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First Move with Julia Chatterley
A Warning From The WHO Chief As The Coronavirus Spreads; The U.S. President Announcing A Bumper Budget For 2021; Tesla Stock Has Investors Spinning Right Around Again. Aired 9-10a ET
Aired February 10, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:12]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE, and here's your need to
know.
Tip of the iceberg: A warning from the WHO Chief as the coronavirus spreads.
Trump's trillions. The U.S. President announcing a bumper budget for 2021.
And like a record baby. Tesla stock has investors spinning right around again.
It's Monday. Let's make a move.
Welcome once again to FIRST MOVE this Monday. Great to have you with us. Hopefully, we'll be able to provide one or two Oscar worthy moments, but
I'll tell you what, they're not going to come from the markets.
Take a look at what we're seeing around the globe. Investor sentiment feels far more muted starting the session this week than it did at the back end
of last week.
U.S. futures right now in stocks, flat in Asia. The Hang Seng losing just over half a percent. And in Europe, the Stoxx 600, the major stocks there
also in the red and once again, it's travel and oil stocks that are weighing here amid that rising concern about the spread of the coronavirus
outside of China. And that's key.
And I think as I've mentioned that concern being fueled by a tweet from the WHO Director on Sunday, saying, "The detection of a small number of cases
may indicate more widespread transmission in other countries. In short, we may only be seeing the tip of the iceberg." Plenty more of analysis on this
coming up in the show.
In the meantime, President Xi Jinping speaking on Chinese state TV earlier saying his country will win the fight against the virus and perhaps there's
some reasons for a degree of optimism on that.
Reuters reporting that Taiwan's Foxconn has received approval to resume production as a plant in Northern China. Foxconn, of course, is Apple's
main supplier in Asia. Tesla, also saying that they'll get back to work.
The problem is it's just not clear how many firms will indeed reopen and even if workers will turn up.
In the meantime, China's Central Bank continuing to add fresh stimulus hereto; this time in the form of special funds for businesses impacted by
the outbreak.
Let's get to the latest on all the details. China, increasing importance of meat and essentials amid rising shortages. This of course, as the country
deals with the ongoing coronavirus fallout.
Millions of people due to return to work today after the New Year break, but many schools, businesses and cities remain on lockdown. The outbreak
now more fatal than SARS with 910 people losing their lives, over 40,000 cases worldwide.
David Culver is in Beijing and continues to cover this story. David, I've been mentioning and reiterating people simply trying to get back in action
here, businesses reopening. What's your experience? What are you seeing in Beijing?
DAVID CULVER, CNN CORRESPONDENT: Right. Technically, it is back to business, back to normal, at least, officially, but it's not really. I
mean, the reality, Julia, as if you go around, this still seems like such an empty city in many parts.
And there's also a part of this that you have to understand and that is that folks are being still urged by their businesses, by their employers,
stay home. If you don't need to come in, work remotely. Let's still avoid people coming together in large masses and congregating.
The other aspect of this has to do with migrant workers. You've got to remember, all of this really took to a new level amidst the Lunar New Year
and that's a holiday in which right beforehand, you had hundreds of millions who left the major cities, left places like Beijing, went to their
home provinces and then were expected to come back.
Well, what did we have? We had an extended Lunar New Year, then you had really what was kind of a moment of self-quarantine for several more days,
and what you have now are many residential complexes, saying if you don't have work, and you don't have proof that you have work, to some of these
migrant workers in particular, we can't have you come back here.
So they're essentially staying in their home provinces and not coming back in in some cases, which is really keeping the crowds quite thin across much
of Beijing.
Now, one of the biggest things that we saw today, and this was rather significant was for the first time in a while we've seen President Xi
Jinping coming out in public.
Now CNN has raised before the question as to where was he prior in the midst of this crisis and this outbreak, and other outlets have as well, to
be fair, he today made it clear that he wanted to be on the front lines of this and CCTV, the state broadcaster certainly running this.
All of the state media outlets, if you just go through their websites and one by one, this is the lead image of the day, it's President Xi in that
facemask that everyone else is wearing around here and he went to a local community, went to a hospital, went to a disease control center.
[09:05:08]
CULVER: And one of the things that he specified in addition to protecting the medical workers and making sure that they have what they need to fight
this epidemic was the need to stabilize the economy.
He also said he wanted to prevent, Julia, massive layoffs because that's a concern here as China is now dealing with what is really an isolated fight
in the sense of several other countries have essentially cut off travel with them and said, until things get better, we're not going to reengage.
CHATTERLEY: Yes, it's so important. The point you make actually about finally seeing President Xi here, getting involved in the middle of the
action at the front here, the presentation is so important, but for me, the bottom line there, David, what you said that the official line here with
regards getting back in action and getting back to work versus the practicalities and what we see in practice.
Great to have you with us. Thank you so much for that. David Culver there.
To Japan now where 65 new cases of coronavirus have been found on board a cruise ship that remains docked in Yokohama, Japan. Will Ripley joins us
from Tokyo on this story.
Will, and I know and I watched you earlier on our programming, you've been talking to one of those quarantined on the ship and actually currently
infected with the coronavirus. What was the lady telling you? How is the situation there right now?
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Rebecca Frasure from Oregon and her husband, Kent, we talked to them when all of this unfolded without
knowing that Rebecca had coronavirus.
She actually tested positive a couple of days after we first had contact with them. Initially, we were talking about the conditions being
quarantined in their cabin and then everything changed when she got that positive test result and it was scary for all of us. We worried about her.
But I can tell you after visiting her at the hospital where she is being held in quarantine here in Tokyo and by the way there are patients that are
being distributed amongst a number of different hospitals throughout Tokyo here.
I mean, there's probably three or four hospitals within a two mile radius of where I'm standing right now. Japanese government not saying where
patients are being held, but we know, we found Rebecca, and we actually were standing outside the hospital earlier when an ambulance came by,
driver in full hazmat gear bringing in more patients.
But she's not showing any symptoms, Julia, and a lot of her friends who've tested positive on the cruise ship are not showing any symptoms either.
In fact, some have described it as less severe than even a common cold. So I think that's the underreported aspect of all of this. This is obviously a
global health emergency, something that we all need to take very seriously. You should be washing your hands. Some people choose to wear surgical face
masks.
But the vast majority of patients do get better, and in fact, for some of these patients who are doing so well right now, they say their fear has
diminished in a sense, you know, now that they have it because they're realizing that it's not as bad as perhaps they thought it might be.
You know, people are, you know, when you hear coronavirus, people are assuming a death sentence and that's simply not the case.
To put it in context, Julia, so far, you know, the coronavirus has killed more than 900 people. The seasonal flu kills hundreds of thousands of
people every year.
CHATTERLEY: It's such a great point, and I think we've been talking about this and making this point since the beginning. The comparison with flu
here, I think and even here in the United States, incredibly important.
It was her general wellbeing actually that struck me when I was watching you talk about this earlier, Will.
Just to give us a sense, how far into the quarantine process are we on board the ship and are they getting any information about how long they're
simply going to have to wait until it's decided that they can all leave and they've got the all clear, particularly when more cases are being found,
even if they're not symptomatic?
RIPLEY: One thing that I just heard from Rebecca,, my producer Sandy was speaking with her a short time ago, she might actually get out of the
hospital before her husband gets off the ship.
And by the way, her husband, Kent, does not have coronavirus even though they were next to each other every single day sleeping in the same bed,
sharing their cabin, their bathroom, he continues to test negative.
He wasn't part of that group of 65 new cases. And he, you know, he expected that he would test positive. He just hasn't. He doesn't have it, at least
at this stage, it hasn't been detected.
And a lot of these new people who did test positive, they didn't even have fevers, which is why they weren't initially checked.
The Japanese government is saying they are not going to test everybody on the ship. They say it's too difficult, logistically to test 3,500 people.
That in itself is pretty upsetting for the passengers who haven't been tested because they want to be.
Some of them are, you know, senior citizens. They are in that high risk group over the age of 60 with preexisting conditions like diabetes and
heart disease or a weakened immune system that could really put them in a bad situation if they were to catch coronavirus.
Also parents who have young children and people want these test, but the Japanese government saying it's just not feasible.
But in terms of when people are actually going to get off the boat, is the date is still February 19th or do all of these new cases potentially change
that date? Apparently according to the Captain of the Diamond Princess, you know, these new infections were not the result of some failure of the
quarantine.
He says that all these people were exposed before they went into quarantine, which indicates that it seems that for now, they're still going
to try to get everybody off that boat on the 19th as scheduled.
But we'll see. That obviously could change depending on how this situation develops. And it is changing every single day -- Julia.
[09:10:18]
CHATTERLEY: Absolutely. It's fluid. Will, fantastic to have you with us. Will Ripley there on that story.
All right, let's move on to our next driver. The White House planning a budget worth nearly $5 trillion for the fiscal year 2021. And it foresees
at least another 10 years of Federal deficits. Joe Johns is in Washington for is on the story.
Joe, this is a budget worthy of an election year, I have to say, three percent growth for the future, bringing the deficit down despite more
spending and cuts where you wouldn't want to see them. Will any of this come to fruition in your mind.
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Well, you know, the rule in Washington is especially when there's a divided government as there is
now, a President's budget arriving on Capitol Hill is, as they say dead on arrival.
And there are some people suggesting already up there that because Democrats control the House of Representatives, Republicans control the
Senate. That, in fact is the case.
Look, this is the beginning of three dimensional chess. It's what the President wants to spend more money on versus what the President wants to
spend less money on, versus what the Congress wants to do.
So the indication as you said, the top line number actually $4.8 trillion, attempting to balance the budget in 15 years, not 10 years, as is the
custom, and what does the President want to spend money on, more defense spending. He wants to spend money on his Space Force. He wants to spend
money on NASA and so on. He also wants to give money to farmers.
On the other hand, the President wants to cut social programs significantly, about a trillion and a half dollars which of course, will
create howling on Capitol Hill.
One of the flash points, certainly will be entitlement programs, the President has promised to preserve Medicare, as well as Social Security.
But there are some indications already that the President would like to cut Medicaid, which is the low cost medical program for people with low
incomes.
The White House indicating in their view, they're not cutting the programs, they are just trying to get rid of waste fraud and abuse, which is
something that people say when these fights begin.
A long way to go. As I said, it's just a blueprint. And we're going to have to see how this plays out over the next weeks and months.
By the way for our international audience, important to say also, there are some indications the President wants to cut foreign aid significantly,
almost by 20 percent. So that would be a big deal, too. Congress hasn't let him do that in the past -- Julia.
CHATTERLEY: Yes. I have to say, no breaking news there, but yes, long road on this one. Joe Johns great to have you with us. Thank you so much for
that.
Now, speaking of breaking news, quite frankly, our next driver, I can tell you the Academy Awards have drawn criticism in recent years for a lack of
diversity and while the top acting awards went to white actors this year, Sunday night's ceremony did take an unexpected turn with a movie from South
Korea.
CNN's Paula Hancocks has more on that film's Oscar moment.
(BEGIN VIDEOTAPE)
UNIDENTIFIED FEMALE: And the Oscar goes to "Parasite."
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT (voice over): The moment "Parasite" made history, the first non-English language film to win Best
Picture in 92 years of the Oscars.
It's a scathing view of class inequality in South Korea, a black comedy that won four Oscars more than any other film.
Accepting Best Director Bong Joon-ho gave a shout out to the director whose films he says he studied at school.
(BEGIN VIDEO CLIP)
BONG JOON-HO, DIRECTOR, "PARASITE": The cottiers from great Martin Scorsese.
(END VIDEO CLIP)
HANCOCKS: And thanks to fellow director, Quentin Tarantino.
(BEGIN VIDEO CLIP)
JOON-HO: Quentin, I love you. Four times. Crazy.
UNIDENTIFIED FEMALE: Yes, yes. Four times.
JOON-HO: Thank you. It's an unbelievable night. It's very hard to believe. It's such a great honor.
(END VIDEO CLIP)
HANCOCKS (on camera): Congratulations are flooding in for the director, cast and crew from all around the world. Praise from the South Korean
President and pride from fans on the streets of Seoul.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE (through translator): It's hard to win an award in a foreign country with a foreign picture. So feels like it has overcome
obstacles. It's a meaningful and special day for the Korean film industry.
UNIDENTIFIED FEMALE (through translator): I'm so happy that the movie has won the Best Picture.
UNIDENTIFIED FEMALE (through translator): I feel very proud watching the director and actors winning the awards and making speeches. It was a proud
moment as a Korean watching them at the Oscars.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: "Parasite."
(END VIDEO CLIP)
HANCOCKS (voice over): "Parasite" has been winning accolades around the world this award season. The story of a poor family inserting themselves
into a rich family's household and lives with devastating results.
[09:15:10]
HANCOCKS: As for what comes next for Bong?
(BEGIN VIDEO CLIP)
JOON-HO: I'm bloody ready to drink tonight, so, until next morning. Thank you.
(END VIDEO CLIP)
HANCOCKS (voice over): Paula Hancocks, CNN. Pyeongchang, South Korea.
(END VIDEOTAPE)
CHATTERLEY: I just love the moment when the director was just staring at the Oscar smiling. It was very cute.
All right, let me bring you up to speed now with some of the other stories making headlines around the world.
Angela Merkel's protege has announced she will not seek to become Germany's next Chancellor. Annegret Kramp-Karrenbaueri is also stepping down as the
leader of the Conservative CDU Party, which has split over whether to form alliances with the far right.
Miss Merkel has said she won't serve as Chancellor beyond her current term which ends in 2021.
The Sinn Fein Party has won the most seats in the Irish General Election as the first vote count comes in. The Nationalist Party has won 29 seats so
far, but that's not the overall majority required to form a government.
Party leader Mary Lou McDonald is calling the victory a revolution. She says she will work on building a coalition government with other parties.
Right now, a powerful storm is hitting Ukraine as it makes its way to Russia. These are images provided by the Netherlands showing the storm's
intensity as it has battered Northern Europe with hurricane force winds over the weekend.
In England, police say a man died when a tree fell on top of his car during the storm. Travel warnings are still in place and flooding remains a threat
as the storm progresses.
All right, we're going to take a quick break here on FIRST MOVE, but coming right up, opening up your digital wallets.
There are some stunning forecasts for the future of banking.
Plus, gone, but not forgotten. Why those images you thought you deleted might still come back to haunt you. A CNN investigation after this.
(COMMERCIAL BREAK)
[09:20:05]
CHATTERLEY: Welcome back to FIRST MOVE, counting down to the stock market open in the United States this morning -- muted. That's what it's saying as
worries about the coronavirus outbreak keep a lid on sentiment here.
We've slipped a bit even in the last 15 minutes. The context though, it follows a strong week globally for equities. The S&P 500 in fact having its
biggest weekly gain since June and among those, the next stock.
I want to mention Tesla's stock premarket, it's up right now over 6.6 percent, so bucking the broader trend there after a head spinning week.
One company that's not been caught out though by Tesla's soaring share price is ARK Invest, which owns shares in the automaker. ARK's big ideas of
2020 maps sounds its views of the future in cards, crypto, digital wallets, to name just a few things.
Cathie Wood is the founder and CEO of ARK Invest and joins us now. Fantastic to have you with us.
CATHIE WOOD, CEO AND FOUNDER, ARK INVEST: Great to be here, Julia.
CHATTERLEY: When I read this, I was so excited. I could take this conversation in 10 different directions, but I'm going to try and hone
down.
Let's talk about Tesla.
WOOD: Okay.
CHATTERLEY: You were out there a long time, I think before everybody else with a sky high valuation on a relative basis saying, look, this is a tech
company, not an auto company. Is this what we're seeing now from the --
WOOD: We're beginning to see a better understanding of that. But interestingly, in the markets as the stock has gone up, the number of buyer
ratings has gone down.
CHATTERLEY: I saw that.
WOOD: There are seven buys, I believe on the sell side, and 18 sells. So this is not like the late 90s when the investors were chasing dreams. This
actually is a reality and they're running away from it. It's really interesting psychologically.
CHATTERLEY: I mean, there are a lot of people who look at this and say, look, the short interest in this stock was so high. This feels incredibly
squeezy, even if you think that the story has changed now with the profitability, the annual profits, the China story hereto. Some acceptance
of the battery technology. It feels like it's gone too far too fast. Your response?
WOOD: So the closing price roughly 750 on Friday, I know it's up today is based on our projections. We believe in our bear case, in other words, no
autonomous effectively, that in five years, Tesla will reach $1,500.00. That's our target price in our bear case.
That is a doubling 15 percent compound annual rate of return. That is our minimum hurdle rate of return.
CHATTERLEY: But -- I mean, at one point last week, we were approaching, you know a thousand dollars. So you're saying five years, so I can
understand why someone looking at this and going, whoa.
WOOD: Yes, so our base case in five years is $7,000.00, so nearly tenfold from here. So yes, whenever we see a stock go parabolic, personally, I like
to see a little bit of settling out --
CHATTERLEY: Consolidation.
WOOD: Consolidation. And we will get it, no question. It's just a question of how many investors are beginning to understand that Tesla's cars are so
far ahead of Daimlers, BMWs, Jaguars -- everyone, they've been waiting to come out and compete.
These companies cannot even match Tesla's Model S from 2012.
CHATTERLEY: You initially said that you thought they would lose some of their 17 percent market share. You said they might lose a third. You're now
suggesting that actually maybe they won't even lose any of that.
WOOD: Yes. Well, the Tesla killers that came out last year, we expected some share loss, and so we had Jaguar, Audi, Porsche, the Taycan and
instead of going down from 17 percent in 2018, it went up to 18 percent.
And as they've released these cars, we've seen how far behind they are to Tesla. Behind Tesla, they were saying, well, wait a minute, the risk to our
34 million unit EV sales forecast in five years is not Tesla falling behind. It's these other auto manufacturers.
So Tesla share actually could go up.
CHATTERLEY: It's almost like they're doing some of the PR for Tesla. But I do want to move on, even just a comparison. I want to talk digital wallets
because the numbers on this are astonishing.
Talk me through why you're looking at this specifically because I know China and the prolific growth that we've seen in China in particular in
this, but across Southeast Asia, too, is what sort of caught your eye.
WOOD: Yes. When we saw in 2016 the numbers for mobile payments, we just didn't believe them because they were almost as high as China's GDP.
So China's mobile payments have gone from $1 trillion in 2014 to $34 trillion last year. That's a 34-fold increase in five years.
[09:25:07]
CHATTERLEY: So they were a tenth of GDP in 2014 and now, they are what? Two and a half times.
WOOD: Two and a half times their GDP.
CHATTERLEY: Of Chinese GDP.
WOOD: Now global GDP is around $85 trillion. We believe ultimately that mobile payments will touch every one of those. But what we missed in the
early days is money turns over every year, velocity -- it is called velocity -- roughly five times in the U.S.
So think that five times 80 or 90 trillion, we're going to be touching, you know, hundreds of trillions of dollars with mobile payments.
CHATTERLEY: So how do investors take risk in this? Because you're saying actually, at the very least these payment companies should be valued on a
sort of price per user, a customer bank faces and they are simply not.
WOOD: Yes, yes. They are not. If we back out the square cash app valuation and the PayPal-Venmo valuation, they're valued at a fraction, maybe five or
ten percent of what a traditional bank.
And we believe these digital wallets are going to effectively usurp the role of bank branches. They're going to be bank branches in our pocket. So
we think the traditional banks are in trouble because they have these tech players nipping at their heels.
Although, interestingly, the number of digital users that both Square and PayPal have has surpassed the number of digital users that JPMorgan has --
more than 50 million.
CHATTERLEY: So they're already doing it.
WOOD: Yes, yes.
CHATTERLEY: Cathie, we'll get back to talk more about this. I lost a good time over Tesla again. Cathie Wood, founder, CEO and CIO of ARK Invest.
Phenomenal to have you with us. Thank you.
The market open is next.
(COMMERCIAL BREAK)
[09:30:00]
CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange and that was the opening bell, some high fives there, but not
helping the markets this morning.
U.S. stocks are a touch lower here, a reminder though, of what we saw for context last week. Wall Street closing out its best week in eight months.
The NASDAQ fell off some five tenths of one percent out of the gates this morning.
What about Europe? Stocks there now slightly lower. Coronavirus concerns around the world, I think. The death toll surpassing the number of people
that lost their lives through SARS.
Also on the data front here, worth watching the fundamentals amid the dent to sentiment here. Italy's industrial output was much weaker than expected
in December falling some 2.7 percent from the month before, so that's not helping sentiment in Europe either.
Asia also softer. The Hang Seng slipping, falling for a second straight session. What happened in Asia today?
Well, China's state TV show President Xi Jinping visiting several public places to oversee efforts to contain coronavirus as David Culver was
telling us earlier.
The Global Movers? What about what's going on there?
Fasten your seat belts. Tesla stock is on the move once again upwards, no immediate catalyst here, but we've seen a wild ride for Elon Musk, so up
down up down is the name of the game on a daily basis it seems for that stock right now.
What about Eli Lilly? Falling after it coming under an experimental Alzheimer's drug did not live up to expectations in a recent trial.
And we've got Mattel under a bit of pressure, too. It is having to close factories as it battles to cut costs and streamline operations.
All right, let's move on. The coronavirus now officially deadlier than SARS and the contagion shows few signs of slowing.
At least a dozen drug makers have joined the race to find a vaccine, but those on the front line warned we are still a long way away.
Among them is GlaxoSmithKline's head of vaccines. He says we're looking at a timeline of 12 to 18 months. Thomas Breuer, Chief Medical Officer for GSK
Vaccines joins me now.
Thomas, fantastic to have you with us. I believe that a fresh vaccines that's not been taken from something else and attempted or at least tested
would normally take 10 years. So is 12 to 18 months actually an optimistic estimates in this regard?
THOMAS BREUER, CHIEF MEDICAL OFFICER FOR GSK VACCINES: Yes, so normal vaccine development indeed takes eight to 10 years. However, what has
happened over the last few years, the time period between starting the development and having a candidate in hand has dramatically been reduced.
So we can have vaccine candidates in hand within three months and two companies have already announced they have vaccine candidates.
However, what takes longer is testing the vaccine in humans because we have to make absolutely sure that the vaccine A, creates an appropriate immune
response and is safe. And that takes time and therefore, under optimistic circumstances, I would guesstimate it takes 12 to 18 months until we have a
vaccine ready for use.
CHATTERLEY: I was looking at some of the headlines last week and I believe that Gilead, the pharmaceutical company is conducting human trials here to
the point that you are making.
How much longer from the point that you're actually conducting human trials can you at least attempt to bring that vaccine to market? Is it still
several months? Is it still that 12 to 18 months or could it be shorter?
BREUER: So Gilead is a company and they currently have in testing what is called antivirals, so these are medicines, not vaccines.
Fortunately, there are some candidates out there either from existing drugs or from drugs, which were already in development and that can already be
tested.
However, the virus is only known since the beginning of January, so it takes longer to develop a vaccine candidate. So a vaccine under really
optimistic scenarios can be available, maybe in 12 to 18 months. So it will not have a direct impact in the ongoing pandemic in China.
But depending on how long it takes until the virus comes to Europe or the U.S., there may be a window of opportunity.
CHATTERLEY: Yes, this distinction here is so important because I think the degree of misinformation on this front remains huge.
Can I ask whether you're working with any other companies and whether you would work with biotech companies in China in particular to try and foster
innovation and accelerate innovation here?
Are you open to that and do you know if work is already ongoing?
BREUER: So, last Sunday, we announced GSK's willingness to work with other companies, because we have what is called an adjuvant, which is a technique
which amplifies the immune response. So it has the potential to create a stronger vaccine.
Or if you want to see it in a different way, you have to use less vaccine per dose, which means you can produce many more doses which are of
particular importance during a pandemic and yes, we have already announced we are working with the University of Queensland in Australia.
Since we announced that we are willing to work with other companies, we have now been contacted by more than half a dozen companies and currently
evaluating who we make our adjuvant technology available to.
But this will be decided at very short notice and obviously, companies in China are included here.
CHATTERLEY: Yes, it's good to hear. Do financials come into the decision to develop a vaccine or an alternative here that you could perhaps take
from something else and test?
Does money come into it? And in a certain situation actually not financially viable or in fact worthwhile to invest technology, time and
money in developing something like this? Can you help me understand what the monetary impact is here and whether that impacts the decision in this
process?
BREUER: I think for companies like GSK, this is not a moment to elaborate on this. Everyone wants to put together, see how individual companies,
individual technologies can help and monetary aspects are secondary.
So, concretely, we will make our adjuvant now available at no cost for research. Should these vaccines go into clinical development, we will make
our adjuvants available at cost and should a vaccine really be made broadly available, we have the production capacity to produce the adjuvant in high
volumes.
And GSK has always followed what we call a tiered pricing approach. So the vaccine, if it comes to light will be made available at very different
costs, according to the country where it will be used into.
CHATTERLEY: It's good to know human life and health comes before the money Thomas, fantastic to have you with us. Thomas Breuer there, Chief Medical
Officer for GSK Vaccines. Thank you very much, sir.
All right, let me bring you up to speed with today's Boardroom Brief.
General Motors says it will restart production in China in five days' time. The U.S. company halted work for the Lunar New Year holiday in January. It
delayed reopening as the coronavirus outbreak impacted travel and disrupted the movement of goods.
E-commerce giant, Alibaba is offering up to $2.8 billion in loans to Chinese firms hit by the coronavirus. Companies from Hubei where the virus
was first detected will get preferential terms.
Beijing has urged banks to lower interest rates and extend loans in the wake of the outbreak.
In China, the price of food and other essentials is soaring as the coronavirus squeezes supplies. Inflation for consumer goods hit 5.4 percent
in January. Earlier today, the government announced it will be increasing imports of meat and other goods amid the shortages.
John Defterios joins me now. John, it was what we were describing two weeks ago, the fallout here, the supply chain impact, whether its essentials,
whether it's food, we're clearly seeing it having a knock-on impact here.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Yes, let's call it the collateral damage from the coronavirus, Julia and in fact this hits
right in the pocketbook.
Their consumer price increase is the highest since we've seen in nine years. I dug up the numbers and there's a couple of standouts there with
vegetables, prices going up by 17 percent over the last year and get this, pork prices because of the swine disease they had in 2019, rising 117
percent. So this is quite severe.
There's obviously hoarding going on because people are panicking in some of the provinces, and then also discussion about price gouging. We had the
Chinese Supreme Court put out a statement in fact saying that price gouging will be met with prison terms. So this is the central government coming
down and putting the word out.
As you talked about here, Alibaba's financial division trying to ease the pressure. Half of that $2.8 billion or just above that is earmarked for
companies that are operating in the Hubei Province, particularly around Wuhan.
[09:40:11]
DEFTERIOS: And we'll have to wait and see February 20th, whether the Central Bank decides to ease interest rates here, again, send the message.
We're standing by after the slower response to the crisis financially to try to help you out.
CHATTERLEY: Yes, I mean, that's an astonishing rise in import prices in particular.
DEFTERIOS: Unbelievable.
CHATTERLEY: You know, you and I have been talking about the -- yes, I mean, the impact that will have.
The divergence between the message that's being sent by certain assets like bonds, like the commodity markets, and the relative highs that we've seen
in equity markets, what about the oil market, John, because there's more developments there, particularly on the Chinese front?
DEFTERIOS: Well, in the last 30 minutes, in fact, Julia, we're struggling to hold on to $50.00 a barrel on WTI in the United States, and surrendered
$54.00 a barrel for North Sea brands.
This is not about an oversupply market. This is the biggest challenge for the OPEC Plus players right now, but it is demand collapsing in a big way
in China.
Other sources have confirmed this collapse of three million barrels of demand of the 10 million that they import. So this is very complicated
going forward.
And I think there's quite a nasty turn from a business standpoint as well, with some of the state run oil and gas companies using force majeure to
cancel contracts have imported LNG. Again, some sources in the region have confirmed they've seen that as well.
This doesn't build confidence going forward about how bad things are in the manufacturing chain. I talked about OPEC Plus. There's a press release that
is put out from the rotating President of OPEC from Algeria, the Minister of Energy, they are saying that they'd like to extend the cuts throughout
2020 -- the voluntary cuts.
But now, they're putting pressure on some of the other players that didn't want to sign on last week, suggesting they would like to have the cuts
deeper and through the second quarter of the year, and this is something that we know that Russia has resisted.
The date seems to be holding at March 5th and 6th for the extraordinary meeting right now, Julia. But again, sources are telling me they may want
to bring that back, if possible if the Russians can make decisions on the cuts.
CHATTERLEY: Yes, I was going to say, it would be a surprise if they can hold on that long. John Defterios, great to have your intel on the show.
Thank you so much for that.
DEFTERIOS: You bet.
CHATTERLEY: And there's a special edition of "Quest Means Business" today. Richard will be speaking to some of the world's top travel executives and
chief economists as the coronavirus continues to take its toll, that of course at the usual time of 8:00 p.m. in London, 5:00 p.m. in New York, and
it will replay on Tuesday morning across Asia.
We're going to take a quick break, but coming up on FIRST MOVE, the app that's triggered fears of facial recognition technology and a dystopian
future it may be leading. CNN sits down with the man behind this all, next.
(COMMERCIAL BREAK)
[09:46:00]
CHATTERLEY: Welcome back to FIRST MOVE where we dig into an app that could help end privacy as we know it. Clearview AI's powerful facial recognition
technology allows users to match faces to other images on the internet sitting on a massive database of billions of photos scraped from the
internet.
The app is under fire from lawmakers and tech giants alike. Our Donie O'Sullivan spoke to the man behind it all.
(BEGIN VIDEOTAPE)
DONIE O'SULLIVAN, CNN BUSINESS REPORTER (on camera): Wow, oh, my god.
HOAN TON-THAT, FOUNDER, CLEARVIEW AI: Is that you?
O'SULLIVAN: That photo is me.
TON-THAT: It doesn't look like you. That's when you're younger?
O'SULLIVAN (voice-over): That's my face, a photo I haven't seen in years, found in seconds by the facial recognition app Clearview Ai.
(BEGIN VIDEO CLIP)
TON-THAT: Clearview is basically a search engine for faces.
(END VIDEO CLIP)
O'SULLIVAN (voice over): Clearview has scraped billions of images from sites like Facebook, Twitter and Google to use in a facial recognition
system. It claims more than 600 law enforcement agencies in the U.S. and Canada are using it, though it's unclear how many have actually paid for
it.
(BEGIN VIDEO CLIP)
TON-THAT: So that's the photo of you.
O'SULLIVAN (on camera): So this is a photo of me from cnn.com. Wow. We're starting to see pictures of me that are not from that original image. This
is from medium --
(END VIDEO CLIP)
O'SULLIVAN (voice-over): Tech giants aren't happy about this. They say it violates their terms of service and have sent cease-and-desist letters.
(BEGIN VIDEO CLIP)
O'SULLIVAN (on camera): This AI technology is looking at what? It's looking at --
TON-THAT: The unique features, so it learns to ignore things a little bit like the beard and focus on the features that stay the same across
different age.
O'SULLIVAN: Do you understand why people find this creepy?
TON-THAT: I can understand people having concerns around privacy. So the first part to remember, it's only publicly available information. We're not
just making technology for its own sake. The reason and the purpose we found is to really help law enforcement solve crimes.
GURBIR SINGH GREWAL, NEW JERSEY ATTORNEY GENERAL: I was deeply disturbed. I was concerned about how Clearview had amassed its database of images. I
was concerned about its data privacy and I was concerned that it was tracking law enforcement searches.
O'SULLIVAN: Are you concerned about taking a tool as powerful as that out of the hands of law enforcement?
GREWAL: A facial recognition can be used properly if we understand how the database is created.
(END VIDEO CLIP)
O'SULLIVAN (voice-over): Clearview claims its app is 99 percent accurate, a claim that CNN hasn't verified.
(BEGIN VIDEO CLIP)
O'SULLIVAN (on camera): So you think this is an area that should be regulated?
TON-THAT: Yes, absolutely. I don't think regulation is a bad thing. And we want to work with the government to create something that is safe and
understandable and keeps the whole public at ease.
(END VIDEOTAPE)
CHATTERLEY: And Donie O'Sullivan joins us now. Great job with this, Donie. I find it quite terrifying. It's not just the images, it allows someone to
just take a picture of someone and find them on the internet and build a far more broad profile of them surely than just images.
It's far more information, whatever's out there, quite frankly.
O'SULLIVAN: Yeah, I mean, I think what we find most spooky about that where they were able to, you know, find this photo of me from when I was a
teenager.
Also my producer, she ran her face through the database, and it found an image from her Instagram account, even though her Instagram account has
been private for almost a year, basically, Clearview when in and downloaded all her photos before she made the account private.
So we find that pretty spooky, but for law enforcement, that is, I guess, the appeal of this tool that they can -- there isn't a government database
like this that we know of.
So when this private company has built this, and we can, you know, find faces from Instagram and Facebook and Twitter and YouTube and everywhere
else -- that is something that's really powerful for them.
But, you know, I think what's most interesting about this company and as I was speaking to its founder, was you know, a lot of what they're doing
sounds wrong, and it seems like something you should say, oh, is that illegal? But there really isn't a lot of laws in this space.
So I think what we're going to see with this company is that it could be a sort of precedent setting company that could help define the laws through
the courts of how facial recognition and artificial intelligence is used in the 21st Century -- Julia.
[09:50:03]
CHATTERLEY: Yes, I mean, they'd certainly want to try and shape and craft regulation to avoid being over regulated here, but they're open to that. I
mean, that was part of the conversation that you were having there. Even they understand this is something pretty powerful.
O'SULLIVAN: Yes. And what's also interesting is, you know, in the past few weeks since "The New York Times" first uncovered this company, is that we
have the likes of Facebook, and LinkedIn, and Twitter and Google and YouTube, all sending cease and desist letters saying, you guys have to stop
taking our -- taking photos from our platforms.
But it's not -- you know, it's not clear that they really -- that Clearview would have to actually comply with those based on some court cases here in
the U.S., and also it's, you know, it's a little bit like, I guess, shutting the barn door after the horse has bolted.
You know, we've seen how much data he's already got, and it's almost impossible for a company like Facebook to verify that you know, he's going
to delete it.
CHATTERLEY: Guys, be careful what you put out there. We've just got to be more careful with our own data. Donie O'Sullivan. Great job. Thank you for
joining us on that.
And you can see Donie's full report at cnn.com/business and I'll tweet it out as well. It's definitely six minutes well spent watching that.
All right, coming up on FIRST MOVE. "Parasite" claims victory in Hollywood. What a twist ending to the Oscars and the film apparently. I have not seen
it yet. What it means for the film industry? After this.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE and the winner is "Parasite," the South Korean film breaking the Oscars language barrier and becoming the
first non-English language film to win top prize at the Oscars.
Frank Pallotta joins us with all the details on this. I mean that's one of the astonishing things of the night as well and then compare and contrast,
I think what happened with the streamers, Netflix specifically and "The Irishman." Plenty to discuss on this Oscars' night. Talk us through it.
FRANK PALLOTTA, CNN MEDIA REPORTER: Yes, it was really a tale of two Oscars. You had the tale about "Parasite." It was the first foreign film to
win in the history of the Oscars win Best Picture, I should say. And it was just a big, big deal.
I mean, most people thought that "1917" was going to be the big winner of the night, but "Parasite" took some of the major categories including Best
Picture and Best Director.
Now on the other side of that, the other big narrative out of last night is Netflix really didn't take home much. Netflix took home Best Documentary
for "American Factory" and Best Supporting Actress for Laura Dern in "Marriage Story," but when you think about the reports out there that
Netflix spent upwards at of least $70 million on Oscar campaign and went home nearly empty handed.
So not a great night for them, but a great night for "Parasite."
CHATTERLEY: Yes, I mean, I read some report saying $100 million worth of spending and the average film studio spends what? Between $5 million to $20
million. What do you think Martin Scorsese, you had that battle over where to release this thinks in light of what happened last night? Would it have
made any difference?
PALLOTTA: I really don't know. It's really interesting to think about though. It's one of these major debates that the industry is going to have
to think about going forward.
[09:55:08]
PALLOTTA: Was there a backlash to Netflix last night? It seems like there was. I mean, "The Irishman" was a well acclaimed movie, so was "Marriage
Story." They had other great films like "Klaus" the animated film and "American Factory," that also won.
But when you think about it, like you know you had "The Two Popes." You had "My name is Dolomite," which didn't get nominated. Maybe the Academy is
having this kind of like allergic reaction to Netflix, and maybe an olive branch would be more theatrical releases. We'll have to see.
CHATTERLEY: I've not seen "Parasite." I watched "1917" you know, and I thought it was phenomenal. So "Parasite" has got a lot to live up to.
Great to have you with us, Frank. Thank you so much for that.
That just about wraps up the show. I'm Julia Chatterley. You've been watching FIRST MOVE, time go make yours. See you in a couple of hours at
"THE EXPRESS."
(COMMERCIAL BREAK)
[10:00:00]
END
