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First Move with Julia Chatterley
U.S., Ukraine at Odds Over Threat of Russian Invasion; One Week until Beijing Winter Olympics; Apple Posts Record Holiday Quarter Sales; China's Vulnerability to the COVID Pandemic; GM Shifts into U.S. Online Used Car Marketplace; Ex-Astronauts Fear Impact of Russia-U.S. Tensions. Aired 9-10a ET
Aired January 28, 2022 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:15]
JULIA CHATTERLEY, CNN ANCHOR: Live from New York, I'm Julia Chatterley. This is "FIRST MOVE." And here's your need to know.
War warning. Joe Biden says a Russian invasion of Ukraine could come as early as February.
Record revenue. Apple shrugs off supply chain issues to end the year on a high.
And COVID cases and boycott calls. Just one week to go until the Beijing Olympics.
It's Friday. Let's make a move.
(MUSIC PLAYING)
Welcome to "FIRST MOVE" this Friyay.
And one week to go over for the Beijing Olympics begins. But the Winter Games are already afoot on global markets beginning with the Powell piece -
more like off peace, if we're talking about monetary policy.
Stocks remain on a down with slope investors facing. A few moguls even after supplies, U.S. GDP lift yesterday.
Market volatility lurching like illusion, no sign of ice in the energy market either. Brent hitting seven-year highs. And that, of course, raising
fresh inflationary concerns.
All this as the tech world applauds an expert triple Axel from Tim Cook and the Olympians at Apple. Supply chain issues just a $6 billion mini-mogul
for the firm when your market cap is, what, closer to $3 trillion. Apple set to rise some 3 percent at the open today.
But otherwise, the view pre-market remains toe curling, higher volatility and volatile action.
Tech now trading a little bit lower as you can see. We'll call that flat. This after another sizable rally melted late yesterday with tech dropping
almost 1.5 percent.
The Nasdaq on track for its fifth straight week of losses. It's now some 5 percent away from falling into what we call a bear market. So that's 20
percent drop from record highs.
In the meantime, in Europe, a Friday feeling amid mixed GDP numbers, the German economy contracting more than 0.5 percent last quarter due to
Omicron led restrictions. But the French and Spanish economies saw strong gains.
Over in Asia, Japan bouncing back after three days of sharp losses. China in the meantime losing ground ahead of the weeklong Lunar New Year holiday.
Just another busy Friday. Let's get to our drivers.
President Biden warning the Ukrainian president that Russia could take military action as early as next month. A senior Ukrainian official said a
call between the two leaders, quote, "did not go well" although the White House has refuted that. And in the last few minutes, NATO General Jens
Stoltenberg detailed Moscow's latest military moves.
(BEGIN VIDEO CLIP)
JENS STOLTENBERG, NATO SECRETARY GENERAL: And they are deploying more troops, more heavy equipment and now also thousands of combat ready troops
to Belarus, also with aircraft, helicopters and advanced weapon systems S- 400 and other weapon systems into Belarus so that military buildup continues. At the same time, Russia was willing to meet us, the United
States and NATO allies a couple weeks ago. And that's a good sign that we sat down in the same room and for hours addressed the situation in and
around Ukraine and the security consequences for all of us, for Europe.
(END VIDEO CLIP)
CHATTERLEY: Kylie Atwood is live in Washington for us and Melissa Bell is in Kyiv.
Melissa, I'll come to you first. And I want to talk about that phone call because it ties to what we were hearing there from Jens Stoltenberg as
well. Two different perspective it seems. And at the core of that, the imminency of a potential Russian attack. Something that the Ukrainians
themselves have been at great pains in recent days to playdown.
MELISSA BELL, CNN CORRESPONDENT: That's right. We heard from a senior Ukrainian official saying that the call hadn't gone well. On one hand,
President Biden presenting the likelihood that an invasion could happen in February. On the other hand, Zelensky, according to that Ukrainian
official, saying, look, turn down the rhetoric.
You have to remember that for Ukrainian officials, the Ukrainian government, all of this tension on the country is not good news for the
economy. So, there is that question of what messaging goes out there. And that very forthfill messaging coming from the White House on one hand has
meant to bring allies together. On the other, for Ukrainians is of concern in terms of their economy and the political situation here in the country.
And we know that there is a divide, Julia, beyond that phone call between the assessments of what's going on the ground. We also heard here in Kyiv
from the Ukrainian defense ministry was speaking to the country's parliament earlier this morning who said that as far as the Ukrainian
assessment was concerned, the military situation, the threat posed by Russia was not very different to what it was in the spring of last year.
[09:05:05]
The only difference he pointed out going back to what we were just hearing from the NATO secretary general was that military buildup in Belarus. Other
than that, he said, things were pretty similar.
So, yes, a different assessment. And the danger of course for the White House in particular in that very strong messaging over the course of the
last week, Julia, is that the longer time passes, the more time goes by, the greater the likelihood that those kinds of differences of view will
emerge. And that unity that's been so crucial over the course of the last week will start to disappear. Not only between intelligence assessments
between the Pentagon and Ukrainian officials but what's happening over the border in Russia but also actually between NATO allies.
There's just been a phone call a couple of hours ago between the French president and the Russian president. For the time being, Julia, we only
have the Kremlin read out of that. But it's interesting -- makes for interesting reading, on one hand, Vladimir Putin repeating what we've been
hearing from the Kremlin these last few days, from Russian officials, that the official response to the responses sent by NATO and the United States
to Moscow's demands will still come, that we have to wait for that. But already saying that Russia was disappointed and that that core demand of
theirs, that NATO guarantee that it will not seek to expand further east and therefore not towards Ukraine is not something that NATO and that
United States would accept. Moscow Vladimir Putin expressing his disappointment about that.
But the most interesting part of the phone call perhaps according to that Kremlin read out was Vladimir Putin saying that he was looking ahead to
that dialogue between Europe and Russia, that France has been calling for some time. Emmanuel Macron spoke to the European parliament last week.
We've been hearing a little less about it because of that rhetoric coming from the White House, because of that need for unity amongst NATO allies.
But we know that Emmanuel Macron is the European leader that is the most keen on having an open and frank and ongoing dialogue with Moscow, reaching
out a hand. And that is a hand that Vladimir Putin appeared to grab in that phone call, Julia.
So, again, the longer - the more time passes, the greater likelihood that this united front will begin to crumble. And of course, that is worrying
for NATO General Jen Stoltenberg also there, we listen to a moment, where he had say - also saying that what he intended to do, what NATO would do
depending on the situation was continue to build up its troops if that proved necessary. And for that to be possible, Julia, unity is essential.
CHATTERLEY: Yes. And no one wants to give Russia the opportunity, perhaps, to utilize the cracks that appear in that united front, too.
Kylie, come in here because the White House suggested that someone was leaking falsehoods. And I'm quoting as a result of this call. But just
based on what Melissa was saying and the rhetoric that we're all seeing, there's clearly a disconnect in the views, at least those presented on the
outwards.
KYLIE ATWOOD, CNN NATIONAL CORRESPONDENT: Yeah, that's right. And I think the readouts that we got from this call, you know differing perspectives,
of course, from some of those Ukrainians who spoke with our colleague, Matthew Chance, and from the White House who spoke with our colleagues who
cover the White House, demonstrates what we've actually seen in the public eye thus far, right? You have heard the Biden administration repeatedly
over the last few weeks say that a Russian invasion of Ukraine could be imminent, really putting people on high alert, taking a lot of action to
make sure that everyone knows that this could be coming, and it could be coming soon.
And then you have the Ukrainians who have been saying they don't think it's as imminent. They want to maintain some sense of calm in their own country.
Of course, while they work alongside the U.S. and other allies in Europe to make sure that there are going to be high costs for Russia if they do
invade.
So, it's not all together surprising that there are different accounts coming out of this call because there have been some tensions between the
United States and Ukraine over the last few days. And that clearly, you know, was presented, was a facet of this conversation between the two
leaders.
But more importantly even you know set aside the imminent versus not imminent nature of this confusion and you know disagreement between the
U.S. and the Ukrainians, there are also disagreements between the you - between the two, excuse me, on the more fundamental fact of how this issue
should right now be dealt with. And the Biden administration has repeatedly said that they have high costs sanctions. That they are ready to implement
the minute that Russia invades Ukraine.
But the Ukrainians are saying, look, why not implement those sanctions now? Why not do something to prevent Russia from going further, to prevent it
from continuing this military buildup? And so, that is a very key difference. We haven't seen any indication that the Biden administration is
moving away from its perspective that sanctions should be a deterrent and that they should be used to sort of keep on the table as a threat, not
towards implementing them anytime soon, but that is a really interesting one to look at. And the Biden administration while they're talking to
Ukraine about all this is certainly as you guys have been discussing in touch with all its European allies to try and get everyone on the same page
if Russia does move forth because that is going to make any cost that is inflicted on Russia all the greater.
[09:10:10]
CHATTERLEY: Kylie Atwood and Melissa Bell, thank you for that.
OK. Just one week to go until the Beijing Winter Olympics. The event is facing diplomatic boycotts over China's treatment of Uyghur Muslims as
authorities battle to keep COVID at bay.
CNN's Ivan Watson joins us now from Hong Kong,
Ivan, great to have you with us. I feel like in some ways for China this can't come soon enough. Every day risks a greater chance of more COVID
cases and the likelihood that they have to take more stringent measures in Beijing itself, which is the last thing they want.
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yeah. I mean, it is striking. As the countdown ticks down, the COVID case count just keeps
going up.
We have a map that we can show you of confirmed cases of Omicron, just the Omicron variant all across China. And that's all the more striking because,
of course, the Chinese government has this zero-COVID policy where any outbreak of the virus is supposed to be extinguished, stamped out. And it
shows that the uphill battle that the authorities are facing there.
And that goes for Beijing as well. Because they are seeing the COVID case going up both inside the Olympic bubble, this so-called closed loop that
will have thousands of athletes and journalists and coaches and Olympic organizers but also outside of the bubble in the general population of
Beijing, the Chinese capital where the authorities are battling outbreaks of both Omicron and the Delta variant. And having to impose these very
draconian measures not only locking down entire neighborhoods or having millions of people take COVID tests.
But if you want to buy an over-the-counter cold or fever medicine, you have to get a negative COVID test and you have to register on your government
app on your phone ahead of time, which sets off red flags that you may be ill. These are just some of the measures that are underway here.
Inside the Olympic bubble there have been at least 141 cases confirmed. And this raises the stakes for the athletes who spent years training for these
games.
CNN we've been talking to some of these athletes who describe their fear and paranoia in countries that have, you know, hundreds of thousands of
COVID cases confirmed a day. They're trying to not catch the virus in these final hours. They have to take -- get negative COVID tests twice before
they're allowed on the plane to Beijing. And if they test positive upon arrival, they will be sent into isolation. And at least two dozen athletes
had to withdraw from last summer's Tokyo Olympics because they tested positive. That is the worst-case scenario.
And I'm going to show you one last element here, Julia. And this is a video from an athlete from here in Hong Kong, a speed skater sent us here at CNN
showing the extremes that Olympic organizers are going to, to try to protect their athletes. He says he's one of only two or three people on the
entire chartered flight, an example of how they're trying to protect their own athletes from any possible risk of contracting this virus. Julia?
CHATTERLEY: Wow. The extent that you have to go to. I saw one comment from one competitor saying at the moment they're just treating everyone like
they have COVID. They're being so careful about who they talk to, where they go, what they do. A whole additional level of stress in addition to
competing.
Ivan, great to have you with us. Thank you.
Ivan Watson there.
OK. New supply chain spoilage at Apple. The tech giant reported record holiday quarterly sales of nearly $124 billion that's up 11 percent year on
year. Thanks to strong demand for the ever-popular iPhone.
CNN's Paul La Monica joins me now.
Just a mere $6 billion plus cost in terms of the supply chain challenges versus far high expectations, I believe. But it's costing in other ways
because they're shipping a lot of the supplies into the iPhone to the detriment of things like iPads.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yeah, this is definitely a case, Julia, where Apple had to make some, I think, some difficult choices and
investors clearly not disappointed. The stock up on this news. And you're right. Because of supply chain constraints with chips, Apple made the
concerted - concerted effort to really try and juice, if you will, iPhone sales as much as possible with a new iPhone model just coming out.
So that was to the detriment of iPad revenue, which slipped in the quarter. But I think Tim Cook's comments on the call about supply chain issues
abating, definitely will go a long way towards alleviating some of the concerns that investors have about whether or not Apple would face longer-
term problems due to supply chain constraints. And then I don't think that's going to be an issue at all especially with those iPhone numbers
being as phenomenal as they were.
[09:15:18]
CHATTERLEY: Yeah. I mean, this doesn't get more juicy or maybe it does. But a phone's accounting for 58 percent of total revenues, the top five selling
smartphones in the U.S. and Australia, all iPhones top four in urban China, all iPhones. Wows us is all I can say. And the part of the business that we
always look to and I think it's interesting, particularly as we push forward is the subscription side of the business, and they saw enormous
growth in that part of the business, too.
LA MONICA: Yeah. Growth for things like Apple Music, Apple TV Plus, iCloud. Clearly very, very robust. All of those Apple iPhone users are subscribing
to other monthly services, and that is clearly benefitting Apple's revenues as well. And one final number that I find astonishing that we'll see what
Apple does with it especially in light of Microsoft just using a lot of its cash for this Activision Blizzard gaming deal, Apple finished the quarter
with $202.6 billion in cash on its balance sheet, Julia. That is a staggering amount of money burning a whole, in Tim Cook's pockets. I'd love
to have that somewhere in my couch, a small fraction of it. I do not.
CHATTERLEY: First thing you'd buy?
LA MONICA: Probably Apple stock to be honest. I mean, yeah --
CHATTERLEY: OK.
LA MONICA: It will be very interesting see whether Tim Cook uses some of that money for Apple acquisitions. The company has done some deals but
nothing to the extent that Microsoft has especially in gaming.
CHATTERLEY: Yeah. That's where I was going say. But I had to ask you, where you were going to splash the cash out. I was wondering if you were going to
say Peloton, whether Apple was going to buy Peloton, but that's a whole another conversation.
LA MONICA: It's possible but I think Tim Cook has a better use of his money than a company like Peloton. It's really falling on hard times to put it in
my --
CHATTERLEY: Super cheap though and subscription. And a lot of wealthy people - mainly wealthy people that buy Peloton.
LA MONICA: I don't think Apple is going to buy them.
CHATTERLEY: We'll have this discussion again.
Paul La Monica, thank you for that and have a great weekend.
OK. Let me bring you up to speed with some of the other stories making headlines around the world.
Motorists in Pittsburgh, Pennsylvania, escape with minor injuries after a snow-covered bridge partially collapsed on Friday morning. One driver
telling CNN, he and others couldn't stop before it gave way. The collapse also caused a natural gas line in the area to break.
Police in London are asking British officials to limit what it published - what it has published in a completed report on Downing Street's lockdown
parties. Metropolitan Police are investigating "Partygate," quote, and they don't want the report to reveal details. They say doing so could compromise
their investigation.
OK. Coming up on "FIRST MOVE."
Zero-COVID consequences. Why China's extreme protections may have increased the risks.
And GM's U.S. president on the online used car market race.
That's coming up. Stay with us.
(COMMERCIAL BREAK)
[09:20:55]
CHATTERLEY: Welcome back to "FIRST MOVE." Live from New York where we're bracing for a winter weather blast this weekend.
Stormy times on Wall Street, too. U.S. futures volatile, strong Apple earnings not really doing much to lift overall sentiment as you can see.
The dollar also trading near 18-month highs as investors anticipate higher yields that could - entice cash from overseas investors. But remember a
higher dollar can also pressure profits for U.S. multinationals.
Take a look at these gains in the energy market complex too. Brent Crude hitting $91 a barrel again amid heightened Ukrainian tensions. Natural gas
spiking over 12 percent. It's actually up more than 70 percent year over year. There's certainly messaging going on in continuing in the energy
markets.
And that takes us back to our top story today, the crisis over Ukraine. Russia's top diplomats saying Moscow will not start a war.
(BEGIN VIDEO CLIP)
SERGEY LAVROV, RUSSIAN FOREIGN MINISTER (through translator): If it's up to the Russian federation there will be no war. We don't want a war, but we'll
not allow our interests to be trampled on. I cannot say that the negotiations are over because as you know, NATO and the U.S. took more than
a month to study our very clear proposals, some grains of reason there on certain issues. For example, which is important such as intermediate range
missiles.
(END VIDEO CLIP)
CHATTERLEY: This comes after President Biden warned Ukraine that Russia could launch an invasion as early as next month.
Today, Vladimir Putin held a phone call with French President Emmanuel Macron.
Let's get some perspective now.
Joining us is former CNN Moscow Bureau Chief Jill Dougherty. She's also an adjunct professor at Georgetown University.
Jill, great to have you on the show with us.
There's clearly a lot of rhetoric, some fierier than others. Can you cut through some of the noise? What's your perspective at this moment?
JILL DOUGHERTY, FORMER CNN MOSCOW BUREAU CHIEF: I think this very moment, there's a lot of signaling, talking, et cetera. But let's take it from the
Kremlin's perspective. Right now, President Putin and his staff have that response. Although, I should say, those responses from the United States
and from NATO to the demands that Russia made. You just heard the reference to that from Foreign Minister Lavrov.
So, they are looking at those. They've given negative signals so far. They haven't been specific, but what essentially -- what they're saying is,
look, on some specific issues -- and one of them would be the placement of missiles in Europe or warning about military exercises in Europe. On those,
yes, we could talk about that.
But on the big issue, what Russia really wants, this revamping of the post- Cold War space in Europe, we're not hearing that from the west. And so, we're not happy. But they haven't come back yet.
So, we're looking for President Putin, what will he say? It probably won't be immediate, may take a little while, but that's the state of play there.
Then on the other side, you have I think the NATO allies, the United States, with a number of things going on. The message there is, yes, we're
united. I was just listening to an interview with the NATO Secretary General Jens Stoltenberg, and the message is, yes, we're united. We know
what we're doing all for one, one for all, et cetera.
But what's happening, too, is you have President Macron of France speaking with Vladimir Putin. And he will be speaking, we understand, with Ukrainian
President Zelensky later today. That's kind of the French taking a little bit of an independent idea that they have a plan.
[09:25:00]
President Macron has a plan that potentially could solve this. Then you have the German side of it, which is the defense minister saying I think
very interestingly that Nord Stream 2 which is that gas pipeline going from Russia to Germany, that might be a part of the sanctions.
So, there's a lot going on. I didn't even mention the conversation between the Ukrainian president and President Biden.
So, you have to kind of keep your - your -
CHATTERLEY: Tough to keep up.
DOUGHERTY: Yeah. Focus -- I think it is two sides of the sheet, a big legal pad. One side is what's happening in Russia, one side is what's happening
with NATO.
CHATTERLEY: You said the magic phrase there. And parts of the reason why I wanted to talk to you was because you wrote what I consider a great piece
for CNN.com talking about the Russian peoples' perspective and the viewpoint that we keep talking about and you and I here now talking about
what NATO is doing and the west is doing and what we think is going on.
But what currently amid the troop build-up on the border and with the rhetoric that we see from Ukraine. What are the Russian people seeing,
hearing, and feeling, based on your experiences as spending many years there?
DOUGHERTY: Well, if they are watching television, and young people, you know, as a whole don't really watch TV. They're on the web. But people who
are watching Russian TV are seeing kind of a different picture. What they're seeing is, you know, those two breakaway republics in the east of
Ukraine that are being supported by Russia. They were seeing reports that they are under attack from the Ukrainians, that it's getting more and more
difficult for the civilians there.
So, the message is we should help those breakaway republics. Maybe as is happening in the Russian parliament right now, maybe recognizing as
independent entities that's one thing, or at least help them with more weapons, more support, et cetera.
Now, you know, if you -- that's watching TV. If you look at the polls -- and there's a very interesting recent poll -- it shows that about 50
percent of the Russian people do not believe that there will be a war between NATO and Ukraine. However, they are very concerned about NATO and
Russia.
And who do they blame for all of this instability and the kind - of the let's say impending -- ideas of impending conflict. They blame NATO. About
half of them blame NATO. And only 3 to 4 percent blame Russia.
So, I think that's where you are. I think, Julia, you know, the bottom line -- and I was talking to a Russian actually who is very versed in polls. And
what they're saying is the Russian people don't really want to think about this because this is very slurry. They don't - you know most of them say, I
don't believe it's going to happen. In the same breath they're fearful that it will happen, and they're fearful about war. So, there's a bit of kind of
don't tell me about that, it's too scary going on.
CHATTERLEY: Yeah, one of the things that came out in your article was fatigue, that people are fatigued about hearing about Ukraine as well which
I do think is important. I think my question would be -- the key question is how much public resistance would there be to a potential invasion or
incursion in Ukraine? And if there is resistance, is that providing enough cover, perhaps, for Putin to say, look, those exercises at the border, the
100,000 troops we've done our job now, we're going to move away. Is there political cover for that from the people if they are exhausted with just
the whole concept of Ukraine and resistant to invasion?
DOUGHERTY: You know, the Russian people are exhausted. But that said, remember I was talking about the news constantly about those breakaway
republics. I think Russians look at that and say, hey, our compatriots, Russian speakers in the eastern part of Ukraine are really in danger. And
we do not want war, this is all in quotes.
We don't want war, but if it happens, if those people are attacked or something dangerous happens, we're going to have to support them. So, I
think that's where you have the government. I would have to believe that most Russians would support action by Russia, but they would frame it as
defensive. That Russia didn't cause it, the west did, NATO did and we were forced to answer.
CHATTERLEY: Jill, great to have you with us. Thank you for your insight today.
Jill Dougherty there, former CNN Moscow bureau chief.
The market comes next. Stay with us.
(COMMERCIAL BREAK)
[09:32:45]
CHATTERLEY: Welcome back to "FIRST MOVE."
U.S. stocks are up and running on the final trading day of the weekend. It's pretty volatile, the blue chips a little bit softer as you can see
there.
Global bond yields also higher across the board as investors continue to price in the greater likelihood of Central Bank rate hikes in the United
States.
Wells Fargo saying today that it sees five Federal Reserve rate hikes this year as Powell and company intensify their inflation battle.
Mohamed A. El-Erian, a frequent guest on this program says this about the market and rate hike uncertainty. Quote, "There's clarity on what we are
leaving, but confusion on where we are going."
I think that's perfectly put.
Apple meanwhile trading higher after posting record revenues but sizable declines for trading app Robinhood. The firm forecasting a Q1 revenue
decline of some 35 percent. That despite the volatility. Robinhood seeing a big drop-in user activity as once high-flying growth stocks fall back to
earth.
Now more than two years into the pandemic. And one week out from the Beijing Olympics. China stands alone in maintaining a zero-COVID approach
to tackling the virus. That's meant mass testing and draconian lock down measures for millions of people with at times very little notice. It also
means very little natural immunity in the population even though China says it's administered almost 3 billion vaccine doses.
My next guest believes China is now one of the most vulnerable countries in the world.
And joining us to discuss is Yanzhong Huang. He's senior fellow for the Global Health at the Council of Foreign Relations.
Sir, great to have you on the show. I guess in the very short term, do you think they can get through the Beijing Olympics unscathed without seeing
some kind of lockdown measures required in Beijing?
YANZHONG HUANG, SENIOR FELLOW, GLOBAL HEALTH AT THE COUNCIL OF FOREIGN RELATIONS: Well, that is a good question. Certainly, I think Beijing still
believes that the situation is under control. There are flare ups, but they are confident that with heightened pandemic control measures the situation
will continue to be under control without turning to a forced citywide lockdown measure.
[09:35:00]
CHATTERLEY: Yeah. I mean, it's a tough one here. And to the bigger point that you've made which is they're now a vulnerability. Yes, they've
vaccinated some 3 billion people they say but their relative efficacy of their vaccines is lower. They don't have natural immunity because they've
certainly not allowed people to get sick with COVID.
Are they able at this stage to just say, look, we're going to ease this policy, even if they don't say it out loud? We're going to try and
transition to what much of the west is now doing which is now living with COVID. Can China even do that?
HUANG: Well, I do believe that is going to happen sooner or later but not now. With the Winter Olympics, I think their foremost priority is to make
sure there's no disruption to the games. So certainly, easing up the COVID zero measures will potentially lead to larger outbreaks. That is not
something that Beijing wants to see happen. But I do believe that after Winter Olympics, you know, there is a policy window that is open for an
introduction of certain flexibility to the implementation.
CHATTERLEY: What policy measures have to be done in order to allow that? I mean, they need to have COVID pills, I'm assuming. Perhaps booster shots
for the most vulnerable people. Surge capacity in the health care system because as we've seen elsewhere in the world, a lot of people are going to
get sick. That's just the way this works if you're trying to live with it.
HUANG: Exactly. That means you have to shift the strategy from containment, mitigation, basically focusing on a significant reducing the risk of severe
cases and death. That means as you correctly point out the availability of more effective vaccines, that's booster shots. The availability of more
effective therapeutic means. But in the meantime, I think it is also important to educate the public so that they could develop an idea that
exactly what the threat is, the scientific understanding of the risk posed by the virus, I think is also vital.
CHATTERLEY: How do the people feel? Because I sort of made the comparison with year one that the rest of world was in. And China is there now. In
year one, most of the world was frightened. Lockdown was OK because people were frightened of getting COVID and frightened of dying.
How do the Chinese people feel about these persistent lockdown and the extreme measures? Are they OK with it because they're frightened? And it
goes to your point about re-educating we can live with this.
HUANG: Well, I think it depends on where you are, right? Certainly, a way - you're in a speedy that you're going to hit by the virus, the outbreak,
right? A new subject to the lockdown measures you found it really inconvenient. You found it like victimized by the stringent government
control measures. You're not happy with that. But for you know those -- the people who are not theoretically affected by the pandemic.
I think you know they seem to be happy, right? They live in a virus-free environment and they would still support the government control measures,
which they believe are very important to keep them safe.
CHATTERLEY: What's the longer-term consequences if they don't ease the zero-COVID policy be it financial, economic, social?
HUANG: Well, I think when we talk about the long-term impact was certainly (INAUDIBLE) the cost and increasing rapidly because you have to rely on
even more draconian measures in order to get things done. And in the meantime, you're going to see very likely the virus seems to affect more
people, more localities, so the social economic cost is going to increase exponentially.
So that raises, right, the sustainability issues for the strategists. So sooner or later you're going to see the cost exceed the benefits. Not to
mention, right, that there's also the problem. You know that strategy make longer work in terms of preventing, right, the quick spread of the virus
and basically the entire country could be engulfed by the pandemic.
CHATTERLEY: Yeah, some severe risks.
Sir, great to have you with us. Yanzhong Huang there, the senior fellow for Global Health at the Council and Foreign Relations. Thank you for joining
us.
OK. Coming up -
HUANG: Thanks for having me.
CHATTERLEY: Thank you.
Coming up after the break, General Motors muscling in on America's online used car market. Will its rivals be hitting the hazard lights? We'll
discuss.
(COMMERCIAL BREAK)
[09:42:30]
CHATTERLEY: Welcome back to "FIRST MOVE."
And a new road for General Motors. It's veering into the online used car market putting it head-to-head with established players in the United
States like Carvana, Vroom and CarMax. The pandemic and the chip shortage of heightened demand for used cars. And GM is offering called CarBravo who
sell cars sitting on dealers for cars and that includes non-GM vehicles too. The shift scale of its inventory and its servicing capabilities may
well be setting off some warning lights among its competitors.
Here to discuss Steve Carlisle, is president of General Motors North America.
Steve, fantastic to have you with us.
Let's talk about CarBravo. (INAUDIBLE) feels like how many of these dealerships should get onboard? How many you've already got onboard? And
you can tell me because that ties to how big the venture will be available for our potential buyers.
STEVE CARLISLE, EXECUTIVE VP AND PRESIDENT, GM NORTH AMERICA: Well, good morning. And thank you for having me. I really appreciate the opportunity
to talk about CarBravo. We're really excited about it.
I'd say early days in terms of how many dealers we've signed up. We made the announcement a couple of weeks ago, and we're on the road right now
signing dealers up. What I would say is that the interest is very high. We have a nationwide network of 4,000 or so locations. And I'd say the
interest is very high.
I think as we get out there everyone is seeing the benefit and the power of CarBravo. So, we're very enthusiastic of the reception we're going to get.
We'll have more to say about how many and so an as we get towards the end of the quarter.
CHATTERLEY: So, can't even give us a hint? I mean, I can tell my viewers Carvana which is a competitor, has around 55,000 cars for sale. Is it fair
to say by the spring when you officially launch, you'll have plenty more than that?
CARLISLE: Oh, if you're talking about cars at any moment in time, we have about 400,000 used cars throughout our network. On an annual basis, we sell
throughout our network about 2.5 million used cars, so inventory is definitely -- access to inventory is definitely one of our advantages.
We get our used cars. They come as a result of trade ins on the new car business. They come as customers are turning in their leased vehicles, and
they come as we take cars back from our rental car companies. So, we're in a very good position in terms of having good numbers of inventory as well
as a great selection. And as you alluded to, CarBravo, we're going to market on an all makes, all models basis, which is a unique aspect.
[09:45:07]
CHATTERLEY: I mean, that's a lot of used car sales. What proportion of those do you think is reasonable to be done online once this is up and
running?
CARLISLE: Yeah. Well, the way we're approaching that is it's a user choice. So CarBravo, it's a platform. It's omni channel so it's up to you. You can
do as much as the shopping and the transactional aspects as you wish online, or you could do as much of it you know with a dealer in a physical
location as you want.
The research would say whether it's new or used about 17 percent of people prefer to complete the complete transaction online. And then there's
another component at the other end of the distribution that prefer to do it all in a dealer location. But what most customers tell us, the vast
majority, 70 odd percent that they prefer a mixed experience of depending on where they are in the process to do some of that online but then to do
some of it in a physical location.
It's such a big and emotional purchase, you know, that there is always that in-person physical component to the total experience.
CHATTERLEY: And what's going to be the cut for the dealership as well? Is there going to be an incentive to sell online? To your point, like some
people like doing it some way, some people like doing it others. But is there a risk that it cannibalizes their - sort of in person dealership
sales here? Because there's great positioning, you're already warning some of your guys not to push it on pricing because demand is so high.
CARLISLE: Well, the way it works is the -- the inventory that's visible online to the consumer it's a combination of what's on the dealer lot
already. It's their inventory, always has been, always will be.
And then there's also access to essential inventory. And essential inventory is made up of the least returns that I spoke about as well as the
vehicles that are coming back to us from the rental companies.
So -- and it all ends up being transacted through the dealer, right? So, there's no real issue there. So, the upside from a dealer point of view
it's the same as the consumer is that they get access to a much broader pool of industry and a much broader view of customers.
CHATTERLEY: I want to ask you about current supply shortages while we're talking about it. Your total sales for GM were down about 13 percent I
believe last year tied to the semiconductor shortages, although we saw a pickup in production at the back end of last year. What are you looking
ahead towards for this year? Can you recover your title as America's top auto seller, snatch it back from Toyota?
CARLISLE: Yeah. That's certainly the goal.
Well, the outlook for this year, first of all, I'll start with the industry. The industry looks robust. There's still a lot of pent-up demand
out there, notwithstanding some of the headwinds that you talked about. So, we see an industry that's quite a lot larger than when are finished last
year, 2021. Kind of in the 16.5-million-unit range for new cars, and that's really going to be a function of supply.
And on the supply side we do see that improving steadily even in this quarter in terms of the chips to support production but then also as we go
through the year.
Now, all that said it's, you know, notwithstanding other events that we don't know about at the moment, we certainly experienced our share of those
through the course of the year last year as did the industry. But it looks better this year and, and the consumer looks to be in good shape. And we
have a great range of new and exciting product that's been very well received. So, we're optimistic and leaning into 2022.
CHATTERLEY: So, Toyota, you've been warned. Very quickly to talk about the speed bumps that you sort of mentioned there, the Chevy Bolt EV. You
recalled over 140,000 of them for battery replacement. So, that's been very little production in the last quarter. That's meant a lot of speculation
that you plan to phase this one out. What's the plan, Steve? What can you tell us?
CARLISLE: Well, when we approached that situation which was unfortunate. You know our focus is clearly on the customers and the current owners and
to get their vehicles repaired and back to normal. And we've been working through that process and so far, very successfully. So, we'll continue with
that commitment.
And certainly, it's our goal to get back into production selling new Bolt and Bolt EUVs here as soon as we can here in the new year. So, we have a
few steps to go through still, but that's certainly our goal. And for the record we have no intention of curtailing anything on the Bolt or the Bolt
EUV. We're very enthusiastic about its - about its prospects. It's done very well in the marketplace.
[09:50:12]
Our most loyal customers, they're most satisfied. So, we see a long life ahead for the Bolt and the Bolt EUV.
CHATTERLEY: We got it, no bolting on the Bolt at GM. We heard it.
CARLISLE: Can I use that? That's awesome.
CHATTERLEY: Yeah, you can. I'll give it to you.
There you go.
CARLISLE: Thank you.
CHATTERLEY: Steve Carlisle, executive vice president and president of General Motors North America.
Sir, thank you for joining us on the show.
CARLISLE: All right. Thank you. Appreciate it.
CHATTERLEY: Thank you.
All right. Coming up after the break.
Keep your eyes on the skies. Could those east west tensions extend as far as the International Space Station?
We'll explore next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "FIRST MOVE."
The final frontier. There are fears that tensions between the United States and Russia on the ground could extend all the way to space.
Space and defense correspondent Kristin Fisher joins us now.
Kristin, always great to have you on the show. It's tended to reach beyond geopolitics on the ground at least in the past. Is this time different
because some astronauts you've been speaking to are a little worried?
KRISTIN FISHER, CNN SPACE AND DEFENSE CORRESPONDENT: That's right. I've spoken with about a dozen former astronauts many of whom spent quite a bit
of time up on the International Space Station. And they're -- some of them are quite concerned that yes, perhaps this time things could be different.
And it's important to remember the history of this, right? The International Space Station has been up there for more than 20 years,
Russian cosmonauts, U.S. astronauts working so closely together. And yet so far, any political tensions that have happened between U.S. and Russia 250
miles below the Space Station have remained very isolated. The Space Station and what happens up there has been very insulated from those
political tensions.
And in fact, I spoke with two of the NASA astronauts that were onboard the Space Station. The last time Russia invaded Ukraine back in 2014, and they
told me that at no point did anyone in mission control in Houston or in the mission control in Moscow, did anyone ever say anything to them about what
was happening on the ground in Ukraine. So that gives you an idea of just how insulated they are.
But I also spoke with some astronauts including former NASA astronaut, Garrett Reisman, who spent 95 days up there, and he says he's worried that
if this current crisis evolves into an actual shooting conflict, that this could potentially be the end of the International Space Station.
And Julia, part of the reason why is because things are so closely connected up in space. These astronauts share everything from, you know,
electricity, propulsion, exercise equipment, I mean all sorts of things, even their urine. They actually recycle each other's urine which they then
drink.
[09:55:02]
So, it's impossible to really divorce these two segments. The Russian segment from the U.S. segment. But NASA administrator Bill Nelson is
confident that this partnership in space, the International Space Station is going to survive and continue because the Biden administration just
announced that they want to extend it all the way to 2030. Julia?
CHATTERLEY: You know, I didn't realize the relationship was so intimate, quite frankly. I remember the last time we had you on the show we were
discussing people wearing nappies or pampers.
(LAUGHTER)
FISHER: Diapers, yes.
CHATTERLEY: This tops that. And I didn't believe that was possible.
Yes, fingers crossed the relationship continues to transcend the geopolitics on the ground.
Kristin, great to have you on the show as always. Thank you.
Kristin Fisher there.
FISHER: Good to see you, Julia.
CHATTERLEY: Thank you.
OK. That's it for the show. Stay safe. Have a great weekend.
And "Connect the World" with Becky Anderson is up next.
We'll see you next week.
(COMMERCIAL BREAK)
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