Return to Transcripts main page
First Move with Julia Chatterley
CNN Goes Inside One Of The Saudi Oil Refineries Attacked Last Weekend For A First-Hand Look At The Damage; Apple Releases This New Bunch To The Iphone 11s; An Oil Trader In Singapore Has Cost Mitsubishi $320 Million. Aired 9-10a ET
Aired September 20, 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]
PAULA NEWTON, CNN INTERNATIONAL ANCHOR: ... in For Julia Chatterley and here is what you need to know.
CNN goes inside one of the Saudi oil refineries attacked last weekend for what will be a first-hand look at the damage. Apple releases this new
bunch to the iPhone 11s, they are now on sale. And going rogue, an oil trader in Singapore has cost Mitsubishi -- drumroll -- $320 million. It's
Friday and this is FIRST MOVE.
Welcome to FIRST MOVE. Great to have you with us. We're winding down an incredibly eventful week here on Wall Street filled with -- let's get this
straight -- a Fed rate cut, a spike in oil prices - a historic one, and yet a historic financial market credit crunch. And guess what guys? It is
Friday, but the week on Wall Street is not over yet.
As we all await that opening bell, futures are pointing as you can see right there to a higher open on Wall Street, a bit modest, but despite all
the drama, stocks, you know what, they are pretty much flat for the week, and still hovering close to those record highs and that's important to have
some perspective as well.
Now before the bell, we're hearing a fresh Goodwill Hunting in the U.S.- China trade war. The U.S. is reportedly dropping tariffs, yes, dropping tariffs on more than 400 Chinese products temporarily. All this comes as
U.S. and Chinese negotiators sit down for another round of talks in Washington.
Now, they are preparing for the high level discussions that are still set to begin next month. White House Economic adviser, Larry Kudlow says he
feels quote, "a little softening in the air" and of course around the table as well.
Meantime, stocks are rising in Europe. Asia stocks finished mixed with the Shanghai Composite posting gains. Chinese officials trimmed the short-term
interest rates for a second straight month today to help those companies that are still suffering from that trade war.
As you can see there though, Hong Kong stocks, however, fell sharply over the week. Look at that Hang Seng, it is now up just over two percent year-
to-date as months of anti-government protests batter that local economy.
We want to get straight to our drivers though. We begin in Saudi Arabia where we are getting a first-hand look at the damage inflicted on a vital
oil facility last weekend.
Now, the attacks knocked out, remember, five percent of the world's daily oil production. Saudi officials tell us they are proud of how their
emergency services responded. Our Nic Robertson visited one of the facilities and saw the damage firsthand.
(BEGIN VIDEOTAPE)
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Officials here say they went on-site putting out the fire within 10 minutes of the first
explosion. They say that they were effective getting it under control within about five minutes. At the other explosions, they say it took them
about four or five hours here to get those fires under control. They are proud they say that within 24 hours, they got capacity up here, back up to
30 percent.
But the real problem for Saudi Arabia right now is not in reviving the full production here at this plant. But the recovery of international
confidence that this is a one-off strike, but not a signal of a wider war to come. Nic Robertson, CNN, Khurais, Saudi Arabia.
(END VIDEOTAPE)
NEWTON: And that will be the tough part there. We will continue to see Nic throughout the day as he continues his reporting from those oil
facilities.
Now, turning to India, it has slashed corporate taxes in a bid to defend growth. Now, the move amounts to a $20 billion hit to government revenues
for a big tax cut for companies. Clare Sebastian joins me. I'm interested in this move by the Indian government because in terms of their toolbox,
they decided to take this one out. But to what end? Because sometimes there are mixed results from this kind of a thing.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Right, absolutely. It is a gamble on the fiscal deficit essentially, Paula, they are at risk now
according to some analysts from meeting their target for the year, but their calculation is that this will spur productivity, it will spur private
investment and that will lead to increase tax revenues over the long run.
So you know, this is a big cut to corporate tax. It's been well-received by the business community. I want to pull up a tweet today from the CEO of
one of India's smaller private sector banks. He called this a big bang reform. He said it allows Indian companies to compete with the lower tax
jurisdictions like the U.S. He called it a bold progressive step forward.
And we can see that the stock market as well up today five percent on the news that's about a two-month high. But this is -- part of what India is
facing at the moment, its economy has been on a really steep decline this year.
Growth in the June quarter was at five percent, that's down from eight percent in the same period last year, and the government is really being
forced to step in and take some big steps to try and spur growth.
I think you're right, it remains to be seen whether this will be enough, but certainly, it is being seen as a big step today.
[09:05:02]
NEWTON: And in terms of that big step, I mean, India is under a lot of pressure right now to try and prove that those growth rates that they
really need, they desperately need that they'll get there. Any other hints about other stimulus that might be on the way?
SEBASTIAN: Well, certainly they've been cutting interest rates, Paula. They may go further in that regard. But there are kind of issues in
individual parts of the economy as well. The auto sector, which is a big part of GDP has been on a steep decline. July was its worst month in 18
years. Hundreds of thousands of jobs have been lost. Rural areas have been particularly hard hit as the economy has been slowing down.
And all of this relates back to a couple of shocks that the economy has had in recent years. There was that demonetization in 2016, and a new goods
and services tax came in in 2017. The OECD saying yesterday that the Indian government should make moves to simplify that even further, and that
will help the revenues to be distributed to the areas that needs spending the most.
But I think once thing to watch here is if the government does miss its fiscal deficit target because of this tax cut, will they have to cut
spending? And what will that mean for the people?
NEWTON: Yes, and that's the issue where you put that stimulus. Clare Sebastian, thanks so much. Appreciate it.
And we go now to the view from the White House where we have Donald Trump who is greeting the Australian Prime Minister Scott Morrison. You see a
lovely view there. Quite a red carpet welcome there for the Prime Minister, a lot of things at stake here and a lot of it has to do with
security issues in Asia vis-a-vis China.
The President is also sure to talk about trade issues, obviously, principally with China, but also Donald Trump wanting to also strengthen
trade ties with Australia going forward.
And as you see there, Scott Morrison and his wife getting out of the vehicle there and greeting the First Lady and President Trump.
Donald Trump came into office saying that he wanted to strengthen trading relationships with countries like Australia, a bit of mixed results right
now. The Australians are very close, in terms of advising other countries about what to do with China -- mixed success there, but at the same time
with so much at stake and with Chinese negotiators on the ground today in Washington, trying to set up the platform for new talks in October.
And you can see them they're just posing for pictures. At issue as well is of course the Five Eyes security establishment which also involves
Australia. It has been under strain, giving leaks not just in the United States, but in other countries as well. And a lot of strain in terms of
that information sharing, how it is done, how accurate it is and how effective it can be. No doubt that will also be on the agenda.
We expect that perhaps that they will have some kind of media opportunity in the coming moments or hours and we will bring it to you when we get
that.
Switching gears now, we go to the Apple fans. Yes sir. Still, many of them. They're waiting to get their hands on the latest iPhone today in
store. The iPhone 11 is finally on the shelves. There is plenty of cheers.
That is the CEO, Tim Cook who opened up the Apple Store at New York's Fifth Avenue. They are kind of treating him like a rock star there. I guess
they were trying to drive up some of the publicity. Samantha Kelly joins me. Samantha, I take it you have seen these phones. You have tested these
phones. What's your review coming out of that?
SAMANTHA KELLY, CNN BUSINESS EDITOR: Yes, so I've been playing with them for a few days now. So this is the iPhone 11 Pro, there's also a bigger
size, the Max. And this is the iPhone 11.
So the iPhone 11 and the Pro are actually pretty similar. The major difference is, there are -- the camera here, there are three different
lenses that help you zoom and zoom out and just take, you know, honestly very stunning photos.
The Pro -- the other Pro line in general has lots of different new features. But there's a lot that you can actually get on the base model.
And it's $50.00 cheaper than last year's base model and $300.00 cheaper than the Pro line, and this is an excellent phone. It comes in a lot of
new different colors.
But you know, at the end of the day, I would say that a lot of these changes are pretty incremental. Apple has to do a lot right now to kind of
increase sales and that price point is going to try to get people to upgrade.
But at the end of the day, again, people are upgrading a lot -- it's taking a lot longer than it used to.
NEWTON: It's taking a lot longer than it used to because most people as you said, the incremental changes are not something that they're into at
this point.
You know, I don't think perhaps the things that drive us crazy every day is the charging of the phone, things like being -- that the Huawei now has,
which is the two slots for the two SIM cards. Is this worth the upgrade at this point?
I mean, Tim Cook and Apple seem very optimistic, and yet when you actually try and get people to spend that cash on upgrading, is there really a need
to at this point?
[09:10:04]
KELLY: Sure. So third party companies are kind of looking at presales and sort of the interest around that and it seems like more people are
interested in these devices than they were last year, even though they are relatively incremental.
But yes, will people upgrade? I think people every cycle are going to upgrade, especially if you haven't upgraded in a few years. These are
excellent top of the line phones and especially now with the iPhone 11, you can get a phone that does so much more than just what a phone did a few
years ago. So there's definitely reason to upgrade.
Next year, we're expecting much bigger changes. Apple is expected to launch a 5G phone which will be even faster and allow you to do things that
we haven't even -- we don't even know yet because the services aren't out there yet. But it is supposed to be a way more groundbreaking than we are
now.
So will people upgrade? I think if you need a new phone, then these are excellent options.
NEWTON: Yes, that's the key thing, if you actually need one. Samantha, thanks so much for taking us through that. Appreciate it.
KELLY: Thank you.
NEWTON: And as you can see there, President Trump along with the Prime Minister of Australia and his wife and the First Lady there, it looks like
they're getting ready to make remarks as there is a podium. We will continue to keep an eye on that.
Guess what? Another person in Washington and that was Mark Zuckerberg the other night having dinner with the President. He had that face-to-face
meeting in the Oval Office. Mark Zuckerberg has been in Washington for a series of meetings with some of his platform's most vocal critics.
Brian Fung is in Washington and joins me now. He's been watching it all. You know, I was actually stunned by some of the blunt language that the
politicians are literally saying to him, no, no, no, sell this, sell Instagram. So what's up? This is what you should be doing right now. Was
there an indication that Facebook knew what they were getting into and what this visit is all about at the end of the day?
BRIAN FUNG, CNN TECHNOLOGY REPORTER: Well, I think Facebook probably knew what it was in for as soon as they touched down. You know, Facebook
obviously has been under a lot of pressure from regulators and policymakers, and this is really the first visit by Zuckerberg to the
nation's capital since he testified to Congress last April about the Cambridge Analytica scandal.
But you know, he sat down with number of senators for dinner on Wednesday night. On Thursday, he met with Senator Josh Hawley, who is a major tech
critic and called on him to sell off WhatsApp and Instagram.
Apparently, according to Hawley, Zuckerberg wasn't too thrilled with that proposal. But, you know, they had a frank discussion about, you know,
things like digital data, privacy and elections security. And then Zuckerberg went on to meet with President Trump, and while Facebook isn't
saying much about what actually went on in that meeting, Trump tweeted a photo of the exchange later and said it was a nice meeting. So you know,
we're sort of still sort of guessing as to what may have gone on there.
Today, Zuckerberg is expected to meet with Adam Schiff, the House Intelligence Committee Chairman, as well as a number of Members of the
House Judiciary Committee, including David Cicilline, who is, of course leading a month-long antitrust investigation of the tech industry.
In fact, last week, Cicilline sent a number of letters to Apple, Amazon, Facebook and Google asking them all to submit, you know, detailed
documentation about some of their dealings with the government in the past.
NEWTON: Yes, I mean, the antitrust issue is obviously the issue. And, you know, Congress is looking at the legacy of this and saying, we've done it
before, we don't see why we shouldn't do with a company like Facebook.
What's the endgame for Facebook here? Do they feel like getting in there, they can set some of the parameters of what might be coming from
government?
FUNG: Well, I think the regulators and the policymakers are going to do what they're going to do, but I think probably Facebook feels that, you
know, if they can, you know, come off looking like they're more approachable, trying to be reasonable, trying to engage on a meaningful
scale, in good faith that perhaps, you know, that will lead to more lenient treatment.
NEWTON: Brian, thanks so much. It is a story that we will continue to watch. And while Mark Zuckerberg and the President maybe weren't saying
too much, congressional leaders have certainly been pretty vocal what they want to happen in the future. Brian, appreciate it.
And we turn to the stories have making headlines around the world. Back to that White House shot now, as you see President Trump is hosting Australian
Prime Minister Scott Morrison. They will hold a joint press conference later today, as well as a full State Dinner.
Meantime, questions swirl all over President Trump and a reported whistleblower. Sources tell CNN the U.S. government's top intelligence
watchdog has suggested that a controversial whistleblower complaint raises concerns about multiple actions.
The Inspector General did not specify if those actions involved President Trump. The report say part of the concern involves the President's
contacts with a foreign leader
[09:15:10]
NEWTON: Right now, across the planet, people are marching for the planet with global strikes and protest to call for action on climate change. You
see the pictures right there from Australia to Dublin to Berlin and New York City.
They've given more than a million students permission to skip school, and some companies are also supporting employees for taking part in the
strikes. Another big day of action is planned about a week from now.
And the first ever Rugby World Cup is set to take place in Asia and it's now underway in Japan. Now the host took on Russia in the tournament's
first match, which took place at a packed stadium in Tokyo. After 48 matches, the winner will be crowned in November. Japan won the first match
30 to 10. I can't imagine how loud it was in that stadium.
Still to come on FIRST MOVE, life in the fast lane, we get the low down on Uber's path to fame and fortune from the author of the tell-all book on the
Kalanick era.
And sun, sea and bankruptcy? Will thousands of holidaymakers be left stranded far from home? Tour operator, Thomas Cook is on the brink of
collapse.
(COMMERCIAL BREAK)
NEWTON: And welcome back to FIRST MOVE. We are once again showing you live pictures from the White House there. That is Scott Morrison, next to
President Trump and their wives.
They are getting quite a roll out here on the lawn of the White House. This is a full State Visit, so they will get this kind of a welcome. There
are bilateral meetings. There is then a full joint press conference and a State Dinner to follow.
These are two countries looking to strengthen their ties, especially when it comes to trade but also when it comes to security. Certainly, China
will be top of mind for both of these leaders as they continue what will be extensive talks, but also as you can see there, President Trump really
wanting to extend a warm welcome to the Australian Prime Minister and his wife and really, a candid measure of where he wants this relationship to go
in the next few years.
[09:20:12]
NEWTON: We will return to the markets where futures are pointing to a higher Wall Street open. The S&P 500 is riding a three-session winning
streak. Yes, after all that, we're on a winning streak and the NASDAQ is on track for its fourth straight week of gains.
We've got a number of Fed officials speaking today on rate policy just two days after the Central Bank's latest quarter point cut. St. Louis Fed
President James Bullard says he still believes that a half point cut -- remember, he was the dissenter there -- would have been the best course of
action because of the continued weakness in U.S. manufacturing. No surprise as to the data he is looking at.
Meantime though, Boston Fed President Eric Rosengren, a rate cut hawk says he sees no need for any further Fed easing. Interesting, the dissension
there on the Fed.
We are going to return to the White House where the President is speaking.
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: ... members of the Australian delegation, and distinguished guests. Today, we celebrate the
long cherished and unwavering friendship between the United States and Australia.
The First Lady and I are honored to welcome you and Jennifer to the White House and we look forward to hosting you for a State Dinner tonight in the
Rose Garden, it will be quite something.
The unbreakable bond between America and Australia is rooted in eternal ties of history, culture and tradition.
Last year, our nations commemorated 100 years of mate-ship since our gallant service members fought together in World War I. Today, we vowed to
carry on the righteous legacy of our exceptional alliance.
The close relationship between our two countries dates back to the earliest days of the American Republic. In 1792, during George Washington's first
term, the American ship, Philadelphia became the first foreign trading vessel to enter an Australian port.
In the coming decades American prospectors, whalers and merchants traveled to Australia for opportunity and adventure. They found in your people a
kindred spirit. Americans and Aussies are loyal, bold, independent, and very, very resilient.
With incredible optimism and grit, our forefathers built homes and nations in the lands of endless beauty and possibility. Together, we share common
customs, common values, common dreams, and common heroes.
In the First World War, our bond was sealed in blood at the Battle of Hamel in France. In the words of Australian General John Monash, the events that
took place there live forever in the annals of our respective nations. General --
NEWTON: That was President Trump in fact welcoming Prime Minister Scott Morrison of Australia to the White House. He calls it an important mate-
ship. So I think the President at this point in time would like to make it clear that he is rolling out the red carpet for this country, a lot of
security.
Relationships depend on it and crucially, as well, Australia will be helping out in the Strait of Hormuz in terms of securing oil supplies for
the world. And that is also something that will come up today, as well as I say, that trading relationship with China.
And we want to turn now to big tech, Facebook CEO as we were saying was also in Washington to try and build bridges the head of the 2020 election
amid growing scrutiny if the Silicon Valley, but bad behavior might lead to bad press.
My next guest says for most in Silicon Valley, it rarely leads to meaningful consequences. Joining me now is the author of, "Super Pumped:
The Battle for Uber." Mike Isaac joins me now. You know, what was interesting here? I think that as toxic and dysfunctional as we all
thought Uber was, you in fact, characterize it as even more shocking than any one of us knew. And yet, you know, as we just pointed out in the lead
into you, what had been the consequences for that?
MIKE ISAAC, AUTHOR: Yes, that's the sort of dismal outcome of this whole thing. You know, anyone who was involved in Uber early on is a millionaire
at this point. Travis Kalanick, the CEO who had this culture fostered under him is a billionaire multiple times over and all the VCs who invested
early have done really well.
So you know, there might be constantly in the public behavior and sort of the idea that you might not be welcome in fine company, but at the same
time, there are millionaires, in there, if not billionaires that continue to sort of do the same thing.
[09:25:13]
NEWTON: You know, I'm interested to hear from you, beyond Travis's personality in the first instance, how much do you think private equity,
though, as you said, those venture capitalists, how much do you think they contribute to this? Because there's been a phenomenon that I've seen in
the last decade, where those companies just hang on to their private status at times, when in other epochs, we would have gone for an IPO so much
sooner?
ISAAC: Absolutely. I think, you know, Uber was the sort of poster child of staying public -- or staying private, as long as possible. I think
Facebook had stayed private for a long amount of time. But Kalanick in particular had this idea in his head that once you go public, you just have
much more scrutiny on your finances, and we're seeing that right now with Uber in the public markets, you know, they keep losing billions of dollars
every quarter.
I think there will probably be a push to bring companies public much sooner, because the ones that have stayed private for a very long time are
starting to see the effects of the market on the on these newly public companies. But I don't know, you know, it's just sort of up to the VCs and
the founders to push themselves out the door.
NEWTON: Which is an exclusive club, and then you have a very close set of hands trying to determine what happens to a company that as you said, the
accountability isn't there. And people have been, obviously riding Uber's for an extended period of time.
A few things here about the personality of the person who used to lead this company. Was it the soul factor? Or do you think the atmosphere around
him was very permissive? No one stood up to him.
ISAAC: Yes, I think he ran into a really familiar problem, which is if you surround yourself with people who just say yes to you all the time, and
don't really challenge you, you can end up getting away with a lot of different things.
You know, Travis was very resilient, very sort of strong headed, and to give him credit, he pushed into a very guarded transportation space that
had not changed for many years.
The problem was, he didn't really realize that once he disrupted taxi and delivery services, he became the dominant figure and kept acting as if he
was a scrappy startup. And that was ultimately, what did the man in the end along with many of the deep culture issues?
NEWTON: Yes, absolutely. And you certainly see the repercussions now in terms of many cities really going in quite hard now with that regulation.
I want to talk to you a little bit about that government footprint now.
You know, we were talking about Facebook earlier, and the fact that they're in Washington, that regulation is coming down. And look, it's not like the
government has a good track record on trying to regulate some of these industries.
At the same time, and I'm sure you've looked at this, when you talk about, you know, American antitrust history here, and we're talking about Ma Bell
or even talking about Microsoft and some have argued, if the government didn't come down on Microsoft early on, then we wouldn't have Google, we
wouldn't have this other ecosystem.
Where do you fall on that? Because I know you've done a lot of work on this. And whether it's Uber in smaller local markets and cities trying to
get a hold on them, or Facebook, where we're trying to deal with the global ecosystem. What do you think?
ISAAC: Yeah, no, no. It's a great point. I think we're, you know, you saw Zuckerberg on the Hill yesterday. And then today, just because he is
starting to realize that part of being a tech CEO now is kind of kissing the ring in Washington and making good with these folks who are threatening
to rein them in, I think probably for the past 10 to 15, even 20 years, the government FTC, you know, any sort of regulatory action against tech has
been largely nonexistent, basically, since U.S. versus Microsoft.
Now, we're sort of seeing this tech lash since 2016-2017, and I think there's probably going to be some action, you know, probably warranted,
especially with this reach that a lot of these companies have, but you know, we'll see how much tooth the FTC has because there's a lot of
criticisms that they're not going far enough.
NEWTON: Yes. And the question is, though, where do you go with it? Just returning to Uber for a moment in terms of that company and its
profitability, do you think it would have been completely different had it not been private and privately held in Mr. Kalanick's hands for so long a
period of time?
ISAAC: Yes, no, I think that's a great, great sort of point. Because there are things you can do as a private company that you can't do as a
public company, one of which is burn billions of dollars at an incredible rate.
I think Uber right now as you're seeing them in the first few months of its being a public company, they're losing billions every quarter. Last
quarter, they lost more than $5 billion, and the market is reacting accordingly and saying essentially, like, we can't let you continue to lose
that much money. We want to see you as a profitable company.
So I think I think the discipline that comes with being a public company is very important. And I think more and more tech companies are going realize
that as time goes on.
NEWTON: Yes, and the issue is that they just sorted an entire market while they were doing that, right? I mean, in so many cities around the globe.
[09:30:07]
ISAAC: That's right. No, I mean, you know, and that's the credit that I give them is pushing into hundreds of cities across the world almost on
every continent. The problem is like a lot of those rides were subsidized, and once we get to a point of the company being profitable, we'll see what
those fares look like.
NEWTON: Yes, I've noticed my discounts have dried up on Uber as well as I am sure many others.
ISAAC: Exactly.
NEWTON: Mike, a fascinating look into the company, and as I said, it has so many implications not just for Uber, but for so many of these so-called
unicorns that we have seen and that we will continue to see. Thanks so much for coming in. Really appreciate it.
ISAAC: Yes, thanks for having me.
NEWTON: And we will have much more news right here on FIRST MOVE right after the break.
(COMMERCIAL BREAK)
[09:33:50]
NEWTON: Welcome back to FIRST MOVE. I'm Paula Newton. The opening bell rang just a short time ago at the New York Stock Exchange and we do have a
higher open on Wall Street on the last trading day of the week.
Stocks are inching closer to those record highs, but we do stress inching. The S&P 500 is only a half percent away from records. The Trump
administration is reportedly making new goodwill tariff gestures to China that is helping the mood a little bit there on the markets.
Today is another quarterly futures and options expiration day, if I can say that on Wall Street, which means it could be a volatile date for stocks and
again up or down especially so close to that record.
I want to show you oil now, it is moving higher again on global markets. Its track is to rise some seven percent this week, its largest weekly gains
since the beginning of the year following the attacks on Saudi Arabia.
What's interesting here is that oil prices have there, risen again more people trying to take into account that geopolitical risk. Joining me now
is DJ Peterson. He is the President of Longview Global Advisors. The market has so badly wanted to shrug off even this and yet it seems unable
to.
Let's deal first with that geopolitical risk of that, you know, obviously would so hamper energy markets. Do you still see it as a risk because some
people say that there's a lot of oil sloshing around the globe, and that even after an attack like this, supplies would still be fine.
[09:35:16]
DJ PETERSON, PRESIDENT, LONGVIEW GLOBAL ADVISORS: That's right, and oil prices today are still below where they were a year ago. And there's
really concern -- a lot of concern -- about the trajectory of the global economy and slack demand for oil. Plus you have rising production in North
America.
So there, in many cases, yes, there is enough oil out there, and certainly the Saudis have been saying that we are going to work as quickly as
possible to assure supplies to the market. You have the United States and China with strategic reserves, which also can be tapped if needed.
So there's been a lot of efforts to reassure the markets. But I think one question is, you know, will we be in a higher oil price for a longer period
than many expected and what does this do to global growth?
NEWTON: And going into the attacks themselves, and the risk of this happening again or happening somewhere else? And of course, we can discuss
the Strait of Hormuz as well, and the risks there. Do you believe that the markets are actually adequately factoring in how volatile it is, especially
given the fact that Iran seems to be unleashed now, right? There doesn't seem to be even a proportional military response in the offing.
PETERSON: Right, the situation is very unpredictable. I think, right now, you have a lot of uncertainty about what the next move is going to be.
What is Iran's move, as you said, I think they're feeling very strong and confident because there hasn't been a significant response, just threats.
We have freelancing in Saudi Arabia, and we're not clear what the decision making is there. We've seen in the past few years, some very poor
decisions being made in the international relations arena in Riyadh.
We have a messaging coming out of Washington, out of the White House, which has been clearly contradictory and mixed messages. And so we don't even
know what the thinking is in the White House. And we also have a changeover of national security leadership going on.
And then of course, there's other issues right now on in the news that are kind of preoccupying the administration regarding this whistleblower. And
so there's a lot of factors going on right now. It's very possible -- nobody predicted this move, this strike on Saudi Arabia. So it's
impossible to say there's not going to be another hit in the near future.
NEWTON: Yes, and especially that Iran, if it does seem emboldened out of this, there might be another one. And yet the market really was quite
resilient throughout all of this. It hasn't been quite as resilient on the global trade tensions specifically against the U.S. and China recently.
How good -- materially good -- does a deal have to be for these markets to accept it and for global growth to really get back on sure footing?
PETERSON: Well, what you're seeing is the markets responding very positively to very minor news announcements, such as there are going to be
talks, or there has been a meeting.
I think what we're seeing right now, in our view, the term to watch is mini deal. We are seeing an effort perhaps to have a very limited deal with
China, U.S.-China, but also with Japan, with India, in very limited arenas, in particular key agricultural segments.
In some cases, these mini deals are just dialing back the measures that the Trump administration has imposed. But the point is, is that the President
wants some good news, and to say his trade agenda is moving forward for the election.
Now, the material benefit to the economy is going to be from these mini deals, and in some cases, they are interim or short term. It is going to
be very specific, and it's going to be very focused. Harley-Davidson motorcycles, perhaps something for Huawei. And then, of course, pork and
soy beans.
But it's not going to be any kind of broad deal, and it's certainly not going to give us confidence over the longer term. What we've seen is there
are many opportunities, for instance, in the China relationship to get tripped up around technology now perhaps around Hong Kong.
NEWTON: And we will not be seeing what the President wanted, which was a better manufacturing data out of the United States if we have that
comprehensive deal. DJ Peterson, The president of Longview Global Advisors. Thanks so much for being here. Really appreciate it.
PETERSON: You're welcome.
NEWTON: Now after the break on FIRST MOVE, their catchphrase was, you know, don't just book it, Thomas Cook it. Now thousands of travelers face
an anxious way to see if the world's oldest holiday company survives into next week.
(COMMERCIAL BREAK)
[09:43:00]
NEWTON: In Britain, the company that invented the package holiday is now at risk of collapse. Thomas Cook is scrambling to find $250 million just
to stay afloat and prevent thousands of holidaymakers from being stranded across Europe.
Anna Stewart has been following all of this from London and you're going to explain what Operation: Matterhorn is, and thank goodness there is one.
How many people could potentially be affected by this and what's being done about it?
ANNA STEWART, CNN REPORTER: Well right now, Paula, 600,000 people are right now abroad on a Thomas Cook holiday with a flight, so that is a lot
of people. A Hundred sixty thousand of those are British. So there's a big British problem, of course it's a British company and as you said
reportedly, the British aviation regulator has set up Operation: Matterhorn.
Now this is a huge repatriation plan that apparently would cost around $750 million to get everyone back home. There is huge pressure here in the U.K.
given it is a British company, 178 year old British company. It survive two World Wars. It's been nationalized. It's thwarted off force off
recession, and now it's going bust. Lots of pressure on the government and on British banks to step in and try and save it from complete collapse.
Also of course thinking about all these employees, 20,000 people work for Thomas Cook and right now, I think half the problem is so much media
coverage. Lots of customers worried about their holidays. Lots of people not wanting to book with Thomas Cook, that's only going to make things
worse -- Paula.
NEWTON: And what should passengers do if the worst happens and as you say, it's kind of tough to keep a viable business going when you have that kind
of press?
STEWART: Incredibly difficult and you see on Twitter, Thomas Cook trying to reassure all customers out there. Now if the worst happens and it's
such a big if, first of all, do not panic. You are not alone. As I said, there are 600,000 people currently abroad. It depends what you booked.
If you booked a package holiday through Thomas Cook, you are actually covered under what's called ATOL, it is an insurance scheme set up by the
British aviation regulator. If you booked a flight and accommodations separately, you may have to go through your credit card, go through the
fine print. You may be ATOL protected, you might not be. For non-Brits, you may have to go through your own country's regulator.
The first port of call, I think, Paula, it really is to go to the airline's website in this event. What would likely happen, a bit like when we have
that Monarch Airlines collapse is you will get redirected to the British aviation regulator's own website to try and help you, but you won't be
alone. There are plenty of people out there.
NEWTON: Not always inspiring to have to go to the website, but I take it that that's the best thing to do. And wow, what an eye-popping price tag
potentially it could be, three quarters of a billion dollars. Wow. Okay. Anna Stewart will be on top of the story for us. Thank you.
And we are in today's "Boardroom Brief" right now. China is opening what you could call a mega airport. Look at that. You're looking at Beijing
Daxing International Airport, which has four runways and a terminal the size of nearly 100 football pitches, and that's just the first phase.
China is forecast to overtake the United States as the world's largest air travel market within three years.
And an update we have for you on Purdue Pharma bankruptcy case. The judge says the company and its subsidiaries can continue paying wages and bonuses
to employees, former employees and retirees. The drug maker filed for bankruptcy as it faced demands to pay billions of dollars in damages over
its alleged role in America's opioid crisis.
Cybersecurity is a multibillion dollar business, and despite stories about data breaches nearly every day, you have to wonder who is listening to the
warnings. We've all seen the scams like e-mails filled with typos, perhaps a faraway King needs you to transfer some cash to him. Now it's more
sophisticated.
One firm Proofpoint says it is blocking more than 600 million e-mail threats every day. The F.B.I. says more than $12 billion was lost in
compromised e-mail attacks last year worldwide. And Proofpoint says nearly half nearly, every time they need some human interaction to make that work.
The CEO Gary Steele told Alison Kosik where the last line of defense is.
(BEGIN VIDEOTAPE)
GARY STEELE, CEO, PROOFPOINT: I think we're all getting a little tired of hearing about the data breaches. I think the unfortunate reality is threat
actors are making money, and so they continue to be motivated. There's more organizations entering that world. So there's actually more threats
than ever before.
And the big shift in the threat landscape is it's moved from these threat actors targeting infrastructure, meaning writing sophisticated code to
break into companies, to targeting individuals like yourself, and trying to get you to click on something and you to open some document or click on a
link.
And so it's really shifted to be much more human centric than it's ever been before.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: So how do you prevent all this from happening? You said, you know, one of the things your company does is
you keep those phishing e-mails we've been getting into the inbox, but what else can you do?
STEELE: So the other things you can do is you need to raise awareness on your employees, because people need to be thinking about it, while they're
sitting in desk, while they are Starbucks, whether at home, it's everywhere, because the threat actors will follow you wherever you are.
And so being thoughtful and understanding what the risks are about clicking that link or opening that file.
KOSIK: Okay, so and you call them threat actors, but you know, crooks, hackers, whatever you want to call them, they are one step ahead of all of
us, aren't they? So how do you stay one step ahead of them? How do you predict where they're going next? If they're going for the human element
now, it means they are already plotting on what they're going for next, beyond the human, what are they going for next?
STEELE: So one of the things we do as a business, and it's one of the reasons we've continued to grow at a fast pace, is we have a set of
researchers that follow the big threat actors around the globe. And we're watching what their trade craft looks like, and how that's evolving over
time.
Right now, it really has evolved to analyzing individual and targeting them in a variety of ways, whether it's an e-mail or on social media, wherever
that individual is, and wherever that threat actor can get through, that's where they'll go. And so we track them really carefully. We're watching
their tradecraft. And that's what's enabled us to grow at a fast pace.
KOSIK: All right, so Proofpoint, one of your biggest competitors is Cisco Systems. So in an age where, you know, many companies are trying to, you
know, reduce the number of vendors they're dealing with, reduce the number of products they have, you know, to have one function, maybe a single
product company, how do you -- how does Proofpoint stay relevant against other companies that have an entire security architecture?
STEELE: You bet. So we've done a couple of things. So one is we've stayed very focused on this market and because of where the threat
landscape has gone, our relevancy is increased over time.
So while Cisco has a broad product line, we stay very focused and that's been beneficial. Two is, our product line has grown significantly as well,
and we've talked in our most recent earnings call, for example, we're now up to 18 products. So the breadth of our suite has increased, and so we're
delivering a lot of value to our customers.
[09:50:03]
STEELE: So to your point, as organizations begin to consolidate vendors, we're in a great position to capture those dollars.
KOSIK: People watching, what can you do to protect yourself from hackers getting to you?
STEELE: So really three simple things. One is be careful before you click, whether it's a link or an attachment. Don't trust everything you
see in an e-mail because they may be directing you to do something you shouldn't do like send a wire or send confidential information, and three,
get educated and get smart about it.
(END VIDEOTAPE)
NEWTON: Still ahead, a very costly mistake. How a bet on the oil market cost Mitsubishi more than $300 million.
(COMMERCIAL BREAK)
NEWTON: Mitsubishi is investigating how a rogue trader in Singapore cost the company $320 million after a bet on the oil market went very wrong.
Our Matt Egan has the details. And you know, at issue here is how could one trader actually get into this much trouble? Are there no checks and
balances?
MATT EGAN, CNN BUSINESS SENIOR WRITER: It's a good question, Paula. I think that the lesson here is if you're going to make an unauthorized
trade, you better at least get it right. Because as you mentioned, this unauthorized trade by an employee at Mitsubishi is going to cost this firm
at least $320 million.
Mitsubishi says that these were trades that were made by an employee at a subsidiary in Singapore. And what happened was, they're saying that these
trades were made in January and the employee apparently was able to trick the risk management system by disguising them as hedges, right?
And so he made them look legit, according to the company, but in reality, they were actually bets. Well, that really went wrong when oil prices
collapsed over the summer. So Mitsubishi said he discovered these unauthorized trades in August when the employee was out the office.
The company says they hired a law firm and they did an investigation. And this week they fired the employee, and they also alerted authorities.
Mitsubishi says that even though they closed out these positions, the losses could actually still go above that $320 million estimate.
But to your point, Paula, I think this really raises two questions, right? How is this allowed to happen? Firms are supposed to have checks and
balances specifically to prevent this kind of activity. And two, why are we only learning about this now three weeks into September?
NEWTON: Yes. And such good two points that you bring up there. Before I let you go, did the company mentioned in terms of there must have been a
wholesale change in the way their trading happens for them to actually go on? I mean, you said higher than $320 million perhaps.
EGAN: Right. That's right. They are still -- it sounds like they're still trying to wrap their heads around exactly what happened and how this
happened. They said that they closed out the positions, but they are also allowing for the possibility that the losses may be higher.
[09:55:05]
EGAN: There's obviously going to also be legal fees involved in this and possibly, you know, forensic activity as well. So we're going to have to
check in on this.
But you know, Paula, this is not the first time we're seeing a rogue trader hurting a financial firm. I mean, you have to remember that last decade,
there was that really infamous rogue trader at SocGen, the French bank. That cost the firm a lot of money. It was $6 billion that the bank
disclosed in 2008.
And then if you go back even further, there was another rogue trader that lost $1.3 billion at the U.K. bank, Barings and that ended up contributing
to the firm's collapse.
NEWTON: Yes, and I think -- I'm going to have to leave it there, Matt, I think that's the issue, right? It's like, weren't these lessons learned
already? Okay, Matt, have a great weekend. Appreciate it.
EGAN: Thank you.
NEWTON: And a quick check on the markets for you as they are picking up a little bit of steam. Not much there, but we'll see, especially as the
expirations are coming due.
That is it for the show. Thanks for watching FIRST MOVE. I'm Paula Newton. "International Desk" starts right after a short break.
(COMMERCIAL BREAK)
[10:00:00]
END
