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First Move with Julia Chatterley
President Trump's Good Manners Come Out As He Asks Vladimir Putin Not To Meddle In The 2020 Election; Senator Carla Harris Repeatedly Knocks The Former VP In The Second Democratic Debates; Apple As Design Genius, Jony Ive Is Leaving The Company. Aired: 9-10a ET
Aired June 28, 2019 - 09:00 ET
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ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT: Live from the New York Stock Exchange, I'm Eleni Giokos in for Julia Chatterley, and here's what
you need to know.
Please don't: President Trump's good manners come out as he asks Vladimir Putin not to meddle in the 2020 election. Biden banged up: Senator Carla
Harris repeatedly knocks the VP in the second Democratic debates. And end of an era for Apple as design genius, Jony Ive is leaving the company.
It's Friday, time to make a move.
All right, so welcome to FIRST MOVE and Happy Friday to everyone, but fasten your seat belts, it's going to be a very busy day.
We've got the G20 that we're watching very closely, but it's also the end of the week, the end of the quarter and the end of the first half of the
year. So lots to get through today.
So let's quickly check in to see how markets are faring before we kick off the trading day. We are awaiting the opening bell. Futures are pointing
to a high Wall Street open, although tech stocks have been lagging a bit.
Bank stocks are set to rally after the Fed gave major institutions the go ahead to raise dividends, as well as launch stock buybacks after successful
stress tests.
Now stocks are currently on track for a losing week overall, but for the month, all major averages are set to pose gains of around six percent or
more. And don't forget, we actually hit record highs this month as well.
We're also on track for quarterly gains. So pretty good all around. Now, if you remember the second quarter's big market event was the breakdown of
the U.S.-China trade negotiations in early May. That sense stocks tumbling. They have pulled back since then. But trade remains of major
market uncertainty. And people are watching this so closely, specifically because there's a big sit down between Xi Jinping and President Trump
tomorrow. That's when third quarter trading begins on Monday.
So that is going to definitely be an important weekend event that is going to impact sentiment as we head into next week.
Now President Trump denied today that he agreed to hold off on raising tariffs on China as part of a so-called trade truth. Mr. Trump, obviously
doesn't want to show his hand, but the upshot is that we've got a lot of uncertainty as we head into tomorrow, and a whole lot at stake.
So time to get into the drivers right now. And we know that the U.S. President Donald Trump started the meeting with Russian counterpart
Vladimir Putin. It's the first bilateral meeting between the two leaders since the Mueller report was released and ahead of a sit down, Trump
appeared to joke about not meddling in the upcoming U.S. elections. Take a listen.
(BEGIN VIDEO CLIP)
QUESTION: Will you tell Russia not to meddle in the 2020 election?
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Yes, of course, I will. Don't meddle in the election, please. Don't -- don't meddle in the
election.
(END VIDEO CLIP)
GIOKOS: All right, so the next big drive that we are focusing on today is the unexpected candidate who stole the spotlight in night two of the
Democratic debate, Senator Kamala Harris repeatedly knocking Joe Biden. It was really interesting to watch over the Democratic debates.
She was criticizing Joe Biden for his record on race. She also ripped into the former Vice President of his 1970s era, opposition to Federal busing to
solve segregation.
Just some of the heated exchange that occurred overnight.
(BEGIN VIDEO CLIP)
SEN. KAMALA HARRIS (D-CA), PRESIDENTIAL CANDIDATE: It was hurtful to hear you talk about the reputations of two United States senators who built
their reputations and career on the segregation of race in this country. And it was not only that, but you also worked with them to oppose busing.
And, you know, there was a little girl in California, who was part of the second class to integrate her public schools, and she was bused to school
every day. And that little girl was me.
So I will tell you that on this subject, it cannot be an intellectual debate among Democrats, we have to take it seriously.
JOE BIDEN (D), PRESIDENTIAL CANDIDATE: I mischaracterized my position across the board. I did not praise racist. That is not true. Number one.
Number two, if we want to have this campaign litigated on who supports civil rights, or whether I did or not, I'm happy to do that.
I did not oppose busing in America. What I opposed is busing ordered by the Department of Education. That's what I opposed.
[09:05:10] BIDEN: I did not oppose --
HARRIS: Look, there was a failure of states to integrate public schools in America. I was part of the second class to integrate Berkeley, California
Public Schools, almost two decades after Brown v. Board of Education --
BIDEN: Because your city council made that decision. It was a local decision.
HARRIS: So that's where the Federal government must step in. That's why we have the Voting Rights Act and the Civil Rights Act.
BIDEN: Now, the Federal government must step --
(END VIDEO CLIP)
GIOKOS: All right, we've got Jessica Dean standing by for us. What an incredible debate overnight, and I mean, really, Kamala Harris stood out as
a really strong candidate, and I guess that leading up to this debate, many people were saying, "Well, maybe she's just going to go for the VP
position," but it seems here, she wants to go toe to toe with the other candidates and even of course, take on Donald Trump.
JESSICA DEAN, CNN CORRESPONDENT: Yes, Eleni. I think that's exactly right. You know, she launched this campaign in the winter, and she had a pretty
splashy launch and we've seen her at events, and she's been campaigning in all the months afterward. But no big huge moment for her until last night,
where she really commanded that stage and stood up there and had everybody talking and was saying, essentially, I'm here to run for President of the
United States. I'm not here running for Vice President or any other slot.
And she went right after the front runner, former Vice President Joe Biden directly and with a very personal story, and that's twofold. She went
after him. But I think you also have to remember, she was making the broader case to people watching at home that I'm not afraid to do that. I
can take on Donald Trump. And that's what these candidates have to prove is that they're able to take on the President of the United States.
GIOKOS: Exactly, Jessica. And what's really interesting here, if you looked at her messaging, everything was carefully crafted, thought out.
She had, you know, a mixture of personal stories, but also trying to speak to people on the ground, especially when it came to the comments about a
really strong economy, and basically saying, well, not everyone own stocks.
And yes, people have jobs, but everyone is working two to three jobs as well. I mean, I guess she wants to resonate with the electorate and did
she get that right?
DEAN: Right. And I think that is the case we've heard from a lot of these candidates on the campaign trail, including Kamala Harris, Joe Biden, and
others that essentially, yes, if you look at the numbers, the stock market is booming and that the economy is doing well.
But when you break it down, who is it doing well for, that's what they say. And they make that argument that there needs to be a $15.00 an hour minimum
wage. To Kamala Harris's point, she says you shouldn't have to work, you know, three jobs to keep food on the table. And that is a message that a
lot of people are looking for.
There are a lot of voters out there, who are still struggling, who are looking around saying, "Okay, who is it going to be that's going to help me
further myself and my family?" And it's certainly the argument that they're hoping to connect with them on.
GIOKOS: Jessica Dean, great to have you on. Thank you so much.
DEAN: Yes, thank you.
GIOKOS: We are now heading into our next driver and it's the end of an era for Apple. We've got design genius, Jony Ive leaving the company after 30
years. He wants to start his own venture called LoveFrom. We've got Seth Fiegerman joining us now.
Seth, the market spoke yesterday aggressively, $9 billion wiped off the Apple share price. Is that the value of Jony Ive to the company?
SETH FIEGERMAN, CNN BUSINESS SENIOR TECH WRITER: You know you can certainly see it that way. I think more than anyone other than Steve Jobs,
this person was definitional to the Apple as we know it today. He along with Jobs was effectively the design duo that put their fingerprints on
every major product that you and I probably use today.
I think for a long time, he has been viewed as the one true, indispensable person inside that company. And so to see him actually leave it both feels
like a long time coming and still a shock to the system.
GIOKOS: Yes, I want you to take a look at this graphic. Jony Ive came up with a lot of the products that a lot of people around the world, including
myself have come to love and use, and he basically was able to take, you know, hardcore technology and you know, some of the devices that we were
used to sitting in our offices and bring them into our hands. I mean, from the iPads to the Apple Watch, and just even the air pods so to speak.
The question is did they reach a peak and have they reached a peak in terms of design? And maybe it was a good time for Jony Ive to leave, and I guess
the question is, is he replaceable? I mean, what more could another designer do to make technology a lot more accessible?
FIEGERMAN: You know, it's funny, I once had a boss who told me that no one has ever actually irreplaceable, but I think he's about as close as one
could come to it.
If you think about the 20 years that you just showed there, he took the company effectively from the brink of bankruptcy to becoming the first
trillion dollar business through a remarkable streak of greatly designed products.
That said, in recent years, all of the reporting has suggested he has stepped away a little bit day by day. And I think as a consumer for the
next few years, it probably won't be much of a change for you.
[09:10:07] FIEGERMAN: A lot of Apple's products are designed well ahead of time, and so a lot of the pipeline is probably already there. But as we
look forward to the next decade of the company, it's clearly going to look a lot different, not just screens, but other technically difficult
products.
GIOKOS: Thanks, Seth. Much appreciated. All right. I want to take us now to Osaka, Japan. We've got Nic Robertson standing by.
The G20 is well underway. We know that President Trump started off his meetings with Vladimir Putin, also jokingly asked President Putin not to
meddle in the 2020 elections. We've got Nic Robertson on the ground for us. Nic, what's the latest?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, he even said, "Please," in there, and this is -- you know, if you contrast this the last
time these two leaders sat together, President Trump took President Putin's word at face value, that he didn't meddle in it believing the Russian
President over the assessment of his own Intelligence agencies. So it's kind of really bizarre to see him in this position. And he only asked that
question because a reporter asked him that question.
He only asked that to President Putin. It was very much tongue in cheek. He didn't look serious. President Putin certainly didn't look in the least
bit worried. And I think that's everyone's takeaway here.
The U.S. President still doesn't seem to believe in his Intelligence agencies, and will transfer his faith to a Russian President who his own --
President Trump's own Intelligence agencies indicate maybe about to meddle again in the 2020 elections.
GIOKOS: It's interesting, you look at the seriousness of meddling in elections versus the seriousness of the Trump-Xi talks tomorrow, and it
seems that President Trump is taking a harder stance against the Chinese versus what we saw against the Russians and so much anticipation about the
meeting tomorrow.
ROBERTSON: Sure, you know, I think we've heard a lot about this already about what it may cost President Trump to get into that meeting and he was
speaking about that today. He was asked by a reporter, "Have you had to compromise? Have you had to hold off on your threat of putting 25 percent
tariffs on another $300 billion of Chinese goods just to get the face time with President Xi?" And President Trump said no, he hadn't done that. He
thought that the meetings would be productive.
And then he clarified that again, by saying he thought, at the very least, that they would be productive saying ultimately it will work out okay. So
I don't think he's expecting any major breakthroughs.
And as if the news that we've been hearing over the past 24 hours of some of President Xi's demands are in any way real, perhaps that is giving some
cause for concern for President Trump.
What we've heard from the Chinese Foreign Ministry is they're saying, you know, to President Trump, the United States should meet China halfway,
well, hey, what is halfway here? What is it that the Chinese are asking for that's outside the terms of the deal, as both sides already know?
So I think President Trump goes into this with some question marks, perhaps he doesn't even have answers to at the moment.
GIOKOS: And this is going to be interesting, Nic, because at the end of the day, the Chinese are going to want to protect their internal economies.
President Trump is also talking about doing the same, they've got to find middle ground.
And I mean, if it's true that we're talking about preconditions about getting rid of the current tariffs, of also lifting the ban on Huawei. I
mean, this is going to go against the very essence of why Trump got into these negotiations in the first place.
ROBERTSON: And there's no indication of the President about to back down on Huawei. That was part of his opening speech today. You know, he was
speaking earlier today with the Indian Prime Minister, who was saying, "Hey, look, you know, we're such a high buyer with such a large population
of high tech products, including 5G, whoever we get it from ultimately, work with us, you can use us as leverage in your dealings with China."
So this is a real hot issue, and it's still a live issue. But the message from President Trump at the moment is he still won't seem to want ring
fence off business with the Chinese 5G provider.
So can he compromise on that? Certainly the language he is using at the moment doesn't indicate that. But it's not just the two countries and this
is what the Chinese are saying. It's not just a U.S.-China businesses at stake here. The concerns of all these leaders and the Chinese are saying
this as well, this is -- you know, this is a global issue if this goes into an escalated war, it's going to affect everyone.
GIOKOS: Yes, Nic Robertson on the ground in Osaka, Japan at the G20. Thank you very much.
Now to check in on news making headlines around the world. Australian Prime Minister Scott Morrison says his government is working with its
partners to find 29-year-old Alek Sigley who is allegedly missing in North Korea. Sigley's family say they've not heard from him since Tuesday
morning.
Italy has destroyed what remains of Genoa's Morandi Bridge in a controlled explosion. Last year the structure of the highway bridge collapsed killing
43 people.
France is recording its highest temperatures since records began. A town in the country's southern region reaching a boiling 44 degrees Celsius.
Four thousand schools have been closed in France as the heat wave scorches Europe and climate scientists are warning that extreme weather like this
will become more frequent because of global warming.
[09:15:18] All right, we're going to short break and still to come on FIRST MOVE, Lego will have more fun and games as it buys theme park operator
Merlin Entertainment in a mega deal and Tesla reboots Model S factory settings that it says were to blame for a car fire in Shanghai two months
ago. Stay with us.
(COMMERCIAL BREAK)
GIOKOS: Welcome back to FIRST MOVE live from the New York Stock Exchange. I'm Eleni Giokos, time now to take a look at the markets futures and
they're pointing high.
Dow is up three tenths of a percent. S&P also looking pretty good. NASDAQ is slightly higher. And it's all ahead of those Saturday trade talk.
We're watching that closely.
Tech stocks were looking a little flat a few hours ago, but they've picked up some momentum since then, and of course, we're also going to be taking a
quick look to see how the banks are going to be faring. Look at that, across the board, we're looking really strong in premarket trading.
The Fed is giving them the green light to increase buybacks and raise dividends after passing recent stress tests.
Shares of Bank of America looking to be up around three percent as we had closer to the start of trade. Goldman also doing really well.
So investors are closing the books on June and the second quarter today. It's also the Russell 2000 Index rebalancing day, which is expected to lead
to a jump in trading volume.
We've got Art Hogan, the Managing Director and Chief Market Strategist at National Securities Corp and keeping a very close eye on the markets and of
course, the trade negotiations for tomorrow. Is that worrying you? Do you think that people are just on edge ahead of the talks tomorrow?
ART HOGAN, MANAGING DIRECTOR AND CHIEF MARKET STRATEGIST, NATIONAL SECURITIES CORP: It's interesting. I don't think that the consensus is
that something great is going to happen over the weekend. I think the consensus is nothing bad is going to happen.
So what would be bad? Not having a schedule for negotiations going forward. What would be bad Trump deciding that it didn't go well and
escalating and putting tariffs on that other $300 billion.
[15:20:14] HOGAN: I don't think either one of those is in the cards. I think what happens is, hey, this meeting went really well. We've got a
great relationship. Well, there are lots of happy things. And then we have to get back to work.
Because if in fact, we're 90 percent done, that other 10 percent is going to be hard.
GIOKOS: To what extent do the markets want to see details coming through from a trade deal? Because the devil is in the detail with trade, always.
HOGAN: Well, that will be pushed out to the future at some point in time. So we will know what the schedule is. We'll know when teams either come
from Beijing over to Washington and vice versa. And we'll know what the sticking points are.
The problem is, we know where they are right now. Somebody has to give and that give looks like something like this.
China: We're willing to change some laws on IP theft. Washington: We're willing to rescind some of the tariffs that are out there now.
GIOKOS: All right, so the S&P 500 year-to-date performance has been incredible. Markets are actually looking overbought. Economic data is
looking pretty good.
The Federal Reserve is saying that they're going to cut rates at some point in time or at least alluding to that. Is it going cut as an insurance
policy? Because we're worried about what trade is going to do to the overall economy.
HOGAN: All right. I think it's pretty clear that the Federal Reserve will have to use monetary policy if trade policy last too long. So the longer
this trade battle goes on, the more damage it is doing to the economy and that's where the Fed will have to come in.
If they cut, it'll be an insurance cap, because as you just stated, markets at or near all-time highs, unemployment at a 50-year low. Most of the
leading economic indicators, the hard data looks okay. The survey data looks a little soft, and that survey data can turn into hard data in the
future if we continue to have an elongated trade war.
GIOKOS: And the trade war risk prognosis and in fact, when we started seeing the Iran-U.S. issues also coming to the surface, we saw bond yields
-- 10-year bond yields -- reaching that two percent level. And we we're even hearing about analysis and forecast that it could go down to 1.7
percent. Is that a harbinger of things to come that we will probably see a recession in the U.S. at some point in time?
HOGAN: I think it's much more of a reflection of how much uncertainty there is right now. So everything you just mentioned, tensions on Iran and
the Middle East. Uncertainty over U.S. China trade. Brexit and how that plays out that.
All of that uncertainly has money coming into the bond market, and that's driving yield slower. And remember, we're the safest U.S. 10-year, we're
still yielding two percent. The rest of the sovereigns around the globe are yielding something close to zero.
GIOKOS: I do you want to touch on banks, because they're doing really well, they are passing stress tests. Fantastic news. But it's only so
long that banks will be able to handle such a low interest rate environment. And that's the thing, banks was really badly -- well, mostly
-- when interest rates are sitting at lower levels.
HOGAN: All right, so there's three things to unpack here. The first and foremost, yes, banks depend on borrowing short, lending long, needed net
interest margin, there hasn't been much of that. But the spread is wider now than it was in the spring.
The second thing is, banks need a stronger economy. So there's economic activity for them to land into their business.
The third thing to think about is they're very well capitalized and a lot of business has nothing to do with interest rates. It has to do with M&A
activity, investment, banking, IPOs, et cetera and that's been very robust.
So those banks that have -- that are over levered to the calendar, to the IPO and M&A calendar, are actually doing quite well.
The amazing thing to me, though, is the valuations of these banks, even with the move they're having today is extremely low. It is one of the
worst performing sectors in the S&P 500. The fact that they can now buy back their shares and offer dividends and all those names that you had up
on your chart are yielding about three percent. So that's going to draw on those investors that are looking for a yield.
GIOKOS: Yes, and of course, passing the stress test means there'll be a lot more excitement about these stocks, right?
HOGAN: Absolutely.
GIOKOS: Thank you, Art Hogan. Thank you very much for joining us. Great to have you on. Enjoy your weekend.
All right, so Lego owners are adding more bricks to their empire with the deal from Merlin Entertainment. The Danish family behind Lego has teamed
up with Blackstone to buy Merlin for $6 billion.
Hadas Gold has more on this story. Merlin share price, I mean looking really good today. Would this ideal see the company going private? And is
there a sense that we're looking at a fair price at this point?
HADAS GOLD, CNN BUSINESS REPORTER: Yes, Eleni, this is the company that most of us know from our childhoods or from our children playing with these
colorful plastic blocks that, you know, you can work with your imagination and build a lot of things here.
But there's a big business behind what we consider a toy company. This is almost a $6 billion deal possibly here taking Merlin Entertainment private.
Now, keep in mind that Merlin already has a relationship with Lego because they actually operate the Lego Land Resorts and the company that owns Lego
already has a share in that, but this is taking Merlin private.
This comes actually a month after this activist investor had written to Merlin saying you have to go private, you've been having a rough few months
and you would be better off going private. And this obviously is the action that they're now taking, to take it private.
Now, the price is 31 percent higher than the average share price has been over the past six months.
[09:25:06] GOLD: But Merlin has had sort of an interesting last two years. They are actually the second largest attraction company after Disney. But
they've been having some tough times partly because of a crash in one of the roller coasters in 2015, and also the terrorist attacks in London in
the last few years, because they own also Madame Tussauds and the London Eye. These are some of the biggest attractions in Central London.
And Merlin has said that some of the fears that people have about going to attractions in city centers has affected their business quite a bit.
But this is really interesting to see, Merlin going back to private and as I'm sure you know, Eleni, private equity is flush with cash right now. So
we should expect more of these types of deals.
GIOKOS: Exactly. And that's the big question as to what is this consortium going to get from Merlin? And you mentioned, you know, the wide
range of businesses. And they even own Madame Tussauds as an example as well. And we've actually -- and it's a really good point you say that
you've got, you know, so much pressure that the company has faced over the past while.
What are the future earnings possible that people are betting on in the PE space?
GOLD: Well, in one word, like we hear from a lot of places, I think it might be China. Listen, Lego is looking to expand in China, they're
already planning to double the number of shops they have there. And they're talking about opening some of these Lego Parks in China.
So obviously this investment joining together with Merlin sort of bringing it back private, combining them all together that is where they're heading
and this is what this activist investor was warning about saying that in order to have a lot of these long term investment to give them a better
return, they needed to go privately -- Eleni.
GIOKOS: Hadas, thank you very much for that update. All right, so we're going to short break. Right after this, the opening bell in New York.
Stay with us.
(COMMERCIAL BREAK)
[09:30:00] GIOKOS: Welcome back to FIRST MOVE. I'm Eleni Giokos. A louder cheer than normal. That was the opening bell. We do have a lot of
people on the floor of the New York Stock Exchange today and this is the end of the first half of the year.
So it's going to be an interesting day to look at. Everyone is positioning themselves for Saturday's Trump-Xi meeting. Trade is on the agenda.
Dow Jones is up three tenths of a percent. S&P up three tenths of a percent as we head into the trading day. All right, so tech stocks were
lagging, but they were the outperformers on Thursday session rising around seven tenths of a percent and as we close out the month, the Dow is on
track to rise almost seven percent. It's the best June in over 80 years. That's a big number.
All right, so meantime the Bitcoin roller coaster continues. Prices have been up around 10 percent today after falling almost 20 percent on
Thursday. Bitcoin rallied to almost $14,000.00 this week. This was not seem since early 2018 of course just plummeting after that. We're sitting
at $11,500.00. Big volatility on Bitcoin.
All right, so the global movers: Apple shares are down. No surprise there. The company's chief design officer, Jony Ive is leaving after nearly 30
years. It's down two tenths of a percent right now, but Ive was instrumental in developing Apple's sleek aesthetic. He is launching his
own design company next year. Shares fell on the news of his exit and losing around $8 billion to $9 billion in yesterday's session alone.
Procter & Gamble shares are trading up, we're up almost two percent. Goldman Sachs upgraded P&G from neutral to buy. The firm says Procter &
Gamble offer shareholders a double -- a potential double digit return. So good news coming through from there.
Take a look at those banking stocks. Bank of America and Goldman Sachs also looking good though, among the major U.S. financial institutions that
passed the Feds annual stress test. The Fed says the bank's balance sheets are strong enough for them to raise dividends and increase buybacks.
Goldman boosted its quarterly dividend by nearly 50 percent.
All right, so good news for big banks as they pass the bad stress test. To dig into all the details, we've got Paul La Monica joining us. Good news
for the banks.
I mean, we've actually seen banking stocks underperforming relative to the overall market and this is what they needed. And I guess coming in and
going and buying and doing share buybacks is trying to send a message to investors we're buying our own shares, so should you.
PAUL LA MONICA, CNN BUSINESS REPORTER: Exactly that's a great point, Eleni and they are going to be raising dividends as well, which rewards existing
shareholders. What's interesting here is that even some of the banks that have been in the headlines for, you know troubles, be it, scandals, like
Wells Fargo, concerns about the financials, Deutsche Bank, for example. They were also given approval by the Fed to raise buybacks and increase
dividends.
The only company that's kind of in a gray area, they didn't have their capital plan rejected, but it wasn't approved entirely is Credit Suisse.
So we have to wait and see whether or not Credit Suisse goes back to the Fed and can eventually get approval to raise a dividend and increase their
buyback.
But you're right, all of these banks are struggling in some respects, because we know that the Fed is likely to cut interest rates at the end of
July and lower rates are not actually great news for the lending operations of many big banks.
GIOKOS: Yes, good news in terms of lending operations, but actually banks just perform better when interest rates are higher. So it's counteractive,
I guess, and that's a big question, what kind of returns are we going to see within the banking space? And then another thing we need to focus on
is if you've got super low rates, and you're lending to customers that can't handle an interest rate increase in the in the future, that could
also create an overheated market?
LA MONICA: Yes, I think there are worries about whether or not we could potentially have hopefully not 2008 all over again, but a possible bubble
that would percolate in real estate, maybe consumers also getting overextended, taking advantage of low interest rates to increase their own
debt loads.
That's obviously a concern that we've had in the broader market that many big companies have been bingeing on debt because interest rates have been
low for such a long period of time. And that's likely to now, you know, continue with the Fed, probably cutting rates, but for the banks
themselves.
These are companies that are very financially healthy now, and the Fed stress tests show that. You didn't have any big banks fail. That is a
good sign of feather in the cap for the industry.
GIOKOS: So what are the top bank picks, do you think for the second half of the year?
[09:35:07] LA MONICA: That's a tough one. I mean, I think that investors obviously are still very enamored with JPMorgan Chase because of the
stability that you have with Jamie Dimon at the helm. I think that is a company that's still seen as a leader that didn't do as poorly during the
depths of the financial crisis.
You know, but then, you know, I think there are a lot of people who are bullish on Bank of America because of, you know, CEO Brian Moynihan. What
is going to be interesting is can Wells Fargo ever turn things around and really regain the trust of not just consumers but also investors?
GIOKOS: All right, Paul, thank you so very much. The bell as you can hear is going off again here at the New York Stock Exchange, lots of excitement
coming through today.
Let's now delve in today's "Boardroom Brief." A mixed bag for Nike earnings last quarter. The retailer saw a four percent boost in revenue
that beat Wall Street expectations, but earnings fell slightly below expectations. It's a first month miss for Nike in seven years.
Tesla recharges after a car caught fire in Shanghai two months ago. The company says an isolated battery malfunction and the model was to blame.
In response, Tesla updated the vehicle's software and battery settings.
Success is written in the stars for Constellation Brands exceeding expectations and its quarterly results as sales of its beers Corona and
Modelo soared with a seven percent boost in net sales compared to this time last year. Their share price up almost five percent today.
All right, so up next, Donald Trump denies he made Xi promises on trade. We discuss the chances of a deal when the two men meet tomorrow.
(COMMERCIAL BREAK)
GIOKOS: In the coming hours, U.S. President Donald Trump will sit down with his Chinese counterpart Xi Jinping at the G20 Summit in Osaka, Japan.
Mr. Trump says he expects the talks to be productive, but he also denies he made any promises not to impose new tariffs on China.
[09:40:12] GIOKOS: Joining me now is Wendy Cutler, Managing Director of Asia Society Policy Institute, and Wendy as the former Acting Deputy U.S.
Trade Representative, I am sure you are watching this so very closely, because it's people like you that have helped establish U.S. trade policy,
and it's all about the details.
And right now, there are no real details. It's just about trying to make a decision whether it's going to be a truce or a war.
WENDY CUTLER, MANAGING DIRECTOR, ASIA SOCIETY POLICY INSTITUTE: Correct. I mean, there are really three options here, either they conclude a deal at
the meeting, highly unlikely; they agree to resume talks with a truce on further tariff increases, or the talks breakdown. My money is on the
middle option. But resuming talks is very different than concluding talks.
And so why resumption will be welcomed, it means there's still going to be a tough path ahead. And of course, there are a lot of other issues in our
relationship with China that will still be subject to a lot of tension.
GIOKOS: And Wendy, if you could put it into perspective for us, you know you've got to embark on talks between leaders at the high level, and then
it's the people at the bottom that are going to execute various things.
I mean, just a week ago, we saw that Chinese companies were banned from buying various components. We've seen a lot of developments on the ground,
even leading up to this conversation. And it seems that both countries are having like a show of force, so to speak, ahead of talking.
CUTLER: Correct. In any negotiation, you want to have maximum leverage, and so both sides have escalated trade actions over the past six weeks
since the talks broke down. And the key will be can President Xi and Trump agree, okay, let's let the negotiators do their work and freeze any further
action against each other. Again, I think the most life the outcome, but it doesn't mean that that things are going to be great going forward.
There's some really tough matters that are going to need to be negotiated and resolved, and, frankly, require give and take from both sides, and we
really haven't seen a lot of that on these, you know, key outstanding issues yet.
GIOKOS: From President Xi, we've heard two things. Firstly, you know, we've got to get rid of the current tariffs that have been put in place and
also lifting the ban on Huawei.
Those two big things are going to be quite pivotal. Because if President Xi wants Donald Trump to compromise on that, I mean, that could actually
hinder the conversation going forward as opposed to fixing the problem?
CUTLER: Well, I think with respect to tariffs, there is a landing zone there. We have $250 billion of tariffs in place against China. They have
$110 billion against us. China wants them all eliminated, we want to keep all of them. I think both sides can find a settlement somewhere in
between, with the path to get rid of the rest should China -- when China agrees to implement all of the obligations made in any trade agreement.
But the Huawei dispute --
GIOKOS: Wendy, what is your view -- yes, sorry, just go ahead on the Huawei.
CUTLER: Yes, the Huawei dispute is just a lot more complicated and that's because it's a national security issue.
And so when you start bringing those issues into a trade negotiation, it's very delicate and it suggests that maybe this isn't a national security
issue, if indeed, you can somehow trade it away for a trade concession.
So I think the Huawei issue is going to have to be put on a parallel track. Perhaps there are some things that Trump can do for Xi on Huawei on the
margins, but I think it's a really core issue that's based on national security concerns.
GIOKOS: Wendy, what is your overall view on tariffs? Because the whole world is becoming a lot more protectionist, you want to protect your own
industries, you want to protect your own manufacturing base.
But if you cannot produce goods at a cheaper level than what China can as an example, you know, our tariffs the right thing to use? Because there
was a point in time where tariffs were a no, no, and now they are back in vogue?
CUTLER: Well, exactly. The problem with tariffs, number one, we break our international trading rules. And as we've seen, other countries now are
doing the same against us. And not just with respect to tariffs, but with respect to other policies, particularly policies regarding the Internet,
and data, and agriculture.
In addition, you know, these tariffs are hurting our consumers, our businesses, our workers, it's an interconnected world. Everyone is using
products from different countries. And it's hard to identify products that are just going to hurt your adversary and you don't end up shooting
yourselves in the foot.
So not a great tool. You know, they've been somewhat useful, I would admit in bringing China to the negotiating table, but at this point, maybe
they've just, you know, maybe they've outlived their usefulness.
GIOKOS: I guess, it's also concerned because you're getting so many mixed messages from the Trump administration and from President Trump himself and
then from the Chinese, we're not really sure what is happening there. But these mixed messages is concerning in the sense that are both parties going
to be prepared to put something tangible on the table that they can both agree on. How do you prepare for these types of meetings? And what do you
think it's going to happen in terms of how Trump is going to walk into this room with his demands and his ideas?
[09:45:24] CUTLER: Yes, you know, that's a great question. Now, you know, I've sat through a number of these meetings through the years, each one is
different, all leaders are different.
But let's remember, they only have 60 minutes for their meeting, maybe a little more. Trade is not the only issue that they need to address.
There's North Korea, there's Iran, other issues.
And so I would suspect that on trade, the most likely outcome is they'll agree to resume the talks, and hopefully give a little guidance to then
what the negotiators, how the negotiators should approach the outstanding issues and some guidance on the time frame for these talks. And again, a
truce on further escalation of actions against each other. That's critical.
GIOKOS: Wendy, yes, one hour hopefully, they can get it right. Thank you so very much for joining us. Good to have you on the show.
CUTLER: Thank you.
GIOKOS: All right, so U.S. Senator Kamala Harris showed democratic voters she wants to take down the President and stand up for the middle class.
Her debate moments that got the crowd roaring, up next.
(COMMERCIAL BREAK)
GIOKOS: Welcome back. I'm Eleni Giokos and California Senator, Kamala Harris had most of the memorable lines in Thursday's debate bringing
together 10 of The Democrats seeking the White House.
One of her most powerful moments when she slammed President Trump for bragging about an economy that isn't for the working middle class. Listen
in.
(BEGIN VIDEO CLIP)
HARRIS: You know what, America does not want to witness a food fight. They want to know how we're going to put food on their table. Yes?
(Cheering and Applause)
HARRIS: So on that point, part of the issue that is at play in America today and we've all been traveling around the country, I certainly have,
I'm meeting people who are working two and three jobs. You know, this President walks around talking about and flouting his great economy, right?
"My great economy, my great economy."
You ask him well, how are you measuring this greatness of this economy of yours? And he talks about the stock market? Well, that's fine if you own
stocks, so many families in America do not.
You ask him how are you measuring the greatness of this economy of yours? And they point to the job numbers and the unemployment numbers. We have
people in America who are working. They're working two and three jobs.
So when we talk about jobs, let's be really clear. In our America, no one should have to work more than one job to have a roof over their head and
food on their table.
(Cheering and Applause)
(END VIDEO CLIP)
GIOKOS: All right, to Harris's point, President Trump just tweeted earlier today, "The stock market went up massively from the day after I won the
election, all the way up to the day that I took office because of the enthusiasm for the fact that I was going to be President, that big stock
market increase must be credited to me. If Hillary won -- a big crash."
Joining us now, we've got Austan Goolsbee, former Chairman of the Council of Economic Advisers in the Obama White House and Economics Professor at
the University of Chicago's Booth School of Business. Great to have you on the show. Thanks so much.
AUSTAN GOOLSBEE, FORMER CHAIRMAN COUNCIL OF ECONOMIC ADVISERS IN OBAMA WHITE HOUSE: Yes, thanks for having me.
GIOKOS: I am sure you've been watching the Democratic debate last night. Stand out candidate, Kamala Harris, and it was really interesting to watch
the dynamics because she had such carefully crafted messages. And she even took it personal and she just tried to speak to the U.S. electorate, did
she get it right do you think?
GOOLSBEE: I think she didn't get it right. She had a great night. And I really appreciate that the snippet that you used was a content snippet. A
lot of the coverage here in the U.S. is all about the fighting. That there was one moment where she attacked Vice President Biden and they're saying
that was the moment of the debate.
And as a Democrat, it pains me to see when the highlights from the debate are perceived to be them attacking each other. I thought going on the
content, she had a good night. I thought Mayor Pete had a good night and several of the other candidates were trying to get their voices heard, but
probably didn't break through.
GIOKOS: So also what's interesting here is like can they use the economy as a card to get elected? Because -- and President Trump was talking about
a strong economy, you know, GDP for the first quarter came in at three percent. We're looking at stimulus in the pipeline, and we're looking at
stock market at the all-time high.
But Kamala Harris brought things down to Earth and she said, well, people have two to three jobs, so that they can actually survive. Do you think
that that is going to be something that Americans are going to be looking at as "Well, this person is actually speaking to me and can go toe to toe
with President Trump."
GOOLSBEE: They might, you know, the economy has in the past been the biggest issue of all in presidential elections. For whatever reason, in
the 2018 midterm election, and it seems like in the polling so far for 2020, the state of the economy is not playing as big of a role as it
normally does.
The President's party lost a large number of seats in the House despite the economy being pretty strong. And so now, partly, it depends on whether the
economy slows down.
If it doesn't slow down, I kind of think we're in a dynamic where the President looks at the best parts of the economy and says "Look at how
great it is." And his opponents look at the worst parts of the economy and say, "Look at all these people that were left out." And we're kind of in a
back and forth dynamic on that. I don't know if it plays out the way it has in past election.
GIOKOS: I mean, so many Democratic candidates we've seen and this is the second Democratic debate that came to the fore and many say, "Well, what is
the direction? What do people actually want to focus on? What is the vision for the Democrats to you know, win back the White House? What is
your view in terms of what they should be focusing on? Healthcare came up, climate change came up, the economy came up. It was an array of things.
GOOLSBEE: Yes, there was an array of things. You know, partly it's -- this is what happens when you've got 25 candidates, you've got 25 different
priorities, and to some of the people, climate changes is their number one. You've got somebody with universal basic income, you've got Medicare-for-
All and I think at the midterm election, for sure, healthcare is on the minds of the American people. And I would be very surprised if by the
second, third, fourth debates, we weren't having a big chunk of it be about healthcare.
And I think that issues of inequality that we had a massive run up in the incomes and wealth of the very richest people in the country, and then
President Trump piled on top of that a huge $2 trillion tax cut for those same people. That's not going away. That's going to be a major focus of
the candidates.
GIOKOS: You know, Joe Biden, Bernie Sanders, Pete Buttigieg, I mean, these are the candidates that everyone is looking at. But is there anyone in
this group that can go up against President Trump?
GOOLSBEE: Yes, look, I think the thing to remember about President Trump is he barely won. I mean, he lost the popular vote, and he barely won the
Electoral College narrowly in three battleground states.
So if his popularity is lower than it was in 2016, even by a small amount, or if the Democratic nominees popularity is higher than Hillary Clinton's
was by even a small amount, the President might be in trouble.
So I think most any of these candidates have at least a fighting shot against the President for sure.
GIOKOS: What do you think is going to be good for America? Reelection of President Trump or someone new in office?
[09:55:06] GOOLSBEE: What would be the focus of the electorate, you think in their mind?
GIOKOS: Yes, I mean, what will be good for the United States --
GOOLSBEE: Is that what you're asking?
GIOKOS: Well, for the United States of America, what will be good? What do you think is going to be good for the country overall?
GOOLSBEE: Look, I'm not a Trump supporter. I wasn't when he ran and I think he is he has undermined the office and the health of our democracy.
So I think what would be healthy for the country would be to get him out of there and get back to something more like a normal state of affairs.
GIOKOS: Austan, thank you very much for joining us. Much appreciated for your time. Great to have you on the show.
GOOLSBEE: Thank you.
GIOKOS: Well, that's it for FIRST MOVE. Thanks so very much for watching. I'm Eleni Giokos, and I'll be back for "The Express" a little later. Take
a look at how the markets are faring right now. A mixed bag, but mostly flat. And we've got Robyn Curnow after the break. Stay with us. Take
care.
(COMMERCIAL BREAK)
[10:00:00]
END
