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First Move with Julia Chatterley
Fed Holds Rates Steady, but Signals more Hikes; EU Parliament Approves New Rules on AI; Chadha: Fed's Rate Pause was Largely Expected; Ian Bremmer on the Next Global Superpower; Bremmer: Governments don't have Abilities to Regulate Tech Properly; NASA Astronauts Taking Spacewalk Outside ISS. Aired 9-10a ET
Aired June 15, 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", great to have you with us for a special Central Bank bifurcation start to the program.
The Federal Reserve and the European Central Bank policies heading in different ways pound firmly entering a hike pausing phase while the guard
still has inflation guns ablaze.
Another quarter point to the ECB raised China though the outlier time for rate cuts it says. A complex economic and geopolitical picture but today
will appraise or at least Binky Chadha well, he's the Chief Global Strategist at Deutsche Bank, and he will be joining us shortly.
And from Central Bank actions to changing superpower factions, Ian Bremmer, the Founder of GZERO media joins us to discuss what he calls the new
digital world order. And what it will mean for us all perfect timing amid some serious artificial intelligence alarm.
Although I have to say it's less alarm and more caution really, I think across global stock markets, U.S. futures are weaker as investors pass the
Federal Reserve's rate pause announcement. Powell and company hitting the snooze button after 10 straight hikes higher.
But that alarm call could be coming soon. Powell says the July meeting remains live. And officials are penciling in the possibility at least two
more rate hikes to battle still sticky inflation. Lots of debate today too, though over whether Powell can should and will then follow through.
Meanwhile, there's no go slow in the land of the Euro. Stocks mostly lower there too, as the European Central Bank announces its eight consecutive
rate hike and more hikes likely to follow the ECB of course playing catch up. With the Fed its borrowing costs still more than one percentage point
below Fed levels.
To Asia now out and a higher HANG SENG as Beijing lowers a key policy rate for the first time in almost a year as growth there slows weak new Chinese
data today too, with youth unemployment. We still to discuss this a lot hitting fresh all-time highs, a busy day indeed for Central Bank economics.
And Christine Romans joins us now, Christine, great to have you with us, a unanimous vote to skip this meeting, which was what you and I were
discussing. But there were a few pointers there that were at least giving investors pause for thought the possibility of more hikes but also
suggesting that if you're hoping for rate cuts, get over it.
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Yes, you're a couple of years out on that on rate cuts. Look, I think that the Powell playbook has,
we're turning into a new chapter in the Powell playbook. There'll be a pause here, as you rightly point out July is a live meeting, which means
there could be a rate hike on the on the horizon there.
And I think what's really interesting, especially coupled with this morning's U.S. economic data, this economy is resilient. I mean, it's
holding in there after all of those rate hikes. They raise their growth targets for the year. They lowered their unemployment rate targets for the
year.
And this morning, we had strong retail sales, decent retail sales, I'll call it and you know jobless claims that are still at historic lows. So you
have this American economy that is sort of impervious in some ways to these 10 rate hikes. I almost wonder after seeing what the EU did today, you
know, maybe it wasn't the right call to pause at this point, because the U.S. economy has been pretty, pretty strong and chugging along here.
CHATTERLEY: Yes, as we suggested a one month really doesn't give you that much more information. So if those meetings live, then perhaps they did
yesterday what they said they would do, and so therefore they had no choice. But if you base it on the data, and they keep saying that data
dependence, more still to do perhaps.
ROMANS: Maybe a couple more, maybe I saw one participant had we've penciled in for more. So where does that take us into next year? And what is the lag
effect? You know, the Washington Post reporter Rachel Siegel ask a very good question in the press conference with Jay Powell yesterday, she said,
you know, what do we know what are you assuming about the lag effect here?
And when this wall of tightening really started working in? And Powell basically says we'll know it. We'll know we're at the end when we know
we're at the end, but we don't know right now when that is or how to actually gauge it. And core inflation still too high. I mean, that was I
think a real bottom line there.
Inflation is moderating with great inflation news by my reading this week, but great in terms of the direction not be final level, right? So they
still have more work to do on the inflation front. It's just such a confusing picture still, you know, 15 months into this, and I'll point out,
you know, 15 months into the Feds aggressive rate hike campaign.
[09:05:00]
Well over 4 million jobs have been created the unemployment rate is still near the lowest in 67 years consumer spending still up 0.3 percent. You
know, the consumer is still chugging along here in the stock market at one year highs. I mean, so it all of it is just a riddle.
CHATTERLEY: Yes, we'll know when we know. We don't know what we don't know at this stage. And when we do know, we'll let you know. We hope some other
hand at the manor crystal wall. Christine Romans, I saw that conversation by the way with the analysts and it was a great question in the press
meeting on early start this morning.
ROMANS: Well, thank you.
CHATTERLEY: So great to get. Thank you. Christine Romans, thank you. OK, a U.N. official sees as many as 750 people were on board the boat that sank
off the Greek Coast on Tuesday evening. Authorities say at least 78 lives were lost. But the true number of casualties looks certain to be far
higher.
There are reports that up to 100 children may have been in the hold of the boat. Correspondent Melissa Bell joins us now from Greece. Devastating in
all respects, Melissa, not the first we've seen this year but perhaps so many children on board. What more information do we have?
MELISSA BELL, CNN CORRESPONDENT: Lever now authorities are carrying out the grisly task, Julia, of trying to figure out who was on the boat of course
very difficult for anyone to know with any certainty or even to begin to figure out families of those who might have been have started to show up
here the Coast Guard in Kalamata.
Also in the building behind me some of those suspected to have been the smugglers that helped these people get on the boats or even now being
questioned. But beyond that, there are much graver questions being asked, actually about how this boat that was known to have been distressed, could
have been left to sink.
(BEGIN VIDEOTAPE)
BELL (voice over): A dramatic rescue at sea, the Greek Coast Guard pulling a group of people to safety, the lucky ones, survivors of yet another
catastrophe on the deadliest migrant crossing in the world, the Mediterranean. Somehow 104 people managed to leave this overcrowded fishing
boat alive.
But hundreds that you see here did not most still missing in the deepest part of the Mediterranean Sea, just 50 miles off the Greece Coast. Onshore
medics rush to preserve the lives of those that survived their bodies in trauma after hours in the water. All our men, aid workers tell me others
were unable to get out.
IPPOKRATIS EFSTATHIOU, SOCIAL WORKER AT IASIS: What we're getting from the -- is that mostly the kids and the women they've been, like locked inside
the basement of the boat.
BELL (voice over): As the search for bodies continues. There are questions about how long it took to try to help these people? The vessel started out
from Libya, heading towards Italy, and called for help on Tuesday afternoon, one charity has said. It claims the authorities knew for hours
that the vessel was in peril, but that a rescue operation was "not launched" until it was too late.
At this stage, there is little hope that more survivors will be found. Those that did make it are deeply traumatized, and their future in Europe,
far from certain.
(END VIDEOTAPE)
BELL: And the images of course that one can't help but have in one's mind, Julia, listening to what we've heard from the eyewitnesses who talk about
what happened what we understand is that this ship sunk within 10 to 15 minutes. Once it did start listing, it was all very fast the desperate
scenes that they must have witnessed, as it went down with the women and children and the vast majority of people still inside, Julia.
CHATTERLEY: Melissa Bell, thank you so much for joining us there from Greece. OK, making gradual progress. That's what the Ukrainian Military is
saying as the offensive continues in the south and east of the country. Meanwhile, the Head of the U.N. nuclear watchdog the IAEA is back in
Zaporizhzhia to assess the safety of Europe's largest nuclear power plant.
Russia meanwhile, sees its forces have "repelled" Ukrainian attacks in that region. And Sam Kiley joins us now. Sam was the Russian Defense Ministry
suggesting that the Ukrainian offensive in Zaporizhzhia has been repelled. Do we have any more contexts? Are we heard nothing from the Ukrainian side?
SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, Ukrainian says surprise, Julia, the exact opposite. They say that they are making
significant advances particularly southeast of the City of Bakhmut with the Deputy Defense Minister today again as saying that they've taken an
additional three kilometers that seems to be roughly about 20 square kilometers that they've taken over the last week.
[09:10:00]
That's a guesstimate by me, but they are making significant progress there. It's not very rapid, but it is significant. And at the same time, there are
incremental gains that the Ukrainians have made on that very heavily defended southern front line of Zaporizhzhia or rather from Zaporizhzhia to
Donetsk city, on the approach, ultimately to the Crimean peninsula.
That is where at the moment the counter offensive is underway not quite in full force at all. But it is growing in energy and passion, if you like
from the Ukrainian side. They are taking losses and those losses are now being in terms of material, at least in part being replenished by the
United States, which has just recently announced extra 15 Bradley Fighting Vehicles.
20 strikers, more high Mars missiles, more Javelin missiles, more ammunition across the board really, and other NATO partners are doing or
are due to do just the same. That is recognition from the international allies of Ukraine that this counter offensive, particularly when it gets
underway in earnest and builds on in scale is going to be costly and it is going to need constant replenishment if it's going to succeed at all.
CHATTERLEY: Yes, and you've got that sense as well. The Swift replenishment at least as far as these vehicles was concerned this week, following what
just days after reports that a similar number of vehicles had been lost. And Sam, can ask you about the IAEA Chief.
And the visit to the Zaporizhzhia power plant, obviously, in the proximity of the dam that broke as well and the flooding that we saw around there, in
addition to the fighting. What have we heard from them?
KILEY: Well, they're inspecting it, kind of as we speak, they have of course, had international monitors there, as well. Now the agency is most
concerned really, that this nuclear power station is the only nuclear power station that has ever been occupied by hostile military forces, that is the
Russians.
They took it by force last year it has been used since then, as a Russian fire base. It is absolutely on the front line of this war. It is used to
fire that its location is used as a firebase to shoot artillery in particular to Ukrainian targets on the other side of the Dnipro River or
the dam indeed that on the Dnieper River there, then over to a Kakhovka dam.
But the other aspect of this is that as the Ukrainians advanced that location is going potentially to become much more dangerous, much more
fraught, much more possibility of some kind of accidental damage being done to this nuclear facility is in a kind of warm.
Well, one of the reactors is in warm shut down and the others are in a cold shutdown. So it's relatively safe. It very difficult to breach one of those
reactors, but there's lots of nuclear material around there that could suffer damage and leak and do certainly a degree of local damage.
So the U.N.'s IAEA is looking very carefully at the threats to it and trying to get assurances from both sides, that somehow they will avoid
bringing the war into that nuclear power station, Julia.
CHATTERLEY: Sam Kiley, there in Kyiv. Thank you, Sam, great to have you with us. And North Korea has launched two short ranges of ballistic
missiles firing them over the sea to the east of the country. That's according to South Korea, which believes the missiles were fired from the
Sunan area north of Pyongyang.
The 14 such launch by North Korea this year, Japan says both missiles landed within its exclusive economic zone. And a long awaited report is
finally out on Former British Prime Minister Boris Johnson and the party gate scandal. The U.K. Parliament's Privileges Committee found Johnson
knowingly misled lawmakers when asked about Downing Street gatherings that breached COVID restrictions in place at the time.
Johnson called the report a charade declaring, "It's a dreadful day for democracy". The Former Prime Minister stepped down as an MP last week
before the committee could suspend him.
And coming up here on "First Move", a Fed pauses, but not without some claws especially if you're hoping for rate cuts, we'll dissect Wednesday's
Fed speak with Deutsche Bank's Chief Global Strategist Binky Chadha. And later, are we looking towards an AI Apocalypse some CEOS not so fast. We'll
discuss later in the show.
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[09:15:00]
CHATTERLEY: Welcome back to "First Move", the European Parliament has approved landmark new rules on artificial intelligence moving one step
closer to formally adopting a set of laws to regulate the technology. They call for bans on AI biometric surveillance, emotion recognition systems and
predictive policing.
Lawmakers also want firms like ChatGPT to disclose anything that's AI generated, helping distinguish between what's real and what's fake? And in
short, nothing illegal gets created. Parliament sees it will negotiate with EU member States to turn the rules into law. In the meantime, in a major
blow to Google EU regulators are threatening to penalize the company over its online advertising practices. CNN's Anna Stewart has more.
ANNA STEWART, CNN REPORTER: The EU is telling Google it should break up its online advertising business saying it's bad for competition. Brussels has
filed antitrust charges against the search giant accusing it of abusing its dominance in the market of buying and selling online adverts.
These claims centered around AdX, which is Google's online auction house that matches advertisers with publishers and the EU believes that Google
has unfairly pushed customers to use AdX rather than rival ad exchanges. This is just the latest blow for Google.
In January, the U.S. Justice Department filed a lawsuit and also called for a break up with the company. Here at VivaTech in Paris, we'll see all the
Big Tech giants including Google, and it's where I caught up with Bruno Le Maire France's Finance Minister. He says he supports the EU's findings.
(BEGIN VIDEO CLIP)
BRUNO LE MAIRE, FRENCH FINANCE MINISTER: I think that we are just sticking to the rules and the Commission has the hole to be sure that every private
company is abiding by the rules. So I fully support the work that is currently done by the Commission. Innovation does not mean that you should
get rid of in -- .
(END VIDEO CLIP)
STEWART: The EU Commission has submitted its findings in writing to Google according to officials and that kick starts illegal process which could end
in billions of dollars of fines and a breakup of the company. Google says it doesn't agree with the EU's findings and they will respond accordingly.
Anna Stewart CNN, at VivaTech in Paris.
[09:20:00]
CHATTERLEY: Now call it a pause with a hawkish clause the U.S. Federal Reserve for now keeping its powder dry, but warning another rate hike may
come in July. Fed Chair Jay Powell stressing that he can't sound the all clear on interest rates until we see more progress on a key inflation
gauge.
(BEGIN VIDEO CLIP)
JEROME POWELL, CHAIR OF U.S. FEDERAL RESERVE: I think if you look at the core PCE inflation overall, look at it over the last six months you're just
not seeing a lot of progress. It's running and it's running at a level, you know, over 4.5 percent far above our target and not really, you know,
moving down. We want to see it moving down decisively.
(END VIDEO CLIP)
CHATTERLEY: So the next few weeks of what we call Fed speak will be key, many suggesting that the Fed should have raised rates even yesterday given
their sticky inflation realities. But it led investors to assume a pause and therefore that's the way they went. Powell saying it was prudent to
wait, given the tightening already in the system as well as ongoing banking uncertainties.
Binky Chadha joins us now. He's Chief Global Strategist at Deutsche Bank, Binky, always great to have you on the show, welcome. What did you make of
the Federal Reserve yesterday? I think what garnered most attention was one, perhaps the view that more hikes are needed, but also if you're hoping
for cuts, good luck.
BINKY CHADHA, CHIEF GLOBAL STRATEGIST AT DEUTSCHE BANK: Yes. Good morning, Julia. And thank you for having me. I wouldn't characterize the meeting as
largely expected. So you know, our economics review is penciled in a rate hike in July. And that, you know, currently is a forecast for, you know,
the last hike, so to speak.
So, I think, you know, what is important to sort of keep in mind is that, even though we are already in the middle of this year, what is fresh in
everybody's minds is what happened last year. And I think the important point to note is that, you know, the big sell off that we saw in equities
and risk assets, in general had been our view as much to do, if not more.
Or, you know, almost entirely to do with the volatility and the aggressiveness and the speed with which they moved. And as Powell himself
noted yesterday, they've already raised rates, you know, by five percentage points. And what they're talking about now is much smaller increments.
So if you take the speed and the volatility view, which we would argue is what explains the big sell off that we had last year? You know, it's a
reason for volatility to come down. And if you look at equities, for example, the S&P 500, or even better, the S&P 500 equal weighted.
We will see that it's been pretty well glued really over the last year or so to, you know, an indicator of rates volatility, the move index, and
quite a bottom line from yesterday's meeting, is it the move only comes out, you know, once a day, at the end of the day, and what did the move do
yesterday, it fell basically to the bottom of the range to small move.
But, you know, relative to history, I would say rates ball still remains very elevated. So it has room to call. And what the meeting yesterday did
is it did not increase the move is the way that I would put it, and this move and rates volatility that's really been a driver of equities and risk
assets.
CHATTERLEY: Yes. So what you're basically saying is, in very simple terms, the Federal Reserve was slow to reach a point of paranoia over inflation
and therefore slow to raise interest rates. And that made investors paranoid. And actually, now they're sounding paranoid enough about
inflation. So investors can be less paranoid perhaps, what does that mean for investors to do because --
CHADHA: Yes --
CHATTERLEY: Go on.
CHADHA: Yes, so what does that mean? I think that, you know, if forward looking, I think it's extremely important to keep in mind, sort of where
we've come from and what basically drove us here, you know, we've had a very, very strong rally in equities. We've had a very, very strong rally in
the NASDAQ.
That was basically our call coming into the year, that positioning was basically extreme, especially really, for the systematic strategies, that
all would come down and systematic strategies would raise exposure, and that's, you know, kind of its seldom that one's forecasts play out to a tee
but that's kind of what exactly --
CHATTERLEY: -- did well.
CHADHA: -- aggregate equity positioning was sitting at the bottom of the band and the call was it would move to the middle that's kind of lo and
behold, exactly where we are sitting this morning, but the driver was really the move up and systematic strategies.
[09:25:00]
And again, you know, to go back to this point about volatility and speed the main driver of the increase in positioning of systematic strategies was
really the declining volume and only needs to look at the way to see where we are today and a VIX at such low levels is telling you that the room for
volume to decline further from here is pretty limited.
So when it comes down to if the systematic strategies, you know, positioning, unwind, or short squeeze is basically now done. And that's our
take then it's really a question about what discretionary investors do. I think discretionary investors have the way that we characterize it, you
know, remained what we call firmly underweight for about a year now.
And given the run up in the market, given the run up, you know, in the mega cap growth in Tech Stocks, you know, the pressure is on to basically raise
exposure from those levels. And over the last a couple of weeks, I would describe the morning price action and the moves as really, you know, it's
some form of -- if you want. Now, --
CHATTERLEY: Here we go, again.
CHADHA: -- response there is, you know, I mean, we are getting more information, right? So, you know, in the market last year from a
fundamental point of view was just very much focused on the possibility of an imminent recession, here there now, in terms of the broader bigger
market narrative.
The possibility of a soft landing, given the resilience of the U.S. economy defying most economic forecasts, it is rising, I would argue, and the
recession, potential recession, which is, our baseline, but it's characterized by a couple of quarters of --
CHATTERLEY: Binky, I'm going to run out of time, but I'm going to summarize and say, I think what you're saying is volatility came down, and that
allowed markets to lift but actually, there was not so much participation. And we hope that perhaps that now could lift us a little bit more, we're
going to get you back.
But I've run out of time. So it was great to chat to you, sir. And hear your wisdom and you most definitely called this bull market, my friend. So
congratulations on that, the Chief Global Strategist at Deutsche Bank.
CHADHA: Thank you, good to see you today.
CHATTERLEY: Thank you, likewise. Thank you more "First Move" after this.
(COMMERCIAL BREAK)
[09:30:00]
CHATTERLEY: Welcome back to "First Move". U.S. stock markets are up and running on this central bank Bonanza Thursday, a mostly lower open as you
can see there, a touch lower for the major averages. The S&P 500 and the NASDAQ is easing from one year highs.
As Investors review the read Fed rate hike pause, the Fed as we've been discussing morning, it will raise rates at least another two times this
year due to persistently high core inflation. The ECB is also raising rates again today too. And this Chinese central bank cutting rates as it deals
with its slowing economy, so lots of different activities and actions taking place around the world.
New evidence today to that the U.S. consumer spending remains robust. Retail sales is rising three tenths of a percent last month versus
expectations for a slight drop. Now ringing the AI alarm, American business leaders are airing their views on artificial intelligence and a lot of them
are worried very worried.
And a survey at the Yale CEO Summit 42 percent of those surveyed said AI could destroy humanity in just five to 10 years from now. Just hold on a
second because the other 58 percent said that that could never happen. And they're not worried. Matt Egan joins me now.
I think that crystallizes to be the conversations that we're all having about AI. On the one hand, you've got people that are saying, you know,
we're all going to die, AI Armageddon, and then people on the other side going, you know, don't be ridiculous. What do you make of this map?
MATT EGAN, CNN REPORTER: Yes, Julia, there is quite a divide here. I mean, the glass half full view is that 58 percent of the CEOs surveyed by Yale,
they are not worried about AI posing any kind of existential threat to humanity. OK, so that's nice. And also, none of the CEOs were polled, none
of them are worried about AI outsmarting humanity outsmarting humans and wiping out humanity in the next five years.
But I don't know I was kind of startled to see that 8 percent are worried about a potential existential threat posed by AI in the next in five years
and 34 percent in 10 years. That is a lot. Jeff Sonnenfeld, the Yale Professor known as The CEO Whisperer, he told me that he found these
findings; these survey results, "Dark and alarming".
And they do come after a number of high profile warnings. Recently, we had dozens of AI leaders and academics warn about a potential existential risk
posed by AI. And also Geoffrey Hinton, the godfather of AI, he has spoken out about the risks that eventually AI could, potentially outsmart humanity
and maybe even manipulate humans.
And he pointed out that there are very few examples of things in life, where you have the more intelligent thing getting controlled by the less
intelligent thing, which I think is a fair point. Also, we should note here, though, Julia, that the doomsday scenarios, of course get all the
headlines.
But you know we do have some more immediate, more pressing issues when it comes to AI right now in terms of the risks around misinformation and the
impact to jobs. And I think that this result, this survey from Yale think it really does show how even the captains of industry, even some of the
people who are the smartest in the business world, they are still trying to wrap their heads around both the risks and the rewards posed by AI.
CHATTERLEY: Yes. All right, we should be providing a little context. So it's only 119 companies from across the business sector. And I do wonder
whether it'd be quite interesting to go back over it and look at the different sectors and see whether there was a difference in views depending
on what sector these people are coming from to your point, I think about jobs. Yes, fascinating conversation, anyway, Matt Egan, great to have you
with us. Thank you.
EGAN: Thank you.
CHATTERLEY: This is also the perfect introduction to our next conversation. Fresh from recording his recent TED Talk, Political Scientist and Author
Ian Bremmer describes what he sees as a third world order, the digital world order.
And it takes us far beyond what we've experienced in the past with nation states vying for one another through military progress and economic might.
And Ian joins us now, he's the President and Founder of Eurasia Group and GZERO Media and the TED Talk is entitled the next global superpower isn't
who you think.
[09:35:00]
Ian, great to have you on the show, I've watched it a couple of times now. And you really did look like you were having a blast doing this.
IAN BREMMER, PRESIDENT, EURASIA GROUP, GZERO MEDIA: That was the first question.
CHATTERLEY: The first question you posed is who rules the world? And it's not an easy question to answer.
BREMMER: It used to be. I mean, you know, you weren't, you know, I grew up and you know, a little bit of you. It was the Americans and the Soviets,
right? Then they collapsed, and then it was the Americans. And now everyone's saying, well, is it China next? And the answer is we don't have
global superpowers.
Superpowers are countries that can project power in every aspect, diplomatically, economically, technologically, militarily, across the
world. And no one can actually do that today. The Chinese project most of their power commercially, because their state capitalist, even though their
economy is smaller than the U.S., the Americans project most of their power, actually militarily.
And if you look at the technology space, that's actually the power that's being projected, is being projected, almost completely by technology
companies in the private sector. We don't have the regulations, we don't have the institutions, and the government leaders don't have the expertise.
And apparently 42 percent of the CEOs think it's going to destroy humanity in the next 5, 10 years. So there you go.
CHATTERLEY: Yes, but the other 58 said, get a grip. So that's where we are today.
BREMMER: I am with the 58, by the way.
CHATTERLEY: Oh, well, we'll get to get to that. Wait, hold that thought. To your point now, the beauty of this TED Talk for me was that you did cover a
lot of ground in geopolitics and sort of pointed out the sort of shifts in power and the differences whether that's the rise of China, the fall of the
Soviet Union, the EU's rise, and of course, the U.S. stepping back.
But I think your point is, and you make it is that the digital world order shakes that up entirely, because then it's less about governments vying for
attention. And it's about the power of Big Tech firms. And in many cases, and we've talked about it before, enormous egos too.
BREMMER: Yes, well, we don't yet know what these technology companies want. Because I'm not saying they're bad people. I'm not saying they should be
destroyed, none of that. And when you meet people that run these new technology companies that are driving AI, and some of them aren't so new,
some of them are that it's not like they have horrible values.
They don't care about their families, those bad citizens. Rather, it's that 98 percent of their time, and their headspace, and their resources and
their labor, and the labor of their employees are just being oriented towards making sure they can build it as fast as they can, so that other
companies don't destroy them.
It's a completely creative destruction, entrepreneurial Doggiie Dog World. And so they're not thinking about how you're going to regulate it, or
implications for society or cold war between the Americans and Chinese. And that would be fine if the government's had the expertise or the
institutions to think about those things themselves, but they don't.
And it's true that governments have more power overall than companies do. Of course they do. But they need to have the institutions, the framework,
and the expertise, to be able to regulate them. And that doesn't exist right now.
Keep in mind, Julia, like six months ago, there wasn't a head of state I spoke with that would ask me about AI, it just didn't come up in a single
conversation, and not from the multilateral is not the G7, not G20. Today, it's coming up in every single conversation, literally every conversation,
but there's a huge head start from these technology companies.
As we look forward the next one to three years, this space will continue to be dominated by a very small number of very powerful, very rich men that
are driving how AI is going to be deployed and experimented real time on people like you, me and our kids.
CHATTERLEY: The question that comes to mind there, and it wasn't what I was going to ask you was those conversations that you're now having with world
leaders, do you think those questions come from a position of fear? Just wanting to understand more and get your expertise? Why do you think
everybody's suddenly talking about this? And do you recognize, I think they recognize that the situation is out of control? Or at least where we're
headed.
BREMMER: It's some of its fears some of its opportunity, but look, so if you think from the American perspective, right, the United States really
prioritizes war with Russia, really prioritizes competition with an adversarial China they don't trust.
Really prioritizes the domestic stability of American democracy. If you talk to members of Cabinet and the Biden Administration top senators
Democrat and Republican those are the things that exercise them the most.
[09:40:00]
All three of those things, Julia are impacted very significantly, by AI, by the disinformation that comes out of AI by the proliferation of AI and what
it can do in the hands of tinkerers, or bad actors, or enemies or competitors. And so as a consequence, all of the issues that have been and
continue to occupy the priorities of very, very busy, powerful leaders in the U.S. and around the world suddenly are being impacted by AI.
And so they're thinking, well, what do we do about that? How do we understand the space, we need to have some hearings and Senate, we need to
have an international advisory panel. My friend, Antonio Gutierrez, the Secretary General of the UN just announced that a couple of days ago, none
of these people were saying this a few months ago.
And AI is not a new topic; we've been talking about AI for more than 40 years now. But it hasn't played out, it hasn't had the kind of impact,
attracted the kind of investment dollars, brought in the commanding heights of the people that are driving technology companies, it is now doing all of
those things. And in very short order.
CHATTERLEY: Yes, and it doesn't leave any sphere untouched, whether it's increasing military progress, social cohesion through social media, and we
know that can be and is already toxic. The jobs market to your point as well. There was a part of the TED Talk, though, that I really loved.
And it sort of takes us back a little bit in this conversation. And it said, the tech companies increasingly define our emotional identities and
lots of that's determined by their algorithms. And the big question that you asked and you've sort of already posed it. The question is what do they
want? And what do they do with this power?
And do they act responsibly, whether it's unleashing AI, whether it's holding the data that they have, or as a result of our access to their
platforms? And I think that's the question to be asking about all of these in what you've defined as a sort of techno polar moment. And so much power
shifts to the hands of a small group of companies away from governments. And they have to work out how they it back.
BREMMER: That's right. And I think today, the most powerful individuals on the planet, may well be the people that control these AI tools, and for the
time being, at least, and that may not be sustainable. It's not, these aren't the government actors. These are actually these technology players.
And I think that's why the governments are suddenly paying such extraordinary attention from a starting spot stop of zero. But it's also
the questions that we need to be asking. It's not just about can the markets continue to operate properly, when so much disinformation from AI
is being flooded into the system?
Can we have democratic elections, when we don't know what real and fake news happens to be driven by AI bots? But it's also about who we are, as
people. And this idea that, you know, when you and I grew up, our emotions were driven by, our identities were driven by nature or nurture, how we
were raised and our genetics and increasingly today, it's actually also driven by algorithm.
And young people, when they're have their faces in their phones. And you know, when they buy their new Apple vision, and they're being intermediated
directly by algorithms, that are how they perceive the world around them and the people around them, that are going to change who they are as
people.
And when we roll out a new vaccine, even during a national global emergency of a pandemic, we test those vaccines first, before we release them, a new
GMO for food, we test them first, before we released them. We are releasing these AI algorithms, real time on 8 billion people in the planet on young
people. And we don't know what the implications will be for their development.
And what we're testing for is addictiveness. We're testing; we're doing AB testing on what's more effective and driving profitability. That's a
perverse thing and when governments need to stop that, because of the business models of the corporation's world.
CHATTERLEY: Yes, it feels like an irresponsible thing at this point. You said at one point in the TED Talk as well, this is where we discussed the
good news, except there isn't any. But there are potential benefits from AI surely. And we've sort of discussed and the question is you've got to get
it right.
Does AI lead us into some kind of digital Cold War in to go back to the sort of geopolitics of the beginning of the talk and where we started here?
And I don't even really know what question I'm asking whether it's between nation states or between tech companies and governments or individual tech
companies vying for a pole position in this space. What do you think?
BREMMER: Well, I mean, right now there's of course there's a huge war going on between the corporations themselves. But I mean, the implications of
that are just who's going to win who's going to be worth the most money whether or not companies end up aligning with governments.
[09:45:00]
And because with the Americans doing export controls on semiconductors that the Chinese need for developing artificial intelligence, you know, that's
more than just the speed bump for China. That's an effort to ensure that the commanding heights of AI will not be in the hands of Chinese
corporations.
And AI is a field that just a couple of years ago, you know, all of the papers were being published. At Open Source, there was an enormous amount
of collaboration between American and Chinese and global AI scientists that's going away.
So even as we talk about de-risking in the U.S. China relationship and Secretary of State Blinken is on his way to China, in the AI space, we're
actually talking about decoupling, which sounds like a much riskier environment, at least in terms of U.S., China relations.
But the final thing I want to say is, you know, you're right, Julia, in the talk, I said, now's where I'm supposed to give you the good news, there
isn't good news. That's the geopolitical perspective. I want to be clear to people that I am an enthusiast about AI.
I believe that the level of productivity and growth that will come out of scientific advances in education and in health, and in driving new energy
sources from AI are unprecedented. They're staggering. They'll create a new globalization. I'm very excited about that. But I'm not worried about it.
I don't think I need to talk about it much. Because the hundreds of billions of dollars going into these investments will take care of that,
like that will happen. What I'm worried about are the negative externalities, on democracy, on society, on civil society, on the family
structure that that no one will pay for.
And as a consequence, we'll all pay for it. That's those are the things I think that are being understated and you need someone who's focusing on the
global order on geopolitics to raise those issues.
CHATTERLEY: Perfectly put. Thank you for doing so.
BREMMER: Good to see you Julia.
CHATTERLEY: Ian, great to talk to you. I recommend people watch it. It's a great TED Talk. Ian Bremmer, President and Founder of Eurasia Group and
GZERO Media, thank you. Well, "First Move" after this.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to "First Move". Small hastily organized groups of Ukrainian fighters were instrumental in blunting the original Russian
invasion to seize Kyiv. Well now those soldiers have evolved into a critical component of Ukraine strategy to drive the Russians out of the
country completely.
[09:50:00]
Sam Kiley spoke exclusively with the Ukrainian special ops team in Bakhmut on their efforts to defeat the Russian invaders. And here is -- .
(BEGIN VIDEOTAPE)
KILEY (voice over): A Special Forces night operation, the objective to bring a special kind of misery to Russian troops. As they arrived alongside
Ukrainian regulars, the Russians attacked a night vision recording of a routine assault that the Special Forces needed to shrug off.
KILEY (on camera): How long did you spend under fire like this before you could move?
BRABUS, UKRAINIAN INTELLIGENCE SPECIAL OPS: The attack lasted about half an hour.
KILEY (on camera): And then what did you do?
BRABUS: After that, we took up an observation position and we watched them, we got to work.
KILEY (voice over): Electronic surveillance pinpointed their victims. First, they killed two paratroopers approaching on their left flank to get
to the group's main targets, Russian commanders near Bakhmut, a sterile record of an all too gritty event in March.
First, one officer is shot, then another down. He says radio intercepts revealed that the Russians lost two officers and five others to their
sniper team that night.
BRABUS: The result of our operation was the demoralization of the Russian airborne unit because they lost their top leader.
KILEY (voice over): Formed when Russia invaded Ukraine last year, this team of experienced Veterans works in a secret realm under the intelligence
services. They're tasked with tactical work seeking strategic effect, as Ukraine's counter offensive takes shape.
Here using a modified heavy machine gun in a hidden bunker last month close to Bakhmut. Drone operators more than a mile away are directing BRABUS on
to Russian troops.
KILEY (on camera): How many Russians have you killed in this war?
BRABUS: A lot of, a lot of, a lot of, for example, here a lot of Russians.
KILEY (on camera): This is when you're on this gun? How many more or less there?
BRABUS: I don't know. We didn't calculate.
KILEY (voice over): It's the Russians they want to do the counting. Because Ukraine's best hope is that Russian troops run rather than fight. Sam
Kiley, CNN in eastern Ukraine.
(END VIDEOTAPE)
CHATTERLEY: More "First Move" after this.
(COMMERCIAL BREAK)
[09:55:00]
CHATTERLEY: Wow that if you suffer from vertigo, perhaps looks away now. You are seeing live pictures of two NASA astronauts taking a spacewalk
around the International Space Station. They're on a six hour mission to install a solar array on the exterior of the station and we are seeing live
pictures.
How incredible is their second spacewalk in less than a week and it goes on for a few hours? And from otherworldly to who runs the world, Beyonce and
apparently she controls prices in Sweden as well. The beehive was buzzing after the superstar kicked off her and nascence World Tour in Stockholm
last month.
But now Swedish consumers are counting the cost of their bills, bills, bills. Deutch Bank sees the surge in Hotel and Restaurant prices in the
area may have sparked a surprise jump in inflation in May, crazy in Love, but not crazy about those higher prices. We'll call that a Beyonce bump.
I believe boos Springfield might be the next one, boos bump next. That's it for the show. "Connect the World" is up next. I'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
