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Wild Swings In Dow After Monday's Record Drop; Trump Must Decide On Dems' Memo By End Of Week; Growing Calls For Trump To Release Dem Rebuttal Memo; Bannon's Subpoena Delayed Until Next Week. Aired 11-11:30a ET
Aired February 6, 2018 - 11:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
BRIANNA KEILAR, CNN ANCHOR: Hi, there. I'm Brianna Keilar in for Kate Bolduan. Buckle up for another white-knuckle ride on Wall Street. Today, just 90 minutes after the opening bell, the Dow has bounced violently in and out of the red.
The volatility coming just one day after suffering its largest single day point loss in history. It also erased all the year's gains and raise the political stakes for a president who seized credit for its breathtaking climb recently.
I want to begin this hour at the New York Stock Exchange. That's where we find CNN money correspondent, Cristina Alesci. Cristina, tell us how things are looking and what the mood is like?
CRISTINA ALESCI, CNN MONEY BUSINESS CORRESPONDENT: When I walked in this morning, it was red across the board. In fact, it looked like a -- it actually was a correction at the open. That is a 10 percent drop from the most recent high. Stocks bounced back from there.
And now we're just bouncing around. In fact, the main story today is that volatility is clearly back in the market. In fact, if you look at the volatility index it has hit the highest level in about two years.
Now, look, I know this looks scary on the screen, but many investors say this is a perfectly normal thing to happen. If you really think about it, we've had a stock market rally for eight years now.
And the markets are overdue in many metrics for a correction here and you layer on top of that a very strong jobs report, which we had last week that showed wages were increasing, that stoked fears that the fed would actually raise rates faster than anticipated.
2And that would drive some investment actually out of bonds and into other assets like -- sorry out of equities and into other assets like bonds. So that's what's going on here. Look, it is anybody's guess as to what happens from here.
We could see another drop. I spoke to some investors today who said stocks are still relatively overvalued to their historic averages, especially when you look at the price relative to how much the earnings they're throwing off.
So, there are a lot of factors to monitor here. Certainly, a bumpy ride, but for most viewers at home, they shouldn't probably -- this is something that Christine Romans talked about all morning, most investors probably shouldn't be paying attention to each little movement in this stock market.
This for right now seems like a pretty healthy correction and one that was overdue. What investors don't like to see are these sharp dips like the ones that we saw yesterday at 3:00. That's concerning and there are some indications that it may have been caused by some technicalities, probably computer trading, that sort of thing -- Brianna.
KEILAR: Interesting. All right. Cristina Alesci, thank you so much for updating us from the floor of the stock exchange there.
I want to bring in our panel to discuss this more. We have CNN chief business correspondent, Christine Romans. We have CNN global economic analyst, Rana Foroohar, and Diane Swonk, chief economist at Grant Thornton. OK, Christine Romans to you, what are you looking for this morning?
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Well, you know, I'm watching to see if this thing bottoms and so far it looks like it has here. But I'm hearing from folks that some of these online trading outlets weren't able to accept trades. You're hearing from regular investors that they weren't able to sell or in some cases buy.
So, you still might have some price discovery as we call it happening here overall. I would caution people here that this could be bumpy for a bit. You know, corrections sometimes can take a long time. We haven't had one in a couple of years.
That one lasted I think like a month of trading where you saw some recoveries, but then setbacks as well so watch for that. That's I think really important. And also remember the Dow is just 30 stocks, so we talk about the biggest point loss ever for the Dow.
Remember it was a 4.6 percent decline yesterday. That is not even the top 20. The S&P 500 is really what you want to keep watching, that's the broader stock market gauge, that's what the experts watch, it has 500 stocks in it, it is an index, not an average. That is still up 20 some percent since the election.
I don't know where we go from here. No one knows where we go from here. This is a bull that's long in the tooth, but the economy is strong. And I think that's really important to remind people. The economy is strong and that's one of the reasons why the stock market is having trouble here because of what that means for the bond market.
KEILAR: Rana, what are you keeping your eye on?
RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: I'm actually looking at the bond market. We're spending a lot of time on stocks and that's totally understandable. Most of us have a lot of our money in the stocks. But there is as Christine has said, there is going to be a lot of volatility.
It's going to be up and down for weeks, maybe even months. The bond market is what a lot of smart investors look to, are bond yields going up or down. That will tell you a lot about what the long-termer term inflation expectations are, and inflation is a big deal.
You know, if you look at what has kept the market so high over the last few years, it has been a (inaudible) of pretty decent global growth, low inflation, and low interest rates. We're now moving into a world potentially of higher inflation and higher interest rates.
[11:05:02] How fast that happens and whether or not the economy overheats, whether or not you start to get asset prices falling and then people feeling, you know, a little less confident about the amount of wealth that they have, and then buttoning up their wallets, not spending as much, all of this stuff is connected, and you can tell a lot from the bond market today.
KEILAR: Diane, what -- if the market is stabilizing today, then what does that mean? Does it mean anything or is it going to be a much longer picture as we saw Christine talk about, this correction can take some time?
DIANE SWONK, CHIEF ECONOMIST, GRANT THORNTON: I think Christine is exactly right. I think what we saw was leading up to this an extraordinary amount of complacency. Christine hit the nail on the head talking about the automatic trades that went on, and there were no breaks to be able to even get into the markets to stop them.
And I think that's really important because we really had a lot of investors, what I say were driving without their seat belts on. They weren't protecting themselves against the downside and that meant the downside was even larger when these automatic trades kicked in.
I think there is another point here that's very important that we saw and that was the point of the bond market, that is the key. Over the longer haul, the idea that we have growth with the price, that we are seeing a warming trend in the economy, we don't want to see a heat wave.
As long as it is a warming trend, we can observe the higher interest rates that is expected, that's more normal. But if we get a flare-up because tax cuts or additional stimulus at this late stage of the game allow overheating, then we have a larger problem down the road where we have growth today at the expense of growth later in the cycle.
KEILAR: I wonder if you can, Dianne, fact check something for us because, you know, we see some Democrats who are pointing at the tax overhaul and they're saying this is why we are seeing this. We actually saw stock prices rise on anticipation of tax cuts. Now saying this is why we're seeing this correction. What do you think about that, Diane?
SWONK: I think it is a confluence of events, the perfect storm. We had some very good economic data which reinforce views that the fed was not maybe gradually raising rates but maybe more aggressively. We've had synchronous world growth.
This is not just happening in the U.S. We're seeing the idea that inflation will pick up again and wages will pick up again is a global phenomena. You put on top of that that we are taking on more debt.
The Treasury announced last week that they're going to have to issue more debt at the same time that the fed is not playing the role it once did in putting a ceiling on those long-term rates. And all of that came together to give us the market we have today.
I don't think putting any one excuse on it or one blame is the way to look at it, it was a confluence of events that frankly the market had a hard time pricing up until this point.
KEILAR: Rana, what do you think?
FOROOHAR: Well, I would love to jump in on that because, you know, I completely agree with all of that. There is not just one trigger to what is happening the last couple of days. I think the Democrats actually have a fair point when they say that, hey, did we really need any extra stimulus, did we need that stimulus of a tax cut at this point in a recovery cycle?
We have been in a recovery since 2009. May not feel like it to most of us, but we have been. In some ways we're actually due in the next few years for a slowdown. If you look at recovery cycles tend to last about 10 years, that's where we are. The president, of course, wanted to -- that's what he ran on.
And of course, Republicans want to get through the midterm elections with growth being strong and people feeling wealthier. So, I think that there is a question about whether tax cut was an appropriate policy right now.
KEILAR: Christine, final word to you as we kind of buckle our seat belts here potentially today and in the coming days.
ROMANS: I always say if you're trying to figure out the login for your 401(k) on a day when the market is swinging triple digits, you have not listened to anything we have ever said. Please don't do that. Just be careful and know if you're close to retirement, don't have everything in the stock market.
The younger you are, you can be buying stocks right now. History has shown us big pullbacks, stocks tend to do better. Warren Buffett says don't bet against the United States stock market because over time, it tends to do very well.
But in the near term, if you need the money, you need to use the money today, don't have it in the stock market if it is anything other than risk capital or in a 401(k) or some place that is a retirement account. Don't be making big trades when the market is down, you know, 1,100 points. That's simply just crazy,
KEILAR: Chill out, says Christine Romans. Thank you so much, Rana Foroohar, Diane Swonk. Appreciate all of your insight. Coming up, the clock is ticking for President Trump after the House Intel Committee unanimously votes to release the Democratic response to the controversial Nunes memo. The president now has just days to act. So, will he clear its release? We will be live at the White House.
Plus, President Trump calling on Democrats who didn't cheer for his state of the union address. He called them un-American and treasonous. We're going to ask lawmakers from both sides of the aisle how they feel about that. Stay with us.
KEILAR: The clock is ticking at the White House where President Trump has until the end of the week to decide if he'll fight the release of a memo from Democrats. It challenges strong accusations made by the Republican counterparts on the House Intelligence Committee.
Chief among them, that the Justice Department abused its authority in the Russia investigation. President Trump has wholeheartedly embraced that GOP memo saying that it totally van vindicates him.
CNN's Kaitlan Collins is at the White House with more -- Kaitlan.
KAITLAN COLLINS, CNN WHITE HOUSE REPORTER: Yes. Brianna, we are actually learning a little bit about this. We know that the memo is over here at the White House. The president has five days to decide whether or not he's going to block the release of this memo.
A source familiar with the process just told my colleague, Jeremy Diamond, that the president is going to act off the recommendations of the FBI and the intelligence community saying specifically, quote, "He'll accept the recommendations of those two groups."
Now, that's interesting because last week when we were going through this entire process, with the Republican memo, written by Devin Nunes, the FBI actually pleaded with the president to not make that memo public, or keep that memo private and not make it public, because of national security issues and what not.
[11:15:08] The FBI did not want that memo coming out to the point where they put out a very harshly worded defiant statement saying why they did not want that memo becoming public. So, it is interesting now that the Democratic memo is over here, this is the line of thinking with this White House that they're going to go off the recommendations of that.
But that's what the White House is maintaining right now, Brianna, the press secretary, Sarah Sanders, putting out a statement saying that the White House has received the memo.
And she went on to say as stated, many times, the administration will follow the same process and procedure with this memorandum from the minority as they did last week when it received the memorandum from the majority here.
Now, two things to note with this, the White House said they're following that same procedure, but we know that last week after the state of the union, the president was caught on a microphone saying he was 100 percent going to release that Republican memo and he had not even read it yet.
Now the other thing to look for with this memo is if there are going to be any White House initiated redactions with the Democratic memo because we know there weren't any with the Republican memo.
But right now, the clock is ticking, Brianna, and we're waiting to see what the president is going to decide with this memo, which is substantially longer and certainly not as flattering for the administration as the Republican memo was.
KEILAR: Certainly not. All right. Kaitlan Collins, thank you so much at the White House for us.
Amid questions about whether the White House played any role in the creation of the controversial memo, the man behind it, Devin Nunes, had this to say to our Manu Raju just moments ago.
(BEGIN VIDEO CLIP)
MANU RAJU, CNN SENIOR CONGRESSIONAL REPORTER: Did the White House have any role in your memo, sir?
REPRESENTATIVE DEVIN NUNES (R-CA), CHAIRMAN, INTELLIGENCE COMMITTEE: Democracy dies in darkness, my friend. Get to work.
(END VIDEO CLIP)
KEILAR: Well, this comes as lawmakers on both sides of the aisle are pushing for President Trump to release the Democratic rebuttal. CNN Congressional correspondent, Sunlen Serfaty joining me live now from Capitol Hill.
Interesting, Nunes certainly didn't respond, he had his own little phrase there, the catch phrase of "The Washington Post." What is the expectation that this Democratic memo is going to be released, Sunlen?
SUNLEN SERFATY, CNN CORRESPONDENT: Well, at this point, we simply do not know for sure, Brianna. As you heard Kaitlan say there, from the White House, but I think the expectation is that there certainly is a great amount of political pressure on President Trump to declassify this memo and potentially that's what he might do.
Certainly, was a strong message being sent by the House Intelligence Committee, the fact that last night they voted unanimously to release this memo, sent it over to the White House to make that decision.
And certainly, we've heard from Republicans saying, look, people need to see this, they believe in the interest of transparency, and we heard from Adam Schiff, one of the lead writers of the Democratic memo, the ranking member on that committee, saying essentially the fact that the Republican memo, the Devin Nunes memo, was released last week gives weight to the argument that this Democratic memo needs to be released. Here's what he said this morning.
(BEGIN VIDEO CLIP)
REPRESENTATIVE ADAM SCHIFF (D-CA), RANKING MEMBER, INTELLIGENCE COMMITTEE: This could be very hard for the White House. They've tried to make the case that they released the Nunes memo in the interest of transparency. So, to say, well, we don't want the country to see this is untenable.
What I'm more concerned about is they make political redactions, that is not redactions to protect sources or methods which you asked the Department of Justice and the FBI to do, but redactions to remove information they think is unfavorable to the president. That could be a real problem and that's our main concern at this point.
(END VIDEO CLIP)
SERFATY: So, again, right now the ball is essentially in President Trump's court to decide whether he declassifies it or not. The White House says that they're reviewing it, evaluating it. Of course, they have five days from yesterday to make that decision -- Brianna.
KEILAR: Sunlen Serfaty on Capitol Hill, thank you so much. I'm joined now by Republican Congressman Rick Crawford of Arkansas. He is a member of the House Intelligence Committee. Sir, thanks so much for being with us. We appreciate it.
REPRESENTATIVE RICK CRAWFORD (R), ARKANSAS: You bet.
KEILAR: OK, so, you voted to release the Democratic memo. Why do you think that it is important that it is out there for Americans to see?
CRAWFORD: Well, I think it is important to compare and contrast. We brought forth the Republican memo and at the time that we did, we offered the Democrats the opportunity to do the same. They came out with their memo, we voted unanimously to support that.
But it will have to follow the same procedure first released to the House as ours was. The House had well over 200 Republicans that viewed that probably around 50 Democrats. At last look I think they had somewhere in the neighborhood of 75 Republicans and about 55 Democrats have viewed the Democrat memo.
So, you know, it is obviously very important to us, we want to see, let them put their memo out there because I think you'll see an interesting contrast.
KEILAR: I'm sure that we're going to. I wonder when you looked at it, was there anything in this Democratic memo that you think needs to be redacted to protect sources and methods?
CRAWFORD: Absolutely. I think we'll defer to the FBI and DOJ to make that call. Yes, we want to protect sources and methods. [11:20:06] But I agree with Adam Schiff that I hope the political contents of this are not redacted because I do want folks to see the tone of this memo is very political and not substantive.
Ours was fact based on the information presented to us, which we had a very difficult time extracting from the FBI and DOJ and that in and of itself is part of the problem. But I do want the American people to see the political dynamic and the tone of the Democratic memo.
KEILAR: I just want to be clear to make sure that I understand you, because Congressman Tom Rooney also on the committee, also a Republican, told Manu Raju that he doesn't think there is much in the Schiff memo that needs to be redacted in his opinion. So, are you saying that you think it needs to go through the process of being examined or are you saying that you think there are things in it that do need to be redacted?
CRAWFORD: I think they need to follow the process just as ours was. The FBI has eyes on ours. I think they need to look at the Democrat memo as well and after that it will be up to the president to release it to the public.
KEILAR: OK. Congressman, so this is what Adam Schiff actually said today about making redactions and removing information.
(BEGIN VIDEO CLIP)
NUNES: I think there is clear -- there is clear evidence of collusion that the Democratic party and the Hillary Clinton campaign colluded with the Russians. You don't get to hire lawyers and pretend like that didn't happen.
(END VIDEO CLIP)
KEILAR: So, that was not magic. You know that was not -- that was not Adam Schiff. That was Devin Nunes. But that said, so you heard what Devin Nunes is saying here, that he thinks -- I'm going to go with what we just played, he thinks that there is evidence of collusion, that the Democratic Party and Hillary Clinton campaign exhibited. Have you seen -- do you think he has a point, have you seen any evidence of this clear evidence as he puts it of collusion between the Democratic Party and the Hillary Clinton campaign?
CRAWFORD: Certainly. I think that's one of the things most startling about our memo. It is clear there was an effort there, the funding of the dossier in question, the two sources that funded that dossier initially that originated the order for the opposition research and then how that became not only opposition research, but then ultimately the basis for the request for a FISA warrant.
I think there is -- this is problematic at every level and let me also just clarify that this is not about trying to malign the FBI or the DOJ. It is about enlightening the American people with regard to a handful of individuals at the highest levels who are making a political issue out of this and exercising their own political values. KEILAR: Adam Schiff, I'm sure you're aware, made the point that in the FISA warrant, it was clear that Christopher Steele, the author of the dossier, didn't know -- wasn't told specifically who the political operator was behind this and that the court was made aware of that. What do you say to that considering that point you just made?
CRAWFORD: Well, there was no evidence that the FISA court was made aware of who funded the dossier. That was a fairly large omission, number one. Number two, Andrew McCabe, former deputy director of the FBI said as much. You can pull the transcript and see where he acknowledged that.
KEILAR: Can I be clear then, is Schiff in your estimation being accurate about this? What he has said publicly is that there was a political operator behind it, Steele, who is obviously his motivation could be key in this. He's the author of it. He was operating in the blind without being told specifically who the political operator was behind it. And that the FISA court was told that there was a political operator, but the Steele -- the author behind it was operating in the blind. Do you take issue with that?
CRAWFORD: I don't know how you can make the assertion that Steele was operating in the blind, he was specifically contracted to provide opposition research on Donald Trump. Putting two and two together, you think somebody asking for opposition research, it is probably the opposition. He's researching and compiling a dossier on Donald Trump. I hardly think that's in the blind.
KEILAR: OK. So, you think he easily could have extrapolated from this clearly. Want to ask you about Steve Bannon, he's scheduled to appear under subpoena before your committee today. Do you think you're going to see him?
CRAWFORD: As I understand it, that has been delayed again and, look, we need to go over the facts, and there are some facts he may have, they need to be made available to the committee. I hope that he'll reconsider and make every effort to come and participate.
KEILAR: What lengths should the committee go to, do you think that the committee should hold him in contempt if he doesn't agree to sit?
CRAWFORD: I'm going to let that be referred to the principles on the investigation and make -- let them make that determination.
KEILAR: How important is it to you to hear what he has to say?
[11:25:04] CRAWFORD: Well, I think it is important. I think that because each side of this has brought forth a witness list and he was one of those individuals on the witness list, and we agreed to that, and that's fine. The problem is that every time we get another witness in, they ask for two more.
And so, you know, seems like the more we cooperate, the more they move the goal post. I just like to see this investigation wrapped up and us be able to present our findings. KEILAR: All right, Congressman Rick Crawford, thank you so much, member of the Intel Committee. We do appreciate you talking to us today.
CRAWFORD: You bet. Thanks.
KEILAR: Still ahead, we are on the brink of another shutdown, right? Here we are, again, lawmakers still cannot seem to get on the same page. The House is set to take a crucial vote today, but the Senate is already pushing back. Stay with us.
KEILAR: This morning, sources tell CNN the president is willing to authorize the release of the Democratic memo based on the recommendation of the FBI and the intelligence community.