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First Move with Julia Chatterley
The Battle For Hong Kong Seems To Be Underway; China Warns The U.S. Against Getting Involved; Memorial Day In The U.S.; Millions Of People Marking The Memorial Day Event, But Managing To Ignore Social Distancing; Hertz Car Rental Company In Chapter 11 Protective Bankruptcy. Aired 9-10a ET
Aired May 25, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ALISYN CAMEROTA, CNN ANCHOR: Jim, thanks so much for joining me today. I really appreciate you being here. Have a safe Memorial Day.
JIM SCIUTTO, CNN ANCHOR: Nice to be here, always.
CAMEROTA: Great to have you. So, CNN's coronavirus coverage continues right now.
RICHARD QUEST, CNN BUSINESS ANCHOR: Live from New York, I am Richard Quest, in for Julia Chatterley all this week. It is still FIRST MOVE and here is
what you need to know.
The battle for Hong Kong seems to be underway. China is warning the U.S. against getting involved.
In the United States, it is Memorial Day, the day when we remember those who have fallen in battle, and millions of people are marking the event,
but managing to ignore social distancing.
And Hertz, the car rental company is in Chapter 11 protective bankruptcy. It's the latest in a large number of big names that have fallen by the
wayside. We will be looking at what makes it and what doesn't.
This is FIRST MOVE.
A very warm welcome as we start a new week together. It is a Monday. It is a bank holiday here in the United States and in the United Kingdom.
Julie Chatterley is off this week. So, I shall do my best to pilot my way through and I ask your forgiveness for indiscretions and in felicitations
on the way.
It is Memorial Day. The European markets though are open in Frankfurt, Paris, Madrid, Milan, and so on, and the trading day is higher overall.
Germany is showing the best gains of the day, two and a half percent, which is quite a lot more than the rest of them.
Asia also was mostly higher. The Nikkei was up over one and a half percent. Japan is lifting its state of emergency on the last remaining prefectures
in the country, and that would include Tokyo.
Hong Kong is flat, which is, I mean, after Friday's five percent fall and the events over the weekend, I suppose that's quite an achievement just to
remain flat on the day.
Oil, let me update you. It is higher. Strong crude gains last week for four straight weeks, still down 40 percent for the year, but as you can see,
when you think where we were just a few weeks ago, and now you see it back over $30.00 about, it pretty much sets up where we started from.
Strong gains for U.S. stocks on last week. The Dow best gains since April, and tomorrow will be a big day for New York Stock Exchange. Some floor
brokers will be allowed back onto the floor. Market makers, not; but floor brokers, yes.
Now, let's go to the drivers. China is threatening measures against the United States over Hong Kong. It is warning the not to interfere in China's
interests in the region.
There were protests on Sunday over the new proposed law by China against sedition, treason and the like, which are being seen by others as being a
full frontal attack on Hong Kong's two systems one country status.
Ivan Watson is in Hong Kong. This latest quasi-threat, you might call it against the United States.
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, I mean, there's a confrontation and tension between Beijing and Washington, and then there's
the question in the future status of Hong Kong and the Chinese government is bristling at any American criticism, including the possibility that if
it is determined that Hong Kong's special autonomy would be threatened by Beijing, that a special trade agreement between the U.S. and Hong Kong
could be threatened. That is not the kind of language that the Chinese government likes.
By the same token, we are witnessing an ongoing crackdown here in Hong Kong itself. The Hong Kong Police arresting at least 180 people on Sunday who
tried to engage in protests, the authorities here describing all of those people as writers, as vandals, as people who attacked police officers, and
echoing the language of the Chinese central government, which has said that -- it has claimed that more than six months of protests last year that got
increasingly violent, clashes between demonstrators and police pose a threat to China's national security as a whole.
And as a result, it has to push through this National Security Law, which would criminalize sedition, treason subversion, and has raised real
questions about the future of freedoms that this former British colony has enjoyed for decades and is supposed to enjoy until the year 2047 according
to international treaties -- Richard.
[09:05:09]
QUEST: Now, let's understand because we'll be talking to one of those in Hong Kong in just a moment involved in this.
The law on its face seems to be fairly straightforward, but as I understand it here, the issue is not so much the law on its face, but how it could or
would be interpreted in an anti-democratic fashion.
WATSON: That's the issue. The phrase here is one country two systems. The system in Mainland China, very close to where I'm standing is one party --
strict one party communist rule. There is no tolerance whatsoever of dissent.
You can't even post on social media in Mainland China, a picture of Winnie the Pooh because that's perceived to be an insult to the Chinese leader, Xi
Jinping.
Here in Hong Kong, it's the opposite. You have freedom of religion, you do have competing political parties. There is a narrative and criticism that
the Chinese central government has been increasingly chipping away at freedoms that Hong Kong has enjoyed.
China's top diplomat here, its Commissioner in Hong Kong made a case to assemble Consuls General here and to business leaders. And his message to
them was, don't panic. This law won't affect you. It'll only affect a tiny group of as he put it, terrorists and separatists and people who are the
agents of foreign powers.
But who will define who is a terrorist and who might simply be a critic of the authorities here especially at a time when large portions of Hong
Kong's population of more than seven million people are so unhappy with their handpick Beijing appointed leadership? When Carrie Lam, the Chief
Executive here only has 27 percent popular support according to a recent poll that came out earlier this month.
And that is one of the questions here. Could this new law mean that China's completely intolerant culture of police state could start to take root
here, decades ahead of what was supposed to be a handover and a switchover of its special autonomy to direct Mainland Chinese rule -- Richard.
QUEST: Ivan Watson is in Hong Kong. Let's stay with the issues of China and the United States. All the U.S. airlines that fly between the U.S. and
China have been seeking to restart some of the routes.
United and American have both asked for permission to restart routes subject to government approval. Washington now says that that government
approval is being withheld.
Clare Sebastian is with me. Clare, the routes are extremely lucrative, but it's a highly restricted set of bilateral understandings on these routes.
So, is Beijing refusing to allow U.S. carriers to start up again?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Well, right now, Richard, the situation is that the Chinese Civil Aviation Authorities have imposed a cap
on all airlines that they cannot basically schedule any more flights than they had in the middle of March.
And as we know, at that time, the U.S. carriers, Delta and United had suspended all flights to China. So right now, they're restricted to zero
flights to China and now, both of those airlines, according to the U.S. Department of Transportation have applied to the Chinese regulator to
resume flights. But apparently, they haven't heard back yet.
Now, the situation is the reason why the U.S. is so sort of getting so heated about this is because in the meantime, Chinese carriers have
continued to fly to the U.S. even though the U.S. banned inbound travel. They did not specifically restrict the airlines.
So the Chinese airlines have continued to fly, and in retaliation, the U.S. Department of Transportation has now said that those main four Chinese
carriers have to now file their schedules with the U.S. government and that they will determine, quote, "Whether those flights may be contrary to
applicable law or adversely affect the public interest."
So, they are trying to put pressure on China to lift these regulations and let these U.S. carriers who, as we know, are really struggling with this
drop off in in travel to resume some flights to China. They were hoping to do so, Richard, at the beginning of June.
QUEST: Okay, but if the day -- is it highly likely that these air routes do become a bargaining chip or back law weapon between China and the United
States, especially if Donald Trump goes on the electoral war path using China as a weapon.
SEBASTIAN: I think, Richard that the track record of this administration has shown that they don't want to be seen to be backing down to China.
So right now, with the situation seen as unequal, the administration is trying to sort of level the playing field by imposing this order on Chinese
airlines making them register their flights.
They say they hope to reach an equitable solution but China, meanwhile, has denounced this, they are saying that they denounce any restrictions imposed
on their airlines.
[09:10:13]
SEBASTIAN: So, we're sort of in a stalemate at the moment. The Chinese regulators has said apparently, to the U.S. authorities that they might
lift the March cap on schedules. They might allow U.S. airlines to fly one flight a week to China, which is currently the level that the Chinese
carriers fly into the U.S. according to the Chinese regulators. So, that might ease tensions a little bit.
But of course, we've been talking about it. This comes in a backdrop of much bigger tensions between the two countries. So, I think this might
continue to simmer.
QUEST: Clare Sebastian. Clare, thank you.
The U.S. is nearing a grim milestone of 100,000. If you look at the numbers -- the number of people who have died from coronavirus in the United States
notching up ever closer towards 100,000 and it happens as the country marks Memorial Day.
Meanwhile, President Trump has spent part of the Holiday Weekend golfing and tweeting. Some of the tweets were extremely personal attacks on a
television anchor alluding to allegations -- I jest not when I say this, a murder.
Now for most of American people, they're hitting the beaches and parks that are nearby. Social distancing, as you can see from these pictures, seems to
be a thing that's been forgotten.
CNN's Joe Johns joins me now. And Joe, before we come to what the likely policy, let's just stick with the President for a second.
In my weekend reading, a lot of criticism that on Memorial Day, when the U.S. and others commemorate those who have fallen in battle, the President
is tweeting about TV anchors and unproven allegations.
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Right, Richard. It's always a solemn holiday, Memorial Day, here in the United States, but particularly
sad, because we are approaching that grim 100,000 death milestone due to the pandemic while the President has spent the entire weekend out on the
links or on his phone.
(BEGIN VIDEOTAPE)
JOHNS (voice over): President Trump's spending much of the holiday weekend doing two things: golfing and tweeting.
Sunday, protesters gathered outside his course in Virginia, criticizing him for golfing while Americans are still grappling with the pandemic.
One sign declaring, "I care, do you?" This visit marked the 358th the President has made to one of his properties and the 266th trip he's made to
one of his golf clubs since taking office.
President Trump also reigniting his feud with former Attorney General Jeff Sessions, calling on him to drop out of the Alabama Republican Senate
Primary.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Jeff Sessions was a disaster as Attorney General. He should have never been Attorney General.
He is not qualified. He's not mentally qualified to be Attorney General.
He was the biggest problem.
(END VIDEO CLIP)
JOHNS (voice over): The back and forth continuing throughout the weekend with the President again criticizing Sessions for recusing himself from the
Russia investigation, but Sessions firing back, "I did my duty and you're damn fortunate I did."
Meantime, the President defending his decision to golf, tweeting, it was the first time he had played in almost three months.
The President further took the opportunity to attack former President Obama and former Vice President Biden for frequently vacationing and relaxing
while in office, even renewing his attack on Obama for, quote, "always playing golf," a line of attack then candidate Trump often made against his
predecessor.
(BEGIN VIDEO CLIP)
TRUMP: It was reported today, he played 250 rounds of golf.
Everything is Executive Order, because he doesn't have enough time because he is playing so much golf.
I'm going to be working for you. I'm not going to have time to go play golf.
(END VIDEO CLIP)
JOHNS (voice over): Trump even criticized Obama for golfing at the height of the Ebola response in 2014. That public health crisis saw four diagnosed
cases in the United States.
But as the U.S. death toll from coronavirus approaches 100,000, noticeably missing from the President's tweet storm, any mention of the Americans who
have died, instead tweeting positively about the nation's response writing, "Cases, numbers and deaths are going down all over the country."
(END VIDEOTAPE)
JOHNS: The President heads out in just a little while for Arlington Cemetery right across the Potomac River from Washington, D.C. where he will
lay a wreath at the Tomb of the Unknown Soldier.
Later today, the President will visit Fort McHenry in Baltimore for an event there. Local officials have criticized this trip because they say it
does not set a good example when they're trying to convince people to stay home -- Richard.
QUEST: Joe Johns in Washington, thank you. The United States is to bar people coming in, foreign nationals from Brazil.
The new policy bars entry to any foreign national who has been there over the last two weeks. It has the usual exemptions for U.S. citizens and for
green card holders.
The Brazilian Foreign Ministry tells CNN it's collaborating with the U.S. in the fight against COVID. Brazil now has the second highest number of
cases worldwide behind the U.S. CNN's Nick Paton Walsh is in Brazil.
[15:15:28]
(BEGIN VIDEOTAPE)
NICK PATON WALSH, CNN INTERNATIONAL SECURITY EDITOR: Brazil particularly now the second most impacted country in the world by coronavirus after
figures emerged late on Saturday night that seemed to be responded to by the United States, the most impacted country in terms of confirmed cases by
banning entry into the U.S. for those from Brazil or those who have been to Brazil in the last 14 days.
It seems in definitely a bid to try and prevent the infection here from getting into the United States or contributing to its spread inside the
U.S.
But this piece of bad news, of course for Brazilians comes on a day in which their President, Jair Bolsonaro has again been seen near crowds of
supporters not wearing a mask.
An unexpected rally in Brasilia, at the seat of government in Brazil, he was reported to have flown over these crowds in a helicopter then landed
wearing a mask and is then later filmed flying to one point by a Cabinet member and two lawmakers supporting him greeting supporters.
These are very common displays by the President of his support in the capital of government and is often used to suggest that he is comfortable
amongst other individuals that masks aren't necessarily essential despite the growing catastrophe inside Brazil itself.
Jair Bolsonaro's statement was always, it was a little flu, coronavirus or a cold. He has later modified his language to talk about the fight against
it being a war, but that was more to justify the use of the drug, hydroxychloroquine, which in some studies have been proven to actually be
harmful to individuals and certainly yet to be proven to be beneficial in the fight against coronavirus.
But Brazil, still it seems a week to two weeks away from its peak and its political leadership giving very divided signals themselves.
That main figure, Jair Bolsonaro not wearing a mask to this day.
Nick Paton Walsh, CNN, Manaus, Brazil.
(END VIDEOTAPE)
QUEST: In that report, you saw some of the President's supporters, the Brazilian President's supporters, but demonstrators also showed up as we'd
like to show you.
Mr. Bolsonaro was heckled by people in the crowd later in the course of the afternoon. According to local media, the President was going for hotdog and
soda when protesters started to bang pots and shout insults, which is the traditional way of demonstrating, banging pots.
Some could be heard calling the president a killer and trash.
Other stories now to bring you from around the world. A top aide to the British Prime Minister Boris Johnson was to make a statement this afternoon
explaining his behavior and answering questions after calls for his resignation following reports that he traveled 250 miles during the
lockdown. A journey he made while suffering from coronavirus symptoms.
Nic Robertson joins us now from London. I mean, he did it because he needed he said for him and his wife, child care and someone to look after their
child and best legal opinion suggests it was against the law despite what the Prime Minister said yesterday. So, what are you expecting to hear from
Dominic Cummings?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, the Prime Minister said he acted legally, responsibly and in integrity that his aide, Dominic
Cummings was in fact doing what essentially any parent, any father would do and the Prime Minister said he wouldn't mark him down for that.
And so, did he break the law? Or did he break if you will, the regulations that were in place? I think perhaps here, what we can expect this afternoon
is a defense of the position that Dominic Cummings took.
He spent many hours with the Prime Minister yesterday, before the Prime Minister gave him that robust defense in the press conference yesterday
afternoon.
So, it would seem that the Prime Minister was giving voice to Dominic Cummings yesterday, in defense of him. And if the Prime Minister is laying
open space within Downing Street for Dominic Cummings to speak again today, one might reasonably expect that that the defense of his position will
continue.
I mean, what the critics are saying, and they're saying it very clearly and loudly and these critics are within Boris Johnson, the Prime Minister's own
party. They're in the opposition. They are in the scientific community. They're within the civil service -- and they're saying that what Dominic
Cummings did undermined the very clear message that the government was giving at the time, which is don't leave your home, stay at home, don't go
and seek help or assistance in other parts of the country.
[09:20:03]
ROBERTSON: If you've got a second home somewhere else in the country, don't use it. Stay put.
So, a lot of people sacrificed a lot amid very, very, very tough decisions, and that's really sort of an emotional sense that you don't feel that the
government has perhaps caught up with yet.
QUEST: Nic, briefly, surely he'll only go if Tory MPs themselves demand he goes. If the Prime Minister feels the lack of support from his own MPs,
which may not happen, but that will be the catalyst to Cummings going.
ROBERTSON: You know, I think very briefly, I think the Prime Minister feels that he could put his neck on the line for a very trusted and key adviser
he has had a lot of success with that he believes that there was something about what Dominic Cummings had told him that would stand at scrutiny.
The Police Commissioner in County Durham, which is where he went in the north of the U.K., has asked the Chief of Police in the U.K. to have an
investigation into this and more facts can be put forward.
But, my sense of it is, is that the Prime Minister and his key ministers around him feel that there is something defensible in what Dominic Cummings
position is.
Now in public scrutiny that evidence isn't out there yet for people to make the judgment and they're angry in the most part.
QUEST: Nic Robertson, thank you. In just a moment, tear gas and violence on the streets of Hong Kong. We will talk to leading activist, a pro-democracy
activist in just a second.
And Hertz has filed for protective bankruptcy. Now, will this magnificent car rental, venerable company come back from the brink? In a moment.
(COMMERCIAL BREAK)
QUEST: Anger and unrest has returned to the streets of Hong Kong after the Security Forces used teargas to break up demonstrations.
Joining me now is Joshua Wong, the Secretary General of the pro-democracy party, Demosisto.
Joshua Wong, thank you for taking time to be with us. Look, the core complaint about this new law is that it could be interpreted as anti-
democratic. It could be used by the Chinese government against the colony. In what way do you think that?
[09:25:29]
JOSHUA WONG, SECRETARY GENERAL, DEMOSISTO: Time is running out in Hong Kong, especially how the introduction of the National Security Law, just
really eroded the one country two system framework to be one country one system with the anti-subversion regulation, which just kind of speech crime
and will just target not only protester, but even journalists, NGOs, religious groups, et cetera.
QUEST: But as I understand it, the law -- the point I'm getting at is the law as written seems entirely reasonable. You can't have sedition, treason,
and those sorts of things. What you're saying is, it's not the way it's written, it's the way it will be enforced.
WONG: Yes, and I think that's the point because in the previous day, China just use the anti-subversion law to arrest Liu Xiaobo or other prominent
political dissidents in China.
And when they bypassed the Hong Kong legislature and arrested people with such National Security Law, we might be jailed for five, 10 or even 20
years just because of criticizing the government.
The problem is not about anti-subversion. It's about how the regime, how Beijing define what is meant by subversion, and of course, in some of the
eyes of the global community, at least it still estimates and recognizes the importance of freedom of speech.
But in Hong Kong or under the hotline rule of Beijing, it would just be to silence the voice of Hong Kong.
QUEST: But haven't you got a big problem here and that is the rest of the world like China, where the rest of the world is only now recovering from
coronavirus.
The last thing many countries will really want, whatever they say publicly, is a full throttle battle with China, which could lead to more economic
harm. The United States could certainly be in that position.
So, isn't your biggest problem while other countries might make noises in your support, they won't do anything active towards it.
WONG: I think how you already point out the fact of how Beijing take advantage during the outbreak of COVID-19 and during the pandemic was
global and -- such a global health crisis, but all you realize is loss of world leaders and also, MPs or congressmen around the world have shown
their concern in the previous few days, especially the joint statement by the Foreign Ministers from UK, Australia and Canada.
At the same time, how Secretary Pompeo also raised the concern and criticized the implementation of National Security Law that just eroded the
high degree of autonomy in Hong Kong.
So after --
QUEST: But Mr. Wong, you need more than strong words and one assumes that the protesters will be back on the streets in Hong Kong. But where are you
going to get real action from other governments?
WONG: Yes, I think that's the point and actions speak louder than words. In local community, of course, we will mobilize as many people as we can, more
than hundred thousand Hong Kongers might take back to the street again soon.
But in the global community, we urge the U.S. government to implement and execute the Hong Kong Human Rights and Democracy Act signed by President
Trump last November.
At the same time, how to enhance the censure mechanism in U.S. and several European countries will really matter to let Beijing realize that we have
international allies to stand with fellow Hong Kongerse to safeguard freedom and free flow of information in such a global city.
QUEST: Good to talk to you, Mr. Wong. Thank you. Joining us from Hong Kong, I appreciate it. It's late in the evening there for you.
Now, in just a moment, no opening bell in New York, of course, because it's Memorial Day, so there'll be no opening bell. But we will have plenty more
for you, including a close look at the future of retail. In a moment.
(COMMERCIAL BREAK)
[09:32:50]
QUEST: A warm welcome back. Julia is having a well-earned week off, let's hope she enjoys it. In the meantime, they've left me at the helm of FIRST
MOVE. So, it'll be a rocky ride for both of us before the week is out, but we shall continue forcefully forward.
And now, U.S. markets are closed today. It is the Memorial Day holiday. It's also a bank holiday in the United Kingdom and other markets, they are
trading higher.
Germany had a rollicking good session. Have a look at the numbers and you'll see. Look at that, up two and a half percent for the German market.
Bayer is rallying on reports that it has closed a large number of U.S. cancer lawsuits. That's all about the Roundup weed killer.
Lufthansa German Airlines -- the Lufthansa Group. That's up, too, apparently to agreed terms of a bailout package with the German government
set to be worth almost $10 billion, Air France got $8 billion -- Air France KLM.
Meanwhile, the New York Stock Exchange this time tomorrow will be we reopened. The trading floor again. The floor has been closed for two months
during COVID and the floor will look a bit different. Hand sanitizers everywhere. Plastic partitions for safety.
And most important of all, it is limited to some of the floor brokers that will be about to trade as the floor market floor will not be open.
Shares of e-commerce companies, Shopify have jumped more than a hundred percent so far this year. That's doubling up.
The company provides online tools to start and manage retail stores.
Joining me now is the Chief Operating Officer, Harley Finkelstein, who joins me now. Look, sir, of this phenomenal growth, how much is because --
I mean, I'm sorry to put it in unfortunate terms -- because COVID-19 has amplified and forced so many other retailers -- to put it crudely -- get
their act together online.
HARLEY FINKELSTEIN, CHIEF OPERATING OFFICER, SHOPIFY: Thanks for having me, Richard. I appreciate it.
So, as you articulate, there is certainly this catalyzing that has happened because of COVID. It sort of feels like if you look at the entire retail
industry, it feels like the year 2030 in terms of what retail would have looked like in that year has been pulled into 2020, and what I mean by that
is, it has taken about eight years or so for us to go from like five percent e-commerce as a percentage of total retail to about 15 percent.
[09:35:17]
FINKELSTEIN: And it has taken like three months to go from 15 percent to over 24 percent. So, certainly there is catalyzing that is happening.
But if you zoom out for just a second, you see something really remarkable, which is that it feels like there's a tale of two different retail worlds.
On one hand, it feels like you have these resilient retailers, people that are pivoting, people that are trying to find new opportunities. They're
moving from brick and mortar to brick and click. They're expanding their business.
On the other side, you have these resistant retailers, those that are sort of maintaining the status quo. And you're seeing that with companies like
J. Crew and Barney's and Forever 21 and they're simply not lasting very long.
And so it's really is a world of two different retail industries effectively.
QUEST: But isn't there also this great drive and wish by retailers, small and medium-size, to be able online to avoid Amazon? Now, we saw last week
or the week last, Walmart's excellent online numbers showing phenomenal growth.
We've seen it with Target, not to the same extent, but if you look at the small to medium sized retailers, they if they want to play online are stuck
in the Amazon ecosystem, is this where you come in?
FINKELSTEIN: Absolutely. So, what we believe is, we think for the future of retail to not only thrive, but continue to thrive. It has been for the last
couple years.
It has to be in the hands of many, and not in the hands of the few. And so for a long time, small brands and small retailers had no choice, but to go
to a big marketplace like Amazon or any of the other ones and sell their products there.
The problem with doing that is when you do so, you effectively are renting customers from those marketplaces. You don't build your own brand, you
don't have a direct relationship with the end consumer.
And so what Shopify has now done for more than a million brands and retailers, some really big ones, but also a lot of really small ones is
we've given them the tools they need to build our own unique online store, and actually in aggregate, that means that they are the second largest
retailer in America, Shopify is after Amazon.
So, what's happening is, we are providing these tools. We are arming the rebels so that the rebels, the small brands can build their own unique
independent businesses.
And honestly, the rebels are winning right now. Consumers are beginning to vote with their wallets, and preferring to do that.
QUEST: Harley, when shops reopen, do you think we have seen a fundamental shift away from going shopping in the mall or going to the high street? Or
do you think after a few weeks of nervousness, we'll be back to where we were?
FINKELSTEIN: Yes, it's a great question. No, I think what we've seen here is, we've seen a complete recalibration of retail. Now, will the growth
rate that we've seen over the last three months continue going from 15 percent of retail being online to 25 percent? No.
I mean, that growth rate has been dramatic, and we will continue to see more of that growth. But that rate of growth has been really dramatic.
But I do think we've seen a complete reset of retail. Consumers want to buy directly from the brands, from the stores themselves. Consumers want to be
able to buy wherever they want. It's all about consumer choice.
If they want to buy online, the retailers have to sell online. If they want to buy offline, the same sort of thing.
So will brick and mortar retail, open up? Yes, but this is a complete reset of retail and it's very exciting in many ways.
QUEST: Good to have you with us. We'll talk more about this in the future. Thank you, sir. I appreciate it on this Monday morning, Memorial Day. Thank
you.
Now, in a moment, micro loans, the ability to get small amounts of money and gives a disproportionate importance to those companies who receive it.
We'll discuss micro loans in the COVID-19 environment, in a moment.
(COMMERCIAL BREAK)
[09:42:02]
QUEST: The peril facing micro lenders is serious. The micro lender relies on debt collection. It's classic lending in the old fashioned way. They
lend, they get some of the money back and they are able then to use that money to lend to new people.
Now, the problem of course, is recovering debts and debt collection isn't possible at the moment in many cases because of coronavirus.
One of the largest micro lenders, Kiva is also nonprofit, which means there isn't much of a cash cushion left to fall back on when things get
difficult.
Now Kiva offers zero percent interest loans to small companies. It's created a Global COVID-19 Response Fund with partners like Hitachi, and so
far it has helped 8,000 borrowers in more than 40 countries including $2 million of support for U.S. entrepreneurs.
Kiva says it hopes to help thousands of businesses survive 2020 and the COVID crisis.
Neville Crawley is with me, the CEO of Kiva. He joins me from San Francisco. So, you've lent them money? What is the issue and the
difficulty? Is it getting the payments back in so that you can then facilitate further lending?
NEVILLE CRAWLEY, CEO, KIVA: Well, thank you, Richard. Good to join you. There are a couple of challenges right now.
One is obviously the collection of our payments, we have a lot of the world in lockdown. But over all the time, we've seen a 97 percent repayment rate
with Kiva and we're confident that ultimately small entrepreneurs, small business owners are very resilient.
One of the challenges right now is that actually, the micro finance field staff are not able to get out there and make loans. We estimate in over
April or May, there's been something like 70 to 75 percent reduction in small business lending around the world.
QUEST: Where are you targeting most? I presume, of course, those countries that didn't have a sophisticated government intervention for small
businesses would be where need is most.
CRAWLEY: We operate in 70 countries around the world and right now, rather than it being a specific geographic area, the challenge I think the way
that this economic crisis is evolving, it's really hitting the working poor and the small business owners globally in every country.
Say, it's hitting here in the U.S., it's hitting in Kenya, it's hitting in the Philippines. It is the people who are really most vulnerable and most
exposed. They're the ones who are seeing access to finance being reduced or completely cut off.
QUEST: So what can you do? I mean, you can lend and I mean, the micro lender philosophy is a brilliant one, but it doesn't always work well in
times of great strain and credit deficit, for the very reason that you do rely to a certain extent, for your own funding on better times.
[09:45:12]
CRAWLEY: Right now, I think micro finance -- or the work that we're doing on microfinance is incredibly important at this moment because we're seeing
government programs, we're seeing a whole lot of kind of interventions here, but microfinance is very, very agile.
In the U.S., we've been able to find loans in between three to six days, in many cases, so very, very quickly. And also the crowdfunding version of
microfinance that we do, the crowd has a forgiveness to it. So we can make loans that no one else would make.
And right now, that agility, and that ability to kind of get the money exactly where it's needed is so important. So, every day that goes by,
another business goes out of business forever, so that the speed is incredibly important right now and that's one of the things that
crowdfunding can do.
QUEST: So, bring this home to us so I fully understand the magnitude of the crisis. What do you expect the percentage of businesses will go out of
business? Or maybe better still, what would you expect the percentage of defaults or nonperforming loans to go to?
CRAWLEY: Well, globally, we see a couple of billion people that don't even have a bank account. They don't even have basic access to finance. And so -
- and right now, it is all about getting the amount of money to we are getting some money to a farmer, so they can buy the seeds for the crops
next year. Getting a store some money so they can restock the shelves.
So you've really got a couple of billion people out there globally, who are very, very exposed at this moment without access to finance.
So, if we don't take action, if we don't get this right, the economic impact is truly catastrophic and can set the world back decades of the
gains that we've made or people made for themselves lifting themselves out of poverty.
QUEST: That's the crucial point. Those people who have managed to make it into a middle class who are now finding themselves thrust back into abject
poverty.
Neville, I'm very grateful that you came and talked to us this morning, got up early. I appreciate it. Thank you, sir.
Neville was talking about micro loans, which is funding the very smallest; some very large corporations are having to restructure themselves, after
the break, Hertz is the latest iconic corporate name to seek protection from creditors under Chapter 11. The chances of survival? Well, we'll
discuss that after the break.
(COMMERCIAL BREAK)
QUEST: J. Crew and JC Penney have all fallen to protective bankruptcy. Now, Hertz, the car rental company has done likewise, brought down by the
pandemic.
What a name -- Hertz. What a history the car rental company has. The car rental giant, Hertz filed for bankruptcy protection. Anna Stewart is
following the story and with me now.
Anna, why?
ANNA STEWART, CNN REPORTER: Richard, really sad users as Hertz is filing for Chapter 11. This is actually after already said it was going to let
12,000 jobs go in the United States. That was in March.
But clearly, it's under a lot of pressure. Two thirds of its revenues comes from cars, which it rents from airports in North America. So, you can
totally understand why that is such a problem.
It has got a very complicated financial structure. Now, it does have enough cash it says to operate right now. But it needs to restructure its debt. So
no surprise that it's the latest in a string of companies, as you mentioned, to file for bankruptcy.
Looking ahead, can this business survive longer term? Well, not in its current state. Many expect it to have to sell many, many of its vehicles.
They are losing their value every week through this crisis.
So, lots of assets will need to go as well as all those jobs, a big debt restructure. And then when will this business return to normal?
Well, if we're talking about aviation not returning to normal before sort of 2023 to 2026, anyone who you speak to, this is a business cost so linked
to that, so it doesn't look good for the future, but it's doing what it can right now -- Richard.
QUEST: All right. Thank you. Anna Stewart, thank you. Now, more people are turning to home delivery in this crisis as America is seeing the return of
the milkman. Athena Jones reports from Connecticut.
(BEGIN VIDEOTAPE)
DOUG WADE, OWNER, WADE'S DAIRY: These are fresh pints of half and half --
ATHENA JONES, CNN U.S. NATIONAL CORRESPONDENT (voice over): For Doug Wade, owner of Wade's Dairy in Bridgeport, Connecticut, March was a scary time,
with schools shutting down and stay-at-home restrictions, forcing many other clients to close their doors,.
(BEGIN VIDEO CLIP)
WADE: And we lost 50 percent of our business literally overnight.
(END VIDEO CLIP)
JONES (voice over): So he switched gears, supplying grocery stores facing shortages and schools ramped up programs to feed needy students stuck at
home, his company regained some of the lost business.
Then --
(BEGIN VIDEO CLIP)
WADE: The phone started ringing for people looking for home delivery service. Do you do this? No, we don't. We did it in the past, but after you
had enough of these calls, you started saying geez, I wonder if this could be a viable way to sell milk again?
(END VIDEO CLIP)
JONES (voice over): The delivery service he launched has been a hit with customers like Christine Ostrowski in nearby Fairfield.
(BEGIN VIDEO CLIP)
CHRISTINE OSTROWSKI, WADE'S DAIRY HOME DELIVERY CUSTOMER: It's really been a big, big boom for us because we were struggling with grocery deliveries.
It's just really eased a lot of anxiety and stress.
(END VIDEO CLIP)
JONES (voice over): Wade's now delivers to 260 customers in some 30 towns across the state and recently bought another truck.
(BEGIN VIDEO CLIP)
WADE: A hand grenade bottle, that was a half pint bottle.
(END VIDEO CLIP)
JONES (voice over): Being a milkman is in Wade's blood.
(BEGIN VIDEO CLIP)
WADE: I was seven or eight years old. The clink-clink noise of glass milk bottles banging up against the metal dividers in the wooden cases is just
something I'll never forget.
(END VIDEO CLIP)
JONES (voice over): His great grandfather began making deliveries in a horse and buggy in 1893.
(BEGIN VIDEO CLIP)
WADE: People would time their meals around when the milkman was coming.
(END VIDEO CLIP)
JONES (voice over): After a century, Wade's halted deliveries in 1992 as clients' habits changed. COVID-19 is shaking things up all over again and
not just for Wade's.
While national numbers are scarce, producers and distributors across the country are reporting a surge in demand for home delivery.
Doorstep delivery in Lancaster County, Pennsylvania serves more than 300 families a week, another 300 or so are on a waiting list, and they're
hiring more staff to try to keep up with demand.
(BEGIN VIDEO CLIP)
DARYL MAST, OWNER, DOORSTEP DAIRY: We probably tripled our home delivery customers in about three or four-week time. Until we kind of maxed out our
capacity.
(END VIDEO CLIP)
JONES (voice over): Shatto Home Delivery outside Kansas City Missouri also has a waiting list. They've seen demand rise some 230 percent since late
March to more than 4,000 customers had doubled their staff.
(BEGIN VIDEO CLIP)
MATT SHATTO, SHATTO HOME DELIVERY: We've purchased four new delivery trucks and created countless new routes, probably about 14 new routes throughout
the metro over that period of time.
(END VIDEO CLIP)
JONES (voice over): Each company provides no contact delivery to promote social distancing.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: Would you like to have home delivery for tomorrow?
(END VIDEO CLIP)
JONES (voice over): And it isn't just milk, like the others we spoke to, Wade's sells a variety of dairy and nondairy products, including yogurt,
cheese, eggs, fresh bread, orange juice, and meats.
(BEGIN VIDEO CLIP)
UNIDENTIFIED FEMALE: The bacon will not be available until the end of May.
(END VIDEO CLIP)
JONES (voice over): The companies are hopeful that strong demand will continue even after the pandemic. Suddenly in this business, everything old
is new again.
Athena Jones, CNN, Bridgeport, Connecticut.
(END VIDEOTAPE)
QUEST: Now just before we leave you, let me show you markets and how they have traded -- the European markets.
There's no U.S. market today. Of course, it is Memorial Day. It's a bank holiday in the United States and in the United Kingdom.
However, the European market are open and you see the rest of the day is in Frankfurt. A gain there of some two and three quarters or two and a half
percent.
[09:55:11]
QUEST: We will be watching to see how the U.S. market does fare when it reopens tomorrow, but before I leave you, Hertz is in bankruptcy, and you
know these grand names -- I'll just enjoy the way Hertz used to advertise itself.
But now even I don't remember these days, but this is what it used to be like, what a way to go.
(BEGIN VIDEO CLIP)
TEXT: Let Hertz take you anywhere at all.
UNIDENTIFIED MALE: This vacation really let yourself go. Go Hertz class with a new Chevrolet or other fine car, you'll see things you've never seen
before. Do things you've never done before.
Hertz lets you change the pace completely. Go where you want when you want, if you wish take up to 20 to pays with the new Hertz revolving credit plan.
(END VIDEO CLIP)
QUEST: Now that's how adverts used to be done.
I'll see you tomorrow. Have a good day.
(COMMERCIAL BREAK)
[10:00:00]
END
