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First Move with Julia Chatterley
Almost One In Four U.S. Workers Now Asking For Government Help; America's Ousted Vaccine Chief With A Stark Warning; A Non-Meaty Opportunity, Speaking With The CFO Of Impossible Food. Aired 9-10a ET
Aired May 14, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:22]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
Jobless claims climb. Almost one in four U.S. workers now asking for government help.
Darkest winter. America's ousted vaccine chief with a stark warning.
And a non-meaty opportunity. We speak to the CFO of Impossible Food.
It's Thursday. Let's make a move.
Welcome to all our FIRST MOVErs around the globe. Great to have you with us on a day when our reopening reality begins to take shape. Let me walk you
through what we're seeing. Germany and France are slowly allowing schools to reopen.
Japan is lifting emergency restrictions in some parts of the nation, and here in the United States, some of the hardest hit states like New York and
New Jersey are set to lift restrictions on businesses in the coming days.
It's clearly a balance between speed and safety as the global economy remains very fragile.
The United States has just announced that an additional three million Americans filed for jobless benefits this past week; that now takes us to
more than 36 million people filing since mid-March.
Fed Chair Jay Powell yesterday reminded us why it is so important not just to get lost in the sheer scale of these numbers. He said that now, they
believe 40 percent of people in households making less than $40,000.00 a year lost a job in March.
The pain out there he said, quote, "is hard to capture in words." Families earning the least are bearing the brunt in this crisis, but clearly, the
pain is widespread.
It was a warning about the risks. It was also a call to action. Powell saying that Congress will likely need to do more to help. We agree.
Investors also heard the warnings. Stocks fell some two percent in yesterday's session. As you can see, futures are pointing lower today, too.
The mood permeated the Asia session, too, as well as trading in Europe, where the Italian government has approved a $55 billion stimulus package
with additional help for small businesses, too.
I'll quote Jay Powell, "This is the time for more fiscal power, more spending."
Let's get to the drivers. Christine Romans joins me now. Christine, I don't think there was a timing mismatch there between what Jay Powell said
yesterday with the warning and we were getting it as we were talking this time yesterday about the sheer extent of the economic damage being done
here and the fact that the gridlock in congress is not good enough at this moment.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: This is a really big hole. I mean, this is an unimaginable hole here in the labor
market and the economy. You'll see the economy just crater when we get these next GDP numbers.
And so this fiscal stimulus is supposed to be this bridge over that hole from before the pandemic, through the pandemic, to whatever the recovery is
going to look like, and what you are hearing from Jay Powell is that what Congress does now is what the recovery will look like on the other side.
I'm also hearing a lot of economists, Bank of America economists for example are saying, don't think of this as before the pandemic and the
after.
There is going to be multiple stages here, right? We're now in the very beginning of the transition. The recovery is still someplace out in the
future.
So, the Fed support we know has been virtually unlimited. And now, you hear from Jay Powell essentially begging, I think Congress to do something, not
to play politics here, but to get money deployed and more money into the economy.
CHATTERLEY: And the challenge here is trying to understand what the recovery looks like. It is not a recovery that happens after some kind of
natural disaster nor a financial crisis because the scale has been so big and it's been so global, which I think is what all these analysts are
struggling to predict at this stage.
Just on a micro level, though, before Congress even acts -- acts again, there are tweaks they can make to programs already in place to try and
support jobs, and you and I talk about this often.
Give these small businesses more flexibility on how they can use the money, how long they can use the money for, too, and, surely, that will help some
of these jobs gains -- these jobs coming back also.
ROMANS: Yes. I completely agree, and what I hear most about that Paycheck Protection Program is you have small businesses who at the outset intended
to use all of that money to pay their workers, but their workers are getting generous unemployment benefits at the moment and they need to spend
that money to transform the workplace to the post pandemic reality.
Maybe putting in different kinds of counters, maybe putting in different kinds of spacing, different kinds of bathrooms.
And so, they want some flexibility for the use of the money and also the payment deadlines, the timing deadlines are kind of arbitrary given that
this is not something that is going to be done in July and then be over. This is something we'll be adapting to.
[09:05:29]
ROMANS: So, they are worried a little bit about that. And you know, and I also was just looking at a "New York Times" study, survey rather, that
found that half of the people laid off say they haven't received any jobless benefits yet.
So, I mean, it is one thing you've heard the Republicans say, let's see how things are working before we spend more money. It is an acknowledgment that
all of the money hasn't gotten into the right places yet.
CHATTERLEY: Yes, and even if it comes, it doesn't help in the interim with the financial damage, the pain, the uncertainty, the challenges and the
mental state that that creates for the people that are struggling to put food on the table, too.
The mismatch in timing is perhaps more important than it has ever been.
Christine, the investor reaction yesterday, today, you and I have said all the way along that we're confused by the optimism that we see for investors
and the picture is not clear in the aggregate, banks are suffering, technology firms are doing well.
But I don't understand the level of confidence here with so much unknown.
ROMANS: I don't either, and you and I on this program and in the hallways, we have talked about what is going on in the stock market when we know it
is the most expensive stock market in modern times and then when the Fed Chief comes out and says, hey, you know, this could be really hard, and the
recovery could be hard and there are a lot of risks to the recovery and that seems to have caught stock market investors by surprise.
Well, there is no surprise there that this is hard. We are in a big hole here. There's a lot of money, record amounts of money that's gone out the
door here. Just completely uncertain in terms of the playbook going forward.
I mean, this rally -- and at one point, I was looking at the NASDAQ 100 that was, I think higher on the year, so, you know, there's just a lot of
risk in the outlook, I think and that's what was a reminder on Wall Street yesterday about that.
CHATTERLEY: Yes, a reminder of the challenges and a call to action to Congress. Christine Romans, thank you so much for that.
Now, we're less than one hour away from the testimony from the ousted head of the Federal agency in charge of vaccine research. Dr. Rick Bright is
expected to warn that the U.S. is facing its darkest winter in modern history if the Federal response to coronavirus is not accelerated
immediately.
Joe Johns joins us now from the White House. It is expected to be, I think a very uncomfortable day perhaps for the White House when we hear this
testimony but, John, there's also been complaints from the Republican side that we should have investigated the claims that the vaccine chief is
making before we make all of these issues and the grievances public.
What do we make of what we hear today and some of the criticism, too?
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Well, we do know first of all that the Office of the Special Counsel looked into some of these
issues, Julia, and the Office of the Special Counsel found that there is some evidence of retaliation in the background and Dr. Rick Bright, the
person who is involved in this controversy, ought to be given his job back.
He was let go from that office, demoted essentially because he says he wouldn't sign on to things like hydroxychloroquine, which as you know the
President again and again really put the hard sell on for a while as a treatment for coronavirus.
So in the background, of course, in the big picture if you will of all of this is whether the Trump administration pays attention to science or
disregards science if the President doesn't like the science, for example.
And that's what we're hoping to get to. Now, we also know that Mr. Bright has -- Dr. Bright I should say -- has put out a statement, and that
statement has a lot of warnings in it.
I'll just read you one of them. He says, "Our window of opportunity is closing," if we fail to develop what he calls a national response based on
science, he fears this pandemic will get far worse, prolonged, more illnesses, more fatalities, and, he says, without clear planning and
implementation of these steps that he and other experts have outlined, 2020 will be, quote, "the darkest winter in modern history."
So, that's quite a warning there, if you will, from Dr. Bright. Now, he certainly is going to get some pushback on this committee, because there
are people who say the United States Congress, the House, Energy and Commerce Committee, ought not to be getting into all of this at least at
this stage.
Among them the President of the United States, who tweeted just a little while ago, Julia, "I never met the so-called whistleblower, Rick Bright, I
never met him or heard of him, but to me he is a disgruntled employee not liked or respected by people I spoke to who with his attitude should no
longer be working for our government."
That issue of him being a disgruntled employee is expected to come up on Capitol Hill and one of my colleagues has reported that if that does come
up, Rick Bright is expected to talk about some of the reviews he has had in which he was seen as, you know, an exemplary employee -- Julia.
[09:10:36]
CHATTERLEY: You raise some very important questions though, there are questions about the steps that were taken in the run-in into this virus
when we had information. We need to know because it hopefully will change our behavior going forward as we reopen states, she says with a degree of
optimism.
Joe, the President is not afraid of tackling his health experts when he disagrees. We saw that again last night where the President disagreed with
Dr. Anthony Fauci over the timing and perhaps the difficulties of reopening schools.
Listen to what the president had to say about this, this morning.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Anthony is a good person, a very good person. I've disagreed with him. I think that we have to open our
schools. Young people are very little affected by this. We have to get the schools open.
We have to get our country open. We have to open our country. Now, we want to do it safely but we also want to do it as quickly as possible. We can't
keep going on like this.
(END VIDEO CLIP)
CHATTERLEY: Joe, what do we think that means for the American public? There is an urgency. People want to see their children back at school, but
there is also the fear of illness during a pandemic.
This conflict between the senior most pandemic official and the President, how do you see this? How do you view this?
JOHNS: When you look at the President, it is very clear that he is on one course. He really doesn't have any other alternative than to try to get the
economy started. You know, that is the hand he has drawn. That is the way he is trying to go forward.
So, when Dr. Fauci says things that don't play into his narrative, it's not surprising that we get pushback from the President on that.
It's also clear even from an interview on Fox Business this morning that the President is trying to balance being complimentary to Dr. Fauci with
also disagreeing with him publicly and that is a reflection, also, of some of the President's frustration with the fact that Dr. Fauci's approval
polling in the United States is much, much higher than the President's.
Especially on issues of science, the public clearly seems to be listening to Dr. Fauci and his well-reasoned, if you will, explanations and
information and the President is aware of that.
We also know the President does not like the idea of people who work in the government polling better or being more popular than him, so that's
probably a play, too -- Julia.
CHATTERLEY: Yes, the problem is you can't separate the economics from the science here and it will be an ongoing battle.
Joe Johns, great to have you with us. Thank you so much, and we await that testimony from Dr. Bright later on this hour.
All right. Let's move to China now. New efforts under way to test everyone in the City of Wuhan, the original epicenter of the coronavirus outbreak.
Earlier this week a handful of new, locally transmitted COVID-19 cases were reported in the city.
Ivan Watson is live in Hong Kong for us. Ivan, what do we know about whether, indeed, everyone is going to be tested, whether they're
prioritizing the elderly? Do we have more information about how this is going to work?
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, at the start of the week, city authorities announced that this was going to be a, quote,
"ten-day battle" to test, presumably, the entire population, 11 million residents of Wuhan in ten days.
Do the math. You're talking about a million plus people a day to be tested. That is a phenomenal logistical challenge.
The testing began on Wednesday. We don't know if they'll be able to pull that off. But recall that this is all in response to less than two dozen
cases of coronavirus that were discovered last weekend, and the fact that the city authorities have announced this just -- it underscores the
seriousness with which the Chinese government at different levels is responding to even relatively small outbreaks.
The same goes for in the northeast of the country. There are two provinces there that have detected about three cases in the last 24 hours. There is
Jilin Province and Liaoning Province, and you have the national health authorities, they are calling for stepped up testing and screenings.
They simply do not want another wave of outbreaks spinning out of control, resulting in the tens of thousands of confirmed cases and thousands of
deaths that we saw in China earlier this winter -- Julia.
[09:15:18]
CHATTERLEY: Yes, it is going to be fascinating to watch. And again, as we mention every time we speak to you, it is a lesson, I think for other
nations who are further behind in this process.
Ivan, I do want to ask you about a separate, but clearly connected issue. The F.B.I. yesterday suggesting that China-connected cyber actors were
trying to access COVID-19 research in the United States. How are the Chinese responding to those allegations?
WATSON: They don't like it. The Chinese Foreign Ministry called this a silly blame game. Let's take a listen to what the spokesperson had to say
earlier today.
ZHAO LIJIAN, CHINESE FOREIGN MINISTRY (through translator): With the current situation of the novel coronavirus epidemic spreading globally, any
online attacks that impede the effort to fight against the pandemic should be condemned by the people of the entire world.
What I want to stress is that slander and accusations cannot eliminate the virus or stop the pandemic.
(END VIDEO CLIP)
WATSON: Now, this isn't the first time that the U.S. has accused China of being behind hacking of U.S. organizations, but what we heard on Wednesday
was a statement from the Department of Homeland Security and the F.B.I., but did not provide any evidence, but said they think that China will be
behind hacking of organizations that are researching COVID-19.
We do know there are separate, private entities like FireEye which is a cybersecurity group which has claimed that there's just been a surge of
what appears to be hacking of hospitals and research institutions and pharmaceutical companies that appear to be coming from China.
Now, in the past, when these kinds of accusations have come, Beijing has insisted that it, too, is a victim of this kind of hacking.
I think it's very safe to say that any treatment, any vaccine that could come in the coming months or years for this terrible and deadly disease
will be incredibly valuable, not just economically, but when it comes to National Security as well.
So it is probably not a surprise that governments are on the lookout for this type of activity into something that could be very priceless
intellectual property.
CHATTERLEY: Absolutely. And it is the opposite of working together, which perhaps we should all be trying to do during a pandemic -- Scold War as we
called it before, Cyber War now added to the list.
Ivan Watson, thank you so much for that.
Still to come on the show, venture capital in the era of COVID-19, where does that cash that fueled the startup boom go during a pandemic?
And with meat supplies disrupted by the virus, can plant-based alternatives seize the moment?
We speak to the makers of the Impossible plant-based burger.
(COMMERCIAL BREAK)
[09:21:09]
CHATTERLEY: Welcome back to FIRST MOVE live from New York where we may remain on track for a weak open for U.S. stocks this morning. A
continuation, I think of the sharp losses we saw in the last two trading sessions.
We also had yet another dire reading on U.S. jobs. An additional three million people filing for U.S. unemployment benefits in the past week.
That, now, equates to some 36.5 million people filing for government help since mid-March.
Let's talk this through and hopes for a recovery. Jason Furman is Professor of the Practice of Economic Policy at Harvard University. He has also has
served as the Chairman of the Council of Economic Advisers under President Obama.
Jason, fantastic to have you on the show once again. You know, I compare those horrific numbers to the numbers that we got on Friday where over 18
million people were saying, look, I've just been temporarily laid off.
Are they right to have that confidence? How confident are you that these are just temporary lay-offs?
JASON FURMAN, PROFESSOR OF PRACTICE OF ECONOMIC POLICY, HARVARD KENNEDY SCHOOL OF GOVERNMENT: The answer, Julia, is a lot of them are temporary
layoffs but when you're talking about over 35 million people, a lot of them are not.
If you assume everyone who reported being on temporary lay-off was immediately brought back to their jobs, incredibly optimistic assumption;
assume we didn't lose any more jobs, the unemployment rate would still be nine percent, and that's even with the temporary laid off people back at
work.
There are a lot of underlying, long-term problems we're seeing in these data.
CHATTERLEY: That is where consensus now has the unemployment rate by the end of 2020. Is that too optimistic, Jason, based on what you're saying
there?
FURMAN: I think that's too optimistic. I think in part it will obviously depend on the course of the virus, it will depend on the impact the virus
has on the economy.
But I would expect at the end of this year, a double-digit unemployment rate and by the end of 2021, I think an unemployment rate above nine
percent is more likely than not, unfortunately.
CHATTERLEY: How can we speed this up, Jason? Because we were just discussing earlier on in the show, it is tough to find a model for this. It
is a recovery after a natural catastrophe that continues. It is a financial crisis to our recovery of sorts, too. There isn't a playbook. How do we
make this recovery quicker?
FURMAN: Yes. Part of the problem is demand and liquidity, and the government is doing a pretty good job solving that by expanding
unemployment insurance, by sending checks, by standing up lending programs.
I think, they need to do more. Aid to state and local governments. And, you know, add more guarantees into those lending programs, so that they really
are more effective.
The problem is, this is also a supply shock and a liquidity -- a solvency shock. And those are things that we have many fewer tools for. We're going
to potentially see a lot of reallocation in the economy, people that need to get jobs in different sectors. That is a process that always takes a
long time.
So, I would use the tools we have. We've used 75 percent of them. We should use a hundred percent of them and see what else we can invent and stay with
it as long as we need to.
CHATTERLEY: How much more spending, Jason? Does it even matter at this stage? Do we just have to spend the money as Jay Powell inferred yesterday?
FURMAN: I think we have to do a lot more on the fiscal side, I think several trillion dollars more will be warranted.
My own preference would be that a lot of the policies include triggers and so that would be as long as the unemployment rate is above, let's say six
percent, such and such policy, unemployment insurance continues.
And when the unemployment rate falls below the target, then the assistance triggers down or triggers off.
So, I think to make it contingent, then you are spending what you need to no more no less.
[09:25:12]
CHATTERLEY: That is such a great point, and that will perhaps convince some of the sort of deficit hawks if there remain any on the Republican
side, that we can allocate the money. It may never be used if it is not necessary.
We often talk in economic terms about just building a bridge to a vaccine. Is that the cure-all in your mind, given the depth of the economic damage
that's being done during this period?
FURMAN: Yes. I worry that the economic problems will last longer than the vaccine. If somebody is returning to their same, original job, that is a
fast and easy process.
But employers aren't going to necessarily want to hire everyone back. They are going to figure out they can make do with fewer employees. They're
going to accelerate whatever downsizing they were doing.
And that is going to leave a lot of people needing to find new jobs in new places and that is a process that historically just does not happen
quickly.
So I think the economic problems I would expect to last longer than the virus itself.
CHATTERLEY: I just want to quickly ask you again for, I know it is difficult, but where you think a reasonable unemployment rate is by year
end. And I know it is crystal ball time and we simply don't have one, but what is your best estimate at this stage given what we've seen in the
latest data today?
FURMAN: Twelve percent.
CHATTERLEY: Really.
FURMAN: With huge, huge error band around that. No crystal ball. You made me pick a number. Twelve percent.
CHATTERLEY: Yes, challenges. Jason, great to have you on as always and to get your wisdom as painful as it is to hear.
Professor Jason Furhman there at the Harvard Kennedy School of Government. Thank you for that.
All right, we are counting down to the market open, and that's next.
[09:30:08]
CHATTERLEY: Welcome back to FIRST MOVE. You're looking at the opening bell there at the New York Stock Exchange, we are open for trade this Thursday
and the major averages are seeing a bit of pressure here as you can see for the third straight session. That's the picture.
Another weak read of course on U.S. jobless claims, too, as we've been discussing, three million more people filing for unemployment benefits in
the past week.
A greater number in fact than expected. It follows the downbeat assessment on the U.S. economy from Fed Chair Jay Powell yesterday and more words of
warning from investment heavyweights.
Hedge fund manager, David Tepper says stocks haven't been this overvalued since the dot com bubble in the late 1990s. It echoes bearish comments from
Stanley Druckenmiller earlier in the week.
As we've noted on the past week, just a handful of big tech names have been some of the key drivers of the gains we've seen recently on Wall Street.
The median stock in the S&P 500, down some 25 percent still, from recent highs. The question is, how does one find value and investment
opportunities at this moment? I'll tell you what, you ask an expert. That's how.
Alexis Ohanian is co-founder and managing partner of Initialized Capital and also a co-founder of Reddit.
Alexis, great to have you on the show. Thank you so much for joining us. You've advised hundreds of innovators of startups. You've also invested in
them. Do you recalibrate your venture capital investment brain in this kind of situation? What are your views?
ALEXIS OHANIAN, CO-FOUNDER AND MANAGING PARTNER OF INITIALIZED CAPITAL: Yes. Well, at Initialized, we are the first investors in a startup so we
need to believe that a founder's vision when that is in many cases literally all they have, and so in a recession we are absolutely looking
for founders who are solving what we call real problems.
They are solving problems where there is clear demand, a clear path to profit, and some real needs. Because what COVID-19 and now, I think this
recession will trigger is expediting something we've talked about for really the last decade of software eating the world.
Businesses are going to absolutely need to adapt to new technology because that is where they're going to find margin, that's where they are going to
find scalability and the companies that can do it will and those who can't will need to either work with and pay for software from those who can or
risk going under.
CHATTERLEY: There is so much in there. You've just called it a recession. This is a recession unlike any other. Are you looking for recession proof
companies? Is that part of the key to this?
OHANIAN: Yes, absolutely. I mean, we have been evaluating companies for really the last year or two with an expectation for some market correction
happening.
And with an early stage company, thankfully, there is not a ton of burn because it is a small team. They all fit in one room and so their costs are
low.
And it is actually, ironically, it ends up being a great time to start a company.
We backed a company called NAZA which is a glossier for black and brown women and beauty is actually quite recession proof. In fact, it tends to do
better because it is a segment people can make an investment in, not spend a ton of money, but feel much better as a result and it tends to do quite
well.
And we did have that lens in mind when we made the investment and as we're looking at new companies, we're very much thinking about how they can
thrive even in an economy that doesn't look great.
CHATTERLEY: And they basically went mobile, so that they could send packs out to people to take care of themselves if you can't come into a store and
be taken care of. It is quick thinking.
OHANIAN: Smart entrepreneurs really are able to -- the great entrepreneurs are able to adapt in situations like this, and Natania, the CEO, her salon
was open for about 20 days. The flagship launch location in San Francisco and then of course shelter in place happened and she very quickly was able
to adapt her business into a hair kit business that would ship out the hair kits and then her stylists would actually using Zoom provide tutorials for
their customers.
They sold out of the kits within the first 24 hours. Now, she has built a business line that she wasn't expecting to go into so quickly, but
necessity breeds that invention.
CHATTERLEY: I mean, that's the hope. There are what -- 30 million small businesses in the United States there, half of employment. You also
invested in a company called Betterfin, a FinTech company because you recognized actually, getting money out to small businesses, lending to
small businesses is an incredible challenge and oh, boy did we get the biggest example we could have ever seen in the United States with the PPP,
the Paycheck Protection Program.
It has been challenged. Talk to me about Betterfin and what the fixes are for what is currently under way in the United States and clearly
challenged.
OHANIAN: Certainly. Well, the Betterfin founders had a long history of working with the SBA to make it easier for them using software to be able
to get these loans out to small businesses.
And then, of course you have COVID-19, you have PPP, and you have a lot of small business owners who all of a sudden are now rushing to find out how
they can get access to the dollars. It is a very cumbersome process.
I mean, it was rolled out quickly, and so Betterfin's Turbo Tax-like software has helped literally thousands of business owners already be able
to apply for this much easier just in the same way that filing your taxes before Turbo Tax was a pretty laborious thing.
[09:35:39]
OHANIAN: Software makes a lot of these processes much better, cheaper, and faster. And I think this is in many ways, I hope, a bellwether of what is
to come where we know small businesses are at the core of our economy both nationally and locally because those dollars when they get spent on the
small business stay in the local economy.
But they are often not one of the most early adopters of software, and I think we're going to see a slew of new companies. I'm looking for those
pitches that are going to help build the infrastructure to help rebuild and grow these small businesses.
And I think we're seeing traction here. There is another company just launched called Withco that was building this specifically for Charlotte,
North Carolina so residents could get access to sort of software infrastructure that would give them best in class software, so it is not
just the Fortune 500 who get it, but also the mom and pops.
And I think this trend will absolutely move and it has to, frankly.
CHATTERLEY: Yes, it does. I mean, this for me this is the most frustrating thing. We see so much innovation and advancement in digitization and yet it
leaves behind the backbone of the economy and then we get to a point like this in a pandemic where the lifeblood of the economy is starved in some
way and the technology exists.
Alexis, I want to talk to you about something else because you have strong opinions, I know, on privacy and one of the ways that we tackle this
pandemic is tracing going forward.
Apple and Google, they cover what -- three billion people with iOS and Android phones. They could be incredibly effective. Do we trust them
enough?
One, as companies and in, general giving up our data to be traced to try and tackle this pandemic.
OHANIAN: Well, you know, we've seen it work in other countries where the government has taken a more hands on approach to doing this and, in fact,
also getting -- put a bunch of people to work as contract tracers which solves a couple of problems, right, looking at our unemployment numbers.
You know, I think for me, personally, that would be an ideal situation. I wish we were in a system right now where there was that high level of trust
and that government could put people to work to do this kind of contact tracing.
At the same time, I know culturally here in the United States, we have this desire to see innovation and technology and business, the private sector,
step up to solve the problems. The challenges are, I mean, Apple actually has a pretty strikingly good record on privacy. Google, TBD on that one.
And I think customers over the years have gotten more and more skeptical.
That said, at the end of the day, we know contact tracing is a very important way to reopen economies safely and that is absolutely what we
need to do.
And if the Federal government -- if the government is not going to do this, then literally our other option is the private sector.
And so, we as consumers, as citizens, need to decide whether it is with our votes or calling our representatives if we don't agree with this and
otherwise accept that we do need some solution and if the government won't fill it, the private sector is capable.
You know, the good news is both Google and Apple have stepped up in making very explicit claims, how they will use this data and how they will protect
this data after we're done. It is going to be very important to then hold them accountable to that as we move forward.
But you know, certainly in an ideal world, yes, this technology can save a lot of time, a lot of lives. It is just a question of the sort of consumer
protections.
I think we're changing that. I think folks are realizing how important this is going to be and that Google and Apple can really make a difference to
help.
CHATTERLEY: So, very quickly, do we overcome our privacy fears and put health interests first? Yes or no?
OHANIAN: Yes, this is -- I think, at the end of the day, there is nothing more meaningful to us than the health and wellbeing and the health and
wellbeing of our loved ones and I think this is ultimately trumps those reservations and, yes, we do decide, but should still absolutely stay
vigilant and then hopefully, we'll be really pleased with how it all turns out.
CHATTERLEY: Alexis, fantastic to chat with you. Please come back soon and chat again because there's always not enough time to discuss all the things
that we want to.
Great to have you with us. Alexis Ohanian there. Thank you so much and stay safe.
All right. We are going to take a break here on FIRST MOVE, but coming up, as meat processing plants close to contain the spread of COVID-19,
opportunity knocks for plant-based alternatives. The CFO of Impossible Meat is next. Stay with us.
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[09:43:13]
CHATTERLEY: Welcome back to FIRST MOVE. The U.S. meat producer, Tyson Foods will cut prices on some products this week with short term
reductions, beef items by up to 30 percent. It comes as the prices of essential groceries soar in American supermarkets.
Dianne Gallagher joins us now on this story. Dianne, and it comes of course as prices at farms collapse, so there is so much going on here. What is
Tyson saying about the decision to cut prices at this moment?
DIANNE GALLAGHER, CNN CORRESPONDENT: And so, Julia, I think we need to be very clear about the fact that this is a temporary price cut that Tyson is
talking about here.
It is anywhere between 10, 15, 20, up to 30 percent off certain cuts of meat for its grocery store, restaurants, and other customers.
These are the popular types of meat that are being sold right now. These ground beef varieties, ground roast and chuck. These are the meats that
we're seeing really explode in price right now because of the increase in demand.
So Tyson said that it is doing this, A, because of the exploding grocery store prices right now. Yesterday, we reported out that according to the
Department of Labor, grocery prices spiked in the month of April by an average of 2.6 percent. That is the largest spike in nearly 50 years,
Julia.
Here's the thing though. Meat went up even more, in some cases, up to five percent in just that month and economists say that because of these food
supply chain issues, that is likely going to get even higher.
So, this does provide some temporary relief what Tyson is doing right now. They also say that if they continue to move more beef out, that that can
help some of these cattle ranchers continue to get through the processing.
[09:45:03]
GALLAGHER: If you remember, last month, especially many of these plants shut down because of the conditions that ended up with thousands of meat
workers who were sickened by COVID-19. At least 30 of them have died across the country here and more than 10,000 have tested positive, Julia. So they
were closing those down.
The President signed this Defense Production Act, and Executive Order underneath that that aims to keep the plants open.
The plants have still been closing down, but they've been opening a lot quicker. Yesterday, 100 percent of the pork processing plants in the United
States remained open.
And so we are seeing a change in that stoppage, that bottleneck in the food supply chain.
Tyson seems to be trying to move beef a bit quicker because the prices had gotten so high at the wholesale level that many grocery stores were now
having to pass that on. Customers said they couldn't afford it.
CHATTERLEY: Yes. That Defense Production Act perhaps should have been used earlier to protect farmers, ensure the supply chain and get food into
stores and groceries. But that is whole another conversation. Dianne, thank you so much. We've got it. Temporary price cuts. Dianne Gallagher there.
Thank you so much for that.
Well, a concern about meat supplies in the United States is opening a window of opportunity for some plant-based alternatives.
Market research group Nielsen says shares of fresh meat alternatives were up by a stunning 250 percent in late March in dollar terms.
David Lee is Chief Financial Officer at Impossible Foods, the private food tech startup, and he joins us now.
David, great to have you with us. I know you're coming off the back of two record months as well for Impossible Foods. You said the last time we
spoke, the opportunity here is in meat eaters, encouraging them to buy your products and not the alternative. Is this a pivotal moment, do you think,
for the brand?
DAVID LEE, CHIEF FINANCIAL OFFICER, IMPOSSIBLE FOODS: I think it is a pivotal moment for Impossible Foods because 95 percent of our consumers
that keep on repeating the purchase are self-avowed meat eaters.
But though we share the same customers as the traditional meat industry, the similarities end there. We have far fewer of those compromises that
meat eaters have had to endure and so we think it is a better choice for meat eaters.
CHATTERLEY: You also have production facilities, though, and we've seen that's created huge challenges at the meat processing plants. Talk to me
about steps that you've taken to protect workers in the same way.
LEE: Well, Impossible Foods operates very differently than almost any company that I have been associated with and certainly different than the
meat industry.
The meat industry has to grow an animal, a cow or a pig, has to transport it. It has to slaughter it, process it, package it and ship it.
And just as the animal goes to plants to turn itself over a period of years into meat, we skip the animal entirely. So we don't have many of those
complications that you're seeing the current industry endure.
But what we do have is a product that meat eaters can now take home from 2,700 grocery stores nationwide and enjoy it the way they would enjoy meat
from an animal.
CHATTERLEY: Soy protein is the main ingredient for the foods that you create. Where do you source that soy protein from? Because I do see a lot
of that comes into the United States from China. Is China in your supply chain, and if so, is that a possible challenge going forward from a
consumer perspective, I think?
LEE: You know, we source all of our plant-based ingredients with the highest level of quality in mind and in particular, the soy protein we put
in our product is grown here in the United States.
It is important for us to understand our supply chain and frankly, to pass on the ongoing savings in our supply chain to customers.
I don't know if you know this, but way back in February, we reduced our prices 15 percent and we will continue to reduce our prices as our costs go
down.
We like to share our cost savings with customers because our mission requires us to be plentiful and available everywhere.
CHATTERLEY: I want to talk about the price cut, but just to be clear, at no point in your supply chain does China appear?
LEE: Our supply chain is primarily from plants that are grown here in the United States and wherever we grow our materials, we ensure that they are
the highest quality.
CHATTERLEY: So no China? I'll take that as a yes. Okay. Cool. I just want to make sure because I do think at this moment, it is perhaps very
important to be clear where the supply chain is.
Talk to me about balancing the lack of demand in restaurants versus as you said, a 50 times increase, I believe in 2020 in your retail footprint.
Is that net beneficial? You've managed to offset what you lost in restaurants with what you are seeing in retail?
[09:50:07]
LEE: Well, you know, COVID has created challenges for many of our food service customers. We have seen them innovate, we have tried to innovate
with them and are supporting them whether it is allowing them to ship Impossible Burger raw direct to home customers or it is increasing the
ability for them to participate with us.
In many of the giveback programs, we've donated a hundred thousand pounds of Impossible Burger to frontline workers who are doing an eight-hour cook-
a-thon to serve the desperate need we see in the United States from those who are going hungry with Share Our Strength and No Kid Hungry.
But we are also focused on our mission, and we know we were just scratching the surface with our successful launch in the fall and now, we are growing
our grocery business 50X as you know.
But it feels like, almost every week we have a new grocer adding products to the shelf.
CHATTERLEY: Just talk to me about the 15 percent price cut as well. Was this about making this product more accessible at what you have agreed is a
pivotal moment?
Because coming into this, there was a suggestion that the alternatives to meat are a little bit more expensive and at a time of economic and
financial difficulty that could make a difference. Is this a plan to help and will it be maintained? Will this price cut be maintained?
LEE: Well, our plan to be more accessible and affordable has persisted throughout the eight to nine years that we've been around as a company.
You know, we believe that our products made directly from plants, bypassing the animal and all of the inefficiency and problems with the animal, allows
us to have at scale at least the same cost profile if not better than the incumbent industry.
We know it has to be shared in a great value with folks who are struggling today who want to buy products that are high quality at grocery stores with
fewer compromises.
So we have stated repeatedly and we will say it again today that we will share our future cost savings with our customers. It is a commitment to
expand the business of Impossible Foods globally.
CHATTERLEY: Yes, the economies of scale, certainly helpful at this moment in time. David, fantastic to chat with you, and thank you for answering my
questions.
David Lee, the CFO of Impossible Foods.
LEE: Thank you.
CHATTERLEY: All right. Stay safe, sir. Still ahead, President Trump's about face on the U.S. dollar and another market check. All of that ahead
and more. Stay with us.
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CHATTERLEY: Welcome back to FIRST MOVE with a final look at the stock market action this morning and the major averages are currently near their
worst levels of the session.
As you can see, down some 1.7 percent across the board. Stocks falling as we see data showing a further three million more people filing for U.S.
jobless benefits last week, even as some states begin easing stay-at-home restrictions.
[09:55:10]
CHATTERLEY: The biggest jump in claims coming from places like Connecticut and California. It of course, follows Jay Powell's comments yesterday about
the difficulty, the downside risks of reopening here which I think is what is driving stocks this morning once again.
In the meantime, the U.S. dollar bucking that trend on the rise, but perhaps a bit of flight to safety here kicking in.
President Trump, a longtime advocate for a weaker dollar said today a stronger dollar is now in the best interests of the United States. The
dollar trading close to three-year highs.
That certainly doesn't fit with the call on negative interest rates, but that is the beauty of having the reserve currency of the world.
A reminder, we're counting down to testimony on Capitol Hill from the ousted head of the department overseeing vaccine research. Dr. Rick Bright,
expected to testify about missed signals and opportunities in the run into the pandemic in the United States in January and February, and a dire
warning that we risk the darkest winter in modern history.
That testimony coming up now. Stay safe. We'll see you tomorrow.
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