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First Move with Julia Chatterley
Square Buys Australian Buy Now Pay Later Business for $29 Billion; The U.S. and U.K. Blame Iran for a Deadly Attack on an Israeli Ship; U.K. Brings in New Travel Rules as Airline Bosses Call for the Government to go Further. Aired 9-10a ET
Aired August 02, 2021 - 09:00 ET
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[09:00:19]
ALISON KOSIK, CNN BUSINESS ANCHOR: Live from New York, I'm Alison Kosik, in for Julia Chatterley. This is FIRST MOVE and here is your need-to-know.
Square deal. Square buys Australian buy now pay later business for $29 billion.
Tanker tensions. The U.S. and U.K. blame Iran for a deadly attack on an Israeli ship.
Restrictions relaxed. U.K. brings in new travel rules as airline bosses call for the government to go further.
It's Monday. Let's make a move.
Welcome to FIRST MOVE. Great to have you with us this Monday. Let's begin as always with a check of the markets. Global stocks are higher across the
board on this first trading day of August, driven in part by strong corporate results and a fresh round of merger activity.
U.S. futures are higher after Wall Street's modest pullback last week. Europe is close to all-time highs, too.
European markets getting a boost from strong results at banking giant HSBC, and news of a mega merger between U.K. aerospace group Meggitt and Parker-
Hannifin of the U.S.
U.S. Fintech firm, Square is announcing its biggest ever corporate purchase, too, a $29 billion deal for Australia's Afterpay. We're going to
have more on that in just a few minutes.
Stocks in Asia finished higher. The Shanghai Composite rallied almost two percent. New numbers however, show Chinese manufacturing activity rising at
its slowest pace in well over a year.
Chinese authorities said over the weekend, they are open to easing tensions with the U.S. over Chinese IPO listings. Beijing also announced new
measures to control cryptocurrency trading.
Okay, let's get straight to our drivers. An Olympic sprinter from Belarus seeking refuge after her team tried to forcibly send her home. This comes
after she criticized her coaches on social media for registering her for the wrong event.
Selina Wang is live for us in Tokyo with the latest. Selina Great to see you. How is all this playing out?
SELINA WANG, CNN CORRESPONDENT: Well, Alison, I'm actually outside of the Polish Embassy here in Tokyo where sprinter, Krystsina Tsimanouskaya had
entered earlier. According to Poland's Deputy Foreign Minister, she has in fact received a humanitarian visa. He said that Poland will do whatever
they can to ensure that she can continue her sporting career.
Now Alison, she was set to compete in the 200-meter race on Monday of the Olympics, but on Sunday, representatives of the Belarus National Committee
came to the Olympic Village, told her to pack up her belongings and go back to Belarus.
Now, when she got to the airport, she approached a Japanese police officer and said that she wanted to seek political asylum and that she was refusing
to go back. Now, her fear of returning comes after she had spoken out against sporting authorities in Belarus. She had complained on Instagram
that she was entered in the 4 x 400 meter relay without her consent.
Now, she later said to a Belarus news website the following. She said, quote: "I'm afraid that I might be jailed in Belarus. I'm not afraid of
being fired or kicked off of the national tea, I am concerned about my safety, and I think that at the moment, it is not safe for me in Belarus. I
didn't do anything, but they deprived me of the right to participate in the 200-meter race and wanted to send me home."
Now, Alison, Belarusian athletes who have criticized the government have faced reprisal. They have been detained. They have been excluded from the
national team. President Alexander Lukashenko has initiated a brutal crackdown on protesters, dissidents, on journalists after refusing to step
down last year.
Some Belarusian athletes participated in those protests and several of them have been jailed.
And Alison, Alexander Lukashenko himself was actually in charge of the Belarus National Olympic Committee for decades before his son Viktor took
over.
Now, Viktor is not recognized by the IOC and Lukashenko and his son are barred from attending the Tokyo Games.
KOSIK: Selina, another headline of the Olympics. After previously withdrawing from the all-around competition and three-event finals, Simone
Biles will now compete in Tuesday's balance beam final at the Olympic Games. Walk us through what changed here.
WANG: Yes, Alison, Simone Biles is making a return on balance beam on Tuesday, as you say after withdrawing from several events, this is going to
be her last chance to take home a gold medal at the Tokyo Olympics after saying that she was stepping back because of mental health concerns.
Now on Friday, on Instagram, she said that she was still dealing with this mental block called the "twisties."
[09:05:10]
WANG: She said she literally couldn't tell up from down and that it was terrifying not to have her mind and body in sync when she was doing these
skills. She even showed videos of herself doing skills and dismounting and struggling there, but she is set to be there on Tuesday on balance beam.
Now, I was actually at the gymnastics finals on Sunday and I saw Simone Biles in the stands. She was cheering on her teammates standing, clapping,
smiling, and calling out their names, and now she will actually get to compete as well on Tuesday -- Alison.
KOSIK: Yes, I was watching, too. Love the uneven bars.
Selina Wang, thanks so much for your reporting. And Selina is going to be back with us later in the show to talk about Japan's gold rush in The
Games.
Jack Dorsey's payments company, Square is buying Afterpay, an Australian buy now pay later firm in a $29 billion deal. It is Square's biggest
purchase and helps build out its global payments network. Clare Sebastian joins me live now. So, this is an interesting trend that has really grown
over the pandemic, the buy now pay later, but it's really taking off among young people.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Alison, buy now pay later, a major acceleration that we've seen over the course of the last 18
months that are driven partly by the lockdowns, partly by the rise in e- commerce. This allows people to sort of borrow money, but it is automated sort of installments, essentially, installment lending, and Afterpay is one
of the leaders in this space. This is an Australian Fintech company.
This acquisition by Square for $29 billion in an all-stock deal really does to some extent put this trend on the map. Square has seen exponential
growth of its own accord during the pandemic, the stock up some 550 percent since its low as of March 2020. It just reported earnings where it saw 91
percent increase in profits. So, it is clearly trying to continue that growth. It has overseas ambitions, which Afterpay will help it with.
So, clearly, there are some synergies here. It hopes to integrate Afterpay with not only its very popular to Cash App, the competitor to Venmo, but
also with its seller ecosystem as well to help sellers reach more merchants.
So, extremely interesting deal. Jack Dorsey saying that, you know, we built our business, he says, to make the financial system more fair, accessible,
and inclusive and, Afterpay has built a trusted brand aligned with those principles.
In terms of the stock reaction today, Afterpay closed, it was an almost 19 percent higher in Australia. Square shares in the premarket down just about
two percent lower, so not too much lower given the cost of this deal.
KOSIK: Clare, what about critics who say that this business model that so far is just loosely regulated, you know, it doesn't require credit checks
to be run on new accounts, that this kind of space is really ripe for fraud?
SEBASTIAN: Yes, I think there's a significant concern, Alison that this is a space that is growing much faster than it can be regulated. There are
moves to try and regulate it in the U.K. There was an article by the Consumer Financial Protection Bureau here in the U.S. that notes that they
don't often conduct very rigorous credit checks before lending. So, it can mean that vulnerable people take on debt.
Additionally, there aren't the same sort of dispute protections that you have with credit cards that help consumers if a product that they buy is a
scam or faulty in some way, and they don't charge interest on these loans, these installment loans, but they do charge late payment fees.
So, there are concerns around that. There was a survey by Credit Karma in the U.S. that found that 40 percent of people have actually used a buy now
pay later service at least once. Of those, 38 percent ended up with a late payment and of those, about three quarters found that that impacted their
credit score.
So, this is something that consumers should definitely be careful of. But Afterpay for it case, they say that they lock your account if you have a
late payment. They cap the late payments at about 25 percent of the original purchase. So, they are trying to sort of go against that concern
that they do lead to consumers taking on more debt and they talk about sort of financial wellness in the statement today with Square.
KOSIK: Yes, consumer beware with this one. I mean, I can see, you know, young shoppers unsuspecting who go from one store to another to another,
and before you know it, four installment payments become like 12 after shopping at three different places.
But that's for another discussion another day. Clare Sebastian, thanks so much.
To the Middle East now, and rising maritime tensions after an attack on a tanker that killed two people. The U.S., U.K., and Israel are all blaming
Iran, which denies any involvement. Oil prices not making any big moves though.
Nic Robertson is on the story for us. Nic, great to see you. What's the latest?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, great to see you, too, Alison.
Look, I think part of the reason that we're not seeing a head on the oil markets at the moment is this didn't cause an explosion, it did cause two
deaths. It is understood that the product tanker was empty at the time and also this is not the first incident of this type in recent months.
The British Foreign Office point out this is the -- there have been three previous such attacks over the past few months since February. So, I think
that's perhaps why markets are not being spooked, but it is certainly having diplomatic repercussions both here in London and in Romania as well.
Iranian Ambassadors to the U.K. and to Romania have both been called in. James Cleverly, the British Minister in charge of the Middle East told the
Iranian Ambassador here very clearly that international shipping should be able to continue without this sort of interference, and has told Iran that
it must stop this kind of behavior.
We've heard as well from Naftali Bennett, the Prime Minister in Israel, saying that Israel knows how to strike back if you will, at Iran.
The denials that are coming from Iran at the moment are very strong. They are very clear. They're saying they weren't responsible for this. But I
think also we're hearing a message from the Supreme Leader in Iran, Ayatollah Khomeini, saying that the West cannot be trusted in negotiations.
We are entering a new sort of diplomatic period, these challenging talks -- nuclear deal talks between Iran and the United States not face to face,
they are stalling at the moment. That's part of the environment.
A new Iranian President, harder line due to be sworn in later this week. All of this, seems to be contributing to these heightened tensions.
KOSIK: What long term ramifications do you see coming of this?
ROBERTSON: I think we're going to see, you know, statements clearly warning Iran against this kind of action. I think there's going to be a lot
of attention later this week when the new Iranian President Ibrahim Raisi is signed in on Thursday, he takes over as President in Iran, and what he
says then, what is the nuance in what he says? Can it be interpreted as throttling back even the very limited engagement with the United States
over those nuclear deal talks? Or is there the potential here for other tit-for-tat type incidents?
That's the kind of environment we're in at the moment, so that that cannot be rolled out at all. But at the moment, focus is on diplomatic efforts to
call out what is happening, all sides to say their position, and to try to find a way ahead. And what we've heard from the State Department, they are
saying, there will be a response forthcoming.
But again, I think we can expect this to be diplomatic at the moment.
KOSIK: All right, international diplomatic editor, Nic Robertson. Thanks for all that great context.
China's capital is tightening its COVID restrictions. A cluster of cases that emerged two weeks ago has now spread to 11 provinces and infected more
than 300 people. CNN's Steven Jiang reports.
(BEGIN VIDEOTAPE)
STEVEN JIANG, CNN SENIOR BUREAU PRODUCER: China's latest number of new locally transmitted cases still pales in comparison to what we are seeing
in many parts of the world, including in the United States, but in this country, they hadn't seen this level of infection for months. That's why
the central leadership has sent a Vice Premier to Nanjing to supervise the local response to this outbreak, and that's the same senior official they
dispatched to Wuhan during the peak of that city's outbreak in the beginning of the global pandemic. That's how seriously concerned the
leadership feels about the spread of this new cluster, which really shows no sign of abating spreading across the country, impacting not only airport
staff, but also airline crews, schoolchildren, tourists, as well as doctors and nurses.
That's why increasingly, we are seeing local authorities re-impose draconian measures we hadn't seen for a long time. And that means millions
of Chinese people are now again being confined to their homes, with the government designating more than 100 so-called high or medium risk areas.
And all of this is happening in the middle of the peak summer travel season, and that hasn't helped things. So we are seeing a growing number of
tourist attractions as well as airports being shut with local officials, including those here in Beijing advising residents not to leave town.
And here in the Chinese capital, they have also greatly tightened entry requirements basically banning anyone from the high or medium risk areas
from entering the city by suspending transportation links to those regions.
And as of now, there is little indication the central leadership here is going to change their current approach which is zero tolerance towards
locally transmitted cases.
So, do expect to see more lockdowns and a sharp decline in domestic travel here in China.
Steven Jiang, CNN, Beijing.
(END VIDEOTAPE)
KOSIK: These are the stories making headlines around the world. Turkish officials say more than a hundred wildfires have started across the country
since Wednesday. Farmers can only watch as land and livestock are destroyed, and homes are burned to the ground.
[09:15:06]
KOSIK: In one village, though, residents are doing all they can to fight the catastrophe as Arwa Damon reports.
(BEGIN VIDEOTAPE)
ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT (voice over): Gulay Kacar can barely breathe, barely shout the words, "My father's land is
burning." "Let it burn, we're going to burn too," her relative responds. She is frantic. Where to go? What to do? What can they save?
For days, the flames have been leaping closer and closer to this tiny village on Turkey's Southern Mediterranean Coast. It's as if they're
fighting a monster that keeps coming to life each time they dare to hope it is dead.
"Everything is going to burn," Muzeyyan Kacar tells us mournfully. "Our land, our animals, our house. What else do we have anyway?" Despite this
being close to popular seaside tourist destinations, these villagers don't have much and what they have, they cherish, they take pride in.
A small band of men from here and other areas trudges do the easily flammable fields. They take control of the firefighters' hose. It's so hot
out, it feels like the water evaporates almost as quickly as it is sprayed.
Trees are fell to stop the flames from growing and sparks flying into other areas. They are fighting a beast they may not be able to beat.
The last of the children are sent away.
"How should I feel? We haven't slept for three days," this woman starts to tell us.
DAMON (on camera): They are so understandably sad -- I mean, so angry that they are actually finding our questions of how they're feeling, what
they're thinking to be absolutely ridiculous and I get it.
DAMON (voice over): For what can one even think, even say when they are watching everything they own in life about to go up in flames?
Arwa Damon, CNN, Manavgat, Turkey.
(END VIDEOTAPE)
KOSIK: COVID lockdown restrictions in the Australian state of Queensland are being extended another week. The stay-at-home order was meant to run
through Monday, but officials now say the initial lockdown was insufficient. Eastern states of Australia are seeing a growing number of
cases of the delta variant.
Still to come on FIRST MOVE, emotional reunions. The U.K. allows quarantine free travel from Europe and the U.S. for the first time since the pandemic
began. We'll take a look at what it means for the economy.
And the record performance of MoneyGram's online offerings drives a 20 percent revenue surge. I'll speak with the CEO.
(COMMERCIAL BREAK)
[09:20:35]
KOSIK: Welcome back to FIRST MOVE. I'm Alison Kosik. And the curtain is about to go up on a new month of trading on Wall Street. Futures are
pointing to early session gains after the sixth straight monthly rise for the S&P 500.
U.S. markets begin the day near records as investors await another busy week of corporate earnings. The big data point of the week comes Friday
when we'll be getting the U.S. jobs report for July. A strong number could move the Fed and its policymakers one step closer to cutting some stimulus.
The big wildcard here of course remains rising COVID infections and their effect on the global economy.
Alicia Levine joins me now. She is the head of Equities and Capital Markets advisory at BNY Mellon Wealth Management. Great to see you.
ALICIA LEVINE, HEAD OF CAPITAL MARKET ADVISORY, BNY MELLON WEALTH MANAGEMENT: Good morning and Happy Monday.
KOSIK: Happy Monday. And it is the first trading day of the month. And as you know, August can really wind up being one of these wild, volatile
months. And this particular August that we're in, it has a lot of headlines, including the delta variant and the unknown impact of it on the
economy.
At the moment, we see investors kind of shrugging it off, but I'm feeling like there are big risks. What do you think?
LEVINE: So yes, look, it's great to see you for the new month and August traditionally has been a very choppy month. And I say the conversation
right now across Wall Street is to expect a lackluster month. So, broad movements up and down with no clear direction as the risks you talked about
are very real. So, it's not just delta, but really how that affects the labor market and whether or not the labor market can really retain some of
its 2019 strength going into the end of the year.
That's the big risk out there, whether we still have people who are on the sidelines, and not re-entering the labor force because of health risks, or
simply because they are in the wrong part of the country as the population has moved to other places, labor may not be in the right place. So, there's
some structural issues out there that we do think will be reflected in markets this month.
KOSIK: The Fed is also buzzing in the background of investor sentiment. And last week, Jerome Powell, he -- you know, he stuck to his script that
inflation is transitory. Do you think that the Fed is making a mistake at this point by not raising rates yet? Is the Fed behind the curve?
LEVINE: So, Alison, this is really a great question because as you know, for the most part, the market has completely priced out long-term
inflation. It is pricing in a shorter term inflation bump, and then longer term, inflation moves lower, and the market pricing is thus.
However, we're hearing from virtually every company in reporting season and even up and down Main Street, that price inputs are higher. They are real
and they are starting to affect businesses. And very slowly, we are starting to hear that consumers are starting to be a little bit more
cautious because of price increases.
So, I think the risk here is that inflation as a transitory issue is not, you know, higher in four months, but maybe four quarters, and perhaps the
definition of transitory has changed and that is the risk.
I don't think the Fed should move yet, because there is a lot of -- there is a lot of damage that has been done to the labor force here. So, I think
that's okay. But I think there may be a collision at some point as prices continue to be higher and not so transitory and the Fed and the market are
really priced for something much more benign. I think we don't know yet.
So much of the price increases are in fact related to the friction and reopening, but some aren't, such as labor prices, wage increases, and
housing.
KOSIK: Okay, so with this possible collision, do you think that, you know, we're going to get a pullback in this market or does, you know, an
accommodative Fed basically, you know, guarantee that buy the dip is any reaction -- is the reaction to any pullback?
LEVINE: So, look, so the 10-year yield has moved down quite dramatically in part because of these kinds of issues and worries about growth concerns.
And so I don't think it's this month. I think that that's a longer term conversation about whether or not the market is properly priced in an
inflation risk here.
So for today, it seems reasonable, but I'd be on guard for any movement upward because the data so far is not quite cooperating.
Like in the end, if the Fed thought transitory meant three months, it's clear it's going to be much longer than that.
[09:25:15]
KOSIK: I'm curious what your takeaway is so far with second quarter earnings. You know, this week is going to be a big week for earnings. And
so what's your takeaway so far, especially for -- not just for the earnings season, but for the guidance going forward?
LEVINE: So it's -- you know, it's been a spectacular earnings seasons. It looks like the second quarter earnings will be up about 82 or 83 percent
year-over-year, and that's because the revenue lines have come in so strong and, you know, large company, America, really did an extraordinary job in
right-sizing their businesses and wringing out costs during the trauma of last year, and we're reaping the rewards this year in terms of earnings.
We see the value in cyclical areas, bringing in triple digit earnings growth for this quarter, and probably next quarter as well.
I'm looking at 2022, those earnings really have not moved higher at all, even as 2021 have, closer to $200.00 a share. So, we really want to look at
2022 and what forward guidance is and that's really the big question here. I think there's no question, second quarter was going to be terrific. We
need companies to tell us what does the Delta variant do for some of those consumer and travel companies? And what does it look like going forward?
When we have a steady state of how people work and how people live and how people shop, what does that look like in terms of growth rates? And I think
we don't know yet. We don't know.
But I'd say, the takeaway is so far, most companies have been able to pass through costs, not all, but most; and second, that the companies have been
very, very nimble in right sizing their businesses, and so for those reasons, I'm pretty optimistic about guidance going forward.
KOSIK: Okay, thanks so much, Alicia Levine, the Head of Equities and Capital Markets Advisory at BNY Mellon Wealth Management. So great to see
you.
And the market open is next. I'll see after the break.
(COMMERCIAL BREAK)
[09:30:10]
KOSIK: And you're taking a live look at the opening bell on Wall Street and you aren't seeing wrong. That is a cardboard cutout of a person.
They're really happy there. That is GXO Logistics ringing the opening bell.
And welcome back to FIRST MOVE. I'm Alison Kosik.
U.S. stocks are up and running on the first trading day of the month, and we've got green arrows across the board with the U.S. majors once again
near record highs. Stocks getting a boost from news that a large U.S. infrastructure bill is making progress in the Senate.
The major averages all saw modest gains last month. All are up by double digits so far this year.
Investors meantime are sure to keep a close eye on shares of Robinhood after its less than stellar market debut last week. Shares of the popular
trading app are seeing gains early in the session, but they still are below their IPO price of $38.00 a share.
Fully vaccinated travelers from the U.S. and the E.U. can now visit the U.K. without quarantining. You're looking at families and friends who have
been reunited at Heathrow. We're now waiting to hear if the U.K. will expand that to visitors from other countries.
Salma Abdelaziz is in London, and it's those scenes that make you feel, you know, maybe things are getting better. But you know what? Then we hear
about the delta variant getting so many people sick. I understand that these travelers will be able to avoid quarantine. But there's also the
reality that travelers will still have to take a PCR test on the second day after they arrive. Right?
SALMA ABDELAZIZ, CNN REPORTER: Absolutely, Alison. There is always a few caveats. But seeing those lovely images, I'm an American in London, just
imagining being able to hug my family again, it's absolutely an exciting day to see these restrictions ease. But there are, as you said, a few rules
around them.
So starting at 4:00 a.m. today, British Standard Time, travelers coming in from the E.U. or the U.S. are allowed to come if they are fully vaccinated.
That means if you're coming from the E.U., you have to show your Green Pass. If you're coming from the United States, you have to show that
vaccine card to prove that you are fully vaccinated. You're also going to have to show a negative PCR test before departure from wherever you're
departing from at that airport to your airline, and then you're going to have to take yet another coronavirus test two days after arrival.
There is one major exception here, Alison, that's France. Any travelers coming from France will still have to follow quarantine rules. They are
still under something called the amber plus list. So separate rules there, even though they are of course inside the E.U.
And as you said, yes, this comes at a time when we're seeing the rising delta variant. We have seen a slowing down in cases, but the argument here
for the authorities is twofold. First, these travelers are fully vaccinated, they have that layer of protection. They are also showing
negative tests before arrival. There is a reasonable measure of safety with them arriving here in the U.K.
And as you know, of course, this country is eager to reopen its travel industry, its business industry, and its restaurants. It wants to see
tourists come back. So, it really drives that benefit.
The second one is of course, there needs to be some sort of benefits for those who are vaccinated. That's what the authorities are really pointing
here. To encourage people to get vaccinated, you have to see that there is some difference. And for them, that means being able to allow travelers to
come back here, meet family, meet friends and visit. That is a really big step forward.
But so far, of course, we don't see any reciprocity from the United States. This is only a one way street. And so far, of course, it's also for the
E.U. and the United States. That means there is very limited vaccines and we are talking about the vaccine privilege here, the world at large. My
mother, for example, who is in Egypt -- that is a much more difficult hurdle for authorities and we are still waiting to see how we begin to
recognize those who are vaccinated in other countries and how we begin to tackle those who are not vaccinated at all -- Alison.
KOSIK: Yes. You talk about how hard it is to get those vaccines. Now, there are actually plans in place to deliver a booster shot beginning in
September.
ABDELAZIZ: That's absolutely right, and it is sort of difficult to begin to imagine when we're still just trying to get everyone fully vaccinated to
think about yet another shot, a third shot, a second shot for some people if you had the Johnson & Johnson, but the authorities have been working on
this for months because what they are concerned about here is two things.
First, variants. That is the concern. The delta variant is the one we're dealing with right now, but there could potentially be more variants in the
future. I'm going to point you to a key paper that was published by a group of scientific advisers that advise the government here, a government backed
group.
They published this paper, it's not peer reviewed, it is not theoretical, but it goes through the scenarios in which the virus is able to evade our
current vaccines. And the paper says that is very likely to happen, and the eradication of the virus, that is unlikely to happen.
[09:35:06]
ABDELAZIZ: Essentially, the bottom line here is these scientists are saying, this is a virus we're going to live with for some time. It is a
virus that's going to mutate and change and it is a virus that is very likely going to mutate and change into a form that could evade our current
vaccines. That means in the long term, we're looking at more shots, more booster treatments, and more restrictions potentially to try to avoid these
variants from taking hold in an already vaccinated population -- Alison.
KOSIK: Okay, Salma Abdelaziz, thanks so much for all that reporting.
The changing of the rules on travel comes after the U.K. lifted most restrictions on movement last month. Despite that, there are still
significant disruptions to the economy, including labor shortages driven by continuing COVID-19 transmissions, and something called a pingdemic where
workers are being asked to self-isolate after contact with anyone infected.
Joining me is Nick Allen. He is the CEO of the British Meat Processors Association. Great to meet you.
NICK ALLEN, CEO, BRITISH MEAT PROCESSORS ASSOCIATION: Good to be here. Thank you.
KOSIK: And so supply chain shortages are a big problem for meat processors. You know, you look at the, the pandemic right now. It is being
felt globally, but especially in the U.K. Talk us through what is happening with Britain's food supply chain in the midst of the pandemic.
ALLEN: Yes. It's been a real struggle right the way through the pandemic. The food sector has always been short of labor, partly because we had
relied to so many non-U.K. workers to keep the industry running. And so we actually had a problem before COVID came along, so that you know, cutting
our ties with Europe so we lost access to quite a few of those workers.
And then sort of COVID in itself, just you know, created some further problems. We lost some workers shielding, more non-U.K. workers went home
and didn't come back again. So the whole food sector was sort of struggling, and particularly on the hauling side, we've been struggling to
sort of move goods around.
And then as you mentioned, in your intro, we had this app that started to, you know, really sort of go wild. So pinging everyone and sort of telling
them, you know, they've been in contact with someone and they had to stay at home for 10 days and self-isolate and that really put the pressure on
us, really the straw that broke the camel's back.
And, you know, we've been struggling to keep the food supply chain running. We are just about managing. But you know, there's a few gaps appearing on
the shelves now -- a few gaps appearing in the shops.
KOSIK: So with this, you know, this app that's making so many in the industry self-isolate, what tough choices could meat processing companies
be forced to make by having that labor shortage that impacts the supply of meat. Talk with me more in detail.
ALLEN: Yes. You're a real dilemma, particularly for meat processors, because you're taking animals off the farm and keeping that whole supply
chain running. And really interesting, the best way to keep the supply chains running is to cut down on the cuts of meat that actually need a bit
more butchery and a bit more refinement, so you can actually get through the plants and get all the volume through the plants and keep everything
running. And that, of course, keeps the animals coming off the farm and keeps everything sort of relatively happy.
The downside of that is that those are the cuts of meat, but actually you make the least amount of money on. You actually make the profit from adding
value. So, it's a bit of a dilemma for the meat processors. So, what do they do? Do they keep the volume running or do they sort of concentrate on
trying to keep the profitability of the business going?
KOSIK: And you talked about the meat products that would be impacted? I mean, how dire is this, you know, from the consumer standpoint, what meats
are you talking about that could be impacted the most where the shortages could really happen?
ALLEN: At the moment, it is thee more refined cut that need a bit more sort of butchery. So, it's the more refined chops and steaks and things
like that. That's what people tend to sort of pay at the premium end.
I wouldn't want to give anyone the impression that this is actually getting so dire, but it is -- it seems to be growing at the moment. You know, we
had a brief lull in sort of cases, but now it seemed to pick up at the end of last week. And also, the app produced a record number of pings last
week, you know, which meant that you've got more people who were having to stay at home.
So, the government has just introduced this new scheme that we can also hopefully sort of sign up to whereby we can sort of test people and not
have them stay at home. But it is early data, it was only introduced last week and it's not hardly up and running yet.
KOSIK: What else do you want the government to do to help the industry?
ALLEN: Well, we've been asking them for some time to sort of allow us to have sort of butchers and the 10 butchers actually covers quite a range of
workers are added to what they call the shortage occupation, i.e. that means we can bring some people in from abroad because that would help.
[09:40:16]
ALLEN: And sort of, you know, we've been asking them for some time and that they keep declining that, so that sort of answers that. In the short
term, I think that this scheme that they've introduced is very sort of clunky and so quite burdensome, too. And it could really do with beings so
organized in a much better way and a much more efficient way to keep it happening.
And we saw sort of -- when we get through to August 16th, we'll be able to -- people that have been vaccinated twice won't have to do their self-
isolation. They'll just have to have one test to check if they are clear. We've been saying to government, look, if we're running into problems here,
so bring things forward a bit.
Also, we've got problems on the hauling side. You know, so it's one thing when our meat plants manage to produce product, but then if they can't
actually get it to where it needs to go, that's the sort of challenge.
So, you know, we've been asking them to -- they actually have extended the number of hours a driver can sort of drive during the day to help with
that. But also, we've got a lot of people on furlough still that probably in truth haven't got jobs to come back to. So, we've been asking them to
have a look at the furlough scheme and see, can we get them back into work, really? Because we're desperate for labor and there's all these people at
home doing nothing.
KOSIK: All right, Nick Allen, thanks so much for giving us a window into what's going on into the meat processing industry where you are. Nick
Allen, the CEO of the British Meat Processors Association. Thanks so much.
ALLEN: Thank you.
KOSIK: Coming up on FIRST MOVE, one of the largest money transfer companies seeing its revenue surge, the CEO of MoneyGram joins us next.
(COMMERCIAL BREAK)
KOSIK: MoneyGram, one of the leading money transfer companies reports its revenue jumped nearly 20 percent in the second quarter driven by a record
number of online customers and transactions. It says cross border money transfer volume increased over 40 percent during the period.
Joining me now is Alex Holmes. He is the Chairman and CEO of MoneyGram International. Great to have you on the show.
ALEX HOLMES, CHAIRMAN AND CEO, MONEYGRAM INTERNATIONAL: Great, thank you for having me this morning.
[09:45:02]
KOSIK: So some solid earnings. What do you attribute these jumps to? Walk us through what's working at MoneyGram and the challenges ahead
HOLMES: Yes, absolutely. It's been quite a remarkable 18 months for a variety of different reasons, and MoneyGram has been seeing the benefit of
our digital acceleration and transformation that we've put in place really over the last several years as we moved from a really transaction-centric
to a very customer-centric focused organization, and the benefits of that digital migration have really paid back for us during the pandemic and for
all of our customers and consumers around the world, as we've seen just a huge jump in the number of transactions initiated and received digitally
around the world.
We had about 33 percent of our business now that is completely digitized, which is up from about 10 percent just you know, three or four years ago.
So, it's been quite a remarkable increase.
And we've also seen, I think, contrast to the concerns put forward originally by the World Bank and others that remittances would slow down as
an industry. We have actually seen remittances increase and continue to surge throughout the pandemic despite the challenges associated with
lockdowns in employment, and many of the other factors that are certainly influencing lives on a daily basis.
KOSIK: Yes, exactly. So MoneyGram is actually in talks, I know, with Stellar Development Foundation about a possible acquisition. What could you
tell us about how all of that's going?
HOLMES: Well, you know, I'm not going to comment specifically on individual rumors, but given the incredible growth the company has seen,
really over the past year and sort of the transformation that we've been through plus, our leading Fintech applications that we've put out, it's not
surprising that there are conversations taking place and rumors hitting the news about potential takeover of the company or mergers or investments.
As you know, we had a long standing relationship with Ripple for a number of years. I think MoneyGram has been seen over the past couple of years as
leading innovation, particularly in the money transfer space around blockchain and our efforts to participate in various different ways in
cryptocurrencies and really begin to look at new applications for sending and receiving money.
And as part of that, you know, it's not surprising that someone like Stellar is doing as much work as they are in the area, you know, have
popped up on the radar, you know, as a potential partner.
KOSIK: Yeah. And Jed McCaleb, he founded Stellar and co-founded Ripple as well where were you all, you know, you severed your agreement with Ripple,
but then with the Jed founding Stellar now, so it looks like it could be courting your company. Some may say, it's a little ironic, this possible
Stellar takeover of MoneyGram right now.
HOLMES: Yes, I would say, you know, generally speaking that, you know, the entire world of blockchain and crypto is very new. I would argue that there
are a number of potential opportunities to do things differently when it comes to cross border money movement, not just in the money transfer space,
but also in the payment space as well and I think a lot of individual organizations out there, you know, including Stellar, including Ripple, and
many others are looking at ways in which to make improvements.
I would argue that most of that technology, as advanced as it is, is pretty far afield at this point from really benefiting the traditional money
transfer space in a variety of ways. I think crypto is still a little bit far field for most mainstream consumers in any market around the world. The
way that crypto moves through exchanges, has a lot of limitations and there are some extraneous costs still associated with trying to move crypto in
and out of fiat currencies.
And we believe that MoneyGram, there's a role for us to play in that bridge and being able to really tie fiat back to crypto and enable it to actually
get to the hands of the many people around the world that would probably more benefit from it, then where it sits today, which is still you know, in
many respects, you know, sitting in the hands of more, I would guess affluent holders of the currencies and really getting down into mainstream
parts of the world.
KOSIK: You know, today's announcement of Square taking over Afterpay, any interest from MoneyGram in expanding into the installment payments space?
HOLMES: Yes, well, I think anything related to consumer credit always comes with an interesting twist to it. And you know, I think there are
times when those pay back and others when it can be difficult.
I would say broadly speaking, that today, when you're going consumer direct, when you have online properties and you're able to reach consumers
in new ways, there is always interest in expanding products that is offering ancillary services.
[09:50:01]
HOLMES: I think the ability to look at subscription type services, Afterpay type services, small micro loans, payments associated with money
movement can all be beneficial to both the upstream and downstream consumers within our space. Most people that are sending money home are
doing that out of need and necessity for those that are receiving the funds, and so, they feel a lot of responsibility and obligation there.
And so I certainly think anything that would enable those funds to get there faster, more real time, and also ensure that they get there even when
there's times of struggle, I suppose on the send side for a sender would be beneficial.
And so I think those types of applications, all the changes in the Fintech space right now are super excited, and I think really helping to push more
progressive opportunity for consumers around the world.
KOSIK: Okay, Alex Holmes, CEO of MoneyGram International, great talking with you.
HOLMES: Thank you very much.
KOSIK: And we'll be right back.
(COMMERCIAL BREAK)
KOSIK: Japan's athletes have already won 17 gold medals at the Olympics. Selina Wang spoke to swimming sensation Yui Ohashi about her country's
success.
(BEGIN VIDEOTAPE)
YUI OHASHI, OLYMPIC SWIMMER, DOUBLE GOLD MEDALIST (through translator): I came this far dreaming of winning a gold medal.
WANG (voice over): Swimmer Yui Ohashi has helped lead the host nation's gold rush.
OHASHI (through translator): But I never thought for a moment that I could win a gold medal even though I had imagined it.
WANG (voice over): Ohashi didn't win just one gold medal, but two, making history as the first Japanese woman to accomplish this at a single
Olympics. And that is just the start for Japan. It has already racked up 17 gold medals, more than it has ever won before and medaled in debut Olympic
events like skateboarding and surfing.
WANG (on camera): These Games have been very controversial in Japan, but now the public is getting inspired by the incredible performance of
athletes like yourself. What do you think the legacy of these Olympics will be?
OHASHI (through translator): Athletes also had to deal with the voices of opposition to The Olympics and the question of whether or not the Olympics
should really be held. We, the athletes, went into The Olympics with a great deal of confusion, but I've received a lot of comments from people
who said they were moved by athletes winning gold medals and other medals, seeing athletes trying so hard, so I'm very happy about that.
WANG (voice over): As the public cheers on its nations athletes like Ohashi, the intense opposition to The Game seems to be softening. According
to Olympic Broadcasting Services, more than 70 million people tuned into The Olympic Opening Ceremony in Japan, making it the much watched event in
10 years.
"Before the Olympics started, there were many issues," he told me. "But once it started, I thought I should support it as a Japanese."
[09:55:00]
DAN ORLOWITZ, SPORTS JOURNALIST, "JAPAN TIMES": There does have to be separator between criticism of The Olympics and criticism of the athletes.
I think Japan is always behind its athletes a hundred percent any sport, any discipline, or any tournament. But these Olympics are still
complicated.
WANG (voice over): Complicated might be an underestimate as COVID-19 continues to cast a shadow over these Games.
"We don't feel like having a festival mood," she told me. "I know there are people suffering from COVID while people are excited about The Olympics."
Despite this, Japan still has the home country advantage.
CHRISTINE BRENNAN, CNN SPORTS CONTRIBUTOR: Even though there are no fans cheering for them, they still know that they are in their country, and I
think because of COVID, and because The Games were postponed for a year, I think there's almost an added sense of like, do it for your country, and
that maybe there's more of a push to say, hey, you know, we have been struggling and there are a lot of issues here in our country, but we are
going to show the world that we can win gold medals.
WANG (voice over): But taking the gloss off of Japan's golden week was the end of Naomi Osaka's Olympic journey. Osaka, the face of the Tokyo 2020
Games who lit the cauldron during the opening ceremony was eliminated in the third round.
UNIDENTIFIED MALE: You know, I was really cheering for her since she is, you know, the best athlete here in Japan.
WANG (voice over): Still, these Games have offered new heroes who hope the golden legacy of Tokyo 2020 will outweigh the costs of this pandemic
Olympics.
KANOA IGARASHI, OLYMPIC SURFER, SILVER MEDALIST: I really didn't realize the impact sport has on a country until this week. From the opening
ceremony to just social media and just seeing how much a sport can bring together not just the country, but the whole world.
WANG (voice over): Selina Wang, CNN, Tokyo.
(END VIDEOTAPE)
KOSIK: I'm Alison Kosik. "Connect the World" is next.
(COMMERCIAL BREAK)
[10:00:00]
END
