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Dow Plunges Over Confusion on Trade War Negotiations; Senator Graham Says, "Not A Smoking Gun, There's A Smoking Saw"; Mueller's Big Week Begins with Flynn Sentencing Memo; Trump Floats Manafort Pardon. Aired 2-2:30p ET

Aired December 4, 2018 - 14:00   ET

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


[14:00:00] ANA CABRERA, CNN HOST: The U.S. and China can work out a trade agreement under the President's 90-day deadline. Kudlow has also dismissed talk of the U.S. could be headed for a recession.

(BEGIN VIDEO CLIP)

LARRY KUDLOW, DIRECTOR OF THE UNITED STATES NATIONAL ECONOMIC COUNCIL: I'm amazed at this mini-wave of recessionary pessimism that has swept the media I am sure you're not guilty of that. The evidence is quite different than the speculations. We're humming. We're humming.

UNIDENTIFIED MALE: Let's talk about the economy. Just a second before we go to questions.

KUDLOW: Yes. I was hoping you would.

UNIDENTIFIED MALE: You don't see a recession on the -- the economy is doing well. You don't see a recession on the horizon.

KUDLOW: I do not.

UNIDENTIFIED MALE: For the next couple of years?

KUDLOW: At least.

(END VIDEO CLIP)

CABRERA: Richard Quest joins us now. What is going on?

RICHARD QUEST, CNN BUSINESS EDITOR AT LARGE: The process or the period we are now in two hours from the end of close, we are in a period of extreme volatility. I think can you see this quite clearly because we were down 800 points here. Now we're down 670. So, bouncing around 150 points one way or the other is going to be the norm for the hour. But the day starts off 200 points. So, it's this fall at lunchtime that's perplexing, suddenly a 200-point fall becomes a 425-point fall and then it just accelerates. Although there's no real substantial reason for today's fall, there are lots of undercurrents that fed into it, not least of which if I may more borrow --

CABRERA: My little Trump tweet cheat sheet. QUEST: When Donald Trump four hours ago tweeted, "I'm a tariff man",

when people and countries come it will always be the best way to max out our economic power. Although he says the Chinese deal has been 90 days and what's going to happen, the Chinese don't agree to this. We don't know where the Chinese stand. One highly technical point and I won't bore you with the details. When Larry Kudlow is talking about no recession, there's two financial indicators at the moment, the yield, the interest yield on one bond and it's crossed into an inversion with another. That usually signifies hard times ahead.

CABRERA: The very fact that he's even saying the word "recession," that must be sending a message. No?

QUEST: No, because that was in response to the question. The question asked, "do you see signs of recession?" But the reason why everyone in the market is talking about this is because the three year and the two-year note have crossed. Their interest rate differentials have crossed.

CABRERA: So, the signs are suggesting that could be where we're heading?

QUEST: All recessions have an inversion, but not all inversion lead to a recession. It is one thing that you and I could be talking about a lot more in the weeks ahead. So, it is just as well that we put in on the table. Today's machinations, volatility is because of China and this highly technical inversion of bond yields and what it might mean for the future. Sum up in a sentence -- the market is unhappy.

CABRERA: And unstable apparently. Richard Quest, all happy to you have with us. You break it down and bring it to us like nobody else. Thank you so much.

I want to turn to the outrage and the absolute certainty that the Saudi crown prince ordered the murder of "Washington Post" journalist Jamal Khashoggi. This from Republican lawmakers after today's briefing from CIA Director Gina Haspel, they say there is clear evidence that Mohammad bin Salman is responsible for the killing, despite all the pushback from the Trump administration. Here is Republican Senator Lindsey Graham.

(BEGIN VIDEO CLIP)

SEN. LINDSEY GRAHAM (R), SOUTH CAROLINA: You have to be willfully blind not to come to the conclusion that this was orchestrated and organized by people under the command of MBS. I think Secretary Pompeo and Mattis are following the lead of the President. There's not a smoking gun, there's a smoking saw.

(END VIDEO CLIP) CABRERA: A smoking saw, as in the bone saw that was allegedly used to dismember Khashoggi's body. Haspel traveled to Istanbul after Khashoggi's disappearance in October to assist in the investigation and she has reportedly heard the alleged audio recording of that murder. Joining us now CNN congressional correspondent, Manu Raju, who was just in that group of reporters. We'll come back to the congressman in a moment. Manu, it seems like Haspel made Some big revelations to this small group of lawmakers. Do you know

what she said? What they learned?

MANU RAJU, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Roughly 12 senators were sitting in this briefing that lasted about an hour, where they were taken through the intelligence, what they know about the Khashoggi murder and what the CIA believes with a high degree of confidence that the crown prince of Saudi Arabia, Mohammad bin Salman, was behind this murder.

[14:05:00]Now, Lindsey Graham told me to one of my questions they did not hear the actual audio of the murder, but the intelligence they saw was pretty revealing in the eyes of virtually every senator who came out there, who know believed that the United States needs to act swiftly and aggressively targeting the crown prince legislatively if the Trump administration doesn't act. One thing was clear, the senators believe there's no doubt the crown prince was behind that murder.

(BEGIN VIDEO CLIP)

GRAHAM: So, here's my takeaway, that Saudi Arabia is a strategic ally and the relationship is worth saving but not at all cost. We'll do more damage to our standing in the world and our national security by ignoring MBS than dealing with him. MBS, the crown prince, is a wrecking ball. I think he's complicit in the murder of Mr. Khashoggi to the highest level possible. I think the behavior before the Khashoggi murder was beyond disturbing, and I cannot see him being a reliable partner to the United States. Saudi Arabia and MBS are two different entities. If the Saudi government is going to be in the hands of this man for a long time to come, I find it very difficult to be able to do business because I think he's crazy, I think he is dangerous, and he has put the relationship at risk.

SEN. BOB CORKER (R) CHAIRMAN, FOREIGN RELATIONS COMMITTEE: I have zero questions in my mind that the crown prince, MBS, ordered the killing, monitored the killing, knew exactly what was happening, planned it in advance. If he was in front of a jury, he would be convicted in 30 minutes guilty. So, the question is what do we do about that. So far, it's unfortunate but I think they feel like this is something that's come and passed because the administration has not spoken to this in a way that -- has spoken to it in a manner that really gives them immunity. So, what the message is to him and those around him is that you can go around killing journalists.

(END VIDEO CLIP)

RAJU: Corker and Graham are working with a bipartisan group of senators to try to come up with a legislative response, involving a wide variety of issues, trying to target the crown prince, trying to do something of more of a symbolic nature and denying moving forward with arms sales, all of this coming to a head this month. They're uncertain whether what legislative package to get behind but undoubtedly right now overwhelming consensus that the crown prince was involved and in the eyes of some senators, the White House is willfully ignoring the obvious.

CABRERA: Thank you for that reporting. Now lawmakers, including prominent Republicans say there is no doubt the crown prince of Saudi Arabia is responsible for the murder of journalist Jamal Khashoggi. As we just heard from Senator Lindsey Graham saying, there is not a smoking gun, there is a smoking saw. Joining me is Democratic Congressman Denny Heck of Washington state, he is a member of the House Intelligence Committee. What is your reaction to what we just heard from those two senators?

REP. DENNY HECK (R), WASHINGTON: I agree with virtually everything both of them said, not withstanding the fact I think Senator Graham used an incredibly indelicate way to describe the act. I think the crown princess was acting on behalf of Saudi government. We need to take action. We immediate to take action yesterday. It ought to begin with suspending arms sales to the Saudi government and contemplation of additional sanctions.

CABRERA: So, Senator Graham says he and others are working on legislation in the Senate but you believe the House will follow suit?

[14:10:00] HECK: I do. I think there's considerable widespread support in doing something. The American people and the American government believe in the rule of law and whether or not we're going to have any standard whatsoever for allowing us to remain as a member of the community of civilized nations. This is the not the behavior of a civilized nation or civil sized people to go about assassinating journalists. Us to remain as a member of the community of civilized nations. This is the not the behavior of a civilized nation or civil sized people to go about assassinating journalists.

CABRERA: What do you make of Mattis and Pompeo saying there is no smoking gun, there is no direct evidence?

HECK: I agree with what Senator Corker and Senator Graham said, including the hyperbolic assertion that if the crown prince were in front of a jury, he'd be convicted within 30 minutes. I think Secretary of State Pompeo and Secretary Mattis know better.

CABRERA: Let's talk about the Russia investigation. Michael Cohen admitting to lying to congress, that he misled both the Senate and intel committees. Have you and your staff gone back through the transcripts to check?

HECK: Sure. Of course, we have. This is going to be an incredibly news jam packed week both with the sentencing memo on Mr. Flynn today and that for Mr. Manafort and Mr. Cohen on Friday. I suspect we're going to have some shocking revelations, frankly, a word I don't use lightly, as to the breadth and depth of the amount of lying that went on. I think we've moved toward a new phase of this where pretty clearly, we're way beyond collusion. That's been hiding in plain sight all along as I've suggested, and now what's on the table, frankly, is the obstruction of justice considerations and I think we'll learn more about that. And that's to say nothing about Mr. Weisselberg, the financial officer for the Trump Organization, who was given immunity to provide information. CABRERA: What makes you so confident about that, because of what you

found in those transcripts?

HECK: That in part with respect to the lying, which is hiding in plain sight as well. Look, when you have somebody like the President or then candidate's personal lawyer, his chief financial saw, his national security adviser, two of his campaign operatives and the like, all entering into plea deals to provide the truth to the special investigator, then you know something is forthcoming and it will be. It will be this week.

CABRERA: In light of what we heard from Cohen last week, again we're expecting more revelations this week when his sentencing memo is due, incoming committee chairman, Adam Schiff, says the President and his business are now compromised when it comes to Russia. We also heard from Congressman Nadler saying the Russians have leverage over Trump, according to his new plea. Do you agree with this or is it too soon to make that conclusion?

HECK: Well, I can think of no other explanation for why it is they would lie about the fact that the conversations between the Trump organizations and the Russians were ongoing far after the point in time when they admitted that they were ongoing. I think that's pretty clearly evidence that the President or then-candidate was trying to leverage his candidacy and his relationship into a profit-making venture for himself in Russia. This is the one avenue that it may be that director Mueller does not pursue, which is the antecedent was. I think it will probably fall to congress to pursue the underlying financial entanglements that may have provided the Kompromat. I also happen to sit on the financial services committee and I think the incoming chair, congresswoman waters, is interested in subpoenaing and getting at some of the records for the deutsche bank, which was the source of some of the financing and potentially money laundering as well. There will be multiple avenues pursued in order to get at the truth.

CABRERA: Congressman Denny Heck, we appreciate you coming on with us. Thank you.

Just in, the FBI investigating a cyber-attack during the midterm elections. Senior members of the national Republican congressional committee say they were hacked. Details ahead. Also, it has been months and months of silence, but any moment we expect Robert Mueller will reveal details on how Michael Flynn cooperated with the special counsel. Let take a look at the Dow, down nearly 625 points. Stay with us.

[14:15:00] (COMMERCIAL BREAK)

CABRERA: After a barrage of bombshells last week in the Russia investigation, we may get the biggest one yet, the sentencing memo of Michael Flynn. Any moment now that court filing could drop. It due today by midnight. This memo is supposed to describe not just the crimes Flynn committed but, more notably, how Flynn has cooperated with the special counsel team since he pleaded guilty last December. I want to bring in Chris Cillizza in just a minute. [14:20:00] But let me bring you up to speed for a moment on Flynn's

guilt plea and what led to resignation as national security advisor. It involves his December 2016 conversations with then Russian ambassador to the U.S. Sergey Kislyak. The topics, United Nations Resolution on Israel and American sanctions against Russia for its attack on the 2016 election. Flynn lied to the FBI about what he said in those calls, but before he did that, you'll recall in January of 2017, Vice President Mike Pence defended Flynn, saying Flynn never discussed sanctions with the Russian ambassador.

Then in February, "The Washington Post" reported the truth, showing Flynn had misled the Vice President. Flynn quitting after 23 days as President Trump's national security adviser. That same month former FBI Director James Comey wrote in a memo that Trump said to him, quote, "I hope you can see your way clear to letting this go." Letting Flynn go. Ten months later, Flynn cut a deal with Special Counsel Robert Mueller.

Let's bring in CNN's politics reporter and editor at large, Chris Cillizza. The President is often accused lying himself but these ex- members of his inner circle have been convicted of it.

CHRIS CILLIZZA, POLITICS REPORTER AND EDITOR AT LARGE: Exactly, I think that is important to note, Ana, you walked through the Flynn stuff really well, this is not a debate over who is telling the truth. These people have pled guilty to lying. You have gone through Michael Flynn, look, he wasn't around all that long. I think his sentencing document might be the most interesting, the one we'll get by midnight. He was only there in February, pled guilty over a year ago. But let's keep going. Paul Manafort. This is lying on top of lying. So, Paul Manafort eventually after being convicted one time in regards to his financial dealings with the Ukraine, he cuts a plea deal with the Mueller team. And admits to lying about his interactions with the Ukrainians, not the Russian s. Then we find out Manafort has been back channeling information to the Trump folks on the Mueller investigation. You can probably put two Paul Manaforts here. Rick gates. Gates is the deputy campaign chairperson. Gates has pled guilty to lying about the nature of his relationship with Ukraine. This is a similar thing that Manafort was convicted on earlier this year. Let's go to the last one here. Michael Cohen. This is lying on top of lies in some ways, Ana. Michael Cohen pled guilty to lots of things, including felonies related to campaign finance but he's admitted to lying to congress about the depth and extent of his conversations about Trump Tower Moscow with the Russians. Now, this to me is hugely important. Folks here at CNN keep this updated. This has already happened. When you see Donald Trump say witch hunt, remember these numbers -- 192 combined criminal charge, 36 people and entities, seven people have already pled guilty. That includes that whole panoply of folks we just showed you. George Papadopoulos has already served his time, as I believe one other person. So, this has already been a considerable investigation, even prior to the Mueller report, the sentencing on Manafort, Cohen and Flynn. Remember these numbers when you see witch hunt and partisan hoax. Back to you.

CABRERA: Let's get some expert analysis now. Joining us, former federal prosecutor, CNN legal analyst Jennifer Rodgers and New York Law School professor and former prosecutor Rebecca Roiphe. Let me ask you first about Flynn because that could be imminent, we'll see his sentencing memo. Jennifer, what will you be watching for?

JENNIFER RODGERS, CNN LEGAL ANALYST: I'm watching for what we don't know. With respect to Flynn, we don't know what he's been telling Robert Mueller and his team. We haven't seen the cases that will be developed from that information. The memo will go through the offense conduct and talk about cooperation and say he helped us in this way, these are the things that he told us that resulted in the prosecution of others. The question is what are they going to let drop today and what are they going to hold back? That's what's going to be the most interesting stuff.

CABRERA: Rebecca, who should be worried?

[14:25:00] REBECCA ROIPHE, NEW YORK LAW SCHOOL PROFESSOR AND FORMER PROSECUTOR: A lot of people should be worried. The prosecution as you said has been progressing in this way, that increasing number of people have been shown -- close to Trump's circle has been lying. There has to be some motivation for that lying. I think Trump's family should be worried, close advisors and maybe Trump himself.

CABRERA: We also talked about Michael Cohen and Paul Manafort and how they, too, have some important court dates this week. Michael Cohen, we're supposed to see his sentencing memo come Friday. We have Paul Manafort who is accused of breaching his cooperation agreement. Which of those are more significant, Jennifer?

RODGERS: I always thought Paul Manafort has the most significant information because he was so close to the campaign. Michael Cohen was a little bit of an outsider in that respect. I think Manafort with his role in the campaign and his ties to Russians and Ukrainians is the one who has the most interesting information. Unfortunately, he's not cooperating anymore, but he will have told them a lot of things before things went south and went sour. Because they went south, we know that Mueller and his team now what he was lying about. We'll learn a lot about those folks and what they were up to with the Russians.

CABRERA: Rebecca, you said Manafort's case shows chinks in Robert Mueller's armor. Explain.

ROIPHE: This investigation is different, in some ways fundamentally from most federal prosecutions. I think you have to keep your eye on that. Part of the difference is that there's all this political pressure to wrap things up and to hurry up. It may that nobody's testifying. It may be at the end of the day this is going to be a big report. There may be concerns that Mueller has that are different than those a normal prosecutor would have. I think the fact that who signed Manafort up, thinking he was telling the truth, and then found out later he wasn't is the first we've noticed in what seems like a flawless investigation, that there has been something less than perfect about what Mueller has been doing.

CABRERA: But he has laid out that trail of bread crumbs along the way in terms of what me knows and where the investigation is headed. We'll find out soon enough. Thank up for being here. Joe Biden weighing in on who he thinks is the most qualified person to be President -- himself. And our breaking news on an election related hacking. The national Republican committee says they were targeted. So, who's behind it?