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First Move with Julia Chatterley
Minister: "We will be Ready for Start this Week"; China Issues Highest Heat Alert for Almost 70 Cities; Posen: There has been Little Progress on Inflation so far; Russian Missiles Hit Odessa Port after Grain Export Deal; Apple Investors Brace for Earnings Report Out Thursday; Laboratory Module Docks with Chinese Space Station. Aired 9-10a ET
Aired July 25, 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)
JULIA CHATTERLEY, CNN HOST, FIRST MOVE: A warm welcome to "First Move". This Monday in a special too hot to handle edition of the program a
critical week ahead for global markets; U.S. growth data may determine recession or not tech investors hope earnings will hit the spot the Fed
will hike rates how much more to do a lot on Wall Street can equities make further gains?
Well, we have a good shot take a look at those green arrows for futures after last week's advanced the NASDAQ finishing up more than 3 percent last
week, even with snaps almost 40 percent snapback Friday that weighed on other big social media names too.
This week's list is vast Apple, Meta and Microsoft just to name a few will report earnings this week what the tech giants say about the current state
of demand and the health of the economy will be key? Tech firms like Alphabet and Microsoft have already said that they will slow hiring.
Plus, we know that stronger U.S. dollar has been pressuring profits heightening those broader slowdown fears the most crucial economic data
point of the week will be out on Thursday when the United States releases its preliminary look at second quarter GDP.
Two quarters of negative growth a very real possibility but just don't call it a recession or at least so says Janet Yellen, we'll discuss later in the
show why with Adam Posen, the President of the Peterson Institute for International Economics.
In the meantime, positive action over in Europe after a weaker handoff from Asia; big earnings on tap in Europe as well financial giants like Deutsche
Bank and Credit Suisse plus major manufacturers like Diamond and Reno all reporting this week too.
The big economic focus in Europe, however, remains the war in Ukraine and how it's exacerbating the ongoing energy and food crisis? Lots of concern
today whether Russia will hold its part of the bargain on grain exports and that's where we begin today's show.
Ukraine's infrastructure Minister says Kyiv will be ready to resume at grain exports this week this despite a Russian missile attack on the Black
Sea Port of Odessa on Saturday, just 24 hours after a deal was brokered by the U.N. and Turkey to unlock trapped grain supplies.
Minister Kubrakov also confirmed that the ships will be escorted by Ukrainian military vessels and not Russian. Nic Robertson joins us now.
Nic, as we discussed in great detail on Friday, there was no explicit ceasefire agreement included in this grain export deal, but it's implicitly
required in order surely to be successful. Is this deal even still valid in light of what we saw this weekend?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, I just talked with the infrastructure minister, Ukraine's infrastructure minister, who was the
one in Istanbul, who signed that agreement, and he feels from their side that still committed to it.
They're sending a technical team to Istanbul at the moment to work with that Joint Coordination Center, which will oversee the implementation and
some of the inspections of the grain vessels coming in going through the boss for us.
He's very clear from their part, their intent is to continue I asked him why he thought that Russia had actually a fire these cruise missiles is
very expensive and accurate cruise missiles into the port in Odessa.
And he said he thought it was because Russia just wanted to show that they were the big player, the main player that they could still do this,
whatever the terms of the agreement was, you know, Russia, on the first hand told it's interlocutor in Istanbul, the Turkish defense minister,
Russia's defense minister told him that they hadn't fired the missiles.
Then the Ministry of Foreign Affairs corrected the day after saying they had fired them that they'd only fired them at military infrastructure in
the port. But the real understanding for the Ukrainian side is that the grain stores and the ships that will take that grain in those ports are
vulnerable to those Russia missiles but they don't think that Russia is going to try to scupper the agreement at the moment merely stress it that's
why they're committed to making it happen.
But when I spoke to the infrastructure minister on that precise issue, another point where Russia seems to be trying to strain the agreement and
strain the understanding because Russia's Foreign Minister has several times over the weekend.
Now said that it will be Russian ships escorting those cargo vessels through the Black Sea the infrastructure minister told me very clearly
that's not part of the deal, and it's not going to happen.
[09:05:00]
(BEGIN VIDEO CLIP)
OLEKSANDR KUBRAKOV, UKRAINIAN INFRANSTRUCTURE MINISTER: So we weren't allowed to do this our territorial waters and our support only Ukraine and
Ukrainian Navy will be up there so if you're talking about like inspections and all these issues that will be in near Turkey it will be near Bosphorus.
And we will be lead it by Turkey and by United Nation.
ROBERTSON: So no Russian ships escorting the convoys, anywhere along the combat ships
KUBRAKOV: No ships at all in this process.
(END VIDEO CLIP)
ROBERTSON: So the benefit obviously the shipments is for those needy parts of the world third world countries where food prices have been escalating
and wheat and other food commodities are in short supply because of Russia's war in Ukraine. But there is a knock on benefit for Ukraine's
farmers. The agrarian minister said that he believes that right now corn prices for Ukraine's farmers are going up about 20 to 30 percent because
the price was down because they had no way to export.
And he also believes that the wheat price is the price that the farmers will get at the farm gate here in Ukraine money in their pockets will go up
is going up by about 10 percent. Ukraine expected to export about a billion dollars' worth of grains over each month that this agreement is in
operation, Julia.
CHATTERLEY: Yes, the Russian is of course making inflammatory comments about the Russian escort. But as we were describing, as well on Friday,
what's the incentive for Russia here and the financial benefits that accrue to them still wanting it seems the upper hand in terms of sending those
missiles in and making a statement that way too.
Nic, thank you for joining us on that, Nic Robertson there, those exports critical as Nic was saying two nations across the continent of Africa in
particular, many of whom rely on Ukrainian grain. And that's why Russian Foreign Minister Sergey Lavrov is now touring with visits to Egypt,
Ethiopia, Uganda and the Republic of Congo, countering accusations that Russia is causing and exacerbating a food crisis.
Larry Madowo joins us on this. Larry, a poignant moment in terms of I think, a PR campaign, of course, many of these African nations have
remained neutral with regards to the Ukraine war. The question is what are the alternative options? I know you've been having conversations with the
Administrator of U.S. AID on what plan B, if this deal doesn't work might look like?
LARRY MADOWO, CNN CORRESPONDENT: That plan B is going to be critical here because this country is in this region here in Kenya and Somalia and
Ethiopia, they're being ravaged by a drought some of the worst on record.
And that is why Sergey Lavrov, the Russian foreign minister is also here in Ethiopia, he started he's here in Africa started off in Egypt, meeting the
leadership in Egypt, but also the leadership of the Arab League, because Middle Eastern countries are also some of the biggest dependence on wheat
and grain from Russia, and from Ukraine.
But then he's also been in the Republic of Congo and Brazzaville he's been holding a press conference a short while ago, is then after Uganda, and
will be finally in Ethiopia, where the seats of the African Union, so he will probably been meeting with leadership of the African Union as well.
And he's been saying that Russia doesn't have the bloody crimes of colonization that some of the Western nations have here in Africa. And he
pointed out that Russia has long standing relations with African nations, and Russia does not impose anything on anyone.
So he's been praising African countries for their balance, because as you remember, Julia or many African countries abstained from a condemnation of
Russia when it invaded Ukraine. In fact, even one country, Eritrea voted against that U.N. resolution.
So this visit is so important for Sergey Lavrov. He has been even calling it fake news, the idea that Russia is exporting hunger, and those who are
suffering the most here in Africa, he's really pushing back against that. And he's got many supporters here. Russia has got many supporters; he will
be meeting with the President Museveni in Uganda.
President Museveni has blamed high commodity prices there on the Russia Ukraine war, but he's also a friends of Russia, state television, Uganda,
as Russia and Russia today that propaganda outlet from Russia is this, the close relations you see in some of the African countries with Russia, but
I've been speaking to Samantha Power, the Administrator of the U.S. Administration, the U.S. Aid.
And she talks about trying to find an alternative way to find grain and wheat for depressed world markets, and especially for people that badly
needed in these parts of the world and calling out China for not doing enough to condemn the war, but also to contribute to the World Food
Programs appeal for those who are facing mass starvation and hunger here in Africa.
(BEGIN VIDEO CLIP)
SAMANTHA POWER, ADMINISTRATOR, U.S. AGENCY FOR INTTERNATIONAL DEVELOPMENT: This is a moment for all countries that play leadership roles in the
international system, as the People's Republic of China clearly aspires to do and has done in certain domains. It is for them, for all of us to show
up and to dig deeper than we have so far if we are going to prevent this crisis from becoming a catastrophe.
MADOWO: How big is the impact of Russia's invasion of Ukraine into the current problem you're seeing in Kenya and Somalia and Ethiopia?
[09:10:00]
POWER: In terms of food just coming from Somalia more than half of the wheat in this country, in the country of Somalia comes from Ukraine. It is
trapped in the port of Odessa 20 million metric tons of wheat and corn is trapped. So, you know, we can all hope and even pray that the deal that the
United Nations negotiated, but that Russia immediately turned its back on by bombing the port of Odessa that deal somehow sticks.
MADOWO: Do you worry about Russia's commitment to that deal, if literally just hours after it was signed, already bombing a desert? And what impact
would that have if they don't honor the end of the deal?
POWER: Well, we have been living the contingency plan because there's no way you can trust anything that Vladimir Putin says. We are working with
the Ukrainians on Plan B, Plan B involves road and rail and river and again, you know, sending in barges and, you know, adjusting the rail
systems so that they're better aligned with those in Europe so that the exports can move out more quickly.
But there is no substitute for Putin allowing the blockade to end his blockade to end and the Grains being sent out the most efficient way
possible, especially because we've lost so much time.
(END VIDEO CLIP)
MADOWO: The world has lost a lot of times Samantha Power says after her trip here in Kenya and Somalia, she's off to India. This is another way to
try and find alternative sources of wheat and grain for the world. And they just announced a $1.3 billion.
The U.S. announced a $1.3 billion extra humanitarian assistance for these countries here in the Horn of Africa because of that drought. But we're
already seeing here in Kenya and across the region, an increase in fuel and fertilizer and food prices because of the impact of Russia's invasion of
Ukraine.
CHATTERLEY: Yes, Larry and fascinating conversation as well. And the fact that the plan B which is other routes out of Ukraine, including rail and
road is difficult as they are have to continue. But we hope this this deal does bear fruit. Great to have you on the show thank you. Larry Madowo
there!
Right, blistering heat waves smashing temperature records across the globe and it continues Boston and Philadelphia among the U.S. cities reporting
record highs Sunday 60 million Americans are under extreme heat warnings Monday. That's down from 90 million however over the weekend, and with the
heat comes fires in Yosemite Park a blaze has been raging since Friday thousands have been evacuated as 2500 firefighters work to contain it.
Over in Europe forecasters say the fire risk in Spain Portugal, Italy and Greece remains extreme as temperatures top 40 degrees Celsius. The battle
against a fire in Greece North East is entering its fifth day. And in China almost 70 cities are under the highest level of heat warning Monday the red
alert is issued when temperatures of over 40 Celsius are expected. And this is China's second heatwave this month.
Selina Wang joins us, Selina; you've been talking to us basically on a daily basis. But the key point to understand here beyond the sheer scale of
people involved is that temperatures in China have been rising faster than the global average. So it's increasingly intense across China.
SELINA WANG, CNN CORRESPONDENT: Exactly Julia, what that means is that China is even more prone to these extreme weather events, not just the heat
but also flooding. You mentioned that more than 70 cities are under the highest heat alert that means more than 104 degrees Fahrenheit.
On top of that you've got more than 390 cities and counties forecast to be sweltering in temperatures as well as 95 degrees and above so all of this
like in other parts of the world is a major wake up call to China about the extreme impacts of global warming. And other state data point here too is
that in China average daily temperatures are at the highest since 1961.
And many cities are also recording record high temperatures. And in China's far western region of Xinjiang officials have said that high temperatures
have accelerated glacial melting and caused natural disasters like flash floods and landslides. And it this heatwave continues Julia, officials
they're saying it could harm cotton production.
That is a big deal because China is the world's second largest cotton producer. And 85 percent of the cotton produced in China comes from
Xinjiang, and not just Xinjiang that's dealing with the double whammy of heat and flooding. Since May, dozens of people in Southern China have been
killed.
And millions have been displaced because of the severe flooding and landslides.
And all of this, as we've been talking about is another blow to China's economy and its people which are still reeling from the impact of COVID
lockdowns. Now these unrelenting weather emergencies that we've seen in China in these recent years, they've been a wakeup call to Beijing, the
government saying that climate change is one of their key targets key priorities, but the question is, is all of this just too late?
[09:15:00]
CHATTERLEY: Yes, critical question to be asking and if you're looking for further inflationary pressures going forward look at cotton and clothing
and that in addition to everything else that the globe's economy is dealing with, Selina Wang, thank you for that.
OK, let me bring you up to speed now with some of the other stories making headlines around the world. The U.N. is joining rights groups in condemning
the execution of two pro-democracy activists in Myanmar. They were executed by the military junta following a trial that included two other men accused
of terrorism according to state media. Amnesty says the killings mark the first judicial executions in Myanmar since the late 1980s. Blake Essig has
more.
BLAKE ESSIG, CNN CORRESPONDENT: For the first time in decades, Myanmar has carried out judicial executions. On Monday, state media reported that four
people have been executed by me and Mars military junta, including two prominent pro-democracy activists, and two others who had been charged with
terrorism. Their deaths are the first of what some fear could be many more to follow. That's because Human Rights Watch says at least 114 people and
sentenced to death since the military seized power in early 2021.
Since the coup civilian cases have been tried in military courts with proceedings closed to the public trials that the United Nations and rights
groups have condemned, saying the secret of military tribunals denied the chance to a fair trial and is designed for speedy and almost certain
convictions, regardless of evidence, or following news of the executions.
The acting Asia director for Human Rights Watch said "The executions were an act of utter cruelty that followed grossly unjust and politically
motivated trials". Well, spokesperson for the United Nations called it a "Blatant violation to the right to life, liberty, and security of person".
Assistance Association for political prisoners says that since seizing power military forces have arrested nearly 15,000 people and killed 2000
more, the military has been accused of crimes against humanity by several international bodies. The junta pushes forward in its effort to crush the
resistance and gain full control of the people of Myanmar people who continue to resist Blake Essig CNN, Tokyo.
CHATTERLEY: Pope Francis is in Canada for what many are calling a long awaited apology is expected to return for decades of abuse by the Roman
Catholic Church against indigenous children who attended residential schools. The Vatican is referring to the trip as a peninsula pilgrimage.
Straight ahead, a dance of defiance the show goes on for the dancers of Odessa's ballet amid relentless attacks on the city. And the FBI warns on
Chinese tech giant Huawei could it be a threat to America's nuclear deterrent? That's all coming up, stay with us.
(COMMERCIAL BREAK)
[09:20:00]
CHATTERLEY: Welcome back to the program as we brace for a "First Move" flurry of key earnings and economic data plus a right move from the Federal
Reserve this week too not their "First Move" nor their last U.S. futures pointing to continue gains on Wall Street after last week's solid advance
sentiment holding up despite fresh signs of global economic weakness just released data shows German business confidence at a two year low as soaring
energy prices push the cost of manufacturing ever higher.
Goldman Sachs also turning more negative on China too saying it sees virtually no profit growth for companies in the MSCI China index this year
due in part to the country's property crisis. But fears of a U.S. recession is truly what's dominating the economic discourse numbers out late last
week show U.S. business activity contracting for the first time since the start of the 2020 COVID lock downs.
And the fear is we could see two consecutive quarters of negative economic growth when the U.S. releases its preliminary look at second quarter GDP
this week. However, Treasury Secretary Janet Yellen and others are quick to point out that it's hard to call a recession when the jobs market remains
robust and consumers keep spending.
This current economic climate clearly a unique one among many posing a unique set of challenges for central banks too. Joining us now is Adam
Posen; he's the President of the Peterson Institute for International Economics and a former Bank of England policy maker. Great to have you with
us, Adam!
And we are seriously in need of your brain. I guess the question is, what is the recession not a recession? And if we do get a negative growth print
for the U.S. economy this week, will you be calling it a technical recession? Help us?
ADAM POSEN, PRESIDENT, PETERSON INSTITUTE FOR INTERNATIONAL ECONOMIES: Yes, thank you so much for having me. And these are critical issues beyond all
our brains. But let's try to sort through it.
CHATTERLEY: Monday problem.
POSEN: We almost yes, Monday, Monday problems this week, we almost never see the kind of job growth we've been seeing in the U.S. ever, that we've
seen over the last year and then essentially, never when GDP growth or total income, total production is going down.
So first thing to think about is maybe the data is wrong, that GDP is an assembled data point that gets revised, the labor market data gets revised
occasionally, but it's much more dependent on because the government knows who's employed and who gets taxed.
And who applies for unemployment insurance. So the odds are that growth is actually higher than what the GDP numbers telling us. And there is a number
called GDI, which tries to accumulate income rather than product and these should match.
But in the end, GDI is positive even though GDP is negative in terms of growth. So putting that all together, it's looking really strange, but the
odds are what we're having is lousy growth, not negative growth, and therefore not a recession, just something to watch.
CHATTERLEY: So you're saying actually put more trust in what we're seeing in the jobs market, which suggests a stronger economy than the growth
numbers that we saw in the first quarter, and you're likely to see this week.
And yet, if I look at the business survey data, and I listen to the noises that we're hearing, particularly from some of the biggest CEOs in the
country, there's a recessionary feel. But is it more slowdown to your point rather than recession?
POSEN: I think the odds are it's more slowdown than recession. And it's important not to get to caught up in the word recession.
CHATTERLEY: Right.
POSEN: Well, your viewers know NBR this think tank and based in Cambridge, it's nonpartisan, has a committee that's called the business cycle dating
committee. And they determine when a recession gets that label.
What we really care about is whether the economy is into a downstate, well below normal trend growth, employment shrinking, production shrinking and
we don't really have signs we're in that state of affairs, a slowdown, I do think it's more likely now.
The forward looking things you mentioned, like business plans for investment are people's confidence, which is a little less reliable. Those
do still say we got a high chance of recession coming I mean the economy not just looking slow, but genuinely slowing down. And that's something the
Federal Reserve and the government has to factor in.
[09:25:00]
CHATTERLEY: So, I mean, I was just about to say we actually had a fun conversation with David Rubenstein of Carlyle group on the show where he
was talking about a U.S. administration that he was involved with it, they wouldn't talk about the word recession, they would use the word banana,
because they literally didn't want to continue to try to talk the economy into recession, which is a separate point too in a very important one as
well.
So the Federal Reserve is going to hike, we think three quarters of a percentage point this week. And they also have to look at all of these
different data points and the measures, and what the markets saying too because if you look at consumer measures of inflation, and you look at
market based measures of inflation, like breakeven, they are coming down.
So there's this sense that perhaps the Federal Reserve is having been behind what it needed to be on top of it now, or at least up to date on
taking action to try and bring prices down. But what I don't see a lot of discussion about is the time lag between talking about policy, the reaction
in financial markets and the tightening, and then the reaction ultimately in the economy to slow it down, and then bring prices down. It's tough to
get a gauge of how much when and how much more is required when that time lag is, is in effect?
POSEN: Yes, it's difficult to get a gauge because it's genuinely hard. I mean, we think central banks even doing their job well, don't know, the
world is a complicated place. But they know better than most other people, and they have less bias when they look at.
So I think your characterization is fair that the path they're on, which is to raise rates by somewhere up to somewhere between 3.75 on 4 by February,
is the right path, they were late in getting on that path, and we can litigate whether they would have spared us some problems now, if they had
acted earlier.
But right now, I think what the markets have, as they say priced in is the rates going up between now and February too. A little below for that the
long term inflation expectations say that's consistent with low inflation. And that we've had a significant decline in the equity market in stocks,
and starting to see a bit of decline in housing prices and production, without huge financial dislocation, like we've seen in past recessions like
in 2008, in particular.
And so, to me, the Fed is on roughly the right course, it could still turn out to be wrong. As my colleague Olivier Blanchard at Peterson, our board
vice chair, Larry Summers have recently published with us, you can look at the labor market data a different way and say the labor market is still
overheating, there's still too much demand for too few workers.
And in which case, they believe that inflation is not going to slow down based on what the Feds doing and the Fed is going to have to raise rates
well past 5 percent. If they are right, what we should see is a reacceleration in wage growth over the next few months, in which case, and
then the Fed will know they have to keep going. But the latest data is that wage growth is now down roughly to 4 percent across the whole economy,
which is consistent with a low rate of inflation going forward. So I'm hopeful the Fed will be able to get away with doing only this much.
CHATTERLEY: The short phrase I was looking for my exceptionally long winded question before was it's an imperfect science. What's the level?
POSEN: You didn't give me the cue card. So I couldn't--
CHATTERLEY: Yes, I'll do that next time. What's the level of inflation? Adam do you think that they're looking for that will allow them to say,
Fine, now we've done enough? No more tightening required?
POSEN: It's a good question. I think in practice, what they're looking for is getting well below 5 percent with clear indications that inflation is on
the downtrend and 5 percent on headline what's called headline inflation.
In reality, the Fed is tracking what's called core PCE, which generally runs at half a percent lower than headline, it's constructed a little
differently. It's meant to be less volatile. And right now it's running a lot below headline because of energy and food and things like that.
So I think they have to be well below five and headline and with a clear downtrend, for them to say, OK, we've done enough or close too enough. The
other point is it's very likely we're going to see a drop in the headline quite substantially over the next few months. You talked about the lags
between when you do something and when it hits inflation.
CHATTERLEY: Right.
POSEN: You know, a lot of the changes of gas prices coming down. Food prices coming down, the wage demands coming down. Those are all going to
start to filter into the inflation over the next few months.
[09:30:00]
CHATTERLEY: OK, I think the key takeaway of many great points of this though is that, if we do get that negative print in GDP this week don't
automatically call it recession and most definitely don't panic. Good takeaway.
POSEN: Don't panic, keep calm and carry on because the labor markets more reliable than the GDP number.
CHATTERLEY: We got it, Adam, great to chat to you, sir. Thank you so much, Adam Posen there--
POSEN: Thank you.
CHATTERLEY: --the President of the Peterson Institute for International Economics. We'll speak again soon sir. Thank you. OK, up next, dancing
despite the darkness, the show goes on for Odessa's ballet dancers even as Russia targets this city, that's next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move" and we return to Ukraine where Russian missiles hit the Port of Odessa Saturday less than 24 hours after
Moscow agreed a deal to restart grain export. The city has been enduring severe attacks for weeks but amid the horror the dancers of the Odessa
ballet are determined to bring hope as Ivan Watson reports.
(BEGIN VIDEOTAPE)
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): There is great beauty in Ukraine amid the pain and suffering. In the Southern Port
City of Odessa dancers in rehearsal, try to tune out Russia's deadly war.
WATSON (on camera): This is more than just a beautiful expression of art and culture. Against the terrible backdrop of this war, these dancers offer
a symbol of defiance a sign that Ukrainians are not giving up.
WATSON (voice over): The Odessa, Opera and Ballet Theater stands like a jewel, albeit one protected by sandbags. The Russian rockets and missiles
periodically pound Odessa residents here cling to pre-war normality and that includes the city's 135 year old opera. Viacheslav Chernukho-Volich is
the Opera's Director.
WATSON (on camera): It's beautiful, do you still need opera and ballet and there is a terrible war?
[09:35:00]
VIACHESLAV CHERNUKHO-VOLICH, CHIEF CONDUCTOR, ODESSA NATIONAL ACADEMIC OPERA & BALLET THEATER: Yes, all people need this and it's very important
for society. Opera House is the symbol of good life, it's - you hear this.
WATSON (voice over): The good life tonight's ballet performance. But amid preparations there's an interruption an air raid siren warns of a possible
attack. I'm ushered downstairs. Musicians and dancers wait in the basement. The threat delays the start of the show. Two of tonight's solo ballerinas
tried to stay limbers.
UNIDENTIFIED FEMALE: This is not normal.
UNIDENTIFIED FEMALE: This is not normal.
WATSON (on camera): Why are you sitting here?
UNIDENTIFIED FEMALE: Because war is in our country.
WATSON (on camera): Are you afraid?
WATSON (voice over): Yes, of course we're afraid says Ekaterina Kalchenko (ph) though we're getting accustomed to these threats and that in itself is
horrible. After a long delay, the opera gets the all clear audience members emerge from their own shelter and take their seats.
UNIDENTIFIED FEMALE: In case of the neighboring - all people must proceed to the shelter. Glory to Ukraine!
WATSON (voice over): The music of - fills the hall. And for the briefest of moments, the war seems very far away. The reality though, is some of these
performers sent their children away for safety to other countries. A number of the artists and crew are defending their country serving in the
Ukrainian Armed Forces, while those on stage struggle to keep the city's cultural spirits alive.
Soloist Ekaterina Kalchenko crosses herself before entering stage right. But after just a few steps, the curtain suddenly closes.
WATSON (on camera): Bad news, the third air raid siren of the night has just gone off. The curtain just came down. And the show has been brought to
a stop.
WATSON (voice over): I want the whole world to start screaming Kalchenko tells me to stop this horror so that innocent people and children stop
dying. I asked for help the ballerina says, and for people not to remain silent Ivan Watson, CNN, Odessa, Ukraine.
(END VIDEOTAPE)
CHATTERLEY: Now to a CNN exclusive tied to fears of Chinese espionage. Sources say an investigation by the FBI has determined that equipment made
by Chinese tech giant Huawei could capture and disrupt some defense department communications in the United States, including those involving
the nation's nuclear weapons.
CNN's Katie Bo Lillis joins us now. Katie Bo, you certainly have our attention on this. What more did the investigation find?
KATIE BO LILLIS, CNN REPORTER: So this investigation dates back to at least the Obama Administration was ultimately briefed up to the Trump White House
in 2019. The FBI knew that these small rural telecommunications carriers in the Midwest were using Chinese made Huawei equipment on top of their cell
towers in places like Nebraska and Colorado, where there's a lot of sensitive military installations to include U.S. nuclear missile silos.
Now the company said that they were using this equipment because it was cheap, and it was reliable. But the FBI in the course of its investigation
was able to determine that the equipment had the capability to recognize, intercept and potentially even disrupt restricted Defense Department
communications, potentially offering China a pivotal and very dangerous window into the command and control for America's nuclear arsenal.
As one source familiar with the investigation described to us this goes into the BFD territory. The FBI in the course of this investigation also
realized that the leading regional provider Viaero was placing traffic and weather cameras atop many of its towers across the region.
And then live streaming them as a public service, which, of course is great if you want to see whether or not you're going to run into a traffic jam on
your way to work that day.
But for counterintelligence officials raised concerns that China would be able to monitor those live streams, and then track sensitive military
movements across the region to determine if there were any patterns.
Now the combination of these two things of course was an enormously disturbing to counterintelligence officials here in the United States. And
came at a time in which the U.S. has become increasingly concerned about what many officials describe to us as a dramatic escalation of Chinese
espionage on U.S. soil over the past decade.
[09:40:00]
LILLIS: Even more alarming to many of the official's current and former familiar with this investigation who spoke to us for this story is the fact
that this equipment, three years on is still in place.
CHATTERLEY: Wow. I mean, regular viewers of this show will recognize that Huawei, of course, was mentioned under the Trump Administration that
technology was, was sanctioned and limited in many ways.
But three years on, Katie Bo, why has this not been changed if there are concerns as it come down, ultimately to cost?
LILLIS: That's exactly it. The FCC in 2019 issued a rule that mandated that these companies had to remove the Huawei ZTE and other sort of trying
blacklisted Chinese made technology from a top their towers.
But the FCC this year, again three years on, has said that there's a $3 billion shortfall in the amount of money that Congress has appropriated to
reimburse these companies to rip out all this equipment and start over again.
So again, here we are three years on from when the FBI initially briefed this investigation up to the highest levels of government. And three years
on from when the FCC issued its rule demanding that companies do what's called rip and replace and remove this equipment. It's still in place.
CHATTERLEY: Yes, and of course Huawei themselves have denied that their equipment can be used to spy on U.S. infrastructure. But here we are. Katie
Bo Lillis, great to have you with us, thank you for that great reporting.
OK, after the break stronger than an ox, Ox Global, the electric truck company looking to revolutionize delivery in Rwanda. That's up next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move" and U.S. stock markets are up and running for the first time this week. And it's pretty volatile stock stocks
losing a lot of the momentum that we saw pre market as we await key earnings and economic data later this week.
I blame all our recession chat this morning on the show. Not really Apple surely one of the most consequential earnings reports of the week,
Investors fear the company will report flat sales compared to last year.
The phone could confirm plans to slow hiring and spending too. So that's what we're watching for Bloomberg reporting today that Apple is taking the
unusual step of offering discounts on high end phones sold in China and admission perhaps that China's slowing economy is also pressuring sales.
[09:45:00]
CHATTERLEY: Apple just to give you a sense down some13 percent so far this year, a much better performance, however, then lots of its tech peers. To
Rwanda now and if you want to get goods to market over tricky terrain, you'd probably use a bicycle or a motorbike.
And for a business owner that could put a serious limit on your ambitions. Ox Global is a British Rwandan startup that is looking to change that it's
flat packed, electric trucks go where other trucks can't, all while carrying up to two tons of cargo that's roughly 20 times what one could
carry by bike.
And being an EV, its daily running costs are 50 percent less than a vehicle with a diesel engine. Simon Davis is Managing Director of Ox Global. And he
joins us now. Simon, fantastic to have you on the show!
The problem that you're trying to solve, and each something you've named is, is transport poverty, the inability of small businesses and
entrepreneurs to transport goods swiftly, efficiently and economically. And that's where your trucks come in.
SIMON DAVIS, MANAGING DIRECTOR, OX GLOBAL: Absolutely, Julia and transport poverty is a major problem in lots of emerging markets. Places like Rwanda
are very fertile countries, but they so often can't get the things they grow and the things they make the market, just imagine being a farmer and
having 250 pounds of potatoes.
And the only way you can move them is on a bicycle up and down with what is one of the healthiest countries in the world. It's an extraordinary
challenge. And it really caps what people can do in an otherwise productive place.
CHATTERLEY: So the choice is burning hours and hours. And I assume days, in some cases of manpower, transporting this by bikes and motorbikes, you're
offering an alternative. And it's a truck that's effectively been built this terrain, I have to say it's not the prettiest EV truck I've ever seen.
But explain how it's been adapted to tackle this kind of terrain, which is key.
DAVIS: Yes, so you know, the sort of narrative around EVs is about making the really fast and all that, but actually, EVs are great going slowly, the
greater hauling heavy weights up hills.
And what's really good about them, as you said earlier, is that they cost very little to fuel and they have very little maintenance. So what we've
done here is really designed the first truck that's purpose designed for the dirt roads of emerging markets, you know, the vast majority of roads
aren't paved.
So you need a truck that's really robust. And also you need a truck that's easy to repair. And that you can operate day in day out. Because this is
all about having lots of uptime, it's not a truck that kind of sit on somebody's drive and be used once a day. This is 24/7, almost moving of
goods for entrepreneurs.
CHATTERLEY: So the first thing I know my viewers are going to be saying because we talk about it on this show all the time charging. What about
charging technology?
DAVIS: Absolutely. Well, the great thing about when you use electric trucks for a business is you know where your trucks are and where they're going
and coming to and from, you know, with personal transport, you kind of have what I call the granny problem.
You know, what happens if your granny falls ill and lives on the other side of the country, and you've suddenly got to get in your car and drive
doesn't really work with an electric truck.
But when you're operating a business, like businesses thrive on consistency, people grow stuff in places and they consume stuff and make
stuff with different places. So you plan the routes, according to what the truck will do.
And for us, we will have our trucks in depots. So we'll have our charging facilities at the Depot. And the great thing about it is, you know, it's a
real win, win people talk about there not being enough energy and not much electrification in Africa, and places like that.
But the real challenge is productive use. The great thing about a truck is it's a really fast way of turning sunshine into solar energy into cash.
It's a really fast cycle and really drives economic growth.
CHATTERLEY: I'm still caught up on the granny problem, but skip over that as the technical term. And let's be clear. No, I want to move on because
then you can breathe it in.
I want people to understand the business model, you're not selling these trucks, you're operating them, what you're doing is allowing via mobile
phone people to book space, and they can pay for space.
DAVIS: Yes.
CHATTERLEY: Now they can't pay on the app. So you're going to have to explain the payment system that you've set up to because that comes down to
bartering I believe between the drivers and the individual.
The individuals who want to sell, how does that work? And are you going to progress to being able to pay on the app to formalize it in some way?
DAVIS: Yes, absolutely. You know, our customers are the people who will never buy a car. Perhaps 3 billion people in emerging markets are never
going to be able to afford to buy a car.
What they do with us is that they pay for space on a truck. And if they need 100 pounds worth of space or 100 tons worth of space they can do that.
[09:50:00]
DAVIS: And as you said, they call us up or they do it via a mobile app. Now in most emerging markets, there's something called Mobile money. So lots of
people pay using that, which is, which is a separate app on it on a 2g phone, which so you can basically send money between phone numbers, so
about half of our money comes in by that solution.
And the other part comes in via cash. And it's important to recognize what our drivers, the drivers aren't just drivers, there's so much more than
that. They really use their local knowledge, to find customers and to agree the prices that make sense for those customers and build the business, you
know, as entrepreneurs from the bottom up.
CHATTERLEY: Yes, I mean, that's incredible if it allows them to grow their businesses. And that's, that's huge. How do you make money, Simon? And I
know you've raised money, are you looking to raise more money, because you, clearly need to scale this up?
DAVIS: Yes, absolutely. This is a profitable business, I think, you know, we set out and one of the first things we did was we started some
operations in Rwanda to really establish whether the revenue is there.
And we've just been blown away by the demand, you know, perhaps on a given day, we only able to serve about 20 percent of the customers in yourself.
And that's because transports really valuable, you know, when you move something, you make it more valuable, whether it's, if you take a banana on
a tree, it's worth very little, if you put it in a Sheraton and sell it to a tourist, it's worth a lot.
And so by moving goods, we enable our customers to create value, which we can share and so this is very much a full profit business. We're raising
capital as a startup.
But the good thing, the really exciting thing about this model is it's a real win, win because when we make money, our customers make money and that
drives economic and social impact.
CHATTERLEY: Yes, this is phenomenal and particularly talking about food products as well that time, the time to get to market so important because
you reduce spoilage as well. Simon, we look forward to your progress.
And as you said it there you are looking to raise money. So if anyone's looking at helping communities, build businesses and build stronger
businesses and then facilitate a startup to then they know where you are, Simon, great to chat.
We'll keep in touch.
DAVIS: Thank you.
CHATTERLEY: Simon Davis, Managing Director of Ox Global there, thank you. OK, coming up is this they mean by foul play, you decide the moment a chess
playing robot goes rogue, after the break. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: The space race 21st century style you're watching the moment China successfully docked a new laboratory module to its space agent under
construction.
The docking marks the penultimate phase as China aims to complete its orbital outpost by the end of the year. Three astronauts were onboard to
witness the docking in orbit. The last component for the Chinese station is set to launch in October.
[09:55:00]
CHATTERLEY: And finally, a quick move at the Moscow chess open nearly cost one player his finger. The seven year old boy was up against a chess
playing robot. Tournament officials say after making a move the boy didn't give the robot a chance to respond, causing it to malfunction, grab his
finger and break it. Bystanders rushed to help the boy get free.
The good news is he finished the tournament with a cast on his finger. Blaming the boy or not the robot, I see. Plenty to say about that, but no
time and that's probably a good thing. That's it for the show.
If you've missed any of our interviews today, they will be on my Twitter and Instagram pages. Search for @jchatterleycnn. "Connect the World" with
Becky Anderson is up next. We'll see you tomorrow.
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[10:00:00]
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