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Dow Tumbles Again; Bird's Eye View of Hurricane Destruction; U.S. Intercepted Saudi Communications; Astronauts Make Emergency Landing; Mexico Beach Destruction. Aired 9:30-10a ET

Aired October 11, 2018 - 09:30   ET

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

[09:30:00] POPPY HARLOW, CNN ANCHOR: This is not about the Fed. This is a normal correction.

Our chief business correspondent Christine Romans is here. Down at the exchange is Alison Kosik. Let's see how the market opens.

But, Romans, to you.

The significance of a president saying, I think the Fed has gone crazy?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Look, it just isn't done, and here's why. You have retirement incomes, you have pension funds, you have the livelihoods of millions of Americans in the stock market. And for a president to throw around blame and scapegoating, that can be dangerous. It also undermines -- it undermines the institution that is the shock absorbers for the market.

JIM SCIUTTO, CNN ANCHOR: By design it's independent from political office.

HARLOW: Right.

ROMANS: Absolutely.

SCIUTTO: But the president has not shied away from criticizing it.

ROMANS: You know -- and you remember when Janet Yellen ran the Fed and President Obama was the president, this candidate complained that monetary policy was too loose and that was helping the president and the stock market was artificial because of low -- you know, the Fed is --

HARLOW: And now it's too tight.

ROMANS: And now it's too tight. The Fed is raising interest rates because the economy is so strong it's trying to prevent overheating. It is doing the responsible, slow, steady management of interest rates.

SCIUTTO: So, Alisyn, you're down on the trading floor this morning. Rough day yesterday. Rough day overnight on international markets. What are the futures market showing about today? ALISON KOSIK, CNN CORRESPONDENT: Well, the market opened about a

minute ago, less than a minute ago. We are seeing stocks extend their losses, Jim. But nothing as to what we expected before the sun came up.

We got a report today on inflation at the consumer level. And it basically showed, in September, inflation at the consumer level was (INAUDIBLE). We're talking about products from cereal to airline fares and to other things that consumers use. So that is putting minds at ease, at least for the moment here on Wall Street.

But the reality is, what caused the market to sell off yesterday, those things still exist. Look, the economy is super strong. And, because of that, the Fed is on a path of raising rates. The Fed doesn't want to see the economy get too hot. It wants to kind of make sure that it keeps inflation in check. So that itself is worrying investors because, as you raise rates, the worry is that could eat into company profits, that could increase borrowing costs and it could potentially slow down the economy.

Now, we did see stocks take their cue from the bond market. There was a selloff in the bond market because there was a second inflation report that came out that did show that costs rose a little bit for companies. And that caused concern. That caused the yields to spike. Stocks took their cue from the bond market. And that's partly why we saw stocks sell off yesterday.

Now, the day is still young. We do see the Dow pairing its losses. Now down only 60 points. But we've got a full day to get through.

Back to you.

HARLOW: All right, but that's nothing like the drop-off we saw yesterday, especially heading into the close.

KOSIK: Right.

HARLOW: Romans, before you go, just listen to the president and his claim this morning.

ROMANS: OK.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: When I took over this economy, this economy was ready to crash. We were at 1 percent GDP. Now we're at 4.2 percent. It was ready to crash. It was the worst -- if you look from depression, from the Great Depression, it was the worst recovery in the history of our country.

(END VIDEO CLIP)

HARLOW: The economy was ready to crash.

ROMANS: It wasn't ready to crash. It was a recovery that wasn't as robust as we would have liked. And when this president took over and immediately started slashing interest rates -- or slashing regulations and cut taxes. That really goosed the recovery otherwise. But it wasn't ready to crash. That's just not true.

HARLOW: An important fact check. Thank you. Appreciate it.

ROMANS: You're welcome.

SCIUTTO: Coming up, homes destroyed, trees toppled, hundreds of thousands of people without power this morning. The devastating aftermath of Tropical Storm Michael.

(COMMERCIAL BREAK)

[09:37:34] HARLOW: All right, we want to take you right back to our friend and colleague, Brooke Baldwin. She is in the air in a helicopter. She's on her way to Mexico Beach, which is said to be just destroyed.

Brooke, what are you seeing right now on your way?

BROOKE BALDWIN, CNN CORRESPONDENT: So, Poppy, we wanted to be able to stop and circle -- we're above Panama City Beach right now. And this is the first sign of just utter devastation I've seen.

I was just told by one of your producers that this is where Erica Hill was this morning. But look at -- look at this. Look at this marina down below. These warehouses of boats, destroyed. Just toppled over and crushed by the sheer force of the winds all around us. These four massive facilities. It's incredible, actually, to see. One of them is perfectly pristine. Not even touched.

Just as we were discussing last hour, almost similar to a tornado, where it skips homes. This hurricane, and its brut wind clocked at one point at 155 miles per hour, just annihilated these two in particular boat facilities right here where people have clearly put their boats up for the season. And it's just unreal. It is unreal to see with your own eyes. I just wanted to show you this as we're en route to Mexico Beach.

HARLOW: Wow. Yes.

SCIUTTO: How about homes? Are you seeing homes? A lot of folks living right along that coastline here. What's the condition of the homes that you've seen?

BALDWIN: Yes, I'm seeing a lot of homes. And hopefully you guys are -- you're on these pictures as well. We see a lot of damage to fencing areas. I don't see as much damage to roofs. Some roofs -- I see some insulation exposed. I see -- it's a mess down below. The roofs are intact, but it's the surrounding fencing, front porch that was just carried away by the winds. It's carried away by the winds and then just to my right it looks to be some sort of inn that was destroyed as well.

We just had gotten into Panama City Beach. We're just about maybe five miles in, into the coastline. HARLOW: Yes. And, Brooke, you're -- just to reminder our viewers if

they missed you a few minutes ago, you are in a chopper headed to Mexico Beach, which Senator Marco Rubio said on CNN earlier is just gone. And the reason you're in a chopper, not only to give us this vantage point, but also because crews just can't get in any other way.

BALDWIN: Yes, that's exactly right. I mean we -- the challenge in covering stories like these is we want to be on the ground. I want to find people who rode it out. I want to see it with my own eyes, you know, the -- what's happened to some of these sea-side towns. And the challenge for us logistically is just physically getting there.

[09:40:14] And the issue with Mexico Beach, which is this little seaside town in between Port Saint Joe and Panama City Beach is because of those hurricane winds. All these trees are in our way. Not just in our way to be able to bring you the story, but in the way of so many emergency responders, which is the challenge. So we are now -- thank you, Alex -- talking to my pilot -- we're now heading, continuing down the coast to get to Mexico Beach and hopefully be the first eyes on the ground to see how level this town is.

SCIUTTO: Well, the other thing you get a sense from where you are, Brooke, is just the -- there's water on both sides of these strips of land.

HARLOW: Yes.

SCIUTTO: Very low lying. Extremely vulnerable to this kind of storm. We're going to stay with you as you get closer to the center of the devastation there. That's our Brooke Baldwin up in the air over the coastline of Florida.

Still ahead, news in another breaking story we've been following. President Trump says that he has sent investigators to look into the disappearance of a "Washington Post" writer and U.S. resident. We're going to listen to what the president had to say this morning, and we have some new reporting from CNN.

(COMMERCIAL BREAK)

[09:45:44] HARLOW: All right, important new development this morning. A U.S. official tells CNN that U.S. intelligence intercepted Saudi officials discussing a plan to lure the journalist, Jamal Khashoggi, back to Saudi Arabia and detain him. That report was last seen more than a week ago walking into the Saudi consulate in Istanbul. He has not been seen since.

We've also learned this morning that the Saudi crown prince, Mohammad bin Salman, reached out to the White House proactively earlier this week, called Jared Kushner. A person familiar with the call says he wanted to speak to the president's son-in-law to deny the accusations that the Saudi government was involved in this. This morning, the president weighed in and said American investigators are overseas looking into this.

(BEGIN VIDEO CLIP) DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Well, we're looking at it very, very seriously. I don't like it at all. Now, you know, you don't have American citizens, but that in this case doesn't matter. I don't like it. I don't like it with respect to reporters. It's a terrible, terrible precedent. We can't let it happen. And we're being very tough and we have investigators over there and we're working with Turkey and, frankly, we're working with Saudi Arabia. We want to find out what happened. There would be no Saudi Arabia if there wasn't a United States because we protected them and we don't get paid for this protection. We should be paid. We spend billions and billions of dollars a year protecting Saudi Arabia.

(END VIDEO CLIP)

SCIUTTO: I'm sure Riyadh listening to those comments from the president this morning.

HARLOW: Yes.

SCIUTTO: Let's speak now to Nic Robertson, Elise Labott.

Elise, I'll begin with you. It's your reporting about these intercepts prior to Khashoggi's disappearance.

I'm curious here, is there any idea that these intercepts were then shared with the White House and/or the State Department prior to his -- or are they just learning about them now?

ELISE LABOTT, CNN GLOBAL AFFAIRS CORRESPONDENT: I think they're just learning about them now, Jim. And I think it's important to note that at the time -- and it's really unclear when these intercepts were from. We believe it was from some time in the last month or two because Jamal Khashoggi has been increasingly vocal in his criticism of the government and particularly Mohammad bin Salman. And so that we think -- but, you know, a lot of times, as you know from covering intelligence, Jim, sometimes you hear an intercept. You don't really know what it means. And then an event will happen and then it kind of paints more of a fuller picture. And so I don't -- certainly don't think whether Jamal Khashoggi was a U.S. citizen or not that if the U.S. had that information that they would have warned him.

Of course, he did know that the Saudis were very concerned about his criticism. They had reached out to him in -- over the last year or so. But it's really since September when Khashoggi started writing for "The Washington Post," that was translated into Arabic, that this was seen as more of a problem for the regime.

SCIUTTO: So, Nic, you've been in Turkey and many of the -- most alarming details about this alleged kidnapping, and in terms from Turkish officials murder, of this Saudi journalist and U.S. resident coming from Turkish officials. What are they saying today? What did they say that they are learning about this?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, I think we've heard the strongest language from President Erdogan today saying that the country, he, cannot remain silent in the face of what has happened here. I mean he's not saying -- he's not saying what has happened, but he is saying that this is not a normal occurrence, that it's happened on their territory.

What his officials are briefing journalists is that they believe Khashoggi was killed inside the consulate. And he's got a big problem. Erdogan has a big problem right now because he's getting into a deep spat with Saudi Arabia over this. The Saudis had agreed to let his investigators go inside the consulate, look inside the specific rooms that they wanted to look at, get into the areas there that they were most concerned and feel that they had the strongest sense of where events took place. But the Saudis had agreed to that.

Now they're not -- the Turks are not getting cooperation from the Saudis. And that's creating a very big problem. So I think you're going to hear -- and that was an example of it today from President Erdogan, we're not going to remain silent. But he is going to speak up more about it, push the Saudi's into a -- into more of a corner on this and in part he's doing that because he's -- he is hearing President Trump also speak more strongly, you know, in terms of, I don't like it, about what he believes may or may not have happened here.

[09:50:16] HARLOW: But the question becomes, what will you do about it if you do have that hard evidence that it was the Saudi regime, that they knew about this, et cetera, because you have a bipartisan group. Every senator on the Senate Foreign Relations Committee, with the exception of Rand Paul at least, has sent a letter now saying that they want to invoke the Magnitsky Act --

LABOTT: That's right.

HARLOW: To sanction Saudi Arabia, right, for this, if it was at the hands of Saudi royalty here, or at least at the direction of or the knowledge of. The president responded to that. What would sanctions mean? It would certainly play into this $110 billion arms deal with Saudi Arabia. And the president said that would be hurting us. We have jobs. Frankly, I think that would be a very hard pill for our country to swallow.

I mean, Elise, it begs the question, human rights versus, you know, economic deals and jobs.

LABOTT: Well, and, also, you know, let's remind people what the Magnitsky Act was created for, which is for Russia and alleged assassination of Russian opponents of President Putin. And so the fact that they are -- they've made it global and now that senators are invoking this obviously very significant.

Look, it's clear that the U.S. is walking a real tightrope right now. The relationship with Saudi Arabia very important. Not just for those arms deals but really the cornerstone of U.S. security in the Middle East and the Gulf. And so U.S. officials are really taking this -- you know, they've been working very quietly behind the scenes for the last few days, but as evidence is mounting of potential Saudi involvement, it's getting increasingly more difficult for the White House and even President Trump in particular to keep quiet. And the fact that he said this, the fact that he said it looks like it could be the Saudis shows that the U.S. has something that leads them to believe that this is a problem.

HARLOW: Yes.

LABOTT: And it's really -- it is going to affect the relationship. Whether it will affect the arms deal, I don't know. But certainly Congress will have their say on that.

SCIUTTO: Listen, you can't put too fine a point on it. A close U.S. ally, perhaps its closest in the region, one of the closest in the region, is accused now of the kidnapping and murder of a journalist who's a U.S. resident. It is truly remarkable circumstances.

Nic Robertson, Elise Labott, thanks very much.

HARLOW: Thank you both.

SCIUTTO: In other news, really just an amazing escape this morning.

HARLOW: Yes.

SCIUTTO: Such a relief. An American astronaut and a Russian cosmonaut forced to abort their Soyuz rocket launch in midair. This on the way to the International Space Station. Parachute in a capsule back to earth after the failure of a booster rocket.

HARLOW: Wow. Both survived miraculously. They are in good condition this morning.

These are new images of the two men getting their medical tests after landing. They had been headed to the International Space Station for a six-month stay.

Fred Pleitgen is on this story for us with the latest on what happened.

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hi, Poppy.

Yes, and it certainly was a miraculous getaway for these two men. And they literally just got some information from the Russian space agency just a couple of minutes ago with the head of that space agency saying that neither of the two men have any sort of trauma. So some very good news coming in there. They just came back to the Cosmo drone, where they took off from earlier today. And it really was a miraculous escape. They blasted off from that Cosmo drone and about a minute or two minutes into the flight, they realized the rocket was malfunctioning, so they had to abort it, separate the capsule from the rocket and go back --

HARLOW: To our colleague Brooke Baldwin. All right, Fred Pleitgen, so sorry about that. We've got to jump to our colleague, Brooke Baldwin. She's getting the first images of the devastation in Mexico Beach.

Brooke, walk us through this. BALDWIN: Yes, Poppy, we have just now flown over Mexico Beach, and

it's gone. It's gone. I want to -- we're going to get Lanel (ph) to show you guys exactly how bad it is. But, I mean, it's -- it's obliterated and it's awful. It's awful to look at. I mean just -- as we watched the deterioration along the coastline, it was bad in Panama City Beach, but I've never seen anything like this.

I'm going to talk to Alex, our pilot. He's going to loop us back around. But as far as the eye can see, I see smoke in the distance. This is all Mexico Beach. Trees, the brute force of the winds, you can see it here with all of these massive trees just flattened. Mobile homes, apartments, warehouses, playgrounds down below --

SCIUTTO: Oh --

HARLOW: All right.

SCIUTTO: Tough signal there from Brooke Baldwin. She's in a helicopter over Mexico Beach, Florida. One of the hardest hit areas. Arguably, the hardest hit area from Hurricane Michael. And her words, just moments ago, saying, as we arrived here, Mexico Beach it's gone.

[09:55:10] Her signal's back up again. Brooke Baldwin, go ahead, tell us what you're seeing.

BALDWIN: Sure. So you can see, you know, home after home, what was a home, just flattened. So many of the homes I'm looking at made of wood. And, you know, when you think of the sheer force of those hurricane winds clocked at 155 miles an hour (INAUDIBLE). You know, Chad talked a lot about how the hurricane took hat right turn, and this is precisely where it took the turn. And Mexico Beach is a town about two miles wide by three miles long. It's not huge. But it's this quaint little seaside town, about 1,000 people live here year round. And I have no words just for what I'm looking at.

HARLOW: Brooke, so for our viewers, if you're just joining us, you are seeing something remarkable and devastating. Our Brooke Baldwin is over Mexico Beach there in the panhandle of Florida for the first time. These are the first images you or any of us are seeing of a community destroyed, a community flattened.

Brooke, we're -- I'm also hearing from our producers here, the National Guard is on the ground there below you. They're working with some local emergency officials who stayed. Right now they're apparently with a group of 20 survivors there who hunkered down.

But keep telling us, keep walking us through this.

BALDWIN: I see some people. I see the -- I see about half a dozen people on the ground. I can -- I can see some official emergency vehicles. You know, we wanted to get in. We wanted to -- because these roads were impassable. and you can understand why just by looking at these pictures. We want to -- we want to land this helicopter and go drive to tell the stories of those few people who did choose to ride this thing out. Fortunately, I think most people heeded those evacuation. It was a

mandatory evacuation in this part of the panhandle. And most people did leave. But as you pointed out, Poppy, there are more than a dozen people who did decide to hunker down.

I see more people down along the roads. Just imagine this is your home, this is your livelihood, this is where you love. This is beautiful, pristine Mexico Beach, Florida, along this gorgeous part of the Florida panhandle. And for people who are also waking up this morning who have homes here, who did heed those warnings and leave, you know, I talked to a city council woman yesterday on my show. She lost her husband in November. And so she's going through this. And she was being texted by friends all saying to her, I'm so sorry for your loss. And she was just describing to me the feeling of losing her home and knowing she would lose her home because of the path of this hurricane. And she's hoping to get back, as so many people I know are trying to get in touch to see if their homes remain. And it's --

HARLOW: Oh.

SCIUTTO: That's Brooke Baldwin there. A difficult signal, you can understand, from in the air, over Mexico Beach. These are images from there just moments ago. Brooke Baldwin in a helicopter over there. You can see entire homes no longer homes, just imprints of those homes where they used to stand.

Brooke Baldwin said she did see some people on the ground there. And, boy, you can tell why officials told folks to evacuate, right? This is a place where folks have no business being during a storm.

HARLOW: We -- let's go to Brian Todd, our other colleague, who's on the phone.

And, Brian, as I understand it, at last check, you were trying to get in to Mexico Beach by ground, but I know it's been nearly impossible. And these are the first images that we're seeing from Brooke. What can you tell us?

BRIAN TODD, CNN CORRESPONDENT (via telephone): Right, Poppy and Jim. We're trying to get into there still. A number of road closures and a number of roads blocked by downed trees and downed power lines. We're still kind of navigating our way around. We took some video as we made our way east on Route 388 trying to get to Mexico Beach, and that was pretty treacherous. I mean just massive trees down in the road. Some (INAUDIBLE) we were able to get around them. We were able to get round some of those trees. But then you come to some other areas where it was just (INAUDIBLE) allowing people through. There was a lot of roads blocked (INAUDIBLE) Mexico Beach (INAUDIBLE).

SCIUTTO: Folks, bear with us here because communications are extremely difficult from there. We've heard of families, they can't reach family members on the ground. First responders cannot.

HARLOW: Yes.

SCIUTTO: But we have both Brooke Baldwin above Mexico Beach. We've got our Brian Todd on the ground. As we get their signal back up again --

HARLOW: And that's the road on the left side of your screen.

SCIUTTO: That's the road.

HARLOW: That's the road that Brian is on trying to get into there. Wow.

[10:00:00] SCIUTTO: So we're going now, we have, I believe we're in touch with our -- another colleague on the ground there.