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First Move with Julia Chatterley
U.S. Features Indicating Another Steep Selloff This Friday; OPEC Awaiting Moscow's Decision On Oil Output Cuts, Prices Drop, Medical Supply Companies Raise Security Levels Amid Panic Buying. Aired 9-10a ET
Aired March 06, 2020 - 09:00 ET
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[09:00:17]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE and here is what you
need to know.
Jobs jump, stocks drop. U.S. features indicating another steep selloff this Friday.
Russia's response. OPEC awaiting Moscow's decision on oil output cuts, prices drop.
And all locked up. Medical supply companies raise security levels amid panic buying.
It's finally Friday. Let's make a move.
TGIF once again to all our FIRST MOVErs around the world. For some of you, it's almost over. We've still got a whole session to go here in the United
States.
There is some good news though. Let me bring it to you. The non-farm payrolls number this morning from the United States showing a blockbuster
273,000 jobs created last month versus just 175,000 expected. The unemployment rate falling, too.
The bad news is -- and I think futures are telling us this -- it is probably too soon to see any virus impact on jobs, so this data could
quickly be assumed backward-looking.
Futures this moment suggesting further steep losses as I've mentioned, adding to yesterday's three percent declines. It's been a rough day
globally for stocks.
Europe, down more than three percent. Asian markets also finishing down over two. It's tough to keep track here in the U.S., but for all the
gyrations, we are still net up over the past five sessions. A marked contrast of course to last week, the worst week for U.S. markets since the
financial crisis.
All we're doing right now is taking back the four and five percent gains from Monday and Wednesday this week. All the major averages though right
now lying in correction territory, so down more than 10 percent from the highs.
A different story in China and we'll be talking about this throughout the show. Stocks are up there over five percent this week, now virtually
unchanged for the year.
The Chinese Central Bank refraining actually from adding more stimulus this week. The Fed's half a point rate cut or half a percentage point taking
center stage and investors in the U.S. expecting more cuts.
We've got the U.S. 10-year sitting at 0.72 percent. The 10-year yield, an all-time low as that flight to safety in bonds continue. Incredible to see
the U.S. unemployment rate near 50 year-lows with 10-year bond yields at record lows, too. There's mixed messages there.
Let's get more on this from our drivers. Paul La Monica joins me now. Paul, whatever way you choose to look at it that was a whopping jobs number. But
for markets right now, the glass is half full and they're saying we're predicting the worst here and that jobs number was the final one that's
immune from the coronavirus.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think that is a great point. That's the right read, Julia. I mean, right now, today is March 6th. Wall
Street cares more about April 3rd because that's where we're going to get the March jobs numbers and that's when we might finally see some impact on
the labor market from the coronavirus.
The interesting thing here is that even though these numbers were really good, you still have no sign of inflation, wage growth back down at only
about three percent year-over-year, and I just took a look at Fed Fund Futures before coming on air here, the market is now predicting a nearly 60
percent chance of a three quarters of a point rate cut at this regularly scheduled March 18th meeting.
This is after the already urgency half point cut, they're now expecting another 75 basis points -- that is just stunning. And we're not going to be
very far from zero if that happens, and the Fed is not going to have that much more ammo to deal with this.
CHATTERLEY: Absolutely. We have to talk about fiscal policy versus monetary policy and what Central Banks are doing.
LA MONICA: I wrote about that today on CNN Business, yes.
CHATTERLEY: And I will tweet it out, too, so our viewers can take a look at it. But to your point here as well, at some point, we're going to be
asking, is this an overreaction?
We're looking through an incredibly strong jobs numbers, for all the concerns about the coronavirus outbreak and the impact it could have in the
future, the U.S. economy was on pretty solid footing, it seems going into this crisis and we shouldn't forget that.
LA MONICA: Yes, I think that is very important to remember, and I think the hope is that because the job market is still holding up very well, that
companies may not necessarily overreact and start cutting jobs in rapid fashion, unless the coronavirus concerns really start to escalate.
[09:05:01]
LA MONICA: And yes, we are hearing about more cases in many states and I think that's the reason why stock market futures are still tumbling despite
this jobs report.
But it is good news that if we start to see some deceleration in the U.S. economy because of the coronavirus, it's coming off of a good level right
now.
It's not like say, if this was happening in the depths of the 2008 financial crisis, where it would be an absolute economic disaster. This
could be something that's maybe a few months of, you know, of sluggishness for the economy, but we eventually get past it and move back forward.
CHATTERLEY: Yes, for now, though, investors aren't listening. So we're not focusing on the potential stimulus, whether it's Central Bank, or whether
it's fiscal and once again, we'll tweet out and present your article talking about that, because I do think this is critical, particularly at
this moment.
Paul La Monica, great to have you with us. Thank you.
All right to Vienna now where Russia's response to proposed oil output cuts is key, particularly if you look at the price action right now, oil prices
down four to four and a half percent on fears that OPEC players like Saudi Arabia will be denied.
John Defterios in Vienna. John, you and I were describing yesterday how everyone has a vested interest here to stabilize prices, including the
Russians. What on Earth happened in the last 24 hours?
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, I think it's the coronavirus meeting the geopolitics of oil. And there's a lot of drama
around right now, Julia, between Saudi Arabia and Russia in particular.
I spoke to a senior source via WhatsApp and said what's going on in there? How tough is it? He would only say very -- three different sources that are
in that negotiating room said basically they could not confirm whether Russia rejected the deal outright that's on the table from Saudi Arabia and
OPEC.
The Russian Minister Alexander Novak came in 20 minutes late with a very straight face and basically went into the meeting where Abdulaziz bin
Salman, the Saudi counterpart came on time, put a very audacious offer on the table, 1.5 million barrels a day, not for the first half of 2020, but
throughout the year, Julia. So this is very different in terms of the narrative going forward.
And they're faced with a case where oil prices are down four percent today. We're in a bear market down 25 percent. And I think the Russians are
thinking that collaboration only means cuts because, as we put, 1.5 onto top of where they are right now, which is 2.1 is 3.6 million barrels a day.
And this would give more room for the U.S. and why it's so difficult for Russia to say yes at the stage and not "nyet."
CHATTERLEY: Wow. So the inference here is that Saudi Arabia tried to move the goalpost again, simply to see if there is some kind of compromise what
the step back would be here and hoping perhaps to get the one and a half for the first half of the year and not the whole lot.
What comes at this meeting, John? What's your spidey sense telling you?
DEFTERIOS: You know, the OPEC Plus was born out of the ashes of the 2016 crisis in the first quarter. Remember, it went down to $30.00 a barrel.
This is the most strained I've seen it ever since then, because we had this black swan appear in the name of the coronavirus and it destroyed demand by
about four million barrels a day in the first quarter.
And you saw the expectations, it is at least demand dropping by a million barrels a day throughout 2020. So how do you respond?
So there's two very different views, Julia. The Saudis want to get ahead of the curve, or at least catch up quickly, send a signal to the market and
try to hold $50.00 a barrel. The Russians say the Americans are above 13 million barrels a day, we're hovering around 11.4. Why are we given away
this market share? They can make a profit at $40.00 a barrel and that's the Russian budget.
The Saudi budget to breakeven, not the cost of production, which is $2.00 to $6.00 a barrel is hovering around $80.00 a barrel. They are Yemen.
They're spending a lot of money right now, and we have a deadlock.
One told me just incidentally that the Russians are having lunch right now after four and a half hours of talks, not with their OPEC counterparts, but
with the Azeris and others from the OPEC Plus. It sounds very strained inside -- Julia.
CHATTERLEY: Tense. Can a compromise be reached? John Defterios, thank you so much for bringing us up to speed with that.
And as John was mentioning there, the common thread in all of these stories, the coronavirus outbreak. Let me bring you up to speed with the
latest on this globally now.
We have global cases now approaching 100,000. We've also seen President Trump this morning at the White House signing that Coronavirus Spending
Bill to the tune of $8 billion, of course, but at the same time, the White House has also admitted in the last 24 hours that authorities do not have
enough testing kits.
In the meantime, California has quarantined thousands on a cruise ship to complete tests there. On the corporate side, Microsoft and Lockheed Martin
have reported cases on the West Coast.
In Europe, the U.K. has reported the first death as a result of coronavirus; and in Asia now, a row has broken out between Japan and South
Korea over travel restrictions.
[09:10:10]
CHATTERLEY: However, some better news from China, the Hubei Province has reported no new cases outside of the City of Wuhan for the first time since
the outbreak began.
David Culver joins us now. David, as we watch the cases multiply around the world, the belief here the expectation, particularly as far as investors
are concerned, I think is that the worst is over in China. Is that the reality that you're experiencing on the ground there?
DAVID CULVER, CNN CORRESPONDENT: You know, Julia, you look at these numbers, and they seem to be reassuring, especially when you point out that
within Hubei Province, which is really the epicenter, ground zero, of all of this, there were no new cases reported over the past 24 hours.
But you point out that within Wuhan, which is the capital of Hubei, they did see another additional cases added to their total count.
So it seems to be outside of it that they're getting some control of this and that's interesting because we figured that given some of the areas
outside of Wuhan, which is a major city in of itself, I mean, that's 11 plus million people, that some of those other cities didn't have the
infrastructure to deal with the influx of cases. They seemed to cope with it just fine according to these numbers.
But the reality is, health officials here are not breathing easy. They are not falling into a place of complacency and the World Health Organization
has advised them not to go into that place either to think that, yes, we've got this beat because that's when it could resurge and that's obviously a
big concern.
Meantime, though, we are seeing folks adjust to this new lifestyle and what for many here including in cities like Shanghai, a metropolis of 24 plus
million people has become, Julia, a new normal.
(BEGIN VIDEOTAPE)
CULVER (voice-over): In the U.S., when you're stocking up for a hurricane, a blizzard or a viral outbreak, you tend to buy in bulk.
Many Shanghai resident flocking to China's only Costco location to do that. We joined them for some shopping of our own.
CULVER (on camera): All right, so this is the long line that's moving actually at a pretty good pace. We've heard several announcements as we've
been standing here and essentially they're telling people keep your distance from the person in front of you.
CULVER (voice-over): The store only allows 1,000 customers in at a time. The wait outside about 10 minutes.
CULVER (on camera): All right, we are going in. So they just told us to come into this one line that's clearly going to take our temperature here.
CULVER (voice-over): Carts sanitized one by one, but some shoppers adding a layer just to be safe.
All employees, customers and their little ones, wearing face masks. Plastic used to protect the apples from germs and plastic even used to shield kids.
CULVER (on camera): We can you hear, there's a loud speaker essentially they're telling people to keep one meter apart from each other.
But as you look around, folks are definitely getting a lot closer than that.
CULVER (voice-over): And if you did not catch that warning, this guy will keep you in line.
But there are other options for folks looking to avoid stores all together. One company launched this mobile grocery van before the outbreak.
Since, it's gained a loyal following. Mostly older crowd.
CULVER (on camera): You can see the folks lined up here. They get essentially a menu of items that they can pick from and the idea is they're
not going into a store, they're not congregating with other masses.
Instead, they hand off the paper with what they want and folks who are inside, do the preparation and then pass out their food. You can check it
out. I mean, it seems to be pretty popular here.
CULVER (voice-over): The company behind it says, over the course of a week, the mobile grocery visits 20 neighborhoods serving more than 40,000
Shanghai residents.
The project manager says they get fresh produce daily and they make sure it's all fully sanitized.
But a van can only hold so much. For shoppers looking for taste of normalcy and plenty of options, like pallets of hand sanitizer, it's back to Costco.
But a warning, if you decide on a cooked meal here or a beverage like I did, it's now a to-go purchase only.
CULVER (on camera): They said, you have to eat and drink everything you buy in there outside of this store. Keep your mask on at all times.
They're also telling folks to get in and out as quickly as possible. You don't hear many stores telling their customers to rush. But they're doing
that here.
CULVER (voice-over): An effort to minimize exposure and to maximize what you can stock up on.
(END VIDEOTAPE)
CULVER: It's been fascinating to see that, Julia, to notice how businesses are really trying to adjust and adapt to this new way of life, especially
in major cities like Shanghai.
I can't help but wonder if that's what's going to be happening in cities across the world as this continues to spread.
CHATTERLEY: Yes, not normal yet. That's the message. David Culver. Great to have you with us. Thank you so much for that.
All right, let me bring you up to speed now with some of the other stories making headlines around the world.
The White House has canceled today's scheduled visit by the President to the Center for Disease Control in Atlanta.
[09:15:10]
CHATTERLEY: But Mr. Trump has just signed an $8.3 billion bill to help fund the fight against the coronavirus outbreak.
He'll then travel to Tennessee to assess the damage caused by the deadly tornado.
In Afghanistan, 27 people were killed in an attack on an event attended by presidential candidate, Abdullah Abdullah. He managed to escape unharmed.
The event was commemorating the anniversary of the death of a political leader. It's the first attack in Kabul since the signing of a historic
agreement between the U.S. and the Taliban.
All right, we're going to take a break here on FIRST MOVE, but coming up, as the coronavirus takes its toll, medical supplies go under lock and key.
Clare Sebastian encounters armed guards at one facility in New Jersey. Stay with us. Plenty more to come.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE and to Europe now where crisis talks on the coronavirus outbreak are being held.
In Brussels, officials there are urging member states to work together to address shortages of medical supplies. Italy with the biggest outbreak in
the E.U. says it needs to import extra protective equipment.
But France, Germany and the Czech Republic and Lithuania have all suspended exports to ensure that they themselves don't run out.
In Indonesia, police arrested two people on suspicion of stockpiling after seizing over 60,000 facemasks from them. Clare Sebastian has the latest now
on the global supply crisis.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Julia, let's call it what it is. What we're seeing among countries is really a sort of medical supply
of protectionism such as the panic buying, such as the concern about stocks running short.
The countries are banning exports in droves. That also comes as the World Health Organization has urged governments and industry to ramp up
production by 40 percent to meet demand and all of this has left companies who make and sell these products facing unprecedented challenges.
[09:20:09]
(BEGIN VIDEOTAPE)
MICHAEL EINHORN, PRESIDENT, DEALMED: So these are all our face masks. We store them in a secure room.
SEBASTIAN (voice-over): For medical supply company, Dealmed, this is part of a new reality at their New Jersey distribution center. They have also
added security outside.
(BEGIN VIDEO CLIP)
EINHORN: There's people that keep coming in from the street, knocking on the door, trying to take product.
(END VIDEO CLIP)
SEBASTIAN (voice-over): Masks are the biggest concern here as demand spikes because of fears of the spread of the novel coronavirus and supplies run
short.
Dealmed, like many others in this industry sources its masks from China.
(BEGIN VIDEO CLIP)
EINHORN: The only production that we're told it's happening right now is the production in China, which is staying domestic for the Chinese
government.
SEBASTIAN (on camera): So you're going to run out.
EINHORN: We're absolutely going to run out, but we have contingency plans in place. We're trying to do the best we can for our customers.
(END VIDEO CLIP)
SEBASTIAN (voice-over): Dealmed can no longer sell based on demand alone. Every day they hold a meeting to make potentially life changing decisions
about who should get their limited stock.
(BEGIN VIDEO CLIP)
EINHORN: So it is going to the actual hospital, what do you want to do, Chuck?
UNIDENTIFIED MALE: Ten boxes.
EINHORN: Let's do 10 today. We'll talk tomorrow again. We'll put them on the list for tomorrow.
(END VIDEO CLIP)
SEBASTIAN (voice-over): Ten sandboxes is just 200 masks. Dealmed tells us that the hospital had requested six times that.
Supply issues are mounting. China, the world's biggest manufacturer of medical face masks says it's not imposing any export restrictions, but
several Western companies tell us they have not been receiving orders.
Countries from Germany to Thailand have banned exports and the French authorities announced this week they are taking control of all medical
masks to distribute to health professionals.
Medicom, a Canadian manufacturer of masks and other medical supplies says as of late January, the Chinese government has requisitioned all production
at their three Chinese factories at market rate.
They're not yet sure what will happen to their factory in France. But here in Augusta, Georgia, they are ramping up as fast as possible.
(BEGIN VIDEO CLIP)
GUILLAUME LAVERDURE, PRESIDENT NORTH AMERICA, MEDICOM: We were basically doubling the capacity of the factory at a rate of four or six months,
between additional shifts, additional equipment, but actual equipment takes a lot of time. These are custom made machines.
(END VIDEO CLIP)
SEBASTIAN (voice-over): They are also not taking on new customers.
(BEGIN VIDEO CLIP)
LAVERDURE: And we decided from day one to go on allocation, to only distribute to existing customers, the historical demand, to avoid any
speculation, stockpiling, additional safety stock, which is a big disruption.
We have wipes, gloves as an example. These are other products that are increasing in terms of demand.
(END VIDEO CLIP)
SEBASTIAN (voice-over): At Dealmed, staff also working extra hours, three new team members have been hired and they are starting to feel the
pressure.
(BEGIN VIDEO CLIP)
EINHORN: It is a terrible situation right now, what's going on right now. I mean, it's terrifying. I mean, we have healthcare workers that are going to
run out of facemask. That's a terrifying situation to be in.
But we feel that it's our obligation and our responsibility to the industry, to work with our customers and be the calming voice during these
crazy, crazy times.
(END VIDEO CLIP)
SEBASTIAN (voice-over): A calming voice in the face of unprecedented demands and dwindling supplies.
(END VIDEOTAPE)
SEBASTIAN: Julia, it was a really sobering experience, honestly, seeing the strain that these companies are under and ramping up, as you know, is risky
if you add capacity, what then happens when this crisis eventually does abate?
And that is why the World Health Organization is also calling on governments to support their manufacturers, to write incentives and support
them as they increase production.
CHATTERLEY: Yes, absolutely. I mean, this is going to be key as well. The government needs to centralize this and support it, not just within
nations, of course, but when you're talking about a situation like Europe, where they're asking other countries to help, it's very difficult.
All right, so we're going to wrap up there. Clare Sebastian, thank you so much for that.
The President signed a spending bill this morning, that $8.3 billion. Let's listen in to what he had to say.
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: So we are signing the $8.3 billion. I asked for $2.5 billion and I get $8.3, and I'll take it.
Okay. So here we are, $8.3 billion, it's written very well, that it's an unforeseen problem. What a problem. It came out of nowhere. We are taking
care of it.
There is big news on the ship and a lot of things are happening on the ship. People are being tested right now. And I just spoke to the Governor
of California, Gavin Newsom. We had a good conversation. We're both working on the ship together.
It's close to 5,000 people, so it's a big ship. We're doing testing on those people. Okay.
Can I have those other papers I am going to sign, please? These are additional papers related to various things
[09:25:00]
TRUMP: This is it? Do you have anything to say to the press?
ALEX AZAR, HUMAN AND HEALTH SERVICES SECRETARY: I just want to make it -- make it clear that in terms of tests, we have provided all the tests for
the State of Washington and the State of California that they've asked for.
The production and shipping of tests that we've talked about all week is completely on schedule. All of the C.D.C. tests, the tests that are
available to test up to 75,000 people, C.D.C. has shifted to America's public health labs. Those are out.
Then, IDT, the private contractor working with C.D.C. to ship to the private sector and hospitals has already shipped enough tests for 700,000
tests, and the remaining lots are arriving at C.D.C. this morning for quality control. It should get out as we forecast this weekend.
And then next week, we'll keep ramping up production. So as many as four million tests next week are going to be driving forward. So everything is
on schedule for the test.
QUESTION: Mr. President, why aren't you going to C.D.C. today?
AZAR: He has actually sent me. I am going to go there.
TRUMP: You could tell them.
AZAR: Yes.
TRUMP: We may go. There was -- they thought there was a problem at C.D.C. with somebody that had the virus. It turned out negative, so we're seeing
if we can do it, but yesterday afternoon, we were informed that there may have been a person who was sick with the virus. And they now find out that
that was a negative test.
They've tested the person very fully and it was a negative test. So I may be going, we're going to see if they can turn it around with C.D.C. We may
-- we may be going.
Here, Steve, this is for you after covering me so well. First time I've ever done that to a reporter.
QUESTION: How big a hit to the economy do you expect?
TRUMP: Well, the job numbers just came out and they are incredible. The job numbers were tremendous. And we picked up close to 80,000 new jobs from
last report.
And if you add that up, it's over 350,000 jobs. Job numbers just came out a little while ago and they were shocking to the people that were analyzing.
QUESTION: You expect more gyrations?
TRUMP: Now, I think, you know, a lot of people are staying here. They're going to be doing their business here. They're going to be traveling here
and they'll be going to resorts here and you know, we have great places where so far, people come but we're going to have American staying home
instead of going and spending their money in other countries and maybe that's one of the reasons the job numbers are so good.
We've had a lot of travel inside the USA.
QUESTION: Do you think the Congress -- or the administration needs to take more action to diminish the risk of recession?
TRUMP: Well, all we can do is do what we do. I mean, we're getting a lot of business from people staying, in other words, they're here, which I always
liked anyway. You've known that for a long time.
But people are staying here and spending their money here, as opposed to go into Europe and other places. Now, that'll change when this goes away. And
hopefully that will be sooner rather than later.
But people were -- I would say virtually everybody, you saw the job numbers, I guess, people were shocked because you had another 80 or
whatever it is -- a lot of numbers from last month where they upgraded.
So the job numbers were the level that nobody thought possible. They were really incredible.
QUESTION: No stimulus needed?
TRUMP: I don't know. I mean, we're going to see whether or not the Fed wants to stimulate. In my opinion, they should because Europe is and China
is and everybody is, but us.
We have a Fed that is not exactly proactive. I'm being very nice when I say that.
QUESTION: No business aids?
TRUMP: I think what happens is the Fed should cut and the Fed should stimulate and they shouldn't do that because other countries are doing it
and it puts us in a competitive disadvantage, and we have the most prime.
We are considered by far the most prime and it's our dollar that everybody uses. The Fed should stimulate and the Fed, they should cut and why should
Germany have an advantage of over us with interest rates?
So Germany just announced that they're stimulating and they're cutting. Asia is -- all over Asia. They are. China is -- China is tremendously --
and we're really not, and we pay higher interest. We have a higher rate and it's ridiculous, frankly.
We should have the lowest rate by far and I've said, we pay more than other countries. Other countries are paying zero and less than zero, you know it
very well and we're paying interest, which is a very conservative approach.
[09:30:10]
TRUMP: Because we're also competing against other countries, whether we like it or not. Even our friends, we're competing against.
QUESTION: Mr. President, so on Afghanistan, are you afraid that once the U.S. pulls out, that the Taliban will basically just overrun the --
TRUMP: Well, you know, eventually countries have to take care of themselves. We can't be there for the next -- another 20 years. We've been
there for 20 years, and we've been protecting the country, but we can't be there for the next.
Eventually they're going to have to protect themselves, you know. It should have been done a long time ago. But you can only hold somebody's hand for
so long. We have to get back to running our country, too. So you understand that.
QUESTION: Sure. Do you think the Afghan government will be capable, in the long term, of defending itself?
TRUMP: You -- I'll let you know later. You know, we'll have to see what happens. I hope they are, but I don't know. I can't answer that question.
QUESTION: Mr. President, any concern that the coronavirus is --
TRUMP: It's not supposed to happen that way, but it possibly will.
QUESTION: Any concern that the virus is more widespread than originally thought because of the lack of testing? Is that any reason why you're not
going to Atlanta today?
TRUMP: No, no, no. They had one person who was potentially infected.
And speaking of that, I'd like to go. So you guys are trying to work that out. I was going to Tennessee first, in any event, and then I was stopping
in Atlanta, then going down to Florida for meetings.
I think that they are trying to work it out that I do go. No, I hadn't heard that. I heard one person, and because of the one person, at a high
level -- because of the one person, they didn't want me going.
But I would prefer going. And now that the person -- the test came out negative, we're going to try and go.
The most powerful man in all of media
(AUDIO GAP)
TRUMP: He has a little something to do with "The Wall Street Journal." I don't know if you know. This is real power, right? You used to do what they
did.
UNIDENTIFIED MALE: Yes.
TRUMP: Right? And I did it -- he did it so well that he's the boss at News Corp. Of course, Rupert has something to say with that, I guess, right? And
Lackland. It's good to have you. It's good to have you.
They treat me very nicely, the media, right? Except for "The Wall Street Journal," but that's okay.
QUESTION: How do you keep people from panicking?
TRUMP: I don't think they're panicking. I don't think people are panicking.
I said last night -- we did an interview on -- on Fox last night, a Town Hall. I think it was very good. And I said, calm, you have to be calm. It
will go away.
We do have a situation where we have this massive ship with 5,000 people, and we have to make a decision. You know, it's a big decision. Because we
have very low numbers compared to major countries throughout the world. Our numbers are lower than just about anybody.
And in terms of deaths, I don't know what the count is today. Is it 11? Eleven people.
But in terms of cases, it's very, very few. When you look at other countries, it's a very tiny fraction, because we've been very strong at the
borders.
But then you have a ship with a lot of Americans on it. It's got 5,000 people on it. It's a massive ship. And, you know, they want to come in. So
we have to make a decision. We're working with the Governor of California on that.
QUESTION: Are you meeting with President Bolsonaro this weekend, sir?
TRUMP: Yes, I am. We're having dinner at Mar-a-Lago. He wanted to have dinner in Florida, if that was possible, the President of Brazil. So we'll
be doing that today.
QUESTION: Do you think the financial markets are overreacting?
TRUMP: I think financial markets will bounce back as soon as this -- really bounce back. Don't forget, they're down probably 10 or 11 percent from, you
know, where they were, but they were up 70 percent, so, you know, it's only -- it's a relatively small piece.
I don't like to see it happen because I was looking for 30,000 very soon. You were -- you were -- it seemed days away from 30,000, and now we have a
little more room to make up.
But I think financial -- I think the country is so strong, we're so strong as a country now. We have never been like this. The consumer is generating
so much because of the tax cuts, the regulation cuts and, you know, the things we've done. So I think we're in great shape. I mean, I think we're
in great shape.
This came unexpectedly a number of months ago. I heard about it in China. It came out of China. I heard about it. We made a good move. We closed it
down. We stopped it. Otherwise -- the head of C.D.C. said last night that you would have had thousands of more problems if we didn't shut it down
very early. That was a very early shutdown, which is something we got right.
Yes?
QUESTION: So looking at the Super Tuesday results, are you -- do you worry the Democratic Party is unifying around Joe Biden and that will take away
your argument about them perhaps being too leftwing and too socialist?
TRUMP: Well, he's leftwing and he's got all people that are leftwing. And, in many ways, he's worse than Bernie. Look at what he did with guns. He put
Beto in charge of guns. Beto wants to get rid of guns, right? So that's a bad -- that's a bad stance.
And he's got a lot of people that are leftwing, and they'll be running the government. He's not going to be running anything. If he ever got in,
they'll be running the government.
They've got people further leftwing than what Bernie has, so --
QUESTION: Do you think --
[09:35:05]
TRUMP: Not going to be good -- it wouldn't be good for Wall Street, I can tell you that.
QUESTION: Do you think sexism --
TRUMP: Plus, if you look at his taxes, he's going to raise taxes incredibly. He's going to raise taxes more than Bernie. I looked at -- and
he's open about it.
Bernie just like -- doesn't like to talk about it. I mean, Joe Biden, his tax increases are -- they're staggering. It's ridiculous. He'll destroy
everything that's been built.
QUESTION: Do you think sexism was a factor in Elizabeth Warren pulling out? And do you believe you will see a female President in your lifetime?
TRUMP: No, I think lack of talent was her problem. She had a tremendous lack of talent. She was a good debater. She destroyed Mike Bloomberg very
quickly, like it was nothing. That was easy for her.
But people don't like her. She's a very mean person and people don't like her. People don't want that. They like a person like me, that's not mean.
Okay. I'll see you guys.
Thank you, everybody.
CHATTERLEY: A wide-ranging press conference there from President Trump as he signs that $8.3 billion coronavirus spending bill.
Of course he talked about the government's response, his potentially delayed trip to the C.D.C. headquarters in Atlanta today. He said he is
still going to try and go there, that there may have been one suspect case that delayed it. He was still working on it.
He threw criticism at the Federal Reserve there, saying that they should be stimulating more, despite the emergency rate cuts, of course, that we saw
by half a percentage point. He said they should ultimately be doing more at this stage.
Plenty to discuss clearly on this. Let's bring in Joe Johns who is in Washington with us. Joe, your takeaway from this press conference?
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Yes, probably the most interesting take away from that appearance in the Oval Office with the
President -- it was the fact that he said they may be going back to the Centers for Disease Control.
Of course, we were told that it was taken off the schedule last night, taken off the schedule, apparently because the President did not want to
interfere in the activities of the C.D.C. That explanation certainly did not fly in our view simply because the President has been over to, for
example, the National Institutes of Health here near Washington, D.C., going to Nashville in just a little while.
In fact, he is already on his way there to visit the destruction and the cleanup from those tornadoes that killed two dozen people. So it didn't
make sense that the President didn't want to interfere.
So now we know, apparently there was some concern about the fact that someone may have contacted the coronavirus and there was concern about the
traveling party apparently going there to the C.D.C.
Now, he says they may have already resolved that issue, and there's a possibility that's going back on the schedule. So an interesting
development there. Probably the other headline as you mentioned at the very top is the President signing said $8.3 billion Bill just passed by Congress
to fund the coronavirus efforts. Back to you.
CHATTERLEY: Yes, he did commend the efforts and of course said that they were accelerating efforts to get testing kits out as well which has been a
huge focus, too. Joe Johns, great to have you with us. Thank you so much there.
All right, we're back up to this. Plenty more to come on FIRST MOVE.
(COMMERCIAL BREAK)
[09:41:38]
CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange. This morning, markets are open and as expected, U.S. stocks right
now deeply in negative territory once again.
Take a look at that picture. Today's strong February payrolls numbers from the United States being viewed, I think here as backward looking and simply
not helping sentiment.
U.S. stocks have fallen back into correction territory, but it's also important to note that they are nowhere near bear market levels. That said,
some $9 trillion worth of value was wiped from global stock markets so far this week. Wow. That's a big number.
Torsten Slok is here with us. He is Chief International Economist at Deutsche Bank. Torsten, great to have you with us. I know your view is, we
shouldn't really be talking so much or focusing so much on the case rises, but more on the stimulus efforts on what's being used to address this.
And we've just seen the President of course signing that $8-plus billion worth of stimulus here.
TORSTEN SLOK, CHIEF INTERNATIONAL ECONOMIST, DEUTSCHE BANK: Yes, I think it's very important, because it's very difficult to figure out where the
spread of the virus will be.
CHATTERLEY: We simply can't.
SLOK: We just don't know that. But what we have a good idea about it is, well, what would the response be both from the Fed and also from Capitol
Hill. And in that sense, we did hear from the President here that there are, of course, some things in the pipeline that are very important for
investors.
CHATTERLEY: We also heard the President criticizing the Federal Reserve saying they should be stimulating and they've been slow to react.
I mean, we've got a half a percentage point cut from the Federal Reserve this week. You've got a great chart that shows what happens from the
Federal Reserve in past crises where we've seen an inter-meeting cut, more stimulus tends to follow.
SLOK: Exactly. So what is unusual is that we normally see them -- whenever they have an inter-meeting cut, at the following meeting, they always
follow up with a cut of the same size.
So that's why when the debate is about what they will do on March the 18th, when they have the next meeting, we do believe that they will go 50 basis
points or half a percentage point again at the next meeting, and therefore we are getting closer and closer to zero, of course, because the Fed takes
this very seriously.
CHATTERLEY: Do you think that alarms the market or do you think that provides some comfort at this stage?
SLOK: Well, the challenge is that the monetary policy and interest rates are really not the right way to deal with the coronavirus, so that's why
they're doing whatever they can do, but that's why we need to look more broader and say, well what can be done and on the broader measures,
something which was just signed that Trump just talked about that is helpful, and particularly helping some of the different departments that
need support.
But the question is, if more fiscal support is needed.
CHATTERLEY: I mean, more fiscal support for the healthcare industry in particular. I mean, you've got another fascinating chart, which looks at
the number of hospital beds per 1,000 people in population.
You've got it for globally. We can show it here. You have to look quite hard to look at some of the countries, but India is actually right at the
bottom there, they simply don't have hospital beds, if they do see a greater onset of this outbreak.
SLOK: Yes, and what's a bit worrying in this chart is that the countries to the right and including the U.S. is a bit to the right in the picture, as
you can see. Those are countries that don't have as many hospital beds relative to those to the left in the chart.
And this is of course, from a more preparation perspective, which countries look more prepared than others. It's not easy to just build a hospital very
quickly as we saw in China just a few weeks ago.
CHATTERLEY: Yes, but China at least had the draconian measures to try and crack down on the spread of this, which I think is illustrative in that
chart. If you can't deal with the fallout, you have to try and limit it in the first place.
But what we are seeing in China though is a bounce to stock markets and I mentioned this at the top of the show.
[09:45:08]
CHATTERLEY: Can we expect that in the United States -- and I'm predicting wildly here, once we see containment and then easing if the case outbreaks
here?
SLOK: Some investors -- it is a small group at this point -- I still putting executive weight on that good argument, Julia, namely that those
areas, in particular, China where we have seen the number starts to -- the second derivative starts to roll over and begin to come down a bit. Those
are also the areas where the stock markets and risky assets have performed very well.
So there is a little ray of hope here that maybe, once you get to the other side of this, you should have that stock market -- it should begin to
normalize.
The outperformance in China relative to the U.S. is very significant. So that's why it could be a sign of hope that there is at the end of this long
process, some ideas that maybe those areas that did do best will also be the ones that are rebounding first on stock market.
CHATTERLEY: Do you think we are overreacting at this moment? Because if I look at the magnitude of cases here versus what we were just mentioning
there, the trillions of dollars' worth of value that's been wiped off global stock markets, something in me says, are we overreacting?
Particularly, when I see a jobs number and the relative strength of the U.S. economy going into this crisis and the markets today just disregarding
it?
SLOK: Yes, it's very unusual. Of course, the job number was very strong and still markets are down so much. I still think that it's important that we
just don't really know how to quantify this.
We don't have a toolbox to take anything out and say, how do we figure this out? But what we do know and what we have a good handle on is exactly this
idea of what can government do? What can the Fed do? And it seems to be very clear to everyone that we know what the problem is.
So now we're just debating exactly what kind of measures need to be taken, not only in the U.S. but also in Italy and in Europe, which as we speak,
also have some headlines about maybe we do need also to see more fiscal support in different sectors in Europe that have been hit in particular, of
course, travel and tourism and airlines included.
CHATTERLEY: Yes, and we have been talking about that all week, targeted support here is key.
Torsten, great to have you with us. Thank you.
SLOK: Thanks for having me.
CHATTERLEY: Torsten Slok there, Chief International Economist at Deutsche Bank.
We're going to take a break here on the FIRST MOVE, but coming up, whether it's high fashion or the high street, many retailers are facing the same
challenge -- paying a high price. How the industry is showing symptoms of its own amid the coronavirus outbreak. That's next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to the show with a look at our Global Movers this session. Shares of companies offering coronavirus testing kits have been
extremely volatile, I can tell you, in trading so far. Today, shares of Quest Diagnostics are currently lower by some more than a half percent. The
clinical laboratory company says it will begin screening for the coronavirus next week with its very own testing kits.
And Genmark $diagnostics also lower. It has begun shipping coronavirus testing kits, too, but volatile, I think the session today. It's tough to
gauge what this price action ultimately means.
Starbucks shares are falling some four percent. It is warning that Q2 same store sales will fall some 50 percent -- five zero percent. In China, we
know they had store closures, of course.
[09:50:10]
CHATTERLEY: The retailing giant, Costco, also under pressure today despite posting better than expected earnings and revenues. Aligned of course with
the broader sector.
The impact of the coronavirus outbreak being felt from Wall Street to Main Street. The luxury sector, in particular, bracing for a huge drop in demand
this quarter, especially in China where high end brands have enjoyed huge growth.
Oliver Chen is a Senior Equity Research Analyst at Cowen. Great to have you with us.
OLIVER CHEN, SENIOR EQUITY RESEARCH ANALYST, COWEN: Thanks for having me on.
CHATTERLEY: We can talk about all of these things, but your view at this stage is actually we're not yet able to quantify how significant the damage
being wrought is here.
CHEN: Yes, what we're really monitoring is the health of the consumer and as the consumer sentiment/consumer confidence starts to decline, that's a
big problem for traffic retail, retail-at-large and discretionary spending.
In past crises, the U.S. was not as impacted and the United States is also a key part of the luxury industry. About a third of the revenue is from
China, even more growth and even more margins. So that's quite material.
That being said, there are stocks we like and we are going to buy. We like Walmart, we like LVMH as well.
CHATTERLEY: Why? Why do you like Walmart? I mean, we've been talking earlier on the show about panic buying and people stocking up. Are they one
of the beneficiaries, the Main Street beneficiaries of the nervousness at this moment?
CHEN: Well, Walmart is 55 percent grocery and Costco, we were on the phone with last night. They had a really great end of the month as people really
think about stocking up on non-luxury goods, just the essentials and sanitizers and personal care.
Furthermore, as we look at this evolving situation, e-commerce curbside pickup drive up really thinking, how do you stay six feet away from people
and consume goods in this new age?
As customers use e-commerce, their engagement increases a lot, so your spending increases a lot of channels, so that's something to watch.
CHATTERLEY: To your point on luxury though, you can tell me why LVMH is favored here?
CHEN: Yes.
CHATTERLEY: The Chinese consumer, such a huge part of the growth that we see globally, but also Chinese tourism around the world wherever it's
coming from is a huge buyer of luxury goods, too.
CHEN: Its huge, at Canada Goose, for example, it could be half of the consumer, so the Chinese just stopping and being able to travel physically
means that is down, you know, a hundred percent in terms of traffic.
What we see in luxury goods historically and in the future is large brands tend to be very successful and somewhat defensive.
Customers go back to large brands such as Louie Vuitton, such as Dior at times of uncertainty and that's why we do like Louis Vuitton, as well as
their incredible cash position, $6 billion to $7 billion in free cash flow, a global franchise where you're getting Sephora, Dior, LV and they had
pricing power, so ...
CHATTERLEY: So they remain resilient, even through times of low footfall, low traffic, low buy.
CHEN: Yes. And also in terms of the financial model, some of the costs in China are variable. So as the sales go down, the rent expense on some of
those locations will go down as well.
CHATTERLEY: That's interesting. The margins in Asia are higher as well.
CHEN: They are. They're incredible. The gross margins in luxury goods at large, 50 percent, 60 percent, 70 percent plus. So there's some healthy
margins there. That being said, everybody is watching how top line will get worse and it's a risk factor.
CHATTERLEY: We've talked about demand, what about the supply chain here? Because that's something else that we're trying to get a grasp on here and
whether or not there will simply be delays, particularly for some of the apparel makers?
CHEN: Yes, that's a big deal. I think as you dissect this issue, there's a supply chain issue. There's a demand issue. Supply chains -- about 20 to 30
percent of apparel and footwear is related to China. So what we're looking at is real delays to the summer deliveries and then as this evolves, it's
very difficult for fall and back to school holiday.
And clothing and foot wear, that's a big deal for everybody and everybody is watching, thinking about freight costs, too and the labor costs and
rebooting.
As we talked to our contacts in China, the factories are getting back up to speed, slowly but surely.
CHATTERLEY: So Walmart and LVMH, just to sum up your picks here for relative resilience.
CHEN: Costco too.
CHATTERLEY: Costco too, also a net beneficiary. Has the sector priced enough damage as a whole yet or do you think there's still more downside?
CHEN: Well, as we look at their earnings per share sensitivities, the sector earnings per share could be down between 10 and 30 percent. That
being said, the S&P is down about six percent. So it's something we're watching. There's winners and losers as you think about staples and
discretionary.
Then also, as we run sensitivities, we are asking investors to look back at the recession, what stocks to own, and in that scenario Walmart, Target are
good names to own as well.
CHATTERLEY: Oliver, fantastic to have you with us.
CHEN: Great seeing you, too.
CHATTERLEY: Oliver Chen there, Senior Equity Research Analyst at Cowen. I would shake your hand, but we'd have to do elbows or the kick. There we go.
Done.
[09:55:01]
CHATTERLEY: All right, let me bring you up to speed with today's Boardroom Brief.
JPMorgan CEO, Jamie Dimon is recovering after having emergency heart surgery Thursday morning. The company e-mailed all employees to say the
surgery was successful and Dimon, aged 63 is awake and alert.
The bank's Joint Chief Operating Officers are in charge while he recuperates.
Twitter CEO, Jack Dorsey says he is reevaluating his plans to spend a part of the year in Africa over concerns about the coronavirus.
Last year, he said he would live somewhere on the continent for as much as six months. Dorsey is also coming under pressure to give up the top job at
one of his two companies. He is CEO of both Twitter and the payments company, Square, but that's got nothing to do with it of course.
All right, let me give you a look at what we're seeing because we are seeing pressure despite that strong February jobs number of course off more
than three percent to add to the losses that we saw in yesterday's trading session.
It could be another long session, Friday of course, but a long one ahead of us. We'll be back in a couple of hours' time with "The Express," but for
now, you've been watching FIRST MOVE, time to go make yours. Get some rest this weekend, please, everyone. We'll see you next week.
(COMMERCIAL BREAK)
[10:00:00]
END
