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First Move with Julia Chatterley
Global Investors Spooked By Rising COVID Cases And Second Wave Fears; Beijing Braces, Parts Of The City In Lockdown As Authorities Confirm A New COVID Cluster; Regeneron's Research On Their Antibody Cocktail Treatment For COVID-19. Aired 9-10a ET
Aired June 15, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:19]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
Stocks sink. Global investors spooked by rising COVID cases and second wave fears.
Beijing braces, parts of the city in lockdown as authorities confirm a new COVID cluster.
And Regeneron's research. The biotech firm's President join us to discuss their antibody cocktail treatment. It's Monday. Let's make a move.
Welcome to all our FIRST MOVErs around the globe. Great to be with you as always this Monday, and we begin the week the same way we ended last week,
in fact, with volatility concerns -- clearly not going away -- about rising COVID cases amid the ongoing challenges of operating life in a pandemic.
Let me give you a look of the global picture. U.S. stocks heading for early losses of well over one percent, more than two percent in fact for the Dow.
We are, though, off the lows.
Asia, meanwhile also, having a really tough session today. The South Korean KOSPI fell almost five percent amid concerns about new COVID-19 cases
there. We saw Chinese stocks falling some one percent, too, a combination, as I mentioned of a new COVID cluster and economic data keeping investors
on edge.
Let me walk you through that. China's industrial output rose for the second straight month, that's good news, though the consumer, I have to say
remains very cautious.
Retail sales down now for a fourth month drop, this time around of almost three percent. We got U.S. retail sales data tomorrow that we'll be talking
about this time tomorrow, too.
The cracks in the spring rally that took the NASDAQ to record highs began to appear last week. We saw the Dow ending down some 5.5 percent after
moves of one percent or more in every single session. Volatility as I've mentioned.
White House Economic Adviser, Larry Kudlow said in an interview yesterday, there's still a chance for a V-shaped recovery in the United States. The
administration remains upbeat it seems even as Jay Powell warns of a weak economy for years to come.
Let's get more on all of this and the drivers. Christine Romans joins me now. Christine, great to have you with us this Monday.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Hi, Julia.
CHATTERLEY: A V-shaped recovery for what? For stock markets, which is kind of what we've seen for the underlying economy here. I'm still a deep
skeptic.
ROMANS: Yes, I mean, look, the stock market was really priced for perfection, wasn't it? Priced for a perfect V-shaped recovery in the
market. And certainly, that's not what we're seeing on Main Street.
You know, the front page of "The Washington Post" this morning has a story about how there will be jobs probably lost forever and parts of economy
will take many years to recover, and you just repeat that sort of story line in newspapers around the world and that's the kind of discussion we're
having here.
So, not how quickly we can get back to normal, but how much damage will be done along the way, and I think that's what investors are finally starting
to grapple with here.
I'll be closely watching to see just how these losses might be contained. You're very right to point out that they keep bouncing off the lows here.
So, two percent losses look like they are in order here, but we'll see if they find some buy in.
But looking at new outbreaks in Beijing, 18 states in the U.S. that are going in the wrong direction in terms of cases and many of those are states
that have started to gingerly reopen.
So, a lot to work through here and investors, I think are just having a bit of a reality check.
CHATTERLEY: Absolutely, and the economic case for optimism here was, to your point, reopening. Bu as we've said all along, reopening doesn't
necessarily mean re-engaging in terms of customers here.
The question is, what stimulus? What next is needed to try and support the underlying economy? Quick review here from Peter Navarro, White House Trade
Adviser saying more stimulus is coming. Listen to this.
(BEGIN VIDEO CLIP)
PETER NAVARRO, DIRECTOR OF THE OFFICE OF TRADE AND MANUFACTURING POLICY: One of the key thrust of any Phase 4 and any economic plan going forward
has to be manufacturing jobs.
The President is very interested in something on the order of at least $2 trillion.
(END VIDEO CLIP)
CHATTERLEY: It is an election year after all. Not the $3 trillion that the Democrats want, but $2 trillion brings us to kind of $5 trillion in total
that you and I, again, were discussing at the beginning.
ROMANS: That's absolutely right, and you're starting to see the contours of the argument that's going to be here, right? You have the Democrats who
want state and local bailouts. They'd like to see $3 trillion. They'd like to see an extension of those unemployment benefits that are richer than
normal.
Republicans would like to see that. They would like to see maybe some kind of a payment for going back to work. The President wants a payroll tax cut.
He is really keen on that.
[09:05:09]
ROMANS: And you heard Peter Navarro say that the White House wants to buy American, hire American. They really want to make sure that there is
manufacturing -- the manufacturing sector is juiced and where the stimulus is next.
And of course, Republicans also want liability shields for companies as they begin to hire people and start to do business again.
So, you're getting, I think, the contours of what the package -- what the discussion will be for the package, and I think more money is probably
coming.
CHATTERLEY: Yes. I think so, too. Christine Romans, thank you so much for that.
To China now, authorities in Beijing have locked down a part of the city after at least 79 coronavirus cases were reported. The new infections are
linked to a wholesale food market. Officials there are now tracking down around 200,000 people who have recently visited the market.
Ivan Watson is live in Hong Kong. Ivan, so much in this story. You can give us the latest. Testing, sheer significant size of tracing here and another
market. What more do we know?
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, doesn't this just underscore really how pernicious this virus is that after China has
been opening up really over the last month or two, after the first wave of the infections erupted across particularly Hubei Province, now suddenly,
you have, since last Friday, at least 79 cases discovered, locally transmitted and tracked back to this enormous market in south of Beijing
that supplies more than 80 percent of the fruits and vegetables and it also sells meats and seafood that helps basically feed the Chinese capital.
And it's prompted the authorities to shut down completely, lock down at least 11 residential compounds around the Xinfadi Market. They have
launched a very impressive testing regime, testing around 79,000 people -- sorry, 76,000 people with nearly 200 sample collection points around the
city.
It has forced authorities to postpone the reopening of elementary schools, to cancel sporting events. They are not going yet in the direction of a
complete province-wide or citywide lockdown, but there are real signs of concern since already they've detected some cases in neighboring provinces
that they've traced back to the Xinfadi Market.
And the local authorities have announced, they're going to try to do contact tracing for up to 200,000 people that they believe to have moved
through this market since the beginning of this month.
So, an enormous logistical challenge and it will be really important to see, can they stop this latest outbreak from spreading any further --
Julia.
CHATTERLEY: I mean, 76,000 tests for 79 known cases. The scale of the response here, I think, is illuminating, Ivan, but very quickly, because it
centers on supply chains. They're saying this may have come from imported salmon, and that raises all sort of questions. Just quickly what do we know
on that?
WATSON: I think we need to be really skeptical about this.
CHATTERLEY: Right.
WATSON: One researcher mentioned they saw traces of the virus on a cutting board that had some seafood on it, imported salmon. It has already prompted
some supermarkets to remove that product from their shelves, but up until now, I don't believe the scientists have indicated that we can contract
this virus from food that's been traveling around.
So, before we jump and get scared about this, I think we need to know an awful lot more. There's a lot riding on this all around the world.
CHATTERLEY: Yes, I couldn't agree more. Ivan, great to have you with us. Thank you so much for that. Ivan Watson there.
To the U.K. now, it's back to business on the English Hyde Street, of sort. The country is easing its three-month lockdown, allowing nonessential shops
to reopen. Anna Stewart has been checking the pulse there for us in London.
Anna, I believe you're outside Selfridges, clearly, a well-known landmark in the U.K. What kind of activity have you been watching this morning?
ANNA STEWART, CNN REPORTER: It's been really interesting, Julia. There were some lengthy queues first thing, particularly outside some of the
iconic stores like the Nike store on Oxford Circus, the Apple store, but so many of the people there weren't there to purchase to new things, a lot of
them were there for repairs and for returns.
Outside Apple, 80 percent of people I spoke to in that queue were there for a repair. So that's not such good news for retailers. Hoping to get cash in
the till after nearly three months of being closed for business.
Now, the queues have dissipated somewhat, but you can see behind me on Oxford Street, it is really busy. And in the U.K., you don't have to wear
facial covering out and about, it is only on public transport.
And there isn't much for one-way system here. Everyone is just milling around as normal. It feels bizarrely back to normal if I am honest.
The shops -- now, it is interesting the different guidance that they've used. Some of them have followed government guidance to the absolute
letter.
[09:10:08]
STEWART: So for fashion stores, for instance, that means not being able to have a changing room that is open. People can't try things on, however,
that was just advice from the government. Many have decided to break away from it.
Selfridges, this iconic department store, for instance. You can try clothes on, but you are told -- I went in the name of journalism, I did go
shopping, Julia and I was told that, if you want to try something on, you really have to want to buy it, because they have to quarantine clothes for
72 hours afterwards.
So it does feel a little bit different though, I have to say in Oxford Street, it is almost prepandemic normal in terms of the foot fall. It
actually feels incredibly busy here -- Julia.
CHATTERLEY: In the name of journalism shopping. Anna Stewart, that will be remembered. But you know, I was just looking, as you were talking there,
behind there are people wearing masks. There are people that have masks but aren't wearing them.
What's the etiquette when you go into a store? Do you have to wear a mask?
STEWART: You don't have to. And you know what? It is different in each shop. Some shops have taken your temperature on the way in, some don't.
Facial coverings and masks are not mandatory at all. Some are wearing them. Some people have really tried to keep a distance within shops and some
people aren't.
It's incredible how there are many shades of gray really when it comes to this new normal of social distancing and shopping in particular. It is day
one, so it will be interesting to see whether all the shops sort of fall into one line of guidance in the next few weeks, I guess.
CHATTERLEY: Yes, we are in a global experiment. Anna, thank you for being there to bring it to us. Anna Stewart there in London. Thank you.
All right, let me bring you up to speed now with some of the other stories that are making headlines around the world.
A deadly police shooting sparks new outrage in the United States. A 27- year-old black man was shot and killed in Atlanta as he was running away from two white police officers.
Dianne Gallagher has all the details.
(BEGIN VIDEOTAPE)
DIANNE GALLAGHER, CNN CORRESPONDENT (voice over): Protests against police brutality pressed on for the 20th day in cities across the country,
including Atlanta outside this burned-out Wendy's.
Here, a memorial is growing in memory of Rayshard Brooks, who was shot and killed by police Friday. Last night, the Fulton County medical examiner
ruling the 27-year-old's death a homicide, saying he was shot two times in the back.
This police bodycam footage showing the start of the interaction. Watch an Atlanta police officer respond to a call reporting a man asleep in his car
at the Wendy's drive-thru.
(BEGIN VIDEO CLIP)
OFFICER DEVIN BROSNAN, ATLANTA POLICE DEPARTMENT: What's up, my man? Hey, my man. Hey. Hey, man, you're parked in the middle of a drive-thru line
here.
(END VIDEO CLIP)
GALLAGHER (voice over): Officer Devin Brosnan asked Brooks to move his car. He eventually does to a parking spot close by, where Brosnan asks --
(BEGIN VIDEO CLIP)
BROSNAN: Okay. How much did you drink tonight? Not much? How much is not much?
RAYSHARD BROOKS, KILLED BY POLICE: I drank about 12 today.
(END VIDEO CLIP)
GALLAGHER (voice over): Brosnan calls in another officer to conduct a DUI test.
(BEGIN VIDEO CLIP)
BROSNAN: I got a guy sleeping in the Wendy's parking lot. I smell alcohol. Hard to wake him up. He's fumbling with his license.
(END VIDEO CLIP)
GALLAGHER: That's when Officer Garrett Rolfe arrives on the scene. Brooks agrees to a breathalyzer test and tells the police --
(BEGIN VIDEO CLIP)
BROOKS: I know, I know. You're just doing your job.
(END VIDEO CLIP)
GALLAGHER (voice over): Rolfe tells Brooks that he's had too much to drink and tries to handcuff him. That's when Brooks begins to resist.
(BEGIN VIDEO CLIP)
OFFICER GARRETT ROLFE, ATLANTA POLICE DEPARTMENT: Hey, stop. You're going to get tased.
(END VIDEO CLIP)
GALLAGHER (voice over): Video from a witness shows Brosnan get his taser ready. Brooks grabs it out of his hands, seen on this dashcam video, before
running away. Rolfe fires his taser and follows.
At this moment, surveillance video shows the incident take a deadly turn. During the chase, Rolfe reaches for his handgun. Brooks turns back and
appears to fire the taser, and Rolfe shoots his handgun three times.
The officers eventually provide medical treatment on site before an ambulance arrives to take Brooks to the hospital, where he is later
pronounced dead.
After the shooting, Rolfe who shot Brooks, was fired from the Atlanta Police Department and Brosnan placed on administrative duty. But that's not
enough for Brooks' wife.
(BEGIN VIDEO CLIP)
TOMIKA MILLER, RAYSHARD BROOKS'S WIFE: I want them to go to jail. I want them to deal with the same thing as if it was my husband who killed someone
else.
If it was my husband who shot them, he would be in jail. He would be doing a life sentence. They need to be put away.
(END VIDEO CLIP)
GALLAGHER (voice over): The Fulton County District Attorney says his office is weighing charges against the officers, and a decision could come
as early as Wednesday.
(BEGIN VIDEO CLIP)
PAUL HOWARD, DISTRICT ATTORNEY, FULTON COUNTY: If that shot was fired for some reason other than to save that officer's life or to prevent injury to
him or others, then that shooting is not justified under the law.
(END VIDEO CLIP)
GALLAGHER (voice over): Atlanta's mayor, Keisha Lance Bottoms, believes that Brooks' death was entirely avoidable.
(BEGIN VIDEO CLIP)
MAYOR KEISHA LANCE BOTTOMS (D), ATLANTA, GEORGIA: This is not confrontational. This was a guy that you were rooting for, and even knowing
the end, watching it, you're going just let him go, just let him go. Let him call somebody to pick him up.
(END VIDEOTAPE)
[09:15:15]
CHATTERLEY: A former U.S. Marine has been convicted of espionage by a court in Moscow and sentenced to 16 years in prison.
The court delivered its verdict after Paul Whelan who denies spying was tried behind closed doors. The U.S. Ambassador to Russia said the trial was
quote, "a mockery of justice."
Philippine journalist, Maria Ressa has been found guilty of cyber libel. Advocates of press freedom have called the prosecution a politically
motivated attack by President Rodrigo Duterte's government. The case against Ressa hinged on an article that came out in 2012, that's two years
before cyber libel laws came into force.
Still to come here on FIRST MOVE, an antibody cocktail that could give temporary protection from COVID-19. We speak at the Chief Scientist at
Regeneron as its drug enters human trials.
And as the pandemic disrupts supply chains, Alibaba positions itself as the first port of call for wholesale buyers. All of that coming up. Stay with
us. You're on FIRST MOVE.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks remain under pressure premarket this morning with the Dow set to fall more than two percent as
you can see. Investors, I think, pondering whether the spring fling that saw stocks rise more than 40 percent from their March lows is now in
jeopardy as COVID cases rise around the world.
There's also a flight to safety happening in bonds. We've got U.S. Treasury yields moving lower this morning, too. Oil prices also under pressure after
tumbling some eight percent last week.
BP announcing today that it is writing down the value of its assets by some $17.5 billion. The oil giant announced the plan last week to lay off some
15 percent of their workforce.
Now, as markets drop on fears of a second wave of coronavirus cases. Our next guest offers cause for hope. Regeneron Pharmaceuticals created an
antibody treatment for Ebola in just six months. Now, it wants to go one better, saying it hopes to get its COVID-19 drug to patients in just five
months.
[09:20:21]
CHATTERLEY: It's still unproven. Human trials began last week and two papers on the antibody cocktail they're creating are being published today.
Joining us now is Dr. George Yancopoulos, he is founding scientist, president and Chief Scientific Officer of Regeneron. George, fantastic to
have you on this show with us once again. I remember speaking to you last time at the height of the crisis here in New York and you certainly gave
our viewers hope, I believe.
Just explain how rare it is to be being publishing two papers in a renowned scientific journal, at the same time as trialing a drug on human patients.
DR. GEORGE YANCOPOULOS, CHIEF SCIENTIFIC OFFICER, REGENERON: Yes, as you said, it usually takes years from publishing fundamental discoveries to
translating them to patients. And so, obviously, this speaks to the record time under which we have all been trying to operate throughout the bio
industry.
But particularly here at Regeneron where our scientists have been working 24/7 to try to bring this to patients because as you know, we were at the
epicenter, we saw how devastating it is and it's our life's mission to try to make a difference here.
CHATTERLEY: Explain why a cocktail of antibodies for treating patients that currently have COVID-19 or trying to prevent someone catching COVID-19
is so important.
YANCOPOULOS: Well, as all common knowledge now, the whole point of vaccines is to make these antibodies that make you be able to resist the
virus. We pioneered making these antibodies outside of the body, growing them up in big bio reactors, giving them back to patients.
Most notably as you said already for Ebola where it worked really impressively in a much more universally lethal disease.
What we have now realized and shown in these papers is that one antibody, this is what a lot of people are trying to just get the best antibody out
of patients or out of a vaccine, just one antibody is not enough. You need to put a combination of them together -- a cocktail.
We actually learned this first for traditional viral drugs as in AIDS/HIV. The original drugs worked, but very rapidly, there was development of what
was called drug resistance -- viral drug resistance.
And then they realized that if they put combinations of these traditional antiviral drugs together in cocktails, they really -- that's what led to
control of the disease. That's essentially what we have shown here of these new classes of drugs, these antiviral antibodies that we have been
pioneering that one, no matter how good, it is not enough. You put them together.
None of these that seem to control the virus better, but it prevents viral escape and mutation, something we have all been hearing about, something a
lot of people are worried about.
CHATTERLEY: So, it basically it learns -- it understands one form of antibody and finds a detour pass so you're still at risk from a mutated
version of the virus. What you're saying is if you combine different antibodies, you just raised the likelihood that you fight this, that the
body fights this.
YANCOPOULOS: Exactly right. The virus mutates, it learns to get around any single treatment. If you simultaneously hit the virus in two or more
different places, it looks like the virus is very hard for it to learn a way to get around that.
CHATTERLEY: You've also worked hand in hand with the F.D.A. here as well in order to move this process far more quickly than we have ever seen in
the past. Normally, it would take three phases of trials in order to get this to a point where you can start using it on patients, and you've
managed to collapse that into one.
Is this a blueprint for how we operate going forward? Or have we -- not in a negative sense, but if have we cut corners here that perhaps, we won't in
the future?
YANCOPOULOS: Everybody is really working 24/7 to avoid cutting the corners to do the right thing. The F.D.A. is in charge first of protecting our
safety, but they have worked with us to come up, as you said, this very innovative phase one, two, three adaptive design where you seamlessly go
through all the phases but in a very careful, very high oversight manner. So hopefully, we don't put anybody at risk.
But as you said, we're all working so hard to combine what normally takes years into months to try to really make a difference.
CHATTERLEY: How soon then are we talking about you being able to use this? And I am assuming it is going to be initially on frontline workers, those
that are treating patients day in and day out whether it is to treat their own virus, but also to try and help them not catch it in the first place.
YANCOPOULOS: Yes. Well we are working with the F.D.A. on several different kind of trials. One trial is to actually treat people who are already
infected, either in the early stages or the later stages.
[09:25:10]
YANCOPOULOS: We showed with Ebola, the earlier you treat, the better. We're also doing separate trials to try to prevent a prophylaxis, as you
said, the most high-risk individuals, those at the frontlines.
The hope here, as we showed with Ebola, is that not only is this going to be a preventative approach like with a traditional vaccine, but if somebody
is already sick, especially at the early stages, hopefully we can really shut this down and make them better. My hope is that --
CHATTERLEY: How long do the anti -- go ahead.
YANCOPOULOS: With this adaptive approach, we may get answers within a month or two, and that means that maybe by the end of the summer, if all
goes well, and there's a lot of risks, this is Biology and Medicine, we can't predict things perfectly here. If all goes well, possibly by the end
of the summer, we'll have enough information and data that the F.D.A. will feel comfortable making this treatment and preventative approach perhaps
more widely available to more people.
CHATTERLEY: I think we have to explain the difference as well. This is not a vaccine. These antibodies don't last for a prolonged amount of time. How
often are we assuming that someone would continue to have to take this antibody cocktail in order to keep that prevention up?
YANCOPOULOS: That's a great point. That's something that we're testing in the clinical trials. We think that these will work at least for a month, so
that you'll have to take a treatment once a month or once every couple of months or once every three months. We'll be testing that in the clinical
trials, but that's why we still need a vaccine because a vaccine is going to be able to perhaps provide permanent protection for more people.
CHATTERLEY: And cost per treatment?
YANCOPOULOS: You know, we're not even thinking about that right now. In fact, we are working with the government to see ways in which we can
distribute this and make this available without us even being involve in costing the product.
CHATTERLEY: Amazing. You and your team, phenomenal. Thank you so much for the 24/7 work that you've been doing for months now, I know and I am sure
you're still doing it.
Keep in touch, please, and stay safe. Dr. George Yancopoulos there, the President and Chief Scientific Officer of Regeneron. Thank you for that.
The market open is next.
(COMMERCIAL BREAK)
[09:30:22]
CHATTERLEY: Welcome to FIRST MOVE. The clapping there for the opening bell at the New York Stock Exchange this Monday. U.S. stocks are kicking off the
week with some pretty sizable losses. I'll give you a look at that. It is the cyclicals. Airlines, banks, energy shares that are all sharply lower in
this session today. We've got the Dow off more than 2.4 percent.
Morgan Stanley warning today that stocks could actually fall another seven percent following last week's 5.5 percent pullback for the Dow. That's
pretty precise, but they also argue, however, that this pullback is quote "healthy" and that stocks will recover quickly.
They see small caps, mid-cap stocks and economically cyclicals like autos, retailers, and as I just mentioned, the airlines leading in the next leg
up. These of course have lagged at least until the last couple of weeks or so.
We're also approaching another significant milestone in the COVID-19 crisis. There are now close to eight million confirmed cases of the disease
across the globe and concerns remain over how rising cases will impact economic reopenings.
Fed Chair Jay Powell will discuss that during two days of testimony before Congress this week and no doubt argue that Congress needs to do more, too.
Paul La Monica joins me now. Paul, lots to discuss in there. Healthy? What do we think of that? Is it a consolidation period or a pullback that we are
seeing? Healthy? Given the rise that we saw?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think that the big pullback that we're seeing essentially today, you know, coming off of last week's
drop in stocks is probably needed, Julia, because the market ran up so aggressively from mid-March, we basically had Wall Street saying that this
could be just a one-quarter, or two-quarter blip.
Even if it's a recession, it may soon be over. We could be back on the upswing, and I think that that doesn't jive with reality and now, we
obviously have concerns about a second wave of cases across the country and that is making people re-evaluate some of these big speculative moves that
we had in airline stocks and other leisure stocks that had been rallying on hopes that people would try and get back to normal.
CHATTERLEY: White House Economic Adviser Larry Kudlow said over the weekend that a V-shaped recovery still is possible. When I look at the
stock markets, I always remind myself that 85 percent of employment in the United States is outside of the companies that form these major indexes.
Can you have a V-shaped recovery in stock markets while still having an L- shaped or a U-shaped -- whatever you choose to call it -- in the real economy? Can we see that?
LA MONICA: Yes, I think it's going to be difficult for us to have a V- shaped recovery in the economy even if the markets get over this latest bout of volatility and wind up bouncing back, because remember, we have
this scenario right now where the markets are a little bit divorced from reality.
I think a lot of investors are making speculative bets, short-term bets, the kind of Robinhood crowd if you will, I wrote last week, about how about
millennial investors seem to be coming into this market making short-term trades.
And then also, even if you have a V-shaped rebound in the markets, it's going to be difficult with an unemployment rate that's not going to
normalize for probably years according to many experts including Fed Chair Jay Powell, to have anything that looks like a normal economy.
So I think that people betting on a V-shaped economic rebound, it's a bit misguided. Maybe it winds up being like the Nike swoosh, so you still have
that decent long tail, but hopefully it is not a W-shaped recovery where we have a double dip. I think that's the big fear now that all of these second
wave of cases creates an even bigger downturn even if we have a slight rebound, we wind up having the economy back sliding there.
CHATTERLEY: Yes, we've got to remain vigilant. No complacency. No room for complacency whether you're a policy maker here or an individual facing the
risks here. Paul, great to have you with us. Paul La Monica.
Now, before the coronavirus pandemic struck, Alibaba had its eyes on the U.S. business to business market. Now, as the world works from home, the
Chinese giant sees a big opportunity for wholesale suppliers.
Inside China, Alibaba is used a lot like Amazon in many ways, but it also offers a huge marketplace for wholesale goods around the world, too. Well,
it is now simplifying logistics and payments to help American suppliers digitize their business and it is even holding virtual trade shows to
connect to buyers and sellers.
[09:35:14]
John Caplan is behind it all. He is the President of North America and Europe at alibaba.com and he joins us now. John, always great to have you
on the show.
Just give me a sense of what you're seeing right now for these American businesses in particular and compare it to perhaps where we were at this
time last year when we spoke about what you were doing for U.S. businesses?
JOHN CAPLAN, PRESIDENT OF NORTH AMERICA AND EUROPE, ALIBABA.COM: It is great to be with you this morning. The U.S. small business owner is using
alibaba.com like they've never used before.
You know, we have seen over a hundred percent growth in transactions involving U.S. businesses in the last couple of months, year-over-year of
tremendous growth.
And like you mentioned, we've launched alibaba.com freight to simplify logistics. And alibaba.com terms to simply payment terms cross border for
the first time, and then like you said, we've just created digital trade shows to make it simple for people working from home like I am, to meet and
discover great new suppliers around the world or if you're a seller, for you to get new customers in over 190 countries.
CHATTERLEY: Just about how many companies now are actually using the platform and where you have seen this dramatic spike in terms of products?
I'm assuming things like PPE given the demand is one of those real winners in terms of people buying and selling.
CAPLAN: Yes, it's been -- the data is remarkable to look at, right. We have had 10 to 20 times growth in medical equipment. The machines that make
PPE or the PPE itself, we have seen a surge in the sale of yoga gear, because people want to be comfortable in their home or educational toys up
50 percent.
The same with outdoor furniture, up just about 80 percent. So, we're seeing this big shift in the U.S. economy and the sort of the creative and
innovative distributor and wholesalers are reorienting their supply for the post-COVID world.
You know, as people need to get digital and go global is really the essential requirement for businesses here in the United States.
CHATTERLEY: You and I discussed this in the past. You were saying, look, this is about allowing businesses of all kinds to go outside of their
locality, to have much bigger access to customers, to supply chains all over the world. How much time in that growth have we just cut out as a
result of people -- necessity actually being the key here and people driven to establish these connections over the space of just a few months?
CAPLAN: Yes, Julia, I think that's a great question and a great point. You know, I think we've seen 20 years of acceleration for businesses going
digital.
You know, it's not a question of if you do, it's just how quickly you can do it, and the alibaba.com tools are so simple to use.
Whether you're a buyer looking for supply, or you're someone who wants to sell to 190 countries, getting on the platform is easy to do and it's an
imperative for folks to have a real marketplace strategy to grow their business in this, you know, shifting and transforming economy.
CHATTERLEY: You know, I made the loose connection there to a comparison with Amazon which I know is relatively uncomfortable for Alibaba because
you actually work very differently, but when you add the payments, you add in the logistics for these companies as well, comparison with facilities
like I guess, PayPal and Square is a more apt comparison.
Just describe what you see the growth like in that part of the business now as well?
CAPLAN: Sure, so historically, if you were sourcing globally, you basically had to pay up front for your goods. So, you paid before the goods
ever got on a boat or on an airplane to come.
With alibaba.com terms, now, it's free for a buyer and you pay 60 days after the goods ship and this is dramatic shift in how the working capital
and cash flow can work for an American business, and we think that's a really important step forward as folks need to invest in their staff, in
their marketing, in reorienting their business for the changed economy.
CHATTERLEY: Talk about churn here, John. Have you seen new businesses come on the site and have you lost businesses as well? Can you give me a sense?
Because we are all trying to get at how much damage has been done to small and medium sized enterprises in the United States, but clearly around the
world, too.
CAPLAN: Yes, so that's a great question. We see -- the U.S. is a third of the traffic on alibaba.com. It comes from U.S. small businesses and medium-
size businesses and that's growing really rapidly.
So, we actually don't see great evidence of our customers churning. We know that to be true that it is happening. The Main Street business, the
restaurant, et cetera.
[09:40:04]
CAPLAN: Our customers primarily are manufacturers and wholesalers and they are -- you know, they have been knocked out, but they're not out, and we're
optimistic about what the future can look like for the businesses that are using alibaba.com.
CHATTERLEY: Yes. We like optimism on this show. And I am so astonished, 20 years of growth done in the pace of just a few months. The other side of it
is, this should really help, which is key.
CAPLAN: Yes, yes.
CHATTERLEY: John Caplan, great to have you on the show, as always, sir.
CAPLAN: Thank you for having me. Yes, see you soon.
CHATTERLEY: Come back soon. thank you.
CAPLAN: I will.
CHATTERLEY: The President there of North America and Europe at alibaba.com.
All right, coming up, on FIRST MOVE, it is off to the races for car trading app Vroom. We speak to the CEO, next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Going public doing a global pandemic and an economic crisis, all in the day's work for online car sales
company, Vroom speeding out of the gate with its NASDAQ listing last Tuesday where the stock closed out more than 100 percent on its first day
of trade.
Let's talk about the road map from here with the CEO of Vroom, Paul Hennessy. Paul, great to have you on the show.
PAUL HENNESSY, CEO, VROOM: Thank you.
CHATTERLEY: Uniquely interesting time to list, I think, but when I look at your share price and I see 117 percent rise, I believe, on your first day
of trade, I wonder why you left some money on the table? Is there a bit of frustration there?
HENNESSY: No, not at all. We're enthusiastic that our investors have greeted us so well and had been enthusiastic about the Vroom model and
really more importantly what we're doing for our customers, so we're thrilled with the outcome.
CHATTERLEY: Online everything right now with people stuck at home, and I was fascinated as I was looking at the used car sales market, it's less
than one percent right now online. Talk to me about how you see the growth opportunity panning out for this part of the market.
[09:45:10]
HENNESSY: Yes, as part of our excitement, Julia, the $841 billion annual used car sales market, with a low penetration that you mentioned, less than
one percent e-commerce penetration, that's the opportunity.
And what we've seen honestly over the past couple of months and the trend over the past couple of years is more and more customers are turning to
models like ours because they simply want a better way to buy and sell their vehicles and Vroom does that for them.
So, we really like that at the back of that, e-commerce is coming our way, and it is one of the last verticals to really go fully e-commerce, and so
we just see that as massive runway for the business.
CHATTERLEY: A lot of people will be looking at this going, I would never buy a car online. It is too high risk. What about the payment? I don't get
to see the car.
How do you cut out the risk for both the buyer and the seller here? Because this is key.
HENNESSY: Yes, well, it starts with selection and it starts with price and transparency, those are two of the huge concerns of consumers and by
showing them lots of photographs, by giving them great pricing, by full transparency, no negotiations, that eases customer's mind.
By being able to offer everything that they could do in a car dealership without ever having to go to a car dealership again that eases their mind
and then I think, at the end, delivering a contact free delivery in the driveway, makes them feel better about the transaction, combined with the
seven-day test drive, I think that's what gets customers all the way through the process. And not just gets them through, but allows them to be
excited about the entire process.
The beauty of the test drive is they can actually use the vehicle in places they would normally use the vehicle. So, instead of a trip around the
dealership with a stranger in the car, they can put their family in the car and drive the car for seven days, and if they're not satisfied, they can
return the car, no questions asked.
CHATTERLEY: Yes, it makes sense. What kind of increased demand have you seen through the last three months as a result of the pandemic?
HENNESSY: Yes, I would say not surprisingly customers want to experience social distancing. Customers that have been issued stay-at-home orders,
they're turning online to get all sort of products, including used cars delivered to them.
And so, our demand is strong and again, you know, we have seen data that customers now are twice as likely to buy a car online versus merely three
months ago. So, we think again the market is completely moving our way.
CHATTERLEY: What about the impact at least in the short term of Hertz? Their bankruptcy? They've got 20,000 used cars now listed, trucks, SUVs for
sale. What kind of impact do you think, if any, that has on your business?
HENNESSY: Yes, we've always been a partner of Hertz. We have always purchased cars from Hertz and we say that there will be an increased amount
of supply, but because of Vroom's agile business model, we're buyers of those vehicles and as buyers, we're actually getting better pricing on
those vehicles and then we're able to pass those great prices on to consumers.
So, again, I'm not sure how the bankruptcy scene for Hertz is going to play out. But we'll be opportunistic in our relationship with them.
CHATTERLEY: Yes, I am not sure anybody does at this stage quite frankly. The key differentiating factor for you though is, in terms of warehousing
space. You're incredibly low maintenance in that regard. Explain this as part of your business and what potential impact that will have in terms of
timing to profitability, because I know you're not yet profitable.
HENNESSY: Right. Well, look, Vroom takes an asset-light model. That means, we don't feel the need to build a large building and infrastructure,
reconditioning centers. We don't feel the need to build fleets of trucks because there are great national fleet providers out there. There are great
infrastructure already in place.
And so, Vroom moves all of that into the variable model while delivering high quality units to our customers. Because we've got low capital into the
business, we fundamentally return a higher return on invested capital to investors and that allows us to get profitable at a significantly lower
number of units.
So, yes, we've got clearly a path for growth, but I think, equally important, a path to profitability.
CHATTERLEY: This year? Next year?
HENNESSY: Yes, we're not giving a specific timing on profitability. There's lot of unknowns in the market, but we have set a target for
ourselves at around 200,000 units. We think the business ought to be self- funding. So, we'll be evaluating that target over time.
CHATTERLEY: Sneaky question to ask twice. The CEO of Vroom there. Sir, keep in touch. Great to chat with you. Thank you so much for joining FIRST
MOVE.
HENNESSY: Thank you so much, Julia. Take care.
[09:50:06]
CHATTERLEY: All right, coming up here on FIRST MOVE. Beyond borders. Europe drops some of its restrictions, but will travelers be willing to
take to the skies once more? That's next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to the show. British airline EasyJet is back in operation after being grounded for 11 weeks by the coronavirus pandemic.
Its first flight taking off early Monday for Glasgow from London's Gatwick Airport.
Meanwhile, across Europe, people are slowly returning to the skies, but with one or two or lots of adjustments. Our Fred Pleitgen has more.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): As Europe reopens, many of its borders and airlines hope to get some business
back. At Lufthansa's check-in in Frankfurt, it's clear, much has changed.
(BEGIN VIDEOTAPE)
PLEITGEN (voice over): As Europe reopens, many of its borders and airlines hope to get some business back. At Lufthansa's check-in in Frankfurt, it is
clear much has changed.
PLEITGEN (on camera): Of course, keeping physical distance is almost impossible when you're on an international air journey. That's why
Lufthansa and many other airlines have a policy of asking all of their passengers to wear masks both in the airport and on the plane.
PLEITGEN (voice over): Inside the terminal, a lot of physical distancing measures, but upon boarding, no more.
Purser Mike Lauterkom hands out disinfectant wipes, but otherwise, he says, passengers don't need to change their behavior much.
(BEGIN VIDEO CLIP)
MIKE LAUTERKOM, PURSER, LUFTHANSA: The only thing we ask the passengers that they wear the mask the whole time. Only if they drink or eat
something, they can take it off.
(END VIDEO CLIP)
PLEITGEN (voice over): Like many European carriers, most of Lufthansa's fleet remains idle ever since the coronavirus outbreak. The company
recently secured a bailout of about $10 billion to help it survive the crisis, but our flight from Frankfurt to Porto is packed.
(BEGIN VIDEO CLIP)
PLEITGEN (on camera): So as you can see, we're all sitting pretty close together. And that's one of the dilemmas that airlines like Lufthansa, but
many others as well face.
On the one hand, they need a hygiene concept that works, but it also has to convince weary travelers that it's safe to get back on planes again.
(END VIDEO CLIP)
PLEITGEN (voice over): Some travelers a bit concerned.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: It's also a little bit scary I think because you never know what you might catch or not.
UNIDENTIFIED MALE: I'm a little bit surprised because I thought actually based on the coronavirus, we are sitting very, very close.
(END VIDEO CLIP)
PLEITGEN (voice over): Lufthansa says state of the art air filters on the planes make infections unlikely.
(BEGIN VIDEO CLIP)
ANDREAS KAUSER, CAPTAIN, LUFTHANSA: The medicine say that more than 99 percent of those viruses are going to be taken out by those filters.
(END VIDEO CLIP)
PLEITGEN (voice over): The pilots, by the way, always have to wear masks on the ground, but never in the air, the captain says.
(BEGIN VIDEO CLIP)
KAUSER: ... the face, its expressions are very important if you communicate with your colleague, you know, and you have some strange
situation. It's good to see, is he in fear?
(END VIDEO CLIP)
PLEITGEN (voice over): Before landing in Portugal, the crew hands out leaflets on how to prevent infections. As airlines tried to convince
travelers that holiday air travel is possible without risking new spikes and coronavirus infections.
Fred Pleitgen, CNN, Porto, Portugal.
(END VIDEOTAPE)
[09:55:15]
CHATTERLEY: Wow, that flight looked pretty full. A look at the future.
All right, let's take a look one last time at what we're seeing for U.S. stock markets. All of the major averages are sharply lower this morning
though.
As you can probably remember, we are off the lows at this moment. The Dow down some two percent, taking the biggest hit. All 30 stocks in the Dow are
lower with the likes Boeing, Exxon and Caterpillar seeing the biggest losses -- one word -- cyclicals.
All of the S&P 500 sectors are lower, too. The energy sector faring the worst. Down by around four percent. BP news of course this morning was the
focus with them cutting and writing down $17.5 billion worth of assets.
A quick look at some other markets there, too.
That's it for the show. I'm Julia Chatterley, your FIRST MOVE this morning. As always, do care of each other and just stay safe and I'll see you
tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
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