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First Move with Julia Chatterley
The Stock Market Weathers Trade Wars And A Recession Threat To Round Out The Year In Record Territory; Tesla Gives Its First China-Made Mode 3 To Its Own Employees; Salesforce CEO, Marc Benioff Tells CNN That Facebook Is The New Cigarettes. Aired 9-10a ET
Aired December 30, 2019 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:10]
ELENI GIOKOS, CNN INTERNATIONAL HOST: Live from New York, I'm in Eleni Giokos and here's what you need to know.
Against the odds: The stock market weathers trade wars and a recession threat to round out the year in record territory.
Delivered. Tesla gives its first China-made Mode 3 to its own employees.
And calling for regulation. Salesforce CEO, Marc Benioff tell CNN that Facebook is the new cigarettes. It's Monday and this is FIRST MOVE.
All right. Welcome to the show. It is good to have you with us as we gear up for the last two trading days of 2019 and checking futures, it is
looking like a mostly flat start to this Holiday shortened trading week. But the Dow and the S&P 500 begin the session at record highs and the S&P
is coming off its fifth straight week of gains and what a year it has been to the U.S. stocks?
The Dow is up 22 percent since January. The S&P has risen almost 30 percent. But it is the tech stocks that have been the big performers with
the NASDAQ up an astounding -- get this -- 35 percent year-to-date. Some analysts warn that the strong year and rally could make stocks vulnerable
to an early 2020 pullback.
A lot will be riding on fourth quarter earnings season which begins in just a few weeks' time and whether the U.S. jobs market will remain strong.
Investors are counting on the Fed to keep rates steady in the New Year as well.
So it's not just U.S. stocks that have been on a roll. The Shanghai Composite rallied more than one percent today after the Chinese Central
Bank announced a brand new benchmark interest rate. Analysts say the move could lower borrowing costs and boost growth in China. That's going to be
much needed for global growth as well.
So let's get straight into the drivers and more on Wall Street's record run. We've got Christine Romans joining us. And what a rocking year it
has been for markets and looking at how the S&P has performed, I'm also just checking PE ratio, so price to earnings showing that markets are
looking expensive. And the question is, if earnings disappoints in the next few weeks that could mean that the bulls won't be in play for much
longer.
CHRISTINE ROMANS, CNN BUSINESS CHIEF BUSINESS CORRESPONDENT: You know, it's been so long. This bull market has been so long and so durable that
it often leads to this question of how much longer can it last? But you're hearing economists and analysts get a little more upbeat heading into the
beginning of next year.
Look, they don't expect these double digit returns for the stock market next year like we had this year, but they do point out the de-escalation of
the China trade war is important if you see a signing ceremony in that first Phase 1 of a trade deal and no more new tariffs next year, that would
be good for business investment and business confidence.
The consumer remains strong here, and the unemployment rate has been very, very low and interest rates are still historically pretty low. So just to
take a victory lap here for a moment, I mean, what a remarkable year it has been. A year ago at this time, we were in the worst December since the
Great Depression, a real nasty pullback in the stock market, and then it stages this big recovery this year. All the three major averages up at
least at 20 percent.
And when you look at the past decade, Eleni, I think it's really important to look at where we've been. It is not just one year, or just two years
here. Last year, a little bit of a step back with four percent loss with the total return of the S&P 500. But it has been a strong 10 years and
this year for the S&P, the strongest since 2013 when the S&P 500 rose 32 percent.
The total return of the S&P over the past decade, more than 250 percent. So your question about PEs and whether there's room to stumble here, very
valid when you look at numbers like these.
GIOKOS: Yes, Christine, I am also just finding it -- I find it absolutely fascinating that the markets have largely shrugged off, you know, the trade
war with China or they've just priced it in. And the question now remains, you know, what, are the winning trades going to be for participants that
have really benefited from these double digit gains?
I mean, what strategy do they then go in with to 2020?
ROMANS: Yes, and that's a good question. Look, when you look at "The Wall Street Journal's" sort of like forecast for next year, it finds an average
of just single digit returns. So that means it's not necessarily a market -- a stock market anymore. It's a market of stocks, you have to know where
you want to be and what your strategy is going to be. So that makes, you know, the market professionals all that much more valuable heading into
next year.
Because quite frankly, if you've parked your money in a low-cost index fund, you've done very, very well here over the past few years. One thing
I think is interesting politically, because there will be political noise next year. No question. But one thing I think that's interesting here
politically is what happens to tax policy.
[09:05:10]
ROMANS: Does the President try to revive any kind of a new middle class tax cut as we head into a next year? The Fed, we expect will remain on
hold here. Will we really see the trade war with China simmering not boiling as it's been? That's incredibly important, as well. Although, the
President tried to open new fronts in the trade war, say with Europe or other countries that he is angry about. Auto tariffs.
So I still think there's a lot that could happen next year that could be unpredictable.
GIOKOS: A lot of unknowns. Christine, thank you so very much, and Happy New Year to you.
ROMANS: You're welcome. You, too.
GIOKOS: All right, so Tesla has delivered its first China made cars less than a year after it broke ground on the Shanghai factory. David Culver
reports.
(BEGIN VIDEOTAPE)
DAVID CULVER, CNN CORRESPONDENT: Tesla rolled out its first made in China electric vehicles Monday, the company handing over 15 key fobs to Tesla
employees who worked on the cars at Tesla's new Shanghai Gigafactory.
The Model 3 sedans are the first China-built cars for Elon Musk's company. The debut comes amid a worsening consumer market in China, the country's
car industry is in a major slump. That's due in part to the ongoing U.S.- China trade war, the massive port crisis and the nation's rising debt. It has all weakened consumer confidence.
But Tesla is forging ahead nonetheless. Musk built the new Shanghai factory in less than a year. The company hopes to eventually produce
500,000 cars a year in China. Analysts tell CNN it could give China's car market a much needed jolt of energy setting a new standard for local
competitors to live up to.
Now investors seem hopeful as well. After falling as much as 46 percent earlier this year, Tesla's stock hit an all-time high this past week.
Monday's China roll out far smoother than the November demo of Tesla's new Cyber Truck in the U.S. when the supposedly unbreakable metal glass windows
did in fact break.
Instead the Shanghai event even turned romantic with Tesla posting on its Chinese social media that one of its employees used the moment to propose
to his girlfriend and amid tears, she did nod yes. That moment, by the way quickly started trending in China.
Now Tesla is not new to the Chinese market. It's been delivering cars to customers in China since 2014. But Musk has called this Made in China
initiative, a template for future growth. David Culver, CNN, Hong Kong.
(END VIDEOTAPE)
GIOKOS: All right, that was David Culver reporting on Tesla. Now two attacks on places of worship or shaking the United States. In Texas, a
gunman opened fire inside a church during Sunday services. He killed two people before he was shot and killed by parishioners.
Meanwhile, New York gets to grips with an anti-Semitic stabbing that left five people wounded inside a Rabbi's home. New York's governor is calling
the attack an act of domestic terrorism. Brynn Gingras has more on that.
(BEGIN VIDEOTAPE)
BRYNN GINGRAS, CNN NATIONAL CORRESPONDENT (voice over): A gruesome stabbing on the seventh night of Hanukkah leaving five people injured.
Just as Rabbi Chaim Rottenberg was lighting the Menorah in his home right outside of New York City.
Police say Grafton Thomas entered, pulled out a large knife and began his stabbing spree. Nearly 100 people were gathered in the home celebrating
the Holiday.
(BEGIN VIDEO CLIP)
ARON KOHN, WITNESS: I saw him walking by the door, I asked who was coming in the middle of the night with an umbrella, while I was saying that, he
pulled it out from the thing, and I had thrown at him tables and chairs and said that he should get out of here.
(END VIDEO CLIP)
GINGRAS (voice over): After the attack, a witness tell CNN the attacker tried to go to a nearby synagogue, but the worshippers inside locked the
door. This surveillance video captures the suspect fleeing the Rabbi's home, running toward his car moments after the attack.
Witnesses gave police the license plate number, a plate reader located the suspect's car crossing over the George Washington Bridge in New York City
nearly two hours after the attack, where he was apprehended by police.
Thomas was arraigned Sunday morning charged with five counts of attempted murder and one count of first degree burglary. He pleaded not guilty.
In a statement, Thomas's family lawyer says that he has no history of violent acts and has a long history of mental illness and hospitalizations.
Thomas's pastor, who says she has known him for more than 10 years echoed the sentiment.
(BEGIN VIDEO CLIP)
PASTOR WENDY PAIGE, KNOWN SUSPECT FOR MORE THAN 10 YEARS: Grafton is not a terrorist. He is a man who has mental illness in America and the systems
that be have not served him well.
(END VIDEO CLIP)
GINGRAS (voice over): All five victims are Hasidic Jews, they are being treated at area hospitals. One of them was the son of the Rabbi.
(BEGIN VIDEO CLIP)
DANI DAYAN, CONSUL GENERAL OF ISRAEL IN NEW YORK: In this Hanukkah, we suffered more anti-Semitic incidents than the countries that we live and
that it's impossible to be here. We are in a completely different game.
(END VIDEO CLIP)
[09:10:01]
GINGRAS: This attack comes just weeks after a deadly terror attack at a kosher supermarket in Jersey City, New Jersey. Over the last week, there
have been at least nine attacks on Jews in the New York area.
Governor Andrew Cuomo says he wants to classify hate crime attacks against religious groups as domestic terrorism.
(BEGIN VIDEO CLIP)
GOV. ANDREW CUOMO (D-NY): And I want this state to be the first state to have a domestic terrorism law to express how ignorant this is, how
intolerant it is, and how criminal it is and I'll be proposing that law for this state.
(END VIDEOTAPE)
GIOKOS: All right, we've got Brynn Gingras joining us now from New York. Brynn, we just heard from the Governor talking about petitioning for this
new law with regards to domestic terrorism and I wonder how the community feels about this because we've seen so many of these incidents in just a
week. And in fact, since the beginning of the year, we've seen a 20 percent rise in anti-Semitic incidents as well. Some people feel it's just
too little too late. What are you hearing?
GINGRAS: Yes, I think a lot of people are questioning why it's happening and certain people, of course have their opinions, especially when it comes
to politics, right? But really, the community is focused on not only just protecting this community, meaning that we have police officers, law
enforcement, protecting synagogues and other places of worship because of this spike and these this recent uptick in anti-Semitic attacks.
But honestly, they are saying that they really want to focus on getting down to the community level, getting to the younger people, explaining how
much destruction hate could really cause. They say, it's not just a law enforcement issue.
So at this point, you know, people are sort of just in disbelief that this actually happened. But they also are recognizing the fact that it is
really, really happening far too often, especially this past month, and they want answers and trying to figure it out and solutions really.
GIOKOS: So Brynn, we know that the suspect has been arraigned and pleaded not guilty and is expected to appear in court later this week, as well.
What is the community saying to you right now? I'm sure there must be heightened fear and heightened anxiety.
GINGRAS: Yes, I think the big question is, why did he come after this particular house? Now, this suspect actually lives about 48 minutes from
here. It's unclear at least from a law enforcement that they're telling us at this point, why this was his target.
There's also possibilities -- did the suspect commit any crimes in this area in the past? So these are questions that not only law enforcement is
asking, but the community as well.
But listen, this is a community that even last night came out in full force, they lit the eighth night of Hanukkah, the Menorah, they had a
parade through the streets. They said they are going to stand their ground and they're going to continue practicing their faith and what they believe
in despite this horrific incident that happened in the home here behind me.
GIOKOS: Brynn, thank you very much for your reporting. Appreciate your time. Brynn Gingras joining us there.
All right, so these are the stories making headlines around the world. U.S. officials say at least four al-Shabaab militants have been killed
after it launched new airstrikes in Somalia. This comes after a devastating car bombing rip through a busy intersection during morning rush
hour traffic in Mogadishu. At least 85 people have been killed and more than a hundred injured.
Iran's Foreign Minister says the U.S. will face consequences for launching airstrikes in Iraq and Syria. At least 25 people were killed and dozens of
others wounded. The Pentagon says the targets were tied to an Iranian- backed militia group, which it says was responsible for a series of attacks on U.S. military personnel. Iraq's Prime Minister says the strikes violate
his country's sovereignty.
A Chinese scientist has been sentenced to three years in prison for his role in creating the world's first gene edited babies. The scientist said
the experiment made a pair of twins resistant to the AIDS virus. But critics called it unethical and a Chinese court ruled that it violated
medical and research regulations.
Residents in parts of Southeastern Australia have been warned that it's too late for them to evacuate as devastating bushfires moved into the State of
Victoria over the weekend. Official say it's too dangerous to be on the roads and that everyone should seek shelter indoors. Our Simon Cullen has
more on the dangerous conditions.
(BEGIN VIDEOTAPE)
SIMON CULLEN, CNN CORRESPONDENT: A small glimmer of hope is a cooler change that has been moving across parts of Australia, but that's still
some way off the fire from Victoria, and of course, with that cooler weather comes more erratic wind conditions, which presents its own
challenges for firefighters.
But this is not isolated to Victoria. This is a national bushfire crisis. The fire threat is extreme in several states here in New South Wales. I'm
standing about an hour outside of Sydney. As you can see, this is not cloud behind me. This is actually thick bushfire smoke. There are ash
particles falling from the sky from fires nearby.
[09:15:12]
CULLEN: There are fires burning still out of control. More the 900 homes in New South Wales alone have been burnt and lost in this bushfire crisis,
and of course, Sydney is still affected by thick smoke that has led to calls to cancel Sydney's New Year's Eve fireworks.
Now at this stage, the fireworks will go ahead, but for the rest of the state, several New Year's Eve celebrations have been scaled back because
there is a total fire ban in place and fireworks have been canceled.
It just goes to show this fire threat is still far from over as Australia swelters through yet another heat wave. Simon Cullen, for CNN in Bowral,
New South Wales.
(END VIDEOTAPE)
GIOKOS: Well, the fires have ripped a lot of animals from their homes including this koala who stopped a cyclist for some water. She says the
koala walked right up to her and climbed on to the bike. The cyclist called it the best thing that's ever happened to her on a ride.
All right, when we come back, a top business leader says the world is facing a crisis of trust. We will explain why Marc Benioff is blaming
Facebook.
(COMMERCIAL BREAK)
GIOKOS: All right, so welcome back to FIRST MOVE live from New York. Checking U.S. futures, it is now looking like a modestly higher start for
US stocks this session. The Dow and the S&P 500 should inch further into record territory in early trading.
A modest rally in the S&P today and tomorrow could in fact push the index to its best gains since 1997. And the S&P and the NASDAQ are around three
percent for the month of December so far, a marked change from last December.
Remember that when we had stocks selling off sharply and almost fell into bear market territory. It's not just stocks that are having a strong
December, oil is also on the rise today and trading near three-month highs.
U.S. airstrikes in Iraq and Syria over the weekend are helping boost crude prices today as well as you can see Brent crude up eight tenths of a
percent.
[09:20:10]
GIOKOS: All right, so Marc Benioff has told CNN the world faces a crisis of trust, not mincing his words in the least. The owner of "Time" magazine
zeroed in on Facebook saying the social media superpower needs to be regulated. Take a listen.
(BEGIN VIDEOTAPE)
MARC BENIOFF, CEO, SALESFORCE.COM: Facebook is the new cigarette for our society. It's something that badly needs to be regulated. It's something
that is not good for us. It's something that the company is out for our kids, and they're certainly not exactly about truth and advertising even
they have said that.
That's why we're really in squarely a crisis of trust when the core vendor themselves cannot say that trust is our most important value. Look, we're
at a moment in time where each one of us at every company has to ask a question, what is our highest value? What is the most important thing to
us?
And you asked why we got involved with "Time" magazine because that value of trust, well, that's been associated with them from the very first day of
their founding.
BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT: I know Facebook has been on a lot of scrutiny and you and others have said it should be broken up. Do
you expect that to actually happen?
BENIOFF: I do. I expect a fundamental reconceptualization of what Facebook's role is in the world and what Facebook's role is in regards to
the word, not just trust, but truth.
And when you have an entity that large with that much potential impact, and not fundamentally doing good things to improve the state of the world,
well, then I think everyone is going to have it in its crosshairs.
And since I first kind of made that statement, which was in January 2018. At the time, I don't think people really understood what I was saying.
Today, I think it's crystal clear that our fundamental role and our relationship with Facebook needs to change.
STELTER: And what about your own media consumptions? Patterns? How do you consume news media these days?
BENIOFF: Well, I consume media in a lot of different ways. And of course, one of my favorite ways to consume media is "Time" Magazine.
The second -- the second part of consuming media for me is, you know, I'm an avid user, actually of one of the social networks, Twitter. I know that
you and I are both on there. And that's been important to me.
And then also I have subscriptions, physical and digital subscriptions. And I spend a lot of time with that every single day.
STELTER: You mentioned Twitter. If Facebook is cigarettes, is Twitter heroin? What is -- what is Twitter?
BENIOFF: Well, I think Twitter is actually quite a bit different. And I - - you know, they still -- there's no finish line when it comes to building trust. They've gone through their set of challenges.
But for sure, Facebook has been the biggest offender and as an example, you know, you can see both organizations made very different positions in
regards to political advertising.
STELTER: That's true. That's a good point. So let me wrap up with, a big prediction for the next 10 years. Where will we all be in 2030? No
pressure.
BENIOFF: Well, I think -- well, artificial intelligence is probably the biggest driver of change in media, and also in all of our lives. You can
see that. I'm sure you, like I have a voice based ambient computing, you know, we're talking to our Alexa or Google Home or our Apple Home Pod to
get some of our news, to get our entertainment, to get information.
Our software and the systems that are around us -- our phones, our cars, our homes -- they're paying attention to us. They're listening to us. And
we're talking back to them. And that is going to become a huge major change in terms of media over the next 10 years because as those systems
know more about you and understand what you want, if you opt into that, it is going to start to give you feedback, and you're going to start to see
things that look a lot more like a scene out of the "Minority Report" than out of a page of "Time" magazine 10 years ago.
(END VIDEOTAPE)
GIOKOS: All right, so it's not the first time Benioff has gone off to Facebook and we've got Hadas Gold joining us. A crisis of trust, placing
Facebook at the center of this, making analogies to our addiction akin to cigarettes, and of course, that it needs to be regulated for many different
reasons.
But why Facebook only? It seems that he is more kind of prone to being on Twitter and social media as a whole. But it seems that Facebook is the big
target for him.
HADAS GOLD, CNN BUSINESS REPORTER: Well, I think for Benioff, he said that he thinks that Facebook is the worst offender when it comes to issues of
trust and safety. And also you have to keep in mind that Facebook is the biggest name when it comes to these types of things. The one that people
most regularly associate when they think of social media, they think of Facebook and Facebook owns some of the biggest apps out there from Facebook
itself, of course to Instagram to WhatsApp.
This is something that a lot of people don't realize and I think that, as he noted, people are starting to sort of wake up not just to the dangers of
social media when it comes to things like political disinformation or misinformation in general or influence campaigns on social media, but also
to the actual health effects.
That's why we're seeing this trend of social media detox as Eleni, I'm sure you have some friends who are saying for the New Year, they're going to
spend less time on social media, less time on their phones. And it's because we're starting to see the studies.
There are studies about children and how addicted they are to social media and actually, we're seeing now regulations being pushed out both from the
government side and also from the social media firms themselves trying to get ahead of regulation, starting to ban certain things on their platforms,
ban certain advertisements.
Just in the last week, actually, Instagram has banned its influencers. These are the people with lots of followers who can promote sponsored
content from trying to promote sponsored content related to vaping or tobacco products or guns, and it's kind of astonishing to think that it's
taken this long for Instagram to take that step.
But that just goes to show you how quickly this is all developing and how the social media companies are trying at the same time catch up while also
trying to capitalize on all these people using their products and all of these -- all the money that's flowing through and all the shopping that can
be done on these products.
But we're seeing the regulations come down and we're seeing people like, there are companies like Facebook starting to shift going from saying, oh,
we don't need regulation to now they're pretty much begging for regulation.
The last year especially has been a significant shift in how Facebook has said whether they want regulation or not. They're pretty much begging for
it now because they say they don't want to be the umpire. They want the governments to be the umpire.
The question, of course, Eleni is how all of these governments are going to do that, and whether we're going to see a hodgepodge of regulations around
the world when it comes to regulating social media -- Eleni.
GIOKOS: Thank you so much, Hadas. It'll be interesting. I know that I'm trying to spend less time on social media. Hopefully we can get that
right. All right, up next, market opens after this short break. We're sitting in positive territory. I'll bring you those numbers right now.
Stay with us.
(COMMERCIAL BREAK)
[09:30:00]
GIOKOS: All right, so welcome back to FIRST MOVE. I'm Eleni Giokos in New York and that was the opening bell on Wall Streets and I think those two
little dogs have given the markets a really good boost today.
Let's take a look to see how the Dow is doing. Well, flat to modest as you can see, but still in positive territory. Stocks on this next to the last
trading day of 2019 looks set to inch further into record territory and the NASDAQ is still hovering around that 9,000 mark. It hit that major
milestone for the first time ever last week.
It's slightly down in early trade, of course, with just a few seconds into the start of trade day. Tech stocks of course have been -- they've been on
currently the longest weekly winning streak in a decade. It's unbelievable to see the kind of gains in that sector.
The bulls are celebrating a year of double digit returns. But 2019 wasn't always an easy year to make money. Stocks were whipsawed by U.S.-China
trade uncertainty, fears of a global growth slowdown and a less than stellar IPO market. Let's take a look back at some of 2019 market
highlights.
(BEGIN VIDEO CLIP)
GIOKOS: The very first trading day of 2019. We're down just over one percent on the Dow. It's not looking very good.
RICHARD QUEST, CNN INTERNATIONAL HOST: And the CNN Business Fear and Greed Index is an extreme fear.
PAUL LA MONICA, CNN BUSINESS REPORTER: I think it's too soon to say whether or not the Fed should raise rates two times, three times maybe,
pause for the rest of the year.
QUEST: Just look at that, about 10:30, look how the S&P suddenly roars up even more. That is on the back of Jerome Powell's comments.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Jay Powell at this round table saying it was almost like music to traders ears. We're going to go ahead
and be patient when it comes to raising money.
JEROME POWELL, U.S. FEDERAL RESERVE CHAIRMAN: There is no preset path for policy. We will be patient as we watch to see how the economy evolves.
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR, FIRST MOVE: Home Stretch: Report suggesting U.S.-China trade perhaps may be nearing completion with a
Trump-Xi signing ceremony possible later this month, too.
LELAND MILLER, CEO, CHINA BEIGE BOOK: The President sees the stock market falling, it's clearly affected him and he has told his guys, go get me a
deal.
CHATTERLEY: All it took with two tweets from President Trump sending global markets into a tailspin.
QUEST: Markets around the world tumbled after the U.S. President made a new promise to hike tariffs on China.
CHATTERLEY: That was the opening bell at the New York Stock Exchange and of course, the NASDAQ market site where ridesharing app, Lyft is making its
stock market debut.
Lyft shares falling some 12 percent on just their second day of trading.
QUEST: Uber has just started trading on the New York Stock Exchange and the share prices have fallen.
LA MONICA: Clearly, the timing was not great for Uber to be going public while the market is falling on China fears. Lyft is plunging.
CHATTERLEY: TGIF or should I say, TGF beta High F. Yes, I'm talking about record highs here for the U.S. wages.
QUEST: Stocks are surging with hopes of a rate cut.
The Fed cuts rate for the first time in a decade and insists it's not simply caving into pressure from President Trump.
POWELL: We never take into account political considerations. There's no place in our discussions for that.
CHATTERLEY: President Trump, he has been tweeting this morning. Let me show you what he said, "The Federal Reserve should get our interest rates
down to zero or less. A once in a lifetime opportunity that we are missing because of, quote, 'boneheads.'"
PAULA NEWTON, CNN INTERNATIONAL CORRESPONDENT: Jay Powell and the Federal Reserve have just lowered U.S. interest rates for the second time in two
months.
GIOKOS: In the last hour, the Central Bank announcing its third interest rate cut this year. The Fed says that's motivated by global economic
uncertainty.
CHATTERLEY: China just announcing a Phase 1 that trades deal with the United States.
DAVID CULVER, CNN CORRESPONDENT: China calling this achieving major progress.
DONALD TRUMP (R), PRESIDENT OF THE UNITED STATES: That's going to be one of the great deals ever, and it's going to ultimately lead to the opening
of China.
QUEST: Tonight, a wave of optimism sweep across global markets. The trade breakthrough between the U.S. and China, boosting the Dow, the NASDAQ and
S&P. Auto record intraday highs.
(END VIDEO CLIP)
GIOKOS: Economist Vicky Pryce joins me now with a take on where the markets and the global economy goes from here. What a year it's been.
You've got trade wars, you've got inversion of Treasury yields. You also had major policy shifts coming through from the Fed as well. It's been
incredible to see how it's worked out.
I mean, I guess the question is, do we have any kind of certainty or clarity about what 2020 is going to look like?
VICKY PRICE, CHIEF ECONOMIC ADVISER, CEBR: Not really, except the majority of economists seem to think that there is going to be very slow growth in
the world economy.
If you look at business confidence, it is still been doing quite badly in the last few month, it may of course pick up if the trade deal that has
been announced, or at least the beginnings of a trade deal with U.S. and China, between them actually having come to some sort of agreement in terms
of easing some of the tensions.
If that one begins to look like sticking and more comes during the course of 2020, then we might see trade growth starting to recover.
[09:35:24]
PRYCE: Remember, the whole of 2019 probably saw trade growth of no more across the world of perhaps one to 1.2 percent. That is one of the lowest
rates that we've seen in ages. And it certainly isn't putting the world economy back to the growth rates that we had before the financial crisis.
In fact, if anything, we've gone backwards.
GIOKOS: And Vicky, what I find interesting is that Central Banks are pulling out many tools that -- you know, to try and keep economies afloat,
to try and keep markets at these kinds of levels and growth at this level.
And I'm just curious that if there's any kind of risk that we could experience in the first six months of the year and Central Banks might be
then vulnerable, where they don't have more ammunition to, you know, pick up economies that might come under pressure, is that your view, too?
PRYCE: I think that's a real risk and everything, for example that the International Monetary Fund says or the OECD or the World Bank have this
downside risk that is going to be perhaps a slowdown in the first half of the year. And the question is, how do the authorities react?
There is still ammunition. Interest rates can still come down a little bit, but you look at places like the European Central Bank, where of course
interest rates are already negative or certainly one of the rates that they offered to banks that keep money with them with the Central Bank, the
Central Banks that keep money with ECB, that is -- that is a negative rate of 0.5 percent. That means basically, that you're charging banks to put in
money with you and the rest of the rates are very, very low if not, zero.
So it means that on the interest rate front, there is a little bit that can be done in other countries, not in Europe. But what we've seen already in
Europe is a resumption of quantitative easing, in other words, putting more liquidity into the market, because the Central Bank fears about slow down
that's taking place already. And the fact that credit is not flowing to companies, certainly in Europe as fast as it should do at this stage of the
cycle.
GIOKOS: So when we are in a situation where you've got Central Banks stimulating and still very much in that kind of frame of mind, where do you
think money should go because you've got cheap money chasing, you know, assets and they just searching for yield at this point in time, and it's
not many countries or economies that are offering that.
PRYCE: That's a real problem for any investor. We've seen yields being negative. You mentioned that earlier in the summary of what happened
during the last year. And of course, the amazing thing is that countries that are still having difficulty in terms of the size of the debt are able
right now to borrow at negative rates.
I mean, look at -- if you look at Europe, Portugal, for example, look at even Greece which has had such a difficult time being able to borrow at say
two and a half percent interest rate or even less, that is extraordinary for the turnaround that they're able to do that we have seen in market
sentiment, but that is because there isn't anything much else to invest in.
And yet we've seen shares go up very significantly in a number of areas and we've seen that happen in the U.S., of course over the last year, but
there's been huge volatility.
So if you're looking for certainty, looking at the stock market perhaps isn't the best because through the year last year, we saw this amazing ups
and downs that took place in the U.S. market and others because mainly of the trade concerns that have been around and they haven't been removed.
In the U.K., of course, we have the whole Brexit situation which is going to be a burden for anyone who is trying to decide where to put their money.
So what firms have done is, I'm afraid, basically buy back their own shares. We've seen a lot of that going on or buying up cheap assets that
they can get.
So there's been a lot of consolidation taking place, purchases of perhaps sort of growing firms from one country to another, so there's been a lot of
that trying to find returns.
GIOKOS: Vicky, and lastly, you've just authored a new book, "Woman Versus Capitalism," and as we head into the new decade, you're basically saying
that free market as we know it right now cannot result in gender equality. That's a real worrying thought. Do you think that we're going to see
fundamental shifts in capitalism going forward? Do you think that's likely?
PRYCE: There's a lot more concern right now about gender equality. There's a lot more concern about equality, more generally, or rather,
inequality. And what we're seeing is that the part of the population, which is in the majority, which is women, still hasn't seen gender
equality.
This isn't just in terms of pay, but it is also in terms of health outcomes, education and so on. But on the economic front, I think what we
are doing at president is not realizing the potential that women have. And that's what I write about in the book.
[09:40:03]
PRYCE: They don't work at a skills level, even though they tend to be better educated these days than the men and the economy is not allocating
resources properly, because it doesn't actually realize the potential that there is if they use women at the right levels, and encourage them to be
more flexible, and also come back to work after they have children.
But also, there's the bias against women, and it's a long term issue. The current system is very short-term oriented. That's what capitalism is all
about and every change we've seen in terms of gender equality has come from government intervention.
And unfortunately, we need more of this. This isn't saying that capitalism is not good at all. It says that it has to be one that works very closely
with the regulators to ensure that gender equality becomes a reality.
GIOKOS: Well, Vicky, thank you very much for your insights and Happy New Year to you. All the best. Vicky Price, chief economist adviser at the
Center for Economics and Business Research.
PRYCE: Happy New Year to you, too.
GIOKOS: All right, so moving on. Confusion and disagreements at the White House. A new report says an order from President Trump left his divided.
We will explain when we come back. Stay with us.
(COMMERCIAL BREAK)
GIOKOS: Welcome back. So we're learning more about the deep divisions within the White House over a controversial order from President Trump.
"The New York Times" is reporting that top officials were split on Mr. Trump's demand to withhold nearly $400 million worth of military aid for
Ukraine. It's that decision that led to his impeachment earlier this month.
Our Jeremy Diamond joins us now from West Palm Beach, Florida, where President Trump is spending the Holidays. Good to have you with us.
I mean, this is really interesting because it kind of spells out who was for it who was against it, and of course he left because of it. What kind
of clarity are we getting about the latest information that we have?
JEREMY DIAMOND, CNN WHITE HOUSE REPORTER Well, look, the White House is out to portray this freeze on nearly $400 million of security at Ukraine as
a routine matter.
And now we've already seen consistent -- a pretty significant evidence through the testimony of many of those career officials that this was
anything but a routine decision.
[09:45:10]
DIAMOND: But now, some of these new e-mails obtained by "The New York Times" in this report that was published just yesterday shows that even
among the President's top advisers inside the West Wing, there was a pretty clear-eyed understanding that this was going to be something extremely
controversial, and something that would cause some headaches.
You have Rob Blair, one of the top advisers to the White House and Chief of Staff, Mick Mulvaney telling him in an e-mail, you know, expect Congress to
become unhinged if we do indeed go and follow through with this freeze on this $400 million of security aid.
And so from that point on, really this set in motion a couple of months, 84 days as "The New York Times" describes, during which you had both career
staff, as well as some of the President's top foreign policy and national security advisers attempting to convince the President to reverse course on
this, including a late August meeting involving the Secretary of State Mike Pompeo, the Secretary of Defense Esper, as well as the National Security
adviser at the time, John Bolton, all of them meeting with the President in late August in the Oval Office attempting to convince him that this was
something in America's interest to release that security to Ukraine, but being unsuccessful in doing so.
Ultimately, it was not until September 11th, after the President learned about that whistleblower complaint, after he learned that Congress was
beginning to investigate those claims, and after several officials, including some Republican senators began asking him whether or not there
was a quid pro quo here involving this security aid for Ukraine and these investigations.
Only after all of those things happened did the President ultimately relent and released that aid.
GIOKOS: So Jeremy, now that we have new information, this is possibly going to influence the way the Democrats view the Senate trial and the
rules of engagement here because Nancy Pelosi has said that the Articles of Impeachment is only going to be handed over to the Senate once there's
clarity on that in terms of who is going to testify, if anyone, how is this going to influence the trial going forward?
DIAMOND: Look, as some new detail and a better understanding to how this all unfolded and so some of those concerns inside the administration and
the highest levels at which it reached. But it doesn't change the overall picture.
Look, Democrats have already known that this was not a routine foreign policy decisions to freeze the security aid. They knew that there were
concerns being expressed, they knew that there were efforts to convince the President to reverse course on this. So I don't think this is going to
fundamentally change Democrats' position nor necessarily Republicans, frankly.
But again, there are still those conversations happening between Democrats and Republicans over the rules in the Senate that Nancy Pelosi has not
indicated whether she will actually send those Articles of Impeachment over to the Senate or when she will do so.
So again, it is still largely a waiting game here and certainly the President still has this very much top of mind as we've watched over his
Twitter feed over the last week of his vacation here in Florida.
GIOKOS: A lot of tweets, we've all noticed. Thank you very much Jeremy. Much appreciated.
So here's today's "Boardroom Brief." Lufthansa subsidiary Eurowings says more than 85 percent of its flights will take place despite a Germanwings
cabin crew strike. The German crew union called the strike on Friday over working conditions. Eurowings has called the strike disproportionate and
absolutely incomprehensible.
The Bank of England Governor says finance firms must act faster to cut investment into fossil fuels. In a BBC radio interview, Mark Carney said
slow progress could lead to sharp temperature increases. The results could make certain financial assets worthless.
Shares in Tesla rival, Neo are up more than 30 percent. The Chinese electric car maker delivered more cars in the third quarter than in the
second, and total revenue rose nearly 25 percent compared to a year earlier.
One programming note, be sure to tune in to CNN for a new documentary. John Defterios takes us around the U.S. to see how the shale oil and gas
boom has revolutionized the nation's energy policy and transformed the global landscape.
It's part of our global energy series which examines how we can transition to cleaner energy while also satisfying our demand for more power.
"The Global Energy Challenge" airs Tuesday at times seen on your screen.
All right, so up next dating app, Bumble makes amends after blocking -- guess who? Sharon Stone. We bring you today's top stories after this.
(COMMERCIAL BREAK)
[09:51:46]
GIOKOS: All right, so welcome back and today, we take a look back at some of the big stock movers in 2019 on Wall Street. It was a great year to be
invested in Apple. The tech giant is turning out to be the best performing Dow stock this year, up more than 80 percent. Microsoft is the second best
stock, up more than 50 percent.
But it wasn't all tech, banking giant JPMorgan Chase is up 42 percent and Visa gained 40 percent year-to-date as well.
So, taking a look at how awful stocks are doing in early trading, most are pulling back a bit as you can see, with exception of JPMorgan Chase that's
up two tenths of a percent.
By the way, there are only three Dow stocks that are closing out the year in negative territory -- Pfizer, Walgreens and 3M.
All right, Truist has become the sixth largest bank in the U.S. after a $28 billion merger between SunTrust and BB&T. Matt Egan sat down with the CEO
to talk about the name, as well as financial regulation.
(BEGIN VIDEOTAPE)
KELLY KING, CEO, TRUIST: I would be less critical today of Dodd-Frank than I might have been 10 years ago, because what we've seen is that it has
generally been applied reasonably well.
And there's some really good things that came out of Dodd-Frank. For example, the Consumer Financial Protection Bureau. At its core, it is a
really good agency. We needed that. We needed broader consumer regulation.
Coming out of Dodd Frank was a requirement that the banks do more robust capital planning. Their so-called CCAR Process has turned out to be a
really healthy thing.
And so, are there some things that we would like to change? Have there been a few things changed? Sure. But overall, you know, I would say that
as a long term banker, I'm comfortable with the level of regulation we have. I don't particularly think we need a lot more. Because if you over
regulate the banks, then you stymie the economy.
MATT EGAN, CNN BUSINESS SENIOR WRITER: Elizabeth Warren has pointed out that the Federal Reserve has not declined any of the 3,800 or so bank
merger applications that it's received between 2006 and 2017. Isn't that a little alarming?
KING: The process that the regulators go through is very thorough. And what does happen oftentimes, is that as companies contemplate merging, and
then they discover more about what's required to be the new institution, they realize they don't have the capacity to perform according to the
regulatory requirements, and so they withdraw their application because they know they will not be approved.
And so to say that they don't approve -- reject any is a bit overstating the case. There are in fact lots and lots of lots of mergers that are
proposed that get withdrawn, which is effectively or de facto, a rejection.
EGAN: Can you tell me a little bit about how you came up with the Truist name?
KING: We want a name that doesn't carry baggage. We really wanted a name that we could build on what the future looks like for Truist and that's
what we got.
[09:55:03]
KING: So the word Truist was a made up word and actually, when we did a lot of scientific research, we got exactly what we wanted, which was 91
percent of the people said, I'm just kind of neutral to that word. Perfect.
Because what we want to be able to do is build on Truist now to be what we stand for.
EGAN: But there's also been some pushback to the Truist name. There was an informal Twitter poll by American Banker that found 68 percent of users
hated the name. Have you had any second thoughts?
KING: No. Because you know that's natural. People tend to think about words and names that they've always liked. But they don't think about
words that were created in the last 20 to 30 years. Take Nike, Verizon, et cetera et cetera things that we love now that are household words and are
all the same kind of scenario.
(END VIDEOTAPE)
GIOKOS: Well the dating app Bumble has restored Sharon Stone's account. It was blocked after users claimed it was fake. The company told the
actress quote, "It looks like our users thought you were too good to be true."
That's it for FIRST MOVE. Thanks so much for watching. I'm Eleni Giokos in New York.
(COMMERCIAL BREAK)
[10:00:00]
END
