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Early Start with John Berman and Zoraida Sambolin
Mattis Forced to Retire Early; Retail Commerce Up 4 Percent. Aired 4:30-5a ET
Aired December 24, 2018 - 04:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[04:30:00]
(COMMERCIAL BREAK)
JOHNS: The ongoing Defense Secretary forced to depart two months early. The president frustrated by the critical resignation letter from Jim Mattis.
(BEGIN VIDEOCLIP)
MICK MULVANEY, WHITE HOUSE CHIEF OF STAFF: It's very possible that this shutdown will go beyond the 28th and into the new Congress.
(END VIDEOCLIP)
ROMNAS: Day three of the Christmas government shutdown. Sides remain very far apart on the president's demand to fund a border wall.
JOHNS: The Treasury Secretary trying to reassure investors after the worst week for stocks in a decade, but Steve Mnuchin's solution has nothing to do with the actual symptom.
ROMANS: And did the president cross a red line venting to his acting Attorney General about revelations that implicate him in the Michael Cohen case? Welcome back to Early Start. I'm Christine Romans.
JOHNS: And I'm Joe Johns. It is now 31 minutes past the hour and we begin with Defense Secretary James Mattis being forced out of the job January 1, two months earlier than planned. Mattis announced his resignation Thursday saying his views were not aligned with Trump's. The departure triggered by the president's decision to withdraw U.S. troops from Syria. Acting Chief of Staff, Mick Mulvaney, defended President Trump's decision to pull out of Syria saying it's aimed at pleasing his supporters, but in the next breath supports don't understand the consequences.
(BEGIN VIDEOCLIP)
CHRIS WALLACE: He went against the recommendations of Mattis, McGurk, Dunford, the Chairman of the Joint Chiefs, apparently Pompeo and Bolton. Who is he listening to?
MULVANEY: Here's - the president listens to a bunch of different people, OK? Including the people - WALLACE: That's his national security team.
MULVANEY: But wait a second, including the people who live here and the ordinary Americans, the people he promised when he ran for office that he was going to leave. We recognize the fact that this is unpopular within the beltway. We recognize this fact as unpopular within the Defense Department. It's very popular with ordinary American people.
WALLACE: Do they really know what the stakes are of pulling U.S. troops out and leaving the Syrian Defense Force to the Turkish slaughter and what the impact is going to be on Iran? I mean, really? We're going to make this a plebiscite?
MULVANEY: Ordinary Americans have no idea about those things. They elect the president so that he does.
(END VIDEOCLIP)
ROMNAS: All right, one thing the president did not immediately realize was that Mattis was resigning in protest. He didn't get that right away. Once he got it, once that became clear, aids saying the president remarked Mattis is only being painted the smartest guy in the world because he was leaving the Trump administration. Now sources tell us senior military officials are worried about the uncertainty this upheaval is causing. With Mattis on the way out, who is in charge for now? Here's Pentagon Correspondent, Barbara Starr.
(BEGIN VIDEOTAPE)
BARBARA STARR, CNN PENTAGON CORRESPONDENT: Deputy Secretary of Defense, Patrick Shanahan, number two at the Pentagon, has been named by the president to become acting Secretary of Defense. There was a feeling inside the White House officially that they needed to get a new person in, that they didn't want Mattis in a lame duck position. But administration officials will tell you that behind the scenes the president was not happy with the extensive news coverage of Mattis's departure, of his resignation letter saying basically that he was resigning in protest over the president's decision to withdraw troops from Syria. So Shanahan now has the leading role here at the Pentagon. He has been involved mainly in things like acquisition reform and innovation. Now with no foreign policy experience, he will take on a national security role on the international stage dealing with America's military allies and America's military adversaries. Barbara Starr, CNN, the Pentagon.
(END VIDEOTAPE)
JOHNS: A lot of moving parts two years into a president's administration. The president's decision to pull U.S. forces out of Syria leading to another resignation. Brett McGurk, the Special Presidential Envoy for the Global Coalition Against ISIS has also decided to step down early. CNN has also learned that days before the president decided to withdraw, he made a crucial phone call to Turkish President Erdogan. CNN's Gul Tuysuz live with more on that from Istanbul. [04:35:00]
GUL TUYSUZ, CNN CORRESPONDENT: Before that decision was made to pull U.S. troops out of Syria, the Turkish President and Trump had a phone call, in which apparently Trump asked Erdogan what about ISIS? Can you handle ISIS? To which the Turkish President said yes we can as long as we have support from you.
And it was at that point that Donald Trump said, "OK, we're done. It's all yours." And that, of course, opens up a whole new can of worms in Syria because it really leaves the U.S. main ally on the ground in Syria in the fight against ISIS in a lurch. Turkey views those Kurdish fighting forces as an extension of what they call terrorists here at home. And in fact, Mattis's resignation came after hearing the words from the Turkish Defense Minister in which he said, referring to those Kurdish fighters, "they will be buried in the holes that they are digging."
So yes, U.S. troops are coming home from Syria, but at this time, that very vital fight against ISIS is being left up to the U.S.'s Turkish ally, who clearly has a very different agenda and a different set of priorities in - on the ground in Syria. Joe -
JOHNS: Some chilling details of that conversation and what could come next. Thanks so much for that.
ROMANS: Meanwhile, the third government shutdown of the year now entering its third day, and right now no end in sight.
(BEGIN VIDEOCLIP)
UNIDENTIFIED FEMALE: We apologize, but due to the lapse in federal funding we are unable to take your call. Once funding has been restored, our operations will resume. Please call back at that time.
(END VIDEOCLIP)
ROMANS: That's the recording you will get if you phone the White House. About 400,000 government workers working without pay, another 400,000 are sitting at home unpaid. A number of national parks and monuments shuddered for the long holiday weekend. I went to Bunker Hill yesterday with my kids - two days ago with my kids, and you could see the monument obviously, but you couldn't go into the museum.
JOHNS: Weird times.
ROMANS: Yes.
JOHNS: We haven't seen something like this -
ROMANS: Yes.
JOHNS: - around Christmas in, what, 20 years -
ROMNAS: Yes. JOHNS: - maybe longer? One thing that is working, Norad's Santa Tracker. Thanks to more than 1,500 military personnel and volunteers, incoming acting Chief of Staff, Mick Mulvaney, says it's possible this shutdown is going to be something the new Congress tackles (ph), duh. Lawmakers will be seated in early January. January 3 as a matter of fact. CNN's Sarah Westwood has the state of play at the White House.
SARAH WESTWOOD, CNN CORRESPONDENT: Well Christine and Joe, President Trump is bracing for what could be a lengthy shutdown that stretches beyond the holidays as he continues his demand for money for his promised border wall and Democrats continue their refusal to fund it. Now, recall that President Trump has initial demanded $5 billion in funding for the border wall, and he said that had to be for the construction of a physical barrier along the southern border. It couldn't just be for border security in general.
Now, sources say Vice President Mike Pence offered support for a border security package worth $2.5 billion if it included funding for the wall. That offer came during a meeting on Capitol Hill Saturday with Senate Minority Leader, Chuck Schumer, but those sources say Schumer rejected the offer, so the talks do still appear to be deadlocked.
Now, Trump has been all over the map when it comes to this shutdown. He first said he would be proud to accept responsibility for it if it was in pursuit of money for his border wall before shifting to blame Senate Democrats, but it's still unclear just how much less than $5 billion the president would be willing to accept, and it's unclear what, if anything, Democrats would be willing to approve because Democrats have little incentive right now to negotiate on the president's terms given that they'll be in the majority in the House in just about two weeks, Christine and Joe -
ROMANS: All right, Sarah at the White House, thank you. One final throw down between President Trump and outgoing Tennessee Senator, Bob Corker. Republican lawmaker and the frequent critic of Mr. Trump said this Sunday about the government shutdown.
(BEGIN VIDEOCLIP)
SEN. BOB CORKER (R), T.N.: This is a made up fight so the president can look like he's fighting, but even if he wins, our borders are going to be insecure.
(END VIDEOCLIP)
ROMANS: The president immediately went after Corker on Twitter saying that the Tennessee Republican wanted to run again, but his poll number tanked after, quote, "I wouldn't endorse him." The president says Corker asked for his endorsement and the presdient said no.
JOHNS: Corker pushed back when the president said, quote, "yes, just like Mexico is paying for the wall #alert the daycare staff." Remember that clip (ph). A quick fact check. CNN reported when Corker declined to run, the president offered to endorse Corker and asked him to reconsider his decision. ROMANS: All right, the Treasury Secretary, Steven Mnuchin, spent Sunday calling bank CEOs from his holiday in Mexico in a big to reassure investors after the worst week since the financial crisis.
First, let me give you the damage report. The Dow fell 6.9 percent, the worst weekly drop since October 2008. The S&P 500 last week lost 7 percent, its worst week since August 2011. The NASDAQ fell more than 8 percent, its worst since November 2008. A really bad week and the NASDAQ is now officially in a bare market.
So that's the damage report.
[04:40:00]
Here's Mnuchin's attempt at damage control.
In a statement after that call, those calls with the six CEO's, he said, the CEO's confirmed that they have ample liquidity available for consumer business markets and all other market operations. News flash, no one thought there wasn't ample liquidity.
The Treasury Secretary essentially telling the world that everything's fine when no one said it wasn't. The bank liquidity has not been a problem here. Then he added this, we continue to see strong economic growth in the U.S. economy with robust activity from consumers and business. Also true, no one has said that's not true. All three major averages are down more than 12 percent in December and they're on pace for their worst December since the Great Depression.
The market's are acting as if a recession is right around the corner, which is why the selling just might be overdone frankly. Yes, the blockbuster growth of last year -- this year rather, is likely to fade and risks like the U.S., China trade war are still out there, but some market veterans argue that a panicky Wall Street is prematurely pricing in a recession that may not happen until maybe 2020.
But messaging from the White House is not helping here. The president's attacks on the Fed Chief raising big concerns, a source said, the president has been asking advisors if he has the legal authority to fire his hand picked Fed Chair, Jerome Powell.
The president has often attacked Powell publically for raising interest rates and blamed him for the market plunge. Interest rates have gone up seven times since Trump took office, four of those increases have been under Jerome Powell.
JOHNS: As they say, don't start nothing, there won't be nothing, but it looks like they're trying to start something. CNN has learned that President Trump has vented to Acting Attorney General Matt Whitaker at least twice in last few weeks about the explosive revelations in the Michael Cohen case.
Sources say, the president is frustrated that prosecutors overseen by Whitaker file charges that made Trump look bad. Cohen pleaded guilty to crimes he said he committed at the president's direction. Now none of our sources say the president ordered Whitaker to stop the Mueller probe. That, of course, would be huge news.
ROMANS: But the conversations highlight how convinced the president is that the Attorney General should serve as his personal protector. Important to note, this is not just Mr. Trump venting about looking bad, this is the President of the United States confronting the nation's top law enforcement officer about a case in which he, himself, has been implicated.
The president's actual attorney, lawyer, Rudy Giuliani, could not confirm the conversations the Whitaker, but he said, the president does view Federal prosecutors in New York as out of control.
JOHNS: The Supreme Court appears to be getting involved in Special Council Robert Mueller's investigation for the first time. Chief Justice John Roberts has issued a pause on a judge's order, holding a mystery company in contempt of court. We don't know the name of the company, where it's based or why it's being investigated. Most of this case is under seal. It's being kept secret.
We do know the company is owned by a foreign government and received a grand jury subpoena that requires it to turn over information about it's commercial activity in a criminal investigation. The company asked the Supreme Court to get involved. Robert's order will give the justices' time to decide if they want to intervene.
ROMANS: All right, nearly 300 people including some beachside concert goers wiped away by a tsunami that hit Indonesia without warning. Overnight the government ordered equipment to direct tsunami's earlier. A live report next.
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[04:45:00]
In a statement after that call, those calls with the six CEO's, he said, the CEO's confirmed that they have ample liquidity available for consumer business markets and all other market operations. News flash, no one thought there wasn't ample liquidity.
The Treasury Secretary essentially telling the world that everything's fine when no one said it wasn't. The bank liquidity has not been a problem here. Then he added this, we continue to see strong economic growth in the U.S. economy with robust activity from consumers and business. Also true, no one has said that's not true. All three major averages are down more than 12 percent in December and they're on pace for their worst December since the Great Depression.
The market's are acting as if a recession is right around the corner, which is why the selling just might be overdone frankly. Yes, the blockbuster growth of last year -- this year rather, is likely to fade and risks like the U.S., China trade war are still out there, but some market veterans argue that a panicky Wall Street is prematurely pricing in a recession that may not happen until maybe 2020.
But messaging from the White House is not helping here. The president's attacks on the Fed Chief raising big concerns, a source said, the president has been asking advisors if he has the legal authority to fire his hand picked Fed Chair, Jerome Powell. The president has often attacked Powell publically for raising
interest rates and blamed him for the market plunge. Interest rates have gone up seven times since Trump took office, four of those increases have been under Jerome Powell.
JOHNS: As they say, don't start nothing, there won't be nothing, but it looks like they're trying to start something. CNN has learned that President Trump has vented to Acting Attorney General Matt Whitaker at least twice in last few weeks about the explosive revelations in the Michael Cohen case.
Sources say, the president is frustrated that prosecutors overseen by Whitaker file charges that made Trump look bad. Cohen pleaded guilty to crimes he said he committed at the president's direction. Now none of our sources say the president ordered Whitaker to stop the Mueller probe. That, of course, would be huge news.
ROMANS: But the conversations highlight how convinced the president is that the Attorney General should serve as his personal protector. Important to note, this is not just Mr. Trump venting about looking bad, this is the President of the United States confronting the nation's top law enforcement officer about a case in which he, himself, has been implicated.
The president's actual attorney, lawyer, Rudy Giuliani, could not confirm the conversations the Whitaker, but he said, the president does view Federal prosecutors in New York as out of control.
JOHNS: The Supreme Court appears to be getting involved in Special Council Robert Mueller's investigation for the first time. Chief Justice John Roberts has issued a pause on a judge's order, holding a mystery company in contempt of court. We don't know the name of the company, where it's based or why it's being investigated. Most of this case is under seal. It's being kept secret.
We do know the company is owned by a foreign government and received a grand jury subpoena that requires it to turn over information about it's commercial activity in a criminal investigation. The company asked the Supreme Court to get involved. Robert's order will give the justices' time to decide if they want to intervene.
ROMANS: All right, nearly 300 people including some beachside concert goers wiped away by a tsunami that hit Indonesia without warning. Overnight the government ordered equipment to direct tsunami's earlier. A live report next.
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ROMANS: Authorities warning more deadly tsunami's could strike the Indonesian coast lines in the coming days. The volcano which triggered the weekend's devastating wave continues to erupt.
At least 281 people dead, 1,000 injured, 11,000 displaced. The tsunami struck without warning Saturday night. Caught on camera, the massive wave crashing down on a crowd at a pop concert. CNN's Ivan Watson live in Hong Kong with the very latest. And that
lead singer the next day saying his wife was missing, two band members are dead, just a tragic situation there.
IVAN WATSON, CNN CORRESPONDENT: Yes, not only two band members dead, and his wife missing, but also three other band members also missing, among the dozens of people that authorities are looking for after this disaster during what is supposed to be a long Christmas holiday weekend in Indonesia.
There are a lot of questions being asked about the threat of a second possible tsunami in this areas because the volcano that the experts in Indonesia believe triggered this tsunami is still very active. It has been active for months.
It's called Anak Krakatau and the experts in Indonesia are saying that part of what surprised everybody on Saturday night were there were no tsunami warnings and that's in part because volcanic activity doesn't trigger some of the early warning systems that an earthquake would in other cases.
But, there's a bigger problem here, Christine, just last September there was an earthquake and a tsunami that killed about 2,000 people in another part of Indonesia and the authorities then were saying, hey, our tsunami early warning system is not working.
We've got this buoys out in the ocean attached to the ocean floor and most of them are not functioning due to theft and vandalism and they're just not being kept up to date. And here we are some four months later and another deadly tsunami rips through.
But there are some major challenges here. Indonesia is made up of more than 17,000 islands, that's a tremendous amount of coastline to protect, it's also in the ring of fire. We have more than 120 active volcanoes and it's in a earthquake zone too.
[04:45:00]
Unfortunately, though, as the deadly evidence has shown, something more needs to be done to protect people in these coastal areas from these deadly walls of water. Christine -
ROMANS: I mean, it seems as if it's a fact of life they've got to figure out the early warning system. All right, Ivan Watson, thank you so much.
JOHNS: British officials say Al-Qaeda is resurgent and could once again target passenger jets. Security Minister, Ben Wallace, telling the Sunday Times, "Al-Qaeda sat quietly in the corner and tried to work out what the 21st century looked like while ISIS became the latest terrorist bad boy band, but meaning Al-Qadea, they have not gone away." His remark follows extensive disruption last week caused by rouge drones at London's Gatwick Airport. That case is not considered terrorism.
ROMANS: But certainly it did tie up -
JOHNS: Yes. Certainly did.
ROMANS: - a whole lot of travel. All right, the King of Atlantis won the holiday box office beating out a Transformer and a magical nanny, a wonderful magic nanny actually. Emily Blunt was terrific in Mary Poppins.
JOHNS: I got to see that.
ROMNAS: CNN Business is next.
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[04:50:00]
WATSON: a tremendous amount of infrastructure. Unfortunately, though, as the deadly evidence has shown, something more needs to be done to protect people in these coastal areas from these deadly walls of water. Christine -
ROMANS: I mean, it seems as if it's a fact of life they've got to figure out the early warning system. All right, Ivan Watson, thank you so much.
JOHNS: British officials say Al-Qaeda is resurgent and could once again target passenger jets. Security Minister, Ben Wallace, telling the Sunday Times, "Al-Qaeda sat quietly in the corner and tried to work out what the 21st century looked like while ISIS became the latest terrorist bad boy band, but meaning Al-Qadea, they have not gone away." His remark follows extensive disruption last week caused by rouge drones at London's Gatwick Airport. That case is not considered terrorism.
ROMANS: But certainly it did tie up -
JOHNS: Yes. Certainly did.
ROMANS: - a whole lot of travel. All right, the King of Atlantis won the holiday box office beating out a Transformer and a magical nanny, a wonderful magic nanny actually. Emily Blunt was terrific in Mary Poppins.
JOHNS: I got to see that.
ROMANS: CNN Business is next.
(COMMECIAL BREAK)
ROMANS: An absolute miracle just days before Christmas. Royals Caribbean's Empress of the Seas rescued two fisherman Thursday after almost a month at sea. Royal Caribbean's Chief Meteorologist says strong winds pushed the men way off couse as they slept. They were out of fuel, they were low on fresh water, and they were surviving off what fish they managed to catch. The cruise ship spotted them halfway between Grand Cayman and Jamaica. The ship was only there because the big cruise ship has been rerouted due to inclement weather. The fishermen were brought on board and given water and medical attention and $300 to buy clothes and food.
JOHNS: You got to wonder what are the odds of that. Christmas is a good time for gratitude to remember, to remember the dedication of U.S. service members stationed around the world. A lucky few get to come home for the holidays, so grab the Kleenex. Here's Polo Sandoval.
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POLO SANDOVAL, CNN CORRESPONDENT: A visit to Santa Claus -
SANTA CLAUS: So what would you like for Christmas?
UNIDENTIFIED FEMALE: For my dad to come home.
SANDOVAL: - turned into a special delivery for these two Minnesota sisters.
UNIDENTIFIED FEMALE: Daddy!
SANDOVAL: Their father, a solider stationed in Kuwait, surprised his daughters just in time for Christmas. It's among the many emotional reunions caught on camera between military members and their families this holiday season. A Wisconsin boy's older brother serving in the Army -
UNIDENTIFIED FEMALE: There's your brother!
UNIDENTIFIED MALE: What's up, buddy?
SANDOVAL: - surprised him at school with a big hug after five months apart. The soldier then marched down the hall to his other sister and brother.
UNIDENTIFIED MALE: It made me feel warm inside.
SANDOVAL: In this viral video, a little boy presented with a large Christmas gift?
UNIDENTIFIED FEMALE: What do you think it is?
UNIDENTIFIED MALE; I don't know! I don't even have an idea yet.
UNIDENTIFIED FEMALE: I think you're going to like it.
SANDOVAL: Inside the box a loved one in military fatigues (ph).
UNIDENTIFIED FEMALE: Oh my God!
SANDOVAL: The person who posted this wrote, "my nephew got to unwrap the only Christmas gift he ask for a few days early. A small army of family members kept this airman from even getting through the door in Sacramento.
UNIDENTIFIED FEMALE: What the heck?
UNIDENTIFIED MALE: Surprise!
SANDOVAL: And finally, at a Christmas choir concern in Indianapolis, and unexpected interruption.
UNIDENTIFIED FEMALE: Ms. Avery Hinton (ph), you have a present under the tree.
SANDOVAL: It lead to a mother serving in the Navy embracing her daughter just in time for Christmas.
AVERY HINTON (ph): It's been a really long year and so many things have happened and I've just missed her so much. And it just makes this Christmas extra special for surprising me.
SANDOVAL: For some of these service members, another deployment could be next, but for now the current marching orders include being home for the holidays. Polo Sandoval, CNN, New York.
(END VIDEOTAPE)
ROMANS: You don't have a heart if you don't cry during those (ph).
JOHNS: Unbelievable.
ROMANS: Thank you for service, everybody. Thank you, families especially. Let's get a check on CNN Business this morning. Global markets are lower after a terrible week on Wall Street. In Asia, markets are mostly lower. You can see Tokyo, Hong Kong down, but Shanghai up a little bit. The European markets actually have opened up and you can see they are mixed as well. On Wall Street, Futures look like they're down a little. Is that the right Futures number, guys? This is Dow Futures. Looks like Futures are down here.
All right, so we'll watch for that. It was a rough week for stocks, the worst in a decade for the Dow. Here is the damage report. The Dow fell 6.9 percent, the worst weekly drop since October 2008. The S&P 500 lost 7 percent, its worst week since August 2011. The NASDAQ fell 8 percent, the worst week since November 2008. Those are terrible comparisons, and the NASDAQ is now officially in a bare market. U.S. markets close at 1 p.m. today, will be closed tomorrow for Christmas.
All right, retailers preparing for the final sprint of holiday shopping as warning signs are flashing about 2019. Data from Adobe Analytics and the National Retail Federation signal a strong holiday shopping stretch so far, but investors are nervous about the U.S.- China trade war and a slow down in overseas markets. For now, Americans are buying everything from TVs to toys to clothes. According to the latest data from Commerce Department, retail sales increase more than 4 percent last month. Consumer confidence is high. Wages are ticking up. Shoppers are spending. The big question is how long will it last?
Now, The King of Atlantis won the holiday box office by beating out a transformer and a magical nanny.
[04:55:00]
