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First Move with Julia Chatterley
U.S. Congress Agrees A Record $2 Trillion Stimulus Bill; Prince Charles, The Heir To The British Throne Has Coronavirus; Lifting Restrictions On Ground Zero As China Relaxes Travel Limits In The Hubei Province. Aired 9-10a ET
Aired March 25, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:21]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here's your need to know.
Done deal. Congress agrees a record $2 trillion stimulus bill.
Prince Charles positive. The heir to the British throne has coronavirus.
And lifting restrictions on ground zero. China relaxes travel limits in the Hubei Province.
It's Wednesday. Let's make a move.
Welcome once again to FIRST MOVE. Great to have you with us and great to be able to say we have an agreement on a $2 trillion insurance, investment in
survival, okay, Stimulus Bill from Congress in Washington.
We have the contours of the plan, but I'll reiterate throughout the show, the devil will be in the detail here. The early relief rally that we saw in
U.S. premarket and European markets as you can see, they have pretty much evaporated.
Here in the United States, we were looking at gains of more than one and a half percent or more for the major averages. They've now been wiped out in
what's been pretty volatile futures trading.
And of course, as I mentioned, European stocks have also turned mixed, too. It doesn't take away from the importance of what was agreed to in
Washington in the early hours of this morning. Perhaps, though, it also reflects the fact that more is required.
Chuck Schumer, who was battling it out to agree this admitted as much on "New Day" this morning, there is still a great deal of uncertainty,
including with the health crisis. Plus of course, we had that bounce in trading yesterday, too.
Let me give you a look at what's included in the Bill, $500 billion in loans for distressed companies, the game changer, I'll argue here could be
if they can some way do some financial magic and scale this up, increase the loans significantly.
Plus $250 billion in small business loans, perhaps grants. Let's be clear, $250 billion in direct payments to individuals and families matched by
employment benefits stepped up and lengthened. The latter critical because it provides months of additional support.
And crucial for me, $130 billion for hospitals and $150 billion for state and municipal authorities. This just dwarfs anything we saw in Hurricane
Katrina in Super Storm Sandy, too.
The Senate Majority Leader Mitch McConnell calls it a wartime level of investment for our nation. That said, thousand dollar government checks
won't go so far if you've lost your job, and are living paycheck to paycheck as millions of Americans do.
Rent, mortgages and car payments also come due on April 1st, so many Americans having to make harrowing choices still -- pay the rent or put
food on the table?
Yesterday, let me give you a look. We racked up some of the best one-day gains in terms of percentages for stocks since 1933 and the best point gain
for the Dow ever. It was 2,100 points. But we've seen big moves higher on a number of occasions over the past few weeks only to see pull backs just as
great soon after.
We've not had a back-to-back two-day rally on Wall Street this month. The big question now, are investors just going to continue to sell on these
rallies? And how well will this package fill the deficit in the real economy?
Richard Quest joins me now. Richard, you heard all that. Good morning. What do you make of it?
RICHARD QUEST, CNN BUSINESS ANCHOR AND EDITOR-AT-LARGE: Good morning to you. It is an impressive size, and I think that you're right, it won't be
enough.
But that's mealy mouthed, both of us to sort of be harping on about that when they've just done it. Instead, I think you've got to really look at
the level of confusion and chaos that's currently in the U.S. economy.
You rightly point out, what happens when those bills are paid? Particularly if they are paid by standing order, or by ACH in automatic payments.
They're going to come out of your account immediately, whether you like it or not.
And this money coming in maybe several weeks away. The loans provisions that you pointed out, we don't know how it's going to work. We don't know
the transmission mechanism of that money from government to lending institution to borrower.
And that of course, just will increase the pressure and that's really what this is now about, Julia. It's about the pressure that people are feeling
in their everyday lives, as you rightly say, do I pay the --
I mean, you know, you talk about do I pay the mortgage? The mortgage may be paid automatically. The car loan may be paid automatically.
[09:05:07]
QUEST: And you know, I've obviously got a mortgage here, and I've had the e-mail from the mortgage lender that says get in touch, but you can't.
So those are huge sums of money that we're talking about, but the transmission mechanism into the economy, that is going to be the crucial
part.
CHATTERLEY: Execution on all of this is so critical.
QUEST: Absolutely.
CHATTERLEY: We spoke to the head of the National Retail Federation on the show yesterday, and he represents one in four of all employees in the
United States that touch this sector.
He said he's got many companies. They have no cash today. They can't mess around for days and a week and waiting for a loan, even if it's a grant and
they don't have to pay it back. It's the timing and the execution here, Richard, to your point, critical.
QUEST: I don't know that they could have done it. They could have done it a bit quicker, but I don't know that they could have done it any better.
I think if you look around the world at all the measures being taken, the huge stimulus, $700 billion in Germany, the British government's 80 percent
for the workers, it's still all a question of how you get the money into people's pockets.
And as for that rally yesterday, you were the one who chided me correctly yesterday, when you pointed out in the office that this is going to go on
for some considerable time, and he even when everything is reopened again, the damage and the collateral damage, and the landscape is going to be
littered with the wreckage of this.
So I think that that 11, 3 I think you call it you know, the dead cat -- the classic dead cat bounce, I think it probably is, but it's better than
nothing at the moment.
CHATTERLEY: Yes, it is. And everything -- all of this, at the heart of this health crisis that we're simply not on top of. And that's the bottom
line here. Richard Quest, thank you so much.
And Washington, as we've been talking about, senators are expected to approve the historic stimulus package when they reconvene this afternoon.
Then the bill goes to the House for a vote before it gets to President Trump's desk.
Joe Johns is live at the White House with all the details for us. Joe, I think that's pretty much a done deal as far as getting this signed and
getting this done.
But I'm sure you were listening to what Richard and I was saying there in terms of simply getting the money out and implementing this. That's going
to be the challenge, not to mention the fact that we perhaps could have agreed this several days ago if there hadn't been politicking in between.
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Absolutely. And the fact of the matter is, all things considered given the size of this stimulus
package being the largest, in fact, stimulus package -- emergency package - - ever produced by the United States Congress, it went about as you would expect.
There had to be negotiations with Democrats, and now we see the final result. So there are concerns about getting money out especially to
individual consumers, up to $2,000.00 on a means tested basis to families with children.
Plus, all the other things in this package, the President and the administration have suggested they'd like to get it out as early as April
6th, which would be extremely lightning fast action by the Federal government.
Still, as you said, there's a question of the House and the Senate, both passing this enormous bill. The Senate expected to take it up this
afternoon. In just a few hours, they all convene, and we'll find out how quickly that goes, then the House of Representatives.
There is some hope by Speaker Nancy Pelosi to pass this bill on what is known as unanimous consent, meaning no one objects. However, given all the
provisions of it, and the 435 Members of the House of Representatives is not entirely likely that that will happen, so it could be a day or two.
But the likelihood is and the expectation is the House of Representatives will move quickly to get this to the President's desk -- Julia.
CHATTERLEY: Joe, great to have you with us. Joe Johns there. Thank you for that.
Now, Prince Charles has tested positive for the coronavirus. The heir to the throne is now self-isolating in Scotland.
Joining us with the latest on that is Clarissa Ward. Clarissa, great to have you with us. What do we know about the state of his health currently?
CLARISSA WARD, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, what we're hearing, Julia, the good news is that Prince Charles is reportedly in good
health and good spirits. That's according to a Royal source.
He apparently has mild symptoms. He was tested by NHS or National Health Service staff in Aberdeenshire after reportedly meeting the criterion.
He is in Scotland as you said with the Duchess of Cornwall. She does not appear to have coronavirus, which is some good news, but of course the
question that many people are asking, Julia is, what about the Queen? Is it possible that she could have been exposed to the virus?
[09:10:05]
WARD: And what we're hearing and what CNN's Max Foster has been hearing from a Royal source is that Prince Charles was only infectious from March
13th, the last time the Queen reportedly saw Prince Charles was the day before that on March 12th in the morning. We're hearing also from the
Palace that the Queen is in good health.
So for now, it appears that she has not been infected or exposed to the virus, but what this does go to show is just how vulnerable anyone and
everyone is to this virus, but particularly Julia, people like Prince Charles, who have incredibly busy diaries and schedules, who meet with many
different people.
He is in the vulnerable category of over 70, but he had not been self- isolating up until this point because, as I said on March 12th, the guideline had not yet been given for him to follow that instruction.
So for now, as I said, he remains in Scotland in Birkhall, his residence there, with the Duchess of Cornwall and everyone hoping he will continue to
make a speedy recovery, but for now it appears symptoms are mild and he is in good health and good spirits -- Julia.
CHATTERLEY: Great to have you with us. Thank you so much for that. Clarissa Ward there.
The second most populous country in the world is now under complete lockdown. Indian Prime Minister Narendra Modi announcing that 1.3 billion
people will have to stay at home for at least three weeks.
According to the Health Ministry, India has more than 500 confirmed coronavirus cases. Authorities say 10 people have died.
Meanwhile, China lifted restrictions on movement in most of the Hubei Province on Wednesday. It's a significant milestone in the battle against
the outbreak. Hubei has seen ground zero of the pandemic.
David Culver joins us on this. David, just talk to us about what they're doing here because clearly the world is watching as the debate here, in
particular, increases about perhaps seeing some kind of staggered reduction in the economic sleep that we're seeing. The world watching really how
China is handling it.
DAVID CULVER, CNN CORRESPONDENT: Well, you've got to remember, Julia, going back just a few weeks when we saw President Xi Jinping here making
his early appearances, he echoed two things.
One was, determined to contain this virus, to stop it spread, and the other was to stabilize the economy. So the economy was in the forefront early on
and that's certainly a part of this resumption of normality, if you will.
But starting as of today, really, just in the past few hours within Hubei Province, so we know that to be the epicenter, provincial region of all of
this, that we've now started to see lifting of certain restrictions. Cars allowed to go around within the streets if you have certain permits, people
in public transportation, getting some access there and even being able to walk to, you know, local markets.
What is not part of that though is Wuhan. So, the city of 11 million people, the real epicenter of all of this is still under its official
lockdown.
They have said two weeks from today, they're going to allow that to be lifted in some manner, and allow people to kind of move forward. And a part
of that will, of course, be the movement of migrant workers, which was mentioned, because we know that they -- in the midst of the Lunar New Year
-- were essentially caught within the City of Wuhan and within the lockdown zones, and were not able to go back to places like we are in Shanghai or in
Beijing and essentially, restart within the factory.
So that will help business once it gets in place. The concern though, is of course, you've got movement again, Julia, and when you've got movement, do
you then risk the exposure going up? Are people then going to be close contact with one another again and do the numbers go up?
So while this is significant, certainly from a mental health perspective, for the people who are within lockdown; from a business perspective, and
the idea of restarting, it's still concerning from a health perspective and a health security perspective nationally, and that's why they've got things
like this tracing of really humanity for us, too, those of us in mainland China, where we've got those QR codes, and they can track where potential
exposures have taken place, and based on our location, they can determine whether or not we are at risk of either getting the virus ourselves or
transmitting it to someone else -- Julia.
So they're very mindful of how this is going to play out. But it's concerning.
CHATTERLEY: It's fascinating how we would, in other countries, look at that and go, it's an invasion of privacy. And yet it's been so successful
in perhaps tracking the flows and understanding what's happening here, David.
I also think one of the challenges is exactly to your point, if there's still a fear that perhaps you could still catch this virus, do you go back
to normal life in the way that you would have done? Do you go back to mass congregations, religious congregations, for example, do you go to a cinema?
What are you seeing people do? Are they making these decisions or are they still being quite reticent to behave like normal?
[09:15:01]
CULVER: It depends where you are and who you are. By that, I mean here in Shanghai and this is a really interesting point, we noticed more expats,
more foreigners who seemed to be a bit more comfortable moving about, and they'll go to restaurants. They'll go to some of the gatherings in the
parks on weekends, which have just reopened.
And little by little, you see locals doing the same, but they seem to be a bit more hesitant.
I've spoken to people within Wuhan and I said, what are some of the first things you're going to do as soon as this lockdown eases? And some of them
are saying probably stay in for a few more days, they don't trust it right away. They are a bit reluctant. And it's because of what they have seen
around them.
I mean, you've got to realize that was really the ground zero of all of this and it was for many of them horrific sites that they had to deal with
and after enduring that, they're trying to figure out whether or not it's just going to spring back to normal. They know it won't go back to normal
that quickly.
And so they're having to figure out how they're going to ease into this resumption of normality knowing that you've got to get back to business and
back to life.
CHATTERLEY: David, your perspective is so important given the discussion that's going on in the United States right now. Thank you. David Culver,
great to have you with us.
CULVER: Sure.
CHATTERLEY: All right, still to come on FIRST MOVE, $2 trillion for the U.S. economy, but will it be enough? We speak to the former White House
Comms Director, Anthony Scaramucci who is still calling for more.
And what's the future of movie theater chains? We were just discussing there as many remains shut, the IMAX CEO joins us to give his perspective.
Stay with us. You're with CNN.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE live from New York and we are bracing for more volatility across stock markets today.
We've got stock futures that have been swinging pretty wildly over the past few hours following that agreement on Washington's $2 trillion relief
package.
President Trump has gone back to comparing coronavirus meanwhile with the flu.
[09:20:03]
CHATTERLEY: My next guest is a former West Wing staffer who says he is wrong. Anthony Scaramucci says flatten the curve, solve the testing, then
slowly get people back to work.
It doesn't have to be a choice between economy and lives. Pay people to stay at home for a month.
To talk us through all of this, we have ex-White House Communications Director, Anthony Scaramucci joining us now. Great to have you with us on
the show. Sir, your thoughts first on the stimulus package agreement in the early hours of this morning?
ANTHONY SCARAMUCCI, FOUNDER AND MANAGING PARTNER, SKYBRIDGE: Well, Julia, when you and I were talking about it last week, we both thought that a $3-
ish trillion stimulus would have been way better in terms of alleviating the anxiety in the American people, but this is a very good start.
I don't think the economy is going to reopen in the United States after Easter, but I do think it's likely that a May 1st or that first week in May
will likely happen given all the information that we are gathering at SkyBridge, and I think that would not be a bad thing, pursuant to that
stimulus package, provided that we're completely confident that people will be safe returning to their normal lives.
So it's a very complicated situation. But one of the big pressures going on right now is in the U.S. mortgage markets. I don't know if you guys are
following that. But the commercial mortgage backspace, and the residential mortgage backspace is basically frozen right now.
So we're going to need the Fed to come in there and start providing some liquidity. So once that starts to happen, I think things will calm down in
general.
CHATTERLEY: Or perhaps an agreement between some of the big banks, some of the bondholders not to trigger debt defaults. Actually, we were talking
about it on the show yesterday. It's a complex arrangement at this moment and the Fed coming in earlier this week and saying, look, they'll buy more
in unlimited quantities.
Clearly, it hasn't underpinned this market successfully enough. There are fears that people won't pay rent, quite frankly for an unknown length of
time.
SCARAMUCCI: Yes, well, you have a combination of things going on. You know, the banks are able to borrow at the Fed window at a zero discount
rate, and you've got these overnight mortgage rates and these overnight residential mortgage backed security businesses that they're pressing hard
down on in margin calls.
And so you're talking about pristine mortgages from two weeks ago, are now getting flushed out because you've got a weak hand of retail investors up
against a very strong hand, where a big commercial bank is backed by the Federal Reserve.
So hopefully, once the Treasury Department gets an understanding of this, they'll figure out a system to relax this because these prices that we're
seeing today are 30 to 40 percent down from where they were two short weeks ago, yet the credit quality hasn't really changed.
So there's a blend of things going on right now. But the good news is that the financial stimulus is going to get to the average American and the
lower and middle income people and hopefully provide some relief until we can turn the corner and flatten the curve.
CHATTERLEY: The point that you're making here and I think this is critical, we have so many crises going on -- jobs crises, economic crisis,
given the economic sleep, financial crisis, a part of what you were just discussing there.
You also said you didn't think the economy was going to be reopening until May 1st. Is this White House going to be comfortable enough with that? Will
they stick with what the health experts are saying? Because surely doing anything else whisks increasing the fear?
SCARAMUCCI: Well, listen, I think that the President knowing him very well, frankly, I think he was putting that out there as a marker and sort
of the bid side of the market and trying to condition the people to the notion that we were going to open up earlier than, let's say the scientists
want.
The very, very good news is whether it's the Governor of New York, Illinois or California or some of the major states, they are not going to endanger
the citizens.
You know, we've seen what Andrew Cuomo is doing here in New York. It's a heroic and monumental call to leadership on his behalf. And I thought he
said something brilliant the other night. I feel the same way about my mom.
He's like, you know, we're not risking my mom over a few points in the economy one way or the other. And so I think we need to just calm down.
Human life is way more precious than anything for that matter. And we can get this right.
But I don't think the White House is going to open up on April 12th. I think it'll be monumentally impossible, and one thing that we're learning
and this is the problem that the President is having right now, you can't call out fake science from the White House press podium.
You can call out fake news in certain ways, but two plus two does equal four, Julia, and you are not going to be able to convince somebody that it
equals seven.
So let's see what happens here. But I bet you, we don't open until the first or second week of May.
[09:25:01]
CHATTERLEY: Does this stimulus package there for the $2 trillion, maybe they can get some leverage and scale up the corporate loan part, which will
make it look bigger, in addition to the trillions of dollars the Fed has provided here too, do you think that gets us to May 1st? Or do you agree
that we are going to need more, Congress is going to have to provide more.
SCARAMUCCI: So I personally think we're going to be more because I've gone through the math. I mean, the one thing I did like in the package, I don't
know if you saw it, it was $130 billion to the hospitals because we're way under bedded, and we need way more respirators, et cetera.
But if you go through the math, it's not enough per capita, you know, and so, the right math would be something like $3,000.00 per adult and
$1,500.00 per child, and they're about 40 percent of that.
But I do think that they will ultimately get there, and I do think that the good news is the Fed because it's not tied to the politics, opening up the
spigot with the $4 billion. Somebody called it a bazooka the other day. I laughed, I said, it's more like a green water wall of money, almost like a
green tsunami that's going to enter the market.
So I see it as very, very powerful on the Fed side, but probably a little bit of underwhelming on the Federal stimulus side, but it should be enough
to get people come and then we can reposition ourselves once the economy opens.
I just don't want things that were pristine in terms of debt and credit quality three short weeks ago, to be blown to pieces without a victim. It
would be one thing if there was a systemic crisis or people weren't making good on their mortgages or things like that.
But this is more of -- all related to the pandemic, it's not a system failure, if you will, or failure in judgment on people's risk management
and so forth.
CHATTERLEY: It's just uncertainty. Anthony, very quickly, what do you say to investors here? Those that perhaps are saying, you know, we rallied in
the stock market yesterday, we're perhaps going to open a little bit lower today.
Is it time to put some money to work here? Or do you just say, stay back and wait until we have a handle on the health crisis.
SCARAMUCCI: So I think it's time to stay back in the stock market. I just remind people when we did this stimulus last time in 2008, the market
bottomed six months later, so it's going to be very sloppy in the stock market.
But go look at the bond market, there's a big opportunity in the bond market. You can buy government backed securities in the mortgage space that
are trading at 70 cents on the dollar.
So I would be cautious here in stocks until we get more visibility on when we're going to open the economy.
CHATTERLEY: Always a pleasure to have you on the show, sir. Anthony Scaramucci.
SCARAMUCCI: Good to be here. Thank you.
CHATTERLEY: Founder and Managing Partner at SkyBridge. Thank you.
The opening bell is next. Stay with us.
(COMMERCIAL BREAK)
[09:30:48]
CHATTERLEY: Welcome back to FIRST MOVE. U.S. stocks are open and trading this Wednesday. We're bracing for yet another volatile session.
We have been all over the place premarket in the past few hours. We opened as you can see now, slightly lower for the NASDAQ and the S&P 500. The Dow
Jones up by some eight tenths of one percent.
The early morning agreement on a $2 trillion aid package, certainly a huge positive as we were discussing there. The big question is, is it enough?
And of course, we have so much uncertainty ongoing.
We did see big gains in Tuesday's session, so perhaps taking back some of that, even if it was people scrambling to buy back what we call shorts.
They'd sold the market and bought them back yesterday. Perhaps that's a factor here, too.
Now, take a look at some of the stocks that skyrocketed Tuesday. Norwegian Cruise Lines rose 42 percent. American Airlines rallied 35 percent. United
up 25 percent. Boeing up 20 percent -- all on anticipation of aid money from the $2 trillion dollar package.
That of course was yesterday. I'd still be cautious as I mentioned, on any further big market gains here. You heard Anthony Scaramucci there say
exactly the same. There's a risk of much more pain in terms of the data in particular coming our way.
Morgan Stanley believes unemployment claims will rise to almost three and a half million claims when numbers are released tomorrow.
Earlier today, from a Fed Chair, Ben Bernanke, he likened this crisis more to a natural disaster, not another Great Depression.
Clare Sebastian, that may be the case, but some of the data and the predictions that are being thrown around here argue that it's the latter
that perhaps we're looking at here.
And yet, we do have a $2 trillion dollar stimulus package which we shouldn't deride here. That's a lot of money.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: That is a lot of money, Julia. I think there's a sense in the markets today that perhaps there was
some sort of buy the rumor, sell the news scenario going on that the expectation of the deal was what fueled those gains yesterday, and now
people really want to see the deal get signed, and they want to see the full text which we expect later this morning to really get a sense of what
this is about and what strings attached are to the loans to businesses and to distressed companies. So that is critical as well.
Meanwhile, as you say, this is showing up in the data, particularly watching the weekly jobless claims that will be out tomorrow. That should
give a sense of what could be a very bleak employment picture for the U.S. economy.
And as you say, this could start to look at least briefly like the depression. Capital Economics saying that they expect a contraction in the
second quarter of some 40 percent in the U.S. economy. There will basically be a rebound, but this is looking like some serious short term pain, and I
think the markets are still digesting that.
We've seen this before. Don't forget on March 13th, where we saw an almost 2,000 point rally on the Dow. It lost one and a half times that in the
following trading session.
Volatility is still very high. The VIX Index, Wall Street's gauge of volatility is well above 60. Bear in mind that the normal level to that
before all of this was around 12 to 15, so very high implied volatility in the market going forward.
CHATTERLEY: We have too many crises to deal with. Jobs, financial, economic, the economic sleep, and, of course, at the core of that, the
health crisis here.
Interesting to see some of the shares yesterday that rallied quite significantly. Those on the front lines here, the airlines, the tourism
stocks, then you look at what came out of the stimulus package, $60 billion for the airline industry, and then you compare to the numbers that Boeing
has perhaps suggested, that is required here to help them and yes, I don't know. I'm not sure about the money and whether it's enough.
SEBASTIAN: Yes, I think that that's an issue. We heard from IATA yesterday that they have now increased their estimate for losses for the global
airline industry to around $252 billion this year. That's up from $113 billion on just March the 5th, Julia. This is a very fast trajectory to the
downside in terms of these estimates.
Boeing, though an interesting one to look at, and especially as you say, all of those transport stocks because that does imply that people are
looking for bargains when we see that the big gains in these really beaten down stocks and the ones that still face a fairly bleak future of this.
[09:35:06]
SEBASTIAN: Boeing expected to rise sharply today. It is up some 34 percent already this week, but still down about 60 percent from its highs of the
year, back in February. That company rising, I think in the hopes of stimulus.
Also the CEO was out yesterday saying he doesn't want the government to take an equity stake as a condition for these loans and there was a report
from Reuters that they still expect the 737 MAX to restart production in May.
So some hopes bringing that very beaten down stock back up, even though this company has already suspended its dividend. It's extended its
suspension of buybacks, and it has suspended production for 14 days in the Puget Sound in Washington State, Julia. So there's still a lot of bad news
around this.
CHATTERLEY: Absolutely. Clare Sebastian, thank you so much for that.
Now, major movie theater chains have been hit hard by the coronavirus outbreak. IMAX forced to temporarily close many of its theaters around the
world.
The Canadian company has around 1,500 theaters in more than 80 countries worldwide. China represents nearly 50 percent of its network with over 700
theaters.
IMAX CEO, Rich Gelfond joins us now on the phone. Rich, fantastic to have you with us. I do want to talk specifically about your business. I know the
general consensus is you're in the best shape financially to withstand what we're seeing right now.
But what do you make, more broadly of the support that's been provided by Congress today?
RICH GELFOND, CEO, IMAX (via phone): So we haven't seen the details of the legislation yet, but I understand that traditional cinemas were seeking
relief in that package and primarily, it was over 150,000 workers put out of work because of the shutdown necessitated by the coronavirus.
IMAX is a different kind of company. We license our technology. We don't really have a lot of assets. We don't own real estate. It's an asset light
model. And we have more cash we have. We have virtually no debt, but we do down our revolver. So the business could go on shut for two and a half
years, and we would be fine.
On the other hand, though, we're housed in multiplexes, and my heart goes out to those companies, their employees, and I'd heard rumors that they're
included and I really hope that's the case.
CHATTERLEY: Do you think there should be a decision to retain workers. We could only be talking about two to three months, particularly for bigger
companies, if they can take this money, retain workers, have that backfill the payroll. That's what they should do here, even if there are other
strings attached.
GELFOND: So we've made the decision even though -- of our worldwide global effort -- a lot of theatres are closed and we don't need a lot of our
employees on a day-to-day basis, we made the decision to retain them for now even though it would probably be fiscally prudent to make changes in
the short run.
And part of that as a moral issue. I feel people have worked hard for us for a long period of time and they deserve to be retained, and we need to
stand behind them.
Part of it, though, is where, you know, we manage our business to withstand a storm like this. So I don't want to be judgmental for a company, that
it's between survive or laying people off. They have to make very difficult decisions.
But I think for the time being, if you don't need to lay them off, you shouldn't. And in fact, we have, as you mentioned, a large network in China
and that's been virtually closed for over two months, and we didn't lay anyone off in China, but these are really hard choices that I think
companies have to make on their own.
CHATTERLEY: When will you make a decision on whether you have to let people go? Can you do the same here in the United States, at least for two
months, retain your employees? And I know it's a tough -- it's a tough call to make at this stage, but you think you can do that particularly, given
you just said you can survive two and a half years like this if necessary?
GELFOND: Yes, well, it's always a tradeoff, right? We could survive, but you want to innovate and you want people to be productive. So, for now,
we've decided not to lay anyone off.
And I'd say, you know, that probably goes, you know, for at least the first month of problems. You know, but we will evaluate. But as I said before,
I'd like to keep them working.
I think all companies kind of have a duty if they could afford it, to best utilize their employees.
IMAX went through a difficult financial time, in about 2000-2001 and through that period of time, we had some of our best innovations. So we
transitioned from analogue to digital. We figured out a new business model. We invented different technologies up res images.
And frankly, we've got a group call called The Future once a week and we talk about how to utilize our employees to how to make the business better,
and how to get to things we never were able to get to.
[09:40:07]
GELFOND: But I think if people have, you know, ways to productively use their employees, that's an added bonus.
CHATTERLEY: Innovation in times of crisis. Rich, I want to ask you about what you're seeing in China in your reopening, but it's clearly the debate
that is going on here in the United States as well. What happens when you reopen with places where people gather en mass? Are you seeing people
coming back and using the IMAX cinemas? Or are they still reticent to be in places where others are?
GELFOND: So the openings just started, Julia. So there are about 500 regular theaters open and about 12 IMAX theaters open.
The schedule calls for sort of the majority to be opened by middle of April and then most of them by early May and I think everybody is going to learn
together.
Certainly, our priority and the government in China Now is to make sure people are safe. So in the early stages, it's every other seat and every
other row. And I think we'll see how it goes from there.
As a matter of fact, what the government did in China was pull out library films, not new releases at a very discounted price, so it's kind of a real
time test. How many people come out? How does it go? And obviously, they're optimistic or they wouldn't schedule it out this way. But I think we all
have to wait and see how it goes.
CHATTERLEY: Rich, very quickly, are you in favor of health first and the U.S. economy keeping shuttered until the health officials say we're good to
go, to reopen, or do you think staggered reopen is a possibility?
GELFOND: Julia, based on what we know today, I think there is no choice, health first. You know, in other countries, where people wait for the game,
specifically Italy. We saw the outbreak run amok, and actually I don't really understand the debate because if you're wrong on the health first
issue, there's no turning back and that will overwhelm the economy as well.
So I think it's a terrible choice. I'm glad I'm the one -- I'm not the one who has to make it. But it just seems clear to me health has to come first.
CHATTERLEY: Rich, fantastic to have you with us. Thank you so much for making the time this morning. Rich Gelfond there. Thank you.
Coming up on FIRST MOVE, IBM launches a coronavirus tracker. I asked the company's CEO and President how it can help us in this time of crisis,
next.
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[09:45:43]
CHATTERLEY: Welcome back to FIRST MOVE. IBM has just announced it is launching a coronavirus incidents map which will be available via The
Weather Channel app. It uses AI -- artificial intelligence to track confirmed cases and deaths across America at a county level.
Ginni Rometty, the chairman, CEO and President of IBM joins us now. Ginni, fantastic as always to speak to you.
For me, this is IBM at its best. Trust in data at a time of crisis when there's so much misinformation in particular out there. Explain what you're
doing and explain how it works, please.
GINNI ROMETTY, CHAIRMAN, CEO AND PRESIDENT, IBM: Yes. Well, thank you, Julia. Nice to see you. So this is something that really our team thought
of just days ago, because what we saw, there was so much confusion over what was the right data and at a very local level, that could mean
something to you.
And so as you just mentioned, we do own The Weather Channel and all of its digital content and the team there said, look, let's go to the source. It's
the C.D.C. data, we could be the trusted source for the consumer. And the idea is if at a very hyper local level, you set a county where you live,
you can see the trending and what's happening. You can use it to help modify your behavior and that of your friends and family.
So I know my mom, the first thing I did was look at the zip code where she lives. My mom has to go to the doctor. How did I feel about her leaving the
house? I could see the trending and the number of cases.
You know, my husband looked at me and he is somewhere else than I am right now and he looked what mine were. And he's like, you should just stay
there, actually.
And so, I think it really is useful. And it's meant to personalize this and be one trusted source around it.
Now, we do reach 300 million people, and so this is just the beginning. The team is going to continue to add, so going to the rest of the world, as
well as Spanish, as well as recovery, so not just incidents -- or deaths -- but recoveries.
But you can see the trending and you can look across anywhere you need to. So that's the idea. But it's just one of the things the team is doing.
CHATTERLEY: And this is so critical, too, because I think a lot of the data that we're seeing at the moment is cases. It's the death rate wherever
you look around the world, but we aren't talking enough about the recoveries and getting the sense of that data, too. Just to be clear as
well, it's free. It's free to consumers.
ROMETTY: Oh, absolutely free. Just download your app. Just give it -- you know, get it at the most current version and off you go. You'll see a
little red dot at the bottom of the screen.
CHATTERLEY: Now, I want to move on and talk about the other things that are going on here and the apparent lack of a Marshall Plan here to
galvanize the sources of -- resources of big corporates.
I know you in particular, you can track hotel rooms around the country. Do you get a sense that at the highest levels, there is that kind of focused
precision? How can big companies help and let's get you doing it? Or is it still pretty sporadic? Because that's how it feels.
ROMETTY: Yes, no, I feel in many ways, it's much more organized and many of us are stepping up and organizing. You see some of that on television.
But the most important thing now, one is fiscal stimulus, the other is to just shrink the duration of this issue. Now, that's going to happen via the
actions we all take about staying safe, working remote. I've got almost 300,000 people working remote as an example because we do mission critical
systems.
But it's also going to be when each of us stands up and organizes something, and so a perfect example. So many efforts right now are about
obviously containment. But we're also doing work on the cure. And when you say about marshaling, so in this case, what we decided to do was we put
together a consortium of all the supercomputers in the world.
Because what you find, and I saw, this -- it must have been 10 days ago, I was at one of the leading health institutions, an academic center here and
the researchers were saying, I have all these ideas on the coronavirus, but I need access to more compute power.
This takes immense compute power for these people to test different viruses, molecules, treatments, et cetera. And so this Sunday, we launched
the supercomputing consortium. It is with the Department of Energy, with NASA, with all the national labs. It is with all the other companies that
can contribute, ourselves included.
We built the number one and two supercomputers in the world, and so this is being used right now to go for what the real cures vaccines treatments are,
and just to give you a sense of, this is 265 petaflops, which in your own mind if you could take every computer in the United States and put it
together and make it one, that might be what you're getting close to.
[09:50:15]
ROMETTY: And this allows and even right now work is being done on -- think about this virus, as you know, it can attach to, as an example your lungs.
Well, are there ways to stop it from attaching?
So that kind of molecular modeling, you could run one model a year on a personal computer. This is allowing them to do thousands in an hour. And so
that, to me is a great example of industry coming together, other companies and industry, the government, all the supercomputing, MIT, RPI, together to
do something.
And I see this in many different areas, whether it's the donation of things like masks, we've donated, you know, companies like us have masks in all of
our different locations. We've donated them, as now have others. That's just a small example.
Two, we've come together with other companies, all the kids that are now distance learning, we are doing dozens of countries, even New York City,
300,000 kids don't have access to anything remote, or any kind of iPad or anything.
We're rolling those out. We did a million kids in Spain. So I actually think industry has come together quite well and put aside -- you know, just
work together to get that done.
CHATTERLEY: It's phenomenal, the power of computing and how it's moving as so quickly to try and tackle what is a global problem at this moment. It's
fascinating to hear.
I want to ask you though, as you pointed out, you have 350,000 workers at home now. I can only imagine the logistics and the support that that
requires on an emotional basis. Never mind anything else.
What do you make of the debate about perhaps staggering a reopening of the U.S. economy? You as a leader of business here knows the balance between
protection for workers economic risks at this moment versus health risks. Where do you stand?
ROMETTY: Well, I know that all of us, I mean, have put number one the health of our employees, our customers, our families. And you're right in
some sense, because what we do is mission critical work, we manage the invisible everywhere. We are so used to working in emergency or in crisis
situations.
So we've been built to work remote, which is when I said we've got almost 300,000 folks actually working remote. Many though do have to go on the
frontline. There are physical things that have to happen and our teams are approved in every country in this world to go out into the frontline
outside to do what they have to do.
And so what we've believed is that, A, we've got to keep these systems running, and we do that remote and where possible, we have to take some of
these chances to do it safely to go on site and get that done.
And so, in my mind, the most important thing to do is work on how to work and how to work safely. And the second most important thing then is to get
the stimulus to people who both individuals, small, medium businesses, critical industries that really do need this right now, Julia.
I mean, that's been -- as my role on the Business Roundtable, one of the strongest things we've advocated for and paid sick leave as an example,
because those systems surround all of us in what we do.
CHATTERLEY: I couldn't agree more. It's always a pleasure. Thank you. Ginni Rometty there.
ROMETTY: Always. Thank you.
CHATTERLEY: President, Chairman and CEO of IBM. Thank you. We'll be right back. One more look at the market price action today. Stay with us.
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[09:55:31
CHATTERLEY: Welcome back to FIRST MOVE for the final look at what we're seeing early on in the stock market trading session.
You've heard it from Anthony Scaramucci, I've said it. Be cautious here. Yes, we've got that $2 trillion investment in survival, as I keep calling
it.
But look, we have to be very cautious. There are still many risks. We have to continue to watch the impact on our markets, on businesses, on jobs of
course, too. Big jobs numbers tomorrow.
That's it for the show. Stay with us. You've been watching FIRST MOVE. As always, take care of yourselves and each other.
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[10:00:00]
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