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First Move with Julia Chatterley
U.S. Private Sector Shed 20 Million Jobs In April; Trump Urges Economic Restart Even As Death Toll Rises; Shanghai Disneyland To Reopen Next Week. Aired 9-10a ET
Aired May 06, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: ... as a June end, even as the U.S. death toll mounts.
Disney's decline. Shuttered parks, closed stores and new cruises hits profits.
And the secret spread. Did COVID-19 arrive sooner than we thought? We'll discuss. It's Wednesday. Let's make a move.
Welcome once again to fast move this Wednesday. Great to have you with us, as always. We can't escape it. We will continue to track the economic cost
of the world's response to the virus today, but we'll also not forget the loss of life as I mentioned there and our hearts continue to go out to
those who have all been impacted.
But at the same time, we'll recognize the innovation that's being sparked by this crisis, too, that's helping us to cope and will drive us forward in
the future, too.
For now, here in the United States, private sector employees cut more than 20 million jobs last month. That is the worst month in history of the ADP
private sector survey. It's just a prelude to the Friday's job numbers, those non-farm payrolls where we could see an unemployment rate in the
United States as high as 20 percent, and whatever number that is, as tragic as it is, I think it underestimates the extent of the job destruction here
in the United States.
It's something that we've watched all around the world. More firms, too here in the U.S. adding to those tolls of lost jobs.
Home rental firm, Airbnb, one of the latest cutting 25 percent of its staff and Qatar Airways, warning too of substantial job cuts.
The key to all of this is how quickly economies recover and then those jobs come back. Critical. And we'll discuss this in the show.
For now, as you can see from futures, markets and investors appear more optimistic, I think than companies are willing to be, at least in their
forecasts.
Take a look at what we're seeing in European markets as well. Data on the services sector in Italy and Spain make pretty awful reading. The E.U.,
meanwhile, has warned that we could see a recession of historic proportions. Again, the response and perhaps more response needed around
the world.
Stocks, meanwhile, in Asia ended higher. The spending data from China caught my eye. Consumers spent 60 percent less cash on travel during this
year's Labor Day holiday than they did -- that ended yesterday than they did this time last year.
Opening up doesn't necessarily mean spending and traveling and I think there's a lesson in there for other nations, too.
Let's get to the drivers. The White House is moving to wind down its Coronavirus Taskforce possibly by Memorial Day, less than three weeks from
now.
Although the number of coronavirus deaths here in the United States continue to climb, now, topping 71,000 people. The President is moving
towards a message of economic revival.
(BEGIN VIDEO CLIP)
QUESTION: Do you believe that's the reality we're facing that that lives will be lost to reopen the country?
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: It's possible there will be some because you won't be locked into an apartment or a house or
whatever it is. But at the same time, we're going to practice social distancing. We're going to be washing hands. We're going to be doing a lot
of the things that we've learned to do over the last period of time, and we have to get our country back.
(END VIDEO CLIP)
CHATTERLEY: Christine Romans joins me now. Christine, when I mentioned that we've seen 20 million plus people losing their jobs, and then I
mentioned 70,000 people plus who have lost their lives, the trade off, and it is that that we're talking about here, I think is crystallized.
I understand to some degree, the economic desire to reopen economies, but the idea that we don't have a Taskforce anymore on top of the health crisis
is astonishing to me.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: You know, and top of mind for the President clearly are these jobs numbers. I mean, he
said it in that interview, people are losing their jobs. We've got to get it back. And that's what we're going to be doing.
The risk here, of course, though, is without proven therapeutics, without widespread per capita testing, without measures in place and workforces
that we know work for the spread of the disease, and without a vaccine, a second wave could be really deadly if you open things up, and then this
fall, we end up having a pandemic crash again, right?
So, I think, you risk getting a normal economy again, if you don't reopen in exactly the right way and it would seem as though a Pandemic Taskforce,
you know, maybe even broadened out with more economists could be exactly the kind of place to be taking a very Federal approach to doing this.
But the President, I mean, these numbers are so shocking in depression era and he is looking at that trade off of paychecks and that seems to be what
is top of mind for this President right now.
[09:05:10]
CHATTERLEY: You mentioned so many great points. My fear here is that our behavior is going to dictate how bad a potential second wave would be. Do
we keep to the social distancing? The idea of sending a message to people that, hey, we've done this now, we're through the worst, we're over it. We
don't need to focus in the same way -- scares me -- even if I agree that we do need to have a rebooting of the economy, Taskforce that looks at what
the future looks like hereto.
To your point, regaining these jobs is important, but not the cost of life.
ROMANS: And that the travel and leisure jobs, I mean, these are the kinds of jobs that are going to be hard to come back in the very near term,
right?
But there could be -- and I don't know what the percentage is because there's no playbook for this, Julia. But there could be millions and
millions of jobs that come back right away when there is a safe and healthy reopening of the economy and the pandemic is behind us, quite frankly.
There's still a lot of work to be done in the near term.
One of the things I think is fascinating is the view from Washington this week. The President began the week as a wartime President fighting an
invisible enemy underneath the dome of the Lincoln Memorial, admitting that there would be more than 60,000 lives lost to this and what a tragedy it
was.
And then within just 48 hours, sort of switching gears and looking as though he is ready to focus on the revival of the economy and less
attention on the lives that could -- potentially more lives that could be lost because of that revival of the economy.
It's a definitive pivot, I think, a pivot from the White House this week.
CHATTERLEY: And tragedy on all sides, tragedy in terms of the health crisis, tragedy in terms of job losses, and the number of people that we're
talking about here.
I mean, to your point and to go full circle. Christine, we could be looking at approaching depression era unemployment in the United States, and that
probably underestimates the impact on the jobs market.
ROMANS: I absolutely agree with you on that, and I also think that we're all penciling in numbers and doing math with what we know from jobless
claims and what we know about the American labor market.
But the pain and suffering of every single one of those data points, you know, people who don't know how long -- you know, some people haven't even
gotten their first unemployment check yet, right, and they've had two months, they've had to pay rent -- April and May.
So, this has been very trying for the American people and not -- it's a health crisis and a kitchen table economics crisis at the same time, which
makes it just that much more, you know, more unbearable.
I'll say two quick things. Until we have an education fix here, I don't think that you could really go back to normal in the American workplace
until our kids are going back to school, or we know -- because parents are home with the teachers teaching their kids remotely.
Now that's a very big -- a very big part of this thing, I think and again, are people going to feel safe going out and venturing into the pre-March
kind of economic activity that they had?
Not unless they are really sure that they're not going to catch this virus.
CHATTERLEY: Yes, 70 percent of the U.S. economy consumption and it is the biggest nation in the world. So, what happens here matters for the whole
world.
ROMANS: Yes.
CHATTERLEY: Christine Romans, thank you so much for that.
Now, to accompany that well and truly has been in the firing line as far as COVID-19 is concerned, Disney, they said they will reopen their Shanghai
theme park next Monday, just as the cost of having shuttered parks worldwide becomes clear. Profit of the company was down 91 percent in the
last quarter. The parks division cost at $1 billion in lost revenues.
Brian Stelter joins us now on this story. Brian, Disney is a company that's built on engagement, being present, whether it is theme parks, whether it's
in stores, we'll put the streaming part aside here.
Everything about their business, the major parts of their business is hit by a pandemic.
BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: Right. That's why Disney is so exposed to the ravages of this pandemic, even more than other media
companies, and what we heard from Disney's leaders on their earnings call, it expresses how much uncertainty there is throughout the American society
and throughout the world.
Disney is a microcosm of what so many hundreds and thousands of companies are going through. When can they reopen the theme parks? And if they reopen
theme parks? Will anybody get on a plane to go there? And then if they open the parks, and there's an outbreak, then at what cost have they reopened
their business? And how much of a disaster would that be for perceptual way and then the cost of lives if there is an outbreak in one of their parks?
Those are the kinds of issues Disney is grappling with, and that's why they provided basically no projections for the foreseeable future.
CHATTERLEY: Yes, large crowds in really small places, ultimately, and I wasn't even thinking that, but you're so right. The liability risk here for
customers, but also for workers as many companies already on the frontlines are phased here.
Brian, talk to me about some of the silver linings here which is of course while many of us are sitting at home, we are watching more movies and their
streaming services and the millions of people that are now tapping into Disney Plus are way past initial expectations -- millions there.
[09:10:18]
STELTER: And that's really the only good news Disney can share right now. It is that in mid-March, in late March, when everyone -- went everything
basically shut down in North America and other parts of the world, Disney Plus subscriptions went on a huge tear.
You know, more than 10 million people signed up in a matter of weeks. Now, Disney has over 54 million subscriptions for Disney Plus. That's an
incredible amount of growth in just a few months for this new streaming service.
So, it is kind of predicted that, yes, people are going to be signing up for this service because they're stuck at home. But that's the one bit of
good news for Disney.
Then the question becomes, how are they going to make shows for Disney Plus? They have everything that is shut down. They can't produce television
and films.
Netflix and others studios are working on solutions for that. Disney also working on that trying to figure out ways to produce TV shows and movies in
a way that is relatively safe.
But Julia, this is all about risk calculation. Right? All of this is about how much risk are individuals willing to take and how much our company is
willing to take?
And right now, I think people's appetite for risk, for example, going and making a television show and putting a hundred people together in a studio.
The level -- the appetite of risk is very low. People don't want to take those risks.
CHATTERLEY: Yes, it's such a great point. This is when a library of content becomes so important, but to finish on a sort of fairytale-ish
ending, Bob Iger, of course, said look, we've been through a lot.
This company has been through a lot and it's seen some bad times and we will survive this, but to your point, we just don't know when it all ends.
STELTER: Or when.
CHATTERLEY: Brian Stelter -- yes -- thank you so much. And great to see you, Brian.
STELTER: You, too. Thanks.
CHATTERLEY: All right, moving on now to Airbnb laying off 25 percent of its workers as the travel industry continues to collapse in the wake of the
virus.
The s-ort term rental company is laying off almost 2,000 people. Clare Sebastian joins me now.
Clare, this company for me cuts to the heart of the challenges with the gig economy. It provided us with a level of freedom. But now, it cuts to the
heart of our fears. Do we want to be going into someone else's home that we don't know? Or getting into a car with someone we don't know? And it's
proving a real challenge for Airbnb.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Absolutely, Julia. This was a pretty heartfelt letter that was sent from the CEO Brian Chesky to
employees yesterday. He said, this is the most harrowing crisis of our lifetime. He said that the problem is, is that they're facing two key
uncertainties. One that they don't know when travel will return.
And secondly, they don't know what it's going to look like when it does.
So given that, the company is now refocusing on its core business trying to support its host community, the people who put their homes and rooms and
various other accommodation up for rental on Airbnb.
They had been sort of diversifying, expanding into a full service travel company with things like transportation, experiences, adventures, even into
hotels, all of that is either being cut back or suspended as they refocus their operations.
They say that revenue this year is going to be about half of what it is -- of what it was last year. So, given that the 25 percent cut is happening
fast for people in the U.S. and Canada, the last day will be this coming Monday, May 11th, and it's happening around the world in all teams, 24
countries in different ways, Julia.
But given that, there is a slight glimmer of hope as people are sort of lock downs are easing particularly in parts of Europe, the CEO, Brian
Chesky told "The Financial Times" they are starting to see a pickup in bookings.
I think there is some sense of pent up demand here. People are desperate to have a getaway throughout all of this as these restrictions ease, but still
a very bleak moment for the company, which was of course, supposed to go public this year.
CHATTERLEY: Yes, I saw that in Denmark and the Netherlands but people tend to stay at home which I think is part of the reality. All of these things
are tied -- cruise ships as well.
I mean, we joke in the past about floating petri dishes, and I think COVID- 19 has been a stark reality. The first to get hit and perhaps the last to recover given the circumstances and we've seen the challenges for ones like
Norwegian just in the last 24 hours. It's an existential crisis.
SEBASTIAN: Yes, for the cruise lines, Julia, it's not just the travel restrictions. It's not just the dramatic slump in demand. They are actually
under a no sale order from the C.D.C. and Norwegian warning in a filing this week that they might not be able to stay in business given what's been
going on.
They say that they're desperately trying to raise cash through private debt offerings. They've raised about $400 million and they've tried -- they're
trying to raise more. They have furloughed about 20 percent of their staff.
CHATTERLEY: Yes, true.
SEBASTIAN: And meanwhile, Carnival Cruises says that they plan to restart sailing in a very phased, very slow manner from August 1st. I think it
remains to be seen how much demand there will be for that.
CHATTERLEY: Yes. And we shall have to wait and see. There's so much uncertainty. Clare Sebastian, thank you so much for that.
[09:15:00]
CHATTERLEY: To the health crisis now, and a new genetic study indicates that COVID-19 spread around the world much earlier than we first thought.
A group of British researchers say the virus is changing, but not necessarily becoming more infectious or worse.
CNN senior medical correspondent, Elizabeth Cohen joins me now. Elizabeth, my read on this was slightly different, I have to say. There were hopes
from doctors that perhaps this had been secretly spreading months and months earlier and perhaps we might have built up greater immunity.
When I look at the details of this, December is early, but it's not that early.
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Julia, many people were hopeful right along with you. You know, please, let's look at the genetic
material and maybe we'll find that this was circulating throughout the fall in Europe and the U.S. and there are many of us who are immune, but that's
not how it turned out.
This really confirms what we already know, which was that this appears to have been circulating before official groups like the U.S. Centers for
Disease Control here in the United States, before they officially knew it, but it wasn't -- it doesn't show that it was circulating like let's say
back in September, it was circulating maybe in the very end of 2019 and early 2020.
And the mutating part is important because I know we say the word mutate, and we immediately think of some horror film. The reality is, is that
viruses mutate. That is what they do. If you were to have coronavirus and give it to me and then we were to look at the genetic material from you and
from me, it would look different, even though you gave it to me.
There are little teeny tiny changes even when it goes from person to person. That is not supposed to be some big scary thing. That is the
reality.
It doesn't mean it's more infectious. It doesn't really mean anything, it just means that there are these little changes.
CHATTERLEY: This is so important, because again, when I read this, and I read one of the quotes from the research analysts in this and they said the
virus is changing, I immediately thought, oh, wow, what does this mean for all our hopes and all the progress that's being made towards finding a
vaccine. Elizabeth, what can you tell us about that?
COHEN: I was speaking with a vaccine expert today and he said, look, a vaccine will still work. These little mutations from person to person to
person don't matter for a vaccine.
If they were huge differences, so much that you would say that we now have two types of coronavirus, yes, that would matter. But that's not what we're
seeing.
We're seeing small differences, and so a vaccine would still work and it's important to know, this is a coronavirus. We know coronaviruses, of course,
this one you know there are differences from coronavirus to coronavirus, but they tend to be stable.
So, they do little changes, not big changes, and a vaccine can deal with little changes.
CHATTERLEY: This is so important. So, don't jump to conclusions when you see that a virus is changing or mutating. It's the degree of mutation that
matters.
COHEN: Right.
CHATTERLEY: Elizabeth Cohen, as always, fantastic to have you with us. Thank you so much.
COHEN: Exactly. Thank you.
CHATTERLEY: To Samsung now and a major announcement from the company, Lee Jae Yong, the heir of the South Korean conglomerate says he will not hand
management control over to his children.
Samsung was founded by Lee's grandfather and run by his father until 2014. They also apologized for Samsung's executives' conduct that led to
convictions for bribery, and union busting.
So, a clean break for the family and the company, it seems.
Now coming in on the break, we will be back after this, but coming up, a global pandemic requires global solutions.
The Atlantic Council's Jamie Metzl tells me why we all need to work together and how we go about it.
Later in the show, in his first interview with FIRST MOVE, the CEO of IBM, new man, Arvind Krishna pledges every business can make about working from
home. That's next. Stay with us.
(COMMERCIAL BREAK)
[09:21:44]
CHATTERLEY: Welcome back to FIRST MOVE live from New York, keeping an eye on the U.S. stock markets this morning and we are on track for a higher
open in what is a very busy day for earnings.
GM shares are moving higher premarket. The company posted a nearly $300 million Q1 profit, a stark contrast if you compare to Ford's $2 billion
loss, although GM burned through $900 million in cash and revenue fell some six percent.
GM says it aims to reopen the U.S. plants on May the 18th. So, a positive reopening story there, key.
Shares of burger chain Wendy's are set to rally, too. It says consumer demand has bounced back this month despite widespread beef shortages.
And meatless burger firm, Beyond Meat reporting a more than 140 percent sales rise. They're up almost 10 percent premarket. That company, of
course, not struggling from meat to supply shortages at all.
With tension between China and the United States over the corona virus outbreak escalating, one thing is clear in the face of a common threat. The
world is for now divided. But a new movement aims to change all of that. An initiative called OneShared.World launches today with a declaration of
interdependence.
The group brings together people from 35 different countries. It's calling on world leaders to work together to find global solutions to what are
global problems. We're all in this together.
The founder is Jamie Metzl, who has worked for the U.S. government, the National Security Council and the United Nations and is an adviser to the
World Health Organization.
He's also a Senior Fellow at the Atlantic Council and joins me now.
Jamie, nothing is more important than recognizing at this moment, particularly in the face of COVID-19 that our behavior impacts everyone
else. And it's not a national story, it's a global story. Is that why now is the time?
JAMIE METZL, FOUNDER AND CHAIR, ONESHARED.WORLD: That's exactly right, Julia. If this pandemic is teaching us anything, with all of the sorrow and
all of the sadness, it is that we're one common humanity.
The virus isn't differentiating between us, and the only way that we're going to overcome this challenge is together, building walls isn't going to
do it. We have to come together to save ourselves.
CHATTERLEY: It's a declaration of interdependence. You want people to sign up and say, look, I agree that we are all in this together, whatever
nationality.
I know, the Chinese languages are also included here as well, which is important. Then what? What's the action part of this?
METZL: Yes, so you're exactly right. We want everyone to go to our site, OneShared.World and sign the pledge of interdependence. Because even here
in the United States, we're suffering terribly.
But if things get better over the summer, and this virus goes to Sub Saharan Africa or South Asia, and grows and mutates, then it's just going
to come back here in the fall and it's going to be much worse for us.
So, our health, our wellbeing resides in others. But this isn't just about lofty declarations. We're immediately pivoting. We're announcing today the
launch of two campaigns. One for global public health, which is co-chaired by the Dean of the Harvard School of Public Health, Michelle Williams.
And one, to address the emergency needs of the most vulnerable populations of the world, particularly in the southern hemisphere as the brunt of this
pandemic shifts from north to south, and that's being co-chaired by Ambassador Rick Barton.
So, we're moving fast. It's about principles. But once we have this common vocabulary, once we accept our interdependence, then we have to apply those
principles to drive real change in the world.
[09:25:41]
CHATTERLEY: And you've drawn really high level attention. I believe, you've also caught the notice of places like the Vatican, for example,
which I think is really interesting, but I read your CV for a reason, because I wonder whether you're suggesting at this stage that ordinary
people have to be part of this movement because institutions that you worked for government, the World Health Organization, National Security
Council -- there's been a an institutional failure here to respond at a global level.
METZL: It's painful to say this, but our governments have collectively failed us. They didn't prevent this totally preventable crisis. And the
reason for this failure is that they've done the job we've hired them to do, we've asked our government leaders to defend our national interests.
And they did a great job in 1945, some really thoughtful leaders creating wonderful institutions like the United Nations that are still however,
funded and largely controlled by States.
And the big problem that we have is that the challenges we face are global, whether it's deadly pandemics, climate change, ecosystem destruction and
everything else, but our responses are national. So, there's a collective action problem and the way that we're looking to fix that is by creating a
global social movement and political force of the common interests of humanity.
Everybody on Earth wants there to be a public health infrastructure that can save us. Everyone on Earth wants us to prevent the collapse of our
ocean ecosystems and everything else, but we can't do it because we're not organized to do it and that's the problem we're trying to fix.
CHATTERLEY: Jamie, you said, 1945. It's a very interesting time. But the United States led the world order up until this point and the tone from the
United States is far more domestic focused.
Many nations around the world, similar for their own reasons, many of them economic at this moment. Who leads this going forward? And if we tie in the
tensions between the two largest nations in the world, the United States and China, how do they come together over this when actually, they're at
diametrically opposed positions at this moment over how this started.
METZL: Yes, it's a really essential question, Julia. If this was 1941, we would just be able to say, oh, we have Franklin Roosevelt, we have Winston
Churchill, and our strategy is just to support them.
But because we don't have those leaders, we have to divide that job among everybody. Everybody has to play a role, and we, a united global citizenry
need to say, this is just not okay.
It's not okay for our government leaders to drive us toward unnecessary conflict. That doesn't mean we have to do and sing Khumbaya, and we can
actually ask some really tough questions, we can ask tough questions, for example, about the origins of this outbreak. We can ask why the United
States was so massively unprepared.
This doesn't mean we have to lie about things or obfuscate, but it means that we have a common interest as humans from all countries and that's why
we've translated our declaration and our pledge in to so many languages, we all have a common interest.
Because I'm here in New York, we're suffering here, just like the people in Wuhan are suffering. We're all around the world suffering from the same
issues, and the same challenges that we need to all come together to solve them.
CHATTERLEY: You have to separate people and you have to separate leadership, I think here and at the heart of this is trust. Jamie, you
created waves by saying, you actually believe that this virus originated in a lab in Wuhan, it was not meant to happen. It was probably an accident,
but it was released.
We need to understand the origins of this to understand how we tackle it and how we prevent it ever happening again, but it's the more important
part of this for now, at least. The cover up, the alleged cover up and the lack of information sharing because none of this works if we don't trust
each other.
METZL: As I said, we don't need to be blind. We actually can't be blind. If a plane crashed, we wouldn't say, oh, we shouldn't ask why the plane
crashed and this plane crashed, that's what this pandemic represents. This is a totally preventable experience.
And there were lots of reasons why it crashed. But the first one was this outbreak, and I certainly think it's most likely this was an accidental
leak from the one the Wuhan Virology Institutes, whether it was or it wasn't, I think everybody agrees, including the Chinese government, that
there was a massive cover up, particularly in the early stages of the outbreak, which were critical.
[09:30:36]
METZL: I think everybody agrees that the United States failed. So, we have to ask those questions. We have to do an honest -- to make an honest
analysis of what are the real problems we face.
And then on that basis, we can come together and solve those problems and more generally, that's the issue. Our world is not organized in the right
way that will allow us to solve our biggest problems.
If we want to do that, we have to think about organizing ourselves in a different way, and that's why so many citizens from every country in the
world are coming together to do that.
CHATTERLEY: Organization, coordination, truth, honesty and asking questions. We'll do that. We'll try to do that on this show. Jamie, great
to have you with us.
Jamie Metzl, Senior Fellow at the Atlantic Council. Good luck with the signups today.
METZL: Thank you. Thank you so much.
CHATTERLEY: I'll tweet that link after. Thank you. The market opens, next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. I'm Julia Chatterley, and U.S. markets are open for trading this Wednesday morning and we're in the green.
We're rising.
As you can see for the third straight session that continues to belie the underlying data that we see for the past month in particular, the jobs
numbers remain grim and new surveys showing U.S. private payrolls falling by more than 20 million people last month.
As I mentioned before, my big fear here is that the unemployment numbers that we're going to see on Friday, simply don't tell the complete story.
[09:35:11]
CHATTERLEY: Let me just give you an example. The Federal Reserve Bank of Chicago says real unemployment in the United States could be as high as 35
percent, much worse than many estimates suggest, because it says the traditional methods of measuring the jobless rate don't include things like
workers on unpaid leave, people unable to search for work during lockdowns. It doesn't give you a full picture of what people are suffering at this
moment.
Meanwhile, in an interview with our Richard Quest, former World Bank President Jim Yong Kim urging countries to invest in the public health
response to this crisis. We can look at the economics, but we have to look at the health, too.
(BEGIN VIDEO CLIP)
JIM YONG KIM, FORMER PRESIDENT, WORLD BANK: We've learned so much from China, from New Zealand, from Australia, from Spain and Italy, we know a
lot about how this virus behaves.
You know, I was born in Korea and I called the Korea C.D.C., the Centers for Disease Control of Korea relatively early on probably seven weeks ago
to get an understanding of what this virus is doing.
And at this point, it's really quite predictable in the sense that it's not changing. It's not going away with warm weather, and unless we get after
the virus, aggressively chase the virus. We're only going to get so far.
I think what we've learned is that even with very strict social distancing measures, you can only get to a flattening of the curve. You can't make
that curve go down.
The big problem, Richard, is we're using bazookas on fiscal and monetary policy. You've heard -- we've talked about this in so many different
settings. Why is it that we have bazookas for fiscal and monetary policy and the public health community is forced to fight with squirt guns? We are
not investing enough and it makes no sense because the economic problem is the result of the public health problem.
We need to invest in the public health response, and there's not a single country other than the Asian countries, Australia, New Zealand, the ones
who've gotten it under control who are investing enough.
This is the most important message. We've got to invest, and we've got to invest right now.
(END VIDEO CLIP)
CHATTERLEY: Such a critical point. Kim also said without massive tests, contact tracing and quarantine measures, the U.S. is not expected to get
out of the lockdown. And yet, states are working their way out of it.
Alicia Levine is the Chief Strategist at BNY Mellon Investment Management. Alicia, great to have you with us, as always. You were listening to that,
I'm sure.
And he was saying, look, the fiscal policy has been great, and I think we're seeing that reflected in financial markets. At the same time, he's
really concerned about the lack of health policy response.
Why are markets so confident, Alicia, when we don't see the follow through on the health side, and that's at the core?
ALICIA LEVINE, CHIEF STRATEGIST, BNY MELLON INVESTMENT MANAGEMENT: Well, that is the great question of the last few weeks. In a sense, investors are
really faced with a dilemma, because the fundamentals really don't support markets moving much higher from here.
And even right now, at these levels, you know, the S&P is really pricing in a V-shaped recovery, a pretty robust recovery, beginning in the second
half.
On the other hand, you do have the bazooka from the Fed. And so the question is, do you fight the Fed? Or do you fight the fundamentals? And I
think there's not a lot of conviction on either side.
And so we're just in a very interesting place. It is the case that the U.S. is opening up, despite not having vanquished the virus that is very true,
and the unspoken message is, is that we all have to live with it. And we have to learn to manage it and manage our actions while we open up the
economy.
CHATTERLEY: It's such a great point. Do you fight the Fed? Or do you fight the fundamentals? Based on where we're lying now, are you saying we're at
that point where, where we've taken as much as we can from the Federal Reserve and the cash that we've got, we're looking at the fundamentals and
going, okay, they're going to be pretty bad.
And actually, we can't tell given what companies aren't telling us about the future, what the future looks like.
LEVINE: Yes, you know, this is a hard one, because fighting the Fed, as we learned from the last financial crisis was not a great idea. And that's
part of the reason that, you know, active managers underperformed the indices because there was no volatility, and there was no way to have an
edge.
And we gave out door prizes for everything, companies that were failing and companies that were really more solid. And so you're faced with the same
question again, and particularly as the Fed goes down the capital structure, so going into high yield, it does suggest that you're supporting
markets everywhere.
And that's a fact which is why the left tail risk really has gone and we do think that if there is a selloff from here, your support levels really are
in the 2,400 and 2,500 range. We just don't see retesting the lows of March.
But it's a great question. I think the unemployment issue that you brought up earlier in this segment, is the real one, because we're not really
counting anybody.
And if you think about the PPP money, that's meant to support businesses and their workers for eight weeks. What happens at the end of eight weeks
when there's no business left, because there's no demand left?
And those are the numbers that we're really going to see, I think, coming into July and August.
CHATTERLEY: And another crucial question, what does recovery even look like at this stage -- when I was just mentioning there up to 35 percent
potentially of people have seen some form of reduced salary, reduced hours, job losses, in its entirety, and if we are continuing to social distance,
if the health risk is still remaining with us, what kind of recovery are we looking at here? To your point, we are priced for perfection and this won't
be a V-shaped recovery.
LEVINE: Yes, I mean, look, the recovery is going to be a rolling recovery, the way our lockdowns were rolling, you know, we have a Federalist system,
each state decides and even the counties are deciding.
So, we had rolling lockdowns, and we're going to have rolling openings. Some states are opening up tattoo parlors and nail salons and others are
simply allowing construction to start again, and lawn care. So, it's very different.
I think the lesson that many firms have learned from this, is they can do okay with less labor, and they can do okay with less real estate.
So, I think those are really areas to watch out for going forward. I think the investment in healthcare is going to be huge going forward and I think
workers' rights, and some notion of a universal basic income and a higher minimum wage are definitely in the cards going forward.
CHATTERLEY: Yes, more power to the workers, perhaps, but less of them working overall.
LEVINE: I think that's right.
CHATTERLEY: Yes.
LEVINE: I think that's right.
CHATTERLEY: I agree with you. Alicia Levine, thank you so much and to stay well, please.
LEVINE: Thanks, Julia. Great to see you.
CHATTERLEY: Likewise. All right, coming up after the break. In his first interview on FIRST MOVE, the CEO of IBM's Arvind Krishna tells me how
COVID-19 will speed up the digital transformation of society and what he is doing to face up to these challenges.
(COMMERCIAL BREAK)
[09:45:47]
CHATTERLEY: IBM's new CEO says building resilience is key for businesses in the face of COVID-19. He also predicts a dramatic acceleration in
digital transformation of both business and of society.
Arvind Krishna spoke at IBM's Think 2020 Conference, which went fully digital in just six weeks, and saw attendance triple on last year to some
90,000 people. That tells you something.
We spoke ahead of his opening keynote address, where he said the hybrid Cloud and artificial intelligence are the two dominant forces that will
thrive.
(BEGIN VIDEOTAPE)
ARVIND KRISHNA, CEO, IBM: The world is only about 20 percent of its way into his journey on Cloud. It would have likely taken five to 10 years to
complete that journey.
I believe that this crisis is going to accelerate that by a number of years.
If I look at AI, we're only four percent of our way into the journey on AI. AI will unlock, we estimate $16 trillion of productivity.
Well, as we unlock that, and you're only four percent in, I think that we are all going to become AI enterprises. And this particular crisis, I
think, will accelerate that, again, by a number of years.
Those both point to incredible growth. The Cloud market, we all estimate is worth 1.2 trillion. That's a mixture of products and services.
So unlocking that potential, unlocking the hundreds of billions that are in there, and then really using all of that to improve how we all deliver
services to our clients, I think is what this crisis is going to accelerate.
CHATTERLEY: This is astonishing, four percent in terms of artificial intelligence, if we fast forward, let's say three years because it's so
tough to predict what the new normal looks like, but in three years' time, can you give us a sense of where you see that percentage?
KRISHNA: So, a quick history lesson. Many, many technologies wants to begin to get embraced, within a decade, they reach a hundred percent. You
know, when we look at smartphones or you look at the Internet. Internet was '95, by 2005, I think it had reached reasonable penetrations, up in the 70
to 80 percent.
So, if I say that in 10 years, we're going to get to a hundred percent. That means the four percent now is going to get well into double digits.
Our guess is in two to three years, somewhere in the 20 to 30 percent range, maybe appropriate for what we can unlock. And then it's going to
keep accelerating from then on in terms of adoption.
(END VIDEOTAPE)
CHATTERLEY: We also talked about what recovery from the situation looks like. We agreed it's incredibly hard to predict, but often said that
recovery when it comes will be patchwork.
(BEGIN VIDEO CLIP)
KRISHNA: So Julia, I'm not an economist, so I'm not going to --
CHATTERLEY: A crystal ball.
KRISHNA: I don't have a crystal ball on this topic. But if we talk and think in terms of people talk about V-shaped and U-shaped, et cetera, one
thing is clear that as we think about the impact on some industries, it is going to be a lot more than in others.
I mean, what's happening in travel, tourism, hospitality is evident before our eyes. Those are going to take a while to recover. That's quite clear.
If I look on the other side, if I look at contactless payments, if I look at banking, I look at healthcare, I look at telecom, those are actually
accelerating slightly as opposed to hurting, so you kind of got two different views of two different industries.
And then as we look upon, then, you try to blend them in, along with the impact on people and return to the workplace, I think that the return to
workplace is definitely going to go in waves.
My hope is that government can help in giving us all some common standards. Otherwise, we may come back to work, but a client we call on has a
different standard that will call cause a lot of mayhem out there because of the different standards.
So, we think they will return to work. We are going to hopefully start soon in a few weeks of some coming back, but we believe it'll go in waves.
(END VIDEOTAPE)
[09:50:10]
CHATTERLEY: In the short term, at least working from home for many of us is the new reality, and IBM has recognized that with an employee work from
home pledge. It's incredibly important.
Arvind told me, there is a single overriding priority here.
(BEGIN VIDEO CLIP)
KRISHNA: I said I was committed to their safety. That comes together with the fact that people -- 95 percent of them to work from home, they actually
managed to get that done literally within a day or two in every country once the regulations and the health authorities began to clamp down.
We have about 8,000 workers who are essentially working at manufacturing sites and data centers. We are committed to their safety whether it's PPE,
whether it's the protocols for how they work, whether it's the protocols for how they isolate, that is essential.
But when I talk about that, there is one that really came up that touches my heart, and I think we put it out -- I put it out, I know on my LinkedIn,
which is our work from home pledge.
Some of our consultants and leaders in that, in that practice, we are discussing with each other, and this was a few weeks into, we're all doing
video calls, we're all from home. And this pledge they made about a work from home pledge, because it touches on your mental state, not just your
physical state.
And we talked about the fact that just because we are at home, we shouldn't be working all the time. You know, it's okay to be video sensitive. There
may be things happening in the background, we don't want to expose to video.
It may be okay to say, look, I need 30 minutes in the middle of the day to cater to a child or a pet or a parent, because we are at home and schooling
is stopped and other things are happening.
It's okay to say, look, I'm not available all of the time. Just because I'm home. I'm not available from four in the morning to midnight.
And so, how do we work around these protocols? We've come to really a new normal of how we work with each other, it is essential and to have not just
sensitivity, but real consideration and empathy for each other as we work together, but remotely.
(END VIDEO CLIP)
CHATTERLEY: Gave me goosebumps. Agree. All right, we're going to take a break here on FIRST MOVE, but coming up, from working home to reading at
home, we will bring you a different kind of story to brighten up your day and it's all on a good cause. Stay with us.
(COMMERCIAL BREAK)
(BEGIN VIDEO CLIP)
MEGHAN MARKLE, DUCHESS OF SUSSEX: Hey look, a duck. That's not a duck, that's a rabbit. Yes, can you turn the page?
(END VIDEO CLIP)
CHATTERLEY: I think some excellent storytelling going on there, of course, that was Meghan the Duchess of Sussex and Baby Archie marking his first
birthday with a book called "Duck Rabbit."
It was a video to raise funds to save the children. They, of course, now live in California after Meghan and Prince Harry stepped down as senior
members of the Royal Family.
[09:55:09]
CHATTERLEY: He's very cute. There were birthday messages from the other side of the Atlantic, too. This photo taken at Archie's christening, last
July was shared by Kensington Palace and Prince Charles shared this picture, too, a touching personal moment from the same day.
Happy birthday, from FIRST MOVE, Archie.
And before we leave you, something to brighten up your day, too. As National Nurses Week get underway, one couple in Chicago showed their
appreciation by donating 2,500 meals to nurses at their city hospital.
It just shows a little extra love and appreciation can go a really long way.
(BEGIN VIDEO CLIP)
LIZ MILLER, UNIVERSITY OF ILLINOIS HOSPITAL: They provided over 2,500 meals for breakfast, lunch and dinner. And so the nurses really appreciate
that especially during these times.
KELLY BANKS, UNIVERSITY OF ILLINOIS HOSPITAL: And we're very happy to be able to show the nurses at UI Health how much we appreciate them during
really all the times of their work, but especially during this crisis, especially during National Nurses Week.
(END VIDEO CLIP)
CHATTERLEY: To our healthcare heroes all around the world, as always, we thank you.
Thank you for watching the show. I'm Julia Chatterley. Stay safe, and I'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
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