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Dow Declines After Biggest One Day Point Gain; Capitol Hill Remains Quiet. Aired 2-2:30p ET
Aired December 27, 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] RYAN NOBLES, CNN CORRESPONDENT: On Wall Street, where the Dow has gone from its biggest one-day point gain in history, on Wednesday, to a triple-digit decline today. And don't forget about the worst Christmas Eve that kicked off the week.
And that's just this week. The long-term, we're seeing a picture that is even bleaker. This month is shaping up to be the worst December for the U.S. markets since the depression.
Here to help us make sense of everything that is happening on the stock exchange, CNN business correspondent Alison Kosik. Alison, the Dow has either gained or lost more than 350 points in seven of the past eight trading sessions. What is behind all this volatility?
ALISON KOSIK, CNN CORRESPONDENT: Yes, just to take your stats one step further, there have been 18 trading sessions in December. And 11 of those, the Dow has made a triple-digit move; that shows just how volatile things have gotten here for stocks.
And if you look at the six-month timeframe, the Dow has lost thousands of points. If you look at the year, all the major indices are in the red. The Dow is down 9 percent for the year. The S&P 500, down 9.5 percent. The NASDAQ, down more than 7 percent. So all of those gains wiped out; volatility certainly adding to the pressure.
To get more now on why this is happening, let's go to Alan Valdes; he is the senior partner with SilverBear. Thanks for joining us today. So we're going to look right over there, and talk to the folks as to why - why this volatility and when is it going to end. Is it going to end?
ALAN VALDES, SENIOR PARTNER, SILVERBEAR CAPITAL: Well, you know, one of the main factor is uncertainty. Wall Street hates uncertainty, and we have uncertainty all over the board, whether it's events out of China, whether it's the Fed, whether it's politics here in the America. So this uncertainty, until we get some clarity, I think you're going to see this volatility continue.
KOSIK: Clarity on what?
VALDES: On, well, China; will the tariffs fade to the background and we'll have some sensible meaning coming out of there? Will the Fed, instead of raising three times next year, maybe two times, maybe one time; we need to know what's going to happen there, and politics, what's going to happen when the new Congress comes in with the administration. Are they going to start impeachment proceedings right away? All this weighs on the sentiment for the investor.
KOSIK: OK, so do you see that clarity coming down the pike, even if it's one of those prongs?
VALDES: I do. I think, next year, we'll have a lot more clarity. I think the Feds will come out and probably say, I believe just maybe two more rate hikes and not three, and if we know that we can adjust for that.
And I think events in China, I think that'll come to a head, and I think it behooves China, as the U.S., to get that settled with the tariffs. So I think that'll come. Politics, it'll always be here, so I don't think there's any clarity coming out of there. But again, the market can look past politics, if we get some clarity in the other events.
KOSIK: All right, so it's all about having a little more certainty and a little more clarity. Alan Valdes, thanks so much for your insight, really appreciate it.
VALDES: Happy New Year.
KOSIK: Happy New Year to you. And we shall see, Ryan, if that actually happens. Just remember what's happening now; you're seeing a lot of volatility as well, as a lot of these investment houses try to square their books as they close the calendar on 2018. Ryan?
NOBLES: All right, uncertainty, the key word there. Alison Kosik live from (ph) the New York Stock Exchange. Alison, thank you.
KOSIK: Thank you.
NOBLES: Let's go now to Peter Nicholas, he's the White House correspondent for The Wall Street Journal. Peter, I assume you heard what Alan Valdes had to say there about the uncertainty. I mean what does history tell us about U.S. markets that have wild swings like this?
PETER NICHOLAS, WHITE HOUSE REPORTER, THE WALL STREET JOURNAL: Well, it's an interesting thing; at the White House, they're kind of puzzled by all this. They believe that the economic fundamentals are strong, that growth in America is good, unemployment is low.
So they're scratching their heads a bit about some of this volatility that we've seen. Senior officials I've spoken to attribute it to an overcorrection, a natural overcorrection, to overheated markets.
So they think that's one reason, and they also are looking at structural problems, perhaps, in the marketplace. But they don't really understand that these wild dramatic swings that we've seen in there; they think, to some degree, it's inconsistent with the strong economic fundamentals.
NOBLES: That's an interesting point you make, that it's an overcorrection. Do overcorrections traditionally have these wild swings, you know, 350 points, from one day to the next?
NICHOLAS: Yes, the sense I get in talking to some economic officials in the Trump administration is that this is beyond - this might be even beyond a normal overcorrection to - to a hot market.
And I think that there's - to some degree, they understand that perhaps there needs to be, as your previous guest mentioned, some more predictability, some more stability; maybe the political situation has to calm down somewhat.
NOBLES: Yes, so one of these political situations that you've reported on an awful lot is the future of the Fed chairman, Jerome Powell. I mean how much of the volatility do you think can be attributed to the president's attempts to influence Jerome Powell in his decision making?
NICHOLAS: Well, I've talked to senior - former senior treasury officials who've said they've talked to Treasury Secretary Steve Mnuchin; they have urged him to get the president to stop tweeting - to stop tweeting about Jerome Powell. And they feel that this is a source of volatility to the markets.
And they would like to the president to maybe back off in terms of some of criticisms of Powell and Fed interest raising practices. But others have gone down this road, too. It's very difficult to - to get the president to lay off Twitter.
NOBLES: Do you think it's possible, the president cares a lot about the markets he's touted the markets as part of his success story when talking about the overall economic picture could this be finally the issue that prompts the president to maybe put his phone down?
NICHOLAS: You know you are raising a very good point, and president follows the markets as closely as he does his poll ratings -- I'm told that he follows it everyday, complains about it at meetings when the market goes down.
Blames officials when he sees these wild market swings, and if anything is going to get him to maybe change his Twitter practices and be more discreet, show some more discretion here it could be these market swings if he's convinced that that would make a difference.
So his aides are trying to set up a meeting now between him and Jerome Powell to maybe clear the air so that he can get a better sense of what the FED's policies amount to. And that meeting could happen as early as January and February, and perhaps that could make a difference too.
NOBLES: Seems like we've been talking for a long time about the president controlling his Twitter habits and it hasn't happened yet, perhaps this is the issue that puts him over the top. Peter Nicholas, thank you for your insight we appreciate it.
NICHOLAS: Good to be with you. NOBLES: Now to Washington where a different kind of uncertainty over
the government shut down is gripping Congress. Both the House and Senate expected to gavel in today, even though no votes are scheduled -- and when and how this ends is really anybody's guess.
But there's one thing we do know, both sides remain very far apart on border security, what it costs and maybe what it even means. Even for President Trump it seems like the specifics on border security should look -- are actually starting to look like they may be evolving. Remember this from the 2016 campaign?
(BEGIN VIDEO CLIP)
DONALD TRUMP, PRESIDENT OF U.S.: We are going to build a great border wall.
We will build a great, great wall.
We're going to build a wall, don't worry about it -- don't worry about anything (ph).
NOBLES: All right let's fast-forward now to a week ago when he said this.
TRUMP: There's a debate over funding border security and the wall, also called so that I give them a little bit of an out -- steel slats. We don't use the word wall necessarily.
NOBLES: We're not done, here's what the president said in the Oval Office on Christmas.
TRUMP: I can't tell you whether the government's going to be open, I can tell you it's not going to be open until we have a wall, a fence -- whatever they'd like to call it, I'll call it whatever they want but it's all the same thing.
NOBLES: CNN's Suzanne Malveaux is on Capitol Hill covering, really the lack of activity there. Suzanne it doesn't appear that a deal is really anywhere in the making any time soon.
SUZANNE MALVEAUX, CNN NATIONAL CORRESPONDENT: Ryan, I mean the halls here are eerily quiet, you can barely find anybody. The Senate is going to reconvene at 4 o'clock, it really is more in an official capacity. I've been told that we're not really going to expect much of anything today, no votes scheduled, no sign of lawmakers really returning to town. If there was a deal they'd be given 24 hours to return but we're told
the negotiations are pretty much at a standstill, everybody has dug in. And we've heard from the president, as well as some of his surrogates (ph) -- the representative Mark Meadows of the Conservative House Freedom Caucus saying that the president is very firm on that $5 billion figure for his border wall.
We've also heard from the democratic leaders -- Nancy Pelosi, Chuck Schumer in a statement saying they are confused they really don't know what the president would accept they're getting all kinds of different messages from this administration.
Nancy Pelosi very likely the incoming house speaker says that she will introduce legislation January 3 when they come back in session to get the government going again. But it's far from clear that Senate Majority Leader Mitch McConnell would actually put that bill on the floor and have support for it.
NOBLES: Yes and Suzanne, the president isn't making it any easier by taking shots on -- taking shots at democrats, I should say. Doing that on Twitter, he made a strange claim without providing any proof, what did the president Tweet?
MALVEAUX: Sure, let me just read this to you here -- the president tweeted, "have the democrats finally realized that we desperately need border security and a wall on the southern border. Need to stop drugs, human trafficking, gang members and criminals from coming into our country. Do the democrats realize that most of the people not getting paid are democrats?"
Well the White House didn't respond to our inquiry where his he getting this from? But one of the largest unions representing federal employees had this to say, this is from the American Federation of Government Employees pushing back here saying "The federal government is an apolitical workforce... a government shutdown doesn't hurt any one political party or any one federal employee more than another, it hurts all of them."
And that's an organization that represents 700,000 federal employees throughout various agencies, so Ryan what we are waiting for now and it is a waiting game here -- is when is the president going to indicate that he accepts how is the government going to reopen? So far we are basically just standing still.
NOBLES: Suzanne Malveaux at a quiet Capitol, where I'm told that even though the law makers aren't there, the famous taco salad is available in the Senate carry-out, so that is good news for the reporters and staffers there. Suzanne, thank you.
For President Trump the border battle isn't just about claims of stopping criminals from crossing in to the U.S., there's also a political battle here and the chance to take aim at his rivals across the aisle, specifically Nancy Pelosi.
(BEGIN VIDEO CLIP)
TRUMP: We're doing well the problem is we need 10 votes in the Senate and they have to be democrat votes, they can't be our people that don't understand that here we have the majority. Well we have right now the majority by one.
Here's the problem here -- here's the problem we have, we have a problem with the democrats because Nancy Pelosi is calling the shots, not Chuck. And Chuck wants to have this done, I really believe that -- he wants to have this done. But she's calling the shots.
(END VIDEO CLIP)
NOBLES: Rachael Bade is a Congressional Reporter for POLITICO and a CNN Political Analyst. Rachael earlier this month of course President Trump said he'd be proud to own the shutdown, I don't believe that there's anybody that covers the president on a regular basis that's surprised that he's now changed his mind about that and says Nancy Pelosi is the one in control of all of this. I mean politically, who is winning this battle?
RACHAEL BADE, CONGRESSIONAL REPORTER - POLITICO, CNN POLITICAL ANALYST: You know right now it's clear it's a standoff but I think that the narrative is going to quickly shift, there's going to be way increased pressure on the president to cave on the border wall with Mexico right now.
And that's because as soon as democrats come in the first order of business Nancy Pelosi will take is to put a bill on the house floor to reopen the government and she will have a vote on that over, and over, and over again until republicans feel the pressure to reopen the government. And you know right now there's not a lot of urgency, right?
I mean there's nobody here, few law makers -- I haven't seen anybody so far. But that is going to change in January -- by January 11, that's the date of the first furloughed paycheck for Federal employees and there are some 800,000 Federal employees -- not just democrats as Trump tried to say this morning in a Tweet.
But Federal employees around the country who are also republicans too who are not going to get paychecks and I think that's going to get serious very quickly and the pressure is going to be on the republicans to reopen the government.
NOBLES: I do think this aspect of Federal government workers and how it directly impacts them will become a bigger story. I live in the northern Virginian suburbs, it is filled with Federal government workers.
Before the holiday many of them weren't really all that concerned about it, they see these things usually work themselves out and as you point out they won't miss that first paycheck until January 11.
I mean once these real stories of real people being hurt by this start to come forward, how much more difficult is it going to be for the president to stand firm -- especially because even though he claims that most of them are democrats, most Federal workers come from various political strides.
BADE: Absolutely, and I think that again once you get those real stories of people who are changing their holiday plans, people who are forgoing something they had to buy (ph) because they're concerned about their next paycheck. Once those come to light the pressure is definitely going to be on.
The president tried to say on Christmas day that Federal employees want me to shut the government down, they want this border wall and they're behind me. Well we've seen a number of unions come back and push back on that in the past 48 hours since he said this on Christmas.
And one of them basically said to the president if he wants to gamble he should go back in -- back to his business running casinos and not be gambling with Federal employees lives. So I think that the unions will become more vocal and again this pressure is just going to build on the president.
Usually if you are the party making the demand in a shutdown, you're typically going to lose. We saw this happen with the democrats last year, they looked like fools when they shut the government down and said, "we need a fix for dreamers," and they got nothing. And you know, it hurt them politically.
I don't see a different path for the president, of course we've said Trump is his own animal and he defies political reality often. So maybe it's going to be different, but I think that the pressure is really going to come to bear on him as soon as January gets here, and we'll have to see if he gets anything. Because democrats right now, they're feeling good and they're feeling like they're in a good spot and they're not willing to give him anything.
NOBLES: And we should also point out that even the deal that was initially hatched was only through the first week in February. So this is a minor problem now, but it's going to become an enormous one in the weeks ahead. Rachael Bade, thank you so much.
BADE: Thank you.
NOBLES: Coming up, the president's botched boast overseas, he says he got the troops their first pay raise in 10 years, but the facts say something else entirely. And muscle flexing in Moscow, Russia shows off a powerful missile it says is impossible to intercept. Will it trigger a new arms race? And Spacey saga, stunning new details about a video taken by a teenager who claims the actor assaulted him.
NOBLES: And after the fallout from President Trump's surprise visit to U.S. troops in Iraq, some lawmakers there now want the U.S. out of Iraq. We'll explain why in a moment. But first, the trip itself looked like it succeeded in boosting troop morale.
Check out the reaction when the president embraced the first lady.
(BEGIN VIDEO CLIP)
TRUMP: Let's let her make the speech, right. No, she's great, a very popular -
(END VIDEO CLIP)
NOBLES: No doubt, the troops appreciated the president being there. But then the president misled them about their pay.
(BEGIN VIDEO CLIP)
TRUMP: If you protect us, we are always going to protect you. And you just saw that because you just got one of the biggest pay raises you've ever received. You haven't gotten one in more than 10 years, more than 10 years. And we got you a big one; I got you a big one.
(END VIDEO CLIP)
NOBLES: All right, facts first here. Military pay has increased every single year for the last 30 years. In fact, the latest increase though is the largest one in the last nine years. But you can that in 2008 and 2009, there were bigger pay increases than 2019.
So let's talk about the president's visit with CNN global affairs columnist and former war correspondent Kimberly Dozier and CNN military analyst, retired Major General James "Spider" Marks.
He, of course, a former commanding general of the Army's Intelligence Center. General, I want to get your reaction first to the president overstating this pay raise. Why was it necessary for him to do that, especially in a war zone?
MAJ. GEN. JAMES "SPIDER" MARKS, FORMER COMMANDING GENERAL, U.S. ARMY INTELLIGENCE CENTER: Well, he doesn't need to do that. And first of all, Ryan, thanks for - for having me on with you today, and it's always good to be on with Kimberly.
The president doesn't need to do that. Look, the troops are just enthusiastic when the - the president of the United States shows up. The commander-in-chief shows up; he brings his bride with him, and that's a big deal.
And it's kind of a rock star kind of a status. He doesn't need to talk about pay; the troops get a leave and earnings statement at the end of each month that says this is what you're getting paid, and here's an increase from last month and here's your hazardous duty pay.
And if you've been deployed X number of months, this is going to be a tax deferred year, and et cetera, et cetera. So accumulatively, all that adds up. Troops aren't - the troops aren't thinking about that when the president of the United States is in the room.
So I think it's kind of a misplaced opportunity; the president really just needs to kind of marinade in the moment of being with these incredible soldiers who are protecting our freedoms, and that's what it's really all about.
NOBLES: Of course, Kimberly, the optics of the president being there, shaking hands, taking selfies with the troops, that's all important. But there's also work to be done, when he makes a visit like this. And we're learning that there was a scheduled meeting with leaders in Iraq, the political party.
Iraq's prime minister says, quote, "Trump's visit to Iraq is a violation of Iraqi sovereignty." Its statements goes onto say that it also shows that the president has to respect for the country's sovereignty. First of all, were you surprised that the meeting was cancelled and secondly, why would Iraqis be so angry about President Trump making a visit there?
KIMBLERLY DOZIER, GLOBAL AFFAIRS ANALYST: Well, I'm not surprised about the last minute snafu with scheduling. An Iraqi official told me this was mostly that they disagreed about logistics, but it was also a little bit of digging in their heels at "you didn't trust us enough to give us enough advance warning of this visit so we could prepare some of our both allies and some of the parties we're having difficulty with in parliament."
Obviously, the White House would do the last minute plans because of security, but there are political considerations. And Iraqi officials I've spoken to prior to this visit said that Trump's Syria withdraw announcement has, for them, armed their opposition in parliament, the people who would rather go with Iran as an assistant and influencer than the United States, because they say, "Look, Iran can be counted on. They won't do these last minute withdraws like this, leaving us holding the bag defending our border."
NOBLES: Well, General, let's talk about something that has caused a bit of a dust-up there. We saw a lot of troops there with the president; they had the red Make America Great Again caps. You see it there; the president signing them.
A U.S. military official say that these caps were personal items the soldiers brought in themselves, meant to show support the president himself, not necessarily a political statement.
The White House also had said, specifically, that they didn't hand the hats out. I mean could these hats be breaking the rules, and have you ever seen like this - something like this happen with other presidents who visit warzones like this?
MARKS: Well, I haven't seen hats being signed by previous presidents. I've certainly been in warzones when the commander-in-chief shows up, and troops are lining up to get an autograph from the boss.
Look, I think we're making a big deal out of this. Sadly, the red cap with MAGA on the - on the front has become a political item. And so, there is - you're conflating the two, and it's commanders business.
I think the commanders on the ground probably should have said, "Hey, guys, put your red caps away." There - there's too much hair on it, if you will. There are too many people that are going to talk about it, so let's put these things to the side. But I totally get it, and I don't think we should make a big deal out
NOBLES: Right, right. And the president also did talk politics to the troops; take a listen to what he had to say.
(BEGIN VIDEO CLIP)
TRUMP: We want to have strong borders in the United States. The Democrats don't want to let us have strong borders, only for one reason. You know why? Because I want it. And that's what you're fighting for. You know, when you think about it, you're fighting for borders in other countries, and they don't want to fight the Democrats for the border of our country.
NOBLES: So the president is getting a little bit of backlash for inserting politics where normally it's not -- this is not the first time he's done something like this. Remember in front of the CIA memorial wall he talked about inauguration crowd sizes, he slammed Hillary Clinton and what he called "fake news," during a national assembly of the Boy Scouts.
And then just last month on his Thanksgiving call to troops he talked about the migrant caravan and the border. I mean, Kimberly is this something that the troops are thinking about when they hear from their president? And should be inserting politics here where it normally isn't?
DOZIER: Well I think it's important to note that soldiers, troops -- they're allowed to have political opinions. They usually are only supposed to express them when they're not in uniform.
That said, a lot of troops looking at social media feeds support this president, feel like he's unleashed them in a way that the Obama administration didn't with its reluctance to take some really aggressive action in Syria over several years. That said you also have another segment of that listening audience who don't like the decision to pull out of Syria because it leaves the Kurdish allies they've been working with high and dry.
So I think you're going to have a mixed reception in a crowd like that. Still a lot of people listening to this president say, "yeah he mixes everything up so the lines are a little fuzzy," that's why the supporters in that crowd would love what he had to say.
NOBLES: All right, terrific insight from both of you -- Kimberly Dozier, Major General "Spider" Marks -- thank you so much for being here, we appreciate it.
MARKS: Thanks Ryan.
NOBLES: Coming up, pushed to the breaking point -- we're going to talk about that in a second. But let's take a look at the DOW down almost 500 points -- almost 600, I should say. A topsy-turvy day on Wall Street for sure, we'll have more on that coming up.
Plus the dire new warning from the head of Homeland Security after a second migrant child dies in U.S. custody, how did it happen? Plus they say it's impossible to stop the brand new nuclear missile system Russia says it is ready to deploy, how big is the threat?