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Wall Street's Biggest Decline of 2019; Cathay Pacific Caught Between Beijing and Protesters; Modi Praises India's Actions in Kashmir on Independence Day; Jeremy Corbyn Threatens No-Confidence Vote to Stop No-Deal Brexit; Emiliano Sala Exposed to Carbon Monoxide in Plane Crash. Aired 2-3a ET

Aired August 15, 2019 - 02:00   ET




ROSEMARY CHURCH, CNN ANCHOR (voice-over): Hello and welcome to our viewers all around the world. I'm Rosemary Church and this is CNN NEWSROOM.

Coming up, fears of a global recession intensified after a brutal day on Wall Street, why investors are suddenly spooked.

A message from Beijing to Hong Kong, as Chinese paramilitary move to the border amid protests.

And, a BROWNSTEIN: showdown maybe in the works the leader of the Labour Party said he has a plan of to stop a no deal divorce from the E.U.


CHURCH: Good to have you with us.

For the first time in a long time Wall Street is genuinely worried the U.S. economy is headed for a recession, that sudden pessimism seems to have come out of nowhere, the economy has bullish for years and the stock market continues to hit record highs, unemployment is at record lows and consumer confidence is strong.

But an ominous shift in the bond market triggered the biggest one-day selloff of the year. The Dow tumbled 800 points.

Markets in Asia are trying to adjust. In Japan, the Nikkei lost more than 1 percent, the Shanghai Composite down about 0.3 percent and the Hang Seng up very slightly there.

CNN's John Defterios joins us now from London for some analysis.

Good to see you John. So alarm bells set off by that yield curve inversion, has resulted in President Trump blaming his own Fed chairman and investors blaming President Trump's trade war with China, meantime, the global economy is slowing down. Where is this all going?

JOHN DEFTERIOS, CNN EMERGING MARKETS EDITOR: The slight recovery we have seen in the Asian markets is a silver lining considering what we saw on Wall Street on Wednesday, with that washout of 800 points. We had a selloff 1.5-2 percent in most of the Asian markets and we see a slight recovery, we talk about interest rates tied to the long term bonds.

These are the 10 year and, 30 year bonds, both in the United States and the U.K., in the past downturns we have seen interest rates drop sharply and that's exactly what we have seen today.

What really triggered it off beyond the bond market on Wednesday, is because the major slowdown we are seeing in Asia, we had industrial production figures out of China they were the slowest the in 17 years also the retail sector, expectation was for a much higher number, they underdelivered in China.

Then it comes to European trading session, contraction in Germany, Europe's largest economy has slowed to 0.1 percent. Basically the outlook is for the top five economies from the U.S. to Germany, Japan, the U.K. and India to the list, of course, China the slowdown I was talking about, we do not see a recovery.

This goes back to the U.S.-China trade dispute. Nine years into the economic recovery, perhaps it ill timed for Trump to tackle such a big policy priority for himself. We are now seeing despite what he said, that it will not affect the U.S. economy, it is pushing the global economy on the edge.

That's what we are seeing in the numbers from China and Germany and in the numbers in the bond market as well.

CHURCH: And it has everyone on edge too, so how inevitable is a recession and what does it take to avert that outcome?

DEFTERIOS: The Australian central bank governor suggesting it's a self fulfilling downturn, what it means, we need to shut down all of the external noise on the market, if you're this long into an economic recovery, you don't want to have a lot of distraction that could undermine consumer and business confidence.

And that's what we see coming from China, no doubt about it. So the priority is to try to find a resolution between the U.S. and China, what is Xi Jinping's threshold for pain? Trump held back on the tariffs to December 15th, trying to find a bargaining ploy here with China.

I don't see them getting to the bargaining table. And the Hong Kong disputes are slowing down global earnings for players in Asia right, now it's an alarm, many people do not talk about it, but South Korea and Japan have their own trade dispute; not great because they're both very large economies.

And then your headlines, talking about Brexit, that's a major flashpoint, going forward dipping into the fourth quarter as well, having a major --


DEFTERIOS: -- $2 trillion economy looking to get out of the European Union, not knowing whether we will have a hard Brexit or not.

So you need to get the external noise out of the way because the economic cycle is tired and many central banks are cutting interest rates but it's not a foolproof way of sparking a railroad this late into the economic cycle that I'm talking about.

CHURCH: John Defterios, it's always great to get your analysis, many thanks.

China is sending a message to Hong Kong. Paramilitaries are gathering at the border, they're armed with shields and batons apparently ready to move in if necessary after weeks of protests.

There is no indication whether they will be deployed anytime soon. It comes as protests heated up again on Wednesday. Police used tear gas on a crowd that had pointed lasers on the windows of a police station. Meanwhile, protesters who violently caused the airport to shut down are apologizing right now.

They said they are scared, because the police shot at them, the government betrayed them and social institutions have failed them. We have our Andrew Stevens in Hong Kong, he's on live.

Good to see you.

So what is the latest on the protesters?

Those activists are saying they are sorry about the violent clashes at the airport.

ANDREW STEVENS, CNN ASIA PACIFIC EDITOR: That is right, perhaps not surprising to many that are watching and the process that preceded them in 2014, that the students are adopting the sort of attitude they, have always tried to make a point of doing things peacefully.

And I'm talking about the broad majority of students here, the protesters that are leading the protests, so to see them going to the airport particularly yesterday, with these big signs of apologizing, that's not that surprising.

They also want the global communities to stay on their side, in their attempts to try to get the Hong Kong government to change its mind.

But just as John was saying, there is an economic impact here in Hong Kong. There's an economic impact on the companies that are operating in Hong Kong. Just to give you some examples, the tourist arrivals in Hong Kong, are down 31 percent in the first two weeks of August compared to the previous year.

So that gives you an idea, that's hurting the companies that are involved in tourism and one of those was the iconic flag carrier, the Hong Kong airline, Cathay Pacific, look what it is dealing with because of the protests.


STEVENS: Tempers were frayed at Hong Kong International Airport as weary travelers tried to pass through a cordon of protesters to get to their flights this week. It wasn't just travelers who suffered. Airlines too are hit as Hong Kong airport was forced to close two days in a row.

The hardest hit one of Hong Kong's best-known international brands, Cathay Pacific. Cathay is still counting the cost of the 272 flights canceled over the past 48 hours, but that's just a temporary headwind.

These demonstrations have thrown up a much more significant problem. How does Cathay keep its biggest and most important customer happy - that's China, while still maintaining the support of its own Hong Kong staff?

Many Cathay employee support the protests and that doesn't watch with Beijing. Cathay was forced to make a hard U-turn after the company said it would not stop employees joining the Hong Kong protest.


JOHN SLOSAR, CHAIRMAN, CATHAY PACIFIC AIRWAYS: We certainly wouldn't dream of telling them what they have to think about something.


STEVENS: It spark a huge backlash in China pushed hard by state media. The Communist Party's mouthpiece People's Daily ran the headline "The Four Sins of Cathay."

Actions by Cathay staff claimed it supported the pro-democracy movement. A social media campaign with a hashtag #BoycottCathayPacific racked up 44 million views.

Within days, Cathay CEO Rupert Hogg reversed course telling employees there was zero tolerance for any joining illegal demonstrations. And Cathay has also fired two pilots. A company source tells CNN the dismissals were linked to the protests.

Behind Cathay's change of heart is an economic imperative.


ELEANOR OLCOTT, CHINA POLICY ANALYST, TS LOMBARD: What the Cathay example shows us, is that essentially for this company that is a Hong Kong legacy brand. The mainland audience, the mainland consumer is just too important.


STEVENS: About 15 percent of all seats on Cathay and its sister airline Cathay Dragon is sold to mainland Chinese customers. Between them they serve 22 Chinese cities. For Cathay staff many of whom -- [02:10:00]

STEVENS (voice-over): -- joined a general strike in support of demonstrations recently, it's a new reality.

Carol Ng represents about 15,000 Cathay cabin crew.


CAROL NG, CHAIRPERSON, HONG KONG CONFEDERATION OF TRADE UNIONS: I don't think any carriers including Cathay are able to find the right approach how to respond and completely but not upset the Chinese government.


STEVENS: But she says many Hong Kong-based crews are frustrated. Despite bouncing back to profits in the first half of the year, business conditions remain tough. The disruptions at the airport helping Cathay share price plunge to a 10-year low.

The last thing Cathay can afford is to turn its biggest passenger market against it.


STEVENS: Cathay Pacific does represent a clear image of what happens to companies in Hong Kong which are exposed to the tourists and a lot of the big companies in Hong Kong coming out in support of the Hong Kong government, calling for an end to this violence.

I think what the key event is in the next few days, there will be a big march on Sunday and there are expected to be hundreds of thousands of people. If there is, a sort of underlined, despite what we saw at the airport, there is still a strong level of support right across the Hong Kong community for the protests, if there's not much a turnout, it could suggest a mood in Hong Kong is starting to change.

CHURCH: We will see, which direction this protest takes in Hong Kong.

Andrew Stevens many, thanks, joining us live from Hong Kong.

We are following a developing story in Philadelphia, where a standoff that lasted for hours ended a little while ago, this video shows suspect surrendering at the home where police said he had barricaded himself.

Police said the shooter fired repeatedly during the confrontation with six police officers wounded, none of the injuries were life threatening, thankfully,

Police came under fire when they tried to serve a narcotics warrant. Philadelphia's mayor said this is another example of why the United States needs stronger gun control laws.

(BEGIN VIDEOTAPE) RICHARD ROSS, PHILADELPHIA POLICE COMMISSIONER: Our officers need help. They need help with gun control, they need help keeping these weapons out of these people's hands, because the government, at the federal and state level, they don't want to do anything about it.

JIM KENNEY, PHILADELPHIA MAYOR: Getting these guns off the street, out of the hands of the criminals, it's just something that, we need to do something about it. And if the state and federal government don't want to stand up to the NRA and some other folks, then let us, let us police ourselves. But they preempt us on all kinds of gun control legislation.

Our officers deserve to be protected and don't deserve to be shot at by a guy for hours with an unlimited supply of weapons and an unlimited supply of bullets. And we need to do something about it quickly.


CHURCH: At last check, a SWAT team is still clearing in the house where the standoff took place.

We will take a short break, more to come, India's prime minister is not backing down from a volatile move, on his country's Independence Day. Modi praises the really move all of the special status of Kashmir.

And Boris Johnson's government could face a no confidence vote soon. The opposition leader plans to block a no deal Brexit. That's ahead.

And investigators now have an idea of what might have led to the plane crash of Argentina soccer player, Emiliano Sala, details ahead.





CHURCH: Welcome back, everyone.

Indian Prime Minister Narendra Modi defended his government's one nation/one constitution policy which revoked Jammu and Kashmir's special status. Mr. Modi addressed the nation on India's Independence Day. Kashmir remains on lockdown. The revocation of Article 370 of the constitution gives India greater authority over the disputed Muslim majority region.


NARENDRA MODI, INDIAN PRIME MINISTER (voice-over): Neither is this time to delay, nor is it the time to prolong our problems. What hasn't been done for the past 70 years has been achieved within 70 days by this government. Two-thirds of both the upper and lower house of parliament voted to abolish Article 370 and 35(a).


CHURCH: A day earlier, Pakistan's prime minister Imran Khan said he's prepared to fight to the end over the disputed region.

For more on this, we have Sophia Saifi in Islamabad, Pakistan, and New Delhi bureau chief Nikhil Kumar joining us from the Indian capital.

Good to see you both.

Nikhil, to you first, India digging in its heels over Jammu and Kashmir, what does Mr. Modi have to say about his plans for the disputed region going forward?

NIKHIL KUMAR, CNN NEW DELHI BUREAU CHIEF: Yes, that is exactly right, no backing down from the government here, they have roughly two weeks ago, announced the move to scrap the special status for the state of Jammu and Kashmir and change the way it's classified in the Indian system, turning it into a union territory and giving Delhi much more of a say in the way affairs are run.

He said this was as you mentioned part of the policy of making sure this region, which includes the Kashmiri region under Indian control, more fully integrated with the rest of the country. He reiterated the message that this is all for the benefit of the people there.

The big thing here, to point out, is we still have not got a full sense of what people there think because, as you mentioned, it's there a pretty big security crackdown of Kashmir. Communications have been down, we don't know what people there really think. Mainstream political leaders are under arrest in various forms of detention so we don't have a full sense of that. And when these restrictions are ultimately eased, the reaction is violent and the government has admitted after denying anything untoward happened after the announcement, though there was some protests.

If those become bigger, if there is a violent reaction in the coming days or weeks, when the restrictions are lifted, this is a very volatile region and it's a contested territory in this part of the world and it, could blow up into something much bigger and be a problem not just for India and also for the world because the Kashmiri region is divided by India and the Pakistan after the war and any problem there spirals into a confrontation.

There is still a very tense situation even, as you say, Mr. Modi defends what the government did a few weeks ago.

CHURCH: That is the worry.

Sophia, as we just reported, the Pakistani prime minister has made it clear that he would fight to the end for the disputed region --

[02:20:00] CHURCH: -- what exactly did he mean, when he said this?

And what else did he say?

SOPHIA SAIFI, CNN PRODUCER: Rosemary, what we have seen most recently and the most recent thing prime minister Khan said this morning after prime minister Modi's speech, is a warning to the international community. He tweeted about Srebrenica, the genocide, the massacre of the Muslims that happened in the '90s and he said there is a worry that if the international community remain silent, then Muslims can be radicalized because of similar things happening in Kashmir.

That is something he took up yesterday when he went especially into the capital of Pakistan, where he called himself the ambassador for Kashmiris in the world and all of the community of Muslim is feeling the pain of Kashmiris.

He spoke about the blockade of communication that is happening there and he did say that they have information that the Pakistan military has information, according to them, India is planning to mount a false flag operation similar to what we they say happened earlier in the year.

When that happens he said, Pakistanis and the Pakistani government, the Pakistani army and the Pakistani people, are going to be willing to fight and the fight to the very end for the independence of Kashmir.

He has made it an international issue. He has been calling international leaders in Turkey in Malaysia and Indonesia Muslim communities in Russia. While the most positive feedback and h El Paso he has had is from China, where he's going to get assistance to possibly bring this matter up at the Security Council, we are still waiting to see whether that happens or not.

There's a long holiday in Pakistan but the feeling on the streets in Pakistan across the country -- I was in Kashmir, I was speaking to protesters on the ground in different parts of the city, as well as in Kashmir -- everybody's feel as if it's a part of Pakistan already, that they are willing to fight and they are willing to go out there and fight for what they say is what should be an independent Kashmir.

CHURCH: It has the region and the beyond very concerned. We will continue to watch the story. Sophia Saifi in Islamabad and Nikhil Kumar in New Delhi, many thanks to you both.

The leader of Britain's opposition party is moving forward with plans to head off a no deal Brexit. Jeremy Corbyn announced he will call for a no confidence vote on prime minister Boris Johnson's government as soon as he thinks he can win it. Isa Soares explains what might happen next.


ISA SOARES, CNN ANCHOR: In theory, all Boris Johnson has to do is wait and let the clock tick down. The 31st of October is enshrined in law as the day the U.K. is set to leave the European Union, deal or no deal.

In reality, there are a number of potential roadblocks opponents of no deal may use to hold things up.

Can peace return to this building in three weeks?

One of the first actions was to call for a no confidence vote, something Boris Johnson may lose, given his parliamentary majority is down to one. After that, this is when things get murky, uncharted legal waters, no one really knows how it will work.

What we do know is, the prime minister will have 14 days to respond, at which time the country could be swept along in four possible directions.

He could call an election, leaving the British people to decide which course to steer Alternatively, the leader of the opposition, Jeremy Corbyn, can get a chance to actually captain the ship and try to form a government and he has said he would call a second referendum on Brexit.

It's also possible that a unity government could be formed led by someone other than Jeremy Corbyn but they could try and sink Brexit altogether.

And a fourth possibility if Johnson loses the no confidence vote is he simply refuses to step down, and that could leave Britain adrift in a constitutional crisis, this is where the queen comes in. And

The Labour Party's John MacDonald says if Johnson refuses to step aside, he will put Corbyn in a taxi straight to Buckingham Palace. Where the queen is normally tucked away, trying to stay out of the politics. Some have said in this constitutional crisis it will fall upon her to act.

Back in Parliament, MPs have a couple of things they can try to avoid in a no deal Brexit. They could force Prime Minister Johnson back to --


SOARES (voice-over): -- Brussels for an extension although the E.U. has refused to rework the deal. Or they could revoke Article 50, the law that began this Brexit process.

All of this requires the opposition and rival politicians to be very organized and coordinated, something they are not exactly known for around here and if they fail to unite, no deal looks inevitable -- Isa Soares, CNN, London.


CHURCH: New details emerge about the plane crash that killed Argentine soccer player Emiliano Sala in January, investigators have discovered Sala and his pilot were exposed in the cockpit to high levels of carbon monoxide before the small plane crashed into the English Channel. CNN "WORLD SPORT's" Don Riddell has more.


DON RIDDELL, CNN CORRESPONDENT: One of the saddest stories I can remember covering at CNN was the death of Emiliano Sala in January and today we have learned more about how he died and it's pretty shocking.

A toxicology report has revealed that he'd been exposed to high levels of carbon monoxide, you may have recall he was being transferred from France to Cardiff in the Premier League and was flying to join with his new club when the plane crashed into the English Channel.

He and the pilot were killed. Sala never got to play in the Premier League and for everybody involved it was just devastating.


NEIL WARNOCK, CARDIFF CITY MANAGER: I've been in football management now for 40 years, I think, and this is by far the most difficult week in my career by an absolute mile. This is a trauma, I cannot even now I cannot get my head around the situation.


RIDDELL: Wednesday we learned more about the circumstances of his death and the carbon monoxide was an unexpected twist. The level was so high it could have caused a seizure, unconsciousness or a heart attack. And it is assumed that the pilot would also have similar levels of the same substance but we don't know because his body has not been found.

At the time of the accident, there was fevered speculation about the condition of the plane, particularly since Sala made a phone call to a friend, where he expressed some anxiety about it.


EMILIANO SALA, FOOTBALLER (from captions): So guys, I'm on the plane and it looks like it's going to fall down in pieces. If in 1.5 hours you don't have news from me, I don't know if they would send someone to look for me because they won't find me. But you will know. Dude, I'm so scared.


RIDDELL: Accident investigators are working to establish how carbon monoxide could have entered the plane's cabin. His family back home in Argentina is now demanding a detailed examination of the aircraft. Cardiff City say that those who booked the flight should be held accountable for the tragedy. Back to you.


CHURCH: Thanks for that.

Years of strong economic growth have pushed the stock markets ever higher, so why are investors suddenly worried a recession is, coming?

We will explain what was behind the huge sellout on Wall Street on Wednesday.

And later this hour, why a university in London is scrapping all beef products from its campus. We'll be back in just a moment.


CHURCH: Welcome back, everyone, I'm Rosemary Church, want to update you now on the main stories we've been following this hour.

Indian prime minister Narendra Modi is defending his government's decision to revoke the special status of Jammu and Kashmir. The decision gives India greater authority over the disputed Muslim majority region.

In a tweet, Pakistan's prime minister warned of a Muslim ethnic cleansing, if the world allows this to happen.

As protests continue to sweep Hong Kong, Beijing has sent para- military units to the border with Hong Kong. Though, there's no sign they will be deployed anytime soon. Protesters and police clashed again on Wednesday. Police fired tear gas into a crowd that had pointed lasers at the windows of a police station.

Fears the U.S. economy could slip into a recession since stocks tumbling on Wednesday, the Dow's 800-point drop was the biggest one day sell-off of the year. The trigger was a shift in bond market that historically precedes a recession.

Wall Street caused the bond market shift an inverted yield curve, when short term bonds pay more than longer term ones. It's an ominous foreshadowing of a possible recession. CNN's Julia Chatterley explains.


JULIA CHATTERLEY, CNN INTERNATIONAL ANCHOR: All the major U.S. stock markets fell in Wednesday's session, because something specific spooked investors. Specifically, we saw an inversion of the yield curve, that sends a warning sign that's had an eerily accurate track record for predicting future recessions. So, the question is, what is a yield curve inversion? And why does it matter?

Well, in plain terms, the during an inversion, investors get paid better interest rates to lend money for a shorter period of time than the longer one. That's clearly not normal. Usually, longer term bonds are considered riskier, your money is at risk for longer.

And therefore, pay lenders better interest rates than shorter term ones. Now, when the yield curve inverted, 2-year bonds paid better than 10-year ones. As you can see, it was slight but it matters. Now, investors are nervous about the state of the economy for a whole host of reasons, we've got the trade war between the United States and China that keeps escalating. Germany's economy now, Europe's largest is shrinking, and there are worries that China slowdown could also get worse here. Now, throughout the year, investors have been putting money into government bonds as a flight to safety mechanism, because unlike stocks, the returns are pretty much guaranteed for bonds. The problem is, the more they buy, the lower the yield goes. And investors are now seeking safety and bonds even though they are getting a miniscule rate of return. The 30-year rate here in the United States is now also at a record low.

So, here is the larger concern, though, and why it's causing a sell- off in stock markets. The last five times there's been an inversion like this, it's been followed by a recession. You can see this highlighted in yellow; yield curve inversion, recession. Seen here, inversion, recession.

The problem here is, though, the recession doesn't always come right away. It can be many months or even years. Traditionally, around 12 to 18 months later. Now, some economists argue this could be different. Maybe the prophesy of the inverted yield curve won't come true.

It's also not always the case that we get this warning sign in the bond market, and then see a U.S. recession, it doesn't always happen. But markets right now are looking to the past records as a recession predictor and they're deciding to sell. Julia Chatterley, CNN, New York.


CHURCH: Joining me now is Eswar Prasad, he teaches trade policy at Cornell University, he's also a senior fellow at the Brookings Institution, great to have you with us to walk through all of this.


[02:35:01] CHURCH: So, the first question has to be, are we facing a recession? How likely is it, given this inversion of the yield curve sounding a warning, apparently?

PRASAD: Certainly, the U.S. economy is flashing many dangerous signs, and around the world, it characterizes what is happening as a mixture of doom, gloom, and some fear, that a country such as Germany and Brazil that have tipped into slight recession (INAUDIBLE) they seem to be losing growth momentum.

That countries like China and India, where this is gloom, because they are growing fast but, there are signs of the growth momentum is weaning off, and then the U.S., where the yield curve is inverted (INAUDIBLE) long term interest rates have now fallen slightly below short-term interest rates, which typically tends to signal recessions.

It's creating some fear that with the uncertainties generated by the trade war and the loss of growth momentum and certain parts of the economy, though the U.S. might also be likely to tip into recession. So, it's not quite there yet, but there are certainly lots of danger signs flashing.

CHURCH: All right. So, let's look at this tweet from U.S. President Donald Trump, where he says this, our problem is with the Fed, raised too much and too fast. Now, too slow to cut. Spread is too much as other countries say thank you to clueless Jay Powell and the Federal Reserve.

Germany and many others are playing the game. Crazy inverted yield curve, we should easily be reaping bigger rewards and gains, but the Fed is holding us back.

So, President Trump blaming the U.S. stock market losses on Fed chairman Powell, and not on his own actions regarding the trade war with China. What does that signal to you and if you breakdown that tweet, how much is he understanding of what is going on in the United States and the world?

PRASAD: Donald Trump is playing a dangerous game, certainly pushing down interest rates, and increasing the amount of liquidity that is money being infused into the economy, would help boost growth by a significant cost in terms of greater financial system risks and that's what the Fed is a little concerned about.

Right now, there are no inflationary pressures, so certainly one could make the case for a rate cut, but the Fed wants to make sure that doesn't create risks that supersede what you might get in terms of a short-term boost to growth.

If you look at this from an international perspective, the concern is that there are many other Central Banks around the world that are also looking to ease their monetary policy in order to buffer growth in their economies.

And the problem is that if everybody tries to cut interest rates at the same time, that may boost their economies, but many of the economies outside the U.S. are looking to weaker exchange rates in order to boost their economies.

And not everybody can - cut their exchange rates at the same time. So, this could set off a potential currency war, where countries are trying to devalue their currencies in a competitive way, and the problem is that, that creates even more uncertainty in addition to the trade tensions that are already out there.

And that is really going to hurt investment and productivity growth which is certainty not going to be good for long-term growth.

CHURCH: Wow. So, what role does Mr. Trump's trade war with China, play, in all of these, and is it too late for him to try to turn this around, find a compromise with China, or at the same time, giving global markets a reason to feel a little more confident?

PRASAD: The trade war and in fact that brought trade tensions at the Trump administration is fermenting not just with China, but many of the other trading partners of the U.S., including, of course, Canada and Mexico, but in addition, Europe, Japan and so on, plus the Japan- Korea trade spat right now is creating a lot of uncertainty in global financial markets.

So, it would certainly be nice to have a path towards a resolution of the U.S.-China trade dispute, but instead, what we are seeing is a ramping up and a hardening of positions on both sides with the U.S. engaging an increasingly harsh rhetoric against China, about the trade war, about China's economic practices and about currency devaluation by China, which is not really consistent with facts.

And in China, the domestic position is hardening, the census that perhaps the negotiators had already been giving away too much to the U.S. in return for too little.

So, with these hardening of positions, I think it's going to be very difficult to resolve that trade conflict, that even come to some sort of short-term interim deal, and that's going to create even more uncertainty in markets as we get through the rest of this year.

CHURCH: Eswar Prasad, thank you so much for a very sobering analysis there, it sounds like they were a certain amount of inevitability that we're all going to have to confront. Many thanks to you. Appreciate it.

PRASAD: Thank you.

[02:40:00] CHURCH: Well, Tropical Storm Krosa is bearing down on Japan on causing chaos for travelers there. The intense system forced the cancellation of hundreds of flights and trains, and more than 400,000 people have been advised to evacuate. The island of Shikoku was slammed with high winds and heavy rain.

And our meteorologist Pedram Javaheri joins us now from the International Weather Center with all the details. Pedram, you've been keeping a very close eye on this. What's happening?

PEDRAM JAVAHERI, CNN METEOROLOGIST: Hey, Rosemary, you know, this storm speaks volumes to a tropical storm and not a typhoon that cause a significant damage across portion of Japan and, of course, many, many days in the works.

Look at radar imagery here, the reflectivity's indicated in red and orange, those are 50 to 80 millimeters of rainfall per hour, and the area around Kochi (INAUDIBLE) really hard hit here when it comes to significant rainfall in the past 24 hours. Of course, the storm moves the shore at 100 kilometers per hour, right around 11:00 a.m. local time on Thursday.

So, a sitting just shy of the threshold there of a Category 1 equivalent system which would be 120 KPH. So, not an impressive system by standards of this area and the storms we've seen in recent years. But, again, you take a look at what has happened here, of course, disruptions, Rosemary, alluded to hundreds of flights cancelled, upwards of 839 cancellations.

In fact, in the world, out of the top seven airports that were most disrupted on our planet, six of them originated out of Japan. There they are, the airport coats for you, from Haneda, all the way point southward towards areas around Fukuoka.

But over 1,300 flights delayed as well, with this incoming system in the past few hours, and wind gust, in excess of 150 kilometers per hour, very densely populated region here across the Kochi prefecture. And look at the rainfall amounts, 563 millimeters, some of this enhanced by the elevated terrain across this landscape.

And, of course, you compare that amount of rainfall to, say, a European City, take you to Paris, and it's comparable to a year's worth of rainfall, happening in a matter of hours across this region of Southern Japan.

So, we know, flooding is a major story out of this area and the system itself pushes off to the north and east and really a shell of its former self here, as far as beginning to phase out and rain itself out.

But, notice over the next 24 to 48 hours, kind of stage right here, pushes off towards areas around Hokkaido and Sapporo in line here for some heavy rainfall, but this is a population density, darker orange colors here indicate higher population.

And notice to the north area, lesser amounts of people going to be impacted with a far weaker storm, as we go in towards late this weekend, Rosemary.

CHURCH: All right. Pedram, appreciate you keeping a very close eye on all of those details. Thanks so much.

JAVAHERI: Thank you.

CHURCH: A teenage activist is heading to a U.N. climate conference in unusual but appropriate fashion. We will explain how she's getting there and why. Plus, a university in London says it's tackling climate change by taking beef off the menu. We'll ask an animal science expert to weigh in. Back in just a moment.


[02:45:27] CHURCH: If you want to help save the planet, eat less meat. That is the blunt message coming out of last week's major U.N. report on climate change.

Beef is responsible for 41 percent of livestock greenhouse gas emissions. And livestock accounts for 14-1/2 percent of total global emissions.

Another report from the World Resources Institute says that if current dietary patterns continue, by the year 2050, new farmlands twice the size of India would be needed to, feed the world's population.

One university is stepping up, Goldsmiths, University in London says it will be scrapping all beef products from its campus at it seeks to become carbon neutral by 2025. The head of the university said the move was made to help cut the school's carbon footprint drastically and as quickly as possible. So, joining me now, with more on this is Paige Stanley, a researcher with the University of California. Thank you so much for being with us.

PAIGE STANLEY, RESEARCHER, UNIVERSITY OF CALIFORNIA, BERKELEY (via Skype): Thank you so much for having me, Rosemary. It's an honor.

CHURCH: Thank you, and I do want to start by asking for your reaction to this university in London, deciding to ban beef as part of its effort to save the environment. What do you think?

STANLEY: Yes, I think, it's not the first time we have seen this. Just last year in the U.S., the company we work, announced that they were going to be doing something similar. And what my first reaction is that it's not quite that simple. We really want to make a difference. It's going to require a really complex -- you know, addressing of the situation.

And like you mentioned, while it's true that beef production and animal agriculture can be a significant contributor to climate change and natural resource use through land, you know, for both freezing and growing beef props.

But, you know, for example, if we were just to zoom in to beef production, you know, beef cattle are often kind of made out to be environmental wrecking balls. But there is actually quite a lot of misinformation on the connection between beef production and climate change.

And not all beef production is made the same. There are different types of production systems, for example, in the U.S., to the U.K. compared to places like South America. And those lead to very different environmental and climate outcomes. And that makes -- so that makes our science very complex.

CHURCH: Right.


CHURCH: OK. So, yes. So, we're talking about that one university, and then you mentioned these others and more and more organizations are moving in that direction, as you say, whether it's going to make a difference, that's a big -- that's a big point there.

But talk to us about what we do need to do? Then, what are -- what are some of the solutions to hold the climate crisis by changing the way we manage land, the way we produce food and the decisions we do make individually, but as a whole on what we eat.

STANLEY: Yes, absolutely. And that's a fantastic question. And I think really what it boils down to is, you know, not only how much we're producing, but how we're producing it?

So, for example, if we look to grass-fed beef, there, it often takes place on grass and rangelands which we can't use for other types of food production. The recent studies have showed that -- you know, grass-fed beef that's regeneratively grazed can actually help us sequester carbon. And that means that it can help plants literally suck carbon dioxide out of the atmosphere, and tuck it down into soils underground. While also maintaining things like wildlife habitat and conserving water, all the while, producing beef.

So, it's those types of kind of holistic and interdisciplinary solutions that I think we need to be winning our efforts towards.

CHURCH: Right. Some good points. But what do you say to those critics who say it doesn't matter what you eat, and this is all a hoax.

STANLEY: I think it absolutely does matter. And those of us -- you know, who are doing science in the space would all completely agree that what you eat completely does matter.

And, you know, the science like I mentioned behind it is complex and the output that you would get, for example, that this university is trying to do with just eliminating their sourcing of beef. That might not be potentially as influential than -- look, like I mentioned, you know, sourcing from better places that tends to be much more influential.

[02:50:02] CHURCH: All right. Paige Stanley, thank you so much for joining us. We appreciate it.

STANLEY: Thank you so much.

CHURCH: Well, if you're planning on attending a U.N. climate summit, maybe getting there in a zero-emissions vessel is the way to go. Teenage climate activists Greta Thunberg thinks so. She is sailing from England in a specially equipped yacht to New York where she said to speak at next month's U.N. climate summit.

CNN's Lynda Kinkade has the details.


LYNDA KINKADE, CNN INTERNATIONAL ANCHOR: Climate activists Greta Thunberg, may be embarking upon her most challenging mission yet. The 16-year-old is sailing across the Atlantic from the English coast to New York City to attend the U.N. climate summit in New York.

GRETA THUNBERG, ACTIVIST FOR CLIMATE CHANGE: I feel a bit seasick and it's not going to be comfortable, but that I can live with.

KINKADE: She's refusing to fly in order to make her voyage emissions- free. Instead, she'll spend about two weeks at sea. And the conditions she's prepared to live with, well she'll have to live with no toilet.

THUNBERG: We will have to do it in a buckets, but I mean that's fine.

KINKADE: There's also no running water. And here is where Greta will spend each night, makeshift sleeping quarters with curtains to create a sense of privacy.

THUNBERG: I don't see any problem with that, really. It's just -- and if it's really hard then, I just have to think it's only for two weeks. And then I can go back to as usual.

KINKADE: This is an old racing yacht. 60 feet long and equipped with sails. The Malizia II is also fitted with solar panels and underwater turbines that generate electricity. The 16-year-old has become a leading voice in the global campaign for action against global warming.

Before setting sail, Wednesday, Greta said she would ignore criticism from climate change skeptics, arguing that science was on her side.

THUNBERG: There are always going to be people who don't understand or don't accept the united science. And I mean, I will just ignore them because, I mean, I'm only acting and communicating on the science.

KINKADE: Greta is traveling with her father, a filmmaker, and two other crew members and plans to address the U.N. summit in New York, September 23rd. Lynda Kinkade, CNN.


CHURCH: An Italian court has ruled that a ship carrying 147 rescued migrants should be allowed to dock in Italy. The ruling angered Italy's far-right interior minister Matteo Salvini who had banned the ship from docking. He has spearheaded a series of anti-immigrant policies since taking office last year and will push to appeal the court's decision.

The Spanish humanitarian ship has been at sea for about two weeks, looking for a place to dock. According to Medecins Sans Frontieres, the vessel is seeking shelter from large ocean swells alongside another humanitarian ship which has more than 350 migrants onboard.

We'll take a short break here. Still, to come, he is the Republican leader in the U.S. Senate, but he has a new nickname. The latest on Moscow Mitch, when we come back.


[02:55:02] CHURCH: U.S. Senator Majority Leader Mitch McConnell has a new nickname. The leading Democrat in the House is calling him Moscow Mitch, because of possible Russia connections. CNN's Tom Foreman explains.


TOM FOREMAN, CNN CORRESPONDENT: Aluminum for airplanes, cars and consumer goods, and lots of work in a tiny corner of Kentucky hit hard by the opioid crisis. That was the promise as officials broke ground for a new aluminum mill.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: That will create up to 1,500 jobs right next to Ashland, Kentucky. You know where we're talking about, right?

FOREMAN: At well, over $1 billion, the project needed loads of money. So, the Washington Post says, the Russians came calling in the form of Rusal, a massive aluminum company ready to kick in $200 million.

But there was a hitch. Rusal was partially owned by Oleg Deripaska, who was tied to Russian President Vladimir Putin. U.S. sanctions forbade doing business with the Russians in response to meddling in the U.S. election.

And that's where The Post, says Kentucky's senior senator Republican Mitch McConnell enters the scene.

SEN. MITCH MCCONNELL (R-KY): I was accused of aiding and abetting the very man I've singled out as an adversary and oppose for nearly 20 years, Vladimir Putin.

FOREMAN: The Post article and others suggest precisely that. Pointing out that former aides of McConnell were lobbying on behalf of the aluminum plant. Even as the senate majority leader himself, was fighting to lift the sanctions on Russia.

McConnell, says he had no idea the Russians were involved in the Kentucky deal. The White House wanted the sanctions lifted.

MCCONNELL: That was how I voted. The reason I voted the way I did.

FOREMAN: The president's response to questions about the timing and appearance of it all.

TRUMP: I think the Washington Post is the Russian asset by comparison. Mitch McConnell loves our country.

FOREMAN: Still, McConnell has picked up a nickname among Democrats already frustrated by him killing so many of their proposals.

REP. NANCY PELOSI (D-CA): Moscow Mitch, says that he is the grim reaper.

FOREMAN: The Post, says McConnell wants to improve election security, but his opposition to legislation along those lines means that nickname won't go away soon.


FOREMAN: We reached out to the senator's office and they say this is a bunch of unfounded innuendo, no truth to the idea that he's helping the Russians. But, it's also clear this nickname Moscow Mitch really rankles the senator. And that likely means Democrats will say it a whole lot more.

Tom Foreman, CNN, Washington.

CHURCH: And I'm Rosemary Church. I'll be back in just a moment with more news. Don't go away.