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First Move with Julia Chatterley

The U.S. Is Closing In On Three Million Coronavirus Cases; Disappointed Civil Rights Leaders Hit Out At Mark Zuckerberg's Response To Their Claims And Requirements For Hate Speech On Facebook; The U.S. Fed's Vice Chair Said That The Federal Reserve Can Do More To Help The U.S. Economy, And They Will. Aired 9-10a ET

Aired July 08, 2020 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[09:00:05]

RICHARD QUEST, CNN INTERNATIONALANCHOR: Live from New York, I'm Richard Quest, sitting in for Julia Chatterley this morning. This is FIRST MOVE, of

course, and here is what you need to know.

Unwanted record. The U.S. is closing in on three million coronavirus cases confirmed.

Disappointed Civil Rights leaders hit out at Mark Zuckerberg's response to their claims and requirements for hate speech on Facebook.

And no limit. The U.S. Fed's Vice Chair has told me that the Federal Reserve can do more to help the U.S. economy, and they will.

It is Wednesday, middle of the week. We need to make a move.

And a good day to you. Welcome to FIRST MOVE. I'm Richard Quest, sitting in for Julia Chatterley today. We are continuing to monitor the number of

coronavirus cases around the world and they are starting to rise at an alarming rate in many places.

Whether you call it a surge or a second or third wave, coronavirus is far from being done. For example, the United States where now coronavirus is

about to hit three million confirmed cases. The cases are also flaring up again in Tokyo and in Hong Kong. Australia is fighting a major outbreak in

Melbourne, where Australia's second largest city is on lockdown and they may limit the number of people entering the country.

And all of this as the United States is beginning its formal withdraw from the World Health Organization. The futures in the United States are

managing to hold on for dear life, barely, pointing to a mostly flat open after Tuesday's across-the-board pullback.

The Dow and the S&P fell more than one percent and the NASDAQ retreated from record highs. Europe is lower. HSBC is a big loser in the U.K. A

Bloomberg report says the White House is considering undermining the Hong Kong dollar peg to the U.S. currency and that might limit HSBC's access to

dollars.

Seventh day of gains for Chinese stocks. The Hong Kong Hang Seng rose half a percent to almost four-month highs. Morgan Stanley says both markets

still have room to run. Although the Nikkei and the Seoul Kospi were lower.

To the drivers and the latest battle against COVID. The number of U.S. cases has now hit just about three million. More and more states are

announcing further lockdowns, restrictions, shuttering bars and restaurants.

Meanwhile, Donald Trump said -- and wait for this -- Donald Trump says he believes the U.S. is in a good place. One is not sure to which place he is

referring. Here's CNN's Rosa Flores.

(BEGIN VIDEOTAPE)

ROSA FLORES, CNN CORRESPONDENT (voice over): A record breaking day in the United States, seeing over 60,000 new coronavirus cases Tuesday, according

to Johns Hopkins University, the highest since the start of the pandemic.

(BEGIN VIDEO CLIP)

DR. PETER HOTEZ, DEAN OF THE SCHOOL OF TROPICAL MEDICINE, BAYLOR COLLEGE OF MEDICINE: There's nothing to stop this train. There's nothing to stop this

steep acceleration in the number of cases. This is a public health crisis. This is a public health disaster.

(END VIDEO CLIP)

FLORES (voice over): Florida is one of the top five states reporting the most new infections on Tuesday.

(BEGIN VIDEO CLIP)

GOV. RON DESANTIS (R-FL): We have no doubt seen a major increase in cases. The median age of our new cases was in the 50s about a month and a half

ago, now that's dropped into the 30s.

People who are healthy and under 40, the death rate of this thing is very close to zero.

(END VIDEO CLIP)

FLORES (voice over): Earlier, the nation's top infectious disease expert warned this --

(BEGIN VIDEO CLIP)

DR. ANTHONY FAUCI, DIRECTOR, NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES: It's a false narrative to take comfort in a lower rate of death.

There's so many other things that are very dangerous and bad about this virus. Don't get yourself into false complacency.

(END VIDEO CLIP)

FLORES (voice over): Arizona is another hot spot. Hospitals there becoming increasingly overwhelmed and people also facing long lines for testing,

with delays in getting back results.

(BEGIN VIDEO CLIP)

MAYOR KATE GALLEGO (D), PHOENIX, ARIZONA: We need medical professionals, we need testing kits, we need supplies immediately. Our hospitals are already

in dire straits and they tell us that in the next two weeks, it is going to get to an unbearable level of crisis.

(END VIDEO CLIP)

[09:05:08]

FLORES (voice over): It's a similar story in California, with coronavirus hospitalizations at an all-time high and a slow turnaround time from

diagnostic labs.

Throughout Florida hospitals, 56 intensive care units have already hit capacity, and an additional 35 show a bed availability of 10 percent or

less.

Still, Governor Ron DeSantis will not reveal official state numbers on how many COVID-19 patients are within Florida hospitals.

(BEGIN VIDEO CLIP)

DESANTIS: So, all of the data that goes into this is all available.

FLORES: The spreadsheets on that data, Governor, it is not available.

(END VIDEO CLIP)

FLORES (voice over): And in Texas, hospitals in Houston could soon also reach their limits.

(BEGIN VIDEO CLIP)

MAYOR SYLVESTER TURNER (D), HOUSTON, TEXAS: The next two weeks will be important, will be critical. So it's not just about providing beds, but the

staffing that goes right along with it.

(END VIDEO CLIP)

FLORES (voice over): Texas has reported over 10,000 new cases, Tuesday, its highest single day count so far.

Governor Greg Abbott asking residents to follow the statewide mandatory mask requirement.

(BEGIN VIDEO CLIP)

GOV. GREG ABBOTT (R-TX): The last thing that we want to do is to shut Texas back down. We will not have to shut it down if everyone will follow this

very simple rule, and that is just get a mask like this, wear it.

(END VIDEO CLIP)

QUEST: Rosa Flores reporting there. Rising infection rates are now starting to call into question whatever economic recovery there had been. The

Federal Reserve Bank of Atlanta says economic activity is now leveling off.

United airlines says it is seeing bookings slowing down and falling even. John Defterios is here. John, Rosa Flores was talking about the situation

in the United States. If we look at the rest of the world, yes, things are better, but there are many places that are showing concern.

JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: That's for sure, Richard. There's a slight pause in the equity markets today, but we've been

living in these two different realities over the last three months.

The financial world, where we've become overly dependent on Central Bank action, I thought your interview last night with the Vice Chairman of the

Federal Reserve was very telling. He is saying we can expand our balance sheet and do whatever it takes. That's the signal to one side of the

reality.

The other one is the real world on Main Street, for example. You take a look at a Brooks Brothers, a very well-known name internationally, of

course, filing for bankruptcy. So as you suggest in your lead-in, the United States, Australia, Israel, developed markets under pressure.

I have great concern about some of the big emerging markets around the world. Let's bring up the pictures here of the three leaders who are under

intense pressure right now. Bolsonaro of Brazil, Prime Minister Modi of India, Lopez-Obrador of Mexico.

If you add them up, Richard, it's about a quarter of the world population. India hasn't been in recession since 1979. They've swung from a plus two

percent to a negative 4.5 percent on the projections by the International Monetary Fund for 2020. They're under pressure.

The one standout, Richard, the one that reacted quickly, maybe not revealing the virus early, is China. The Shanghai Index surged again today

to another five-year high. They could grow in 2020 by one to two, maybe even three percent if they get the fourth quarter recovery.

QUEST: Just listening to you saying that thought about China, it begs the question, were they that good at handling it? Do we know the true picture

there? Why should everybody else be in such a dreadful position and China not?

DEFTERIOS: Well, I tell you, Richard, because they did do a very severe lockdown. But I think the other thing that's bubbling there that we should

address today is the intensifying nature of the U.S.-China tensions that we see today.

It's not about the hard goods that we've talked about in the past, but TikTok, right? Huawei. ZTE the telecom equipment manufacturer. You've heard

Mike Pompeo's language. He says, he is going to go quite aggressively here all the way through 2020 to take China to account.

But the gold rally we're seeing today for example, is because of the report from Bloomberg talking of pressure by the United States on the peg of the

Hong Kong currency to the U.S. dollar to punish China. That peg has been in place since 1983.

So whether you're questioning the number of cases in China, how did they lockdown, whether they were transparent, then have the Trump administration

looking for a political play here, let's be honest, in an election year going very aggressively against Beijing through Hong Kong is the report

today.

QUEST: John Defterios. John, thank you. U.K. government has announced its budget or at least a supplementary budget. Anna Stewart is in London. The

focus is what?

ANNA STEWART, CNN REPORTER: The focus is without doubt jobs, jobs, jobs, and surprise there, Richard. Nine million people in the U.K. have been on

the government's furlough scheme. That is set to wrap up in October, and so looms mass unemployment.

So this was a budget very targeted about creating, protecting and retaining jobs and it involves a lot of tax cuts and a lot, Richard, a lot of

spending.

[09:10:16]

QUEST: But Anna, the way -- this spending, this idea of $1,000.00 or a 1,000 pounds, I should say, to take somebody back on, on the back of a job

retention scheme that was extremely expensive. Essentially the British government has paid to keep people on the rolls and is paying to put those

that left back on again.

STEWART: Yes, this was a really -- this was a surprising measure, I have to say, today. Any company that has furloughed workers will receive 1,000

pounds per employee they bring back if they retain them until January.

Unclear how many businesses will feel that that is enough support to actually bring people back, and the government said there's no cap on this.

If all nine million furloughed workers were to be brought back into work and retain those jobs until January, it would cost them nine billion

pounds.

If only it were that simple though, even though that is very expensive, that is what is needed to keep the economy ticking, to dig the U.K. out of

this deepest recession it has ever really been and the deepest economic slump by any count.

I mean, we're talking multiple times over in terms of historic. Also, actually, Richard, before I go, some new schemes targeted towards young

people, under 25 scheme called the Kick Start Job Scheme. The government will pay the minimum wage salary for any new under 25-year-olds that are

hired for six months, so that also goes to the spending. And then numerous other incentives to kind of certain industries, particularly leisure and

tourism going.

QUEST: Anna, these are all very worthy schemes with admirable aims, but they are essentially job creation schemes, particularly the last one, the

Kick Start. It's a way of getting people off the government's rolls and onto companies' books.

But if the underlying economy isn't strong, all that happens is that there aren't the necessary business to keep these people on after the schemes

come to an end.

STEWART: Well, it's interesting that this government, a conservative government or the one before it was the one that actually canceled the last

very similar job scheme from a Labour government. So, it's interesting that it is them now that is creating the scheme. How effective is it?

Alongside creating these jobs for young people, they are creating ideally jobs in targeted sectors like green energy, like construction. So perhaps

they're seeing that this is a way of remodeling the economy if some industries in some sectors will be under pressure for medium to long-term

for the next few years, perhaps the creation of jobs in sectors that might be less harmed by this recession -- perhaps that will help, but yes, lots

of economists scratching their heads wondering just how effective this will be.

But there is no doubt, you have to do something. You can't just take everyone off the furlough scheme and expect jobs to stay and to keep the

economy going. You can't have mass unemployment. The government feels it's worth the cost.

QUEST: Good point. Anna Stewart in Downing Street. Thank you.

Companies who are against -- who are leaving and boycotting Facebook say that the social media giant, they are criticizing the reaction of Mark

Zuckerberg after their meeting yesterday.

(BEGIN VIDEO CLIP)

JONATHAN GREENBLATT, CEO, ANTI-DEFAMATION LEAGUE: I think the meeting was disappointing, to say the least. Facebook asked us for this meeting and we

expected them to share details and timeframes to execute on those recommendations. Instead we didn't get any details, we didn't get any

timeframes. No commitments. No outcomes.

(END VIDEO CLIP)

QUEST: Brian Fung is with me. Shouldn't we be surprised that Mark Zuckerberg was unable to come up with the necessary to satisfy the critics?

Would he ever have been able to?

BRIAN FUNG, CNN TECHNOLOGY REPORTER: Well, Richard, it's been very clear from Facebook for months now that the company is going to proceed on a path

and a timing of its own choice.

The Civil Rights groups that met with Mark Zuckerberg yesterday brought a list of 10 demands, one of them being that they want Facebook to hire a C-

suite level executive to handle Civil Rights issues.

Another one is that they want the company to address the exemption that it has for politicians under its rules. Apparently, Zuckerberg not really

addressing any of those and moving ahead with the release of a Civil Rights audit today conducted by an independent authority on Civil Rights, Laura

Murphy.

And on the heels of that report, Facebook is saying, look, this report shows that we need to do better and we will do better, but this is a

process and we are making progress on that.

That's not enough for a lot of these Civil Rights groups who have said the audit is simply just a list of recommendations and a critique of the

company. It doesn't represent binding commitments by the company either on its actions and they want more. They want to hear actual concrete promises

from the company as far as what it's going to do to clear up its platform and fight hate speech.

As you heard from Jonathan Greenblatt from the Anti-Defamation League, he didn't hear any commitments, and what Facebook has consistently said is

they've made lots of investments, lots of -- taken some steps in hiring.

[09:15:39]

FUNG: Now, at this point, their artificial intelligence systems are capable of clearing up 89 percent of hate speech on its platform before anyone sees

it, while Greenblatt responded in the meeting that 89 percent is not something that any other company could get away with claiming.

He said that Ford Motor Company, which is one of the companies that signed onto this campaign wouldn't be able to get away with saying 89 percent of

car seatbelts work in its cars and the other 10 percent or so don't work.

So clearly, the Civil Rights groups here are very frustrated, very disappointed in the way that Zuckerberg and his top lieutenants have

handled the issue and some of them even have told me they won't agree to meet with Zuckerberg again until they see some commitments.

QUEST: Brian Fung who is in Washington.

Now the stories and headlines making news around the world. Brazil's President, Bolsonaro, says he is feeling fine the day after he told the

world that he had been tested positive for coronavirus.

He says he is feeling fine, which is interesting from a man who has repeatedly dismissed the seriousness of the pandemic. CNN's Bill Weir is in

Sao Paulo with more.

To Australia now -- we'll have the report from Bill Weir in just a moment. To Australia where the City of Melbourne goes into full lockdown for six

weeks as coronavirus cases surge.

The country has also shut the border between its two most popular states, Victoria and New South Wales in an effort to contain the virus.

Now, we are able to rejoin Bill Weir, of course, who is talking about the Brazilian President, Bolsonaro who says he is feeling fine after he has

been diagnosed with coronavirus.

(BEGIN VIDEOTAPE)

BILL WEIR, CNN CORRESPONDENT (voice over): After months of sneering at a little flu and wading into crowds of unmasked fans, Brazil's Jair Bolsonaro

told his country today that he has COVID-19. But there was no sign of a President humbled.

"I'm feeling very well," he said, and gave much of the credit do two doses of hydroxychloroquine, the controversial antimalarial drug first pushed by

Donald Trump and then stockpiled by Bolsonaro, but unproven as a treatment for COVID-19. And he insisted that the millions of young people he is

urging back to work can still feel invincible.

(BEGIN VIDEO CLIP)

JAIR BOLSONARO, BRAZILIAN PRESIDENT (through translator): Younger people, take care. But if you are affected by the virus, rest assured that for you,

the possibility of something more serious is close to zero.

(END VIDEO CLIP)

WEIR (on camera): When you were Health Minister, did you try to warn him, try to get him out of those crowds for his own health?

DR. LUIZ HENRIQUE MANDETTA, FORMER BRAZILIAN HEALTH MINISTER: Everybody did, not only the Health Minister. All of the other ministers, we all

advised him.

WEIR (voice over): Dr. Luiz Mandetta was Brazil's Health Minister until Bolsonaro fired him for trying to get the nation to stay distant or stay

home.

But instead of the virus converting the President to science, Mandetta worries it will only amplify a pseudo-scientific message of more malaria

pills and less quarantines.

(BEGIN VIDEO CLIP)

MANDETTA: He spins for it and makes a political stand for, well, I had the disease, here look at me, I'm okay. I'm a superhero. I took this medicine

and I really did well. You should do this also.

His message could be a disaster.

(END VIDEO CLIP)

WEIR (voice over): Meanwhile, the largest cemetery in Latin America is not large enough these days and in his 25 years digging at Vila Formosa,

Andenelson Costa (ph) has never seen fresh graves fill up so fast.

"There were four COVID families here this morning and we're shocked," he says. Everyone is the same, ten minutes max. No wake, no way to look in the

coffin, because it is the last greeting they will ever give to the loved one they lost and there is no time for a ceremony.

Bill Weir, CNN, Sao Paulo, Brazil.

(END VIDEOTAPE)

QUEST: Now when we continue on FIRST MOVE, the U.S. Fed's Vice Chair, there's more that we can do, there's more that we will do, he told me, if

it is needed. You'll hear from the Vice Chair in just a second, Richard Clarida.

And Mexico's President flies economy to get to Washington. At least, he has got -- the reason for the trip coming up in a moment.

(COMMERCIAL BREAK)

[09:23:18]

QUEST: A warm welcome back to FIRST MOVE. Julia is off for the day. It's 22 minutes past nine. We're just about seven or so -- eight minutes away from

the opening on Wall Street and the futures are pointing to a modestly higher open overall, trying to bounce back from yesterday's losses.

The NASDAQ fell for the first time in six sessions on Tuesday, but it looks like it's going to reverse that, at least at the open. If you look at the

Russell 2000, the economically sensitive small cap stocks took the biggest hit in the previous session.

Very interesting what's happening with small caps at the moment. They didn't join in the boost that we saw over the last few weeks in as much as

the other more broad based market, although the Dow and the NASDAQ did. Anyway, the Russell 2000 is falling almost two percent.

AMC shares are rallying in premarket. Reports say the theatre chain is working on a financial deal to help it to avoid bankruptcy. And Walmart

higher after a six percent rally on Tuesday. The reports say it may launch a service similar to Amazon Prime, which of course will be a great boom for

Walmart and would certainly give Amazon something to think about.

Air Asia shares are down 17 percent. EY, its auditor say there is significant doubt that Asia's budget regional carrier can survive. Tony

Fernandez's airline, they have qualified the results and talking of now materially significant doubts about Air Asia's survival.

Beijing says Washington should stop peddling what it calls political lies after the F.B.I. Director Christopher Wray called China the greatest long-

term threat to America's economic vitality. Stocks in Shanghai this session signaled rising optimism on China's own prospects.

[09:25:16]

QUEST: Michael Every joins me now, Head of Financial Market Research at Asia Pacific at Rabobank.

Michael, good to have you, sir, and now, let's start with the easy stuff in a sense. Why are China stocks doing so well when the rest of the world is

now rethinking so much of the coronavirus issues and problems?

MICHAEL EVERY, HEAD OF FINANCIAL MARKETS RESEARCH, ASIA PACIFIC-RABOBANK: Well, let's break that down in two ways, if I can. First of all, why are

stocks everywhere doing so well when the coronavirus is still raging around the world? Tens of millions of people are without jobs and millions of

those may never get their jobs back.

And as we heard, company after company around the world is wondering whether it will survive this crisis. So, it is a global question we need to

ask rather than a Chinese-specific one.

But if we are looking just at China and asking why they've had a rally recently, the answer is very simple, because the government wanted there to

be one. That's the be all and end all of it basically.

QUEST: And so as they have in the past, the government is pumping the market?

EVERY: Yes, and you have to say that traditionally that is something that we thought of as a characteristic of Chinese markets, that they would be

easily pumped by the regulators like that to try and initially push the market up a little bit, get all the retail investors running after them to

push it higher and higher and higher, and hopefully everybody notice that share prices are going up and have not notice that the rest of the economy

is moving sideways, at best, if not getting worse.

But of course this is now a global technique, when you have the U.S. President tweeting on almost a daily basis how wonderfully the U.S. stock

market is doing and how badly it would do should his opponent win the election. So we've all become very Chinese in a way.

QUEST: Okay, but the way in which -- I mean, you can only do it for so long. What has been clear, of course, you talk about the U.S., eventually

people realize what's happening, the Fed comes in, we'll hear from the Fed Vice Chair in just a moment.

In China, what happens when the smoke and mirrors are revealed for what it is and that China's trading partners are in deep trouble?

EVERY: Well, obviously not good things. If you pump a bubble anywhere to try and get people excited about the price of a particular asset, whether

it's one company, the stock market as a whole, housing, for example, is another asset, you can just do the same thing, too, and you push that price

up and up and up.

Well, at the end of that journey, you have a crash of one form or another, or at the very least, you have a long period of stagnation where everyone

is feeling pretty grumpy. That is going to happen everywhere that does it and everyone globally is doing it at the same time.

QUEST: We'll put Hong Kong to one side because there are unique issues in that market. But if I look at Indonesia or if I look at Malaysia, if I look

at many other ASEAN markets at the moment, they all have very high PE ratios, particularly forward-looking PE.

So that begs the question, of everybody, it is -- you know, is this all predicated by the same fiction which is the Chinese stock market at the

moment?

EVERY: Oh, absolutely. I mean, you're talking about PE ratios as if fundamentals like that still matter. In many cases, there's no longer any

E. There's no longer any earnings or there are fundamental questions over the long run survivability of the company or even the whole industry given

we don't understand what's happening with corona, but prices continue to levitate everywhere.

So it is exactly the same fiction that you're seeing. And in fact, you know, we are all presuming as if fundamentals and facts matter, and in

reality, perhaps none of these matter anymore at all.

QUEST: How very old-fashioned of us, Michael, to be worrying about things like economic fundamentals and what actually -- and numbers and things like

that. Good to have you, sir. Very kind of you. Thank you. I appreciate your time this morning.

All right, when we come back after the break, the Vice Chair of the U.S. Fed, it was a version of Mario Draghi's whatever it takes. In this case,

we'll do it, we'll do it well and you'll hear what he says after the break.

(COMMERCIAL BREAK)

[09:32:45]

QUEST: A warm welcome back to FIRST MOVE. Julia is off. I'm at the helm for the moment. We're off to the races. The markets are open and doing

business.

If we take at least, the New York market, I should say, if we take a look at the Dow and the way they're trading, they're up about 60 odd points, a

third of a percent. The NASDAQ is having the best of the session on an early start of a half a percent.

New evidence that the U.S. effort to contain COVID-19 is faltering, I mean, who knows what's holding up this market? Is it new stimulus? The

possibility after the White House says it wants a new Emergency Aid Bill passed by early August?

Airlines are on the downward trend. United says it's seeing decreased bookings, which is exactly what you don't want to see at the moment. Gold

is pushing on ahead, $1,800.00 an ounce, highest levels since 2011. Solid reasons why gold is higher, if you look at the current uncertainties in the

economy.

Brooks Brothers, one of the grand old names of men's fashions, now women's fashion of course in the United States, is filing for Chapter 11

bankruptcy. One of the long line of victims of COVID-19 in the corporate world, particularly the retailing.

Clare Sebastian is with me. Brooks Brothers, the button-down shirt, famous from Brooks Brothers, the blue button-down shirt. Why have they gone bust?

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Richard, it's pretty much what we talk about with all of these retailers, it's the acceleration from the

coronavirus pandemic added to the fact that they were struggling before this.

Of course, Brooks Brothers is particularly exposed. They've had to close their stores as many retailers have due to being declared nonessential and

they have seen the drop off in foot traffic, of course, but they are also heavily exposed to something that was happening before this, and that is

the sort of decline in the suit.

People are not wearing pin stripes to work in the same way that they used to. Present company, of course, exempted. They are now working from home,

which means even less demand for things like this. And Brooks Brothers, you know, we saw this coming in a lot of ways.

They had already warned that they might have to close their U.S. factories. They got a $20 million loan in May from a restructuring company. They are -

- a Chapter 11 means they are going to continue trying to operate. They have $75 million in financing to try to do that.

But just another example, Richard of the sort of Darwinism that we're seeing in retail accelerated by this pandemic. I think it was UBS that

estimated 100,000 stores are going to have to close in the U.S. by 2025, yet, more evidence of that today.

QUEST: Clare Sebastian, thank you. We will talk more about it.

The number two official at the Fed has told me that the Central Bank will do more to help the U.S. economy as and when it becomes necessary. The Vice

Chair, Richard Clarida, said there's no limit on asset purchases the Central Bank can make in support of the U.S. economy. He told me, though,

because there are real fears of a double dip recession, he said a double dip recession was not the Fed's base case.

(BEGIN VIDEOTAPE)

RICHARD CLARIDA, U.S. FEDERAL RESERVE VICE CHAIRMAN: After taking a huge hit in March and April, we did see evidence of the economy beginning to

rebound in May and June and that was very, very welcome, but you correctly point out, we have seen an increase in cases in certain large states.

We're not epidemiologists and we're following it closely as we've said many times. Ultimately, the course of the economy is going to depend on the

course of the virus and we're following it very closely.

QUEST: But if we look at the risk, if we look at the number of cases that are going up and we look at the sort of lockdowns that are taking place, do

you have the right tools in place, for instance, if there were to be a double dip recession? Is a double dip even on your horizon?

CLARIDA: Well, look, we look at a broad range of scenarios. It's not our base case. But of course we look at all relevant eventualities. What I can

say is, as your earlier clip indicated, you know, we have a lot of accommodation in place.

There's more that we can do. There's more that we will do if we need to. And as you correctly point out, fiscal policy is an important part of this

and it looks like negotiations may well result in some additional fiscal support as well.

QUEST: You say there are things you can do and there are things that you will do. Is that your version of the famous whatever it takes?

CLARIDA: Well, you know, Mario Draghi has sort of got the trademark on that phrase, the copyright on that phrase. What we will say and what we have

said is when it comes to the size of our balance sheet, we make those decisions. There's no limit to how much we can purchase in terms of

Treasuries and mortgage-backed securities.

You talked about the alphabet soup of programs. I think it's important for your viewers to know, Richard, these programs are meant to encourage and

support the flow of credit to households and businesses in the economy and those will remain in place as long as they're needed.

So there's more that we can do and there's more that we will do if we have to do it.

QUEST: And on that alphabet soup, some of them are more esoteric unless you're actually in the market, municipal bonds one for example, some of the

corporate debt ones.

Some of them haven't been used very much. Is the idea here the old traditional Fed idea, you know, you don't -- it's like a lender of last

resort. You hope you never need it and the mere fact you're there with these plans deters anybody?

CLARIDA: Richard, I'm glad you asked that because I think that's actually quite important. I think announcing that these are backstop facilities, so

we really hope companies and individuals don't necessarily need to access them.

But they are backstops if needed and I think there's a lot of evidence that just announcing the facilities are in place are essentially allowing

private markets to function much better and we think that's great.

So these are backstop facilities and if we need to be used, they're there. But I think we do see the flow of credit at good levels in many parts of

the economy, so that's positive.

QUEST: On the stock market, barely four months on, the NASDAQ set a record high, the Dow is flirting again. Just about every economist we have on

"Quest Means Business" always says the same thing, and perhaps you would have said it in a previous life, Vice Chair, which is, well, of course the

market is high, the Fed is pumping so much liquidity. This is a Fed market.

Now, it's not your responsibility to prop up the stock market, but that is the effect of what's happening.

CLARIDA: Right. Well, I think, look, our focus is now and always has been on putting in place policies that help us to achieve our -- the goals that

Congress has assigned to it, which is full employment and price stability.

Obviously, our policies work through the financial markets and our focus is not on any one market. It's really on a broader question, can companies get

access to funding to financing so that they can stay open?

We're providing a bridge to companies. We think that's important, and obviously a lot of factors contribute to market prices, so I'm not going to

go into that. But our focus is not really on any particular market. It's on getting the economy back to full employment and price stability as soon as

possible.

(END VIDEOTAPE)

[09:40:25]

QUEST: Richard Clarida talking to me yesterday. Now, in a moment, financial disrupters. I talk to the South Korean Fintech that has completely changed

the landscape. I'll speak to the CEO of Toss on how the pandemic has changed the landscape and what they are doing to respond, in just a moment.

(COMMERCIAL BREAK)

QUEST: Israel's Director of Public Health has resigned as the number of confirmed cases of coronavirus seems to be out of control in Israel. The

Director says that his warnings about an early reopening were ignored and the results are now following. CNN's Oren Liebermann reports from

Jerusalem.

(BEGIN VIDEOTAPE)

OREN LIEBERMANN, CNN CORRESPONDENT (voice over): If Israel's first wave of COVID-19 was a success story, the second wave appears on pace for a very

different ending.

(BEGIN VIDEO CLIP)

BAR COHEN, JERUSALEM RESIDENT: I am still taking care of myself and washing my hands and not getting close to people so much. I hope it will be fine

soon.

(END VIDEO CLIP)

LIEBERMANN (voice-over): As coronavirus cases surge across the country, the government has re-imposed closures of public halls, pubs, gyms, pools and

more.

With unemployment already more than 20 percent, Prime Minister Benjamin Netanyahu is trying to avoid another complete lockdown.

(BEGIN VIDEO CLIP)

BENJAMIN NETANYAHU, PRIME MINISTER OF ISRAEL (through translator): Today, there are around 90 severe cases and the numbers doubling every four days.

If we don't act now, there will be hundreds, perhaps thousands of severe cases in coming weeks, which will paralyze our systems.

(END VIDEO CLIP)

LIEBERMANN (voice over): When the country reopened in early May, Israel looked like an international coronavirus success story: low mortality rate,

few new infections, available hospital space, and Netanyahu was riding that first wave to high approval ratings.

[09:45:16]

LIEBERMANN (voice over): Then came the second wave. Daily infections that increased 50-fold, 20 new cases a day are now a thousand new cases. Active

infections hit record highs, and Netanyahu's approval rating on the handling of COVID-19 has plummeted: 74 percent in May to 46 percent now,

according to recent polling.

The national unity government, formed specifically to deal with coronavirus, appears more concerned with political squabbles.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE (through translator): This government is crap and the prime minister is full of crap.

(END VIDEO CLIP)

LIEBERMANN (voice-over): Sixty percent of Israelis fear for their financial future, but worry that bad can still become worse.

(BEGIN VIDEO CLIP)

ARI BARROZ, REHOVOT RESIDENT: My heart goes out. I don't know how people are maintaining, people raising families, people who have lost their

businesses. The last shoe has not yet dropped, unfortunately. So it is concerning.

(END VIDEO CLIP)

LIEBERMANN (voice-over): On Tuesday, the top public health official at the Ministry of Health resigned, saying her professional opinion was no longer

accepted and warning that the country is approaching a dangerous place.

"To my regret, for a number of weeks, the handling of the outbreak has lost direction," she wrote in her resignation. "Despite systemic and regular

warnings in the various systems and in the discussions in different forums, we watched with frustration as the hourglass of opportunities runs low."

In late April, Netanyahu said Israel had been successful in its mission to combat coronavirus as he began easing restrictions and opening the economy.

But the mission isn't over yet.

Oren Liebermann, CNN, Jerusalem.

(END VIDEOTAPE)

QUEST: We are under way. The markets are trading. The Dow, the NASDAQ and the S&P 500, they were at the start all showing small gains and those gains

are just basically extending marginally, so we're looking at a good day, well, at least after the 20 minutes in. Who knows where we will end?

It's FIRST MOVE with Richard Quest in for Julia.

(COMMERCIAL BREAK)

QUEST: The pandemic is clearly changing the way we pay for things. Look no further than South Korea, where the company Toss is hoping to create new

markets and take advantage of what has been going on.

Toss is a financial services platform with a valuation of nearly $2.5 billion. And among its investors is PayPal. It turned a profit in April and

is expanding into a fully-fledged bank. South Korea's third digital only bank.

Lately, Toss has had one or two security concerns that we will talk about and particularly about having to compensate customers who have fallen

victim to fraud.

S.G. Lee is the CEO of Viva Republica which created Toss. S.G. Lee joins me now via Skype from Seoul.

[09:50:10]

QUEST: It is good to see you. Hopefully, you can hear me. When I look at the growth of Fintech and payment methods and the way in which companies

like yours have been able to find opportunities in this pandemic, where do you see them?

SEUNGGUN LEE, CEO, TOSS: So, I think people are more and more looking to find a way to solve their financial needs more on mobile, and less

preference to retail or front retail.

People are trying to fulfill their financial needs in internet when it's mostly mobile rather than just go to the offline branch, that 90 percent of

cases, all the transaction has been done by the offline branches so far.

Starting this year, because of the COVID situation, it changes everything.

QUEST: Why do you want to become a fully-fledged bank? What is the advantage to having a banking license rather than just being a payments

mechanism?

LEE: Right, so Toss is -- we are the first one who operate in the world so far, the financial super app that enables every financial need for every

financial facet.

So from the money transfer and for the loans, we offer the full suite of the consumer finance that solve any financial needs in retail, and as we

are doing this, we came to find that rather than let the bank offer the best product of the loans, why don't we just go and double down and provide

loans from ourselves so that we can dramatically lower the interest rates compared to that of the loans of the traditional bank.

QUEST: You're aware, of course, that you've had one or two issues concerning fraud within the payment mechanism, which you've had to

compensate.

I guess what I need to understand from you is, new Fintech loves the open boundaries, the possibilities, the opportunities, but you also have to take

onboard the responsibilities of bank ratios, tier capital, dealing with fraudulent claims. Do you accept that there's two sides to new Fintech?

LEE: I think that in general, every entrepreneur in the Fintech industry believes there is a way we can achieve secure, but also a very convenient

way to do any transactions.

It's about the trust and I think the industry, including Toss is valuing -- reliability is a big issue, so we are really focusing on the security so

that we can just make sure that everyone really trust Toss as their main platform of finance and believing in Toss as really safe as cash.

We're trying to do very in advance, full comprehensive compensation policy, so we already launched the new policy enabling to suspend all the accounts

if the user claims fraudulent transactions and refund all the loss, even in its investigation process.

I think -- well, for Toss it wasn't really a security issue. It was a fraudulent payment scam by identity theft.

QUEST: We seem to be having difficulties hearing. S.G. Lee joining me from Seoul in South Korea. Thank you, sir.

President Trump meets the Mexican President today. Andres Manuel Lopez- Obrador left Mexico City on a commercial flight. He did manage to snag an emergency exit row seat. I wonder whether he paid extra for that.

Anyway, he flew commercial after he tested negative for coronavirus. His visit to Washington is to celebrate the new USMCA.

Matt Rivers is in, joins me now. So he is going to the U.S. in economy, in emergency seat to meet President Trump, but Justin Trudeau of Canada is not

going. Square that circle.

MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: Yes, I mean, Richard, Justin Trudeau isn't going because you know, there's a really bad pandemic in the

United States right now. There's a bad pandemic in Mexico.

Trudeau said, look, maybe now is not the best time to be having this meeting. But you have two leaders, and President Trump and President Lopez-

Obrador who have a lot of common ground when it comes to their approach to the coronavirus crisis.

[09:55:10]

RIVERS: They would rather talk about the economic reopening than the fact that, for example, in the U.S. you've got cases surging, here in Mexico,

cases and deaths have tripled roughly since June 1st.

But clearly, these are two men who want to talk about something other than the coronavirus and it's interesting when you look at the timing of this

meeting, neither leader is getting good marks when it comes to public polling in their respective countries on their respective handlings of this

outbreak.

And so maybe they're looking at this meeting, both of them, as a distraction, if only to get the media to talk about something else for a

little while.

But you know, here in Mexico, Richard, there's also been a lot of criticism of Lopez-Obrador going to Washington, D.C., given the demonizing rhetoric

that you hear from President Trump about immigrants, a lot of them are Mexicans. But clearly, Lopez-Obrador prioritizing the economy because the

USMCA is crucial for Mexico's economy down here -- Richard.

QUEST: Matt Rivers, who is there. We'll follow that story as it goes on.

That is FIRST MOVE. I'm Richard Quest. I'll see you on "QUEST MEANS BUSINESS" in a few hours from now.

(COMMERCIAL BREAK)

[10:00:00]

END