Return to Transcripts main page

First Move with Julia Chatterley

Jobs Surged As The U.S. Economy Got To Work; Jaguar Going Electric; Amazon Is A Quarter Century Today. Aired: 9-10a ET

Aired July 05, 2019 - 09:00   ET

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

PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Live from the New York Stock Exchange, I'm Paula Newton, in for Julia Chatterley. And here is

what you need to know right now. There was no hanging around in June. No, that jobs report is in. Jobs surged as the U.S. economy got to work and

quite a jumpstart for the Rover. Recharging that Rover. It is a fact what the U.K. auto industry needed. We will tell you all about Jaguar going

electric. And you know, they've come a long way from selling books. Can you even remember when they were selling books? Amazon is a quarter

century today. And it is Friday. And this is FIRST MOVE.

All right. Welcome to the FIRST MOVE. You know it is the day after the July 4th holiday, and I'm here to tell you that the fireworks are not over

yet. And this is why. That latest jobs report. What a stunner. It shows the U.S. adding a greater than expected 224,000 jobs last month. The

report shows solid employment right across most major industries, I would say save for retail there, job gains for April and May though revised

slightly lower.

Now in the meantime, this is what's key here, the unemployment rate ticked up to 3.7 percent that was from 3.6 percent and wage growth was tepid,

which we'll discuss because that means the Fed may not be on top in terms of trying to tamp down inflation.

Now futures, however, are pointing to our lower open for stocks right across the board after this report. And I'll tell you why. It is because

they are wondering if that Fed will stay on the sidelines for July instead of having to move. This means that all the major U.S. averages are set to

pullback. Remember, we were at record highs on SIN volume on Wednesday.

Now investors snapped up both stocks and bonds on the hopes that the Fed will begin cutting rates this month. As we're saying, this puts all of

that into question. Will it tempt enthusiasts to stay there even at these very high valuations? Or will they decide that the Fed is absolutely not

going to move in July?

The jobs report of course, our major driver for today. Paul La Monica watching all of this. And Paul, I like when you break this down because

you are looking at the big number. But you're also looking at the numbers behind that major number. Any surprises there for you?

PAUL LA MONICA, CNN BUSINESS REPORTER: I think the big surprise is the nice rebound that we had, Paula, in jobs growth after you know tepid

numbers for May, which really led a lot of people to believe that the Fed would cut interest rates definitely in July was a slam dunk or so we

thought.

And not only that, but maybe they would even go as far as a half point rate cut; I think now, that is in question. I still believe the Fed probably

will lower rates at the end of the month by a quarter of a point because there still are other concerns for the global economy, trade tensions,

which haven't completely gone away. Other data looks like it is starting to soften a little bit in manufacturing and housing.

So I think the Fed can justify a quarter point cut, essentially taking back the one they did last December, which a lot of people think might have been

too aggressive. But after that, I think all bets are off with regards to how much more the Fed needs to cut rates in the economy, at least for the

labor market that still looks pretty solid.

NEWTON: Yes, I find it fascinating that the market was able to talk itself into the fact they might even go down 50 basis points. But here we are.

Paul, likely they will go in with that quarter rate cut but some people still here unsure. Paul La Monica there, breaking down those numbers for

us. Appreciate it.

Now Samsung, bad morning here for this company. It had warned that profits would be low. In fact, profits were 56 percent lower in Q2. It was hit,

of course by a global downturn but specifically hurt a lot on trade as well, and we will get to that.

The interesting thing here is that the decrease in profits were not as bad as analysts were predicting. Sherisse Pham is up for us late and I

appreciate it. In terms of what's going on here. It is a bit of cold comfort though, considering that headline number 56 percent down in terms

of profits.

SHERISSE PHAM, CNN BUSINESS REPORTER: Yes, they did manage to beat market expectations. But that's because market expectations were so low, Paula.

A couple of things that were driving this massive profit plunge. We had a slowing demand in memory chips. We also had poor smartphone sales. And

yes, of course, the U.S.-China trade war does play a factor here.

Samsung had recorded record profits for years, thanks to memory chip sales. But now of course, demand is slowing and the market is oversupplied. That

is for Samsung to cut prices in order to drive sales.

[09:05:06] PHAM: Over in the smartphone business, their latest flagship smartphone hasn't really won over customers, right? So we've got the

Galaxy S10. Weak sales there. That is going to hit Samsung's sales revenue. And of course, there is the big elephant in the room and that is

Huawei.

Washington added Huawei to a trade blacklist back in May, barring U.S. companies from selling tech and components to Huawei and that is going to

have an effect on the global supply chain.

Now Trump did ease up on restrictions, saying that he would allow U.S. companies to sell to Huawei again to get U.S.-China trade talks back on

track. Details, however, are still unclear on that.

So if these U.S. restrictions continue, that will further affect the memory chip supply market in the coming months and that will hit Samsung's bottom

line even further -- Paula.

NEWTON: Yes, and they were looking for a rebound in that in 2020. And I want to talk to you about that, Sherisse, when it gets to a question like

Huawei and the fact that there are still the trade tensions, could they give any guidance? I mean, clearly, they were blaming Huawei for a lot of

the problems, even though they were sidestepping that smartphone issue.

PHAM: This was just an earnings guidance, so they were staying pretty quiet in terms of details. They did say that one of the reasons they beat

market estimates was a one-time sales bump in display. But what analysts are saying is that the Huawei problems are already starting to both benefit

and hurt Samsung.

So on the upside, they're going to probably win over ex-Huawei smartphone users; on the downside, the memory chip market is going to be hurt. But

what's really interesting and we'll be watching for this going forward is how Samsung's network equipment business will be affected because Samsung

has been ramping up 5G network equipment. Huawei wants to be a leader in 5G network equipment. But that is where U.S. restrictions are really

targeting Huawei.

Pretty unlikely from what analysts are saying that the Trump administration will lift restrictions, allowing U.S. companies to continue selling

equipment so Huawei can make 5G networks and once again, Samsung really in the best position to benefit from some of Huawei's problems.

NEWTON: Yes, and they certainly will. We will continue to keep an eye on guidance for 2020. As you say, Sherisse, as they continue to try and take

on Huawei, basically where they're hurting right now. Sherisse, thanks so much for staying up late. We appreciate it.

And on to the embattled U.K. auto industry now. It is getting a much needed jolt of industry. I would say from an unlikely source here, Jaguar

Land Rover says they will build electric vehicles in the U.K. And this comes at an all-important plant just outside of Birmingham, England, this

plant will in fact protect thousands of jobs, jobs that are at issue now when we have Brexit, front and center.

Anna Stewart joins me now live from London. Anna, this comes as a surprise not so much in terms of the industry that they want to go into. We know

that they've been eyeing those electric vehicles, and yet they are firmly giving the decision. Anna, is this firm that they will build this plants

just outside Birmingham?

ANNA STEWART, CNN REPORTER: They are committing to it, so this will secure 2,700 jobs. It's millions of pounds. And the reason as you said it's so

surprising is this is a company that is shedding thousands of jobs across Europe, undergoing a $3 billion restructuring plan. So why invest lots of

money and make this commitment given all the Brexit uncertainty around it? There is a dark nebulous cloud on the horizon. No one knows how or when it

will be resolved.

But this is the thing, they say they are being always forced to make this decision. Now, they've clearly held off making any investment decisions

for some time, they decided to go ahead with it.

And electrification as you say is definitely where Jaguar Land Rover sees itself going. It's had terrible collapsing sales in diesel ever since

dieselgate, their sales are abysmal in China, it's got Brexit uncertainty. It is looking to strengthen itself in this area.

But the CEO made very clear today that business cannot do this alone. It is going to need government to invest in, you know, electric battery

facilities in the U.K., it is going to have to invest in infrastructure if their future is to survive, but for this investment is to really go

anywhere, they need massive investment as well from the government to make sure that electric is both affordable and convenient.

NEWTON: And that will be interesting, as of course the Brexit saga continues and of course, the leadership of the Tory Party being contested

there. Anna, I have to ask you though, we had a lot of doom and gloom predictions about Brexit principally from that U.K. auto industry. It has

been suffering significantly. Is this a turnaround in the sense that if they get certainty from Brexit one way or another, can that industry start

to rebound?

STEWART: You know, it's interesting because Brexit isn't obviously the only problem with this industry. You are looking at the slowdown in China,

the overall trade war. Also the fact that there is a collapse in diesel sales and actually a structural shift maybe away from people owning cars,

so there are other issues at play.

But looking at the stats across Europe, you can see that the U.K. is being hit particularly hard and that has a lot to do with Brexit.

[09:10:08] STEWART: Car production fell over 15 percent in May from the year before. And that was actually the 12th consecutive month of decline.

Business investment in this industry, in the car industry fell 47 percent last year from the year before.

And let me show you the job losses we've had announced this year. So Jaguar Land Rover itself, they announced four and a half thousand jobs to

be lost in Europe, the majority of those in the U.K. That's actually in addition to losing 1,800 in redundancies last year. Ford losing 12,000

jobs in Europe; Honda, three and a half thousand; U.K. closing a factory in Sweden.

So yes, this is great news, this little piece of investment. The Business Minister here is heralding this as a vote of confidence in the U.K. auto

industry. But it is really one vote and it really buffs the overall picture.

NEWTON: Anna, so much perspective there. I think something to think about in terms of a rebound. You are truly a little disheartening when you

actually break down those figures for us, Anna. Thanks so much and have a great weekend. We appreciate it.

And right now we turn to stories making headlines around the world. Iran is demanding the release of an oil tanker seized by Britain off the coast

of Gibraltar. Now Iran is calling it piracy. The U.K. says that Grace One was carrying Iranian oil to Syria, and that they say is a violation of E.U.

sanctions.

Now Iran says British Marines seized the ship at the request of the U.S. Gibraltar though says the decision was made independently.

Venezuela's opposition leader Juan Guaido has called for massive demonstrations in the coming hours. Now it comes on the heels of a new

report from the UN. And it is a significant one. It detailed torture of people who have been critical to the government of Nicolas Maduro. And of

course, it also says it has evidence of excessive force used during those demonstrations.

And Joe Biden has dismissed Donald Trump as a quote, "bully," and says he's ready to take him on. Now, the Democratic presidential hopeful made the

comments during an exclusive sit down interview with CNN's Chris Cuomo, the former Vice President also shared his tactics for defeating President

Trump.

(BEGIN VIDEO CLIP)

CHRIS CUOMO, CNN ANCHOR: How do you beat him?

JOE BIDEN (D), PRESIDENTIAL CANDIDATE: I beat by just pointing out who I am and who he is and what we're for and what he's against. This guy's a

divider in chief. This guy is acting with racist policies. I'm looking forward to this man.

He walked behind me and in debate, "Come here, man." Don't you think I -- you know me too well. I mean, the idea that I'd be intimidated by Donald

Trump. He's the bully that I knew my whole life. He's the bully that I've always stood up to.

(END VIDEO CLIP)

NEWTON: Okay, that from presidential hopeful, Joe Biden. Coming up here on FIRST MOVE, Fed chair Jay Powell, of course like us watching those job

reports closely. We'll ask what it could mean for interest rates especially for July. And a quarter century of Amazon. Can you believe it?

The company turns 25 today. Remember, it started with just books. We will discuss it gold stars, successes, but also the growing pains.

(COMMERCIAL BREAK)

[09:16:19 ] NEWTON: Welcome back to FIRST MOVE and we are live here from the New York Stock Exchange as those blockbuster numbers -- job numbers --

were released today. Instead though futures continue to point lower. Why? They are looking at the Fed and wondering if they are going to move in July

and through the next -- through the rest of the year as these numbers come in.

And what are those numbers? 224,000 nonfarm jobs were created in the U.S. last month, that's about 60,000 more jobs than expected. Key as well, the

unemployment rate ticked up to 3.7 percent from 3.6 percent. This is a significant number as well that analysts will be looking at.

Now, stocks as I was saying, looking to pull back on those record highs. Remember, we had those record highs on very thin volume, which can mean a

very crazy day today as well, as we expect volume to continue to be quite low.

Now, traders, of course are concerned as to whether or not those very good job numbers will mean that the Fed will stay on the sidelines.

Randy Frederick joins me now for his take on all this. He is the Vice President of Trading and Derivatives at Charles Schwab. Thanks for having

me here on what most people were hoping would just be a long weekend. I'm going to bet, Randy that some traders will just take it as a long weekend,

trade for a couple hours ago and go, bleh, back to the pool. What do you think, though? What was your reaction when you saw to 224,000?

RANDY FREDERICK, VICE PRESIDENT OF TRADING AND DERIVATIVES, CHARLES SCHWAB: Yes, I think you're right, Paula. In fact, on my drive into where I'm at

right now, the traffic was completely -- there was nothing. So I think you're right, everyone is taken it as a four-day weekend.

So here's my take on it, essentially, yes, we've got a very nice, strong nonfarm payroll number, I'm not really surprised. I'm not surprised that

it was better than expected. I never really bought into the whole concept that when we had one weak number last month, that it was going to create a

trend.

If you remember, we had a very weak number back in February. And immediately, within the next couple of months, that number came back.

So overall, it shows not a whole lot of change in terms of the Labor Department report, certainly the unemployment rate ticked up a bit. But

you've got to keep in mind the way those things are averaged, that happens sometimes.

If we start to see a two or three tenths tick up over the course of a few months, then I think we have to start worrying. But given the number we

got, we're essentially -- they are showing very little weakness at all in the labor market overall.

NEWTON: And so where does this put the Fed? I mean, look, they've been consistently saying that they are data dependent, you see this number.

They would have had an inkling that the number was going to be fairly strong.

I mean, I was kind of surprised. I thought it was lunacy to say that the Fed might actually decrease by 50 basis points in July. And yet, where do

you think the Fed is looking now?

FREDERICK: So that's what changes. Again, I also never was of the belief that we would get a 50 basis point cut, a 25 basis point cut has been baked

into the market at about 100 percent probability for almost three solid months now.

And what most people see that as is simply a reversal of the very last hike, which happened in December of last year, which most people believe

probably should not have happened.

So in some sense, there's almost no chance that's going to change, the probability of a 50 bips cut was only about maybe 20 to 25 percent at its

peak that will probably come down. But again, I don't think there was really any probability that was ever going to happen anyway.

What we do know is that when the Fed was in a hiking cycle -- when the Fed was in a hiking cycle, we had to have about a 65 percent probability or

greater for them to actually move. So we never got to that point on the 50 basis, point cut. So I don't think that was a realistic possibility.

But it does cause the market to tend to just -- to ease off a bit. But keep in mind, as you said earlier, the volume is very light. A lot of

people are on vacation. And just two days ago, the S&P 500 was at an all- time high, which makes it very, very vulnerable to any kind of news that might cause it to ease up just a little bit.

NEWTON: Yes, and I want to talk a little bit about valuations with you as well. I want to also point out that the 10-year US Treasury note did ease

up over that two percent benchmark, as we saw that job numbers point out, do you see a lot of significance in that?

[09:20:03] FREDERICK: Well, 10 percent has been a little bit of a technical support line, but as you mentioned, we broke through that a

couple of days ago. So I think a lot of people would like to see it hold there.

And in fact, what Treasuries have been telling us is that as the rates come down further than many people expected, is it's sort of trying to force the

Feds' hand.

Keep in mind, if the Fed does cut a quarter point, they cut it at the very short end, that's actually going to cause the curve to steepen just a

little bit. What people are more concerned about is the curve flattening and inverting. So that will actually help that out.

NEWTON: Got you. Good point, Randy. Valuations. Let's talk about earnings. So now we were off the jobs numbers. Were on to earnings, which

start in about a week's time. You think those earnings numbers from what I can tell from your analysis might look a little bit weak for Q2?

FREDERICK: Yes, so the expectation when we went into Q1 was that we would see earnings down about a percent and a half relative to Q1 of last year,

what we actually got was about a percent and half above. So it was a little better than expected.

Similar situation going into Q2, the earning season is kind of just going to start maybe at the beginning of next week, we just finished the quarter.

And the expectations are that we will have a very slight decline or potentially completely flat. I think we'll probably see something just

slightly better than that.

In general, corporations tend to sort of lowball the analysts a little bit so they can exceed the targets. And obviously, there's plenty of reasons

for that one, it causes their stock price to go up. Many corporate leaders are shareholders of their own companies. Some compensation plans are based

on the shareholder prices. So there's a lot of reasons for that.

In fact, what you typically see is on just about any given quarter, earnings per share tend to beat the Wall Street expectations, anywhere from

two thirds to about three quarters of all the companies in the S&P 500. Typically, we'll beat the expectations.

So I think this quarter, we're going to see a similar situation. Yes, it was a slightly lower number last quarter than what we saw the previous

year, but it's kind of just getting back to long term norms.

So I would expect to see around two thirds or so of them beat the earnings estimates, and probably around 50 percent will actually beat the revenue

estimates as well.

But that means essentially flat to a very modest gain relative to the previous year.

NEWTON: Yes, Randy, a lot to chew over there for the weekend. I suspect some people were going to wait until Monday to get that done. Randy,

thanks so much for coming in on what most people are taking as a long holiday weekend. We will continue to digest those jobs numbers.

And yes, it's a birthday for someone we all know. I'm not sure we all love them. Happy birthday, Amazon. The tech giant turns 25 today, a quarter

century. This were very humble beginnings. I remember when we used to discuss the fact that Amazon had decimated bookstores. I don't have to

tell you they're not just into books anymore. There have been some very memorable moments though along the way. Take a listen.

(VIDEO CLIP PLAYS)

NEWTON: I mean, that goes beyond nostalgia. Clare Sebastian has been looking -- I looked at that video and thought, where did that come from?

It looked like something that was pulled directly from Lawrence Welk. I mean, but 25 years, quarter century, we're talking.

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Twenty five years. Yes, it's a ripe old age for an internet company. Paula, I was thinking back in

1994, it was three years until I even got my first e-mail address, but this company has been around in terms of internet companies for a really long

time. And obviously, very humble beginnings.

It began with just $10,000.00 of Jeff Bezos's own money. It was originally called Cadabra, interestingly, but that apparently was too easily confused

with the word "cadaver." So eventually, they settled on Amazon.

But it's come a long way. From books as you say, it's now not only "the everything" store of the internet, it's a logistics giant. It's a web

hosting company. It's a real player in entertainment and Paula, Jeff Bezos has so much money that he has a billion dollars a year to spend on what is

essentially a hobby -- space travel.

But we've been trolling through the archives in the lead up to this anniversary, and we found one clip from Jeff Bezos speaking to my

colleague, Hala Gorania back into 2000. And this has aged particularly well. Take a listen.

(BEGIN VIDEO CLIP)

JEFF BEZOS, FOUNDER, AMAZON: If you look at stock prices over a three- month period, you're just a short term investor, and amazon.com has never been a good investment for short term investors. And I don't think it ever

will be.

(END VIDEO CLIP)

SEBASTIAN: Now boy, was he right about that, Paula. If you'd had the stomach to invest in Amazon in 1997, when it went public and stick it out

through the last 25 years, which would have taken a very strong stomach through the dot com bubble, you would now have almost $1.3 million.

I think a lot of us will be kicking ourselves that we didn't do that.

NEWTON: Ouch, Clare. That is not a good way to go into the weekend. But here we go anyway. Amazon, we've been talking about a lot of its successes

and yet even today, a lot of concern about is it just too big? And there are a lot of challenges for this company, as it continues to really change

quite a bit going forward.

SEBASTIAN: Yes, I think this is probably the biggest challenge Amazon faces going forward is that their size is now something liability for them.

Just today, as you say we see in the U.K. the Competition Authorities have put a hold on their potential investment in food delivery business

Deliveroo because of concerns that the investment is actually a takeover bid by another name.

And here in the U.S., Paula, in the lead up to the 2020 elections, it's attracting a lot of criticism from candidates on both sides. Take a

listen.

(BEGIN VIDEO CLIP)

SEN. BERNIE SANDERS (I-VT), PRESIDENTIAL CANDIDATE: You'll all be delighted to know that Amazon Company that made almost $11 billion last

year in profits pay how much Federal income tax.

SEN. ELIZABETH WARREN (D-MA), PRESIDENTIAL CANDIDATE: You can be an umpire to run the platform or you can have a team in the game, run one of the

businesses competing with the other businesses. But you don't get to do both at the same time.

So here's my pitch, I just want to break those two things apart.

DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: Amazon has the money to pay the fair rate at the Post Office, which would be much more than they

are paying right now. The other thing is a lot of retail businesses all over the country are going out of business. So that's a different problem.

(END VIDEO CLIP)

SEBASTIAN: I mean, I think we can look at some of the companies that have fallen by the wayside as the President was saying since Amazon has really

cemented its rise in retail.

Some big names of their time, like Circuit City, like Borders, like Sears, and Toys 'R Us. But going forward, look, it's not just a political pawn

regulation, it is a real challenge. I think that's probably the biggest challenge that Amazon will face over the next 25 years of its existence.

NEWTON: Yes, it will certainly be interesting to see how Amazon and Jeff Bezos himself navigates through all of this regulatory uncertainty. Clare

Sebastian, that was nice. It was nice to look back. Appreciate that, Clare, thanks so much.

And as I was telling you, futures are still pointing lower and kind of picking up there. As I said, we could be in store for some real chaos here

as the volume is thin. We will be right back with the market open in just a few moments.

(COMMERCIAL BREAK)

[09:30:59] NEWTON: And welcome back to FIRST MOVE. I'm Paula Newton live from the New York Stock Exchange. And yes, that was the opening bell on a

jobs report Friday and what a jobs report it was.

As expected, U.S. stocks, though, are falling from their record highs as this market opens in early trade after today's stronger than expected jobs

report, it did indicate that 224,000 jobs were created. That means the unemployment rate also ticked up slightly to 3.7 percent.

Job gains for April and May though were also revised lower. Now, we were talking earlier about those uptick and Treasury yields as well. That was

after today's report, 10-year yields are again above two percent. That's up over four percent, folks, as traders reevaluate their prediction that

the Fed might even cut the rate by 50 basis points.

We can maybe safely say that that is right off the table. Now, our Rana Foroohar is here watching it all for us as well. Thanks so much for coming

in on what possibly could have been a long holiday for you, Rana. We ruined that?

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: I'm always here for you, Paula.

NEWTON: You are indeed. And Rana, I am going to ask you, if you're the Fed, you're a central banker looking at this jobs number right now. This

is a Federal member that says it is data dependent. What is the Fed thinking?

FOROOHAR: I think this is a really strong number. I think it's tough in the face of this number to justify a cut. Now, the one caveat to that

would be if you look out and think, "All right, this is a great report," but we're looking probably at the next one or two jobs report being a bit

weaker, we're looking at a lot of data suggesting that the second half of the year could be weaker.

You could potentially argue for a kind of insurance cut to keep the markets high. That's certainly what President Trump and his advisers would like.

But it's going to be very political, Paula. I mean, the Fed is in such a tough position. There's this dichotomy between Wall Street and Main

Street, you see that today with, you know, great jobs report and yet the markets are falling because they're worried about a rate hike.

NEWTON: Yes, and I think at this point, many people had spoken about the Central Bank having raised rates, and that maybe that was a mistake. This

is a very strong number now. Rana, I don't have to remind you, we are at a record expansion point for the U.S. economy. It just kept chugging away.

We're in record territory this month, and yet a survey -- a recent survey of CFOs said that almost half of them expect a recession in 2020. Why?

What are they seeing in the data?

FOROOHAR: Well, you know, just earlier, you put up that chart showing that inverted bond curve, right? You know, long rates and short rates are

moving in a way that historically would suggest recession. I mean, all the data point to this.

Also, we should say that not only is this an incredibly long recovery, it's the longest in recorded history, since something like 1847, you know, when

basically when they started keeping records, so you've got to think that what goes up at some stage is going to come down.

Now, the President is going to try to do everything he can. I mean, you see Peter Navarro, his trade adviser going on and saying, "We've got to

keep rates low." He is going to want to try and keep those markets juiced, I think, artificially, until the election in 2020. But we'll see.

I mean, we have a record amount of bond debt out there. We still have a very difficult geopolitical situation out there in the world. I do not

think the President's quote unquote, "deal" with China is really going to fix the U.S.-China problems. So a lot of risk factors, still.

NEWTON: A lot of risk factors, and Rana before I let you go, one of them is of course, Europe. Today as well, I just want to talk about it. We had

manufacturing in Germany still looking quite weak. What's interesting here -- I mean, we have to remind everybody, we have negative yields in Germany

on their Treasury bills.

The issue here though Rana, is we've got perhaps Christine Legarde again, coming in perhaps as a central banker for Europe. What can monetary policy

do when fiscal policy both in the United States in Europe, looks like it's really hamstrung right now?

FOROOHAR: You know, that is the $64 million question. I don't think it can do a lot, to be honest. You know, my last book was about this topic.

I think we've had actually 40 years of monetary policy sort of papering over various problems in in the Western world and developed economies. And

I think that we're really at an end of what we can do.

And you see that every time central banks try and put a little more kerosene on the fire, the markets don't respond as well as they used to in

the past. Now, that said, I would say that I think Europe is fundamentally a little stronger than people think.

I mean, you do see banks still lending to corporations. You see consumer sentiment in some economies being stronger. So, I'm not worried Europe's

about to fall off a cliff, but I don't think there's a lot more that central bankers can do for the global economy.

NEWTON: Yes, which will be a problem if we do indeed get into some trouble. Rana, thanks so much, have a have a lovely weekend and I hope

there is a barbecue in near future somewhere, somehow.

FOROOHAR: Thank you, Paula.

[09:35:06] NEWTON: Thank you. Appreciate it. Now we move on to those global market movers. Shares of semiconductor company, Qualcomm are lower

and now it's being dragged down of course by Samsung. We discussed that before.

The South Korean electronics giant warned that its second quarter profits likely plunged by more than half compared to the previous year. And that

brings us to, of course, Micron shares which are also lower for the same reason. It was also hit by the warning from Samsung. That of course weak

chip demand is hurting profits. They are still looking for that elusive rebound there.

And shares of Kellogg -- this is interesting -- are rallying. Now this is an article about the food maker. It says it is sitting on a wait for it --

fake meat gold mine that was bigger than Beyond Meat.

Now the "Barron's" article reminded investors that Kellogg's Morningstar farms is still the largest meat substitute operation in the United States,

and we will continue to follow that story.

Now, retaking the title of the world's fastest growing economy -- not an easy thing to do. It is an ambitious target that is set. But how does

India intend to get there. We'll have details on India's latest budget. That's next.

(COMMERCIAL BREAK)

NEWTON: Okay, it's all about foreign investment as India's new Finance Minister wants to make it a $5 trillion economy by 2025. That also means

doubling the growth in that economy. That's just one of the ambitious targets set in the latest budget unveiled this Friday. It's the first one

since Prime Minister Narendra Modi was re-elected by a landslide.

Gaurav Choudhury is the Deputy Executive Editor at moneycontrol.com, a CNN's sister TV network News 18. He joins us now from New Delhi and not a

lot of surprises in this budget. And yet what are they looking for in terms of trying to attract that FDI that foreign direct investment which

they hope will help this economy really take off?

[09:40:01] GAURAV CHOUDHURY IS THE DEPUTY EXECUTIVE EDITOR AT MONEYCONTROL.COM: Hi, so, this was the first budget of this Narendra Modi

government's second term and clearly there was a lot of expectations riding on it coming as it does in the middle of a slowdown.

In the January to March quarter, the Indian economic grew actually by 5.8 percent, although in 2018 and 2019, India follows April to March

financially, our system, it grew at 6.8 percent.

While India is still the fastest growing major economy in annualized terms, it's still -- it's in the middle of a serious slowdown precipitated by a

consumption spending slide. And this can be seen from various proxy indicators.

So, for instance, people are buying fewer cars and car sales in fact slumped to multiyear lows. So, there was a lot of expectations riding on

it. Also on the aspect that this government was expected to make a lot of big announcements on the farm sector.

Indian agriculture is currently in the middle of a persistent distress, particularly because farmers have been demanding debt write-offs and

various kinds of state support from state governments which have been coming about and the central government before going to elections in the

interim budget presented in February actually gave out direct income support scheme to the extent that 6,000 rupees was transferred annually --

was transferred to farmers who own two hectares of land or less.

Shortly after coming to office and coming to power and assuming office, one of the first decisions that this government do was to universalize that

income support scheme to include all farmers, not just those who own two hectares of land or less, in fact, extended also to those who own more than

two hectares of land as well as those who are landless.

So they did demonstrate their intent to walk the talk so far as rural distress is concerned, because more than anything else, this is a very

large, strong political constituency, which they don't want to antagonize.

But coming to the consuming class, this budget was expected to give a lot of tax breaks to individuals in the form of, you know, giving them --

bringing down the taxes in the form of a rejig in tax labs and rates that did not come about.

So that India's vast consuming middle class and the salaried class probably is trifle disappointed with what the Finance Minister, Nirmala Sitharamana

announced in Parliament today.

But what she did however, was to bring down the headline corporate income tax rate to 25 percent from 30 percent for most companies and in fact, the

headline corporate -- the corporate income tax rate for 99.3 percent of Indian corporate now stand at 25 percent and only 0.7 percent of Indian

companies based on a certain turnover threshold will have to pay a higher corporate income tax rate.

Individual income tax rates remain unchanged as of now. And this is a signal to the corporates to go and invest with the surplus that they will

have by paying fewer taxes.

NEWTON: Right and then seeing what happens, we will really have to see if it really manages to move that growth rate. Gaurav Choudhury, thanks so

much for going through those budget numbers for us. He joins us live from New Delhi. Thank you.

Meantime, Greek Prime Minister Alexis Tsipras is fighting for his political life this weekend. Now, Greeks look set to vote out that populist

politician and vote in really one of the country's most established political parties.

Now this is as Greece tries to move past years of crisis and hardship of course with all of those bailouts. Eleni Giokos has more for us.

(BEGIN VIDEOTAPE)

ELENI GIOKOS, CNN BUSINESS AFRICA CORRESPONDENT (voice over): Call it the Battle of the Billboards. Greek Prime Minister Alexis Tsipras and opponent

Kyriakos Mitsotakis are ready for their face to face showdown to lead a post bailout Greece.

The vote comes after Tsipras was forced to dissolve Parliament and call for snap votes, following his party's humiliating defeat in E.U. and local

elections.

(BEGIN VIDEO CLIP)

ALEXIS TSIPRAS, GREEK PRIME MINISTER (through translator): I will ask the President of the Republic to immediately call national elections so that

the Greek people will make the final decision.

(END VIDEO CLIP)

GIOKOS (voice over): Now, that final decision is near as Greeks head to the ballot box. Mitsotakis's center-right New Democracy Party has taken a

commanding lead in the polls.

Investors believe it's not a question of whether Tsipras's Syriza Party will lose, but by how much.

(BEGIN VIDEO CLIP)

ATHANASIOS VAMVAKIDIS, GLOBAL HEAD OF G10 FX STRATEGY, BOA MERRILL LYNCH: The question is only if New Democracy will be able to form a government on

its own or if they will need a coalition partner. And whether the new government will have a strong majority to be able to implement very much

needed economic reforms.

(END VIDEO CLIP)

GIOKOS (voice over): Tsipras's fall from grace is a stunning reversal from four years ago. Back then he won a resounding victory on an anti-austerity

platform, a Greek exit from the Eurozone seemed a real possibility.

[09:45:10] GIOKOS (voice over): Fiery protests rocked the streets, then in mid-March 2015, Tsipras made grand pivots and agreed to the harsh bailout

terms he had campaigned so strongly against. Grexit never happened.

Last year, the Greek bailout program ended wrapping up almost 10 years of emergency support. The country's economy is finally growing again that's a

plus for Syriza, but harsh budget cuts and crippling taxes continue to pummel the middle class.

Mitsotakis says his pro-business low tax policies are what Greece needs to jumpstart growth.

(BEGIN VIDEO CLIP)

KYRIAKOS MITSOTAKIS, PRESIDENT, NEW DEMOCRACY: Growing at one to two percent is simply not enough for the Greek people. I'm aiming at a much

higher growth rate, but this can only happen if you can stimulate some serious investment.

(END VIDEO CLIP)

GIOKOS (voice over): A stable, business friendly government will please investors. Greek stocks have risen roughly 17 percent since the May E.U.

vote, and bond yields are at record lows, but ordinary Greeks worry that their economic safety net will suffer under New Democracy.

Mitsotakis may get his chance to govern, but Syriza will be ready to battle again if his growth plan falters. Eleni Giokos, CNN, New York.

(END VIDEOTAPE)

NEWTON: Something we will be watching closely this weekend. Still to come here on FIRST MOVE, swinging into summer. "Spider-Man" arrives on the

silver screen. Is it just in time? Can he pull this movie season out of its slump?

(COMMERCIAL BREAK)

NEWTON: Welcome back to FIRST MOVE. "Spider-Man" is coming to the rescue. Is he? The music industry certainly hopes he is.

[VIDEO CLIP FROM "SPIDER MAN: FAR FROM HOME" PLAYS.]

NEWTON: Okay, "Spider-Man: Far From Home" is expected to make $125 million at the North American box office over its six-day holiday opening. The

summer movie season, really though, it needs a hero.

Let me tell you. After a raft of sequels that fell flat, so what's gone wrong? Erik Davis is Managing Editor of movie ticketing company, Fandango

and he joins me now.

You know, I have to say there was nothing wrong with "Spider-Man" in terms of the reviews. There seems to have been nothing wrong with all of these

sequels. Are we at a real inflection point with the big studios and these movies? I mean, what's going on?

ERIK DAVIS, MANAGING EDITOR, FANDANGO: You know, I think it has a couple of things. The movies in June were okay, you know. There was a Men In

Black" reprisal that did not meet audience demand. The "Godzilla" movie, the "Picachu" movie. I think, you know, Disney is listening to this

conversation and they're saying, "What do you mean the box office is down?" you know, "Avengers: Endgame," "Aladdin," "Toy Story 4" even backing up to

"Captain Marvel" all did well.

[09:50:10] DAVIS: They also have a "Lion King" coming out expected to be one of the biggest movies of the year. But I think we do need to note that

some of the biggest summer movies, some of the movies that people expect to make the most amount at the box office haven't come out yet beginning with

"Spider-Man: Far From Home." A $125 million, it broke records -- biggest Tuesday opening of all time at $39.5 million.

And then we have the "Lion King" and we have a Quentin Tarantino movie, "Once Upon a time in Hollywood." We have a "Fast and Furious" spin off,

"Hobbs and Shaw" globally, those franchises -- that franchise does spectacular at the box office.

And so I think that the summer will rebound. I think July will be a much better month than June.

NEWTON: And yet, we've already had "End Game" "Avengers: End Game" which was colossal. It broke records everywhere. Do you see this though as kind

of a restructuring? I mean, remember, TV streaming, having all of those moments compiled together? In terms of the way you make money from movies

now, especially those blockbusters, what's changed?

DAVIS: Well, I think there's definitely more demand in terms of your attention. You know, there's movies and TV shows everywhere on every

platform. And so you have to make a little noise.

And when it comes to sort of getting people out of the house and going to the movie theaters, it really does rely on demand. What do people want to

see? You know, I feel like something like "Men In Black" didn't perform as well. Maybe audiences didn't need a new "Men in Black" movie.

And so, you know, you look at something like the "Lion King," I feel like that one, the live action remakes, Disney remakes have been doing well.

People like to revisit. There is nostalgia at play there. And so that film, I think, will do really well at the box office. The superhero movies

doing really well as well.

So I think it depends on demand and studios looking out to their audience, listening to the audience saying, "What do you want to see?" And making

those movies instead of just rehashing franchises, hoping that people will go see them when in reality, they're like, "I did not need another one of

those in my life."

NEWTON: Yes, and it's such a good point, right, Erik? If you're a movie studio right now, you've got to think what's going to get these people off

the couch. And you need to do a lot more to get them off that coach.

Having said that, what's also changed in the movie industry itself? Because, you know, in terms of the ticketing company Fandango, which you

work for, we're talking about these big movie theaters right now, what are they doing in terms of trying to get people into those seats? Because

there's been a lot of them in the North America side, a lot of competition as well to get those theaters, those screens up and running and get those

blockbusters on those screens when they want them to release.

DAVIS: Yes, and what we're seeing is we're just seeing a more luxurious experience, you know, so if you're used to kicking back in your recliner in

your living room, then guess what, your local theater will likely be retrofitted with an even more comfortable recliner that's there.

They're serving you different kinds food, you know, an upgraded food menu, you can get your food to your seat, you can get alcohol in a lot of

theaters.

A lot of the big chains like AMC, my local AMC has a bar in the lobby of its theater. And so they're just making it like a better experience, you

know, getting out of the house. It's still one of the cheaper ways to sort of have a fun night out. I feel like you can't really leave the house

without spending $100.00 these days.

And so I think going to the movies is still a good choice if you want to get out of the house and have a comfortable experience. And my advice is

to seek out those theaters.

Look, do some research in your neighborhood and find out which theaters have the more luxurious experience because when you sit back and you kick

back, it's great.

NEWTON: Erik, it's funny the only movie I've seen is "Avengers: End Game" and the only way that got my husband and I and my kids to go see it was

they said there were recliners. It's over three hours, but you'll be in a recliner the whole time.

And in fact, you said it was a much better experience that way. Erik, we will continue to check in with you again as this blockbuster season

continues. Appreciate it.

DAVIS: Take care.

NEWTON: Now and finally, oh, what a birthday take a listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: The Sony Walkman is a tiny stereo cassette player with truly incredible sound.

(END VIDEO CLIP)

NEWTON: This device single handedly responsible for all of my hearing loss. Yes, Sony introduced the Walkman to the world 40 years ago this

week. I can't believe that I had two. They were yellow.

The world sat up and listened and yes walked. Okay, we didn't walk that much. Sony sold 50,000 in the first two months alone and went on to rack

up 400 million in sales. I know that doesn't sound like a lot now, but it really is.

Apple cofounder Steve Wozniak said the company had Sony in its sights from day one. He said quote, "No other company in the world was the model for

consumer electronics."

In its first decade, the Walkman became such a cultural icon as it raked in millions even in the 1990s. They weren't so bad. The Walkman weathered

changing audio formats as cassettes gave way to CDs and then to digital music, but in 2001, Apple took a big bite with this.

(VIDEO CLIP PLAYS)

NEWTON: Yes, the new device now responsible for other people's hearing loss. The millennials cousin to Sony's Gen X Walkman, the iPod and with

it, Apple had figured out how to walk the walk and turn it into a dance.

The rest, as I will say to you right now is history. Just three years after Steve Jobs launched the iPhone in 2007, the Walkman faced the music,

Sony announcing unfortunately it would discontinued. I can tell you, I can probably still find mine in my basement.

That was FIRST MOVE for today. I want to let you know though right now that futures are still down. I wouldn't get too excited about it though.

Again, this is on pretty thin volume. I'm Paula Newton, the "IDesk" is next.

(COMMERCIAL BREAK)

[10:00:00]

END