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Stock Markets Makes Rock and Roll; Trump Flip-Flops His Blame to Democrats; Second Child Died in U.S. Custody; Manhunt Underway For Shooter Who Killed Officer; Putin Touts New Russian Hypersonic Missile; Trump Inaugural Donors And Decisions Under Scrutiny; Top International Stories Of 2018. Aired 3-4a ET

Aired December 28, 2018 - 03:00   ET

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

[03:00:00] GEORGE HOWELL, CNN ANCHOR: The U.S. government shutdown, partially, it drags on and there are fears it could last longer than anyone expected. The U.S. president, though, somehow claims it's mainly Democrats who are impacted. We'll explain or try to explain that ahead.

Plus, another roller coaster day on Wall Street. Stocks did finish up that's not helping investors sleep any easier. Also, ahead this hour, just days after a second migrant child dies in U.S. custody, a top Trump official is headed back to the border.

Live from CNN world headquarters in Atlanta, we want to welcome our viewers here in the United States and all around the world. I'm George Howell. The CNN Newsroom starts now.

At 3 a.m. on the U.S. east coast. Thank you for being with us this day.

Just a few days to go before the new year and there is little hope for progress when it comes to the partial U.S. government shutdown. We are now seven days into this thing. It is the same shutdown the U.S. president once said that he would own. President Trump now point to the finger at Democrats and neither side seeming willing to budge.

Jessica Dean has this report for us.

JESSICA DEAN, CNN CORRESPONDENT: President Trump is back in Washington and back on Twitter less than two hours after arriving home after his whirlwind trip to Iraq, the president tweeted about the government shutdown, saying that the Dems realize that most of the people that are not getting paid are Democrats.

There president of the American Federation of Government Employees, one of the largest union representing government workers push back against Trump's claim the shutdown affects mostly Democrats. Saying, quote, "A government shutdown doesn't hurt anyone political party or anyone federal employee more than another. It hurts all of them."

While in Iraq, the president repeatedly avoided directly answering whether he'd accept $2 billion for the border wall instead of his original $5 billion request. (BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I'm not going to talk about it now, but I will say this. We have been building a lot of wall.

(END VIDEO CLIP)

DEAN: Instead, Trump blamed Nancy Pelosi for keeping the government closed despite him repeatedly saying he wants the shutdown to continue until he gets border wall funding.

(BEGIN VIDEO CLIP)

TRUMP: But she's calling the shots and she's calling them because she wants the votes, and probably if they do something, she's not going to get the votes and she's not going to be speaker of the house.

(END VIDEO CLIP)

DEAN: Pelosi does have the voted to become speaker and is expected to take the gavel when the new House convenes January 3. As the shutdown drags on, the president also faces questions about his trip to Iraq. He was in the country for three hours but did not meet with the Iraqi prime minister after their face-to-face was canceled due to differences over logistics.

Instead, President Trump spoke with the prime minister by phone. Trump was met by loud applause as he spoke to troops talking about their pay raise.

(BEGIN VIDEO CLIP)

TRUMP: You know what, nobody deserves it more. 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. I said no, make it 10 percent, make it more than 10 percent. Because it's been a long time. It's been more than 10 years.

(END VIDEO CLIP)

DEAN: But that's not true. Military pay has increased every year for more than three decades. The 2.6 percent increase in the 2019 National Defense Authorization Act is the largest in the past nine years, but it's not the 10 percent Trump claimed. President Trump didn't shy away from politics while talking to the troops.

(BEGIN VIDEO CLIP)

TRUMP: The Democrats don't want to let us to have strong borders.

(END VIDEO CLIP)

DEAN: Late Thursday afternoon, Sarah Sanders put out a statement once again reinforcing that any bill that reopens the government has to have, quote, "adequate funding for border security." She also called out Democrats saying that Republicans in the administration had offered what she considered to be a compromise of a bill and that they had not provided an answer.

Well, Nancy Pelosi put out her own statement through her spokesman saying that in fact Democrats have offered Republicans three different chances to reopen the government but that they haven't taken them, and that those three opportunities have had a border funding built within that bill, but that they were not funding the border wall.

Jessica Dean, CNN, the White House.

HOWELL: All right. The examination of phrases and claims let's talk more about this now with Richard Johnson. Richard a lecturer in U.S. politics and international relations at Lancaster University, live this hour from Lancaster, England. A pleasure to have you with us.

Let's start with the shutdown showdown over the border wall. You remember President Trump said in his own words earlier, that he would own the shutdown. He has flip-flopped on that now blaming Democrats. It's interesting though to look back at when Mr. Trump's predecessor was president, Barack Obama and there was a threat of a shutdown, private citizen Trump have this to say.

(BEGIN VIDEO CLIP)

[03:05:03] UNIDENTIFIED FEMALE: If there is indeed a shutdown of our government.

TRUMP: Well, if you say who gets fired, it always has to be the top. I mean, problems start from the top and they have to get solved from the top. And the president is the leader. And he's got to get everybody in a room. And he's got to lead.

(END VIDEO CLIP)

HOWELL: It just comes to these things that were stated by the U.S. president back then in 2013 and then most recently in the Oval Office. Can the president sidestep his own words?

RICHARD JOHNSON, LECTURER IN U.S. POLITICS AND INTERNATIONAL RELATIONS, LANCASTER UNIVERSITY: Yes. One of the things to focus on here is that Donald Trump is speaking to his own base, his own audience here. So, one thing that's interesting is that his approval rating has dip below 40 percent for the first time since the Charlottesville incident in 2017.

But among Republicans he maintains 80 percent approval ratings, and still two in three Republicans believed he should shut down the government over the border wall.

And so, although this is hitting his overall popularity and certainly he's extremely unpopular with Democrats, now 90 percent disapprove of him and very increasingly unpopular with independents. When it comes to his base, which is what Donald Trump seems to have been preoccupied with ever since he announced he's kind of to see for president, he is largely delivering on that -- on that issue that they care about.

HOWELL: Richard, you know, here's the thing. We're seeing that lawmakers are less than optimistic about what lies ahead. Let's listen.

(BEGIN VIDEO CLIP)

REP. MARK MEADOWS, (R) NORTH CAROLINA: If the Democrats are not willing to put up even 2.5 or 2.6 billion they were never serious about, they were warning the amnesty portion but not the border security portion. And when you look at that, that's one of the tragedies of today.

(END VIDEO CLIP)

HOWELL: So, you know, you here from lawmakers, Richard. And here's the thing. There's some 800,000 people federal workers here in the United States who don't know when they will be paid next. You know, we talk about the politics, we talk about the president, the Democrats and the Republicans.

The people in the middle want to know what's next.

JOHNSON: Well, I think there are probably two likely scenarios. So, one scenario is that the current Congress tries to get something through at the 11th hour. And there's been some speculation that there might be an attempt to pass a new funding bill on New Year's Eve, New Year's Day. That happened during the fiscal cliff crisis under the Obama presidency.

Otherwise, we are waiting until the new Democratic House comes into session. And then I could see a scenario where the new House passes a funding bill which is then acceptable to the Senate, and then that places it on the desk of the president. And then it's much more difficult for the president himself personally to block a funding bill.

It's one thing to blame Congress for back and forth situation like the one we have at the moment. It's a very difficult thing when it's down to the president himself.

HOWELL: I want to switch gears now and talk about what we saw the U.S. president during his time in Iraq visiting troops which is customary, which is expected of U.S. presidents to do, but there were certain statements that were made that have been called into question.

One of the them, the U.S. president telling troops that he gave them their first pay raise in more than 10 years. That is an outright lie. It is simply not true. It's a story that we fact checked and proven.

The question here the president getting a great deal of pushback for this telling the troops something that's just not true.

JOHNSON: Yes. I mean, it's certainly not true that the troops haven't received a pay increase. And also, although they have received continued paid increase under President Trump when in factor in inflation. (Inaudible) with inflation increase.

The only thing I can see in terms of this claim that he's made is that if you added up the value of the pay increase without taking into account, inflation, over the four years of Trump's presidency that would be about a 9.6 percent pay increase. But that's effectively just maintaining level pegging with inflation.

So, at -- if there's a grain of truth in it that's probably where he is getting it from but it's a gross distortion and it's also completely inaccurate to say that there hasn't been any pay increase in the last 10 years.

HOWELL: Again, important to point out the U.S. president spending time with these troops in theater of war, you know, and in dangerous places. And this is what our troops would want to see of their presidents to be there to show that they understand what the mission is, what they're dealing with in these different parts around the world.

[03:09:59] But one thing that is drawing some criticism and even on conservative media, Richard, is the president in this case, seeming to make it more about him than about the troops. Let's listen.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I would never consider us as a country is the United States suckers. We have always led the fight in every single major war, our military men and women I believe deserve way more respect from that.

JESSICA TARLOV, FOX NEWS CONTRIBUTOR: The president made this trip, which he absolutely should've done and not use it as a campaign rally. Because when you use language like that and the words suckers --

(CROSSTALK)

UNIDENTIFIED FEMALE: Well, he talked about the border wall as well, which didn't have a place --

(CROSSTALK)

TARLOV: Of course.

(END VIDEO CLIP)

HOWELL: That back and forth on a conservative commentary show, but, your thoughts about the optics of that trip.

JOHNSON: Well, the first thing to say is that this very late in this president's term to be making his first overseas visit to Iraq. Barack Obama made his first visit to Iraq in April of 2009, his first year in office, I mean, four months into his -- less than four months into his first year in office.

So, this is, I think some people feel that this is overdue. There is an irony about the Trump presidency and that he is quite heterodox when it comes to foreign policy. And he is in some ways more dovish or isolationist than where we might expect mainstream Republican opinion to lie. And I think that he's been able to sort of suppress that with a, sort

of more patriotic nationalist rhetoric at home. And certainly, paying lip service to his love for the troops. But in reality, his -- he is making policy shifts which are quite unlike mainstream Republican leaders have done in the past.

And so, I think that, you know, I can see and I can sort of see the confusion among conservative commentators who are in some cases being forced to make a sort of, about turn on foreign policy and others who are sort of sticking to their Republican principles on this and for a rare instance chastising the Republican President Donald Trump.

HOWELL: Richard Johnson, live for us in Lancaster. Thank you again for your time.

JOHNSON: All right.

HOWELL: Now to the markets. With only two trading days left in 2018 some investors are ready to trade this year in for a new one with a little less whiplash.

The Dow bounced back in the final minutes Thursday and closed up more than 260 points gaining more than 1 percent. At one point it had plunged more than 600.

Asian markets have already closed. The Nikkei closed down a 3rd of a percent. Minimal gains for Shanghai and Hang Seng, but Australia managed to reclaim some territory. And European markets are just opening.

CNN business correspondent Samuel Burke is on story live in London. A pleasure to have you with us, Samuel. Look, life comes with its ups and downs but fair to say the last few weeks of been a little much.

SAMUEL BURKE, CNN CORRESPONDENT: George, wild flow, mixed, bizarre the people that I usually go to make sense of these things. Those are the words that they're using and quite frankly, some of them are just stepping back because things are so volatile at this point.

Right now, let's just put up the European markets as they open right here on the screen and you see it's actually looking pretty good. That's after heavy losses yesterday in the European markets, and maybe they're taking some pointers from the U.S. markets that you showed at the very last minute erased all those losses and actually ended up positive.

But what do you do when things are so volatile and even the experts don't know what's going on? Well, traditionally, people go to what are known as safe havens. On this case, we're seeing people put their money into the Japanese yen and the Swiss franc and that's because those currencies are usually seen as pretty stables.

So, when everything else looks like it's wild you have to go to those. Right now, people are looking at the big picture of something that happens one day is not a trend, especially when it's so contradictory day today. So, I just want to put up on the screen for you, George, what people are looking at as they see the big picture, not just in the United States but around the world, starting with slowing economic growth in China, as well as other countries. Growth is very slow here in Europe as well.

But we have new numbers showing that the China industrial profits decline for the first time in the past three years. The China-U.S. trade war we do have a little bit of optimism there. There's a report from Bloomberg that says there's a delegation that's going to go from the U.S. to Beijing in January.

When it comes to Brexit, again, this is such uncertainty. There's no way to price Brexit into the market because there are so many different outcomes that could happen here and you just spent the first part of your show talking about all the chaos in D.C.

Well, let me just break it down in terms of numbers for you. At the end of the day those government workers have to pay their mortgage bill just like you and I, George, but if they don't have that money they have to put it on pause. The banks don't get their money maybe they have a loan to a friend or a family member, they can't pay that back. That can have a real effect on the economy in the long run.

[03:15:06] Now it's not a major factor, but little things like that can add up so it looks like there's some big negatives out there as we look at the political and economic fronts.

HOWELL: That knock on effect certainly is in place. Samuel Burke live for us in London. Samuel, thank you.

To talk more about this let's bring in Ryan Patel. Ryan a global business executive joining this hour from Los Angeles with his experience and knowledge. Thank you again, Ryan for your time.

RYAN PATEL, GLOBAL BUSINESS EXECUTIVE: My pleasure.

HOWELL: Let's talk about where things stand right now because obviously, we saw this course reverse, the Dow Jones rallying more than 1,000 points. Great news on the surface, but people are still jittery about the slowdown and even a recession. How would you categorize the markets?

PATEL: Well, if there's any great news from being down so much in the morning and then just barely get to the top, I think that's great news to walk out of the day that should have been in the red.

I think what I learned about this today that we are. We live in a global economy now what's different from the depression and from the recession will a lot more intertwine, so things like China and the U.S. trade war news that would come out affects the market. Things like Brexit next year will affect the market depending on how it ends. Even from the Saudi blockade to Qatar and regional things like Italy and even Turkey you saw this year became issues in the markets.

So, those kinds of things coming to 2019 will have an effect that is not baked in to this market and those kinds of fears will cause this kind of extreme days up and down because you don't know what's going to be ahead.

HOWELL: OK. So, we talk about the gains. But let's talk about those losses because clearly, we've seen volatility in play. There are the downward pressures as you point out of global slowdown, the trade tensions between the U.S. and China.

What you make of the losses that we've seen here in recent weeks?

PATEL: Yes. I think -- I mean, let's just talk about what happened, what just happened today. I think what happened today was the market was trying to figure out the volatility. Is this the bottom? And the answer to that question is no. There's a -- it may take a month, it may take a few months to see where the volatility will keep going until we find what the rogue bottom looks like.

And that's what we've seen this kind of, when you start to see these extreme pressures from up and down it's obviously people buying and selling. But also, people are trying to figure out is the time to gain or not. And right now, the sentiment is still not ready to buy on this kind of dips.

HOWELL: This rally certainly welcomed by the U.S. president who, unlike his predecessors, Donald Trump enjoys hanging his hat on stock market as he has done many times in the past. Let's listen.

(BEGIN VIDEO CLIP)

TRUMP: We're doing record business, record stock market, record everything.

Very well, right? We're all doing well. The 401K is doing well. The stocks are doing well.

And since I took office the value of American's mutual funds and pension funds has increased by $2.7 trillion.

(APPLAUSE)

TRUMP: That's good money. That's good money.

(END VIDEO CLIP)

HOWELL: So, it's great when it's great, but mum (ph) is the word when it's not. In fact, we know President Trump phoned his advisors from Air Force One on his way back from Iraq to talk about that thousand- point gain. We know the markets can be unpredictable, as we know, this president takes pride in unpredictability as well. So, how predictable would you say this strategy is of his to continue hanging his hat on the markets?

PATEL: Well, you know, I think that he knows no difference. I mean, you saw him last year too we went to the situation where he went up, the market was up and even when it had bad days, he would just ignore it. So, for him, you know. I think he is one, this is going to be his

legacy like, when he's done with this term in his presidency he's going to look back and he's going to look at this legacy and he thinks the market is going to be his one because he is the business guy.

And you know, I think, hence why you came after the Fed, right? He was blaming the Fed on why this market was going to go toward down so needing to have a kind of actually a point that he needs to push across.

But you know, again, we've known in the history that presidencies of presidents don't really kind of dictate and put their hand on the economy, stock market per se because it is a different animal.

HOWELL: OK. So, heading into 2019, do you see us heading into a strong economy or do you expect more ups and downs like we've seen.

PATEL: Listen to this. I think you need to bring your seatbelt, George, because it's going to be a roller coaster ride for the first two quarters. Because you know, earning season -- earning season is right around the corner, one, and we don't know where it's going to go positive or plus. Obviously, we know the U.S. economy is 2 to 3 percent of GDP. It's still pretty healthy.

But again, like I said, you don't know what's going to happen with this -- I mean, this China-U.S. trade piece is a big deal. And -- you know, this deadline for March 1st first, you will have the Fed meeting date from March 30th.

It's all on the calendar and the market is watching what's going to happen these days. You cannot ignore this when they are put that far in advance behind it.

So, you know, I feel, you know, people have been using the word recession freely to 2019, 2020. When is it? I think the first two quarters, let's get through that first and see how it will play out.

[03:20:00] I think the Federal Reserve is watching this now no longer quarterly but once a month and so that's going to be a big deal here that got everybody's attention.

HOWELL: It's got everybody jittery, everybody for sure. Ryan Patel, thank you so much for your time.

PATEL: Thanks for having me.

HOWELL: Next on Newsroom, the search for answers continues after a second migrant child dies in U.S. And now the homeland security secretary will travel to the U.S.-Mexico border to look at the situation for herself. We'll have that ahead.

Plus, the Russian President Vladimir Putin boasts about the invincibility of his new missile. But some experts have their doubts.

Stay with us.

(COMMERCIAL BREAK)

HOWELL: Welcome back to CNN Newsroom. I'm George Howell.

The death of a second child in U.S. border patrol custody it is prompted the secretary of homeland security to say she will go to the southern border to see the medical conditions for herself.

Kirstjen Nielsen will travel to El Paso, Texas on Friday, then Yuma, Arizona Saturday.

Both children were from Guatemala and died within weeks of each other after they and their fathers were picked up by border agents. The cause of death has not yet been determined for either child.

[03:05:00] Let's more about this now with Dylan Corbett, the director of the Hope Border Institute in El Paso, Texas, joining via Skype this hour. Dylan, thank you for your time.

DYLAN CORBETT, DIRECTOR, HOPE BORDER INSTITUTE: Thank you.

HOWELL: Your group focused on bringing religious and secular communities together around issues on the border. And now with the deaths of two children what are people telling you about the government's approach given these latest tragedies.

CORBETT: You know, I think it's simply tragic that it had to come to this. What has been going on in the border to all of 2018 policies like zero-tolerance policies, like family separation, with policies like posting CBP agents on the bridge that had people access to asylum, which is forcing people into more dangerous and more remote parts of the border.

And unfortunately, deaths like this were to be expected. The U.S. government approach had been to militarize the border in response to what's going on in the problem and the phenomenon of immigration at the border. And the military's response deploying troops and deploying extra resources to secure the border and militarize the border has resulted unfortunately in -- unfortunately, we had deaths as a result of this.

HOWELL: Groups like the ACLU place blame squarely with Customs and Border Patrol. The Department of Homeland Security though, sidesteps the blame, and instead, points the finger at migrants themselves, as we see in this statement from the secretary of homeland security, Kirstjen Nielsen saying, quote, "Our system has been pushed to a breaking point by those who seek open borders, smugglers, traffickers, and their own parents, put these minors at risk by embarking on the dangerous and arduous journey north."

Your thoughts on that statement.

CORBETT: You know, I read Secretary Nielsen's statement yesterday on the death of Felipe Alonzo-Gomez and what shocked me was that she blamed Congress, she blamed immigration judges, she blamed activists and advocates, she blamed the migrants and the parents of migrants themselves, but she never took responsibility. She never took responsibility as the secretary of the Department of

Homeland Security. When Jakelin Caal died at the beginning of December the CBP was obliged, CBP and DHS were obliged within 24 hours to inform Congress as per the law.

Secondly, they broke the law by not informing Congress of the young girl's death.

By not taking responsibility for the children in their custody, this is troubling. Because DHS and CBP have a responsibility to guarantee the safety and the security of the families in their custody, to guarantee the safety and the health and the well-being of the children in their custody.

Both of these children were in the custody of border patrol when they expired. So, this is troubling because the secretary doesn't seem to think that she needs to take any responsibility for this.

HOWELL: You talk about the migrants fleeing these various countries. And as they flee, as they are detained by Customs and Border Patrol in these different facilities, we're hearing more about the conditions there. More and more these agents are seeing families together with children crossing the border.

And we heard the commissioner for Customs and Border Control say they're not just ready for it. Listen.

(BEGIN VIDEO CLIP)

KEVIN MCALEENAN, COMMISSIONER, U.S. CUSTOMS AND BORDER PROTECTION: What we're seeing with these flows of huge numbers of families with lots of children, young children, as well as unaccompanied minors coming into border patrol custody after crossing the border unlawfully that they're not -- our stations are not built for that group that's crossing today.

They were built 30 or 40 years ago for single adult males. And we need a different approach. We need help from Congress. We need the budget for medical care and mental healthcare for children in our facilities.

(END VIDEO CLIP)

HOWELL: And Dylan, you touched on this, I mean, these facilities as they are presently how crowded are they and what does it mean for children?

CORBETT: Very crowded. I agree with the commissioner on those. These facilities are not -- they're not adequate for families, they're not adequate for children. When ICE began releasing people into the streets in El Paso over the Christmas holiday downtown and we encountered them we greeted them, we gave them food and we provided medical attention when necessary.

We saw that they had not bathed in several days, that they were not being given adequate nutrition. Many of them were sick. One of the children we actually had to send to the hospital because he exhibited the same symptoms that Jakelin Caal did.

He had a fever. And he was dehydrated. They are in the cells they're called (Inaudible) for reason because they are like ice boxes like sardines, it's difficult to even go to the bathroom with any degree of privacy. There is no place for children. There is no place for families.

HOWELL: Dylan Corbett, we appreciate your time. Thank you.

CORBETT: You're welcome. Thank you.

HOWELL: We are learning that the man suspected of shooting and killing a California police officer was in the U.S. illegally. Authorities are still searching for the alleged shooter. They have not released his name, but they say he shot Officer Ronil Singh.

[03:30:05] Authorities say the 33-year-old policeman was doing a traffic stop at the time as part of an impaired driving investigation. The U.S. President Donald Trump has tweeted on this.

There is a full-scale man hunt going on right now in California for an illegal immigrant accused of shooting and killing a police officer during a traffic stop. Time to get tough on border security bill build the wall says the U.S. president.

Still ahead here on CNN Newsroom, the U.S. response to Russia's ballistic boasting how it might match Vladimir Putin's new hypersonic missile, we will explain.

(COMMERCIAL BREAK)

HOWELL: Welcome back to our viewers here in the United States and all around the world. You are watching CNN Newsroom live from Atlanta. I'm George Howell. Thank you for being with us.

The Pentagon says that it plans to increase research in hypersonic, both offensively and defensively. This move in response to Russia, which has chosen to weaponized that technology. Moscow tested its new hypersonic nuclear missile that Vladimir Putin calls invulnerable. CNN's Fred Pleitgen has this story from Moscow.

(BEGIN VIDEOTAPE)

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Vladimir Putin in command observing his Armed Forces test what they claim is a hypersonic missile capable of defeating America's missile defense systems called Avangard.

VLADIMIR PUTIN, RUSSIAN PRESIDENT (through translator): The new Avangard System is invincible when faced with current and future air defense and missile-defenses technology of a potential enemy. This is a great success and a great victory.

PLEITGEN: While some experts doubt whether the Avangard missile is really combat ready and as capable as Moscow says. [03:35:01] Russia claims it flies up to 20 times the speed of sound,

and is capable of evasive maneuvers, if confronted by missile defense systems.

PUTIN (through translator): Next year the Avangard System will be put into service. A regimen will be formed which will start combat duty. This is a wonderful tremendous gift to the country for the New Year.

PLEITGEN: The missile test came at the same time President Trump was in Iraq. Standing by his decision to pull U.S. troops out of Syria, giving a massive boost to Russia's influence in the region and the growing tensions between Moscow and Washington over Trump's decision to pull out of the decades-old Intermediate Range Nuclear Forces Treaty.

Vladimir Putin unveiled plans for a variety of nuclear weapons in March, including the Avangard and an unmanned underwater drone which the Russians also claim will be invincible.

PUTIN (through translator): We chose major breakthrough in developing new weapons this year. There is nothing in the world like this weapons. And I hope that our new system will make those used to militaristic and aggressive rhetoric, think twice.

PLEITGEN: While Moscow says, its new generation of nukes are not aimed at threatening anyone, experts fear Russia, China and the U.S. could be on the brink of a new nuclear arms race as tensions between them rise and Arms Control Treaties are scrapped. Fred Pleitgen, CNN, Moscow.

(END VIDEOTAPE)

HOWELL: Fred, thank you. The oldest American World War II veteran has died. Richard Overton, the man you see right there. Longtime resident of Austin, Texas. He is also the oldest man living in the United States and he lived on the street that bore his own name. Overton is 112 years old. His family said that he had been treated for pneumonia.

The governor of Texas and Richard Overton was quote an American icon in Texas legend who made us proud to be Texans and proud to be Americans. Overton join the U.S. Army in 1942 as part of all-black units that serve in the Pacific. He was honored by the former President Barack Obama in 2013. Overton gave credit to God and his daily routine, cigars, whiskey, and ice cream for his long life. And what a life. Condolences to his family.

[03:40:00] (COMMERCIAL BREAK)

HOWELL: He has been almost two years now since the White House falsely claimed that Donald Trump's inauguration was one for the record books. It turns out it wasn't the crowd size that made history. It was the spending and now that inauguration is reportedly under investigation. Our Randi Kaye has this report.

(BEGIN VIDEOTAPE) DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Starting right here and

right now.

RANDI KAYE, CNN CORRESPONDENT: $107 million. That's how much Donald Trump's inaugural committee raised in donations for the event. Now federal prosecutors want to know if any of that money was misspent and perhaps more importantly, did top donors pay big money in exchange for access and influence in the Trump White House. The Wall Street Journal first broke the story.

UNIDENTIFIED FEMALE: Part of this is certainly looking at what this donors gave him, what they expected and what they received, but it is also partly about what happened with the Inaugural Committee expenditures.

KAYE: This all apparently stems from the raid on former Trump attorney Michael Cohen's office. According to the Wall Street Journal, investigators seized a recording of a conversation between Cohen and a woman named Stephanie Winston Wolkoff, a former advisor to Melania Trump and one of the key planners for Donald Trump's 2017 inauguration. Wolkoff reportedly expressed concern during that conversation about how the Inaugural Committee was spending money.

UNIDENTIFIED MALE: This is a wow.

KAYE: Real estate developer Tom Barrack who ran the Inaugural Committee denied there was a new investigation, adding he been questioned about it in 2017. The White House is distancing itself from the probe.

SARAH HUCKABEE SANDERS, DEPUTY WHITE HOUSE PRESS SECRETARY: That has not anything to do with the president or the first lady. The biggest thing the president did in his engagement inauguration was to come here and raise his hand and take the oath of office.

KAYE: Meanwhile, an investigation by ProPublica have found that the inauguration paid the Trump organization for rooms, meals and event space at Trump's Washington Hotel. And that Ivanka Trump, the president's daughter and then a Senior Executive at the Trump organization was involved in negotiating the prices at above market value for venue rentals by the Inaugural Committee. A spokesman for Ivanka's lawyer told ProPublica that Ivanka said discussions should be at a fair market rate.

And it isn't just about the money. The Washington Post reports that certain attendees at the inauguration also reportedly caught the attention of counter intelligence officials at the FBI, though it's unclear which attendees. The Paper reported that Victor Vekselberg, a tycoon closely aligned with Putin's government, attended inaugural events, along with Natalia Veselnitskaya. The Russian lawyer whose meeting with Donald Trump Jr. at Trump Tower in June 2016 is now under scrutiny.

UNIDENTIFIED MALE: Congratulations Mr. President.

KAYE: It's all just part of why federal prosecutors are zeroing in on the day Donald Trump officially became the 45th president of the United States. Randy Kaye, CNN, New York.

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HOWELL: Randi thank you. What a year? A historic summit between the U.S. and North Korea and also that daring rescue of the boys, soccer team from the cave in Thailand, so many stories. Where counting down the year's top International stories ahead. Stay with us.

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HOWELL: A 71-year-old Frenchman is hoping to cross the Atlantic Ocean. But here's the thing, he is not in any hurry. In fact he is using a barrel. It has all the comforts of home, including a bed, a small kitchen and even wine for New Year's Eve. Jean-Jacques Savin, set off from the Canary Island, he is planning to drift at lazy speed of a couple of miles or two to three kilometers per hour. He hopes to reach the Caribbean by the end of March, but he is taking his time. Somehow, Cyril Vanier would like that story.

From a dramatic and daring cave rescue to the brutal murder of the journalist. CNN's Clarissa Ward takes us through the top eight stories that make global headlines in the year of 2018.

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UNIDENTIFIED MALE: In Thailand rescue crews are searching for a missing youth soccer team and their coach, they are believe to be trapped in a cave.

CLARISSA WARD, CNN CORRESPONDENT: The 12 boys and their coach trapped deep inside the cave by sudden Monsson flooding. While many feared the worst, rescuers from all over the world converged on the cave, searching for signs of life. 10 days into the mission success, the team found huddled on a ledge, an unforgettable chorus of little voices.

UNIDENTIFIED MALE: How many of you? 13. Brilliant.

WARD: But the threat was far from over. Thai diver died during the rescue efforts and with more Monsoon rain coming, the boy's parents waited on pins and needles as they progress that the world, until --

UNIDENTIFIED FEMALE: Juvination (ph) in Thailand, all 12 boys, every child from that soccer team has been rescued from that flooded cave in Thailand after 18 days.

WARD: Number seven. A migration movement becomes a humanitarian crisis. Some 7,000 Central Americans fleeing violence and poverty in their home countries, walked thousands of miles to the U.S.-Mexico border. Many saying they want asylum in the United States. President Trump taking a hard line against the caravan.

TRUMP: No nation can allow its borders to be overrun and that's an invasion.

[03:50:02] WARD: The situations slowly simmering for weeks since the caravan drew closer, finally reaching a boiling point at the border.

UNIDENTIFIED MALE: Happening now. Breaking news. Border escalation. President Trump is defending the used of teargas against migrants who rushed for the U.S. border.

WARD: Thousands of asylum seekers are still there waiting and hoping in makeshift camps and shelters.

She says, if she goes back to Honduras, they will kill us.

Number six. In March, a former Russian spy and his daughter were found on a park bench in Salisbury England. Poison with the toxic nerve agent, Novichok. A former double agent Sergei Skripal and his daughter are in critical condition. They were found slumped over on a park bench. After investigating Britain said, the Russian government was behind the attack.

UNIDENTIFIED FEMALE: The two individuals named by the police and CPS are officers from the Russian military intelligence service.

WARD: Russian President Vladimir denied those claims. The accusation provoke diplomatic expulsion and sanctions against Russia.

Number five. A jolt to the right in European politics. In Germany, Hungary, Sweden, Austria, and Italy, populous far-right political parties made major gains in legislative elections.

UNIDENTIFIED FEMALE: We are now into election results in Hungary, that is the like in nationalist, the ringing alarm bells in some European capitals.

WARD: Nationalism, Islamophobia and Anti-Semitic attacks surge. Fueled by anger about immigration and mistrust of the elites.

UNIDENTIFIED FEMALE: When you talk about the elites, and you talk about finance, is that another way of saying, Jewish people?

UNIDENTIFIED MALE: Yes.

WARD: A CNN poll found that 28 percent of Europeans think that Jewish people have too much influence over financing business across the world.

Number four.

UNIDENTIFIED MALE: -- decree years of civil war. Yemen is now the world's worst humanitarian crisis.

WARD: Famine, water shortages, a deadly cholera epidemic. And by some estimates 85,000 children under the age of five had died from malnutrition. People don't often think of this war as an American war, but many Yemenis do. A plane from the U.S. backed Saudi led coalition struck a bus carrying dozens died. Mission experts tells CNN, this was a U.S. made Mark MK82 bomb. Critics call Saudi Crown Prince Mohammed Bin Salman the architect of the war. Now for the first time in two years, the U.N. has forced the warring parties to the negotiating table. The stakes are high, almost 12 million people are on the verge of starvation.

Number three, the brutal murder of the journalist sends political shockwaves across the world.

UNIDENTIFIED FEMALE: We are getting more information coming in right now on the death Washington Post journalist Jamal Khashoggi. He walk in to the Saudi Consulate in Istanbul, Turkey on October 2nd, he was never seen again.

WARD: Saudi officials released several shifting accounts of what happened. Evidence, including an audiotape revealed chilling details Khashoggi's killing was premeditated. The assassin even bringing a body double to pose as the murdered journalist. Take a look, same clothes, same glasses and beard similar age and physique, everything except the shoes. The CIA and other U.S. allies concluded the Saudi Crown Prince ordered the murder. President Trump unwilling to hold him accountable.

TRUMP: Maybe he did - maybe he did.

WARD: Number two, unprecedented dialogue on the Korean peninsula.

UNIDENTIFIED MALE: The leaders of North and South are about to meet and negotiate a peace settlement and denuclearization, President Moon shaking hands with Kim Jong-un.

WARD: And in June, the first ever meeting between a sitting U.S. president and North Korean leader.

TRUMP: We are ready to write a new chapter between our nations.

WARD: North Korea's Kim Jong-un also promising to end his nuclear program, including shutting down a major missile testing site, but in the month since little progress and recent satellite images suggest North Korea is moving ahead with its ballistic missile program. Despite all this, President Trump projects a positive front and plans are still in the works for a possible second summit between Trump and Kim.

Number one. An American president upending the traditional world order. 2018 presented diplomatic challenges and in some cases major missteps clashing with allies and flirting with folks.

[03:55:07] UNIDENTIFIED MALE: President Trump lashing out at the NATO summit insulting, Germany and calling our NATO allies delinquent.

UNIDENTIFIED MALE: The president directly undermine the precision of Theresa May --

WARD: Calling the Canadian Prime Minister quote, very dishonest and weak. But it was Trump's summit with President Vladimir Putin in Helsinki that drew the most scrutiny especially his response when asked about Russian interference in the U.S. election.

TRUMP: I have great confidence in my intelligence people, but I will tell you that President Putin was extremely strong and powerful in his denial today.

WARD: While the president touts his chemistry with world leaders.

TRUMP: In fact I will get that piece of dandruff off.

WARD: Some worry he has become an international punchline.

TRUMP: My administration has accomplished more than almost any administration in the history of our country. America's so true.

WARD: 2018 ends with more uncertainty about America's role and influence in the world, and a public rebuke.

UNIDENTIFIED FEMALE: Breaking news. Defense Secretary Jim Mattis quits. In a stunning letter to the President of the United States, the four star general calling out President Trump for not backing American allies for supporting authoritarian regimes.

WARD: And for a president who likes to proclaim America first, 2019 will be a true test of where his priorities stand among American allies.

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HOWELL: Thank you for watching this hour of the CNN Newsroom. I'm George Howell at the CNN Center in Atlanta. For our viewers in the United States, Early Start is next. For viewers around the world, my colleague Will Ripley picks it up live from Hong Kong. You're watching CNN, the world's news leader.

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