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Dow And S&P 500 On Track For Worst December Since 1931; New York Times: Facebook Gave Companies Access To Users' Private Information; CNN Reality Check: Why Russian Social Media Posts Were So Effective In The U.S.; Hacked European Cables Reveal Anxiety About President Trump. Aired 7:30-8a ET

Aired December 19, 2018 - 07:30   ET

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

(COMMERCIAL BREAK)

[07:30:44] ERICA HILL, CNN ANCHOR: World markets, as you can see there, mixed this morning. U.S. stocks appear to be set for a solid opening. A rally, though, fizzled yesterday as Dow and S&P 500 remain on pace for their worst December since 1931 which, of course, was in the middle of the Great Depression.

So you may be wondering what's going on. Joining us now is CNN political commentator Catherine Rampell who is a "Washington Post" opinion columnist. And, CNN senior economics analyst Stephen Moore, who was also an economic adviser to the Trump campaign.

As we look at all of this, let's just pull back for a minute because there is a lot of up and down, as we know, in the markets and you're told all the time by financial advisers -- whether it's the people you call on the phone or if you have someone you talk to about your money regularly -- don't look at this on a day-to-day basis. Don't go and look at your 401K.

STEPHEN MOORE, CNN SENIOR ECONOMICS ANALYST, DISTINGUISHED FELLOW, THE HERITAGE FOUNDATION, FORMER TRUMP ECONOMIC ADVISER: Yes.

HILL: But, Catherine, as people at home are looking at this it's hard not to look at the headlines every day and say whoa, what's really going on with this market.

How concerned should people be?

CATHERINE RAMPELL, CNN POLITICAL COMMENTATOR, OPINION COLUMNIST, THE WASHINGTON POST: Well, a lot of the slide in the market recently, or at least the whipsawing, has to do with recent policy uncertainty, right, about the trade war, news that we do or don't have a deal with China.

There's other uncertainty, of course, about the Affordable Care Act because a judge struck it down as unconstitutional last Friday. So we saw a big decline in health-related stocks on Monday.

So some of this has to do with recent policy uncertainty which may or may not get resolved. Some of it has to do with potentially actual weaknesses in our economy, right, if you look at housing, for example, or you look at other signs that there might be some lurking risks in the economy, like the inverted yield curve.

But there doesn't seem to be an indication that we are like on the verge of a recession if you look at forecasts.

For example, "The Wall Street Journal" surveyed a bunch of economists and they said -- more than half of them said they are expecting a recession by 2020. It does seem like there might be a recession sometime in the next few years.

But, you know, if you're worried about the stock market, if you're worried about the economy, I do not recommend looking at the day-to- day fluctuations, although they are a little bit telling about what risks may lie in store.

HILL: I hear you laughing, Stephen. Is that in agreement or is it --

MOORE: Yes, I'm going to jump around that one. My wife -- my wife is guilty of it. She -- every night she calls me. Oh, honey, we lost $5,000 today or we gained $3,000 or $5,000 the next day.

I agree with that. Look, especially, by the way, if you're a long- term investor. If you've got your money in a retirement account or even if it's a three- or five- or 10-year investment, you don't want to look at these daily changes in the stock market. It's only going to make you seasick.

Look, I think that the economy is still very fundamentally strong. And, in fact, it's really interesting -- I've been studying this stuff for 25 years. I've very rarely seen such a divergence in terms of where the real economy is, which is extremely positive still.

Yes, I mean, we've come down from these incredible highs we had six months ago. But manufacturing is strong, construction is strong, industrial production is strong. Consumer confidence is still near its 30- or 40-year high. And yet, the stock market keeps falling.

RAMPELL: But --

MOORE: I agree -- I agree with Catherine --

RAMPELL: There are some --

MOORE: -- and I think the main --

RAMPELL: Yes.

MOORE: -- point is this China trade war. But I'm actually somewhat optimistic that in the next 60 or 70 days we are going to get a deal. And if that happens, the stock market goes through the roof.

HILL: Alan Greenspan, speaking with CNN's Julia Chatterley yesterday, said basically prepare first. I just want to play a little bit of what he had to say.

MOORE: OK.

(BEGIN VIDEO CLIP)

JULIA CHATTERLEY, CNN ANCHOR, "FIRST MOVE WITH JULIA CHATTERLEY": Do you think we're still in a bull market -- an equity bull market?

ALAN GREENSPAN, FORMER CHAIRMAN, FEDERAL RESERVE BOARD: Not really, no. It's beginning to fumble. You can see it by the reaction in recent days.

It would be very surprising to see it sort of stabilize yet and take off again, but it's happened in the past. However, at the end of that run, run for cover.

(END VIDEO CLIP)

HILL: And, Stephen, your point, I think, with China could change things. Then you hear Alan Greenspan saying even if this happens, at the end of it --

MOORE: I think it could.

HILL: -- run for cover. Those are sobering words.

MOORE: They sure are. I mean, look, Alan Greenspan's a smart guy, you know. He ran the Federal Reserve, obviously. He did a -- he did a pretty darn good job at the Fed for -- I think he was there over a decade.

But, you know, he's not an oracle. None of these people at the Fed are.

I'm going to stick with my prediction that I'd put it maybe better than 50-50 odds that as we get close to that 90-day deadline that Trump set in Buenos Aires with President Xi to get some kind of concessions from China -- if that happens I think you're going to see some real jubilation in the stock market.

[07:35:15] Look, I think President Trump has really almost staked his presidency on getting this deal done. And it's all, right now -- the ball is in -- it's hard to predict because the ball is in Beijing's court whether they're going to come forward.

And by the way, last week we saw what a -- what a, you know, bad actor China is on the international scene with the hacking of American companies. They're stealing our technologies.

This is a fight Trump has to win. It's a Trump -- it's a fight, frankly, America has to win.

HILL: I want to look at another fight that's coming up or the president seems to be picking with his own Fed chair, Jerome Powell. So we know, too -- we're waiting today, obviously, for a possible Fed rate hike.

Catherine, we look at this, though -- these unprecedented attacks on the Fed. What's the overall implication there? What's the lasting impact? RAMPELL: I think the lasting impact of this is very dangerous, is how I would put it.

So, essentially, the Fed has worked over the decades -- this is a multi-decade-long project to establish credibility to show that they are politically independent. That they are now swayed by the day-to- day considerations, politics of the next upcoming election, and that is critically important for price stability and for growth.

I mean, if you want to look at a useful counterexample, look at places like Venezuela or Argentina or pre-Euro Italy or other places where politicians got control of the printing press.

So it is critically important for the Fed to both maintain its political independence and the perception of political independence.

And when Trump starts browbeating them and saying I think that they should keep rates low because we want to juice growth a little bit more, that threatens the Fed's credibility and could actually backfire if you're looking at what Trump's ultimate objective is because the Fed might say look, we don't want to look like we're caving to political pressure. Maybe we should err on the side of raising rates if there's some ambiguity about whether we should or whether we shouldn't.

So they may decide that --

MOORE: That may --

RAMPELL: -- if -- that if Trump is going to publicly browbeat them and try to arm-twist them -- which again, goes against decades of precedent for what presidential administrations do -- they may say we need to assure markets that we are politically independent and we're going to raise rates.

MOORE: Well --

RAMPELL: I don't know that they're going to do that, but that could certainly be an outcome.

MOORE: Well, let me -- let me respond to that.

HILL: Real quickly, Stephen.

MOORE: Look, the fact is that three months ago Donald Trump criticized, very severely, the Fed decision to raise rates, and it turns out Donald Trump was exactly right. That, in fact, since then the stock market has been on a long-term -- we've lost 10 percent value.

And the economy -- you know, there's a deflation now. I mean, you look at what's happened to the oil price, you look at --

RAMPELL: But that's because of his trade war. I mean --

MOORE: -- the price of copper and cotton and so on. RAMPELL: But, you know -- but you said -- you just said --

MOORE: And so, I'm -- look, my only point is this. Catherine --

RAMPELL: You just said that the economy is fundamentally strong.

MOORE: Let me just make this point.

RAMPELL: You can't have it both ways.

MOORE: It is strong.

RAMPELL: Either the economy is fundamentally strong --

MOORE: No, I --

RAMPELL: -- which justifies raising rates.

MOORE: The economy --

RAMPELL: Or it's fundamentally weak --

MOORE: Catherine, let me -- let me finish my point.

RAMPELL: -- which suggests a pause.

MOORE: The -- no, no, no, no. The economy is strong. The problem that we face in the future is a deflation because of these raising of interest rates.

I want the Fed to set a stable --

RAMPELL: What?

MOORE: -- price system. We don't have stable prices now. Catherine, we have deflation.

Look at what's happened with the -- you know, we've got a 10 percent decline in corn prices, soybean prices, cotton prices. But that -- yes -- no, there was a deflation on --

RAMPELL: We don't -- we don't have deflation right now. You can look at the CPI. There is not deflation right now.

HILL: One thing that we do have, though -- we do have a time limit, so I'm going to have to cut you both off there.

MOORE: Oh, damn.

HILL: The good news is you know we'll bring you back again and we're not done with this topic.

Stephen, Catherine, appreciate it.

MOORE: OK.

HILL: Thank you, both.

RAMPELL: Thank you.

HILL: John --

JOHN BERMAN, CNN ANCHOR: I'm going to use that. We have a time limit -- all right.

Who is Facebook sharing your personal data with? "The New York Times" report -- you know, the headline is this -- your private messages may not be so private. That's next.

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[07:42:47] HILL: This morning, Facebook is facing another stunning privacy scandal. And, yes, we're talking about your information. "The New York Times" reported the social media giant gave more than 150 partner companies intrusive access to users' personal data -- something that went on for years.

CNN's Brian Stelter joins us live to help explain.

So, first of all, these internal documents here that we do have, what do they reveal about the information that Facebook was sharing with these partner companies?

BRIAN STELTER, CNN CHIEF MEDIA CORRESPONDENT, ANCHOR, "RELIABLE SOURCES": Yes, there was a wide variety of private information being shared with these trusted partners. The companies say that this data was not abused, but the point Erica is that the public didn't know. Users didn't know about these various uses of data.

Here are a few examples involving different big tech companies. Sony and Microsoft, for example -- Amazon able to obtain e-mails with -- private messages with friends. Netflix, Spotify, and the Royal Bank of Canada able to read, write, and delete private messages.

Yahoo! able to view a real-time feed of friends' post. And, "The New York Times" which broke this story, also had access years ago -- access to friend lists.

Now these companies, like Spotify and Netflix, they say they did not abuse this access. In many cases, they say they never even looked at all.

The point, though, is that Facebook left the door open. They left the door open for this access --

HILL: Right.

STELTER: -- and that seems very worrisome.

HILL: Well, also, I mean, there are -- there are so many sort of layers to this, too. Although you may -- you may not have done it but if you knew you could do it should you have raised a red flag? That's a separate issue there. There is the range of information, as you pointed out there. The ability to delete people's messages -- messages they thought were private.

Facebook is obviously responding. Are they shedding much light on this?

STELTER: Well, the company is saying what it's said, frankly, all year long, which is we need to do better, we've got problems.

Here's a part of the statement from one of the company's representatives, saying, "We know we've got work to do to regain people's trust. Protecting people's information requires stronger teams, better technology, and clearer policies, and that's what we've been focused on for most of 2018."

And look, Facebook has been under scrutiny all year long about these issues for a number of reasons. There's this tension baked into the platform.

Facebook is where I go to find out about my friends' and families' lives, their health concerns, their babies, their plans. And yet, Facebook also profits from all that data and works with all these other companies. And the headline from "The New York Times" overnight is that all these other companies also were able to be in that relationship and unbeknownst to users.

[07:45:06] Now, technically, if you click the box -- if you hit OK, you might -- you might -- Facebook might say you've given permission.

HILL: Right.

STELTER: You've allowed it. But I don't think users actually know what's going on.

So there's two questions this morning. One, did Facebook violate its 2012 agreement with the FTC -- its consent decree? The company says it didn't; others say it may have.

And number two, what are regulators going to do now? What is Washington going to do now to provide more oversight for these big companies?

HILL: And question three -- and I think a lot of people at home have, too -- is any of this still going on --

STELTER: It's still going on.

HILL: -- and who may still have access, if anyone? What are they doing with that?

STELTER: Right.

HILL: A lot of questions, not always a lot of answers. We get them from you, though. So, Brian, we appreciate that.

STELTER: Well, thanks.

HILL: Thank you -- John.

BERMAN: All right.

Those Russian social media ads and posts designed to influence our election, they seem silly and almost obvious now. So why were they so effective and what does that say about our deeply divided society?

Senior political analyst John Avlon has your reality check -- sir.

JOHN AVLON, CNN SENIOR POLITICAL ANALYST: That's right.

So, the pair of new studies commissioned by the bipartisan Senate Intelligence Committee first found that Russia's social media messaging ahead of the election, quote, "Clearly sought to benefit the Republican Party and specifically, Donald Trump, as early as the GOP primaries." And not to mention, of course, all of the requisite hitting on Hillary.

But what's really stunning is how Russia's efforts to spread misinformation over social media preyed on America's identity politics divides. They targeted tribes on the far-right and far-left. And to look through their characters of identity politics is to see how easily duped we are by dividers.

For example, Russian trolls targeted memes to the religious right in the name of the so-called Army of Jesus and their appeals were not exactly biblically-based.

Here's a picture of Jesus arm-wrestling the devil as a proxy war for Clinton versus Trump. Or this meme showing Trump and Pence as the Jesus team and Hillary and her running mate, Tim Kaine, as the Satan team. There's even an image of Jesus wearing a MAGA hat.

And if you liked these you were duped by the Russians.

On the left, Russian trolls also targeted an African-American activist community, pretending to care about Black Lives Matter and victims of police violence on the prolific Blacktivist page. At the same time, Russian trolls were pumping up the so-called Blue Lives Matter movement, showing police funerals and blaming them on Black Lives Matter activists.

Supposedly, patriotic gun rights memes were created and promoted by Russian trolls, like this image declaring that, quote, "The 2nd Amendment Is My Gun Permit" -- as well as LGBT pages like this adult coloring book offering a look at a quote-unquote "Buff Bernie" which we did not need to see.

There were anti-immigrant memes that echoed Trump's fearmongering about illegal immigrants voting. And pages that celebrated the Confederate flag as heritage, not hate, and promoted Texas secession as the next step after Brexit.

There were memes that mocked politically correct culture and concerns about white supremacy and also attacking John McCain.

Perhaps most sinister was when all of this fakeness aligned to attack real journalism, from fake George Orwell quotes to memes that compared North Korean propaganda to real news.

Now, if all this is enough to give you whiplash, that was part of the point. The goal of this kind of disinformation is to confuse, divide, and distract -- to create anger and apathy, sometimes with the specific goal of driving down election turnout, such as this meme aimed at the African-American community or promoting the Green Party candidacy of Jill Stein, who received more votes in key swing states of Wisconsin, Michigan, and Pennsylvania than Trump's victory margin.

In all, 10.4 million tweets, 116,000 Instagram posts, 61,000 Facebook posts, and 1,100 YouTube videos.

But on the most fundamental level, the Russian trolls understood that our identity politics divides, the kind that focus on common enemies rather than our common humanity, is the real source of weakness in our society and they exploited it with unwitting Americans' help.

Now, there's a phrase used by the mass murdering founder of the Soviet Union, Vladimir Lenin, that applies to folks who liked and shared these links -- "useful idiots."

And that's your reality check.

BERMAN: Sobering, and I'm not just talking about like the muscular workout Bernie Sanders. The whole thing is sobering.

HILL: Yes, the whole thing is.

AVLON: It's surreal and sobering.

BERMAN: All right, John. Thanks very much.

HILL: Hacked cables revealing how the international community really feels about President Trump, Iran, and Russia. "The New York Times" reporter who broke this story joins us, next.

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[07:53:24] HILL: "The New York Times" has obtained more than 1,000 hacked European diplomatic cables. Those cables reveal the international community's serious concerns about President Trump, Russia, Iran, and more.

Let's discuss with the reporter who broke the story, national security correspondent for "The New York Times" and CNN political and national security analyst, David Sanger.

David, good to have you with us, as always.

Give us a sense as we look at these. James Clapper was with us a little bit earlier and he said this certainly doesn't rise to the level of WikiLeaks in terms of the information that is now out here. But still, it's significant that somebody thought it important enough to steal it, post it somewhere to be found, and then have those folks share it with you.

DAVID SANGER, CNN POLITICAL AND NATIONAL SECURITY ANALYST, NATIONAL SECURITY CORRESPONDENT, THE NEW YORK TIMES: Well, Erica, I think that's right. I think Gen. Clapper is correct. This is not on the scale of WikiLeaks, which was 250,000 U.S. cables. And, frankly, Americans cared more about those cables because they were American in origin and I think did reveal a bit more.

In this case, the hackers who followed all the patterns of a Chinese People's Liberation Army group -- I don't think intended for any of these to become public.

They did a sort of traditional phishing campaign against the European Union. They got in through Cypress, a small and less well-defended member of the E.U. And then, used that access to get all of the documents that -- appear to have gotten all of the documents that are exchanged daily among European diplomats through the E.U.'s main network.

[07:55:00] In doing so, they briefly passed through some public sites on their way up to the cloud, and it was there that a company called Area 1 found them and turned about 1,000 of them over -- a little more than 1,000 of them over to us.

What they reveal, as you suggest, is that the diplomats get assurances from the National Security Council that President Trump didn't mean exactly what he said when he spoke with Vladimir Putin at that famous Helsinki press conference.

They worry that the Russians have already put nuclear weapons into Crimea. They are concerned that Iran will use the excuse of the U.S. coming out of the nuclear deal to restart their nuclear program.

HILL: They also, too, were looking at even just a cable that refers to a July meeting with E.U. officials and Xi Jinping talking about U.S. demands -- both U.S. -- what we're hearing from the U.S. and U.S. demands are inconsistent.

When that's the message that's going out which isn't shocking, perhaps, to a lot of people who have been following the headlines, obviously -- but does having this out there do any damage to relationships with these countries?

SANGER: You know, at this point, given the state of relations between the European Union and the United States, I don't think so.

The cable you refer to though, Erica, I think was one of the most interesting. It was a private meeting between Xi Jinping, the president of China, and the Europeans in Beijing. It was an E.U.- China summit in which President Xi basically says the Americans never live up to their word. President Trump is bullying them.

But then he goes into this fascinating long reverie about how China, for 100 or 200 years, has bent to larger powers and in this case, now feels strong enough that it doesn't plan to go do it again. And what's interesting is that the president views this entire thing transactionally --

HILL: Yes.

SANGER: -- and Xi views it as part of a long historical continuum in which the tide has turned and China is going to make sure that it doesn't get run over again.

HILL: It certainly sets it up there, doesn't it?

As we talk about all of this -- and even just putting it into context as you did off the top -- these cables and this communication versus some of the other things that have been hacked and then leaked -- it still begs the question of what's the conversation like at "The New York Times" when Area 1 comes to you and say we have 1,000 cables that we found that someone hacked. We want you to have them. We think you should publish them.

How is that decision made because there's still people at home who are going to say why should we see these?

SANGER: You know, that's a very good question and we debated this at some length, and here was the reasoning.

First of all, these were posted in an open site. It's not as if we got them through a hacking process or that Area 1 did, as well. The Chinese, in moving them -- or whoever the hackers were, though they certainly appear to be China-based -- did that.

Secondly, there were no big national secrets here. There were no nuclear codes. These were at the restricted level and confidential level. They were not top-secret documents.

And thirdly, as we looked at it they sort of gave a backstory, one that you would frequently get in background conversations with European officials and others, to their interchanges with the president, with the Chinese, with the Iranians. And it just sort of confirmed how they're talking to each other on it.

There were no great privacy revelations here, Erica. These weren't -- these didn't get into personally private data in any way. They were the kind of discussions you would get in a background candid conversation if you sat down with a European official.

HILL: They also, which I know you've pointed out and which James Clapper also did point out as well this morning -- they also pinpoint the fact that people have been concerned about the communications systems within the E.U. for some time and there's a question about what this could lead to in terms of changes.

David, we're out of time.

SANGER: Absolutely.

HILL: You're always appreciated. Thank you. SANGER: Thank you.

HILL: Michael Flynn's legal journey is far from over. NEW DAY continues right now.

(BEGIN VIDEO CLIP)

SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: The FBI broke standard protocol in the way that they came in and ambushed Gen. Flynn.

JAMES COMEY, FORMER DIRECTOR, FBI: I'm very proud of the way the FBI conducted itself.

EVAN PEREZ, CNN SENIOR JUSTICE CORRESPONDENT: This judge repeatedly went back to Flynn to make him say that he was, indeed, guilty.

UNIDENTIFIED MALE: He stepped in front of a judge and said nope, I lied and I intended to. None of this makes sense to me.

KEN STARR, FORMER SOLICITOR GENERAL: We have a rule of law country. We saw that with checks and balances of Judge Sullivan.

REP. HAKEEM JEFFRIES (D), NEW YORK: Jared Kushner was authentically serious about trying to get something done to reform our broken criminal justice system.

UNIDENTIFIED MALE: Formerly incarcerated people, directly impacted people refuse to die on this.

UNIDENTIFIED MALE: To see bipartisan legislation out of Washington these days is force of revelation. Who knew it could happen?

(END VIDEO CLIP)

ANNOUNCER: This is NEW DAY with Alisyn Camerota and John Berman.

BERMAN: Good morning. Welcome to your NEW DAY. It is Wednesday, December --