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First Move with Julia Chatterley
More Than 30 Million U.S. Workers Now Asking For Government Help; Encouraging Signs About A Potential Coronavirus Treatment; Tech Giants' Musk And Zuckerberg Have Very Different Views On Reopening. Aired 9-10a ET
Aired April 30, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:07]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here's your need to know.
COVID claims climb. More than 30 million U.S. workers now asking for government help.
Healthcare hope. Encouraging signs about a potential coronavirus treatment.
And polarizing plans. Tech giants' Musk and Zuckerberg have very different views on reopening.
It's Thursday. Let's make the move.
Welcome once again to FIRST MOVE this Thursday. Great to have you with us as always, and today, as I mentioned briefly, there are some encouraging
signs to bring you on a potential treatment for COVID-19.
Yes, it's very early days, but even Dr. Fauci seemed encouraged. All the details on that coming right up and of course, not a moment too soon as we
continue to track the economic fallout from the shutdown measures.
As I mentioned, more than 30 million people in the United States have now filed for unemployment benefits since mid-March. That is a further 3.8
million people -- families -- in the past week alone. The trend is lower. That's one thing.
But of course, it's still heartbreaking in numbers. More analysis on what we're seeing and what they look forward to -- the hope is for the future.
The hope here is that this will slow as economies reopen. That remains the focus I think, for Wall Street in addition to the future of science and
treatments to tackle the outbreak.
As you can see, futures at this moment are losing a bit of ground.
Right now, tech continues to keep us connected in person and drive stock markets higher. Facebook, Microsoft and Tesla all delivering solid results
and again, as you can see that premarket, Facebook and Tesla, the outperformers.
Europe, meanwhile, as you can see in the red following the worst growth print on record for the Eurozone and the European Central Bank saying they
will do more if necessary.
Meanwhile, take a look what we're seeing in Asia. The message I think it seems to be at least from the data there that recovery is complicated as
you would imagine.
Japanese tech giant, Softbank, has warned overnight that investment losses could top $9.5 billion. While in China, the manufacturing survey sector
data for activity falling again in April, after gaining in March.
I said it -- complicated. Even Jay Powell of the Federal Reserve yesterday said he sees considerable medium term risk, and that both Congress and the
Federal Reserve may have to do more. He said, now is not the time to worry about deficits. Wise words, I think.
Let's get to the drivers because Christine Romans joins me now.
Christine might, the hairs on my arms raise every Thursday when I see this economic data -- 30 plus million Americans now claiming for help.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: It's just unimaginable and this is Main Street pain. There's no question about it. In
some countries, the government steps in and pays a big portion of the payrolls to keep people in tact financially for their week to week and
month to month budget.
But in the United States, we have a different system where people have to apply for jobless benefits. They have to wait for the states to approve
them, then they get the state benefits. And then the states have to figure out how to get this Federal stimulus money that's an extra $600.00 a week
for these people.
And you and I both know, a lot of people haven't even received the first unemployment check yet. So, this has been six weeks of true Main Street
pain.
We've been crunching the numbers, Julia, and when you look at the percentage of the labor force out of work, there's some states that are
really hit much harder than others.
Hawaii, for example, 29 percent of its labor market has filed for unemployment benefits over the past six weeks. That's remarkable, but also
not surprising, since it's such a big tourism state.
Kentucky, 28.8 percent. That's the home state of Mitch McConnell, who is someone who's going to be very key to any kind of future stimulus that we
see.
Georgia, Michigan, Rhode Island and Pennsylvania, all with big, big shares of their labor markets that have filed for unemployment benefits in the
past six weeks.
So, these are going to be governors and states that are going to be really feeling the pain here in trying to get their aid, get aid to people
quickly.
CHATTERLEY: Disparity, too, when you look at the individual states, as we start to see economies reopen, those that are more sales oriented versus
those that have the ability for their workers to remain at home, I think that's going to be an interesting, perhaps, contrast between what we call
blue or Democratic states and Republican states here, Christine.
But to bring it back to individual people, there is still a fear for workers going back to work. Am I safe? Is it the right time?
This is going to be part of the challenge, too. Am I better off taking government money?
[09:05:07]
ROMANS: And I think there's so many levels to that question if you are somebody who is out of work. You may not even had a couple of unemployment
checks yet, and already, you're thinking about when you're going to go back, but your kids aren't in school.
Maybe you have someone in your in your immediate family who has a preexisting condition. Maybe you work in a job that is consumer facing and
you've heard nothing about what the plans are going to be to keep you safe.
You don't know what happens to you if you get sick and have to take a bunch of time off. I mean, there are a lot of questions, I think that people are
trying to figure out as they make this calculation.
Everybody wants to get back to work. There's no question about that. But what is that working situation going to look like?
You know, in Iowa, for example, and in Texas, I know that those governors have said, look, if you don't want to go back to work, but your job is
available to you, you don't get your unemployment benefits anymore. You have voluntarily left the labor market and that's going to be something
facing meatpacking workers, facing retail workers, facing bar and restaurant workers as those slowly begin to open up in some states.
CHATTERLEY: Yes. And even for the strongest retailers, I mean, Amazon. We've had the conversation before. They said to their workers, you can take
as much unpaid leave as you want if you are frightened. You only get paid if you're sick or you're quarantined in this case, and that's the challenge
even for the strongest retailers.
Christine Romans, the challenges continue. Thank you.
Now, let's talk about some good news hopes arising after some promising news about a possible coronavirus treatment.
A study shows Gilead antiviral drug, remdesivir might help patients recover more quickly from the virus. Even Dr. Anthony Fauci, the Director of the
National Institute of Allergy and Infectious Diseases says he expects the F.D.A. will issue an emergency use authorization for the drug very soon.
Elizabeth Cohen has all the details.
(BEGIN VIDEOTAPE)
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT (voice over): Finally, after months of illnesses, deaths connected to the scourge that is COVID-
19, we have some good news.
Doctors have found a medicine that seems to work. It's called remdesivir.
(BEGIN VIDEO CLIP)
DR. ANTHONY FAUCI, DIRECTOR, NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES: The data shows that remdesivir has a clear cut significant
positive effect in diminishing the time to recovery.
(END VIDEO CLIP)
COHEN (voice over): Remdesivir was a drug developed for Ebola, but it didn't work very well for that virus. It's never actually been on the
market for any illness.
In preliminary results of this new study sponsored by the National Institutes of Health, more than a thousand patients were randomly assigned
to take either remdesivir or a placebo.
It took the placebo patients 15 days to recover. It took the remdesivir patients 11 days to recover, a 31 percent improvement.
(BEGIN VIDEO CLIP)
FAUCI: Although at 31 percent improvement, doesn't seem like a knockout, hundred percent. It is a very important proof of concept, because what it
has proven is that a drug can block this virus.
(END VIDEO CLIP)
COHEN (voice over): Specifically, the drug blocks an enzyme the virus needs to replicate. Researchers can use that knowledge to create other drugs.
(BEGIN VIDEO CLIP)
FAUCI: There are a lot of other enzymes that the virus uses that are now going to be targets for this.
(END VIDEO CLIP)
COHEN (voice over): Plus four fewer days in the hospital means less time for something to go wrong, like a hospital acquired infection.
(BEGIN VIDEO CLIP)
DR. ANDRE KALIL, REMDESIVIR TRIAL RESEARCHER, UNIVERSITY OF NEBRASKA: If you stay four more days in a hospital, intubated and in a ventilator, you
increase dramatically the chances that you're going to have nosocomial infections and the chances that you're going to die.
(END VIDEO CLIP)
COHEN (voice over): Another advantage, it is thought that the drug has few side effects.
(BEGIN VIDEO CLIP)
DR. ANEESH MEHTA, REMDESIVIR TRIAL RESEARCHER, EMORY UNIVERSITY: Through the data we had in our trials in Ebola patients, we knew that the side
effects were pretty minimal in patients and they were easily reversed when the medication was stopped.
(END VIDEO CLIP)
COHEN (voice over): But researchers are clear, this is not by any means a cure for coronavirus.
(BEGIN VIDEO CLIP)
DR. JEREMY FAUST, BRIGHAM AND WOMEN'S HOSPITAL: I think that we are seeing a slight glimmer of hope here. But I worry that the exuberance is
related to an old saying that there's no sauce better than hunger and we want something so bad that even something that looks a little bit promising
is getting blown out of proportion in terms of what it means for the number of lives that we're going to save here.
(END VIDEO CLIP)
COHEN (voice over): They'll forge on. They'll keep looking at remdesivir and also try to find another drug or maybe a combination of drugs that will
be even more powerful against COVID-19.
Elizabeth Cohen CNN reporting.
(END VIDEOTAPE)
CHATTERLEY: Treatment and not a cure. That is what you were hearing, but fingers crossed -- some help. All right, the European Central Bank says
it's prepared to increase the size of its Coronavirus Stimulus Package, this after the Eurozone's economy shrank at a record rate in the first
quarter.
Anna Stewart joins us now on the details, and Anna, I know Christine Lagarde, of course, the Chief of the E.C.B. is speaking at this moment, but
what was astonishing for me in these numbers was looking at the growth collapse in the likes of Spain and in France, two big countries in Europe
and compare that to what we saw at any point during the financial crisis, and this dwarfs that.
[09:10:02]
ANNA STEWART, CNN REPORTER: Yes, performance in Spain, contractions of over five percent for the first quarter. One economist this morning, Julia,
is saying it was a blizzard of depressing economic data that frankly, the economy was in freefall at the end of March.
Now, what isn't good, of course, is not only these dismal numbers, but the fact that really, lockdown for most of these European countries hit mid-
March right at the end of the first quarter. So, you can only imagine what that means for the second quarter figures that we will see.
There are also some depressing numbers out of Germany in terms of unemployment and that increased by 373,000 in April. Now, that would be a
lot worse, without the scheme, of course, for all those workers who are furloughed, and those workers with shorter hours, they now have 10 million
workers in Germany signed up for state aid.
So, just some of the depressing numbers we're seeing out this morning.
CHATTERLEY: Yes. And Germany, arguably more able to bear the brunt of this than many of the other Eurozone nations. What has Christine Lagarde
God said so far, about possible additional measures because they've done a lot, but the view is that they need to do more?
STEWART: And I think they will do more. Christine Lagarde is still speaking at the moment, a few announcements from the E.C.B. today.
I think the most interesting one was regarding the PAP Program. That's the Pandemic Asset Purchase Program. Currently, that has an envelope of 750
billion euros, that's $820 billion. Now what they've said on that so far, because that will run out by autumn, I believe, at the current rate of
purchases. They've said it will run through the end of the year at the least, possibly longer for as long as the crisis persists.
Plus, they said they are prepared to increase the size of the program and also adjust its composition, which makes you wonder whether she might start
thinking about purchasing up so-called fallen angels, corporate debt that is below investment grade as a direct result of a pandemic.
A couple of other things to note, lots more liquidity, TLTRO III, an easing of conditions, and Julia, a whole new acronym, a new series of PELTROs --
I'm sure plenty of viewers would be scratching their head on that acronym. It is Pandemic Emergency Longer Term Refinancing Operations. Plenty more
just helping banks helping liquidity around the system -- Julia.
CHATTERLEY: Yes. I lose track of all the acronyms, but that's one heck of a tongue twister to keep saying out loud, so perhaps we'll forgive them
on that.
Anna Stewart will continue to watch this space. Thank you so much for that.
All right, on to a clash between the heads of Facebook and Tesla over coronavirus lockdown measures. Facebook CEO Mark Zuckerberg expressing
concerns about the risks of easing restrictions too soon, Tesla CEO Elon Musk meanwhile calling the stay-at-home orders fascist.
Clare Sebastian has more on this. Now, Clare, let's be clear. A couple of differences between these businesses -- both tech giants -- one needing
workers in place in a manufacturing facility to be clear, Elon Musk, versus perhaps the ability to do work from a distance in the case of Facebook and
the workers there.
Neither uncontroversial. But Elon Musk is not afraid of sharing very controversial views.
Talk us through what he said first.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: He did not hold back, Julia, on the company earnings call, which was last night, as you said, calling
the stay-at-home orders fascist.
He said, this was like forcibly imprisoning people in their homes. He called it an outrage. At one point, he said, give people back their goddamn
freedom.
So, you know, this is something we've seen from Elon Musk before, a sort of slightly colorful language on earnings calls, but he is still -- he's
clearly very frustrated and not least because their Fremont Gigafactory remains closed due to shelter-in-place orders in California.
This is the beating heart of the business where most of their car production happens.
He said this will be extremely harmful, not only to Tesla, but to other companies down the supply chain.
But look, Elon Musk has been sort of outside the mainstream, certainly mainstream health officials in his views on COVID-19 for months now, I
think we can pull up some of his tweets back on March 8th here, he tweeted, "The virility of COVID-19 ..." which he calls C-19, " ... is overstated due
to conflating diagnosis with contraction date and over extrapolating exponential growth, which is never what happens in reality."
Unfortunately, we have seen exponential growth, " ... keep extrapolating and the virus will exceed the mass of the known universe."
So, clearly he is trying to say that all the panic is overstated, and he went back on Twitter here. He was on Twitter a lot on this subject on March
16th, saying, "Maybe worth considering chloroquine for COVID-19." And we know there was a lot of hope around that drug, particularly from the
President, but the F.D.A. has since issued a warning that this can cause serious heart rhythm issues among patients and shouldn't be used outside of
a hospital context.
So, Elon Musk treading fairly close to the line with his views on COVID-19, and it is controversial, Julia, because it is noise around this company,
which meanwhile, has withdrawn its guidance. It did post a profit, but it's very uncertain what's going to happen next, particularly, as the factory in
California remains closed.
CHATTERLEY: Yes, it's such a great point. I mean, you missed the tweet on March the 13th, where he said probably close to zero new cases in the
United States, too, by the end of April, based on current trends.
[09:15:08]
CHATTERLEY: Yes, just quickly flip to Mark Zuckerberg because he chose from the onset of his call to say, reopening too soon was a real concern
for him.
SEBASTIAN: Yes, and not just from the call, Julia, from the onset of this crisis, Mark Zuckerberg has been very conservative, very vocal on how,
you know, Facebook is essentially letting employees work from home.
It has canceled all events and meetings with people with other 50 people until June of next year. He really is trying to get ahead of this.
On the call, he said that he worries reopening places too quickly before infection rates have been reduced will almost guarantee, he said, future
outbreaks and worse future economic and health outcomes.
This meanwhile, while Facebook while showing some resilience in the face of this, they did see a steep decline in ad revenue in March, showing some
stabilization in April, but again, they are very uncertain about what's to come, but perhaps as you point out, more resilient in the face of this than
the likes of Tesla because they don't necessarily rely on their workers being in the office.
But then again, ad revenue businesses spending, that is something where they are vulnerable.
CHATTERLEY: Yes, absolutely. And I will just, for completeness, point out that Elon Musk did say, look, we open with care and appropriate
protection and that comes down to businesses themselves, once they are given the go ahead to protect their workers as best they can.
So, yes, that will be the focus then for both of these companies, for all companies of course.
Clare Sebastian, thank you for that.
All right, we're going to take a break. Coming up next though on FIRST MOVE, the CEO of Southeast Asia's biggest bank talks digitalization in
times of crisis and how they are helping their customers get through this.
And later in the show, re-growing a business during shutdown. The founder of Farm Girl Flowers tells us how. Stay with us. We are back after this.
(COMMERCIAL BREAK)
CHATTERLEY: We're back. Welcome back to FIRST MOVE live from New York where stocks remain on track for a lower open this morning following
another dismal update on America's ongoing jobs crisis.
Initial jobless claims rising by another 3.8 million people last week. It means more than 30 million workers have filed for jobless benefits since
the U.S. lockdown began in mid-March. So, we're only talking six weeks.
[09:20:14]
CHATTERLEY: Futures were higher earlier after a solid batch of tech earnings from the likes of Tesla, Facebook and Microsoft, but clearly that
news weighing.
Oil continues to recover, too, from last week's historic drop. U.S. crude up another 12 percent, actually, it is 10 percent now -- volatile as
President Trump considers emergency assistance for the oil industry. Another indicator here of the challenges.
Royal Dutch Shell today saying it will cut its dividend for the first time since World War II.
Let's talk about somewhere else in the world. Southeast Asia's biggest bank, DBS reporting its first quarter profit dropped nearly 30 percent from
a year ago. That's the headline. This, as the Singapore based bank sets aside almost $780 million in bad loans provisions.
According to Johns Hopkins University, coronavirus cases in Singapore have surpassed 16,000 individuals.
Let's get the context clear because I think this is important. DBS Group CEO, Piyush Gupta joins us live from Singapore. Sir, always a pleasure to
chat to you and glad to see you keeping well.
I mentioned some of the headlines from your earnings report. But beneath the surface, customer engagement, I think is key. Talk to me about the
efforts on what you're seeing from customers at this moment.
PIYUSH GUPTA, CEO, DBS GROUP: Good to be on, Julia. Honestly, we, like everybody has put aside some buffers for provisions in the context of
uncertainty with the pandemic.
But the real story is that our operating performance was actually very strong. Our top line grew 13 percent which includes dismal March, with the
dropping interest rates and the truth is that the top line growth is actually accompanied by fairly strong and robust business volume growth.
Loans held up, but more importantly, activity in wealth management, the payment space, transaction services were all robust, and we can only
believe that part of it reflects the economy. Part of it reflects the fact that we've been able to put together a whole suite of digital engagement
tools, digital access tools for our customers.
And there's no question that customers are very rapidly moving digital in this environment. So, that certainly helps a company like ours, which has
been ahead on the forefront of the digital transformation.
CHATTERLEY: This was one of the things that stood out for me when I was with you, talking to you in Singapore and the efforts that you've made over
a number of years now to harness digitization and to make it easier for customers to transact with you, to take out loans, to pay, repayments of
credit cards and things from a distance.
Do you think this has been vital at this moment in maintaining that customer engagement? Because clearly small businesses in particular need
cash and they need credit more than ever at this moment.
GUPTA: Frankly, this has been crucial. It has been crucially helpful in two ways. One, certainly with lockdowns everywhere. It's hard for customers
to get out, and the capacity to be able to do your banking online is sometimes a lifesaver for them.
We were actually able to accelerate many of our plans for this year, and doubled down. We've introduced another dozen trade finance digital products
which give us the capacity to do huge amount of account opening for migrant workers.
Our equity volumes doubled in this quarter, principally because we've made it so simple for people to do equity trading. So, it's been a lifesaver,
but at the same time, it's also been good for our business because we've been able to increase market share in things like the payment space and
online effects.
So, thus, giving a boost to our economics as well. So it's a win-win on both sides.
CHATTERLEY: Please talk to me about the outlook here. How worried are you? I mean, Singapore has battled with a rise in cases, particularly with
the immigrant community here. We know this is having an economic impact, the shutdown measures, the measures to fight the caseloads here and to try
and suppress the virus are having such a devastating impact.
How worried are you about what recovery looks like in consumer behavior in that recovery?
GUPTA: Julia, it is a tale of two parts. Let me first give you the little piece of good news and that is North Asia.
The facts are that North Asia is beginning to open up. Taiwan actually didn't ever shut down. It is running at 100 percent plus. Hong Kong opened
up in the last couple of days so people are willing to go out into the restaurants. Golf courses are opening up.
China is opening up, 95 percent of our people are back at work in China.
[09:25:04]
GUPTA: And so the opening up of North Asia gives me a glimmer of hope. And in most of these countries, interestingly, there hasn't been a huge
amount of preparation around transitions of phased opening.
People just went and figured they had the crisis under control, contract tracing was working. The number of cases came down to zero. So, they were
in a position to open up rapidly.
Singapore, of course, in a slightly different position. We had the virus under good control in what I call Phase 1, about Phase 2 with foreign
returnees and immigrant labor has created a new set of challenges for us.
But even Phase 2, I think the last two or three data is beginning to look more promising. I think we're beginning to get our arms around it.
Now, your question about where we go from here is an interesting one. I expect here a lot of people like working from home, so there's no question
that there could be a change in behaviors, people like interacting discreetly whether it's the banking activity or the e-commerce activity.
At the same time, this is true in short periods of time. In Hong Kong, we've already had this going for some months because of the protests. We
were able to serve with our employees.
And it's quite clear that beyond a certain amount of time people miss the human engagement. They do want to get out. They do want to get back to
work, office and do face-to-face interactions.
So, we're running a lot of experiments based on the psychological impact of what it means to be divorced from people, and so to me, the jury is out. I
think they will be changed. But how much of the change is radical, and how much of the change is nuanced is something that just remains to be seen.
CHATTERLEY: Do you think, you, as a business leader, and as someone who has to make decisions to protect workers will encourage your people to work
at home more in the future, even when we get through this crisis? And do you think you will travel less as a result?
GUPTA: I think in a relative sense, the answer is yes. I will probably travel less and more people will work more flexibly from home.
But I do think there are three things that we still have in dimension. One is productivity. So, it's interesting that on a tactical basis, our
productivity levels are holding up. There are no backlogs, our volumes are high, but we are being able to handle them all from home.
On the other hand, several of my people already telling me that they think they might not be able to meet some of their goals and targets for this
year because working from home is just different.
So, productivity is something we'll have to think about. Psychology and culture is something we'll have to think about. What does it mean to be
part of a single company? What is the soul of the company, if enough people are not aggregating together in common meeting ground in workplaces?
And finally, there's an element of risk. There is, I believe many of us have dialed up the risk we're accepting in this working from home
environment, all kinds of cyber risk, phishing, hacking and so on.
In a business as usual world, you might go on to dial back on some of that as well. So, I do think that our world will change, but people will have to
work their way through what the new optimum is.
CHATTERLEY: Yes, you raise so many great points and I love that you bring up the psychology of what we're going through here.
It's a lesson in many things. Piyush, congratulations once again on the results and the way that you're serving your customers and protecting your
workers, I know, too. Stay in touch, please, sir and stay safe to you and your family.
GUPTA: Thanks very much. You, too. Stay safe.
CHATTERLEY: Piyush Gupta, thank you.
The market open next. Stay with us.
(COMMERCIAL BREAK)
[09:31:38]
CHATTERLEY: Welcome back to FIRST MOVE where U.S. stocks are up and running this Thursday. We're easing back after a solid day of trading
Monday. The major averages rising some two percent or more. The Dow, as you can see, off just over one percent.
What about the small cap stocks though? Those that focus more on the United States. They were standing tall yesterday rising for a sixth straight
session, up more than six percent as you can see.
But in the meantime, McDonald's shares a week in early trading today, they said Q1 earnings fell some 17 percent. Net sales fell six percent even,
this despite three quarters of their stores remaining open worldwide.
They say they're witnessing, quote, "dramatic changes in consumer behavior."
In the meantime, more bad news for the airlines. Speaking of consumer behavior, American Airlines say it has lost $2.2 billion in the first
quarter. They're suspending their dividend and stock buybacks and they're eyeing some $12 billion in spending cuts going forward.
United Airlines are going to be reporting later today. They've already warned about plunging profits, too.
The Director General, meanwhile, of the global airline association, IATA says that social distancing measures will make it almost impossible for
carriers to make a profit going forward.
(BEGIN VIDEO CLIP)
ALEXANDRE DE JUNIAC, DIRECTOR GENERAL, IATA: If you neutralize the -- let's say the central seat on both sides of the aircraft, it means that you
cannot fly with more than two thirds of the aircraft. So, load factor is below 65 percent.
And in these conditions, there is no airline which is able to fly and make money on these -- on these flights.
So, it means two things. Either, we cannot fly or we have to increase the price of the tickets by at least 50 to 100 percent.
(END VIDEO CLIP)
CHATTERLEY: Yes, global airlines are aggressively cutting costs as their travel collapses. British Airways saying this week it will cut some 12,000
jobs.
Now, here in the United States, the number of people filing for first time jobless benefits rose by another 3.8 million people last week. That's more
than 30 million doing so since mid-March.
Mark Zandi is from Moody's Analytics, and he joins us now. Mark, great to have you with us. Your assessment first on another 3.8 million people
asking for help.
MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Well, you know, it's one for the record books. Thirty million people have lost their job and, you
know, Julia that is just part of the story, right? Because probably, another 30 million people have lost hours. They are still employed, so
they're not filing for unemployment insurance per se.
But they've lost hours and they've lost wages. So that's, let's say, 60 million to 70 million people just for context.
There were 150 million people employed before the COVID crisis. So that gives you a sense of the magnitude and the scale of the damage here that's
being done.
CHATTERLEY: How many of these jobs come back, Mark? By the end of this week, 31 U.S. states will begin the process of reopening in some form. How
many of these jobs come back and how quickly and how many do you think remain persistent and that these people are going to be struggling for a
long while.
ZANDI: Yes, good question. You know, my sense is that we will get over the next two to three months as businesses reopen across the country,
roughly half those jobs back, and then it will be a slog to get the remainder back. It's not going to happen quickly.
[09:35:17]
ZANDI: Just to put it in unemployment terms, the unemployment rate will likely peak this month, the month of April, somewhere between 15 and 20
percent. And if you told me that by the end of the year, we had an unemployment rate that was about half that, you know, eight to nine
percent, I say that sounds about right.
And to get back down to something you'd consider good, you know, four or five percent unemployment rate. That probably will take another couple or
three years. So, this is a process. It's not something that now we're going to get all these jobs back very quickly.
The other thing I'd point out is a lot of jobs obviously are in small business, you know, very small business. There's eight million
establishments across the United States. Four and a half million of them are establishment with fewer than four employees, many of those companies
will fail, those small businesses.
So, even when businesses reopen, those won't and therefore, many people won't have jobs to go back to. So, it's going to be a long process.
CHATTERLEY: Define many, in this case, if you're talking about small business, very small business failures?
ZANDI: Well, if you go back, just for context, if you go back to the financial crisis, at the peak of the crisis, business bankruptcies were
running somewhere around, you know, 60,000, and then if you consider the failure, so you know, businesses will fail. They don't go through the
bankruptcy courts.
You're probably talking 200,000 to 250,000, you know, in 2008 and 2009. I'd say we're probably going to see double that, you know, half a million
establishments fail or go into bankruptcy over the course of the next 12 to 18 months.
CHATTERLEY: It's frightening, Mark. You know, it was so interesting, and so as I was listening to Jay Powell yesterday saying, look, probably the
Fed will have to do more. Probably Congress will have to do more and we saw stock markets continue to rise.
And I just wonder whether we come back to a question of one, is and are investors predicting some kind of V-shaped recovery? Because that's very
different from the scenario and the picture that you're painting here, or can we not judge based on what we're seeing here because of all the
liquidity and cash sloshing around?
ZANDI: Yes, all good explanations for why the stock market is up, while you know, obviously Main Street is getting crushed. You know, I think
investors are probably getting ahead of themselves here.
I mean, you know, clearly we are getting better news with regard to potential vaccines and therapies and that's all good, and maybe they come
earlier than previously anticipated.
So, that's a good reason to feel more confident about the economy and to go out and buy stocks. But despite all of that, I think investors are
discounting a lot of very good news and they are putting a higher weight, a higher probability on a more V-shaped kind of recovery where the economy
does come back quickly. All of those jobs do come back quickly. Unemployment goes back to where it was quickly. I just don't see that.
And so I think, you know, the script is still being written in the stock market, and I wouldn't be surprised if there's another leg down here at
some point.
CHATTERLEY: Yes. It's interesting when you're talking about up to 70 million people impacted by what we're seeing, half of the workforce and
yes, the two things don't gel. Mark Zandi from Moody's Analytics. Great to have you on and get your insights.
Stay safe.
ZANDI: Thanks, Julia.
CHATTERLEY: As always, thank you. All right. Speaking of small businesses, coming up after the break, the U.S. small business loan program
failed. One entrepreneur who had to make devastating decisions, dumping his stock. Look at that picture. The CEO of Farm Girl Flowers tells us her
story and what next, after this.
(COMMERCIAL BREAK)
[09:42:05]
CHATTERLEY: Welcome back to FIRST MOVE. Here in the United States, the Paycheck Protection Program, PPP, had a simple goal, to keep small
businesses -- as you were just hearing there -- float during the quarantine to prevent the spread of the coronavirus.
Farm Girl Flowers sales wilted by 60 percent, forcing the CEO Christine Stembel to discard $150,000.00 worth of stock. She could not even give them
away, you can see there.
To make matters worse, she didn't get a PPP loan. She found bank lending difficult for her e-commerce model and felt aggrieved that big businesses
were getting money from that pot.
There is some good news though to this story. I'm pleased to say Christina managed to set up five new distribution centers in time for Mother's Day
here in the United States. And Christina joins us now. Christina, great to have you with us.
We spoke to you Valentine's Day last year when we were talking about the growth of your business, that you were building it. It's heartbreaking to
see that pile of flowers. Talk to me about what happened because you were in San Francisco, and then the shutdown orders were called.
CHRISTINE STEMBEL, FOUNDER, FARM GIRL FLOWERS: Yes, so when the shutdown orders were called -- and hello, Julie, thanks for having me again. But
when the shutdown orders were called, we had 12.5 hours to make some really big decisions on what to do with a facility, our distribution center, where
85 to 90 percent of all of our orders came from.
And so you know, we already had lots of, you know, hundreds of thousands of dollars of flowers on trucks and on airplanes on their way to us for the
orders that week. You know, we had close to 200 team members that were expecting to work that week. And 12.5 hours just isn't a lot of time to
make those decisions on how you're going to move forward. But that's what we had to do.
CHATTERLEY: Yes, you can't give them away in that time. You've got no time.
STEMBEL: No.
CHATTERLEY: What about your workers? Because I mean, you have around 200 workers, I remember.
STEMBEL: Yes. So, we had to make really, really tough decisions. And, you know, most people don't realize that companies like ours, where we actually
make things with our hands, it is not something where you can shelter in place and work from home and still have a business that is in business.
And so we had to furlough immediately over 90 percent of our team members, while I figured out what we were going to do moving forward.
So, we had 197 team members at the beginning of that day on March 16th, and at the end, we had six of us working to try to figure out what our next
steps were.
CHATTERLEY: You know, it's interesting for me, you are the classic example of someone that should have been able to apply for their paycheck
protection scheme, get access to money, pay your workers, work out what you're going to do in the interim, and you really struggled.
Talk to me about why you struggled so much.
STEMBEL: Yes, I mean, I thought the same way that you did. I thought this is -- this was set up for companies like me, and many, many companies
smaller than us.
You know, I kind of -- I feel honored that I can have a voice for, you know, the taquerias and the coffee shops and the gyms and the, you know,
bike shops in all of your neighborhood, you know, Main Street businesses that they don't have a voice because it was built for companies like ours.
[09:45:19]
STEMBEL: And, you know, we're unfunded, we bootstrapped this entire company, you know, we've -- you know, just don't look like most of Silicon
Valley or, you know, New York City. And I thought that it was built for companies like us, but it turns out, it was, I think, intentionally set up
for companies like us, but that's not how it rolled out.
And I think it was just some missteps on setting up safeguards and protections to ensure the companies that really needed it were the ones
that received it and I think that started from the government level of not putting in safeguards in place to make sure that that happened to the banks
putting it in banks' hands which --
You know, it's obvious why it failed, honestly, because you know, banks are going to put the interest of the customers they have the best relationships
forward first, not the ones like us that don't have even a relationship manager to help take care of us because we never have enough money in the
bank to make us a good relationship for them to have.
And then to the CEO level, you know, CEOs should have the integrity. If they have $100 million in the bank to know that this was not set up for
them.
And, you know, they should just not have gone for it knowing that, but instead, I heard from so many CEOs that really were looking at it like free
money that they could just use for anything they needed to use it for that were, you know -- it was easy access for them. It wasn't for companies like
us.
CHATTERLEY: I know. And this is a challenge because it was very cheap money. You didn't even have to get forgiveness on 75 percent of it. It's
one percent loan over annualized over two years. It's really cheap money. And this is a critical point.
Christina very quickly because we only have a minute. How have you managed to keep going? I've mentioned that you'd set up five facilities. How have
you managed that and then I'll point our viewers to your website if they are in the United States because you do, do beautiful flowers.
STEMBEL: Thank you so much. Yes, so we just got to work really fast. And we were able to bring back about 40 of our team members because our
customer supported us so well. And after that 60 percent decline, we were able to rebound the very next week just by telling our story to our
customers, and they rallied around us.
And then we got to work setting up five distribution centers in time for Mother's Day so we could supply the demand that was there, thankfully for
us.
CHATTERLEY: Yes, you see, this is the key. So, resilience in the face of adversity and actually crowdsourcing and funding and using social media
which you are clearly great at, and I think you've defended a lot of small businesses out there that also missed out here which is key.
Christina, keep in touch. I'm showing some very pretty flowers here as well.
STEMBEL: Well, thanks, Julia.
CHATTERLEY: Very distracting. Christina Stembel. Well done for fighting. Founder and CEO of Farm Girl Flowers. Stay well as well, please.
STEMBEL: Thank you, Julia.
CHATTERLEY: All right, getting back to business, there is a challenge wherever you are in the world. The financial hub of the Middle East, Dubai,
eased coronavirus curfews over the weekend despite the Emirates having the region's deadliest outbreak after Saudi Arabia.
Since Friday, diners have been able to return to restaurants. Shopping is an option, too, with one of the world's largest malls opening its doors
once again, but it won't be the low key experience we once knew.
The mall is reopening at 30 percent capacity. Temperature screenings and masks are mandatory and social distancing must be observed.
John Defterios is there for us. John, this is a look at the future, I think for all of us wherever we are in the world. Talk me through what you're
seeing specifically and what the word is there.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, it's interesting you say, a look into the future because if you came here to
Dubai Mall even during the Ramadan period, it wouldn't be this eerily quiet. So, it's different than it's been in the past.
And Julia, outside of Ramadan, which the first two weeks are kind of traditionally slow. We're looking at visitors of 250,000 during a weekday
and up to 350,000 on the weekend.
They're going to cap that at 75. That's their plan and they're doing it.
You talked about the screening that they're doing and I can see it here on the temperatures, limiting the flow to 30 percent, even on the weekend of
normal capacity, and even visitors above 60 years old are not allowed into the facility or children between three and 12.
And there is a method behind this approach here. They're trying to ease their way into business, if you will, and send a signal to the outside
world they are not overreacting, not rushing to get back into business, Julia, but it was crystal clear, the feedback I was getting from a major
retailer, even the chairman of the group that runs the Dubai Mall.
They were saying, they don't expect a real robust recovery -- get this -- until the second half of 2021 with a lot of fits and starts along the way.
Let's take a listen.
(BEGIN VIDEO CLIP)
MOHAMED ALABBAR, CHAIRMAN, EMAAR: I expect that we really have to go gradually moving upward towards the end of the year, if there was no major
outbreak there and then probably into first quarter -- in the first quarter next year --
DEFTERIOS: When you start to recover.
ALABAAR: Yes, and then mid next year, maybe we are back to normal.
(END VIDEO CLIP)
[09:50:08]
DEFTERIOS: That's pretty conservative, Julia, mid next year. And you know, we had this conversation earlier in the week, the International
Monetary Fund is suggesting we could have two to three economic shocks because of the boomerang of the COVID-19, and that's what they're planning
for here in the Middle East as well.
CHATTERLEY: Yes, so many unknowns. It's actually interesting. We're just watching there and I can see people walking behind you. So, there are
people there, it's just going to be -- it's just going to be slow progress, I think, as people get comfortable with being back out there and
interacting with people, even if you're masked up.
DEFTERIOS: I think that is the case, Julia. But you know what surprised me the most and I spent the entire day here, it starts off slow. It'll
gather momentum because it's open until 10 o'clock in the evening and one hour from now, they'll break fast for Iftar, so there'll be people using
the food and beverage, but they have normally 200 food and beverage outlets. So, they're easing those way back into to business as well.
And don't forget here, they have the triple whammy and I'll say what that is. It is the COVID-19 that undermined consumer spending. The Gulf Airlines
used to bring all the tourists. They've been grounded like many places in the world, but they're losing $250 billion, the Middle East exporters in
2020.
That is such a shock that actually filters into consumer spending. So, you can see why the head of EMAAR Group, Mohamed Alabbar is being that
conservative on the recovery going forward.
CHATTERLEY: Yes. Don't underestimate the impact here of lost tourism for all of these kind of places. John Defterios, thank you so much for shedding
light on that. It's going to be interesting to watch.
Coming up after the break, from billboards to little cards, fundraising veteran Tom Moore celebrates his birthday with a big thank you from Britain
and as you'll see, literally the sky is the limit. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Two Royal Air Force spitfires in the skies above the home of Tom Moore, who you might remember from earlier
this week and who marked his 100th birthday today.
What a sight. The military thank you comes after the war veteran raised more than $39 million for Britain's National Health Service. An outstanding
achievement for a truly outstanding hero who is also now referred to as Colonel Moore after receiving an honorary promotion from a captain, as Anna
Stewart reports. That's only a small part of his celebrations.
(BEGIN VIDEOTAPE)
ANNA STEWART, CNN REPORTER (voice over): Tens of thousands of cards filled this school hall, a makeshift sorting office, near the home of
someone very special.
The message is simple and heartfelt.
(BEGIN VIDEO CLIP)
UNIDENTIFIED CHILD (singing): Happy birthday to you.
UNIDENTIFIED FEMALE: You are our hero.
(END VIDEO CLIP)
STEWART (voice over): War veteran Captain Tom Moore captured the world's heart when he walked 100 laps of his garden ahead of his 100th birthday,
raising tens of millions of pounds for N.H.S. charities.
[09:55:09]
STEWART (voice over): And since crossing that finish line --
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Congratulations.
(END VIDEO CLIP)
STEWART (voice over): He's been nonstop.
(BEGIN VIDEO CLIP)
CAPTAIN TOM MOORE, WAR VETERAN: The Nightingale Hospital is open.
(END VIDEO CLIP)
STEWART: Opening a Nightingale Hospital in Northern England, appearing on numerous TV shows.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: You seem to have more energy than I do.
MOORE: I am enjoying every minute of it.
(END VIDEO CLIP)
STEWART (voice over): He's even had a train named after him, and recently he became the oldest person to ever hit number one in the record
charts.
(BEGIN VIDEO CLIP)
MOORE AND UNIDENTIFIED MALE (singing): And you'll never walk alone ...
(END VIDEO CLIP)
STEWART (voice over): In honor of his birthday, the British Royal Mail are marking every letter sent in the U.K. with a special postmark.
Of course this week, thousands of those letters are destined for him.
Anna Stewart, CNN, London
(END VIDEOTAPE)
CHATTERLEY: So, to Colonel Tom and everyone out there raising money and saving lives and singing to our healthcare heroes -- that was very cute --
FIRST MOVE salutes you.
I'm Julia Chatterley, stay safe and I'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
