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First Move with Julia Chatterley

President Trump Named His Next Two Fed Picks; Tesla Stocks Jumped After Pumping Up Its Production And Deliveries; Canopy Growth Co-CEO Talks About His Shocked Exit. Aired: 9-10a ET

Aired July 03, 2019 - 09:00   ET

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

ZAIN ASHER, CNN INTERNATIONAL ANCHOR: Live from New York, I'm Zain Asher standing in for my colleague, Julia Chatterley and here is your need to

know.

Three times a charm. President Trump named his next two Fed picks. One is actually a big critic of the Central Bank. And breaking records, Tesla

stocks jumped after pumping up its production and deliveries. And fired, Canopy Growth co-CEO joins us about his shocked exit. It is Wednesday, and

this my friends is FIRST MOVE.

All right, welcome everybody. I'm Zain Asher. This is FIRST MOVE. It is the day before July 4th. It is half a day of trading on Wall Street and we

could see some fireworks before the shortened session is over. Taking a look at futures now, let's see, they are certainly pointing to a higher

open across the board. Right now, you see green arrows there across your screen.

S&P 500 is set to open in record territory after closing at an all-time high on Tuesday. The Dow and the NASDAQ are inching towards record highs

as well, relatively flat though for the time being.

Before the bell today, we've got an important reading on the health of the U.S. jobs market. ADP says that 102,000 jobs were added to the private

sector last month. A weaker number than had been expected, slightly below expectations and a sign that Friday's all important U.S. jobs report could

actually disappoint for a second straight month in a row.

In the meantime, we are seeing solid gains for stocks in Europe. Italian stocks are rallying almost two percent after E.U. government said the

country is making quote "considerable improvements" in getting its finances under control.

But let's get straight to the drivers right now. I want to begin with some breaking news this morning. Canadian cannabis company, Canopy Growth has

announced the departure of its co-CEO Bruce Linton. The stock is falling pre-market in New York. Bruce Linton himself actually joins me on the

phone now.

So, Bruce, the statements are saying that you stepped down. You're saying that you were actually fired? Did you have any inkling whatsoever that

this was going to happen?

BRUCE LINTON, FORMER CO-CEO, CANOPY GROWTH (via phone): Yes, no, I think our press release captured accurately. I think, subsequent coverage

misstep. But no, I was terminated. And the co-CEO is working through a transition as they search for a new CEO. Which I suspect, there is nobody

listening to your program who is not thinking, "I should apply to that" like this is the fastest growth sector in the world. These guys have the

most IP and kind of the biggest market share.

ASHER: Do you agree though, with the direction? I mean, you sound very sort of nonchalant about it, and very sort of philosophical, but do you

agree with the direction that Constellation Brands is taking here and removing you?

LINTON: I didn't step down. So I guess that means I wasn't eager to do it. But you know, we had a new board coming November 1 when the $5 billion

closed and that board configuration was essentially four appointed by Constellation, three, including myself by non-Constellation. That's like

eight months and two days ago.

And so I think their intention is probably to run things a bit differently than was mine because they can now.

ASHER: So just in terms of the company's fourth quarter earnings that disappointed, the losses of Canopy Growth mounted. I mean, what does Mark

Zekulin, your co-CEO actually need to do to take the company forward, do you think?

LINTON: I would say, keep doing the same. Most of those losses were related to what's called stock-based compensation. And so one of the

things that I've done from the starting of the business is that if you come to work for us, and you are the guy who cleans the floor, you get stock

compensation, equity options.

And so because we hand them out broadly, not concentrated to one person, and because the stock has gone up a lot over the last several years, you

know, from a couple hundred million to nearly $20 billion, you a big number, but that number today, if people are feeling upset that I'm

transitioning out, means they're not leaving because they have stock comp.

And so most of the loss was there. Our margin was a bit lower than people expected in Q4. It was actually a point higher than our model internally

and it's because when you build out say three or four million square feet of greenhouses to grow cannabis, you can't sell them instantly, which means

you carry a big overhead until they get filled up.

Anybody who sold on that news is saying well as the margin comes back to being bigger, because we did run the business a year and a quarter earlier

at about a 55 percent gross margin and then we decided to get much bigger, I wouldn't be surprised that the company can get back to you know, higher

margins very quickly as it uses up that capacity.

So, you know, if you're buying and selling stock in the quarter, I'm not sure why you're in the cannabis space. The cannabis space is probably the

only thing in your portfolio that will never be smaller, really, the governance models are just beginning to be set up globally. And Canopy is

the best position company in the world with the passion of Constellation and the IP that we created.

[09:05:10] LINTON: I suspect in about a couple of months or three or four months, an unbelievable candidate will be named because they will have

their pick of the litter.

ASHER: Interesting and just in terms of beyond Canopy itself, just in terms of the broader industry as a whole for cannabis. What does the

success of the cannabis industry hinge on, do you think? Is it about educating consumers? Is it about branding? Is it about marketing? What

are your thoughts?

LINTON: Maybe a bit slower and more boring. I think it is science. I think its intellectual property. I think it's taking the cannabis plant

apart. And rather than simply getting paid for THC and CBD to take those cannabinoids and the other 90 or more, in fact, to isolate them and combine

them in different ways. Maybe combine them with different combinations that could be as complicated alkaloids which lead to opioids.

But if you mix them potentially with cannabinoids, maybe you can make a medical product, which diminishes anxiety and manages pain, so people

aren't taking the drug as quick or as frequently.

So I think things like that, and the science around that lead to all kinds of durable value, which are intellectual property claims, then when you get

to recreational, you take that science, and you create products that are not available in the illicit market, because they didn't have the depth of

R&D or the capacity to make what I think is going to be a big winner, tweed and tonic, you know, come in December to Canada. And you should be able to

acquire a tweed and tonic which will have no calories, taste delicious, have a two or 2.5 milligrams of THC and have a fairly rapid effect like

sipping a wine.

And, you know, I think people will like that quite a lot and because it has a very low drug on drug profile, it means a whole bunch of folks who are

taking other medications can't have I'll call might become customers. So that's the kind of stuff that I think is going to be very good. And if you

do that really well, the branding of something that's great is much easier than trying to brand "me to" products.

ASHER: So it's really about overall though science and research is what you're saying. Bruce Linton, we have to leave it there, but we wish you

all the best in your next endeavor. Thank you so much for joining us at such a short notice.

LINTON: Thank you.

ASHER: Appreciate that. OK, so Donald Trump has announced his nominations for the two vacant seats on the Federal Reserve Board. Number one Judy

Shelton is a prominent critic of the Central Bank, while Christopher Waller currently serves at the St. Louis Fed. Clare Sebastian joins us live now.

So Clare, just walk us through these two nominees, what their background is? What their experiences are?

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Right, so Zain, Trump has been trying to fill these two empty seats for months now. His last two

picks, Herman Cain and Stephen Moore actually withdrew before getting close to the Senate nomination process because of the backlash that Trump faced

over their qualifications and independence in some cases.

So this is his latest attempt and certainly in the case of Christopher Waller, it is a slightly more conventional pick. He is an insider. He

works for the St. Louis Fed, which is one of the 12 regional banks. He has advocated in the past for Central Bank independence.

But Judy Shelton is a little more left field. She is closer to Trump. She advised the transition team and she has outspoken views on things like she

thinks that the U.S. should return to the gold standard. She thinks the Fed isn't necessarily the best way to regulate the money supply.

But both of these picks crucially, Zain, given the market climate that we're in, given the pressure we've seen from Trump towards the Fed, both of

them seem to be of the opinion that lower interest rates now would be the right way forward. So that certainly fits in with what the President

wants.

ASHER: And it's also important to mention that this is not anywhere close to being a done deal yet. There's going to be thorough background checks,

still awaiting Senate confirmation. And as you mentioned, Stephen Moore, the last nominee actually ended up withdrawing. So there's still a ways to

go here.

SEBASTIAN: Absolutely. And they haven't even been officially nominated yet. There was just the President's tweets that put this out there and the

Senate confirmation process could take months.

So certainly when we're looking at the upcoming Fed decision, which has a lot of people waiting for a potential rate cut, this won't impact that.

But I think it is worth noting here, Zain, that President Trump has actually had a lot of power to fill seats on the Fed Board.

Of the current five members, only one was, you know, was there -- well, two actually including Jerome Powell were there before his presidential term

and Jerome Powell, of course, he elevated from within.

So this is something that he can do. This is a power that he can wield over the Fed board to potentially influence decision making.

ASHER: And this comes at a very interesting time for the Fed because you've got the President sort of going head to head with Jerome Powell

constantly criticizing the Fed for raising rates four times last year, not raising rates so far, not lowering rates rather so far this year, even

though we are anticipating a rate cut this month.

SEBASTIAN: Yes, absolutely. This is the time where not only the President's pressure but market expectations are ramping up for a rate cut.

[09:10:09] SEBASTIAN: As I said this, these potential picks won't influence that. But it is interesting, particularly in the case of Judy

Shelton to look at her views. She has in the past that criticized lower rates just like the President, but she has recently said that she thinks

that the time is now to start cutting rates.

And I want to bring up a quote that shows just how critical she is of the Fed in general. She has advocated the gold standard, and this is the

reason why. She says, "It is wholly legitimate and entirely prudent to question the infallibility of the Federal Reserve in calibrating the money

supply to the needs of the economy. No other government institution had more influence over the creation of money and credit in the lead up to the

devastating 2008 global meltdown."

She continues, "The Fed response to the meltdown may have exacerbated the damage by lowering the incentive for banks to fund private sector growth."

So she feels that the Fed isn't the best tool to regulate the money supply to ensure a stable financial system and a stable currency. She instead

advocates the gold standard.

So this is an extremely left field economic view to be putting on the Fed boards in.

ASHER: Right, Clare Sebastian, live for us, thank you so much. All right, so on some Tesla news now, because Tesla shares are jumping in premarket

trading as a result of record sales. The delivered -- the company now say they delivered almost 100,000 cars in the second quarter. And that's by

the way more than double the number sold last year.

Let's bring in Paul La Monica, who joins us live now. So Paul, this is obviously just in terms of deliveries, obviously, a very sort of closely

watched number. The question is, is it sustainable?

PAUL LA MONICA, CNN BUSINESS REPORTER: I think that is a great question. Obviously, one of the concerns Zane that investors have about Tesla is that

there is a lot of competition in the electric car market. But make no mistake, these are extremely solid numbers, especially since it is a record

for obviously, all of Tesla's vehicles, but most notably the Model 3 and that is the car, the more affordable electric car from Elon Musk that

investors are hoping will become a mainstream hit so that Tesla can become a mainstream auto company that might be consistently profitable.

So these are very good numbers. The question of course, yes, will they be sustainable? Because you've got increased competition from Nissan, from

GM, from tech companies that are developing electric cars. So Elon Musk can't rest on his laurels. But he can definitely take a victory lap this

morning, that's for sure.

ASHER: Again, we just saw the numbers in terms of premarket trading, Tesla shares up about seven percent or so, six and a half percent or so, but they

are down overall, Paul, about 34 percent so far this year, because there have been some concerns about demand. Do these delivery numbers change

that? Do they assuage investors' concerns when it comes to demand, do you think?

LA MONICA: Yes, I think this is a clearly a good sign for the second quarter and will, you know, obviously allay some of the worries but also

keep in mind that some of the tax credits that buyers had, incentives to purchase electric vehicles, for Tesla, in particular, a lot of them are

going to be diminished and maybe even go away. That could be something that may be drove demand in the short term as people rush to buy a new car

at an advantageous price.

Now, the question becomes, is this sustainable? Because there's a lot of competition and it may not be as economically feasible to buy these cars

going forward without the favorable tax credits.

ASHER: All right, Paul La Monica, thank you so much as always. Okay, so she has of cybersecurity firm, Symantec are soaring in premarket trading

and that's after a report that the chip maker Broadcom is closing in on a deal to buy the company, to buy Symantec.

Broadcom investors appear less pleased because their shares are actually trading four percent lower as you see there. Matt Egan joins us live now.

So Matt, I think it's important to note just begin with that this deal isn't final at all yet. It's a report that came out but of course, as

always, talks could easily fall through. What do we know so far?

MATT EGAN, CNN BUSINESS LEAD WRITER: That's right, Zain, so right now, these are just reports. We've reached out to the companies and we haven't

heard any comments back yet. But what is clear is that Broadcom has been on a bit of a buying spree.

You know in 2017, it went and made $100 billion play to try to acquire rival Qualcomm. Now that deal got blocked by President Trump due to

national security concerns, but Broadcom was undaunted. It went out and last year, it spent $19 billion to acquire software company CA

Technologies.

And now, there are these reports that Broadcom wants to double down on software by acquiring potentially Symantec for more than $15 billion. Now,

Symantec of course is a pioneer in the cyber security space. It was founded in the early 80s. And today, it says that it has got 350,000

organizations and 50 million people using its products which include, of course, the Norton Antivirus platform, as well as LifeLock, which is used

for identity theft protection.

[09:15:11] EGAN: Now, as you mentioned, the Broadcom stock is down about four percent premarket and that probably signals some concern about the

strategy here. Because you know, Symantec does face some challenges. It has a lot of competition in the cyber space.

Its CEO abruptly stepped down just two months ago, and there was a financial accounting investigation that led Symantec to tweak its results a

little bit. And you know, history does show that there are some risks here because in 2010, Intel acquired McAfee for almost $8 billion. The goal was

to try to use McAfee's technology on Intel's processors, but the strategy never really worked out. And they ended up having to sell off McAfee for

about half the price to a private equity firm.

So the question of course would be whether or not Broadcom will have any more success should this deal go forward with trying to integrate a

software company.

ASHER: Matt Egan, thanks as always, appreciate that.

EGAN: Thanks, Zain.

ASHER: All right, so let's turn now to the headlines -- or stories rather making headlines around the world. At least 43 people have died in the

Indian state of Maharashtra after the heaviest rainfall in 14 years. Dozens more have been injured, seven people were killed after a dam burst

washing away houses. We know that 17 people are still missing and six construction workers died when the wall of a college collapsed as well.

And heavy rain in Japan is forcing more than one million people to leave their homes. Local officials expect the island of Kyushu to get more than

a month's worth of rainfall in just one day on Wednesday. Thousands of troops have been deployed to help emergency responders.

And this is a sad one, heartbreak for England, the Lionesses are booted out of the Women's World Cup by defending champions and the poignant favorites,

United States. They will either -- this is the U.S. - they will either now face the Netherlands or Sweden in their final. Their semifinal match is

later on tonight.

Okay, still to come here on FIRST MOVE, Tesla stock get supercharged with new delivery records. We will dig in more with Dan Ives after the break.

That's next.

(COMMERCIAL BREAK)

[09:20:26] ASHER: All right, welcome back to FIRST MOVE, I'm Zain Asher coming to you live from here in New York. Let's take another quick check

of U.S. markets. U.S. stocks as you can see there, all green across the board. They remain on track for a southerly higher open.

The S&P 500 should hit fresh record highs in early trading. That's because they closed at record highs yesterday. The Dow is closing in on record

territory as well. And it's not just riskier assets that are rallying.

Demand remains robust for safe haven bonds as well, the yield on the 10- year U.S. Treasury remains below two percent today, the lowest level in more than two years.

German bond yields are falling even deeper into negative. Territory yields are falling amid continued fears of slower global growth. Earlier today, a

new reading of private U.S. jobs growth actually missed expectations. That was the ADP report that came in at 102,000 jobs added.

Let's talk more about this with Tom Porcelli. He is the Chief U.S. Economist at RBC Capital Management. Tom, thank you so much for being with

us. So you've got the S&P 500 in record territory eking out slight gains yesterday, despite the fact that the E.U. tariffs on the horizon over

airline subsidies is certainly causing investors some degree of concern.

TOM PORCELLI, CHIEF U.S. ECONOMIST, RBC CAPITAL MANAGEMENT: Yes, look, I think, you know, trade has been a narrative that has lingered for quite

some time. Whether it is the U.S. talking about levying some tariffs on the E.U., obviously, the big focus is China, U.S. trade relations.

And, you know, what's been in about that, in particular is, you know, I don't think enough credit is given to what happened after G20. You know,

there was some real momentum gained back. You know, and if you remember what Powell said, the U.S. Fed Chair Powell, he basically said the thing

that started them to really worry about what was happening from a U.S. economic perspective was a lack of momentum from a China-U.S. trade

discussion perspective.

Well, we've got some of that momentum back, and so thus, you know, when we think about what this means from a Fed policy perspective, you know, we

still don't think that there's quite enough justification at this stage to look for cuts.

But nevertheless, the market is c d learly continuing to believe that for the time being, which is why we think, July 10th, next week, when Chair

Powell gives give his Humphrey-Hawkins discussion, we think that he is either going to lend credence to the idea that the Fed is going to cut or

he is going to try to walk the market back.

ASHER: So you don't believe there should be a rate cut this month, even just 25 basis points? Just talk to us about why not.

PORCELLI: Yes, yes. Well, because if you look at the economic backdrop broadly in the United States, it's actually in very good shape. So here's

a great way of thinking about that. We will be at three days before the FOMC meeting, we will get Q2 GDP. Q2 GDP -- Q2 growth in the United States

is actually going to look pretty constructive.

In fact, consumer spending is probably going to have a four handle on it. So in other words, it's probably going to be about four percent jobless

claims, which is the single best metric to really gauge what's happening from an underlying labor market perspective, continue to improve, even this

week, even today, we just got another number.

So you know, we struggled to understand where the sort of the stresses, and again, we continue to hear folks sort of lament the plight of corporations

and make no mistake, we are very sympathetic to that idea, particularly with uncertainty around trade.

But again, what do the data show? The data show a couple of very interesting things. For starters, capital expenditures is actually going

to probably run at about a five or six percent pace in the current quarter, and ISM, which, you know, some people would argue is one of the sort of

better leading metrics from a corporate sentiment perspective.

Think about what -- we just got that number on Monday. Think about that number for a moment. It was -- that reporting period for that number was

literally over peak trough related to sort of worry about trade relations with the U.S. and China.

And even at peak trough, the best you could do was get ISM to 52, which was basically, you know, sort of little change from the prior month. So if --

and just to sort of draw the point a tiny bit more. If you look at the respondent comments from ISM, it was littered with worry about China and

even Mexico just to drive home how sort of dated this this number was.

So in other words, it did not capture G20. It did not capture the fact that Mexico is no longer an issue as it relates to trade for the United

States. So we would argue it is one of these great leading metrics that people love to sort of talk about as it relates to the corporate sector.

It is probably going to bounce back next month.

[09:25:14] BASHER: I mean, listen, you are right, there was some momentum gained at G20 in terms of the trade truce with China, and also President

Trump backing down when it came to Huawei.

However, there is a long way to go from getting from a trade truce to actually signing a trade deal. And then on top of that, reversing the

tariffs that are already in place, don't you think?

PORCELLI: Sure, absolutely, no one can deny that point. But what does it have to do with cutting rates right now? Right, like? So what I would say

is, if you know, any economist who does this for a living has a view on what that's worth, right? What trade -- what sort of a disruption between

U.S. and China trade is worth to the United States and to China?

So we have a view, the economist -- other economists course in Wall Street have a view, the Fed has a view. But if you are crafting monetary policy

and you don't know with precision, what the impact would be from a disruption with trade and we would argue that as pretty modest, actually

But if you don't know with precision what the impact is, then how do you know with precision what the right policy prescription is? And therein

lies the problem with this notion of the Fed sort of being preemptive. The Fed has literally never been preemptive.

You know, people love to talk about 1995 and 1998. The Fed didn't respond proactively to something. The Fed responded to something. And 1995 was

the mid-cycle slow down

Most forecasters across Wall Street were slashing their growth estimates. That hasn't happened today. In 1998, the Fed was responding to the

emerging market crisis where equity markets were down 20 percent, so I think we need to be careful with this idea.

ASHER: Tom, I have to interrupt you. I'm so sorry. My producers are in my ear and we have a hard break in a second, but we have to leave it there.

You bring up some very interesting points. Appreciate it.

PORCELLI: Thanks so much.

ASHER: Tom Porcelli from RBC Capital Management and we do have the opening bell after a quick break in about three and a half minutes. We'll see you

on the other side of this break. Don't go away.

(COMMERCIAL BREAK)

[09:30:00] ASHER: All right, welcome back to FIRST MOVE. I'm Zain Asher. What you're looking at are live pictures of the New York Stock Exchange.

That was the opening bell there. We have got higher opens across the board for you, so green arrows earlier today, but actually we're starting the day

down slightly. Remember the S&P 500 actually closed in record territory yesterday, we'll see if it ends up being reversed. There's this sort of

downward trend right now we're seeing.

Remember this is a shorter trading week because of July 4th tomorrow, so the markets do close at one o'clock today and the Dow, I should also

mention is relatively close to record highs although it is down slightly today.

Now before the bell, we got a weaker than expected reading on the private sector U.S. jobs. The report that actually spelled trouble for Friday's

all important U.S. jobs report. That said, weaker than expected economic numbers further raise the chance for Fed rate cuts.

All right, so now it is time for global movers. Shares of cyber security software company, Symantec -- let's take a look here -- are rallying, up

about 14 percent or so. Reports say Broadcom is in advanced talks to buy the company. Broadcom shares are actually trading lower. You can see they

are down about four percent and shares of cannabis firm, Canopy Growth are lower towards the bottom of your screen down four percent, five percent

actually.

The company's Co-founder and Co-CEO Bruce Linton is leaving the company. He told us earlier in the program that he was fired. Canopy has the

largest market cap of any public cannabis firms. Linton says he believes Canopy remains in good shape.

And final one, shares of Tesla also rallying up over seven percent right now. The electric car company has just reported a record setting second

quarter. It delivered more than 95,000 cars in the spring and it's the best quarterly performance in its history.

Analysts were actually expecting deliveries of about 91,000 cars. It's also big turnaround from the first quarter when deliveries missed

expectations. So let's bring in Dan Ives. He is the Managing Director of Equity Research at Wedbush Securities, which has a neutral rating on Tesla.

So, Dan, how much should we be reading into these delivery numbers, do you think?

DAN IVES, MANAGING DIRECTOR OF EQUITY RESEARCH, WEDBUSH SECURITIES: Look at the major step in the right direction for Tesla and Musk. I mean, the

company has gone through some dark days over the last six to nine months. I think this is something where the bulls are definitely going to digest

this well.

Still a lot more wood to chop, but no doubt, a great first step for Musk afterwards been a disastrous six months.

ASHER: Okay, so the question is, are these sorts of numbers sustainable? How does he sort of conduct this good run that he is seeing when it comes

to delivery?

IVES: Yes, that's really where the trick is. And that's why there's a battle ground stock, because many, including ourselves in the second half,

it's going to be a Kilimanjaro, an uphill battle to hit those numbers. Just given what we're seeing, an overall demand trend globally and is the

U.S. demand trend sustainable on Model 3. That's really the question here.

It's a fork in the road situation for Tesla, but no doubt, the bulls won the battle last night. This has really been, you know, what's really

become an emotional bull-bear story with many, I think, saying that this is a company on the verge of death's doorstep and I think they proved that

wrong last night.

ASHER: So should we be focusing on total deliveries? Or just specifically deliveries for the Model 3, because that's where their growth is coming

from?

IVES: Yeah, Model 3 is the linchpin, I mean, for this company, to be the transformational EV play, it has to be Model 3. Model 3 came in at

expectation, now it comes down to, can they sustain that? You've got Model Y going into next year, but the big question here is profitability, because

can they do this in a profitable nature? And ultimately, will they need to raise more capital? That really is the overhang on the stock right here,

even though where you saw last night, with their backs against the wall, put up a great 2Q -- second half continues to be the focus.

ASHER: So I mean, then should we be skeptical given that Tesla essentially have to cut prices several times in order to stimulate demand?

IVES: That's really the issue on Model 3, because if you think about S and X, I mean, that was really from a margin perspective, the key now you're

seeing call the price points 37K to 38K, can they do that profitably? And you look at the tax credits, you know, you had December 31st, one came off

July 1st, another in the U.S.

And there's some pull forward about 5,000 to 7,000 units. That's why the question we're getting from investors, what's the run rate? Is this

sustainable into 3Q and 4Q? And is this really a story that's maybe starting to turn the corner in a positive step after what's been really a

debacle the first few months of the year.

[09:35:12] ASHER: OK, so these delivery numbers aside, what would you say, just heading into the next quarter, what would you say were the sort of top

three major challenges for Tesla, when it comes to things like logistics, for example, which has been -- which has caused them some headaches in the

past?

IVES: Yes, I think logistics and production have really been smoothed out. Although, right now, I'd say the top three, the bill down demand in China

is key. with Giga 3 as well as what demand looks like in China. Two, sustainable growth on Model 3 in the U.S., that's really at the crux and

the linchpin, and the third, and I would really put an asterisk around this is can they do this profitably? Because if they can't, they're going to

have to raise more capital and right now, the albatross around Musk's neck is the $10 billion of debt.

ASHER: All right, Dan Ives, live for us. Thank you so much for your perspective on Tesla. Appreciate that. All right. We want to come here

on FIRST MOVE, a tributes to a man who added the horse to the horsepower. Lee Iacocca, the father of the Ford Mustang died this week. We'll have

more on him after the break.

(COMMERCIAL BREAK)

ASHER: All right, welcome back everybody. In Europe, investors seem pleased that the IMF Managing Director, Christine Lagarde has been

nominated to head the European Central Bank. All the major markets are trading higher.

Lagarde is one of two women selected for top E.U. jobs alongside Ursula Von Der Leyen. She has been tapped as the next European Commission President.

Anna Stewart has the details. So Anna, let's start with Christine Lagarde because obviously, she brings star power. She was previously Finance

Minister of France, but she's not an economist. So how much of a surprise pick was this really for her to head the ECB after Mario Draghi?

[09:40:04] ANNA STEWART, CNN REPORTER: You know, it really was. We've been watching this for weeks and the idea was that whoever got the top job

of the E.U. Commission President would affect who then got the ECB President position and she was not in the top 10, I would say.

As you say, she's got star power. She's got presence. She is well known across the world. However, she lacks an Economics Degree. She hasn't had

any experience at a Central Bank. These are things that critics today are putting against her.

Lots of people saying that you know what, she's got experience in politics, and perhaps, as a sign that this position is being slightly politicized,

she can find common ground amongst the ECB committee, and markets as you just said are reacting well, because they see her as very much a

continuation of Mario Draghi and his policies.

ASHER: And so when she takes over from him -- when she completely takes over from him, just walk us through what we can expect in terms of her

first priority as head of the ECB.

STEWART: So first of all, this has to actually get the approval of the E.U. Parlimant, so it's by no means done and dusted yet. That will happen

in mid-July, assuming she gets an absolute majority there, what would happen next? She would take that position in November.

I would expect to see and I think the economists I've spoken today would expect to see perhaps further monetary easing, perhaps a rate cut before

the end of the year. That's certainly what currently Mario Draghi has guided us towards I would say in his very good times. He would guide us

towards that. There was a huge fear that a hawk -- a hawkish member like Jens Weidmann could have taken this role. And in that case, we would have

seen a very different market reaction.

To bring up some of the bond yields that we've seen today. Both Germany and France have been negative for some time, but you'll see here Germany

going even lower, minus 0.39 percent actually flirting there with the EC deposit rate which is minus 0.4 percent.

Also France lower, and also today, the Belgian bond yields and the 10-year, they fell negative the first time. So we are seeing huge market reaction

here, but very much positive in terms of people seeing this as a continuation of what see currently.

ASHER: All right, Anna Stewart live for us there. Thank you so much. Appreciate that.

All right, so here's today's "Boardroom Brief." Baidu's CEO found himself in cold water, literally. A man just burst onto the stage and poured water

on Robin Li, Baidu's CEO and founder at the company. They have been in Beijing on Wednesday. The identity of the man and his motives were not

immediately clear but Li recovered quickly saying quote, "The termination will not change going forward."

And French police are raiding Renault's headquarters outside Paris. The search is part of an investigation into former chairman, Carlos Ghosn. He

is facing trial in Japan on charges of financial misconduct relating to Renault's alliance partner, Nissan. Renault said they were cooperating

with authorities.

And auto industry legend, Lee Iacocca passed away on Tuesday at the age of 94. This man is credited with designing the iconic Ford Mustang and then

saving Chrysler from bankruptcy. Let's take a look at how he will be remembered.

(BEGIN VIDEOTAPE)

UNIDENTIFIED FEMALE (voice over): Lido Anthony Iacocca, better known as Lee was born in the rust belt in Allentown, Pennsylvania in 1924. Trained

as an engineer, he vaulted to auto industry superstardom by helping design and championing the amazingly popular Ford Mustang.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: This is car that dreams are made out of.

(END VIDEO CLIP)

UNIDENTIFIED FEMALE (voice over): He also fathered the world's first minivan.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Dodge Caravan, Plymouth Voyager. They're the most versatile wagons ever built in America. There's nothing like them.

(END VIDEO CLIP)

UNIDENTIFIED FEMALE (voice over): With a Master's Degree from Princeton, Iacocca started at Ford in 1946 as an engineering trainee. He earned his

reputation with Ford's racing program in the 60s, but found his place in history with the introduction of the Ford Mustang at the 1964 World's Fair.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The Mustang can be tailored to be virtually anything its fire designs.

(END VIDEO CLIP)

UNIDENTIFIED FEMALE (voice over): The Mustang was an overnight success. It spawned the American muscle car movement is still in production today.

He was named president of the company in 1970.

Despite his success at Ford, in 1978, he was unceremoniously fired by company Chairman and namesake Henry Ford II, who told him according to

Iacocca's autobiography, sometimes you just don't like somebody.

Within months he was hired at Chrysler. The next year, Iacocca was named CEO. The company was in serious financial trouble and nearly out of

business, but Iacocca persuaded Washington to bail Chrysler out with a billion dollars in Federal loans.

As part of that effort, he agreed to take a personal salary of just $1.00 a year. Even so, he took heat from critics when he cashed in stock options

worth millions.

His response was vintage Iacocca.

(BEGIN VIDEO CLIP)

LEE IACOCCA, FORMER CEO OF CHRYSLER: I mean, that's the American way. If little kids don't aspire to make money like I did, what the hell good is

this country? We've got to give them a role model, right?

(END VIDEO CLIP)

UNIDENTIFIED FEMALE (voice over): Iacocca was Chrysler's pitch man. He starred in 61 Chrysler commercials touting American cars and American

values.

(BEGIN VIDEO CLIP)

[09:45:07] IACOCCA: I have one and only one ambition for Chrysler, to be the best.

(END VIDEO CLIP)

UNIDENTIFIED FEMALE (voice over): He made Chrysler profitable again and paid the government back every penny. He did it with an emphasis on

quality.

(BEGIN VIDEO CLIP)

IACOCCA: If you can find a better car, buy it.

(END VIDEO CLIP)

UNIDENTIFIED FEMALE (voice over): Iacocca introduced longer warranties, lower prices and a new kind of vehicle. The minivan sold so well, dealers

had waiting list six to 10 months long. Iacocca's quest for new models actually redefined the landscape for Detroit's Big Three.

He engineered the buyout and eventual demise of number four car maker American Motors, just so he could add AMC's Jeep brand to Chrysler's

inventory.

Iacocca chaired the commission that raised almost $300 million to restore Ellis Island and the Statue of Liberty.

(BEGIN VIDEO CLIP)

IACOCCA: We remember the millions drawn here by that flame. And we renew our commitment to the ideals that kept it burning.

(END VIDEO CLIP)

UNIDENTIFIED FEMALE (voice over): Iacocca was known for talking tough, and he often sounded like a politician.

(BEGIN VIDEO CLIP)

IACOCCA: The administration has seemed to understand the importance of bargaining chips in nuclear disarmament, for example, but they don't have

the faintest idea how to bargain in trade.

(END VIDEO CLIP)

UNIDENTIFIED FEMALE (voice over): In the 1980s, he resisted entreaties to run for the White House himself, but has campaigned since for both

Republican and Democratic presidential candidates.

Iacocca retired from Chrysler when he was 68, yet, when the company presented him with a Legacy Award 20 years later, his vision couldn't be

any clearer.

(BEGIN VIDEO CLIP)

IACOCCA: I think the big three is coming back.

(END VIDEO CLIP)

UNIDENTIFIED FEMALE (voice over): Only one car was ever named for Iacocca, a 45th Anniversary Special Edition Mustang produced in 2009.

(BEGIN VIDEO CLIP)

IACOCCA: Who did you expect?

(END VIDEOTAPE)

ASHER: And Chrysler's parent company, the FCA Group has released a statement paying tribute to Lee Iacocca. It says, "Lee gave us a mindset

that still drives us today, one that is characterized by hard work, dedication and grit. His legacy is the resiliency and unshakable faith of

the future that live on in the men and women of FCA who strive every day to live up to the highest standards that he set." We will be right back after

this quick break.

(COMMERCIAL BREAK)

ASHER: Welcome back everybody, Team USA are on track for a fourth Women's World Cup often knocking out England in Tuesday's semifinal. America won

two one and did so without one of their star players Megan Rapinoe who was out with a strained hamstring.

The competition's record viewing figures are elevating Rapinoe and some other teammates into household names.

Let's discuss with Patrick Rishe, Director of the Sports Business Program at Washington University at St. Louis. So, Patrick, thank you so much for

being with us. So if the USA ends up winning this weekend, another Gold Cup back to back. What does that do in terms of really cementing the

women's game into the public consciousness do you think?

[09:50:05] PATRICK RISHE, DIRECTOR OF THE SPORTS BUSINESS PROGRAM AT WASHINGTON UNIVERSITY AT ST. LOUIS: Well, we hope that it will elevate it

even more, but the evidence still remains to be seen, because when they won in 2015 in Vancouver, we did see in a short term spike in club attendances,

but we did not see it sustain, and we still see kind of a weak economic model at the Women's Club level.

Now, in terms of the money that the women generate from the FIFA World Cup, at least this year, the purse is $30 million, as opposed to $15 million

back in 2015.

However, that still pales in comparison last year, in 2018, the men's World Cup, the purse was $400 million.

ASHER: So then, just in terms of -- I mean, you know, there's been dramatic changes, even though there's issues when it comes to making money

or generating money on either side, and the division there between men and women, you are seeing ticket sales being higher for the Women's World Cup.

I mean, this is evidence that this game can really be much more commercially viable than it has in the past.

RISHE: There's no question that the big winner here is just the television ratings, not just in the United States, which have seen about a six percent

jump on Fox compared to the 2015, which is pretty impressive, given that in 2015, we were playing in Vancouver in Canada. So it's the same time zones,

whereas we're we have a huge time lag with these games in France and yet the ratings are up.

In several countries, in England and Norway in Germany and Italy, you're seeing ratings records on television, so there's no question that's been

positive. Zain, what disappoints me from what I've been reading and seeing and hearing is that the way FIFA has marketed the event in France itself

has been subpar.

You've had a lot of people that are over there on the ground that talk about how in the big cities like Paris and Nice, you wouldn't know that

there's a Women's World Cup if you're walking around the city. FIFA has done a poor job of getting the word out about the event.

ASHER: So what's the excuse for that, then?

RISHE: Well, I think that part of it is, again, you go back to the resources where those same folks that have been on the ground reporting

have talked about if this were a men's World Cup, if this were an Olympics, you would see much more local marketing and even here in the States, when

you have any kind of event when the NCAA puts on a championship, they invest resources, and the local host committee in the city that the event

is taking place, makes an investment and make sure that there are banner ads around town, street pole ads everywhere. And it just seems like

they've been begging there.

The other place, Zain, where FIFA dropped the ball is with respect to ticketing. You understand that when folks bought their tickets, they

weren't guaranteed tickets together. And they didn't know that. And so many fans were complaining about not being able to sit together with their

family in some cases with their children.

Now FIFA rectified that in some instances, but again, poor planning. The last thing, Zain, is merchandise sales on site. Online, merchandise sales

were setting records with Nike.com, but on site, they've done a very poor job of having a lot of material there for folks to buy at stadiums.

ASHER: So essentially, there needs to be a catch up for the way FIFA handles and promotes the game, comparing women's game to the men's game.

But I do want to ask you about some stars in particular, Megan Rapinoe, she's almost I would say a household name at this point, particularly after

some of her controversial comments about President Trump that went viral.

Alex Morgan has been relatively a household name for some time in certain circles. But how do both of these women capitalize on just all the

excitement surrounding the World Cup in terms of their brands?

RISHE: Well, they certainly want to do it right away because much like Olympians who only get their real visibility and exposure every couple of

years, there's no question that Megan Rapinoe and Alex Morgan need to cash in while the iron is hot, obviously, we've known both of these women for

some time. But Rapinoe, not only the comments that you cited with respect to Trump, she just came out with a Body Armour ad, which is very, I think,

in your face to our President.

But she's also excelled on the field. So you look at all these things she needs to cash in. And of course, Alex Morgan has been a great brand for

quite some time. So their agents -- if I'm their agents -- I'm making sure that we're getting out there and making sure that companies are aware of

their interest in doing business.

ASHER: I mean, it's not just the fact that Megan made those controversial statement. There's also the fact that a lot of people have been up in arms

and outraged about the difference when it comes to gender pay gap for the men's team versus the women's team. That's also something that can really

propel these women forward, if they continue to speak out and fight against issues like that.

RISHE: Oh, there's no question. And again, the interesting parallel between FIFA perhaps not doing as good of a job of marketing this event,

and not spending the resources that they would spend in a Men's World Cup versus the separate issue that you just raised, which is the women's soccer

team in America now getting hopefully equal pay.

And by the way, they came out with some numbers recently that the women's national team from the United States has generated $51 million in revenue

in the last four years. The men just a little under $50 million.

[09:55:17] RISHE: So when they're in negotiations when this World Cup ends, I think that that's going to bode well for the women in terms of

getting a much better and much fairer deal.

ASHER: All right, Patrick Rishe, thank you so much. Director of the Sports Business Program at Washington University. Thank you so much.

Let's take another quick look at the markets. You've got a higher open across the board on this shortened holiday week, up ever so slightly, the

Dow is up about 66 points. Also the S&P begins the territory or the day rather in record territory again, but this is a short week and there's

still some concern about those E.U. tariffs, could this end up leading to a trade war between the United States and Europe? A lot of people are

concerned about that.

And that said we can expect the economic numbers further raise chances for Fed rate cuts in terms of ADP coming in at just 102,000 jobs today. That

is FIRST MOVE. Thanks so much for watching.

(COMMERCIAL BREAK)

END