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Big-Gap Tech Stocks Led Friday’s Selloff; U.S.-China Trade Tensions; Musk Slams The SEC; West Wing Shakeup; White House Chief of Staff John

December 11, 2018



<Date: December 10, 2018>

<Time: 06:00:00>

<Tran: 121001cb.231>

<Type: SHOW>

<Head: Big-Gap Tech Stocks Led Friday’s Selloff; U.S.-China Trade Tensions;

Musk Slams The SEC; West Wing Shakeup; White House Chief of Staff John

Kelly Will Be Out By the End of the Year; Border Funding Showdown; Ghosn,

Nissan Indicted; Softbank IPO Reaches $23.5B; Uber And Lyft File For IPOs;

Prime Minister Theresa May To Full Vote On Britain’s Exit From E.U. - Part 3>

<Sect: News; Financial>

<Byline: Maria Bartiromo, Dagen McDowell, Jason Chaffetz, Cheryl Casone,

Ashley Webster>

<Guest: Mitch Roschelle, Tom Lydon, Dan Eberhart, Kristen Soltis Anderson>

<Spec: Huawei; Markets; European Union; Intellectual Property; China; Elon

Musk; SEC; Short Sellers; Twitter; ETF; Southeast; Snowstorm; Britain;

Brexit; Emmanuel Macron; France; Taxes; Tax Cut Plan; Oil; IPO; SoftBank;

Uber; Lyft; President Donald Trump; John Kelly; Nick Ayers; Mick Mulvaney;

Border Wall; Tijuana; DACA; Chuck Schumer; Nancy Pelosi; Nissan; Carlos

Ghosn; Nissan; Theresa May; House of Commons>


MARIA BARTIROMO, FOX BUSINESS NETWORK ANCHOR: Welcome back. Good Monday morning, everybody. Thanks so much for joining us.

I’m Maria Bartiromo. And it is Monday, December 10th. Your top stories right now just before 7:00 a.m. on the East Coast.

The U.K. vote on the country’s exit from the European Union is now at risk. Reports this morning say that Prime Minister Theresa May is ready to pull it. She is reportedly holding an emergency cabinet meeting this morning. We will take you live to London with the very latest, coming up.

Stocks are extending losses this morning, Dow Industrials down another 65 points this morning, down a quarter of a percent. S&P and the Nasdaq also down a quarter of a percent, extending a big selloff last week.

Sharp declines on Wall Street on Friday, capped a terrible week. Major averages down better than 22 percent apiece. The Dow and the S&P 500 negative now for 2018. The Nasdaq was down better than 3 percent on Friday at the close, 219 points lower.

Global markets this morning are also under pressure. Take a look at the markets in Europe. Now the FT 100 just changed direction on this speculation that Theresa May is pulling the Brexit vote and it is up now 21 points.

The CAC 40 and the DAX index are lower by about a half a percent this morning. But London has completely turned around. Markets are responding to the speculation that Brexit is in trouble.

In Asia overnight, deep declines across the board -- worst performer Japan. Nikkei average down better than 2 percent.

The U.S.-China trade truce hanging in the balance this morning. The Trump administration taking a hard line stance on its 90-day line. White House Trade Council director Peter Navarro told me yesterday he’s optimistic about getting a deal done though.


PETER NAVARRO, WHITE HOUSE TRADE COUNCIL DIRECTOR: We’re bullish. The China trade is a small part --


NAVARRO: -- of our overall economic growth and world trade. And I think what we need to do is focus on structural adjustments that are occurring here in this economy under the leadership of the best president we’ve had in modern history.


BARTIROMO: We have the very latest on the tensions as the CFO of Huawei is headed back to court. We’ll bring you the very latest there -- how that impacts things.

Elon Musk is speaking out. The CEO of Tesla taking aim at the Securities and Exchange Commission and his critics in a new interview. His controversial comments coming up.

All those stories coming up this Monday morning. And joining me to break it all down -- Fox Business Network’s Dagen McDowell, former House Oversight Committee chairman and Fox News contributor Jason Chaffetz, and PWC partner Mitch Roschelle is here. Good to see everybody this morning.


BARTIROMO: This Carlos Ghosn story is just incredible -- out of Japan. Now he is being indicted by Japanese authorities. He’s been sitting in a jail cell for about a month with no charges.

And we know what was going on behind the scenes and underneath the headlines. And that is Carlos Ghosn wanted to merge Nissan with Renault which is part of its alliance. Japanese employees and Nissan did not want to be acquired by Renault, nor did the Japanese government, frankly, want its jewel of an automaker to be acquired by a weaker -- a financially weaker company from France. And so they put him in jail. This does not smell right to me at all --

JASON CHAFFETZ, FOX NEWS CONTRIBUTOR: We were talking off the air -- wait, what’s going on with the board of directors? How could they -- how could all this happen and they not be involved and engaged in this?

BARTIROMO: If he actually did underreport his salary as they are charging, somebody else had to know. I mean you just don’t do that in a vacuum.

You know all about this -- deferred compensation means what, he hadn’t gotten the money yet.

ROSCHELLE: Presumably it had been earned on some level and not paid until a future date.

DAGEN MCDOWELL, FOX BUSINESS NETWORK ANCHOR: And Japan’s economy, by the way, is contracting. So let’s point out that when you send the message to the rest of the world that we will throw you in jail with no charges and then the charges end up being under-reporting your compensation, basically making you a target because of a corporate issue, because the Japanese government and the Nissan leader didn’t want to be replaced, they didn’t like what this outsider was doing to this Japanese company --

BARTIROMO: Exactly right.

MCDOWELL: -- despite the fact that he saved it from bankruptcy. You know what, that hurts your economy.


MCDOWELL: People don’t want to do business there because there is no rule of law.

BARTIROMO: Well now, we know that Japan are actually not capitalist. I mean we thought that this was a capitalist country. But how do you call yourself a capitalist if you throw a guy in jail with no charges? You keep him there for a month and it’s based on this idea that you just didn’t want him to merge the company with a French company. I mean seriously. This is disgusting.

We also have breaking news this morning on the U.K.’s exit from the European Union. This is breaking as we speak. Fox Business Network’s Ashley Webster is live in London right now with the very latest.

Ashley -- where are we right now? Is Theresa May pulling the Brexit vote?

ASHLEY WEBSTER, FOX BUSINESS NETWORK CORRESPONDENT: Well, apparently that’s where the money is although we’ve had no official word from Downing Street that she is doing just that.

Speculation has been growing and then we heard maybe about 45 minutes ago that the Prime Minister had called for a conference call with all of her key cabinet ministers. Of course, that just fueled speculation that she had decided indeed to delay the vote knowing there was no way that she could get it passed in the House of commons behind me.

In fact, it was only the scale of that defeat that was being debated, not whether she would win it or (AUDIO GAP).

I was just reading some comments from European ministers today because the speculation is that she may try to rush back to Brussels and say look, let’s renegotiate for something better that I can take back to my parliament.

Bottom line is that the latest I read here from the E.U. is they’re not going to renegotiate. They say we gave you the best deal and as far as we’re concerned, the U.K. is leaving on March 29th, 2019. This is the deal we’ve been offered. Take it or leave it.

That’s not good news because that means that the Prime Minister is really left in limbo and it raises the prospect of perhaps the U.K. crashing out next March with no deal in place at all which would be very, you know, by some accounts very chaotic and just adding to all the uncertainty.

MCDOWELL: Ashley -- do the leaders in Europe not realize this hurts them as well, this kind of intractable position where you’ve got the German economy is contracting. France is literally on fire with the leader of France swanning about the globe and not addressing the fact that his capital city is burning.

So don’t they realize that this hurts them? It looks like they’re intentionally trying to hurt Britain.

WEBSTER: But Dagen -- you have to understand, they’re still very -- feeling very angry and jilted by what the U.K. decided to do. And they want to make an example of the United Kingdom. They don’t want anyone else leaving.

And if they give the U.K. what would be considered a sweetheart deal, then all of a sudden maybe Italy or some other of the 27 members of the E.U. may say, you know what, we want what the U.K. has.

So they are making it very clear, they’re making it as hard as possible for the U.K. to get out because they don’t want other countries leaving the union.

BARTIROMO: Yes. But I mean the uncertainty of it has businesses unsure of what to do. Do they move headquarters to London? Do they move their people to Germany? I mean this has been a year of uncertainty --


BARTIROMO: -- which is why the economy has been a laggard.

WEBSTER: Well -- and it’s exactly right. The economy is hurt. The unemployment level has gone up. And you’re quite right -- Maria. There are a number of especially financial companies who have not only moved headquarters but have already moved quite a number of their employees across on to the continent.

The question being is what happens if the U.K. leaves with no deal? And with what we’re hearing today, that is becoming increasingly more of an issue. And I think what we should be looking at is the chances of Mrs. May keeping her job going towards the end of not only this week but by the end of the year because I guarantee you, there there’s going to be a challenge to her leadership, not only from her own party but definitely from the opposition Labor Party.

So all of those scenarios that could play out are still very much in focus and the fact that she knows that she can’t get this deal passed in parliament just adds to that sense that, you know, she is struggling.

BARTIROMO: Ashley -- the protesters behind you, they are chanting what?


BARTIROMO: Let’s take a look at that because they’re getting louder right behind you.

WEBSTER: Those -- there’s many groups. These people are Brexit supporters. If you read their signs, “leave means leave”. And is the sign -- I attended a rally yesterday here just outside parliament from UKIP. And it was very much “Brexit means Brexit, leave”. “We voted to leave”.

There is something we haven’t talked about -- Maria. There was a growing number of people who say there should be a second referendum. That the reason that the people voted to leave the first time around in 2016 was not going to be the same reason this time because they didn’t know what they were getting.


WEBSTER: The so-called people’s vote. But the Prime Minister has said look, the people have already had their vote, they have spoken. And it’s my job to carry that out to the best of my ability. But you can see these “leave means leave” people, they feel like if we don’t leave or if there’s some special deal that keeps the U.K. in the European Union, they have been let down.

BARTIROMO: Ashley -- thank you. We’ll get back to you as news develops there.

Joining now us on the telephone to talk more about this from London is CMC Markets chief market analyst Michael Hewson. Michael -- thanks very much calling in.

Your thoughts on how this all impacts markets. We’ve already seen the FT 100 completely reverse course. It was negative, now positive on this speculation -- this new speculation she may pull the vote to leave Britain -- leave the E.U. rather, pardon me.

MICHAEL HEWSON, CHIEF MARKET ANALYST, CMC MARKETS (via telephone): Yes. No, I get what you’re trying to say. I must admit the events of the last hour or so still got me wondering whether up is down and down is up.

The pound is obviously at an 18-month low and I think that’s why you’re seeing a little bit of a rebound in the FTSE 100. But ultimately, we still don’t know whether or not Theresa May has pulled the vote for tomorrow.

Ultimately, you’ve got cabinet ministers briefing that there is a possibility the vote will be called. And yet their aides are actually briefing to the exact opposite.

Now, there is a news item out that says that the U.K. Prime Minister will be making a statement to the House of Commons at 3:30 p.m. U.K. time this afternoon. And it will be titled “Exiting the European Union”.

But for the moment, the uncertainty is killing the pound, the pound has fallen to an 18-month low. It’s popped up about 90 cents against the euro as sentiment towards sterling goes overwhelmingly negative.

That being said, it doesn’t make a prime ministerial resignation any more likely nor does it make a possible general election any more likely simply because the European Union has stated that they will not be renegotiating the Brexit agreement which rather blows out of the water the Labor Party’s stance that it can actually get a better deal.

So I spoke to you guys just over an hour ago -- nothing really much has changed. The political uncertainty still very much up in the air. And ultimately we don’t know whether or not this vote tomorrow will take place.

ROSCHELLE: Michael, Mitch Roschelle. One of the things that concerns me and I’m curious to get your reaction, is because of all the pent-up uncertainty which may not be resolved for quite a while, what longer term impact could that have on the economy in the U.K. because businesses aren’t going to invest if they don’t know what the future looks like and there could be a knock-on effect that carries on for years to come.

HEWSON: There is certainly I think for the last couple of months we have seen a significant slowdown in the U.K. economy but it’s not immediately clear to me whether or not that’s as a result of the Brexit uncertainty or whether or not it’s part of a general wider slowdown that we’re seeing pretty much across the rest of Europe.

If you’re a U.K. business and you’re looking at whether or not to move your HQ from say for example London to Paris, when you look at events in Paris over the weekend, that doesn’t seem to be a particularly attractive option given the problems that Emmanuel Macron is having to deal with at the moment.

So I think you’re absolutely right. I think Maria was absolutely right when she said earlier that a no deal outcome is not a particularly attractive option for the European Union but at the moment people are looking at the possibility of a no deal Brexit and setting that off against the potential fall, the collapse of the U.K. government and a potential Labor Party coming in.

So I think until that particular conundrum is resolved, it’s likely that the U.K. economy is going to struggle forward (ph) with investment over the course of the next two or three months until we draw a line under the events of the last few days.

BARTIROMO: Right. It’s all about certainty. I mean people need certainty in order to operate. And make decisions for their businesses.

Michael -- thank you. Thank you for weighing in. We will check back once this emergency cabinet meeting takes place and we find out what’s taking place there.

MCDOWELL: I was just going to add that you know what is certain -- that Emmanuel Macron is going to be in that job until 2022, so maybe he gets rid of his Prime Minister, maybe he gets rid of some of his cabinet ministers. But this is somebody who’s not leading.

Let’s compare that to the United States --


MCDOWELL: -- can you imagine if Fifth Avenue was on fire and the President of the United States said nothing --


MCDOWELL: -- four weekends in a row. That’s what’s going on in France.

BARTIROMO: And you think we’re going to hear from him today?

MCDOWELL: He’s making a statement. It will be 2:00 p.m. Eastern time, 8:00 p.m. French time.

But again, the world is on fire. No rule of law in Japan. This going on in Britain. Japan contracting that economy. Germany’s economy contracting. France is on fire. And then what’s going on here in the U.S. and you wonder why the market has been selling off.

BARTIROMO: Yes, don’t underestimate the impact of some of these global events happening in the markets. I agree with you.

Michael Hewson -- thank you.

Coming up, Elon Musk’s new criticism for the Securities and Exchange Commission. His bold words coming up.


BARTIROMO: Welcome back.

Standing firm on trade -- the U.S. trade representative Robert Lighthizer saying that the 90-day trade truce with China is a hard deadline. The lead American negotiator saying that there will additional tariff on $200 billion worth of Chinese goods if a satisfactory deal is not reached.

Yesterday, I spoke with the assistant to the President for trade policy, Peter Navarro who commented on the prospects for a deal with China but also on the effect of tariffs on the market.

Watch this exchange.


BARTIROMO: We all know the tariffs were your idea. People are worried that these higher tariffs are cutting into company’s ability to grow because input costs are going higher. That’s crushing profit margins and hurting the stock market. So what are you going to do about it?

NAVARRO: First of all, I think that’s a false narrative in terms of the impact of the tariffs on the stock market. My view is that this is strictly an interest rate effect. I think the Fed went too far, too fast. And what we saw basically was a little asset reallocation from the stock to the bond market. We’ve had some impact on the housing market in terms of the dollar.

It’s too strong now and that’s exacerbated our trade deficit. But this is a normal adjustment. To me it’s not even a correction.

You have to where we started from back on election day. We’ve come thousands and thousands and thousands of points forward. And the day after election, Maria -- I predicted that we would go to 25,000 on the Dow. A lot of people laughed at me at the time.


BARTIROMO: And joining us right now is “The Coming Collapse of China” author, Gordon Chang. And Gordon -- it’s good to see you this morning.

We have two issues that we’re talking about here. We’re talking about the deal with China. But in that clip obviously we’re talking about tariffs and the impact on the U.S. economy.

Dagen -- this is something you brought up for now a year, ever since the tariffs went into place. You’ve been very upset with the steel and aluminum tariffs. It looks like it is having an impact on profit margins.

MCDOWELL: it’s having an impact in the stock market. It is having an impact -- just read the “Wall Street Journal” or pick up the phone and call somebody in your hometown about who imports goods from China, who uses steel or aluminum in their day-to-day business. It is having an impact.

And quite frankly, I think that individuals in the administration need to stop talking about the stock market as if you work at an investment manager as if you look at like Blackrock. Stop it. You need to get off of this and stop equating what’s going on in the economy with what’s happening in the stock market.

I think it’s unnerved it -- increasingly investors feel like some of these individuals don’t know what they’re doing.

BARTIROMO: And they don’t understand -- markets don’t understand why we haven’t had a deal yet.

Gordon -- China, the U.S. relationship is a tough one. I mean they’ve been stealing from us for decades, forcing this transfer of technology. Do you think this 90-day truce is going to change any of that. What can happen in 90 days in your view?

GORDON CHANG, AUTHOR: Ninety days, you could have a deal but whatever deal we arrive with, with the Chinese isn’t going to hold. You’ve got to remember Xi Jinping wants to dominate technology in those 10 now 11 sectors. And one of those sectors, by the way, affects Huawei and 5G.

So you know, they can say that they aren’t going to steal technology. They can say this, they can say that. But you know, our history with China is that they violate their trade agreements.

And Xi Jinping, you remember, his mentality is that, you know, China is the world’s only legitimate sovereign state. So you can’t have a deal between the world’s only sovereign and colonialists and subjects.

This is a problem for us. And we’ve got to understand the dimension of the Chinese mentality.

BARTIROMO: And when you saw what happened with Huawei last week. I mean the CFO of Huawei arrested. This wasn’t just about the Iran sanctions. The Chinese government has been using this company along with ZTE as a tool to spy on foreigners.

CHANG: Clearly. And it’s going to get worse. Because on 5G, the Internet of things, it connects everything in your home. So if Huawei were in your backbone for 5G, the Chinese would know when you use your toaster or your car or whatever. It would all be -- all that information would be collected in Beijing.

BARTIROMO: Yes. And now, the “Journal” Mitch, is reporting that two British banks, HSBC and Standard Chartered are in the middle of this dispute. So this Huawei spying situation and the Iran sanctions violation has brought in these banks.

ROSCHELLE: Yes. And Gordon -- the thing I’m trying to figure out on the Huawei CFO is, is she a bargaining chip in all of this negotiation with China because they want to extradite her back to mainland China.

CHANG: Yes. Well, they want to free her back to China. She is a bargaining chip. But we’ve got to remember though, you know, that China’s attack against the United States is comprehensive and we’ve got to respond to it.

So there are going to be these times where two things are going to occur at the same point, and that is, of course, now trade and Huawei. But it could be something else.

You know, on Saturday you had a Chinese military officer urge at a communist party sponsored event the attacking of American vessels in international water. You know, all of these things are going to coincide and collide and make things so much more difficult to resolve.

BARTIROMO: Yes. Because this is not just an economic issue. This is a national security issue, isn’t.

CHAFFETZ: It is and what’s going on with North Korea and what the President is willing to do -- there’s a lot of moving part.

BARTIROMO: It sure is. Gordon -- it’s great to get your insights this morning. Thank you so much.

CHANG: Thanks.

BARTIROMO: Gordon Chang.

Coming up, James Comey speaks out in A closed door testimony but he doesn’t seem to remember very much. We’re going to break down that testimony and the impact, next.



JAMES COMEY, FORMER FBI DIRECTOR: Not in the formal sense that he’s been named in an indictment, but if he’s not there, he’s certainly close, given the language in the indictment, in the filing, that the crimes are committed at his direction.


BARTIROMO: That was fired FBI director Jim Comey last night, possibly suggesting that President Trump was a co-conspirator in the indictment of his former attorney, Michael Cohen.

Joining us right now, Fox News senior judicial analyst, Judge Andrew Napolitano. And Judge -- no comment from Comey on all of his crimes, in terms of leaking, in terms of misuse of the FISA court. In fact in that testimony, I want to get your take on it, he said “I don’t remember” 71 times. He said “I don’t know” 166 times. And he said “I don’t recall” eight times. This was arguably the most important case of his career.

JUDGE ANDREW NAPOLITANO, FOX NEWS SENIOR JUDICIAL ANALYST: And arguably the Justice Department for which he formerly worked has dropped the ball because it should be interrogating him and investigating him and not Congress who of course, has investigatory powers but thanks to the constitution, not prosecutorial powers.

In terms of the clip that you ran from what he said last night, he’s essentially correct. The statements that were released not by Bob Mueller, but by the acting U.S. Attorney in New York City -- acting because the U.S. Attorney is a Trump appointee, Jeff Berman who has recused himself.

Bob Khuzami, who used to run the enforcement division of the SEC is the number two person. And so the acting U.S. attorney for this case basically says in the documents filed with the court, Donald Trump paid Michael Cohen to commit a crime.

Now, if you pay me to shoot somebody, you are as liable for my shooting them as I am. They haven’t charged him with anything but the implication is clear.

The ethics rules do not permit them to make an allegation like that unless they have evidence to substantiate it. As well, this is the most reputable prosecutorial entity in the United States, the southern district of New York. They’re not going to stick their necks out and make an allegation against the President unless they can prove it.


NAPOLITANO: The question is what do they do next?

MCDOWELL: I just want to get back to Comey. Comey said that he never heard of Christopher Steele while he was at the FBI. That he understood that he was hired by Republicans, which has been refuted. And he did not know that Fusion GPS was hired by Perkins Coy, law firm paid by --

NAPOLITANO: That is very dangerous.

MCDOWELL: So he’s not telling the truth. Meantime Jerry Nadler says pointblank, when he takes over Judiciary he’s shutting down any investigation into the FBI and what was going on at Justice during the 2016 campaign. What happens? What happens? Where is the rule of law?

BARTIROMO: That’s not what we’ll hear right now from Doug Collins, who is the ranking member now. He’s going to be the ranking member in judiciary once Jerry Nadler becomes the chairman. It all comes after that closed door testimony on Capitol Hill where you just heard he revealed nothing. I mean he said that he concealed a memo about his one on one meeting with President Trump from the Justice Department.

Here’s what Senator Lindsey Graham said along with Congressman Doug Collins who is the ranking member, new ranking member in Judiciary, weighing in on that testimony just yesterday with me.


SENATOR LINDSEY GRAHAM (R), SOUTH CAROLINA: Well, my biggest reaction was he made a statement after he testified that the FISA warrant process basically to look into that would be sort of a joke. I don’t think it’s a joke at all that a warrant was issued based on a document paid for by a political party prepared by a foreign agent that’s unverified to basically surveil a member of a presidential campaign.

BARTIROMO: We know that Comey used the words “I don’t remember” 72 times”, I don’t know” 167 times, or “I don’t recall” -- all 245 times he didn’t remember anything. What did you think about that comment just there, that no abuse in the FISA court.

REP. DOUG COLLINS (R), GEORGIA: It is amazing that Jim Comey has memory lapse issues. Maybe he needs to get checked for that, I’m not sure. But you know, when he walks out in the hall and he finds reporters, he all of a sudden becomes very loquacious. He gets to talk about everything.

And to say that there was not a FISA abuse, this to me, Maria, is really bottom line issue. And to this moment, that is still not verified that they used in every FISA application of Carter Page -- this are the kind of things that make Americans sit back and say what’s in it for me.


BARTIROMO: Well, this is the point Judge -- I want to get your reaction here. And you know, when I’m talking about what we know has taken place with Comey. I mean, I don’t know, when you leak something that is a felony, right, when you’re leaking classified information.

Update hourly