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First Move with Julia Chatterley

Dangers of Delivering Supplies to Civilians Unable to Flee; Both Countries Rejected Moscow's Demand for Payment in Rubles; U.N.: 70 Percent plus of Africa's Economies at Severe Risk from War; Russia has Cut Off Gas Supplies to Poland, Bulgaria; GDP Shock: U.S. Economy Shrank in First Quarter; Mattel Q1 Sales Rise 19 Percent to $1.04 Billion. Aired 09-10a ET

Aired April 28, 2022 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[09:00:00]

(COMMERCIAL BREAK)

PAULA NEWTON, CNN HOST, FIRST MOVE: A warm welcome to everyone. You are watching CNN. I am Paula Newton in New York and we begin with the latest on

the war in Ukraine. This hour the UN Secretary General seeing for himself. The horrors in Ukraine ahead of a meeting with President Zelenskyy Antonio

Gutierrez told CNN the war will continue unless in his words, Russia decides to end it and it won't be resolved by meetings. Now, at this hour,

you've seen for himself the devastation in Irpin and Bucha listen.

(BEGIN VIDEO CLIP)

ANTONIO GUTERRES, U.N. SECRETARY GENERAL: When I see those destroyed buildings, I must say what I feel I imagined my family in one of those

houses, that is now destroyed, and black. I see my granddaughters running away in panic. Part of the family eventually killed. Our hearts, of course,

stays with the victims, our condolences to their families. But our emotions are there is no way a war can be acceptable in the 21st century. Look at

that.

(END VIDEO CLIP)

NEWTON: All right, Secretary General there clearly emotional as he toured that scene and yet reports of atrocities just keep coming out of Donetsk

now. The U.S. says it is credible information that Russian forces executed Ukrainians. Think about this while they were trying to surrender. The

intelligence suggests the victim's hands were bound and they were murdered execution style.

And overnight and explosion rocked the Russian occupied city of Kherson in Southern Ukraine. Russian media is blaming Ukrainian forces for the attack

which appeared near the main TV broadcasting center. Ukrainian media reports that Russian TV channels had stopped working in the city.

Meanwhile, Russian appointed administrator said the city would not be returning to Ukrainian control. As Russian shelling intensifies right

across Eastern Ukraine civilians trapped in the region continue to rely on police officers determined to bring them the bare essentials. Sam Kiley was

on the ground with them and has our story.

(BEGIN VIDEOTAPE)

SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Donetsk on the frontline with Russia. It's an artillery frontline.

KILEY (on camera): Let's get into the basement.

KILEY (voice over): Local police are delivering aid to civilians unable to leave. There's no time to wait out the bombardment. There's no likely end

to the shelling either supplies lead delivering and past. She tells me there are three people next door including a granny of 92. Upstairs a

bedridden woman, she says that normally they stay in their flat and only use the basement when it's bad. Thank you for not forgetting as she adds.

KILEY (on camera): The urgency of these sorts of deliveries cannot be exaggerated just in his block there's mostly old people. One gentleman is

dying of cancer in front of his wife. She's saying she's living in a double health since we've been here they've been, I don't know, 5, 6, 8 impacts

very, very close.

And almost every tree every corner, every bit of this local neighborhood has got the signs of recent impacts. And Russians are just a kilometer

maybe three away.

KILEY (voice over): Russian guns are so close you can hear the whole arc of their shells. From Kyiv to Mariupol from Kharkiv to here this is the

Russian way of war pound civilians flattened cities and maybe occupy the ashes.

Oleksandr says we're in danger now they're shelling us so it could come at any moment and shrapnel could hurt us. We tried to hide there in the bomb

shelter.

[09:05:00]

KILEY (voice over): Three months of war has driven these people underground. And there's no end in sight. Stuck with the fears Oleksandr

confesses. He tries to keep inside, but it creeps out.

KILEY (on camera): There's one more delivery that the police have got to make. But every time we try to get out the front door of this building,

there's another impact. There's another one now. They're saying that the hospital which is nearby is under heavy shelling. We were planning to go

there. We can't get through or indeed at the moment. Can we even get out of this bunker?

KILEY (voice over): The hospital was hit. Images of the damage done that morning, posted online by the local administration official said that one

civilian was killed, others injured, and several floors were badly damaged. The humanitarian effort goes on. This woman asks only for the basics of

existence, water and candles for light.

KILEY (on camera): You do this every day?

KILEY (voice over): Bogdan tells me that most people left here now have nowhere else to go. They've lived here all their lives and don't want to

abandon their homes.

KILEY (on camera): Do you think the Russians are going to take Donetsk?

KILEY (voice over): Never he says we will stand our ground to the last man, no one will leave here. That may be a dangerous claim. It's likely that

Ukrainians will destroy this bridge to hold up the invasion. And anyone still here would then be trapped in Russian hands.

(END VIDEOTAPE)

NEWTON: Alright, Sam has moved to the city of Kramatorsk. He joins me now with the latest. It really is chilling to see that report. And I know given

all your war experience that you certainly felt what the civilians there have been going through for such a long time now?

You know, so many defense analysts right now, including the Institute of War say that, look, this is going to be a much more methodical campaign

right now on the part of the Russians. They are making advances. But it is a lot through that indiscriminate shelling. I'm going to lean into your

experience here, Sam, I mean, what do you make of the kind of progress right now that Russian forces could be making through that region?

KILEY: Well, I think one of the first things to think about here is how thinly stretched Russian forces really are? They're in an enormously long

front line. It must be close to 500 miles, all the way from Izyum in the north and a great big arc all the way down to Mykolaiv in the South.

Now they're going to prioritize trying to capture where I am here in Kramatorsk. But they've also said that they want to hang on to or even

expand their control along the southern coastline, perhaps all the way to the border with Moldova. They're being held up in Mykolaiv.

Now, then we need to dial back and say well, what is it that they would like to hold on to? They'd like to capture and hold on to the Donbas, the

two Oblast provinces of Luhansk and Donetsk, of which they already control 60 to 80 percent, including - they would like to capture Kramatorsk where I

am.

They probably almost certainly will never want to give up on Kherson because that controls the water supply into the Crimean Peninsula, which

they've illegally annexed back in 2014. So in that context, they are spread thinly. So they are going to be moving incrementally.

They are going to try and use their at the moment a domination of artillery in order to overwhelm the Ukrainian forces who are spread equally thin,

that could be rebalanced, if the more modern NATO style weapons that have been promised up flooding in to the Ukrainians and they can put them to

good effect.

So therefore, from the Ukrainian perspective, it's a race against time, the longer the Russians get to use their kind of technique of relentless

pounding of Ukrainian civilian areas and Ukrainian positions, the more likely they are to, if not prevail, hold the territory that they've already

captured. And that's a critical thing.

I think, looking forward. There is a real sense among Ukrainian supporters at any rate, that they may be able to turn the tide of this war entirely

and push the Russians right back that, I think maybe something of a pipe dream, but what they're trying to avoid is a long term frozen war of the

sort that we saw established back in 2014, which means that the Russians sit here in perpetuity, permanently destabilizing a nascent democracy here

in the rest of Ukraine, Paula?

NEWTON: Yes, clearly, NATO is concerned about that. We just even had the NATO Secretary General saying, look, this conflict could go on for years.

Just turning though quickly, Sam to the Ukrainian forces them, you do mention how difficult this will be for them? Critically, do you believe

that at this point in time they are confident they will be re armed in the way they need to be by the U.S. and its allies?

[09:10:00]

KILEY: They do seem to be increasingly confident certainly that's the message coming from a President Zelenskyy. He still saying we're not

getting enough and we're not getting enough quickly enough, but they are getting the sorts of weapons that can really make a difference.

If you look at what an incredible difference the - and javelin these shoulder launched anti-armor missiles made, they turned back entirely

turned back the assault on Kyiv using those just pretty much just those weapons.

On top of that you got the game changing Turkish built drones that the Ukrainians have. You've got - you can assume every single shred of

intelligence coming from every possible Western sources being fed to the Ukrainians. And then on top of that, they're now even the German supplying

armored anti-aircraft capabilities, the British coordinating an enormous response to try and push a lot of these very important weapons or suicide

drones so called these were the you know, these weapons are very, very simple to use, but can have devastating effects.

Now while they can they need to take that technological advantage and put it to best use against the Russians before the Russians catch up. The

Russians, it's would appear have been over boasting about their technological capabilities.

And we now have seen the results but what they do have is the old fashioned mass killing apparatus and that is what they're putting into lethal effect

at the moment.

NEWTON: Sam really appreciates you giving us the state of play as it stands right now Sam Kiley there for us in Ukraine. Now two European energy firms,

meantime, are in talks with Gazprom about how to pay for Russian natural gas while still complying with EU sanctions? And as we've been reporting,

Russia cut off supplies to Poland and Bulgaria for rejecting its demand to pay for gas in Rubles.

So what are we looking at here in terms of the alternatives? Clare Sebastian has been digging into this for us now. Clare, those companies are

in talks with Gazprom. Crucially, the issue is they're going to try and keep that gas flows and the payments coming. Is there a potential

workaround right now?

CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, Paula, this is a very gray area. And perhaps pointedly so you know, we were talking when this was first

announced this payment mechanism that Russia has put in place about the fact that it might leave room for both sides to sort of save face to agree

to something without looking like they're capitulating.

And this might be what's happening now, because if you look at the EU has said there might be a potential workaround that might avoid violating

sanctions, both companies that have come out and said that they're in talks with Gazprom have said the same.

UniPro the German gas importer has said, we consider a payment conversion compliant with sanctions and the Russian degree to be possible, continuing

UniPro will continue to pay in euros. And that is crucial, because the Russian decree doesn't actually, you know, force companies to pay in

Rubles.

What it does is it makes them open two accounts at Gazprombank, one in euros or dollars, and one in rubles. They then pay the money into the euro

or dollar account as normal Gazprombank carried out the conversion into rubles, and then deposits it back into the buyers ruble account.

So the question is for the European Union and for these gas companies, as does that role in the transaction end with the euro or dollar account? Or

are they still involved at the point at which the money from the ruble account is then transferred to Gazprom? So it's complicated.

There's a lot of questions around these two accounts and when the transaction ends, but it's clear that there is sort of momentum now to try

to find a compromise clearly accelerated by what happens with gas being cut off to Poland and Bulgaria.

NEWTON: Clare you and I both know, breaks the spirit of the sanctions categorically does so I would argue and yet we're supposed to have, you

know, a Europe that is moving away from Russian fossil fuels.

SEBASTIAN: Yes, this is what Ursula Von Der Leyen the EU Commission President said yesterday. She said the era of Russian fossil fuels in

Europe is coming to an end. I think you know, they've said that before. The question, of course, is when? And is it going to be quicker because we've

now already seen it get real.

And we've really seen Russia is willing to turn off the taps and to weaponize its energy exports. And I think the one to watch here, Paula, as

always, is Germany, which is Europe's biggest economy. The German Economy Minister has said that, you know, he really thinks now is the time to try

and get to consider things that were previously thought unrealistic, like, for example, stopping gas imports from Russia.

It's clear that they cannot do that straightaway that it is going to take a lot of infrastructure development, a lot of sort of lateral thinking,

essentially going into renewables, things like that. He says, he's urging Germany to speed up the building of an LNG and Liquefied Natural Gas

terminal to ramp up renewables.

But like, it's clear that this is going to have to take some difficult decisions from Europe because the only way they're going to get through

without Russian gas is to cut back on demand. And we're getting close to the point Paula at which they're going to have to start preparing for

winter building up that gas storage.

So it's getting really real and I think this is going to involve some quick decisions. We do know finally that the French Environment Minister is

convening a meeting on May 2 with ministers in charge of energy in Europe.

[09:15:00]

SEBASTIAN: So it's clear that talks on this are beginning pretty soon.

NEWTON: Yes, they need a new plan as this will involve economic pain. Clare Sebastian for us, thank you for taking us through that. And now we want to

look at the markets around the world.

U.S. futures are trying to hold on to gains after this is a bombshell folks new first quarter numbers showed the economy in the United States

contracted yes, shrunk by 1.4 percent annualized. That's a huge downturn from 6.9 percent growth in the first quarter.

You see there the markets as I say trying to stay in the green Asian markets meantime closed higher on optimism that Beijing will boost

infrastructure spending enough to give the Chinese economy a badly needed lift is COVID lock downs and mass testing there continue.

Now that has slowdown in the first quarter in the U.S. economy's worst performance since the pandemic driven recession of 2020. Rahel Solomon has

been following this bombshell for us that top line number incredibly shocking.

And it definitely puts recession fears in perspective.

RAHEL SOLOMON, CNN CORRESPONDENT: Shocking and stunning, Paula, to give you some context, the consensus among U.S. economists was 1.1 percent growth,

so to see the reading come in at negative 1.4 percent are safe to say not a lot of folks were expecting it.

In fact, this morning, Deutsche Bank report I was reading before the numbers came out. And they put their consensus at exactly 0.0. And I

remember thinking, well, that's awfully bearish.

Deutsche Bank, of course, the first bank to predict or to forecast a recession, and yet this number coming in even worse than they expected. So

let's take a look at some of the factors being cited for the number that we're seeing today.

Omicron first quarter that Omicron is really being reflected in the data, decrease in private spending. The note pointing out that that was led by

decreases in wholesale trade, mainly motor vehicles.

Of course, the auto industry has been really crushed by supply chain issues by Chip issue. So those issues persist. And then, of course, the war on

Ukraine and its impact on gas prices, we've seen gas prices search. So you put all of that together.

And it sort of explains how we have gotten to negative 1.4 percent, but certainly not something we were expecting.

Also, when you consider it compared to last quarter of growth of almost 7 percent, 6.9 percent, it really explains sort of why it's stunning. And

yet, Paula, in the midst of all of these futures are still higher this morning. How could that be?

Well, perhaps because the consumer is still strong. We know how important the consumer is to the U.S. economy and economies around the world. And

we're still seeing strong spending on things like services on things like travel.

We've heard that from companies that reported this week like Visa, we've heard it from the airlines, so perhaps that the all-important consumer

coming to the rescue yet again, sort of lifting markets this morning.

But to your point, Paula, no one was expecting a negative 1.4 percent contraction this quarter. The expectation had been a positive 1.1 percent.

NEWTON: Yes, and I argue this will have some political implications as well. Well, I don't have a lot of time. But the problem here is it's not

just the U.S. economy, right?

SOLOMON: Yes, in fact, in a lot of the issues that we're experiencing here in the U.S., our European counterparts are experiencing as well of course

the war in Ukraine supply chain issues, the Omicron bearing.

It's part of the reason why we're starting to see governments around the world and entities around the world slash growth forecasts, Germany,

Europe's largest economy, slashing its growth forecast to 2.2 percent, the IMF recently slashing global growth to 3.6 percent so we're Paula, all in

this together.

I don't know that anyone feels necessarily better about it because of that, but a lot of the factors impacting us here in the states impacting our

neighbor's as well in Europe and beyond.

NEWTON: Yes, Rahel thanks so much. I know you'll keep a close eye on it throughout the day. Appreciate it. Coming up here for us, the war in

Ukraine is having a devastating impact on these children thousands of miles away in Africa next, the President of Afreximbank on what can be done to

help.

(COMMERCIAL BREAK)

[09:20:00]

NEWTON: And welcome back. The World Bank is warning Russia's war on Ukraine is contributing to an historic shock to commodity markets that expects

energy prices to jump more than 50 percent.

But this is key food prices are still expected to rise 22 percent this year alone. A recent U.N. report on the impact on Africa said that the war

presents a severe risk to most of the continents.

Economies with more than 40 countries are facing one or more forms of emergency. This month Afreximbank launched a $4 billion program to help

African countries cope with the effects of war.

Joining me now it's President Benedict Oramah. And I thank you for joining us, sir $4 billion, certainly much needed capital here. And yet what are

the greatest challenges you are facing?

You know, the U.N. report made clear nearly three of every four countries on the continent will suffer severe impacts from the war in Ukraine.

BENEDICT ORAMAH, PRESIDENT, AFREXIMBANK: Paula, the war we fought in - that the impact has been that Africans are getting hungry up by the day. You

have children who do not have enough food; you have farmers who cannot have access to fertilizers.

And of course, energy prices have gone up complicating the development challenges we have on the continent. So the $4 billion facility which our

board approved in the form of a --response to what is going on Ukraine is to provide a platform to enable us mobilizing more money to support the

continent.

As we speak today, we have requests for financing exceeding $15 billion from across the continent. So what we have decided to do was to use these

$4 billion to mobilize additional funding by trying to leverage partnerships we have around the world.

But beyond that, we have also seen that some countries that need fertilizer, to be able to mitigate future food. The future food problems do

not even have access. So we have also decided to put in place a digital platform to enable pooled procurement of fertilizers and fruit.

This will enable us to discuss and negotiate better prices as a collective because we know the content has 55 countries. So these countries are very

small. So if they go individually to the global markets at this time, they pay too much. Some of them are Island economies.

So when we pull all our demand together, we're able then to negotiate better prices and then we support them to the fork in the --financing we've

provided.

NEWTON: I don't have a lot of time left. But in terms of how you see this working out during the growing season, I will add that your continent as

well is dealing with conflict and even climate change issues.

[09:25:00]

NEWTON: Do you see production being able to be increased in Africa this year to try and help with the food and security issues.

ORAMAH: Unfortunately, we do not see production increasing, because we do not have access to agrochemicals. Most of the some of the countries

imports, the fertilizers from Russia, and they cannot have access anymore.

And even those who, who have something do not have anywhere to buy these fertilizers. So we expect that even food prices will worsen in the future.

NEWTON: That is indeed a very stark assessment from you. We appreciate it though and we'll continue to keep an eye on it. As I said international

organizations saying that the next few months if not years ahead will be very tough for Africa. Appreciate your insights there.

Next for us here demand and supply cuts, we speak to a top EU official. As Russia turns off gas supplies to Poland and Bulgaria we ask the solution be

reached.

(COMMERCIAL BREAK)

NEWTON: So right now the Head of the U.N. is in Ukraine to meet its president and see some of the devastation there firsthand. There are some

these are in fact we're bringing you some of the latest images of Antonio Guterres is to Bucha.

Speaking to CNN, Mr. Guterres said the war will go on until Russia decides to end it.

Adding that a serious political agreement must be reached to this as Washington says it does have credible information that Russian forces

executed Ukrainians while they were trying to surrender.

We will continue to bring you the very latest developments right here on CNN. And as European companies hold talks with Gazprom over how to avoid

having their Russian gas supply switched off, Hungary has told CNN it will use a payment scheme set out by Moscow.

[09:30:00]

NEWTON: Brussels says it may be possible to comply with Russia's demand for payment in rubles without breaking EU sanctions. Hungary's Foreign Minister

told our Richard Quest the priority is serving his country.

(BEGIN VIDEO CLIP)

PETER SZIJJARTO, HUNGARIAN FOREIGN MINISTER: The thing is the following that gas supply and oil supply of a country is not matter of philosophy or

communication or ideology or politics. This is matter of physics.

The fact is that we are determined by infrastructure 85 percent of our gas supply comes from Russia and 65 percent of our oil supply comes from

Russia. Why? Because this is being determined by infrastructure, this is not for fun; we have not chosen this situation.

Simply this is the physical situation in Central Europe. There are no alternative gas sources, no alternative delivery routes, which would make

it possible for us to get rid of the Russian oil and Russian gas in the upcoming couple of years.

We have done a lot in order to diversify; we have built all the interconnectors with the six of the seven neighboring countries. So in case

there's a new gas source being explored somewhere in the neighborhood, we would be happy to buy gas from there.

If Exxon Mobil had made its final decision to exploit the gas from the Black Sea in Romania, now, we would be in a much better situation. But

since there have been no new gas resources, and no new gas was explored in the last few years.

Unfortunately, we have no other choice than rely on the Russian energy sources in the upcoming couple of years. But this is once again not for

fun. This is the physical determination for our country.

RICHARD QUEST, CNN CORRESPONDENT: But there is a feeling there is a view a sort of a perception that Hungary's position is not as united with the EU,

as other countries or indeed with NATO, for example. For example, the transmission or the distribution of military weapons through Hungary, which

until now, you've not allowed taking place? The view is Hungary is not united with the rest.

SZIJJARTO: You know, I think you made it very rightly at the beginning, because you said it's a perception. It's a view, it's a feeling. But this

is not the reality. Hungary has given its consent to all the five packages of sanctions so far, in the European Union.

We have given our consent, we just made it very clear, that says this physical determination I try to describe to you in my previous answer, in

order to preserve the European unity, do not come forward with sanctions, which would stop our country and stop our economy to operate.

(END VIDEO CLIP)

NEWTON: All right, we now want to speak to someone who is dealing with these issues firsthand. Terry Britton is the European Commissioner for the

internal market, and he joins us now live from Brussels.

So good to have you speak to these issues right now, as they're at the forefront, to the sanctions. First, Putin has now taken the first steps

towards some would argue weaponizing Russian energy cutting off Poland and Bulgaria for not paying in rubles.

Now, I know that the EU has called this blackmail, but clearly Russia is getting its money for energy. Is this in any way shape or form in your

opinion, breaking the spirit of the sanctions if not the letter of the - there?

THIERRY BRETON, EUROPEAN COMMISSIONER FOR INTERNAL MARKET: Well, you know, I think - was extremely clear, by the way yesterday when she mentioned

that, of course, today, regarding the contract that we have with Russian gas, 97 percent of these contracts stipulate very clearly that they have to

be paid either in Euro and Dollar.

So they will have to be paid in Euro and Dollar. And you should - it was clear it will be an infringement. So that's the way it is.

NEWTON: And yet there seems to be some work around here. I mean, if you ask me very clearly you nations are funding Russia's war. Do you see anything

in the near term that will change over the next few months?

And I know the work around that is going through the banks. But the bottom line is Russia is in a fashion getting payment in rubles. And Hungary we

just heard from them saying look, we will pay in rubles anyway, we have to, we need Russian energy.

BRETON: You know, are our sanctions. These sanctions have been voted and of course have to be applied by the way they've been voted by both U.S. and EU

and therefore we love to be put in place.

But you know, I think the most important thing is that those two things to see, to see this, this subject which is by the way, a very important find

out. As the first one and then of course we have the sanctions and I could tell you that we are working in the EU on the sixth package of sanctions,

this will be discussed soon.

[09:35:00]

BRETON: We are working on it. And, and of course, regarding what happened in, in Ukraine, it will be a decision of our particular leaders to, to

decide if we move on. But as at least we have been instructed to work on it.

The second thing is that, of course, we will see what we put into sanctions. The second thing is that, of course, we not have a - Putin is

using this as a weapon. So OK, by the way, he did it yesterday.

So maybe tomorrow, it will be invented in Hungary, nobody knows. So I think our duty and my duty personally as a commissioner for internal market is to

be prepared to this event.

So I could tell you that we worked very hard, by the way since day one of this tragedy of this war, to see what we will do. If for a reason or

another, we will stop buying gas from Russia.

Personally, I think we should do it when, as soon as we can, of course, but let's, let's imagine that it could happen tomorrow. So we import today 155

BCM, a billion cubic barriers. So we have now an extensive plan to see what we will do, including by the way importing gas from the U.S.

And we are importing a lot now for more than 50 billion cubic meters. But we have other solutions. And you know, that's like, if I may say, so an

economy of war. Of course, you could beg, of course you could say, well, I hope that missile will not come on my factory.

But if it does, what do we do? So here we are, and we worked extremely hard. And we have to be ready. And at least it's my job to propose

solutions to be ready.

NEWTON: And in terms of being ready, energy security can be existential security. I know this is also critical. And it's a matter of defense. Do

you think the time has arrived that Europe, you know, come close to energy self-sufficiency?

I know you have pointed out in the past that it's possible that it is a challenge, but it needs to happen sooner. So I ask you a direct question.

You still need Russian energy now, how soon do you think you could move away? Are we talking months or years?

BRETON: Of course. I mean, we will give you a very simple question. - will be the easiest to transition, but we will transition we are transitioning,

we are accelerating. But regarding my previous statement and commands, we are ready, and we are working to be ready if this will happen tomorrow.

Again, that's our mission. And of course, we will have other sources of energy, we will increase it. By the way, some are maybe like, you know, in

some countries in Europe, it have been decided to shut down nuclear plants.

By the way some already decided like Belgium, to postpone this shutdown, for two plants, in Germany, we have three ones are supposed to be to be

shut down. That's another possibility. Of course, we have also possibility with coal.

We don't like it, of course, because it will be against our commitment towards the green deal strategy, and the Paris Agreement, but for the time

being maybe one or two or three years. So we have solutions.

And of course, we will need to use all our intelligence and all of our willingness to work together. And you know the key word here is solidarity.

We have been able to do this for many crises.

What we have income in Europe is solidarity. And we know of course, that some countries will have difficulties not to do it alone. But we are

working also on a much, much broader package, when we will use our solidarity towards the one who need it.

NEWTON: I want to turn now to another topic another headline Elon Musk's buyout of Twitter; he wants a more open platform where free speech is

paramount. You know, you tweeted pointedly and then you follow that up.

You know, I quote you here, Elon, there are rules. You are welcome. But there are rules. It's not your rules, which will apply here. How do you

envision a compromise with someone who's going to take this company private and claims to be a champion of free speech?

BRETON: By the way, I will tweet the same thing to - Mark or to Sundar because since last it's very, very soon. That's why I'm happy to be able to

- that you gave me the opportunity to speak as early as today.

Because since last Friday, after two years of very hard work, we have a very comprehensive regulation in Europe saying that of course for digital

platforms by the way who - they are could be Twitter could be Facebook and whoever could be European platforms, Asian platforms if you want to enjoy

digital market.

[09:40:00]

BRETON: By the way we are the biggest today in the free world with 440 and 50 million eyeballs in Europe, that is - in the U.S. So if you want to

enjoy this market, you're absolutely welcome.

But we have no rules to protect our freedom of speech, to protect our people, to protect our children, to fight against hate speeches, to fight

against fake news, to fight against - to fight against a counterfeit product.

This is put in place now. It's not too complex, it will lead by the way to have openness on your algoid but it will be true for everyone. So my job is

not to see who is a shareholder of what, my job is to make sure that we the company would like to enter into market is absolutely welcome, but these

are - ours.

NEWTON: Breton, thank you so much. Really appreciate your perspective on what is a busy news day. Appreciate it.

BRETON: Thank you.

NEWTON: Now coming up after the break for us, honey, I shrunk the economy. No, don't blame me. But these numbers are shocking. How it will show how

America's economic machine could now be going into reverse, we have analysis next you won't want to miss it.

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NEWTON: Alright, those economic numbers from the United States ugly, that's all I have to say ugly. Yes, I say it growth right? That was not growth.

It's actually a contraction.

Yes, GDP declined between January and March at an annualized 1.4 percent. You should really not be seeing a minus sign there and yet we are minus and

red. Growth was predicted to be against growth 1.1 percent that was following that huge jump 6.9 percent in the previous quarter.

David Kelly is Chief Global Strategist at JP Morgan Asset Management. I'm not exactly sure if this shocked you. I'll ask you right off the bat. Some

are already saying this is an anomaly. OK, even given that it certainly speaks to the fragility of the U.S. economy right now.

DAVID KELLY, CHIEF GLOBAL STRATEGIST, JPMORGAN ASSET MANAGEMENT: It has some important messages. I wasn't shocked by who were thinking going into

this with the number coming at zero. And then when we got some numbers yesterday on trading inventories it looked like it would come in negative.

[09:45:00]

KELLY: So I wasn't shocked by it. And I do think that it is an anomaly what last quarter was 6.9 percent, this quarter a minus 1.4. If you average

those together, it's about two and a half, two and a half to 3 percent growth.

And that's truly what's going on here. We had a lot of accounting issues between the fourth quarter in the first quarter would you've given this

result. But this does suggest that we are transitioning from very fast growing economy in 2021, to something much slower.

So the Federal Reserve needs to take it easy here. This is not a booming economy, and it can only take so much pain here. The second thing I'd say

is just look at what's going on here; we've got a very, very negative trade number.

We're buying stuff from all over the world, they're not buying our stuff, the dollar is too high. So I think this is this suggests that the exchange

rate is just too high, and the dollar will need to come down. So I think there's a lot of really interesting information in this.

It's not as scary as I think some people think I do expect growth to bounce back in the second quarter, but we should, we'll look at these numbers very

carefully.

NEWTON: And I hear you, especially on the trade and obviously that U.S. dollar, which is incredibly high, which as you know, poses a lot of

problems for American companies. When we talk about the Fed, though, and they are in quite a bind.

What do you expect, given the fact that look, Chairman Powell has already said that perhaps a half percentage point increase is on the table a half?

KELLY: Well, yes, it is. But it's a half from very low level. I think, I think its OK for the Federal Reserve to raise rates by 50 basis points, or

half a percent in May, next week, which I think they will do, and then perhaps do that again in June.

But thereafter, I think they need to go easy. I know inflation is very high. But what people need to realize is inflation will actually fade, you

know, going into next year, the year after.

And you don't want to kill the economy just to kill inflation faster, you know, that I wrote a note on LinkedIn as we called killing it softly the

way to deal with inflation. And that's what you're going to do.

I mean, just raise rates a bit. But don't try and win the whole war this year because you don't want to tip the economy into recession. And I think

the message from this morning support is this economy is not quite as strong and vulnerable as you think it is. You do need to take it easy here.

NEWTON: And I hear you things will even out. So but you're on the record, then half a percentage point will still go through.

KELLY: I think so because the Federal Reserve should not have been surprised by this number either. And they really want to make a statement

about inflation at this point. I just think they shouldn't get too hawkish here. But I think half a percent is likely next week, despite this number.

NEWTON: Listen, I don't have a lot of time left. And I know you don't have a crystal ball. I look at what's going on in China, and I see more supply

chain disruptions.

When you talk about inflation and how much more we have to maneuver there. I know what you mean by killing it softly. And yet, do you worry that we'll

still get more shocks? And again, they are shocks?

KELLY: Yes, I worry that it's going to be prolonged, but the prices of everything are high. And what that does it encourage production. So I don't

expect us to be looking at $100 barrel oil this time next year, I think oil prices will come down.

I think the computer chips will get into the cars used car prices will come down. So we need to have some patience here. Inflation didn't come upon us

overnight. It's going to take some time to fade.

But the Federal Reserve needs to take it easy because the biggest risk here is they've waited too long. And now they do too much and tip the economy

unnecessarily into recession in 2023. They really should try to avoid that.

NEWTON: Sure thing. Yes. And the labor market might get a little bit better along the way as well which will help inflation. David Kelly, really

appreciate you weighing in here on what was a shocker for many of us this morning. Thanks so much.

KELLY: Thank you.

NEWTON: Still to come for us Mattel has sent Barbie into space. Now it is supporting refugee Ukrainian children and their families as Russia's war

continues. I will speak to Mattel's CEO about its efforts next.

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[09:50:00]

NEWTON: Strong first quarter earnings from Mattel despite global supply chain issues impacting many companies around the world. We were just

talking about them. The toy maker reporting net sales were up 19 percent for the first quarter.

But it said its goals take into account any unexpected disruptions to that supply chain market volatility and uncertainties that have been related to

the pandemic and in some cases are ongoing.

And as Russia's invasion of Ukraine continues, Mattel has paused all its shipments to Russia, and announced it would contribute $1 million in toys

and cash to support organizations helping Ukrainian refugee children and their families.

Chairman and CEO, Ynon Kreiz joins me now. I want to thank you here. And before we get to some of the other issues on the table, your hot take there

on GDP. In your guidance, you mentioned those supply chain disruptions.

Do you see more turbulence ahead? And what does that say in terms of the economy's weakness, you know, a negative number that took many by surprise.

YNON KREIZ, CHAIRMAN & CEO, MATTEL: Yes, thank you for having me. We are very focused on managing our supply chain. And this has been a real

contributor, an important contributor to our success. Our momentum continued in the first quarter, and we saw double digit growth for Barbie

hot wheels and Fisher Price.

In fact, this was a record one of our strongest quarters, our record quarter, first quarter in terms of profitability and the revenue, we

started the second quarter with strong consumer demand.

The full year outlook is also strong, and we expect to grow market share, so overall, an excellent start of the year. And we're firmly in growth mode

carefully and smartly and thoughtfully managing our supply chain.

NEWTON: You don't see the turbulence then that the broader market sees right now in the GDP growth.

KREIZ: Well, it's not that we are not seeing supply chain issues, but we're able to manage through them and leverage our capabilities, our skill and

expertise. This is core to our competence, and something that we do really well.

So we are able to manage the disruption and work in collaboration with our retail partners to make sure there is product on shelves to meet consumer

demand.

NEWTON: So given that there are reports that you're in talks with private equity about a potential sale, how would you characterize those talks at

this moment? And I'm really curious, given that you say things are going well how this potential sale would then help you manage growth going

forward, how to better manage growth going forward?

KREIZ: Well, as you know, we don't comment on speculation, and we are focused on executing our strategy. We're seeing growth in our business; our

strategy has worked very well throughout the last over the last four years.

As we transitioned the company, we're now operating as a high performing toy company, an IP driven high performing Toy Company, and seeing

tremendous growth opportunities for the company.

NEWTON: But with those growth opportunities really expand, do you think if you had more freedom in terms of a different structure, a different

financial structure, a different ownership structure?

KREIZ: I can't comment on the speculations. But we are focused on executing our strategy and feel very confident about our growth trajectory. We just

reiterated our guidance for the year and goals for 2023. And we're staying focused on executing our strategy.

NEWTON: We had discussed the fact that you did stop all shipments to Russia; you're doing what you can to help out in the war effort. In terms

of these global shocks going forward, how has your company responded because again, we do also have these issues in China as well with the

supply chains perhaps being impacted there?

KREIZ: Well, as it relates to Russia and Ukraine, let me say first that our thoughts are with all those who are suffering. As you mentioned at the

beginning, we took significant steps to support those who are impacted by this war.

[09:55:00]

KREIZ: We stand with the Ukrainian people and support organizations on the front line, and in neighboring countries aiding refugees, children and

families. They are we also had a retailer donation program across Europe with 100 percent of proceeds going to relief to relief efforts, and we

remain hopeful for peace.

And our thoughts are all with those who are suffering. This is something that we are managing as part of our business. Even with the impact in the

Russia and Ukraine.

We're seeing growth that will offset those declines in Russia and Ukraine and have maintained our guidance and expectation for a strong year.

NEWTON: All right, and for now, we will leave it there, I have noted your no comment on a potential --. We'll continue to watch this carefully,

especially as you said as the growth outlook for your company at least remains quite strong.

Ynon Kreiz, Chairman and CEO of Mattel, I want to thank you for joining us.

KREIZ: Thank you.

NEWTON: And that is it for our show. We will say the markets continue to try and come off of this 1.4 percentage decrease on GDP in the United

States. Want to thank you for joining us. "Connect the World" is next with Eleni Giokos.

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