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Fed Hikes Rates; Republican Debate; Freddie Gray Case. Aired 2- 2:30p ET

Aired December 16, 2015 - 14:00   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

[14:00:00] WOLF BLITZER, CNN HOST: Viewers. A special edition of "Quest Means Business," that's coming up next. For our viewers here in North America, "Newsroom" with Brooke Baldwin starts right now.

ANNOUNCER: This is CNN breaking news.

BROOKE BALDWIN, CNN ANCHOR: All right, here we go, top of the hour. Thank you so much for being with me here on CNN. I'm Brooke Baldwin.

You just saw the animation roll, breaking news here. This is news that impacts virtually every single one of you. The near-certain hike of interest rates that the Federal Reserve is expected to announce at any moment. Any moment now we're going to get news from the Fed. Think about it. The last time the Fed raised the rates, the iPhone had not come out yet. That's just a little perspective for all of us. June 26, 2006, that was the last hike. The iPhone was released one year three days later.

But while the iPhone has definitely gone through a lot of change, you can see from this graphic here, the ups, the downs, the ups, the downs. This is what's called the Federal Funds Rate. What it's seen since 2006. A sign of the tough times the economy has gone through.

So why does the rate hike matter so much? Why does this matter? Overall, it will make borrowing more expensive. Actually, we're just getting the news here being handed to Christine Romans.

You ready to roll? Christine Romans just handed a piece of paper here. So we're getting the quick skinny from the Fed. What's - what's the deal?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: The Federal Reserve has raised interest rates by 25 basis points, 25 basis points. So that means it's not zero percent - zero percent interest rates anymore. You're going to have interest rates. You're going to get - you're going to get paid. There's going to be some interest on - on those - I'm getting it in my ear as we're talking right now.

The Fed not signaling concern about - not signaling concern about the global economy, noting considerable improvement in the job market, which is important, but also saying that GDP could be stronger than expected and unemployment will decrease faster. So the unemployment rate will decrease faster.

BALDWIN: OK. ROMANS: So all of this is positive assessment of the economy.

BALDWIN: OK.

ROMANS: If the Fed can raise rates for the first time in ten years. And that really is the end of the emergency situation for the economy.

BALDWIN: It's a good sign.

ROMANS: Back to normal.

BALDWIN: The economy is in a good place. Therefore, after ten years -

ROMANS: Yes.

BALDWIN: They have finally raised their rate. Can you give your analogy? This is so fantastic.

ROMANS: Oh, yes.

BALDWIN: Your analogy about the hospital and the patient.

ROMANS: The patient is out of the hospital. The patient is out of the hospital, back home, healthy again. And that's the American economy. And for a long time you had the Fed supporting the American economy, trying to prevent the U.S. economy from falling into that great depression. It's been years now. This signals that that emergency situation is over, time to get back to normal. The GDP is growing. The jobs market is growing.

Now, some would argue that they should have done this a long time ago, Brooke. You know, the patient has been healthy for an awful long time and still in the hospital. And now there are some new concerns about a junk bond, little bit of problems in the junk body market, will that spill over into something bigger? Not hearing - not hearing worries about the spillover just yet.

But it's been so long of zero interest rates. Many saying it's just time to start raising those - raising those interest rates.

And the - a really important thing here, Janet Yellen, the Fed chief, is going to speak at 2:30. That's going to be critical to hear how she addresses this. But what are they saying going forward?

BALDWIN: Right.

ROMANS: Everyone expected this. Gradual increases from here. And that's - that's what the markets want to hear, that they won't be jacking up interest rates really quickly, but they will be gradually raising interest rates from here.

BALDWIN: So will she explain, now that we have the news that it is being raised, will the chairwoman, Janet Yellen, then explain what will happen over - over a prolonged course of time? Do we have to wait until we see how the economy is in 2016?

ROMANS: They will be - no, I think you're going to see a lot of caveats.

BALDWIN: OK.

ROMANS: They'll say barring any kind of "x" or "y." We want to hear what she has to say about the global economy, but so far in this statement there are not big concerns about the global economy from here on out. There will be caveats. And the Fed is going to want to be able to change course if it needs to. But at zero percent interest rates, it's time for those rates to start rising.

Now, it's going to mean higher mortgage rates. It's going to mean it's going to cost more to buy a car. Car loans are going to go up. If you have a lot of credit card debt that's a variable rate credit card debt, that's going to become more expensive.

BALDWIN: OK.

ROMANS: Those are the ways we're going to feel it directly. But I like to also use the analogy of all those 13 people on the stage last night in Las Vegas who are vying to become the leader of the free world.

BALDWIN: The big debate.

ROMANS: In about 26 minutes, the leader of the free world is going to be giving a press conference -

BALDWIN: Janet Yellen.

ROMANS: Janet Yellen. No, she really is the very important money person right now.

BALDWIN: Yes.

ROMANS: It is the Fed that really has its thumb on the pulse of what's going to happen with the economy here.

BALDWIN: We'll take it. Stay with me.

ROMANS: Yes.

BALDWIN: I want to pivot just quickly, as we're getting this news from you via our wonderful producer there in Washington, Alison Kosik is standing by on the floor of the New York Stock Exchange.

Alison Kosik, I'm seeing a lot of green on the screen thus far, as far as trading goes. What are you seeing right now?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: (INAUDIBLE) I have heard on the floor, Brooke, since we heard that, the Fed went ahead and raised rates is, ladies and gentlemen, we have liftoff. Just by a quarter of a point. Not much. Yes, not much but it's the beginning of the end of cheap money and how is Wall Street reacting? Well, when that first hits the - the tape, you saw the market actually fall, but then it came back. This could be the beginning of volatility over the next few days as you see investors readjust their portfolios based on what this new pathway is going to look like. [14:05:18] What's going on here is investors are saying, finally,

finally the Fed went ahead and raised rates as it's been talking all year. And many people here on the floor believe that the Fed had to do it today, not only to save the credibility, but to give itself some wiggle room because, Brooke, right now, where rates - actually where rates were a few hours ago, if the economy did take a turn for the worse, the Fed wouldn't have any tools in its tool shed to sort of refigure its monetary policy.

Well, now that it's on a course to raise rates, if the economy should hit an obstacle, well now the Fed would have some wiggle room and maybe even cut out of (INAUDIBLE). Right now, that's a side discussion. Rates are on their way up.

What the discussion is actually going to turn to now is how often will the Fed raise rates and by how much. And by all indications, from the people I've been talking to, the expectation is over the next year we'll see at least four rate increases. So that means we could see interest rates at 1 percent by the end of next year because the expectation is you'll only see a quarter rate - a quarter percent of an increase four times over the course of the next year.

Brooke.

BALDWIN: That's a great question. I want to ask that also of my next guest. Alison Kosik, thank you so much, and in the hustle and the bustle there of the floor of the New York Stock Exchange.

Ken Rogoff, Harvard professor and public policy in economics, used to serve as chief economist and director of research at the IMF, the International Monetary Fund. He's with me.

So, Ken, you know, what, not a huge shocker. This is sort of anticipated. It had been ten years. Writing was sort of on the wall. Economically speaking, it's a good thing. Your initial reaction?

PROF. KEN ROGOFF, HARVARD UNIVERSITY: Well, I mean, it's a nonevent so far. If they didn't do this, it would have just shocked the pants off of everyone. They had really telegraphed this was the plan. And I think as you said, the big question is, what's next?

BALDWIN: What do you think?

ROGOFF: What is the chair going to say in her press conference about how fast it's going to go up?

BALDWIN: What do you think? How often could there be hikes? How much?

ROGOFF: Well, I kind of tend to think they're going to get to 1 percent a little faster than people think, that that's still a very low interest rate in today's environment. I mean this rate - this hike is microscopic. They raised it. Actually it was at 0.13 to 0.25. I mean you're not going to notice this one that much. The question is, what's next. And, you know, all the signals that they get are that they're inflationary pressures, except they don't see it yet, but they often build up over time. Labor market, you know, is really tightening. Their core inflation that they look at is up to the level that they want it. And 1 percent still letting the economy build up a lot of steam. That's not the neutral rate.

So I think they're going to kind of move it up. And what she has to face in her press conference is giving herself some elbow room. I mean markets want to hear it's going to be every other meeting, just something really simple. But she doesn't know what's coming and she wants to leave herself some room and tell people what she's going to look at without creating a lot of uncertainty.

BALDWIN: We will be listening to that potential elbow room when we hear from the chairwoman, Janet Yellen, in just about 20 minutes from now.

Ken Rogoff, thank you so much.

Christine Romans, final thoughts?

ROGOFF: Thank you.

ROMANS: My final thoughts are, I agree with him, that they're not going to telegraph exactly what they're going to do. They need - they need the wiggle room if something happens in the bond market, if something happens in the global economy, if there's something that we don't see around the corner. But the U.S. is strong relative to the rest of the world right now and that's the bottom line. He's right, Ken Rogoff is so smart, he's right, it is microscopic.

BALDWIN: He is super smart.

ROMANS: You know, when you look at -

BALDWIN: It's like, it's a nonevent.

ROMANS: But you think about - you think about interest rates in the '80s. Oh my gosh, I mean people were getting mortgages for 18 percent mortgage rates.

BALDWIN: Wow.

ROMANS: You know, if - bottom line for you, if you want to refinance your mortgage, my dear, next year, if you want to buy a home next year, it's still - it's still OK. It's still relatively low interest rates for consumers here.

BALDWIN: Thank you for the breaking news and the multitasking at the top of the hour.

ROMANS: You're welcome.

BALDWIN: She's a good one. Christine Romans, thank you.

Meantime, right now, Donald Trump holding his very first rally since last night's fiery debate in Vegas. Will he take on his rivals on that stage? We will stand by and listen for that.

Also ahead, the winners, the losers, the awkward moments, the heated exchanges. We will analyze the greatest hits for you ahead.

And we are watching Baltimore very closely today after being deadlocked, the jury, in the trial of one of those Baltimore police officers accused in Freddie Gray's death has sent a message to the judge today. What does that mean? Also, we'll talk about how a decision could come at any moment.

[14:10:01] You're watching CNN. I'm Brooke Baldwin.

(COMMERCIAL BREAK)

BALDWIN: You're watching CNN. I'm Brooke Baldwin.

Did you watch? Did you watch? As co-moderator Hugh Hewitt pointed out, last night's Republican debate, hosted, of course, by CNN, by Wolf Blitzer, will be the one that Americans talk about at the - Christmas. Ratings figures just in to CNN showing that a lot of you will be talking. Eighteen million viewers tuned in last night, making it the third most watched primary debate of all time. The candidates talked almost exclusively about how to keep this country safe from limiting Internet access to, quote, "carpet bombing ISIS." Each candidate used specific details when examining his or her plans to combat terrorism. Here is CNN's national security debate in two minutes.

(BEGIN VIDEOTAPE)

SEN. RAND PAUL (R), PRESIDENTIAL CANDIDATE: The question is, how do we keep America safe from terrorism? Trump says we ought to close that Internet thing.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: I sure as hell don't want to let people that want to kill us and kill our nation use our Internet. Yes, sir, I am.

CARLY FIORINA (R), PRESIDENTIAL CANDIDATE: We now learn that DHS says, no, we can't check their social media. For heavens' sakes, every parent in America is checking social media and every employer is as well, but our government can't do it?

JEB BUSH (R), PRESIDENTIAL CANDIDATE: This is a tough business to run for president.

TRUMP: Oh, yes. Oh, no, you're a tough guy, Jeb, I -

BUSH: It is. And we need to have a leader that is (INAUDIBLE).

TRUMP: Real tough.

BUSH: You're never going to be president of the United States by insulting your way to the presidency.

TRUMP: You're real tough, Jeb. Yes. Well, let's see, I'm at 42 and you're at three.

BUSH: Doesn't matter.

TRUMP: So, so far I'm doing better.

BUSH: Doesn't matter.

TRUMP: So far I'm doing better.

GOV. CHRIS CHRISTIE (R), PRESIDENTIAL CANDIDATE: I want to talk to the audience at home for a second. If your eyes are glazing over like mine, this is what it's like to be on the floor of the United States Senate. I mean endless debates about how many angels on the head of a pin from people who have never had to make a consequential decision.

[14:15:01] SEN. TED CRUZ (R), PRESIDENTIAL CANDIDATE: I told voters in Texas that I would oppose the federal government having the authority to detain U.S. citizens permanently with no due process. One of the problems with Marco's foreign policy is he is far too often supported Hillary Clinton and Barack Obama undermining governments in the Middle East that have helped radical Islamic terrorists.

SEN. MARCO RUBIO (R), PRESIDENTIAL CANDIDATE: If you're an American citizen and you decide to join up with ISIS, we're not going to read you your Miranda rights. You are going to be treated as an enemy combatant, a member of an army attacking this country.

BEN CARSON (R), PRESIDENTIAL CANDIDATE: It's actually merciful if you go ahead and finish the job rather than death by a thousand pricks.

HUGH HEWITT, CONSERVATIVE RADIO HOST: So you are OK with the deaths of thousands of innocent children and civilians? It's like -

CARSON: You got it. You got it.

WOLF BLITZER, MODERATOR: If the U.S. imposed a no fly zone over Syria and a Russian plane encroached, invaded that no fly zone, would you be prepared to shoot down that Russian plane and risk war with Russia?

CHRISTIE: Not only would I be prepared to do it, I would do it. A no fly zone means a no fly zone.

BLITZER: If there was a no fly zone, you say that potentially could lead to World War III, why?

PAUL: Well, I think if you're in favor of World War III, you have your candidate.

GOV. JOHN KASICH (R), PRESIDENTIAL CANDIDATE: And for the Russians, frankly, it's time that we punched the Russians in the nose. They've gotten away with too much in this world and we need to stand up against them.

HEWITT: Are you ready to reassure Republicans tonight that you will run as a Republican and abide by the decision of the Republicans?

TRUMP: I really am.

(END VIDEO CLIP) BALDWIN: Oh, so much to talk about. Let me bring in Jennifer Ruben. She writes for "The Washington Post" "Right Turn Blog," and CNN political commentator and veteran investigative journalist Karl Bernstein.

So great having you on.

And, Jennifer, out of the gate and beginning with you, you know, really with the exception of Rand Paul, Jeb Bush was the one candidate to really take on Donald Trump head-on. Do you think he scored points with the establishment in doing so?

JENNIFER RUBIN, BLOGGER, WASHINGTON POST'S "RIGHT TURN": I think it's probably a little bit too late and a little bit too little. I think, you know, had he done this from the first debate, he might have maintained his standing.

But I think, unfortunately for him, the electorate has moved on. They're now very good candidates who have gotten up to speed on foreign policy, Chris Christie was one, Marco Rubio is certainly another, and I think it's going to be very hard for him to get back into the race. Now, it's always possible everybody else collapses. But barring that, I don't see that he's going to really be back into the top tier in the - either in Iowa or in New Hampshire.

BALDWIN: OK. Carl, let me pivot to you and talk about Marco Rubio. We sort of anticipated that his, if I may, Achilles heel would be exposed according to his critics, you know, talking about his role in the gang of eight, immigration reform, supporting a pathway to citizenship. How much do you think this, depending on who you're talking about, Achilles heel would hurt him in a primary versus help him in a general election?

CARL BERNSTEIN, CNN POLITICAL COMMENTATOR: That is all about a fight for the soul of a right-wing party, including all of this strong talk, bomb them, carpet bomb them, punch them in the nose, et cetera, et cetera.

BALDWIN: That's a lot of that.

BERNSTEIN: But in terms of Rubio and Cruz, they're going to slug this thing out. They don't like each other. The real sleeper of the night I would say is Christie. And we'll talk about that in a minute.

BALDWIN: OK. But bottom line, this - the what - what we know about Rubio on immigration, will that help or hurt him in terms of this primary election?

BERNSTEIN: It's hard to say. He's got to get through several primaries. And I think that this fight, this mono a mono between him and Cruz has a temperamental aspect. I don't think it's predictive. I think one thing we know about Rubio is that he's a really good debater and it's possible with him to have a true fact-based debate, which is something you don't see in Washington. With Cruz, bomb, bomb, bomb. I'm tougher than you are. Will that play with the right wing of the Republican Party? Probably. But you also got to look at the calendar here, which is in everybody's calculation, which gets to my point about Chris Christie.

BALDWIN: OK. We'll get back to him in a moment.

Jennifer, Carly Fiorina obviously the only woman on the stage, and she referenced gender multiple times, referencing the "b" word, referencing the quote from Margaret Thatcher. Here she was.

(BEGIN VIDEO CLIP)

FIORINA: I fought my way to the top of corporate America while being called every "b" word in the book. Margaret Thatcher once said, if you want something talked about, ask a man. If you want something done, ask a woman.

(END VIDEO CLIP)

BALDWIN: So do you think she scored points by, you know, bringing up her gender or not so much?

RUBIN: Not so much. I think she had a moment after perhaps the first couple of debate performances where she could have really put together a campaign. Instead, she's just had a series of debates, some better than others, and I think she's lacking a message. I think that's why you see her sinking in the polls. I don't think a gender-based argument really is going to work at this point. And she really hasn't advanced as a candidate.

What she's saying now is almost exactly what she was saying in the first debate. You see a level of specificity. And I totally agree with Carl that particularly with Rubio, who knows his stuff, you can see that this is a guy who's, whether you agree with him or not, who is based in the details of foreign policy. With her, it's a lot of surface stuff. I just don't see her catching fire. My suspicion is after New Hampshire she'll probably go away.

[14:20:23] BALDWIN: OK. We're going to have that whole who's going to go away conversation a little later because it's an important one to stay after the debate.

Carl, to you. Chris Christie, I thought he had a huge moment after we saw that back-and-forth between, you know, Rand Paul, Ted Cruz, Marco Rubio, back and forth, metadata, surveillance, immigration. And he was like, listen, let me talk to you people watching. Your eyes are glazing over. I can make decisions. But he's still not huge in the polls. What does he need to do?

BERNSTEIN: Again, first of all, he's looking at New Hampshire and he's on the board in New Hampshire. He's the center right alternative to Jeb Bush. Jeb Bush is fading. And also he is going to get the support of Rupert Murdoch, I'll bet it. And that is going to be a very big deal, I think.

And if he wins in New Hampshire or does well in New Hampshire, it creates some momentum. Trump is going to keep his numbers up, but he also is not going to get the nomination unless something surprising happens that enables him to get a majority, which is very hard to see. But could Christie put it together and he can come after Hillary, bridge scandal or no scandal behind him, because he gets on there with Hillary and he says, liar, liar, pants on fire! And it's a hell of a debate that the two of them could have. So I think watch Christie after this.

BALDWIN: OK. Carl Bernstein, thank you. Jennifer Ruben, thank you as well.

As we mentioned, the Republican frontrunner, Donald Trump, he has just officially landed in Arizona. He'll be holding his first campaign rally ever since that debate last night. The Trump plane has landed. Live pictures in from Mesa, Arizona. We'll watch for what he could say, any jabs he could take momentarily.

Also ahead, after more nan 15 hours of deliberations, the judge denying a request made by the jurors today in Baltimore in that Freddie Gray case. We will take you live to the courthouse. Where does this stand at this moment? This is so important here in Maryland. We'll be right back.

(COMMERCIAL BREAK)

[14:26:15] BALDWIN: Jurors in the high-profile Freddie Gray case are giving it another go today. This is less than 24 hours after telling a judge that they could not agree on a verdict. They're trying to hash this thing out, trying to decide the guilt or innocence on this man right here, this is Baltimore Police Officer William Porter. He is the first of six police officers to stand trial after Freddie Gray suffered a broken neck while being transported in a police van after he was arrested in April.

Miguel Marquez is following the trial for us there in Baltimore. So I want to begin with you, Miguel. We know - we're following, I know, every little tick tock in this - in this whole deliberation. We know the jury sent a message to the judge. What was that about?

MIGUEL MARQUEZ, CNN CORRESPONDENT: They asked him for the transcripts of testimony. The prosecution, during this eight-day trial, heard from 16 witnesses. The defense called 12. So there was lots of testimony produced and lots of transcripts of those. The jurors wanted those transcripts. It's not clear if they wanted the transcripts from one, two, or all of the individuals that gave testimony during this. Remember, there were a lot of experts who gave testimony.

The jury does have access to the videotape, all of this was videotaped, so they can watch all of that, but it's much more difficult, obviously, for them to fast-forward and go through that if they are trying to get one or two jurors to change their minds. So they asked the judge for those transcripts so they could isolate the bits of the testimony that they want to show other jurors and perhaps change their mind. The judge said, nope, only item that have been placed in evidence. So the testimony itself, the videotaped testimony, is in evidence. The transcripts of them are not. The jury can't have them.

Brooke. BALDWIN: All right, Miguel, thank you.

I want to talk about this as we await this decision in this case. I have CNN legal analyst and former federal prosecutor Sunny Hostin with me here and also in Baltimore Monir Buhar (ph). He is also the founder of the local 300 Men March Movement, an organization working to prevent youth violence through community policing.

So great to see both of you.

But, Sunny, first to you. And we were talking about this when this was breaking yesterday, you were describing the Allen Charge and how - let me just get this straight. So since they are still deadlocked, they're back and forth with this message, the judge can send them back to deliberate however many times he wants, correct?

SUNY HOSTIN, CNN LEGAL ANALYST: He can send them back after giving this Allen Charge. Basically what the Allen Charge is, it's, OK, you guys can get together and you can do this.

BALDWIN: Yes.

HOSTIN: You know, keep your mind open. Listen to everyone else's views but don't give up your own views simply because you want to reach a verdict. And so that's basically what the judge in Maryland will do - has done. He can send them back again. And I think that is likely given the high profile nature of the case.

BALDWIN: Yes.

HOSTIN: Considering the fact that the nation is waiting for this verdict. I certainly think that's possible. Will he then send them back two and three and four times? I don't think. Because you have to make sure when you're a judge that the Allen Charge is not a coercive instruction because then you open up on appeal the argument that this judge was - this jury, rather, was forced into a decision. So I think perhaps one more time he'll send them back but no more than that.

But let's face it, Brooke, this is really fascinating in the sense that they were deadlocked yesterday. They got this Allen Charge, again, explaining that they need to go back and continue trying. They came back today. They deliberated for another three hours and then they asked for more information.

BALDWIN: Right.

HOSTIN: And so this is a jury that's working very, very hard towards trying to reach a unanimous verdict, towards trying to reach some sort of consensus. And I think what we're hearing is, some of the jurors probably remember testimony a certain way and there are other jurors that are saying, that's not what I heard. I heard it a different way. And so I think what we're seeing is a jury hard at work, and that is a very, very good sign for this jury.

BALDWIN: The notes, the messages, the questions.

HOSTIN: Sure.

[14:29:57] BALDWIN: So many people in Baltimore are following every single precise move from this jury. I'm sure including you, Monir. I mean you have your ears and eyes to the ground there in the city. So can you just tell me - obviously you can't speak for an entire city, but just for you and your group, what's the sense right now in Baltimore?