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First Move with Julia Chatterley
COVID Fears And Election Uncertainty Equals More Volatility; One Week Until The U.S. Election And Over 60 Million Votes Already Cast; HSBC Shares Jump As The Bank Says It May Resume Dividend Payout. Aired 9-10a ET
Aired October 27, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:10]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
Investor insecurity. COVID fears, election uncertainty equals more volatility.
Turnout tide. One week until the U.S. election and over 60 million votes already cast.
And dividend delight. HSBC shares jump as the bank says it may resume dividend payout.
It's Tuesday. Let's make a move.
A warm welcome to FIRST MOVE as always. Seven days to go now until the U.S. presidential elections. No end in sight either to the global COVID
emergency. We'll hear from an author of a study that comes to a pretty shocking conclusion.
It says the lives of more than 100,000 Americans could be saved between now and February if 95 percent of the population wore masks. A Federal mask
mandate, it says, is needed to immediately, and we're seeing these popping up all around the world. We'll discuss.
In the meantime, the global health crisis, the inability to agree on more emergency aid and I think just general pre-election jitters spells
volatility for markets. U.S. futures, you can see those stabilizing, bouncing a little bit here after Monday's two percent market drop, though.
Europe remains under pressure. Not only have American cases hit fresh records, but the second COVID wave in Europe appears larger than the first.
Are we underestimating the risk of larger scale shutdowns? We'll discuss that later in the show, too.
For now, a brief focus on the fundamentals and some deal-making in the chip sector, a sector, I think, forever changed by the pandemic as we rely more
on big datacenters now to host things like video conferences and other digital services.
AMD buying Xilinx for $35 billion in stock. Bad news, perhaps, for rival Intel. Those shares are up some 15 percent premarket. Intel is meanwhile
pulling back as you can see a little bit, too.
Earnings also lending some support. Financial giant HSBC, as I mentioned, up nearly -- actually, more than four percent in Hong Kong on better than
expected earnings. Spanish Bank, Santander also raised their forecast, too.
We've got to remember here that the banks have a lot of bad news priced into them for the stocks. Some down some 30 percent to 45 percent. Some
even more as you can see on that chart.
For others, though, I think the big worry now is that Q3 earnings are deeply out of date as the health risks rise and consumers and small
businesses go without more financial aid.
Let's get to the drivers. Christine Romans joins us now. Christine, I've just named a whole host of reasons for investors to be unsure and nervous
here. Clearly, one thing we have to remember is we're still pretty close to recent record highs, quite frankly, but I think the point about Europe is
key. That wave looks bigger than the first.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: It really does and you saw Russia put on a mask mandate today and you've seen other
countries and regions and counties and the like doing the same. It's a conversation not really happening with much gusto here in the United
States, quite frankly.
And when you look at the U.S., the U.S. case count, it almost looks like three crests of a wave there in terms of the rising coronavirus cases and
that's what really kind of struck the market yesterday. Three things, I think. The stimulus impasse, number one. Number two, these rising case
counts and rising hospitalizations in the United States, and three, seven days exactly now to go until the election.
There's an awful lot of election uncertainty baked in here when you consider that the S&P 500 is still up five percent for the year, so pricing
in a calm and kind of perfect scenario in terms of election risk as well, so a lot going on here for investors.
CHATTERLEY: Yes. Predicting and pricing in a calm aftermath of this and a result on the night, quite frankly, looks deeply complacent, and we'll be
discussing that, I think, in the show.
The irony here is that if we are seeing the worst wave in Europe, it's coming to the United States, potentially, too, Christine. It requires the
need for financial aid and more financial aid here is ever greater than before and the Senate is now it seems adjourned until after the election.
ROMANS: And I think when you look at the kinds of stocks that really fell most sharply yesterday, leisure, you know, hotel, airlines, cruise lines --
these are sectors where both the employees or the former employees are hurting very badly, so you need that support in terms of direct stimulus
aid or potentially, of a more robust jobless benefits, but also these industries have been begging for help and relief from the government.
In some cases, it is an existential crisis for some of these industries if you're not talking about air travel resuming to normal until something like
2023 or 2024, as some CEOs have worried.
So we're at a moment here where they've gone quiet in Washington on stimulus at the very moment where you need to guarantee the recovery.
We're going to see Thursday, a GDP number that's likely to be gangbusters. The best we've ever seen, a record, and it is completely stale, completely
rearview mirror. The action is all about what's happening today and what's the damage going forward by this resurgent virus.
[09:05:32]
CHATTERLEY: Yes. All the data now deeply, deeply out of date in the face of what we're seeing on a day by day basis at this moment, too. You know one
of the other things I wondered whether voters -- sorry, investors were looking at yesterday was the sheer quantity of early voting and the
proportion of that, the mail-in voting and the challenge here for counting these votes, not only from the point of view of the risk of a contested
election, which I think is sort of priced out and perhaps shouldn't have done.
But also just the delay that this may take and the probability then that that provides a window for a contested result on either side, quite
frankly.
ROMANS: Yes. And a window for legal challenges and how those -- we know that I think it was December 12th in 2000 before there was a winner
declared in Florida, right, that allowed the election to be called.
I have been cautioning people not to be hoping for Election Night. It is an election, the 2020 election and we will know the outcome of that election
when it has been carefully counted and carefully and cautiously decided, and we should just, you know, put away our hopes and expectations for a
late-night Tuesday, early morning Wednesday decision. I don't think that's happening.
CHATTERLEY: Yes. I'm with you. We shall see. Christine Romans, thank you so much for that. Watch this space.
All right, let me bring you up to speed now with some of the other stories making headlines around the world. A powerful typhoon heading towards
Vietnam after bringing death and destruction to the Philippines. More than one million people have been told to leave their homes with the storm
expected to reach the Vietnamese Coast early on Wednesday.
Right now, it has the strength of a Category 3 hurricane. It left at least three people dead in the Philippines while a dozen or more are missing.
A second wave as we have been discussing of the coronavirus pandemic sweeping across Europe and threatening to spin out of control. Governments
are imposing new restrictions to try and avoid full-scale lockdowns. France is leading Europe in cases and a government adviser there says the true
number of daily infections could be twice as high as official figures show.
China, meanwhile, testing nearly five million people in the western region of Xinjiang after one asymptomatic COVID case was reported over the weekend
as we discussed on the show yesterday. The outbreak is Xinjiang's second since China's initial wave of infections was brought under control in
March.
While parts of the world are tightening restrictions, Melbourne meanwhile, Australia, just lifted its lockdown minutes ago. Millions of people there
have been under stay-at-home orders for months but officials decided it's now time to reopen after they recorded no new cases for two days in a row.
It's not quite business as usual, though, in Australia's second biggest city as Selina Wang has been covering developments for us and reports.
(BEGIN VIDEOTAPE)
SELINA WANG, CNN CORRESPONDENT: Julia, Melbourne is exiting one of the world's longest and toughest lockdowns. This decision was made after
reporting zero COVID-19 cases for the first time since June.
Today, authorities also reported the second straight day of no new cases. For more than a hundred days, though, the city's five million residents had
to stay at home expect for essential trips and for a while could not even travel more than five kilometers from their homes.
But from midnight Wednesday, they can now freely leave their homes and stores, restaurants, and bars will all reopen but there are still a litany
of rules in place. For instance, outdoor gatherings are limited to 10 people. People are still required to wear facemasks when leaving the home.
In fact, those caught maskless without a waiver could be fined 200 Australian dollars.
They also cannot leave the Melbourne Metropolitan area without a permit until November 8th. If they are caught without a valid reason, that's a
fine of thousands of dollars.
Now, this long lockdown has been controversial. It strained the economy. People even protested the lockdowns in September with dozens arrested. But
health experts say the approach has worked.
Nearly three months ago, Victoria's Premier, Daniel Andrews declared a state of disaster when Victoria State was reporting more than 700 COVID-19
cases a day. He then put in place restrictions that other governments in the U.S. and Western Europe have been hesitant to do.
But now, Victoria has reined in the pandemic while cases in the Europe and the U.S. continue to skyrocket. This experience in Victoria shows once
again that targeted lockdowns plus testing and contact tracing are effective.
The Premier has praised Melbourne's citizens for staying the course, but also gave a sobering reminder that residents have to be vigilant, and that,
quote, "Until a vaccine comes, there is no normal. There is only COVID normal." -- Julia.
(END VIDEOTAPE)
[09:10:10]
CHATTERLEY: Selina Wang reporting from Hong Kong there. I have to say those doughnuts did look good.
All right, seven days to go until the U.S. election and voters are coming out in droves. More than 60 million people have cast their ballots early,
exceeding the 58 million who did so in 2016.
Conservatives are also relishing a victory with Amy Coney Barrett now officially a Supreme Court Justice. Lots to discuss. John Harwood is at the
White House for us.
John, great to have you with us. So, millions more have already cast their votes than did in the whole of 2016, and of course, we've still got a week
to go. We have to underscore the sheer volume and enthusiasm for voting, irrespective of which candidate they are voting for here and which party.
JOHN HARWOOD, CNN WHITE HOUSE CORRESPONDENT: Julia, we're going to have a massive turnout in this election, probably more than 150 million voters. I
don't know how far north of that we're going to get.
This continues a trend during the Trump administration in 2018. We had a very large turnout in midterm elections. Both sides turned out heavily
although it was disproportionately in favor of the Democrats. We don't know if that's going to be the case this time, but what we do know is that
Democrats have placed a big emphasis on early voting. So they are banking a lot of their vote.
Republicans are counting on in-person voting on Election Day and one risk associated with that, Julia, is that the pandemic seems to be cresting now
and that creates some dangerous conditions if you're counting on people, especially a lot of older Americans, to get out to vote on Election Day, if
the pandemic in those critical states, especially in the Midwest, is spiking.
CHATTERLEY: John, I also want to weave in the second story here and the victory celebrations that we saw as a result of the Supreme Court Justice,
Amy Coney Barrett, now being joined to the Supreme Court.
Ian Bremmer of Eurasia Group tweeted yesterday, "After tonight, Republicans will have nominated 15 of the last 19 Justices, despite having lost the
popular vote in six of the last seven presidential elections."
It says a few things to me. One, the laser-like focus of the Republicans on the Supreme Court and perhaps the lesser focus from the Democrats here, but
also the importance of the Electoral College and what this all means for the country going forward.
HARWOOD: Well, most of it is luck, Julia, in terms of the Supreme Court because any President who is going to fill a Supreme Court vacancy if he
gets one. The President has happened to have three vacancies. The one who did not get a chance to fill an open seat was Barack Obama and that's
because the Republican Senate led by Mitch McConnell refused to consider his nominee in the year 2016.
But this creates a six to three conservative majority. It's a triumph for Mitch McConnell, for the conservative movement that has looked to use the
Supreme Court as a way of preventing the American society from going too far left and the question is, how does that collide with the rising
preferences of the electorate which lean toward the Democrats? The Democrats are almost certain to win the Popular Vote again this year, so
there's a potential collision course.
And if Joe Biden takes office next year, if he has a Democratic Congress, they're going to pass legislation. Question is, does that get past the
Supreme Court or is the Supreme Court going to stand as a bulwark against what Democrats want to do? It's a very interesting situation, and you know,
I don't know how long that six-three majority will last.
Vacancies occur unexpectedly. Nobody expected Antonin Scalia to die in 2016, so that could happen at any time, but it's been interesting collision
on tap between the Executive, the Legislative, and the Judicial Branches.
CHATTERLEY: Yes, it is going to be a fascinating year or so, whichever way this election goes. John Harwood, thank you so much for that.
All right, let's move on. Shares in Europe's biggest lender, HSBC, are up almost six percent. The bank reported earnings that beat estimates and
suggested that it might resume paying dividends. Anna Stewart joins me on this.
Anna, it is fascinating when you can have profits, down 36 percent year-on- year and investors celebrate like this. It is all relative, I guess, but it was the dividend that I think got investors really excited here.
ANNA STEWART, CNN REPORTER: Really excited about that dividend, despite as you say, some pretty dismal headline figures. But Q3 revenue down 11
percent, pretax profit down 36 percent, that's compared to the year before, but the outlook is so much more optimistic than when we last heard from
HSBC which was back in July and here is why.
Credit losses appear to have stabilized. They now think the full year that will come at the lower end of the range they gave us which is between eight
and 13 billion dollars. They are even going to go further and faster on their mega cost-cutting plan.
And perhaps the most interesting bit is a recognition that interest rates are going to be lower or negative for much, much longer and as a result,
they are changing their business model. They are shifting away from interest rates to business lines they say to fee-generating businesses, but
back to that dividend, a final decision will be made in the full year results.
That's not until February, Julia, and as you know, with this pandemic, a lot can change in weeks, let alone a whole quarter.
[09:15:28]
CHATTERLEY: Yes, absolutely. I mean, they have got the coronavirus to deal with. They've got ongoing interest rates, low interest rates that make the
business a challenge. They are also, of course, caught in the crossfire between tensions with China and the West over what happens in Hong Kong and
this has been really pivotal, I think, for them.
And if we're talking about turning this super tanker around and honing in on some of those Asian businesses, perhaps, that are more lucrative,
doesn't that also accelerate the challenge that they have with that particular issue in that region?
STEWART: It sure does. The fee generating business shift was what I was listening at, Julia, on the earnings call today and that really is doubling
down on Asian investment and wealth management, asset management, insurance and so on, all the bits that make money, particularly China, which is where
it generates the majority of its profits and this is going to raise eyebrows once again.
Of course, this is where HSBC generates much of its profits, but there are these huge tensions between China, particularly with the national security
legislation with the U.S., with the resulting sanctions, and as ever, on this call, there were questions as to whether HSBC should reconsider where
it is domiciled, whether or not it should split its business between Asia and the rest of the world and the simple answer from the CEO was no.
But I feel like we're going to hear that question asked again and again and again -- Julia.
CHATTERLEY: Yes. The bottom line is, there are no simple answers to this conundrum or any of them, quite frankly. Anna Stewart, great job. Thank you
so much for that.
All right. Still to come on FIRST MOVE, it is time to mask up and not just because it's almost Halloween. A new study says mask-wearing could save
100,000 American lives this winter. We'll be speaking to the author.
And destination: quarantine. The 14-day isolation period is more damaging to the airline industry than any other measures says the CEO of Dubai
Airport.
More of that interview coming up on the show. Stay with us.
(COMMERCIAL BREAK)
[09:20:15]
CHATTERLEY: Welcome back to FIRST MOVE live from New York where U.S. futures are trying to bounce back after Monday's pullback. It was actually
the worst drop for the S&P 500 in a month. All of this, amid a mixed picture for U.S. earnings. We've had some disappointing results from some
of the drug giants, Pfizer and Eli Lilly, premarket. 3M and Caterpillar shares also lower premarket after their earnings results disappointed
investors, too.
A massive $35 billion deal in the chip industry lending support to the tech sector, however, AMD buying rival Xilinx to help strengthen its lead in the
market for datacenter chips. Just the latest, actually, in the huge merger spree that we've got going on in the chip sector. The big question now is
how will rival Intel respond?
In the meantime, a Supreme Court ruling late Monday highlights the major uncertainties for investors too, going into next Tuesday's presidential
election. The high court ruling that mail-in ballots in the swing state of Wisconsin must arrive by Election Day to be counted. It's perceived as a
big win for the Republicans.
All right, our next guest says a market-jolting disputed election remains a very real possibility, and he is Greg Valliere, the chief U.S. Policy
Strategist at AGF Investments. Greg, great to have you on the show. We have so much to talk about. But I do want to take a step back. Just for our
international viewers that are watching this election and help them understand that this is not 330 million Americans all heading to the polls.
Every vote counts, but some votes matter more than others, and that comes down to the mathematics of the Electoral College in these battleground
states that we always talk about. Just give us a sense of what we need to understand.
GREG VALLIERE, CHIEF U.S. POLICY STRATEGIST, AGF INVESTMENTS: Well, you need to get 270 votes, and it gets complicated because you could get a
Popular Vote victory, like Hillary Clinton did four years ago, and still lose in the Electoral College.
CHATTERLEY: So, as you quite rightly pointed out, this is exactly what we saw in 2016. The Popular Vote was won by Hillary Clinton, but the election
itself was won by President Trump. This ties to battleground states and why we keep hearing specific states mentioned in particular that we have to
watch.
It's not about a national poll, really, that we have to be looking at. We have to be looking at state polls and who is popular or most popular, at
least, in some of these battleground states.
VALLIERE: Exactly. I mean, Hillary Clinton won California by over two million votes, but she still got the same amount of Electoral College votes
no matter what. So, the really contested states are the close ones like Pennsylvania, Michigan, maybe Wisconsin, Iowa, states like that where I
think the final margin will be very, very close.
CHATTERLEY: I mean, two of them that come to mind, Arizona and Pennsylvania, I think one of the big fears here, and it goes to the point
about the contested election, is that the results in these states are so close, in addition to the votes that are being counted because they've been
mailed in rather than cast on the exact day that we have this window where we don't know who won the election.
VALLIERE: Well, as if the markets didn't have enough to worry about, with no stimulus bill, with an economy that may be softening, we now have the
possibility on two fronts of a disputed election.
Number one, I don't think we'll know who won on Election Night. It may take several days afterwards before all the votes are counted because so many
votes are mail-in ballots, and number two, more ominously, if Donald Trump narrowly loses, he has made it clear, he will appeal. He'll go to the
courts. He's very litigious, as we all know.
I think he would go to Mr. Barr, his Attorney General, and say, I want you to take this all the way to the Supreme Court because I won.
And one other thing, Julia, is that in the year 2000, it went to the Supreme Court, and they didn't decide until December 12th whether George W.
Bush actually beat Al Gore, so it could take a while.
CHATTERLEY: How does that actually work, then? It goes to the Supreme Court and the Supreme Court can say, okay, you have to go back to the individual
states and recount all those votes. That's what takes the time.
VALLIERE: Yes indeed. And Donald Trump's argument will be that the mail-in ballots are corrupt and rigged. He said it again yesterday, and so he will
use that as the premise that the election was stolen from him.
CHATTERLEY: Are investors being complacent given what we're seeing priced for stock markets in particular at this moment about that risk? We've sort
of discounted it.
[09:25:03]
VALLIERE: Frankly, I think there are a lot of risks, whether it's the new explosion in COVID cases, whether it's a significant delay in finding out
who won, whether it's a U.S. economy that may start to soften without a stimulus bill, I think there are a lot of things right now to be concerned
about.
CHATTERLEY: Greg, what do you make of what's happened? I mean, we've seen the Senate now adjourned until at least after the election. Do you think
there's any kind of hope of some kind of agreement before the Inauguration, and obviously, that does depend on the result and the make-up of Congress.
VALLIERE: It's pretty unlikely, Julia. I suppose they could come back in a lame duck session in the middle of November, but I don't sense a lot of
enthusiasm for that, so let's say Biden does win, he wouldn't have a bill put together until -- well, Inauguration Day is January 20th, so it could
be early February before we actually got a bill to help people, and quite clearly, the economy needs more assistance.
CHATTERLEY: Greg, the last time you were on the show, you first -- you made your first call. You said, look, I think Joe Biden is going to win this
election.
I'm going to put you on the spot once again. Has anything about what you have seen, the final debate, the campaigning, even the polls, because at
this time four years ago, we suddenly saw that collapse in support for Hillary Clinton. Has anything changed your mind about the election result,
however long it takes?
VALLIERE: I'm not sure it's going to be a blowout blue wave, maybe it's a light blue wave. I'm not sure the Senate will be more than a one-seat or
two-seat gain. But I will say this. Big, big difference between now and four years ago. Tremendous surge of female voters for Biden. Tremendous
surge of senior citizens for Biden. And incredibly, the Democrats have a lot more money to spend in the last couple of weeks now on TV ads.
CHATTERLEY: And young people voting as well, which is something that's quite astonishing compared to this time four years ago, which makes me
happy, whoever they are voting for. Young people galvanized is good. Greg, great to chat to you. Thank you so much, sir. Greg Valliere there of AGF
Investments.
All right. The market opens next. Stay with us.
(COMMERCIAL BREAK)
[09:30:15]
CHATTERLEY: Welcome back to FIRST MOVE where U.S. stocks are up and running. That was the opening bell at the New York Stock Exchange this
Tuesday, and we are one short week away from Election Day here in the United States.
Stocks trying to bounce in early trading, helped along by news of a mega merger in the tech industry, AMD buying rival Xilinx in an all-stock deal
worth some $35 billion. We have also had some solid economic data, too.
U.S. Durable goods orders rising almost two percent last month. That's the fifth straight month of growth and significantly above expectations. That
helping offset disappointing Q3 results from drug makers like Pfizer and Eli Lilly.
Caterpillar earnings fell 54 percent on the quarter, but they did beat estimates. 3M shares, meanwhile, are lower after it failed once again to
provide forward guidance and we've discussed this on the show, firms being punished for being unable to provide guidance at a very unclear moment in
time.
Joining us now, Kristina Hooper is Chief Global Market Strategist at INVESCO. Kristina, great to have you on the show. In your latest note, and
I love that you coined a phrase which I'm going to use, "Pepto-Bismol days." Digestion issues days just with the sheer level of uncertainty, and
things going on at the moment, the event risk, and you say expect more of them.
KRISTINA HOOPER, CHIEF GLOBAL MARKET STRATEGIST, INVESCO: Absolutely, Julia. This is a very uncertain environment and we know the market doesn't
like uncertainty.
CHATTERLEY: Yes. Talk to me about between now and the election. What are you expecting? Is it just a case of expecting more volatility, up days,
down days?
HOOPER: I expect more volatility, but I expect the trend to be downward. There is just a lot of nervousness and apprehension in the market and it's
not just the presidential election. We have rising COVID-19 infections in the U.S. and all we need to do is look across the pond to see what's
happening in Europe where there are actually -- where they are actually having increases in stringency.
The lockdowns are more targeted than what we saw in the spring, but this could be America's future in just a few short weeks if we follow that same
trajectory. Then, of course, we also have what seems very much a fait accompli when it comes to fiscal stimulus, in other words, no fiscal
stimulus and that's causing concerns especially as it comes in tandem with rising COVID-19 infection rates and then of course the cherry on top is
this presidential election in just a week.
So a lot of nervousness, a lot of market jitters, I expect. I think we should all be prepared for volatility and a bias towards downward
volatility.
CHATTERLEY: Yes, this is the key, Kristina and you actually raise so many good points there. As you said, actually, what we're seeing, if we look
across at Europe, it's far more targeted shutdowns, but if you look in terms of case numbers.
Wave two actually looks far worse than wave one. Do you think we are underestimating the potential for a higher degree of lockdown if not broad-
scale lockdown similar to what we saw in March or April of this year. The bar may be higher, but so are the cases.
HOOPER: Well, what we've heard from government leaders in the United States, in Europe, for the most part, is that they don't expect to have
wide-scale lockdowns. That was a blunt instrument, not a surgical tool that they know enough now that the lockdowns can be more targeted.
I also should add that it does seem as though we have learned something from what we went through in the spring in terms of being able to utilize
therapies to lessen the severity of the illness in many people.
So, I think that combination suggests that we might be able to get by with just targeted lockdowns, but I am no expert. I'm just an optimist.
So hoping for the best, but recognizing that the trajectory is not looking good right now.
CHATTERLEY: Yes, we have to be optimistic, but also realistic, I think, too. Speaking of being realistic, Greg Valliere just on the show was saying
that he thinks perhaps the market is underpricing the risk of either a contested election or a significant delay in just counting the votes here,
whether they are mail-in or otherwise. And it could take some time to work out who actually won this election. Agree or disagree?
HOOPER: I think there's a very good chance that we see that. I know the Biden campaign is hoping for a strong win so they can close the books on
Election Night. But that seems to be really a wish as opposed to something that is more akin to reality.
I think what we're more likely to see is what Greg alludes to, that environment in which we have uncertainty for days, and we could very well
have a contested election.
[09:35:08]
CHATTERLEY: So Kristina, days of uncertainty potentially, downside risks in terms of the health crisis, no deal in sight as far as financial aid is
concerned. You've said a bias for stocks to the downside. What should investors be doing at this moment?
HOOPER: Investors should be doing nothing at all. They have a long enough time horizon, most of them. That's why we have investing plans and asset
allocations, is to weather storms like this.
So, I would advise to not make any kind of rash decisions out of fear in the current environment. There is the potential to look for opportunities,
though. For example, those countries that are doing a good job managing this virus might emerge with even greater strength because, let's face it,
this is unlikely to be our last pandemic.
So that those countries that are better able to manage this could wind up with a strong competitive advantage for the future. So, we're looking for
opportunities. We're not making rash decisions. And I think finally, Julia, we just have to expect that this -- that ultimately, we do have strong
monetary policy that over the longer term, I believe, creates an upward bias for stocks.
So, so long as we have an accommodative Fed, and accommodative Central Banks around the world, the picture is a lot brighter than we would assume
just looking at infections, just looking at this tumultuous -- the potential for tumultuous presidential election and just looking at the fact
that we don't have more fiscal stimulus in the near term.
So I guess my last message to everyone is, have some wine with that Pepto- Bismol. We've gone through contested elections before. We have gone through pandemics before. We've gone with a scarcity of fiscal stimulus before, and
yet the bias for stocks is upward and now we have an accommodative Fed to boot.
CHATTERLEY: Yes, I'm just trying to imagine what the combination of Pepto- Bismol and wine actually tastes like or feels like, quite frankly, but people are certainly drinking a lot of wine in this pandemic.
HOOPER: You chocolate and wine. Maybe that would be better and you can toss the Pepto-Bismol.
CHATTERLEY: There we go. Kristina Hooper, thank you so much for that. Chief Global Market Strategist at INVESCO.
All right, up next, one of the things that could help, universal mask- wearing could prevent tens of thousands of U.S. deaths this winter according to a new study. We speak to the author after this. Don't go away.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. In Portugal, facemasks will become obligatory in public places from Wednesday. Russia, too, reinstates its
mask mandate tomorrow. This amid mounting evidence that mask-wearing can save lives.
A new study found that more than 100,000 U.S. deaths could be prevented this winter if 96 percent of Americans wear masks. The problem is, the
majority don't. In September, that number was at just 49 percent.
Joining us now is Chris Murray. He is Director of the Institute for Health Metrics and Evaluation at the University of Washington. Chris, fantastic to
have you on the show.
I want to talk about what the study found and some of the scenario analysis that you've got, but your base case here was a September survey saying 49
percent of people always wear masks. Do we believe the number is that high?
DR. CHRIS MURRAY, DIRECTOR OF THE INSTITUTE FOR HEALTH METRICS AND EVALUATION, UNIVERSITY OF WASHINGTON: I think we do. That was based on the
premised surveys and there are other surveys that have similar numbers, if not slightly higher. But it also depends on what setting.
People really wear masks when they go to the grocery store. They're much less likely to wear a mask when they go to a restaurant or a bar or have
guests at home.
CHATTERLEY: Yes. So, it depends on where you are and what activity you're doing at any given moment. Chris, let's walk through the scenarios. You
were saying on one of the first ones, if we just stayed at that 49 percent of people wearing masks, if we continue to relax some of the social
distancing measures that we've seen being done, how many deaths might we see in the United States by February of next year?
MURRAY: Well, by the end of February, we can get up over cumulative deaths over 500,000, and that -- what's driving that is the big winter surge due
to the seasonality of COVID-19, and we're seeing this play out in Europe, and we're certainly starting to see it play out in the United States now as
well that winter surge.
CHATTERLEY: From my analysis of your study, it gets above 500,000 cumulative deaths if you assume that there's this kick-in point when we get
eight deaths per million people of the population, at which point you start to go into those shutdown measures.
So, given that the bar feels higher today for those kind of shutdown measures than it was, perhaps, back in March or April, is that sort of a
dangerous assumption to make?
MURRAY: Well, it certainly could be worse and our worst case scenario where governments sort of get paralyzed and do nothing is a dramatically higher
number. But I think we're seeing, in Europe, for example, places like Ireland, you just mentioned Portugal on the broadcast, we're seeing a
number of governments, when hospital systems are threatened to be overwhelmed, starting to act.
And so, I think our statistical analysis suggests that governments will respond with some types of lockdowns, perhaps not as extreme as April, but
that is very likely to occur, at least in our view, so that 500,000 number, unfortunately, is where we may well be headed.
CHATTERLEY: Yes. I mean, that's terrifying enough. Let's be clear. The challenge here that you've got is we don't know where the virus is going,
when you're trying to model for this.
What's your sort of guesstimate now of the percentage of people wearing masks? Because if the alternative is lockdown, then arguably just saying to
people, hey, just wear a mask and wear it a bit more, feels like the easier option, even if it's become politicized here.
MURRAY: Well, it's become politicized and the -- it shouldn't be, because it is the best way both to save lives, you know, more than 100,000 lives
could be saved in our study, by the end of February, just from getting mask use up to the level we see in Singapore, but it also will delay the
implementation of further mandates or lockdown and save jobs.
So, regardless of what you prioritize, it's the smart thing to be doing. It is to be -- having a mask mandate and getting mask use way up.
CHATTERLEY: What is the percentage of mask users in Singapore, just out of interest?
MURRAY: Ninety five percent always wear a mask. And so that's the number we've benchmarked off as it is possible to achieve that. We look around the
world, because there's actually now pretty decent data every day about mask use around the world, and a number of countries in Latin America get up in
the high 80s, and a number of countries in Southeast Asia are in the 90s. So it's quite possible to achieve that. That's why we've modeled that
scenario as, you know, sort of the target for the United States.
[09:45:42]
CHATTERLEY: Yes, because we're watching other countries do it. This is the critical point. What happens if we can't get to 95 percent? Have you
modeled scenarios -- let's say if we got to 85 percent?
MURRAY: We did. We included in the analysis an 85 percent. We also internally model a number of different levels, and you save fewer lives,
but you still get a huge benefit. So, basically, going from where we are now, every increment of mask-wearing is -- has a huge benefit in terms of
lives saved.
And it also delays the onset of, you know, stress on the health system and the risk of those future shutdowns. So, every part helps. We know that
mandates also help, so not included in the paper, but as a statistical analysis, we've done that shows when there's a government that bumps up
mask use, so it's not just individual choice but government action on masks does have a benefit.
CHATTERLEY: And that's exactly where I was going to go next. So, as a result of this, and the analysis that you have done, are you saying that
whether it's at a state level or even at a Federal level, quite frankly, which is very complicated, simply saying to people, we want you to wear a
mask, and perhaps we'll fine you if you don't, works?
MURRAY: It does. Simply putting a mandate in place gives you often more than a 10 percentage point increase in mask use, which a lot of lives
saved. And if you add a penalty to that, so that if you, like the State of Victoria in Australia that went from a very low level of mask use to a very
high level in a week, they did that by having a $3,000.00 penalty for not wearing a mask.
And so, penalties, statistically, also give you a further bump up in mask use. So, mandates with penalties really do work.
CHATTERLEY: Yes, an added incentive not to get caught here when it hurts your pocket. It actually works. Have you spoken to governments, whether
it's at the state level or the Federal level about your findings? And if you have, what response have you had?
MURRAY: We have. We have been in pretty much continuous contact since March with both the White House and with Democratic leaders in Congress as well
as Vice President Biden's campaign, so we're in very constant contact over the months of the modeling work and our finding around masks is certainly
something that we've been communicating as well as to various state governors.
CHATTERLEY: I don't want you to get political, Chris, but I'm going to get political. Do you think there's more likelihood of a mask mandate under a
different government, based on what you're hearing from the Biden campaign versus your conversations with the White House?
MURRAY: Well, I think that both candidates have been very clear. I think there's very little likelihood under President Trump of a national mask
mandate, and certainly Vice President Biden has been quite explicit about promoting the idea of a national mask mandate, even though there's clearly
some constitutional and legal issues around that.
CHATTERLEY: I'll take that as a yes. You're a diplomat. Chris Murray, thank you so much for coming on the show and doing great work with the study.
Thank you. The Director of the Institute for Health Metrics and Evaluation at the University of Washington.
All right, still to come, as fall moves into winter, the aviation sector still finds itself in dire straits. Hear from the CEO of Dubai Airports on
the challenges ahead. Stay with us.
(COMMERCIAL BREAK)
[09:51:25]
CHATTERLEY: Welcome back to FIRST MOVE. Nearly 200 airports in Europe face insolvency over the coming months if they can't see their traffic recover
by the end of the year. That's according to the Airports Council International Europe. Even the world's busiest airport in Dubai is
struggling to recover, too.
John Defterios spoke to the CEO and joins us now. John, I don't feel like it's a fear of flying anymore. It's the difficulty of the quarantine either
side. Do you agree?
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Yes, I agree completely and this is the case that the G-20 is making and also the CEO of
Dubai Airports at the same time, Julia. But listen to the numbers we're talking about. Nearly 200 airports going under.
Let's take a look at the World Travel and Tourism Council and their latest numbers in terms of normal contribution in terms of jobs, 330 million. But
look at this, Julia. We're losing nearly 200 million jobs worldwide by the end of this year and the entire sector.
The contribution to GDP is usually about 10 percent. That's dropping by $5.5 trillion. So, the key points from Dubai are, yes, we need to remove
the quarantines unless you test positive, and we have to think about setting up air corridors and starting with Dubai to London. They hope to
have it by the first quarter of next year. Let's take a listen.
(BEGIN VIDEO CLIP)
PAUL GRIFFITHS, CEO, DUBAI AIRPORTS: If we could adopt one which could give you a positive or negative result to a COVID test in literally a few
minutes, that would transform the whole thing. But that's not just the entire picture, because the other problem, of course, is the extended
quarantine periods that are being applied at the moment.
In my view, they are actually doing us more damage than any of the other single measures because people don't have the time to be able to spend up
to 14 days in quarantine on reaching their destination.
DEFTERIOS: I'm wondering if you can get an early win with an air corridor between Dubai and London, for example. There's discussion of London to New
York and adding Beijing or Shanghai. When could we see an established air corridor to serve as a case study?
GRIFFITHS: Well, we believe we have all the steps in place, both here and in London to make that happen. But the thing is, of course, before we can
get any agreements signed, we have to get the governments on board. If we could get a travel corridor established between here and London, then we
could very, very quickly see a massive surge in traveler confidence and the numbers starting to come back.
(END VIDEOTAPE)
DEFTERIOS: And what Griffiths is saying though, Julia, this is a health crisis. We have to acknowledge it, but it's also an economic and social
crisis. And we have an industry that contributes so much to GDP, you have to have the governments pushing in the same direction.
I have to say, and that is a question I posed to him, it's a tough sell, right? Because you have cases spiking in Europe. They all have different
policies and cases spiking in the United States. It's very hard to get a single global policy, but they want this by the first quarter of next year.
That's the aim here.
CHATTERLEY: Yes, you need to be able to do a test when you land, test a few days later, test again. We've got to get more coordinated on this. John
Defterios, thank you so much for that. Couldn't agree more.
All right, let's move on. NASA says it now has definitive proof that water exists on the moon and in multiple places. It's based on research from two
studies. Scientists found water not only at the moon's freezing poles, but also in areas where the sun shines. It's a discovery one scientist saying
came as a surprise with some pretty important implications.
(BEGIN VIDEO CLIP)
PAUL HERTZ, NASA DIRECTOR OF ASTROPHYSICS: We were expecting water. We weren't guessing that water could survive in the sun lit part of the moon,
and so thinking about how did it get there and how did it survive? It's an interesting scientific question that tells us something about the history
of the moon. It might tell us about processes that take place on other airless bodies in our solar system.
(END VIDEO CLIP)
[09:55:17]
CHATTERLEY: The finding came, in part from data gathered by NASA's SOFIA airborne telescope as well as other -- as the lunar orbiter. Get it
straight. We love a bit of space on this show.
Beam me up, Scotty, please, but just not before the election.
All right. That's it for the show. You've been watching FIRST MOVE. I'm Julia Chatterley.
Stay safe, and we'll see you tomorrow.
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[10:00:00]
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