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First Move with Julia Chatterley
A Massive City In China Locked Down And Lunar New Year Celebrations Axed To Try To Contain The Fast-Spreading Coronavirus; Democrats Use President Trump's Own Words Against Him In The Senate Impeachment Trial; France And The United States Spar Over Digital Taxes And Tariffs. Aired 9- 10a ET
Aired January 23, 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]
ZAIN ASHER, CNN INTERNATIONAL ANCHOR: Live from New York, I'm Zain Asher. And here is what you need to know.
A massive city in China locked down and Lunar New Year celebrations axed to try to contain the fast-spreading coronavirus.
Staging their case. Democrats use President Trump's own words against him in the Senate impeachment trial.
And in the Swiss Alps, France and the United States spar over digital taxes and tariffs.
It is Thursday and this is FIRST MOVE.
All right, welcome to FIRST MOVE coming to you live from New York, and also the World Economic Forum in Davos, Switzerland with Julia Chatterley and
Richard Quest who will join us from Davos a little bit later on in the show.
But first, let's take a quick check of global markets where the spread of the Asian coronavirus is growing concern for investors. See a lot of red on
your screen.
Right now futures are pointing to a flat to lower Wall Street open when trading gets underway just about a half hour from now.
European stocks are lower across the board. Big losses came from Asia. Chinese stocks tumbled two and a half percent, plus Hong Kong closed down
one and a half percent. It was the worst day for Chinese stocks in more than eight months.
Asian carriers continue to get hit hard by the virus uncertainty. Shares of Air China, China Eastern and Cathay Air all fell two percent or more. It's
important to note that Asian markets are still going to be closed for the Lunar New Year. Chinese markets will be shut down for a full week beginning
tomorrow.
U.S. stocks finished Wednesday's session mixed after hitting fresh records earlier in the session. Gains evaporated later in the day, as investors
learned a little bit more about the seriousness of the outbreak and China's efforts to contain it.
Asia's health emergency is our main driver for today. Chinese authorities are stepping up their efforts to control the spread of the coronavirus
which has killed 17 people and infected more than 500 so far.
With just days to go until the Lunar New Year, city officials in Beijing have counseled on large scale celebrations. Wuhan, which is the city that
is the size of London and at the epicenter of the outbreak has now been placed on partial lockdown, and so have two other smaller neighboring
cities as well.
David Culver joins us live now from the Beijing. So David, this idea that people in Wuhan are being told essentially they can't leave or they
shouldn't leave and that city being placed on partial lockdown. I mean, I can only imagine the level of fear that there must be for residents who are
still there inside the city.
DAVID CULVER, CNN CORRESPONDENT: It's interesting to note, Zain, because we were there for roughly 36 hours all together before we were able to get
out. But there is a level of fear for some. For others, there's really just an acceptance that this will be what it is, and we'll get through it and
we'll be back in our homes and our normal lifestyle within a few weeks. That's kind of the two ranges that we see there.
But what's also very interesting is to see how the government is expanding this now. So this goes beyond Wuhan, as you mentioned, this goes into two
other cities. And yes, they are smaller cities, but you've got to put it in scale here, because small is bringing the total number from 11 million in
Wuhan alone, up to nearly 20 million people that we're talking about.
And what are these restrictions looking like? Well, they're restricting public gatherings. So going to movie theaters, going to entertainment
venues, going to tourism centers, and they're starting to inspect cars that are going into these cities.
So what they'll do is they'll stop the vehicle and they'll check the temperature of those going in to this city and one by one, making sure that
they're not bringing with them fever.
So they're pretty strict in what they're implementing now, and you mentioned Beijing, dampening the celebrations a bit for the Lunar New Year.
This is a major holiday here. Hundreds of millions have been traveling over the past few weeks to celebrate this weekend.
Beijing's efforts to try to contain this and prevent any exposure and wider threat is now causing them to have to scale back a lot of the celebrations
and they are then telling folks please abide by this. Don't go out there and risk it and don't cause the exposure threat to rise any further.
Our own experience in Wuhan was interesting in and of itself. I mean, while we were there for 36 hours, we got a good feel for some of the uncertainty
and tapped into the unknowns and there's a lot of questions that we were hearing from folks there as to really is this going to be effective? Is
this something that going forward is going to prove to have been a positive step?
And that remains to be seen because some are questioning should this have happened several days ago, maybe even a couple of weeks ago?
[09:05:10]
CULVER: Why is it just happening now? Nonetheless, this is the situation that China and its citizens is finding itself in and trying to figure out
where they go from here.
It's a moment of uncertainty and folks really just hoping for clarity going forward -- Zain.
ASHER: All right, David Culver, appreciate that update. Thank you so much. In the U.S. Senate later today, Democratic prosecutors will continue making
the case that Donald Trump abused his presidential power. They are trying to convince at least four -- at least four Republicans that witnesses
should be called and new documents presented in evidence.
Lauren Fox joins us live now. So Lauren, how likely or unlikely is it at this point that that we will have witnesses in this case?
LAUREN FOX, CNN POLITICS U.S. CONGRESSIONAL REPORTER: Well, it's really too early to tell, Zain. What we can expect to see is today, Democrats will
be back making the case, the House Managers will focus today on their first Article of Impeachment: Abuse of power. Then likely tomorrow, they focus on
something like obstruction of Congress, that second Article of Impeachment.
Then you still have 24 hours of presentation that are available for the President's defense team. That would likely begin Saturday, then they could
have Monday and Tuesday as well to handle their defense of the President, then we likely won't get to a vote on witnesses until next Wednesday at the
earliest.
Now, that can all change because if people yield time back where they aren't interested in making a case for the full 24 hours, that timeline
will shift. But I will tell you that right now, the number of senators who are getting out of their seats a little more frequently stretching their
legs, walking to the back of the chamber, having quiet conversations, that's really starting to increase because there's a little bit of a sense
that people have heard this story before.
Remember, Democrats are really going over the facts of the case here, but there's not a whole lot of new information that's coming out. I'll tell you
funny moment, which is that when they play these video clips, because sometimes they play clips of the President or Mick Mulvaney, interviews of
the past, senators, really you see them suddenly perking up paying attention, there's just sort of a shift in the energy in the chamber,
because this is pretty monotonous for a lot of senators, which is why you're starting to see the patience wear a little thin -- Zain.
ASHER: And just in terms of what's happening today, you touched on this fact, just a little while ago that Democrats are really going to be
continuing to make the argument that they believe that the President should be removed from office.
Just walk us through what the crux of their argument will continue to be.
FOX: Well, yesterday, they really broke this up into a few specific chunks. They talked a lot about the specific language that the President
used in that phone call between him and President Zelensky of Ukraine.
They also talked about the withholding of that U.S. military aid in a lot of detail and part of the reason they did that was because they want to
fill in the gaps.
There's been a lot of information and documents that have come out since the House concluded their investigation from a Freedom of Information Act
lawsuit. So they wanted to highlight that new information.
You can expect that they're going to break it down into chunks once again today. The House Managers really taking turns making that case, shifting
voices and narratives as a way to try to keep attention from the U.S. senators. But again, it's getting harder and harder because a lot of
members feel like they've heard this before.
ASHER: Lauren Fox live for us, thank you so much. Now to Davos, Switzerland. The U.S. and France have agreed today on how to press ahead
with rules for digital taxes. France says the two sides will focus on securing a global deal this year.
Julia Chatterley joins us live now. So Julia, you know, just the fact that the United States has actually agreed to suspend tariffs on French goods,
but we all know that this is clearly not the end of the argument. Richard Quest has been speaking to Bruno Le Maire about this. What did he have to
say?
JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR, FIRST MOVE: Oh, and the perfect lead in. Richard Quest is here with me, Zain. So let's talk about
that because it's just one of the things of course, that's being discussed here in Davos, the coronavirus, of course, Black Swans is always a huge
debate. That also being front and center here among the debate.
But let's talk about the truth between the United States and France here over digital taxes. The United States saying or understanding that any
company that voluntarily pays a voluntary tax on anything is probably likely not to hang around very long.
RICHARD QUEST, CNN BUSINESS ANCHOR: They've kicked it into the long grass, and for whatever reason, neither side wanted to go into full battle, but I
don't think one should be fooled that this has been put off to one side.
Bruno Le Maire, the French Finance Minister, I suspect, you know, he defended why he wanted this tax, but he did tell me that though -- it
hadn't gone away.
(BEGIN VIDEOTAPE)
BRUNO LE MAIRE, FRENCH FINANCE MINISTER: I think I understand the concern of the U.S. administration, but they should also take into account that
it's difficult for us to have those biggest companies in the world, having all the European customers without paying the due taxes in Europe.
[09:10:14]
LE MAIRE: So that's also a fair deal to say, well, you want to have access to the single market in Europe, that's fair. You want to have access to the
500 million of European customers. That's fair, but you have to pay your taxes.
QUEST: But do you think you can reach a deal with the -- well, do you think there is ground that the U.S. will eventually agree to?
LE MAIRE: I think so, because you know, that's a global deal. In the deal, you have digital taxation, but you also have minimum taxation, and we share
exactly the same point of view with the American administration.
We want all the companies to pay their due taxes. We don't want to have tax evasion, and we want to have minimum taxation.
(END VIDEOTAPE)
CHATTERLEY: The Americans, I think, realizing here that no one's going to ultimately pay voluntary tax and that's what the French was saying all
along. But it's got to be far bigger than these two countries. It's got to be far broader.
We can debate this further and I'm sure it's going to come up with a broader trade battle, but I do want to talk about the coronavirus, because
we're all talking about this that the Chinese is suspending the big New Year's celebrations as a result, very different feel perhaps, if we believe
the response to what we saw in SARS in 2003.
QUEST: Well, they learnt a lot from SARS, and from Ebola, and they are effectively the same. The size of this is pretty huge. But the Airline
Association, IATA, was already put out guidance, and the airlines are going to coordinate with national health authorities in a view to stopping it.
But the nature of this, first of all, the city involved is 11 million people. So they came to it late. There'll be many more people who may have
traveled already. I would expect you will see a rise, a continuing rise until authorities have got a grip on it and then it'll fall off quite
shortly.
And that's what you're seeing with the -- the travel industry knows how to deal with it. It's not pleasant. It's not nice, but they know what to do
about it.
CHATTERLEY: Do we trust the information we're getting? Because the problem back in 2003 was the suggestion was they were too late. We didn't have all
the information.
Yes, we can say that the Chinese are perhaps acting more precipitously this time around. Is everyone else not taking the risk actually, that they don't
have enough information, so they step up the global response?
QUEST: Absolutely. Absolutely. Because at the end of the day, if you're Thailand, Singapore, Australia, the U.K., the U.S.
CHATTERLEY: Hong Kong.
QUEST: Hong Kong, of course, thank you. If you are those countries, you are not going to rely on the Chinese statistics, in case they are wrong, or
misguided or whatever. You are going to put in place and that means identifying those travelers as they come through, and for those who are
already there, having in place a Travel Health Advisory System that you get in, quarantine and deal with it.
They do know how to do this. This is not rocket science for the health authorities. It's hard work, but they know how to do it.
CHATTERLEY: Uncertainties at this point in time of course as well. We're all over it, Richard Quest.
QUEST: Yes, thank you, Julia.
CHATTERLEY: Thank you for that. Zain, back to you.
ASHER: All right, Julia Chatterley and Richard Quest, thank you.
So these are the stories making headlines around the world. The International Court of Justice has ordered Myanmar to do all it can to
prevent the genocide of Rohingya Muslims. The U.N.'s top court ruled that it does have jurisdiction to hear the genocide case against Myanmar.
Hundreds of thousands of Rohingya have fled from Myanmar to Bangladesh to escape violence at the hands of Myanmar's military. The country's de facto
leader, Aung San Suu Kyi has called genocide allegations incomplete and misleading.
Dozens of world leaders are in Jerusalem to mark 75 years since the liberation of Auschwitz. The U.S. Vice President Mike Pence, House Speaker
Nancy Pelosi joined Russia's Vladimir Putin and Britain's Prince Charles.
Oren Liebermann is that the Yad Vashem Holocaust Memorial in Jerusalem. Oren, just certainly a solemn reminder of what happened 75 years ago. Just
set the scene for us where you are.
OREN LIEBERMANN, CNN CORRESPONDENT: Absolutely. The ceremony now well underway now, as we hear from the speakers here. Frankly, some of the
biggest names of world leaders from around the globe have come here to commemorate Auschwitz, and what happened there in the Holocaust in the 75th
anniversary of liberation of the Auschwitz concentration camp in Nazi occupied Poland.
We've heard from Russian President Vladimir Putin, Vice President Mike Pence, French President Emmanuel Macron, and others and all of them here
spoken one voice against anti-Semitism, agreeing that this is a scourge that has once again risen, and needs to be dealt with.
Putin even saying that we need to be vigilant to maintain or to watch for the first seize of anti-Semitism, of racism, of xenophobia, so it can be
dealt with at its core. Others pointing out that it always starts with anti-Semitism. It always starts with hatred of the Jews. But that's never
where it ends.
Of course, one of the speakers we heard from today was Prime Minister Benjamin Netanyahu and he began by talking about the evils of Auschwitz and
then segued to talking about what Jerusalem means to the Jewish people, what Jerusalem means to Israel and what has become of the Jewish people
after the creation of the state.
[09:15:18]
LIEBERMANN: He then went off and made a comparison he has made before. He compared Auschwitz and Nazi ideology to Tehran and the threats coming
towards Israel from Iran saying this is where the world needs to stand up and deal with the world's leading purveyor of anti-Semitism.
Here, he essentially has a captive audience. Most of the representatives of the states that have signed on to the Iran Nuclear Agreement, and he
essentially told them, they should stand by President Donald Trump and the American administration's maximum pressure campaign. So definitely
Netanyahu getting a little political in his speech here.
Then we heard from Vice President Mike Pence, who gave a very powerful speech, saying memory is the collective obligation of all generations. What
happened in the Holocaust, what happened in Auschwitz must be remembered. He, too, gave a shorter, essentially part of his statement about talking
about Iran in what he called the world's leading purveyor of anti-Semitism.
He then concluded his speech with a Jewish prayer he said, [Speaking in foreign language]. That means, may he who makes peace in the heavens, grant
peace to Israel and to all of us. Amen. It is the conclusion of the Jewish prayer of mourning. It is also a Jewish prayer of hope.
So powerful speech coming from Pence there. He was then followed up by French President Macron and Prince Charles, who concluded the biggest
speeches of this event. Arguably, the biggest event in terms of world leaders, dignitaries and heads of state that this country has ever hosted.
ASHER: Oren Liebermann live for us, thank you so much. After the break here on FIRST MOVE, U.S. Treasury Secretary mocks climate activist, Greta
Thunberg in Davos.
And the head of the Hong Kong Stock Exchange tells our Julia Chatterley that he is hoping China handles the current virus outbreak better than the
SARS crisis back in 2003. That's next.
(COMMERCIAL BREAK)
[09:20:06]
CHATTERLEY: Welcome back to the World Economic Forum here in Davos, Switzerland, where as we've been talking about all week, climate change
remains a particularly hot topic.
The U.S. Treasury Secretary Steven Mnuchin weighing in today with his own comments, comments regarding the 17-year-old activist, Greta Thunberg, he
dismissed her calls for countries to divest from fossil fuel investments.
He said, "After she goes and studies Economics in college, she can come back and explain that to us." I should point out he did say he was joking.
Let's get some comments on this. I'm very excited to say I'm joined by the Prime Minister of Finland, Sanna Marin, the world's youngest female head of
government.
Just a note in point, Prime Minister, fantastic to have you with us.
SANNA MARIN, PRIME MINISTER OF FINLAND: Thank you very much.
CHATTERLEY: What do you think of Steve Mnuchin's comments to Greta Thunberg here?
MARIN: Well, actually, I think it's not very good investment to invest in fossil fuels. We all know that if we want, and when we must stop climate
change, we have to leave most of the fossil fuels on the ground. So it's not a very good business to invest in fossil fuels.
And for example, I think it's very good business to invest in green energy and renewables. So, so I think Greta was right on this one.
CHATTERLEY: Do you think that his views were in some way patronizing? He said he was joking, but you faced your own level of criticism from all the
generations that you're perhaps too young for the role. We will wait and see what she does with this role? Does it frustrate you because voters'
message particularly younger voters' messages, they do care about climate.
MARIN: People do care about climate because they are smart. They're smart to know that if we don't solve this problem, we will have so big problems
that everything that we are facing today feels nothing.
CHATTERLEY: So you're saying the U.S. Treasury Secretary isn't smart on this point?
MARIN: Well, I think the climate issue is a fact, the climate issue, the climate change is a factor, and we all need to act now if we want to stop
this, and we want to make a better world for our children.
And when you asked me about is it frustrating? Well, if you look at Greta Thunberg, she is just a girl. She's just a young girl. She's not in a
position of power. She's not a leader, a political leader or business leader, so she's telling us to act. And I think she's right when she is
telling us this, and I think that we need to act.
And actually Finland is wanting to become a climate neutral country by 2035, and we want to do it in a way that also helps economic, also help
businesses and we need to see the opportunity for green growth, green jobs and so on.
CHATTERLEY: She is talking about real zero though. No more investments in fossil fuels, cut all the subsidies. I mean, I've had big business leaders,
the Microsoft President saying, fine, that will mean no cars. That will mean no manufacturing. We turn off the lights, too.
Is it unreasonable to suggest we need to be real zero at this stage? It has to be done gradually, surely.
MARIN: Well, of course, we can't be climate neutral now, but we have to be climate neutral in a half of a century. So we need to act now to get there.
And we need to do this smart way that also helps people and we want to do our change in a way that is also socially sustainable, to help people get
jobs, to help people, to get better quality of life.
So I think we have to find a perspective that is also not only environmentally, but also economically and socially sustainable, and this
is the plan that our government has, and I think it's the right way to go forward.
CHATTERLEY: It's something that your government has said isn't on the agenda and I do want to clear up some of the confusions, the four-day work
week, with the six hours a day. You were talking about it. So it's clearly something you're passionate about. Can you convince your coalition to
implement this, to get this on the agenda?
MARIN: Well, actually, I said this in a panel, my party's panel. We had our 120 years anniversary in our party and I said this, to answer a
question about what are the visions for future as Social Democrats, and I suggested that we should use when -- companies evolved when productivity
goes up, when the new technologies are taking place, then this should also show in the ordinary people's life. Maybe shorter --
CHATTERLEY: People can work less.
MARIN: People can work less and I think it's very important that people will have and be able to spend more time with their families, with their
loved ones.
We all care about our work, but also we have other things in life, so --
CHATTERLEY: So just to be clear --
MARIN: So it was a suggestion for the future. It's not in our governmental program for these few years.
[09:25:09]
CHATTERLEY: For the three and a half, maybe more that you have left. What about your next term, if you can win an election? What about that term?
Because then we're talking five years, potentially in the future, two and a half plus more?
MARIN: Well, I'm focusing what we can do now. Of course, I'm focusing on our program now and on the issues that matter, and then if we do a good
job, people will elect us again. But we have to focus on the issues and not the polls.
I think we were talking about the polls too much, and watching the polls. I think we should focus on the issues.
CHATTERLEY: Are you daunted? Are you in some way afraid of getting it wrong? Because for most political leaders, for better or worse, they have
years, decades to prepare for this moment to lead a country. Are you daunted?
MARIN: I'm not because I'm just focusing on myself. I don't think what people think of me as a person, I think what I can do with the position
that I have. So I'm very privileged to work on the issues that I care about, and one of them is climate, also gender equality, also human rights,
also, the wellbeing of everybody, for example, education, I also feel passionate about.
So I think we should focus on making everybody else's life better, and not focusing on ourselves so much. So I don't think about that.
CHATTERLEY: It's not about you.
MARIN: No.
CHATTERLEY: I bet they're daunted watching you though, which probably is quite pleasing. Prime Minister, fantastic to have you with us.
MARIN: Thank you very much.
CHATTERLEY: The Prime Minister of Finland there. Thank you so much.
We're counting down to the market open this morning. Stay with us. Plenty more to come here from Davos and of course from Zain in the studio. Stay
with us. We'll back up after this. You're with CNN.
(COMMERCIAL BREAK)
[09:30:00]
ASHER: That was the opening bell on this Thursday morning, local time here in New York. I'm Zain Asher. Welcome back to FIRST MOVE. We also have our
Julia Chatterley at the World Economic Forum in Davos, Switzerland for you.
As expected, U.S. stocks are mostly lower in early trading. The Dow is already down almost a hundred points, markets are under pressure across the
globe as traders grapple with all of the uncertainty surrounding the coronavirus outbreak.
Asian stocks tumble today as China put two cities on lockdown to help contain the virus ahead of the Lunar New Year holiday. Meantime, the
European Central Bank did as expected today and actually kept rates on hold. It is also launching the first review in over 15 years on how it
conducts monetary policy.
ECB head, Christine Lagarde said today that she is seeing some global economic uncertainties ease as the New Year begins. It's time now for a
look at our Global Movers as well.
Procter & Gamble shares are lower after reporting fourth quarter results. The consumer products company beat earnings expectations, but revenues came
in light. The Dow component is also raising its 2020 sales outlook as well.
Shares of another consumer products maker, Kimberly-Clark are lower as well, down about four and a quarter percent. It beat on both its top and
bottom lines and announced that it is raising its 2020 stock dividend. And shares of American Airlines are higher there at the bottom of your screen,
up ever so slightly, its earnings and revenues came in slightly above expectations despite the ongoing pressures from the 737 MAX crisis.
The United Nations is calling for an investigation into claims that Saudi Arabia hacked the phone of Amazon CEO, Jeff Bezos. U.N. experts reviewed
forensic analysis by a consulting firm that suggests the message from the Crown Prince delivered spyware to Bezos's phone.
Nick Paton Walsh joins us live now. So Nick, what do we know for sure about the Saudis sort of potential involvement in the hacking of Jeff Bezos's
phone?
NICK PATON WALSH, CNN INTERNATIONAL SECURITY EDITOR: I mean, Zain, this is an extraordinary story involving two of the richest most powerful men in
the world, using incredibly expensive, it seems, resources here, but there is a deeply disturbing core to it.
I should point out, Saudi Arabia say, these accusations are absurd. Now, what are they? Well, they go back to May 2018, a dinner party in Los
Angeles. Jeff Bezos, and Mohammad bin Salman, the Saudi Crown Prince exchanged phone numbers, a relatively harmless WhatsApp message was
exchanged and then a video was sent it seems from a phone associated with the Saudi Crown Prince. It seems perhaps the number he gave Jeff Bezos.
And then nothing appears to occur. Mr. Bezos becomes compromised by a number of disclosures that seemed to be from possibly private information
on his phone that compromised him publicly and then says well, where did this information come from? And begins to look at messages he's received.
Two spring to his mind perhaps were that of investigators, one in November 2018 in which a picture of a someone who looks a bit like the woman he's
alleged to be having an affair at the time with comes to him along with the phrase, arguing with women is like a Software License Agreement. You have
to ignore it and simply click I agree.
Strange to get that from the Saudi Crown Prince or a phone associated with him. And then later, he gets a message from the same number, saying that he
shouldn't be paying too much attention to warnings about cybersecurity he's been getting elsewhere.
How did that number or the person behind it come to know what was possibly on his phone at that time? That makes the investigators very suspicious.
They look further into that message exchange and find a video file was sent early on it which appears to be able to make Jeff Bezos's phone do
extraordinary things and sending gigabytes of information to an unknown destination.
I should point out the U.N. have not physically handled Jeff Bezos's phone. As you say, they were relying upon an investigation done by a consulting
firm hired by Bezos, which they, the U.N. say they've had four separate independent experts, I say, a source close to the investigation said
they've had four separate experts look at again and again to vet those conclusions.
But there are some possible holes in the evidential chain here, and also Saudi Arabia saying the whole idea is absurd, but really, Zain, you have to
go back to the fundamental question here that if really, essentially, the core of this is the accusation that MBS, the Saudi Crown Prince sent
malware to one of the richest men in the world, a tech giant, nonetheless, you have to ask, would he be that stupid to have pressed send himself?
We don't have an answer that question at all. And it goes, I think we hit to the heart of that sense of possibility, those accusing Saudi Arabia of
having a feeling of impurity, but also more disturbingly to the techniques around the killing of Jamal Khashoggi. He worked for "The Washington Post"
owned by Jeff Bezos, and these messages seem to have picked up after his death at the hands of Saudi agents in the Istanbul consulate of Saudi
Arabia.
So a dark, dark story here and an extraordinary series of allegations here between such extraordinarily wealthy and resourced individuals -- Zain.
[09:35:13]
ASHER: And extremely concerning, Nick, for anyone else, any other world leader or any other sort of powerful person who has also exchanged WhatsApp
messages with MBS.
PATON WALSH: Yes, there are many messages here.
ASHER: Nick Paton Walsh live for us there. Thank you so much.
All right after the break, we're back with Julia Chatterley in Davos. She's been speaking to Charles Li of the Hong Kong Stock Exchange amid the
protest and China's looming health emergency, there is a lot for him to contend with. That story next.
(COMMERCIAL BREAK)
CHATTERLEY: Welcome back to the show, live from the World Economic Forum here in Davos where business leaders and politicians from around the world
alike are watching to get further news of China's coronavirus outbreak.
The latest news there is that 600 people have now been affected. It has impacted financial markets to the level of uncertainty about what might
happen and how this might develop.
Shanghai Composite, as you can see there closing down in the overnight session some two and three quarter percent. The Hong Kong's Hang Seng
closing down one and a half percent in the session. More pressure, of course, potentially on an economy already impacted by the recent pro-
democracy protests and of course, caught up in the battle over the U.S.- China trade war.
Earlier today, I discussed the issues with Charles Li, the CEO of Hong Kong Exchanges and Clearing. Take a listen to what he had to say.
(BEGIN VIDEOTAPE)
CHARLES LI, CEO, HONG KONG EXCHANGES AND CLEARING: I think market reacts very quickly, very naturally to something that is unknown, something like
this, how fast it is going to go, how serious it is going to be, how broadly affecting the population it is going to be, so while those
questions are still lingering, the market is going to pass.
But we've been here, right, 2003, SARS and everything else. So hopefully, this time not only we have learned, but hopefully, we are going to do
better this time.
[09:40:11]
CHATTERLEY: You've obviously been impacted whether it's the protests that we've seen in Hong Kong, the tensions between the United States and China.
That's had an impact on volumes, on performance, on many things. Where are we now? Have we seen the worst in your memory?
LI: You know I mean, you know, the Chinese are always saying the trouble never come in singles and happiness never come in doubles. We had a tough
year, Hong Kong local economy in particular, but the broader capital market has been very resilient.
And as you know that the Hong Kong market is very different. The local market is only a small part of it. You know, the GDP too, market cap ratio,
every other market is one to one, we are one to 14.
So essentially $13.00 of the market cap really have very little to do with the local economy. They come to Hong Kong, because China trusts Hong Kong.
The world trusts Hong Kong, and we are able to really create a market where they can meet.
CHATTERLEY: What we saw as well was a downgrade from rating agency, Moody's, saying that they're worried about the governance, the
institutional environment. You come to a place like this, big business knows Hong Kong.
LI: Yes.
CHATTERLEY: A lot of them have bases in Hong Kong, they understand. What if they said to you, in light of this decision? Has their belief in the
structures and the benefits of Hong Kong changed in your mind?
LI: I wouldn't say rating agency decisions don't have an impact, I'm sure they do. But in terms of the actual tangible operations and tangible
results of the market, I haven't seen any yet. But I'm sure this is now something I'd rather, they upgrade rather than downgrade.
But this is one of those situations, I think, it is sort of anticipated. But I'm sure we're going to bounce back.
CHATTERLEY: Carrie Lam, the Chief Executive was here yesterday and she said, look, China is not encroaching on Hong Kong's powers. It's not in
China's interest. And I think a lot of us, we look at the growth of China and we say actually, Hong Kong's GDP is an increasingly small part. Is that
a relevant comparison to make?
Because for many reasons, we hear it time and time again, the benefits that Hong Kong has and its special situation is a benefit to China, as well as
companies looking for access and the financial flows in and out.
LI: Yes, I think 30 years ago when Hong Kong GDP is about 27 percent of China. Now, Hong Kong is important to China in every way.
CHATTERLEY: Yes.
LI: Today, we are 2.7 percent of China, so we are no longer important to China in every way. But we're extraordinarily important to China in one
way, it is the financial market, because China now is the second largest economy, second largest financial market. But their market structure, by
its own design, by its own nature, by its own characteristic and choices, is fundamentally different from the rest of the world.
CHATTERLEY: Do you think we need to see a Phase 2 trade down in order to allow international countries to welcome ostensibly Chinese investment,
because I think we went through a period in 2019, where there was great sensitivity, never mind business, the business aspect, it was a political
thing. Can we put the politics aside in 2020?
LI: I hope so, and I think the work needed to happen. I think one big thing here at Davos is globalization, is it over or is going to really go
backward? And I use the analogy that the world was connected by the bones long time ago, physically.
But supply chain is like the muscle, we finally have the supply chain that really bring the whole world together through muscle, then capital is like
the blood that is really flowing. Capital is the one that drives all the supply chain. So we are really connected.
The problem is that we're entering into the next level is the nerves. It's the technology because technology started redefining even how we do things
and how we think about it. It is their -- trust becoming a lot more important, and that's where I think the world needs to find ways to trust
China better, and China need to make an effort to make people make it easier for people to trust them.
CHATTERLEY: We've certainly had some frayed nerves. Do nerves get less frayed in 2020?
LI: I think it is the inevitability of this. Hopefully, people will say, okay, we have fear. We don't like to trust, we probably have no choice.
(END VIDEOTAPE)
CHATTERLEY: Trusting technology, the trade war Phase 1, a potential Phase 2, all critical issues for our next guest. He's the CEO of Micron and he is
Sanjay Mehrotra. Great to have you with us, sir.
SANJAY MEHROTRA, CEO, MICRON: Good to be here, Julia.
CHATTERLEY: Probability of a Phase 1 -- a Phase 2 trade deal? And how do you feel in light of the Phase 1 signing because as far as intellectual
property is concerned, this is a good thing surely for you.
MEHROTRA: So first of all, we are very appreciative of the Chinese government as well as the U.S. government in terms of months of
negotiations that culminated in the Phase 1 deal that has addressed some of the key issues, issues around IP protection have been considered as part of
the Phase 1 deal.
[09:45:10]
MEHROTRA: We are encouraged. This is good progress, good start, and it paves the way for Phase 2 deal to address more complex issues, you know,
such as state subsidies, et cetera.
But ultimately, we would be hopeful that Chinese and the U.S. governments can resolve the conflicts that they have had, and really, ultimately lead
to a system where there is level playing field.
And, of course, the adherence to international law standards, giving enterprises in the two countries, as well as all around the globe, to
develop products and technologies for the betterment of businesses and life in general.
CHATTERLEY: I mean, just to make sure our viewers are clear, I mean, you are absolutely at the heart of this battle. You had accused China of
stealing your intellectual property, but of course, China is your biggest market and you have to work with them to provide them with the storage and
the chip requirements that they have ultimately.
But at the same time, you have to protect yourselves, too, and they didn't then turned around accused you of antitrust issues. Do you trust the follow
through on Phase 1, because right now, it's just a bit of paper?
MEHROTRA: So of course, you know, the enforcement of, you know, the mechanisms that have been built in Phase 1 will be important and
ultimately, enforcement of intellectual property, for example, is going to be important, not just for Micron, but for all businesses and frankly, for
businesses within China as well, because innovation is taking place in China as well.
Chinese businesses, Chinese large companies also do want intellectual property to be protected. So I'm hopeful that with some of the changes that
have occurred in China over time, that with time, enforceability related to IP protection will become a commonplace, but of course, this is something
to be watched here.
Let me point out that Micron is a global leader in memory and storage. We have a rich 41-year history. The company has contributed 43,000 patents in
these 43 years.
We have invested billions of dollars, thousands of engineers who have worked on innovation and driving leadership in technology. Of course, we
would want to make sure that our intellectual property, our trade secrets, for manufacturing and developing these innovative technologies and products
is protected. I think that's what every company would like to do.
CHATTERLEY: And to point as well, you have 34,000 employees around the world. You are a global company, too. And I will point that out.
MEHROTRA: We are a very global, very well-diversified company addressing exciting new markets, from Cloud, to autonomous to smartphones, to PCs,
that need more and more memory and storage, and we are, at Micron, advancing our technology and product leadership to bring value to customers
worldwide, including customers in China as well.
CHATTERLEY: You're at the heart of the technologies of the future that we talk about all the time on the show.
MEHROTRA: Absolutely.
CHATTERLEY: Electric vehicles, smartphones, whatever it is, you're providing that at the heart of that. I completely agree. What does 2020
bring? Because if we look back over 2019, you have to look at end-user demand, and that remains strong, whether it was smartphones or the demand
for the technology, but the supply was excessive and the market was depressed. That's something that you have to manage.
And there's a cyclicality of this business that you know, what does 2020 bring?
MEHROTRA: So as we have said, 2019, as you noted, end market demand drivers continue to be strong. That means consumption of flash and memory,
given the data economy today and all the trends of growth in Cloud, growth in smartphone content, as well as autonomous features being built into the
cars, as well as other applications continue to drive healthy consumption of memory and storage. So that's the good news.
Yes, as you noted, in 2019, there was ...
CHATTERLEY: Challenges.
MEHROTRA: ... excess supply in the industry and it was a challenging environment, yet, in that challenging environment where there was some
excess supply, with steep price decline, Micron actually produced healthy reserves in 2019.
In fact, we were free cash flow positive all throughout our fiscal 2019, and we continued to invest in R&D, product development and carefully
managing our CapEx for capacity supply growth, ultimately leading to a position where supply situation has improved significantly.
And when we look ahead at 2020, what we have said is our current quarter which will end in February is going to be the low of this cycle, and we
look at gradual recovery starting from our quarter that will be our third fiscal quarter starting from the March timeframe, you'll see gradual
recovery with stronger recovery in the second half versus the first half.
And again, the important thing is that we are focused at Micron on technology development, product development and managing our supply growth
prudently to meet the demand growth and end market demand drivers continue to be strong.
CHATTERLEY: We shall see that eyes on the future. Very quickly because I have to thank you, Phase 2 trade deal in 2020? Yes or no?
[09:50:10]
MEHROTRA: Well, I'm not going to comment on the timing, but I certainly remain hopeful that the U.S. and Chinese government will get to a Phase 2
deal soon, and really provide an environment of level playing field and driving innovation across the globe.
CHATTERLEY: We'll see. CEO of Micron. We will reconvene on this conversation. Sir, thank you so much. Great to chat with you.
MEHROTRA: Thank you, thank you.
CHATTERLEY: All right, in the last few minutes as well, we do have a response from the climate activist, Greta Thunberg. She's responding, of
course to what we were talking about earlier, the U.S. Treasury Secretary, Steven Mnuchin's joke that she should go and get an Economics degree.
The 17-year-old tweeting, "My gap year ends in August, but it doesn't take a college degree in Economics to realize that our remaining 1.5 degree
carbon budget and ongoing fossil fuel subsidies and investments don't add up. So to either you tell us how to achieve this mitigation or explain to
future generations and those already affected by the climate emergency, why we should abandon our climate commitments?"
I think she could have written it shorter and said something like, okay, Boomer, perhaps.
Yes, Greta, giving it some lip -- Zain, back to you.
ASHER: Greta certainly a force to be reckoned with, 17 years old. All right, Julia Chatterley, thank you so much.
CHATTERLEY: Not afraid.
ASHER: All right, Elon Musk has yet another reason to break out the moves. Tesla has just surpassed a major stock milestone, a big Musk payday can be
in the cards coming up. That's next.
(COMMERCIAL BREAK)
ASHER: One CEO is known as Iron Man, now you can call him the $100 billion man. Elon Musk and his Tesla team are no doubt charged up as the market cap
of their company surpasses the $100 billion mark, meaning Tesla is actually worth more than Ford and GM combined.
Clare Sebastian joins us live now. So Clare, I mean, let's be honest, it hasn't actually -- it hasn't in fact been an easy ride for Tesla. Not
exactly been smooth sailing, how on Earth have they managed it?
CLARE SEBASTIAN, CNN BUSINESS CORRESPONDENT: Yes, Zain, it's been a really long ride. This is something that Elon Musk will certainly see as a
vindication of his vision, and it really is that vision that we're talking about because as you were alluding to there, if you look at the raw numbers
for sales and deliveries for Tesla and how they stack up against the other major car makers, Tesla's numbers do not tell a story worth a hundred
million dollars.
In the first three quarters of this year, they delivered just about a quarter of a million cars. Compare that to Volkswagen that delivered eight
million, Ford more than five and a half million and sorry -- Ford more than three million, and GM, more than five and a half million.
Now, as you said, Tesla is now worth more than Ford and GM combined despite those delivery numbers, but this is about the future.
We've seen signs that Tesla is really starting to execute. The stock is up more than 120 percent since October. You can see it there when they
reported a surprise profit, we then saw delivery numbers for the year come in better than expected.
There are things that are pointing to a promising future. They've built a Giga factory in Shanghai, the world's biggest electric vehicle market in
just 10 months.
[09:55:10]
SEBASTIAN: It's already starting to produce. This year could bring their next mass market car, the Model Y. So there's a lot to hope for in terms of
Tesla, but there are still questions, Zain.
People are worrying still about whether they can execute this growth. Tesla has a track record of missing deadlines and deliveries and then there are
those who are concerned that this stock price run up was just too far too fast and could be something of a bubble.
ASHER: Yes, and certainly, there's fears as to can they actually keep up this momentum? As you mentioned, the share price has been on a stellar
ride. Clare Sebastian, live for us there. Thank you so much.
All right. That is it for the show. You've been watching FIRST MOVE. I'm Zain Asher in New York. "CONNECT THE WORLD" starts right after this short
break. You are, of course, watching CNN.
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[10:00:00]
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