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EARLY START

Watches and Warnings in Central Gulf Coast Ahead of Tropical Storm Barry; Trump Pulled Back Census Citizenship Question; U.K. Raises Threat Level for Tankers in Strait of Hormuz. Aired 4:30-5a ET

Aired July 12, 2019 - 04:30   ET

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


(BEGIN VIDEO CLIP)

[04:31:58] GOV. JOHN BEL EDWARDS (D), LOUISIANA: Look, there are three ways Louisiana floods, storm surge, high rivers and rain. We're going to have all three.

(END VIDEO CLIP)

BORIS SANCHEZ, CNN ANCHOR: The Gulf on alert for Tropical Storm Barry. Heavy rain couple with high water along the Mississippi presenting a problem never seen before.

CHRISTINE ROMANS, CNN ANCHOR: The president is abandoning the fight for a citizenship question on the census, but he's ordering data compiled from existing federal records instead.

SANCHEZ: And breaking overnight. New sex trafficking charges against R&B star R. Kelly.

ROMANS: And how many calories would you have to cut per day to stay healthy? Not as many as you think. Just a little bag of chips.

SANCHEZ: Are you sure it's more than zero?

ROMANS: It's more than zero.

SANCHEZ: That feels like fitness.

ROMANS: Welcome back to EARLY START. I'm Christine Romans.

SANCHEZ: And I'm Boris Sanchez in for Dave Briggs. We're 32 minutes past the hour here in New York and we start in the Gulf Coast which is bracing for Barry. It's now a tropical storm but there are hurricane warnings along the Louisiana coast.

The Weather Service says Barry presents a problem never seen before, that combination of heavy rain from the storm itself on top of extremely high-water levels from record-flooding already this year on the Mississippi River.

(BEGIN VIDEO CLIP)

EDWARDS: Look, there are three ways Louisiana floods, storm surge, high rivers and rain. We're going to have all three. (END VIDEO CLIP)

ROMANS: The Mississippi already so high around New Orleans that heavy rain plus a storm surge could overwhelm its pumping system. The result would be a repeat of Wednesday's flash flood emergency. One resident who lived through Katrina is concerned.

(BEGIN VIDEO CLIP)

TONY BAKER, LIVED THROUGH HURRICANE KATRINA: This brings some unique elements. We've never had the river this high. You know, a storm come in, the levies are saturated. I think after the Katrina situation, we had Gustav and they did a much better job of getting people up and getting people out, securing the city. And I think that was a lesson learned. I'm concerned, however, that they've gotten complacent.

(END VIDEO CLIP)

ROMANS: Already states of emergency declared in New Orleans, St. Bernard, Saint Charles, Jefferson and Plaquemines Parish. President Trump yesterday approved an emergency declaration for Louisiana to speed up federal help.

SANCHEZ: Now Tropical Storm Barry is moving very slowly. And that slow movement is one reason the Weather Service has issued a rare high-risk outlook for excessive rainfall along the Louisiana coast. The warning has only been used two other times since 2007 for Hurricanes Florence and Harvey.

Let's get out to meteorologist Derek Van Dam live in the Weather Center. Derek, this thing is moving at a snail's pace.

DEREK VAN DAM, AMS METEOROLOGIST: We can walk faster than it's moving right now, Boris. In fact, the flooding is the point that we are trying to drive home. We don't want people to get lost in the minutia of whether or not it will make landfall as a tropical storm or a hurricane. This is a potential flood issue and in fact the Weather Prediction Center has a high risk of flash flooding from Baton Rouge all the way to New Orleans that includes the Morgan City and (INAUDIBLE) regions as well.

[04:35:04] We have over five million Americans under a flash flood watch. That is valid from Saturday through Sunday. And you can see the rainfall totals going forward. We could easily pick up 10 to 15 inches, maybe locally higher amounts closer to 20 inches of rain. That's a lot of rain. It will flood any location. But you add in two to four feet of storm surge, perhaps three to six feet of storm surge right along the mouth of the Mississippi.

And New Orleans may be facing its Achilles heel. We already know the Mississippi River is at or near flood stage. 16 feet the current level right now but you add in two to four feet of predicted storm surge plus the extremely heavy rain that is in the forecast and the potential for overtopping levy is very high. You can see some of the levies that we've dotted out here along the

downstream of New Orleans that are actually below 20 feet. So you don't have to be a mathematician to put that altogether, Christine. We have a serious problem on our hands.

ROMANS: I think we do. All right, Derek, we know you'll be watching it for us. Thank you so much.

Thirty-six minutes past the hour. To Chicago now, breaking overnight, R. Kelly arrested in Chicago and charged with sex trafficking in New York. The entertainer is also facing charges for child pornography and attempting to influence a case in Atlanta. The NYPD, Homeland Security and other agencies assisted in his arrest.

The R&B star has been fighting sexual abuse allegations for nearly two decades. In February he was charged with aggravated sexual abuse involving four women, three of them minors. He pleaded not guilty and was released after posting bail.

SANCHEZ: A 3,000-acre brush fire forcing residents from their homes on the Hawaiian island of Maui. Kahului Airport operating on emergency generators and diverting flights at one point. Fortunately operations are back to normal. More than 600 people are in shelters. The Maui Humane Society also evacuating its animals to Maui High School.

Oprah Winfrey has a home in Maui and the private road on her property has now been opened up to help fight that fire.

ROMANS: President Trump trying to pump up his base with some unprecedented action on two fronts, one involving the census, the other immigration. First the census, the president being careful not to defy a Supreme Court order to keep a citizenship question off the 2020 census. Instead, he says he's taking executive action to get the information a different way. It's an idea census officials, well, they recommended that a year ago. If it had been adopted, it could have saved millions of dollars and a lot of time, not to mention a lot of gray hair at the Justice Department.

Jessica Schneider has more.

JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT: Christine and Boris, the president pulling back on his plans to add a citizenship question to the 2020 census. After a week of insisting his administration would continue to fight in court to get it on the questionnaire, President Trump has now simply signed an executive order.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I am hereby ordering every department and agency in the federal government to provide the Department of Commerce with all requested records regarding the number of citizens and non-citizens in our country.

(END VIDEO CLIP) SCHNEIDER: But the president, in backing down here, he's also hinting, though, at another possible political fight. He said that politicians may also soon use this citizenship data to try to draw voting districts in states by counting only voters as opposed to all residents. And, of course, that is a whole other issue that would draw a whole other set of court battles, so this might not actually be the end -- guys.

ROMANS: All right, Jessica. Thank you so much for that.

Neither side appears to be backing down in the clash between House Speaker Nancy Pelosi and freshmen lawmakers to her left known as the squad. Congressman Alexandria Ocasio-Cortez appearing to suggest she and other members of the squad were being marginalized over their race and lack of experience. The clash began when Pelosi told her caucus this week behind closed doors to stop attacking each other on Twitter. Pelosi elaborated yesterday.

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REP. NANCY PELOSI (D-CA): They took offense because I addressed -- requested my members on offensive tweet that came out of one of the members' offices that referenced our blue dogs and our new Dems essentially as segregationists. Our members took offense at that. I addressed that. How they're interpreting it and carrying it to another place is up to them.

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ROMANS: But Ocasio-Cortez told the "Washington Post" Thursday that she thought Pelosi was unfairly targeting the squad saying, "The persistent singling out, it got to a point where it was just outright disrespectful. The explicit singling out of newly elected women of color."

SANCHEZ: Ocasio-Cortez downplayed race but she stood by her claim of being targeted when she was approached by CNN's Manu Raju.

(BEGIN VIDEO CLIP)

REP. ALEXANDRA OCASIO-CORTEZ (D-NY): It's singling out four individuals. And knowing the media environment that we're operating in, knowing the amount of death threats that we get, knowing the amount of concentration of attention, I think it's just -- it's just worth asking why.

MANU RAJU, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Do you think she has racial animus? Is she racist?

OCASIO-CORTEZ: No, no. Absolutely not.

(END VIDEO CLIP)

[04:40:05] SANCHEZ: Other Democrats that CNN spoke with either dodged the question or they seemed to back Pelosi.

(BEGIN VIDEO CLIP)

REP. JOYCE BEATTY (D-OH): She was very clear that if people have problems, direct it to her because she's head of the family. So I was very comfortable with Speaker Pelosi's comments.

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SANCHEZ: Congressman Lacy Clay of Missouri weighed in saying, quote, "What a weak argument. Because you can't get your way you resort to using the race card? Unbelievable."

Moving on, a jury of one is still deliberating on the fate of Labor Secretary Alexander Acosta. And that jury is President Trump. Sources tell CNN the president is still questioning whether Acosta did enough to defend himself at a news conference earlier this week. Acosta is facing calls to resign over the secret plea deal that he helped broker in 2008 for sex offender Jeffrey Epstein.

President Trump has been silent about Acosta in recent days. One official telling CNN the Labor secretary is not yet not in the clear. Meantime, Epstein is facing new sex trafficking charges. His attorneys are proposing a bail package that would place in home detention in his $77 million Upper East Side residence.

ROMANS: The very residence that federal authorities say is where these crimes took place.

The Fed may have to change its tune on inflation and potential rate cuts after a key report on consumer prices came in stronger than expected. The U.S. government said overall prices rose 0.1 percent in June. So-called core prices, though, that excludes food and energy, those were up .3 of a percent. The jumping core price is the biggest monthly gains since January last year.

Core inflation is now rising 2.1 percent over the past 12 months. Now prices increased for housing, for clothing, for home furnishings, medical care, auto insurance, among other things. Investors still expect a small rate cut from the Fed later this month with the calls for a larger move have quieted down a bit after this CPI report.

The Fed typically cuts rates of course when the economy is weak and inflation is not a threat. What is less certain is how many times the Fed will cut rates after the expected cut.

You know, this whole low inflation thing has been kind of a mystery, that is, booming economy why is inflation so low? It's one of the reasons that many people have said the Fed could have the room to cut rates and now we're starting to see some signs of inflation in some of these numbers.

SANCHEZ: Yes. President Trump certainly wants to, especially going into an election to get it right.

ROMANS: That's right.

SANCHEZ: New warnings overnight for British tankers in a critical shipping route in the Persian Gulf. We have a live report next.

(COMMERCIAL BREAK)

[04:46:35] SANCHEZ: New overnight the U.K. raising the security level for British tankers in the Strait of Hormuz. The Iranians tried to seize a British ship in that critical shipping route just hours earlier.

CNN's Nic Robertson is live in London with the latest. Nic, is there a genuine fear that the Iranians may try something like this again?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Oh, absolutely. We've heard both the Foreign Office here in the Ministry of Defense condemning what Iran has done. The prime minister's office here asking Iran to deescalate the tensions. But this raising the threat level to level 3, which means the assessment is that the attack on a British flag vessel in the Strait of Hormuz is now at a critical level, just indicates how seriously this is being taken.

Of course the British Heritage vessel that some Iranian Revolutionary Guard call fast boats tried to intercept and maneuver into Iranian territorial waters. It took a British naval vessel HMS Montrose to train its guns on those Iranian boats to deter them and then escort that tanker out through the Strait of Hormuz, out into safer seas.

The commander of the U.S. Navy Fifth Fleet based in Bahrain says that he's aware of these illegal actions by the Iranian Revolutionary Guard Corps. The State Department says that they are watching this. That they condemn what Iran is doing. And all of this because Iran has told Britain it must release its super tanker, the Grace One, which was taken into custody in the waters off Gibraltar just last week.

And the authorities there announcing that the captain and the first officer aboard that ship are arrested on charges of essentially sanctions busting, trying to take that Iranian oil to Syria. But the United States leaving the door open a little for diplomacy here deciding not at this time to put sanctions on the Iranian Foreign Minister Javad Zarif -- Boris.

SANCHEZ: Right. And the Revolutionary Guard claiming that nothing ever actually happened.

Nic Robertson reporting live from London. Thank you.

ROMANS: All right. Amazon planning to spend big money to retrain its work force as new technology disrupts the labor market. CNN Business will tell you how much next.

(COMMERCIAL BREAK)

[04:53:11] SANCHEZ: Heroism and tragedy at a Florida beach as a man drowns trying to save his 8-year-old daughter. Thomas Zakrewski was walking along a sand bar out in the water of Captiva Island near Fort Myers on Tuesday with his wife and his little girl. The wife at one point glanced back and saw her husband and daughter struggling in the surf. She jumped in. He was somehow able to pass her the girl, then she saw him go under for the last time. Divers had to fight rough water and they eventually recovered his body on Tuesday night.

Officials believe the 46-year-old was caught in a rip current. It's a powerful nearly invisible undertow that's the leading cause of surf fatalities in Florida with 27 deaths in 2018 alone.

ROMANS: New video this morning of a Coast Guard crew going to astonishing lengths. Part of an operation to stop drug traffickers in the Pacific.

"Stop your boat," he yells. The boat is actually one of the infamously elusive narco-submarines built by cartels to haul huge amounts of drugs. On June 18th the Coast Guard cutter on patrol found one -- found one of these hundreds of miles off the Colombian and Ecuadorian coast. Three guardsmen slipped on to the narco-sub, pound on the hatch, and a suspected trafficker pops up with his hands up. Officials say the operation netted $569 million worth of cocaine and marijuana. More than 230 million on this boat alone.

SANCHEZ: Not exactly a routine traffic stop in Guthrie, Oklahoma. Officers pulled over Steven Jennings for some expired tags on June 26th. They found a gun in the car, then they discovered an open bottle of deluxe bourbon whiskey and a rattle snake in a terrarium in the backseat. The fun was only just beginning. The officers then noticed a canister containing radioactive powdered uranium.

ROMANS: What?

SANCHEZ: Yes. Jennings is facing a slew of charges apparently none of them involving the actual uranium.

[04:55:04] Police are still investigating where the canister came from and what he planned to do with it.

It sounds like everything you need for a good trip to Vegas.

ROMANS: Yes. An eclectic mix of stuff.

All right. Cutting just 300 calories from your daily diet could significantly benefit your heart. That's only a modest 12 percent drop in average calories according to the Lancet Diabetes and Endocrinology Journal. Study participants on a calorie restriction diet saw a decrease in blood pressure and bad cholesterol.

You too can achieve these results with intermittent fasting or by simply skipping that slice of cheesecake for dessert. About 610,000 people die of heart disease in the U.S. every year. That's one in every four deaths.

SANCHEZ: She's captured the hearts of millions.

My nephew and nieces love her. Disney's Moana is so beloved. 25- year-old Kensli Davis of Atlanta wanted the character's image on her birthday cake so her mom called the local baker and ordered a Moana cake. But the woman on the other end of the phone heard marijuana and delivered this cannabis themed cake instead. No worries, Kensli says she and her mom were laughing hysterically. And even without the munchies, the cake was apparently delicious.

Twenty-five years old, you're getting a Moana cake.

ROMANS: With the -- well, marijuana Moana cake.

SANCHEZ: Right.

ROMANS: All right. Let's get a check on CNN Business this morning. First let's take a look at global markets here to end the week. There are Asian markets as they closed a little bit higher here. European markets have opened mixed on Wall Street. The Dow looks like it's leaning a little bit higher here. Look, above 27,000 for the Dow. The Dow and the S&P 500 hit record highs Thursday. The Dow up 228 points. That's above 27,000 for the first time. The S&P 500 beat the record it set last week rising to 3,000. The Nasdaq fell just a tiny bit.

You know, the market is strong. Taking a look at stocks since President Trump's inauguration. The Dow is up 36 percent. The S&P up 32 percent. Look at the Nasdaq, whoa, up almost 48 percent.

On the tech front there are now two $1 trillion companies in the stock market. Amazon joined Microsoft Thursday. Big tech stocks have soared this year despite concerns about the possibility of more regulation in the U.S. as well as those trade tensions with China.

Eye-popping deficit numbers -- budget deficit numbers as the debt crisis looms. The deficit now stands at $741.1 billion. Jumping 23 percent in the first nine months of the fiscal year. Federal spending and revenue also hit records for the same period. A number of factors are driving the increase including the president's trillion-dollar tax cut in 2017 and a very big spending package. Those numbers paint a dark picture for the U.S. budget as the government runs short on borrowing right now.

Adapt or be left behind. In a world of advanced robotics and artificial intelligence American workers need more training to stay relevant. Amazon is about to see how that works out. It's spending $700 million to retrain thousands of its U.S. employees. Amazon's Upskilling 2025 plan expands existing training programs. Workers can use the training to transfer between positions that without this training they might not have been qualified for.

For example, warehouse workers could be trained for technical roles and non-technical workers could be retrained as software engineers even if they have limited technical background. The program comes as robots and artificial intelligence are advancing and more capable of replacing human jobs. Amazon also fighting for employees in a very tight labor market. The plan could help attract and retain them, if you know there's lots of extra training and there's movement in your company.

SANCHEZ: Yes. Disruption is a huge deal. And some folks are running on it.

ROMANS: It is. SANCHEZ: Andrew Yang offering a --

ROMANS: That's right.

SANCHEZ: Thousand dollars a month.

Thank you so much to our international viewers for joining us. Have a great rest of your day. For our U.S. viewers, EARLY START continues right now.

(BEGIN VIDEO CLIP)

EDWARDS: Look, there are three ways Louisiana floods, storm surge, high rivers and rain. We're going to have all three.

(END VIDEO CLIP)

ROMANS: The Gulf is on alert for Tropical Storm Barry. Heavy rain coupled with high water along the Mississippi presents a problem never seen before. We've got a brand-new update from the National Weather Service moments away.

SANCHEZ: Plus, the president is abandoning the fight for a citizenship question on the census. Instead he's going with an executive action suggested to him a year ago. We'll explain.

ROMANS: Breaking overnight. New sex trafficking charges against R&B star, R. Kelly.

SANCHEZ: And how many calories would you have to cut per day to stay healthy. It's not as many as you'd think.

Good morning. And welcome to EARLY START. I'm Boris Sanchez in for Dave Briggs.

ROMANS: Nice to see you here this couple of days this week. I'm Christine Romans. It is Friday, July 12th. Happy Friday this 5:00 a.m. in the East.

Let's begin, though, in the Gulf Coast. Bracing for Barry, now a tropical storm but there are hurricane warnings along the Louisiana coast. The Weather Service says Barry presents a problem we've never seen before. This combination of heavy rain from the storm on top --

[05:00:00]