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First Move with Julia Chatterley
Huge Protests Follow The Death Of Iranian General Qasem Soleimani; President Rouhani Says There Will Be Consequences For Years; Oil Prices Climb As U.S. Stock Futures Fall. Aired 9-10a ET
Aired January 06, 2020 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:31]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE. And here's your need
to know.
Iran mourns. Huge protests follow the death of Iranian General Qasem Soleimani.
Retaliation promised. President Rouhani says there will be consequences for years.
And market unease. Oil prices climb as U.S. stock futures fall.
It's Monday. Let's make a move.
Welcome to FIRST MOVE. Great to be back with you on the show today. The latest on the escalating tensions in the Middle East following the death of
Iranian General, Qasem Soleimani and all the market reaction, of course. What a way to begin the first full week of trading for 2020.
Let me give you a look at the global snapshot here. U.S. futures pointing to a weaker open with losses as you can see of around six tenths of one
percent across the board, that follows Friday's pullback of around three quarters of one percent.
It's always tough to gauge and price this kind of geopolitical risk. Right now, I call this a pretty measured response.
For perspective, U.S. stocks hit record highs on Thursday of last week. It's not just the United States though, the MSCI Emerging Market Index
entered a new bull market last week and European stocks were also trading around record highs before the session on Friday.
So you could argue some consolidation here amid broader risks events here make sense. In Europe, today, the majors off the session lows, but still
down around one percent. As you can see Germany, the underperformer, they're down some 1.3 percent.
What about the Asia session? Well, the Nikkei fell almost two percent on the first day of trading in Japan of this year. Chinese stocks though
little changed.
The oil market remains key at this moment, too, continuing to make gains. These follow Friday's three percent plus rally, too. More detail on this
shortly.
But once again, compare these moves to the 14 percent oil price rise we saw during the attacks on Saudi oil fields in September of last year, measured,
once again I think is the key word here.
Our driver today is, of course, Iran. Massive angry crowds taking to the streets of Tehran for the funeral of General Qasem Soleimani; his daughter
saying the killing would bring a quote, "dark day for the U.S."
Meanwhile, the Iranian Supreme Leader Ayatollah Ali Khamenei prayed and wept over the General's body. Fred Pleitgen is in Tehran with the latest.
(BEGIN VIDEOTAPE)
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: I've been in the thick of all this pretty much all morning. And, you know, obviously
there's a lot of grief that's being expressed, so you can see that on those remarkable live pictures.
There's actually some people who have come out earlier today by official estimates who have said that they believe that well over a million people
have come out into the streets, and that certainly is something that is pretty remarkable and bigger than anything that I've ever seen here and
this is about my 15th or 16th time reporting from Iran.
I've been in a lot of demonstrations here in this country as well. The people here obviously in the state of mourning, and would also very much,
John, in a state of anger as well.
The bodies of Qasem Soleimani and the others who were killed in that airstrike in Baghdad were this morning eulogized here in Tehran at the
Tehran University and it was the Supreme Leader himself who said the prayers over the bodies. That's something -- that is an honor that is not
bestowed on very many people here in this country that shows how important Qasem Soleimani is to many Iranians.
Obviously, he is very controversial in western countries, but here in Iran, he indeed is someone who is very much revered.
Now, the people here on the one hand, obviously very much in the state of mourning, but they also are in a state of anger. One of the things that we
heard earlier today was people chanting "Death to America," also, as we were going live on TV, and many of them saying they want what they call a
hard revenge.
They want their nation to hit back at the U.S. and to do so quite quickly as well.
(END VIDEOTAPE)
CHATTERLEY: Fred Pleitgen there reporting earlier. Now, the heightened tensions between Washington and Tehran raising concerns all around the
world as the U.S. sends thousands of additional troops to the Middle East.
Nic Robertson is live in Riyadh for us. Nic, until recent days, we'd actually seen protests against the regime in Iran and what we're seeing
today in light of these pictures is them united against America and against its allies.
[09:05:08]
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, this is absolutely the image that Iran wants to portray. It's what's happening on
the streets there, not a counter protest against the government, but something that shows just how widely the government is supported at a time
when so many people in Iran feel that the country is under attack, because of the killing of Qasem Soleimani.
So this is, you know, this in Iran is certainly the message that the Iranians would want to see, and if we think back to just a few weeks ago,
over the past few months in Iraq, anti-Iranian demonstrations there now no more, yesterday is the body of Qasem Soleimani was taken through the
streets and through some of the religious shrines, Karbala and Najaf. There are huge crowds out on the streets in support of Soleimani, in
support of Iran, in support of the Shia proxy groups that Iran supports in Iraq.
So this really is an indication, certainly from that part of this region, that it has had a unifying effect against U.S. interests in Iraq and in
Iran.
Here in Saudi Arabia, concern of course, about what comes next. They want the situation to de-escalate. The Crown -- the brother of the Crown Prince
here in Saudi Arabia, Khalid bin Salman, essentially the third sort of most important man, powerful man in this country is in Washington today in the
next couple of hours meeting with Secretary of State Mike Pompeo, undoubtedly wanting to find out what the United States plans next, what
it's red lines will be.
They're really talking here about trying to find a way to de-escalate and not escalate the situation.
CHATTERLEY: And that's the message for the entire international community here, but as we heard from Fred there, the Iranians are saying that there
will be retaliation here and I think everybody is just watching to see what kind of form that takes.
What we've already seen is the Iranians taking what I believe now is the fifth step away from that 2015 Nuclear Accord for the Europeans here that
was simply trying to hold the fragments of that together. What does this mean for them, too and for this Accord going forward? Is this now well and
truly dead and buried?
ROBERTSON: You know, the German Foreign Minister is saying that, you know, he is concerned about it. We've heard from a spokesperson within the
German Foreign Ministry sort of commenting about that, mopping it up a little bit and saying no, that it is not dead yet.
Look, if you take the JCPOA, this multinational nuclear deal, it's been a thorn of contention, between really -- between the United States and its
European allies ever since President Trump unilaterally pulled out of it. The Europeans have been trying to hold it together, find a monetary
mechanism to continue to be able to do business, regardless of the sanctions that the United States is putting on Iran and find a way to
continue to keep Iran compliant.
This additional step now, the Iranians, the Foreign Minister tweeted earlier today that it is reversible. But the reality is, Iran is walking
down a road here now that it is very clearly signaling to the world that it will not limit it stockpiles, as it had agreed to of enriched uranium, that
it will enrich uranium above the internationally agreed thresholds, that it will use more sophisticated centrifuges to enrich uranium faster.
So what it is effectively saying here is, we will get back into compliance if you do what we will say, but effectively they are shortening the path to
making a nuclear bomb, and that's what the JCPOA, that agreement was designed to thwart.
So how long Europe can continue to take a position supporting Iran as Iran makes these statements and continues in this vein, it is hard to see how
that can continue much longer, but it's struggled on so far, but things have changed subsequent the killing of Soleimani.
CHATTERLEY: Yes, just one of the increased threats here. Nic, I just want to quickly bring in the Iraq angle here, too. I mean, the message from
Iraq has been, look, America is our ally. But Iran is our neighbor here. And they obviously held this non-binding vote over the weekend to expel
U.S. troops.
The President of the United States responding immediately and threatening extreme sanctions on Iraq. What do we make of this situation
incredulousness, I think coming from the Iraqis here in light of what we've seen?
ROBERTSON: Yes, I think it's probably something that's taken aback a lot of the United States allies as well. Look, the allies and we've had
President Macron of France, talking to the Iraqi Prime Minister and the President there. Boris Johnson, the British Prime Minister has also spoken
today with the Iraqi Prime Minister and both of them are talking about, you know, how the future relationship not just of U.S. forces but the
international coalition of international forces that are in Iraq to fight ISIS.
[09:10:14]
ROBERTSON: How that can go forward? And the important words are being raised in those conversations between Paris and Baghdad and London and
Baghdad, and that is respect to the sovereignty of Iraq.
And the international understanding is that these forces are in Iraq at Iraq's requests. They're not an occupying force. So, you know, President
Trump's statements fly in the face of that. And also, when you think about the sanctions that the United States put on Iraq, after Iraq invaded Kuwait
in 1991 and through the 90s, these sanctions that effectively diminished the living standards of millions of Iraqis.
This is a very bitter pill for Iraqis to swallow and it's one that's likely to make them want to turn their backs on the United States. So there's a
rearguard action by the United States, European allies and partners in this international coalition to try to undo the damage that President Trump
appears to be doing in his relationship with Iraq at the moment, but it's an uphill battle. That is not something that's going to be won over
easily.
I think everyone is trying to slow this all down, roll it out more slowly and hopefully -- and hope that in the process of slowing down the tempers
and the anger here that a diplomatic agreement can be found down the road.
CHATTERLEY: Nic Robertson, thank you so much for joining us on that. Now, we are seeing direct market reaction of course in the oil market. Brent
and WTI adding to Friday's three percent gains.
John Defterios joins us now on this. John, great to have you with us. Earlier on the show I compared to this to the 14 percent rise that we saw
in oil prices in light of the attacks on Saudi oil facilities back in September of last year. It feels muted to me here -- muted. What do you
make of what we're seeing right now in the oil markets and why?
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: You make a very interesting point because as you know, most investors are risk adverse and
the red lights are flashing, especially if you're sitting in the Middle East right now.
I spoke to a senior source at a state oil company. He said it's unchartered territory and that the terrain is very complex, and I would
add, I think investors have been very complacent, Julia.
We have a five percent gain between Friday and Monday. We're knocking on the door of $70.00 a barrel, which by the way, is a nine-month high even
after that Aramco attack.
But this is a very different market. Before the Aramco attack, the market was lower, because there was worries about over supplies. This shock from
Donald Trump and the attack against Soleimani are hit when we had a market that was climbing.
Remember, the early December meeting of OPEC, they decided to cut production to 1.7 million barrels a day. So we've been on the staircase
even higher, and then this shock to the market.
We could go much higher because it is a very complex situation. What do I mean by that? We don't know what Iran is going to do next. They're very
crafty. Does it target U.S. embassies in the region? Could it go after U.S. jetliners -- which wouldn't be the first time -- flying here in the
Middle East?
Are they extended to the proxies, their allies here in the region -- Saudi Arabia, the UAE, Bahrain, for example? Do they go after energy
infrastructure? That's why I think this march up to $70.00 a barrel. It is significant, a five percent gain. But it could be much worse because we
sit in a region that sits on top of two-thirds of the proven oil reserves around the world.
CHATTERLEY: Yes, when we think about tackling or targeting energy infrastructure, I go back to what I mentioned earlier with Saudi Aramco.
And to your point, is it no surprise today that we see immediate price pressure on Saudi Aramco? I believe it is trading out the lowest level
that we've seen since it IPO'ed.
DEFTERIOS: Yes, again, a very clear point you're making here, Julia. You would think that higher prices means higher revenues. That's the case for
Saudi Aramco.
But the selloff that we see here has all to do with the resilience of Aramco going forward. We had the September 14th attacks that we talked
about. Would Iran try to test Aramco again? That's a huge question mark that nobody has an answer for. Some of the other state oil companies that
again, that are aligned with the United States, do they get tested?
And I think we cannot ignore the fact that the Strait of Hormuz comes back into play again. Anytime Iran has had a problem in the international
markets or with sanctions, it does threaten to cause havoc within the strait. That would be to tankers.
Don't forget, over the last nine months, we saw attacks against pipelines in Saudi Arabia, tankers south of the Strait of Hormuz, even airports in
Southern Saudi Arabia. It could happen again. And that's why sources I'm speaking to today say I'm surprised at the market reaction in Asia, Europe,
and the United States. Here in the Middle East, it's a very different feeling overall.
CHATTERLEY: Yes, very measured and surprisingly so. John Defterios, great to have you with us. Thank you for that.
Now, here in the United States, House Speaker Nancy Pelosi is saying the House plans to vote on a War Powers Resolution to limit the President's
military actions here as far as Iran is concerned.
[09:15:07]
CHATTERLEY: Boris Sanchez is live at the White House for us. Boris, what are the options here and what can be achieved with a vote both in the House
and in the Senate here?
BORIS SANCHEZ, CNN WHITE HOUSE CORRESPONDENT: Yes, well, ultimately, the goal for Nancy Pelosi is to try to restrict President Trump's ability to
attack Iran without any caution as to what sites he targets.
For example, just last night, the President contradicting his own Secretary of State Mike Pompeo saying that he would attack Iranian cultural sites as
part of a response to any Iranian aggression.
Ultimately, though, the President does have wide powers when it comes to Article 2 of the Constitution. That's the argument that we heard from
counselor to the President, Kellyanne Conway this morning, scoffing at this resolution that House Speaker Pelosi has promised to present.
She effectively argued that the President is well within his authority to carry out a number of measures to try to protect Americans from the
Iranians.
We should also point out that in regard to those cultural sites, Conway tried to sort of recast them as legitimate targets, arguing that some
Iranian cultural sites are also military sites. So you're trying to sort of recast them in a way that makes it more palatable for the President to
pursue that sort of measure.
Obviously, we've heard from the Iranians, our colleague, Fred Pleitgen speaking to one of their senior military officials saying that if President
Trump pursues that kind of policy, then the gloves are truly off, and Iran has several hundred targets that it intends to go after depending on what
the Americans do -- Julia.
CHATTERLEY: Boris, great to have you with us. Boris Sanchez there, thank you for that.
All right, so let me bring you up to speed with some of the other stories now making headlines around the world.
To Australia now where thick smoke from the deadly bushfires is stalling rescue efforts as authorities race to take advantage of a second day of
light rain and cool winds.
Officials have reopened roads as conditions to ease, but warn that dangerous weather will return later this week. The death toll since
September has been revised upwards now to 25.
Earlier the Prime Minister unveiled a recovery fund of almost one and a half billion dollars.
Harvey Weinstein's sexual assault trial gets underway today after a hearing. Jury selection is scheduled to begin on Tuesday. The former
Hollywood producer is charged with raping a woman in a New York hotel room in 2013. Another woman has accused him of sexual assault this time in
2006.
Weinstein has pleaded not guilty and vows he will be quote, "fully exonerated." He is not expected to take the stand.
All right, we're going to take a quick break here on FIRST MOVE, but coming up, U.S.-Iran tension shaking global markets. More analysis after this.
Stay with us on CNN.
(COMMERCIAL BREAK)
[09:20:59]
CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange. Let me give you a look of what we're seeing as far as U.S.
futures at this moment pointing to a weaker open as we mentioned earlier.
Losses of more than half a percent at this stage. Stocks set to fall into negative territory for the New Year as a result, if we continue to see
these losses by the end of the session.
Let me give you a look as well, a quick cross asset market snapshot. We've got the MSCI World Stock Index down around a quarter of a percent. The
U.S. Dollar Index also losing around the same.
Safe havens though gaining. The Swiss franc up some two tenths of one percent against the dollar; similar story for the yen on Friday as well
seeing gains. Gold, the obvious one here, up by one and a half percent now sitting at more than six-year highs.
The flight to safety in bond markets of course playing out. I'm showing you the 10-year Treasury yield here, a touch lower, 1.77 percent.
Let's talk this through Jason Draho, the head of America's Asset Allocation at UBS Global Wealth Management joins us now. Jason, great to have you
with us.
JASON DRAHO, HEAD OF AMERICA'S ASSET ALLOCATION, UBS GLOBAL WEALTH MANAGEMENT: Great to be here.
CHATTERLEY: Just stepping onto our little box here to make the height that, I don't know if you saw that, I apologize. It's so tough to price
geopolitical risk for investors here. What do we think? And what are you saying to people?
DRAHO: So it's really difficult to like kind of calibrate these risks. So what you try and do is focus more on, if things do escalate, what impact
would it have on the economic fundamentals? Would it slow growth? Would it hit earnings?
We've seen incidents like this the past, like last year, when there was strikes to the Saudi oil fields, oil prices rose; equity markets and risk
assets kind of sold off. And you kind of really calibrate and realize, this is not going to have significant economic impact.
CHATTERLEY: Are you surprised by the lack of action that we've seen, or the lack of price increase that we've seen in the oil markets as a result
of this?
I mean, we were comparing it earlier to what we saw in September with the attack on the Saudi oil facilities and the price difference here is very
different actually.
DRAHO: So I think one of the reasons why we haven't seen such a big price impact this time is the expectations for oil prices. Certainly, at least,
in our expectation, whether it would kind of fall a little bit from the levels they were prior to this news, because there's a lot of oil supply,
more so than demand.
So just the general economic fundamentals would suggest that oil prices would be a little bit weaker, and then when we see oil prices move up
higher, people expect, investors expect to get more supply from shale producers in the U.S. and other markets can come online.
So it sort of caps the upside unless things really, really escalate and there's a real disruption in supply from the Middle East, for example.
CHATTERLEY: It's so important. We always see this knee jerk reaction, but it tends to very quickly reprice, and to your point, the fundamentals of
what we need to keep in mind here ultimately.
DRAHO: Exactly.
CHATTERLEY: Norway, I guess, is another one where we're seeing increased production as well to provide that supply.
DRAHO: Multiple countries, yes.
CHATTERLEY: It's so important. Yes. Gold. Talk to me about gold.
DRAHO: So gold did very well last year. It was up 18 percent. It should still do well in this environment where interest rates are really low. So
when you own gold, you don't get kind of any coupon, you're not getting interest payments.
While interest rates elsewhere are really low, economic cost -- our opportunity cost in the investment gold is low. Different people tend to
buy.
We've also seen globally, Central Banks are trying to diversify their holdings, buying more gold. So structurally, there's a demand for gold.
So we see gold going from around $1,525.00 right now, up to about $1,600.00. That's about five percent. So not as much as it was last year.
But structurally, there's a demand for that, surely, there is continued price appreciation this year.
CHATTERLEY: The other important thing to keep in mind with gold is, is the U.S. dollar. It's priced in U.S. dollars. And this is really important.
You've got to have a pretty firm view on where you think dollar prices are going to go in 2020 as well if you're comfortable holding gold.
DRAHO: So we think the dollar generally is going to decrease against most currencies.
CHATTERLEY: Okay, so that helps.
DRAHO: So that helps. It does. As the dollar goes down, commodity prices tend to go higher, all else equal.
We see an environment where if global growth gets better, it should lift other currencies vis-a-vis the dollar, which has done very well for really
the past six or seven years to a point where it's probably a little bit expensive. Along the term, that should start to kind of reverse and it
could happen as soon as this year.
CHATTERLEY: What does this mean for things like defense stocks? Because I've had a number of conversations with people who even at the back end of
last year were saying, if you look at the United States defense stocks, they did well. In 2019, we've got an increased budget spending,
particularly from this White House into defense stocks.
[09:25:10]
CHATTERLEY: And then geopolitical risk thrown in. What's your view here? Do we need to be cautious?
DRAHO: So defense stocks did reasonably well last year including the industrial sector, which had been sort of hurt because of the global trade
tensions.
So they were sort of relatively good performers, partly because the market was pricing in this sort of increase in defense spending. That was already
the case before, but now this news on what's happening in the Middle East, with Iran, defense stocks in general could get a further boost because
that's not priced into the market.
So within that sector, that looks like to be one of the more attractive beneficiaries of what's happening.
CHATTERLEY: Okay, so if we talk about 2020 and beyond, how should investors be positioned? They've got to keep an eye on the geopolitical
risk. But there's a whole host of other factors that we need to consider here and knee jerk reactions are not advised.
DRAHO: So when we started this year, we actually thought that the macro environment overall was relatively benign. So global growth should be
getting better this year. That's a positive.
Inflation is low. The Central Bank has cut interest rates a lot last year, so they have a very loose accommodative policy. So a lot of very good
factors, which explains why the market has moved up a lot in the last year.
So this doesn't really change that story that much, but just a lot of good news is already priced into financial markets. So the question is, how
much higher do we go from here? There's more upside as opposed to being pessimistic at this point in time.
CHATTERLEY: Best case scenario here?
DRAHO: Best case scenarios, as sort of cooler heads prevail, we don't get further escalation in the Middle East. Economic data gets better and we
see good performance for equity markets, especially outside of the U.S., which have been real laggards for the past -- well, for the decade.
CHATTERLEY: So even emerging markets, maybe even European stocks as well, where specifically very quickly.
DRAHO: So I think emerging markets is our favorite area. They have definitely underperformed in the U.S. for the past year and a half. Even
on Friday, we saw manufacturing data from the U.S., that's supposedly on the downside, has actually improved in emerging markets.
So you see kind of a bit of a bifurcation that should lead to better performance for emerging markets relative to the U.S.
CHATTERLEY: We will hear more on this, later on this week, I'm sure. Jason Draho there. The market opens next.
(COMMERCIAL BREAK)
[09:30:06]
CHATTERLEY: Welcome back to FIRST MOVE. I'm Julia Chatterley live from the New York Stock Exchange. That was the opening bell this Monday morning
and as expected, we've got a weaker open across the board here for U.S. stock markets.
Wall Street is down for a second straight session, seven-tenths of a cent as you can see there for the Dow. This follows the U.S. attack that killed
Iranian General Qasem Soleimani.
Stocks still only around one and a half percent away from record highs. So perspective here, important.
Tech stocks, in fact, seeing the biggest pullback in early trading. The momentum stops here. Airline stocks also among today's biggest losers on
concerns, I guess, about how rising oil prices could hurt future profits.
Let's go there specifically. The oil markets. Brent and U.S. Crude both up around more than one percent actually for Brent here, WTI up some nine
tenths of one percent.
There are other concerns for investors beyond the Middle East though as well. Let me give you a look at what we're seeing in terms of some of the
data here.
Weak numbers on U.S. manufacturing on Friday. Factory activity fell for the fifth straight month. New numbers out today showing European business
activities still barely in expansion mode, but European factory activities now contracted for an 11th straight month.
So yes, keep the fundamentals in focus hereto. But for now, I want to take you back to our top story.
Take a look at these live pictures. The casket of Qasem Soleimani is being taken through an emotional crowd in the City of Qom. Meanwhile, massive
anti-U.S. protests continue across Iran.
Fred Pleitgen is live in Tehran with the very latest. Fred, great to have you with us. Fred, emotional scenes, and as I mentioned there, live
pictures here of the casket. The General's body being carried through the City of Qom here. Just talk about the reaction that you've seen from the
people there.
PLEITGEN: Well, right now, Julia. What we've seen on the streets in Tehran, we were right in the middle of those funeral processions that took
place in Tehran where the casket of Qasem Soleimani was in the main Grand Mosque at Tehran University and then was brought along the streets to one
of the main points there, one of the main memorials inside Tehran.
We saw a lot of people and a great deal of grief, a lot of people also with a great deal of anger, quite frankly. When we were around there, a lot of
people continuously screaming "Death to America" saying that they want revenge for the death of Qasem Soleimani.
And, you know, I've been at demonstrations here in Iran before. I've really never seen anything on the scale of what we saw today in Tehran,
with the amount of people that came out there.
We are estimating that it was hundreds of thousands. There's some Iranian outlets that are saying that it could have been well over a million, and
indeed more than millions of people that actually came out to line the streets there as Qasem Soleimani's casket and the others who were killed in
that U.S. airstrikes were brought through the streets of Tehran.
So a great deal of anger going on. And of course, you do have the Iranian government and the Iranian leadership vowing revenge for the death of Qasem
Soleimani. Senior adviser to Iran Supreme Leader telling me that revenge is going to happen. It's going to be a military retaliation. It going to
be retaliation against military sites.
Iranians also saying that they don't want a full-on war with the United States. The Iranians also saying that they already have a successor for
Qasem Soleimani, he vowed revenge today as well.
So as you can see here, in Iran, right now, this nation really very much in a state of grieving. They are in a state of mourning, but at the same time
also extremely angry and vowing to take revenge as well -- Julia.
CHATTERLEY: Fred, what we've also seen is the President of the United States doubling down, it seems on his threat to potentially target cultural
sites in Iran.
I mean, we've been talking about this already on the show, this idea that perhaps the result of this is uniting a nation that in many cases is
divided. It has been protesting against the regime.
What impact would targeting cultural sites have on the people here and the stance that they're taking against America, but also against America's
allies hereto?
PLEITGEN: Well, you know, I think that just the President tweeting about that is already something that's united people here in Iran a great deal,
but you're absolutely right.
We were on the ground there today in that demonstration, and one person came up to us and he said, look, we have these divisions in our society.
We've had these recent protests that of course, had that crackdown on the protests as well, but they said the death of Qasem Soleimani has really
unified this nation.
One of the interesting things was yesterday, in the town of Ahvaz which was very restive as those protests were going on, also tens of thousands of
people turned out there to mourn the death of Qasem Soleimani.
[09:35:10]
PLEITGEN: And to pay respects to his casket as it went through the streets there. So that alone was a unifying factor for many Iranians and then
President Trump tweeting about possibly hitting sites that are important to Iranian culture is certainly something that didn't go down well at all with
many Iranians on social media.
You have people already posting pictures of the many Iranian cultural sites and saying these places really shouldn't be hit.
One thing that Iranians can seriously unite around is the fact that this country is thousands of years old, and has these very valuable cultural
sites, and that senior adviser to Iran's Supreme Leader also told me if President Trump's talking about hitting 52 cultural sites in Iran, then the
Iranians will hit 300 -- Julia.
CHATTERLEY: Yes, that's the response. Fred Pleitgen, great to have you with us. Thank you for that.
All right, let's get some further insight now. Robert Jordan is the former U.S. Ambassador to Saudi Arabia, and he joins us now.
Ambassador, great to have you on the show with us. I know it's difficult for you to debate the current events without discussing what's been brewing
between these two nations and Iraq over the last four decades.
But if we keep it specific to what we're seeing right now, what's your assessment? How high are the risks here of further military engagement,
perhaps hereto?
ROBERT JORDAN, FORMER U.S. AMBASSADOR TO SAUDI ARABIA: Well, the risk is certainly increased. I trust that when this decision to take out Soleimani
was made, some of those risks were evaluated and appreciated.
But I do think it's very important to see here the deterioration of the relationship with Iraq, a sovereign country in which this hit was executed,
likewise, unifying the country of Iran are second and third order effects that I think we've got to take account of.
The risk of military confrontation comes from what retaliation we see next from Iran. There's a stair step of escalation here that I think has a
chance of getting out of hand.
Iran is preparing some kind of retaliation. At the same time, they have to be considering what sort of retaliation the United States will execute in
response to that.
We saw something similar to this at the beginning of World War I where events got out of control. I'm not saying we're there yet, by any means.
But I do think that there's a danger out there increased military confrontation that could really lead to catastrophic results.
CHATTERLEY: Ambassador, General Petraeus, the former C.I.A. Director in an interview over the weekend called this quote, "very significant efforts to
reestablish deterrence" here. In light of what you were saying about the potential for tit-for-tat here in terms of response in Iran and then what
the United States does. Do you think this may be enough of a deterrent to say, look, this White House, this administration is willing to take action?
JORDAN: Well, I think it's a mixed message that we're seeing here. When we saw the events of this summer, the downing of an American Intelligence
drone, the attacks in the Gulf, and then the attacks on the Saudi oil infrastructure. There was no response from the Americans. So Iran didn't
pay a price and they felt perhaps free to continue to escalate.
Now, we've come back with really a cataclysmic response, a massive response. And I'm not sure if it is going to be as much of a deterrent as
we would like. But it certainly does show that finally, we're willing to take action.
Had we taken action after the attacks on the Saudi oil facilities, at least in a measured way, perhaps Iran would have paid a price and realized that
there is a deterrent capacity out there.
What we now see is the potential I think for unbridled, uncontrolled responses on each side, and that's what I think we've got to really keep an
eye on.
CHATTERLEY: Ambassador, do you think when we look at the -- and there are many risks and possibilities here -- the only real beneficiaries perhaps of
the confusion and the rising tension here is al-Qaeda and Islamic State?
JORDAN: Well, I think they are going to benefit from this certainly in the short run. If America truly is expelled from Iraq, then we slip back into
the same situation we saw after 2011 when ISIS and al-Qaeda were able to enter into a resurgence in Iraq. They then invited us back in and 2014 to
try to straighten things out.
We can't keep bouncing back and forth like this. We need to have some sort of stability in the relationship, and I think this assassination, as at
least for the short term, endanger that.
[09:40:01]
CHATTERLEY: What do you want to see from regional powers? I mean, to point, the Saudi Arabians were incredibly quiet in light of the attacks
that we saw on their facilities. They've been very muted in response to this as well. Clearly, they want stability in the region and the
international community, of course, for de-escalation. But what more can the GCC nations here do to try and help?
JORDAN: Well, I think that first of all, some lack of unity within the GCC, the State of Qatar, the Emirate of Qatar made a statement that the
drone that killed Soleimani did not come from them and most likely came from Kuwait. Kuwait has now denied that.
So they're all scrambling right now, I think, to not be implicated in the drone attack. The Saudis had been surprisingly quiet. That may be partly
because at least, the Prime Minister of Iraq has reported that Soleimani was going to meet with him to discuss Saudi efforts to de-escalate tensions
with Iran.
Now, that may have come on the heels of the American failure to respond after the oil attacks. But the Saudis certainly may have had an interest
in trying to de-escalate with Iran, which of course now has been greatly interrupted by these events.
So we haven't seen anything from the Saudis or the Emiratis right now, and I think they are probably keeping their powder dry and trying to figure out
how not to be caught in the crossfire. They are certainly at risk as an ally of the United States if Iran does choose to retaliate.
CHATTERLEY: Ambassador, just very quickly, do you believe that Americans are less safe as a result of the decision that was taken here by the
administration?
JORDAN: Certainly, in the short term, I think that's the case. We have asked all Americans to leave Iraq immediately. We have drawn down at the
embassy and I think we've put all of our installations in the region on high alert.
So I think Americans, at least right now are much less safe than they were earlier this week.
CHATTERLEY: Robert Jordan, former U.S. Ambassador to Saudi Arabia. Sir, thank you so much for joining us on the show.
JORDAN: Thank you.
CHATTERLEY: All right, up next, as Tehran vows revenge on the United States, we take a look at one of its potential weapons of war, a
cyberattack. Stay with us. We're back after this.
(COMMERCIAL BREAK)
[09:45:32]
CHATTERLEY: Welcome back to the show. Iran has vowed revenge for the death of General Soleimani. One of Tehran's potential weapons is a
cyberattack.
Over the past decade, we've seen multiple examples of cyber based attacks out of Tehran between 2011 and 2013. Iran attacked Bank of America, Wells
Fargo and JPMorgan.
In 2013, it hacked into the control system of a key New York dam and two years ago, nine Iranians were charged with stealing data and intellectual
property by hacking into hundreds of universities and companies.
Joining us now is Hemu Nigam. He is founder and CEO of Cyber Security Affairs. Hemu, great to have you with us on the show. Let's start there.
What is the most probable risk here? Does it go to American infrastructure like dams? Like utilities? Do we need to focus there specifically?
HEMU NIGAM, FOUNDER AND CEO, CYBER SECURITY AFFAIRS: Well, thanks for having me, Julia. I think one of the things that we have to focus on is
that whatever cyberattack happens, it's going to be very personal and personal in our country means attacking entertainment, attacking travel,
attacking, where you are at the New York Stock Exchange or other stock exchanges, and attacking our financial institutions.
And so when you look at that, the best way that Iran can do this is by going after things like that, but also things that are connected to the
critical infrastructure because all of those things are powered by oil, gas and other things and the critical infrastructures all connected to it. So
that's where I think the focus can be, along with spreading out to make it personal.
CHATTERLEY: How well protected are these types of infrastructures, utilities, power grids. I have to say I'm kind of concerned about their
ability to protect themselves and to ward off this kind of threat.
NIGAM: You're absolutely right there because one of the things that state and local systems always wrestle with is resources. So this may look like
a battle between the U.S. Federal government and the Iranian government, but at the end of the day, it's the state and locals that are sitting
targets.
And it's -- your side in the New York, if the New York system was actually live at the time or connected to the dam, once those hackers got in, they
could have opened up the dams and that would have created a major flooding situation. I imagine that in the Hoover Dam or other places like that.
CHATTERLEY: You've actually listed five key points to watch. That just being one of them. One of those five his fastest route is that they can
hire hackers on the dark net. So these don't have to even be Iranian hackers. They can just find hackers out there. Explain this is a as a
specific risk here because for me, this is quite fascinating.
NIGAM: Well, one of the things that people always are focused on when it comes to countries like Iran is well, their cyber capabilities or cyber war
capabilities or what people call or what I call so and so. The reality is, go to the dark net, and put out a call for help.
You don't have to say you're the Iranian government or Iranian Intelligence, all you have to say is, I'm willing to pay. Here's the
target. Here's what I need done either ransomware or malware, or freezing up systems or denial of service attacks.
There's plenty of hackers out there willing to do it for money, and in that situation, you don't actually have to train anyone, you don't have to do
what you do in physical boots on the ground, which is put in the resources, put people through boot camp, make them train, make them qualified and do
all of that. You just have to put out a call and make sure you pay them, and there's plenty of hackers willing to take that.
CHATTERLEY: What about using other proxies or relative enemies of the United States? I guess the first one that comes to mind is Russian
hackers, for example? Is that another potential route that they can go down?
NIGAM: Yes, absolutely. Julia, one of the things that we've already seen is that Russia has partnered up with Iran in the past, and Russia is an
expert at information warfare. So you could imagine Iran doing it, partnering with allies that are experts, U.S. partners with allies at the
time.
You're in a region where allies are constantly shifting, as you were saying, and the Ambassador was talking about just earlier, people are all
of a sudden silent because they have other interests. Their countries who are saying it wasn't me, it was them. And so, in a personal situation like
this, there's lots of moving parts. There's lots of allies who may use it as an opportunistic method to go in and say, well we will help you do an
information war campaign. And you won't even know that that's happening.
[09:50:14]
NIGAM: You'll start seeing videos, for example, being posted on Facebook and going out through Twitter that are pushing out agendas that are pro-
Iranian, anti-American, and may not know that it's actually coming from there.
CHATTERLEY: Hemu, very quickly, how long before we could see some kind of attack? How long does it take to coordinate this kind of attack? And what
can companies do in the interim to try and help protect themselves?
NIGAM: Well, I think some of these things are already ready to go. I wouldn't doubt it if they're already in the works. As a company, I would
say make sure your systems are locked down. They have the latest and I say latest meaning, operating systems, latest security protocols in place,
because that's usually where the weaknesses are.
You install the security, but you forget to update it and as a country, as a people, as a company, that's where our focus needs to be.
CHATTERLEY: Makes perfect sense. Hemu, great to have you with us. The founder and CEO of Cyber Security Affairs. Thank you for that.
NIGAM: Thanks, Julia.
CHATTERLEY: More to come after this and we'll take a look at the market reaction, too. Stay with us.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. Well, a look at the broader market.
Shares of Boeing are down around one percent. The aerospace giant confirms that it's uncovered another potential design flaw with the 737 MAX. This
time it's a problem with the plane's wiring.
Paul La Monica joins us now. Paul, what more do we know on this?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, just what you pointed out there. There are these reports over the weekend of potential issues with
the wiring that Boeing has confirmed. It's just yet another big problem for Boeing as it seeks to try and get the 737 MAX back in the air sometime
soon. But that is not likely to happen, I think at any point in the foreseeable future, given these new revelations and shares are down this
morning as a result.
There's also a report that Boeing may be looking to raise more debt because of its financial problems as a result of the 737 MAX grounding.
CHATTERLEY: Yes, you just have to assume that the time horizon here for getting these planes back up into the air extends further.
Paul, let's talk more broadly about what we're seeing for markets right now. I've been calling it a measured response here throughout the show in
light of a broader geopolitical sense.
They are tough to price here, but we are still seeing it as general flight to safety here across asset markets here.
LA MONICA: Yes, I think there is a continuation of Friday's broader market selloff. You are seeing gold obviously as a classic flight to safety
trade. That is higher.
But I think, you know, oil is also moving higher because of the geopolitical tensions in the Middle East and some oil stocks are moving up
as well and defense stocks, it's a bit perverse, unfortunately.
We are talking about more military conflict and obviously investors go out and buy the likes of Lockheed Martin and Raytheon and some of the other
defense contractors, but those are companies that could potentially do well, if there is a prolonged military conflict with Iran.
[09:55:15]
CHATTERLEY: Yes, and we were talking about this earlier on the show actually, they did pretty well in 2019, as well. The question is, does it
extend in light of what we're seeing? Paul, I have to say, though, we are still just off record highs, though.
So some consolidation here, in that vein, makes sense. This stock market is incredibly resilient here, I think, and we have to bring it at some
point back to the fundamentals, and probably quite quickly.
LA MONICA: Yes, I think everyone is going to be very eagerly looking at what first quarter earnings outlooks are like. We're going to have fourth
quarter earnings reports in a couple of weeks and companies are going to probably talk about decent Holiday season and, you know, the trade truce
that we have with China, hopefully boosting things as well.
CHATTERLEY: Yes, absolutely plenty to consider. Paul La Monica, thank you for that.
The President just tweeting that Iran won't have nuclear weapons, not what Iran is saying. But that's it for the show. Our coverage of Iran
continues next. Stay with CNN.
(COMMERCIAL BREAK)
[10:00:00]
END
