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Markets Rebound; Trump Fumes over Fed Chief; Child Dies in Government Custody; Withdrawal from Afghanistan. Aired 1-1:30p ET

Aired December 26, 2018 - 13:00   ET

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

[13:00:00] MANU RAJU, CNN ANCHOR: Anytime soon.

Thank you guys so much for joining us.

And thank you for watching us and for joining us today on INSIDE POLITICS.

Right now, Dana Bash takes over right now.

DANA BASH, CNN ANCHOR: Hi, everybody. I'm Dana Bash, in for Brianna Keilar. I want to welcome our viewers in the United States and around the world.

We start with some positive news for investors. Right now the market is up 536 points. It's been a bit of a roller coaster. That's an understatement. The finish is expected to be on the positive side. And if that happens, it would be a very, very welcome sign after historic, historic bad days, including the worst Christmas Eve drop in history.

I want to get straight to CNN business correspondent Alison Kosik, who is on the floor of the New York stock Exchange.

Alison, what's pushing the market up today?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Well, you know, one thing I did notice, Dana, is that President Trump didn't tweet about the markets. Maybe that could have something to do with it. Otherwise, it looks like investors are more willing to dip their toes back into the water today with this rally of the Dow up 500 points.

But getting here wasn't a straight line because we did see the Dow rally triple digits this morning and then dipped into the negative and now is rallying again. Look, we've got three more hours left in the day. It's anyone's guess where stocks will wind up because the reality is the same worries that were weighing on Wall Street just days ago continue to weigh on Wall Street. That's the Fed's path of interest rate hikes, the unresolved trade situation between the U.S. and China, what the earnings picture is going to look like next year for corporate Americans. It's expected to be slower than this year.

And then, of course, there are concerns about slowing economic growth globally. And, finally, there's one more thing added to Wall Street's plate, political risk. Every time the president tweets and attacks Fed Chair Powell, we certainly see the market react negatively. That is something that undercuts confidence here in the market.

Dana.

BASH: Yesterday was the last time the president spoke about the Fed chair and it was Christmas, so the markets were closed, at least in the U.S. But you saw the effect overseas.

We're going to keep an eye on the floor and on the markets.

Alison, thank you so much.

Meanwhile, here in Washington, the outlook is less positive, at least for some in the Trump administration. A source close to the White House tells CNN that the president has grown frustrated with his Treasury Secretary Steve Mnuchin. And Mnuchin's not the only one. The president has, as we discussed, very publicly been fuming over Fed Chair Jerome Powell, somebody he appointed. And there's now a chance the two men could meet in the new year.

Let's bring in CNN White House reporter Sarah Westwood, live at the White House.

Sarah, it is not a new storyline for the president to take his frustrations on events out on people and personnel close to him. But when it comes to the Fed chair, we've heard over the past several days his administration official try to rein in and calm the markets about any notion that he could fire Powell. What are you hearing today?

SARAH WESTWOOD, CNN WHITE HOUSE REPORTER: That's right, the president has long been blaming the Federal Reserve and his pick to run it, Jerome Powell, for stock market downturns. He's claimed in the past that the Fed has gone crazy by Powell's decision to raise interest rates multiple times throughout his administration, claiming that Powell did it too quickly, claiming that that has undercut economic growth.

But the White House today has tried to reassure investors after stock markets slid on Christmas Eve and they're trying to reassure Wall Street that there is no liquidity crisis after Treasury Secretary Steve Mnuchin sent confusing signals earlier this week by saying that their -- that the banks have ample liquidity, which is not something people were worried about until Mnuchin brought it up.

Now, top economic adviser Kevin Hassett told reporters outside the White House today that the partial government shutdown is not likely to have a negative impact on the markets and he said that Powell's future at the Federal Reserve is 100 percent safe. Take a listen.

(BEGIN VIDEO CLIP)

KEVIN HASSETT, WHITE HOUSE ECONOMIC ADVISER: What happens in the end is that people get their pay. They might miss a pay period. So, in the end, it's not -- it's really just a sort of short-term problem, not a long-term problem for government workers. In the end, a few week shutdown is not going to be something that has any kind of significant effect on the outlook. QUESTION: Is the Fed chairman's job safe?

HASSETT: Yes, of course, 100 percent, yes.

QUESTION: One hundred percent the Fed chairman's job is not in jeopardy by this president.

HASSETT: Absolutely. That's correct, yes.

(END VIDEO CLIP)

WESTWOOD: Now, a source tells our colleague Kevin Liptak that Powell and the president could meet sometime in the new year, that aides hope to orchestrate such a meeting because it might help ease tensions between the two men and allow the president to have a conversation with Powell, who he's been speaking about publicly for a while. That kind of meeting wouldn't be unprecedented, but it would be rare because a lot of White Houses do try to preserve the independence of the Federal Reserve.

[13:05:04] But we know that the president is particularly sensitive to downturns in the stock market because for so long, Dana, he's characterized stock market rallies as proof of the success of his economic agenda.

BASH: He sure has. And at least one of the people we're about to talk to has begged the president not to do that publicly and probably privately as well.

Sarah, thank you so much.

Let's bring in two former Trump advisers, Stephen Moore, who I was just talking about, a senior economics analyst for CNN. He previously advised the president on economics. And Steve Cortes is a CNN political commentator and the former head of Trump's Hispanic Advisory Council.

Stephen Moore, I want to start with you about the notion of a Powell/Trump meeting. The president bringing in the Fed chair to have a conversation. Good idea or bad idea?

STEPHEN MOORE, CNN SENIOR ECONOMICS ANALYST: Well, first of all, Dana, let me say, maybe there is a Santa Claus when I see this 500 point rise in the stock market. Let's hope it keeps up.

And, incidentally, I think that's a result -- you know, you were asking why markets are up a bit. I think stocks are very cheap right now. Or, you know, as my buddy Larry Kudlow, who's now the chief economist for Donald Trump likes to say, you know, earnings are the mother's milk of the stock market. And earnings continue to be very strong and so I think stocks are still pretty cheap.

BASH: And, Stephen, come on, you don't think it has anything to do with the fact that the president has been silent for 24 hours on the economy? MOORE: Oh, sure. Look, I mean the -- no, no, actually, I'm not so sure

I'd agree with that. But I do think there's a lot of political risk out there, I agree with you totally on that, Dana. I mean you do have the situation with the China trade and what's going to happen with the Fed and so on.

Now, look, Donald Trump is very frustrated with the Fed. He believes, and I think he's exactly right, about the Fed made a major mistake last week, a couple days, you know, a few days before Christmas, raising rates when in fact they should probably be lowering them. But it's -- it was interesting to me. I was a bit surprised when my buddy Kevin Hassett said 100 -- didn't he say 100 percent chance that --

BASH: Yes.

MOORE: Trump would keep Powell? That was news to me. We will see because I know Donald Trump is frustrated with Powell. But don't forget, Dana, that Donald Trump is the one who appointed Powell.

BASH: Yes.

MOORE: So, you know, he only has himself to blame.

BASH: But should they meet? Should the two of them meet?

MOORE: Should they? You know, that's a good -- I was thinking about this today because it might put Powell in a bit of an awkward position if he meets with Trump because he could be seen as being strong-armed by Trump. On the other hand, you know, every president, and I shouldn't say every president, but it's been pretty routine, the presidents would meet with the Federal Reserve chairman to talk about the condition of the economy.

STEVE CORTES, CNN POLITICAL COMMENTATOR: Right. Right.

BASH: Steve Cortes, you're agree?

CORTES: And, Dana, I think, you know -- right. Also what's important here is it's very routine for presidents, by the way, to struggle and fight with the Fed. Often in the age of Trump, anything he does mainstream media immediately erupts and acts as though it's totally unprecedented. And that's simply not the case.

George H.W. Bush, for example, blamed his re-election loss on the Fed and presidents fighting with the national bank in our country goes all the way back to Andrew Jackson. So there's a very long tradition of tension, in fact, in this relationship.

Now, I would say that the president, I think he's exactly right to be critical of the Fed. I agree with my friend Steve Moore. I think the Fed erred badly last week by raising rates when if, if anything, deflation, they don't like -- a complete lack of inflation seems to be the risk globally right now. So I think they errored.

But I also will say that President Trump, who I greatly support, I think he made a mistake by publicly calling him out. He effectively put him verbally in a corner and almost dared him to raise rates. I think, in that situation, Powell has to try to defend the institutional integrity of the Fed. So I much prefer quiet conversations in the Oval Office rather than public ones on Twitter when it comes to trying to persuade the Fed that they can slow down, and they should slow down.

BASH: And, Steve Cortes, as a supporter of the president, as a supporter of his -- or as somebody who agrees with his frustration with the Fed, do you think Powell should potentially be fired?

CORTES: Not at this point. But, listen, I -- you know, I -- this is a president who likes to fire people, who's very demanding of his subordinates and I think it's OK to put them on notice to say, I think you made a very serious mistake, one that's been costly for this country and let's talk about policy going forward. Not meaning --

BASH: But isn't that helping to shake the markets? I mean now it's up, what, 470.

MOORE: Well, can I --

CORTES: Well, I think --

BASH: But that wasn't the case when he was tweeting about the Fed and talking about the Fed.

CORTES: Look, I don't think that was helpful. But if we look at the markets, by the way, you know, for sure it was not helpful that the Fed raised rates and I think that was part of what -- of the market turmoil.

But the market turmoil really began in early October, well before this recent rate rise. I believe, personally, that the main reason the markets are so volatile right now is because at that point in early October it became pretty obvious, I think, to capital markets that the Democrats were going to win the House. And the Democrats are hell bent, and I've said this from day one and a lot of people don't believe me but I still stick by it, they are hell bent on impeaching this president. And that has introduced political risk into the United States. Something that investors simply haven't had to deal with for a very long time.

[13:10:09] So I pin the blame -- if we're going to pin the blame in Washington on politics, I think it is politics largely that's roiling the market. But it's not Trump's tweets, which I didn't like, it's much more the fact that the Democratic House is intent on at best an investigatory circus of this president, and at worse an actual impeachment of this president. And financial markets simply don't like that prospect.

BASH: Stephen Moore, real fast. We --

MOORE: Dana, there's one other --

BASH: Go ahead.

MOORE: Yes.

I was going to say, the other big wildcard out there we haven't even talked about yet, which I think -- I mean I agree with Steve Cortes, but I think a much bigger factor than all of this is this China trade situation. And, you know, we -- Trump has given President Xi in Beijing, what, 60 days now to come up with some kind of deal that America can live with. This is the kind of fight of our time. It's affecting all the global economy. But the upside here, Dana, and I said this on your show the other day but I'll say it again, if Trump can pull out a victory here, and I think there's a decent chance of that, I don't know if you'd agree with this, Steve, but I think the market booms if that kind of thing happens.

BASH: Yes, look, it's --

CORTES: No, I --

BASH: It is uncertainty that we are seeing real-time and it is a big "if," it is a big risk that --

MOORE: Yes, but it -- but this is the right time for --

BASH: Yes.

MOORE: This is the right time to be fighting this fight with China because we can't go on with this abusive relationship.

CORTES: Well, and -- right.

BASH: We'll see -- we'll see at the end of this 60 day deadline.

CORTES: And also we --

BASH: Real fast, Steven Cortes.

CORTES: Also just, main street's doing great. So don't get too hung up on market machinations beau case main street, consumer confidence, manufacturing indices, small business, all of it is surging. The Christmas spending was the best in six years that we just saw this year. So there is fantastic news out there in main street growth, even if markets are nervous.

BASH: I am proud to say that I contributed to that uptake in Christmas shopping. I'm sure you did too. Both of you joining me from Chicago. Thank you so much.

MOORE: Thank you.

CORTES: Thank you.

BASH: And coming up, new details emerging over the death of an eight- year-old boy in Border Patrol custody. The agency now floating new policy in the hopes of avoiding another tragedy.

And, brace yourself, the fight resumes tomorrow on Capitol Hill as lawmakers come back to the table to try to reach a deal to fully reopen the government.

(COMMERCIAL BREAK)

[13:16:49] BASH: Immigration and Custom Enforcement officials are unexpectedly dropping off hundreds of migrants at a park and bus station in El Paso, Texas. Local officials say it's a significant uptick, adding that they are expecting 1,200 migrants in the next few days. The agency came under fire after failing to notify shelters they were bussing in the migrants. That left local officials scrambling to find ways to house and feed them.

An autopsy is scheduled for today for an eight-year-old Guatemalan child who died in U.S. Border Patrol custody. This is the second death of a Guatemalan child in custody along the southwest border in a month. It is prompting a number of changes nationwide in the agency.

I want to get straight to CNN correspondent Nick Valencia, who is in El Paso.

Nick, what have you learned first about what happened to this eight- year-old child?

NICK VALENCIA, CNN CORRESPONDENT: Well, Dana, as you mentioned, the body of that eight-year-old is currently in Albuquerque, New Mexico, undergoing an autopsy. Still no official cause of death. All of that will be part of the investigation.

But this child, Dana, was effectively diagnosed with a common cold. And within 14 hours of a CBP agent first noticing that this child didn't look well, the child died. All of that is going to be part of the investigation. CBP saying that the child did get medical treatment. He was prescribed amoxicillin, a generic antibiotic, which is a little bit curious for us here. If he just was diagnosed with a common cold why he was given that. He was also given ibuprofen. And according to the CBP timeline, he did take medication. But within hours after taking that, he was nauseous, he was vomiting, he lost consciousness and he never regained it, dying on his second trip back to the hospital.

According to CBP commissioner, because of these incidents, here we are talking about yet another child who's died in U.S. custody, they're taking steps effective immediately, more health screenings for all the children currently in custody with the primary focus being on children ten years and younger. They're also getting more resources from the Department of Defense, as well as CDC help in what Secretary Nielsen with the Department of Homeland Security says is an uptick of illnesses that they're seeing as these migrants are crossing. So these incidents, these tragic incidences have led to some very real changes with CBP.

Dana.

BASH: Well, that's good to hear that there are changes.

Let's talk more about what we reported coming in to you, which is that ICE is dropping off migrants in El Paso. You're in El Paso. What are you seeing and hearing?

VALENCIA: So we were told that no migrants would be dropped off at this bus station today. But what we're seeing, and what we can report now is, in the course of the last 30 minutes, we've seen just over a dozen or so migrants coming from CBP custody be dropped off here with the help of what appears to be local volunteers. Not with any specific agency.

But I did get a chance to talk to one of those migrants who was dropped off. He said he was part of the group. He confirmed to me that he was in custody for three days. And when I asked him why now, why is he being released, he said he wasn't told any reason specifically. He says it was just his time to go. He was told it was time to go, so they left.

I asked him, interestingly enough, if he was going to apply for asylum or if he was here applying for asylum. He said, no, that he was just released. I asked him what his plans were now. He said he's on his way to Missouri, where his family has bought him a bus ticket.

But what we're seeing now with our own eyes here, our crew here, is that migrants are being dropped off with the anticipation of even more to come, Dana.

[13:20:12] BASH: So interesting.

All right, we'll, we're going to get back to you as you see and hear more of that where you are in El Paso.

Nick Valencia, thank you so much for that report.

And CNN sources say President Trump is set to announce a massive troop drawdown in Afghanistan. Up next, a CNN exclusive. The top military commander in the region lays out the risks that move could pose to America's safety.

(COMMERCIAL BREAK)

[13:25:16] BASH: In the next two months, there could be a major shift in the 17 year war in Afghanistan. President Trump has ordered the military to begin planning withdrawal of roughly 7,000 troops in the country according to a military official. It raises a lot of questions about how the mission will ultimately end.

Well, right before that news broke, CNN's Kate Bolduan traveled to Afghanistan with Republican Senator Lindsey Graham and, in an exclusive interview, she talked to the new top commander of U.S. and coalition forces, Four Star General Scott Miller, to get his perspective.

(BEGIN VIDEOTAPE)

LT. COL. KEITH BENEDICT, U.S. ARMY: We truly believe that we're here defending the homeland by preventing safe haven for terrorist organizations here in this region! PFC BRENNEN BLEDSOE, U.S. ARMY: The training we get, the mission we're

on, it's just -- I feel like I'm actually doing something for my country.

KATE BOLDUAN, CNN ANCHOR, "AT THIS HOUR." Two different soldiers, two different stories. Lieutenant Colonel Keith Benedict, he joined the military a month before 9/11.

BENEDICT: This is my fifth deployment, fourth to combat. I went to Iraq in 2006 to 2007 and then in Haiti in 2010 and now three times to Afghanistan.

BOLDUAN: Private Brennen Bledsoe was three years old when the 9/11 attacks happened. Now on his first deployment.

BLEDSOE: This is what I signed up for. As long as I have a good head on my shoulders and I stay on my task and know what my job is, no, I'll be fine.

BOLDUAN: These soldiers say they know what their mission is, but now, 17 years in, what about the overall mission today? I asked Four Star General Scott Miller, the new top commander of U.S. and coalition forces in Afghanistan.

BOLDUAN (on camera): You've been in command for a few months now. We've seen other top military officials offer their assessment that things here are essentially a stalemate. I want to know your assessment though of where things are right now.

GEN. SCOTT MILLER, COMMANDER, U.S. AND COALITION FORCES IN AFGHANISTAN: This fight will go to a political settlement. I mean these is a -- these are two sides that are fighting against one another. One -- which neither one of them will achieve a military victory. At this stage, I'd like to -- I'd like how the Afghan national security forces are performing.

BOLDUAN: Seventeen years on, why is the United States still here?

MILLER: This is ultimately about national interests, not just for the United States, but it's vital national interests. 9/11, terrorist groups came from here and today there's other terrorist groups that could affect external to Afghanistan and the homeland.

BOLDUAN (voice over): Our exclusive sit-down came after General Miller briefed U.S. ambassador to Afghanistan, John Bass, and Republican Senator Lindsey Graham, on a trip there to visit the troops.

BOLDUAN: Ambassador, if a political solution is the reality in the end, how do you get there?

JOHN BASS, U.S. AMBASSADOR TO AFGHANISTAN: Well, we've got an opportunity today that we didn't have six or 12 months ago to see if it's really possible to achieve that political settlement that General Miller indicated is the only way this conflict ends. We don't know if we're going to be successful. I think what we have to see is whether the Taliban is interested in responding to the deep desire of the Afghan people for peace.

BOLDUAN: When you look at the -- over the 17 years, the troop levels, over 100,000 at one point down to just over 10,000 now, do you have enough? Can you be successful with the U.S. mission with even less troops?

MILLER: We have the resources we need. The Afghans, this is an Afghan fight. Resolute support provides support. And we enable them when able. But make no mistake, the Afghans are in the lead in this fight. And you can see that through the casualty figures, but it's their fight now.

BOLDUAN: You mentioned 9-11. You were one of the first troops into Afghanistan after 9/11. Do you want to be the commander who ends U.S. involvement in the war in Afghanistan?

MILLER: What I tell people is, when I leave Afghanistan this time, and I tell this to the Afghan people, it will be my last time as a soldier. And what I'd like to leave is a country that's peaceful and unified. And that's a tall order, but that's what I -- would be my hope.

BOLDUAN: You're confident you can accomplish that?

MILLER: We'll keep working at it. Again, we'll keep supporting the political process. We'll keep supporting the Afghan security forces. All designed to support the political process. And so I do -- I do see some pathways of hope.

BOLDUAN (voice over): Until then, it's another holiday season with U.S. troops stationed in Afghanistan. Another holiday 14,000 service members are spending away from their families, like Major Isaiah Thomason, a father of two with twins on the way.

BOLDUAN (on camera): What is it like being away for another holiday?

[13:29:54] MAJOR ISAIAH THOMASON, COLORADO AIR NATIONAL GUARD: It's tough. You know, like I said, now with kids, you know, Christmas is a lot more important to them, so it becomes a lot more important to me. So missing their faces, you know, FaceTime helps a lot, but, still, you can't make up for it.