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First Move with Julia Chatterley
U.S. Navy Base In Pensacola Has Confirmed That An Active Shooting Has Taken Place; U.S. Unemployment Numbers Have Come In Way Stronger Than Expected; Uber Has Released Safety Report Detailing Almost 6,000 Incidents Of Sexual Assault. Aired 9-10a ET
Aired December 06, 2019 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:13]
ANNOUNCER: This is CNN Breaking News.
ZAIN ASHER, CNN INTERNATIONAL ANCHOR: Hello everyone. I'm Zain Asher. I want to get you straight up to speed on the breaking news out of Florida
where the U.S. Navy base in Pensacola has confirmed that an active shooting has taken place. An active shooting has taken place at a Naval Base in
Pensacola, Florida.
We know the shooter has been killed. Five people have been injured and five patients are being treated at a nearby hospital. The base is
currently on lockdown there in Pensacola, Florida. We will bring you much more on this breaking news as and when we get more information.
In the meantime, let's get you up to speed on the business news. It is a jobs day. Jobs Friday and what a Friday it was. U.S. unemployment numbers
have come in way stronger than expected. In fact, 266,000 jobs were added last month, November. Analysts were actually expecting growth of only
about 180,000. So this is much better than expected.
In the meantime, the unemployment rate ticks slightly lower to three and a half percent. Wages moved higher as well as traders inspect the numbers.
It's looking like a solidly higher open here on Wall Street, as we close out what has been a relatively choppy week of trading because of
conflicting or different reports rather, when it comes to a trade.
Before today, stocks were on track for their worst week since September. Futures -- let's take a look right now are also getting a boost from the
latest on trade.
China says it is working to waive tariffs on some U.S. pork and soya exports. It could be a further sign that trade negotiations between the
U.S. and China are progressing.
Stocks are trading higher in Europe right now despite some weak economic data from Germany. German industrial output fell 5.2 percent in October.
That is the biggest drop in a decade. Stocks finished solidly higher in Asia.
Let's get right to the drivers though now and a closer look at today's jobs report.
It is the latest piece of data that points to a healthy U.S. labor market. Let's bring in Paul La Monica who is joining us live now. So Paul, I mean,
over 260,000 is certainly stellar, just walk us through how the GM strike and those strikers returning to work affected these numbers.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, you had that coming back into this report, Zain, so about 50,000 jobs or so added in the month because of
strikers returning. But even if you net that out because we all knew that they were coming back, you net that out and you still have jobs gains of
about 216,000 which were much higher than the forecast of about 185,000 jobs added for the month.
So I'm happy to see that the market is treating this as good news as well. Good news is good news that the U.S. economy still seems to be rolling
along quite nicely despite concerns about the trade tensions around the globe, and I think will diminish some of the fears that we had about a
major slowdown heading into 2020 and possibly even a recession.
ASHER: But which sectors, though Paul, more specifically saw the best job gains and, you know, with these jobs reports, everybody looks at
manufacturing, in terms of potential signs of a slowdown there, what would the manufacturing numbers like as well?
LA MONICA: Yes, the manufacturing numbers were obviously lifted by the return of many of those auto workers, so that was a big bright spot.
Healthcare continues to be another area where you are seeing jobs add and I think a lot of people feel that that's going to be a secular long term
trend as the U.S. population continues to age and will require more healthcare.
It was a bit of a mixed bag for retail because you had some clothing stores, you know cutting jobs while mass merchandise stores were adding
jobs. That's possibly, you know, both a casualty of some of the struggling stores in the malls that are going under, but the strength of companies
like Walmart and Target and other mass merchandisers, they are probably adding some employees heading into the holiday shopping season.
ASHER: All right, Paul La Monica live for us there. Thank you so much.
Okay, so Uber has released a safety report detailing almost 6,000 incidents of sexual assault. Shares in the ride hailing company are down more than
one percent in premarket trading. Hadas Gold joins us live now.
So Hadas, what do these numbers tell us about issues when it comes to safety of ride-hailing apps like Uber?
HADAS GOLD, CNN BUSINESS REPORTER: Well, Zain, actually, one thing that surprised me when reading this report, it is actually the first ever safety
report we're seeing from Uber and Uber has been around for just about 10 years.
This is the first time we're seeing them actually lay out the numbers here that they have of both sexual assaults and also physical assaults. What
we're seeing, as you noted about almost 6,000 cases -- just under 6, 000 cases in 2017 and 2018.
[09:05:09]
GOLD: Among those, about 464 reported rapes, 19 deaths related to physical assault. Now, what's interesting is they say in about 45 percent of the
cases of sexual harassment, they said the drivers were actually the victims. But when it came to rapes -- the reported rapes -- almost all of
the victims were reported to be the riders.
Now, Uber points out that they've done in the United States about 1.3 billion rides, so this is a small percentage, but still rather startling
numbers to see laid out here like this.
Now actually, the pledge for the safety report came after a CNN investigation in April of 2018 when CNN found that about 103 Uber drivers
had been accused of sexual assault and also just laid out some of the consistencies that Uber had when it came to checking the records of the
drivers on their platform.
Now, Uber CEO said in a tweet linking to the safety report, "I suspect many people will be surprised at how rare these incidents are, others will
understandably think they're still too common. Some people will appreciate how much we've done on safety. Others will say we have more work to do.
They will all be right."
Now, Zain, of course, safety has been a major issue for Uber, and it is something that's also affecting its actual just operations. It's something
for example, here in London, that officials are taking into mind when deciding actually in the last few weeks, they didn't necessarily want to
renew Uber's license to even operate in London. So this is something we clearly know they need to get on top of in order to just not only retain
the trust of the riders, but also be able to actually operate legally in some of these cities -- Zain.
ASHER: So what is Uber going to do going forward to make sure that people are safer and as you mentioned, in some of the cases, obviously with rape
and sexual assault, it is mainly the riders that are in danger. But in other cases when it comes to violence, the drivers are also in danger as
well. So what is Uber doing going forward?
GOLD: So Uber says it's taken some extra steps already, for example, now it has an emergency button in its app that when you press it, it will
automatically connect to emergency services in your area. It says that it has also improved background checks, criminal checks, removing drivers from
the platform.
But there are still some issues. For example, with the licensing issue here in London. London officials said that some drivers were just
replacing their picture on the app and driving under other people's accounts. So it's still possible that the driver that you thought you were
getting is not who is actually going to pull up in your car.
So there's still several steps left for them to take in order to appease some of these regulators. And of course, some of these riders who are
incredibly concerned about the safety of their Uber rides.
Now again, Uber shows you the numbers and they say this is a very small percentage of their total riders. But it's interesting to see how in the
beginning, everything around Uber was sort of very -- everything was out there. You were just kind of getting in a car with a new person, and now
they're starting to tamp down more on more on safety because this is becoming such a huge issue, not only for the riders but also for their
bottom line.
ASHER: All right, Hadas Gold. Thank you. Elon Musk is on trial over a tweet calling a British rescue diver a quote, "pedo guy." The case took a
twist on Thursday, when the defense actually submitted this photograph as evidence that the caver had been unharmed by the tweet.
Clare Sebastian is joining us live now. So Clare, what exactly is the defense? What is Elon Musk and his team trying to prove with that photo of
Theresa May?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Right, Zain, so one of the things that Vernon Unsworth, this British caving expert has to try to prove
in order to win damages from Elon Musk is that the tweet caused him material harm. That's how he will claim that he deserves financial damages
as a result of this.
So what the Musk team is trying to say is that that isn't the case because he was, you know, given awards, he got an MBE, and he was given a hero's
welcome by the British Prime Minister, as you saw in that picture and they claim that would not have happened if there was any suspicion on the part
of the British Prime Minister or other officials that he was, in fact, a pedophile.
And that gets to the other key argument that the Musk defense team is trying to make is that when he tweeted using the phrase, "pedo guy" back in
July of last year, he wasn't actually meaning to call him a pedophile. This was just an off the cuff statement.
They said it was designed as an insult, and when Musk took the stand in his own defense on Tuesday, he said that, you know, he was insulted when Vernon
Unsworth went on CNN and sort of told him that his submarine that he had specially designed to help with the rescue of that Thai youth soccer team,
that that wasn't useful, and he told him to quote "stick it where it hurts." That he hadn't meant that literally. So therefore, we shouldn't
interpret "pedo guy" literally either.
So this is sort of a three-day set of evidence that we've now had from these two parties, some guess, the heart of this erratic moment in Elon
Musk's life, and I think that, you know, a lot of people are watching this to see whether or not this will be, you know, in his favor and what will
that mean for his twisted behavior going forward -- Zain.
[09:10:15]
SEBASTIAN: So as of now that all the evidence has been presented, the jury is going to get final instructions today and then will have to make a
decision.
ASHER: And what could Vernon Unsworth stand to make in damages if he does end up winning this?
SEBASTIAN: So that is unspecified at the moment. We don't know how much he is asking for. We do know as a result of this trial, that Musk's net
worth is said to be about $20 billion. That is one thing that came out of it, although most of that he says is not in cash.
So this is not a financial concern so much for Elon Musk, but I think a lot of people are looking at this and questioning why he has let it get to this
point? Why he is standing up there in court? Why he didn't just settle?
I spoke to one shareholder in Tesla who said that he was annoyed that he was there up in court defending this rather than focusing on the mission of
manufacturing 100,000 Model 3s this quarter.
So I think a lot of people are looking at this and wondering and I think this has revealed that he is still angry about this and that he still wants
to fight it at the defensive side of Elon Musk's personality that we saw in such sharp focus last summer.
ASHER: All right, Clare Sebastian, appreciate it. Have a great weekend. Saudi Arabia has pulled off the biggest IPO in history raising over $25
billion by selling shares in a state-owned oil company, Aramco.
The Saudi Stock Exchange confirms trading is going to begin next Wednesday, December the 11th. Meantime, falling oil prices remain a major concern and
OPEC is expected to extend supply cuts.
Matt Egan joins us live now. So first let's talk about Saudi Aramco. This IPO is huge, but actually just in terms of pricing, still fell short of
Aramco's very, very high expectations.
MATT EGAN, CNN BUSINESS SENIOR WRITER: Yes, that's right, Zain. It is a monster IPO, and yet, it isn't quite what the Kingdom wanted. But for now,
we can focus on the fact that Alibaba is no longer the world's biggest IPO. Now, that is Aramco.
This deal raised $25.6 billion. Just to give you some context around that, that's more money than all 117 IPOs on the NASDAQ so far this year. That's
according to Refinitive, and the valuation is gigantic as well, $1.7 trillion is what the market is saying Aramco is worth. That makes it the
world's most valuable public company by a half a trillion dollars over what Apple is worth.
And if you even just compare Aramco to its peers, if you add up the valuations of Exxon, Chevron and BP, Aramco, is almost three times bigger
than that combined price tag.
So these are big numbers. The Saudi Exchange did confirm that they're going to start trading Aramco on December or 11th. Don't expect any big
price swings, though, because they've set a 10 percent fluctuation limit on Aramco shares.
But Zain, to your point, the Kingdom really has been forced to scale back their ambitions. I mean, they originally wanted a $2 trillion valuation.
They wanted to raise about $100 billion dollars, and they wanted to list on a marquee exchange, such as New York or London, or Hong Kong, and none of
that has happened.
I think that's just a reflection of some of the long-term concerns here about both the company and the long term future of the oil industry.
ASHER: And speaking of the future of the oil industry, we know that obviously OPEC is meeting in Vienna, falling oil prices has been a problem,
especially for Saudi Arabia. Just walk us through where -- what we're going to see in terms of further extensions in production cuts from OPEC
Plus?
EGAN: All right, so OPEC and its allies are under serious pressure to take action to prevent a crash -- another crash in oil prices. And so what
we're hearing is that OPEC and Russia will likely announce deeper production cuts. They're likely to increase the cuts by about 40 percent
or roughly half a million barrels per day.
I think the question is whether or not that is enough, unlike the dramatic reaction that we saw in the stock market to the blockbuster jobs report in
the United States. The oil market does not seem all that impressed so far by what we're hearing at OPEC, the press conference, and the official
statement, could maybe trigger more of a reaction.
But I think there's two big takeaways here. I mean, one, there's a lot of dissension within OPEC. They met for hours yesterday in Vienna. They were
unable to reach a consensus and enough time to hold a press conference, so they just canceled the press conference altogether.
Some countries like Iraq really need -- they really want to keep producing more oil and other countries don't want to do that, and I think the other
big point here is that you know, they are really acting preemptively here if they do in fact deepen their production cuts. That's because there's
record setting non-OPEC oil set to arrive next year, especially out of the United States where oil production could increase by about a million
barrels per day.
[09:15:16]
EGAN: And Rystad Energy put out a report and they said, listen, if OPEC doesn't do anything, oil markets are going to be over supplied and crude
prices could crash by 40 percent. That is not something that OPEC wants and so that is why they're acting.
ASHER: All right, Matt Egan. Thank you. All right, so these are the stories making headlines around the world. The U.S. Navy base at
Pensacola, Florida has confirmed that one person was killed in a shooting on its campus. The gunman has also been killed. An unknown number of
patients from the base are being treated at a nearby hospital. The base remains on lockdown.
One day earlier, also in Florida, a UPS driver and bystander were killed after being caught up in a shootout. It started when two suspects robbed a
jewelry store, hijacked a UPS truck and took this man, the UPS driver hostage leading police on a massive high speed chase. Both suspects were
killed along with the driver and a fourth person. UPS issued a statement saying, "We are deeply saddened to learn a UPS service provider was a
victim of the senseless act of violence. We extend our condolences to the family."
And the House Judiciary Committee here the United States will hold its next Impeachment Hearing on Monday. This comes after U.S. House Speaker Nancy
Pelosi told the Chairman of several committees to draw up Articles of Impeachment against President Donald Trump.
The White House has until Friday evening to decide whether it will participate in the impeachment hearing. Mr. Trump says he is preparing to
mount the full defense of the Senate, which is controlled by Republicans.
And one of the most famous faces in the fight against climate change is in Madrid for the U.N. Climate Conference. Greta Thunberg is expected to
speak later today before leading a march through the Spanish capital.
All of this comes as the Australian states of New South Wales tries to confront vicious bushfires and hundreds of thousands of people have tried
to make new homes off the floods and droughts ravaged their communities in the Horn of Africa.
All right, still to come here. Will stocks be naughty or nice this holiday season? It will come down to the outlook for trade. We will talk to the
new head of the IMF.
And BNY Mellon's 2020 predictions.
Plus, Wall Street bulls could use one of these -- the Street Fighter. We will introduce you to one of the stars of this year's International
Motorcycle Show. That's next.
(COMMERCIAL BREAK)
[09:20:54]
ASHER: All right. Welcome back to FIRST MOVE. I'm Zain Asher coming to you live here on this Friday from the New York Stock Exchange. U.S. stocks
are ready to rally here in Wall Street after today's blow out. Jobs numbers -- there we have it. Dow futures are up almost 200 points already.
Jobs report indicated 236,000 jobs were added in November. Certainly a lot better than the 180,000 that were expected. All of this helped by the
resolution of the GM strike and those strikers returning back to work. U.S. jobs numbers were revised higher for September and October as well
suggesting a stronger jobs market than we thought this fall.
In the meantime, the unemployment rate ticks slightly lower, three and a half percent. Wages moved higher as well. Joining me now is Alicia
Levine, Chief Strategist, BNY Mellon. Thank you so much for being with us.
So before we get to all things trade, bad markets, et cetera, I have to start with the jobs numbers -- 266,000, stellar. What are your thoughts?
ALICIA LEVINE, CHIEF STRATEGIST, BNY MELLON: Great jobs number blow out, and even more impressive with the increase for September and October
because it means the last three months, the average is 205 jobs created 10 years into a recovery.
This is actually extraordinary. We've had a reacceleration of job growth here. So it's amazing. It's a great job market.
ASHER: So how much of these numbers do we attribute to GM strikers returning back to work?
LEVINE: So essentially, you're only getting 46,000 jobs.
ASHER: So it's still stellar, regardless of that.
LEVINE: It is stellar regardless, and because you've raised that number in the previous months when they were on strike shows you that there's an
underlying strength of the economy and the wage growth is going up nicely, not too much.
So it's just -- it's a Goldilocks job number and suggest the U.S. is nowhere near going into recession.
ASHER: When you look at certain things that might sort of move the needle just in terms of the economy, it's of course, got to be trade. We've had
mixed signals this week at the beginning of the week during the NATO Summit, the President talked about perhaps not getting a deal until
November 2020. The next day that was walked back a bit. Just walk us through where you see trade relations between the U.S. and China going and
what that means for the state of the economy if it drags on longer than necessary?
LEVINE: So I think we have to take the daily vastitudes of what is being said with a grain of salt, and actually, the market has been taking it with
a grain of salt.
I think the trade headlines don't move the market as much as they did, let's call it six months to a year ago.
ASHER: Earlier this week, though, the Dow was down 450 points.
LEVINE: Right. So we've recovered from that, and I have to believe that both sides have an interest in some sort of trade deal. There's been pain
clearly on the Chinese side and we have lower capital expenditures here in the U.S. as a result of the trade war.
And the states that are necessary for President Trump's reelection have been having softer job growth, so he needs a trade deal. I have to believe
that sometime before, let's call it March or April of next year, there is a deal. The market is already pricing it in.
ASHER: Right.
LEVINE: So that's your risk. The risk is there's no -- there's no trade deal and the market has priced in a trade deal.
ASHER: Okay, so what -- where would you say the risk of tariffs being put in place by December 15th, which by the way, is only -- it's only next
week, I think.
LEVINE: It is only next week. We're here already.
ASHER: I think, I think.
LEVINE: We're already in the first week of December. So, if the December 15th tariffs are put on - that would be very negative for the U.S. economy
because those are the consumer tariffs. Those are the consumer goods and would hit consumers.
As we know here in the U.S., the consumer is 70 percent of the economy. So if the consumer stops spending, you actually will affect the GDP growth
rate.
Those December 15 tariffs cannot be put on. The expectation again, is that they're going to be postponed. If not postponed, that would be hugely
negative for the market and for the economy eventually.
ASHER: You mentioned that the U.S. consumer is huge when it comes to the U.S. economy, which brings me to retail. You know, we just got Black
Friday, Cyber Monday, still the numbers there, but it really was a sort of tale of two different stories when it came to retail.
[09:25:09]
ASHER: You had the likes of Amazon, obviously, Best Buy and Target doing well and Kohl's and Macy's not so much. So what's the story there then?
LEVINE: It's really interesting story in retail, because it kind of is a tale of two markets -- of two sectors. So, you know, it's clear that
technology has disrupted the sector completely and those companies that have a long term strategy have had to manage that and have to manage their
growth with the use of technology are going to be fine, so Walmart and Target.
But companies that are simply trying to make the quarter by simply trying to make the Christmas season are not going to be as successful because this
is a long term structural disruption, and it has to be seen as a disruption that requires a complete corporate thought process about how to manage it
and some have been better than others.
Not all bricks and mortar retail will die, but some will.
ASHER: And in terms of what we think the Fed is going to do next year, especially the market has already priced at least 25 basis points cut.
What would have to happen for that to drastically change, do you think so?
LEVINE: So I think the jobs report like today actually. This jobs report could be a game changer for Fed expectations. Because the interesting
thing about the Fed, they've set the bar high for more cuts, but they've also set the bar much higher for any future hike.
So the market is rallying this morning because we've had a great jobs number and no risk of any rate hikes. I think we're probably going to
price out some expectations for those cuts next year with this jobs report.
The U.S. economy is really doing pretty well and it looks like the global economy is bottoming.
ASHER: We have to leave it there. Alicia, thank you so much for being with us. All right. You're watching FIRST MOVE. The opening bell is
next.
(COMMERCIAL BREAK)
[09:30:03]
ASHER: That was the opening bell. You just caught the tail end of it. I'm Zain Asher coming to you live from the New York Stock Exchange. As
expected today, Friday, jobs report day, it is all about the stellar numbers we got. The Dow is already off the races, up 200 points already,
266,000 jobs added in November. A lot better than what we had been anticipating. Expectations were roughly around 180,000. Those numbers
should further ease concerns about slowing U.S. economic growth.
The manufacturing sector actually did better as well. It added 54,000 jobs, thanks to the resolution of the GM strike and those workers returning
back to work and then we also got 45,000 jobs added in healthcare as well, so healthcare another bright spot.
Meantime the unemployment rate ticked slightly lower to three and a half percent from 3.6 percent, and time to take a look now at some of today's
Global Movers.
Uber shares are trading lower after the release of the company's first ever U.S. safety report. The company says it received almost 6,000 reports of
sexual assaults during Uber trips in 2017 and 2018 as well. That includes over 450 reports of rape.
Let's take a look at Tesla. Tesla up about one and a half percent after some positive comments from a Morgan Stanley analyst. The analyst is
raising his best case price target for the company to $500.00 a share citing hopes for stronger sales in China and the buzz over the Cyber Truck.
Shares of CrowdStrike are higher as well. The cybersecurity firm is one of the best IPO performers year. It is reporting a narrower than expected
quarterly loss and raising its full year outlook.
Zoom Video Conferencing is lower. Zoom is another one of our 2019 IPO winners. Its earnings beat expectations a by wide margin, but it gave weak
guidance for the current quarter.
Let's talk jobs now with Deutsche Bank Chief U.S. Economist, Matthew Luzzetti joining us here at the exchange.
So, a stellar jobs report. Nobody is disagreeing with that, 266,000 jobs added in November and even though some of it is attributed to the GM
strikers returning back to work. Not all of it is, even if you take out those numbers, it was still a good jobs report overall.
MATTHEW LUZZETTI, CHIEF U.S. ECONOMIST, DEUTSCHE BANK: Absolutely. I think the way that the Fed will look at this is averaging through the past
two months because you had GM workers subtracting from the previous month, adding back now, and if you do that, it's a very strong pace and trend that
we're seeing in the jobs market.
We've added over 200,000 private payrolls jobs on average over the past two months. From where we are in the business cycle, you know, more than a
decade after the recession, this is a very robust jobs growth.
It came with lower unemployment rate, as you mentioned; wage growth, which, you know, is looking steady at this point. So from an income growth
perspective, from a consumer perspective, it's a very strong jobs report.
ASHER: And the previous months were revised upward as well. So even when the GM workers were on strike, those numbers still came in better.
LUZZETTI: Yes, I think that's really important because the revisions that we've had over the past two months have completely changed the trajectory
of what we thought the labor market was.
Last month, we had 95,000 of upward revisions. This month, we had additional upward revisions, so that's coming on top of what is already
looking like solid job gains. It does change the trajectory a little bit. I think the Fed will have to be a bit more confident in their view that
they can remain on pause, and that the labor market and consumer will continue to carry the day even though manufacturing looks weak.
ASHER: Yes, because it's not -- it is never just about one jobs report. It's always about how that particular jobs report fits into the broader
trend. Where do you see the Fed going in terms of interest rates next year?
LUZZETTI: Yes, so the message from them was pretty clear in October. Chair Powell noted they needed to see a material reassessment in the
economy for them to change rates again.
On the downside, I think that meant that you need to either see the labor market slow or consumer spending slow. Obviously, today's jobs report does
not fit that bill.
And so when they meet next week, I think the message from Chair Powell will be very similar. They are going to be on hold for the foreseeable future.
On the other side for rate hikes, I think you really need to see inflation pressures build. We don't expect that either. Actually inflation has been
lower than expected recently, and therefore you have a trajectory for the Fed where they're pausing at this point. They are waiting to see how
things evolve.
And you likely need to see something that's a negative on the trade front to knock them off their horse.
ASHER: And then in terms of specific areas that we should be paying attention to in this jobs report. Manufacturing was brighter, but you can
attribute that also to GM workers coming back to work, but overall, the trend for manufacturing has been concerning.
[09:35:10]
ASHER: Healthcare was also a bright spot today as well.
LUZZETTI: Yes, you had health and education that was strong. Manufacturing was very strong, due in part to the GM story.
If you look at services, providing industries, it was another strong report there. So the breath of jobs growth was, you know, pretty, pretty wide,
and it was not driven by significant outliers. That's important.
I think it tells you that the underlying health of the labor market is pretty healthy. And that you know, the labor market should continue on a
decent trend. I would not expect 266,000 jobs on an ongoing basis.
ASHER: On a regular basis.
LUZZETTI: The job gains should to continue to slow, but they should remain strong enough in order to keep the economic growth pretty solid.
ASHER: Okay. In terms of obviously this week alone, we've had some mixed messages when it comes to the U.S.-China trade war. That continues to drag
on if what the President said at the beginning of the week, which, you know, he kind of walked back.
But if what he said at the beginning of the week, which was that we might not see a deal until next year, I don't know if anyone actually believes
that, but let's assume that he is right. How does that affect the labor market? Because obviously, the U.S. companies, the issue is investment and
business certainty.
LUZZETTI: I think it depends on what exactly does that mean? So if we don't see a deal until after the election, but he does not go through with
a December tariffs on China, he continues to push that forward. And there's indications that they're not going to escalate further, then I
think economic growth can remain okay. CapEx will remain weak in that environment.
But on the other hand, if he does raise tariffs, I think that could be very damaging for certainly business sentiment. We saw the ISM Manufacturing
Index earlier this week was still weak, CEO confidence still looks a bit weaker.
So I think if he escalates, then I think you're in a world where it really is a risk to growth. The Fed in thinking about rate cuts come back on the
table.
ASHER: Matt Luzzetti live for us. Thank you so much.
LUZZETTI: Thank you.
ASHER: Enjoy your weekend. Okay, so now, back to a breaking news story out of Florida. A U.S. Navy base at Pensacola is now confirming that two
people were killed in a shooting on its campus. The gunman has also been killed as well. We are told that three other people are injured.
The base employs nearly 25,000 military and civilian personnel. The base is still on lockdown. The F.B.I. says it is responding to the situation.
We will keep our eye on the story and bring you more details as and when we have them.
Huawei taking U.S. regulators to court. The company's Chief Security Officer in the U.S. joins me after this short break.
(COMMERCIAL BREAK)
[09:40:50]
ASHER: The new IMF Chief says the cost to the world of the U.S.-China trade war will come to hundreds of billions of dollars. Speaking to CNN's
Eleni Giokos on the sidelines of the Development Conference in Senegal, Kristalina Georgieva also insisted the IMF has the resources to support
countries in need.
(BEGIN VIDEO CLIP)
KRISTALINA GEORGIEVA, MANAGING DIRECTOR, INTERNATIONAL MONETARY FUND: First, we have been very clear, what is the cost of trade war? By next
year, we would lose as a planet, $700 billion, this is 0.8 percent of the global GDP. Everybody loses.
Second, we have been also very clear what can be done. So, this slow down in a synchronized manner we have seen can be stopped in reverse. And we
say to countries three things; one, if you have monetary space, if you can cut the interest rates, please do it. Very few countries now have that
much space.
Two, if you have fiscal space, please use it. Some countries do have fiscal space and we're seeing even more reluctant players like Germany, the
Netherlands, South Korea, they're coming up with stimulus packages.
Three, most important, everybody can do it. Structural reforms, labor market reforms, eliminate red tapes so our private sector can boom, jobs
can be created. So one, two, three and I think we see governments around the world actually listening.
ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: But a lot of countries don't have fiscal room to take out more tools out of the monetary policy
box. That's the big problem. And the world is very leveraged right now.
If you see a further slowdown or this trade war continuing, is the IMF ready to step in? Do you guys have enough resources to do that?
GEORGIEVA: That was the very good news that we got during our annual meetings in October, my inaugural. Our shareholders committed to provide
the IMF with fiscal financial capacity of $1 trillion.
So we do have sufficient firing power to step up. But we tell countries, do the right thing so you don't need to come and knock on the door for
money.
GIOKOS: Right now at this moment, how are you feeling about all the uncertainties? You feel optimistic that we're going to work as a global
team? Because that's the message that you've been giving everyone.
GEORGIEVA: What we see is that we need each other more, but it is harder and harder to come together. And institutions like the IMF have a duty to
bring out 189 membership and seek that consensus to take action together when this is necessary.
I do believe that the world is changing much more rapidly today than 10, 20, 30 years ago. This is the new normal. Uncertainty is the new normal
and therefore we have to help our membership to be more agile, more adaptable to this fast changing world. Enjoy the pace of change today. It
will never be that slow in the future.
(END VIDEOTAPE)
ASHER: Huawei is fighting back. The Chinese tech company filed a lawsuit in the United States challenging new restrictions on doing business with
American telecom operators. This is Huawei's second lawsuit.
Earlier this year, it sued the government for banning Federal agencies from buying its products. Andy Purdy is Huawei's Chief Security Officer here in
the United States. He joins us live now from Washington.
[09:45:09]
ASHER: So Andy, you believe that this F.C.C. order violates the Constitution? What do you expect to come from this lawsuit?
ANDY PURDY, CHIEF SECURITY OFFICER, UNITED STATES, HUAWEI: Well, our hope is to use this one of the legal tools available to us to demonstrate that
this action by the F.C.C., an independent agency is really part of a coordinated U.S. government approach to carpet bomb Huawei out of existence
in the United States, despite the fact that it's going to impact thousands of jobs.
So we want to take advantage of the legal system while we still can to be able to say no, you have to follow the Constitution. You have to use a
rule based approach. You have to follow due process. And so that's why we filed the lawsuit.
ASHER: After the ban or at the time of the ban, I'm sure you've heard this many times, but the F.C.C. Chairman, Ajit Pai actually said that part of
the problem is that companies like Huawei and ZTE would be subject to China's laws and we both would be obligated to cooperate with any requests
from China's intelligence services, and to keep those requests secret.
He also went on to add that both companies have engaged in conduct like intellectual property theft, bribery, and corruption. What is your
response to that?
PURDY: Well, we've seen the British government and the German government respond to the pressure from the United States government, and they have
said there had been no even allegations of wrongdoing against Huawei, of a significant cybersecurity perspective.
The fact is, there are five nations in the world that have the ability to virtually implant hidden functionality and malware. That's why we have to
concentrate not on blocking Huawei, we have to do the measures that are necessary to make America safer.
The kinds of things that I discussed in our meetings at the United Nations in New York on Tuesday, we need objective and transparent basis, steeped in
international standards and independent testing. So we have an objective basis for knowing which products are worthy of trust, regardless of where
they're manufactured, regardless of where the company is headquartered.
ASHER: So then, what are some of the key ways in which you might negotiate with the U.S. government to address some of the concerns it has about
Huawei posing a national security threat?
PURDY: Well, I think part of the issue and we see it in what the European Union is doing with their 5G risk assessment, some of the principles we're
communicating to Europe. But what does it take to address real cyber security risk relative to the telecom and mobile operators? Relative to
the equipment providers?
We can put in place -- we're open to talking to the U.S. government and they're not willing to talk to us about measures we can put in place where
we can demonstrate, we can prove that our products are not influenced by the China government. We can prove that the conduct of Huawei employees in
the United States are not subject to undue influence.
We can demonstrate that in a way that can be proof, not just a promise, and so we hope at some point, the U.S. government will be willing to talk with
us and we can take the situation where thousands of American jobs are at risk, and they're not even willing to talk with us.
ASHER: So can you give sort of some specifics about the type of measures you might suggest?
PURDY: Well, there are certain measures right now that Nokia and Ericsson that are deeply connected to China in terms of their R&D, in terms of
manufacture. Nokia is in fact tied in with the organization owned by the China government.
So they're only allowed to do business in the United States, because they're subject to government monitor risk mitigation and code evaluation.
We are open to independent code evaluation. We are open to independent testing. It needs to be for all providers, and there needs to be
conformance programs for the telecom and mobile operators because cyber security, our dependence as a society, when information and communication
technologies is going to grow dramatically.
So we have to make sure we have these basis, these transparent basis for knowing which products are worthy of trust.
ASHER: Financially, Huawei is still doing well because of its sales in China. But just talk to us about how valuable the U.S. market is to
Huawei. And if this continues to drag on without a resolution, how might that damage the company financially?
PURDY: Well, it's not entirely clear how much of an impact it's going to have in the U.S. As you know, we've released our third quarter numbers
that demonstrated over 24 percent growth year-over-year.
The fact is, it's not clear how much we're going to be impacted, but none of our executives are going to lose their jobs based on this, but there are
over nearly 300 American companies that want to sell to Huawei. There are 40,000 jobs that are at risk.
There is no national security implication for us being allowed to buy those products. If we're forced to, we want to stay being supplied by U.S.
companies. But if we're forced to, we're going to go elsewhere.
And so we know there will be a negative impact on American jobs just like this, trying to cut off our ability to sell to our small customers is going
to impact thousands of jobs, it is going to impact service in rural America for no gain.
[09:50:05]
ASHER: Andy Purdy, thank you for your time. Be right back here on FIRST MOVE after this short break. Don't go away.
(COMMERCIAL BREAK)
ASHER: The world's highest spec motorbikes are in town and currently revving up for New York's Annual Industry Fair over the weekend.
The Ducati Street Fighter V4 will be among the headliners. It was crowned -- look at that go -- it was crowned the most beautiful bike in Milan. The
revamped model is a highlight of Ducati's 2020 collection. I caught up with the brand's North America CEO and began by asking him whether his
industry has had a bad year as the auto industry has suffered.
(BEGIN VIDEOTAPE)
JASON CHINNOCK, CEO, DUCATI NORTH AMERICA: Well for Ducati, our sales have been very stable and specifically in the category that we're really known
for and that's the superbike category.
We've had two years consistently in North America top volumes in this category and also market share, which is unprecedented for us.
So we don't really see the same effects in terms of that slow down and it largely has to do with the fact that our riders are seeking something
that's youthful, something that allows them to feel like it's a bit more sport oriented, and it's not rooted in the past.
So we're always forward looking and this is a product that people are looking forward to, from a matter of how it can enhance their life as well.
ASHER: Harley Davidson does the best just in terms of sales, in terms of market share in this country. How do you try and compete with them?
Obviously, there's a huge difference in terms of sales numbers between Harley Davidson and Ducati. Is that something you're even trying to do?
And if so, how?
CHINNOCK: Well, actually a lot of the brand is -- they're quite different in terms of product. While Harley Davidson is primarily focused on the
cruiser market, we are rooted in let's say, sport.
So every one of our motorcycles have that same DNA of sport motorcycle and all the way through it, but what we've done over the last 10 to 15 years is
we have broadened our product offering, so that we take the same DNA that people have come to love us for and we've made the brand more accessible
through things like the Diablo, which is a cruiser style motorcycle, the Multistrada, which is a little bit more of an off road, Enduro world
traveling motorcycle.
So it's taking our soul and our spirit of our product and having it available for more people. And that has actually allowed us to bring a lot
of new customers in, conquest customers that come from other brands.
ASHER: Okay, and speaking of new customers, Ducati is a youthful brand, not necessarily for young people, but for people who are trying to
recapture their youth, so to speak.
But in terms of trying to get more women, how do you make sure that it doesn't continue to be such a boys club?
CHINNOCK: That's a great question and a lot of it has to do with our communications. I mean, it starts with product and building product and we
have the example of the Scrambler, the Diablo, a product that had been received very positively through all different categories, but women
specifically.
But then also our communications and making sure that we don't fall into the trap of let's say the traditional sexist, bikini-clad marketing that
used to be done in the years past.
[09:55:06]
CHINNOCK: I mean with a brand like Ducati, when we have such a beautiful motorcycle, it is attractive to both genders no matter what. So it really
-- we don't have to pander to one or the other. We stay true to where we are and we make sure to be sensitive to those things that aren't relevant
for our market.
ASHER: And you know, some of the motorcycle brands in the U.S. are dealing with the issue of baby boomers. Baby boomers getting older, is that
something that is troubling Ducati or not?
CHINNOCK: Definitely not. In fact, what we see is that our demographic since we have such a widespread in terms of age, it allows us to stay
pretty consistent. We don't see our customers aging out, which is very helpful.
(END VIDEOTAPE)
ASHER: All right, before we leave you, let's take a look at the how the markets are doing. We did get job numbers coming in on this Jobs Friday at
266,000 jobs added in November. You see the market certainly seems to like that.
Previous months were revised higher as well partly because of the GM workers were striking now returning back to work.
That's it. You've been watching FIRST MOVE. I'm Zain Asher. "CNN Newsroom" starts after this short break.
(COMMERCIAL BREAK)
END
