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First Move with Julia Chatterley
President Trump Calling Off A Planned Military Strike On Iran; Slack, The Messaging Platform Shares Do The Work, Soaring On The First Day Of Trade; Facebook And Twitter Get Set For The 2020 Democratic Debates. Aired: 9-10a ET
Aired June 21, 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 London, I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.
Mission aborted. President Trump calling off a planned military strike on Iran. No slacking. The messaging platform shares do the work, soaring on
the first day of trade; and taking on the trolls, Facebook and Twitter get set for the 2020 Democratic debates. It's Friday, let's make a move.
A warm welcome once again to FIRST MOVE. Great to be back, and we've got a busy hour ahead. The focus, of course remains on the tensions in the
Middle East following reports that President Trump approved a military strike against Iran and then decided to reverse that call. We will walk
you through the latest on that and try to gauge the risk of direct military action, what of course that also means for investors.
Let me give you a look. Right now, stocks around the globe are performing pretty well. It's always tough to price this kind of conflict and
uncertainty on Wall Street. U.S. futures right now a touch softer. The S&P 500 of course hitting record highs in Thursday's trading session.
The Dow now just half a percent away from making its own fresh record highs. It's a prospect, of course of fresh rounds of global stimulus
that's clearly exciting investors at this moment into buying assets and having a bit of a tranquilizer effect, I'll call it that amid the
heightened tensions in the Middle East.
Both factors, though, are playing into the rally that we're seeing in gold. Right now trading -- where are we now? Well, just below that $1,400.00 an
ounce level that is near a six-year high.
Also giving you a look at what we're seeing for our 10-year bond yields just above that two percent figure, as you can see. What about oil prices?
Front and center. Right now we can see solid gains more than one percent of Brent crude.
It's actually risen more than eight percent since the attacks last week on those two tankers in the Gulf of Oman. The other recent catalyst for the
escalation that we've seen. U.S. crude up some 10 percent over that period, too.
All right, that's exactly where we're going to begin the drivers. Let's get to it. U.S. President Donald Trump ordered a military strike on Iran,
only to call it off again. That's according to a U.S. official.
The change of mind was first reported by "The New York Times." It would have been an act of retaliation for the downing of a U.S. drone on
Thursday. Sam Kiley in the Gulf of Oman in the UAE for us.
Sam, great to have you with us. What exactly do we know about this decision, this order of a military strike and the apparent U-turn? Walk us
through it?
SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it came last night, our time, when -- and I'm speaking to you from the Emirates when
there was a decision taken in the White House to trigger this military retaliation. Before any weapons were launched, though, there was another
decision taken, Julia, in the White House to stand that operation down.
Now, we're not exactly sure why that decision was taken. It is conceivable there may have been some diplomatic overtures or some level of intelligence
that may have come through. But it's very clear that prior to that decision, Donald Trump was reaching for reasons not to take it when he said
that he believed or that there was some chance that a rogue element within the Iranian administration, within the military had triggered the downing
of the drone.
That has been rejected flatly by the Iranians, who say no, it was a very deliberate act to take down that drone because it was in Iranian airspace.
Of course, the Americans say it was in international airspace, but I think there is a real sigh of relief that has gone around the region because
whatever people's attitudes on this side of what they call on this side, the Arabian Gulf, the Iranians call it the Persian Gulf, there is a sense
that the retaliation, a military retaliation over the downing of what is a flying robot could be seen as something of an overreaction, and would
certainly, in many people's view here trigger the chain reaction, which could have been really catastrophic.
CHATTERLEY: Yes, and that's to the heart of the matter here at this stage, Sam. I mean, the President is caught between hawkish Republicans on the
one side, Democrats like Chuck Schumer saying the risk carries is that we bumble into a war situation. What are the Iranian saying light of this
news and what next? Because I think everybody here has to be very careful about how they handle what we're seeing here.
[09:05:09] KILEY: Well, the Iranians recently have said that they had the opportunity to shoot down a manned spy plane with some 20-plus crew members
on board, and elected not to do it. Now, true or false, I think that indicates a degree to which the Iranians are calibrating how they're
reacting, how they're putting low-level military pressure to try to achieve diplomatic ends.
And by that I mean, Julia, if the Iranians as the Americans and the U.K. suspect were behind the bombings of six super tankers behind me in the Gulf
of Oman over the last few weeks, and then moreover, the downing as they admit of this drone, what they're doing is they're showing military
capability without killing anybody.
The moment it comes into spilling a blood, all bets are off, and there is a real chance of a very rapid escalation, what they're trying to feel their
way towards, and I think there are indications that the Americans who keep sending messages through third parties are also trying to do is to get to
the point at which they can negotiate.
The problem there is that the Iranians won't negotiate effectively until the Americans come back on board and start recognizing the terms of the
deal that they signed with the previous administration, and many other nations, but which the Trump administration abandoned last night and that,
of course, was a deal to lift sanctions in return for suspending their nuclear program.
CHATTERLEY: Yes, you're right, though. A catalyst here in the sequence of events. We'll talk more about this later on in the show. But for now, Sam
Kiley, thank you so much for bringing us up to speed with the story.
The latest events, of course, in the Middle East, also impacting airlines around the world. The U.S. aviation regulators banned American carriers
from flying through the airspace in the region it deems unsafe.
The FAA says a commercial plane was less than 90 kilometers away from the American drone that was shot down on Thursday. Anna Stewart joins us now,
and she has been tracking all of the details.
So what exactly do we know about where the restrictions are? Because it's a whole host of different airlines that do operate in this airspace. And
now obviously, we have to be very cautious.
ANNA STEWART, CNN REPORTER: So of course, all morning, we've been contacting all the airlines trying to work out who has done what, so we
knew from yesterday, very quickly, United Airlines suspended their flight from New York to Mumbai that flew through this bit of airspace.
Now, we can tell you that Emirates, KLM, Qantas, British Airways -- all rerouting some of their flights to avoid the area. It is very specific.
As you see from the map, its Iranian controlled airspace over the Persian Gulf, over the Gulf of Oman. It's not hugely heavy traffic for
international airlines. But obviously it now is an airspace that's got to be avoided. It's very complex, of course for the airlines in this area.
CHATTERLEY: Yes, and we're showing you what you can see now and we see the dispute over where in the airspace it took place.
I mean, the two issues for me here; one, we didn't know how long this conflict, this standoff, the risks here that the FAA directly are citing
here will continue? What about cost when you're talking about the extra miles to be traveled to avoid these specific areas now that are deemed
unsafe?
STEWART: It's really hard to quantify. For instance, the United Airlines is spending a flight indefinitely that will have X amount cost.
However, when you're looking at all the other airlines that just have to reroute, as you say, it depends how far they have to. And this is the
problem with the Middle East or airlines generally, it's very, very complex, plenty of international disputes, just between different
countries, for instance, Qatari Airlines cannot fly over Saudi Arabia. Some of them reroute like a thousand kilometers -- very costly, indeed.
As I said, this area isn't hugely trafficked by international airlines. In fact, since the Iraqi conflict, that's when we saw lots through this area,
now not so much. So it shouldn't have a huge impact for many international airlines. But these things always do have a cost in terms of how many
hours for jet fuel, for staffing, and of course, the passengers, you have to have much longer flights as a result.
CHATTERLEY: You remember that you mentioned that the Qataris, obviously, Etihad Airways, what are they specifically saying? Because even -- it's
only been just about the actions that they take, it's about how they specifically respond when they're asked questions, so they are just
avoiding the subject completely and just continuing with the routes that that they're going.
STEWART: Currently, the only flights that I can see in this airspace are Qatari airlines and Iranian airlines, and that is all I've got from the
real time data. But I'll be watching that all through the day.
CHATTERLEY: That you will. Anna Stewart, always great to have you with us. Thank you.
All right. We've had Donald Trump tweeting in the last few moments, several of them in fact here. In part he said, "On Monday, they shot down
an unmanned drone flying in international waters. We were cocked and loaded to retaliate last night on three different sites. When I asked how
many will die, 'A hundred and fifty people, sir,' was the answer from a general. Ten minutes before the strike, I stopped it, not proportionate to
shooting down an unmanned drone."
"I am in no hurry. Our military is rebuilt, new and ready to go. By far the best in the world. Sanctions are biting and more were added last
night. Iran can never have nuclear weapons, not against the U.S.A. and not against the world."
[09:10:15] CHATTERLEY: So the President there suggesting that he was told lives would be lost, and that that was not proportional to taking down a
drone that, of course, the United States believe Iran did, so any further tweets from the President, we will bring it.
But there you go, from the President himself and the decision last night to abort a mission to attack three different sites in Iran.
All right, let's move on to the next driver. Slack ready for another star turn on Wall Street set to open high on its second day of trade. The
workplace messaging app is the latest tech unicorn to earn an ovation on the New York Stock Exchange. It's now worth more than $20 billion dollars
after its stock rocketed more than 50 percent from its opening price on Thursday.
Paul La Monica joins us now and has been watching the action. Paul, that is pretty stellar performance for a first day of trading, $20 billion
valuation. I make that more than three times the valuation that it raised money at just what? Nine months ago in the private market. There are some
very happy investors watching the price action over the last 24 hours.
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, definitely. Slack, obviously, a success in its first day of trading, and there has been a steady stream
of companies that cater to, you know, corporate customers that have done well as of late and in the IPO market.
And obviously, Slack is a bit of a different story here because it's not technically an IPO, it's a direct listing, which is different. They sold
shares directly on the New York Stock Exchange. But make no mistake, Slack is doing extremely well, it has a lot of momentum. But I think there are
going to be some concerns going forward that people have to look at.
The revenue growth is starting to slow a bit. They're not profitable. And then there's Microsoft in the background, which has its Teams collaborative
software tool, and when you think about Microsoft, they've also got Office. They have LinkedIn. They have Skype. It's going to be interesting to see
whether or not Slack can fend off competition from Microsoft. And if not, could Slack become an acquisition target down the road?
CHATTERLEY: I love when we get worried about the prospect of revenue growth slowing to between 40 and 50, four zero and five zero percent here.
But you also make a great point about the fact that the key difference here to what we've seen from other IPOs in recent weeks is that these guys
didn't need to raise money.
So I know there's been a lot of commentary on whether or not this is perhaps a model for other tech giants. Perhaps you go direct rather than
the traditional IPO model. But the point is, if you need more money, hey, you don't have a choice, Paul?
LA MONICA: Yes, you probably need to go public at some point. We've seen that obviously this year, Julia, with Uber and Lyft going public. A lot of
these unicorns have been private for a long period of time and it is now you know, the point where they have to graduate to the public markets.
But if Slack can continue to do well as a publicly traded stock, I think it's going to be interesting to see the unicorns that are left out there.
Companies like WeWork and Airbnb, will they now consider a direct listing as opposed to a traditional IPO?
Because for all the merits of you know, going public through Wall Street investment banks, it hasn't really helped Uber all that much, or Lyft for
that matter. So one could take a step back and say, "Hey, look at what Slack just did without the support of investment bankers and Wall Street,
why not we try that route as well?"
Of course, Spotify also did a direct listing and hasn't been as successful because they've had to face tough competition from Apple.
CHATTERLEY: Yes, do all your borrowing in the private market and then just go direct? It's an interesting question, isn't it but I have to say, each
story and each individual name trades differently, and we just have to value them appropriately or at least try. Paul La Monica, thank you very
much for that. All right. We'll see how it opens up today, too.
All right. Let me bring you up to speed now with some of the other stories making headlines around the world.
Protesters in Hong Kong once again gathering in the central business district blocking the city's financial heart. Demonstrators a surrounding
the police headquarters accusing officers of acting with brutality during earlier protests.
Let's bring in Ivan Watson who is in Hong Kong for us. It's not just about police brutality here. They want the Chief Exec Carrie Lam to step down
and they want the permanent removal of this Extradition Bill. The question is, are they going to get it, Ivan? How did the executive here react?
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: You know, most of what we're hearing for the past two hours that we've been monitoring the
situation is a lot of anger being vented at the police force here in Hong Kong.
This remarkable scene of thousands of protesters surrounding the headquarters of the Hong Kong Police chanting "Shame," and if you can see
right next to the sign there where the escalator is turning the facade there into an omelet with dozens of eggs being hurled at it.
[09:15:10] WATSON: The police throughout this have adopted a very passive, almost submissive posture, and even have slowly withdrawn while having eggs
thrown at them.
So this is a dramatic turn from what we saw a week and a half ago here in Hong Kong on June 12th when police were very aggressive. They fired more
than a hundred rounds of tear gas canisters, pepper spray, rubber bullets, baton charges, detained protesters, and there were violent clashes in these
very streets.
It is that violence that has angered so many of the people here who are demanding their fellow protesters be released. They're calling for an
investigation into allegations of excessive use of police force.
However, there are some questions being raised by members of society that were previously part of this coalition that was protesting against the
extradition law that you mentioned, Julia, among them, the Catholic Church here, which had joined in opposition against the law.
But now we've had a prominent Bishop raising questions about these very tactics, take a listen.
(BEGIN VIDEO CLIP)
JOSEPH HA CHI-SHING, BISHOP, CATHOLIC DIOCESE OF HONG KONG (through translator): You have all done a lot. You have all been very clear about
your goal and demands, but I'm very worried about your safety.
I wish your actions would not affect the interests of the public. Because if so, you will turn the people against you. And this is not good to the
entire development of the event.
(END VIDEO CLIP)
WATSON: So there we get a warning from a previously sympathetic voice to this grassroots opposition movement. It doesn't have one single leader.
I've talked to people who are mobilizing the crowd. They say there's no one plan here because it is very grassroots, very young.
I talked to a 17-year-old girl who came here after school to join in the protest. The signs are is that the crowd grew as people got out of work.
They also ground life in the center of this international commercial hub to a complete halt by stopping one of the main thoroughfare through the city.
As one of the opposition lawmakers has put it, there is this stalemate right now in Hong Kong between the protesters and the city authorities --
Julia.
CHATTERLEY: Yes, it's interesting. I think if the authorities don't move more here, then we need to brace for some more disruption. We'll see.
Ivan Watson, thank you so much for that update there. We can hear that chanting behind you.
All right, so let's move on. The British Prime Minister has suspended a member of her government after he was filmed grabbing a Greenpeace
protester by the neck and marching her out of a dinner in London.
Mark Field, the Foreign Office Minister tackled the woman when she and other activists interrupted a speech by Finance Minister Philip Hammond.
Greenpeace has accused Field of assault. He apologized for grabbing the woman, but said he did it because he thought she may have been armed.
A huge fire broke out an oil refinery in the American city of Philadelphia. At least one explosion shook the ground. Balls of gas and flame lit up the
night sky. The blaze started in a vat of butane at America's 10th largest refinery. The cause of the fire has yet to be determined.
All right, we're going to take a quick break here on FIRST MOVE, but coming up not so crude, oil markets making moves reacting to heightened tensions
between the U.S. and Iran. And the lesson in fearlessness, philanthropist Jean Case joins me in the "Chatt Room." Stay with us, that's coming up.
(COMMERCIAL BREAK)
[09:21:48] CHATTERLEY: Welcome back to the show. Global stocks are modestly lower amid the latest Middle East tensions. President Trump
tweeting in just the past few minutes as I brought to you earlier that he called off the air strike against Iran when he learned that someone 150
people would die in the attack.
He says he is in no hurry to strike Iran, so clearly just trying to deescalate some of the noise surrounding this situation amid reports
overnight, of course, of that military action, or at least the potential of it and the U-turn from the President.
Right now, we see futures pointing to modest losses at the open today in the United States. The S&P 500 set to pull back slightly here from record
highs hit yesterday.
Kit Juckes joins me now. He is the Global Head of FX Strategy at SocGen. Kit, fantastic to have you on the show. It's interesting amid the border
tensions that we're seeing in the Middle East between Iran and the United States Pacific specifically, and yet we do have U.S. markets trading at
record highs. We've got bonds being bought, rates coming down. Does this buying of assets that we're seeing right now make sense to you?
KIT JUCKES, GLOBAL HEAD OF FX STRATEGY, SOCIETE GENERALE: It does in a sense, you know, I mean, Alan Greenspan described the described the 1995
series of rate cuts that were put in the one-time leading indicators suggested there would be a recession, which then didn't materialize. This
is the Feds finest moment under his watch.
The equity market went nuts for the rest of that decade for what it's worth and they're trying to do something like that -- stave off recession by
acting fast -- because you can afford insurance when you've got this little inflation. And you have to decide whether you think they're going to
succeed or not.
But at the moment, the market thinks they'll do whatever it takes to remove the risk of recession. And on that basis, let's go out and put some money
in something that's got some returns.
CHATTERLEY: Right now, the bond market is saying it is 70 percent sure that we're going to get three cuts just by Christmas, but we're pricing in
more cuts than that even.
Again, if we get some kind of trade agreement between the United States and China, suddenly, we're going to look at the situation surely and go, have
the bond markets been a little bit too enthusiastic here about the support that's coming just from the Federal Reserve, never mind the other central
banks around the world that are indicating that they're ready to ease?
JUCKES: For sure, though, though there have been five rate cutting cycles in the last 30 years, 49 cuts, do it yourself on that basis.
CHATTERLEY: Yes, you can.
JUCKES: When they go, they go. Going against the start of a Federal easing cycle by betting that the market has priced in too much, too soon,
is an easy and sometimes appealing trade. It has never worked in my career. So you have to be careful.
But yes, you know, if this is a new a new world where a stitch in time saves lives, or nine or as many rate cuts as you want, then everyone is
going to feel slightly silly. But I suspect we've got further to go on rates.
CHATTERLEY: It's interesting. I was just trying to make a list this morning of all the central banks around the world because it's not just
about the Federal Reserve here. There's far more.
I mean, the European Central Bank, the Australian Central Bank, the Bank of Japan, we've got Turkey, we've got India, we've got Korea, we've got South
Africa -- everywhere. So many nations now is probably looking at easing and yet, you have a call in the United States for a recession in 2020?
Circle that for me, please?
[09:25:07] JUCKES: Okay, so I think what drives the economic cycle is the earning cycle. So in a typical world, when companies run out of people,
they start paying them more. That eats into their profits, the two biggest costs a company faces -- capital and people.
So you pay higher wages, that's lost profits and then interest rates go up in response, that's more lost profits. And then the cycle turns. We've
avoided the cycle for a long time. But the danger in the last year is, President Trump gave the cycle a fiscal boost. So that accelerates you one
way and then trying to get back under control is worse.
Imagine him giving -- I don't know, giving a young person some Red Bull while they're going out for their morning run. Perhaps that is okay. This
is a middle aged cycle and I'll say it here on television. If you give me Red Bull before I go on my morning, run, please call a doctor soon. I'll
start very fast, but I may fall in a heap quite quickly and I think that's what this economic cycle is in danger of looking like.
Now, you know, the Fed is very clever. They may stave this off, but it's a fine balance.
CHATTERLEY: Very quickly. What does this mean for the U.S. dollar?
JUCKES: Well, the dollar will go down if we can find something for it to go down against. The Norwegian kroner is up because they raised rates.
Gold is up because gold is not a currency. It's the alternative for dollar.
CHATTERLEY: And the safe haven here as well if we're seeing border tensions elsewhere.
JUCKES: For sure. But shortage of alternatives is the only thing keeping the dollar from falling.
CHATTERLEY: Sterling?
JUCKES: Oh, for heaven's sake.
CHATTERLEY: Don't talk about it. I always do that to you. I've only got 20 seconds, so I am going to thank you. Kit Juckes, saved by the bell,
from SocGen. Thank you so much. Naughty. I had to try.
All right. We are counting down to the opening bell this morning. Big Tech preparing for the 2020 democratic debates. We've got a story on that
which is fascinating. Plenty more to come. You're with FIRST MOVE.
(COMMERCIAL BREAK)
[09:30:00] CHATTERLEY: Welcome back to FIRST MOVE. That was the opening bell back at the New York Stock Exchange Lending Club with smiling faces.
They're ringing the opening bell. Now, we do have a modestly lower open for U.S. stocks this Friday as anticipated. The S&P 500 pulling back from
all-time highs hit in Thursday's session.
Right now, we're losing some seven tenths of one percent as you can see that for the S&P 500. Context everything. Those stocks are on track for
the third straight week of gains on hopes, of course, of the new global stimulus as we were just discussing.
We also saw President Trump seemingly deescalating the tensions with Iran. More on that in just a few moments.
But I do think that's very important for the session, too. The global movers for now. Slack moving higher for the second straight day after its
successful direct listing yesterday. We saw the shares rising almost 50 percent in the first day of trade. It closed over $38.00 a share, well
above its reference price of $26.00, adding just three tenths of one percent so far in the session, but bucking the broader trend.
Canopy Growth higher by some at 2.2 percent. The Canopy producer reporting a wider than expected fourth quarter loss. It says pot sales slowed during
the quarter, but investors clearly prepared for that.
T-Mobile and Sprint are in focus, too. A little bit softer here for Sprint. The two telecom giants facing off in a Federal Court today against
a number of powerful U.S. states that want to block the $26 billion merger, so we'll track developments on that throughout the day, too.
All right, let's bring it back to our top story today. Donald Trump says he pulled back from an attack on Iran because he thought it would cost too
many lives. The President saying in a tweet just a few minutes ago that the U.S. was cocked and loaded quote "to attack three different sites." But
he changed his mind and called off the attack 10 minutes before it was due to begin when a general told him 150 people would die.
President Trump said that would not be proportionate to shooting down an unmanned drone. He also praised the U.S. Military and vowed never to let
Iran have nuclear weapons. Oil trading higher in the session as the Iranian situation and the standoff between the two nations heats up.
This follows with the overnight spike of more than four percent of Brent and crude on news that Iran had downed an American drone.
Joining us, Jason Bordoff, he is Professor and Founding Director for the Center of Global Energy Policy at Columbia University. He served as White
House Energy adviser to President Obama.
Jason, fantastic to have you with us on the show. What do you make of the intervention here by the President on social media just to point out
exactly what happened. All sorts of rumors swirling about this apparent strike and the decision to U-turn after.
JASON BORDOFF, PROFESSOR AND FOUNDING DIRECTOR FOR THE CENTER OF GLOBAL ENERGY POLICY, COLUMBIA UNIVERSITY: Yes, it's a pretty extraordinary set
of tweets this morning, and I think Trump is in a tough position. He sort of boxed himself in.
It is clear he wants to avoid military confrontation. That's directly what he said. But he also seeking a strategy of maximum pressure against Iran
and it's hard to have both of those things at the same time. When you apply maximum pressure and try to take Iran's oil exports to zero and you
push Iran up against the wall, they are going to lash out and respond.
And unless we have a pathway to get to a negotiating table, which seems hard to see right now, you're going to have these tit-for-tat escalatory
things, and the more the U.S. doesn't respond to escalation like the drone attack, the more emboldened Iran will feel to continue that sort of action.
CHATTERLEY: I mean, that's the problem here, Jason. You called it tit- for-tat. But we haven't seen the tat yet because the United States was rumored to respond, and then hasn't. How do you deescalate the situation?
As you said, what is the path to negotiation here when we've had a series of events here?
The United States have said they have been down to Iran here, but we've also gotten the other side that the nuclear deal that the United States has
stepped away from, finding a pathway to negotiation is incredibly tough.
BORDOFF: It's very difficult and I don't think it's clear exactly what the criteria are for negotiation and exactly what the U.S. wants to see and how
well that's been communicated to Iran.
So Iran again, when you have your back up against the wall, you're going to lash out. They were not able to take this sort of economic pressure going
to zero for oil exports lying down. They had to lash out economically and try to get the U.S. out of its comfort zone that this status quo of zero or
even close to zero oil exports was not sustainable from their point of view.
And then at some point, you're either going to have to find a pathway to the negotiating table or the next Iranian response to the one after that,
you know, could really put the U.S. in a position where they have to respond.
If the U.S. is escorting a tanker through the Strait of Hormuz, and some Iranian military action affects a U.S. target, there's going to be no
choice but to respond.
[09:35:08] CHATTERLEY: You know, we can debate whether that's the right way to act or the wrong way to act, but I just want to bring it back to the
markets and what we're seeing.
In fact, the lack of response that we're seeing in the markets. I mean, a couple of weeks ago, we were talking about a bear market for Brent and
crude right now, and we've seen them rally some eight to 10 percent since the two tankers were attacked here.
Is it just the macro backdrop and the rising in ventures that we're seeing that is nullifying the fact of these tensions and the importance of the
region that we're talking about?
BORDOFF: Well, we've certainly seen the market respond a bit yesterday. I mean, things were muted at first. But oil prices jumped yesterday in
response to some of this. And now I think there's more recognition about the geopolitical risk of that, it is in the market that the market is
starting to take a little more seriously.
We see Trump say he is going to meet with Xi at the G20, and so the prospects for a resolution of the trade war, which would be bullish for oil
demand are a little bit stronger.
And the fundamentals in the market are stronger. We see refinery crude runs up, U.S. inventory is starting to draw. So when you look at the
fundamentals, as well as the geopolitical risk and the potential for resolution to trade conflict, things do look constructive, at least for the
rest of this year, 2020 is still a little bearish just because there's so much supply coming online, especially from the U.S. shale revolution.
CHATTERLEY: I mean, there's so many angles here. What does this mean for OPEC and for the non-OPEC members here, too? I mean, it was struggling to
even reach a date for negotiations. Now they have at least, assuming it goes ahead. What does it mean for these guys?
BORDOFF: OPEC is in a difficult position as again, trying to even reach agreement on what day they were going to meet was difficult; nevertheless,
what's going to happen at the meeting. I expect like most people do, they will roll over the agreement. They know failure to reach an agreement
would really be bearish for prices. And I think it'd be difficult to get any sort of agreement to do more.
They're going to have to message this in a way where the market knows that there's flexibility and they stand ready to move in either direction,
depending on what happens that you clearly could see a circumstance in which there's resolution of trade conflict and some more geopolitical
events in the Middle East, and prices could start to run up.
On the other hand, it's easy to see a scenario where prices take a down dive later in the year as well. So they're going to have to signal and
Saudi Arabia in particular is going to have to signal that it's flexible and is ready to sort of do what's needed to manage the market for the rest
of the year.
CHATTERLEY: Yes, and of course, we've got the European work around potentially coming for U.S. sanctions, too, as far as Iran is concerned.
So lots of factors here to consider. Jason, fantastic to get your wisdom on this. Jason Bordoff joining us there. Thank you for joining us on the
show.
BORDOFF: Thank you.
CHATTERLEY: All right. We're going to take a quick break. But coming up on FIRST MOVE, for any startup, there's a balance between taking the risk
and the fear of failure. We speak to someone who has lived it and find out what it takes to be fearless. Philanthropist Jean Case joins us in the
"Chatt Room." That's next. We're back in two.
(COMMERCIAL BREAK)
[09:41:06] CHATTERLEY: Welcome back to FIRST MOVE. President Franklin Delano Roosevelt famously said, "The only thing we have to fear is fear
itself." In her new book, "Be Fearless," Philanthropist and CEO of the Case Foundation, Jean Case tells the stories of the ordinary people who
overcame fear and achieved huge success. I sat down with Jean and discussed what those individuals have in common.
(BEGIN VIDEOTAPE)
JEAN CASE, CEO, CASE FOUNDATION: The subhead is "Five Principles for a Life of Breakthroughs and Purpose," and that really frames the book based
on some research we did in 2012 at the Case Foundation looking at core qualities of entrepreneurs, change makers, and innovators.
And what we found, of course, was it doesn't take any special genius or any special quality, it really is just the application of these five simple
principles that help people find tremendous success and breakthroughs.
CHATTERLEY: I mean, the book is a collection of stories of ...
CASE: It is.
CHATTERLEY: ... pretty ordinary people -- and I use the term carefully -- having wonderful success in achieving that. What was the common thread
among these people? Because you've hinted at it?
CASE: Yes.
CHATTERLEY: The ability to, I guess take a risk and take bets.
CASE: That's right, the principles really start with a big bet, then taking risks, making failure matter. You know, it turns out in every
success story, there was kind of a failure road along the way. But the difference between those that breakthrough and those that don't, is they
can look that fear and that failure in the face and push past it and apply those lessons.
And you know, you're right. I was born in a town called Normal -- Normal, Illinois, and really the message of the book is that it's ordinary people
who end up doing extraordinary things.
CHATTERLEY: You know, it's interesting, because it's kind of an advice book as well, for someone perhaps that is watching this that has a great
idea that thinks, "Look, I don't have the financing. I'm afraid to take my attention away from my family or my job or what I'm doing right now." And
actually, that innovation and that idea gets lost.
CASE: Right.
CHATTERLEY: What's your message? And what's the message from the book to those kind of people?
CASE: Well, as we've talked about, you know, startups are at a 30-year low, and the first chapter of the book is called "Start Right Where You
Are." And I talked about, for instance, the Airbnb guys.
You know, when they got started, their backs were against the wall, they couldn't make rent. So what did they do? They rented out two air
mattresses on their floor. They got started right where they were.
I don't think they were thinking that night, "Let's disrupt the entire hospitality sector." But they took what they had to apply and then you
know, slowly but surely built a big business out of that.
But this make a big bet is an important mindset as you get started. You might take small steps to get there, incremental steps, but the idea is
aiming for something big.
(END VIDEO CLIP)
CHATTERLEY: Jean Case doesn't just write about being fearless, she has lifted to some degree while working in a secure job at GE, Case took a risk
and joined a little known startup at the time called, AOL, a revolutionary company at the time that helped make the internet mainstream though
admittedly, it went on to face its own disruption and struggle.
You just heard her mention that the number of startups in the U.S. right now is at a 30-year low. I asked her why.
(BEGIN VIDEO CLIP)
CASE: Well, let me tell you the state of things right now, last year -- just some data to ground it. Last year in the United States, 75 percent of
venture capital went to just three places -- New York, California, and Massachusetts. Florida is the third largest state now. It got less than
two percent of venture capital.
Women got less than two percent -- women founders of venture capital last year, and African-American founders, less than one percent.
So when you take that very siloed, very limited kind of focus of where capital is going, it shouldn't be surprising that we're at a 30-year low.
What I say is, look, we need all the ideas and all the players on the field and we need to back them all no matter where they're from, no matter what
they look like, or what they bring to the table.
If they have a great idea, let's get mentoring around and let's get support to build new businesses.
CHATTERLEY: Is that the fault of the people that want to set up the companies and the startups that they're not making connections or the right
connections with venture capital? Or is it that venture capital is not looking outside of those mistakes?
[09:45:09] CASE: Yes, I think it's quite clear that venture capital is not looking outside, and you know, there's some data that also says, you know,
a venture capitalist doesn't want to drive more than 50 or 100 miles from where -- or fly -- from where they are to go see deals, right?
But this is changing, you know, my husband has led something called rise of the rest, which really is putting the spotlight on innovation all over the
nation, particularly between the coast.
And you know, Julia, we're here, you know, on the stock floor, the vast majority of Fortune 500 companies were founded between the coasts, not in
the places that were sending the capital today.
So we just have to get back to being more diversified in terms of where we're sending capital, and I think it'll lead to more entrepreneurs and
more great new businesses.
CHATTERLEY: There is a message in here for venture capital, though, too, but if we look at what we've seen, from a couple of companies that have
just gone public, the likes of Uber, and it has created this big debate about whether actually, too much money is been chucked to these companies
by private markets that you're there now, a bad judge of value, and then it comes to the private market, and there's this sort of rationalization and
they go, "Hang on a second, you guys are now underwater yourself because you were giving them money, and it was too expensive."
CASE: Yes.
CHATTERLEY: So there's a benefit for both sides.
CASE: So I do think the valuations have been pretty high. We've seen that. We've also seen some outsized companies that in many cases create
such great competition for new companies that are starting that sometimes venture capital says, "Oh, I don't want to do that, that competes with
Google," or, "I don't want to do that, that competes with Facebook." And so in a weird way, it's really having a chilling effect on innovation.
(END VIDEO CLIP)
CHATTERLEY: As a veteran of a big tech company, Case understands the benefits, but also the drawbacks of potential government regulation. She
says far more will be necessary if we don't see change soon.
But of course, there is a fine line between regulation that protects consumers without also suppressing innovation. I asked if regulators are
capable of finding that balance.
(BEGIN VIDEO CLIP)
CASE: It really was the breakup of the phone companies that started this whole internet revolution. I know, I spent my career in the internet, when
we created AOL, you know, three percent of people were online and they were online one hour a week, okay.
But it really did take some regulatory support to make sure that the big companies that control all the access to consumers, allowed more
competition and that's really what paved the way for AOL. That's really what paved the way for all of the companies that are really, you know,
using the internet as the backbone of what they do today.
CHATTERLEY: AOL was a pioneer at that point in the use of the internet, as you said, used at a fraction of the time now. Do you think ultimately, it
is other companies, other forms of technology that disrupt the big players right now? Or do you think it is ultimately regulation that perhaps stems
the rise of these players?
CASE: Yes, but it might be a combination, because as I said earlier, you know, we'd love to see new disruptors and that's of course, the trend in
American business, the Fortune 500 turns over routinely, because upstarts are nipping at the heels of the big ones.
But if we have a situation where the big are so big, that now you know, investors don't even want to take a chance on a company that competes.
That's a problem. And that's when I think we'll start -- if that continues, I think that's when we're going to see regulation step in.
(END VIDEO CLIP)
CHATTERLEY: Jean says the ultimate message of her book, "Be Fearless" is not how to live without fear, but just how to push through it. I asked her
how she finds that courage within herself.
(END VIDEO CLIP)
CASE: I still feel like I live with fear all the time. What I've learned to do is push past it. And you know, I don't know, I credit my mom, really
in the book. I was the youngest of four kids raised by a single mom. And I think she can get up every day with a smile on her face and make it all
work and push past what I know must have been daily fear. And I think that was a real inspiration for me.
(END VIDEO CLIP)
CHATTERLEY: Mom, and that is my case. All right, let's move on. Democrats assemble when they take the stage for next week for the first
U.S. presidential debates, it will be a big night for politics, but maybe also Big Tech. We will explain after this. We're back in two.
(COMMERCIAL BREAK)
[09:51:19] CHATTERLEY: Welcome back to the show and a look at today's "Boardroom Brief." Apple supplier, Foxconn is preparing for a new boss for
the first time in 45 years.
Foxconn Chairman Terry Gou says he is stepping down preparing to run for the Presidency of Taiwan. Liu Yang-wei will take over operating the
world's largest electronics contract manufacturer said Gou on Friday. Analysts say the handover is just a formality meaning Gou is likely to keep
control of the company.
Rupert Murdoch is recovering from pneumonia and is now doing well according to two people familiar with the matter. The 88-year-old's health is a
particular focus for investors as his companies enter a new phase after they sold a large part of the media empire 21st Century Fox to Disney last
year.
Walmart has settled an international bribery investigation with the U.S. government paying nearly $218 million. The case involves the retailer's
businesses in Brazil, China, India and Mexico.
The investigation accused Walmart of having a lack of oversight of anti- corruption measures.
Two nights, 20 Democrats, trolls and a Big Tech focus. Silicon Valley is bracing for the first U.S. presidential debates next week. We now know
debate nights were heavily targeted by Russian trolls back in the 2016 campaign.
CNN Business has learned that Facebook and Twitter plan to watch their social media platforms like a hawk for any unusual activity.
Donie O'Sullivan is standing by with all the details. Donie, a fascinating story. I was reading this again earlier this morning. What exactly
happened in 2016? And what measures are the Big Tech firms going to take to try and control the fallout this time around?
DONIE O'SULLIVAN, CNN BUSINESS REPORTER: Julia, these tech companies desperately do not want to be the story next Thursday and Friday morning.
They want the debate to -- the stories from the debates to be based on what the candidates are saying not is what is happening on Twitter and on
Facebook.
We know in 2016 that Russia targeted the American political process. They had sent millions of tweets and Facebook posts over a number of years, and
as part of all the investigations going into that activity, we have this huge trove of data -- the post, the tweets from 2016 -- and we can see on
debate night, right from the start of the Democratic primaries and the GOP primaries in 2015, all the way to the final the presidential debates in
October 2016 that Russian trolls loved debate nights, and they were particularly spreading messages that were really, I guess, seeking to
undermine the whole concept of the debate.
A lot of, you know, reviewing the posts and a lot of it was sort of putting out, "Well, what's the point of these debates. It doesn't even matter."
And that sort of just trying to sow division I guess, but also questioning at the entire democratic process.
CHATTERLEY: Speaking of undermining the case here. Facebook and Twitter are going to work together, but I just remind myself of the conversation
we've been having about the Nancy Pelosi fake news video that Facebook wouldn't take down. YouTube, of course did so we should draw that
distinction.
But how can you say, look, we're going to tackle one source of fake news, but not be willing to take down fake videos like that? I just -- I just
see so many conflicts here and I'm not sure the message is clear. I don't really trust what they're doing here. Am I right? Or am I wrong here? Am
I overanalyzing?
O'SULLIVAN: Well, I think they certainly have -- there's certainly a trust problem with these platforms with Silicon Valley. And Nancy Pelosi herself
came out in the weeks after that video and said, you know, Facebook, essentially wittingly is aiding Russia or peddlers of disinformation by not
removing this sort of content.
[09:55:02] O'SULLIVAN: I mean, this is sort of I think the nightmare situation for Facebook and Twitter as a business is that what if a fake
video emerges after the debate that makes it look like candidates said something or is caught in some sort of way that is extremely misleading and
it goes viral on Facebook on Wednesday or Thursday night? Will Facebook decide to remove that or will they do this thing where they say they down
rank it, it is seen by less people, but it's still on the platform?
So there's going to be plenty of debates. There's going to be plenty of opportunity for this sort of stuff to happen, and I know that Facebook and
Twitter at least are going to be watching it very closely.
CHATTERLEY: Yes, tough to gauge what success looks like here. And yes, we shall see, Donie O'Sullivan, thank you so much for that story. Fantastic.
Fantastic news gathering there.
All right, that just about wraps up the show. I'll give you a look once again in what we're seeing for markets under a bit of pressure, a lot going
on of course with tensions in the Middle East.
I'll be back in a couple of hours' time to keep you abreast of all those stories, but for now that's it for the show. I'm Julia Chatterley, you
been watching FIRST MOVE, time to make yours. Happy Friday.
(COMMERCIAL BREAK)
[10:00:00]
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