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First Move with Julia Chatterley
Democrats Remain Divided, Biden's Spending Plans in Peril; Merck Claims its New Pill Cuts the Risk of Death and Hospitalization; Rising Energy Costs and Inflation to Multi-Year Highs in Europe. Aired 9-10a ET
Aired October 01, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:22]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need-to-know.
D.C. deadlock. Democrats remain divided, Biden's spending plans in peril.
COVID curb. Merck claims its new pill cuts the risk of death and hospitalization.
And powering prices. Rising energy costs and inflation to multi-year highs in Europe.
It's Friday let's make a move.
A warm welcome once again to FIRST MOVE this Friday, a day when minor miracle, the U.S. government remains open. The state of President Biden's
stimulus agenda is best left unspoken and a weak finish to Q3, but the bulls are not broken because on Wall Street, we're looking at a mostly
higher open to begin the final quarter of the year.
In Europe, though, it's an October oh no. As I mentioned, Eurozone inflation now sitting at the highest levels in over a decade as energy
prices spike. We've got all the details on that.
Plus breathing space in Asia as Chinese stock markets will remain closed for the Golden Week holiday. Global stocks truly lacked the Midas touch or
should we say the gold finger in September. The NASDAQ plunged at five percent as bond yields bite. Time to call the real "Bond" perhaps better
known as 007, the new "James Bond" film making its U.K. premiere this week, I'm sure no one missed that. It's titled "No Time to Die."
But there is no quantum of solace amid the specter of rising borrowing costs, food and energy shortages, less Federal Reserve firepower and a
looming debt crisis -- a debt ceiling crisis is all weighing on investor sentiment.
And let's not forget, President Biden's wider stimulus hopes are being held up by the Democrats very own Doctor No. Senator Joe Manchin, a Democrats
liberal, frank in revolt, too. There could be a windfall rather than a sky fall though for the bulls in all of this, perhaps further delays in fiscal
spending could mean a longer delay in Federal Reserve tapering.
But let's not be complacent, diamonds may be forever, bull markets are not.
Let's get right to the drivers. And thank goodness it's Friday.
Nancy Pelosi refuses to live and let die. No, we're still going.
The U.S. House Speaker vowing to put the $1 trillion infrastructure bill up for a vote today. After a failed attempt yesterday, the Biden
administration agenda truly at a critical juncture. John Harwood joins me from Washington. No more "Bond" puns, please.
Do we see about today, John? And if so, on what? What's the latest?
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: I would expect a vote today, but I wouldn't expect it, Julia, on that bipartisan infrastructure bill
because the reason that didn't take place last night was the negotiations that were very intensively underway between the White House, Democratic
Congressional leaders in both the House and Senate, the to hold-out Senators, Manchin and Sinema, as well as progressives, they are trying to
come to a framework agreement that would allow the progressive to feel comfortable with the infrastructure plan, and Joe Manchin and Kyrsten
Sinema to get comfortable with the reconciliation plan.
The reason they need a vote today is that the end of the fiscal year was the expiration of the Federal Highway Program. They need to have at least a
short term extension of the Federal Highway Program to avoid highway projects coming to a dead stop.
So if there is a vote today, and I expect there will be, I would expect it to be on a short-term extension of the Federal Highway Program rather than
the infrastructure package. It's possible, I guess, if they can actually get a detailed framework agreement that they could -- the progressives
could feel comfortable enough to allow the bipartisan infrastructure bill to go forward, but I think the negotiations likely will take longer than
that.
CHATTERLEY: I want to put an investor's spin on this as well, just given the show focus. And do you agree perhaps that it might mean a delay to Fed
tapering? And also if we're seeing ultimately less spending, perhaps, and particularly given Sinema's view on not having further tax rises, that's
sort of a boon for corporates, if not individuals in this country as well?
HARWOOD: Well, certainly the package is going to be smaller than President Biden proposed, and because it's going to be smaller, there'll be less
spending, and there'll also be fewer of the tax increases that he proposed on both high-income individuals and corporations, so corporations
presumably will see depending on what exact piece of shakeout can see that as a positive.
We're not going to see, I don't think, the corporate rate, for example, go up to 28 percent. It'll be somewhere between 21 and 28. We've also seen
some of the tax items on high-income individuals like step up basis, things designed to capture capital gains that are passed on to heirs.
[09:05:28]
HARWOOD: That has fallen out of the package so far, in terms of the spending, a lot of the spending, of course, as you know, Julia was going to
take place over a number of years. So, I don't know how much that will factor into the tapering decision by the Fed. Some of it is short term
spending, for example, the child tax credit, that's money that goes out every month into the bank accounts of people who qualify, but they might
narrow the number of people who qualify. If so, that would be less stimulative spending in the economy.
CHATTERLEY: Wow. I mean, it's already been a really long week in D.C. Something tells me, it could be another long day.
John, thank you for your wisdom on that and have a great weekend. John Harwood there.
All right, let's move on to our next driver. Drug maker Merck has announced a potential breakthrough treatment for COVID-19. It says its experimental
pill can reduce the risk of death and hospitalization by half.
The company will apply for emergency use authorization in the United States, and if that gets greenlit, that pill would be the first oral
antiviral drug for COVID.
CNN's Elizabeth Cohen joins us with more -- I am running out of words there. Elizabeth, great to have you with us. Just compare this to what we
already have in terms of monoclonal antibodies because of course, that's taken intravenously. So this appears to be if it works, easier and cheaper,
but perhaps slightly less effective. What more do we know?
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Easier is the key word here, Julia. So monoclonal antibodies, which can be given early on and
early on in COVID infection, that's when they're given. It's either intravenously or by several shots. You have to get four shots. And that can
be tough to administer, at least in the United States.
Hospitals have had a tough time getting people in for that, administering it. It hasn't gone so smoothly. This is a pill -- a pill is a whole lot
easier. So if you know that you've just been exposed to COVID, you could conceivably call your family doctor, talk to them or go see them, and then
they could just call in a prescription for you. That is way easier.
So let's take a look at what the Merck's clinical trial found. It was just announced this morning. So they took -- these are participants who were in
the early stages of COVID-19. They were no more than five days out from a positive COVID test. So, you can see how soon that is.
More than 700 people in the trial, about half were given the drug. It's an antiviral, and about half were given a placebo. The folks who got the
placebo, which is you know a drug that does nothing, 45 ended up being hospitalized over the next month, and eight of them died. Folks who got the
drug, 28 were hospitalized and zero died. You can see that is a huge difference.
Obviously these results need to be scrutinized by the U.S. Food and Drug Administration, by the E.M.A. in Europe to see if they hold up. And at
least in the United States, also an external board of advisers will look at it. But if these results hold up, this really could be a game changer for
people in the early stages of COVID.
CHATTERLEY: Yes, we'll keep our fingers crossed. What about potential side effects? And I guess the other question, if I can tie it to this, too, is
they're not the only ones that are working on this. I believe Pfizer has also got an option that they're working on and Roche as well.
COHEN: Right. It's not surprising that other pharmaceutical companies are working on this. This is an antiviral. This is very basic. You have
antibiotics for bacterial infections, you have antivirals for viral infections. It just sort of took a while for them to get here.
And it's interesting, because Merck tried this drug out in folks who were hospitalized, and the results weren't nearly as good. And at least in the
in the U.S., it is not on the market for hospitalized patients. It didn't really go anywhere, and that's because as with many viral infections,
you're much better off giving it very early on.
And again, when it's a pill, rather than injections or IV drugs, it is much easier to administer to people who are out of the hospital.
CHATTERLEY: We will keep our fingers crossed that these results and then the F.D.A. is happy enough to sanction this. Elizabeth Cohen, great to have
you with us. Thank you.
All right, now to Europe where inflation hits a 13-year high as energy prices spike. Eurozone consumer prices reached 3.4 percent in September,
with Germany's inflation at its highest level in nearly three decades. Anna Stewart is live in London with more.
I mean, higher fuel prices make us uncomfortable. These kind of inflation numbers increasingly uncomfortable, I think for the European Central Bank,
I believe they said four percent inflation by the end of the year, but then it would come down sharply and I guess the fear is that we don't see that.
ANNA STEWART, CNN REPORTER: Exactly that, and I think even economists right now increasingly divided as to whether this really is transitory. Are
we at the peak or is this heading higher? And I'd say in recent days, that worrying specter of stagflation looms. I'm seeing that word used more and
more.
[09:10:11]
STEWART: We're obviously not there yet, but it's really interesting looking at these inflation figures. We can bring you a chart from Eurostat,
because it is gas that is really driving it, up 17 percent.
Now, this is obviously very high on the agenda for European governments. Eurozone Finance Minister on Monday, we will probably see this being
discussed. Some governments like France, Greece and Spain have already taken some measures to cap the price. So, it's not being passed on to the
consumer. Of course, that will be at the cost for taxpayers or for utility firms, but that might mean that we don't see quite as much of the gas
inflation bleeding through into the next month's figures.
But as you say, this is adding more pressure on to the E.C.B. and the last meeting, they did say they were reducing their asset purchases moderately.
There may be more pressure for a tightening, but I have to say, Christine Lagarde so far has really cautioned against that.
CHATTERLEY: Yes, and that makes sense to me. We've been talking to you all week about U.K. labor shortages, and I feel we have to continue the
conversation. Let's talk about pork. Literally we have a situation with pigs in blankets. Panic buying pigs in blanket, not yet, but we might.
Anna, tell us more about what's going on.
STEWART: It's so upsetting, Julia. Honestly, I feel like there's a shortage of just about everything or the risk of and it's going to hit our
Christmas dinner. There were already concerns about Christmas turkeys, and actually the government announced that they were issuing five and a half
thousand temporary visas for poultry workers to come from overseas, 5,000 temporary visas for truck drivers to help with a petrol prices amongst
other things.
And now, the National Pig Association says they are operating at a 25 percent reduced capacity. Pigs that are ready for slaughter, ready for
processing aren't being and that means the younger pigs coming up through the process are at risk. Their huge whelpers, there were too many pigs in
the pig farms that is leading to culls. I was reading one report of a farmer having to cull hundreds of little piglets.
This is a huge issue and it does feel like while there are labor shortages and issues across Europe, in the U.K., it has been exacerbated by Brexit.
Over 60 percent of meat processing employees before Brexit came from the E.U. and there have been huge calls now for such a long time for the
government to do something in terms of visas, make it more attractive, maybe salaries need to increase that it has become more attractive jobs if
we can get British workers to do them, but so far nothing has happened.
And my goodness, our Christmas dinners are at risk and so unfortunately are the profits for farmers and meat processing companies here in the U.K. --
Julia.
CHATTERLEY: And I feel it's about time to apologize to all the vegetarians out there that are feeling really sick at this time in the morning in the
United States and wherever you are in the world, Anna.
My mother once cured my sister of vegetarianism, I think with three days of nut roasts, so we can all look forward to nut roasts at Christmas perhaps.
Yikes. Sorry, mom, but I'm not lying.
Anna Stewart, great job. Thank you for that.
Okay on, the Venezuela is the latest country to face currency woes yet again. Today, it launched a Central Bank backed digital currency. It also
cut six zeros from the bolivar, the national currency in an attempt to fight rampant hyperinflation, something that they've already tried twice.
Stefano Pozzebon, joins us now. Stefano, great to have you with us. You know, I read this week that the I.M.F. believes in hyperinflation or
inflation, there is going to be around 5,500 percent this year and I read one stat that said it's 300,000 percent in 2019.
I mean, this is just unimaginable. Explain what's happened today because these are two separate issues in my mind.
STEFANO POZZEBON, JOURNALIST: Yes, correct, Julia. What is happening today is that yet again, the Venezuelan government is chopping off zeros out of
its digital -- out of his currency and it's the third time they've done it.
Since 2008, they have cut 14 zeros so far, meaning that the current -- the new currency that is being launched today, is that worth hundred thousand
billion of the ones that were in circulation up until 2008. This is because Venezuela has chronic issues of the hyperinflation.
The figure that you just mentioned, 5,500 percent is actually low for Venezuelan standards. You said Venezuela had over 300,000 percent year-on-
year inflation in 2019-2020. That was the highest inflation in the world, and there is little sign that this new digital currency could help in the
fight against inflation.
At the same time, the government is calling it a digital currency to discourage people to use cash as another tactic to combat hyperinflation,
but Venezuela has a chronic power issues. Blackouts happen almost every day in Caracas and you don't even have a tap and pay on your card when you
travel across Venezuela, so it's a very different thing, for example for what El Salvador is trying to do with its Bitcoin launch -- Julia.
[09:15:10]
CHATTERLEY: Oh, and you've led me there. Speaking of power, what's the latest from El Salvador, quickly, Stefano?
POZZEBON: Yes, correct. El Salvador is trying to use Bitcoin as its official tender. It starts this year. This has caused quite a stir in El
Salvador or Salvador has so far used the U.S. dollar as its legal tender, but the President, Nayib Bukele is trying to move away from the dollar and
launch a new Bitcoin-based economy to woo investor and startups to move to El Salvador.
This is something by the way that, Julia, Venezuela tried to do with the petrol, its own cryptocurrency back in 2018 and 2019. It didn't work that
well, so they resorted yet again to the traditional in Venezuela tactic of just chopping zeros out of their currency -- Julia.
CHATTERLEY: Yes, I think we all know what we think of that.
Stefano Pozzebon, thank you very much for that update there.
And for more on crypto is legal tender, stay tuned later, I speak to the CEO of Strike who was involved in El Salvador's at crypto adoption. He's
also the man behind Twitter's new tipping option, too. I'm very excited to have him on the show. He is coming up later on, too.
For now, let me bring you up to speed with some of the other stories making headlines around the world.
In Ecuador, at least 118 people have now died following a massive prison riot on Tuesday, at least 79 people are wounded and receiving treatment.
Authorities have been inspecting the prison to re-establish control. They've seized guns, drugs, and a few explosives.
Australia says in November, it will reopen its borders to citizens and permanent residents who are fully vaccinated against COVID-19. That will
allow over half the population to travel domestically and internationally. Australia's tough COVID-19 restrictions help to mostly control the
coronavirus inside its borders.
Okay, still to come here on FIRST MOVE, he says he is the oldest and the boldest. I think, the baldest -- B-A-L-D actually, but anyway, he's a smart
man in crypto, billionaire Bitcoin bull Mike Novogratz talks China and regulation. Don't miss that.
And bringing back Bollywood, India's movie business moves beyond COVID with cinema reopenings and blockbuster deals, the CEO of Reliance joins us
later.
(COMMERCIAL BREAK)
[09:20:03]
CHATTERLEY: Welcome back to FIRST MOVE live from New York, where it is looking like a higher open across the board for U.S. stocks as the curtain
rises on fourth quarter trade. Stocks getting about after yesterday's weakness despite a whole host of market challenges as we've been discussing
including the worsening global supply chain chaos.
Shares of U.S. retailer Bed Bath and Beyond fell more than 20 percent yesterday after they warned of weaker sales, rising costs, and possible
product shortages during the holidays. And they're not the only retailer seeing red. Discount chain Dollar Tree announced this week that it is
raising prices to more than a dollar on some goods because of inflationary pressures. They'll have to change the name soon.
Now, a bit of price inflation in the cryptocurrency space today, too. All the major cryptos are higher. Bitcoin bouncing after posting another weak
September, its fifth straight September fall in fact.
One of my big questions today and onwards is the relationship between cryptocurrency prices and the quality of the underlying blockchain
technology. It's something I discussed at a special event for CNN Business with Mike Novogratz, founder and CEO of Galaxy digital. Key to it all is
what happens with regulation, of course, and his view is that the fraudsters and not the innovators should be the target. He described how
his firm is preparing.
(BEGIN VIDEO CLIP)
MIKE NOVOGRATZ, FOUNDER AND CEO, GALAXY DIGITAL: I'm desperately trying to hire a senior Washington guy, hopefully in the next week or two, I land him
to help with our outreach to the political side, both Republicans and Democrats. A Republicans a little bit more like crypto because it's
libertarian, but in reality, it's a very progressive system.
And what's weird is the progressives don't like it, right? Elizabeth Warren is shooting bullets at it. AOC and her cohort haven't said anything
positive. And I'm like, wait a minute, there's nothing more progressive than cutting out the rent takers. Right? Banks charge $8 billion a year in
overdraft fees. That mostly hits the poor, they charge $3.50 or $4.00 on an ATM transaction. That mostly hits the poor.
Crypto will make bagging relatively free -- money transfer relatively free. And so, it really is progressive. We've done a bad job of educating them,
and so there's a big education initiative that has to happen.
Right now, Gary Gensler, who understands crypto to a pretty large degree, who runs the S.E.C., he wants to be the regulator. There are things that if
I was running the SEC, that I'd say, I'm worried about that, I'm worried about that. Ironically, it's not the stuff that's on chain, it's not the
decentralized finance. That actually is almost self-regulating because you actually -- the whole community sees exactly what's happening. There's
complete transparency.
Where he should be worrying is this hybrid where you're doing a lot of crypto business, but there's a lot that's not on chain, right? And then do
we have, you know, organizations running as banks that aren't banks that have way too much leverage? And do consumers even understand they are
taking credit risk in those places?
Like, yes, that's what the S.E.C. should be worrying about.
Here's the trick, because a lot of cryptos aren't securities, you know, by the definition of what a security is, which is a 1930 something law, it's
not even clear that Gary has got a right to regulate. And so he is pushing Congress to try to give him I'm guessing, more power to regulate. He has
got the right to regulate some of this space, but not the broad swath of regulation he wants.
And so given where Congress is today, we are having a really hard time passing any bill. We'll see if, you know, the future for the S.E.C. is a
broader mandate than it is today. If I was there, I would do some regulation. But broadly, I would leave a lot of space for innovation. This
is a young industry, it is creating jobs at an incredible rate. It does self-regulate.
They should be going after the fraudsters and the gimmicksters, but really allowing space around the innovation.
(END VIDEO CLIP)
CHATTERLEY: To many, China's decision to slam the door on crypto seemed inevitable as they develop their own Central Bank digital coin. Mike told
me Bitcoin is a symbol of freedom, and you heard that a bit there, and that it is being read in wildly different ways between the East and in the West.
(BEGIN VIDEO CLIP)
NOVOGRATZ: President Xi, six years ago made a pivot from wanting to be part of this global globalizing world to say, No, no, I'm going to be in
charge. We're going to have a more authoritarian space, not less authoritarian space. I'm going to be a dictator in lots of ways, right? Or
at least, a long-term leader. That's so anti American, right?
Bitcoin is about freedom. The blockchain is about limited government. It's about, hey, we're not going to have no government. But man, we don't want
government knowing every less bit, even the decision of the Central Bank digital currency, right? You can have one like Brian Brooks proposed and
like I think the U.S. will do and I pray the U.S. will do where the Fed sets guidelines on what kind of private organization can set one up, and
where they need to keep the deposits to make sure that that stable coin is backed one to one.
[09:25:38]
NOVOGRATZ: Or you could have one run by the Central Bank where they get every bit of pricing information that anyone spends.
Now, I personally don't want the Fed or any part of U.S. government knowing everything I spend my money on, right? And I think it's so anti-American to
think we're going to have this surveillance state. And you know, and so it's a beautiful setup and that China is showing you who they are, and
they're using this technology in a really -- because it's not decentralized, but they can call it a Chinese cryptocurrency, but it's a
centralized cryptocurrency where you have programmable money with complete surveillance.
And I think in the West, we want the exact opposite.
(END VIDEO CLIP)
CHATTERLEY: For most of us, crypto is a fairly new concept, yet Mike has been investing in the space for almost a decade, and with Bitcoin trading
at $47,000.00 a coin and with hundreds now coins now being traded, I asked Mike for his 10-year price prediction on Bitcoin, and how many of those
hundreds of currencies will actually survive over the next 10 years?
(BEGIN VIDEO CLIP)
NOVOGRATZ: I think the Bitcoin price is over $500,000.00 in 10 years' time, and I would bet 75 percent of cryptos don't make it, right? I'm
pulling that.
CHATTERLEY: More like 90.
NOVOGRATZ: It might be 90.
CHATTERLEY: We'll reconvene in 10 years' time and discuss.
NOVOGRATZ: Yes, we'll come back.
(END VIDEO CLIP)
CHATTERLEY: The market opens next. Stay with us.
(COMMERCIAL BREAK)
[09:30:17]
CHATTERLEY: Welcome back to FIRST MOVE. The opening bell has sounded on Wall Street for the final time this week. And as expected, we've got a
solidly higher open on Wall Street. The bulls coming off a volatile third quarter, but the S&P 500 was able to eke out a sixth straight quarterly
gain.
Inflation pressures, though still making headlines. The Federal Reserve's preferred measure of inflation, the core PCE Price Index rose by 3.6
percent year-over-year in August. That's the biggest jump since way back in the 1990s. It comes on the same day as a troubling new read on Eurozone
inflation, too.
Merck, one of the big gainers in early trading today, the drug maker announcing that its experimental COVID-19 pill can reduce the risk of death
and hospitalization by half. If approved, the medication would become the first oral pill that fights viral infection for COVID 19, as we've already
discussed on the show.
Okay, easy, free, financially, at least and instant communication worldwide. That's the beauty of a social network like a Twitter or a
Facebook. But wouldn't it be amazing if that were the case for global payments, too.
Well, my next guest is working on exactly that, making that model a reality. He is the CEO of a company called Strike and his company powers
the new Twitter tipping option. It allows users to send each other Bitcoin at virtually no cost. And joining us now is Jack Mallers. He's the CEO of
Strike.
Jack, fantastic to have you on the show. I have to say, when I saw this announcement, it completely blew my mind and no offense to Twitter content
providers, it wasn't about them getting tips. Let's just take a step back and explain what the vision is. What does Strike do?
JACK MALLERS, CEO, STRIKE: Julia, first of all, how are we this morning? Thanks for having me.
Strike -- the thesis we hold at Strike is that Bitcoin, the monetary network is the best monetary network in human history, Julia. It's the only
inherently global monetary network we've ever seen, and it offers finality both instantly and at relatively no costs anywhere in the world.
And so we make use of that monetary network as it compares to the Visa monetary network or the Western Union monetary network, or the Square
monetary network, or the PayPal monetary network, and we use the Bitcoin monetary network, not necessarily to speculate on the price but as
financial rails under the hood to make for efficient, free, global and instant payments and we're talking about remittance, we're talking about
checking out at commerce, we're talking about online tipping, and we make use of this really granular innovation for humanity in monetary network
sense.
CHATTERLEY: Okay, so we've got the Bitcoin network. We've also got something called the lightning network. And I know you were one of the
earliest developers of this. Before we dig into the details of this global payments network that we're talking about, just explain the importance of
the lightning network, because I do think my viewers need to understand how much of a game changer that is, too, when you're talking about particularly
efficiency and speed.
MALLERS: You've got it? Yes, so everyone is familiar with the mainstream media critiques that Bitcoin is, one, it is too slow, supposedly to make
use of payments and it's too expensive, right? So the lightning network set out to achieve and solve those two variables.
One, can we solve the variable of time for finality? Can we make a Bitcoin transaction instant? And then two, can we solve the variable cost so that a
Bitcoin transaction isn't too expensive to buy a cup of coffee? And those were the two optimizations the lightning network set out to solve?
And so when you take the Bitcoin legacy monetary network and you combine it with the protocol of the lightning network, now you have a monetary asset
and a monetary network that's inherently global and those two variables solve where finality can be achieved instantly and finality can be achieved
at relatively no cost.
Again, no other monetary network in human history can say the same and that's why it is such a big deal.
CHATTERLEY: I mean, this is basically what Facebook was envisioning, I think with Libra, but everyone went, we don't want to give Facebook that
kind of power. Twitter just seems to obviously, with help got there first and I suppose that's no surprise given Jack Dorsey's interest in crypto.
But can all the big social networks now in some way sort of tap into this via the capabilities of the lightning network?
MALLERS: Yes. Of course. Let me draw it akin to the internet, Julia, in the sense that all of these companies are tapped into the internet --
Facebook, Twitter, Instagram, Snapchat, they all use the worldwide web. They all use HTTPS, TCPIP requests in live on the same standard for
communication. Bitcoin as a monetary network is doing the same for money.
[09:35:07]
MALLERS: Facebook, Instagram, Snapchat, they can all interface with their users in a monetary, global, instantaneous, and free fashion on a singular
standard for money in the same way that they operate on the singular standard for communication.
Bitcoin network is not an optional monetary network. It is the monetary network to operate for instantaneous global settlement. And how different
companies, different services, different internet networks like Twitter and Facebook, how they deem to use it is up to them, but as a singular
standard, in the same way that we don't have a lot of internets, we have one, we won't have a lot of monetary networks, we will have one that offers
instantaneous, free global settlement.
CHATTERLEY: I mean, the key here is, you know, and it was something that I realized when I got to the United States. It was like, you want to send
somebody money? Do you have Venmo? No. Okay. Do you have PayPal? Yes, I do. Oh, okay, great, then I can I can send via PayPal. Do you pay Chase Pay?
No, but I have Venmo.
No one interacted with everybody else. So we needed some way of bringing all these payment systems, these individual payment systems together. I
think anyone that is involved in sending money from A to B probably sat up and looked at this, whether it's a Visa or MasterCard, a Western Union with
remittances, too. I mean, the capacity for this to be a game changer for me is huge.
What are the limitations, Jack, as someone who is involved? What are the limitations of this that you can see?
MALLERS: The limitations to be quite frank, is that we're not all on boarded onto the same standard. You're absolutely correct. If I have my
Venmo account linked to my Twitter account, can I receive a tip from Japan? No, because the Venmo network is closed. Only other Venmo users can tip me
and that's restricted to the United States.
If I have my Strike app linked to my Twitter account, can I receive a tip from Japan? Yes, in fact, I just did. And we need to get everyone onto the
same monetary standard. And let's be clear, that doesn't mean you have to love Bitcoin. That doesn't mean you have to think the Bitcoin price is
going to the moon, right? We're using it under the hood.
So as a tip comes in from Japan on the Bitcoin rails, Strike is going to take the Bitcoin, auto convert it to dollars and credit you the dollar, so
users don't know Bitcoin is being used, but it's a standard under the hood.
So there's a world not far from here, Julia, where my Venmo account can pay my Cash App account, my Cash App account can pay and tip on Facebook, my
Facebook account can tip someone on Instagram, Instagram can tip on Twitter. If we're all on the same standard in the same way that we're all
on the same internet, interoperability and connectivity becomes seamless, easy, global, instant, and free.
CHATTERLEY: Yes, and the point here is you don't have to accept Bitcoin, for example, if it's transferred in Bitcoin, you could accept to receive it
in U.S. dollars or Japanese yen to your point if it's going to be coming from Japan.
Okay, so I mentioned in the introduction that it was virtually costless. What is the relative cost? I mean, if you're doing a transaction on a
credit card, the average cost it gets is around two and a half percent. How low and what is the cost of using this and if it is so low, Jack, how does
Strike make money?
MALLERS: Yes, well, how low can it get? That low. Zero.
CHATTERLEY: Yes, race to the bottom.
MALLERS: Zero. Race to the bottom, baby. Yes, so let's talk about the two and a half percent of a card processor. Why? It's because all of the legacy
fixed costs and intermediaries -- that's the key point -- that are required to achieve settlement.
When I go check out at a Starbucks, Julia, the dollars that I'm pledging to pay Starbucks don't instantaneously somehow hop out, jump out of my debit
card and pop into the cash register. No, there's a lot of intermediaries, banks, credit association balance sheet flow that's required to achieve
settlement for Starbucks to actually retain the dollars that I pledged to pay them and that is why it's two and a half percent.
So for Strike monetizing, this is easy. Monetization is built into the system. Instead of a large retailer paying 2.9 percent, Strike, we could
charge them 0.05 percent if we want, and all of those 0.05 percent, it's all cash profit and no other processing or monitoring network can bring
prices down that low because of the fixed cost. They'd go out of business, they'd go bankrupt.
So at Strike, we can be as revolutionary as with tech as we are with pricing and monetization is built into the system in that sense and
[raspberries] we to all the legacy monetary networks that just can't compete.
CHATTERLEY: And it's not instant, but it's far quicker actually than what we're seeing today in terms of the old payment rails, quite frankly. As any
small business owner watching knows, it can take days and weeks for transactions to settle and that can be a huge problem for any business,
which is why I think this is also so transformative as well.
Know your customer, how are you getting around that? Because you know, I was speaking to the Chief Legal Officer of Gemini, which is a big
cryptocurrency exchange and they were talking about the challenges of know your customer rules when we're talking about the crypto space in particular
and trying to understand who's doing what, particularly where regulators are concerned, how do you get around that, very quickly, Jack?
[09:40:13]
MALLERS: We don't get around anything. We're a regulated entity, we comply with regulation. We take it very, very seriously and compliance is a big
deal.
Listen, I mean, we're living in an extraordinarily disruptive time. Imagine a world before the internet, it seems scary. And we're living through a
similar dematerialization and disruption for money, it is the same thing. And so everyone around the world whether you're a consumer, a retailer, a
business, or a regulator is adapting learning, and so we have good relationships, we are compliant, always looking to learn and so we're not
getting around anything. We are executing and working in lockstep as we should.
CHATTERLEY: I should have said -- I should have said how you're handling it rather than getting around it. I didn't mean to infer that you were
bypassing any rules. Jack, you're sensitive to that.
Now, I was going to ask you about El Salvador, but I don't have time I'm going to have to get you back.
I have to ask where you are. You look like you're in the most phenomenal walk-in wardrobe in the world except it is empty. Jack, where are you?
MALLERS: I am in a giant empty women's closet. You're exactly correct, Julia.
CHATTERLEY: Not necessarily a woman's.
MALLERS: You're right. I guess, technically, it is a giant empty men's closet because it's mine. So, good point.
CHATTERLEY: I could definitely fill that.
MALLERS: Good point.
CHATTERLEY: I could definitely fill that. Great to have you on.
MALLERS: Yes, I guess, I can.
CHATTERLEY: Come back and talk to us about El Salvador as well because I know you're involved in their ambitions as far as Bitcoin and legal tender
is concerned, so we have more to talk about, but, yes, one track mind today. Jack Mallers, great to have you on, the CEO of Strike there.
MALLERS: I'm here whenever you call. Awesome. Thanks.
CHATTERLEY: Thank you.
MALLERS: Thanks, Julia.
CHATTERLEY: We will see you soon.
We're back after this. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. You know sometimes, you ask for something and the world provides and I'm pleased to say Jack Mallers is
back with us, the CEO of Strike.
Few technical issues here, Jack, you are still in the hot seat. So, we do get to talk about El Salvador after all. Talk to me about what Strike is
doing there.
MALLERS: So again, Julia, Strike optimizes around this thesis that we now have a global instant, free monetary network for the world. El Salvador is
an emerging market. It's a developing country and you're talking about a place where 70 -- seven zero -- not 17 -- percent of their citizens don't
have a bank account. They don't have access to any monetary network. They're still living on a cash standard like we were 50 years ago, right?
[09:45:11]
MALLERS: And so what we want to do is make this monetary network accessible to them, give them an access to high quality of life basic human
freedoms to where the Cash Apps and the Venmos that we're so privileged to here, they don't have access to that and make this monetary network
extensible to them because, a very important point, it's the most inclusive monetary network of all time.
It works the same here in this closet as it does in El Salvador. That's a very, very positive and helpful concept to understand that does not vouch
the same for Venmo, like I said. So that's our goal, it is to make this monetary network extensible, usable, and helpful to people that need it
most.
CHATTERLEY: I think that's the allure of cryptocurrencies, in general, whether you're talking about Bitcoin, or some of the others. It is
borderless, it is global, no single nation has jurisdiction or oversight, for better or for worse, and that's also at times a challenge, too.
But just in light of the conversation that we've just had. What role really beyond just saying, okay, you can go ahead and allow this and people can
create or have their own wallets and exchange, does the government need to play? Because you know, I spoke to the Chief of the I.M.F., and she was
like, just because something is possible, doesn't make it a good idea in terms of making Bitcoin legal tender.
Does the government even need to do that, Jack? Give us your wisdom.
MALLERS: Listen, well, let me actually -- simply no. Another very powerful concept, Julia, is that the Bitcoin network, it's an open network. Julia,
in the same way that Google could not do anything for the rest of the year, and they'd be a better company, come January 1st, 2022. How? Because
everyone else around the world is making the internet better and every new website that joins the internet makes Google a more valuable company.
So if they wanted to, they could just sit on their hands and continue to appreciate in their value proposition because they're in an open network
that is the internet.
Bitcoin is the same thing. If the government of El Salvador doesn't want to do anything ever again, you know, who is making Bitcoin better, and their
financial infrastructure better? Myself, Jack Dorsey, Twitter now all of a sudden, developers all over the world, so they don't have to, but they want
to. Why do they want to? It's because they now have access. They don't have to ask permission from any central body, from any counterpart. They have
access to a monetary network that acts in their best interest and a monetary asset that acts in their best interest.
You're talking about an emerging market that gets absolutely crushed by the expansion of monetary supply at Central Banks. So, if I'm a government and
my job is to provide a high quality of life to my citizens, there's really no other project I should frankly be spending my time on.
So do they have to? No. Should they? Arguably, I think so. I think their efforts in Bitcoin are brave, and I'm very supportive of what they're
doing.
CHATTERLEY: Yes, it's an alternative when there's a lack of trust in institutions, and when you have great volatility and depreciation in your
currency anyway, which is why I think certain nations are looking at this and other nations are far slower to react because they sort of have the
luxury or the control of not having to worry so much, and there is going to be criticism of me saying that, I think from certain quarters, because I
know there's criticism of the U.S. dollar and monetary policy here.
Jack, you mentioned this at the beginning of our conversation, and I do think it's really important, how does any of this tie to the value of
cryptocurrencies? Because I do think we have to talk more and more about cryptocurrencies and the volatility and the price changes that we see there
and sort of dissociate that or in some way understand the value of the underlying technology and what that represents, too. How does the value of
Bitcoin change or not change what you're doing?
MALLERS: So it's actually a very interesting point. Internally at Strike, we make a divide between Bitcoin the asset that is typically priced in
dollars and Bitcoin the network that we deem revolutionary and disruptive to existing monetary networks, like a Visa or like a PayPal.
And so, if Bitcoin was $100.00 or if Bitcoin was $100,000.00, I can still get money from here to Japan instantly at no cost, and not even allow the
consumer to be aware that I'm using Bitcoin under the hood.
So we're unaffected and the network is going to disrupt the world no matter what the Bitcoin price is. Bitcoin, the asset, I expect to go well into the
six figures this year and that's because it is the only asset in human history that we've designed from scratch. We engineered it to be perfect.
And so I expect it to appreciate against a global macro environment that's quite frankly absolutely chaotic and asinine. But we think of them as
separate technologies and disruptive and innovative in totally different ways.
CHATTERLEY: Okay, we've already talked about this, but I need you to reiterate it, and we've got about 30 seconds. The foreign exchange risk,
the volatility in the price of Bitcoin if you're trying to convert to dollars at any given point. Why is that not important? Why is that not a
pain point? Why is that not a pain point?
[09:50:09]
MALLERS: Yes, so let's walk through our 30-second example.
CHATTERLEY: Sorry.
MALLERS: No, it's okay, don't apologize. We've got this. Money coming in from Japan. We are going to take the Japanese yen, live convert it, zip it
to Bitcoin. Bitcoins is going to get to this closet instantly and for free, and we're going to convert it to dollars. Julia, all of that took one
second.
And so we're willing to take price volatility worth one second for that level of disruption. That's not a problem. And that type of balance sheet
risk is nothing compared to the services you use today. So it comes easy, Julia. It comes easy.
CHATTERLEY: Micro, micro, microscopic exchange risk, foreign exchange risk if you can do it super-fast.
Jack, you need more than one Bitcoin to fill that closet. You will be back to talk again soon. I'm glad that we got to chat again. Jack Mallers, CEO
of Strike. Thank you, sir. Great to chat with you.
MALLERS: Thank you. Cheers.
CHATTERLEY: All right. After the break, Scarlett Johansson and Disney put their lawsuit behind them and settle their differences over pay. That's in
two minutes. Don't go on away.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Come on, Bond. Where the hell are you?
(END VIDEO CLIP)
CHATTERLEY: Mr. Bond, we've been expecting you. It's been a really long wait. Stunning car chases and shooting in sewers, it can mean only one
thing, the release of "No Time to Die," which was delayed by almost 18 months with the pandemic, and while "Bond" wages war on the bad guys,
Disney and Scarlett Johansson have made peace.
They've settled a dispute about how actors are paid if a movie is released in theaters and via streaming at the same time.
Frank Pallotta is here. Frank, I'm super excited about "Bond," but we don't have time to talk about it. We have to talk about Scarlett, no longer
seeing scarlet, what do we know about their arrangement?
FRANK PALLOTTA, CNN MEDIA WRITER: There's been a lot of news about super spies in the entertainment industry lately with "James Bond" and "Black
Widow."
Basically last night, a big movement in the Scarlett Johansson versus Disney lawsuit. Basically, the two sides finally realized, let's just come
together here and settle and that's exactly what happened. They resolved their dispute is what Disney is basically saying, and what that basically
means is that they found a settlement.
Now, there are some reports out there that you know Scarlett Johansson who argued and alleged in the lawsuit that by putting "Black Widow in" theaters
and on Disney+ at the same time, it basically took away the money that she said she was going to earn. Instead now, they've said that they finally
have come to terms what those terms exactly are, they were not disclosed. Some reports have it out there as much as $40 million. I haven't done that
reporting, so I don't know if that's the actual number, but that sounds like a good chunk of change.
And basically this just allows one of the biggest stars in Hollywood and the biggest studio in Hollywood to stop fighting in public. So in my view,
this was pretty much negotiation, but via litigation.
CHATTERLEY: Wow. But ultimately, we think she got more money and the franchise will continue to use her because I guess that was the risk.
[09:55:10]
PALLOTTA: Yes. She has other things going on at Disney, too. She is producing a tower of terror films for Disney+ I believe, for Disney. You
know, Alan Bergman, the Chairman of Disney Studios content said last night he is excited to continue to work with Scarlett Johansson and Johansson in
a statement said that she is happy that they could come together on this finally after all this time.
But this is a huge deal because this was like a cultural flash point in Hollywood. We're trying to figure out what the future of entertainment
looks like, but more importantly, this lawsuit showed how are the creators and directors and actresses and actors are they going to come together? How
are they going to be compensated for that content that we are going to watch in streaming or in theaters? Or you know, when they implant a chip in
our brains and that's how we watch Disney movies like 20 years from now?
We are trying to figure out how people are going to pay for that going forward? And this lawsuit which has now come to an end was a big flash
point about that.
CHATTERLEY: Yes, I sort of think that's a win for Scarlett. Now, the industry has to work at how they pay everybody else because it has been a
challenging period.
Frank, great to have you with us.
Frank Pallotta there. Have a great weekend.
That's it for the show. Stay safe as always and a special "Connect the World" with Becky Anderson from Dubai's Expo 2020 is up next.
(COMMERCIAL BREAK)
[10:00:00]
END
