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First Move with Julia Chatterley
Americans prepared to spend on Black Friday deals; Buffett Rebuffed Losing A Bid For Tech Data; Car Maker, Daimler Announcing At Least 10,000 Job Cuts By The End Of 2022. Aired 9-10a ET
Aired November 29, 2019 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:11]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
Thanksgiving to thanks getting. Americans prepared to spend on Black Friday deals.
Black Friday to block Friday. Some French activists saying enough is enough.
And Buffett rebuffed. Losing a bid for Tech Data, the oracle didn't see that one coming.
It's Friday. Let's make a move.
Welcome once again to FIRST MOVE. It's Fri-yay. It also happens to be Black Friday here in the United States, a shopaholics' paradise. Plenty of
extra time today to shop, too because the stock and bond markets here close early at 1:00 p.m. Eastern Time.
Right now, as you can see, futures are a little bit softer. Investors that weren't eating turkey yesterday spent the session waiting, of course for a
response from China, after President Trump signed legislation expressing support for Hong Kong's protesters. Nothing, of course, was forthcoming.
And so we wait on and ask what this means as well for the trade negotiations.
That wait, I think not helping sentiment here in Asia markets, there a sea of red as you can see. Healthcare stocks, in fact, in Hong Kong tumbled
when a document circulated on social media suggesting Beijing could add dozens of new drugs to another round of procurement that would of course
force drug prices lower.
So that's having an impact there, but there's other news as well. A wall of worry to climb. In South Korea, let's start there. The Central Bank
kept rates unchanged, but they did cut their growth forecast for 2019 and 2020.
A similar story in India. We saw growth there for the third quarter falling to some four and a half percent. That's down just to give you a
comparison from seven percent for the same quarter of last year. What about jumping to Japan now? The Bank of Japan governor promising to
continue with powerful stimulus, while also paying close attention to economic risks, especially those stemming from overseas, read, yes, the
U.S.-China trade war.
More evidence of strife if we look at Germany as well and the German auto sector in particular. Daimler, announcing thousands of job cuts this
morning. More on that shortly. Now, amid all the warnings, the tantrums and the tariffs of course, too. Perhaps it's time to bring it back here to
the United States and hope for some retail therapy this Friday. At least that's what I call it.
Let's get into the drivers. Alison Kosik is at a Best Buy in northern New Jersey. Best Buy of course raising their forecast going into this season
so confidence there, but Alison tell us what we can expect and what you're seeing already this morning.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: The doors here, Julia had been opened about an hour and a healthy stream of customers has been coming in.
TV seems to be a go-to for many of the shoppers and you know, the stream of customers really proves that Black Friday is still alive and well.
But it's also become one of the five days of a sort of a shopping event because all the shopping began late yesterday. Yes, Thanksgiving Day here
in the United States all the way through Monday. That's Cyber Monday.
So during this long weekend here in the United States, 165 million people are expected to go out there and spend their money and you know what?
They've been spending their money even since October.
More than half of consumers actually started buying holiday gifts that early because unemployment is low and people are feeling more confident and
kind of safe in their jobs and happy about their paychecks.
So the National Retail Federation is expecting that this holiday season will be a strong one, one that could bring it as much as $730 billion.
Now, the National Retail Federation also says, it does not expect tariffs to impact the way that shoppers get out there and spend their money. Those
79 percent, Julia, 79 percent of those surveyed -- shoppers I'm talking about -- they are concerned that the tariffs could mean higher prices when
they get out here and shop for those holiday gifts -- Julia.
CHATTERLEY: Yes, you make such a good point. And we've talked about it in the show before, this idea that actually retailers bought their inventory
ahead, ahead of the prospective tariff increases.
So for this season, we're fine. The question comes, of course, is if we see those tariffs rise in December 15th to be specific what that means for
next year, but of course, for now, it seems consumer confidence is all and consumers continue to be pretty confident, quite frankly.
KOSIK: Yes, and you make a good point. Best Buy is the perfect example. This is an electronic store here in the United States. It took actual
steps to mitigate the impacts of those tariffs.
[09:05:08]
KOSIK: It talked with its vendors, tried to negotiate cheaper costs. It is diversifying its supply chain, that's helping as well. And then as you
said, you know, companies like Best Buy went ahead and pre-ordered their inventory, you know, to get those products in into Customs before those
tariffs hit.
The thing is not every retailer is going to be planning ahead like that. Small retailers, for instance, they're not able to really absorb the higher
costs of tariffs. So you're seeing smaller businesses get hit a lot harder than the bigger retailers like Best Buy -- Julia.
CHATTERLEY: That is such a great point and we will discuss that later on in the show, the difference between the ability of the big retailers here
to mitigate this and particularly relative to some of the smaller. Now, Alison, I happen to know you're a very tiny person, but those TVs next to
you are enormous.
KOSIK: Let's take a wide shot. They are and these are actually really, really cheap. I'm surprised they are not flying out of here just yet.
CHATTERLEY: They're too heavy to carry. They're too heavy. That's an argument for online purchases. Alison Kosik, great job.
KOSIK: That's right. We'll wheel them -- we'll wheel them out.
CHATTERLEY: Get some help on that. Alison Kosik in New Jersey for us there at Best Buy. Thank you very much for that. All right, let's move on
to our next driver. Shares in Tech Data are up some 11 percent, premarket after private equity firm, Apollo sweetened their offer for IT firm after a
second suitor stepped in.
Now there's a report that the mystery bidder was none other than Warren Buffett's Berkshire Hathaway. Paul La Monica joins us on this story.
Fascinating if Berkshire was buffeted here and prevented from buying it, but actually Warren Buffett has made no secret of the fact that he thinks
private equity have bid up prices here and the premiums are too high and quite frankly, he is not paying for it even if he has got a massive cash
pile and can afford it.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, Buffett can clearly afford it, Julia, because Berkshire Hathaway has $128 billion in cash. He has
repeatedly, Buffett, has said that he is itching to use some of it for a quote-unquote, "elephant-sized acquisition." But we know that Buffett
tends to be frugal. He does not want to overpay and he has bemoaned the fact that you've had valuations go up so dramatically.
We have a market at all-time highs, and as you point out, private equity firms are more than willing to pay higher premiums for companies and Buffet
is not going to play that game.
CHATTERLEY: What actually is this company? Because if we look at this space, in particular, private equity have been pretty interested and we've
seen some M&A activity in this space. What does the company actually do and why the excitement here?
LA MONICA: Yes, it's a distribution company, provider of software and other tech services to larger companies. It's kind of boring to be
brutally honest, Julia but that is what Warren Buffett loves.
I mean, when he bought big tech companies in the past for his portfolio, IDM used to be the main stalwart, Big Blue, you can't really get much more
boring than that.
Now, his top holding is Apple and critics would say that Apple isn't really an exciting company anymore because they're just churning out one new
iPhone after another and really relying on services for much of their revenue.
So this seems like it could fit the classic Berkshire Hathaway-Warren Buffett mold for an acquisition. Now, he has got to look elsewhere and you
know, there's been talk, rumors that he was interested in PG&E, the utility in California a couple of months ago, but that talk died down.
There's been chatter because he owns big stakes in several airlines that he could make a run for Southwest or another airline that Berkshire Hathaway
has stock in because that could be a good fit with its Burlington Northern Railroad business. He loves transportation, but I think he wants to do a
big deal, but he is not going to rush into one if the price isn't right. He didn't become this rich by overpaying -- Julia.
CHATTERLEY: I was about to say kind of boring and kind of beaten up as well, which works in the case of PG&E. I mean, this stock, Tech Data
trading at record highs. So yes, I think we can probably rule out a sneaky return bid here to it to try and get it in the end. Not paying. Paul La
Monica.
LA MONICA: I don't think so.
CHATTERLEY: Thank you so -- Paul La Monica, thank you so much for that.
All right, next driver. The car maker, Daimler announcing at least 10,000 job cuts by the end of 2022. It's the third German auto giant this week to
announce significant cost cuts.
Anna Stewart joins us with the details. Anna, let's focus on Daimler first. We know investing in technologies, cars of the future costs money.
You have to strip back those costs somewhere and these look pretty steep.
ANNA STEWART, CNN REPORTER: This is the biggest announcement we've had certainly of late from these big German carmakers.
They said a figure in the low five figures. So we're looking at least 10,000 jobs being cut and this is part of a broader restructuring program
that Daimler indicated they would do earlier this month. They're planning to reduce staff costs by around one and a half billion dollars. They're
planning to reduce management positions by 10 percent.
And as we said, this is all to do with meeting ever stricter emissions regulations. And that involves not just investing more in electric
technology, but also really increasing those car sales numbers.
[09:10:16]
STEWART: Electric car sales are abysmal, really in Europe. Add to that all of those big, big headwinds that we talk about all the time, trade
wars, softening demand in key markets like China; and Julia, listen to this.
On Monday, Fitch Ratings says it expects global car sales to drop this year by 3.1 million. That is a sharper fall than 2008.
CHATTERLEY: Yes, I mean, they really have to do some retrenchment here and we're starting to really see it, not just Daimler though, we kind of hinted
at it already with the likes of BMW, Audi this week, also announcing significant adjustments and cuts here.
Just give us a sense of those, too and then you can really understand what we're seeing for these German automakers. Huge retrenchments.
STEWART: Because it's very easy to see all these figures and just not really absorb them all. They are coming thick and fast. Yes, we had
Volkswagen's luxury brand, Audi earlier this week, they're reducing their workforce by seven and a half thousand or 10 percent of the overall
business by 2025. They plan to free up in the sense, $6.6 billion over 10 years for future investment.
BMW mentioned there, they also made an announcement not quite as severe in terms of job cuts as such, they are reducing bonus payments for their
employees.
It was interesting actually, because the new CEO said this allows us to avoid drastic measures that others are taking to reduce their costs. And
that is actually part of a broader plan to save more than $13 billion.
Plenty of these have also already announced many job cuts in recent years. So this is just the very last few days. So you can see there's a sense of
urgency here to do more, to really try and get more money available for their investment and restructure quickly.
CHATTERLEY: Yes, it makes sense. Anna Stewart, thank you so much for joining us on that story.
All right. Let me bring you up to speed now with some of the other stories making headlines around the world.
Iraq's Prime Minister, Adil Abdul-Mahdi says he will submit his resignation to Parliament. Deadly protests have flared up repeatedly across Iraq for
many months. A surge of violence on Thursday this week left at least 41 people dead.
Let's get straight to Baghdad now where our Arwa Damon joins us on this story. Perhaps no surprise, Arwa, in light of recent protests. And the
protesters cheering when this news broke. Talk us through what this means now for the country and what leadership change will represent?
ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, this is both something of a surprise, at least in terms of the protesters here and in
terms of the exact timing of it, but not something that was entirely unexpected, given the fact that we did hear this intention announced by the
President a while ago, but then nothing from the government which really frustrated those who have been taking to the streets.
But the minute that announcement actually trickled down to those who are here and we're in Tahrir Square in the capital of Baghdad, which has become
something of the epicenter of these ongoing demonstrations.
People started coming out en mass. People were dancing. There's music blaring over loud speakers. They were shooting small fireworks out into
the air. There is an air of jubilation, yes, but at the same time, it's worth noting that people are still quite somber when it comes to all of
this, because they paid such a heavy price just to get to this moment.
Since October, more than 380 people have been killed. And you do quite often see many of the faces of those who perished throughout the course of
these demonstrations, placards with their photographs on them being carried through and 17,700 at least, people injured across the entire country.
Yesterday was an especially deadly day in the southern part of the country in Iraq's Shia heartland. The minute that announcement did come out,
though, people were yes, celebrating, but they were also saying, look, this is just the beginning. We want an entire overhaul of our system of
governments. We want changes to the Constitution. We want an end to this rampant corruption, these sectarian politics.
And people are also saying something that is, frankly, not necessarily something that everyone would have expected to hear in Iraq, but that is
that they want an end to Iranian influence.
And this is something that we really only heard being publicly said during these demonstrations, but it's really an indication of how fed up the
population is with the status quo.
Most of these demonstrators are the country's youth. They are unemployed but they want to see a better Iraq. They tell us over and over again that
that the Iraq that their parents grew under, Saddam Hussein's Iraq, an Iraq of oppression -- that is not one that they will accept and they're
determined to do everything that they can to change it.
[09:15:08]
DAMON: So yes, right now we do have celebrations to a certain degree at this development, but people are very cautious and this does not mean the
end they said to their demonstrations. In fact, they say it is only the beginning of their demands.
CHATTERLEY: Yes, and the question is, does it change things to your point, whether it's corruption or mass unemployment or the failure of public
services, does anything really change?
Arwa, thank you so much for bringing that story to us there. Arwa Damon joining us from Baghdad.
U.S. President Donald Trump is back in the United States after a surprise visit to Afghanistan. In his first trip there since taking office, he told
us troops the Taliban wants to make a peace deal.
The Taliban has responded agreeing to resume talks if that's what America wants. That, according to statement from the militant group spokesman.
Hong Kong's Polytechnic University says hopes teaching can restart as early as next semester. After police searched the campus which had been used as
a stronghold by protesters, officers say they found nearly 4,000 Molotov cocktails on the site, along with other weapons.
Police say they've arrested almost 5,900 people this year in relation to those pro-democracy protests.
All right, we're going to take a break here on FIRST MOVE. But coming up, Thailand taking digital payments seriously. We'll hear how traditional
banks are changing.
And lining up for a Black Friday bargain. The shoppers who sacrifice Thanksgiving to wait out in the cold. It's the retailers who will be
rubbing their hands with glee. Stay with us. We're back after this.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. A quick look at the markets right now. U.S. futures are a touch lower heading into the final session of this
week. The NASDAQ as you can see underperforming there, but I should point out liquidity amid trading conditions and volumes are going to be light
today with the Thanksgiving weekend holiday.
[09:20:15]
CHATTERLEY: Just one thing to watch, though, cast your eyes over Latin America and specifically what we're seeing in some of these costs rates.
The Chilean peso versus the dollar, under pressure continuing yesterday and the Colombian peso hitting an all-time low, too.
The Brazilian real are managing to eke out gains but only remaining a shade above its own record low. Political turmoil in the region continues
following an ongoing anti-government demonstrations. So record lows for a number of those currencies there.
All right, let's head out to Asia now and it may be the largest commercial bank in Thailand, but Siam Commercial has long recognized the disruptive
threat from digital competitors, but also the opportunity that digitization represents.
So over the past three years SCB has spent a billion dollars on modernization. Now, I caught up with their President during a FinTech
Festival in Singapore and I asked him about the banking environment today.
(BEGIN VIDEOTAPE)
ORAPONG THIEN-NGERN, PRESIDENT, SIAM COMMERCIAL BANK: If you look at the banking industry today, we are in the a challenging cycle. We look at
return on equity of all the banks in the world going down.
In Thailand, our bank five years ago, used to have the ROE, return on equity of 22 percent; now we are at 10.2 percent in five years, and we're
projecting this five more years if the trade will still be like this, you can see the future of their banks in jeopardy.
A lot of people believe that banks will still be around but the banks will be around because we are being protected by regulators.
And if I say that my future exists because I'm being protected. It's not so much of a future. That's a stopping point. We are seeing that clearly.
And this last five years, we are entering a challenging time and as we are entering this, this has just started and it's not Thailand, it is the whole
banking industry.
So with that, our initial thought was, in order to be competitive, we need to be innovating. Because the competitors are not just banks, the new
commerce, they have more digital, and they don't have foundation -- physical foundation. So their cost is very low.
So we look at that and said, protecting this five more years, how are we going to compete with a new commerce?
CHATTERLEY: And you cut -- you close branches.
THIEN-NGERN: Yes, right now we have about 900 branches. But if you look at the kind of changes that is happening in the market. If you compare
three years ago, we had our -- own bank had about 2.5 million digital users, and now we have 10 million in three years.
CHATTERLEY: What percentage of your transactions now are digitized?
THIEN-NGERN: Yes. Interesting question. It is 96 percent digitized.
CHATTERLEY: Ninety six percent.
THIEN-NGERN: Four percent is still branches.
CHATTERLEY: So you need to close more branches.
THIEN-NGERN: Yes. Close more branches or transform the branches to serve other purposes. We -- everyone who has money need to manage their wealth.
Wealth, insurance those two high touch business for now. Until innovations come, that will change again.
(END VIDEOTAPE)
CHATTERLEY: It's quite stark. Traditional banks like SCB are not only facing disruption because of digital competitors as we've been discussing
there, they also need to figure out how to respond to the rise of digital currencies and coins and the impact of blockchain technology for example.
SCB's President says Facebook's future digital plans have the potential to change everything.
(BEGIN VIDEO CLIP)
THIEN-NGERN: For us, it's a good wake up call. Because the subject of digital currency has been in the media for the longest time, but it was
done by startups, small group of people, even though it got, as always speculated.
But once Facebook and the group of companies that are well known got together and said, we are going to do this, it woke everyone up.
Personally, I don't think it will happen --
CHATTERLEY: At all?
THIEN-NGERN: At all. Not in this current form, because you look at the people who are caught up in --
CHATTERLEY: The regulators.
THIEN-NGERN: They started to go against it, but it helped in the sense that now, it is surfacing all the issues that need to be addressed. And
that will open the road up for the next generation of digital currency.
CHATTERLEY: What about the electronic payment system? Is all the power concentrated here in the wallet? And whatever it is that's facilitating
the transfer of value or wealth. IS the power in whoever owns the wallet?
[09:25:20]
THIEN-NGERN: This is highly debatable. If you look in the low, bankable population --
CHATTERLEY: The unbanked.
THIEN-NGERN: The unbanked, right, wallets are stronger than banks. But in our country, I look at data of 2016, ninety seven point five percent of
bankable people already have banking services.
CHATTERLEY: Right.
THIEN-NGERN: And telcos in our country have been trying to promote wallets for the longest time. And luckily, so far they have not been successful
because wallet is no different than accounts. If you can make payment, you can make money transfer in three clicks, from a consumer point of view, I
don't care is it a wallet or is it an account.
(END VIDEO CLIP)
CHATTERLEY: Now despite the uncertainty and the many challenges traditional banks are facing, the SCB President said he is optimistic about
the future. Listen in.
(BEGIN VIDEO CLIP)
CHATTERLEY: Let's end on a positive note. It's challenging. It's an exciting time for technology and for advancements. Are you going to be
around in another hundred years?
THIEN-NGERN: That's the intent.
CHATTERLEY: That's the plan.
THIEN-NGERN: We have been around for 114 years and we are very alert. Even though right now we are the largest bank in Thailand, there was not a
single day that we enjoy this success. We see the trip. We see the trend. We see how fast new technologies have been adopted.
We feel very uncomfortable, but that's also positive sign.
CHATTERLEY: Yes.
THIEN-NGERN: It gives us energy. I wake up every day thinking about this try to experiment something about this, trying to find solutions, and
that's what makes top five.
CHATTERLEY: My first boss at Morgan Stanley said to me, the moment you feel comfortable, panic. I think that's good advice.
THIEN-NGERN: That's very good advice. Thank you very much.
CHATTERLEY: Thank you.
(END VIDEO CLIP)
CHATTERLEY: All right. Some breaking news now coming into us at CNN. The Metropolitan Police say they are dealing with an incident at London Bridge.
Details are pretty unclear at the moment.
Anna Stewart is in London for us on this story. Anna, what can you tell us? What more do we know?
STEWART: Well, we've had a flurry of tweets regarding the situation as you said. We just had a tweet from the London Met Police to say that they're
in the early stages of dealing with an incident.
Of course they've been plenty of reports on Twitter, the City of London Police have just told us that it is a very dynamic situation. And I think,
Julia, we have to remember with a situation like this, that there is so much interest and alarm simply because in 2017, there was of course, the
terrorist vehicle ramming and stabbing incidents that really shocked the whole capital of the nation, in fact, the whole world.
So we'll be bringing you more details as we get them. Very thin on the ground right now.
CHATTERLEY: Absolutely. Yes. Anna Stewart, thank you so much for that update there, and just as Anna said, we will keep you posted as more
information comes through. We're back after this.
(COMMERCIAL BREAK)
[09:31:34]
CHATTERLEY: Welcome back to the show. Let me just bring you up to speed with the breaking news just in the last few moments.
The U.K. Metropolitan Police say they're dealing with an incident at London Bridge. Details remain unclear at this moment.
The police are advising people nearby to follow police directions. We will bring you more when we get it. But right now I'm just showing you some
images that we're taking from Twitter, from social media, just to give you a sense of what we're seeing there.
That's just the corner of London Bridge going from north to south that you can see there is the camera pans across. We could clearly hear sirens of
the emergency services there.
It does look like traffic seems to be still flowing at least on one side going across the bridge that you can see there and of course, a number of
buses seem to be at a standstill as well.
Just to reiterate that, of course, the Met Police tweet there as well. The early stages of dealing with an incident at London Bridge. We will bring
you any further information there as we get it.
All right. So let me give you a look at what we're seeing right now for U.S. markets. We have opened lower as anticipated, easing back from those
record highs of course that hit when the markets were last open on Wednesday. All majors though in the red.
The trading day today will be shortened, too for the Thanksgiving Holiday, 1:00 p.m. Eastern Time, both the bond markets and the equity markets
closing today.
Let me give you a look for now at some of our Global Movers. Stocks that are moving most in the session. We've talked about them already, Tech Data
stock climbing after the private equity firm Apollo improved its offer. It was reported that a second suitor stepped in and that was apparently Warren
Buffett's Berkshire Hathaway.
Right now, the stock is that higher by just shy of 12 percent. Apollo paid more perhaps, than they might have done in light of that entry from alleged
Warren Buffett and Berkshire Hathaway there.
What about at Wynn Resorts? We are seeing that down some one percent. The story there, just to bring you up to speed on that is that Wynn Resorts has
reached a settlement with Steve Wynn. He stepped down after its sexual assault allegations which he denied, of course.
All right, as holiday shopping season ramps up here in the United States. It's highlighting a Black Friday divide between retailers who have seen the
light and reinvented themselves and those left perhaps fumbling around in the dark.
On the one hand, you've got the likes of Target, Costco and Best Buy who've ramped up their online offerings, offering deliveries and in-store pickups.
Then at the other end of the scale, you've got names like Gap, L Brands, which owns Victoria's Secrets, of course and Macy's lagging behind and
moving with the times.
To explain the divide, Charlie O'Shea is the Vice President at Moody's and a senior credit officer. Charlie, fantastic to have you with us and I hope
you had a wonderful Thanksgiving yesterday.
Let's start with Best Buy because we were actually in store earlier on in the show. I feel like this is a company that's gone in to the Thanksgiving
and this holiday shopping weekend with high confidence. They even raised their forecasts ahead of time. These guys are like one of the winners.
CHARLIE O'SHEA, VICE PRESIDENT, MOODY'S: Absolutely. And Best Buy has been winning holiday for a long time now, but I think this year, the
company is better positioned.
Some of the things that Best Buy is doing now are resonating more heavily with the consumers than they have in the past.
[09:35:02]
O'SHEA: I was in the store last night. A lot of the tech features, not TVs. I mean, TVs are always going to sell. But a lot of the things that
the company is selling now are more solutions focused, which brings into play the consultative sales force that Best Buy has and the ability to come
to your home with a Geek Squad and actually install things, which creates a deeper relationship with the customer.
CHATTERLEY: Yes, that's such a great point actually, the targeting of customers with specific products and actually that touchiness is one of the
benefits of having bricks and mortar stores to that point.
Do we see the likes of a Walmart, of Best Buy, of Amazon -- some of the strongest players competing against each other for market share? Or
particularly given the broader backdrop here, the impact of tariffs, do we see them stealing market share from some of the more restricted and smaller
players here?
O'SHEA: I think what we've been seeing is the latter rather than the former. Certainly, there's some head-to-head battles going on, but it's
much easier to pick off a weaker competitor than it is to go head-to-head.
Say you're Walmart, going head-to-head with Amazon is tough, and the reverse is also true. But Amazon has an advantage with those shareholders
that really don't seem to mind the lack of profitability as long as sales grow.
So if you're a Walmart, you can go after some of the smaller guys pretty easily, and they don't really have a lot of defenses. They've been
struggling over the last several years without the financial flexibility to be able to invest in the stores, invest online, and invest in employees.
And then most importantly, this time of year, invest in price, which is promotion. And a lot of them just don't have the ability to do it.
You've got to keep the lights on. They've got to meet their debt maturities, and there's something that has to give. Walmart, Amazon,
Costco, Best Buy, Target -- don't have to worry about that because they've got loads of money. They've been able to invest and they have a distinct
competitive advantage this holiday and beyond.
CHATTERLEY: What about the delivery options that are available here? I mean, we even, I go back to Best Buy offering next day delivery. You can
also pick up in store and they're saying that actually you don't even have to be the equivalent of a Prime member and pay some monthly premium in
order to have that option. That's really taking the fight to Amazon despite their investment in all these fleet bands.
O'SHEA: That's true. Best Buy has been offering -- and I've been trying to remember and I was talking to my family about it yesterday, when we
actually picked up our first online order in a store, and we were 15 years ago, and we were struggling whether it was really that long ago, maybe it
was, but it's been a while.
And that's one of the advantages brick and mortar has always had and now they've really unlocked it, which is using those stores.
My estimate is for the big companies that I cover, between 40 and 50 percent of the online orders are going to be picked up in a store, which
gives you another opportunity to make an attachment sale which is important.
Delivery is easy. Free delivery is easy to do. All you have to do is be willing, if you're a retailer to bear the cost and your shareholders again
have to be patient.
But the other things come into play. Amazon is doing everything it possibly can to speed up delivery. We think it's a reaction to buy online
and pick up in store. So Amazon is almost being forced to accelerate its two-day to one-day, and then in some cases, same day, it's going to cost
the company about $4 billion plus this year. It'll cost more money next year.
And the whole key to this is to keep those Prime members happy because they spend a lot more money. But delivery for us has been -- we consider it to
be an arms race. And we really don't know yet if and when it becomes you know, the retailers have to charge for it. How much the consumer is
willing to pay for fast delivery? Do I need it today? Do I need it tomorrow? Do I need it the next day? Do I need it the next day? And the
pricing will likely be tiered at that point.
And then the consumer really has a decision to make, and maybe the retailers are overestimating the demand in which case they will overspend.
CHATTERLEY: Yes, it's such an interesting point and I guess, the proof will be in the pudding. We just have to wait and see how this plays out.
Talk to me about the shopping season specifically because we're already starting to get numbers for what happened either in store or online for the
Thanksgiving spend and it looks pretty strong here, but I guess the comparisons to last year was a December where we had a government shutdown.
We had a market pressure -- all sorts of things going on. What are we expecting this weekend?
O'SHEA: For the whole holiday, the weekend is tough. We look at the holiday as lasting the entire quarter, which runs from November to late
January. The season gets elongated every year. The promotion started earlier this year. They started in October before. I was seeing Christmas
before Halloween, which is kind of an interesting phenomenon.
But I think it gets longer. I think we have to kind of pull back from the traditional gauges that we're using to evaluate the holiday. You know, the
Thanksgiving weekend is now the Thanksgiving weekend. It used to be Black Friday and Cyber Monday now. It's Thanksgiving weekend.
[09:20:02]
O'SHEA: And it's going to be a long -- it's going to be a long battle. It's a marathon, not a sprint. And I think that the early data is
encouraging from a sales perspective.
We forecasted four to four and a half percent top line growth this holiday. But we're operating income focused. So we want to see how much money you
actually make on those sales.
If you're selling the dollar for 99 cents, that's not necessarily a good thing. So it'll -- we're always late to make a call because we have to
wait for the income data. But some of the data points I've seen so far, again, have been encouraging. Twenty percent online sales growth.
Anything less than 15 for online sales has to be disappointing.
You start getting around 20, that means it's a very positive push. I saw another data point this morning that store visits are down a little bit. I
don't know that that's unexpected. I think the retailers have finally gotten the religion that we don't care where we make the sale, be it online
or in the store. We just want to make the sale and if you want to buy stuff from us sitting on your couch, or even taking a break from dinner on
Thanksgiving. That's just fine with us. We just want to make the sale.
So I think we just have to -- you know, the paradigm has shifted. And I think our analyses have to kind of move along with that.
CHATTERLEY: Yes, our metrics have to move. Charlie O'Shea, Vice President at Moody's. Sir, thank you so much and have a great day.
O'SHEA: Thanks, Julia. Thanks. You, too.
CHATTERLEY: All right. I want to bring you back now to the breaking news that we've been talking to you about just in the last few minutes.
The U.K. Metropolitan Police say they're dealing with an incident at London Bridge. As we've been discussing with you details remain pretty unclear at
this moment. But we do have some further information. Anna Stewart is in London. Anna, what more are we hearing now?
STEWART: Well, an eyewitness has told CNN that they heard five gunshots in the area. That's all we know from them. The City of London Police have
told CNN that it is a very dynamic situation.
And then of course we have that response from the London Met Police. They tweeted a short while ago saying, "We are in the early stages of dealing
with an incident at London Bridge. Please follow @metpoliceuk on Twitter for updates. If you are near the scene, please follow the directions of
any officers on the ground."
We can bring you some videos of the scene from social media. You can see a heavy police presence there. Frankly, the bridge looks to be on lockdown.
So much interest and so much concern here, although we know nothing about this incident.
Of course this was the scene of a dreadful terror attack in June 2017 when a vehicle rammed into pedestrians on London Bridge before attackers left
the vehicle and went on a stabbing spree. That terror attack ended with eight people being killed and 48 injured. So a huge concern here.
We don't have any further details. It is a very dynamic situation. So I expect we will get lots more information in the next few minutes to the
next hour, and we will bring that to you as we get it -- Julia.
CHATTERLEY: Yes, thanks very much. And I just want to say to let our viewers know exactly what they're looking at here. You're looking at
London Bridge. On the left of your screen that's North London. And then of course, across the Bridge, towards South London.
It's an incredibly busy time of day. It's a Friday. So ordinarily you would be seeing traffic cars, buses, as you can see there that seem to be
at a standstill passing across this bridge at this time of day.
And actually, you can see the bridge behind where the traffic actually was flowing, but to Anna's point there, right now whatever is going on, it has
brought traffic to an absolute standstill at this stage.
And Anna, you were just saying to us, an eyewitness suggesting that they'd heard noise that sounds like gunfire and obviously, that's now given the
sensitivity of the situation.
The police are clearly investigating and they've got the thing on lockdown, it seems as far as traffic is concerned until we know more.
STEWART: That is certainly the situation at the moment. We expect to hear more from eyewitnesses. There's plenty on social media. Of course we're
waiting for more official statements from the police as to what happens next, how long the police presence will be there and what's happened and
whether we see any arrests coming up. But we should be getting more detail shortly -- Julia.
CHATTERLEY: And Anna, to your point, there's a real sensitivity in London, just given what we've seen in recent events. The initial response, I
think, for everybody is to, when you hear a noise like this, is to flee to try and get out of the area. And instantly, we start looking to social
media here.
As you were saying earlier on the show, in London, as in other places around the world, there's a real sensitivity right now, when you hear
noises like this.
STEWART: There really -- there really is and we take every instance of this incredibly seriously just in case it turns out to be one of these
dreadful attacks we have seen in the past and it's too easy of course to jump to conclusions. You do have to wait for the information to come in.
But as a Londoner myself, you do worry about situations like this. If you hear a bang, you know of course you are going to be extra nervous and you
are going to go seek safety, which you should. Follow the police's advice.
And it is often very useful to go into social media and see what people are saying, but at the same time, making sure that we wait for official
statements before jumping to any conclusions.
[09:45:10]
CHATTERLEY: Absolutely. And I'm just again going to reiterate what we're looking at here again, London Bridge, brought to a standstill. On the left
of your screen is North London across then to the South of London. One has to presume as well, if we've not seen as yet passengers getting off these
buses, it is a busy time of year.
You have to assume that there are passengers remaining on some of these buses as the traffic has come to a halt and are just waiting to see what
happens.
So just a developing story in the last few minutes, the shopping area, and the railway stations apparently as well as you can see on your screen there
have been brought to a halt, too, so taking all precautions it seems and we've heard from the Metropolitan Police as they deal with this situation.
Thank you very much, Anna Stewart there. We will continue to bring you further details on this story and keep you abreast on the information as we
get it. For now, you're watching FIRST MOVE. We'll be right back.
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CHATTERLEY: Welcome back to the show. Again, an update on the breaking news this morning.
The U.K. Metropolitan Police say they're dealing with an incident at London Bridge. Anna Stewart is on the story for us in London. Anna, and I think
a further piece of information now from the Metropolitan Police. What do we know?
STEWART: We've just had an update from the Met Police who tweeted to say, "Police were called at 1:58 p.m. to stabbing at premises near to London
Bridge. Emergency services attended including officers from the Met Police. A man has been detained by police. We believe a number of people
have been injured and further info will follow."
We know that London ambulances have responded. We also have an eyewitness report telling CNN that they heard five gunshots.
[09:50:00]
STEWART: Of course, we don't know whether that's true. We don't know whether that was in response to this attack, but we are getting more
information.
It appears to be a stabbing incident according to the police, and of course, this will worry people, particularly given that this was the scene
of the most dreadful terror attack in 2017, a vehicle ramming into pedestrians and a stabbing spree.
So people will be questioning of course, whether there's any terrorist incident related here. We'll be waiting to hear a lot more information
about that, that normally takes a lot longer of course to decide to determine, but we'll also be looking at to see how many people have been
injured.
Ambulances are on standby and you're looking at pictures there, live pictures or pictures from earlier of London Bridge at a standstill.
You can see there's buses are kind of parked there. No idea why the people are stuck on those buses. The police have got that area on lockdown.
We're also seeing plenty of videos coming through to social media showing a very heavy police presence. But there's been a lot of confusion. A lot of
people taking social media saying what they think they heard, but of course no one really knowing. We're waiting for more official response, but the
latest from the Met Police is that there was a stabbing incident and one man has been detained -- Julia.
CHATTERLEY: Anna, stay right where you are. Thank you for that update because I do want to bring in Noa Bodner, an eyewitness. Noa, fantastic to
have you with us. Thank you so much for joining us. What can you tell us? What did you see and hear?
NOA BODNER, WITNESS TO LONDON BRIDGE INCIDENT (via phone): I saw very little. There was a rush of people running into the cafe. We were at the
cafe at the base of the bridge. People rushed in immediately.
The manager ran and shut the door and locked it. Everybody, basically dove under the tables and we were told that shots were heard.
And then at some point, where we saw police coming to the bridge and closing it off. We were asked to move to the back of the restaurant, or be
just away from the windows.
And everybody has been here ever since trying to piece together all the information that we're getting from what we're seeing, which to honest is
not a lot.
Just basically, nobody is allowed to come through on the -- on all the main roads and the station here. We've heard that there's been a stabbing.
We've heard that it's possibly that it was police that shot.
And now everybody is here just waiting to hear if it is okay to come out again, which you've not heard yet. But hopefully, that will happen soon.
People are quite calm and just trying to support each other, I think.
CHATTERLEY: So, but, right now you are -- you're locked in. The owner of the cafe locked you in and you're just remaining there.
BODNER: Yes, we are. We are not allowed to go out. Yes.
CHATTERLEY: Do you think people are more frightened? Do you think people are more frightened just when we see these kind of events now, in light of
what we've seen in London, over the -- over the past several months?
So to your point, actually, do people just act quite calmly in this situation and just get back to the -- you know, the back to the cafe and
just wait it out?
BODNER: Well, you know, the, the main motto here is keep calm and carry on. And I think that's at least what I'm seeing and people don't seem to
be panicky.
I think everybody knows that because this is a sort of gun free country that that the level of danger is always a bit lower. And police are very
good at dealing with these sorts of situations as we sadly have seen in the past couple of years.
So we all believe they've got this under control and we're just waiting for the okay. And yes, nobody is being very brave in trying to step outside.
Everybody is just compliant with what we've been told to do and carrying on.
CHATTERLEY: We're showing images now just to make our viewer aware of fire engines moving on to the site, a police cordon as well and a number 17
double decker bus as you can see. Can you -- can you hear -- actually, Noa, I'm going to leave where we are. Noa Bodner there. Thank you so much
for joining us.
I'm going to hand over to my colleagues in the United States for more on this.
NINA DOS SANTOS, CNN EUROPE EDITOR (via phone): ... about a quarter of a mile down the road along side the River Thames and many of them totally
unaware of what is happening nearby London Bridge -- Anna.
ANA CABRERA, CNN ANCHOR: And Nina, I know you are still working your way there, but it sounds like you're fairly close. You say you're still seeing
ambulances heading to the scene?
DOS SANTOS: Well, I've seen one ambulance and a motorcade of about three or four police outriders as well heading towards the scene and obviously
traffic was stopped for them to pass.
But otherwise, apart from the sort of furtive back and forth of some of the emergency vehicles, it is a calm scene just about a quarter of a mile away.
But obviously, as I was pointing out, before the fact that the busy subway station, London Bridge is a really busy station, it's also a busy train
station as well for the overland train network as well. And it's a big tourist hot spot as Max was just telling you there.
[09:55:02]
DOS SANTOS: There's a big market there. It often is busy, at a festive time like this with the Christmas season getting under way. And for all
those reasons, this is a busy part of London and it's a part of London that is a thoroughfare as well.
So the fact that the train station, the subway station is shut off at the moment as head into a Friday and a weekend, obviously that is significant
in itself. So as I get closer to the scene, of course I'll try to keep you updated.
But it's what I'm seeing over there but as I was saying before, as Max also said, we're starting to see already on social media a lot of the kind of
pattern that you do see when in the past you have seen some of these things become eventually bigger.
The Metropolitan Police putting out a statement about 45 minutes or so ago saying that they were in the early stages of dealing with an incident, but
we just don't know at this point what the motivation of that type of incident is.
CABRERA: Right.
DOS SANTOS: And as Max was also saying, there are many videos that appear to have been taken by some of these commuters going back and forth on buses
on London Bridge having witnessed what actually happened firsthand.
CABRERA: Right. Okay, Nina dos Santos, we'll let you get back to gathering more information. Thank you for that update.
I have another update for our viewers. London Ambulance Service now tweeting out some more information saying they are responding to a major
incident over London Bridge and have a number of crews at the scene there.
And also we know there was a stabbing according to the Met Police and multiple people injured. Still unclear exactly how many people were
involved, at least one person, we're told, has been detained.
We're going to stay on top of this breaking news. A quick break. We'll be back with the very latest. You're watching CNN. Stay right there.
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