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Early Start with John Berman and Zoraida Sambolin

Political Turmoil In U.K. Following Brexit; Secretary Of State Kerry To Visit Brussels, London; Global Market Reaction To Brexit; Clinton Stumps With Elizabeth Warren In Ohio; Brexit Vote, Link To Trump Supporters; Legendary Coach Pat Summitt's Health Declining. Aired 5-5:30a ET

Aired June 27, 2016 - 05:00   ET

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

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[05:00:42] CHRISTINE ROMANS, CNN ANCHOR: Good morning. Welcome to EARLY START this Monday morning. I'm Christine Romans.

KOSIK: Good morning. Another busy morning. I'm Alison Kosik. John Berman is off. It's Monday, June 27th. It's 5:00 a.m. in the east.

ROMANS: All right, political uncertainty rules in Britain this morning following that surprise vote to leave the European Union. No clear candidate has yet emerged to replace the Prime Minister David Cameron, who announced he'll step down in October.

Parliament is meeting today for the first time since that vote as the government tries to ease fears about the economy. Diana Magnay live outside 10 Downing Street with more on the political fallout in the U.K. -- Diana.

DIANA MAGNAY, JOURNALIST: Hi, Christine. We've just seen government ministers go in for their first Brexit cabinet meeting. There is so much on the table, what framework, what will be the future shape of the U.K.'s relationship with the E.U., who, indeed, will be running the government.

David Cameron has me it clear that it won't be until October that there will be a new prime minister, but Tory leadership elections are convoluted processes, and sometimes their results can be as unexpected as referendum results.

We've also had George Osborne, the Exchequer chancellor this morning give a speech before the markets open trying to really communicate a message of reassurance that the British economy is resilient and able to cope with this Brexit shock. Let's take a listen to what he said.

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GEORGE OSBORNE, CHANCELLOR OF THE EXCHEQUER: It will not be plain sailing in the days ahead, but let me be clear, you should not underestimate our resolve. We were prepared for the unexpected and we are equip for whatever happens. And we are determined that unlike eight years ago, Britain's financial system will help our country deal with any shocks and dampen them, not contribute to those shocks or make them worse.

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MAGNAY: It was interesting, Christine, because many people were wondering whether George Osborne's political career would be going in the same direction as David Cameron's. But in that speech this morning, he seemed to make it fairly clearly that he wanted to stay with -- and take a position in a future government in this country.

We've also got turmoil in the Labour Party with half the shadow cabinet resigning on Sunday. Really an expression of their lack of faith in the Labour Party leader, Jeremy Corbyn. He seems determined to fight on and has appointed new people to those posts, even though there is, of course, considerable pressure for him to leave.

There's a meeting tonight at the Labour Parliamentary Party. We'll see what happens. Both political parties in this country, the major parties, in incredible turmoil as a result of this Brexit vote -- Christine.

ROMANS: Yes, the number of times I've read and heard the word unprecedented, too many to count. Diana Magnay, thank you so much.

KOSIK: All right, as we keep an eye on things in London, let's go to Brussels. Secretary of State John Kerry putting his diplomatic skills to the test amid the global uncertainty that's followed last week's Brexit bombshell. Kerry traveling first to Brussels and then to London to consult with leaders on Britain's transition out of the European Union.

A State Department spokesman saying Kerry will reiterate U.S. support for the U.K. and the E.U. as Washington tries to contain the fallout from the Brexit. Kerry is expected to arrive in Brussels in the next hour or so.

Let's bring in CNN international editor, Nic Robertson on the phone. He is live in the Belgian capital -- Nic.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR (via telephone): Good morning. There were two things that Secretary Kerry will be doing here. One, he'll meet first with the NATO secretary-general. Obviously there's a big NATO security summit just a week away. Russia is the big concern for Europe and the United States. No doubt they'll be discussing that.

He'll then come to European Union headquarters to meet with the European Union foreign policy chief.

[05:05:02]Now she has just authored a paper, a document about a more robust, united European defense strategy. This is early European thinking.

So we can see that part of Kerry's visit here will be about the security tie-ups in the United States and Europe in the face of Russian aggression. However, a major part of it will be to address the outfall of Britain's vote.

And he'll be here at a time when European leaders are demanding Britain move quickly to stake its place and begin its exit negotiations from the European Union where Britain at the same time is saying, hold on, slow down. We don't want to do it so quickly.

Secretary Kerry saying it's coming here to help calm the markets and no doubt take his lead, international diplomatic position here to sort of calm the situation on both sides and find a common position between the British right now and the Europeans who are still at the moment holes apart on how and when Britain should begin to negotiate its exit -- Christine.

KOSIK: Interestingly enough, certainly is one of the things that will calm the markets. That is something really nobody has at the moment. Nic Robertson, thanks so much.

ROMANS: Markets hate uncertainty. We have at least two years of uncertainty ahead. Let's take a check on your money this morning. Global markets calming down, I would say, after falling off a cliff on Friday. Dow futures slightly lower. The losses, though, modest at 60 points if this holds until the opening bell. Nasdaq and S&P 500 also slightly lower here.

Let's go to London. The stock market there down about 1 percent. Shares in Paris and Frankfurt also down about 1 percent. That's adding on to those losses from Friday, but certainly not anywhere near the magnitude we saw then.

And then let's look at Asia. Those markets have closed. There was a bounce back there in Tokyo after the Nikkei plunged nearly 8 percent on Friday. A big decline Friday, and then picked up a little bit this morning. Other stock markets in Asia mostly higher overnight.

OK, where was the money going? If it's flooding out of the stock market, where is the money going? Two places. Cash and gold and bonds. The safety here dumping -- dumping their money, putting it into cash or gold and bonds. Gold prices up again this morning after surging 8 percent on Friday.

And look at the yield on the 10-year treasury, 1.47 percent. I mean, you've got yields falling for all the wrong reasons, a rush into safety here. It's one silver lining, though, in the Brexit market chaos.

Mortgage rates in the U.S. are tried to that yield that's tumbling. Home buyers are those who are refinancing will benefit from lower rates for the short term, at the very least.

But Alison, trying to quantify the effect on the U.S. economy of the Brexit is almost impossible. This is one of the United States' strongest and oldest and biggest ally and it's in turmoil. What does that mean for U.S. influence? What does mean for the U.S. economy? We just don't know.

KOSIK: And that is the problem. That is why we saw markets tanked the way they did on Friday. All right, let's get more now on the global market reaction. CNN's Andrew Stevens live in Hong Kong. Andrew, what are you seeing?

ANDREW STEVENS, CNN CORRESPONDENT: Well, it's interesting what Christine was saying about where the money is going. The money has also been going into the Japanese yen, perhaps surprisingly. Even though Japan's economy is weak, the yen is seen as a safe haven currency.

And this, if fact, was the big reason why we saw that massive sell-off in the wake of the Brexit vote on Friday. The Nikkei down 8 percent. Today, we saw it up 2.4 percent and that's because the Central Bank and the prime minister of Japan got together today basically to talk about strategies to keep a lid on the strengthening yen.

A stronger yen means more expensive exports to Japanese companies. That's why you get the hit on the markets. So it was reversed today, the yen coming off slightly and we had that nice little pop in the Asian markets. Pretty much across the board they were up.

Not spectacularly, but certainly it's -- we're in a really strange position at the moment, Alison, because there is nothing more -- nothing clearer now than there was after the Brexit on Friday, after the reaction to the Brexit on Friday. But, yet, the markets here have calmed down bit.

I think it's because we have heard from the Bank of England governor. We've heard from the Japanese governor and we also heard from the English finance minister, all saying soothing, calming words saying we're in control. We've got this, if you like. It's taken the edge off the turmoil at least here in Asia.

KOSIK: Yes, interesting you say that we are seeing cooler heads prevail. Economically nothing has changed but sentiment has changed and sometimes that is everything to get the markets back on track. All right, Andrew Stevens, thanks for that.

ROMANS: All right, so much to talk about, so much to watch. Again watching those markets, not seeing a big resumption of the selling, but it's still early here.

[05:10:04]All right, Hillary Clinton teaming up with Senator Elizabeth Warren going after Donald Trump. Has Clinton found her running mate? Breaking down new developments in the race for president, next.

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ROMANS: Hillary Clinton and Elizabeth Warren taking the fight to Donald Trump together in the key swing state. Clinton will hold a rally in Cincinnati alongside the Massachusetts senator. It's their first joint appearance on the campaign trail as Team Clinton sharpens its general election message targeting Trump. Could this be a preview of a Democratic ticket?

KOSIK: Also there is good news for Clinton in the latest polling. Let's talk about it with Coleen McCain Nelson, White House correspondent for "The Wall Street Journal." First, let's talk about Brexit taking focus on the campaign trail.

You know, we've got Hillary Clinton coming out and talking about this. We've got Donald Trump tweeting about this.

[05:15:03]You know, one thing to keep in mind with this Brexit, David Cameron, many have said, really lost touch of the will of the people there when this referendum came about.

Now you got Hillary Clinton trying to connect with voters here in America because you're seeing parallels being made between the outcome of the referendum and the possible outcome of the presidential election in the U.S. Let's first hear what Hillary Clinton had to say.

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HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: Just as we have seen, there are many frustrated people in Britain. We know there are frustrated people here at home, too. I've seen it. I've heard it. I know it. That's why I've worked hard to find solutions to the economic challenges we face.

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KOSIK: So she is trying to show that she understands the American voter, but then we heard from Donald Trump in the following tweet saying this. "Crooked Hillary Clinton got Brexit wrong. I said leave will win. She has no sense of markets and such a bad judgment. Only a question of time." So this seems to be a competition of who knows the American voter the best.

COLLEEN MCCAIN NELSON, WHITE HOUSE CORRESPONDENT, "WALL STREET JOURNAL": That's right. Donald Trump basically is making the argument that he's in touch with kind of voter unrest and that sentiment is what he thinks will carry him all the way to the White House. You heard Hillary Clinton yesterday in Indianapolis basically saying that she is in touch with voters.

She understands their frustrations, but this is not a time to give in to frustration. She argued that this is a time for steady experience, leadership, and she tried to basically argue that Donald Trump is kind of associated with chaos and turmoil that you're seeing come out of Brexit and saying that this is not what we want to have in the United States.

We want to not add to the tumult but basically calm things down and she is saying that she would be a steady leader during a situation when there is a lot of turmoil.

ROMANS: What we saw from those British voters, quite frankly, working class voters, is a backlash to globalization. And Clinton and brand Clinton has been associated with globalization from the beginning, NAFTA through all kinds of trade agreements and the like.

The kind of alliance between the business community and western democracies and globalization is something that has been the second half of the 20th Century, it's just been the way it is. Are we underestimating the working class voter backlash to that, and could that really be the story of this election?

NELSON: I think that's a great question. That's exactly what -- that's exactly the question that will be tested come November. Hillary Clinton is trying to walk a fine line here and trying to make the argument that globalization is not all bad.

And that there are positives to this, but she also has kind of moderated her opinion on some of these things. You've seen her come out against some trade agreements. You've seen her shift or position on the Transpacific Partnership. Now she's against that when she was secretary of state. She called that the gold standard of trade agreements.

So she's trying to walk a careful line here and say that the answer is not the Donald Trump response and say we don't want to close our borders. We don't want to cut ourselves off from the world.

But we -- as you know, this sentiment was underestimated ahead of the Brexit vote, and polls show polls got it wrong in the U.K. It's not clear whether we really have a handle on voter sentiment in the United States at this point.

KOSIK: OK, turning from Brexit to GOP, we are seeing more prominent or so-called prominent GOP members either leaving the GOP or speaking out against Donald Trump. You've got George Will saying he's leaving the Republican Party because of Trump and then we have Senator Mitch McConnell being very outspoken as well. Listen to what he had to say.

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UNIDENTIFIED MALE: Do you believe he's qualified and how do you convince all those voters who think he isn't?

SENATOR MITCH MCCONNELL (R), MAJORITY LEADER: I think there's no question he's made a number of mistakes over the last few weeks. I think they're beginning to right the ship. It's a long time until November and the burden will be on him to convince people that he can handle this job.

UNIDENTIFIED MALE: I didn't hear you say whether you thought he was qualified.

MCCONNELL: Look, I leave it to the American people to decide.

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KOSIK: So you've got these GOP members defecting from Trump. Does it really matters to voters which GOP members rally behind him or not? I mean, Trump is a lone ranger anyway, right?

NELSON: Right. A lot of Trump voters are already frustrated with the so-called establishment and so Mitch McConnell certainly is part of that. But it is notable how many prominent Republicans are still having a lot of heartburn about Donald Trump and it's not getting better.

[05:20:06]As you voted, George Will, departing the party and Mitch McConnell came out a couple of months ago and he gave kind of this tepid endorsement of Donald Trump then he later refused to say that he wouldn't rescind the endorsement if Trump continued to say controversial things.

Now you have him refusing to say that Trump is even qualified to be president. And so this probably doesn't matter for the diehard, already decided Trump voter who is wanting to shake up the status quo. But there are still some undecided voters out there.

Donald Trump certainly needs to make inroads with independents and when voters see how troubled Republicans are about their own nominee that may be something that they consider as they decide when to vote for in November.

ROMANS: All right, Colleen up early for us this morning from "The Wall Street Journal." We'll talk to you again very, very soon. Thank you, Colleen.

Emotions running high this weekend in Cincinnati as the Reds honored Pete Rose's number 14. Andy Scholes with the details in the "Bleacher Report" next.

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ROMANS: All right, some sad news to tell you about this morning. The family of legendary basketball coach, Pat Summitt says her health has declined in recent days.

KOSIK: Andy Scholes has more in this morning's "Bleacher Report." Good morning.

ANDY SCHOLES, CNN SPORTS CORRESPONDENT: Good morning, guys. Pat Summitt retired from coaching Tennessee in 2012 after announcing that she was diagnosed with early onset dementia. Her family says the disease has progressed over the last few days and once the news broke yesterday, #prayforpat began trending on Twitter immediately.

Summitt coached 38 seasons, won eight national titles at Tennessee. She has more wins than any college coach, male or female. To this day, Summitt continues to hold a position as head coach emeritus of the Tennessee women's basketball team.

The Cincinnati reds officially retired Pete Rose's number 14 yesterday capping a huge weekend for baseball's all-time hits leader on Saturday. He was inducted into the team's Hall of Fame, not the one in Cooperstown. He's still has a lifetime ban from that one for betting on his team. By the way, the only other player to wear 14 for the reds was Pete Rose's son, Pete Jr.

All right, and finally a shocker from the U.S. Olympic swimming trials. Ryan Lochte failed to qualify for the 400 meter individual medley last night. That's the one he won gold at the 2012 Olympic Games. He pulled his groin earlier in the day and that could put his Rio Olympic dreams in jeopardy.

Michael Phelps, meanwhile, he is going to try to qualify for Team USA starting tomorrow with the 200-meter butterfly. The swimming trials, one of the best pre-Olympic events out there. It's so exciting.

ROMANS: Wow, OK, Andy Scholes. Thanks for that, Andy. Talk to you soon.

Political and financial chaos across Europe reeling from the Brexit. What it means for the E.U., for Britain, and for your 401(k). That's next.

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