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First Move with Julia Chatterley
U.S. Consumers Spend Less Than Expected In July As Efforts To Open The Economy Stall; The Owner Of The Game, Fortnite Sues Apple And Google; China's Answer To Netflix Hits Trouble As U.S. Investigate Its Financial Records. Aired 9-10a ET
Aired August 14, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:17]
ZAIN ASHER, CNN INTERNATIONAL ANCHOR: Coming to you live from New York, I'm Zain Asher. This is FIRST MOVE and here is your need-to-know.
Growth slowdown. U.S. consumers spend less than expected in July as efforts to open the economy stall.
An epic battle. The owner of the game, Fortnite sues Apple and Google.
China's answer to Netflix hits trouble as U.S. investigate its financial records.
It is Friday. Let's make a move.
Welcome to FIRST MOVE on this Friday. It is so good to have you with us once again. I'm Zain Asher filling in for Julia Chatterley.
Let's begin with a check of the U.S. markets. Right now, U.S. stocks are mostly on track for a slightly lower open after a weaker than expected read
on retail sales.
The U.S. reporting a short time ago that retail sales actually rose 1.2 percent last month, which is a marked decline from the spikes we saw in
both May and June. The big fear is what will happen to spending this month now that enhanced benefits for unemployment Americans have run out.
Millions of jobless workers may have to wait until September to get additional aid as stimulus talks break down in Washington.
In the meantime, stocks are also lower in Europe. Travel-related firms are among the hardest hit after the U.K.'s latest quarantine restrictions.
Details on that with our Nina dos Santos a little bit later on in the show.
Asian stocks were mixed as well. China shares advanced despite disappointing economic data. Chinese retail sales fell 1.1 percent last
month. Factory output rose but came in weaker than expected as well. All of this as we await trade talks over the weekend between Beijing and the U.S.
All right. Let's get straight to our drivers now. More on today's market picture.
Christine Romans joins us live now. So retail sales, Christine, coming in at 1.2 percent weaker than we had been anticipating. You know, to add to
that issue is the fact that unemployment insurance has run out for millions of Americans, so then what will happen to retail spending in the future?
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Yes, there's a big concern that you've seen the best of the resumption of retail sales
over the past three months.
We have three months in a row of rising retail sales, 1.2 percent. That was light of what expectations were. They revised June higher, up 8.4 percent.
So, that shows you that even as they were having these reopening across the country, people were buying more stuff.
And then in July, people were still getting the extra $600.00 a month in their unemployment check, so they had money in their pockets and they were
spending on things like electronics and appliances, up something like 23 percent retail sales there. Gasoline, clothing, resumption of clothing
purchases. And food services and restaurants in July, they were still spending more money at those places.
But there was a decline in auto sales. Auto sales is something that helped to sort of pull things down here. And looking forward, a couple of things
here, there's concerns about coronavirus cases and new hotspots, also concerns about the end of that extra money and that will definitely be felt
in the economy and could hurt consumer confidence.
You know, the Senate went home, so they're not talking about more stimulus. And when you look at numbers like these where you see the marked
deceleration of what we were hoping would be a V-shape recovery, it just seems to me like Congress would want to be spending money and quickly to
keep this recovery on track, but they are not talking right now.
ASHER: Yes, those stimulus talks have stalled. In terms of what's on the calendar this weekend, we've got U.S.-China trade talks. Just walk us
through what we can expect to actually come out of these meetings. Will there be a recommitment to Phase 1?
ROMANS: I'm not sure what the deliverable is going to be. I mean, this is going to be a compliance and about how they are meeting their goals and
promises here so far.
We know that the farm sector in the United States has been simply devastated for several years, actually, and now really needs the help of a
resumption of big purchases from places like China.
But the coronavirus pandemic has slowed trade around the world, so it really puts a layer of complication and uncertainty onto the trade picture
overall.
ASHER: Christine Romans live for us there. Thank you so much.
ROMANS: Nice to see you.
ASHER: Epic Games has fired the opening shot in what could be a key battle with Apple and Google. The company behind the online game, Fortnite is
suing the tech giants for removing the game from their app stores.
Clare Sebastian joins us live now. So, Clare, why was this game removed from both Apple and Google's App Store? It turns out that Fortnite is being
accused of not playing by the rules.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, and all of this unfolded really quite quickly on Thursday. What happened was that Epic Games, the
maker of Fortnite, they announced to users of Fortnite that they could get a 20 percent discount on in-app purchases if they went directly to Epic and
bypassed Google and Apple's proprietary payment systems, which they are required to use according to the App Store and Google Play policies.
Now, Apple and Google both came out and said that was in violation and they removed the app and Epic is now suing both of them.
[09:05:26]
SEBASTIAN: So clearly, they are willing to take on this pretty high stakes fight to protest what is a 30-percent commission that both of these
companies take on app downloads. Obviously, Fortnite is free, but in this case, in-app purchases.
In Fortnite, you purchase all kinds of things, particularly the virtual currency, V-Bucks, so they make a lot of revenue on that. So clearly, they
are willing to take on this battle to claw back some of that revenue.
The company has been very vocal in the past about how it sees that as unfair and anti-competitive, particularly when it comes to Apple. Because
on Google, don't forget, the android ecosystem is much more liberal in the way you can download apps through a variety of different App Stores, not
just Google Play, whereas Apple relies on the App Store.
ASHER: So how material do you think this could end up being for all the parties involved financially?
SEBASTIAN: So when it comes to Apple, I mean, this is almost a $2 trillion company. Now, the valuation is just sort of off the charts compared to
other companies.
I think, when you have a $17 billion business like Epic Games, which is the underdog in this, then you will see what you're dealing with.
Apple has made a lot of money in terms of services, which the in-app purchases and that commission are part of, that's up to $13 billion as a
standalone company, but that's still only about 20 percent of their revenue.
So for Apple, this probably isn't all that material at the moment unless it starts to set a serious precedent.
As for Epic though, perhaps this is more of a risk for them. They make a lot of money through these in-app downloads, particularly on mobile.
They've passed a billion dollars in lifetime spending from players, according to one company earlier this year, partly because of the
coronavirus pandemic accelerating gaming.
So they perhaps have a lot more to lose and that was particularly of course in the App Store, rather than Google Play, which they only launched in
April this year.
ASHER: All right, Clare Sebastian live for us there. Thank you so much.
China's answer to Netflix is proving some real life drama. IQIYI U.S. shares are set to plunge for a second day as an investigation by the U.S.
Securities and Exchange Commission continues.
CNN's Selina Wang is in Hong Kong for us. So, Selina, just walk us through what the probe is about. What is the SEC looking for? What are they
accusing IQIYI of doing in terms of their accounting practices?
SELINA WANG, CNN CORRESPONDENT: Zain, we can tell that investors are clearly rattled by this investigation by the SEC into IQIYI.
It was prompted by a report from Wolf Pack Research back in April claiming IQIYI has been committing fraud well before its IPO in the United States in
2018.
For some context here, IQIYI is often referred to as the Netflix of China. It is owned by Baidu, it is a video streaming giant. It is a household name
in China. It's known for its popular TV shows, movies and dramas.
And this Wolf Pack Research report alleges that it's been vastly inflating its revenue by up to 44 percent and user numbers by up to 60 percent.
They allege that the company has been hiding this fraud from investors and from auditors by inflating its expenses in order to burn off that fake
cash.
Now, at the time IQIYI pushed back against the report saying that it included many unsubstantiated numbers and errors, but now it says that it
is cooperating with the SEC and that it does not know the outcome or the timing of what they're going to investigate.
ASHER: Okay, so they are cooperating. They've been accused of inflating their expenses, among other things. So how does this probe fit into the
broader dynamic and the broader tensions between the U.S. and China right now?
Because it was only just a couple of weeks ago, we saw the announcement about WeChat and TikTok being banned in the U.S. by President Trump and
therefore potentially having to look for another buyer.
Just walk us through what this means in the broader context.
WANG: And if we just look at this from the financial decoupling standpoint, I mean, the timing could not be worse. This comes shortly after revelations
of a massive accounting scandal at Luckin Coffee, which is another Chinese upstart. It is a coffee chain, and ultimately they were de-listed from the
NASDAQ and its Chairman and CEO were fired.
And this also refreshes the story, Zain, that Chinese equities are dangerous. Back in 2011 and 2012, more than 100 Chinese companies were de-
listed or suspended from trading because of allegations of fraud or of accounting scandals.
And allegations like this only further these growing calls in Washington to limit financial flows from the United States to China.
Back in May, the Senate unanimously passed a bill that would make it impossible for Chinese companies to list on Wall Street if they did not
open up their books.
In addition to that, the NASDAQ has also proposed legislation and rules that would make it more difficult for Chinese companies to list.
So really, could it be a more terrible timing for this type of allegation.
[09:10:24]
ASHER: Yes, you said it. Selina Wang, live for us there. Thank you so much. Appreciate it.
In Hong Kong, Jimmy Lai, the pro-democracy newspaper owner has been speaking to CNN after being released on bail. Police arrested him earlier
this week under the controversial new security law. Lai spoke to our Will Ripley.
(BEGIN VIDEOTAPE)
JIMMY LAI, FOUNDER, APPLE DAILY: It's very stupid to think that Hong Kong can be independent when they can send troops to turn you down in free
hours. This is not impossible.
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: So you're going on the record saying you're not pushing for independence, but you want people to have the
right --
LAI: To keep the rule of law and the freedom we have.
RIPLEY: And the right to say that they want independence.
LAI: Yes, Exactly. The freedom of speech. I don't associate with the independent camp, not at all. I never have.
RIPLEY: Did you meet with U.S. officials at the consulate and other places as China alleges and tried to encourage U.S. officials in Washington? Do
you have a lot of connections in the States to sanction Hong Kong government leaders and whatnot?
LAI: Well, I did not do it in person, but in the interview, I did -- I said, you know, the only help that we can get is the U.S., and when they
asked that, whether the U.S. should revoke the special status of Hong Kong, I said that is sensitive. What you should do is to censor China.
RIPLEY: Do you feel that some aspects of the pro-democracy movement have pushed China too far and lost?
LAI: Well, you can't say that we've moved China too far. We never burned a car. We never looted the shops.
RIPLEY: Some people did light fires.
LAI: Like those guys. Well, set fire, yes.
RIPLEY: To property, you know, destroy --
LAI: Yes, but that's a very small scale compared with what the riots are now in the U.S. It's a very small scale.
RIPLEY: There hasn't been a significant protest since this law was passed, even when there were calls for people to come out. People didn't in large
number.
LAI: Yes, because with this law, people won't dare to come out. Only those very hard core supporters of the movement came out.
RIPLEY: So has China already won in that regard?
LAI: I think China only won with the intimidation. The effect is very strong already. Some people have left or are leaving. Many have side-
stepped the movement. And what we have left are those hard core like myself.
RIPLEY: I know your own children were among the group who were arrested. So, you're a parent and you obviously supported the involvement of your own
children.
But for somebody who might not have the money or whose family might not have the money to defend themselves legally, do you think it's a good idea
to go out there and still call for democracy and independence if they now face the risk under this law?
LAI: I think it's a good idea any time in any situation that you are in to fight for your freedom, because without freedom you have nothing left.
(END VIDEOTAPE)
ASHER: All right, these are the stories making headlines around the world.
The Palestinian Authority is withdrawing its ambassador to the United Arab Emirates slamming the UAE's peace deal with Israel as a betrayal. The
agreement requires Israel to suspend annexation in the West Bank, but Palestinian leaders have long urged Arab nations not to normalize relations
with Israel until it ends the occupation and agrees to an independent Palestinian State.
Let's get more now from our journalist, Elliott Gotkine who is live in Tel Aviv for us. So, Elliott, this peace deal is basically only -- the third
only peace deal ever between Israel and an Arab nation. Just walk us through how both Israel and the UAE benefit here.
ELLIOTT GOTKINE, JOURNALIST: There's benefits for both sides. From the UAE's perspective, it gets access to Israeli security cooperation, Israeli
technology. Israel has got a very strong technology ecosystem here.
And also, it has the opportunity for cultural tourist exchanges and the like and they're talking about direct flights running from Tel Aviv to Abu
Dhabi.
It also has the opportunity of being more involved in the ongoing negotiations to try to forge some kind of peace with the Palestinians.
From the Israelis perspective, as you say, this is only the third Arab country that Israel will be signing, will be normalizing relations with,
following Egypt and Jordan.
It means for Israel that they can collaborate, that they will have more opportunities to travel and be kind of freer to have relations trade-wise
and business-wise with the UAE as well, and I think also from Israel's perspective, and certainly Prime Minister Netanyahu's perspective, it kind
of vindicates his policy.
He said last night this was peace for peace. There are effectively no concessions from the Israeli side, whereas in the past, there always have
been.
[09:15:18]
GOTKINE: Now, you may say, well, look, Israel has agreed to suspend its plans to annex parts of the West Bank, but Netanyahu just in the minutes
and hours after that announcement said look, it's still on the table. It's just a postponement at the request of the United States.
I suppose the secular group's concern is that if President Trump doesn't get reelected that a Biden presidency will not allow such an annexation to
go ahead.
So from that perspective, the settlers, many of them are not particularly happy with this agreement either. But most people in Israel certainly think
it's a great deal, but as you say, the Palestinians clearly feel that they've been somewhat thrown under the bus here.
ASHER: Yes, a lot of Palestinians are saying that they weren't warned beforehand that the deal was coming. But, Elliott Gotkine, we'll have to
leave it there. Thank you so much. Appreciate it.
The United States has refused a Russian offer of help with a coronavirus vaccine. Officials in Moscow tell CNN, the White House on Thursday said it
is concerned that the vaccine Russia has approved for use has not completed human trials.
However, Russia says U.S. pharmaceutical companies have shown interest. More than 20 potential vaccines are in various phases of testing around the
world.
Still to come, the U.S. and China review their Phase 1 Trade Deal this weekend amid an escalating tech standoff. We'll take a look at what to
expect.
And the U.K. imposes new quarantine restrictions on countries, including France, to the dismay of travelers and airlines alike. That's next.
(COMMERCIAL BREAK)
ASHER: Welcome back to FIRST MOVE. U.S. stocks remain on track for a mostly lower open. Tech stocks are losing altitude premarket but are still
technically in positive territory.
The U.S. reported before the bell that retail sales rose by weaker than expected, 1.2 percent last month. Retail sales fell by more than one
percent in China last month as well. All of these raising fears that global growth is slowing after months of improvement.
The broader market has run into resistance. The past few sessions with the S&P 500 unable to close at record highs. Encouraging jobless claims data
failed to lift the Dow and the S&P yesterday.
Fears that unemployed workers won't get new help from Congress until next month continues to weigh on sentiment as well.
Top Chinese and U.S. officials are expected to meet by videoconference this weekend to review the progress of the Phase 1 Trade Deal.
At the White House on Thursday, President Trump said the deal has been good for American farmers.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The Phase 1 deal, it's a very interesting situation because you've been hearing the largest order of corn
in history, the largest order of soybeans, the largest order of beef. They've done more than they've ever done.
They have gone into orders that are extremely large -- extremely large -- and our farmers are very happy.
(END VIDEO CLIP)
ASHER: Joining us now is China Beige Book CEO, Leland Miller. Leland, thank you so much for being with us.
So, part of the sort of centerpiece in terms of the Phase 1 Trade Deal was China's commitment to buying $200 billion worth of U.S. goods. They haven't
done that.
So will the U.S. still be as committed to Phase 1 as it was previously?
LELAND MILLER, CEO, CHINA BEIGE BOOK: I think most people in the government right now are scratching their heads because, you know, you have two
components of the Phase 1 Trade Deal.
You have the economic targets, which clearly haven't been met. They are failing by all metrics. And then you have the political decision about what
to do with it.
If the targets aren't being met, but there isn't a political will to crack down on the Chinese or to push back on the Chinese for not nothing hit
them, then nothing really happens and this thing continues to sputter along.
So I think we're at that stage right now where everybody is looking at Phase 1 as this very difficult deal to defend, but at the same time,
there's not a strategy for how to go forward into a more combative mode and certainly, the Biden campaign hasn't attacked Trump enough on this.
And so you really haven't gotten into the full dynamics where the deal is under siege, but I think we're heading there.
ASHER: Okay, so you think we're heading there. The deal would be under siege.
So just from China's perspective, though, a commitment to $200 billion worth of U.S. goods is quite a lot given what's happened to their economy.
Yes, their economy is recovering, but it's still fragile at this point. So what have they been through this year?
MILLER: Well, it's not just difficult, it's impossible to meet. You know, the targets were ambitious virtually across the board from the very
beginning, but once COVID hit and it not just affected the Chinese economy, but the global economy, there was absolutely no chance that China could hit
these targets.
So, again, the question then moved from the economic sphere, okay, the Chinese are going to fail by the original deal commitments, to the
political side, how bad do we want them doing something?
And I think that's what the White House is struggling on right now. They don't want the Chinese to cut off all corn purchases and soybean purchases
and others. You know, as the President said, they just talked about some very big deals that are on the table.
But the deal is not working and the question is, if you're running on China and you're running on trade and these are two of your big priorities for
your administration in your first four years, how long can you continue to defend a deal that's just failing across the board?
ASHER: Is it surprising that both sides are still willing to negotiate when it comes to trade? Just given the broader rift we're seeing right now
between the U.S. and China, be it sanctions against individuals on both sides, closed embassies, what's happening right now with WeChat and TikTok
and their operations in the U.S. being threatened?
Does it surprise you that we're here in terms of what's happening this weekend?
MILLER: No, it really doesn't. I mean, from the Chinese perspective, if you've given a deal and you understand that if you buy more and more
purchases, then the White House is going to leave you alone and the White House is going to keep the Republicans in Congress from attacking you more
aggressively, then you buy more.
I mean, your goal is to try to get through November to see whether you have to deal with a Trump 2 or a Biden 1 administration. So I think it makes
absolute sense for the Chinese to play the game as long as they can.
The administration has a different set of complexities and that is they have to be tough on China. Trump is going to be running as the guy who was
tough on China like nobody else.
But it's very difficult to talk about how much you're beating down the Chinese in every way, but they have a trade deal, they're not adhering to
the trade deal and you're not doing anything about it.
So there's a break here that's going to have to be rectified when Trump goes on the record in the run-up to the campaign and the campaign debates,
et cetera.
ASHER: So beyond the fact that China isn't meeting the main target and that is the main point of the deal, what is likely to be some other points of
contention over the weekend?
MILLER: Well, I think that the Chinese want to say that as long as you're being mean to us on -- whether it's on TikTok or WeChat or other aspects of
the relationship, it's going to make it very difficult for us to buy all of those goods.
So I think that they simply want to put as much pressure on the White House to tamp down the rhetoric. I think that they understand that this fall is
going to be extremely nasty once we get into it in terms of blaming the Chinese for everything and attacking the Chinese model and the Chinese
system and the Chinese Communist Party.
[09:25:36]
MILLER: So, I think what they would like to do is just hope for the best circumstances and say that Phase 1 Trade Deal was in part reliant on you
being nicer to us, and then it's going to be up to the administration to figure out whether they're going to call the Chinese bluff or not, and this
is where it starts getting interesting in a few weeks.
ASHER: And in the meantime, what is at stake here for the U.S. economy? President Trump in the sound we just played talked about just how
beneficial this deal has been to U.S. farmers.
MILLER: Look, from a macro perspective, this isn't moving the needle. I think for President Trump's campaign, it's nice to be able to tell farmers,
you know, you stood with us for years and now we're delivering the goods. You know, we said, trust us, and now we're delivering.
So I think there's a very potent political message here, but from a macro perspective, this isn't moving the U.S. economy one way or the other,
particularly when we're in the midst of the COVID fallout, which is hitting us from every direction.
So it's a very potent political message, but from a macro perspective. The Phase 1 deal isn't doing anything for us right now, which is why I think
it's in a lot more danger than most people understand.
ASHER: Leland Miller, live for us there. Thank you so much. Appreciate it.
Diplomacy in the Middle East, a historic deal sets up normalization between Israel and the UAE. Coming up on FIRST MOVE, the former U.S. Ambassador to
Israel -- that is after the break.
(COMMERCIAL BREAK)
[09:30:01]
ASHER: There we have it, a social distanced ringing of the bell on this Friday morning on Wall Street.
Welcome back to FIRST MOVE. U.S. stocks are up and running on this last day of trading for this week. We have got a lower start to the Dow. The Dow is
down 120 points. Also a lower start to the S&P 500 as well.
Tech stocks are on the rise though for the third straight session, weaker than expected reads on both Chinese and U.S. retail sales are hurting
sentiment and is weighing apparently on the Dow.
We began the week with cyclical stocks in the driver's seat on the hopes for a stronger global economic growth, but that rotation appears to be
running out of steam amid fresh economic concerns and rising COVID-19 cases in Europe.
The E.U. is among those welcoming the historic peace deal between Israel and the UAE, saying that it will help promote regional stability. U.S.
President Donald Trump helped broker the agreement which requires Israel to suspend annexation in the West Bank in exchange for normalized relations
with the UAE.
Some countries oppose the deal. Turkey is considering suspending diplomatic ties with the UAE.
Let' get some perspective now from the former U.S. Ambassador to Israel, Dan Shapiro. He is also as distinguished visiting fellow at Tel Aviv's
University Institute of National Security Studies.
Thank you so much for being with us. So just walk us through how this deal, how this peace agreement between Israel and the UAE changes the broader
power lines and the power dynamic in the Middle East, especially given that both countries have a common enemy in Iran.
DAN SHAPIRO, FORMER U.S. AMBASSADOR TO ISRAEL: Sure, thanks for having me. It's been a long-term strategic objective, bipartisan administrations in
the United States that supported it for Israel to strengthen and even normalize its relations with other Arab States.
And the opportunity here was already there. These are two countries that have had very warm unofficial ties for some number of years, precisely
because they share a common adversary in Iran. They share concern about other extreme jihadist organizations in the region.
And so, they already cemented a quiet security and intelligence cooperation, but now, it can be brought out in the open. It can accelerate
cooperation in many other fields from trade to tourism, to science to technology to health to many other fields.
And that cements a camp of moderate nations aligned with the United States who can in an open way, cooperate together against common threats that they
and we face.
So it's very much a positive from that perspective.
ASHER: Do you believe that there will be other sort of Suni Arab Nations that will follow suit? If so, which ones do you think?
SHAPIRO: Well, the UAE has been in a leadership role in terms of bringing already, even before it was official, into the open some aspects of its
relationship with Israel. But they are kind of the trailblazer.
I think it's quite possible and maybe even likely, that some other Gulf States perhaps Bahrain, perhaps Oman, perhaps others will consider similar
steps in the weeks and months ahead.
Again, this has been a long-term U.S. objective and that will further cement Israel's recognition in the region as a legitimate actor, a partner
in security and technology and increasingly in economic and cultural affairs as well. So this is very much to the positive.
One of the other positive things that came of it, of course, was that it gave Israel a reason to put aside a very bad idea that had been floated,
which was unilateral annexation of the West Bank, which would have probably killed off any remaining chance for a two-state solution between Israel and
the Palestinians.
So in this way, the UAE was able to leverage the opportunity it was proposing to Israel for this normalization and perhaps, being the first of
several, in exchange for backing away from a step that helps to keep the two-state solution alive for a further attempt at negotiations.
ASHER: So if the annexation of the West Bank is off the table, at least temporarily or delayed, depending on what language that Netanyahu used,
what has been the reaction to that among people in Israel, particularly among settlers?
SHAPIRO: First, I think most Israelis are very pleased and excited. They have not seen an Arab State formally normalized relations with Israel since
the Peace Treaty with Jordan in 1994 and the UAE is only the third nation after Egypt and Jordan to do so.
It's the opening of an avenue to commerce and tourism in the gulf. I think many Israelis will look forward to traveling to Abu Dhabi and Dubai. So I
think there is a lot of enthusiasm.
But there was criticism. There was criticism from within Prime Minister Netanyahu's Likud Party and from among settler leaders who felt that he had
promised them that he was committed to annexation, and of course he had.
He had run three consecutive election campaigns around the issue that he was preparing to unilaterally annex portions of the West Bank. He secured
at least temporary or partial backing of the Trump administration to do so and then made this decision to actually trade in annexation in exchange for
normalization.
I think that was a good decision, but he will definitely take some criticism from parts of his political base for it.
[09:35:29]
ASHER: So aside from criticism against Netanyahu within Israel, we've seen expected criticism from obviously, Iran. Turkey is also coming out and
criticizing.
But also among the Palestinian people as well, many of them saying they you know, they weren't consulted, they weren't told about this deal and it
involved them -- it involved the West Bank and you have the UAE essentially speaking on their behalf.
So, how does this change the dynamic between the UAE and the Palestinian people?
SHAPIRO: Certainly, some Palestinians had hoped that normalization would be withheld and only offered as a reward for achieving a two-state solution
and end to the conflict, and that has often been how discussions have been structured in the past.
But I think what this decision by the UAE demonstrates is that they and other Arab States are not necessarily going to wait. They see opportunities
because of their own common security interest, the threats of Iran and other extremist elements to cooperate with Israel.
They don't want to hold back. They see other economic and scientific collaborations that they don't want to hold back. They of course, had their
criticisms of Israeli policies and would certainly have opposed annexation, but they also have criticisms of the Palestinian approach to negotiations,
too often staying away from negotiations, sometimes walking away from negotiations rather than finding a way to keep them going.
So I think it is a signal to the Palestinians that there is still an opportunity. As I said, two-states has been kept alive by annexation being
removed from the table, but that they'll need to get off the sidelines.
I think it's also important that the United States be prepared to transition back into a leadership role in support of a realistic two-state
solution. That's not the Trump plan that was introduced in January, which really doesn't describe a viable Palestinian state, it's something along
the lines of negotiations that had been conducted previously.
Certainly, Vice President Biden is describing a return to U.S. leadership in support of two states where Palestinians could achieve their legitimate
rights for independence and self-determination and a state of their own, while Israel could achieve its goals of security and long term recognition
of its Jewish and democratic status.
So there is an opportunity here, but the United States is going to have to take a leadership role to take advantage of it.
ASHER: Dan Shapiro, former U.S. Ambassador to Israel. Thank you so much. Appreciate you joining us.
SHAPIRO: Thank you.
ASHER: The U.K. has imposed new quarantine measures on France, The Netherlands and Malta. The trade body representing U.K. Airlines called it
quote, "another devastating blow" to the travel industry.
Nina dos Santos joins us live now. So, Nina, yet again, you have travelers being caught by surprise by another announcement in terms of quarantine
rules. Just walk us through how airlines and travel companies and travel agents can effectively plan appropriately, given so much uncertainty.
NINA DOS SANTOS, CNN CORRESPONDENT: This isn't the first time that the U.K. has imposed quarantine restrictions on countries in very, very short-term
periods. The last time that they imposed a quarantine restriction on Spain a few weeks ago, that actually caught the Transport Minister, Grant Shapps,
himself unawares and so he had to halt foot it back to the U.K. and leave his family back in Spain to finish off their vacation, and thereafter
quarantine as well.
This is the type of predicament that about 160,000 Britain who are currently in France may be having to grapple with as we speak. France is
the biggest most important destination on the list of those four or five countries that have been added to these new quarantine restrictions
overnight by the U.K.
It is the second most visited destination by British tourists after only Spain, so this really presents an important issue. It also presents an
important transport and logistical issue as well because remember that a lot of British families will be in their cars and trying to make their way
towards the border with France, which is of course, the Port of Calais under the British Channel, what we have is trains going there to connect to
the U.K.
Many of those trains are already completely sold out and the operators of those trains are saying, whatever you do, don't come to the North of France
if you don't already have a ticket secured. It's going to be very difficult to find accommodations there.
There are some flights that are still operating. The tickets are getting more and more expensive. But remember that the cut-off point is 4:00 a.m.
tomorrow morning.
If you're not back on U.K. soil from any of these destinations by then, the 14-day quarantine rule does apply.
Now, what is the French government saying about this? Well, you can imagine there's furious diplomacy going on behind the scenes. We're here outside
the French Consulate. Behind here is the biggest French school in the United Kingdom. Many French citizens will be coming back here to send their
children to school, if they are expats living in London and they themselves may be caught unaware by this.
The French government has said that they regret this decision by the U.K., they acknowledge that of course, it is down to a spike in infection rates,
but they also haven't ruled out any reciprocal measures and that is the real fear here for some of these travel companies when it comes to these
types of public health and travel policies to get joined up thinking to prevent this becoming a tit-for-tat quarantine rule during the end of this
peak summer season -- Zain.
[09:40:46]
ASHER: And what does this effectively do to the summer travel season in Europe?
DOS SANTOS: Well, it's been a really difficult summer travel season, hasn't it?
In the United Kingdom, obviously, the government has encouraged the staycation. The weather has been a bit more forgiving than it has in
previous years. But then, again, there are some destinations in the U.K. that don't necessarily want to see large influxes of tourists from other
parts of the country where there may be coronavirus outbreaks taking place.
The real difficulty for all public health bodies, all governments around the world, and particularly in Europe, which is such an interconnected part
of the world, is trying to plan to contain local outbreaks, national outbreaks, and of course trying to salvage what is left of the summer
tourist season, a massive revenue driver.
The other thing you have to think about, though, Zain, is also schools. Schools like this French school behind me, schools across the rest of the
country will be opening in a few weeks' time and if people are getting stuck behind 14-day quarantine rules, those children won't make it back to
school in time after such a disruptive year last year -- Zain.
ASHER: Yes, that is an important point to mention. Nina dos Santos live for us there. Thank you so much.
Still ahead, if the pandemic is giving you sleepless slights, stick around, the CEO of the mattress company, Casper joins me after this.
[09:45:10]
(COMMERCIAL BREAK)
ASHER: The quality of your night's sleep can make or break your day and I say this as someone who gets up at 3:00 a.m., sometimes 4:00 a.m. to anchor
this program.
It's something that people at mattress maker, Casper have built their brand on, but they know they can't afford to sleep in just yet. There have been a
few bumps in the night for their share price after the company posted a second quarter loss this week.
Casper's CEO, Philip Krim is here in New York. Philip, thank you so much for being with us.
So, just give us a sense of what this year has been like for you, because obviously you had your IPO back in February, you know, it was met with a
pretty chilly reception. Then the markets tanked after that.
Then there's also, you know, given coronavirus disruption to supply chains, issues with retail outlets as well. Just walk us through what this year has
been like for Casper.
PHILIP KRIM, CEO, CASPER: Sure, happy to. And thank you for having me today. You know, certainly 2020 has been a challenging year from a number
of different perspectives.
But ultimately, I think the company has performed well. I think our team has really stepped up when it came to performance, even when we moved to a
completely remote work from home environment, which we've been in since COVID really hit back in March.
And I think overall, we're delivering more products to more customers than ever before and I think there's a real demand out there for people who want
to upgrade their quality of sleep, who want to upgrade their home and a lot more people are spending more time at home, more time in bed, more time in
their bedroom, and we're seeing really strong demand for the industry because people realize that getting a great night of sleep is key to
wellness, key to being healthy, and people really value that.
And that's why we're seeing great demand for our mattresses and great demand for our other products like our pillows, our weighted blankets, et
cetera. So we've overcome a tough year for sure and I think we're actually in a good position given what's going on with our overall industry.
ASHER: So even if you do have great demand, you know, people change their mattresses -- what -- once every five years, six years, seven years? So how
do you sustain that demand and how do you -- I mean, I know that you don't just sell mattresses, but walk us through how you've diversified beyond
just mattresses then?
KRIM: Sure. So mattresses are actually a huge, huge industry. In the U.S. alone, $17 billion to $18 billion is spent every year on mattresses, so
something like 20 million mattresses will be bought this year and even more next year.
Globally, I think it's something like a $40 billion plus industry and that's every year on mattresses. So even though the replacement cycles
might be seven to eight years, the average home is actually in the market every two to three years and this is a highly considered purchase, it's a
purchase that impacts your health, how you feel.
And so people are doing their due diligence, finding out who is the best. Oftentimes that leads you to Casper and we think that we've really elevated
the experience to shop for these products and we're trying to build Casper to be the world's first sleep brand. So, it certainly is more than just
mattresses.
Although the mattress is literally and figuratively the foundation of a great night of sleep, but like I mentioned, we have other great products as
well that will help you get a better of sleep like sheets and pillows and bedding and all of this are huge industries globally and something that
consumers need every year.
So it's not about the replacement cycle, it's actually about satisfying the demand that's out there and the industry is seeing really strong demand as
people focus on investing in quality sleep.
ASHER: At the same time, though, there are about over 170 different digital sleep companies out there. Even though you were the sort of major mattress
in a box company, how do you make sure that Casper continues to dominate in terms of market share and beats out competition? How do you keep up that
momentum going forward?
KRIM: Yes, it's a great question and it starts with product. Our products really are designed to be the best night of sleep possible.
We have a Casper Labs team that is focused on designing products with true efficacy of sleep and that's very different than our competition.
So we are doing the R&D. We are understanding what aspects are needed for the best night of sleep possible. Our mattresses circulate air better than
any mattress we test against, so it provides a cooler night of sleep.
Our mattresses have advanced ergonomics to help you wake up feeling more refreshed and rejuvenated, and it's that focus on great products that I
think really leads us within the mattress industry.
And then I combine that with great experiences, so we now have 60 retail stores in the U.S. where you can shop for our products. It's a delightful
experience, it is fun.
We have really knowledgeable sleep experts within our retail stores to help you pick the right products for you, and we have a great brand.
People love the Casper brand. People trust us to get you the best night of sleep possible. That's why word-of-mouth has been such a powerful driver of
our business and why we continue to grow and take market share within this industry.
[09:50:10]
ASHER: Philip Krim, CEO of Casper. Thank you so much for joining us.
KRIM: Thank you so much.
ASHER: You're welcome. Still to come here, social distancing deep underground, an exclusive look at how COVID-19 is affecting an already
dangerous profession.
(COMMERCIAL BREAK)
ASHER: As you know, industries of all kinds are reeling from the impact of the coronavirus pandemic. Now, Eleni Giokos has an exclusive firsthand look
at the challenges facing mining.
In South Africa, a surge in infections is forcing the government to balance protecting lives with protecting livelihoods. Take a listen.
(BEGIN VIDEOTAPE)
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT (voice over): Descending more than 200 meters into a coal mine has always carried a certain level of
risk, and at Sasol's Impumelelo Mine, they've always taken serious precautions.
On my belt, an emergency breathing pack and a sensor that will stop the heavy machinery if I get too close.
Still, working through South Africa's COVID-19 peak brings a new level of fear to even the most hardened of miners.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Father God, I pray for Usiliso (ph), the greatest survivor who tested positive in this mine.
(END VIDEO CLIP)
GIOKOS (voice over): Pelaelo Mthombeni was this mine's first employee to come down with the virus. She is grateful to be back underground.
(BEGIN VIDEO CLIP)
PELAELO MTHOMBENI, SASOL MINE WORKER: Like it is all just cool because of this job.
(END VIDEO CLIP)
GIOKOS (voice over): And the sector is just as essential for South Africa's economy. Around 80 percent of its power still comes from coal.
(BEGIN VIDEO CLIP)
GIOKOS (on camera): How many of those jobs are essential and critical skills that aren't easily replaced?
SANDILE SIYAYA, GENERAL MANAGER, SASOL IMPUMELELO COLLIERY: Ninety percent. Above 90 percent. But I must say everybody that we have in the mine is
entirely critical. Everybody that's working underground is critical.
(END VIDEO CLIP)
GIOKOS (voice over): But even with the constant mask wearing, the constant sanitizing between shifts, the clinic on site, cases here continue to rise.
More than 100 positive cases at this mine alone.
(BEGIN VIDEO CLIP)
SIYAYA: We've got about 16 percent loss in production that we have experienced on this particular mine.
GIOKOS (on camera): I mean, look, we're still heading towards the peak. Does this worry you? Does it scare you that the production losses are going
to be inevitable?
SIYAYA: If I said that I was not worried, I would be lying to you. I am definitely worried.
MANZEZULU NKAMBULE, ASSOCIATION OF MINEWORKERS AND CONSTRUCTION UNION: COVID-19 will be an eye-opener, especially in the mining sector, right
across the board.
You could see the numbers are rising. They've been inhaling this dust for years. Now, when this virus comes in and finds an immune system that is
already weakened, and then it overtakes.
(END VIDEO CLIP)
GIOKOS (voice over): Its community transmission outside Sasol's gates that is driving the spread here and the Union says not enough is being done to
address it.
[09:55:10]
(BEGIN VIDEO CLIP)
PERCY SIMELANE, SASOL MINER: Once you leave the mine, I think they are forgotten. They forgot about you. They say, you must look after yourself.
(END VIDEO CLIP)
GIOKOS (voice over): Percy Simelane is returning home after nine hours underground.
(BEGIN VIDEO CLIP)
SIMELANE: They say the COVID-19 attacks the lungs. I feel vulnerable under.
(END VIDEO CLIP)
GIOKOS (voice over): Even at the Sasol owned housing complex where he lives with his wife and two sons, he says no one from his company has come to
talk about COVID-19 since the pandemic began.
(BEGIN VIDEO CLIP)
SIMELANE: I never see someone come here. It's tough. It's tough.
(END VIDEO CLIP)
GIOKOS (voice over): But he'll keep going underground like so many in the sector. He is an essential employee and the job means everything.
Eleni Giokos, CNN, Secunda, South Africa.
(END VIDEOTAPE)
ASHER: All right, before we leave you, one last look at the U.S. market.
Stocks here are lower across the board in early trading. Disappointing retail sales data from China and the U.S. is putting pressure on stocks.
The Dow is down about a hundred points.
Despite today's losses, U.S. stocks are still on track for modest gains this week.
All right, that's it for the show. I'm Zain Asher. It was so good to be with you. Have a great weekend.
(COMMERCIAL BREAK)
END
