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U.S. Stocks Set to Drop After Opening Bell; Candidates Begin Final Push to Iowa; Rising Tension between Saudi Arabia and Iran; Hillary Clinton Confronts Heckler in New Hampshire; Aired 9-9:30a ET

Aired January 04, 2016 - 09:00   ET

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

[09:00:00] DEBORAH FEYERICK, CNN ANCHOR: Good morning, everyone. I'm Deborah Feyerick in for Carol Costello. Thanks so much for joining us.

Investors on edge this morning. U.S. markets bracing for a very rough start to the new year. 30 minutes out from the opening bell, and futures are way down.

CNN's chief business correspondent Christine Romans is with me now.

And, Christine, this is the first time that China has ever had to stop trading. What is going on there?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: That's right. Chinese stocks slammed overnight. Their first trading day of the year slammed sharply because of a factory output number. A manufacturing number in China that was weak, less we heard than people thought, showing for 10 months in a row. Factory activity in China has been shrinking that. That spread around the world quickly.

Look at Shanghai, those stocks, they were halted at 7 percent down. Then Tokyo fell. Then they spread to Europe, Frankfurt down almost 4 percent. Paris down and London, as well. So selling, dumping of stocks around the globe. And buying safe havens, like gold and bonds.

There is a second factor here. China is the big driver, just like last year. China was a big driver all year. China, the big driver to start this new year. But there's a second factor. Saudi Arabia and Iran, deepening, dangerous tensions between those two countries. Boiling into this sort of global unrest, global tensions, and that's keeping stock market investors, having them heading for the exits here.

FEYERICK: And it's very interesting because when you see it happening in China, you think, well, there's got to be something inherently going on in China that would lead to this sort of spiral effect throughout the country. But how deep is China's economy in trouble right now? Because they've been putting so much out there. Millions of workers right now are at risk of losing jobs. That creates uncertainty, that creates instability, they're trying to overhaul their economy on some level.

ROMANS: They are trying to also overhaul their economy and trying to overhaul the regulation of their stock market, as well. Right? So one of the reasons, the first time you've ever seen stock market curbs put in in China, is because this is them trying to modernize their stock market. Right? So you have them halting trading to kind of get control of all the selling here. It's going to be a big test for China going forward.

But we know China is the factory floor to the world, quite frankly. And we know that the factory floor has been slowing a little bit and because it is such an inter-connected world market, that is why you're seeing concerns here this morning.

We're watching oil markets, too, very carefully, because of what's going on in the Middle East. That'll be important to watch. But for right now, selling stocks going into oil, going into bonds, the market opens in 28 minutes. And the last read on the Dow was it could be down almost 300 points.

FEYERICK: Right. So fear not exactly the best way to start out the new year. But, Christine Romans, thanks so much.

ROMANS: You're welcome.

FEYERICK: We'll be checking in with you a little later on in the broadcast. Thank you.

And now to the race for the White House. And with just 28 days until the Iowa caucuses, the men and women who would be president are making their closing arguments to voters that they need to make it to Washington and get the job done.

For frontrunner Donald Trump, that includes a new ad combined with a familiar attack on his Democratic rival, Hillary Clinton and her husband, Bill Clinton. He spoke to CNN's Chris Cuomo about why Mr. Clinton's past indiscretions are in fact relevant to the 2016 campaign.

(BEGIN VIDEO CLIP)

CHRIS CUOMO, CNN ANCHOR: Years ago, you said Monica Lewinsky, they shouldn't have chased after her like this. Bill Clinton's sex life shouldn't be an issue. Now you're saying it's like one of the main issues. How is the voter supposed to see you for that?

(CROSSTALK)

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: No, no. I tried to help him a little bit because they were -- it was important for me as secretary of state, as a senator, to have all these people on my side. I needed votes for things. I got many things done. I needed votes. And I would have these people on my side. So I wasn't going to get involved in the Monica Lewinsky thing, and I wouldn't get involved in it now.

CUOMO: You're bringing it up.

TRUMP: I don't really care about Monica Lewinsky other than I think that, you know, Hillary was an enabler and a lot of things happened that were, you know, obviously very seedy. I mean, he was impeached, for heaven's sake.

(END VIDEO CLIP)

FEYERICK: And CNN's Athena Jones is in New Hampshire for us.

Interesting conversation there. What are you seeing, Athena?

ATHENA JONES, CNN CORRESPONDENT: Hi -- hi, Deb. It is interesting to hear Donald Trump have to explain why he's changed his tune when it comes to the importance or lack of importance of Bill Clinton's past indiscretions. And this kind of scrutiny on him and other candidates is going to continue.

This is that new phase in the race. The holidays are over. Voters are paying more attention. The candidates are ramping up their activities. And in many cases, the race has already gotten more heated and more personal.

(BEGIN VIDEOTAPE)

JONES (voice-over): Just four weeks from the first contest in the 2016 presidential election.

[09:05:01] TRUMP: If we win Iowa, I think we're going to win everything after that.

JONES: GOP candidates scrambling to build momentum ahead of the high stakes Iowa caucuses.

JEB BUSH (R), PRESIDENTIAL CANDIDATE: Donald Trump, I don't believe is going to be the party's nominee. If he is, he's going to get crushed by Hillary Clinton.

JONES: As Jeb Bush grapples with dwindling poll numbers.

Trump leads the pack, accusing his biggest Iowa rival Ted Cruz of copying his immigration plan.

TRUMP: He said, we will build a wall, the first time I've ever heard him say it. And I'm the one that came up with it.

JONES: Trump slamming Cruz on religion in the battle over evangelical voters.

TRUMP: Cuba generally speaking is a Catholic country, and you don't equate evangelicals with Cuba.

BILL CLINTON, FORMER U.S. PRESIDENT: She's the best qualified person for the time.

JONES: And as President Clinton readies to hit the campaign trail, Trump taking digs at Secretary Clinton, drudging up her husband's past, tweeting Saturday, "I hope Bill Clinton starts talking about women's issues so that voters can see what a hypocrite he is, and how Hillary abused those women." And Sunday night, tweeting, "The worst thing Hillary could do is have her husband campaign for her. Just watch."

After appearing in this terror propaganda video, Trump pointing the finger back at his Democratic rival in front of a crowd in Biloxi.

TRUMP: Hillary Clinton created ISIS with Obama.

JONES: Shrugging off what critics say is his anti-Muslim rhetoric.

Meanwhile, the Carson campaign struggles to overcome a major shakeup. Three top aides resigning in one day.

DR. BEN CARSON (R), PRESIDENTIAL CANDIDATE: Now we're in a different ball game. And we need the ability to execute.

(END VIDEOTAPE)

JONES: Now with just a few weeks to go, this is not the time you want to be making big adjustments to the campaign. But of course we know that in politics a lot can happen in the course of a month. And these candidates are going to be crisscrossing the country, trying to make their case to voters. We'll be following as much of it as possible -- Deb.

FEYERICK: All right. Athena Jones, it is definitely go time out there on the campaign trail. Thanks so much.

And Trump may be attacking him, but Bill Clinton is not staying away from the campaign trail. He's making his first solo appearance this cycle. Appearing in New Hampshire later today. Bill Clinton, of course, no stranger to the Granite State. A second place finish in the state's primary for him back in 1992 gave Clinton a major boost, labeling him the comeback kid.

Hillary is not just taking hits from Trump on her husband. The Democratic frontrunner pushing back at a heckler, who interrupted one of her campaign events, taking shots at her husband's sex scandals. Listen.

(BEGIN VIDEO CLIP)

HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: Just -- just -- well, I'm going to call on people. I'm -- wait a minute, I -- I'm not going to take your question because other people have been -- yes, go right there. This man right there in -- here we go. Right there. You are very rude and I'm not going to ever call on you. Thank you.

(END VIDEO CLIP)

FEYERICK: So let's bring in CNN's senior political correspondent Brianna Keilar. She didn't shy away from that one, calling that woman out.

BRIANNA KEILAR, CNN SENIOR POLITICAL CORRESPONDENT: No, that was one of the more testy exchanges, if not the testiest exchange, certainly that we've seen at a campaign event, for sure, Deb. But Bill Clinton is going to be here at National Community College next hour. This is his first of two events today. The second will be at the Exeter New Hampshire town hall, where he'll be talking to organizers and volunteers, trying to get them ready to go for primary day.

The campaign very much views Bill Clinton as an asset. You look at how he plays overall nationally in the polls. He's at about 60 percent, an enviable position certainly Hillary Clinton would say. And so she's trying to use him to her benefit at a crucial time in this state where it's a very competitive race.

Bernie Sanders, Hillary Clinton, neck and neck. And it's been that way pretty much since the summer. She's really trying to pull ahead and she's hoping that her husband, with his popularity nationally, and in this state, can help her do this. But Donald Trump clearly trying to rile up his supporters and undercut Bill Clinton as an asset.

Also, he has been pushing back lately on this idea that many Republicans think, which is if you hit Bill Clinton, it doesn't necessarily hurt Hillary Clinton. Donald Trump saying that he doesn't think that's necessarily the case. He looks to 2008 and he thinks that his strategy is going to work here, Deb.

FEYERICK: And so, Brianna, it was interesting to see that woman and sort of the anger. You've been out on the campaign trail for a lot. And have you ever seen something like this? Tell us more about the woman who interrupted Hillary Clinton yesterday.

KEILAR: You know, I haven't really seen anything quite like this when it comes to Hillary Clinton. But just to give a little context, this is Katherine Prudhomme O'Brien. She is a Republican state lawmaker here in New Hampshire in the Derry which is where Hillary Clinton was yesterday.

[09:10:03] And she has been known to go to events not just for Democrats, and speak up, basically what you saw yesterday, heckle or shout questions.

CNN actually caught up with her yesterday to talk about why she did this. And here's what she said.

(BEGIN VIDEO CLIP)

KATHERINE PRUDHOMME O'BRIEN (R), NEW HAMPSHIRE STATE REPRESENTATIVE: Because of this stuff, because of what I saw happen in the Clinton years. This was the hypocrisy of so-called women that fight for women. The height of hypocrisy.

(END VIDEO CLIP)

KEILAR: But like I said, Prudhomme O'Brien isn't a stranger to events like these or exchanges like these. Back in 2007, she confronted Rudy Giuliani. And back in 1999, talking about the same thing, Bill Clinton's past indiscretions. She actually had an exchange with Al Gore about very much the same thing.

FEYERICK: And Hillary Clinton could have gotten easily rattled but certainly deflected by something, calling her rude, and moving on. Interesting exchange.

Brianna Keilar, thank you so much.

So much happening in politics. Here to discuss a very busy political news day, Republican strategist and conservative writer, Kayleigh McEneny, and CNN political commentator and "Daily Beast" columnist, Sally Kohn.

Sally, Bill Clinton is back on the campaign trail. And he's getting withering criticism from Donald Trump. Does he engage, take on Trump's criticism of him and his relationships with women, or does he simply do what his wife did, say he's rude and pat and move on?

SALLY KOHN, CNN POLITICAL COMMENTATOR: Well, first, let's pull back the covers here and look at what Donald Trump is trying to do. Donald Trump has a documented record of sexism. And that's a word you don't want to throw around, but he's earned it. Right? He's calling women fat pigs and slobs and disgusting animals. A whole recent hail of sexist comments thrown at Hillary, calling her disgusting. The schlonging incident, obviously.

So those were starting to stick and those were going to hurt him with women voters, and frankly in this day and age, males voters, too, who just don't like this sort of thing.

KAYLEIGH MCENENY, REPUBLICAN STRATEGIST: Sally --

KOHN: Not to mention -- hang on. Not to mention, by the way, the Republican policies he supports, which are also hurting women. So instead -- to deflect from all of that, he now wants to say, oh, Hillary Clinton, who may be our country's first female president, oh, she's the sexist because of the actions of her husband. Nobody is buying it. It's ridiculous.

FEYERICK: So, Kayleigh, Kayleigh, let me ask you a question in terms of, if we see Donald Trump -- and if we see Donald Trump and Hillary Clinton debating, if they're the nominees, then what does that debate look like? Because this may be an issue now, but does it translate on to a podium when they're talking about real things?

MCENENY: No, it doesn't. Because what you're going to see from Donald Trump is boldness when it comes to Hillary Clinton. Hillary Clinton is unconfronted when it comes to Benghazi, when it comes to her e-mail scandal, when it comes to quid pro quo corruption in the Clinton Foundation. These are all viable questions that have not been asked of Hillary Clinton in a debate format.

And you will see Donald Trump pointedly attack her for these things. It's no wonder she has nearly a 70 percent untrustworthy rating among Americans because people don't trust her. And Donald Trump will hit her on those issues.

And Sally, to say that Donald Trump has a documented record of sexism, false. Sexism is when you treat men and women differently. Donald Trump, for better or worse, attacks both men and women. It's part of her persona, it's what he does. It's not sexism. Sexism, however, is what we have seen Bill Clinton exhibit when he

preyed on a 20-something-year-old in the White House. When he allegedly raped two women. Allegedly. Two rape allegations. Those are viable questions when it comes to sexism, Sally. To just throw that word out there about Donald Trump is false and is wrong.

FEYERICK: This is a word that we can talk about a lot. The interesting thing also, you talk about whether people trust Hillary Clinton. I think it was Chris Cuomo, who notably after the interview with Trump this morning, said morality shifts based on your motivation, and that's possibly something that Trump is going to have to deal with. But as we segue into this next topic, that is Trump has released his first TV ad. Heavy on national security.

Let's take a look.

(BEGIN VIDEO CLIP)

TRUMP: I'm Trump and I approve this message.

UNIDENTIFIED MALE: The politicians can pretend it's something else, but Donald Trump calls it radical Islamic terrorism. That's why he's calling for a temporary shutdown of Muslims entering the United States until we can figure out what's going on.

He'll quickly cut the head off ISIS and take their oil. And he'll stop the illegal immigration by building a wall in our southern border that Mexico will pay for.

TRUMP: We will make America great again.

(END VIDEO CLIP)

FEYERICK: So, Sally, you look at this, Donald Trump is reversing his position, saying he never would buy television ads. Now he's come out with one that exceptionally is strong. And I'm going to ask you the same thing, Kayleigh. What do you think -- who does this appeal to and what is the end game in terms of what he hopes to convey?

KOHN: Well, look, I mean, this is -- this is turning out to be an election where both sides are sort of trying to mobilize their base and, unfortunately, this is going to be an election that -- voters have to decide, are they on the side of hope or are they on the side of fear.

[09:15:13] And Donald Trump is sort of courting fear. I mean, you see what he's played into right there. The larger conversation is, and I hope other Republicans, by the way, will come out and stop defending this very dangerous man and his positions, but look, we know that whether Hillary was right or not, he just appeared. Donald Trump was just used in a terrorist recruiting ad. We know that what he's saying is not only stoking fear among Americans, it's actually bad for America. It's bad for Republicans.

He can't win. He's just going to -- he's just going to make Americans more afraid. He's going to make his base more afraid. And sure, they're going to support him. But to what end?

FEYERICK: So, Kayleigh --

KOHN: To ruin our country.

FEYERICK: And, Kayleigh, how do you see this ad, as being perhaps a powerful recruiting tool to get voters to go to the polls for him?

MCENENY: It's a powerful ad. Look, there's no -- make no amends about it. When you look back, we've had seven years of a president who has extended himself to the Muslim world. He gave that speech in Cairo. He called Islam a peaceful religion. He made overture after overture to the Muslim world.

And what have we gotten? Last year a "New York Times" reported study said terror deaths have increased by 80 percent. People are scared and rightfully so.

(CROSSTALK)

MCENENY: Sally Kohn, rightfully so. And by the way --

KOHN: I'm sorry but I can't sit here while you say those things. Islam is a peaceful religion.

MCENENY: No --

FEYERICK: Wait.

KOHN: There are 1.5 billion Muslims in this country. And to demonize an entire religion is un-American.

MCENENY: No, I'm not demonizing -- I'm not demonizing an entire religion.

KOHN: You just didn't.

MCENENY: There is a strand called radical Islam that began in the early 1900s.

(CROSSTALK)

KOHN: You don't demonize radical Islam.

MCENENY: By a man named Sayyid Qutb. There is a strand of Islam that is radical.

FEYERICK: Donald Trump, Donald Trump has been very clear about that, now saying he's going after extremist Islam.

MCENENY: Exactly.

FEYERICK: And so -- but the problem is --

(CROSSTALK) FEYERICK: Is by saying he's going to ban all Muslims, it sets the expectation that one Muslim is equal to another, and that certainly a lot of people who are going to go to the polls are not going to see that as equating and some will. So that is to be seen.

Kayleigh McEneny and Sally Kohn, thanks so much. We appreciate your insights and the passion you both bring to this argument.

KOHN: Thanks, Deb.

FEYERICK: Thank you.

And still to come, deterring relationships. Two more Middle Eastern countries scaling back ties with Iran. It's a tense situation about to get even worse.

(COMMERCIAL BREAK)

[09:20:41] FEYERICK: Relations quickly deteriorating between Middle Eastern powerhouses. The United Arab Emirates just downgraded their diplomatic ties with Iran. Bahrain went a step further and joined with Saudi Arabia to totally cut ties with Tehran. Giving diplomats 48 hours to leave their countries.

The situation quickly started boiling over after Saudi Arabia executed 47 alleged terrorists, including dissident Shiite Cleric Nimr al-Nimr. Then Iranians retaliated.

And this weekend, protesters in Tehran hurled Molotov cocktails and cheered as they torched then raided Saudi Arabia's embassy.

CNN chief international correspondent Christiane Amanpour is live in London with the latest.

Christiane, just to put it in context, the Saudi monarchy is Sunni. Iran is Shiite. The fact that Saudi Arabia would execute, behead, 47 people, isn't that sort of a call to escalate tensions on some levels?

CHRISTIANE AMANPOUR, CNN CHIEF INTERNATIONAL CORRESPONDENT: Well, this speaks here quite a lot of those people who were executed, the Saudis say, had been convicted of violent al Qaeda related and other terrorist crimes. The Shiite cleric, though, is not in that same area, although the Saudis accused him of terrorism. He has been against the monarchy because he has wanted more rights for the Shiite minority in Saudi Arabia. So he has been trying to lobby for that. Yes, he's been an activist, but he's also always said that he has had nothing to do with either violence or propagating violence.

So Iran is very angry that that particular Shiite cleric was dragged into this group execution, which did include other terrorists. Convicted terrorists.

Now on the other hand, people are condemning what happened by Iran because violating another national's embassy is against international law. Now in Iran, of course, there are also divisions. We've seen it in tweets. We've seen the president, the moderate president Hassan Rouhani, tweet that the storming of the embassy was unjustifiable. He called those who did it extremists. Hid own people, he called those who did it extremists and they have put the Interior Ministry and other police forces on to the case. And already, we understand according to media reports, that some 40 people in Iran have been arrested. And the government is trying to calm tensions.

On the other hand, you have a tweet sent out by the Iranian supreme leader, who is more hard lined, who has compared Saudi Arabia to the other face of ISIS. Calling ISIS in Syria black ISIS and ISIS in Saudi Arabia white ISIS. So that's what's going on.

But you're right, Deborah, the real underlying tension is this struggle, this adversarial relationship between Iran, which represents the Shiites of Islam and Saudi Arabia, which represents the Sunnis of Islam. And Saudi Arabia, very angry that Iran has been -- you know, started to be reintroduced as the community of nations by this nuclear agreement with the United States and other world powers.

FEYERICK: And you talk about the nuclear agreement, but there was -- there's something else at foot because the U.N. is trying to broker some sort of a peace deal with Syria, bringing all sides to the table to try to ease the sectarian tension. But we see it sort of escalating in other countries around them. What is the U.S.'s position now?

AMANPOUR: Well, look, it's all very, very complicated. There's no doubt about it. Particularly because of Syria and the ISIS phenomenon, of course, in Iraq, as well. And until the nuclear agreement between Iran and the rest of the world, Iran was cut out of any kind of Syria discussion. But the latest attempt by the United States was to get Iran, which backs and has supported Assad and the Shiite minority in Syria, as well as Saudi Arabia, which backs the Sunni rebels, who are arrayed against Assad, to get them and all the other interested parties to try to figure out an end to the Syria conflict.

This obviously complicates that effort, which has not been going on so well anyway. The fighting has been continuing, even since the so- called Vienna political -- process was convened by Secretary of State John Kerry. And also of course, you've got interests in Iraq, where Iran backs the majority Shiite, which is the government there, and Saudi Arabia, the other side.

[09:25:03] And you've got the same issue -- a similar issue in Yemen, as well, where both of these countries back opposing forces. So it is very complicated and it complicates the idea of trying to have any political resolution to these fires that are raging in that region.

FEYERICK: Yes. Fires indeed. And interesting because the sheikh also was an outspoken critic of the kingdom, and that's something you never do.

All right, Christiane Amanpour, thank you so much. We appreciate it.

AMANPOUR: Thanks, Deborah. FEYERICK: And still to come, it is looking like it could be a very

ugly day on Wall Street. What this means for you. Opening Bell just moments away.

(COMMERCIAL BREAK)

FEYERICK: And good morning, everyone. I'm Deborah Feyerick in for Carol Costello. Thanks so much for joining me.

The Opening Bell is about to be rung. The U.S. market will be reacting to that global selloff. Christine Romans is with me now.

And, Christine, a lot of people right now trying to figure out, what should they be doing with their accounts?

ROMANS: Happy new year, right? You're opening the new year with selling around the globe. It started in China. A 7 percent decline in Chinese stocks. That spread to Europe, where you had big declines in Europe. But now we're expecting maybe a 300-point decline at the open of trading in the U.S.

Here is what the trigger. China had a manufacturing number that was weaker than expected. Showing factory output for China slowing for the tenth month in a row. That sparked concerns about just the strength of China as a consumer and producer and what that's going to mean for the rest of the world. That spread quickly to Europe, and so you have selling in stocks and buying of things like gold and bonds. Those are fearful trades. So there is fear reigning in the market beginning this year. We're seeing the Dow down about --