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Big Red Flag Is Raised On The Economy; Epstein Accuser Sues Estate, Alleged Co-Conspirators And Others; Family Takes Down Online Obituary of Dayton Shooter. Aired 2-2:30p ET

Aired August 14, 2019 - 14:00   ET

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

ANNOUNCER: This is CNN Breaking News.

BROOKE BALDWIN, CNN HOST: You are watching CNN. I am Brooke Baldwin. Thank you so much for being here. The Breaking News is this: This big red flag is raised on the economy. Right now it is triggering a big plunge on Wall Street and fueling fears of the dreaded "R" word -- recession.

Today's warning signal from the bond market has preceded each of the past seven recessions. The signal: Yields on 10-year treasury bonds fell below yields on two year bonds for the first time since 2007. The move suggesting many investors are shunning stocks for safe havens and government bonds.

And all of this is happening amid Trump's trade war with China. The President delaying some new tariffs now until December. CNN political analyst Catherine Rampell is a "Washington Post" opinion columnist and Joe Ciolli is a senior investing editor with "Business Insider." So great to have both of you on.

Let's just start with you, I mean, we were just chatting on so much of this yesterday and the President's speech, and here we go. You see the markets and there's a recession, is it not a matter of if, but when?

CATHERINE RAMPELL, CNN POLITICAL ANALYST: Well, that's always the case. Right? The nature of the business cycle is that it's a cycle and cycles turn. So there will at some point be a recession. The question is how far away from a recession are we?

BALDWIN: Do you know?

RAMPELL: Look -- no, we don't. Statistically speaking, we are now in the longest expansion on record. Right? We passed that last month, essentially. And so yes, it looks like you know, we're overdue for a recession. That said, expansions don't die of old age. They generally have to be murdered by someone or something, and the cause that precipitates a recession is generally a shock of some kind.

But it could also be just sort of a collective loss of confidence right now, right? We've seen that before. But you could imagine that right now, there's so much uncertainty about escalating trade wars. There's so much uncertainty that other global risks from Brexit to the China slow down to tensions between India and Pakistan, that all of those things could basically get everyone to collectively decide, you know what, maybe I shouldn't hire, invest, build, because I'm worried that everybody around me it's going to stop hiring, investing and building.

BALDWIN: Joe, you're nodding.

JOE CIOLLI, SENIOR INVESTING EDITOR, BUSINESS INSIDER: Yes. So, I think that what we saw today was the straw that broke the camel's back was the slowdown in China. We had some bad data there. We also saw contraction in Germany, which many economists believe is already in a recession.

And recessions don't really tend to stay quarantined. They spread internationally. And there's always a risk of contagion and the U.S. is particularly vulnerable right now. We're at a point where the President is stoking a trade war with China.

He did sort of take his foot off the gas pedal there a little bit yesterday.

BALDWIN: He did. Going September to December.

CIOLLI: Yes. And that was a little -- that was a nice relief for the market yesterday. But then, you know, back at it today with the sea of red globally, and, and really what it's going to take, I think is the Federal Reserve to step in, ease monetary conditions, once again, like they did at the end of July. And I think that's what Trump wants. The question is will be enough? And that's definitely something that people aren't sure about.

BALDWIN: Wasn't he blaming the Fed? Wasn't he throwing the fat under the bus again today?

CIOLLI: Yes.

RAMPELL: Yes. He always wants somebody to be his scapegoat. Right? I mean, he is the one who is making conditions a lot worse right now, arguably, through these trade wars.

BALDWIN: Yes.

RAMPELL: And he hasn't even suspended all of the tariffs or delayed all the tariffs until December. There are still a lot of them that are going into effect, some like on $100 billion worth of goods, something like that on September 1st, so he is making things worse. He wants a scapegoat.

Reasonable people can agree or disagree about what the right route for Fed policy is, whether they should have hiked rates last year, but either way, he is not making things better through his trade actions, and I would argue he is not making things better by compromising the political independence of the Fed.

You want the Fed to step in because they think it's the right thing to do, not because they're being bullied or because -- or you don't want markets to perceive them as being bullied. BALDWIN: But he has, and we've talked about this, and Joe, you weigh

in on this one is, you know, the President has repeatedly, you know, been so proud out really, obviously of the economy and the great strong market, right?

CIOLLI: Right.

BALDWIN: And so what happens when what you guys are discussing actually comes true and he is backed into a corner? What is he -- what are his options when that happens?

CIOLLI: What he is trying to do is prolong it through the next election cycle. So what we try -- and the reason why he keeps kind of trying to bully the Fed is because he wants to keep the economy going. He wants to keep growth looking somewhat strong, and he doesn't want the stock market to crash.

It seems like he might have overplayed his hand with the trade war. We're seeing a lot of signs of that weighing negatively on U.S. companies, on companies in China. It's supposed to be something that's hurting China. But there's evidence that it's hurting the U.S. as well.

So it's really just a matter of, you know, can he sort of kick the can down the road on a recession that is going to happen eventually until it's past the point that it makes convenient for him politically.

BALDWIN: It's a dangerous gamble as we have discussed. I'm going to thank you. I'm sure we'll be talking about this in the future, guys. Appreciate it very much, Joe and Catherine, on the markets.

Now, I want to move to this and I'm just going to quote here, "Today, I am starting to reclaim my power." With those words, Jennifer Araoz shown here in an NBC interview last month announced that she is suing the state of Jeffrey Epstein along with his alleged co-conspirator and British socialite Ghislaine Maxwell, and three others described as a quote, "recruiter and secretary and a maid."

Araoz claims that they conspired to facilitate her sexual abuse and rape. Araoz is suing under the New York Child Victims Act. It was signed into law in February, but beginning today, it offers a one-year period where any adult survivors of child sexual abuse can sue an abuser or negligent institution no matter how long ago that abuse took place.

Araoz alleges Epstein abused her back in 2001, when she was just 14 years old, and that lawsuit was filed as "The New York Times" is reporting today, these stunning developments in the moments leading up to Epstein's apparent suicide in his Manhattan jail cell just over this past weekend.

Several law enforcement and prison officials tell "The Times" the two staffers guarding the protective unit where Epstein had been housed, failed to check on him for about three hours.

Just to put that into perspective, they were supposed to check on Epstein every half hour. What they were doing during that time period? Not clear. But those officials tell "The New York Times" that they are trying to get to the bottom of that and they also say that the guards are not talking and have hired attorneys.

Attorney Spencer Kuvin represented three of Epstein's accusers in a civil suit more than a decade ago, that lawsuit I should point out was settled. All three were in high school when the alleged abuse occurred. He currently represents one of the original three. So Spencer, thank you so much for joining me today.

SPENCER KUVIN, ATTORNEY WHO REPRESENTED THREE OF EPSTEIN'S UNDERAGE ACCUSERS: Thank you for having me on. I appreciate it.

BALDWIN: So let's just start with first just the news that the guards found Epstein dead in his cell over the weekend, what was your first thought?

KUVIN: Unbelievable. There was a complete failure within the system there at the MCC with respect to Mr. Epstein. They obviously should have either been checking on him more frequently than they were, or at the very least, he should have still been on suicide watch at the time.

The whole thing just smells. It's incredibly suspicious. And I know from talking to my client, as recently as Saturday, one of the victims that occurred back in 2006, she was shocked to learn that they failed in this regard.

BALDWIN: I want to talk about the women and again your lawsuit was settled, but can you just tell me about your clients and their allegations.

KUVIN: So back in 2006, I represented three of the victims, one of which was the first young lady, a girl at the time, 14, to actually come forward to the town of Palm Beach and report what had happened to her.

She is the one that really started this ball rolling here in Palm Beach County back in 2006. She had been recruited from high school at the time and brought over to the home by taxi, paid for by Mr. Epstein to be able to go to his home and give him a massage in his massage room.

At the time, he had asked her to get undressed and disrobe and he also reached out during the massage and was touching her.

Now when that investigation began back in 2006, the F.B.I. then stepped in and found 40 plus young girls, who told a very similar, if not, an identical story to my client back then. And subsequently, I represented two other victims very similarly.

BALDWIN: You know, in reading all these various women statements, you know, a lot of these -- a lot of Epstein's accusers or angry, right? They're angry now that he's dead, that they won't have their day in court. And I'm just wondering how your clients are feeling? KUVIN: Well, frustrated. You know, back in 2007, when the non-

prosecution agreement was entered into; that secret sweetheart deal that they gave Mr. Epstein back then, they never told our clients about that deal.

When it was being negotiated, we were kept out of the loop on behalf of the victims. When they finally entered into it, they wouldn't provide it to us on behalf of the victims. We had to go to court and actually force a court order, which then Mr. Epstein's lawyers appealed up to the Fourth District Court of Appeals before we were finally able to get a copy of that non-prosecution agreement.

BALDWIN: So you're saying, the point in bringing up that sweetheart deal just that they've sort of been through a version of this before, of feeling wrong, to feeling frustrated.

[14:10:04] KUVIN: Correct.

BALDWIN: You know, you have seen Jeffrey Epstein up close. What were your impressions? What was the man like?

KUVIN: This was a man who was very intelligent. I saw him on at least three separate occasions, twice during depositions I took of him and then once during a settlement conference that we had. He clearly knew what he was talking about. He always wanted to be friends with the people that were in the room with him.

Even knowing I was his adversary at the time, he would always smile, he would always try to be friendly with the people around him. He always felt he was the smartest man in the room and always denied that anything he did was wrong or improper or inappropriate.

He always took the position, ignoring the young girls' ages at the time that they volunteered to come over to his home. So he just -- he oozed creepiness, I guess is the best way to describe it.

BALDWIN: Oozing creepiness. I'll take your word for it. Spencer Kuvin, thank you very much.

Coming up here on CNN, a the Republican congressman who keeps saying offensive things. Just said, "If it weren't for rape or incest, no one would be left on Earth." Yes, we're going to discuss that.

Plus, Ken Cuccinelli tries to defend his version of the Statue of Liberty poem, but the explanation just made the whole situation worse.

And why the family of the Dayton, Ohio shooter just took down his obituary.

You're watching CNN, I'm Brooke Baldwin.

(COMMERCIAL BREAK)

[14:16:24] BALDWIN: The mass shootings in El Paso and Dayton compelled one prosecutor to act fast in the case of a teenager in Ohio who the Fed say had 10,000 rounds of ammunition in his home. Eighteen-year-old Justin Olsen has just been charged with threatening to assault Federal law enforcement officers.

The F.B.I. says he posted this after a discussion on the 1983 deadly siege in Waco, quote, "In conclusion, shoot every Federal agent in sight," end quote.

Court document show that the home where Olsen had moved not only contained 10,000 bullets, but 15 rifles, among them long guns and AR- 15 style weapons. Also 10 semi-automatic pistols, camouflage clothing and backpacks, plus a machete was apparently in this guy's car.

But before any of that was found, take a look at what police report on Olson actually indicates. An investigator mentions that the prosecutor agreed with him, quote, "In light of the recent mass shootings in the United States that we could not wait to act on this information." So that was back on August 6th. The shootings and El Paso and Dayton happened August 3rd and 4th.

Olsen told authorities his comments were all a joke. He has a bail hearing in two days.

And staying with what happened in Dayton, Ohio where a gunman murdered nine people including his own sister. So the sister's obituary was just posted with the final sentiment saying this about 22 year old Megan Betts, quote, "The world is a darker place without her."

Her brother's obituary also went up today, but was quickly taken down. CNN's Ryan Young is live in Dayton for us. And so Ryan, what happened to that to the shooter's obituary? And what exactly did it say?

RYAN YOUNG, CNN NATIONAL CORRESPONDENT: You know, still a lot of questions about this, Brooke. As you can understand, because you were here in this community, it's like a lot of people said they've had their hearts taken by the shooting here.

So, to have the shooters family post that obituary, a lot of conversation, maybe just about the timing of it, especially since this family really hasn't given any real strong public statements just yet about what happened.

So this obituary had things like he was an avid reader, and it goes on and on. But there are some people who were concerned it was almost like glorifying the shooter. So you can understand how that sentiment would be here in this community.

Just across the street right behind me in the next hour or so, there will be a Federal court case involved with Ethan Kollie, and that's the friend of Connor Betts who actually helped him buy the ammunition round, and also that part of the AR-15 that goes on the top, plus the body armor.

So many questions about this in terms of how he hid it at his house, or apparently to make sure that Connor Betts' parents did not know that he had all of this extra material at that house.

We know that Federal authorities have charged him with several different charges. He faces 15 years in jail if he is convicted. But all these questions lead the community back to that same normal question, which is, what is the motive and that's something that police and investigators have not been able to determine just yet.

We did see the timeline video that was produced and put out there, and as I was talking to people in the neighborhood this morning, they were shocked by the idea that Connor Betts could be at the bars with all these people walking amongst them before returning to his car, then spending some nine minutes back there before walking down the street and opening fire.

And every time we do one of these live shots, we should not forget those brave Dayton police officers who responded to the call surrounding Connor Betts and putting an end to the shooting because within 30 seconds, he was able to shoot more than 41 bullets and we know that ammunition drum had over a hundred shots.

So what would have happened if he would gotten inside that club that he was trying to get into, if it wasn't for those Dayton police officers? All of this to say with that obituary being released and the family not talking and then asking for privacy, a lot of people asking for questions about maybe when they will speak and give some information about what they knew about this, Brooke.

Obviously, a lot of open wounds in this community, a community struggling with so much pain in these last few days.

[14:20:17] BALDWIN: You're right to point out the family of -- you know, that not only lost their son who was the shooter who murdered the nine, including their own daughter. Ryan Young, thank you very much in Dayton.

Congressman Steve King is under fire again today, this time for comments about rape and incest. We'll talk to Dana Bash about this one.

And the President's top immigration official tries to defend his revision of the Statue of Liberty poem, but accidentally reveal some insight into how the administration really feels about immigration.

(COMMERCIAL BREAK)

[14:25:15] BALDWIN: Over his nearly two decades in Congress, Iowa Republican, Steve King has made headlines and drawn sharp rebukes from both Democrats and members of his own party for racist and controversial statements.

And today, we can add yet another totally bizarre comment to the mix. I want you to listen to his explanation for why he didn't support allowing exceptions for rape or incest and anti-abortion legislation that he tried to pass in Congress.

(BEGIN VIDEO CLIP)

REP. STEVE KING (R-IA): What if we went back through all the family trees and just pull those people out that there were products are rape and incest, would there be any population of the world left if we did that? Considering all the wars and all the rape and pillage that has taken place and whatever happened to culture after society, I know I can certify that I am not a part or a product of that.

(END VIDEO CLIP)

BALDWIN: That no one would be left on Earth. No. Dana Bash is CNN's chief political correspondent. Dana, where do we even begin?

DANA BASH, CNN CHIEF POLITICAL CORRESPONDENT: I don't know. That's a good question, because look, he does, as you mentioned, have a history of making very controversial, racially tinged -- even more, you know, horrific comments than what we just played. What you just played, is in the bizarre realm.

You know, he could have a philosophical and academic conversation about the history of humanity and how different cultures melded, but he is a United States Congressman, and it was just weird. It's just plain weird.

And it's on the backdrop of as I said, all of these other very controversial statements, not the least of which talking to The "New York Times" about the fact that a few months ago that he was bemoaning the idea that the term "white supremacist" has gotten a bad name in recent years.

So that is why we are listening to things that Steve King says, on the political side of this because of all those comments, and today, of course, just adds another one, he is in trouble.

He is in trouble in a district in Iowa that is very, very Republican, that he has won, as you said, since 2002, nine times by very, very healthy margins. It's a Republican district. And he has several Republican primary challengers, one of whom is doing pretty well.

And so this statement today is just one more piece of evidence for those challengers, for his Republican challengers to use against him. Never mind if King ekes it out in the Republican primary for the Democratic challenger who is getting a lot of money and a lot of attention and a lot of support from the Democratic Party nationally, because Steve King -- because of what he said today, and many other times before -- is a prime target of the Democrats.

BALDWIN: Yes, add it to the list. Dana Bash. Thank you.

BASH: Thanks, Brooke.

BALDWIN: A police commander makes an emotional plea to her community after 11 children are shot and killed -- 11 kids since June.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: It's not acceptable. And we're not the only community like this. Some things needs to change. People need to step forward. And these are not the only children being murdered. But these are the youngest. We've had four under the age of 10 this year alone. Why aren't people coming forward to us? (END VIDEO CLIP)

(COMMERCIAL BREAK)

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