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First Move with Julia Chatterley
President Trump Arrives In Japan Ahead Of A Pivotal G20 Says The Chinese Put Their Concessions On The Table; Bad News For Boeing As More Flaws Found On The MAX 737; Democrats Divided. Aired 9-10p ET
Aired June 27, 2019 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00] ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: Live from the New York Stock Exchange, I'm Eleni Giokos. I am in for Julia Chatterley
and here's what you need to know. Trade truce: President Trump arrives in Japan ahead of a pivotal G20 says the Chinese put their concessions on the
table. Bad news for Boeing as more flaws found on the MAX 737 ahead of course of it returning to air and Democrats divided. We've live in Miami
as candidates try and break away from the pack. It's Thursday. Let's make a move.
Welcome to FIRST MOVE, and it's a really important day on the G20 front. That's when the meeting kicks off in Osaka, Japan and trade truce or deal,
I guess that is the big question, and that of course is the discussion here and around the world ahead of a very pivotal meeting between President
Trump and President Xi, are they going to be able to compromise and come to a decision? That is going to affect markets throughout the day here in New
York.
Let's check in to see how the futures are faring at the moments in premarket trading. We are seeing a slight positive open for the U.S.
stocks. Many news headlines we need to focus on. Upcoming talks of course under the spotlight and "The Wall Street Journal" is reporting that the
Chinese are set to present a list of preconditions for ending the trade war, which includes lifting the U.S. export ban on Chinese tech giant,
Huawei.
"The Journal" also says China is demanding that the U.S. lift all the tariffs it has slapped on China thus far. President Trump said on the
record yesterday that he is ready to impose additional tariffs on China, if he is not satisfied by what takes place this weekend. So the stakes are
pretty high.
That said, U.S. officials tell CNN that they're hoping for some kind of interim trade truce that would delay further tariffs and they are hoping
both sides will agree to a timeline for new talks.
So in short, with so many dynamics playing out right now, there's also a lot of uncertainty and that could mean subdued markers as we had closer to
the end of the week.
And of course, it is also the last trading week of the second quarter as well. We've also had some economic data out of the U.S. first quarter GDP
coming in pretty strong at 3.1 percent. Now, is expected second quarter GDP is not going to hit the same levels that it's going to go down to
around 2 percent, and that, of course, being impacted by the trade negotiations with China, the trade war issues that we are seeing, and this
of course is going to be a very important piece of economic data that is going to be taken into consideration as the Fed is considering rate cuts
going forward.
So it's now time to get into the drivers. We need to start with the G20 that is going to be a really big thing everyone is focusing on over the
next couple of days. President Trump arriving in Japan, he also arrives with a whirlwind of many news headlines. We've got Nic Robertson standing
by for us in Osaka.
Nic, we've heard from the Chinese reports saying that they want various conditions before they even perhaps agree to a truce or a deal. What is
the likelihood of the U.S. compromising?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Well, there seems to be a compromise of sorts in the air already at least that's what U.S.
officials are telling CNN, officials that have knowledge of the conversations that have gone on with the trade teams that are dealing with
China on this issue in the recent week or so.
One of those conditions does seem to be that for President Xi to have this meeting with President Trump. He wanted guarantees that President Trump
wasn't about to slap additional tariffs on those additional $300 billion worth of trade with China. So that was an important precondition it seems.
"The Wall Street Journal" is obviously reporting other conditions.
But the way that CNN understands it at the moment is this, that the expectation would be and again, anyone that we're talking to who is
commenting about this says really, at the end of the day, it does come down to President Trump. No one knows what he will do when he gets into that
room with President Xi.
But the expectation would be that there would be a formula somewhat similar, if you will, to the last G20, Buenos Aires in Argentina and that
formula would be that by agreeing not to slap on more tariffs, whatever the extent of their sort of timeframe for that may be and then Argentina or the
United States said it was three months, China didn't put a length on it, and it lasted about five months until May.
[09:05:10] ROBERTSON: Then, of course, the United States upped its tariffs on those $250 billion worth goods, 25 percent, but the expectation now
would be that if you get this agreement not to increase the tariff -- not to put tariffs on these $300 billion worth of goods, then you can restart
the talks more in earnest if you will. That's where we seem to be.
GIOKOS: And it's interesting, because President Trump says he is ready to impose 25 percent on $300 billion, which is interesting, because we know
that they're trying to get some kind of resolution, at the same time, we know that the deal was almost complete in May and we're just constantly
moving backwards. We're taking a step forward and taking five steps back.
And the question is, you know, how much confidence do we have in the meeting that will occur on Saturday? And I guess, just how much do they
actually want to see this happening? Because at the end of the day, they're also trying to assert their power, and change the power dynamics
that China has been able to achieve over the last decade or so and the growing strength of that economy?
ROBERTSON: Look on the face of it, if you trust what "The Wall Street Journal" is saying that China is turning the tables on President Trump as
President Trump has been making the demands until now.
Now, China, President Xi Jinping has raised the stakes saying, you know, stop your campaign against Huawei, allow them to trade goods, and this is
impacting their sales, not just in the United States, but potentially across to the rest of the world. Stop this campaign.
So China is turning the tables. Why does Xi Jinping think that he can do that? Is it because President Trump is going into an election cycle? Is
it because he feels he would be weakened there? Is it because he feels that at this G20 Summit, President Trump is going to hear from other
leaders who are concerned about, you know, about a global recession.
If there was a global recession that would be terrible for President Trump's reelection prospects. Is that the gamble here that President Xi is
working with? We don't know. But what is very clear, Xi is now trying to turn the tables on Trump and clearly, he feels he has got some wind in the
sails if he is going to do this.
GIOKOS: Right. Nic, thank you very much for your reporting. Great to have you on the show. All right, let's turn our attention on to Boeing.
We've got more bad news coming through about the company. Another flaw found on the MAX 737, and it sounds very similar to what we heard before.
It's the flaw of the software that actually pushes the nose down of the aircraft and just looking at what's happening on the share price front,
Boeing is down around two percent in premarket trade. We've got drew Griffin joining us now.
You know Drew, we look at it from you know, just a consumer perspective, it looks like the software of this aircraft is fundamentally flawed and it
doesn't inspire confidence towards the testing or even this aircraft returning to air. Is it similar to what we saw previously, is this also a
completely new flaw that we have to contend with?
DREW GRIFFIN, CNN SENIOR INVESTIGATIVE CORRESPONDENT: It is a new flaw, a serious flaw, Eleni and Boeing engineers have to go back to square one and
try to fix it, another problem before this plane can be recertified and flying.
What happened according to our sources is that U.S. government test pilots working in a simulator found a problem with microprocessors or a
microprocessor onboard the 737 MAX that when it fails, it sends the plane into a downward position, much like that MCAS system did, involved in the
Ethiopian and the Lion Air crash.
This is a separate incident though, and the pilots could not recover within a matter of seconds. Because of that, the FAA says, "Boeing you really
need to fix this." Boeing says it understands, it needs to fix this, put out a little note to us last night, saying that the Boeing engineers are
working on a software fix, which according to my sources aligning may be premature. They're trying to determine amongst the FAA inspectors, whether
or not this is just a software fix, or whether or not microprocessors in 737 MAX's will need to be replaced. It is a big issue. It is going to
delay again, the recertifying of this plane.
GIOKOS: Drew, thank you very much for that update. All right, turning our attention now to the Democratic debates, and we saw candidates go head to
head ahead of the 2020 campaign, each of them trying to send out in their crowded field. It was a civil debate compared to some of the ones we've
seen in the past.
I mean, we did see a few shocking comments and of course people did butt their heads on healthcare and even immigration.
At one point, we even saw the candidates start to speak Spanish. Take a listen.
(BEGIN VIDEO CLIP)
SEN. ELIZABETH WARREN (D-MA), PRESIDENTIAL CANDIDATE: I think of it this way, who is this economy really working for? It's doing great for a
thinner and thinner slice at the top.
[09:10:10] WARREN: It's doing great for giant drug companies. It's not doing great for people who are trying to get a prescription filled.
JULIAN CASTRO (D), PRESIDENTIAL CANDIDATE: You are concerned about human trafficking and drug trafficking, but let me tell you what, Section 18 --
Title 18 of the US Code, Title 21 and Title 22 already cover human trafficking, but I think you should be -- on this issue.
BETO O'ROURKE (D), PRESIDENTIAL CANDIDATE: If we apprehend a known smuggler or drug trafficker --
REP. TULSI GABBARD, (D-HI), PRESIDENTIAL CANDIDATE: The Taliban was there long before we came in. They will be there long before we leave.
O'ROURKE: This economy has got to work for everyone. And right now, we know that it isn't. (Speaking in Spanish). (Through translator): We need
to include every person to make the economy successful in order to do that we need to include everyone in our democracy.
(END VIDEO CLIP)
GIOKOS: All right, so economy took center stage, and many candidates talking about the fact that the U.S. system is actually rigged to help the
rich and the powerful. We've got M.J. Lee standing by for us. And I guess the big question is here, did we see any viable candidates overnight that
could run for presidency and head up this country?
M.J. LEE, CNN POLITICAL CORRESPONDENT: Well, you know, I think all 10 of the candidates who were on stage last night would probably argue, yes, my
goal is to try to show that I can take on President Trump come next November.
But what was really interesting about last night is that we actually didn't have a lot of candidates invoking President Trump's name. They didn't go
out of their way to criticize the President or go after his policies. They mentioned him maybe in passing, or sort of in an implicit way, and I think
that just goes to show that at this point in the campaign, so much of the fight, and so much of the race right now, are the Democrats trying to
distinguish themselves against each other.
The field is so big right now. The fact that we have 20-plus candidates, it's pretty remarkable. And because it is just the summer, a lot of the
candidates are just trying to get the voters to get to know them, to try to talk about their policies, and especially particularly for a forum like
last night, the candidates really wanted to have breakout moments.
So for some of these lower tier candidates who have had trouble registering in the polls, their singular goal last night was to try to have a moment
that would really stick in the minds of voters. And for some of them, they were actually successful in doing that.
GIOKOS: So M.J., who were the winners and the losers here? Did anyone really stand out and breakthrough?
LEE: Well, I think the candidate we were certainly watching very closely was Elizabeth Warren, because of our front runner status, at least among
the 10 that took the stage last night. And because the focus was just going to be a little bit more on her, because she was center stage.
And it seemed clear that she came out of last night pretty unscathed. She didn't have any major stumbles. She held pretty steady to her message, and
not a lot of the candidates really were taking -- making punches at her, right? They weren't really taking her on.
And then I think the winners last night, were probably folks like Julian Castro. He is a candidate, the former Housing Secretary, who has not been
successful in trying to, you know, gaining momentum and gaining support from supporters this early on in the stage in the campaign.
And because he was able to really tackle the issue of immigration in such a passionate way, it's clear that that resonated with people. And it was a
moment that I think will stick with voters who previous to last night probably didn't know that much about him.
GIOKOS: Yes. M.J., thank you for that update. Appreciate it. All right. Let's now take a look at the news making headlines around the world.
Democratic hopefuls are blaming Donald Trump for the death of a father and toddler who drowned at the Mexico-U.S. denouncing the President's
immigration policies as inhumane. Mr. Trump blames the democrats for the tragedy.
(BEGIN VIDEO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: I hate it. And I know it could stop immediately if the Democrats change the law. They have to
change the laws. And then that father, who probably was this wonderful guy with his daughter, things like that wouldn't happen. Because that journey
across that river -- that journey across that river is a very dangerous journey.
(END VIDEO CLIP)
GIOKOS: At least one person was killed and several more injured in two suicide bombings in the Tunisian capita, Tunis. The attacker targeted a
police patrol in the city center according to state-run media and officer died in the blast. Ten minutes later, a second bomb went off near a police
station.
Now there are renewed concerns for the health of German Chancellor Angela Merkel after she was seen to be shaking in public for the second time in
less than two weeks. Last time it happened, Mrs. Merkel said, she was dehydrated. After this latest incident, her spokesman said she's well.
[09:15:15] GIOKOS: All right, so coming up on FIRST MOVE, the art of the deal, Donald Trump takes on the world at a gathering of the G20 leaders in
Japan and taking tech to new heights, in the mountain air of Aspen, Colorado, Mark Zuckerberg, his thoughts on Facebook and privacy. Don't go
anywhere.
(COMMERCIAL BREAK)
GIOKOS: Welcome back to FIRST MOVE live from the New York Stock Exchange. I'm Eleni Giokos. Let's take another check of U.S. futures. Still looking
like a pretty mixed day. We've got the Dow pointing down and S&P futures looking up a quarter of a percent.
Shares of Boeing set away on the Dow today, that's why we are seeing a bit of loss there. Boeing shares are set to fall around three percent or
concerns over a possible new flaw in the 737 MAX computer system.
In the meantime, the U.S. and China are stacking up their positions before this weekend's trade meeting between President Trump and President Xi.
U.S. officials tell CNN that they're hoping to reach some sort of trade truce that would avoid new tariffs and establish a timeline for new talks.
Now, "The Wall Street Journal" in the meantime is saying that China will present a list of preconditions that it wants to see before a final trade
deal including the total lifting of the U.S. export ban on Huawei.
Joining us now, we've got Peter Cecchini. He is the Global Chief Market Strategist at Cantor Fitzgerald. Did I say that right? Cecchini?
PETER CECCHINI, GLOBAL CHIEF MARKET STRATEGIST AT CANTOR FITZGERALD: Cecchini, but you did well. You were 95 percent of the way there.
GIOKOS: Thank you. It is so good to have you on.
CECCHINI: It is nice being here.
GIOKOS: Let's start on the trade negotiations. Saturday is going to be really pivotal and here you have news that China is already putting
concessions on the table. It's all about whether President Trump wants to compromise on this.
[09:20:10] GIOKOS: To what extent is this going to weigh on sentiment? Because this has been dragging on, many people say for far too long?
CECCHINI: Well, you know, the negotiations are complex. They involve not just trade issues, but geopolitical security issues, as we know,
cybersecurity issues, intellectual property issues. And frankly, it should take some time to negotiate these issues, because it is a multifaceted
negotiation.
So I would be very surprised if we came away with any kind of a deal. I think the best we can hope for is an agreement to continue to negotiate,
and I think it will drag on for quite some time.
GIOKOS: But to what extent is that hurting market sentiment, do you think? Because I look at the 10-year yield, and you're seeing it hovering around
two percent and even breaching that two percent level. We're seeing markets doing really well. So you're getting conflicting reports about
what the people are really feeling?
CECCHINI: Well, I think trade has to some extent, been responsible for a bit of the market volatility we've seen. But it's really more of an
exacerbating factor, relative to both growth and market volatility.
It is our view at Cantor that we're already beginning to see a slowdown here in the U.S. data, again, exacerbated by trade, but not caused it, same
thing in China. The trade is exacerbating they're slow down, but not causing it.
GIOKOS: So Volatility Index, that's been really interesting to look at. I mean, over, you know, since January, we're not looking that bad, but it is
increasing and volatility is on the rise.
CECCHINI: Yes.
GIOKOS: It's a good and a bad thing because you can play the volatility, you know, you're better -- but at the end of the day, that's just of
course, it shows a lot of uncertainty.
CECCHINI: Well, I think it is showing more uncertainty. And what's interesting is, is that the VIX has actually been better than one would
have expected near market highs. In other words, it didn't press into that floor of 10 that we had seen when the markets were in a really bullish
phase.
So I think they're at an inflection and I'm actually fairly bearish into the second half of the year. And I think, to your point, I think
volatility is telling us that investors are more concerned.
GIOKOS: Okay, so we've got GDP numbers out. First quarter, 3.1 percent growth. We know that it's going to slow in the second quarter, that's
inevitable, but the question is, how much cognizance is the Federal Reserve going to pay to this figure in terms of getting rates lower? Which of
course the market has really priced in significant rate cuts rates on it, which we haven't received?
CECCHINI: Well, I think that figure is old news, all right? I think what the Fed is going to be looking at is the inflation data, the consumption
data. We've got a little bit of that this morning as well.
The Feds are going to be looking at the employment data that we're getting next Friday, and I think the employment data in particular is going to be
very important to the Fed. And what they're looking and why they've pivoted to from a hiking mode in December to cutting mode now is because of
the global growth deceleration which is really pretty pronounced.
GIOKOS: So what are you doing right now in terms of asset class allocation? We're seeing so much buying into gold, we're seeing the S&P
looking overheated many people say and then of course, the Dow floating all-time highs last week. So what is the next move?
CECCHINI: Well, for just a little bit of context, my narrative for this year is really a tale of two halves. Strong equity markets in the first
half off the December lows rallying up to 2,800-ish. We're obviously north of there right now.
But at that level, I feel like equity markets are pretty fully valued and that risk reward is pretty poor to equities at this point.
GIOKOS: So looking expensive right now.
CECCHINI: Yes, yes. The interesting trade was at one point to be reallocating from equities and into short duration U.S. Treasuries when
they were at about 240.
GIOKOS: Yes, I was going to say there's no yield --
CECCHINI: But right now, that trade is not particularly interesting. And so I really think one should be in a wait and see mode, have a little bit
more cash on hand than one might normally have. And frankly, look to think about hedging.
GIOKOS: So rush to safety? Gold?
CECCHINI: You know, gold is tricky. I think gold has had quite a rally. I think it's a bit overbought here. But here's the thing, if you actually
look at the amount of negatively yielding securities globally, it correlates very well to the price of gold. And there are about $13
trillion or $14 trillion worth of negatively yielding securities globally. It's a stunning amount.
GIOKOS: Fantastic. Peter, thank you very much for your time.
CECCHINI: Thank you.
GIOKOS: Good to have you on the show. Much appreciated.
CECCHINI: It was nice being here. Thanks.
GIOKOS: All right, so Bitcoin volatility is back -- big time. The cryptocurrency surged on Wednesday to close to $14,000.00. Within minutes,
it then plunged by nearly $2,000.00. It recovered a lot of it over the next few hours, but it stalled heavily again trading well below the $12,000
mark. And right now, it's down just over six percent.
We've got Paul La Monica joining us on this wild ride. Bitcoin equals wild rides. I think that's what we've kind of noticed with this cryptocurrency
and the question is, why are we seeing this coming through?
I mean, we know that institutional investors have been buying up. We know that Facebook has also had an impact, but no one can really explain why
people are getting in and out so aggressively.
[09:25:00] PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think it is difficult, if not impossible, Eleni to try and figure out what Bitcoin is
doing on any particular day because it has been so volatile and you are right. There clearly has been more institutional support for Bitcoin and
other cryptocurrencies.
The Facebook Libra news really, I think, in the mind of many crypto investors validated the cryptocurrency space in general and Bitcoin first
and foremost and then again also a lot of concerns about interest rates where they're heading. You know, they're going to be going lower probably
in the U.S. and around the world.
We've got bond yields falling, negative bond yields in parts of Europe and Japan. That is good, I think for Bitcoin as well, but Bitcoin is highly
speculative and that's not going to change anytime soon.
And you have to keep in mind that Bitcoin right now, even around 11,000, that's well below the $20,000.00 or so peak from December 2017, but it's up
from $3,700.00 or so at the beginning of the year. So it's just an amazing ride.
GIOKOS: Exactly. And Paul, you know, when we hear the Bitcoin bulls talking about where this crypto is going, they're talking about crazy
numbers in the next few years, which haven't materialized exactly, so let's just take a look at where you think this is going, very quickly.
LA MONICA: Yes, it wouldn't shock me if Bitcoin topped the record high from late 2017 at some point in the next year, but it also wouldn't shock
me if it plunged back to $5,000.00. That's the problem.
Bitcoin is still this wild unknown for many big investors and obviously average consumers, so it's really impossible to figure out what's next.
GIOKOS: Fantastic. Thank you very much. Paul, we're going to short break. Right after this, the opening bell. Stay with us.
(COMMERCIAL BREAK)
[09:30:00] GIOKOS: Welcome back to FIRST MOVE. I'm Eleni Giokos, live from the New York Stock Exchange. That was the opening bell. Let's take a
look at how U.S. stocks are faring as we head into the trading session.
Remember, it's all about the G20 meeting and Trump and Xi getting the conversation going on Saturday. Dow Jones slightly higher, S&P is hitting
up three tenths of a percent, a bit of reticence coming through. It's not surprising. Just so much news flow.
And remember tomorrow is going to be a very busy trading session in terms of what we are seeing on the volume front, the small cap index is going to
undergo a rebalancing. So investors are going to be preparing for that.
Let's take a quick look to see how the big movers are faring in today's session. And as you can see there, Netflix is up four tenths of a percent,
and we're seeing that the company is talking about the streaming service could see dramatic international growth in the next few years. That's in
light of the company's potential to penetrate mobile only households.
Boeing is under pressure, down around two percent. No surprise there as well. The company says that it found a new flaw on its computer system
that runs the company's troubled 737 MAX plane. The defect can push the aircraft's nose downwards. It is expected to further delay the jet's
return to service.
In the meantime, Walgreens up three and a half percent. The Dow components earnings fell by less than expected boosted by higher prescription drug
sales. The CEO called it a recovery after results slumped in the previous quarter.
Climate change, Iran, trade -- these are just some of the key issues on the G20 agenda, only to happen and just over a few days. And at the hearts of
them stands on man, U.S. President Donald Trump. He touched down in Japan a few hours ago, amid a flurry of headlines on U.S.-China trade.
We've got Clare Sebastian standing by and Clare, as the G20 kicks off, businesses going to be watching this so closely. And I guess there's
expectations that we will probably hopefully see some kind of clarity.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Eleni, businesses have a lot to lose here not just from the reality of tariffs and potentially new
tariffs. We know that they've already started to hit home. They've affected businesses ability to plan. They've even affected earnings in
some cases.
The uncertainty is just as corrosive as the reality in many cases and on the news out this morning that the potential preconditions that are being
reported, I think that there might be some hope for that to actually happen among businesses.
If as, "The Wall Street Journal" is reporting, China is demanding a lifting of the ban on Huawei, that might actually be a bit of a relief to the
business community because of course, the worry was that there might be retaliation targeted at individual U.S. companies.
But Eleni, businesses have a lot to lose not just because of the prospect of new tariffs. I think, it's worth pointing out at this stage, as we head
into this crucial meeting that businesses are also looking at the core mission of the U.S. here, their ability to get China to back down on some
of its unfair practices, to ease the ability for U.S. companies to operate in China.
I spoke to Jacob Parker, he is Vice President of the U.S.-China Business Council, which represents about 200 American companies doing business in
China. This is what he had to say about that.
(BEGIN VIDEO CLIP)
JACOB PARKER, VICE PRESIDENT, U.S.-CHINA BUSINESS COUNCIL: We see the overarching issue that our companies are concerned about and that President
Trump I think is really trying to get at is this un-level playing field on which foreign companies operate in the China market.
Just by being a Chinese company, your administrative licenses are granted more quickly, your products are approved more quickly, your environmental
impact assessments happen in a month and a half instead of a year.
So there's advantages from being a Chinese company in the China market that foreign companies frankly, can't always enjoy.
So the tactics are not great, but the objectives are clearly something our companies are supportive of.
(END VIDEO CLIP)
SEBASTIAN: So businesses tend to support the ends, not the means, though, I think what a lot of businesses would have rather the President had done
is to build a coalition with other countries, the likes of the European Union and Japan and use that kind of power to try to pressure China to
change its ways rather than these unilateral tariffs -- Eleni.
GIOKOS: Yes, and Clare, I mean, I know that a lot of businesses are doing scenario planning, and there's actually a barometer that you've been
tracking to show the likelihood of a deal. What are you finding out?
SEBASTIAN: Well, I mean, in terms of market expectations, any Eleni, we see, of course, with the market this morning that the likelihood of
potential truth is rising, but in terms of an actual deal, Goldman Sachs has a barometer causative of U.S.-China trade tensions and the likelihood
of a deal in mid-April when we saw that negotiations seemed to be on track.
It was 80 percent by May 24th, after the U.S. President raised the tariff rate on China, it dropped to seven percent. Now, it's back up a little bit
to 15 percent. Hopes have been going up a bit. The fact that he walked back those tariffs on Mexico helped a bit, but still only 15 percent.
[09:35:01] SEBASTIAN: So I think the markets aren't expecting any major breakthrough, but there certainly is hope that they will restart
negotiations and that there is a potential, perhaps, to suspend new tariffs as those negotiations continue.
GIOKOS: All right, Clare. Thank you very much for that update. All right, so blackberry wants to boost its business with Beijing. The former
phone maker is walking the tightrope between its Five Eyes, customers and trade tensions with China.
Earlier, I spoke to BlackBerry's Chief Executive, John Chen. And he told me that there's room to grow in the software industry.
(BEGIN VIDEOTAPE)
JOHN CHEN, CEO, BLACKBERRY: This year, we will do about a billion dollars, a little bit over a billion in software, and particularly cyber security
and security software. And I think there's a lot of room to grow in that space.
Hardware is -- it's reasonably a difficult market especially like you've talked about, the supply chain right now because of all the U.S. and
Canada, U.S. and Mexico and U.S. in China. We have a lot of discussion on different parts of the supply chain, and I think -- I'm actually a little
bit glad that we're not in the hardware today because of the logistics and the supply chain thing, part of the problem.
GIOKOS: Absolutely. Okay, so national security, one of the big things that is playing out when it comes to negotiations between the U.S. and
China regarding the trade negotiations, how do you see this playing out? And is it affecting your business in any way? I know you're in the
software game, but you've got customers around the world?
CHEN: Yes, good question. You know, because of the fact that Blackberry is a big supplier of mobile software and security software to the Five Eyes
countries that share intelligence, and most of all the G20 countries, we don't do a lot in China, part of them is export reasons, part of them is
the Chinese government also wanting to have a control of their own security system, which we respect.
I would like to do more with the Chinese government, but at this point in time, we haven't done that, and so given that, we're not really highly
impacted at all.
GIOKOS: You said earlier that you want to get into China, you would like to work in China, how soon can you pull that off? And can you do it
knowing that, you know, your home base is basically you know, going up against the Chinese in a sense? We've seen retaliation on both sides.
CHEN: Yes, yes, of course, we will have to work you know collaborative with all my major customers in the U.S. and Canada and U.K. and you know,
Australia and so forth.
So this is why we haven't been big in China or get any traction there. But you know, I'm hoping somewhere around the world that we could work on
things that are not maybe as sensitive. So this is just something that is a desire more than what we're doing today.
(END VIDEOTAPE)
GIOKOS: All right, so rare praise for Donald Trump's foreign policy. My next guest warns against underestimating the President, that coming up on
FIRST MOVE. Don't go anywhere.
(COMMERCIAL BREAK)
[09:41:26] GIOKOS: Welcome back. So President Donald Trump has frequently left observers baffled by his foreign policy moves, but as he touches down
in Japan for a crucial G20 meeting, my next guest says it would be a mistake to underestimate him.
Joining me now is Niall Ferguson, senior fellow at The Hoover Institution at Stanford University and he's also an author. All right, so Niall, thank
you so very much for joining us today.
You know, the last time you and I spoke, it was in South Africa and it was just as Donald Trump was elected President, and you basically called a
strong economy, strong market stimulus within the market as well. And you also were talking about trade wars.
I mean, looking on a few years later, has anything surprised you over the last few years in terms of what we've seen from President Trump.
NIALL FERGUSON, SENIOR FELLOW, THE HOOVER INSTITUTION, STANFORD UNIVERSITY: Well, I don't think anybody could claim not to be surprised by President
Trump. It's really his specialty to surprise commentators. But as you said, my expectations at the outset of the Trump administration have
roughly been met.
Those people who predicted a stock market catastrophe on the evening of the election, like Paul Krugman, look pretty foolish by about 11:00 a.m. on
November 9th, 2016. There has been fiscal stimulus, though the Keynesian hate to admit it. That's exactly what's come out of the administration.
But I think the really striking feature is that it took President Trump about a year, maybe more than a year really to get his Chinese policy
figured out and the trade war, the use of tariffs as a lever to try to change Beijing's behavior that only began last year.
So it was a little bit of a delayed action. But I think it's become the defining feature of Trump's presidency. The thing that future historians
will writes about, maybe rather more than today's journalists. He has fundamentally altered the direction of U.S. foreign policy, particularly
with respect to China. But also I think, with respect to the Middle East.
Most people and I guess probably the majority of contributors to CNN tend to emphasize the President's many weaknesses and I don't dispute those, and
I'm not here to defend his personality or his conduct and all kinds of respects.
But if you ask the question, is this a substantive presidency in terms of foreign policy outcomes, then I think you have to concede that it has been
so far.
GIOKOS: It's interesting, you say that, but at the end of the day, you're seeing this trade war or the trade debate that is ongoing, having a
detrimental impact on the economies that have been stuck in the middle of it all. It has created uncertainty within the emerging market space. Many
say it's a power play about just asserting the strength of the U.S. on the international stage.
And you've got this delay in negotiations. There's a lot of to and froing. There's no real you know, drive to try and find a resolution. Is this just
the power play, do you think, Niall?
FERGUSON: Well, power is important, and one shouldn't lose sight of the fact that in many ways, it's the most important thing, the alternative
strategy, which is really what the Obama administration had ended up with, it was just to acquiesce in China's rise to be number one, not only
economically, but geopolitically.
You can be a free trader as I am, and still see the rationale of using tariffs to try to rein China in, to try to change its behavior, to stop it
engaging in the theft of intellectual property to try to alter the way in which it essentially breaks World Trade Organization rules with subsidies
to state-owned enterprises. I could go on. So I think the key here is --
GIOKOS: Do you think that we will be able to change China -- will we be able to change China's ways. I mean, for a very long time before this
trade war, people were saying China is becoming very strong.
[09:45:10] GIOKOS: You know, it's intervening in its currency. We don't trust its data. Is this the right way to approach China?
FERGUSON: Well, it's not. It seems to me as if there aren't many other ways to get the attention of policymakers in Beijing. And you can't deny
that President Trump has achieved that. Here we are on the eve of G20 in Osaka, and its President Xi, who has to come up with proposals to try and
restart the trade negotiations.
The Chinese are extremely worried that this is going to be another non- event where there really won't be anything agreed, and President Trump is continuing to threaten to raise tariffs on the remaining Chinese imports to
the U.S. which haven't yet been tariffed.
So there's no question that he has got China's attention, and we know that some of the concessions that have been made by the Chinese negotiators in
the course of the past year are meaningful. They're going to significantly increase, for example, their imports from the United States to reduce the
bilateral trade deficit.
And I think there will be meaningful changes. There will have to be meaningful changes not only in terms of intellectual property rights, but
also in terms of the Made in China 2025 strategy.
So I think you can't deny that this is a much more effective approach to the China challenge than we've seen from previous administrations, not only
the Obama administration, but the administration before it.
GIOKOS: Niall, very quickly, because we're running out of time, and I have to ask you this question. You had said to me, that President Trump has
basically captured the bad mood and the ugly mood of Americans. We are heading up to reelection, we are heading up to the elections, is he going
to get reelected? What do you think is going to happen? Can Democrats go against a Trump economy and fight against that?
FERGUSON: I think the economy is not going to be growing as strongly this time next year as it is now, but I'd be surprised if it was in recession.
Having listened to the Democratic contenders, or at least the first half of the Democratic field last night, I was struck by how far they implicitly
agreed with Trump's policy on China. There was no criticism of his China policy.
There was even some acceptance that his Iran policy might be going in the right direction in the sense that he has walked away from the nuclear deal
that Obama negotiated and there weren't that many people lining up to defend entirely the Obama deal with Iran.
So I think when I listen to the Democrats, I'm not seeing anybody who is really going to be able to land a punch on Trump if the economy is still
growing and if his foreign policy agenda is still delivering.
GIOKOS: Niall, what a pleasure to have you on. Thank you so very much for joining us. Great to speak to you again. Appreciate your time.
FERGUSON: Thanks, Eleni.
GIOKOS: All right, so pleading for big tech, high up Mark Zuckerberg defends Facebook at a festival in Colorado's Rocky Mountains. Don't go
anywhere. We'll bring you that news after this.
(COMMERCIAL BREAK)
GIOKOS: Welcome back. Now, the Facebook CEO is making a plea, "Don't break up big tech," Mark Zuckerberg says. "Scale actually helps prevent
the spread of misinformation and election interference." He made these comments at the Aspen Ideas Festival.
(BEGIN VIDEO CLIP)
[09:50:04] MARK ZUCKERBERG, CEO, FACEBOOK: The question that I think we have to grapple with is that breaking up these companies wouldn't make any
of those problems better.
The amount that we're investing in safety and security is greater than the whole revenue of our company was earlier this decade when we went public.
So it just would not have been possible to do the things that we're doing at a smaller scale.
(END VIDEO CLIP)
GIOKOS: Meanwhile, Facebook has agreed to hand over the identification data of French users suspected of hate speech on its platform to judges.
It is reportedly the first country to strike such an agreement.
When I headed by -- we are now joined rather by a French Minister for Digital Affairs, Cedric O. He is live for us in Paris. Thank you so much,
Minister, for joining us. I just want to touch on what Mark Zuckerberg said there that it actually is a good thing to keep these Big Tech in place
and social media being confined to one or two companies as opposed to many different segments. What are your thoughts on that?
CEDRIC O, FRENCH MINISTER FOR DIGITAL AFFAIRS: Good afternoon. Yes, actually, the fact is, there is a question about dismantlement and the
question of whether those companies are too big for democracies or too big for economies. I think the question is legitimate, and you have to set the
questions, both question from the U.S. and the E.U.
What I do agree with Mark Zuckerberg is that the dismantlement won't solve any problem as far as hate speech is concerned, as far as privacy is
concerned, as far as many subjects.
So we have to look at after the dismantlement and to be able to solve problems that show up on the short term.
GIOKOS: Minister, a world first where Facebook is going to hand over data of users that have been found to use hate speech. That is pretty
unprecedented. I mean, I know that France has very strict rules and laws regarding hate speech. But now, you're going to get this information in
the hands of judges, but there's so many gray areas here. How are you going to decide who to prosecute?
O: The idea is that -- the basic idea that we want to lower the level of hate speech online. If you want to lower down the level of hate speech
online, you shall be able to sue people that are posting such kind of comments.
And if you want to be able to sue those people, you have to get the IDs and the IP addresses, so that's why the announcement of the Facebook is so
important.
But what's important is that in the hand of justice of the French justice, and I think this is now an acknowledgement of the fact that we're handling
the issue both of civil rights and freedom of speech, but also a protection of our citizens. And we can find the right balance.
GIOKOS: Do you think this is going to set a precedent worldwide, where you will see Facebook or other social media platforms, handing over information
to governments because that comes with the risk, not all governments perhaps have best interests at heart, and they might just police users?
O: I think there's a common interest, at least for democracies, between big platforms and governments is to be able to lower down the level of hate
speech. So that's why such cooperation is a good thing and I hope that it will spread and other platforms will cooperate, too.
There's other question about individual countries, it is a huge question, but I think this is why Facebook first chose to work with the French
justice, which has a right balance between civil liberties and protection of its citizens.
GIOKOS: Are you -- have you already looked at people that you'd like to target in terms of the information that you're going to be getting, are we
going to see news in that regard? And I know that the French Parliament is also working on a new law to actually find social media platforms that
don't remove Facebook, and we're talking about four percent, I think of global revenue. So that is going to be a big deal as well.
O: I think our first mission as a state is to ensure people that they are safe, both offline and online. So we have to have efficient judicial
processes. And as far as the big platforms are concerned, I think there's a huge variety, there is a critical size of -- a huge amount of content
that is posted online.
They shall be able to take down content that are harmful on the very short term. So that's why we are working with them. That's why we're entering
the fact that they will be able to do so. And I think no country in the world has ever been doing -- has ever been able to solve the problems as
this is only the beginning of the work. We still have a huge work to do, but I think this is a good beginning.
GIOKOS: All right, thank you very much, Minister for your time. Great to have you on the show. Live from Paris.
All right, here is today's "Boardroom Brief." Shares of German drug maker Bayer are rising. The company revealed plans to tackle multibillion-dollar
lawsuits linked to its weed killer. It is facing many claims in the U.S. that it is cancer-causing. Bayer says it hired an outside lawyer to advise
its supervisory board and it set up a committee to help resolve these issues.
[09:55:15] GIOKOS: Ford says it will cut 12,000 jobs in Europe by the end of next year in an attempt to return to profits. The move is part of a
wave of cost reductions as the company faces stalling demand. Ford has also ended production at three Russian plants and is closing factories in
France and Wales.
And Kim Kardashian's new line of body shaping underwear is causing backlash from some Japanese. The celebrity launched her products earlier this week
under the name Kimono and is reportedly trying to register at it as a trademark. The problem is that the word for a traditional Japanese gown
that dates back to the 7th Century.
All right, thanks very much for joining us with FIRST MOVE. I'm Eleni Giokos, and I'll be back tomorrow. Take care.
(COMMERCIAL BREAK)
[10:00:00]
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