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First Move with Julia Chatterley
A Warning From Dr. Anthony Fauci On The Dangers Of Reopening Too Fast; Dallas Fed President Robert Kaplan And What This Might Mean For Economic Recovery; Wuhan Launches A Mass Testing Drive As Reopening Risks Are Laid Bare. Aired 9-10a ET
Aired May 12, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:11]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
Needless suffering. A warning from Dr. Anthony Fauci on the dangers of reopening to fast.
Not fast enough. Dallas Fed President Robert Kaplan and what this might mean for economic recovery.
And COVID clusters. Wuhan launches a mass testing drive as reopening risks are laid bare.
It's Tuesday. Let's make a move.
Welcome once again to FIRST MOVE wherever you are joining us from in the world. It's great to be back with you.
Let me give you a sense of what's coming up in the show today. As you heard there, the President of the Dallas Federal Reserve will be joining to give
his take on economic recovery and what more financial support might be needed.
Plus, at a time of massive government spending and therefore currency printing, what alternative assets like Bitcoin, for example, might offer to
investors.
For now, here's a look at the global market picture. Europe is pretty mixed as you can see following a weak session in Asia. Hong Kong shares in fact,
were hit the hardest, down by some one and a half percent. I gave you a hint there in terms of regional risks amid the COVID outbreak.
In the meanwhile, U.S. futures are warming up slowly here following a pretty muted finish for the Dow and for the S&P in yesterday's trading
session. The NASDAQ though, the tech heavy sector continues to outperform. That's now up -- up -- two and a half percent year-to-date.
Yes, you heard me right, the divergence here, I think is key. A small handful of big tech names have led the charge higher as you can see. If you
look at the median stock, though in the S&P 500, it's still down some 25 percent from recent highs. We call that market breadth and the lack of that
breadth remains a concern to me.
Certainly, we're relying on a small number of stocks to keep us at these levels in aggregate. In that vein, Goldman Sachs now warning that the stock
market rally has gone too far too fast. They're saying we could see an 18 percent pullback over the next three months as the challenges of reopening
become clearer.
It's a challenge that Dr. Anthony Fauci is likely to confirm on Capitol Hill in the next hour.
The White House's top coronavirus expert will reportedly warn against restarting the U.S. economy too quickly, even as states begin to reopen in
the absence of widespread testing. And that's where we begin the drivers with Dr. Fauci's testimony.
Joe Johns joins us from the White House. Joe, we've had a hint, I think from "The New York Times" today on just what we're expecting from Dr.
Fauci. But do we get a different tone than perhaps we normally hear, which is perhaps more reserved when he is in front of the President and wary to
avoid challenging the President, I think in terms of views here?
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Well, he certainly has a way of walking the line, doesn't he? He seems to balance contradicting the
President with trying to get information out, but this is going to be a very interesting, hearing number one for the reason that we're going to
have witnesses testifying remotely, including Dr. Fauci before the Senate Health Committee.
And what we've been able to discern from a variety of sources is that Fauci essentially, is going to be speaking not just to the public here in the
United States, not just the United States Senate, but also to the governors of the states that are trying to unlock their economies right now in doing
so at quite a clip.
His message is doing that too soon will risk needless death and suffering. This statement he gave to "The New York Times" in the form of an e-mail, it
says if we skip over the checkpoints, we risk the danger of multiple outbreaks throughout the country. This will not only result in needless
suffering and death, but would actually set us back on our quest to return to normal.
He'll be testifying with some others who are also in quarantine, including the Director of the Disease Control Unit out of Atlanta, also the Food and
Drug Administration and an Assistant Secretary of Health and Human Services.
No hint really at all, by the way, Julia, in the prepared text from these myriad number of officials, as to what Fauci is going to say if it is along
the same lines of what he wrote to the reporter at "The New York Times".
[09:05:02]
CHATTERLEY: It's interesting, Joe, because you can't help but feel like it's a case of trying to slam the barn doors after the horses have bolted.
More and more states continue to open up irrespective I think of the challenges here that we simply don't have enough testing state by state,
that we're not doing the kind of tracing that we see happening in other nations around the world.
What good does this do perhaps other than frighten people that we know, in aggregate are cautious of how quickly things are opening up as much as
we're all frustrated with lockdown measures?
JOHNS: Yes, it's very, very difficult to try to bring those two ideas into compartment, if you will. I can tell you also looking at some of the
statements that they've submitted, this testing issue is going to be a real one because as you know, just last night in the Rose Garden, the President
of the United States once again repeated that line he's had before, anyone who wants to test can get one.
The doctors and scientists have been making it very clear that people who need tests in the United States, in other words, they have a medical
necessity because of exposure, or because of illness or because of symptoms, those people are more likely to get a test if they need one.
But as far as the general public, not so much, and then it goes, of course back to that question of confidence in the U.S. and who needs to get tested
and what else needs to be done in order to restart the economy and to let businesses, as well as the general public feel as though they can go back
to some semblance of normalcy.
CHATTERLEY: Yes. The challenges of predicting workers and consumers here, which is not there yet. Joe Johns at the White House. We look ahead to that
testimony. Thank you so much for that.
Meanwhile, Tesla CEO Elon Musk, one of those pushing for a rapid reopening, he restarted production at the company's California plant despite local
officials, saying it should remain closed. Dan Simon reports.
(BEGIN VIDEOTAPE)
DAN SIMON, CNN CORRESPONDENT (voice over): A packed parking lot at Tesla's assembly plant in Fremont, California, as employees headed back to work at
the direction of their CEO.
Elon Musk tweeting on Monday, "Tesla is restarting production today against Alameda County rules. I will be on the line with everyone else. If anyone
is arrested, I ask that it only be me."
(BEGIN VIDEO CLIP)
ELON MUSK, CEO, TESlA: I present to you the cyber truck.
[CHEERING AND APPLAUSE]
(END VIDEO CLIP)
SIMON (voice over): Musk has been fiercely critical of the stay-at-home orders, calling them fascist. And over the weekend, in another tweet, said,
"Tesla will now move its headquarters and future programs to Texas or Nevada immediately. If we retained Fremont manufacturing activity at all,
it will depend on how Tesla is treated in the future. Tesla is the last car maker left in California."
In response, one state lawmaker saying "F Elon Musk."
Governor Gavin Newsom praised Musk in April after the CEO said he helped secure more than a thousand ventilators. Though the gift became a subject
of contention, as some hospitals reported receiving different devices that help with sleep apnea.
On Monday, Newsom tried to strike a delicate balance in the latest dust up. After all, Tesla employs more than 10,000 workers at the plant.
(BEGIN VIDEO CLIP)
GOV. GAVIN NEWSOM (D-CA): manufacturing broadly throughout the State of California is no longer restricted with modifications.
(END VIDEO CLIP)
SIMON (voice over): But Newsom also acknowledging that counties have the ability to make independent decisions. Musk filed suit Saturday against
Alameda County after the automaker was warned bringing workers back would violate its rules.
Alameda County says it is working with Tesla to implement a safety plan that allows for reopening while protecting workers.
(BEGIN VIDEO CLIP)
MUSK: If you don't make stuff, there is no stuff.
(END VIDEO CLIP)
SIMON (voice over): Musk telling podcaster Joe Rogan last week that in order to get products on the shelves, in his case, cars in the showroom,
the economy has to open up.
(BEGIN VIDEO CLIP)
MUSK: My thing is if somebody wants to stay home, just stay home. I say if somebody doesn't want to stay home, they should not be compelled to stay
home. That's my opinion.
(END VIDEO CLIP)
SIMON (voice over): And as Tesla employees now leave their homes to go back to work, Musk is getting support from Treasury Secretary Steve Mnuchin.
(BEGIN AUDIO CLIP)
STEVEN MNUCHIN, U.S. TREASURY SECRETARY: He is one of the biggest employers and manufacturers in California, and California should prioritize doing
whatever they need to do to solve those health issues so that he can open quickly and safely or they're going to find that if he is threatened, he is
moving his production to a different state.
(END VIDEOTAPE)
CHATTERLEY: CNN's Dan Simon there. One thing is clear, he has to protect his workers now because if he gets this wrong, and people get sick, oh boy,
the scrutiny.
All right, let's move on. Clearly to that point, the challenges of reopening amid the pandemic laid bare in Wuhan, China, the original
epicenter of the coronavirus outbreak. The city is now planning to test all residents after new cases emerged over the weekend.
Ivan Watson is live in Hong Kong for us. Ivan, this just encapsulating I think all the challenges that we were just discussing in the United States
and beyond, laid bare in Wuhan, it's not just Wuhan, where China is taking action either.
[09:10:12]
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: No, it's not. We're watching China deal with two relatively small outbreaks of, in total, only
a couple of dozen confirmed cases of coronavirus.
But the seriousness with which the national and provincial authorities, municipal authorities are taking this really speaks volumes.
In the case of Wuhan, that city that back in December where the coronavirus was first really discovered and identified and then it just exploded into
the first real epicenter that the planet saw and then it kind of raced on from there.
Well, the city had succeeded in keeping the coronavirus cases down. No new cases detected for about a month. High school seniors had gone back to
school last week and then over the weekend, six new cases discovered.
So, city authorities have issued an emergency notice on Monday of this week, announcing what they describe as a quote, "10-day battle," and they
aim to test presumably more than 10 million residents of that city for the coronavirus in a 10-day period.
We do not know when that will begin, but that suggests that they are not fooling around even six confirmed cases of coronavirus are being treated
with deadly seriousness.
CHATTERLEY: And this just shows you what it takes and the kind of response again that we're seeing elsewhere in the world, Ivan, and it is not just
about the testing, it is about tracing people as well. Who are your contacts? And did they now need to be quarantined or isolated, too? That's
how you lock this down.
WATSON: It is, and it's not just Wuhan that China is dealing with. There's another city in Jilin Province, that's on the border with Russia and North
Korea, and there's a city there called Shulan, and over the weekend, a number of cases were identified there as well.
And epidemiologists with the Chinese Center for Disease Control have traced the possible source of this to a 45-year-old woman who reportedly worked in
the laundry section of a Public Security Bureau in that city.
And so, there, they've done a complete lockdown this week, and we're only talking about 14 confirmed cases in two days. But again, it goes to the
seriousness with which the Chinese authorities are responding to these cases.
And these are numbers that frankly, most American cities and towns would wish to have, given the just explosion of cases and the fact that confirmed
number of cases in the U.S. vastly outnumbers the confirmed cases of coronavirus in China that is if we can really trust the official statistics
coming out of China.
CHATTERLEY: Absolutely and that is a great point to make. But to your bigger point here, there are so many lessons that need to be learned in
response, in reaction and comparative numbers. And the reaction, even though small numbers gets.
Ivan Watson, great to have you with us. Thank you so much for that.
To Saudi Aramco now. The oil giant seeing profits slide some 25 percent over the last quarter. This comes amid the coronavirus outbreak and the
price war with Russia that sent the price of a barrel of oil into freefall.
John Defterios joins me now. John, when I look at these numbers, you get a sense of the reaction function that we've seen in terms of the austerity
measures coming from the Kingdom, but as bad as it is, we know, current quarter will likely be much worse. Talk us through the details here.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Yes, that's a perfect way of putting it, Julia and considering the state of play in the market
right now, the bar was lowered low for Aramco in Q1, and it didn't meet expectations at 16.7. It's about a billion off of the estimates I was
looking at and they made $20 billion in this quarter last year.
And as you suggested here, because of the oil price war and the pressure that Saudi Arabia put on the market by adding production in April, it'll
get worse in this quarter and we'll see those results obviously, coming in July and August.
But unlike ExxonMobil for perspective here, it made money in the quarter, a lot of money, right? And the dividend is going to hold at $75 billion,
something that Shell couldn't do, but it's not clear sailing here in the Middle East by any stretch of the imagination.
I was looking at it. The average price for Brent last year was $64.00 a barrel. We're hovering around $30.00. If we get away with $35.00 as an
average price, Saudi Arabia, the UAE, Kuwait, Iraq, the major producers will suffer.
That's why we saw the Crown Prince Mohammed bin Salman put forward some draconian measures on the Monday that people are still talking about here,
the VAT tripling, benefits cut and now he has to revisit his major Vision 2030 projects like the futuristic city, Neom, which he was hoping to spend
a half a trillion dollars on, right?
[09:15:12]
DEFTERIOS: His elder brother, the respected Minister of Energy, Abdulaziz bin Salman, additional cut of the million barrels a day, Julia. Do the
math, it's nearly five million barrels taken off the market by Saudi Arabia and Saudi Aramco in a span of 45 days.
It is extraordinary, 18-year low in production that will hurt revenues. So, the bottom line here is desperate times, tough decisions, and even Bernard
Looney of BP was suggesting today because of COVID-19, and something you've tracked very carefully, it may have brought forward peak demand for oil. It
may never go back again, and that's very hard for the IOCs and a company the scale of Aramco.
CHATTERLEY: Wow. I mean, there's so much math to do here, and unfortunately, none of it really adds up, John, and that's the challenge
and great to have you with us. John Defterios there, thank you so much for that.
All right, we're going to take a break here on FIRST MOVE, but coming up, an exclusive. The President of the Dallas Federal Reserve on FIRST MOVE to
discuss jobs and jumpstarting economic recovery.
And track and trace, a look at how officials in Hong Kong are leveraging wristband technology to fight COVID-19. Stay with us. That's next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. We are looking at the solidly higher open for U.S. stocks as we count down to that Senate testimony from
Dr. Anthony Fauci on how best to reopen the U.S. economy. He is expected to recommend a cautious, go slow approach to avoid a resurgence in cases.
Investors perhaps also concerned that the way back will be a long and difficult one, too. The futures market appears to be pricing in negative
Fed funds rate by the end of the year, although you've got technical factors here to consider, too.
In the meantime, the U.S. Federal Reserve is set to begin buying Exchange Traded Funds or ETFs that invest in corporate debt today.
It's a key program intended to help the United States get through perilous times.
Robert Kaplan joins us now in an exclusive interview here on FIRST MOVE. He is the President of the Dallas Federal Reserve, and a voting member of the
Fed Policy Setting Committee.
[09:20:10]
CHATTERLEY: President Kaplan, fantastic to have you on the show with us. Just let's start by discussing the numerous measures that the Federal
Reserve has taken and at breakneck speed. Are you comfortable that enough has been done, given what you're seeing for the U.S. economy at this
moment?
ROBERT KAPLAN, PRESIDENT, FEDERAL RESERVE BANK OF DALLAS: Yes, I mean, I think what we've done is stabilize the markets, work on helping small and
mid-sized businesses to be able to have access to funds.
Most of what we do is lending though, it's not grant making, its lending. And so, it is intended to be a bridge to help businesses get through this
period, and it needs to be complimented by fiscal stimulus and other more grant making activities which are done by Congress and the Treasury.
But yes, I think we've gotten where the financial markets are working relatively well during this period.
CHATTERLEY: You're echoing Jay Powell who has said, look, our responsibility here it comes down to lending, not spending to be specific.
Are you suggesting that more help from Congress is required?
KAPLAN: Well, if we get to a peak unemployment rate, which we think we will have around 20 percent, and we end the year around 10 percent unemployment
rate, yes, there may well be the need to be more fiscal stimulus in order to boost economic growth, so that we can grind down that unemployment rate
and get closer to full employment. Yes, I think it will be necessary.
CHATTERLEY: You've suggested an eight to ten percent unemployment rate by the end of 2020. That's millions of jobs lost from where we were at the
beginning of the year. It is millions of jobs gained, from where we sit today. What drives that confidence based on real concerns about the risks
of reopening and getting businesses back to work quickly, when you've got the health crisis that we're still fighting at the same time?
KAPLAN: Yes, so certain sectors will have an easier time reopening than others and they'll hire workers back. There are other sectors, as you point
out, that are very sensitive to health concerns -- restaurants, hotels, airlines -- you know, a number of other sectors like that where they're
going to be very slow and cautious to reopen and they are going to be more limited in how many workers they bring back.
And even when they are up and running, they may decide they need fewer workers than they did before. So, that's the dilemma.
So the health concerns will have a big impact on the rate of job growth, and then there'll be structural changes in the economy which were already
happening before which will be accelerated that also are going to affect this.
CHATTERLEY: You know, one of the big components of this is the consumer, whether it's confidence or spending power. When you look at the measures
that have been taken, the boosted unemployment benefits, the extension of those. Net-net, do you think overall income levels for people in the United
States will be equal to what they were last year, less than or perhaps higher than based on the support that's been provided?
KAPLAN: So, I mean, there's been support provided to sustain people through this period. But the reality is, if you have an eight to ten percent
unemployment rate, at the end of the year, you're going to have more job insecurity. It's going to have some downward effect on wages. You're going
to have people that are out of the labor force that were previously in the labor force.
And so the overall effect on incomes and consumer spending power has got to be negative, I would guess, which is why it's going to be critical to grind
down that headline unemployment rate.
CHATTERLEY: Talk to me about what the support the Federal Reserve might be able to provide here. Can we rule out negative interest rates at this
moment and at any point in the future? Because it's a debate that keeps coming up.
KAPLAN: Yes. I would be against negative interest rates. I think a number of others have spoken about this, and the reason for being against negative
interest rates is the impact that would have on our financial system, on intermediaries, on money market funds.
I'm a skeptic as to whether negative interest rates would actually be helpful, or whether the help would in fact be outweighed by the harm it
would do to the financial sector.
So, I personally am not a fan or proponent of negative interest rates. I think we're going to have to try other measures instead.
CHATTERLEY: I want to talk to you about the energy sector in particular, it's obviously very relevant for Texas in particular. You've talked about
bankruptcies from some of the smaller highly leveraged players. Can you give us a sense of proportion, how many small businesses in this sector are
you fearful that we lose?
[09:25:17]
KAPLAN: So, let's try it this way. In December of 2019, U.S. energy, U.S. oil production was 12.8 million barrels a day. We think it'll end the year
at 10.8.
The Permian will shrink by as much as a million barrels a day. So if that's true, it means a bunch of wells are being shut in by producers. It means
those who provide services to those producers have less business, a number of them are highly leveraged, and many of them are going to either go
bankrupt or need to be restructured.
And so the scale though, the best way to talk about the scale is just an absolute production, which is actually going to have a meaningful decline
and you're seeing meaningful shut-ins right now, and all of that has a ripple effect through the entire sector.
CHATTERLEY: Is it right --
KAPLAN: It will work its way through eventually -- it will work its way through, by the way eventually and by somewhere in the end of 2021, we
think we might actually work off the excess inventory, but it will take a long time.
CHATTERLEY: That's just one component of the economy, the energy sector. The Federal Reserve, Congress cannot save everybody. They cannot save all
businesses of all shapes and sizes. How many businesses do you think we lose as a result of this staggered approach that we're talking about to
reopening? It goes back to your point about the unemployment rate.
KAPLAN: So, we will lose some businesses. I mean, the nature of capitalism is that businesses emerge and businesses fail, jobs are gained, jobs are
lost, you know, in the tens of millions of dollars, tens of millions of jobs in a given year.
But it's clear that in some of these sectors that are particularly sensitive to consumer behavior and consumer confidence and the health
effects, we're going to lose a number of restaurants, service sector businesses, others that despite the help, just may have even been marginal
before going into this and don't make it through.
And a lot of it, again, will be correlated to which sectors are most sensitive to the prevalence of this disease, and people are just nervous
about frequenting those businesses. I think you'll see more failures and closures in those sectors.
CHATTERLEY: As a result of what you've just said, should more priority be given to tackling the health crisis spending in the form of testing,
tracing, in addition to tackling the stabilization of the economy in the interim? Do you worry that not enough attention is being given to the
health crisis that we face?
KAPLAN: Yes. Well, I put it more positively, a lot of attention has been given, but I put it more in a more positive way. Drug development, vaccine
development, testing, contact tracing are essential -- essential -- to the consumer being able to act with confidence, people being able to go back to
work with confidence and will accelerate the reopening of the economy.
So, investing in all of these healthcare measures is money well spent. That is probably the highest return investment we could be making right now.
CHATTERLEY: I like the positive spin. Thank you for that. Robert Kaplan, President and the CEO of the Federal Reserve Bank of Dallas. Great to have
you with us, sir. And thank you for your perspective.
KAPLAN: Good to talk to you.
CHATTERLEY: All right, the market opens next. Stay with us.
(COMMERCIAL BREAK)
[09:31:59]
CHATTERLEY: Welcome back to FIRST MOVE. The U.S. stocks are open for trade this Tuesday. You can have a look at what we're seeing and it's a higher
open, around five tenths of percent higher as you can see for the Dow after Monday's mixed session.
Investors, in the meantime awaiting Dr. Anthony Fauci's Senate testimony at the top of the next hour. His thoughts on how to get the U.S. economy up
and running safely again will help drive sentiment, I think today, particularly if he's warning that we may be going too quickly.
In the meantime, the United States rushing $11 billion in new aid to states to help them ramp up testing measures. This, of key importance, as more
Americans begin heading back to work.
It comes as more and more companies say their operations may have seen the worst. Toyota say sales could be back to 90 percent of normal levels by the
end of the year.
The CEO of hotel chain, Marriott, meanwhile, says negative trends, quote, "have bottomed" in much of the world and he says, business is improving in
China. We like those positive signs.
Meantime, the price of Bitcoin rising against the U.S. dollar this morning after the third halving in the currency's 11-year history. Halving means
the number of Bitcoins earned by coin miners is half what it was before. It's a measure to limit supply going forward.
Hedge fund manager, Meanwhile, Paul Tudor Jones has been boosting Bitcoin's credibility as an asset, he revealed he holds it as a possible hedge
against inflation.
Joining us now is Mike Novogratz, founder and CEO of Galaxy Digital. Mike, great to have you on the show this morning. I want to talk about halving
and what that means going forward.
But Paul Tudor Jones, for me was quite a wow moment. He is not holding it on his personal account. He is holding it within his hedge fund. What does
that mean to you is a signal perhaps of acceptability going forward?
MICHAEL NOVOGRATZ, FOUNDER AND CEO, GALAXY DIGITAL: Yes, listen, that's a huge deal.
CHATTERLEY: Yes.
NOVOGRATZ: You know, a lot of people -- I know a lot of people that bought it personally but wouldn't put it on their funds because you create a
career risk or look stupid risk, and all of a sudden, you know, Paul is one of the greats, right? He's been around for 30 odd years.
You can put him up in the Pantheon with Stan Druckenmiller and Louis Bacon and really as the kind of the Lords of Macro. And you know, what he is
putting us in and writing about it and writing very articulate about it, it opens up the field for anyone else who feels like they want to participate
in Bitcoin.
And so I think it's a very big deal, you know. We're slowly getting adoption. Today, JPMorgan (AUDIO GAP) and send it with both coin base and
Gemini.
That's a huge change from (AUDIO GAP) from where they were two to three years ago.
CHATTERLEY: Yes, just trying to price what you said is the look stupid risk here, which is a very interesting way to put it. Talk to me about the
halving as well and the impact that's likely to have because if it means that miners get less reward in terms of Bitcoin, do they go mine something
else?
But that equilibrium to find an equilibrium will surely take some time.
[09:35:06]
NOVOGRATZ: Well, listen, there's two -- the technical side of it is really simple. It's just less selling pressure.
CHATTERLEY: Right.
NOVOGRATZ: So there is less-- others have less points to sell on, so less supply.
The story though, right, Bitcoin is a story, and right now we have this amazing tailwind because of the macro situation globally. Right? We've got
quantitative easing on top of quantitative easing all over the world, not just here in the U.S.
Today, the Fed is going to start buying, you know, ETFs. And so, on the flip side, halving is really quantitative tightening. And so, you've got
this exclamation point on the story of what a scarce asset does. You know what a monetary system with scarcity looks like vis-a-vis or in contrast
what the Fed is doing?
And so it really is just this perfect timing really for what looks like a macro story that people are thinking I should have one to two percent of my
portfolio in this Bitcoin because the probability or possibility that things go really poorly with classic monetary fiat, monetary policy is
rising.
CHATTERLEY: So just to an investor who has never invested in crypto before, you're just saying, look, the risk reward here of simply having even just
one or two percent invested of your money in crypto assets like Bitcoin is, you know that your downside is it goes to zero. Your upside potentially
limitless in a world where there's lots of money printing going on?
NOVOGRATZ: Yes, you know, one thing I learned both from 1997 back in the Asian crisis and then in 2008 is when you have these paradigm shifts.
Things happen that you don't think could happen, like who would have thought oil could have traded negative in what it did or swaps rates could
go negative.
Before 2008, we didn't think swaps rates could go negative, and so with the kind of fiscal response that we're getting, I think we're going to continue
to get that and I'll get to that in a second. The dollar as a reserve currency, no one thought it was really at risk for 10 to 15 years. That
could change.
Listen, coming out of 2008, we had a lot of these same conversations, not around Bitcoin, but around gold, right? It was going to be the great
inflation, and instead we got a decade of deflation. The one thing I think is a little different is the response that came out of 2008 politically was this fringe party called the Tea Party that said,
no, no, no, no, Mr. Obama, you can't spend any more money.
And so we had this long tension of the Fed having to do a lot because fiscal wouldn't do anything.
Well, listen, Donald Trump swallowed and spat out the Tea Party, right? They don't exist. There is no fiscal conservatism, at least on the
Republican side, and the fringe party, if you want to call them fringe, that's coming out of this moment, looking at the rich-poor gap, the
inequality gap, quite frankly, is AOC.
CHATTERLEY: Yes, on the left.
NOVOGRATZ: It's the -- and so I just think, you know, right now we've got an extra $600.00 you know from unemployment insurance out of the Federal,
it feels pretty good if you're unemployed to be making $25.00 an hour.
Is it going to be -- pay off the college debt? Or is it going to be free college? And so, now that the fiscal doors are blown wide open, I think
we're going to have a hard time closing those barn doors this time.
And so, you know, we could just have this giant fiscal orgy monetized by the Fed, that's harder to stop and that's where you get the kind of first
we're going to have a deflation so we could really get to the basement of our currency.
CHATTERLEY: You raise so many important points there, but I want to hone in on something that you said about the stimulus checks because it's something
that I picked up with Robert Kaplan of the Dallas Fed.
You recently tweeted that you think household income in the United States could actually be up this year, even if we have 25 percent unemployment
because of the bumped up and extended unemployment benefits and the stimulus checks.
Do you really think that? He said he thinks it will be net negative, but you think actually, household income could hold up really well. It matters
for recovery.
NOVOGRATZ: It certainly does because I read that from some research shop, so I probably should double check if he is right.
CHATTERLEY: Couched it. Okay.
NOVOGRATZ: And tweeting it. But if you think about it, the living wage in America is $16.00, right? Eighty five percent of workers that work in big
box retail, so that's Home Depot, Lowe's, Target, made less than a living wage, right? They make roughly $13.00 an hour.
The entire fast food industry roughly makes $13.00 an hour. That's the average.
And right now, you know, if you're an employee and you come from one of those jobs, a good portion of the 30 million people that are unemployed are
not coming from high-end jobs, you're getting $25.00 an hour plus a $1,200.00 stimulus on top of that.
Now that's only lasting to July and we'll see what does Congress do? Do they extend it or not? But right now, you know, the numbers do add up. And
it's -- actually, if you look at the amount of retail buying in the stock market and the buying on things like Robinhood. You know, there's lots of
money being put toward -- even to the stock market. It's interesting.
[09:40:27]
NOVOGRATZ: This is a retail (AUDIO GAP) stocks.
CHATTERLEY: And it was -- I should point out, you tied it to the retail demand for Bitcoin, too. Very quickly, because we have about 10 seconds
before I get yelled at. What's your price target on Bitcoin by yearend?
NOVOGRATZ: I think we at least touch the old high of $20,000.00, if not higher.
CHATTERLEY: Wow. Mike, great to talk to you.
NOVOGRATZ: That's bullish.
CHATTERLEY: Yes, I can tell. Mike Novogratz, founder and CEO of Galaxy Digital. Great to have you on the show, sir. Thank you so much and stay
safe.
NOVOGRATZ: Thank you.
CHATTERLEY: Alright. People in Hong Kong are now free to go to the movies, sweat it out at the gym and relax at bars, partly thanks to new tracking
technologies. We'll discuss how it works, next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Russian President Vladimir Putin's spokesperson is in hospital with coronavirus.
Russian state media reports Dmitry Peskov is currently in treatment after testing positive for the virus. Peskov said he last saw Putin over a month
ago.
Meanwhile, the fire at a hospital in Russia has killed five COVID-19 patients. Officials in St. Petersburg say all five of the dead were
connected to a ventilator. The exact cause of the fire is under investigation.
According to John Hopkins University, Russia has now more than 230,000 coronavirus cases, that's the second highest in the world after the United
States.
Hong Kong meanwhile, has further eased social distancing rules after successfully battling a second wave of coronavirus cases.
The city is pioneering tracking technology using wristbands that ensure visitors follow quarantine restrictions.
[09:45:10]
CHATTERLEY: Joining us now is Victor Lam, Hong Kong's Chief Information Officer.
Sir, fantastic to have you on the show and to talk to you once again.
By far, the lion's share of the cases that you were discovering were coming from travelers, people coming in to Hong Kong. Talk to me about the how the
wristband technology works because I know it was about tracking quarantine adherence.
VICTOR LAM, CHIEF INFORMATION OFFICER, HONG KONG: Yes. Currently, disposable electronic wristbands are being used in pair with the Stay Home
Safe mobile app to monitor people and the quarantine. The wristbands and mobile app are local innovations that are modified to address the specific
needs of Hong Kong in supporting home quarantine arrangements.
To ensure that the people in the quarantine have the wristbands on at all time, the mobile app will continuously detect the signal of the wristband
and send random requests to the confinee to scan the QR code of the wristband.
We also have spot checks to conduct -- to be conducted by our staff of our control centers via video calls.
CHATTERLEY: It's fantastic technology that you're using here in order to try and make sure that people that are coming in are remaining in
quarantine for a given period.
Just tie that to the efforts that you're making in Hong Kong to reopen. Where are you now in terms of phasing reopening?
LAM: There in fact are different solutions that are being used in different places all over the world to monitor people under quarantine. In Hong Kong,
geo-fencing technology has been adopted as we attach very great importance to privacy protection, but we want to balance the effectiveness in
monitoring.
So, of course GPS allows detection of signals, but only in two dimensions and is not reliable in a city crowded with high-rise buildings like Hong
Kong.
On the other hand, geo-fencing technology detects signal changes up and down the floors and it allows a three-dimensional tracking of the confinees
without sacrificing their privacy, since we will know the exact location or the movement will be detected, as in the case of GPS.
We are still in the quarantine period, so we are still monitoring people under quarantine. As I said, now, over 170,000 people arriving in Hong Kong
had already undergone home quarantine by the various technologies we adopted and over 90,000 use different versions of our wrist bands.
CHATTERLEY: Wow. It's fantastic. It's, again, technology that other nations around the world could certainly look to and perhaps look to utilize going
forward.
Victor, I think one of the concerns as we watch Hong Kong is that as the region begins to open up and we see people acting to some degree, finding a
new normal that we see a return to the protests that we were talking about in Davos earlier this year.
How worried are the authorities about to return to protests and what measures do you have in place to try and control that for health and safety
reasons beyond anything else?
LAM: In fact, we attach great importance to privacy protection in the use of these bands, and we also want to lessen the inconvenience brought to the
people under quarantine.
So, our electronic wristbands are made to be waterproof and have been improved over time to become lighter in weight, and smaller in size.
Now, this is our current version of the wristband. It is of the size and weight of a watch and can be removed and disposed of by the confinees
directly upon completion of the quarantine period.
So, it's very easy to use, and for those who do not possess a smartphone, we will lend one to them for monitoring purpose and collect the devices
afterwards.
CHATTERLEY: It's going to be fascinating to watch the progress. Victor Lam, sir, fantastic to have you on the show with us and stay safe and good luck
with the technology. Thank you for that.
LAM: Thank you.
CHATTERLEY: All right.
LAM: Thank you very much.
CHATTERLEY: We're going to take a break here on FIRST MOVE. The risks of reopening too fast and too slow. Richard Quest is on the countdown as we
await testimony from Dr. Fauci, next.
(COMMERCIAL BREAK)
[09:51:41]
CHATTERLEY: Welcome back to FIRST MOVE and we're moments away now from testimony in the U.S. Senate from Infectious Disease expert, Dr. Anthony
Fauci who is expected to warn there could be quote, "needless suffering and death" if the U.S. reopens too soon. Richard Quest joins us now.
Richard, great to see you and thank you for holding the fort yesterday on the show.
I mentioned earlier --
RICHARD QUEST, CNN BUSINESS ANCHOR, QUEST MEANS BUSINESS: Anytime, anytime.
CHATTERLEY: Thank you. I mentioned earlier on that it feels like we're trying to slam the barn doors after the horses have bolted as more and more
states get cracking with opening.
The warning here from Dr. Fauci is apt, but late.
QUEST: Okay, so it doesn't matter what the country, it doesn't matter the time. The issue remains the same. As Fauci put it some weeks ago, at what
point, what price are we prepared to pay?
And it would seem that the United States is prepared to pay a higher, some say, much higher price in terms of death and cases versus the economy.
This is -- Governor Cuomo -- I keep getting confused with his father, of course, Andrew -- I'm that old -- Andrew Cuomo says again and again, it's a
false choice. But it is a choice that is being made.
On the one hand, it is the number of deaths; on the other side of the scale, the cost to the economy, and what price are we prepared to pay?
That's what we're looking at tonight on "Quest Means Business."
And you see it today. You'll hear it in Fauci's testimony today. It is the subject that every country is looking at.
CHATTERLEY: I know you're doing a special on it tonight, I think this is going to be a vitally important discussion. But to your point, if it's a
balance between what the price of life is in order to restart an economy, you have to be responsible with that.
And that requires testing, tracing, analyzing, making sure that you're at least reducing the amount of people that are put at risk as a result, and
we're just not there.
QUEST: That -- the testing and the tracing is a promise that leaders are making, and they're hoping to -- they're hoping to reverse it into the plan
afterwards rather than putting it in place forward.
The truth is, it's about how much we're prepared to pay.
CHATTERLEY: Yes, it makes sense. But President Trump actually and this is a critical point of one CEO that's been pushing authorities in his county and
we talked again, Elon Musk, earlier on this show.
Well, President Trump has now tweeted and said, "Elon Musk should be allowed to reopen his plant, now. It can be done fast and safely."
So, even at the highest level in the country, you've got the battle between states, between local authorities, between the White House over how they
should be efficiently and safely handled.
QUEST: Is that mutually exclusive? Efficiently and safely? Can you have both opening and safety at the same time?
CHATTERLEY: You can if you've got testing and tracing, Richard.
QUEST: You can't before the horse.
[09:55:03]
CHATTERLEY: Exactly. They've already left. We're trying, Richard. Thank you so much. I'm really looking forward to the show. I'll show your guests for
you as well, as Dr. Fauci warns about the cost of prematurely reopening economies. Tune in later as Richard mentioned, for a special edition of
"Quest Means Business."
Richard will be joined by Gary Cohn, Mohamed El-Erian, Paul Krugman and Jim Yong Kim. Wow. An all-star cast for a debate on the true cost of reopening
the global economy. That's at 8:00 p.m. London time. Do not miss it. It's going to be a fascinating conversation.
But that's it the show for now. I'm Julia Chatterley. Stay safe. Thanks for watching, and we will see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
END
