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S&P 500 Enters Bear Market Territory As Recession Fears Mount; Biden Confronts Consequential Foreign Policy Challenges In Asia; Ginni Thomas Pressed Arizona Lawmakers To Upend Biden's Win By Choosing Trump Electors Instead. Aired 3-3:30p ET

Aired May 20, 2022 - 15:00   ET

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

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VICTOR BLACKWELL, CNN CORRESPONDENT: Top of a brand new hour on CNN NEWSROOM. Good to have you with me. I'm Victor Blackwell.

Plunging stocks, rising prices, recession fears, the S&P 500 just entered bear market territory dropping more than 20 percent from recent peaks. Only one bear market in the last 50 years was not accompanied by a recession. And cost of living keeps climbing, rising home prices are driving rents to a record high up almost 17 percent from last year. Gas prices are also soaring.

The national average now at $4.59 per gallon cost 30 percent more to fill up your tank today than it did the day before Russia invaded Ukraine. You get all that? Let's bring in CNN's Matt Egan now.

So let's start with the S&P 500 now into bear market territory today. What could that mean for the economy at large?

MATT EGAN, CNN REPORTER: Well, Victor, this is a flashing red light about the U.S. economy. If the S&P 500 closes below 3,837, and as you can see it's trading just above there right now, if it closes below 3,837, it'll officially be a bear market. Now a bear market is a 20 percent decline from previous highs. This would mean that the bull run that began in late March 2020 would be over and this is a big deal because bear markets often coincide with recessions.

But they don't always coincide with recessions and there are some false alarms along the way. We should also talk about the Dow, because the Dow is well on its way for another losing week. This would be the eighth losing week in a row. We haven't seen anything like that since 1923, which is pretty incredible.

I think there's a couple of big factors behind the losses that we've seen in the last few weeks. One, it's that investors are very worried about high inflation, that the Federal Reserve is going to get inflation under control but only after tipping the economy into recession first.

And the other big concern is that unlike many other markets scares in the last few decades, the Fed does not have the markets back here. The Fed is probably not going to be able to lower interest rates anytime soon. That means they're not coming to the rescue. That is not sitting well with investors.

But I do think that we should point out that there are some strong points about the U.S. economy, meaning unemployment is very low, people are shopping, companies have lots of money on their balance sheet. They're in pretty healthy conditions. So there is a risk of this becoming a self-fulfilling prophecy, Victor, where we sort of scare ourselves into a recession and the stock market could be the trigger. Hopefully, that is not the case here. But it is worth noting that there are some strong points in the economy right now.

BLACKWELL: That's certainly important to balance the picture here. Let's talk about gas prices, another record high today, an increase but not a leap today.

EGAN: Right. The national average of $4.59 a gallon, that is another record. It's up just fractionally from yesterday, but the direction continues to be in going the wrong way for many drivers. That means that millions of people are going to be hitting the roads Memorial Day weekend and they're going be greeted with near record highs for gas prices. I mean, this is a another negative for the economy.

Many states are already above $5 a gallon, California is above $6 for the first time ever. JPMorgan put out this report earlier this week. They're warning that the national average could hit $6 a gallon by the end of August. I mean, that's just one forecast from one bank, but it does speak to the concern here.

And the big issue is that demand is really high, because people are traveling again. But supply is not OpEx not producing as much oil as it did before the crisis. The United States is not producing as much oil and then you have - throw on top of that you have Russia's invasion of Ukraine, which has really distorted supplies of oil, of petroleum products and that has caused a lot of different issues. I do think it's worth noting that on an inflation adjusted basis, gas prices are not at record highs.

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They would have to actually be above $5.30 a gallon for it to be at an inflation adjusted record. But Victor, I think that's a little consolation to people who are certainly feeling sticker shock when they fill up at the gas pump.

BLACKWELL: Important point, though. Matt. Let me ask you about this stat that my team really is into. The cost of hiring a teenage babysitter is now up. It's way up. What is happening there?

EGAN: Yes, Victor. So, I guess, parents who maybe want to cheer themselves up this weekend about their (inaudible) at the gas and they want to go out to eat, they're going to be paying more for a babysitter. The Wall Street Journal had this report talking about how some teenage babysitters are actually - they're actually charging more than $30 - more than $20 - sorry, more than $30 an hour in some markets. That's what teen babysitters are getting. That's a lot of money. We're seeing nationally, the average price for

a babysitter is now above $20 an hour. That's according to urban sitter.com. As you can see, it's going up.

Victor, I do think this kind of ties in with some of the elements that we're talking about here, though, because this is related to the worker shortage. It's related to the fact that there's a childcare shortage and it's another example of how the cost of living is going up.

BLACKWELL: Thirty dollars for one kid?

EGAN: For one kid.

BLACKWELL: Side job. All right. Matt Egan ...

EGAN: Are you volunteering, Victor. Are you volunteering?

BLACKWELL: How many do you have? Are you paying the 30 bucks?

EGAN: One. Just one.

BLACKWELL: Thirty bucks, I'm in. Matt Egan ...

EGAN: All right. Deal. Deal.

BLACKWELL: ... thank you.

All right. President Biden finished up his first day on his inaugural trip to Asia as President. Now, he visited the Samsung semiconductor plant with South Korea's new president. The two is set to hold bilateral talks on Biden's second day there. The goal is to strengthen U.S. alliances in the East while China, North Korea and the war in Ukraine loom, of course, in the background.

CNN White House Correspondent Jeremy Diamond is in Seoul. Jeremy, President Biden invoked Vladimir Putin and, of course, his war in his remarks today. Get us up to speed.

JEREMY DIAMOND, CNN WHITE HOUSE CORRESPONDENT: That's right, Victor. He did. And it's interesting because this trip is designed to show Asian allies of the United States that the U.S. is committed to this region in the long-term even as the war in Ukraine has dominated President Biden's foreign policy focus over the last several months and yet still President Biden alluding to the war in Ukraine and the supply chain disruptions it has caused, as he urged us allies to bind together and not rely on autocratic regimes listen.

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JOE BIDEN, PRESIDENT OF THE UNITED STATES: Putin's brutal and unprovoked war in Ukraine has further spotlighted the need to secure our critical supply chains so that our economy, our economic and our national security are not dependent on countries that don't share our values.

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DIAMOND: And President Biden there talking about Russia. But the subtext of that could not have been clearer. It's all about China, Victor, because that is one of the key areas of focus for President Biden as he meets with U.S. allies, including South Korea, Japan, India and Australia also set to meet with President Biden in Japan.

The message is that these countries should work to foster more economic cooperation amongst themselves not rely on countries like China for critical supplies, like the semiconductor chips, for example. All of this coming as the threat of North Korea still looms large over this visit.

U.S. intelligence assessing the possibility that North Korea could launch an intercontinental ballistic missile as a test while President Biden is here in South Korea that has certainly raised the stakes and also gives President Biden an opportunity to show how he would respond to such a test, particularly with allies like South Korea and Japan.

President Biden though still needing to focus on the war in Ukraine. That bill that $40 billion assistance bill to Ukraine is actually being flown over here to South Korea by a government official who was already scheduled to travel here, I'm told, and President Biden will sign that legislation into law. It gives billions of dollars in military assistance to Ukraine, as well as assistance to the Government so it can keep paying salaries, continue running and also assistance for global food aid and other natural disaster assistance because of those supply chain disruptions that have been caused by this war, Victor?

BLACKWELL: Jeremy Diamond traveling with the President in South Korea. Jeremy, thank you.

The FDA, the head of the FDA, I should say, said that the severe baby formula shortage will get better in days, but it will be weeks before things get back to normal. Forty-five percent of baby formula products nationwide were reportedly out of stock at some point last week. Now to counter that, the Biden administration says the first mission of Operation Fly Formula is now underway. Officials say the administration has secured 1.5 million bottles of formula for - overseas and it will be on a flight in days.

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They point out the three kinds of formula on the way are hypoallergenic and for children allergic to cow's milk.

CNN Senior Medical Correspondent Elizabeth Cohen joins us now. Elizabeth, you've been speaking with families who are struggling through this baby formula crisis. Some are now rationing formula, how are they doing?

ELIZABETH COHEN, CNN SENIOR MEDICAL CORRESPONDENT: These families are strong and are doing everything they can for their children, but it has been tough. I want to introduce you to two of them. This is Claire Holland, she graduated from sixth grade yesterday. She won the science prize. She's on the honor roll, but she has a genetic disorder. She can't digest protein properly. So all her life, she's taken a formula and she will have to take it for the rest of her life.

It's a formula made by Abbott. That's the company that had the recall that makes Similac. And so she uses this formula, but now her parents are having a hard time finding it and they've cut the amount that they give her in half. They said Abbott was great and sent a big box when they asked for it, but they don't know when they're going get the next box, so they have maybe a month or two left and that's why they're rationing the formula. And they are really worried about what this could mean long-term. Let's take a listen to Claire's mom, Shannon.

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SHANNON HOLLAND, RATIONING FORMULA FOR DAUGHTER: It never would have occurred to me that suddenly we wouldn't be able to get her formula. I usually try to be on top of things and then when this happened, and we had no backup that she could take that we knew that she would like, as a mom, I felt very terrible and I felt worried for her. I never expected not to have access to her formula. I - it just never really occurred to me that would happen.

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COHEN: It's really a tough time for the Holland family and also for the Stiver (ph) family. They live outside of Chicago. Their son Owen is 11 years old and has a rare disease where he's allergic to many, many different kinds of foods and it actually affects his esophagus. And so what he does is he has a very limited diet and they feed him through a tube in his stomach, they feed him formula, but now they can only give him a fraction of what they used to give him they can't give him all of it and they are also worried about what this could mean for him long term.

So for the Stiver (ph) family, for the Holland family, for all families, the government is trying to make this better to get more products on shelves. Let's take a look at what they're trying to do.

First, the Defense Production Act is telling manufacturers, look, there are certain ingredients out there, we're going to prioritize the infant formula makers over the makers of other kinds of products. Also, Nestle, as you mentioned is sending those 1.5 million bottles, and the FDA and Abbott have agreed on steps to open up that closed Michigan plant. Victor?

BLACKWELL: Elizabeth Cohen with the latest there, thank you very much.

Let's bring in now CNN Political Commentator Errol Louis. He's a columnist for New York Magazine and host of the You Decide podcast. Errol, good to see you. There's always work to do at home when a president heads abroad, but a lot of the challenges we just listed off are things that people feel every day. Is this president facing an onslaught unique that other presidents haven't faced? Is this more challenging than other presidents have seen? ERROL LOUIS, CNN POLITICAL COMMENTATOR: Good afternoon, Victor. Look,

this is a president that's got his share of problems, being President is tough at the best of times. He's been dealt an unusually challenging hand as we go into the midterm elections, because he's got these shortages of formulas, something that everybody can relate to and has a great symbolic meaning that he's going to be blamed for.

He's also though - he's got this international situation, which is really quite complex and we'll see the effects of it later on. The President on this Asia trip is really making strides at a time when China's economy is faltering. I think we're starting to see even the faint outlines of what could be called a Biden doctrine, where he's trying to rally the economic and security interests of smaller democracies against the main superpower rivals of the United States for both Russia and China.

The problem for the president politically is that it takes time for these things to come together. It takes time for what could be outstanding victories to be felt by the voters back home. And I think that's what's going to be the main driver of the upcoming midterm elections, which are probably not going to go well for the president's party, Victor.

BLACKWELL: I don't know if you heard that story that Elizabeth just brought us of people rationing baby formula. Yesterday, she introduced us to families that had to take their infants to the ER. They needed feeding tubes. Do you think this baby formula crisis moves votes in November?

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LOUIS: If it is made an issue at the local level, district by district, it's hard to pin this on any particular member of Congress. So on one level, I don't know if it necessarily will. If the general sense, though, is that the country is going in the wrong direction that something as basic as the market for infant food is falling apart under Democratic rule, well, that's another story. And that becomes one of the list of particulars thrown on top of rising crime, rising inflation that is going to really be used to beat up on Democrats from coast to coast.

BLACKWELL: Let me get your take on this announcement from the AG, Merrick Garland announced the DOJ's new efforts to combat hate crimes, increased reporting, grants to establish reporting hotlines, help police report hate crime data to the FBI among other things. This president ran for office saying that he wanted to restore the soul of the nation, it was Charlottesville that he said was the tipping point. What's your take on how aggressively the administration is addressing white supremacy, the issue of hate in this country?

LOUIS: Well, look, that particular policy, you reference $5 million to encourage local law enforcement, they're about 18,000 law enforcement agencies around the country, Victor. They need to put a couple of extra zeros on that if they really want them to comply. The reality is there are about 12,000 local law enforcement agencies, about 88 percent of the total that don't report at all. Why? Because it's voluntary. It's not funded. It's extra work.

And so they're not reporting hate crimes out of Miami or Little Rock or Huntsville, Alabama not because there are no problems there, but because there's no particular incentive to do it. Five million dollars is close to being zero, to be honest, and they probably would have been better off with a zero.

Until they get serious about it, they're not going to get cities into this fight. It clearly is necessary. There's a reporting system that has failed us. We saw this in Buffalo, New York, when there's a student who says I intend to come and shoot up the school and then kill myself and somehow the reporting system doesn't capture that, doesn't stop in its tracks, does it have law enforcement intercede in a way forcefully to prevent the subsequent massacre, something has gone seriously wrong.

It's going take more than sort of penny ante incentives flung out haphazardly to make a more robust reporting system, which could be what this country really needs.

BLACKWELL: Errol Louis, always appreciate the perspective. Thank you, sir.

LOUIS: Thank you.

BLACKWELL: Well, sources say former Attorney General Bill Barr has tentatively agreed to testify in front of the House Committee investigating the January 6th insurrection. We'll talk about the impact next.

And new reporting reveals just how far a Supreme Court Justice Clarence Thomas' wife went to keep former President Donald Trump in office.

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BLACKWELL: Just in to CNN, new emails show that the wife of a Supreme Court Justice Clarence Thomas, Ginni Thomas, pressured two Arizona state lawmakers to upend Joe Biden's 2020 popular vote win in that state. Now, the emails show that she encouraged both lawmakers to 'fight back against fraud', and exercise what she characterized as their constitutional authority to choose a clean slate of electors rather than accepting those based on popular vote results.

CNN Legal Analyst Carrie Cordero is with us now. Carrie, good to see you. So we know that there are investigations surrounding these fake slates of electors that were put together in some states. Is she getting close to being in type - some type of legal jeopardy here?

CARRIE CORDERO, CNN LEGAL ANALYST: Well, I think there's two aspects to this latest reporting, Victor. One is does this reveal additional information that she was more deeply involved in trying to subvert the 2020 election. And so there - as we know, there is a very extensive Justice Department investigation that's being conducted that has looked at the individuals who participated in the attack on the Capitol, that is also looking at the individuals who plan that attack and may also think the outstanding question is whether they're looking at who was involved in actually planning the legal way that people were trying to subvert the election.

And so I think it does raise the question, these latest reports as to whether she could end up part of an investigation. But I think, Victor, the bigger issue that is very immediate is what this means for Justice Thomas in terms of cases that might in the future come to him that are related to the election, related to January 6th, potentially related to the January 6th Committee's investigation. And so the issue of recusal and his failure to do so in cases that he has heard before, I think this brings that issue right back up.

BLACKWELL: And the decision is his alone. Let's talk about former AG Bill Barr here. Tentatively agreeing to testify under oath before the 1/6 Committee. Now, there was an informal conversation. I think it was in the fall at his home with the Committee. Clearly the testimony from him could be crucial in determining directly how the President tried to overturn the 2020 election.

CORDERO: I think Bill Barr as former attorney general who was in place at - leading up to the election and right after the election certainly could have information important to the Committee.

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I am going to wait to see if this actually happens and whether he actually testifies under oath or sits for a deposition under oath. So I think there's some gap between him saying that it might happen or us having reports that it might happen and him actually doing it. With that said, he wasn't in government right around January 6th and so I think there is a potential that there's a limited window of information that he could provide that was be of value.

BLACKWELL: So you're saying you're waiting - are you thinking that it won't happen?

CORDERO: I don't know. I'm just - we have - we don't know that he has actually sat for the - being under oath yet. And so I think it's worth - just waiting to see if that really takes place, if he really does go under oath in front of the committee and answer their questions or whether he goes and obfuscates or changes his mind.

BLACKWELL: Okay.

CORDERO: So I'm going stay tuned on whether he really does that.

Ff All right, we will too.

All right. John Eastman, this is the attorney who wrote this memo detailing the plan for VP Pence on January 6th. He revealed in a court filing overnight that he had some direct correspondence with former President Trump about overturning the 2020 election, including hand written notes from Trump. Eastman and his team are arguing that the Committee should not have access under attorney-client privilege. But this could be obviously some crucial evidence here the importance from your perspective.

CORDERO: Well, John Eastman has been fighting complying with the committee's request to get to the bottom of what led up to the attack on the Capitol on January 6th every step of the way. So he has consistently argued that his information should not be able to be turned over and he has not cooperated on - in the committee's investigation.

He obviously maintains and has in his possession knowledge and documents that are highly relevant to the committee's investigation. It's particularly his communications directly with the White House and obviously his involvement in crafting a strategy to overturn the election.

BLACKWELL: All right. Carrie Cordero, always good to have you. Thank you.

CORDERO: All right. Thanks, Victor.

BLACKWELL: New U.S. intelligence suggests President Putin staying power may be even stronger than initially believe regardless of what his country may want, more on that next.

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