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First Move with Julia Chatterley
The Big Banks Reporting Strong Results as the COVID Recovery Continues; President Biden Takes Action to Tackle the Supply Chain Crisis; Prince William Says we Should Focus on Earth Not Space. Aired 9-10a ET
Aired October 14, 2021 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:18]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is what you need-to-know.
Wall Street waltz. The big banks reporting strong results as the COVID recovery continues.
Port plight. President Biden takes action to tackle the supply chain crisis.
And planetary punch up. Prince William says we should focus on Earth not space.
It's Thursday, let's make a move.
A warm welcome once again to FIRST MOVE this Thursday, and a busy week so far, William Shatner's trip to the spheres brings him to the point of
tears, as U.S. ports are running all hours as the supply chain drama further sours. Chinese wholesale inflation the hottest in 25 years and big
banks are reporting their earnings, and investors are all ears.
Wall Street bulls, meanwhile, all smiles and cheers. Take a look at that. The major averages higher premarket. Tech, the outperformer once again as
bond yields steady a strong handover. As you can see there from Europe, too, despite the array of ongoing challenges from rising prices, supply
chain shortages, and higher energy costs, too.
Energy energized yet again. Brent crude closing in on $85.00 a barrel, natural gas naturally higher, too, up almost four percent and China really
feeling the burn. New data on wholesale prices show a record rise in September's coal and natural gas shortages increase business costs there as
well.
It's perhaps no surprise that notes from the last Federal Reserve meeting show policymakers sounding the inflation alarm and are ready to begin
reducing support as soon as next month. Tapering is one thing of course, rising interest rates or raising them is quite another.
The San Francisco Fed President, Mary Daly joins us later in the show with her thoughts and timeline.
Rising rates are good for banks, profits, of course call it a bank earnings boom. Citigroup, Wells Fargo, Bank of America, and Morgan Stanley all
reporting nice results as the economic recovery gains pace, resulting in strong investment banking numbers, fewer loan loss reserves, and robust
deal making, and that's where we begin the drivers.
Paul La Monica joins us now. Paul, it is a bonanza and it is tough to sort through them, but that's your job this morning, and welcome.
The overriding theme I think, is one of ongoing pandemic recovery. And of course, being able to release some of these loans that they've put aside as
the defaults that they were fearing simply didn't happen.
PAUL LA MONICA, CNN BUSINESS REPORTER: Exactly. Julia, I think that really what you're seeing from all of these major banks and we got it from
JPMorgan Chase, Jamie Dimon was very upbeat yesterday about their results and the expectations going forward.
Consumers and businesses did not wind up having the problems paying back loans that many had feared would happen in the midst of the very sharp
economic downturn that we had last year when COVID-19 really became both a health and economic crisis in the United States, and of course, the rest of
the world.
So all of these banks, you have JPMorgan Chase saying it yesterday, but Citigroup, Bank of America even troubled Wells Fargo today, they're able to
release some of these loan reserves because they don't wind up having -- they haven't wind up having as much of a problem with bad loans as they
thought.
Credit quality remains strong and consumers and businesses are starting to look to expand again and borrow even more money at rates that are still
pretty low, even though bond yields have gone up and the Fed has hinted that rate hikes might be coming late next year.
CHATTERLEY: Yes, and as we've watched the challenges and we talk about them, we have watched stock markets in particular much higher. The asset
management businesses, whether we're talking about Citigroup, Bank of America as I look at them here, and Morgan Stanley, as well, all
outperforming.
The trading business as well at Citigroup, helping them see some incredibly strong results this quarter.
LA MONICA: Yes, trading has been an extremely lucrative business for all of these banks, obviously, on the equity side, but also bond trading as
well. And, you know, in addition to asset management, all of these companies that have big investment banking businesses, they are benefiting
as well from a boom and merger activity.
We've had a lot of initial public offerings, even all these SPACs that have been taking place, a lot of the big banks have to be advising companies on
some of those transactions as well. So investment banking, activity, and revenue has been surging in this quarter. And that, of course, is great
news. We're probably going to hear more from Goldman Sachs tomorrow when they report a continuation of this trend.
[09:05:28]
CHATTERLEY: Yes, I guess, the critical thing and it comes down to what we hear from some of the CEOs on the earnings calls as well, and I know we
were pouring over it with JPMorgan and Jamie Dimon yesterday is, any concerns about the pricing pressures, any concerns about the rising energy
costs, because that is going to have an impact on consumer behavior, whether it's on borrowing behavior, on lending behavior, credit card
behavior, and that comes down, I guess, to how concerned some of the CEOs are when we get the earnings calls.
LA MONICA: Yes, most of the big banks that have reported today, they are either in the midst of those earnings calls right now as we speak, or a
little bit later today. So, we're going to have to dive in to those conference call transcripts to see what you know, people like Brian
Moynihan, Jane Fraser, you know, James Gorman, et cetera have to say.
But Jamie Dimon raised a very good point yesterday repeatedly on both the media call that the bank had with reporters, as well as the analysts call,
he's not particularly worried about rising inflation, especially the fact that wage pressures are one of the main reasons why we're seeing inflation
go up.
He pointed out that after the pandemic, when we had so many bad, gloomy economic news, people getting more money in their paychecks, that's not the
worst thing in the world. So, let's not get too caught up in this fear of inflation, when the reason that we might be getting it is that people are
bringing home more money that they have to spend.
CHATTERLEY: Yes --
LA MONICA: And in some cases, it pays, too.
CHATTERLEY: Yes, pay rises are good inflation as long as they don't have longer term impacts on small businesses. There is always a balance here,
isn't it? But yes, without Congress being able to raise the minimum wage, pay rises are good rises, in our view.
Thank you very much there, Paul La Monica.
All right, let's move on. Speaking of reopening, starting today, tourists from 19 countries can now head to Indonesia's top holiday destination. The
International Airport in Bali was empty this morning, but that is likely to change as Manisha Tank reports from Singapore.
(BEGIN VIDEOTAPE)
MANISHA TANK, CNN CORRESPONDENT: Like many beautiful resort islands across Southeast Asia, Bali has been hit hard by restrictions to curb the spread
of COVID-19. But now, some really welcome use. It has been announced that Bali can receive international visitors from a list of 19 countries.
And on that list, some big hitters, China, India, Japan, New Zealand, France -- very valuable sources of tourism dollars. Indeed, Bali's economy,
derives 54 percent of its income from these international tourists.
So this is news that's worthy of celebration. So, why is it happening now? Partly because the situation around COVID-19 has improved drastically
across Indonesia. But in particular, in Bali, the vaccination rate is running very high with double doses of vaccinations running at more than 83
percent and those who've had a single dose at some 99 percent or so. So it's a very, very high number.
However, if you were expecting for tourists to have been lining up for this reopening, that was bizarrely not the case.
TAUFAN YUDHISTIRA, NGURAH INTERNATIONAL AIRPORT (through translator): Until today, Bali International Airport still hasn't received any
international flight slot request, whether a flight to or from Bali, but instructions from the National COVID-19 Task Force said that Bali is now an
entry point for international flights to Indonesia.
TANK: That was Taufan Yudhistira from Ngurah International Airport, outlining some of the issues around bringing tourists back in, notably, the
fact that no flights have been scheduled to land just yet.
So it's a softly, softly approach that the government says it will continue to review.
What do you need to do then if you are an international tourist and you want to go to Bali? Well, you'll need to pay for a five-day quarantine at a
Balinese hotel, and you'll have to stay in your room. On top of that you'll need $100,000.00 worth of COVID-19 insurance and you'll have to be double
vaccinated within a particular timeframe before your arrival in Bali.
For now though, it is reason for the Balinese to be upbeat after what's been a really difficult one and a half years.
For CNN, I'm Manisha Tank in Singapore.
(END VIDEOTAPE)
CHATTERLEY: One of my favorite holidays in Bali though, so recovery there is good sign even if it takes a bit of time.
Okay, onwards, port problems. President Biden announcing the Port of LA will now operate 24/7 to help clear the backlog at one of the world's
busiest. This, as another major port in Savannah, Georgia is also approaching crisis point with around 80,000 shipping containers stacked up
and waiting.
Amara Walker is live for us and there. Amara, great to have you with us. Just talk us through some of the challenges that this port is seeing and
whether or not they believe actually, the moves announced by President Biden will help.
[09:10:23]
AMARA WALKER, CNN CORRESPONDENT: So just to put things in context, Julia, this is the third largest container port in the country after LA, Long
Beach, and also New York, and New Jersey. So first of all, I just want to show you what we're seeing here, and it really takes your breath away.
If you look behind me, you'll see a wall, a huge wall of just shipping containers piled as high as you can see here at the terminal at the Port of
Savannah. And as you said, 70,000 to 80,000 of these steel boxes just waiting to be picked up by retailers or logistics companies. They've been
sitting here for days, and we're talking about a 15 percent increase in the number of shipping containers that the Port of Savannah now is dealing
with.
This backlog that we're seeing has a lot to do with the retailers just not picking up their goods, and as you know, this has a lot to do with the fact
that there's a huge shortage of truck drivers in the country. So yes, I'm sure the Georgia Port Authority would say President Biden's plan to get
more commercial driver's license issued so that there could be more hiring of truck drivers will definitely help.
On average, the containers are sitting here for four to five days, on a normal day. But look, these are not normal times, right? So the average has
been bumped up to more than double, 12 days. But there's hundreds of containers we're told that are sitting here for weeks and weeks at a time.
So the Ports Authority has been on the phone calling retailers, reminding them that they've got stuff here, the freight is here, and it needs to be
picked up. They are talking to the Federal government right now and to the railways to find more storage facilities. They have identified four pop-up
storage facilities inland, and they're hoping that they'll be able to move some of these shipping containers inland.
But look, it looks overwhelming. It is overwhelming. But overall, we're told that operationally, things are moving smoothly. And throughout the
morning, we've seen just dozens and dozens of trucks coming in and out, about 14,000 trucks that are coming in to do transactions, whether it's
dropping off or picking up -- Julia.
CHATTERLEY: Yes, but you make a great point, four days to several weeks, I think is illustrative of the challenges here and it's not just in the
United States, it is going on elsewhere around the world, too.
Amara Walker, great to have you on the show. Thank you for that.
Okay, to Lebanon now where the Lebanese Red Cross say at least five people have lost their lives and more than 30 others are hurt after heavy gunfire
broke out in Beirut. Protesters have been calling for the removal of a judge leading the investigation into last year's port explosion. Ben
Wedeman has the latest.
Ben, and people there are desperate, of course for answers, but the challenges of investigating this very clear today.
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, it's very clear, Julia that there are forces within Lebanon who do not want to see this
investigation move forward.
This violence that took place today in Beirut, the worst thing at the Lebanese capital has seen in years was sparked when a protest organized by
Hezbollah and Amal, two Shia parties, which also have militias were protesting against Tarek Bitar, who is the judge who was appointed to
investigate the August 4, 2020 blast that left more than 200 people dead, and now he wanted to question Ali Hassan Khalil, who is a former Finance
Minister affiliated with the Amal movement. He had Minister Khalil -- Ali Hassan Khalil had put forward a legal complaint against the judge, accusing
him of bias on Thursday morning. A court denied that legal complaint.
This protest went ahead and there was fire from surrounding buildings on the protesters. At this point, we understand from the Lebanese Red Cross
that six people have been killed, more than 30 wounded.
And what we heard from Hezbollah and Amal was they were accusing the Lebanese Forces, a Christian Party, which also has a militia of placing
snipers on those buildings and firing upon the protesters.
Now this happened in an area very close to where the opening rounds of the Lebanese Civil War began in April 1975, and many of the scenes we saw today
were reminiscent of that. Children huddling under desks in schools. People -- civilians fleeing from the area.
[09:15:10]
WEDEMAN: The Lebanese Army has tried to restore control in the area, warning that it would open fire on anyone who was shooting in that area and
telling civilians to leave as quickly as possible.
Now, the new Lebanese Prime Minister Najib Mikati has met with Army officials and is monitoring the situation. He has called for calm, but as I
said, this is the worst violence Beirut has seen in many years, and this is causing extreme concern among residents of Beirut, many fearing that this
could be the beginning of a round of violence the likes of which Lebanon has not seen since the end of the 1975-1990 Civil War there -- Julia.
CHATTERLEY: Very worrying. Ben Wedeman, thank you so much for joining us on that.
Okay, let me bring up to speed now with some of the other stories and making headlines around the world. Norwegian Police say the bow and arrow
attack yesterday appears to be an act of terrorism. It happened in the town of Kongsberg. Five people were killed in the attack. Police say the suspect
was on their radar.
(BEGIN VIDEO CLIP)
OLE BREDRUP SAEVERUD, POLICE CHIEF (through translator): It was previously stated that the perpetrator is a 37-year-old Danish citizen living in
Norway. The police have previously been in contact with the man, including as a result of previous concerns related to radicalization.
(END VIDEO CLIP)
CHATTERLEY: A fire at a residential building in Taiwan has left at least 46 people dead and dozens injured. It happened in the middle of the night
when residents were sleeping. The building was home to many elderly and disabled people. It's unknown what caused the blaze.
Still to come on FIRST MOVE, inflation fears at the Federal Reserve. The F.O.M.C.'s Mary Daly on jobs, prices, and tapering.
And one more reason to go green, the head of the I.E.A. says we need to triple spending on renewables not just to save the planet, but to meet
energy demand.
That's all coming up. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Call it a case of mid-October outperformance, a sweater weather rally for U.S. futures where economic
reopening stocks looking particularly strong this morning.
[09:20:04]
CHATTERLEY: Solid earnings, too, from a cornucopia of U.S. banks, helping sentiment and United Healthcare raising its 2021 forecast, too.
The action in the longer dated U.S. bond market, that's quiet, and that's helping tech, I think, which is also set to rise for a second straight
session. That said, shorter term bond yields have risen to more than one- year highs as markets begin pricing in less Federal Reserve pandemic support. And perhaps an earlier Fed rate hike lift off than perhaps
predicted or thought earlier as inflation looks less transitory than hoped.
Tapering assets will come first. Fed Minutes out yesterday show the U.S. Central Bank ready to begin the process of cutting bond purchases as soon
as next month. They laid out an illustrative path that reduces the $120 billion of asset purchases by some $15 billion per month until tapering is
done sometime in mid-2022. So, it's a long path.
Joining us now is Mary Daly, President of the Federal Reserve Bank of San Francisco, and a voting member of the F.O.M.C.
President Daly. Mary, always great to get you on the show. Thank you for joining us.
MARY DALY, PRESIDENT, FEDERAL RESERVE BANK OF SAN FRANCISCO: Thank you. I'm so glad you could have me.
CHATTERLEY: I think a lot of people will have read those minutes yesterday and see a group of people that are increasingly concerned about the price
pressures as food costs rise, as energy costs rise amid ongoing shortages. Several of those members saying, look, it's time to start pulling back the
policy. Is that where we are?
DALY: Well, when we think about pulling back the policy, it really isn't about tightening or removing support, it's really dialing back the amount
of support we're adding to the economy. That's what tapering would be -- dialing back the amount of support we're adding.
So that bar was substantial further progress towards our goals. And clearly we've met that one in terms of inflation, because our -- we have a two
percent average inflation target. We've made substantial further progress and actually gone over that level.
And on the labor market, if you compare where we are now to where we were in the pandemic depths, we have made tremendous progress. So, that's why
we're at the point where we feel like we can dial back the level of support we're adding to the economy, and put ourselves in a good position to
continue to achieve our dual mandate goals.
CHATTERLEY: We need to separate, and I think you're doing it already, the impact and the decision to perhaps pull back on some of that support -- the
support, like bond buying and a future decision to raise interest rates, because the time lag between those two things is many months. It could even
be years.
DALY: Absolutely, and really at this point, it is premature to start talking about rate increases. That's a different metric. That's the metric
of eliminating employment shortfalls, and being sure that we have achieved average two percent inflation that is sustainable isn't just a temporary
reaction to supply chain bottlenecks. That it really is part of the ongoing fundamentals of the economy, and we're too far away from those things to
call those jobs done.
So right now, we're just talking about tapering, which again, is just dialing back the amount of support we're continuing to add to the economy.
CHATTERLEY: One of your Federal Reserve colleagues, Raphael Bostic, the President of the Atlanta Fed, acknowledged in his view that price rises
aren't simply so transitory. In fact, every time he mentions that word, or anyone there mentions that word, they've got her a cookie JARRETT: that
they put dollars in, $1.00 bills in to sort of punish themselves because he says it's a dirty word.
Are you still confident that the price rises that we're seeing are going to dissipate relatively quickly? That transitory is still appropriate, or are
we in for the long haul here?
DALY: You know, what I'd like to offer is that we can step back from what word we should use, or whether it's a good or bad word. What I really want
us to focus on, and what I think is material for policymaking is how long do we expect this to last? And what are the driving forces of these price
increases we've seen?
Well, they're going to last as long as COVID is with us because COVID is causing the supply chain bottlenecks that we see across the globe. Those
are translating into price increases that are eye popping in some categories. That's what I mean by not expected to persist, is they are
COVID related as COVID subsides, we would expect those pressures to ease, we'll be back to the fundamental dynamics of the economy, where inflation
is much more related to the strength of the labor market and the overall strength of the economy than it is being buoyed around or boosted by
temporary price increases in used cars, which you couldn't expect to persist.
The rate of inflation on used cars can't continue to go on like this forever, because it will spur more used cars, you know, spur more car
creation, but right now we have bottlenecks in semiconductors. That is COVID related.
[09:25:01]
CHATTERLEY: Yes, the brilliant thing about you is you always sort of make it human and the impact that we're seeing on individuals, and I think as
you say, the priority always for you is to look at how the individual is being impacted.
The point I think where price rises are impacting people's ability to feed their families, for example, or afford the basic things that they need on a
daily basis, and that's where the Federal Reserve has to say, okay, perhaps we're a little bit behind the curve here and we have to tamp down on some
of those price pressures in order to make sure that people can get on with their daily lives and they aren't impacted. I guess, that's the key here.
Are we late? Is the Federal Reserve late in tackling prices for those reasons?
DALY: So, when we think of people, and I do think of people in everything we do -- when we think of people, we think of two things: The temporary
increase in prices or they are COVID-related, let's get out of temporary, transitory, episodic. Let's put those words aside. Let's talk about COVID
related price increases versus jobs.
I'm committed to doing both, right? Achieving price stability, which is people can count on prices not rising at these rapid rates we've been
seeing down the road, and also means making sure that they can come back to work when it's safe -- that they feel it's safe to do so when they're not
dealing with childcare and other kinds of constraints that make it hard to come back to work. This is what we mean when we say achieving the dual
mandate.
And we if we would pull back on a commendation for the economy, pull back our support, bridle the economy, I is probably not going to solve the
supply chain bottlenecks. In fact, I would wager a bet that it won't solve the supply chain bottlenecks. Things like opening the ports 24/7, that's
going to make much more of a material difference on getting the supply chains intact.
So one of the things I caution us all to do is not think the Fed can do everything or that we're behind, because we see a rise in gas or food
prices that isn't expected to persist beyond when COVID is on our shores.
CHATTERLEY: Yes, there are far more targeted things that policymakers can do, that the Central Bank can't. I think that was a point well made.
To your point on jobs, and I do want to talk about this because I know this is a focus of yours, and actually, you've done some brilliant work,
actually, in terms of the impact of inequalities in the labor market. We still have six million people that are out of jobs compared to when we
entered the pandemic.
And, you know, I follow these numbers every month. And I see the unemployment rate for African-Americans, for Hispanics. It is tough to
bring those rates down. Also women, primarily out of the labor market, because of the uncertainty of schooling and being able to take those jobs
even part time, never mind full time.
Talk to me about the numbers here, too, because this is important. The cost of the economy of not reducing some of these inequities that we see in the
labor market. I mean, we're talking trillions of dollars over years.
DALY: We are talking trillions of dollars, and in fact, the research that we've done shows that we are leaving, you know, on average, $1.2 trillion
to $1.3 trillion, just in labor market input on the table each year, even before the pandemic, because we have people on the sidelines who are of
working age, they want to work, but they don't work in the same ways.
They are either underutilized, completely unutilized, or not even in the jobs where their skills and talents would match them best. And so, this is
a loss of our economic output.
And importantly, I think it, it really is important for all of us to recognize that when they're on the sidelines, the pie, the economic pie for
everyone is smaller.
So this isn't just about helping people, this is about engaging people fully so that they can help us build and grow the economy and the pandemic
has really left a bigger scar on individuals who are at least able to bear it, already underserved in this regard. And so it's incumbent on all of us
to get them back in the labor market and really get them participating like they want to do.
CHATTERLEY: What about the discussion about further spending if Congress can manage to get its act together? I mean, if my understanding of
economics, if you add more spending at a time when you've got these supply chain bottlenecks, too much money chasing too few goods available, that
adds to some of the price pressures.
There is also, again, the social requirement, the need for infrastructure spending. How do you view the balance of more spending today versus perhaps
providing other forms of support for people if they don't get the help they need in other ways?
DALY: Sure, those are -- and I -- this is really an active debate right now in Congress and so I won't front run their -- I mean, it's not my
decision. It's our elected officials' decision. So, I'll leave the details to them.
But let me just give you something from -- put my economist hat on and look through history. Historically, fiscal spending of all types is not
something that, you know, you don't build a bridge overnight. You don't build a roadway overnight or even put broadband in rural areas overnight.
It takes time.
And so they are debating what kinds of support the economy needs for the long haul, what kinds of things are going to make us globally competitive,
continue to allow us to expand our productive capacity and use everyone in our society to their fullest potential. Those are really important things
to debate.
[09:30:13]
DALY: But when we think about the near-term inflation outlook, it really is not going to be directly affected by decisions about roads, bridges, and
things that take multiple years to put into place.
CHATTERLEY: And President Daly, very quickly, can I just ask you about some of the recent resignations of the Presidents of the Fed Banks of
Boston and Dallas, once reports of their trading or investment activities became known. I just wanted to get your views on this. Are more guardrails
needed perhaps for all concerned?
DALY: Well, I welcome the review that Jerome Powell is taking up about what rules and procedures should we use to do a very simple thing, ensure
that the public trust, which is our most important asset, our most important tool is something we can earn every single day.
You know, the trading brought to light that certain things we were doing weren't appropriate for people. They look at it and they say, well, wait a
minute, I don't quite understand this. So, I applaud Chair Powell for saying we're going to do a review and the Office of the Inspector General
reviewing the actual trades themselves. These are all important things for us.
And whatever we they decide, whatever the rules are, I am prepared, as well as my senior team here to comply with them because ultimately again, and
let me underline this -- trust is our most important asset. We're committed to earning it every day.
CHATTERLEY: Yes, thank you for trusting us with your time this morning. As always, a great conversation.
DALY: Thank you.
CHATTERLEY: Mary Daly, President of the Federal Reserve Bank of San Francisco. Thank you.
We're back after this. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks are in rally mode as we kick off Thursday trading. The Dow is on track to snap a four-day losing
streak and in some style as reopening optimism takes hold again on Wall Street.
[09:35:13]
CHATTERLEY: Fresh economic data helping the mood, too. Initial jobless claims in the United States falling to a fresh pandemic low last week and
prices on the factory level rose less than expected last month, too, so brief respite there, as well.
Bank earnings continue to come in strong with double digit profit jumps for Bank of America, Citigroup, Wells Fargo, and Morgan Stanley. Shares of all
four firms are higher in early trade. Actually, we can see Wells Fargo just tilting to the downside there, so spoke too soon. That said, rising
corporate costs remain a concern.
Delta Air Line shares sank from five percent in Wednesday's trade after it warned of the effect of higher fuel prices on Q4 results. JPMorgan also
flagging the potential risk of higher costs, too. And, amid tight labor markets, we are now seeing workers flex their muscle as well. Ten thousand
unionized John Deere workers are out on strike today, that's the largest private sector strike in the United States in two years. Hollywood film
workers may soon be walking the picket lines as well.
The U.S. plans to aggressively expand wind energy capacity. The Biden administration announcing it could hold as many as seven new offshore lease
sales by 2025. The United States has fallen well behind Europe as CNN chief climate correspondent Bill Weir tweets: "There are over 5,000 offshore wind
turbines in Europe. The United States has seven." This coming as the International Energy Agency urges the world to triple clean energy
investment by 2030 to tackle climate change in its annual outlook report.
I spoke to the I.E.A. Executive Director, Fatih Birol as the world also struggles with soaring energy prices. Listen to what he had to say.
(BEGIN VIDEOTAPE)
FATIH BIROL, EXECUTIVE DIRECTOR, INTERNATIONAL ENERGY AGENCY: We are seeing a great creative momentum in terms of clean energy across the world,
in North America, Europe, Asia, around the world, but looking at the challenges we have in front of us, both energy challenges and climate
challenges, we need to accelerate our efforts in terms of the solar, wind, electric cars, and other clean energy technologies. Otherwise, we may well
see A, more turbulence in the energy markets as we are experiencing now. And B, we may well be short of reaching our climate goals.
CHATTERLEY: You're talking about a tripling of green energy investment by 2030, and the key statistic for me in this report is that 70 percent of
that investment has to be done by emerging markets, and many of those countries have already faced huge challenges in COVID. There needs to be
support from elsewhere in the world surely, to allow them to ramp up investment.
BIROL: That's true. I mean, first of all, when we look at the world, we don't have lack of capital, there is enough money. And I believe money --
capital, will meet the clean energy projects sooner or later in North America and in Europe.
But the issue is bulk of the growth of emissions will come from the emerging countries in the future. And today, only a tiny bit, 20 percent of
these clean energy investments are going to emerging countries.
So therefore, my hope, my expectation is, for example, in the upcoming Climate Summit in Glasgow, there will be some international architecture
mechanism so that the rich countries provide some catalyst money for the clean energy investments in emerging countries.
And it is even in the benefits of the -- in the interests of the rich countries, because emissions go into the atmosphere from Jakarta, or from
Detroit, or from Stockholm, from Johannesburg, it has the same effect on everybody. Emissions don't have a passport.
So you reduce emissions there, it will be cheaper, and also in the benefits of everybody, including the rich countries.
CHATTERLEY: Within the report, you also plot two scenarios. You say, look, we'll take where we are today and plot what the future looks like. We'll
also look at all the different pledges and policies that have been promised and assume they're going to get enacted, and then we'll look at the rise in
temperature for the world.
And assuming in that second case, everything takes place. We've got demand for fossil fuels peaking in 2025. We've got global CO2 emissions falling by
40 percent by 2050, which sounds great, but it's still not enough.
BIROL: You are completely right. Why we did this report one month before the COP meeting, the Climate Summit is we want to show that governments
around the world who commit -- made commitments to address the climate change, to reduce the emissions -- it is the United States, it is Europe,
it is Japan, China, Korea and others.
[0940:16]
BIROL: If we add them together, where does it bring us for climate? And what does it mean for the energy markets? What we see, if we put all this
ambitious all these commitments together, we only reduce about 40 percent of the emissions by 2050. We are far from reaching our 1.5 degrees Celsius
temperature increase, which scientists tell us it is the maximum.
What do we come with these commitments? We come to 2.1 degrees temperature increase, which would have catastrophic implications for the rather fragile
equilibrium of our planet.
CHATTERLEY: We are going through a power, an energy crisis at this moment, wherever you look in the world, and we can see prices accelerating, we're
also going to see the largest rise in carbon emissions. The second largest rise that we've ever seen this year as we burn more coal.
What's the risk that while we're trying to invest in renewable energies, but we don't invest so much, because it's a dirty word now to invest in
fossil fuels, we create a short-term dislocation, where actually prices soar, and we know that that can create economic crisis, it can cause social
crisis, if people can't heat their homes. They can't get around because they can't drive their cars.
There is a danger here that we under invest in the fossil fuels, and we don't invest enough in the renewable fuels, and then we have significantly
higher price spikes in the short term, because we simply don't have enough energy.
BIROL: There is a great risk here. If we don't invest in clean energy options, we may well see more turbulences in the energy markets, in terms
of price spikes. This is a serious issue. But I am hopeful that the governments around the world will accelerate the clean energy transitions
and clean energy technology investments, not only for the reason to save the planet, to address the climate change, but many governments would like
to have an advantageous position in the clean energy technology race coming, in terms of electric cars, in terms of the hydrogen, in terms of
the solar, in terms of wind.
So, I am hopeful that the governments will see the risk of A, creating market turbulences to address this issue, and B, for their own governments,
for their own economies to prepare them for the next chapter of the global energy industry.
(END VIDEOTAPE)
CHATTERLEY: But we still need fossil fuels in the interim.
You're watching FIRST MOVE, more to come.
(COMMERCIAL BREAK)
[09:45:41]
CHATTERLEY: Welcome back to FIRST MOVE. Ringing the opening bell around 15 minutes ago at the New York Stock Exchange, IHS Towers, one of the world's
largest independent operators have mobile phone towers connecting countries like Nigeria, the Ivory Coast in Zambia. Its IPO values the firm at nearly
$7 billion.
And just to be clear, IHS works beyond Africa's borders, too with operations in Colombia, Peru, Brazil, and elsewhere.
Sam Darwish is Chairman and Group CEO and he joins us now from the floor of the New York Stock Exchange. Sam, fantastic to have you with us. Tell me
how this moment feels? It's a huge moment, I'm sure for you and your team.
SAM DARWISH, CHAIRMAN AND GROUP CEO, IHS TOWERS: Julia, thank you for having me. I mean, we're trying to soak it in. This is unprecedented for
the continent.
I mean, no company of this scale and quality and nature has ever made it to this stock exchange, and we're so happy to be at the big board.
CHATTERLEY: Yes, fantastic. Congratulations. Talk to me about how you're going to spend the money, and talk to me about what IHS Towers actually
does.
DARWISH: Look, IHS just started 20 years ago. We were founded by a group of engineers led by me. We are an engineering focused company. We want to
solve problems -- telecom, infrastructure problems, in particular in the emerging market.
At the moment, we are in 10 countries spanning three continents, as you rightfully said. We build towers. We connect those towers with fiber, who
basically provide connectivity to people otherwise, that won't have a phone or connectivity or ability to connect to the world. I mean, that's what we
do. And that's what we love to do.
CHATTERLEY: You know, whenever I talk to people that operate in these parts of the world, and you do operate, I mean, half of the towers, I
believe are in Nigeria, but as I mentioned, you're pretty diverse in terms of the countries. Some of them challenging, whether it's property right
concern, perhaps terrorism concern in certain countries, too. You need local knowledge, you need local connections, too.
How important is that? And how do you manage some of the risks that I just mentioned there?
DARWISH: Yes, our markets are definitely challenging. I mean, they have their own issues. And that's why our engineering kind of like expertise
comes into motion. But we cover 10 countries that have roughly 700 million people.
I mean, these are young, vibrant economies. People that are eager to basically improve their lives, bridge the digital divide. So yes, there may
be some challenges, but everyone needs the phone. I mean, the past year, the sad pandemic 2020 taught us all that the world could have lived without
cars, planes, and others, but we couldn't have lived without connectivity, and that's what we do.
CHATTERLEY: I mean, the parts of the world that you're in, and to your point, about the need for connectivity is some of the best growth
opportunities, I think, at this current moment in time.
Talk to us again about expansion, where you see, perhaps opportunity, and are you profitable in each of these areas? How does that play out?
DARWISH: Look, we are cash generative in all our operations. We make money that we reinvest in building towers and building fiber and building rural
solutions. We have now roughly 2,000 rural sites that we plan to build in the next couple of years in Nigeria and Africa in general. I mean, these
are villages, basically that in the 21st Century, still don't have coverage.
So, big plans, of course, with our skill set, with our deep operational skill set, we look at the emerging market as a universe. We look at LatAm,
we look at the Middle East, Southeast Asia. I mean, these are areas with millions -- hundreds of millions of people, again, young, vibrant, they
still want connectivity. They want the broadband pipe to be wider.
They want to be able to watch the Netflix's of the world, the Facebook's and this and that, and we have to provide it to them. I mean that's -- they
need to do that to access better healthcare. They need to do that to access financial inclusion.
And then at the base of all of this is that piece of tower, that land that is connected to the tower. It just processes the whole communication. And
we are proud and we are happy that we are able to build and contribute to that bridging of the digital divide.
CHATTERLEY: Yes, fascinating times. MTN, which is obviously a huge company. It is a significant shareholder of yours. There are reports that
perhaps they'll look to sell down some of their stake now, how much of a concern is that if investors are looking at your stock today and trading
and thinking hey, perhaps there is you opportunity here. Is that a concern and a thing to worry about?
[09:50:04]
DARWISH: Look, MTN of course is a public company they speak for themselves. This is not a concern.
I mean, we are -- we have always been an independent tower company. MTN got into the share capital by virtue of an asset contribution at some point of
time. It was a big and important asset for them. So, we're happy to have them, but they are just a financial investor. We're independent.
If MTN wants to sell over their time, that's their own decision. I mean, we believe we have sufficient demand, so we're not concerned about that, none
whatsoever.
CHATTERLEY: Sam, onwards and upwards. Congratulation. Congratulations on going public today. We'll see how it trades later on.
And for now, thank you so much for joining us and talking us through what you do.
DARWISH: Thank you, Julia.
CHATTERLEY: Thank you.
DARWISH: Thank you for taking the time.
CHATTERLEY: Sam Darwish there, Chairman and Group CEO of IHS Towers there. Thank you.
You're watching FIRST MOVE. Stay with us. There is more to come.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Now to a down to Earth message for our billionaire space race contenders from an heir to the British throne. A
day after Jeff Bezos's Blue Origin sent a Hollywood star into orbit, Prince William said the world's greatest mind should focus on saving this planet,
not perfecting ways to leave it.
(BEGIN VIDEOTAPE)
PRINCE WILLIAM, DUKE OF CAMBRIDGE: A rise in climate anxiety. You know people -- young people now are growing up where their futures are basically
threatened the whole time. It's very unnerving. It's very, you know, anxiety making.
We need some of the world's greatest brains and minds fixed on trying to repair this planet, not trying to find the next place to go and live.
CHATTERLEY: And Clare Sebastian joins me now. Clare, I'm an uber space geek, but I have to say myself and many of the people that I've spoken to
over the last six months as we've seen these rockets launch have -- I think, have had the same feeling.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, I think many people would agree with him. Certainly, there have been some pretty high profile
criticisms of this billionaire space race that the director of the World Food Programme said back in June that, you know, he would love to see these
billionaires team up to save the 41 million people who are set to starve this year. But it would only take $6 billion to do that.
And I think it is raising eyebrows not just because this are billionaires, but that some of them are electing to send themselves into space. But Jeff
Bezos, he talked about this in an interview back in July with CNN's Rachel Crane, he addressed this very issue. Take a look.
(BEGIN VIDEO CLIP)
JEFF BEZOS, FOUNDER, BLUE ORIGIN: We have to do both, and our job at Blue Origin is to do and what this space tourism mission is about, is having a
mission where we can practice so much that we get really good at operational space travel, more like a commercial airliner and less like
what you think of as traditional space travel.
If we can do that, then we'll be building a road to space for the next generations to do amazing things there and those amazing things will solve
problems here on Earth.
(END VIDEO CLIP)
SEBASTIAN: Jeff Bezos making the point that saving this planet and you know, sending many, many people into space are not necessarily mutually
exclusive goals. He has expressed in the past that there is a climate purpose behind his space initiative and that is to essentially move heavy
industry and energy generation off this planet and on to another one and that would solve some of the climate issues that we're seeing.
[09:55:20]
SEBASTIAN: But obviously, that's a lofty goal. It's in no way guaranteed and the climate crisis, Julia, as we've been talking about, is imminent.
CHATTERLEY: Yes, and also let's be clear, tourism, they argue that space tourism helps finance all their research and operations in order to be able
to make these advances that help on Earth.
I guess, the example I would use, and I'm not defending them, but I'm justifying -- I mean, look at what SpaceX is doing. The satellite links
that they are trying to put up, Star Link that will allow telecommunications in some of the hardest to reach places in the world we
hope, an internet access.
Telemedicine for those people in those places will be transformative and it will save lives. So, as always with these things, it's not black and white.
SEBASTIAN: It's not black and white at all, and I think, you know, in some ways, the billionaire space race, many would argue, has already been won by
SpaceX and Elon Musk, a much more mature company than Blue Origin or even Richard Branson's Virgin Galactic.
They are already doing manned space flight. They launched the first manned mission from U.S. soil in May and they own a third of the satellites that
are currently in orbit.
And as you say, trying to broaden access to the internet around the world, a mission that so far no one has been able to solve, so certainly there are
a lot of sort of technologies that are being developed by these -- the sort of billionaires behind the space race that have a greater good in society
and I think Prince William could perhaps also face criticism for coming himself from a position of privilege and making these comments.
CHATTERLEY: Yes, and you know, I made the observation earlier this week that Bezos and Musk have a combined wealth -- paper, of course, in large
part -- than the entire GDP of South Africa.
Why not do both? Help this planet, advance in space.
Clare Sebastian, thank you so much.
That's it for the show. Stay safe.
"Connect the World" with Becky Anderson is next.
And we'll be back tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
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