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First Move with Julia Chatterley
Nancy Pelosi Blames Republicans as Bailout Talks Falter; Apple Announces Four New Phones that are 5G Ready; Another COVID Vaccine Trial Halted on Safety Concerns. Aired 9-10a ET
Aired October 14, 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 is your need to know.
Democrats' dilemma. Nancy Pelosi blames Republicans as bailout talks falter.
Five jeepers. Apple announces four new phones that are 5G ready.
And pressing pause. Another COVID vaccine trial halted on safety concerns.
It's Wednesday. Let's make a move.
Welcome back to all our FIRST MOVErs around the globe. We are back with you just in time this Wednesday. Why? Well a few things. Because it's Q3
earnings time. For the banks, it is the second day of prime time for Amazon, and I just mentioned thereto, it is 5G time for Apple.
Verizon CEO Hans Vestberg will be here to explain the superfast future for the iPhone at 12. That's coming up later in the show. We're also watching
the ongoing testimony of Supreme Court nominee Amy Coney Barrett. We will go live to Capitol Hill up for the latest on that later in the show for
you, too.
For now, time for a look at stocks. The stimulus stalemate contributing to some softness yesterday and today, we look pretty muted. Let's call it that
premarket. We are digesting a whole array of earnings, too. You have to be careful this quarter. We are effectively comparing numbers to estimates for
Q3 that were created by analysts without much guidance from Corporate America last quarter, of course due to COVID, so that's always going to be
the challenge when we're assessing these numbers, but we did get results from U.S. banking giants, Goldman Sachs, Wells Fargo, and Bank of America
out before the bell today.
Goldman gets the gold star. Its profits almost doubled, driven by a near 50 percent rise in bond trading revenues.
Meanwhile, Wells Fargo and Bank of America said they will set aside less money for potential bad loans, a positive sign perhaps on the health of the
U.S. consumer or that they've simply created enormous reserves already. It follows similar moves by JPMorgan and Citigroup yesterday.
JPMorgan still has almost $34 billion to cover losses. That's according to CEO Jamie Diamond who seemed to take a page from the power playbook
yesterday saying, quote, "A well-designed stimulus package would increase the chances for a sustainable economic recovery time." Time. Clearly, not
on the side of the Washington negotiators as we head towards that presidential election.
Let's get more on this in our drivers. Christine Romans joins me now. Christine, I was hoping that while I've been away for a couple of days,
there would have been a breakthrough, but no.
What I do want to talk to you about Christine, though, is a conversation that our colleague, Wolf Blitzer had with the House Speaker Nancy Pelosi
yesterday, and it got pretty contentious. Let's just play a little bit of it.
(BEGIN VIDEO CLIP)
WOLF BLITZER, CNN HOST: There are millions of Americans who have lost their jobs. They can't pay the rent, their kids need the food.
REP. NANCY PELOSI (D-CA): That's right and that's what we're trying to get done.
BLITZER: $1.8 trillion and the President just tweeted stimulus, "Go big or go home." He wants even more right now.
PELOSI: That's right.
BLITZER: So why not -- why not work out a deal with him? And don't let the perfect as they say here in Washington be the enemy of the good?
PELOSI: Well, I will not let the wrong be the enemy of the right and --
BLITZER: What's wrong with $1.8 trillion?
PELOSI: Well, you know what? Do you have any idea what the difference is between the spending that they have in their bill and that we have in our
bill? Do you realize that they have come back and said all these things for child tax credits and earned income tax credits or helping people who have
lost their jobs are eliminated in their bill?
(END VIDEO CLIP)
CHATTERLEY: Christine, it reminds me of a conversation you and I were having last week. $1.8 trillion is a lot of money.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Yes. It really is. But the President says "Go big and go home" and Nancy Pelosi,
her case is, we did go big. We spent $3.4 trillion. The House approved back in May, five months ago exactly, and the Republicans tabled it for many,
many, many weeks. And now they're back going over the same old ground again, trying to come to yes.
Her point and her accusation there is that Republicans have stripped out some of these really important tax credits that she thinks are very
important for childcare workers and for childcare and for all of the people, the real working families who have been affected so badly by COVID.
That Heroes Act really focused in on working people and the people who are, you know the first responders, healthcare workers, teachers, state and
local governments.
[09:05:11]
ROMANS: So they have just a completely different worldview here. And I wonder the President saying "Go big or go home." Who was he talking to?
I mean, on paper, he was talking to Nancy Pelosi and the Democrats, but it's the Republicans and Senate Republican leadership that had been worried
or hearing from some of their membership about going too big. They don't want to spend a lot of money here again after four big tranches have
already been doled out.
So I think the bottom line here is that a big comprehensive, or at least full big relief for American families is not coming until early next year.
CHATTERLEY: Yes. And that's the heartbreaking thing, Christine. You made so many great points in that. We can lambaste the Democrats for seemingly
not being willing to do a deal, even a $1.8 trillion deal. I get they wanted $3 trillion earlier, but something is better than nothing.
ROMANS: Right.
CHATTERLEY: But I think your point is also a great one, if the Republicans here and many of them are saying, hang on a second, what do you mean $1.8
trillion? We've got no intention of doing anything of that size, even promising a deal at $1.8 trillion. It doesn't necessarily mean it's going
to come true. I want to bang everybody's heads together. People need money.
ROMANS: I know, they really do. And you know, Mitch McConnell, the Speaker of the House, the Senate Majority Leader, he had said, maybe we should do
just a PPP, a one-off provision next week. We can vote on PPP.
And so then you start going back in time, again, to some of these piecemeal efforts to get money to small business or to folks who need a one-time
payment, and I just don't think politically that that's possible.
We have been over that ground again and again, and I think there are a lot of people on Wall Street that are starting to assume that there's going to
be some big spending in the beginning of the year if you have a presidency that is Joe Biden, and the Senate taken over by the Democrats.
Is that going to happen? Who knows if that's going to happen, but at least that's sort of in the back pocket of some people who are hoping that
there's going to be some cash going out to hold up the economy and maybe even infrastructure, too, that is sort of the conventional wisdom now. That
can change over the next 20 days.
Let me be clear, that can change, but for people right now who are trying to figure out how to pay their bills, I just think this has got to be so
frustrating.
You mentioned Jamie Dimon, this summer, I interviewed him and he was assuming $1.5 trillion to $2 trillion in a matter of weeks then to get us
to the end of the year. He said that was the stabilizer to the end of the year. It doesn't look like we're going to have that stabilizer. That was
the assumption that a lot of people had, that there would be a shock absorber, another shock absorber for real families, and it doesn't look to
me like that's coming right now.
CHATTERLEY: Yes, I mean, the politics is just toxic. Meanwhile, there are families that are struggling to feed themselves. It's just -- it's
unacceptable.
Christine Romans, thank you so much for that. We all sigh.
ROMANS: You're welcome.
CHATTERLEY: Thank you.
All right, Apple entering the 5G era introducing four iPhone 12 models all capable of connecting to a much faster 5G network, starting prices range
from $700.00 for the mini to $1,100.00 for the Pro Max.
Dan Ives joins us now. He is the Managing Director of Equity Research at Wedbush Securities. Dan, always great to have you on. You said this is the
most important product cycle in what -- six years since the iPhone 6. It's the start of a super cycle. Did you get what you wanted from this
announcement?
DAN IVES, MANAGING DIRECTOR OF EQUITY RESEARCH, WEDBUSH SECURITIES: Yes, we did. I think Cook did not disappoint. In terms of weighing out not just
iPhone 12 5G but really a lot of the specs.
I think this is enough with a pent up install base, 40 percent haven't upgraded their phone in three and a half years within Apple's golden
install base. I think that's enough to be a super cycle, which is why I view yesterday a greenlight to continue to buy this stock.
CHATTERLEY: It's great to have a phone with 5G capabilities, but if the network is not there for many people, and there are a lot of analysts
saying, look, 5G is going to fail a lot like 4G, quite frankly, for a pretty long time. Does that matter for Apple? And does that matter for the
upgrade cycle that we're talking about and the benefits? Are people willing to buy the phone and just wait?
IVES: Also, if you look at China, that's important. I mean, in China 5G is already ready. That's about 20 percent of the upgrades that we expect over
the next year.
In the U.S., it's a work in progress. But I do believe in terms of you know, this sort of transformational, you know, speed highway that we see
with 5G, it's going to be enough for called 70 to 80 percent in a window of an upgrade opportunity to go ahead on iPhone 12.
But no doubt, you caught 20 percent to 30 percent in the install base will be fence sitters, but I do believe, if you take a step back here, it is a
once in a decade upgrade opportunity for Apple, which I think you're starting to see more and more optimism on the street.
CHATTERLEY: It's quite interesting, Dan, to your point again about how important China is. What are you hearing from some of the Asian suppliers
from Apple themselves because that's the best whisper gauge of what demand is going to look like and where it's going to be strongest.
[09:10:05]
IVES: Yes, I mean, if I look back in the last six to eight weeks, our Asia checks has been in tick up. I mean, originally, it was 65 million units for
the launch cycle. Now, we're seeing the 75 million, potentially 80 million. It speaks of the pent up demand.
And I think ultimately, this is going to be an A-minus product cycle at a minimum. I think base to best case, it's a super cycle.
So I think what you're starting to see here is just global demands there and also scattered price points. You look at this consumer backdrop, you
have some lower price points. That's what Apple is doing. It's an iron fence around its install base. And then of course, the services, which is
key to the rerating of the story.
CHATTERLEY: Oh, that's interesting. So we're actually in terms of phone price point versus some of the optionality that you have with that phone,
whether it's the camera, whether it's the sensor technology, what do you think is going to see greatest demand and how does that therefore all feed
into your price target for Apple?
IVES: Yes, it's a great question. I think it's specifically an iPhone Pro, the six one inch, six, seven, that's where we're seeing the biggest demand
in terms of what's coming out of suppliers. You'll get the LiDAR technology, the camera technology, the E14 chip, but it comes down to 5G
and especially in China.
Remember, China is the winch pin to this upgrade cycle. Now Apple has a horse in the race, and you look at the U.S. I think this is tip of the
spear. I think this is all tuned where 5G is are sort of next step to what I will use in the next three to five years. That's key to the Cupertino
growth story and I view this kind of going to the whole theme of upgrades comparable to iPhone 6 because as I said, I think it's a once in a decade
opportunity for Cook.
CHATTERLEY: Dan, are you an iPhone user?
IVES: Yes. We are a core iPhone household.
CHATTERLEY: Are you going to upgrade? Are you going to be one of those 20 to 30 percent fence sitters?
IVES: I'm not on the fence. I'll be pre-ordering the Pro Max because to me, Julia, it speaks to you know, I like the specs that I'm seeing, the
faster processing technology and I view 5G as really the start of really a transformational upgrade cycle. And for me personally, that's enough to get
me to upgrade.
CHATTERLEY: Yes, you know, I'm still one of those people that puts the finger over the lens when they take pictures with their iPhone. So I think
I'll stick with mine, but good to know.
Dan Ives, thank you so much for that.
IVES: Thanks for having me.
CHATTERLEY: Managing Director of Equity Research at Wedbush Securities there.
All right, for more on this, Verizon CEO Hans Vestberg will join us later in the show to talk about that 5G technology, so don't miss that.
All right to China now, carrying out mass coronavirus testing on one of its biggest cities. Officials in Qingdao say they have conducted 8.2 million
tests in just three days. This comes after 12 COVID cases were found over the weekend following the Golden Week holiday. More than 630 million people
in China traveled away from home during Golden Week.
David Culver is live in Beijing for us. David, I was pausing and deliberating there over some of the numbers. The scale of response from the
authorities in the face of all that travel and relatively so few cases says everything to me.
DAVID CULVER, CNN CORRESPONDENT: Julia, its massive scale. I mean, when you talk about a city that's larger than New York, and they are determined
to test every single resident, according to health officials. Yes, it's a lot of people. More than eight million they say that they have already
tested.
Of that eight million, they've got roughly half of the samples processed, and they say those are negative results. So they say there were no new
cases beyond the dozen or so that initially surfaced. Now, there's a lot of skepticism that is always met with the official reporting out of China.
And even one virologists who CNN spoke with, my colleague Kristie Lu Stout spoke with this virologist who suggested that this type of batch testing
because that's what they're doing here, essentially, it's pooled testing where they will do multiple people. And they'll do one run with say, 10 or
so individuals in that and if that comes back positive, they would then run individuals on each of those samples.
So this pool testing, while they say it's efficient, Chinese government that is, for this type size of city. The virologists that we spoke with
suggested it's not. It's a waste of resources even is how he characterized it.
However, China is moving forward with it. They stand by it and they've done it before. We saw it in Wuhan when they tested all 12 million residents of
that city.
We saw that here in Beijing in June, where they tested hundreds of thousands and I actually went to one of those mass testing sites and it is
rather impressive. It's quite organized and orderly. And it's also not an option. So people are brought there and they have no choice but to go
through with that.
Anecdotally, we can also say, Julia, when you talk to folks who are on the ground in Qingdao, one of the things I wanted to understand was, is this
just the official government numbers that are coming out and yet life perhaps is showing a fear and anxiety -- that does not seem to be the case.
If you look at social media here and you talk to some of the people who are in Qingdao, it seems as though life is continuing as normal. In fact, they
did no compartmentalized lockdowns, aside from the mass testing, it just is continuing on.
And that's something that does speak a lot of -- really to how they're handling this and it speaks loudly to how they plan to do it in the future.
But this is also going to be used by state media and Chinese officials to tout the containment effort.
But a lot of people say this is, you know, an authoritarian government's approach to it. You know, can it be applied elsewhere? It remains to be
seen. But the reality is people here in China, and Mainland China in particular, Julia, a lot of us feel as though we're in this bubble that
does look like life pre-COVID.
[09:15:46]
CHATTERLEY: Yes, it's fascinating, isn't it? So many, the elements of this simply wouldn't work in nations elsewhere in the world to your exact point.
And with regards to the data and the numbers, David trust-but-verify Culver, thank you very much for joining us on the show as always.
CULVER: Thanks, Julia.
CHATTERLEY: Thank you.
These are some of the other stories making headlines around the world. At least 36 states in the United States reporting an increase in new COVID-19
cases with hospitalizations rising nationwide. According to Johns Hopkins University, the country is averaging 49,000 new infections per day, with
the worst acceleration in the Midwest and northern states.
Meanwhile, Europe also grappling with a surge. Poland has recorded its highest daily new cases and deaths since the start of the pandemic.
Germany is also reporting a sharp rise in cases. The Czech Republic and Northern Ireland are closing schools, pubs and restaurants to curb local
outbreaks.
In the United Kingdom, Prime Minister Boris Johnson rejecting calls for a short nationwide lockdown, opting instead for regional restrictions.
On the coronavirus treatment front meanwhile, drug maker, Eli Lilly says it is suspending its trial of an antibody treatment due to safety concerns. It
follows Johnson & Johnson which paused its clinical trial of a vaccine candidate. It said a participant developed an unexplained illness. Here's
what the company's chief financial officers said about that on "Quest Means Business."
(BEGIN VIDEO CLIP)
JOSEPH WOLK, CHIEF FINANCIAL OFFICER, JOHNSON & JOHNSON: We don't know even at this point whether that individual is in the placebo arm or the
vaccinated arm, and we just have to do a little bit more diligence through the independent external panel before we can make any conclusive decisions
going forward.
But again, in speaking with our scientific team, especially for a study that's this large, 60,000 patients to have an adverse event or two
unexpectedly is -- is not uncommon.
(END VIDEO CLIP)
CHATTERLEY: Elizabeth Cohen joins us now. Elizabeth, we've talked about this before, not unusual in these kinds of trials. Safety first, what more
do we know?
ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: What we know so far is that of the four trials that have started in the U.S., two are currently on
pause. Julia, let's take a look at this big picture.
So Johnson & Johnson, as we were just discussing, that one is on pause. That pause is new.
AstraZeneca that trial has been paused for more than a month and we are not sure why it is taking so long to come to a decision should it go back on,
should it be discontinued. Moderna, they started their trial on July 27th. They have not paused. Pfizer, they started July 27th and they are also
still going. And of course, there are other vaccines around the world.
Now, as you mentioned, these things do happen. Sometimes a participant gets sick, there are tens of thousands in each trial, but what's important to
know is that this does not happen with every trial as we have just seen from this list.
A participant has to get sick and doctors who were running the trial have to be convinced that there's a possibility that it was because of the
vaccine, for example, to be silly, if a participant gets a vaccine one day, and the next day gets a mammogram and it shows a breast cancer, you're not
going to stop the trial then for that. The breast cancer had nothing to do with the vaccine. That breast cancer was there long before the person got
vaccinated.
So it's not just any illness that stops the trial or the pauses of trial. It's an illness where doctors are concerned it might be connected to the
vaccine. Does it happen? Yes. Is it the standard? No, it's not the standard. It doesn't usually happen.
CHATTERLEY: Yes, the critical element here unexplained.
COHEN: Right.
CHATTERLEY: Actually, Elizabeth, what you were mentioning there about AstraZeneca, very interesting to me, because my understanding, it's been on
pause in the United States since September 8th. But in the U.K., the trials restarted. Why would we have a situation where one country still has it on
hold and another country doesn't?
COHEN: You know, I have asked that questions of British and European and U.S. regulatory authorities, and I can't get a straight answer. I've also
asked that question repeatedly of AstraZeneca.
Basically, the way it looks is that each country has their own standards and their own process. Again, when someone gets sick, you have to ask
several questions: are they the only one who got sick? Are they the only one who got sick like this, who had this set of symptoms or this particular
diagnosis? And what's the -- you know, how common is this illness? If this happens a lot, maybe it's not such a big deal.
And so coming to that decision, trying to figure out was this because of the vaccine, or wasn't it, different groups of experts might have different
opinions. It appears that that maybe is what's happening in the U.K. versus the U.S.
In the U.K., in really just a matter of days, they decided it was safe to continue. In the U.S., one could say they are being more conservative. It
has been weeks, and they still have not decided whether it's safe to continue.
[09:20:41]
CHATTERLEY: Fascinating, isn't it? I guess where trust is everything in this country, we know we have a real challenge, a relative real challenge,
so they have to be really sure.
Elizabeth Cohen, great to have your insights, as always, thank you.
COHEN: Thanks.
CHATTERLEY: All right, you're watching FIRST MOVE. There is plenty more to come. Stay with us. We are back after this.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. U.S. futures are strengthening ahead of the opening bell and a nice jump premarket for Goldman Sachs. The
banking giant up almost two and a half percent after reporting pretty blow out Q3 results. Let's be clear, earnings almost doubling driven by strong
results from their trading desks and the investment banking division.
Revenues, meanwhile, at Bank of America came in light, but the amount of money that the bank set aside for credit losses came in well below previous
quarters. Meanwhile, Wells Fargo's earnings missed expectations but they too reported lower provisions for potential credit losses.
John Petrides joins us now. He is Portfolio Manager at Tocqueville Asset Management. Great to have you with us, sir, on the show. What do you make
of earnings season so far? To me, my strongest takeaway is if you have other things outside of the consumer banking division, you've been held up
pretty well this quarter.
JOHN PETRIDES, PORTFOLIO MANAGER, TOCQUEVILLE ASSET MANAGEMENT: Yes, I think your read is exactly right and those companies that are beating on
the top line beating expectations on sales and on earnings per share, their stock prices are going up; and those that are mixed, the stocks are going
down.
You know, my read through the banks collectively is -- and you nailed it right on the head, if you have a diversified business model that's a way
from traditional banking, you're hanging in pretty well.
[09:25:10]
PETRIDES: But the loan loss provisions that are coming in significantly less than analysts' expectations, that's a good thing. That means that the
CARES Act provided enough liquidity and that the economy is rebounding enough that the amount of provisions, the sandbags, if you will, that the
banks are putting out to protect against the hurricane or less, and you're seeing those come down dramatically.
So I think the read through for the bank's -- now, listen, expectations for the banks have been nothing. I mean, you know, it's hard to -- it is very
hard to get hurt falling out of the basement window, you know. I mean, this is the second worst performing sector in the S&P 500, only behind energy.
And, you know, for this to turn around, you really need two things. You need a second stimulus package to get put through, and you need really, you
know, the vaccine to get announced to distribute it to the masses.
CHATTERLEY: Oh, you mentioned some great points there. I was about to say -- and I do just want to talk about the sandbags, as you quite rightly
called them. I mean, JPMorgan yesterday, those earnings were pretty incredible as well defying gravity, but it came down to what you saw in
terms of their corporate and investment bank, in particular, with people rushing to raise money.
But Jamie Dimon did say $34 billion worth of reserves, should they be required? So when you've got that amount of cash set aside, or at least
available? Do you really need to be provisioning for more cash?
PETRIDES: You know, it's a great question. And I mean, the banks have been regulated post the financial crisis of 12 years ago to have stockpiles of
cash on their balance sheet, have stockpile of reserves, I mean, every bank you're seeing, all of their capital ratios that the Federal Reserve and the
government required them to have on their balance sheet have actually gone up.
I mean, they were protected for the hurricane coming into this. So the question is, once the economy starts to rebound, and you know, assuming
that you believe that COVID is not here in permanence, that hopefully Julia, nine months from now, when we have, you know, when we're looking --
or a year from now that you and I both have the vaccine that we all feel more comfortable.
And the idea of a socially distanced economy shrinks, and we want to go out and spend money more and go back to what life was, you know back in January
and February, the banks are going to unleash all of this capital. They're not going to be under the foot of the Federal Reserve as much as they are
currently as we get through this storm.
And guess what's going to happen at that point? Inflation expectations are going to go up because the economy is cranking again and that's going to
have the Fed apply less quantitative easing. They're going to print less money, which means interest rates are probably going to go higher, which
again, spells good things for the banks.
CHATTERLEY: We can reconvene a conversation in 2025, I think quite frankly with inflation. I'm sorry, we've got a long way to go, my friend.
I do just want to ask you something that you said to me last time, though, and that was that what would be best for stocks, and I appreciate your
point that the vaccine is critical here, and actually Goldman Sachs made the point earlier today that the vaccine is more important than earnings.
It's more important than elections.
But you said split government would be better for U.S. stocks? Do you still believe that in light of everything that we've seen, or do you think stocks
are perhaps pricing in a different scenario here?
PETRIDES: Yes, yes. So I do believe if it is a Biden presidency, and this is not a political statement. Again, this goes back to how I think the
stock market will react. If it's a Biden presidency, and the Republicans hold the Senate, I do think that the stock market will react favorably to
that scenario, because Biden has been very open about wanting to raise the corporate tax rate from 21 to 28 percent.
If you increase taxes on companies and they have to increase their earnings per share, we will get this massive headwind. How are they going to have to
increase earning earnings? They're going to have to increase their sales or cut expenses. And when you cut expenses, what are you going to probably do?
You've got to probably lay -- you have to lay people off.
So if you have a split government, it prevents -- it is not as easy for the Biden administration to pass through that corporate taxing and there are
other things that the Biden administration has possibly kicked around. This is, you know, possibly increasing the capital gains tax rate when you sell
a stock in your taxable account, and/or even removing, you know, the step up in cost basis when you're doing estate planning for stocks held in
taxable accounts.
All of those things, if they do come through are not good if you own stocks, just structurally, so that's why I think there could be short term
headwind if it is a Democratic sweep.
CHATTERLEY: Interesting, but it does raise all the likelihood that they can break the stimulus deadlock quite frankly, John, but we're out of time,
so we will have this conversation, we will continue at a later point.
John Petrides, great to have you with us as always, Portfolio Manager for Tocqueville Asset Management.
PETRIDES: Thanks for having me on.
CHATTERLEY: Great to be with you. All right, after the break, Tim Cook's guest at the Apple launches. Our next guest, Verizon CEO, Hans Vestberg is
talking super fast.
(COMMERCIAL BREAK)
[09:33:23]
CHATTERLEY: Welcome back to FIRST MOVE and the U.S. stock markets are up and running this Wednesday. The major averages pushing a little higher.
Well, a little bit, despite a new disappointment from Washington, a comprehensive emergency aid bill failing businesses and cash strapped
Americans is looking less likely than ever before the election.
A mixed picture for U.S. banks in early trading, too. Shares of Goldman Sachs rising after its golden quarter profits almost doubling in Q3, but
the likes of Wells Fargo and Bank of America, we are seeing some softness as you can see. Their results continue to get hit by weak loan demand.
Apple's new iPhones are billed as a leap forward in speed with 5G, but that won't mean anything without network coverage. Verizon says it's built a 5G
nationwide network for 200 million people in the United States and a faster ultra wideband serving parts of 55 U.S. cities, as well as 43 stadiums and
arenas.
Just to give you a sense, the nationwide service is shown in the deep red blobs on this Verizon map while the ultra-fast areas of the red circles
that you can see. The rest, it is mostly 4G LTE.
Hans Vestberg is Chairman and CEO of Verizon and joins us now. Great to have you on the show, sir. When I think about 5G, I always think about a
tradeoff between the low and the high spectrum and you compromise range in order to get greater speed.
Tell me what you mean when you say 5G just got real because that was your big statement yesterday.
[09:35:04]
HANS VESTBERG, CHAIRMAN AND CEO, VERIZON: You know, I think that for us, I think we have been building our network for the last couple of years here.
Of course, with the foundation of the best 4G network in the nation, that's the foundation, then we have built our ultra wideband which has a 10X, 20X
better performance than our 4G, which is best in the nation. We built that as you say, in the urban places, stadiums, et cetera, where the majority of
all the traffic are so we can both get the performance, but also see that the 4G performance is better for the for 4G users.
On top of that yesterday, we also launched our nationwide 5G, which is on a low band spectrum. That means that it has much more coverage, but a little
bit less of performance. That's what we have done. So basically, we have now the full map and what's happening, of course, is that when Apple comes
out with a 5G phone, with so many iPhone users in the United States, that's really when it happens for the consumers to find the consumers happening.
So that's why it was a big event yesterday, and our partnership with Apple has been super important for us to continue to develop our technology and
having partners supporting our network strategy.
CHATTERLEY: Define what little bit less means in that case then when we're talking about the low band network, because is 4G going to feel better than
the old 4G and how much of an improvement is there going to be when we're talking about 5G because the skeptics are already leaping on you and saying
hang on a second, actually 5G is going to feel much like 4G for much of the nation.
VESTBERG: First we need to remember, our 4G is fantastic and it is award winning. We won the root metrics in the last 14 years, so of course, that's
a really great base compared to. The 5G will have, when it comes to nationwide, it's going to be similar in the beginning. But that's just the
beginning of the 5G era, how we then can stack on new things on top of it, and I'm not going to be too technical, and then you can start doing
differences with slices of the network, et cetera. That's a nationwide.
But again, the ultra-wideband is a totally different dimension of how 5G can perform with the low latency capacity and speed in urban places. So
that's the sort of mode that we have built is, of course, something we want to give to our consumers and our customers to use the 5G network from now
on.
CHATTERLEY: You know, as you quite rightly point out, these two things are very, very different. How long does it take? And do we ever sees full
convergence? Because I guess the hope is that at some point, we'll be able to have that faster speed 5G technology when the infrastructure is there
all over the country. Will we see that one day? Or is that probably never going to happen?
VESTBERG: No, that's going to happen. But we also need to understand the customer base of Verizon is everything from 3G to 4G to 5G customers. We
need to see that we have the best network in all of them.
So remember, I mean, the market predictions or forecasts on external parties, how many will have a 5G phone in five years from now is basically
50 percent of the base in the U.S. will have a 5G phone, and think about 4G, that took quite a long time before everyone has a 4G phone as well.
So remember, you need to manage the world in order to have the best experience for all your customers and as the nation's biggest wireless
supplier, we of course need to see that and that's what we want to have.
But clearly 5G users are going to move on from here and be better and better.
CHATTERLEY: You know, we recently spoke to the Microsoft CEO and the Land O' Lakes CEO Beth Ford, and they were saying that there are 21 million
families and particularly in rural communities in the United States that simply don't have broadband access and everything that we've seen in the
last seven months has accelerated the digital divide for those that do have access, whether it's education or working from home, versus those that
don't.
Is there more that can be done or is the risk that actually what we're doing here with 5G technology accelerates the divide that we already have
and have seen widened in the last seven months.
VESTBERG: I don't think that the 5G is doing that acceleration, but I think that our society today is more -- rely more and more on the
digitalization because we need to do education, we need to do healthcare, and all other important society things at the same time, we need to do that
wirelessly or wireline.
So that is increasing. So I think we are doing quite a lot. I mean, we have now, starting this semester, we have 38 million students that we are
connecting, so they can actually do schooling from home or from the university in 40 states.
So we're doing everything we can to see that happening, and remember, there are three things we need to discuss with the digital divide. That
accessibility to broadband, affordability, as well as usability and usability is, is there content that they can use as well and I think that
we all the time need to be very specific, which are we solving for and I think that the accessibility where you're moving out the networks more and
more and of course, Verizon is the most scaled operator in the West when it comes to wireless and reaching more people than any other carrier.
So we are there, but then is also affordability, and then usability of all devices, applications for healthcare, for education, et cetera that is so
important to bridge the digital divide.
[09:40:31]
CHATTERLEY: Hans, I mean, you raise so many great points about the way that we have to think about this, do you need more government support,
because you're a company that has to focus on profitability. It may never make sense financially to build infrastructure in some of these regions.
If the government doesn't help and provide support -- financial support, too, it will never happen. Is this part of what is required as well at this
moment?
VESTBERG: I think we see that already. I mean, remember, building the networks, we are doing it from the private sector, then of course,
affordability is something we need to collaborate with. And then of course, applications is very much owned by the government, especially when it comes
to education. In certain areas, of course, healthcare is private, an application there.
So it has to be a collaboration and many of the biggest challenges we have on Earth today, you really need private and public sector coming together
to solve them. But clearly mobility broadband and Cloud is the foundation to solve some of the largest challenges we have right now when it comes to
inequalities.
CHATTERLEY: Yes, Hans, fantastic to have you on the show. And congratulations on the announcement with Apple. Exciting times.
Hans Vestberg, the CEO and Chairman of Verizon there.
VESTBERG: Thank you.
CHATTERLEY: Thank you. All right, calculating the gigantic cost of the coronavirus pandemic. We speak to one of the authors of a study that put a
figure on paper and it's not pretty. Details up next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. $16 trillion, that's an estimated cost of the coronavirus pandemic in the United States alone. It's
equivalent to 90 percent of the country's annual GDP.
And according to the study by two Harvard professors published in a leading medical journal, that's an optimistic estimate. It's based on a projection
that the pandemic will be substantially contained by the fall of next year.
David Cutler is one of the authors of the study. He's also a Professor of Economics at Harvard University, and he joins us now. David, fantastic to
have you on the show. It is $16 trillion over the course of a decade, I do want to be clear, but I think the breakdown of the costs here is also
important. The first one, $7.6 trillion, which comes down to reduced economic output over the next 10 years compared to where we would have
been.
[09:45:47]
DAVID CUTLER, PROFESSOR OF ECONOMICS, HARVARD UNIVERSITY: That's correct and those are estimates that come from sort of consensus forecasts, like in
this case, the Congressional Budget Office, but they are consistent with other Wall Street and other analysts of what will the pandemic mean.
They forecast a very, very slow recovery in labor markets and product markets, and so output below its potential for the next decade, at least.
CHATTERLEY: And half of this price tag is $8.6 trillion, and that's driven by the long term implications and costs for those who actually contract
COVID-19. But you've also put a statistical estimate on loss of life, which is $7 million. Can you just explain sort of how you came to some of those
numbers as well? Because I think they will raise eyebrows.
CUTLER: Yes. So there are really three health impairments that we take account of. One is premature mortality. Second is long term health
consequences of individuals who survived COVID, but will have some will have respiratory and cardiac symptoms, and then third is mental health
impairments where as much as 40 percent of the U.S. population is reporting symptoms of anxiety or depression.
A year ago, it was about 10 percent of the population, so it's gone up roughly a third of the adult population. Now it says, they have symptoms of
anxiety or depression that they did not. In each of those cases, you need to take a health impairment and value it in dollars. So there's actually a
very well-established methodology for doing that. It's used in environmental contexts. For example, how much is it worth to clean up
polluted water or air sites?
It's used in health contexts, how much should a country be willing to pay for a new drug that does a certain amount for people who are sick? And it's
based on what's called valuing a statistical life? Which is, how much are people willing to pay in order that their risk of something bad happening
to them is reduced by some amount, so risk of something bad on the job, risk of something bad while driving, risk of something bad in their home,
and those numbers are then used to say, okay, therefore, how do we value the risk of something like COVID?
CHATTERLEY: I understand. But just to be very clear, when we're talking about the mental health risks, and you mentioned 10 percent of the country
feeling anxiety, and that's gone to 40 percent, this is not as a result of contracting COVID, this is simply the result of lockdown, of the anxiety of
fear of catching a virus, of the isolation. It's the other aspects of what we've suffered and are suffering.
CUTLER: That's correct. That's correct. This is lockdown. This is fear of losing a job. Fear of not being able to pay medical or rent or housing
bills, or buy food or groceries. Fear that one's loved ones will contract COVID and die of COVID and one won't be able to do anything.
So all of those things are adding to population anxiety and depression.
CHATTERLEY: What I didn't see measured in this report, David, and you can tell me, if you've modeled for it is the impact of not providing more
stimulus, more financial aid versus providing more financial aid, which is clearly very much tied to that point. And we don't need to talk about the
politics, which is pretty toxic.
But have you modeled the impact of not doing more -- yes -- not doing more versus doing more versus doing more.
CUTLER: Yes, we haven't modeled that explicitly, you're correct. The forecasts from the Congressional Budget Office have something built into
them that way. If we were to fall short of what the recovery would look like, and Washington takes no actions that would both increase the economic
cost enormously, as well as increase the health consequences and the economic costs coming through that.
Conversely, if we were to act in a way that would be responsible, then we could cut the costs in terms of lost output over the long term and cut the
health impairments.
So really, these are not kind of immutable numbers that can't change, but they could be responsive to very good policy if we could get that policy to
happen.
[09:50:04]
CHATTERLEY: Yes, I mean, there's so much of that required. One of your other big bleak assumptions is a triple loss of life, a total of 625
premature deaths in the United States according to this study. David, it was heartbreaking to read, but very important, too, and it's a short
report. I'll tweet it out.
David Cutler, thank you for joining us, Professor of Economics at Harvard University.
CUTLER: My pleasure. Thank you.
CHATTERLEY: Great to talk to you. Thank you.
All right. Still ahead. We'll go live to Capitol Hill. It's not stimulus negotiations. It's the second day of questioning now underway for Donald
Trump's controversial Supreme Court nominee. We will go there, next. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. U.S. senators have one final chance to grill Donald Trump's Supreme Court nominee today before her
almost certain confirmation.
A second day of questioning is underway as we speak. Amy Coney Barrett says she has no preconceived agenda, but Democrats are warning about abortion
rights, gay marriage, even the future of healthcare could be at stake.
Sunlen Serfaty is on Capitol Hill and joins us now. Sunlen, great to have you with us. Highlight so far and what should we expect from today's
hearing?
SUNLEN SERFATY, CNN CONGRESSIONAL CORRESPONDENT: Julia, yes, second day of hearing of this questioning session following yesterday's marathon 11 hours
that Justice Barrett, excuse me, Judge Barrett face questioning.
Today, we expect a lengthy session as well. Each senator will have 20 minutes to give her questions, a lengthy question and answer session over
the course of the day, then they'll go into closed session where they will discuss her background check. That is something that is very customary for
a Supreme Court nominee.
But what we have seen so far since the hearing has been underway today for about an hour is again Democrats focusing squarely on the Affordable Care
Act, focused squarely on the Healthcare Act and how she potentially could rule given that there is this case that is going to go up in front of the
Supreme Court about a week after Election Day.
We saw the Ranking Member Dianne Feinstein in her first round of questioning really focused on the ACA and then a preview conference call
this morning, Democrats really again telegraphed their strategy here is in their words to show that she would have incredibly broad consequences if
she were to be confirmed as a Supreme Court Justice.
Now as far as the timeline after today, this will be the last time that we will hear from Judge Barrett in this sort of open session. Tomorrow, the
committee will hear from outside witnesses, and then after that, the committee will vote. Likely, potentially early next week, although that has
not been firmly set yet by the committee and that sets up a full Senate floor vote for later this month.
And Julia as we've talked about before, this is in line with what Republicans have been driving to since Amy Coney Barrett has been nominated
by President Trump driving to get her sat on the court as a Supreme Court Justice before Election Day -- Julia.
[09:55:03]
CHATTERLEY: Yes, we shall see. Sunlen Serfaty in Washington. Thank you so much for that update there.
All right, and finally, a very special and romantic merger to discuss on FIRST MOVE.
I just want to say a huge congratulations to two very dear colleagues and friends. Our very own Richard Quest and FIRST MOVE, producer Chris Pepper
got married this weekend. It wasn't what they initially planned, but it was still beautiful and on behalf of the entire team, we wish you endless
happiness, joy and sparkle in your future lives together. What a beautiful picture. We heart you.
That's it for the show. I'm Julia Chatterley. Stay safe and we'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
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