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First Move with Julia Chatterley
The White House Comes Up With New Stimulus Proposals; New COVID Outbreaks Cause China To Sound The Alarm Over Food; The Brazilian Airline Returns The 737 MAX In Service. Aired 9-10a ET
Aired December 09, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:18]
ZAIN ASHER, CNN INTERNATIONAL ANCHOR: Coming to you live from New York, I'm Zain Asher, in for my colleague, Julia Chatterley. This is FIRST MOVE and
here is your need to know.
Stimulus stakes. The White House comes up with new proposals.
Frozen fears. New COVID outbreaks cause China to sound the alarm over food.
And back in the sky. The Brazilian Airline returns the 737 MAX in service.
It is Wednesday, my friends. Let's make a move.
Hello, welcome to FIRST MOVE. So good to have you with us on this busy Wednesday for global investors. Let's begin with a quick check of the
markets for you.
U.S. futures are pointing to a mostly higher open, mostly higher open just in terms of the Dow and S&P 500 across the board as Wall Street applauds
the latest vaccine milestones and awaits a mega IPO launch.
Food delivery service DoorDash begins trading on the New York Stock Exchange today. Positive movement in the U.S. in terms of emergency aid
negotiations, in terms of stimulus package. That is also boosting sentiment as well.
The S&P 500 is set to open in record territory after a come from behind win for the bulls on Tuesday. S&P 500 closing above the 3,700 mark for the
first time ever. That's a big milestone, too.
Stocks are up in Europe as well as investors await the latest E.C.B. policy meeting on 2020 tomorrow. Lagarde and company are expected to signal new
monetary support for the Eurozone as well.
Asian stocks were mixed. The Shanghai Composite fell more than one percent. New numbers show Chinese consumer prices falling for the first time in over
a decade.
Meantime, SoftBank's shares rallied in Japan. Reports that the company is discussing plans to go private.
In vaccine news today, the UAE says that China's jab has an efficacy rate of 86 percent. U.S. health officials meet tomorrow to discuss the safety
and efficacy of the Pfizer-BioNTech vaccine, the shot that is now being administered to people in the United Kingdom.
Along with the science, there is hope for stimulus. The White House has put it up on the table as negotiations heat up in Washington, D.C. Let's get
more on all this in terms of our drivers.
The White House is now proposing a package that would include sending $600.00 stimulus checks out to many Americans that they wouldn't be instead
of a $300.00 a week enhanced unemployment benefit, the lawmakers are proposing.
Lauren Fox joins us live now. So Lauren, just walk us through this new stimulus proposal that was put on the table by Treasury Secretary Steve
Mnuchin.
The original $1,200.00 direct payments that we saw earlier in the year, that's now down to $600.00. And plus, there's no sort of weekly
unemployment insurance for those who've been left jobless. Just walk us through what more is in this package?
LAUREN FOX, CNN POLITICS U.S. CONGRESSIONAL REPORTER: Well, essentially, Zain, this is a non-starter for Democratic lawmakers. They made that clear
just a few hours after Mnuchin made his proposal public.
What we do know about this proposal is it's different in the bipartisan proposal we've been talking about over the last couple of days, in that
like you said, it adds a $600.00 benefit for Americans affected by coronavirus, but it gets rid of that $300.00 a week in boosted Federal
unemployment benefits. And that is something that Democrats say they cannot support.
This feeling that you need that $300.00 in additional Federal unemployment benefits because the people who need this money the most are the people who
are not working right now.
Just sending $600 checks, a one-time check, they argue is not sufficient when you're trying to get targeted relief to Americans.
Now, I want to take a step back because these negotiations have been a little bit of a game of whiplash over the last several hours.
You saw yesterday, Majority Leader Mitch McConnell arguing that maybe if the bipartisan group cannot get agreement on two outstanding sticking
points that state and local aid for local governments, or liability insurance, a Republican red line in these negotiations, perhaps they drop
both of those and move forward without them. Now Democrats said that was a nonstarter.
Meanwhile, we are still waiting on whether or not this bipartisan group can actually put pen to paper and release legislative text or at least a
summary of what they're working on.
We've been waiting for days. We had heard originally that they'd have legislative text by Monday, of course, now it's Wednesday, we still haven't
even seen a summary of what they're working on, Zain.
So there are a lot of balls in the air right now whether or not they can actually close these negotiations, which is nine days until the deadline
still remains to be seen.
ASHER: Yes, so many sticky points as you mentioned: liability insurance for businesses, concerns about state and local funding. But there is so much
pressure to try at least somehow to get things done. Lauren Fox live for us there. Thank you so much.
[09:05:06]
ASHER: The United States has crossed 15 million confirmed coronavirus cases with an average of more than 200,000 new infections a day over the past
week and record numbers of people hospitalized with the virus. Alexandra Field has more.
(BEGIN VIDEOTAPE)
ALEXANDRA FIELD, CNN CORRESPONDENT (voice over): As new coronavirus cases spread rapidly across the country, some states are shifting into crisis
mode once again enforcing more restrictions as intensive care units fill up with patients.
GOV. JAY INSLEE (D-WA): What we do now literally will be a matter of life and death for many of our citizens.
UNIDENTIFIED MALE: We're experiencing a surge like we've never seen.
FIELD (voice over): Among those with stay-at-home orders in place: California, Michigan and North Carolina where the governor is also
enforcing a 10:00 p.m. curfew.
GOV. ROY COOPER (D-NC): We will do more if our trends do not improve. That means additional actions involving indoor restaurant dining, entertainment
facilities or shopping and retail capacity.
FIELD (voice over): The virus running rampant with the U.S. recording more than 215,000 new cases, Tuesday. Here in Rhode Island, there's a 9.4
percent daily positivity rate and the nation's highest new average of new coronavirus cases per capita.
Health officials treating patients inside this field hospital in Providence. More than 104,000 people nationwide are hospitalized with the
virus, a dangerous record.
President-elect Joe Biden outlining a coronavirus response plan for his first 100 days in office.
JOE BIDEN (D), PRESIDENT ELECT OF THE UNITED STATES: As a country, we have been living with this pandemic for so long. We're at risk of becoming numb
to its toll on all of us.
FIELD (voice over): His top three goals: safely getting more children back into classrooms, promoting widespread mask wearing and distributing
vaccines to at least a hundred million Americans.
BIDEN: It is going to take some time. But I'm absolutely convinced that in a hundred days, we can change the course of the disease and change life in
America for the better.
FIELD (voice over): Tomorrow, an F.D.A. panel needs to consider whether the first vaccine candidate will be granted Emergency Use Authorization in the
United States, a decision is expected this week.
UNIDENTIFIED MALE: We do feel that preliminarily that the success criteria have been met.
FIELD (voice over): But in the meantime, with most of the country likely facing a month long wait for a vaccine, Dr. Anthony Fauci says it's
important to accept the reality of the pandemic.
DR. ANTHONY FAUCI, DIRECTOR, NATIONAL INSTITUTE OF ALLERGY AND INFECTIOUS DISEASES: There are a substantial proportion of the people who still think
that this is not real, that it's fake news or that it is a hoax. It's extraordinary. I've never really seen anything like this.
We've got to overcome that and pull together as a nation uniformly with adhering to these public health measures.
(END VIDEOTAPE)
ASHER: Alexandra Field reporting there. The U.K. is advising people with significant history of allergic reactions to not -- to not -- take the
Pfizer COVID vaccine. The new advice comes after two health workers suffered allergic reactions to the injection on Tuesdays.
Cyril Vanier has the latest from Guy's Hospital in London. So Cyril, it is common knowledge that a lot of vaccines come with this caveat that there
may be -- may be -- complications if you suffer from allergies for example. Should the N.H.S. have done more in terms of warning healthcare workers
that this could be potentially the case if they suffer from allergies?
CYRIL VANIER, CNN CORRESPONDENT: Well, Zain, I think it is fair to ask that question. It is even fair to be surprised perhaps that people weren't
apparently being screened for having a severe allergy history.
Well, that has changed. On day two of the rollout, we learned that two of the very first Britons who got this vaccine, they happen to be N.H.S.
healthcare workers developed anaphylactoid allergic reactions shortly after getting the first dose of the Pfizer-BioNTech vaccine.
The N.H.S. says that they gave them medical treatment and that they recovered. So I think that is also important to note. The Chief Medical
Director here says this is not uncommon with new vaccines.
Pfizer and BioNTech, meanwhile, say that they are fully cooperating with the regulators here, MHRA, the medicines agency in the U.K. as an
investigation is going to be conducted into what exactly caused those allergic reactions.
For now though, it has changed the way the vaccine is going to be rolled out, rolled out for a certain subsection of the population and that is to
say people who have had in the past severe allergic reactions either to the vaccine to medicine or to food, those people will no longer be offered the
Pfizer-BioNTech COVID vaccine -- Zain.
ASHER: And just in case there is sort of apprehension, it is important to note the chances -- the chances of suffering from any kind of allergic
reaction from this vaccine is still relatively small based on statements that Pfizer has put out.
[09:10:09]
VANIER: Yes, absolutely. Well, Pfizer pointed out that, you know, in the Phase 3 clinical trial of its vaccine -- that is the phase where phase
where it has tried on -- the vaccine is administered to tens of thousands of people, it was generally well tolerated with no serious adverse effects.
I am not even sure that yesterday's allergic reactions can be considered a serious adverse effect, but I'm not a doctor, we would have to wait to find
out more from the N.H.S. on that.
So you're absolutely right that reactions to vaccines do occur. And if you had asked any scientist prior to yesterday, what we could expect from a
mass rollout, any scientist would have told you, it is not the same thing, administering it to 40,000 people and 40 million people.
So we are going to find out a little bit more as the rollout happens. And you're also right to point out, the climate, of course in which this is
occurring. There are a lot of eyes on this vaccine, Zain, from the British population.
We know from polls that there is a sizable part of the population that's a little bit apprehensive that wonders if this vaccine was developed too
quickly and maybe want to wait to find out a bit more about the vaccine before they get it themselves. They will obviously be looking at this
information keenly.
But I am confident that we're getting quite a bit more information on all of this before long.
ASHER: All right, Cyril Vanier live for us there. Thank you so much.
China has gone from the epicenter of the coronavirus at the start of 2020 to a country where life has pretty much returned to new normal. But recent
outbreaks of course are a concern. Chinese officials say they could have come from imported frozen food. David Culver has more.
(BEGIN VIDEOTAPE)
DAVID CULVER, CNN CORRESPONDENT (voice over): Health officials in China blaming imported cases of COVID-19 for recent cluster outbreaks. They warn
that it has been carried in not only by some human travelers, but also and perhaps more alarming, on goods imported from other countries.
CNN saw firsthand, it has sparked immediate changes in the handling of international cargo that now enter China.
CULVER (on camera): You'll notice the crew members behind me are in full PPE from head to toe. We have been told strictly not to go within a certain
distance of them. And we've also been told not to touch any of the cargo. The reason is, there's growing concern here in China that the imports from
other countries might be carrying the virus, particularly, frozen food.
And so those who are handling that cargo as it is coming in or going out, now have to undergo these new measures.
CULVER (voice over): While both the World Health Organization and the U.S. C.D.C. insist there is no evidence that people can contract COVID-19 from
food or food packaging, Chinese media is airing images of the strict precautions now being taken.
Food transport trucks sprayed down with disinfectant. Frozen seafood like shrimp and salmon, along with the surfaces of all types of packaging all
frequently tested for COVID-19.
CULVER (on camera): This is one of the cold chambers here in the cargo wing of Shenzhen International Airport. Now, the concern with the frozen food
has gotten so sensitive, that if I were to walk in just like this I would have to do two weeks of quarantine as soon as I walked out.
CULVER (voice over): Full body suits now required for those working in these facilities.
China's Ministry of Transport warning that before and after transporting the cold chain products, one should disinfect the used transportation means
and body parts that may have touch the containers.
Chinese health officials believe recent confirmed coronavirus cases might have been caused by contaminated imported goods. Last month, two Shanghai
airport cargo handlers tested positive for COVID-19.
In September, two dock workers in Qingdao handling imported frozen seafood also contracted the virus. And back in June, a massive Beijing market
shutdown. State media reported more than 300 people tested positive. Some have suggested that cluster outbreak might have been linked to imported
salmon.
Health experts say COVID-19 is tough enough to last for a long period on surfaces, but they warn --
SRIDHAR SIDDHARTH, DEPARTMENT OF MICROBIOLOGY, UNIVERSITY OF HONG KONG: This is not the most common way by which COVID-19 spreads. In most
situations, COVID-19 spreads from person to person. Directly by particles in which the virus is present through the air.
CULVER (voice over): Still Chinese state media are using the imported case fears to repeatedly put into question the actual origins of the virus.
Stressing that Wuhan is the place the disease was first identified, but probably not the place where the virus originated from, sowing seeds of
doubt ahead of a W.H.O. field team's upcoming trip to China. They will investigate the origins of COVID-19 as China works to keep new cases of the
virus from seeping in through its borders.
David Culver, CNN, Beijing
(END VIDEOTAPE)
ASHER: All right, these are the stories making headlines around the world. President Trump's latest and perhaps most brazen efforts to overturn the
election result has hit another dead end.
The Supreme Court on Tuesday denied a Republican attempt to block the certification of Joe Biden's victory in Pennsylvania. Hours earlier, the
President suggested the court might take his side.
And British Prime Minister Boris Johnson heads to Brussels later today to try to sort out a Brexit trade deal. He'll be meeting with European
Commission President, Ursula von der Leyen.
British and E.U. negotiators are deadlocked on three key issues and many worry that a deal will not be reached.
Anna Stewart joining us live now in London. So Anna, you've got Boris Johnson on the one hand that seems to sort of be backing down from his
previous hardline approach. But on the other hand, you've got German Chancellor Angela Merkel saying that the E.U. will not be backing down from
its core principles.
So based on that, what is -- what are the chances right now of a deal getting reached by the end of the month?
ANNA STEWART, CNN REPORTER: In recent days, they have felt pulls apart really. Now Boris Johnson was actually in Parliament just a couple of hours
ago delivering his weekly Prime Minister Questions and he said, a good deal is still there to be done.
But he also went on to suggest that it's the E.U. that needs to make a compromise. Of course, if a deal is to be reached, a compromise will be
needed on both sides. The PM now heads to Brussels, as you mentioned for this dinner with the E.U. Commission President, Ursula von der Leyen, also
the two key negotiators from either side.
Now, they have a lot of meaty issues to discuss at that table: fishing issues, perhaps was one of the biggest ones, it is the issue of fishing
rights; also competition law and also who enforces or polices any deal that is reached.
What we do not expect from this dinner, Zain, is an agreement in and of itself. Essentially, these issues have been kicked up to the top of the
political spectrum because talks have really got deadlocked beneath them, between the two negotiation teams.
So if there is a willingness, a willingness, a sound of willingness to compromise, then perhaps that will ease talks going forward.
Timing wise, this is interesting. There is an E.U. Leaders' Summit tomorrow for the 27 E.U. member states. Now, it was expected at one stage that
perhaps there would be a future trading deal to be signed by those E.U. leaders. Of course, we don't expect that to happen now.
We've got 22 days left of this transition period, so perhaps those E.U. members are going to have to keep discussing this in the weeks to come.
Perhaps there will have to be another E.U. Summit sometime between now and the New Year -- Zain.
ASHER: Boris Johnson and Ursula von der Leyen discussing meaty issues or rather as you say fishy issues because obviously fisheries are a major
sticking point here. Anna Stewart live for us there. Thank you so much.
Paris Saint Germain and Istanbul Basaksehir will resume their Champions League match today after Tuesday's play was suspended because of an alleged
racist incident.
Both teams walked off the pitch after an alleged racist comment by an official. The match will feature a new refereeing team UEFA n now says it
has opened a disciplinary investigation into the incident.
All right, still to come here on FIRST MOVE, why pet food retailers are moving into healthcare for your four-legged friends. I speak to the CEO of
Chewy.
And food delivery startup, DoorDash goes public at a valuation of $38 billion. We dig into the details, that's next.
(COMMERCIAL BREAK)
[09:21:13]
ASHER: Welcome back to FIRST MOVE coming to you live from New York where it's still looking like a mostly higher start to the trading day. The Dow
and the S&P 500 are on track to open in record territory on continued optimism over vaccines and U.S. stimulus.
The White House is now proposing a $916 billion stimulus package that includes a new round of stimulus checks, but no boost to weekly benefits
that will surely of course be a sticking point to the Democrats.
Greg Valliere joins us live now. He is the Chief U.S. Policy Strategist at AGF Investments.
Greg, thank you so much for being with us. At a time when a lot of Americans are struggling right now to put food on the table, they can
barely survive. You're seeing Wall Street as usual this year in record territory, Dow and S&P 500, especially so.
So just walk us through that. Why is there still -- still this massive disconnect between what's happening on Wall Street and Main Street?
GREG VALLIERE, CHIEF U.S. POLICY STRATEGIST, AGF INVESTMENTS: Well, I think three things, Zain, good morning. Number one, I think Wall Street realizes
that a vaccine is on the way, you know, by late winter, early spring.
Number two, we still see signs that the Federal Reserve is extraordinarily accommodative, just remarkably accommodative, and will stay that way for
another two or three years.
And now number three, the growing likelihood that we will get a stimulus package. It may take a few more days, it's still sort of up in the air, but
I do think we'll get a deal.
ASHER: Okay, so there is a likelihood that we will have a deal. But when you think about the numbers that Secretary Mnuchin put forward, is $916
billion, actually enough, just given the dire straits the economy is in? It's significantly less than what we saw earlier in the year, plus the fact
that the direct payments have been cut in half. They are now $600.00 to ordinary Americans.
And then on top of that, for those Americans who are no longer working, they no longer have their unemployment insurance. Is this enough?
VALLIERE: No, it's not. I think there should be a lot more and there probably will be more. If the Georgia Senate races go in the right
direction for the Democrats, I think Joe Biden within a week after his January 20 inauguration will have another stimulus bill ready to go.
But to answer your question, no, it is not enough.
ASHER: Obviously, one of the major sticking points is the fact that well, on the one hand, you've got questions over liability insurance of
businesses. But on the other hand, one key point that Democrats were really excited about was making sure that state and local governments really had
enough funding.
What has been the impact on the coffers of state and local governments this year, during this pandemic? They have lost billions of dollars of revenue.
VALLIERE: Yes, quite simply, their revenues are way, way down, and their expenses are way, way up, and that's going to continue.
I would prefer to take the glass half full on this one. It looks like the deal that Mnuchin and others were talking about will have something for
state and local governments. It looks like they and Mitch McConnell have come up to the higher number $916 billion, still not enough, I agree.
And it looks like maybe McConnell will cave on liability protection for companies that face lawsuits. He indicated yesterday, he might be willing
to wait until next year to address that.
ASHER: One of the issues that Republicans have had, which is why the deal is significantly lower than what it was, why the package is, I say, only
$916 billion. Is that they are concerned over current and projected Federal deficits. Is that a valid concern, do you think at a time like this?
VALLIERE: Deficits are high. We had a new number yesterday for the last month. The deficits are quite extraordinary. But I wouldn't lose any sleep
over it.
Debt servicing costs are remarkably low because Jerome Powell and the Fed will keep interest rates, the Fed Funds Rate close to zero.
So I wouldn't worry about servicing the debt. I think first you have to save the patient. First, you have to do triage before you have to begin to
worry about a deficit.
[09:25:16]
ASHER: And in terms of the Christmas Holidays, you know, this is usually a very big month for retailers, aside from the pandemic and people just not
wanting to be out and about as much in stores.
Obviously, a lot of people are going to be online shopping, but you've also got the fact that, you know, without that direct payment of $1,200, for
example, now, it's only $600.00 and without the unemployment insurance, the weekly unemployment insurance of $300.00, a lot of people are not going to
have the money to spend this year on lavish Christmas gifts.
What do you think the impact will be on retailers this year, especially?
VALLIERE: I think we're looking at a very soft period for the economy. I think that GDP in the first quarter could be close to flat.
However, I do think by the time we get to May-June, things will look dramatically better, much, much better. But there's no way of sugarcoating
if the economy looks bad for three months, and most importantly, fatalities look terrible for the next three months.
ASHER: And so quickly, Greg, you know, likelihood of a deal just in terms of what Steve Mnuchin has put forward. What are the chances of Democrats
and Republican coming together here?
VALLIERE: Let's say 70 to 75 percent. I think that moderate centrists are putting together a good faith bipartisan deal. I think we get one in about
10 days.
ASHER: All right. Greg Valliere live for us there. Thank you so much, of AGF Investments.
The opening bell is after the short break. Don't go away.
(COMMERCIAL BREAK)
[09:30:01]
ASHER: Welcome back to FIRST MOVE. The U.S. stocks are up and running this Wednesday, and as you can see there, from the opening bell, there is so
much excitement as DoorDash makes its debut. This year has really meant a boom for a lot of delivery companies because restaurants have been
shuttered.
This particular food delivery startup has priced its shares at $102.00 apiece, well over initial targets. That shows that there has been some
investor appetite. They've raised well over $3 billion. They are now valued at around $39 billion.
As we wait and see that opening trade and DoorDash, U.S. stocks are mixed. Value oriented stocks that will do well in vaccines rollout and economies
improve are outperforming tech in early trading.
Investors are encouraged today by signs that Washington may be moving closer to a stimulus deal after months of debate.
One stock making big moves in early trading is FireEye. Shares of the cybersecurity firm are down by more than eight percent on news that it was
a victim of a sophisticated cyberattack. The company says hackers stole security testing tools.
Today, the Brazilian Airline, GOL, becomes the first airline to fly passengers on the Boeing 737 MAX since it was grounded worldwide nearly two
years ago.
So far Brazil and the U.S. are the only countries to have cleared the commercial airliner to fly passengers. John Defterios joins us live now.
So clearly, John, Boeing is very, very keen to put those two air disasters, Ethiopian Air, LionAir in the rearview mirror. How crucial are the 737 MAX
deliveries for Boeing being able to turn a corner here?
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Yes, I think it's interesting and unusual that it was GOL, the Brazilian carrier, Zain, that
decided to proceed going into the commercial flights first. Today, in fact, taking place.
But GOL has been a huge supporter of the 737 MAX. It had seven in the fleet and it is adding 95, and I think this is an opportunity for Boeing to say,
now, the worst is behind us as it cost $20 billion, not counting the legal settlements because of those crashes.
I would say the U.S. carriers are taking a more tepid approach to this, American Airlines is going to launch on December 29th with the flight
between Miami and New York LaGuardia Airport.
United Airlines on February 11th with 11 flights and then Alaska Air is going to follow a few weeks later.
Now it's interesting, the Southwest Airlines is taking deliveries of the planes, but it only said that it's going to start flying in the spring of
2021. It has not outlined what the plan is for that.
But it's been a terrible year for the airline industry and for Boeing. Just basically delivering 118 planes, it's about a third of what they did in
2019. And you have to think about restoring confidence, Zain. GOL for example, is saying to the passengers, if you realize it's a 737 MAX, and
you don't want to fly it, we will let you change your tickets for free to get on to another aircraft if that's your desire.
And I think this is going to be a challenge to restore the confidence in the airplane.
ASHER: And just what do the order books look like for Boeing just going forward? I mean, obviously you say a key sort of headwind for them is their
ability to restore trust. You've got GOL making various concessions to customers, but what do the order books look like? How many other airlines
are ordering at this point?
DEFTERIOS: Well, they are improving. I mean, for example, symbolically, United Airlines took a delivery yesterday of the 737 Max, Ryanair, the
largest low cost carrier is adding to its fleet 95 to take it up to 210, even though the regulators in Europe have held back and the same thing in
Canada, although we know that the decision is supposed to be imminent.
But this is a primary narrative of cancellations. We're looking at about 500 for the 737 MAX for Boeing. So it does take time to kind of restore the
confidence on that front, and you have to think about, Zain, a double whammy for this industry.
You have the Boeing jet disasters in '18 and '19 that you talked about, basically hitting the turbulence of COVID-19 and the slowdown in traffic.
The U.S. Department of Transportation just yesterday said that year-on- year, October to October, that passenger traffic in the United States was down what -- 62 percent -- and that's a very similar tail from the Middle
East to Asia, 60 percent to 70 percent, sometimes even more in terms of the fall of passenger traffic.
And the carriers next year are supposed to lose another $38 billion. This is something very difficult for Boeing as it tries to restore the luster of
the 737 MAX, which is basically very efficient on fuel just had those major setbacks and that's got to be difficult.
ASHER: Right. Well, with that the idea of a vaccine, hopefully it would bring some light at the end of the tunnel. We'll see what that means the
Boeing next year.
[09:35:10]
ASHER: John Defterios live for us there from Abu Dhabi. Thank you so much.
All right online pet food supplier, Chew, reported a 45 percent sales surge in the third quarter. This, as the pandemic kept pet owners at home and
sent animal adoption rates skyrocketing.
Now, the company plans to move into pet healthcare. Joining me now is Sumit Singh, who is the CEO of Chewy. Sumit, thank you so much for being with us.
So this year has been quite phenomenal for Chewy.
When you think about the number of shares, they have soared between 150 to 200 percent this year. From February to July alone, you added more
customers than in all of fiscal 2019. Your shares started about $30.00 a share. Earlier this year, they shot up to $72.00 in October.
You are now valued at $30 billion. Just walk us through what this year, 2020, with the pandemic and all, more people wanting to adopt pets and that
sort of thing. What has this meant for your business?
SUMIT SINGH, CEO, CHEWY: Good morning, Zain. It's good to be here.
Well, you've summarized it aptly, right. We were enjoying -- see pet is an emotive category, and we were already on a mission of acquiring customers -
- we play in the United States today, not internationally. We were already on a mission of acquiring customers and the customers that we acquire, we
actually build long term relationships with.
So we have a really large active customer base that has grown to almost 18 million customers as of Q3. And what the pandemic has done is the secular
shift that we were enjoying, you know, from -- into e-commerce, it's accelerated that secular shift even more.
So, you know, quarters of growth that were supposed to happen over the next several quarters have been compressed into this particular year. And, you
know, clearly Chewy has been a beneficiary of that, and a lot of credit to the team that's actually been preparing, you know, to be able to handle a
surge in volume in the capabilities that we've developed over the last past years, so that when the demand ultimately came in the manner that it did,
we were ready to take it head on and serve millions of pet parents across the United States.
We're happy to be in this position. We're proud to be in this position, rather.
ASHER: But there must have been at the very beginning, I'm talking February-March, there must have been some kind of panic, just in terms of
how quickly demand change.
I mean, were you ready? Just talk to us about shipping fulfilling orders, back orders, that sort of thing. That must have been -- that must have, to
some degree caught you guys off guard?
SINGH: It certainly did. Look, you know, we -- typically, you e-commerce peaks during the Q4 time period over the Holiday Season that we're in right
now. But the Holiday Season is a planned prepared interval.
Like you mentioned, the pandemic arrived in February unannounced, and clearly, it took all of us by surprise. But I think that's the mark of a
good team and good leadership and good capability of a company.
You know, we got behind it very quickly. We decided to get our core leadership together, and we said all right, let's communicate that next
couple of weeks, and perhaps even months because we weren't clear what we were stepping into are going to be super tough.
We had a couple of key decisions to take. One, we had to move our workforce off site very quickly, and we are a young company, nine-year-old company.
We have never worked from home before.
So nearly over a period of three to four weeks, we transitioned, you know, approximately three to 4,000 people, you know, to working from home without
disrupting customer experience. Freight and logistics were pressured. In- stock levels went down from our peak of 99 percent in-stock that we like to maintain down to 70 percent levels for a few weeks.
But we rebounded back really strongly because of our strength in supply chain planning and general customer orientation. So it's been a year of
learning. It's been a year of transparency, of innovating on customer's behalf, and of perseverance.
ASHER: It's been a roller coaster ride, I'm sure.
SINGH: It has.
ASHER: So DoorDash is IPO-ing today. They had an amazing year, obviously, because unfortunately, restaurants were closed and so people relied on
delivery apps.
But there's a lot of question about what they're going to do next year when there's a vaccine. Restaurants start opening again, everything goes back to
normal. Are you guys in sort of the same boat whereby yes, you had an amazing year because obviously people were stuck at home, they were
isolated. They longed for companionship in terms of four legged furry friends.
But then next year, especially with a vaccine on the horizon, people are going to go back into the offices, everything is going to return back to
normal. How do you sustain that level of growth going forward?
SINGH: Yes, you know, we actually believe that not only has the pandemic accelerated the shift, we believe that that acceleration, not only will the
acceleration continuing to online, we also believe that the shift is likely permanent to a large degree and there's a couple of reasons for that.
The first one is, as I mentioned, pet is an emotive category. Once we capture hearts and minds of consumers and we provide you the peace of mind
and unparalleled customer experience, you really don't have a reason to go back and shop anywhere else. And we've shown that, Zain.
If you look at the way that we acquire customers and grow cohort behavior, we can show via data that customers over time end up shifting their entire
share of wallet to Chewy. That's really unlikely and unheard of in other categories, you know, that drive e-commerce penetration.
[09:41:31]
SINGH: The second one is, while most of the economy has been down and stores have been shut down, pets has been an essential category. So
consumers have had the opportunity to step out as the pandemic has eased. And yet, our retention is stronger by over 600 basis points year-to-date.
So even when consumers had the opportunity to step out and revert back to their own behavior, they didn't. They chose to stick with Chewy. So we're
bullish and optimistic on the trends in the future to come.
ASHER: All right, so you have faith in the future. So I guess the big question is, and unfortunately, we don't have time for this, there is a big
question about the main goal really going forward is really the path to profitability because you're still making losses, but Sumit Singh, we do
have to leave it there. Thank you so much for being with us.
SINGH: Thank you.
ASHER: Robots are on the rise, but not quite as fast as many people have thought. We'll bring you the details of two years of research into that
particular subject.
(COMMERCIAL BREAK)
ASHER: There has been a coronavirus scare on board a Royal Caribbean Cruise. The ship turned back after a single case emerged. Kristie Lu Stout
reports.
(BEGIN VIDEOTAPE)
KRISTIE LU STOUT, CNN CORRESPONDENT: In Singapore, a cruise to nowhere was turned back after a passenger tested positive for COVID-19.
Caribbean confirmed to CNN that the passenger tested positive for the virus after checking in with a member of the ship's medical team.
The cruise then informed Singaporean officials of the news and turned back to port.
Now, all the guests were not permitted to disembark until full contact tracing measures were carried out.
[09:50:02]
STOUT: In a statement, Royal Caribbean said this, quote, "We worked closely with the government to develop a thorough system that tests and monitors
all guests and crews and follows public health best practices that we were able to quickly identify this single case and take immediate action is a
sign that the system is working as it was designed to do."
The Royal Caribbean Cruise ship it was called the Quantum of the Seas. It was hosting a four-day three-night cruise for Singaporeans around
Singapore.
It's part of a plan to boost domestic tourism in the city state in the midst of the COVID-19 pandemic.
And the case of COVID-19 onboard this cruise ship to nowhere is just another setback for Singapore just a month after it was forced to cancel
its plans to open a quarantine free travel bubble with Hong Kong.
Kristie Lu Stout, CNN, Hong Kong.
(END VIDEOTAPE)
ASHER: The pandemic has made millions of people either redundant or worried about that jobs. Before the coronavirus outbreak, though, one of the
biggest concerns in the workforce was a seemingly imminent rise of robots and automation.
But how much of a threat is that really? And how soon exactly?
The Massachusetts Institute of Technology has recently published the results of two years of research. It says "The advancements have been a lot
slower than many people feared. There will be plenty of job openings in the next decades to come, but more worker training is certainly required.
Without it, the decades old inequality in the U.S. labor market will only get worse."
Julia spoke with one of the authors of the M.I.T. report, David Autor and asked him how that inequality was being affected by the pandemic.
(BEGIN VIDEOTAPE)
DAVID AUTOR, FORD PROFESSOR OF ECONOMICS, MASSACHUSETTS INSTITUTE OF TECHNOLOGY: Well, very unfortunately, the pandemic just seems to be an
accelerant on this fire, in terms of, you know, it's basically been in net, almost harmless or even beneficial to people in, you know, many highly paid
jobs where they can do their work remotely, they now commute less, they use their time more productively, and their consumption has not fallen.
You know, money they would have spent on travel, they're spending on you know, remodeling their homes, and so on.
But for workers who do hands on work, many of whom are low paid, that's not true for all hands on workers, obviously, medical doctors and nurses are
not low paid and they do hands on work. But for many people who do you know driving and cleaning and food service and so on, they are exposed to
additional disease risk.
Their pay is not commensurate with the degree of risk that they are bearing and moreover, we expect that because of the long-term decline in commuting
to work, in business travel, in retail sales, there's going to be less opportunity and less demand for workers who do those kinds of jobs.
JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: So how do we tackle this? Do we have to look at it and say, it's essential that more than 40
percent of the population get a college degree education or we have to incentivize businesses to maybe buy tax incentives to continue to skill
their employees and allow them to continue to add to their skills?
Can you give me a set of ideas and policies that the next administration need to focus on? Because it feels like time is running out. We have to act
now.
AUTOR: Sure, so I certainly agree with the thrust of your question that skills is an essential part of it. It doesn't all have to be college
degrees. It can be you know, skilled vocational training.
There are good high paying jobs in the trades and construction, plumbing, electrical work, there are good high paying jobs in healthcare, healthcare
professions that don't require a four-year college degree, but are well remunerated and have, you know, a very secure and robust future. But they
require concentrate skills investments, even it is not a four-year college program and those can be expensive, and it's also difficult for people to
know what type of skills to acquire.
But let me just say, building better workers is not itself sufficient. We need to be focused on building better jobs. What would that require? Well,
one place to start would be to have a reasonable level, a well calibrated level of the Federal minimum wage, which has basically sank to the point of
irrelevance at this point.
The U.S. minimum wage at present is about the same level as it was in 1950. So we could raise it to a meaningful number and then index it to the median
wage, so it doesn't keep, you know, sinking again, as inflation inevitably occurs. That's one point.
A second thing we could do -- and this is hard -- is we should separate the provision of healthcare from employment. That is, it creates added
insecurity because when people lose jobs, they potentially lose access to healthcare. It also creates a burden on employers and kind of distorts the
employment relationship in a way that is just totally unnecessary.
(END VIDEOTAPE)
ASHER: All right, still let's come here, the dash to DoorDash. The food delivery startup is serving up its mega IPO today. Should investors bite?
All that and more, coming up.
(COMMERCIAL BREAK)
[09:51:59]
ASHER: All right, let's take one last look at U.S. markets. We are higher in early trading. The Dow and the S&P 500 are in record territory yet
again. All this as Wall Street awaits the opening trade of IPO, DoorDash.
The food delivery firm is going public today in a deal valuing the company at an eye watering $39 billion. Airbnb is expected to price its shares
later today. Airbnb is going to be beginning trading tomorrow.
Paul La Monica joins us live now. So Paul, I do want to start with the market because we are seeing fresh record highs. Despite the chiasm between
Wall Street and Main Street, it does appear that there is a lot of investor optimism about the potential stimulus package that they hopefully cost.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think stimulus and vaccine hopes and it is unfortunate, Zain, I mean, we point out a lot that the
market is forward looking and investors are expecting that in 2021, the economy will be in better shape because of stimulus and a vaccine, but
neither of them are here yet.
So if you are an average consumer waiting for a stimulus check or some form of stimulus payments if you're a small business, optimism about the future
doesn't help right now, especially right around the Holidays.
ASHER: Let's talk about DoorDash going public today. I mean, what do you think are the prospects of DoorDash just given that it faces a lot of
competition from Uber, from the new owners of Grub Hub, for example, and then plus when there's a vaccine, everyone goes back to work and
restaurants open up again. Things could be different for them.
LA MONICA: I agree. This is, I think, a risky bet right now given the excessive optimism surrounding the DoorDash IPO. I mean your valuation is
surging, you know, nearly $40 billion for a company that by the way is not yet profitable. The revenue growth is stunning.
But as you point out, Uber is a major competitor. Grub Hub getting taken over by Just Eat takeaway is now part of a larger company as well, and I
think you're right that there are probably a lot of consumers, average Americans that would love the idea of going out again to a restaurant if
there's a vaccine and they feel safe.
I mean, heck, I can't wait to get the baby sitter to come tonight and go out to dinner, but that's a 2022 story.
ASHER: I hear you.
LA MONICA: But you know, we will see.
ASHER: But with Airbnb -- just quickly -- it is the opposite story because they got hammered this year, but at the same time next year, as things
actually open up again. Obviously, they're going public tomorrow. Next year, if things open up again, the future picture for them is actually much
brighter.
LA MONICA: Exactly. Airbnb's revenues are suffering now, dropping precipitously during the pandemic and they are losing money as well.
But I think that Airbnb is in a much better competitive position going forward because they're really disrupting the hotel chains right now and
the hotels are having a worst sales decline than Airbnb is.
So Airbnb is a category killer. You can't say that about DoorDash.
ASHER: Yes, Paul La Monica live for us there. Thank you.
[09:55:04]
ASHER: 2020 has certainly been a rough year and it isn't even over yet. How on Earth do people make sense of it? Well, Google has some answers.
As you expect, election results, one of the biggest trending searches. Also -- I'm guilty of this -- coronavirus was heavily stashed as well. And Zoom
as all of us looked for ways to stay more connected with our colleagues, friends and families.
A lot of other timely stuff made the list like for example stimulus, checks, sourdough bread, social distancing, date ideas, people going on
dates on Zoom, for example, and PlayStation 5.
Along with the questions like why is the NBA postponed? And why on earth is toilet paper sold out?
I'm still scratching my head over that one. All right, that is FIRST MOVE. I'm Zain Asher. Julia is going to be back tomorrow.
"CONNECT THE WORLD" is up next. You are of course watching CNN.
(COMMERCIAL BREAK)
[10:00:00]
END
