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First Move with Julia Chatterley
Republicans Talk Up The Economy, But Melania Trump's COVID Comments Dominate Day Two Of The RNC; Hurricane Laura Intensifies And The Gulf Coast Prepares For The Worst; Hitting Out At Silicon Valley On The Way To Wall Street, Tech Firm, Palantir Prepares To Go Public. Aired 9-10a ET
Aired August 26, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:18]
ALISON KOSIK, CNN INTERNATIONAL HOST: Live from New York, I am Alison Kosik. This is FIRST MOVE and here is your need-to-know.
Republicans talk up the economy, but Melania Trump's COVID comments dominate day two of the RNC
Hurricane Laura intensifies. The Gulf Coast prepares for the worst.
And hitting out at Silicon Valley on the way to Wall Street. Tech firm, Palantir prepares to go public.
It's Wednesday, let's make a move.
Welcome to FIRST MOVE. Great to have you with us this Wednesday. I'm Alison Kosik, in for Julia Chatterley. Let's begin with a look at the markets.
U.S. stocks are mixed in premarket trading. The S&P 500 and the NASDAQ begin the session at all-time highs. And the NASDAQ looks set to hit fresh
records at the open.
A new report says orders for big ticket durable goods items rose 11 percent in the U.S. That happened last month. That's more than double the estimates
on strong demand for autos.
All of this as investors await tomorrow's big policy speech from Fed Chair, Jerome Powell. Powell is expected to outline new inflation targets that
would allow the Fed to keep rates lower for longer.
European stocks are mostly higher. French stocks are up for a third session in a row as investors await next week's announcement on new government
stimulus.
In Asia today, China was the big loser with the Shanghai Composite down 1.3 percent. Chinese tech startups pulled back after two days of sharp gains.
Alibaba shares rallied 4.1 percent. Its Ant financial unit has filed to go public in an IPO that could raise a record $30 billion.
Looking at oil now, it is lower but still trading close to five-month highs, all of this as Hurricane Laura takes aim at the Gulf States of Texas
and Louisiana.
Laura is expected to make landfall tonight perhaps as a category 4 storm.
All right, let's get straight to our drivers. Christine Romans is in the front seat. She joins us now. I'll tell you what, you're looking at all
these records for the S&P 500, the NASDAQ. What do you think? Might it be time for investors to check their enthusiasm? We are in the middle of a
pandemic, millions of people are out of work.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Yes, you keep hearing about the K-shape recovery, right, where there are these winners
like investors in certain parts of the stock market and there are losers like frontline workers and so many people whose temporary layoffs that are
now turning to be permanent layoffs.
So, it is one of the story lines we've been following here closely for the past few weeks, just the disconnect between Main Street and Wall Street and
then within the economy, the disconnect between who the winners are and who are the laggards here overall.
You know, what you're hearing at the RNC, Alison, is you're really only hearing the positives. You are hearing the President of the United States
and his surrogates and his friends and allies casting this economy is something that is fantastic under his stewardship.
You know, Larry Kudlow, the President's economic adviser, even talking about the pandemic in past tense, in terms as if it's in the past.
So what you're really seeing, I think, Alison, is a rebranding of what's happening in the economy now to something that the White House hopes voters
will take into the voting booth with them in 69 days and think they're better off today than they were four years ago.
KOSIK: And Christine, this goes further than just a rebranding. You wrote a great piece about a big math problem that the Trump administration has
here.
ROMANS: Yes, the math problem is the jobs deficit. I mean, it's really clear here, when you look at jobs, we lost more than 22 million jobs in
just two months because the pandemic put the economy on ice. And then you saw 9.3 million of those jobs come back.
The way the President describes it, he only talks about the bounce back. Record jobs gains of nine million, and he minimizes the fact that you had a
record jobs collapse right before that.
I think what you're going to see is you're going to see this mathematical mirage from this President as we head into the polling booth, right,
because he is going to focus on the bounce backs.
Look, the recession and the crash was so devastating, it has distorted all the data. So you're going to see big pops in durable goods. You're going to
see big pops in car sales. You're going to see big pops in things because you had such huge crashes before.
What's really important to understand, I think, is the stock market, the Dow Jones Industrial average, for example, since inauguration is up some 45
percent. That's the number the President will focus on.
He'll focus on these numbers in the stock market and say the stock market is sort of my personal poll on how I do on the economy.
But for jobs, Alison, for jobs overall, he is down about 5.8 million jobs from the day he took office because of that crash this summer.
He won't talk about that number. He'll just talk about the numbers that show the bounce back from the lows. Really important context.
[09:05:32]
ROMANS: The big question I think is, will it work? It might work with his base. "The New York Times" poll this week found that eight in 10
Republicans who had lost their jobs and still hadn't got the job back, they gave him high marks on how he is handling the pandemic.
KOSIK: Well, that's stunning news right there. Great perspective, Christine Romans, thank you so much.
ROMANS: Nice to see you, Alison.
KOSIK: Good to see you, too.
U.S. House Democrats have opened an investigation into Secretary of State Mike Pompeo's remarks from Jerusalem on the second night of the Republican
National Convention.
Critics say he was engaging in partisan politics while on duty, which is banned. It's just one of the ways the evening proved to be unusual.
Jeff Zeleny rounds it up.
(BEGIN VIDEOTAPE)
JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT (voice over): The second night of the Republican National Convention smashing political norms and
blurring the lines between government and politics.
(BEGIN VIDEO CLIP)
CHAD WOLF, ACTING HOMELAND SECURITY SECRETARY: Congratulations. You're now citizens of the United States of America.
(END VIDEO CLIP)
ZELENY (voice over): The President appearing in a naturalization ceremony in the White House, conducted by acting Homeland Security Secretary, Chad
Wolf.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: There is no higher honor and no greater privilege; and it's an honor for me to be your President.
(END VIDEO CLIP)
ZELENY (voice over): The event raising concerns it could have violated the Hatch Act, which prevents members of the executive branch, except the
President and Vice President, from taking part in political activity.
In a late-night statement, a White House official defending the move: "The campaign decided to use the publicly available content for campaign
purposes. There was no violation of law."
Secretary of State Mike Pompeo breaking with precedent, making an appearance at the convention from Jerusalem. Pompeo made a full- throated
endorsement of the administration's foreign policy, praising policies in the Middle East, China, and North Korea.
(BEGIN VIDEO CLIP)
MIKE POMPEO, U.S. SECRETARY OF STATE: Delivering on this duty to keep us safe and our freedoms intact, this President has led bold initiatives in
nearly every corner of the world.
(END VIDEO CLIP)
ZELENY (voice over): Two of the President's children, Eric and Tiffany Trump, continuing the dark themes from night one of the convention,
painting a Joe Biden presidency as a threat to America.
(BEGIN VIDEO CLIP)
ERIC TRUMP, SON OF DONALD TRUMP: And in view of the radical Democrats, America is a source of the world's problems. They want to destroy the
monuments of our forefathers. They want to disrespect our flag.
TIFFANY TRUMP, DAUGHTER OF DONALD TRUMP: This is a fight for freedom versus oppression, for opportunity versus stagnation, a fight to keep America true
to America.
(END VIDEO CLIP)
ZELENY (voice over): And Kentucky's Attorney General slamming Biden for his past comments about black Americans.
(BEGIN VIDEO CLIP)
DANIEL CAMERON, KENTUCKY ATTORNEY GENERAL: I also think about Joe Biden, who says, if you aren't voting for me, you ain't black; who argued that
Republicans would put us back in chains; who says there is no diversity of thought in the black community.
Mr. Vice President, look at me. I am black. We are not all the same, sir.
Joe Biden is a backwards thinker in a world that is craving forward- looking leadership.
ZELENY (voice over): Melania Trump striking a different tone than most of the night's speakers during the closing speech of the evening, refusing to
attack Biden or Kamala Harris.
Speaking from the White House Rose Garden, the First Lady was one of the few who addressed the coronavirus pandemic that has killed nearly 179,000
Americans.
(BEGIN VIDEO CLIP)
MELANIA TRUMP, FIRST LADY OF THE UNITED STATES: I want to acknowledge the fact that since March, our lives have changed drastically. The invisible
enemy, COVID-19, swept across our beautiful country and impacted all of us.
My deepest sympathy goes out to everyone who has lost a loved one.
(END VIDEO CLIP)
ZELENY (voice over): The First Lady also addressing the racial unrest in America, calling for unity and empathy.
(BEGIN VIDEO CLIP)
M. TRUMP: It is a harsh reality that we are not proud of parts of our history. I encourage people to focus on our future while still learning
from our past.
(END VIDEOTAPE)
KOSIK: And our thanks to Jeff Zeleny for that.
Stay with CNN for a special live coverage of the Republican National Convention with U.S. Vice President, Mike Pence headlining the event on
Wednesday. Our coverage begins at 7:00 p.m. Eastern right here in the U.S.
For our international viewers, that's midnight Thursday in London, 3:00 a.m. in Abu Dhabi and 7:00 a.m. in Hong Kong.
Police in Hong Kong arresting two pro-democracy lawmakers. They are among 16 people arrested today over last year's anti-government protests.
Ivan Watson is live for us in Hong Kong with the details. Good to see you. You know, I'm curious about the circumstances about these arrests and not
just the circumstances, but the timing of these arrests, because these offenses allegedly were committed over a year ago.
[09:10:24]
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, this can be viewed very much as part of a broader crackdown that we're seeing on the
political opposition here in Hong Kong and opposition leaders and activists.
By CNN's count in the last three months, at least 14 elected legislative council members or district councilors from the opposition have been
arrested.
This latest arrest targeted at least 16 people. They were charged by police with everything from unlawful assembly, dishonest use of computers,
property damage and perverting the course of justice.
The arrests were linked to two incidents in July of last year, which was the height of the kind of anti-government, pro-democracy protest movement
in Hong Kong, one that was been squelched from the streets in the past number of months.
And these two lawmakers, Ted Hui and Lam Cheuk-ting actually have videos of themselves being arrested this morning and read their rights.
One of them, Lam Cheuk-ting was arrested on charges of rioting in connection with a really violent incident in July of last year when a group
of men wearing white t-shirts armed with sticks were attacking the black dressed anti-government protesters and dozens of people went to hospital.
This lawmaker actually suffered a number of stitches from wounds to the face and he has now been charged with rioting. He says, hey, I was a victim
and now you've turned me into a rioter.
Beyond these arrests, you do have this larger crackdown that's taking place, Alison, where you've had a number of opposition leaders who have
been barred from running for office here in Hong Kong in past months.
You've had the legislative council elections that were supposed to take place next month being postponed a year on the grounds of the coronavirus
pandemic, though that is criticized by opposition members here.
You've had people like the newspaper publisher and fierce critic of the government here and Mainland China, Jimmy Lai, who was arrested in a real
show of force where police raided his newspaper's offices.
All of this combines to make a case that the internal criticism critics here in Hong Kong and a growing number of governments around the world
argue, is that Hong Kong, and by extension the Chinese government are ripping away democratic freedoms and the autonomy that treaties say the
city was supposed to enjoy until the year 2047 -- Alison.
KOSIK: Ivan Watson, thanks so much for staying on top of this very important story. Good to see you.
Here in the U.S., one of Silicon Valley's most controversial names pulled no punches in a document filed ahead of its stock market debut.
Palantir is the analytics company that works with the Intelligence Community on counterterrorism and its CEO attacked tech culture in a
scathing letter.
Matt Egan joins us live now. Matt, this is interesting. This is taking a huge shot at Silicon Valley. Talk to me about what was in this letter and
why did he write it?
MATT EGAN, CNN BUSINESS SENIOR WRITER: Well, Alison, Palantir is a company that really prides itself on keeping a very low profile. It's rare to read
anything about this company without the word secretive before it.
But we now know a more about Palantir. One, we know that it's growing rapidly. Revenue was up nearly 50 percent during the first half of the
year, and yet Palantir has never made any money. It actually lost nearly half, more than half of a billion dollars last year, and Palantir said it
may never make money. The other thing is that Palantir gets about half of its revenue from government agencies.
Now, the timing of this IPO is no coincidence. The stock market, as you know, is at record highs. Tech stocks, software companies are going great,
and the IPO market is red pot. U.S. companies have raised $16.4 billion in 41 public offerings in August alone. That is already the most on record.
So Alison, we know that Palantir has been a hit in Washington, now the question is whether or not it will also be a hit on Wall Street.
KOSIK: A lot of buzz for Palantir on Wall Street already and Palantir is not the first to go public without showing a profit. But we'll put that
aside for now because I want to ask about the government aspect of this, which is obviously very different from where Silicon Valley as a whole
stands.
But if you think about what Palantir's agenda is, government contracts are its business. Of course, it is going to come out and defend the government,
right?
[09:15:16]
EGAN: Absolutely, Alison. It's so different from what we hear from companies like Google, which have been under fire for their ties to the
Federal government.
By contrast, Palantir is coming out and fully embracing its cozy relationship with Washington. Just listen to the alphabet soup of
government agencies that Palantir lists as some of its customers, it includes the S.E.C., the C.D.C., the N.I.H., the D.H.S., the Army, the Navy
and the Air Force, and that's just in the United States.
And Palantir really acknowledges that its software is used for really important purposes for the government that includes everything from
tracking coronavirus to keeping soldiers safe, to targeting and killing terrorists.
Now, the question I think, Alison, is whether or not those really close ties to the government are going to penalize Palantir on Wall Street,
because this is coming at a time when there's just been this rise of ESG and socially conscious investors. So some of them may end up deciding they
don't want to do business and they don't want to invest in Palantir. We'll have to wait and see how the stock performs when it starts trading.
KOSIK: We will certainly be watching it along with you. Matt Egan, thank you for breaking all of that down for us.
EGAN: Thanks.
KOSIK: These are the stories making headlines around the world.
A manhunt is under way at this hour after two people were shot dead and another injured in Kenosha, Wisconsin. It happened during a third night of
protests following the police shooting of Jacob Blake.
Wisconsin police have not yet explained why Blake was shot in the back seven times in front of his children. His family says he may never walk
again.
Sara Sidner is in Kenosha and she joins us live now. Sara, good to see you. Walk me through this escalation and violence that happened overnight.
SARA SIDNER, CNN CORRESPONDENT: Alison, this has people really shaken up here. There were protests between protesters and police over the shooting -
- the police shooting of Jacob Blake. He is now paralyzed from the waist down.
This was something different. This was, according to the Sheriff who talked to the "Milwaukee Journal," he said this appears to be vigilantism, that
there were some militia members in the streets who were armed.
They have not linked any particular militia to this particular person who was caught on video on social media shooting people as he walked down the
streets.
We see this video of a man who is walking down the streets with a long gun strapped across his chest. He is running. People are screaming, he just
shot somebody. He trips and falls.
People are trying to get to him to try to, it looks like, apprehend him while he is armed. He then fires his gun not once, not twice, but several
times. He hits someone. That person falls to the ground.
And then he gets up, people are moving away from him at this point. He is still firing the gun and you see police vehicles coming up. He has got his
hands up with the long gun and the police roll right past him.
So at this point, there is a manhunt under way for the person who they are now looking for who has killed two people and there is a third person who
is injured.
Now, we do not know, because we understand there were others who were also armed, whether or not they are looking for one or more people. But they are
certainly looking for this person with a long gun who was caught on social media video actually shooting someone, and potentially shooting a second
person.
This is all in the backdrop of what happened with Jacob Blake. Another black man who was shot and killed seven times -- sorry, shot and injured by
police officers, shot in the back seven times, who has multiple injuries, including right now, paralysis.
And there are a lot of people looking at these two scenarios. On the one hand, you have a man who was clearly armed, who has just shot someone and
people are screaming to police as they are rolling by that she host someone.
On the other hand, you have Jacob Blake who is not clearly armed, who does not appear to have any sort of a gun or weapon, who is shot in the back as
he is trying to get into a vehicle that has his three children inside.
A lot of people are talking about the differences here, a lot of frustration, a lot of sorrow.
And on top of that, Alison, we have heard from the family of Jacob Blake, who had begged people to please be nonviolent as you protest, to please try
and peacefully protest and not to break up the city and not to cause more destruction in his name.
They have denounced any kind of violence and then you see this violence from a white man who has a long gun shooting at people.
There is a lot of consternation here and a lot of worry that this is going to escalate after what we saw in the streets last night -- Alison.
[09:20:09]
KOSIK: And once again, we are still waiting to hear from police about why they did shoot Jacob Blake in the back.
Sara Sidner, thank you so much for being there and reporting there in Kenosha, Wisconsin.
North Korea's state media released images that it said Kim Jong-un heading an emergency party meeting. It said the topic was, how to address threats
to the North Korean people and to agriculture amid the coronavirus pandemic and an approaching typhoon.
North Korea is yet to confirm a single case of COVID-19.
Still ahead, a natural disaster in the midst of the pandemic. The Gulf of Mexico prepares for the arrival of Hurricane Laura.
And a time for reflection. Disney takes "Mulan's" battle online in a year Hollywood has floundered. We speak to the CEO of IMAX about that and the
year's other big release, "Tenet."
(COMMERCIAL BREAK)
KOSIK: Welcome back to FIRST MOVE. I'm Alison Kosik live from New York where U.S. stocks look set for a mostly higher open. All of this after a
record close for both the S&P 500 and the NASDAQ on Tuesday.
Apple is higher in premarket trading after falling for the first time in six sessions yesterday. Shares of software giant, Salesforce are soaring by
more than 15 percent after raising its full year guidance. Salesforce is one of the three stocks that will be added to the Dow Jones Industrials
next week.
New numbers show consumer confidence in the U.S. at six-year lows, but investor confidence remains robust, which could spell good news for
Republicans as they gear up for day three of their convention.
Research firm, Strategas says if the S&P 500 is higher in the three months before a U.S. presidential election, the incumbent party usually wins.
Dan Clifton joins me now, he is the head of policy research at Strategas Research Partners. Great to see you.
[09:25:10]
DAN CLIFTON, HEAD OF POLICY RESEARCH, STRATEGAS RESEARCH PARTNERS: Thank you for having me, Alison. Great to see you.
KOSIK: So you've locked it up now between what the financial markets are telling you, what your election portfolios are telling you. Who is going to
win the election?
CLIFTON: Yes, but I still think that we're 70 days away and we're really coming to the moment where the financial markets care about the election.
As you mentioned, the S&P has been a very good predictor of presidential elections. The S&P 500 has predicted every presidential election winner
since 1984 and 87 percent of the presidential election winners since 1928.
And if stocks are higher in that three-month period, usually the incumbent party wins. Interestingly, in 2016 the market indicator was negative, which
was a sign that the incumbent party, the Democrats, were going to lose.
We're using a lot more financial market indicators these days given some of the issues around polling that we've seen over the past several election
cycles, but you mentioned another key element, and that is our election portfolios.
These are the stocks that are most levered up to a Trump win or Biden win and that's sending a conflicting message right now. It is suggesting that
Joe Biden has about a 60 percent chance of winning.
This really starts to come into focus right after Labor Day and I think that makes sense. We wait to see who the Vice President is going to be, we
wait to see what the conventions are going to produce, and I think once the Republicans roll out of their convention this week, investors are going to
start putting serious bookends around the potential outcomes of the election, not only the presidential race, but the Senate race, and what
that means for taxes, healthcare, energy, and financials.
KOSIK: But should we be looking at the S&P 500, its historic data, because what we're going through right now is unprecedented. There is no historical
data on what we are going through.
Additionally, you also mentioned that avoiding a recession two years before an election is an important indicator of an incumbent's reelection and
guess what -- we're in the middle of a recession. So could that be the deciding factor since you've got this conflicting data?
CLIFTON: Alison, that's a great question and, you know, I would agree that recessions are a perfect indicator of whether a President gets reelected or
not and we are going through one.
We're going through four super disrupting events at once right now. We have a pandemic, a recession, mass protests, and a presidential election all
happening at the same time.
We've gone back a hundred years and we can never find all four of those happening, so that makes it hard to predict. And what I would suggest is
really that COVID-19 and how if it flares up again or doesn't will really largely determine how close this election is going to be over the next two
months.
If you see COVID not flaring up in September and October during normal flu season, the economy can rebound faster. I think you'll see Trump gain some
momentum and make the race a bit closer.
But if we see a flare-up in September-October, the economy slows, trump is likely going to lose and then it's a question of how much does he lose,
thus the Democrats take the Senate with it, and that's what investors will be focused on if they come to the conclusion that Trump is not going to win
the election. Could there be a Democratic sweep? And that will be very important for the policy outlook in 2021.
KOSIK: And how nervous is Wall Street about a Democratic sweep, which would usually be the thinking?
CLIFTON: Yes, I would say they're less nervous today and the reason for that is, one, the market is not convinced that democrats are going to sweep
in the Senate. That may change over time.
But number two is that there's a belief that Biden really isn't going to raise taxes in 2021.
If you begin to see a move where the Democrats are going to sweep and are talking about tax increases that will start to pose some real risks to the
equity market. A higher corporate tax rate reduces earnings; a higher capital gains tax lowers the after tax rate of return on stocks.
I would argue though, there is some offsetting benefits to a Biden administration, and that is that you would see better international
relations, particularly with Europe and a different approach taken with China. That will show up in a lower dollar and that lower dollar eases
financial conditions in the U.S. and is positive for the market.
So it's not all negative. You get some benefit and some headwind just like the Trump administration was for the financial markets over the last two or
three years.
KOSIK: All right, great getting your perspective, Dan Clifton from Strategas Research Partners. Great talking with you.
CLIFTON: Thank you, Alison.
KOSIK: And you're watching FIRST MOVE. The market open is next.
(COMMERCIAL BREAK)
[09:32:47]
KOSIK: Welcome back to FIRST MOVE. I'm Alison Kosik. U.S. Stocks are mostly higher in early trading, a bit of weakness for the Dow, but the NASDAQ is
solidly higher and rising to new records.
Meantime, the big market event of the week is fast approaching. Fed Chair, Jerome Powell updates us tomorrow on the Central Bank's emergency response
to COVID-19. His speech is expected to assure investors that interest rates will not rise for years, even if inflation picks up.
The Fed's actions to support the U.S. economy is taking on new importance as Congress remains deadlocked on new aid to the unemployed.
Major U.S. companies are still cutting jobs. Retailer Bed, Bath and Beyond is laying off almost 3,000 additional workers. American Airlines says it
plans to cut almost 20,000 jobs in October if it doesn't receive more financial aid.
Hurricane Laura is picking up speed as it barrels across the Gulf of Mexico. The storm is now a major Category 3 Hurricane and could strengthen
to a Category 4 before it slams into Eastern Texas or Louisiana.
Officials are urging people to get out of the storm's path because of the enormous rainfall expected.
Let's get more details now from our meteorologist, Chad Myers. You know, Chad, I hear Category 4. I grew up in Miami and saw lots of hurricanes and
Category 4 makes the hair stand up on my neck.
CHAD MYERS, CNN METEOROLOGIST: It really does here as well, because this is a major oil producing area for the U.S., refining area for the U.S., and
we're going to push a 15-foot or five-meter storm surge on top of those platforms, on top of the wells, on top of the digging rigs, on top of those
things that are offshore. Right now here 165 kph out here in the Gulf of Mexico.
Now, planes have been flying around it and they have found 191 kph just in the past hour or so. So it continues to get stronger and it will likely be
somewhere around 215 in the middle of the Gulf of Mexico in just a few hours before it maybe slows down a little bit on it ways to Texas and
Louisiana border.
Here are the oil wells, the platforms -- all of those things that support the oil industry are going to get blasted by these 200 kph winds and many
of them, they just sit there and they float around and motors keep them in place. We'll have to see how that works.
[09:35:21]
MYERS: Here is what the radar is going to look like here. Really moving up toward a town called Lake Charles. Lake Charles, Louisiana may pick up
winds somewhere in the ballpark of 190 kph.
I don't care what town you're in, 190 will knock down your power lines, will knock down your trees, will knock out windows in some spots, and
that's what that town is expecting, and many of these places are going to be 110 miles per hour, 190 kph somewhere around in there, and plus for the
time somewhere between after midnight local time and then about 4:00 a.m. local time.
And here is what the power outages are going to look like. Power outages take a long time to come back with COVID. I mean, they really do. They have
to be very careful and with a 10 foot or somewhere around a five-meter surge, that is going to take all of that land.
There are many barrier islands. There are towns in the way and they're not 15 feet above sea level. That water is going to wash over those barrier
islands, wash over those towns and wash many things away, I'm afraid -- Alison.
KOSIK: Very quickly, you said this is a rainmaker. Is this a slow-moving storm or do you think this will move through quickly?
MYERS: This moves very quickly and that's another part of the problem. It's the water. It's the saltwater that's going to push on up all the way 30
miles, almost 50 kilometers from the Gulf of Mexico. There will be water going the wrong way in these rivers, up the rivers, up to where people are
living, up to businesses that are really along the river and use that river for supply.
So it's not so much of a freshwater rainmaker, it's a saltwater flood, and those are worse. I mean, salt gets in everything and it ruins electricity,
and you know, fresh water flood is bad enough.
KOSIK: All right, meteorologist Chad Myers, thanks so much.
As Chad mentioned, the hurricane is having a significant impact on U.S. oil production. The government says more than 80 percent of production in the
Gulf of Mexico has been shut.
Oil prices are up slightly. They are trading at the highest level in almost five months. John Defterios joins us now.
So, this threat of the hurricane, it is obviously rattling the oil market. How is the industry preparing?
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, you know, it's interesting, Alison because Laura is waking up a market that's been pretty
darn dull for the last three months. But when you talk about Category 3 or Category 4, we have many that are making comparisons to Katrina back in
2005.
But there are two kind of distinct differences this time around. Number one, these platforms have been fortified, same thing with the rigs, and
they're quick to shut them in temporarily to stay out of harm's way, if you will.
So what are we looking at? Chad touched on this briefly, but if we bring up the graphic, we're looking at about 300 platforms and rigs. Most of those
platforms representing right now a shut-in of the Gulf of Mexico, about 82 percent of production or 1.5 million barrels a day. That's about 10 percent
of the daily output of the United States.
Does it make a difference? Clearly it does, if it was sustained.
Number two, though, this is really -- it kind of weighs down to what the damage is. I had a chance to go to Sabine Pass, for example, Louisiana or
Port Arthur, which is a huge refinery facility in Texas. We have to look to see what the flooding means. We are talking about a 15-foot surge here.
This could cause damage and clog up the refining capacity in the United States, the ability to export as well.
So Laura, particularly if it has the reach of nearly 50 kilometers going into Louisiana and Texas, it could wreak havoc, depending on the damage to
facilities. But they have learned their lessons over the last decade and a half. That's for sure.
KOSIK: John, as I said, you know, we're seeing oil prices at levels we haven't seen in months. How sustainable is this rally and what influence do
you think COVID-19 is having on this rally?
DEFTERIOS: That's a good question because we should break it down into two different categories. Number one, oil. Traditionally, we see a spike up
before the damage and then we settle back rather quickly once those assessments are made.
But when it comes to gasoline prices, we could see the spike that we see today sustained for a month or two, depending on the bottlenecks and the
backups when it comes to refining a distribution throughout at least the south in the United States right now.
But this is hitting the market because of COVID-19 that has been well supplied. So if we look back at North Sea Brent for the year, you saw that
severe dip that we had in April and then the recovery.
Then it's been almost a flat line through the end of June, July, and August, until now, we hear Laura shaking things up a little bit.
Why is that the case? OPEC took off at one point, nearly 10 million barrels a day. They still have nearly eight million a day in the market that is now
off completely until the end of the year and maybe even through the first quarter of 2021.
Secondarily, and often overlooked, because of this low price, Alison, the U.S. has lost nearly three million barrels of production so far in 2020.
That's substantial.
So this could be a tighter market if the damage is bad, but nobody is predicting it, and you just basically have to look at demand.
The latest U.S. figures in terms of global traffic for airlines right now, down two-thirds over last year. So the demand is not there and in fact,
both the International Energy Agency and the U.S. government are suggesting right now, even OPEC, that demand will stay down eight percent to nine
percent this year.
That's a record drop and why we don't see a huge spike up. Near five-month high, but look closely if we break $50.00 a barrel. We're hovering around
$46.00 for the international benchmark.
[09:40:50]
KOSIK: Yes, the details are when you pull back the curtain. John Defterios, thank you for doing that for us. Good talking to you.
Coming up next, Hollywood releases the first global blockbuster in months. We speak to the IMAX CEO as movie theatres emerge from lockdown.
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KOSIK: Tom Cruise to the rescue as movie theatres across the world either remain shut or struggle to attract customers, worried about the virus. The
Hollywood mega star is encouraging people to watch films on the big screen.
Cruise posted a video on Twitter of himself going to a London cinema while wearing a mask to watch Christopher Nolan's "Tenet." The movie is opening
today in approximately 40 IMAX markets around the world. It will release in the U.S. and China next week.
"Tenet" is distributed by Warner Brothers Pictures, which is part of AT&T, CNN's parent company.
Richard Gelfond is CEO of IMAX, he joins us live now. So great to see you.
RICHARD GELFOND, CEO, IMAX: Great to see you as well.
KOSIK: Nothing like a megastar to give more buzz to a huge movie that was actually, from what I understand, filmed for IMAX screens using IMAX
cameras. What do you think of the sendoff so far?
[09:45:20]
GELFOND: Well, I think it's been great and Tom has been a really good friend of IMAX for years. We've done many movies with him, and in fact, he
was at the BFI IMAX Theatre when he sent that tweet.
Tom is a big fan of theatrical experiences, along with the public. And from the early results, it looks like the public is ready to go back to the
movies.
KOSIK: But you've got a lot of challenges. You say the public is ready to go back to the movies, but not in the amount before the pandemic.
At IMAX Theatres, masks are required, but you can take them off to eat and drink. What's to stop people from just keeping them off the entire time?
GELFOND: So the good news is this -- you know, it's been one day for a few shows, but there are some interesting data points.
So in China, the first Chinese blockbuster was released this past weekend called "The 800" and it did $115 million, which was the sixth highest local
language opening in history, and that was with social limitations, only 50 percent of the screens.
You're completely correct, the numbers are not going to be as high as historic numbers, but the fact is, where it's safe to go see a movie in
those territories where people feel safe, they're going to go.
And there have been protocols all over the world, as a matter of fact, in North America, the association has set some extremely stringent guidelines
which don't only include masks, but they include things like cleaning, social distancing, and reduced capacity.
In Korea, we opened a move called "The Peninsula" a few weeks ago. It was a very high-grossing movie. So I think in places where people feel safe,
they're going to come back to the movies.
KOSIK: But it's the blockbusters that really draw people to the movies, right, so another challenge, you know, besides the safety aspect of it is
the actual movies themselves, which have either been put on hold or have been delayed by months or even up to a year or even years.
What other blockbusters are down the pipeline? And how do you account for not having as many big movies coming in?
GELFOND: I mean, it depends on your timeframe. Yes, over the next month or two, there aren't, you know, blockbusters every couple of weeks like there
have been in prior years. But we're reopening in a thoughtful, safe way around the world.
And if you look at the rest of this year, you've got "Black Widow" from Marvel. You've got a new Bond movie coming out in November. You have
"Wonder Woman" from Warner Brothers. You have a lot of really good, strong movies.
When you go into 2021, you've got movies like "Fast and Furious," coming out, "Mission Impossible," "Jurassic World," lots of movies.
So if your timeframe is the next month, you're right, there aren't blockbusters every other weekend. But if you're looking at this from a
recovery of an industry that was a victim of this terrible pandemic, there's a really strong runway over the next year going forward.
KOSIK: People say the world is forever changed. You have something poignant to say about that.
GELFOND: I did. I said I thought five months of a pandemic doesn't change a hundred years of history and I really mean that.
So there have been a few mid-level blockbusters that have gone off theatrical and have gone to streaming and I think a lot of people were
quick to say it's the end of the theatrical experience and everyone is going to stay in their living room and watch streaming.
Well, there are kitchens in people's houses and they like to go to restaurants. As I said before, I don't think human behavior changes.
As a matter of fact, if you look at other behaviors, whether it is restaurants starting to open outdoors or the recent evidence I told you
about movies, I think people are anxious to get out of their homes.
And if anything, I think the last five months have taught us that people don't just want to sit in their living rooms on couches. They crave an
interactive experience. They crave a cultural event, and again, going back to "Tenet," if you look at the IMAX presales in a lot of the European
territories now, the numbers are going to be lower because of lower capacity, but people really want to get out of their homes and do something
in a social way.
KOSIK: Richard Gelfond, great talking with you. I know I miss going to movies. Good to talk with you. The CEO of IMAX, Richard Gelfond. See you
soon.
GELFOND: Thank you so much.
[09:50:04]
KOSIK: News just in, next year's annual gathering of global leaders in Davos, the World Economic Forum, has been postponed due to the coronavirus
pandemic.
It will now take place in summer 2021 instead of January. The organizers say it would not be possible to do it safely at the original date.
Coming up on FIRST MOVE, football fans around the world closely watching Lionel Messi's next move as the Barcelona star says he wants to leave the
club. The latest development, next.
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KOSIK: Football superstar, Lionel Messi saying he wants to leave Barcelona. This comes days after his club's humiliating defeat in the Champions
League.
Messi has been with Barcelona since 2000. Amanda Davies joins us live now with the details. Good to see you, Amanda, so walk us through why he is
leaving and how this came about.
AMANDA DAVIES, CNN WORLD SPORT: Yes, Alison, in terms of players and stories and football, it really doesn't get much bigger than this.
I have to say, it certainly was making waves on the remote Cypress Beach where I was sitting yesterday when this news started breaking.
Because Lionel Messi and Barcelona have been synonymous with each other for so long. He has been so integral to their success, and they, to his success
since he joined the club as a 13-year-old and then made his competitive debut in 2004.
They've won Champions League trophies. They've won Spanish League titles. He, himself, has been named the World's Best Footballer, a record six
times, and he has said on more than one occasion that he wanted to see out his career with Barcelona.
But the problem in recent times is that the success on the pitch, the trophies just haven't been there. And in particular, in that competition,
you mentioned the European Champions League.
He has very, very publicly spoken out in recent years, particularly in 2019, saying he saw it as his mission to bring this trophy back to the camp
now.
But they've really suffered again and again. What he has seen and taken very personally as humiliating exits at the hands of Roma, at the hands of
Liverpool and then that 8 to 2 drubbing to Bayern Munich just a couple of weeks ago that led to a sacking of another manager and we had the news on
Tuesday that Lionel Messi, at the age of 33, with one year left on his contract, has handed in a transfer request, wanting to leave the club with
immediate effect.
But that is where this situation, the messy situation potentially gets even messier. What are the terms with which he is allowed to leave this
contract, which has him see out another year officially written in?
Messi and his team say that there is a release clause that is on that contract, which enables him to leave the club on a free transfer,
basically, so he can leave now for free without any money being spent.
[09:55:32]
DAVIES: However, the club say that there was a date on that contract, June the 21st, which means that any club wanting to buy him has to spend $700
million euros, a whopping $826 million, and obviously, in the current climate, particularly there is not many clubs who would be able to do that.
So we're talking about the likes of Paris Saint-Germain, about the likes of Manchester City, about the likes of Inter-Milan. So many questions still to
be answered, but we will be following it every step of the way.
KOSIK: And we can't wait to see the ups and downs of this. Amanda Davies, great talking with you. Thanks.
And that's it for the show. I'm Alison Kosik. Stay safe.
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[10:00:00]
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