China Wants to Replace the U.S. as World Leader: Investor | Business Matters Full Broadcast (Apr 24)

The TikTok ban legislation is signed into law. Now the question is to vest or face a national ban. We'll tell you what's next coming up on Business Matters. And good afternoon. Thank you very much for joining me here today. I'm your host, Don Ma. Starting with markets today. Benchmark S&P 500 closed higher in choppy trading. Tesla shares jumped after electric vehicle makers' plans to boost production and rollout. More affordable models overshadowed its weak quarterly results. And as well, gotta mention Boeing today. Shares fell after the playmaker reported its first quarterly revenue drop in seven quarters. This is even though the result beat analyst expectations. Markets now are eyeing first quarter gross domestic product data on Thursday. And as well, we're going to bring you our unique insights on that as well tomorrow. And the clock is ticking for TikTok. China-based ByteDance now has about a year to divest TikTok, or it's going to be banned in the U.S. CEO Shouzhi Chu is vowing to fight the new bill signed into law today by President Joe Biden. Take a listen. Rest assured, we aren't going anywhere. We are confident that we will keep fighting for your rights in the courts. Make no mistake, this is a ban. A ban on TikTok and a ban on you and your voice. TikTok has 270 days to find a new owner. Lawmakers feared China could access American data or spy on Americans with the app. The U.S. is TikTok's biggest market with 170 million users. Beijing has previously said that it would strongly oppose a forced sale of TikTok and has pledged to take any necessary measures to protect its interests. Now, a sale could be blocked outright if the Chinese regime refuses to relinquish TikTok's lucrative algorithm. And the TikTok legislation was actually included in a wide-ranging foreign aid package meant to support Israel, Ukraine and Taiwan. And the deadline for the sale is January 19th with the possibility of a three-month extension. The Biden campaign says that it plans to continue using TikTok. Now, for a deeper discussion on the TikTok bill, I spoke to Andrew Selipak. He's a social media professor at the University of Florida. Andrew, thank you so much for your time today. Biden just signing a potential TikTok ban legislation into law. How are you looking at this? What's your stance? Well, I think it's something that's needed. We can look at TikTok for multiple reasons in terms of how it can potentially be dangerous, influential, potentially harmful to U.S. users. And this is something that we've been talking about in this country for about four years now. And they're finally actually making a push on it. So it's something good to see. What will actually happen is really the big question we have now. Yeah, can you elaborate on that? What will actually happen? Are we going to see a sale? Are we going to see the app entirely banned in the U.S.? Well, we know that TikTok obviously doesn't want this. And they are going to press to kind of place an injunction on this. They're going to press to prevent this sale from actually happening in the courts. And they clearly have enough money to be able to do that. And that's going to prevent any immediate change. Right now, it's that it could happen as soon as January. President Biden also has a 90-day extension that he can basically grant to it. But even with that, the fact that ByteDance will be able to sue to say this violates First Amendment rules, this violates any number of issues that they may come up with, means that we're not going to see any change on this anytime soon. In fact, what we may see, if anything, will be that TikTok will actually sort of influence content to go onto the platform, the algorithm, where you have people complaining about the issue, getting people stirred up about the issue, getting them to, as we saw when the House originally voted to ban the app, getting users to contact their members of Congress about why this should not happen, or content in general about why this should not happen. And what about its algorithm? Is ByteDance going to allow its algorithm to be sold? Well, China's not going to allow the algorithm to be part of any potential sale. Really, the whole thing about the app, the reason why people would be interested in purchasing it is the algorithm itself. And that sort of proprietary information is not something that the Chinese government allows to be sold. So for any company interested in maybe making this purchase, the reason why you would purchase would be to get that proprietary special sauce algorithm, and the Chinese government wouldn't allow that to be part of the sale. Who are some potential candidates to purchase the social media platform if it were to be forced? And that's another huge issue, because we already know that the government's looking into companies like Meta and the fact that they own Instagram, Facebook, Oculus, WhatsApp. So a sale to Meta would not be approved, essentially probably would not be approved by the U.S. government, because that would give them a greater monopoly over the social media space. Google wouldn't be allowed to purchase it because of their control over search and YouTube. Microsoft, you know, people could talk about that being a potential buyer, but they already have ownership in LinkedIn. You know, they're already a tech company. They have their AI that they're into. So there's very few companies and really no individuals who would have the financial power to be able to purchase TikTok, even in the U.S., we're still going to be talking about a $40, $50, $60, $80, $100 billion purchase. In terms of companies that could, Amazon probably is out as well because of AWS. So we might be looking at a Walmart or a McDonald's. And that just seems like it would not be part of a portfolio that they'd be looking to have. All right. Thank you so much for your time today, Andrew. Thank you. And now I want to give you guys a quick update on Truth Social. So the owner of Trump's Truth Social wants Congress to investigate if someone is illegally manipulating the company's stock price. So this is according to a letter made public today, and it's from Devin Nunes, the CEO of Trump Media. What the letter says is that just four market participants are responsible for over 60% of the trading of the stock. So Nunes suggests that there are signs of what's called naked short selling. It's when someone sells shares that they do not own or have not borrowed. However, on the other hand, some analysts seem skeptical, one of them saying that the stock is overvalued and is almost for certain to fall in price. You know, since peaking at $66 in late March, Trump Media's shares price has lost more than half its value here. And now let's go to Boeing. Badly hurt, but yet still breathing. Its massive losses were lower than analysts' expectations. NTD's Virginia Gibson has the details on Boeing's latest earnings. Boeing reported lower-than-expected losses as it deals with reputational damage. Widespread claims of a broken safety culture culminating in a door blowing off a plane mid-flight earlier this year. Its commercial airplane division lost $1.14 billion, nearly doubling the loss in the same quarter last year, but less of a loss than expected. CEO Dave Calhoun began Boeing's earnings call by immediately addressing the crisis. I will direct my comments toward the dramatic actions we've taken since the Alaska Airlines accident. We held quality stand downs across all of our production lines in BCA and sought the advice and counsel of more than 70,000 employees to improve our factory disciplines and adherence to our quality standards. All in all, we collected over 30,000 ideas. Calhoun says though he's stepping down by the end of the year, he is committed to making sure everyone is 100% confident in Boeing. New safety protocols and inspection standards are affecting production, but he expects things to ramp back up. While this effort will slow our recovery timing, we are now seeing these proof points that give us confidence that we'll begin to stabilize and improve performance moving forward. This comes amid accusations that Boeing retaliated against workers, workers who insisted on higher safety standards. The workers wanted to re-evaluate the engineering work on 777 and 787 aircraft. They alleged Boeing pushed back and gave them negative performance reviews. In an official statement, Boeing says it has zero tolerance for retaliation and found none after investigating this incident. Virginia Gibson, NTD News. Thanks for that report, Virginia. Electric vehicle maker Tesla also in headlines today saying that it would introduce new models by early 2025 using its current platforms and production lines. In addition to that, it also retreated from more ambitious plans to produce an all-new model that had been expected to cost $25,000. Now, here's what you need to know on that. On Tuesday, the EV maker said it would introduce cheaper new models early in 2025, but details on the products were in short supply. Musk wouldn't say whether they would be all new or updates of existing vehicles. Tesla said the models would use aspects of current platforms. It warned that cost reductions might not be as great as under previous plans, suggesting any new cars won't hit the $25,000 starting price that Musk has long promised. Even so, the news sent Tesla shares sharply higher in after-hours trade, gaining as much as 12.5%. The stock had seen months of declines amid signs of rising competition and falling sales. On Tuesday, Tesla also promised to unveil an advanced robo-taxi without saying when. Musk says the firm should really be viewed as an AI robotics firm as a result, not as a car maker. The news all came as Tesla reported a fall in quarterly revenue for the first time since 2020. It sank to $21.3 billion over the three months ended March, worse than analysts expected and about $2 billion down on a year earlier. Revenue per vehicle also fell as a result of repeated price cuts, with net profits cut by more than a half in consequence. Tesla recently said it would lay off more than 10% of its workforce amid waning demand. And here's something that potentially may matter to you. The Biden administration announcing a new rule that is going to make millions more salaried workers eligible for overtime pay. So what's happening here is that the rule raises the salary threshold that would exempt salaried employees from overtime pay. So starting July 1st, the threshold is going to increase to an annual salary of just under $44,000. Then on January 1st, threshold increases again to a salary of more than $58,000. Now, the Department of Labor estimating that about 4 million more workers will qualify for overtime when the rule is fully implemented in January. And starting in 2027, the Labor Department says salary thresholds will be updated every three And a legal clash is underway over non-compete agreements. Lawsuits have been launched against the U.S. Federal Trade Commission over the agency's near-total ban on employers requiring signed agreements to not work for competing rivals. The FTC issued the rule yesterday, and the U.S. Chamber of Commerce filed the suit in Texas. It alleges that the FTC is supposed to be enforcing existing antitrust laws and does not have the power to enact rules that determine what type of business is anti-competitive. The FTC is saying that non-compete clauses hamper competition for labor and result in lower pay and benefits for workers. So for now, the rule is still set to take effect in August. The rights to several offshore winded development projects will be going up for auction starting this year. The Biden administration has released its plans to hold up to a dozen auctions through 2028. Four auctions are set to take place before the end of the year. And the leases are for the areas in the Central Atlantic, Gulf of Maine, Gulf of Mexico, and Oregon. This is according to a statement released by the Interior Department. The agency said the auction schedule is meant to help companies, states, and others plan for these projects which require a lot of investing and infrastructure. Meanwhile, new technology is taking fracking to another level. The advancement is helping the U.S. shale oil industry reverse years of productivity declines. Fracking has become less efficient because many wells were drilled relatively close to each other and that has impacted ground pressure. In a new oil field innovation called Simulfrack can be faster, less expensive, and more yield. Investors rethinking their investment in China amid geopolitical tensions. What are the risks? We're going to take a short break. A veteran investor who pulled out of Chinese stocks shares his perspective. And as well, we're going to have good news for air travelers. A new rule by the Transportation Department could save flyers millions of dollars. We'll tell you more on that and more when we come back from this short break. And welcome back. Some quick headlines for you now. AT&T surpassed Wall Street's first quarter estimates. It added 349,000 net subscribers. And these are customers paying monthly wireless phone bills. As well, software giant Oracle is moving its headquarters to Nashville, Tennessee. CEO Larry Ellison said the goal is to move closer to companies in the healthcare industry. And by the way, that is one of the company's key areas of focus. This is Oracle's second big move in the last few years. New orders placed for key U.S.-made capital goods rose moderately in March, according to the Commerce Department. This suggests that business spending on equipment likely was weak in the first quarter. U.S. prosecutors want the founder of crypto exchange company Binance to serve three years in prison. Prosecutors made the request in a Tuesday night filing in Seattle federal court. Now, if you remember just a few days ago, we told you how big Wall Street firms are steering billions of dollars of American retirement money into blacklisted Chinese companies. Well, it was in fact a very important topic. So we're going to follow up on that story and go into a deep dive discussion with it. Here's Art Alley, founder and president of investment firm Timothy Plant. Art, thank you very much for your time today, this afternoon. So first question I have for you is, we're seeing that according to reports, apparently Wall Street companies steering billions of dollars into Chinese company and blacklisted ones, in fact. And I know your position as well from where you stand at your company. Tell us how you feel about that. Wall Street companies giving so much money to these Chinese companies. Well, so far, we still live in a free country. If they want to do that, but I mean, it's a really bad idea. You know, when we launched Timothy Plant, my friends on Wall Street said, Ali, you are nuts. And I said, what do you mean? They said, you cannot create an investment program that screens out the largest, most profitable companies in the industry and expect to get good investment returns. And my response hasn't changed. That was 30 years ago. My response was simply, look, if you have basic moral values, following them beats performance every single time. And I think these, to answer your question, the Wall Street companies, the investment companies, companies like BlackRock, I mean, my goodness, they have $10 trillion. They put the clamps on U.S. companies by demanding good ESG scores and all the other things that's not good for profitability, but they don't impose those same restrictions on Chinese companies. As for Timothy, you know, when we first launched, I made the decision for our company, we would not invest in any companies in China that are owned by the government, but they do have privately owned companies. And then, you know, after a while, it kind of occurred to me, look, if you're in China, that communist government runs everything. So even if it's privately held, they exert influence. So we will not invest in any company in China. Right. OK. So, I mean, you touched on this, why you don't want to invest in Chinese companies that are state owned. But if you wouldn't mind elaborating for us a bit more with some examples and more detail as to exactly why that is for you. Well, you know, China, and it's becoming increasingly clear to everybody in this country, unless their head is in the sand, China is not our friend. China is trying to replace us as the leader of the world. And China is a communist country that is abusive and human rights and all the rest. It is just so contrary to who we are with our freedoms and our values, which seem to be eroding, by the way, in America, that it just makes no sense to invest in companies that really want to kind of destroy communism. Is it never worked? It can't work. It cannot last because everybody becomes equally poor with a very handful of people at the top that kind of have all the benefits of life. So I don't know if that answered your question, Don, but we will not invest in any company based in China, period. Yeah, it's very clear. It seems like you don't want to invest in a country that could potentially undermine the country that we live in, the United States. But I also want to ask you, besides that reason, do you see any risk at all to investors when it comes to investing in China? Well, there's risk in whatever you invest in. I mean, things go up, things go down. You know, at one time, China was one of the poorest countries in the world and they have risen up. But now there are a lot of what appears to be earthquake breaks in their economic system. They're not in real good shape. I mean, China went out and built cities, humongous cities all over their country that are, you know, years ago that are now just rotting and nobody's living in them. China is not communism, is not a good economic model. It never has been. It never will be. So sooner or later, China is going to collapse. Fascinating discussion. I wish we had more time, but that's all the time we have for today. We can continue maybe next time. Thank you very much for your coming on the show today. Thanks, Don. I look forward to it. Meanwhile, new federal rules say air travelers deserve cash refunds, not just vouchers or travel credits when flights are delayed or canceled. The rules were announced by the Transportation Department earlier today. Here's Secretary Pete Buttigieg. The Biden-Harris administration is now requiring that if an airline cancels or significantly delays your flight within seven days, they will be required to provide an automatic refund to the credit card that you use to book it without you having to call or wait on hold or sort through digital paperwork or haggle with that airline. Now, passengers will receive an automatic cash refund if a domestic flight is delayed by more than three hours. And the same applies to international flights that are more than six hours behind schedule. Now, let's talk about a new study revealing that millions of Americans on Medicare could be eligible for a weight loss drug. This was a research done by the Kaiser Family Foundation. So it found that an estimated 3.6 million overweight or obese patients with hard conditions insured on the U.S. Medicare program could be eligible. They could be covered for Novo Nordisk weight loss drug Wegovy. And the study reported that some Medicare Part D plans would start covering Wegovy this year. And finally, Katelyn Clark is far from done setting records. Now, her latest will come off the court. The Iowa star turned number one pick in the WNBA draft has agreed to an eight-year, $28 million contract with Nike. And this deal features a signature shoe, according to the Wall Street Journal. That gives Clark the most lucrative shoe deal in women's basketball history. And Clark has been with Nike since 2022, when she was starting to hit the national mainstream with the Hawkeyes. Her name, image, and likeness deal expired at the end of the 2023-24 college season. And with that, thank you very much for watching. It's all the stories we have for you today. If you have any feedback for the episode, feel free to let me know down in the comments below. I'll read them. And one last thing, business matters. See you tomorrow.