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First Move with Julia Chatterley
A Judge Rules That Samsung's Heir, Jay Y. Lee Will Be Retried On Charges Of Bribery; Italy's Former Prime Minister Is Trying To Form A Whole New Government; Opponents Of Prime Minister Boris Johnson Aim To Stop Him Suspending Parliament. Aired 9-10a ET
Aired August 29, 2019 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ZAIN ASHER, CNN INTERNATIONAL ANCHOR: Coming to you live from the New York Stock Exchange, I'm Zain Asher sitting in for my colleague, Julia
Chatterley and here is what you need to know.
Standing trial, again. A judge rules that Samsung's heir, Jay Y. Lee will be retried on charges of bribery. And second verse, same as the first, not
quiet, but Italy's former Prime Minister is trying to form a whole new government. We will explain shortly. And pulling out all the stops.
Opponents of Prime Minister Boris Johnson aim to stop him suspending Parliament. It's Thursday, and this is FIRST MOVE.
Hello and welcome to the FIRST MOVE everyone. I'm Zain Asher, great to have you with us. U.S. stocks are ready to rally in early trading today
after some calming new comments on China when it comes to the U.S. trade war. U.S. futures are suddenly higher across the board. You see all those
green arrows there after China hinted that it is actually not ready to retaliate against the latest round of U.S. tariff hikes. China is saying
they're not going to retaliate.
China's Commerce Ministry also confirmed that U.S. and China are discussing when to start up trade talks again. Talks had been expected to take place
sometime in September sometime next month, but last week's trade war escalation had the potential to derail them.
Ten-year bond yields are bouncing from multi-year lows on the news that U.S. Treasury yields are bouncing off record lows. The yields have been
tumbling on fears that the trade wars will drive the global economy into recession.
Before the bell today, the U.S. released an updated look at second quarter GDP. That new estimate shows the U.S. economy growing at a two percent
pace in spring. It's a bit lower than previous estimates of 2.1 percent and substantially below the three percent growth rate we saw earlier this
year. But it shows U.S. growth still solid despite the trade war that is happening right now.
All right, let's get right down to the drivers. Samsung heir, Jay Y. Lee is facing a reach trial of a bribery, he was jailed in 2017, but walked
free after an appeal in 2018. Also facing a new trial, Park Geun-hye, the former South Korean President who is serving a 25-year sentence for
corruption and abuse of power.
David Culver joins us live now. So David, what does this mean for Jay Y. Lee? Could we see him off probation and back in jail?
DAVID CULVER, CNN CORRESPONDENT: Well, this has major implications, Zain. This ruling essentially means that the man who has been basically running
one of the world's largest cell phone companies, we're talking about Samsung, the cell phone maker, potentially going to prison.
Now the South Korean Supreme Court made this ruling and decided that Jay Y. Lee, who is the Vice Chairman should be retried in a case that really
sparks national outcry here. It's a case of alleged bribery and corruption and went all the way to the top to South Korea's President at the time,
Park Geun-hye. Now, she was ousted as President. She is currently serving a 25-year prison sentence as you point out.
As for Lee, he is currently free. He was suspended with his sentence, last year a court decided that. However, this Supreme Court ruling, it changes
everything. I mean, this could essentially mean that both Lee and the former President will have to go through a new trial that could then lead
to a tougher outcome of sentencing here.
To put this in the wider picture though, Zain, Samsung is dealing with a very difficult situation. They've got right now this trade dispute, this
bitter one at that between Japan and South Korea. Last month, Japan decided to restrict three chemicals that they often export to South Korea.
Why does that matter? Well, those are chemicals that Samsung relies on to make microchips that help with smartphones. So that could ultimately even
impact the global market there when it comes to smartphones.
And then you've got just yesterday, the South Korean government reacting to Japan removing them from their preferred trading partner list that could
slow Japanese exports from Japan to South Korea and it could cause costly delays, and it seems like, Zain, this is having an impact already when it
comes to Samsung on the market.
We're seeing that their stock was trading down by about 1.7 percent. So this ruling having an impact on the market, but we'll see where it will
have the impact as far as Lee and his future.
ASHER: And what does this mean for Samsung just in terms of reputation and in terms of trust, David?
CULVER: Well, one of the things they're trying to out there right now, Zain, is that they're apologizing and they put this statement out
apologizing to the country.
[09:05:07] CULVER: They realize that South Korea right now is really just taking this personally. I mean, this trade war even has been taken quite
personally. A lot of South Korean citizens have even banned and boycotted certain Japanese products. They've gone to the extent of even demolishing
Japanese cars. One man did that. I mean, that that's how personal this has gotten here.
So Samsung wants to come out in front. They want to state that they are apologetic here, and they also say they will keep from doing past
wrongdoing, so to speak.
So they're trying to remedy this. They're hoping that this will be ultimately the end of this chapter. But right now, it's going to linger a
little bit longer as we go through yet another trial.
ASHER: All right, David Culver, live for us there. Thank you so much. In Italy, former Prime Minister, Giuseppe Conte has been given a fresh mandate
to start a coalition government. He will bring together the anti- establishment Five Star Movement, and the center left opposition Democratic Party. Barbie Nadeau joins us live now from Rome. So Barbie, how on Earth
are these two sort of sworn political enemies going to make this coalition work?
BARBIE NADEAU, CNN CONTRIBUTOR: Well, that is the million dollar question. And that's one that's on everyone's mind, not least of all, I think most of
the Parliament who is going to have to vote a confidence vote on this sometime probably next week.
But Giuseppe Conte is going to have to change his hand a little bit to do lead this government, for him to lead the country out of this crisis. But
he seems very well aware of the challenges ahead of him, let's listen to what he had to say earlier.
(BEGIN VIDEO CLIP)
GIUSEPPE CONTE, ITALIAN PRIME MINISTER (through translator): This is not going to be a government against, but for the citizens and to modernize the
country, and to make our nation even more competitive internationally, but also fairer and more inclusive.
(END VIDEO CLIP)
NADEAU: You know, that's an entirely different sort of approach that he had when he led the government with the far right League Party under Matteo
Salvini, who pulled his support, and which has led us to where we are today.
So he has challenges ahead of him. The first will be to fill this Cabinet and face a confidence vote -- Zain.
ASHER: How on Earth did Giuseppe Conte go from being this sort of forgotten mocked figure in Italian politics to now being playing
essentially a crucial role in forming this new coalition?
NADEAU: Well, you know, he really was the referee of the last government. He was able to take these two very opposite parties. Now, you have to
remember that the first coalition, the coalition that fell was also made of two very, very opposite parties.
He was able to keep that boat afloat for 14 months, and he seems to have the ability to play sort of the referee, probably a little bit of good cop,
bad cop as he is doing it. And he proved himself to be sort of the lovable, misunderstood Prime Minister. People really, really appreciate
his ability to do that.
And I think a lot of people were endeared even more when he gave a blistering speech to Parliament last week before he resigned in which he
really called Matteo Salvini to task about all of the things he didn't agree with in the government and I think that that really won him over in
the hearts and minds of the Italians, but it's the Parliament that he has to convince that his government is worth going forward -- Zain.
ASHER: All right, Barbie Nadeau, thank you so much. Just the day after British Prime Minister Boris Johnson said he was suspending Parliament, the
plan is now meeting some determined resistance.
The opposition Labour Party says it is seeking an emergency debate in Parliament while an anti-Brexit campaigner is going to the High Court to
try and stop Mr. Johnson. Hadas Gold joins us live now from Downing Street.
So Hadas, the fact that you also have Ruth Davidson, a Scottish conservative, a very popular Scottish conservative resigning? A lot of
people are saying that that throws into question the Conservative Party's prospects north of the border. Just walk us through how risky of a move is
this by Prime Minister Johnson?
HADAS GOLD, CNN BUSINESS REPORTER: Zain, it was definitely risky, it was dramatic. It was a drastic move by Boris Johnson, but for his supporters,
for the people behind him they saw as necessary to just try to force something through -- either to force people to vote for whatever deal if he
manages to get some sort of new deal with the E.U. or to force through a no-deal just to get some action happening.
Because for a lot of the pro-Brexit, pro-leavers, they saw Theresa May as sort of dithering and not being able to be strong enough to get something
through. But as you noted, we've already seen the fallout from that decision.
We had protest here outside of Downing Street yesterday, more than a thousand people more, than a million people have signed a petition online
to stop this no-deal and we've seen some resignations. Lord Young -- he has been a long term serving Member in the House of Lords back from -- he
has been a Minister since the Thatcher government. He resigned in protest of this suspension.
Then as you noted, Ruth Davidson, a very popular leader of the Scottish Conservative Party, she resigned. Take a listen to what she said in her
comments about why she is stepping down and what she hopes Parliament will do going forward.
(BEGIN VIDEO CLIP)
[09:10:10] RUTH DAVIDSON, BRITISH MEMBER OF PARLIAMENT, SCOTTISH CONSERVATIVE PARTY: Prime Minister, get as a deal with the European Union.
And I want to say to people that say they want to avoid no-deal is what I've just said, the Prime Minister brings a deal back to the House of
Commons, as I know he is trying to do, for God's sake, get behind it, and this time, at the fourth time of asking, vote for it.
(END VIDEO CLIP)
GOLD: And Zain, you can really sort of hear the emotion in her voice about what is happening currently and how desperate some people are just to get
something through because they really see the future of the country on the line here.
Now in terms of what could happen next, we do have those legal challenges. Possibly, we could see some sort of injunction. There's a legal challenge
both with Gina Miller, as you said, is a big, anti-Brexit campaigner, and also in Scotland, there is a legal challenge, as well.
There also could be an emergency session that Labour could call, maybe trying to get some sort of bill through to stop a no-deal. It is not clear
how much time there's going to be for that.
There's also of course, the possibility that somehow Boris Johnson will negotiate something with the E.U., bring it back to Parliament and then
they will vote on it and everything will be fine in the end.
There is of course also the possibility which many have argued has increased dramatically in the last 24 hours that a no-deal will be the
actual scenario on October 31st.
ASHER: And just so our viewers know, Labour leader, Jeremy Corbyn is set to speak any moment now. We will of course bring it live to our viewers.
Hadas Gold, thank you so much.
And these are the stories making headlines around the world. A near miss of Puerto Rico as Hurricane Dorian scrapes past the U.S. territory without
making a direct hit. The British and the U.S. Virgin Islands caught the worst of it with flooding and power cuts in some areas.
Meantime, people on the U.S. mainland are hunkering down. Dorian could hit Florida as a Category 3 storm or higher in the next few days. Our Chad
Myers joins us live now. So Chad, for Floridians, this could be pretty dire. Just walk us through how people are preparing on the ground there.
CHAD MYERS, CNN METEOROLOGIST: Yes, this is a real deal here. This is not a Category 1 or just a little 90-kilometer per hour tropical storm. This
thing is already 140, getting toward the Bahamas in a couple of days in very warm water and will certainly gain strength. There's no question
about it.
Now here's a plate, I wouldn't want to be on. The Hurricane Hunter in a C1-30 aircraft flying through the eye of the hurricane right now. No, no
thanks. It's a prop plane with four propellers, and they're in there getting bounced around finding out what the pressure is and what the wind
speeds are. Godspeed to you guys. I just would never want to be in that plane.
I know we get offers to go do it, but no thanks -- 205 kilometers per hour by Sunday, not that far from NASA, 205 coming on shore into Florida and
then slowing down to only 140. Not only slowing down wind speed around the eye, but slowing down forward speed, and that is going to spell a lot of
problems with flooding across Florida.
There have been three or four other storms very close to where Dorian has started. Jeanne, Frances, Hugo, Irma, you can look them up on Wikipedia.
None of those had very good results, all bad consequences when you have low wind shear, lots of warm water, water here is 32 degrees.
And you're going to make this come on landfall in a place where millions and millions, tens of millions people live. There's going to be
evacuations. There's going to be water that doesn't work. There's going to be lots of power lines down. It's going to look a mess across parts of
Florida.
There's a certain chance and it might only be five, Zain that this storm could stop before the Florida Coast and turn to the right away from the
Coast. But 95 percent chance that somewhere, there's going to be landfall in Florida.
I'll take the five when I can get it because it's better than zero, but it's not a high enough chance just now, still though, 120 hours away --
Zain.
ASHER: By the way, Chad my heart also skipped to beat when you talked about that plane. That is -- I'm with you there. That is not a plane I
would want to be on either. But just talk to us about the atmospheric conditions that have actually caused this storm to intensify and also
change course as well?
MYERS: Right. The water is warm and that's the fuel to the fire. Now in a big thunderstorm complex for a tornado, you want winds aloft to be fast
and that would cause shear. That's a good thing for a thunderstorm. That's a bad thing for a hurricane. Hurricanes want to be all by
themselves. They want to be the big dog just out there. No wind at all. They make their own wind.
And so earlier today, the forecast had it going toward Jacksonville. Later on this morning, now it is going toward Daytona Beach where the Daytona 500
is and the 24 Hours of Daytona. That area there, very touristy spot.
This is a tourist weekend for North America called Labor Day. So we're going to take all these people, move them into Florida to have a vacation,
and then by Saturday, the police are going to say, "You've got to go. We're evacuating." So a lot of things going on in here. It's the warm
water that truly is the fuel to this fire and you go swimming in the Bahamas. Yes, you don't need a wetsuit. Any time of year, the water is
warm there.
[09:15:19] ASHER: All right. Chad Myers, live for us there. Thank you so much. OK, so Brazil's President, Jair Bolsonaro says he will be meeting
with other South American leaders to discuss ways to defend the Amazon rainforest.
The giant ecosystem has been hit by fires in recent weeks, most of which are manmade. Mr. Bolsonaro says he will be meeting with other regional
leaders next Friday to find solutions.
All right, still to come here on FIRST MOVE. Default Mode: Argentina ask its creditors for more time as it struggles to pay its debt.
And a promising new player at the U.S. Open. Can IBM's coaching tool be the unexpected game changer? That's next.
(COMMERCIAL BREAK)
ASHER: All right, welcome back to FIRST MOVE live from the New York Stock Exchange. U.S. futures are still pointing to a solidly higher open here on
Wall Street. NASDAQ futures are looking the strongest, up by over one percent.
Stocks look set to build on Wednesday's gains after new trade comments from China Commerce Ministry spokesperson hinted today that Beijing will not
immediately retaliate against the most recent round of us tariff hikes. The spokesperson also says Beijing and the United States are discussing
when to restart face-to-face talks.
European stocks are on the rise as well. You see green arrows across the board there. This is on the hopes of calmer heads on the trade war front.
Italian stocks are up almost two percent as political leaders move closer to forming a new coalition government.
Joining me now for more of the market is David Bailin, the Chief Investment Officer at Citi Private Bank. David, thank you so much for being with us.
DAVID BAILIN, CHIEF INVESTMENT OFFICER, CITI PRIVATE BANK: It's a pleasure.
ASHER: So the Dow looks to be pointing to a subtly higher open for now because we've got some reassuring comments from China that they're not
going to necessarily be retaliating right away to the latest round of tariff hikes imposed by the United States.
However, yes, the market likes that. However, we are just -- we're in this environment where we're literally just one tweet away from a massive U-turn
from the Dow being down 500 to a thousand points. How do you trade in that kind of environment?
BAILIN: We don't actually like to trade in this kind of environment. What we want to do is, if there is a dip, if the markets were to be down five
percent from here, we would be buying opportunistically in the market.
At this point, we see earnings that are underlying the stock market is being positive, I think with relatively low-growth rates, and lower
interest rates, you have the corresponding impact of actually making equities more valuable in general right now. So if there is no imminent
recession, we want people to continue to get exposure to the market there.
We recently have added gold to our portfolio about two percent, so we've advised Citi Private Bank clients to do that. And that is a hedge really
on a potential very big, unexpected event. In other words, a material deterioration in the relationship between U.S. and China that would have a
material further impact on the global economy.
ASHER: Right. So in this environment, I mean, around the world, people are looking to Central Banks to sort of quote unquote, "save" them. But
it's very difficult for the Central Banks to do that, because we're already in this low rate environment.
BAILIN: That's right. And the Central Banks have rates as a means of encouraging lending, right, and discouraging people from putting money in
the bank, which is what negative rates really do. Those things have limited utility.
Now, the rates are as low as they are and as negative as they are in Europe, we've advised our clients in Europe actually not to, you know, own
negative interest rate bonds of any way.
And if you swap those back into the dollar, and we expect the dollar to be relatively strong, you can actually get a positive yield, which is very
important for clients.
So it's -- you're absolutely right about the limitations and what we expect to see happen over the next six months or 12 months or 18 months, is that
eventually governments will be able to spend more, use fiscal policy, right, the ability to borrow and build roads, highways, infrastructure, and
that will have a positive economic impact that's far greater than one might expect just from lower rates.
ASHER: Okay, so in terms of a recession, being on the horizon, you know, people are pointing to the inverted yield curve as maybe there's going to
be a recession, sort of 12 to 18 months from now. How do you hedge against that? I mean, and what are your thoughts on a recession happening more
imminently?
BAILIN: You know, what I like to say is that there will be one. We don't know when.
ASHER: We don't know when.
BAILIN: And we don't remember what a normal recession is. You know, as most investors recall what happened in 2007 to 2009, not normal. What
happened before that was normal. So we will expect a dip in the economy. We'll expect markets to overreact. We want our clients not to trade
through that.
We want them to get ready for that by having the higher quality portfolio, which means more dividend stocks, more stocks that are exposed to
healthcare and other areas of the world, like China and Asia broadly, which are going to have higher growth rates.
These things are defensive hedges, like you were talking about in portfolios and then you can outright hedge a portfolio. You can take the
dividend income from your portfolio, and buy, for example, puts on the S&P which on world indices and use that as an active hedge in your portfolio.
ASHER: So do you think that the U.S. economy is resilient enough to withstand an escalating trade war between the U.S. and China? A lot of
people are pointing to retail sales numbers, for example and at the U.S. consumer is really very healthy.
BAILIN: U.S. consumer is healthy and acting in a very healthy way and continues to make purchases. The manufacturing economy is not doing as
well, certainly in Europe. And now coming to the United States, we're seeing real slow down numbers there.
Interestingly enough, as the U.S. consumer spends, the U.S. consumer has very great negativity about markets. Their optimism about the stock market
itself is low, and that turns out to be a positive indicator.
They're often very wrong about when their sentiment is most negative, markets tend to react positively in the near term. So, I feel as if you're
right and with unemployment low like this in the United States that does create more resilience in our economy than say if we had a five and a half
percent unemployment rate now.
ASHER: David Bailin, live for us there. Thank you so much. Chief Investment Officer at Citi Private Bank. Appreciate you being with us.
So Argentina is asking its creditors, including the IMF, the International Monetary Fund for extra time to repay loans of more than $100 billion. The
IMF is currently analyzing a new payment plan. But fears are growing that Argentina could be headed for a default for the ninth time.
John Defterios is joining us live now. So John, the economy there in Argentina is currently in recession, inflation is around 55 percent. Where
did Mauricio Macri go wrong? Where did he lose his footing, do you think?
JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Well, it's extraordinary in terms of the inflation, Zain. That's the highest since
1991, and clearly a case where ninth time is not the charm as you suggested. It would be the ninth time in the history of Argentina here,
better than $100 billion of debt, interesting to note that $57 billion of that sits with the International Monetary Fund and there was so much
promise with Mauricio Macri and he just hasn't been able to deliver.
And we now have an economic and political storm kind of clashing here. The economics are that in the short term market, they can't raise debt because
of the political defeat we saw last month in a primary election. So they're talking about restructuring $7 billion near term and then a re-
profiling to use their word on $50 billion of debt.
[09:25:12] DEFTERIOS: So what has this meant for the peso? Since 2018, a drop of 50 percent that triggered that very high inflation that you're
talking about, and a shock from Mauricio Macri, he was saying that they're going to leave the populist past behind. He was going to push forward
reforms, and he was unable to deliver. And now the pressure during a global slowdown that you were just talking about with David.
ASHER: What is the key though? I mean, obviously they have -- they are asking for extra time to repay loan, but what is the key to providing
stability for the peso, do you think?
DEFTERIOS: Well, you know, it's interesting, because I remember when Mauricio Macri went to the World Economic Forum at the start of 2018, he
was the belle of the ball -- and the disappointment, because he was promising everything, Zain. Opening up the mining sector, they made these
big shale gas discoveries. They were going to open up the energy sector and the potential in the tourism sector.
This is a government that has not delivered on the promise. So when you have a global slowdown, demand for commodities dropping, there is basically
no easy way out for Macri.
Now, the International Monetary Fund after making that commitment in the autumn of 2018, has suggested they will stay with Argentina to go through
the restructuring. But now we're in a situation where he lost in the primary going to the general election and trying to restructure the debt.
And it's no simple answer to your question there, because the short term market doesn't look favorable to him, so he has to get this restructuring
done before the election and hopefully stabilize the currency and bring down that inflation rate.
ASHER: All right, John Defterios live for us, thank you. All right, stay with FIRST MOVE. The opening bell is coming up after this quick break.
Don't go away.
(COMMERCIAL BREAK)
[09:30:00] ASHER: All right, welcome back to FIRST MOVE. That was the opening bell. I'm Zain Asher coming to you live from the New York Stock
Exchange.
U.S. stocks are actually in rallying mode in early trading. Opening bell just rung. You see the Dow there, it is up about 200 points or so. This
is on the hopes of new trade talks between the U.S. and China.
In addition to hopes about these fresh talks, Chinese Commerce Ministry spokesperson actually says that the two sides are discussing when to start
face-to-face negotiations again. They were supposed to happen in September. We are not sure when it will happen, but the two sides are
trying to discuss when to restart face-to-face negotiations.
The spokesperson also said that China's focus is on dialing back planned tariffs and not on further tariff retaliation as well despite the recent
trade related stock gyrations. The S&P 500 begins today's session less than five percent away from record highs after Wednesday's solid advance.
Time now for a look at our global movers. Retailers are in focus once again. Today shares of Best Buy are lower. Earnings for the electronics
retailer easily beat estimates, revenues, and missed expectations and the company says its outlook for the rest of the year remains uncertain because
of trade war and tariff uncertainty.
Shares of Dollar General are rallying. The discount retailer is reporting better than expected profits. It is also raising its 2019 sales forecast.
Shares of fashion retailer Guess? are rallying to on an earnings and revenue beat. Shares of Abercrombie & Fitch a sinking. The struggling
retailer is reporting a narrow loss than expected. But the same store sales numbers were flat. Abercrombie is also cutting its sales guidance
because of the potential hit from new tariffs as well.
The chief organizer of Hong Kong's mass protest was violently attacked at a restaurant in the city. Masked men armed with a knife and a baseball bat
carried out the assault on Jimmy Sham and a friend. Sham's friend was taken to the hospital to be treated for his injuries.
I want to bring in Paula Hancocks who joins us live now from Hong Kong. So Paula, we're obviously seeing a lot of violence as a result of these
protests. But in addition, these protests have taken their toll on the local economy. Just walk us through that.
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Absolutely, Zain. I mean, it's three months in now. So you can imagine it's had a massive
impact on the city. We're seeing tourists thinking twice about coming here. We're seeing businesses being hit hard and as it often happens in
these kinds of circumstances, it is the lowest earners in the city that are being hit the hardest.
(BEGIN VIDEOTAPE)
HANCOCKS (voice over): The food is just as good and the opening hours just as long. But business is bad at Man Kee's award winning noodle restaurant.
The owner says people are afraid to eat out since police use tear gas on the streets of his neighborhood Sham Shui Po.
(BEGIN VIDEO CLIP)
SIMON WONG, MAN KEE RESTAURANTS OWNER (through translator): Also, in fact, the revenue of our business has recently dropped by 20 percent due to the
protests.
(END VIDEO CLIP)
HANCOCKS (voice over): Empty tables are becoming more common around Hong Kong, and at least 700 people lost their jobs after more than 15
restaurants shut down in the last two months, according to an industry union.
A recent survey by a restaurant workers union find 99 percent of those polled said their business has been affected by the protests.
(BEGIN VIDEO CLIP)
KWOK WANG HING, EATING ESTABLISHMENT EMPLOYEES GENERAL UNION (through translator): Many people dare not go out to dine and go through the series
of protests, particularly foreign tourists and Mainland Chinese tourists.
(END VIDEO CLIP)
HANCOCKS (voice over): Police says 32 countries have issued travel warnings of varying degrees for Hong Kong. Tourists are choosing to stay
away and that's hurting the hotel business.
A five-star hotel worker spoke to us on condition of anonymity.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Last year, 2018, July and August, the normal occupancy rate is around 70 percent to 80 percent. Right now, it is 50 percent
occupancy rate.
(END VIDEO CLIP)
HANCOCKS (voice over): The Hotel Workers Union says around 10,000 people have been affected. Cost cutting measures include asking workers to use up
their annual leave or take lower pay. That makes a big difference to hotel workers who typically earn the equivalent of less than $2,000.00 a month.
HANCOCKS (on camera): Protests like this one are becoming almost a daily occurrence here in Hong Kong these days. There's no sign of them letting
up and it's just adding to a sense of instability in the city.
Some workers from hotels, airlines and restaurants are willing to stand with the protesters, even though they know that there was a chance it could
affect their livelihoods.
HANCOCKS (voice over): At the Man Kee noodle restaurant, there's a sign apologizing for the inconvenience of the protests and asking patrons to
avoid talking politics, but sometimes it can't be avoided.
(BEGIN VIDEO CLIP)
WONG (through translator): Lots of people ran to our restaurant to escape tear gas fired by the police. We were forced to shut down immediately.
(END VIDEO CLIP)
HANCOCKS (voice over): Lost revenue or worse is fast becoming a reality for some businesses in Hong Kong, even those trying to stay out of the
unrest.
(END VIDEOTAPE)
HANCOCKS: And looking ahead to the weekend, Zain, we're expecting much of the same. One of the largest protest groups here and also one of the most
peaceful was planning to have a big march on Saturday that hasn't been approved by the police. They're worried about unrest.
But quite frankly, it's unlikely to make much difference to the number of people that will come out onto the streets.
ASHER: And what's it going to take, Paula, to really give Hong Kong's economy a boost again? What's it going to take to turn things around?
HANCOCKS: Well, what it would take first and foremost is for the protests to end. I spoke to a number of tourists that were actually -- that were
here in Hong Kong and had decided to come. One was Israeli and they said, "Well, we have problems in our own country, but we still have tourists
there."
But most tourists simply haven't come. There are reports from colleagues and other people we know that flights coming into Hong Kong, flights
leaving Hong Kong, they are a lot emptier than usual.
The fact that many of these tourist spots that we have been to are very quiet. Some of the stalls that expect August and September to be their
busiest here, say they haven't seen it this bad in years.
So quite frankly, the first thing that has to happen is the protest need to end. There needs to be some kind of political agreement. But at this
point, the Chief Executive, Carrie Lam doesn't appear willing to meet any of the five demands that the protesters are asking for.
And without that, the protesters don't seem willing to stop coming out onto the streets. Carrie Lam did say that she had a dialogue with some young
members of the community that it was a start on Monday. But without accepting any of those five demands, it's difficult to see how Hong Kongers
who are protesting will stay home and end this -- Zain.
ASHER: You're right to say the first thing that needs to happen is for the protest to end. Paula Hancocks live for us. Thank you so much. All
right, coming up here on FIRST MOVE. Brexit backlash, as political turmoil continues in the U.K., how are businesses reacting with just two months ago
until the U.K. leaves the E.U.
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[09:40:27] ASHER: All right. Welcome back to the FIRST MOVE. U.K. Prime Minister Boris Johnson is facing multiple challenges to a suspension of
Parliament. Critics are claiming it will give lawmakers less chance to stop the U.K. crashing out on October 31st without a deal.
As the political Brexit battle continues, how exactly are businesses feeling. Ian Wright is the Chief Executive of the U.K. Food and Drink
Federation which represents more than 4,000 businesses. He joins us live now.
So Ian, now that the possibility of a no-deal Brexit is looking slightly more set, how can businesses prepare for the worst case scenario?
IAN WRIGHT, CHIEF EXECUTIVE, U.K. FOOD AND DRINK FEDERATION: Well, I think it's the case that it's looking more and more likely that we will go down
to the wire on a no-deal Brexit. And that means not just that businesses have to prepare, it also means that they have to do so knowing that just as
in March and April of this year already, it's quite likely that we won't go over the cliff at the point from which we're currently expected to do so.
So not only are they having to spend the money for the third time on getting ready for a no-deal Brexit, they're doing so in the knowledge that
it might very well not happen, which isn't a very happy outcome.
ASHER: Even right now, you have the pound weakening. I mean, how is that affecting businesses for people or companies rather, that rely on importing
a lot of goods?
WRIGHT: Well, actually, that's probably the most immediate impact of this announcement yesterday from the Prime Minister. And the currency is
actually the unseen hand in all of this Brexit issue, because every time we get a new announcement, or a new piece of news or something that makes
people believe that no-deal is more likely, the currency weakens quite appreciably.
Now, this is a country which imports 40 percent of its food, and that isn't finished goods by and large, that's imports. The vast majority of those
finished good of those imports come from the E.U. So we are very vulnerable to currency fluctuations, and that yet causes another cost for
business in what is already quite a difficult economic situation.
ASHER: So is there anything that businesses that rely heavily on imports? I mean, you mentioned 40 percent of British food is imported? Is there
anything concrete that businesses can do to either cut out the middleman or to lower costs in this environment?
WRIGHT: Well, what they have to do to prepare for a no-deal Brexit is by and large stockpile ingredients on this side of the channel. And if their
exports is stockpile finished goods on the other side of the channel or in Ireland, in order to avoid the disruption that we're going to see at the
ports if there is a no deal Brexit.
The government itself is forecasting that the capacity of the Dover-Calais route could be reduced by half in the three months after a no-deal Brexit.
That means almost all lorries going either way across either with exports or coming in with ingredients could have an up to two-day extra wait at the
ports. That means that a whole bunch of products won't be available in the U.K. because they have short shelf lives and arrive fresh.
Now that adds together with the currency that all adds to the cost of product at the end of the day for the shopper or the consumer. The only
way you can avoid that is by hedging the currency or by stockpiling ingredients and finished goods.
ASHER: Some people are hoping that the weaker pound will bring in -- possibly bring in more international customers. Is that providing any kind
of glimmer of hope for the businesses that you represent?
WRIGHT: Well, in the long term, the very long term. The whole business of a Brexit and a no-deal Brexit is supposed to make Britain more
international. The trouble is the long term is a very long way away, and the short term issues which we will face over the next 10, 12, 14 weeks are
so serious that many businesses may not get as far as the long term.
The other thing is that, this is an international, but very integrated supply chain. So trying to unscramble the supply chains which have been
built up over 40 years in fewer actually really than 40 days is a real challenge for any business and it is unlikely to be a good thing to do
under pressure.
So I don't think that the long term prospects of more international trading are terribly important to most businesses at the moment.
[09:45:12] ASHER: So what should the government do, do you think or be doing, do you think, Ian to provide businesses with more reassurance at a
time like this?
WRIGHT: Well, the thing that really -- I find quite surprising about the Prime Minister's decision, which is undoubtedly a great coup of theater,
it's very dramatic and it illustrates his determination to get a deal done or to leave the E.U., as he said, "do or die."
The problem is that it also cuts down on the parliamentary time available to get all the legislation through that is required for a no-deal Brexit to
work even on the government's own terms. So one example of that would be that the rules on immigration, the so-called end of free movement of labor
needs to be put in place through an immigration bill that has to go through Parliament.
By proroguing parliament, he puts that legislation at risk. Similarly, the free trade deals that we're trying to roll over with countries like Korea,
Tunisia, Jordan, Mexico, have all got to be put through Parliament before they can become effective, and the time available for that is being
constrained.
So I think the problem with this exercise of proroguing Parliament is that it actually makes the government's valid aim of turbocharging a no-deal
Brexit in preparations for a no-deal Brexit, it's like turbocharging them and then switching one of the engines off, which doesn't seem to me to be a
very effective way of proceeding.
ASHER: And, actually, Ian beyond just planning for a no-deal Brexit, are businesses, they're planning for a possible recession at this time?
WRIGHT: I think many businesses are very concerned about the economic future in the next six to nine months. I mean, we've seen a number of
conflicting signs in the U.K. economy.
The labor market remains astonishingly buoyant, and that is a good thing. But every time we've seen a recession over the last 30 years, we've seen
them take different characters.
Now, you wouldn't traditionally think you could have a recession with a buoyant labor market, but I think we're beginning to think that could
happen. And we are only one quarter away from the technical definition of a recession.
We have the disruptive effects of people stockpiling product in February and March for the potential April exit, which means that the whole economic
cycle is being disrupted. People have bought forward, but -- excuse me -- but it does mean that the summer has been very quiet and output has fallen.
So it's quite difficult to work out what the statistics are telling you. But I think most British food manufacturers would be hunkering down for
quite a difficult few months, caused partly by Brexit, partly much more immediately by the currency and certainly by rather bitter economic
prospects.
ASHER: Ian Wright, live for us there. Thank you. Chief Executive of the U.K. Food and Drink Federation. Appreciate you being with us. All right,
up next, artificial intelligence on the court. How IBM hopes to transform the U.S. Open?
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ASHER: All right, welcome back. Serena Williams' tightly fought victory against teenager Caty McNally was the match of the night at the U.S. Open.
But McNally is not the only competition newcomer threatening to disrupt the game.
IBM has used the competition to launch its Coach Advisor, which uses artificial intelligence to hone a player's game. Joining me now is Noah
Syken, Vice President of Sports and Entertainment Partnerships at IBM. So just talk to us about this new piece of technology and what exactly it
would offer.
NOAH SYKEN, VICE PRESIDENT OF SPORTS AND ENTERTAINMENT PARTNERSHIPS, IBM: Sure. So we have created -- we've used AI at the U.S. Open for several
years creating sports highlights. I mean, there's so much rich data inside video. And we've Watson tennis. What a break is? What an ace is? What
are all the critical points of a tennis match?
We've taught Watson to listen for crowd cheers and look for gestures of excitement from the players, and we used that over the past year or so to
create highlights for the U.S.T.A. content to use.
But we've actually now transition that same technology to start to help players and coaches, and so we realized that those same kind of data sets
can actually measure the energy levels of the players, how fast they run? How quickly they stop? And we start to calculate new data sets around the
energy they're spending. And those players now have a new tool to actually understand how they really feel not in their gut, but from the data.
And so the coaches now have an opportunity to not just rely on the player's intuitive sense about themselves, but to teach those players really what it
means from a physical exertion standpoint, and where their optimal performance level is at.
ASHER: So it will allow the coaches to use data from AI.
SYKEN: Sure.
ASHER: To help improve a player's performance. So specifically, what sort of performance metrics? I mean, I know you mentioned a few things that
Watson will can listen out for, but what sort of performance metrics will we be getting from the players?
SYKEN: So really this technology is three to six months old, so we're still training it. And it really helps calculate what the optimal
performance level is within, you know, within their energy system.
And so, you know, fundamentally, coaches only rely on players today for their sense of themselves. But at the end of the day, there's a point in
their energy system where they're performing at their peak. And beyond that, their performance actually starts to decrease.
So identifying that sweet spot --
ASHER: They get to know themselves better.
SYKEN: Exactly. I was, you know, I was a pitcher, a baseball pitcher and the coach always said, "How do you feel?" And I always said, "I feel
great, leave me in, coach." But the coach never had the tools to say, "You may say you feel well, but based on your historical performance, we know
you're about to hit the tipping point. And your performance's spark is going to decrease."
ASHER: So how do you think AI is going to revolutionize professional sports going forward?
SYKEN: Sure, sure. So that's part of it, coaches and players are starting to tap into it. But if you think about all of the sports content, and all
of the over the top services, all of the leagues and teams who are starting to put out there, there's an enormous amount of content that people will
have to sift through.
So if I'm a consumer, at the end of the day, we think that AI is actually going to play a great role to be able to get me to the right content on
whatever platform that is my choice. I'm a baseball fan, a soccer fan, a football fan. There's so much content out there, how do I sift through the
noise and get right to the content? We think AI is going to play a role from a consumer facing standpoint in that way.
ASHER: I mean, obviously, you know, there are advantages to relying on AI for this sort of thing, but there are also going to be challenges and
pitfalls to that as well. I mean, just walk us through what you think, obviously, you work with IBM, but what do you think might be the potential
challenge to something like this?
SYKEN: Well, you know, it's hard to predict. But I think the key here is that our AI is really in assistance of the humans on the ground. So in
assistance of the coaches who really know, you know, what's going to be important for players, it helps the content teams at the USGA at Wimbledon
at the Masters all the places that we show up.
So we never think about AI alone making decisions. We always think about that pairing of AI with humans, and how the AI makes the humans better. So
I'm not sure we're going to -- we really think about it as the unforeseen pitfalls of AI because that marriage of man and machine is actually what's
going to help balance that out.
ASHER: All right, Noah Syken live for us there. Thank you so much. Appreciate it.
SYKEN: Thanks for having me.
ASHER: Okay, before we leave you, let's take one quick look at the market. Let's see. We've got a nice little rally going on here. The Dow is up 300
points. Stocks are actually up over one percent across the board after the Chinese Commerce Ministry attempted to turn down the heat in the trade war.
Every sector on the S&P 500 is trading higher right now.
[09:55:09] ASHER: Tech stocks and consumer stocks are the biggest gainers. We've also got U.S. bond yields ticking higher today after falling to
multi-year lows earlier this week.
Again, you can see the Dow there across the board higher. The Dow, the NASDAQ, and S&P 500 across the board higher after China actually came out
and said that they want to have face-to-face talks with the United States to de-escalate the trade war.
They also want to make sure that they are not going to be retaliating against the U.S. tariffs that have been put in place already.
So now the market is happy because we are seeing this sort of calming down, this de-escalation in terms of the U.S. trade war with China, but obviously
as I was saying with one guest earlier in the show that we are one tweet away from all of that turning around. This is a very volatile environment
to trade and you see there, we did get earnings from Best Buy. They are trading lower right now.
That is it for the show. I'm Zain Asher. Thank you so much watching. IDesk with Robyn Curnow is right after this short break.
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