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Dow Falls amid Recession Warning; Recession Indicator First Time since 2005; New Information Surrounding Epstein's Death; Feds Search Epstein's Private Island; Disturbing Arrest of Ohio Teen; Harris Unveils Gun Plan; O'Rourke Returns to Trail; Trump Claims He's Losing Billions. Aired 1-1:30p ET

Aired August 14, 2019 - 13:00   ET

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

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[13:00:19] BRIANNA KEILAR, CNN ANCHOR: I'm Brianna Keilar, live from CNN's Washington headquarters.

Underway right now, the red lights are flashing on the economy as markets warn of a recession as the deficit explodes.

New revelations about what the guards assigned to Jeffrey Epstein's cell were doing before his apparent suicide.

Plus, police find 25 guns, 10,000 rounds of ammo, and now a teenager in Ohio is behind bars.

And as the Trump administration rewrites the lady liberty poem, historians say they need a lesson.

ANNOUNCER: This is CNN breaking news.

KEILAR: We begin with the Dow. We're watching it. It has fallen more than 700 points after the bond market issued an ominous warning today that a recession could be looming. This also comes on the heels of the president's mixed signals on the trade war with China. But the president was quick to blame the Federal Reserve for the descent. He tweeted this. The Federal Reserve acted far too quickly and now is very, very late. Too bad. So much to gain on the upside.

Let's go now to CNN politics and business correspondent Cristina Alesci. She is -- she's there on the floor of the New York Stock Exchange.

Tell us what's happening here, Cristina?

CRISTINA ALESCI, CNN POLITICS AND BUSINESS CORRESPONDENT: Three years ago President Trump said only he could save the company. Now his ill- planned trade war is causing panic and uncertainty. And now he wants the Fed to bail him out.

Well, investors, they're losing their patience. What is going on today and the reason that we have so much red across the board is that investors are fleeing risky assets, looking for cover and less risky assets and safe places, and that is causing an unnatural phenomenon in the bond market, which is called the inverted yield curve, which essentially means that it's less expensive to borrow over a ten-year period than a two-year period, which is not the case, and a recession usually follows. That is the phenomenon that you just laid out in your introduction.

Investors also waking up to the fact that they may have been a little bit too optimistic yesterday when the administration announced a delay in those tariffs. They maybe thought that was a sign that Trump was getting closer or maybe mentally closer to a deal with China. They're coming to terms with the reality that that may not happen. And, by the way, we still have tariffs on $100 billion of goods that will go into effect in December. That's making it really hard for CEOs and business leaders to plan.

I listened to earnings calls just a couple of months ago. Every company is telling the street, Wall Street, it can't plan because it does not know what lies ahead. And that's why we have so much uncertainty, not to mention the fact that other economies around the world are also facing serious challenges.

Brianna, there is no place to hide. It looks pretty ugly here. Doesn't mean we can't bounce back, but right now it's looking terrible.

Back to you.

KEILAR: Yes, just look at that number. You see what Wall Street thinks about uncertainty.

Cristina Alesci, thank you.

I want to get more now on where the economy is headed with Jim Tankersley. He's the tax and economics reporter for "The New York Times."

Jim, thank you for being with us.

And you heard Cristina talking about this. You have a warning from the bond market for both the U.S. and the U.K., citing a slowdown, as well as this U.S./China trade dispute. But we are in the midst of an inverted yield curve, which in English means what?

JIM TANKERSLEY, TAX AND ECONOMICS REPORTER, "THE NEW YORK TIMES": It means in English that, first off, that -- like Cristina was saying, the bond market is worried about the direction of the economy. It means essentially that it's -- you're getting less of a return on a long-term investment than on a short-term investment, which is not how it normally works. Usually an inversion of the yield curve precedes a recession in the United States. A lot of debate about whether that's going to be the case this time. But that certainly is the fear that markets are seeing right now.

KEILAR: And the president is delaying these tariffs against China past when he was initially going to in September. This will be until February of next year right now. Business has been somewhat welcoming to that. But what does the Trump administration really need to do between now and then to turn this around? TANKERSLEY: I mean I think what markets have been looking for, what

economists have been looking for, what businesses certainly have been telling me over the last year is, a resolution of this trade war in some sort of final way. I mean there's been lots of halting steps forward and back. It looked like a deal was possible in the spring. Now one looks much farther off.

To be -- to have the confidence that we're talking about here to invest and to know exactly where you want to put your operations, you need to know what the rules of the road are going to be, not just next month, but for the years to come. And so I think they need more than just a short-term proclamation that everything's OK. They need to see some sort of concrete agreement that says we're not going to have tariffs or any new tariffs any time soon.

[13:05:02] KEILAR: You put it very clearly. Even, you know, people who are not invested in the stock market should be curious about this inverted yield because it could precipitate a recession. Morgan Stanley had said that we could be in a global recession -- a global recession in nine months.

How widely accepted is that assessment and does that change at all with this move to delay tariffs?

TANKERSLEY: I would say that it is not -- certainly not consensus right now that a recession is imminent. I think there is this concern that a recession could happen, that it could be a global recession. There is certainly a global manufacturing recession already in place. You know, Germany is contracting right now. There are lots of warning signs.

But the U.S. economy is growing. It's growing more slowly than it grew last year. It's growing much more slowly than the Trump administration had planned -- or had promised, I'm sorry. And so I think there is reason to think we could avoid the recession. It's probably the base case to think that we avoid a recession, but that fear is rising and certainly the trade fears are what is stoking the recession fear.

KEILAR: You're watching the deficit. We're seeing mortgage debt rising. Why should Americans be keeping their eye on these numbers?

TANKERSLEY: Well, I mean, the budget deficit is important because it tells us in one sense how much fuel the federal government's already been tossing onto the economy to keep growth going. It's been borrowing more money to spend more and to deliver on tax cuts and so that may suggest that if we did fall into a recession, there's less appetite among policymakers to increase the deficit even more to combat the recession.

On things like mortgage debt, what you want to watch with credit is the worry that if people are starting to default on a lot of things, that that is a sign that there is weakness in the consumer or on the side of the economy that has really been propping up growth. And so I think we would worry a lot if we started to see, you know, things like credit card defaults spiking.

KEILAR: All right, Jim Tankersley, thank you so much for explaining that to us.

And now to a major security lapse that appears to have allowed convicted pedophile Jeffrey Epstein enough unsupervised time to kill himself. According to "The New York Times," two staff members guarding the jail unit where Epstein hung himself failed to check on him for three hours.

We have CNN's senior justice correspondent Evan Perez here with some new reporting on this.

Do we know what these guards were doing during that time?

EVAN PEREZ, CNN SENIOR JUSTICE CORRESPONDENT: Well, the FBI is looking into all of the possibilities, and that including whether or not they were simply asleep, were they playing games on their -- on their phones? There's a lot of possibilities.

And one of the most interesting parts of this story, Brianna, is just, you know, days after -- several days after he was found dead on Saturday morning, there are basic details of this story that the Justice Department, the Bureau of Prisons can't nail down. And one of the reasons is that some of the people who know what happened aren't talking. They've lawyered up. They are not cooperating with investigators. It's a very unusual situation. These are law enforcement officers. And part of their job is to cooperate with an investigation and they're not doing it.

So the FBI is having an extra harder time to try to get basic details. How was he found? Who found him? You know, what happened? Why is there a dearth of video of exactly what went on in -- out of his cell, in the hallways there? There's a lot of big questions that people at the Justice Department are still asking, the attorney general, the deputy attorney general are deeply involved in this because, let me tell you, this is probably the biggest crisis that they've faced, that Bill Barr has faced in the six months that he has been here. This is a huge, huge screw up. And they believe that this story certainly is going to be a lot worse before it gets better.

KEILAR: Lawyering up. That's very interesting.

PEREZ: Right.

KEILAR: It tells you a lot, right, an indication that perhaps there is concern that what they have to say is not going to look good for them.

CNN also has some new footage of this private island in the U.S. Virgin Islands that Jeffrey Epstein had.

PEREZ: Right.

KEILAR: It's a pretty sizeable island, as you can see, with many abodes on it. And federal officials actually were at the property earlier this week. Did they find anything?

PEREZ: Well, it's not clear what they found, but one of the huge -- the big questions we had is, why now? Why did this happen? And, look, the fact that he's dead means that there's no case against him. And I think it frees up agents to be able to go do certain searches that perhaps they might have been more constrained to be able to do.

So one of the things that we know that they're doing is, they are pursuing this case as if it's still ongoing, right? You have the key person involved who's not here, unable to say anything, but they believe that there might be co-conspirators here who helped Jeffrey Epstein carry out the conspiracy that he's accused of carrying out for years, you know, luring these young women, helping -- trafficking them and helping to make sure -- secure, you know, these women. He didn't do this on his own. He did this with the help of a lot of people. And so that's what FBI investigators, that's what prosecutors at the Justice Department and the Southern District of New York are still working on because they believe that just because he's dead, obviously, doesn't mean that there can't be justice, some measure of justice, for the young women who have suffered so much, and the families, right? And so that's part of what is driving all of this.

[13:10:23] There's still so much of a mess at the Bureau of Prisons. The Metropolitan Correctional Center in Manhattan, it appears, has been a mess that the Justice Department is only now beginning to understand.

KEILAR: All right, Evan Perez, thank you so much.

A disturbing discovery. What the feds found inside the home of an Ohio teenager who made online threats against federal agents, as well as others.

Plus, just in, Senator Kamala Harris unveiling a new plan to keep guns out of the hands of domestic terrorists.

And after rewriting the poem on the Statue of Liberty, President Trump's top immigration official has a new explanation.

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[13:15:50] KEILAR: The FBI arrested an 18-year-old for threatening to assault a federal law enforcement officer in an online post. But when they searched Justin Olsen's residence, they made a disturbing discovery. It was an arsenal of weapons stockpiled throughout the house, over 10,000 rounds of ammunition and 25 guns, including an AR- 15.

CNN justice correspondent Jessica Schneider is following this case.

And is this a sign, Jess, that the FBI is cracking down on these online threats, especially in the wake of a spate of mass shootings that we've seen in California, Texas and Ohio?

JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT: Yes, you know, it really is a sign, Brianna. I've talked with local and federal law enforcement officials around the country, they are increasingly scouring social media to find people making these threats, to then monitor them and then to move in when the threat seems serious. In fact, FBI agents in Anchorage, Alaska, were monitoring the Internet

chat room ifunny (ph) and they flagged this account that they say belonged to 18-year-old Justin Olsen. They found multiple posts promoting mass shootings and promoting ambushing federal agents. Olsen also allegedly blamed the ATF over the deadly 1993 Waco siege in those posts.

And authorities really grew very concerned when they saw Olsen's number of followers grow to more than 4,000 and when they started seeing posts just like this that said, don't comply with gun laws. Stock up on stuff that they could ban. In fact, go out of your way to break these laws. They're f'ing stupid.

He also posts this. He said, hell, even the Oklahoma City bombing shows that armed resistance is a viable method of political change. There is no legal solution. And this was the most alarming part. In conclusion, shoot every federal agent on sight.

And when federal agents saw that, that's when they subpoenaed ifunny and Google to track Justin Olsen down. They referred the case to FBI agents in Ohio. And just days after the mass shooting in Dayton, that's when agents interviewed Justin Olsen and he told them, well, he was just joking with these posts.

But, of course, agents took this seriously. They searched his car and his father's home, where he had lived for a few weeks. They found a wide array of weapons here. They found 15 rifles, 10 semi-automatic pistols, 10,000 rounds of ammunition, as well as camouflage clothing.

Now, these weapons were in his father's home. And his father kept most of them in a gun vault, which he unlocked for federal officials.

But, for now, that means the 18-year-old is just facing these charges of threatening to assault a federal law enforcement officer. He is locked up for now. He faces the judge again Friday.

But, Brianna, it's possible he could face additional charges. And, of course, he will go before a judge to see if he remains locked up on Friday.

KEILAR: All right, Jessica Schneider, thank you. We'll continue to follow that story.

Presidential candidate Kamala Harris is releasing her new plan today on combating gun violence, extremism and domestic terrorism. She would permit law enforcement to temporarily take someone's guns if they, quote, exhibit clear evidence of dangerousness. It would close the background check loophole for online gun sales. She would also commit $2 billion over the next ten years to combat hate crime and domestic terrorism.

And we have David Chalian, our CNN political director, here to work all of this out for us.

The NRA is actually singling her out. They tweeted about her, criticizing this plan as ridiculous. That's actually a good place for a Democrat to be when you're in a primary race like this.

But how does this shape -- how does she shape up on this issue with other candidates?

DAVID CHALIAN, CNN POLITICAL DIRECTOR: Yes, no, it's a good point that it is a good place to be for a Democrat. That's a badge of honor for them to take to the Democratic base, that the NRA is singling them out.

Where Kamala Harris is different than others, Brianna, is, she's leaning heavily into executive action instead of legislative framework for solutions to this. She has said, if Congress doesn't act within her first 100 days, she's going to act through executive action.

And what you just laid out there are some of -- she's sort of putting meat on the bones of what that means, what kind of action she would take.

It kind of admits her -- her approach to this kind of admits of a stasis and gridlock on the -- in this -- on this issue in Congress, where she currently serves, by the way. She's a United States senator and her approach to this is sort of like, well, I guess I'm just going to have to do this by myself.

[13:20:08] KEILAR: Which might be why the NRA finds it to be actually more of a potential possibility, right?

CHALIAN: Yes.

KEILAR: Also, she wants to allow victims to sue gun manufacturers in -- when you're talking about the deaths of victims in gun violence. Is this a sign that she's going to attack Bernie Sanders, because he has voted to protect gun manufacturers in the past?

CHALIAN: You probably remember better than anyone how much Hillary Clinton tried to make this an issue against Bernie Sanders in their nomination fight back in 2016.

It certainly -- it could lead to that down that road. I don't think we're seeing a real indication that Kamala Harris is very focused on Bernie Sanders at the moment. I think her campaign is more focused on Joe Biden or seems to have been that way and now maybe Elizabeth Warren. But, nonetheless, she clearly -- I mean there's a clear indication there that that's a separation and a distinction from perhaps Sanders' record on this.

KEILAR: And let's talk about Beto O'Rourke, because he'd actually been off the presidential campaign trail for a while, obviously, in the wake of the El Paso shooting, his hometown, his former district that he represented. He's now back. He's given a speech. But he's getting pressured within his state yet again to run for Senate.

CHALIAN: Yes. Local Texas newspaper sort of wrote an editorial, you know, Beto, please come home kind of a thing.

But, you're right, the former congressman did come off the trail. Remember, he served in the city council in El Paso. This was obviously hitting home literally for him and emotionally. His campaign announced today he's going to give a speech in El Paso tomorrow and that will set him off -- back on to the presidential campaign trail. It's hard to imagine, Brianna, that these issues, guns and hate, are not going to be driving forces in his campaign after what he just experienced in his community back home.

KEILAR: Real quick --

CHALIAN: Yes.

KEILAR: Because I want to ask you about another Texan running for president. Julian Castro bought ad time near Bedminster, New Jersey. And -- let's -- can we -- can we play this really quick, this ad?

(BEGIN VIDEO CLIP)

JULIAN CASTRO (D), PRESIDENTIAL CANDIDATE: President Trump, you referred to countries as (EXPLETIVE DELETED). You urged American congresswomen to go back to where they came from. You called immigrants rapists. As we saw in El Paso, Americans were killed because you stoked the fire of racists. Innocent people were shot down because they look different from you.

(END VIDEO CLIP)

KEILAR: Is Julian Castro hoping to get a rise out of the president, who may see it, or is he just trying to get some attention for trolling the president, or both?

CHALIAN: Both. He's trying to get you to play it, right?

KEILAR: That's right.

CHALIAN: So we're giving it attention. I think that's the main mission he wanted here. He would love it, I'm sure, if the president picked a fight with him. I'm not -- I'm not sure that he will.

But, clearly, by spending very little money, but cleverly saying, I'm targeting this so that the president, when he's watching Fox News, will see me talking to him straight to camera, it gets him free media attention, something Julian Castro needs, and it is a pretty powerful ad, it's just not in everybody's living room right now, you know?

KEILAR: Now it is, right? The clever placement for him.

CHALIAN: Yes.

KEILAR: All right, David Chalian, thank you so much.

CHALIAN: Sure.

KEILAR: Just ahead, protesters are gathering outside of a California courthouse as judges decide whether the Trump administration can end temporary protection status for nearly 300,000 refugees living in the U.S. Also, the president claims he's losing billions by being president.

I'm going to talk to one man who exposed the truth behind his wealth.

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[13:28:00] KEILAR: President Trump says he's losing billions, with a b, serving as president. But he doesn't want you to feel sorry for him.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: This thing is costing me a fortune being president. Someone said, oh, he might have rented a room for -- to a man from Saudi Arabia for $500. What about the $5 billion that I'll lose? It's probably costing me from $3 to $5 billion for the privilege of being -- and I couldn't care less. I don't care. You know, if you're wealthy, it doesn't matter.

(END VIDEO CLIP)

KEILAR: Now our next guest says there's no way that President Trump is losing this much money because you can't lose what you don't have.

David Cay Johnston is an investigative reporter with a long history of reporting on the president. He's also the author of, "It's Even Worse than You Think: What the Trump Administration is Doing to America."

So, David, according to Forbes, President Trump is worth approximately $3.1 billion. But why don't you believe that?

DAVID CAY JOHNSTON, INVESTIGATIVE REPORTER: Well, the president's own financial statement shows a lot less than that.

But, remember, during the campaign in 2015, Trump said he was worth $8.7 billion. And then he said ten. And then more than ten. At one time he said $11 billion. When he filed his disclosure statement as president, 90 percent of that disappeared.

He just makes these numbers up. He's done it his whole life. He told me one day in 1990 he was worth $3 billion. And I looked at him and said, Donald, I don't believe you. And he said, what do you mean you don't believe me? And I said, you know, I'm just a newspaper reporter with eight kids, I can pay my bills on time. You can't.

Well, later that same day he went and told a TV correspondent he was worth $5 billion. So somewhere between mid-morning to mid-afternoon his worth went up by two-thirds? He just makes this stuff up.

KEILAR: So do you think that the president is he losing money, like he says, or is it what ethics watchdog have expressed, that he's actually profiting off of being president?

[13:29:55] JOHNSTON: Oh, I think it's most likely he's highly profiting. Some of his properties, like the Doral Country Club in Miami, are not doing as well. But you look at the hotel just down the street from the White House, the one that he --