Return to Transcripts main page
First Move with Julia Chatterley
European Leaders Agree A Massive COVID Spending Plan; The White House And The GOP Remain Divided Over Fresh Financial Aid; The U.S. Sanctions More Chinese Firms, Beijing Calls It A Mistake. Aired 9-10a ET
Aired July 21, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:31]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from New York. I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
E.U.-phoria. European leaders agree a massive COVID spending plan.
Republican rupture. The White House and the GOP remain divided over fresh financial aid.
And a China clamp down. The U.S. sanctions more Chinese firms, Beijing calls it a mistake.
It's Tuesday. Let's make a move.
Welcome once again to all our FIRST MOVErs around the globe. I'm calling it a big shot edition of the show today. Big shots in Europe, as I mentioned
agreeing to a whopping multibillion dollar recovery deal. Then we've got congressional big shots in D.C. fighting over the next stimulus bill. And,
of course, the big vaccine shots that will hopefully help us emerge from the COVID crisis.
All three, I think providing a boost to global sentiment -- more help is coming. I think that's the message. The U.S. and Europe adding to Monday's
gains. European stocks, in fact now, at four-month highs.
Germany's stock market has traded positive year-to-date now. In Asia, Hong Kong was the winner up some two percent, plus context important though,
still down some nine percent on the year.
We said it was all about tech this week, too and no disappointment there with the NASDAQ hitting fresh record highs. Amazon spiked almost eight
percent in the session yesterday. Microsoft rising more than four percent. Tesla jumping over nine percent.
There is nothing normal about these moves and I have to say I'm not the only person who is nervous. Investor Mark Cuban now says he sees
similarities to the stock market bubble in the 1990s. His message is, don't get greedy.
We have to keep in mind, second quarter U.S. earnings still set to pull some 40 percent, the worst quarter since the financial crisis, yet you have
to say the mixture of new fiscal stimulus, Central Bank aid and vaccine hopes appears to be the best immunization from fear that we've got at this
moment.
Still, it may make sense to be aware and take note of these business big shots, too.
Let's get to the drivers. A landmark E.U. agreement aftermath and talks leaders have agreed a coronavirus relief package worth some $860 billion as
well as a $1 trillion plus a budget for the next seven years.
John Defterios is here with all the details. John, great to have you with us. Two words, debt mutualization. The COVID crisis has done something that
no amount of suffering during the European debt crisis has achieved, and that's joint debt in order to finance support here. Quite fascinating.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: It is and the debt to GDP as a result of this package, Julia, a lot of people are overlooking
because of the euphoria of the deal is over a hundred percent of GDP, but can I say what a grind here. It almost felt like a university all-nighter,
if you will, because they didn't sign this until just past 5:00 a.m. in Brussels. So it took a lot to get there.
But this is pretty good, $860 billion for the stimulus plan alone considering all the domestic programs that are already in place, at least
from the wealthier states.
But I have to say Julia, Humpty Dumpty almost didn't stay glued together this time around because of the north-south divide. It was all about the
grants versus the loans here and when they came in, the package was supposed to be direct aid or grants, two to one over the loans.
But the Frugal Four led by the Netherlands said, no can do here, and it was almost a 50/50 split with governance conditions tied into those grants as
well going forward. Something that kind of irked the Southern Europeans who need the direct aid.
And at the end of the day, I always find it quite fascinating, the European Union is the two anchor states that kept them glued together as a union
being Germany and France with Angela Merkel and Emmanuel Macron actually holding a joint press conference at the end of this arduous negotiations
saying when we do need to come together, we can and the chips were on the table this time around for sure.
CHATTERLEY: Yes. Angela Merkel's legacy, I think being defined hereto, with a step up in powers for E.U. institutions. You could make the argument that
she worries about what the 27 remaining nations of the E.U. will do going forward given the steep divisions here.
You made the point though, the Frugal Four, at times Frugal Five had to be in some way pacified here. Tax rebates? A lesson learned from the Brits
here perhaps, too?
[09:05:11]
DEFTERIOS: I like the point you're bringing up. You know what? The other spin I have on this is that failure wasn't an option and Angela Merkel with
her 15 years as Chancellor knew it.
I think the primary reason is because of the formal Brexit in 2021, right, Julia, they wanted to send a message to others who are perhaps thinking of
breaking out that this unity will stay.
Number two was a message to the anti-European Union populace at the same time. I'm thinking of the Five-Star Movement or Cinque Stelle in Italy and
the populists in Spain who have been arguing we're suffering through this, and we need some support, and they had to balance that against the north at
the same time. So I think this is important.
And one other thing that the United States is not doing that Europe is doing, they're making this a long term infrastructure play for green
infrastructure.
By the way, the energy transition is all over this. The President of the European Commission was suggesting it's a sustainable package over seven
years, and we've had the Germans, the French, the U.K., even outside the European Union, leading this charge at the transition. So it's not just
throwing all kinds of money at nothing. It is saying, let's rebuild Europe at the same time and make it greener. It's a pretty fascinating deal.
That's why it took nearly five days to get it done.
CHATTERLEY: Yes. Money is always tied to reform in the E.U. You're not escaping without doing some degree of reform when you get it.
John, very quickly, and this is a tough one to answer quickly, do you think this is as close as it gets to the United States of Europe? They've come
together on this during this crisis. Is this as good as it gets?
DEFTERIOS: Well, I tell you, this was a real test, and I think it was something that Merkel wanted to get delivered, but because we had the
migration issue over the last six years, right, with the Middle East, and Africa, particularly with Syria, and because of the criticism from the
Southern Europeans that Brussels is not doing enough for them, this is as close as you get to getting the deal that starts to glue them closer
together for a longer period of time.
Seven years, $2 trillion is quite a bit, but they had to answer the call, Julia, after the failure on so many fronts in the past.
CHATTERLEY: Yes, I couldn't agree more. John Defterios, great to have you with us on that. Thank you.
So Europe may have a deal, but here in the United States, agreement on a fresh stimulus package feels, well, challenging.
The Republican Party and the White House don't see eye to eye on hot button issues, including more funding for COVID testing, and a payroll tax among
others, and all of that before they've even started talking to the Democrats.
John Harwood joins me now. John, I think some of the Republicans and the Democrats here would be gleeful if they could agree this in five days, not
looking likely based on disagreements even between the White House and the Republicans here, never mind the Democrats.
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: That's right Julia, but I do think that events are pushing the leverage toward the Democratic Party. The
Democratic Party passed a $3 trillion bill in May, when it appeared and certainly President Trump was encouraging the idea that the United States
was putting the pandemic behind us.
Well, the situation obviously has deteriorated sharply since then. Republicans slow walked the idea of responding to the Democrats. But now
that the pandemic has gotten worse, the President's polling standing has gotten much worse. Republicans are increasingly worried about their
electoral prospects and the economic recovery, as you know, Julia has begun to slow.
That is putting more and more pressure on Republicans to fund some extension of the expanded Federal unemployment benefits, provide some money
to states and localities and, crucially providing money for expanded testing and tracing which the administration has resisted and now Senate
Republicans are beginning to buck the administration and say, yes, we need to substantially increase testing and tracing.
CHATTERLEY: You mentioned so many great points there. The incentives now are aligning even if the Democrats wanted $3 trillion. The fact that we've
been coming to some kind of agreement on doing more here is critical and the economy at the heart of that, but also the health crisis, too, John.
Interesting to see the President finally tweeting last night, it is patriotic to wear a mask. Also reinstating it seems the coronavirus press
briefings, too. What can we expect today from the first one?
HARWOOD: Well, those are the kinds of shifts that you would expect to happen when a President is in a deep, deep political hole as he runs for
reelection. The President also fired his campaign manager last week. The question is, will the President be able to pivot in a way that helps
himself?
The embrace of masks in his tweet yesterday was grudging. He said, many people say it's a patriotic thing to wear a mask. He included a picture of
himself. He didn't say himself that he was urging people to wear a mask. And he didn't, to state the obvious, invoke any kind of Executive Order
mandating mask wearing.
[09:10:17]
HARWOOD: Even this morning, when he was tweeting about the pandemic and the resumption of briefings, he continued to assert we're doing very well with
the virus. That is false, and Americans know it's false. We're not doing very well.
In fact, we're doing very poorly compared to the European Union and others who have gotten on top of this situation, if not crushed the virus,
dramatically suppressed it.
So the question is, does the President try to handle this himself? Usually, when he handles things himself, he hurts himself politically, or is he
going to put push out the highly respected members of his Taskforce like Anthony Fauci who he has been discrediting in recent days.
That would be the advisable political move for him to make, but it's not clear whether he can do that, yield the spotlight and acknowledge that his
response has been inadequate so far. That's very difficult psychologically for the President to do.
CHATTERLEY: Yes. A U-turn on recent criticism. Many angles here. Few hours to wait. We shall see. John Harwood, great to have you with us. Thank you
for that.
Now, U.S. Secretary of State, Mike Pompeo is in London this hour for meetings with Prime Minister Boris Johnson and Foreign Secretary Dominic
Raab. Talks are focusing on China and are expected to include concerns over Hong Kong anti-Chinese telecommunication communications giant, Huawei.
CNN's Nic Robertson is live at Downing Street with more for us. Nic, a very delicate balancing act that the U.K. has got going on here. It knows it's
angering China with recent moves, but at the same time in the absence of a broader trade deal with the E.U. here, America, that relationship -- all
the more important.
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Absolutely. It's all on the table for Boris Johnson and I think we've got a flavor of that in a
statement from 10 Downing Street on their view, the Prime Minister's view of how his early discussions went with Secretary Pompeo.
The Secretary of State is now meeting with Dominic Raab. They're having lunch together. They will hold a press conference in about an hour. They're
sort of spending the most time together. They'll meet again together this evening.
But the view from Downing Street yesterday talked about a British initiative which is to have the Five Eyes group of nations: the United
States, along with Canada, along with Australia, along with New Zealand, along with the U.K. develop new technologies.
This is sort of the British answer to, where if we can't have Huawei 5G, then let's all of us who work together in security, let's develop that
ourselves.
There was talk as you said, China, Hong Kong, the Uyghurs, Xinjiang Province, obviously we've heard from the U.S. side that they've put
increased sanctions on Chinese companies based on the human rights violations for the Uyghur minority down in Xinjiang. So that's clearly come
up for conversation.
It's not something Britain has done yet, the British, according to the Chinese Ambassador here shouldn't go down that path and follow the United
States. They've talked as well about Iran, about the Middle East peace process. And yes, as you said, the importance of that Free Trade Agreement
because the one with the European Union is looking shaky, at best.
If the U.K. can get at least a provisional agreement by the end of the year, that would give the Prime Minister a reason to sort of breathe a
little easier on the other issue that's come up, according to Downing Street was the issue of Harry Dunn, that young teenager who was knocked off
his motorcycle near a U.S. base last year, killed by a the wife of an American diplomat, Anne Sacoolas.
Extradition requests over her from the United States that the U.S. been very clear, that's not going to happen. So that's a thorny issue on the
table as well.
But as you say, it's that balance over the Free Trade Agreement and being perceived as not doing America's bidding on everything they want on China.
The Prime Minister said he wants and he knows that the relationship is going to go on longer. He wants to keep that relationship with China open
as well.
CHATTERLEY: Yes, receive something, but don't give up too much. Lots to discuss. CNN's Nic Robertson, thank you so much for that there. And as Nic
mentioned, we'll bring you that press conference with Mike Pompeo and Dominic Raab in the next hour.
Now picking up on one of the things Nic was saying there, Beijing accusing Washington of violating the basic norms of international relations
following fresh U.S. sanctions.
The U.S. Commerce Department, singling out 11 Chinese companies over alleged human rights violations in the Xinjiang region. This would also
pressure some major American companies doing business with the sanctioned Chinese firms.
David Culver is live in Beijing with more. David, I know your pronunciation is far better than mine here. Talk us through what we know.
DAVID CULVER, CNN CORRESPONDENT: Only based on asking the locals here, that's how you learn it. But I can tell you one thing, it is interesting to
hear from Nic's perspective there as Secretary of State Mike Pompeo is meeting with British officials right now, and the focus, as Mike Pompeo
laid out last week is the Chinese Communist Party. That's top of the agenda.
[09:15:17]
CULVER: And it's interesting that they're continuing to push that directly, not just China in general, but the party is what they're now singling out
with the rhetoric, Julia, and this is Xinjiang that you're referring to. And Nic mentioned it as well. It's that far western region, and the 11
companies that have been sanctioned have really a range of roles.
They run from biotech to making wigs, and as you mention, those companies that are American companies that might be doing business with those
entities could face backlash as well and potential sanctions as they're continuing to operate, and those are major companies in the U.S.
According to one report published by an Australian strategic publication that suggests these could be Nike, it could be Apple, it could be Calvin
Klein, so really well known brands.
What is going to be interesting here is to see beyond rhetoric, where do the Chinese go? Because what we have seen in recent weeks is as the U.S.
has continued to either issue sanctions with regards to Xinjiang, with regards to stripping Hong Kong of its special trade status, with regards to
increased attentions in the South China Sea, no matter where it is, the Chinese have said that this is a domestic issue with regards to Xinjiang,
that has to do with terrorism and subversion and preventing separatism and stopping extremism.
They go on to say this is internal affairs and everyone else should essentially keep out of their business. That's how they phrase this. And
they say they will respond with necessary countermeasures.
Julia, they stopped short though of specifics there and part of me wonders, are they waiting on the U.S. election? Are they going to wait this out long
term? Are they going to perhaps react after the U.K. weighs in with any potential backlash that they may be putting sanction-wise with regards to
Xinjiang?
It is just right now a waiting game, but the rhetoric is strong. The actions haven't yet followed suit -- Julia.
CHATTERLEY: Yes, it is fascinating, isn't it? Particularly as far as the United States is concerned. It's one of the few things where both the
Democrats and the Republicans seem aligned on is being more forceful in handling China here, so I'm not sure. I suppose the waiting game goes, it's
going to work.
David Culver, we will discuss this no doubt through the coming weeks. And thank you once again for the pronunciation. I won't get it wrong next time.
All right, still to come on FIRST MOVE, the shopping shake up. The CEO of bulk buying company Boxed on how the pandemic is reshaping retail.
And the company taking on the dairy industry with a little help from Oprah. I speak to the CEO of plant milk maker, Oatly, after a celebrity heavy
investment round.
That's all coming up. Stay with us.
(COMMERCIAL BREAK)
[09:20:41]
CHATTERLEY: Welcome back to you FIRST MOVE live from New York where we are looking at a green open here on Wall Street. The NASDAQ set to hit fresh
records once again. The S&P 500 actually beginning this session, if we start like this in positive territory again for the year, too. Optimism, I
think over the E.U. recovery deal and vaccine hopes, helping it drive sentiment in the session today.
Anything, of course that helps support growth going forward will also help oil demand and we're seeing Brent and U.S. crude both up over three percent
in the session so far. That $40.00 a barrel oil as you can see there trading above, in both cases for Brent and WTI. Context, so everything oil,
still down some 30 percent year-to-date. So these gains have to be put in perspective.
Meanwhile, speaking of perspective, weakness in the jobs market triggering a punishing round of layoffs at LinkedIn. The networking site announcing
today that it is laying off Six percent of its global workforce, citing the drop in corporate hiring.
Right now to the global race for a coronavirus vaccine. Early results from trials suggesting a vaccine developed by the University of Oxford and
AstraZeneca is safe and induces an immune response, as we were to coming on the show yesterday.
(BEGIN VIDEO CLIP)
ADRIAN HILL, DIRECTOR, JENNER INSTITUTE, OXFORD UNIVERSITY: I think getting a grip on coronavirus will be next year, having a vaccine distributed
hopefully will be before the end of this year.
But remember distributed is anything from producing a million doses to two billion doses, and the sooner we get an efficacy result that is positive,
the faster we can scale up.
So I think it's really quite likely that we will know by the end of this year or maybe even a few months before that that some vaccine works.
(END VIDEO CLIP)
CHATTERLEY: Dr. Amesh Adalja is Senior Scholar at the Johns Hopkins Center for Health Security and he joins us now. Dr. Adalja, fantastic to have you
on the show. I'm sure you were just listening to that.
Do you share that level of optimism about a vaccine coming before the end of the year or do we need to be a little bit more cautious?
DR. AMESH ADALJA, SENIOR SCHOLAR, JOHNS HOPKINS CENTER FOR HEALTH SECURITY: I do think we need to be a little more cautious. You have to remember that
vaccine development is something that's traditionally measured in years, not months, and although we are breaking records with coronavirus vaccines,
we have to be prepared for things to slow down in Phase 3 clinical trials or with manufacturing scale up.
So we need to really prepare to fight this virus without a vaccine for probably a period of 18 months to two years, because that's how long it's
going to take to get it scaled up, to get it into the arms of people all around the world, and I think that's an important point to make that we are
making great progress, but we shouldn't over promise.
CHATTERLEY: Yes, as someone who is focusing on the policy planning and the pandemic response, when you're saying, look, we've got to be prepared for
an 18-month to two-year run, we have to pay attention here.
We'll come back to that. I just want you to describe, because often, I think we throw out these terms like Phase 1, Phase 2, and Phase 3, and I
just want to make sure that my audience understands what we're looking for particularly in Phase 1 and Phase 2, and then we can talk about Phase 3.
ADALJA: So Phase 1 and Phase 2 clinical trials are early development and Phase 1 really focuses on safety. Does this cause an intolerable amount of
side effects? And clearly, the vaccines that have advanced through Phase 1 have had some side effects, but all manageable.
So it tells you that this is relatively safe, and in small numbers of people. It doesn't tell you the whole picture, but it gives you enough of a
signal to move into Phase 2, where they continue to study safety, but now also, try and study does the vaccine do what it is intended to do? Meaning
does it create antibodies? Does it create T-cell immunity? And at the same time, is it safer in a larger group of populations?
And you start to figure out what the dose might be. Do you need to get one dose or two doses or how many micrograms per dose do you need to give?
So Phase 1 and Phase 2 are the early stages of development to try to get you into Phase 3, where all the real work really begins.
CHATTERLEY: And then when we're talking about Phase 3, we're talking about challenging the vaccine, so putting the people that have received the
vaccine effectively into harm's way in situations where the virus is spreading and they either are protected or they aren't from the virus. Is
that correct?
ADALJA: Right. So what Phase 3 does is really show the show whether or not the antibodies and the T-cell immunity that we proved in Phase 2, is it
effective in stopping people from getting infected? Needing to be hospitalized? Getting a complication or dying from this or spreading the
virus?
We're checking it for really hard outcomes to see, does this actually work in a real world setting? So there are many places in the world where this
virus is circulating.
[09:25:26]
ADALJA: So what you do is you randomize people to get the vaccine and not get the vaccine and then compare the rates of what happens to those people.
And this is a larger study with a larger group of people and you follow these people for a longer period of time and that's really, when we know
this vaccine is something that's going to be effective against this virus.
CHATTERLEY: When we're talking about what we're seeing at this moment, whether it's AstraZeneca and Oxford University, we're seeing big
manufacturing deals being signed all over the world. The Serum Institute of India as well, I believe involved with AstraZeneca and Oxford University,
too.
They are prepared and willing to scale up in terms of manufacturing capacity before we've even got to the stage where we're happy with the
results from Phase 3.
Beyond actually seeing a vaccine that we're happy and it is safe and it works. Is the greatest risk here in manufacturing a vaccine that may never
come to market?
ADALJA: Yes, it is. It's a major financial risk and we've never seen this before with any type of vaccine and it's also embodied in Operation Warp
Speed going on here in the United States.
This is something that people have decided needs to be done because we cannot wait because we know that the longer that this virus remains a
threat, the longer all of our lives are in jeopardy, that our economy is in shambles, and this is one way to try and reduce that lead time for a
vaccine so that we can get it into the arms of people and make this virus something that's part of our past as quickly as possible.
But it is a major financial risk to do that, because some of these vaccines may not make it through Phase 3 clinical trials.
CHATTERLEY: You know, it's interesting as someone who looks at policy planning, we've not second guessed this decision at all, whether that's the
private sector or the public sector. We don't feel like we have a choice, yet where things like wearing masks are concerned, listening to expert
advice, particularly here in the United States, there has been serious mixed messages.
Do you worry that not necessarily knowing who to trust, when and how to behave will also impact people's willingness to take the vaccine, and that
could have huge implications for health, too? We can't mess this up.
ADALJA: Definitely. The Vaccine Hesitancy Movement and the Anti-Vaccine Movement are ready to pounce on this vaccine even before it's been
developed. So this is going to be very important for public health messaging to really be clear about what the safety is, what the side
effects are, what the risk benefit ratio is, and to persuade people to get the vaccine when it is in their best interest.
And this is going to be difficult because you can expect this to be politicized. You can expect the Anti-Vaccine Movement to undermine
confidence in the vaccine, and this is something we saw during the 2009 H1N1 influenza pandemic as well, where that vaccine was undermined, and we
had one of the lowest uptakes of a vaccine for flu ever.
So this is something we really have to start thinking about now and making sure that we're on the offense and not reacting to myths and disinformation
and arbitrary assertions that are going to come from the Anti-Vaccine Movement, undoubtedly.
CHATTERLEY: Yes, there is enough resistance without seeing sort of political interference, perhaps on the top.
Dr. Adalja, fantastic to have you with us. Thank you so much for your wisdom. Senior Scholar at the Johns Hopkins Center for Health Security.
Thank you for that.
ADALJA: Thank you.
CHATTERLEY: All right. The market opens next. Stay with us.
(COMMERCIAL BREAK)
[09:31:38]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stock markets are up and running this Tuesday. We're building on yesterday's gains in early trade.
Tech, which rallied two and a half percent Monday outperforming once again as you can see, but airlines, banks and energy stocks are also higher, too.
The recovery play in focus.
The tech giant, IBM, is also gaining strength after beating profit expectations. The gloomy sales woes continue, though, with revenues down
more than five percent, but Cloud computing results came in stronger than expected and that's helping the stock driving at higher today. Margins also
better for that name as well.
Coca-Cola in focus. Sales taking their biggest quarterly hit in decades amid weak demand from restaurants, but the firm did see improved beverage
demand globally going forward. So slight forecast coming from Coca-Cola thereto.
In the meantime, a big executive departure in the world of retail, the CEO of luxury goods conglomerate, Tapestry is stepping down after less than one
year on the job, the company says for personal reasons. Tapestry is the parent company of the Coach and Kate Spade brands.
Now, if there's ever a time to be a big box online retailer, surely it's during a pandemic and that's exactly what our next guest does. Boxed
appears better equipped to deal with the current surge in U.S. coronavirus infections, which is putting traditional retailers under further strain,
while increased consumer demand has served it well though.
There are concerns about staff safety and delivery capacity. Two of the firm's three fulfillment centers are in Texas and Nevada, states that have
seen a significant uptick in cases.
Chieh Huang is the co-founder and CEO of Boxed and he joins us from the company's other fulfillment center in Union City, New Jersey. Chieh, always
fantastic to have you here on FIRST MOVE.
Let's start there just with what you're seeing in terms of demand and how you are protecting workers that you have on those sites.
CHIEH HUANG, CO-FOUNDER AND CEO, BOXED: Yes, you know, a lot of folks have been saying unprecedented throughout history. I don't know if they're 100
percent getting it right whenever they use that term. But truly what we've seen has been unprecedented, from the stocking up early on to the second
kind of surge of demand now that we're seeing especially in non-food products and cleaning products.
It has been a few wild, wild months for all of retail and especially for us here at Boxed.
CHATTERLEY: Are you seeing unprecedented -- to use your word, and we have overused it -- levels of demand. I mean, you clearly saw a period back in
April when we saw the peak, particularly in areas like New York City. But obviously we've seen it shift now to southern states, too. Protecting
workers clearly a critical part of this as well.
HUANG: Absolutely. And it has been the ultimate responsibility for us to not only take care of our customers, but also equally as important take
care of those folks within our buildings.
And so we had -- we bore the worst of it over the last 60 to 90 days here in New Jersey, here in New York City. But now, our other fulfillment
centers between Dallas and in Vegas are seeing that second wave.
And so for us, taking those learnings that we've learned here in the East Coast and propagating those throughout the country in our other buildings
has been really important. Things like mandatory 30-minute downtime between shifts where no one is mingling in the parking lot. Things like allowing
folks to spread out during breaks, mandatory facemasks.
All the things that make folks really believe we're doing the best for them have been really important for us.
[09:35:06]
CHATTERLEY: We're actually just showing some images, and I know one of the key differentiating factors for your business is just how much it is
automated. But we were just showing some of your workers and they weren't wearing masks, but they were wearing gloves.
I just want to make sure for our viewers that are perhaps wondering, what is your policy with regards mask wearing wherever you're operating the
warehouses around the country?
HUANG: Yes, actually here in our building, it might have been some B-roll that was filmed beforehand, but right now, everyone gets to -- as you as
you walk into the building, you're required to have a mask on the minute you set foot in the building.
So there's a no tolerance policy in the sense of once you come in here, we've got to keep everyone safe and you have to have a mask on.
CHATTERLEY: Yes. Okay. Perfect. I just want to clear that up in case we get questions afterwards. What exactly are people buying and have you seen,
particularly peak case times when we are seeing people perhaps concerned. Have you seen certain things being bought more often? And has that now
lessened off or are they still buying what we saw during peak crisis period?
HUANG: Yes. So, you know, every time we're on the show, we kind of joke about the fact that I'm a toilet paper salesperson. And throughout these
years, I never thought it would be that popular of a profession in 2020.
But you know, that initial hoarding of toilet paper has definitely subsided. Folks have moved on from there to canned foods, canned goods and
then now, in the most recent surge, what we're seeing is that, you know, cleaning supplies, anything antibacterial is starting to see a renaissance
of sorts in terms of what the customers are demanding.
So it's been ebb and flows of what we're seeing. But right now everyone has definitely from our data has shown that cleaning products are top of mind.
What's really interesting for the viewers out there as well is that when you quantify kind of what we're seeing today, the cohorts of customers that
are coming in are the stickiest in the history of our company.
And I think for other online players, they're probably seeing it there as well. Both are shopping for the first time online for these products and
after they receive it, if it's a decent price, if it's not damaged, they're thinking to themselves, why didn't I do this the entire time?
CHATTERLEY: Yes, it's quite fascinating, isn't it? What kind of increase in new uses have you seen throughout this period? Stickiness is one thing, but
just bringing them onto the platform in the first place is critical, too.
Yes, starting around March when we first saw that kind of sustained surge of customers, we found since then, you know, we've had months where we were
double or more when it comes to new top of the funnel customers.
And again, an interesting stat is that the demographics are certainly shifting, too. Traditionally, remember Julia, where we're primarily geared
towards millennial customers, folks who didn't have the time the means or the patience to visit a big box store, but now it's an older demographic
that's certainly coming in, as we can see in our numbers here.
CHATTERLEY: Yes. Those that are more likely to be concerned and stay at home and do their shopping online, perhaps rather than would have done
beforehand. What about the broader retail environment? We've talked about this in the show in the past. It was already challenged in many ways. There
was already this push online.
We've seen a number of retailers, particularly in the United States, but elsewhere struggling as a result of the COVID crisis, some have even
entered Chapter 11. Do we see more of this?
HUANG: I think we're going to see a lot more Chapter 11s before all is said and done. I think retail is already a very difficult business. I think a
lot of them were way over levered even before this current crisis and we're going to see a lot of Chapter 11s, and probably quite a few Chapters 7s, as
well.
What you find, though, is that the folks emerging from Chapter 11 retailers typically die a very slow death, because they have the ability to not only,
you know, sell at least back some of their properties, do layoffs and basically what you find is that a lot of them have all these different kind
of weapons in their kind of treasure chest to be able to kind of stave off a Chapter 7 bankruptcy in which they finally and fully go away.
So we'll see a lot of Chapter 11s in the coming months, that's for sure.
With that said, though, the folks that can invest in the e-commerce that can invest into changing how the stores are used, I think those folks are
actually going to come and emerge even stronger.
Again, automation, like the stuff that you see behind me right now, it is not only for us to be able to provide efficiencies so that we can offer
even lower prices to the customer, but you're going to see actually, what we're finding is that there's less physical touches of the boxes up to 20
percent less human touch the boxes and you can make the argument that automation not only saves money, but also provides a safer environment to
get some of these boxes out the door.
CHATTERLEY: Yes, absolutely. The less touching and the less close proximity for your workers in particular, the better and that's with us for the
foreseeable future.
Chieh, great to get the update from you. Stay in touch, please and stay safe. Thank you so much for joining us today.
Chieh Huang there, the CEO of Boxed.
All right, up next, lock in the moment, the CEO of Oatly joins FIRST MOVE to discuss raising money, global growth and one day going public. Stay with
us.
(COMMERCIAL BREAK)
[09:43:19]
CHATTERLEY: Welcome back to FIRST MOVE. Oprah Winfrey, Howard Schultz and Jay-Z's Roc Nation -- just some of the famous names investing in plant milk
maker Oatly.
The Swedish company raised $200 million in a Blackstone-led funding round. The company says it plans to use the money to expand across the 20
countries across Europe and Asia where it already has a footprint.
Joining us now is Toni Petersson. He's the CEO of Oatly. Toni, fantastic to have you on the show and congratulations with the funding round. This is a
huge vote of confidence from some very high profile names. What makes Oatly such a great investment opportunity.
TONI PETERSSON, CEO, OATLY: Hi, Julia. Thank you so much. Yes, you know, I think you know, the last month events, you can see that so many things have
changed, and I think it's like triggering things at accelerated level.
We don't know what tomorrow is going to look like for sure, but there are things in movement that you can see accelerating. Sustainability,
definitely being one of them, and I mean, we make those notes, yes, but the idea is so much bigger than that and it's driven by young people who
understand that they're going to be given what's going to be inherited.
So that is a really powerful movement that is global, and you know, you can see that across all the continents. Most people want to do good and they
want eat healthy and drink healthy and all of that.
CHATTERLEY: Is this about sustainability than do you think for your customers? Or is this about milk intolerance? Because when I look at the
statistics on the number of us who have some form of intolerance, whether it's minor or major. It's huge.
PETERSSON: Oh yes, I mean, the vast majority of the world population are intolerant to cow's milk, and you know, when this whole case -- if you look
at the development of the plant based category, it all started with lactose intolerance.
But what you see today is conversion from cow's milk into plant based and specifically into Oatly, and there's a little bit of a different driver and
what's behind that is health, of course, but definitely sustainability.
So it has developed throughout the years. I mean, plant-based milk has been around for, I don't know, 30 years or so, you know. But this is something
different and that's why you see the massive acceleration here because the dairy volumes across the world is so big, and there's so much to go for
there.
And that is where you can see how cow's milk is challenged in a way it hasn't been before.
CHATTERLEY: I read one estimate that suggested that this dairy alternative market could be a $35 billion market by 2026. Do those kind of numbers make
sense to you?
PETERSSON: But do you mean the plant based milk category?
CHATTERLEY: Yes. In terms of the market.
PETERSSON: Yes. Yes. But you know, I think you should look at the whole dairy market, and I don't know, estimation around a trillion U.S. dollars.
I mean, that is the market. That is the thing that is going to change, you know.
CHATTERLEY: You're saying you're the ultimate disrupter to the milk market. Step aside cows here. You know, when I was doing my preparation and my
research for this interview, the majority of people said to me that the reason why they buy Oatly is because it tastes better than any other oat
milk product on the market, and it does seem when you go into a market abroad, you suddenly become the market leader. But does that come down to
the product itself?
PETERSSON: Yes, I think yes. Absolutely. You have to have amazing products. And you know, we've been nerding down on oats for 25 years only, you know,
and we're the only company in the world to do that. So there's a lot of craftsmanship. You have the technology that we use.
But you know, it is more than that today for consumers. It has to be good, but it's also who you are as a company and what you stand for. That is
equally important for the consumer.
CHATTERLEY: Talk to me about expansion plans. Where is the bulk of your revenue generation whether it's Europe or Asia in particular, where I know
again, intolerance is higher than anywhere? Where are you going to spend this money?
PETERSSON: On all three continents. I mean, we have our -- we have a strong foothold in Europe for sure where we've been around for a long time. Now
U.S. is actually the biggest single market for us. But you see what we have done in Asia and China, where we created this whole new plant based
category. It didn't exist -- I mean, a year ago, it didn't exist there.
And you can see how we are driving that whole change and how that market is -- the pace of that market is completely different than anywhere else.
So it's going to be super exciting to see the development there, but we're going to -- those are the markets we want to be and develop and where we
want to be the leaders.
CHATTERLEY: What about COVID, Toni? What impact is that going to have, whether it's your operations, or on your expansion plans? Because many
companies at this moment are saying, hang on, we're going to be cautious about spending and investing at this moment.
PETERSSON: Yes, you know, we are very humbled about the situation we are in. I mean, COVID-19 is nothing less than a tragedy for so many people.
We grew by 90 percent last year and despite the pandemic, we think that we're going to reach similar result for this year, and we haven't faced any
major hiccups when it comes to supply surprisingly. We definitely thought there would be more, but we have been very -- the measures we've taken to
protect production has been very heavy.
And I think, yes, we've been able to manage that whole situation. But you don't see a slowdown in terms of demand right now anywhere.
CHATTERLEY: And very quickly, where do you source your oats from, by the way? That's a very important question.
PETERSSON: Yes, and that's the beauty of oats. You can grow them anywhere. You can grow them in any continent, and mainly in Europe, it comes from
Sweden, and Nordics and for the U.S., it comes from Canada.
CHATTERLEY: Good to know. And a final quick question here, Toni. When private equity gets involved, they do look at exits. What about going
public one day, what are your views on that?
PETERSSON: Yes, I mean, we're keeping the options open. I can't comment there right now, but I mean, we're an independent company. We're not part
of any structure. And I think we've been favored by that.
But what the future holds, well, we'll have to wait and see, I guess.
[09:50:18]
CHATTERLEY: Yes. We'll get you back to discuss, no doubt.
PETERSSON: Yes.
CHATTERLEY: Toni, fantastic to chat to you. Toni Petersson, CEO of Oatly there. Congratulations on the money raising again.
All right, coming up on the show, a torrid summer for tech, Amazon helped the NASDAQ hit record highs yesterday as the stay-at-home trade remains
strong, but can the rally last? All of that ahead.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE for the final look at what we're seeing for U.S. stock markets this morning. We remain higher, though, the
NASDAQ now under performing, oops we've talked it down a bit. We are still trading in record territory.
The NASDAQ now up more than 20 percent year-to-date. Clare Sebastian joins us now.
Clare, we'll talk about IBM as well, because I know that was one of the drivers of broader sentiment here with that stock rallying, too, but, you
know, when I see Amazon, Microsoft, Tesla rallying seven, eight, nine, ten percent, I look at these markets and I go, they're very frothy.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes. And Julia, I think that's why we see a little bit more hesitation coming into the markets today.
Amazon, a staggering number yesterday. I think they added more than the entire market cap of Boeing in that gain yesterday. Microsoft as well
surged on some positive analyst reports.
But as, you know, we're now heading into earnings season. I think the question for investors is are these stocks priced for perfection? Should
they take some money off the table, just in case earnings end up disappointing slightly?
And we are in a slightly strange earnings season. If you look at IBM. That stock is up slightly today, off the back of 31 percent drop in earnings. I
think when the company posts a 31 percent drop year-on-year on earnings and still the stock rises, you see the kind of situation that we're in. They
did better than expectations.
But they are seeing the kind of dichotomy that we do expect to play out during this tech earnings season, the short term recessionary cuts that
we're seeing for businesses that cut back on spending on things like IBM's business and technology services, while at the same time this is
accelerating the adoption of things like Cloud and AI that IBM is aggressively pivoting into.
I think that sort of short term cuts versus long term accelerated adoption is something that we're going to see in tech, and it just depends how the
balance falls.
CHATTERLEY: I put out exactly the same thing, Clare. Cash preservation mode. That was the message from IBM. Clients delaying projects, deferring
purchases, favoring OpEx - operating expenditures, efficiency over capital expending, and surely that's going to continue.
But to your point, we know the bad news already. It's about the future and the predictions and we're just not getting these forecasts.
Let's talk Amazon taking measures. Amazon Prime Day seems to be off.
[09:55:06]
SEBASTIAN: Yes, I think this was expected. There were a lot of rumors around this, Julia, in April, when we saw the demand surge that Amazon saw.
They've hired sort of in the region of 200,000 people to try to deal with that.
They did now confirm to me in a statement today that Amazon Prime Day will be delayed, they said until later this year. They haven't officially set a
date yet. Presumably, it will have to come before Cyber Monday, otherwise, it seems like there's no point when you're heading into the holiday
shopping season. So perhaps sometime in the autumn.
But you know, I think part of this will be about logistics, perhaps they are, you know, looking at their sellers, and their sort of fulfillment
network and worrying about how they will handle another surge in demand because of all the discounts.
And also, they said in their statement that they are trying to do this in a way that will protect the safety of their employees. This is something of
course they faced a lot of criticism for throughout the pandemic.
CHATTERLEY: Yes, workers' safety paramount. They've got enough to cope with given the level of demand that they're seeing already.
Great job. Clare Sebastian, thank you so much for that update there.
All right, that just about wraps up the show for today. I'm Julia Chatterley. You could also listen to our podcast, cnn.com/podcast. But for
now, thank you for watching. Stay safe and I'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
