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First Move with Julia Chatterley

The Iranian Foreign Minister Responds To The Killing Of General Soleimani; The Secretary Of State Is Set To Talk In The Next Hour; Japan Issuing A Warrant For Carlos Ghosn's Wife. Aired 9-10a ET

Aired January 07, 2020 - 09:00   ET

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

[09:00:14]

JULIA CHATTERLEY, CNN INTERNATIONAL HOST: Live from the New York Stock Exchange, I'm Julia Chatterley. This is FIRST MOVE. And here's your need

to know.

State terrorism: The Iranian Foreign Minister responds to the killing of General Soleimani.

Pompeo speaks. The Secretary of State is set to talk in the next hour.

And a further Ghosn twist. Japan issuing a warrant for Carlos Ghosn's wife. We are live in Beirut. It's Tuesday. Let's make a move.

A warm welcome to you all once again. It's been fascinating actually to watch what we've seen in terms of market reaction here in the United States

and around the world of course.

There's still, obviously the ongoing tensions and concern about the Middle East. That caution remains well and front and foremost, but that's being

backed with this fear of missing out particularly for stock investors, I think at this moment.

Take a look at what we're seeing on Wall Street right now, where we continue to see a bit of improvement in sentiment.

Right now, stock features indicating mostly flat after what we saw an impressive reversal yesterday. We began the session at our worst point, we

were down around half a percentage point. We then managed to end the session higher by around two tenths of a percent or more. All the major

averages, once again, higher for 2020.

The NASDAQ less than what? Two tenths of a percent below record highs. We could see it close to record in fact, at the open today. We'll wait and

see what happens as far as the rest of the markets are concerned.

But if I'm just looking at what's going on in the European session right now, the DAX up by six tenths of one percent. The CAC 40 though coming

under a bit of pressure. So we are trading, in fact, around session lows here.

So I mentioned the kind of tensions and concerns that we're seeing for investors right now. But of course, this is a key worry.

All right, let's bring it back around now and get to the drivers this morning. Iran, of course remaining, our top driver this morning.

And let's get there. A deadly stampede at the funeral of Soleimani. More than 30 people were killed and dozens of others were injured in the

southern city of Kerman, the hometown of Soleimani. His burial has been postponed as a result.

Meanwhile, the Iranian Parliament has voted to designate U.S. troops as quote, "terrorists."

U.S. Secretary of State Mike Pompeo is set to speak to the media as I mentioned in the next hour. Nic Robertson joins us live from Riyadh. Nic,

so many developments in fact, in the last 24 hours, but we'll talk about what's set to happen with this press conference from Mike Pompeo in the

next hour and then we can go backwards.

What are we expecting Mike Pompeo to say because they've come under a lot of pressure for what was ultimately this threat that justified the

strategic killing of General Soleimani? What can we expect?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes. The threat and of course, what President Trump has said subsequently to the United States

ally, Iraq, threatening them with sanctions, so -- and also the possibility of targeting cultural sites in Iran.

So some of those things, I think we can expect the Secretary of State, Mike Pompeo to put a gloss on them as we can hear from him details of what those

possible attacks would have looked like. The indication so far from National Security adviser have been -- the U.S. National Security adviser

have been that these would have been a attacks on U.S. military installations, as well as diplomatic installations, embassies and

consulates, that sort of thing. And also at sea as well.

So we can expect more details on that. I certainly know from this perspective here in this region, they'll be looking to hear a perhaps more

calming restrained voice than some of those tweets from President Trump who sort of ratcheted up rhetoric aimed at his allies and threatened what most

of the United States allies would consider a war crime targeting cultural sites in Iran.

So I think there would be a hope in this region that what we hear from Secretary of State Mike Pompeo does not ratchet up tensions. And I know

from one of the Saudi officials who was meeting with him yesterday, this was what they wanted, the message they wanted to get across in the meetings

I'm told were excellent.

CHATTERLEY: Yes, and Mark Esper, of course, the Secretary of Defense also seeming to contradict the President here saying that cultural sites

wouldn't be tackled. So this is, I think something as you point out incredibly important to hear from Secretary of State, Mike compare today.

Can we also talk about the leak of the letter yesterday that seemed to suggest a far sooner withdrawal of U.S. troops from Iraq too?

[09:05:14]

CHATTERLEY: I mean, for the Iranians here, or at least the rhenium regime that of course and their influence there, that would be a strategic win for

them to it was what back or denied by the Pentagon. Can you talk us through what happened there to, Nic?

ROBERTSON: Sure, well, the U.S. Commander of Forces in Iraq wrote to his opposite number in Iraq with a briefly worded note letter, saying that they

were repositioning some of the troops and the implication was that that could be part of a later withdrawal.

Now, that was brought back. That was unfinished and President Trump said that it needed and required more work, but I think what is very clear and

clearly emerging here, several things. One, is that for Iran, Soleimani is a martyr. He becomes a strategic asset to be used or his martyrdom becomes

a strategic asset to be used, is being used to isolate the United States.

And they are very clearly making the threat against U.S. forces, not the countries -- not the civilians of the countries that they're in, and not

their allies in the region, that it is U.S. forces, military forces who will be the target.

Now, in the light of that what we've seen it in Iraq, and in light of what U.S. Intelligence officials are now saying that they're seeing Iran move

some missile systems and drones around Iran and these systems have been used for complex, sophisticated, long range, highly directed, very, very

precise targeting.

I went to one of the Saudi oil facilities that was targeted, incredibly direct and precise targeting, the missile systems from these drones.

So it appears as if listening to the Iranian threats of attacks on military sites that the United States has repositioned some of the forces who are no

longer engaged and sort of active duty chasing down ISIS in Iraq or training Iraqi forces, reposition them to safer locations within Iraq

because of the possibility, the potential of this pinpoint targeting, which could render some structures where the forces might be in inappropriate

shelter.

CHATTERLEY: Yes. Nic Robertson, thank you so much for joining us on that. And just to reiterate, Mike Pompeo, Secretary of State set to speak at

10:00 a.m. Eastern Time. We will bring that to when he does.

For now though, CNN's Fred Pleitgen spoke to the Iranian Foreign Minister, Javad Zarif, who called the U.S. killing of General Soleimani an act of

quote, "state terrorism." Take a listen to that discussion.

(BEGIN VIDEO CLIP)

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: You have said that Iran will retaliate for the targeted killing of General Qasem

Soleimani. President Trump has said that would be a district disproportionate response if you do that? What do you make of President

Trump's threat?

MOHAMMAD JAVAD ZARIF, IRANIAN FOREIGN MINISTER: His threats will not frighten us. But he is showing something. He is showing to the

international community that he has no respect for international law, that he is prepared to commit war crimes, because attacking cultural sites is a

war crime, and this disproportionate response is a war crime.

But he doesn't he doesn't care, it seems about international law. But has he made U.S. more secure? Do Americans feel more secure? Are Americans

welcome today in this region? Do they feel welcome?

PLEITGEN: Your government and your leadership and the military here has vowed to take action against the United States. What kind of retaliation

is that going to be?

ZARIF: Well, the United States violated three principles. Iraq is sovereignty and the agreement that they had with Iraq. Take that response

from the Iraqi Parliament. They violated the emotions of the people. They will get a response from the people. They killed one of our most revered

commanders and most senior commanders, and they took responsibility for it. This is state terrorism. This is an act of aggression against Iran. And

it amounts to an armed attack against Iran and we will respond, but we will respond proportionately not disproportionately, because we are committed to

law.

We are law abiding people. We're not lawless like President Trump.

PLEITGEN: So you think that you can strike at any point? Because obviously, it's no secret that you control militias in this region, that

you have forces that are on your side in this region and in many countries.

ZARIF: No, we have people on our side in this region. That's much more important. The United States believes that this beautiful military

equipment, according to President Trump, that you spent $2 trillion on these beautiful military equipment. Beautiful military equipment don't

rule the world. People rule the world -- people.

The United States has to wake up to the reality that the people of this region are enraged, that the people of this region want the United States

out. The United States cannot stay in this region with the people of the region, not wanting it anymore.

[09:10:10]

PLEITGEN: Would it be worth speaking to him?

ZARIF: Well, he doesn't need speaking. He has to realize that he has been fed misinformation, and he needs to wake up and apologize. He has to

apologize. He has to change course. He cannot add mistake upon another mistake. He is just making it worse for America.

He is destroying the U.S. Constitution. He is destroying the U.S. political process. He is destroying the rule of law in the United States.

But that's not for me to say, that's a domestic affair of the United States.

He has enraged people of our region. He has killed people of this region. He has spent a trillion dollars. He said U.S. had wasted $7 trillion in

our region. He has added another trillion. Is the United States more secure today because of that?

(END VIDEO CLIP)

CHATTERLEY: A punchy response there, as you can see from the Iranian Foreign Minister. Investors made their own decisions very quickly, though,

they thought that that retaliation or in some form, could focus on the oil markets and yet look at what we're seeing for oil prices today.

We're actually seeing them retreat in the session, taking back some of those early gains as investors, I think reassess some of the risks around

oil infrastructure.

John Defterios joins us now. John, great to have you with us. We were discussing this on the show yesterday and a number of analysts now coming

out and saying the oil industry, the infrastructure is more secure and safe than it was even last year and there are easier ways for Iran to retaliate

here than targeting the oil industry.

JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR: Yes, I think the view, Julia is that there's no clear and present danger so why panic until

you have evidence of a U.S.-Iranian confrontation.

This is amazing because we have Iran through the National Security Council there drafting 13 different scenarios that the head of that Council said,

will be a historic nightmare for the United States.

Now, of course -- and this will continue to be the case. The Iranians are keeping that very close to the vest. So what is going on in this market

right now? We've corrected by about five, five and a half percent since that rally that we saw Friday and Monday and then the selloff that we see

today. This is a market though that was already strong, Julia.

We finished at the end of 2019 as $60.00 a barrel and change on the global benchmark North Sea brand. And that's because of the work that OPEC Plus

did at the start of December, which triggered that rally.

But I would be accepting of that market response if we had not seen what we did in 2019. The attacks on tankers here off the coast of the UAE and

Fujairah, pipelines and pumping stations in Saudi Arabia, and then the audacious attack that we saw against Saudi Aramco in September.

Now, the U.S. Pentagon through CNN sources suggesting that there's a threat here of drone attacks. They warned Aramco, we could see further

escalation. And the U.S. Maritime Administration is suggesting there's already been threats against U.S. tankers in the Persian Gulf and the Gulf

of Oman as well.

So if you're sitting in the Middle East, it doesn't feel too comfortable, then you check the gold price, which rallied as you know. We saw the

rally, with people rushing to safety. Today, it is flat.

So at this point, and we've seen this in a number of different analysts' notes it is contrary to what I'm hearing from sources in the region. They

are on high alert, Julia, but the Wall Street analysts that I'm talking to, and those in Asia say, we don't need to respond just yet until we see a

real threat to U.S. installations. It seems very odd for my 20 years in the region.

CHATTERLEY: Yes, cautiousness remains, though I have to say. But to your point, absolutely. John Defterios, thank you so much for that.

All right, we're going to stay in the region, but on a different story here because Japanese prosecutors have issued an arrest warrant for Carole

Ghosn. She the wife of former Nissan CEO, Carlos Ghosn.

Carlos, course, skipped bail in December, fleeing to Beirut. And Richard Quest is there for us.

Richard, so many questions about the issuing of this arrest warrant, including the timing here, I think, this week, but just tell us first, what

is this arrest warrant related to specifically because I think this is important, too.

RICHARD QUEST, CNN BUSINESS EDITOR-AT-LARGE: So it is. The arrest warrant relates specifically to evidence and testimony that Carole Ghosn gave to

the court in Japan in April of last year, at the time that Carlos Ghosn's bail application was being considered.

Now, we don't know exactly what it is that the Japanese are saying she lied or perjured herself or gave untruth evidence about, but that is what they

are now saying is relevant to her arrest.

[09:15:04]

QUEST: Now, in terms of her personal security, she is here in Beirut, along with Carlos Ghosn, where they're expected to hold some form of news

availability press conference, and the like and do some interviews tomorrow on Wednesday.

If Carole Ghosn has now been under -- or is now under an arrest warrant, she'll be in the same position to some extent as her husband in that the

Lebanese government does not extradite its citizens. And she is a Lebanese citizen, too, like Carlos Ghosn. So both of them could find themselves not

extraditable from here, but effectively having to stay here because if they go anywhere else, well, they risk being arrested.

CHATTERLEY: There was all sorts of speculation at the time as well as of what role Carlos Ghosn's wife played in his escape from Tokyo and

ultimately ending up in Beirut, to your point here, but I just wanted to point out that this arrest warrant doesn't seem to be relating to that at

this stage.

So there is huge question to ask, do we think that this will also be addressed if they do indeed decide to speak to the press this week?

QUEST: Carlos Ghosn has said about his escape -- two things. He is not going to talk about it, even though he is going to do a press conference,

he has made it clear he will not discuss the methods, the means and the way in which he escaped from the Japan.

Separately to that, he put out another statement in which he specifically denied media reports that his wife or anybody else was involved, saying he

alone was responsible for the plans of his escape.

Now, obviously, everybody is going to want to know how that is credible or how that actually happened, but I suspect he is going to stick firmly to

that line. Because the closer you get, Carole Ghosn to his escape, then the more you make her potentially liable for what happened.

As it is at the moment, the Japanese have held discussions with the Lebanese government. Lebanon has said even -- is in a very uncomfortable

position -- it welcomed him here. It said he entered Lebanon legally.

But of course it also receives money from Japan, but it doesn't extradite its own citizens. We're getting the picture here that it is an extremely

complex web of circumstances and laws that's by no means certain how it plays out -- Julia.

CHATTERLEY: No, and pivotal to hear what he has to say if he speaks this week. Richard, fantastic to have you with us. Thank you so much for that.

Richard in Beirut there.

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

In Australia, a state of emergency remains in effect with around 100 bushfires still active. The U.S. is sending a team of 20 people to help

aid in those efforts. Insurers estimate losses at close to $500 million so far.

Puerto Rico has being shaken by a series of powerful earthquakes in the last several hours. After getting hit with the earthquake, authorities

continue to prepare and assess the damage that was undertaken as a result of those earthquakes.

All right. We're going to take a quick break here on FIRST MOVE, but great to have you with us and plenty more to come on the show. We will be back.

(COMMERCIAL BREAK)

[09:21:54]

CHATTERLEY: Welcome back to FIRST MOVE. It is looking like a pretty mixed open after Monday's come from behind gains that we saw. The S&P and the

Dow futures right now, I'll call that relatively unchanged.

We are still seeing the NASDAQ higher by some two tenths of one percent premarket. So we are now, for these the majors in the United States, less

than a half a percent away from record highs, signs of that risk of trade also receiving despite the uncertainties that we still see across the

Middle East.

We've been talking about this really for the last two days. Take a look across the asset performance here. The MSCI World Index up around one

tenth of one percent. Gold, it was trading flat to slightly lower earlier. It's back kind of into positive territory. We're going to remain cautious.

I think that's what we have to underscore here.

The 10-year yields still below significantly below that two percent, right now down at 1.8 percent. Giving back some recent gains though here, the

Swiss franc, and we've got what? We've got it down some two tenths of one percent versus the U.S. dollar.

Let's talk about what's going on. Mark Zandi joins me. He is now the Chief Economist for Moody's Analytics. Mark, fantastic to have you on the

show as always. We've got the battle here of the ongoing uncertainty and what might come as far as geopolitical risk with a feel I got yesterday,

particularly from the equity markets here in the United States of a fear of missing out on any future rally. What do you make of it?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Well, I think investors are on edge. You know, the conflict, the tensions with Iran are a serious

threat, so oil prices are up. We have seen global oil prices up several dollars a barrel and the rally -- the powerful rally in the equity market

that we've been experiencing in the U.S. and across the globe has been put on pause.

And I think investors are going to remain cautious until they get a little bit more clarity with regard to what the Iranian response is and what the

American response is to the Iranians.

So I think global investors are on edge and I don't see the market going anywhere quickly until some of these uncertainties are resolved.

CHATTERLEY: What created the turnaround yesterday for stock markets was a reduction in the rally. As soon as all prices started to soften, and we

saw some of the anxiety in the oil markets retrace, the stock markets rallied.

So to your point, it's this sensitivity about not only the short term impacts of higher oil prices, perhaps but the fundamental impact of oil

prices and the impact that higher oil prices have on the economy. Can we quantify what that means? What $10.00 price increase in oil prices means

for the real economy here?

ZANDI: Sure, so a $10.00 increase in oil, so right now let's say we're at $60.00, WTI - West Texas Intermediate, we go to $70.00 and we stay there.

That'll shave about a tenth of a percent off of GDP, U.S. GDP over the next year.

The impacts are more serious globally. It'll shave about a quarter point off of growth over the year, globally. And that's because the U.S. has

become less energy oil dependent.

[09:25:02]

ZANDI: The fracking revolution means that we're producing a lot more oil, we're exporting a lot more energy products. And so we're much less

vulnerable to a rise in oil prices.

But nonetheless, if oil prices rise, then that will hurt consumers who will have to pay more at the gas pump and that will weigh on economic growth, so

not inconsequential.

CHATTERLEY: Overall though, you were less optimistic, I think then the many analysts about stock market performance in 2020. You said it was

going to be a tough year for stocks. Why do you think that? What's the justification? And is it data driven and fundamentals driven?

Because I look at some of that survey data from the United States on Friday from the manufacturing sector and Phase 1 deal with China or not here on

trade, the data is still saying cautiousness particularly in the manufacturing sector to me. So talk us through what you're thinking here.

ZANDI: Yes, you're right. I'm less upbeat about the stock market than clearly global investors have been. You know, I think 2020 is going to be

a more difficult year for equity investors. Lots of reasons.

Most fundamentally, I do think corporate earnings growth profits are going to be flat this year. Sales should be okay. I don't think the global

economy is going into recession. You know, now that the President Trump has called a truce in his trade war, at least temporarily, I think a

recession looks less likely.

But I do think profit margins will continue to decline. And so I don't see much growth in corporate earnings. And, of course, corporate earnings

growth is the key fundamental driver of stock prices.

The other thing is, valuations, you know, given the run up in stock prices are very, very high. Now, they shouldn't be high, because interest rates

are low, but even accounting for that, stock market valuations are as high as they've been since the Y2K bubble.

So all of that combined makes me less optimistic about stocks in 2020. Then of course, you throw in these geopolitical uncertainties, Iran just

being one of many, you know, that just adds to the concern that I have with regard to equity prices this year.

CHATTERLEY: Makes perfect sense. Mark Zandi, fantastic to have you with us. Chief Economist for Moody's Analytics there.

Now, a quick primer for you, too. Stay with CNN because Christiane Amanpour is going to be speaking to U.S. Secretary of Defense Mark Esper at

1:00 p.m. in New York, 6:00 p.m. in London right here on CNN. Stay with us. The opening bell here at the New York Stock Exchange is next.

(COMMERCIAL BREAK)

[09:30:32]

CHATTERLEY: Welcome back to FIRST MOVE live from the New York Stock Exchange. We just heard the opening bell this morning for the second time

this week, a relatively muted start overall for U.S. stock markets.

The tech stocks aren't managing -- oh no, I'll change my mind. Actually, we're relatively unchanged for that, not able to build on the half a

percent gains that we saw for the tech stocks yesterday. Still a need for caution, I think here amid the continued tensions over in the Middle East.

Iran, of course to continuing to threaten retaliation in response to the death of General Qasem Soleimani. That's clearly going to be a continued

focus for investors at this moment as too is the oil market.

Brent crude falling further back from three-month highs hit in the previous session. As you can see, we are down some one and a quarter percent from

Brent just over one percent for WTI.

This was the turning point for the U.S. stock markets yesterday as we saw oil prices pull back some of their gains. We saw a flipping sentiment,

more positive sentiment for stock markets. But as you can see right now, early start to the market here remains pretty fragile.

What about for the U.S. dollar? Strengthening in trade today. The Dollar Index currently are up around a quarter of a percent and under pressure in

recent sessions as investors were buying things like the Japanese yen and the Swiss franc, the safe haven currencies and then of course selling the

dollar against it. So a bit of a reversal of that trade, too.

Now America's top diplomat set to speak live from the State Department in around 30 minutes time. It will be the first time Secretary of State Mike

Pompeo has given a live briefing since the killing of General Soleimani.

Now former U.S. Ambassador to NATO Ivo Daalder joins us now. He's also President of the Chicago Council on Global Affairs.

Ambassador, fantastic to have you with us. You said that the killing of General Soleimani is likely and I'm quoting you, "a strategic disaster for

the United States." Is there anything that the Secretary of State Mike Pompeo can say this morning to perhaps change your thinking here?

IVO DAALDER, FORMER U.S. AMBASSADOR TO NATO: Well, it will be very difficult, because the immediate consequences of the killing strategically

are to advantage of Iran.

We are seeing pressure in Iraq for U.S. troops to be pushed out and to withdraw, which means that Iran's influence in Iraq will increase. We're

seeing allies of the United States distancing itself from the United States, leaving us standing alone.

And importantly, we see inside Iran, hardliners really gaining the strength of popular support and we are likely to see a more hardline Iranian regime

than we might otherwise.

So even without retaliation by the Iranians, we already see a significant strategic impact of the killing that was in many ways unforeseen, I think,

by the administration when it took this action.

CHATTERLEY: There was some confusion yesterday over whether or not the United States was going to accelerate its withdrawal of U.S. troops from

Iraq. Would this be perhaps the most efficient form of retaliation from the Iranians here, greater influence in Iraq without even having to do

anything that the U.S. creates that situation to here if they withdraw quicker than it first believed?

DAALDER: Yes, I think that's in fact, one of the ways in which Iran can quote-unquote "retaliate." To let the Iraqi political situation play out

in such a way that the U.S. troops will have to leave.

There's some debate about whether the U.S. has already ordered American troops to leave with a letter that was leaked yesterday from the senior

commander in the region.

But if the U.S. troops leave Iraq, then U.S. troops will also have to leave Syria because the Syrian troops are deeply dependent for intelligence and

support on the U.S. presence in Iraq.

And in both cases, it will strengthen Iran's hand in Iraq, in Syria, in the region, which is exactly what we didn't want to happen.

CHATTERLEY: What about the feeling among some of the Gulf allies here? I mean, no one it seems, wants to see any form of escalation at this

situation that the Iranian Foreign Minister accused the United States of creating instability in the Middle East where none was necessary. What are

your thoughts on that? And how are Gulf allies reacting particularly as far as Iran here?

[09:35:03]

DAALDER: Well, I think they're very worried about the outcome here. The unpredictability of the Trump administration is something that has left our

allies in the region and particularly Saudi Arabia and the UAE deeply uncomfortable.

Remember, in May the Iranians attacked Saudi oil facilities, taking offline 50 percent of the Saudi oil production capacity and the United States,

which has pledged to protect the free flow of oil out of the Persian Gulf since Jimmy Carter was President did nothing.

And at that point, it was clear to the UAE, to the Saudis, that they could no longer rely on the United States to protect their interest and they

started a quiet diplomatic outreach to Iran.

I think this has now been reinforced. They don't want to be the target of retaliation by the Iranians and they are trying to find ways to de-escalate

the situation and one way to de-escalate is to distance one's self from the United States.

CHATTERLEY: You know, one of the first questions I think that Mike Pompeo will be asked today, and if he doesn't already answer the question is, what

was this terrorist threat that led them to believe that a strategic killing of General Soleimani was the only option available to them here?

Do you think that question gets answered today? And is it relevant in any way perhaps in light of the following in the ensuing events?

DAALDER: Well, I don't think it will get answered. I hope it will be answered by the administration when it briefs the Congress tomorrow. But

here is the reality, we know from the recording that the killing of Qasem Soleimani was one of the options on the table to respond to Iranian

actions.

And because it was an option, it means that there were other ways in which one had to deal with the challenge that was there, which raises significant

questions about whether there indeed was an imminent threat or whether that was an ex post facto rationalization for the decision to take him out.

CHATTERLEY: Sir, fantastic to have you with us. Ambassador Ivo Daalder there. Thank you so much for your perspective this morning.

DAALDER: My pleasure.

CHATTERLEY: All right. We're going to come back after this. Stay with us. Coming up, the CEO of Rolls Royce Motor Cars on why its SUV is a key

driver for success. Stay with us.

(COMMERCIAL BREAK)

[09:40:31]

CHATTERLEY: Welcome back to the show with a look at today's at "Boardroom Brief." IKEA is to pay $46 million after a toddler was killed by a three-

drawer dresser, which toppled over. It is thought to be the largest settlement for the wrongful death of a child in American history.

The lawsuit alleged IKEA failed to do enough to improve the safety and stability of its dressers.

A TV with a rotating screen is one of the stars at the Consumer Electronics Show in Las Vegas. It's called the Sero. It's made by Samsung and it's

designed to marry your phone with social media videos in mind.

Aston Martin slashing its profit outlook after a quote, "very disappointing year of falling sales and high costs." The luxury carmaker is predicting

profits of around $180 million, almost half what it made in the prior year. The news of shares falling around 12 percent in today's session.

Now, while Aston Martin struggles, Rolls Royce is speeding ahead. The brand says it recorded a 25 percent jump in sales in 2019, and according to

the firm, worldwide demand for their first ever SUV was a key driver of success.

North America led sales followed by China and Europe and for more, I'm pleased to say we're joined by Torsten Muller-Otvos, he is CEO of Rolls

Royce Motor Cars. Torsten, fantastic to have you with us once again on the show and congratulations on a record year for the firm.

Talk to me about the SUV sales. Such a strong performance here, and is it sustainable? Will we see that stabilize in 2020?

TORSTEN MULLER-OTVOS, CEO, ROLLS ROYCE MOTOR CARS: Thanks. First of all, I mean, just to say that plus 25 percent is an excellent achievement. I

would even call it a British success story to the best. What we leave at year 2019, it's not only just for the sake that Cullinan was such a

success, it is also that we basically pulled all strings with all our other cars worldwide to make that result happen in a very, let's say,

professional way.

So for that reason, it's a great result. Chew on that plus 25 percent for a minute. That's a great result. I mean, Cullinan, of course has proven

to be a stunning star for us, great order book from the very first day on when we opened the order book and we are still sitting on a very strong

order book far into 2020 for Cullinan, so for that reason, I'm very pleased how the brand developed here over the last years.

CHATTERLEY: I want to talk to you about what you're seeing in terms of some of your largest markets and of course, we spend a lot of this show

about what's going on in terms of rising tensions in the Middle East.

I believe the Middle East is your third largest market. I just wanted to get a sense from you, particularly given what we're talking about here with

the ultra-high net worth individuals, what's your outlook for the region? Are you paring your expectations for demand in any way at all at this

stage?

MULLER-OTVOS: I mean, for 2020, I would say optimistic again, that we should see a strong year for Rolls Royce Motor Cars, growth wise, of

course, not on levels like plus 25 percent. But we will again see a strong year probably similar levels finally on 2020 compared to what we have

achieved in 2019.

So I think when I look into the world, our biggest market is the Americas by far, 30 percent of all our volume goes into the Americas, lots of ultra-

high net worth individuals over there.

Second market now is China. Second biggest market worldwide, roughly 25 percent. Europe has been very strong, including the U.K. last year, around

20 percent. And then comes the Middle East, 15 percent. So for that reason, I'm very pleased on the results.

Middle East in particular has done a tremendous job just being here a little bit on Middle East, because Cullinan has played an important role in

this kind of market.

CHATTERLEY: So at this stage, you're not paring back your estimates for the Middle East region, specifically? You're still remaining optimistic

here.

MULLER-OTVOS: I mean that -- yes, I mean, that depends, of course, what happens now in the course of the year and in the course of the next months,

but so far, the order bank, what I see here today, is still very healthy also for the Middle East.

I mean, you never can forecast what happens down there. And also we as a brand as a luxury brand, we are not immune against I would call it

recessionary tendencies in an economy or in a country or even some political unrest.

[09:45:06]

MULLER-OTVOS: So that, of course, affects the mood and the sentiment. For us, the consumer sentiment is important. It's never about money. Money is

always available. It's about the consumer sentiment. And if that is affected, of course, people might think twice or three times should they

really go for a new Rolls Royce?

CHATTERLEY: Yes, it's such an interesting point. It's about sentiment perhaps rather than the actual cost, and one thing that you aren't worried

about or talking about really is the electrification as far as your role as a car maker, but I did read that what you're looking at is designing the

world's fastest all-electric plane. Can you give us a little hint about how soon we may see an all-electric plane coming to market because this is

fascinating?

MULLER-OTVOS: No, I mean, that is just speculating. What I said, that is already in the making that in this decade, Rolls Royce Motor Cars go

electric. We said Rolls Royce Motor Cars and I said it, goes electric, this decade, Julia. And the project is in the making, but I haven't

released anything more and I won't release anything more today.

So wait and see. It will be again a stunning Rolls Royce that will come to the market in this decade. And we also committed that long term, the brand

would go full electric in all models.

CHATTERLEY: Fantastic. Well, we'll look out for that, whether it comes early on in the decade or later on. Congratulations again, sir, on the

sales -- great performance. Torsten Muller-Otvos there.

MULLER-OTVOS: Thank you very much, Julia. Thanks a lot.

CHATTERLEY: Thank you.

MULLER-OTVOS: Brilliant.

CHATTERLEY: The CEO of Rolls Royce.

MULLER-OTVOS: Thank you.

Chat Thank you. All right, let me give you a look at today's Global Movers. Alphabet lower. The company shares rallied some two and a half

percent to an all-time high on Monday. So paring a little bit of that gain. The leading research group sees Alphabet launching larger buyback

and perhaps a dividend this year, too. Wow. Watch out for that.

Goldman Sachs meanwhile, trading higher in the session. The financial giant is announcing a reorganization of its business structure. The news

comes before the release of its fourth quarter earnings report next week. Goldman's is making the changes so that the bank better resembles other

Wall Street firms. It will give it retail banking its own business category.

Cyber security firm Fireeye is rallying. The company shares were upgraded to a buy at SunTrust. Today, analysts say Fireeye could see increased

business given the ongoing Iranian cyber security threats, among others, of course, too.

All right, one of our other key stories today, Tesla's Elon Musk was in a dancing mood in China. He actually ripped off his jacket at the Tesla

Shanghai factory as it gets to work on a new Model Y car.

It's another milestone for the automaker's first foreign car plant. News helping Tesla hit a fresh all-time high today. Take a look at that.

Shares up some 1.3 percent in early trading.

With all the details, Steven Jiang joins us from Beijing. Steven, always a pleasure to have you with us. Walk us through the details here. And I'm

not talking about Elon Musk's relatively ropey dancing, I'm talking about the cars. Talk us through it.

STEVEN JIANG, CNN SENIOR PRODUCER: Well, Julia, I think Elon Musk broke into a dance in the middle of a ceremony probably because the winning

streak the company has had in the Chinese market so far is music to his ears.

Remember, this Giga factory in Shanghai, which of course is a multibillion dollar investment from Tesla broke ground only a year ago and now, they're

churning out a thousand cars per week, with the eventual goal being producing 3,000 cars per week.

These are impressive numbers especially given that sales in this market, the world's largest auto market having dropping three years in a row

because of the economic slowdown as well as the phasing out of government subsidies.

But even with these challenges, as well as growing competition from both domestic and international rivals, Musk was very bullish today -- on

Tuesday saying that they, as you said, not only would it produce Model 3 sedans, but also the popular Model Y crossovers and even opening a design

center in Shanghai specifically to design cars for the Chinese market.

And the other interesting thing, Julia, is this is also a success story the Chinese government is eager to show off because this, of course, is the

time when they are trying to show the rest of the world that they embrace foreign technologies, embrace foreign investments, opening their market to

anyone who is actually able to turn out quality products for their domestic consumers, as well as to spur domestic growth in industries that government

considers cutting edge and environmentally friendly.

So I think their goals from both sides really are aligning very well. And also Julia, considering Tesla is a U.S.-based company, and we are of

course, still in the middle of a trade war between the two countries, the investment Tesla has had in China is also helping the government reinforce

this message that these are two mutually beneficial economies -- Julia.

[09:50:01]

CHATTERLEY: Yes, you make some really fascinating points here. I just wonder whether they're going for volume here perhaps rather than for

margins if they're sort of cutting prices, I believe around a nine percent price cut in order to compete with the competition there.

So it's going to be interesting to see the numbers on this, too. Steven, fantastic to have you with us. Thank you so much, Steven Jiang there

calling in from China.

Now up next, we return to today's top story, U.S. Secretary of State Mike addresses the press in just 15 minutes time. We're in Washington. We will

preview those remarks. Stay with us. We're back after this.

(COMMERCIAL BREAK)

CHATTERLEY: Welcome back to the show. Just in to CNN, it's emerged Russian President Vladimir Putin has met with Syrian President Bashar Al-

Assad.

Russian state media is reporting President Putin made a rare visit to Damascus and held the bilateral talks with Assad. President Putin said

enormous progress has been made in Syria. It's his first time visit to Syria in fact, since the start of the nearly nine-year old war.

President Putin expects to travel to Turkey now for a meeting with President Erdogan.

Separately in Washington, U.S. Secretary of State Mike Pompeo due to address the press amid heightened tensions in the Middle East.

Earlier today, the U.S. Defense Secretary denied reports that the United States is pulling troops out of Iraq. Alex Marquardt joins us now on this.

Alex, so many questions for the Secretary of State here. The question is, does he answer them? Talk us through what we can expect.

ALEX MARQUARDT, CNN U.S. SENIOR CORRESPONDENT: Well, he is going to be faced with a barrage of questions from the very talented State Department

press corps about what exactly the nature of these imminent threats against U.S. interests were.

Now, this strike against Qasem Soleimani happened in the evening on Thursday here in Washington. So we're almost five days out from that. And

Julia, there really are very few answers, very little insight into what the nature of the imminent threats were. How significant they were in order to

justify the killing of a figure like Qasem Soleimani, who of course was a truly monumental figure in Iran.

Now, Mike Pompeo really has been the leading figure of the Trump administration that they have put out front to explain, to justify that

drone strike against Qasem Soleimani.

And really what all that he has said is that there was a significant imminent series of threats against U.S. targets in the region.

But what we really have failed to hear from the administration so far are any sort of concrete details. Mike Pompeo and others, publicly and

privately saying that revealing those details would reveal sources and methods that would threaten U.S. intelligence assets in the region.

But I can assure you, Julia, those questions are not going away. So we are hoping to get at least a few more details about the nature of those

imminent attacks from Mike Pompeo when he speaks shortly.

CHATTERLEY: Yes. What's the strategy? And of course, Mike Pompeo, Secretary of State expected to speak within the next few moments.

[09:55:04]

CHATTERLEY: We'll bring that to you live here on CNN. Thanks for watching.

(COMMERCIAL BREAK)

ANNOUNCER: This is CNN breaking news.

BECKY ANDERSON, CNN INTERNATIONAL ANCHOR: Tonight, revenge, war crimes, terrorists, assassinations. Iran and America hurling accusations at one

another. Who is accusing who of what?

Well, we will connect you through it all from right here at our Middle East broadcasting hub here in Abu Dhabi.

Welcome. I'm Becky Anderson for you.

In this hour, two of the most senior diplomatic players speaking out. Iran's Foreign Minister telling CNN the killing of its top General Qasem

Soleimani by the U.S. was an act of quote, "state terrorism."

While any moment now, we will hear from U.S. Secretary of State, Mike Pompeo.

[10:00:10]

END