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First Move with Julia Chatterley
President Trump And Joe Biden Face Off In The First Presidential Debate; The World Bank Warns The COVID Pandemic Is Condemning Millions To Poverty In East Asia; LVMH Says Tiffany Faces Dismal Future As It Tries To Escape That Multibillion-Dollar Takeover Deal. Aired 9-10a ET
Aired September 29, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:24]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from New York, I'm Julia Chatterley. This is FIRST MOVE, and here's your need to know.
D-day. President Trump and Joe Biden face off in the first presidential debate.
COVID's cost. The World Bank warns the pandemic is condemning millions to poverty in East Asia.
And sparkle lost? LVMH says Tiffany faces a, quote, "dismal future" as it tries to escape that multibillion dollar takeover deal.
It's Tuesday. Let's make a move.
Welcome to FIRST MOVE once again. Fantastic to be with you on D-Day as we're calling it here in the United States. "D," of course, stands for
debate, the first face-to-face match-up between President Trump and Joe Biden taking place tonight. We'll talk debate strategy with former Obama
campaign manager, Jim Messina that's coming up later this hour, plus super star fund manager and China critique, he calls himself a realist, let's be
clear, Kyle bass on why Beijing should remain a key focus.
There is clearly no debating that tonight is a big event for investors, too. Futures at this moment, a little cautious. It does follow a strong
start to the trading week yesterday, beaten down energy and financial stocks leading the charge.
In fact, we actually saw 11 out of 12 sectors of the S&P 500 rising in the session yesterday. It could be a positive, but it also suggests some window
dressing, so buying or rebalancing as the quarter ends after a few tough weeks.
Skepticism aside, too, sentiment may have been helped by House Democrats unveiling an updated $2.2 trillion emergency aid plan. The two sides, the
Democrats and the Republicans, are talking, but I have to say, a deal still feels remote this side of the election.
What about in Europe? Well, we're seeing consolidation there too after the best day of trading since June in the session yesterday. The pound trading
higher earlier too after a Bank of England official pushed back on the future use of negative rates, so a sigh of relief on that front.
What about in Asia? Well, there's IPO buzz in the air. E-commerce delivery firm ZTO Express rose some nine percent after its secondary listing debuted
in Hong Kong. It already trades in New York. And in South Korea, too, shares of k-pop music label Big Hit Entertainment, the home of boy band
super stars, BTS, have priced well ahead of their October debut. They've priced well. Let me be clear on the pricing there.
Now, the two men taking stage in Cleveland are higher tonight hoping to score some hits, too and that's where we begin the drivers.
The first presidential debate of 2020. Millions of voters and others around the world will watch President Trump and Joe Biden square off on all the
big issues, including the COVID crisis, the outlook for the U.S. economy, not to mention the recent revelations about the President's financial
affairs.
Joe Johns joins us now on this. Joe, hotly and highly anticipated, lots of key issues to describe. The framing, I think, of the two gentlemen tonight
going to be very, very different.
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Absolutely right. Framing is everything when you think about it, but among the issues that we expect
to hear about, certainly "The New York Times" report showing that the President's finances appear to be a mess, that he has taken a lot of
questionable write-offs and other issues. That's likely to come up in this debate, and the President's people here have said publicly that they think
the piece in "The New York Times" was a hit piece, a hit job, whatever.
But if you listen to the surrogates for the President who were already out on TV today framing the issue, as you say, Julia, they're also making clear
that the President's substantive response is going to be to say, number one, that he paid more taxes than the article showed but also that he took
as many write-offs and took advantage, in other words, of the Tax Code as much as he could, as much as any other American would have been entitled
to, and that, of course, falls right in line with the same kinds of arguments about his taxes he made to Hillary Clinton in the debates four
years ago.
But big picture, the number one issue that Americans likely will be tuning in to hear about will be coronavirus, the Trump administration's response
to it, and the economic fallout from all of that.
So, expectation game, this obviously is a very important moment for the President of the United States who has been trailing Joe Biden in the polls
for weeks, but the fact of the matter is, this President is also a very skillful debater if you look at the way he handled Hillary Clinton with the
insults, with the sharp language, interrupting, generally the kinds of things that you think normally don't play very well apparently played quite
well for him four years ago.
So, as you say, again, Julia, framing is everything, and there will be a lot for both sides to frame.
[09:05:57]
CHATTERLEY: Yes, and will it be the same playbook as 2016 or will the President go about this differently? We shall see. Joe Johns, thank you so
much for that update there.
And you can watch the debate live on CNN with special coverage tonight starting at 7:00 p.m. in New York, midnight in London and 7:00 a.m. in Hong
Kong.
Now, let's move on. The coronavirus pandemic has crossed a disturbing new threshold. More than one million people worldwide have now died from the
virus, and there's no sign that it is slowing down. The U.S. ranks at the very top of the list in terms of numbers of COVID fatalities. CNN's Paula
Newton takes a look at some of those lives lost.
(BEGIN VIDEOTAPE)
PAULA NEWTON, CNN CORRESPONDENT (voice over): It's a grim milestone no one wanted to reach, one million dead from COVID-19. And yet in less than one
year, the coronavirus has taken so many.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I didn't get to say goodbye to my mom or dad now, and that's what hurts me the most right now.
(END VIDEO CLIP)
NEWTON (voice over): Mothers, fathers, sisters, brothers, children and of course grandparents with no mercy.
The spread of the virus so fast, so indiscriminate, striking those tasked with fighting the disease -- doctors, nurses, first responders taking away
those very souls who stepped into the eye of the storm to protect others from its deadly reach.
The trail of sorrow worldwide now incomprehensible.
With a historic speed, researchers are trying to develop a vaccine, a way to lessen the vice grip from this invisible enemy amidst the reality that
in some countries a second wave has already begun.
And accusations from some that it never had to get this bad if only people followed lifesaving health measures.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Adeline passed away because of COVID. This isn't a hoax. And if you can do something as simple as wearing a mask, everyone is
being affected by this.
(END VIDEO CLIP)
NEWTON (voice over): As the numbers of lost loved ones rises higher every day, the toll the COVID-19 pandemic has exacted on those who survived may
never truly be known.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: For my baby to just die by himself and not -- it just hurts my heart.
(END VIDEO CLIP)
NEWTON (voice over): For those who mourn, another blow. Not just longing for those they love as they said succumb to the virus, but also isolation
in grief. In-person funerals, memorials, a luxury of the pre-COVID era, one that those who want to keep living don't dare risk.
Paula Newton, CNN.
(END VIDEOTAPE)
CHATTERLEY: The lives lost, just one measure of the devastation caused by COVID-19. The World Bank says poverty in East Asia is set to rise for the
first time in decades as a result of the pandemic. Almost 40 million people could find themselves below the poverty line there.
John Defterios has been looking at this report for us. John, some devastating numbers in these. The thing that stood out to me, just to get a
sense of the scale of the crisis here, the sheer quantity -- proportion of households that have lost some form of earnings and in nations like
Indonesia and Cambodia, it's astonishingly high.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Yes, you're looking at the range of 79 to well over 80 percent, Julia, which is pretty
shocking. This is COVID-19, the job destroyer, and then tilting millions, as you're suggesting, over the edge, but also creating the new COVID-19
poor as the World Bank is calling it because it reached right into the lower middle class, which is extremely unusual.
They're calling it the Triple Shock Syndrome and what do I mean by that? You have the death rates of the pandemic early on and then the severe
lockdown as stage two and then stage three, it undermines very important sectors in these economies.
Two that stood out for me as I poured through that report, exports, number one, because these are all engines for growth and the low-cost labor
countries of Southeast Asia in particular, and tourism, right? Because nobody is traveling. And then you look at some of the fallen stars of Asia
that stand out for me.
It's incredible, some of the economic contractions that that we're seeing, Thailand down by 10 percent; The Philippines, nearly 10 percent, Malaysia,
better than six percent and the common theme there is quite interesting because it's farm exports or palm oil, for example, in Malaysia, because
the demand has dropped so severely.
[09:10:33]
DEFTERIOS: Even Vietnam, which is a star, as you well know, the supply chain factory system all over the world, still had 33 percent major income
destruction in the Vietnam, and then the big number we have to remember here, Julia, over a half a billion -- because we saw the rates in poverty
dropping for years in Asia, if you add 38 to that number, it takes us to 517, a horrible sign indeed as COVID-19, the toll still adds up.
CHATTERLEY: Yes, John, you know, I'm just looking at these numbers again and in aggregate, I just -- I wonder to what extent China is perhaps
raising the average levels of the numbers that we're talking about here.
DEFTERIOS: Well, it's a fantastic point you're bringing up, because it skewed the numbers in the -- for the better, let's put it that way. China,
because of the scale of its economy, better than $14 trillion. It is scheduled to grow this year in 2020 at two percent. It actually lifted
people out of the poverty system overall. So again, that tilted the numbers in favor of Far East Asia.
It would have been much, much worse, Julia, which is pretty shocking in itself, and then the other thing that stands out for me and I think the
World Bank is being far too ambitious here, they're suggesting that China very likely will get the vaccines earlier, could grow nearly eight percent
in 2021. That seems very high. And then they're suggesting for the region, regional growth of five percent.
Again, I would imagine, Julia, and I'm sure you agree with me on this, that vaccine distribution to some of the poorer countries that we're talking
about that saw the income destruction taking place will not see growth snapping back that quickly so I would say a washout in the first half of
2021 and a struggle to get those vaccines distributed in some of the poorer countries in Far East Asia in the second half of the year.
CHATTERLEY: Yes, that's why the richer nations in the world need to be coming together to organize this and make sure we get those vaccines to
those people as soon as possible. Record amounts spent on social programs, of course, to tackle this pandemic, but the World Bank here is saying
efforts to liberalize economies, increase social safety nets are desperately required. It's just tough to do in a crisis of any kind.
DEFTERIOS: It is.
CHATTERLEY: John Defterios, thank you for that.
All right, LVMH and the Tiffany romance souring further still, if that's even possible. The French luxury goods group is countersuing the American
jewelry retailer, blasting its business practices as it tries to back out of a proposed acquisition. Paul La Monica has the details.
Paul, not surprising here because they bought the absolute high here, but some really strong language, dismal prospects, performance since COVID
catastrophic, LVMH not holding back.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, this has turned into a "bad romance," to quote a Lady Gaga song here. I really am surprised, though,
Julia, that LVMH is taking this strong of a stance when Tiffany has counter argued that when you look at their latest results, they returned to
profitability in their most recent quarter.
So yes, they obviously, did get hard like just about every retailer in America and around the world, for that matter, due to store closures and a
consumer spending slowdown in light of COVID-19, but Tiffany did point out that it is back to profitability. It has stores open again.
So their counterargument to what LVMH is claiming is saying that, you know, it's baseless to make this claim that they've had a material adverse
effect. You know, Tiffany also is arguing that LVMH's claims that the French government told them to not do the deal, that might be flawed as
well, because Tiffany is claiming that LVMH only received a response to a request that it sent the French government first about the deal so that it
might not have been necessarily that the French government told LVMH to not do it, but that LVMH asked first and then basically got approval from the
French government to scrap the deal.
CHATTERLEY: It's a great point. Investors clearly getting increasingly nervous as well as we inch away from that, what was it? $135.00 bid, we are
trading at $116.00 now. To be continued.
Paul, you get it. The phrase of the show. Bad romance. Paul La Monica, thank you for that.
All right, still to come here on FIRST MOVE, debate prep. The man who helped President Obama take on Mitt Romney in 2012 discusses tonight's TV
duel. That's former campaign chief, Jim Messina who joins FIRST MOVE.
And Palantir's unconventional route to Wall Street. The Silicon Valley firm with some shadowy government contracts goes public. We got Scott Galloway's
take on the company. He's not polite, nor does he hold back. Stay with us.
(COMMERCIAL BREAK)
[09:18:15]
CHATTERLEY: Welcome back to FIRST MOVE live from New York. We're expecting a muted start to the session today after yesterday's gains of around 1.5
percent or more. That's the picture.
Economically sensitive for small caps with the big winners overall on Monday. The Russell 2000 up more than two percent. A bit of context,
though, the Russell still the big Wall Street laggard this year, down some 10 percent year-to-date as you can see.
Now, in the meantime, the countdown continues ahead of tonight's presidential debate in battleground state, Ohio. As we wrap up the month
and the quarter this week, we will have fresh U.S. job numbers Friday to watch and the start of another earnings season, too, so it's going to be a
busy week.
It may also be the final earnings season for the parent company of Chinese social media app Weibo who is quitting Wall Street. This, as the U.S. ramps
up scrutiny of China's tech firms. Sina Corp listed on the NASDAQ 20 years ago. Its CEO now taking it private in a deal that values the company at
some $2.6 billion. There's lots to discuss.
I'm pleased to say joining us now, Kyle Bass, chief investment officer at Hayman Capital Management who joins us now. Kyle, always great to have you
on the show. Do you think we see more of this? Chinese companies listed in the United States leaving, perhaps less listings going forward, too?
KYLE BASS, CHIEF INVESTMENT OFFICER, HAYMAN CAPITAL MANAGEMENT: Yes, I mean, I think it's for two reasons. Number one, what China is starting to
figure out is that the U.S. is no longer going to allow Chinese companies to list on our exchanges and have much easier listing rules and
characteristics than U.S. companies do.
You know, they don't submit themselves to real audits. Can you imagine how much fraud is in the Chinese companies that are actually unaudited? So, I
think at a certain point in time, China figured out that they need to start moving listings to exchanges they control like the Hong Kong Stock
Exchange, and even Jack Ma made a public announcement and said Chinese entrepreneurs, list now in Hong Kong, i.e. you better get listed before
things get tougher, and I think that's what drove this Ant Financial -- or Ant Group IPO, brought it forward.
It was supposed to be public in call it, the middle of 2021, and here we are with the preliminary prospectus out today and we're talking about a $30
billion capital raise for Ant Group.
[09:20:41]
CHATTERLEY: Just to be clear, why might things get tougher? Simply because you lose the option of listing in the United States or there could be
potential challenges in listing at all wherever you do it in the world?
BASS: Yes. No, I think that -- look, the only way the U.S. is going to level the playing field, we all know that the Chinese government is the
world's best at lying, cheating, stealing, bribing, whatever they have to do to get forward in the world and so what we're going to do is start
enforcing our domestic laws.
We're going to level the playing field by saying, you know what? Chinese companies are going to have to adhere to PCAOB covered audits just like
U.S. companies do today.
Again, this concept of leveling the playing field and not particularly being difficult or more stringent against Chinese issuers, just say
everyone around the globe has to play by the same rules will actually allow U.S. companies to compete in a more balanced way, and I think that you see
a whole of government approach in the United States headed towards that particular outcome, and so I think it's just going to be, if Chinese
companies won't submit to real audits, they're going to have to find somewhere else another sandbox to go play in.
CHATTERLEY: Ant Group chose Hong Kong, it chose Shanghai for a dual listing. It could be the biggest IPO that we've ever seen. I mean, some
rumors are $30 billion. What do international investors in particular need to be aware of with this one because in the last 24 hours, you've been a
prolific tweeter on the subject?
BASS: Yes. I just -- you know, when you read through the prospectus and you understand what Ant Group is, you know, Ant Group and Alibaba own -- they
have big investments in Megvii, which is a black-listed company by the U.S. Commerce Department for helping the Chinese assimilate the Uyghurs in
Xinjiang and basically commit crimes against humanity in Xinjiang and Tibet and Mongolia.
They own a number of different A.I. companies. They have actually -- they are one of the eight companies in China that's chosen by the Chinese
government to put together the Social Credit Scoring System that's this Orwellian, dystopian system of giving each individual person in China a
personal credit score and deciding whether or not they can fly, whether or not they can have a bank account, and all of the different things, the,
quote, "freedoms" that the Chinese government allows their people.
You know, Ant Group is an amalgamation of military-civil fusion and it's something that China desperately wants to raise capital for, and so you're
going to see -- I think you're going to see a $30 billion deal or more in Hong Kong and Shanghai, and this is -- this is the Chinese government's
modus operandi today.
CHATTERLEY: I think we should say for balance as well, I believe it's a passive investment in terms of the Megvii technology that you mentioned and
I know that concerns were raised in a Human Rights Watch report back in 2019 about the use of this company in surveillance of Uyghur Muslims.
They then retracted, Human Rights Watch, the segment of that, but of course the Commerce Department then acted afterwards and the credit report
company, Zhima Credit. They stated back in 2017 in an interview with "The Financial Times" that they didn't provide data to the Chinese government.
Kyle, I know what you're going to say in response.
BASS: I mean, come on. Like, Xi Jinping stood in the Rose Garden and told President Obama he wasn't militarizing the South China Sea, but our
satellites actually said otherwise. So, you know, the Chinese, again, the Chinese government is the most prolific liar in the world, and we have to
stop taking them for their word and looking -- look at their actions.
And that's what the Commerce Department and our Intelligence sources do. We're not doing this flippantly. We understand what's happening and we're
following what's happening, and I think you're going to see more sanctions.
I think we still have the Huawei question on the agenda, and I think you're going to see ZTE be kicked out of the United States. I mean, there are so
many wrongs that have been proliferated by the Chinese Communist Party that we just need to clean house, and I think we're doing so.
CHATTERLEY: If we're talking about a company, though, like Ant Group or Alibaba, there is huge benefits. I mean, they have the payment structure.
They offer insurance products, loan products, for example.
The Chinese government also recognized the power, the benefits, the utility benefits of these companies, but it's very difficult for these companies to
turn around and go, hey, we are definitely not going to give our data to the Chinese government even if they would refuse behind the scenes because
then, they put themselves in direct conflict with the Chinese government.
Would you acknowledge that? They do have power.
[09:25:29]
BASS: Of course. I think, Julia, what we're talking about is an ideological difference in the manner in which we operate our world. Right? They are a
totalitarian, communist government, and we are a democracy that plays by global standards and global rules, and they play by their own rules. In
fact, there are no rules for them.
And so, the answer is yes, i.e., should we do business with companies that share all of their data with the Chinese government? Should we do business
with companies that basically bring military and civil fusion to China when they are deemed to be our number one strategic adversary?
I actually, as you can probably tell, I don't believe we should interface with them. I think we should let Alibaba and Ant Group deal with themselves
and let them run their big company in Southeast Asia, but we shouldn't allow them to do business in the United States unless they become a proper
global actor.
You know, I don't know how we can interface with a regime that is actually committing cultural and ethnic genocides in various areas of the country
and yet somehow CNN and CNBC and the others give them the air and the time to say, you know what? We're going to do something great for climate change
by 2060.
I mean, these particular mutually exclusive statements make no sense to me and I know --
CHATTERLEY: Kyle, we report the news. It was the news. And there was plenty of skepticism, I can tell you, in the coverage of that with regards to the
2060 carbon neutral. On that point, and I have a million questions for you, they have vested interest, surely, in tackling this. They have a pollution
problem that's killing people in the country. So, it is one of their pillars to try and at least tackle the pollution problem in China.
BASS: I agree. They are the worst incremental polluter of any country in the world.
CHATTERLEY: Okay. So, we'll come back to that. You said sanctions will increase. I think the other point I have to make here is -- and the Ant
Group IPO sort of plays against a position that you have which is, short Hong Kong. You're very, very cautious about Hong Kong, about the currency
in particular.
We've had this discussion on the show before. There will be those that look at this once again and say, you're negative on this IPO and what surrounds
it because it plays against that trade. Kyle, your response.
BASS: Yes. I mean, I call the spade the spade, and that's -- I put my money where my mouth is, and you know, I think there are many commentators out
there that also, you know, that are, let's say, pro-China, that have their money where their mouth is.
From my perspective, this trade will come and go, Julia, and my opinion on China and Hong Kong will never change unless the regime changes. So, I'll
leave it at that.
CHATTERLEY: Yes, you're consistent. I hundred percent give you that. You also promised to give every person in your contact book a billion dollars
by 2060 if they actually hit that target. Speaking of putting money where your mouth is.
BASS: That's an easy bet.
CHATTERLEY: Kyle, great to have you on the show. Thank you for your wisdom, as always.
BASS: Thank you, Julia.
CHATTERLEY: Kyle Bass, Chief Investment Officer at Hayman Capital Management. Great to chat with you.
All right, after the break, former Obama campaign manager weighs in on tonight's big presidential debate. Stay with us.
(COMMERCIAL BREAK)
[09:31:53]
CHATTERLEY: Welcome back to FIRST MOVE and U.S. stock markets are open and running this Tuesday. As expected, a bit of a softer open. As you can see,
I'll call that relatively unchanged.
Investors hoping, I think, for a clear cut winner in tonight's first presidential debate. Just to give us a sense of greater clarity here, a
Biden win perhaps then look to green energy stocks for a lift. A Trump win could help firms benefitting from low taxes. Of course, Biden has suggested
he would raise taxes after the election if he wins.
Investors also hoping to hear the White House response to the new $2.2 trillion emergency aid plan from the Democrats.
The presidential debate, too, is expected to pull in a colossal global TV audience. The White House Press Secretary says the President has done
enough preparation and that he has helped by the hostile questions he receives from the press every day.
The media dub my next guess, Mr. Fixer, during his tenure at the Obama White House. Jim Messina, masterminded his successful re-election campaign
in 2020. He is the CEO of the Messina Group and he joins us now.
Jim, fantastic to have you with us. Mr. Fixer hat on, how would you be advising Joe Biden ahead of this debate and how do you think he does?
JIM MESSINA, CEO, MESSINA GROUP: Well, look, I think this is the most consequential presidential debate since 1980. You have a President who
trails in the national polls by seven points. You have a challenger who has a lead, but needs to kind of solidify it with the country to make his case
on where he wants to take it, so as we sit 35 days before the election.
I think Vice President Biden tonight just has to withstand the barrage that is certainly going to come from the President. Donald Trump is known as a
very strong debater. He takes no quarter and is going to go right after the Vice President.
And the Vice President has to just continue to do what he's done, which is stay calm and talk about his message to these swing voters. You know, there
are less swing voters in America than any country in the world.
We are more partisan than any other country, and this is the first time these swing voters who are going to decide this election are actually going
to kind of watch the debate and figure out who they're going to vote for, so I don't think tonight could be any more important to both campaigns.
CHATTERLEY: Okay, you raise some great points there. Do you think preparation helps? In this case? Because the President said, look, I'm too
busy running the country. Obama -- Biden, my apologies. The Biden campaign have suggested that Joe Biden is prepared and has been prepping for this.
Have lessons been learned from how President Trump behaves on a debate stage? Because we saw what he did with Hillary Clinton four years ago.
MESSINA: Yes, it's a great point. And you know, here's a little statistic. The incumbent President has lost the first debate in every debate in the
last 40 years. And the reason is, they're used to kind of -- they're used to getting long time to answer questions to reporters. They're not used to
having people really push back, and when I was president Obama's campaign manager, we lost the first debate worse than anyone had lost a presidential
debate and then were able to recover it. Obama's
On the other hand, you know, President Trump is in Twitter every day going back and forth, pushing hard. He's done a couple smart things. He's done a
couple Town Halls. He did a Town Hall with George Stephanopoulos recently to try to get himself back and forth.
And so it will be a real question, you know, Biden had 15 debates in the primary season, which will help him, but there isn't anyone who debates
like Donald Trump.
[09:35:23]
MESSINA: Now, I think the expectation is that Trump has to win tonight, and he sort of set that up for himself, and I think it will be an incredibly
interesting night. I plan to get a bunch of popcorn and a wine and watch this thing. I cannot wait.
CHATTERLEY: I have to say, I've had people all around the globe telling me that quite frankly. Do you think they'll be held to a different standard in
terms of the way that they interact, the behavior, and the language that they use?
There's very little, I think, that surprises us in terms of where President Trump is willing to go. Joe Biden is a different person, and I think there
is a level of exhaustion out there with hate, anger.
MESSINA: Oh, absolutely right. And that's part of the challenge for Biden, right? He can't let Trump drag him down. Trump is going to come after his
son. He's going to come after his family. He's going to do a bunch of things.
And you know, in the Obama world, we used to call it, don't chase rabbits. Which means, don't go into holes that your opponent wants you to. Don't
answer every charge. Don't take every bait. Instead, what Joe Biden has to do is just stay calm, be the kind of blue-collar Lunch Pail Joe that people
really like, that has a seven-point lead nationally and just talk about the future and connect with these voters.
And if he can avoid getting in a scrap with the President on every single question, that will be incredibly beneficial.
Now, President Trump has a different challenge. He just has to take the fight to Biden. He is behind. He is in trouble and he has just got to pull
Biden down with him, and so, you know, those two competing interests are going to be the story of this debate.
CHATTERLEY: You know, it's quite fascinating, we were just showing a Monmouth poll there that said three in four voters will be watching this
debate tonight, but when you look at the statistics for the number of people that will make a decision based on this, it goes to the point that
you made right at the beginning of this conversation. It's just three percent.
Three percent saying what they hear tonight may sway them, so why does this matter, ultimately, Jim?
MESSINA: Because this is the first time these kind of three percent are really looking at this and saying, hey, you know, where is this race and
who are these two candidates? I have a theory that this country has decided to fire President Trump. The question for them is, is Joe Biden the person
they want to hire? And that's his challenge tonight.
But to your point on the polls, there's a poll out in the State of Wisconsin which is the most important battleground state in America with
the race at 49 to 48, meaning only three percent of people in the entire state are left with 35 days left.
Here's another statistic. You know, everyone is voting right now. We have early vote in the United States. And people are getting their vote by mails
and they are voting early. By the next debate, over half the country in some of these battleground states will have already voted.
So, this is the moment where a bunch of people are looking at this saying, okay, here's the night. Tell me who to vote for, and that's why it's such a
big moment tonight.
CHATTERLEY: Yes. Who do you trust to get us through the next four years? Jim, great to have you with us. We shall see. Jim Messina, CEO of the
Messina Group. Enjoy your popcorn, sir.
All right. He was the first to invest in Facebook. Now, he is taking another company he co-founded public. But there's one or two unusual things
about Peter Thiel's Palantir here and its listing. We'll discuss next.
(COMMERCIAL BREAK)
[09:41:50]
CHATTERLEY: Welcome back to FIRST MOVE. A new week, a new crop of U.S. tech firms set to go public on Wall Street. Plenty of technologies: the
secretive data mining firm is set to make its NYSE debut. It won't be a traditional IPO, though. It's a direct listing, so the company won't be
raising any money as only existing shares are being sold.
Palantir is relatively unusual in other ways, too. The majority of shares will remain controlled by its executives, including the tech investor and
PayPal cofounder, Peter Thiel.
Palantir does have one thing in common with many other unicorns going public. It hasn't made a profit since it was founded 17 years ago.
Joining us now, Scott Galloway is a Professor of Marketing at the New York University School -- Stern School of Business. Scott, always great to have
you on the show. You don't often hold back, but on this one, you're really punchy. What is it, specifically, that you most dislike about this company?
SCOTT GALLOWAY, PROFESSOR OF MARKETING, NEW YORK UNIVERSITY STERN SCHOOL OF BUSINESS: The notion that from the good people at Facebook, we are bringing
you a company whose mission is to be the operating system for government.
If you look at some of the most impressive people in business, whether it's Reed Hastings, Ken Chenault, Susan Desmond-Hellmann, and Erskine Bowles.
They all have one thing in common and that is they were so uncomfortable with the governance of Facebook they decided to leave the Board early, but
the one constant there has been Peter Thiel.
So if you think that maybe there's some problems or some issues around governance or concern for our commonwealth at Facebook, would you want the
kind of wizard behind the curtain there to have total control of a company whose mission is to be the operating system for surveillance for the
government?
So, I don't think a lot of people think, yes, I really like how Facebook has handled the responsibilities. I'd like to see more of that in terms of
government and decisions around who the F.B.I. surveils. So I think there's some very legitimate concerns here.
CHATTERLEY: In a blog post that you wrote about this, you said Palantir is all the calories of Facebook scaled sociopathy with none of the great
taste. Profits. Scott, be specific.
If we take Peter Thiel out of it, is it when you look at what the company does, when you look at who their clients are, because a vast chunk of their
clients are government contracts.
GALLOWAY: Yes. So, a lot of the controversy and the things I'm talking about, I think the company likes. The company wants to create this spy
versus spy, opaque illusion and mystery and has purposely said they're working for the government and they embrace working with the U.S.
government which I believe is actually a very valid statement, but it's all meant to distract you from one thing, Julia, and that's, this is a terrible
business.
It took Google three years, Facebook five, and Amazon seven to become profitable. This company, as you pointed out, has been around for 17 years,
has raised and spent $3 billion, and last year lost $500 million on $750 million in revenue.
They claim in their prospectus that their growth is largely dependent upon the incompetence of government. The government last year with a record
deficit lost 30 cents on the dollar. Palantir lost 60 cents on the dollar. I would argue the government should be consulting to Palantir.
So, there's a lot of noise meant to distract you from one thing. This is a terrible business.
[09:45:15]
CHATTERLEY: Okay, so, don't get distracted by what they say they're doing or the benefits, perhaps of government contracts.
You call and point out word mentions in their filing for this listing. Rights. Privacy. Individuals.
I mean, isn't that a contradiction in terms of what we're talking about here, in terms of the government contracts and the software that they are
used for?
GALLOWAY: Yes, again, this feels like the Rudy Giuliani of tech. You just listen to it for a minute and it begins contradicting itself.
Peter Thiel is a known libertarian, to my understanding, libertarian philosophy is small government and individual liberty. Unless, of course,
you're getting contracts from the government to expand the scope of government to begin surveilling immigrants or citizens.
I mean, it just kind of makes no sense, and then you have a CEO who is all of a sudden claiming he is a socialist, despite paying himself $15 million
a year.
This is a company with 120 clients, three of whom account for 30 percent of the business. It's clearly an interesting business. It's more of a services
business, I would argue, with a strong technology component, so if you look at comparables like an Arthur Andersen, which is massively profitable, but
trades at three to four times revenues, you're talking about a company that in most markets wouldn't be worth the amount of money it's raised.
So this is -- it's a strange company. I think they are purposely promoting these contradictions in the story and the strangeness because they don't
want people to look at the underlying fundamentals of what is a terrible business that would unlikely have any hopes of getting public in any other
market, but what is arguably the frothiest market we've seen since 1999.
CHATTERLEY: I mean, it's fascinating when you look at the scale of the losses here. There was an improvement to $165 million net loss in the first
half of 2020, I believe. I mean, these losses are larger than you would expect for a software company that is expected to make -- what -- a billion
dollars in revenue this year.
I think the argument for these kind of companies would be, look, the revenues are growing. Don't look at the losses. I'm just struggling to
counter your argument here based on some of the numbers that I'm seeing.
GALLOWAY: Yes, it just doesn't -- again, it's -- they purposely fomented all this spy versus spy about, finding Osama bin Laden and wrapping
themselves in a flag and claiming they're a different type of technology company because they moved to Denver.
But this is all meant to say, look over here. They don't publish with most SaaS companies, if you want to talk about boring stuff like renewal rates
and dollar renewal, but they don't want to talk about it because they're awful here. The majority of their products have failed miserably. They have
significantly high-profile clients within the government and private companies that have decided after using the product for a year that they're
not going to renew.
And this is a company where it feels like the existing shareholders are running for the door and yet you put on top of that, the chaser here is
terrible governments, two class shareholder system where the individual who is the primary, the static figure of governance at Facebook will control
this company, even if he sells this stake.
This is shavings of ugly on an ugly salad and I don't -- this is an indication -- if this isn't a canary in a coal mine if this thing trades
up, it is an ostrich in a coal mine.
This is not only a threat, in my opinion, to our Commonwealth, but it's just a terrible business where I would argue, you know, crap is being flung
at tourists to the unicorn zoo here. I just don't think this company makes any sense.
CHATTERLEY: Wow, that's one heck of an analogy, Scott. You know, the interesting thing is I believe the vast majority of the stock that's coming
up here and that will be listed has a 180-day lock-up period.
What's the likelihood that we see a similar Snowflake style, what feels like a huge squeeze as this thing comes to market and those stocks begin to
trade? Investors need to be wary of where we are as a point in time.
Take a step back. What does this say about the market at this moment, and I think investors' ability to value companies like this or willingness to
value companies like this.
GALLOWAY: Well, that's the correct question, Julia. We have the perfect storm of good things. If you're a data company or a big data company or a
tech company that is perceived as a disrupter, you've had entire swaths of the consumer economy, the retail economy, the real estate economy that have
been prohibited from the public market, so there's a dearth of companies coming public.
At the same time, institutional investors never had more money to deploy. So, if you're a disrupter, you're tech, you're SaaS, it is good to be you,
and we saw Snowflake, which has 3,400 clients, by the way, and is easier to ramp up and easier to dial up and dial down, go out at a remarkable
valuation.
And so Palantir is hoping that some of that sunshine will glean on them, but this feels -- I mean, this feels eerily reminiscent of '99 when people
abandoned the consumer economy and started going to B-2-B. It feels like anything with the term SaaS in it trades up hysterically.
So it's difficult to time the markets. It's difficult to predict the markets, but by all reasonable measures in the past, the fundamentals here
just don't justify the valuation, and I would look for a lot of existing shareholders to run for the door here. It is a great time to be a seller in
this market.
[09:50:44]
CHATTERLEY: Would you be selling Snowflake? Really quickly. I have about 20 seconds.
GALLOWAY: I think Snowflake is an incredible company. That's a better business. The question is whether it's worth its multiple of revenues.
So you know, that's a tough one. I would say that is under -- that is a great business that may be overvalued. Palantir right now is one of those
things.
CHATTERLEY: Scott, great to have you with us. Scott Galloway, Professor of Marketing at the New York University. Great to have you with us.
All right, and we've extended an invitation, it should be made clear to the Palantir executives to come on the show and respond to the criticism here,
so open invite to them.
All right, up next, out of runway. Nearly 50,000 U.S. jobs could be lost Thursday when restrictions on airlines laying off employees expires. We've
got the details next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Airline industry group, IATA says 25 million jobs globally are at risk in the wake of the COVID-19 crisis.
In the U.S., workers are bracing for mass layoffs expected to begin Thursday. Nearly 50,000 jobs could be on the line. United Airlines has
agreed not to furlough any of its pilots until at least next June, but as Pete Muntean reports, others might not be so lucky.
(BEGIN VIDEOTAPE)
ROBIN HAYES, CEO, JETBLUE: I'm here with just one request.
(END VIDEO CLIP)
PETE MUNTEAN, CNN AVIATION CORRESPONDENT (voice over): Airline CEOs are making a new plea on Capitol Hill, to avoid a layoff cliff only days away.
(BEGIN VIDEO CLIP)
HAYES: Please, Congress, we need you to do your job, and we need you to do it now.
(END VIDEO CLIP)
MUNTEAN (voice over): A new CNN analysis finds nearly 50,000 airline workers are facing furloughs that begin October 1st.
(BEGIN VIDEO CLIP)
DOUG PARKER, CEO, AMERICAN AIRLINES: It would be a very, very horrific event, I think, if that happens, given all the support.
(END VIDEO CLIP)
MUNTEAN (voice over): Doug Parker is the CEO of American Airlines. It sent involuntary furlough notices to 17,500 of its workers. At United Airlines,
the new number is 12,000. The furloughs industry-wide for mechanics and gate agents to pilots and flight attendants like Angela Frid.
(BEGIN VIDEO CLIP)
ANGELA FRID, FLIGHT ATTENDANT, UNITED AIRLINES: It's very emotional. You know, I'm scared for myself. I'm scared for my friends.
SARA NELSON, ASSOCIATION OF FLIGHT ATTENDANTS: This is real people. Moving their stuff into their cars and trying to figure out how to survive.
(END VIDEO CLIP)
[09:55:05]
MUNTEAN (voice over): This new push means a new bailout for airlines, a new bill would give carriers $28 billion to keep workers on the payroll through
next March.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: This is taking longer, and it is deeper than most people expected six months ago.
(END VIDEO CLIP)
MUNTEAN (voice over): New T.S.A. figures show air travel remains stalled at 30 percent of last year's levels. Airlines are losing millions of dollars a
day flying planes that are only two-thirds full. But more help is facing new slowdowns. The Capitol is now consumed with the Supreme Court pick.
House Democrats want airline assistance in a larger recovery package. Industry leaders say they need to know now whether workers will be saved.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Six months from now, I really don't believe we'll be even close to this level of furloughs and hopefully zero.
(END VIDEO CLIP)
MUNTEAN (voice over): Pete Muntean, CNN, Washington.
(END VIDEOTAPE)
CHATTERLEY: Thursday is that deadline.
And that's it for the show. You've been watching FIRST MOVE. Great to be with you.
I'm Julia Chatterley. Stay safe and we'll see you soon.
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[10:00:00]
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