Wilbur Ross confirms US will delay Huawei ban


ABOUT IT, ALL THE STORIES COMING UP MONDAY MORNING, FIRST TOP STORY THIS HALF AN HOUR, U.S. AND HAUWEI, NEW REPORT THAT IS THE U.S. WILL GIVE HAUWEI ANOTHER 90 DAYS TO BUY FROM AMERICAN SUPPLIERS, THE PRESIDENT BUSHING BACK ON THE TELECOM GIANT, WATCH.>>HAUWEI IS A COMPANY WE MAY NOT DO BUSINESS WITH THEM AT ALL, WE ARE ACTUALLY OPEN NOT TO DOING BUSINESS WITH THEM. THEY ARE SECTIONS OF HAUWEI LIKE FURNITURE AND OTHER THINGS WE CAN DO BUT WHEN YOU CUT OUT SECTIONS IT GETS COMPLICATED, WHAT IS BEING SOLD, WHAT’S COMING IN, SO AT THIS MOMENT IT LOOKS MUCH MORE LIKE WE ARE NOT GOING TO DO BUSINESS, I DON’T WANT TO DO BUSINESS AT ALL BECAUSE IT IS A NATIONAL SECURITY THREAT AND I REALLY BELIEVE THAT THE MEDIA HAS COVERED DIFFERENT THAN THAT. MARIA: CHIP MAKER STOCKS RALLY THIS MORNING AHEAD OF HAUWEI CONFIRMATION AS YOU SEE, 2%, INVIDIA, QUALCOMM. ALWAYS PLEASURE TO SEE YOU.>>GOOD TO BE HERE, MARIA. MARIA: CAN YOU CONFIRM THAT YOU ARE EXTENDING THE DEADLINE?>>THE BIG NEWS TODAY THAT WE DECIDED TO ADD 46 MORE HAUWEI SUBSIDIARIES TO THE ENTITY LIST. WHEN SOMETHING IS ADDED TO THE ENTITY LIST IT MEANS THAT THE AMERICAN COMPANIES CANNOT SELL TO IT EXCEPT IF THEY GET A SPECIFIC LICENSE. MARIA: SO –>>NOT ANY SPECIFIC LICENSES THUS FAR. MARIA: SO YOU’RE DOING 46 NEW SUBSIDIARIES MAKING IT TOUGHER ON HAUWEI?>>MAKING SURE THERE’S IN LOOPHOLES IN THE ORIGINAL. WE NOW HAVE MORE THAN 100 SUB — SUBSIDIARIES ON ENTITY LIST. MARIA: TELL ME WHY IT’S IMPORTANT?>>IT’S UNDER LEGISLATION AND ITS PURPOSE IS TO MAKE SURE THAT WE DON’T ENDANGER U.S. SECURITY. THE PRESIDENT YESTERDAY IN HIS NEWS CONFERENCES MADE CLEAR HIS CONCERNS ABOUT NATIONAL SECURITY IN HAUWEI, ADDING MORE ENTITIES MAKES IT FOR DIFFICULT FOR HAUWEI TO GET AROUND THE SANCTIONS. WHAT ABOUT THE DEADLINE TODAY?>>THERE’S ANOTHER 90 DAYS FOR THE U.S. TELECOM COMPANIES, SOME OF THE RURAL COMPANIES ARE DEPENDENT ON HAUWEI, WE ARE GIVING THEM MORE TIME TO WEAN THEMSELVES OFF BUT NO SPECIFIC LICENSES BEING GRANTED FOR ANYTHING. MARIA: OKAY, NEXT DEADLINE WE SHOULD LOOK AT IS NOVEMBER 19TH?>>ROUGHLY NOVEMBER 19TH. MARIA: DO YOU THINK U.S. COMPANIES ARE COMING UP WITH A PLAN TO FILL THAT BUSINESS ONCE THAT — ONCE THAT DEADLINE IS REACHED?>>WELL, EVERYBODY HAS HAD PLENTY OF NOTICE OF IT, THERE’S BEEN PLENTY OF DISCUSSIONS WITH THE PRESIDENT AND THE PRESIDENT HAS MADE CLEAR AND HAS ANNOUNCED SINCE YESTERDAY THAT HE’S VERY CONCERNED ABOUT MORE DEALINGS WITH HAUWEI.>>SECRETARY, TELL ME THE RISK AROUND HAUWEI, WE TALKED ABOUT HAUWEI BEING A NATIONAL SECURITY RISK BECAUSE IT IS A STATE COMPANY, CHINESE COMMUNIST COMPANY, CAN YOU EXPLAIN WHAT THAT MEANS TO VIEWERS?>>WELL, TECHNICALLY HAUWEI SAYS THEY’RE PRIVATELY-OWNED COMPANY, BUT UNDER CHINESE LAW, EVEN PRIVATE COMPANIES ARE REQUIRED TO COOPERATE WITH THE MILITARY AND WITH THE CHINESE INTELLIGENCE AGENCIES AND THEY’RE ALSO REQUIRED NOT TO DISCLOSE THAT THEY ARE DOING SO. SO IT’S A BIG PROBLEM, BUT THE REAL PROBLEM WITH THE HAUWEI IS IN CONNECTION WITH THE 5G BECAUSE 5G BEING SOFTWARE DRIVEN, VERY HARD TO SEPARATE CORE ACTIVITIES FROM PERIPHERAL ONES AND YOU CAN MAKE PRETTY GOOD ARGUMENT THAT YOU CAN SEPARATE, REALLY CAN’T MAKE THAT ARGUMENT WITH 5G AND AS 5G BECOMES THE BIG ACTIVITY, IT BECOMES OF GREATER AND GREATER CONCERN AND THAT’S WHY WE’VE BEEN ADVISING OUR ALLIES TO BE VERY CAUTIOUS IN MAKING THEIR DECISION AND THAT’S WHY CONGRESS HAS PASSED SOME LEGISLATION CONSTRICTING AMERICAN FUNDING OF HAUWEI PURCHASES. MARIA: I SPOKE TO SECRETARY POMPEO ABOUT THIS, HE SAID THAT EUROPE WAS NOT SURE, THEY WERE PUSHING BACK A BIT, DO YOU FEEL THAT OUR FRIENDS IN EUROPE UNDERSTAND THE NATIONAL SECURITY RISK AROUND HAUWEI BECAUSE THEY HAVE HAUWEI TELECOM INFRASTRUCTURE THROUGHOUT EUROPE?>>SURE THEY DO IN TERMS OF THE 3G AND THE 4G, BUT AS I SAID, THOSE ARE VERY DIFFERENT SYSTEMS AND THEREFORE THE NATIONAL SECURITY CONCERNS IN 3G AND 4G ARE NOT NEARLY THOSE IN 5G, ALSO THINK ABOUT IT, 5G IS GOING TO AFFECT EVERYTHING, ALL THE WAY FROM GPS TO ANY OTHER FUNCTION YOU CAN IMAGINE AND AS THE INTERNET OF THINGS BECOMES MORE AND MORE EXTENSIVE, NOTHING WILL OPERATE IF SOMETHING INTERFERES WITH 5G, SO THE MAGNITUDE OF THE RISK IS FAR GREATER. WITH 3G AND 4G, THEY DON’T HAVE ANYTHING LIKE THE INTERCONNECTEDNESS OF EVERYTHING TO EVERYTHING ELSE. MARIA: SO CHINA WE KNOW IS A COMPETITOR TO THE UNITED STATES, WANTS TO BE THE SUPER POWER OF THE WORLD, NOT ONLY ECONOMIC BUT MILITARILY, WHAT ARE SOME OF THE THINGS THAT CHINA COULD DO IF HAUWEI IS EMBEDDED IN — IN OUR INFRASTRUCTURE IN THE UNITED STATES?>>THAT’S A VERY GOOD QUESTION, WELL, FIRST OF ALL, YOU NEVER KNOW WHAT MIGHT BE EMBEDDED IN THESE LITTLE TINNY CHIPS, VERY SMALL SERVICES AND VERY SMALL THINGS WITHIN THEM CAN DO A LOT OF DAMAGE AND NOBODY KNOWS THE DESIGN BETTER THAN THE PERSON WHO BUILT IT, SO YOU CAN HAVE CONSULTANTS LOOK AT IT AND THEY’LL BE VERY CAREFUL, BUT THEY DON’T KNOW IT AS WELL AS THE ONE WHO BUILT IT. THAT’S NUMBER 1. AND NUMBER 2 THERE’S CONSTANT MAINTENANCE AND MAINTENANCE THERE’S POTENTIAL OF SOMETHING BEING ADDED OR ON EXTRACTED — SUBTRACTED. AND NUMBER 3 UPGRADES, YOU DON’T KNOW WHAT’S EMBEDDED IN IT, THERE’S RISK AND ONGOING RISK ALL WHICH IS DIFFICULT TO MEASURE AND THE ONLY WAY YOU REALLY KNOW WHETHER A SIDE DOOR HAS BEEN PUT IN IS WHEN THEY DECIDE TO OPEN IT AND THEN IT’S TOO LATE. MARIA: WE KNOW THAT THERE WAS A SIDE DOOR, BACK DOOR, WHATEVER YOU WANT TO CALL IT IN AFRICA, WE SAW A SITUATION — THE AFRICAN GOVERNORS NOTICED IT AND RAISED THEIR HAND AND TOLD HAUWEI AND HAUWEI CHANGED IT. THEY DIDN’T KNOW IT UNTIL THEY KNEW IT.>>WELL, THAT’S THE PROBLEM, YOU DON’T KNOW WHAT YOU DON’T KNOW UNTIL IT’S TOO LATE. THAT’S THE BIG CONCERN THE PRESIDENT HAS, WE CAN’T AFFORD TO TAKE A RISK WHEN WE GET TO THE INTERNET OF THINGS BECAUSE LITERALLY EVERYTHING WILL BE INTERCONNECTED, THAT GIVES THE POTENTIAL FOR EVERYTHING BEING SHUT DOWN. MARIA: I FEEL LIKE FOR SO MANY YEARS AMERICAN COMPANIES AND CEO’S WERE SO INTERESTED IN GETTING THEIR PRODUCTS IN FRONT OF 1.4 BILLION PEOPLE IN CHINA THAT THEY FORGOT ABOUT PROTECTING THE PRODUCT.>>I THINK THERE’S SOME TRUTH TO THAT, ONE OF THE PROBLEMS WITH AMERICAN PUBLIC COMPANIES IS THEY LIVE IN A LIFE DENOMINATED BY 3-MONTH PERIODS, QUARTERLY EARNINGS. MARIA: YEAH.>>THEREFORE TOO MUCH PRESSURE ON THEM TO MAKE QUARTERLY EARNINGS PERHAPS OF THE EXPENSE OF LOAN TERM RESULTS. MARIA: DO YOU THINK THE COMPANIES WANTING TO SELL TO HAUWEI KNOWS THOSE RISK?>>NOBODY WANTS TO LOSE A BIG CUSTOMER. THE PRESIDENT HAS MADE CLEAR THAT HE DOESN’T WANT TO MAKE PUBLIC THE NATURE OH AND TIMING OF PRESIDENTS WITH PRESIDENT XI, THEY TALK ABOUT — THEY WILL CONTINUE TO TALK ABOUT IF HE WANTS TO MAKE AN ANNOUNCEMENT OF A PARTICULAR CALL, HE WILL. MARIA: AND THE PRESIDENT SAID THAT HE’S STILL TALKING WITH CHINA BUT HE’S NOT READY TO MAKE A DEAL WHA THE DOWNSIDE FRISK WE DON’T MAKE A DEAL? YOU YOURSELF, YOUR COLLEAGUES HAVE MADE A STRONG CASE IN TERMS OF NATIONAL SECURITY RISK AROUND CHINA, NOW WE GET IT, SO IS THERE A REAL DOWNSIDE RISK IF THE PRESIDENT DOESN’T DO A DEAL WITH CHINA, HOW ARE YOU GOING TO GET THEM TO AGREE TO SOME OF THE BIG-TICKET ITEMS THAT WE KNOW IS CULTURAL LIKE THEFT OF INTELLECTUAL PROPERTY?>>WELL, FIRST OF ALL, LITTLE POINT OF MAKING A DEAL IF YOU AREN’T SURE IT CAN’T BE ENFORCE, ONE THING TO MAKE THE TERMS OF A DEAL, IT’S QUITE ANOTHER THING AND MAYBE EVEN MORE IMPORTANT TO MAKE SURE IT’S VERIFIABLE AND ENFORCEABLE, THOSE ARE KEY ELEMENTS, THE DEAL ITSELF VARIABILITY AND ENFORCEABILITY. WE NEED ALL 3.>>WE KEEP SEEING CHINA BREAK PROMISES, THEY BREAK PROMISES IN WTO, THEY BREAK PROMISES TO HONG KONG, LOOK AT THE 2 MILLION PEOPLE IN THE STREETS RIGHT NOW.>>RIGHT. MARIA: IS THAT A BIG TOPIC OF CONVERSATION AROUND YOUR TRADE DEALINGS, WHAT’S HAPPENING IN HONG KONG?>>WELL, THE PRESIDENT HAS MADE CLEAR HE WOULD LIKE PEACEFUL RESOLUTION IN HONG KONG, HE HOPES THERE’S A RESOLUTION THAT WOULD SUIT ALL OF THE PARTIES BUT IT’S VERY DIFFICULT TO IMAGINE THEM USING FORCE, THE CHINESE USING FORCE AGAINST PEACEFUL DEMONSTRATORS. MARIA: WE HAD A STATEMENT FROM THE EU IN CANADA ABOUT HONG KONG, WELL, THE PRESIDENT TWEETED ABOUT IT.>>I THINK A TWEET IS A POWERFUL SYMBOL. MARIA: SURE IS. THE PRESIDENT SPOKE ABOUT MEETING WITH APPLE TIM COOK AND COOK MADE THE POINT THAT TARIFFS WILL HURT U.S. BUSINESS, WATCH THIS.>>TIM WAS TALKING TO ME ABOUT TARIFFS, ONE OF THE THINGS THAT HE MADE A GOOD CASE THAT SAMSUNG IS THE NUMBER ONE COMPETITOR AND SAMSUNG IS NOT PAYING TARIFFS BECAUSE THEY ARE BASED IN SOUTH KOREA AND IT’S TOUGH FOR APPLE TO PAY TARIFFS IF THEY ARE COMPETING WITH A VERY GOOD COMPANY THAT’S NOT. I SAID HOW GOOD A COMPETITOR, HE SAID THEY ARE A VERY GOOD COMPETITOR. SO SAMSUNG IS NOT PAYING TARIFFS BECAUSE THEY ARE BASED IN A DIFFERENT LOCATION, MOSTLY SOUTH KOREA BUT THEY ARE BASED IN SOUTH KOREA AND I THOUGHT HE MADE A VERY COMPELLING ARGUMENT, SO I’M THINKING ABOUT IT. MARIA: HE’S THINKING ABOUT IT.>>WELL, THAT’S TRUE, IT’S A VERY COMPLEX SITUATION. MARIA: NOTHING NEW. WE KNEW THAT ANYBODY ELSE NOT IN CHINA WILL NOT PAY THE TARIFFS.>>THAT’S TRUE, NOT QUITE AS COMPETITIVE AS THE COMPETITION BETWEEN SAMSUNG AND APPLE. MARIA: OKAY.>>THOSE ARE REALLY THE FUTURE, TECHNOLOGY IS THE FUTURE BOTH FOR US, FOR SOUTH KOREA, FOR EVERYBODY. MARIA: ONCE THAT 10% TARIFF GOES INTO PLACE, DO YOU EXPECT THAT THE ECONOMY IS GOING TO TAKE A HIT?>>WELL, TARIFFS FOR THE MOST PART HAVE NOT BEEN PAID FOR BY THE CONSUMERS, FOR ONE THING YOU NOTICED AGAINST THE BREAD BASKET OF OTHER CURRENCIES, THE DOLLAR IS UP SOMETHING LIKE 11%, SO A 10% TARIFF GETS INTO THAT. SECOND, IT’S BEEN SEEN THAT A LOT OF THE CHINESE VENDORS ABSORBED ALL OR PART OF THE HIT THEMSELVES, THEN THERE’S PROBABLY MORE GOVERNMENT SUBSIDY GOING INTO IT TOO. IMPORT PRICES, IN FACT, HAVE BEEN DOWN FROM A YEAR AGO AND AS YOU KNOW THERE’S VERY LITTLE INFLATION IN THE CONSUMER ECONOMY, SO THUS FAR THERE HAS NOT BEEN ANY REAL BASIS FOR SAYING THE TARIFFS HAVE HURT THE CONSUMER. MARIA: INTERESTING BECAUSE WITH YOUR ECONOMIC POLICIES HAVING MOVED THE NEEDLE ON ECONOMIC GROWTH, YOU’VE SEEN LOTS OF ASSETS COMING TO AMERICA AND THAT’S THE BAD SIGN TOO, THAT’S THE STRENGTH OF THE DOLLAR, PROLONGED DOLLAR RALLY PRESSURING U.S. CORPORATE EARNINGS HITTING COMMODITY PRICES AND THREAT ON THE DEEPEN THE SELLOFF IN EMERGING MARKETS, HOW WORRIED ARE YOU ABOUT THE DOLLAR IMPACTING THE ECONOMY?>>WE ARE UPSET ABOUT THE PUSH AND STRENGTH OF THE DOLLAR THAT’S DUE TO MONETARY POLICY BY THE FED, WE THINK THAT OUR INTEREST — INTEREST RATES ARE HIGH RELATIVE TO MANY OTHER COUNTRIES, THERE WAS AD LAST WEEK THAT BANK IN EUROPE MAKING MORTGAGE LOANS WITH NEGATIVE INTEREST RATES, PAYING BORROWERS TO BUY A HOUSE. MARIA: INCREDIBLE.>>THE U.S. IS PAYING POSITIVE INTEREST RATE, WHAT’S WRONG WITH THE PICTURE? THIS IS A WRONG PICTURE. AND OTHER COUNTRIES ARE CONTINUING TO LOWER THEIR RATES, VERY MUCH CHAIRMAN POWELL GOES FORWARD AND DOES LOWER THE RATE THIS NEXT TIME AROUND. MARIA: WHAT ABOUT — WE DON’T HAVE A LOT OF WIGGLE ROOM HERE, WE ARE AT VERY LOW LEVELS AND YOU HAVE GOT NEGATIVE RATES AS YOU JUST SAID IN EUROPE, HOW SIGNIFICANT IS THIS IN TERMS OF INDICATING A RECESSION ON THE HORIZON? DO YOU WORRY ABOUT THE ROCK-BOTTOM RATES EVEN THOUGH YOU WANT ANOTHER CUT?>>EVENTUALLY THEY’LL BE A RECESSION BUT THIS INVERSION IS NOT AS RELIABLE IN MY VIEW AS PEOPLE THINK. ANYTHING THAT TAKES 22 MONTHS TO AFFECT THE ECONOMY AND IN SOME CASES THE INVERSION HAS TAKEN THAT, THAT’S A LONG WAYS AND A LOT OF THE VARIABLES COME IN DURING 22 MONTH PERIOD, NORMALLY INVERSIONS HAVE OCCURRED IN A PERIOD OF TIGHTENING MONEY, TIGHTENING CREDIT. AVAILABILITY OF CREDIT IS THE BIGGEST PROBLEM.

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