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First Move with Julia Chatterley
Djokovic: Grateful Visa Cancellation was Overturned; U.S. and Russia Hold Crunch Talks over Ukraine Crisis; Kazakhstan's President Calls Protests "Attempted Coup"; China's Port City of Tianjin Enters Partial Lockdown; Fed's Hawkish Pivot Rattles Global Investors; Cryptocurrencies See a Volatile Start to 2022; Flytrex Drones Dispatch Food and Drink Orders in Minutes; Study: Dogs Know When You Speak A Different Language. Aired 9- 10a ET
Aired January 10, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:20]
JULIA CHATTERLEY, CNN ANCHOR: Live from London, I'm Julia Chatterley. This is "FIRST MOVE." And here's your need to know.
Djokovic drama. The tennis star is allowed to remain in Australia for now.
Tense talks. The U.S. and Russia begin a week of crucial meetings over Ukraine.
And winter warning. China takes measures to keep Beijing COVID-free ahead of the Olympics.
It's Monday. Let's make a move.
(MUSIC PLAYING)
A warm welcome to "FIRST MOVE." Once again, great to be back with you as we get straight to our top story today.
Out back and in the open at least for now. Novak Djokovic is free from immigration detention and could claim the Australian Tennis Open after a
court battle in Australia.
A few minutes ago, he tweeted, I'm pleased and grateful that the judge overturned my visa cancellation. Despite all that has happened, I want to
stay and try to compete at the Australian Open."
Paula Hancocks is in Melbourne for us now.
Paula, the ball certainly at least for now in Novak Djokovic is caught, he is free and out in the open, but the final serve surely goes with the
immigration minister. And we have to wait and see what the government's final decision is.
PAULA HANCOCKS, CNN CORRESPONDENT: Well, that's right, Julia. We've heard from the ministry already this evening. And they have said that they're
trying to figure out whether the minister himself will decide to personally revoke the visa. He has the power to do that. And we heard at the end of
the hearing on Monday that the government's lawyer said that could be a possibility. But this could be back in front of - in front of the court, of
course, if he then decides to appeal that.
So, yesternight, Novak Djokovic is a free man. We know from a press conference that his family has just held that he's also been out on the
court already practicing. So, obviously, trying to get his mind towards what he thinks is the job ahead, the Australian Open starting in a week's
time. But it isn't necessarily over.
Now, what we heard from the judge today though was that he believed there were procedural issues at the airport when his visa was revoked. He said
that Novak Djokovic was not given the chance to speak to his lawyer. He was not given the chance to speak to tennis Australia organizers to find out
what he should do and that is where they were at fault.
So, of course, we wait now to see what will happen with the immigration minister. It's the early hours of Tuesday morning here in Melbourne. We
have been seeing many supporters of Novak Djokovic celebrating in Melbourne. But also angry at the way that he has been treated.
But we're also hearing from the affidavit that Djokovic had in court saying that he did test positive on December 16th for COVID-19. There were many
questions remaining about his actions on the day of and the day after that positive test result. We did see him in public. We saw him on the 16th and
on the 17th. He was at a panel discussion maskless. He was also at the - awards ceremony with a number of young people maskless as well.
Now at that press conference, the parents and the brother were asked about that. And it's at that point they decided to adjourn that press conference.
So, didn't want to address that very question that many are now asking.
But at this point early hours of Tuesday morning, Novak Djokovic will be preparing for the Australian Open. Tuesday morning, we will see if the
Australian government has a response.
CHATTERLEY: Yes. One wonders whether it is a somewhat pyrrhic victory in that case if more questions are asked about what he knew on December 16th
and then still perhaps attended some of these events knowing that he was COVID positive. And of course, we don't know that yet. And we have to keep
asking those questions and certainly will do.
Where is popular opinion on this, Paula, in Australia? I mean, Australia has had some of the strictest border controls from what I can see and what
we've reported on over the last two years. Around the world people have been prevented from seeing their family, from going in or out of Australia
for many, many months. How do they feel about the fact that he's being allowed into the country, at least for now, and remains unvaccinated,
irrespective of whether he has a medical reason for not doing so?
HANCOCKS: There's not a huge amount of sympathy for Novak Djokovic in Australia. It has to be said. In particular in Melbourne -- and Victoria is
a state that has been particularly hit hard by COVID-19. They have had well over 250 days in lockdown here.
[09:05:05]
So, certainly, to see somebody else, a celebrity being allowed to come in unvaccinated is not going to sit well with many people. As you say, the
border controls were some of the toughest in the world in Australia.
For two years, many Australian citizens abroad were unable to come home. Many Australians here were unable to leave the country. And we heard
heartbreaking stories of people not able to attend funerals, not able to see loved ones when they were ill. And it has been a particularly strong
and, in some cases, brutal immigration policy and border control policy.
So certainly, there isn't going to be sympathy for someone who has chosen to be unvaccinated coming into the country. In fact, when he tweeted --
Novak Djokovic that he was coming and had a medical exemption, there was a backlash here as well.
The vaccination rates in Australia are extremely high, well over 90 percent, because this is the way that they believe they are going to get
out of this pandemic. And this was the way that they could get out of the lockdowns as well, as the government said. So certainly, the level of
sympathy among Serbian community here in Melbourne is high. The sympathy wider in Australia is not quite so high.
CHATTERLEY: Oh. And that makes it tough for the government to make a final decision on this. We await the words of the immigration minister.
Paula Hancocks, great to have you with us. Thank you.
Now from drama down under to high stakes geopolitics in Geneva. The U.S. and Russia kickoff a week of tense talks on the Ukraine crisis that could
be the most significant reset of relations since the breakup of the Soviet Union. The U.S. secretary of state warns he's not expecting breakthroughs.
(BEGIN VIDEO CLIP)
ANTONY BLINKEN, U.S. SECRETARY OF STATE: I don't think we're going to see any - any breakthroughs in the coming - in the coming week. We're going to
be able to put things on the table. The Russians will do the same. It's hard to see making actual progress as opposed to talking in an atmosphere
of escalation with a gun to Ukraine's head. So, if we're actually going to make progress, we're going to have to see de-escalation, Russia pulling
back from the threat that it currently poses to Ukraine.
(END VIDEO CLIP)
CHATTERLEY: The Russia/U.S. talks come as Ukraine meets with NATO ahead of the Russian summit with the alliance on Wednesday.
Nic Robertson joins us now.
Nic, great to have you with us.
The Russians have been incredibly clear about what their lines are as far as these negotiations are concerned. I think the Ukrainians actually come
in to this as well saying, look, we shouldn't be negotiating until the troops are removed from their border. The west has said that we're not
hoping for much. What does diplomatic success look like for each of the players involved here?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: You know, I think a diplomatic success is on such a distant horizon at the moment, it's very
hard to define. There's been discussion that there is the potential for some sort of long-term negotiation over arms reduction. But on the key
ground that it is reciprocal.
And that's going to be a very thorny and difficult issue to work out. There have been arms controls agreements between the United States and Russia,
long-term ones that have fallen by the wayside. The Russians are saying that they want quick results. That they don't want these talks to drag on.
That was a position of the Russian foreign minister just a few days ago.
The Deputy Foreign Minister Sergei Ryabkov who is leading the talks here in Geneva for the Russian side is due to give a press conference in a few
hours' time. And that according to Russian officials will give a readout of how the Russians think these talks are progressing. Going into this
particular round of talks, they said that they were disappointed with what they were hearing from Washington. Disappointed with what they were hearing
from NATO and Brussels as well.
So, on both sides, expectations have been played down. And going into this round of negotiations, the U.S. side, led by Deputy Secretary of State
Wendy Sherman have been on their position. They're not going to talk about anything to do with Ukraine or NATO. Nothing about them without them in the
room at the table.
So, this is really bilateral issues between the United States and Russia at the table today. But from the U.S. side, they're expecting to get a very
clear understanding if Russia is really coming to the table, able to negotiate against these very high demands that Ukraine not be allowed to
join NATO. NATO to rollback its forces from - from Eastern Europe. Demands that NATO has already said cannot be accepted. So, you know, later this
afternoon I think we should begin to see is there more mileage to go and can be reached out distant horizon to begin to see what that diplomatic
solution might look like.
CHATTERLEY: I mean, what some of us asking for here is a rewriting of European security architecture. It's effectively a win surely that they're
even having this discussion whether or not they actually get anything. And that they've brought everybody around the table or at least around the
table. Where do the Europeans stand ultimately on this, Nic?
ROBERTSON: They want to have a voice. The EU is not represented per se at the table. NATO is. That includes many EU members, the OSC, Organization
for Security and Co-operation in Europe, includes many European members.
[09:10:05]
But the EU as a body, as an important geopolitical body for Europe, doesn't have a specific period of - or specific meetings with the Russians. And so,
that's causing a little consternation. But that's why you see the United States being very clear. NATO being very clear that all partners are being
talked to.
You know the Secretary of State Antony Blinken who's spoken with what's known as the Bucharest Nine, who's spoken with -- which is many of the sort
of former East European states but has spoken you know in a joint phone call with the Italian, the British, the French, the German, foreign
ministers as well.
But you had just last week, you had Josep Borrell, the European Union's foreign policy chief on a lightning visit to Ukraine to get the feel of the
lay of the land there. You had over the weekend. He had a conversation with a NATO Secretary General Jens Stoltenberg. Josep Borrell also spoke with
the European Commission President Ursula von der Leyen.
So, you know, there's been wide ranging discussions, everyone saying we're on the same page. Where does Europe stand on this?
Where does Europe stand on this? Pretty much in the position that it doesn't want to be - it doesn't want to see Russia rewarded for its
aggression. It wants its security infrastructure along the eastern borders to be protected. And it doesn't want to be drawn down if there's not a
reciprocal move on Russia's side roll in into that as well. Europe's dependence, quite heavy dependence on Russia's gas and escalation
potentially could impact that flow. That's not on the table per se at the moment, but I think it's well recognized that there is the potential for
that further down the road if things go off track at these talks.
CHATTERLEY: Yeah. And remains a critical issue. They all seem to be on the same page, but it's a rather large page. And I think we'll require a
diagram to it to help us explain it.
Nic, great to have you with us. Thank you. You were here for us. Great to chat to you there.
OK. Let's move onto Kazakhstan where the country's president calls last week's antigovernment protests an attempted coup. Authorities say more than
160 people were killed and about 8,000 others were detained during the unrest.
Fred Pleitgen joins us with the latest.
Fred, great to have you with us.
He also said that the coup was coordinated by what he called "a single center," and I'm quoting him, and that the hunt for the terrorists was
ongoing. Any more information about who those terrorists might be? And what he meant by "a single center?"
FREDERIK PLEITGEN, SENIOR INTERNATIONAL CORRESPONDENT: Well, "a single center," it's very difficult to ascertain what exactly he did mean. But I
think another thing that he also said sort of might shed some light on that. He did say that he believed that at least some of the people who were
involved in those protests were trained outside of Kazakhstan. And that's sort of one of the things, of course, that we have heard from the Kazakh
government. We've also heard from some others as well.
For instance, from the Russians that they believe that there is outside influence behind all of this, without very much being specific as to who
they actually mean. The Kazakhs did say, and the Kazakh president also said -- this was in a call by the way today which was also attended by Russian
President Vladimir Putin. That there would be more evidence forthcoming. So far, that evidence has not been provided yet.
But certainly, the Kazakhs are saying that that crackdown that they've launched, that antiterror operation, as they put it, will be ongoing. And
when we were talking about those numbers of detained, right now the Kazakhs are saying that it's around 8,000. Those numbers over the past couple of
days that I have been following the story here, have really shot up.
If you look at throughout the weekend, we started the weekend, we were around 3,000. The number was 4,000 yesterday. Now we're around 8,000
already. And then you have those 160 people killed. That number also was one that shot up over the weekend, Julia.
And if you - if you sort of dissect that number a little bit, of those 164 people who were killed, around 100 -- little over 100 were actually killed
in Almaty alone. That of course was really one of the epicenter where a lot of that violence took place, where also we saw some of those awful videos
of security forces opening fire on what seemed to be civilians that there in that crowd. And certainly, some of those videos that did raise a lot of
international questions even as the Kazakh government continues to claim that the people who were behind those demonstrations were terrorists as
they put it.
Now, if we look at what's going on today, Julia, it's certainly seems though the Kazakh government is getting things under control. Things seemed
to be calmly down. There was a day of mourning today and also the Internet was switched on, at least for a short period of time. People have really
been in the dark over the past couple of days. They could at least get some information.
But one of the things that President Tokayev of Kazakhstan said is that it was really some of those outside forces that help or are helping the Kazakh
get this under control. Of course, the largest troop contingency from the CSTO that peace keeping force, as they put it, comes from Russia. And the
Russians are saying those forces are going to stay on the ground in Kazakhstan as long as needed, Julia.
CHATTERLEY: Yeah. And that outside threat of course critical to legitimizing the reason to invite those Russian-led troops into the country
in the first place. And he did say he'd provide the international community proof over what happened. So, we await that.
[09:15:08]
Fred, certainly great to have you with us. Thank you, Fred Pleitgen.
Amid a port city in partial lockdown, the Chinese city of Tianjin are testing its entire population of 14 million people after medics found the
country's first locally transmitted Omicron cases there.
Selina Wang joins us with more.
Selina, China continuing with its zero-COVID policy - what, 3.5 weeks out from the Olympics, desperate attempts to keep COVID out of Beijing ahead of
that.
SELINA WANG, CNN CORRESPONDENT: Exactly, Julia. And that is the key context that we're just weeks away from the winter games in Beijing and
intensifying pressure on authorities across China to keep COVID-19 cases low. So, against that backdrop, just 80 miles away from Beijing in the
northeastern port city of Tianjin, they are reporting the first case of locally transmitted Omicron cases.
Now after reporting at least two Omicron cases, Tianjin is taking the action of testing its 14 million residents. It's put 29 residential
communities under strict lockdown. Citizens cannot leave the city without special permission. And overall, this is after overall, the city has
reported at least 40 COVID-19 cases which, Julia, as we've talked about before, it sounds dramatically low compared to what we're seeing. The
numbers we're seeing in the U.S. and other parts of the world.
But again, as you say, China doubling down on this zero-COVID-19 strategy, which continues to involve mass testing, strict lockdowns or quasi
lockdowns and these extensive quarantine measures. And the outbreak in Tianjin is especially significant because of the close proximity to
Beijing. It's only about 30 minutes away by highspeed rail. Typically, there are hundreds of thousands of people that regularly commute. That's an
estimated number.
And now most of those trains are now banned to try and stop the spread. But already Omicron has spread far beyond Tianjin in China. Hundreds of miles
away in the central province of Hunan. There have been Omicron cases reported linked to a traveler in Tianjin.
And it's also not just people of Tianjin whose lives are being disrupted. The city of Xi'an, that city and its 13 million residents have been under
strict lockdown since December 23rd. And since then, there has been the steady outpouring of both heartbreaking and desperate stories of people
struggling to get food, basic necessities and medical care.
Including this viral video of a pregnant woman who was turned away from a hospital because she couldn't provide valid proof that she did not have
COVID-19. And according to that video, she was standing outside for hours. She was bleeding and ultimately was admitted to the hospital but ultimately
had a miscarriage. Now the hospital officials have been punished.
But really, Julia, all of this is highlighting and putting focus on the human toll that China's zero-COVID-19 strategy is taking. And critics would
say that the suffering and disruption and pain that people have to go through to achieve that goal is not sustainable. And as the Olympics near,
we'll have to see how it plays out, Julia.
CHATTERLEY: Yeah. And impossibly high cost. And as the rest of the world has proven, containing Omicron in particular has been sort of impossible --
incredibly difficult if not impossible.
Selina Wang, thank you for that.
OK. Let me bring you up to speed now with some of the other stories making headlines around the world.
A faulty electric heater was the cause of a New York apartment fire on Sunday that killed 19 people, including nine children, officials say.
Scores of people were hurt. Investigators are looking into the building's fire alarm system, one resident telling CNN, the building's alarms often
rang when there was no fire.
In Brazil at least 10 people have died after a massive rock broke off a cliff and crashed down on top of tourists in motorboats on Saturday. At
least 32 people were injured. Officials say heavy rain had loosened the rock.
OK. Still to come. Still to come, plenty more on "FIRST MOVE." Stay with us.
(COMMERCIAL BREAK)
[09:21:40]
CHATTERLEY: Welcome back to "FIRST MOVE." Live from London this week, hoping to bring you some gems from the Thames over the next few days. I'll
be casting a London Eye overall that's going by and we can start with the week on Wall Street.
The S&P 500 set to fall for a fifth straight session. Tech set to extend the 4.5 percent losses suffered last week on Fed tightening fears.
I think investors today also processing fresh comments from Goldman Sachs, which now sees four Federal Reserve rate hikes this year versus market
expectations for just three - just three.
Anticipated Fed tightening helping drive U.S. bond yields higher to benchmark 10-year U.S. yields now at levels not seen since the start of the
pandemic. You've got the 10-year U.S. yield there approaching 1.8 percent.
Last Friday's jobs report showing weaker than expected jobs growth, but robust wage growth, further evidence that labor markets are tightening and
helping contribute to rising inflation pressure.
Much to discuss. And Alicia Levine joins us now. She's head of Global Equities and Capital Markets Advisory at BNY Mellon Wealth Management.
Happy New Year, Alicia. Great to see you.
December clearly marked a regime shift as far as the Federal Reserve is concerned. They're going to start pulling back on policy. They're going to
do it far quicker I think than investors certainly anticipated. What do you make of Goldman Sachs' view that we could see four rate hikes this year?
ALICIA LEVINE, HEAD OF EQUITIES, BNY MELLON CAPITAL MANAGEMENT: So, I think the four rate hikes has become consensus among strategists and economists
on Wall Street. Not yet priced into the market, though. If you look at that two-year yield, we're still pricing in between two and three hikes for -
for this year. So, the market has to catch up to the strategists.
I think what the market is mulling over is that that very fast growth rate that were coming at Q4 with and moving into 2022 is probably going to slow
down midyear. You're probably going to start seeing eyes in manufacturing start to roll over, not go - not go under 50, but go comfortably closer to
50 to 52, 54 then 60. And when that happens, that signals that growth is slowing.
And so, with that, you've got a lot of very complicated variables. It's not really a linear story here. You've got the Fed tightening sooner than the
market expected, inflation running hotter, longer in part because of Omicron which came out of the blue. So, we got to deal with the inflation
issue. But then you've got real growth slowing by midyear.
So, a lot to balance out. And I think the market is telling us maybe you don't get that fourth rate hike this year. We do think you will start
though with quantitative tightening. And that's what the issue - the issue that the market is really most worried about.
CHATTERLEY: Can the economy handle this? When we're taking about a potential midyear slowdown from incredibly strong growth levels. The jobs
data was weaker than expected on Friday, but again the recovery that we've seen has been incredibly strong up to now. I mean the average of last year
was incredibly strong in terms of jobs recaptured. Can all of these risks be managed? And then that answers the question of whether investors can
perhaps manage these risks?
LEVINE: So -- so, let me just start with the conclusion, which is we expect the market to be up this year. We expect it to be a pretty good year in the
market, but not without turmoil.
[09:25:02]
And the turmoil is because the policy story from the Fed is not going to be linear, not something you can price in the first week of January and let it
sit. And that's kind of what's happened. We've had deep over positioning towards value overgrowth stocks in the first week.
And I suspect that's not how it's going to playout the rest of the year. So, yes, the economy can handle it. The pandemic in the end was more akin
to a natural shock than it was a financial crisis whether caused by debt or bubbles or anything else. So, therefore, it can come out of it.
We're not worried about the real economy here, but there is going to be volatility in the markets. I doubt we're going to get another up, 27
percent year. But Julia, I'll say this.
Since 1950 when you have a year where the market is up 20 percent or more, 75 percent of the time the next year is up 10 digits or more. So, it
doesn't feel so today but I suspect we're going to even out in our sectors by the middle of the year.
CHATTERLEY: Yeah. I mean, investors will certainly take that 10 percent if they can get it. What drives it? Because pre-Omicron we were seeing some of
the reopening plays, the travel stocks, the experiential type stocks, all benefiting and then Omicron was a bit of a - OMG. Do we quickly get back to
those kinds of plays? Particularly given the dates that we're seeing.
LEVINE: So, I make this joke, which isn't actually a joke, which is every time we get a new variant, we have another opportunity to reopen.
CHATTERLEY: Yeah.
LEVINE: So, we do think that those reopen names will be strong on the other end of it. You know we're looking to South Africa. We in the U.S. are
looking to the UK to see how you know quickly Omicron can kind of speed through the population. You know expecting by March here we're at the end
of a peak. I hate sounding like an epidemiologist. But that's what it's looking like.
So, you'll get reopening names working, we think. You know we'd say this, those speculative names where companies are trading multiples of revenue
and where the earnings don't match the revenue growth rates, where the earnings are just simply not there. I think those stocks will suffer and
may not bounce here.
The large cap tech we're pretty comfortable with. They're down about 10 percent. Could they go lower and take the S&P index with them? Yes, they
could. But we're not concerned about that because we think the earnings power is so strong that we'll get through it.
Earnings will drive the market this year, not multiple expansion. We think earnings are probably a little bit under shooting in terms of estimates for
this year, which is why we think we're going to be up by the end of the year. Because we think earnings will drive through this. Don't forget, the
S&P is not the U.S. economy. And the companies that we have can earn through this.
CHATTERLEY: Yeah.
LEVINE: Yup. It's a great reminder.
CHATTERLEY: Yes. Yeah, it is.
Very quickly, what do you avoid this year?
LEVINE: OK. You avoid the tails, right? So, you avoid the specks, the IPOs, the high multiple of revenue stocks. You want to look at a chart from
Nasdaq 2000 to see what happen. Nasdaq was down 80 percent. Some of those very speculative names will not bounce on this, but many others will on the
growth side. So, you want to be picky. You want to go for companies that can earn. You want earnings.
On the other hand, we think some of those kind of safety areas, you know, the deep staples, they get expensive very quickly once they start working
because they simply don't grow very fast. So, it may be a place to hide tactically but we think ultimately if you're going to hold something for 12
months, probably not the best place. So, our message is don't buy the tails, you know, the high speck or the very safe and buy earnings and know
what you own, right? And know that this Omicron blip is going to be a blip. And if you're going to invest for the year, it's very hard to time the
market. So, that's the message.
CHATTERLEY: Yeah. Fingers crossed - fingers crossed on the blip. And we like picky on this show. We are very picky. And that's why we speak to you.
Alicia Levine, great to have you with us. Alicia, thank you for your wisdom.
LEVIN: Miss you, Julia.
CHATTERLEY: The head of Equities and Capital Markets Advisory at BNY Mellon Wealth Management.
The market open is next. Stay with us.
(COMMERCIAL BREAK)
[09:32:20]
CHATTERLEY: Welcome back to "FIRST MOVE."
And U.S. stock markets are open for business on Wall Street. A not so frisky first move for the Wall Street majors this Monday. Tech beginning
the week down well over 1 percent on uncertainty about the timing and the speed of Federal Reserve tightening.
The Nasdaq moving closer to 10 percent correction territory. Will tech bounce as it's done in the past, or is this time different? Yeah, that's
certainly a significantly weaker start to the week.
Tech suffering but a sizzling start of the year for old school sectors like energy, telecom and financials. Banks of course thrive in a higher interest
rate environment. The major U.S. banks also set to kickoff earnings season later this week with powerful profits expected.
Also, today, the first big U.S. merger of the year and it's in the gaming sector. Take-Two buying Farmville's parent company Zynga for more than
$12.5 billion. Wow. Look at the rally in Zynga's share price this morning too.
Now, it's been a rocky 2022 so far for cryptocurrencies as Kazakhstan's political unrest hits mining. But more turbulence lies ahead warns my next
guest. He has been in the space since 2011, which he says gives him the status of crypto grandpa. He is the CEO and co-founder of Blockchain, one
of the earliest providers of crypto wallets. Since then, Blockchain has also become a crypto exchange processing one-third of bitcoin transactions.
It has over 31 million users in more than 200 different countries.
And joining us now is Peter Smith, CEO and co-founder of Blockchain.
Peter, fantastic to have you on the show.
There are some incredibly big numbers there. To someone who may have never heard of what Blockchain is and does, give us the vision on what you
provide.
PETER SMITH, CEO AND CO-FOUNDER, BLOCKCHAIN: Sure. We provide price to make it easy for consumers and institutions to be a part of the digital currency
market. So, whether you want to buy your first $100 of bitcoin, whether you're an institution and you want to buy you $100 million worth of crypto
to put on a trade, we're here to provide those products and services.
CHATTERLEY: So, I just gave numbers that said 31 million users -- verified users and 18 million wallets have been provided. How many of those are
active and using the resources that you provide on a daily or monthly basis?
SMITH: Sure. We don't disclose our monthly active user number. What I can tell you is that actives are up about 3.5 x this year. We've done about a
trillion in transaction volume to date in the consumer product alone. This year was really big for both us and the crypto markets as well.
[09:35:02]
And we saw about 10 x revenue growth in fiscal year 2021. And that was coming off of a very strong year in 2020. And so, the space is expanding
you know rapidly.
But as you noted, coming into the call, you know we have seen a pullback in the last two weeks. So, I think one of the first things that I told folks
getting involved in the crypto market is, we're still in the early stages of it. And you have to be really ready to hold positions long term. There's
no, you know, reliable way to make money fast in crypto. The way to make money as an investor in crypto is to you know invest responsibly and hold
positions for the long term.
CHATTERLEY: What does responsible investing look like in crypto?
SMITH: So, a few things you know. I think trading on high leverage or trading in you know very early-stage coins is probably ultimately bad for
consumers. You know you see a lot of consumers get wiped out of the market like that.
I think responsible investing looks like you know investing the amount of capital that you can comfortably invest. So, capital that you're not afraid
to lose. You're not worried about losing. And investing that slowly over time. And really recommend that people do that in the blue chip names in
the space. So, you know Bitcoin, Ethereum, you know, and so on and so forth rather than engaging in a lot of high leverage trading or you know early
stage all coin trading.
CHATTERLEY: I read, and you can correct if I'm wrong that Bitcoin and Ethereum account to the vast majority of your revenues. It's up with a 70
percent but I see huge growth in other aspects of what we're seeing in the crypto space, whether it's digital art, whether it's NFTs, gaming. Do you
intend to continue to branch into those spheres, and what proportion of the business do you see those becoming? Because I have spoken, and we have
spoken on the show to other pure play exchanges. And they say there's going to be consolidation and the margins that you see today in particularly in
cryptocurrency digital asset trading are going to be competed down very quickly.
SMITH: I think we've been talking about margin compression in crypto for about seven years.
CHATTERLEY: But you said it's early days.
(LAUGHTER)
SMITH: Right.
I think we will see it at some point, but it's hard to predict when.
We are always aggressively expanding into new products. So, three years ago when we started building institutional products or crypto, people called us
crazy. You know right now we're making a lot of investments in the NFT and gaming verticals. And I'm sure people call us a little crazy for that.
You know to provide a little bit of perspective on the NFT space though, you know the global spot crypto market trades about as much volume in a
single day as NFTs have in the entire existence of NFTs, right? So, the NFT space is still very early.
Now, blockchain.com, that means it's the right time to engage. And you know we're currently building an NFT marketplace that makes it really easy for
our consumers to buy any NFT on any protocol and we're really excited about that future. But I sort of couch this by saying it's early in that
vertical, right? And when you compare that to the sheer volume in market cap of things like Bitcoin and Ethereum, it's going to be a long time
before you know NFTs make up a significant revenue line at any major crypto company.
CHATTERLEY: Do you think that we can continue to see gains in cryptocurrencies? In particular, ones that you mentioned. If you're saying
to new investors and there are many people out that still haven't engaged in crypto, invest in Bitcoin, invest in Ethereum. Do you expect to see
prices despite the turbulence that we've started the year with, higher by the end of the year?
SMITH: You know I never know exactly how to predict the price of crypto over the next six months. If I did, I'd have a cool crystal ball and maybe
I'd be in that business. But what I do know is that you know we're in the very early days. Less than 5 percent of U.S. institutions have ever traded
crypto. And you know probably a single digit percent of the world's population has ever interacted with cryptocurrency.
You know that number goes up every single year. And as it does, the tow of market cap at crypto goes up as well. And so, you know I don't know if -
you know we go from 5 percent of institutions to 15 percent this year or next year, but this is the future.
Finance powered by opensource crypto protocols in a financial system for the Internet is an inescapable trend in our world today. And it's only a
question of your time horizon. And that's why it's so important to be a long-term investor when you're an investor in the crypto market.
CHATTERLEY: You're a self-described grandpa of the crypto space. And many of the grandpas that we speak to on this show talk about smart regulation.
But the sector does need regulation that allows, to your point, the institutions to feel comfortable enough to come in and be stronger, bigger
players in this space, which perhaps will bring down some of the relative volatility too.
You gave an interesting answer on this.
[09:40:00]
And I want to read the quote, "If regulation was the answer, you wouldn't have seen banks fail. At the end of the day, the free market corrects this.
The market rewards companies that are run well and the market punishes companies that are run poorly."
And I couldn't agree more with you. But do you think this space can successfully regulate itself?
SMITH: So, this is a great one. I think, first of all, someone else called me a crypto grandpa and I repeated it once and for some reason it stuck
with, which is frustrating.
(LAUGHTER)
CHATTERLEY: So, no more crypto grandpa. Sorry. Sorry.
SMITH: But I have (audio gap) there yet.
Look, on regulation, I think I stand by what I said. I think the best regulator is the market. Ultimately, though, at the end of the day for
crypto to succeed, we have to have good regulation.
And so, you know, we work with you know dozens of regulators all over the world, Europe, U.S., Latin America to craft regulations that hopefully keep
consumers safe, right? Because when the market corrects bad behavior, it corrects it in very, you know, often catastrophic way. You know failure of
companies, customer losses, consumer harm. And we'd like to see that prevented, right?
And I think that regulators around the world are doing a pretty good job you know coming up with rules. I would highlight the work by BaFin in
Germany, which is really forward thinking. The guy (inaudible) there is up there as well. And so, this year we're going to get crypto specific
regulatory frameworks and licenses, which historically crypto companies have had to kind of contort themselves into you know older regulatory
environment, so licensing structures. Which maybe didn't make a lot of sense for them.
This year, we're getting crypto companies with specific licenses and regulatory regimes. And I think those are going to be really helpful for
increasing trust and transparency in our market. And as that happens, you know you'll have more and more institutions involved in the space and that
will dampen volatility over time.
CHATTERLEY: I have a million questions. You're going to have to come back and talk to us because I'd not have time. But I know you're raising a lot
of money in the private markets. You are also expanding into Latin America. And we talk about that often as a huge opportunity for not only the
unbanked but as a crypto market and the savvy crypto market growing savvy.
But I want to ask you about the wealth creation that we're seeing. There was news this week that the Binance CEO is worth $96 billion. And that's
the world's largest crypto exchange.
Peter, what do you make of the wealth creation that's going on in this space? And how do you value companies in particular in this space that in
many ways are due to their youth untried and tested?
SMITH: Look, I think the -- there's two ways you can evaluate - three ways you can evaluate a company. What people think it might be worth, the value
of the stock at the last private company transaction, or the value you know when it goes public and actually has a real liquid market.
CHATTERLEY: Yeah.
SMITH: You know companies are - crypto companies are all across that spectrum, right, like Binance for example. As far as I know has never
raised the preferred ground, right? So, people are just guessing what Binance might be worth and then you know projecting CZ's number off of
that. You know then there's companies in the private market like us. But that's not really a liquid true market test of what we're worth, right,
because it's only a snapshot in time every year or so.
And then you have a company like you know for example, you know Galaxy Digital which trades in Canada which gets a new market price every minute
or so, right? That's the real market price of Galaxy on any given minute. And so, you know, until crypto companies are public, it's really hard to
know what they're worth at all, right? Because something is only good for you know an asset is only as valuable as what you can sell it for, which
the vast majority of crypto companies today don't have freely traded liquid stock. And so, I think a lot of this is driven by the media, where it's
like a fun number to speculate around and to you know make a headline out of, but I don't think a lot of it's real yet.
(LAUGHTER)
CHATTERLEY: We will get you back, because we have so much more to discuss. But great to begin the conversation.
Peter smith there, the CEO and co-founder of Blockchain. Thank you for being so candid and I promise never to call you grandpa ever again.
SMITH: Thank you.
CHATTERLEY: We're back after this. Stay with us.
(COMMERCIAL BREAK)
[09:46:55]
CHATTERLEY: Welcome back to "FIRST MOVE."
Flytrex is working to give fast food a whole new meaning. It's the company that's using drones to fulfill orders from places like Starbucks or
McDonald's in mere minutes. You might have seen these videos on TikTok. One user in North Carolina got her food air dropped in just 15 minutes. Flytrex
says drones are green, cheaper, safer and keep food fresher.
And Yariv Bash is Flytrex CEO and co-founder. And he joins us now.
Great to have you with us on the show.
Just explain what your company offers and why you see this as the real future of delivery?
YARIV BASH, CEO AND CO-FOUNDER, FLYTREX: Hi, Julia. Thanks for having me on the show.
Flytrex is all about getting you, as you said, getting you your meal hotter, faster and in a more affordable way. So, when you look at all of
those, it seems inevitable. And we're already servicing almost 10,000 families in North Carolina, making deliveries seven days a week every day
to people's backyards during lunch, dinner. We send Tylenol in the afternoons, diapers in the evening, just servicing whatever people need in
their homes.
CHATTERLEY: I mean, let's talk logistics on this because you - believe it, the moment you have three stations, they have a limit of a one-mile radius.
But you're working on that, expanding that and expanding your reach and very quickly I believe this year. But the videos that went viral on TikTok
showed Starbucks and McDonald's being delivered. And right now, and you can tell me whether this is going to change. McDonald's and Starbucks are
housing the cost. So, to a consumer, it's simply the goods that you buy is what you pay. How sustainable is that?
BASH: So Flytrex works with drones, which are basically robots. You don't have to pay salaries to robots. And that way we can take the calls in the
order of magnitude and make it - an order relative more affordable than using humans for deliveries, especially in the suburbs where the population
density is too low to optimize for multiple deliveries in the same run. And because of that, we can basically offer a free delivery to our customers
and charge a very small amount for the different restaurant chains and retailers.
So, it's basically a win-win situation for everybody. The customer doesn't have to pay for the delivery and the restaurant or retailer can pay a lot
less than what they're accustomed today to making those on demand deliveries happen.
CHATTERLEY: I mean if this can be scaled up, this is such a dramatic disrupter to traditional food delivery, particularly if, as you say, you
can make 10 to 15 drone deliveries in an hour compared to someone on a bike or someone driving around. What it's going to come down to is I think air
regulation and to your point autonomous drones flying around create some degree of alarm. So, talk to me about the possibility of not only scaling
up the one-mile radius which I think is very important, but also getting permission to go outside of the scope of the area that you have today.
[09:50:03]
BASH: Well, drone deliveries have been a pie in the sky for almost a decade now. Flytrex have been working with the Federal Aviation Administration for
almost five years now. Our drones seem like something you can buy online, but they're actually passing through certification as if they're commercial
airplanes. So, we are talking with the same teams that Boeing or Airbus or any other airplane manufacturer has to speak with to get the needed
certification.
It's a lengthy process. It has to be done, because we have to make sure that the skies are safe as they are today. And we're nearing the end of
that process. And at the end of that almost five-year process, we are going to have a certification that will allow us to expand our services on a
federal level throughout the U.S. So, we're going to move from three stations to a lot more hopefully in the next year or so.
CHATTERLEY: In the next year, interesting. Prime Air is Amazon's offer, I believe, and Wing is Alphabet. How fierce is competition from them,
particularly given the inbuilt consumer market, particularly as far as Amazon is concerned, Yariv? How worried are you?
BASH: So, there are more than 82 million single family detached homes -
CHATTERLEY: Good point.
BASH: -- in the U.S. So, more than 82 million backyards. It's an infinite market. I'm not competing with Amazon because Amazon is going to perform
deliveries from their warehouses. They're not going to deliver hamburgers from McDonald's or merchandise from Best Buy.
CHATTERLEY: Yeah.
BASH: So, we can service everybody else. We have to remember that Amazon is roughly 50 percent of the online ordering market, but they're a very small
portion of the entire retail market. If I can deliver you your iPhone in 10 minutes versus getting them from Amazon in 30 minutes because their
warehouse is 50 miles away and I'm delivering it from the nearest shopping center, then it's going to be an interesting value proposition to the end
customer.
CHATTERLEY: Yeah. I understand.
Very quickly, because sometimes I have been known to be incredibly lazy, little Mumu and order a Starbucks coffee or other coffee brands and it's
only about a 200-yard distance. And then I always bemoan because my coffee spilled or it's all slushy around the top. How stable is this?
BASH: And you have to stay in the line.
You don't want to stand in line. You just want to -
CHATTERLEY: That lazy.
BASH: You know, this is for you to just -- you want to work. You know you want to continue chill and watching Netflix or Disney or whatever and just
get your food or your coffee. That's what we're here to do. Usually when people register to the service, one of the first things they try to order
is either eggs or coffee just to test us. But at the end, these are you know robots that just perform the same way again and again. And so, the
quality is pretty high. In one of the videos, a lady is ordering Starbucks and you can see there isn't a drop, there isn't even a small spill of
coffee over there.
CHATTERLEY: Yes. No eggs were broken in the making of this production. Yariv, I have to go.
BASH: No eggs were broken, exactly.
(LAUGHTER)
CHATTERLEY: Thank you. Great to have you on. Thank you so much and keep us abreast of progress, please, particularly as far as regulations are
concerned.
Yariv Bash there. Sir, thank you.
BASH: You're more than welcome to come and visit us.
CHATTERLEY: Oh, I would love to. Thank you. It's a date.
All right, up next.
A canine conversation list, could my dog Romeo have a much appreciation for language as his namesake? Why in this study says it's plausible?
(COMMERCIAL BREAK)
[09:55:50]
CHATTERLEY: Welcome back to the finally on "FIRST MOVE."
Wherefore art thou, Romeo? It's a question I've sometimes asked - many times asked actually on why I named him. But that's because my dog, Romeo,
likes to play hide and seek. And here's the poetic pooch himself.
And speaking of language, a new study has been exploring how much of what we say dogs actually pick up on. Turns out dogs know when we're speaking a
foreign language and when we're speaking to them in gibberish. 18 dogs listened to a book while research has monitored their brains. They found
that different parts of the brain lit up when they heard familiar languages, rather than ones they didn't recognize, which is enough to give
us all pause for thought.
I'll tell you what my dog recognizes the word food in any language.
That's it for the show. Good to be back. Stay safe. And I'll be back with you in a few moments on "Connect the World." Stay with CNN.
(COMMERCIAL BREAK)
[10:00:00]
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