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First Move with Julia Chatterley
Emergency Rate Cuts Provide Little Assurance, Though Stock Futures Bounce Today; Facebook Giving The World Health Organization Free Advertising Space On Coronavirus; The Former Vice President Catapulting Into Frontrunner Status. Aired 9-10a ET
Aired March 04, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:27]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from the New York Stock Exchange, I'm Julia Chatterley, this is FIRST MOVE, and he is you'll need
to know.
Federal Reserve bail. Emergency rate cuts provide little assurance, though stock futures bounce today.
Managing misinformation. Facebook giving the World Health Organization free advertising space on coronavirus.
And Biden is back. The former Vice President catapulting into frontrunner status.
It's Wednesday. Let's make a move.
Welcome once again to FIRST MOVE. It was certainly Super Tuesday for Joe Biden, Super Wednesday for me of course because I'm back with you and it's
also a super day for my mother, too. It's her birthday. Happy birthday, Mum. You are my superhero.
Now, it's also a historic or heroic rise -- let's call it that -- two percent or more this hour for futures bouncing back from losses yesterday.
Politics also, I have to say might be driving this.
Joe Biden's strong showing in the primaries far more market friendly than a Bernie blow out. That would have added, I think to some of the juices here
that we're seeing more broadly, though, volatility once again the name of the game. Volatile again yesterday. We did plummet a further three percent
for the U.S. markets despite the Fed's emergency half a point rate cut.
My take on this, I think the Federal Reserve actually alarmed the market yesterday. Many investors took -- they looked at that message, took a look
at the rate cuts and said, hey, what do they know here that perhaps we don't?
There's also, I think the border worry -- we've discussed it many times on this show -- are rate cuts here limited in tackling a viral outbreak that
we're seeing, especially when interest rates are so low.
South Korea's actions argued I think that point best today. The Central Bank keeping rates steady once again, yet the government unveiled an
emergency budget of nearly $10 billion to help support the economy.
South Korean shares rose on the news. They are up some two percent. Chinese stocks overnight also making gains - that despite more awful services
sector activity data. I think there's plenty of bad news and the expectations in the price already here.
We've also got a bounce going on over in the European session, too. In summation today, for now, we are green.
Let's get to the drivers because Christine Romans joins us now. Christine, great to have you with us. So the Federal Reserve, despite the fact that
the G7 said they weren't going to make any kind of coordinated measures, they said, we're not hanging around, they cut rates and the market took
fright.
What do we think of this?
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: I think you're exactly right that they hit a panic button they haven't hit since the days
after the Lehman Brothers collapse and that signaled something very big, and the time before that, it was the 9/11 terrorist attack.
So you're putting what's happening now with coronavirus, which is still very uncertain on par with some very dangerous times in American life.
Now, look for the economy. We are seeing disruptions, no question. In tourism, a lot of these local communities are going to be hurt by the --
you know, all of these conferences that are canceled and travel around the country that has been canceled and people working from home.
But we don't know how deeply that will go and how will lower interest rates -- how will lower interest rates kill a virus or ensure an effective
government response or affect a health crisis?
You know, cutting rates is usually a tool for more financial type crises, not necessarily a health crisis.
So right away, you had investors saying we think the Fed panicked unnecessarily.
CHATTERLEY: Yes, I agree with you. Do you think politics is also playing into this, perhaps, too? I mean, when you look at the Super Tuesday
results. Had Bernie Sanders made a stronger showing here, then perhaps the market would have gone woo -- we know some of his policies certainly aren't
all that market friendly, but particularly compared to Biden here.
ROMANS: Look, if Tuesday was a Fed flop, Wednesday is a Biden bounce. And everyone I've talked to this morning said the moderate in the driver's seat
for the Democratic Party is something Wall Street likes.
Wall Street prefers Trump. Trump's policies have been great for Wall Street, right? They prefer Trump, but they can live with Joe Biden. Joe
Biden from Delaware.
He knows how credit card companies operate. Right? He is somebody who knows about business and he is seen as palatable -- palatable to Wall Street,
quite frankly.
You know, Bernie Sanders was someone who Wall Street didn't want to see as President, but did want to see potentially as the Democratic nominee if it
looked like Trump could beat him.
So there is a changing narrative, a morphing narrative -- and look, a lot can change. You've got debates, you've got more primary states to go here.
There's a lot of missteps that can happen and a lot of jockeying for the front position here that could still happen.
But it's a reminder, Julia, that election year markets are very unpredictable and surprises happen all the time.
[09:05:18]
CHATTERLEY: Yes, absolutely. And what did you say? Fed Flop to Biden bounce. I like it. Flop is better than fail. I think here, there's still
room to move. Christine Romans, thank you so much for that.
ROMANS: Nice to see you.
CHATTERLEY: All right, let me bring you up to speed now with the latest on the coronavirus outbreak because Italy has announced two weeks of closures
of schools and colleges. This, of course, amid the ongoing global battle to contain the outbreak.
The World Health Organization has warned of worldwide medical equipment shortages. We have China reporting that 75 international arrivals into the
country now have tested positive for the coronavirus.
To South Korea where reports of nearly 300 new cases appeared overnight, a total now of over 5,600 that remains the largest outbreak outside of China.
In Iran, they are using tent hospitals as it runs out of beds. Eight percent of the country's lawmakers have tested positive for the virus, too.
The infection is also reported to be spreading in Iran's jails.
Now, those are the facts, of course. The problem is, where do you go for information? Is there a risk? And of course the risk that you get
misinformation particularly on social media.
Well, Facebook is now trying to tackle that. They are giving free advertising space to the World Health Organization to try and tackle some
of this information. Hadas Gold joins us now on this story.
Hadas, this is a positive step. When I saw this, I thought this is a great idea. When you actually get a pop up, because I've tried it -- directing
you to official information from the World Health Organization.
HADAS GOLD, CNN BUSINESS REPORTER: Yes, Julia. That's right. This is a positive step forward, and actually experts I've been talking to have
lauded Facebook and what they're doing.
They are essentially giving the organizations like the W.H.O. as much free ad space as they want in order to try to get their message out there, and
that's because there is a huge problem. This virus of misinformation, the experts are calling it an infodemic is spreading almost faster than the
coronavirus is spreading.
It is so easy to stumble upon bad facts about where the virus comes from, how it spread, and even worse, even potentially more dangerous, is
potentially how to cure it. Everything from just drinking garlic water to even worse.
So this is a good step by Facebook and actually I've been speaking with the person at the W.H.O. has been liaising directly with these tech companies
about what they're doing and how sort of difficult it is to balance both the free speech, just the common flow of information on these websites with
trying to make sure that the good information is getting out there. Take a listen.
(BEGIN VIDEO CLIP)
ANDREW PATTINSON, MANAGER, DIGITAL SOLUTIONS FOR W.H.O.'s DIRECTOR GENERAL: And a lot of the time it's a very fine line between the freedom of speech
and this misinformation and technology companies are all promoting freedom of speech, which is fine.
But a lot of them do have a policy which says that as soon as it content is dangerous to one of their users or a danger to a human, then they would be
happy to take it down.
So we looked at basically finding what the tech company is willing to do and what we need to get done and finding that sweet spot in the middle of
what we can actually work together on.
GOLD: But Julia, the problem is the W.H.O. only has a small team that are working on this, only actually three people are dedicated to watching
social media and having that direct line to places like Facebook to flag it and take it down.
But the problem is, this misinformation that is coming out at such a speed, just this morning, I was on Instagram, looking at coronavirus, and I was
stumbling across accounts that are not necessarily giving out the best information out there. It is sort of a whack-a-mole procedure, but at least
there is some progress being made because as some people are saying, this is the first epidemic we are really having that's on a global scale, that's
in this sort of incredibly hyper connected social media world -- Julia.
CHATTERLEY: Absolutely. I believe you said drinking garlic water was one of the suggestions. I mean, that's going to keep people away. I don't think
that's going to help fight coronavirus, quite frankly, and I don't really want to make a joke about something so serious, but some of it is
completely laughable here.
By far, the better idea here is good as it is to give free advertising space to the World Health Organization is to try and lock down on some of
these accounts that are fueling this misinformation and whether we're talking about coronavirus or anything else, Hadas.
You and I talk about this all the time. They need to get better at attacking the accounts that are providing the misinformation, and this is
the challenge here. Anything else is a mere distraction.
GOLD: Right. And that's the danger because there's people that are honestly just trying to get information that they believe is correct, and there's
other people who are trying to make money off of it, trying to sell these sort of herbal cures or something like that.
Then of course you have the more traditional groups like the anti-vaxxers who are coming out already against any sort of coronavirus vaccine.
[09:10:06]
GOLD: Now, the W.H.O. says it is -- it is working on with some tools with these social media companies, artificial intelligence that can help them
track certain phrases or accounts that are often sort of signifiers for this bad information.
But it is still, I have to tell you, I've been looking at this for the past few days, it is so easy to just stumble upon this bad information and
despite the good efforts, despite the links that will pop up next to the information to try to get you to click on other websites that take you to a
good place, it is just way too easy to find bad information on the coronavirus online and that is just too dangerous.
CHATTERLEY: I couldn't agree more. Hadas Gold, great to have you with us on that story. Thank you for that.
All right, let's move on now to our next driver. Joe Biden is back. He won nine states in the Super Tuesday Primaries on the path of course to
selecting a Democratic nominee for President. Bernie Sanders leads in the big prize of California.
Jessica Dean joins us now from Los Angeles. Jessica, great to have you with us, a reinvigorated Joe Biden, it seems but to the point about California,
it's the delegate numbers that matter. Where are Joe Biden and Bernie Sanders lying at this moment?
JESSICA DEAN, CNN CORRESPONDENT: Right. So right now we're still waiting on California's delegate numbers, and then all of the results from here to be
finalized.
California is unique in the way that it counts its results. It usually takes days later, because if you mail in your ballot, and it's in by
yesterday, you have until Friday for it to get there. So it can take days for them to really get to a final, final count.
We see Bernie Sanders leading here, but Joe Biden following close behind, and then if you look wider out at the delegate numbers broadly, Joe Biden
is now in first place. So what a difference a week makes, right?
It's just an incredible turn of events. It's unprecedented, the comeback that Joe Biden has had. Remember after New Hampshire, people were declaring
his candidacy dead, so he keeps saying, I'm back. We go to these rallies. He says, I'm back, I'm alive.
The campaign was really hoping that that big significant win in South Carolina would give them the momentum to go into Super Tuesday and really
capture and make the most of this moment. But they didn't know until it actually happened if that would work out.
So what did they do? They focused on key districts within these Super Tuesday states that they knew were delegate rich. They looked for
endorsements there. And then of course, those big endorsements from his former rivals: Amy Klobuchar, Pete Buttigieg, and Beto O'Rourke.
And again, they hoped that that would move the needle and that people would break late for Joe Biden, but until those results came in last night,
Julia, we just had no way of knowing. It was such a short turnaround between Saturday and Tuesday, it was hard to be predictive of how that
would shake out.
But just a huge night for Joe Biden, and certainly an incredibly energized Biden campaign.
And one more thing I'll add, Julia is the money issue. There is now millions of dollars flowing into Joe Biden's campaign where they had once
really, really struggled with raising money.
In fact, in some of these states that he actually won, they were not on the airwaves with any sort of advertising. And you know that Michael Bloomberg
was spending tens of millions of dollars in a lot of these states on ads.
So it was an interesting comparison that Joe Biden was able to win some of these states where he hadn't visited or had been on the air, when others
had spent a lot of time and money there.
CHATTERLEY: Absolutely critical question as well for Elizabeth Warren now, less so, of course, for Mike Bloomberg. And it's going to be interesting to
see what these two do now as well.
Jessica, great to have you with us. Thank you for that wrap up there, Jessica Dean.
All right. Let me bring you up to speed now with some of the other stories that we are following around the world.
The U.S. has conducted an airstrike on Taliban fighters following attack on an Afghan checkpoint. This strike comes just hours after President Donald
Trump says he spoke with the Taliban leader by phone describing it as a "good conversation," and it hasn't even been a week since the U.S. and the
Taliban agreed to work towards a peace deal.
A major diplomatic spat is developing between Turkey and Greece after Turkey claimed Greek Security Forces fired live ammunition at migrants.
Greece categorically denies this and says Turkey is fabricating and spreading fake news.
The European Commission has adopted its first European Union-wide climate law which aims to reach climate neutrality by 2050. The law comes as
activist, Greta Thunberg visits the European Parliament in Brussels, where she is due to meet the President later today.
All right, so we're going to take a break here on FIRST MOVE, but coming up in the show, how Super Tuesday marked a super shift in the Democratic race
for the nomination.
And breaking down LEGO's strong earnings, brick by brick, piece by piece.
More to come. Stay with CNN.
(COMMERCIAL BREAK)
[09:17:57]
CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange. We continue to try and quantify the impact of the coronavirus
outbreak on the global economy. But what is clear is the travel and tourism sector is well and truly on the front lines. Richard Quest investigates the
likely impact.
(BEGIN VIDEOTAPE)
RICHARD QUEST, CNN BUSINESS ANCHOR (voice over): The travel industry has faced many shocks of different types before, but this is something
different.
(BEGIN VIDEO CLIP)
SCOTT SOLOMBRINO, EXECUTIVE DIRECTOR, GLOBAL BUSINESS TRAVEL ASSOCIATION: The last time I've seen anything close to this was post 9/11.
(END VIDEO CLIP)
QUEST (voice over): It's the range and scale of industry that's truly worrying. Think about it, it's more than just planes and trains, it's the
hotels where we stay. They are the restaurants we dine at, the credit cards we use for expenses.
Giant companies like Nestle and Unilever have restricted almost all business travel, and massive trade shows like Mobile World Congress have
been canceled, along with even travel, trade shows such as ITB.
It's creating a cascading threat to the travel industry and the millions of people who depend on it.
(BEGIN VIDEO CLIP)
SOLOMBRINO: If there's nobody traveling on planes, there's nobody staying in hotels, if no one is staying in hotels, no one is going to restaurants,
no one is using taxi cabs, Uber-chauffeured cars or anything else, everything kind of stops and that's the problem.
(END VIDEO CLIP)
QUEST (on camera): This is what the impact of coronavirus looks like on Chinese airspace. Busy routes disappeared altogether at the height of the
outbreak as travelers stayed home.
Now, major European and transatlantic routes are also being canceled because of falling demand. All told, IATA says, it will cost airlines more
than $29 billion this year.
(BEGIN VIDEO CLIP)
BRIAN SUMERS, SENIOR AVIATION BUSINESS EDITOR, SKIFT: It is not good. I'm talking to people who say that this is the worst crisis for airlines since
at least 2008 and maybe post 9/11. People right now don't want to travel.
(END VIDEO CLIP)
[09:20:01]
QUEST (voice over): The cruise industry has been particularly hard hit. Last month, thousands of people were confined on board two cruise ships
amid fears of spreading the virus. Coronavirus was detected on only one of the ships.
There are fresh restrictions as companies deny boarding to passengers deemed at risk. Cruise Line share prices have tumbled heavily.
And some countries are turning ships away from ports that rely on the constant flow of tourists.
QUEST (on camera): So look at the effects on some of the major players across three areas.
Cruise Lines, Carnival -- straight away down. United Airlines with all those Asian routes out of the West Coast, also a big fall. And the largest
hotel group in the world, Marriott have seen some very serious falls, down some 21 percent.
(BEGIN VIDEO CLIP)
SOLOMBRINO: This is a new twist. It's the Black Swan that landed on your lawn. Nobody ever wants the Black Swan showing up, but we had one show up.
But you know, the world is resilient. Humans are resilient. There's always a solution. It's just a matter of how much time is it going to take to find
the solution that's necessary.
(END VIDEO CLIP)
QUEST: The travel and tourism industry is huge. It's estimated 10 percent of the global workforce is in some way connected to travel and tourism.
So with all its vulnerabilities, the industry is worried, but well- practiced at dealing with crises.
Richard Quest, CNN, New York.
(END VIDEOTAPE)
CHATTERLEY: Now, as Richard was showing you there, some of these stocks have been incredibly beaten up, but they are bouncing in the session
premarket. Take a look at what we're seeing for some of these stocks.
The carriers, they're all higher at this moment. You can see Delta and United higher premarket. Carnival as he was showing you there as well
bouncing a little bit here, but nothing of course, compared to the losses that we've seen over the past few weeks.
What about more broadly? Futures still looking pretty good here overall. Stock set to rise, well, more than two percent right now for the Dow. This
is a look pre-market once again gaining back a lot of Tuesday's three percent losses, if we can hold on to them, but we've seen huge swings in
the Dow specifically, more than -- more of one percent or more into the past five sessions.
The Dow could exit correction, actually, if we can hang on to these gains at the open this morning, too.
There is a lot going on. Mark Zandi joins us now. He is the Chief Economist at Moody's. Great to have you with us.
MARK ZANDI, CHIEF ECONOMIST, MOODY'S: Good to be with you.
CHATTERLEY: What do you make first of the Federal Reserve's move yesterday and the market's lackluster -- let's call it -- response.
ZANDI: Well, they did the right thing cutting rates. The execution left something to be desired. I mean, clearly their intent was to lift
confidence and sentiment --
CHATTERLEY: Support.
ZANDI: And it had the opposite effect, right? I mean, investors said, well, what's going on? Are they panicked? That was one thought. And I think the
second thought was, well, now we're at a one percent Federal Funds Rate target, that's the rate they control. So one percent, zero, that isn't too
big a difference. So how much more room do they have to maneuver?
So I think investors -- a little bit nervous about the way they pulled this off.
You know, if I were King for the day, I probably would have waited until the meeting, when they would normally make a decision that's only two weeks
away. So --
CHATTERLEY: Just to be able to say to people, look, we are going to take action. We are here. We stand ready to support, but we're not going to make
a knee jerk reaction.
ZANDI: Exactly.
CHATTERLEY: Particularly in the hours after the G7 decided not to do anything on a coordinated basis.
ZANDI: Yes, because you've got Jay Powell, the Chair of the Fed pretty much got what he wanted on the Friday before. Remember, he came out almost a few
minutes before the market closed, he said, look, you know --
CHATTERLEY: There was a statement.
ZANDI: We stand to provide the support you need, and the market came back a thousand points, I think. So he did pretty much what he needed to do. He
stabilized sentiment and confidence. So I think that would -- but you know, this is a tough job, right? And judging sentiment, particularly in this
market, given how people are thinking, you know, it's hard to gauge how they would respond.
CHATTERLEY: You were saying just a few days ago that you think the market is still underestimating the potential economic impact that the coronavirus
can have.
So there's two questions there. Do you still think that that's the case and do rate cuts here at the margin have any impact beyond as we've discussed,
the signal and the sentiment rather than actually providing an economic boost?
ZANDI: Look, I don't think the market has discounted a recession. So if this virus is as bad as the C.D.C. says it is likely going to be, very
disruptive, schools closed -- that kind of thing. Probably, it's going to be pretty hard to avoid a recession.
If we have a recession. We're going to go down another 10 percent on the S&P.
CHATTERLEY: You're saying we are 50/50 probability for a U.S. recession.
ZANDI: Yes, I think the odds are pretty high. Again, you know, this thing can go on lots of different paths. There's a lot of -- there is a lot of
known unknowns that are unknown.
CHATTERLEY: Yes.
ZANDI: So we'll have to see. But yes, I think odds are pretty high.
CHATTERLEY: What's the path that leads us to recession? Is it to your point, business activities subdued, a hit to jobs, a hit to consumer
confidence? Because it hasn't been the consumer that's kept the U.S. economy as buoyant as it has been, particularly on a relative basis.
[09:25:04]
ZANDI: Yes, you know, this is going to be disruptive to the economy. The economy is going to slow and we may not go into recession. But if we go
into a recession, you're right, it's going to be the consumer that takes us in.
At the end of the day, a recession is really just a loss of faith, you know, faith that I'm going to have my job, faith that my best egg isn't
going to evaporate in front of me.
Once you lose that faith, you kind of run for the bunker, that's a recession.
CHATTERLEY: When do we see that -- when do we see that playing out, though, in perhaps, the job numbers? Because in the end, we have to bring it back
to fundamentals and wait and see what the data is telling us about economic activity.
ZANDI: I think it's going to show up pretty soon.
CHATTERLEY: Do you?
ZANDI: Yes, I mean, it won't show up on Friday -- Friday, we get unemployment number for February. That was for the middle of the month of
February before the virus really was on our minds.
CHATTERLEY: Yes.
ZANDI: But it'll start showing up. If this is going to turn into a recession, it will show up in initial claims for unemployment insurance.
So someone gets laid off. The first thing you'll do is you go down to the Unemployment Insurance Office and say, hey, I need some help. They cut you
a check.
We count the number of people who do that every single week.
CHATTERLEY: Right.
ZANDI: Thursday morning -- so tomorrow morning, it will come out. So we should watch that very carefully.
CHATTERLEY: So if businesses start to get more and more nervous, we can track that data on a weekly basis, never mind jobs.
ZANDI: And that's when consumers lose faith, right? Because once unemployment starts to rise, they go, oh, my goodness -- and they start to
pull back and then businesses see that, then they become more cautious. So you can see how we get into a self-reinforcing vicious cycle -- that's a
recession.
CHATTERLEY: Yes. Mark, stay there, because we are going to continue this conversation once we've opened up the markets and seen what the price
action looks like.
Right now though, as I've mentioned to you, we are looking like a stronger open to this Wednesday's trading session, a bounce back after three percent
across the board losses yesterday.
Volatility is the name of the game and we'll keep saying this, but this is what we keep seeing. Right now, the Dow higher by some 2.3 percent.
If we open like this, we will be out of correction territory, at least for the first few moments of this trading session. Not willing to bet anymore
at this stage.
Stay with us. We've got you covered. Plenty more discussion to come and Mark Zandi, of course.
Stay with us. You're with CNN.
(COMMERCIAL BREAK)
[09:30:03]
CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange. That was the opening bell this morning.
Lots of green faces, Green For Life and green markets as well. We have a bounce for U.S. stocks, all the major averages are bouncing back after the
three percent losses that we saw yesterday.
The Fed's emergency half point rate cut not giving any immediate relief to markets yesterday as we've discussed, perhaps frightening them into what
the Fed knows versus everyone else, but sentiment, I do think is being held today by Joe Biden's strong showing in the Super Tuesday voting yesterday
and overnight.
Also some solid U.S. jobs numbers, a positive here. A stronger than expected 183,000 private sector jobs created in the United States last
month despite the negative coronavirus developments, though of course, those developments have intensified since then.
As we've mentioned as well, U.S. Treasury yields remain under pressure. Yields hovering around that one percent level right now, near all-time
lows. In fact, we're just tilted below.
What about our Global Movers this morning in the stock market session? General Electric shares are higher despite warning that the coronavirus
will impact results. It's warning that cash flow and earnings will come in weaker than expected in Q1. But it said sales at its troubled power
division are looking up and it's keeping full-year guidance intact. I think that perhaps is the key message for investors today.
Campbell Soup also actually not opening up yet, so we'll have a look at what's going on with that one. But they did beat earnings expectations and
it is raising full-year profit guidance. There we have it now. It's up 4 percent as you can see.
Meanwhile, shares of healthcare companies like United Health and CVS Health as well rallying up to Joe Biden's strong showing in Super Tuesday -- get
my teeth in gear -- Biden's victories in key states slowing the advance of Bernie Sanders who has promised universal healthcare at whatever cost of
course, if elected.
Let's bring up Mark Zandi back and he is the Chief Economist at Moody's. Do you think politics is playing into what we're seeing today for a bounce for
the markets here?
ZANDI: Yes, I think yesterday's Super Tuesday -- say that fast three times -- Super Tuesday.
CHATTERLEY: No.
ZANDI: I think it probably played a role, right? Because I think Vice President Biden is the safe bet. I mean, the world feels very unsafe. And I
think the electorate wants somebody who they, you know, feel confident in, not only because he's been there and done that, but just his temperament.
You know, he's not going to blow anything up and things are blowing up all around us, so I think --
CHATTERLEY: That's an interesting point to make. Do you think it played into -- coronavirus played into voting to some degree yesterday, too or is
that --
ZANDI: Oh, I do.
CHATTERLEY: Do you?
ZANDI: Oh, yes, yes. No, I think -- I think voters said, look, you know, this is a time we're very troubled, very nervous, personal health on the
line, I want somebody who really knows what the heck they're doing. And Vice President Biden has been there.
You know, he's on the front lines for lots of crises, and so I think they feel more comfortable with him.
CHATTERLEY: You know, we've talked on this show before about the statistics of re-election for Presidents and the unemployment rate between the
midterms and the presidential election is absolutely critical.
Just to circle back to the conversation we were having earlier and your relative concerns about the prospect of severe slowing of the U.S. economy.
How quickly might it happen? And will it play into voting in 2020? We've got -- what -- between now and November?
ZANDI: Relatively quickly. I mean, underlying -- you said 180 today, the ADP number that's juiced up by weather. We've had really warm weather, you
know, in the U.S. January-February all juiced -- that's going to come out of the numbers in next couple of months.
So the underlying rate of job growth distracting from these vagaries about 125 to 150, that's consistent with stable unemployment.
If you get below 100K per month on, you know, a couple or three months, unemployment will start to notch higher and we could by Election Day, you
know, if things don't play out reasonably well, you know, closing in on four percent, which is still very low, but it's the change in --
CHATTERLEY: It's a bit higher.
ZANDI: It's the change in that matters, particularly obviously, in Pennsylvania, Michigan, and Wisconsin. You know, it doesn't really matter
what's -- from an electoral perspective, it doesn't matter what's going on in Kansas or Hawaii. You know, they're going to be R, D no matter what's
going on. It is really those three states.
CHATTERLEY: Yes. Mark, fantastic to have you with us.
ZANDI: Sure.
CHATTERLEY: Thank you so much.
ZANDI: Thank you.
CHATTERLEY: Mark Sandy there, the Chief Economist at Moody's.
All right, let's bring you up to speed on the latest for Super Tuesday. Here is where we stand regarding delegates. A candidate needs 1,991 to win
and so far, we can see that Joe Biden is leading rival, Bernie Sanders. What a comeback for Joe Biden, originally the frontrunner, he then fell
back in early states like Iowa and New Hampshire, only to surge since South Carolina.
[09:35:12]
CHATTERLEY: For more, let's get some more context. We're joined by Lanhee Chen. He's the Director of Domestic Policy Studies at Stanford University,
and he is joining us now from California.
Lanhee Chen, whichever way you look at this, this is one heck of a comeback for Joe Biden. What do you make of it now?
LANHEE CHEN, DIRECTOR OF DOMESTIC POLICY STUDIES, STANFORD UNIVERSITY: Well, no question. It was a quite an incredible comeback. It was one that
was unexpected. Joe Biden didn't even visit some of the states that he won.
And so I think what you're seeing is the coalescing of this race on the Democratic side. You have Bernie Sanders, who was the early frontrunner;
now you have Joe Biden that's coming back into the race.
Joe Biden and Bernie Sanders now are going to fight head-to-head. The question really becomes can Joe Biden sustain the kind of effort and the
kind of success he saw in the campaign trail in that last few days leading up to Super Tuesday? That will be the ultimate test here over the next
several weeks.
CHATTERLEY: Do you think he can? Because he benefited even just in the last 24 hours with the likes of Amy Klobuchar and Pete Buttigieg stepping out,
endorsements not just from them, but other big key Democratic players.
The momentum can't be underestimated that he received just in the run into Super Tuesday. Do you believe that this can continue?
CHEN: I think it could. Now the issue, of course is going to be how many more endorsements are left? There are a few big endorsements that still
could come in for the Vice President over the next few weeks.
There's a televised debate coming up here in the next few weeks, and then you've got a cluster of states next week, including Michigan and Missouri,
followed the next week by states like Florida.
So there are still a number of states where the Vice President could do well, we're demographically -- the demographics suggest that he could do
well.
So it's really going to depend on what happens here over the next few days. Can he parlay the momentum that we saw from last night into these next few
days? Fundraising is going to be a big issue, Julia. He is going to need to raise money, both from sort of traditional deep pocketed Democratic donors,
but it also demonstrates some ability to raise money with lower dollar donors, which Bernie Sanders has been very successful at so far.
CHATTERLEY: Yes, the grassroots fundraising for Bernie Sanders here is so critical. What do you make? Because for him, what do you make of his
performance last night? It was a weaker than expected performance. But California is king in terms of delegates.
When we get those numbers out. He could, on a pure delegate basis still be leading Joe Biden as we push on from here. What about his momentum?
CHEN: Yes, I mean, this is the amazing thing about California, over 400 delegates at stake here in California. Certainly, the case of Bernie
Sanders could come out of this still with more overall delegates when the night is completely counted than Joe Biden.
And I think part of that goes to the fact that you have in California State, the demographics of which in many parts of the states suited Bernie
Sanders well.
You had a younger population, the Latino vote really came out big for Bernie Sanders. But you've got to be disappointed if you're Bernie Sanders
and the Bernie Sanders Campaign to lose states like Oklahoma, for example, which he won in 2016, and then to underperform in Texas, where Joe Biden
winning there really was a shock to a lot of people.
And so we'll have to see what happens with the Bernie Sanders campaign. But there's no question they're disappointed, even though they still could come
out last night with a delegate lead.
CHATTERLEY: Yes, there's two questions now for me. How swiftly do Elizabeth Warren and Mike Bloomberg decide, look, okay, we've gone as far as we can
go, one clearly will run out of money and that will be a problem; one won't.
And then the bigger question for me, I think, if Joe Biden ultimately becomes the Democratic nominee, what happens to those that have put their
support behind Bernie Sanders? Do they sulk at home and actually don't go out to vote because it does feel like those voters then will be critical
when Joe Biden goes head-to-head against President Trump, if indeed that's what happens.
CHEN: Yes, I mean, you're absolutely right. So to the first question about Warren and Bloomberg. There is no pathway for Elizabeth Warren. There is no
pathway for Michael Bloomberg.
I'm sure the Bloomberg Campaign is enjoying their big win in American Samoa last night, but clearly there is no pathway for Mike Bloomberg. And you
know, for Warren as well, I think they're going to have to get out of this race.
In terms of what it means for the Sanders voters if Biden wins. Look, I think by and large, Democratic voters are so focused on beating Donald
Trump, that a fair number of those voters, I would dare say a vast majority of those Sanders voters, I think do turn out for Joe Biden, but really in a
race that's going to be close, every vote counts, every voter counts.
And so it's going to be up to Bernie Sanders, frankly, if he loses to say, look, we didn't win here, but let's get behind the person who can beat
Donald Trump, and it's going to be entirely up to him to do that.
So again, as this race evolves, we'll see the posture he takes.
[09:40:17]
CHATTERLEY: Yes, it is going to be fascinating to watch. Lahnee Chen, great to have you with us. Thank you so much for your wisdom.
All right, we're going to take a break here on FIRST MOVE, but coming up building on success one brick at a time. Look, here is what I made earlier.
No, I didn't. Someone else did. I would not be capable of making this.
But anyway, the LEGO CEO be on the show talking about earnings and what's going on in China, too, an important area for them. Stay with us. That's
after this.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. LEGO, the toy everyone grew up with is building on some strong earnings. The plastic toys maker, reporting top
and bottom line growth in 2019. Global consumer sales rising by 5.6 percent compared to 2018. Full year revenues up six percent and operating profits
grew one percent leaving a net profits of just over $1.2 billion.
LEGO Disney Princess themes also performed strongly along with its Marvel Adventures and Harry Potter tie-ups. This year, the company is planning an
aggressive expansion into China with 80 stores in 20 cities.
Niels Christiansen is LEGO CEO and he joins us now. Sir, fantastic to have you with us. Lots to discuss here, but as I mentioned that you're seeing
pretty solid growth -- revenue growth -- all around the world. Talk us through how you're achieving it.
NIELS CHRISTIANSEN, CEO, LEGO: Yes, it is true. We're very happy with the fact that we are actually growing in an industry that has a quite a
difficult time right now.
We've grown in all major markets around the world we've taken market share also in all major markets, so we're really happy with that development.
[09:45:00]
CHATTERLEY: Can I talk specifically to you about China? Because I mentioned there your expansion plans, 80 further stores, I believe that would take
you to 220 this year.
In light of the coronavirus outbreak and the challenges we're seeing, have you adjusted your plans in any way?
CHRISTIANSEN: It is true what you say. I think in China, we have seen strong double digit growth in 2019, and we did open another 80 LEGO-branded
stores around China, as did we actually really increase our presence also on e-commerce and online sales channels, and we're looking, as you say in
2020 to open another 80 brand of stores to really make sure we get the brand into more cities around China.
So by the end of 2020, we would be in 50 cities with more than 220 stores.
Now in terms of coronavirus, our focus so far has really been on the wellbeing and the safety of our employees. So we've been acting along all
the guidelines and recommendations from local authorities in China, and I must say, with the plans we have in place, I'm quite confident with the way
we've been able to handle it.
So far, we're in a good situation. But, of course, there's uncertainty to how it will go for the rest of the year. But for now, we intend to stick to
our plans of opening 80 stores in China also this year.
CHATTERLEY: I mean, protecting workers has to be the first -- first and foremost in terms of your planning. I completely understand that.
Have you managed to keep all your stores in China open or have there been closures and I know you produce locally, Mexico for U.S. products, China
for Asia. Have you and will you see an impact as a result of what we've seen with the outbreak and the restrictions put in place on your supply
chain?
CHRISTIANSEN: I think as you also point out, we are quite -- we are quite in a good position in that we have a flexible supply chain that we have an
opportunity also to ship products around globally, so we're not depending on a finished good or product being done only in one place.
We did have our factory in China. We have a big factory in China closed for a little longer than the Chinese New Year, but it is actually ramping back
up right now.
And as I said, we are now in a relatively good position on how we've been able to supply.
Now in terms of market, we also benefiting from the fact that we are well represented online in China, as we are building our network of LEGO branded
stores and if the situation would be that people would be we would see less traffic in stores and less revenue in stores then then there's a good
chance to some of that will flow into the online sales channel where we would also be in a good situation.
So I would say, so far so good. It's too early to guess on the full year.
CHATTERLEY: That's an interesting point to make though about e-commerce. Have you already seen a pick-up in e-commerce sales just in the past
several weeks?
CHRISTIANSEN: It's hard to say because we are seeing growth in e-commerce all the time. We also saw growth in e-commerce throughout 2019. But we are
actually well-positioned to get that extra if it would happen.
But so far -- so far, we are comfortable where we are. And yes, there are some stores that are closed. But there's also many stores that are open.
And we keep that going as with the recommendation and guidelines we get also from authorities in China. So we are comfortable where we are right
now.
CHATTERLEY: I want to talk to you about sustainability, too, because I do know you're making progress towards making all the bricks recyclable or
recycled plastics by 2030.
How are you progressing with that plan? And is there any ability to perhaps move up that time horizon, given how much people are talking about the need
for brands and companies to focus more on sustainability?
CHRISTIANSEN: Right. It is a very important area for us. And as you know, we're investing a lot of money into that, actually trying to find materials
that are not there today. They're not available today, but to find those that will live up to our quality standards and our safety standards, and
we've given ourselves to 2030, which I think is already a pretty ambitious timeline for that.
But in the meantime, of course, we're working very hard on also making sure that the circularity of the recyclability of our products is high. You
know, LEGO is made of plastic, but it's durable plastic.
Many of us have bricks at home that are 20 or 40 years old, and they still work and they still fit the new bricks, and they are often passed on from
generation to generation.
So in that sense, LEGO bricks aren't just being thrown out. They aren't ending up in oceans. So in that sense, it's more an issue also, of making
sure we have a good circular that the bricks are getting back into use and for that reason, in the U.S. already in '19, we actually launched this
replay trial where we actually allow people to give or make or enable people to give back their bricks so that we can actually make sure they go
further on to charity, to children in need and that has been very successful.
That's something we actually look in here in 2020 and beyond to roll out to many more markets.
[09:50:08]
CHATTERLEY: Yes, fantastic ideas and your point, sustainability has many different avenues. Fantastic. Niels Christiansen, great to have you with
us. Thank you so much. The CEO of LEGO there.
All right, we're going to take a break here on FIRST MOVE, but coming up, at a time when many supermarket shelves are low or empty of essentials like
hand sanitizer, prices online are spiking, and it's left some sellers rubbing their hands with glee. We've got an update. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE and just in to CNN, Lufthansa is to ground 150 jets in response to falling demand because of the coronavirus
outbreak.
One hundred and twenty five short haul aircraft and 25 long haul jets will be taken out of service as the airline reduces the number of flights. It
comes as the International Air Transport Association reports the slowest air traffic growth in nearly a decade.
Meanwhile, here in New York and other cities around the world, the coronavirus outbreak has meant hand sanitizers suddenly become harder to
come by with the supermarket shelves cleared.
If you turn to sites like Amazon, for example, you might need to prepare for a shock. Third-party sellers aren't wasting their time pushing up
prices.
Clare Sebastian has been looking at some less than special offers around the market right now. Clare, took us through what you've been seeing?
I was looking at this yesterday and there are some extortionate prices being charged by some of these sellers?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia, for simple products like hand sanitizers, that as you point out are not available in a
lot of brick and mortar stores. Let me show you a couple of the examples that we found, you know, a four-pack of Purell hand sanitizer selling on
Amazon for $274.15. That was one of them.
Another one selling for $147.89. Now, I must make it clear, these are third party sellers. This isn't Amazon doing it and we have a statement from
Amazon. They say, "We are disappointed that bad actors are attempting to artificially raise prices on basic need products during a global health
crisis. And in line with our long standing policy, we have recently blocked or removed tens of thousands of offers. We continue to actively monitor our
store and remove offers that violate our policies."
Now neither of those two listings that we showed you we have to be clear about that, neither of them are still there. So Amazon, clearly playing
this sort of 24-hour game of whack-a-mole with these listings.
They say they've removed more than a million of these, but look, it is something that's happening. You can't buy these products elsewhere. We took
a look for the sort of more normal retail price on Target. It retails, a bottle of Purell's, I mean similar to this for about $2.99, but it's out of
stock.
So you see how we've arrived at this situation, and this is putting pressure on the makers of Purell, a company called Gojo Industries. They
told me -- and they've been tweeting to a variety of concerned customers, "We have significantly increased production and continuing to bring
additional capacity online, as is typical ..." they say, " ... in any supply chain whether it's dramatic sudden increase in demand, we would
expect to continue to see some outages while supply ramps up fully."
[09:55:14]
SEBASTIAN: I asked them how they feel about the price gouging that's going on online, they say that they feel strongly that there is no place for
price gouging especially during times of elevated public health concerns. So a real sign of the sort of fear that's out there -- Julia.
CHATTERLEY: Yes, I mean we see this in health crises all around the world, but pretty terrible, isn't it? Don't forget to take that bottle with you,
Clare, it is worth more than gold quite frankly.
Great to have you with us. Clare Sebastian there. Thank you so much for that.
All right, a quick look at markets. We are bouncing after steep losses yesterday. Green for now. The question is can we hold it. The Dow out of
correction territory, too. If we can hold on to two percent more -- no, we've slipped. We'll be back in a couple of hours' time with more, but for
now, you've been watching FIRST MOVE. Time to go make yours.
(COMMERCIAL BREAK)
[10:00:00]
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