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First Move with Julia Chatterley
Mexico And The United States Agree A Deal On Immigration; United Technologies Is Tying Up With Raytheon; Salesforce Acquiring Data Analytics Firm Tableau In A $15 Billion Deal. Aired: 9-10a ET
Aired June 10, 2019 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR, FIRST MOVE: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE, and here
is your need to know. Tariff crisis averted. Mexico and the United States agree a deal on immigration. Details though are pretty scarce. Defense is
the best offense sometimes, at least United Technologies is tying up with Raytheon. And may the force be with you. Salesforce, acquiring data
analytics firm Tableau in a $15 billion deal. I take that as an M&A Monday. Let's make a move.
Welcome to FIRST MOVE once again. I hope you all had a great weekend, not a moment to lose. It's a tariff turnaround story. Today, as I mentioned,
the United States and Mexico reaching a deal over immigration, didn't see tariffs hit today, and that's forcing futures higher this morning.
Let me give you a look at what we're seeing. It's a global market story, though basically green across the board. I have to say though, investors
were increasingly confident I think that a deal would be reached and the solution would be found. We did see gains of more than one percent for the
U.S. majors on Friday.
In fact, the S&P 500 gained over four percent for its best week since November of last year. The NASDAQ added more than four and a half percent.
In fact, we're just 100 points now above where we were for the S&P 500 prior to President Trump's tweets threatening Mexican tariffs to kind of go
nowhere fast. Why? Well, I think we have to thank Jay Powell of course and hopes for a rate cut from the Federal Reserve.
For now, we are seeing a relief rally in the Mexican peso, too; up some two percent versus the U.S. dollar in the session. I do have to wonder though
what the full politicization of tariffs and they are used for tackling something like immigration here will mean for the Chinese deal hopes.
There's still expectations that when President Xi and President Trump meets at the G-20, those talks will bear some kind of fruition as far as further
talks are concerned at least on the trade deal.
I just wonder whether President Xi might now look at it and worry that even if we see a deal reached that tariffs could be used on China for things
like South China Sea; not agreeing over North Korea, perhaps even Iran and whether that will limit the deal or limit the follow through -- just my
thought, but we'll discuss later on in the show.
Right now, one thing to watch, of course, on this front is weakness in the Chinese renminbi currently sitting at its lowest level of the year versus
the U.S. dollar. Goldman Sachs over the weekend, saying we could see break through that psychologically important level of seven over the next three
months, something that's not happened in a decade.
And if we see that, watch the U.S. administration. Clearly, no shortage of things to discuss. But Mexican trade, immigration, trade and immigration,
of course, in this case, is where we kick off the drivers and Mexico breathing a sigh of relief this morning agreeing a deal with the United
States.
Christine Romans joins us now. Christine, we have a deal. We just don't know really what's in the deal. And there seems to be some confusion over
whether agriculture is going to be purchased or not. Walk us through it.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: And it's so fascinating. It's almost as if it's a reality TV episode. Right? And the
President has sort of rebranded those nine days of threats against Mexico into a conclusion, wrapped it up and ended the season.
But we're wondering, wait a minute, there's some missing pieces here. So look, the President says there's this big Ag deal that's part of this, in
addition to some of the border security measures that he says that the Mexican government has agreed to including 6,000 troops on Mexico's
southern border with Guatemala.
The President tweeting that Mexico has agreed to immediately begin buying large amounts of American agricultural product from our great patriot
farmers. But when you talk to people around the Mexican delegation, and people inside the beltway, they say, wait a minute, we're not sure exactly
what that is. It hasn't really happened yet.
The President was just asked about it, actually, on CNBC, where he's been in a 20 or 25-minute sort of meandering conversation on the phone on live
TV, where he was asked about those Ag purchases. He said, "Well, everybody who knows about this knows it's going to happen, but we can't say it's
going to happen yet because the Mexican legislature has to decide if it's going to happen."
So you know, I mean, he is again, branding, this big Ag purchase, but we don't have any real details on that yet.
CHATTERLEY: I just think we're perhaps conflating two things as well, a deal over immigration in the USMCA, of course, the NAFTA mark two perhaps,
but as you rightly point out on this point, it's pretty tough to tell.
I mean, if I take the backdrop here in markets, we were already rallying at the back end of last week on hopes of a solution here, but the greatest
contributing factor here I think are hopes for a rate cut here no matter what happens on the trade front, the hope is that Jay Powell is going to
ride to the rescue and the President weighing in on that too, and saying, the Fed should never have raised rates here.
[09:05:14] ROMANS: Yes. The President very critical, "Our Fed is very destructive to us," is what he just said on television. He said they never
should have been raising rates, and they never should have been doing, you know, the quantitative tightening that they had been doing.
I mean, remember, the U.S. economy was just flush with stimulus after the financial crisis. We have never had a balance sheet like with the Fed
ever. The President at the time criticized it for saying it was going to lead to bubbles down the road. But now he's saying, "No, no, don't take it
away on my watch. I want it. I want to here."
I want to remind people, too that in Wall Street, it's an upside down logic, right? I mean, bad news is good news last week on Wall Street
essentially is what I saw there and you've got investors who -- stock market investors -- who are addicted to cheap money, anybody who has been
the market for the past 10 years knows that the stock market is addicted to all this cheap money and all this liquidity.
They're saying, look, we want the Fed to cut rates. But when the Fed cuts rates, it's for not a good reason. It's because the economy is faltering.
There's a financial crisis there. There's either trade wars brewing around the world with uncertain outcomes for global growth.
So I mean, for all those people who are cheering that the Feds are going to come to the rescue and be the shock absorber for President Trump's shocks,
you don't want to hope for shock in the global economy.
CHATTERLEY: Well, you also want to have some firepower and some cushion in the next crisis or the next downturn. And the risk is that you don't have
that, too. Christine Romans, I can tell you one thing, if this is a reality TV show, the series isn't over yet.
ROMANS: And you're hired, Julia Chatterley.
CHATTERLEY: Thank you, you, too. Let's move on to our next driver. One of the biggest merges -- United Technologies, or UTC and Raytheon together
with some $166 billion set to create a U.S. aerospace and defense powerhouse. Matt Egan, can also join our show and has all the details on
this.
Talk me through this because this is a huge deal, and actually pretty transformative. Two companies coming together from very different sectors.
MATT EGAN, CNN BUSINESS LEAD WRITER: It is a huge deal. And it really accelerates the makeover of what is one of America's last major industrial
conglomerates. That's United Technologies.
So last fall UTC, they announced the deal to spin off their Otis Elevator division as well as the Carrier Building System Unit. And now they are
joining forces with Raytheon to create really what would be an aviation and defense behemoth, second only to Boeing in those categories.
And you know, there is some concern all of a sudden about whether or not there will be some opposition to this deal from Washington, because just in
the last few minutes, as Christine mentioned, President Trump was giving an interview to CNBC and he expressed some concern about this deal.
He was asked about it, he said, "I'm a little concerned." He said, "It's hard to negotiate if you only have two companies." He was talking about
some competitive issues due to all the consolidation in the industry.
So we'll have to see whether or not this deal is able to get through the regulatory scrutiny.
CHATTERLEY: You raise so many great points there. I mean, UTC is in the middle of a breakup right now. It's trying to absorb Rockwell Collins,
just the acrobatics involved in this deal are quite illustrative for me of perhaps some of the challenges going forward.
But to your point about President Trump, I mean, if we look at this deal in isolation, these are two companies that actually have very little crossover
here. So even if you are going to make a national champion, the idea that this would mean sort of greater consolidation in the industry, perhaps is a
moot point here.
EGAN: Right. So you raise some great points there. There is some execution risk here, not just because of the regulatory scrutiny, but it's
also because there's a lot of moving pieces here.
United Technologies just recently acquired Rockwell Collins, the aerospace parts maker, and so it's already, you know, consolidating with that deal.
It needs to complete the spinoff of the Elevator and the Building System Units before this deal can go forward.
And then as far as, you know, a concern about overlap goes and President Trump did express some worry about overlap, but really analysts say that
there isn't all that much overlap. So there may not be a real competitive and anti-competition issue here.
CHATTERLEY: Yes, so I think as far as the President is concerned, as long as there's more defense spending that perhaps, okay. Matt Egan, thank you
so much for giving us the details on that.
And now, on to another multibillion dollar deal. Salesforce, this time buying data analytics firm, Tableau for $15 billion. Paul La Monica is
live for us on this one. Paul, what is Salesforce going to do with Tableau here.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, this is a very fascinating deal, Julia because you know, what you have with Salesforce buying Tableau
-- data visualization, it's yet another example of how having as much big data as possible is what customers that are buying all of these software
platforms really want.
[09:10:08] LA MONICA: And it comes on the heels of Google just announcing a deal for another big data firm last week, Looker. And that is actually a
deal that sent Tableau shares down because people were wondering, "Oh, all of a sudden, now Google is going to be a much bigger player in this
business."
So you have Salesforce scooping in, buying Tableau, pretty big premium as well. This is something that obviously many big Cloud software companies,
Microsoft, as well as Amazon Web Services Unit, they all are finding value in having as much data and data intelligence as possible.
So it'll be interesting to see whether or not Microsoft, which already has Azure might want to do a similar deal. Could Oracle strike SAP? All of
the big software companies, this is the Holy Grail.
CHATTERLEY: Yes, I'm just looking at Tableau premarket as well, and it is absolutely soaring on this price as well, the amount that Salesforce are
paying here is quite interesting in terms of the broader sector here.
How soon is this going to add value to Salesforce? When are we expecting this deal to close?
LA MONICA: Yes, it's going to be, you know, a couple of months before the deal closes. But I think, it is something that investors are hoping will
be pretty solid for the company, you know, in coming month. It is an all- stock deal. So there could be some dilution as a result of that.
And I think that is why Salesforce stock is down about five percent in early trading, but I think Salesforce and Marc Benioff, he is a very high
profile visionary in this industry realizes that you have to get bigger in order to compete with other rivals like Oracle and Microsoft.
And don't forget IBM and the Cloud as well. They just did the Red Hat deal also. So that's something that a lot of big software and tech companies
are really looking at this business a lot more closely.
CHATTERLEY: Yes, beefing up the competition there. Paul La Monica, thank you so much for that.
All right. Let me bring you up to speed now with some of the other stories making headlines around the world. In Hong Kong, hundreds of thousands of
people took to the streets Sunday to protest a law that would allow people arrested in the city to be extradited to China. Protest organizers are
calling for more demonstrations on Wednesday.
Despite the tensions, Hong Kong's Chief Executive is vowing to push ahead with the bill.
(BEGIN VIDEO CLIP)
CARRIE LAM, HONG KONG CHIEF EXECUTIVE: There are severe deficiencies and gaps in our existing system to deal with cross border crimes and
transnational crimes. So we have to sort of tuck that loophole and rectify that deficiency for the long-term benefit of Hong Kong because nobody wants
Hong Kong to be a fugitive offenders' haven.
(END VIDEO CLIP)
CHATTERLEY: Matt Rivers joins us now. Matt, those are the words of Hong Kong's Chief Executive justifying this bill and the actions required here.
Hundreds of thousands of people beg to differ though and they came up onto the streets to display their discontent here. Talk us through what we saw.
MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: Yes, I mean, it was absolutely massive protests that I think might have even surprised the
organizers themselves in terms of how many people came out to really voice their discontent with this bill.
Let's talk a little bit about what the bill would mean and what critics are saying about it. Basically, what would happen here is that if this bill
would pass in its current form, and that's still being debated, then what would happen is China would have the ability to request extradition of
anyone here in Hong Kong, including, you know, not just Hong Kongers, but also foreign citizens.
And what critics say is that because of Beijing's notoriously opaque legal system, because of Beijing's, oftentimes not guaranteeing a fair trial to
people, what critics are saying is that Beijing could request the extradition of people here in Hong Kong simply for political reasons,
request the extradition of people like dissidents, human rights campaigners, journalists, activists, people that Beijing doesn't like for
political reasons.
And so what critics are saying is that it's a human rights issue and then it really erodes this one country two systems concept that really kind of
has guided the way Beijing and Hong Kong exist, essentially separately of one another with semi-autonomy here in Hong Kong.
If you're looking at that protest, you're seeing kind of a wide swath of society here. You've got some older people, younger people, the students
that you might expect to be there, but you've also got business people, you know, people who are concerned that outside foreign direct investment might
not come here to Hong Kong as much if those companies, those foreigners can't guarantee the safety of the companies -- the business executives or
the business people that would come here to do that work.
So that's what you're seeing here. A pretty widespread movement, one in seven Hong Kongers of this entire city were out on the streets if you
believe the organizer's numbers, Julia.
[09:15:01] CHATTERLEY: Wow, a million people, I mean, to your point, and that's exactly where I was going. If we do see this bill passed, it has to
change the relationship that Hong Kong has with the likes of Washington, with London, with Brussels and the financial firms looking at this. This
is the conduit for financial flows in and out of China. It has got to hurt Hong Kong, and it's going to hurt China, too.
RIVERS: Yes, well, I think without question, I mean, you would have a situation here, where if you are a company from another country, and you
are looking to put a lot of resources into Hong Kong, one of the reasons you've done that in the past is because like you said, it's a conduit to
the mainland. But this operates independently of Beijing.
And so there's a relative level of safety living here, as opposed to, let's say, living in Shanghai. If you take that away, and you give Beijing the
opportunity through this law to say maybe go after business executives for inadvertent business offenses, let's say which is another critique, that
that the protesters have this. Well, what does that do to the confidence in the company to move resources here?
You know, and I think that's ultimately what you're looking at. It's not just a human rights issue when you talk to the protesters, though, that's
their number one issue. It's also what kind of business community are we creating, or is being created in Hong Kong? And what are the ramifications
of this law moving forward?
The Hong Kong government says there wouldn't be a ramification, it wouldn't be a negative thing. But I think you've got a whole bunch of people here
in Hong Kong right now, Julia, who disagree with that.
CHATTERLEY: Yes, try persuading your workers to move under those conditions. Ouch. Matt Rivers, thank you so much for that. Yes, real
challenge.
All right, let's move on and the race to replace the British Prime Minister Theresa May has officially kicked off. You're looking at some of the MPs
vying now for her job. Candidates have fewer than three hours before the window for nominations closes. They'll need support from at least eight
fellow lawmakers to put themselves in the running.
Former Boston Red Sox legend, David Ortiz is recovering after he was shot on Sunday night in the Dominican Republic. Police tell CNN the baseball
star is in a stable condition following surgery and they're waiting now to talk to him.
Investigators say he was shot in the back by a motorcyclist who headed directly towards him. Several people are being detained including the
alleged gunman who was attacked by bystanders after the shooting.
All right, we're going to take a quick break here on FIRST MOVE, but still ahead bad for business. American CEOs join Hollywood in the fight against
the abortion bills in several U.S. states. And a debt of gratitude, why company should help their staff pay off student loans. That's all coming
up. Stay with FIRST MOVE. You're watching CNN.
(COMMERCIAL BREAK)
[09:20:45] CHATTERLEY: Welcome back to FIRST MOVE live from the floor of the New York Stock Exchange this Monday, the first trading session of the
week, and it does look like we're going to see a positive open this morning, adding to the four percent plus gains that we saw across the
markets in the United States last week.
The stock markets, at least at this stage optimism that the tariff crisis over at Mexico has been inverted in light of a broader deal agreement
between the United States and Mexico to tackle immigration, those we've mentioned already on the show. Details at this stage are scarce.
Let's talk through what we think of this. Greg Valliere is a chief U.S. policy strategist at AGF Investments, and he joins us now from Washington.
Greg, always a pleasure to have you on FIRST MOVE. What do you make of both the use of tariffs to push the Mexicans into an agreement here on
immigration and the deal that the President says has now been reached?
GREG VALLIERE, CHIEF U.S. POLICY STRATEGIST, AGF INVESTMENTS: Well, it's a pretty blunt weapon, but it worked. A win is a win, I guess.
You might argue that he is getting credit for solving a problem that he created. But the fact is that we were not -- we're not going to have an
ugly tariff war with Mexico, and I think chances of getting a deal with the Mexico-Canadian agreement, and maybe even seeing a resumption of China
talks. Those chances may have improved a bit.
CHATTERLEY: You know, it's interesting. And you mentioned the point that actually, it did get them to the table here to negotiate and the President
said on CNBC earlier today, "Look, they respect us now and do you really believe that they would have put 6,000 troops on the border, if I hadn't
threatened to play really tough here." Would you agree with that?
VALLIERE: I think his tactics are very blunt. But maybe they weren't. Maybe they did force the Mexicans to act hastily because they did not want
to get into a big tariff war.
I would say this, also, I think the President was eager to get a victory and declare a victory because he was facing a rebellion on Capitol Hill
from Republicans.
And he was also facing a very discombobulated stock market that worried about slowing growth. So I think there were a lot of reasons why he agreed
to a deal. But again, you have to say, a win is a win for him.
CHATTERLEY: You know, it's interesting, as you said that, I think you used the word "discombobulated" there. There's real nervousness for investors
at this moment, not only on the threat of tariffs, not reaching a deal with China, but that terrorists can be used for anything.
Now things like immigration, so they've been fully politicized, and that threat remains. What we did see though is a rally last week on the belief
that Jay Powell is going to ride to the rescue here and cut rates. Is that the saving grace here, ultimately? Because the President reiterated that
again today.
VALLIERE: Well, how is this for an irony, Julia, here's the President who got the market so disconcerted about tariff wars because of his policies
that the Fed had to step in or probably will step in to add a rate cut or two in the second half of the year, just to make sure we don't slide into a
recession.
So the great irony is that Trump's policies wound up getting him the one thing he really, really wants, and that's Fed rate cuts.
CHATTERLEY: Do you think we'd end up seeing a China a deal? Or do you think that the Chinese will look at what's happened here and go, you know
what, even if we sign a deal if the United States disagrees with our policies on the South China Sea or on North Korea or on Iran, perhaps in
energy purchases there, we could see tariffs being slapped once again on our nation. Do you think China looks at the situation like this and it
makes them more or less likely to do a deal? I worry about this?
VALLIERE: Yes. So, do I, and I think China is a much tougher call. I thought Mexico would capitulate as they did. China, however, you know, you
look at their rhetoric the last three or four weeks toward the U.S., it's been really shockingly harsh.
I think there are a lot of bruised feelings in Beijing, but that said, I think they need a deal. Their economy seems to be weakening. And I do
think at the end of the day, we'll get one.
The key obviously, is late June when Trump and Xi will meet. My hunch is they'll have a pretty constructive meeting. They all agreed they'll resume
talks, but we're still months away before getting resolution on all of the issues that divide the two countries.
[09:25:04] CHATTERLEY: To your point before though, riding to the rescue here, Jay Powell with potential rate cuts, whether they've been pushed by
the President, and he said trade wars? Is that the saving grace, do you think for investors here? And do you think we can still see fresh highs of
these markets without a resolution on China?
VALLIERE: Well, it sure looks like we're going to get a rate cut, I would guess at the end of July, not one at the end of June because I think the
Fed wants to watch what happens in Japan at the G-20 summit.
So if we get a rate cut at the end of July, and maybe another one late in the second half, that's pretty bullish. I think that gives the economy a
booster shot. We already have extraordinarily stimulative fiscal policy.
And now to see stimulative monetary policy, I think people may conclude that while a recession hasn't been outlawed, it's not imminent.
CHATTERLEY: Greg, I want to get your views on the 180 plus companies that are sending a letter to the administration today saying abortion, and what
we're seeing in certain states in the United States is bad for business. Is this going to become a problem for President Trump and the Republicans?
I mean, 52 percent of white women voted for Trump. Is this going to be a problem?
VALLIERE: I think it's a problem for both parties as Joe Biden found out last week that the data the Democrats will be pretty unanimous on this
subject. But I had thought, perhaps incorrectly, that abortion would not be a big issue in 2020. But thanks to Alabama and a few other states, this
could be a big issue, and it's one that puts Trump in a fairly awkward position in his own party.
CHATTERLEY: Yes, I have a feeling on this one. It's going to continue to escalate. We'll be talking about that more after the open this morning.
Greg, always a pleasure to have you on the show.
VALLIERE: You bet.
CHATTERLEY: Greg Valliere joining us back from Washington. All right, plenty more to come here on FIRST MOVE. But for now, the market open is
next. We're back in two.
(COMMERCIAL BREAK)
[09:30:00] CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange. That was the opening bell, lots of happy smiling faces as
that was rung this morning and the investors smiling as well today because we are seeing a higher open as anticipated for stock markets here in the
United States.
We avoided a tariff crisis with the United States and Mexico reaching a deal over immigration, as we've mentioned throughout the show. A little
light on details at this stage, but for now, at least not seen those tariffs applied to Mexico today of some five percent allowing investors to
continue to show optimism for these markets adding to the four percent plus gains, of course that we saw last week as well fueled as we've discussed by
hopes for a Federal Reserve rate cut following that weak payrolls number, of course on Friday.
All right. Let me give you a look at some of the global movers, the individual stocks that we're focusing on in the session today. And as
we've mentioned already, United Technologies and Raytheon joining up, both are moving higher in the session right now. Announcing a merger would be
the biggest ever defense deal, so an aerospace giant tying up with a defense giant here in the United States.
Also the industrial conglomerates in Raytheon competitor Honeywell trading higher and speculation that the deal may spark more consolidation in this
sector, too. So an interesting reaction from the broader sector. Also eyes on Salesforce. Salesforce announcing its biggest acquisition ever, a
$15 billion deal for data analytics company Tableau Software, as you would anticipate the acquirer under a bit of pressure in the session, but Tableau
soaring in the session on that valuation.
All right, let's move on and talk about what I was mentioning actually before the market opened, some top execs of almost 200 firms sending U.S.
lawmakers a stark message that restricting abortion is quote, "bad for business." They placed a full page ad in Monday's "New York Times" and
Clare Sebastian joins me on this story.
Just looking through the letter and the details in "The New York Times" it said that these abortion laws that some states are looking at right now are
against our values and impede corporate efforts to build a diverse workforce. It's a pretty stark message.
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, it's a pretty stark message, Julia. This is the full page ad in "The New York Times." They've
definitely got their names out there. It's Page 5. It's about as visible as you can get. It's two things really they're saying, it's bad for
business, or as you said, impedes their efforts to hire people. They are framing it as an issue of workplace equality and economic prosperity. And
it's also against their corporate values.
That's why they've decided to speak out, but it really is a bit of a sea change. We have seen a rise in CEO activism over the past few years,
everything from gun rights to race to sexual harassment. But abortion traditionally is something that they've really avoided touching. That has
changed recently as a raft of restricted abortion laws have swept through Republican states.
We've seen the likes of Disney; WarnerMedia, CNN's parent company; Netflix threatened to boycott Georgia where a restrictive abortion law has been
signed by the Governor.
So really, we're seeing a bit of a shift here, but there are missing from this list, Julia some of the big multinationals, the most valuable
companies in the U.S. The likes of Amazon and Microsoft and Apple, but some big names; Jack Dorsey, CEO of Square, and after that company has
signed it, the likes of Yelps, Slack, H&M, Bloomberg as well. So a pretty diverse coalition.
CHATTERLEY: Interesting some of the names that you mentioned, though, some of the biggest names in the spotlight right now, broader antitrust
concerns, perhaps and yet they're staying quiet on, as you point out is a very contentious issue and something that actually people have generally
stayed away from even when they've waded into the gun debate, for example, immigration; yet on this subject, remaining quiet, at least for now.
SEBASTIAN: Yes, I think it's a measure of the risk that goes -- I mean, it's a calculation for the businesses, some may feel that customers will
appreciate this, and some may see that there's too much risk.
If you look at the Twitter responses just this morning, it has only been out for a few hours, there is already some backlash. But I think the
question for these companies going forward is -- will people, will customers, will future employees potentially interpret silence as a tacit
endorsement of things like this? Is there more of a risk of staying silent? And are we entering into a world, Julia, where we're not just
going to see red and blue states? Perhaps red and blue companies? Is it becoming that political out there?
CHATTERLEY: Yes, it's such a great point. And actually, Georgia is the one to watch as you mentioned, with the likes of Netflix, Disney and
WarnerMedia, who do a lot of production there, whether the financial interest here outweighs the potential politics, that's going to be a really
interesting one to watch.
SEBASTIAN: Yes, absolutely, Julia and especially as we go into 2020. Recent polling has suggested that a large number of people you know, are
going to -- are only going to vote for candidates that share their views on abortion. This is becoming increasingly divisive. And many of these laws
that have been passed by the states are designed to try to push a legal challenge at the Supreme Court that could potentially start to chip away at
Roe v. Wade, that 46-year-old Supreme Court decision that enshrined a woman's right to choose in the Constitution.
So I think this is this is only going to grow and these companies are going to increasingly start to speak out.
[09:35:36] CHATTERLEY: Yes, looking increasingly vulnerable right now. Clare Sebastian, thank you so much for that. All right, we're going to
take a quick break here on FIRST MOVE, but coming up, U.S. President Donald Trump boasting that he has forced Mexico to take action on immigration, but
also leaving the threat of tariffs on the table should the country fail to deliver on its promises. We speak to a former Mexican NAFTA negotiator to
get his take, next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE where trade threats remain front and center. U.S. President Donald Trump is again warning he'll consider
imposing tariffs on imports from Mexico if the new deal to tackle immigration with the country doesn't succeed.
The Mexican peso has strengthened versus the U.S. dollar today though recapturing recent lost ground as a result of the deal announcement.
President Trump spoke to CNBC a short time ago. Here's what we had to say on the deal.
(BEGIN AUDIO CLIP)
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: If we didn't have tariffs, we wouldn't have made a deal with Mexico. We got everything we
wanted. And we're going to be a great partner to Mexico now because now they respect us. They didn't even respect us. They couldn't believe how
stupid we were with what's going on, where somebody comes in from Mexico, and just walked right into our country and we're powerless to do anything.
Whereas they have very strong immigration laws. They don't have to take anybody. They can say, "Out, you get." So we're going to be essentially
using to a large extent the very powerful immigration laws of Mexico.
(END VIDEO CLIP)
[09:40:12] CHATTERLEY: Joining us now, Kenneth Smith Ramos. He is a former chief NAFTA negotiator from Mexico. He's now an international trade
consultant at Mexico City based Argon and joins us now live. Kenneth, fantastic to have you on the show. What do you make of what the President
was saying there? Do you agree that without the threat of tariffs on Mexico, a deal to tackle immigration would perhaps never have been reached?
KENNETH SMITH RAMOS, FORMER CHIEF NAFTA NEGOTIATOR: Thank you very much, Julia. I believe it's a positive outcome that the tariffs will not be
imposed. I mean, I think that, without a doubt, an immigration deal has been worked on in the past, there's been a lot of cooperation activities
between Mexico and the U.S., and it is unfortunate that the U.S. chose to really take hostage the NAFTA and the USMCA and put in danger its
ratification.
There's a lot of cooperation activities that have been going on between Mexico and the U.S., not just in this administration, but in previous
administrations, and blaming Mexico for regional immigration problem is completely unfair, it's something that is unjustified and that while I am
glad that we were able to avoid the threat of tariffs, which would have been illegal in many event, it is unfortunate that the USMCA has been put
on their thread as it was.
CHATTERLEY: We will tackle both of those issues. But do you think knowing what you do of Mexico that having 6,000 troops of the National Guard at the
border will solve some of the flow of migrant issues that the United States is complaining about? Is this deal a solution to a problem here?
SMITH RAMOS: Well, in reality, this is a very complex problem. It involves not only policing the border, but also the cooperation that exists
between Central American countries, Mexico and the United States. The real solution in the long term is to be able to ensure that Central American
countries can have economic development, which is the answer to avoiding immigration in the long term.
Mexico has been cooperating, has been ensuring along with the United States, the treatment of the migrants at the border, both in the southern
border and the northern border of Mexico. So I think the answer in the long term is cooperation.
Mexico is definitely advancing in that direction, and there's no reason at the end of the day to threaten a major economic pact between Mexico, the
U.S. and Canada in order to advance on an issue where there's already a lot of cooperation going on between Mexico and the United States.
CHATTERLEY: You made the point that as a result, the USMCA or the NAFTA mark two deal was held hostage, do you think now that we've seen an
agreement reached that that will facilitate the ability for all three nations to pass this deal and see the USMCA actually put into practice now?
SMITH RAMOS: Hopefully, we will be able to move in that direction. I think that this removes a major obstacle, not just in Mexico, but also in
the United States where the U.S. private sector and the U.S. Congress have voiced its opposition to these types of tariffs being introduced, because
they would have had a terrible economic impact in the U.S. as well.
So it does clear the way for a discussion on ratification on NAFTA -- the USMCA on all three countries. But at the same time, we still have trade
irritants that exists between Mexico and the U.S. that need to be resolved to clear the way for a full ratification of the USMCA talking specifically
about the tomato dispute between Mexico and the U.S. that is threatening the exports of $2 billion worth of tomato exports to the United States.
So there are still some issues pending, plus the Democratic Party in the House of Representatives is negotiating in a tough fashion with the White
House and they are still calling for changes to the text of the USMCA. So, the way is cleared by not having the tariffs, but definitely there still a
lot of work remaining.
CHATTERLEY: Yes, it's not without its complications. To your point earlier, the President said that Mexico now respects the United States.
And he will look at this and believe that the tariffs brought the Mexicans to the table, allowed a deal to be reached here. And he has threatened
that the tariffs could still happen if Mexico doesn't follow through. Is that threat credible, do you think, enough to make the Mexicans take action
on immigration? And does Mexico now respect the United States as a result?
SMITH RAMOS: Look, it is very important to point out that the relationship between Mexico and the U.S. for decades has been based on respect. That's
why we were able to negotiate the NAFTA originally. We have the strongest trade relationship of any country in the world with the United States along
with Canada. So this is not a question of respect between our countries.
Respect exists. I think it will continue. We must make sure that we honor our international commitments and these types of threats are not
constructive. At the end of the day, the threat of the tariffs was illegal because it would be violating the U.S. commitments in market access of the
NAFTA and before the World Trade Organization as well.
[09:45:12] SMITH RAMOS: So I think we should move away from the issue of threats, the issue of trying to return to a mechanism of tariffs within
North America, and to favor cooperation. That has been what has worked over the years between Mexico, the U.S. and Canada, and we should continue
down that path.
CHATTERLEY: How optimistic are you that the President will drop his desire to use tariffs to threaten nations?
SMITH RAMOS: Well, hopefully that will be the case. But I will tell you that what we have seen so far from the U.S. administration is the use of
for example, national security measures that are nothing but -- you know, under a ground sort of safeguard mechanisms that are used to prevent
countries from exporting into the U.S. and bringing them to the negotiating table.
Hopefully, that modus operandi will change, and we will be able to have a relationship based on the focus of the future of ratifying the USMCA and
guaranteeing that that will be the path forward.
CHATTERLEY: Yes, I'm not sure you answered the question there. But I don't blame you. Kenneth Smith Ramos, former chief national negotiator for
Mexico. Sir, thank you so much for joining us on FIRST MOVE.
All right, we're going to take a quick break here. But coming up, the chief executive who says companies need to be front and center at the
student debt crisis solution. Stay with us. All the details, next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE and a look at today's "Boardroom Brief." American Airlines says it is keeping its Boeing 737 MAX grounded
until September 3rd. The airline says the extension will meet the cancellation of 115 flights per day.
American is the second largest U.S. carrier operating the Boeing aircraft. Boeing 737 MAX fleet was grounded back in March after two crashes killed
346 people.
Get ready gamers. Microsoft has unveiled a new Xbox console codenamed Project Scarlet. The new Xbox will debut at the end of next year.
Microsoft says it is four times as powerful as the Xbox 1S. It comes with more memory higher resolution and better graphics, but oh boy, you have to
wait for it. That's a long time.
Shares in tour operator, meanwhile, Thomas Cook are up over 16 percent, as you can see, after it said a Chinese company Fosun may take it over. Last
month, the British firm issued its third profit warning in less than a year. Fosun, which owns French rival, Club Med is already Thomas Cook's
largest shareholder.
All right, you might have heard the statistic, 45 million Americans have student debt amounting to around one and a half trillion dollars. The
education company Chegg, companies have no choice but to start tackling the problem. The firm's Chief Executive told me how he is helping employees to
pay down their student loans.
[09:50:10] (BEGIN VIDEO TAPE)
DAN ROSENSWEIG, PRESIDENT AND CEO, CHEGG: The numbers are extraordinary, and they're not good. I mean, there are 318 million Americans and 44
million of them still have student debt. That's $1.5 trillion, which is more than credit card debt, 40 percent of students aren't able to pay it.
And it's the only debt that you can take in this country that you can't declare bankruptcy.
So what we're doing is we're taking the youngest, most vulnerable people, giving them extraordinary debt, hoping they get an education then hoping
that they can pay that off, and it's just not working.
In fact, 50 percent of high school students go on to college, but out of that 50 percent, 43 percent don't even graduate, so they're leaving school
with no degree and debt.
So we wanted to find a way to make something replicable, scalable, sustainable, that other companies might be able to copy and see if we could
make an impact.
CHATTERLEY: Explain how it works.
ROSENSWEIG: So it's a little bit unique. We had for seven years, we've already had a program in place, that's similar to a 401(k), which is,
instead of putting your money in your 401(k) and the company matches, we were amongst the first to say if you put $1,000.00 in, we will match that
thousand dollars just for student debt.
But student debt just kept climbing and climbing and climbing. And so in this case, with the help of the Board and my executive team, we put
together an equity pool, which allows employees who don't usually get access to equity, and our lowest paid employees a chance to benefit from
the value they're creating in the company.
That pool is uniquely and exclusively dedicated to paying off the student debt of our employees. So over 20 percent of our employees, we know for
sure have student debt, it's millions of dollars, and we take the lowest paid employees and we give them $5,000.00 a year, convert that equity in to
cash and then pay their debt directly.
And then the group that's a little bit higher, gets $3,000.00 a year, as long as you stay at Chegg, we will continue to pay until your debt is
completely gone. We wanted it not to be a one year thing. We wanted it to be something that other companies could mirror or adjust to their own.
(END VIDEOTAPE)
CHATTERLEY: Student debt crisis is a hot political issue ahead of 2020 presidential elections here in the U.S. I asked the CEO what the
government is saying to his company about the problem.
(BEGIN VIDEO CLIP)
ROSENSWEIG: We're speaking with people in Congress, we're speaking with the policy people on a number of the campaigns. We have spoken to some
candidates. Everybody is intrigued by it. They want to -- you know, they're always a little cautious, so they want to understand more.
So we've got the extremes, which is help nobody or pay for everything. What we're saying is the crisis exists today, and there's actually
something we can do about it. So if you take a look at the tax plan that we did. Imagine the economic stimulus, if we would have made things like
this tax deductible, and companies would have paid it and then students, young people would have been -- had more money in their pocket. Right?
So it says substantial raise for America's youngest, brightest people who work their butts off to get through and get a degree or at least attempted
to get a degree and they would have bought houses, and they would have bought cars and clothing and food and investing in their neighborhood.
CHATTERLEY: It has a multiplier effect.
ROSENSWEIG: It is an enormous multiplier effect as opposed to just putting it on company's balance sheets, allow us to use it in a productive
constructive way that grows the economy.
CHATTERLEY: And less than 10 percent of companies right now in the United States are doing anything to try and support their workers with this debt
situation.
ROSENSWEIG: Most companies are focused, as you can imagine, they would be on healthcare, right, which is also another crisis in this country. So you
offer healthcare, the price of healthcare goes up every year. But we looked for a way that was unique and innovative.
We said we can take this, use your equity pools if you're public. But if you have huge cash, like Apple or Google, you can also use your cash pools.
There's multiple ways that you can do this, but why not invest in those that invested to come work for you and create value is our perspective.
And we're hoping conversations like this start a dialogue.
(END VIDEO CLIP)
CHATTERLEY: Billionaire investor Robert Smith recently hit the headlines promising to pay off the student debt to the graduating class at Morehouse
College in Atlanta, where he was a graduate. I asked Dan, what he made of this charitable move.
(BEGIN VIDEO CLIP)
ROSENSWEIG: What he did was incredibly generous. And it'd be great if every billionaire did something like that. But it still wouldn't change
the system. What we're looking to do is change the system. We want the cost of college to be less expensive. We want the curriculum to expand and
use more technology to make it more on demand, more accessible, and more relevant.
And we want to be able to get rid of this debt that's on the backs of our young people in this country. It's our tax money. Nobody should mind
giving it to our children to expand their capability to be more successful and happy in this country.
And businesses should look at colleges or education environments, like sports looks at the NCAA, which is this is our minor leagues. This is
where people get trained to come work for us. So why shouldn't we be a contributor and the last thing I would say on that is this, the more
corporations contribute, the more we have a right to communicate what we think the curriculum could and should be.
And we can make it more relevant. We can make state schools focus on the companies in their states, what they need for future employment, schools
need to change faster.
So this is all part of a larger program that we're hoping makes an impact. In this case that our employees -- hopefully, more companies do it quickly
-- but then the entire system gets to be realigned with today's economic needs and students needs and families' needs.
(END VIDEO CLIP)
[09:55:38] CHATTERLEY: Such a great conversation, something that desperately needs tackling. All right, let me give you a look at what
we're seeing for the U.S. stock markets this morning.
Adding to gains that we made last week, of course, some four percent plus across the board. Right now, the NASDAQ outperforming higher by just over
one percent. Optimism that we didn't see tariffs hitting Mexico amid a border deal over at U.S.-Mexican immigration.
We will continue that thread in a couple of hours on "The Express," but for now, you've been watching FIRST MOVE, time to go make yours. Have a great
day.
(COMMERCIAL BREAK)
[10:00:00]
END
