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First Move with Julia Chatterley
The U.S. Senate Agrees More Cash For Businesses And COVID-19 Testing; Second Wave Warning - A Top U.S. Official Says There Could Be Worse To Come, The Aftermath In The Virus Epicenter Of Wuhan. Aired 9-10a ET
Aired April 22, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:05]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I am Julia Chatterley. This is FIRST MOVE and here is your need to know.
Done deal? The U.S. Senate agrees more cash for businesses and COVID-19 testing.
Second wave warning. A top U.S. official says there could be worse to come.
And the aftermath, we're back in the virus epicenter of Wuhan.
It's Wednesday. Let's make a move.
Welcome once again to FIRST MOVE. I hope you are all staying safe and healthy wherever you are watching us from. Now, more coronavirus cases
around the world continue to rise, I also want to remind us that the recoveries are rising, too. We've seen almost 700,000 people globally
recover, and that's important and good news.
Meanwhile, here in the United States, more than 45,000 people have died. What remains very clear is that more testing is required all over the world
to help save lives.
At least here in the United States, the Senate started to recognize that yesterday allocating $25 billion for increased testing efforts. That in the
latest emergency aid bill. We'll call that a start. I think more will be required. They also added $310 billion to the Paycheck Protection scheme
that's for small businesses.
The Treasury Secretary Steven Mnuchin says the PPP, the Paycheck Protection scheme has already saved 30 million jobs. But the new money is not expected
to last long.
The Consumer Bankers Association warned yesterday it could be gone in as little as 48 hours. That gives you a sense of the pent up demand.
Now, as we heard yesterday on the show, first in line for the money may in fact be some of the small oil firms. A new study says more than 500 U.S.
oil exploration and production companies could file for bankruptcy by the end of next year. This, of course, comes as crude prices fell 43 percent
yesterday.
We'll be discussing all of the details on this, but the oil markets certainly are sending a message, I think, about the outlook for global
growth, and it is weak.
Stock futures, as you can see, moving higher here following a sharp sell- off yesterday, but the Dow has fallen some five percent over the last two days. So, volatility, we're still seeing that for these markets.
To Asia now where Fitch, the rating agency, once again lowered its sovereign rating on Hong Kong, this time citing the coronavirus crisis.
Hong Kong closed the session flat.
All right. Let's get to the drivers, because as you can see, we have plenty to get to.
Following Senate approval, the House is now expected to pass the $485 billion aid package tomorrow to help small businesses among others.
Christine Romans joins us now on this.
Christine, you and I have been saying on a daily basis, more money desperately required for what is the backbone of the U.S. economy. Now,
they get it. The question is does it go where it's supposed to?
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: And this is the cornerstone really of what is emergency relief right now. Before we
can talk about opening and rebuilding the economy, we have to just make these Main Street firms be able to survive here in the very near term. So,
what's is in it?
There is more money for that PPP Program, that's Payroll Protection Program, $310 billion there, and $60 billion set aside to go to small --
really small lenders and I think the idea here is that these small lenders already have associations, business lines with very small Main Street
businesses and they might be able to get that money to them quickly.
But getting it to them quickly is so important here. You know, that 48- hours statistic that you just gave us -- wow -- that is really stunning. I've been hearing that this money is going to run out in a matter of days,
no question. Can they get to everyone and can they get to everyone fairly? That is going to be the real test here.
CHATTERLEY: Yes, and that's going to be the challenge, and as you and I have been discussing, we are not even still sure that they have the
mechanism right to get to the banks that they have promised will get money, the smaller banks here.
Christine, I also want to talk about the money for testing. It is astonishing that that is seen as some kind of trade-off politically in
order to get money for small businesses, get more money for testing, because I've lost count of the number of businesses that say, particularly
the biggest ones, we're not going to be secure opening up without it.
ROMANS: Yes, I mean, this whole idea that there is a light switch that the President can turn on and off for the economy or that the governors
have a dial that they can slowly turn up, it is the American worker and the American consumer who is going to decide when this economy opens up and
that will be after they feel safe.
After they know how widespread the illness is and whether there are antibodies, all kinds of things are going to go into that calculation, and
you hear again and again from economists that they need to have more testing, a widespread national strategy, and that is the very first step
before you start talking about reopening.
So, a $25 billion downpayment on a national testing strategy is in this money here. You know, it's almost amazing how much money has been spent in
just the past few weeks and there really is still a lot of work to be done to get this pandemic under control.
[09:05:28]
CHATTERLEY: Downpayment. Agree. Christine Romans. Thank you so much for that.
ROMANS: You're welcome.
CHATTERLEY: now, to the oil market where prices are a touch higher today after a historic drop, of course, over the last two sessions. President
Trump promising to rescue the industry from a looming wave of bankruptcies and mass layoffs.
John Defterios joins us now to discuss. I mean, we can talk about the individual pressures on the oil market and what we're seeing here, but I do
think what President Trump said there was interesting.
We spoke to the CEO of the U.S. Chamber of commerce yesterday and he said, it's not the big guys we have to worry about, it is the shale players and
the smaller businesses that are going to need loans and support here.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Yes, I think that is absolutely correct, Julia, and I think the tweet by the President after we
had that conversation yesterday that they will never let the U.S. oil and gas companies down, the great ones he even said, but how deep is the well
of support here?
Right now, the mandate seems to be small and mid-sized producers. The U.S. Energy Secretary, Dan Brouillette is having conversations with Steve
Mnuchin, the Treasury Secretary. Loans between $200 million to $250 million, you talked about it at the top of your program here, to stave off
the bankruptcies. Five hundred perhaps over the next 18 months. That was based on $20.00 to $25.00 oil. We're in a whole new territory here around
$11.00 to $12.00 for WTI.
There is a real clear problem because the $200 billion that these companies are holding as debt, they took it on collateral from their oil and gas
reserves priced at the start of the year at $60.00 a barrel. Break even in the shale basins when I visited last year, they talked about 30, 35, 40.
Again, this just doesn't work at $11.00 to $15.00 a barrel. That is a huge challenge. So, you ask, when are we going to have this recovery take place?
I talked about deeper for longer -- a deeper demand fall for a longer period of time yesterday. FACTS Global Energy, one of the better
consultants out there was suggesting you can start to see the rebalancing, Julia -- July-August. The word was careful.
Early stages of recovery was the phrase as a matter of fact, and then an experience we had in 2016 and 2017, that was a six to nine-month process to
eat up the surplus oil out that is out there and if you have complete compliance by the OPEC Plus producers.
A lot of big ifs here, right, Julia? So, you could see a fourth quarter recovery in prices to get us back up to $35.00 to $40.00 a barrel, but
right now, nobody is talking about that.
CHATTERLEY: Yes, there's so many ifs there, John, and it just underscores the point that these businesses are going to need some support
in the interim, because I'm still digesting what you said about the fact that those predictions about bankruptcies was oil double where it lies
today and that is the critical point here as well.
DEFTERIOS: Yes.
CHATTERLEY: Everybody hurts at these oil levels. I mean, we're talking about the United States, but what about Nigeria? What about the Iraqis?
What about even Saudi Arabia when it has got a May budget commitment that it has to keep to its people. How do these countries cope with this?
DEFTERIOS: Well, it is a good time for us to talk about it because this is a global contagion that has spread to North Sea Brent as you suggested
here. They are struggling to hold on to $20.00 a barrel, so look at the year-to-date. Everybody forgets $68.00 a barrel in January on the tensions
with Iran, which are resurfacing again with Donald Trump and we could talk about that at another time.
But this is the challenge now because we're in this $20.00 range. The most extreme example is a country that had a lot of protests in 2019 -- Algeria.
They need to balance their budget at $157.00 a barrel.
You talked about Nigeria. We've had protests here with people kind of hungry for food because of the lockdown that's taking place. They've
already taken $7 billion from multilateral lenders. They are looking at a recession of four percent this year. It could be much worse.
Iraq had intense protests last year because of the oil corruption in the country. The second largest producer in OPEC and they're doing salary cuts
of 50 percent already.
And then I say the big four quickly, Julia -- Saudi Arabia, the UAE, Kuwait, Qatar -- they have sovereign wealth of $500 billion, so $1 trillion
for example here in the UAE, but again, their budgets, most of them $60.00 to $75.00 a barrel.
So, for the Crown Prince of Saudi Arabia. Mohammed bin Salman, and the major projects, they're looking at budget cuts of 20 percent, sources tell
me right now.
So, can you proceed with a 2030 plan at the pace you were planning for when you have this crisis on your hands? That's what is with us right now.
People are saying, John, 2021. Still difficult in budget planning when the range of $20.00 to $25.00 a barrel -- the math just doesn't work in this
region as well.
[09:10:10]
CHATTERLEY: No, it doesn't, and this is years. The legacy of this is years, isn't it? Even if we see some kind of recovery in terms of spending
capabilities and that is aside from the health crisis.
Thank you, John. John Defterios, thank you so much for that.
Now, a warning from the U.S. Centers for Disease Control. It says a second wave of the coronavirus is coming and it could be worse than the current
outbreak. However, not all experts agree as White House Taskforce coordinator, Dr. Elizabeth Birx suggests.
(BEGIN VIDEO CLIP)
DR. DEBORAH BIRX, WHITE HOUSE CORONAVIRUS RESPONSE COORDINATOR I don't know that it will be worse. I think this has been pretty bad. When you see
what has happened in New York that was very bad. I believe that we'll have early warning signals both from our surveillance that we've been talking
about in these -- on the vulnerable populations -- we are going to continue that surveillance from now all the way through the fall to be able to give
us that early warning signal.
(END VIDEO CLIP)
CHATTERLEY: CNN's senior medical correspondent, Elizabeth Cohen joins us now. Elizabeth, always fantastic to have you on the show. A bit of
disagreement there about how bad a second wave might be. I know the C.D.C. was saying, if you combine it with flu season, it could be very bad and
pretty overwhelming for our medical systems here.
Is it just ultimately an argument to say we need to track and we need to spend more money on testing and tracing just so that we are on top of this
if it comes back?
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Julia, I think you've hit the two bottom lines here. One, we need to keep testing. We need
to keep being vigilant. Secondly, Dr. Redfield of the C.D.C., I think has been misunderstood.
The headline on "The Washington Post" story says second wave. He never said that. In "The Washington Post" story not once did he use the term second
wave.
Let's take a look at what Dr. Redfield actually said, because he is actually, I think pretty much in agreement with Dr. Birx. So, let's take a
look at that. What he said was, "There is a possibility that the assault of the virus on our nation next winter will actually be even more difficult
than the one we just went through. We're going to have the flu epidemic and the coronavirus epidemic at the same time."
All he was saying was, you think this is bad? Wait until we have flu on top of it. We're out of flu season right now. But he doesn't think there is
going to be a second wave.
A wave makes it sound like things will get better and then worse. I talked to someone in Dr. Redfield's office and they said, no. What he meant was
that coronavirus is going to continue ebbing and flowing, but will continue until the fall and then we'll have flu on top of it and that's why it's
going to be worse.
It's not because there is going to be a new wave of coronavirus. It's because coronavirus will be on top of the flu.
CHATTERLEY: Yes, it's the double whammy effect here although admittedly, there are a lot of ifs in there depending on what opening up looks like and
whether or not we see a rise in cases as well so that there are lots of questions still.
Talk to me about the University of Virginia sponsored study into the antimalarial drug. You and I were talking about this in the past. You said
just because I give you a cookie while you're ill doesn't mean your cold gets better and that sticks in my mind, quite frankly.
Three hundred and sixty eight people in this study, so it is still a small one, but there is evidence to suggest again, we need to be very cautious
about this drug.
COHEN: Right. I want to talk about the size of study since you brought it up, Julia, because I think this is important. Steven Hahn, the head of
the U.S. Food and Drug Administration called this a small study.
Frankly, it is one of the larger, if not the largest hydroxychloroquine studies. So, is 368 small by sort of normal standards? Yes.
But by coronavirus standards, this is not small. In fact, it's large. The study the President keeps touting -- President Trump keeps touting saying,
see, hydroxychloroquine works essentially was 20 people. So, this one is actually relatively large.
So, let's take a look at what that study found. It was done by the Veterans Administration. Veterans who have served in wars. And so, this is a good
study done by a good group of people who are considered to be reliable.
And what they found was that when people took hydroxychloroquine, 27.8 percent of them died. When they did not, 11.4 percent of them died.
Now, to be clear, this is a study where all sorts of things were going on and so there were other factors as well. But even so, the authors say this
is statistically significant.
I will note that this was published on a preprint server, meaning that it has not been reviewed by the medical community or by peers and that it has
not been published, so that is important to point out. But still, this study really says -- it really says a lot.
CHATTERLEY: Yes. It does, and to your point, when you don't have that many studies done, this one, given that it is, and I have read, too that it
is the largest actually that we've got so far -- we have to listen to it. Elizabeth Cohen, senior medical correspondent, thank you so much.
COHEN: Okay, thanks.
CHATTERLEY: Great to have you with us.
[09:15:04]
CHATTERLEY: All right, to Wuhan, China now and a return to the original epicenter of the coronavirus pandemic as the city of 11 million people
finds some kind of new normal.
David Culver joins us now. David, great to have you with us and great to have you there. You know, one of the stand out moments for me three months
ago was talking to you when you were given hours to leave as the lockdown happened and you said you felt bad for leaving. What does it feel like now
being back?
DAVID CULVER, CNN CORRESPONDENT: In the few hours that we had to sleep after we arrived, Julia, I woke up around 3:00 a.m. local time realizing
that was the same time three months prior I got that call to say, you need to get out. Wuhan is going on lockdown.
And hundreds of others of folks were at the train station doing exactly what we were doing, trying to find a train out. Now, here we are after what
was a 76-day halting of life. Things came to a stop. People were really sealed inside their homes. Everything was so still here as the hardest part
of this outbreak was trying to be brought under control.
And here we are now post the reopening of Wuhan, which happened on April 8th, and you can hear behind me the traffic. You can see things are
starting to reopen, starting to come back online, but it is with a cautious optimism and a lot of hesitation from the folks that we talked to.
I think people for the most part want to believe that they are past this, but they don't fully believe it, and even the government here says don't
get complacent. Don't think that you've got this beat because they, too, fear that there could be a second wave.
You heard Elizabeth talking about that, it is something that even at the epicenter where they talk about the harshest and sometimes brutal lockdown
conditions they feel like they could still be susceptible to something coming back.
But let me show you what they are doing in some places including our hotel. I think this is kind of telling and interesting and kind of anecdotal
experience that we are going through.
Going into the hotel, for example, an elevator, you start to see a setting for each person to stand in. Only four people allowed in those places in
the elevator in all four corners.
You go in. You stand in your place. You can use a tissue to touch the buttons. That is how really mindful they are of any sort of contamination
and exposure to this virus.
Going into the hotel, they even spray us up and down with this pesticide like bottle full of what you assume to be some sanitizer just to make sure
we're not carrying with us anything that's unwanted. That is every time we go in. So, it is not just when we go to check in with our luggage, each and
every time, head to toe and then your feet as well.
Getting here was interesting in and of itself, Julia, because we took the train and it is not just something you can book a trip and think that you
can get there.
Getting around China is tricky because you also don't want to fall into quarantine, so you have got to be really aware of what the local
jurisdictions are doing.
And so, we had weeks in planning this and kind of being very watchful as to how they might be implementing some of these quarantine laws.
We were able to get here just about 24 hours ago, and coming on the train, there were a good number of other locals doing the same, but what you
realize is, they're looking at foreigners in particular.
They came up to myself and my photo journalist and asked us where we were coming from, how long we had been in the country. They wanted to see
passports to verify that we had been here beyond two weeks.
It shows you the real concern now is imported cases. So, foreigners are deemed to be the external threat. And so, that has carried through even as
we arrived. They wanted to check and make sure our temperatures were in check and that we were not going to be bringing along with us anything that
would potentially cause more exposure and problems here -- Julia.
CHATTERLEY: Yes, absolutely. I think every country in the world is going to act the same to be fair to China here. You know, you deal with your own
people and you hope that no one else is coming in and bringing it in.
David, thank you so much for being there. And safe journey, please, back to Beijing. Great to have you with us.
CULVER: Thanks, Julia.
CHATTERLEY: David Culver in Wuhan there. All right. We're going to take a break here on "First Move" but coming up, as small businesses prepare to
jump on more stimulus here in the United States, more cash made available, one FinTech lender, one online lender is taking a different attack.
And later, our obsession with Carole Baskin is helping Netflix drive up those subscriber numbers. We will show you how big of a leap the company
saw. That's later in the show.
(COMMERCIAL BREAK)
[09:22:18]
CHATTERLEY: Welcome back to FIRST MOVE where we're seeing green arrows for U.S. futures for the first time this week. Stocks are coming off two
days of losses as we learn more about the economic implications of the coronavirus outbreak, but you can see nice rises at this moment. New. And
we are sure to get fresh evidence of the damage tomorrow when the U.S. releases new jobless claims numbers.
Remember, some 22 million people have already filed for help since mid- March and the turmoil of course in the oil and gas markets since then could trigger fresh job losses in the weeks ahead.
Meanwhile, major airlines are beginning to report first quarter results today, too. Delta posting its first loss in five years. United's CEO says
ticket demand is essentially zero right now. United is set to sell more than a billion dollars in stock to raise more cash.
Meanwhile the new aid package is expected to give the Paycheck Protection Program a further $310 billion, but for many small business owners who
don't have prior relationships particularly with some of the larger banks, the problem could still be accessibility if they don't have access to the
Small Business Administration.
One of the online lenders that was given access though and can help is Lendio, and joining us now, Lendio, founder and CEO, Brock Blake. Brock,
great to have you with us on the show. Thank you so much for being here.
I know one of your key concerns was just how many banks are going to be able again to use this facility, because small businesses do have
relationships with banks, but if the bank can't get access to the program they've got to go somewhere else.
BROCK BLAKE, CEO AND FOUNDER, LENDIO: Yes. No question, Julia. Thanks for having me this morning.
I am excited that Congress has earmarked $60 billion toward community banks. My biggest question from round one, my biggest concern were that a
lot of banks were sitting on the sideline and not participating in these loans either because they chose not to participate or they weren't approved
by the SBA.
That meant millions of small business owners were going to their own bank, applying for a loan and being rejected and pushed to a different bank. When
they went to another financial institutions they were at the back of the line.
That puts a lot of business owners at a disadvantage, so we are encouraging every community bank in the country to hopefully jump in the game and start
participating in this program and hopefully the SBA approves every FDIC bank and credit union in the country.
CHATTERLEY: Yes, and we are still waiting for that information. At least there is more money here, but you know, concerns I've heard already is that
this money is not going to last very long simply because there is so much pent up demand and the banks know kind of what is coming when the cash
becomes available.
[09:25:15]
BLAKE: No question. Last round, there was 1.6 million business owners that got approved for financing and that sounds like a very, very large
number.
But when you consider there are 30 million small businesses in America meaning that 94 percent of businesses didn't get approved so that is
significant pent up demand.
Most lenders that we work with at Lendio already have as much demand built up already today than they did in the first round. So, I imagine this
second round is going to go very, very quickly.
CHATTERLEY: How quickly?
BLAKE: Well, that is the guess. If I were a betting man, I would say three days from when it starts, it sounds like Friday morning is our best
estimates.
So, I think by mid next week it'll probably be gone.
CHATTERLEY: I mean, one of the things here that you could suggest is that the average loan size will reduce now as the smallest businesses in
the country start to get access and I know this is something that is so critical about having online lenders such as yourself providing access.
Because when I look at the average loan size that you provided, relative to the loan size overall, it is much smaller and I know you did 70,000 loans.
I mean, that's huge.
BLAKE: Yes. So, let me clarify a little bit. We are not a lender ourselves. We are a marketplace and we have 300 financial institutions,
FinTech lenders, banks, credit unions on our platform.
But our focus the entire time was on the smallest of the small businesses. We had 70,000 businesses funded. About 30,000 of those couldn't get a loan
directly through their financial institution. And so we were focused on Main Street.
We were focused on construction, restaurant owners, retail shops, other healthcare providers. Our average loan size with our lending institutions
was between 70,000 and 80,000.
The program's average loan size is around 240,000. I was surprised that many financial institutions have an average loan size of over 500,000. This
round two has to focus on the smallest of business owners that were at a disadvantage in round one.
Yes, and I think some of the larger banks as well perhaps know that the optics of this are going to be very much a focus and so perhaps, push
resources toward the smaller businesses in this case, too.
How much more money do you think is going to be needed, Brock, just back to what we were saying about it running out so quickly?
BLAKE: Yes, when we did our estimates and you look at the 30 million businesses and the average payroll, our expectation we thought it would be
at $850 billion total, so, an increase of $500 billion. We got $310 billion.
So, I wouldn't be surprised if there is a round three to make sure every business in America can get access to these funds.
CHATTERLEY: Wow. I mean, Congress is saying they're not going to come back to raise any more money until May and it looks like this could run out
pretty quickly.
It is going to be some interesting days ahead. Brock, great to have you with us. Thank you so much for joining us. Brock Blake there. The founder
and CEO of Lendio.
All right. Counting down to the market open this morning. Stay with us. That's next.
(COMMERCIAL BREAK)
[09:31:35]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stock markets are up and running this Wednesday. I can give you a look at what we're seeing.
And as expected, a strong start for stocks after Tuesday's three percent drop. In fact, in the S&P 500, they remain volatile. We're getting a bit of
traction here I think as oil prices stabilize following the historic plunge earlier this week.
I hope I haven't spoken too soon, but as you can see that is a strong bounce from low levels for oil prices.
Individual investors though increasingly feeling the pain, I think of oil's collapse. The United States Oil Fund, a popular ETF, an exchange traded
fund that tracks oil fell more than two percent yesterday. It's down almost 40 percent this past week. Energy investment is a tricky thing at the
moment.
In the meantime, shares of consumer products giant Kimberly-Clark are higher after the company reported earnings and revenues that easily beat
expectations. Why? Well, of course consumers are stocking up on paper product essentials during the lockdown.
Social distancing also helping boost the bottom line at Netflix. The streaming giant added more than 15 million new subscribers in the first
three months of the year as viewers stuck at home clamored for content like "The Tiger King" as we showed you earlier. I've not watched that, I have to
say. Profits have more than doubled, too.
Clare Sebastian joins us now. Clare, I haven't watched "Tiger King," so I have to say I didn't understand who I was talking about, but maybe I should
catch up.
And it wasn't just about the number of people, it was some fascinating comments from the CEO about the lack of ability to gauge what comes next
that stood out for me.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes. That was really striking, Julia. The phrase guesswork -- he used the word guess several times. He
said that they don't take it lightly. They simply don't know what is going to happen.
But this was a really big number for Netflix, 15.8 million new subscribers were added, but there were a lot of caveats that most of them pointed out
and emphasized by Netflix itself in a very downbeat shareholder letter.
Obviously, not great PR to celebrate something like this at this time, but they seem to be genuinely worried. They said that, A, lot of that new
subscriber growth came from outside the U.S., and the revenue boost that they have expected from this was offset by a much stronger dollar.
Secondly, they said that -- as I said, that a lot of what is coming next is guesswork. They expect 7.5 million new subscribers in the second quarter,
but of course, they don't know.
And then they say that they guess that in the third and fourth quarter, subscriber growth will be lower than it might have been because a lot of
what we have seen in this quarter was pulled forward. There was an acceleration of an existing trend.
So that is one thing -- as we've said, in our 20-year history, we have never seen a future more uncertain or more unsettling. So, this is a
company that is worried, of course, production has stopped around the world and that puts a lot of uncertainty on their content going forward and that
of course is critical in an environment where competition in streaming is only increasing.
CHATTERLEY: Yes. I mean, this is such a great point, 64 million people watched "Tiger King." It is -- how do you keep coming up with those kind of
shows when you are struggling to produce content because of all the restrictions that the country -- the world is facing?
I guess the point is, all the competition is facing the same thing. Clare Sebastian, great analysis. Thank you so much for that.
All right. Now, for more on self-isolation essential to another -- food. The CEO of Stew Leonard's grocery stores is calling for grocery workers to
be designated first responders.
This would give them priority access to things like personal protective equipment such as masks and gloves. We're now joined by the company's CEO
and President, Stew Leonard, Jr. and he is coming to us via Skype from one of his stores in Norwalk, Connecticut.
Great to have you with us, Stew. Fantastic to have you on the show.
[09:35:33]
CHATTERLEY: And you're all masked up, I see, but the backdrop shows lots of beautiful fruit and vegetables. It's great to have you here. Just talk
me through some of the biggest issues that you faced and why you think, and I agree with you, grocery workers should be designated protected as well?
They're our heroes, too.
STEW LEONARD, JR., CEO AND PRESIDENT, STEW LEONARD'S: Well, you know, Julia, first of all, I love your accent. I'm going to go home and watch
"Tiger King" tonight.
CHATTERLEY: Me, too.
LEONARD: We're right -- I am right in the middle of the action here. And as you can see, customers, they are going by the store and right now we
have a challenge feeding everybody, and that's is our biggest effort right now.
And right now, there are four things we focus on at Stew Leonard's. The first thing is full shelves and we are starting to see some hiccups in the
supply chain in the U.S. right now because I talked to one beef farmer out in Montana. He's got plenty of cattle. He just can't get them processed.
As you know, Smithfield packing plants is closed in Colorado. So, you know, the product is out there. Restaurants are closed, so all of the food from
restaurants went over to the supermarket.
And so right now what they're doing is they're -- we are getting the food. We've just got to make sure the plants are safe and we can get the food to
Stew Leonard's.
CHATTERLEY: This is such a great point. You called it a hiccup. As you say, the farms have got the foods. You've got the capacity to get access to
customers and give them food, but it is that -- it is getting it from the farm to the shelves that is the problem here. What helps fix that? What
support is required?
LEONARD: Well, one of the things we're lucky about at Stew Leonard's, we're buying direct from family farms. So, they're able to get us the
product right now. It is the big manufacturers who I think they're starting to see problems in the packing plants.
And I think the thing we probably didn't do well enough at Stew Leonard's was react quickly enough for redesigning our work place at Stew Leonard's.
I don't know if you'll notice, but we have Plexiglas areas up in front of all of the work areas now to protect our workers from the customers. And we
didn't do that fast enough.
We're doing a little video actually today to educate our people like how to eat together because we noticed even when you go up one way very, very
contagious is when you're eating. You know, it is easy to spread the virus through your saliva.
And so, we are teaching everybody six feet away. When you touch the refrigerator handle, you've got to keep washing your hands and keep them
clean. So, education was a big part of it.
CHATTERLEY: Yes, it is fascinating to hear you say that as we start to see parts of the country, parts of the world open up and restaurants
opening up and you're making a clear point about the challenges that those kind of businesses face as well.
You know, one of the great things about your stores if people ever get to go or have been in the past is that it was very interactive. You could test
things. You could taste things. You could pick up bagels. You had the deli counter as well.
What does the future of food shopping look like? Do you think we'd get back to that one day? Because we have to be so sterile at the moment. And
probably for the foreseeable future.
LEONARD: You know, I'm speaking to our food and wine people all around the world right now. That's the biggest question, what you just asked.
How quickly are we going to get back to this? Now, we are only an hour from New York City and we went through 9/11, and when you looked at it, people
were running away from that area of Manhattan. And all of a sudden now it is some of the most expensive real estate in Manhattan is right down there.
So, I think people's attitudes are going to change. We've been always touted as the Disneyland of dairy stores. We have animation. We have free
samples all over the place. Open food buffets. Bagel ovens where you could go pick your own bagel. That is definitely going to stop for a while right
now.
And the question is, how slowly are the customers going to feel comfortable now shopping the way they used to? I think everybody likes free food.
Everybody likes farmer's markets. I feel very optimistic about post corona here.
Once we get a vaccine, I feel optimistic people slowly will get back to their regular routines.
[09:40:08]
CHATTERLEY: Post corona. I just want to ask you again about as an owner of a business, the legal risks here. Protecting consumers, but also your
workers. And I know you've had some challenges actually trying to hire people to help.
Do you think when we try and restart businesses, just convincing workers and consumers that things are safe and we're doing everything we can is
going to be one of the biggest challenges?
LEONARD: Well, that is one thing I'm trying to do at Stew Leonard's. I'm trying to calm our customers down. They think there is going to be no food
on the shelves, and there's a little bit of a panic buying going on. We've seen that.
I've been in this 50 years since I've been a little kid. I've never seen anything like this before because there are so many different factors
involved.
There's not only the coronavirus where people are petrified, you know, of catching it, and as you can see, we're doing a lot of things like social
distancing, six feet apart.
You see, everybody is wearing masks coming into the store now. We are starting to get different designs of masks. People are wearing gloves, not
because they help you, but it tells me not to touch my face at all when I have them on.
And we're seeing a different customer coming into the store every day right now and we've noticed a few things, the Instacart and the delivery has gone
up fourfold since we started.
We've had like a 22 percent more action on our website. We are seeing a 70 percent increase in the average sale. I don't know if you can see any of
the shopping carts going by, but they're almost double what they used to be.
So, people are definitely eating home and stocking up right now and the big question is, you know, what is this going to look like after things settle
down a little bit?
CHATTERLEY: Wow. Seventy percent increase in shopping. People want to buy more and they're eating more at home, but they also want to come less,
I guess, less often and frequent visits to the grocery store.
LEONARD: You know, Julia. One thing I want to ask you is that -- one thing that I noticed, and I know you do a lot of financial stuff. We're a private
business. I'm mainly here on the floor. But here is the thing that gets me.
This bag of potatoes is less than a dollar a pound, okay? We have these mashed potatoes right here already mashed up and everything by our chefs.
And you can buy these, these are about five bucks a pound.
Now, when you think the stock market is down, right? People tend to make their own mashed potatoes. Okay? And I haven't done any data stuff on this
or any of that, but I would just say that right now we're seeing a triple increase in these inexpensive potatoes.
CHATTERLEY: Right.
LEONARD: And we're seeing a decrease in the chef-made mashed potatoes that are more expensive.
So, I think when the stock market gets wobbly, people tend to go to the basics more and buy the less expensive food. We're seeing that around the
store. People are cooking more. And when you talk about what's going to happen after this is done, you've never seen more people asking for recipes
right now.
What am I going to cook tonight? What am I going to do for dinner? I think they're starting to be home with the families and starting to cook. So,
maybe you're going to see, like, more foodies emerge after this whole thing is done.
CHATTERLEY: Well, I have to say if it were my own cooking, there is a risk I would starve quite frankly. But when you have 22 million people
claiming for benefits in a country, people start to recognize that you need to protect your money and make your money go further and I guess that would
be the point I would make.
LEONARD: Right.
CHATTERLEY: Stew, stay in touch, please. The shop looks great. I know you're working incredibly hard. Thank you to all your workers there as well
and keeping us all fed and watered. Stew Leonard, Jr. there.
LEONARD: Yes, our workers. I am so proud. So proud. Thank you very much.
CHATTERLEY: Thank you. You're right to be proud of them, sir. Thank you.
LEONARD: I'm going to watch "Tiger King" tonight. Okay.
CHATTERLEY: You enjoy. Thank you, sir.
LEONARD: Okay.
CHATTERLEY: All right, we're going to take a break. Coming up, we'll go to cars. Auto makers in Europe are getting back on the road. We're live at
Volkswagen's German headquarters as production slowly restarts.
(COMMERCIAL BREAK)
[09:47:34]
CHATTERLEY: To Europe now where the car industry pretty much ground to a halt as the outbreak took hold. Now, major auto makers like Volkswagen are
restarting production and that is no easy task when you consider European supply chains.
CNN's Fred Pleitgen is at Volkswagen's headquarters in Wolfsburg in Germany and he joins us now. Fred, it is not just about supply chains of course.
It's getting workers safely back into the work space and in the end, who is going to buy these cars? But talk us through what Volkswagen is doing here.
It's fascinating.
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, you are absolutely right. It is a really difficult process from start to finish,
and you're also absolutely right to say that it really starts with actually getting the workers to the work place.
I was speaking today to the head of production of Volkswagen and he was telling me, look, we need to tell workers every morning they need to take
their own temperature and really know if they are feeling all right, if they're going to be able to come to work at all.
Then it gets to how do they change into their work clothes? What do they do when they eat? Where do they go? All of the cafeterias are closed right
now.
And then of course, you get to the working process as well. I was in Germany's second largest Volkswagen plant as well today, Julia, where they
make transmissions for Audis and they were saying that they did a whole flurry of measures to make sure social distancing, physical distancing in
those plants is assured.
One interesting thing that I did see is that there weren't that many workers actually wearing masks and the way they explained that to me, they
said, look, if the distance is kept, we believe that is all right. However, in those situations, in those areas where that is impossible, where two
workers for instance have to go and work on a machine or fix a machine, that is where they need to put the masks on, they need to put those gloves
on as well.
Volkswagen says it has a hundred-point plan on keeping workers safe because on the one hand, worker safety is of course key. On the other hand, the
coronavirus case in one of these factories would no doubt lead to at least a partial shutdown of the factory.
And then, you get to the whole logistics of reopening factories for the largest auto maker in Europe and of course, a lot of other big auto makers
are dealing with exactly the same thing. How do you do it? What sort of phased approach do you do?
I was able to speak to the Head of Global Production of Volkswagen about that. Here is what he had to say.
(BEGIN VIDEO CLIP)
ANDREAS TOSTMANN, HEAD OF VOLKSWAGEN PRODUCTION AND LOGISTICS: It takes a couple of days to prepare everything and to go through the whole logistic
chain, but we do this plant by plant and that's all together created this step by step approach where we started already in our Slovakian factory in
Bratislava this week and as well as Zwickau and we will start next week here in the headquarter in Wolfsburg with these slow relaunch of production
and then it goes around Europe and into other areas as well.
And it will take us probably two, three weeks before we are back to normality.
(END VIDEO CLIP)
[09:50:21]
PLEITGEN: So, yes, they have two to three weeks from Volkswagen and of course, other European auto makers aren't exactly in the same boat. Toyota
Europe looking to start some factories this week. Mercedes saying they're starting some next week, and then absolutely right to point out, I spoke to
an expert about this as well. What about the automobile market?
Certainly, a lot of people are saying, it could take a very, very long time for demand to really come back not just in Europe, but around the world --
Julia.
CHATTERLEY: Yes, absolutely. But a fascinating insight into what the world of work and social distancing in that kind of environment in
particular looks like, and it is a process.
Fred Pleitgen great to have you on that story at the Volkswagen headquarters there in Germany.
All right. Up next, Facebook makes a multibillion dollar bet in India. We've got the details next.
(COMMERCIAL BREAK)
CHATTERLEY: Facebook has taken a $5.7 billion stake in an Indian telecoms operator. The investment in geo platforms give Facebook a foothold
in one of the world's fastest growing internet markets. Hadas Gold has the story for us.
Hadas, and never has internet access perhaps been more important as it is today.
HADAS GOLD, CNN BUSINESS REPORTER: Yes, that's a good point. This investment, this $5.7 billion investment gives Facebook about a 10 percent
stake in Reliance Jio, which is a really fast growing telecoms company in India.
But it doesn't just do, let's say, mobile services, it is also getting really into streaming and most importantly for this deal is its new e-
commerce platform called JioMart.
Now, the reason that Facebook wants to invest in Jio is not only because the Indian market is so ripe for investment, but also because of the
opportunity of marrying WhatsApp which is huge in India with JioMart because keep in mind, Facebook is already planning to roll out a payment
services on WhatsApp in India in the coming year.
So just think about the opportunities there. Marrying WhatsApp with this e- commerce platform. And also, keep in mind just that India has so much opportunity for growth.
Facebook already has 340 million people who are on WhatsApp, but 600 million people in India don't have access to the internet yet.
So, think about how many more customers they can get in India through that. Now, Mark Zuckerberg gave a statement on his own Facebook post about this
and he actually connected it to the current pandemic situation, saying, "With communities around the world in lockdown, many of these entrepreneurs
need digital tools they can rely on to find and communicate with customers and grow their businesses. This is something we can help with and that is
why we're partnering with Jio to help people and businesses in India create new opportunities." -- Julia.
CHATTERLEY: Yes, e-payment, internet access, 1.3 billion consumers. Need we say more? Hadas Gold, great job. Thank you so much for that.
[09:55:10]
CHATTERLEY: And finally, we salute a man in San Francisco who is giving away coffee to essential workers from his kitchen window. Take a look at
this.
Ben Ramirez uses this toy gorilla arm to hand out the brews. His son came up with the idea and now, he is making around 10 to 15 cups a day during
the pandemic all of course at arm's length.
(BEGIN VIDEO CLIP)
BEN RAMIREZ, BREWS FREE COFFEE FROM HIS HOME: A lot of people have actually been very thankful, having just like a space to come get your
coffee and talk to somebody for a second. It makes it feel like they're back in their kind of routine.
(END VIDEO CLIP)
CHATTERLEY: Ben works in the tech industry, but says he'd actually love to open a cafe and coffee roasting company in the future. You have to hand
it to him. He's got a pretty unique, let's call it that, technique there.
Wow. "Tiger Kings" and gorilla arms, it all happening on FIRST MOVE.
But that's it for the show. Stay safe everybody, please. I'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
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