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First Move with Julia Chatterley

Iran Written All Over It: President Trump's Take On The Tanker Attacks Yesterday; Broadcom's Forecasts Send A Trade War Warning; Women Across Switzerland Walking Out Of Work, Calling For Greater Quality. Aired 9-10a ET

Aired June 14, 2019 - 09:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR, FIRST MOVE: Live from the New York Stock Exchange, I'm Julia Chatterley, this is FIRST MOVE. And here's

your need to know.

Iran written all over it. President Trump's take on the tanker attacks yesterday. The chips are down. Broadcom's forecasts send a trade war

warning. And the Swiss strike back. Women across Switzerland walking out of work, calling for greater quality. It's Friday. Let's make a move.

Welcome once again to FIRST MOVE. Happy Friday and a Happy Friday for stock investors. Again, we are just two percent away from record highs.

I'll be asking throughout the show, is that justified? Ultimately, as I walk you through the fallout from the tensions in the Middle East and what

we saw yesterday with the tanker attacks, but also some pretty concerning data from around the world, too.

Right now U.S. futures, a little bit softer. We did manage half a percent gains yesterday despite these tensions that I mentioned. The energy sector

of course, performing well.

Today though, it's all about the tech sector especially the chip stocks. Broadcom dashing hopes of a business pick up later this year. The trade

war, Huawei, you mentioned it, we've got all the details for you in a second.

Everywhere you look though, I'm seeing signs of broader concerns, the weight of the trade war of filtering in here. China, retail sales numbers

there held up pretty well, I have to say that the industrial output numbers, those growing at the weakest pace in 17 years.

The U.S. version is out in 15 minutes, so we'll be all over that. But for now, we did see a solid retail sales numbers in line with estimates. The

U.S. consumer remains resilient. But hey, before we get too excited, compare and contrast Morgan Stanley's U.S. business conditions index has

just had the biggest monthly drop on record. Fine. It's just one month and we did see a pullback in the stock markets in May of course, too.

But now more than 600 U.S. firms warning the U.S. government about further Chinese tariffs. We'll talk about that, too. But all sorts of signs here

and warnings don't do more. Please, the U.S. government.

What's going on in the energy sector? A U.S. oil prices study today after that four percent rise that we saw yesterday after the twin tanker attacks.

The U.S. firmly blaming Iran and tensions, of course not easing there. But you have to argue here the dominant driver for prices is bumpy U.S. supply

and demand fears.

Let's break this down. Get to the drivers. Iran has said the U.S. government's tanker accusations are quote "sad, and a suspicious act" while

the U.S. says this footage shows the Iranian Navy removing an unexploded mine from one of those crippled tankers.

Donald Trump just told Fox News that the incident had Iran written all over it. Listen in.

(BEGIN AUDIO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Well, Iran did do it, and you know, they did it because you saw the boat. I guess one of the

mines didn't explode, and it probably got essentially Iran written all over it.

And you saw the boat at night trying to take the mine off and successfully took the mine off the boat, and that was exposed and that was a boat that

was them. And they didn't want the evidence left behind. I guess they don't know that we have things that we can detect in the dark that worked

very well.

(END VIDEO CLIP)

CHATTERLEY: All right, we've got John Defterios for us in Abu Dhabi, Fred Pleitgen is in Tehran. First to Fred, I'm going to come to you first.

Extraordinarily quick to accuse the Iranians here whether it was Mike Pompeo, of course, and the President this morning.

But talk us through this video as well, and the evidence perhaps that provides.

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, you're absolutely right, Julia and the Iranians really aren't very happy about the

fact that the U.S. was very quick to point the finger at Tehran. First of all, of course, Secretary of State Mike Pompeo, and then what we've just

seen now, President Trump essentially saying the same thing.

Now according to the U.S. Military, what's going on in that video the U.S. says is that this was taken a long time after that attack initially took

place. The U.S. said it already had a ship in the area, but that little patrol boat from the Iranians then came up to one of those stricken

tankers, came up to the side.

And that essentially the U.S. says, the crew of that Iranian patrol boat then took an object off the side of that tanker which the U.S. believes may

have been an unexploded sea mine. And it was therefore trying to get rid of some of the evidence the U.S. believes against Iran.

Now the Iranians, of course, having none of that saying that these are false accusations that are being levied by the United States. There's one

senior Iranian lawmaker who came out and essentially says the main suspects in all of this are the U.S. Intelligence services and the Israelis.

[09:05:08] PLEITGEN: Obviously also not to offer any sort of evidence to back that up. But you can really feel how the rhetoric certainly isn't

being toned down in any way, shape or form, Julia. In fact, it is indeed being heated up.

On the one hand, you have President Trump and his accusations that we heard just there and Secretary of State Mike Pompeo. On the other hand, you have

the Iranian Foreign Minister Javad Zarif, who just a few minutes ago, he's at an economic forum right now tweeted the following saying that

"Unilateral U.S. actions, including its economic terrorism on Iran are solely responsible for insecurity and renewed tensions in our region."

So the Iranians not only saying they didn't do it, but they're the ones who are saying that the U.S. is the one that's fueling and fanning the flames

in the greater Middle Eastern region -- Julia.

CHATTERLEY: Yes, the Foreign Minister said it was war mongering, the accusations from the United States here. I mean, I think everybody here is

wondering what now? We've seen a ratcheting up of the tensions, the accusations from the United States on Iran. They're accusing the U.S. of

economic terrorism here, what now?

PLEITGEN: Well, the big question is, are these two sides able to walk this back right now? Is there going to be some sort of way to move forward to

try and essentially prevent this from escalating any further?

Certainly right now, what the U.S. is saying is that all this is being investigated that apparently, authorities are out there at those two tanker

boats, and trying to see what exactly happened there.

But the U.S., of course, has now already laid the finger of blame at the Iranians. And if we look at Secretary of State Mike Pompeo's press

conference yesterday, he wasn't just saying that. He was also saying the other tanker attacks were also done by Iran. He was accusing the Iranians

of an attack on a pipeline in Saudi Arabia, its allies, the Houthis coming from Yemen.

So also laying the finger of blame at the Iranians for a lot of things that are going on in the greater Middle Eastern region, and essentially accusing

them of destabilizing the region.

Now, of course, as you can imagine, the Iranians, for their part are not happy about that at all. And if you look at yesterday, when the Supreme

Leader of Iran met with Shinzo Abe, the Prime Minister of Japan, he said, "Look, it's not even worth negotiating with someone like President Trump."

He said he wouldn't even give President Trump an answer when President Trump wanted those negotiator trying to start those negotiations with the

Iranians. So right now, it's going to be very, very difficult to try and prevent this from escalating any further -- Julia.

CHATTERLEY: Yes, that is quite fascinating to me all, the reaction that we saw in the oil markets yesterday. And, John, the lack of reaction that

we're seeing today, despite what is an escalation of tensions here and to Fred's point, too similar to our reporting events within a month. JD, what

do you make of it? There's clearly other dominant factors here for investors that are weighing on oil prices.

JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, it's extraordinary because we're in a risk on environment, as we were talking

about here.

You've had the tanker attacks, an attack against a pumping station for Saudi Aramco, even an airport in Saudi Arabia and it's just barely moving

the needle. But I think the three key factors at play here that are impacting prices. First and foremost, the U.S. trade sanctions whether

against China, Iran, Venezuela, Mexico, or the threats against Mexico, it's hitting demand.

The International Energy Agency put out its latest report saying the daily demand growth is now down to just 1.2 million barrels a day; sharply lower

than last year. U.S. production is surging, Julia.

The expectation is between 2018 and by the end of this year, the U.S. is going to add 3.5 million barrels a day. It's like adding another UAE to

the energy market, and it's a major OPEC producer.

And finally, we see that the call on OPEC production right now is at the lowest level since 2014. It's below 30 million barrels a day.

So the U.S. is rising, it is forcing OPEC to cut back. Iran, Venezuela, Libya all see the production lower. At the end of the day, the two key

players in the OPEC, non-OPEC stratosphere right now. Saudi Arabia and Russia are looking at the five year moving average. Because of the

uncertainty of the economy right now, inventories are growing. So this is going to put pressure on them at their next meeting in Vienna, not to

release more oil onto the market, and perhaps make a deeper cut.

This will be an interesting meeting, because they have Iran and Venezuela at the table with U.S. sanctions hammering away at those two countries,

with the U.S., Saudi Arabia and UAE partners here with the pressure on against Iran.

CHATTERLEY: And we're talking nonstop about the back and forth between the United States and the Iranians here. But there are other countries

involved, particularly in the region right now, John, what are they saying about the situation just keeping a little bit quiet here?

DEFTERIOS: Well, they don't like the idea that we could stumble into war. This is the definition here constantly. So we have this access of power

against Iran. I would include Israel in the mix, Saudi Arabia, the UAE, Bahrain and Egypt.

And this could be something that could trigger something much worse than the oil markets, if it spirals out of control. You know, it's interesting

because I've been in this oil market for 25 years. You go back to the Gulf War, for example, the Iran-Iraq War, the invasion of Iraq, even the removal

of Colonel Qaddafi.

[09:10:17] DEFTERIOS: Julia, we'd see spikes 10 to 15 percent, with anything around the Strait of Hormuz. And right now we saw a blip going up

four and a half percent losing the gains entirely. And we have to take a step back, we're in a bear market since the end of April, we've lost $15.00

or about 20 percent, whether it's WTI or North Sea Brent.

There's just too much oil around and the United States is going to go past 13 million barrels a day, while President Trump's pressure on sanctions is

slowing down global growth. That's the reality of why the markets not reacting to the pressure we have in this region.

CHATTERLEY: Yes, it's a negative sentiment tranquilizer on steroids. John Defterios, thank you so much for that. And Fred, of course, over in Tehran

for us, too.

All right. Let's move on to our second drive. Of course, the Iranian situation not the only foreign policy challenge that the United States is

facing. China, too. Six hundred firms here in the United States warning President Trump and the administration about the risks of further tariffs

on the Chinese.

They say more times will cost U.S. jobs and harm millions of American consumers. Clare Sebastian has the story for us, and it's not just the

ordinary U.S. firms. I mean, these are giants -- Walmart, Costco -- urging the President to remove tariffs and not to add further, Clare. Tell us

more.

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, this reads Julia like a who's who of the biggest retailers in the U.S. Walmart, Target, Costco, as

you say the likes of, Footlocker, Levi Strauss, Macy's as well. These are, you know, some huge employers.

Walmart employs 1.5 million people in the U.S. It's the biggest private sector employer and you can bet if they are threatening to raise prices.

The many, many smaller companies on the list are doing it as well.

There's a lot of pressure on these companies and actually, Julia, I spoke to one of these smaller companies this week, a bike and bicycle pot

wholesaler called Kent International. And their President explained to me how the pressure on the company is increasing. Take a listen.

(BEGIN VIDEO CLIP)

ARNOLD, KAMLER, PRESIDENT, KENT INTERNATIONAL: We had to raise prices immediately. But our customers have policies where they don't accept price

increases right away. And so in the time gap, which was about 75 days, we had literally one and a half to two months of time when we were paying

these additional tariffs and yet we couldn't pass it on. So we suffered quite a bit of losses during that period.

(END VIDEO CLIP)

SEBASTIAN: He says he lost about $3.5 million. He also said that ocean freight costs rose in that time because many people were rushing to get

their products to the U.S. before the tariff increases came in.

But Julia, so far with the $200 billion in tariffs that have been hit, consumer goods have been broadly insulated. If another $300 billion gets

hit by tariffs, you can bet this will be a direct hit to consumer products. And that's why we see so many retailers so worried.

CHATTERLEY: Yes, and they can't substitute quick enough. I mean, we're talking of price increases of some 16 percent, so they were saying.

Yes, we'll see what the response is. Clare Sebastian, thank you so much for that.

All right, next driver. The chip maker, Broadcom down some nine percent premarket. They lowered their full-year outlook warning of a demand

slowdown due to the trade will impact and of course, the direct response at the ban on Huawei, of course on their technology.

Matt Egan joins me now. Matt, a blow for the entire industry here, I think, because everyone was hoping that we'd see a bit of a pickup in the

second half of this year and Broadcom saying, "not happening."

MATT EGAN, CNN BUSINESS LEAD WRITER: That's right, Julia, not happening. It's clear that the chip makers are getting hit by a one two punch here of

the trade war with China and a global slowdown in growth and Broadcom cited both factors in dramatically lowering its revenue forecast for the rest of

the year by about $2 billion.

The company also pointed to the U.S. export ban on Huawei, which accounted for nearly a billion dollars in direct revenue for Broadcom last year.

Now Broadcom's CEO, Hock Tan, he said that he is seeing a -- he said that the environment is very, very nervous. And he's saying that he is seeing a

very rapid and sharp contraction in orders.

Now, those are pretty stark words from a major CEO and Hock Tan did not shy away from blaming the trade war specifically. He said that it is clear

that the U.S.-China trade conflict including the Huawei export ban is creating economic and political uncertainty.

Now that gloomy sentiment from Broadcom has further dashed those hopes of a second half turnaround in the chip industry. We've seen AMD and Micron and

Qualcomm and NVIDIA, Intel all move down premarket.

Apple which relies on Broadcom chips for some of its products is also set to open down last check about one percent. Now, Julia, I think all this

bears watching because the chip industry is looked at as an economic bellwether and just yesterday, billionaire investor Jeff Gundlach said he

does think there's something to this idea that the trade war is contributing to a global slowdown.

[09:15:13] EGAN: And he thinks there's a 40 to 45 percent chance of a U.S. recession within six months.

CHATTERLEY: Wow. I mean, he tends to be a bear. I guess we counter it slightly with that. But when you're talking about a company like Huawei

that outsells Apple, in terms of smartphones, and the supply chain is so huge as far as network equipment is concerned, you kind of have to see a

reaction more broadly than just initial sales like we see the chips. It's a great point. Matt Egan, thank you so much for that.

All right, let me bring you up to speed now with some of the other stories that we are following around the world. President Trump appears to be

backtracking from his statement that he would accept foreign dirt on his opponents.

In an interview with Fox News, the President said there's nothing wrong with accepting the information. However, he would turn it over to the

F.B.I.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES (via phone): I don't think anybody would present me with anything bad because they know how much

I love this country. Nobody's going to present me with anything.

But number two, if I was and of course, you have to look at it. Because if you don't look at it, you're not going to know if it's bad. How are you

going to know if it's bad, but of course you give it to the FBI or report it to the Attorney General or somebody like that.

But of course you do that.

(END VIDEO CLIP)

CHATTERLEY: President Trump also declined to offer any new details on whether China's President Xi plans to meet with him at the upcoming G20

Summit.

Female lawmakers in Kenya stormed out of a Parliament in protest after a male member of Parliament allegedly assaulted a female lawmaker.

MP Fatima Gedi, who you see here says Rashid Kassim punched her several times in the mouth and jaw after confronting her over a budget issue on

Thursday. He is now being arrested.

All right, still to come here on FIRST MOVE. Oil on troubled waters as tensions rise over attacks on tankers and the Gulf of Oman. We seek to a

former Ambassador who says the U.S. should fight fire with fire.

And breaking up is hard to do. The CEO of Google pushes back against moves to cut his company into smaller pieces. Our exclusive interview coming up.

Stay with us. You're watching FIRST MOVE.

(COMMERCIAL BREAK)

[09:20:24] CHATTERLEY: Welcome back to FIRST MOVE. We're looking at a lower open for stock markets. All the focus on the tech sector. In

particular this morning, in light of what we've been talking about, chip maker Broadcom's warning and fears that the second half bounce for the chip

stocks won't happen.

Some perspective here is important though, too. That Semi-Conductor Conductor Index is still up some 20 percent here today, even as it's down

12 percent from the April highs that we saw.

We are still on track more broadly for a second straight week of gains here, but continue to watch the signs in the bond market. That 10-year

treasury yield sitting around 2.1 percent on broader growth. That said, we have to point out that the economic numbers today were good.

Industrial production numbers just out, up better than expected to 0.4 percent in May following solid retail sales numbers for May out earlier,

too.

Let's talk all this through. Jonathan Golub is Managing Director and Chief U.S. Equity Strategist at Credit Suisse, and he joins us now. Great to

have you with us.

JONATHAN GOLUB, MANAGING DIRECTOR AND CHIEF U.S. EQUITY STRATEGIST, CREDIT SUISSE: Good morning.

CHATTERLEY: Talk to me about retail sales. Solid number here. The consumer holding up pretty well in the face of border uncertainty.

GOLUB: Yes, but the key for the consumer is that jobs are abundant, the unemployment rate is low. So if you lose your job, it's very easy to get

one and you're getting a raise. So the consumers are in great shape. The cyclical data, especially on the industrial side, and I know the industrial

productions a little better today, but it's been sloppy, really for the last year.

CHATTERLEY: It has. And we saw yesterday and I mentioned it earlier on the show, actually Morgan Stanley's Business Conditions Index was splashed

all over the financial news and websites over the last 24 hours as a warning for May.

How closely should we be following things like that and the business surveys at this stage, which are showing kind of conditions, the market

selloff in May? The broader trade tension?

GOLUB: It's the most important question, because if you look at what the surveys, they tell you what businesses intend to do and a funny thing, when

they say they intend to cut back, they tend to actually do that.

If you look at what they call the hard data, which is the actual production itself, it tends to be a little bit more lagging. So we're very focused on

this survey data that you're talking about.

CHATTERLEY: And it brings it back again to trade war concerns and the level of uncertainty that we continue to have hear, whether we're going to

see more tariffs on China or a deal fundamentally reached. It's tough for businesses to make decisions.

GOLUB: I think there's two issues. First, if we step back and said there was nothing going on with trade whatsoever, we've seen a weakening of this

industrial type activity now for quite a while.

So I think that the most important thing is to separate this out as we were seeing a deceleration regardless. But yes, if businesses are making a

long-term decision, if I want to relocate my factory or retool a plant or initiate a new project, very, very difficult for businesses to do that.

CHATTERLEY: Okay. So the Fed.

GOLUB: Yes.

CHATTERLEY: It has to work out how it's going to message to the market here. The consumer, the retail sales is holding up, as you said, even if

we strip out the trade war impact on the economy, the underlying economy was weakening. How do you justify potential rate cuts in the face of sort

of mixed messages here as far as the economy is concerned.

GOLUB: The Fed is all about interest rates, and right now, the yield curve is steeply inverted at the short-end of the curve. And putting in simpler

terms, the short rate is just too high compared to the general level of rates for the rest of the market. And the market is bullying the Fed to

lower rates.

If we didn't have a trade issue, the Fed would still have to lower rates. Why? Inflation expectations are super low. Interest rates are falling

now, about 120 basis points, 1.2 percent since November.

The market is telling you that rates are too high and again, is trade part of it? Yes. But it's not the only story.

CHATTERLEY: See that's a fascinating point to me. So arguably, the fact can say that, look, we're looking at inflation at this moment. We're

looking at the data. That's what we do. That's our job. There is uncertainties out there. But you know, we need to get some easing.

GOLUB: The reason I'm smiling is that what the Fed really should be saying is, is that we're -- that they're off sides, that they tighten too much and

they need to pull back. They're not going to say that they made a mistake, which is probably the case. What they're going to say is "Oh, we're using

this as an insurance policy."

The market is going to look right through that and realize that in fact, they are easing because the rate is too high.

CHATTERLEY: I mean, I call it the Fed pirouette. We've seen one pivot, make sure it keeps spinning basically, if they've wrecked the cake, how

many times will they cut this year then?

GOLUB: Our view is that they cut once this year, but the market is saying and it's what's important, the market thinks if they cut three times this

year and one time, so the fact the market thinks that they have to cut 100 basis points, one percent, it really means that the market believes the Fed

is off side and needs to take action.

CHATTERLEY: Okay, so when I started the show today, I said should we be two percent away from record highs more broadly in the U.S. stock market?

And some of the justification I get is that rates have come down and that support stocks.

[09:25:27] GOLUB: Right.

CHATTERLEY: You've done some analysis on this, on the relationship between lower rates here and the performance of stocks. So two questions there.

GOLUB: Okay, so there's again -- is this a short term or long term?

CHATTERLEY: Yes.

GOLUB: In the short run, when rates are falling, it's a signal that something is broken, and so by rates going down this much in the last five

months, it's really telling you that the economy is taking on more -- under more pressure than we think. And it and it is stressed that way.

And so we've kind of -- and we've been really bullish for the last five years. This is the first time we're saying, you know what? Maybe now is

not the time to jump in and buy every dip. Longer term, the real key here is the companies are responding. They are doing a great job of managing

costs. They're returning dividends back to shareholders very high. We like U.S. stocks longer term, but the near term, a little more spicy.

CHATTERLEY: So be careful in the near term.

GOLUB: If you had a two or three year horizon, I'm absolutely a buyer. Would I be jumping in this morning? I'm not sure.

CHATTERLEY: That's my response. Jonathan, thank you so much. Obviously popular on the floor as well, sir. Thank you so much. Great to have you

here.

GOLUB: Good to be here.

CHATTERLEY: Happy Friday. All right. We're counting down to the market open this morning. As you can see, Chewy actually is listing today, so no

animals around, but lots of cute pictures. We'll see how that performs when it opens up later today, but plenty more to discuss to on the show.

Stay with us. The market open is next.

(COMMERCIAL BREAK)

[09:30:01] CHATTERLEY: Welcome back to FIRST MOVE. I'm Julia Chatterley from the New York Stock Exchange here. That was the opening bell on Wall

Street where pet food and supply company, Chewy is going public today.

Chewy is the internet arm of retailer Pet Smart. Share prices actually priced at $22.00 a share, so that's above the target range. They've raised

around $1 billion. It's another example of how the pet business has become a pretty big business. And there was a very cute dog on the balcony I saw

there.

Now, forget the fun, but it's going to be a bit of a rough start. Yes, sorry. They didn't write that out on Wall Street. In more ways than one,

as you can see stocks losing a bit of ground here. The biggest drop for the NASDAQ, some four tenths of one percent. Weak Chinese factory data and

of course, poor results from chip maker Broadcom as we've been discussing weighing on sentiment.

Though there is the bright side here. The industrial production numbers that we just got from the United States came in above expectations. U.S.

retail sales also, those numbers coming in pretty solidly, too.

All right let me walk you through our global movers. Broadcom, let's take a look at how that's been going well. Bouncing seven and a half percent.

The chip maker revenues missed expectations. It lowered his full-year revenue guidance, too. They blamed the demand slow down on the trade

tensions between the United States and China and of course, Huawei's export restrictions, too.

We're seeing the broader sector under a bit of pressure as a result of that, too, and in the European session, in fact.

Facebook higher by 1.7 percent. "The Wall Street Journal" is reporting that the social network's new cryptocurrency will be called Libra, and it's

getting backing from more than a dozen companies including Visa, MasterCard, PayPal and Uber. The digital coin will be unveiled next week,

and it's set to launch next year.

Blue Apron, down nine and a half percent in the session. Ouch. The misery continues for the meal kit company. The board approved a one for 15

reversed stock split that goes into effect after Friday's market close.

It's now trading as you can see it just over 59 cents a share. Ouch. All right, let's move on. The controversy over attacks on oil tankers maybe

heating up, but as you can see the energy market's reaction is looking a lot cooler today. Investors shrugging off the floor its trading as you can

see just higher by some six tenths of one percent for Brent, twelve tenths of 1 percent higher for WTI.

This is the video that's ratcheted up tensions in the Gulf of Oman. The U.S. said it shows an Iranian naval vessel coming up alongside one of the

tankers, a Japanese ship in fact, and removing an unexploded mine. U.S. officials believe Tehran was trying to get rid of the evidence.

Our next guest wrote recently that the United States should take an eye for an eye approach with the Iranian leadership. If they attack an Emirati

ship, we should attack an Iranian ship. That's a quote. And that's the only language the Iranian leadership understands.

Adam Ereli is a former U.S. Ambassador to Bahrain. He also served as Deputy State Department spokesperson, and he joins us now from Washington.

Ambassador, that's a pretty punchy response. Would you argue that if indeed, Iran is responsible for this latest attack, it's a direct result of

a lack of action from the events that we saw less than a month ago?

ADAM ERELI, FORMER U.S. AMBASSADOR TO BAHRAIN: Short answer is yes. And yes, I don't think there's any question and I don't think the question is

if Iran is responsible. You know, there are those who -- I mean, Iran is denying. There's no reason to believe them. There are others who think

this might be a false flag operation. That's patently ridiculous.

Number three, you know, everybody is looking at these latest events as if they are some one-off. But we have a pattern of behavior by Iran over the

past 40 years since 1979, when the revolution came to power of attacking American and American targets, and those of its allies. And there's never

been a response by the United States.

So my point is simply this. Iran will continue to test us and see how far it can go. Unless there's a brush back from us, unless they're forced to

pay a price. Until now that hasn't happened, and as a result, we've seen a pattern of aggressive actions, not only in the last several months, but

over the last 40 years.

CHATTERLEY: Some people would look at what you're saying here and go, "Hang on a second. Why is it the United States' responsibility to respond

if they are Iranians attack an Emirati ship or a Saudi ship?" Isn't it a responsibility of other nations in that region to respond, too and not just

leave it to the United States to take care of military action here, because that's what we're arguing?

[09:35:13] ERELI: Well, I would qualify that. First of all, the United States is a superpower, we ought to act like one. We're the only country

with the capability to attack quickly, precisely, and effectively. No other country in the world has that. So that's point one.

Point two, we have made a commitment to secure freedom of navigation in this part of the world. That is a commitment we need to stand by, or our

word means nothing.

Finally, number three, just because Saudi Arabia and Bahrain or the United Arab Emirates aren't pulling the trigger, they are providing significant

and I mean, significant logistical, material, political support for U.S. forces. We operate as a coalition, and this would not be the United States

going it alone.

CHATTERLEY: Why isn't President Trump acting here? In the article that you wrote, you said, "Look, he's afraid that it will costing votes in

2020." Explain?

ERELI: Well, two points. You know, Trump is nothing if not consistent, right? I mean, he might seem to be a loose cannon and a wild card. But if

you actually look carefully at what he said, and what he's done, there is a method to the apparent madness.

Number one, he said he wants to -- he doesn't want to get America involved in any wars, and he wants to get America out of the wars that it's in.

So in Afghanistan and Syria, he has been very aggressive about pulling us out. The only reason a small number of American troops remain there is

because his military advisers convinced him that it was necessary to do.

He is not going to get into another -- he doesn't want to get into another conflict with Iran.

Now, my point is, this isn't a question of full scale war or peace, you can -- you can take limited surgical strikes against Iranian targets without

going to a full scale war.

But the final point is this. Trump doesn't want the price of oil to go up because that hurts the U.S. economy. That's been a bedrock of his foreign

policy with Saudi Arabia and others, keep the price moderate, number one. Number two, he doesn't want to lose votes in 2020.

His eye is on November 2020 and all of his decision making is with that in mind.

CHATTERLEY: I think in any kind of relationship, and you can educate me better on this, Ambassador, you have to have an end game. You have to know

what your end game is. Is it bringing Iran around the table for negotiations? Because I wonder how the attack for the attack and the eye

for an eye achieves that? Because at this moment, we see the United States very quick to point the finger at Iran, whether that's right or wrong. I

just don't see an exit.

I don't see the ability for Iran here or an opportunity for them to be able to back down and negotiate because that will look like weakness here, too.

ERELI: Right.

CHATTERLEY: What's the endgame here?

ERELI: Well, it depends who you ask and when. But, the administration says the end game is very simple. It's to have Iran be a responsible

member of the international community, to abandon its nuclear program, abandon its support for terrorism. And live in peace with its neighbors.

All right, that's the endgame.

Now they've chosen a number of tactics to achieve that. Number one, they've imposed a brutal sanctions regime on the government of Iran in

order to deny the resources it uses to fund terror. Second, it has opened the door to negotiations saying our goal of negotiation is not just the

nuclear program, but all your troublesome behavior.

To think that Iran is going to do that is crazy in my view, but at least we're trying. Number three, and this is where I get to the use of military

force. Deterrence is an important part of that strategy. Yes, you can have negotiations; yes, you can have a path forward. But if Iran tests us,

if Iran challenges us, if Iran tries to intimidate us and our allies, and threaten international peace and security by bombing oil tankers in the

part of the world where 30 percent of seaborne oil exports or oil trade goes through, then we have to act.

We can't be -- how should I put it? We can't be afraid of taking decisive action in defense of our interests when those interests are challenged, and

Iran is doing just that. And we're staying quiet and holding our powder, keeping our powder dry. I don't know why.

CHATTERLEY: Ambassador, very quickly, what do the Iranian people want here?

ERELI: Well, I think what the Iranian people want is clear. And they've been saying that in a very loud and clear voice since December of 2017.

We're talking about really almost 18 months.

[09:40:07] ERELI: They have been in the streets, interestingly saying that they have lost faith in the Islamic Revolution, which brought the current

regime to power in 1979.

Never before have Iranian protester said, we don't believe in the Revolution, we don't believe in the Supreme Leader, we don't believe in our

leadership. The game is over is quote what they say, "Death to Rouhani. Death to the dictator."

So the Iranian people, you know, the they don't see the United States as the enemy. They see their own leadership as the enemy as sacrificing

Iranian lives to defend Bashar Al Assad in Syria, for example, spending money to blow up ships in the Persian Gulf, or give Houthis missiles to

fire in Saudi Arabia, instead of providing, you know, food and medicine for the people of Iran.

So the people of Iran, I think, would love -- would love it you know, to show the Mullahs the back door. But, you know, unfortunately, and this is

what people need to remember, Iran is a police state of the first order. This is not a place where -- this is a place where the secret services are

in total control and the religious extremists are in total control. It makes Iran under the Shah or Germany under Stasi, East Germany under Stasi

look like a walk in the park.

CHATTERLEY: Yes, it's complicated. Ambassador, always fantastic to have you on the show. Thank you so much for joining us with your perspective.

Ambassador Adam Ereli there. All right. We're going to take a quick break here. But coming up, breaking up is hard to do. Google CEO, Sundar

Pichai, our exclusive interview where he talks possible antitrust action and the breakup of big tech. That's coming up. Stay with us.

(COMMERCIAL BREAK)

[09:45:10] CHATTERLEY: Welcome back to FIRST MOVE. Google CEO, Sundar Pichai says he's not surprised by the news of possible U.S. antitrust

regulation, and also responded to growing calls to break up big tech. He spoke exclusively to our Poppy Harlow. Listen in.

(BEGIN VIDEOTAPE)

POPPY HARLOW, CNN ANCHOR: There's reporting that the D.O.J. is laying the foundation for a possible antitrust investigation into Google. What's your

reaction to that?

SUNDAR PICHAI, CEO, GOOGLE: No, we have always felt as a large company, we have gone through similar, you know, scrutiny in other countries, including

in the U.S. before.

You know, I think it's perfectly fine that, you know, as companies get to big scale, there is scrutiny. Scale does offer many benefits. It's

important to understand that. As a company, we now invest sometimes thinking five to ten years ahead without massively worrying about short

term profits.

And if you -- if you think about how technology leadership directly contributes to leadership in a global economic scale, big companies are

what -- who are investing in tech colleges like AI the most.

So there are many benefits, taking a long term view, you know, driving long term development, which big companies can do. But I think it's important

to make sure that we are also able to create a healthy competitive ecosystem in which other companies are able to emerge.

And you know -- and that's the important question, you know, and I think scrutiny is right. And, you know, we will participate constructively in

these discussions.

HARLOW: Did you expect it to come, Sundar? Or were you surprised by this news?

PICHAI: Maybe the specific timing of it. But you know, we had always expected, you know, we have gone through similar situations in Europe. And

so it's not a surprise to us.

HARLOW: Congress, the House Judiciary Committee has also launched this top to bottom antitrust investigation into you and your competitors, the whole

tech industry, all the big tech. And I'm interested, if that has changed any action you take within Google? Meaning has it changed what you and the

Board are talking about? Has it made you rethink potential acquisitions for anything that may look anti-competitive?

PICHAI: You know, for Google, the scrutiny has been there for a while now. So we've always taken that into account. There have been times when we've

looked at some acquisitions and said, "Look, this is not, you know, something that may be possible." And so we've always taken that into

consideration.

HARLOW: Because of this concern.

PICHAI: Yes, potentially, you know, making sure there's not too much concentration in a sector or so on. So-- but I think for some of the other

companies, maybe the scrutiny is newer, but for us, you know, we've had this for a while.

HARLOW: You're used to it.

PICHAI: Yes.

HARLOW: As you may have heard, some 2020 contenders and lawmakers think you guys and all your competitors are way too big. Senator Elizabeth

Warren, a Democratic 2020 contender has even put a billboard in San Francisco talking about breaking up big tech. And she says that Google and

its competitors are in her words, they have too much power. She says, you hurt small business and stifle innovation. Is she right?

PICHAI: I mean, you have to look at the actual facts. And we, first of all, as a company, we do many things. Some areas, we are upstarts. We are

challenging other established companies. And so if you look across the breadth of what we do, you know, you look at every area. You look at

whether there's other competition and the users have choices.

And above all, are we doing well, because we are executing well as a company or you know, and doing the right things and doing well or not. And

so, you know, the details end up mattering.

And you know, so, I also think it's important that when we look at it globally, our tech companies are going to contribute to our economic growth

in an important way. And we compete against other countries, other companies. And so I think it's important to keep that in mind as well.

HARLOW: It sounds like you think she's wrong.

PICHAI: I think there needs to be healthy debate, you know. Any campaign has, you know moments around that. But what matters to me is the healthy,

thoughtful conversations around it.

HARLOW: Your argument about other countries and America's competitiveness is similar to an argument Mark Zuckerberg has made basically, we're going

to do it or China is going do it. Is that essentially what you're saying? Don't stifle this growth in America or it will go elsewhere.

PICHAI: You know, it could you know, when being in Silicon Valley, for example, I always think, I mean, you can't take for granted that you will

always be successful. I think you have to own it. You know, now there are many countries around the world, which aspire to be the next Silicon

Valley, and they are supporting their companies, too.

So we have to balance both. This doesn't mean you don't scrutinize large companies, but you have to balance it with the fact that you want big

successful companies as well.

HARLOW: Well, to that point, I mean, I know that you view Google as more than an American company, you view it as a global company. So are you

essentially saying, look, look at us, you've even asked for regulation for rules of the road, but if we are too squeezed or broken apart, we won't

hesitate to build more elsewhere.

PICHAI: It's basically -- I worry that if you regulate for the sake of regulating it, it has a lot of unintended consequences. If you take a

technology like artificial intelligence, you know, it will have implications for our national security.

[09:50:10] PICHAI: And you know and how we offer you know, other important areas of society.

(END VIDEOTAPE)

CHATTERLEY: The Google CEO, Sundar Pichai there. All right, we're going to take a break. But coming up next, they didn't get to vote until 1971,

now, they're demanding equal pay and they're tired of waiting. As the women are Switzerland's take to the streets, we'll to live to Zurich. Stay

with us.

(COMMERCIAL BREAK)

CHATTERLEY: Welcome back to the show and a look at today's "Boardroom Brief." Huawei says that will launch its foldable phone, the Mate X in

September. The phone was reportedly set to launch in June, but was delayed after users faced issues with Samsung's Galaxy fold earlier this year. Not

the only reason, I imagine.

NASA says it will need $20 billion to $30 billion over the next five years for its ambitious moon project. The legendary Apollo mission cost around

$25 billion back in 1960. That will be the equivalent to $150 billion today.

NASA plans to send two astronauts including the first woman to walk on the moon by 2024.

Women across Switzerland walking off the job today and onto the streets demanding equal pay. They're also urging zero tolerance of violence

against women and they seem to have some support from Swiss residents.

Almost 64 percent say they back today's strike. CNN's Switzerland Hannah Wise is live from Zurich, a pivotal moment 28 years since 500,000 women

took to the streets. Talk to me about how things have improved and why they're still protesting today.

HANNAH WISE, CNN SWITZERLAND ANCHOR: Okay, well, if you speak to the people on the streets, they will tell you that things really just haven't

moved fast enough. Because yes, on one hand regulation has improved very much. We signed it into the Constitution, gender equality back in 1981.

And even just last year, we even had Pay Parity Law put into force for some companies, but in tangible effects, in real life, people are not seeing

changes.

If you look at the women's salaries here in Switzerland, they're on average, around 20 percent less than their male counterparts. And of

course, that goes much further than just the monthly paycheck. You've got the pension pause, down 37 percent on their male counterparts because women

are taking time off to look after children.

And of course, there's bonuses as well, you may remember UBS, Switzerland's first bank, and of course, a cornerstone of the financial industry, just a

few months ago, they were back in the papers because women were claiming that their bonuses were cut while they were on maternity leave and some

woman even resigned on that.

So while there is change on the regulation side, it's just not happening fast enough in real life. And I think a really good statistic to

illustrate this is from the World Economic Forum last year, which is of course held here in Switzerland on gender pay.

[09:55:11] WISE: They say that women to earn the same as men, it would take 180 years for that to happen. So over a century for women in

Switzerland to earn the same as their male counterparts.

CHATTERLEY: Yes, proud of them. Get out there on the streets, and it's nice to see widespread support as well. Hannah, fantastic to have you on

the show. Thank you so much for joining us from CNN Switzerland there, Hannah Wise.

All right. Let me give you a look at what we're seeing as we get kicking and get started on this session right now. We are some six tenth of a

percent lower for the NASDAQ. As you can see the chip stocks right now front and center. That warning from Broadcom not only about the broader

trade concerns, of course, but the fallout, the impact from the restrictions on China's Huawei feeding into these numbers.

Also, the S&P off some four tenths of one percent. We'll be back in a couple of hours' time to keep you abreast of all these stories. But for

now, that's it for the show. You've been watching FIRST MOVE. Time to go make yours. Have a great weekend.

(COMMERCIAL BREAK)

[10:00:00]

END