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First Move with Julia Chatterley
Beijing: Concerns over Tariffs Expressed in Talks with Yellen; Airport Chaos Intensifies over U.S. Holiday Weekend; Millions Displaced by Wave of Extreme Weather Events; DOW Opens Down Around 500 Points after 4th July; Capstone Marks Rocket Lab's First Mission into Deep Space; Moviegoers Wear Suits for "Minions: The rise of the GRU". Aired 9-10a ET
Aired July 05, 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]
JULIA CHATTERLEY, CNN HOST, FIRST MOVE: Welcome to "First Move". I'm Julia Chatterley in New York. And global markets may have started the third
quarter feeling a little stronger.
But it does look like some U.S. investors are extending their Fourth of July holiday that is likely to stay in bed perhaps we're on track as you
can see there look for a lackluster start on Wall Street with U.S. futures lower by more than 1 percent amid intensifying pricing pressures and fears
of a potential coming recession that concern only exacerbated by what we're seeing in Europe?
Take a look at that as you can see stocks under some serious pressure today the catalyst. Well, its energy workers in Norway that have decided to
strike and we're talking about Western Europe's number one oil and gas producer that strike set to take a big chunk out of noise gas output this
week, it's normally around 20 to 25 percent of the EU and UK's natural gas that gets bought from Norway. We're going to have all the details coming
up.
But it comes with a highly fragile time with the EU, already facing the threat of Russia abruptly turning off supplies and potentially punching
vital industries in to crisis. And it's not the only strike causing disruption at this moment too.
FAS shares falling as you can see them more than 9 percent after the Scandinavian airline filed for Chapter 11 bankruptcy protection in the
United States. A walkout by pilots forced it to cancel hundreds of flights this Tuesday alone. We've got all the details on that coming up shortly
too.
And the context meanwhile, let me give you a look at what we're seeing in the Asia session. Once again, markets closing while it's a mixed bag
slightly lower there for the Shanghai the NIKKEI they're managing to eke out some gains.
The Wall Street Journal, however, is reporting that the Biden Administration may lift some tariffs on Chinese goods as soon as this week
and that is where we begin the drivers. So let's get cracking a constructive dialogue with the United States. That's what China says after
it's vice premier held a virtual meeting with U.S. Treasury Secretary Janet Yellen.
Beijing says it had expressed concerns over us tariffs, Selina Wang joins us now. Selina at a time of slowing growth in China, but in the globe,
particularly and with the ongoing kinks in the supply chains removing some of these barriers to trade must be helpful. The problem is if you look at
the two different readouts of this meeting, we're not quite sure what was discussed and what wasn't. So what can you tell us?
SELINA WANG, CNN CORRESPONDENT: Yes, Julia. Well, there were some areas of agreement, which is that this talk between Treasury Secretary Janet Yellen
and Chinese vice Premier Liu He was substantive and candid. Both sides also suggested that the U.S. had brought up these talks and had initiated them.
The timing here, as you say is absolutely critical. It comes as there are growing reports that the U.S. may roll back some of those Trump era tariffs
on Chinese goods as early as this week. Now, the Chinese side said they had discussed the issues and concerns around these tariffs on their goods. Now,
the U.S. side did not mention tariffs, but said that Janet Yellen had brought up some issues including the impact of Russia's war on Ukraine on
the global economy, and what the U.S. side had called China's unfair trade practices.
Now, while the Biden Administration has reversed a number of Trump era policies, so far, the tariffs on some $350 billion worth of Chinese goods,
will they still remain after Trump had put in place several rounds of those tariffs well China also issued its own retaliatory tariffs on some American
made goods? Now a truce was reached in 2020 but trade tensions have remained extremely high. And China so far actually hasn't lived up to its
purchasing promises. It has only purchased about 57 percent of U.S. exports that it had committed to purchasing by the end of 2021, Julia.
CHATTERLEY: OK, so, as you quite rightly said, these were Trump era policy tariffs, the Biden Administration then came in and decided not to remove
them so clearly saw a reason to have them in the first place. I saw that Barclays was saying in a note that a tariff rollback would lead to a max
0.3 percent drop in U.S. inflation.
So if that's one of the reasons for doing this, then the bang for the buck isn't that big? Is that what it comes down to? What is the disagreement
behind whether or not the U.S. should lift these tariffs Selina?
WANG: Well, as you say, there is a lot of disagreement on what the impact of a possible rollback would be if it should be done if it should not be
done? The struggle here is trying to reduce inflation while also trying to keep that economic pressure on Beijing and we've seen that within the U.S.
administration there is this fair amount of disagreements.
[09:05:00]
WANG: Janet Yellen has said before that she thinks these tariffs are a drag on the economy. On the other hand you've got U.S. Trade Representative
Katherine Tai who has said that these tariffs are critical of in critical importance to keep that leverage on Beijing.
And also we had Commerce Secretary Gina Raimondo recently, tell CNN the following she said this about tariffs, "Steel and aluminum" we've decided
to keep some of those tariffs because we need to protect American workers. And we need to protect our steel industry. It's a matter of national
security. There are other products, household goods, bicycles, it may make sense.
Now to your point, some analysts say that scrapping these tariffs would have a marginal impact on inflation. You mentioned that Barclays report
will also the Peterson Institute of International Economics, they say that removing tariffs on Chinese imports would only lower consumer price index
inflation by point two six percentage points.
This would be initially and also appear so far that these tariffs have not really achieved their goal of rebalancing the U.S./China trade
relationship. They haven't really impact Chinese exports even as Chinese economy was being hammered by the COVID lockdowns earlier this year. Well
take a listen to this data exports to the U.S. in the first five months of 2022 still grew more than 15 percent from a year earlier.
CHATTERLEY: That's fascinating, isn't it? If the reason for doing this is simply to look like you're doing something, then as we were saying the
impact actually, inflation is going to be minimal according to some of these estimates. But did they achieve the purpose that they set out to do
in the first place? We can debate and we'll be here for several months. Selina great job thank you Selina Wang there!
OK to Europe now, the price of natural gas is spiking to a four month high as Norway's offshore energy workers staged a series of strikes overpay.
Clare Sebastian joins us now on this. Clare many angles to this story too.
Let's hone in on the strikes themselves and what workers are saying and they're in an industry that's making bumper profits. They see prices
rising. But the cost of living for these workers is soaring too. And they're saying hang on a second. We want an adjustment that reflects that
too, that's the starting point for this story.
CLARE SEBASTIAN, CNN CORRESPONDENT: Yes, that's exactly it the strike is to overpay. Julia, this is just one of the unions that are operating in
Norway's oil and gas industry that is doing this, the Norwegian Oil and Gas Association says the rest, about 85 percent of workers have agreed
contracts. But it's still going to be very disruptive.
The union is the Norwegian Organization of Managers, and executives. And their plan is to gradually escalate strikes throughout the week. So Tuesday
today, the smallest of all the strikes, that is set to affect about 1 percent of Norwegian daily gas production.
Tomorrow, Wednesday was set to see another strike that could then affect about 13 percent of Norwegian daily gas production. And then on Saturday,
they're expected to escalate even further with a strike that could affect 56 percent of Norwegian daily gas production.
So that's not only the production off line that's been revenue that's impacted extremely disruptive to Norway. And the fear is, of course, that
if they don't resolve this, this dispute, and the Norwegian Oil and Gas Association is saying that they actually can't change the contracts that
they have with these workers.
Then this could continue spiking gas prices in Europe even further and coming, of course, at an extremely inconvenient time for Europe as a whole,
which is already dealing with disruptions caused by Russia.
CHATTERLEY: Yes, we should talk about that, of course too because very painful for Norway having pushed and negotiated for more contracts with
European nations to increase their reliance on the nation's now they're turning around and saying guys, we're not necessarily going to be able to
provide what we've promised.
The backdrop of course, Clare is material here, whether it's the threat of Russia switching off gas supplies to Europe, and we know that's a viable
threat, potentially. But there's other issues, of course, too, that we can bring in. Nord Stream Pipeline--
SEBASTIAN: Yes, no way. Norway is extremely material to Europe and increasingly so of course, because it's not just that Europe is trying to
reduce its reliance on Russia it's that Russia is also using its leverage in terms of its gas supplies that.
At the moment, Russia is saying that technical issues have dramatically brought down the supplies from the Nord Stream Pipeline, one of the key
pipelines in Europe that's pumping out about a third of its previous capacity at the moment.
It's also set to go offline next week Julia for about 10 days for planned maintenance that we've also got a disruption when it comes to LNG Liquefied
Natural Gas that Europe is importing from the U.S. in increasing quantities, one of the main suppliers of LNG is now going to be offline
completely until at least October.
So all of this together is extremely disruptive and Norway was already a very key supplier. Take a look at in 2020 it was the third biggest supplier
of oil to the EU and also in 2020. It was the second biggest supplier of natural gas to the EU. So clearly very disruptive, and it's a reputational
damage as you say, to Norway. This is something that the Norwegian oil and gas Association pointed out today. This is the last thing that they wanted
as well.
[09:10:00]
CHATTERLEY: Yes, trust critical. Clare Sebastian thank you! OK, let's move on Scandinavian Airline FAS filing for bankruptcy protection in the United
States. This after pay talks with its pilots fell apart on Monday. It comes amid an already chaotic travel season for holiday makers in Europe and
beyond.
Anna Stewart joins us now with more. Anna, there'll be a lot of people going hang on a second, that Scandinavian Airline filing for Chapter 11
bankruptcy in the United States? Critical to understand what chapter 11 allows you to continue to do explain?
ANNA STEWART, CNN CORRESPONDENT: Continue to do operations as usual. And this is certainly not the first and we'll be the last even international
airline to file for Chapter 11 bankruptcy in the U.S. I think it was an Aeromexico and LATAM Airlines in the last couple of years.
But this airline, let's be fair I mean, they're saying that the strikes that are ongoing from pilots really push them to this point. But that's
just been the latest pressure. This was an airline that's been in a lot of trouble for many years, even actually before the pandemic.
Now this strike is expected according to a - analysts were speaking to you today to cost the airline around $10 million a day is SAS pilots striking.
But before the pandemic, they were struggling with lots of competition from low cost carriers, and then the pandemic loaded it with debt.
Now, like many airlines, they're facing some really high cost when you're looking at jet fuel which has skyrocketed, or for this airline in
particular, actually the cost of lease planes, many of which are just standing idle due to the closure of Russian Air Space, which of course,
this airline used a lot.
They're also struggling with labor, not just in terms of wages, which of course pilots are very upset about but also in terms of hiring. So many
airlines let staff go they had huge cuts during the pandemic. And actually one of the big upsets from this strike from pilots is the fact that they've
hired back pilots from agency staff, rather than the ones that they let go originally.
What's really though, I think, push them to this point in recent months, the tipping point perhaps was one of their main stakeholders, which is the
Swedish government refusing to bail them out. Now Sweden and Denmark both have a 21.8 percent stake in this airline. Denmark said they would be
interested in increasing their stake, but only as part of a broader restructure. So here we are.
CHATTERLEY: Here we are. Swedish government won't help go to the U.S. government and use their laws and legal procedures to declare bankruptcy.
Anna very quickly for consumers, for people perhaps that have booked flights on this airline and are watching what do they need to know?
STEWART: I'm sorry, in terms of the chapter 11 that will make no difference in terms of the operations. But of course, we're looking at huge strikes
and yesterday the SAS said that around 50 percent of flights will be canceled yesterday impacting 30,000 passengers. So that is huge.
Today actually was looking at data from it, I think was Flight Aware. They said around 80 percent of flights were canceled today. And this strike is
not yet resolved.
So for people booked on holidays with SAS for the coming summer, you may want to look at alternatives but SAS should of course try and find you an
alternative if they cancel your flight, Julia.
CHATTERLEY: Yes. Anna Stewart thank you! Now not just Europe, major turbulence at U.S. airports over the holiday weekend too. The Fourth of
July, bad weather and staff shortages as we were just discussing - creating a perfect storm leading to thousands of flight delayed or canceled.
Pete Muntean joins us from Reagan National Airport in Washington, D.C. Pete great to have you with us! Although I have to say I read this weekend that
many people were saying look, this could have been worse. How bad was it?
PETE MUNTEAN, CNN AVIATION CORRESPONDENT: You know it's not nearly as bad as it could have been Julia. Remember airlines were anticipating big
cancellations also the federal government was as well. We'll get to that in a second.
Look at the cancellation numbers according to Flight Aware more than 2200 flights canceled nationwide here in the U.S. from Thursday to Sunday. They
really peaked on Saturday. But let's put this into context. This is about half as bad as the previous weekend before the holiday weekend.
That is a huge win for the airlines. Remember they were under this pressure from Transportation Secretary Pete Buttigieg to get their acts together for
the long July 4th holiday weekend. It's also a huge win for passengers. More than 11 million people pass through security at America's airports
over the five day holiday travel period.
That number was really high on Friday 2.49 million people screened by TSA the highest number we've seen since February 11, 2020. We've not seen
numbers this high in the pandemic. It's also a really big win for workers. I want you to listen now to Sara Nelson of the Association of Flight
Attendants who says when these massive cancellations happen, often pilots, flight attendants, gate agents mechanics are really caught in the middle of
all of this.
(BEGIN VIDEO CLIP)
SARA NELSON, ASSOCIATION OF FLIGHT ATTENDANTS: Oftentimes, crews are waiting for 1, 2, and 3 to 4 hours to get in touch with a crew scheduler.
That means if we're not getting our next assignment, we're timing out. And so we're very frustrated with the airlines on the back end on operational
support during this time too.
(END VIDEO CLIP)
[09:15:00]
MUNTEAN: Remember, airlines got a lot smaller over the pandemic in terms of planes and pilots. When summer weather really comes into the mix that's
what creates the bad cocktail for the airlines and really causes this house of cards to come tumbling down.
There's really no slack in the system anymore Julia. We are not totally out of the woods just yet. There could be bad weather across the United States
today, we will see as this unfolds, especially throughout the summer, the airlines haven't hired near as many people as they need to and they're
still scrambling to do so.
CHATTERLEY: Yes, that says it all there is no slack in the system. So the slightest problem and chaos ensues. And it's a perfect storm as we
mentioned. Pete, great to have you with us Pete Muntean there!
Now for planes to trains and there's a sudden surge in demand across the English Channel for the Eurostar Rail Service that connects Britain and
France. The CEO told our Nina Dos Santos how their services have reemerged from dark times during the pandemic.
(BEGIN VIDEO CLIP)
JACQUES DAMAS, CEO, EUROSTAR: At the beginning of the year, with Omicron crisis, we were getting almost zero. In 15 months, we have just got 5
percent of our ridership. This ridership was divided by 20 and also, just in a couple of months' time, we are about 80 percent of our pre pandemic
business and ridership. So it's ramped up has been very, very quick. And you see and there is an appetite for traveling and even the summers there
is appetite. But it is almost 1 percent of the people on the big figures.
NINA DOS SANTOS, CNN CORRESPONDENT (on camera): And with this return to interest in travel and the summer holiday season now kicking off, are you
finding it hard or easy to attract and retain talent because obviously inflation is very high. Many CEOs are kept up at night thinking my staff
might want to inflation type pay rolls.
DAMAS: Yes. So attracting talent, of course, is something which is absolutely key for our business. You see what Eurostar even if it has gone
through a very tough crisis, because of those figures. The ridership divided by 20 for 15 month an average.
But despite that was there was - is absolutely terrific. And so it's - so well known that it is real attraction for going back to these rules of
business. So yes, we've gone through a very tough time. But when the business is starting again, and attracting talent is of course possible and
we do that as much as we can.
(END VIDEO CLIP)
CHATTERLEY: OK, let me bring you up to speed with some of the other stories now making headlines around the world. In the U.S. State of Illinois, at
least six people were killed and dozens injured on Monday when a gunman opened fire at a Fourth of July parade. It happened in a suburb of Chicago.
Police have taken the man into custody. They say the shooter used a high powered rifle.
CNN's Josh Campbell is in Highland Park for us now, Josh, this should have been a day of great patriotism celebration for families instead of which
many there are now in mourning. What more do we know?
JOSH CAMPBELL, CNN SECURITY CORRESPONDENT: That's right, this parade here celebrating the Independence of the United States one of many parades that
were going on across this country rocked by gunfire.
Witnesses describing the scene behind me as a battlefield and that is because authorities believed that a suspect in his early 20s came here to
this area was on a rooftop of a building behind me in a sniper type position, opening fire on the crowd.
And we saw a video of hundreds of people fleeing to safety authorities eventually recovered a rifle on the roof of one of those buildings. They
described it as a high powered rifle. Of course, it's so many of the mass shootings that we've seen across the country. This is the weapon of choice
for so many of these shooters a weapon that can shoot rapidly, a quick number of rounds obviously a large amount of victims as well.
Six people were killed in this attack, dozens injured. Now after this attack, Julia police didn't know exactly who they were dealing with.
Eventually, they did put out the description of the suspects' vehicle, eventually, the suspect's photograph as well.
It was a police officer who was about five miles from where I'm standing, who eventually located the suspect were told that he was taken into custody
with that incident. I was actually here at the crime scene. We saw police flooding out, I traveled down behind the SWAT team, we saw them quickly
arrive, process that scene.
They didn't know if that vehicle had any type of explosives or anything like that. And so they took some time to actually go through. But again,
the suspect now, taken into custody. We are waiting to hear what those potential charges will be against six people were killed.
And then finally, the more we're learning about the suspect we're learning of potential warning signs. We are hearing from sources that the suspect
had a very robust online presence include posting audio and video.
[09:20:00]
CAMPBELL: In one post you see this animation of a figure that resembles the shooter himself conducting an attack as well as some very ominous writing
about wanting to conduct an attack and kill people and the like.
So again, those warning signs, obviously very troubling this community here now with mixed feelings, they're obviously very happy that this person has
been taken into custody that there's no longer this threat, no longer this manhunt, but obviously a community that is also in mourning six people
dead, dozens wounded people just coming out for a holiday parade here that again was struck by gunfire.
CHATTERLEY: Yes, some huge questions remain over, trying to do something to prevent these things happening an ongoing conversation, Josh, thank you,
Josh Campbell there! OK 30 nations will soon become 32 NATO has formally begun the process of ratifying the membership of Finland and Sweden. A
historic step brought on by Russia's war in Ukraine. NATO's Chief saying the move will make the alliance even stronger and its people safer.
(BEGIN VIDEO CLIP)
JENS STOLTENBERG, NATO SECRETARY GENERAL: So today, we will formally sign the protocols of accession. This marks the start of the ratification
process. NATO's door remains open to European democracies, which are ready to and willing to contribute to our shared security. This is a good day for
Finland and Sweden and a good day for NATO.
(END VIDEO CLIP)
CHATTERLEY: OK, coming up here on "First Move" from devastating floods in Australia to a sizzling heat dome in the United States. I look at some of
the extreme weather patterns around the world plus suits you while these teams are dressing in suits to see them movie "Minions" the answer coming
up. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move". Extreme weather events are displacing millions of people around the world. In Australia 50,000 people
have been warned to flee as torrential rain brings flooding to New South Wales.
Meanwhile, more than a third of states in the United States are battling dangerously high temperatures while an enormous wildfire spreads in
California. I'm joined now by CNN Weather Anchor Chad Myers. Chad wherever we are looking in the world and they're geographically significantly
diverse it's tough not to connect the dots. Explain what you're seeing.
CHAD MYERS, CNN METEOROLOGIST: Yes significant events thousands and thousands of kilometers apart. I mean that's really what you're talking
about here. Australia obviously Sydney here the area around Sydney had East Coast low over the weekend.
[09:25:00]
MYERS: Storm came off of Brisbane, gathered steam in the warm water to the east here and then just slammed into Sydney. Now this happens about four to
five times per year, but not over the city. Sometimes its north, sometimes its south and you spread the rain out a little bit, not this time.
400 millimeters' in three days and it's still raining right now, although is a little bit farther to the north, it's still raining significantly in
the mountains, and all that water has to run back downhill. Here you go for the next couple of days, it finally shuts itself off on Thursday afternoon
and the rain is done.
Another 100 millimeters or so on top of what we have that's not going to help because obviously, we already have the rivers out of control. 1.7
meters of rainfall so far in Sydney, this year since January 1st, the old record, less than that, obviously and still more wet weather to come across
Australia.
Temperatures are going to be cool across Sydney. That's the good news. Not cool in the middle part of the country for the United States. Temperatures
are going to approach 44, 45 when it comes to the heat index it's just been in the same area above normal temperatures have been in the same area and
people there are fatigued.
They're just really tired of this. I'm going to give you one thing you're not - you're never going to hear this on a different newscast. But there's
something out here called "Corn Sweat". I know it sounds gross, but it's the plant evaporating moisture from the soil the Evapo Transpiration
increases the humidity right there in the central part of the breadbasket the corn basket of the United States where temperatures are going to
approach about 110 Fahrenheit, about 44 to 45 Celsius.
And then the rain across parts of India had those mudslides up to the northern part of India up here in the Northeast. Still some rain across but
this is monsoon you expect it. You just kind of want to spread it out a little bit more than that, Julia.
CHATTERLEY: Yes. Chad, thank you for tying all those things together for us, Chad Myers thank you! OK, more "First Move" after the break stay with
us.
(COMMERCIAL BREAK)
[09:30:00]
CHATTERLEY: Its pump smiling and cheering over at the New York Stock Exchange this morning. Welcome back to "First Move"! You are looking at the
opening bell this Tuesday and U.S. markets are headed for a lower open despite their enthusiasm this of course the first trading day after the
Independence Day holiday in the United States.
And it has been an ugly 2022 for investors so far. I just wanted to give you a bit of perspective on where U.S. stock markets are lying currently
year-to-date? The DOW down at nearly 15 percent the NASDAQ the tech heavy sector shedding almost 30 percent.
As you can see in green there markets of course around the world battered by numerous concerns a whole array of them including Russia's war in
Ukraine, COVID-19 lockdowns in China specifically rising prices and aggressive rate hikes by Central Banks all clearly connected, and all
factors raising the specter of a global recession.
Now analysts at Citi say the chances of that happening are now as high as 50 percent. Joining us for some perspective on that is Nathan Sheets,
Global Chief Economist at Citi. He's also the Former Under Secretary of the Treasury for International Affairs.
Nathan, welcome to the show, great to have you with us! You know that headlines, though, sir, attributed to your report said Citi says the
likelihood of recession now is a coin flip 50/50. I think we desperately need your perspective on that. Tell us more.
NATHAN SHEETS, GLOBAL CHIEF ECONOMIST AT CITI: I think the bottom line from our report is that we see appreciable recession risk in the global economy.
And quite frankly, my sense is that recession risk is rising. And fundamentally, it is attributable to this very high global inflation that
is occurring and is manifesting itself by in many different places in many different ways around the globe and then Central Banks being called into
action.
And Central Banks are responding vigorously. They learned from their predecessors in previous generations that high sustained inflation is very
painful for the public, it's very painful for the economy, and they're doing everything they can now to ensure that this inflation does not become
entrenched. And that's the challenge the economies these rates are rising, and financial markets are responding adversely as a result of that.
CHATTERLEY: And as you point out, there are very few places that aren't battling the higher prices, and therefore Central Banks aren't responding.
So there's no counterweight in terms of a part of the world that continues to grow. And isn't having the challenge of Central Bank tightening and an
impact on growth.
Can you give us a sense of potential timing anything because I do think when we keep throwing around these statistics of the likelihood of
recession, where we're in danger or sort of talking consumers into it, particularly at a time when they're already facing a cost of living crisis
in certain parts of the world, and certainly rising energy prices. Is that not a danger, though, that we talk ourselves into it, timing?
SHEETS: I think sentiment right now is very fragile. And the risk of some kind of self-fulfilling downward adjustment and consumer spending is
something that I'm quite worried about.
Now, at the moment, I would say the good news is that we're seeing a meaningful rebalancing through the summer, towards services and toward
tourism and travel and restaurants. People are taking the holidays, the vacations that they postponed for the last several years through the
pandemic.
But as we get into the fall, is it possible then we see a sharper correction in consumer spending, and recession rests rise on the back of
higher inflation, cutting into real incomes and reducing purchasing power, but also, as you point out on the back of the consumer, just kind of
getting nervous about the whole contours of the economic situation. And pulling back even more than one might be dictated by fundamentals.
CHATTERLEY: I think at the core of this as well as the energy markets and you can tell me how closely you're honing in on this in some of the
forecasts that you're making. It's simply we see a market reaction today that I think he's looking at the strikes in Norway and saying they're so
important now to Europe.
[09:35:00]
CHATTERLEY: We know we're in a possible period where Russia could play even harder ball with the energy supplies that it provides to Europe. And
there's also sensitivity around what we're seeing in terms of growth slowdown in Europe, it has a global impact. And it does, in many ways,
emanate from energy markets, wherever you are in the world, but particularly given the sensitivities and the challenges of the geopolitics
in Europe, in particular.
SHEETS: The energy markets are very much at the core of this challenge. We are seeing a higher gasoline petroleum prices, we're seeing higher natural
gas prices, other commodities, maybe have recently come off the boil a little bit but remain historically high.
And the bottom line is less purchasing power for consumers, the ability to substitute away from some of that commodity intensive expenditures low and
so that means there's less money left over for consumer discretionary.
So as we think about global risks, if you could present me a global outlook, where oil prices say, were $20 or $30, a barrel lower, or there
was a significant reduction in the uncertainty about gas supply for Europe, that would be an outlook where I'd say, well, maybe there's not as much
recession risk as I think I turn that knob down. So that is a critical aspect of what we're watching now.
CHATTERLEY: Yes, what are the other wildcards Nathan? I want to get your perspective. Last week, we were talking to the largest private data
collector in China. And they were saying, we're seeing significant slowdown in services in the manufacturing, we're not seeing the kind of stimulus
that you will automatically see credit conditions for smaller companies in particular, and some of the weaker ones are tightening quite significantly.
And I just wondered from your perspective, and what you're seeing whether you're more worried about the growth slowdown that you're seeing in China,
or perhaps the inflationary kicker to the rest of the world, if China does see a resurgence post the lockdowns and does start to provide stimulus?
And then that creates this sort of demand pull for products elsewhere in the world and perhaps contributes to the inflationary pulls that we're
seeing, which is the greater risk here, the slowdown or the inflationary kicker?
SHEETS: For the moment, I'm much more worried about the strength to the Chinese activity. Over the last couple of months, we've marked down our
growth outlook for China appreciably and now we're well below we're at 3.9 percent, for this year, well below their 5.5 percent growth target.
But if we don't see more economic stimulus there, there is a meaningful rest that ultimate number may even be lower than 3.9 percent. We're seeing
a distinct slowing in the Chinese economy.
And if you took that and layered it down on the other risks that are afoot right now Central Bank, tightening inflation, energy prices, and overall
uncertainty, if we had a Chinese recession on top of that, then I think we need to mark up those probabilities of recession, even more than where they
are at the moment. So it's really about Chinese, that stability of the Chinese economy.
CHATTERLEY: So you're saying actually, very quickly, the risks are to the downside here even now, with your global recession call?
SHEETS: Exactly.
CHATTERLEY: Yes, Nathan great to get your perspective, thank you! Nathan Sheets, the Global Chief Economist at Citi. We appreciate your time, sir,
thank you. OK, still to come here on "First Move". I'm speaking to the Founder of Space Systems Company Rocket Lab, providing and proving they're
saying to infinity and beyond isn't just for "Buzz Light Year" we'll explain next.
(COMMERCIAL BREAK)
[09:40:00]
CHATTERLEY: Welcome back to "First Move" with a mission to the Moon, Mars or even an asteroids based company Rocket Lab is celebrating the successful
launch of the Capstone Satellite part of the team working with the U.S. space agency NASA now just the size of a microwave.
Capstone is now headed for lunar orbit. The mission directly supports NASA's Artemis Program, which if you remember we've spoken about on the
show. And plans to return humans to the moon and pave the way for a journey to Mars.
Rocket Lab played a critical role in this mission, it provided the launch for NASA as well as designing, manufacturing and operating its lunar photon
spacecraft which powered Capstone into orbit. The launch also marked the successful completion of Rocket Lab's first mission into deep space.
Now Peter Beck is the CEO and Founder of Rocket Lab and he joins us now. Peter, I'm so excited to have you on the show! And I'm sure you're equally
as enthusiastic about this, but there will be people in our audience going, what on earth just happened? So I think we need to take a step back and
explain what's so unique about this launch and what this Capstone Satellite will achieve?
PETER BECK, FOUNDER AND CEO OF ROCKET LAB: Yes, absolutely, I mean, there's a number of really unique elements here. So you know, the first is this is
a, the very first beginning of the mission and returning to the moon. So that's very unique in its own right.
But what's also unique is that, you know, we went to the moon with a very small launch vehicle and a very small spacecraft. And that's never been
done before. And consequently, you know, the price tag to do this was you know, tens of millions of dollars, which, you know, when you consider going
to the moon is an absurd price tag.
So, you know, there's really two elements, one, we've created a new capability to explore the moon and other planets and beyond. And this marks
you know, as you point out the very beginning of the Artemis Program and returning to the moon.
CHATTERLEY: OK, so there are two separate things there. And we'll come back to the cost of this and collapsing the cost of this, which I think is
important for many reasons. But I think the technology and understanding the profile of the moon orbit is going to be critical, not just for getting
people back on the moon, but perhaps for the ambitions elsewhere.
And I mentioned Mars and an Asteroids, just explain that because that's also part of, of what you've created in order to help achieve this.
BECK: Yes, we created a very low energy way of getting to the moon and other celestial bodies. So we launched the Lunar Photon Spacecraft into a
low Earth orbit and an elliptical orbit. And over a period of eight days, we actually use that the Earth's gravity, and we do subsequent burns at the
perigee or the lowest part of the little bit to gain energy and then yesterday was the TLI or Trans Lunar injection burn where we broke free of
the Earth's gravitational force.
So these kinds of techniques and missions enabled us to go to places at a much lower energy and consequently a much smaller spacecraft.
CHATTERLEY: I love this part of it. It accelerated to more than 24,500 miles per hour to break free of the Earth's orbit. And then it went on the
trajectory to the moon, which is just part of me geeking out because I love this. OK.
BECK: OK.
CHATTERLEY: CHATTERLEY: OK and this mission cost $30 million just compare and contrast because there will be a lot of people going hey we have a lot
of issues down on the ground that needs solving and this remains a lot of money
[09:45:00]
CHATTERLEY: How much would this have cost? Without the technology that have now been developed, I mean, prohibitive cost.
BECK: I mean, you know, $30 million a part of the program was actually $10 million. So, you know $10 million to launch it, and build a spacecraft and
send it to the moon. And then, you know, the spacecraft itself, the Capstone that - spacecraft that we separate was about another $10 million,
and then about another $10 million to complete the mission.
And, you know, in that is a significant sum of money, but in space terms, that's ridiculously cheap. Generally, admission to the moon would start
with a billion dollar price tag not let alone $100 million, or a $10 million price tag. So there's really, you know, one or two orders of
magnitude lower cost than traditional missions.
CHATTERLEY: How, how are you managing to keep costs down?
BECK: Well, I mean, it's a new time, and, you know, the electron launch vehicle that we use to launch it, prior to that vehicle being brought to
market, if you wanted to go to low Earth orbit in a dedicated way that used to cost you know, between $50 and $70 million.
Now we fly, you know the electron to a low Earth orbit for $7.5 million. It's really an order of magnitude once again. And this is what you can do
with private space companies. I think that's the biggest change or disruption to the industry over the last decade.
CHATTERLEY: Yes, I mean, we've seen this. We're almost getting used to seeing satellite launches and rocket launches now. Thanks to guys like you
and SpaceX and I think it was, it wouldn't be possible without the collapsing cost and then new technologies that we're seeing.
Explain how this may be used for putting humans back on the moon? But also, I think the critical thing that gets people really excited is how long is
it going to take before we're talking about landing men and women on an asteroid, for example? It reminds me of that movie, I can't think of the
name right now or Mars, how long before we're doing that? Armageddon, they go in my field, that's what we like.
BECK: Yes, yes. Well, I mean, this is, you know, this mission was testing out a new kind of Halo orbit. So actually, the orbit around the moon is not
stable. So to you know - to put any anybody, you know, for any time around, the moon actually consumes quite a lot of propellant.
So this new orbit is actually influenced by its gravitational field and the moon's gravitational field, which enables you to put a space station in
this halo orbit. And ultimately, that ensures you can have some longevity, and the ability to go back to the moon easily.
But more importantly, it's a stepping stone to go to Mars and other destinations. So this, this whole mission was really to test out this
unique orbit between the Earth and the Moon and the Earth, to enable, obviously, return to the moon, but you know, just step stone to other
planets.
CHATTERLEY: OK, I have two questions now, and not enough times have to make a choice. I want to talk to you about recycling rockets. And a helicopter
tried to catch a rocket and it sorts of images of this, which was phenomenal. And then the other thing is that people will notice you're
coming from New Zealand, as well. And I think this is an important point to make as well. So you can answer both of those things as quickly as you can,
please, I'm going to get told off for this.
BECK: So firstly. So firstly, you know, we're a U.S. company, but I did start the company down in New Zealand, and we have two launch pads down
here. So we were able to launch quite a significant amount down here in New Zealand.
And the second we are reusing launch vehicle, and with a small rocket, it's very difficult to you know, to do that in a normal technique. So, you know,
we let nature do its work and decelerate the rocket, but we put it under a parachute, but we really don't want to get a whiff so as you probably saw
in the video, we come in and snatch it with a helicopter 400 nautical miles offshore.
CHATTERLEY: It is amazing, it is incredible. I have voices in my head now asking whether it's SpaceX because I knew obviously you compete with them
in rocket meeting. Is SpaceX sighs the future of Rocket Lab?
BECK: Yes, so we are building a much larger launch vehicle that we will be more akin to what people are familiar with the Falcon 9 or SpaceX launch
vehicle.
CHATTERLEY: Yes.
BECK: It's a reusable first stage as well. So that vehicle was due to debut in 2024. So yet we have moved up significantly in the launch vehicle scale,
but what is so I think what makes us unique is we build satellites as well as you can see.
[09:50:00]
BECK: We head this mission to the moon but we've got two other satellites for NASA go into Mars in 2024.
CHATTERLEY: We're going to continue this conversation. Great to have you on super exciting times, no shortage of enthusiasm on my part. Peter, great to
have you with us! Peter Beck, there CEO and Founder of Rocket Lab--
BECK: Thanks Julia.
CHATTERLEY: Great to chat to you sir, thank you. OK, coming up after the break why these little minions are helping drive movie goers back to the
cinema, and why fans are dressing up to see it?
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move" and the mighty minions are back. The latest film in "The Despicable Me" franchise clocked up $125 million
over its four day opening weekend here in the United States the biggest ever opening over a July 4th Holiday. Frank Pallotta joins us now. Frank,
and not only that, people were dressing up in the suits deliberately to go to the cinema in order to watch it and it caused some excitement.
FRANK PALLOTTA, CNN MEDIA WRITER: I mean, personally, I think you should always wear a suit to go see a movie--
CHATTERLEY: Me too.
PALLOTTA: --and if you were to go on a cane. Yes, there was this train called gentle minions where people would move like young men would
literally dress up in suits and ties and go see the minion's movie, which is "Minions: The Rise of Gru".
As you said it made 125 this weekend, domestically, that's incredible, made around $200 million worldwide. It's really great for family films that were
kind of like in this weird zone where people were wondering, would families ever come back to the theater after the pandemic?
We're still in the middle of the pandemic. But this shows that families are coming back and that question even got bigger. After Pixar's Light Year
kind of bombed earlier this year flop maybe didn't bomb but definitely flop. So let's get back to these gentle minion folks, did they actually
have an impact?
Well, some of the demographics show that about 15 percent were aged 18 to 24. So do I think that wearing that a bunch of teenage men or men in their
20s wearing suits and ties are the reason why Minions broke the 4th of July box office record? Not necessarily do I think it helped it shouldn't hurt?
So I think universal is very happy about it. So I think hey, any way you can get people to go to the movies, this is the way to do it.
CHATTERLEY: It caused some problems though, didn't it? I mean, the Universal which obviously is the distribution company was like we see you.
We love you. They tweeted it out and yet some of these guys, and we've got the videos on TikTok were pretty disruptive to the point where some U.K.
cinemas were like we're not going to let you in if you're wearing a suit and you're dressed up because we're worried you're going to cause trouble.
PALLOTTA: Yes, I think that's kind of silly. It's the movies like let's be quite honest. There has been years and decades think about Rocky Horror
Picture Show. Think of other think of any Marvel movie that you ever go to people cheer people clap. I understand if you're a family and you have
kids, and you don't want a bunch of like 20 or 30 men, I'm just thinking that I had this image in my head about 20 and 30.
[09:55:00]
PALLOTTA: You know, 22 year old men showing up in suits and ties to minions, and just going crazy. You're in the film. But at the end of the
day, I mean, this is what the theatrical experience is, you're supposed to go and have a good time.
CHATTERLEY: Yes.
PALLOTTA: Obviously, if you're causing a lot of trouble, if you're talking during the movie, then obviously, then there's, then you're not really
shouldn't be going. But at the end of the day, if you can get people into the theaters at this time, after this post pandemic.
Again, we're in the middle of pandemic what I mean; it's after the last two years where the theaters have been kind of hit hard, anyway to get people
in as the way to get people in. So I'm supportive of the gentle minions.
CHATTERLEY: OK, I think they took bananas and didn't need to eat and I think they were throwing them around or something, missing a banana, and
that--
PALLOTTA: It's a great source of potassium. I mean I think all I see is a bunch of young men eating potassium and also at the same time wearing
formal wear to the cinema. I really don't see for that.
CHATTERLEY: Frankly, you are one of them? No, you're one of them frankly.
PALLOTTA: No, I mean, at this point - I mean you're talking about, two years ago, maybe but I think at this point, I think if I showed up in a
suit and tie and a banana to a minions movie, I think, call somebody to - tell somebody I'm in trouble. So somebody I need some help.
CHATTERLEY: Call the parents. Frank, great to have you with us thank you! That's it for the show. If you've missed any of our interviews today, there
will be on my Twitter and Instagram pages you can search by @jchatterleycnn. Meantime "Connect the World" with Becky Anderson is up
next, and I'll see you tomorrow.
(COMMERCIAL BREAK)
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