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First Move with Julia Chatterley
China Sees Drop In New Coronavirus Infections; SoftBank Profits Plunge As WeWork And Uber Investments Weigh; Samsung Hopes Consumers And Investors Flip Out Over Its New Phone. Aired 9-10a ET
Aired February 12, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:01]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
Slowing down. China sees a drop in new coronavirus infections.
Vision mixed. SoftBank profits plunging 99 percent as WeWork and Uber investments weigh.
And fixing the fold. Samsung hopes consumers and investors flip out over its new phone.
It's Wednesday. Let's make a move.
A warm welcome once again to our FIRST MOVErs all around the globe. Great to be with you.
New Hampshire Democrats are feeling the burn today from Bernie and Buttigieg and I have to say Wall Street bulls are pretty fired up, too. Let
me walk you through what's been happening.
U.S. futures solidly higher once again, as you can see after the S&P and the NASDAQ closed at fresh record highs yesterday. The Dow, the relative
underperformer, the Boeing burden continues. No orders last month and tech regulation fears I think are taking some of the heat out of Microsoft
yesterday, too.
Meanwhile, stocks in Europe also hitting record highs. Asia also had a good session, too. The Shanghai Composite advancing for the fifth straight
session. Asian stocks had a good session, too.
India as you can see, up from eight tenths of one percent. Thailand up one percent. Investors it seems willing to rely on Central Bank stimulus to
offset any broader coronavirus and growth risks here.
Well, that was the message from Fed Chair, Jay Powell. He said the Fed stands ready to act if the virus endangers the U.S. expansion. Don't need
to do anything, he says just yet. Back on Capitol Hill today for more testimony. So we will be watching that -- soothing words though from
Central Banks clearly helping the mood in the bond markets, too.
Take a look at the U.S. 10-year yields, back up over 1.6 percent today bouncing off those five-month lows and the other big safe haven play, the
U.S. dollar sitting near four-month highs.
The economic bulls will be closely watching this dollar strength of course, could pressure profits for U.S. multinationals in next earnings season.
All right, let's get to the drivers. China reporting its lowest number of new coronavirus cases since January on Wednesday. The count still rising
though: 1,100 deaths and 45,000 infections have been confirmed.
Thousands of people remain stranded on cruise ships. Cases aboard the Diamond Princess in Tokyo continue to multiply, too. Another cruise ship
carrying some 2,000 people has been turned away from four different ports.
David Culver joins me from Beijing, David, early days at this stage, but the suggestion it seems that we are seeing a degree of light at the end of
the tunnel, how confident can we be at this stage, if at all?
DAVID CULVER, CNN CORRESPONDENT: With all of these numbers, Julia, we always have to consider the source. I mean, this is the Chinese government
putting out this data. And that's really all we have to rely on here.
And they are certainly, here in state media, focusing heavily on these recent drops in the total number of reported cases. It's something that
they deem as reflective of effectiveness for this containment effort, which in some cases, is a rather extreme containment effort that many folks are
still living amidst the lockdown zones, tens of millions of people, in fact.
But the thing that we're going to be really looking forward to is this, really starting again of businesses, if you will, and that's going to be
February 8th, where we're going to see tens of millions, rather 160 million is what they're projecting, who are going to be coming back to the major
cities like Beijing, like Shanghai, and they're going to be getting back to work.
But Julia, what does that mean? It means people are going to be once again congregating in masses, so as to travel back to these major cities.
So that in of itself is a concern from a medical standpoint for exposure. But it's also not necessarily indicative that business is just going to
resume as normal.
In fact, we know that even for some migrant workers, they don't even have jobs in some cases to come back to. And that's because if you look at, for
example, one case, a family worked for an expat family, they evacuated.
So they simply have nothing to step back into and that is actually indicative of several different scenarios that we have heard from many
migrant workers.
But all in all, it's going to be interesting to see if consumer confidence boost over the next week or so as well. That's something that's lagged here
for obvious reasons. And quite frankly, folks still really aren't leaving their homes all that much.
I will say, you know, anecdotally driving even into work, you see more and more people with each passing day, but still not the crowds that you
normally see here in Beijing -- Julia.
CHATTERLEY: Yes, it was interesting, I saw two different stories in the last several hours, one jd.com, the e-commerce giant saying that they're
going to hire thousands of people to try and offset some of the impact here, which I think was an important thing.
But also that the Formula One that was going to be held has now been canceled and that pushes us into April, just to give you a sense of the
cautiousness that's being still applied here.
When we're talking effectively two months out here with the idea of pulling masses of people together for a big event. There's still, to your point, a
high degree of cautiousness at this stage and efforts to mitigate it going on.
[09:05:29]
CULVER: I think you're absolutely right. And part of that as well is looking at how the airlines have handled this. I mean, some of these
airlines have gone to your point, into April.
So to say there's a light at the end of the tunnel -- that is certainly with Chinese state media wants to portray in many ways and perhaps they're
right when it comes to this peak that's projected to be by one leading epidemiologist here in the next 10 days or so.
But there's also the reality of restarting everything and getting factories back to production and that's going to take time, weeks if not months.
CHATTERLEY: Yes, David Culver. Great to have you with us, as always. Thank you so much for that.
To our next driver now. SoftBank profits virtually wiped out, big losses from its massive tech fund dragged third quarter profits down by some 99
percent compared to the same quarter last year.
Sherrise Pham is in Hong Kong for us on this story. Sherrise, great to see you with us. I mean, I mentioned it at the top of the show, WeWork
incredibly painful in this quarter; Uber, the papal losses for both of these things impacting, but it was a tale of two halves of course because
Sprint in the last 24 hours, a good thing for SoftBank and their investment.
So talk us through the details here because it's complicated.
SHERISSE PHAM, CNN BUSINESS REPORTER: Yes, day of contrast for SoftBank here, right? On the one hand, we've got their share price, climbing to a
six-month high, closing up nearly 12 percent in Tokyo today on the back of that really positive news that the Sprint-T-Mobile merger is going to go
through, a merger by the way that Masayoshi Son has been trying to engineer for years. That's a big albatross off of his neck.
But of course now, he is dealing with the massive losses from the Vision Fund which continue to plague SoftBank's earnings.
Vision Fund reported $2 billion in operating losses. That was enough to completely wipe out the operating profit that was brought in by SoftBank's
telecom carrier unit.
So really, not a good sign for Masa Son and he was saying, look, the Uber losses and the WeWork losses are still painful and for the first time
today, he also acknowledged reports and admitted that these recent losses to the Vision Fund are going to have effect on his next mega tech fund.
Have a listen.
(BEGIN VIDEO CLIP)
MASAYOSHI SON, CEO, SOFTBANK (through translator): The WeWork challenges and Uber challenges for example, our share prices went down since IPO of
Uber for example.
Due to those unexpected events, we have cast a concern amongst potential investors for SoftBank Vision Fund 2.
(END VIDEO CLIP)
PHAM: Unexpected events he called it there. I think some analysts would disagree with him on that and that a lot of people were foreseeing that
WeWork was a troubled company, before SoftBank was pumping billions of dollars into it and driving the valuation of that company sky high.
And so what was he talking about there, though? The Vision Fund 2 now in danger of losing some of those potential investors.
Let's remind folks of who some of those potential investors were. There were some big names. They included Microsoft, iPhone builder Foxconn
Technology, Apple itself, as well as Standard Chartered.
We reached out to all of those companies, most either declined to comment or they did not respond to a comment. But Masa Son coming out himself and
saying these guys are rethinking their investment because the Vision Fund performance has spooked them and made them very, very concerned about the
performance of his company and his fund -- Julia.
CHATTERLEY: Yes, I mean, it makes sense. It makes perfect sense to me. I mean, even just the Sprint, the idea of what was achieved in the last 24
hours and there is a dichotomy of the disappointing investments, and this was one of those, let's be clear,.
But that the shift, I believe, $44 billion off the balance sheet, so that at least in the short term is helpful, but to your point about the
complications of trying to raise another fund here and perhaps some pressure here from investors.
Elliott Management, the activist investment, openly building up a stake in SoftBank here, perhaps, to push for change here and some reassessment of
how the Vision Fund and how SoftBank decides to make these kind of investments.
What do we think of that and what do we think SoftBank ultimately thinks of that?
PHAM: Son did address that today. He kind of alluded to it in the earnings presentation, but then he was directly asked about it in the Q&A, which is
always the spicier part of these presentations, I will say.
And he said, look, I agree with Elliot Management that our shares are grossly undervalued and he said that he met with Elliot Management about
two weeks ago and they're on the same page regarding a couple of things. That includes a buyback and also increased transparency.
At the moment, SoftBank's Board only has two independent directors. He says he agrees with Elliot that they need more independent directors, and they
already were having talks with people and are going to announce candidates very soon.
But one place where there seems to be a little bit of friction is also what kind of a buyback, how big it will be and the timing of it.
I believe, the reported buyback that Elliot is pushing for is somewhere between $10 billion and $20 billion. It seems really unlikely that SoftBank
is going to want to initiate that kind of a buyback at that level especially considering how much trouble he's having now trying to fund
Vision Fund 2.
So it will be a little bit of a wait and see, but we are in for more of a long ride with this one -- Julia.
CHATTERLEY: I think we can call that a clash of the titans, quite frankly. It's going to be an interesting one to watch.
Just a quick point on this, Bernstein is saying that even with all the losses that we've seen from SoftBank, it's deeply undervalued.
The Vision Fund generated a rate of return of 24 percent through September of 2019. So, that's going to be an interesting point, perhaps for SoftBank
and those guys to make. Sherrise Pham, thank you for joining us.
PHAM: Indeed. Thank you.
CHATTERLEY: Always a pleasure. Let's move on. Senator Bernie Sanders winning the New Hampshire Primary after narrowly beating former Mayor Pete
Buttigieg.
Senator Amy Klobuchar, though came in third after strong debate performances. Former Vice President Joe Biden ended up finishing in fifth
place. He left for South Carolina even before the polls closed in New Hampshire.
Meanwhile, entrepreneur, Andrew Yang is ending his presidential campaign. Wow. What a night. Jessica Dean is live in Manchester, New Hampshire with
all the details on this. Jessica, give us your views here because for some, it's about Bernie's relative win, it's the rise of Pete Buttigieg. But also
Amy Klobuchar just in the last few days, too. Lots to discuss.
JESSICA DEAN, CNN CORRESPONDENT: Yes, there's a lot of news coming out of New Hampshire this morning. I think you start with Bernie Sanders who
secured that victory last night. His campaign very pleased with that, of course. He is a neighboring senator.
So there was some pressure on him to perform here. He you won it so soundly back in 2016, when he was running against Secretary Clinton at the time, so
his campaign very pleased with that.
Pete Buttigieg, a mayor of a small town in the middle of the country, who no one had really heard of what -- a year ago -- really almost, you know, a
very close second place there, and really is going to propel both of them forward into this next phase of the campaign, where we really build out
into more diverse states.
And then, as you mentioned, Amy Klobuchar, of course, maybe the biggest surprise of the night that she finished so strongly here in New Hampshire.
It was something that they were able to build on from Iowa and then into New Hampshire.
But you know, even her campaign, I think, was surprised at just how strong of a finish she had. We had some exit polling that CNN performed here
showing just a high number of people who made their decision late in the game from that debate that happened last Friday until you know, where they
went to vote yesterday.
So really in a concentrated amount of time, and that Amy Klobuchar was really able to benefit from that.
So what happens now, we move into Nevada. We move into South Carolina. We move into Super Tuesday -- all, you know, more diverse states, which Joe
Biden's campaign is very, very excited about. They're ready for him.
Do they think that he can flex some muscle with more diverse populations like African-Americans support, Hispanic support, but as we move into
Nevada, what's going to be an interesting thing to watch, healthcare of course has been a huge issue in this primary and the discussion between
what is the best way forward to better the healthcare system?
What is going to be interesting is the unions out there and how they see -- they're very powerful -- how do they see healthcare?
And one of the most powerful unions out there, the culinary union has been circulating a flyer pointing out specifically Bernie Sanders and his
Medicare-for-All policy saying that's not good for union workers, because union workers have fought so hard to get that healthcare in place and they
say that that will be taking it away.
So there's going to be -- expect to hear a lot of discussion about that, especially from Pete Buttigieg, whose Medicare-for-All who want it, which
is more of a public option. And then Bernie Sanders, of course on the other side, which is this massive overhaul of the healthcare system Medicare-for-
All -- Julia.
CHATTERLEY: Yes, the fight for broader appeal here. Jessica Dean, great to have you with us. Thank you for that.
All right. Coming up after the break, Samsung adds a flip phone to its foldable range, bending over backwards to make them more durable.
Plus --
(BEGIN VIDEO CLIP)
ANDREW YANG (D), FORMER PRESIDENTIAL CANDIDATE: I am the math guy and it is clear tonight from the numbers that we are not going to win this race.
(END VIDEO CLIP)
CHATTERLEY: The breakup of the Yang Gang -- what went wrong for this businessman's pitch for the presidency? Stay with us. We're back after
this.
(COMMERCIAL BREAK)
[09:18:14]
CHATTERLEY: Welcome back to FIRST MOVE. We are still looking at like seeing a solidly higher open for U.S. stocks this morning as we count down
to the start of the trading day on Wall Street. All the major averages look set to make fresh records this morning.
We are higher by a half a percent as you can see premarket; that of course despite the coronavirus freeze. February is turning out to be the best
month on Wall Street since June of last year. All the major averages are up some three percent or more for the month so far.
Big tech also in focus once again. Shares of Microsoft and Facebook falling over two percent Tuesday on reports that the U.S. is ramping up its
antitrust investigation of some of these major tech firms.
Meanwhile, ratings agency Fitch warns that while we know the coronavirus will slow China's growth, the scale of the impact won't be clear for some
time yet.
Brian Coulton is Chief Economist at Fitch Ratings and joins us now. Brian, great to have you with us.
The interesting thing here is you are looking potentially and seeing an outright decline in China's real GDP for the first quarter of 2020, and
we're talking on a quarter on quarter basis. I mean, that's unprecedented.
BRIAN COULTON, CHIEF ECONOMIST, FITCH RATINGS: We've got data going back to the early 90s in China for sequential GDP growth and we can't find our
negative numbers.
So this is really kind of uncharted waters -- uncharted waters for the world economy. You know, we've always been talking about a slow growth
scenario in China, but actually, the Chinese economy is shrinking even for one quarter is going to be a really big deal for the rest of the world.
CHATTERLEY: What does that mean on an economic basis, but also on a psychological basis to your point, fine, you know, we've only got data back
going 40 years or so -- modern Chinese economic history, but the impact of that I don't think we can underestimate.
[09:20:10]
COULTON: There's been a complete transformation in the impact of China on the world economy since the SARS outbreak in 2003. China's GDP is now
something like 18 percent of the global total, up from five percent back then, it's now 50 percent of metals demand, huge share of global auto
demand, 25 percent of the global auto market. And it's been accounted for a third of global growth.
So, you know, any given shock to China is going to have a much bigger impact than we had back then, and what we saw over the last 18 months, two
years in the world economy, China slowed down because they were focusing on deleveraging or derisking the financial sector that had a really big
fallout on global growth, particularly in the Eurozone.
So this is going to matter. You know, we used to say when I first started working on the world economy, when the U.S. sneezes, the rest of the world
catches a cold and it's a bit of an unfortunate simile.
But you know, that's the case now for China. It really is having a huge impact on everything else.
CHATTERLEY: But you're talking at this stage a worst case scenario for Chinese GDP in 2020 of just above five percent. You know, we often joke
about the structural setup in China that they can kind of decide what the GDP number is going to be at the beginning of the year.
So what does that mean, that five percent or 5.2 percent in terms of your assessment actually mean in practice here for China, because the automatic
assumption here is they will be stimulating like crazy to support the economy.
COULTON: I mean, that scenario assumes that the panic and the disruption goes on right through March. And you know, there's been some better numbers
in recent days that you know, the number of new cases has slowed down. So maybe that's a bit of a harsh assumption.
But if we do get disruption right the way through to March into the second quarter, then we could be looking at year-on-year growth in Q1 close to
three percent.
Now three percent is a sort of number that we've all been looking at when we've been trying to assess the impact of a hard landing in China.
So I think that number would really generate a very strong response from the government in terms of easing fiscal policy, trying to boost
infrastructure.
So we would get a very sharp bounce back in the second half of the year, and that's why I think we'd still probably be looking at numbers around
five percent or slightly above, even in that worst case scenario.
So I don't think it's a question of massaging the numbers, I think it's a question of them, three percent will be well outside their comfort zone,
and they would not want the economy to grow that slowly. So they would really push the accelerator in terms of trying to get growth back up in the
second half of the year. And I think they have got the levers to achieve that.
CHATTERLEY: That's such a great point. It's the comfort level with the numbers and the economic output that we're seeing here.
I do want to ask you about your decision at the back end of last year to lower the rating and the outlook on Hong Kong in particular. The
authorities there said your assessment of the situation was incorrect.
You were concerned about the institutional set up, the rule of law, the impact that potentially could have on the business community.
In reflection, do you remain happy with the rating and the outlook that you have in Hong Kong or has anything changed? Because we haven't seen
businesses shifting out to the region. They still look at it as an opportunity and a conduit in and out of China.
COULTON: We never said that it would affect Hong Kong in that sort of way. It was about the linkage between Hong Kong and China becoming much stronger
over time, and so the gap between the two ratings was looking stretched.
We have seen the Hong Kong economy already into recession because of the impacts of the social unrest on the economy. And now this China shock is
going to make things worse.
So in terms of the macro economic situation, though, it's really looking quite soft for Hong Kong at the moment.
CHATTERLEY: Brian, fantastic to have your insight. Brian Coulton, Chief Economist at Fitch Ratings. Thank you for that.
Now, one of China's biggest e-commerce firms is taking on workers who have been laid off because of the coronavirus.
As I mentioned earlier on the show, jd.com says it is opening up 20,000 new positions mainly for warehouse workers, couriers and drivers. Now, some of
the jobs are temporary, but online shopping has seen a boom as people in medical quarantine order goods from home.
All right, let's turn our attention now to South Korea where Samsung is having another go at making a foldable smartphone, it's called the Galaxy Z
Flip and it folds into a square.
Its first folding phone, the Galaxy Fold came out last year, if you remember, but early reviewers said it didn't work so well and it broke
easily.
Samantha Kelly has one of the new phones. She has actually tried it out. This is very exciting. Sam, what do we think of this phone? Have they
managed to get away from that awkward history with their first attempt?
SAMANTHA KELLY, CNN BUSINESS EDITOR: Right. So yesterday was a big day for the company out in San Francisco where it announced its new S20 flagship
smartphones.
But to your point, everybody is talking about the Z Flip phone. So we have one here, it comes out tomorrow in stores.
And basically it's much smaller than the first version, which kind of opened like a book. This is a clamshell design here, totally new design,
new hinge which was one of the big problems that we saw with the first version with them breaking and the screen flickering.
Now we've only had this for a little bit, so we can't really test the battery and how well the hinge will hold up.
But I really like the new design. It's much sturdier and what I really like is there's so many big smartphones these days. Everything is big.
But this is definitely a throwback to the original flip phones that we saw years and years ago where it's smaller, so it's much easier to throw into a
bag.
There's also a small display on the front, too, so you can get running notifications. But what I really like too, is you know, we're so used to
having a smartphone, flash notifications and glow when we get something in, and this is sort of a way to kind of close that.
So we'll see whether or not how this stacks up in reviews, but it's certainly a nice form factor here.
CHATTERLEY: And $600.00 cheaper than the Galaxy Fold as well. So I am sure people will like that.
KELLY: Oh my goodness.
CHATTERLEY: It's going to be interesting to see. Samantha Kelly, great to have you with us. Thank you so much for that assessment of the phone
available tomorrow.
KELLY: Thank you.
CHATTERLEY: Thank you so much for that. All right, we're counting down to the market open. We are set to see fresh record highs for the Dow, the
NASDAQ and the S&P 500 as you can see. We're adding to the gains we were seeing just 15 minutes ago.
The market open is next and it looks like we're going to go. Stay with us. You're first FIRST MOVE.
(COMMERCIAL BREAK)
[09:30:00]
CHATTERLEY: Welcome back to FIRST MOVE live from New York. That was the opening bell over at the New York Stock Exchange and U.S. stocks are in
rally mode this morning.
The S&P and the NASDAQ as we anticipated making fresh all-time highs early on in the session here. The Dow also on track for a record close.
Traders will be monitoring Fed Chair Jay Powell's testimony on Capitol Hill. Of course, he spoke yesterday saying that the Fed would take action
if the impact of the coronavirus threatens U.S. growth going forward.
In the meantime, take a look at what's going on in energy prices. Oil strengthening for a second straight day, significantly actually. A bounce
back here.
China has reported its lowest daily number of fresh coronavirus cases since January and we saw OPEC today drastically cutting its outlook for oil
demand in 2020.
Now, you'd expect that to have the reverse reaction in the oil markets, but I have to say, I think that's pretty much baked into the price right now,
of course. Just two days ago, oil was trading at one-year lows.
What about a look now at our Global Movers. Shares of Shopify rallying to all-time highs. The Canadian e-commerce company reporting stronger than
expected Q4 earnings. It's also raising its 2020 outlook as you can see, up some 17 percent, just shy of -- Shopify there.
Bed, Bath & Beyond shares tumbling. The popular home furnishing retailer warning that sales slowed by a greater than expected rate in December and
January Wow. Down some 26 percent.
Lyft shares also under pressure, down more than six and a half percent. Uber's ride sharing rival says revenue topped $1 billion for the first time
in Q4. But Lyft says it won't be profitable until 2021. That's around a year later than Uber says they can get there.
Uber shares as you can see, little changed in the session.
All right, let's leave the ride hailing race behind and go on to a fresh race here and we're talking about the race to the White House.
Senator Bernie Sanders scoring a victory in Tuesday's primary in New Hampshire narrowly holding off a challenge from Pete Buttigieg.
(BEGIN VIDEO CLIP)
SEN. BERNIE SANDERS (I-VT), PRESIDENTIAL CANDIDATE: Our campaign is not just about beating Trump, it is about transforming this country.
[CHEERING]
SANDERS: It is about having the courage to take on Wall Street, the insurance companies, the drug companies, the fossil fuel industry, the
military industrial complex.
(END VIDEO CLIP)
CHATTERLEY: It was a bad night for Elizabeth Warren and former Vice President Joe Biden, too.
CNN Senior Political Analyst, David Gergen joins us now. David, fantastic to have you with us on the show. We can talk about Bernie Sanders and the
implications of what we saw in that vote last night.
But I do want to talk about the stunning demise, it seems of Joe Biden and the support that he is getting. He predicted that he would lose here and
he'd already moved on. Are we looking at the end game here for Joe Biden?
DAVID GERGEN, CNN SENIOR POLITICAL ANALYST: Thank you, Julia, for inviting me on. I do think he's in deep, deep trouble now. And the most important
story of the campaign so far has been the near collapse of Joe Biden.
He was the front runner everyone counted on him to take the fight to Trump. He's finished fourth in Iowa and fifth in New Hampshire.
You know, I wonder, I must tell you, you know, the Trump folks were going after him and Ukraine, they wanted to smear him. I wonder whether the
controversies over his son and over his own personal relationship with things in Ukraine wound up weakening him as a candidate in this race.
Whether, in fact the Trump people got what they wanted after all. So we'll have to wait and see.
I would tell you as well, Julia that it's also true that Joe Biden is not campaigning for the Presidency. It has not been his forte. This is his
third time seeking the presidency. He has yet to win a primary or a caucus.
CHATTERLEY: You know, it's interesting what it does do therefore is potentially open up the center ground. I mean, we saw voters going for Pete
Buttigieg here. Amy Klobuchar's rise even just since the debate that we saw last week has been quite fascinating hereto.
But then, of course, you've got the wild card here, which is Mike Bloomberg. What do we think here and what do we think is acceptable to the
party? And we'll leave Bernie Sanders out of it for a second and we'll come back to that.
GERGEN: Well, I do think that Bernie Sanders has become the front runner. But uneasy rest of the crown. He after all, again four years ago when he
won New Hampshire against Hillary Clinton. He won it massively. He won by 20 points.
[09:35:10]
GERGEN: This time, he won by two points and the turnout was not particularly good. But very importantly, as you said, the departure of
Biden has opened up this moderate lane and what was interesting last night is, if you add up all the people who voted for say the progressive far left
candidates versus those who voted for the moderate left candidates.
The moderate left drew the most votes by about 52 percent of voters went for the more moderate candidates, and about 36 percent of the voters went
for the far right or far left, I'm sorry, progressives.
So that explains why there is this open invitation -- maybe not an invitation but why Mike Bloomberg is gaining strength.
He is a person, of course with enormous ability here. Here in New York, he was elected to Mayor three times, and he has formidable strengths,
including his resources. And very, very interestingly, a poll last week showed that in head on heads among the Democrats who are now still in the
race against Trump, Mike Bloomberg has the biggest lead against Trump. It is a nine-point lead according to a Quinnipiac poll.
That quite -- it took me aback because I didn't think he'd come that far that fast.
CHATTERLEY: You know, it's interesting, you know, CNN's polling shows that by and large, Democrats here are saying, look, we do ultimately want
someone that can take the fight to Donald Trump here, that can beat Donald Trump rather than necessarily somebody who we agree with all their
policies.
I just want to pull in what Elizabeth Warren said in congratulation for the win here for Bernie Sanders and the sort of dig that was implied. Just
listen to this for a second.
(BEGIN VIDEO CLIP)
SEN. ELIZABETH WARREN (D-MA), PRESIDENTIAL CANDIDATE If we're going to beat Donald Trump in November, we are going to need huge turnout within our
party and to get that turnout, we will need a nominee that the broadest coalition of our party feels like they can get behind.
[CHEERING]
(END VIDEO CLIP)
CHATTERLEY: And this for me is the question about Bernie Sanders here. Yes, he got 25 percent, but it is what -- only a quarter of the votes here
and how does that support translate on a more national level for voters? For the Democratic Party themselves?
The views that others that have worked with him in D.C. and say, this is not a person that unites, in fact, he's not achieved much since his time in
Washington. It's been a long while. What do we think of this guy's popularity on a nation basis?
GERGEN: On paper, you would think that if Bernie Sanders wins a few more, he would be a front runner and be almost impossible to stop.
But as you suggested, Julia, the pros in the Democratic Party are frightened of a Bernie Sanders candidacy. He is an avowed socialist, and
America has a long history of opposing socialism being much less, you know, going all the way back to the 1920s.
We've been much less receptive to a socialist. We never had a socialist party in the United States. You look across Western Europe, and most of the
countries there have had socialist parties, still have socialist parties. But that's been a never to the United States.
So, when you take the long view, it's just hard to imagine Bernie Sanders emerging as the nominee, but he is on a better track than he has ever been
before.
CHATTERLEY: So that's a title he can take at this stage, the most popular socialist in America, quite what he can do with that remains to be seen.
GERGEN: Yes.
CHATTERLEY: Thank you so much.
GERGEN: Stay tuned, Julia. Glad to see you this morning.
CHATTERLEY: Likewise, sir. Thank you. All right, we're going to take a quick break.
But up next, the Spotify of the Middle East. The co-founder of the music streaming app, Anghami will be here. He says he welcomes competition from
Western rivals. Stay with us. We're back after this.
(COMMERCIAL BREAK)
[09:42:01]
CHATTERLEY: Welcome back to FIRST MOVE. Meet the Spotify of the Middle East. Dubai-based Anghami is the leading music streaming app in the Middle
East and North Africa. It boasts 73 million users, a library of 31 million songs and a billion streams a month.
Now Bloomberg reports the company is considering a sale which could value it up to $400 million. I'm joined now by Elie Habib, he is Anghami's
founder.
Elie, fantastic to have you on the show. You've revolutionized digitized music consumption in the Middle East and North Africa. Talk to me about
what your company ultimately is doing? How it works and why you're not worried by some of the big competition that's now looking at the region?
ELIE HABIB, FOUNDER, ANGHAMI: Hello, Julia. Thank you for having me. Basically, you know, we had the dream, roughly eight years ago, that you
know, the region has no legal streaming service.
I mean, we have absolutely no legal anything in terms of, you know, IP rights, whether it's books or movies or music. We thought that we, you
know, locals could come up with an idea, you know, come up with a concept of streaming music in the region and get people to buy into that.
And you know, we had not that big of a dream in terms of numbers. We thought we're going to get, like maybe 300,000 users in the first year. And
we eventually got a million in the first three months and after that, we realized we're onto something. And we kept growing.
Right now, looking at that, yes, we are growing where 2019 was our biggest year on records and you know, way more than what I could have expected.
Hopefully, it validated the idea that when competition comes in, if you're properly armed, not just a local brand, because local helps, but if you
have a good product and the local brands and local knowhow, understanding of what your users want, you can keep growing.
So yes, I'm not worried. I'm happy that there's competition because after all, competition breeds more creativity on our end.
And right now we're not exactly the same product like others in the region. But we're fighting to make sure that we remain the number one by far like
we did in 2019.
CHATTERLEY: What differentiates you? Because you do have a mix of local artists, of international artists? What kind of demand that you see for a
mix of those products? And to your point, you say we're not exactly the same. Why aren't you? What are you doing differently?
HABIB: We started -- you know, when we started there was like no book to follow, right? For us, we understand that the user to actually to listen to
music, to eventually get to pay to music need to believe in something. They need to believe that what it can do, the platform interacts with him in a
way that would make sense for a user to pay.
[09:45:07]
HABIB: And we need to find ways that the user would pay without it being a credit card commitment.
People in the Middle East notoriously don't use credit cards online. You know, the biggest platforms like Amazon has I think 60 percent cash on
delivery. In our case, you know, cash on delivery wouldn't work in the streaming world.
So one, we made sure that we're actually integrated with all the telcos in the Middle East. We currently integrate with 36 telcos, that's not exactly
all, but that's most of what matters, right? Over 85 percent of active people in the in the region can subscribe via mobile operator on Anghami,
which is kind of unique to everybody.
We provide, moreover, we don't just do Arabic, you know, or international, the people in the region listen to a mixture of both.
You would want to listen to Fairouz in the morning, and maybe some Britney Spears later when it's night, that's normal.
I mean, that's the kind of weird combination, but I've seen way worse than that, honestly. So we understand the user DNA, the user taste, and that
took us many billions of streams for us to understand that and that's the differentiation that will require a lot of other competitors to take, you
know, many years to actually get to the sense of understanding the users.
But for Anghami, we differentiate ourselves by our product. Our product is actually uniquely social, which is, you know, no other product has the
features of Anghami in terms of social because we think that music streaming the way it was invented, originally, it was started from, you
know, back from the Walkman and eventually to the iPod and all of -- and then eventually to Pandora and Spotify stopped over there.
We think that consumption in the music have to be different.
CHATTERLEY: Elie, I am going to interrupt you. Forgive me for interrupting you, Elie, because I don't want to run out of time without asking you, but
I love the point that you make about payments, because that was going to be one of my key questions is how do people pay when actually credit card
penetration is so low? So I do think that's important.
Talk to me about potentially selling. I mentioned in the introduction about whether you're open to be bought by somebody, one of these competitors. Do
you want to remain independent? Or are you having conversations and are you open to being bought at some price, at least?
HABIB: Yes, I mean, what's open for us is that we actually signed up JPMorgan to raise a fund, you know, to raise -- around funding. And since
doing that we've gone -- we've been approached by multiple parties who are interested to buy -- to carve some equity or to buy out the entire company.
We're contemplating that. We've not decided. What's for sure for me is that I'm very much interested on how Anghami heads in. I mean, we're not going
to sell out just to sell out. We want to actually make sure that Anghami keeps growing properly in the region.
And we're in a very comfortable place. We are one of the streaming services that are profitable. And that is kind of unique in the world of music
streaming. And why? Because we know how to spend our money and how to grow and how to invest.
We think 2020 is going to be very big. Whether we are going to sell, I can't answer that right now because we haven't decided, but whether we're
going to keep growing and doing more investments, for sure.
CHATTERLEY: Congratulations, Elie. Come back and talk to us soon. Fascinating. I've got plenty more questions for you. I can tell you. Elie
Habib there, co-founder of music streaming app, Anghami. Great to have you with us.
HABIB: Thank you. Thank you for having me.
CHATTERLEY: All right. Thank you. Still ahead, sharpening up the FAANGs. The FAANG stocks have been a fantastic way to track the growth in tech
investment. Here on FIRST MOVE, though we can keep -- it might be time to consider expanding this pretty exclusive club. Stay with us.
(COMMERCIAL BREAK)
[09:51:00]
CHATTERLEY: Welcome back. U.S. President Donald Trump praising some of the big U.S. tech companies at the White House yesterday. He says four in
particular are making corporate America great again.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: We have four trillion companies. One is Microsoft, one is Apple. One is Google, one is Amazon.
So you have Amazon, Google, Apple, and Microsoft. And so you have an M, you have an A, you have a G and you have an M. You have MAGA --
(END VIDEO CLIP)
CHATTERLEY: President Trump calls them the MAGA stocks. It's his variation on a group better known on Wall Street as the FAANGs. The FAANGs have been
Wall Street's shorthand for the hottest U.S. tech names for years.
But with new global titans gunning for growth, maybe the FAANGs have become a bit long in the tooth. So FIRST MOVE has a plan to make the FAANGs great
again.
(BEGIN VIDEO CLIP)
CHATTERLEY (voice over): It's the exclusive club that the tech world obsesses over -- the FAANGs. Facebook, Amazon, Netflix and Alphabet.
They've been members since 2013, then Apple joined the gang a few years later.
But with Tesla increasingly defined as more tech than tires, and Microsoft, a $1 trillion market cap Cloud colossus, maybe the FAANGs need a bit more
bite.
(BEGIN VIDEO CLIP)
DAN IVES, MANAGING DIRECTOR AND EQUITY RESEARCH ANALYST, WEDBUSH SECURITIES: The FAANGs continue to be the Mount Rushmore of tech. I think
right now, Tesla and Microsoft -- Microsoft being probably more front and center -- are the only two names that I could see in terms of expanding
that FAANG definition.
(END VIDEO CLIP)
CHATTERLEY (voice over): Perhaps a full throated FAANG overhaul is now in order.
Call them if you will, the FAANTAMs of Wall Street, all the original FAANGs plus the might of Musk and the riches of Redmond.
Facebook, Apple, Alphabet, Netflix, Tesla, Amazon and Microsoft, seven corporate bellwethers to better represent the tech titans of today.
The FAANTAMs might represent a strange new world for some, but perhaps one day, they'll get some tech world acclaim.
(END VIDEO CLIP)
CHATTERLEY: Paul La Monica joins me now. Look, Paul, that's my version of a mask. Little bit more high-end.
PAUL LA MONICA, CNN BUSINESS REPORTER: On behalf of all your viewers, Julia, I'm glad that you went with that Andrew Lloyd Webber and not "Cats."
CHATTERLEY: I'll leave that to my colleague, Richard Quest, of course, I think. Let me move on quickly.
Paul, what do you think? FAANTAMs and then then we'll talk President Trump.
LA MONICA: Yes, I mean, there is obviously more to this market momentum then those really large tech stocks that dominate the S&P 500. Actually,
the story earlier this week, calling them the S&P Five essentially when you look at the market cap concentration in that index.
But of course, Tesla and Netflix also are extremely popular right now. You could throw in some of the international companies like Alibaba and Tencent
as well, you know, that's why some people refer to the BATs in China -- Baidu, Alibaba and Tencent.
So we all know that Wall Street loves acronyms and so does President Trump, obviously. But one thing with Trump here that I find curious, he has often
taking potshots at these companies, particularly Amazon, the Jeff Bezos, "Washington Post," and now he's praising them for their market milestones,
because he is trying to make it about him and that he deserves the credit.
Not so sure about that, and remember, also, the F.T.C. is now looking at the acquisitions of all these companies. There's talk of potential
breakups, so it's just very strange.
CHATTERLEY: It is very strange. And this -- to the point though, it is the heart of innovation and success in corporate America and jobs are being
created. So there is a balance to find here. It's just clearly a little bit difficult at the moment perhaps.
[09:55:06]
LA MONICA: Yes, yes. Definitely. And obviously, I mean, we're going to see what happens with the Democrats with Bernie Sanders winning New Hampshire.
He hasn't been a big fan of large tech companies either.
And, you know, will these companies have to get broken up? Will there be more taxes? You know, well, we'll have to wait and see.
CHATTERLEY: Yes, I think my other observation, hey, would be MAGA perhaps stands for Make Alphabet Google Again, because we still -- we keep calling
it by the wrong name and --
LA MONICA: It's kind of like the coming to America joke. You know some people still call Muhammad Ali, Cassius Clay. I think most people still
call Alphabet, Google.
CHATTERLEY: Please. I know time. Time to call it Alphabet. Anyway, Paul La Monica, thank you so much for playing with us. We have to go.
That just about wraps up the show. I like FAANTAMs. You've been watching FIRST MOVE. Time to go make yours. We'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
