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First Move with Julia Chatterley
Stocks Suffer Amid the U.S. Stimulus Standoff; President Trump and Joe Biden to Compete in Rival Town Halls; Microsoft Discusses its Cybersecurity Efforts to Protect Election Integrity. Aired 9-10a ET
Aired October 15, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:30]
JULIA CHATTERLEY, CNN BUSINESS ANCHOR: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
Plug pulled. Stocks suffer amid the U.S. stimulus standoff.
Debate duel-ish. President Trump and Joe Biden to compete in rival Town Halls.
Trick bots takedown. Microsoft discusses its cybersecurity efforts to protect election integrity.
And --
[VIDEO CLIP PLAYS]
CHATTERLEY: It's certainly dynamite. The BTS management IPO sets the market alight.
It's Thursday. Let's make a move.
And the warm welcome to another busy hour here on FIRST MOVE. Coming up, as I mentioned, the tech giant Microsoft will be discussing the exploding
ransomware threat and the concerns about election integrity and their efforts to tackle so-called trick bots, appropriate for this time of year.
But certainly, it's all tricks and no treats.
Plus a dining out dilemma as winter approaches in the United States and across Europe and COVID cases rise. We'll be speaking to a successful
restaurant owner about both the challenges and the lack of U.S. government support -- all of those issues front and center for global investors.
The handover, as you can see from Europe, clearly weaker after various restrictions were announced in France, in Germany and in the U.K., all of
the details on that coming up. For now though, let's take a look at futures as well.
As you can see, set to fall more than one percent -- one and a half percent in the case of the tech heavy NASDAQ. There remains, I think little hope
now of financial aid coming before November 3rd.
The Treasury Secretary said negotiations will continue, but so does the blame game over the lack of agreement between the two sides and of course
workers suffer as a result. Almost 900,000 new applicants sought first time benefits in the past week here in the United States, over 25 million
workers continue to receive some form of government support. Wow.
Asia stocks meanwhile losing altitude Thursday, too, meet new U.S.-China tensions. Reuters reporting that the White House may add Chinese Fintech
giant and financial to their trade blacklist ahead of the company's upcoming IPO launch. That said, China did successfully sell some $600
billion worth of debt largely to U.S. institutional investors today, a message about the global hunt for high returns, I think, but perhaps a
relative vote of confidence in Beijing's ability to fight the virus and contain the economic fallout. The contrast could not be more clear.
Let's get to the drivers. Christine Romans joins us now. Christine, we were hoping for a slightly better number for these first time jobless claims.
And actually, it was a slightly worse number than expected and I have to say you and I have been expecting this in light of the lack of support for
small businesses in particular.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: I mean, it's unwelcome, but not super surprising. You and I, every week really talk
about how the job recovery of the summer stagnated and is stagnating, and probably the best of the hiring was back in August, and now without the
shock absorber, without the stimulus for the economy, you're seeing layoffs pick up again.
Eight hundred ninety eight thousand in normal times would be just an unheard of number. Now, we have 30 weeks of historic high unemployment
claims and you add in the pandemic programs. That's another 370 some thousands, so more than a million people for the first time filing for
unemployment benefits.
The continuing claims came down a little bit, I'm glad to see that. Honestly, that's -- to have that around 10 million again, in normal times,
it would be unheard of. But to have that sort of trending lower, that means that people who are long term unemployed, that situation might be improving
slightly or less terrible than it was a week ago.
But still, with COVID cases rising, a jobs recovery apparently faltering and no help from Congress, this is a pretty miserable place to be if you're
in the job market or out of work in the job market right now.
CHATTERLEY: Yes, we have to choose our phraseology carefully, don't we? Less terrible. I think we're going to go with that because an improvement
is one thing, but when you're looking at the baseline here, it's pretty shocking and it remains so.
Christine, I just think we've all got so complacent. Lawmakers have gotten complacent throughout the summer that we've managed to see a bounce back
from the lows. We're still looking at a situation where we're not going to be able to agree because the politics is being put before the people, and
the likelihood is these numbers get worse, and they get worse towards the back end of the year, as we head into winter and COVID cases rise.
[09:05:27]
CHATTERLEY: I would agree. I mean, and I also think -- we've talked a lot about the shape of the recovery, I think there are some industries and some
people who are getting back to work, who are actually thriving actually in the labor market right now, and those are people who don't work in these
frontline businesses. They don't work for restaurants, or hotels or bars, or, you know, customer facing kinds of jobs.
So you have like a bifurcated labor market and a lot of pain is being had by people who may not have the elites in Washington, don't have close
contact with it. You know, I'm just wondering how much out of touch Washington is to how deep the pain is on Main Street here, you know, the
stock market has recovered. You know, you hear some people talk about how the bounce back was better than we thought, it wasn't as bad as we feared.
Well, that may be true, but the collateral damage here is millions of people who have lost their livelihoods or lost income, and we are heading
into a really tough, really tough part of the calendar.
CHATTERLEY: We're going to talk about that later on in the show with a restauranteur who did specifically that: galvanized lots of restaurant
owners, because they simply didn't feel they had the lobby power in Washington to defend them in these negotiations, and it's such a great
point.
The contrast with like the airlines, for example, who clearly are still suffering, too.
Christine Romans, thank you.
All right, President Trump and Democratic challenger, Joe Biden will both take questions from voters tonight. Instead of facing off in their second
debate, there'll be holding separate Town Halls at the very same time. Joe Johns is at the White House and has been looking at this -- all about this
-- Joe, get my words out.
The phrase "preaching to the choir" actually comes to mind here, because you're going to have supporters of each person and party watching the
respective ones. I just wonder if anybody benefits -- Joe.
JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Right. I mean, that's the criticism too, because what we've got here is dueling Town Halls that are
arranged in different cities. The President of the United States down in Miami; the challenger, Vice President, former Vice President Joe Biden,
closer to Washington, D.C. over in Philadelphia.
They will be on different networks, and the criticism is that the networks could have coordinated this better so that these two very important
television events weren't held at the same time. That's one of the biggest issues. You're going to hold this thing at the same time so people don't
have the opportunity to watch both events live as they happen.
And there's a reason for that, because obviously, the networks we're trying to work around these candidates very busy schedules at the end of the
campaigns, and fit them into their evening programs. And there's a lot of back and forth on that.
The problem with it, of course, is that a lot of people say it sort of plays right into the hands of President Trump because what President Trump
is going to get on NBC is simulcast on three networks, NBC, MSNBC, CNBC, which naturally means larger ratings at a time when he is going head to
head against Joe Biden. The President loves to brag about his ratings.
And from a campaign point of view, at this stage in the race with the President down in the polls, generally or tied with Joe Biden in many
states, what that campaign wants most is to get eyes on the candidate, eyes on the President. So in that way, it's a big issue. And never mind, the
fact that this was supposed to be Debate Night in America and we didn't get that because the Debate Commission said essentially, that the President was
going to have to participate in a virtual debate because of COVID concerns, and the President backed out.
So that's all the background -- Julia.
CHATTERLEY: Yes. It's interesting, isn't it? One wonders whether the Commission made that decision a little bit too early, because in light of
the test results that we've had, subsequently, perhaps that debate could have gone ahead.
But yes, you need a bit of a runway here to make these decisions. My recommendation is, you know, social media and mobile phones one can watch
right debates at the same time. The joys of modern technology.
JOHNS: Yes, that's absolutely right. Very important to say that. I mean, you can afford this thing. You can look at it on the internet. It's not
like 20 years ago when you didn't have other options to reach right back in and catch what you missed.
CHATTERLEY: A hundred percent there are options here. You do not have to choose.
Joe Johns in Washington for is there. Thank you, sir.
[09:10:02]
CHATTERLEY: All right, so let's move on. BTS, one of the world's most popular boy bands grabbing the spotlight and this time it's in the stock
market. Shares of Big Hit Entertainment, the management company behind the K-pop sensation soared 90 percent on the first day of trading in South
Korea.
Paula Hancocks is in Seoul for us with all the details.
(BEGIN VIDEOTAPE)
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT (voice over): Everything this band touches seems to turn to gold. BTS is South Korea's most well-
known boy band shooting to the top of the Billboard chart last month, a feat no other Korean artist has achieved.
(BEGIN VIDEO CLIP)
JUNGKOOK, SINGER, BTS (through translator): It still doesn't feel 100 percent real, mostly because right now, we can't perform in front of
people, in front of our fans.
(END VIDEO CLIP)
HANCOCKS (voice over): The next chapter, IPO. BTS' management Big Hit Entertainment is listing the company on South Korea Stock Exchange, a move
that values the company more than $4 billion, more than the next three top K-pop agencies combined.
In today's strong market, some assume investors will flock to buy the shares including the band's hardcore fan base.
(BEGIN VIDEO CLIP)
KIM EUN-HEE, BTS FAN (through translator): I'm eager to pick up one or two shares even if it's just one, so I pulled my money and plan to put in
150,000,000 won. I want to get closer to BTS as one team and help them.
(END VIDEO CLIP)
HANCOCKS (voice over): Big deal for Big Hit. But some worry that they are too reliant on just one act.
(BEGIN VIDEO CLIP)
PARK JU-GUN, BUSINESS ANALYST (through translator): Ninety percent of Big Hit Entertainment's revenue is from BTS, so the risk is there, but it has
started to shift its revenue structure to a multifaceted portfolio.
(END VIDEO CLIP)
HANCOCKS (voice over): Big Hit says it has created an ecosystem of artists, apps and content.
(BEGIN VIDEO CLIP)
BANG SI-HYUK, CEO, BIG HIT ENTERTAINMENT (through translator): We drove profit not only through the album and music, but online concerts, official
merchandise, multimedia content and more.
(END VIDEO CLIP)
HANCOCKS (voice over): Military service looms for all seven members of the group, but they could use another international K-pop group, Big Bang, as a
model, solo careers, some also questioned the timing of the IPO in the middle of a global pandemic, but the market sees it as a sign that the
company can only go up as the world recovers.
(BEGIN VIDEO CLIP)
JU-GUN (through translator): If the company is highly valued now in the midst of a pandemic, it will be an opportunity to gain even more momentum
next year post pandemic.
(END VIDEO CLIP)
HANCOCKS (voice over): In a rare move for the industry, Big Hit has given more than $7 million worth of shares to each member of the band, a share of
the success and perhaps a guarantee for the future.
(END VIDEOTAPE)
CHATTERLEY: Paula Hancocks joins us now. Paula, there is everything in this business story. There's politics, there's the money, there's the
complication. Just to be clear, they've outsold more physical albums in the United States than Justin Bieber, Harry Styles, Billy Eilish, they are huge
around the world.
But talk us through some of these complications: military service, potentially, for some of these guys, and really soon.
HANCOCKS: Well, that's right, Julia. I mean, this is mandatory military service here in South Korea, every man does it unless they have a
particular exemption or aren't able to, and it lasts about 18 months. So this is very close for some of these members of BTS. Just a couple of
months away, it would be because the oldest is almost 28 years old, which is how far you can defer the military service. That one particular member
has now, we hear joined a graduate school program, so he can defer it another year.
But what is happening in this country now is politicians are now talking about this. Should they change the rules for BTS? Should they actually
defer them going to military service for another two years, so that they can really enjoy their career? And of course, they are bringing a lot to
South Korea as well, that the Culture Ministry here estimates that BTS has contributed about one and a half billion dollars to the South Korean
economy with tourism, with promoting Korea, promoting Korean goods like food and cosmetics.
So politicians are really thinking about it seriously, and there is potentially going to be a bill to try and push back the military service
for them -- Julia.
CHATTERLEY: Yes, I mean, there are different ways that you can provide service to your country, and when you're bringing in those kind of revenues
versus providing support in terms of a military service, one has to ask the question.
But it's a huge issue as well, if somebody is investing in this stock when -- and you pointed this out in your report, when 90 percent of the sales of
this management company come from one group. They need to diversify and they need to do it quickly.
HANCOCKS: Absolutely, and the company knows this. They've been quite honest about their saying that they are signing on more artists quite quickly. But
of course, who knows if those artists are going to be successful. It's highly unlikely they will be as successful as BTS.
So yes, BTS is a massive asset to big hits, because they wouldn't have had this IPO quite frankly, without them.
But it is also a liability to have all of their eggs in one basket, but they say they're trying to diversify in different ways as well. Not just
new artists, they have a platform for example called Weavers which they are giving exclusive content to fans of the particular bands that the fans can
message particular artists, so they are trying to find different ways to make sure that they are not just reliant on one band.
At this point, we know for the first half of this year there has been about 88 percent of their sales which have been attributed to BTS, so it's
slightly less, but not really very much at all.
So clearly, all their eggs are in one basket and they are aware of this, but they also see it is an asset and they're trying to diversify they say.
CHATTERLEY: Yes, these are some very sparkly eggs. I have to say, South Koreans, they are used to losing their stars to military service and them
disappearing for a while, but here in the United States, if you're gone for a year or a year and a half, you are forgotten, so they need to think about
this as well, their global audience.
Paula, great to have you with us. Paula Hancocks there.
All right, speaking of pops and K-pops, no pop in this bubble. Singapore and Hong Kong is setting up a travel bubble between the two cities.
Visitors will need to provide a negative COVID test and travel on dedicated flights.
Officials call the plan a significant first step in reviving air travel. Selina Wang joins us now from Hong Kong. This is exciting, Selina, and
actually critical for two international regions. Talk us through what more we know.
SELINA WANG, CNN CORRESPONDENT: Julia, that's exactly right. Hong Kong and Singapore are both major travel hubs, so the fact that they are opening
this travel bubble is a very strong sign for getting back to normalcy.
So what this bubble means is that travelers going between these two locations do not have to quarantine, but they do need to prove that they
had negative COVID tests and this is also a sigh of relief for these places because they've been hit, Julia, extremely hard by these travel
restrictions.
They don't have a domestic market to rely on, to offset the massive drop in international travel. For instance, if you look at the data for this August
for passenger airport traffic volume, it shrunk to just two percent of last August's number, so a severe drop here.
But the fact that they're able to open up this travel bubble also speaks to the fact that both places have managed to rein in the pandemic and keep
those COVID cases low through contact tracing, through social distancing, and through intense travel restrictions. So Hong Kong has banned most non-
residents from coming in, and they've set up this complex system in place to prevent any imported infections.
For instance, when I traveled recently from Beijing into Hong Kong, I had to quarantine for 14 days. I had to wear a wristband tracker every day just
to prove to authorities that I was staying in my room. I had to take two COVID tests.
Singapore has also had intense restrictions as well. And even despite all of this, some experts have said that maybe this is too soon. They think
these places need to be showing zero COVID infections for many consecutive days before going forward with this.
And you have seen Asian countries be really tepid about opening these travel corridors, even with countries with a low risk of infection, and
that Julia is in stark contrast to what we're seeing, for instance, in Europe, where there are some countries there with free borders despite this
resurgence in cases.
CHATTERLEY: Yes, you know, I have my head in my hands when I listen to the management tools that are being used in countries over near where you are
versus what we've seen in Europe and here in the United States. It has to be managed or it's not possible at all.
Selina, great to have the details and they'll just have to be flexible. Selina Wang, thank you for that.
All right. These are the stories making headlines around the world. The World Health Organization says around 80 percent of European countries are
seeing a rise in COVID numbers.
On Wednesday, Italy recorded its highest daily increase in coronavirus cases since the beginning of the pandemic. European leaders meanwhile,
meeting in Brussels for a two-day Summit on Brexit. British Prime Minister Boris Johnson previously set today as the final possible date for a trade
deal to be agreed.
That won't now happen, but Prime Minister Johnson has indicated he'll wait for E.U. leaders to finish their discussions Friday before deciding on the
U.K.'s next steps.
Thailand's government has issued an emergency decree banning gatherings of more than five people in Bangkok. It is designed to stifle pro-democracy
demonstrations that have gripped the country now for months. Police arrested several protest leaders after thousands of people marched on
Wednesday calling for the Prime Minister to resign.
All right, those are just some of the headlines we are watching and now we're going to take a break so FIRST MOVE will be back after this. Don't go
away.
(COMMERCIAL BREAK)
[09:22:32]
CHATTERLEY: Welcome back to FIRST MOVE live from New York where U.S. stocks are set to fall for a third straight session as stimulus hopes fade
further, and the United States this morning reporting an additional 898,000 people seeking first time jobless benefits. Fears that governments are also
still unable to get a handle on rising COVID cases playing into sentiment, too, I think as France, Germany, and the U.K. announced fresh health
restrictions.
In the meantime, shares of banking giant, Morgan Stanley lower premarket despite beating on both the top and bottom line like Goldman and JPMorgan
results were boosted by strong trading revenues up some 20 percent in Q3. I think it's a case of buy the rumor, sell the fact.
Meanwhile, shares of Cloud computing firm, Fastly are tumbling after a warning that business from its largest customer, TikTok has slowed due to
the uncertainty over the Chinese app's future in the United States.
All right, there's no end of things to discuss. Lisa Shalett joins us now. She is Chief Investment Officer at Morgan Stanley Wealth Management. Lisa,
great to have you on the show, as always. We can be glass half empty today and say there's plenty of things to concern investors, whether it's
election risk, earnings risk concerns about a lack of additional stimulus here in the United States. Does it give investors pause for thought here?
LISA SHALETT, CHIEF INVESTMENT OFFICER, MORGAN STANLEY WEALTH MANAGEMENT: Oh, absolutely. Look, you know, we've been in the recovery phase of this
market, in our humble opinion, really, since the end of July. And that's meant, you know, that we're really range bound with a high degree of
volatility. As you know, the market which has really completely recovered and even achieved new all-time highs on September 2nd, has to wait for the
fundamentals to catch up.
And you know, we're just not there yet, and as we enter third quarter earnings, despite the fact that, you know, earnings revisions had come up,
coming into the quarter, you know, expectations at these levels have just been quite high.
And so we expect that we're going to have these periodic pauses around uncertainty and then bursts of optimism, and that's really what we're
seeing.
I think in the latest week, obviously some of the news that were getting out of Europe is distressing with regard to their second wave and that's
really kind of crushed their bond markets and the German bund yields there and that obviously, we think is having an effect anchoring, you know our
10-year Treasuries and in turn, you know, putting some pressure on stock markets around that type of COVID-19 related uncertainty.
[09:25:20]
CHATTERLEY: You know, it's very hard for an investor to build some kind of healthy diversified portfolio here given what you're describing when you're
looking at what's going on in the bond market, you're looking at what's going on in the stock market, too.
My first boss, actually, at Morgan Stanley used to say to me, healthy markets do not all go up at once and all go down at once. That's not
healthy. What do you do as an investor at this moment?
SHALETT: Yes, so what you know, one of our theme songs in the current environment is, you know, love stocks, but hate the market. And what we
mean by that is that this is just not a time that we would be, you know, playing aggressively in the passive indices, you know, owning quote-
unquote, "the market."
We think that this is the type of volatility that really requires stock selection and active management and looking for those things, those
companies, those stocks, those bonds, you know, that are getting thrown out maybe in the bathwater type analogies.
You know, and as we've talked about, and you alluded to this, you know, one of the single most mispriced securities in the market today we fear is the
U.S. 10-year Treasury. You know, we did a just a rough rub back of the envelope analysis that said, if all you owned in a 60/40 portfolio in the
bond part of your portfolio were 10-year Treasuries, and the U.S. stock market went down, you know, 10 to 15 percent, how much would yields have to
go down on the 10-year to completely offset that? And it's close to 150 basis points, which would bring, you know, U.S. nominal 10-year yields from
something like 70 basis points today to maybe minus 70 basis points.
And so that's just an extraordinary move that's unlikely to happen. And so, Treasuries are not playing that diversifying role that investors have
historically needed them to play in these periods of volatility. So, you know, we're really asking clients to look at things much more on a security
specific level to get some diversification.
CHATTERLEY: Yes, I mean, you raise so many great points there. Bonds are not the safe haven that you think they are in a stock market selloff,
because to your point about bringing the yield down, that means the price of the bond goes up, and it's just the math of it doesn't work right now to
provide that level of security. Very, very important point.
Lisa, just very quickly, in terms of election risk, because I'm asking all our guests this, what's in the price at this moment? Are we looking at a
Democratic sweep? Are we looking at a split government? What do you think is in the price and how might stocks in particular react post-election?
SHALETT: Yes, so you know, our contention is that really over the last two and a half weeks, the widening of the U.S. presidential polls has given the
market some degree of certainty. Not only that the market seems to know who the winner of the presidential election will be, but that it will be a set
of information that we get closer to November 3rd, then dragging out. And that has been, I think, one of the sources of optimism in the market over
the last 10 days.
I think right now, with the presidential election potentially understood, I think that the focus is now on the Senate. And there, I think it's much,
much closer. I think there's much more uncertainty and that's really going to gauge as we know, how much spending and where that spending gets done.
And so, you know, our view is that right now, this is a market that is hungry for fiscal stimulus and is baking in particularly, I know us at
Morgan Stanley, in terms of our V-shaped recovery thesis, we're still looking for, you know, close to $1.5 trillion in additional stimulus.
And, you know, I think if we get a Biden win and we still have a Republican Senate, I think that that there's going to continue to be contention about
the size of that next CARES 2.0 bill and where the money gets spent. Does the money gets spent on clean energy infrastructure, and at the state and
municipal level, which seems to have been at a more Democratic set of priorities or does the money get spent in some of these other areas that
have been different debated.
So I think that's --
CHATTERLEY: Anything at this stage would be good. Lisa, I have to go because I'm going to lose you very shortly. Great to have you with us.
Thank you so much and the best phrase, loves stocks, but hate the market.
Lisa Shallett, Chief Investment Officer at Morgan Stanley Wealth Management.
The market opens next. Do stay with us.
(COMMERCIAL BREAK)
[09:33:36]
CHATTERLEY: Welcome back to FIRST MOVE and U.S. stocks are up and running this Thursday. As expected, it is a weaker open across the board. Tech
stocks as you can see under most pressure, down some 1.2 percent. Investors disappointed by the continued stalemate over stimulus when assistance is
clearly needed.
And the data is telling us that almost 900,000 more Americans filing for jobless claims in the past week. That's the highest level since August.
Treasury Secretary Mnuchin says the White House hasn't yet given up.
Restaurant owners though bracing for a fresh set of problems as we head towards winter. Eateries, including this one in Virginia expanded outdoor
seating by taking over parking spaces. But colder weather could mean fewer customers.
The National Restaurant Association says one in six restaurants have already closed. It is the industry that seen the biggest surge in
unemployment, and without a significant relief plan from Congress, up to 85 percent of independent restaurants may close permanently.
So let's hear directly from one restaurant owner, Naomi Pomeroy joins us now from Portland, Oregon. She runs Beast Restaurant there and is the co-
founder of the Independent Restaurant Coalition.
Naomi, great to have you on the show. I know you'll talk about the challenges you've faced with your award-winning restaurant, but talk to me
about your decision to set up the Independent Restaurant Coalition because you recognized the industry needed a voice.
[09:35:07]
NAOMI POMEROY, COFOUNDER, INDEPENDENT RESTAURANT COALITION: Yes, of course. I mean, I've been in my little bubble in Portland running restaurants for
the last 20 years or so. You know, my restaurant, Beast, is very small. And I realized, of course, across the country, I have, you know, thousands of
friends who run independent, smaller restaurants as well and it really felt like we needed our own voice.
You know, before I helped to start the coalition, I didn't even realize, you know, that 76 percent of restaurants across the country are actually
independently owned smaller businesses. So really, you know, everything from the white linen tablecloth restaurants that you see, to a mom and pop
diner, just really needed some representation and help because we employ, you know, we are the second largest private sector employer in all of the
country behind healthcare. So I think it's just really important that we talk about that and figure out how to get some Federal help.
CHATTERLEY: It's interesting that you mentioned those kind of numbers, because I remember when I was assessing the data that came through the
paycheck protection scheme, the small business loans, the cheaper loans that were given by the government, and the proportion that went to
restaurant seemed incredibly low. Why do you think that was?
POMEROY: You know, I think a lot of it is really ultimately about access. Unfortunately, you know, when you work in the restaurant industry, you're
sort of head down working big, long, 16 hour days, lots of restaurants are run by immigrants and minorities, women and other people that maybe don't
have the same kind of access that someone with big banking connections might have, frankly.
CHATTERLEY: I mean, we certainly learned that throughout the process. The suggestion has been perhaps a stabilization fund of some sort, a cash pot
of money would be better, because to your point, as well, there's razor thin margins in restaurants anyway. Wages are relatively low.
The ability even to take on any form of debt, perhaps is another impediment to taking money, even if it's a one percent loan.
POMEROY: That's absolutely true. You know, a lot of restaurants already have to get started with some kind of debt. Restaurants are usually founded
on a dream, frankly. And honestly, it really takes something extra above and beyond to support these small businesses. Ninety cents of every dollar
actually -- that comes into a restaurant goes back out into the community. And the majority of that is through payroll.
Frankly, we employ a huge number of people and right now, 2.3 million of the jobless here in the United States are coming directly from our sector.
And we actually represent one out of every four jobless claims. And actually, what you mentioned at the top of the show here about, you know,
suddenly the numbers are going way up, I really think that has to do with the fact that a lot of people's paycheck protection, people who did get
paycheck protection, that money is actually running out now.
A lot of people were able to hire people back, in that sense setting right around now, my paycheck protection ends October 20, actually, so yes, we're
all really feeling it. And I think there's going to be a flood of layoffs if we don't do something.
You mentioned the funds, you know, $120 billion fund, which is our ask sounds like a lot of money. But we have had all kinds of independent
research done that shows that that would generate up to 200 and $70 billion in revenue immediately.
So really, it's sort of a no brainer. I mean, that's a great investment.
CHATTERLEY: Yes, it is. And jobs are everything, particularly as we head into winter. Naomi, what about for your business? And I know you've set up
a class action lawsuit because even insurance and many small businesses thought they'd have insurance if they were shut down as business
disruption, and it seems like the insurer is making it tough to make a claim.
POMEROY: That's right. Unfortunately, there's a lot of evidence that insurers have gotten together and wholeheartedly denied every restaurant
claim that I've heard of, I haven't heard of a single person. But you know, if you own a restaurant, and you haven't filed a claim yet, you really need
to jump on it, because I think it is really important.
I mean, obviously, you know, I've owned my Restaurant Beast for over 13 years, I've been paying into that system for the entirety of it, expecting
that if something happened, that would shut my business down, that I would be covered for those revenue losses. That's what we pay for insurance for.
So you know, not to get on the soapbox too much about it. I mean, you're right. I do have a class action lawsuit and a lot of people are starting to
join that suit because clearly, insurance is for situations that are exactly like this.
As far as my Restaurant Beast goes, it's so small. Frankly, I haven't been able to reopen it safely. We have a very small sidewalk patio, so we're not
like some of the places that have been able to reopen, and we serve a six- course tasting menu which is kind of not really what you think of for to-go food. So it's been a struggle and we're actually going to have to pivot the
entire business and sort of change the model, which obviously cost money, too, and what we need really is to be able to take creative minds like mine
and my friends, you know, who run these industries who are support of the backbone of America.
[09:40:26]
POMEROY: You know, when you think about, what do you do when it's your birthday? Or your anniversary? Or you know, you're celebrating something or
mourning something -- people eat in restaurants, that's what they do, you know.
So frankly, it's just something that we have to really put our money behind, because it obviously will generate an incredible amount of return
instantly and put people back to work, which is what we really need to do for the economy.
CHATTERLEY: Yes. You've sold me and I actually looked to your website and your food looks incredibly beautiful. So come back and talk to us with the
pivot.
POMEROY: Thank you.
CHATTERLEY: We'll do our best to help you. Naomi Pomeroy, thank you so much. Cofounder of Independent Restaurant Coalition and the owner of Beast
Restaurant in Portland.
All right, can you imagine what would happen if computers used to present election night results were hacked? That's a threat Microsoft is actively
working to prevent. Details on its work and its success, next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to the show, we are just 19 days away from the presidential election here in the United States and one of the big talking
points in the run up has been the risk of election interference.
And according to Microsoft, a new serious threat is ransomware. The company said earlier this week it took action to disrupt trick bot, which it calls
one of the world's most infamous and prolific distributors of ransomware. It could for example, infect computer systems used to report election night
results seizing those systems at a prescribed hour to cause maximum chaos. Wow.
We're joined by Tom Burt, Corporate Vice President of Customer Security and Trust at Microsoft. Tom, great to have you on the show once again. We've
given viewers a sense there, but just lay out the threat and how prolific is this?
[09:45:08]
TOM BURT, CORPORATE VICE PRESIDENT OF CUSTOMER SECURITY AND TRUST, MICROSOFT: Well, the threat is a serious one and it's been recognized as
such by both the technology sector, but also government. Chris Krebs, the Director of CISA in the Department of Homeland Security has been talking
about this threat for some time, and the challenge is exactly what you described. It is that this software could be used by cyber criminals
looking to make money by nation states looking to disrupt the election, in order to tie up, to lock up the computers being used for some part of the
voting process on Election Day, and not reveal the key to let you get those computers operating again until you pay a significant ransom.
CHATTERLEY: Yes, I mean, you can imagine the chaos that would cause and they have infected a number of Internet of Things devices, as well. We're
enjoying greater connectivity than we've ever had before. But then it can access corporations, to households, we're all potentially vulnerable.
BURT: We all are very much potentially vulnerable, and these botnets, these criminal networks of infected devices that have been secretly infected by
these criminal syndicates with their software so they can control your computer, this is a real plague on the internet. And so that's one of the
reasons why we've been working to disrupt the botnets and have a real focus on how they might impact the election this year.
CHATTERLEY: And who's doing this, Tom, before we talk about what the Digital Crimes Unit that you guys have actually been up to? Who's doing
this? Is it networks? Is it nation states? How accurate can you be in tracing where the threat is coming from?
BURT: The threat of ransomware can come from a number of different sources and that can include these well-established syndicates of criminals who can
live in many different countries, but work together to conduct their crime, but also nation states and actors who are controlled or directed by
governments can also use ransomware to try to create some disruption, so we're concerned about both of those risks.
CHATTERLEY: Tom, talk me through what the Digital Crimes Unit did and what you took down. I know it involved a court order, working with
telecommunication companies, just talk me through what was required and what was done.
BURT: In this instance, we identified one particular botnet, this one called trick bot that has been a plague on the financial services
industries. It's been stealing money from consumers for a number of years. It's really an infamous botnet. But it also is known as a prime distributor
of this ransomware malware.
And we decided that if we could possibly take that botnet down prior to the election, it would help us reduce the risk that ransomware would be
utilized as an attack during the election itself. So what the Digital Crimes Unit did is they have forensic investigators, engineers who actually
look very carefully at how does the botnet operate?
We actually take some computers and get them infected on purpose by the botnet, so that we can then communicate with those who are controlling the
botnet and observe what's happening and it takes a lot of work and a lot of time to build that out.
And once we know how it operates, what its architecture is, then we built partnerships, in this case, extensive partnerships, including other
technology companies, like Symantec was a great partner, and we worked together to then go to court and get an order from the court that will
instruct everyone who controls, who hosts part of the infrastructure that the criminals are using to block that infrastructure.
And that's been -- we got that court order. It was sealed until we could launch our work to actually block that infrastructure, and we've been
working on that since a week ago and we're making really great progress on shutting down this botnet.
CHATTERLEY: Tom, it's great work. I know, it's just a piece of the Defending Democracy Program. I was just looking at it here and this is
where you work with global governments and institutions to protect democracy and election integrity, which is fantastic work by you guys that
Microsoft.
Tom, who did this? Where do you think this emanated from?
BURT: The best we can say today is that it appears that the people operating this trick bot botnet operate from somewhere in Eastern Europe,
and whether that's from a single country or multiple countries, we can't say for sure, but it does appear to be operated from Eastern Europe.
CHATTERLEY: The obvious response there would be, it's coming from Russia, but you would have told me that if you could, I'm assuming so we can't be
so specific, Eastern Europe.
[09:50:03]
BURT: That's right. I can't be that specific, but certainly, Russia could be one of the countries from which this botnet is operated.
CHATTERLEY: Yes. Great to have you with us, Tom. Great work from you and the team. Thank you so much.
Tom Burt there, the Vice President of Customer Security and Trust at Microsoft.
All right, some breaking news now just in to CNN. Vice presidential nominee Kamala Harris leaving the campaign trail until Sunday, after one of her
flight crew tested positive for coronavirus.
Her campaign say she did not have direct contact with the crew member, but out of an abundance of caution, they are canceling her travel schedule.
All right, G-20 countries offering a new lifeline to nations struggling under the strain of the pandemic. But the World Bank says, more needs to be
done to support them. We'll discuss what that might look like, next. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. The World Bank is encouraging G-20 countries to do more to help poorer nations weather the financial impact of
the pandemic.
On Wednesday, the G-20 agreed to suspend debt payments on emergency loans for an additional six months, but the World Bank says a more radical action
is needed.
John Defterios joins us now. JD, great to have you with us. I think we need to be talking about the F word here and that is forgiveness.
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Yes, that's a good way of putting it, Julia. And they keep on saying that the G-20 do whatever
it takes, but it doesn't include the F word, let's put it that way. And this is a very tricky window of time, because the second wave is settling
in primarily on the G-7 countries, so they're showing some hesitation.
So from the top, the I.M.F. Managing Director, Kristalina Georgieva said, it's important not to pull back on the stimulus right now. And it's very
important, according to David Malpass, the World Bank President to help those who need it most.
So they're talking about $25 billion to go to the poorest countries, that's a proposal and $12 billion to deal with vaccines. Extraordinary number
that's coming right now, Julia, $150 million being added to extreme poverty which Malpass calls, he says a depression for those below the poverty line.
Let's take a listen.
(BEGIN VIDEO CLIP)
DAVID MALPASS, PRESIDENT OF THE WORLD BANK: For many developing countries and the people in the poorest countries, it is truly a depression, a
catastrophic event, and it is continuing to add to the ranks of those in extreme poverty.
(END VIDEO CLIP)
DEFTERIOS: So David Malpass, suggesting this is the biggest challenge for extreme poverty. Julia, you know, they had this target to reduce poverty by
2030 under the U.N. SDG, the Sustainable Development Goals. They have now admitted because of COVID-19 that is impossible.
Another theme that came out I thought was interesting from the International Monetary Fund, being blunt enough to say the China, you need
to get to the table with your banks. They've lent almost $300 billion to Latin America and to Africa over the last 20 years.
[09:55:10]
DEFTERIOS: You can't have debt relief for those two continents without China at the table. It is the first time I've heard that. Back to you.
CHATTERLEY: Yes, I wonder what China thinks of that suggestion, quite frankly. But it's a great point to be making and JD, full credit to you
because you were saying this back in March that these discussions needed to be had -- been having had ASAP so full credit to you.
All right, thank you so much for that. John Defterios there.
DEFTERIOS: Take care.
CHATTERLEY: Thank you.
All right. That's it for the show. You've been watching FIRST MOVE. I'm Julia Chatterley. Stay safe and we'll see you tomorrow.
(COMMERCIAL BREAK)
[10:00:00]
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