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First Move with Julia Chatterley
New U.N. Report Accuses Of Human Rights Abuses; IAEA Inspectors Arrive At Zaporizhzhia Nuclear Plant; U.S. Orders Nvidia, AMD To Stop Selling AI Chips To China. Aired 9-10a ET
Aired September 01, 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]
ALISON KOSIK, CNN HOST: A warm welcome to First Move. I'm Alison Kosik. Another jam packed show for you this Thursday. Russian state media showing
international inspectors arriving at Ukraine's massive nuclear power plant even as shelling forces the shutdown of one of the facilities reactors.
We'll be live in Ukraine with the latest.
Also the U.N. out with a scathing report on human rights abuses in China, accusing Beijing of possible crimes against humanity for its treatment and
detention of Uyghurs and other minority groups. All that and more just ahead, but first to check on the markets. Global stocks beginning the month
of September with losses. U.S. futures look weaker, European markets currently are down more than 1 percent, chip stocks in the red.
That's as the U.S. moves to restrict sales of sophisticated semiconductors to China and Russia. And we're going to have more on that in just a moment.
Energy shares are weaker as well. Oil continues its decline driven by fears of weaker demand. Crude coming off its third straight month of losses. Red
arrows in Asia as well. New numbers showing Chinese factory activity contracting in August as new COVID lockdowns weigh on sentiment, and we'll
have more on the markets later in the show.
But first, a team of experts from the International Atomic Energy Agency has arrived at the Russian occupied Zaporizhzhia Nuclear Plant. It follows
hours of delays and a drive through an active war zone. One of the reactors at the facility that was shut down earlier Thursday, and a emergency
protection system activated because of shelling in the area.
Let's bring in Melissa Bell. She joins us now from Kyiv. Melissa, gosh, you know, this is clearly a dangerous mission for Atomic Energy Agency
inspectors, how long are you thinking that they're going to be spending at the plant?
MELISSA BELL, CNN CORRESPONDENT: Well, the idea is that we've been hearing from the Ukrainian Energy Minister that in fact, Rafael Grossi himself,
who's leading that team will be coming back across the line to Zaporizhzhia city back in Ukraine and the Ukrainian held side by this evening leaving
some of his team behind if all goes according to plan.
But as you suggest, Alison just getting there was even more difficult than I think they'd imagined as they set off from Kyiv a couple of days ago.
This was always going to be a mission that was fought for with difficult, with dangers along the way. But the shelling that took place in the town
around the Zaporizhzhia nuclear power plant this morning was the worst according to the town's mayor that the town has seen since it was occupied
back in March.
So a sudden flaring up of that shelling, of the fighting with each side, of course, accusing the other of being responsible, but the fact of the plant
being more vulnerable than ever still there in the middle of that, as you say one of the reactors turned off it is now just one that is running. And
that is the inspection. That is the plant that the inspectors will be having a look at, as you say they've arrived.
But as they set off, they'd been briefed about all of the shelling that was going on. And some of the dangers they were likely to face along the way.
Have a listen to what Rafael Grossi had to say.
(BEGIN VIDEO CLIP)
RAFAEL GROSSI, IAEA DIRECTOR GENERAL: We are moving. We are aware of the current situation. There has been increased military activity, including
this morning until very recently, a few minutes ago. I have been briefed by the Ukrainian regional military commander here about that and the inherent
risks. But weighing the pros and cons and having come so far, we are not stopping. We are moving now.
(END VIDEO CLIP)
BELL: They are now carrying out that inspection, visiting the plant. We've been hearing also this morning from Sergey Lavrov, the Russian Foreign
Minister, who has been speaking of the fact that they would - wanted to make sure that this inspection was carried out properly, that they would be
showing the inspectors damage to the plant that they say was done by Ukrainian forces.
So it's difficult to know exactly what the inspectors are going to have access to, and what information they're going to be given about exactly
what's going on and how the plant has continued to function all this time. Bear in mind that this is a plant that is in Russian hands but is manned by
Ukrainian staff, those who lived and worked in it before the occupation.
How much access will the team get to them, that is far from clear for the time being. What we expect to hear more from then is Rafael Grossi himself
who as I say should be back in Zaporizhzhia city on the other side of that very dangerous line later today, Alison.
[09:05:00]
KOSIK: OK and I know you will stay on top of this story. Melissa Bell, thanks so much. The Zaporizhzhia facility isn't the only nuclear power
plant in Ukraine under threat. CNN's Sam Kiley has the details.
(BEGIN VIDEO CLIP)
SAM KILEY, CNN CORRESPONDENT: Ukraine's second largest nuclear power station is under Russian missile threat. Even as warnings of a nuclear
disaster are causing international horror at its largest plant.
There's just been a dramatic air raid siren. Do you know what the threat was then?
IHOR POLOVYCH, DIR GEN SOUTH UKRAINE NUCLEAR POWER PLANT (through translator): Yes, we received information from the Military that the air
raid alert was for the danger of our flying or launching missiles by aircraft.
KILEY: Can we carry on or do we have to go down again?
UNIDENTIFIED MALE (through translator): There are planes over Crimea with guided missiles on board, nobody knows where they will fly.
POLOVYCH: Let's go.
KILEY: Down again. So the director's just said that they've got information that aircraft have been seen in Crimea. They're in this (inaudible) this
province or heading in this direction so they pose an immediate threat. This is something that happens several times a day very often they say the
sirens are almost back to back.
The director is told that the Russian aircraft crossing the Dnipro have fired missiles. Ukraine's Military are tracking them, trying to figure out
if this nuclear power station is the target.
POLOVYCH: You're welcome.
KILEY: This monitor shows the background radiation remains normal. Working in this bunker has become a new normal for the teams running the South
Ukraine nuclear power plant. The maintenance of Ukraine's four power plants and 50 nuclear reactors is stressed.
POLOVYCH (through translator): Parts of the factory that produced spare parts were bombed by Russian Army. That is at the moment there is no way to
make some types of spare parts.
KILEY: And Russia has stored army trucks in Zaporizhzhia's turbine hall. It's identical to South Ukraine's turbine. Both use highly explosive
nitrogen as a coolant. Fire here could be disastrous, and Russia is accused of shelling the plant which it denies.
This man worked in Zaporizhzhia under Russian occupation but fled in June.
OLEKSANDR, FORMER ZAPORIZHZHIA NUCLEAR POWER PLANT WORKER (through translator): The Russians shoot at the territory of the plant, where a
storage facility for solid waste is, where as a dry storage facility for nuclear fuel is.
KILEY: At least three Russian missiles have been recorded flying over the South Ukraine plant. Back above ground the director is amazed by Russia's
threats to Ukraine's nuclear industry.
POLOVYCH (through translator): They were so smart they shelled the nuclear power plant. Either the Military was not aware of the danger or that it did
it on purpose.
KILEY: But as this plant generates 10 percent of Ukraine's electricity and Zaporizhzhia up to 20 percent, there's no wonder that both are such
tempting targets. Sam Kiley, CNN in South Ukraine Nuclear Power Plant.
(END VIDEO CLIP)
KOSIK: The chairman of the giant Russian oil and gas company LUKoil has died after falling from a sixth floor hospital window in Moscow. That's
according to state media. LUKoil website acknowledged the death of Ravil Maganov but attributed it to a severe illness and made no mention of a
fall.
Back in March referring to Ukraine, the oil company called for an end to the armed conflict. RIA Novosti quoted a law enforcement source as saying
the businessman most likely committed suicide.
The Xinjiang report finally released a long awaited report from the U.N. says China has committed serious human rights violations against Uyghurs
and other Muslim groups in Xinjiang, which may amount to crimes against humanity. But Beijing is angrily rejecting the findings calling the report,
a political tool to serve the U.S. and the West. Anna Coren has the details.
(BEGIN VIDEO CLIP)
ANNA COREN, CNN CORRESPONDENT: Tears for missing family, harrowing details of torture, of imprisonment and even death.
MEHRAY TAHER, WIFE OF MAN DETAINED IN XINJIANG: The next thing you know your husband is in a detention center and you can't even see him, you can't
even communicate with him.
COREN: Now a vindication of some of that pain suffered by Muslim minorities in China's West at the hands of the state apparatus. Four years after
stating its initial concerns, the United Nations has documented that abuses are occurring in Xinjiang and says China may have committed crimes against
humanity in its internment of some 1 million people in what Beijing calls vocational education training camps.
The damning report published minutes before U.N. Human Rights Chief Michelle Bachelet left her post, China vehemently opposed its release.
[09:10:00]
RAYHAN ASAT, HUMAN RIGHTS LAWYER, UIGHUR ADVOCATE: Since World War II, this is the second time ever seeing a government, a powerful government building
massive and large scale concentration camps to collectively punish a population, for just being who they are. China insists its camps are used
to deradicalize religious extremists, and that the facilities are closed, a claim the U.N. says it couldn't verify. Its propaganda paints a picture of
violent separatism in the Xinjiang region.
The U.N. says ultimately, China's anti-terror campaign has led to the large scale arbitrary deprivation of liberty, the liberty of people like Ekpar,
brother of New York Human Rights lawyer Rayhan Asat, a successful entrepreneur, Ekpar traveled with a Chinese delegation to the U.S. in 2016
for a month long trip, even visiting CNN headquarters in Atlanta.
ASAT: It was in weeks returning from the United States, he was forcibly disappeared by the Chinese government into the shadows of one of these
camps and it's been six years, four months and still counting.
COREN: China has kept the world away from its alleged crimes in Xinjiang. Bachelet herself was not allowed to speak to any Uyghurs in Xinjiang for
her report. But for years, rights groups and news organizations, including CNN have uncovered alleged abuses in Xinjiang, including sexual violence
and forced sterilization inside the Xinjiang camps.
UNIDENTIFIED MALE: Don't do this, don't do this, I cried. Please don't do this.
COREN: Human rights group says the international community can no longer remain silent.
SOPHIE RICHARDSON, HUMAN RIGHST WATCH: The States should be going into the Human Rights Council thinking, armed with this report, what best can we do
to end violations in that region and find justice for the victims and survivors. That's what should be driving their next actions, not blowback
from Beijing.
COREN: Despite the mounting evidence, Beijing refers to the Human Rights allegations as the great lie of the century. It says the report is a farce
that the United Nations has succumb to a Western plot to discredit China. The report itself accuses China of intimidating Uyghurs abroad, threatening
those who are brave enough to speak out against the system they say is designed to destroy them. Anna Coren, CNN, Hong Kong.
(END VIDEO CLIP)
KOSIK: And Will Ripley joins us with more. Will, what if anything will come out of this report that clearly lays out serious human rights violations? I
mean, will the international community step up here?
WILL RIPLEY, CNN CORRESPONDENT: I think the most that can be expected is some sort of consensus on the matter. And of course, this will become part
of the historical record, along with, you know, this is a 45-page report, China put out their own 131-page report, nearly three times the length,
where they lay out their case that this is disinformation, and lies, fabricated by anti-China forces.
This issue of human rights is a fundamental difference between the authoritarian system in China and the West, because in China, when they
talk about human rights, they look at statistics like the economic or GDP or even life expectancy.
If healthcare systems, you know, in Xinjiang have improved at the expense of assimilating, you know, a million people more or less, you know, taking
them, ripping families apart, forcing them to, you know, speak a different language and to basically, you know, erase their culture and become part of
this homogenized, orderly Chinese system that is championed by the Chinese President Xi Jinping, who was actually in Xinjiang, as recently as July
visiting and talking about how you know, these, what the U.N. called reeducation camps, what China calls vocational training camps are a huge
success.
You know, they're looking at people who now look like everyone else in China, because their culture was essentially erased. And from the viewpoint
of the Chinese leadership, that's a success story. And so even though this report, which has been in the works for four years, which China did
everything possible, you know, to prevent from actually being released to the public, now that it's out, certainly, there's going to be global
criticism.
But at the end of the day, it's almost, you know, impossible that there will be any consequences for China itself, given the sway they have at the
U.N. You know, there's certainly not going to be any consequences internally. Because, you know, this policy in Xinjiang has the backing of
Chinese President Xi Jinping, much like the zero COVID policy also has the backing of the Chinese president.
So even though the rest of the world has moved on, China is doing its own thing at the expense of people's freedom of mobility. This is you know,
they've essentially created this huge surveillance state where everywhere people go, not only are they photographed and regularly tested for COVID,
but they're scanning their QR codes.
[09:15:00]
So every citizen, one and a half billion people, their movements are being tracked. And the pandemic was the reason that they did it nationwide. In
Xinjiang, they said it was religious extremism. And that was the excuse that they gave for setting up this Police state that is essentially made it
impossible for people to have to live, you know, the cultural - cultural experience that they were brought up.
That was, you know, and not only that, but even to live with the people they love, because families were ripped apart. And in many cases, still,
years later, they've had no contact and have no idea where their loved ones are.
KOSIK: Will Ripley, thanks so much for your great reporting all that great context. No AI chips to China. The Biden Administration ordering Nvidia and
AMD, Advanced Micro Devices to stop selling certain high performance processors to China over security concerns. Shares of the two companies are
falling in the pre-market. Want to bring in Rahel Solomon, she joins us now. Rahel, great to see you.
So in this regulatory filing Nvidia says that, by not being able to sell these devices to China, it could potentially lose $400 million in sales in
the current quarter. Is there any idea how Nvidia is going to make that up?
RAHEL SOLOMON, CNN CORRESPONDENT: Well, yes, Nvidia is warning that it could take a pretty big hit from this. So let's talk about what we're even
talking about here. Right? When you think computing chips, Alison, you think gaming consoles, you think are computing chips, you think perhaps
gadgets. What we're talking about here is really top computing chips. They're used in AI for a perhaps speeding up machine learning. Well, the
U.S. saying, the concern being that these chips could end up in the hands of a Military end user. So Nvidia, as you pointed out already warning that
it could take a pretty big financial hit from this warning that it could potentially lose $400 million worth of business, also saying in a statement
to CNN Business that it is working with customers to in China to satisfy their plant or future purchases with alternative products and may seek
licenses where replacements are not sufficient.
It appears that this restriction could have different impacts on different chip makers because AMD said it does not expect that this will have a
material impact saying in its statement to CNN Business that at this time, we do not believe that shipments of these chips are impacted by the new
requirements adding we do not currently believe that it is a material impact on our business. That said both stocks lower in the pre-market, as
you rightly pointed out Alison, Nvidia off about 4 percent AMD off about 2 percent in the pre-market.
KOSIK: I'm wondering if this could backfire and actually hurt American companies like Nvidia and AMD because it would incentivize Chinese
companies to you know move forward in this space and excel in this space.
SOLOMON: Well, it certainly makes it more expensive, however, for Chinese companies after this restriction and I should say that China already
hitting back with a comment accusing the U.S. of imposing a tech blockade, also saying in part that the U.S. continues to abuse export control
measures to restrict exports of semiconductor related items to China, which China firmly opposes.
Look, this is the latest headwind Alison for semiconductors. We should point out last month in August, Nvidia had warned of slowing sales of
slowing revenue because of slowing demand for gaming consoles. And the stocks of both of these companies have really been quite badly battered
this year. AMD is off about 43 percent year to date, Nvidia worse than that, it's off about 50 percent year to date. So it's been a rough go for
the chip makers and this latest restriction certainly not making it any easier else. Alison.
KOSIK: OK. All right. Rahel, Solomon, thanks so much. And these are the stories making headlines around the world. Former U.S. President Donald
Trump says the discovery of classified documents at his Florida home should not have been a cause for alarm. In a court filing, his legal team argued
that officials should have expected to find classified items because they were presidential records. It was his formal response to a filing from the
Justice Department which said his team had concealed documents at his home.
The White House says President Joe Biden will deliver a primetime speech today about protecting the soul of the nation. He's expected to ramp up his
attacks on the Republican Party, which he says is embracing semi-fascism. His more aggressive message comes ahead of the midterm elections this
November.
And Serena sails through in what could be her last major tournament, Serena Williams beat world number Anett Kontaviet in three sets to make it through
to the third round of the U.S. Open. She's also preparing for a doubles match with her sister Venus later today.
Still ahead on First Move is now the autumn of our discontent. As we enter what's sometimes the worst month for Investors. We'll speak to a Market
Strategist about what's ahead and up to 130,000 people facing new travel chaos. The latest as Lufthansa cancels flights due to strike action.
[09:20:00]
(COMMERCIAL BREAK)
KOSIK: Welcome back to First Move. I'm Alison Kosik. The curtain about to rise on a new month of trading on Wall Street. Futures pointed to a rough
start though to start September with the major averages currently on track for their fifth straight day of losses. Stocks are coming off a sizable
drop in August with the NASDAQ leading the declines, down by more than four and a half percent.
September is traditionally a volatile month on Wall Street and lots of challenges for Investors coming down the pike this year, including
tomorrow's all important U.S. jobs report. The report could influence the size of the Feds interest rate hike that comes later this month. The big
fear is that the Feds' efforts to raise borrowing costs and reduce inflation will tip the U.S. economy into recession.
Just released the jobless claims numbers show little evidence that employment is slowing so far with claims at their lowest levels since June.
Troy Gayeski joins us now. He's the Chief Market Strategist for FS Investments. Thanks for coming on the show today.
TROY GAYESKI, CHIEF MARKET STRATEGIST, FS INVESTMENTS: Yes, great, to be on Alison.
KOSIK: So let's talk about September. It's historically the worst month for investing. I'm curious to hear what you're expecting for the month. Well,
you know, we've got an ECB meeting, we've got the Fed. We've got, you know, the bond market, you're looking at the two year at breached three and a
half. So you've got this inverted yield curve going on here as well.
GAYESKI: Yes, so unfortunately, Alison, the outlook is for more pain ahead because you know, the Feds most powerful financial institution on the
planet, they want tighter financial conditions. They want - that means is they want lower equity multiples, they want higher bond yields. And the
reason they want that is they have to slow the economy in order to break inflation.
And that basically means the outlook is very problematic for 60-40 portfolios, including both fixed income or bonds, and equities. It's an
unfortunate development. But that's just where we are at this stage of the cycle.
KOSIK: You know, we're all still reeling from the Jackson Hole appearance of Jay Powell and excuse me, you got that aggressive stance that he made
there about some pain on the horizon? Do you think that Jay Powell has reignited the bear market?
GAYESKI: Oh, well, we don't think we're ever out of a bear market. We just had a very powerful bear market rally. People were very conservatively
positioned and then ultimately trend followers flipped from being short to long and that sucked in long managers to chase their benchmarks.
[09:25:00]
It was going to come to the end, the question was just how soon and obviously, the catalyst for it was Powell pushing back very hard and saying
look, we're raising rates, we're draining the balance sheet. We're not cutting again anytime soon. And that's led to this another round of pain.
KOSIK: And the stronger the data comes in, the more pedal to the metal the Fed is going to get right? I mean, you know, for instance, the jobs report
coming Friday.
GAYESKI: Yes, that's exactly right. And you know, it's encouraging to see the labor markets still hang in there, there's still a low probability that
we can avoid a recession here, although unfortunately, that's gone up. But the stronger the economy behaves and the more buoyant markets are like they
were in July and early August, the more aggressive the Fed can be at tightening, because, again, they want to cool the economy.
And so one of the cool things now, Alison, is that, you know, alternative investments have been democratized or much more user friendly. So there are
strategies like senior secured commercial real estate, or there are strategies that are very market neutral, where you have a chance to make a
mid to low, high single digit return in an environment like this. And you don't have to be a sovereign wealth fund or an endowment or foundation to
actually go after those strategies in a choppy, sloppy mess environment.
KOSIK: I want to ask you about cryptocurrencies. Bitcoin continues to trade in this very narrow range. What has to happen to get it to make its next
move higher?
GAYESKI: Yes, well, the first thing would be remember crypto and Bitcoin in particular is a very cyclical asset, because every four years new supply
has halved. So in 2024, will be the next halving cycle. So we do expect strength to start to emerge in late 23, early 24. So that's more about
local crypto issue.
In terms of the broader economy, though, it's unlikely that we have material upside in any asset until the Fed eventually pivots. And really
the soonest we could see that happening is late 23 right now. So crypto alongside equity markets, and fixed income will remain a pretty challenging
place to be and you can't expect material upside.
And unfortunately, you should be expecting more downside.
KOSIK: And you talked about opportunity in this market. I'm curious if you think it's better to keep cash on the side, or is there a risk reward
scenario going on here?
GAYESKI: Yes, look, so if you have some cash, don't be aggressive at putting it to work. Certainly, do me a favor, don't chase the next bear
market rally, that always ends in tears. But if you can allocate to strategies and alternatives that can generate either through income or
total return, you know, that mid to low high single digit that's going to look very good over the next several years because we're in this period,
what we call a galactic mean reversion.
We're just about every factor that drove excessive financial outperformance versus the real economy, including limitless money supply growth, lower and
lower interest rates, globalization, moving to deglobalization, they're now moving the other way. And they're moving the other way in tandem very, very
fast.
So in an environment like this protecting capital, you know, having some cash, don't chase bear market rallies, focus on democratized alternative
strategies that can grind out a mid to low high single digit return.
KOSIK: Yes, we definitely don't want to see tears. We don't want to see tears. Our thanks to Troy Gayeski, he joins us from Chief - he's the Chief
Market Strategist for FS investments. Thanks very much.
After the break why run one supercar company when you can run two and sell battery technology as well. Just like his cars, there are many angles to
Bugatti, I believe talking about - I'm going to be talking with Mate Rimac, next.
(COMMERCIAL BREAK)
[09:30:00]
(COMMERCIAL BREAK)
KOSIK: Welcome back to First Move. I'm Alison Kosik. U.S. stocks are up and riding this Thursday, the first trading day of September. The major
averages beginning the month with across the board losses. Higher bond yields helping pressure stocks as investors weigh the chances of aggressive
interest rate hikes from both the U.S. Federal Reserve and the ECB.
The ECB meets next week to consider a possible three-tenths of a percent increase in borrowing costs. Stocks in the news today include chip giants
Nvidia and AMD. They're falling on news that the U.S. will restrict sales of some chips to China and Russia citing security concerns.
MicroStrategy under pressure as well, down by some 4 percent. The company's Chairman Michael Saylor is under investigation for allegedly not paying
over $20 million in local income tax. Saylor is famous in the investing world for placing aggressive bets on Bitcoin using company funds.
Bugatti is a slogan is If it's comparable, it's no longer Bugatti. But just like Ferrari, the supercar seller says it's not seeing recessionary fears
among its uber wealthy buyers. In fact, it's heading in the opposite direction with the company sold out until 2025 and that includes this
limited edition, Mistral Roadster. They cost a $5 million each, and they will be the last Bugatti to have a famous W16 gas engine as the company
transitions to a hybrid electric future.
And amid that transformation, the company structure, that has changed as well. Now spun off from Volkswagen, Bugatti Rimac also known as (inaudible)
is now known - also, as a sell all electric supercars under the brand. The Nevera costs just over $2 million. And it's seen strong sales in the U.S.
Rimac also ships EV batteries to major manufacturers.
I want to bring in Mate Rimac. He is the CEO. I'm so excited that you can join us today on the show.
MATE RIMAC, CEO, BUGATTI RIMAC: Thanks so much. It's nice to be here.
KOSIK: All right. So just about every analyst and economist thinks that a recession is coming yet at $5 million a pop, your buyers were lining up to
purchase your last gasoline powered car. Why are your buyers seemingly not worried about recessionary risks?
RIMAC: Yes, really good question. I must say I have been surprised a little bit as well, because the Mistrial, the 99 units we have only shown to our
existing customers, so only to people who have multiple Bugattis already. And we did that during the summer break, basically. So in late July and
early August.
And within three, four weeks, we completely sold out the car and had a long line of customers lined up being a little bit angry that they didn't get
their allocation because the car was limited to 99 units. Why that is so? I guess it's multiple factors.
First of all, the glorious W16 engine it's like you know peak engine, everybody's scaling down on engine development or stopping their engine
development or switching completely to electric cars. So I guess that people want you know the last of its kind in the pinnacle of engine
development which will never be matched again as everybody has stopped developing combustion engines.
[09:35:00]
Then I would say it's also a beautiful car. But I think also, as we have just heard before, that stocks are, you know, very volatile at the moment,
crypto as well, and so on. So, I think it's also very good assets to invest in to keep your money safe.
KOSIK: Do you think that some of this is also I'm talking about these buyers lining up to get one of these 99, are customers kind of lamenting
the end of an era of these gas powered cars?
RIMAC: Yes, absolutely. The whole industry is going really electric. While it was, you know, like, just a few years ago, it was still like
greenwashing and everybody was talking about it, but not really doing anything. Now, in the last few years, things have changed dramatically.
And you know, I started making electric cars when I was 21 in 2008, in a - in my parent's garage. So I'm in this industry, while everybody thought
it's never going to happen. And I must say, I don't know what it was, in the last couple of years, if it was COVID or Greta or you know, whatever.
But you know, legislation is changing, the markets are changing, the car companies are all fully committed to really go electric.
So yes, it's changing, and people are kind of nostalgic, and wants to get their last combustion engine cars.
KOSIK: I love how you started in your parents garage, I have to say that. You know, as the company shifts to all hybrid and electric, are you
experiencing any supply chain restraints, or constraints?
RIMAC: Yes, supply chains are challenged everywhere. I mean, we have two sides of the business making hypercars in small volumes where the
challenges are less. But on the other side of our business, we are developing and producing electric batteries and batteries for electric cars
and powertrain systems for the big car companies. So 10s of 1000s or hundreds of 1000s of batteries and so on.
And we see the challenges everywhere in the small volume production and also in large volume production. You know, the global supply chains are so
interlinked, you know, even if you talk about raw materials, you know, that raw material manufacturer also relies on modern equipment that relies on
electronics.
You know, if there's problems down the line, for example, if the raw material supplier cannot buy an excavator, because the excavator
manufacturer cannot buy chips, you know, to make the excavator, you feel that down the line. So all the supply chain is really challenging. But what
we have learned, I think, as an industry, and everybody kind of has adapted to it, you just have to plan better in advance and make commitments really
early on.
So if you plan well, you know what you're doing, what's going to happen, and put the money there, you know, with your suppliers, then it's
manageable.
KOSIK: Mate, I want to ask you this. I checked as your Instagram saw a picture of you and Elon Musk, you know, hanging out in New York, what was
that meeting all about? And are you looking for a tie up in the future maybe? Or was this sort of getting advice from him? Are you giving advice
to him?
RIMAC: Well, that was actually dinner at the - so Goldman Sachs is one of our investors. And Mr. Solomon, the CEO of Goldman has invited us for
dinner there. So Elon and me were some of the guests. And I must say, you know, I'm a big fan of Elon Musk and whatever he's doing, I think he's
doing the most exciting things in the world right now and making the future really exciting with rockets and everything else he's doing.
So it was really fun to discuss and to meet, you know, one of my personal heroes also in person. Yes.
KOSIK: I know the first Nevera was delivered to Formula One legend Nico Rosberg, I think we've got video of you both enjoying that ride? What was
that like? And were you scared, he was going to break it.
RIMAC: Yes, you know, developing a car and actually building a company that can build a car. It's a really tough undertaking, especially you know, I'm
sitting here in Croatia that never had a car manufacturer. It's - no Investors, no market, no supply chain, you know, no talent. So it was
really, really hard to build a company here. And then finally, after years and years of doing that, we finished the car.
And then the moment of truth comes, you know, everybody has a plan until they get they get punched in the face. And in our case, that's when the
customer, you know, drives the car, you know, you can do everything in your power, but then you are depending on the verdict of the driver. And who
better to give a verdict than a Formula One World champion who actually paid $2 million to buy the car.
So that was, you know, lots of emotions for me, but also good drivers are usually bad passengers and especially with a Formula One driver. I must say
it was a little bit too exciting for me.
KOSIK: Yes, fast to say the least. A pleasure talking with you. Thanks so much for taking time out today. Mate Rimac, the CEO of Bugatti Rimac,
thanks so much. Still ahead to $1.4 billion and beyond. SpaceX inks a major new deal with NASA. What it means for Space exploration next.
[09:40:00]
(COMMERCIAL BREAK)
KOSIK: Up to 130,000 more people could be facing travel chaos after Lufthansa canceled flights on Friday due to industrial action. Passenger
and cargo planes from its two biggest hubs Frankfurt and Munich will be grounded. Pilots are going on strike after the company turned down their
pay demands. That's according to their union.
Anna Stewart is on the story for us. I guess this is just the latest salvo in just a terrible travel season for Europe.
ANNA STEWART, CNN REPORTER: It really is. And for Lufthansa particularly which has faced lots of strikes actually over the summer. And this isn't
the first strike for Lufthansa's pilots. And once again, as you said this is going to impact so many passengers expected 130,000. And that's given
that almost all flights from Munich and Frankfurt are expected to be canceled tomorrow. You have been warned.
Ongoing pay disputes with the pilots union the VC, they say that talks have failed they want to see a 5.5 percent pay rise for their pilots. That's
more than 5000 of them and inflation compensation thereafter. Now interesting, Lufthansa has actually fairly recently reached a deal with
their ground staff. They also went on strike earlier this summer causing extra chaos.
And actually the one day of pilot striking that we saw, I think last month not only caused a lot of chaos, but it costs Lufthansa a lot of money.
Estimated lost revenues of 30 to 35 million euros. And for that last strike, I was actually quite shocked at just how many people found
themselves on particularly long haul flights, connecting of course, through Frankfurt and Munich suddenly found themselves stranded, weren't aware of
what's happening.
And when you talk about strikes of this magnitude, it's really hard for the airline to communicate well with passengers as to what they should do with
their next steps. They have faced this multiple times across - across the summer. So perhaps tomorrow, it will be different, but we'll have to check
in with passengers tomorrow and see how they get on. Alison.
KOSIK: Either labor shortages are really causing issues here in the U.S. as they are in Europe.
STEWART: Yes, it's been - it's been a summer a lot of people would like to forget in terms of travel. On the one hand, the good news was this huge
resurgence in travel demand. People wanted to take off and get away and go on holidays, go on business trips.
But the sadness was, that really airports particularly and airlines simply weren't ready for that level of demand. Now there were huge job cuts, also
pay cuts throughout the pandemic. They were necessary for many airlines and airports to keep them afloat but it's been really a struggle to recruit and
get back to the levels where they were.
[09:45:00]
So we've seen actually in Europe 1000s of flights just canceled from existing summer schedules, both by airports and by airlines. And on top of
that the staff that are there feel disgruntled by pay cuts or with inflation now topping 9 percent in Europe, feeling like their real wages
are just falling month by month.
They want to be paid more, they feel overstretch, and that's why we've seen such huge strike action also, weighing on this sector. A number of airline
strike deals have actually been reached, which is quite interesting. In June, for instance, Norwegian Air, they agreed to deal with pilots, we've
had SAS and Ryanair follow suit, as well.
British Airways and KLM agreed to deal with ground staffers, added Lufthansa just last month. But of course, many deals have yet to be
reached. So I think we could see more travel disruption to come from multiple airlines as this summer closes. But also of course, for the next
holiday season, which will come up before we know Alison.
KOSIK: In no time. Anna Stewart, thanks so much. And from aerospace to outer space.
(BEGIN VIDEO CLIP)
ANNOUNCER: 3-2-1. And liftoff.
KOSIK: As SpaceX celebrates its latest launch of Starlink satellites, it's signing a major new deal with NASA. They've agreed to extend their
partnership to cover five more astronaut launches. The deal is worth $1.4 billion. Paula Monica joins us now with all the details. So it seems like
this contract really cements the relationship between Musk's SpaceX and NASA.
PAUL R. LA MONICA, CNN REPORTER: Yes, definitely Alison, this will bring the size of that contract to about $5 billion now for SpaceX. And clearly,
it is yet another validation for Elon Musk's space exploration company. And it's a reason, I think why SpaceX has that whopping private market
valuation in excess of $100 billion.
It really does show that NASA trusts SpaceX to bring crews to the International Space Station through 2030. Boeing, for example, is a key
competitor to SpaceX. And they're still in the stages of doing unmanned missions to the space station and not going to have a crewed mission until
2023.
So clearly NASA trusts SpaceX to get actual human beings to the space station now.
KOSIK: Yes, what - I'm just curious to see what missions are in store here since they have such a solid contract.
LA MONICA: Yes, I mean, it's going to be very interesting, because there are also questions, Alison about the future of the space station. There are
hopes, obviously, that you will have astronauts there through 2030. But that includes Russia astronauts as well. And of course, as we all know,
there's a lot of tension between the U.S. and Russia and Russia and the rest of the world regarding the invasion of Ukraine.
Hopefully that won't disrupt this space exploration partnership, but it is an open question whether or not Russia will still be committed to the ISS
through 2030 in light of the geopolitical tensions.
KOSIK: OK, Paul La Monica, thank you so much. And next, the company giving prefab sprout a new meaning. How tiny homes like these are popping up and
even winning the affection of people like Elon Musk.
(COMMERCIAL BREAK)
[09:50:00]
KOSIK: As we were discussing earlier, Elon Musk might have grand designs in space, but it appears he also has tiny ones here on Earth. Musk reportedly
owns a home like this that can be set up in just an hour, costing just under $50,000. The company behind it is called Boxabl and it wants to
change the way we think about housing. Boxabl's founder - director and founder Galliano Tara Mani joins us now from Las Vegas. Thanks for your
time today.
Hi there. Thank you so much for having me.
All right, I want to get a little bit more on the specs here. Once this thing is set up, how do you get services in? Where's the plumbing? And
about that concrete slab that it sits on, how does it get there?
GALIANO TIRAMANI, DIRECTOR & FOUNDER, BOXABL: Yes, so our first product is actually a 20 by 20 room like kind of a little studio apartment with a
kitchen, bathroom, bedroom and couch, it deploys in just about an hour. And the idea is that our product would dramatically reduce the cycle time for
builders and developers.
So instead of having, you know, six months to build a building, they can just prep the site with utilities and foundation and deploy a room that's
fully finished from the factory in just you know, a few hours. And by doing it this way, we think we're going to be able to dramatically lower the cost
and time to build houses.
KOSIK: And that concrete slab, is it how does that come into play here?
TIRAMANI: Well, actually, our rooms don't need a foundation, or they are compatible with any different foundation type. And really at Boxabl we have
just a new way to build that is better lower cost and we are actually mass producing these buildings in a factory like - like the factory behind me
right here.
KOSIK: I want to talk about the price because I understand the starting price is $50,000 for one of these. The website now saying the price of
what's known as a casita on a case by case basis is this because of inflation that building materials cost more and so the, the price is really
uncertain?
TIRAMANI: Well, the real reason is we've seen such incredible interest and demand in the product. So now the wait list has over 130,000 names on it of
people that want to buy a casita. So we're working as fast as we can, as hard as we can to scale up this first factory, which we set up just a year
ago. We now have a second factory next door that we'll be moving into in a few months, and we're working on a third factory, that's hopefully going to
be a billion dollar factory, that's going to allow us to meet some of this huge demand.
But the idea with the price is with 130,000 names on the waitlist, we don't know when we're going to be able to deliver you your house. So we thought
it made sense to just kind of pull the price because of course, inflation, things are changing.
KOSIK: And then also to the prices is shipping, you can ship anywhere in the world. But it's $3 to $10 a mile. So a little rough math, if I ordered
one from Las Vegas to New York, so that's 2522 miles at $3 a mile, it's $7500 on top of that, but it could go as high as $25,000 to ship. So that's
on top of the price, right?
TIRAMANI: Yes, our initial order when we set up this factory was to Florida for 150 houses, so we shipped them all there, I believe it was under 10,000
to ship each house over to Florida. And the idea here is that since our houses do fold up, shipping is dramatically less than comparable modular
home, which ships as a wide load and cost a lot of money.
So what that's going to do is allow us to scale up manufacturing so that hopefully, we can you know, kind of mass produce these the same way we mass
produce automobiles and dramatically, you know, push the price down.
So you see most car factories producing one house - one car per minute, we'd like to produce one house per minute in our factory. What about where
you put the house? You have to obviously own the land. And if you don't own the land, you have to have zoning, right?
TIRAMANI: Yes, we have all kinds of different used cases for these buildings. The original idea was accessory dwelling units. So backyard
houses in places like California, where they've actually kind of legalized putting a backyard house in almost every backyard in the state. So in that
case, you're just going to deploy one in the backyard of an existing house.
[09:55:00]
But you can do other things too like build a little village of them or just do a new development or a vacation rental. What we're producing here are
rooms and they can also stack and connect and the plan is that these will go far beyond the tiny house, we'll end up with a building system where we
kind of mass produce different size rooms with different interiors and can build most different building types on the planet, whether it's traditional
single family, or a big, you know, 1000 unit multifamily apartment building.
KOSIK: Very quickly. I'm curious because I know you've done business with the U.S. government, any - any idea about doing business with cities and
housing, the homeless? 30 seconds.
TIRAMANI: Yes, we have - Yes, we have a huge amount of interest coming from all over different governments, local governments, and we're working with a
bunch of different places to get this housing out there to hopefully increase supply of housing, therefore lower the cost of housing, and you
know, maybe help the homeless.
KOSIK: All right Galiano Tirmani, thanks so much for coming on the show today. These look kind of cool.
TIRAMANI: Thank you.
KOSIK: That's it for the show. I'm Alison Kosik. Follow me on Instagram and Twitter at Alison Kosik. Thanks for joining us. Connect the World is next.
I'll see you tomorrow.
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END
