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First Move with Julia Chatterley
Dr. Anthony Fauci Questions The Health Cost Of Reopening; Amazon; The Retail Giant's Working Practices Criticized By A Resigning Employee; The CEO Of Slack Tells Staff, We Won't Rush Back, See You In September. Aired 9-10a ET
Aired May 05, 2020 - 09:00 ET
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[09:00:04]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here's your need to know.
Paying the price. Dr. Anthony Fauci questions the health cost of reopening.
Bye Amazon. The retail giant's working practices criticized by a resigning employee.
And see you in September. The CEO of Slack tells staff, we won't rush back.
It's Tuesday. Let's make a move.
Welcome once again to FIRST MOVE. Great to be with you this Tuesday where we're very focused on FIRST MOVE to reopen global economies including
positive signs and the challenges, too.
Firstly, a shot of coffee here in the United States from Starbucks who say 85 percent of their stores will be back in action within days.
Meanwhile, the world's fifth largest economy, California will allow some stores to open by the end of this week; and in New York State, they may
start easing some measures and allow some reopening as of next Friday, too.
For some of us, it comes as a relief after weeks of lock down as the economic cost mount, too; for others, it is a reason to be afraid.
Reopening comes with renewed health risks and the number of U.S. COVID-19 cases has only plateaued, it's not come down.
Investors though showing relief today, comforted, I think also by reports that U.S. Intelligence allies are playing down concerns that COVID-19 came
from a lab in Wuhan. The hope, of course, being that it might reduce the risk of future punishment on China over the pandemic.
European stocks, meanwhile, benefiting from a reduction in restrictions and recovery hopes in Europe, too. Oil giant, Total meanwhile being rewarded
for maintaining its dividend.
If you remember last week, competitor, Royal Dutch Shell cut their dividend for the first time since the Second World War.
To Asia now and a quick look of what we're seeing there, I have to tell you, most markets were closed for a holiday. Hong Kong shares though
gaining on news that gyms, cinemas and beauty parlors can now reopen there. Fingers crossed that where nations in Asia in particular, others will be
able to follow safely.
Let's get to the drivers on that point. So, how soon is too soon when it comes to reopening economies? The top U.S. Infectious Diseases expert, Dr.
Anthony Fauci put it like this.
(BEGIN VIDEO CLIP)
DR. ANTHONY FAUCI, DIRECTOR, NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES: It's the balance of something that's a very difficult choice,
like how many deaths and how much suffering are you willing to accept, to get back to what you want to be some form of normality sooner rather than
later?
(END VIDEO CLIP)
CHATTERLEY: Christine Roman's joins me now. Christine, some might argue when you're talking about the cost being human life, there's no acceptable
risk here.
But I'm actually quite surprised that it's taken this long for states to start reopening measures given the sheer economic damage that we've seen.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: And you know, I think that people have been pretty disciplined overall as well, right,
that for these weeks, people have really maintained their physical distance. They have stayed away from their workplace or their workplaces
sent them home and they've really been working hard to try to do their part for the better of everybody. Right?
But now, we are seeing this thawing of this freeze in activity, of careful thawing. You've got Macy's opening some stores this week, Simon Property is
a big mall operator in the U.S. opening in several states.
You're going to see peeking out, consumers peeking out and deciding if they're really ready to go back to normal and I don't think they are.
CHATTERLEY: Yes, I mean, this was highlighted in an Edelman Trust Survey that said -- and it looked around the world actually, but it looked at the
United States in particular, and it said two thirds of people here are frightened that we're moving too quickly to reopen.
In my mind to some degree, I think that's a good thing if it keeps us cautious. It keeps people wearing masks, it keeps them washing their hands.
But at the same time, Christine, as you and I discuss confidence.
ROMANS: Right.
CHATTERLEY: Consumer confidence is everything.
ROMANS: And I think companies know that, right? For example, Macy's is opening up stores. Its executive say there's no playbook for this. But
there will be social distancing. There will be markings in these stores to show how far people should be staying away from each other.
There will be no more ear piercings or you know, having somebody touch your face when you're going to the makeup counter. They know that the American
public, the global public probably is not ready for that yet.
And so they're going to have to tweak their playbooks with that consumer confidence in mind. When the consumer feels safe, and the consumer feels
secure, that's when the consumer spends again.
[09:05:07]
CHATTERLEY: This is interesting. So, you think actually from a business perspective, you almost have to be too careful, too protective of workers,
and then you take the responsibility and reassure customers.
ROMANS: I think that if people -- look, I think people know that the new normal will not be like what it was in February. I mean, that's gone for
now.
So, how are we going to adapt? There's a lot of talk about restaurants moving outside of my town, for example. They're talking about closing
streets and moving restaurant tables outside for the summer.
And I think that you're going to be more likely to see people going back to restaurants, if there's a big distance between them, you know, contactless
payments and the like, and you see business owners starting to talk about how they can transform their business for the cautious consumer to make the
cautious consumer feel safe and secure, and then that will be the path back to a healthy and normal economy again.
CHATTERLEY: Yes, it's just going to take time and for the travels, the tourism globally, this is -- yes, devastating.
Christine Romans, thank you so much for that.
Coming up in the show, we're going to be speaking to the Slack CEO. His message, as I mentioned at the top of the show was, we're not coming back
to work until at least September. We'll talk about the psychology of that decision for workers and what led him to that.
In the meantime, Intelligence shared by U.S. allies suggest that coronavirus is highly unlikely to have escaped from the Wuhan's Institute
of Virology.
A Five Eyes report contradicts claims made by the U.S. President Donald Trump and his Secretary of State.
David Culver is in Shanghai for us. David, it's interesting because this is what of course the Chinese have argued the whole way along, look, you're
getting this wrong. You're accusing us of the wrong things. They fought back.
Important, if we look at the economics here and the fears that perhaps this could result in an escalation of trade tensions at particularly the wrong
time for both nations and the world.
DAVID CULVER, CNN CORRESPONDENT: You're right, Julia. Trade tensions would be one part that could escalate here. In fact, even state media today
suggesting in an editorial that maybe they put off discussions for a Phase 2 trade talk.
Of course, Phase 1 was signed in mid-January just before this outbreak, but that would push things back further, and it would do damage to President
Trump politically. So, that's something they floated around.
But the other reality here is that this could lead to not just a trade war conflict, but an actual war conflict. And I say that based on a lot of the
rising concerns that tensions here are increasing between the U.S. and China.
Now, I want to go to that Intelligence report that you mentioned. It's the Five Eyes Intelligence Sharing Coalition. It's between the U.S., Canada,
the U.K., Australia and New Zealand and essentially this suggests that it is highly unlikely that that virus started in a lab, in the Wuhan Institute
of Virology, which we traveled to just a couple of weeks ago.
Instead, they say it's more likely that this was an animal to human transmission, and it happened at the market as was initially suggested by
Chinese scientists. That's what they're assessing as of now.
Of course, it contradicts directly what President Trump has said and what Secretary of State Mike Pompeo has been saying. And on that point, state
media has been fueled once again to continue their attacks against the U.S., not calling out President Trump. They always avoid that
strategically, and President Trump likewise avoids criticizing President Xi Jinping.
However, they go right after Secretary of State Mike Pompeo, and they are continuing that rhetoric. And today, CCTV, the state-run broadcaster during
their evening flagship broadcast suggested that the world should investigate the U.S. for what they allege to be its mishandling of this
virus -- Julia.
CHATTERLEY: A thing to watch the politics here, the messaging which we know for actually both of these leaders domestically and internationally is
very important.
There was also this report from Reuters suggesting that China is gathering intelligence of what their perception is around the world, and they're
about as unpopular at this moment as the perception of China if you go back to the late 1980s in the Tiananmen Square tragedy.
David, what does that mean for Xi Jinping and messaging internally in China?
CULVER: Oh, I think this is really a rattling and worrisome report to come out. I mean, this suggests that this report showing the anti-China global
sentiment, as they've characterize it, you know, worse than more than 30 years, went all the way to the top, went to President Xi Jinping, so, he is
aware of that, and they look at the worst case scenario being armed conflict.
So, it really does bring these echoes now of a U.S. Soviet Cold War era, and that's what is seeming to be suggested here as they put forward, you
know this idea that perhaps the world is turning against China and that's the real concern that the Chinese are facing.
And it's combined, Julia, with what we're seeing as a rising nationalism. So, the climate is very, very susceptible to falling into this if this war
of words fuels emotions, which in turn could become action -- Julia.
[09:10:18]
CHATTERLEY: Yes, an incredibly dangerous point in time. I think it's masked with domestic issues, be the economic and fighting the virus, but
the geopolitical undercurrents here and really quite frightening.
David Culver, always great to have you on the show. Thank you.
CULVER: Thanks, Julia.
CHATTERLEY: Meanwhile, here in the United States, the Vice President at Amazon resigns because the company fired staff who raised safety concerns.
Tim Bray was a senior engineer in Cloud computing. He says, "I quit in dismay at Amazon's firing whistleblowers who were making noise about
warehouse employees frightened of COVID-19."
Clare Sebastian has more on this. Clare, this is the allegation coming from a former employee, a gentleman who resigned on Friday. What more do we know
about the allegations that he is making here? And what is Amazon saying?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Amazon is not saying anything yet, Julia. They haven't commented on this gentleman, Tim Bray's departure.
He was a high ranking executive, the highest ranking, so far to speak out on these issues.
Now, none of the cases that he talks about were new. We knew about several warehouse workers who were fired who had spoken out.
We knew about a couple of corporate employees who tried to help the warehouse workers who spoke out, but Tim Bray, for him, he had been
concerned about how the company treats its employees since last year, since employees started organizing to push for Amazon to take greater leadership
when it came to climate change. He was one of those employees pushing.
He said and we know there were reports at the time of employees who were within that group being threatened with dismissal. But he says that the
COVID-19 situation and what he sees as retaliation against workers who spoke out really was the tipping point.
This is what he said. Here is a quote from him. He says, "It's evidence of a vein of toxicity running through the company culture. I choose neither to
serve nor drink that poison."
He says that he escalated his concerns within the company, but it got to the point where he felt that by staying on as a Vice President within the
company, he was endorsing these concerns -- Julia.
CHATTERLEY: This is a huge challenge for a company that's on the frontlines, providing essential services to people that are stuck at home
ordering.
They have thousands of workers they've hired -- what -- 175,000 people to try and cope with the demand. In the past, they've said look, we do not
condone in any form attacking whistleblowers. But at the same time, if you're behaving badly as an employee, we reserve the right to challenge
that.
They find themselves under immense scrutiny at an incredibly difficult time.
SEBASTIAN: Yes.
CHATTERLEY: It's a tough moment, whichever way you look at this.
SEBASTIAN: It's really tough, and I thought it was super interesting because, you know, in the past, Amazon has said, for example, in the case
of Chris Smalls now, a fairly high profile figure who was an employee in a warehouse in Staten Island who was fired back in March.
The company said that, you know, while they support the rights of employees to criticize workplace conditions, that doesn't come with blanket immunity.
He, according to the company, was fired because of violating social distancing rules.
But this is what was really interesting, Tim Bray says that he believes both things are true. The complaints of the warehouse workers and the
statements from Amazon that showed just how much they're spending, how much they're investing on safety.
For example, we just heard the company is basically plowing everything it's going to make in the second quarter back into safety measures, to higher
wages for workers and things like that.
But this is what he says about that. He says, "The big problem isn't the specifics of the COVID-19 response, it is that Amazon treats the humans in
the warehouses as fungible units of pick and pack potential." He says, that's not just Amazon. That's capitalism in general.
But I think the question here, Julia, is that yes, Amazon is going to emerge from this with greater market share, but it will also -- it's
looking increasingly likely emerge with even greater questions around its treatment of employees.
We know the New York Attorney General, for example, is looking at this.
CHATTERLEY: Yes. Time to bring in monitors, I think. Part of being an essential business and I'd argue the government should be helping with
this, too. But that's a whole different story.
Clare Sebastian, great to have you with us. Thank you.
Saudi Arabia, meanwhile, I'm having a major rethink on investment following the collapse of its oil income and of course, the coronavirus pandemic.
Although oil prices are off the lows, the world's largest exporter is set to slash spending -- one of the world's largest exporters. Let's not forget
the United States.
John Defterios has all the details on this. John, when I saw these numbers and these measures, I was completely astonished at the measures that
they're taking. They chose to engage in a price war and oh boy, now people are paying the price. Talk us through some of the details.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, the narrative certainly has changed even from Saudi Arabia in the last 10 days, Julia,
and now the announcements are coming fast and furious.
[09:15:10]
DEFTERIOS: I think this is the key number, if we can put it up on the screen here. This is net foreign assets being held by the Central Bank at
$465 billion. The problem is this key threshold is a half a trillion dollars.
But if you go back to 2014, that was $750 billion dollars. So, that is cash burn in a period of six years and the lowest level since 2011. And this
prompted the very respected Minister of Finance Mohammed Al-Jadaan in an interview over the weekend with an Arabic broadcaster to say that
everything is on the table all of a sudden, and we will cut, it will be painful except for critical needs of the citizens.
So, that sounds rather dramatic and it brings into question the 2030 plan for the Crown Prince, Mohammed bin Salman who is the son of the King, the
neon futuristic city, what happens? The big tourist destinations in the mountains? The Red Sea Island resorts?
This is all on the drawing board at this stage. The announcements aren't formalized, but you get the message. They are starting to retrench.
SABIC, one of the biggest chemical makers in the world reported first quarter loss of $253 million, and that was before the coronavirus really
set in said it is cutting all CapEx going forward unless it's essential.
And then finally, late night last night, we heard word through a Ministerial Decree that private sector companies can cut salaries by 40
percent. That's extremely unusual because of the Saudi penetration in the private sector.
Secondarily, if the pandemic continues for six months, they can lay them off. So, this is an oil crisis. And one would say on the positive side,
this Crown Prince is not waiting. They're taking measures now to get ahead of the curve. But it almost sounds like a hint of panic, if you will --
Julia.
CHATTERLEY: I was about to say that, John. I was about to say how did these kind of measures resonate domestically, and particularly for one,
their handling of a crisis, but what we've seen in the ensuing three to four months in terms of the Crown Prince, what does this mean socially and
domestically and perception of leadership?
DEFTERIOS: Well, he has the support at this stage, of course, as the Crown Prince, his father is the King. He has this roadmap to go forward.
The challenge has been the level of spending and the lack of foreign direct investment, and then you have a price war, and then this oil crisis.
So, clearly he needs to get that all shored up. Again, the Finance Minister was very direct with the language. Now, you have another benefit here,
Julia. Saudi Arabia has some 30 million citizens so the job is tougher.
You have states like the UAE, Kuwait, Qatar -- all slowing down, but their sovereign wealth is over $2 trillion. Now, the next level is the bigger
states like in Egypt that has a population of 90 million consumers saw the worst PMI figures on record dropping to 29.
So, they did all these reforms in 2019 with the International Monetary Fund, devalued the currency, stabilized the economy, and lo and behold, the
Black Swan did arrive here.
So, these are some of the major challenges in the Middle East. And all of these states are dependent on higher oil prices.
Finally, the silver lining, if you will, UBS was saying, today, by the end of the year, we could see a rebalancing of the market, oil at $43.00 by the
end of the year, averaging $55.00 in 2021.
It even prompted a tweet from President Trump in the last half hour saying, I like the fact that the demand is rising, so to our oil prices. He doesn't
want it too hot, not too cold, but clearly north of $30.00 a barrel is much better than where we are today.
CHATTERLEY: Yes, but it's just one crisis that we're dealing with at this moment, and the broader concerns about demand in COVID-19 or another.
When the likes of Saudi Arabia has to put a statement out saying it wants to maintain its peg against the U.S. dollar and not de-peg and allow the
currency to weaken, you know there are challenges in this region. I think that was one of my big takeaways hereto. John Defterios, thank you so much
for that. We'll keep an eye on some of these measures.
DEFTERIOS: You bet.
CHATTERLEY: Great. Thank you. Coming up, after the break here on the FIRST MOVE, exclusive access inside the German airline, Lufthansa as it seeks for
a bailout.
And later in the show, as I mentioned already, the CEO of so-called e-mail killer, Slack, tells me why companies need to throw everything at
communications at this moment. Stay with us, we're back after this.
(COMMERCIAL BREAK)
[09:22:23]
CHATTERLEY: Welcome back to FIRST MOVE live from New York where we're still looking like we're heading for a green open for U.S. stocks. Look at
that positive territory.
Investors, I think remaining hopeful here about the reopening efforts of economies around the world and the transition to the new normal.
It's a harsh new normal for some companies, though and individuals.
What about the airline stocks? Well, they're bouncing premarket after Monday's broader selloff sparked by the news, if you remember, that Warren
Buffett has sold his stake in the four biggest U.S. carriers.
Well, following that there, there are reports that now United is aiming to slash some 30 percent of its management and administration staff this year.
A United executive has said in an internal memo that employees should seriously consider taking offered buyouts.
In the meantime, Virgin Atlantic says over 3,000 jobs are at risk as passenger demand collapses. It's also looking at temporarily closing
operations at Gatwick as it holds bailout talks with the U.K. government.
The airline founded by Sir Richard Branson says a recovery to pre-crisis levels may take up to three years.
In the meantime, Lufthansa says its survival is its biggest priority as its bailout talks continue with the German government. The group's annual
general meeting was held virtually for the first time without shareholders present in the room while Lufthansa's passenger numbers collapse.
Cargo operations, meanwhile, are still going on. Senior international correspondent, Fred Pleitgen has been granted exclusive access.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): While most of Lufthansa passenger fleet stands idle at the company's hub in
Frankfurt, grounded due to the coronavirus pandemic, the cargo wing is still humming. This plane carrying medical gear among other things, getting
ready to depart for the U.S.
The pilots saying they constantly have to adapt to new rules for international travel in times of the pandemic.
(BEGIN VIDEO CLIP)
JENS PIOTTER, CAPTAIN, LUFTHANSA CARGO: We have longer duty periods so we have -- you need more pilots in the cockpit.
We are flying with four pilots, so for example, when flying to China.
(END VIDEO CLIP)
PLEITGEN (voice over): Lufthansa has even had to convert some passenger planes into cargo planes to meet demand. Those weren't hard to find as
Lufthansa Group says it's only flying about one percent of its usual passenger load.
Management saying Europe's largest airline group needs billions in bailout money from the German and other European governments.
PLEITGEN (on camera): The Lufthansa group says of the 760 planes that they own, about 700 are currently on the ground. Many of them don't look like
they're going to be taking off anytime soon.
[09:25:10]
PLEITGEN: Now Lufthansa says it needs government assistance to get through this crisis, but also to be competitive in the future.
PLEITGEN (voice over): European competitors like Air France KLM have already secured state assistance and the Trump administration says it will
prop up struggling U.S. carriers with billions of dollars.
Lufthansa says it believes the market for international air travel will remain volatile. And Lufthansa Cargo CEO tells me the company is currently
adapting to an ever changing business environment.
(BEGIN VIDEO CLIP)
PETER GERBER, CEO, LUFTHANSA CARGO: This is clearly a challenge because we have all this assets we have to plan. We need the pilots. We need the
traffic rights and all of that, so this needs of course, some days, but sometimes we have to adapt really in hours.
(END VIDEO CLIP)
PLEITGEN (voice over): For now, Lufthansa continues to bleed money as its planes standstill, with only the occasional one taking off what is normally
one of Europe's busiest airports.
Fred Pleitgen, CNN, Frankfurt, German.
(END VIDEOTAPE)
CHATTERLEY: Budget airline, Wizz Air says it is adding new routes to Greece and Portugal in anticipation of travel restrictions being eased
across Europe.
It comes as the Greek government aims to persuade tourists to return this summer. Nic Robertson is once again in Athens for us.
Nic, we were discussing your interview with the Prime Minister of Greece yesterday and I was just fascinated as we sit here in the United States and
we watch, I think, countries that have managed to tackle this well and begin the process of reopening.
How hopeful are people that you speak to there and businesses that the tourists will come back, and what measures that they're putting in place to
reassure them?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: You know, I think there is a real night and day feeling compared to the weekend to today,
it's suddenly busy again, and you really feel that this is Phase 2 of COVID-19, the sort of how do we get back economically? Carefully stamped by
the government.
Now, what do people here really think? You know, I think everyone is just totally realistic about it.
No one thinks it's going to be like it was before this summer. Of course, they're hoping that it will come back to a degree, but there's a double
burden with having tourists and that is a potentially bring infection.
So, there's a level of caution about it. But the airline piece and international cooperation is such an important part. It doesn't matter to a
degree what the Greek government decides or doesn't decide on this issue.
You know, does Germany advise its citizens against visiting other countries like Greece? That's going to play a major factor. And airlines -- is there
a new international agreement for people traveling? Should they have a test -- a COVID-19 test to see if they've got any kind of immunity against the
virus before they leave home and have a sort of health passport? So they arrive, if you will technically clean and that they don't travel, if
they're not.
All of these questions are still out there, but the government here is putting in place, I mean, just to be really clear, they are putting in
place steps, you know. Yesterday was you know, the bookstores and the flower shops and the hair salons.
And on the first of June, they will be opening restaurants for takeaway, and the thinking here is, you know, restaurants can do better in the
summer. It will be good for tourists eventually, because people can sit outside and the virus is thought to spread less well in warmer weather.
But tourists aren't anticipated to begin arriving until the first of July. That's when the country sort of has that threshold to allow them in and
they're hoping that maybe, August, which is their biggest month of the year, can get some level of business, but nobody from the Prime Minister on
down to the small businessman here is fooling themselves thinking, yes, we dodged the bullet of COVID-19 Phase 1 and there's a silver bullet coming to
fix the economy and it's called tourism.
But they are not even sure that that bullet, if you want to call it that, the people that generate the money when they arrive are actually going to
be, sort of technically able to fly around freely, planes or health passports, whatever they'll be.
CHATTERLEY: This is such an important point because we're hearing from the airlines what their anticipated recovery is, and they're saying two, three
years if you sort of tie the pieces of the story together, the belief from them at least is we're simply not going to be traveling the way that we
were before, particularly for your reason.
That, I think, people are going to be reluctant to see infection spread or what the risk of crossing borders looks like, Nic, what is the probability
-- the possibility that we see concerted action in Europe to coordinate this, to discuss, to make sure that borders are protected, but they're also
open to allow people to travel safely.
ROBERTSON: Every country has vested interest in this. Greece because it feels that it got the first phase right, hopes that its voice is being
listened to in Europe.
You know, I was speaking to people in the Western Isles of Scotland where they haven't had any recent infections for several weeks. They don't really
want to see outsiders arriving there yet, and islands here in Greece, although they want tourists, there will be the same sentiment.
[09:30:17]
ROBERTSON: You have to have confidence. Confidence in the tourists that they're going to come and be safe. Confidence in the community that they're
coming to that the community is going to be safe.
And part of that assurance comes from the airlines saying that the people were bringing you and moving around are safe, and we know that typically,
you know, international agreements of this sort of level of detail and a different national interest are hard to hammer out.
But there's an expediency here to it and that is, you know, it's tourism, it is business. There's an expediency and perhaps as we've seen, trying to
develop vaccines, et cetera, that expediency for business, as well as the cure will make decisions happen faster.
CHATTERLEY: Nic, you've given me goosebumps. Confidence and coordination - - vital.
Nic Robertson, great to have you there. Thank you so much.
All right, the market opens, next. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. This morning, U.S. stock markets here in the United States are up and running. As expected, we do see a
positive open, a continuation in fact of the late-day rally we saw on Monday.
All of this, though amidst a fresh evidence of the pain, the economic pain that the shutdowns are inflicting on global businesses.
Let me walk you through what we've seen. Fiat-Chrysler pulling its earnings guidance after posting an almost $2 billion quarterly loss.
In the meantime, GE's aviation unit is set to cut some 13,000 jobs. L Brands is scrapping plans to take Victoria's Secret private, then to the
cars base again, car-hiring Hertz may be forced to file for Chapter 11, too, and Norwegian Cruise Line says it may be forced out of business.
Paul La Monica joins us on all of this. Paul, the economic damage here piling up as you can see. For me, there's some key stories here.
[09:35:10]
CHATTERLEY: There's weaker retailers that have been disrupted who are ordinarily struggling before this.
Hertz Cars disrupted by the likes of Uber, Lyft, for example, and then the travel industry, which we know is severely damaged. None of this I think is
unexpected, unfortunately, with what we're seeing.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, unfortunately, Julia, I agree with you. None of this should be considered a surprise at all.
I mean, we know that if you look at Victoria's Secret, you know, there have been hopes that they were going to sell the private equity, but you know,
the question now in an environment like this, where so many stores are closed, can a company like Victoria's Secret that was already struggling
because it was disrupted by competitors like Aeire and Madewell and others, you know, how could they really survive in a market like this?
So, you know, L Brands is hoping to still go through with this transaction where they can spin off Bath and Body Works, you know, a separate publicly
traded company, but what does that mean for Victoria's Secret? I think that remains to be seen.
And then you look at Hertz. The good news with Hertz, if you want to call it that is that they just filed with the SEC this morning saying that
they've reached a forbearance agreement with some of their lenders to give them a little bit more time to work on a financing deal. They now have
until about May 22 or so.
So, we might not get that bankruptcy filing this week, as originally reported, because they're going to be working on a deal with their lenders.
But as you point out, Waymo, Tesla, Uber -- all of these tech companies have disrupted the rental model for cars.
CHATTERLEY: Paul, you raise a great point here, too, and that is by the time we start to hear about these chapter filings, the plan for the future
is normally in place. It's been talked about. What are they going to do with the debt? How are they going to restructure? What does a slim line
version of the company look like?
What about the ones that we aren't hearing about here? The companies that are struggling with debt loads, struggling to rearrange their finances?
This is also what I worry about.
LA MONICA: Exactly. I mean, we talked about this yesterday. J Crew, good news for them is that there is -- filed for bankruptcy. They pledged that
they will come out of it with lower debt loads and when stores can reopen in the wake of the pandemic that's shut down the retail industry, they
hopefully can get back on track.
Obviously, you know, I am not sure that's going to happen, but at least there's a plan. There are many other retailers out there that we talk
about, the likes of Sears, which already went Chapter 11 once, could they do the proverbial Chapter 22?
Are we going to see JCPenney and others that are struggling also potentially have to close more stores and file for Chapter 11? It might be
some time before those companies are able to actually make those reorganization plans in the wake of what's going on right now in the global
economy.
CHATTERLEY: Yes, and that's the challenge and it sort of belies the performance that we're seeing in stock markets, I think. But that's a whole
different story. Paul La Monica, great to have you with us. Thank you.
Now, it's not just retail that's been upended by the pandemic, the work environment, too, is unrecognizable. How we interact is, quite frankly,
never mind work.
Offices around the world are closed and tools that connect workers virtually are seeing a surge in new users; among them is Slack, the company
once called the e-mail killer. The app combines chat and internal mail into channels to create a one-stop solution for work conversations and beyond.
Joining us now is Stewart Butterfield. He is CEO of Slack and just for disclosure, we also need to say that CNN uses Slack internally, too.
Stewart, great to have you with us. Thank you so much for being on the show. You recently told your workers that, look, you have to get used to
this idea. We're probably not going to be back in the office before September of this year. Talk me through that decision and what response
you've had from employees.
STEWART BUTTERFIELD, CEO, SLACK (via Skype): It's a decision that's based on when we think we're going to expect or require employees to come back
in, and I think the minimum for that is September and it's a mixed reaction, to be honest.
I think there's a lot of people who are comforted by knowing some kind of time and want to be able to feel safe, and I think others who are always
hopeful that they're going to be able to get back to some kind of normalcy, maybe a little bit stressed out from being cooped up with the kids and a
spouse and everyone trying to do video calls all day.
CHATTERLEY: Are you being conservative, based on what you're seeing with the health risks?
BUTTERFIELD: Yes. We are being conservative. It's the health risks and it's also, you know, kind of being a good citizen. We're not an
organization that needs to go first. I don't think there's any kind of prize for that.
We're surviving pretty well in this work from home and remote work environment. So, no pressure to come back to the office and you know, I
think we're likely to go last.
CHATTERLEY: You know, it's interesting you're in a relative luxury position of being able to make that choice because people can work from
home.
You're also pretty punchy about leadership and the handling of this. I just want to read our audience a tweet that you mentioned, because I do think
this is really important. You said, "From my perspective, wasting April was worse than wasting February. The virus was inevitably going to infect many
people, many were going to die. But now we've found nearly the perfect worst of both worlds, balancing point, economic devastation plus no
progress, and no plan."
Stewart, what do you want to see, as a leader of a company? What do you want to see from the leaders of this nation?
[09:40:43]
BUTTERFIELD: I would love to see a strong Federal response. I think it's too much to ask from the governors to try to coordinate at that level.
And when I say that, I mean, I don't -- I'm not an expert on the specifics of their response. But I think we have things like the Army Corps of
Engineers who could be building testing stations nationwide. We have a lot of resources at the federal level that should be deployed.
And I think part of it is just articulating division, getting people on board. It's not dissimilar in so much in leading a smaller organization.
People want to have a plan. People want to feel comforted. And I think that over the last couple of weeks, there's been a real pullback and lack of
leadership from the Federal level, which will be difficult to overcome.
CHATTERLEY: It's a difficult message, but I think it needs to be heard. So, thank you for sharing it.
So, I do want to talk about the business, too. It's funny back in 2016, when Microsoft sort of got into the game of looking at video communicating
in this way, you wrote them a letter saying, look, we're genuinely excited to have competition, but actually, this space isn't as easy as it looks.
And I listened into some of the Microsoft earnings call last week, and they didn't stop mentioning their product. In fact, I lost count of how many
times they talked about Teams.
If you had to write that message today to Microsoft, what would it say?
BUTTERFIELD: Well, that's a good question. I hadn't actually thought about that. Well, I think what we've seen over the last couple months, huge surge
in the usage for a whole bunch of tools, for Zoom, for Microsoft Teams, for Slack -- and showing up in different areas.
So, I think that Slack is specifically designed to get messages out of inboxes, which put the individual first and into channels which put the
team or the organization first and kind of drive organizations toward a greater degree of alignment and therefore, agility.
We've seen private announcement after private announcement on the Team side, which is focused on voice and video calling, which I think is a very
important feature. Microsoft had a hundred million people using Skype for Business that they're transitioning over.
So, I think that a lot of what we said in 2016 has kind of worn out in the sense that the actual space that Slack has carved out and the business have
carved out, so far hasn't really seen any competitive pressure from Microsoft.
CHATTERLEY: Very quickly. What you're seeing today in terms of users of your business and the growth in users, do you think that's maintained? Do
you think the new normal, at least for a while is what we're seeing today? Distance communication.
BUTTERFIELD: It's kind of -- it's easier just to think about the short term and the very long term, and the medium term is a little bit more
clouded. We saw an enormous surge in new customers and new teams signing up for Slack and increased usage among existing customers.
And in the long run, I think this is going to open up a lot of possibilities in the software business more broadly. Organizations that
thought they could never work remotely, or there would have been a three to five-year transition when they have to do it in a week, it turns out, they
can do it in a week, which I think opens up a lot more possibilities for digital transformation.
In the medium term, however, I think we still have no real idea how this is going to affect small and medium businesses, what the real economy is going
to look like two or three quarters from now and how long it's going to take to come back.
So, it's a little bit of a mixed bag in the medium term.
CHATTERLEY: Yes, and that's the challenge. Stewart, great to chat to you. Thank you so much for sharing your thoughts and wisdom on leadership.
Stewart Butterfield, CEO of Slack. We will stay in touch and stay safe, sir. Thank you.
Coming up on FIRST MOVE, a bird's eye view of the global economy from one of the world's largest distribution and transport companies. That's next.
(COMMERCIAL BREAK)
[09:47:24]
CHATTERLEY: Welcome back to FIRST MOVE. XPO, one of the biggest logistics and transport providers in the world not immune from the impact of all the
lockdowns we've seen says first quarter revenues were down around six percent from a year ago with more than 1,500 locations all around the
world. XPO is uniquely positioned to take the pulse of a global economy.
Joining us now, XPO Logistics CEO, Brad Jacobs. Sir, fantastic to have you on the show. Just talk me through what you're seeing because I said it
there and I meant it, whether it's logistics or transport or distribution facilities. You have a leading indicator sense of what's going on in the
world. What are you seeing?
BRAD JACOBS, CEO, XPO LOGISTICS: Well, Julia, you're right. We are a leader. We're the first to go down and we're the first to come up. And we
have a good window into what's going on in the economy in certain geographies.
So, if you take the perimeter of France, U.K., Spain, we're the largest transportation network there. If you look at all of Europe, and you look at
logistics, we run about 800 warehouses worldwide, about half of them are in Europe, and we're the largest e-fulfillment platform in Europe for e-
commerce. We see a lot that's going on.
Here's what we're seeing in Europe, let's start there. In Europe, it tanked hard, and then it bottomed out about four weeks ago, and it's come back
fast and furious.
So, if you look at our LTL volumes, our Less Than Truckload volumes, they are up anywhere between 12 and 23 percent in a three-week period.
If you look at the U.K., U.K., it's up a little bit less than that. It's up like low single digits. That's not surprising since the U.K. was hit by the
pandemic afterwards.
If you look at the logistics in Europe, the bottom was around April 14th. You might say, why am I picking that one date? Because we tracked all our
customers when they closed the warehouses, when they didn't have work to do.
And the worst point was April 14th when we had 49 warehouses closed. And today we have about 25 closed and that's working through.
Let's go over the United States now, Julia. Julia, we don't see that. In the United States, we see it came down hard. It's stabilized at the bottom.
It's not getting worse. It's not getting better. It's not getting better yet. We hope it's going to get better over the next few weeks as businesses
reopen.
For instance, our automotive customers were at zero, now they're reopening over the next few weeks. We have to see how it plays out.
CHATTERLEY: That's interesting, the point that you make. Is the lack of rebound in the United States expected just because we're that much further
behind what you're seeing, particularly in Western Europe? Or is that, do you think about a lack of confidence perhaps or a slow reentry to
reopening?
[09:50:17]
JACOBS: I think it's the former, I think that the pandemic hit China first and we have some capacity in China. They got hit like everybody else and
that has started back in January, and now that's back to almost normal.
It then came over to Italy, and then it went to Spain and France, then it went to the U.K., and then a couple of weeks later, it's around middle of
March, maybe Friday, March 13th, Friday, the 13thth, the infamous March 13th. It came here in a major way and things started shutting down.
So, it's only natural that we'll come back later than Europe.
CHATTERLEY: I want to just ask you, you made some really quite fascinating comments in there, in your letter to employees and to investors.
One thing was about the work and the efforts that you're making to support your employees and you put them first and foremost, including their mental
health, which I thought was important.
But the other thing you also mentioned and it stood out to me was that you said, the crisis made partners of fierce competitors in our industry. We've
all had to pull together. Do you think this lasts and how are your employees doing?
JACOBS: I don't think it lasts forever with the same intensity as it's happening during a crisis. In a crisis, we kind of forget pettiness. And
maybe after the crisis, we get normal again, we won't be as petty, but we'll still compete each other very, very fiercely.
On our employees, that was our first thought when the pandemic hit here is how do we protect our employees? We have 100,000 employees at quarter end.
How do we fulfill our responsibility to keep them safe at work? They're the frontline employees actually coming to work every day, not sheltering in
place and going into harm's way.
How do we protect them? How do we protect them physically? How do we protect them emotionally and psychologically? How do we protect them
financially?
So, from a physical protection point of view, we had to get smart real fast, and we read up everything we possibly could immediately from the
government guidelines from the experts and so forth, and we implemented them with haste, right away, and they've been working, which is great.
We've got to stay vigilant to make sure they keep working.
In terms of the financial health, we've incentivized people, we've rewarded them by giving them raises, by giving them special bonuses by giving a lot
of paid time off and encouraging anyone who is feeling sick or is in contact with someone feeling sick, just stay away from the office, we will
pay them anyways.
CHATTERLEY: I think there is a lesson in here for other leaders, but we have to wrap this up here, but and we will get you back because this is a
fascinating discussion and we will continue.
Brad Jacobs there from XPO, a lesson I think in leadership, particularly where essential employees are concerned. Sir, thank you.
JACOBS: Thank you.
CHATTERLEY: All right, we're going to take a break. Coming up, Nike donates to workers on the front lines -- speaking of leadership -- fighting
COVID-19 and dancing for joy. Two reasons to be cheerful for Elon Musk. Stay with us.
(COMMERCIAL BREAK)
[09:55:22]
CHATTERLEY: Welcome back to FIRST MOVE. Finally today has a bit of a skip and its step, Nike is donating 30,000 pairs of shoes to healthcare workers
around the United States.
The shoes were specifically created after Nike designers went to see how people worked at a hospital in Oregon. They will be given to health care
workers and to the Veterans Health Administration. Some perky shoes for our heroes.
And the coronavirus is throwing some anomalies in car sales data. Right now, the bestselling car in the U.K. is the Tesla Model 3. The Society of
Motor Manufacturers and Traders said 658 were sold in April, but bear in mind, they dropped some 97 percent. That's car sales in the U.K. Perhaps
they racked up those orders before the lockdown.
Also baby news for Elon Musk, proudly tweeting this picture of his baby boy with his partner, Singer Grimes. That is a very cute baby. Oh, good grief.
I hope they're not real.
Anything is possible with Elon Musk.
That's it for the show. Stay safe. We'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
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