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EARLY START

Close Count in Israelis Elections; U.S. Rules Out "Knee Jerk" Response to Saudi Attack; DNI Doesn't Comply with Subpoena; FedEx Profits Slip After Dropping Amazon. Aired 4:30-5a ET

Aired September 18, 2019 - 04:30   ET

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


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[04:31:16]

DAVE BRIGGS, CNN ANCHOR: Breaking overnight, no clear winner and no concession in Israel's critical election.

CHRISTINE ROMANS, CNN ANCHOR: Patience prevents stupid moves. The White House taking a hands-off approach as it plans a response to the attack on Saudi oil.

BRIGGS: And the acting spy chief misses a subpoena deadline. How will House Democrats get their hands on an urgent whistleblower complaint?

CNN live this morning in Jerusalem, Riyadh, Jeddah, and Tehran on another busy news day.

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

ROMANS: And I'm Christine Romans. Thirty-one minutes past the hour here in New York.

We begin with, breaking overnight, a race too close to call. Counting still underway in Israel's unprecedented repeat general election. Exit poll projections show once again a very top race. The top two parties within one or two seats of each other.

Israel's longest serving Prime Minister Benjamin Netanyahu and his Likud party slipping a bit against Benny Gantz and his blue & why party.

BRIGGS: The exit polls have a reputation for unreliable. Remember, both Netanyahu and Gantz claimed victory five months ago. Overnight, no one declared victory, but no one was ready to concede.

(BEGIN VIDEO CLIP)

BENJAMIN NETANYAHU, ISRAEL PRIME MINISTER, LIKUD PARTY (through translator): Israel needs a strong and stable and Zionist government -- a government that is committed to Israel as a national state for the Jewish people. BENNY GANTZ, BLUE AND WHITE PARTY (through translator): I hope to

create a wide unity government -- a government that is willing to return to Israel its special values where one people, one society -- the polarization is behind us.

(END VIDEO CLIP)

BRIGGS: So which leader will get to form a governing coalition, as Israel faces critical decisions at home and abroad?

Let's turn to Sam Kiley live in Jerusalem.

Sam, good morning.

SAM KILEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Good morning, Dave.

Based on the exit polls, and you quite rightly gave a health warning to say that they're often quite a bit wide of the mark when it comes to reality, but based on the exit polls, there is no clear winner.

So, this will be a major problem for Reuven Rivlin, the president of Israel, who constitutionally over the next week will interview members of the Knesset once the results are published. There will be 120 members of the Knesset. He'll interview numbers of them to try to figure out who has the best chance of forming a government and invite that person to step forward and have a go at it.

Now, it was that process that ran into the sand after six weeks that led to this second round of elections this year when Benjamin Netanyahu was unable to knit together a coalition. He would find himself in a spectacular position, having to reach out in particular to Avigdor Liberman to join him as he tries to move forward. Lieberman expected to get eight to ten votes, seats.

Similarly, Benny Gantz who has already said that he has established a negotiating committee would love to get into bed with the Likud, but doesn't want Benjamin Netanyahu there, because of the corruption cases that are hanging over him.

So the chances are that this is going to be a protracted process, and for many Israelis the fear is there could be a third round of elections this year, Dave.

BRIGGS: Long process still ahead.

Sam Kiley live for us in Jerusalem this morning, thank you.

ROMANS: Thirty-four minutes past the hour.

The Trump administration appears to be showing constraint after a missile attack crippled a huge oil facility in Saudi Arabia. Defense officials were ordered to plan potential responses, but the White House waiting instead for the Saudi Kingdom's rulers to decide on the next step.

A source tells CNN the administration wants, quote, no knee-jerk reactions to this.

[04:35:04]

The source says this: It's very systemic -- what happens with patience is, it prevents stupid moves.

Nic Robertson joins us live from Riyadh, Saudi Arabia, with the very latest -- Nic.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, good morning.

I mean, the White House seems to be in lockstep with the Saudis on this at the moment. You know, strategic patience, strategic caution. The United States and Saudi Arabia both share a huge and growing, steeply growing concern about what they see as Iran's great maligned influence in the region. And what has happened here in Saudi Arabia is an opportunity for Saudi Arabia and the United States to build bigger international support for Saudi's position. This is something that's been lacking in recent years.

So we heard this morning the Saudi ambassador to London, Khaled bin Bandar, saying that while they believe that the attack had the backing of Iran and in this context, he means, essentially, who else in this region would have the capacity, the wherewithal to develop these weapon systems, to deploy these weapons systems, to be able to put them in the hands of proxies in the region, he's saying undoubtedly, it was Iran backed. But they don't want -- Saudi Arabia doesn't want to rush in to anything. The last thing he said the region needs right now is another conflict.

So, the Saudis are trying to build an international coalition around their position here. The ambassador appealed to all of their allies to the United States, to the United Kingdom, to the United Nations. We heard today that the French are sending investigators to help with the investigation here.

So Saudis are really opening their doors here to bring in a wealth of international backing. And that's what we've heard from the ambassador this morning and this reflects, I think, the position that we see the White House taking at the moment.

ROMANS: All right. Nic Robertson for us in Riyadh. Thank you for that, Nic.

BRIGGS: Iran's foreign minister to the United States is in denial for suspecting Iran is behind the attack.

Nick Paton Walsh live from terrain with the latest there.

Nick, good morning.

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Dave, the Iranians continue to deny their involvement in this and they are continually talking about Yemen. Remember, from the very beginning, he said the Yemeni Houthi rebels who are engaged in a lengthy and frankly barbaric war with the Saudi Arabia government, they're using air power to often cause the humanitarian crisis, they say that the Houthi rebels launched ten drones to carry out this attack. That has been frankly scorned by some U.S. and Saudi officials with their interpretation of events.

But today, the Iranian president, Hassan Rouhani, during cabinet meeting said we do not want conflict in this region, but we must see who started the war. And he's essentially saying, this all began with the Saudi Arabia-backed campaign inside of Yemen and Yemen responded. He said, referring to the attacks, he said, they -- the Yemenis, did not target a hospital, school or market to cause this upset, they hit an industrial center to warn you and to take lesson. So essentially saying that this, in their view, is a Yemeni response to the attacks on Yemen itself.

Now, that is against entirely what you've just heard from Nic there, the interpretation of U.S. and Saudi investigators. But Iranians are continually saying, we had nothing to do this, point to their original version of events.

And while all of that occurs, the U.S. and the Saudis have yet to put forward convincing irrefutable evidence to back up their particular case. So, we are in the bit of a no man's land. This longer this goes on, frankly, the more Iran's officials will say, where is your evidence, where is your proof to back this up? And they remain consistent in their point.

The supreme leader, yes, they said, there will be no negotiation with the United States. In fact, we're hearing from Iranian state news that the Iranian delegation was supposed to go to New York for the UNGA in the week ahead or so is and is wondering if they can make that trip. They haven't been able to send a forward delegation to prepare their visit and haven't been issued visas, they say.

So, even that small window for diplomacy in New York, even though Iran they want to talk, that's closing too -- Dave.

BRIGGS: Interesting new development there. Nick Paton Walsh, live for us this morning. Thank you.

ROMANS: All right. Secretary of State Mike Pompeo en route this morning to Saudi Arabia to consult with the Kingdom's rulers. Global oil prices dropped sharply on Tuesday, that's following their surge on Monday, which sent financial shockwaves around the world.

Why did prices fall? Largely because the Saudis announced plans to ramp up oil and gas production.

CNN's John Defterios was at the Saudi news conference in Jeddah. He has spoken to the CEO of Saudi Aramco.

What about the time frame here?

JOHN DEFTERIOS, CNN BUSINESS EMERGING MARKETS EDITOR AND ANCHOR: Well, it's certainly shortened, Christine. That's for sure. How do you spell "relief" in the energy markets by saying when you'll get 100 percent capacity? That's what they did at the press conference last night, both the minister of energy and the CEO of Aramco, as you suggested.

[04:40:04]

And we've been on this roller coaster of 14 percent on Monday and down 7 percent last night because of what they had to say. Amin Nasser was suggesting 7 percent in terms of their regional output after that shock of 5.37 million barrels on Saturday, and very likely the full Monty by the end of the month.

Let's take a listen.

(BEGIN VIDEO CLIP)

AMIN NASSER, PRESIDENT AND CEO OF SAUDI ARABIAN OIL COMPANY SAUDI ARAMCO: We will be back at our production levels before the attack by the end of this month.

DEFTERIOS: If not earlier?

NASSER: If not earlier, but by the end of the month, more comfortable, we will be definitely.

(END VIDEO CLIP)

DEFTERIOS: And Nasser was suggesting here that their customers did not go wanting, because they used some of their reserves, which will last at the end of the month, when they have 100 percent capacity. And as a result of getting to that level, they don't think that the U.S. should release any supplies from the strategic petroleum reserve, which I think is the headline out of this press conference, as well.

Secondarily, I think what the Saudis are doing in expressing caution about striking anybody in the region, but getting international support to actually protect their oil assets going forward, Christine. Not just the waterways around the Strait of Hormuz, but actually their installations. They would like to pride themselves on rebuilding after such a shock, but they need to learn and get the support, how to protect all of those assets, particularly if they want to go for an international public offering.

ROMANS: Make sure this doesn't happen again, you know? I mean, that was a huge event and big shock in the markets.

All right. John Defterios for us in Jeddah, thank you.

BRIGGS: Also breaking overnight, the acting director of national intelligence, Joseph Maguire, refusing to comply with a deadline to hand over a whistleblower complaint to the House Intel Committee. The Intelligence Committee inspector general deemed the complaint credible and urgent, but the DNI's office says the complaint does not meet the definition of urgent concern, because it does not relate to intelligence activity.

ROMANS: The letter does acknowledge the whistleblower complaint involves confidential and potentially privileged matters relating to the interest of other stakeholders within the executive branch. The acting DNI's office says he will not be able to appear at a hearing tomorrow on such short notice.

Chairman Adam Schiff says he expect Maguire to appear under subpoena if necessary.

BRIGGS: Former Trump campaign manager Corey Lewandowski stonewalling and tweaking the Democrats during the first official House impeachment hearing. In that hearing, marked by partisan sniping, Lewandowski did disclose some new details confirming the president did tell him to order then-Attorney General Jeff Sessions to limit the Mueller investigation

(BEGIN VIDEO CLIP)

REP. HANK JOHNSON (D-GA): That's what he wanted you to deliver to Attorney General Jeff Sessions, correct?

COREY LEWANDOWSKI, FORMER TRUMP CAMPAIGN MANAGER: I believe that's an accurate representation.

JOHNSON: And he wanted you to deliver it to Jeff so that Jeff could say it to the people, right?

LEWANDOWSKI: I believe so.

(END VIDEO CLIP)

BRIGGS: No small admission there. He seems to be confirming, under oath, the president told him to obstruct the investigation. The Mueller report concluded Lewandowski did not carry out the president's order. Prosecutors found there was substantial evidence of obstruction, at least 10 of them.

ROMANS: Tuesday's hearing grew so contentious, Chairman Jerry Nadler threatened to hold Lewandowski on contempt. It verged on comedy several times, including when Lewandowski was asked about an interview in February, including when he said he did not remember the president ever asking him to speak with Jeff sessions.

(BEGIN VIDEO CLIP)

BARRY BERKE, HOUSE JUDICIARY COUNSEL: My question, sir, is when you said the president never asked you to get involved with Mr. Sessions --

LEWANDOWSKI: I have no obligation to have a candid conversation with the media whatsoever, just like they have no obligation to cover me honestly.

REP. STEVE COHEN (D-TN): Either you were willing to break the law for politics and Mr. Trump or you're some kind of a Forrest Gump relating to corruption.

REP. JAMIE RASKIN (D-MD): Let me ask you -- I'm really -- I'm -- LEWANDOWSKI: It's not my privilege to waive.

RASKIN: Well, I don't think it's anyone's privilege to waive because I don't think it exists, Mr. Lewandowski. I think the whole thing is imaginary. It's like the tooth fairy. You didn't work for the president in this White House.

LEWANDOWSKI: My children are watching, thank you, Congressman.

(END VIDEO CLIP)

ROMANS: And the next step in the Judiciary Committee's impeachment probe is to examine the president's alleged violation of the Constitution and emoluments clause over concerns Mr. Trump is benefitting financially from his presidency.

All right. Police say a North Carolina sheriff tried to have a former deputy killed. You will not believe why.

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[04:49:03]

ROMANS: All right. A crack formed in a corner of markets crucial to how the global financial system operates. A spike in overnight borrowing rates forced the New York Federal Reserve to inject $53 billion into the financial system. This is the first time it's had to do that since the financial crisis in 2008.

It sounds wonky, but it's really important. So what happened here? The rate on overnight repurchase agreements, repos, which are short- term loans used by financial institutions like banks hit 5 percent on Monday. Rates spiked to 10 percent Tuesday before the New York Fed stepped in.

The bank launched what's called an overnight repo operation where it tries to ease borrowing costs from purchasing treasuries and other securities. The goal is to pump money into the system, to keep borrowing costs from creeping above the Fed's target range. It is unclear what is causing the stress in this overnight market or how long it will last. The New York Fed said it will conduct a similar operation today to help keep that target, that rate in its target range.

[04:50:02]

BRIGGS: President Trump is in California where his campaign says he'll add $15 million to his 2020 re-election effort. Trump's trip to one of the wealthiest areas of the country marked by clashes on a pair of local and national issues.

Trump criticized Los Angeles and San Francisco over homelessness, saying the cities are destroying themselves by allowing people on the streets top ruin their prestige. And he suggests he may step in.

But California's leaders are concerned that a heavy-handed intervention from the Trump administration could upend plans for building thousands of new units of affordable housing. The White House also signaled an environmental clash with the Golden State on emissions standards.

Kaitlan Collins traveling with the president in Los Angeles.

(BEGIN VIDEOTAPE)

KAITLAN COLLINS, CNN WHITE HOUSE CORRESPONDENT: Yes, Dave and Christine, the president is waking up here in Los Angeles today continuing this West Coast tour. It's the final day where he'll be over here before he heads back to Washington.

But something else notable is happening today and that's that back in Washington the president's administration and the EPA is expected to revoke one of California's signature environmental policies.

Their ability to institute those tougher pollution -- tailpipe pollution laws stricter than the federal guidelines -- something the president is going to roll back, and not only in a blow to California but also a blow to his predecessor, President Barack Obama and his environmental legacy -- something that we've seen the administration keeping their eye on, wanting to do for a while now. And now, sources say they are expected to follow through with that today -- Dave and Christine.

(END VIDEOTAPE)

ROMANS: All right. Kaitlan there in Hollywood for us.

Losing Amazon may not have been the best decision for FedEx's bottom line. CNN business has the details, next.

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[04:55:56]

BRIGGS: Purdue Pharma says it will continue to make OxyContin for now. Purdue filed for bankruptcy this week, part of the company's plan to settle lawsuits filed by thousands of local governments over the drug at the center of the opioid crisis.

CNN spoke to attorneys for Purdue after a bankruptcy hearing Tuesday. One of them told us the plan is not to stop the sale of OxyContin. He said, quote, what we want to do is stop the inappropriate use and the abuse. CNN has reached out to Purdue for additional information.

ROMANS: The sitting sheriff in North Carolina has been indicted after officials say he encouraged a plot to have one of his deputies killed. Granville County Sheriff Brindell Wilkins faces obstruction charges. Prosecutors say he was not only aware of a threat to kill his former deputy Joshua Freeman, he also coached the would-be assassin and told him to, quote, take care of it.

So why on earth would he do this? According to the indictment, the sheriff had been told Freeman, the former deputy, planned to release an audio reporting of the sheriff using racially offensive language.

BRIGGS: A college football fan asked for beer money and a hospital ended up with a $60,000 gift. Iowa state alum Carson King held up a sign on ESPN's game day, reading saying Busch Light supply needs replenished. The sign included his Venmo account information and money started pouring in. Twenty thousand bucks worth.

Carson did buy a case of Busch Light and decided to donate the rest. And went Busch beer and Venmo heard about the story, they stepped up and matched the donation. Cheers to all involved.

ROMANS: Cyclone nation, well done.

All right. Let's get a check on CNN Business this morning.

First, a look at markets around the world. I would call that narrowly mixed here. Really trying to find their footing this week after all of the news out of the weekend.

On Wall Street, you've got futures leaning down a little bit. Looking at the energy sector, because of what's been happening in oil, you can see declines in Brent, West Texas Intermediate crude and gasoline at the moment. Natural gas prices are higher.

Stocks closed slightly higher as investors wait on a decision about interest rates from the Federal Reserve. The Dow closed up just 35 points. The S&P 500 and Nasdaq closed slightly higher, as well. Also up slightly, manufacturing output. This was kind of a surprise that people were talking about.

The Federal Reserve said Tuesday, production rebounded in August, up 0.5 percent after falling in July. Factory production was boosted by a surge in machinery and primary metals production.

Now, the outlook for factories, though, still weak amid trade tensions and global growth. Losing Amazon as a customer is weighing on FedEx's bottom line. It posted a slight revenue decline Tuesday and a 12 percent drop in operating income.

FedEx says global trade disputes increased costs and the loss of business from a large customer contributed to the decline. In June, FedEx decided it would not renew its contract with Amazon for air cargo services and in august it said it would stop providing ground delivery for Amazon. FedEx says it will make some reductions to its express air network to cut costs.

All right, the streaming wars heating up and NBC universal has finally revealed the name of its service. Peacock is set to debut in April 2020 with 15,000 hours of content from NBCUniversal's shows and films. It will be the exclusive streaming home for popular sit sitcoms like "The Office" and "Parks and Recreation."

And classics like "Saved By the Bell" and its newly announced reboot. NBCUniversal did not say how much peacock would cost. "The Wall Street Journal" reports this morning, big story in the journal about the streaming wars. They say the big names have spent more than $2 billion on classic TV shows in recent weeks.

Everybody trying to grab their cornerstone, whether it's, you know, "The Big Bang Theory" or "Friends" or "Parks and Rec."

BRIGGS: Yes. Or more "Saved By the Bell", just what the world needed at this hour.

(LAUGHTER)

BRIGGS: Thanks to our international viewers for joining us. Have a great rest of your day.

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