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First Move with Julia Chatterley

Omicron Drives Record COVID Surges in France and Ireland; Ireland's Holiday COVID Case Count Tops that of 2020; China Keeps City of Xi'an Under Strict Lockdown; About 1,900 Flights Canceled So Far Today in U.S.; Major Hong Kong Independent News Outlet Closes; Biden: U.S. to Respond Decisively if Russia Invades Ukraine; Leading South African Doctor on Passing the Omicron Break; Tesla Annual Vehicle Deliveries Jump 87 Percent in 2021; U.S. Grapples with Testing Crisis as Omicron Surges; Prince Andrew's Lawyers Try to Dismiss Sex Assault Case. Aired 9-10a ET

Aired January 03, 2022 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[09:00:40]

ALISON KOSIK, CNN ANCHOR: Live from New York, I'm Alison Kosik in for Julia Chatterley. This is FIRST MOVE. And here's your need to know.

New year, new records. Coronavirus cases continue to surge around the world.

COVID cancelations. Thousands more flights are grounded as winter storms and Omicron hit.

Speeding sales. Tesla post-record figures for 2021.

It's Monday. Let's make a move.

(MUSIC PLAYING)

And a very warm welcome to the FIRST MOVE of 2022. Happy New Year. It's the first trading day of the year, which follows one that will be hard to beat.

All three main U.S. indexes gained between 19 and 27 percent in 2021. Breaking record after record in the process. Investors clearly focused on

positives such as vaccines rather than new variants of the coronavirus or rising inflation.

U.S. futures are pointing toward more of the same today. Hope generally dominates despite a surge in cases caused by Omicron and ongoing travel

chaos. More on that in a moment.

Auto makers are driving the gains with Tesla leading the way.

Europe is also starting the year on a high. The London Footsie is closed for a public holiday but encouraging data from the eurozone regarding

manufacturing and inflation is pushing other indexes to records once again despite reported COVID cases at their highest since the pandemic began.

In Asia, the beleaguered Chinese property giant, Evergrande, has halted trading its shares in Hong Kong. The company said in a filing to the Stock

Exchange that it's pending, quote, "an announcement containing inside information," although it did not give more details.

The Hang Seng fell, while other indexes were mixed. The Nikkei was closed.

Now, let's get straight to the drivers.

France will continue to see record breaking COVID-19 numbers over the coming days, says its health minister. The country eased quarantine rules

for the fully vaccinated Sunday as Omicron surges across Europe.

Officials in Ireland say they recorded more cases over the holidays than in the whole of 2020.

Barbie Nadeau joins me now.

Barbie, good to see you. Happy New Year to you.

And now, I would imagine that everyone is bracing for a post-holiday spike in the number of COVID cases that's as people socialized over the holidays

even more.

BARBIE NADEAU, CNN CONTRIBUTOR: That's right. You know, we're standing in front of a testing center which is also a vaccine center. We've just seen a

steady stream of people getting tested. It's either because they have symptoms or because they were in contact with someone who's COVID positive.

As these cases surge across Europe, where you know the concentration is how to get the kids back to school and how keep them in school. We've seen

country after country come down with new restrictions about what to do if there's a positive case in the classroom.

And France, if these kids that are not in class have to test three out of four days.

In Italy, if there are three cases, that class is online.

So, that's a real concern right now after the holiday season where everybody got together. And they're telling us that we haven't hit the peak

or the plateau quite yet on this latest wave. Alison?

KOSIK: Yeah. And we're just learning that UK Prime Minister Boris Johnson has warned of considerable pressure on hospitals coming - in the coming

weeks.

NADEAU: Yeah. That's right. And we're seeing that here across Continental Europe as well. And it's not just the patients in the hospital, it's the

doctors and the nurses and the support staff that are coming down with COVID or coming down to Omicron variant. They may not be that sick. They

may not even have symptoms. But if they're positive, they can't go to work.

We're also seeing in other sectors as well. The bus drivers, the garbage collectors, all of these sorts of things have a huge impact on how at least

cities run and how these countries deal with it.

Everybody wants to avoid a lockdown. That's economic disaster.

Again, you know we're talking two years into this now. You remember maybe, Italy was the first epicenter of the pandemic back almost two years ago

when those strict lockdowns in this country really, really, wreaked havoc on the economy. Then nobody wants to go back to that.

[09:05:01]

So, if it means testing, if it means you know a little bit of quarantine to keep people safe, that's what they'd rather do than lock people down again.

Alison?

KOSIK: Right. But there's certainly - it's clear how disruptive COVID can be once you get those cases in school, the bus drivers can't drive. It

can't have classes, so on and so on.

Barbie Nadeau, thanks so much.

In China, the number of daily cases has dropped in the city of Xi'an with fewer than 100 infections on Sunday, but the city's 13 million people are

still under a strict lockdown ahead of next month's Winter Olympics.

Kristie Lu Stout has the latest.

(BEGIN VIDEOTAPE)

KRISTIE LU STOUT, CNN CORRESPONDENT: There was growing desperation in Xi'an as the city enters its 12th day of lockdown. On Monday, China reported 101

new local cases down from 131 a day earlier. And the vast majority of new cases are in the northern city of Xi'an.

It's home to the famous Terracotta warriors. It's also a major industrial and tech hub that is home to 13 million people.

And ahead of the Winter Olympics in Beijing next month, China has been going all out to put an end to the Xi'an outbreak.

Since December 23rd, this entire city of millions has been under lockdown. Residents are forbidden from leaving their homes unless it's for a COVID

test. They cannot go out for food or basic supplies. And there's also has been public shaming of people accused of breaching COVID-19 safety laws.

And on Sunday, Xi'an announced that two senior Chinese Communist Party officials had been removed from their post to quote, "strengthen prevention

and control of the epidemic," unquote.

We've also been monitoring social media in China to get a picture of life in this quarantine metropolis.

And on Friday, this footage emerged on Weibo of a man being beaten by COVID-19 prevention workers at the entrance of a Xi'an residential

compound. The man was trying to enter with a bag of steamed buns. There is an altercation. The man stumbles. The buns he's holding, they scattered all

over the ground.

And in response to this viral video, local police put out a statement. They acknowledged that there was a dispute, and that epidemic control staff

assaulted the man. And afterwards, two staff members apologized, and they were fined and detained for seven days.

And the Chinese government has vowed to deliver three to five days' worth of groceries to people still stuck in their homes.

Kristie Lu Stout, CNN, Hong Kong.

(END VIDEOTAPE)

KOSIK: Here in the U.S., air travel troubles continue. Some 1,900 flights have been cancelled so far today, according to FlightAware. It's caused by

COVID-related staffing issues as well as winter storms.

Pete Muntean is live at Reagan National Airport outside Washington, D.C.

Pete, I know you've been following this aviation agony for many, many days. Are we seeing any improvement today at all?

PETE MUNTEAN, CNN AVIATION CORRESPONDENT: Agony is the way to put it, Alison. You know a quarter of all flights cancelled here at Reagan National

Airport. That is the most flight cancellations of any airport nationwide. Also, big cancellations at Dallas, at BWI, also at LaGuardia.

You know we are not out of the woods just yet. There were layering issues with those Omicron-related flight crew sickouts. But now, there is the

snowstorm, the snow coming down pretty good here at Reagan National Airport. Every so often we hear at wards, sounds like a jet. It's not. It's

a snowplow.

Just look at the numbers. 1,800 flight cancellations so far across the country today. About 10 percent of Southwest Airlines schedule. But another

10 percent of the SkyWest schedule, it's the smaller regional airline that operates commuter flights for American Delta and Untied. But 13 percent of

JetBlue's schedule, they fly up and down the East Coast, big hub in New York.

You know we are not done with these cancellations. They will probably go up even more as the day goes on and the snow keeps coming down. We have seen

long lines at airports across the country as the storm also made its way across the Midwest, in Chicago, in Atlanta. We heard of people staying

overnight in the airport in Atlanta.

I just want you to listen to one traveler who is stuck in the Atlanta Airport trying to get home since Thursday.

We don't have that sound bite, I'm told.

But you know the airlines say that those Omicron-related sickouts have actually tapered off a little bit. They're actually about the same as

they've been for the last few days, according to American Airlines. They also say at American that really this was a big issue at O'Hare and Chicago

just yesterday and they're also able to get out of the woods just a little bit here.

But this was so far supposed to be a big day for air travel here in the U.S. January 3rd was going to be one of the biggest days of the holiday

travel season when everyone is coming home all at once. We've seen about 17,000 cancellations in total, Alison, since Christmas Eve.

KOSIK: You know it's OK that we didn't go to that soundbite. We can only imagine how it feels to be stuck since Thursday in the airport.

Let me ask you this.

MUNTEAN: Yeah.

KOSIK: I mean, is there anything that - is there anything that airlines can do to beef up their staffs? Because look, I realize a lot of this is

weather, but a lot of it is also you know people calling out sick because of Omicron.

[09:10:02]

MUNTEAN: That's right you know. And the airlines are really looking to try and get people back. No - the fact of the matter is, that airlines got a

lot smaller during the pandemic. Not only in the size of their airplane fleets but also in the number of employees they've had. So, they're trying

to incentivize some coming back by paying them double and triple time in some cases.

You know it's a tough rub for airlines because they don't want people to show up to work sick. Although if they do show up to work sick, then they

can cause even bigger problems. So, the airlines are saying, stay away if you can. But if they don't come in, then that cause staffing shortages and

then more flight cancellations. So really compounding issues here, Alison.

KOSIK: Yeah. Double-edge sword there.

Pete Muntean, thank you so much.

In Hong Kong, the largest remaining independent news outlet is now closing. Citizen News says the decision was made for the safety of its staff. It

comes just days after police raided the offices of pro-democracy website "Stand News," forcing it to close.

Ivan Watson is in Hong Kong for us.

Ivan, this is yet another independent news outlet that covered the pro- democracy movements in Hong Kong that's now being targeted by Beijing.

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yeah. It's part of a much broader pattern of forms of dissent that were tolerated in, I would

argue, protected for decades that are being shut down now in different forms over the past year and a half. The latest now is "Citizen News,"

which announced on its Facebook page with this title "Thank you and So Long." That it would basically close up its operations on Tuesday, citing

as you mentioned, safety of its staff. Take a listen to what its chief writer had to say.

(BEGIN VIDEO CLIP)

CHRIS YEUNG, CHIEF WRITER, CITIZEN NEWS: Overall, media is facing an increasingly tough environment. And - and for those who are being seen as

critical or troublemakers, they are more vulnerable. So, this is what we are facing. And that's why we made the decision.

(END VIDEO CLIP)

WATSON: Now, this organization had been around for five years. And then, of course, it's closing down.

What is he referring to?

Well, last June, the biggest tabloid newspaper in Hong Kong "Apple Daily," I watched its printing presses come to a stop for the very last time. The

was after police had raided its newsroom, had arrested its publisher and some of its top editors, seized the publishing company's assets and it said

it was forced to close.

And just last Wednesday, we saw a police raid on another independent news outlet "Stand News" with a police raid on the newsroom, at least seven

people connected to that online publication who were arrested and charged with sedition. So, what it appears now is that "Citizen News" is

preemptively closing down as their hinting at to protect their staff and their assets from being seized by the authorities.

Now, the Hong Kong government, when asked about this kind of targeting of publications here that happen to criticize government officials, they

argue, no, no, no, this has nothing to do with targeting journalism. This is targeting alleged criminals. It's targeting people who are a threat to

national security. They call it wolves in sheep's clothing, people who disguise themselves as journalists to then do all sorts of alleged

nefarious things.

But if you look at the broader pattern here where you have a number of publications shut down, the politicians who were in once-accepted

opposition political parties either in jail or in exile and the street protests that were once part of this city's culture have effectively been

banned for two years, purportedly on health grounds because of COVID. It all adds up to a pretty broad crackdown on dissent in a city that once

enjoyed these freedoms.

KOSIK: Yeah. And I think it certainly adds up to a very disturbing trend.

Ivan Watson, thanks so much for your reporting.

And these are the stories making headlines around the world.

U.S. President Joe Biden has told Ukrainian leader, Volodymyr Zelensky, that America and its allies would respond decisively if Russia further

invades Ukraine. The leaders spoke by phone, Sunday, ahead of diplomatic talks between the U.S. and Russia this month. Washington is urging Moscow

to ease tensions after amassing thousands of troops near Ukraine's borders.

Our Nic Robertson joins us from Moscow with more.

So, Nic, the United States obviously watching the situation very closely. Do you think that sanctions in the way that the U.S. kind of phrases it -

are there really the decisive response. And if that is the response, would sanctions really be enough to deter Putin?

[09:15:09]

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: You know, I think the economic and financial sanctions that President Biden communicated very

clearly to President Putin during their first phone conversation back in early December and then again on the 30th of December. Were for President

Putin part of his calculus of, well, these haven't been articulated publicly how big and how bad they can be, and Russia has withstood a vast

number of sanctions over the recent years.

There's a view now though that's being expressed by the White House that perhaps does have a little more resonance with the Kremlin. And that is

that it wouldn't just be these economic sanctions. There would be a military cost as well.

Remembering that President Biden has said U.S. troops are not going to come into Ukraine to fight alongside Ukrainian troops if there was a Russian

invasion. The British have said the same. And that's been the indication from NATO partners.

But the military price to pay is that NATO, President Biden says, would increase its forces in Eastern Europe. That's the western flank of Russia,

if you like. That's the way that President Putin sees it. And that's exactly what President Putin is trying to avoid at the moment. He is trying

to make sure that Ukraine can become part of NATO. The NATO gets pushed further back from Russia's western borders.

So, I think, what President Biden has articulated and made it more public now. It's not just an economic threat. There are military implications that

don't necessarily flatten a wall, but they give the reverse effect of what President Putin is trying to achieve.

Now, it's not clear that that's a final position. It's not clear that this is what's going to keep the two sides from making some sort of diplomatic

agreement. But it does up the ante and it certainly does convey that message that alone probably economic sanctions might not have been enough

to deter if Russia was planning -- and they say they're not -- an invasion of Ukraine.

KOSIK: Is there a realistic path to de-escalation here?

ROBERTSON: Not an immediately obvious one. I mean, one of the things that came out of the conversation between President Biden and the Ukrainian

President Zelensky was talk about the Minsk agreement. This was the cease fire agreement that came into effect, the second version of it, early 2015

to end the fighting of the Russian backed separatists in the east of Ukraine with the Ukrainian government.

It has really been stalled. It's not going anywhere. The line of control, the sort of frontline between the two sides, is potentially still

dangerous. So out of that conversation, there's a diplomatic push to achieve more in terms of the Minsk to agreement, diplomat - you know

confidence building measures is the way the White House puts it. You know the -- the Ukrainian president has put it in the frame of you know

diplomacy to try - to try to advance the Minsk agreement.

But even that, you know it's mild in controversy on both sides and certainly, any giving of ground from the Ukrainian government perspective

would lock in potential gains for the Russian backed separatists. And that's not something that's going to happen readily and easily. But it does

seem that at least that scenario where there can be a de-escalation of tensions and perhaps some diplomatic movement. But it still doesn't get to

President Putin's sort of stated concern of legal guarantees to stop Ukraine becoming part of NATO.

KOSIK: OK. Nic Robertson in Moscow. Thanks so much for all that great context.

And for the second time in sixth months, Brazilian President Jair Bolsonaro has been hospitalized with an intestinal obstruction. The hospital says

he's in stable condition and receiving treatment. In a tweet, the president said he would be tested to determine if he needs surgery.

Sudan's prime minister has resigned after days of violent protest against military rule. Abdalla Hamdok has -- has served as civilian premier under a

power sharing deal with military leaders but said he would step down after being unable to forge a consensus. In a speech, he praised demonstrators

for demanding freedom and justice.

Still to come on FIRST MOVE.

One of the first doctors to encounter the Omicron variant on what she is seeing now in South Africa.

And Tesla triumph over supply chain snags. The electric carmaker delivers a record number of cars despite chip shortages.

(COMMERCIAL BREAK)

[09:22:22]

KOSIK: Welcome back to FIRST MOVE. I'm Alison Kosik.

And we're just minutes away from the opening bell ringing for the first time in 2022. Hopes are high after a year that was one of the best for

equities on record.

Futures are pointing to a mixed open with gains for automakers and recovery stocks.

Oil prices are falling ahead of an OPEC Plus meeting happening on Tuesday. The cartel and its allies are expected to stick to their earlier plan to

start raising output.

Back to our top story. The efforts to contain Omicron.

One of the doctors who first encountered the variant in South Africa says the country is past the peak of infections. As you can see, the seven-day

average of daily cases is falling sharply. And a study has found that most Omicron patients in South Africa weren't as sick as people hospitalized

with earlier variants.

That doctor is Angelique Coetzee, national chair of the South African Medical Association. And she joins us from Pretoria.

Great to have you with us, Doctor.

DR. ANGELIQUE COETZEE, CHAIR, SOUTH AFRICAN MEDICAL ASSOCIATION: Good afternoon from Pretoria. And it's great to be with you. And I wish you and

your viewers a great 2022.

KOSIK: And we wish you a very Happy New Year as well.

I want to hear about how it was to be one of the first doctors to treat patients with Omicron. When was it that you realized you were seeing a

different variant than Delta?

COETZEE: It was on the 18th of November last year when I got a family in. That it makes the criteria they're off Delta. In our country we treat

differently. Most of us still are of old school and we let patients come in into the surgery and we treat our patients after we examine them with a

clinical examination.

And that's how we - that's how I noticed that the symptoms don't make any sense. I've treated personally over 600 Delta patients, so I'm quite

familiar with the clinical symptoms and the disease progression with Delta. And immediately this was not the same.

KOSIK: Right, right.

So, now that South Africa has passed its peak, which means you're seeing fewer Omicron cases than you were, let's say, two months ago, November

18th. How concerned are you that there's going to be complacency in South Africa about the pandemic itself?

COETZEE: Well, I think it's not only South Africa. I think it's a global phenomenon that everyone - you know they are getting tired of listening and

doing what they're supposed to do. So, yes, it's definitely going to happen.

[09:25:11]

But, again, we have sort of a lot of these restrictions, the curfews have been taken away. However, we are still very adamant regarding the wearing

of masks, and we have been promoting the wearing of masks since the pandemic started. You will not that easily go into any of our shopping

centers without a mask. They will ask you to leave or they will ask you to get a mask. So, for us, it's still the most important thing, is the

simplicity of trying to prevent the spreading of virus infections.

KOSIK: What are the lessons that other countries can learn from South Africa?

COETZEE: So, first of all, you know the country should stop making a huge thing about how many cases are there every day because we ask people to go

and test. So, the moment when they go and test and the case numbers are high, then everyone is up in arms. The fact you're asking them to go and

test. So, that's the first thing.

The second thing is we need to start to get a balance. And balance between 99 percent of people will be treated at the primary health care level.

However, 1 percent might end up in hospital. And I know if the case loads are high, that it might mean a lot of people.

But if you look at what we are seeing in South Africa, currently with the stats of yesterday, there's only 310 ventilated patients across South

Africa, 660 facilities. We have, however, 1,390 oxygenated patients. But again, it is not a huge amount of people if you look what happened with

Delta.

KOSIK: Doctor, is it inevitable now that Omicron is fading there, and you can sort of see a pattern before we are because we're in a thick of it here

in the United States. Is it inevitable that there's just a new variant around the corner?

COETZEE: That's difficult. I think there -- you know, this virus is very unpredictable. However, my gut feeling is there will be a new variant some

way coming in again. Because remember, the virus sole purpose is to survive. So, it's not in the virus's best interest to kill everyone off.

And if the virus finds it difficult with the vaccines to you know to keep on surviving all with your own immune system, there will be a new variant

coming. And hopefully, it will be you know not a very potent one again. And we can live with the Omicron variant at this stage. And I think a lot of

people will get immunity from Omicron, because half of the people won't even know that they have been infected with Omicron.

KOSIK: So, with people getting that immunity, do you think Omicron could actually speed up this path from moving from a pandemic stage to the

endemic stage?

COETZEE: Definitely. Especially if you look at the mildness of the cases. And I know that W.H.O. doesn't want us to wear - to use the term mildness.

I know that a lot of the scientists doesn't want us to use the term mildness. But this is what it is.

I cannot say it's a very severe disease. Yes, it's severe if you are in the ICU, if you are on mechanical ventilation, if you're getting ECMO, if

you're getting acute respiratory disease. That's something - again, if you look at the numbers really ending up with severe disease on ventilation,

it's not a lot. 310 is not a lot.

KOSIK: OK. Dr. Angelique Coetzee, thanks so much for everything that you've been doing and thanks for coming on the show today.

COETZEE: Thank you so much. And please stay safe.

KOSIK: You too.

Stay with FIRST MOVE. The market open is next.

(COMMERCIAL BREAK)

[09:32:25]

KOSIK: Welcome back to FIRST MOVE. I'm Alison Kosik.

U.S. stock investors are off to the races are we start the first trading of the year. Earlier, optimism has fizzled out a bit with modest gains right

now for the S&P 500. The Dow looks flat. And the Nasdaq is flat as well. Actually, up of 0.75 percent.

Investors are weighing positive such as the vaccine rollout and solid consumer spending against supply chain issues, rising prices, and the COVID

surge.

One sector doing well today is autos. Tesla is firmly in the driver's seat after it reported record sales in the last quarter. That's despite a global

chip shortage that has hindered many competitors.

Paul La Monica joins me live.

Now, Paul, Happy New Year. I'm sure that Elon Musk is thrilled today after it had its latest quarter. Dan Ives at Wedbush summed up the fourth quarter

delivery number for Tesla, calling it a trophy case quarter. So, then the question is, what's the momentum for Tesla as we move into 2022? Is the bar

just too high?

PAUL LA MONICA, CNN BUSINESS REPORTER: Yeah. It's a great question, Alison. I mean, we're talking about a company that is now worth more than a

trillion dollars, so the expectations are very high for Tesla. But as Dan Ives pointed out, the company is really firing on all cylinders right now.

They were able to do extremely well in the fourth quarter despite those well publicized chip shortages that have hurt the broader automotive

industry.

And I think that's in part due to the fact that Tesla did have some issues earlier last year, they worked through, you know having a lot of its own

technology in its cars, including those automatic software updates that mitigate some of the problems that it had due to continued semiconductor

shortages around the globe. That obviously helped.

And Tesla is now a company that is the clear leader in a rapidly growing electric vehicle market. Because make no mistake, Alison, there's a lot of

competition coming from the likes of traditional automakers such as Ford and GM as well as upstarts such as Rivian and Lucid, which both have the,

you know, electric vehicles that recently won you know industry awards for having you know great technology as well.

KOSIK: Right. The pressure is always on to up your game, right, even for Elon Musk.

[09:35:01]

And speaking of Elon Musk, for the past several weeks, I know we've been monitoring how many Tesla shares Musk has been selling. And the proceeds

from those sales going to pay an $11 billion tax bill. So, it leaves him with about $3 to $5 billion left over. Any ideas, Paul, you know what Elon

Musk will do with this you know spare change?

LA MONICA: Exactly, the world's wealthiest individual does have some spare change, it seems, Alison. My colleague, Chris Isidore, has an interesting

story on CNN Business right now. His take is that potentially, Musk could be using some of the proceeds from these Tesla stock sales to invest

directly into his other major business venture SpaceX, which is a company that requires a lot of cash because of the massive amounts of operating

expenses due to launching satellites.

So, it will be interesting to see whether or not SpaceX, which is one of the world's most valuable private companies out there, benefits from all of

these Tesla stock sales that Elon Musk has been making as Tesla shares have risen pretty dramatically in the past year or so.

KOSIK: That will be interesting to see.

Paul La Monica, thanks so much.

And Sam Stovall is the chief investment strategist at investment research platform, CFRA. And he joins us via Skype. Great to see you, Happy New

Year.

SAM STOVALL, CHIEF INVESTMENT STRATEGIST, CFRA: Happy New Year, Alison.

KOSIK: Let's go ahead and start with tech. Technology investors you know who zeroed in on these mega cap stocks, like Tesla, like Apple and Nvidia.

They did really well in 2021, but small to mid-caps in tech have fallen in the double - or it's fallen by the double digits below their highs. So, the

question I have for you, are valuations too stretched for these big tech names? And could tech be headed for a bear market in 2022?

STOVALL: Well, certainly interest rates are among the major concerns that we have to face for 2022. The Fed has already told us that it is unwinding

its bond purchasing program and will be done with that by the first quarter and said that it's likely to raise interest rates three times in the second

half of 2022.

So, when you look back to history, because it's a great guide, although it's never gospel, whenever we have seen an increase in interest rates, we

have seen a reduction in the price to earnings ratio for the S&P 500.

So, like valuing real estate price per square foot, investors value stocks price per earnings and usually they're willing to pay less as interest

rates go up.

KOSIK: Talk with me more about what you think is in-store for the markets in 2022. I mean, you know, the bar again is very high, S&P climbed 27

percent in 2021. What do you see for the markets in 2022, you know, when we talk about the Fed, inflation and the pandemic?

STOVALL: Sure. Well, I think it's going to be a good year, but not a great year. History implies that whenever we've had a gain of 20 percent or more,

then the market continues to rise pretty nicely up about 10 percent. But obviously, that's an average. There have been observations where it's

actually fallen. I believe that we're going to see the S&P up about 5 percent for the full year and the headwinds are going to increase the

volatility.

This is President Biden's second year in office, also typically called the sophomore slump in which the volatility or price action in the market has

been 40 percent higher than the average for the other three years of the presidential cycle.

Also, when we are looking at earnings rising by 7.5 percent this year versus the near 44 percent surge in 2021, investors are going to be very

careful about what stocks they buy, especially if they look overvalued.

KOSIK: What do you think is the biggest worry for Wall Street? Do you think its inflation?

STOVALL: Well, I think its interest rates, because that's really what drives the value of stocks, using discounted cash flow or intrinsic value

models. The biggest input is interest rates. And investors try to get a guess as to where interest rates are going to go based on inflation. We do

think that inflation will peak in the first quarter at about 6.9 percent year on year rise for headlines CPI, but then come down to about 3.2

percent by the fourth quarter of 2022. So, inflation will still be elevated compared with the last several years, but I think the biggest worry is how

aggressive will the Fed be with its interest rate increases.

KOSIK: Are you thinking that the market is a little bit too complacent lately with seeing those strides that made in 2021? Little complacent with

so much - so many headwinds to deal with?

STOVALL: Yes, I do.

I think that right now while the overall trend is positive for a majority of the U.S. indexes, we like to say every so often that the market gets

ahead of itself, it gets overbought.

[09:40:07]

And I think that's where we are right now. So, I wouldn't be surprised if after a couple of good trading sessions maybe with a couple of good weeks

that we do start to see the market falter a little bit. But I don't expect this bull market to be ending any time this year.

KOSIK: How should investors be positioned right now?

STOVALL: Well, I guess really, it depends on the investor themselves. If they are an income-oriented investor, they should be focusing on those

companies that have had a high consistency of raising earnings and dividends, make sure that they're buying those stocks whose dividends do

not exceed their earnings and also have lower volatility than the market itself.

I think for right now in general, investors should have good exposure to equities. And while interest rates remain low, they can stick with some of

the growth areas like consumer discretionary like technology. But there's an old adage that "sell in May and go away."

I always say you're better off rotating than you are retreating, because usually it's the defensive areas like food, beverage, tobacco, health care

and utilities that do better in that very challenging May through October period.

KOSIK: OK. Sam Stovall of CFRA, thanks so much for your perspective today.

STOVALL: My pleasure. Thanks for having me.

KOSIK: Sure.

Coming up next, America's COVID-19 testing crisis. I'll be talking with the CEO of a provider about the shortages.

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KOSIK: After a weekend of muted celebrations, Americans are set to return to work and school amid record high COVID-19 cases. To make matters worse,

the Omicron surge is colliding with a severe testing crisis. President Biden has promised to start delivering 500 million COVID-19 tests this

month to tackle the shortage.

Joining me is Julia Cheek. She is the CEO and founder of Everly Health, an at home, lab testing company.

Great to see you and have you on the show.

JULIA CHEEK, CEO AND FOUNDER, EVERLY HEALTH: Thanks for having me, Alison.

KOSIK: Walk us through what Everly Health provides, in the way of COVID tests.

CHEEK: So, Everly Health is a digital health company offering end to end virtual solutions for diagnostic testing.

[09:45:03]

And we've been a critical digital first responder during the pandemic since March of 2020. Today, we have a wide offering of both third part

manufactured rapid antigen tests, like Becton Dickinson's test, Quidel test, et cetera. As well as over the counter at home mail-in PCR testing.

We also partner with some of the largest pharmacies in the country like Walgreens and Rite Aid to provide HHS drive-through PCR testing. So, we

have an end-to-end compliant platform for all forms of testing, including telehealth consults, and hopefully therapies in the near future.

KOSIK: I'm curious what you thought when President Biden announced Americans will receive tests through the mail this month. Do you think it's

a little too late or it's you know, hey, it's about time that this happening?

CHEEK: I think it's probably both of those, right? We think this is a significant move in the right direction, but in order for testing to truly

help and serve all Americans during the pandemic, we really need to see reimbursed telehealth. We need to see reimbursed shipping costs and the

entire experience of managing COVID-19 needs to be provided free and fully reimbursed for all Americans.

And so, I think while this is a move in the right direction, I'm hoping that as we learn more about the distribution plan for these tests

imminently, that we start to see provisions specifically for telehealth and shipping to make comprehensive impact for people that need tests at this

critical time..

KOSIK: Why do you think it wasn't a priority? Shouldn't it have been a priority? I'm talking about testing early in the pandemic. I mean, you were

the second company to receive FDA approval to distribute at home tests. You know, what are your thoughts about the administration's lack of

prioritization of testing?

CHEEK: I think that the administration has been responding to the waves as we've seen them. And we have observed as we've served hundreds of

organizations, including municipalities and federal and state contracts as well as employers and private companies, that the testing demand has waxed

and waned substantially. And this is an infrastructure that, unfortunately, has not been modernized to be able to scale and automate in really

compressed timelines.

In fact, we've been able because we have a technology that has providers across the country, labs, logistics, et cetera. We've been able to adhere

to a one to two-day turnaround time throughout the pandemic with our lab partners. But that is only because we had this technology enabled

infrastructure.

You look at companies trying to scale rapidly, manufacturing facilities for rapid tests, laboratory equipment and staff and they're facing the same

shortages that we're seeing throughout the health care labor market today and throughout manufacturing and logistics.

And so, I don't know that it was not a priority for the administration, but I think the ability to move quickly in these different surges has not yet

been a problem that's been solved by the government and private sector alike.

KOSIK: Is your company involved in the distribution of these test kits, you know, in any way at all?

CHEEK: So, we do not manufacture the rapid antigen tests that have been selected by the president to distribute. We do partner with many of them

and we actually have some of them still in stock today that we're providing to our enterprise clients and on our everlywell.com platform. We are a

provider of end-to-end telehealth services for -- through our contracts with Walgreens and Rite Aid funded by HHS and have been for a couple of

years due to pandemic.

And so, we have a number of different ways in which we work with the government. I do believe that there's an opportunity in this yet to be

announced distribution plan by the administration to partner with some of these technology companies like Everly Health and others. They are doing

great work to modernize the digital distribution of testing.

And so, if there's a way that we can serve and be helpful, we stand ready to.

KOSIK: Is Everly Health looking to go public any time soon? What are the future plans for the company? An IPO in the future?

CHEEK: You know at home testing is here to stay. This is something we have been committed to for six years and we have continued to see rapid growth

because of the behavior change from the pandemic, not just through the pandemic and testing itself. You know women's health tests are up over 250

percent year over year, STI testing, and others.

And so, we are really thinking how to best, keep - be competitive strategically and keep our business capitalized.

And so, we are assessing all different options, an IPO potentially in our future. But at the moment digital health companies as you know are not

faring well in the markets and I think there is some time to really understand how this business model takes hold and becomes a normal part of

the American health care delivery system.

[09:50:03]

KOSIK: OK. Julia Cheek, CEO and founder of Everly Health. Fantastic talking with you today. Thank you.

CHEEK: Thank you so much for having me.

KOSIK: Next on FIRST MOVE.

We are expecting a major development in a legal case involving Prince Andrew and the woman accusing him of sexual assault. Full details, next.

(COMMERCIAL BREAK)

KOSIK: A settlement between Jeffrey Epstein and the woman who's accusing Prince Andrew of sexual assault is expected to be unsealed later today. It

could have an impact on the civil case involving the prince.

Max Foster is on this story.

So, Max, what more are you hearing from Prince Andrew's defense team?

MAX FOSTER, CNN ROYAL CORRESPONDENT: Well, the defense team basically argue that there was a settlement reached between Giuffre and Epstein in 2009,

which basically disqualifies her. She opts out effectively. They argue from future cases such as this one with Prince Andrew.

So that case, that document is being unsealed today. So, we're waiting to see what that document says whether or not it allows Prince Andrew's team

to have this case dismissed from the U.S. court. We'll hear tomorrow from the judge in this case whether or not she believed that to be the case. So,

there's a hearing tomorrow where the judge overseeing the Prince Andrew case, will look at this document and say whether or not the overall case

should be dismissed.

If she believes the case against Prince Andrew should continue, then we're looking at potential depositions from the likes of Prince Andrew, Sarah

Ferguson, even the Duchess of Sussex arguably, according to Giuffre's team. At least those of depositions that they'll be asking for.

Prince Andrew has of course denied all of these - all of these allegations. His current strategy seems to be to have the case dismissed.

Another thing that judge will need to be looking at is this such an allegation from Giuffre that she had sex with Prince Andrew in Ghislaine

Maxwell's house in London after going to a nightclub. And Giuffre says that in the nightclub, Andrew was there, he was dancing and sweating profusely.

Now, Prince Andrew, in a BBC interview in 2019, denied ever being in the nightclub and said he had a medical condition, saying which meant he

couldn't sweat. Have a listen to how he described that to the BBC.

(BEGIN VIDEO CLIP)

EMILY MAITLIS, BBC ANCHOR: She was very specific about that night. She described dancing with you.

PRINCE ANDREW, DUKE OF YORK: No.

MAITLIS: And you profusely sweating and that she went on to have bath possibly.

PRINCE ANDREW: There's a slight problem with the sweating because I have a peculiar medical condition which is that I don't sweat or I didn't sweat at

the time and that was -- was it -- yes, I didn't sweat at the time because I had suffered what I would describe as an overdose of adrenalin in the

Falkland's War when I was shot at.

[09:55:06]

And I simply -- it was almost impossible for me to sweat. And it's only because I have done a number of things in the recent past that I am

starting to be able to do that again. So, I'm afraid to say that there's a medical condition that says that I didn't do it so therefore --

(END VIDEO CLIP)

FOSTER: So, Giuffre has asked for documentary evidence of this inability to sweat, this medical condition. So far, Prince Andrew's team haven't

delivered that. But that's another thing the judge will be looking at on Tuesday.

KOSIK: OK. We will be following this story right along with you.

Max Foster, thanks very much.

And that's it for the show. I'm Alison Kosik. Follow me on Instagram and Twitter @alisonkosik.

Thanks for watching. "CONNECT THE WORLD" with Becky Anderson is next. I'll see you tomorrow.

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[10:00:00]

END