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First Move with Julia Chatterley

Former U.K. Prime Minister John Major Tries To Stop The Government Suspending Parliament. Two Hong Kong Democracy Activists Are Free Again After Being Arrested; Florida Now Bracing For Hurricane Dorian As The Storm Grows Stronger As It Heads For The Coast Of The United States. Aired 9-10a ET

Aired August 30, 2019 - 09:00   ET

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


PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Live from the New York Stock Exchange, I'm Paula Newton sitting in for Julia Chatterley and here

is what you need to know right now. Major Pushback: Former U.K. Prime Minister John Major tries to stop the government suspending Parliament.

Released On Bail: Two Hong Kong democracy activists are free again after being arrested. And Florida of course, now bracing for Hurricane Dorian.

The storm is growing ever stronger as it heads for the Coast of the United States. It's Friday, and this is FIRST MOVE.

Welcome to the FIRST MOVE. It is the late summer rally edition. I know it took me by surprise as well, but futures are solidly higher. I'm pointing

to yet another strong open for stocks.

Now, guys that we appear to be, of course now in a much better place than we were just last Friday. I know that seems like a long time ago. But

remember, trade tensions hit a boiling point at that point, and when the U.S. President decided that he was going to call President Xi the enemy,

remember that? And of course, the follow up to that is the NASDAQ dropped three percent. My gosh. It seems so long ago, especially when you look at

that board, and we are positive across the boards.

We, of course have cooler heads that seem to be prevailing here. Both sides appear to be preparing for those new trade talks. And for the week,

this is important to keep in mind in terms of perspective, U.S. stocks are on track to post their most solid gains of around two and a half percent.

It will be the first week of gains though on Wall Street this month.

That gives you a sense of the kind of volatility we've been dealing with. That said, new U.S. Chinese tariffs are set to go into effect on Sunday.

Yes, folks, it is already September 1st, and that should mean increased costs for U.S. businesses and possibly, possibly higher prices for

consumers.

Remember, we're factoring in the devaluation of the Chinese currency in all of that as well. Two big retailers -- Best Buy and Abercrombie -- warned

yesterday of the toll that tariffs are taking on their bottom lines and shares of chipmaker, Marvell Technology are set to drop today after a Q3

profit warning. Now, it's been hit hard by of course that Huawei ban which remains in place.

Further trade related warnings could be coming soon after that Labor Day break. But for now the U.S. consumer remains apparently in a really good

place. You know new numbers out today show personal spending rising a very strong 0.6 percent last month with the Feds preferred index inflation well

below, and I mean well below that two percent target.

Over to Europe now, stocks are finishing up the month with gains. Asian stocks finished mix to close out a horrible August. Again, perspective

here folks. Chinese stocks fell more than two percent this month. That Hang Seng fell almost nine percent as of course those anti-government

demonstrations hit Hong Kong economy hard.

And that brings us right over to our drivers for the day and we begin in Britain where former U.K. Prime Minister John Major is backing a legal

challenge to stop the suspension of Parliament. Major is a Conservative that means he is from the current Prime Minister's own party, but he

believes that Mr. Johnson is trying to prevent Parliament from opposing a no-deal Brexit.

Bianca Nobilo joins me now. That no-deal Brexit is the litmus test there. And Bianca, everyone is weighing whether or not this kind of effort has any

traction, does it? And even if it does work what then?

BIANCA NOBILO, CNN CORRESPONDENT: Well, the first question of whether or not this could gain traction, if we think back to 2016, Gina Miller, one of

the people who put forward this application to the courts, she was successful in her attempt to try and thwart the government from invoking

Article 50 on its own. She wanted to make sure that Parliament needed to legislate in order for the U.K. Government to trigger the beginning of its

exit from the E.U. and she was successful in doing so.

So this is being led by her and now, John Major, the former Prime Minister is getting behind it, too. Interesting also that he is wading into this

because back in 1997, he himself came under quite a lot of political fire for actually proroguing Parliament, his critics said to avoid the

publication of an embarrassing report which would have been harmful to his government.

The question of what impact it would have if it was successful, it would be huge. We're already in uncharted territory, but essentially what this

would mean, it would mean that Parliament wouldn't be suspended, but also that the advice that Boris Johnson had given to the Queen when he asked her

to prorogue Parliament was unlawful, which again puts the monarchy in a very difficult place.

So all of this is very prickly in terms of the Constitution. And we'll have to wait until next Tuesday to see whether or not and the courts decide

that the merits of the case are in favor of those that would like to see Parliament not suspended -- Paula.

[09:05:25] NEWTON: Yes, and the point is that it gets us further away from the issue at hand. I mean, sooner or later, the Prime Minister does in

fact have to face the Parliament.

While all of this is going on, would indeed strengthen or weaken Britain's hand as it goes back to a very reluctant European Union to try and

negotiate that Brexit deal.

NOBILO: As ever, with Brexit, Paula, it entirely depends on who you ask. So if you ask the Prime Minister or key members of his government, they

would say that taking this position that really demonstrating that they mean it that Britain is ready to leave without a deal and that will do

whatever it takes to make Brexit happen. That is a key component of getting the best possible deal out of the E.U., if in fact they can.

In fact, Boris Johnson has been speaking today about this. Let's take a listen.

(BEGIN VIDEO CLIP)

BORIS JOHNSON, BRITISH PRIME MINISTER: I think our European friends have understood one -- two big points in the last couple of weeks. I think they

get that the U.K. is really going for a deal. They understand that.

But they also understand that the U.K. is absolutely willing to come out without a deal, if we have to. They understand that, too. And we're

serious, but totally serious about both propositions. And I think what that's encouraging is progress.

(END VIDEO CLIP)

NOBILO: Paula, the stakes in this is so high even though Johnson and his government might argue that taking a really firm line on this preparing to

exit without a deal, proroguing Parliament might be the only way to demonstrate how serious Britain is and therefore get a better deal under

the E.U.

Obviously, opponents within Parliament, those who'd like to see Britain remain will have huge amounts of trepidation about Britain leaving without

a deal think that this is a constitutional outrage to prorogue Parliament. They don't think it's the best way to secure a healthy exit from the

European Union, if an exit at all.

So everybody is coming at this from different angles. But I think, Paula, even though we're talking about the impact of the courts on Brexit, it's

unlikely to be settled there truly, because at the end of the day, this is a political issue, and court cases, economic forecasts and so one will be

harnessed by the political actors.

So really, it will depend on where the lawmakers end up on this and where the political will is. That will be the determining factor.

NEWTON: Yes and that political will to be determined by Parliament. Boris Johnson very clear there, in fact, quite strident saying, "Our hand is

strengthened if we tell the Europeans we are going out with or another deal." Our Bianca Nobilo, as usual. You will have your work cut out for

you for the next few weeks. Really appreciate your time.

Now, authorities in Hong Kong have charged one of the territory's most prominent pro-democracy activists as they clamp down on anti-government

protesters. Police have also banned a planned rally on Saturday as the city heads into what will be the 13th consecutive weekend of

demonstrations. Our Paula Hancocks has more.

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Police here in Hong Kong say that they have arrested more than two dozen people since Thursday night

in relation to the recent protests, including this time around, a number of prominent pro-democracy and anti-government activists.

The most well-known out of these is probably Joshua Wong. He was one of the leaders of the 2014 Umbrella Movement. He has been very vocal this

time around as well and has been arrested a number of times and served prison time.

Now on this particular occasion, police say that he has been charged with organizing, inciting and participating in an unauthorized assembly. Now he

has since been released on bail along with a fellow activist and he spoke to journalists once he was released.

(BEGIN VIDEO CLIP)

JOSHUA WONG, HONG KONG PRO-DEMOCRACY ACTIVIST: I urge international communities to send a clear message to President Xi, sending troops or

using emergency ordinance is not the way out. We will continue our fight, no matter how they arrest and prosecute us.

(END VIDEO CLIP)

HANCOCKS: It's worth reminding ourselves though, that this is still technically a leaderless movement. The movements -- the different groups

involved wanted this to be the case so that authorities couldn't just take one particular leader into custody and then cut the head off the movement.

It is still very much being led by people on social media.

Now another development this Friday. We also have a report from Reuters saying that the Chief Executive of Hong Kong, Carrie Lam had suggested to

the Central Government in Beijing that they do agree to one of the five demands of the protesters that they completely withdraw this controversial

Extradition Bill, which is where these protests started.

Now, according to Reuters, they say that said that the Beijing government rejected that and said none of the demands should be agreed to.

[09:10:05] HANCOCKS: Now, we do have calls into Carrie Lam's office. We've also called the Hong Kong-Macau Affairs Office for confirmation. If

this is confirmed, though it would show the protesters that what they believe is happening is in fact true -- that Beijing is pulling the strings

behind the Hong Kong government and this one country two systems is under threat.

Now looking ahead to Saturday, we were expecting a very large rally from one of the main and most peaceful protest groups, but that has been denied

by police. They say that they're worried about civil unrest.

So that particular group has not called for its supporters to come out onto the street. They say they can't guarantee their safety. But what we could

see is a number of people coming out anyway.

Now police have said that if that happens, and if it is peaceful, then they will act accordingly. They have also said though, that if protesters do

decide to be violent, they will take appropriate action. Paula Hancocks, CNN, Hong Kong.

(END VIDEOTAPE)

NEWTON: Okay, Google says it has found evidence of what it claims sustained hack of iPhones lasting years. It says that some websites were

exploited to implant malicious software on unsuspecting user's phones to get their contacts, images and other data. Our Anna Stewart has more.

I am not exactly sure why I'm surprised. But these things never fail to surprise me, especially in terms of the scope. How did Google detect this?

And what are the implications?

ANNA STEWART, CNN REPORTER: So these were from the cybersecurity analysts that worked for Google and they posted today, which is how it's all come to

light. But they actually discovered this vulnerability back at the beginning of the year.

They told Apple on February the first and by six days later, Apple had updated their software to fix it. Now, it's interesting, because it's not

the phones themselves that were hacked as such, its websites, unnamed websites that received thousands of visitors every week, and when an iPhone

that was vulnerable visited that website, essentially, some sort of security implant could be implanted on to it by a hacker who could then

access and there's a long list -- your contacts, your photos, your location, data from apps, like IM message, WhatsApp, Telegram, Gmail,

Google Hangouts.

And Google says that the group that were behind this were there for about two years -- a minimum of two years, they believe -- and we just don't know

what the scope of it is at this stage. And I think what's particularly --

NEWTON: Apologies there, we seem to have lost Anna. That doesn't happen frequently from London. But as she was saying, there were problems with

the detection of this, I think, Anna, in terms of what you were saying, the issue is two years. How are we only learning about this now? And this is

on the heels of many different data and privacy breaches?

STEWART: Yes, it took a long time to come to light and Apple were quick to fix it. But what's quite scary is how we're only finding about it now.

And what we don't know, and there are so many questions that we haven't heard back today from Apple or Google is, you know, was the data actually

successfully stolen?

If it was, what has it been used for? Is it still out there? Who was impacted? Was I hacked? You know, what were the websites? They are

unnamed. We just simply don't know.

All we can tell people at the moment is make sure that your iPhone software is always up to date because Apple continually finds these security flaws.

They patch them up. They put a new update out. This one was patched up in February that was iOS 12.1.4.

Right now, you should be straight ahead of that. If you go to your iPhone, go to your settings go to General, About My iPhone -- you should currently

be on 12.4.1. What is so important to remember is we don't know what the security flaws are right now. They are continually being patched up. You

don't want to find out months down the line that potentially your iPhone has been hacked because you didn't keep it up to date -- Paula.

NEWTON: Okay, 12.4.1. Okay, I'll check it after the show. And a very good information there. Appreciate it. Have a great weekend. Someone

hacked your live shot, by the way. Go look into that. Thank you so much.

We are now moving on to stories making headlines around the world. Hurricane Dorian is gaining strength as it heads towards the U.S., now a

Category 2 hurricane. It's on track to hit the Florida coast, yes, the Florida coast as a Category 4 early next week.

Now, just in the last few minutes, Florida's Governor urged residents to be prepared with food, water and fuel. This timing of course couldn't be

worse for local businesses as the hurricane is hitting the state over the Labor Day holiday weekend. Our Nick Valencia is on the ground there in

Daytona Beach. Nick, glad to have you with us. I'm going to get first to some of the safety concerns. And then we'll just talk about the impact

from this weekend.

But Nick, you know, the big issue here is whether or not there will be a large scale evacuation. If there needs to be that evacuation and then will

people listen? Are they inclined to listen that they need to leave?

NICK VALENCIA, CNN CORRESPONDENT: It's something that was talked about yesterday, Paula at a news conference that the Governor gave saying that

there are no mandatory evacuations just yet.

But if you have that gut instinct that you want to leave, they say leave now and don't wait until everyone else is leaving because what will happen

is, ultimately everyone leaves at the same time. Those roads are clogged and packed and it's going to take longer to get out of here.

[09:15:06] VALENCIA: These are nervous times. These are you know, normally what happens during hurricane preparations. We're seeing that

going on around here in Daytona. Some businesses have boarded up -- not a lot. Some homes have boarded up -- not a lot. But the fear, of course, is

the economic impact.

And I want to bring in Martin Allen, he is somebody that is going to be impacted by this storm. How are you Martin? Thank you so much for taking

the time with CNN International. You run an aerial advertising agency. This is a big weekend for you guys, Labor Day weekend. A lot of people on

the beach, but this weekend, not as many people are going to be on the beach as you guys may have anticipated.

MARTIN ALLEN, AVPRO WORLDWIDE: Well, the three big weekends for us our Memorial, Fourth of July and Labor Day weekend. Just crowded beaches.

This is our target market. This is a big one for us. The whole Florida market is one of our largest in the whole southeast of America,

particularly the Florida area. So yes, this one is going to hurt.

VALENCIA: In terms of how bad it will hurt financially. I mean, can you put it into numbers? How much money you're expecting to lose out on?

ALLEN: Well, we're certainly talking thousands of dollars, tens of thousands of dollars for this big weekend. But the other issue that we

have is potential damage that will be done to possibly airplanes flipping over hangers. Equipment is in there.

Some of our pilots will have to move their airplanes out of state. There's a cost involved in all of that. So it all adds up. This is a tough one.

VALENCIA: You've been through this before. You were talking to me off camera just a little while ago about the impact that Hurricane Andrew has

had. Yesterday a resident equated their anxiety to Hurricane Andrew. Are you anxious as somebody being here in the area? I know you're planning on

leaving, but do you have any anxiety about the news that you're seeing?

ALLEN: Well, the truth of the matter is I'm not anxious, but it's out of ignorance because I have never experienced anything like this before. And

from my point of view, we're flying back to Boston tonight, so we'll be gone.

But yes, I mean it gets my attention, but certainly the financial aspect is the big one that's going to hurt us.

VALENCIA: Well, we hope it's not too big of an impact on you, Martin Allen. Thank you so much -- for taking the time with CNN International.

Good to hear you.

ALLEN: My pleasure. Good to meet you.

VALENCIA: All right, Paula, so you know that there is some nerves here. Residents and tourists alike and of course, business owners who expect to

feel it in their wallets -- Paula.

NEWTON: Yes. And it's not bad enough that they're dealing with the fact of, if they have to evacuate or not, but obviously worried about their

livelihood on a very busy week. Our Nick Valencia there looking at the effects of this storm, really appreciate it.

Coming up right here on FIRST MOVE, time to talk. Former U.S. Ambassador to Singapore David Adelman joins me to discuss what's next for the U.S.-

China trade war and questionable marketing. Cigarette maker, Juul in the spotlight over allegations of marketing to minors. You don't want to miss

this. Stay with CNN.

(COMMERCIAL BREAK)

[09:20:38] NEWTON: And welcome back to FIRST MOVE. We are live from the New York Stock Exchange, which should be a low volume day. We'll see how

it goes as right now everything is still solidly looking like a higher open for U.S. stocks.

Now, all is quiet on the trade war front as well today and that is helping that market mood, right? No news is good news. Volume could be pretty

quiet, as I was saying though, we are headed into that long holiday weekend.

Stocks are on track for a winning week though. August -- you know, to be honest, it was pretty rough for the bulls, but it's ending well.

The Dow and the S&P are down about two percent for the month so far. I'd say that's not so bad in terms of they were off their highs, the NASDAQ

meantime down 2.4 percent.

But let's put some things into perspective because we are still holding on to some pretty significant gains for the year. All the major averages up

double digits, and for that we have brought in Brian Levitt. He is joining me. He is Global Market Strategist at Invesco. Thanks so much for being

here.

BRIAN LEVITT, GLOBAL MARKET STRATEGIST, INVESCO: Absolutely.

NEWTON: Especially before a long holiday weekend.

LEVITT: Happy to be here.

NEWTON: When we look at this market, take the temperature of this market for us because it seems to be hot and cold, depending on the tweet of the

day on the trade war.

LEVITT: Yes, exactly.

NEWTON: How significant do you think that really is? Or do you think there's more at play here in terms of people worrying about a slowing the

global economy?

LEVITT: Well, it's clear that the global economy has slowed. But we have to ask ourselves, why has the global economy slowed? And the global

economy is slow because of the answer certainty regarding policy.

And so investors should expect market volatility around policy uncertainty. What's more worrisome is when you look at business sentiment, new orders,

CapEx spending -- they've all gone down and why have they gone down? Because businesses don't think they know the rules of the game.

The good news is that can also change with a more positive tone and that's what we're seeing over the last few days.

NEWTON: And last man standing seems to be the U.S. consumer. That is really the top of this matter.

LEVITT: The U.S. consumer is the last person standing. Low unemployment, wages have been generally good, and so the consumer is in decent shape.

NEWTON: The talk of the recession, you know, we've had a lot of talk about the talk of the recession, and that we're all talking ourselves into a

recession. When you look at things like the slowing of productivity gains, the lack of CapEx investment, does that tend to tell you that, look, 2020

is not going to be a great year for corporate profits, and it could really have a slowdown in the economy, even if we don't get into recession

territory.

LEVITT: Well, I think that's right, but it's happening right now. So you're already seeing a lot of my favorite leading indicators are getting

into that.

NEWTON: We are already down.

LEVITT: Yes, they are in those ominous areas, particularly the yield curve, which of course famously everybody is looking at. So we probably

have had to slow down. The time to be defensive was in the last weeks or so.

My expectation is now that the Fed has backed off, and the administration is going to go into an election year, you're probably likely to see

policies that stabilize the currency, start to bring sentiment up, reinvigorate economic activity.

So I would think rates would go up some and I would expect the cyclicals to outperform amid better policy certainty than the defensives, which have

outperformed more recently.

NEWTON: Talk to me about this mini rally though. This has caught a lot of people off guard, as did of course, that bond rally as well.

LEVITT: Yes, I mean, I think people need to realize that the best days and the worst days in the market is almost always grouped together. So it's

very hard to try and time these things.

Volatility -- the downturn happened because of policy uncertainty, it always does. We saw it in 2011 with the ECB raising rates. We saw it in

2016 with the Fed's rate hike. We're now seeing it now around trade uncertainty.

If investors are going to shift their portfolios, they're going to do it at their own peril. In my opinion, the broad stories have been changed. This

is a slow growth, benign inflation world where central bankers are easing. That should support risk assets. But the administration is getting a bit

in the way, but I believe the administration is going to want to support risk assets in an election year.

So this mini rally, we might test where we were, again, that volatility, that churn is likely to continue to exist. Ultimately, I think markets are

going higher.

NEWTON: Into the end of the year or also into next year?

LEVITT: Into the end of the year and into next year.

NEWTON: So you're a bull.

LEVITT: I'm a bull and I've been -- look, I've been on record saying this cycle is going to go on for five more years and --

NEWTON: Five more years.

LEVITT: Five more years.

NEWTON: You're saying five --

LEVITT: And you know, there's nothing magical about five more years. But when I look at where valuations are, where inflation is, where equity

ownership is, none of those things are signaling end of a cycle.

And so at the end of the cycle, the dashboard isn't flashing, but your recession risk right now are disconcerting. All it means is we need a

policy shift and that policy shift should drive markets higher.

[09:25:09] NEWTON: Policy shift, as in, perhaps some kind of a resolution to this trade war, but also a new election, right? And an election

probably in 2020. Does that give you any pause there at all?

LEVITT: No. I mean, I've seen markets do well across multiple administrations across different platforms. So I've said for years that

hating the government is not an investment strategy. So there's always enough people that are there to hate the government.

I wouldn't put too much emphasis on it because typically what happens is, you probably don't get single party rule, and even when you did for two

years under Obama and two years under Trump, you get one or two big things done. And then that's it, because then we shift to giving the House or the

Senate to a different party.

So I don't think investors should be overly concerned. Even when Trump won, you had a very brief period where value stocks won. Rates went up.

And then we went right back into this slow growth world, rates down, growth stocks outperforming.

NEWTON: Before I let you go into your holiday weekend, global investors, it's been the argument -- is that the U.S. market is the best thing in

town. And for that reason, we will continue to see global money shifting into the U.S. market. Do you see that at all?

LEVITT: I mean, obviously, that's been the case. And it's because, you know, with the U.S. being the best growth economy relative to expectations,

and with the Fed raising interest rates, that's been an environment that's favored U.S. dollar assets.

Typically, what you see in an environment where the Fed is backed off, its tightening cycle in the U.S. is running pretty large twin deficits, you

should expect the dollar strength to stabilize and moderate and then you've got valuations outside the United States more attractive, but you'll need a

catalyst for that. That catalyst particularly in the emerging markets should be a better tone between the U.S. and China.

China stimulating growth, the Fed easing -- that should start to unlock some value in the emerging economies.

NEWTON: We'll see. A lot of people have been waiting very long.

LEVITT: Absolutely.

NEWTON: Brian, have a great weekend.

LEVITT: Thank you so much.

NEWTON: We appreciate you being here.

LEVITT: You as well, thank you.

NEWTON: And we will be right back in a moment. We will have that opening bell for you as again stocks are on track here to have a good open.

(COMMERCIAL BREAK)

[09:30:00] NEWTON: And welcome back to FIRST MOVE. I'm Paula Newton here live from New York Stock Exchange. That was the opening bell on a day that

promises to perhaps be lower volume. It is a beautiful sunny day here. People getting ready for that long holiday weekend.

As expected, though we did get that opening that went higher on U.S. stocks. We are on track, in fact, the best week on Wall Street in just

over two months. All of that despite the fact that new U.S. and Chinese tariffs are set to take effect Sunday.

Yes, folks, it's already September 1st. Traders hope to soon get some more clarity though on when face-to-face trade talks will begin. Again, they

were promised for September. We continue to watch the action in the U.S. bond market though, too.

Such an interesting story for the last few weeks, yields are holding steady and back above 1.5 percent. That said, the main U.S. yield curve remains

inverted, which is seen and historically seen as a strong recessionary signal.

Now the Trump administration's bold use of tariffs has been part of the trade strategy going forward for this administration. But the top trade

adviser to the White House, Peter Navarro, speaking to CNN's Richard Quest, in fact said that the tariffs have been used similarities, he claims

throughout U.S. history and the only reason that China has come to the negotiating table are those tariffs. Take a listen.

(BEGIN VIDEO CLIP)

PETER NAVARRO, DIRECTOR, WHITE HOUSE OFFICE OF TRADE: Certainly the tariffs are central to the strategy of this administration, and they work

in different ways depending on the situation.

For steel and aluminum, we had to put tariffs on simply to defend our domestic industries against what was a flood and glut of international

imports into this country.

In the case of Mexico, for example, when we threatened tariffs, we literally got more done in two weeks on our immigration policy than any

previous President done in the last 20 years.

And I think, Richard, you might agree with me on this. Absent the tariffs that have been put in place on China, China would never have come to the

bargaining table and advanced this far in those negotiations.

And as a fourth element of the strategy, we are seeing on a daily basis new investment come in from Japan, from Germany, other places in Europe,

particularly in our auto industry, simply because of the concern of these countries over the possibility of auto tariffs.

So President Trump is using the tariff strategy, I think brilliantly. It's a great defense of this country. It has a long history as part of this

country in terms of previous Presidents. And yes, he is doing it different than any modern President, but certainly not within the context of the

broad sweep of American history.

(END VIDEO CLIP)

NEWTON: And that was in fact, Peter Navarro, trade adviser to the White House. David Adelman joins me here now on the balcony of the New York

Stock Exchange. The former U.S. Ambassador to Singapore, currently a partner at Reed-Smith. And of course, you worked in Hong Kong as a

Managing Director at Goldman Sachs. Tough days ahead there in Hong Kong, which we'll discuss as well.

Right now, though, I want to get to what Peter Navarro said. HE is saying, look, if we didn't take this tough stand, if we didn't have tariffs on the

table, we'd be getting nowhere with China.

DAVID ADELMAN, FORMER U.S. AMBASSADOR TO SINGAPORE: Well, that's certainly the White House's theory on trade policy, it has been for a couple of

years. I suppose I subscribe to the theory that you get more with carrots than you do with sticks. They've been very, very tough. And it's unclear

to me, there's been any real material results for the United States. And it certainly has created significant headwinds for the American economy,

and in fact, the global economy.

NEWTON: Two things I want to pick out from what you said. The first thing is the headwinds, is this a structural change? I've been asking many

people if they believe that going forward, even if we get a trade deal in six months, eight months, that this is going to be a structural change in

the way the U.S. economy works with China or doesn't work with China.

ADELMAN: Well, structural in the sense that China is perhaps learning a lesson from this and will be less dependent on American exports going

forward.

They've already moved their economy to a consumption based economy. And in fact, when you look at the statistics, more than 80 percent of Chinese

exports go to markets outside of the United States.

So in that sense, I suppose there has been a structural change to the U.S.- China relationship. The question is whether that has been something that will be in the U.S. interest over the long term.

NEWTON: And that is a big debate on this. Having said that, where do you think this goes now in terms of that negotiating strategy? And at the

heart of this, what does a winning trade deal look like? Is it winning for the United States? Or can you see something that is win-win? What does it

look like? No one has spelled that out -- I haven't seen from the administration yet.

[09:35:03] ADELMAN: Well, that's been the question for about three years. What's the end game for the Trump trade team?

Look, what they've done. It has been -- use a very blunt instrument at a time when the economy has shown some fragility. The fact of the matter is,

American businesses have been greatly impacted by this.

President Trump now seems to be getting that message. Two weeks ago, he blinked. And I think this week at the G7, it was a full flinch. We saw

President Trump talking about a warming of relations, and in fact, talking about constructive progress with the Chinese in the negotiations, although

there's no real evidence of that.

I think what we'll see is the White House is going to back down, especially as we enter -- fully enter the political season, and they recognize the

delicacy of the American economy and the fact that American consumers might be hit by the effects of these headwinds of the increased prices to

consumers as a result of the tariffs.

NEWTON: Some people would be skeptical though in saying that they would cave completely. Have they come this far? Do they not have an obligation

to put something on the table that looks like something that no other administration could have gotten or was willing to try and get from the

Chinese?

ADELMAN: Well, I hope it'll be more than just looking like something. He is the President of the United States, and should be, I think, aggressively

negotiating with our trading partners around the world, you know, whether the President has to do something to save face?

You know, that's a political question, and I suppose China will be able to give President Trump something that will allow him to declare victory, but

we shouldn't forget that our counterparty also has a domestic audience to which he has to consider. And so President Xi also will want to save face.

The good news is it's in both the interest of the United States and the interest of China and for that matter, the interest of the global economy

for there to be a fair and predictable longer term compromise on these important trade terms.

NEWTON: Yes, and we'll see if they can get there. David, before I let you go, the Hong Kong protests continue -- very controversial. In terms of

your history in Hong Kong, I've been interested to see the editorials that have been coming out of there lately, and that is editorials that are

either pro-Beijing or going for the protesters and actually admiring what the protesters are doing.

All of them are saying that the way the Chinese government is interpreting this right now is incredibly dangerous. What do you think?

ADELMAN: I don't know if I would use the word dangerous. You know --

NEWTON: So the quote here is that, they're viewing it as a challenge to national sovereignty, to national security and a potential threat to the

country as a whole."

When we say that, we don't mean a threat to Hong Kong, right? We're talking about a threat to China.

ADELMAN: Yes, again, I don't know if I would say this is necessarily a threat to China. China is a huge country with its own momentum. This is

certainly an important story, and that's why it's on the front page of the newspapers around the world.

Hong Kong people as well as the leaders in Beijing have a mutual interest in the success of Hong Kong, and that's what makes this challenging for

both the demonstrators and the government officials in Hong Kong and the government officials in Mainland China. So it's an important story.

I don't know if I would call this something that is really dangerous to China, but rather a political issue for China-Hong Kong government and the

Hong Kong people.

NEWTON: And a lot to be gained on both sides if they come out with a resolution.

ADELMAN: For sure.

NEWTON: Yes. Dan, thank you so much. So appreciate seeing you.

ADELMAN: Thank you.

NEWTON: And have a great weekend.

ADELMAN: My pleasure.

NEWTON: We had into that long weekend, a lot on the trade war next week with those September 1st tariff deadline. Appreciate it.

And right now we are going to go on to those global market movers. Shares of Tesla are up more than four percent. Reports say China says they will

exempt several Tesla models from its auto purchase tax. Tesla also says its Shanghai Gigafactory will begin production in December. Remember, many

people were looking for a start date on that.

Shares of chipmaker Marvell Technologies are lower. The company's second quarter profits beat expectations. But it says Q3 will be hurt by the U.S.

government's restrictions on companies doing business with China's Huawei.

Now, shares of Dell rallying more than 10 percent. Second quarter earnings and revenues topped expectations thanks in part to strong sales of those

desktop computers. Remember everyone is trying to upgrade their Windows. Dell is also raising its full-year outlook and is looking to raise prices

to offset the impact of once again, the new tariffs.

Shares of Campbell Soup also rallying Q4 earnings easily beat expectations. Sales were lower than Wall Street estimates, but the company says it's on

track to deliver good results in this fiscal year.

And you are watching FIRST MOVE. We are here live at the New York Stock Exchange as we continue to have a rally underway. We will be back in a

moment with more of FIRST MOVE.

(COMMERCIAL BREAK)

[09:42:49] NEWTON: And back now to one of our top stories this hour. Hurricane Dorian is gaining strength. It is now a Category 2 hurricane

already traveling over warm water. It is expected to crash into the American mainland on Monday evening or Tuesday morning.

At this point it could actually hit as a Category 4, which would make it the strongest hurricane to hit Florida since 1992. Chad Myers joins us

now. Chad, 1992. I really can't believe that that would be the strongest hurricane to hit Florida since 1992. What is the issue here?

CHAD MYERS, CNN METEOROLOGIST: Close to Florida --

NEWTON: Close to Florida, pardon me.

MYERS: The East Coast.

NEWTON: What is it that you hear in terms of what you're looking at in terms of this storm track right now?

MYERS: The problem is that this is going to get into a very highly populated area, Paula and the southern half of Florida including Miami and

Fort Lauderdale and all very big cities you've all heard of, even south of Daytona, all millions of people will be in the way of 220 kilometer per

hour storm.

Roofs will be gone. The storm surge will approach four meters. So if you're less than four meters above the ocean, and many people are because

they have canals in their backyard and they have a boat there and their house is no more than a meter above sea level, all of those houses are not

only going to get smashed by the wind, but they will get flooded as well.

Category 4 and it's going to get down to about 200 maybe 215 kilometers per hour as it makes landfall and then it will affect even Orlando. We will

have winds there somewhere in the ballpark of 120 to 140 kilometers per hour, but tremendous amounts of rain.

Some places will pick up 500 millimeters of rain over the next 72 hours after the landfall. Hurricane Dorian right now is 175 and still getting

stronger and the pressure is still going down.

Now overnight, we got a couple of models that really worked out for us. The Hurricane Hunter aircraft, the planes that fly through it and above it

were out there all night long, and that truly helped our forecast. We have now hurricane watches for the Bahamas. But the models are in certain

agreement now all right through where we are right through the Bahamas and into South Florida.

And how that happened? How are the models -- because they've been terrible -- how did they do so well? Out of the back of these airplanes, they drop

these parachutes with these little sensors. And they go to all the way down to the ocean and they sense what the humidity is, what the wind is,

what the temperature is. And all of that information goes into the model, the European model, and also the American model.

[09:45:24] MYERS: It's kind of like a weather balloon, but it goes the wrong way. You know, you put a weather balloon up and it goes up. This,

you drop out of an airplane and it goes down, but it gets you the same data and it gets you the same information so that the models can act better.

And look at this, simultaneously, just to the north of what we call West Palm Beach, and then changing a little bit, but that's still 72 hours and

they're on the same track? That's amazing.

So we're going to see at least 500 millimeters of rainfall across parts of Florida and it is going to run all the way to Georgia and up to the

Carolinas as well.

NEWTON: Yes, Chad, I have seen you in these positions then give us scenarios. You're saying this is pretty much going to be that kind of a

track right now for this storm. Okay.

Chad, you will continue to keep an eye on this for sure. Thanks for joining us. Up next, could vaping be as bad for you as cigarettes and the

reports that the FTC is investigating Juul, we look at an industry now under scrutiny.

(COMMERCIAL BREAK)

NEWTON: Welcome back. Shares in tobacco giant, Altria are recovering ever so slightly, up almost half a percent. The shares took a dive on Thursday

connected to Altria's 35 percent stake in the e-cigarette maker, Juul.

Now it came after reports that the Federal Trade Commission is investigating Juul over its marketing to try and figure out whether the

company targeted minors.

Now, the FTC - the Federal Trade Commission investigation comes amid increased scrutiny of e-cigarette industry. Doctors are reporting an

uptick in cases of severe lung disease, which they say could be caused by vaping.

Now the CDC said last week it was aware of at least 193 possible cases since last June. CNN's Chief Medical Correspondent, Dr. Sanjay Gupta has

more in this report.

(BEGIN VIDEOTAPE)

SANJAY GUPTA, CNN CHIEF MEDICAL CORRESPONDENT (voice over): That's 17- year-old Tryston Zohfeld, a previously healthy athletic teen from Texas whose symptoms initially baffled doctors and then took a turn for the

worse.

(BEGIN VIDEO CLIP)

KAREN SCHULTZ, PEDIATRIC PULMONOLOGIST, COOK CHILDREN'S MEDICAL CENTER: His chest x-ray went from having what we would have thought was a little

bit of pneumonia to having complete white out of both of his lungs.

(END VIDEO CLIP)

GUPTA (voice over): Look at the striking difference to this other scan of his.

(BEGIN VIDEO CLIP)

MATT ZOHFELD, TRYSTON'S FATHER: When the doctors start telling you that they're worried, then you get worried.

TRYSTON ZOHFELD: I was throwing up everywhere and my heart was just completely pounding and I really couldn't breathe.

SCHULTZ: We eventually had to put a tube down his throat because his lungs totally failed and were not working.

M. ZOHFELD: Within 48 hours of being admitted to ICU, they had him in a medically induced coma.

T. ZOHFELD: They had me on this big machine that was pretty much breathing for me. If that didn't work out and nothing else was going to work out.

(END VIDEO CLIP)

[09:50:00] GUPTA (voice over): Doctors at Cook Children's Medical Center in Fort Worth ran a battery of tests looking for what caused Tryston's

mysterious illness. But they all came back negative.

But then came a possible clue.

(BEGIN VIDEO CLIP)

SCHULTZ: His cousin came forward and started talking about the fact that they had been vaping up in his bedroom.

T. ZOHFELD: He immediately went home and grabbed all the vapes and everything, brought it back up to the hospital showed them you know, "Like

this -- this is what we've been doing."

(END VIDEO CLIP)

GUPTA (voice over): Tryston's case is like many others across the country now being investigated by the CDC, with health officials saying there could

be a link between severe lung disease and vaping.

(BEGIN VIDEO CLIP)

SCHULTZ: We do not know what causes this at this point. The best guess is that it is inflammation within the lungs so that you are not able to

breathe.

(END VIDEO CLIP)

GUPTA (voice over): While it looks notoriously difficult to prove cause and effect, it's not just lung disease health officials are looking into.

The FDA has been conducting another investigation into what could be a link between vaping and seizures. All of this in the midst of what's being

called an epidemic of vaping among young people.

(BEGIN VIDEO CLIP)

M. ZOHFELD: It doesn't matter if your kid is a straight A student. It doesn't matter if your kid is, you know, one of the star players on the

football team. You can't be naive to what they are doing.

(END VIDEO CLIP)

GUPTA (voice over): Fortunately for Tryston, after 18 days in the hospital, he is recovering well, and is sharing his story because he wants

to enlighten other people around his age.

(BEGIN VIDEO CLIP)

T. ZOHFELD: I definitely feel like I was given that second chance for a reason. I'm definitely not the only one. I'm just the one spreading the

word at the moment.

(END VIDEOTAPE)

NEWTON: And joining us now, our Chief Medical Correspondent, Dr. Sanjay Gupta. You know, so disturbing for a parent, Sanjay, just so chilling to

see him and lung failure there. And we thank the family for you know, letting a see all of that, you know, it's obviously quite stark.

Sanjay, what went on here? This was supposed to be an alternative to people who were trying to quit smoking. No one has to tell you and I that

there's an epidemic among young people, right? We see it. We see it every day, whether it's outside of the high schools or whatever.

So what can be done going forward to really try and assess if there is this causal link?

GUPTA: Yes, I mean, you're absolutely right. First, I have three kids right around that age, now preteens, teens, and it is a conversation topic

number one, Paula, you know, among these kids, and it's remarkable.

Two years ago, we weren't talking about this at all, a city in the United States, Milwaukee has basically said no more vaping in our city at all

because of the concerns here.

So what's going on is a little bit hard to sort of investigate out right now. On one hand, these devices could be effective at helping adults stop

smoking. On the other hand, they become very attractive to young people who may have otherwise never smoked and are using these devices.

Is it the vape devices? Is it the e-liquid that goes into these devices? Or is it something else entirely? Sometimes people will put THC --

marijuana cannabis -- into these devices. Could it be something like that? A synthetic? We don't know.

But you know, there was just a few isolated cases a few weeks ago, and now you know, close to 200 cases in 20 states, everybody has to be paying

attention to this.

NEWTON: Yes, and that's the bottom line. We don't know. We need more medical studies. And in the meantime, what are those e-cigarette companies

saying about all of this?

GUPTA: Well, you know, the biggest one is a company called, Juul. They are, you know, they have the lion's share of the market. The headline is

that they're still going to keep selling the product for now. But they are very much aware of obviously these investigations.

The CEO, Kevin Burns sat down and talked to CBS and had this to say specifically.

(BEGIN VIDEO CLIP)

KEVIN BURNS, CEO, JUUL LABS: Worrisome for the category and worrisome for us if we contributed it to it. CDC is leading the investigations. We are

obviously in close contact with them.

If there was any indication that there was an adverse health condition related to our product, I think we'd take very swift action associated with

it.

(END VIDEO CLIP)

NEWTON: And we want to take him at his word is that there would be swift action obviously, Sanjay, as we continue to invest again exactly what's

going on here medically.

As always, Dr. Sanjay Gupta, thank you. Really appreciate it.

GUPTA: Yes, thank you.

NEWTON: And we move on now to our "Boardroom Brief." Disney says it's sold its 80 percent stake in the Yes Network, a Sports Network that airs

New York Yankees NBA games. It's been brought by an investor group that includes Amazon and the Yankees in a deal valuing the business and about

$3.5 billion.

Now, Disney picked up the Yes Network when it acquired most of the assets, if you'll remember now, 21st Century Fox.

Chinese ride hailing giant DiDi is taking his hands off the wheel with plans to launch self-driving cars in Shanghai within months. Now, they'll

still have a human driver onboard and rides will be free if you choose a self-driving vehicle. DiDi wants to expand the scheme internationally

though by 2021.

Now getting a lot of lover in China. I will tell you what I mean, Taylor Swift has now sold more than a million copies of her latest album there in

its first week. Yes, just its first week. That makes her more popular in China than the U.S.

Some of her lyrics in "Calm Down" could appear to be relatable to the current political climate. Take a listen.

(BEGIN VIDEO CLIP)

[09:55:12] TAYLOR SWIFT, AMERICAN SINGER: Say it in the street, that's a knockout.

But you say it in a Tweet, that's a cop-out. And I'm just like, "Hey, are you okay?"

And I ain't trying to mess with your self-expression. But I've learned a lesson that stressing' and obsessing about somebody else is no fun.

And snakes and stones never broke my bones.

So oh-oh, oh-oh, oh-oh, oh-oh, oh-oh. You need to calm down ...

(END VIDEO CLIP)

NEWTON: Whether it's the lyrics or something else, Taylor Swift definitely taking advantage of that China market there and here, we're going to have a

quick look at the market here which is continuing to hold on ever so slowly to a rally here.

You see the Dow up about 113 points, but as you can see, the major indices all up almost half percent. I have to say we are losing some momentum

there on the buying.

We will continue to watch for that. Thank you for watching FIRST MOVE. I'm Paula Newton. The "International Desk" with Robyn Curnow starts right

after the break.

(COMMERCIAL BREAK)

[10:00:00]

END