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First Move with Julia Chatterley
The U.S. Adds Back almost One Million Jobs in July; Apple, the Tech Giant Says it is Willing to Scan Photos to Help Tackle U.S. Child Abuse; The IOC Hails Olympic Success as The Games Draw to a Close. Aired 9-10a ET
Aired August 06, 2021 - 09:00 ET
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JULIA CHATTERLEY, CNN BUSINESS ANCHOR, FIRST MOVE: Live from New York, I'm Julia Chatterley. This is FIRST MOVE and here is your need-to-know.
Summer surge. The U.S. adds back almost one million jobs in July.
Apple Watch. The tech giant says it is willing to scan photos to help tackle U.S. child abuse.
And Tokyo turn around. The IOC hails Olympic success as The Games draw to a close.
It's Friday. Let's make a move.
Welcome once again to FIRST MOVE. Great to have you with us on another jobs Friday here in the United States of America, and I can tell you, it was a
healthy one. The U.S. adding back a stronger than expected 943,000 jobs last month. It was driven by gains in sectors like leisure and hospitality,
as well as education.
We also saw wage growth posting a nice positive jump, too, once again. However context though, is everything. U.S. payroll still down by some 5.7
million jobs since the pandemic began. We still have 8.7 million Americans that remain out of work.
The increasing number of firms delaying a return to offices could also pressure jobs growth going forward, too. There is plenty of uncertainty as
we head into the winter months.
That said, today's numbers are so strong that it could give the Fed at least some of the ammunition it needs to begin slowly pulling back on
stimulus. Much more on the discussion on that throughout today's show.
In the meantime, U.S. stocks set for a mostly lower open following the report. They are also jumping ahead and thinking about what the Fed will
do, too. The S&P and the NASDAQ beginning today's session at record levels. Europe, mostly higher, too, but it's also not all about jobs.
Lots going on in the Asia session as well and a mostly lower end to the week. As you can see though, just the Japanese Nikkei managing to eke out
gains. China, the word though, Chinese telecom giant, Huawei, reporting its biggest ever quarterly sales drop as U.S. sanctions continue to bite.
Beijing's tech crackdown seemingly not over yet, too. Report say China could impose a $1 billion equivalent antitrust fine on its food delivery
giant, Meituan.
A busy Friday indeed, let's focus and get more on that jobs report to begin.
Clare Sebastian joins me now. Clare, not only did we see 943,000 jobs added back for the month of July, but I was looking at the revisions, an extra
100,000 jobs added back in the prior two months that we weren't expecting.
This is a solid release.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: This is a very good jobs report, Julia. Really whichever way you look at it, this is something that
many of us have been waiting for after some disappointments in the spring; combined with those revisions also extremely good news, and if you dig into
those numbers, you can see where the jobs are coming from.
About 40 percent of them came from leisure and hospitality. We know that was the most beaten down sector during the pandemic, those immediate
layoffs. It looks like slowly, slowly those jobs are starting to come back, another almost a quarter of that jobs number came from local government
education.
This is slightly distorted by COVID. We haven't seen the usual seasonal pattern of layoffs, which is why we're seeing this unusual number of jobs
for this time of year being added. So, it's a slight idiosyncrasy there.
But overall, you know, excellent number.
I want to dig into wages, though, because this does to some degree, as you mentioned, put pressure on the Fed, not only because of the strong number.
We know that Jerome Powell was looking for a string, as he put it, of good jobs numbers, but because of the wages.
If you look, we saw a surge in the spring, we are now seeing several more pretty strong numbers in terms of the amount by which wages are going up.
This is inflationary, and crucially, Julia, it may not be transitory. So that is something that the Fed is going to be watching very closely.
CHATTERLEY: Yes, that is such an important point, and we know anecdotally as well that a lot of particularly small businesses are having
to pay people more and more money to try and get them in the door.
And even anecdotally, I speak to restaurants near where I live, and they say they can get people in the door and then they just walk off the job
mid-serving and then they go and walk three doors down the street and they get another job in another restaurant for slightly more money.
So, these challenges are all going to feed in.
There is good news today. There are also challenges and I mentioned it, too. We've still got 8.7 million people unemployed and that's what the
people we are counting. There are people that are simply not counted in these numbers because they're not looking for a job, still down just shy of
six million jobs since the pandemic began, and we've got a few wild cards here.
We've got the variant COVID, what impact that is going to have as those cases ramp up? We've got whether or not children go back to school in the
summer. There's lots of things here that will dictate to what extent the labor market has changed or not, and we've got to wait a few more months
for that.
[09:05:15]
SEBASTIAN: We do. And I think, you know, while this was a crucially important jobs report, and again, we're looking for that string of strong
months for the Fed to potentially act, it is also really important to note that this was carried out, the survey for these jobs numbers was carried
out earlier in the month. And we've really seen the true impact or the start of the impact of what the delta variant could do to, society to the
reopening happening in the last week or so.
So, really, we're looking to August and September, perhaps even October to see whether this could impact whether people postponing return to work
could impact the jobs number, whether hiring could stall because of this.
And I think another point to make when we look at how the Fed might respond to this is the participation rate. They've seen -- we know Jerome Powell is
crucially focused on this. He wants to see it go up. It really has stayed within the same range that we've seen since the pandemic hit, it was 61.7
percent this month, so I think that might hold back the Fed action as well -- Julia.
CHATTERLEY: This is such a great point, a 45-year low in the participation rate, and it is barely budging, quite frankly. And that's why
we saw the unemployment rate come down so quickly, because we're not bringing those people off the sidelines.
A fantastic point, Clare. Stay where you are because we're going to talk about another story that we both feel very strongly about in a few moments'
time.
For now, though, as we just discussed, the COVID impact on jobs in the United States, well, parts of the Asia-Pacific have been hit hard by the
delta variant, too. China reporting its highest daily COVID-19 cases in the current outbreak with 124 new infections. The relative numbers here are
quite fascinating.
But also some of Australia's biggest cities entering a strict lockdown as the delta variant spreads there, too as Kristie Lu stout reports.
KRISTIE LU STOUT, CNN CORRESPONDENT: Lockdowns are now in force in Sydney, Melbourne, and Brisbane, Australia's three largest cities. More
than 60 percent of the country's population must now stay at home. The State of Victoria is now in its sixth lockdown since the pandemic began and
that triggered an angry anti-lockdown rally in the State Capital of Melbourne. The worst affected city is Sydney.
Today, New South Wales reported 291 new locally acquired cases of the virus. That is the highest daily tally on record. Australia was once a
pandemic success story, so, how did it come to this?
Well, here's Catherine Bennett. She's the Chair of epidemiology at Deakin University. She spoke to us from lockdown in Melbourne.
(BEGIN VIDEO CLIP)
CATHERINE BENNETT, CHAIR OF EPIDEMIOLOGY, DEAKIN UNIVERSITY: The methods we use so successfully to keep returning to COVID zero in Australia while
we were trying to roll out our vaccine program have now been defeated by this variant. It just moves too quickly for that normal test, trace,
isolate approach to actually be effective.
Even with the lockdowns in place, like in Sydney, we are still just seeing the case numbers roll on because we can't completely get ahead of the virus
to close those outbreaks down.
(END VIDEO CLIP)
STOUT: Experts say there are two main factors behind the delta surge, the highly contagious nature of the delta variant, Bennett describes the
delta variant as slippery, having the ability to evade and move past once proven pandemic controls; and a slow vaccination drive.
Australia's Chief Medical Officer, Paul Kelly, says the delta outbreak has created a quote, "pandemic of the unvaccinated." Only about 21 percent of
Australians above 16 are fully inoculated, but the pace is picking up, 1.2 million doses have been administered in the last seven days.
Kristie Lu Stout, CNN, Hong Kong.
CHATTERLEY: Okay, let's move on. Apple says it will begin checking for child abuse images on iCloud and on iPhones. User photos will be given a
unique code and then compared to a database of abuse images. Any match will be reported to the authorities.
Clare Sebastian is back with us. Clare, clearly, a very contentious subject for some; an emotional subject for others; but for Apple itself, a company
that I think has tried to differentiate itself in terms of privacy, push back on authorities when they've asked for access to phones of suspected
terrorists, for example, this feels like a monumental step.
SEBASTIAN: Yes, and look, this is a very divisive issue, Julia. You can certainly see both sides of the argument. And clearly, this is something
that given the way Apple has positioned itself, certainly in the last few years, and we've seen all these privacy concerns come out around the likes
of Facebook, they have really positioned themselves as the opposite of that. That's been a unique selling point of the company, all sorts of sort
of encryption and privacy built into their services and products.
And they are doing a couple of things here. One is that the photo scanning tool that you mentioned, they're going to be able to scan through people's
photos on their phones and on iCloud. They say they're not looking at the actual photos. They're looking at a sort of set of unreadable hashes, which
they then are going to match against a national database for child sexual abuse images and material online and that way, they'll be able to root out
this content.
[09:10:08]
SEBASTIAN: And there's a second feature as well, where they will be able to look at image attachments in iMessage accounts belonging to children.
This is particularly interesting because they will blur those images, they say they'll warn the child who owns the account that they don't have to
open it; if they do open it, and equally, if the child sends an image like that, the parents will be notified. This is something that the parents have
to switch on.
This will be available in a future software update, but as I mentioned, Julia, clearly, it is very divisive. A lot of heat they are taking this
morning from privacy experts. Here's a tweet from the Electronic Frontier Foundation, they say, "Apple's filtering of iMessage and iCloud is not a
slippery slope to backdoors that suppress speech and make our communications less secure." They say, "We're already there. This is a
fully built system, just waiting for external pressure to make the slightest change."
This is the big concern that while Apple may have the right intentions, this opens the door to perhaps an erosion of people's privacy.
CHATTERLEY: Yes, it's fascinating, isn't it? I mean, obviously, child protection groups are applauding this move. I think the sort of broader
fear here for security experts, as well as what happens if a government for example, says, hey, Apple, here's a whole bunch of images, we want you to
scan them, and maybe Apple says, no, but their technology doesn't. It's in place there, and I guess, it does open them up to some degree of abuse.
SEBASTIAN: You know, I think there's two sort of major --
CHATTERLEY: Pressure.
SEBASTIAN: Yes. There are two major concerns here. One is that Apple could get it wrong, right? That these images could be scanned and something
harmless, like perhaps someone's photo of their child in the bathtub could end up being flagged and the authorities are alerted. That certainly is
something that people will be concerned about, although clearly, you know, Apple has a very strong history of software development and should be able
to get this right.
And the second concern is that even if Apple gets it right, it could fall into the wrong hands, that the Pandora's Box has been open. So, this is why
you're seeing so much concern this morning. But as I said, Julia, it's not -- it's not happening yet on people's phones, it's going to be available
with a future software update, and it will be something that certainly in the case of the iMessage tool that people actually have to actively turn
on, so parents can sort of help police their children online.
CHATTERLEY: Yes, opt in and opt out. Clare Sebastian, thank you so much for that.
And I was wondering whether you were going to do A Superwoman-style outfit change in the one minute thirty that I gave you there to switch between
stories, but you didn't. But you are my Superwoman of the day, as a result. And always, of course.
Have a great weekend. Thank you.
Okay, let me bring you up to speed with some of the other stories making headlines around the world.
Hezbollah says it fired rockets from Lebanon into Israeli-controlled territory. It says these rockets were fired into open land in response to
Israeli airstrikes on Thursday. No casualties were reported.
Israel says it intercepted most of them and fired back, then insisted it is not looking for war.
Our Ben Wedeman is live in Beirut with more. Ben, what can you tell us about the importance of the timing in terms of what we've seen here and the
escalation of violence between these two nations because it does feel what we've seen in the region with a new President in Iran also factors highly.
BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: The timing is somewhat puzzling, if you look at it only within the context of Lebanon, a
country where just a day before yesterday, we marked the first anniversary of the Beirut Port blast, a country which according to the U.N., where 78
percent of the population now lives in poverty. This is not exactly the most opportune time of for war.
And what is interesting is that both Israel and Hezbollah are clearly -- they want to fire, they want to show that they have the ability to fire
back, but both sides seem to be aiming at open land. So, I think both sides are avoiding what could become an open -- sort of open-ended conflict.
And if you look at the broader context of these attacks on oil tankers in the Gulf of Oman, and elsewhere, this shadow war that's going on between
Israel and Iran, it does appear that Hezbollah, which of course is affiliated and supported by Iran, is also being used to remind Israel that
it has the ability to open another front in this shadow war between Israel and Iran.
And therefore, we need to put it in that context, rather than the context of Lebanon, where nobody can afford war.
And what's interesting, one incident that happened today is that a truck- full with a rocket launcher in it was driving back after a Hezbollah had said it was driving back after firing rockets. It was stopped by villagers
in a Druze village and the villagers attacked the Hezbollah members who were in the vehicle and the Army had to intervene.
They detained four Hezbollah members and commandeered the rocket launchers. This is something we have not seen before and it certainly is an indicator
that many Lebanese, the last thing they want at this point is a war with Israel -- Julia.
[09:15:15]
CHATTERLEY: Yes, the last thing they need. Ben Wedeman in Beirut. Thank you so much for that this morning and for your context, all important, too.
The Taliban are claiming responsibility for the assassination of the Afghan government's top media and information officer. U.S. and E.U. diplomats are
condemning the attack saying they are quote, "shocked and appalled." The Islamic group is trying to weaken President Ghani's administration, which
is backed by the West.
In Greece, at least 20 people have been hospitalized as wildfires continue to burn. On the outskirts of Athens, more than 400 firefighters are
struggling to contain flames driven by strong winds. Many people in the area have been evacuated and several homes have been destroyed.
Okay, still to come here on FIRST MOVE. Delta doubts. Expedia warns of travel's bumpy road to recovery. We've got the CEO who will join us later.
And e-commerce enthusiasm. Shares of Bukalapak surge on its first day of trade, as investors reach for a slice of Indonesia's online and offline
market. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE.
The Olympic Games are winding down in Tokyo, the economic action just gearing up here in the United States and the U.S. jobs market truly earning
a gold medal last month, 943,000 jobs added back for the month of July. That's well above estimates. Nice upward revisions to May and June as well
adding back around 100,000 jobs that we weren't anticipating.
Average hourly earnings rising by almost half a percent to 0.4 percent, the rise there. The big question is whether these numbers are strong enough to
at least allow the Fed to begin gingerly taping stimulus, after all major COVID challenges remain.
United has become the first U.S. airline to require all U.S.-based workers to get vaccinated for COVID, also likely to have an impact on what we see
in terms of the economy going forward, this kind of move.
For context, joining us now Mike Feroli, Chief U.S. Economist at JPMorgan. Mike, fantastic to have you on the show. You are very much in line with
your forecast for these numbers. What do you make of what we saw?
[09:20:00]
MIKE FEROLI, CHIEF U.S. ECONOMIST, JPMorgan: I think it was a good number all around, not only as you mentioned almost a million jobs added in
July and in June, but a nice big move down in the unemployment rate from 5.9 percent to 5.4 percent.
There are still challenges to be sure, we're still almost six million jobs short of where we were in February of 2020. The labor force participation
rate, the number of people with a job or looking for work still remains somewhat elevated -- I'm sorry -- somewhat depressed. So there's still some
work to go, but certainly, the progress we've seen recently has been pretty encouraging overall.
CHATTERLEY: I mean, I would mention the point about the participation rate, because generally that takes some of the shine off the change in the
unemployment rate when we see a number like this because you bring people off the sidelines, but we're not seeing that.
To what extent do you think when we get to sort of the back end of the summer and into the fall here in the United States and their final states
that haven't removed the bump up in unemployment benefits, perhaps children go back to school that we see people more coming off the sidelines and
perhaps we add yet more jobs.
FEROLI: Yes, I think that's really one of the biggest questions right now about the labor market is how much those expanded unemployment benefits
are affecting labor supply. You know, it's a big question, but we should find out one way or another pretty soon, because nationally, those are all
set to expire in early September. So we would think, as we get to October- November, we will have a clearer picture of the labor market.
Some of these issues on participation, though, may be broader than that. We've seen a pickup in retirements. So, there may be some structural
changes here that suggests that perhaps we're not going to get back to the participation rates that we saw in 2019.
I think, as you mentioned, for the Fed, that's going to be one of the areas they are watching because they want this broad based and inclusive measure
of full employment to be attained.
But there are a lot of unknowns about what that actually means, including what the normal level of participation is. So, there are distortions that
will fade shortly. But there are also some, I think, deeper questions that are going to remain for perhaps several months, or quarters, even.
CHATTERLEY: You raise a great point, and the Fed could be waiting a long time if they want this broad based recovery in the jobs market. And to your
point, perhaps things have changed. We've seen an acceleration in digitization, people have learned to work with other things, and work with
less perhaps in certain cases. The structure of the jobs market may have changed.
How long is the Fed willing to wait in your mind to get the data that it wants, or not get the data that it wants in the face of some of the other
pressures that we're seeing? Wage pressures, for example, cost pressures with the supply bottlenecks out there that remain?
FEROLI: Sure. I think the evidence over the past week or two is that the Fed may be a little less patient than we had thought. Up until recently,
we've had some indications from some key Fed policymakers that they are intending to perhaps step off the accelerator a little bit here, as we
later this year, slow down the pace at which they are buying bonds.
And there's even some indication they could be considering raising short term interest rates as early as late next year, which is a pretty big shift
from where we or where they were signaling even just a few months ago.
So, I think they are observing the improvement in the labor market, but they also are seeing some of the cost pressures that you mentioned, and
they may be getting a little bit uncomfortable with keeping rates at zero for a very long time, just given both the wage and the price increases
we've seen.
So, there may be a little bit of a change going on in the Fed's thinking, certainly that seems to be the evidence over the past few weeks.
CHATTERLEY: You listen to what companies are saying during earnings season and they are all talking about rising costs; they are all talking
about price pressures and they are talking about labor challenges. Where do you go? And how quickly do you go from that where you see them forced to
raise wages? They pass on the extra costs to the consumer. The consumer then says, hang on a second, I feel a little bit poorer, I'm going to
demand higher wages -- and you end up in that sort of cycle where each thing self-reinforces.
I mean, that in the kind of face of the situation that we're in now, perhaps with the delta variant slowing growth to some degree as we pass
into the fall, I guess, I use the word carefully, but I do use the word stagflation, and I think we'll see it talked about more and more. Am I way
off?
FEROLI: Well, I think you highlight the main concern here, which is if expectations for inflation were to build in wage setting demands and things
of that nature, then that would be a really pernicious development. And that is one reason why we and the Fed are watching very closely inflation
expectations.
So what people, what investors, what customers are expecting inflation to be in the longer run after we get past, you know, the short run
disruptions.
So far, we haven't seen evidence or really convincing evidence that people's inflation expectations are moving up the way they did in the 60s
and 70s, and that is one reason I think the Fed, while they may be moving a little bit more toward eventually hiking rates, they're not -- they are
still not in a big rush and they're still not overly worried about it that wage price, you know, development spiral happening.
[09:25:17]
FEROLI: On the delta variant. I do think this is certainly worth watching. So far, there hasn't been big evidence that it is affecting
activity, certainly nowhere near like what we saw with the second wave over last winter. But it is something we're watching, of course.
As I said, the evidence, you know, it is pretty limited, and certainly, we and other economists have been over the past year and a half, really paying
a lot more attention to these daily things like, you know, restaurant reservations and flight bookings, and things of those nature. Not a big
effect so far, but certainly a risk.
But I think, you know, it is interesting, growth should be slowing as we go into the winter months, as you know, most of the reopening will be behind
us, most of the fiscal stimulus will have been spent, and that will be another reason why once we get into the fall and the winter, the data
become a little more -- I guess, you could say believable because we're getting closer to normal times and then we'll see what kind of inflation
backdrop arises after we get back to more normal growth developments.
CHATTERLEY: I have to say, I don't envy anyone who has to forecast anything, quite frankly, in these markets. I've called it a pandemic
puzzle, and I'll continue to do it.
Mike, thank you for your wisdom on the show today. Mike Feroli, Chief U.S. Economist at JPMorgan, have a great weekend. Thank you.
Okay, after the break, the CEO of Expedia Group is here and we're talking travel and a tie up with UNICEF to help boost vaccinations in other
countries. That's next. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: From the delta variant to returning to work and schools, there are unknowns across the board for the U.S. economy and beyond, in
particular for the travel sector and that's the key takeaway from Expedia's earnings.
[09:30:07]
CHATTERLEY: While second quarter revenues rocketed more than 270 percent compared to a year ago, the level of growth going forward is by no means
certain.
Expedia, which owns brands like hotels.com, Travelocity, and CheapTickets is also working to improve global vaccination rates, and we will come to
that in just a moment.
But first, let's talk about the numbers. Peter Kern is CEO of Expedia Group, and he joins us now.
Peter, fantastic to have you on the show. You're clearly seeing an improving picture. I think that's the message. But there is a stark
contrast with the challenges and some of the pickup I think that you've seen in the domestic business in the United States versus the international
picture. Just talk us through what you're seeing.
PETER KERN, CEO, EXPEDIA GROUP: Yes, thank you, Julia, for having me. I think what we're seeing is kind of what everyone expects and is
experiencing themselves, which is, initially people were comfortable traveling domestically, driving to places, moving within the country. There
were limits about where they could go.
Then as things opened up, they began to fly more, they began to travel further. But on an international basis, it's still fairly limited. And for
a lot of the world, borders are still essentially closed or they're opening only for vaccinated people or only in certain circumstances.
So, we've seen it's expanding, but international is still as you mentioned, dragging compared to domestic, and we expect that to pick up. But
obviously, every time there's something like delta or something that comes along, you create new uncertainties. Some countries will react more
aggressively as Australia has, whereas others are continuing to open and are still, you know, working towards more open borders and that's
encouraging.
So, there's some puts and takes, but I think broadly, we're going in the right direction, it's just not a straight line.
CHATTERLEY: I know. And how long does it take? Because obviously, you haven't provided guidance, because there is, and we all see it, as you
point out so much uncertainty. Are you seeing a sort of pickup in cancellations and adjustments, given the pickup in COVID cases that we're
seeing wherever you look in the world, really?
KERN: I would say the market is pretty reactive to the new cycle. So, when things get a little scarier, you know, you're going to have some
people who decide there's risk and decide they're not comfortable entirely with that risk.
But there's a big swath of the population across the globe that that has gotten comfortable with COVID, who is vaccinated, and is, you know, more
willing to move around. So, I think we see it on the edges. It's not these big swings like we had earlier in COVID where there were no vaccines and
much less of the population was vaccinated. These are smaller swings, but you definitely see it start to percolate through when you get a bad news
cycle or when you get an increased caseload and places start to change rules and start to suggest masks and other things that changes people's
desire to go to a certain place.
So, all those things have impact, but it is pretty much as you would expect, it's really pretty closely tied to what is happening in the news
and what people are seeing.
CHATTERLEY: And also -- and we talked about this last time you were on the show, and it does fascinate me, the strength that you see in the
vacation home rental market. Vrbo, of course, is the business. You launched Fast Start earlier this year, which was allowing people who've got ratings
on Airbnb to transfer them over to your business, which sort of gives them a kick start rather than starting out fresh.
Talk to me about the kind of activity that you're seeing there, and sort of how much that helped generate actual bookings and business because that
seemed pretty smart to me.
KERN: Yes, thank you. We are very pleased with that program and it was very successful. In general, our homeowners and people who are on our Vrbo
platform make more than they do on any other vacation rental platform. We're very productive for them.
And so, we're trying to make sure that when someone new comes on, especially in this time, where things have been compressed, where in the
places people want to go, there haven't really been enough homes, we're trying to make sure everybody gets on the platform and performs well from
the beginning, which has been a very successful program.
But clearly, vacation rental has been a really interesting use case for travelers, especially those who think they want to get away, but they are
not sure how comfortable they are being in a hotel, or being, you know, sort of blending into broader society.
Now, that's been changing considerably over the summer as people have gotten much more comfortable with conventional lodging, going to a hotel or
a resort, et cetera, but people still love vacation rentals. If you've ever done them, they are a great experience, and I think this has given us a
chance to give more people exposure to that experience, which I believe will be great for us long term as now people think about vacation rentals
more often than they used to.
CHATTERLEY: Yes, absolutely. And speaking of smart moves, in another smart move, and it is helping, I think promote the app and get people
booking on the app. You're also pushing good causes and something incredibly human, which is trying to making donations as a result of
bookings on the app to UNICEF, to try and get people around the world that is struggling to get access to vaccines that access.
And on that note, I want to bring in Michael J. Nyenhuis is president and CEO of UNICEF U.S.A.
[09:35:10]
CHATTERLEY: Gentlemen, great to have you both on the show talking about this, because it's such a vital issue.
Michael, to you first, just explain the importance of a company like Expedia, making a move like this and promoting and pushing financial help
to get vaccines to people. Just how vital is this?
MICHAEL J. NYENHUIS, PRESIDENT AND CEO, UNICEF U.S.A.: Yes, thanks for having me on, Julia. Yes, and we're so excited about what Peter and his
company are doing. You know, one of the benefits -- two main benefits for as well. One, there are resources coming from a company to us to help with
this incredibly important global effort that UNICEF is undertaking to really vaccinate the globe.
But maybe more than that, the reach that a brand, a really excellent brand, like Expedia has to their customer base, to raise awareness about why this
is so important that we continue to move forward with this global vaccine campaign. You know, none of us are safe until all of us are safe. We have
to get vaccines to the entire world to beat this pandemic and it is companies like Expedia that are going to help us do it.
CHATTERLEY: And Peter, come in here, because it's an important cause. It also makes smart business sense. I mean, some of the facts here,
introduction of the vaccine could help prevent the loss of $375 billion to the global economy every month and for your business, the sooner we get the
world vaccinated, quite frankly, the sooner everybody recovers, and everybody is better from a health perspective, from a business perspective,
from a life perspective, we should all be looking at this and focusing on this, as individuals and as businesses.
KERN: Yes, I think you said it beautifully there. You know, we believe that it is the right thing to do, that none of us are safe until the world
is really safe, and I was part of a World Economic Forum panel where I heard the President -- former president of Liberia talk about how only one
in 500 people in the developing world were vaccinated.
And it really brings home this idea that, you know, we might all be in our little bubble where we fight about vaccines, or whatever, but at least we
have access in the U.S. certainly, but for a lot of the world, access isn't even there. And until we really make a dent in this, I think it's foolhardy
to believe we're going to get past and learn to live with COVID.
So for us, it's really about helping people. It's what our employees believe in. It is what we think our customers believe in. And it's really
about -- and it's perfectly aligned with our goals as a company, which is we want people to be able to travel and come together across the world, and
so it was the perfect alignment for us.
We did it on the app, because we think the app is the best experience for customers. We want our customers to be there, and we think we can do great
things to support UNICEF, and frankly, I hope other companies feel compelled to do it.
You know, there's lots of companies who have actually benefited during COVID rather than companies like ours who have gotten hurt by COVID, and
I'd love to see them all participate in doing something broader across the world.
CHATTERLEY: You made that point and it is $2.00, I believe, per booking. And I was going to make the point, actually, if you didn't, there were
companies that have benefited, admittedly, many of them are helping. They are providing support, the financial support to you. But I like what you're
doing here. And also the fact that as Michael said, this raises awareness as well.
Michael, another statistic that I think is vitally important for my audience to understand, it is an estimate, but for every dollar invested in
vaccines in the world's 94 lowest income countries, $16.00 is expected to be saved in healthcare costs, lost wages, and lost productivity. I mean,
that number gave me goosebumps.
This makes so much sense for so many reasons. We need to be doing more to support these other nations.
NYENHUIS: Yes, absolutely. You know, we know from years and years of working in vaccines that vaccines are the most powerful public health tool
that we have and that is true with the childhood vaccines that that UNICEF does every year, year in and year out, nearly half the world's under five
children.
Now, that's core part of our work. We know the power of vaccines to deal with health issues, and it's no different with COVID. In fact, it's
critically important and urgent, it is the key way we're going to end this pandemic is to make vaccines available in an equitable way across the
entire globe.
So, we're thrilled to have corporate partners in particular that are helping with this. It's an all hands on deck effort. We need corporate
partners, foundations, individuals, everybody has to stand up and help us do this.
CHATTERLEY: Yes, everybody needs to stand up. And I know you're hoping a minimum donation here, Peter, of $10 million. Oh, wow. If more companies
could come together and do this, it would make a huge difference. And I also think, not only from a business perspective, but also -- and I talk
about this a lot on my show -- for the G7 nations, they have given a lot of money, more is required in order to do this.
It is sort of business also flying the flag, I think, to push governments to do more, too, as much as they are fighting their own battles. This is
one battle we're in.
KERN: Yes, I totally agree. And one thing that brought it home for me was that, you know, the Western governments have committed a billion
vaccines this year and two billion next year and as, again, this former president of Liberia reminded us all. That's only going to vaccinate about
a third of the world's population.
[09:40:10]
KERN: So, even though these sounds like big numbers, and it's great that our governments are doing something to help, we have a long, long way to
go. And, you know, with COVID, as a virus with variants, you know, it's not going to go away until we really, really make a broad dent in this across
the globe.
So, I think, you know, we're all aligned in this. I hope every company, every person who can, you know, gives and helps. I think, sometimes we lose
track of everything outside our borders, because we're just trying to get to a more stable state ourselves. But this is a global problem and we all
have to help if we can.
CHATTERLEY: Yes, and in some nations, we're talking about third doses when less than one percent of those in the low income economies have had
access to even one dose.
Gentlemen, thank you so much for coming on the show. Such an important topic to discuss and I'm grateful to both, for your time, Michael J.
Nyenhuis there, President and CEO of UNICEF, U.S.A.; and Peter Kern, CEO of Expedia Group, both, thank you so much for your time today.
All right, up next, shares of Bukalapak start trading after Indonesia's biggest ever IPO and investors, well, they can't get enough. We speak to
the President of the group coming right up.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE, and a pretty good start for the U.S. majors in the early price action this Friday. The S&P 500 trading at
fresh records. Tech though, a little bit softer after today's stronger than expected jump in U.S. employment numbers, almost 950,000 jobs were created
last month, an extra 100,000 added back to the prior two months.
It's the strongest employment gains since this time last year and it was driven by hiring in places like restaurants and bars, as well as in the
education sector, too. Okay, let's move on and we'll head to Indonesia, scene of the latest tech IPO frenzy. Bukalapak, which operates a major
online and offline marketplace went public earlier this Friday in the country's biggest ever listing.
It was founded 11 years ago to help mom and pop stores sell online and beyond. It is the fourth largest e-commerce player in the country. Business
surged during the pandemic as e-commerce moved online.
Joining us is Teddy Oetomo. He is president of Bukalapak and he joins us now.
Teddy, fantastic to have you with us and congratulations on the listing, a huge first for Indonesia, never mind anything else, and I know you were
hired as CEO just before the pandemic So, oh boy, you've had a busy 18 months. How does this moment feel?
[09:45:12]
TEDDY OETOMO, PRESIDENT, BUKALAPAK: Yes. Thank you for having me, Julia. I think you know, I must say that I'm very proud -- proud not so much about
just having the IPO done, but I think I'm really proud of the fact that the whole company kept together. You know, it's a testament of the strong
collaboration within the company as overall, a strong testament to the focus and commitment of the employee, present and past, right? So, I think
this is something that is a very proud moment for all of us.
CHATTERLEY: And explain to our audience who may be confused what Bukalapak actually does, because you do have some stiff competition that we
have spoken to on this show in Indonesia. What differentiates you and makes you special?
OETOMO: Yes, so I think a lot of people, you know, if you look at Indonesia with 270 million population, in reality, only 30 to 40 million
people live in the tier one cities, which is the Jakarta, Surabaya, Bandung, Medan, Semarang, like the big cities, right, 230 million people
are scattered across the country.
And the problem is that a lot of this mass market Indonesian, they do have relatively lower financial inclusion. They don't have credit cards. They
don't have digital banking.
What we have done is we kind of combined both online and offline. So, on top of the marketplace, which is just practically one of our channel, we
are connected to seven million mom and pop kiosks across Indonesia, enabling people who wants to transact on the online.
And we also infuse a vast amount of capability to this mom and pop kiosks, and we grow the business, right? So, they started off from, for example,
traditional convenience store and we enable a bunch of additional capability, transform them into, you know, selling plastic train ticket,
they can be logistic agents, they can be remittance agents.
So practically, they kind of transformed from this normal mom and pop traditional convenience store, to basic bank branch to travel agent, and
that enhance their revenue and allow them practically to be our extended hand to reach out to this mass of 230 million population across the whole
Indonesia and nationwide.
CHATTERLEY: Yes. So, I mean, at the moment, I believe you have around 105 million registered users. Is the ambition going forward, and this sort
of ties to the decision to go public now and raise what -- some $1.5 billion -- is the ambition to be a super app to provide the access and the
opportunities that you've said to these mom and pop businesses, but also, perhaps financial tools?
Because we hear that a lot again, on this show. You're a tech company, you're growing, you have big audience, consumer use, and then you expand to
other products. Is that the ambition?
OETOMO: Well, I don't think it's about extending to the other product. I think our philosophy is very simple. We're looking at things probably not
so much about just going out there to acquire buyers, which is the typical playbook that you see in the Southeast Asia tack, right.
Our method is more looking at the merchant, looking at this mom and pop kiosk, looking at this online merchant, and how we can grow their business.
So you know, for example, the offline store that started from traditional convenience store, we infuse that additional capability including
financials within that, right?
CHATTERLEY: Right.
OETOMO: So that they can grow their business, and on average this mom and pop store after connecting with us, their revenue went up three times,
not so much because they are selling three times more shampoo or three times more milk and all that, right? But because they started off from
selling, you know, instant noodles and snacks and all those basic FMCG. Now, on top of that, they can sell the bus ticket, train ticket, gold
investment, remittance, phone credits, and electricity token, right? So, that added a lot of their revenue.
Likewise, on the market by seller, we are enabling them to go multi- channels. We are enabling them to be able to sell -- practically the focus is how we can help the MSME to sell more volume, more products, and
therefore as they grow and do better, obviously, our business model is commission based and so, we will do better as well.
CHATTERLEY: Yes, when they make more money and have better margins on the products that they're selling, you also make more money.
OETOMO: Exactly.
CHATTERLEY: Now speaking of that, you do have some pretty huge investors. China's ANT Group, Microsoft, and Singapore Sovereign Wealth
Fund, GIC. So, they clearly saw the potential in what you're doing.
But then they look at the numbers and your losses are big. In fact, they are sort of pretty similar size to your revenues, and I appreciate that
you're in growth phase, that you're investing in the business and this is important.
But you are also a numbers guy and I wonder whether you were sort of chosen because you're the guy that can innovate, but also keep people on the
straight and narrow, and present a path to profitability. Any timing when you may get to zero losses.
OETOMO: Yes, I think this is a very dynamic industry, and I think everybody will say it's investing in the growth and whatnot, but if you
really look at our number, right, not only that we sustain the growth on our pay GMV or TPV at 50 percent CAGR plus, right?
[09:50:10]
OETOMO: What we have done is, we have increased the monetization and we have been reducing our costs. Our sales and marketing costs has been going
down, not just in ratio, but also an absolute time. And that's on the back of sales, staging 50 plus percent growth, right?
So if you look that in terms of our cash burn, it has declined significantly over the last two to three years. And as a result, we are
actually we -- I believe, at least we are on plan, hopefully to reach that profitable level, hopefully in less than 36 months at most.
CHATTERLEY: Thirty six months. Fantastic. I'll write that down. Teddy, you and I will reconvene no doubt many times before that 36 months is up,
but we will continue the conversation.
Great to have you on the show. Congratulations to you and to your people. It's been 10 years I know I've worked for all of them. But what a fantastic
day and a great performance on the stock market, day one, too.
Teddy, we'll speak again soon. Teddy Oetomo there, President of Bukalapak.
OETOMO: Great. Thank you, Julia.
CHATTERLEY: Great to chat with you. Bye.
Okay, after the break, for all the controversy surrounding the Olympic Games, simple acts of human kindness have emerged, which means we could be
remembering Tokyo 2020 as the Gracious Games. Plenty of examples to warm the heart, next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to the show. The Tokyo Games have seen intense competition, but they will be remembered for feats of sportsmanship and
kindness.
From the sharing of gold medals to runners helping fallen rivals back to their feet, Will Ripley has this take on the Feel Good Games.
(BEGIN VIDEOTAPE)
WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT (voice over): The legacy of Tokyo 2020 may not be measured in medals or COVID cases, but acts of
kindness, moments of grace, Olympians choosing humility over hubris.
American gymnast Simone Biles cheering on her teammates, even as she was struggling to compete. American swimmer, Annie Lazor hugging her South
African competitor, Tatiana Schoenmaker who broke a world record to win gold.
ANNIE LAZOR, TEAM U.S.A. BRONZE MEDALIST, SWIMMING: To have someone right next to me break a world record, just as a fan of the sport in
general, that's something that's pretty amazing to happen to you.
RIPLEY (on camera): Given that there were no spectators and you were in this bubble in the middle of a pandemic, do you think that brought the
athletes closer? This experience?
LAZOR: Definitely more of a sense of we're just really happy that this is happening and really happy to be here.
RIPLEY (voice over): Happiness written on the faces of the first ever Olympic skateboarders.
SKY BROWN, GREAT BRITAIN BRONZE MEDALIST, SKATEBOARDING: Winning as one big family, probably getting on the podium with two of my best like -- two
of my favorite people is like awesome.
ROB KOEHLER, DIRECTOR GENERAL, GLOBAL ATHLETE: I think, you know, we're seeing that camaraderie between athletes now. There is always something
good that comes from something bad, and I think this is part of what the pandemic has done is, it has created a better community of athletes that
are supporting each other under very difficult conditions in Tokyo to be supporting each other is huge.
[09:55:13]
RIPLEY (voice over): Support spanning across continents and badminton courts. When Denmark dethroned China to win gold in the men's singles, the
players traded shirts as a symbol of respect.
These Qatari and Italian high jumpers, friends and competitors for years opted out of a jump off deciding to share the gold.
GIANMARCO TAMBERI, ITALIAN GOLD MEDALIST, HIGH JUMP: It was just amazing and sharing with a friend is even more beautiful.
MUTAZ ESSA BARSHIM, QATARI GOLD MEDALIST, HIGH JUMP: Thank you.
RIPLEY (voice over): There were high-fives and helping hands. After falling during the 800-meter, these runners from the U.S. and Botswana
finished the race arm in arm.
A legacy of kindness and camaraderie outshining even the Olympic flame.
Will Ripley, CNN, Tokyo.
(BEGIN VIDEOTAPE)
CHATTERLEY: The flame of kindness burning right. That's it for the show.
Stay safe. Have a great weekend.
"Connect the World" with the Becky Anderson is next, and I will see you on Monday.
(COMMERCIAL BREAK)
[10:00:00]
END
