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U.S. Republicans Finalize A New Stimulus Proposal As Millions See Their Benefit Boost Expire; Moderna Becomes The First To Reach Phase 3 Trials In The U.S.; Precious Metal, Gold Hits An All-Time High. Aired 9-10a ET
Aired July 27, 2020 - 09:00 ET
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[09:00:22]
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Live from New York, I'm Alison Kosik. This is FIRST MOVE and here's your need to know.
Revealing the relief plan. U.S. Republicans finalize a new stimulus proposal as millions see their benefit boost expire.
Vaccine milestone. Moderna becomes the first to reach Phase 3 trials in the U.S.
And gold glitters. The precious metal hits an all-time high.
It's Monday. Let's make a move.
Welcome to FIRST MOVE. I'm Alison Kosik. I'm filling in for Julia today.
Great to have you with us as we kick off a very busy week for global investors. Big Tech earnings are ahead, as well as another Fed policy
meeting and the release of closely watched U.S. and European GDP data.
As we wait for the opening bell, U.S. futures are pointing to a solidly higher open amid hopes that Congress can make progress this week on its
next stimulus bill.
Congressional Republicans are set to unveil their long awaited proposal later today as enhanced the unemployment benefits run out for millions of
Americans.
European stocks are currently lower. Travel related stocks are falling after the U.K. ordered vacationers flying back from Spain to self-
quarantine.
Asian markets were mixed with Chinese stocks rising for the first time in three sessions. Hong Kong's new tech index, which includes well-known names
like Alibaba, fell 1.4 percent on its first day of trading.
Another big market story we're following today is a record high for gold. Gold getting a boost in part from a weaker dollar, miniscule returns from
Treasuries and investors seeking safe havens from this year's long list of economic uncertainties.
Let's get to the drivers right now and the latest on the stimulus negotiations that are happening in Washington. John Harwood joins me now
live.
John, great to have you with us. We're watching as negotiators at the White House are said to be pushing to scale back new coronavirus stimulus
legislation, just as Senate Republicans are set to unveil their trillion dollar proposal today. What are you hearing?
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Good morning, Alison. The key thing to remember here is that Republicans in the Congress are looking to
do the absolute minimum that they have to do, spending money for domestic programs is their least favorite activity.
After Democrats passed their Bill in March, or in May rather, what the Republicans had been hoping was that the positive trends on coronavirus
would continue and they would not have to pass another bill.
Now that cases have resurged especially in the south and the west. The economic recovery is threatened again. They realize they have to do
something and the question is what? Democratic proposals total about $3 trillion and over a wide range of things that includes not only checks for
individuals, extension of those unemployment benefits, election security, aid for state and local governments which have seen their revenues collapse
because of the coronavirus.
The Republican proposal is expected to be around $1 trillion, but while they negotiate these unemployment benefits, the $600.00 Federal payment is
due to expire.
And so now that the administration realizes that they're up against the deadline, their poll numbers are weak. They're trying to see if they could
arrange a much narrower bill that would have a reduced level of extended unemployment benefits and some Republican priority like shielding
businesses from liability in the case of workers coming back.
Democrats have not ruled that out, but they've got the leverage in this situation because they're ahead in the polls, and the public is alarmed and
thinks that -- it has a stronger view of what the Democratic approach than the republican approach, so we will see once they unveil that bill, what
kind of negotiating process begins.
KOSIK: John Howard, very quickly, what timing are we looking like to see a bill pass?
HARWOOD: Well, if they're going to deal with the unemployment before it runs out, they've got to do it by the end of the week. Mitch McConnell, the
Republican leader in the Senate has said two to three weeks of negotiation. The question is do they have some sort of interim extension while they have
that negotiation or do those benefits run out for some period of time?
[09:05:11]
KOSIK: Okay, John Harwood, thanks very much. The U.S. and China are drifting further apart. The U.S. consulate in Chengdu, China officially
closed today.
Beijing ordered its close after the U.S. shut down the Chinese Consulate in Houston last week. David Culver is live in Chengdu with more. What are you
hearing?
DAVID CULVER, CNN CORRESPONDENT: Hi there, Alison. Well, as of today, after 35 years, Chengdu no longer has a Consulate General to the United
States of America. That closed at 10 o'clock in the morning, local time.
The U.S. diplomatic staff were given 72 hours to move out. It may seem rushed and hurried, and it seemed from what we were seeing that they were
trying to get as much done and as quickly as possible over the weekend, but it's the same amount of time that U.S. officials gave Chinese diplomats in
Houston, which is why the Foreign Minister here felt it was a reciprocal action to not only shut down that Consulate, but give the staff that amount
of time to get out.
We did see that there was the lowering of the flag, the symbolic removal of that, and as of 10 o'clock, it was Chinese officials property. They stepped
in. They took over. They covered up the signage out front, and it no longer exists as a consulate here -- Alison.
KOSIK: What are you hearing about what the folks there are saying about what's happening between China and the U.S.?
CULVER: It was interesting to see how much attention this closing garnished here. I mean, we were here all weekend to feel almost a tourist
attraction. People going by that consulate and wondering what was happening, taking pictures, taking selfies, taking pictures of us because
we're foreigners and we're media and just curious with everything that was going on.
We did see some were quite anti-American and telling us to go home and calling us certain names, the vast majority though, I think, were pro-
China. They were just supportive of China meeting the U.S. with this reciprocal action.
And some even conveyed to me, Alison that they felt like they didn't want to go down this path, but that China had no choice at this point because
they felt it was an irrational decision on part of the U.S.
However, we've heard the U.S. side saying that this is about national security in the U.S. It's about American jobs, according to Secretary of
State Mike Pompeo, and more than that, they've tried to make this a global issue, saying that the Chinese Communist Party is posing a threat to the
global freedom of all freedom loving nations, as Pompeo has put it.
But overall, the people here feel like it shouldn't have gotten this far, and they hope it doesn't further escalate. However, as we near the
election, they think things might get worse -- Alison.
KOSIK: Yes, that's the concern. Who is going to make the next move? And what will that next move be? David Culver, thanks very much.
HSBC is under renewed pressure in China over accusations it played a role in the U.S. legal fight with Huawei. Sherisse Pham has the details from
Hong Kong.
SHERISSE PHAM, CNN BUSINESS REPORTER: HSBC pushing back on claims it helped frame Huawei. The bank making headlines in China for all the wrong
reasons over the weekend.
Chinese state run media accusing HSBC of being quote, "an accomplice" of the United States, saying the bank conspired with U.S. authorities against
Huawei and its CFO Meng Wanzhou.
Meng has been in Canada under house arrest since 2018. She awaits a hearing on whether she will be extradited to the U.S. to face criminal charges.
U.S. authorities accused Meng and Huawei of misleading HSBC about its business dealings in Iran, leading to violations of U.S. sanctions. Meng
and Huawei deny those charges.
Now HSBC is not a party in that ongoing case, but Chinese state run media has long blamed HSBC for its role in Meng's arrest. The bank saying over
the weekend that contrary to local media reports, it doesn't have any hostility towards Huawei. It didn't frame the company and it didn't
fabricate evidence or hide facts.
The latest criticism in China coming after new documents submitted by Meng's defense team were made public last week. Meng's lawyers say the
documents prove that HSBC knew about Huawei's business in Iran, and that Meng did not mislead the bank.
Huawei declined to comment on the latest development, citing the ongoing legal case.
Sherisse Pham, CNN, Hong Kong.
KOSIK: European airline and travel stocks are falling on fears of a prolonged hit to tourism. The U.K. has re-imposed a 14-day quarantine on
people arriving from Spain and hinted restrictions on other countries could follow.
Anna Stewart joins us live now. You know, Anna, great to see you. Just -- this is happening just as airlines, you know, they were getting back on
their feet in Europe. Do you think this could set their recovery off course?
[09:10:07]
ANNA STEWART, CNN REPORTER: Well, that's certainly a concern for investors today. I mean, not only do they have to contend with the financial
consequences of the lockdowns that have already happened and also the longer term future passenger numbers may not return to 2019 levels for
years, but the travel direction between those two points now looks really beset with perhaps more uncertainty than many had expected.
You can see it in the share prices today. We will show you those, AIG, Ryanair, EasyJet all sharply downwards plus, TUI, the package holiday
operator, and this was just as people in Europe were beginning to book a few holidays, getting going again. Now the U.K. and Norway actually have
re-imposed quarantines and travel restrictions on Spain.
And today, the U.K.'s Junior Health Minister said on Sky News that they are looking at France and Germany as well. They are reviewing the situation
there. The infection rate has crept up in those two countries, too.
So this is of course, very bad news for anyone from the U.K. or Norway traveling to Spain or planning to travel soon. It is bad news for those
looking at France and Germany, who were planning to travel there for the next few weeks having to, you know, consider a quarantine on return.
But it's also just the general sentiment for the airline industry. So many people will have held off on booking a holiday. They may have thought about
it, maybe thinking, maybe in the autumn, maybe in a few months' time.
But I think the idea that a sudden, sudden lockdown, sudden re-imposition of these restrictions could apply. I think that will put a lot of people
off.
We've actually just had a statement from IATA, Alison, I'll try to bring it up for you. It says that this is a big setback for consumer confidence that
is essential to drive a recovery and actually criticizing the idea that it's a unilateral blanket quarantine on a whole country. They think it
should be a more regional basis -- Alison.
KOSIK: All right, you mentioned Ryanair, it did release some disappointing results today. What do you think -- is it has the worst now? What's the
outlook that you're seeing?
STEWART: Yes, and very disappointing results for the quarter that has just been -- not really surprising, and particularly if you go into the
statement where they said that 99 percent or actually more than 99 percent of their fleet was grounded. It is getting back on its feet. It got up to
about 40 percent of flights resuming in July this month.
Next month, there are hopes that could rise to 60 percent. But of course, this is so dependent on what happens in the coming weeks and months in
terms of if there's a second wave, if there are further travel restrictions, and it was actually very interesting as in the statement,
Ryanair said, a second wave of COVID-19 across Europe and late autumn when the annual flu season commences is our biggest fear right now.
And I think perhaps that fear has actually been bought forwards -- Alison.
KOSIK: All right, Anna Stewart, thanks so much.
These are the stories making headlines around the world. Demonstrators packed the streets of Portland, Oregon Sunday on another night of protests
over racial injustice.
City police say several hundred people tried to bring down a fence surrounding a Federal Courthouse. Activists demanding racial equality also
protested the presence of Federal officers deployed by President Trump.
North Korea is reporting what it calls its first suspected case of COVID- 19. A state run news agency says Kim Jong-un ordered a lockdown for the border city of Kaesong after a defector returned from South Korea last week
apparently infected with coronavirus.
Brazil has now recorded more than 2.4 million coronavirus infections, just five months after its first case was diagnosed. A Brazilian health workers
organization is accusing the President of crimes against humanity for refusing to take the pandemic seriously.
Meanwhile, Jair Bolsonaro says he has tested negative after testing positive three times this month. But even amid a soaring number of COVID
cases, scientists searching for a vaccine are pinning their hopes on Brazil. CNN's Nick Paton Walsh explains.
(BEGIN VIDEOTAPE)
NICK PATON WALSH, CNN INTERNATIONAL SECURITY EDITOR (voice over): There's an extra bit of bravery here you can't see. Denise is a dentist, doing for
five months of coronavirus in Sao Paulo, the not-to-pretty job of cleaning infected mouths.
Like everyone here, living away from her family, death around her daily. But she's a first. The first Brazilian to be given a trial vaccine from
Oxford University, carrying the hopes of pretty much all of us -- that this front-runner vaccine works.
Being a volunteer is an act of love, she says, donating a little bit of yourself.
WALSH (on camera): All of the staff here have been offered if they want to take part in the Oxford vaccine trial, putting them on another frontline,
the world's urgent hunt for immunity from this disease.
WALSH (voice over): Denise was subject one and her boss, Flavia, was roughly subject 1,000. In their hearts, the memory of a fellow doctor.
(BEGIN VIDEO CLIP)
FLAVIA MACHADO, PROFESSOR OF INTENSIVE CARE MEDICINE, UNIFIES: I lost my friend for 23 years. He works -- he worked here for 23 years.
WALSH (on camera): I'm so sorry for that.
MACHADO: Yes, it was -- it was quite -- quite bad.
(END VIDEO CLIP)
[09:15:10]
WALSH (voice over): Their eyes betray exhaustion, yet here, they still give what they have left.
The vaccine trial needs more people like us at high risk of contamination. Being away from the people you love is very difficult.
Across Sao Paulo, there's a race between powers raging in one of the worst- hit cities on Earth over who can prove first that their vaccine works.
China, last week, sent its Sinovac vaccine for trial here among the city's frontline workers, but its rollout was met by an angry fringe, railing on
what they call, quote, "the Chinese virus," and so also railing at the China vaccine.
WALSH (on camera): Are there concerns amongst your staff here for the safety of people who participate in this because of that rightwing
rhetoric?
ESPIER KALLUS, HEAD OF SINOVAC VACCINE TRIAL IN BRAZIL: This is the number one concern. Some people may react oddly in these days to a volunteer who
participated in a -- in a vaccine that was conceptualized in a Chinese company.
UNIDENTIFIED FEMALE: She is with my mom.
WALSH (voice over): Dr. Stephanie Texieira Porto is the only Chinese trial subject to go public yet, and this is the easy bit of her painful pandemic.
(BEGIN VIDEO CLIP)
STEPHANIE TEXIEIRA PORTO, DOCTOR AND VACCINE TRIAL VOLUNTEER: In these past months, I was really, really anxious. I cry a lot.
(END VIDEO CLIP)
WALSH (voice over): While she's not had any threats since she had the jab here, she says she'd been warned by the trial to be careful.
(BEGIN VIDEO CLIP)
PORTO: They told me to not expose it too much and to try not to tell everybody how this study is going to be.
WALSH (on camera): Yes. Isn't that strange that --
PORTO: Yes, it's a -- it's very strange. All of -- all of that. I don't understand why they hate China.
(END VIDEO CLIP)
WALSH (voice over): As if this wasn't enough, the Americans are coming. Pharma giant, Pfizer looking to test its vaccine, which the U.S. has paid
$1.9 billion for in Brazil's mega-city hot spot, too. All hoping to be first, all finding Brazil wants access to their vaccine in return, and all
feeling the heat and anguish of the months ahead.
Nick Paton Walsh, CNN, Sao Paulo, Brazil.
(END VIDEO CLIP)
KOSIK: Still to come on FIRST MOVE. Moderna's milestone, the first vaccine candidate in the U.S. to progress to the final stage of testing.
And the pharmacy for the pandemic meet the startup that allows you to fill a prescription without leaving your home.
(COMMERCIAL BREAK)
[09:20:42]
KOSIK: Welcome back to FIRST MOVE. I'm Alison Kosik live from New York where U.S. stocks remain on track for a higher open across the board. The
bull trying to bounce back from last week's pullback. The Dow fell for the first time in four weeks.
Tech stocks were the worst performers with the NASDAQ dropping 1.3 percent, and pressure will be on tech once again in the coming days. FAANG stocks
Apple, Amazon, Facebook and Alphabet all reporting results. The CEOs of all four companies testified before Congress on antitrust issues on Wednesday.
Meantime, shares of Moderna are rallying more than eight percent in the premarket. The biotech firm is receiving new funding from the U.S.
government as it begins Phase 3 trials of its COVID-19 vaccine.
For more on the markets, I'm joined by Tony Crescenzi. He is the Executive Vice President Portfolio Manager and Market Strategist at PIMCO. So great
to have you with us.
TONY CRESCENZI, EXECUTIVE VICE PRESIDENT PORTFOLIO MANAGER AND MARKET STRATEGIST, PIMCO: Thanks, Alison. Thanks for having me.
KOSIK: All right. We've got a lot riding on this week's tech earnings. A number of stocks responsible for the bulk of this year's stock gains are
reporting as well. Do you think this poses a danger for the market this week?
CRESCENZI: No, we don't think so. In fact, we would expect the tech sector to perform well, not only this year, but in the years to come.
If one looks at all the fiscal stimulus that's been put in place in Europe, in the United States and Asia, a lot of that money is going to benefit the
tech sector, especially in Europe, where a lot of money we put about 30 percent of a recent European recovery fund toward technology, for example,
to help the environment, green projects so to speak, which tends to help semiconductors and chips and, and software and equipment companies.
And so even if there are some bumps along the road here and there, we expect very strong double digit growth, at least in the tech sector in
terms of profit growth in the years to come.
All right, today we are seeing the dollar down sharply. Something good for multinational companies, of course, it's helping to boost commodities and
metals. We're seeing gold prices moving higher. Some are predicting we could see gold top $2,000.00 an ounce by the end of this year.
Talk to me about what's going on here. Is this just the fact that investors feel like they have nowhere else to invest?
CRESCENZI: Well, it's a fungible asset. It can be converted into any currency, and investors these days don't really know what the outlook for
currencies in general are. Consider the U.S. dollar, no one really knows the outlook for the U.S. given all the money printing that's occurred.
The more there is of anything, the lower the price tends to be. It's simple supply and demand. But there are lots of euros that have been printed and a
lots of yen. So no one really knows the outlook for currencies is one reason.
The other reason is because, the infinite amount of money all the money printing from Central Banks chasing a finite amount of gold. All the gold
that has ever been mined and will be mined according to the experts fits into three Olympic sized swimming pools, so there's not a lot of it. There
lots of money because so much of it has been printed and it is striving up the price.
And finally, is what we call the momentum factor, where because the movement is drawing in investors, it tends to cause even more movements,
and so that's a big factor right now.
KOSIK: Do you think that at its next policy statement on Wednesday that the Fed will have even more stimulus planned? I mean, you're talking about
the Fed printing money.
CRESCENZI: Correct. In fact, it is very likely at the Federal Reserve will purchase, call it around $120 billion of U.S. securities per month, split
between U.S. Treasuries and mortgage backed securities, an 80/40 split or so.
The Fed will probably do that for about a year. They will be very supportive of the flow of credit to households and businesses and of
course, help Uncle Sam to borrow more money in the upcoming stimulus plan that's likely to be approved in the next week or so.
KOSIK: What do you think investors are looking for in the next stimulus package? I mean, you know, getting rid of the $600.00 extra benefit on
those unemployment benefits. That's just going to crush households. What are investors hoping to see come out of this package?
[09:25:08]
CRESCENZI: Well, investors these days are content with money flowing to households to fill the gap in the incomes that have been lost. But
investors are also leery and this is probably the reason for the weakening of the dollar versus the euro of the way the U.S. is spending the money.
The money is going toward necessities for consumption, vital without a doubt. But there's nothing transformational happening, and as I mentioned
in Europe, in its recovery fund, 30 percent of the loans and grants will go toward green projects, things that have benefits for decades.
Think of -- here is one quick point. The U.S. Defense -- Eisenhower Defense Interstate Highway System was built in the 50s and 60s, fifty thousand
miles of roadway that we all still use today in the United States getting benefit for decades.
The money that's being spent today by the U.S. is more towards short term things, consumption, things we need, but that won't provide for long term
growth.
And so investors in the end will be would be better off having the type of program that Europe has, which is why the euro is rallying than the one the
U.S. has, but it'll do for now and it's what's helping the market to hold on.
KOSIK: We are also getting second quarter GDP this week. It's expected to have shown that the economy contracted at least 30 to 35 percent. Are you
expecting to see a bounce back in Q3 even as we're seeing the number of coronavirus cases spike in the southern states here in the United States?
CRESCENZI: It's a good question, Alison. One way to think about this is to not think so much about numbers and think more of concepts. For example, is
there radical uncertainty as we saw in March or ordinary uncertainty -- an insurance company that has to deal with -- would think of how many
accidents will there be today? It doesn't really know this uncertainty, but it's pretty ordinary.
If I had to gauge whether what the impact would be of a meteor hitting the Earth, that's radical. These days, markets are dealing with more ordinary
uncertainty. The numbers won't matter as much as the concept of is the economy recovering?
Ultimately, the specific numbers will matter, and to your point about GDP, it probably would be up to two years before GDP, the amount of income that
exists in the economy reaches where it was before March 2020.
But markets will be content for now as long as it's on that path.
KOSIK: Okay, Tony Crescenzi, great talking with you today, Executive Vice President and Portfolio Manager at PIMCO.
CRESCENZI: Thanks, Alison. Thanks for having me.
KOSIK: Thanks for your time.
Coming up we have encouraging news this morning as the first Phase 3 trial of a coronavirus vaccine has officially begun. What that means for you and
the race for a cure, next.
(COMMERCIAL BREAK)
[09:30:47]
KOSIK: Welcome back to FIRST MOVE. U.S. stocks are kicking off a new week of trading, and as expected, we've got a higher open across the board.
Actually not across the board, it just turned a bit lower, so we are seeing stocks are flat. Investors are hoping to see robust earnings from Big Tech
this week.
Almost 40 percent of S&P 500 companies, they are going to be reporting their earnings over the next few days, overall, including pharmaceutical
giants like Pfizer and AstraZeneca. They could update investors on their COVID-19 vaccines and medications. Investors are also hoping for progress
on the next U.S. Stimulus Bill.
Meantime, the yield on the benchmark, 10-year bond is dropping again today, not far from its all-time lows. Gold is also rising to all-time highs today
on economic uncertainty. We are watching oil pullback as the first this is happening as we are seeing a sharp drop in the dollar.
As the first Phase 3 vaccine trial begins in the U.S., infections are on the rise in 29 of 50 U.S. states 147,000 people have died and more than
four million people have been sick. Rosa Flores reports from Miami.
(BEGIN VIDEOTAPE)
ROSA FLORES, CNN CORRESPONDENT (voice over): Florida's coronavirus crisis is showing no signs of slowing down. The Sunshine State now has the second
highest number of positive cases, surpassing New York.
Miami-Dade County's hospital ICU beds are at 146 percent capacity. And on Saturday, the county had a daily positivity rate of 18 percent, meaning
nearly one out of five people tested here have the coronavirus.
(BEGIN VIDEO CLIP)
MAYOR FRANCIS SUAREZ (R), MIAMI, FLORIDA: Our base line is way too high. The growth rate has shown flattening since we implemented the mask in
public rule, and we're following, you know, the advice of our healthcare professionals.
(END VIDEO CLIP)
FLORES (voice over): With the higher demand for testing across the State of Florida, some are experiencing an extremely slow turnaround time. It's a
problem happening nationwide, including in California, which added nearly 8,300 additional cases to its total Sunday.
(BEGIN VIDEO CLIP)
DR. ANISH MAHAJAN, CHIEF MEDICAL OFFICER, HARBOR-UCLA: Wearing a mask is essential. Social distancing is essential. What we have to do differently
now is we have to have more testing, and we have to have contact tracing.
Without these steps, we will be in this perpetual cycle of, as we reopen, we'll again see a resurgence of infections.
(END VIDEO CLIP)
FLORES (voice over): In Louisiana, there's a significant backlog, too. And the Health Department says 94 percent of the 3,840 cases reported Sunday
coming from community spread.
President Trump repeatedly made this claim throughout the pandemic.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: If somebody wants to be tested right now, they'll be able to be tested.
(END VIDEO CLIP)
FLORES (voice over): But now, the Trump administration official overseeing testing admits it's taking too long for people to receive their results.
(BEGIN VIDEO CLIP)
ADMIRAL BRETT GIROIR, ASSISTANT SECRETARY FOR HEALTH, U.S. DEPARTMENT OF HEALTH AND HUMAN SERVICES: We are never going to be happy with testing
until we get turnaround times within 24 hours, and I would be happy with point-of-care testing everywhere. We are not there yet. We are doing
everything we can to do that.
(END VIDEO CLIP)
FLORES (voice over): Health experts fear that delays in states experiencing high levels of transmission, like Texas, could be damaging.
(BEGIN VIDEO CLIP)
DR. PETER HOTEZ, DIRECTOR, NATIONAL SCHOOL OF TROPICAL MEDICINE, BAYLOR COLLEGE OF MEDICINE: What happens is people give up even trying to get
testing. The lines are really long, and the lines themselves not even safe, so people are not getting testing.
(END VIDEOTAPE)
KOSIK: And that was Rosa Flores reporting. The race for a coronavirus vaccine is accelerating with U.S. biotech company, Moderna officially
beginning the first Phase 3 clinical trial in the country.
And our senior medical correspondent Elizabeth Cohen is at a medical research facility in Savannah, Georgia, where the first Phase 3 volunteer
was actually given this injection. Great to see you there. What was her reaction to this?
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: Alison, she was very excited to be involved in this study. Her name is Dawn -- Dawn Baker and
she said she is doing this because she knows people who have been affected by COVID and she wants to be a part of the solution because she has seen
the problem firsthand with friends and with relatives.
Now as part of this trial, 30,000 people in the United States will be getting the vaccine, half of them will get or actually will be a part of
the trial. Half will get the vaccine and half will get a placebo which is a shot that does nothing.
[09:35:10]
COHEN: So after Dawn got her jab, I sat down with her to talk about the experience.
(BEGIN VIDEOTAPE)
COHEN: Now, you don't know if you've got the vaccine or the placebo, but either way, you're helping to find a cure.
DAWN BAKER, MODERNA PHASE 3 TRIAL VACCINE PARTICIPANT: Either way, it's a really important role to have -- to be a part of that research -- and I
never thought that I'd do something like this.
COHEN: You are the first person in the United States to get a shot in a Phase 3 COVID trial. What does that feel like?
BAKER: It is very exciting. I'm very anxious about it. I just hope that there are really, really good, good results. I know a lot of people are
doing a lot of different vaccine trials and things are going on, but I for one, I feel so proud.
(END VIDEOTAPE)
COHEN: Now Dawn noted that there are many vaccine trials going on these, Phase 3. This is the final phase with tens of thousands of people per trial
that are go -- there's five that are going on around the world right now.
One is in the United Kingdom. That's the University of Oxford and AstraZeneca working together. And then there are three in China. So this
fifth one, this is the first in the United States. And again, Dawn was the first person to get a dose for this trial here in the United States --
Alison.
KOSIK: And how long do doctors wait to see, you know what the reaction is from those in the placebo and those getting the actual vaccine?
COHEN: So, Alison, they will actually follow Dawn and the other study subjects for two years just to see what happens and how they do, but
really, they hope to get results that are usable in the next couple of months, and hopefully even sooner than that.
What they're going to look for is they're going to check and see how is the placebo group doing and how is the group doing that got the actual vaccine?
And when they see -- if they see a difference quickly, that's hopefully good news.
If it takes a while to see a difference, then it could go on even longer.
KOSIK: Okay, Elizabeth Cohen. We will watch along with you. Thanks very much.
And coming up on FIRST MOVE, Beijing closing a key U.S. diplomatic post in China in an act of retaliation. Rising tensions between the two giants,
next.
(COMMERCIAL BREAK)
[09:40:25]
KOSIK: Some breaking news just into CNN. A source tells us Robert O'Brien, the U.S. President's National Security Adviser has tested positive for
coronavirus. He is the most senior member of the Trump administration known to have tested positive. It's not clear when he last met with the
President. We will bring you more on this throughout the day on CNN.
A diplomatic standoff is worsening after the U.S. Consulate in Chengdu closed on Monday by order of Beijing, a case of retaliation for the U.S.
order to close a Chinese consulate in Houston.
The world's two biggest economies are locked in a series of disputes from the new Hong Kong security law to accusations of unfair treatment of Huawei
and territorial claims in the South China Sea.
Michael Hirson is Eurasia Group's Practice Head for China and Northeast Asia, and he joins me live. Thanks so much for your time.
MICHAEL HIRSON, PRACTICE HEAD FOR CHINA AND NORTHEAST ASIA, EURASIA GROUP: Sure, thank you.
KOSIK: So the closing of the consulate in Chengdu, not a huge surprise. We did expect some sort of retaliation from China. But now that both the U.S.
and China have made their moves, who makes the next move, and what could it be?
HIRSON: Well, I think the next move is likely to come from the U.S. side. It's really the Trump administration at this point that is looking to
confront China on a range of issues, as you said. I think the next move probably won't come in this specific diplomatic tit-for-tat, but is likely
to come in areas for example in technology where we could see more Chinese tech firms added to the Commerce Department's entity list essentially
banning them from U.S. exports.
I think we're likely to see moves in that area in particular in the coming months.
KOSIK: How concerning is this that the relationship between the U.S. and China is only getting worse, it seems day by day.
HIRSON: I think it's quite concerning. I mean, the impact of this right now is far reaching in terms of these two -- the world's two largest
economies where really the sort of connective tissue between the two sides is breaking down because of these geopolitical issues.
There's also I think, a risk of a more acute crisis, really, that would be caused by accident or miscalculation. For example, something in the South
China Sea, a collision between the two militaries. That's not something that we should expect, but it's a danger given the high temperature right
now between the two sides that we need to be on guard for.
KOSIK: And seeing this high temperature between the two. What do you think it means, you know, for the Phase 1 Trade Deal. I mean, you know, it seems
like things are going well as far as the Chinese buying more agricultural products. But are we judging their relationship now based on that trade
deal still?
HIRSON: I think the deal is less important as a barometer of the relationship.
I do think it will probably hang together through the election. But it's sort of becoming something of a zombie deal, where it's underperforming in
terms of the expectations, but neither side really has the incentive to call the deal off track, and to see the economic risks that come from that.
So it's sort of a very narrow Band-Aid, if you will, on the relationship and really tensions will continue to rise in all of the other areas of the
relationship.
KOSIK: You know, we saw this attack in a Pompeo speech, this happening last week, China's Communist Party and appealing to U.S. allies, it came
very close to calling for a regime change by Pompeo.
Do you think that the Trump administration is pushing this situation past the point of no return with hints at possible regime change in China?
HIRSON: I don't think we're there yet. I don't think this is past the point of no return, I think, particularly if it's a Biden administration,
and there will be a chance for at least a partial reset of the relationship. I don't expect things will go under Biden back to the pre-
2016 relationship, because there's too much, I think, in contention now between the U.S. and China, but I don't think we're past the point of no
return.
KOSIK: What about the next stimulus bill that is in the works right now in Congress? There is some talk about including anti-China policies in there.
What have you heard about that, and what could they include?
HIRSON: Well, I think there's a lot of appetite in Congress, first of all, for anything that's taking aim at Beijing, but I think in particular, we
could potentially see some incentives for U.S. firms to re-shore from China to the U.S.
Now, I don't think that's going to work across the board. There are strong economic reasons for many firms to be in China, but it will be a sign of
growing consensus in the U.S. that there needs to be some positive incentives for firms to consider moving out of China.
That's a goal of the administration and I think it's supported by many in Congress.
[09:45:17]
KOSIK: Okay. Michael Hirson from Eurasia group. Thanks so much for your time. Great talking with you.
HIRSON: Thank you.
KOSIK: Sixty four new infections were reported across multiple U.S. military bases in Okinawa, Japan over the weekend. In a CNN exclusive,
Kaori Enjoji and her team were given access to one of those military bases to see how personnel are responding.
(BEGIN VIDEOTAPE)
KAORI ENJOJI, JOURNALIST (voice over): Hundreds lined up at this community center in Okinawa to be tested for the coronavirus. All of them work inside
the two U.S. Marine Corps bases hit hardest by COVID-19.
Yunuaki Zamami (ph) mans the food court at Camp Hansen. He tells me he's scared that so many servicemen are testing positive. By the time he hands
over his saliva sample, the parking lot is full of worried people just like him.
There are more cases inside the ranks of the U.S. military in Okinawa than there have been on the whole island during the course of the pandemic.
Local residents say they want the bases locked down. They fear servicemen arriving from the Mainland where virus that is raging could spread the
virus further.
(BEGIN VIDEO CLIP)
COL. RAY GERBER, CAMP HANSEN, OKINAWA: The rotation of personnel is a tremendous concern for us here at Camp Hansen and for the Marine Corps at
Okinawa writ large. It's why we have some very stringent measures in place.
Anytime someone lands on Okinawa via military chartered aircraft, they're taken directly to a residence, where they spend two weeks essentially in
isolation. Their symptoms are monitored. They're checked up on and they're also completely isolated to prevent the transmission of potential COVID
from the United States.
(END VIDEO CLIP)
ENJOJI (voice-over): Still, the possibility of contagion permeates through Chatan town, a popular hangout for off-duty servicemen and their families
before the pandemic hit. It is also a short drive from Futenma Air Base, the site of another cluster outbreak among the Marines.
(BEGIN VIDEO CLIP)
MASAHARU NOGUMI, MAYOR OF CHATAN, OKINAWA (through translator): From experience, we feel the U.S. servicemen are, in the end, always protected
by the status of forces agreement. They do not follow Japanese laws nor do they work within our system. That is the biggest reason we do not fully
trust each other.
(END VIDEO CLIP)
ENJOJI (voice-over): This hotel symbolizes the latest mistrust. The military has rented it out to find space for personnel rotating out en
masse at this time of year.
With more than half of Chatan's land already taken up by U.S. bases, many resent having to give away more and risk being exposed to a virus they had
under control until July.
ENJOJI (on camera): Japan has depended on the U.S. for its security ever since it lost World War II. And half of all of the U.S. military bases in
Japan are located on the island of Okinawa. Futenma Air Base is one of them. It has long, long been controversial with plans to relocate it over
decades.
And residents say they bear an outsized burden and want some of the bases relocated somewhere else.
ENJOJI (voice-over): The Okinawans want more information than just the number of cases. With infections among servicemen rising in the U.S. and
around the world, their pleas this time may resonate far beyond its shores.
Kaori Enjoji, for CNN, Okinawa, Japan.
(END VIDEOTAPE)
KOSIK: Coming up, how one man's poor experience at a pharmacy led to the creation of a multimillion dollar business? We will talk to the CEO and
founder of online pharmacy, Capsule, next on FIRST MOVE.
(COMMERCIAL BREAK)
[09:50:45]
KOSIK: New York startup, Capsule calls itself the pharmacy of the future. Its staff fill prescriptions ordered by text or app and then deliver them
to the patient's home in an agreed window of time, and it says coronavirus is making that kind of service more important than ever, letting customers
order and receive their meds without exposing themselves to possible infection.
Joining me now is Eric Kinariwala, he is the founder and CEO of Capsule. Great to talk with you today.
ERIC KINARIWALA, FOUNDER AND CEO, CAPSULE: Hey, Alison, thanks for having me.
KOSIK: So you say that your business has been valuable even before the pandemic, how has your business evolved since the pandemic?
KINARIWALA: During the pandemic, we've seen a tremendous surge in volume from people who are looking for a safer, more convenient way to get their
medications in an uninterrupted way, and what we've seen is not only a tremendous increase in people using Capsule, but everybody around the
healthcare ecosystem wanting to partner with Capsule because we've spent the last five years building the technology and operational expertise to
deliver a consistently amazing experience for consumers.
So that's everything from local city governments to doctors, hospitals, insurance companies. You know, everybody wants to work with Capsule because
we're able to provide an unparalleled and right now, a safer experience for everybody.
It's something that's gone from medication deliveries that offered something that was a convenient pre-pandemic to something that is
absolutely essential right now, and Capsule has been at the forefront of that.
KOSIK: Where do you see growth for the company? Right now, you're in New York. You're in Minneapolis. What are the plans for expansion? Where are
you getting those investor dollars?
KINARIWALA: So during the pandemic, we actually pulled forward a number of our launch plans, and so we launched in Minneapolis, in Boston, in Chicago
all in the last 60 days to really be able to serve those communities that have been hard hit by the pandemic because New York City, while an enormous
market, it is only three percent of the U.S. pharmacy market, and we're committed over the next 12 to 18 months to be able to serve the vast
majority of Americans through a simpler, safer and more convenient pharmacy.
KOSIK: So your company, Capsule is called the Uber of pharmacy and back in 2018, you had said the business is unprofitable, but that the company
generates its money on each prescription fill.
Talk to me about where you are now as far as that profitability goes.
KINARIWALA: Absolutely. So the business has been profitable on a unit basis for nine quarters. That means every time a prescription goes out the
door, we make money, and I think that's really important to build a solid foundation for the business.
We're continuing to very aggressively invest in our technology platform, which we spent five years building. We have a proprietary technology
platform that's end to end, and what that really enables us to do is to deliver completely personalized consumer journeys through the pharmacy, so
that when I use Capsule and you use Capsule, based on what our medication is, based on who our doctor is, our employer, our insurance company, we can
tailor that experience to deliver better health care outcomes than have ever been possible before.
I mean, one of the most amazing things about this industry is that 50 percent of prescriptions in America go unfilled, and because we've made the
experience of using the pharmacy frictionless because we've applied machine learning and data science to that consumer journey to create incredibly
personalized ones, that number is 50 percent better at Capsule.
People are significantly more likely to receive their medications when those prescriptions come to Capsule versus them coming through a
conventional pharmacy.
KOSIK: You're a relatively new company. What are some challenges that you're facing?
KINARIWALA: The biggest challenge is just managing the growth. We saw unprecedented demand in March and April and continue to do so over the
summer. And so managing the growth, both in our home market of New York City, but while we aggressively and rapidly expand the business nationally
to serve everybody in America is the biggest challenge that we have.
KOSIK: All right, well, I wish you much luck. I know that you're certainly busy during this time when you know, the elderly, the high risk and those
in isolation are in need of their medications and they can get them sent.
Eric Kinariwala, founder and CEO of Capsule. Thanks for your time.
[09:55:10]
KINARIWALA: Thanks for having me.
KOSIK: And before we go, let's take a quick look at what's happening on Wall Street on this very busy week for Wall Street. We're seeing green
arrows across the board. This is as gold prices jump.
We're seeing oil prices down and we are expecting big earnings from tech companies and also big economic data as well later this week. We are
expected to see what second quarter GDP is. It is expected to have plunged 30 to 35 percent. We are going to be watching that number on Thursday.
Of course, the unemployment claims data come out Thursday, and we're waiting to see what happens on Capitol Hill with the stimulus package.
That's it for the show. I'm Alison Kosik. Thanks for watching and stay safe.
(COMMERCIAL BREAK)
[10:00:00]
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