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Trump Turmoil Anticipated as World Leaders Meet This Weekend at G-7; South Korea to End Intel-Sharing with Japan; Smoke from Amazon Fires Plunge Brazil's Sao Paolo into Darkness. Aired 4:30-5a ET

Aired August 23, 2019 - 04:30   ET


[04:30:01] JULIA CHATTERLEY, CNN ANCHOR: Cracks in the economy threatening a downward spiral. The Fed chief will try to calm investors today.

DAVE BRIGGS, CNN ANCHOR: Top world leaders gathering this weekend for the G-7 in France as they try to calm growing concerns back home.

CHATTERLEY: Brazil's president pointing fingers over raging fires in the Amazon. He says they're being ignited to make him look bad.

BRIGGS: And a school superintendent in Tennessee got a $15,000 bonus. What he's doing with it will inspire you.

Welcome back to EARLY START. Happy Friday, everybody. I'm Dave Briggs.

CHATTERLEY: I'm Julia Chatterley. We are, what, 30 minutes past the hour here in New York. And I have to say, hard to recall a choppier two-week period for the markets and the economy cracks into form. Some of them admittedly self-inflicted by the White House. In just the last two weeks, the yield curve has inverted. Investors demanding high rates in the short term. We've had new projections saying the deficit will soar past $1 trillion in 2020. Job estimates will then revise down. The president repeatedly flip-flopped on new tax cuts.

His ongoing persistent trade uncertainties leaving the Fed searching for flexibility here. And then yesterday we learned that the manufacturing sector is shrinking for the first time in a decade. All that means a pretty big day for Federal Reserve chair Jerome Powell. He faces a serious test with a high-profile speech in Wyoming, looking here to reassure investors. He's also facing pressure from President Trump and expectations to deliver yet more rate cuts.

Here's one of the president's economic advisers, Larry Kudlow.


LARRY KUDLOW, DIRECTOR, NATIONAL ECONOMIC COUNCIL: I'm not going to second guess Jay Powell. I'm just going to say I think the handwriting is on the wall for lower rates.


CHATTERLEY: Stocks were all over the place on Thursday, up, down. We saw the bond market flashing warning lights yet again for the recession, it could be coming. Only the Dow managing to eke out a gain of just 50 points. The "Washington Post" reporting top advisers notified the president that some internal forecasts showed the economy could slow over the next year, complicating his path to re-election.

Now that contrasts sharply with the positive rhetoric we've heard from the White House. The "Post" is also reporting the administration has discussed creating a rotating Fed board where only some Fed governors would be able to vote at each interest rate meeting.

BRIGGS: Meanwhile, the leaders of the world's major economies meet this weekend at a sunny resort in south France. But storm clouds hover on the horizon in the form of disruptor-in-chief Donald Trump. And with U.K. Prime Minister Boris Johnson bringing Brexit woes of his own, expectations for the summit are low.

CNN's diplomatic editor Nic Robertson standing by live this morning in Biarritz.

Nic, Boris Johnson, Donald Trump, what could go wrong?

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Oh, absolutely nothing, Dave. I mean, can you imagine it, Boris Johnson, who is just sort of clinging on to his leadership in U.K., desperate to get some good trade talks going with President Trump. And that may be the ray of sunshine for the pair of them because they like each other. But the reality is President Macron here in France has said don't expect a communique out of this. He's trying to avoid the trouble that happened in Canada at the G-7 last year.

Remember, President Trump left early, refused to sign the communique, have that now infamous stare-down with the German chancellor, Angela Merkel. But that isn't the only reason that the French president is trying to downgrade expectations here. I mentioned Boris Johnson, he -- his leadership in the U.K. is already under threat. You have the Italian prime minister coming here. He's just resigned. Angela Merkel, the German chancellor, she's only got a couple of years to run on her leadership. She's essentially a lame-duck leader. Her economy is hurting in Germany.

You have Shinzo Abe, the Japanese prime minister, coming here, perhaps one of the leaders here in the strongest position, hoping to get a trade deal with President Trump or improved trade relations at the very, very least. But the reality here is that the United States is out of step with the six other nations here. It's sort of called the Six Plus One. In a way, there's a reason for that. The United States isn't aligned with the others on how to deal with durable trade, on how to deal with climate change. Those are big issues here. And expect Iran to come up, as well.

President Macron sort of stepping into global leadership shoes, trying to tamp down tensions with Iran. Will be looking to President Trump to make some concessions on that. Will he get them? Not clear. Again, no communique, and that tells you everything you need to know. This is a group of people who are going to get together and talk, but they won't agree -- Dave. BRIGGS: Let's just get that group to enjoy that picturesque backdrop

there. That perhaps will calm things.

[04:35:02] Nic Robertson, thank you.

CHATTERLEY: And they get (INAUDIBLE) for not doing nay work.

BRIGGS: Right.

CHATTERLEY: All right. Let's keep on. In a move that could affect U.S. intel gathering in a key global hot spot, South Korea says it's ending its military intelligence sharing with Japan in the wake of a broader trade dispute. The Pentagon issuing not one but two statements. The last are voicing, quote, "concern and disappointment" as the move widens the split between two U.S. allies. It may also hinder U.S. efforts to fend off North Korea, China, and Russia.

Let's bring in CNN's David Culver live from Seoul with the latest here.

David, the timing here, whether from a trade perspective or an intel- sharing perspective, particularly with the likes of both North Korea and China, actually couldn't be worse. Talk us through this latest escalation here.

DAVID CULVER, CNN INTERNATIONAL CORRESPONDENT: Incredibly frustrating. I was standing in this spot just one week ago today, and we were talking about the latest round of test missile launches coming from North Korea. Eight in total since May 4th. So, tensions certainly rising. It's getting complicated when it comes to trying to fully understand what the North is proving with these short-range missile launches. And of course, monitoring them and understanding the intelligence and the classified information shared amongst Japan, South Korea, and the U.S. is crucial at this time.

So, to suggest, Julia, that we're at a point where Japan and South Korea won't have information going back and forth, that would put the U.S. right in the middle. The former commander of the U.S.-South Korean forces here in South Korea, he explained this as a very complicated situation now going forward. He said before this pact was in place in 2016, it worked as though Japan found something that might be interesting, saw something on surveillance data-wise that maybe impacted South Korea, they would then have to reach out to the U.S. and say this is the information we have.

The U.S. would then have to go back to Japan and say, can we share that with South Korea, they would have to give permission either way, and then it would be relayed to South Korea. So you're talking about information that could be greatly delayed if even not transmitted at all. So there is a danger in all of that.

The same general, Army General Vincent Brooks, who's now retired, he stresses, though, there is a period of time now that this could all be worked out. Take a listen.

(BEGIN VIDEO CLIP) RETIRED GEN. VINCENT BROOKS, FORMER COMMANDER, U.S.-ROK COMBINED FORCES: So the next 90 days will be very telling to see whether South Korea is trying to generate leverage in their discussions with Japan or even in their attempts to get the United States to help mediate, which the United States has been less willing to do, or to gain a greater sense of favor with North Korea and those I think are the three potential attempted outcomes from this.


CULVER: And he stresses those 90 days, Julia, because technically the information sharing is continuing for the next three months before it's completely terminated. His suggestion, he says if he were to still be in power and in command, he would hope that the U.S. before reacting too strongly would pick up the phone, back channel things with South Korea, and fully understand what their intention here was.

CHATTERLEY: Yes. That's the timeline. See if something can get done.

Great to have you with us, David. Thank you so much for that.

BRIGGS: OK. Some truly bizarre new claims coming from the man who just resigned as CEO of In a series of interviews including on CNN, Patrick Byrne added key details to his claim he helped the FBI carry out political espionage. He says he was asked to renew a romantic relationship with accused Russian spy Maria Butina. She's now serving 18 months on charges stemming from the Russia investigation.


PATRICK BYRNE, FORMER CEO, OVERSTOCK.COM: They said and the very honorable men and women, the men in black, they said we want to be clear. This never happens in the United States. We are the good guys. We're not -- we don't work like the bad guys. But we need to ask you to rekindle a romantic relationship with Maria Butina and --

CHRIS CUOMO, CNN ANCHOR: Members of the FBI that you're sure were members of the FBI asked you to do this. And you know their names?

BYRNE: And I know their names. I was specifically told this request is coming from Jim Comey at the request of somebody, who I'm not going to name. Do not assume it's the president. Do not assume it's -- President Obama, do not assume that.


CHATTERLEY: Wow. Byrne did not offer any further proof, but former FBI director Jim Comey telling CNN, quote, "That's just ridiculous. The FBI doesn't work that way."

Byrne stepped down as CEO yesterday days after putting out a news release entitled "Comments on the Deep State." He claimed he aided the FBI's Clinton and Russia investigations, but came to believe they were more about spying on 2016 candidates. The strange announcement last week triggered a steep decline in Overstock stock price. The share is surging more than 10 percent Thursday on news of Byrne's exit.


CHATTERLEY: Doesn't surprise me. Yes.

BRIGGS: Brazilian president Jair Bolsonaro says his country doesn't have the resources necessary to fight raging wildfires in the Amazon rain forest.

[04:40:07] The Amazon is vast, about two-thirds the size of Continental Europe and produces about 20 percent of the world's oxygen. Bolsonaro, long opposed by environmental groups, is now pointing fingers over the cause of the fires.

CNN's Shasta Darlington in Sao Paulo with more.


SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: Fires are ravaging the Amazon at an alarming pace. According to the National Institute for Space Research, there have been more than 72,000 fires in Brazil so far this year, many of them in the Amazon, many of them started by loggers and ranchers. The destruction has really been felt all the way over here in Sao Paolo some 2,700 kilometers away from the Amazon when earlier this week the city was plunged into darkness at 3:00 p.m. It looked and felt like nighttime.

Environmentalists blaming the government, President Jair Bolsonaro, who's repeatedly said that the Amazon needs to be developed and has also defunded many of the agencies tasked with cracking down on illegal activity there. Ironically, when he was asked about the spike in fires, he blamed the NGOs themselves without citing any evidence, saying maybe they were starting the fires to make him look bad. What's clear is not -- is that not enough is being done to stop them.

Shasta Darlington in Sao Paolo.


CHATTERLEY: Nearly 4,000 people have been evacuated in Shasta County, California, because of the threat from a fast-moving wildfire. The so-called Mountain Fire has grown to 600 acres and is now 20 percent contained. Authorities say more than 1100 homes and structures are being threatened. So far, no injuries have been reported. But all students, faculty, and staff from Shasta College are among those evacuated.

BRIGGS: All right. Coming up, is Bernie Sanders dialing back Medicare for All to appease unions? A new shift from the campaign next.


[04:46:18] CHATTERLEY: Welcome back to EARLY START. Some health insurance companies set to expand their Obamacare

offerings next year. The "Wall Street Journal" reporting insurers are looking at stronger bottom lines after Obamacare's rocky start. Oscar Insurance adding six new states to the nine it currently serves. Also expanding next year, Cigna, Bright Health, Molina Health Care, Centene and Anthem. In some cases, companies are going into markets like Nebraska where there have been few options. Insurers say sharp rate increases let them catch up to claim costs but increases for 2020 should be mostly moderate. The number of Obamacare customers is actually shrinking overall likely because the penalty for not having coverage was eliminated.

BRIGGS: Is Bernie Sanders looking to appease organized labor with a change to his Medicare for All plan? According to the "Washington Post," companies with union-negotiated coverage would have to renegotiate contracts and use the money they save to give union members other benefits. That would effectively give unions more negotiating power than other consumers. Analysis from Politico says Sanders' proposal does not change the legislation but does add requirements for a transition period to a single-payer system.


SEN. BERNIE SANDERS (D-VT), PRESIDENTIAL CANDIDATE: The question arises is if under Medicare for All an employer saves money, as many employers will. What I want to see is the workers themselves get the benefit of those savings, not just the employer.


CHATTERLEY: The communications director for rival presidential candidate Kamala Harris who has struggled to articulate her own health care plan pounced on the change, tweeting, "Oh, how interesting. I thought no one was allowed to make any changes to Medicare-for-All plans at all, ever." The Harris campaign adviser is acknowledging this week's CNN poll that showed a 12-point drop was the lowest point to the campaign thus far. They say they're encouraged by private fundraisers which have all met and in most cases exceeded their goals.

BRIGGS: Robocalls are the targets of a new joint venture between telecom and law enforcement. Companies, including AT&T, Sprint, Verizon, and T-Mobile are teaming up with attorneys general from all 50 states. They announced a set of agreed-upon anti-robocall principles that will include call-blocking technology at the network level at no cost to phone customers. Americans receive an average of five billion robocalls every month and about a dozen to my co-host here.

CHATTERLEY: Yes, make it stop. Make it stop. I know.

BRIGGS: They don't call me. I don't know -- I don't know how I've already blocked them but kudos.

CHATTERLEY: It's that initial excitement when you think someone's calling you and then, yes, recorded message. This is a fun story, too. Apple's new credit card is here and it

comes with some interesting warnings. It's pretty sensitive, I can tell you. CNN Business has all the details.

BRIGGS: I mean --



[04:53:38] CHATTERLEY: Welcome back to the show. Subpoenas have been issued to as many as 20 jail staffers in the Jeffrey Epstein death investigation. That's according to a source familiar with the investigation. It's the clearest indication yet that some corrections officers may face prosecution.

Epstein was found hanged nearly two weeks ago in his cell at Manhattan's federal detention facility. He was awaiting trial on charges of sex trafficking underage girls. A source says corrections officers turned down voluntary interviews unless they were offered some form of immunity. In the days since Epstein's death, reports have emerged of mistakes and mismanagement at the jail.

Now, MIT's president says the school is reviewing about $800,000 it received from foundations Epstein controlled. He says the school will donate that same amount to a charity benefiting Epstein's victims or other victims of sexual abuse.

BRIGGS: Frightening moments for passengers when smoke filled the cabin on a Hawaiian Airlines flight. Seven people, five adults and two children, were taken to hospitals after the plane made an emergency landing in Honolulu. Their injuries described as minor.


UNIDENTIFIED FEMALE: We just all had to kind of go like this to breathe, and said, prepare for an emergency landing and evacuation.

UNIDENTIFIED FEMALE: They came with some wet cloths for everyone to breathe through with the smoke because it was really getting thick.


[04:55:06] BRIGGS: The airline now says a seal failed in the left engine sending oil to hot parts of the plane, causing the smoke.

CHATTERLEY: A scientific breakthrough could save America's great barrier reef. The Florida Aquarium in Tampa says it successfully stimulated coral to reproduce two days in a row in a lab setting. That's a first for coral native to the Atlantic and something experts doubted was even possible. The effort is part of a program aimed at eventually repopulating dying parts of the Florida reef tract.

BRIGGS: Miami Dolphins owner Stephen Ross voicing his support for his players and their decision to protest the national anthem as the new NFL season approaches. Ross has come under fire for recently hosting a fundraiser for President Trump. But speaking to Yahoo! Finance, he says Trump tried to make the social justice campaign about the military.


STEPHEN ROSS, OWNER, MIAMI DOLPHINS: Originally, I was very supportive because I think it was a message that had to get out.


ROSS: And I've supported the players, and I -- initially. When Trump made it about the military, that was a different story. He took that whole message and changed it.


BRIGGS: Ross recently removed himself from his post on the NFL's Social Justice Committee in the wake of backlash for his financial support of President Trump.

CHATTERLEY: I love this story. A Tennessee school official is literally giving back to his students. Hamilton County superintendent Bryan Johnson plans to spend the $15,000 he earned in bonus money to fund scholarships for his students. Johnson says the scholarships will be made in the name of his mother who passed away two years ago.


BRYAN JOHNSON, HAMILTON COUNTY SUPERINTENDENT OF SCHOOLS: She was a pastor's wife, and she raised my sister and I to serve. And she raised us to press towards excellence. And so, we're just excited to be able to allow her legacy to live on.


CHATTERLEY: The fund will provide one scholarship for a senior in each of the district's learning communities.

BRIGGS: A would-be robber in Chicago left empty-handed and in pain when he chose the wrong person to attack. Claire Quinn happens to be a Golden Gloves boxer. On Sunday she says a man who asked for directions grabbed her, punched her in the head, and demanded her phone. That's when Quinn fought back.


LALO BEAS, CLAIRE QUINN'S TRAINER: Right away she started hitting him wherever she could and the nearest spot was the groin area. He messed with the wrong girl, and she had some skills.


BRIGGS: Quinn suffered a mild concussion and some bruising but she was clearly the unanimous winner. She's 6-0 in the ring and apparently 1-0 out of it, but she will miss this weekend's boxing match. (LAUGHTER)

BRIGGS: You like --

CHATTERLEY: I love that story.

BRIGGS: -- Claire Quinn.

CHATTERLEY: Absolutely. I do not condone violence, but --

BRIGGS: But in the case of Claire Quinn --

CHATTERLEY: Serves you right. Go, girl.

BRIGGS: Nice job. Good performance.

CHATTERLEY: Yes. Yes, nice.

All right. Let's get a check on CNN Business this morning. On Wall Street, right now as you can see, well, actually that was a follow through, a positive follow through from Europe and Asia. Right now in Wall Street we are bouncing as well. Higher by some .5 percent of 1 percent for the Nasdaq. Well, I can tell you stocks all over the place Thursday after the bond market once again flashed warning lights that a recession could be coming. Just the Dow managing to eke out a gain of some 50 points. We did see the S&P 500 and the Nasdaq falling slightly by the end of the session.

Cracks beginning to form in the economy. Some of them self-inflicted by the White House. Just yesterday we learned that the manufacturing sector is shrinking for the first time in a decade. All eyes, of course, on Federal Reserve chair Jay Powell who's set to speak at 10:00 a.m. Eastern today. He needs to assure investors the Fed will step in to support the economy if necessary. The expectations for a September rate cut are roughly around 94 percent. Well expected.

DoorDash has finally revealed changes to its controversial tipping policy one month after widespread backlash. DoorDash was criticized for putting customers' tips towards covering the base pay it delivers workers. Now its CEO said the minimum base pay DoorDash provides its delivery workers called Dashers will increase from $1 to $2, and could be as much as $10. All tips will be added on top of that. DoorDash will also give customers the option to leave tips both before and after a delivery is made rather than just before. Those changes are expected to roll out next month.

The new Apple credit card is here. But just be careful where you put it. Apple is warning customers not to keep the titanium card by leather or denim or loose change. The card can get scuffed up easily and the damage won't wash off. If you do sign up for the card, Apple recommends putting it in a wallet or pocket made of soft materials.

BRIGGS: Soft materials. Well, put it in your wallet seems --

CHATTERLEY: Can't do that.

BRIGGS: One would imagine --

CHATTERLEY: No. Can't do that. Can't put it in your --