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U.S. Retailers Target and Walmart Post Losses Amid Inflation; U.K. Inflation Hits 9 Percent as Wall Street has Tough Day; White House Announces "Operation Fly Formula" to Import More; Finland and Sweden Formally Apply to Join NATO; Pennsylvania Republican Senate Race Still Too Close to Call; U.N. Chief: Time is Running Out, World Must Act in This Decade; NATO Official: War at Standstill, But Momentum Favors Ukraine. Aired 4-4:30a ET
Aired May 19, 2022 - 04:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[04:00:00]
MAX FOSTER, CNN ANCHOR: Hello and a warm welcome to our viewers joining us in the United States and around the world. I'm Max Foster in London. And just ahead on CNN NEWSROOM --
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Inflation fears are fueling even most of chaos on Wall Street.
UNIDENTIFIED MALE: What we need to see inflation coming down.
UNIDENTIFIED MALE: We meet during what is the greatest global food security crisis of our time.
UNIDENTIFIED FEMALE: Millions are already being threatened by hunger.
UNIDENTIFIED MALE: I think it's impossible to predict who has the upper hand.
UNIDENTIFIED MALE: We can see the path ahead. We can see victory ahead and it is all because of you, so thank you, Pennsylvania.
UNIDENTIFIED MALE: Intense flooding in Europe and China. Increased forest fires in the U.S., leaching of corals in the oceans.
UNIDENTIFIED MALE: Time is running out.
(END VIDEO CLIP)
ANNOUNCER: Live from London, this is CNN NEWSROOM with Max Foster.
FOSTER: It's Thursday, May 19, 9:00 a.m. here in London, 4:00 a.m. in New York and Washington. Investors on Wall Street will be waking up in just a few hours after recording the worst trading day in nearly two years. All eyes on the U.S. markets to see if the roller coaster ride continues as fears of a recession grow amid high inflation rates. Let's take a look at how this is impacting life for everyday Americans
right now. Gasoline prices, for one, are soaring, so are home prices. And if Americans want to buy a car, with the supply chain shortages even the price of used cars has skyrocketed.
In California, for example, gas prices have hit $6 a gallon this week and experts warn that could be the national average before the summer is out. AAA has the current gas average at just a little over $4.50 today. Now the cost of groceries are up as well with milk, eggs and cheese costing more, whole milk went up 15 percent last month compared to last year. And business leaders expect things to get worse as well. 68 percent of CEOs say the Fed's quest to keep inflation at bay will eventually trigger a recession. Anna is with us. That is depressing.
ANNA STEWART, CNN REPORTER: All of this is rather depressing. And this is after we had a high day on Wall Street on Tuesday, turns out that was just a bear market rally. Clearly this downturn for equities has god a lot further to go. And yesterday was really sparked by the earnings from Target -- which actually followed on from earnings from Walmart. And these big retailers are showing us the real impact of inflation, of higher costs for consumer, people are spending less on bigger ticket items. They're going for only essential goods. Frankly they're going for cheaper brands, the store brands. And that is costing these companies. As is higher costs for them, whether it's freight, whether it's labor costs, whether it's energy costs. And that is really biting corporate profits.
FOSTER: And this affects the world. Obviously, Wall Street affects other markets, but this inflation problem is global. So, what happened after Wall Street shut in Asia in here in Europe?
STEWART: Well, that said to have bled through unto the Asian day. We can bring you those markets. All of the indices were trading down, Shanghai is now a bit flat. And we also had weak results in China. So, we're seeing this picture across the world. Europe opened last hour, also a negative day and I have to say, it's going to bleed through right through to Wall Street I think because U.S. futures -- guess what, they're down.
FOSTER: So, for everyday people we're talking about how the costs of things are going up. You've suggested that they are going for their own brands instead of more branded goods in supermarkets. But isn't the essential problem here that wages are going up by not by as much as inflation, so we're all getting poorer, but actually it's the poorest who are suffering most.
STEWART: The poorest get hit the hardest most. But this is, yes, the cost of living crisis, wages are going up. That is hurting corporate profits, but not enough to insulate consumers. And that is impacting what they can buy and how they feel at home.
Here in the U.K., inflation hit 9 percent in March. Sorry, in April, that was up from 7 percent in March. That is a huge increase. And around three quarters of that increase was actually on energy because the price cap here in the U.K. lifted, so that's feeding through to consumers. They're going to have to spend on the average household around $850 more every year. That's to you and me but, yes, the poorest are going to get hit the hardest and it's going to really impact what they can buy and heating their homes.
FOSTER: OK, it's going to be a difficult year. Anna, thank you.
Families struggling to find baby formula, meanwhile, in the U.S. may soon have some relief thanks to the White House.
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On Wednesday, President Biden announced the government will be taking more control over the production of formula ingredients and provide more ways to import formula from abroad. A pair of bills was also introduced in Congress aimed at providing emergency funding for the FDA and ensure families using government support programs can still buy formula. CNN's Arlette Saenz has more on how the U.S. is combatting the crisis.
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ARLETTE SAENZ, CNN WHITE HOUSE CORRESPONDENT: President Biden is invoking the Defense Production Act to try to alleviate the baby formula shortage. A major step as the White House has scrambled to try to address this issue causing so much anxiety for American families. Now the Defense Production Act is a 1950s era law that allows the federal government to have more control over industrial domestic production. And what the president is doing, is he is directing suppliers to provide the resources needed to manufacture formula, things like ingredients.
Additionally, the administration is starting Operation Fly Formula. The president sending a letter to the secretaries of agricultural as well as health and human services telling them to utilize commercial Defense Department planes to try to import formula products from overseas into the U.S. The FDA earlier this week had already announced that they were making it easier for overseas companies to send their formula to the United States, but those approval processes are still under way.
Now, this comes as the administration over the past two weeks has really been scrambling to try to address this crunch that American families are feeling with lack of access in some areas to baby formula. On Thursday, FDA Commissioner Robert Califf will be up on Capitol Hill testifying before a House committee. Talking about the oversight of infant formula as the administration still faces so many questions about how the shortage came to be and the steps that they are taking to alleviate it. Now, officials have said that they expect the shortage to really begin to gradually improve over the course of the next few weeks, but they have yet to offer a definitive time line of when things will get back to normal.
Arlette Saenz, CNN, the White House.
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FOSTER: In the coming hours President Biden leaves for his first trip to Asia as sitting president. He'll make stops in South Korea and Japan to firm up relations and also address the war in Ukraine. Mr. Biden is also set to unveil a new economic plan for strengthening supply chains between the U.S. and the region. White House officials say that they are preparing for the very real possibility North Korea conducts nuclear or long range missile tests whilst the president is abroad, both short and long term contingency plans are in place for the trip.
Before departing the White House for Asia, President Biden will meet with the president of Finland and the Prime Minister of Sweden. It'll be a key show of support for both countries after they formally submitted their requests to join NATO. Effectively ending decades of official nonalignment. It also underscores how Russia's brutal aggression against Ukraine has shaken capitals across Europe.
CNN's Nina dos Santos is covering this for us in Stockholm. It was going to be a smooth process, wasn't it, this application. But now Turkey has stepped in. I know you spoke to the Prime Minister of Sweden about that, but is there a way that President Biden can help unblock this obstacle really to the membership of these two countries?
NINA DOS SANTOS, CNN CORRESPONDENT: The U.S. throwing itself full throttle into this informal role of mediating in this issue that Turkey has with Sweden and Finland, but largely it's aimed at Sweden -- which is home to a large Kurdish Diaspora. And President Recep Tayyip Erdogan of Turkey says that he has issues with some security concerns with support, perceived support, of certain Kurdish separatist groups like the PKK and also the YPG. He also apparently wants to discuss an arms embargo that Sweden pushed for back in 2019 when Turkey had a military operation in northeastern Syria against those Kurdish separatist groups.
And you can imagine the bigger picture here is that Turkey actually, wants to also negotiate with the United States. Remember it was frozen out of the fighter jet program a few years ago after Turkey did a missile defense deal with Russia. And for that reason, this is an opportunity for Turkey to remind everybody that it has a big role in NATO. It has the second biggest army in NATO, and it has some concerns that it wants to air publicly. So, yes, it has leverage over these negotiations.
What is the position of the United States? Well, Antony Blinken went into his meeting with his Turkish counterpart yesterday in New York saying that this is a process and everybody has to be heard. That is something that has been reiterated by the Secretary-General of NATO Jens Stoltenberg himself.
But in the meantime, as you said, all eyes on the key show of support that is set to take place at the White House in a few hours' time.
[04:10:00]
Joe Biden just yesterday briefing reporters, saying when it comes to the issue of Turkey, we think it'll probably be OK -- Max.
FOSTER: OK, Nina in Stockholm, thank you. A NATO official says whilst the war between Russia and Ukraine is
largely at a standstill, momentum has significantly shifted in favor of Ukraine. The Ukrainian military has been touting its progress in pushing the Russians back in multiple areas. And says it's retaken another settlement in the Kharkiv region. Meanwhile, Russians are now targeting some of the U.S. provided weapons that have been giving the Ukrainians a boost. Russia released this footage of a Howitzer artillery system being targeted.
The U.S. has sent Ukraine dozens of Howitzers in recent weeks and says they've been very effective against Russian forces. In the south the future remains uncertain for the last at the Mariupol steel plant which is now in Russian hands. Russia says this video shows some of the wounded Ukrainian soldiers being treated in hospital. But more than 900 Ukrainian troops are being housed in a pretrial detention center in Russian -controlled territory. Ukraine has been pushing for a prisoner exchange to free them.
The fiercely contested Republican Senate primary in the key state of Pennsylvania is likely to drag on now for days whilst every last vote is tallied. It's a critical showdown that could affect which party controls the U.S. Senate come November. TV personality Dr. Mehmet Oz is holding on to a very narrow lead over establishment Republican Dave McCormick. Just over 1,200 votes separate them. The race could go either way and a recount is looming as CNN's Jeff Zeleny reports.
(BEGIN VIDEOTAPE)
JEFF ZELENY, CNN U.S. CHIEF NATIONAL AFFAIRS CORRESPONDENT (voice- over): Over time in Pennsylvania, Dave McCormick --
DAVE MCCORMICK, PENNSYLVANIA REPUBLICAN SENATE CANDIDATE: We're going to win this campaign.
ZELENY (voice over): And Dr. Mehmet Oz.
DR. MEHMET OZ, PENNSYLVANIA REPUBLICAN SENATE CANDIDATE: When all the votes are tallied, I am confident we will win.
ZELENY (voice over): Locked in an extraordinarily tight battle for the Republican Senate nomination with a razor thin margin from a field of 1.3 million votes cast. A day after the election, both campaigns tell CNN they see a path to victory, with McCormick relying on mail-in votes still being counted and Oz hoping his strength at the polls holds.
In Lancaster County, election workers scrambled throughout the day to sort through about 22,000 mail-in ballots, which were printed with an incorrect code that could not be scanned. In Delaware County, 4,800 mail-in ballots were being fed one by one into a sorting machine.
KATHY BARNETTE, PENNSYLVANIA REPUBLICAN SENATE CANDIDATE: This campaign has always been about you.
ZELENY (voice over): Kathy Barnette, whose candidacy surged in the final week of the race fell short, but her imprint on the race was clearly a factor in the bitter duel between McCormick and Oz.
After the counting, the race could head to a recount if the margin is one half of a percent or less.
LEIGH CHAPMAN, PENNSYLVANIA ACTING SECRETARY OF STATE: By next Tuesday, we'll have a good sense as far as whether or not there will be an automatic recount.
ZELENY (voice over): Donald Trump, who loomed large in the race weighed in today saying, Dr. Oz should declare victory.
The winning Republican will face John Fetterman, who won the Democratic Senate race, but is still recovering from a stroke with a defibrillator implanted on Election Day.
GISELE FETTERMAN, WIFE OF JOHN FETTERMAN: John is going to be back on his feet in no time.
ZELENY (voice over): The stage is set for a raucous general election in Pennsylvania with Doug Mastriano winning the Republican Governor's race campaigning on a platform of lies about the 2020 election.
DOUG MASTRIANO, PENNSYLVANIA REPUBLICAN GUBERNATORIAL CANDIDATE: There's this movement here that's going to shock the state here on November 8th.
ZELENY (voice over): Trump picked a winner in Mastriano, who many Republicans believe is too extreme to win in November. He will face the Democratic nominee, Attorney General Josh Shapiro.
In Pennsylvania, it is the Governor who ultimately selects the top election officials, a critical post with a 2024 presidential campaign just around the corner.
ZELENY: And as election day turns into election week, the margin between the Oz campaign and the McCormick campaign grew even smaller. The reality is both campaign advisors say they are bracing for a recount likely next Tuesday. What that is, is just an automatic retally of the results. Not counting every ballot, just simply running the tapes. But advisers also say the count going into the recount is the most critical. This race is likely to be won by hundreds and no more.
Jeff Zeleny, CNN, Chester, Pennsylvania.
(END VIDEOTAPE)
FOSTER: New York's Attorney General is launching an investigation into social media sites used by the suspect in Saturday's racially motivated mass shooting in Buffalo. That includes the communications app "Discord." We learned the alleged gunman used that site to reveal his plan in a private chat room just 30 minutes before the attack. New York's governor says social media platforms have to take responsibility and says the Attorney General will report back the findings of the probe to her.
Now still to come, a new report is sounding the alarm about the state of the global climate and the effects of climate change. Details next.
[04:15:00]
Climate change is impacting the world's access to food and Russia's war in Ukraine threatens to make it even worse.
(COMMERCIAL BREAK)
FOSTER: Some concerning news on coronavirus in the United States. The Centers for Disease Control and Prevention say nearly a third of all Americans live in areas with medium to high levels of COVID-19. On Wednesday the agency's director urged people in those communities to mask up and called for greater access to testing and treatments.
And even those cases are still much lower than during the omicron surge this past winter. New infections have tripled in just the past month.
U.S. health officials are also investigating a case of monkey pox in the country. Officials say the virus was confirmed in a Massachusetts man who had recently traveled to Canada and they are now tracing his contacts. The Centers for Disease Control and Prevention is also tracking multiple clusters of monkey pox reporting in Portugal, Spain and the U.K. and a CDC spokesperson told CNN that it's monitoring six more people for potential infection after they shared a flight with a British patient who tested positive for the virus.
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ANTONIO GUTERRES, U.N. SECURITY GENERAL: Time is running out. To keep the 1.5 alive and prevent the worst impact of the climate crisis, the world must act in this decade. The good news is that the life line is right in front of us.
(END VIDEO CLIP)
FOSTER: Well, that warning from the U.N. Secretary-General comes as effects of climate change are fueling wildfires in the U.S. New Mexico's Hermits Peak, Calf Canyon fire has now destroyed more than 300 homes and has burned through more than 300,000 acres or 122,000 hectares. So far, the fire is only a third contained. Weather is also complicating things for firefighters in Texas. Officials said earlier that the Mesquite Heat Fire was 10 percent contained but it's now back to zero containment because of strong winds and high temperatures.
Now a new report finds the world is set for alarming climate records in 2021. Greenhouse gas concentrations, sea level rise and warmer and more acidic oceans. The World Meteorological Organization stresses this is another clear sign that human activities are causing harmful and long lasting changes to the planet. The report follows a U.N. climate assessment which warned the world must cut greenhouse gas emissions or face catastrophic climate changes.
Joining us with more is CNN meteorologist Derek Van Dam. This is all adding to this evidence that humans are of course affecting climate change.
DEREK VAN DAM, CNN METEOROLOGIST: Yes, right, Max. In fact, the U.N. Secretary-General said about this report, it is a dismal litany of humanity's failure to address and tackle the climate disruption. It says it right there. What did the WMO report actually find? Well, it's these four key indicators that you see behind me. And like for instance, the greenhouse gas levels, the carbon dioxide we emit into the atmosphere when we burn fossil from our vehicles, for instance reaching record levels.
But I want you to notice the theme between the last three, right. Ocean heat, he warmth of the oceans is actually penetrating deeper and deeper into our oceans than ever before. Ocean acidification, the oceans are supposed to absorb about 23 percent of our carbon dioxide that we emit on an annual basis. But unfortunately, this is leading to acidification of our oceans and that threatens our global food supply with ecosystems just basically failing.
And the rate of sea level rise has nearly doubled in the past ten years compared to the last decade that it was measured against as well. This is mainly due to the accelerating melting of the ice sheets on Greenland for instance. They're experiencing rain on some of the highest altitudes in Greenland where they should be experiencing snowfall of course. And of course, this threatens coastal communities that are vulnerable to tropical cyclones. This happened in North Carolina. Just last week for instance, just that small increase in our sea levels, of course, puts the coastal communities very vulnerable.
Now the past seven years according to the WMO report have been the warmest seven years on record and this is coinciding with that sharp increase in the carbon dioxide that we've seen over the past several decades as well. This has led to extreme weather events across the planet from the flooding in Durban, South Africa last month. To the ongoing drought and wildfires over the Western U.S. And then the current heatwave impacting India and into Pakistan as well.
These are the extreme weather events across the world, there it is, the heatwave that is suffering across India and really this extreme weather is just our day to day face of the climate change crisis that we are seeing play out right in front of our eyes. Fortunately, the United Nations put out five key solutions to kind of kick start and fast track this solution process, and that includes shifting energy subsidies away from fossil fuels -- Max.
FOSTER: OK, Derek Van Dam, thank you very much indeed.
Now momentum on the side of Ukraine, that's the assessment from a NATO military official. The latest on Ukraine's efforts to push back Russian forces, just ahead.
Plus, Ukraine says the Russians are stealing its grain by the ton, food that should have been exported to feed people around the world.
[04:25:00]
(COMMERCIAL BREAK) FOSTER: The U.S. flag is again flying in the Ukrainian capital and the
U.S. embassy there has officially reopened. The diplomatic staff had left Kyiv three months ago just before Moscow launched its invasion. Wednesday's reopening also comes as the U.S. Senate confirmed Bridget Brink as ambassador to Ukraine. The U.S. had been without a confirmed ambassador for three years, ever since then President Trump recalled Marie Yovanovitch.
Now a NATO official says not to expect significant gains from either side in Ukraine in the coming weeks, but that Ukrainian forces do have significant momentum in their favor. Ukraine's military has touted progress over Russian forces in multiple areas just 8 miles from the Russian border in the Kharkiv region. This video shows a Russian tank on fire hit by Ukrainian fighters. Further south in the Luhansk region, Ukraine has destroyed a number of bridges to slow a Russian advance. CNN's Suzanne Malveaux joins me now from Lviv, Ukraine -- Suzanne.
SUZANNE MALVEAUX, CNN CORRESPONDENT: Well, Max, this new intelligence from this NATO security official very significant here. I mean, essentially this person outlines what we may anticipate seeing in the weeks and perhaps even months to come. That in fact they believe that the tide has turned here, that there is momentum on the Ukrainian side, at this point significantly so in their favor. But also, that there is a period here where you will not see significant wins or losses on the battlefield either way, that this is going to be a long slog. And that is something Ukrainian people will have to prepare for and wrap their heads around.
The report from the Ukrainian military officials essentially what is happening on the ground confirms reinforces that very notion of what we're expecting to see. Despite the fact that we have seen an escalation in these air attacks and artillery that you have seen an increase in the air power itself, that there has been cross-border skirmishes, that the battles have been very intense on the side of the east and south as shelling as well. A dramatic escalation if you will. This official saying here in this military court that the Russians have not taken any significant new territory.
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