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First Move with Julia Chatterley
Donald Trump Impeached; Trade Around China and US Uncertain; Aired 9-9:35a ET
Aired December 19, 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]
ZAIN ASHER, FIRST MOVE HOST: Live on the New York Stock Exchange, I'm Zain Asher sitting in for Julia Chatterley, and here is what you need to know.
Donald Trump impeached. The president is charged with abuse of power, obstruction of Congress. What comes next is entirely not exactly clear,
and the queen's speech in the U.K., Brexit and the Health Service are the government's priorities. And when every second counts, leaked Bank of
England audio may have given traders an unfair advantage this Thursday. And this is First Move.
All right, welcome to First Move. So good to have you with us on yet another very, very busy New Year's Day (ph). We'll have the latest on
Donald Trump's impeachment in just a moment, but first, let's give you a quick check of the markets. Futures are pointing to a mostly flat open for
U.S. stock succession. Stocks actually pulled back from all time highs overall on Wednesday, but the NASDAQ was able to inch further into record
territory.
Tesla was a big winner in a previous session. It rallied more than 3 percent to close at record highs for the first time in more than a year.
And U.S. investors have by in large simply ignored the impeachment battle in Washington, focusing most of their attention on the solid U.S. economy
and the easing of U.S.-China trade tensions as well. A more certain economic environment is also helping to boost borrowing costs. The yield
on the U.S. 10-year Treasury has now broken through 1.9 percent for the first time since September.
Bond yields are also moving higher in Europe. The Swedish Central bank raised its main interest rate by a quarter of a percentage point today,
becoming the first global central bank to end its negative interest rate policy. The Bank of Japan and the Bank of England kept their rates steady.
More on the BOE's decision in a few minutes from now, but first let's get right to our main driver, the latest on the Trump impeachment. On
Wednesday, the U.S. House our representatives (ph) actually voted to impeach President Trump for abuse of power and obstruction of Congress.
Lauren Fox joins us live now. So Lauren, just walk us through some of the various highlights of the hearing, particularly a moment when Donald Trump
was compared to Jesus Christ. Walk us through that.
LAUREN FOX, CNN CONGRESSIONAL REPORTER: Well essentially there was a long debate yesterday on the floor leading up to a very momentous vote last
night on those two Articles of Impeachment, which of course passed the House of Representatives.
Now, this vote was largely along party lines, and many of the arguments you heard were the same that you have been hearing for the last several months
as this investigation continued in the House of Representatives, but I will tell you, Zain, last night on the floor, some of the rhetoric got very
heated as you heard some of the Republicans comparing the impeachment of Donald Trump to the crucifixion of Jesus. They were arguing that even
Pontius Pilate, of course a biblical figure, had given Jesus more of a trial than what the House of Representatives gave to the president.
Obviously Democrats disagreeing with that prospect, but I will tell you that the drama now on the Hill is what will happen with these Articles of
Impeachment. When will they be sent to the Senate?
Nancy Pelosi said last night that she is not planning to send them until she sees a fair process in the Senate trial, and I will tell you there are
some Republican senators who basically say if you never send them, Nancy Pelosi, that's fine with us.
I talked to Senator John Cornyn, a Republican from Texas and a member of leadership. He said essentially if she doesn't want to send them, that's
fine. It's - we don't need to undergo this massive Senate trial which, of course, it going to suck time out of the Senate schedule and stop them from
doing other business. So that's the big question now. When will those Articles of Impeachment be transmitted to the Senate? Zain -
ASHER: So Nancy Pelosi, she's holding onto this impeachment case. We know that in about 25 minutes or so from now Mitch McConnell, the Senate
Majority Leader, is set to speak. Do we know what he's expected to say, Lauren?
FOX: Well, essentially he's going to outline how unfair the House procedure was. This is something we've heard him talk about on the floor
before. The big question looming is whether or not Majority Leader McConnell will sit down and actually meet with the top Democrat in the
Senate, Senator Schumer, to set up really a resolution for when this trial would begin. Right now if you transmit these Articles of Impeachment, the
trial automatically would begin at 1 o'clock the next day. Certainly they don't want this trial to begin during the Christmas holiday, so there's a
little bit of a dance going on right now as to how they avoid that process. Essentially Schumer and McConnell need to meet. They need to get some kind
of agreement of the entire Senate to ensure what the rules will be and to make sure that this trial starts in January and, of course, not over the
Christmas holiday. Zain -
[09:05:00]
ASHER: All right, Lauren Fox live for us. Thank you so much. Wall Street is certainly watching the impeachment battle closely. So far, traders
don't seem to think it's going to be hurting their U.S. economy. In fact. U.S. stocks remain on track to post their best year since 2014. Christine
Romans joins us live now. So Christine, the markets just rally haven't shown any kind of sensitivity to impeachment at all.
CHRISTINE ROMANS, CNN CORRESPONDENT: Yes.
ASHER: Just walk us through why that is, why have they seemed to shrug it off? Is it because they know that, you know, it's not going to - it's not
going to be voted for in the Senate?
ROMANS: That's part of it. There's an assumption that there will be no removal of office of this president, that he's impeached but will not be
removed from office. There's also - I mean, you know, markets hate uncertainty and this has been telegraphed for some time now. It's not an
uncertainty that he was impeached. The markets were really expecting it.
There's not a lot of history also to compare here. You know, you go back to Bill Clinton and the stock market rose when President Clinton was
impeached in part because the economy was doing so well, but the economy was - and the stock market both did very poorly around the Nixon time
because of, you know, high interest rates and a spike in oil prices. Now, Nixon, of course, was not impeached. He resigned rather than face this
process, but - you know, so history even doesn't give us really a clear guidance for what impeachment means for the overall markets. It is, at its
core, it's the economy, stupid (ph). 2 percent economic growth, a jobs market that is still strong, interest rates that are very, very low,
mortgage rates that are low, a Fed that has cut rates three times in the past - this summer of this year. All of these are the things that are
really the factors that investors really care about here, Zain.
ASHER: And, of course, one factor is, of course, this phase one trade deal -
(CROSSTALK)
ROMANS: That's right.
ASHER: -- between the U.S. and China. Just looking forward to next year, how optimistic should be we about the future of the economic relationship
between the U.S. and China given that some of the big details still haven't been worked out yet?
ROMANS: Look, there's way more unresolved than resolved with the China- U.S. situation. I mean, trying to balance a very unbalanced trade relationship, I mean, I would say, you know, they're in the very early
innings of being able to get this rectified. You've seen this symbolic phase one deal. Actually, you've seen some chapter titles of different
chapters of what this deal is going to be, but we haven't seen the text yet. There's no signing ceremony. There's even - you know, we're told
that there are numerous reports that there's still big disagreement about when, where, and if this thing will be signed publically.
So look, there's still a lot of uncertainty about the U.S.-China trade. We do know there was a show of bipartisanship. You know, there is this USMCA
which will stand for a vote. The House expected to go through with this here, and this is really something that the Democrats and the White House
and the three nations that used to be the NAFTA nations have agreed upon. That is, I think, a win and a positive for the president here. It makes
more content of automobiles made in the United States, must be made by the North American partners, and more of that content must be at $16 an hour or
higher. There are strengthened labor laws. There's some more access for dairy farmers. There's money in there to address some environmental
inequities between the different countries. So this is where I think you've seen a show of bipartisanship that both parties will claim as for
the American worker, and Wall Street wanted to see this deal signed for sure, Zain.
ASHER: Christine Roman live for us there. Thank you so much.
ROMANS: You're welcome.
ASHER: All right, in the U.K., the queen has officially opened the next session of parliament with a speech outlining the priorities of Boris
Johnson's government for the next year. And this hour, the prime minister is set to address the House of Commons as well. Let's bring in Phil Black
who's joining us live now from London. So Phil, just walk us through what is on the agenda based on what the queen said for the next session of
parliament.
PHIL BLACK, CNN INTERNATIONAL FREELANCE REPORTER: Yes, so Zain, as you touching on there, the queen's speech is the regular ceremonial opening of
parliament. It's where the prime minister and the government essentially speak through the queen. They write a speech, she reads it. It lists all
they hope to get done through the coming parliament. Now, keep in mind that she last only did this about two months ago. Since then, of course,
we've had the U.K. general election, which Boris Johnson and the Conservatives won reasonably comfortably.
So we've heard a lot from the prime minister and his government about just what they hope to get done. So in that sense, not a lot of surprises, but
particularly I think there weren't any surprises about just how the speech opened. The prime minister didn't quite ask the queen to repeat his manter
(ph) of getting Brexit done, but it sounded pretty close. Take a listen.
(BEGIN VIDEOCLIP)
QUEEN ELIZABETH II: My government's priority is to deliver the United Kingdom's departed from the European Union on the 31st of January. My
ministers will bring forward legislation to ensure the United Kingdom's exit on that date and to make the most of the opportunities that this
brings for all people of the United Kingdom.
(END VIDEOCLIP)
BLACK: So like what - but like much of what Boris Johnson has had to say recently, the speech was in many ways designed specifically -
[09:10:00]
-- to target those first-time Conservative voters and traditional working class areas that have, on this occasion, elected Conservative MPs and
helped Boris Johnson get that 80 seat majority in parliament.
With that in mind, there was a lot of reinforcing of the domestic reform that he's already promised them, particularly, for example, more money for
the National Health Service, money which he says will now be intrined (ph) within legislation. It will become legally binding on the government to
deliver some GBP34 billion of funding towards the National Health Service by the year '23, '24. That's unusual, but what it does is it signals to
those working class voters that Boris Johnson is serious about all of this and that he deserved the vote that they gave him that short time ago.
Back on Brexit, while we expect the government to shortly present a motion to the parliament which would see parliament return tomorrow and begin
debating once again the E.U. withdrawal bill so that this government can get about securing Brexit in time for the deadline of January the 31st,
Zain.
ASHER: And Phil, just how much - given the Conservative Party's massive win, how much emboldened and strengthened is Prime Minister Boris Johnson
going into this new year?
BLACK: Well, I think we can expect that because of the - because of the election, because of Boris Johnson's really big, comfortable majority there
that almost everything that we heard from the queen today and, no doubt, other things that the government is going to make clear over the coming
weeks and months, and particularly I think once it gets Brexit out of the way, that's when you're going to see a real ramping up of its domestic
agenda. But that new parliamentary arithmetic, what all of that means is that Boris Johnson can do all of this very comfortably. And so, the
expectation I think is that in the early months of this premiership particularly once Brexit is out of the way, he's going to start talking in
a very big way about the bigger things that he hopes to achieve while he's still got the political goodwill, the honeymoon period if you like, and of
course they very comfortable client majority to get it all through parliament very, very quickly, Zain.
ASHER: All right, Phil Black live for us there. Thank you so much. OK, so these are the stories making headlines around the world. Russian
President, Vladimir Putin, says he expects his U.S. counterpart, Donald Trump, to remain in office despite being impeached. Mr. Putin made the
comments in his annual televised press conference. The Russian leader also suggested a change to his country's constitution to allow an individual to
serve as president for more than two consecutive terms. This brought (ph) speculation he plans to remain in office beyond 2024.
A state of emergency has been declared for the second time in two months in New South Wales, Australia as fire crews battle an unprecedented bushfire
season. Wednesday saw a record-breaking average national temperature of 41.9 Celsius. That's more than 107 degrees Fahrenheit. The forecast is
also hotter for the days ahead as well.
All right, still to come here on First Move, how an audio feed leak at the Bank of England might have given some hedge funds a precious head start on
rate decisions. And Senate Majority Leader, Mitch McConnell weighs in on the impeachment of U.S. President, Donald Trump. We'll bring you his
statement live from the Senate floor in just about half an hour from now. All right, that's First Move. We'll see you on the other side of this
break.
(COMMERCIAL BREAK)
[09:15:00]
All right, welcome back to First Move coming to you live from right here at the New York Stock Exchange where it's looking like pretty much a flat
open. The U.S. stocks are down. The S&P 500 pulled back from record highs Wednesday and posted their first losses in six sessions.
The tech stocks rose to records again. Markets have largely ignored the impeachment headlines from Washington since they do not appear to be
denting consumer or business confidence, but fresh challenges await the market in the new year. Joining me now to talk about that is Michelle
Meyer. She's the Head of U.S. Economics at Bank of America Securities. Michelle, thank you so much for being with us. So just speaking of what
the market cares about going into 2020, obviously this year has been about the trade war with China. We got phase one of that deal, but there seems
to be still some hurdles on the horizon. How sure are we about the future of the U.S.-China economic relationship?
MICHELLE MEYER, BANK OF AMERICA SECURITIES HEAD OF U.S. ECONOMICS: Yes, so I think that it's still a pretty tense relationship unbalanced (ph). So
we're making some progress. The phase one deal is certainly encouraging. At a minimum, it prevents the tariffs that would have kicked in last
weekend from occurring, and those would have been painful. They would have been painful for U.S. consumers, and they would have been escalation in the
trade war. So we avoided that. Maybe we have some of these roll backs which also, again, are encouraging, great agriculture purchases from China.
So steps have been taken to address the - some of the issues, but by no means do we have a clear resolution. A lot of the thornier issues have not
been resolved, particularly around technology, around lots of (ph) security issues. So we would anticipate that negotiations continue, and we are
sensitive to seeing further flare ups into next year, certainly beyond. A key question will be how the trade negotiations potentially could change
post election.
ASHER: So going into the early start of next year, why has the market been so willing to accept that this idea of a peace meal trade deal in fits and
starts is acceptable?
MEYER: Because I think what really shook up markets was the fact that there was just so much uncertainty in the negotiation, so it was really
trade policy uncertainty that created this economic headwind and created a challenge for markets as well.
Trade negotiations are OK. They're typical, right? And markets can operate in that environment. Businesses can invest in that environment,
but what you can't invest in is an environment where you have high degrees of uncertainty in terms of what the next stage of those trade negotiations
will be.
So what we've learned in the past month or so is that we're going to be in a period of calm in terms of negotiations for now, and I think that has
been comforting for markets and for economic participants.
ASHER: OK. You look overall at this bull market.
MEYER: Yes.
ASHER: It's getting very old. It's ancient. That does mean that the end could be nigh. I mean, what are your thoughts on that? It wasn't so long
ago that everybody - the first word around here was recession.
MEYER: Yes.
AHSER: That's the move of the table (ph), but still you have to acknowledge that this bull market can't simply last forever.
MEYER: So, you know, you have to think about the time. Sure, duration matters, but it's so much more than duration, especially when you think
about it from an economic point of view, right? So I'm thinking - I'm not thinking about necessarily from a strategy point of view but from where are
we in the economic cycle. And the economic cycle, we're in later stages, sure. That's very clear, but we're not seeing signs of excesses in terms
of actual investment or spending. And that's because it's been the recovery of fits and starts.
[09:20:00]
You've had these episodes where the economy fell below potential for a period of time, and that's prolonged the cycle because it meant that we had
to then regain those inventories. We had to rebuild the capital of stock after that, and it's created a longer cycle. So no, I don't think that
we're on the verge of recession. Certainly market participants don't feel that way either at this moment.
ASHER: OK, so looking at the end of the year, we know that the U.S. consumer is very strong. We've talked about the U.S. consumer being one of
the pillars holding up the U.S. economy, but -
(CROSSTALK)
MEYER: That's right.
ASHER: -- going into retail sales, especially in this holiday Christmas shopping environment, how strong do you expect the numbers to be?
MEYER: So when you think about holiday sales, one consideration is relative to last year how the holiday sales look, right, because you're
looking at it in a year-over-year perspective, and last year was really challenging for holiday spending. December was exceptionally weak given
the sell off in the stock market, the government shutdown. There was a lot of things that were worrisome for U.S. consumers and they pulled back.
This year, the backdrop is more favorable. So I do think you can see a really favorable comparison to last year with holiday sales up 4.5 to 5
percent pretty easily and more broadly the consumer is pretty well- positioned right now. If you think about savings rates are elevated. Aggregate income is rising given that job creation is continuing and wage
growth is maintaining a healthy pace. So the consumer is well-positioned to spend and I think they certainly well, especially relative to what
happened last year.
ASHER: Wonderful. Michelle Meyer, thank you so much -
(CROSSTALK)
MEYER: You're welcome.
ASHER: -- from Bank of America Securities. Appreciate you joining us. All right, so coming up the sound of subterfuge. An audio feed which was
meant to be private could have put traders seconds ahead of the competition. The Bank of England tells regulators to investigate that
story next.
(COMMERCIAL BREAK)
Seconds can make all the difference when it comes to investing, so U.K. regulators are looking into a leak of audio from Bank of England press
conferences that could have given traders early access to market-sensitive remarks. Hadas Gold is in London to explain. So Hadas, what exactly -
what was the information that essentially was leaked?
HADAS GOLD, CNN REPORTER: Yes, Zain. So this is unprecedented and actually rather embarrassing for a central bank. So pretty much what
happens is that hedge funds were paying almost at least GBP2,500 to get access to this third party supplier who was supposed to do this audio back
up to Mark Carney press conferences at the central bank, but what it meant is that hedge funds would get about an eight second head start on any
information that Mark Carney might be saying, but these audio backups were just supposed to be back ups for if the video failed. They weren't
supposed to be accessible to these hedge funds who, as we all know, getting an eight-second head start on information that might give you clues are
where interest rates are going to go, can move the markets, they can move the bond markets, the currency markets, and that could mean millions worth
of dollars for these hedge funds who do this high-speed training.
So now we're seeing some consequences from this. Like I said, this is unprecedented for a central bank. They say that they have referred this to
the Financial Conduct Authority now.
[09:25:00]
High-frequency trading is not illegal, but what the FCA will likely look into is whether this eight-second extra and especially the fact that it was
a hack not meant to be public whether that could be somehow construed at insider trading, insider information of any kind. The bank has called this
unacceptable. They have cut off this third party supplier, and now there are also calls for the COO of the Bank of England, Joanna Place, to resign.
And honestly, Zain, it just casts this shadow over Mark Carney in his last six weeks,
He's supposed to be exiting the bank very soon. His replacement is supposed to be announced in the next few days, the next few weeks. It's
just not a very good look for the Bank of England, especially right now, especially with so much going on with Brexit. It's just - it's very
unfortunate for them and it's just sort of stunning hack. Now, it might not seem like a lot of time for us, eight seconds, on something that's
going to be public anyway, but those eight seconds when you're working with these high-frequency traders, with all these computer trades, that all they
need is milliseconds, that could mean a lot of money for these hedge funds.
ASHER: So how do they make sure that this type of thing never happens again at the Bank of England, Hadas?
GOLD: I mean, it's going to require a complete security review, and also who they are working with, these third-party suppliers, can they trust
them, what are they doing? And that's why there are calls for the chief operating officer to resign. Just the fact that this could happen under
somebody's watch, this could happen at such an important central bank like the ECB, that is a big question facing them right now, and that will facing
the new president, whoever takes over.
ASHER: All right, Hadas Gold live for us. Thank you so much. All right, still to come here on First Move, Senate Majority Leader, Mitch McConnell,
is set to speak about impeachment. We'll have that story after the break.
(COMMERICAL BREAK)
[09:30:00]
All right, that was the opening bell you just heard there. Welcome back to First Move. I'm Zain Asher coming to you live from the New York Stock
Exchange. As expected, we have got a mostly flat start to the trading day. We are seeing movement in the bond market where borrowing costs are hitting
three-month highs. Investors are largely ignoring all the higher drama, impeachment drama in Washington. In fact, the S&P 500 has risen some 7
percent since the House announced its formal impeachment probe into President Trump back into - back in September (inaudible).
Time now for a check of the global movers. Shares of dating site firm, the Match Group, are trading higher. Parent company IAC, InterActive, has
formally announced plans to spin Match off into a standalone company. Match owns popular dating brands like OkCupid, Match, and Tinder.
Shares of chip maker, Micron, are rallying. The company is reporting better than expected profits and revenues and foresees a more predictable
business climate going forward. Micron is one of Wall Street's biggest gainers rising more than 65 percent so far this year. Shares of food
conagra (ph) and drug store chain, Rite Aid, are rallying as well on better than expected results.
All right, we are due any moment now to hear fro the Senate Majority Leader, Mitch McConnell, in the wake of that impeachment vote we saw
yesterday. According to excerpts attained (ph) by CNN, McConnell is set to slam the Democrats and call the whole process - the whole impeachment
process unfair. Meantime, House Speaker, Nancy Pelosi, has yet to take the next step towards the trial in the Senate. She's also due to speak in the
next hour as well. We'll monitor both of these significant events, of course, so do stay with CNN.
In the meantime, Suzanne Malveaux joins us live now from Capitol Hill. So Suzanne, just quite something to watch yesterday, the president impeached
by the House on two articles - abuse of power and obstruction of Congress. Just walk us through, for our international viewers, what happens next.
SUZANNE MALVEAUX, CNN WHITE HOUSE CORRESPONDENT: Zain, you know, yesterday you'd think it was high drama, high emotions, high stakes. Well, House
Speaker, Nancy Pelosi, took it to a whole other level as well when she introduced the notion, the idea that she was going delay - that she was
actually going to delay those Articles of Impeachment being sent over to the Senate for the trial.
Now, there's nothing in the Constitution that says she has to do it by a particular time or a method here, but once she does, that is when the
Constitution kicks in and says that the Senate, the sole body will go ahead and begin this trail in earnest.
Now, Pelosi says this process is unfair, and she points to the fact that already we've heard from Senate Majority, Mitch McConnell, saying that he's
not an impartial juror. We've heard from Senator Lindsey Graham saying he's not going to try to be fair. And so, that is what she's putting on
the table. There are other Democrats, however, who say, look, this is a good point of leverage for the Speaker.
I mean, she could hold this up and decide to pass it off to the Senate like in the spring or in the middle of this 2020 campaign, that there is some
wiggle room here, and what they are arguing is that Senator Chuck Schumer, who's in negotiations with McConnell, he has asked and requested more
witnesses, documents, that all this be part of the trial. He's been roundly rejected. And so, they say, OK, we're going to hold off on this
and let's see if we can get more of what we want out of a Senate trial by holding onto these Articles of Impeachment. So that's how we're - this is
what we're watching and waiting for, seeing how this all plays out. We do know Senate Majority Leader, Mitch McConnell, is very critical of what is
happening now.
There's another senator, Senator Cornyn from Texas, who says, you know, we don't care if we ever get the articles or if we never receive them. But
that is not the general thinking here on the Hill. The thinking is that this will happen. It will take place. There will be a trial in the
Senate. Very likely the president will be exonerated or at least he will not be removed from office. It's just a matter of how this happens, when,
and just how fierce these negotiations will be between these two parties, Zain.
ASHER: So Suzanne, just in terms of what's at stake for moderate Democrats, obviously there are a couple of Democrats in the House yesterday
that voted against impeaching the president. What is at stake for Democrats who are in very, very red districts here?
MALVEAUX: Well, one thing that's happening - and I talked to a lot of lawmakers yesterday on the House side, Democrats and Republicans alike -
and what they tell me is they express a great deal of frustration that they did not hear from some of the key witnesses that they had hoped to hear
from in the impeachment hearings, in the process itself, that they did not receive these documents. So there are people of the mind on both sides
that this would potentially give more information and clarify if you had those kinds of things playing out in the Senate trial.
[09:35:00]
There is a group of moderate Republicans, Zain, that the Democrats are hoping to sway. Let's take a listen. McConnell's speaking now.
MITCH MCCONNELL (R), SENATE MAJORITY LEADER: -- in order to impeach President Trump. Over the last 12 weeks, House Democrats have conducted -
(CROSSTALK)
ASHER: All right, it looks as though Mitch McConnell, Senate Majority Leader, is speaking. Let's listen in.
END
