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Apple Warns iPhone Sales Take Hit From China Slowdown; Democrats Taking Over House As Trump Digs In; Schumer: Republicans "Feeling The Heat" Over Shutdown; Chinese T.V.: Successful Landing On Far Side Of The Moon; U.S. Ambassador Visits American Arrested for Spying; Countdown to Brexit; Macron Starts 2019 with a Political Crisis; Romney versus Trump versus Romney; U.S. Sailor not Apologizing for Kissing Husband. Aired 1-2a ET

Aired January 3, 2019 - 01:00   ET



[01:00:00] JOHN VAUSE, CNN INTERNATIONAL ANCHOR: Hello everybody, great to have you with us, I'm John Vause, you're watching CNN NEWSROOM. Ahead this hour, a slowing economy in China since iPhone sales tumbling dragging down Apple stock in after-hours trade causing Dow Futures to plunge. In other words, it's not good.

Plus, the man behind the Art of the Deal still can't make one to end the U.S. government shutdown. And it won't get any easier for Donald Trump with Democrats set to take control of the House. And China makes some space history landing a vehicle on the far side of the moon, the first time it's ever been done.

The iPhone, once Apple's most lucrative product quickly becoming the company's biggest headache. Just days into the New Year and Apple says its fourth quarter will fall way short of expectations mostly because of a big slow on iPhone sales in China. CEO Tim Cook blames China's slowing economy and the ongoing trade war with the U.S. Apple stock plummeted in after-hours trading more than seven percent from its close.

U.S. stocks futures also fell after Apple's announcement Dow Futures pointing to a law opening on Thursday down about 1.5 percent. Well, Apple blames its rise forecasts on China's slowing economy. Asian markets still seem to be only slightly fighting over the Nikkei there in Tokyo down by a third of one percent. Hong Kong's Hang Seng down by about half a percent, Shanghai has barely moved its down touch and Seoul's Kospi down by more than half of one percent.

Live down from Beijing, Matt Rivers is joining us. And Matt, here part of what Tim Cook wrote to investors dealing with the impact of China's slowdown. He wrote, while, we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration particularly in Greater China. In fact, most of our revenue shortfall through our guidance and over 100 percent of our year-over-year worldwide revenue decline occurred in Greater China across iPhone Mac and iPad. So he's basically saying China just fell off a cliff in terms of iPhone sales which is an ominous sign. MATT RIVERS, CNN CORRESPONDENT: Yes, absolutely. And I think you can

look at real two reasons for that, John. The first would be a bit more measurable if you will, but more quantitative. I mean, just look at the fact of what's going on with China's economy right now. I mean, there was a number of negative signs before you factor in this whole trade war with the United States has suggested that China's economy was slowing down to a drastic degree, and 2018 was China's worst year economically basically since 2009.

Looking forward 2019 doesn't look to be any better. A number of economic indicators are suggesting that things might only get worse in this coming year. And so for a number of different reasons you've got weakening consumer sentiment here in China. You look at these iPhones, they're more expensive than other competitor phones like Samsung's or Huawei's or Oppo here in China. And think you're seeing the Chinese consumer according to Tim Cook at least, saying you know what, we're not going to shell out for that status symbol, that iPhone X or that iPhone 8+. It's just too expensive.

I think the other thing you have going on here though, there's some friction on a politics, on the nationalism standpoint between the U.S. and China right now over Huawei, the Chinese cellphone maker. You had the CFO of Huawei detained in China at the request of the United States for violating sanctions the U.S. had put in place on Iran. China's government here has used state media to stoke nationalism against the United States and you've seen a number of anecdotal examples of companies of certain local governments, of even individuals saying you know what, we're not going to buy iPhones, we're going to buy Huawei phones instead.

And Huawei's numbers here, smartphone sales wise are actually pretty good year-over-year. So people are still buying smartphones here, they're just not buying as many iPhones. And for Apple, that's a very bad sign and for other U.S. companies looking at the overall economic picture in China. I think there has to be a lot of worry about the current sentiment of the Chinese consumer towards American products.

VAUSE: Yes. Matt, good point. Thank you for being with us. Matt Rivers there live in Beijing. More on the story now, the Director of The Economist Corporate Network Robert Koepp joins us now live from Hong Kong. So, Robert, we have Apple during this growing number of companies saying they are paying a real cost to Donald Trump's trade war with China. Listen to CEO Tim Cook talking to CNBC earlier. Listen to this.


TIM COOK, CEO, APPLE: So as we look at what's going on in China, the -- it's clear that the economy began to slow there for the second half. And what I believe to be the case is the trade tensions between the United States and China put additional pressure on their economy.


VAUSE: You know, Apple says it's feeling the pain, you know, at least according to Cook even though the iPhone is actually exempt from tariffs. So how big of an impact is this trade war actually having on Apple which seems one step removed from all of it?

[01:05:06] ROBERT KOEPP, DIRECTOR, THE ECONOMIST CORPORATE NETWORK: Well, you have to look at the pervasive effect of the trade war. So it's absolutely correct to say yes they're not impacted by the import tariffs of the United States but that doesn't mean they're not impacted by the overall effect on China. So you know, Apple among a number of companies is beginning to see the effects of the trade war in just the slowing down and deceleration of not only the Chinese economy but consumer sentiment as well.

VAUSE; He's put a report from China Finance Magazine there. The trend of economic slowdown will continue -- still continues rather and the slowing momentum is increasing. The fourth quarter GDP growth is very possible to be lower than 6.5 percent.

You know, a decade ago, anything below eight percent economic growth, that sets your alarm bells. So you can bind that outlook and now Apple blaming all of its revenue cut on falling iPhone sales solely in China. All of this is paying a very bleak picture for the year ahead.

KOEPP: Well, I should say it's perhaps bleak in the context of what you just mentioned, what China was having with its previous growth rates but it not unexpected really. I mean, I don't know many mainstream economists that haven't been expecting China's economy to slow down. I think Apple was also factoring it in but they maybe weren't fully anticipating whether it's the effects of the trade war or the slowing economy or I would even argue perhaps just some internal issues.

China's share for Apple, I mean Apple was previously about 13 percent of the China smartphone market. It's now down to above eight percent. So that might have things to do totally unrelated to the overall macro conditions.

VAUSE: What was interesting in that letter to investors explaining why the revenue is down, Tim Cook noted the long review if the slowdown in China. There are other factors here including some customers taking advantage of significantly reduced pricing for iPhone battery replacements, you know they're $29.00 now. It basically feels taking longer to upgrade their iPhones. The bigger picture here, that doesn't seem all bad.

You know, the world can't continue to make three billion smartphones every year. And long-term for Apple moving away from you the hardware to cloud services like Apple music seems to be a better business model. It doesn't mean much right now, but you know, the bigger horizon isn't too bad, right?

KOEPP: Yes, I think you made an excellent point actually with that. You cannot expect infinite growth, right, of any -- particularly like you were mentioning in product sector. So I would advise Apple, if they're looking at a strategy for trying to do exactly what you're talking about, looking at balancing out having more of a balanced portfolio to borrow a term from finance, they need to be looking at other sectors and maybe also thinking about changing tastes for the Chinese consumer. VAUSE: Because basically right now still, the bottom line for Apple,

its bill basically the iPhone company. All that other stuff it does doesn't come close to the revenue and the importance that iPhone sales have to the bottom line.

KOEPP: That's exactly what I noted in the statement from the CEO Tim Cook where he said all of this decline is attributed to iPhone sales. They've actually had record sales and other developed markets so that's one part of the picture. It's developed versus developing and indeed this huge reliance on iPhones, it just seems that it's maybe time for adjusting a strategy.

Now, I'm not going to try to second-guess Apple I'm sure they have very smart people thinking this through but I think it also shows maybe there's something more than just the Chinese slowdown here. It's a matter of a tech shift going on with product tastes and different markets that are opening up that this needs to be explored further.

VAUSE: It may be they just need a better phone to get some excitement and buzz back. That's my -- that's my advice. Robert, good to see you. Thank you.

KOEPP: Thank you.

VAUSE: OK, in a matter of hours, it will be a whole new world in Washington for Donald Trump. Democrats will take control of the House on Thursday. The top of their agenda, a vote on a plan to end the partial government shutdown now on day 13. But there'll be no funding from the Democrats for President Trump's big beautiful border wall. Jessica Dean reports now from the White House.


JESSICA DEAN, CNN WASHINGTON CORRESPONDENT: In his first appearance in nearly a week, President Trump coming out swinging standing by his $5 billion demand for border wall funding.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: The $5 billion, $5.6 billion approved by the House is such a small amount compared to the level of the problem.

DEAN: And refusing to say if he'd accept anything less.

UNIDENTIFIED MALE: Is there a number of below $5 billion that you might be willing to accept in order to reopen the government and get this thing to fold.

TRUMP: Well, I'd rather not say it.

DEAN: As we near the two-week mark of the government shutdown, the President vowing to keep it closed if needed.

TRUMP: As long as it takes. I mean, look, I'm prepared. I think the people of the country think I'm right. DEAN: This as Democratic congressional leaders head to the White

House for the first meeting with Trump since he made this promise last month.


TRUMP: I am proud to shut down the government for border security, Chuck. So I will take the mantle. I will be the one to shut it down. I'm not going to blame you for it.

DEAN: The White House calling today's meeting in the Situation Room a border security briefing but a Capitol Hill source calling it more of a stunt than a serious attempt to have a discussion over the shutdown.

[01:10:05] TRUMP: Our southern border, our southern borders like a sieve.

DEAN: Border security topping the agenda at a cabinet meeting earlier in the day.

UNIDENTIFIED MALE: Congress has to. They have to fund the wall.

DEAN: Every cabinet member sticking to the White House message talking about their agency's response to the border and they spoke as a large Game of Thrones inspired posters set on the table emblazoned with Trump's photo and the seemingly unrelated words sanctions are coming.

Meantime, Utah senator-elect Mitt Romney fired his own shots at the President in a Washington Post op-ed published today writing in part, "On balance, his conduct over the past two years, particularly his actions last month is evidence that the President has not risen to the mantle of the office."

Trump tweeting back, "Would much prefer that Mitt focus on border security and so many other things where he can be helpful. I won big and he didn't. Be a team player and win." Then adding today --

TRUMP: If he fought really hard against President Obama like he does against me, he would have won the election.

DEAN: Romney and Trump have a storied history that's included previous criticisms from Romney.

MITT ROMNEY (R), SENATOR-ELECT, UTAH: Here's what I know. Donald Trump is a phony, a fraud.

DEAN: And kinder words when Romney was in the running to become Trump's Secretary of State.

ROMNEY: These discussions have had enlightening and interesting and engaging. I've enjoyed this very, very much.

DEAN: Also here at the White House this afternoon, President Trump a hosting congressional leadership for what was being billed as a border security briefing in the Situation Room here. All the players were present for a compromise to maybe get further along in these talks, perhaps reopen the government. But by the time everybody came out of that roughly hour-long meeting, both sides saying they were no more closer to any sort of compromise, a reopening of the government than they were when they went in. Jessica Dean, CNN the White House.


VAUSE: From Washington now and CNN Political Analyst and Senior Political Correspondent for the Washington Examiner, David Drucker. So, David, the blind pretty can see this. The President seems to have painted himself into a corner here digging in on his demands of this $5 billion for his border wall. I'd like you to listen to the conservative commentator Ann Coulter talking about the consequences for Donald Trump if he fails to deliver on that wall. Keep in mind, Coulter was one of his earliest and biggest supporters.


ANN COULTER, CONSERVATIVE COMMENTATOR: They're about to have a country where no Republican will ever be elected president again as happened statewide in California and is about to happen in Florida and Texas. And at that point, Trump -- it'll just have been a joke presidency that scammed the American people enraged that you know, amused the populace for a while. But he'll have no legacy whatsoever.


VAUSE: You know, they're strong words. But is this essentially why Trump can't compromise here. If he does, it'll cost him bigly with his base. And right now the only support he has is his base.

DAVID DRUCKER, CNN POLITICAL ANALYST: Well, the interesting thing about this is that Trump does not have to do the full Ann Coulter to satisfy his base. i do think though that he's created a scenario in which if he backs down to the Democrats and the way they would prefer to do border security which would mean no money for a wall, that would make him look weak and that's not why they elected him.

But he is in a position where his base would allow him to do a pretty big immigration deal in which he could trade wall money for some of the immigration reforms legalizing of the DACA kids and all of that, that Democrats might want. I think the question here is whether or not the President wants the fight or whether he actually wants to do a deal. And the only way you do a deal is if both sides win.

VAUSE: And a deal will have to be done with the incoming Democrat majority in Congress. On high noon Thursday, the Democrats take control. Nancy Pelosi will once again be Speaker of the House. Here's Alexandra Pelosi talking about her mother's second time around as House Speaker.


ALEXANDRA PELOSI, DAUGHTER OF NANCY PELOSI: She'll cut your head off and you won't even know you're bleeding. That's all you need to know about her. No one ever won betting against Nancy Pelosi. Think about all those presidents she's indoors, right? She was in the Bush, the Bush, the Clinton. You know, she's been through it all so she's been around. This is not her first rodeo.


VAUSE: Has the President underestimated Pelosi, and I mean in terms of the fact that this is a very different Democrat Party than the one that she was you know, leader of in the House you know, ten years ago. This is a Democrat party coming from urban areas strongly opposed to Donald Trump. There no Blue Dog Democrats there that's just to worry about.

[01:14:45] DRUCKER: Right. So you know, I think that there are a couple of unanswered questions here. First of all, at some point voters are actually going to expect Democrats to do some compromising because they only control the House, they don't control the Senate or the White House. And the last two years, they've been able to watch Republicans sort of self-immolate because they controlled all that levers of government, and Democrats really didn't have to do much.

On the flip side, and you raised a good point here. I'm not sure yet if President Trump understands who is dealing with exactly. Speaker Pelosi -- incoming Speaker Pelosi has proven very adept at deal making and legislating and keeping her conference in line.

And there may be some hiccups in that regard with a very sort of ambitious freshman class of lawmakers that have a lot of grand designs on what they're going to do.

But they all -- but a lot of them come from -- as you say, urban areas. But not just that, they come from the suburbs, all places in America that rejected President Trump, both his policies and his brand of leadership. And so, I think that's what Pelosi has going for her.

And I don't know that President Trump has ever really taken account to what happened in the 2018 midterm elections. Even though Republicans maintained control of the U.S. Senate, gained a couple of seats, they lost 40 seats in the House, and they did so because a lot of places that usually vote Republican didn't. And they didn't because of him.

VAUSE: And everybody goes through the government shutdown. You mentioned this -- you know, a few moments ago. I wish to listen to Democrat Chuck Schumer, the minority leader in the Senate, talking about the shutdown. And this was him after meeting with the President on Wednesday. Here he is.


SCHUMER: They are now feeling the heat. It is not helping the president, it is not helping the Republicans to be the owners of this shutdown. Today, we gave them an opportunity to get out of that and open up the government as we debate border security.

And to say to them because he says he won't sign it and use the government as hostage, we should just give in, the American people don't want that. (END VIDEO CLIP)

VAUSE: You know, I tell you that Schumer is right. They are feeling the heat or they will be feeling the heat -- you know -- you know, in some time in the future -- in the near future. But is there any reason in the world why Democrats would actually throw Trump a lifeline at this point?

DRUCKER: Well, not at this point. No. Well, what Senate -- look, Senator Schumer is correct that the initial polling shows that vote -- more voters blame President Trump for the shutdown than do Democrats. That's probably because he said, he would own the shutdown.

Because he has taken ownership of it and basically keeps reminding voters that there's a shutdown because he wants it. But eventually, what's likely to happen when voters return from the holidays, and if this shutdown lasts long enough, which it could. As voters are likely to get a little frustrated, and just sort of demand that both parties fix the problem.

And at that point, if both sides are smart, they'll start to offer the other side lifelines at the same time, and see if they can't reach a compromise. If they dig in and this thing goes on forever, then, you know, it's, then, both -- that either side is only going to move if they determine that they are really feeling the political heat.

So, Senator Schumer may be pointing to some of the initial polling. But I don't think that anybody in Washington is feeling the heat yet for this shutdown. Once they do, you will start to see more movement.

VAUSE: Good to see you. Thanks so much.

DRUCKER: Thank you.

VAUSE: Well, shedding a little life on the far side of the Moon. China state media reports, its space program has achieved what no country is ever done. Details on a lunar, first in just a moment.

Also, this hour, an American arrested in Moscow gets a high-level visit to his jail cell for U.S. officials laid out their demands to the Kremlin. That's next on CNN NEWSROOM.


[01:21:05] VAUSE: A major development to report for China's space program with state media claiming a vehicle has successfully landed on the far side of the moon. The rover's mission is to carry out a number of experiments including attempts to find water and other resources and to see if certain plants can grow in low gravity.

Former NASA astronaut and cosmonaut David Wolf joins us now from Houston with some of her first perspective on all of this. You know, OK. China, they (INAUDIBLE) the first country to land a vehicle on the far side of the moon. And why has it not been done before? Is it because it's too hard technically? Or is it just more to do with effort versus reward in this case? DAVID WOLF, FORMER ASTRONAUT AND COSMONAUT, NASA: Yes, you know, we have to pick landing sites. And it was a lot easier to have direct communications on the Earth-facing side of the moon. A relay satellite had to be put up to relay communications.

In this case, I think it's just a matter of order of events, there's a lot of exploration to do out there.

VAUSE: So basically, that's how they'll run the problem of no communication. Because radio waves usually don't turn corners on their own.

WOLF: That's right. Then we've -- they bounced it off a satellite, and you band up as band back to earth.

VAUSE: OK. I said, now that the rover is there, you know, we know, there's going be these experiments carried out. What is the value here? What are they expecting to learn from this?

WOLF: So, you know, these experiments are one thing very interesting in this particular, the crater that they've landed in near the South Pole was a huge crater. Eight miles or so deep, dug out by a major impact event. So, the thinking is that it probably dug up a lot of deep layers of the moon and geology can be better understood of how the moon formed, which likely came from the earth also.

So, this is a geological target, a good target. There's good radio astronomy to be done since we're the blockage that we just talked about also blocks interfering radio signals from radio telescopes. There's quite a bit of science to be done on the far side of the moon.

VAUSE: Yes, and there's also resources say like uranium, as well, which -- you know, I read once that it's actually incredibly powerful, or small amount can actually power an entire city.

WOLF: I'm not so familiar with that, but the radio -- I didn't hear that. So, a radioactive power sources you're talking about --


WOLF: I think, yes. Absolutely. The moon has helium-3 and another source --


VAUSE: Helium-3, source thinking of, yes.

WOLF: There's a lot of new geology since it's been facing away from the earth all these millions of years. It sees a different part of the solar system you might say we'll learn about the far reaches of the spoke solar system by looking at the other side. I think it's a great idea.

VAUSE: Yes, yes, China's relatively come out to traveling to the moon, and you know, to space in general. But clearly, they are making up for some lost time. They're having to launch a Mars probe next year, it's first. They say they'll have a fully operational Space Station by 2022.

It's quite a contrast to United States, the country which put the first man on the moon. But now its government shutdown, and the government which couldn't work together to order a pizza.

WOLF: Yes, maybe putting it a little harsh, but we do have a first- rate world-class space program.


WOLF: And that's what our citizens expect. But I think it's great that the rest of the world also sees the importance of space travel and the whole planet is moving out in space. In fact, we already have. And that's a lot of about the orderly way we must now settle the lands that we've explored you might say. Not quite land but it's more of a settlement mentality use the space in an orderly law-abiding way.

[01:25:01] VAUSE: You don't see a threat from China's space program? Because you know the past, it has been spoken of in that way that it's a threat to the United States, it's a race.

WOLF: Well, anything can be used when I -- as a threat or an asset, or a positive. And, of course, these kinds of technologies can be used negative. The idea is to have the global space enterprise so enticing, so valuable, that we would rather cooperate and move enterprise and industry into space.

Utilizing space would be better-spent effort than tearing things down and I wore lines should not be brought up into space. And there's no need to bring those war -- warp those, those divisions up into space.

VAUSE: Absolutely, David, a good point to finish on. Astronaut, Cosmonaut, you're a tycoon on as well I -- you're just checking.

WOLF: Thank you.

VAUSE: David for us in Houston. Thanks for being with us. David, oh, it's great. Appreciate it.

WOLF: Welcome, anytime.

VAUSE: Yes. NASA has released the first color images from the New Horizons spacecraft of Ultima Thule. A 6 billion -- at 6 billion kilometers from the Sun.

This strange rock is the most distant object ever explored up close. The pictures show it's shaped like a snowman. It's red, a little more than 30 kilometers in length. Apparently was formed 4-1/2 billion years ago.

NASA expects to release some highly detailed images in the coming weeks and hopes a detailed study of Ultima Thule will reveal secrets about how the solar system was actually formed.

Next up here at CNN NEWSROOM, pharmacies in U.K. stockpiling insulin and other critical drugs fearing there could be a shortage in a no deal Brexit.


VAUSE: You're watching CNN NEWSROOM. I'm John Vause, to take the headlines this hour. Apple warning investors that fourth-quarter sales are lower than expected. Mainly because they'll have dropped in iPhone sales in China.

CEO Tim Cook, says Apple did not foresee the magnitude of China's economic slowdown. Points in part, the rising trade tensions with the United States.

Major milestone for China's space program. State media reporting, a Chinese rover has landed on the far side of the Moon. The mission now, is to conduct a number of experiments including attempts to find water and other resources and to see if certain plants can grow in low gravity.

[01:29:43] The U.S. government shutdown now into its 13th day and no end in sight. President Trump says it will last as long as it takes to get the funding for his border wall. House Democrats say they'll vote on a plan Thursday to reopen the government but there will be no funding for the wall. The Senate Republican leader says he will not bring that to a vote because the President won't sign it.

Well, Washington has sent a clear message to Moscow in sending the U.S. ambassador to Russia Jon Huntsman to a meeting with an American being held on accusations of spying. The Kremlin is yet to reveal why it believes Paul Whelan in fact is a spy, a charge his family has denied.

We get the very latest now from CNN's Matthew Chance reporting from Moscow.


MATTHEW CHANCE, CNN CORRESPONDENT: Russian and U.S. officials tell CNN consular access has now been granted to Paul Whelan, the former U.S. Marine held at the Lefortovo Prison in Moscow on charges of espionage. But so far there's been no details on the circumstances of his arrest by the FSB, Russia's main counter espionage agency.

Much of what we do know comes from his twin brother, David Whelan, who denies his brother is a spy.

DAVID WHELAN, BROTHER OF PAUL WHELAN: He was visiting Moscow for a wedding for a friend and helping his friend because Paul had been to Russia before and could navigate Moscow and the sights. And so he was helping to esquire some of the American tourists around who were part of the wedding party.

CHANCE: It may have been Whelan's longstanding contact with Russia including social connections to former or active members of the Russian military that flagged him to the country's security services. The security consultant regularly posted photos and messages sometimes in Russian language on a Russian social media platform called VK, similar to Facebook.

CNN contacted one friend who didn't want to be named and asked about the allegations against Whelan, his friend for nine years.

"I think this is some kind of a misunderstanding," the friend responded. Paul always spoke well of Russia and had many Russian friends," he told us.

WHELAN: I knew over the years he'd met Russians. I don't know whether it was through work or through his Marine activity. But he met people while he'd been traveling around and he connected with them on social media. And he would tell us that when he was traveling he would go and visit those people.

CHANCE: More detail is now also emerging about Whelan's military service, his record obtained by CNN says he spent 14 years in the Marine Corps Reserve serving in Iraq and being discharged for bad conduct in 2008.

A military judge found Whelan guilty of attempted larceny, making false official statements, wrongfully using another's social security number and making checks without having sufficient funds for payment.

It was at this upscale hotel in central Moscow where Whelan was staying before his arrest on December 28th. Hotel employees contacted by CNN confirmed he was a guest but said they were unaware of his detention.

But it's the timing that looks most suspicious. Whelan was detained just weeks after Russian gun enthusiast Maria Butina, held in the U.S., pleaded guilty to conspiracy after U.S. prosecutors accused her of trying to infiltrate the NRA and the Republican Party.

There's no apparent direct link between the cases, just speculation that Whelan may be a useful negotiating chip for the Kremlin if some kind of prisoner swap is eventually agreed.

Matthew Chance, CNN -- Moscow.


VAUSE: Well, the make or break Brexit vote in the U.K. parliament could be just days away. And defeat for the prime minister still seems the likely outcome.

Theresa May postponed the vote once back in December rather than face certain defeat. Since then she's been talking to E.U. leaders, hoping for assurances that if Britain must remain in the E.U. Customs Union, it will only be temporary.

And for no apparent reason at all, Britain's foreign secretary speaking in Singapore predicted parliament will now accept May's Brexit agreement.

(BEGIN VIDEO CLIP) JEREMY HUNT, BRITISH FOREIGN MINISTER: When Theresa May comes back with those reassurances that she's been seeking from the E.U. the deal that is on the table is not going to lead to us being permanently trapped in the Customs Union against the will of the British people.

I think that she will find a way to get this deal through parliament. And I know that's what the British people would want.



UNIDENTIFIED MALE: So there you go. So, it's routine.

SAMUEL BURKE, CNN CORRESPONDENT: Routines that are part of the fabric of the U.K.'s National Health Service. The supply chain for prescription drugs for conditions like these anchored in the European Union for more than 40 years. Now that arrangement is at risk under a no deal Brexit.

The Brexit Health Alliance, a nonpolitical group representing the health sector, says 37 million patient packs including prescriptions are imported from the E.U. every month, 45 million are exported to the E.U.

UNIDENTIFIED MALE: But if you look at the insulin, you can see it's being made in Denmark.

[01:35:00] BURKE: The devalued pound then makes that much more expensive.


BURKE: Pharmacies are also facing uncertainty over future drug supplies from the E.U. Now Britain's health ministry advises that in the unlikely event of a shortage pharmacies can provide an appropriate alternative medicine to their patients.

MITRA AZIMI, PHARMACIST: We've got a lot of people coming in with prescriptions where we turn them away and say, look, I can't get hold of this item. But we fear we are going to get a lot more shortages. The medicines that we are worried about are mainly the antidiabetics, the inhalers. They tend to be out of stock.

BURKE: The health ministry says it's planning for the worst. Five hundred companies that supply medicines and medical supplies told to increase stockpiles by another six weeks, to expect delays of up to six months at the border due to new customs checks, to seek alternate routes of shipment for drugs including air freight and increase additional warehouse capacity for drugs at ports. That also includes increasing refrigerator capacity at warehouses to stockpile medicines like insulin that must be kept at low temperatures.

And what about people who say that we're scaremongering talking about stockpiling drugs? LAYLA MCCAY, DIRECTOR OF INTERNATIONAL RELATIONS, NHS CONFEDERATION: I

think that having pharmaceutical companies stock piling is in order to reduce the risk of scaremongering. We need to know that in the worst- case scenario, if there is no deal and there's lots of disruption at the borders, then we have put the right plans in place.

BURKE: The fear is real. But the Brexit Health Alliance says if Theresa May gets her plan through it would meet the major concerns of the health industry. Medicines and medical supplies would continue to cross border without customs checks during a transition period.

Still, for James Moore who also takes multiple injections of insulin every day, he is planning his own contingencies while Britain is still in the E.U.

UNIDENTIFIED MALE: I can take my prescription. I'm going to a French pharmacy and get it. It is possible to conceive of hopping across the channel than doing that right now offline across the island.

BURKE: This holiday season, the one gift James and many others desire above all, an end to the uncertainty for what comes after Brexit.

Samuel Burke, CNN -- London.


VAUSE: Well, France's Yellow Vest movement has spread to Germany inspiring the leader of a left-wing group to organize protests against the government in the coming year. The Germany "Get Up" movement reportedly has 170,000 followers and was formed by Sahra Wagenknecht who told the Foreign Press Association that in Berlin the growing inequality and frustration over the government failure to adequately tackle it has motivated her to take her movement to the streets. She ads the French protesters showed it's possible to bring about change without being a political party.

Meantime in France, the Yellow Vest movement is not the only problem facing Emmanuel Macron. One of the President's former security aides is accused of illegally using a diplomatic passport after being fired last year.

Melissa Bell explains how it's all sparking yet another controversy.


MELISSA BELL, CNN CORRESPONDENT: 2019 began with a bang in Paris With 300,000 people out on the Champs Elysees to see in the new year. But amongst the revelers, a high visibility reminder that the troubles of 2018 may not be over.

The Gilets Jaunes protesters have called for effective and nonviolent gathering, their eighth since the protest over a hike in the fuel tax began in November and a reminder also that they do not intend to stop.

On New Year's Eve, the French president addressed them directly. EMMANUEL MACRON, FRENCH PRESIDENT (through translator): To me this

anger means one thing. Whatever its successes we didn't resign ourselves. Our country wants to build a better future based on our ability to invent new ways of doing things and of being together. To me, that's 2018's lesson.

BELL: But even as Emmanuel Macron attempts to look ahead, the past is casting a shadow in the shape of this man, Alexandre Benalla, the former senior aide and security advisor who hasn't strayed far from the headlines ever since a video emerged of him beating up a protester on May 1st.

The Elysees initially suspended him, then later fired him under pressure from the media storm. Benalla says that he was just a citizen trying to help out and that he made a mistake. President Macron has denied any coverup.

A parliamentary commission was set up to investigate Benalla's role at the Elysees. In September he appeared and told the commission that he had lost any privileges including official passports that he may have had.

ALEXANDRE BENALLA, FORMER AIDE TO MACRON (through translator): Had they been returned they are in the office that I occupied at the Elysees. So I think that the Elysees must have taken care of it.

BELL: Three months later that was found to be a lie. When it emerged in the French press that Benalla had traveled to Chad on a diplomatic passport, meeting the Chadean president only weeks before Emmanuel Macron paid a Christmas visit to French troops there.

[01:40:06] Macron's chief of staff told the press that Benalla was neither a formal nor an informal envoy of the government. And that if he claimed to be, that would be false.

Benalla's lawyers could not be reached but he told the investigative journalism Web site Mediapart that he had been in touch with the President and that that would be difficult for the Elysees to deny given his regular exchanges that are still on his mobile phone.

The Elysees has now confirmed to CNN that Emmanuel Macron did send two text messages to Benalla since his resignation -- messages that many are now very eager to see.

Melissa Bell, CNN -- Paris.


VAUSE: Well, the mayor of Mexico was shot and killed less than two hours after taking office. Alejandro Aparicio was on his way to a meeting in Oaxaca State at city hall when he was gunned down.

Another town official was also killed, two others remain in the hospital. Aparicio is the second mayor killed in Mexico this month alone. At least 72 mayors and mayors-elect have been killed since 2006. Next up here on CNN NEWSROOM, could the former Republican presidential candidate Mitt Romney be looking to become the next John McCain. A scathing op-ed he wrote criticizing the President suggests that is the role he may take as he takes a seat in the next Senate.

We'll hear from the newest thorn at Donald Trump's side in just a moment.


VAUSE: Well, the incoming U.S. Senator and former presidential Republican candidate Mitt Romney is slamming the current U.S. president, also fellow Republican Donald Trump. He wrote a scathing op-ed in the "Washington Post".

Here's part of it. "With the nation so divided, resentful and angry, presidential leadership in qualities of character is indispensable. And it is in this province where the incumbent's shortfall has been most glaring."

Back in November, 2016 Romney was being considered for secretary of state. But now in response to that criticism Trump says Romney should concentrate on being a team player.

Romney sat down for an exclusive interview with CNN's Jake Tapper.


JAKE TAPPER, CNN HOST: So why write this op-ed and why do it now?

ROMNEY: Well, I actually wrote a very similar op-ed before I got into the primary in Utah and laid out my views with regards to the President and his presidency. And noted that I work with the President, as I would, frankly, with any president, which is on those areas where I'm in agreement, we'll be able to work together. Where I disagree, I'll point that out.

[01:45:03] But in matters that relate to the divisiveness that's been part of our political environment, I'll speak out if I feel a need to, if there is something significant.

And I think it's important, as I begin this new job, to make it very clear where I stand. And I also note that the departure of Secretary Mattis and the decision to pull out of Syria and the abrupt way that it was done was a precipitating event for my finally going on this record.

TAPPER: A senior White House official told me today that the President was disappointed that you, even before you were sworn in, would go after him instead of joining him and going after Democrats in the shutdown. What's your response to that?

ROMNEY: Well, with regards to the shutdown, I'll be with Republicans on that front, which is -- I think it's important for us to secure the border. At the same time, what I did in my op-ed was not just talk about the President and my relationship with him and how we'll work together. But also I laid out my perspectives and priorities in a very broad basis, on everything from trade to China to our allies around the world, immigration and so forth.

So I think it's important as you begin a new job to describe exactly what you hope to accomplish, and that's what I did.

TAPPER: The President mentioned you in his cabinet meeting today. Here's just a little bit of what he had to say.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I wish Mitt could be more of a team player. You know, I'm surprised he did it this quickly.

If he fought really hard against President Obama, like he does against me, he would have won the election.

TAPPER: What's your response? What's your thought when you see that?

ROMNEY: Well, the President, of course, is entitled to his perspectives, his own views. And I respect his right to express those things. Just as I do.

And we'll work together on things that I think are in the best interest of the country and my state. And where we disagree, well, we'll just have to disagree.

TAPPER: When you say that you have issues with his character and you talk about his integrity and honesty, the suggestion being that he lacks integrity and honesty, what specifically has he done that has bothered you? What is the rhetoric that has come from his mouth, his actions, that trouble you the most?

ROMNEY: Well, over the course of the last two years, I have put out a number of statements that relate to things that were of great concern to me. The Charlottesville response by the President was something that gave me great concern. The support for Roy Moore in the Senate race was something I was very, very concerned about. His attack on the media, I wrote an entire piece about that.

So I've laid out time and again places where I disagree with the President. And I think it's very important for a president to demonstrate the qualities of integrity and honesty, forthrightness, empathy and respect for the institutions of our democratic republic. I think those are all parts of the job.

And while I agree with him on a lot of policy fronts and salute the work that's been done by the Republican leadership in Washington, there are places that relate to the -- if you will, forming of national character that I think we could do a better job.

TAPPER: Well, you've called him a fraud. I mean, in 2016, you gave a very strong speech in the -- was it in Utah or Arizona -- calling him a fraud. Some people who are allied with the President, some people who are not allied with the President, say hey, you know, the President endorsed you in your Senate race, and you accepted the endorsement. The President pointed that out today. You interviewed for a job with him to be potentially secretary of state.

What changed? Why were you willing to talk to him and accept his endorsement when you have all these reservations about him?

ROMNEY: Well, you know, after he was elected president, it was very much my hope that he would rise to the occasion, rise to the mantle of the office. After all, becoming president of the United States is quite an elevation for anybody.

And he has said during the campaign that he could be extraordinary presidential. When I hear that, I think of Washington and Lincoln and Jefferson and Roosevelt and Kennedy and Eisenhower, and I think of those qualities.

And I think that while he spoke of that, and while that was my hope, I don't think he's followed through on that front the way he's followed through on some of his other promises.

TAPPER: Do you regret accepting his endorsement when he sent that tweet during your Senate race?

ROMNEY: Well, he was endorsing me. I wasn't endorsing him. And I haven't decided who I'm going to endorse in 2020. I'm going to wait and see what the alternatives are.

TAPPER: So, you're not on board -- because the senior senator from Utah, Mike Lee, said he's likely going to endorse the President.

ROMNEY: I think it's early to make that decision and I want to see what the alternatives are. But I pointed out, there are places where we agree on a whole series of policy fronts. But there are places that I think the President can -- if you will, elevate his game and do a better job to help bring us together as a nation.

TAPPER: Is there any chance that you might emerge as an alternative to President Trump and run against him for president in the primaries in 2020?

ROMNEY: No. You may have heard, I ran before. I've had that experience. And, by the way, I acknowledge the President was successful and I was not. He did something I couldn't do. He won.

And I recognize that and appreciate that. But no, I'm not running again. And we'll see whether someone else does in a Republican primary or not. But time will tell.

(END VIDEOTAPE) [01:50:02] VAUSE: The incoming junior senator from Utah speaking with CNN's Jake Tapper.

Well, it was just a homecoming kiss and while it provoked some angry comments at first, the backlash to the backlash is a lot about acceptance and tolerance. We'll explain after the break.


VAUSE: Cathay Pacific is handing out some belated Christmas presents to thousands of travelers. The Hong Kong-based carrier says it will honor super cheap tickets sold on its Web site Tuesday. Flights from Vietnam to New York first class and business class flight usually $16,000 dollars but for a few hours yours for $635.

Apparently the airlines spent about $100 million recently to upgrade security after a huge data breach last year. How is that working out?

At first the story was all about the backlash. Those who were so deeply offended when this photo went to air on local news in Jacksonville, Florida and was posted on Naval Station Mayport's Facebook page.

The couple, Bryan and Kenneth Woodington, have been married for a year and Bryan had been deployed to the Persian Gulf and Europe for seven months aboard the USS The Sullivan.

The couple won a lottery for the ceremonial first kiss. It's not the first time the same-sex couple has been chosen to be the Navy's first dockside kiss and chances are it won't be the last.

Despite that though, almost on cue came the complaint. Just a handful of comments it seems like this one sent to television station WJXT. "I thought this was a family friendly news channel.

Well, another viewer wrote, "How sad that your station has dropped to such a low as showing gay couples kissing on your newscast."

But over the last few days a funny thing happened to the outrage machine. It's been overwhelmed by messages of support for Bryan and Kenneth. Here's a sample form the Naval Station's Facebook page.

"Times have changed when a gay sailor can welcome home his partner without fear. Welcome home. Life is short. Love whoever you want to love."

(INAUDIBLE) Jennifer wrote I wish my man would kiss me like this. Just saying."

If nothing else it's a sign of the times and the times are changing.

For more, Bryan and Kenneth join us now from Key West in Florida. Good to have you with us -- guys. Thank you so much.


Bryan -- I want to go to you first.

I guess it took, you know, three negative comments to bring out the positive ones. Has this level of support come as much as a surprise to you or does it reflect what you experience on a daily basis? BRYAN WOODINGTON, U.S. NAVY SAILOR: To be honest, it doesn't come as

a surprise because everyone that I work with there is fantastic. They're loving and supporting. Our friends, our family and all my co- workers. They're my second family. Everyone's been wonderful.

VAUSE: And you know, what was interesting is that Kenneth, you were, you know, trying to recreate that iconic 1945 photo the kissing sailor. And that apparently was partly, you know, one of the reasons at least for some of the angry comments.

So I guess, you did a pretty good job of it, by the way. If you had to do it all again would you do it the same way?

[01:55:02] KENNETH WOODINGTON: Yes, of course. I probably would not cry during it but I would definitely do it again. I love -- my husband likes to dip me a lot and we started doing it when we were dating. So I would do it again in a heartbeat?

VAUSE: And what you've seen over the last couple of days, you know, first the negativity and now, you know, the sort of positive response that you had. Is that how you expected this to play out?

K. WOODINGTON: To be honest, no. I honestly didn't think it would be as big as it is now. I honestly didn't think it was -- I won't say that important but I didn't think it was that big of a deal. You know, I'm happy that it is showing our love to the world and how much we love each other. But, you know, I'm happy that that is what people are seeing.


VAUSE: And by all those messages of support, you know, that's great. But what would be even better I guess is when no one comments either way. Is that day maybe just a little closer now?

B. WOODINGTON: I think at this point we are at that point -- I mean even with Navy's perspective, you know, love is love and we're allowed to get married and there's no backlash for that in the Navy so I don't see why the world has to be like that anymore.

I mean the military accepts us. Gay rights has moved forward. I mean we can even adopt children. Why is our little kiss on the mouth -- (INAUDIBLE) we've seen married couples. It really shouldn't be that shocking for those --

VAUSE: And Kenneth -- finally what would you say to those people who may, you know, have felt offended and complained when they saw the images of that first kiss on their local news? If you had a chance to speak to them directly what would you say?

K. WOODINGTON: Honestly I feel like if it's their opinion. They are entitled to their own opinion. At the end of the day we were showing our love for each other. And that's it. I love him and I want everybody to know that I love him.

VAUSE: Well, that's fantastic. Bryan -- welcome home and thank you guys for being with us. Appreciate it.

K. WOODINGTON: Thank you so much.

VAUSE: And thank you for watching CNN NEWSROOM. I'm John Vause.

Please stay with us. There's a lot more news after a very short break.

You're watching CNN.


[02:00:07] UNIDENTIFIED FEMALE: Impasse in Washington.