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Possible Financial Impact of Ebola Spread Examined; Wall Street Stocks Undergo Large Swings in Previous Week; Entertainment Companies Offering Alternatives to Traditional Cable; Female Billionaire Discusses Innovations in Phlebotomy; Fashion Designer Discusses Current Fashion Trends
Aired October 18, 2014 - 14:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR: Mistakes mounting, jitters growing. Can the missteps be fixed before Ebola punishes the global economy? I'm Christine Romans. This is "CNN MONEY."
(BEGIN VIDEO CLIP)
ROMANS: Ebola exposing cracks in the world's most expensive health care system.
UNIDENTIFIED MALE: Something went wrong in that hospital.
ROMANS: A second health care worker infected with Ebola. Nurses saying they aren't getting the training they need.
UNIDENTIFIED FEMALE: Stop pointing fingers and fix the problem.
ROMANS: Is it a question of resources? Federal funding for hospital preparedness has been cut in half since 2003, some members of Congress calling for millions more to be spent.
UNIDENTIFIED MALE: Today it's Ebola. Tomorrow it will be something else unless we make the right investments.
ROMANS: The president says there will be no outbreak in America.
BARACK OBAMA, PRESIDENT OF THE UNITED STATES: The dangers of a serious outbreak are extraordinarily low.
ROMANS: That as the epidemic in West Africa spreads.
UNIDENTIFIED MALE: We will go over 9,000 cases this week.
ROMANS: Private donors are stepping up, but as fear grows so will the financial damage. Is Ebola's economic toll just beginning?
(END VIDEO CLIP)
ROMANS: Dr. Joseph McCormick is a professor and regional dean of the University of Texas, School of Public Health. He worked at the CDC in 1976 when it investigated the first Ebola epidemic in central Africa. Thank you so much for joining me, Dr. McCormick. I want to ask you point-blank, is this a lack of funding for hospital preparedness, or is this just a culture that we're not ready here, yet, to deal with this?
DR. JOSEPH MCCORMICK, REGIONAL DEAN, UNIVERSITY OF TEXAS SCHOOL OF PUBLIC HEALTH: Christine, I think this is an issue of culture and preparedness and far less about funding. Let me give you an example. I think that in terms of hospital infections, the United States has one of the lowest levels of hospital infection rates in the world among developed countries. And yet -- and I think what happened was, many people thought was, OK, we have a great job with hospital infections. We're ready for handing Ebola. I think that may be part of the issue at Presbyterian. And unfortunately handling a viral illness like this is totally different. And I think that may have played a role.
Although there are plenty of people who say we still have too many hospital infections, we still don't do a good enough job of just washing hands for doctors and nurses. That's still, you know, I think we saw 99,000 people get have a health care-acquired infection every year. But this is Ebola. This is different. This is something that has to be handled very carefully and appropriately, immediately. There can be no mistakes. The two nurses infected in Dallas have been moved to a specialized bio-containment unit, one in Georgia, one in Maryland. There are some four facilities like this in the country. Do we need to scale up on that?
MCCORMICK: I don't think so, because I think what that means is, we're trying to replace good old-fashioned competence and training with technology, and I don't think that's going to work.
ROMANS: So competence and training, what do we need to do, then? If we don't need to spend more money or build more bio-containment units, is this -- clearly webinars and websites with protocol isn't working.
MCCORMICK: Yes, we have to first of all have the correct protocol, and it wasn't there. Secondly, this is the kind of training that means hands-on, and it means that the health care workers have to buy- in to the protocol. It's not enough to give a webinar or a YouTube video. You simply have to have boots on the ground training. It has to be a group, in my opinion, that is dedicated to this and they're going to be the go-to group wherever there's a suspect case. You have to have a protocol ready for when somebody walks in the door of your emergency room all the way to the time when you're finished.
ROMANS: Really interesting. Dr. McCormick, so nice to see you. Dr. Joseph McCormick, interesting that it's not necessarily just more money that's needed, but we need to change the culture and have different training, not necessarily more technology. Thank you, sir, for joining us.
I want to bring in CNN MONEY's Cristina Alesci. She joins me now. You know, let's talk about the cost of this, let's talk about the response to the Ebola crisis in Africa in particular. Private donors are starting to step in here. Interesting. Tell me about that. CRISTINA ALESCI, CNN MONEY CORRESPONDENT: Starting. The Bill and
Melinda Gates Foundation as well as Mark Zuckerberg pledged to this effort $50 million from Bill and Melinda Gates alone, $25 million from Mark Zuckerberg. Some of that is going to aid organizations. Some of it's going to actually the U.S. government organizations and units like the CDC. Now, private sector donations are not enough, clearly. The U.N. said that it needs about $1 billion in a fund to go ahead and get ahead of the curve.
ROMANS: We are not there.
ALESCI: We are totally not there. You're talking about $20 million in pledges, and the fund itself only has $100,000 in cash. Now clearly there's money going to other organizations, but the U.N., it's clearly indicative of a shortfall.
ROMANS: Let's talk about the industries affected. Interesting that the chocolate industry is actually affected by Ebola because it operates in these countries. It's a $67 billion business, 26 global companies collectively donating $600,000. Wait a minute. Look at the profit number, look at the revenue number, look at what they're donating. Could they do more?
ALESCI: Absolutely they could do more. And 70 percent of the world's supply of cocoa beans actually comes from West Africa. So you would think, if anybody has skin in the game, these guys have skin in the game.
Now, granted, the high-producing countries are not the ones that are actually affected, but they are neighboring them, like the Ivory Coast right next door to Liberia. So you would think that the chocolate companies would want to protect themselves.
ALESCI: In fact, Ivory Coast is so exposed that the CDC is actually sending staff down there to test its preparedness. So it may not be in the country, but people are concerned that it could spread there. And look, you talk about $10 billion in profits. Mars alone, one of the biggest manufacturers of chocolate, number one in market share, only gave $100,000.
ROMANS: Wow. That is interesting and maybe a little bit of a wake-up call for corporate responsibility. Thank you so much, Cristina Alesci. Have a great weekend.
Coming up, another week and another wild ride on Wall Street. Why you should not panic, next.
ROMANS: So, you know, October has a pretty bad wrap when it comes to the stock market, and so far this month it's living up to its bad reputation. That lead our CNN MONEY top four this week. Our CNN MONEY panel is here, Paul La Monica, Rana Foroohar, and Samuel Burke. OK, guys, another volatile week on Wall Street. We're talking about 400-point swing on the Dow. Paul, is there more selling or are there bargains here?
PAUL R. LA MONICA, CNN MONEY DIGITAL CORRESPONDENT: I think there are definitely bargains going forward, but that doesn't mean that the worst is over. We could still have another steep sell-off because a lot of people are worried about Europe's economy. Ebola's a big wild card. But there are quality companies trading for a lot less money than they used to that have probably been oversold.
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: I agree. Now, I think that the U.S. is still in some ways the prettiest house on the ugly block, right? It doesn't feel that great here, but if you look at Europe about ready to tip into recession, Asia is slowing down, China is really having a debt crisis of its own right now, I think that we're going to see a lot more volatility, but I think that people will have a few better places to park their money ultimately than U.S. equities.
ROMANS: Every time we've had to have a pullback in the last two years of 10 percent, we haven't had it in the S&P 500. The NASDAQ had a full 10 percent correction and bounced right back, Samuel.
SAMUEL BURKE, TECH BUSINESS CORRESPONDENT: And there are lots of opportunities just because of what you're saying. For instance, I was covering Netflix and Google this week. Netflix down 26 percent. But just a few hours later back up seven percent. Wish I would have gone in. Google down five percent at one point, an hour later, back up four percent.
ROMANS: But raise your hand, we shouldn't be surprised the market is going down. It's not unpredictable here. All of these factors are well known. So does the fed do anything or does the Fed really get out of --
LA MONICA: I hope not.
FOROOHAR: I hope not too.
LA MONICA: The rally that we saw on Thursday at the end of the day, a lot of it was due to one Fed member hinting that maybe QE lasts a little bit longer.
ROMANS: And a decent jobs number. So you look at the internals of the American economy, it's not doing so bad.
LA MONICA: The Fed should act if the economy is weakening, don't you think?
FAROOHOR: Absolutely. They've already put $4 trillion into the economy since the financial crisis. We know that's created some bubbles. And you know, we know that it's not doing much more for the real economy to put more money in it.
ROMANS: Lots for us to talk about, lots for us to watch. If stocks are dropping, so are oil prices. Oil down 25 percent from the peak this summer. I think it's fair to say oil prices have plunged since June. The national average for a gallon of regular gas down more than 20 cents in the last four weeks. And Gas Buddy tells us that parts of the western U.S. and the Rocky Mountain states could see another drop of 15 to 30 cents a gallon. The Energy Department says heating bills will also be lower this year. What's driving this decline? Is it only production in the U.S. up and worries about global demand?
FAROOHOR: It's two things. Production in the U.S. is up because of the shale boom, but also, China is slowing down. That's a big part of this. For the last year China has been the single largest energy consumer in the world. When they slow down, the price of oil drops.
BURKE: For every one cent that gas drops in the United States, that's $1.4 billion that Americans have to spend on something else. And that's coming right --
ROMANS: It's like a tax cut.
BURKE: Exactly. That's even better than the last one for most people. And this is coming right before the big holiday buying season. So people might have even more to spend, could be good for consumers.
ROMANS: And a little bit warmer winter and you have these lower prices for how you're heating your home, that's going to be a real tailwind for consumers.
LA MONICA: Definitely. This is very good news. And hopefully oil prices stabilize. We just don't want them to plummet, because remember how low they got in 2008?
ROMANS: For all the wrong reasons.
FAROOHOR: Right, right.
LA MONICA: I'm starting to worry we might be having --
ROMANS: That's why we hear politicians promise $2.50 gas we say, no, no, no, the reason you get $2.50 gas is because bad things are happening.
Let's talk about cord cutters because this story if for you, folks. HBO and CBS unveiling new subscription Internet services. The CBS offering, is available immediately, it costs six bucks a month. HBO's debuts next year. No word yet on price. Is this the game changer, Samuel?
BURKE: Netflix was the game changer, but our parent company Time Warner was the first television company to actually pull the cable cord. This is a game changer. But what I'm wondering now is if I'm getting Hulu, Netflix, the CBS offering, HBO, is it going to cost as much as cable when it's all said and done?
ROMANS: And what a pain is it going to be? How many logins am I going to have to know? FAROOHOR: And you're going to be able to see what you're being
charged for, which is interesting. And I think that's going to put a lot of pressure on content creators to make you want to pay for it.
LA MONICA: People want it al a carte and they're finally getting it. But what's interesting here is that live sports remains the most coveted form of programming right now because people don't really watch it, usually, on delay. They're not skipping through ads. And guess what, no one is offering live streaming, really, of sports in a major way.
BURKE: CBS, and they're not including NFL in this online offering.
ROMANS: The cord cutting thing, sometimes I hear some people say it's totally overstated. Really, most people, still, are getting their content through their cable subscription.
BURKE: I'm not. I know I work for the cable news network and I don't have cable like many people in my generation.
ROMANS: This will be his last day.
BURKE: Don't tell the bosses.
LA MONICA: It's certainly I think of demographics issue.
ROMANS: It is.
LA MONICA: There are lots of older Gen-Xers like me and boomers as well that haven't yet cut the cord. But we're just getting older and older.
FAROOHOR: Last year was a big turning point too. The cord cutting really sped up. I think the fact that you have got CBS and HBO and all this, this is a seminal year.
ROMANS: Seminal year, game changer, turning point, cord cutters, good news for you.
All right, a new perk that's not without controversy. Facebook will pay for female employees to freeze their eggs. Apple reportedly will add that benefit starting in January. Supporters say this promotes motherhood, this is good for women, this gives them flexibility, this allows them to really focus on their career at a young age and worry about the child rearing later. Critics say it pressures women to delay child rearing. This is a big topic of conversation.
ROMANS: I think this is tech changing what we're expecting for our companies and for their coverage.
FAROOHOR: And it's done that in so many ways already. I think increasing the American work culture is a tech culture. It's 24/7, people are in cubicles. I think that in some ways it reflects how male and how hard-driving technology is.
FAROOHOR: I do. And you see that the number of female executives are very low in tech. They're taking three minutes off and get back to work. I've got to say, it makes me tired, all of it.
BURKE: A lot of the women who were asked about this in the tech industry said one of the reasons they want to freeze their eggs is because they just can't find a husband. It's not necessarily about work. It's about finding a good men.
ROMANS: It's not a lack of viable eggs. It's a lack of viable men.
BURKE: My question is, if you're gay, theoretically, and you know somebody, you're a male in one of these companies and you know a woman's whose eggs you want to use, will the company pay for you to freeze her eggs?
ROMANS: In tech, I wouldn't be surprised if somebody pressed the issue.
LA MONICA: I think the message here is lean in eventually. I mean, Cheryl Sandberg, it's all about how she gets out of the office at a normal time so she can go home and spend time with her kids.
FAROOHOR: Who believes that? Who believes that?
ROMANS: Look, I spoke to a big tech CEO recently who told me that what happens is, women go home, put their kids to bed, make dinner, they come back and work until midnight. That's the reality. All right, guys, thanks so much. Have a great weekend, everybody.
And coming up, America's you youngest self-made female billionaire, she left college, Stanford, to start her own company. What she founded could change health care for millions of Americans.
ROMANS: America's youngest self-made female billionaire is a college dropout. Now the company she left school to start is revolutionizing how we draw blood. Rachel Crane has her story.
RACHEL CRANE: At any given time there's about a gallon of blood running through your body, a substance that isn't usually at the forefront of our minds. But perhaps it should be. Your blood is one of the best indicators of your health.
ELIZABETH HOLMES, FOUNDER AND CEO, THERANOS: Today people have more access to data about their credit card than they do about their body. The question that we were focused on in starting this company and building this company was, how do we make it a reality for every person to be able to find out the health information that they need or the health information that someone they love needs? It's far too often when someone you love is really sick you're finding out about it too late.
CRANE: The practice of phlebotomy is over 3,000 years old, but the way we draw and test that blood hasn't really evolved much. This 30- year-old billionaire is changing that by making it possible to run multiple lab tests on just a single drop of blood.
So how do you feel about needles?
HOLMES: I have a major problem with needles. I really believe that if we were from another planet and we sat down to put our heads together on torture experiments, the concept of sticking a needle into someone and sucking their blood out would probably qualify as a pretty good one.
CRANE: Elizabeth Holmes is a college dropout. She left Stanford University at 19 to start Theranos. The company's technology will soon be in every Walgreens in the country.
How does this lab compare to the lab you would find at a more traditional laboratory company?
HOLMES: Here we're doing all R and D around our own platform. So what we've spent the last 10 years doing was test by test redeveloping the chemistry.
CRANE: When you say you've reinvented the chemistry of all of this, what does that mean?
HOLMES: It means you basically have all the chemicals that would be used to process a test in a traditional lab with a large volume of blood, and you have to go reinvent each of those chemicals to be able to work with a small amount of blood.
CRANE: And that's not all Theranos will actually tell you about their technology. They operate under a culture of secrecy, all the way down to where the real lab sits, several feet below ground.
The life-and-death decisions are being made based on these tests that you guys are doing here. Some of your critics have said not enough review has been done.
HOLMES: We're certified as a high-complexity lab. And that's the exact same level of regulation and testing and certification that every other lab has.
CRANE: Your company is now evaluated at over $9 billion, making you the youngest self-made billionaire in the world at this point. How has that changed your life?
HOLMES: You know, it hasn't changed my life at all. It's a wonderful thing. But it's not why we're doing this. And it's not why we're going to be successful as a company. And we're just getting started.
ROMANS: Changing your relationship with that needle when they draw blood, that is really disrupting.
All right, she's got 60 stores around the globe. Fashion designer Cynthia Rowley tells us how she makes it work next.
ROMANS: Cynthia Rowley is a fashion designer with boutiques around the world, collections sold in top department stores. But she says these days none of that is necessary. If you want to be a designer like her, there's never been a better time to do it.
ROMANS: I'm going to ask her some very serious questions. Any big surprises on the runways this year?
CYNTHIA ROWLEY, FASHION DESIGNER: Well, people are talking about a little bit of a mod feeling on the runways.
ROMANS: This is a little bit mod.
ROWLEY: You know, this is a little bit mod.
ROMANS: Can I just try this on?
As a brand, we're kind of known for these graphic prints and mixing sporty with pretty. You know, I like the idea of putting great design in everyday necessities. This is function and fashion together. Go jump on a city bike.
ROMANS: What advice do you give a young designer?
ROWLEY: It's such a great time for making your product accessible to tons and tons of people and getting the word out and telling your story. It's never been better. You know, it used to be you needed to invest, you know, so much in a start-up. Now it's like you can have an idea. You put it out there, and it's OK if it's small.
ROMANS: You always were pretty and sporty. Now you've taken sporty and have sporty on its own.
ROWLEY: So that's all here. And fully functional, like the wetsuit.
ROMANS: Do you think this is a growth area?
ROWLEY: Most definitely. Every single industry from Silicon Valley to Wall Street to the New York fashion world, people don't really dress up. If you feel like you look good and you're excited about what you're wearing, you're going to perform better. You're going to have more fun. You're maybe going to do things and try things that you've never done before.
ROMANS: The track pants and t-shirt.
ROWLEY: Well, I still like a Budweiser t-shirt.
ROMANS: Where does Cynthia Rowley fall on the lean-in, lean-back spectrum? Two kids, a big business?
ROWLEY: Is there a bungee jump version? I still work really hard.
ROMANS: You like to work really hard, don't you?
ROWLEY: That's the thing. The reality is I really like what I do. And it's really fun. And it's really exciting. So it's not like work.
ROMANS: I love that, Lean in or bungee jump in.
Thanks for watching CNN MONEY. Check us out on the web, CNNmoney.com. Have a great weekend, everybody.