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At This Hour

Inflation Cools More Than Expected Last Month; Biden Vows To Work With Republicans, Control Of Congress In Limbo; Ukrainian Forces Advance After Russians Retreat From Kherson. Aired 11:30a-12p ET

Aired November 10, 2022 - 11:30   ET

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

[11:30:00]

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KATE BOLDUAN, CNN HOST: A rare November hurricane made landfall in Florida, damaging beaches, knocking out power to hundreds of thousands of customers. Just look at that. Nicole is now a tropical storm and is still pounding the state with heavy rain, really scraping across the entire state at this point. Leyla Santiago is live in Florida with much more on this. Leyla, what are you seeing?

LEYLA SANTIAGO, CNN CORRESPONDENT: Well, Kate, the entire state, 67 counties, still remain under a state of emergency, the governor just announcing that. But let me show you what one of the big problems is here, the police in South Daytona just tweeting out that they're dealing with significant flooding. Take a look right behind me. You can see how that is a problem.

You're also looking out because just beyond those trees you'll find the coast and you will also find a community that is named Wilbur-By- The-Sea, that community, the sheriff is out there right now still evacuating some condos because they have deemed dozens of structures out there to be unsafe, directly correlated with coastal erosion. So not only are we still, what, seven, eight hours after landfall of then-hurricane Nicole dealing with the wind, the rain, the flooding, but also this is a state that is going to now have a bit of a new coastline in some areas because coastal erosion remains a big threat for a lot of those structures that are now deemed unsafe and still being evacuated at this hour, Kate.

BOLDUAN: Absolutely. Much more to come. It's great to see you, Leyla. Thank you so much for covering that for us.

There's also this. U.S. stocks rallying this morning on a better-than- expected inflation report out, showing that inflation is easing from its four-decade high as the Federal Reserve, of course, is still working to figure out how exactly to tame it and handle it correctly. Matt Egan is looking into this report. He joins us now. Matt, what do you see here?

MATT EGAN, CNN REPORTER: Well, Kate, finally, we get some good inflation news, right? I mean, this might actually be one of the most positive economic developments we've seen all year. Month over month, we saw prices go up by point 4 percent. That is encouraging because it was actually supposed to get worse than that and it didn't, that was flat. Year over year, consumer price is up 7.7 percent. Normally, that is terrible news.

BOLDUAN: Exactly.

EGAN: But we're obviously not in normal times right now. This is actually a nine-month low. And that is a significant improvement from the 9 percent input -- inflation that we saw this summer. Of course, none of this means that the inflation situation is gone, right? We're still feeling sticker shock at the gas station, the grocery store, paying rent, but some prices are actually dropping. Month over month we saw price declines for apparel, airfare, used cars, fresh fruit. Used cars, in particular, that was a big driver of this better-than- expected inflation report.

One economist said that the "used car bubble is rapidly deflating." Now markets are loving this news. The Dow surging 900 points, around 3 percent, even bigger gains for the S&P 500 and the NASDAQ, they're on track for their best day since April of 2020. Markets are hoping that this means -- it's actually 1000 points, 3.1 percent.

BOLDUAN: Yes.

EGAN: Now, session highs for the stock market. Investors are hoping that this means that the Fed can finally chill out with these monster interest rate hikes, which would be great because those rate hikes are raising the risk of recession, raising borrowing costs for all of us mortgage rates, credit cards. But I would caution it's a little too early to declare victory. We need to see a number of better-than- expected reports before the Fed is going to back off here.

BOLDUAN: It's good -- it's good to see you. Thanks for bringing us -- thank you for bringing us some good news.

EGAN: Finally, right?

BOLDUAN: I'm taking that.

EGAN: Thanks, Kate.

BOLDUAN: All right, joining me now for more on this is CNN global economic analyst Rana Foroohar. She's a global business columnist and the associate editor for The Financial Times. Rana, give me your take on the report. Matt says it could be the best report of the year. What do you think?

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Oh, one hundred percent. I mean, inflation has been the major issue for this administration and for Americans.

[11:35:02]

And the fact that it's coming down means A., the Fed rate hikes are work -- are working and B., you've got a clear political environment going forward, at least the Democrats. You know, just to bring in the midterm elections from yesterday, I was really fascinated that inflation was an issue for sure. But it was not the only issue. It didn't play as the loan economic issue. And I think that that speaks to the fact that Americans of balance sheets are in better condition than they have been in a while in part because of some of the buildup that happened during COVID are savings. So the fact that you've got that buffer and you've also now got a report that says inflation is starting to dampen, boy that could be game-changing for the markets and for the American public next couple of years.

BOLDUAN: How does this play into the calculation, the equation of the risk still out there of a U.S. -- of a recession?

FOROOHAR: Yes. Well, you know, you're seeing big layoffs, for example, in the tech sector. Facebook laying off double-digit numbers, and a number of other tech companies really taking a hit. You saw the meltdown of crypto in the last couple of days. I think that that is somewhat sector-specific, I think that you have -- you are -- what you're seeing is the deflation of a major tech bubble.

Now, that's going to ripple into some other areas. We don't know exactly where. We -- there's a lot of debt out there right now amongst corporations. And as rates go up, and you know, you probably will see not maybe as strong of a movement in the future, but certainly still some more rate hikes.

It's -- it goes back to the old Warren Buffett quote about how you know that when the tide pulls back, you can see who's been swimming without shorts, and we are seeing that. We saw it in England, we see it in the crypto markets, we've seen it in tech but you also see bright spots in energy, you see bright spots in the industry so I don't think it's going to be an across-the-board market slide. Are we due for a recession? Technically, yes, we are. Does it have to be a hard landing? No, I don't think so.

BOLDUAN: So what does -- what does this inflation report today? In -- as Matt was saying, one report doesn't necessarily mean that Fed's going to completely change its direction.

FOROOHAR: Yes.

BOLDUAN: But what do you think does it make it more or less likely that the Fed is going to keep up with the trend of a -- of a -- their aggressive rate hikes or -- and what is the risk kind of easing too quickly? Well, This is something we keep talking about.

FOROOHAR: Yes, for sure. I would not want to see a quick easing. I would see this being seen as one data point of many. You know, three's a trend and reports. But the Fed is going to be looking at a lot of different things.

They're going to be looking at now the housing market, how are asset prices moderating, and in certain ways, what's the labor market doing. Is it still hot? Are there hiring gaps? Are companies having a hard time finding skilled labor? I mean, there are so many things that go into this picture. The CPI is just one of them.

BOLDUAN: It's good to see you, Rana. Thank you very much. So the White House announcing just moments ago, President Biden is going to be meeting face-to-face with China's leader for the first time since Biden took office. What are they going to talk about? What does the White House want to get out of it? White House Communications Director joins me next.

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[11:43:11]

BOLDUAN: President Biden says that he will invite party leaders from both sides of the aisle to the White House in the coming weeks. And the president, the White House, and everyone else, of course, is also preparing for the possibility that Republicans could take control of the House when all -- when all votes are in. His agenda for the next two years, on the line. Joining me now is White House Communications Director Kate Bedingfield for much more on this.

I do, of course, want to talk to you about the midterms. But first, Kate, we just learned that President Biden will be meeting with the Chinese leader Xi Jinping face to face next week at the G20 Summit. This will be their first in-person encounter since Biden became president. What do you all want out of this meeting?

KATE BEDINGFIELD, WHITE HOUSE COMMUNICATIONS DIRECTOR: Well, President Biden is someone who believes very much in the value of face-to-face communication, leader-to-leader communication, he's obviously has known Xi Jinping for a long time, they've spoken a number of times, and he is looking forward to the opportunity to speak in person. They will, as the president said, when he was asked about this yesterday, they will talk about issues of mutual concern, they will talk about issues of regional concern, they will also talk about how we keep this relationship for in a place of competition and from tipping over into a place of conflict.

The president said yesterday, he will lay out his red lines and lay down and explore where those may be in conflict with China. So, we anticipate that this will be a productive discussion. And again, it's part of the ongoing relationship and communication between President Biden and Xi Jinping.

BOLDUAN: Let me ask you now about midterms and well, kind of we're still in -- still in a waiting period, of course, to understand exactly what the balance of power will be in Washington. But President Biden spoke on -- by the -- by phone last night with Kevin McCarthy. What can you tell us about the conversation?

BEDINGFIELD: Well, President Biden has been clear from the time he took office, frankly, from the time he was running for president that he wanted to be able to work with Republicans in the places where we can find common ground, where we can find consensus.

[11:45:03]

And so, there are a couple of things I would say. First -- firstly, we don't yet know what the balance of power is going to be. Frankly, there is still potentially a path for Democrats to hold the House. Certainly, things are looking very, very strong for Democrats in the Senate. So, we'll see where things net out.

But regardless of where the ultimate count comes down, what we saw across the country on Tuesday as people came out in support of President Biden's agenda. They came out in support of his work to lower costs, his effort to tackle the climate crisis, his effort to bring down prescription drug costs, health care costs, and frankly, what he laid out about the need to protect our democracy and to protect a woman's right to choose. So across the country, we saw a really broad coalition of independent voters, women, communities of color come out in support of the Biden agenda and the president is looking forward to working with the next Congress to continue to make progress.

BOLDUAN: But that actual telephone conversation, can you give us more on what was actually said or what the intent was of the president speaking with Kevin McCarthy?

BEDINGFIELD: Well, the intent of speaking with Kevin McCarthy is to -- is to continue to build a relationship, should we need to work together which, you know, as the president has said, he is certainly open to. Frankly, he's been -- he's been able to do it. We look at -- look at the last two years, we're able to pass an infrastructure bill with Republican votes, we're able to pass a semiconductor CHIPS bill with Republican votes, able to pass veterans benefits with Republican votes.

So, he's shown he's been able to do it. The purpose of the conversation was to continue that open line of communication. But in terms of sharing details of their private discussion, I'll leave their private discussion private.

BOLDUAN: OK. Will President Biden go to Georgia in the next few weeks to campaign with Raphael Warnock in the runoff?

BEDINGFIELD: He will do whatever is most helpful to Senator Warnock. Obviously, that is an election that has not been completed yet so they're -- I'm limited on what I can say, standing here on the White House lawn about it. But what I can say is that the president will do whatever is helpful to Senator Warnock, whether that's campaigning with him, whether that's raising money, whatever Senator Warnock would like the president will do.

BOLDUAN: Biden was asked last night what he'll do differently now to change people's opinion of the direction of the country. And the president's answer was nothing. He would do nothing differently. Do you want to offer more context around that today or are you comfortable with the takeaway that Biden says he's going to do nothing differently after this midterm, even with his approval rating still underwater?

BEDINGFIELD: Well, the president himself offered a lot of context about it yesterday, Kate. And he said -- you know, we saw people come out in support of his agenda. And I think that's what -- that's one of the big -- BOLDUAN: In that answer though, Kate, he didn't.

BEDINGFIELD: That's one --

BOLDUAN: He said -- he said because they're just finding out what we're doing. The more they know what we're doing, the more support there is. He said he would do nothing differently.

BEDINGFIELD: Exactly, right. And that's because he has put forward an agenda that's lowering costs. Again, that's tackling the climate crisis, that's about protecting fundamental rights, protecting our democracy, protecting a woman's right to choose. And so what you've -- what you saw was that people across the country had a choice.

On Tuesday, they had a choice between President Biden's vision and congressional Democrats' vision for this country and congressional Republicans. And largely, they chose the vision that President Biden and congressional Democrats have put forward. So, there's nothing to change except to continue to press forward on the progress that we've made. And certainly, the president is looking forward to doing that.

BOLDUAN: There -- you listed out some of the things that you're able to accomplish with Republicans in the -- in the recent times. They're also big things that you have not been able to get done, even with Democrats in control of both chambers. With the possibility of Democrats having less power in Congress, are you lowering expectations now on what's within the realm of possibility to accomplish in the next few years?

BEDINGFIELD: Well, there's no reason that lawmakers on both sides of the aisle shouldn't be able to come together to keep making progress on lowering costs. You know, there's no reason that we shouldn't be able to -- for example --

BOLDUAN: Right. But the assault weapons ban, that's something that the president says that he's going to get done in his -- before, you know, in the next two years.

BEDINGFIELD: And he --

BOLDUAN: Do you think he can get that?

BEDINGFIELD: And he --

BOLDUAN: Do you have any belief that he can get that done if Republicans control the House?

BEDINGFIELD: And he's going to keep -- he's going to keep -- he's going to keep pushing. And there's no reason that Republicans shouldn't support that. You look across the country, there's overwhelming support from people all across this country for an assault weapons ban. And, frankly, when we saw the previous assault weapons ban, which, then-U.S. Senator Biden was critical in getting done and getting across the finish line, we saw -- we saw crime dropped precipitously after that assault weapons ban passed decades ago. So, we've seen that it works. People across the country want to see us do it. And there's no reason that Republicans shouldn't be able to come to the table with Democrats and get that done to make our community safer and to get guns off the street.

BOLDUAN: Let's see where the election lands. I would love to have -- I would love to have you back on as always. Kate, thanks for coming on.

BEDINGFIELD: Thanks so much. Appreciate it.

BOLDUAN: Thank you.

Another big setback for Russia. Why its forces appear to have pulled out of a key Ukrainian city? The very latest in the war in Ukraine, that's next

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[11:54:11]

BOLDUAN: Ukrainian forces are advancing in the South after Russia's stunning withdrawal from the port city of Kherson. Ukrainian officials say hundreds of -- hundreds of square miles of the Russian-held territory have now been liberated. Here you see soldiers standing with the Ukrainian flag in a town along the main road to Kherson city. Nic Robertson joins us now live in Ukraine with much more on this. And, Nic, Kherson is a big deal. Talk to us about the significance of this development.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: It's a big deal because it's the capital of one of the regions. It's a region that President Putin illegally made part of Russia less than six weeks ago. He's now going to lose it. It's an embarrassment for him. His troops are retreating. They're calling it a withdrawal to save troops' lives and equipment. But we all know that way Russia has treated its troops elsewhere in the country callously and within -- with indifference. The death toll has been staggeringly high.

[11:55:09]

So, it does seem that Russia is forced into this position because of you -- the Ukrainian's success in targeting their supply routes across the river. So the Russians are moving back, the Ukrainians are moving forward, several 100 square kilometers taken today, 12 villages. Ukrainian say that they're concerned this might be a trap that the Russians might be mining the roads, mining buildings, laying booby traps, and perhaps there'll be ambushes, so far, that's not been the case. As best we know. But the reason that the Russians are -- the reason the Ukrainians are concerned is because they just don't trust the Russians. Nevertheless, they are taking ground, and not many days now potentially before they actually have the city itself, Kate.

BOLDUAN: Nic, thank you so much. All right to the midterm elections, the results still coming in, votes still being counted in several key races, the very latest from across the country, our reporters on the ground. That's next. (COMMERCIAL BREAK)