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First Move with Julia Chatterley
The U.S. Economy Added 145,000 Jobs The Last Month, Missing The Estimate; U.S. And Allies Increasingly Believe That Iran Shot Down A Ukrainian Airlines Plane; More Trouble For Boeing As Damaging Internal Documents About The 737 MAX Have Been Released. Aired 9-10a ET
Aired January 10, 2020 - 09:00 ET
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[09:00:12]
ZAIN ASHER, CNN INTERNATIONAL ANCHOR: Coming to you live from here in New York. I'm Zain Asher, in for my colleague, Julia Chatterley. And here is
what you need to know.
December jobs report. The U.S. economy added 145,000 jobs the last month, missing the estimate.
And searching for answers. The U.S. and allies increasingly believe that Iran shot down a Ukrainian Airlines plane.
And more trouble for Boeing. Damaging internal documents about the 737 MAX have been released.
It is Friday, my friends. And this is FIRST MOVE.
All right. Welcome to FIRST MOVE. I'm Zain Asher. It is so good to have you with us on this Friday morning, local time. U.S. stock futures are on track
for a flat, modestly higher open this Friday.
Take a look that. The Dow futures look up only about 20 points or so. So pretty much flat. Investors right now are digesting a weaker than expected
U.S. jobs report, stocks begin today's session at record highs though. It looks as though we'll see stocks move further into record territory in
early trading today.
That said, stocks have lost some of their gains premarket this past half hour. Taking a look at our U.S. jobs numbers, it just came in about 30
minutes or so ago. The U.S. added about 145,000 jobs last month. Analysts were expecting a jumps growth of around 164,000, so the numbers coming in
slightly less than expected and the numbers are also much weaker than the 256,000 jobs added in November.
November gains by the way were boosted in part, not entirely, but in part by the end of that six-week long GM strike. Meantime, the U.S. unemployment
rate is steady at three and a half percent. The jobless rate remains at a 50-year low.
Stocks rose to record highs on Thursday with signs that the U.S. and Iran were pulling back from a wider military confrontation. The NASDAQ closed
above 9,200 for the first time ever, and the Dow is coming very, very close right now to hitting 29,000 for the very first time, too.
New challenges await the markets next week. However, we've got fourth quarter earnings season beginning with major U.S. financial institutions
reporting. Jobs report is our main driver today though. Paul La Monica joins us live now.
So Paul, walk us through this, 145,000 jobs added, slightly less than expected in terms of what analysts had been anticipating which was 164,000
jobs added. We had been expecting a deceleration in December, but just as you sift through the numbers, what are you seeing?
PAUL LA MONICA, CNN BUSINESS REPORTER: Yes, I think that obviously it is disappointing, Zain, that we had a sharper pull back from those really
strong November gains that even after you back out those GM jobs that came back following the end of the strike, it was still very strong, above
200,000. So that's disappointing.
I think one of the key things, that is kind of a good news bad news scenario is that wage growth pullback was only up 2.9 percent year-over-
year, which if you are focused on what you think the Fed is going to do, and the broader market, that might be a good sign because it justifies the
Fed's stance of keeping rates on hold. They don't need to be worried about inflation.
By the same token, 2.9 percent wage growth is among the weakest year-over- year increase we've seen in over a year, so workers have less in their paychecks and that's not really great news for the economy because you
could see a pullback in consumer spending.
ASHER: I mean, and wage growth, you would anticipate it to be higher, just given the fact that we are already at full employment, but just in terms of
being at an unemployment rate of three and a half percent, how much room is that for this labor market to continue to expand as it has been doing?
LA MONICA: Yes, it's a fantastic question, Zain. I think a lot of people are worried that because of how long this economic expansion has gone on,
that you're going to see smaller increases in jobs growth become the norm over the next couple of months. The unemployment rate may not be able to go
significantly lower than where it is now.
You did see interestingly, that the so-called underemployment rate fell to about 6.7 percent. That's, you know, a notable sign because people that are
working part time that want to work fulltime are being able to find more work. So that is encouraging.
But you're right, I think it's going to be very difficult for the unemployment rate to drop significantly lower from these levels without
sparking higher wage growth and inflation fears, and the number of jobs being added, I think are going to slow, and then you look at some of the
sectors, the oil sector mining, they lost jobs, and manufacturing, one of Trumps favorites to look at, they lost jobs as well.
[09:05:03]
LA MONICA: Possibly, you know, a casualty of the trade war, even though the tensions are starting to ease with China and other nations.
ASHER: And just looking ahead, Paul to 2020 and beyond, what are the major risks to the U.S. labor market do you think on the horizon?
LA MONICA: Yes, I think that right now, the consumer has helped power the U.S. economy, and you might be starting to see some cracks if wage growth
decelerates even further, that could be a potential problem.
I think a lot of people are hoping that we will see maybe more jobs added in higher wage industries, professional services, that that can boost up
you know, consumer spending.
So I'm going to definitely be focusing a lot on the wage growth numbers and the types of jobs that are added.
ASHER: All right, Paul La Monica, live for us there. Thank you so much. Appreciate it.
All right, Iran is analyzing the black box data belonging to the Ukraine jet that crashed near Tehran. It comes with a growing list of countries who
say they believe that Iran shot down the jet by mistake with two surface to air missiles.
Iran says that is a big lie and accuses the U.S. of conducting a psychological operation.
Richard Quest joins us live now. So Richard, we know that there is going to be black box evaluation happening Friday. Just walk us through what is the
key pieces of data, the key sort of concrete evidence that will prove to us categorically whether or not this plane was shot down or not.
RICHARD QUEST, CNN BUSINESS ANCHOR: It won't come from the black boxes in that sense. The black boxes will show how the plane responded, what the
plane did after. The data probably comes to a complete halt afterwards.
If it doesn't -- if the plane is in extremis after the missile hit, and it is starting to crash then you'll see all sorts of parameters being all over
the place.
The evidence of which will conclusively prove this, to most people will be the wreckage and that is being bulldozed. It is being removed in an
indiscriminate way.
The crash site has not been secured. It's not been sterilized in the sense of only officials can go in there. If you look at the pictures, you've just
got people wandering around. You've got scavengers. You've got trophy hunters, all of which is highly dangerous by the way, bearing in mind, the
things that have been falling out of the sky.
We've had no reports on how human remains are being treated with the dignity and reverence one would expect. We don't know about DNA
requirements to identify those on board. Look at it. It's shambolic the way this is being contained.
And Zain, some of the reports from Ukrainian investigators who are already there, make shocking understanding reading when they talk about the
bulldozing of the wreckage.
ASHER: So the crash site, as you say, clearly not secured. Wreckage being removed indiscriminately. Iran, though is saying these accusations that
there was a surface to air missile that shot down this plane. They're saying it is a big lie.
Based on the people that you've spoken to, Richard, what are they saying about whether or not there is faith that Iran can actually conduct a full,
proper and fair investigation?
QUEST: The Iranians have already puts out a preliminary report. In that preliminary report. They said specifically, there was no warnings, there
had been no communications from the pilots.
Yesterday, they are now starting to talk about the plane had problems and was turning back when it happened. Well, I'll tell you one thing, assuming
it's not corrupted in one way or the other, the flight data recorders will show if there was an internal explosion in the engine.
The data recorders will show if anything went wrong with the hydraulics or any of the controls. The cockpit voice recorder will tell you what the
pilots were saying, if there was something wrong with the aircraft.
Remember, we've got a timeline from the video. The video shows us when the explosion happens. If you marry that up with the cockpit voice recorder,
and you start to then see well what could have happened?
So if the Iranians are right and it was something on board the aircraft, then the flight data and cockpit voice will give evidence of that. However,
if those recorders just stopped recording at a certain point, and there's no further data coming from them and you're left with an extraneous
explosive event. In other words, the missile.
[09:10:07]
ASHER: All right, we'll see what the black boxes hold. Richard Quest live for us in Beirut. Thank you so much.
More trouble for Boeing now with another setback for the company's now infamous 737 MAX jet. Newly released document showing Boeing employees
expressing doubts about the planes ability to fly.
Clare Sebastian is joining us live now. So Clare, what are we learning from these documents about how well or rather, how poorly pilots believe that
they were trained to transition to the 737 MAX?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Well, Zain, we are learning there were doubts and concerns within the company. We're also seeing that
there was a concerted effort from Boeing and Boeing employees to try to avoid having regulators mandate simulated training for 737 MAX pilots who
were already qualified on the older version of the 737.
Now, this is a crucial element for Boeing when it came to selling and marketing this plane to airlines. They want it to compete head to head With
the A320 Neo that the Airbus similar type of aircraft, and so they didn't want to have to mandate simulator training that would incur extra time and
costs for the airlines.
And we see this appear in these e-mails, in one case, a technical pilot says they will go face to face with any regulator who tries to mandate the
training.
But it goes further than that, Zain, we are seeing concerns about the manual provided to pilots, in some cases, concerns about the plane itself.
Take a look at this particular e-mail from April 2017. Just a month before the first 737 MAX was delivered. One Boeing employee says, "This airplane
is designed by clowns, who in turn are supervised by monkeys."
There were also concerns not just about the plane, but about the simulators themselves designed to sort of help pilots train. In one case, in February
2018, just 10 months before the first deadly crash on Lion Air, a Boeing employee says, "Would you put your family on a MAX simulator trained
aircraft? I wouldn't." The Boeing employee he is talking to says, "No." So this is very concerning, of course, to the flying public.
As for Boeing, it has now reversed course on that simulator. Just this week, it said it would now recommend simulator training for 737 MAX pilots,
and they put out a statement to go with these documents which they did release to the media saying, "These communications do not reflect the
company we are and need to be, and they are completely unacceptable."
They continue, "That said, we remain confident in the regulatory process for qualifying these simulators." It is not Boeing's confidence they need
to worry about though, it is the confidence of the flying public.
ASHER: And just in terms of how these documents factor into the F.A.A. investigation, Clare.
SEBASTIAN: Well, this is an interesting one, Zain, because certainly for the F.A.A., they have released a statement. They had already seen these
documents, don't forget. They said that they have reviewed them and they haven't seen any new safety issues that they weren't already aware of.
So certainly, it seems that everything that arises in these documents, the F.A.A. has gone through and said that it's not new. They've already
reviewed all of that.
They did call the tone and content of these e-mails disappointing, but this, don't forget is not just a black eye for Boeing, this is a problem
for the F.A.A. as well. In as much as it was Boeing's responsibility to make sure the plane was safe and the training was correct, the F.A.A. had a
responsibility to certify that as well. And this is something that is crucial to watch going forward as they work to get the 737 Max back in the
sky.
The F.A.A. has said, it is evaluating its certification processes, but this will add renewed scrutiny to that -- Zain.
ASHER: All right, Clare Sebastian live for us there. Thank you so much.
All right. These are the stories making headlines around the world. The U.S. House has passed a War Powers Resolution aiming to restrict President
Trump's actions against Iran. It now has the Senate and there was a debate among Republicans and Democrats, whether the resolution is legally binding.
The Duchess of Sussex has returned to Canada after she and her husband, Prince Harry said that they were stepping back as senior members of the
Royal Family.
Let's get the latest with our Max Foster. So Max, this is unprecedented. I mean, what is going on. What is happening behind the Palace walls?
MAX FOSTER, CNN ROYAL CORRESPONDENT: Well, it's a family firm. They've got to find some way of resolving this or one of them needs to, you know, stand
back even further. I think that's the issue.
There are crisis talks taking place over the next few days. Hopefully, they say resolved by the beginning of next week. They're in a real rush to get
this done.
Effectively, what you've got is the three main households. So William's household, Charles's household and the Queen's household, sending their
teams in to try to flush this one out, try to find a way forward for the Sussex's.
What they're talking about is trying to find a workable solution here, which is implicit -- implicit into that is that what the Sussex's have
presented as their future role isn't workable.
So whatever they've put on that website that we were talking about yesterday, the details, you know, statistics and how they are going to work
with the media, what their roles will be in the future, that isn't going to remain intact if the couple wants to stay in their Royal roles. There is
going to have to be some level of compromise here.
The question then will be, will the couple compromise and edit the website or even take it down? They're not known for their compromise. So I think
that's going to be difficult for them, particularly when they care so deeply about what they do, and they have been very upset and under a lot of
pressure in recent months and years.
So I think there's -- you know, it is a big moment next week for the Royal Family. Can they get through this and keep the Sussex's within the fold?
[09:15:27]
ASHER: Just talk to us a bit more about the events that have led up to this moment. There have been so many conflicting reports about the Duke and
Duchess of Sussex's relationship with the rest of the Royals? I mean, what do we know for sure about what caused this?
FOSTER: Well, there has been -- I mean, we've seen tension between the brothers for some time. I think people are, you know, there's been a lot of
speculation around that. But I don't think that's a big surprise nor between the sons perhaps and their father, sometimes.
I think the big shock here has been the way that Prince Harry undermined his Grandmother and his side aren't denying this, not saying much at all
about this, but certainly Buckingham Palace are very clear that the Queen wasn't consulted about all of this.
And she actively went out of her way to ask Prince Harry not to publish the statement and the website, and he went ahead and did it. That's a big issue
within the monarchy.
The Palace is very clear. It's a red line for them. But I think the wider public as well. Whilst there's a huge amount of admiration and goodwill for
the Sussex's, there is a red line when you're undermining the Monarch, the Head of State who is very revered in this country.
I will say though, young people are very supportive of the Sussex's, what they're trying to do, stand up to the establishment and promote the causes
very close to young people's hearts.
So there's a bit of a divide between younger and older people, but I think there's definitely been some goodwill lost over the way they've treated the
Queen.
ASHER: Max Foster, live for us. Thank you so much.
The Australian government is urging almost a quarter of a million people to evacuate their homes as bushfires continue to rage. American firefighters
have been arriving in Australia to help fight the blazes which have so far killed 27 people.
All right, still to come here on FIRST MOVE. Is Impossible pork good enough to convince a carnivore? We put the latest innovation from Impossible Meats
to the test.
And robo-cats, flying cars and artificial humans. More highlight for the CES Show in Las Vegas.
(COMMERCIAL BREAK)
[09:20:30]
ASHER: All right, welcome back to FIRST MOVE coming to you live from New York. Let's take a quick check of the markets. U.S. futures are pointing to
a modestly high open of stocks. Dow future is up about 25 points or so after the release of that weaker than expected December jobs report. Stocks
are still set to rise though to record highs this session.
We know that 145,000 nonfarm jobs were created in the United States in December, about 20,000 fewer than expected. Unemployment rate remains
steady at three and a half percent. As we mentioned earlier, though, this could be another milestone day for the stock market.
The Dow is close to crossing that all important psychological 29,000 milestone for the first time ever and that would put the Dow less than four
percent away from the 30,000 mark.
Meantime, stocks are trading mostly flat in Europe today. Stocks finished mixed in Asia. Let's go straight now to Sam Stovall, the Chief Investment
Strategist at CFRA Research. Sam, thank you so much for being with us.
So let's talk about jobs numbers coming in slightly less than expected, 145,000 jobs added in December. How is the market going to digest that, do
you think?
SAM STOVALL, CHIEF INVESTMENT STRATEGIST, CFRA RESEARCH: Well, I think we've got an idea that when it was initially announced, we did see the Dow
futures slip into negative territory because I think investors were expecting there to be a stronger than anticipated payroll report.
And when they got something that was weaker than anticipated, that just threw them for a loop. But I think the numbers in total are still
relatively positive because it implies an upward trajectory, and the unemployment rate remained at three and a half percent.
ASHER: And we still expect record highs this session. We do anticipate the Dow at least crossing over the 29,000 thresh mark. So when you sort of look
at this week for U.S. stocks, it's really been all about U.S. stocks breathing a sigh of relief after tensions in the Middle East just seem to
have sort of been walked back. Just walk us through that.
STOVALL: Yes, well, on Friday, we got the news that we had launched the attack. We had killed the general and therefore it elevated tensions in the
marketplace.
We saw about a near one percent decline in stocks overall, which was actually fairly consistent with history looking at 20 such military or
terrorist action since World War II, the market to tended to fall about one and a half percent on that first day, and then take about a five percent
decline from the peak to the eventual trough, usually occurring more than 20 calendar days later.
But we found that actually the market reversed course fairly quickly and got back to a new record high, only a couple of days after the event.
ASHER: So when you think about what the market is going to prioritize over the coming weeks, how important is geopolitical tensions versus what's
happening with the economy and also corporate profits?
STOVALL: Well, geopolitical tensions, I think make for good headlines, but don't traditionally affect bottom lines, and that's what Wall Street
focuses on.
They do look for the economy and when they assess these terrorist or military actions, the first question they ask is, will this lead to global
recession? Because stock markets, bull markets don't die of old age, they die of fright, and what they're most afraid of is recession.
We start the fourth quarter of 2019 earnings reporting period in earnest on Monday. And right now, expectations are for a two percent decline. Yet in
the last 31 consecutive quarters, we've had actual results exceed end of quarter estimates, and beat those estimates by about four percentage
points.
So when all is said and done, we might end up seeing earnings up two percent rather than down two percent.
ASHER: All right, so you're hopeful that corporate profits will rebound in 2020, after a relatively lackluster 2019?
STOVALL: Correct. The reason for the lackluster 2019 in my opinion, is that we had a much stronger than anticipated gain in 2018. The bar was set very,
very high. In the beginning of 18, earnings were expected to rise by about 11 and a half percent, and by the end of the year, they were actually up by
twice that amount.
So for 2020, U.S. earnings are expected to be up about eight percent, developed international up about 10 and a half percent and emerging markets
likely to see about a 13 percent rise in earnings.
[09:25:11]
ASHER: So earnings season starting in earnest on Monday. Next week, we also have the U.S. and China signing Phase 1 of the U.S.-China trade deal. How
will that factor into market rationale? Is that already baked in, do you think?
STOVALL: I think much of it is already baked in. There's an old saying that prices lead fundamentals, and right now prices are soaring as earnings
expectations, GDP growth rates are pretty much stagnant.
So I think investors are saying, okay, we know what the estimates are. But what if we're wrong? If we're wrong, do we underestimate or overestimate
these expectations?
And right now, because of the trajectory of prices, I think Wall Street is essentially saying maybe we are under estimating how strong economic and
earnings growth will be this year.
ASHER: And so when you look at -- when you sort of look at 2020, just from a bird's eye perspective, we know that the Fed is trying to keep interest
rates steady for the year, but what would it take? What is there on the horizon that might change that calculus, do you think?
STOVALL: Well, I think that's a good question about inflation, Zain, because inflation is probably the one thing that could upset the apple
cart. Right now, we have a Federal Reserve that is in an easing mode.
Historically, the market gain is about 18 percent, 18 months after the start of a new rate reduction cycle. We don't see the Fed cutting any rates
anytime soon. But if we start to see the economy come in much stronger than anticipated, then I think investors will begin to worry that maybe the Fed
will have to reverse course.
So in some ways, you could say there was a silver lining to today's employment report, because hourly earnings came in less than anticipated,
and that's a big push.
ASHER: All right, Sam, we have to leave it there. Thank you so much. Stay with CNN. The opening bell is after this quick break.
(COMMERCIAL BREAK)
[09:30:07]
ASHER: All right. That was the opening bell on this Friday. We are looking to see. We are watching with bated breath to see whether the Dow actually
crosses that all important 29,000 mark.
We've got disappointing jobs numbers though and so that pulled down futures back ever so slightly, but we are very, very close to that all important
psychological high. We'll check back in in just a moment.
Stocks were weakened as I mentioned, because of the U.S. jobs numbers coming in at 145,000, slightly less than expected. The unemployment rate is
steady at a 50-year low at three and a half percent.
Time now for a look at our Global Movers. Shares of biotech firm, Dermira are on the rise today. Lilly announced that it is buying up the company for
more than a billion dollars. Dermiraa makes medications for skin disease.
Before today's deal, the company's stock more than doubled in just one month.
The GrubHub is lower. The struggling food delivery company is denying reports that it's trying to find a buyer. Shares surged 12 percent on
Wednesday on merger speculation, some believe Walmart could be a potential buyer.
Shares of amusement park company Six Flags are tumbling. The company is warning that fourth quarter results will come in weaker than expected
because of problems with developing parks in China.
Returning now to one of our top stories today, Iranian investigators are examining the black boxes from the crashed Ukrainian jet. It comes as the
U.S. provides Ukrainian government with what it calls all-important data about the tragedy.
The U.S.-Canada and the U.K. are standing by their claims that Iran fired two surface to air missiles likely by accident. Iran is denying that.
CNN's safety analyst David Soucie joins us live now. So David, today is the day that Iran says that they're going to be evaluating the all-important
black boxes, what is going to be key in terms of piecing together what happened in this crash?
DAVID SOUCIE, CNN SAFETY ANALYST: Well, the key items right now that I'm concerned about, Zain, is just the chain of custody of these boxes.
It appears as though they've just done it themselves. Iran has just done it themselves. Typically, with the black boxes, the chain of custody is
coupled with at least two different entities, and I'm not aware of another entity that's there. For example, Boeing might be there or the N.T.S.B. or
another investigative team would be there to assure the chain of custody.
And the other thing I'm concerned about is their expertise in doing so they've said that if they can't get data off the box, that they would then
enlist other people to do it. The challenge is, what are they doing trying? Are they trying to get the data off the box? That's not the way to go about
this. It needs to go to a laboratory to be examined in detail in order to get the critical data that's necessary to find out exactly what happened
with this aircraft.
ASHER: Just in terms of, you know, learning lessons from the past, it was, what? Six years ago that we had MH-17. Obviously, there were warnings by
the U.S. in terms of U.S. aircraft, at least not flying over Iranian airspace, given the tensions in that region.
I mean, just walk us through what could have been done to prevent something like this from happening, if it is indeed, as we will find out, hopefully
later today, a surface to air missile?
SOUCIE: The difficult thing, Zain, is that little or nothing has been done to inform civilians and passengers and let them know what they're walking
themselves into.
They go through security. The airplanes are examined. Everything is looked at that we put passengers in the safest airplanes in the world and then
launch them directly into what could be a war zone without any information whatsoever.
So these innocent victims need some way of understanding that and even since they MH-17, the United Nations and ICAO, the division that oversees
aviation has come up with what they call a repository of information.
But I've been looking for that myself all morning and I have not been able to find where that repository is or where they would have been able to find
information about this risk area.
ASHER: So given that Canada lost a significant number of souls on this plane, I believe it was 63. Obviously, France had casualties as well, what
should be their role in this investigation?
SOUCIE: They should be actively involved in this investigation. They have been invited to attend, to send representatives. I know that one
representative from the N.T.S.B. and the U.S. is en route to be there and examine the wreckage, but they should be involved in every step of the way,
particularly in that their military has information and the British military has information about the locking on of these missiles and the
fact that the missiles were launched.
[09:35:05]
SOUCIE: So that is a critical piece of the information that they can provide to investigators to determine what exactly happened.
ASHER: When you have a situation where you're dealing with a war of words between Iran and the United States, the United States and Canada, pointing
to this tour, surface to air missile, two of them that that likely brought down this plane, the Iranians are saying that's not true. They're calling
it a big lie. They're saying that this is just psychological warfare by the United States. When you have that kind of situation, how does the flying
public get to the bottom of this?
SOUCIE: Facts speak as facts and speculation, as an investigator and really, as anybody even observing this, we have to be cautious about
falling into the web of deceit and speculation.
And what I'm looking at are the facts of what's happening, the fact that we did see some evidence on the ground of the engines and the fact that they
were on fire coming down, led me at first towards possible engine failure, which doesn't typically take the aircraft down.
But now at this phase, with the information that we have about the missile, they're going to be pushing back. Everyone is emotional. They are
heightened. No one wants to jump to any conclusions.
So it's irresponsible to say that the information about a missile is a lie. There's no reason to think it's a lie. It is coming from multiple different
sources. I think that that that's just a reactionary, basically immature response to what is a horrific and catastrophic situation.
ASHER: And when you think about the fact that this crash site is clearly not secured and wreckage and remains are being removed indiscriminately, I
mean, what are you, somebody who has been in aviation for many years make of that?
SOUCIE: Oh, you know, I've never done an accident investigation where there was an anarchy on the site. It's always that way and people in good
heartedness where they are trying to help, but curiosity gets in the way.
You know, is there any reason to try to hide things? It makes people wonder about what's happening. That's one of the main reasons we secure sites is
to make sure that there's no question down the road when the investigation report comes out that someone tried to hide something.
And that again goes back to my answer about the black boxes. You can tell there's a lack of experience in this because it benefits Iran to have as
many different entities there to observe and be transparent about the accident site, it would help them down the road.
And it's just a lack of experience, I think in in securing the site and making sure that is pristine. I would not have moved those materials. I'm
not there. I don't know.
I have done that before in the past, though, had to take pieces off of a site, just to secure it from the general public when it can't be secured
properly. So I don't know that they're doing that to hide anything. They might just be the way that they have to do it to do an accurate
investigation.
ASHER: I see. All right, David Soucie live for us there. Thank you so much. All right, still to come here on FIRST MOVE, gay and lesbian campaigners
praise Alibaba for an advert recognizing same sex couples. It could be a first for a major Chinese company. That's next.
(COMMERCIAL BREAK)
[09:41:21]
ASHER: All right, the December jobs numbers, as we've been saying came in below expectations with the U.S. economy adding just 125,000 jobs. Wage
growth, also disappointing, coming in at about 2.9 percent year-over-year. That's despite unemployment remaining at 50-year lows at three and a half
percent.
Joining me live now is Mike Feroli, Chief U.S. Economist at JPMorgan. Thank you so much for being with us. So just give us your take on these numbers.
We had been expecting some kind of deceleration in December, just given how strong November's numbers were. But just walk us through your thoughts on a
145,000.
MIKE FEROLI, CHIEF U.S. ECONOMIST, JPMORGAN: So I wouldn't get too hung up on the slightness in the December payroll job growth number. There may have
been some seasonal distortions. As you mentioned, it came after a very strong November.
I think probably the wise thing here is to look at like the three-month average, which is 184,000 jobs per month in the fourth quarter, which is a
very solid outcome. So that is all -- you know, nothing to complain about there.
But as you mentioned, the wage number is disappointing. Again, you shouldn't make too much of one month, but when you look at the year ago
numbers, which obviously takes account of the whole year or 12 months, you know, that has slowed to 2.9 percent on a year ago basis. That's down from
3.4 percent earlier last year.
So it's a bit surprising that we're seeing the slowdown in wages particularly because as you mentioned, the unemployment rate is low and
remains low, 3.5 percent, is you know, multi-decade low. So, the fact that wage growth has been slowing again is the aspect of the report that I would
-- is a little more concerning than then the slightness on the headline job growth number.
ASHER: Right. So why is that? I mean, why is it that when you have a labor market that's this tight, we are still seeing disappointing numbers
concerning wage growth. Where does that come from?
FEROLI: So I don't think the mystery here is that wage growth is low. I think the mystery is that it's been decelerating over the course of last
year. I think the low wage growth in this expansion in general has been in part due to the fact that productivity growth over the past decade has been
quite soft.
And in the long run, it is productivity growth that drives real wage growth. So I think that explains why wage growth in general has been soft
or softer than we might have expected in in previous decades.
I think as I mentioned, the more curious aspect is that it's slowed over the course of 2019 and 2019 was a year in which the unemployment rate
remained, it was not only low, but declined over the course of the year.
I suppose one explanation is simply that employers, you know, certainly showed some caution in the second half of the year. There were fears, as
you may recall, well, in the third quarter about the economy may be slowing into recession.
We certainly had concerns about the trade wars. We had some financial indicators flashing recession risk. And so that may have caused employers
to be a little more hesitant to hand out wage increases.
But if we just looked at the numbers in terms of the tightness of the labor market, it's not the relatively low level of wage growth, but the slowing
in the course of 2019 that was a bit of a surprise.
ASHER: Concerns. So looking at the long term view, but employers as you say, might have been apprehensive, but just given the tightness already in
the labor market, three and a half percent unemployment rate. How much room is there for this labor market to continue to expand?
FEROLI: Well, I think this has been one of the interesting things about this expansion is that we continue to lower our estimate of what a normal
level of unemployment rate is.
[09:45:10]
FEROLI: So if at 3.5 percent we're not seeing wage growth numbers that would suggest inflation worries, then there's no reason to slow things down
from the Fed's perspective, we can let this run.
Obviously, it's going to be harder to find more workers. But, you know, there's no reason that we can't get, you know, lower than 3.5 percent. It
certainly has happened in the past and with little sign of inflation, I don't think there's a reason why we should expect, you know, the Federal
Reserve to kind of want to cool things off in terms of the job market.
ASHER: All right. I admire your optimism. Mike Feroli live for us there. Thank you so much. Appreciate it.
FEROLI: Sure.
ASHER: All right. Here's today's Boardroom Brief. Facebook made some changes to its political ad policy, but will continue exempt them from the
fact checking standards used for other content.
The tweak allows users to turn off certain ad targeting tools but it does not prevent political ads from spreading lies.
Amazon's home security company, Ring, has fired four employees for spying on customer videos. The company said the employees used their access to a
degree not required by their jobs. The company is also currently under scrutiny for external hacks into its system.
And Apple stock rose to a record high after iPhone sales in China jumped 18 percent in December compared to a year earlier. The company had previously
warned a slowdown in the country.
And staying in China, a subtle new advert is making waves for appearing to depict a gay relationship. The ad released by Alibaba owned, Tmall, going
viral after it posted on Chinese social media giant, Weibo.
Steven Jiang joins us live now from Beijing. So just walk us through this ad and what's in it because it's sort of -- it's very subtle. It's very
subtle. It's sort of intimate at a same sex relationship. But what has been the reaction there in Beijing?
STEVEN JIANG, CNN SENIOR PRODUCER: That's right, Zain. It looks innocuous enough for most western eyes. This shows a young man bringing his partner
home, but only introducing him to his parents as Kelvin.
Only at dinner when a dad hands over Kelvin a bowl of soup, he responds by saying, "Thanks, Dad," creating this awkward moment of surprise. So it's
very subtle, but also kind of humorous.
But you know, you have to consider the context of this. That is, even though homosexuality is not legal in China government, there was a lot of
discrimination and prejudices that this community continues to face from both the government and society according to experts and activists.
And since 2016, Chinese censors have banned all LGBT content in television and online shows. So it's this kind of environment that makes this ad very
rare and refreshing.
Really, you know, it's been viewed millions of times, attracting hundreds of thousands of likes and prompting mostly positive comments praising the
company for recognizing the gay community, embracing its visibility.
Now, it's worth pointing out, it's not the first time that Alibaba has shown its subtle support for the gay community. A few years ago, another
subsidiary actually sponsored a contest with a gay dating app to send gay Chinese couples to the U.S. to get married.
But, you know, some analysts would also tell you it may be a wise business decision on Alibaba's part because online shoppers obviously tend to be
younger, more open minded and progressive, so they would appreciate this message of inclusion.
But, you know, still when we asked the company about this, they would not even acknowledge the gay subplot at all, saying only that the context, the
context of this ad is the Chinese New Year celebrations. It's a time for family reunion and inclusion that is meant to celebrate that. So a long way
to go when you think about the company that's generating so much positive comments wouldn't even acknowledge the fact that they have featured a gay
couple in their ad - Zain.
ASHER: That is certainly very, very interesting. The fact they wouldn't even acknowledge it, but yet they put it out there. Steven Jiang live for
us there. Thank you so much.
All right, China is in the grip of a pork shortage. One company thinks it has the answer and it has nothing to do with pigs. We are at the Consumer
Electronics Show in Las Vegas after the break.
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[09:51:36]
ASHER: All right, welcome back, everybody. Let's take a look and see how the Dow is doing right now. We had been anticipating 29,000, another record
high for the Dow. We are currently just shy of that 30 points or so just shy of that partly because of the disappointing jobs numbers we got.
Jobs numbers in December actually coming in lower than expected, 145,000 jobs added in December compared to 164,000 jobs that had been anticipated.
Wage growth also slightly disappointing as well.
All right, this week has been or has seen the latest in gadgets unveiled at the Consumer Electronics Show. Samantha Kelly joins us live now.
So Sam, just walk us through what the highlights were specifically with Samsung because I know that they actually came out with the world's largest
television ever, but there are some issues with it. Walk us through it.
SAMANTHA KELLY, CNN BUSINESS EDITOR: Yes, sure. So Samsung, you know, when you think about Apple and Amazon, they tend to have their own keynotes and
host their own events throughout the year.
Samsung always has a very big presence at CES and of course did so this year as well. So let's talk about the big TV. So it's 292 inches, which is
really, really big. When you think about big TVs these days. It's 70 to 80 inches, this is three times the size of that.
Of course it's not going to fit in most homes, it's not going to fit in most doorways and I don't even want to think about the electric bill. But
then when you think about sort of how it looks in person, I mean it is just stunning 8K TV.
Basically, it's a modular set. So Samsung will come to your home, a bunch of different panels go together, you can go up to 292 inches. So this is
all about customizing and making it more options for consumers.
But it wasn't the only TV that got a lot of buzz at the show this year. There was also a TV which you can see right here, horizontal traditional TV
that turns vertically if you want to watch social videos, YouTube something on Instagram or Facebook or even watch something in the way that you
originally intended it to be viewed.
A little bit gimmicky there. I'm not quite sure how many people will actually buy it and of course with you know, traditional computer monitors,
you can kind of always turn it that way. But it certainly got a lot of buzz.
ASHER: And also Impossible Pork making headlines at CES. I understand that you actually got a chance to cook one up. What was that like?
KELLY: Yes, so Impossible Foods have you know long in the U.S. been about a burger alternative and now they're expanding into pork which is consumed
more than any other meat internationally, so looking to expand the market there.
So I got to try it and you know, it was great. It tasted just like pork. I have to say it was in a sandwich and in little dumplings, so of course I
was tasting you know, same thing with like a burger, you taste the bun around it.
I'm not quite sure what like a slice of it would taste like. But for what it was. It was pretty -- it was pretty good. So this is a part of a bigger
strategy. What's really interesting is they said that with their competitor or at least, you know, market competitor Beyond Meat that he was -- I spoke
to the CEO Pat Brown a little bit about this.
He was very passionate that they aren't direct competitors, and that the main competitors are meat manufacturers out there. A part of their global
effort to make more people stop eating meat.
ASHER: And Ivanka Trump, the U.S. President's daughter, gave a reception -- gave a speech rather at CES this year and it was quite controversial
because even though people had been pushing for more women's take on this role, she wasn't necessarily the candidate that people had been expecting.
[09:55:14]
KELLY: Exactly. So in 2017 and 2018, CES didn't have any female speakers during their keynote presentations. At the very last minute last year, they
added two women panelists to their keynotes.
But this created a lot of attention. And so this year, everybody, you know, was kind of anticipating what, you know, female CEO or entrepreneur was
going to take the stage and just a few weeks ago, they announced that Ivanka Trump was going to fill a spot during a keynote. And this created
you know, some tension in the industry. People saying perhaps it should have been somebody else.
But her points weren't contended. It was more of just her presence.
ASHER: All right, Sam Kelly, thank you so much for walking us through those highlights. Appreciate it.
And that is it for FIRST MOVE. I'm Zain Asher. Listen to our podcast on cnn.com/podcast. "Connect the World" is after this short break.
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[10:00:00]
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