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First Move with Julia Chatterley

Stocks In The Oil Giant, Aramco Soar On The First Day Of Trade; One More Day Of Campaigning Before Tomorrow's U.K. Vote; Baltimore Company Sharing $10 Million With Its Workers. Aired 9-10a ET

Aired December 11, 2019 - 09:00   ET

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

[09:00:18]

JULIA CHATTERLEY, CNN INTERNATIONAL HOST, FIRST MOVE: Live from London. I'm Julia Chatterley. This is FIRST MOVE and here is your need to know.

Saudi Aramco go. Stocks in the oil giant soar on the first day of trade.

Final countdown. One more day of campaigning before tomorrow's U.K. vote.

And then the surprise. The company sharing $10 million with its workers.

It's Wednesday. Let's make a move.

Welcome once again to FIRST MOVE coming to you live from London, the day before a historic -- another one, let's say -- general election and the

race has tightened according to a pollster that was pretty accurate ahead of the 2017 vote. The latest on all that coming right up.

But first, as always, let me give you a look at stock market futures in the United States. A bit of a mix start as you can see there, expected

following two days of pretty modest losses. There were hopes of course that we could get news of a delay in U.S. tariffs set to hit for the

Chinese products this weekend. So far, though, it remains just a rumor of delays.

On the brighter side though, House Democrats in the United States signing off on that U.S.-Mexico Canada trade deal, of course NAFTA Mark 2, so there

are bright spots abroad that global trade issues.

European stocks, let's take a look at those. They're having a pretty quiet session awaiting the U.K. votes as well, I think here. Asia stocks

finishing mixed. Although, take a look at Hong Kong, rallying more than three quarters of one percent.

Last but not least, of course on the agenda today, the Federal Reserve -- the U.S. Central Bank expected to hold rates steady today in its final

meeting before the holidays. Cast your minds back though to December of last year and they actually hiked rates and the markets reacted

accordingly, of course. We came close to falling into bear market territory. So what a difference a year makes.

Now, speaking of bears -- nothing bearish about the reaction over in Saudi to oil giant Saudi Aramco is the first day of trade. And that's where we

kick off the drivers, so let's get there.

Shares of Saudi Arabia's state oil company, Aramco riding high after their IPO. They jumped 10 percent in the session today. That's called limit up.

It means Aramco as a whole is now valued at almost $1.9 trillion dollars.

Nic Robertson, joins us now from Riyadh on the story. Nic, great to have you with us. If only we didn't know the back history here and the fact

that expectations on size, on geography had been scaled back, we could call this as good as it gets here on these moves today.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, stellar day. I mean, look, the read here in Saudi Arabia, despite all the distractions and

the detractions from this, you know, 1.5 percent sold rather than five percent, the anticipated original valuation at $2 billion down to $1.7

billion until where we're at today.

It's seen as a success that the Crown Prince has really been able to push this through. It's a vehicle for reform. It was a huge and heavy lift.

There was broken crockery right along the way, if you will.

The Energy Minister, the CEO at Aramco, the same man moved out of the way, replaced by two other people about in the past couple of months. So yes,

the shine taken off of this for international investors because, well, let's face it, when those international investors were invited here back in

2016, they were taken into the glitzy ritzy Ritz Carlton Hotel and given the high talk about how this IPO would be wonderful.

Yet less than a year later, 300 princes and businessmen from Saudi Arabia were locked up there. In essence, the government called it curbing

corruption. The international read was that this was consolidation of power by the Crown Prince, who really took fortunes offered to some of

those people.

So yes, that took some of the shine off of it. But today is a huge success, as you say, almost $1.9 trillion.

CHATTERLEY: It's interesting that you mentioned those fortunes being taken off people because that's a lot of the speculation that's going on right

now, it is given that they didn't launch this on an international exchange, who actually bought into this and you only have to look at the prospectus

to look at the security issues, the risks of investing here, that even they mentioned the drone attacks, I think the most recent issue here to

understand that there was reticence and who actually bought into this, Nic?

[09:05:05]

ROBERTSON: Yes, it really became much more of a Saudi thing, a regional thing to a small degree. But you know, there were reports that rich

people, and there are still rich people in this country who were pressured by the Crown Prince and his team to invest in this, that there was pressure

on them to do that, and also pressure on some banks to lend to, you know, some larger corporations so that they could invest as well.

So, look, you know, the takeaway here is that, you know, the amount of money raised $25.6 billion is a drop in the bucket for the Crown Prince.

That sort of money can get spent very quickly when you have huge projects like the $500 billion futuristic Neom City up on the Red Sea Coast.

But for the Crown Prince, this is going to give him the ability to leverage a huge amount, hundreds of billions of dollars' worth of borrowing on the

back of this flotation should he so desire.

CHATTERLEY: Yes, you make a great point. The symbolism here is all and it's incredibly important and an incredibly important step for Saudi Arabia

here. Nic Robertson, great to have you with us. Joining us there from Riyadh.

All right, next driver here in the U.K. It's the final day of campaigning before Thursday's general election. Boris Johnson's Conservatives still

ahead in the latest poll, but only just. Phil Black joins us now.

Phil, great to have you with us. The reason why this specific poll and the model that they use garner so much interest is go back to the vote in 2017

and they predicted the seats with 93 percent accuracy and what they're saying right now is the Conservatives lead has narrowed in recent days.

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: Yes, that's right, Julia. So this latest YouGov research, this snapshot if you like, seat by seat,

constituency by constituency shows that Boris Johnson's Conservative Party would get a majority of around 28 seats.

Now, that's 40 seats down from what the research showed just two weeks prior to that, so it's a significant tightening. It still shows the

majority, but because of the margin of error, it is still possible that the result could be greater than that or it could be less than that, too.

It could still be within hung Parliament territory, and there are other things that the research can't account for as well, such as tactical

voting, which in this Brexit defined election with party allegiances scrambled, perhaps in an unprecedented way, that is certainly something

that could impact specific constituencies and perhaps the overall result as well.

So because of all of that, because it is so tight, Boris Johnson today is arguing strongly his message to voters, is don't be complacent, don't be

lazy. It's simply too tight to be clear.

So if you want a Conservative victory, you've got to make sure you get to the polling station and vote for it.

He is also been very cautious. This morning, he was pursued somewhat, live on breakfast television here by a journalist seeking an interview, and he

was clearly going out of his way to avoid that encounter. Take a look.

(BEGIN VIDEO CLIP)

BORIS JOHNSON, BRITISH PRIME MINISTER: Go on.

QUESTION: Prime Minister, will you deliver on your policy where you could give one Britain.

JOHNSON: Of course, I will.

QUESTION: Thank you very much. We will --

JOHNSON: That is perfect there. Is that all right there? I thought you were hanging full on.

UNIDENTIFIED MALE: No, we're --

JOHNSON: There you go. There you go.

(END VIDEO CLIP)

BLACK: So at one point during that exchange, Boris Johnson entered an industrial-sized refrigerator that's being interpreted by his critics, by

many online, by some of the British press as well as Boris Johnson hides in fridge to avoid interview.

In his efforts to avoid an unscripted moment, he appears to have created a scripted moment.

Jeremy Corbyn, the Labour leader is also on a last minute blitz. He started his day in Glasgow. He is moving his way south, and would be back

in London by tonight.

But here's a little of what he told supporters on the road earlier today.

(BEGIN VIDEO CLIP)

JEREMY CORBYN, BRITISH MEMBER OF PARLIAMENT, LABOUR PARTY: This election is really about a choice. Tomorrow, the people all across the U.K. will go

to vote, and they have a choice. They can elect a government that they can trust, they can elect a government that will eliminate child poverty across

Britain. They can elect a government that will end the cruelty and the injustice of universal credit.

[CHEERING]

CORBYN: They can elect a government that will give hope to the next generation by investing properly in education for the future all across the

U.K. And they can elect a government that will deal with the greatest news on the world stage of climate change.

(END VIDEO CLIP)

BLACK: So despite the tightening, Labour knows that it is unlikely that they will secure an overall majority, but they also know to deprive Boris

Johnson of victory, they just simply need to keep him from getting a majority because remember, that's why this whole election was called: To

give Boris Johnson the majority in Parliament he wants in order to drive through his Brexit agenda. Without that majority, this will be a clear

defeat for Boris Johnson -- Julia.

[09:10:16]

CHATTERLEY: Yes, still everything to play for in these final hours. Just trying to think of a headline as well with the fridge moment -- campaign

temporarily on ice. That would have been my headline. So trying. Phil Black, thank you for that. And just try to stay dry there.

All right, next driver. The U.S. Federal Reserve meets the last time this decade in fact, wrapping up an extremely busy year. 2019 saw the Central

Bank cut rates three times and winding almost half of the two years' worth of tightening before it, all the while under a barrage of ire of course

from the U.S. President.

Clare Sebastian joins us now. Clare, not expected to do anything today. What it's all going to come down to is what their forecasts look like for

the economy, but also rates into 2020, a critical election year, of course, too. What are we expecting?

CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes. Julia, absolutely no fridges for Jerome Powell to hide in today, but he does have cover when it

comes to the market expectations.

CHATTERLEY: Allegedly.

SEBASTIAN: Yes. And in terms of the data that we've seen recently, the Fed is widely signaled, as you say that they are going to do nothing. The

jobs report from November really supported that stance.

Jerome Powell has made it clear that something really big, really material has to change in the outlook for them to start raising rates.

Analysts looking forward say that there's a much higher chance that we'll see future rate cuts in 2020 rather than rate rises, but Wall Street is

divided on that.

Goldman Sachs sees no rates cuts next year. UBS by contrast sees potentially three. So there's a lot of divisions. There's going to be a

lot of focus on how he phrases things in the statement, which isn't really expected to change and in the press conference, will he will he make it

further clearer that rate hikes are less likely than rate cuts.

So this is, you know, perhaps the simplest meeting of this year. His communication strategy is likely to be to say as little as possible and

stick to the message that he has had particularly in the last meeting and recent speeches -- Julia.

CHATTERLEY: Yes, quite fascinating to see so much concerns still and the need for rate cuts because if you look at the jobs numbers, of course, the

strength of the job numbers that we got last week. Clare Sebastian, more to come on this later on in the show, but thank you for that for now.

All right, let me bring you up to speed with some of the other stories making headlines around the world.

The Myanmar civilian leader, Aung San Suu Kyi is defending her government to the International Court of Justice. The Noble Peace Prize winner is

calling allegations of genocide against the Rohingya quote, "incomplete and misleading."

In New Zealand, new tremors on White Ireland are increasing the risk of another massive eruption. The quakes are preventing the recovery of

victims' bodies after the volcanic explosion killed at least six people. Nine people are listed as missing.

Climate activist, Greta Thunberg is "Times" Person of the Year. The Swedish 16-year-old who spoke emotionally to world leaders at September's

U.N. Climate Conference was unveiled as the winner a short time ago.

Also on the shortlist were the Hong Kong protesters, President Trump and the anonymous whistleblower who triggered the Impeachment Inquiry.

All right, we're going to take a quick break here on FIRST MOVE. But still ahead, the general election general uncertainty as Boris Johnson fights to

stay at Number 10 Downing Street: The view of the investment world coming up. Stay with us.

(COMMERCIAL BREAK)

[09:16:42]

CHATTERLEY: Welcome back to FIRST MOVE coming to you live from London on the eve of the U.K. general elections, what's been called, "The Nightmare

Before Christmas." I have to say that there's no nightmare on Wall Street at this moment.

Futures pointing to a mixed open as traders await today's Fed statement, too, and perhaps more news on a potential tariff delay, too. The tariffs

are expected to rise, of course, just four days to go before the U.S. hike tariffs on $155 billion worth of Chinese goods. Though the rumor suggests

there will be a delay.

Let's take a look at what's going on in currency land. To the British pound trading modestly higher ahead of tomorrow's general election after

dipping earlier on in light of a poll that came out late last night. You can see the FTSE flat. Anything short of a clear victory for the

Conservative Party could trigger sharp declines in both the pound and U.K. stocks given how we've seen them move in recent weeks.

Now that clear Conservative Party majority no longer looking quite as likely as it once was. A survey released late Tuesday has the Prime

Minister's lead over Labour shrinking, as I mentioned there.

Roger Bootle, Managing Director of Capital Economics joins me now. Great to have you with us. What are you expecting in terms of the results?

ROGER BOOTLE, MANAGING DIRECTOR, CAPITAL ECONOMICS: Well, first of all, it is of course, as you're saying incredibly uncertain.

CHATTERLEY: Yes.

BOOTLE: A lot of don't-knows. We've got the phenomenon of tactical voting, which is a comparatively new thing in British elections, so we

don't know. I'm not going to stop there.

I personally think -- I personally think that Boris is going to win a decent majority and possibly a majority a fair bit bigger than the polls

are saying.

CHATTERLEY: Define decent here.

BOOTLE: Well, I mean, workable. Mrs. Thatcher when she was first elected in '79, I think she only had a majority of about 30. The big majorities

came later. Thirty is perfectly doable, but I think it may be more than that, somewhere between the 28. I think it was 68 that the YouGov polls,

the first one that's come out.

CHATTERLEY: Initially.

BOOTLE: Initially said.

CHATTERLEY: Yes.

BOOTLE: Then more recently, 28, anything between that would I think be very acceptable. My suspicion is -- but it's just me. You know, we're in

a difficult territory.

CHATTERLEY: We're fingering the air here.

BOOTLE: My suspicion is that people are overcorrecting for the surprise result last time in 2017 where virtually all the pollsters got things

wrong.

CHATTERLEY: Except this one, of course which was 93 percent accurate.

BOOTLE: Except this one. That is true.

CHATTERLEY: Which is why we're talking about it so much.

BOOTLE: That is true.

CHATTERLEY: The reason why I'm asking about the degree of potential win here, it's important for Boris Johnson's call of getting Brexit done,

legally fine, if he gets his majority, then the U.K. can leave the E.U. on the 31st of January.

But the degree upon which he can then negotiate does depend on how big his majority is and to what degree he has to rely on the arch Brexiteers and

how much pressure they apply.

So it is very important, and I think it is going to be important for market reaction hereto.

BOOTLE: You know I think that's right. If he gets a majority, of let's say four or five seats, he is going to be a hostage to his right wingers.

CHATTERLEY: Yes.

BOOTLE: And then there's, you know, there are people who die mid- Parliament, you know, there are desertions, so he has constantly got to be on the lookout.

That being said, I'm not sure if he piles up a majority much above 40 or 50. It makes much difference. I mean, that sort of number. He is, I

think, in a very strong position. But he is going to be in a strong position also against his European counterparts when he begins the

negotiations.

[09:20:02]

BOTTLE: But if it's a hundred, let's say or 80, I think that makes that much different compared to 40 or 50.

CHATTERLEY: The risk here too, is that we see a hung Parliament. What we're not expecting here to see is any majority or win here for the Labour

Party.

I think, for me coming into this, I haven't quite appreciated the scale, the differences here in economic policy for the Labour Party and the

Conservatives, and we'll stick with those two for simplicity, quite frankly.

The spending, the potential spending that the Labour Party was talking about here and we got a flavor of that early on in the show, it was quite

eye opening. Can you just explain to us how dramatic policy would have shifted or would shift if the Labour Party were in charge and perhaps could

be in a coalition sense?

BOOTLE: So I think one way to look at it is that essentially, the policies that the Labour Party is putting forward effectively amount to the complete

reversal of Thatcherism.

So we're back really to the economic policies of the 1970s on several fronts. First of all, of course, the share of government and default tax

in the economy, public ownership, or the renationalization of large parts of British industry that's been privatized.

CHATTERLEY: Utilities.

BOOTLE: Utilities. The power of the unions. It really is a reversal of all of that and of course, the things we don't quite know whether that's

going to be the end of it, because Mr. Corbyn has been making some promises on the hoof.

The other day, he promised something that wasn't even in the manifesto, maybe to compensate women pensioners who missed out when the pension age

was increased. That was upwards of over 50 billion pounds. It just came out --

CHATTERLEY: Almost 60 billion.

BOOTLE: Yes, that's right. Just like that.

CHATTERLEY: Yes, and quite eye opening. But the point is for both of these more government is the future. More government spending and there

are a lot of people looking at this and saying, actually, the economy requires that there is inequality and greater support is needed.

What's the risk here that we do see a Conservative win based on the polls, and actually the distraction of Brexit and the need to get a trade deal

continues into 2020? What economic policies are required to be galvanized? Or should we be an optimist and say, actually, investment will come back if

there is a conservative win here?

BOOTLE: Well, I'm quite optimistic that investment will come back both from British companies and foreign companies who postponed making a choice

really, because they wanted to sort out -- get sorted out Brexit and Corbyn frankly.

But over and above that, I would support a fair degree of increased public spending and borrowing provided that it is spending on the right things --

investment projects, good investment projects. And provided it is within an overall framework, a fiscal framework, which doesn't then run away with

itself.

I think, actually, if Conservatives do win a majority, that's roughly what we will see. There will be more spending and more borrowing, but it's not

going to be the runaway sort.

CHATTERLEY: We can cope with it.

BOOTLE: Yes, we can.

CHATTERLEY: The U.K. economy can cope there.

BOOTLE: We need it, probably.

CHATTERLEY: Yes. Good point. Roger Bootle, thank you so much for joining us. Roger Bootle there, Managing Director of Capital Cconomics.

We're going to take a break, but up next, feeling the burn. Peloton share price falls again. This time after an activist investor says there's

plenty of downsides to come. We're back in two.

(COMMERCIAL BREAK)

[09:25:05]

CHATTERLEY: Welcome back to FIRST MOVE. A badly misjudged TV advert, and now a critical report by an investor that sent Peloton share price downhill

at zero resistance. It's down more than two percent in premarket trading off to almost a six percent for during Tuesday's session.

Paul La Monica joins us now on this story. Wow, when it rains it pours even if you can cycle indoors with this one. The advert, Citron Research

is saying is the least of their worries. He is comparing this to the likes of Fitbit and GoPro, which is quite prescient actually given that Fitbit is

now selling itself to Google at an 85 percent drop from the highs. What do we make of this report?

PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think that Citron makes some interesting observations about Peloton and the hype that has surrounded

this company.

Clearly, there are a lot of people that love the bikes and love the classes that come with it, but there is so much competition, Julia. I think that

is why Andrew Left of Citron Research is so worried that the valuation just doesn't make sense.

And throw away any concerns about the commercial and how it may have been tone deaf, elitist -- whatever you want to call it. The simple fact of the

matter is that if Peloton is going to try and sell these pricey bikes when competition is going to be selling cheaper bikes, then you have the

subscription model.

Subscription companies don't get the valuation that Peloton has right now. That's what Left and Citron are worried about. The stock is just way too

high for all the hype that's out there.

CHATTERLEY: Yes, I mean, he lists the competition -- Nordictrack, Proform, Echelon, Bowflex -- there's a whole host of alternatives out there.

The Peloton bike costs $2,300.00 and to your point -- and this one, I think is the important one, the subscription model. The valuation here just

sounds out of whack. Some of these competitors can give you a bike for free, and I think that's the key there, isn't it?

LA MONICA: Yes, I agree. I think that because of the fact that the subscription services -- that monthly payment --might be where you generate

most of the money and profits, if there's ever going to be profits because oh, by the way, Peloton is losing money, that's going to be the big problem

for this company.

CHATTERLEY: Yes. Among many. Paul La Monica, thank you so much for that.

All right. The opening bell is next. Stay with us.

(COMMERCIAL BREAK)

[09:30:15]

CHATTERLEY: Welcome back to FIRST MOVE live from London. That was the opening bell on Wall Street. Plenty of high fives there and it's a less

high five for the market though. A mixed open for U.S. stocks. Investors playing it safe before a deluge of big events over the next couple of days.

We've got today's Fed decision, of course, and tomorrow's U.K. general election. Not to be forgotten neither, the first European Central Bank

meeting with Christine Lagarde of course at the helm taking place in tomorrow's session, too.

Now, despite all the trade and political uncertainties, U.S. stocks, just to give you some context here down by only around half a percent this

December, and still less than a percent away in aggregate from record highs.

Now, before the bell, we received a hotter than expected reading on U.S. consumer prices, too, rising some 0.3 percent in November. That lifts

inflation to a 12-month high, certain to be a topic of conversation at today's Fed meeting.

So let's get some more context now. Joining me is Scott Minerd. He is the Chief Investment Officer at Guggenheim Partners. Scott, always great to

have you on the show. Thank you so much for joining us. Your assessment of what the Fed doesn't say today, all eyes, I think on the dot plots and

their forecasts for the future.

SCOTT MINERD, CHIEF INVESTMENT OFFICER, GUGGENHEIM PARTNERS: Yes, well, Julia, I think the Fed is probably pretty satisfied with itself right now

because given the employment data and the data that's coming in, I think Jay Powell can basically say that the Fed's rate cuts have been -- or

achieved the objective that they were looking for, which is, you know, we stabilize the economy and it seems to be reaccelerating at this point.

And, you know, I think the dot plot is going to maybe be predicting future rate hikes. You know, history shows us that about nine months after the

Federal Reserve stops cutting interest rates, if there is no recession, then the economy begins to reaccelerate.

So, you know, given where we are and how the Fed has cut rates into the third quarter and to the fourth quarter, I think, by the time we get into

the second half of next year, we'll see a lot more strength and the Federal probably has to move again.

CHATTERLEY: You actually think the Federal Reserve could hike in an election year?

MINERD: Yes, I think so. I think, you know, the Fed will have achieved its objective. Of course, there are always some macro risks here. The

trade war if it should increase, I think that's going to make it more difficult on the Fed.

But I don't think that President Trump is really interested in elevating the trade war anymore because he is facing reelection, and the impact it is

having on domestic manufacturing has been not exactly what he had anticipated.

So perhaps easing off on the trade war should be in the cards, and I think that will help the U.S. economy.

CHATTERLEY: What do you think would be the trigger for that ultimately? Are we talking about rising inflation? Are we talking about the buildup of

excesses that you often talk about, particularly market-based excesses or the combination of that and the fact that the jobs market remains and still

is incredibly strong, particularly when we look at last week's payroll numbers?

MINERD: Well, you know, it's interesting. Again, if you go back to the history of these mid cycle slowdowns, like we had in 1998, or even in 1987,

and the Federal Reserve pauses on its rate increases and reverses course for a short period of time, it allows excesses to build up into the system.

Between 1987 and 1990, there were a lot of excesses that built up in the real estate market, and we ended up having the government having to bail

out the banks in their commercial real estate exposure.

And then, obviously, in 1998, we had the internet bubble. And so by the time we got to 2001, the excesses in the system had forced the Fed to have

to take more aggressive action.

So you know, when I look at the world today, and I see record levels of corporate debt, especially relative to GDP and free cash flow ratios,

anytime the Fed starts to put more pressure on the economy in the future, this bubble in corporate debt is going to come under pressure and I think

the next downturn, unlike the past one, where it what was focused on the consumer will be focused in the business sector and I think there's a lot

of damage to be done.

[09:35:09]

CHATTERLEY: You know, it's interesting, we'll stick with this theme because we were talking earlier on in the show about the range of analyst

expectations for 2020 and this divergence between perhaps one further cut, staying on hold, or even in certain cases, three cuts.

If you and the Fed perhaps going to suggest one hike potentially next year, and right now, the market pricing suggests they do nothing until November

of next year, we're looking at potential digestion problems, perhaps if they're not cautious with the language and start to warn the market perhaps

that that they're coming to get them with rate hikes potentially sooner than they think.

MINERD: Right. Well, I think that at this stage of the game, they are going to be really hesitant to talk about rate hikes other than what might

show up in the dot plot.

I think that they're going to emphasize that they're on hold, and I think, you know, as we see the economy rebounding, Julia, it's going to give more

of a lift to risk assets, including stocks.

And so by the time we get into the second half of next year, and we're facing a presidential election, I think the Fed is going to be feeling

pretty good about things and that's going to give them a lot more confidence to try to deal with some of the longer term issues they're

concerned about, which is obviously price stability.

CHATTERLEY: Yes, the fundamentals and expectations will have caught up by that point. Scott, I want to bring it to the U.K. because there's a reason

I'm here, what are you expecting? And what are you telling investors about the U.K. election and the potential market fall out post that?

MINERD: Well, you know, I think that Corbyn will probably get reelected. I think the market is feeling pretty confident about that.

And Julia, you know, I've always been in the minority and that I really felt the whole Brexit discussion was never such a big deal.

The reality is, is that Europe is not going to allow the U.K. to have a hard Brexit. It's not in their interest and Great Britain has a lot to

gain through Brexit because by being able to negotiate the treaties independently to allow the pound devalue as it did, is good for the British

economy.

And so in the longer run, I think Brexit will prove to be sort of a passing storm that nobody really remembers later on.

CHATTERLEY: So, just to be clear, a Boris reelection, so even in the short term, and let's say over the next six months, you see upside potentially

for U.K. assets, if we do see a majority government and a reelection of Boris Johnson here in the U.K.

MINERD: Well, I think Boris Johnson -- and sorry, I misspoke with Corbyn.

CHATTERLEY: It's okay. I just wanted to be clear.

MINERD: Boris Johnson -- yes, I get a little confused with the British politics. Sorry, Boris Johnson will, I think be able to consolidate power.

And, you know, the most disturbing thing about Boris Johnson when you look at it is, it is yet another vote for populism and nationalism around the

world.

And someday, you know, we're going to be dealing with the consequences of this because as you've seen in the United States, the very nationalistic

and populist movement here has caused a lot of turmoil, which we're currently watching in the impeachment hearings.

So I think, longer term, Johnson will in the short run, he will benefit and he will negotiate his way through Brexit. But in the longer run, you know,

Great Britain may choose another Prime Minister to take them down that road.

CHATTERLEY: Yes, growth policies required, otherwise you can't financially afford to fulfill your promises.

Scott Minerd from Guggenheim Partners, great to have you with us and get your wisdom, as always, thank you.

MINERD: Thank you, Julia.

CHATTERLEY: All right, up next, as China reportedly orders all foreign tech to be stripped from its systems, we bring you an interview with the

head of Intel, one of the firms that could suffer. Stay with us. We're back in a few.

(COMMERCIAL BREAK)

[09:42:39]

CHATTERLEY: Welcome back to FIRST MOVE. China wants old foreign technology removed from its systems. That, according to report in "The

Financial Times."

Now, if true, the move would likely impact big U.S. firms that supply to China such as Intel. Tech and particularly 5G technology has emerged as a

key battleground in an increasingly damaging trade war between the two nations.

Well, before this news broke, I spoke to Intel CEO about the opportunities offered by 5G, particularly in China. Listen in.

(BEGIN VIDEOTAPE)

BOB SWAN, CEO, INTEL: Yes, we are equally as excited about the opportunity that 5G creates for us. We believe that that is one of the emerging

technologies that's going to create new opportunities for, again, both consumers and enterprises.

And in this 5G world, we expect a bit of a convergence of communications -- what happens in networks and compute. And a 5G world will have more

compute moving to the network.

So those big pipes that the telecom providers put into service can be more intelligent because more compute will happen in the networks, and with more

compute happening at the networks closer to devices at the edge, it will create more and more use cases that factories and retail stores and

hospitals where they can benefit from the power of compute technology close to the network edge in a 5G world.

It's one of the key emerging technologies that we see that we've been investing in for a while that we think is going to create real

opportunities for compute at the network and at the edge.

CHATTERLEY: What we've seen in the last couple of months is China rolling out 5G networks in 50 different cities, and then I look at what the United

States is doing, and I wonder, how far are we behind what China is doing here and the capabilities that they've got and how quickly can we catch up?

SWAN: So, we play a reasonably big role in deploying technologies around the world.

CHATTERLEY: Right.

SWAN: We're a global service provider. We have customers everywhere, including a role that we play in the deployment of 5G technologies in

China.

[09:45:10]

SWAN: So we work with the telcos here to drive 5G deployment with key telcos and players at the network. The challenges we need to move faster

as a country, we need to deploy more resources, more technology to facilitate the pace for the U.S. to keep up with the power that the

technology, 5G provides, to roll it out in a more rapid way.

And we're committed to working with the players in the ecosystem, to accelerate the pace of 5G rollout here in the U.S.

(END VIDEOTAPE)

CHATTERLEY: Intel also has had a pretty turbulent year. The company finalized the sale of its 5G modem business to Apple for $1 billion

dollars. Intel has subsequently suggested that deal represents a quote, "a multibillion dollar loss" and alleges that rival Qualcomm pushed it out of

that market.

The tech giant has also grappled with some supply chain issues. Both Dell and HP blamed Intel when announcing lower revenue expectations. I asked

Bob Swan how he is dealing with these issues.

(BEGIN VIDEO CLIP)

SWAN: First and foremost, the business -- our business -- has grown tremendously over the last several years. We've added roughly $14 billion

in revenue over the course of the last four years and during that time, we've been putting in more and more capacity to deal with the growth that

our customers are experiencing.

And our customers are in turn counting on us to meet their growing needs, whether it's data-centric collection of customers or PC-centric collection

of customers.

When we came in to 2019, with put more capacity in place under the expectation that the PC time would be roughly flat in 2019. And the

reality is what we're experiencing collectively as an industry is much stronger growth than we anticipated at the beginning of the year.

And we haven't had the ability to put more and more inventory in place that would enable us to meet this growth and deal with volatility in our

factories.

So as a result, we're growing much faster than we thought six months ago. But at the same time, we haven't been able to build the microprocessors

that our customers need and we're constraining their growth in the fourth quarter.

So we are working extremely hard in conjunction with our PC customers to get them the product they need when they need it. But given the growth

that we've seen, we haven't been able to keep pace with their demand. We're working hard with them. They are counting on us. That's important

to us to continue to earn and win their respect and their trust and that we will be there for them in helping them grow their business.

CHATTERLEY: Yes. To your point, it's a first-class problem when you're surprised by the growth that you've seen. How long is it going to take

before you can meet their demand? To your point, it's about putting in the capacity, the manufacturing capacity to meet that and that does take time.

SWAN: Yes, Julia. It is a first-class problem, but it is a problem because our customers are counting on us. So, we put 25 percent more

capacity in place in 2019, and our expectations in 2020 is we will put another 25 percent capacity in place. So our customers do not have to

worry about our supply. They have more important things to worry about, about the services they provide for their customers.

So in 2020, we will put another 25 percent capacity in place so that we can meet their needs and build the inventory buffers required for the

volatility and the demand signals that we see for our business and for the industry.

(END VIDEO CLIP)

CHATTERLEY: Intel's core business is undergoing a fundamental transition at this moment. The move from storing and processing data on PCs to then

doing it on the Cloud has created what its CEO called an insatiable demand for that part of the business.

(BEGIN VIDEO CLIP)

SWAN: We have been going through quite a transformation and what we characterize as going from a company who has built the technologies to

power the compute era, to a company that's increasingly building the technologies to empower or unleash data and the applications of data on

both consumer experiences and on enterprises.

So data-centric for us is what we've seen over the last several years is an insatiable appetite by both consumers and companies to use more and more

data to influence the decisions and/or improve the experiences that our customers provide for their customers.

[09:50:20]

SWAN: In that world of creating a ton of data, the implications are that companies need more and more compute capacity to process all of that data.

They need to store that data more and more and have it readily available. And that data needs to move around more and more.

That desire to create more and more data has implications in demand for the things that we do so well, which is build the compute technologies that

power computers.

And today, we just see a world where there's more and more compute not just to PC, not just a data center, but increasingly compute at the networks and

compute at the edge, including the billions of connected devices, whether they're a phone, whether they're a retail shop, whether they're a factory,

whether they're an automobile.

We are building and deploying the technology in an increasingly data centric world that allows consumers and enterprises to use that data in new

and different ways.

CHATTERLEY: And you've said whether it's 5G technology or the Internet of Things or to your point, artificial intelligence and actually using that

data in a more sophisticated way going forward, 70 percent of the growth that is going to be derived from this data-centric focus. What do we mean

by the future? How many years are we talking about for Intel here before we see that statistic?

SWAN: Well, it's been just in terms of historically, over the last six years, we've gone from 70 percent of our company has been driven by the PC,

the technologies that power the PC.

And over that relatively short period of time, today, it's roughly 50/50. And we project forward. We look at roughly over the next five years what

was 70/30 six years ago to 50/50 today will be more like 30/70.

(END VIDEO CLIP)

CHATTERLEY: That was the CEO of Intel there. My favorite story of the day coming up. It's beginning to feel a lot like Christmas for the staff of

one Baltimore company, the surprise that's moving them to tears, next.

(COMMERCIAL BREAK)

CHATTERLEY: Welcome back to FIRST MOVE with a look at today's Global Movers.

Shares of Boeing falling around two percent in the session. The F.A.A. says the process for getting the 737 MAX back into the air will probably

extend into 2020, I am not sure if there's any breaking news there.

There had been hope that Boeing would get this up the 737 recertified this month.

[09:55:10]

CHATTERLEY: Hope Depot shares also under pressure. The company cutting their 2020 sales estimates.

Also look at Peloton right now, shares sharply lower, almost five percent for a second straight session of losses. As we mentioned earlier, short

seller, Citron Research, saying the shares of the exercise biking firm could plunge 85 percent as competitors enter the space.

And Netflix bouncing back a bit after Tuesday's three percent sell off on analysts warning yesterday that the company could lose four million

subscribers next year as the streaming wars heat up.

And speaking of that war, in today's "Boardroom Brief," Disney Plus is the most Googled the term of 2019. Wowzers.

The streaming service beat out "Game of Thrones" and iPhone 11 to the top spot in what is a fairy tale ending to a stellar year for Disney.

Now, to one real estate company that's really feeling the Christmas spirit. Baltimore's St. John Properties surprised 198 staff at their annual holiday

party with a $10 million bonus, split among them that averages around $50,000.00 each. Quite the sweetener to end the year on.

And that's it for the show. I'm Julia Chatterley. You've been watching FIRST MOVE. Time to go make yours. Looking forward to our Christmas

Party, too.

(COMMERCIAL BREAK)

[10:00:00]

END