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First Move with Julia Chatterley

The E.U. Offers The U.K. Yet Another Brexit Delay; President Trump Announces ISIS Leader Al-Baghdadi Is Dead, Diamonds Are A Girl's And Potentially Louis Vuitton's Best Friend. Aired 9-10a ET

Aired October 28, 2019 - 09:00   ET

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


[09:00:23]

JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR, FIRST MOVE: Live from London, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.

Flexible Friends: The E.U. offers the U.K. yet another Brexit delay.

A political win -- President Trump announces ISIS leader al-Baghdadi is dead.

And diamonds are a girl's and potentially Louis Vuitton's best friend.

It's Monday. Let's make a move.

Welcome once again to FIRST MOVE coming to you live from London where we've gone from Brexit to flex it once again this week. The latest on the Brexit

delay in just a moment, but first, let me give you a look at futures right now firmly, as you can see in the green on Wall Street in what is set to be

a pretty big week for markets.

Investors expecting a Federal Reserve rate cuts on Wednesday. We've also got the FAANGs out in force this weekend. No, not those fangs. I mean the

tech FAANGs. We have earnings on Facebook, Apple and Alphabet and we can throw in Friday's jobs report and a first look at third quarter growth

numbers for the U.S., too. So a busy week.

What about the S&P 500? Well, that was on track for a record close on Friday before we eased back slightly. We should be therefore close to

record territory again in early trading today. Stocks rising even with mixed earnings at this stage, and lowered estimates from the likes of

Caterpillar and chip bellwether, Texas Instruments as a real glass half full feeling, I think in markets at this moment.

And perhaps that's justified. Why now we've got 60 percent of the world's Central Banks easing policy. We're looking at the biggest synchronized

cutting cycle in some two decades.

Plus, President Trump literally just in the last few moments saying the U.S.-China trade negotiations are going well, and that he hopes to sign a

deal at the upcoming APEC Summit. But this is not just a U.S. story. Now, while the S&P 500 has gained one and a half percent over the past month,

the MSCI Eurozone and the emerging market indexes have risen more than three and a half percent.

We've also got the Nikkei over in Japan outperforming, too. We'll come back to this theme later this week because I look to the opportunity there,

but for now, let's get back to Brexit because that's where we're going to kick off today's drivers.

The E.U. has accepted the U.K.'s request for a third Brexit delay. The latest extension will likely push Brexit into 2020. The question now is

whether the news out of Brussels will bolster the U.K. government's call for a December election.

Nic Robertson joins us now. Nic, it may bolster their call. The question is, can they get the two-thirds majority they need to see elections come

12th of December. It looks incredibly tight, if impossible.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: It does feel that way, certainly as the government has framed it, which is to get that 12th of

December election, you also have to sign up to a very short period to negotiate the legislation of the Withdrawal Agreement Bill, and that is

something that has been resisted in Parliament as well.

So it seems unlikely that Boris Johnson will get the support that he needs today for that election on December the 12th. However, the Liberal

Democrats and the Scottish National Party are considering introducing the alternative of a December the 9th election. That could happen tomorrow.

That could be offered to a vote, and it could be a simple 50 percent -- a simple majority, a 50 percent vote in Parliament on that.

Where we're at today with this flex extension that's being offered by the European Union, the government here still has to accept that and that then

that gets ratified Tuesday or Wednesday, finally, to really come into effect.

But I think after the vote today that Boris Johnson is looking for that December the 12th election, there is still -- there's still a huge number

of variables as it always is with Brexit about the directions that it could go in -- Julia.

CHATTERLEY: Absolutely, and the caveat to that effective olive branch over an election from the Scottish National Party and the Liberal Democrats here

is no more debate on Boris Johnson's current withdrawal deal, so does the Conservative Party and Boris Johnson agree to that in order to get an

election before December, even if it means they can't debate their deal. Dead in a ditch feels like a long way ago for Boris Johnson here.

[09:05:12]

ROBERTSON: It does, and certainly there's a lot of MPs of various parties calling the Liberal Democrat SNP, 9th of December election a stunt. So

it's not clear that the Prime Minister would sign up for that.

You know, he still is intent on trying to get through the Withdrawal Agreement Bill in a shape and form that's acceptable to him and his party

and if that is completely removed from the table until after the election, that takes away from him the sort of electoral bounce that he would have if

he successfully negotiated it, which is the terms that he is sort of offering today, if you will.

So, there are minuses in this if the Prime Minister takes the SNP liberal democrat offer. The Prime Minister we understand may also be considering

his own version of that what's known as a One Line Bill, simple 50 percent majority, you know, decision on an early general election.

And what else will he attach to that really isn't clear. The benefits for early election from him are certainly stronger if he has been able to prove

that he is getting what he wants out of the Withdrawal Agreement Bill and so far, he doesn't have that in the pocket.

CHATTERLEY: No, there's no easy solutions here and there never has been. Nic Robertson, thank you so much for that.

All right next driver, HSBC's global business is taking a hit. The bank is reported an 18 percent drop in profit before tax for the third quarter.

Its shares here in London, are down some four and a half percent. Sherisse Pham is in Hong Kong for us.

Sherisse, we were expecting to see some weakness particularly when you look at the Asia business in Hong Kong, but actually HSBC pointing to weakness

in the United States and in Europe here driving these numbers lower. Talk us through the details.

SHERISSE PHAM, CNN BUSINESS REPORTER: Yes, Julia, this is a bad omen for all bank earnings. As you know, HSBC is something a barometer for the bank

industry and the bank is facing significant headwinds.

We've got the U.S.-China trade war, we have falling interest rates, which makes it hard for them to make money and mortgages and loans and the retail

services there. And of course, you've got broader geopolitical uncertainty in places like where you are over there in London with Brexit.

And of course, all of that coming into play in today's earnings. We had profit -- pretax profit of $4.8 billion, and the vast majority of that was

made in Asia.

HSBC pointing to Hong Kong as a bright spot, which is noteworthy because we are in our fifth month of mass protests and political crisis here in the

city. But Hong Kong proved to be incredibly resilient for HSBC, and Asia continues to drive this business forward.

HSBC still warning that there is more pain ahead, new CEO Noel Quinn saying, quote, "Our previous plans are no longer sufficient to improve

performance for business in Europe and the United States, and we are therefore accelerating plans to remodel them." So I think if we read

between the lines there, we can expect pain and probably job cuts ahead -- Julia.

CHATTERLEY: Yes, not remodel coming, we assume at the full year endings when we get them in February, so we're going to have to wait a while to

find out what the details are.

But I want to get back to what you said about Hong Kong, a bright spot right now, but I did notice that they made a huge increase in their

provisions for potential bad loans going forward as a result of the ongoing protest right at a time when we see Hong Kong now in technical recession,

or at least we're expected to see that.

PHAM: Yes, the Hong Kong economy is really starting to hurt from 21 weeks -- five months of protests rocking in the city. We saw the Financial

Secretary come out over the weekend saying Hong Kong is in a technical recession. The city is expected to post negative growth for GDP on

Thursday, its second consecutive quarter.

So if things are not looking great here -- but that being said, the investment community hasn't really turned its back on Hong Kong yet. We

still see big IPOs making their way in Hong Kong including AB InBev's APAC business just a few months ago making that $5 billion IPO market debut here

in Hong Kong, the second biggest in the world so far after Uber.

So a mixed bag certainly Hong Kong, a bright spot for now and hopefully it will continue to be because once again Asia is the driver of HSBC's

business at the moment -- Julia.

CHATTERLEY: Yes, we're watching out for that remodeling plan. Sherisse Pham, great to have you with us over in Hong Kong there.

Next driver, Louis Vuitton looking to add another jewel to its crown. The luxury goods company eyeing a takeover of Tiffany's. The iconic New York

jeweler confirming that LVMH is offering $120.00 per share in cash. Tiffany calling it an unsolicited nonbinding proposal.

[09:10:11]

CHATTERLEY: Anna Stewart joins us with all the glittering details. I'll tell you what, Tiffany share price, glittering with joy here and not yet

near that $120.00 mark. Talk us through the details here.

ANNA STEWART, CNN REPORTER: Rocketing higher, $14.5 billion. That's what they're valuing Tiffany and speaking to analysts today and I spoke to a

slew of them, they all seem pretty confident that this is a good idea for both sides of the company. It is the price that's really the question

here.

Now jewelry remains one of the most attractive categories in luxury. Tiffany adds to LVMH something it doesn't has. It has Bulgari, but this is

a much broader consumer base -- silver jewelry, more affordable price points, obviously. I'm sure not your thing at all, Julia.

Now also America, Tiffany has 44 percent of sales in America compared to LVMH with just jewelry and watches. That's just nine percent, so that will

bring it back up.

CHATTERLEY: The geographical diversification here, critical. You know I was looking at some analyst commentary here. Cohen saying, a fair offer

for Tiffany's here, around $160.00 a bid. Wowsers.

STEWART: That seems lofty.

CHATTERLEY: Yes.

STEWART: $120.00 is where we're at. Now, some people think that is a little bit low. That's already a 20 percent premium on the closing price

on Friday, and we saw shares up last week. So actually, that's already really a 30 percent if we look further back.

The problem with Tiffany, we've had a sales slump. We've had a huge turnover of CEOs. The new one came in 2017. We have not seen sales pick

up. There is a lack of direction in terms of millennials. That's what experts say.

However, I guess Tiffany would argue that one thing that they've got going through right now is China. They are growing in Mainland China where all

the luxury groups are failing.

CHATTERLEY: And that's such a great point, actually. I was just looking at the closing peak $139.50 on July 2018. So if you're talking about

$160.00 that's humongous in terms of premium which is why --

STEWART: I think that's too -- but we'll see.

CHATTERLEY: But to your point about China, Asia, concern about luxury demand there. So a little bit of diversification here in particular for a

company that is managing to grow particularly in this region, very important here.

STEWART: Crucial. I think, China is crucial when we look at any luxury business, but this one is so interesting just because its sales are

slumping absolutely everywhere else. It is interesting that that is a bright spot.

CHATTERLEY: Yes. Anna Stewart, Sparkle Queen for us there. Thank you so much for that. All right. Let me bring you up to speed now with some of

the other stories that making headlines around the world.

The Kremlin says, if it confirmed the death of ISIS leader al-Baghdadi, it would be a quote "serious contribution by U.S. President Donald Trump."

The Russian military initially cast doubt on whether the operation had actually taken place. President Trump announced Baghdadi had been killed

by U.S. Special Forces in Syria over the weekend.

Boris Sanchez is at the White House for us. Boris, whichever way you look at this, it's a huge victory, I think for Donald Trump and the White House

here.

BORIS SANCHEZ, CNN WHITE HOUSE CORRESPONDENT: Yes, it certainly is a victory for this administration, Julia. The President again today touting

the death of Abu Bakr al-Baghdadi and his role in it. The president standing outside of Air Force One speaking to reporters before heading to

an event in Chicago.

Even the death of this brutal terrorist, though, is facing partisan spin. The President using this to go after Democrats. The President did not

alert congressional leadership, the Democrats specifically about this raid before it took place. So he is facing criticism for that because the

President coordinated with the Kremlin on this raid beforehand. So Democrats are essentially charging that the President trusts Russians more

than he trusts members of his own government.

The President here shooting directly at Adam Schiff, the Chairman of the House Intelligence Committee, saying that he is a corrupt politician that

had he shared this information with Democrats like Schiff, it could have led to leaks that could have put U.S. forces in danger.

So even a positive for this administration facing that sort of partisan spin likely having to do with the Impeachment Inquiry that's still ongoing

in the house -- Julia.

CHATTERLEY: Yes, it's also important, I think, to bring in strategic partners in this, the Intelligence gathering that was going on. And I

guess the other question that will be asked here is whether or not the timetable for this raid had to be accelerated as a result of the U.S.

decision to pull troops from the region. What do we know about that, Boris?

SANCHEZ: Well, there are still many questions about how that announced withdrawal from President Trump several weeks ago, may have hastened the

approach to this raid. We were told by at least one Defense official that it did not have an effect on this raid.

But of course, the future of the situation in Syria and whether it could potentially lead to the resurgence of ISIS is something that is top of mind

for many officials within this administration, specifically advisers to the President who counseled him on really giving second thought to such an

abrupt withdraw not only because of the incursion of Turkey, obviously into that region, but potentially what this could mean for terrorism, broadly

and for the United States specifically, as well.

CHATTERLEY: Yes, some very important questions, but for now at least, a win as far as the death of the leader of Islamic State. Boris Sanchez from

the White House. Thank you so much for that update there.

[09:15:10]

CHATTERLEY: President Trump received a less than cordial reception at the major league baseball game on Sunday. He was greeted by boos and chants of

"lock him up," quote, after his picture appeared on the Jumbotron.

The President and the First Lady were attending Game 5 of the World Series in Washington. This was the first baseball game President Trump has

attended since entering the White House.

Over in India, people are celebrating Diwali, yet many are concerned about the pollution created by all the fireworks. This year, officials are

allowing only green pyrotechnics. They say pollution levels jumped nearly 40 times over what's considered safe after last year's festival.

And still to come on FIRST MOVE, Argentina cast a clear vote against austerity returning center left Peronist Alliance line to power.

And Microsoft wins the battle for the combat Cloud, but Amazon could contest the $10 billion Pentagon contract. That's all coming up. Stay

with FIRST MOVE.

(COMMERCIAL BREAK)

[09:20:16]

CHATTERLEY: Welcome back to FIRST MOVE coming to you live from London with a check on Wall Street futures as always and stocks get ready to rally this

week. The S&P 500 on track to open in record territory today. It was briefly on track in fact, for a record close on Friday then it pulled back

slightly. The NASDAQ though, the big market winner last week rising almost two percent. Watch the FAANGs of course this week or at least a few of

them that are reporting.

We also see solid gains with well some beaten down value stocks last week. Investors seemingly looking past some of the mixed earnings results and

hoping that we've seen the worst of the numbers here amid a global economic slowdown.

Positive comments President Trump on trade talks this past hour, also helping its sentiment, too. Let's hope we're not speaking too soon. But

for now, let's return to the latest on Brexit.

The European Union says that it will accept the U.K.'s request for a further extension or flex-tension until January 31st next year. The delay

therefore would tear up the Prime Minister's promise to leave the European Union by Halloween. Now, he is calling for a December election to break

the deadlock.

Parliament votes on that motion in the coming hours. Boris Johnson needs the backing of two-thirds of the House of Commons. So far the opposition

Labour leader, Jeremy Corbyn has refused to play along.

Joining me now though, Labour MP Katy Hoey, who is pro-Brexit. Kate, fantastic to have you with us. Thank you for joining us. Do you expect

the vote today to fail? Let's begin there.

KATE HOEY, BRITISH MEMBER OF PARLIAMENT, LABOUR PARTY: With today's vote, I think we'll probably go down and two-thirds majority is quite difficult

to get when there are substantial Members of Parliament who will do anything to stop us leaving the European Union. So it's not just now about

a simple majority and people who want an election, it's about whether people who want to stop us leaving think that it's better not to have an

election.

I personally will vote for a general election. I think when the government can't really get its legislation through and when the government can't

govern properly. I mean, this Parliament is now a bit of a shambles to be honest.

So therefore, I think the general election is necessary to change that whole situation and allow us to get on with either getting out or getting

on with other business as well.

CHATTERLEY: I mean, that's certainly the argument the Prime Minister is making at this stage. Jeremy Corbyn, though the Labour leader has

suggested that if no deal is taken off the table here, which you could argue has been done by the E.U. offering an extension to the 31st of

January here, what's his reason for holding out and not providing the votes here from the Labour Party to sanction an election, at least to break the

deadlock, if not, because he is worried about a significant loss in that election.

HOEY: Well, of course, 70 percent of our seats where we have Labour MPs didn't vote to leave, and therefore he is aware that up in the north of

England, in the Midlands and various parts of the country, South Wales, there is a real chance that Labour will lose to a combination of Brexit

Party and the sort of anti-Labour feeling, and so that's worrying him, obviously.

And MPs themselves who think their seats are at risk don't want to vote for a general election, a bit like turkeys not voting for Christmas, but I

think he is going to have to change once the other two opposition parties and the Dems and the Scottish Nationalists, although they may not vote for

that motion today, will likely to put forward their own no confidence motion linked to a general election tomorrow and that would mean that I

think Jeremy Corbyn and Labour would look really ridiculous in the country.

They have been calling for a general election over and over and over again in the last year, they suddenly decide we're not having it, and you know,

the thing about no deal is the only way no deal can be taken off the table is either with a deal or by revoking Article 50, which of course made it

very clear that we would leave with or without a deal.

So this whole thing about no deal has just become a kind of a mantra that is now, you know, chanted out by people who don't want us to leave at all.

CHATTERLEY: Kate, you said you won't run in the next election. So you can talk pretty freely here. Do you see Jeremy Corbyn as a liability now for

the Labour Party heading into a fresh election?

HOEY: I think once there is an election and there is a campaigning, Jeremy Corbyn is very good at campaigning. He is very good out there with people,

but he has been rather trapped by his own backbenchers, and some of those people who want -- who didn't want him as leader in the first place. And

they've used the European Union issue and Brexit as the issue to kind of beat Jeremy down because of course he was a leaver.

He voted with myself and other people many, many, many times over the past number of years, and he has now been rather trapped in that he has had to

go against what he really believes in, in order to keep his party together.

The problem is out there in the country, people don't understand that. And therefore I think it is going to be difficult, but all of those people who

want to get rid of him, you know, they will be wishing, perhaps some of them that Labour doesn't win an election, and then they can all fight over

who is going to take over from him -- that's being -- that's being realistic.

[09:25:36]

CHATTERLEY: Do you think that's the way it looks? Because you know, I come at this from a business journalist perspective, and when I speak to

big investors, they say there's effectively two toxic options here, there's a no deal exit, or there's Jeremy Corbyn and they see it as being pretty

toxic for the U.K. Do you think that's justifiable? Do you think, to your point, actually they don't have to worry here because he'll be replaced.

HOEY: Well, no, I mean, you can't -- you can't -- the way we select our leaders is that every member has a vote. And of course, when he was

challenged last time in Parliament, by a substantial -- a big majority of Labour MPs challenged him, there was another leadership election, and he

won with an even bigger majority, because the average rank and file member, a lot of them who have joined since he became leader are going to continue

to support him, whatever his views are on the European Union.

But you know, I think sometimes we have to think of what's in the best interest of the country and not our party, and I just feel now that

business needs certainty. Business needs to know what's happening. And this extension again, is just going to cause so much problem.

I would have liked to have seen us get out. Boris Johnson was not able to take us out because Parliament put in that ridiculous amendment to actually

say we couldn't leave, you know, without a deal, and therefore, the Benn Act was really sending a signal to the European Union, look, do what you

like, because Parliament is not going to back a no deal. And that's where we are now.

So I think we need a general election to get this all out and let people decide, let the parties have their manifestos and let the country decide.

CHATTERLEY: Yes, key line there, put country before party. Kate Hoey, great to have you with us. The British Labour MP there. The market opens

next. Stay with us. More to come.

(COMMERCIAL BREAK)

[09:30:22]

CHATTERLEY: Welcome back to FIRST MOVE. I'm Julia Chatterley live from London. That was the opening bell back at the New York Stock Exchange for

the first session this week. Stocks beginning a really important week with solid gains.

The S&P 500 was poised to hit records at premarket. What we're seeing right now in early trading, right now higher by some four tenths of one

percent. Yes, I make that to a fresh record -- 3,025 on target for a record close. So that's the level we've got to close above -- 3,027 now

we've hit in intraday record highs that were a point below that.

Investors clearly expecting a Fed rate cut this week. Futures right now signaling a 93 percent chance of a cut. What do they say about the outlook

though, and that would add some 40 rate cuts around the world over the past three months. So just additive to the global stimulus that we're seeing

right now.

Let's talk Global Movers. Spotify is rallying in this session. The music streaming service posting a surprise profit and better than expected

revenues. The number of paid subscribers to its Premium service also surpassing expectations. Right now, that stock up 8.6 percent.

Look at Tiffany's. We've already spoken about that, up some 30 percent in the session, trading above that $120.00 price tag. Interestingly enough,

the jewelry giant confirms that it has received a $12.5 dollar takeover offer from LVMH. Tiffany says, it is reviewing the proposal which values

Tiffany, as I mentioned at some $120.00 a share.

Cohen analysts, as I mentioned earlier too saying, $160.00 is a fair price. So watch this space for a potential revision to that offer.

Microsoft, also in focus. It is higher by some three percent. Amazon meanwhile, trading lower. The Pentagon awarding a massive $10 billion

Cloud computing contract to Microsoft.

Amazon was considered the front runner and reports suggest, it could challenge the announcement of this deal. Christine Romans joins us now.

The force well and truly with Microsoft on the awarding of this JEDI contract.

CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS: Yes.

CHATTERLEY: The question I think that is being asked, though, by Amazon and everyone at this moment, was it politically driven here given we know,

the President has one or two issues with Jeff Bezos and his businesses?

ROMANS: I mean, the President has been very vocal about his -- I don't think hatred is too strong a word of "The Washington Post." He doesn't

like "The Washington Post" and "The Washington Post" is owned by Jeff Bezos, of course the post editorially operates separately from Amazon, but

not in, you know, the view of the President of the United States.

So he has criticized Jeff Bezos. He has criticized Amazon. He has without evidence said that Amazon is ripping off the Postal Service. There have

been independent analyses that have shown that that is, that is not true or doesn't really bear out in the numbers, but the President has that in his

mind.

So here you have Amazon, which is the world leader in Cloud computing services, right, going head to head with Microsoft and others for this big

JEDI contract. JEDI stands for Joint Enterprise Defense Infrastructure, and it's very cool, and it's worth $10 billion over 10 years and Microsoft

wins.

So there are obviously questions, did the President put his thumb on the scale. The government Department of Defense says no, it was by the book

and all the bidders were created exactly in the same way. The evaluation process was appropriate and the DoD chose Microsoft in the end.

But in a new book by speechwriter for James Mattis, the former Defense Secretary, this book paints this picture of the President going to Mattis

and saying screw Amazon on this. I want to make sure you guys screw Amazon on this bid.

There's no evidence that anybody did what the President asked. But still, that raises a question and one wonders if Amazon will consider maybe its

options here even potentially trying to go to court over this.

CHATTERLEY: Yes, I mean, you have to say, and the awarding of these contracts, they had to expect scrutiny, they had to expect questions. So

to be able to be unable to justify the decision here would seem a little crazy.

But I guess the other point is, irrespective of what Amazon do here, this is not going to be the only contract. This is not the only Pentagon

contract out there. And Amazon has to continue to fight to get those as well over the coming months and years.

ROMANS: That's true. I mean, one analysis I saw, just about 10 percent of the sensitive data that the military has, that the government has, has been

migrated to the Cloud. Just 10 percent. So there is a huge market there.

CHATTERLEY: Right.

ROMANS: And it also could be that when you're looking at the people who are making these decisions, what other kind of calculus do they have? Did

they want to diversify?

[09:35:10]

ROMANS: You know, did they want to make sure they have different providers for different parts of this business? You know this was a long and you're

right, highly -- lots of scrutiny on this process. And from what it seems like, it seems as though the President may have made suggestions against

Amazon, at least if you believe this book, but maybe his supporters didn't follow him up on it.

CHATTERLEY: Yes, it's interesting, isn't it? No doubt the scrutiny $100 billion potential offering here according to Dan Ives to your point, yes.

There's more to come. Christine Romans. Thank you for that.

All right. We're going to take a quick break here on FIRST MOVE.

Still to Come. Back to Brexit. The Brexit extension could pave the way for a general election in Britain, but what it means for Boris Johnson and

the U.K. government and the economy going forward. Stay with us.

(COMMERCIAL BREAK)

CHATTERLEY: Welcome back to FIRST MOVE. We're going to return to events here in London. The E.U. granting the U.K. the Brexit extension it

requested. The Prime Minister never wanted a further delay, Parliament forced its hand, and now his fate and the country's lies with lawmakers

once again. They vote in a matter of hours on whether to give him a December 12th election.

Joining me is pro-Brexit economist, Roger Bootle, Chairman of Capital Economics. Roger, great to have you with us. You say an election here is

essential to break the deadlock to some degree. Do you think by the end of this week, by hook or by crook, we end up with an election date this

December? Sorry --

ROGER BOOTLE, CHAIRMAN, CAPITAL ECONOMICS: I think so. I think we're all exhausted by the way.

CHATTERLEY: Yes, we are.

BOOTLE: I mean, insofar as I understand the politics, today's vote is going to be voted down.

CHATTERLEY: Yes.

BOOTLE: Boris Johnson is not going to get probably what he has been asking for, but important developments over the weekend suggests that the Scottish

National Party and Liberal Democrats will be prepared to cooperate with him.

[09:40:01]

BOOTLE: As I understand it, this requires just a simple majority in Parliament. To put those three together, the conservatives or most of

them, the SNP and the Liberal Democrats, he will then be able to get a vote on an election then if it's a few days earlier in December, frankly, I

don't think it makes it any difference at all.

CHATTERLEY: Yes, a lot of us raised eyebrows over the change of dates, an election is an election. You asked a really important question, though.

And the suggestion when you look at the polls is that by and large for the majority of voters, this is going to be an election if we get it based on

Brexit.

Your question is, but what the Labour Party leader Jeremy Corbyn or what does Boris Johnson as the Conservative Party leader means for the economy

going forward and for policy? And it is a critical question. We can't ignore this.

BOOTLE: Well, I think this is the great tragedy of the events of the last few years, well, at least one of them that we haven't had a proper debate

on these really important issues about our society and economy. It's all been Brexit, wall-to-wall Brexit, and most of us are fed up with it.

And there's some very serious questions at stake here and I think the electorate does have a pretty good idea of what Jeremy Corbyn stands for.

And outside the Labour Party, most people don't like that. But we don't have a very clear idea of, I think, actually what Johnson stands for. And

that's going to be really interesting how he fashions his tale to the electorate, what's the offering?

And there are some signs he is going to try and take some ground from Labour actually be arguing for and says he is going to deliver big

increases in spending on the NHS, aid for the regions, a move, if you like towards the center, not going for the straightforward, Thatcher policies of

cutting taxes.

CHATTERLEY: So the end of austerity, more spending. But what about the things that are needed to raise productivity to your point about potential

corporation tax cuts, individual tax cuts and paying for that extra spending? Where does that come from?

BOOTLE: Well, I don't think he knows. And I understand this because after all, the first thing is he has got to get the majority. He can't govern at

the moment, so there, we desperately need answers to these questions.

In a way, they are premature. Let's see what the man does if he gets the majority, then he has got to face up with these questions and they're not

easy. How on earth do you turn around Britain's productivity records? Not good. And it won't be an easy way of doing it.

CHATTERLEY: You said, we all know what the Labour policies are. Just explain to me because for those outside of the U.K., it may not actually be

that clear, and there are a lot of people, particularly when I speak to larger investors that worry about what Jeremy Corbyn means. They worry as

much if not more, as a no deal Brexit scenario and what that creates for the economy.

BOOTLE: Well, I think they're right to worry. And I'm not saying this from a party political point of view. I think there have been lots of very

good British Labour governments and the markets and investors are worried unnecessarily.

Indeed, some Labour governments have been more effective and more pro- business and better for the economy than the equivalent Conservative government. This is different. What Jeremy Corbyn is espousing is a

policy of a large scale nationalization. So reversal of the fascist reforms of the 1980s as far as public initiatives is concerned, increased

taxes on individuals and companies, the restoration of trade union powers, a much bigger role for government in the economy, and even to the point of

returning exchange controls.

So unless you are an out and out socialist, it's very difficult to think this will be other than a disaster for the economy.

CHATTERLEY: So you're saying and you are biased because you said, a clean break from the E.U. is okay and would be a good decision in many respects.

You're saying actually by far the largest fear here should be a Jeremy Corbyn government.

BOOTLE: Absolutely. I've been telling clients all around the world for the last I don't know how many years. Forget Brexit. Although I'm a

Brexiteer, I don't actually think that the fate of this economy hangs on that issue. If we didn't leave, it would be what I want, but I don't think

the economy would collapse because of it. But I do think the really, really big issue is a Corbyn government.

CHATTERLEY: You think voters are coming to realize that?

BOOTLE: Yes.

CHATTERLEY: Bet back to where you started. You think they do. You think they understand that -- how angry they are with austerity? How angry they

are with a Conservative government that's failed to deliver Brexit, that's failed to deliver any solution here. They recognize that Jeremy Corbyn

represents potentially a larger threat.

BOOTLE: I think that's right. You can never be sure, of course until the only vote that counts -- that's the one at the ballot.

CHATTERLEY: Yes.

BOOTLE: But I think the signs are, they are bored stiff with Brexit. I mean, obviously, there's some extremists on either side who are Brexit

fanatics. I think that's all that matters. But I think the rest of the country pretty much just wants to get it over and done with, but it's quite

clear what Jeremy Corbyn stands for and all credit to him.

I mean, I don't agree with him, but he hasn't hidden his views. He believes this stuff, and I think the electorate understand that.

CHATTERLEY: Yes. Just tough if you're a remainer, quite frankly. You know what you're choices are. Roger, fantastic to have you with us and

feel better. I know you're unwell, so I appreciate you coming in. Roger Bootle there from Capital Economics.

All right. Let's move on. The center Peronist Party returning to power in Argentina. After storming this weekend's election, voters rejecting the

austerity measures of President Mauricio Macri and elected Alberto Fernandez.

The election also sees a return to power for Cristina Fernandez de Kirchner, now Vice President-elect. She previously served as Argentina's

leader.

Now, the Argentine economy has been spiraling recently, only getting worse as investors feared the exit of President Macri's more business friendly

government.

[09:45:16]

CHATTERLEY: Let's take a quick look. Back in May of 2018, the peso weakened sharply amid a flight from emerging markets. The next month, the

IMF agreed a three-year $50 billion bailout. Fast forward to August of this year and President Macri found himself in second place in a primary

vote the next day the peso fell over 15 percent -- all of that leading up to this weekend's vote.

Well, those fears came to fruition with the election of Alberto Fernandez. Joining us now is Hans Humes, CEO and Chairman of Greylock Capital. Hans,

always fantastic to have you on the show.

Are investors right to fear the return of a Fernandez or at least Alberto Fernandez in a leadership role in Argentina going forward?

HANS HUMES, CEO AND CHAIRMAN, GREYLOCK CAPITAL: I don't think people are worried about Alberto Fernandez. I think that there was a reaction to the

margin of victory in the PASO back in August. I think that the polling had suggested, it was going to be an extremely close election.

And when the 16-point margin came out, people really you know, were shocked that there was such a surge of populism and such reaction against Macri.

But I think really what's been putting pressure on the markets recently has been the uncertainty. It's not so much the people are scared of Alberto

Fernandez. I mean, I dealt with Alberto Fernandez when he was Chief of Staff of Nestor Kirshner, and he is actually an extremely pragmatic,

rational politician.

He doesn't come from the hard left. He's actually very solution minded in his approach to political and economic issues. There was a bit of fear of

Cristina Fernandez de Kirshner, but that that ends up becoming something where we're handicapping who is going to be calling the shots in this

administration?

CHATTERLEY: And will he call the shots rather than her?

HUMES: There's a lot of speculation, I would say that especially in the tradition of Peronism, the person who is in charge, who runs the party, and

who is the President calls the shots. She has had her turn. And I think that there are enough signs that he is going to be the person who is going

to be designating the people to lead, you know, this sort of the economic effort, the negotiations with the creditors, of which I am one with the

IMF.

So we'll see. I mean, going into the midterms, if things aren't settled down in two years, there may be a struggle for control between the so-

called Campora and Alberto Fernandez.

But I would, yes, I would think it is him who is going to be calling the shots. And, you know, realize also that there are a number of channels of

communication between the two. There's a lot of overlap and influence. Sergio Mazza is going to be the President of the Deputies Congress. And he

has a good relationship with both Cristina Fernandez de Kirshner and Alberto Fernandez.

So my sense is there will be a reasonably cohesive approach to governing you know, from December 10th on.

CHATTERLEY: You've laid out here, we need to see a credible economic adjustment plan going forward. He's got to keep creditors on side. He has

got to appease the IMF here, too. But you know, when I look at the 10 percent unemployment rate, I look at the reason why Macri was thrown out of

power, 60 percent interest rates and crippling effect that has on the real economy. How does he put forth something here that works for everybody

where President Macri couldn't?

HUMES: Well, I mean, listen, I think that the one encouraging sign that I got from people around the Fernandez camp when I went down the week after

the PASO, was that everybody hearkened back to Lula in his first term in Brazil, and they were the ones who -- they were also talking about a

credible re-profiling.

So in terms of sort of a model of how do you implement the kind of, oh, I don't know, change or programs that the IMF is going to deem necessary if

they do get a new program, there's a better chance that a Lula or in our country, a Bill Clinton can impose sort of measures on the economy that a

more sort of typical free market candidate wouldn't be able to put in place.

So I think there's some latitude but the reality is yes, there needs to be social spending. And I think the big issue that will be front and center

in any negotiation with creditors or especially the IMF will be social spending.

There isn't really clearly an appetite for big cuts and social spending in Argentina. That's why Alberto Fernandez won the presidency.

[09:50:26]

HUMES: So the IMF is going to have to take a hard look at some of their programs and this reminds me a little bit of Greece. There's a big -- not

so much the IMF, but certainly the E.U. is dictating some harsh austerity measures, and it's arguably why the Greek economy took so long to recover.

You know, I think the social spending will need to happen in Argentina. And I think that the kind of, if you need a primary surplus, it's going to

have to come from growth in the economy, not from cutting expenses, at least with the election results that we've just had.

CHATTERLEY: Yes, but you also make a great point that sometimes tough policy is more acceptable from a center left candidate or a President than

perhaps some center right or right, which is going to be quite interesting to watch. Hans, fantastic to have you with us. Hans Humes there, Chairman

and CEO of Greylock Capital. Thank you for joining us.

All right, FIRST MOVE is going to take a quick break, but coming up, to boldly go where no stock has gone before. Virgin Galactic making history

as the first ever space tourism listing, but they haven't been to space -- just yet. That story just ahead. Don't go away.

(COMMERCIAL BREAK)

CHATTERLEY: Welcome back to First Move and a brand new listing at the New York Stock Exchange is literally out of this world. Richard Branson is

celebrating the launch of Virgin Galactic as a public company today. The first ever publicly traded space tourism stock.

Clare Sebastian has been watching the action. I'd say, sign me up, Clare, but it's $250,000.00 a price. Probably not right now. Talk us through it.

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Right and Julia, that is the real question for investors today -- is this the sustainable market

going forward? The proposition from Virgin Galactic and they haven't actually started commercial flights yet, although they say they're a couple

of months away is a 90-minute experience.

You get sent into the edge of the Earth's atmosphere on a rocket propelled plane and you get a couple of minutes of weightlessness, and then you come

back and the cost is, of course, a quarter of a million dollars. So the question is whether that market will continue to be sustainable.

So an unusual proposition for investors, Julia. And that's not an unusual path to the public markets. This isn't your traditional IPO. Essentially,

the way they've done this is by merging with an existing company called Social Capital Hedosophia. That company was already public.

So essentially, what we're getting today is a name change, a ticket change and now, they're going to be called SPCE like space, because they merged

with Virgin Galactic and this helped Virgin Galactic come to the public market, raise more money to continue to fund their operations, but avoid

all the costs and disruption they said associated with a traditional IPO.

[09:55:08]

SEBASTIAN: IPOA which is the original ticker symbol of Social Capital Hedosophia - that was already up 13 percent or so since they announced the

merger with Virgin Galactic.

CHATTERLEY: Yes, competition fierce. Blue Origin - SpaceX, But to your point about the sustainable model, at least for now, this is really the

only way that investors can get direct access to space tourism as an investment should they want to do so. That matters.

SEBASTIAN: Yes, that matters, and there's no real sense apart from, you know, speculation that Blue Origin, which is owned by Jeff Bezos, the CEO

of Amazon is looking to go public.

That company of course has very deep pockets because the Bezos continues to sell billion dollars of Amazon stock every year to fund it and you know,

this company, Virgin Galactic has 600-plus tickets already bought on the plane. So that is, of course implied revenue in itself.

CHATTERLEY: Yes, Clare Sebastian, thank you for watching that story. We'll see how it treats later on today.

But that's it for the show. I'm Julia Chatterley. You can listen to our podcast, too, cnn.com/podcast. You've been watching FIRST MOVE, time to go

make yours, and right now stocks are trading up record highs.

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