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First Move with Julia Chatterley
President Trump Faces A Second Whistleblower Over His Call With Ukraine's President; Chinese Companies Suspend Ties With The Houston Rockets Basketball Team After The GM Tweeted Support For Hong Kong Protesters; Unilever Pledges To Reduce Its Plastic By Half. Aired 9-10a ET
Aired October 07, 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: Right now, President Trump faces a second whistleblower over his call with Ukraine's President. Full Court
Press: Chinese companies suspend ties with the Houston Rockets basketball team after the GM tweeted support for Hong Kong protesters. And cutting
back big time, Unilever pledges to reduce its plastic by half. It's Monday, and this is FIRST MOVE.
And welcome to FIRST MOVE. Glad you could make it with us, guys. This was a real wild week of trading here on Wall Street last week. I don't have to
remind you. The madness may not be over yet as U.S.-China trade talks get underway once again in Washington.
Again, though in Washington, we have whistleblower mania, and that could also impact sentiment. I know we've been saying that it hasn't been but
hold on, buckle up. It's still could; and of course, I know you don't want me to say the words but Brexit. Brexit talks again will be in focus.
We'll see if there's any clarity into this week.
Now, as we await the opening bell, it is looking like a lower open across the board for stocks. But I can tell you futures were pointing to a much
worse open.
Remember, after the third losing week in a row for the Dow and the S&P, some people are trying to see if there's still a bump there that could
happen especially on the heels of those trade talks. Futures are falling of course, because we are now hearing that China will walk away from a
trade deal if it's forced to make any key structural reforms.,
Our latest economic numbers are sending mixed signals about how trade is impacting that U.S. growth. September jobs numbers show that the job
market is holding up pretty well actually, which hasn't really surprised people.
Fed Chair Jerome Powell said Friday that the economy is in his words, still in a good place. But you know last week for lackluster readings in the
manufacturing and services sectors rattled investors for sure. The latest Atlanta Fed estimates GDP growth is slowing to less than two percent for
that third quarter, and that is significant.
Now a further report out today points to weak economic growth next year and we will have more on that in just a moment. But first we want to get right
to our main driver and that is the latest on this impeachment probe.
Now more detail and more information is emerging relating to President Trump's attempts to lean on a foreign leader for political gain. Now a
second whistleblower has now come forward with firsthand knowledge of that call between President Trump and the leader of Ukraine. And 90 -- I will
say that number again -- 90 former National Security officials have released a letter in support of that first whistleblower.
Suzanne Malveaux joins me now from Capitol Hill. Suzanne, you've been up and down those hallways getting reaction in the last few days. What's been
the reaction now to a second whistleblower who says he has firsthand information?
SUZANNE MALVEAUX, CNN U.S. CORRESPONDENT: Well, Paula, people don't really know what kind of information that is. Only some information from the
House Democrats saying that it actually corroborates the first whistleblower story. But this is of great concern to Republicans, and
therefore you've got a lot of these Republican senators as well as Members of the House who were on recess, of course, but those who aren't do try to
reach.
They are running -- running away from the Hill here. And so it's going to be a lot more difficult to run when they go back from this recess when they
come back tomorrow. That is one group. On the other hand, you've got President Trump, who is lashing out at Speaker Pelosi and the Chair of the
Intelligence Committee Schiff, turning the tables on them saying I've done nothing wrong, that they are the ones who are guilty of high crimes and
misdemeanors and should be impeached.
But when you take a look, and you listen to those senators, those Republicans who are willing to speak out very interesting, one of them,
Senator Rubio, dismissing all of President Trump's statements as simply a joke, not to be taken seriously, something to rile up the media.
Then you have others like Senator Ron Johnson, who is the Chair of the Homeland Security Committee, and he says he doesn't trust anything that the
CIA or the FBI or the U.S. Intelligence Community puts out.
And so those are just some of the ways that they're responding. And then you do have a few Republicans who are very critical of the President at
this time, Senator Mitt Romney calling the President's actions appalling.
You also have other moderates, like Senator Collins, and Ben Sasse. They also are expressing some reservations and displeasure about what the
President has done and what they've learned already.
And Paula, one of the strategies, if you will, coming from a Fox News commentator in an op-ed, Tucker Carlson, he says, look, the President's
actions are indefensible, but not impeachable, and that might be the kind of roadmap, the kind of language that Republicans might use, to at least
express some displeasure with what they have seen out so far out of the House Democrats Impeachment Inquiry, but not go so far as to condemn the
President and to vote for Articles of Impeachment -- Paula.
NEWTON: Yes, which would be a shrewd political strategy which we will get to those Republicans and independents who, you know, if they check their
guts, they know what the President did was probably not right. And yet on the other hand, they're saying it's not impeachable. I get that.
Suzanne, going forward here. We have some more hearings right there on Capitol Hill. How much more information do you expect we will be able to
get this week?
[09:05:19]
MALVEAUX: Well, these are critical witnesses, and the fact that they were even going to be here is very important, because some of the other State
Department officials are not showing up. They have decided that they're not going to cooperate because of what the Secretary of State Pompeo has
said, they don't have time or they need to be lawyered up with their own State Department lawyers.
But what we're going to see tomorrow, the U.S. Ambassador to the European Union, very important Ambassador Sondland, he is somebody who in these
discussions, in these text messages was a key part in the negotiations, in the talks leading up to President Trump and the Ukrainian President to have
a meeting or a discussion and whether or not that was quid pro quo.
He is somebody who said no, hey, wait a minute, when he was called out by a U.S. diplomat, is this a quid pro quo? And he said no, absolutely not.
Then abruptly suggested that they stop using texts and that they talked to each other directly by phone.
So people are going to want to get to the bottom of that. What does that mean? What does he know?
And then Friday, it will be the former U.S. Ambassador to Ukraine. She was recalled abruptly in May. What was that about? We know that the President
has been openly critical of her as well as his private attorney, Rudy Giuliani, so she will be important as well to kind of flesh out what she
knows in terms of the approach to Ukraine. What did the President want and demand? And was there in fact, some sort of exchange?
NEWTON: Suzanne Malveaux there on Capitol Hill, thanks. A lot of details there still to go through and you wonder what voters are making of it. We
will continue to track of course, what investors are trying to make of it here at the New York Stock Exchange.
Meantime, President Trump's goal of three percent GDP growth is looking increasingly out of reach. A new report shows the U.S. economy slowing
further in 2020. And that, of course, comes smack dab in the middle of an election campaign.
The good news for the President, it doesn't seem like this is actually going to turn into a recession. Clare Sebastian joins me now and the
consensus, Clare tells us that the U.S. will slow down, right? But may be able to avert that recession, likely because of the consumer, right? The
U.S. consumer?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Right. So far, the consumer seems to be going strong, Paula, but as you say that three percent growth
that the President has touted is not on the horizon. If you ask the National Association of Business Economics and their survey of chief
economists and strategist at big companies. They say that next year growth will slow to about 1.8 percent, which will be the first time it has dipped
below two percent since 2016.
And if you look at the odds of a recession, as you say, it's not imminent, according to these economists, about seven percent chance this year, but by
the middle of 2021, that chance in their eyes rises to about 69 percent.
So it's not imminent, but it's certainly not off the table. There you have it there. You see it dramatically rising over time. So the slowdown they
see is taking hold. And then the question, Paula, of why -- the biggest key risk to the downside for the economy, according to this survey is trade
policy. That was the biggest risk according to 53 percent of respondents in this survey.
And it's interesting, if you look at the other risks that they point to: Slowing growth, market volatility, geopolitical event of some sort -- all
of those risks, I would say, exacerbated by trade policy itself. So really, this is taking hold.
And I think, one thing you can say is that if trade policy were to be sorted out, if there were to be some kind of deal, the picture here would
change markedly.
NEWTON: Yes. What's interesting, Clare is how we dovetail all of this. Right? So we're talking about impeachment. We're talking about a trade
deal with China. This morning, we hear that perhaps China is not likely to come up with a comprehensive deal, they probably don't feel that they need
to do that right now. How will all of this affect trade going forward?
Because you know, the argument some people say it'll make Donald Trump, the whole impeachment thing and the problem with the slowdown of the economy
will make him more likely to strike a deal with China. Other people say less.
SEBASTIAN: Well, I mean, it's just a couple of weeks ago, Paula, that the President said, you know, he wanted a complete deal with China. Now that
unnerved some investors, because that suggests that he is going for something really ambitious, which could take a while and some kind of
interim deal is off the table.
Obviously, a lot has changed in the last couple of weeks, not least the Impeachment Inquiry. But we've also had some worrying news in the economy.
We had a survey of manufacturing activity, which is at its lowest point since 2009 and that's affecting key Trump constituents don't forget, in
states that have high levels of manufacturing jobs.
But we're also seeing jobs lost there and it was slightly disappointing, not a complete disaster, but slightly disappointing jobs report.
So certainly, he is under pressure from the economy. The White House standing firm, Peter Navarro, on CNN on Friday, saying that it's the Fed
and the strong dollar that's to blame for the manufacturing slowdown, but certainly it's not outside the realms of possibility that China is watching
all of this, watching the pressure that the President is under and realizing that it has more leverage and so maybe less willing to come with
big compromises -- Paula.
[09:10:10]
NEWTON: Yes, and usually probably taking bets on who the President will be in 2020. Clare Sebastian there who continues to watch those numbers very
closely. Appreciate it.
Meantime, British Banking Group, HSBC is set to slash up to 10,000 jobs, and that's according to "The Financial Times." It says the move is part of
an ambitious cost cutting plan under the lender's interim CEO.
Matt Egan joins us, and the question I have for you, Matt, is that you can see this as kind of tinkering and yet HSBC has been very clear, they need
to transform the way they do business. Is this the beginning of this, a very small part of this? How're they framing it?
MATT EGAN, CNN BUSINESS SENIOR WRITER: Yes, that's a good question, Paula. I mean, it's another painful day for European bank employees. HSBC's CEO,
Noel Quinn, he is apparently on this quest to really, really cut costs quite significantly.
"The FT" is reporting up to 10,000 jobs are at risk and this would be on top of the 4,700 job cuts that were announced in August when HSBC made the
CEO change.
Now, we should caution that this has not been confirmed yet. This is an "FT" report, HSBC is declining to comment. And although 10,000 is
obviously a large number, HSBC is a massive bank. So this would represent about four percent of the bank's total headcount of about 238,000 people.
But you know, Paula, I do think there are still three big takeaways here. One, HSBC is clearly hurting right now from a combination of factors
including slow economic growth in Europe and elsewhere. It's also hurting from low interest rates, and then all of these geopolitical uncertainties
as well, including a Brexit and the unrest in Hong Kong.
And HSBC is not alone here, right, and Barclays and we've seen SocGen, and most notably, Deutsche Bank also announced large job cuts.
You know, it is also clear that HSBC is serious about trying to really cut costs, "The FT" reported that the board actually pushed out the former CEO,
in part, because he was not serious enough about cutting costs, and Paula, the last point is that, no one is really safe from these moves, because
"The FT" is reporting that high paying jobs are actually the ones being targeted by HSBC in this latest round of cost cuts.
NEWTON: Obviously, looking at the value of those jobs at this point, and what they add to the bottom line. I have to ask you, Matt, we've been
talking a lot about lower interest rates, but also in places like Germany, negative interest rates, how is that impacting the whole financial sector,
including the HSBC?
EGAN: Well, Paula, I think it's clear that these really unusual extreme monetary policy moves that we've seen in Europe and Japan and elsewhere,
they have unintended consequences and one of them is that it really does hurt banks, right?
These banks are now dealing with near zero rates; in some cases, negative interest rates. We saw the ECB go further into negative territory, and the
Bank of Japan talking about doing the same thing. The Federal Reserve has dialed back rates. And that's a big deal because it actually eats into
bank lending profits.
And so now, the banks are under pressure to come up with ways to cut costs. And I think that, you know, given all of these technological innovations,
it may be easier and easier for them to actually find ways to cut cost by investing in automation and artificial intelligence.
So I do think that this is a trend that we're going to have to keep an eye on, and we'll hear more from the big U.S. banks in the coming weeks about
what they're seeing and what moves they have to cut costs as well.
NEWTON: Yes, it is a sector that hasn't gotten much love, especially from investors recently. Matt Egan, thank you for that. Appreciate it.
Now several Chinese businesses are not playing ball with the NBA's Houston Rockets. It follows the team General Manager tweeting his support -- his
support -- for Hong Kong's pro-democracy protests. This has caused quite a controversy in China.
China's top state broadcaster says it will stop airing Rockets games on television altogether. Our David Culver is from Beijing and has been
following all of this.
You really cannot make up the intensity of the reaction both in the United States and in China on this?
DAVID CULVER, CNN CORRESPONDENT: No, Paula. No question. This has gotten really messy here. Everything from what we're seeing from state-sponsored
media and on online -- social media. In state-sponsored media and government backed papers, they're coming down really harsh against the team
and against the NBA saying that they need to take harsher punishment against the GM.
And on social media, we're hearing folks say that people should boycott the Raptors.
(BEGIN VIDEOTAPE)
CULVER (voice-over): China's passion for basketball can be seen in a neighborly game of pick-up. When he is not shooting hoops with his friends
in Beijing, 15-year-old Erik Qu is closely following the NBA.
(BEGIN VIDEO CLIP)
ERIK QU, NBA FAN: Toronto Raptors.
CULVER (on camera): The Toronto Raptors?
QU: Yes.
CULVER (on camera): They're your favorite?
QU: Yes, they win the championship.
(END VIDEO CLIP)
[09:15:10]
CULVER (voice-over): But a team that's no longer on his preferred watch list, the Houston Rockets because of a now-deleted tweet sent out Friday by
team general manager Daryl Morey. The Rockets GM tweeting a photo that read, "Fight for freedom. Stand with Hong Kong," referring to the months'
long democracy protests underway in Hong Kong -- protests that have both embarrassed and angered China's government.
Over the weekend, Morey's tweet unleashed a strong response in Mainland China. The Chinese Basketball Association severing ties with the Rockets.
CCTV, the Chinese state-run broadcaster, no longer planning to air upcoming games. And the Chinese tech giant, Tencent, suspending its deal to
livestream Rockets games.
The reaction led to an apology by Morey, tweeting in part, "I have always appreciated the significant support our Chinese fans and sponsors have
provided and I would hope that those who are upset will know that offending or misunderstanding them was not my intention."
CNN was in Tokyo as the Rockets hit the court Monday, practicing ahead of their preseason game against the Lakers.
Rockets guard James Harden echoing his GM's apology.
(BEGIN VIDEO CLIP)
JAMES HARDEN, HOUSTON ROCKETS: You know, we love China, we love playing here. I know for both of us, individually, we go there once or twice a
year. They show us the most support and love, so we appreciate them as a fan base.
(END VIDEO CLIP)
CULVER (voice-over): The NBA acknowledging Morey's tweet deeply offended many in China and called it regrettable, but that has U.S. lawmakers on
both sides upset.
Republican Senator Ted Cruz tweeting, "Human rights shouldn't be for sale and the NBA shouldn't be assisting Chinese communist censorship."
Democratic Congressman Tom Malinowski called the NBA's response shameful.
Back on the streets of Beijing, Erik and his friends try to see past the off-court drama.
(BEGIN VIDEO CLIP)
CULVER (on camera): Does it make you think differently about the Rockets?
QU: Just okay. It didn't change my opinion on them. I still like Harden and -- but maybe I won't watch them too often.
(END VIDEOTAPE)
CULVER: And I should clarify what I said at the top of that piece. People here on social media saying that they should boycott the Rockets. But
naturally, they're going to be boycotting the Raptors, too, for the next game because the Rockets are playing the Raptors in Tokyo.
And the frustration here is really deep rooted because there's such a love for basketball, Paula, and that love was really furthered when Yao Ming
joined the Rockets in 2002, and where is Yao, today? But he is the President of the Chinese Basketball Association, the same association that
has now severed ties with his former team.
So it puts him in a really tough position, too.
NEWTON: I know really, you can't make it up. This is an extraordinary story that obviously weaves together sports and politics. We will continue
to talk about it throughout the day. David, I really want to thank you for that report. Appreciate it.
And we want to turn now to the stories making headlines around the world. We stay in Hong Kong where mass protesters have gathered outside of police
station in violation of Friday's emergency law banning facemask.
The ban unleashed a weekend of some of the most violent protests there in four months, and believe me that's saying something. Earlier hundreds
gathered in Hong Kong's shopping malls Monday for a sit-in protest.
In a major change, meantime, in U.S. foreign policy, American troops are pulling out of Northern Syria. U.S. officials says they will not defend
the Kurds left behind there. Now, they are the same Kurdish forces who fought alongside the Americans as they battled ISIS.
Turkey views them as terrorists. The pull out paves the way for a Turkish operation against the Kurdish fighters in that border area.
Coming up on FIRST MOVE, General Motors strike enters its 22nd day and it doesn't seem to be ending anytime soon.
And pulling the lever on plastic. Unilever commits to cutting its plastic use in half all by 2025. Stay with CNN.
(COMMERCIAL BREAK)
[09:21:59]
NEWTON: And welcome back to FIRST MOVE live from the New York Stock Exchange. You know, in the last few weeks, the conventional wisdom has
been, well, the impeachment fight will not affect the markets, not so much anymore, especially as we turn to the news that is breaking in the last 24
hours that there was a second whistleblower that has now come forward.
Greg Valliere joins me now. He is the Chief U.S. Policy Strategist at AGF Investments. I mean, Greg, look, we have been hearing from many people
that the impeachment will not affect the market. They are looking more at issues about growth and of course, the all-important trade equation. At
what point -- at what point in time, does that actually start to affect what we believe will be these markets?
Because, you know, as we continue to say, while trade is an issue, of course, the Fed is an issue. Most people have said that politically --
politically -- the impeachment will not affect these markets. When does that change?
You know, I had noticed you were quoted as saying that the election will be about two things. Either the issues like the economy - that Trump will
likely do well, as long as there's no recession. But you also said this election could also be completely about Trump himself. And if that's the
issue, that he probably won't do well.
Greg, I don't know if you can hear me now. Did you hear any of that?
GREG VALLIERE, CHIEF U.S. POLICY STRATEGIST, AGF INVESTMENTS: I don't hear Paula that loudly.
NEWTON: Greg, go for it. Just tell us about how you think impeachment, may or may not affect the markets?
VALLIERE: I can't -- I can't hear it. I'm sorry.
NEWTON: We're going to pull away from Greg. So, hopefully that we can get back to you in a little bit. I want to remind everyone about what's going
on with the markets here.
We were in fact, at session lows a few hours ago. Futures don't look that bad right now, continuing on here. They continue to say that trade is what
is impacting these markets. And as we continue to look at those futures, again, not a great day here and the Dow coming off a two-week losing
streak.
Greg, I hope you can hear me now. I think you can.
VALLIERE: Yes, yes.
NEWTON: We want to talk to you about that conventional wisdom that says that impeachment will not affect this market. What do you think?
VALLIERE: Well, so far, it hasn't. And I have to say, Paula, that the two big stories for the markets are the resumption of China trade talks this
week, and the Federal Reserve meeting at the end of October.
At some point, impeachment could affect the markets, but only if there starts to be a change in the outlook for a Senate trial. If it looks like
a senate trial might convict, that's a really big deal. But as long as it looks like a Senate trial won't convict, I think the markets can focus on
other things.
NEWTON: But how about that impeachment fight actually changing how Donald Trump begins to negotiate and principally obviously with China? I mean, it
obviously doesn't make him look like a strong -- like in a strong bargaining position with China and China continually is really hedging
their bets and wondering if he is even going to be President come 2021.
VALLIERE: Great point. I would say there are two major casualties of the impeachment process, the likelihood of a trial, even if Trump is not
ousted, number one, it means progress on all sorts of other stuff -- legislation, China trade deal, that progress could stall.
[09:25:13]
VALLIERE: I think the Chinese might think, well, maybe we ought to wait until after the U.S. election before we cut a deal. And number two, I
think the other casualty is Trump's ratings. I think they're going to continue to slide. I think his reelection prospects are looking less and
less likely.
And for the financial markets, the possibility, not the certainty, but the possibility that Elizabeth Warren could win is something the markets have
to start focusing on.
NEWTON: Yes, and the markets already have started to weigh in on that. It'll be interesting to see how that develops, especially as her platform
develops.
I want to talk to you as well about the Fed. You know, when we saw those job numbers, most people assumed that look, they were weak enough to mean
that the Fed would move in October and in December, what do you think?
VALLIERE: Well, I don't know if Jay Powell has the votes. It's that simple. When Trump tweets about Powell, Trump overlooks the fact that
there's an FOMC that votes on this stuff. And I think several members Rosengren in Boston, Esther George in Kansas City, are reluctant to waste
more ammunition with an economy that has an unemployment rate at 3.5, with an economy that's grown about two percent.
So I think some people on the Fed would prefer to wait, maybe we just get one move between now and the end of the year. I think two moves is maybe a
bit too much for many of the Fed Governors.
NEWTON: Yes. And you know, some people have argued that look, the monetary policy won't help that much and I have to go, but very quickly,
which side are you on? Monetary policy can still do a lot here or is it all about fiscal policy going forward?
VALLIERE: Fiscal policy is incredibly stimulative and that's going to stay stimulative. If I were voting at the Fed, I'm not -- if I were voting at
the Fed, I would not cut rates for a while because you don't want to waste your last few bullets with an economy that's still growing and with a
market that's close to record highs.
NEWTON: Interesting, Greg. Sorry about those audio problems at the top. I'm glad we got to hear from you. Anyway, Greg, we will continue to watch
the markets as this impeachment plays out. I will be right back with the opening bell.
(COMMERCIAL BREAK)
[09:30:14]
NEWTON: And welcome back to FIRST MOVE. That was the opening bell here at the New York Stock Exchange and stocks on all indices now pointing lower.
This day could go either way, though, many wondering what is up with the U.S.-China trade deal and hoping that there is some kind of a breakthrough
and we begin with that.
As expected, as you can see stocks are headed lower. This is the first full trading week of Q4 in case you are wondering. Traders are cautious
ahead, of course, that U.S.-China trade negotiation that continues later this week.
White House Economic Adviser, Larry Kudlow said Friday that we might get some positive surprises. The new report saying China is not in a
compromising mood and doesn't feel like putting together full structural changes.
Meantime, hopes for new fed rate cuts could lend some support for stocks. Investors see a 77 percent chance of another Fed cut this month. I wonder
if that's being a bit too optimistic.
Fed Chair Jay Powell speaks on the economy again tomorrow and of course, those all-important Fed Minutes are out on Wednesday. So you know, we've
got some news to try and propel this market forward that is not trade related, although I'm not sure that's going to be any kind of good news
either.
We want to turn to our "Global Movers." Of course, General Electric, trading higher at this moment. The company moves to try and slash its
debt, which I don't have to remind you is fairly hefty. It is announcing plans to freeze pensions for 20,000 U.S. employees who have salary
benefits.
Uber shares meantime are up. It follows the stock getting upgraded by Citi Group, which is an interesting move. Analysts say renewed revenue growth
could be on the horizon with third quarter earnings set to release next month.
And General Motors shares trading lower. This is not a surprise as talks to try resolve that strike have taken a turn for the worse. That's
according to the United Auto Workers Union and they put out a statement.
I want to remind you here, nearly 50,000 GM employees are on strike. It's in its 22nd day, but that's not all it is impacting, right? It's impacting
a lot of other industries, including those all important parts suppliers. It's the auto industry's longest work stoppage in more than a decade.
Our Vanessa Yurkevich is there in Detroit for us. And you know, this was really interesting, because a lot of people assumed that they were close to
a deal. What happened?
VANESSA YURKEVICH, CNN BUSINESS AND POLITICS REPORTER: Hi there, Paula. Yes, these talks really broke down over the weekend, and we're really
starting to see this cost bear down on these workers, including small businesses here in the area.
Economists are warning that as long as this strike continues, we could see a recession in the State of Michigan, and it could have serious
implications for the 2020 election.
(BEGIN VIDEOTAPE)
JESSIE KELLY, GM WORKER: ... American dream.
YURKEVICH (voice over): Jessie Kelly's life is in boxes.
(BEGIN VIDEO CLIP)
KELLY: We use this as a toy room, so --
YURKEVICH (on camera): Now it's a box.
KELLY: -- now it's a box-holding room, yes.
(END VIDEO CLIP)
YURKEVICH (voice-over): These boxes packed and ready for the dream home she's saved for. Then, she went on strike.
(BEGIN VIDEO CLIP)
KELLY: It's devastating. It's very hard. You just see your savings depleting every single day a little bit more and more.
(END VIDEO CLIP)
YURKEVICH (voice-over): Kelly is a single mom, raising her 6-year-old son, Colton, and living at her mom's house until she can close on her new home.
She is one of 50,000 autoworkers on strike against GM, surviving on $250.00 a week.
(BEGIN VIDEO CLIP)
KELLY: The other day I had to go get a new rim on my car and I remembered just that sinking feeling of this is my whole strike check for this week is
the cost of this rim.
(END VIDEO CLIP)
YURKEVICH (voice-over): She also lives in Macomb County, Michigan, critical to President Trump's win in 2016 and helping him flip the state
red.
(BEGIN VIDEO CLIP)
PATRICK ANDERSON, PRINCIPAL AND CEO, ANDERSON ECONOMIC GROUP: A lot of the people in the auto industry are very sensitive about where the economy is
and they are very careful to look at which leader is going to help them maintain their jobs.
(END VIDEO CLIP)
YURKEVICH (voice-over): The auto industry is the anchor of Michigan's economy. For every one auto job, seven others are created. And they're
hit harder, losing an estimated $400 million in wages since the strike began.
Amicci's Pizza, down the street from GM's Hamtramck plant, says sales are down 25 percent.
(BEGIN VIDEO CLIP)
JOHN GROSSI, OWNER, AMICCI'S PIZZA: We don't like having to give employees and drivers bad news that they can't work because we don't have enough
business to support all the paychecks. I'm hopeful that they'll find a solution to the problem before it becomes a bigger problem for us than it
already is.
(END VIDEO CLIP)
YURKEVICH (voice-over): Michigan has the highest risk of recession in the nation and this strike could push the Rust Belt state over the edge.
(BEGIN VIDEO CLIP)
ANDERSON: There's no way to look at the strike now and not say somehow this is going to play into how people feel about the economy when they
start thinking seriously about the presidential election in 2020.
(END VIDEO CLIP)
YURKEVICH (voice-over): In the 2016 election, Trump campaigned in Michigan more than Hillary Clinton and won, which is why nearly every 2020 candidate
has walked the picket line.
John Hatline has taken notice.
[09:35:08]
(BEGIN VIDEO CLIP)
JOHN HATLINE, GM WORKER: Anytime I can get presidential support here behind the Union to help us in our cause, you know, it's fantastic.
(END VIDEO CLIP)
YURKEVICH (voice-over): Hatline, a Democrat, knows many of his fellow picketers are Trump supporters.
(BEGIN VIDEO CLIP)
HATLINE: I'm sure after the strike some of them may change their position when they're going without a house payment or without eating that week.
(END VIDEOTAPE)
YURKEVICH: And one of the reasons why these negotiations broke down over the weekend is because the Union is insistent that GM bring some of their
product lines back from Mexico to the United States. Paula, this is important because four GM plants are slated to close by the end of 2020,
including this one right behind me.
So these workers here now waiting to see if this contract gets resolved, also waiting to see if there's going to be a new product they can work on
here in 2020 -- Paula.
NEWTON: Yes, Vanessa, certainly those workers putting everything on the line looking at their future job prospects. Vanessa, thanks so much you
continue. You'll continue cover this union dispute for us and it is an important one to watch.
Meantime, Unilever says it will attempt to half -- cut in half all of its plastic consumption that it uses in its projects and all of its products by
2025. To say this is a tall order is an understatement. Hadas Gold joins us now from London. Hadas, what -- in terms of how they've outlined how
they're going to do this, I mean, it is quite a timeline that's still six years. How do we know that it is going to move beyond more than just a PR
statement?
HADAS GOLD, CNN BUSINESS REPORTER: Well, part of the reason is that unlike some other companies that have pledged sort of to do more recycling to
reduce packaging is that Unilever is putting a number on this.
So Unilever, you know is this big consumer goods company. It represents more than 400 of some of the best known brands. This includes brands like
Dove, and even Marmite and Luxe brands, everything from food to household cleaners, and they say that every year, they use more than 720,000 tons of
plastic in their packaging.
Now part of their proposals now is that they plan to half their use of virgin plastic, so that's raw plastic they have to create new, and reduce
the overall use of their plastic packaging by 14 percent.
Now, part of the way that they say they're going to do this is to include - - to start introducing potentially refill stations, that means you might buy a glass shampoo bottle at your local store and that when you're done
with that shampoo, you'll just take the empty bottle back to the store and refill it from a Unilever brand. Just refill it right there and then reuse
it over and over again.
They're also introducing some alternative materials like naked materials, these might be like shampoo bars. They're already starting some new
initiative such as a loop initiative, which is refillable deodorant sticks. And they say they're going to start working with cities to try to
incorporate how they can recycle some of their own plastic.
Now, Paula, this is sort of a two-pronged strategy, because it's not just because there's a new generation of consumers who care about companies that
are ecologically friendly, people who are going to seek out brands that they know adhere with their own beliefs.
But also there is regulation coming already in the E.U., they've banned single use plastics by 2021. And the U.K. here is considering a draft law
to tax packaging that does not include at least 30 percent recycled content.
So it's both sort of a marketing strategy both for their -- they think this is good for society. But also, I think, to head off some of these
regulations they see coming down the line.
NEWTON: Yes, you make a good point there. Their hand was forced. Fourteen percent, Hadas, doesn't sound like that big of a deal, especially
if they are relying -- and this is key -- if they are relying on the consumers to do the heavy lifting in terms of bringing in these recycled
glass bottles.
GOLD: Yes, I mean, and the recyclable -- and the reusable bottles are just a part of the strategy. They're also thinking, like I said, of
interesting, you see shampoo bars. These are bars that look like soap, but are actually shampoo that you can use and come with a lot less packaging.
We've seen this sort of trend with other things like trash bag packaging, that instead of wrapping it in cardboard, you will just be trash bags by
themselves. But if you think about 14 percent, for a company like Unilever that they say use more than 720,000 tons of plastic every year, that's more
than 100,000 tons of plastic they say that they will reduce by 2025.
And they're one of several companies like Procter and Gamble and Coca-Cola, who have also introduced these new pledges to try to reduce the number of
plastics that they have because plastic packaging amounts for a huge amount of the plastic pollution that we see in the world today.
NEWTON: Yes, absolutely. Hard to get rid of and it might surprise some people, Hadas, it's very difficult to recycle. Everyone is putting it in
those bins, a very small percentage actually gets recycled. Hadas Gold for us in London. Appreciate that.
And now we turn to some very serious protests in Iraq that we have been following for several weeks now. The Iraqi Army now admits that it has
been using excessive force that is after yet another night of bloodshed there. We will have more on the protest shaking Iraq when we come back.
(COMMERCIAL BREAK)
[09:43:15]
NEWTON: Okay, the Iraqi military has admitted using excessive force against protesters. That's after overnight clashes in Baghdad left another
15 people dead. This brings the death toll after almost a week of violence to at least 110. More than 6,000 people have been injured.
Police backed by of course military forces have used live rounds against the crowd since the demonstrations began last Tuesday. John Defterios
joins me. You know in the face of all of this, and even the police there and the military admitting that there was excessive force used, Iraqis
remain defiant. What's at the heart of their grievances?
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, it's looking nastier by the day, isn't it, Paula? That's for sure. This is not a very
complex storyline. This is a complaint the Iraqis have had for years. And it's about basic services, water and power.
But most importantly, employment which by the way, the Iraqi government hasn't reported for the last two years. That's how dire the situation is.
This came up during the elections a year ago. It is what brought Prime Minister Adil Abdul-Mahdi into power who promised to change things around,
but this boils down to and this is after many trips myself into Iraq.
It is corruption, ranking 168 out of 175 countries by Transparency International. Paula, we're 16 years after the invasion of the United
States in 2003 to oust Saddam Hussein and the Iraqis are now realizing there's no pot of gold at the end of the rainbow.
This is not a challenge of revenues. Iraq's expansion into oil has -- their productions picked up 50 percent in the last five years ago, so at
$55.00 or $60.00 a barrel, they are making plenty of money and they have natural resources in abundance. A hundred fifty three billion barrels,
about nine percent of global reserves.
But again, the problem is getting it down to the average Iraqi and that's the huge challenge today. And that's where we see a wildfire protest
taking place and a very hard line by the government suggesting, yes, we would like to turn things around. It's not that simple. But the average
Iraq is saying that's not enough. That's not the answer we were looking for when we went to the polls last year.
[09:45:25]
NEWTON: Yes. And after so many years, going through what they have, 16 years that has been one year worse than the next, John, you can certainly
imagine this.
In terms of these protests, we have seen some protests that kind of mirrored in places like Algeria and Sudan. Is there any indication of
which way this is going to go?
DEFTERIOS: You know, if you weren't hit in 2011 by the Arab Spring, and these countries were not. There are clearly -- this is a delayed reaction,
because people do not see the economic development they were hoping for.
So yes, in Algeria, yes, in Sudan. And the common theme here, Paula, is that they're very, very, very persistent. So I don't imagine this is going
to go away overnight. And then you could point back to a place like Egypt, which had that incredible overthrow here of the government and having a
military government come into place.
We saw protests in the last three weeks, yet again. So it is a huge challenge and a common theme here. A year ago, they were promised
overhauls and economic policy. Now Prime Minister Mahdi is saying, look, there is no silver bullet, or in his words, no magic solution. So I think
this is the biggest challenge.
But if you put the context of Iraq over the last four decades, think about it, they fought an eight-year war with Iran, over 1.5 billion people on
both sides were killed. In the 1990s, you saw Saddam Hussein go into Kuwait. So that was a lost decade. The invasion by the United States in
2003 and then often overlooked in this challenge for them was the ISIS confrontation, which has set them back even more.
And when I went in April of last year, it struck me and I thought this is one of those countries, that's never really going to realize the potential
of its natural resources, because it's not reaching all rungs of society. And that's exactly what we're seeing today.
NEWTON: And that's why sometimes they say in some of these countries, it is actually a curse to have the oil and not a help at all.
DEFTERIOS: Yes. Yes.
NEWTON: John, thanks so much for putting that into perspective. I mean, my gosh, more than four decades of this. Thank you, John. Appreciate it.
Now up next, President Trump has called it a phenomenal victory for U.S. farmers. Take note U.S. farmers. We take a look at the Japanese deal that
the President says has been overshadowed by a political storm.
(COMMERCIAL BREAK)
NEWTON: And welcome back. We have some breaking news just in to CNN. A Federal judge in New York has just handed a big defeat to President Trump.
The judge has ruled that the President cannot stop his accountants from releasing eight years of tax records to Manhattan prosecutors looking into
his business dealings.
Mr. Trump has refused to release his tax returns in the past. The Judge rejected Trump's argument that he is immune from criminal investigations.
Now, the President's lawyers are appealing today's ruling.
[09:50:06]
NEWTON: Now, it is shaping up to be a busy day for U.S. President Donald Trump. He's juggling a second whistleblower, a change of policy in Syria
and of course, the diplomatic clash with the U.K. It is a whirlwind that is threatening to sideline what Mr. Trump has called, in his words, a
phenomenal victory for U.S. farmers, a trade deal with Japan.
The White House has just added the signing ceremony this afternoon to the President's schedule. The deal cuts tariffs on some U.S. foreign products
on Japanese machine tools and crucially, avoids higher duties on Japanese cars coming into the U.S.
Joining me now is the head of the Japanese startup, Attuned, the company uses what it calls predictive HR analytics -- I'm getting that right -- to
help employers figure out what workers really want. This is Casey Wahl, and he is the CEO of Attuned. We're going to get to Attuned in a second.
Since we've got this whole issue of the trade deal coming up. I mean, you've lived in Japan for so long. How significant is this, you know, this
would be headlining news 20 to 30 years ago to have Japan even move a little bit on some of these trade issues?
CASEY WAHL, CEO, ATTUNED: Absolutely. I think like the farmers have so much political clout in Japan. So -- and when you're looking at these
things and having a trade deal, it's just a big movement for them. But this is what Japan is trying to do kind of within all of the global
dynamics that are going on, especially with U.S. and China.
Like Japan is looking at these specific relationships and specific trade deals that we can make to make progress, and that's starting to happen.
NEWTON: You know, one area for Japan that hasn't gone very well, though, is its relations with South Korea, which tends to kind of take two steps
forward and three back. At what point are we at now and how are they viewing that relationship, which is still an important one to the United
States?
The U.S. doesn't want to see South Korea and Japan at each other's throats.
WAHL: It seems like the U.S. is taking a step back, and you know, it kind of feels like because of what the U.S. is setting as the new kind of global
norm about treating different people where you have kind of a confrontational relationship depends like, okay, now we can do this a
little bit more and South Korea, can you know, act like this a little bit more.
It's a little bit quieter. You know, certainly we're seeing tourist numbers down, we're seeing trade partners down. Some of the big Japanese
beer brands are not doing well in South Korea. But at some point, I think it's just going to go away, right? You have Hong Kong, you have all these
other issues.
NEWTON: It's a bit worrying, because of course, it tends to bring up the issue of nationalism in most countries.
WAHL: It does. But it's used as a tool, I think more for kind of the government. So if we are looking at the individual and personal industry,
it's not a big deal. Like you've always had something with South Korea and Japan going on for a long time there. There's a lot of issues and it has
never ever really come to a resolution. So can we win a few points on this? Whether it's Japan's side or South Korea's side is what you're
looking at?
But in Japan, like the nationalism has been coming up for the last seven or eight years to a certain degree. But at this point in time, it's stable.
Abe has been in power for quite a long time and the government is stable, and everybody is very happy from an economic point of view about their
stability here.
And the nationalism is not necessarily an aggressive one, maybe it's a little bit more economic nationalism, where we want to win some more deals
and be a bigger presence in the world.
NEWTON: And perhaps not as intimidating. I want to get to Attuned. Okay.
WAHL: Please.
NEWTON: HR analytics, fine. What can it do? The reviews on this to be frank have been really -- built this up as basically 55 questions and what
it can tell you about your employees.
WAHL: At end of it, so it's a 10-minute assessment, you're going to know - -
NEWTON: Ten minutes, folks. Ten minutes.
WAHL: Ten minutes, and it will show you your intrinsic motivators for work. So everybody's intrinsic motivators for work. So this is why
managing people or hiring people or trying to retain people is so difficult, because you think you know them, but until you spend quite a lot
of time with them, whether it is weeks or whether it is months, you don't.
And there's 1.7 million different combinations of intrinsic motivators at your palm. So at the end, you're going to get your intrinsic motivator
profile. So if you were to hire me, okay, you've met me, you've interviewed me, you think, hey, Casey is going to be fantastic at this job.
But then you start to manage me, oh, like these buttons that I thought was are very different, but you're going to see with data prove objectively and
scientifically, what is going to motivate me.
NEWTON: Why doesn't that work in a 10-minute conversation?
WAHL: Because what motivates you is down in your subconscious layer. So we probably won't even start with the same vocabulary. You know, if you
think okay, Casey is motivated by money or he has been in Japan a long time, maybe it is social relations or security, you're going to come in
with your biases, and we're going to have a different language and it's not going to be as scientific.
NEWTON: In terms of the companies using this. I mean, what success have you had in terms of the uptick on it and what kind of feedback have you
been getting?
WAHL: The feedback, like they love it. Like people love the data. It's something that was unseen now is suddenly seen, and you can save so much
time as a manager, or as somebody going into your teams or you're constructing a team.
So what's happening in Japan economically right now is all of the big companies, they still have so much market power, they have a lot of money,
but they're not as competitive from a productivity standpoint, globally.
So they're starting to roll in one on ones for example. They want higher employee engagement, which is only six percent in Japan. So using this
tool is absolutely fantastic. They love the data.
[09:55:09]
WAHL: The difficulty is okay, how do you make this usable? So okay, Casey is motivated by competition. He is motivated by rationality. If you're my
manager, what does that mean? But now we're going to start delivering in very bite size, kind of munch pieces, so you're coming to work, it is going
to be on your phone. Hey, Casey, I'm meeting Casey today, I should ask him these questions. And that's just going to get him excited.
NEWTON: It's interesting, all of that you say because it really is in the measurable results afterwards. You have any data on that?
WAHL: We do. We've reduced turnover for different companies. We've increased the communication between employees and managers. There's one
company whose name I can't divulge. It is a very large Japanese company that was involved in scandals before and that's because there's a gap
between communication between managers and teams and now that's starting to get much better.
NEWTON: Casey, we'll have to leave it there. We will continue to follow the course of your company, but also of course what's going on with Japan
with this all-important trade deal today. I want to thank Casey Wahl.
And that's it for FIRST MOVE. Thanks for watching. I'm Paula Newton and "CONNECT THE WORLD" with Becky Anderson starts right after the break.
I want you to have a look at those numbers though in the meantime, loss is not as bad as they could have been, but still a losing day here on the
markets.
(COMMERCIAL BREAK)
[10:00:00]
END
