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First Move with Julia Chatterley
The Queen Welcoming President Trump To The U.K. As The Mexicans Arrive In The United States Battling To Avoid Tariffs As A Result Of Migrant Flows; Google May Be Facing A Second U.S. Antitrust Investigation. Aired: 9-10a ET
Aired June 03, 2019 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR, FIRST MOVE: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE and here is
your need to know.
Tariffs and tiaras. The Queen welcoming President Trump to the U.K. as the Mexicans arrive in the United States battling to avoid tariffs as a result
of migrant flows. And is it second time unlucky? Google may be facing a second U.S. antitrust investigation. It's Monday, let's make a move.
Welcome, once again to the show and of course, it's the first trading day of June, lots going on in the show today as I mentioned there, including
the fact that President Trump is of course in the U.K. and meeting with the Queen. We've got plenty of pomp and pageantry coming up in just a couple
of minutes' time.
But I want to bring you back here to the global markets to the New York Stock Exchange where it's the President's alter ego, the so-called tariff
man that's currently occupying the minds of businesses and investors alike. Right now, futures are low. We've got the NASDAQ off around a quarter of a
percent premarket.
We've taken back some of the earlier losses watching U.S.-Mexico trade talks today, well, talks not on trade, but on tariffs. The U.S. saying
it's ending its special trade status for India as well, of course last week, and apparently the President discussed imposing tariffs on Australia
last week, too. Clearly, that didn't happen. But all of the United States' trading partners right now must be on higher alert.
Let's not forget China as well. In a press conference yesterday, on Sunday, Chinese officials saying look it was the United States fault, front
and center, that we saw those trade talks breakdown. We are of course, still waiting for their corporate blacklist, too. This is taking a toll on
markets.
What can I tell you? We've got the NASDAQ right now approaching correction territory, off almost 9 percent from that last month's record high. Chip
stocks, too, have been severely punished. We've got the Dow now falling for some six straight weeks. It's also taking a toll in the bond markets,
too.
The 10-year yield today has been close to breaking 2.1 percent. The warnings, too from the big banks coming thick and fast. Among them, Morgan
Stanley warning that we could be less than a year away from a global recession if the trade war worsens. We will be talking this through
throughout the show.
But for now, the President is royally occupied over in London and Hala Garani is there for us, too. Pomp, ceremony and controversy, Donald Trump
has only been in London for a few hours, but we've already had plenty of three. Hala Gorani outside Buckingham Palace for us. Hala, great to have
you on the show with us. Talk us through what we're seeing so far.
HALA GORANI, CNN INTERNATIONAL ANCHOR: Well, you mentioned the pomp and the ceremony, but there were insults and they began flying before the plane
had even landed.
Donald Trump has begun his first ever state visit to Britain. You'll remember last year in July, he also visited the U.K.; that was a working
visit. Now, a short time ago, the U.S. President sat down for a private lunch with the Queen after a formal reading ceremony at Buckingham Palace.
Well, there were no warm greetings for London Mayor though, not long before Air Force One touched down. The president sent out a tweet calling Sadiq
Khan, a stone cold loser. He also made fun of his height. This after the Mayor slammed Mr. Trump in a scathing editorial calling him an example of a
global far right threat.
CNN's Nic Robertson joins me now with more. So today is a very, very busy day for the President. Today is royal day, tomorrow is politics day.
We'll talk about that them. But right now, we expect the next event to be what?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: After the lunch is finished here, then they will go and review gifts. These are gifts that
former U.S. Presidents, U.S. officials, dignitaries have given to the Queen over the years. These are held in the Royal Collection, one of the things
that they might be able to see, in fact, I think we can expect President Trump to be shown a copy of the Statement of Independence from Britain over
200 years ago. But it's things of that stature that he'll be shown.
[09:05:10] ROBERTSON: This is again to sort of talk about the history and the strength of the relationship, and that it goes back many, many
generations.
GORANI: Well, the U.S. President did not shy away from some might even say, meddling in U.K. politics by having kind words for Boris Johnson
though perhaps he hasn't been reminded that Boris Johnson once said some not very nice things about him, and also engaging in this Twitter war of
words with the London mayor. Telling "The Sun" political editor in an interview from the Oval Office, he didn't know Meghan Markle, Prince
Harry's wife was nasty. What a controversy, which we've come to expect.
ROBERTSON: We have and outside of the Meghan Markle question, which was something President Trump has later said that he didn't actually say, but
it was there on tape and he did say it and it was to the editor as he was speaking to him before, Tom Newton Dunn who had told the President,
reminded him that Meghan Markle during President Trump's election campaign, that if he got elected, then she would emigrate to Canada. So that's what
he was commenting on. He was trying to make up for it.
But the issues of Boris Johnson, of Sadiq Khan, of dissing in a way, Theresa May's own handling of Brexit, the things we saw when the President
came here on that working visit last year, and he tried to make it up with Theresa May when he saw her after those comments became public, but it is
par for the course. And I think that's what people here have expected.
His Twitter spat with, the Mayor of London goes back to after one of the terror incidents in London. He criticized the way that the mayor was
handling that. He seems to want to take it all on and do this again.
And it diverts from some of the more substantive issues that he will be talking about while he is here.
GORANI: And there will be very substantive issues that the U.K. cares about deeply after Brexit. Because if they are -- and they are moving away
from the closest of relationships with the rest of Europe, which is being part of the same E.U. club, they're going to have to develop some special -
- even more special relationships with the U.S.
ROBERTSON: One of the strengths of being in the European Union is you're part of those 28 countries, 500 million people made up of all those
nations. This is a powerful trading group that has clout around the world.
As Britain alone, you like that clout. So you're more exposed to the leverage that the United States might put on Britain to, for example, take
certain products from the United States or want access to markets in the U.K. There was a discussion over the weekend that, you know, Britain's
health service could be opened up to U.S. medical interests in a way that it isn't today.
But that would be a concern for British people, because they have some pride in what is a somewhat decrepit health service, but it is free to the
user, and that's not the case in the U.S., that would be a concern.
So these will be some of the topics coming up. But there will be a lot of businesses leaders that the President will be bringing with him that the
British government is hosting as well, and this will be an important part of the conversation.
GORANI: Right. Some big business leaders, banking industry leaders, pharmaceutical industry leaders as well taking part.
ROBERTSON: Military industry, yes.
GORANI: Thanks very much, Nic Robertson, we'll see you in a little bit. Jeremy Hunt was the first Minister to greet the U.S. President on his
arrival.
The Foreign Secretary told Mr. Trump that Britain will be putting on a great show this week to celebrate the "amazing partnership," quote,
unquote, between the two nations.
But speaking to CNN, the Foreign Secretary conceded that there are some big differences between the two allies.
(BEGIN VIDEO CLIP)
JEREMY HUNT, BRITISH FOREIGN SECRETARY: But we don't agree with everything he says or does. We don't agree with, for example, his approach to climate
change or the Iran nuclear deal. I've disagreed with him on the NHS before, but that doesn't mean that we can't celebrate the fact that this is
one of the most important alliances in history.
And it's not just about Britain and America did in the Second World War, is the international order that we created since then that has led to
unparalleled peace and prosperity across the world. And in that, President Trump stands rock solid with the United Kingdom.
(END VIDEO CLIP)
GORANI: Well, Peter Westmacott is a former U.K. Ambassador to the United States, and he joins me now. So let's talk a little bit of just about the
first few hours and perhaps even the hours preceding the President's touchdown at Stansted Airport outside of London. Already controversy there
preceding the U.S. leader.
PETER WESTMACOTT, FORMER U.K. AMBASSADOR TO THE UNITED STATES: I think everybody knew that once the President of the United States -- this
President of the United States was on his way or about to land, there were going to be tweets, there was going to be stories, there was going to be
some sort of high risk stuff.
One or two British politicians who are going to be in London have taken the opportunity to be critical of the visit, critical of him. The nature of
the President is that he fires back. And of course, if he was going to give interviews which he did a day or two beforehand to a couple of the
Murdoch newspapers, it was inevitable that he will get involved in British domestic politics. That's par for the course, nobody is really surprised.
[09:10:06] GORANI: Right. No one is surprised, but what is significant then about this particular visit? Because this is post Brexit referendum
Britain, and they know that their interests lie in developing closer relationships, even with traditional allies like the United States, but the
President is talking about a trade deal that would involve access to the U.K. market even say for pharmaceutical goods. That may be some people in
Britain wouldn't be comfortable with.
WESTMACOTT: I think you're right, Hala. We have to remember that this State Visit goes back to the day when Theresa May rushed off to the Oval
Office, to be the first person to congratulate the President on his election. And he had been saying Brexit is wonderful, and thanks to Brexit
and the President, and he has been very supportive of Brexit.
Now, we haven't done Brexit yet. Who knows? We might not even do it. It remains to be seen. It's extremely messy. He carries on talking about
shiny, new free trade deals between Britain and America.
But most of us who've done free trade negotiations know that it's much more difficult than that. It will take a long time and there will be some
seriously difficult negotiations over I think long time, whether it's chlorine washed chicken, beef hormones, financial services, American by
America Act, or state procurement policies in America. This will be difficult.
So it's nice to hear that he wants Brexit to be a success. But you know, I'll believe it when I see it.
GORANI: And this will be the U.K. on its own and not as part of the E.U. Boris Johnson and Nigel Farage, both men who are proponents of Brexit, of a
hard Brexit were complemented by the U.S. President as being good leaders, and in the case of Nigel Farage, even saying he should be part of the
negotiations.
WESTMACOTT: I saw that, too. And, of course, Boris said a little bit earlier, he was extremely rude about the President when he was the
candidate.
GORANI: He called him unfit.
WESTMACOTT: Unfit for office. But he seems now to be very popular. For whatever reason, I don't know, he is being very complimentary, of course,
about this President and he is a hardline Brexiteer, or he is for the moment until he is not. So we'll have to wait and see.
But I think it's inevitable if this President is asked, "What do you think about the candidates for the race?" There's a dozen of them out there.
It's hard for him not to answer the question to say which one he likes.
GORANI: Now, as far as the U.K. is concerned, I mean, this has been -- this honor has been bestowed on only three Presidents. I wonder why the
U.K. felt the need, in your opinion, for such a lavish welcome ceremony because this is as incredibly lavish as it gets.
WESTMACOTT: It is lavish. It is the full State Visit. I was Ambassador in Paris when we did the same thing with President Sarkozy. We went over
to Buckingham Palace in the same way. We didn't have a helicopter on the lawn. But otherwise, it was very similar and it's spectacular.
And I like to think we do these things beautifully. Why? Answer: Theresa May really wanted to make him this offer on day one. Normally, to be
honest, you wait and see how the relationship goes. You wait and see how the President performs before you issue an invitation to something as
lavish and as important as this.
As you rightly say, not every President gets a State Visit. But this was promised and this President, even though he was here for a mini visit, last
year, clearly wanted the full works, too.
GORANI: Right. We are expecting by the way a gift review to take place. It was meant to be done in private, but we understand we will be getting
live images of that. Peter Westmacott, former U.K. Ambassador to the United States, always a pleasure. Thanks so much for joining us.
Julia, back to you at the New York Stock Exchange. And we'll bring those live images to you when the event takes place in Buckingham Palace behind
us. Back to you.
CHATTERLEY: Gifting is definitely going to be a high point. I hope we do get to see those pictures and we will come back to you if we get them,
Hala. Thank you for that. All right, for now though, let's bring it back to what we're seeing right now.
Futures pointing lower, as the trade at war heats up. Talks, of course between the United States and Mexico taking place today. This in light of
the threat from President Trump to impose tariffs on all Mexican imports, if they don't do something to tackle migrant flows into the United States.
Christine Romans joins us now live. Christine, we can talk about Mexico, but it's not just Mexico. We have the Chinese overnight saying, look, it
was the United States that blew the trade deal, not us. We have the reports of potential tariffs on Australia, too.
I mean, we thought the President was choosing his battles here with China and there's all sorts of battles erupting, left, right and center.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Erupting -- the President igniting the fuse in each and every one of those, too, so it
shows you this is a White House that feels confident that it can fight trade wars on multiple fronts opening new fronts all the time.
"The New York Times" -- the front page of "The New York Times" this morning has a Maggie Haberman story about how the White House was considering
putting tariffs on Australian aluminum. You know, there was an exemption that was granted by the President now thinking about maybe taking that
away.
So all of these things rattling investors, although I will say my gut is telling me you could see maybe some nibbling here today because you've got
major stock market averages in the U.S. down 5 percent, 6 percent, 7 percent for the NASDAQ last month. Really kind of really rough month.
So I think that you just watch to see what kind of volatility we see here today, but this is what we're hearing from the White House.
[09:15:06] ROMANS: Mick Mulvaney, the President's acting Chief of Staff on Fox News Sunday, essentially saying that no, the rules of economics don't
apply in the Trump economy. American consumers will not feel tariffs and they are confident of that. And they're going to keep going forward.
Listen.
(BEGIN VIDEO CLIP)
MICK MULVANEY, ACTING WHITE HOUSE CHIEF OF STAFF: We put tariffs on China, we're putting tariffs on Mexico, and inflation is still under control.
American consumers have gone to products that are made in the United States, for example, that don't carry those tariffs. We think the same
thing will happen here, and American consumers will not pay for the burden of these tariffs.
(END VIDEO CLIP)
ROMANS: Well, I mean, tell that to anybody trying to buy a car. I mean, Deutsche Bank says that if you have tariffs on Mexican imports, and
whenever you have a risk of global auto tariffs; that will raise the price of a car. There are supply chains that are not as simple as Mick Mulvaney
is making it sound that crisscross these borders.
So it's not as cut and dry as he says it is. But they are holding firm that, you know, tariffs are not a bad thing in Trump world.
CHATTERLEY: Yes, it's fascinating, isn't it? I think we're confusing the short term impact, which is that U.S. companies pay those tariffs in order
to import those goods versus the medium to longer term if companies do decide not to manufacture in China, to do it elsewhere and ship them in
from another country that then will hurt China.
But you've got to keep the timings here, front and center. And right now, it is the United States that pays these tariffs. I mean, to your point,
what we've seen now is banks falling over themselves to lower their growth estimates to say that the Federal Reserve is going to kick in here and be
cutting rates, maybe two times, maybe three times.
Jay Powell front and center this week, I think what he says this week about the trade impact, and perhaps whether or not he signals that they're more
worried than they have been will be critical, I think for markets this week.
ROMANS: I think you're absolutely right. And don't forget, we end this week with the jobs report. I mean, is all of this tariff talk and tariff
man running the United States, you know, the President -- as the President of the United States, as he has called himself, is that cooling hiring
enthusiasm?
We have seen a very strong jobs market. Are we going to see that maybe taper off here? I will say one thing, the trade hawks around the President
for a year now have been telling me that the U.S. economy is so strong, and inflation so benign, that this is exactly the time to make a big move on
trade vis-a-vis China in particular.
Now, this move on the border using trade as leverage on the border is very new. It's a very new tactic and very concerning for a lot of people who
watch the economy. You know, they want trade to be about trade. They don't want it to be about other issues, but that's clear what the President
is making it here.
CHATTERLEY: Yes, the firm politicization of tariffs here and not just to tackle trading balances. Christine, great point. Christine Romans joining
us there.
So actually, I said the tariffs and tiaras, but it's tariffs, tantrums and tiaras. I changed my mind on that.
All right, let's move on. We're going to take a quick break here on FIRST MOVE, but -- so when we come back, Boeing, issuing a wing warning. How the
plane maker's 737 problems just went from bad to worse.
Plus, going after Google. The U.S. Justice Department gearing up to investigate the search engine giant on antitrust grounds. We've got all
the details next. Stay with us. You're watching CNN.
(COMMERCIAL BREAK)
[09:21:31] CHATTERLEY: Welcome back to FIRST MOVE with a quick look at what we're seeing right now for U.S. stock market futures.
It is the first trading day of the month, the first trading day of the week to a bit of pressure that we have taken back earlier losses. The NASDAQ,
the tech stocks looking at the softness right now, down some three tenths of 1 percent.
We are seeing the flight to quality continue not only in the bond markets of course with yields under pressure, but also in the currency markets,
too.
Take a look of what we're seeing across the board here. The Swiss franc currently trading at two-year highs versus the euro, a notable one. The
dollar also strengthening despite the pressure that we've seen on bond yields, too.
It's also a key week for U.S. data. We've got manufacturing survey numbers out in less than an hour's time. We've got the jobs report, as that
Christine Romans was mentioning out on Friday.
GM and Walmart are holding their Annual Shareholder Meetings. They are going to update investors on the risk of tariffs, of course, and the impact
on pricing. And we've got the Fed beginning a two-day conference on monetary policy talks tomorrow with Jay Powell speaking. So lots to watch
this week.
For now though, let's move on because we have more bad news from Boeing firm. The firm is warning that some 737 jets may have defective wing
parts, and it's not just about the 737 MAX, but other new generation 737 planes as well.
You've got the regulators and Boeing telling airlines now to ground the planes with faulty parts until they are replaced. The question is how long
will that take?
Oren Liebermann joins me now. Oren, the news goes from bad to worse for Boeing. Another challenge. Talk us through what we learned as a result of
these faulty parts.
OREN LIEBERMANN, CNN CORRESPONDENT: So the part we're talking about specifically was known as a slat track. A slack is a part, a movable part
of the front edge of a wing that comes out and improves airflow at low air speeds, generally.
The slat track is simply the two railings on which that part moves forward and back. And that's what we're talking about with this latest issue.
The FAA says some of these are defective and need to be inspected and repaired within 10 days. It affects quite a number of aircraft, 312
aircraft worldwide according to the FAA, as well as 65 in the U.S. that includes both the 737 MAX that have been such a focus lately, as well as
the 737 NG, the new generation. So there are a number of airplanes affected here.
This is however relatively a minor issue. The FAA says it'll take 10 days or it should be fixed and inspected within 10 days. So the problem is not
major. The FAA says it can't take down an airplane, it can however damage an airplane slightly.
The bigger issue is however exactly what you said it is, it is another question of doubt, another hit to the public confidence not only in Boeing,
but also in the 737 aircraft. Now not only as we've said the 737 MAX but also the 737 NG and that is the major hit here as Boeing has been
struggling trying, working to get the 737 MAX back in the air after the Lion Air crash and the Ethiopian Air crash -- that is the bigger story
here.
Another hit to Boeing's confidence -- that and there's another issue here, Julia, an even bigger issue and that's the question of will the world's
airline regulators -- aviation regulators -- work in lockstep as they have? Or are we about to see a break here?
We could very well be looking at a situation where the FAA says, yes the 737 MAX is ready to go back into the air and the European say, no way. We
want a few more tests. We have a few more questions and that in and of itself would be stunning.
On top of that, the Chinese may also say the same thing. We want more time. We want more tests.
[09:25:05] LIEBERMANN: The difference is, in the Chinese case with the trade war looming, their questions maybe of a political nature instead of
an aviation nature -- Julia.
CHATTERLEY: Yes. And Boeing has really got no defense at this stage. Huge, huge challenges. Oren Liebermann, thank you so much for that update
there.
All right, let's move on. Another stock we're watching is Alphabet. It is sinking around 3 percent premarket on reports that the U.S. Justice
Department is preparing to launch an antitrust investigation with a particular focus on the search business, but also advertising practices.
Paul La Monica joins us now. Paul, this is fascinating because the sentiment shift in the United States since the last time they were
investigated has been huge. Walk me through what's the focus of this investigation, potentially, if we see it launched?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, as CNN's Brian Fung has reported, it does look as if the DOJ is preparing some sort of antitrust
probe of Google on or Alphabet, focusing on the search and advertising side.
Remember, Julia, Google also owns YouTube. It owns the massive, you know ad agency, Double Click as well. So there's a lot of moving parts at
Google. And this is a company that has become dominant along with Facebook, in search and online and mobile advertising.
And what I find fascinating is that obviously, President Trump has been very critical of the tech giants, including Amazon as well, particularly
because of Jeff Bezos' personal ownership of "%he Washington Post."
But I think that any criticism of big tech companies for how wide ranging they have become and the big businesses they dominate, that would have buy
in from Democrats as well.
CHATTERLEY: Yes, we shall see. Thank you so much. Paul La Monica on that. We will watch it at the open. The market open is next. Plenty more
to come. Stay with us. You're watching FIRST MOVE.
(COMMERCIAL BREAK)
GORANI: An extensive coverage of U.S. President Donald Trump's State Visit to Britain. We'll get back to Julia in a moment. Here at Buckingham
Palace, the Queen has just presented the President with an extensive collection of objects and artifacts to mark the occasion of this State
Visit.
Among other gifts, the President was given a First Edition of Winston Churchill's book, "The Second World War."
[09:30:06] GORANI: Remember Churchill was the one who first coined the term, "the special relationship." So that gift has huge symbolic weight
for both countries.
Now, what is happening now is that the -- Her Majesty, the Queen, and Prince Charles and Camilla, you can see them there as well inside
Buckingham Palace are being presented with a series of objects.
The formal gift exchange will happen a little bit later. That is a special event. Nic Roberson is here with more. What is the Queen showing
President Trump and First Lady, Melania.
ROBERTSON: Well, it just appears as if they've been looking at a colored engraved portrait of George Washington. They will be looking at a copy of
the Declaration of Independence. Other pictures of George III, letters that have been exchanged, important historical letters.
But I'm noticing a couple of very interesting items coming up that will be things that President Trump will -- that are clearly being put out,
particularly for President Trump that perhaps other leaders wouldn't see.
Remember President Trump's mother brought him up to respect the Queen. She liked the Queen. She was from the Outer Hebrides in Scotland, the remote
islands off the Northwest Scottish Coast.
There he will be shown a picture of a standing stone. This is symbolic in the Outer Hebrides, but from very close to where his mother grew up, and
also the MacLeod Tartan, The Book of Tartans will be open to the MacLeod Tartan, and his mother was a MacLeod.
So there is clearly an effort here to show the President things that will mean something specifically to him, some of the Queen's prized items, yes,
that show the connection between -- sorry, a connection between Britain and the United States, but things that will, I'm sure she will hope that will
please President Trump.
GORANI: Or more specifically related to the history of Donald Trump's family on his mother's side. On his father's side, the family is of German
heritage. And this is separate from the gift exchange in which the U.K. will then give a gift to Donald Trump, the President and vice versa.
Correct?
ROBERTSON: Correct. This is -- these are things that have been gifted to the Royal Family that they have collected over the centuries and this is
something that President Trump is now being shown and this is quite normal. When the Queen hosts somebody on a State Visit, this is often something
that that she would like to do that is traditional to do that she will give them an insight into, you know, into the ties between the two countries.
Again, it speaks to those issues. So this is obviously where Buckingham Palace has been renovated. She doesn't have full access to show him all
the room she might normally like to do during a State Visit.
But this will really give him a flavor of how close the United States and Britain has been over the centuries.
GORANI: Of course, it's a visit that is not without controversy. We'll get to that in a moment. But right now, of course, this is a state visit.
This is the highest honor that the U.K. can bestow upon a visiting Head of State.
I was speaking with Sir Peter Westmacott who is the former U.K. Ambassador to the U.S. He described how Nicolas Sarkozy was welcomed here on his
State Visit.
Before Donald Trump, of course, Barack Obama was and George W. Bush. In this case, you were mentioning Buckingham Palace, parts of it are being
renovated. And so therefore the President that is the reason the President is overnighting at Winfield House, which is the residence of the U.S.
Ambassador.
ROBERTSON: Which is a very beautiful residence and it's a prime location. It's something that the American, the United States has had for a long time
now, but in this -- but, you know, obviously, for President Trump, it perhaps would have been very nice to be able to stay one day in his memoirs
that he stayed at Buckingham Palace. This has always been something that's very important to him.
GORANI: I am just sorry to jump in, I just noticed Ivanka Trump there in the background and her husband, Jared Kushner. Also Prince Charles and
Camilla, both present at this particular event. It's 2:33 p.m., London Time and John Bolton I'm being told. I have not seen him, but John Bolton
I'm being told is also part of this and talk to us about some of these objects as well because you mentioned the Tartan, The Book of MacLeod.
Other artifacts as well?
ROBERTSON: Well, there's a book of Birds of America, Volume I, the Bird of Washington, that's an eagle, the water color of the bald eagle. The
Natural History of the Carolinas, Florida and Bahamas Islands open up the page of the red cardinal.
They will they be looking at Joseph Farington's account of George III and Benjamin West conversation about George Washington. All of these items are
what will have a special relevance, a special moment in history and the relationship between the two countries. These books open at certain pages,
like the Book of his mother's Tartan. She was from Scotland, a MacLeod Tartan.
[15:35:08] ROBERTSON: His mother was as MacLeod. Interestingly, the MacLeod side of his mother's family all lived on that Island of Scotland
within a few villages of each other for several generations further back.
President Trump is believed to be Donald named after a grandfather who was -- who was lost at sea not far from one of the pictures that he'll be shown
there, the standing stone from Stornoway. So all of this supposed to have a relevance for President Trump.
GORANI: And we see Her Majesty, the Queen there leading the President. We remember in July during that working visit, there was a bit of controversy
where he walked ahead of her during the Inspection of the Guards.
In this case, it seems as though at least so far, in the last few hours, this visit has gone off. There were a few tweets. But aren't there always
with the President, but has gone off pretty well, as far as protocol is concerned?
ROBERTSON: I think everyone is going to be interested to see what he tweets after this experience today. He really has been assured who else
gets to go in this room and be shown around here by the Queen. This is an absolute high honor.
So yes, those tweets at the beginning. But he does seem to have been on his best behavior, trying to observe protocols, trying to do what is
expected of him rather than what he wants, which is often his own want.
The Queen there, a very diminutive figure next to him and the First Lady, but he is paying attention. I'm sure there are a lot of Heads of State who
would wish President Trump paid as much attention to them and what they're saying as he is to the Queen right now.
But he does appear to be on his absolute best behavior. This is going to be a moment that he is going to be able to recall, that his family is going
to be able to recall whatever one's views of President Trump are, this is a moment that he is not going to forget in his life. This will be a special
moment for him.
GORANI: Yes, and neither will his children, because unusually the President brought with him four adult children and their spouses, which is
not something that's normally done.
ROBERTSON: And they will be going to the State Banquet tonight and that's a very big representation from the family of the President of the United
States at any gathering like this. It is unusual. This does seem to be in keeping as we understand, President Trump wants to expose his family to the
pleasures of the high office that he now holds.
So what they will be able to take away from that State Dinner tonight will have been to rub shoulders with some of the leading most -- well, the
leading figures of this nation.
GORANI: Now, interestingly, I am not seeing Prince Harry here, although we know he was part of the private lunch. We are seeing for instance there
father though, Prince Charles and his wife, Camilla.
This evening, I understand is when Prince William and Kate, his wife will be taking part in the Banquet Dinner. And the Queen is the one who chooses
which members of the Royal Family attend which events.
ROBERTSON: Absolutely. This is something that she choreographs. She knows how she wants it to go. It is very important I think that we saw
Prince Charles earlier walking along the Honor Guard with President Trump and it really does sort of -- it's not only symbolic of the changing of the
guard, as in the Royal Family that Prince Charles is being now bought into -- forced into more senior and significant role duties.
Of course, he has done this throughout his life. But with Prince Philip, taking somewhat of a retirement - semi-retirement back seat, Prince Charles
is stepping up and this is the direction of the Queen.
GORANI: Will Prince Philip be at the Banquet tonight? Do we know?
ROBERTSON: I don't know the answer to that.
GORANI: And with the changing of the guard in the U.K., one has to wonder by bringing his children, if the President is hoping for at least some sort
of passing on from generation to generation of status and power?
ROBERTSON: President Trump is all about his business. His family is part of that business. President Trump seems to live in the mode of wanting to
create a dynasty whether it's a political one or a financial one. He certainly came from a financial dynasty in as much as he inherited the
business from his father.
This does seem to be something that he wants to pass on and any high level connections that he can make, the people that he holds in high esteem is
something that he is going to want to do for his family to pass the benefits, the business benefits that it's not forgotten on anyone that both
the First Lady and President at times have expressed the interest that being President is also an opportunity to up the profile of the Trump
brand.
GORANI: Just to remind our viewers or to bring our viewers up to date who may be joining us.
[09:40:06] GORANI: This is one of the many ceremonial events that are taking place on this day one of the Trump State Visit. This is Royal day.
This is a review of past gifts given to the Royal Family, which include, as you were saying, Nic Robertson, certain items that would have special
significance to Donald Trump himself in his mother's side of the family that came from the Outer Hebrides in Scotland.
There are also American objects, "Books of Birds" and other interesting American objects, artifacts and historical pieces that were given to the
Royal Family and that are now being presented.
And this is an extended group because it's not just the President and the First Lady. It's also the President's daughter, Ivanka Trump and her son-
in-law, Jared Kushner. We're seeing Prince Charles there and his wife, Camilla.
I saw flashing past the camera, John Bolton, the National Security adviser, and I understand someone told me, Kellyanne Conway was there, though I have
not laid eyes on her.
ROBERTSON: Kellyanne Conway has been part of this lunchtime delegation. We understand, along with Steve Mnuchin as well.
GORANI: I see, all right, well, there you have it. This is just a look at one of these events. Coming up next will be an exchange of gifts, I
understand and we will bring that to you when it happens. And we will have a lot more analysis of also the relationship between the two countries and
what this State Visit will mean to that.
The state of the special relationship will be key as the two countries discuss the opportunity for what Trump referred to ahead of his visit as
quote, "a very big trade deal."
The U.S. Ambassador angered some on Sunday by suggesting that everything including access to the National Health Service for U.S. pharma companies
should be on the table in any such deal. And that is something that would be by any measure a very unusual thing for an American President to say.
Hadas Gold joins me now with more. Talk to us more about what the President said about any upcoming trade agreement between the U.K. and the
U.S. after Brexit.
HADAS GOLD, CNN BUSINESS REPORTER: Yes, Hala, you can't look at all this pomp and circumstance of this State Visit without understanding the
importance of what the future relationship with the United States will be for the United Kingdom post Brexit.
Now, I want to lay out here the importance of the U.S. trade relationship with the U.K. First, I want to talk about the top investors in the United
Kingdom for 2017. Number one was the United States with 26.3 percent, followed by the Netherlands at 17.1 percent; Luxembourg at 8.7 percent, and
so on.
When you look at the top export markets, though, for the United Kingdom, the number one export market for the United Kingdom is the United States at
18.6 percent. However, if you think about the European Union, and all of the countries there, added them all together, that rip, the E.U. bloc
represents a larger export market and trading partner for the U.K. than the United States.
But that just goes to show you this is going to be an interesting scenario that the U.K. will find itself in post Brexit in terms of trying to strike
these trade deals.
In March, the Trump administration issued a few documents clarifying what they would be seeking in a trade deal with the United Kingdom and that
includes changes to certain standards, things like agricultural products, that's the famous chlorinated chicken we've been hearing about for so long.
They want to change those standards to make it easier for U.S. products to make it to the United Kingdom.
However, on the other side, the U.K. has to deal with the E.U. standards which are much higher on things like agricultural products. And so the
U.K. will have to balance those two things together while trying to strike as beneficial of a trade deal, while they're at a much lesser power status
than they have been before because you're dealing with much bigger blocs with the E.U. and a much bigger country with much more power in the United
States.
Clearly, that is what the U.S. is trying to get in at a more favorable position. The U.S. Ambassador with his comments yesterday about how they'd
want American companies to be able to bid on contracts on the National Healthcare System here in the United Kingdom was met with a lot of backlash
already.
In fact, just a few minutes ago, the Mayor of London, Sadiq Khan, specifically called out this NHS idea that Ambassador Woody Johnson threw
out and said that it would cause the U.K. to have to agree to anything that President Trump wants. This will obviously be an issue as this visit goes
forward tomorrow morning.
President Trump is expected to meet with business leaders from companies that represent big companies both in the U.S. and the United Kingdom. But
all of this will also of course, be all determined on how Brexit actually turns out -- Hala.
GORANI: All right, Hadas Gold, thanks very much. And we'll catch up with Hadas a little bit later for more on another contentious issue and that is
of course Huawei.
For now, Julia, back to you. We'll see you in a little bit.
CHATTERLEY: Yes, great point on Huawei as well. Front and center as far as these border trade battles are concerned.
Right now, let me give you a quick look at what we're seeing for U.S. stock markets this morning. Under a bit of pressure, I think as investors digest
not only the bond market reaction to what we've seen over the last several sessions, but just how many fronts in this trade war exists right now.
Let's get some context.
[09:25:11] CHATTERLEY: Mohamed El-Erian is Chief Economic Adviser at Allianz. He says the Feds must signal the start of a rate cutting cycle
soon to avoid a costly policy mistake, and he joins us now. Mohamed, always a pleasure to have you on the show.
That's a bold call pushing the Federal Reserve here to signal that they're more concerned about the outlook than perhaps they have suggested. Talk me
through why you think they need to do this and then we'll talk about the Catch 22 that presents.
MOHAMED EL-ERIAN, CHIEF ECONOMIC ADVISER, ALLIANZ: It is very simple, Julia. The markets have already priced in three rate cuts this year. And
they've done so on account of three things.
One, is concern that the trade tensions are becoming even less predictable. Because of what happened vis-a-vis Mexico last week. Two, the European
elections mean a more fragmented regional and national political landscape, harder to implement pro-growth policies and three, the own dynamics of the
bond market.
And the concern here is even if it's not justified by the U.S. economic conditions, if the markets don't get a rate hike, they'll have a huge
tantrum that will then contaminate the economy.
CHATTERLEY: I mean, that's a huge problem for the Federal Reserve to have to face down. They have to do what the market is telling them or risk the
market having a tantrum because they don't get what they want. Is the bond market getting this right, whether it's the inversion of the yield curve,
and the risk that that perhaps either does or doesn't suggest some kind of broader slow down and recession riskier? What is the market getting wrong?
And what is it getting right here in your view?
EL-ERIAN: So I think the market has been conditioned for the last 10 years to expect the Fed to be their best friends forever, they are BFF. And when
they don't see the Fed reacting quickly enough, they force the Feds hand, and that's been the story of the last few years.
It is not a good story. You want the Fed to lead the markets, not to follow the markets. But unfortunately, this codependence has gone too far.
And now the market risks a self-fulfilling problem and that's one thing that I think that the Federal Reserve doesn't yet understand well enough.
And it's like you say, it's a very uncomfortable position to be in.
CHATTERLEY: Do we need the Federal Reserve and Jay Powell to suggest that this week because Jay Powell does have an opportunity to perhaps indicate,
"Look, the trade risks here are perhaps greater than we initially thought."
EL-ERIAN: So this is a really hard question for me to answer. If you look short term in terms of market stability. Yes, we need Chairman Powell to
indicate this this week.
If you look longer term, at some point, you've got to get out of this unhealthy codependence. So I think at the end of the day, the Fed will do
it short term, and will do what previous Feds have done which is simply kick the can down the road.
CHATTERLEY: Where does this unhealthy codependence between the markets and the Federal Reserve end? Because we could argue that compared to all the
developed markets, central banks, at least the Fed has managed to hike nine times. It has some cushion for the next slow down. That's a very
different story elsewhere in the world.
EL-ERIAN: It is and as much as we talk about the Fed, we should be spending a lot more time talking about the European Central Bank. They
face an even tougher policy outlook.
First, the economy is much weaker. I worry about what economists call "stall" speed growth, which means it is not going fast enough to maintain
enough momentum. Secondly, let's not forget that interest rate is already negative in Europe. Thirdly, the ECB is going through a major leadership
transition.
So as much as we worry about the Fed, Julia, remember the ECB, their complexity is much higher than that of the Fed.
CHATTERLEY: Yes, and we're going to hear from them this week, too. Mohamed El-Erian of Allianz, I have to say goodbye to you. I apologize
that we got trumped by President Trump and the Queen today, but we'll get you back soon. Thank you so much for that.
More to come on FIRST MOVE. Stay with us.
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[09:52:01] CHATTERLEY: Welcome back to FIRST MOVE and I want to get straight back to London where President Trump is on his official visit to
the U.K. Hala is there with all the details for us. Hala, it's a jam packed schedule. What can we expect in the coming hours?
GORANI: Well, he doesn't have a lot of downtime because after having been escorted by the Queen through the gift review at Buckingham Palace, he is
on his way shortly to Westminster Abbey and that's where he will lay a wreath at the Tomb of the Unknown Warrior.
Leslie Vinjamuri, Associate Fellow at SOAS and head of the U.S. Programme at Chatham House joins me now. What jumps out at you? And just in the
first few hours of this visit, of course controversy accompanying the President usually wherever he goes, but the U.K. is making a huge effort
here.
LESLIE VINJAMURI, HEAD OF THE U.S. AND PROGRAMME AT CHATHAM HOUSE: It is and yet, to me it actually strikes me that the crowds aren't as big as I
would have imagined. Of course, it's a deeply controversial visit. This is a President who as we know has only a 21 percent approval rating in the
U.K., isn't popular, people have been very worried about security.
And the timing is not what was planned, but very difficult for the U.K.
GORANI: Well, the Prime Minister Theresa May is on our way out. She is a lame duck Prime Minister, we don't know who will lead the Conservative
Party and thus, become the next Prime Minister. But the President has already weighed in in favor of Boris Johnson, a man who by the way, called
them unfit to be President in 2016.
VINJAMURI: Yes, well, the President moves on very quickly, depending on where he sees a potential win. And I think with Boris Johnson, he sees
somebody who very seems very independent, not constrained by any sort of deeper political expectation, somebody who he could do a deal with.
And I think somebody, you know, who has made it very clear that he wants a hard Brexit for Britain. This is what the President wants. He wants
independent nations that he can deal with anything. He has made it very clear that for a U.S.-U.K. trade deal to go forward, Britain needs to get
itself out of the customs arrangement and become completely independent.
GORANI: But the price of "complete independence," quote, unquote, and might be some level of dependence on big trading partners like the United
States and to hear Donald Trump describe a potential deal would have to include access to markets. That the U.K. as part of the E.U. doesn't open
up to American say pharmaceutical products.
VINJAMURI: Yes, that's absolutely right. We saw in that interview with Ambassador Johnson yesterday or on Sunday, that yes, there will be an
expectation that all sectors of the U.K. market will be open. It's a slightly odd decision to insert that into the debate right now because of
course, it risks a backlash from the British public, when you start to talk about pressure on private investment, international investment in the NHS.
If you are trying to move the U.K. towards a harder Brexit, why make that intervention now? It's not a very strategic choice, actually.
GORANI: Oh, well, thank you very much, Leslie Vinjamuri and there will be many, by the way, business leaders, industry leaders taking part in this
State Visit whether from the pharmaceutical industry and also the armaments industry as well. Thanks so much for joining us.
Julia, back to you. There's going to be a lot to talk about in the coming hours. The President on his way shortly to Westminster Abbey, back to you.
[09:55:08] CHATTERLEY: Absolutely, and we look forward to you bringing it to us. Thank you so much for that, and as you pointed out there, the
timing could have perhaps, been better for this visit. But there it is anyway.
All right. Let me give you a look of what we're seeing in terms of the market action here today.
Obviously, lots concerned investors. Right now, it's the NASDAQ under pressure, some seven tenths of 1 percent as you can see there. Watching
D.C. today, of course, too, for headlines on the U.S.-Mexico talks. The Mexicans trying to avert the threat of tariffs hitting imminently, of
course, June the 10th, the date there.
And of course, I'll be back in a couple of hours' time with "The Express" to bring you all the latest not only on the market action and the stories
that we're following, but of course, what's going on over in London and the Queen, visiting with President Trump and Melania, of course, too. So stay
with CNN. We've got you covered.
For now though, that's it for the show. I'm Julia Chatterley, you've been watching FIRST MOVE, time to go make yours.
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