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Markets Dip at Open; Tariffs on Foreign-Made Movies; Severe Storms for the Eastern U.S. Aired 9:30-10a ET

Aired May 05, 2025 - 09:30   ET

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

[09:30:00]

COL. CEDRIC LEIGHTON, U.S. AIR FORCE (RET.): Have basically said that the first priority is to destroy Hamas, quote/unquote. And what they're trying to do here is by figuring that they could control that territory, if they control that territory, then they will have a greater likelihood of destroying Hamas as an organization. I think the jury is out on that. I think it is probably a grave strategic mistake because this is going to take a long time for the Israelis to stay there, and it might be a war without end if they do that. And that's a very dangerous place to be.

SARA SIDNER, CNN ANCHOR: There's so much destruction. There is so much suffering on the part of Palestinians who are still there in Gaza, trying to figure out where to live, how to get food. And the U.N. agencies are saying they can't go in while all of this is happening. They want full access, not just fettered access. You know, what happens now? They're saying that people are near starvation again.

LEIGHTON: Yes, that's right, Sara. And so, if the U.N. doesn't get access and let's say the Israeli's control all the humanitarian aid distribution, it really will be very difficult, I think, for the Israelis to avoid having a famine in Gaza. So, if that happens, then you have a humanitarian disaster on your hands that is even worse than what we already see. And what we see is really bad.

The U.N., if it gets unfettered access to this, will have a better chance of distributing the aid to the people who need it. Yes, there are concerns that the Israeli's have about some of the aid being pilfered and some of the aid being basically stolen by Hamas and others. But that is kind of the price you have to pay in order to get things into the people who actually need them.

SIDNER: Yes, it's devastating what we're seeing the civilians deal with over these many, many months and now years.

Let me ask you about this. Let's turn to Yemen and what happened with the Houthis, sending a strike very close to Israel's airport. What can that tell us about their capabilities? And Israel's response is it will respond.

LEIGHTON: Yes, Israel - when you look at what they say happened here, you know, when you - when you see what the Yemen Houthis are talking about, they talk about having a hypersonic missile that they used in this particular case. Now, we don't know if that is true or not, but according to the Houthi declaration, what they said was that this was a hypersonic missile that had maneuverability. And it traveled 16 times. It had the capability of traveling at 16 times the speed of sound. This would be in concert with the kinds of missiles that the Russians say they're producing in the hypersonic - hypersonic realm.

So, if the Houthis did this, and if they had a missile like this, then it would probably be the kind that would be able to evade Israeli air defenses, air and missile defenses. The Israeli system that was used to try to intercept this was that - is known as the Arrow Three, which is their long range missile interceptor system, and that is a system that is designed for normal missiles. The hypersonic missiles are basically beyond its technical capabilities, at least as the system is currently configured. And so the Israeli's are going to have to change the way they do their missile defenses if this, in fact, turns out to be a hypersonic missile. But it points not only to an Iranian connection, but also a possible Russian connection.

SIDNER: Colonel Cedric Leighton, it is always a pleasure. Thank you so much for your great analysis this morning.

John.

JOHN BERMAN, CNN ANCHOR: All right, we have a live look at the markets this morning. They open just a short time ago. And you can see, arrows pointing downwards. This follows the president announcing new, sweeping 100 percent tariffs on a product you all know and watch.

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[09:38:34]

KATE BOLDUAN, CNN ANCHOR: Markets are open. The opening bell ringing on Wall Street just a short time ago. And the markets are starting down this week. Why? I don't know, but Zain does. She's here this hour.

We were having -

ZAIN ASHER, CNN ANCHOR AND BUSINESS CORRESPONDENT: Let me see if I can actually help you out with this.

BOLDUAN: We were having too much fun in the commercia break.

OK, what's driving the markets so far this morning?

ASHER: OK, so they're down, but it's flat. Just in terms of what is moving the markets right now, it really is a bit of a mixed bag. We did get some encouraging news over the weekend, with Trump essentially saying that he expects tariffs against China to come down. Also this idea that they are actively negotiating with various countries around the world. China is on that list.

BOLDUAN: Yes.

ASHER: We know that there is some kind of now opening between the U.S. and China. BOLDUAN: But it's unclear.

ASHER: It's - it's so unclear.

BOLDUAN: I mean it's like two steps forward, two steps back, depending on who's speaking, right?

ASHER: Exactly. And from a - from an investor's perspective, we have to now go beyond just talk, right?

BOLDUAN: Yes.

ASHER: Talk is cheap. We actually need real, concrete trade deals being announced with strategic trade partners. Because if you think about it, the longer this goes on for without any kind of trade deal being announced, the more economic damage is being done.

And speaking of economic damage, we did - we did actually get this weekend the auto tariffs officially kicking into gear. And even though there are concessions. So, for example, you know, possible reimbursements, not stacking, it still is at the very least extremely disruptive.

BOLDUAN: Yes.

ASHER: The other thing that we're watching very closely is, of course, the Fed, right? The Fed is meeting tomorrow, Wednesday. No changes yet expected in terms of monetary policy. They're not going to cut interest rates just yet. Why would they?

BOLDUAN: Right.

ASHER: Inflation is not completely where it needs to be. We've got a pretty good jobs report.

[09:40:01]

BOLDUAN: Yes, exactly.

ASHER: But everybody's going to be watching what Jerome Powell says at the press conference at 2:30 on Wednesday.

BOLDUAN: Because remember last time he said more than he usually does at these press conferences.

ASHER: Right. Right.

BOLDUAN: So, this one is definitely -

ASHER: And this is the first official FOMC meeting since liberation day. So, everybody's going to be watching closely, especially Trump, right, because he's going to react to what he says about interest rates.

BOLDUAN: And we will watch it all play out.

ASHER: Yes.

BOLDUAN: Good to see you, Zain. Thank you so much.

ASHER: Good to see you.

BOLDUAN: John.

BERMAN: All right, with us now is Justin Wolfers, professor of economics and public policy at the University of Michigan, and Art Hogan, chief market strategist at B. Riley Financial.

Professor, I want to start with you with this announcement or statement President Trump made overnight of placing 100 percent tariffs on foreign made films. Now, it's unclear if he's talking about literally like foreign films that are in a foreign language, shot and produced overseas and then sold here in the U.S., or if he's talking about "The Avengers," shot on a soundstage in London their. Big picture, Professor, what happens if this trade war expands to services and intellectual property?

JUSTIN WOLFERS, PROFESSOR OF ECONOMICS AND PUBLIC POLICY, UNIVERSITY OF MICHIGAN: Yes, so that's the really big news here. I think actually there's two pieces of news. One, the president has opened a whole new front in the trade war because the thing about movies is they're a service. And tariffs are normally on goods when stuff crosses into the border. The problem with opening that new front is the U.S. is incredibly vulnerable. We export enormous quantities of services all around the world, much more than we import. And so, if anyone were to strike back with retaliatory tariffs, American consulting firms would be worried, medical imaging firms would be worried, computer companies are going to be worried, software engineers are going to be worried, and so on and so forth. That's the first thing.

The second thing is, this is Trump taking another step forward into the trade war. And a very poorly thought through step. It's pretty clear that there was no expert analysis. He declared making movies a national emergency. It turns out that's so that he can trigger the emergency powers. But the Emergency Powers Act says it can't apply to movies. So, it's just more incoherence, more uncertainty, and every other industry has got to be worried they're next.

BERMAN: I can think of a few movies that were an emergency, but that's an aside right there.

Art Hogan, to you.

You must have had - the last six weeks of your life, I can't imagine what it's been like waking up every morning and seeing the new news. When you did see the post from President Trump on the 100 percent tariffs on films, what's your reaction and the immediate impact in your line of work?

ART HOGAN, CHIEF MARKET STRATEGIST, B. RILEY FINANCIAL: yes, that's such a great question. I think Justin hit it on the head. First and foremost, you're just opening up a new window that's not good. We - you know, come into the week hoping that we're going to hear about some trade deals announced. And again, we're just opening a new door to just bad - more bad news. And, you know, and it's analogous to Trump on Sunday night thinking that perhaps he needs to put a tariff on the International House of Pancakes and, and in favor of Waffle House or something like that.

We need to get to a place where the administration delivers some positive news, meaning, we've cut a deal with, and then fill in the blank, Canada, Mexico, India, Japan, et cetera, because we're running out of time in this 90 day negotiating period and we're doing more economic damage the longer we wait.

So, I think we're at a place now where what the market needs to see is something positive, and we just haven't seen that yet.

BERMAN: Yes, Art, I will say this though, I mean, if you did like a Rip Van Winkle and went to sleep all of April and woke up this morning, you'd be like, oh, the market's basically where it was when it began with that ridiculous roller coaster we had, just nonexistent. So why is it that the markets at least, and I understand the markets is not the economy, the markets are back to where they were?

HOGAN: Yes. So, John, that's a great way to frame it up. So, we - post the inauguration, when we found out that the first two policy changes that the administration was going to make was going to be immigration and tariffs. Markets started to price that in. So, we spent from January 20th to April 2nd pricing in getting very defensive, but making some assumptions that we're going to be, you know, call it 10 percent across the board tariffs that could get negotiated away.

The April 2nd chaotic announcement, flip that on its head, and we went down 10 percent in two days. Gradually we've seen some walking back of that. And therefore the market was able to retrace back to the place where it was before liberation day. But now that we've effectively likely priced in less worst case scenarios, we need to have evidence that those are going to be the less worst case evidence that the, you know, they're - this administration has the ability to get us out of this, find an exit on the trade war highway here.

BERMAN: Evidence.

So, Professor, on that front, you know, we speak to Republican members of Congress and supporters of the president who say, you all predicted, economists all predicted that the president would announce this and then everything would go south. And they say, look at the jobs report that just came out. The jobs report was strong.

[09:45:01]

They say, look at the inflation numbers. The inflation numbers are still strong.

I see you shaking your head back and forth. So, why?

WOLFERS: Well, first of all, let's look at first quarter GDP. The economy shrank in the first quarter. Second of all, the defense there was, look at the jobs report from April. Now the funny thing is the jobs report from April, just because of how the data is collected, actually turns out to be a head count for most companies of how many people they had on the payrolls at the end of march. So, pre- liberation day. So, it tells us nothing about what happened after the fact.

Look, if what you want to do is see what happened as the economic consequences of the actions of April 2nd, you have to wait till we have data from after April 2nd. We don't have that yet. What we do have is a lot of opinion data, a lot of business confidence and consumer confidence data that speak absolutely clearly that the American public and American business is terrified about what this administration has done.

BERMAN: Art, we may get an announcement, I don't know. I mean, there's all these whispers that a trade deal of some kind could be announced with some country soon. What do you feel like you need to see in that deal? It's easy to say we have a deal. The details, though. What details will you need?

HOGAN: Well, first and foremost, there won't be new trade deals. It will be MOAs, basically an agreement between two countries to do something. And that something will likely be a pull down of tariffs on the exporter side. And certainly perhaps an agreement to buy product from the United States, like agricultural products, things of that nature, those are the types of agreements we'll likely see. We need to see that happening sooner rather than later. And we need to see the first couple of deals that are announced by major trade partners. So, it has to be an India or Japan or Canada or Mexico. And eventually we have to get to a China.

Away from that, you can just sort of throw in the other 175 countries, and that's not as monumental - I guess I'm forgetting the eurozone, but away from that those, you know, if we get a deal of, you know, a lesser trade partner, it's certainly not going to make much of a difference to investors.

BERMAN: Art Hogan, go Celtics. Appreciate you having here.

Professor Wolfers, great to see you this morning. Thank you very much.

Sara.

SIDNER: All right, coming up, a heart-stopping rescue. What happened as a semi dangles off an interstate overpass.

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[09:51:53]

BOLDUAN: It was a dramatic rescue in Louisville, Kentucky, Sunday morning. Rescue crews saved a truck driver whose truck had crashed and was dangling dangerously over a gap in between two overpasses. Investigators say that it appears the driver lost control of the semi, which then hit the rail of the bridge. It took the crew about 30 minutes to get the driver out. Can you imagine what's going through that poor man's mind the whole time? Thankfully, no one was injured. And police are also investigating and now asking for the public's help

after a deadly shooting at a restaurant in Glendale, Arizona, on Sunday. Three people were killed and at least five others are injured. Police believe multiple shooters were involved, but the events leading up to the shooting remain quite unclear. And police are asking people, anyone with information, to come forward. They had detained several people for questioning but have not yet made any arrests.

And a new survey shows nearly half of Americans are forgetting or choosing to not wash their hands at key moments. Key moments like after you're out shopping, after you're dining out, or after visiting the doctor. Just, no need. The good news, if there is any here, 33 percent of people said that they are washing their hands more now than before the hygiene push was - that was spurred on by the Covid pandemic. And if a reminder is needed, John Berman, health experts recommend washing your hands for 20 seconds with soap, that's key, to stop the spread of germs and viruses. The survey is being released today on World Hand Hygiene Day as part of the National Foundation for Infectious Diseases' handwashing campaign.

John Berman.

BERMAN: It's World Hand Hygiene Day.

BOLDUAN: I know, so are you going to wash your hands today?

BERMAN: I mean, how are you going to celebrate? How does one celebrate World Hand Hygiene Day?

BOLDUAN: You going to rock it with some fragrant soap.

BERMAN: Yes, I left some soap underneath the -- the mantle today. I mean, what does one do?

World Hand Hygiene Day. Do all our appendages get world days like this?

SIDNER: Oh, God. John Berman.

BOLDUAN: (INAUDIBLE).

BERMAN: All right, this morning, severe weather is moving in with flooding becoming a major concern across the deep south and thunderstorms bringing hail to the East Coast.

Let's get to Derek Van Dam in the Weather Center.

Good morning, Derek.

DEREK VAN DAM, AMS METEOROLOGIST: Yes, I'm with Kate on the fragrant soap one. That's how I prefer to wash my hands on this day.

Look, we're going to move on from that segment because it's desperately needed.

We have got a very interesting weather pattern setting up across the country today. So, we're going to refresh your Greek letter alphabet. What is that? That's the Greek letter omega. And we look for these patterns in the upper levels of the atmosphere because it kind of blocks weather patterns from moving across the country. So, we're in this stagnant pattern. And that means more rain along the East Coast.

So, what we're doing is driving in this moisture. Nothing to really push this low-pressure system out of the way. So, we've got a rainy few days across the northeast, including the lower Hudson Valley, into portions of Connecticut, even Long Island and New York City. So, that area could see some localized urban flooding. But there's also the potential for some severe storms that pop up today as well.

Anywhere you see this shading of yellow, Pittsburgh, down to the Delmarva peninsula, that's where we could see a wind threat, perhaps some larger hail. This is the area of west Texas that we could see some tornadoes develop later today. Also some greater sized hail where you see that hatched region.

[09:55:03]

Two inches or more falling from the sky. That's a large hailstone.

So, the time frame for this would be really after supper tonight. Then the severe weather threat moves eastward for the day tomorrow. So, heads up, Dallas, Fort Worth metroplex. There's going to be a lot of rain associated with this system in an area that does not need more precipitation. So, heads up tomorrow. This area, where you see the shading of red, we could pick up several inches in a saturated environment. That means localized flash flooding a possibility. The National Weather Service already hoisting these, well, they're flood alerts for millions of Americans across the deep south.

Kate. Sara.

BERMAN: Yes, some of those red zones there, threatening. Threatening maps. Derek Van Dam today. Thank you very much for that.

VAN DAM: Better wash your hands.

BERMAN: All right.

SIDNER: He's talking to you, John, but I do want to say -

BOLDUAN: Do you - do you (INAUDIBLE).

BERMAN: Well, I'm just saying, there's World Hand Hygiene Day. What about your feet?

SIDNER: You know what? Ew.

BOLDUAN: I also think (INAUDIBLE).

VAN DAM: It was a good question. Very valid.

BOLDUAN: I don't think we need to continue this line of inquiry.

Sara.

SIDNER: We must move on.

Feliz Cinco de Mayo, everyone.

"THE SITUATION ROOM" is up next.

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