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First Move with Julia Chatterley
President Trump's Assessments Of Turkish Military Action In Syria; Boris Johnson And His Irish Counterpart Meeting For Talks; LVMH's Q3 Earnings Giving Luxury Stocks A Lift. Aired 9-10a ET
Aired October 10, 2019 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:32]
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: Live from the New York Stock Exchange, I'm Julia Chatterley, this is FIRST MOVE and here is your need to
know.
A Bad Idea: President Trump's assessments of Turkish military action in Syria. All you need is a Brexit deal in Liverpool, Boris Johnson and his
Irish counterpart meeting for talks. And dazzling Dior. LVMH's Q3 earnings giving luxury stocks a lift. It's Thursday, let's make a move.
Welcome back to FIRST MOVE. Great to be back in action in what well and truly feels like game day, at least the latest game day in the U.S.-China
trade talks which have just began over in D.C. It's the 13th round of talks, in fact. Good job. It's Thursday and not Friday today or that will
be Friday the 13th to sort it there.
But anyway, yes, let's move on. It still feels like there's a risk of a fright here for investors if these talks go badly. Stock futures right now
a little bit softer. But oh, we've been on a bit of a roller coaster premarket with some pretty wild swings at one point.
Stocks down one percent premarket following Chinese media reports that talks could get cut short. The White House, meanwhile, playing that down
saying that they've had no indication that the Chinese plan to exit early here.
I know exactly what you're thinking. You're thinking that I sound like a parrot and this sounds exactly like the past 12 times of talks, and please
wake me up when it's all over.
Yes, you will be well within your right to say that. Tough to ignore the backdrop and this is key hereto. The talks come as the U.S. expanded its
blacklist of Chinese tech firm, if you remember earlier on this week, and of course, the ongoing NBA controversy that put Hong Kong protests front
and center, too.
That said, the optimists were out in force yesterday, stocks rising around one percent on the hopes of some kind of mini deal coming through here,
including a pact on the Chinese currency, perhaps even a carve out for tech giant, Huawei. We've had it all before.
I've argued for a long time now there's two deals here. There's a trade deal and there's a tech deal to be done here, too. And the latter is going
to be far more difficult. It still feels like a huge stretch.
Investors, though, more broadly optimistic. The S&P 500 still sitting some three and a half percent away from record highs. The risk of
disappointment here and I'll continue to argue this, too, is high, five days out now from a potential rise in tariffs.
Let's get to the drivers because Christine Romans joins us now. Christine, great to have you with us. Just as those talks kick off in D.C., of
course, and back to my point there. There's two deals here -- a trade deal and a technology deal. And I just don't think we're any further forward on
the thorny one here, which is the technology deal.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: Couldn't be a resolution if either of these two deals at this meeting, if you listen to
the whispering classes in Washington, D.C. and in Beijing right now.
I mean, the best that I think you could hope for is that it doesn't get worse, and that they keep talking and that's how kind of both parties have
been playing it this week, they're kind of guiding expectations.
Earlier this week, it seemed like the Chinese were guiding expectations to a very narrow deal, and that was greeted as negative by Wall Street. And
then by yesterday, expectations of achieving a narrow deal was greeted as positive because it would be something, at least. So how Wall Street
reacts still remains to be seen.
The leverage that the White House has here, though, is pretty significant. You're right to point out next week, there's a deadline, October 15th when
you've got a whole bunch of products that the tariff rates are going to go up to 30 percent.
And there's another bit of leverage that the White House has moving forward into December when there's yet another 15 percent tariffs on $160 billion
worth of consumer-facing goods that go into place here.
So I think a win would be really not a loss is what they're looking for here; not to put new tariffs in is what the Chinese would like. Big Ag
purchases, perhaps would help a little bit on the U.S. side. But I don't think anybody thinks, Julia, you're going to get a resolution of these two
thorny trade issues -- tech and the broader trade relationship in this next 24 hours.
[09:05:05]
CHATTERLEY: Yes, basically what you're saying is no further escalation looks like a win here.
ROMANS: Yes.
CHATTERLEY: That's the situation that we've got to, and in the meantime, for businesses, for the economy, the uncertainty, the concerns remain here
and again, if you look at the Fed Minutes from yesterday, the Federal Reserve, putting trade front and center.
This is the big bargaining chip, the risk factor here for the U.S. economy, and the White House needs to recognize that.
ROMANS: It's so true. And you even look at some of these numbers coming out. I mean, we're a year and a half into a trade war that had had a cost
of $34 billion on importers, that's a big trade group that is against these tariffs, by the way. Put these numbers together, $6.5 billion in tariffs
Americans paid in the trade war in August of this year.
So even if you don't have an escalation, even if it just stops as it is right now, it is still a drag. It is still uncertainty going forward.
Now, I've been talking to a lot of people in trade land, who have been watching this and they've been saying that, you know, the Chinese are
looking past the 2020 election. They see a wounded President, and they would rather take a deal in 2021 with whoever is the President than a bad
deal in 2019.
Also internally, you know, changing Chinese laws still a sticking point. That is something that the White House wanted, remember way back in March,
when the trade talks really fell apart. They thought they had a deal in principle, the Chinese backed away. The Chinese aren't going to walk any
closer to that line today than they were then.
CHATTERLEY: Yes, it's going to be an interesting strategy as long as they get President Joe Biden in the future. If they get President Elizabeth
Warren, then I would refer them to her recent blog post on China and the way she takes an approach to China and it could be even more lively,
perhaps. Christine Romans, thank you so much for that.
ROMANS: Buckle up.
CHATTERLEY: Yes, buckle up. We're strapped in. All right, let's move on to our next driver now. The Turkish military says its operation in Syria
is continuing quote, "successfully." This is an advance in the northeast.
Kurdish SDF forces report, at least 11 people dead, including civilians as the operation enters its second day.
A short while ago, Turkey's President rejected international criticism of the incursion, saying over a hundred quote, "terrorists" have been killed.
Nick Paton Walsh joins us now from the border. Nick, I guess it depends on your view on who the terrorists are here ultimately, but just bring us up
to speed with the action and the activity you've seen over the last few hours.
NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Join me here with a skyline that has transformed in the last hours. We've been seeing
repeated strikes, it seems artillery rounds impacting over there. And that is obviously the Syrian side of the border, Tall Abyad, which it seems is
increasingly less in the hands of the Syrian Kurds that took control of it when they kicked ISIS out of it.
We've seen Turkish military vehicles come from inside Syria towards the border here seemingly cross over that puts evidence to the Turkish military
statement last night that they had begun their ground operation, but clearly today, the move to take Tall Abyad behind me is continuing.
Now, we're hearing from our colleagues on the other side of the border that some of these plumes of smoke, you might be seeing are from tire fires set
by the Syrian Kurds in their positions to try and obscure the view of the advancing Turkish forces.
I have to say though, I mean, this is second largest army in NATO. So given the Syrian Kurds who were often complaining about how old and
inadequate their weapons were to fight ISIS when we were with them, they will have a tough chance pushing back any advancing Turkish force.
But for Turkey, the news is also bad today. We've heard today ourselves from officials in the town that the blasts we heard were in fact mortars
landing near the Government Center and the Riot Police Headquarters. That has caused six or seven people to be injured, we heard from government
officials.
The first that we are aware of, of retaliatory strikes, presumably from the Syrian Kurds to land inside of Turkey.
President Erdogan though clear in his determination, it seems to continue what he considers to be an operation to rid their southern border of what
he refers to as terrorists, the Syrian Kurds.
But it's fair to say the Syrian Kurds are the ones fighting terrorists with American backing for the last four or five years.
This is a complexity that Turkey has entered into here. But Erdogan's statement today very clear that if the E.U. doesn't quote, "pull itself
together" and stop referring to this as an invasion. In his mind, that's simply returning these parts of Northeastern Syria to the Syrian Sunni
Arabs that are in the midst of this Turkish military invasion.
If Europe doesn't stop calling it an invasion, then it's entirely possible they will send the 3.6 million Syrian refugees that are in Turkey towards
Europe.
Remember, part of Turkey's goal here is to send those millions of Syrian refugees displaced by the Syrian Civil War back into Syria itself and
Turkey hopes to create a corridor along the border here in which that can peacefully and safely be done.
The issue is how wide and extensive will this operation be. I heard from U.S. official familiar with this area, well, that their assessment is that
initially, certainly, the Turkish military will aim to take Tall Abyad here, all the way down to Ras al-Ain, a two-hour drive along the border
here potentially as much as five miles deep initially, and then possibly might go for the whole stretch of the border that is currently held by
Syrian Kurds.
That is a massive operation if undertaken, one that could take weeks, if not months, involving clearing populated areas will cause many displaced.
And of course, we're also reminded today that there is an issue with the ISIS detainees.
The White House has said that they will be given to Turkey to be in Turkish custody. You're hearing outgoing blasts there that may soon land in a
distance over behind me.
But two of the most prominent of those ISIS detainees, the so-called "Beatles," Kotey and El Shafee, British citizens responsible or accused of
mistreating Western hostages held by ISIS. They've swiftly been transferred to U.S. military custody and are thought to be in Iraq on their
way potentially to trial in the U.S., a sign maybe that the White House doesn't really value the Turkish promise to hold them in custody,
particularly well.
But still this operation behind me advancing fast. Back to you.
CHATTERLEY: So many important questions that are being asked, Nick, and including the depth of this offensive, which clearly at this stage, we
don't know. Nick Paton Walsh there for us. Stay safe, Nick.
All right. Let's move on to our next driver. The NBA game in Shanghai is on, even if you can't watch it on television there, still the stadium two-
thirds full and there also has been some off court drama with the NBA Commissioner canceling his pre-match press conference amid the broader Hong
Kong tweet storm.
Of course, David Culver is in Shanghai at that match. He has been covering the story for us. David, it looks like strong support, even to my point,
though, if viewers in China don't get to watch this match. What are people there saying?
DAVID CULVER, CNN CORRESPONDENT: That is a great point. Yes, that's a great point, Julia. Yes. The perspective of the only Chinese citizens
really officially allowed to be able to see this happening live are the ones who are inside the stadium. We just stepped out from the courtside.
We're in the press center, but still within the stadium. So they're the ones who are able to watch it as it's going on.
And behind me, it looks like it's all set up, right, for a press conference. Beautifully lit. They've got the podium ready. But we were
told just before the game that Adam Silver, the NBA Commissioner will not be taking to that podium. And after the game, the players aren't going to
be speaking in any postgame press conferences like we usually do hear from them.
So that suggests to us, Julia, that this is still incredibly sensitive, that things are still being worked out to the point where they don't want
something to be said that could be misconstrued and then further deteriorate, what is already a very strained relationship between the NBA
and China.
Speaking to some of the fans inside the stadium, I wanted to get a feel for what actually brought them out to be there as Chinese citizens who are
hearing their government very upset and angry. And as they put it, their feelings hurt based on what the NBA and the Houston Rockets did.
They said they still love basketball. They still wanted to show their support. They're wearing their jerseys as they're in there as the players
took to the court in tip off. They were screaming. They were they were electric.
I mean, it's like as though you were in Madison Square Garden or Capital One arena wherever normal games happen. That's what you feel inside that
arena and by the court.
They do point out, though, that in their minds, their country comes first. Now they're saying that -- and they all seem to be carrying little Chinese
flags. It's not clear if those were handed out. My suspect -- I do suspect that that is the case and I am working to actually figure that out
because everyone seems to have them, and they say that's to show that patriotism is first for them -- Julia.
CHATTERLEY: Yes, it's interesting whether or not that will continue or whether consumers and Chinese consumers' love of basketball will perhaps
push this forward in the NBA's favor. We shall see. David, fantastic to have you with us. David Culver there.
All right, let me bring you up to speed now is some of the other stories making headlines around the world.
In Washington congressional leaders are plotting their next move after the White House vowed it would not cooperate with their Impeachment Inquiry.
House Democrats are preparing a wave of subpoenas two days after the administration blocked testimony from the U.S. Ambassador to the European
Union.
Meanwhile, former Vice President and current presidential candidate, Joe Biden has called for President Trump's impeachment for the first time.
Suzanne Malveaux joins us now. A lot of people here saying that on that point, at least, better late than never for Joe Biden. If you compare and
contrast with the presidential candidate, Elizabeth Warren, she was very much on the front foot here. What difference do we think this makes for
Joe Biden and for the President here?
SUZANNE MALVEAUX, CNN U.S. CORRESPONDENT: Well, we know that Joe Biden is really trying to appear that he is a fire, that he is ready to take this
on. This has been a very aggressive campaign against him and he realizes looking at the poll numbers they have dipped, and perhaps a cost for the
last couple of weeks or so that this drumbeat has continued to push against him, to allege corruption by him and his son.
[09:15:10]
MALVEAUX: All of these investigations, these allegations simply debunked. And so he realizes that he has been told by various supporters that he has
to come out a lot stronger.
And yes, you're absolutely right, Julia, he is behind many of the presidential candidates who have already called for this.
And of course, the backdrop to all of this is the President's own behavior. That letter that the White House sent to House Speaker Nancy Pelosi saying
we are not going to cooperate at all with this impeachment investigation, that also demanding that there be a full vote for the full House when
Members of Congress come back from recess for an Impeachment Inquiry - that is a battle that is ensuing and taking place.
And then you have the President, making at least three phone calls to the Senate Majority Leader Mitch McConnell, each day trying to encourage him,
trying to circle the wagons and make sure that Republicans are behind him when it comes to this Impeachment Inquiry, saying that they have to be
unified, go up against his detractors, and there are very few detractors when it comes to Republicans. But you have senators like Mitt Romney, who
are openly critical.
One of the things, too, Julia, that the strategy of the GOP seems to be as I looked at my Twitter this morning, and I saw one of the leaders,
McCarthy, who actually tweeted out this morning saying that the Democrats are obsessed with this Impeachment Inquiry - that they are not getting
their jobs done.
And so that is part of really the strategy, if you will, to hit back and say, look, the Democrats aren't even doing their jobs. This is something
that is leading down a rabbit hole and we're just not going to participate.
CHATTERLEY: Yes, but for our viewers, I think this is such a critical point to make. He can be impeached in the House. But if the Republican-
controlled Senate will not vote to impeach the President, then he remains and the only way the Democrats get him out is seeing him elected out in in
2020. Such an important point.
Suzanne, fantastic to have you with us. Thank you so much for that. Suzanne Malveaux there over in D.C.
MALVEAUX: Thank you.
CHATTERLEY: All right. Let's move on. A 27-year-old male has been arrested in an Eastern German town of Halle suspected in a deadly shooting
rampage.
A woman was killed near a synagogue and a man was fatally shot outside a kebab shop. The gunman appears to have live streamed the attack online and
can be heard making anti-Semitic comments on the video.
The attack occurred on Yom Kippur, the holiest day of the year for the Jewish community.
Two Rugby World Cup matches will not take place on Saturday as a result of safety concerns. This, because of a super typhoon set to make landfall in
Japan.
New Zealand's match against Italy and the contest between England and France have been canceled.
All right, we're going to take a quick break here on the FIRST MOVE, but coming up from dot com bubbles to financial trouble. I speak to the man
who's been through it all, the former NASDAQ CEO make his FIRST MOVE that's coming up on the show. Stay with CNN. We're back in two.
(COMMERCIAL BREAK)
[09:21:12]
CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange. We're counting down to the market open this Thursday, a bit of
cautiousness, I think feeding into what we're seeing in terms of the price action here, awaiting news and headlines from those talks over in D.C.; of
course the 13th round of trade talks kicking off today.
It's making a pretty tough trading environment, I think, at least for now. And speaking of tough trading environments. Take a look at the U.K.
economic growth numbers.
The U.K. economy contracting 0.1 percent in August amid Brexit and broader trade uncertainty. That's the first negative GDP reading since April.
Manufacturing plunging some 0.7 percent in August. That was significantly worse than expected. Just having a look at how the FTSE over in the U.K.
is performing higher by one tenth of a percent of the pound. Also a touch stronger against the dollar.
Where are we? Well, I can tell you 21 days and counting no deal on Brexit insight. The Brexit deadline looming large of course that Halloween 31st
of October is the date.
Today, Boris Johnson meeting his Irish counterpart, the Taoiseach to try and break the impasse. Nic Robertson joins us now. Nic, is there any hope
that they can achieve some kind of breakthrough in these talks today?
NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: You know, I think the expectation of a breakthrough has really been played down by both sides.
I mean, look at this scenario, for example, it's not happening in London, it's not happening in Dublin, where you would naturally expect these
meetings to normally take place. We only found out about the location of this meeting a few hours before it took place.
Both of these Prime Ministers, Boris Johnson and the Irish Taoiseach, Leo Varadkar, both like the cameras yet here they are today holed up in a hotel
in Merseyside spending two hours of those last 21 days here, trying to see if there is any way that they can bridge the current gap and that that
impasse.
The biggest part of that impasse really is that Boris Johnson's latest offer essentially says that Northern Ireland will come out of the E.U.
Customs Union, along with the rest of Great Britain.
The European Union, the Irish, of course included with them are saying that's a no-go, and that's the major stumbling block at the moment.
Everything is set up at the E.U. right now for a Leader's Summit in a week's time, and they're supposed to ratify the agreement. But look where
we stand right now. It doesn't seem that there's going to be an agreement by then.
So are we talking about extensions? Are we talking about more political fighting here in the U.K.? Legal fighting? Is Boris Johnson going to
follow the law here and put in for that three month extension? All of these questions in the air? We haven't yet heard from either of them here.
What we may hear today. I don't know. We may not hear much -- Julia.
CHATTERLEY: Right down to the wire, it seems once again. Nic, fantastic to have you with us. Nic Robertson on that story there.
All right, let's move on because the luxury sector is getting a lift today as I mentioned earlier, LVMH's Q3 earnings beating expectations. Anna
Stewart has been pouring over the numbers. Sales here defying gravity, Anna. Talk us through it.
ANNA STEWART, CNN REPORTER: Yes, they really took me by surprise actually, Julia because if you look at the backdrop of a global trade war, of a key
market like Hong Kong rocked by protests and many stores actually had to close their doors temporarily in recent weeks.
And yet and yes, look at this, sales expedient currency movement is up 11 percent in the third quarter. Sales was strong not just in China, a key
market, but broadly Asia and Europe and the U.S., too.
So with my surprise, I did speak to an analyst, they said it just shows how super, super brands like the ones under LVMH's umbrella are incredibly
resilient.
And although you have China's economy slowing, although you are seeing consumer demand dip, we saw some soft numbers in the summer, we're looking
at the very high-end luxury consumer here and they are resilient. And actually China is currently creating two billionaires a week.
[09:25:09]
STEWART: That is the sequence sparkly version, Julia. I would say that if China catches a big enough cold, LVMH will struggle.
CHATTERLEY: Yes, it's going to be a fascinating to watch, I think. Something else actually that struck me in the last few weeks and I've
actually written an article about it. Comments from Bernard Arnault, the Chairman of LVMH in light of Greta Thunberg's comments. He said that her
comments over the environment were demoralizing.
Last time I checked, all the growth in luxury was coming from the under 40s. I just wondered, is there going to be any sort of blowback on those
kind of comments?
STEWART: They were controversial comments. He said that he prefers positive solutions, rather than catastrophizing. LVMH -- they are
interesting here. They do have their own sustainability goals. And now, of course, to meet them, they're going to cover 30 percent of energy needs
next year from renewable sources, and so on and so on.
But they have been a bit different. They are very competitive when it comes to sustainability. They are not joining a pact led by caring rival
on these goals. They don't want to sign up to any kind of pact.
Speaking to analysts, I did ask, will they see a drop of sales, particularly for the younger consumer, and he says currently, no. If and
when it happens, and we're looking much longer term, they may be keener to strike more of an environmentally friendly pact. They may, you know, join
forces with other brands, but currently, they don't.
Also their supply chain is so complex. They don't want to sign up to anyone else's pact unless they can actually meet it.
Anti-fur protest. That was 20-30 years ago. It took a long time for any brand to actually make any changes there. This could be a much longer term
shift that we see -- Julia.
CHATTERLEY: Yes, putting the planet before profits. It's going to be an ongoing conversation. Anna Stewart, thank you so much for that.
All right. Okay. We will return to the market open and that follows this. Stay with us. We're back in two.
(COMMERCIAL BREAK)
[09:30:00]
CHATTERLEY: Welcome back to FIRST MOVE and the opening bell here at the New York Stock Exchange. We've got a bit of pressure on stocks as
anticipated in early trading after a pretty volatile session premarket. Investors right now have little clarity over where the U.S.-China trade
talk stand.
Do we get some kind of mini deal? Are we looking at an ongoing trade truce? Who knows? I think the bottom line here, a win will be no further
escalation. And we've got five days really to see whether or not we get that.
The Fed, of course yesterday in the Minutes cite trade as their biggest concern when they lowered rates at the September policy meeting. The
question, of course, is how does that play into what we get in the October meeting?
At least inflation for the Federal Reserve is not a worry here. New numbers showing consumer prices were unchanged in September. Perhaps
giving the Fed at least room on this front to cut rates further later this month.
All right. Let me walk you through our global movers hereto. Apple shares trading higher in the session. The company removing a controversial app
that allows protesters to keep track of the police in Hong Kong. More details on that later on in the show and what the company, the app
developers are saying about it.
What about GM shares? Well, they're higher by some eight tenths of one percent. The company announcing that car sales in China fell 17.5 percent
in the third quarter. That's the fifth straight quarterly sales decline for GM in China. I think challenge is the word there.
Trade related stocks like chipmaker Micron, Caterpillar also seeing a bit of movement hereto. Caterpillar higher by some half a percent in the
session today.
All right, since the start of the trade war almost one and a half years ago, shares of both companies have gone virtually nowhere, with both down
around two percent over that time.
All right, let's bring it back to one of our top stories now. President Trump's decision to pull U.S. troops out of Northern Syria is having deadly
consequences.
Turkish military says its troops have hit 181 targets so far in Syria. CNN reporters on the ground tell us they're seeing civilians, including
children fleeing the shelling on foot.
Republicans here in the United States are among those slamming President Trump, accusing him of abandoning the Kurds. President Trump seemed to
downplay the alliance with them saying that they didn't help the U.S. during World War II.
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Now the Kurds are fighting for their land, just so you understand. They're fighting for their land.
And as somebody wrote in a very, very powerful article today. They didn't help us in the Second World War. They didn't help us with Normandy.
(END VIDEO CLIP)
CHATTERLEY: That in a press conference yesterday. We're now joined by U.S. Colonel Cedric Leighton joining us from Washington. He's also CNN
Military Analyst. Colonel, fantastic to have you with us. Your assessment to begin with what we've seen in the last 48 hours in Syria.
CEDRIC LEIGHTON, CNN MILITARY ANALYST: Well, Julia, it's great to be with you. The basic assessment is that Turkey is moving its plan forward to
occupy about 18 miles of territory into Northeastern Syria.
So what they're doing is they're establishing a buffer zone, and this is something that we thought would happen anyways. They would want to do
this. They've indicated for basically over a year now that they wanted to take territory from the Kurds, because they want to make sure that Kurdish
forces don't exercise terroristic attacks against -- don't mount terrorist attacks against Turkish territory. So that's one part of it.
The other part of it, though is that the forces of the Syrian Democratic Front, the basic forces that we've been allied with from the U.S. side in
the fight against ISIS, are really abandoning their positions against ISIS and guarding the ISIS prisoners and also mounting up military operations
against the remnants of ISIS and they're turning toward fighting the Turks.
And so this is weakening the fight against ISIS. As much as, you know, we don't talk about that right now, that's still a significant issue.
CHATTERLEY: Some of the pushback on the criticism of President Trump's actions in the last few days has been, look, the caliphate itself for ISIS
has been erased and actually the remaining counterterrorism efforts that could take place and not ones that can be done by having troops on the
ground here. Is that a strong enough argument at a justification or do you disagree here?
LEIGHTON: I actually disagree, because when it comes to counterterrorist operations, the best counterterrorist operations are mounted by troops that
are actually on the ground in the area that we're targeting.
So in the case of the fight against ISIS, what you're looking at is the need to maintain a presence in Northeastern Syria and in Iraq to go after
the remnants of that group.
If you're not there, they'll fill that vacuum. And the idea of us leaving that area before the job is done, which is exactly what is happening is a
very, very bad idea at this point.
CHATTERLEY: The President called what he has seen in in Syria now and the Turkish response, a bad idea. He said earlier this week that he would
obliterate the Turkish economy if they went off limits. Do we have any sense of what off limits in this mind of this White House represents here?
LEIGHTON: Well, I don't think it's, you know, really a hard and fast set of limits that he has established even in his own mind. But what the
President is basically saying is, if the Turks violate certain norms of human rights, then we would put a stop to it.
But it's a lot harder to put a stop to something if you're not physically present. And in fact, it's almost impossible to do that.
So the threat against the Turkish economy or against Turkish military forces, if you take it to its logical conclusion, is really not very
viable. And the Turks know that and they're going to act with impunity.
They're not going to really abide by the niceties of Human Rights Conventions or anything like that when it comes to dealing with the Kurds
and that's going to be a really big tragedy for that group of people.
CHATTERLEY: You know, in the end, it has to be a diplomatic solution, whether it's a Russian, Iran, a greater U.N. Security Council, action or
activity, there has to be diplomacy involved here in order to end the Civil War. And it's been something that we've been talking about now, for years
and years and years. Is it further away -- a diplomatic solution -- as a result of what we've seen now over the last 72 hours in your mind?
LEIGHTON: I think it is, at least when it comes to the United States being involved in diplomatic solutions. So the minute that you either alter your
presence into the downside, or you eliminate that military presence, the less leverage you have on the diplomatic bargaining table.
And in this case, I think what we're going to see is Russia and Iran, and the government of Bashar Al-Assad, in Syria, profiting from this withdrawal
of American forces.
The Turks and the Russians, and probably the Assad regime are working together in order to eliminate the Kurdish elements in Northeastern Syria.
And that is not only bad, from a moral standpoint, since these people are the ones that have really fought on our side to go after ISIS, but it's
also very dangerous from a humanitarian standpoint.
The refugees that Turkey has taken in are certainly a volatile lot. The refugees that remain in Syria, are even more volatile than those and that's
going to, I think, create a humanitarian crisis that may dwarf the crisis that we saw a few years ago, where there were so many refugees coming into
Europe, and the social strain that we saw in Europe may very well be repeated in the next few years, if we're not careful with this.
CHATTERLEY: Colonel, the President made a point yesterday of saying how heartbreaking it was to be with the families of soldiers who have lost
their lives, and their bodies are repatriated, and he has to talk to those families.
As a military person, as someone who has faced this time and time again, is there any justification for the withdrawal of troops, because the President
promised and has said that the United States can't be the police force of the world, particularly when there are other countries in the region that
needs to step up perhaps and take action and with greater responsibility here? Is there any justification, do you think?
LEIGHTON: Well, there is justification from a political standpoint, you know, in essence, the viewpoint that we have to withdraw and to worry about
our own problems here in the United States, as opposed to the problems of the world.
The problem with that view, though, is that if you withdraw from the world, the world will do things that you don't want it to do. And in this
particular case, where you have the Kurds that were really very good allies of ours, their sacrifices far exceed those of the United States in terms of
numbers of people killed during the fight against ISIS, that becomes a wrong move. You need to stay until the job is done.
You know, if you want to use a World War II example, as the President did, when he wrongly talked about the Kurds, the correct thing is that we really
provided influence and guidance to countries in Europe and in Asia, after World War II, and that proved to be a very successful model.
Military presence doesn't mean that you're fighting all the time, but it means that you're influencing all the time.
[09:40:10]
LEIGHTON: And that's very, very necessary in the world today.
CHATTERLEY: Yes, separation of the short term and the longer term. Colonel Cedric Leighton, thank you so much, sir, for joining us on the
show.
LEIGHTON: You bet, Julia. It was a pleasure.
CHATTERLEY: Thank you. All right, we're going to take a quick break. But coming up on FIRST MOVE, the former boss of the NASDAQ with a warning about
the next bubble to potentially burst. Stay with us. We're back in two.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE. The dot com bubble, the financial crisis, global recession, just a few of the tests that investors and the
markets have faced in recent years and one man navigated it all at the helm of the NASDAQ. And he is Bob Greifeld. And he has now written a book
about his exploits. It is called "Market Mover: Lessons from a Decade of Change at NASDAQ." And Bob joins us now.
Fantastic to have you with us, sir, great book, too. I really enjoyed it. My favorite chapter, I have to say was Institutionalizing Innovation. I
just want you to talk about that to begin, the way you went about it, your background as well as a tech entrepreneur and what you brought to the
NASDAQ.
ROBERT GREIFELD, CHAIRMAN, VIRTU FINANCIAL: So I would say this, we focused on being a lean, mean operating machine. And in that context, it's
really very difficult to have the iPad develop.
So what we did is, we basically set up a venture capital concept within NASDAQ itself and the deal was that if you came to this council and got
your new business approved, that did not count against your budget, so it was a certain way a free lunch.
You gave up sovereignty over the decision of whether you get the funding, but as a result of that you got to then invest in the business and that
changed the company in some fundamental ways.
It doesn't happen instantaneously. It was interesting in the beginning, we had a very difficult time getting new concepts to come forward. But as the
pump got prime, we saw more and more good business concepts come forward, this amazing amount of IQ points within an organization, a lot of market
knowledge, you've got to use that.
[09:45:18]
CHATTERLEY: I mean, you have to change the mindset completely because if you'd run this, the way that you approach the rest of the business with a
degree of prudency, I think, to your point, you would have never achieved the advances, the changes, the technological shift that you needed to
achieve at the NASDAQ without it.
GREIFELD: Exactly. And you also have to be comfortable with failure. I said, with respect to what we're trying to do, we're not going to have the
percentage of an NBA player shooting free throws, but we should be a top tier Major League Baseball player, three out of 10.
That means seven out of 10 endeavors you're prepared to say, okay, that did not work. So you have to have a question culture willing to accept that,
and obviously, that starts at the top.
CHATTERLEY: Fast forward to today, and we're asking questions, I think about the venture capital model, the mismatch perhaps that's appearing now
in valuations between what we see in private markets and what we see, for companies trying at least to come -- to go public. Never mind already
being public, WeWork as an example.
And you've suggested there are perhaps similarities to what you saw during the dot com, boom bust era. Can you just talk us through what you're
seeing perhaps here?
GREIFELD: Yes, I would say this. One, is I think WeWork is an outlier, right? So they have their own somewhat unique set of circumstances. But I
think what you could say today with great deal of confidence is if you're trying to come public, you better have a clear path to profitability.
If you do not have that, I think it's going to be a very difficult endeavor. The public markets can be quite understanding and quite long
term in thinking.
When you think about the biotech companies that come to market, they typically have to wait a decade before they go profit -- go profitable.
But people know there's a clear path there. So you have to have that clear path.
Even in the worst of times, right, the worst of times, if you are growing, and you're profitable, the IPO window is open.
CHATTERLEY: Have we spotted this early enough, do you think to avoid the boom bust that we saw back then with the dot com bubble? And I appreciate
that the situation here is very different.
But there are a lot of people looking at valuations looking at the impact of Vision Fund, of course, if Softbank's Vision Fund and the sheer quantity
of money that's being put to work by them here and going, you know, do we have a bigger problem here? Are we seeing the beginnings of a bigger
problem? Agree or disagree?
GREIFELD: I think I disagree. But you know, with some caveats, obviously, when there's a lot of supply of money coming in, it will tend to inflate
valuations. And then people will tend to move away from basic analysis of what is the market opportunity? What's your expected market share? What's
your profitability?
You start walking away from those analysis and get into competitive bidding wars for assets and bad things will happen?
So certainly in different points in time, you see different inflation and what assets are worth. And so we might have been through that, certainly,
we have a couple of examples where you can argue that, but by and large, what we've seen is public markets providing rationality to valuations, and
they do that better than private markets.
In part, private markets have a greater propensity to get the valuation numbers wrong than a public market would.
CHATTERLEY: Yes, and that's the problem when companies are staying private for longer and longer and longer.
GREIFELD: Yes.
CHATTERLEY: I want to sum up the book, because throughout the book, you literally -- you drop pearls of wisdom on what great leadership looks like:
Honesty, transparency, having debate. What's your best advice, advice for budding entrepreneurs today, and also, for leaders of businesses today that
are looking for ways to be better and to build stronger teams?
GREIFELD: Okay, so two things. One, with respect to the company, right, you always have to be in lockstep with the customer, you have to understand
exactly what the customer is thinking.
But I also say that the customer would give you the incremental value to your product, and that you have to just basically take directly from them.
If you want to make the big leap forward, you really don't get that directly from the customer. And I love the old line saying if I had
listened to my customers, Henry Ford, I would have built a faster horse.
So you have to then synthesize all your knowledge and say, okay, this is the leap forward, you have to do that.
With respect to teams I talk about, you have to get the right people on the bus. It's always about having the best team you can possibly develop.
I certainly have always believed in the one, three, five-year strategic plan. But I knew by definition, they were wrong -- dead wrong, right?
So the team on the bus had to be able to do course corrections and understand okay, this set of circumstances changed, we had this plan. It's
wrong. What do we do now?
So you have to have the right the team on the field, get the best group of athletes. You don't know exactly what skill set they're going to need.
That's where they have to be overall, you know, athletic in terms of what they can do and kind of basically respond to what the external environment
is giving to you.
[09:50:30]
CHATTERLEY: Yes, be flexible. Lots of sporting analogies there. We like it. Bob, fantastic to have you on. We'll get you back. Hopefully, at the
Stock Exchange as well if the politics allows it.
GREIFELD: I will surely do, Julia.
CHATTERLEY: Bob Greifeld -- naughty -- the former NASDAQ CEO and Virtu Financial Chairman, great to have you with us, sir. Thank you.
GREIFELD: Good to see you, Julia.
CHATTERLEY: All right. So let's take a break. Up next, though, Apple backs down as it becomes the latest business to feel Beijing's muscle over
Hong Kong's protests. Stay with us. All the details next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to FIRST MOVE and a look at today's "Boardroom Brief." Fidelity has become the latest broker to cut commissions for
online trading to zero.
Last week rival Charles Schwab stuns the industry when it announced that it would no longer charge fees for trading U.S. stocks online.
Its main competitor scrambled to follow suit sending share prices in the big brokers sharply lower. The company behind video game Fortnite says
players are free to speak out in support of Hong Kong protesters during online streams.
The CEO of Epic Games is speaking out after Activision Blizzard banned an eSports player for his support of the pro-democracy movement during a live
stream event. Epic is 40 percent owned by China's Tencent.
Alibaba CEO, Jack Ma remains the richest person in China with a net worth of $39 billion dollars. Second place goes to Pony Ma, the founder and CEO
of Tencent.
Tech billionaires continue to top the reports China's rich list. Pharmaceutical entrepreneurs now make up eight percent of the list.
Chinese food service moguls saw their wealth sore, too as pork prices surged. Good for the billionaires, not so good of course for the people.
Apple, we mentioned this story earlier. Apple has removed from its store a Hong Kong app used by protesters to track police. The decision comes a day
after Chinese state media accused Apple of opening the door quote, "to violent protesters" by allowing the app.
Hadas Gold joins us on this story. Hadas, the app companies are saying this is purely a political move by Apple. What do we make of this?
HADAS GOLD, CNN BUSINESS REPORTER: Yes, Julia, this app called HKmap.live. It used input from people on the ground saying where there was police
activity. How, HKmap has put out a series of tweets calling the move political decision, said it doesn't endanger police and that their
moderators take down any sort of input that might encourage criminal activity.
But Apple says that they were moved it because it is being used in a way as they say to hurt law enforcement. They say that they got complaints from
customers in Hong Kong, although notable that the takedown came after this app was heavily criticized in the official Communist Party newspaper.
[09:55:13]
GOLD: But in a statement, Apple says, that they verified with Hong Kong authorities that, "The app has been used to target and ambush police,
threaten public safety, and criminals have used it to victimize residents in areas where they know there was no law enforcement. This app violates
our guidelines and local laws and we have removed it from the App Store."
Of course, this is putting Apple along with a long list of companies that have come under pressure in China, as you noted in that introduction, and
there has been a lot of activity online of people criticizing Apple for what they say is bowing to Chinese pressure.
But China is a very important customer for Apple. It's a bright spot in areas where other sales might have lagged. Just to give you an idea of how
important China is to Apple. In their third quarter earnings call, China was mentioned 22 times -- Julia.
CHATTERLEY: Yes, it's an interesting one. I'm not sure any other government around the world would act differently when we're talking about
violent protests, but an interesting one for Apple.
That's it for the show, though. You've been watching FIRST MOVE. Time to go make yours.
(COMMERCIAL BREAK)
[10:00:00]
END
