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First Move with Julia Chatterley
Kirby on Russia Allegation: "It's Obviously a Ludicrous Claim"; Pacwest Bank Shares Plunge on Fears it Might be Next to Fail; Carida: I Think Fed is Done with Hikes for Now; Maersk CEO: We are facing a new set of Risks; China Holiday Spending Exceeds Pre-Pandemic Levels; Relevance of Monarchy in Modern-Day Britain. Aired 9-10a ET
Aired May 04, 2023 - 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, CNNI HOST: A warm welcome to "First Move", coming to you once again from London, great to be back with you and just ahead on today's
show, Russian bombardment Moscow unleashing its largest air attack in a year against Ukraine while insisting the United States was behind an
alleged attempt to assassinate President Putin at the Kremlin.
The White House out with a strong denial or this is Ukrainian President Zelenskyy speaks at the heat demanding Putin and other Russian Officials be
tried and sentenced for thousands of war crimes. Also Lagarde on guard the European Central Bank raising rates for a 7th straight meeting a quarter
point hikes this time.
Lagarde let up even as Fed Chair Powell hints at a pause and financials falling hard fresh Regional Bank tremors was shares of PacWest currently
down almost 40 percent pre market. The bank reportedly looking into "strategic options to study its business", but it insists deposits remain
solid will explain what's going on and further financial fissures.
Shares of First Horizon Bank sector for almost 40 percent as well, after pulling the plug on a $13 billion merger with TD Bank Fed Chair Jay Powell
saying in his Press Conference Wednesday that conditions that U.S. banks have broadly improved, but Former Dallas Fed President Robert Kaplan
warning this week that we're only in the early innings of the banking crisis.
And still lots of concern about contagion too, and the effects of ongoing credit tightening, or they're sent to weigh on sentiment even as the
Federal Reserve left the door open for a rate hike pause following its 10th straight interest rate increase on Wednesday. The Feds target right now
above 5 percent for the first time in 16 years.
Jay Powell saying the Fed will remain data dependent as it plots its future rate pause, but just don't call it a pause.
(BEGIN VIDEO CLIP)
JEROME POWELL, CHAIR AT U.S. FEDERAL RESERVE: A decision on a pause was not made today. You will have noticed that in the statement from March we had a
sentence that said the Committee anticipates at some additional policy firming may be appropriate. That sentence is not in the statement anymore.
We took that out.
(END VIDEO CLIP)
CHATTERLEY: And call it perhaps the Harry Potter style Voldemort pause the pause that can't be named! As investor take all this in U.S. futures under
pressure after a late wobble on Wednesday post Powell, Europe still in the red to after today's European Central Bank rate hike as well.
So much to discuss, but we will begin in Ukraine and Russia launching the worst attack on Kyiv in a year. And it's now accusing the United States of
being behind the alleged Ukrainian drone attack on the Kremlin, the White House firmly rejecting Russia's claim that the U.S. was behind the alleged
drone attack. National Security Council Spokesman John Kirby was on CNN this morning, a short time ago.
(BEGIN VIDEO CLIP)
JOHN KIRBY, WHITE HOUSE NATIONAL SECURITY COUNCIL SPOKESMAN: I would just tell you, Dmitry Peskov is lying. I mean, as obviously it's a ludicrous
claim the United States had nothing to do with this. We don't even know exactly what happened here, Kaitlan, but I can assure you the United States
had no role in it whatsoever.
And again, just to be clear and I think you've not covered this at the beginning that we encourage nor do we enable Ukraine to strike outside
Ukraine's borders.
(END VIDEO CLIP)
CHATTERLEY: And Matthew Chance joins us now. Matthew, certainly a firm denial there from John Kirby, but it plays to a similar theme that we've
long been hearing, which is Russia's desire to portray the United States is perhaps the key architect operating behind the scenes, irrespective of what
the actions are that Kyiv or that Ukraine themselves take.
But there are certain voices that are suggesting that someone else perhaps closer to -- been responsible for these drone attacks too.
MATTHEW CHANCE, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, I mean, you're right, that first thing you're absolutely right about, in the sense that
we've heard this narrative all along from the Kremlin, that this isn't a sort of war, they're fighting against the country of Ukraine. This is a war
they're fighting against a much broader sort of Western alliance led, of course, by the United States.
And that helps to justify from the Russian point of view their conflict. And it also helps to account for the fact that they've not made the kind of
rapid progress that perhaps they thought they were going to make. But they said they were going to make when the invasion was launched in February of
last year in terms of other possibilities, yes.
Well, I mean, Ukrainians in the United States, that's the possibility the Kremlin are pushing, of course, both the United States as we've heard, and
the Ukrainians have categorically denied that.
[09:05:00]
The other idea is that this was some sort of false flag operation in order to provide justification for very severe strike which may be coming in the
next couple of days against Ukraine. I mean, that's something that may, will be the case as well. And we're going to watch how that plays out.
But as you refer to there, I also spoke to a Former Russian MP, who's now very close to various militant groups that are operating inside of Ukraine,
striking military recruitment centers, derailing trains and things like that. And he said that this is the work of what he called Russian
partisans.
And there are definitely groups of individuals in Russia, Russian nationals, perhaps with some support from Ukraine, as well, from the
special services in Ukraine, although that's been denied by the Ukrainians and those Russian groups, who are increasingly active inside the country.
They're carrying out very small, but symbolically important attacks against the Russian state. And, you know, their view is that if you have this
Former Russian MP, is that this drone attack on the Kremlin, two drones, in fact, falls into that category of strikes.
CHATTERLEY: Just watching the images once again. Matthew, you know, it's quite fascinating. You mentioned some of the suggestion perhaps that this
was a false flag operation. This is the Kremlin, there's always been this belief that it was utterly impenetrable. This is embarrassing. It makes
them look vulnerable.
I sort of don't buy the suggestion that this was some kind of way of justifying a more virulent attack by the Russians. Agree or disagree?
CHANCE: Yes, well, it's a difficult one.
CHATTERLEY: It's all speculation.
CHANCE: Yes, it is all speculation, but let's speculates that's fine. Look, I mean, I think you're absolutely right. I mean, what strikes me as most
incredible about the images is that they are such a potent symbol of Russia's vulnerability, and to do that on purpose to you to justify for
political reasons.
An uptick in attacks against Ukraine just seems to, I mean, logically to be unnecessary. Given that, you know, Russia has already destroyed entire
cities in Ukraine, while we didn't need to provide political justification and to whom to do more of that kind of thing.
The way the theory has been explained to me, is that, you know, well, it's not necessarily the Russian audience that the Kremlin applying to its
countries of the global South, it's China, it's India, it's South Africa, it's other countries in sub-Sahara Africa, who are at the moment, sort of
sympathetic towards the Russian point of view.
And it's to them in order to maintain that support, that they would have to justify stepping up military action, if they're going to do that. And so
the false flag, if it is that will be aimed at sort of smoothing the way creating political justification amongst countries of the global south at
the moment is sympathetic to Russia's point of view.
CHATTERLEY: Yes, brilliant context. Matthew Chance, great to chat to you, as always, thank you. Meanwhile, President Zelenskyy making a surprise
visits to the International Criminal Court in The Hague.
(BEGIN VIDEO CLIP)
VOLODYMYR ZELENSKYY, PRESIDENT OF UKRAINE: Of course, we all want to see different Volodymyr here in The Hague, the one who deserves to be sentenced
for these criminal actions right here in the capital of the international law.
(END VIDEO CLIP)
CHATTERLEY: And Nic Robertson joins us now. Nic, the backdrop, of course, is what I was just discussing with Matthew Chance and the worst drone and
missile attacks on Kyiv specifically that we've seen what in more than a year.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: This is what city officials are saying, although successfully for the Ukrainians, all those
missiles that were fired at Kyiv were shot down. It doesn't appear as if the intensity was as big as when Russia really began that offensive back in
the late fall last year when they were targeting the energy infrastructure, but nevertheless, a noticeable uptake over recent weeks and months.
And when you look at what was written on the tail fins of some of the drones that were shot down around a desert in the south of the country, 15
drones fired at it 12 shot down. And on the tail fins the message was written from Moscow, from the Kremlin.
So there's clear messaging, not just in the intensity, but on the missiles themselves. That someone there who's sending these off to impact sites in
Ukraine thinks that this is their response from this alleged drone incident over the Kremlin. But I think it's Kherson that took the hardest, hitting
overnight in the past 24 hours, as of early this morning, 539 artillery shells on that city.
[09:10:00]
23 people killed, 46 wounded, 2 of those at least children and this barrage, this intensity and barrage of artillery strikes there is the
biggest since the war began certainly that's the understanding of people who are in the city at the moment. And from a Ukrainian perspective, they
would expect that the Russians were targeting it because the Russians think that this is a potential launch point.
However difficult it may be for Ukrainian counter offensive. So all of these high intensity issues and results, perhaps that we're seeing from
Moscow have multiple reasons. The result is exactly the same. It is innocent civilians in Ukraine who are getting killed.
CHATTERLEY: Yes and that's the point President Zelenskyy was making and to your point, great that the defense forces protected Kyiv so well, but other
parts of the country clearly more vulnerable still. Nick Payton. Nic Robertson, my apologies. Thank you so much for that.
OK, let's move on the U.S. Federal Reserve raised interest rates once again days after another Regional Bank collapse and signs of another Regional
Bank failure are brewing. Clare Sebastian joins us now. Clare much to discuss. We also have the European Central Bank, of course, raising
interest rates as well.
Let's talk about the Federal Reserve first, because the challenge for them was always going to be in Jay Powell. Specifically, if you mentioned the
word pause, investors perhaps even consumers might hear the word cuts, as far as rates are concerned and he didn't want to do that. So did he get the
balance right?
CLARE SEBASTIAN, CNN CORRESPONDENT: Well, Julia, he was very specific, I would say very upfront, even going as far as commenting on his own
communication strategy to do to a degree when he pointed out that they had removed the line in the statement that said they were going to anticipate
that additional policy firming may be appropriate.
He called that meaningful, he did keep his options open by saying that they will be prepared to do more if warranted. But in his own words, he said
that he believes that they are closer to the end of this then the beginning. So it was pretty clear that he's leaning towards a pause without
actually saying it.
Obviously, the big problem that he has, and to a perhaps lesser extent, but still the European Central Bank has it too is that there's a factor in this
monetary tightening that they are not in control of and that is banks tightening lending. And he said as well, very specifically that is very
uncertain, it's hard to know, to what extent that translates into monetary tightening.
That again, perhaps is strengthening the argument for a wait and see to see how it does impact to the economy. But I think this does put us in this new
phase when it comes to the fight against inflation, which of course is still ongoing with inflation in the U.S. at 5 percent in the euro area at 7
percent.
And that is when to stop and wait and see how the monetary tightening so far as worked, how the banking issue which was in attendance has been
created by this tightening cycle plays into that? And I think that's what we saw play out in that Fed Press Conference.
CHATTERLEY: Absolutely, and I think there's certainly in some quarters, some head scratching going on with what we're seeing for some of these
smaller Regional Banks, particularly when you have big bank CEOs like Jamie Dimon saying the worst is over. And yet we still seem to have this domino
effect in some of the Regional Banks.
PacWest just the latest one saying, look, they're looking at all their options here. And you could look at their deposits and say, hang on a
second. They're saying that the deposits are stable. What's going on? What do we think is taking place?
SEBASTIAN: Well, I think it has a lot to do with what you just put up on screen there, Julia, which is the market said the shares impact question,
then we're certainly not the only ones have not recovered. Since that major tumble off the back of the Silicon Valley Bank troubles in March, I think
that has emboldened short sellers to some degree, certainly their profits have been going up over the month of April.
And we have the situation where you don't even have to have a run on the bank. PacWest has not seen a run on deposits. It did lose deposits in the
first quarter of the year. But they have come up it says since then its uninsured deposits are at 75 percent, much, much higher than what we saw
with Silicon Valley Bank.
So you don't even have to have those sorts of issues within the bank for the markets to have an impact now that they've seen their share price
dropped by some 50 percent in a day. We'll see how they open of course, in the next few minutes, but you still have to deal with this issue.
So they had to come out with that statement saying that they are and I "They said that as previously announced the company has explored strategic
asset sales". They've been approached by several potential partners, discussions are ongoing that a potential red flag to Wall Street but you
can't ignore when your stock drops that much and that is the situation we're in.
CHATTERLEY: Yes, I couldn't agree more. All these smaller banks have now got fierce competition with money market funds which offer a higher rate of
interest and they can to attract deposits, which is a problem going forward and we know this, but never mind what else is going on within the bank when
your share price falls 50 or 60 percent?
That's your problem. Perhaps a balance short selling as you and I discussed when Silicon Valley Bank went down perhaps should have been considered.
[09:15:00]
Clare Sebastian, thank you so much for that. OK straight ahead lots on investor's minds this week and we haven't even got to the April jobs report
next. Yet, that's tomorrow we'll discuss it all with Former Vice Chair of the Federal Reserve, Richard Clarida. That's up next. And later a murky
warning from Maersk, the shipping giant CEO joins us to discuss changing demand and stormy seas ahead.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move", the U.S. Federal Reserve hiked its benchmark interest rate for a 10th consecutive time this time by a
quarter of a percentage point. But now policymakers are leaving the door open for a pause on hikes.
(BEGIN VIDEO CLIP)
POWELL: All these uncertain headwinds along with monetary policy restraint we've put in place. Our future policy actions will depend on how events
unfold. In determining the extent to which additional policy firming may be appropriate to return inflation to 2 percent over time, the Committee will
take into account the cumulative tightening of monetary policy.
The lags with which monetary policy affects economic activity and inflation and economic and financial developments, we will make that determination
meeting by meeting based on the totality of incoming data and their implications for the outlook for economic activity and inflation.
(END VIDEO CLIP)
CHATTERLEY: And certainly investors are no doubt looking at one of the things that he talked about which was financial market concerns and shares
of PacWest. Regional Bank fell by half in after-hours trade after Bloomberg reported the Regional Bank is looking to raise capital break itself up or
possibly sell itself strategic options.
That was what the suggestion was they're looking at strategic options much to discuss. Joining us now is Richard Clarida. He's Managing Director and
Global Economic Advisor at PIMCO. He was also Vice Chair of the Federal Reserve from 2018 to 2022, Richard, fantastic to have you on the show.
No one better to speak to you I think at this moment let's start with Jerome Powell and the Federal Reserve. Do you think he got the balance
right in terms of signaling that perhaps the possibility of a pause was now potent, but also saying Hey, guys, don't expect rate cuts anytime soon?
RICHARD CLARIDA, FORMER VICE CHAIRMAN OF U.S. FEDERAL RESERVE (2018-2022): Well, Julia, good to be on your show. Yes, I think it was a tricky balance,
because you're right.
[09:20:00]
There are really three things to share, wanted to get done yesterday, he obviously in the committee wanted to get that rate hike in. They also
wanted to signal that they have the option not to hike at the next meeting and that they think they're close to done.
But then they also wanted to provide some insight into their thinking about the financial system. So the Chair on that indicated that he felt that the
banking system as a whole is sound, and liquid and has enough capital. And I think that's about the message we could expect from him.
CHATTERLEY: OK, there are two things there. We'll take the first one do you think they're done in this cycle?
CLARIDA: I think they think they're done and I think that's the most likely outcome. You know, there's, if inflation has proven to be very stubborn,
and sticky, certainly not transitory. And if a year from now, it's still somewhere in the mid to high threes, they're probably not done.
On the other hand, the economy could slow and inflation could show and, and those rate cuts that are priced in could materialize. So I think it's a
very other broad range of outcomes -- my baseline is I do think they're done.
CHATTERLEY: And one of the things that they have to focus on watch, I think, very carefully is the impact of some of the volatility that we've
seen in the banking sector and the knock on impact the degree of credit tightening that we see, how concerned are you even in by what we've seen in
the last few days, PacWest now, just the latest bank that's shaking?
CLARIDA: Well, the reality is when Central Banks hike interest rates banks that have a lot of exposure to interest sensitive assets are going to face
challenges. We see that in all rate hikes cycles. I think that and the Chair indicated more so at the last Press Conference then yesterday.
That the Fed does think I think correctly so that tighter financial conditions are going to do some of the work for them in terms of being
equivalent to some additional rate hikes, so, I think that is a factor in the communication of the pause. So I would not say concerned, but it is
certainly a part of the reality of hiking rates to reduce inflation, that's too high.
CHATTERLEY: Do you think it is about hiking rates? Or if some of these banks who said look, our deposit situation now is stable, actually, it's
more about the way that financial markets work, and that investors look for those that they think are most vulnerable and they sell them?
They sell the stocks and that can create a crisis, even if the underlying financial conditions in the bank perhaps a challenge, but not to the extent
that strategic options are required.
CLARIDA: I think that's an excellent question. And obviously, that is a factor in this. Right now, it's a very fluid situation, as you mentioned,
and we've had, you know, to very substantial failures just in the last couple of months, so it is definitely something that I'm sure they're
watching that I'm watching.
CHATTERLEY: Yes, I think everybody should be watching, certainly a conversation that I was having on the show in light of Silicon Valley Bank,
and whether perhaps some kind of balance, short selling, perhaps may have been needed, at least in the short term, but I think consensus coalesced
around the idea that initial bout of instability that we saw in the banks equated perhaps to around a quarter of a percentage point hike?
Where do you think we are today, in light of the latest of it, perhaps take us around half a percentage point, and I appreciate it sort of finger in
the wind. But I'm just trying to gauge what the extra sort of rate hike impact equivalent is today?
CLARIDA: Well, Julia, it's a good question, the Chair himself at the previous Press Conference indicated, it could be worth at least a quarter
of a percentage hike, I myself thought at the time, probably worth more and certainly after the events with First Republic, especially you have to
factor in that, especially the more medium size and smaller banks lend to a lot of customers who don't have access to the corporate bond market or
other markets.
And so when those banks cut back lending it is definitely going to have an impact on their customers who don't have other ready sources of borrowing.
So it is going to be a factor. I think, you know, getting equivalency is hard, but certainly more than a quarter of a percentage point.
CHATTERLEY: Yes, I guess one of the big questions is how do we ensure that this period that we're now going into isn't sort of reminiscent of the
1960s and the 1970s, where it was sort of a game of Whack a Mole with inflation, raising interest rates, cutting interest rates, not really
getting inflation under control is the key here what I think we've already discussed with and that Jay Powell emphasized, which was, you know, if
inflation doesn't come down the way we want it to.
There's no way we're cutting rates, is that the key now to hold steady and not ease too quickly, because there are those clearly that are looking at
the situation and saying had they raised rates earlier? We wouldn't be in this situation in the first place. And I know it's a sort of balance of
monetary policy and fiscal policy clearly, but is the error that they could make today easing back too quickly?
[09:25:00]
CLARIDA: Well, I think that it's hard to do the counterfactual. But certainly what I would say is the Powell Fed, I think in Jay Powell himself
has said this a number of times, the Powell Fed has learned the lessons of the history that you described earlier, stop, go monetary policy, declaring
mission accomplished before inflation has returned to your objective.
And I don't think they're going to make that mistake. But certainly, the degree of difficulty in executing, this hiking cycle has just gone up
there's no doubt about it.
CHATTERLEY: I would agree with you that hindsight is perfect sight. And you could sit pretty when you have the benefit of wisdom of time.
CLARIDA: Yes.
CHATTERLEY: But just to go over the point, too slow perhaps to raise rates in this cycle, too slow to cut them in the financial crisis and I think we
sort of all recognize that. Do we need better ways of calibrating more dynamic ways of addressing the data? I guess I'm asking, can we do this
better?
CLARIDA: Well, I think policy can always improve, I guess I would want your audience to recall that. The big reason that we're here, not just in the
U.S., but in the euro zone, the U.K., most Central Banks around the world are facing a situation in which underlying inflation is uncomfortably high.
I don't think they all of a sudden just got amnesia. I think what happened is we had a once in a century pandemic we had a once in a century
reopening. And we had a lot of policy support both monetary and fiscal. And I think, given the magnitude and nature of those shocks, including the
policy response, this is turning out to be a challenging period in order to get inflation down to target. So I prefer to think about it more in that
context.
CHATTERLEY: Yes, Julia, proud government officials as well as the amount of spending that they did. How concerned are you by perhaps a debt ceiling
breach and the implications of that?
CLARIDA: Well, I spent two years of my career as an Assistant Treasury Secretary 20 years ago.
CHATTERLEY: Yes.
CLARIDA: So I went through a couple of those inside the Treasury Building. Our view is that in the end of the deal does get done. These things always
look messy and chaotic, up to the you know, the 11th hour and 59th minute, but our bottom line, is that a deal will get done. But the politics of this
is always contentious when you have a divided Congress as we do today.
CHATTERLEY: Yes, so I guess expect more posturing but a deal in the end is the message. Richard, great to chat to you. Thank you so much for your
wisdom.
CLARIDA: Thank you.
CHATTERLEY: Richard Clarida, there, the Vice Chair of the U.S. Federal Reserve and Global Economic Advisor at PIMCO. Thank you. OK, coming up.
After the break, navigating uncertain waters, the shipping giant Maersk is saddled with falling demand, and new conditions and a new CEO. His game
plan next.
(COMMERCIAL BREAK)
[09:30:00]
CHATTERLEY: Welcome back to "First Move" live today from London. The UK as a nation in anticipation for Saturday's coronation and the U.S. say Fed
rate hike pause is under consideration at the ECB Lagarde keeps hiking with no slowdown in inflation. And later today Apple is out with Q1 earnings
information.
And on Wall Street well, early session trepidation stocks under pressure amid super busy news flow. We've had a further quarter point rate hike from
the European Central Bank as I mentioned Chair Christine Lagarde warning that there's more ground to cover in the fight against rising prices.
That's after the Federal Reserve signaled it might soon hold off on more hikes as we've been discussing worry about ongoing banking tremors. Two
shares of PacWest Bank tumbling in early trade after a warning it is considering all options to battle investor flight and First Horizon falling
two after calling off its merger with TD Bank citing concerns about regulatory approval.
And speaking of market concerns, let's not forget the still real threat of a U.S. debt default. As soon as June 1st White House Economists now warning
that a protracted default could lead to the loss of more than 8 million U.S. jobs and trigger a 50 percent drop in the stock market. It feels like
a worst case scenario.
Now a radically changed business environment, that's the standout phrase from the earnings report, did the shipping giant Maersk. Operating profits
in the last quarter fell by over two thirds dragged down by falling demand and falling freight rates.
The results from the world's second largest shipping line weren't as bad as many expected. But they came with a warning of weaker numbers perhaps to
come and all this at a time when industry capacity is increasing, just as demand is changing course.
Vincent Clerc is the CEO, and he joins us now. Sir great to have you on the show! A radically different business environment just explain if you can,
whether that's specific to your business after what three years of booming profitability, versus a broader economic slowdown and welcome.
VINCENT CLERC, CEO, MAERSK: Thank you. Thank you for having us. No, I think it is really after three years of increasing earnings and record earnings,
many quarters in a row. This is the normalization that we knew was going to happen at some point.
And it unfolds pretty much as we expected, with this quarter being probably a good transition between the numbers we've been used to looking at over
the last couple of years into a more normal trending environment that looks a lot more like what we had in 2018 or 19 before the COVID pandemic and its
impact.
Now, this means also that we have to handle a whole new set of risks. You talked about some of the uncertainties that there is on the horizon, they
will certainly factor in also how the rest of the year shapes up, which is really also what is the foundation for our guidance.
CHATTERLEY: Yes, I just wondered to what extent contracts that were signed at higher freight rates in particular, is still cushioning the business to
a certain extent and when some of those roll off particularly given the sort of macro backdrop. And as I mentioned in the introduction as well, the
increasing supply of capacity across the sector too. We've got more ships coming online in the next, what 12 to 24 months?
CLERC: That's correct. But actually, so far, I would say, for throughout 2023 we're seeing a significant caution in our earnings from the contracts
that we have had. It played very well for our customers in 21 and 22.
And you see a bit the flip side of this right now where they adjust much slower and provide a caution on earning. There is no doubt that over time,
the supply and demand developments with a weak macro background.
[09:35:00]
And a lot of new ships coming online are going to require a lot of capacity discipline, a lot of cost discipline, in order to handle this in a way that
is protecting the earnings that we have and the integrity of the service that we deliver to customers.
CHATTERLEY: Now, when you said it's always going to be a balance between what you've achieved on the shipping side versus the logistics business,
which you continue to broaden out. I just wanted to ask you about what you're seeing in Hong Kong and China now, because I believe in the
mainland, you're actually bigger there.
Now than you were pre pandemic, you were at the development forum in March, and you said, look, the dramatic rebound that we were expecting in the
region hadn't happened yet. Can I ask you what you're seeing, specifically today, and whether the catch up now perhaps has kicked in?
CLERC: Yes, so what we are seeing now is a gradual improvement in terms of activities in China to support consumption rebound over there. If the
expectation was a very swift and sharp rebound, following the opening that was certainly not what we were seeing in March instead of this, both in
March and in April.
And also the lead indicators that we have for the rest of the quarter point to a gradual increase and normalization of consumption over there. So we're
seeing that increase. It's not sharp, but it is coming. And it will continue to gather strength we expect in the coming month.
CHATTERLEY: So an even now, because we're going to talk later on the show about Golden Week and revenge spending that's been seen over there sort of
May-Day Holiday. You're saying there hasn't been this sharp rebound, but it is slowly progressing. So perhaps don't be -- by one week spending is the
message?
CLERC: I think that's what we have seen so far. There is a very important sales day on 6/18 in China, which is relatively soon, that will be a good
bellwether for how much of this revenge spending we're going to see here in the year.
CHATTERLEY: OK, I want to talk about some exciting things too. The world's first container vessels, sailing on green methanol, which is going to be
operating, I believe, in the Baltic Sea this year, talk me through this, because I've seen some fantastic images we're showing our views now.
CLERC: Yes, this is a real milestone for us where a lot of the decision and the work that we have made on our energy transition. And our journey to net
zero is actually really taking a very, very concrete face with this new ship that is about to join our fleet here over the summer.
This over hundred years now is running on diesel or bunker fuel. And now a transition that starts towards methanol and a net zero, it's the first of
many, but it's going to be something quite significant.
And we're going to do something with it to actually demonstrate and show to both our customers, our public and also public authorities and so on that
where there is a will there is a way. And we have taken quite a few risks to have the chips at the time where we ordered it the green methanol that
we need to power it was not available.
And we have worked since then to secure that methanol. And I think that this will really be a first very important step on our transition. And a
clear also leading example for what the industry can do when he puts his mind to it.
CHATTERLEY: Yes, to point these kinds of risks are easier to take when profitability is high, and the business is booming. The challenge comes
when things are slightly slower. And what's the cost difference? Because we know the cost of this has to come down to make it more broadly viable. But
what's the cost difference annually of running one of these versus traditional container ships today?
CLERC: The cost of vessel, in principle is pretty much the same whether it runs on green methanol, or it runs on bunker, it's a different engine. But
it is pretty much the same. What we have done with this ship, because of the uncertainty of having sufficient methanol to run all of the orders that
we have made is we take them with dual propulsion so an engine that can do traditional fuel and green methanol.
The intention being that if methanol is available, this is what they will run on. And that has a premium on the price of about 8 to 10 percent in
order to take that insurance premium on the availability of the fuel, and then there is the price of the fuel.
And this is something that is evolving very, very fast because there is no market for that fuel today. There is no facilities at scale to produce that
fuel today, we've been able to secure quite a bit of the capacity that is going to come online this year, next year and the following years.
And there we're seeing some price differentials that vary a little bit from project to project, but that are still within the willingness to pay that
we're seeing from our customers to help us do the transition here. And then I also want to just mention the IRA in the U.S. as being a real accelerator
for the development of the capacity of fuel.
Because getting ordering the ship is actually relatively easy from a technology and from a CapEx perspective. But having the fuel available
requires the mobilization of a whole industry. And that is what we're starting to see happen now in the U.S. following the implementation of the
IRA.
[09:40:00]
CHATTERLEY: Yes, wild in America come on Europe. Are you daunted by the way? Because you've just taken over as the CEO, you've got this sort of
transition on the energy front and the operations for what container shipping looks like in the future as it transitions to more green plus, as
you've said, this sort of new dawn and a more challenging, certainly more challenging macro environment. Are you daunted?
CLERC: No, I'm actually quite excited. It's -- we have a fantastic opportunity. We have a strategy today that really sets on to address some
of the big problems we have seen our customers have here over the last two years.
A true fragmented supply chain with insufficient visibility, insufficient control, a supply chain that is not sustainable for a minute -- from an
emission perspective. Our strategy is about solving these problems. That is actually the risks as we just discussed, but it's more importantly, a
fantastic opportunity for us to make a difference, and to create growth opportunity for the company and really, also for our customers.
So yes, there are a lot of challenges right now, but all of them can be actually turned into opportunities. And even if some of the quarters will
probably be bumpy I think we have a really good road ahead.
CHATTERLEY: Yes, you're ready for action. Good answer. It's great to chat to you. Look forward to speaking next, Clerc there you go. There's your
smile. Thank you. Great to chat to you, sir thank you! The Maersk CEO there!
CLERC: Thank you.
CHATTERLEY: OK after the break from troubled waters in shipping to the sailing in China or spending or well, we'll see based on that conversation,
just the country does enjoy a post pandemic travel Blitz (Inaudible) next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move"! China has been celebrating the May-Day holiday period and they're calling it a Golden Week because the
signs are that spending has surged past pre pandemic levels for the first time. Travel has sought too with 274 million trips taken within China just
to give you a comparison that 71 percent more than a year ago.
Anna Coren joins us now. Anna I think we have to remember for many people this is the first time in what three years that they've been able to travel
like this without fear of catching COVID and clearly they're taking advantage of the opportunity?
[09:45:00]
ANNA COREN, CNN CORRESPONDENT: Yes, absolutely Julia. There's basically been no May-Day holiday or Golden Week as it's known in China for the past
three years, as you say, you know, China, they've been dealing with COVID. You know, they basically cut themselves off from the world.
But this five day holiday, which ended yesterday proved that spending and travelers certainly back with a vengeance. As you say, travelers made 274
million trips within Mainland China during the holiday that's 19 percent higher than 2019 surging past those pre pandemic levels that's according to
data from China's Ministry of Culture and Tourism.
Now, many tourist attractions they were inundated images of people crammed into buses, bridges, restaurants, they were all over social media. This
May-Day is crazy. It was a popular hash-tag on Weibo that's China's version of Twitter.
And many travelers in fact, were complaining about the queues. Some saying this is the worst holiday experience ever. Revenue from domestic tourism
Julia it reached 21 billion that's also higher than 2019. And then on the international front, booking skyrocketed for travel overseas, compared to
Chinese New Year, which was the end of January.
Bookings from China to Southeast Asian countries are increased by 91 percent according to trip.com, the Chinese travel service platform. These
let's throw the list were the 10 most booked outbound global destinations with Japan and South Korea overwhelmingly the most popular.
The CEO of trip.com James Liang said and let me read you the quote, they May-Day holiday has ushered in the first wave of outbound tourism growth
this year. Chinese consumers have been unable to travel for an extended period but its clear consumers wish to explore the world again.
And Julia here in Hong Kong, you know, there were many Chinese tourists returning to the city for in fact the first time since 2018. We have to
take into consideration the Hong Kong protests of 2019 which really drove many mainlanders away, but you know it's safe to say they're certainly
back.
CHATTERLEY: Yes, I was about to say it was just so wonderful to see all those complaints actually about tourist attractions being too busy. It's
like what you wouldn't have given that over the last few years.
COREN: Exactly.
CHATTERLEY: Good news. Anna a great to have you with us thank you!
COREN: Thank you.
CHATTERLEY: Now to the U.S. now in summer travel kicks off in just a few weeks' time but airlines are facing a major problem an air traffic
controller shortage. Aviation experts even warning now it's a problem that could affect summer plans. CNN's Aviation Correspondent Pete Muntean has
more
(BEGIN VIDEOTAPE)
PETE MUNTEAN, CNN AVIATION CORRESPONDENT(voice over): Warnings of not enough workers for your next trip stretch from cockpits to control towers
with the FAAs own air traffic controllers now in short supply. The agency says nationwide 2 in every 10 controller jobs are empty. The problem is so
severe at a key facility in New York that the FAA is warning summer delays at the area's three main airports could rise by 45 percent.
PAUL RINALDI, FORMER PRESIDENT, NATIONAL AIR TRAFFIC CONTROLLERS ASSOCIATION: It's a chilling message that we're not able to fly. You know
the routes at that level because we don't have enough air traffic controls.
MUNTEAN (voice over): Now the federal government is scrambling to play catch up opening a rare hiring window Friday. Last year it was flooded with
58,000 applications. That's 38 candidates for every one opening.
MUNTEAN (on camera): It's an important job.
CAMREN SMITH, AIR TRAFFIC CONTROL STUDENT: Absolutely. It's an important job. Well, it's the backbone for aviation.
MUNTEAN (voice over): Carmen Smith is one of the air traffic control students here at Embry Riddle Aeronautical University in Florida ready to
hit submit the moment the application window opens. FAA hiring slowed down during the pandemic. Professor and Former FAA Official Michael McCormick
say compounding the problem the agency shuttered ITS Training Academy.
MICHAEL MCCORMICK, ASSISTANT PROFESSOR, EMBRY-RIDDLE AERONAUTICAL UNIVERSITY: Over time this builds and that's why we have such a gap now in
the training of controllers and in need to hire so many more.
MUNTEAN (voice over): To see if I have what it takes I stepped into this control tower simulator to give it a try. Students practice lining up
flights for takeoff and landing issuing fast specific instructions with no margin for error.
MCCORMICK: It's so much to keep track of--
SMITH: That's probably every single time I ever hear someone say that's such a stressful job and I'm sitting here and I'm like I can do it.
MUNTEAN: Clearly the students here are more accustomed to the intensity of this job than I am. It can take three years for the FAA to fully train
recruits Acting Administrator Billy Nolen insists hiring is on schedule, but it might not be fast enough to keep flights on schedule this summer.
[09:50:00]
BILLY NOLEN, FAA ADMINISTRATOR: We're hiring over the next two years 3300 additional controls, that'll give us a net plus up of about 500 accounting
for retirements and attrition.
(END VIDEOTAPE)
CHATTERLEY: OK, coming up here on "First Move" a time of transition, the coronation of King Charles, just two days away now, a look at the
monarchies role in modern Great Britain next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move"! Just two days now until the coronation of King Charles appeared here in London. But some polls show
public support for the monarchy is lower among the younger generation and that's going to be a challenge going forward. Bianca Nobilo takes a look at
its place in modern day Britain.
(BEGIN VIDEOTAPE)
BIANCA NOBILO, CNN CORRESPODENT (voice over): The longest interlude between two coronations in British history. Decades of demographic, religious and
societal change, raising questions about the relevance of the monarchy today 1953 was full of postwar Xiphoid Aviv and excitement about a new
young queen.
UNIDENTIFIED MALE: They've come to seek work in Britain.
NOBILO (voice over): Despite waves of historic migration, Britain in the 1950s was overwhelmingly white, Christian, and divided along class lines in
society and the halls of power. Today, three of the four great offices of state including the Prime Minister are from minority backgrounds. 20
percent of the population today is from ethnic minority backgrounds too and rising many from countries subject to exploitation in the form of British
Empire.
BIDISHA MAMATA, COLUMNIST: The monarchy itself has to find a respectful and humble place for itself without pretending that it doesn't have all of its
privilege, all of its history and all of its baggage.
NOBILO (voice over): Though crumbling slowly after the Second World War, Britain was still stratified along class lines in the 1950s. Modern Britain
is in many ways allergic to the idea of inherited privilege. Society at least strives to be egalitarian.
But a recent poll commissioned by the BBC Britain's National Broadcaster suggests that King Charles might have a problem appealing to young people
38 percent of whom said that they would support an elected head of state, and the difference might be a problem too. 78 percent said they weren't
interested in the royal family.
UNIDENTIFIED MALE: I think it's definitely time to rethink and I know a lot of people loved Queen Elizabeth. And I don't think that same fondness is
there for King Charles.
NOBILO (voice over): The monarch since the 16th century is also Titular Head of the Church of England. In 1953 the majority of the country was
Christian. Today it is half that with the number of non-religious and non- Christian faiths rising each year with multi faith leaders playing a role in the coronation for the first time.
[09:55:00]
NOBILO: (on camera): Charles, who has declared he to be defender of all faiths, was honored here at Britain's largest mosque ahead of the
coronation. So could this be an opportunity for all communities in Britain to come together?
SABAH AHMEDI, IMAM: Within Islam, we're taught that part of your faith is loyalty to your nation. And we also know that colonization is part of
history of this nation, and our citizens we respect that history.
NOBILO (voice over): The coronation is a litmus test for how King Charles will be received by 2023 Britain and whether enthusiasm apathy or
opposition to the monarchy will shape his reign? Bianca Nobilo, CNN London.
(END VIDEOTAPE)
CHATTERLEY: OK, and that just about wraps up the show. If you've missed any of our interviews today, they will be on my Twitter and Instagram pages you
can search for @jchatterleycnn. In the meantime "Connect the World" with Becky Anderson is up next, and I'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
