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First Move with Julia Chatterley
Coronavirus Infections Soar Among Chinese Health Workers; The Center For Disease Control Warning The Virus Could Be Here Beyond 2020; U.S. Attorney General Attacking President Trump's Tweets. Aired 9-10a ET
Aired February 14, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:18]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE, and here is your need
to know.
Struck down. Coronavirus infections soar among Chinese health workers.
Lasting effects. The Center for Disease Control warning the virus could be here beyond 2020.
And love lost? The U.S. Attorney General attacking President Trump's tweets.
It's Friday. It is also Valentine's Day, let's make a move.
Welcome once again to FIRST MOVE this Friday. Happy Valentine's Day, as I mentioned, thank you for your ongoing engagement with FIRST MOVE. Can't
promise that's the end of it, particularly with what we're seeing as far as stocks are concerned.
Premarket, looking a little bit unloved this Friday. I have to say flat after a pretty volatile session Thursday as well. We recovered earlier
losses to end pretty much unchanged -- cautiousness, I think is the watchword here.
The story also today in Europe, a serious Friday feeling, not a Valentine's Day one. Over to Asia, the Nikkei falling some half a percent to transport
stocks.
Wait, I'll reiterate again that coronavirus fears perhaps simmering thereto, although Chinese stocks did manage to finish the day higher. In
fact, the Shanghai Composite posted an overall rise of the near one and a half percent this week despite the developments in the virus outbreak.
This week in Asia, however, is ending with a stark warning from the Prime Minister of Singapore. He sees the impact coronavirus has already exceeded
that of SARS back in 2003.
He says, "Recession is a very real possibility." This of course, a small open export driven economy, trade is key. Not the only country that are
worried. Downbeat numbers from exporting giant Germany, too. The economy flatlining in the fourth quarter. That well before the coronavirus outbreak
became a global concern. The Eurozone in fact overall growing at its slowest rate since 2013.
Let's bring it back to the United States now. Robust consumer spending continuing to support the economy. New numbers today showing retail sales
rising an expected 0.3 percent last month; sales though rising over four and a half percent year-over-year. The mighty U.S. consumer.
All right, let's get to the drivers now. I want to bring you the latest on the coronavirus outbreak.
The coronavirus striking medical workers over in China. Beijing, saying more than 1,700 healthcare workers have been infected by the disease, six
have died.
This is as the country reports more than 120 new deaths today, bringing the total number now to nearly 1,400.
In the meantime, Japan reporting seven new cases sending the total there to 257. The majority of cases in Japan are from the Diamond Princess cruise
ship. The Japanese government has allowed some of the most vulnerable passengers now to leave the ship and completes their isolation on land.
David Culver, once again joins us from Beijing with the latest. Just to give us a sense, David, 90 percent of those infected medical workers are in
the Hubei Province of course tackling at the heart of the disease here, but really critical understanding here of the impact of being on the front
lines of tackling this virus.
DAVID CULVER, CNN CORRESPONDENT: No question, Julia, and you might recall we have been in touch with a lot of those doctors and nurses throughout
this crisis.
For the past few weeks, they've been sharing with us initially keeping it rather private because they didn't want to get in trouble. But it's gotten
to the point where they were then willing to vocalize it more publicly, that they didn't have enough supplies and they felt like they were being
sent into battle, as one nurse put it, without the armor essentially, the protective gear that they have come to rely on now to treat folks with this
virus.
I mean, you're talking about the hazmat suits, the protective suits, as well as the face mask and the goggles.
Now, while that gear may be getting to them at this point, because the central government has stepped up mobilization efforts and deployment of
that supplies for some it is coming to light and the numbers are proof of that.
As you mentioned, 1,716 medical workers infected with this virus, the vast majority in the epicenter of all of this, Hubei Province and even within
the City of Wuhan, in particular, and then you had six of those who lost their lives, one of whom we spoke with Dr. Li Wenliang, he passed away just
last week, but a week before he passed away, we were in touch with him and he could barely talk on the phone, but described his efforts early on, to
try to sound the alarm about this virus.
[09:05:07]
CULVER: He was one of those early whistleblowers who ultimately succumbed to the illness.
But there is some good news that we are seeing, and that's something that the Chinese state media certainly has wanted to put out as well and that
has to do with the recovery rate.
In fact, CNN for the first time today, was able to see from a family -- a mom and dad and a one-year-old -- who came in front of the hospital to
share their story of really survival, of coming through this. And that is the reality for the vast majority of folks who get this virus.
But they describe to us how they got it. It was essentially contracted from a family member who was in from out of town, from the Hubei Province.
And the one-year-old, of course, you see how young he was being impacted by all of this. I mean, it's emotional to see, but at the same time, it's a
relief to know that families are pulling through this.
We did here from the doctor, and it's interesting to hear what that infectious disease doctor had to say. So take a listen.
(BEGIN VIDEO CLIP)
DR. XU BIN, BEIJING YOUAN HOSPITAL (through translator): We are seeing fewer and fewer patients. Today, eight people have been discharged from my
hospital unit after undergoing treatments. There are now only 21 patients left in my unit.
(END VIDEO CLIP)
CULVER: So Julia, that's coming from one of the doctors here in Beijing, trying to give an idea that outside of Hubei and even outside of Wuhan,
where things are increasingly, we're hearing getting desperate at times, it seems like they are trying to find some sort of ground in stopping the
spread outside of that region.
CHATTERLEY: Yes, and we'll talk a little bit more about that later on in the show as well. David, great to have you with us and to all these people
that are working in these conditions in particular, heroes, every single one of them. David, thank you for that.
All right. Let's continue talking about this because America's top public health institute is saying the virus might be around beyond 2020.
The CDC, the Center for Disease Control says, it is in aggressive containment mode.
Dr. Sanjay Gupta has been granted access to the C.D.C. and he joins us now. Dr. Gupta, great to have you with us.
Sanjay, can you give us context here? What does this mean? What is the C.D.C. telling us here and their sense of the containment efforts in China,
and the risk of community spread beyond? Can you give us some context here?
DR. SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT: Yes. You know, first of all, some of the strategies that have gone into place, Julia, are
strategies that haven't been used in this country in 50 years.
So that gives you some idea of the seriousness with which they're taking this. At the same time, to your point, to your question that they're
talking about this idea that despite the best containment strategies, we're talking about a little tiny, microscopic virus, it doesn't respect borders.
So even the best strategies, the best you can hope for is to slow this down, not to prevent it from getting into various places. So it's all about
buying time. That's what Dr. Redfield and I talked about at the Emergency Operations Center. Take a listen.
(BEGIN VIDEOTAPE)
DR. ROBERT REDFIELD, DIRECTOR, C.D.C.: This is going to, you know, obviously be a significant investment.
GUPTA (voice over): On the same day, the C.D.C. confirmed the 15th U.S. coronavirus case, I went inside the agency's Emergency Operations Center
with Director, Dr. Robert Redfield.
GUPTA (on camera): How good is the public health infrastructure in reporting --
GUPTA (voice over): To give you an idea of how rapidly this situation is changing.
REDFIELD: By the way, the number has changed, I can tell you -- it's actually 15 there.
GUPTA (voice over): It's a lot to keep up with.
GUPTA (on camera): What is the worst case scenario here in the United States?
REDFIELD: So far, we've been able to contain it. But I think this virus is probably with us beyond this season or beyond on this year, and I think
eventually, the virus will find a foothold and we will get community based transmission, and you can start to think of it in the sense like seasonal
flu.
The only difference is, we don't understand this virus.
GUPTA (voice over): Which is exactly why the C.D.C. wants to be on the ground in China. It's probably Redfield's biggest frustration.
REDFIELD: Right now, there's no evidence to me that this outbreak is at all under control. It's definitely not controlled and the sooner we can
help them get it under control, the better for the whole world.
GUPTA (on camera): So I guess that does raise the question, why are we sitting here in Atlanta talking about this versus the C.D.C. being in China
collecting some of this data?
REDFIELD: I don't think it's a medical decision that we're not being invited in.
GUPTA: What do you think it is?
REDFIELD: Well, I think it's above the medical --
GUPTA: You think it's a political decision?
REDFIELD: I think it's above the medical. I don't think this -- the Director of C.D.C. is making that decision.
GUPTA: You think it's a political decision?
REDFIELD: Well, I think it's -- all I can say is, I think it's above the Director of C.D.C. because I know he would love to have us assist them.
GUPTA (voice over): China has accepted help from the World Health Organization. The C.D.C. is waiting to hear whether it's going to be a part
of that team.
In the meantime, Redfield says his priority is to keep Americans safe.
REDFIELD: Our whole issue right now is as I said, aggressive containment to try to give us more time that it's going to take, you know, one to two
years to get that properly developed and out, to prepare the health systems to be able to be flexible enough to deal with the potential second major
cause of respiratory illness.
(END VIDEOTAPE)
GUPTA: So there were several things, Julia, which, you know, sort of was new information. First of all this idea, as you heard, that the virus is
likely to spread into these communities and become a virus that is within the communities over the next period of time, not likely to go away.
But also this idea of buying time is important, because with that time, you may come up with better strategies to try and isolate people, but also
possibly new therapeutics in terms of treating people. And possibly as everyone has been talking about, Julia, a vaccine, you need time to do
that.
CHATTERLEY: And there's two things that come to mind here; one, the risk of greater spreading to your point about this just being a window to try
and prepare and get ready for that.
It's one thing if it spreads to a developed country like the United States, perhaps far worse, if it spreads to a country that doesn't have the medical
facilities, doesn't have the support the infrastructure, perhaps to tackle people.
And then the other question for me would be, again, can we compare and contrast symptoms? Because the fatality rate here is far lower than SARS. I
think that context here still is needed, perhaps not to frighten people.
GUPTA: Yes, and then no question. I think when the World Health Organization declared this as a public health emergency of international
concern, you know, you're exactly right.
I mean, you know, the developed world is going to have an easier time because of resources of dealing with this, but there are countries and
public health systems around the world, which are going to have a greater challenge.
So these public health emergencies are really geared towards those countries to try and provide resources, and obviously if you do buy time,
then possibly getting some of the therapeutics, some of the treatments and again, hopefully a vaccine if it's developed in the places that could
really use it.
I think, the idea that that the transmission is occurring and even occurring asymptomatically, meaning people who have no symptoms, aren't
sick at all, still able to spread this is something else Dr. Redfield confirmed. I asked him about it a few times.
But if you think about that, Julia, it does change how we approach this virus. How -- who we think of as people under investigation, who we have to
sort of trace to make sure that they themselves are not infected.
So it does add a lot of layers to this whole system. And again, we're seeing containment strategies that haven't been used in decades in this
country as a result.
CHATTERLEY: Yes, we've talked about it on the show, Sanjay as well. There's two to three people -- each infected person transmits to two to
three people it seems, so I can't help but feel that global response is needed.
Great to have -- great to have you with us. Thank you so much for that interview and the context.
All right, let's move on to our next driver because we're going to Munich now where world leaders and military bosses are gathering to talk weapons
and welfare among other things, an event known as the Davos of Security. Nick Paton Walsh is there for us.
And I have to say the tech titans are soaring to the top of the agenda here and Nick, Facebook set to talk about paying more tax and Huawei, of course,
we can't get away from that debate either. What can we expect?
NICK PATON WALSH, CNN INTERNATIONAL SECURITY EDITOR: Well, we've already certainly heard from U.S. officials here, an event on the sidelines, them
bolstering a case that they began to extensively make last night by increasing the number of indictments currently leveled against the tech
giant, Huawei, in which they are accused essentially of racketeering in order to steal intellectual property, indictments that also have accused
Huawei of assisting in Iran and North Korea's repression of its own people.
I mean, pretty much everything apart from the kitchen sink to some degree for Huawei who say that this was essentially a bid to try and irrevocably
tarnish their image.
They've always denied the central U.S. charge that they're sort of some kind of backdoor into the 5G technological systems that they would be part
of for the Chinese government.
But these U.S. officials from the Department of Justice and State clear on the sidelines here that they consider Huawei and the Chinese Communist
Party to some degree inseparable.
And in fact, they said that it's up to Huawei who passed pressure evidence to the United States. It's up to Huawei to prove their innocence and also
separate itself essentially entirely from the Chinese government.
So very much the U.S. coming here after the news that the United Kingdom will permit parts of its system to have Huawei equipment put into it.
The U.S. continuing to press its case to his European allies here, who it tried to suggest more positive to its message than before.
But as you mentioned, too, Mark Zuckerberg, the head of Facebook here arriving, shortly expected to travel on to Brussels afterwards to meet key
E.U. officials accepting as you said that they believe they will have to possibly pay more tax going forward and asking essentially that some kind
of concrete system is put together for tax payments within the European Union.
We will see next week a broader package of digital measures from E.U. commissioners, certainly which may begin to cause great attention in that
debate about what this U.S. tech giants do when they're not operating entirely in the United States, how money is brought from their services for
the coffers of various European powers here, but certainly, the Huawei message very strongly voiced from the Trump administration today -- Julia.
[09:15:32]
CHATTERLEY: Yes, absolutely. We will watch for both of those for the details. Now, Nick, also a hot topic there, of course, Afghanistan, and I
believe you've got some news on an announcement soon to be made.
PATON WALSH: Or not -- this case, actually, yes, Julia. I'm hearing from a source close to the talks that we are here potentially expecting an
announcement about Afghanistan. Key U.S. officials, Secretary of State, Secretary of Defense, head of the U.S. military there and the Afghan
President, too.
I'm hearing from a source close to talks that they're not anticipating an announcement today or tomorrow, which of course brings to mind whether or
not the Afghan President may depart before that is made. Unclear.
This could be last minute haggling. There are a lot of discussions about details still happening on some obviously, inside the room. A lot of things
that the Afghan government wants to see as part of this reduction in violence, like possibly the free passage for its military around during any
sort of Taliban in other parts of Afghanistan.
But possibly bad news here for those American officials who are hoping the choreography of telegraphing this announcement might herald some kind of
broader statement or timetable as to when the seven to 10 days reduction of violence timetable begins to kick off.
As I say, it doesn't sound at this point like we're going to see it today or tomorrow. Back to you.
CHATTERLEY: Yes, managed expectations. Nick Paton Walsh, thank you so much for that.
All right. Let's bring you up to speed now with some of the other stories that we're following around the world.
In Washington, U.S. Attorney General William Barr issuing a rare public rebuke of President Trump.
(BEGIN VIDEO CLIP)
WILLIAM BARR, U.S. ATTORNEY GENERAL: ... to have public statements and tweets made about the Department, about our people in the Department, our
men and women here about cases pending in the Department and about judges before whom we have cases make it impossible for me to do my job.
(END VIDEO CLIP)
CHATTERLEY: Shimon Prokupecz joins us now from Washington with all the details, seemingly asserting his relative independence here, I guess. But
the timing does feel key in light of the challenges that we've seen here with the Justice Department and Roger Stone.
I think you need to give this context here, Shimon and then we can talk about why.
SHIMON PROKUPECZ, CNN CRIME AND JUSTICE REPORTER: Well, yes, look, it seemingly -- it seems that he's going against the President and this is
some kind of rebuke against the President, but that's not really entirely clear and there are a lot of people who are highly skeptical of whether or
not what he is doing here is really against the President.
There's concern here within the Department of Justice that he is very much aligned with the President, in fact, so much concern that the integrity ---
the integrity within the Justice Department, the AUSAs, the U.S. Attorney's that work what they refer to as line assistance, are these lawyers who are
prosecutors, and they work every day to investigate cases, to prosecute cases.
And there's a lot of concern that the integrity of the Justice Department because of some of the actions by the Attorney General, by Bill Barr,
recent actions, have hurt the justice system, have hurt the work that the Justice Department conducts.
And so in some ways, people feel that the reason why he did this, why he chose to come out and say this was to try and reinforce that he supports
the work that the Department of Justice and the prosecutors there are doing on a daily basis.
Because right now, there's a lot of concern, as I said, inside the Department of Justice that the Attorney General doesn't have their back,
and so he had to do what he did.
But the question is, was he really serious about this? Or was he just sort of coming out to say this for the public so that we all believe and the
prosecutors who work at the Department of Justice believe that he has their back.
But that's not entirely clear. There are a lot of people who are skeptical of what the Attorney General said.
CHATTERLEY: Yes. For whose is was this interview done? That's a great point. Shimon Prokupecz there and the President, I will just mention
tweeting this morning, quoting Attorney General William Barr, "'The President has never asked me to do anything in a criminal case.' This
doesn't mean that I do not have as President the legal right to do so. I do. But I've so far chosen not to."
All right. We're going to take a break. You are watching FIRST MOVE. Still ahead, could this be a crucial new way of helping to contain the
coronavirus? I speak to a boss of a Chinese tech company that thinks drones could be the way forward.
[09:20:10]
CHATTERLEY: Also the one in investment you can never truly put a price on -- education. We hear from the company that wants to put a world of
knowledge into the palm of your hand. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Let me give you a look at the futures premarket this morning. Of course, the action in a bit cautious
little bit softer here though, as you can see actually with tilted -- no, I'll call that unchanged. Let's leave it there. Let's get some context on
what we're seeing here.
Pernille Henneberg joins me from London. She is the Vice President of Global Economics at Citi Research. Pernille, great to have you with us.
You guys have produced a report looking at the impact of coronavirus, the global impact potentially. I know it's a tough gauge, but what are you
saying at this stage to clients when they ask you what you think the impact will be.
PERNILLE HENNEBERG, VICE PRESIDENT OF GLOBAL ECONOMICS, CITI RESEARCH: So the first thing to consider is obviously what the impact on the Chinese
economy will be, and here the first thing we look at is the measures taken by the Chinese authorities to contain the spread of the virus.
These measures have been aggressive, and they suggest that there will be a hard hit to the Chinese economy in the first quarter.
So specifically, the forecast that our Chinese economies have for the economy is that growth will be only 3.6 percent in the first quarter of
this year. So a dramatic decline in China, which is going to spill over to the rest of the world.
China's share in the global economy has increased and one of the years we look at it from before is 2003, when we had the SARS outbreak.
China is much more important for the world now, so it will also be more important what is happening in China these days.
CHATTERLEY: I mean, we've gone from a $1.4 trillion economy to a $14 trillion economy. So I think just in terms of the change in the growth of
the Chinese economy since SARS.
So I agree with you on that point, but can we talk about that the region in particular.
[09:25:10]
CHATTERLEY: I know you've said on the trade side, in particular Vietnam, Taiwan most exposed. We also had Singapore warning today that they could
see recession, too.
Just talk about the spillover effects for me in the region.
HENNEBERG: Yes, so what we look at is, first of all, how it's going to impact the manufacturing and the supply chains, and here, we will see
somewhat more of an immediate impact both in China, but also in the rest of the world.
We also expect that there will be a recovery within manufacturing, some of the countries will be affected with a lag, so it may not be as fast for
other countries than in China, but generally manufacturing should recover.
It's more challenging when we look at services and particularly tourism will be hard hit by the virus outbreak.
Here, the problem is that services are not storable, so there may be permanent losses. And this is also going to dampen this V-shape that we
would otherwise have expected in the economic recovery.
Finally, the thing we look at is the oil price impact, and our commodity strategist have also made dramatic downward revisions to Citi's oil price
forecast.
So what we have there is, in some countries, it's kind of counterbalanced the negative shock from the Chinese economy because consumption will be
supported by a lower oil price.
CHATTERLEY: You know, I think for most investors here that are looking at the situation and saying, if you look at what the bond market is pricing,
what the commodity market is pricing, this stock markets don't seem to be getting it. Stock market investors don't seem to be getting it. What's your
response to that? What is Citi's view?
HENNEBERG: So we did see some market turbulence with the outbreak of the virus and it got market attention a few weeks ago. In equity markets, our
U.S. strategist has a panic euphoria model and it's suggested that U.S. stocks were vulnerable already going into this.
When that is set in our more long term perspective, from Citi's equity strategists, is that any deep is one that you should buy into.
And when we look at the bond market, as you say, we have seen some reaction. You would have expected that Europe would be most exposed because
it has stronger linkage with China in terms of economic growth, but U.S. has also reacted and that could reflect that the Fed will have more scope
to ease if this spreads and become a more global issue, whereas the E.C.B. has reached the effective lower bound.
CHATTERLEY: Yes, I mean, there is already speculation that the European Central Bank could end up adding greater QE here to try and support the
economy. Do you think we see recession in Germany? They've been flirting with it for a while.
HENNEBERG: So we have the German number out this morning and what we continue to see is that Germany has a manufacturing that is struggling and
has been in recession for a long time. But the services sector is still holding up and consumption is still growing.
That is kind of the picture on the global economy more broadly, and the persistent strength of the service sector is important for growth to
continue at the rates that we are expecting, but it seems to be holding up.
CHATTERLEY: Yes. And your point, though, this V-shaped recovery that you're predicting as well, important, I think as well as investors are
looking ahead.
Pernille, great to have you with us. Thank you so much for that. Pernille Henneberg from Citi Research.
All right, we're counting down to the market open. Relatively unchanged at this point in the day, plenty more to come though on the show. Stay with
us. The opening bell is next.
(COMMERCIAL BREAK)
[09:31:50]
CHATTERLEY: Welcome back to FIRST MOVE from the New York Stock Exchange. The opening bell rang a few moments ago and as expected, a pretty cautious
flat start for U.S. stocks, but the S&P and the NASDAQ are seeing modest gains for all the choppiness in the United States this week.
Stocks have remained what? Just around two percent away for the Dow for that 30,000 milestone. We'll continue to watch that. We've got pretty solid
readings on U.S. retail sales today, too. As I mentioned earlier, sales rising an expected 0.3 percent last month.
The U.S. consumer remains a key bright spot for the U.S. economy. What about the commodity market though? Oil wrapping up a volatile week making
gains in the session, as you can see both Brent and WTO crude up over one percent in the session.
Oil currently on track for its first weekly gain, in fact, since early January. That is despite the continued coronavirus growth fears. OPEC and
the International Energy Agency all cutting their 2020 demand forecast this week, a bounce from a low base I believe, but also hopes that OPEC might
consider bringing forward their plans to do something hereto.
All right, throughout this week on FIRST MOVE, we've been looking at how the coronavirus is choking international supply lines. It's affecting
importers of Chinese goods everywhere.
Clare Sebastian is visiting a company in New Jersey which relies on China to turn a profit. Clare, not to take it away from the tragedy that's going
on here, but just talk about what the company is saying and what kind of impact they've already seen.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia, it's been pretty stock. This is a company called Mon Cheri Bridal, which imports 90 percent
of these many, many dresses that you see around me from China.
We're in their warehouse right now. There are about 35,000 dresses, they say in this warehouse. That's wedding dresses, prom dresses, and things
like that.
But if we look over here, if you follow me all the way around to this other part of the warehouse, you can start to see the impact from the virus.
These empty racks that you see behind me, there would otherwise be dresses there. They haven't been getting shipments from China.
Their workers in their 45 factories on the East Coast of China, they were supposed to go back to work at the beginning of this week at the end of the
Lunar New Year holiday.
Only half of the factories got up and running they say because they was still disinfecting because as we know, with the travel restrictions and the
lockdowns, many workers were struggling to get back. So that is causing disruption.
They haven't had any shipments yet through from China. There's also, you know, clogging up of the freight lines. It is difficult to get shipping
capacity, but they do expect one next week.
And the question, Julia, for many companies like this is, should they diversify out of China? Will the tariffs along with the coronavirus
accelerate that trend? They say they've already started. They have some facilities in Myanmar and Vietnam.
But if you look at these wedding dresses, the kind of work that you see on a dress like this, the needle work, the beading, the stitching, they say,
is very hard to replicate outside of China and this is something we see across the apparel industry, Julia.
Forty two percent of the clothes that are imported into the U.S. come from China. So it is a big part of the supply chain here and this disruption is
something that we're seeing throughout this industry.
CHATTERLEY: Yes, and this was exactly the question I was going to ask you is the double whammy of the tariffs and the trade tensions that we've seen,
and now the impact on supply chains of the coronavirus.
The question, I guess for me is, does it accelerate that decision making process if you held out perhaps on the tariffs, do you now go, actually, we
simply need to diversify our supply chain here, and in the case of this company, quite quickly, too?
[09:35:23]
SEBASTIAN: Well, the problem is -- what they're telling us is that there's no way to do this quickly. You're talking about not only building a
factory, you're talking about training up a staff. And it's that training that is really the bottleneck here. It takes a long time for people to
learn how to do this.
The CEO of this company was telling me that some of their workers in China can make dresses like this now without even using a pattern. They are so
experienced in this regard, and that's one of the problems that we're seeing, Julia, as well with the coronavirus.
It is that some of the key employees at some of these factories aren't making it back. The lead cutters for example, and that's paralyzing the
operation. Not to mention of course that the factory isn't the only part of the supply chain in China. There are fabric mills. There are, you know,
other sort of fabric factories that they get them materials from.
And even if you do diversify out of China, you may still be relying on China to get those materials.
CHATTERLEY: Yes, and there's still a huge delay of months and months and months. Clare Sebastian, great context. Thank you so much for joining us on
that story.
Now, there is a high tech weapon in the battle against coronavirus, DJI, the world's largest maker of consumer drones is deploying its fleets of
drones to spray disinfectant and potentially affected areas. For more, we're joined by Brendan Schulman. He is Vice President of Policy and Legal
Affairs at DJI. Great to have you with us.
Specifically, tell me what you're doing and how you're using drones, because I believe you're operating now in a thousand counties in China?
BRENDAN SCHULMAN, VICE PRESIDENT OF POLICY AND LEGAL AFFAIRS, DJI: Yes, that's right. Actually, drones can do a lot of amazing things, and what we
found lately is that we can use them to disperse disinfectant to help combat disease.
And really that's a matter of taking drones that were built for agricultural purposes, in other words like pesticide and fertilizer and
converting them to use disinfectant.
We're doing that -- we have a commitment of $1.5 million. And this has now been done in conjunction with agricultural researchers across a thousand
counties in China.
And at the moment, we've got up to 250 square miles of land that's been done this way. It's 50 times faster than doing it by hand.
CHATTERLEY: Wow, I guess there's also the distance benefits to some degree as well. You don't have people inhaling the chemicals perhaps.
SCHULMAN: Exactly right. The people who are dispersing the disinfectant can be very far away from the chemicals themselves, so it's also safer for
the workers.
CHATTERLEY: Wow. Okay, and 50 times faster, which makes perfect sense. What about what they're seeing? Have you captured images as well? I mean,
we've seen pictures -- and I've seen your pictures in Shenzhen as well, just to go back to the sort of point that we were talking about just there.
It's very quiet. People going out less, they are moving around less.
SCHULMAN: Well, the virus coincided with the Lunar New Year. So what effectively happened is that the vacation that people were taking already
was extended an extra week.
As of this week, people are back at work. They're working from home. They're following the health protocols that are recommended by the
government.
And of course, we care most about the health of our workers there, and so they're following the protocols that are recommended.
CHATTERLEY: That's interesting. Your employees are back at work. Are you still allowing a proportion of them to work from home?
SCHULMAN: That's correct.
CHATTERLEY: You are? Yes, so it's just going to take time to get back up to speed here.
SCHULMAN: Well, we haven't been substantially affected by this yet. I think it remains to be seen in the long term. How long does this last?
What, if any disruption is there? But our factories are back at work. We're producing the product. And thankfully, our employees are safe and healthy.
CHATTERLEY: What about supply chains here? Again, to go back to the conversation we were just having, what does that mean for your company?
What's your sense here?
SCHULMAN: Well, we're a global technology company. So just like any other consumer device, we rely on components from the United States and from
around the world.
And our products -- I mean, here's an example of one of our latest drones. So when we talk about drones, we're not talking about military systems,
we're talking about a camera that can fly.
And so this can take pictures. It can search for missing people. In fact, we've noted over 320 people have been rescued from peril, people who are
missing, people who are in avalanches, floods and fires, just using an aerial camera.
And so the components that go into this are very much the same as you might find in your mobile telephone or your iPad or laptop.
CHATTERLEY: Okay, so you're giving me the reasons and the sort of hard sell on why this technology is good. But there is pushback, a couple of
things that I want to talk to you about. The first one being this idea of a sort of blanket system for a database that knows exactly who is operating a
drone where. What's that going to mean in practice?
And I guess in terms of innovation, too, does that mean that consumers will be like, wow, I'm not sure I want one after all?
SCHULMAN: Well, that's a great question. So one of the top policy priorities for the U.S. government and really around the world is what we
call remote identification. That's basically like a license plate for drones.
So that when drones are flying, security officials, law enforcement and even the public can have some assurance about who is flying the drone, and
are they authorized to be here. That's a great idea. We support it.
In fact, we have built it into our products for the past two and a half years. However, there's now a proposal from the F.A.A., the Federal
Aviation Administration on how to do that. And that proposal envisions connecting all the drones to a database system as you suggested.
[09:40:20]
CHATTERLEY: Even a drone like this?
SCHULMAN: This is slightly below the proposed weight limit. But something that's just a little bit heavier than this would have to connect, and the
F.A.A. anticipates monthly subscription fees just to use something a little bit bigger than this to fly in your backyard, take pictures of your
vacation, or do something more productive like tower inspection or agriculture.
So we support it, but we're worried about the costs and burdens of doing it. From our perspective, all you need is the radio broadcast out to
provide that ID information.
CHATTERLEY: But the drone that caused the chaos in the U.K. airports -- that would be covered -- and you're in agreement with that kind of drone in
some way being tracked.
SCHULMAN: We agree that all drones should be tracked if they could cause a problem. It's not clear what happened at Gatwick, a lot of uncertainty
about that, whether there even was a drone.
However, that scenario is something we need to guard against, and the way to do that is to have remoted ID on all the drones out there that could
cause a problem like that.
And in that way, the good ones, the legitimate ones are identified to the authorities and those that aren't stand out and action can be taken.
CHATTERLEY: Very quickly, Chinese technology being used in in Federal operations, the restrictions that we're seeing. There's a real nervousness.
Where do you stand on this?
SCHULMAN: It largely stems from political considerations. As you know, our products are -- they are cameras to fly. They only take pictures of what
you want to take pictures of.
CHATTERLEY: But is the data safe?
SCHULMAN: The data is safe. None of that data comes automatically back to our offices or to our facilities. We have data security features built in,
things called local data mode.
Our government products developed for government agencies have been validated and tested by the Department of Homeland Security's contractors
and laboratories, as well as the Department of Interior.
So we've taken affirmative proactive measures in the absence of any standards that would tell us what to do to guard data and we're confident
that anyone using our products would be secure.
CHATTERLEY: We'll get you back and we'll discuss this further. Thank you so much, Brendan Schulman there.
All right, time now for a look at our Global Movers. Shares of Nissan tumbling to a ten and a half year low in Tokyo trading today. The Japanese
auto giant issuing a shock profit warning earlier this week and saw Q3 profits falling some 83 percent. Investors now fearing the company will
have to slash its dividend, too.
Tesla also a mover in the session today. The company pricing its secondary stock offering at $776.00 a share, a bit below Thursday's closing price.
Where are we? We are down some eight tenths of one percent.
Shares of Pinterest lower also in the session by some six tenths of one percent. Facebook releasing a competing photo sharing app called Hobbi in
some of its global markets, a bit of competition there perhaps.
Reports also say Japanese e-commerce giant, Rakuten has sold its entire stake in Pinterest.
What about Canopy Growth? Wow. Soaring. Up some 21 percent. The cannabis producer reporting a 62 percent quarterly sales jump in the third quarter.
It posted a 35 cents a share loss, but analysts were expecting a much wider 50 cent a share loss. So, analysts liking what they're hearing there.
All right, we're going to take a break here on FIRST MOVE, but coming up, lessons in growth. We study the learning app that's top of the class in
India and now looking to get ahead in the rest of the world. That's after this. Stay with us.
(COMMERCIAL BREAK)
[09:46:41]
CHATTERLEY: Welcome back to FIRST MOVE. Call it an education revolution, small enough to fit in your pocket and yet big enough to get the attention
of investors.
BYJU'S is an education technology firm offering online tutoring. Its learning app with tens of millions of users and the company is now valued
at around $8 billion.
It's the brainchild of entrepreneur Byju Raveendran. He has founded the company to help Indian students excel, and now it's taking off globally. I
spoke to him about how he got started in technology and how he hopes to jumpstart the firm's profitability.
(BEGIN VIDEOTAPE)
BYJU RAVEENDRAN, FOUNDER, BYJU'S: I come from a small village, so I didn't have access to a good school. So even the English -- the average English,
which I speak here is what I've learned by listening to sports commentary on radio.
So Math and Science, first, I've taught myself and then I used to teach kids in the village. And then now, by learning and teaching, and following
that passion of Math and learning Math and teaching Math.
So though I talked about all the challenges in the system and the opportunity of a large student population, that's not the reason why I
started the business.
It's a clear case of you pursuing your passion, and that intersecting with a clear need in the society.
CHATTERLEY: Yes, you saw the gap.
RAVEENDRAN: Yes, and then now, because it started making an impact, it ended up becoming a business.
So I always feel that I'm an engineer by chance, teacher by choice, which made me an entrepreneur by chance.
CHATTERLEY: Okay, let's talk about the numbers then, 40 million subscribers, but only three million subscriptions. Where do you see that
ratio going? Can you encourage more than that three million or the ratio of three out of 40 million to pay?
RAVEENDRAN: It's a freemium model. So depending on what the students need, and how much the help they need from the application, they have an option
of moving from a free user to a paid user.
So that conversion ratio had been moving up. So the fact that there are three million continuous users, those who are spending on an average of 71
minutes on a daily basis.
So it's a clear --
CHATTERLEY: That's the three million.
RAVEENDRAN: Of the three million.
CHATTERLEY: Yes.
RAVEENDRAN: And with segment awareness increasing over a period of time this conversion rate has been moving up.
CHATTERLEY: Where do you see that rate going?
RAVEENDRAN: So I expect that to go up to 10 percentage from a free to a paid user over the next few quarters.
CHATTERLEY: Wow.
RAVEENDRAN: Right now it's at seven, seven and a half percent.
CHATTERLEY: Yes. And we're beyond? Where do you think that then stabilizes there? Let's fast forward a year -- two to four years?
RAVEENDRAN: Opportunity to create because even today though, like people talk about us as a large education company coming out of India, probably
one of the most valued education technology companies in the world.
But even today, our penetration for paid users is under two percentage. So the opportunity to create a scalable and sustainable -- but the best part
about this is, it is already profitable.
So we are independent in that vein and for our primary market, which is India, which is giving us an opportunity and having a large primary market
has given us an opportunity to do, give a good attempt at creating one or two more new markets.
CHATTERLEY: Where?
RAVEENDRAN: So we start with -- naturally, the extension will be English speaking markets.
CHATTERLEY: Makes sense.
RAVEENDRAN: Like -- it's too early for me to disclose further details on this.
CHATTERLEY: I thought you were going to disclose there. Just encouraging you
(END VIDEOTAPE)
[09:50:04]
CHATTERLEY: Playing a bit coy, I did try there. But it's pretty certain that BYJU'S has its eyes on the U.S. market. The company has lined up high
profile investors that see global opportunities for the apps special take on learning.
But the key question for me is, how do you make learning so addictive? Take a listen.
(BEGIN VIDEO CLIP)
RAVEENDRAN: What we've done is that by using a lot of new age formats, which kids like so let's say movie like videos, game like interactions.
CHATTERLEY: Content.
RAVEENDRAN: Yes. So like, by doing -- by investing a lot upfront in terms of making it engaging, but without losing its effectiveness, finding the
right balance between engagement and effectiveness.
The indication is there because students are spending an hour on the application, and these are not entertainment movies. These are Math movies,
Science movies, and that's an indication that they like it.
But that's not enough because in education, no, you need to show the results. So the biggest indicator is 85 percentage of our annual user base,
they renewed from last year to this year. It is a clear validation that it's helping them because --
CHATTERLEY: Otherwise, they wouldn't sign up again.
RAVEENDRAN: Otherwise, they won't sign up again. So that's the best part about the model. So --
CHATTERLEY: I think other validation perhaps is who is investing in you. I know you've just closed a funding round in recent weeks. But if I look at
those who have invested. They are sovereign wealth funds. There's pension funds like the Canadian Pension Fund.
Chan Zuckerberg Initiative. Tencent, as well has invested. You now have the valuation -- a private market valuation, I believe $8 billion.
RAVEENDRAN: I really don't want to talk too much about the valuation, but we have an inherent advantage of attracting best of the investors, best of
the talent because it's a segment which is close to all of us.
CHATTERLEY: Yes.
RAVEENDRAN: Education, now, although, you might say that it is one segment where most of the investors have not made money, but it's close to all of
us.
Now, it is one of those few segments where you do well, you'll end up doing good. So now, it is easy to start a mission-driven company. If you can keep
it mission driven, I am sure there's a long way to go and we can be relevant even after 10 years, 20 years. And that's --
Short term, you can't do much in this segment, because you need to take -- create a lot of content, make sure that it is adding value to the users.
First, you need to get that engagement from students and especially in this day and age, getting the attention of the next generation is a big
challenge.
CHATTERLEY: Tough. It's tough.
RAVEENDRAN: That's what we are slowly, but surely solving. And the idea is to create a large, long term business, which will actually make an impact.
Now, you can say that the aspiration is to create a large education company coming out of India, a large tech company coming out of India, but they are
all still -- like they can all be the results, but that's not what we are after.
We are after, to make sure that there are more and more students getting the benefit of this because that will help the country, that will help the
students and help their families.
So the real fun in this segment is not in creating a billion dollar company but in changing the way millions think and learn.
(END VIDEO CLIP)
CHATTERLEY: Okay, so it's Valentine's Day. Coming up after the break, stocks investors love and those they love to hate. Stay with us.
(COMMERCIAL BREAK)
[09:55:17]
CHATTERLEY: Welcome back to the show and Happy Valentine's Day to you all.
For now, a quick look at stocks that make investors hearts beat a little faster.
This year's main squeeze in the Dow is Microsoft, up more than 16 percent in 2020. Elon Musk still a heartthrob, too. Tesla shares are up some 90
percent year-to-date, and Netflix the best performing FAANG stock, up 17 percent.
What about the big Dow losers in 2020? The energy stocks. Both Exxon and Chevron breaking the hearts of oil investors. Ford, the worst performing
U.S. auto stock, down 11 percent. We'll call it a Romeo in reverse. Boo.
That just about wraps up the show. I'm Julia Chatterley. Happy Valentine's Day to you and to my team as well. Lots of love for those guys.
You've been watching FIRST MOVE. Time to go make yours. And some chocolate for me.
(COMMERCIAL BREAK)
[10:00:00]
END
