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First Move with Julia Chatterley
Passengers Leave The Ship Docked In Japan Despite The Coronavirus Spread; Mike Bloomberg Says In The Campaign, He Will Sell Up If Elected President; President Trump Pardoning Junk Bonds King, Mike Milken, Among Others.. Aired 9-10a ET
Aired February 19, 2020 - 09:00 ET
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[09:00:12]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR, FIRST MOVE: Live from the New York Stock Exchange. I'm Julia Chatterley. This is FIRST MOVE and here is
your need to know.
Quarantine completed: Passengers leave the ship docked in Japan despite the coronavirus spread.
Bloomberg Buyer. The billionaire says in the campaign, he will sell up if elected President.
And I beg your pardon. President Trump pardoning junk bonds King, Mike Milken, among others.
Is it only Wednesday? Yes, it is. Let's make a move.
Welcome once again to a particularly stimulating FIRST MOVE this morning or at least, I'll try to. Why? Well, the stimulus hopes in the air from China,
from other places around the world, too. I'll talk you through it.
But first, take a look at what we're seeing right now for U.S. futures. We do look to make some pretty good gains this morning. That of course follows
Apple spoiling sentiment with their revenue warning Tuesday, though we finished off the lows and I do think that's important.
The NASDAQ in fact managing to eke out a fresh record high even if the rally that we're seeing here as we've described on the show, narrower and
more defensive.
Apple though actually could lend some support today, were higher by around five tenths of one percent premarket. That follows yesterday's two percent
drop.
What about Europe? Well, markets are higher thereto. Italians stocks, in fact, hitting their best levels in over a decade. Asia stocks meanwhile, a
bit mixed. China is back a little bit. The Nikkei though in Japan ending higher.
Export data for January coming in less awful -- let's call it that -- than feared. Still down some two percent, but I think the key today is that we
seem to be seeing some thinking outside of the ordinary stimulus box or toolkit.
There are reports that China is considering cash bailouts for the airline industry. Also, China announcing new support for businesses thereto.
Chinese firms able to raise cheap cash to government supported so-called coronavirus bonds. And they aren't alone.
Turkey cutting interest rates today. The South Korean President calling for emergency steps to support their economy. Singapore has also unveiled a $4
billion plus stimulus package, too.
Meanwhile, we've got a whole slew of Federal Reserve officials speaking today. So watch for their views specifically on the outbreak and perhaps
the need for further economic support here.
Let's get to the drivers because we do begin once again, with the latest on the coronavirus outbreak.
More than 2,000 people now known to have died as a result of the outbreak. President Xi says progress is being made to stem the epidemic, but Beijing
has expelled "Wall Street Journal" reporters over an opinion piece that they wrote calling China the sick man of Asia. None of the journalist being
expelled were the actual authors, in fact of that opinion piece.
The other big development this morning, passengers have begun disembarking from the Diamond Princess. The cruise ship had the largest concentration of
coronavirus cases outside of China. Mat Rivers is in Yokohama for us on this story.
Great to have you with us. There were criticisms all the way along that the quarantine efforts being made aboard this cruise ship simply weren't
working given the spread of the virus, but some alarming suggestion about how the passengers were disembarking and using public transport and taxis
and things. Talk us through what we saw.
MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: Yes, well, I mean, basically what's happening here, Julia is, this is the Japanese government holding to
the line that they believe that the quarantine measures that they've undertaken onboard this ship since February 3rd are working.
They looked to these new cases and we saw another 79 positive diagnoses for the coronavirus on board this ship amongst passengers, but they say that
these new cases are not being spread post quarantine. They say that anybody that has a new infection, well, they picked it up before the quarantine
started and it just took a while to manifest.
Now, there's a lot of outside experts and there's a lot of passengers that are quite skeptical of that, and yet you continue to see Japan say no, we
are holding to this line to the point they're so confident in it that they're letting people off this ship.
Eight hundred people tested negative for the coronavirus earlier. You know, over the last couple of days, none of them presented any symptoms as they
got off the ship today and so they took taxis, they took buses, they took private cars, and they went home and that's what we're going to see over
the next couple of days.
Now Julia, we did have a chance to speak exclusively with the CEO and President of Princess Cruise Lines, that would be the ship's operator here,
Jan Swartz and she basically says -- we had a chance to ask her about the worries of passengers and experts about what Japan is doing here. Here is
what she had to say.
[09:05:15]
JAN SWARTZ, PRESIDENT, PRINCESS CRUISES: What I can say is today as our guests disembarked, they had tested negative for coronavirus. They had a
health check right before they got off. They had a thermal screening.
And the Japanese Ministry of Health issued them a certificate saying that they had tested negative for coronavirus.
So I would just defer those types of questions to the Japanese Ministry of Health who have been in charge.
RIVERS: On a human level though, you can understand the concerns if you put yourself in the shoes of those passengers. You can understand why some
people may feel that way or they might feel uncomfortable.
SWARTZ: I think on a human level, right, this is an unprecedented situation. I mean, nobody going on vacation thinks that they're going to be
notified in the last days that they've got an extension of 14 days and they're not going to be allowed to leave their cabin.
So our heart breaks for everybody who experienced this situation.
(END VIDEO CLIP)
RIVERS: Look, what she's saying here essentially is, you know, the Diamond Princess staff is doing what they can to make the people on board
comfortable in a tough situation. But ultimately, you know, they're a private company that have to operate by Japanese regulations here --
Japanese law, so even if they wanted to do something different, they can't. They have to do what Japan's Health Ministry tells them because they're
currently in a Japanese harbor. They don't really have a choice here, and so they're going to keep doing that.
They're hoping for the best. They're working with Japan's Health Ministry. But from all indications, Julia, so far that we've seen, Japan's government
is going to continue to hold this line and do what they've been doing and we're going to see all of these passengers get off the ship, you know, in
the next couple days.
CHATTERLEY: Yes. We're just suffering from a broader lack of information here amid these concerns. Matt, but the standout word for me there was
guest. These people don't feel like guests anymore. They feel like prisoners. So palpable relief, I'm sure for many of them.
Matt Rivers. Great to have you with us. Thank you so much for that update there.
Let's move on to our next driver. The E.U. is unveiling the shape of its digital future drawing up policies regarding the use of things like
artificial intelligence, keeping trust, apparently at the heart of it.
Anna Stewart joins us now. Anna, trust in technology critical, but these plans do sound ambitious. What more do we know?
ANNA STEWART, CNN REPORTER: So these are two big publications today, both with terribly boring names. We have the White Paper on Artificial
Intelligence and we have the European Data Strategy Proposals.
Now, these are both starting points for how the E.U. wants to see the future digital market and regulation on it.
Both are thankfully, Julia, far more interesting than their names suggests. Now, on the AI side of things, they're looking at ways that AI can benefit
all sorts of different sectors and businesses, but also, of course addressing the risks and challenges associated with it.
And so to fill out one of the more interesting bits, facial recognition, they're going to start a debate on when and how it should be used, for
instance, in a public space, should it be used for public interest? And what level should that public interest be?
The most explosive announcement of the whole lot though was actually on the digital strategy side of things and data sharing because this felt -- and
it felt like there's a swipe at American tech firms.
Essentially, they're saying that non-personal data that can be useful for various industries and businesses should be shared. It should not be held
by any large tech firm. It should be available to all. They've said it should be available to all whether public, private, startup or giant. Now,
it's just the proposals. They haven't said how they plan to force big tech giants who hold this data and protect it.
They don't say how they plan to do this in the future or of course, when this will be implemented. But I was actually in the press conference.
Thierry Breton, who is the commissioner for digital did discuss the fact that they've already lost -- that he has already lost the first battle for
personal data to these big American tech firms.
He says this is the second battle, the battle for industry data, and he says Europe is the battlefield -- Julia.
CHATTERLEY: Wow. It's going to be fascinating to see what they do with that, and I would agree actually, Europe is the battlefield because the
Europeans, particularly compared to the likes of the Chinese and the United States have always been on the front foot, whether it's antitrust, whether
it's data privacy and breaches, specifically and actually, in other countries, we've benefited from the demands that the E.U. has made. This
looks like the E.U. leading the way again here.
STEWART: Yes, once again, I think we saw that very much with GDPR in 2018. Protecting, you know, European citizens use of that personal data to a
great groan, of course, from corporates that operate in Europe all over the world.
There are of course, as you mentioned, those big antitrust fines as well and the E.U. certainly slapped plenty of those on major tech firms, and
that was something that was referenced today because slapping fines on a major company like Google or Amazon certainly gives them a penalty.
But the market could already be altered. Market share could already be taken and it's very hard to sort of address that situation.
[09:10:10]
STEWART: So Margrethe Vestager, the antitrust commissioner also speaking in the press conference said that part of this will be about preventing
that from happening in the first place.
If data can be shared, perhaps these big giant tech companies can't actually get that market share in the first place. Highly controversial. I
will be interested to see what the tech firms say themselves, and of course, perhaps we'll get response from the White House as well -- Julia.
CHATTERLEY: Yes, precision regulation. I'm sure they'll turn around and say, Europe, this is why you don't have big tech giants because you
regulate them to kingdom come quite frankly. Anna Stewart, thank you so much for that great job.
All right, let's move on to our next driver and to the 2020 White House race. Billionaire Mike Bloomberg seeking the Democratic presidential
nomination would sell his company if he is elected in November. His campaign adviser telling CNN "There will be no confusion about any of his
financial holdings blurring the line between public service and personal profiteering."
Bloomberg of course is set to appear in his first Democratic debate tonight and Christine Romans has more. It couldn't have been more pointed perhaps
to the not quite so arm's length, perhaps relationship between President Trump and the Trump business dealings. Who is going to buy Bloomberg?
That's my other question here. What do you do you make of all of this?
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: And how much would it be worth? I mean, you had some estimates this morning saying it
could be worth something like $60 billion, would they be able to find a buyer?
But look, that's all in the future here, and the point of this statement from the campaign is that they want to be 180 degrees away from Donald
Trump and his family. They never want to be in a situation where it looks as if Michael Bloomberg is profiting from the presidency.
So going back to those old days where Jimmy Carter sold his family's peanut farm, Donald Trump did not divest of his company. In fact, his kids are
running it and every time a foreign leader comes to Washington or New York or someplace where he has a resort, they stay there.
And the allegation is that the Trump family profits from the notoriety and the position of the President of the United States.
Look, we're going to probably hear about this tonight, maybe on the debate stage when we will hear Michael Bloomberg for the first time on this very
public national debate stage for the President of the United States. It's a place he hasn't been before.
You know, he hasn't done a lot of interviews. He's been able to manage with his multiple millions of dollars, manage the conversation through very well
done television ads.
Now, he will be asked questions and have to act like the other candidates on the debate stage tonight.
CHATTERLEY: Yes, I mean, the interesting thing as well and just in terms of policy is, is he just going to be another player for this center left,
center ground with the likes of Klobuchar, Buttigieg, Biden are fighting over here, or does he present something else and can he unite them?
He announced he is fixing finance plans yesterday among some of his other policies here. What do we make of those, Christine? Where in the spectrum
is he?
ROMANS: It looks like attack to the left. I think you're absolutely right. It's a little bit of an attack, but he's still solidly here in the middle
of the pack. I mean, he is trying to hold that middle ground there with Amy Klobuchar and Pete Buttigieg and a few others and Joe Biden.
But this is attack to the left. He is talking about transaction tax. I mean, there are a couple of Wall Street analysts this morning, they were
like, hey, what about that Wall Street is not going to have any problem with Michael Bloomberg theory. That's maybe gone after yesterday.
But this is still, you know, the primary season. This is still trying to find a Democratic nominee. So which Michael Bloomberg will we get here?
He's a very -- you know, long seen as a pro-business guy. He knows how business works, but he's also very concerned about climate change. He's
concerned about gun violence.
He spent a lot of money and built a lot of deep ties in Democratic communities and in cities and municipalities on these issues.
So he has ground game on those center left issues on the financial stuff. We'll see how that shakes out.
CHATTERLEY: Yes, it's going to be fascinating to watch. Christine Romans. Thank you so much for joining us on that story.
And sticking actually with the White House because President Trump issued an array of pardons on Tuesday. Mike Milken, the former investment banker
known as the junk bond king was pardoned along with several others.
Paul La Monica joins us on this story. This is a fascinating one, Paul, for me because many people have been pushing for this -- decades in the making,
we can call it.
He revolutionized access to credit for young companies, entrepreneurs back in the 80s with this particular market, and then it sort of all went wrong.
What do we make of this decision by President Trump today?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, as you pointed out, obviously, Milken is the so-called junk bond King, really symbolizing that 80s greed
is good sort of era that we then saw in the movie "Wall Street" with Michael Douglas.
I think, though that the issue was obviously he went to jail and served a little less than two years of a 10-year term for securities violations. But
he's second act, Milken has been a major philanthropist with a lot of donations to cancer charities. He himself is a prostate cancer survivor.
And I think a lot of people feel that Milken has done much good in the past couple of years and has really reformed his image, of course, and that was
one of the reasons why President Trump was willing to pardon him.
[09:15:26]
LA MONICA: I think there were a lot of people, including Rudy Giuliani in the inner circle of the White House, who led the prosecution against Milken
when he was an attorney in the late 80s, that he felt that Milken deserves this. And I think a lot of people do agree that this was a good move on the
part of President Trump.
CHATTERLEY: Yes, it's a fascinating one. I mean, pushing money into charities, looking at research into things like melanoma and prostate
cancer in particular. I mean, these are some of the things that spark up here. "The Wall Street Journal" today as well coming out and saying, look,
we know this is controversial, but we think this is the right decision, too.
When we look at what happened here, do we think this is about money or simply just doing the right thing with someone who has done great good with
their life and served their time?
LA MONICA: Yes, I think in this particular case, it probably is about being someone who has admitted his guilt and served his time and has
reformed himself and gone above and beyond that, so I think that's really what's at play here.
Obviously, a lot of the other pardons are far more controversial politically, but I don't think you're going to see as much ill will towards
Milken getting pardoned as what happened with say Blagojevich and DeBartolo and Bernie Kerik.
CHATTERLEY: Yes. Take each case individually. Paul La Monica, thank you so much for joining us on that story.
All right, let me bring you up to speed now with some of the other stories that we are following around the world.
U.S. Attorney General William Barr is ready to call it quits, that is according to sources. Barr is considering resigning after President Trump
ignored his pleas to stop interfering with Justice Department matters.
Barr said the President's tweets attacking law enforcement are making it impossible for him to do his job. The U.S. Secretary of State say "America
is prepared to talk with Iran only if they change their behavior fundamentally." Mike Pompeo was speaking on board his flight to the Saudi
Arabian capital, Riyadh for talks with the Saudi Foreign Minister. He will also be visiting Amman.
The Duke and Duchess of Sussex may not be able to hang on to the term Royal for much longer. The use of the word in their branding is under review.
Prince Harry and Meghan Markle planned on generating income through their Sussex Royal brand as they work to become financially independent. I am not
really sure how much of that matters.
All right. We're going to take a break. Coming up on FIRST MOVE, some out of this world returns for Virgin Galactic shareholders. What's got them
stratospherically excited? Find out next.
Meanwhile, stuck on the ground. As Boeing does its best to get the 737 MAX flying, now, there's another problem with the plane. Stay with us. More to
come.
(COMMERCIAL BREAK)
[09:21:14]
CHATTERLEY: Welcome back to FIRST MOVE where stocks looks set to open in the green in this morning's session.
For all the volatility, in fact, stocks are still on track for their best month since June of last year. A bit of a different story though in the
bond market.
Look at 10-year yields in the United States. We are -- what -- around 1.57 percent, but the 10-year and the three-month yields have inverted.
So that means the three-month going above the 10-year once again. In the past, not always, but it has been a recessionary signal.
We're also keeping an eye on Argentina today. Debt restructuring talks with the IMF is set to end in a worst case scenario. Are we looking at another
Argentinian default? The first since 2014. We'll keep an eye on that. Lots to discuss.
Kristina Hooper joins us now. She's the Chief Global Market Strategist for Invesco. Great to have you with us.
KRISTINA HOOPER, CHIEF GLOBAL MARKET STRATEGIST, INVESCO: Great to be here.
CHATTERLEY: I actually wants to talk about coronavirus. You said the floodgates have opened. Apple in the last 24 hours. We had Adidas and Puma
in the European session all saying this is going to have an impact on the numbers.
HOOPER: Oh, absolutely. Last week, we had Alibaba's head talk about how it is a black swan event. Tesla is warning about it as well.
So we're starting to see an impact on -- or expectations of an impact on earnings.
CHATTERLEY: When do we start to perhaps price that to a greater degree because we've seen it hit specific sectors -- transport, the airline
sector, in particular? Investors are focused on those specifically versus perhaps those with bigger supply chains.
I mean, Apple, two percent drops -- it's not much.
HOOPER: Well, it's not much, but I think it's also important to recognize that this is likely to be a short term phenomenon. And so that's what
markets are really pricing in, it is this expectation that yes, we have a difficult quarter and then we move beyond it. So actually, I think the
reaction has been relatively appropriate.
CHATTERLEY: So it's back to the V-shaped recovery at some point in future quarters perhaps.
HOOPER: It could be a bit more like a U for a little while, but I do expect there to be a nice snap back as soon as we see some level of
stabilization of the coronavirus, because keep in mind, we did have a lot of positive sentiment, just as coronavirus was emerging because of the
U.S.-China Phase 1 trade deal.
CHATTERLEY: It's a really important point to make. Also, and we've talked about it many times on the show, 60 percent of the world's Central Banks
are also stimulating and I do think -- and we made the point at the top of the show today that there is a belief here that China will continue to
stimulate the Federal Reserve stands ready to do something.
What's the likelihood of an insurance rate cut from the Federal Reserve here?
HOOPER: I think there's a very good chance of an insurance rate cut if the situation deteriorates. Keep in mind that the Fed thinks of itself as the
world's central banker. So it doesn't necessarily have to significantly impact the U.S. economy. It impacts the Chinese economy and is impacting
the global economy -- that may be enough.
This is just -- you know, we have to think of 2019 as a very significant about face for the Fed where it really started to change its mindset and
create something of an expectation of a safety net, and I think that continues to this day.
CHATTERLEY: Do you think the U.S. consumer though and we had this discussion on the show yesterday actually benefits in some way from lower
energy prices, lower mortgage rates, the prospect perhaps of stimulus from the Federal Reserve, if indeed required.
HOOPER: Oh, absolutely. This is an environment where could that could be very good for the U.S. consumer given that oil prices should continue to
come down, given that we should see rates come down in this environment. It would be an added kicker, of course if the Fed cut rates as well.
CHATTERLEY: Also an added kicker and supportive perhaps of President Trump's political ambitions as well. We've talked many times about the
importance of the U.S. economy heading into that election.
[09:25:10]
CHATTERLEY: How many questions are you getting from clients about Bernie Sanders? Because my belief is we're sort of writing him off. Wall Street is
writing him off. They think Trump wins.
There's also the Bloomberg dynamic perhaps. What are you saying to clients right now?
HOOPER: Well, I think you're absolutely right. I think the markets are overlooking it. And we're not hearing a lot from clients about this right
now.
But I have been warning that if we get a few high profile primary wins by Bernie Sanders -- that might change the dynamic and cause investors to get
nervous. I do think it could result in some very short term sell offs, particularly in specific sectors that we expect to be more highly
regulated. But in general, it could create a selloff in the S&P 500.
CHATTERLEY: And Mike Bloomberg?
HOOPER: I think that markets right now or assuming that Michael Bloomberg is the backstop for Bernie Sanders. And so they're proceeding with this
assumption that Trump wins.
But in the off chance that he doesn't, that the Democratic nominee would be Michael Bloomberg.
CHATTERLEY: And very quickly, you said a potential market selloff in the case of Bernie Sanders, difficult to predict. We did that with President
Trump as well. What kind of selloff are we talking about? And would it be a buying opportunity?
HOOPER: Well, I think that anytime we see a selloff just given the policy backdrop, which is so supportive of risk assets, any kind of selloff can be
a buying opportunity for investors, because they're hard to come by, and we see rebound so quickly.
And I would expect some market jitters if Bernie Sanders continues to accumulate delegates and has any kind of high profile primary wins.
CHATTERLEY: And are no bears in this market.
HOOPER: Exactly.
CHATTERLEY: Kristina, we've got to wrap it up. We'll get you back. Kristina Hooper, Chief Global Market Strategist at Invesco. The market
opens next. We're back after this.
(COMMERCIAL BREAK)
[09:30:00]
CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange and the opening bell this morning, marking the halfway point of
the week. We've got a higher open.
Tech stocks in fact, making fresh record highs. We've got green across the board in Europe. Broader stimulus hopes and not only of course in China,
but beyond including in the region. We will also hear what Fed officials -- Federal Reserve officials have to say about the economy and the prospects
perhaps for more support going forward. We've got five members of the Board set to speak today.
The Global Movers. Let me walk you through those. Apple shares are higher, bouncing back from the two percent losses suffered on Tuesday following
that revenue warning, coronavirus related, of course.
Tesla shares also higher. Analysts at Piper Sandler raising their 12-month price target on Tesla to $928.00 a share, the most aggressive target on
Wall Street so far if you take out ARK Invest, of course, which is stratospherically higher.
Groupon shares under pressure this morning. The discount deal company reporting weaker than expected profits and revenues. It says it will stop
selling merchandise on its site because of the fiercely competitive marketplace.
It will now focus on selling experiences like dancing lessons, and wine tasting.
Boeing today also in focus. The company admitting it found debris in fuel tanks of undelivered 737 MAX jets. The head of the program for the 737
calling it "absolutely unacceptable."
Clare Sebastian has all the details. What do we know about this, Clare? When I saw this story, I was, quite frankly disbelieving. Does this mean
debris left in the production process for some of these planes?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: That is exactly how it sounds, Julia. These are planes that are currently in storage. Don't
forget, throughout this grounding, which has now been almost a year, Boeing has continued to produce these planes but it's had to store them, you know
in parking lots in various other locations.
It says it found the debris during maintenance. It says it is conducting a robust internal investigation. It's taking corrective action in its
production system.
Here's the quote from Mark Jenks who is the VP and General Manager of the 737 Program. He says, "We're taking action after a range of foreign object
debris ..." FOD it's called, " ... was recently found in the fuel tanks of several 737 Max airplanes in storage."
Now, they don't say how many. "FOD is absolutely unacceptable." He says, "One escape is too many. With your help and focus, we will eliminate FOD
from our production system." That's a note to employees at the Renton Washington plant.
Now, bearing in mind there are around 400 of those planes that are in storage, so inspecting the more will be a big job.
Now they haven't said if this will push out the timeline for returning the 737 MAX to service. The latest we heard from the company is they expect to
get approval around midyear, whenever that means.
The U.S. airlines have pushed out flights to August or September. They don't expect to have the plane back in service during the summer flying
season. But this, Julia, definitely not the kind of looks that Boeing needs and will lead to further questions about, you know, their production system
in general and what else is out there.
This isn't the first time the company has faced issues with the sort of foreign object debris on planes.
CHATTERLEY: Yes, and you raise so many great points there for me. Recertification is one thing, trust from consumers is entirely another as
these problems stack up.
One thing I did notice and it was my second thought when I read this story, different in terms of communication, program managers straight out and
saying, look, this is unacceptable. We're tackling it. We're going to address it.
Different communication strategy already, I feel from Boeing under a new CEO.
SEBASTIAN: Yes, and we're hearing about this directly from Boeing. This is clearly part of the strategy, Julia. David Calhoun on the job, fighting
just over a month now. He came in on the promise that this would be a new era of transparency.
And clearly, if they can't deliver on ending these issues that they have with the plane that keep coming to light as the grounding continues, they
can at least deliver on that promise of transparency of getting out ahead of leaks, ahead of whistleblowers, you know, hearing it directly from
Boeing, rather than the regulators. That I think is critical.
But this just adds to the challenges the company faces and don't forget, this is the second issue that's come to light this month. Just a couple of
weeks ago, there was another software fix that were discovered during flight testing of the 737 MAX.
So there's a lot that the company is grappling with, and still we're approaching the anniversary now of Ethiopia Airlines Flight 302 that
crashed in March last year and still no approval for the plane to fly again.
CHATTERLEY: Yes, I remember the conversation I had with Emirates, and I said they can't get this wrong. And he said, the Chairman said, they are
going to get this right. They have to get this right. Trust. Clare Sebastian, thank you so much.
All right shares of Virgin Galactic soaring. The stock up around 160 percent so far this year. Investors seemingly getting excited over plans to
launch a commercial space service.
Matt Egan joins us now. Matt, what do we know about this commercial space service and investors clearly delighted, but it's really the only way to
take risk in this sector.
[09:35:26]
MATT EGAN, CNN BUSINESS SENIOR WRITER: Well, Julia, we know that this stock appears to be defying the laws of physics. It's up eight days in a
row, up double digit percentage again today. It's basically tripled since the end of last year, which is really just a stunning move.
And as you mentioned, it's really benefiting from the fact that if you are bullish on space tourism, this is really the only pure play for that trend
and investors are getting understandably excited about Virgin's progress trying to launch passengers into space.
This is definitely an exciting place, but you know, it is probably time to tap the brakes a little bit on this stock. They haven't even reported
results since they went public through that merger with a special acquisition company last year.
We know that they're not making money. They don't expect to make any money. Virgin is supposed to be reporting results next week, so we'll have to
listen to what they say.
But what's really interesting, Julia, is that even some Virgin bulls are sounding a little bit nervous about this meteoric rise.
Just look at what Morgan Stanley analyst Adam Jonas said in a report just yesterday, Morgan Stanley said that they are very constructive on Virgin
Galactic story and they said that the company has a pole position in space tourism. They could they could use that to potentially fund even bigger
projects.
But Morgan Stanley said they think that the share price could use a breather. Again, this is from a Virgin bull, and that's because this stock
has already blown by Morgan Stanley's $22.00 price target. It's now trading at $30.00 and above that.
So there is some nervousness even from some of the optimists. Julia, we should definitely keep an eye on this stock because eventually, gravity
should catch up to it.
CHATTERLEY: You know, it reminds me of Beyond Meat and the stratospheric rise that we saw after the IPO of that one, and analysts coming out and
saying, yes, it's not that we don't like the story. We're just a bit concerned about how quickly this stock has risen.
I wonder though, given what we were saying earlier about this being really the only way to take risk if you want to as an investor in this space, does
this entice the likes of Jeff Bezos and Elon Musk to spin off their space divisions and monetize those?
EGAN: Well, Julia, you mentioned Beyond Meat. I mean, it does kind of feel like there's been more of these one stock manias lately. There was the boom
and bust of Beyond Meat, the rise and fall of the cannabis company Tilray. Tesla is still enjoying this incredible rally. You sort of wonder if this
is at all a byproduct of all that easy money sloshing around from global central banks.
But it is interesting to see, and you mentioned these other space companies. I mean, if you are Elon Musk or Jeff Bezos, you've got to be
drooling when you see these moves from Richard Branson's Virgin Galactic, maybe they will try to take those companies public.
But I've got to think that the clock is ticking on this a little bit. If they're going to make a move like that, they want to do it when the economy
is sturdy like it is now and they want to do it when it's basically free to borrow money right now.
CHATTERLEY: Yes, great points. Matt Egan, great to have you with us.
Now, we're going to take a quick break. We're going from destination space to destination zero. Carmaker Jaguar Land Rover says its mission is to get
to zero emissions, zero accidents and zero congestion. That conversation after this break.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Jaguar Land Rover unveiling a new electric concept vehicle Vector at the opening of the U.K.'s National
Automotive Innovation Center.
The car is designed to provide autonomous rides in urban areas with zero emissions. I spoke to the company's CEO about the futuristic vehicle as
well as the impact of the coronavirus on the company's business.
(BEGIN VIDEOTAPE)
RALF SPETH, CEO, JAGUAR LAND ROVER: The Vector is something that is special, creating a new kind of mobility, creating something which is very
space efficient. On the other hand, zero emission and can be really -- then also charged by renewable energy and with fast charges and delivers
individual public mobility and its autonomous ready.
It goes in the direction to integrate infrastructure and the car. They speak to each other and make sure that at the end of the day, we get a high
safety and security in order to deliver a new modern smart mobility.
CHATTERLEY: What kind of costs are we talking about for this? And how soon do you think we could see these kinds of vehicles on the roads?
SPETH: We will have these kind of vehicles with the first prototypes on the road within the next two years. We advanced. We have put the
technology. We are also working together with partners in order to make sure that we have the latest technology and really fit for the purpose.
That is also the reason why we didn't come out immediately, kept it in the drawer and opened the drawer just today.
CHATTERLEY: You know, it's interesting, I was looking on your website with regards Destination Zero, and we're talking zero emissions, zero accidents
and zero congestion. And the numbers for me on accidents were mind boggling, 1.3 million people dying globally as a result of cars each year.
You make the comparison to it being like eight jumbo jets crashing every single day. We don't focus enough on safety on the roads and the benefits
perhaps that autonomous technology could bring. Does the need to be more government focused, government investment in this, not just from the
automakers?
SPETH: Yes, you're totally right. At the end of the day, no car company can do these kinds of Destination Zero on its own. We need to have
collaboration. We have to have government, regional leaders, academia and industry across sectors together in order to make it happen.
CHATTERLEY: I want to ask you about the impact, in least in the short term of the coronavirus outbreak. What does this mean for the supply chains that
you have right now? And the potential impact on demand, what are you seeing?
[09:45:05]
SPETH: Yes, at the moment we are seeing absolutely a different picture. First of all, you mentioned demand. There are no sales at the very moment
in China. Dealers are not back and there's no demand.
So that will be a huge impact, but we don't know how long it will take so we cannot give you any, let's say, prognosis or the forecast.
We have so much good in swing. Our team delivered until the day 28 last month, over and above the target, and all of a sudden there's nothing
anymore so that's strange from a supply point of view. We have to feed both the factory in China, but as well the factories in Europe.
At the moment we are safe with two weeks in Europe. We are going to start the production in China next week, on Monday and we are safe for one week.
The rest, nobody knows at the very moment because nobody knows how long a government will ultimately close the regions, how long it will take, but
also the tier two, tier three and tier four suppliers will come back on stream.
So we don't know what kinds of parts will be in short supply.
(END VIDEOTAPE)
CHATTERLEY: The CEO of Jaguar Land Rover there.
And a look at today's Boardroom Brief. Adidas says the coronavirus has had a huge impact on its business in China. Activity there is down 85 percent
according to the German sportswear company. It also said it has seen declines in Japan and in South Korea.
And Adidas's rival, Puma also says the virus is hurting the bottom line there. They said the travel restrictions in effect in China are impacting
their business with fewer Chinese tourists going abroad. Sales are suffering in other markets, too.
Qatar Airways is increasing its stake in IAG, the company that owns British Airways. It paid around $600 million to raise its shareholding from 21 to
25 percent. Last month, AIG loosened its restrictions on the proportion of its shares that non-E.U. entities can own.
Okay let's take a quick break here, but the life of a freelancer is fraught with dangers. Often, it boils down to feast or famine.
After the break how Fiverr is putting work in their hands. Stay with us. We're back in two.
(COMMERCIAL BREAK)
CHATTERLEY: Come back to FIRST MOVE. Fiverr is one of those gig economy brands we keep hearing about. It's built at the-everything-store for
digital services.
In other words, it's a marketplace for freelancers offering their labor. Its marketing plays heavily on low cost, high convenience. Check it out.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Maybe simplicity just isn't for you. So you'll find yourself in that overpriced boutique studio that charges triple for the
same gig and think to yourself, well at least they gave me a tiny branded water bottle because they know how important it is to keep hydrated.
(END VIDEO CLIP)
CHATTERLEY: No, not everything is a Fiverr. Sellers out their terms and their fees up front. Services offered include writing, graphic design,
digital marketing, video and animation.
[09:50:12]
CHATTERLEY: Micha Kaufman is the co-founder and CEO of Fiverr and joins us now. Great to have you with us.
MICHA KAUFMAN, CO-FOUNDER AND CEO, FIVERR: Good morning, Julia.
CHATTERLEY: I thought that lady was very excitable. It's borderline scary. Your numbers were out this morning and they look pretty good. Just talk us
through your quarter because I know it's early days. You're investing money, but investors are liking what they're seeing.
KAUFMAN: Absolutely. So we had an amazing quarter, which is a great ending for the year. We've seen an amazing momentum starting with the first half
of the year accelerating through the second half of the year.
And we're actually seeing that momentum carried into 2020 which makes us very excited about the year and has influenced our goals for this year,
which are exceeding market expectations.
CHATTERLEY: You're loss making? Target unprofitability? Does it matter?
KAUFMAN: It obviously does. The way we think about it is we're a young company with a huge market. So we're prioritizing growth. But we're doing
it in a way that increases the efficiency of everything we do and you see that in the massive improvement of our EBITDA margins and the loss of the
company, which are very small and shrinking.
CHATTERLEY: Next year? This year? And then we'll move on.
KAUFMAN: I'm not giving a rate.
CHATTERLEY: I have to try. One of the things that is interesting to me, firstly, that the sellers of their skills, set the price up front. So
there's no fear factor on that this is a project that's going to escalate and I don't know what the endgame here in terms of price is going to be.
But the average spend, actually, is relatively low. It's around $170.00 per person. When I look at a competitor like Upwork, it's like $1,000.00. Why
the difference?
KAUFMAN: So basically, the two companies are very different and are targeting very different types of audiences. Fiverr targeted mostly what we
call the zero enterprise, we don't have a Salesforce, which is a great plus.
For us, that majority of our traffic actually comes organically, which is great. So these are different types of businesses.
That said, I think that the low spend per buyer is the opportunity. The fact that we can actually grow that and you see constant growth throughout
quarters. So this is definitely being a tailwind and accelerating.
CHATTERLEY: $163.00, last time now, the average spend is $170.00. Where do you see that going?
KAUFMAN: Oh, so basically, as you think about the more established businesses, the medium-sized businesses, they spend $15,000.00 a year on
freelancers, so you know, the room to grow is just amazing.
CHATTERLEY: Do you think you can capture -- how much of that do you think you can capture? Because that's for all sorts of services, not just the
sort of digital and video.
KAUFMAN: That is great, but when we look at just the categories in which we operate, the addressable market for that, in the U.S. is 100 billion.
E.U. is one and a half times bigger than the U.S., so there's so much room to grow.
CHATTERLEY: You're also introducing AI into the process, too. We went on the website to look at FIRST MOVE with Julia Chatterley. We have some
examples of what I came up with. It takes your own inputs. I think I had pink and sparkly. Yes, it ignored me on most of those. I am sure what we
think of those.
But talk to me about AI as well because you're trying to make the process simpler and facilitate the use of it. I wonder whether you're kind of doing
your sellers out of a job here, perhaps too if computers can do it better?
KAUFMAN: Absolutely not. So what we're doing and I think this is probably one of the first times that a company is doing that is we're not trying to
replace the human factor. We're trying to compliment on that.
So the way we do it is we allow our creative community to design those logos, but we use AI to make sure that those logos are being customized for
customers. And that takes a lot of the work of customization from our freelancers.
So essentially what we're doing is we're using AI to their benefit instead of trying to replace them.
CHATTERLEY: I know you're expanding globally as well, you're setup in Germany as well. What do you think the big challenge is going to be as part
of that? Is it about hiring people? Is it about fast expanding?
Many companies struggle with just simply hiring the right people at this expansion stage.
KAUFMAN: So the good news for us is that we don't need to hire many people to run the global operations. What we've done is we've actually started
testing in Germany of what does it take to increase the rate of growth of Germany?
And we've done it very successfully through soft localization and investing a little bit in marketing in Germany. And we've seen Germany right now
growing much faster than the overall market base, which is great.
And what we've done recently is we launched two new languages, German and Spanish, and we're going to roll out two more languages as we go and we
think that together with some brain marketing and performance marketing done in these countries, we will be able to increase the penetration rate
in these areas.
[09:55:07]
CHATTERLEY: We'll be helping you with that, too. It's a PR and the marketing. Micha, great to have you on the show. Thank you so much. Good to
see you. Fiverr there. Come back and talk to you soon.
All right, that just about wraps up the show. Let me give you a look at what we're seeing as far as that market action is concerned. We are higher
right now. The NASDAQ hitting fresh record highs of course, too.
As you could see there as well, the Dow higher by some three tenths of one percent. Can we hang on to these gains? Stimulus hopes, as I was discussing
earlier on in the show.
Okay, we'll be back in a couple of hours' time with "The Express." But for now, you've been watching FIRST MOVE. Time to go make yours. We are going
to work on my website design. We will see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
END
