Nancy Pelosi Reclaims Gavel as House Speaker
PAULA NEWTON, CNN NEWSROOM HOST: Hello everyone, and thanks for joining us. I'm Paula Newton, and you are watching CNN Newsroom. Ahead this hour, bad news at Apple leads to another rough day on Wall Street and triggers more fear about a possible global slow down. Plus a U.S. Congress like you've never seen before. The country's most diverse group of lawmakers is sworn into office ready to take on Donald Trump. And some of Thailand's most popular tourists resorts brace for what could be the strongest storm to hit there in decades. OK, one bad day for Apple is spoiling a whole bunch of portfolios for investors right from New York to Tokyo. Now, the tech giant's warning about missing its sales targets drag down, of course, the U.S. markets right across the board. And in Asia now, look at that. The Nikkei took the biggest hit. As you can see there now down 2 and a bit percent. That is off of its lows. You can see some of the enthusiasm there in China. Those stocks coming back on both the Hand Seng and the Shanghai, and that is over some good news on trade, which we will get to in a moment, but we have to remind you about New York. The Dow lost 660 points. Apple shares were 10 percent lower - its worst day in six years. Analysts say it's a clear signal that U.S.-China trade war is starting to bite. Journalist Kaori Enjoji is joining us now from Tokyo. You know, this was a rude awakening from the holidays for Japan. Obviously some of the suppliers to Apple falling, but this is really starting to send tremors through the Japanese economy as a whole.</s>KAORI ENJOJI, JOURNALIST: Absolutely. I think this is the worst first day of trading in the new year we've seen in about three years, and the market has just closed here at the Tokyo Stock Exchange. We're looking at a loss of more than 2.5 percent, down more than 450 points at 19,561 on the Nikkei 225. It made up about half of the losses because at one point this morning it was down over 700 points, but still. This is a big selloff for the first trading day. We're seeing the Apple outlook cut not just for the suppliers to Apple but the whole China slowdown story starting to eat into confidence here in Japan as well. And as an indication of that, the central bank and the finance ministers and the regulators held an emergency meeting in Tokyo this afternoon. This is the third week in a row that they've done something like this, and they tend to do this when there's a sense of panic in the market. So you can tell that this has been a build up since the end of last year. On top of the Apple news, on top of the slowdown worries for China and the U.S. you have the resurgence in the yen. People are calling it a flash selloff on Thursday when the Dalian basically tanked 104. Today's it's been fairly stable at around the 108 level for Dali Yen, but still when you have a repatriation in funds like this there's a lot of concern because if the yen strengthens, it could eat away at Japanese corporate profits as well. So that has been a big concern on top of everything else for Japanese investors. And I think on top of that, you're also seeing a general caution about the sanctions, the trade war going on between China and the U.S. In a addition to the equity, I think what's also noteworthy today is the moment that we're seeing in government bond deals because bonds tend to be a safe haven in times of turmoil like this. The yield on the benchmark Japanese government bond - that's a 10-year bond - fell below zero. So that's minus - minus 0.05 percent at one point. So these are yields falling into negative territory, so that indicates a lot of the panic that we're seeing in the equity markets. It is still a little bit thin, but because Japan is such a liquid market, when international investors want to make a so-called China play, they tend to use Japanese companies like construction companies, electronics companies as a proxy play to get into that China mood. And as investors are starting to question the viability of the overall China's economy and what impact it's going to have sort of a double whammy from the trade sanctions, a lot of these electronics companies and construction companies, even some of the consumer electronic companies are getting hit hard. So it's a very, very rude awakening for Tokyo stocks today with a selling pretty much across the board but also - but mostly in some of the tech space as well. The broader topics index also ending down by more than 22 points today at 1,471. So after a four-day new year holiday, a very big selloff here in Tokyo.</s>NEWTON: Yes, and Kaori, coming off of a 15 percent drop for 2018, even more difficult than it was on the Dow. Kaori, thanks for your technical analysis there. There was a lot at play in the Japanese market and a good place to start today. Appreciate it. We now want to head to Los Angeles and Global Business Exectuive, Ryan Patel. I mean, look. These are fragile markets and I do have that feeling in the pit of my stomach. You know, there were two things there. There was the word panic and also flash anything, right? The flash crash that unfortunately we're used to. Ryan, try and dissect this for us. There has been this whole debate about whether or not this is tech and Apple specific or whether people against data that says otherwise should stop worrying about a slowdown.</s>RYAN PATEL, GLOBAL BUSINESS EXECUTIVE: Well, it is Apple tech specific and it is China specific.</s>NEWTON: Good news, Ryan. Thanks. Great.</s>PATEL: Yes. Well, you said something that hopefully makes you feel better. You said flash, right? And I think this flash piece could kind of easily go away once this kind of comes down with the between China and the U.S. Apple specific, as you mentioned, you know, they have - China is a big market for them, and obviously they see the data that they were selling less and they were losing market hare in China, and that's because during these trade wars, people are buying less of Apple products, and the second piece, as I mentioned to you, was their iPhone sales were going down on top of that. And that's because multiple things. Obviously their price point's a little bit higher. They're losing - less people are trying to upgrade. So the things that they haven't been successful at has now kind of all kind of compounded on top of this. So when you have those kind of things and then you have CEO - Mr. Cook comes out and has to cut out expectations, that gut feeling that you were feeling, think about this. Warren Buffet today, his firm lost $4 billion on the Apple shares just alone.</s>NEWTON: Yes.</s>PATEL: So that's a pretty penny.</s>NEWTON: Fought into the Apple level where he thought things could just - were going to continue to get better. I know you've been following this today, have been many people, but I just want to remind our viewers of White House Council Economic Advisor Chairman, Kevin Hassett, telling CNN that this Apple thing, it's going to affect a lot of different companies. Take a listen.</s>KEVIN HASSETT, WHITE HOSUE COUNCIL ECONOMIC ADVISOR CHAIRMAN: The rest of the world is slowing and that is having an impact on earnings, and you know, and it's not going to be just Apple. I think that there are a heck of a lot of U.S companies that have a lot of sales in China that are -</s>NEWTON: Yes.</s>HASSETT: - basically going to be watching their earnings be downgraded next year until, you know, we get a deal with China.</s>NEWTON: You know, what's so interesting here, Ryan, is that he then followed that up to say that this could mean that a trade deal may happen more easily and more quickly. What do you think?</s>PATEL: Well, that's - he's being optimistic, and he also said then that thing it was about IP and both parties wanted to - you know, both parties from Republicans to Democrats wanted to get an IP agreement, but what does that even mean? I don't even know there's an agreement, what that deal looks like. So, you know, yes, it may get China to come to the table, but it's not all roses on the U.S. side as well. It is hurting Apple, and I think he proved the point to China's point, well, other companies like Boeing, like Caterpillar that took a huge hit that has these kind of construction plays in China, you know, how long can this go? And we also know China's GDP is coming down. They've already kind of recognized that. And so, they're both going to be bleeding. There isn't really a winner in any kind of trade war, and in this case it's shocking to me that we - you know, both sides can be optimistic. I think it's time to get together. I think we have more days like this. I assure you companies, consumers are going to be out and vocal and saying get this thing done so we can move forward.</s>NEWTON: And it's interesting because when that kind of pressure, though, has come to the floor, sometimes it hasn't worked. I will note that one of the reasons that we saw the Chinese markets up was that talks are now scheduled on those trade talks January 7 and 8, so Monday and Tuesday. I want you to listen, though, to what some advisors have been saying to their - you know, these are people that are moving large amounts of money around. This is from Ian Shepherdson from the - Chief Economist at the Pantheon Macroeconomics in a letter to clients saying awful and worse to come. The story here is that the trade war coupled with China's underlying slow down is wreaking havoc in both countries. Ryan, I would argue and beyond. You know, we just heard from Kaori in Toyko. I am worried about the trade silos, and I'm wondering what you think when we talk about these trade skirmishes right now because that's what they are, but let's talk about trade in Europe, let's talk about trade in Japan, let's talk about trade in South Korea and say that countries are starting to retreat and for very specific political reasons not wanting to do the trade deals that we've seen for the last few decades.</s>PATEL: Yes, and I think throw the fundamentals out. Like we used to be at a place where you used to look (ph) fundamentals are (ph) looking at specific companies, and now we live in this day of age where these kind of days, even any kind of rhetoric, it changes the market today. People are scared. You talk about China and the U.S. Think about what to come to 2019. You've got Brexit. You've obvisouly got last year you saw Turkey and Italy got their own worries, and you've - you know, obviously you've got the Middle East. You've got the Qatar and the Saudi - the Saudi blockade on Qatar. This is - they may seem regional to you and I, but they're not. They're all interconnected in this, and this is why, like you said, these specific trade deals between certain countries, certain regions become even more heightened to be able to get into this kind of deals. Like I said, this is - this is going to be a year where the market will see some extremes while we are seeing this volatility, and it may be just on somebody saying a tweet or a certain message just to kind of change it, and that may be the new norm for this year I hate to say it.</s>NEWTON: Now, as you said, the sickening feeling in my stomach, Ryan, is still there, but -</s>PATEL: I tried to get it out. Think long-term. Think long-term.</s>NEWTON: Yes, I think long-term and those bargains that some people can now pick up on the stock market. Ryan, really appreciate seeing you.</s>PATEL: (inaudible)</s>NEWTON: Now, Democrats are back in control of the U.S House of Representatives, but behind the smiles and all that good cheer was the reality of a partial government showdown - shutdown that is now already two weeks old with no end in sight. We get more now from CNN's Manu Raju on Capitol Hill.</s>KEVIN MCCARTHY, U.S. HOUSE REPUBLICAN: To the Speaker of the House, Nancy Pelosi, I extend to you this gavel.</s>MANU RAJU, CNN SENIOR CONGRESSIONAL CORRESPONDENT: With that, Nancy Pelosi officially took over as House Speaker and the newly emboldened Democrats took charge in the House with plans to confront President Trump and his administration.</s>NANCY PELOSI, SPEAKER OF THE HOUSE: Two months ago the American people spoke and demanded a new dawn.</s>RAJU: Goal number one, reopen the government amid a bitter standoff with Trump who is demanding billions for his border wall despite the stiff opposition by the new House Speaker and her powerful majority. But Senate Republicans refuse to take up the bill because of Trump's opposition. Goal number two, conduct what could be the most aggressive and expansive investigation of a sitting president on a wide array of his controversies, and already Pelosi facing pressure from her caucus to move forward on impeachment proceedings, especially once Robert Mueller's investigation concludes. On the first day of the new Congress, one Democrat introducing articles of impeachment against the president.</s>BRAD SHERMAN, U.S. HOUSE DEMOCRAT: The road to impeachment is a long road, many miles. The standard is high crimes and misdemeanors, and he has committed the felony of obstruction of justice.</s>RAJU: Some influential Democrats are not ruling it out.</s>ADAM SMITH, U.S. HOUSE DEMOCRAT: But it's something we are clearly going to have to investigate. There nod that (ph) is the best path forward.</s>RAJU: Pelosi for now wants to keep the focus elsewhere but telling NBC News she is not closing the door.</s>PELOSI: We shouldn't be impeaching for a political reason and we shouldn't avoid impeachment for a political reason. So we just have to see how it comes.</s>RAJU: Democrats have a laundry list of items they want to investigate. The Chairman of the House Oversight Committee tells CNN he wants to get to the bottom of the decision to put a controversial citizenship question on the U.S. Census suggesting Commerce Secretary, Wilbur Ross, mislead Congress.</s>ELIJAH CUMMINGS, U.S. HOUSE DEMOCRAT: He has to answer for something that he said that I don't think was accurate, and what we're going to do is be in search of the truth.</s>RAJU: Also, acting Attorney General, Matt Whittaker, could be forced to appear before the House Judiciary Committee this month to answer questions about his oversight of the Mueller investigation.</s>JERRY NADLER, U.S. HOUSE DEMOCRAT: They're trying to get a date, and they're dragging their feet on a date. We'll see what happens.</s>RAJU: You want to - will you send us a (inaudible) if he doesn't -</s>NADLER: We have to.</s>RAJU: For Pelosi, the challenge will be balancing demands from her base looking to take on the president and other eager for bipartisan accomplishments. On the floor today, 15 Democrats revolted and opposed Pelosi's ascension to Speaker thought she was elected with 220 votes, four more than she needed, and now she represent the most diverse House in American history with a record number of women and minorities sworn in. In the Senate, the GOP added two more seats now with a 53-47 majority and the ability to protect the president against their democratic foes. Now, the Republican leader, Mitch McConnell, made very clear that he is not going to move on the House Democratic bill to reopen the government for one reason and one reason only - it is opposed by President Trump. He does not want to put anything on the floor of the Senate that could pass, could land on the president's desk, force him to veto it even if there may be the votes to override a presidential veto. He said today that he has no role in ending the standoff. He said it's all about House Democrats and the president to negotiate a solution, and they plan to have a meeting on Friday to discuss this going forward at the White House. But the question is will any of this - can resolve only lead to more bickering. Maju Raju, CNN, Capitol Hill.</s>NEWTON: Jessica Levinson joins me now. She's a law professor at Loyola University in California. Quite a day. I think many people would say that it is about time in terms of Congress actually trying - at least trying to reflect the diversity in America.</s>JESSICA LEVINSON, PROFESSOR OF LAW & GOVERNANCE, LOYOLA LAW SCHOOL: It is, and what we've seen is a number of times where in America we've said it's the year of the woman. This is the year of the woman in the sense that we have over 100 members of Congress who are now women. 90 percent of those are Democrats, but we're still not anything near gender parity. We also have a more diverse House than we've ever seen. We have the two first Native American members of Congress. We have Muslim members of Congress. We have many more Hispanic members of Congress. So is Congress starting to look more like America? Absolutely. Are we close? No, there's still a huge.</s>NEWTON: There is a huge gap and we'll take a pause here to at least celebrate how far the country has come, though, after these midterms. You know, a lot of questions about whether that diversity extends as well to the Republican party. We do want to take a breather here, though, Jessica, right? As I was saying, it's one of the more positive days that we've seen in Washington in quite some months. I want you to listen now to Ilhan Omar tell CNN exactly how she feels about being a refugee and now a congresswoman.</s>ILHAN OMAR, U.S. HOUSE DEMOCRAT: As we exited our place, we realized that him and I had not returned on that same airport since the day we first landed her as refugees. And so, you know, it is - it's very - really overwhelming and emotional time for us.</s>NEWTON: You know, and she's saying, Jessica, it's emotional. She has her father standing right there with her, and yet when we go to that leadership, when we go to the diversity, what will it actually mean considering right now the government is shutdown over what? A wall to keep migrants out.</s>LEVINSON: It's very ironic, and I have to say the congresswoman's tweet, I think, was one of the most powerful things we've seen in a long time where she bascialyl tweeted a picture of her father at that very airport and she said what she had just said which was we haven't been here for 23 years since we were refugees, and that really is when people think of the American dream and when they think of an American story. In 23 years being able to go from refugee status to an elected member of Congress is really enormous, and again, that's why that will be one of the biggest visuals that we take away from this new Congress, from the swearing in ceremony. As you've said, it's juxtaposed, though, against the fact that the government is shutdown because we're trying to keep people out, because President Trump has said, "I need funding for a wall." And what we see with this new Congress is I think that's just not likely to occur. I think that the president, frankly, had a much better chance with the Congress of last week and the Senate of last week. So this really is, in a way, an incredibly high stakes game of chicken to see who's going to blink first. You know, the past and current Speaker of the House now the most powerful elected - female elected official in America has said, "you're not getting the funding for that wall," and I take her for her word (ph).</s>NEWTON: And yet, Jessica, doesn't that bring us right back to square one in terms of where that leadership takes you? I mean, what good is the diversity in Congress if Americans are just going to see the same old reruns played over and over again? You know, before - I want you to listen to Nancy Pelosi talk about the significance of her, once again, taking on that gavel as Speaker.</s>PELOSI: I don't think of it as an accomplishment. I think of it as a responsibility in how we go forward. And what that means in terms of the lives of America's working families and that more this isn't breaking a glass ceiling. This is breaking a marble ceiling in the capital of the United States.</s>NEWTON: As poignant as those words are, Jessica, she said that before and not much has changed in terms of, again, those working families that she and her party want to represent.</s>LEVINGSON: Yes, this is such an important question. So I would say, one, we're entering an era of a divided government, and that means there's going to be gridlock. So does it matter that Congress is diverse? I mean, in that very kind of 30,000 foot view of will we continue to butt heads and fail to pass bipartisan legislation? Yes, we will, even with a more diverse Congress. But we know from study- after-study in social science and political science and psychology that more gender diversity, more racial diversity when it comes to people who are at the table making decisions can lead to different and better policy outcomes. So I still think that it is different, one, just for people to be able to look at their representatives and say, "they look more like us. They're at least fighting for things that we care about and they're more atuned with us," because that will get more people civically engaged. And I also think that it could bring a new approach. Does that mean that we will have, you know, everybody's going to join hands and the President of the United States and Nancy Pelosi are going to accomplish, you know, amazing things together? Absolutely not, but I do still think it makes a difference for both symbolic and practical reason.</s>NEWTON: And Americans are counting on it, in fact, to be transformative this time around. Jessica, thanks so much. Appreciate you being with us.</s>LEVINSON: Thank you.</s>NEWTON: OK, next on CNN Newsroom, Russia detains an American in Moscow and says he's a spy, but a former CIA official says this case is all about getting leverage over the U.S. Plus, North Korea's top diplomat in Italy hasn't been seen in weeks. What his disappearance could imply.