you know, something that in any other Fed, in any other reality, not only would we have started talking seriously about tapering
several meetings ago, but we would probably be doing it already.
And that makes us wonder, you know, how the market is going to respond, when the inevitable, more amplified taper talk starts to happen?
CHATTERLEY: Is that why you're cautious, at least in the short term, Julian? What are the signals that you're getting that just makes you go,
even if we think longer term, we're still in a stock market bull market. We're nervous, shorter term.
EMANUEL: It really is, Julia. Look, there is no doubt that between the rebound and the stimulus on both the monetary and the fiscal side, and
frankly, the pent up demand -- all of it augur very well for above trend economic growth, certainly in 2021, absolutely in 2022, in our view, and
very likely in 2023.
So, in essence, bull markets don't tend to end unless there's going to be recession. However, when you look at it, this whole idea of betting on the
concept of transitory, truly being transitory is going to get stress tested in September when the labor market, you know, should in theory, be
addressing the supply demand imbalance without wage pressure, because you're going to have a return of people to the labor force.
We're just not so sure that that's the case because, frankly, the appreciation and assets, whether house prices, or other financial assets
has caused a lot of people to rethink re-entering the workforce.
CHATTERLEY: So what's the underlying message here, Julian? If you're an investor, if you're invested, they're sort of hearing your caution, but
they're seeing things go up. And even if stocks aren't moving up in aggregate so quickly, with those consolidating at record highs, what's the
message for people?
EMANUEL: Yes. So, the message is one that's reasonably simple, that I think has served us very well through you know, going back to 2009 at the
bottom of the financial crisis. Ten to fifteen perhaps as much as 20 percent pullbacks are a normal course in a bull market.
[09:25:11]
EMANUEL: If you as an investor, don't see yourself as being a buyer down 10 to 15 to 20 percent, and you should be because buying the dips is the
strategy that works. If you don't see yourself being a buyer, then you probably want to lighten up on some of your stock holdings.
If you're a more active investor, option prices are incredibly, incredibly inexpensive, and we think represent really profound value here. So, you can
hedge your downside without having to sell your holdings by owning some put options very, very inexpensive insurance, particularly given how much money
you've made on an S&P 500 portfolio this year.
CHATTERLEY: Fantastic and Julian, I have about 30 seconds. Bitcoin at $50,000.00 by the end of the year?
EMANUEL: We still see it and frankly, Julia, the fact that people are nervous about the lack of volatility in crypto the last number of weeks is
a positive. We think the long term case, particularly in inflation and bear environment, holds, $50,000.00 by year end.
CHATTERLEY: Yes, I mean, we saw that in 2019. We saw it in 2020. Storm followed by calm. Julian Emanuel, thank you so much for that.
EMANUEL: That's correct.
CHATTERLEY: The Chief Equity and Derivatives Strategist at BTIG.
We're back next. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE, and probably my most favorite story of the day, the United States is launching a $10 million reward
scheme to catch cyber hackers. As Washington says it won't reveal who is behind the online disappearance of the group, REvil.
Alex Marquardt is here to explain what's going on. Alex, as I said, I love this story. We had the CEO of CrowdStrike on yesterday and he said that the
$160 million of ransomware demands have been made in the last year, the average is around $6 million.
So, this is like one of those ransom demands on steroids in order to perhaps shop someone you know, who might be an attacker. What do we make of
this?
[09:30:17]
ALEX MARQUARDT, CNN SENIOR NATIONAL SECURITY CORRESPONDENT: Well, and Julia, when it comes to REvil, which is the ransomware group du jour your
that we keep talking about, their latest demand was $70 million.
So, now you have the Biden administration keen to show that they are doing something about this growing and consistent wave of ransomware attacks.
We've seen these attacks recently against the Colonial Pipeline, against JBS Foods, against the Kaseya software provider. And so now the State
Department is rolling out a new program, one that it usually reserved for terrorists, a scheme that would allow informants to collect up to $10
million if they offer information that leads the identification of state- backed malicious cyber actors who attack critical infrastructure.
And Julia, one sign that the State Department knows where these potential informants are, is that they are -- they have set up a tip line,
essentially a tip box, a site on the dark web and are offering that payment in cryptocurrency.
One more thing that the administration is rolling out today is a new website called stopransomware.gov. It's being backed by a number of
different Federal agencies. And essentially, it is one stop shopping, they say, a resource for groups big and small who wants to learn about
ransomware, who need a ransomware resources help figuring out how to recover from ransomware attacks.
So again, Julia, the Biden administration keen to show that they are doing something about what has really become a plague of these types of attacks.
CHATTERLEY: Yes, and we still don't know who removed REvil, the website, the infrastructure, the U.S. Secretary of Homeland Security on our air this
morning with John Berman, sort of refusing to be led over who may have taken their infrastructure down.
MARQUARDT: Yes, Secretary Mayorkas is saying a simple. "No comment." It's the same thing that I heard from a senior administration official last
night, and that the mystery is deepening, Julia. REvil just simply disappearing from the places where they would normally negotiate, where
they would normally demand those ransom payments.
So, there are all sorts of theories. Did the U.S. carry out some sort of operation against them? Or did their pressure to Russia, to the Kremlin
actually work in terms of REvil feeling that pressure and wanting to take themselves down essentially. The Kremlin has said that they don't know
anything about this. But obviously, that has to be taken with a grain of salt.
What is clear, Julia, though, is that, even if they are disappearing, for now, they could come back eventually. We've seen it before where attackers
will disappear for a little while, and then they'll come back possibly under a different name.
And one important thing that we should not forget, Julia, is that, as they've disappeared, they have also left a number of clients still locked
up, and what will likely happen is that those victims will lose access to their systems and have to start from scratch. So, they've been left in the
lurch while we try to figure out what actually happened with REvil -- Julia.
CHATTERLEY: Yes, I mean, that's part of the challenge of what's happened here, to your exact point, and we discussed it on the show, there are
people who were trying to get their get access to their data and negotiate paying a ransom and have been sort of stopped mid flow.
I wonder if the U.S. government is actually going to pay out that reward in Bitcoin, by the way, something that occurred to me this morning as well.
Don't answer that. Alex Marquardt, great to have you with us. Thank you.
All right, let's move on to the crisis now in South Africa. The country's military is now calling all reserve members to report for duty as looting
and violence continue in parts of the country.
The unrest was triggered by the jailing of former President Jacob Zuma, but quickly erupted into an outpouring of anger over the government's handling
of the economy and the pandemic.
Joining us now is Ian Bremmer, President of Eurasia Group and GZERO Media. Ian, always, always great to have you on the show. There's an irony here
that it was a President who was elected on a mandate of rooting out corruption, tries to tackle a former President who has been accused of all
sorts of corruption, and now we see an explosion of protests. What do you make of what we're seeing?
IAN BREMMER, PRESIDENT OF EURASIA GROUP AND GZERO MEDIA: It is interesting, you know. I think that this might be an example -- the example
-- of the leader that has been able to make the most of the coronavirus crisis to consolidate his own country's democracy.
You're right. President Ramaphosa was elected on an anti-corruption mandate and he was completely stymied by people like former President Zuma, a
deeply corrupt kleptocrat, as well as Ace Magashule within his own ruling African National Congress.
But over the last year, the regions where former President Zuma are very strong have not been able to have their ANC meetings because they couldn't
get together under the quarantine rules, and they couldn't rally, they couldn't demonstrate, and that's finally allowed Ramaphosa to really clean
house.
[09:35:21]
BREMMER: First by removing Ace Magashule, his major competitor and Zuma's ally from inside the ANC, and now in arresting former President Zuma and
you see that Zuma has called for demonstrations called for violence, his own children have been involved in that, state security members around Zuma
have been involved in it.
There's been a lot of death, there's been a lot of carnage, a lot of economic damage, and that's going to be what it takes for Ramaphosa to
really clean house and get rid of these kleptocratic Cabinet members.
So this is kind of like the January 6th moment for South Africa. It's not a coup, but it's really ugly. But unlike in my own United States, it's
actually going to be the move that allows South Africa to finally -- to finally transform itself from a party of liberation to a functioning
democracy.
CHATTERLEY: And the way to your point that they handled this or that the current President handles this, is tackle some of the things that have long
existed, the basic level of inequality, their high level of unemployment, particularly for younger people, and of course, one of the key catalysts
here, which is of course, that the challenges of COVID.
BREMMER: Yes, I mean, of course, as you know, Julia, I mean, Africa is the forgotten continent in terms of COVID. And for so many months, everyone was
saying, oh, it's great. That's a young population, maybe we don't have to worry about it. The reality is they've gotten virtually no vaccinations.
I mean, a continent of 1.3 plus billion people, and you know, barely a couple percentage points have gotten their first jab. Functionally, no one
is vaccinated in Africa, very few in South Africa. And as we know, from the delta variant, if you're not getting vaccinated, you're getting the
disease.
And so I do think that the economic hit that Africa is going to have over the coming 12, 18, 24 months, is so much greater than what they've already
experienced. So, they are not at all out of the woods, but at least in South Africa, they're now going to have a leader that can get it done.
By the way, I do want to remind people that, you know, Ramaphosa, the President was there with Mandela, a true global hero, and we don't have
many these days to get rid of apartheid. And he was meant to be the President that succeeded Mandela and then that decision was changed, and
Ramaphosa went into business, but now he's back.
And I do think that for most South Africans, young South Africans, he is an inspirational leader that does actually hark back to the days where we
thought South Africa had decisively turned its back on not caring about the majority of the citizens of their country.
CHATTERLEY: Yes, it's such an important point as well, because I think it's something that we credit President Zuma with, former President Zuma
with, and the fact that he was so anti-apartheid and stood together with Mandela as well. But to your point, actually, don't forget where Ramaphosa
was at that time, too.
Ian, I want to pick up on your point as well, that you made about vaccinations because it's something I feel incredibly passionately about.
And the Secretary General of the U.N. tweeted overnight, again, reiterating the need for greater support for some of these nations to get the richer
nations to provide the financing that's required to get vaccines to them.
Just when we see situations like this erupt in places like South Africa, do you think it galvanizes the international community, particularly, the G7
nations to step up? They've done some, they need to do more.
BREMMER: Julia, I don't know what the words "international community" mean when we talk about the coronavirus. I mean 500 million, you know, vaccines
being donated by the United States announced at the G7 a month ago, so little so late, compared to what is desperately needed around the world.
I mean, this is an environment where every country is focusing primarily on its own citizens, the only country in the world that didn't do that was
India, one of the poorest countries in the world that was exporting a lot of vaccines, because their leader thought that they had actually crushed
the virus domestically, and it turned out he was really wrong and that was a lesson that he learned, really in a very, very direct and dramatic way at
home.
But here in the United States, as we're now talking about maybe the need for booster shots, a third jab, and those third jabs, if they're needed
will certainly be provided before they are exported to anybody else who hasn't received their first job. And here, we're talking about reducing
transmission, but in other countries we're talking about avoiding hospitalization and death.
[09:40:05]
BREMMER: So, I mean, the viability, the value of a human life is not the same around the world, and what a painful thing to have to say in response
to the question of international community.
Leaders around the world are showing very, very painfully, that they do not consider those lives to have anywhere close to the level of import. And
unfortunately, that means that places like the African continent, are going to be under enormous both healthcare and economic stress, the part of the
world that can least afford that over the course of the coming one to two years.
CHATTERLEY: Yes, it's unacceptable.
BREMMER: Yes, it is.
CHATTERLEY: I want to get your take on Cuba while I have you as well. Clearly, protests going on there, great challenges, a number of elements.
We saw the President ease import duties for travelers coming into Cuba, but of course, a critical part of, again, what's going on not only COVID, but
the United States handling of Cuba and sanctions. How do you see this playing out?
BREMMER: I think that the main reason why you see this level of instability in Cuba is because of economic mismanagement of their communist
government. COVID made it worse. COVID made those stresses worse.
And of course, it's not just in Cuba. Why do you think the explosion happened in Belarus? Why has it happened in Peru? Why has it happened in
Colombia? I mean, all over the world, we see greater demonstrations, because when governance is bad, and you have the kind of economic stresses
that come from COVID, it gets a lot worse.
Now, the sanctions from the U.S. have made it more challenging. But having said that, when Obama tried to open up the economic relations into Cuba, he
was stymied. He was slow rolled by the Cuban government, because they know that if American tourists and investment and trade overwhelm the Cuban
people, that that government is going to fall apart very quickly.
The people will respond to economic liberalization with demands for political liberalization. They're not willing to accept that.
So, the United States is in a bit of a box. I mean, we're not going to invade. Right? I mean, we might try to help ensure that internet gets open
and access for the Cuban people, and I think that would be a useful and constructive thing for the American government to do. By the way, the
Florida Governor DeSantis has been calling for that.
But Biden is in a bit of a box here because he wanted to loosen relations with Cuba. And of course, given the fact that the Democrats have
underperformed, particularly in Florida, they lost a couple of Congress seats on the back of a looser policy towards Cuba. Biden is not going to
want to do very much other than say, we support the Cuban people her
CHATTERLEY: Yes. And I loved your point about the size of the economy and the relative openness closed. It works if you're China, it doesn't work if
you're Cuba in this regard where loosening is a challenge.
BREMMER: Exactly.
CHATTERLEY: Ian Bremmer, thank you.
BREMMER: A pleasure, Julia.
CHATTERLEY: The President of Eurasia Group and GZERO Media there. Great to chat with you, sir. As always.
All right, coming up after the break, as America's weed smokers get lit, a plan to legalize nationwide. We'll hear from one pot producer with much to
gain. Stay with us.
(COMMERCIAL BREAK)
[09:45:14]
CHATTERLEY: Welcome back to FIRST MOVE and it's a weaker open that we're seeing for U.S. markets as we await fresh congressional testimony from Fed
Chair Jay Powell. And despite June's hot price data, as we've already discussed on the show, benchmark 10-year bond yields are lower, as you can
see once again. Yields now still near February lows, in fact.
Oil also a little bit softer in the session, too. Reports say Saudi Arabia and the UAE have reached a compromise agreement to raise output. The UAE
was the holdout to an OPEC+ production agreement earlier this month and we'll watch out and see if that is the case. Rumors abound.
In the meantime, Democrats in the U.S. Senate are pushing to decriminalize marijuana at the Federal level. Majority Leader Chuck Schumer admits his
proposed bill will not have enough votes to pass, but says it's a step in the right direction. Several things about this actually caught my eye.
Firstly, it could ultimately mean an end to restrictions that prevent financial institutions offering cannabis companies commercial banking,
things like credit cards, and insurance products, too.
And secondly, 18 states and Washington, D.C. have already legalized cannabis for recreational use, and it is estimated that the legal cannabis
market was worth over $17 billion last year. However, illicit sales are worth over $100 billion -- tax dollars are also a potential driver for
legalization, surely, too.
Canopy Growth is one of many pot producers watching this closely. It's a Canadian company that's poised to accelerate its exposure to the U.S.
market if and when Federal legalization occurs. David Klein is the company's CEO and joins us now.
David, fantastic to have you on the show. How optimistic are you about this move on whether or not eventually something will be done to legalize at the
Federal level?
DAVID KLEIN, CEO, CANOPY GROWTH: Yes, I think Americans want and actually need the end of cannabis prohibition, and so I think this bill is just
another part of the momentum that we're seeing across the country toward the ultimate end of that prohibition.
CHATTERLEY: What's most important in this bill? Because certainly, those that I've spoken to already about this, say, look, even if this doesn't go,
parts of this could. And I mentioned the financial aspect of this, particularly for smaller businesses in the cannabis space, if they can get
access to a bank account, to a credit card, it opens up all sorts of opportunities.
KLEIN: Yes, I think the benefit of this bill really is, it lays out the gamut of things that really should be done in order to effectively end that
cannabis prohibition from things like de-scheduling cannabis, which would allow access to banks, changing the way those businesses that are dealing
in cannabis are taxed in the U.S. right now because they are illegal enterprises at the Federal level, they get taxed differently.
But just as importantly, creating that Federal regulatory regime just like exists in alcohol, where there's a Federal overlay, but then the actual
regulation is left in most instances to the state, I think is really important.
And I also believe that the social equity provisions that are in this bill are important for the industry and could make good legislation. So, a lot
to work with in the framework of this new bill.
CHATTERLEY: I know you as a company have opportunities if and when as I mentioned, Federal decriminalization happens, but that you're working
around it anyway. So, there are already opportunities in the United States. Just very quickly, how long do you think it takes? Are we talking one year?
Two years?
KLEIN: Ultimately -- to ultimately get through to passage of a bill and implementation, you know, I'm actually at the optimistic end. I think it's,
you know, it's within 12 months, because -- and here's why. We've seen this happen on the U.S. political stage over the past several years, where
there's a lot of discussion around something. There is even a fair amount of alignment.
The U.S. Cannabis Council has done a survey which suggests over 91 percent of Americans across the country are in favor of legalization. So, this is
an electable issue. We just have to get through some of the trading that will have to be required to get people on both sides of the aisle
comfortable with this bill, but that could happen sooner than later because I think both parties want to appeal to their constituents who want cannabis
legalization.
CHATTERLEY: I think your point about the politics is very apt, quite frankly, as we head towards midterms and future presidential elections,
particularly for the Democrats talking about this at the current juncture.
Let's talk about Canada and what you're seeing there. What you saw throughout the pandemic, because I look at some of your numbers, there is a
pretty big loss in the 12 months to March. David, what did you see amid the challenges in Canada of COVID lockdown? Challenges for individuals? What
has it meant for your business? And how is it looking now?
[09:50:11]
KLEIN: So the industry in Canada evolved much more slowly than people expected it would. Really, the industry, you mentioned how large the
illicit market is in the U.S. There was a very large illicit market in Canada, and it wasn't until last August, actually that the legal market
became the same size as the illicit market.
So, transitioning people away from that illicit market takes some time. It was hampered -- that transition was hampered by COVID because we couldn't
get retail shops open, even as licenses were being issued and consumers couldn't go into those shops. And I think, as you know, Canada was more
restrictive in terms of lockdowns than the United States, and those are just starting to peel away right now.
So, I think we'll see an acceleration in the shift from the illicit market to the legal market now that those restrictions are going away.
CHATTERLEY: It is so interesting. I also saw the app store, the Apple App Store has allowed Ease, which is an app to offer cannabis delivery back on
or back into its App Store. What do you think the potential is for sort of the digitization of this industry, particularly in terms of perhaps
delivery, whether we're talking about Canada, in connection with all the challenges that we've seen, particularly over the last 18 months, and
future in the United States?
KLEIN: Yes, so we learned a lot about home delivery as a result of COVID, and you can see how robust that home delivery activity is in a state like
California, but you know, that the Amazon and App Store point that you raise is just another reason why we need Federal level regulation and
legalization of cannabis because, you know, even though cannabis is legal in a state like California, it's still federally illegal for somebody in
that state to do business with cannabis or to possess cannabis.
And so those kinds of confusion are things that really create conflicts at places even like Apple and Amazon and you know, some of the big direct to
consumer companies that exist out there.
CHATTERLEY: David, I have 30 seconds. Still capable of being profitable in the next 12 months?
KLEIN: You know, that's our stated objective and we feel comfortable with that as our projection right now. And, you know, as we're moving toward
that, we're really keeping that eye on the U.S., so we're making sure that we're entering the U.S. market CBD, where we can and with some of our other
consumer branded products, like BioSteel, and in This Works, and yes, continually continuing to just do what a normal consumer packaged-goods
company does, and that's create great brands and connect with your consumers to get insights that we can turn into products for those
consumers.
CHATTERLEY: Great to chat with you, David and get your insights today. Thank you. David Klein, the CEO of Canopy Growth there.
You're watching FIRST MOVE. More to come.
(COMMERCIAL BREAK)
[09:55:18]
CHATTERLEY: Welcome back to FIRST MOVE. A lifeline for both health and for the economy. Spain's Economy Minister says the success of the country's
vaccine rollout could herald a new economic era in Spain.
She spoke to Richard Quest for a special edition of "Quest Means Business."
(BEGIN VIDEO CLIP)
NADIA CALVINO, SPANISH ECONOMY MINISTER: What is clear is that the vaccine is a game changer that since the month of March, we saw that the progress
with vaccination was also making us go into a different phase in terms of the economic recovery.
The Spanish economy is recovering very strongly. Everybody is foreseeing a very strong growth in 2021 and 2022 that Spain will be one of the engines
of growth in Europe and worldwide, and that is, I think the new situation.
(END VIDEO CLIP)
CHATTERLEY: And you can watch the full interview on "Quest Means Business" later on this evening.
Richard will anchor the program from sunny Southern Spain. He will also speak to the chief executives of Iberia and Telefonica. That is at 3:00
p.m. here in New York or 8:00 if you are in London.
And 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. "Connect the World" with Becky Anderson is next, and we'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
