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First Move with Julia Chatterley
U.S. Politicians Grapple with the Debt Ceiling, a Potential Shutdown, and President Biden's Spending Agenda; The Fed is Facing Inflation Pressures as Supply Bottlenecks Push Up Prices; Production Slows as Power Cuts Hit the World's Second Biggest Economy. Aired 9-10a ET
Aired September 30, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:07]
ALISON KOSIK, CNN BUSINESS ANCHOR: Live from Los Angeles, I'm Alison Kosik, in for Julia Chatterley, this is FIRST MOVE and here is your need-
to-know.
D.C. dilemmas. U.S. politicians grapple with the debt ceiling, a potential shutdown, and President Biden's spending agenda.
Powell's problems. The Fed is facing inflation pressures as supply bottlenecks push up prices.
And China's concerns. Production slows as power cuts hit the world's second biggest economy.
It's Thursday. Let's make a move.
Welcome to FIRST MOVE. Great to have you with us this Thursday, the last day of trading for the month of September, as well as the third quarter and
a crucial day in Washington as Congress tries to avert a government shutdown. The $1 trillion Biden infrastructure bill faces a key test today,
too.
Wall Street is closely watching what's going on in the nation's capital, and for now, it is looking like a solidly higher open for U.S. stocks. That
said, stocks have swung wildly this week as rising bond yields pressure tech stocks. The major averages tumbled on Tuesday and gave up a lot of
their early session gains yesterday.
Checking other global markets, Europe is mixed. New numbers show the Eurozone jobless rate at 15 month lows. Chinese stocks closed higher
despite the release of disappointing manufacturing data, more on that in just a moment.
Let's begin our drivers with the latest from Washington.
And so to what could become known as the disaster in D.C., and John Harwood joins me now. John, you know what? The clock is certainly ticking down.
Today is the day, there is supposed to be a vote. Please tell us what is going to happen?
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Well, first of all, I think we are going to avoid the government shutdown, Alison. Democrats and
Republicans have agreed they don't want that to happen, but the more significant question mark surrounds this infrastructure and reconciliation
package that President Biden is pushing to try to transform the American economy for the 21st Century.
The bipartisan infrastructure package has been slated for a vote today. Progressives, because they want moderate support for the other part of the
bill, the $3.5 trillion reconciliation package have been saying they're going to withhold their support, unless they get some commitments from
people like Joe Manchin and Kyrsten Sinema in the Senate. They don't have those commitments, so Nancy Pelosi has a decision to make as to whether to
put that infrastructure bill on the floor, potentially have it be defeated, or to withhold that vote.
I think most expectations are right now is that she will delay that vote and try to sustain negotiations a little while longer. But you're correct,
at the moment, it is a disaster and President Biden is trying to figure out a way to extricate the Democratic Party and his presidency from that
disaster, it has not happened yet.
KOSIK: You know what's interesting, John, even in the middle of a crisis, we've got the Biden agenda in jeopardy. There is a potential default. Both
sides still found time to go to a baseball game.
HARWOOD: This was remarkable, Alison. We had the congressional baseball game, it happens every year, but it was fraught with more significance this
year because, you know, you had images of Nancy Pelosi sitting in the dugout in urgent phone calls as she continues this process of negotiation.
You have President Biden on the phone from the dugout as well.
All these members of both parties gathered. You had one remarkable moment where a Republican Representative actually hit a ball out of the ballpark
the way a major league hitter might do.
Republicans ended up winning 13 to 12. First time, they've won in the last several years. Question is, are they going to win on the legislative agenda
that they're trying to stop from Joe Biden? That's what the Nancy Pelosi phone call, the Joe Biden phone calls, those are continuing today, all this
intense in-person consultation, and we don't have visibility into the content of those conversations.
You still hear some underlying optimism from the White House and congressional leaders that they'll get there in the end, but they haven't
gotten there yet, and don't know how long it's going to take.
KOSIK: I really love that -- that video of Pelosi on the phone. Who knows? Maybe she's furiously making dinner plans.
HARWOOD: Could be.
KOSIK: I think you may be right, she's negotiating there. John Harvard, great to talk to you and we will stay on top of this with you.
HARWOOD: You bet.
KOSIK: A potential shutdown is not the only thing concerning U.S. investors, Federal Reserve Chair Jerome Powell, he warned that he expects
inflation to remain high into next year. He says COVID continues to disrupt supply chains pushing prices higher. Christine Romans joins me now.
You know, when I heard Jay Powell talk about inflation yesterday, it harkened back to what he said two meetings ago. It's transitory, it's
transitory inflation. But the first indicator that it may not be transitory is that it was left out of last week's statement. And now actually, Powell
is acknowledging that it may not be transitory.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: You know, and it's the supply chain hiccups that have been really hard to grapple with,
and they just continue.
I mean, you have international shipping workers groups talking about how you've got to get vaccines available to workers all over the world who are
driving trucks and unloading ships, and you've got to, you know, allow the freedom of movement of some of these workers and just -- the virus has just
really wreaked havoc on the global system and that's one of the reasons why you've seen so much of this inflation problem persist.
And the Fed Chief, acknowledging that it's stayed higher, longer than they had originally thought, and he talked about the two real frustrating things
for him right now in terms of the economic outlook. Listen.
(BEGIN VIDEO CLIP)
JEROME POWELL, CHAIRMAN, U.S. FEDERAL RESERVE: It is frustrating to acknowledge that getting people vaccinated and getting delta under control
18 months later still remains the most important economic policy that we have, and it's also frustrating to see the -- you know, the bottlenecks and
supply chain problems, not getting better.
(END VIDEO CLIP)
ROMANS: So a lot of experts, a big front page, "Wall Street Journal" story today even talking about the delta variant and these bottlenecks right now
aside on the other side of COVID, a lot of people are expecting real economic rebound and these things to work out. It's just that right now
that has been so frustrating to try to forecast.
Everyone from Sherwin Williams, the paint maker, higher raw material prices means they're raising their paint prices. The Dollar Tree stores you know,
known for dollar products having to raise the cost of some products because they can't be made and sold for a dollar anymore because of the higher
input costs.
Bacon, energy, you just go down the line and I just can't find a quarter of the economy that hasn't been affected by the increased demand and the
supply. The supply snafus frankly that have caused prices to go higher.
KOSIK: All right, Christine, Romans thanks so much for that great perspective.
In China, factory activity unexpectedly shrank In September. The Manufacturing Purchasing Managers index fell to 49.6 from 50.1 in August.
This as the world's second biggest economy faces an energy crunch that has caused power outages in some areas.
Selina Wang joins me now live. You know, this is the first time the official survey showed activity shrinking since the pandemic began. So,
this is really significant.
SELINA WANG, CNN CORRESPONDENT: Yes, Alison, this was an unexpected downturn in China's manufacturing sector, and it was manufacturing and
construction in China that lifted the economy out of the pandemic, but that work requires a massive amount of energy, a massive amount of coal and
China has been dealing with these power shortages for months now that have gotten more severe as coal prices have soared and as local authorities have
scrambled to meet these yearend targets as China tries to limit its carbon emissions, and we're seeing these factories get hit hard by this power
crunch.
But in this particular power shortage, it's not just industries that are being affected, it is also people's daily lives.
(BEGIN VIDEOTAPE)
WANG (voice over): The world's biggest energy consumer is running out of power. China's energy crunch is triggering blackouts, forcing factories to
cut production, overturning people's daily lives and threatening to slow the world's second largest economy.
Social media users have posted images of cities gone dark, severe traffic jams caused by traffic lights that stopped working, shops forced to close
early or resorting to candlelight to stay open. A mother with two young kids trapped in an elevator for 45 minutes after a sudden power outage.
UNIDENTIFIED MALE (through translator): It was completely dark. I can see nothing because the power is cut from everything. Only when vehicles drove
past, you can see lights on.
WANG (voice over): The power cuts have rippled across Northeastern China and parts of the South. The cause of it all, a perfect storm of factors:
Demand for Chinese goods is surging as the global economy emerges from the pandemic, increasing use of China's electricity hungry factories that is
sending energy prices skyrocketing, but since electricity prices are regulated in China, some power companies are losing money and hesitant to
boost production.
At the same time, China is trying to meet its ambitious climate goals to bring carbon emissions to a peak before 2030 and net zero by 2060. So,
local officials are rationing power to meet annual targets before the year end.
Power outages aren't new to China, but this one is especially severe.
[09:10:17]
YUN JIANG, DIRECTOR, CHINA POLICY CENTRE: For most provinces in China, when there is a shortage of power, they ration for industries first, so it
doesn't affect residential users. But in the Northeast, because it has reached to quite a significant shortage, it is now even rationing for
residential users and that is quite significant because it could lead to a lot of social discontent.
WANG (voice over): And residents are taking to social media to complain. One user posted: "There is no gas. Don't we need to cook and eat? I have
been ordering takeout for two days." Another wrote: "People from Northeast China have to light candles in the middle of the night. This is not North
Korea. I'm speechless."
This person writing: "Many communities have been locked down due to the pandemic. If there is no water or electricity, that's so unbearable."
The power rationing could create new headaches for global supply chains with several Apple and Tesla suppliers suspending production.
PHILIP ANDREWS-SPEED, SENIOR PRINCIPAL FELLOW, ENERGY STUDIES INSTITUTE, NATIONAL UNIVERSITY OF SINGAPORE: And further interruptions to do supplies
of different things, whether it be to toys for Christmas, or metals and silica for advanced materials and advanced equipment.
WANG (voice over): But the power supply challenges aren't unique to China.
ANDREWS-SPEED: It is partly a problem of managing the low carbon energy transition, at a time when the economy is picking up after the pandemic.
I think we're going to see the same sort of challenges in other parts of the world.
WANG (voice over): China's energy crisis is a sign of what the world is reckoning with in its bumpy transition to clean energy.
(END VIDEOTAPE)
WANG (on camera): Economists are slashing their estimates for China's GDP. Goldman Sachs estimates that as much as 44 percent of China's industrial
activity has been hit by this power shortage, and Beijing is now scrambling to deliver more coal.
Some analysts think that Beijing may consider lifting the state controlled cap on electricity prices, but what we're really seeing now with this power
supply crunch is the Chinese Communist Party trying to balance its efforts to curb back emissions to reach their climate goals, as well as growing the
economy -- Alison.
KOSIK: All right, Selina Wang, thanks so much.
And these are the stories making headlines around the world. A former London police officer has been sentenced to prison for life with no chance
of parole for murdering Sarah Everard in March. Prosecutors say Wayne Couzens used his police ID and handcuffs to coax Everard into his car under
the pretense that she had violated COVID-19 rules.
CNN producer, Nada Bashir joins me now from the courthouse in London. I'm curious to hear, Nada, what the reaction was in the courtroom. Have you
heard from her family, the reaction to the sentencing?
NADA BASHIR, CNN PRODUCER: Well, Alison, it's been an extraordinary two- day sentencing hearing into Wayne Couzens, a former police officer charged with the murder of Sarah Everard and we have just heard, we've had a
statement from Sarah's family and I can tell you just a little bit about what they said.
They said that: "Nothing can bring Sarah back, but knowing that Wayne Couzens will be in prison forever brings some relief that the world is a
safer place with him in prison." And that follows the emotional statements that her family gave to the court yesterday. Her mother saying that she is
still tormented by thoughts of what her daughter had to endure in the hours before her death.
Now, the Judge has sentenced Wayne Couzens to life in prison without parole. This is rarely given, it's for exceptional circumstances. But the
judge said that the way in which Sarah Everard was killed and the fact that Wayne Couzens abused his power as a police officer meant that this was the
appropriate sentence for him.
And we've also heard from the Crown Prosecution Service who said that they feel betrayed that Couzens abused his position as a police officer to carry
out such abhorrent crime, calling it a truly evil thing to do and really the details around the murder of Sarah Everard have been shocking to say
the least of the prosecution without some additional details yesterday, and we do know that Everard was manipulated by Couzens.
He told her that he was a police officer presenting her with his police ID and handcuffing her before abducting her, and she was later strangled with
his police belt. It is really horrifying details presented in the courthouse, but now we know that Wayne Couzens will be sentenced to life
without parole -- Alison.
KOSIK: Any reaction from the police department about how to, you know, prevent things like this from happening in the future?
[09:15:03]
BASHIR: Well, the police say that they are putting all the work in to try and prevent cases like this from taking place again, not only just within
the police force, but in general, violence against women and we've heard from many women's rights groups, as well as politicians, London Mayor Sadiq
Khan calling violence against women an epidemic in this country and there has been widespread backlash against both the police authorities and the
government calling for more to be done.
And just after the murder of Sarah Everard, an inquiry was launched by the Home Office. Priti Patel, Home Secretary launching that report to look into
how the government and police officials can tackle violence against women, but many women's rights groups have said that this simply isn't enough,
that the root causes of male violence against women need to be stamped out -- Alison.
KOSIK: All right, CNN's Nada Bashir, thanks so much.
North Korea's leader says he is willing to restore severed communication lines with the South early next month. According to state media, Kim Jong-
un told legislators that the future of inter-Korean relations now depends on Seoul's attitude.
South Korea welcomed Pyongyang's offer saying it is preparing for the reopening of hotlines.
Ecuador's President says a massive prison riot has left more than 100 people dead and about 80 wounded. It's thought to be the worst ever
outbreak of violence in the country's prison system. Authorities have been trying to regain control since gang fights broke out Tuesday. The
government is sending more troops to help.
Still to come on FIRST MOVE, ripple effect: The shipping crisis caused by COVID could last years. We'll hear from the experts making that forecast.
And another senate grilling for Facebook, this time over reports that it knew Instagram was bad for teenagers and did nothing.
(COMMERCIAL BREAK)
KOSIK: Welcome back to FIRST MOVE. Lights, camera, action.
We are live today from Los Angeles. Investors on Wall Street hoping for a blockbuster end to September trading and the third quarter. We've got green
arrows for Wall Street futures right now. But lots of drama set to unfold in Washington as Congress works to prevent a government shutdown before
midnight tonight.
And it's not looking like a happy Hollywood ending on Wall Street for the month. Stocks are on track to close September in the red. Tech is the worst
performer due in part to higher bond yields.
[09:20:10]
KOSIK: October could be a tear jerker, too, as we speed toward the October 18th debt ceiling deadline. Third quarter earnings season kicks off in a
few weeks.
Meantime, a strong U.S. jobs report next week could seal the deal for the Fed. Fed officials hope to begin tapering stimulus as soon as November if
they continue to see solid U.S. employment growth.
Jeff Kleintop joins me now. He is the Chief Global Investment Strategist at Charles Schwab.
Great to see you.
JEFF KLEINTOP, CHIEF GLOBAL INVESTMENT STRATEGIST, CHARLES SCHWAB: Thanks for having me.
KOSIK: So the recent selloff we saw and all the volatility, many are pinning that on rising bond yield. I'm curious what you think investors
should expect as we get closer to the Fed pulling the trigger on its policy changes?
KLEINTOP: Well, they can expect yields to continue to rise. I mean, growth momentum has slowed, but growth is still strong. You know, world GDP may
slow to four and a half percent next year from six percent this year, but that's still a booming pace of growth. We'll see that booming pace of
growth continue in the U.S. as well.
You combine that with stubbornly higher inflation, and not just in the U.S. either. You know, the Bank of England last week talked about inflation may
not be so transitory. French inflation rose above two percent today, and the Central Bank tapering in Europe in the U.S. that can also add a lift to
yield, so we continue to expect yields will move higher.
But rising rates or inflation aren't necessarily a problem until the unemployment rate falls to meet the rising rate of inflation. When that gap
closes, the unemployment rate and the CPI rate, a recession and bear market usually follow. That's been the case for 40 years. That is now the case,
that gap has just closed, but we expect inflation to begin to ease back to the two to three percent range from the five percent it has recently been
in, and if that's the case, stocks may have more room to run.
KOSIK: And I know you're keeping an eye on the S&P 500, and it hasn't reached even a five percent correction this year. I think it's down three
and a half percent. So, maybe it is getting a little close.
What are you seeing under the hood though, with the S&P 500, even though the index itself has now corrected?
KLEINTOP: Well, there are a lot of rotations taking place, right? So we've gone back and forth from value stock leadership to growth stock leadership
over and over again this year. I think we're on the cusp of a rotation back into value stock leadership, and that could breathe new life into the
overall index and cause it to hit new highs even as those growth stocks, tech, for example, begins to take a breather.
What we've seen this year is every time the case count from COVID rises, we see a return to the lockdown leaders, stocks like tech do really well, and
when that case count begins to fall again, we see a return to value stocks like energy. And that's beginning to happen now. We've started to see more
of a rotation back towards that value part of the market. Again, could help to lead the overall index to new highs on new leadership.
KOSIK: And I know you've got your eye on Japanese stocks that became some of the world's best for performers in September in the third quarter. What
do you see going forward, you know, as far as momentum goes?
KLEINTOP: Yes, I think that surprised a lot of investors. But you know, with the Olympics being behind us, maybe a selection of a new Prime
Minister behind us now, we're getting to a point where I think Japanese stocks are really starting to hit their stride.
We've got an election here in the fourth quarter in Japan, leading into general elections and coming out of them usually very good for Japanese
stocks, very strong earnings revisions. And I'd note that the Japanese economy is still feeling the effects of the lockdowns with Tokyo still in a
state of emergency. That is soon to lift.
We'll actually see likely better economic growth in Japan next year than we have this year, and that's the reverse for so many nations. So,
accelerating economic and earnings momentum, low valuations and optimism around the elections could help Japan stocks to continue to lead in Q4.
KOSIK: Before we go here, I've got to ask about Fed Chief Jay Powell because Elizabeth Warren called him a dangerous man who is weak on bank
regulation. There's also this stock trading scandal hanging over the Fed.
I'm curious, where do you put his chances of a second term?
KLEINTOP: Very high. Nearly a hundred percent that Powell will be reappointed. I think that as the longer it goes before we hear something
from President Biden, the more the market may worry about leadership at the Fed and the direction of future monetary policy.
We are pretty highly confident that Powell will be reconfirmed given from what we're hearing from our Washington contacts.
KOSIK: And one more for you, you know, related to what's happening on Capitol Hill, what do you think ultimately happens to tax policy?
KLEINTOP: Tax policy does change. We do see minor increases in tax rates, but watered down from the proposals we're seeing right now. Historically,
it hasn't been a big impediment for the stock market. I think we can continue to see stocks move higher on higher revenue and earnings growth
and pay a little less attention to the bottom line impact of slightly higher corporate tax rates.
[09:25:07]
KOSIK: And the corporate tax rate you're seeing, do you see 26.5 percent?
KLEINTOP: Somewhere around there, I mean, not going all the way back to where rates were prior to the Trump tax cuts, and I think that's just part
of the global trend for the last 40 years of lower and lower global corporate taxes, though, we may see a floor put in place globally. That
trend continues to be in place, and I think very unlikely to see countries buck that trend to begin to raise corporate tax rates. It's just too
competitive a global environment.
KOSIK: Okay, great conversation. Thank you, Jeff Kleintop, the Chief Global Investment Strategist at Charles Schwab.
KLEINTOP: Thank you.
KOSIK: Thanks for your perspective.
And it's finally here, Expo 2020 kicking off in Dubai after being delayed by a year because of COVID-19. It's expected to be the biggest event to be
held in the world since before the pandemic.
Scott McLean is live for us in Dubai with more. So Scott, what's it looking like?
SCOTT MCLEAN, CNN CORRESPONDENT: Hey, Alison. Yes, this is the very first World Expo ever to be held in the Middle East, and it is a big deal for
Dubai.
Truth be told, a lot of North Americans likely don't know that world's fairs or world expos are still taking place. They've heard about them
happening in history, perhaps because the last one in the U.S. was held almost 60 years ago.
But this is still very much a global meetup, an exchange of ideas, the latest technologies and 192 countries and a lot of other business people
and interested parties will be here over the next six months.
So the gates don't actually open until tomorrow. Tonight though is the opening ceremony. It starts in about two and a half hours from now and when
it does, all of the invited guests, you can't buy a ticket for this, all of the VIPs will come down from this main exhibition area. They'll come down
this main road past people singing, dancing, entertaining, and they will come to this Expo, the Al Wasl Plaza where they will be greeted by a
performance.
We got to see a preview of that a couple of nights ago that is easily on par with any Olympic opening ceremony. Andrea Bocelli is going to perform
along with Ellie Goulding, Andra Day, and the list goes on. They even borrowed some talent from Cirque du Soleil.
What's really amazing though here, Alison, is if you know anything about Dubai, they don't do anything in half measures, they go big, and they
certainly have here as well. Back in 2013, when this city won the bid for this event, all of this where we're standing right now, this was open
desert. This was a camel farm. There were a few trees and a heck of a lot of sand.
Now, it is a small city that they have created just in the last couple of years. It's really something pretty amazing to see. But they do obviously
have their share of challenges. This event was delayed by an entire year because of the coronavirus pandemic. You have to be double jabbed to get in
or have a negative test.
And even once you're in, you have to be wearing a mask even outdoors. They've made exceptions for broadcasters while broadcasting, which I'm
thankful for.
Also, just a couple of weeks ago, the E.U. Parliament passed a resolution calling on European sponsors and member states to withdraw from this event
citing human rights concerns. That is something that the Emirati government strongly rejected. And so far, no European countries have actually dropped
out, perhaps because they don't want to miss out on the opportunity to forge some connections, do some diplomacy, show off their latest
technologies and maybe borrow some ideas from some of the other countries here that are going to be exhibiting.
But I have to say, one of the biggest challenges is the most obvious one when you walk in here, Alison, and that is the suffocating heat. Right now,
it is 93 degrees Fahrenheit last time I checked, about 33 to 34 Celsius and really, really humid.
This week, it is expected to get over a hundred. I brought this up with one of the Emirati organizers who said, this is comfortable, the winter, it
gets better. So, they are certainly hoping that the temperature comes down over the next six months.
It's already difficult to get people to travel in the age of a pandemic. It is even more difficult to get people to visit somewhere with this kind of a
heat. So we'll see how well they can do.
They're expecting at least on paper to see tens of millions of visitors -- Alison.
KOSIK: Well, hopefully they'll provide a lot of ice water. Scott McLean, thanks very much.
The market open is next.
(COMMERCIAL BREAK)
[09:32:39]
KOSIK: Welcome back to FIRST MOVE. I'm Alison Kosik, and U.S. stocks are up and running this Thursday, the last trading day of the third quarter and
as expected, we've got a higher Wall Street open across the board with tech in the lead.
Deal making in the pharmaceutical sector is helping to boost the market mood. Merck has announced the deal to buy Acceleron therapeutics for $11.5
billion.
Meantime, Bitcoin is on track to close the quarter with a gain of about five percent. It is still down though eight percent for the month due in
part to Beijing's ongoing crypto crackdowns.
And for a closer look at the future of crypto, I want you to join FIRST MOVE anchor, Julia Chatterley and Mike Novogratz, the founder and CEO of
Galaxy Digital for a special edition of CNN Business's Foreseeable Future.
This is a streaming show that's going to go live today at noon Eastern Time in the U.S., so head to the CNN Business website to sign up. Today's topic,
"Cryptomania."
Shipping rates are at a record high. Container prices are up 90 percent compared to last year. That's according to the Xeneta, which provides real
time data on the freight business for clients including Nestle, Unilever, and LVMH.
Now, it is warning the impact of COVID on shipping could last well beyond next year.
Let's get more with Patrik Berglund. He is the CEO of Xeneta. Great to have you with us. This topic is something that everybody is talking about
because the supply chain challenges, they're driving prices up as ports face a record backlog. Can you really pinpoint that this is singularly
caused by the pandemic?
PATRIK BERGLUND, CEO, XENETA: Well, Alison, first and foremost, thanks for having me on CNN today. I think we've got to look back to understand why
we're in this situation as of today. Because what we're seeing today is not very far from what we've seen over the last 18 months to be honest. It's
just gone from really bad to even worse.
We have a situation now with more than a hundred vessels waiting to enter U.S. ports globally. There's hundreds of vessels stocks and particularly in
Asia, and there's overall a container shortage. They're stuck at sea. They're stuck in ports. There is strained infrastructure in particular in
the U.S., shortage of drivers, limited port capacity, overall.
There is weakened sort of inefficient hinterland connections and the results sort of from this is that this year is going to be hard to reach
the Christmas season and all of that speculation, but really what's made this sort of -- what has brought us to this point is a series of events.
[09:35:17]
BERGLUND: COVID hits, right? Capacity got reduced because everybody expected that there would be less trade. On the contrary, with the
lockdown, more trade happened as we shifted our spendings away from services and travel, right, and the hard thing about that is that was
increased -- it increased demand on a reduced shipping capacity.
Then Brexit followed, Evergiven blocked the Suez Canal. We had lockdowns in Yangtian and Ningbo. We had recently now South Vietnam locking down,
typhoons reducing throughput capacity in Shanghai. We've had strikes on the U.S. East Coast, congestions, and basically endless amounts of bottlenecks.
And this is like, almost a vicious cycle that we've been stuck in and we are seeing the result of this, as we speak, right? And another --
KOSIK: And so this is very clearly -- finish your thought, go ahead.
BERGLUND: No, just -- I want to raise a conundrum here where there's three alliances, that, you know, is controlling more than 90 percent of global
container ocean volumes, and they're reporting historical results.
They're making more in a quarter than they done collectively over the last 10 years, and we're heavily relying on them to ease the situation. And I
guess, it's a fair question to ask whether, you know, they have the right incentive with those financial results to ease the situation.
KOSIK: So how do you see this easing up then? You know, where does this improve? You know, I'm hearing warnings from industry groups have a global
transport system collapse? Do you agree with that? And once again, where do you see the pressure, you know, alleviating a little bit here?
BERGLUND: Yes, I think, I'm not sure I would use the word "collapsing." But you know, there's a need to regroup and really look at the
sustainability and how resilient our global supply chains really are.
The longer term consequences of this situation is really that we need to improve the infrastructure supporting global supply chains, and
particularly in the U.S. There are significant investments needed. And with that in mind, there simply isn't no immediate relief on the horizon. It
will take years to improve the situation, way beyond 2022.
And then, with this comes, you know, a risk of inflation as well as these costs, these increased costs at some point that will be passed on to
consumers, even more so than we've seen already, right?
And that sort of brings me to another point that if this really is a new normal for the cost of transportation, we have to reconsider and revisit
which commodities are even moved between which nations, whether in the long term makes sense to continue moving them, or whether the increased cost
actually justifies new trade patterns to emerge from other areas of the world, or even in some cases, nearshoring.
And these are even longer term consequences beyond 2025 and 2030, because it will take decades to build up something similar to what we've built in
the Far East for decades, right?
On the flip side, I just want to mention that as well on a more positive sort of note. These market conditions finally is what's needed for this
industry, for the shipping lines to have a real fighting chance to invest in sustainability and to reduce the environmental footprint. And that I
guess, at the end of the day is beneficial for all of us.
KOSIK: Do you see companies -- and you mentioned this could change trading patterns -- do you see companies changing where their manufacturing is
happening?
BERGLUND: So the first thing that happens for businesses is that they look for stable supply, which is everything else than what they're currently
getting, right? And COVID initially gave sort of like an appetite to think about multi-sourcing, could you potentially bring your cargo from Vietnam
or even South America not only rely on China as a source? And they've explored this and while sort of period into COVID, they realized that that
there are genuine opportunities to maybe find some parts in Eastern Europe and some raw material elsewhere then the traditional sources.
But building up enough capacity in that -- you know, on a more global scale from other sources will take a lot of time and the long-term implication
from the situation is, is maybe that we are planning, more nations will try to be less dependent on China or even Southeast Asia as the delivery hub of
the world.
[09:40:11]
KOSIK: Yes, fascinating to see how these supply chain issues have caused this other domino effect and the way we see trade happen around the world.
Great talking with you, Patrik Berglund, CEO of Xeneta.
Coming up on FIRST MOVE, teenagers and tech, a hearing today about social media and its effect on mental health raises questions -- serious
questions. We'll explore after the break.
(COMMERCIAL BREAK)
KOSIK: Welcome back. Facebook's Global Head of Safety will face tough questions at a Senate hearing this morning. She will be asked about
internal Facebook research into how Instagram affects teen users including their mental health. Facebook owns Instagram.
Clare Sebastian spoke to some school kids in New York about the intersection of the real world and the digital one.
(BEGIN VIDEOTAPE)
HANNAH KURDZIEL, SENIOR, TOWNSEND HARRIS HIGH SCHOOL: I do think there is like a certain dependency. I've noticed this behavior in myself.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT (on camera): Do you ever find yourself doom scrolling, I think it is called?
NOAH ROBERTS, SENIOR, TOWNSEND HARRIS HIGH SCHOOL: Yes, just scrolling forever and not doing anything not any school work you need to do, yes.
SEBASTIAN (voice over): High school seniors Hannah and Noah have no time to waste. They're just weeks into their final year of high school, juggling
schoolwork, clubs, and college applications -- and social media.
KURDZIEL: I think a lot of it is just a fear of missing out or not being as involved with your friends.
SEBASTIAN (voice over): Hannah is Student Union President, a job she says she couldn't do without Instagram. She runs the union account. And yet last
winter, she did delete TikTok.
KURDZIEL: I would just constantly be sucked into these videos that were really appealing, but didn't particularly help make me happier as a person.
I think overall it has been a net positive. I think I've stopped worrying about the way my body looks a lot.
SEBASTIAN (voice over): These teenagers are aware of the mental health risks of social media, and as the "Wall Street Journal" recently reported,
so is Facebook.
The paper said Facebook's own research in 2019 showed one in three teenage girls with body image issues felt Instagram made those issues worse. News
that didn't come as a shock to teachers here.
IAN MORZAN, DEAN, TOWNSEND HARRIS HIGH SCHOOL: So we were noticing the ill effects of oversaturation with regards to social media, students reporting
sleeplessness, all kinds of other kind of social emotional learning challenges.
[09:45:04]
SEBASTIAN (voice over): The School Dean, Ian Morzan says the pandemic brought things to a head. Last year he began running regular classes,
teaching students to take charge of their online presence.
MORZAN: They can really have an open discourse about what's good, what's bad, and then how do they protect themselves.
SEBASTIAN (voice over): So Hannah and Noah, 18 months of virtual school did prompt a reckoning.
ROBERTS: It made you more in control of yourself because you had to be, or else you get completely lost in it. I think that limiting my social media
to a lot of healthy stuff actually, you follow people that inspire you, your friend.
SEBASTIAN (on camera): You guys were born in the same year as Facebook was. Do you ever worry about the long-term implications of never having
known a world without social media of how it might have shaped you?
ROBERTS: I don't because the way you guys describe it before, social media doesn't sound like a fun place at all. You get to see more people and learn
more cultures much quicker than you would.
KURDZIEL: I do worry sometimes about what it means for not only things like my attention span or something that I think we're facing
generationally, but on a more personal level. I do worry that I become preoccupied with maybe the way I'm being perceived by other people online,
and I know that's not a healthy thing to worry about a lot.
SEBASTIAN (voice over): Clare Sebastian, CNN, in Queens, New York.
(END VIDEOTAPE)
KOSIK: Okay, and watching that report with us was Lance Ulanoff, tech expert, and he joins me live. Great to see you.
Let's first talk about the Senate hearing happening this morning. It's called "Protecting Kids Online." What do you think is going to come out of
this hearing? What do you think it will ultimately accomplish?
LANCE ULANOFF, TECH EXPERT: Well, ultimately, it won't accomplish anything because nothing moves. You know, no regulation comes out of these hearings.
But it is -- you know, they are shining a bright light on Facebook, its practices, what it does and doesn't know about its audience and how it's
impacting them.
So we're going to get a lot of questions about "The Wall Street Journal" report. We're going to get a lot of questions about the slides that
Facebook itself released in the last 24 hours, which support much of what "The Wall Street Journal" reported, but it also maybe expands on a little
bit because Facebook kept saying that they were distorting their findings.
But I've been looking at the slides, and I don't see much distortion. I see that Facebook is well-aware of the impact of Instagram on young people in
particular women -- teen women.
KOSIK: So I mean, what Facebook did was pause the development of Instagram for kids, so it is doing something, right? But I don't know, does that mean
that Facebook or that Instagram won't just -- or Facebook won't just pick up the ball and go back into development of that Instagram for kids and run
with it again, when all this negative press dies down?
ULANOFF: Yes, I mean, there is a big question about whether or not this is a real turning point, because, you know, Facebook has been under scrutiny
for years. It has all sorts of things going on -- antitrust questions, regulation questions. So there's -- you know, some people think this feels
different because Facebook knew, and I know that we're going to be hearing from a whistleblower in the next couple of days, which I think is somebody
from the inside of Facebook, which might make a difference.
But it's also -- we knew this. I mean, I think we all understand the distortion that is coming through Instagram and Facebook, in particular
Instagram, and the videos and the images that is not reality. Facebook says, you know that people don't -- you know that they need to kind of help
people understand what they're seeing is not reality. That people can lie for instance when they say, look, my face is clear. I don't have any
pimples, no filter, when in fact they are using a filter, and it's very confusing for young people who may already have image and body issues.
So we've known this. I think that, it is now -- it's out there in the open. The big question is, what is Facebook going to do about it? What is
Congress going to do about it? What are teens going to do about it? And what are the parents of teens going to do about it who know that their kids
are looking at these platforms.
KOSIK: Yes, I mean, you wrote an impactful piece on "Medium" and one of the points you were getting at is that our children need less screen time
and more eye to eye time. Look, this is not something new, we know this. But really, how can parents execute this strategy? I mean, you saw on that
piece that the young woman there needs to use Instagram, you know, for her school, you know, in the position that she holds on the school government,
yet she realizes there are drawbacks of it. So it's sort of, you know, a love-hate relationship with social media.
ULANOFF: Yes, and I think for parents, you know, it's a lot of frank discussions. You know, talking about and not judging, but talking about the
platforms they are using, why they use them, what they enjoy about them, what they don't enjoy about them? And helping them open up about when they
see something on these platforms that upsets them.
And it is not -- you know, it ranges from you know what they see their friends are maybe doing online, they have more friends than they do, to
what celebrities are doing and how they can't attain that lifestyle. So helping your children, helping your teens be grounded in reality, and a
balance of how much time they actually spend with these devices.
[09:50:16]
ULANOFF: You know, your report talked about the pandemic, and I think that intensified all of this. We all spent a lot more time on devices -- the
only way we could experience things, we could see other people. You know, I still believe there is a net positive to social media in bringing people
together, but the idea that everything you see and read and experience on these platforms is true and real, and is something attainable for the
average person is simply not true.
And I think those are the conversations that have to happen. But again, largely, we don't need really young people on social media. You know, one
of the things I said in my piece is that children on social media is a problem and that is something that Facebook is super aware of that people
under 13 are on their platform, and that is all platform, that's TikTok, that's YouTube.
And so that's a bigger question for parents and a bigger question for Congress about how we regulate that and how we ensure that's not happening.
KOSIK: All right, independent technology expert, Lance Ulanoff, thanks for your perspective today.
ULANOFF: It's my pleasure.
KOSIK: Still to come on FIRST MOVE, Britney Spears is one step closer to regaining control of her life. Details on a major court ruling against her
father's oversight.
(COMMERCIAL BREAK)
KOSIK: For the first time in 13 years, Britney Spears is free of her father's court ordered oversight.
A judge in Los Angeles has suspended Jamie Spears from a conservatorship that controls the singer's business affairs. Attorneys for the popstar had
accused her father of cruelty and abuse and hailed Wednesday's ruling as a big victory in their legal fight. They will now try to end the
conservatorship all together.
Let's get more now from our Chloe Melas. She is live for us in Los Angeles. So Britney waking up today without her father as conservator.
CHLOE MELAS, CNN ENTERTAINMENT REPORTER: Hey Alison, that's exactly what Britney Spears's attorney said that she wanted, that not one more day could
pass with Jamie Spears, her father as her conservator, a role he has had for 13 years since this conservatorship was first put into place in 2008.
And the judge, Judge Brenda Penny clearly agreeing with Matthew Rosengart saying in the courtroom, which I was in, that this is a toxic and untenable
situation for Britney Spears.
Britney later taking to Instagram saying she is on cloud nine. She didn't address too much more, Alison, but she seems to be really happy.
KOSIK: I saw that she posted -- there was a post of her in an airplane that she was on cloud nine. So what's the next step? When is the next
hearing?
MELAS: Yes, so the next hearing is on November 12th, and it is expected to be a termination hearing. That is when the judge will effectively look at a
care plan for Britney's finances, her mental health, and say okay, you have the right people in place, go forth, enjoy your life. You get your finances
back. You get your credit cards back, your debit cards back. I mean like basic civil liberties back that she hasn't had for over a decade.
[09:55:10]
MELAS: But again, this is something that Jamie Spears doesn't want, an attorney for him telling CNN that the court was wrong to suspend Mr.
Spears, put a stranger in place to manager Britney's estate and that Britney begged the court to terminate earlier this summer, and that's what
they claimed that they were trying to do.
In the meantime, a certified public accountant by the name of John Zabel is going to be temporarily filling in, but by the New Year, you can expect
that Britney, no more conservatorship.
KOSIK: Very quickly, what can we expect to see from Britney?
MELAS: Well, you know, she has said she will not perform as long as her dad is in control, Alison. So now that he is not in control, could we see
her put out more music? Go on tour? Maybe go back to doing some sort of a residency on her own terms? Have a baby, get married -- and all the things
she talked about in the testimonies this summer.
KOSIK: All right, we shall see. Chloe Melas, thanks so much.
That's it for the show. Be sure to connect with me on Instagram and Twitter @AlisonKosik.
"Connect the World" is next. I'll see you next time.
(COMMERCIAL BREAK)
[10:00:00]
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