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First Move with Julia Chatterley
The Central Bank Will Buy A Range Of Bonds In Whatever Size To Ensure Financial Stability; The $2 Trillion Stimulus Package Has Been Delayed; Pressure Mounts To Postpone The 2020 Olympics As Countries Begin To Pull Out. Aired 9-10a ET
Aired March 23, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:58]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here's your need to know.
Whatever it takes, Fed style. The Central Bank will buy a range of bonds in whatever size to ensure financial stability.
Come on, Congress. The $2 trillion stimulus package has been delayed.
And game is over. Pressure mounts to postpone the 2020 Olympics as countries begin to pull out.
It's Monday. Let's make a move.
Welcome to all our FIRST MOVErs around the globe as we begin what will surely be another week of unbearable loss for so many and our hearts go out
to all those impacted by this health crisis.
We do begin today though, with a whatever-it-takes-moment from the Federal Reserve. The Fed going all in saying it will buy mortgage bonds, corporate
bonds, provide support to the municipal bond market, too. That's used by states in the United States to fund themselves and they're going to do it
in whatever size necessary, they say to ensure the smooth functioning of the market.
They also announced borrowing facilities for small and medium-sized enterprises and large employers. I think it shows two things. One, simply
how bad things were getting in the functioning of financial markets, but also how seriously they're taking the economic crisis itself. And, of
course, the need to support the recovery when we get through this process.
And yet, we still need more. U.S. Congress so far has been unable to reach agreement on the $2 trillion emergency package. That of course critical to
get cash to those that have to survive the next few months. Many workers in this country living paycheck to paycheck.
We have an additional crisis to going on health, economic, financial, jobs, and a crisis of confidence, and that's also what the Federal Reserve has
tried to tackle today. Here's where we stand.
Well, earlier, stock futures have plunged some five percent. They had hit their lower limit, but as you can see, as a result of the Federal Reserve's
actions, we are now, in the green.
Let me give you a look of what we're seeing for Europe as well. At this moment, we are still seeing pressure in the European session. Most Asian
markets finished lower, too.
Indian stocks really felt it. They plunged today, as the country now begins a massive lockdown. The Fed action though helping to bring down Treasury
yields.
Another important part of their bond buying program here. We've got the U.S. dollar lower, too. A sign that some of the tensions that we've been
seeing in financial markets will likely lessen as a result of these actions.
But this is by no means over yet. The health crisis, the economic crisis continues. This is about trying to address this in the short term, and of
course, where we end up today and beyond depends on decision making in D.C.
St. Louis Fed President, James Bullard, who we will be speaking to you a bit later on in the show says GDP could fall 50 percent next quarter,
something we've simply never seen, not even during the Great Depression. He says the U.S. government should match every lost dollar for dollar.
Clare Sebastian joins me now. Clare, it doesn't take it away from the need for Congress to simply get together here and agree on terms. But oh, boy,
is this an unprecedented and necessary move from the Federal Reserve this morning?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia, I think we thought they'd already throwing the kitchen sink at this. But there are
more measures this morning and they are big.
They are saying that now QE, that's the purchases of Treasuries and mortgage backed securities will essentially be unlimited.
The phrase in question is in the amounts needed is how they say they're going to purchase these. So that is essentially a blank check. They're
going to continue to support these markets, but it's not just about unclogging these markets right now.
[09:05:00]
SEBASTIAN: This is about really trying to support the real economy. They've announced new lending programs for larger businesses. They're going
to try and roll out a Main Street business lending program. There's a lot of measures in there which show the Fed is really trying to funnel money
into the real economy, because of course, as you've been reporting, this is a sudden stop.
Businesses are trying to survive through this and they don't know how long it's going to be. They need some relief on their loans. They need to find a
way to keep cash on the books so they can keep workers hired and the Fed is really trying to funnel money to those businesses.
CHATTERLEY: It's such a great point, 85 percent of employment in this country is small and medium-sized enterprises. It's self-employed
individuals, so making sure that they can survive the next few months is absolutely critical here, but I'll go back to the point that it doesn't
negate the need for Congress to act today.
We need to see the stimulus cash being pumped in here, checks being sent to individuals, a bare minimum, quite frankly, to allow people who survive and
live paycheck to paycheck here to have some sense of stability and that they can survive and buy basics like food over the next few weeks and
months.
SEBASTIAN: Absolutely, Julia. I think the Fed has made it very clear all along, even as they've announced these emergency measures that they are not
the only game in town. They cannot do this alone. It will take a partnership between not only the government and the Fed, but also the
private sector as well.
The Federal Reserve Chair, saying in a statement that it's now clear, despite all the uncertainties that our economy he says, we will face severe
disruptions. This isn't just about ensuring survival for as many businesses as possible as we go through this.
This is about trying to make sure that once this is over, and of course, we don't know how long that's going to be. We don't know how you exit these
emergency measures, these lock downs, but once we do, he has to try to ensure that there is some kind of softer landing that the businesses can
start to ramp back up, that society can start to restart and that things can start to function again, and they have to pump this money in to be able
to do that.
CHATTERLEY: That's such a great point. A soft landing from these measures at the back end, when we try and come out of them needs to be guaranteed at
this stage.
What we really don't know is the terms and conditions. Are these loans for small and medium-sized enterprises that don't want to go into debt as a
result of what we're seeing here in this economic coma, that's going on for the U.S. economy here -- will there be grants, if they retain employees?
What kind of terms and conditions will be attached to the corporate lending here, because we know in D.C., this is incredibly sensitive.
And from what I've heard, the Democrats are trying to attach conditions on executive pay for the next 10 years. So they're trying to use politics to
tackle some of the issues that they have and they are real issues.
But we have to focus on the next two to three months, arguably and nothing more right now.
SEBASTIAN: Yes, although Julia, I will say that memories on Main Street are fairly long. You know, I did speak to a small business last week and
they said, you know, the phrase bailout in itself is still heavily tainted from 2008.
They said, well, how can they bail out the airlines and then leave us just stranded like this? These restaurants across New York that I've been
speaking to, Julia, already -- they've already laid off most of their staff, most of them.
This is already happening to them, and they are looking at this and thinking well, how does this -- how do we deal with this? How does it
impact us? You know, it's clear that the airlines are going to get support. The cruise lines, but what about the businesses that are sort of propping
up the economy on a day-to-day basis? The small and medium-sized ones as you say that are the kind of cornerstone of American employment?
CHATTERLEY: I couldn't agree more. Clare Sebastian, thank you so much for that.
Now, more than 750 million people across India have been put on lockdown until the end of March. Restrictions on work, on travel and movement apply
in 75 cities, including New Delhi, Mumbai and Bangalore.
John Defterios joins us now. John, I mean, India, the world's largest democracy, implementing these kind of measures is just eye opening. But
it's not just about one country in the emerging markets, we know that they don't have the same kind of healthcare systems, the burden of this virus,
in addition to their financial tensions and the money being pulled out of these regions, it's the perfect storm.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: It is a perfect storm. It is time to start focusing on it, Julia, it may not be on the
radar of the Federal Reserve, or for that matter, the G-7 countries right now, but it doesn't mean that the problem doesn't exist.
I think the lockdown by Narendra Modi of India will start to change that narrative. But candidly, the discussions over the last three or four days
have been about that block deal coming out of Capitol Hill, $2 trillion.
By the way, it's just under 10 percent of GDP, so it's equal to what we did 10 years ago and that's the frustration, I think you've been expressing on
air.
Nothing new here, but the FOMC, the Federal Open Market Committee is now pulling out the big guns.
I isolated five economies here. If you take India and add Indonesia, Brazil, a country like Nigeria and the Philippines, we're looking at a
population collectively here, and they were fast growing economies of two billion people. What do they need going forward, Julia? They're not on the
front line of the virus yet. But we had Nigeria's first death. And they have cases in six states, for example, it is coming. They need access to
medicine, as we were talking about here.
[09:10:20]
DEFTERIOS: They'll need fiscal stimulus going forward, and they're getting squeezed by the dollar right now. Many of them hold corporate debt and
international debt in dollars, and this is going to be a problem for them going forward.
There is an opportunity right now. There was supposed to be a G-20 Virtual Summit taking place that's going to be led by the Chair for 2020 Saudi
Arabia.
I'm saying this because this should be a rallying call for them to say, what did we do back in 2009 and 2010? The G-20 was effective pulling
everybody together, including the emerging markets.
We have to put the emerging markets now front and center, particularly these in the developing world like Africa who are going to suffer very
badly from the virus when it does take hold.
CHATTERLEY: Yes, you make some great points there, John. And actually, if I look around the world, the United States no longer seemingly taking the
leadership role there. It's now China that's giving money and resources to these people.
The world order is going to be changed by what we're seeing. And we'll see, I think in the coming months. Thank you so much for raising awareness. John
Defterios. Thank you.
The world awaits a decision from Japan and the International Olympic Committee on whether this Summer Tokyo Olympic Games will go ahead. Will
Ripley joins us on this story.
Will, and we're seeing a number of countries. The Canadians, I believe, the Australians, even the Irish saying, look, we're simply not going to send
athletes here. Surely it's only a matter of time now before this is canceled or postponed.
WILL RIPLEY, CNN CORRESPONDENT: And the list of countries saying they're not going to send athletes is only bound to grow because of the simple
fact, the chaotic situation in Europe in the United States will not allow athletes to train safely.
Not to mention the fact that there's no way to know what's going to be happening with this pandemic by the time July 24th rolls around.
Now for weeks, we've been hearing an almost stubborn insistence on the part of Japanese officials and the International Olympic Committee, frankly,
saying that the games would go forward on schedule. That was their goal to deliver the games on schedule.
But just in the last 24 hours, there's been a dramatic change in tone, Julia, and particularly surprising to me were comments made by Japanese
Prime Minister Shinzo Abe, acknowledging that in this current global climate, it will be impossible to host the games.
That is all but admitting that a postponement is inevitable, but what we don't know yet and we're going to learn in the coming weeks is when the
games will be moved to, and the reason why that's going to take a while to announce is because as you know, all too well, Julia, there are billions of
dollars at stake here.
There are so many stakeholders, not to mention athletic qualifying events and whatnot. But I was talking to one economist here in Tokyo today who
estimates the cost of postponing the Olympics could be five and a half billion dollars, and Japan was already on track to spend $20 billion.
You know, even simple details like the Olympic Athletes Village where they're supposed to stay, those units have largely been sold. People are
supposed to be moved in by this time next year. That's just one of the logistical nightmares that Japanese and Olympic officials are now going to
have to presumably sort out.
They've given themselves four weeks to do it. A lot of people are saying they need to make the official announcement sooner to ease the anxiety of
so many athletes who have been training for the Olympics, but are in countries and conditions where they're not even able to leave their homes
in many cases.
CHATTERLEY: Yes, as important as the financial implications are, if this in the end, well, health matters more, and I think we'll go from a point
where we're sort of expecting a decision on this to being perhaps annoyed for the uncertainty for the athletes that are wondering whether, you know,
they have to leave their homes and go there and whether it's safe, quite frankly, we sort of need to end the uncertainty.
RIPLEY: Yes, absolutely. And not to mention that there's still uncertainty about the coronavirus situation inside Japan itself.
Just yesterday, they saw their largest single day jump in the number of deaths and while the number of confirmed cases remains relatively low here,
just around 1,100 when you compare it to other countries, Julia, they're testing a tiny fraction of what other countries are testing.
There were social media pictures being circulated this weekend of young people packed into the parks here in Tokyo viewing the cherry blossoms.
They reminded me of the pictures I saw from Florida and Australia. And a lot of these people were not wearing masks.
People are going to the office. They're crowding into public transportation. Bars and restaurants are open and they're busy here.
And you have to wonder, this feeling of calm in Tokyo, this relatively relaxed attitude on the part of the government. Is that the true picture of
the situation, or is this the calm before the storm?
CHATTERLEY: Will Ripley. You said it. People need to go home and save lives. Will Ripley. Thank you for that.
We're going to take a break here on FIRST MOVE, but coming up, a chilling warning as the coronavirus pandemic spreads, the U.S. unemployment rate
could reach 30 percent.
[15:15:04]
CHATTERLEY: Plus, how IBM is teaming up with the government to fight the health crisis. Stay with FIRST MOVE. You're with CNN.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to first move on yet another historic day on financial markets. U.S. stock futures have turned around in pretty dramatic
fashion this past hour as the Federal Reserve announced sweeping new support for the U.S. economy.
The Central Bank unveiled what amounts to unlimited QE, an open-ended commitment to buying as many Treasuries, mortgage-backed securities and
lending facilities to help steady the real economy and the financial markets.
That said, investors believe what happens in Congress today is just as important. Democrats and Republicans have not yet been able to come to an
agreement on the terms of a $2 trillion Stimulus Package.
Joining on the phone now, I'm pleased to say James Bullard, the President of the Federal Reserve Bank of St. Louis. So President Bullard. Jim,
fantastic to have you with us.
I've been calling this a whatever-it-takes-moment from the Federal Reserve. Just in your own words, the view from the Federal Reserve today and the
measures you've decided to take.
JAMES BULLARD, PRESIDENT, FEDERAL RESERVE BANK OF ST. LOUIS (via phone): We took a lot of good action today. We had already set at least $500
billion and for those that we are paying very close attention, but we rewarded that to make it clear that this is unlimited as far as the amount
of buying we will do, and we set up new facilities to handle some of the illiquidity in various markets as we try to adjust to this big shock.
So I think it's a great package. And I think, Jay Powell has put on a great leadership on this.
CHATTERLEY: You've suggested that a 30 percent unemployment rate is possible in the United States. Can you just clarify what you mean by that?
Is that even given the measures that you've taken today, assuming we also get the stimulus package from Congress?
[09:20:09]
CHATTERLEY: Is that kind of unemployment in this country, still a risk?
BULLARD: Well, Julia, this is a planned, temporary shutdown of the U.S. economy. The health authorities are telling us to produce only essential
services, plus a little bit that we can produce by working at home.
So this is going to be throttling back the U.S. economy dramatically from what we're used to. So everything is upside down compared to how we usually
do business cycle analysis where we're trying to produce as much as possible.
In the second quarter, we're going to produce, you know, very low amounts, and so I think it's very hard for, you know, people like us, you and me,
who I do this every day to get our heads around what we're trying to do here.
So the goal is to keep everybody whole as you have this project going on where everybody goes home and sits on their couch. You know, that sounds --
that part sounds easy, but to get the economy to bridge over through this is the tough part.
So what we're going to have to do is use the unemployment insurance program extensively to keep people whole that gets get disrupted out of their jobs,
and then we're also going to have to lend to businesses. They're unemployed, too. So we're going to lend to businesses so that they can get
through this and get to the other side.
So I think the good news is, I think we're going to win this war, but the bad news is we've got to fight that battle, but that is a huge project that
has to go on to get all of that in place by the time we get to the second quarter here.
CHATTERLEY: I feel like you're saying then that even with the measures that we're taking, 30 percent unemployment is plus possible, but this is an
imperfect science.
BULLAR: Julia, I am going to knock you off a little bit about the word stimulus. Because normally when you're talking about a recession, you'd
say, well, what we want to do is bring production into the quarter, that's going to be the down quarter. But we don't want to do that here.
You don't want to force people back onto airplanes. You don't want to force people back into the bars and restaurants. The whole idea is to throttle
back U.S. production.
So we want to throttle back U.S. production, but keep people whole during this process so that we can come on to the other side with the economy
intact and then we'll be fine. We will turn on the factory and we'll go back to work.
But we don't really want to bring production into the second quarter as you normally would when we talk about stimulus. So I think the better word here
is insurance or income maintenance during this shutdown period, this very special shutdown period. That's how you want to think about this.
CHATTERLEY: Investment in survival. That's what we're doing at this stage. You know, if I take a quarter at the output of this economy, we're talking
$4 trillion or $5 trillion. It's a $22 trillion economy.
Sir, is $2 trillion of investment in survival enough? Or do they need to do more? Does Congress need to agree more here?
BULLARD: Yes, I love this way to frame what we're talking about here. A typical quarter in the U.S. in very round numbers would be $5 trillion
worth of goods and services.
CHATTERLEY: Right.
BULLARD: And the health authorities are telling us to throttle back and not do that. So let's say, just rough numbers that we have to cut that in
half, so we're going to be missing two and a half trillion dollars' worth of income that we would otherwise would have had in the second quarter.
So that's what Congress is trying to bridge. That's the revenue that isn't there for businesses. That's the income that isn't there for households
and, you know, they're putting these programs together to try to make sure that everybody has got a check during this period.
And that's why I'm saying unemployment use, which I would really call pandemic insurance that's going to skyrocket during this period and that
will be a good thing. That's exactly what you're trying to do. You're trying to transfer income to people during the pandemic period, so that
they can get through, so that we can come out on the other side and have the economy completely intact.
CHATTERLEY: Jim, to use your analogy, if we're creating a bridge here, then at $2 trillion, we're only building half, maybe even less than the
bridge here. Just explain to me how essential it is that Congress agree these measures to your point and I'll use some of your statistics. 40
percent of U.S. households can't cut a $500.00 check in an emergency.
If we're talking about 30 percent unemployment, we're also talking about social unrest, that level of anxiety for people that live paycheck to
paycheck.
[09:25:02]
BULLARD: You know, I know that that's what people are thinking, but I actually think we could complete this project without social unrest. If we
get everybody on the same page by the time the second quarter begins and everyone understands what's going on, we're all going to shelter in place,
we're going to sit in our houses and apartments, not do very much, not produce very much, and that consume very much and basically not going to do
very much during the second quarter.
And to tie this over, some people are going to go to the unemployment insurance office, the ones that have been disrupted, and these businesses
are going to have to get loans to pay basic expenses during this period.
So that's the flavor of what we're doing. I think that's all very accomplishable. But it's a big project, because it's a big economy.
CHATTERLEY: You suggested the output could half in the next quarter. The President has suggested that the economy could go off like a rocket when we
come out the other side of this because of all the pent up demand. What kind of damage and recovery are we looking at here just with the measures
that we're talking about?
I come back to the idea and you and I basically agreed on it, that more is required. What does recovery even look like at this stage?
BULLARD: You know, I think I think we can do very well on the other side of this. I think I would -- I would envision, as of today, and you
understand, and I think all viewers understand that this depends on how the virus goes ahead here.
But if you kind of assume we have to shelter in place all during the second quarter, then the third quarter would be a transition quarter where you're
starting to open things up again, health authorities are saying that it's okay to go back outside. Then, fourth quarter of this year could be the
boom quarter and the first quarter of 2021 would be the boom time when everything is really up and running, and you're rocking and rolling again.
CHATTERLEY: Jim, there are those that are talking about, and it came up in the press conference on Friday and on Saturday with the President that
there is a risk here with the measures that we are putting in place to suppress the health crisis, that we're perhaps imperiling more lives than
we're trying to save. What's your view on that?
BULLARD: You know, that has crossed my mind, but I don't really know the research on that. So that might be a debate to have and talk about, but I
think, right now we want to focus on the health crisis.
Like I say, I think this is all very doable. It's kind of a simple thing. We want people to just go home and not do very much, but we need to get the
financing in place to make sure we don't do damage to the economy or to individual households, as we're trying to cope and make our investment in
the health of the population.
CHATTERLEY: And just very quickly, President Bullard, if I can, did the measures that the Federal Reserve took today prevent a brewing financial
crisis?
BULLARD: Oh, well, we're definitely providing outstanding liquidity in these markets. It's very understandable that all kinds of traders around
the world and investors around the world are very nervous about what's going to happen and this tends to make some of these markets become very
illiquid, no one wants to trade anything.
And so we're going to make sure that we can get price discovery in these markets, and I think that'll work very well and we're going in in size, and
I would also mention, and this will be a topic for coming days, we've got this Main Street Funding Facility that's brewing in Congress.
So I'd like to see Congress go ahead and vote for that now, and then we'll implement soon and that I think, will be a boon for smaller businesses and
more Main Street type activity in the U.S.
CHATTERLEY: And just very quickly, if small and medium sized companies borrow money on that facility, but decide to keep their employees, will
that be a grant, as opposed to a loan?
BULLARD: I'm not sure about the details. The details seem to change every five minutes on Capitol Hill.
CHATTERLEY: I heard that, too.
BULLARD: So I am not sure what the details are, so it depends on how the Congress comes down on that. I think that they are intended to be loans, at
least initially, and then there might be some forgiveness features, but you would have to meet certain criteria maybe to get the forgiveness features.
So I mean, I defer to people that are on Capitol Hill that are doing negotiating to talk about that, but I think the spirit of it is, there's no
reason why you can't lend to a solid business, and they can get through the 90-day period or 120-day period or whatever it is.
And then they come out on the other side, they get plenty of revenue, they're a well-run business and they pay that off in the future.
[09:30:19]
BULLARD: I think most of them, overwhelming majority of them would do exactly that. So there's really no reason why it's not as risky as it
sounds. I think you can -- you could totally do that and get that done.
CHATTERLEY: We defer to D.C., sir, and we also send them a message as well. James Bullard, the President of the St. Louis Fed. Sir, thank you for
your time this morning. We appreciate it. Great to have you with us.
BULLARD: All right, Julia, thanks for talking to me this morning. All right.
CHATTERLEY: Thank you. And the markets have opened and just take a look at that. The Dow -- so despite the fact that we were looking at positive
markets, at this moment, we are under a bit of pressure as you can see.
You are looking at the Dow. Big measures from the Federal Reserve today as you were just hearing. More needed from Congress. We await. Stay with us.
More to come.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. We're just eyeing what we're seeing on the stock markets this morning. We're expecting a higher open.
But yes, let's call that a little bit mixed.
Clare Sebastian is back with us. Clare, I have to say, we've got to keep an eye on stock markets here, but there was a lot more markets that we can't
show our viewers that were being tackled by the Federal Reserve.
And of course, we're still waiting for that stimulus package from D.C. It's a busy day.
SEBASTIAN: Very busy, Julia. You know, the Fed really sort of throwing everything it can once again at this crisis. Treasury markets mortgage
backed securities.
A week ago, they said they were going to spend $700 billion on buying up those assets. Now, they say it's pretty much unlimited. Not only that, but
they're trying to funnel money to Main Street through new lending programs to big corporations. They're trying to get it to small and medium-sized
businesses as well through some crisis era measures.
There's apparently going to be a new Main Street business lending program they're going to roll out.
[09:35:09]
CHATTERLEY: So all of this designed, not just unclog these markets, let's be clear, this isn't just about keeping liquidity flowing through the
system. This is actually about trying to get money to those businesses that need it most that are already, Julia, laying off workers.
We had Steve Mnuchin on television this morning pleading with businesses not to lay off workers. I'm afraid that horse has already bolted in many
cases. So that is why there is so much pressure out there for Congress to get this done.
CHATTERLEY: Absolutely, and you heard there the conversation I was having with the St. Louis Fed President about whether or not the loans that are
being given to small and medium-sized enterprises will be grants, i.e. no repayments versus loans.
We know small and medium-sized enterprise wants to add more debt. I mean, imagine if you're a self-employed person, so the devil is really in the
detail here.
SEBASTIAN: Yes, I think the question is and this is looking increasingly less positive is whether how much of the demand lost and business lost
during this time will be recaptured.
Certainly, if you look at the travel industry, there are people who are not going to go on vacation this year. So a lot of this is lost revenue. I
think the same if you look at restaurants and bars and hotels, people just aren't going to be spending that money. So it's not like we're going to see
that sort of long alluded to V-shape recovery that people have been talking about for weeks.
This is going to creak back to life. People are going to need to be in a stronger position as possible to survive, not only the downturn that we're
now sort of, you know, going into, but also the slow recovery that this might then engender.
And I think Julia, it is interesting, there is not just a concern on Main Street about what this is going to be and when it's going to happen, I
think there's a trust issue as well.
I had an e-mail from a CEO just now saying, you know, are they meeting? Are they are they talking to Washington about how to administer this? So very
well making these promises. But how are they going to trickle down to the businesses that need it?
I think people are worried that Washington doesn't have a handle on this.
CHATTERLEY: Yes, size, speed and then execution critical. Clare Sebastian, thank you so much for coming back and talking to us about this.
Now, around the world, as Clare was describing there. Big and small companies are racing to help us get through this. Here are just some of the
few ways that are contributing.
General Electric working around the clock making ventilators. Alcoholic drinks companies including Absolut Vodka and the Scottish beer brand
Brewdog are making hand sanitizer, so is the French luxury goods giant, LVMH.
Another big fashion brands, Zara ordering in material to make hospital gowns. And that's just the beginning.
Silicon Valley is devoting a slice of its resources to battling the coronavirus outbreak. Joining us now is someone leading that charge Chuck
Robbins, CEO of Cisco Systems, which makes networking equipment.
On Sunday, he announced the company is contributing tech services worth $210 million and a further $8 million in cash to help the global efforts to
fight COVID-19.
Chuck, fantastic to speak to you, as always. Just describe in detail what you're actually doing here. What's this money going towards?
CHUCK ROBBINS, CEO, CISCO SYSTEMS: Well, Julia, first of all, thanks for having me. And look, this is an unprecedented time, and so what we're
focused on are our employees, our communities, our customers, and this is this is where everything is going.
So the money that we announced, some of it has already been deployed. We have been working in China and Korea, in Italy and other countries around
the world to deploy technology, video capabilities like we're using here today to help fight this crisis that is out there.
We are deploying cash, but one of my biggest concerns are the most vulnerable in our communities right now. That's why this Washington, D.C.
initiative is so important because people are struggling today and whether it's the homeless or it's those who are, you know, one major bill away from
being homeless, we have to actually support these people right now.
So some of our money is going there. We have money going to the United Nations Solidarity Fund supporting the World Health Organization.
And then all the technology services to our customers, we just basically said, look, if you need Cloud security, you need collaboration tools, you
need WebEx for working at home, all of our customers now, you know, the volumes are just unbelievable what we faced with our customers in what
they're trying to accomplish.
So it's going towards all of those things, keeping our customers up and running, helping in our communities. We also launched a $5 million matching
gifts program for our employees to give and then we match on top of that. So it's a broad array of activities.
CHATTERLEY: It's giving me goosebumps hearing it, to be honest. Talk to me about the workers that you have as well. The waged workers.
I know you, you said to your workers, look, we're going to continue to pay you. We'll give you some stability here because this is something where
we're already seeing waves and waves of unemployment benefit claims.
It's the jobs. It's for the people that live paycheck to paycheck. But I think the real fear is for, at least in the short term.
[09:40:04]
ROBBINS: That's exactly, right. We are fortunate that we have a strong P&L, a strong balance sheet. So one of the very early things that we
committed to were really our contract hourly workers. They're not even Cisco employees.
These are those hourly workers who are in our cafeterias, those who are in custodial roles cleaning our buildings, we just wanted them to know that
they're going to be taken care of on a global basis because that they didn't create this challenge, and we certainly don't need to exacerbate the
problems in our communities by having more people that are struggling to eat, struggling to pay their bills, and even though we have eviction
moratoriums, that doesn't mean that those rents are being forgiven. They're ultimately going to have to be paid. We have to help these people and try
to keep them on their feet.
CHATTERLEY: I couldn't agree more. I do want to get your view on as a leader though, as a corporate leader, what I'm hearing is some of the
holdup between the Democrats and the Republicans here is that the Democrats want to tie loans for bigger business to executive pay and give Congress up
to 10 years control on executive pay, even if those loans are paid back in the first few months.
What is your view on that? It feels like we're not tackling the next two to three months and the crisis, but trying to throw in bigger issues that
perhaps need solving, but not solving right now.
ROBBINS: Well, I think you answered the question. I mean, the reality is that, this is not a time for -- no, it's good, it makes it easy on me.
This is not a time for partisan politics. This is a time to get solutions to the American people because they're struggling, and you know, these many
of these businesses that are struggling, they did not bring this on themselves.
So looking at punitive or controlling things for companies like airlines that had nothing to do with this or hotel chains that this is happening to
them.
So I think expedience that getting this done fast is the most important thing, and if it needs to be tweaked later, tweak it later. But the reality
is, is that the longer this takes, the more suffering and the more the workers are going to be hurt by this. So we need to go.
CHATTERLEY: People are using terms like 30 percent unemployment rates, economic depression, how worried are you by that? And do you think the
money that we're getting from the Federal Reserve and from D.C. we hope is enough?
ROBBINS: Well, I think the Fed has done a great job. Once they started moving, they're moving. And they're basically saying we will do whatever it
takes. And I think Congress needs to do the same thing.
These numbers are speculative, obviously, and when you hear them, they scare people. But I think that, you know, the best way to avoid that is to
get this movement out of D.C. today, and then hopefully, we, using American ingenuity that always seems to prevail, you know, we can actually get this
thing behind us sooner rather than later and I think that's what we all need to be focused on.
CHATTERLEY: Chuck, thank you for your leadership and of course, joining us by WebEx there, which is the word of the day quite frankly, so we are
grateful for your support on that front as well.
The CEO of Cisco Systems there. Chuck, thank you for joining us.
ROBBINS: Good to see you. Thank you.
CHATTERLEY: All right, we're going to take a break. Coming up on FIRST MOVE, a new effort to find a coronavirus treatment. How supercomputers are
being deployed to the frontlines of the battle against the coronavirus? That's next.
(COMMERCIAL BREAK)
[09:0146:25]
CHATTERLEY: Welcome back to FIRST MOVE. In an announcement last night, the White House confirmed it is working with tech giant, IBM and others to
direct the nation's supercomputing powers to help fight the coronavirus outbreak.
The idea is to put an unprecedented amount of computer power directly in the hands of researchers. Joining us now, Director of IBM Research Dario
Gil. Dario, fantastic to have you with us. Thank you so much for joining FIRST MOVE.
Just start by explaining how supercomputers can help us fight this virus?
DARIO GIL, DIRECTOR OF IBM RESEARCH: Well, ultimately, we are all going to have to come together and empower the scientific community to find new
treatments and ultimately a vaccine.
So just to give you an example of work that has been done in the largest supercomputer on earth in IBM Summit in Oak Ridge National Laboratory.
They went and they looked at what are the potential compounds that could bind to the spiked protein that then attaches to the cells and infects the
cells and spreads the virus and they were able to look at over 8,000 compounds and down select to the 77 most promising small molecules that
could tackle and deactivate the virus.
So it's an example of how we can do modeling to be able to screen and narrow down the experimental efforts to find new therapies and ultimately
vaccines.
CHATTERLEY: How long would it take to achieve what you're describing there in terms of isolating a number of compounds if we were just using ordinary
brainpower or ordinary computers, because this is the key isn't? It collapses the time taken.
GIL: Yes, the power of supercomputers is its power to accelerate the rate of discovery. So, in fact, it would take months to do those kinds of
calculations in a normal computer where it took less than two days to be able to screen those 8,000 molecules and down select to 77 by using a
supercomputer.
CHATTERLEY: And just to ask you, because you did mention it, the summit supercomputer system. This is about trying to isolate a compound that can
effectively disable the coronavirus. Can you give us any sense of what sort of progress you're making there?
And I know I'm sort of asking for the moon here, but any sense of time to get to the point where we could be using something like this.
GIL: So we have to be able to move on so many fronts in parallel. There are of course researchers and scientists who are looking at our existing
drugs that may be able in the market that could interact with the existing virus, but also we have got to be able to deliver, you know, unexplored new
molecules that could interact with them.
So this is an effort that is going to work on multiple horizons, but the work I shared before that was done in Oak Ridge in the University of
Tennessee using IBM Summit is already work that has been published, and then it can enable others in the community.
So what this initiative really allows us to do is to tap an unprecedented amount of supercomputers. We're talking about worth 330 teraflop of
computation power and match it to the best scientists around the nation and the world to accelerate their progress.
CHATTERLEY: So where's the White House fitting in here? Are they simply making sure that you're providing your powers to the researchers, but this
coordination among some of the big tech giants that have this kind of technology just to simplify the process, I guess, streamline focus the
process.
[09:50:02]
GIL: The White House Office of Science and Technology Policy, you know, and Michael Kratsios there, the CTO of the United States specifically has
been at the very heart of this effort, working in partnership with us and with the Department of Energy. And we all coalesced together to marshal the
resources of the nation in doing that.
So working collaboratively, we launched these week the COVID-19, High Performance Computing Consortium and then we have attracted an
extraordinary group of partners.
We're talking about five national laboratories, NASA, the National Science Foundation, MIT, RPI and many leading technology companies, we are all
coming together to put these resources in the fight against the pandemic.
CHATTERLEY: You know, IBM has so many different ways of helping in this crisis. I know you have blockchain technology as well, that can isolate
hotel rooms that perhaps could be used for hotels. What do you think should be the corporate focus at this moment? Is it about the ways that you were
describing to try and find unique ways of helping in this crisis?
Or is it also about protecting the employees that you have? Because this is one of the great fears now is that we're heading to a significant jobs
crisis in the United States as well.
GIL: That's right. So the initiatives that we have launched, I would summarize it in three core areas. First, having to do with resiliency and
adaptation. So we must, you know, keep IBM open for business, which we are and enable all the mission critical systems for the work of the world, you
know, financial institutions, telco, transportation, up and running and working.
The second front that we're focused on is how do we enable trusted information for all? How are we able to bring information we can trust and
make it available to citizens to make informed decisions?
And the third is this topic we chatted before about accelerating the rate of discovery, accelerate discovery overall.
So those three are fundamental for us to respond as one institution for the safety of our employees and to help and support all that is needed.
CHATTERLEY: It's so great to hear the role that Big Business is playing in tackling this crisis. Dario, thank you so much for joining us and giving us
your perspective this morning. Dario Gil there, Director of IBM Research. It was great to chat with you.
GIL: Thanks, Julia.
CHATTERLEY: All right, stay with us. We're going to take a look at the markets and reaction to the announcement from the Federal Reserve, of
course, unlimited QE coming this morning as we await passage of that Stimulus Bill. Stay with us. We'll back after this.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Let me tell you, losses are accelerating on Wall Street at this moment. Stocks are falling despite the
Fed's latest aggressive action to study the U.S. economy and it was whatever it takes moment, unlimited QE. In other words, open ended
purchases of things like Treasuries, mortgage backed securities.
[09:55:00]
CHATTERLEY: The municipal bond market as well where U.S. states find themselves, and had seen soaring borrowing costs and the provision of loans
to the real economy. They didn't say they would buy equities. So that's one thing to remember.
But as you heard earlier, the St. Louis Fed President, James Bullard called it insurance, an income maintenance during an unprecedented shutdown
period.
We still need to see action from Congress. It's something, it's not enough, guys. And I will continue to reiterate that. That $2 trillion emergency aid
package needs to be signed on Capitol Hill.
We'll await to see what they can come up with, but Republicans and Democrats need to put aside their differences, sign this bill, and more
money will probably be needed, too.
There is too much uncertainty about the health crisis, about the ensuing economic crisis to argue for higher equities at this stage. There's too
much going on and too much uncertainty.
We'll be back, but that's just about it for the show. Thank you for watching. You've been watching FIRST MOVE. Take care of yourselves and each
other. We'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
