Return to Transcripts main page
First Move with Julia Chatterley
Jerome Powell Says Outlook For U.S. Remains Extraordinarily Uncertain; China's COVID Response, An Exclusive Report On Leaked Documents Revealing Early Mishandling Of COVID-19; Pfizer Files For Vaccine Approval In Europe. Aired 9-10a ET
Aired December 01, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:32]
ALISON KOSIK, CNN INTERNATIONAL ANCHOR: Live from New York, I'm Alison Kosik, in for Julia Chatterley. This is FIRST MOVE, and here is your need
to know.
An economic warning. Jerome Powell says the outlook for the U.S. remains extraordinarily uncertain.
China's COVID response. An exclusive report on leaked documents revealing early mishandling of COVID-19.
And a step closer. Pfizer files for vaccine approval in Europe.
It's Tuesday. Let's make a move.
Welcome once again to FIRST MOVE. Great to have you with us. Let's begin with a check of the markets.
And we're seeing green arrows across the board for global stocks. As investors kick off the new trading month, Wall Street is set to rally after
Monday's pullback with records for the S&P 500 and the NASDAQ in sight.
Europe is posting solid gains as well.
And in Asia, Chinese stocks rose more than one and a half percent after a private study showed factory activity there hitting 10-year highs.
The O.E.C.D. today saying that China will account for some one third of global economic growth next year. It sees the global economy back to pre-
pandemic levels in 2021 as vaccines roll out, but it is warning governments not to pull fiscal support anytime soon.
And Fed Chair Jerome Powell is set to deliver a similar warning during congressional testimony that's happening later today. In his prepared
remarks, Powell says that the outlook for the U.S. economy remains quote, "extraordinarily uncertain." He sees challenging months ahead as the U.S.
grapples with an ever worsening COVID crisis.
Jay Powell appears before the Senate today along with Treasury Secretary Steve Mnuchin. This is going to be the first time the two men have actually
appeared together since their very public rift on the future of emergency lending programs.
Let's get more from this. I am bringing in Christine Roman. She joins me live. Christine, great to see you.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Hi.
KOSIK: Hi. So this is, as I said, the first time these two are going to appear together. They are coming from two different sort of quadrants on
where they think the challenges in the U.S. economy are right now. What's going to happen today in the hearing? Is the fur going to fly?
ROMANS: I don't know about the fur flying really, but I think you're going to see two very different perspectives here and that is what the headline
could very likely be. You have a Fed Chief who is still very cautious here and in line with what you're hearing from the O.E.C.D., which is don't pull
away targeted support and important lending programs too soon. We do see an economy recovering sometime next year.
There is great medium-term optimism about vaccines. But all of that has to be developed and distributed. You've got to have a national strategy for
how to get people vaccinated. There still are risks along the way before we get to that pre-pandemic economy that so many of us want.
He was very clear, "significant challenges and uncertainties remain." He did not hide his worries that the longer term -- the near term until we get
to what hopefully is better than the longer term still has a lot of risk.
We've heard him many times talk about the need for more support, more appropriate for support for Congress. All the while, he has been making
those public statements, Congress has not moved on stimulus. So, there's a real urgency, I think, here.
KOSIK: You know, you look at what's ahead for the Biden administration. It's really got a full plate. It's got, you know, millions of Americans out
of work, countless evictions. We've got these lines of people -- these food lines of people who really can't get food without, you know, getting a
handout.
Where does the Biden administration start to get a handle on what's happening?
ROMANS: So they've got a lot to do, and they've got to move quickly, and they know it. People associated with the transition, people who've been
advising and talking with the campaign are all saying that first hundred days is about a broad financial aid package for Americans to really help
Americans.
We look at the makeup of his economic team that he hopes to nominate here. You see labor economists. You see people who have studied inequality,
people who have talked about the fact that when we have these periodic crises, whether it's the financial crisis in 2008 or this pandemic here
today, they reveal the structural problems in the American economy.
Neera Tanden who he is planning to nominate for Office of Management and Budget has called moral distortions. The pandemic has revealed the moral
distortions and inequalities in American society.
[09:05:08]
ROMANS: And so while the team and the Biden administration wants to talk about income inequality and racial inequality in the economy, the first
thing that they have to do, get money into the pockets of people who are suffering: millions and millions of families who are suffering, get some
kind of comprehensive, baseline financial aid package out there and get COVID-19 under control.
KOSIK: Absolutely. All right, Christine Romans, I know you'll be watching this hearing with Mnuchin and Powell speaking. We'll look to hear what
happens there. Thanks for joining us.
The spike in coronavirus cases is straining hospitals across the United States and officials warn it's only going to get worse during the Holiday
season. As Stephanie Elam reports, the number of Americans hospitalized reached a record high 20 times last month, most recently, just yesterday.
(BEGIN VIDEOTAPE)
STEPHANIE ELAM, CNN CORRESPONDENT (voice over): The coronavirus pandemic not abating. At least 43 states are over the crucial five percent test
positivity threshold.
More than 96,000 Americans now hospitalized with the coronavirus, another high for the country.
GOV. MIKE DEWINE (D-OH): We have to do everything we can during this very serious time where our hospitals are really being hit to slow down the
transmission.
ELAM (voice over): Governor Mike DeWine said more than 5,000 people are hospitalized with the coronavirus in Ohio, the most for the state
throughout the entire pandemic.
STACEY MORRIS, COVID UNIT NURSE MANAGER, AKRON GENERAL: Our numbers have just risen so quickly and so drastically.
JAMIE GIERE, UPPER VALLEY MEDICAL CENTER NURSE: We're seeing healthy, healthy individuals come in and they just -- they declined so quickly.
ELAM (voice over): This field hospital in Rhode Island is starting to receive patients after hospitals in the state surpassed their capacity.
DR. LAURA FOREMAN, MEDICAL DIRECTOR, CRANSTON FIELD HOSPITAL: We're expecting to be taken care of a lot of folks here. We didn't have to be
here knowing that had we, as a population come together and all stayed safe and stayed distance and stayed home and stayed masks that we could have
avoided this.
ELAM (voice over): And in California, the recent surge of new cases forcing Los Angeles County last weekend to implement another stay-at-home order for
its 10 million residents.
The Governor warning new restrictions could be coming as the state predicts some hospitals could be near capacity by Christmas without intervention.
DR. MARK GHALY, SECRETARY, CALIFORNIA DEPARTMENT OF HEALTH AND HUMAN SERVICES: People just want to be done with this. But it doesn't take a
break. Just because we're tired of it. We need to recalibrate for a short period of time what we do to keep this transmission down.
ELAM (voice over): As experts warn Thanksgiving travel and gatherings will likely cause a worsening surge in coming weeks. The C.D.C. Vaccine Advisory
Committee expected to make recommendations later today on who will receive the vaccines first when they are available.
DR. MONCEF SLAOUI, CHIEF SCIENTIFIC ADVISER, OPERATION WARP SPEED: What's important to note is the number of those as the amount of vaccine that we
have is still limited in comparison to the needs. So it's going to take a while for all Americans who need it on a priority level to get it.
ELAM (voice over): Drug makers, Pfizer and Moderna have submitted their vaccines to the F.D.A. for Emergency Use Authorization. The F.D.A. will
consider Pfizer's vaccine on December 10th and Moderna's, one week later on December 17th.
Dr. Anthony Fauci, urging Americans to get a vaccine.
DR. ANTHONY FAUCI, DIRECTOR, NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES: Do you want to be part of the solution? Get vaccinated.
(END VIDEOTAPE)
KOSIK: And that was Stephanie Elam reporting.
Even countries that successfully contained COVID-19 earlier in the year are seeing case numbers spike. South Korea reported 451 new infections, Monday.
The virus is spreading faster there than it has in months. Authorities refer to the latest infections as a third wave.
In neighboring Japan, more patients are in intensive care than at any other time during the pandemic. The country reported more than 2,000 new cases
Sunday, almost a fifth of those the result of an outbreak in Tokyo.
We now bring you an exclusive investigation on the coronavirus pandemic. CNN has obtained leaked documents from inside China that reveal the
missteps and chaos of its early response to the pandemic. The documents are from Hubei Province, home to the City of Wuhan where the pandemic is
thought to have begun.
They show authorities released misleading public data on the number of deaths and cases, took about three weeks to diagnose a new case and much
more. CNN's Nick Paton Walsh has this report.
(BEGIN VIDEOTAPE)
NICK PATON WALSH, CNN SENIOR INTERNATIONAL SECURITY EDITOR (voice over): An unprecedented leak of internal Chinese documents to CNN reveals for the
first time what China knew in the opening weeks of the COVID-19 pandemic, but did not tell the world.
A whistleblower who said they worked inside the Chinese healthcare system shared the documents with CNN online, which show a chaotic local response
from the start.
[09:10:02]
YANZHONG HUANG, SENIOR FELLOW FOR GLOBAL HEALTH, COUNCIL ON FOREIGN RELATIONS: This lack of transparency sort of also contributed to the
crisis.
DR. WILLIAM SCHAFFNER, PROFESSOR, VANDERBILT UNIVERSITY MEDICAL CENTER: Seeing information in black and white was very revealing and instructive.
WALSH (voice over): CNN has verified them with half-a-dozen experts, a European security official, and using complex digital forensic analysis
looking at their source code.
WALSH (on camera): The documents provide a number of key revelations about the Province of Hubei, home to the epicenter city of Wuhan.
Firstly, some of the death tolls were off. The worst day in these reports is February the 17th, where these say 196 people who were confirmed cases
died. But that day, they only announced 93.
WALSH (voice over): China was also circulating internally bigger, more detailed totals for new cases in Hubei for one day in February, recording
internally nearly 6,000 new cases, some diagnosed by tests, others clinically by doctors and some suspected because of symptoms and contact,
but all pretty serious.
Yet, publicly that day, China reported nationwide about 2,500 new confirmed cases. The rest were downplayed in an ongoing tally of suspected cases.
That meant patients that doctors had diagnosed as being seriously ill sounded like they were in doubt. They did later improve the criteria.
DALI YANG, PROFESSOR OF POLITICAL SCIENCE, UNIVERSITY OF CHICAGO: If China had been more transparent and also more aggressive in responding, clearly,
there would have had an impact on how much the virus spread in Wuhan, in Hubei in China and perhaps to the rest of the world as well.
WALSH (voice over): Strikingly, the documents reveal one possible reason behind the discrepancy in the numbers. A report from early March says it
took a staggering 23 days on average from when someone showed COVID-19 symptoms to when they got a confirmed diagnosis. That's three weeks to
officially catch each case.
HUANG: As the information seems to be very surprising to me because normally it would take just a couple of days.
SCHAFFNER: You're making policy today based on information that already is three weeks old.
WALSH (voice over): Perhaps the most remarkable revelation concerns early December, the moments when COVID-19 first emerged in China.
WALSH (on camera): Startlingly, these documents reveal there was an enormous spike in influenza cases in Hubei, right when studies have shown
the very first known patients were infected with COVID-19, twenty times the number of flu cases compared to the same week the year before.
WALSH (voice over): Experts said it could have flooded the hospital system with patients sick from flu-like symptoms, making it harder to spot the
first cases of COVID-19.
The documents don't link the outbreak to coronavirus origins directly, but they show flu patients were regularly screened and many did not have a
known flu virus strain, leaving open the possibility they were sick with COVID-19.
HUANG: The spike right in Wuhan was very unusual, like compared to previous years, so that would raise a red flag.
SCHAFFNER: It was very, very sizeable. It's clear that the Chinese virologists can make precise diagnosis of influenza, but in retrospect, you
have to wonder, was there some COVID in there masquerading as influenza?
WALSH (voice over): The documents also show the flu outbreak was biggest that first week in December, not in Wuhan but in two other cities nearby in
Hubei, all valuable information in the hunt for where the disease came from.
Chinese officials have said the outbreak began here, the Huanan Seafood Market in Wuhan in mid-December. And despite Western accusations that it
has limited its cooperation with W.H.O. investigation into the virus's origins, China has insisted it has been as transparent as possible over the
coronavirus.
Sometime now, in order to shift the blame, she said, some U.S. politicians have constantly used the pandemic and other issues as a pretext to smear
and demonize China and sow lies and misinformation about China. This will, of course, seriously mislead citizens of the United States and some other
Western countries understanding of the truth of China's fight against the epidemic.
China's Foreign Ministry and Health officials in Beijing and Wuhan have not responded to our requests for comment.
This disease has killed nearly 1.5 million people, about a fifth of known deaths in America. These documents are rare, clear, and open window into
what China knew all along, trying to appear in control, while a local outbreak turned into a global pandemic.
(END VIDEOTAPE)
KOSIK: And that was an exclusive CNN report from Nick Paton Walsh.
In Europe, Pfizer and BioNTech filing for approval from the European Union for their coronavirus vaccine. Meantime, Germany is building its first mass
vaccination center to administer up to 1,000 shots a day.
[09:15:09]
KOSIK: Fred Pleitgen is live in Central Germany with details. You know, Fred, I've been watching you all morning in these live shots, and this
really looks like one of these huge logistical challenges. How's it doing?
FRED PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes. It certainly is a huge logistical challenge, especially in light of the fact that some of
the vaccines that we believe and many believe will get approval first, like, for instance, the one from Pfizer and BioNTech, but the Moderna one
as well needs to be stored at very cold temperatures. The Pfizer one, for instance, at around minus 100 degrees Fahrenheit.
So essentially, what the Germans are doing, Alison, is they're building a lot of centers like this one, where they're going to have a lot of fridges,
a lot of freezers, and they're going to bring thousands of people here to then get vaccinated. Now, of course, they have to try and do that in a safe
way.
And essentially, the way they want to do that is they're going to have these so-called vaccination streets, where you go in one direction, one way
streets that way to make sure you don't get into contact with too many other people. The way that the Germans put it, is they say they want to
give people the vaccine, they don't want to give them coronavirus, obviously.
So people get vaccinated. First of all, they come to this area right here. This is where people first see a doctor and the doctor asked them about any
sort of medical conditions, they might have, any preexisting conditions that could make it dangerous to get a vaccine shot. Then they go over here
to this area, and it's about four rooms here, and this is where you get the actual vaccine jab.
And the reason why they have four rooms here is that, for instance, you'll have one person who is taking off their shirt to get the shot, you'll have
another person at the same time as putting back on their shirt after getting the shot, simply to make it more logistically feasible to be able
to get more people through here at a faster pace.
And then in the end, folks come to this last area around here, which is sort of after they've gotten the shots. And this is actually quite
important they told us. This is the area where people then are monitored for at least 15 minutes to see whether or not they have any sort of
reactions to the vaccine. There's always medical personnel on hand. And after folks have waited 15 minutes here, they are essentially done with
getting vaccinated.
Now, as you mentioned, it's a big logistical operation that's going on here. It's a big logistical challenge, but the Germans believe that each
one of these centers is going to be able to vaccinate about a thousand people every day.
And again, they're building dozens of these around the countries because they say, right now with the way the vaccine logistic is panning out with
these ultra-cold stored vaccine, this is the most efficient and the safest way to administer them -- Alison.
KOSIK: And you wonder if they're successful, if other countries will follow this model, we will have to wait and see. Fred Pleitgen, thanks so much.
And these are the stories making headlines around the world. In Germany, people say several people are dead as a car was driven into a pedestrian
zone in the western city of Trier. One person has been arrested and the car has been secured. We still have got details coming in and we're going to
bring you the very latest as soon as we can right here on CNN.
Iran's Parliament has overwhelmingly approved a draft that would -- a draft a bill that would increase uranium enrichment. After voting, some lawmakers
chanted "Death to America" and "Death to Israel." It follows the assassination of the country's top nuclear scientist on Friday.
Prosecutors in Argentina are investigating potential gross negligence in the death of football legend Diego Maradona. A judicial investigator says
Maradona did not receive adequate medical supervision after surgery on November 3rd for a blood clot on his brain. He died of complications from
heart failure last week at age 60.
Still to come on FIRST MOVE, video conferencing, Zoom was one of the big work from home winners. Question is, can it continue to boom as we move
over closer to a vaccine? I will be speaking to the CFO.
And British retail in ruins, Debenhams and Topshop parent, Arcadia collapsed into bankruptcy within hours of one another as the pandemic takes
its toll on the High Street.
(COMMERCIAL BREAK)
[09:22:08]
KOSIK: Welcome back to FIRST MOVE. I'm Alison Kosik live from New York, where U.S. stocks are set to rally in early trading today. The S&P 500 and
the NASDAQ are on track to rise to records. All this, after the major averages posted their strongest November gains in years.
The small cap Russell 2000 saw its best month ever, up by almost 20 percent. Markets are rallying amid hopes for vaccine rollouts and new
fiscal stimulus in the U.S. Investors hope to hear more about the prospect for stimulus later today when Fed Chair Powell and Treasury Secretary Steve
Mnuchin testify before Congress.
And the bullishness is not just limited to equities, Bitcoin hitting an all-time high yesterday and almost cracked the 20,000 milestone. So it
pulled back from there. The cryptocurrency is down about two percent right now in volatile trading.
As America and the world pin hopes on COVID vaccines, Joe Biden's incoming economic team is getting together to assess ways to help turn the U.S.
economy around. This, as one of the current President's controversial Coronavirus Taskforce members, Dr. Scott Atlas has stood down. He was on a
130-day detail set to expire this week.
Joining us now is Dr. Celine Gounder, a member of the Biden Coronavirus Advisory Board. Great to see you.
DR. CELINE GOUNDER, MEMBER OF THE BIDEN CORONAVIRUS ADVISORY BOARD: Great to see you, Alison.
KOSIK: First your reaction to Scott Atlas stepping down.
GOUNDER: Well, frankly, it's been confusing as to why he was even on the Taskforce. He's a neuro radiologist. He's not an infectious disease
specialist. He's not an epidemiologist. He has not worked in public health. So it just wasn't really the appropriate detail for him to be on that
taskforce.
KOSIK: Okay, so today is the day the C.D.C. is deciding who is going to get the vaccine first. So talk to me about who that will be, when those
vaccines will start and how many doses we're actually talking about.
GOUNDER: Well, most likely, that's going to include healthcare providers, in particular healthcare providers who are really the ones coming into
contact with patients who have coronavirus, so that's people working in the ER, emergency rooms, that would be hospitalists, so doctors who care for
patients in the hospital, infectious disease specialists. So those would be among the first line.
But in addition to that, you also have other frontline essential workers like EMTs or police officers or firefighters, who also very often are the
ones who if you call 911 are the ones who show up on the scene. So those would be among the essential workers.
And then you have older residents of nursing homes, people with disabilities in nursing homes who are also at high risk of severe disease.
So these are among the groups that we predict will be among the first to be vaccinated.
[09:25:06]
KOSIK: Okay. You mentioned older residents, let's say in nursing homes. Is there any concern because the C.D.C. has warned that the side effects will,
quote, "Be no walk in the park," to give the vaccine to those who are most vulnerable, though, could those effects be tolerable for the most
vulnerable who gets the vaccine first?
GOUNDER: We have no reason to believe they would be any less tolerable. You know, I think the side effects that you're looking at are not that
dissimilar to what you have with say, a flu vaccine where people might have some achiness at the site of injection, maybe a fever for the next day,
maybe just feeling fatigued.
But you know, there's no reason to believe that those side effects would be so much more significant in the elderly than they would necessarily be in
anyone else.
KOSIK: Okay, let's talk about when the Biden-Harris administration is actually in play, and is there a plan to ramp up testing in the U.S.? And
if so, how will that actually happen more than what's happening now? What will change?
GOUNDER: Well, unfortunately, under the current administration, there's been active discouragement of testing. We've heard the President say we're
testing too much, which is really wrongheaded. The problem with coronavirus is a big chunk of the infections are asymptomatic or mildly symptomatic,
meaning people have no or minimal symptoms, and yet they are propagating the infection and they are passing it on to other people.
So the only way to stop that transmission is to make what are essentially invisible infections visible by doing a lot more testing. So that includes
everything from producing more tests, having more testing sites, having more staff to help collect the specimens and run the samples. So there's
all up and down the supply chain, so to speak, that you have to ramp things up.
KOSIK: Okay, I want to get your quick prediction here. Now that we've all traveled over Thanksgiving, what do you expect to come of it? What are the
next two weeks, you know, two to three weeks going to look like?
GOUNDER: Well, the next one or two weeks after Thanksgiving, we'll start to see people getting sick, developing symptoms. A week or two after that,
people will get sick enough that they need to be in the hospital. So you'll see hospitalizations start to go up and then another week or two after that
is when you would start to see deaths.
Unfortunately, I think a lot of people who celebrated perhaps unwisely over the Holiday, over Thanksgiving might find themselves in the ICU or
unfortunately, perhaps even passing away from coronavirus by Christmas and New Year's.
KOSIK: And maybe this is a lesson for those who are looking to travel during Christmas. What do you want to say to them?
GOUNDER: Well, I just hope that people observe what happens to the case rates to hospitalizations in the next week or two or three and that does
serve as a warning.
You know, it's not just for yourself, but it's also for the people that you care for, and your family and your community who are perhaps more
vulnerable than you.
KOSIK: Okay, great advice. Dr. Celine Gounder. Great talking with you, thank you.
GOUNDER: Take care.
KOSIK: You too. And the opening bell is next.
(COMMERCIAL BREAK)
[09:31:07]
KOSIK: Welcome back to FIRST MOVE. I'm Alison Kosik and U.S. stocks are up and running on the first trading day of the month. The NASDAQ and the S&P
are rising to new records in the early action; the Dow not too far behind here, strong factory numbers from China and promising new vaccine
developments, all of that is helping sentiment.
Early today or earlier today, Pfizer and BioNTech asked the E.U. to approve their COVID shot on a conditional marketing use basis. That follows a
similar move from vaccine maker Moderna in the U.S. yesterday. Shares of Moderna rallied more than 20 percent Monday and are up another 14 percent
today. So far this year, its shares are up almost 700 percent.
The need for bold fiscal stimulus is not going away anytime soon. President-elect Biden is expected to introduce his economic team later
today and he is expected to push for bold economic stimulus during his first month in office.
Shares in video conferencing company, Zoom are trading lower after the company warned that its staggering growth could be slowing. As one of the
biggest beneficiaries of the work from home move, Zooms stock was also hit last month by news of a potential vaccine.
Joining me it's Kelly Steckelberg. She is the Chief Financial Officer of Zoom. Great to see you, Kelly.
KELLY STECKELBERG, CHIEF FINANCIAL OFFICER, ZOOM: Good morning. Thanks for having me.
KOSIK: Good morning. So this is a question I'm sure you get a lot because you know investors have created these buckets for stocks since the pandemic
and Zoom is labeled a work from home stock, and we've really seen outsize growth for your company. And the question, of course is can Zoom maintain
this kind of growth when there's no pandemic.
STECKELBERG: So we hope for an effective vaccine as quickly as possible to end the disruption of this pandemic. But, you know, remote work trends were
happening even before this, and the pandemic has just accelerated it. And given the way that the world has embraced Zoom, we expect this experience
of working from anywhere to continue well after a vaccine or in a post COVID world.
And we're excited about Zoom's ability to support workers as we transition back to working in a hybrid environment through exciting capabilities like
our smart gallery, which we announced in October as Zoomtopia, which enhances the experience of face-to-face communications between remote
workers and those in the office.
And so we're going to be there to support employers and employees as we move back to eventually coming back together in a more flexible approach,
and we're excited about that prospect.
KOSIK: But there is the reality even for those individuals and companies that continue to use Zoom during -- you know, after the pandemic, it's not
going to be as much and sure companies are going to look to cut costs by keeping their employees from traveling. And they're only -- you know, I
guess what is Zoom doing beyond products to try to keep people in front of the main product?
STECKELBERG: Well, we've been really excited and inspired by the many creative ways we have seen our customers and prospects use Zoom during this
pandemic, and we've seen specifically this growth in this customer base with fewer than 10 employees. That was about 20 percent of our revenue last
-- in Q4 last year, and we announced last night it's risen to 38 percent.
And to meet those needs of those small business owners and individuals, we announced a new platform in October called On Zoom, which is an event
hosting platform that will start to seamlessly bring together small business owners, individual business owners, and also even large enterprise
events with their end user customers.
And we're excited about what that does because it seamlessly brings them together and that is something that is certainly going to continue after,
you know, a vaccine because it's just more convenient. You can take a piano lesson at your house. Take a cooking lesson at your house.
[09:35:10]
STECKELBERG: Take a cooking lesson at your house, take a yoga class, go to a concert from the comfort of your own home, and so it's these innovations
that are really driving more interaction with our end user customers. And we're excited to see how that goes.
KOSIK: So competition could also be another headwind, you've got Cisco and Microsoft, for instance, they're dug into the larger enterprise segment. So
how much more difficult is it for Zoom to kind of grab that market versus the small business space?
STECKELBERG: You know, we really -- pre-pandemic, we were really focused on our large enterprise customers and we've continued to do that during this
time. We have some amazing -- we're honored to have Fortune 10 companies in our customer base, and we continue to innovate around experiences for them
as well.
We saw our customers contributing more than $100,000.00 of trading with 12- month revenue. We saw a record number of ads, over 300 customers in that segment added during Q3. So we continue to see strong growth in that
segment of our customer base as well.
KOSIK: So I saw that there was an analyst from Nucleus Research who came out with this really harsh assessment of Zoom saying it will be known as a
quote, "one hit wonder" after the pandemic. I want to give you a chance to respond to that because, obviously, from your previous answers, you're not
feeling it's a one hit wonder. But that's a pretty harsh assessment there.
STECKELBERG: No, we have been focused on minimizing disruption and extending communication and collaboration around the world since we were
founded. And we are honored to have been an integral part as the world has changed over the last nine months of how families, individuals, as well as
large enterprise have kept their employees safe and kept the world connected.
Also, we're in 125,000 K through 12 schools around the globe. These are all you know, students and young people that are now ambassadors of Zoom that
are going to go forwards and carry that forward.
So we have been honored the way that the world has embraced Zoom and really believe that we have a lot to offer in a pre and post -- during and post
pandemic world.
KOSIK: Has free use of your video conferencing, let's say from schools hurt your bottom line and do you foresee a change in allowing free use of Zoom's
services.
STECKELBERG: So we talked about this on the call last night. There has been an impact to our gross margin due to the increase for users, but we are
really committed and believe it's our corporate responsibility to do everything we can to facilitate remote learning during this time, as well
as over Thanksgiving, for example, we lifted the 40-minute limit to allow families to be connected as well.
And we take our responsibility very seriously and are committed to providing that during this disruptive period, and so we indicated that we
expect our gross margins to be at this impacted level for at least the foreseeable future.
KOSIK: Okay, Kelly Steckelberg, Zoom's CFO. Thanks so much. Great talking with you.
STECKELBERG: Thanks for having me.
KOSIK: Still ahead, 25,000 retail jobs are on the line in the U.K. as a household name is forced to close permanently. Details next.
(COMMERCIAL BREAK)
[09:40:27]
KOSIK: Welcome back. A low moment for the British High Street, tens of thousands of jobs are at risk after knock on consequences from the collapse
of Topshop sees another huge name shutdown, Debenhams. Anna Stewart is in southwest England and joins us live.
You know, we've seen this sort of pattern in retail during the pandemic, if companies were already having trouble before, the pandemic accelerated
those issues. And now we're hearing that Arcadia is one of the retail casualties and it has entered administration. Talk about what happens next.
ANNA STEWART, CNN REPORTER: I mean, this could be one of the biggest retail casualties in the U.K. in terms of the pandemic. Arcadia is a huge group
that owns Topshop, Topman, you mentioned also Dorothy Perkins, Wallace Evans, and a few others. It's a big chunk of any British High Street and
now 13,000 jobs are on the line as it enters administration.
Now what that means is essentially it's ringfenced from creditors so administrators can work out what to do next. Is it another big restructure?
Is it selling off some or all of its brands? Or does it end up going into liquidation? That is the decision on the table.
Now, the pandemic may have struck the sort of final deadly blow, Alison, in terms of Arcadia. It's certainly not the beginning and end of all of its
problems today. This is a group that actually narrowly avoided collapse last year, June 2019. It had to go through a big restructure then. It had
to close all of its Topshop and Topman stores in the United States as part of that.
Analysts point to plenty of issues here. It has been beaten on low cost price on the physical High Street, the likes of Primark and then online,
lots of full online offerings from ASOS.com, boohoo.com. Analysts say it really hasn't kept up really when it comes to e-commerce, and of course
this pandemic has really accelerated the shift to e-commerce, it is not going back anytime soon.
The future of Arcadia will probably involve some sort of bias seeing a future where, can it keep up in the future with e-commerce -- Alison.
KOSIK: And 24 hours after hearing about Arcadia, Britain's biggest department store chain is permanently closing its U.K. operations.
STEWARTS: Yes, the fortunes of Debenhams unfortunately, were sort of inextricably linked to the fortunes of Arcadia. Now, Debenhams is a
department store, but some of its main concessions are brands from Arcadia.
Now this brand, Debenhams entered into administration earlier in the year, one of the first casualties from the pandemic. It was looking for a buyer.
It pretty much had one sorted in terms of JD Sports. They, in the last few hours have pulled out that acquisition based on what's happening with
Arcadia.
So unfortunately for Debenhams, that means they are now at risk and they've said that ultimately they're going to sell off their stock and then they're
going to look to close their 124 stores, I think it is in the U.K. unless another buyer is found. That added to the 550 stores of Arcadia, the
thousands of jobs, the British High Street could look very different on the other side of this pandemic -- Alison.
KOSIK: Well, I must say speaking of what things look like, you have beautiful -- you have a beautiful background there, Anna Stewart --
beautiful background.
STEWART: Thanks, Alison. Wish you were here.
KOSIK: Me, too. Anna Stewart, thanks very much.
Here in the U.S., the holiday shopping season starts with huge online sales. Cyber Monday is expected to be the biggest online shopping day in
history, it was, once the final numbers come in that is. This as the coronavirus pandemic accelerates, consumers shift to online shopping.
Americans already spent a record $9 billion on the web on Black Friday. And he joins me live. Great to see you.
[09:45:13]
MATTHEW SHAY, PRESIDENT AND CEO, NATIONAL RETAIL FEDERATION: Hi, Alison.
KOSIK: So yes, we're seeing a lot of optimism, especially with the NRF's predictions with how the overall shopping season is going to go and
expected three to give percent increase in sales versus last year. But how can you have all the optimism considering millions of people are out of
work?
SHAY: Well, Alison, it's a real challenge. There's no question that there are millions of Americans and American families that are really suffering
right now, and that's why we've been so vocal in our support for continued fiscal relief from Washington from the administration and the Congress. And
we hope that they'll get back to work before the end of this year and support some of those programs, those communities that need help.
But against that backdrop, the consumer has actually been behaving very robustly, shown a lot of resilience. We've had six consecutive months of
retail sales growth. And based on that momentum, we expect we'll continue to see a lot of spending through the Holiday season, and people have
increased savings. Obviously, housing starts remain pretty robust. There are a number of factors contributing here.
So those that can spend are spending, but certainly there are many Americans that need more support.
KOSIK: Black Friday foot traffic is down, I think a little over 50 percent, do you think that the coronavirus pandemic has accelerated consumers' move
toward shopping online, and it's just going to become bigger and bigger each year forward? And they're not going back to in store shopping as much
as yesteryear?
SHAY: Yes, well, I think Alison, it remains to be seen for all of us, in all parts of our lives how much of this recent change becomes permanent and
how much of our old behavior we revert to, when we get the vaccine widely distributed when we feel like we can go out and resume normal activities.
But there's no question that the pandemic has accelerated a number of trends in retail, including a whole new range of fulfillment options, of
curbside pickup, of delivery next day, same day, and of mobile engagement and across all demographic groups, whatever your age group, everyone is
doing more online of necessity, and certainly some amount of that will remain sticky and become permanent.
But I do think that as social beings and social creatures, even Black Friday has become more of a social experience than anything else. When we
get the chance to go back to all of those old activities, I think many of us will want to do that.
KOSIK: Yes, I hear you. I hear you. So let's switch gears a little bit. And you've been pretty outspoken in the political arena, and I know that you're
an advocate for businesses big and small.
And with a Biden administration, the President-elect is expected to face a big decision whether to back a short term national lockdown to get a handle
on the pandemic. Do you agree with this? What would you tell President- elect Biden if you were sitting across the table from him about a national lockdown?
SHAY: Well, I think what we would say to the President-elect and we're already speaking to his transition team and a number of our members have
actually spoken directly to the President-elect and to the Vice President- elect, and I think what we would say is, we are 100 percent aligned and in agreement that our top priority should be to fight the pandemic, to fight
this virus and we want to help make that happen.
Since the beginning of this year, you've seen retail businesses large and small, really promote and prioritize the health and safety of their
workers, their team members and associates, as well as their customers and the communities in which they live, and we want to bring that expertise and
experience to help fight the pandemic. And the way to do that is to change behavior and that doesn't require massive lockdowns. It simply requires
behaving responsibly, and following the kinds of guidelines put out by the C.D.C. and other medical experts.
KOSIK: So you would try to talk him out of a national lockdown where we would see retailers have to close.
SHAY: Yes, I think the President-elect and his team recognize as many governors do, both Republicans and Democrats that there's a middle ground
between going all the way back to the very dramatic restrictions we saw in March and April on one end, and on the other end, just letting the economy
run wide open. And I think there's a balance there and we've seen retailers strike that balance that's why you've seen retailers behaving very
responsibly in terms of protective equipment. They provide health and safety protocols.
So we want to lean into that, share those experiences and really show people there's a way to keep the economy open safely and not take either
extreme position.
KOSIK: Very quickly here. Once in office, Biden is expected to raise taxes including payroll taxes and taxes on corporations by raising the corporate
income tax rate. What would you say to Biden if he went ahead and actually did these things?
[09:50:03]
SHAY: Well, certainly there's a lot -- a lot that remains to be determined specifically with regard to the two races in Georgia that will determine
the outcome of control of the Senate. But either way, I think we've got a closely divided country and closely divided government.
And so I think President-elect Biden is going to want to continue to stick to his more moderate, more consensus building approach and we certainly
want to be part of that and would encourage him to find ways to bring all of us together in support of solutions that work for our entire economy,
and for all Americans.
KOSIK: Okay. Matthew SHAY, President and CEO of the National Retail Federation. Great to get your perspective today. Thank you.
SHAY: Thanks, Alison.
KOSIK: Coming up on FIRST MOVE, Tesla driving into the S&P 500 at full weight, the possible impact of the massive addition, next.
(COMMERCIAL BREAK)
KOSIK: Shares of Tesla jumping right now after S&P and Dow Jones indices announced that it will add the EV giant to the S&P 500 all at once, later
this month. Paul La Monica joins us live with the details.
So this is sort of that approach of ripping the Band-Aid off, one and done, Tesla is in there. Talk to me about what impact this will have on the S&P
500 and what your predictions are moving forward.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, it's going to be very interesting to see how logistically this works out, Alison, because you
have all of these index funds and value funds, I mean, you know, big, large cap funds that are benchmarks to the S&P that are likely to be needing to
add Tesla to have that as the best possible benchmark.
Tesla, though, is a gigantic company, it's now worth about $550 billion. There are only five companies in the S&P 500 that are worth more:
Microsoft, Apple, Amazon, Google-owner Alphabet and Facebook.
So this is going to be very fascinating to see, you would think that most mutual funds that track the S&P 500 have probably already added Tesla
because you'd want a stock that's done this well in your fund in order to boost your own returns. But there might be some funds that have been
laggards that have been worried about the valuation about the lack of profitability until recently that may still now need to rush and add Elon
Musk's company to their fund.
KOSIK: Tesla could take a hit meaning its stock once this happens and why?
LA MONICA: I mean, it's possible that you could see some selling on the news because Tesla is a company whose shares have already skyrocketed, you
know, triple digit percentage gains this year. But make no mistake, now that Tesla is in the S&P 500, it needs to be in all of those ETFs and
mutual funds that are tracking the index. They have to be in there.
You can't ignore Tesla no matter what you might think about their future profitability prospects. Elon Musk and his distractions running SpaceX and
Boring Company and have you, you need to have Tesla in your corner if you're going to be competitive with the rest of the market.
[09:55:17]
KOSIK: Okay, switching gears a bit, Salesforce reporting its quarterly earnings after the bell, but I think investors are also looking for
something additional with those earnings.
LA MONICA: Yes, that is true. Salesforce, a recent Dow component competes with Microsoft in many ways. And they may be stepping that competition up
if Salesforce as rumored buys collaboration software giant, Slack. So it'll be very fascinating to see if that deal gets done. It's been rumored for
the past week or so.
So what kind of premium will there be? How expensive will the deal be? And you know, what will Slack look like within a broader Salesforce product
portfolio? You know, I think it is interesting.
KOSIK: Yes, it will be. All right, Paul La Monica. Thank you.
And that's it for the show. I'm Alison Kosik. Stay safe. I'll see you soon.
(COMMERCIAL BREAK)
[10:00:00]
END
