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Volodymyr Zelenskyy Pleads For Modern Anti-Missile Weapons System; U.S. Fed Expected To Announce Three-Fourths Percent Point Rate Hike; China Reports "Momentum Of Recovery" For May; European Court Halts First U.K. Deportation Flight To Rwanda; White House Announces Presidential Trip To Saudi Arabia. Aired 12-1a ET

Aired June 15, 2022 - 00:00   ET

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

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[00:00:11]

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hello, everyone, I'm Ivan Watson.

Ahead on CNN NEWSROOM, a critical moment for Ukraine. Leaders warned that without more weapons, Russia could take even more territory.

Plus, the fight against inflation. The U.S. Federal Reserve is expected to make its largest interest rate hike in decades.

And a last minute flight cancellation blocks the British government's controversial plan to deport migrants to Rwanda.

All right, the war in Ukraine is now at a pivotal moment, that assessment sources say comes from Western intelligence and military officials who believe this critical stage could determine the long term outcome of Russia's invasion.

On the ground in eastern Ukraine, fierce fighting rages on in the Kharkiv region and in Severodonetsk. That's where President Volodymyr Zelenskyy says his country is experiencing painful losses.

He says it's vital for the Ukrainian military to stay in the Donbas region. And he's now pleading for more help, which would include modern anti-missile weapon systems to fight Russia's aggression.

That help could come soon, U.S. Defense Secretary Lloyd Austin, he'll lead a working group of nearly 50 countries to discuss the crisis in the hours ahead with the U.S. expecting announcements of weapons and equipment packages for Ukraine.

(BEGIN VIDEO CLIP)

VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT (through translator): Even though Russia has fewer and fewer missiles with each passing day, Ukraine's need for such systems remains because Russia still has enough Soviet types of missiles, which are even more dangerous. They are many times less precise and therefore threaten civilian objects in ordinary residential buildings much more. (END VIDEO CLIP)

WATSON: And Mr. Zelenskyy warns that if Ukraine isn't strong enough, Russia will expand its ambitions further beyond regions in the country's east.

CNN's Ben Wedeman has more on this ongoing battle.

(BEGIN VIDEO CLIP)

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: (voice over): American symbol, American weapon. Ukrainian troops try out new equipment. U.S.-supplied M4 rifles, fresh out of the box. Away from the front lines, these soldiers are preparing to join the battle raging in the east.

This exercise is designed to accustom Ukrainian forces to the use of Western weapons. This is an American 50 caliber machine gun fire Italian bullets. There's a problem though, we're told there's not enough Western ammunitions.

And not enough weapons, either. Even in this drill, much of the firepower dates back to the Soviet era.

Ukrainian forces are slowly losing ground in the battle for the eastern Donbas region. Morale here is high.

UNIDENTIFIED MALE: Good morning, Vietnam!

WEDEMAN: Yet, no one believes these rifles will halt the Russian advance.

UNIDENTIFIED MALE: This, this is not enough.

WEDEMAN: Ukrainian officials say Russian artillery outnumbers their artillery at a ratio of perhaps more than 10 to one, used to deadly effect in the city of Severodonetsk, now almost completely under Russian control.

Big guns, not small arms, could help Ukraine turn the tide.

VITALI, UKRAINIAN ARMED FORCES: If I can protect myself as a soldier with this weapon, I can protect my comrades. But unfortunately, I can't clear my country from invaders using only this rifle, so we need more artillery. We need to have a rocket system, and have serious weapon, because it's a modern war.

WEDEMAN: U.S. and its allies have delivered advanced weapon systems to Ukraine, and more are on the way. But the army here is losing men at an alarming rate, more than 100 killed in action every day according to Ukrainian officials.

We need a basic minimum to avoid more casualties. Artilleries, smart weapons, radar, drones, and people to train us says the commander Lieutenant Oleksandr (PH), a veteran of the French Foreign Legion. We've shown we will fight. We will learn to use these weapons. And that will take time, and time is a luxury this nation at war cannot afford.

Ben Wedeman, CNN, central Ukraine.

(END VIDEO CLIP)

[00:05:10]

WATSON: All right, now, Pope Francis is making new remarks about the war in Ukraine. He's now saying that the conflict was "perhaps in some way either provoked or not prevented". Those comments were published by Italian newspaper La Stampa on Tuesday.

The pontiff said, what we see is the brutality and cruelty of Russian troops. But the danger is only seeing that and not the whole drama unfolding behind the war.

The Pope went on to say he's not in favor of Russia's president, but in his words, he is against reducing complexity to the distinction between good and bad.

Now, let's make a pivot. The U.S. Federal Reserve is expected to announce its biggest interest rate hike in nearly 30 years in the coming hours.

Analysts are predicting a three quarters of a percentage point increase meant to slow the economy and to bring inflation under control. Investors are already pricing in the rate hike.

Now, to get a look at where things may be headed, we are looking at the Asian stock markets, the Nikkei down 0.8 percent. The Hong Kong Hang Seng up 1.4 percent, as is the Shanghai Composite 1.4 percent.

The U.S. markets are hoping to reverse course after a string of losses. And we can see that the Dow, NASDAQ and S&P 500 Futures, they're all up less than a percentage point.

For more now, let's turn to CNN's Alison Kosik.

(BEGIN VIDEO CLIP)

ALISON KOSIK, CNN BUSINESS CORRESPONDENT (on camera): The bear market for U.S. stocks deepened into the close of the session on Tuesday, a day before the Federal Reserve is set to make its interest rate decision.

The Dow fell over 150 points. The S&P 500 fell slightly but the NASDAQ ended with slight gains.

Investors are on edge about the meeting. Will the Fed be more aggressive in its rate hikes?

As much as Wall Street is worried about the possible side effects of the Fed getting too aggressive, many economists and traders are calling for the Fed to get tougher on inflation through its rate hikes. And the question is will the Fed get it right?

There's no guarantee that interest rate hikes will solve the inflation problem. But increasing rates at a faster pace is expected to slow demand exactly what the Fed wants. But the outcome could push the U.S. economy into a recession. It's a delicate dance for the Fed and investors know it.

And so, investors are preparing, which is why we've seen so many volatile selloffs in the market. There's a repricing of stocks underway to adjust and reflect a new landscape, not just a fewer gains in the stock market, but slower economic growth, higher interest rates and high inflation.

Alison Kosik CNN at the New York Stock Exchange.

(END VIDEO CLIP)

WATSON: Thanks, Alison. Now joining me for more here in Hong Kong is financial expert Peter Lewis. He's the director of the aptly named Peter Lewis Consulting. Thank you for joining the show, Peter.

What's your bet? Does the Federal Reserve have any chance of controlling inflation in the U.S. with what many are predicting will be an historic interest rate hike?

PETER LEWIS, DIRECTOR, PETER LEWIS CONSULTING: Well, even if it wants to, it's going to have to move very, very quickly now, because there is no doubt that the Fed is way behind the curve, and is losing control of inflation.

When you see inflation, consumer price inflation of 8.6 percent, that is extraordinarily high. And interest rates below one percent.

And also, inflation expectations are becoming more and more entrenched amongst the consumer. They're now at the highest level since 2008.

This is very, very dangerous for the Fed, and it's on the verge of losing control of inflation altogether.

The problem it has is that the type of inflation that we're seeing is very difficult to bring down just by interest rate rises alone.

We're seeing it because of supply shocks from the war in Ukraine and from the lock downs that we've been seeing in China.

Rising interest rates don't produce more fuel at lower prices or lower food costs, which is the biggest concern of consumers at the moment.

WATSON: So, what are the problems that the Federal Reserve could create if it doesn't successfully make this soft landing?

LEWIS: Well, it's treading a very fine -- walking a very fine tightrope now. Because it's left things so late. There were many economists last year who were saying raise interest rates now before inflation gets out of control. When the Fed decided that inflation was transitory, that was wrong in

hindsight, and now it has this awful choice. It either raises rates very sharply, 75 basis points at this meeting, probably 65 basis points again in July, and risks plunging the economy into its -- into recession. Or it goes easier, in which case inflation could surge even more.

[00:10:27]

LEWIS: So, it really is caught between a rock and a hard place now, but it has no choice but to raise interest rates when inflation is 8.6 percent and interest rates are only one percent, it is way, way too low.

WATSON: And Peter, I assume, and I'd like to hear your opinion on this, that what the Federal Reserve does in the U.S. is likely going to have an impact on economies around the world, which are already dealing with the challenges of rising food and fuel prices. Am I correct?

LEWIS: Absolutely. Ivan, I mean, there are central banks now in the U.K., in the Euro zone, in India, in Australia, all raising interest rates much faster than they anticipated last year. And they have no choice but to follow the Fed.

And if they don't, what will happen is their currencies will collapse. And we're seeing that in Japan right now. Where the Japanese (INAUDIBLE) the Bank of Japan isn't raising interest rates, it's still very stimulative. And the Japanese Yen has plunged to a 24-year low.

If other central banks particularly in emerging markets don't follow the Fed, they will see the same collapse in their currencies as well, which just imports even higher inflation into their economies.

So, this is having a global impact. And central banks around the world are having to respond to what the Fed is doing. And these very high rates of inflation.

WATSON: You're talking about a global economic tightrope that we're all on right now. Peter Lewis here in Hong Kong, thank you very much for your analysis.

And going from the world's number one economy, we're going to go to the number two economy now. Beijing says that China's economy is on the mend, but at a slow pace and the new numbers for May were released just hours ago from China's National Bureau of Statistics. The report showed some growth after repeated hits from extended COVID-19 lockdowns as well as blows to the country's tech and real estate industries.

CNN Beijing Bureau Chief Steven Jiang, he joins me now to break down the data.

Steven, the Chinese economy took this this big hit from these lockdowns, particularly what we saw in Shanghai. What do these latest government statistics tell us? STEVEN JIANG, CNN BEIJING BUREAU CHIEF: Well, Ivan the government economic data which of course many experts and economists around the world always view with a grain of salt does point to a partial recovery of this economy. Despite the ongoing lock downs in many cities, including Shanghai in May.

Now, industrial output, for example, actually grew rather unexpectedly by 07 point -- 0.7 percent. That compared to a drop of nearly three percent in April.

Now, this is probably due to the resumption or ramping up of production, especially in Shanghai where authorities have ordered factories to set up the so called a production bubble. It's basically forcing workers to live and work in their factories, and in some cases, sleeping on factory floors to keep the production lines going.

But when you look at other numbers, even officials here acknowledge there are still a lot of challenges and difficulties ahead.

For example, retail sales, that number still dropped 6.7 percent in May, although slightly improving from the previous month of a drop of 11 percent.

But this is not surprising, again, because when you have millions of people confined to their homes, especially in wealthy cities like Shanghai, they're not -- they're spending money. And many people have said even when they are released from quarantine, there will be no so called revenge shopping because many remain very, very concerned about the uncertainty in this economy and therefore, their future income.

And another set of numbers that I think we should pay attention, of course, is unemployment rate. Officially nationwide, this figure stands just shy of six percent, fairly stable but when you zoom in to look at unemployment among young people, people aged between 16 and 24, that number actually was creeping up to 18.4 percent a May.

That is very alarming because this year, this country is going to produce its biggest the number of college graduates, 10 million people are graduating in the coming weeks and months flooding this already very depressed job market. So, that's why this is very very worrisome to the government.

So, even with a few positive developments, if you will, this overall picture remains fairly, you know, challenging. And that is why a lot of people are calling to question if the government stated goal of achieving positive growth for the second quarter, which only has a few weeks left at damping, of course, their hope of achieving a full year growth at around 5-1/2 percent for 2022, Ivan.

[00:15:16]

WATSON: So, I'm curious to hear, what did the Chinese government say in response to these statistics coming up, especially the high unemployment among the youth?

JIANG: They're obviously putting on a very brave face and publicly saying a lot of the numbers they have just released, pointing to as positive trends, including the industrial output number I mentioned, but also, of course, strong export growth, because of the ease of supply chain bottlenecks. And then, of course, they were saying they were implementing government mandated measures and policies to help small and you know, medium sized businesses, for example.

But at the end of the day, data -- people's lives and livelihoods are not data points, right? When you talk to people on the ground, many remain very pessimistic because of the uncertainty, because of the continued zero COVID policy and it's increasingly harsh enforcement.

Beijing, for example, just closed down all of its bars and entertainment venues and many other facilities in its largest district because of this latest cluster of cases. So, when we talk to bar owners, they are just very, very pessimistic about their future, Ivan.

WATSON: And Steven, it's an uncertainty that we feel down here in Hong Kong as well with you don't know which way the government is going to go on zero COVID policy. Thanks very much for your analysis there. Steven up in Beijing. Good to see you.

Now, the engines were on, the cabin crew was on board, but at the last minute, a court halted the U.K.'s first deportation flight to Rwanda. Reaction to the ruling and what's next for this controversial policy.

Plus, the U.S. announces the worst kept secret in Washington, President Biden will travel to Saudi Arabia in July. How the White House is defending the trip. All that's coming up.

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WATSON: Welcome back to the program. The first flight of a controversial deportation plan by the U.K. was grounded at the 11th hour, the plane was on the tarmac, its engines had started and the cabin crew was seen boarding when the European Court of Human Rights intervened. It issued a series of rulings regarding the cases of the handful of asylum seekers on board.

The court ordered the U.K. not to deport them for the time being as legal proceedings are ongoing.

ITVN's Paul Brand filed this report earlier from the Rwandan capital.

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PAUL BRAND, U.K. EDITOR, ITV NEWS: That flight is now off, we are down to zero asylum seekers eligible to be deported tonight in this last minute flurry of cases at the European Court and out of (INAUDIBLE) judge has decided that none of those remaining asylum seekers should be deported. He has delayed all of their deportation.

[00:20:08]

BRAND: So, that flight is not going to be leaving tonight. It is not going to be landing in Rwanda tomorrow. Now that is not necessarily the disaster for the U.K. government that you might think it is. They had anticipated this battle with a course. It is a battle that in some ways, they relish.

It is more of a disaster I'd say for the Rwandan government here who have also been putting a huge amount on this policy.

For them, it was a huge international win to have this cooperation announced with the United Kingdom. It comes with huge economic development for Rwanda.

There have been questions all week, though, about freedoms, about human rights here in Rwanda. And we have certainly witnessed for ourselves here concerns about those human rights. And they were questions repeatedly put to the Rwandan government about that today too.

But that flight will not be landing here in Rwanda tomorrow. It does not mean that it won't be coming here in the coming weeks. This is a delay. It is not the end by any means of this policy.

(END VIDEO CLIP)

WATSON: Now, this ruling is a setback for the British government, but Prime Minister Boris Johnson is vowing to press on.

(BEGIN VIDEO CLIP)

BORIS JOHNSON, BRITISH PRIME MINISTER: We always said that this was going to be a long process. Remember when I first announced the policy, I said it would take a long time to get going and there'll be plenty of legal challenges. There'll be bumps on the road but I think what opponents of the policy have to say is well, what is your alternative? What is your alternative to people being shipped across the channel in very frail, unseaworthy dinghies risking their lives and undermining the rule of law? What's your alternative?

We think it's a sensible partnership we set up with Rwanda. Yes, it may take a while to get working properly, but doesn't mean we're not going to keep going.

(END VIDEO CLIP)

WATSON: Meanwhile, London Mayor Sadiq Khan has been reacting on Twitter saying, "sending people fleeing violence to a country thousands of miles away was already cruel and callous, it's now potentially unlawful too".

The Church of England on Tuesday denounced the policy as immoral. In a joint letter to The Times, the leaders of the church write, our Christian heritage should inspire us to treat asylum seekers with compassion, fairness and justice, as we have for centuries. We cannot offer asylum to everyone but we must not outsource our ethical responsibilities or discard international law which protects the right to claim asylum.

Turning now to Washington, the White House is making it official, announcing President Joe Biden will visit Saudi Arabia, Israel and the West Bank in mid-July. The Saudi stop on this trip is reviving controversies. As a candidate,

the president vowed to make Saudi Arabia a pariah over human rights abuses and the murder of journalist Jamal Khashoggi.

But now, Mr. Biden is expected to meet with the man accused of authorizing that murderer, Crown Prince Mohammed bin Salman.

A White House official spoke to CNN's Brianna Keilar earlier, here's how he defended the trip.

(BEGIN VIDEO CLIP)

JOHN KIRBY, PRESS SECRETARY, PENTAGON: He's going over there as part of the GCC Plus three to talk about counterterrorism, Iran's destabilizing behavior, certainly energy production, as well as trying to end this war in Yemen.

And he'll talk with nine heads of state. There will be lots of bilateral discussions. And, yes, that will certainly include King Salman and his leadership team and we would expect that the crown prince will be part of those discussions. We're not shying away from that.

I mean, it's just -- there's a big context here with respect to this trip and what this trip -- why this trip is so important to the -- to the president and to the American people.

(END VIDEO CLIP)

WATSON: Now, for more on the upcoming trip and the state of U.S.-Saudi relations, let's go to CNN's International Diplomatic Editor, Nic Robertson.

(BEGIN VIDEO CLIP)

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR (on camera): Well, the Saudis are saying that President Biden is going there at the invitation of the king, King Salman. But they're making it also very clear that President Biden will meet with Crown Prince Mohammed bin Salman, indeed, it's what the Crown Prince is expected at least from a Saudi point of view, expected to have his most substantive conversations about food security, energy security, economic ties, improving trade relations, even discussions about space.

So, MBS is really the day to day power in Saudi Arabia. And there seems to be a recognition now by the White House that MBS is going to become the king eventually in Saudi Arabia, that is likely to be in position for many decades to come.

MBS himself views himself and the Saudi Kingdom as being the significant power player in the Gulf region.

So, for all of these reasons, and the fact that President Biden does need an oil producing swing capacity state like Saudi Arabia, to help out with the rising energy prices around the world.

[00:25:03]

ROBERTSON: But for all these reasons, compromises on both sides are being made, but it is a significant climb down for President Biden. He had said on the campaign trail that he would turn Saudi Arabia into a pariah state.

Now, the Saudis listened to his campaign rhetoric, believed that once in the White House Biden would tone it down, and from conversations I've had with Saudi officials, none of them really expected the relationship to get as rocky as it has over the past year and a half, or to take this long to reset.

But it does seem to be coming back to that point that so many Saudis talk about, about a long and enduring an important relationship with the United States.

Nic Robertson, CNN, London.

(END VIDEO CLIP)

WATSON: The White House is deflecting much of the blame for the highest inflation in decades, and it's pinning much of the blame on Russia, we'll explain that.

Plus, it's not officially summer yet in Europe, but it sure feels like it. The latest on the heat wave that's gripping Spain. All that, coming up.

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WATSON: Hi, there, you're watching CNN NEWSROOM. I'm Ivan Watson.

U.S. regulators are stepping up their war on skyrocketing inflation. Much of Wall Street expects the Federal Reserve to raise interest rates by up to three quarters of a percentage point in the coming day. That would be the steepest hike since the mid 1990s to fight the highest pace of inflation in more than 40 years.

But the concern is that the rate hike could also push the economy into a recession. Inflation has been politically damaging to President Joe Biden.

On Tuesday, he put some of the blame on congressional Republicans for blocking his domestic agenda. He also spoke about what his administration did right.

(BEGIN VIDEO CLIP)

JOE BIDEN, PRESIDENT OF THE UNITED STATES: Under my plan for the economy, we made extraordinary progress. We put America in a position to tackle a worldwide problem that's worse everywhere but here, inflation. It's sapping the strength of a lot of families.

(END VIDEO CLIP)

WATSON: Economists say there's no short answer to why inflation feels so out of control. But the White House says the Russian president has a lot to do with it. As CNN's Tom Foreman explains.

(BEGIN VIDEOTAPE)

TOM FOREMAN, CNN CORRESPONDENT (voice-over): In the air on the ground in businesses and homes, rising prices are scorching American pocketbooks. Yet who does the White House blame? The leader of faraway Russia, Vladimir Putin.

BIDEN: We've never seen anything like Putin's tax on both food and gas.

[00:30:05]

I'm doing everything in my power to blunt Putin's gas price hike.

FOREMAN (voice-over): Certainly, when Russia invaded Ukraine, global energy prices soared as much of the world turned away from Russian fuel exports.

Agricultural export problems in Russia and production disruptions in Ukraine had the World Food Program tweeting about ripple facts everywhere.

UNIDENTIFIED MALE: These two countries supply about 30 percent of all the wheat exports globally.

FOREMAN (voice-over): So, money watchers like Julia Horowitz say --

JULIA HOROWITZ, CNN BUSINESS SENIOR WRITER: I think Joe Biden has a port, and the war in Ukraine is absolutely exacerbating rising food costs and rising fuel costs that are putting pressure on American households all across the country.

FOREMAN (voice-over): But, hold on. Americas inflationary surge started in May of 2020, while Trump was still in office, and has skyrocketed under Biden. The war effect kicked in only a few months ago.

Economists say that bigger trend was driven by the pandemic, which is still disrupting production in places like China and supply chains all over. But they also cite supply's evil twin, demand for goods and services, which is way up, pushed by Americans eager to spend pandemic savings. And that has President Biden himself taking heat.

HOROWITZ: There's a lot of debate right now among economists about whether the stimulus packages that were passed by the Biden administration fueled demand, and that supercharged the inflation problem.

FOREMAN (voice-over): Still, many financial analysts say, while Putin does not deserve all the blame, his war in Ukraine has undeniably made inflationary woes worse, even as the White House keeps promising to somehow make it all better.

BIDEN: Jobs are back, but prices are still too high. COVID is down, but gas prices are up. Our work isn't done. FOREMAN: The White House would not be wrong to say the real causes of

inflation are a global economy, the lingering pandemic, the fighting in Ukraine, maybe some corporate greed, and Americans going on a spending spree after being cooped up for two years. But that's complicated.

It is much easier politically to say, See that bad guy in the Kremlin? It's his fault.

Tom Foreman, CNN, Washington.

(END VIDEOTAPE)

WATSON: There is also worrying economic news from the U.K. That's where average wages are falling at the fastest rate in more than two decades. The country is also facing its highest inflation since the early 1980s.

CNN's Anna Stewart reports people everywhere are feeling the impact, even when it comes to something synonymous with the British Isles.

(BEGIN VIDEOTAPE)

ANNA STEWART, CNN INTERNATIONAL CORRESPONDENT (voice-over): People flock to the seaside town of Whitstable for this. A peaceful day out on these pebbly shores.

It feels far removed from the war in Ukraine, but its impact is still reaching the U.K. shores. And Britain's unofficial national dish.

(on camera): This is delicious. You actually just can't beat eating fish and chips right by the seaside. Now, this traditionally was considered a quite cheap meal, but everything you see here is shooting up in price. From the white fish and the batter used to cook it; the potatoes and the cooking oil; the mushy peas; even the packaging.

STEWART (voice-over): Since last year, vegetable oil is nearly 50 percent more expensive globally. Wheat prices are up even more.

And the price of fertilizer made in the U.K. are up nearly 180 percent, which pushes up the cost of vegetables like potatoes. All key ingredients for fish and chips, and all that largely a result of the war in Ukraine, one of the world's biggest producers of food commodities.

STEWART: Thank you very much.

STEWART (voice-over): B.C. Jones is a family-run business.

STEWART: So how long has this been in your family?

UNIDENTIFIED MALE: Sixty years plus.

STEWART (voice-over): The last two years have seen it battered by these rising costs.

UNIDENTIFIED MALE: You see the horror going on in Ukraine. Brexit had an impact. Prices of fish, everything has gone through the roof.

STEWART: So much of the white fish that you get in fish-and-chip shops is actually caught in Russian waters. And that's gotten more expensive as a result of tariffs.

UNIDENTIFIED MALE: Seeing the price of cod increase week on week to 60 percent, so far, it's directly linked to the sanctions.

STEWART: Your profit margins must be really squeezed.

UNIDENTIFIED MALE: The profit margins are literally evaporating.

STEWART (voice-over): Down at the harbor, local fishermen are bringing up shellfish, the main catch for this seaside town.

CHRIS ATTENBOROUGH, FISHERMAN: What affects us is oil, plus the feel. My diesel bill has doubled. I only have a little boat at the end of the day, but it's a big cost.

STEWART (voice-over): For these fishermen and the U.K.'s chippies, the problem doesn't stop there. Not only have prices gone up, but customers have less money to spend.

UNIDENTIFIED MALE: Energy bills have gone up. Petrol has gone up, as well. I definitely will be more conscious, I think, when I go out.

[00:35:04]

UNIDENTIFIED FEMALE: We think twice before --

UNIDENTIFIED MALE: Yes.

UNIDENTIFIED FEMALE: -- we decide to go out.

UNIDENTIFIED MALE: To be sure, I'm looking for the cheapest place to have food, because I used to go to the restaurant. I only go there now -- it's horrible. The price has nearly doubled.

UNIDENTIFIED MALE: Twenty-six.

STEWART (voice-over): For now, fish and chips still appears to be in hot demand here, but as the cost of living continues to bite, tucking into this traditional seaside dish may become less palatable.

Anna Stewart, CNN, Whitstable, U.K.

(END VIDEOTAPE)

WATSON: It's not only prices that are going up; it's also temperatures. A record-breaking early heat wave is still being felt across much of Spain.

Daytime temperatures have topped 35 degrees Celsius for much of the country. That's more than 95 degrees Fahrenheit.

People trying to keep cool any way they can: running through water fountains and cold sprays. The heat forced some schools and businesses to adjust their schedules. And unseasonably warm weather is causing concerns all across Europe.

For the latest, let's bring in CNN meteorologist Pedram Javaheri. Is there any break in sight, Pedram?

PEDRAM JAVAHERI, CNN METEOROLOGIST: Goodness, Ivan, great seeing you.

You know, this is a long duration set-up here when it comes to this heat wave. As you noted, people are trying to find any which way to cool off here.

But the elements in place to produce tremendous heat here as we approach the longest day of the year. High pressure, we get a clockwise flow around there. Low pressure just towards the West. We get a counter-clockwise flow around there. And notice, both of these flows end up being a Southernly flow, which means the air is coming right off of areas of Northern Africa and the Sahara Desert.

This tremendous heat is essentially being ushered directly into this region. And in Madrid, again, we're talking about several days, eight days now, where temps have exceeded 30 degrees. And we know the previous month, month of May, was also remarkably hot, as well, across the region.

Look at these observations: 15 degrees Celsius above what is typically seasonal, which is about 27 across some of these sites. But Grenada comes in at 30 this time of year, typically, but 42 is what they observed in the past 24 or so hours.

And May 2022 was the hottest May we've seen since 1964. So again, going back to this long duration set up. And we have a high temperature of 42 degrees across Northern areas of Spain last month.

Speaking to the intensity of this heat here, that really hasn't wavered much in the past several weeks.

But notice heat alerts: a level two in place there out of a 1 to 3 scale. Northern areas, even Southern areas, all of it here underneath these heat alerts, where Madrid, once again, aims to right around, say, 40, 41 degrees, the afternoon hours of Wednesday.

Paris at 31. London into the upper 20s. And this heat really begins to expand a little farther towards the North. So some of these areas that have not been quite so hot all season begin to see it and the effects of it here over the next several days.

But even across France, you'll notice the observations have been remarkable, touching 36, 37 degrees. That is 100 Fahrenheit, if you convert that.

And again, incredible heat alerts across the Southern tier of France, as well, in place. And you'll notice, it just gets hotter, Ivan.

Going into Saturday afternoon, up to 38 degrees in Paris. We do expect at least cooler air beyond that, Sunday into Monday back to seasonal temperatures early next week -- Ivan.

WATSON: Get your fans and air conditioners ready. Pedram Javaheri, thank you very much.

Now, it could be the end of an era in K-Pop. Superstars BTS say they're taking a break, but does that mean they're really gone for good? What we're learning about their solo project, that's coming up.

(COMMERCIAL BREAK)

[00:40:35]

WATSON: Welcome back.

Now, K-Pop superstars BTS, they say they aren't breaking up, just taking a break. This massively popular boy band made the announcement during their ninth anniversary celebration on Tuesday, and were very careful to call this a hiatus.

The members says they want time to explore solo products. One of them did admit they were going through a rough patch right now. But BTS promises the band will get back together again someday.

For more now, let's go live to CNN's Blake Essig in Tokyo.

Blake, very good to see you. Very interested to get your perspective on this, because I suspect members of the BTS Army did not take this news well last night. Did they?

BLAKE ESSIG, CNN INTERNATIONAL CORRESPONDENT: Yes, you know, Ivan, as expected, the BTS Army that includes tens of millions of fans worldwide are devastated by the news, with many taking to social media saying that they've been crying for hours.

And while last night's announcement seemed pretty straightforward, the band's management company, Hive, which saw stock price in the Korean exchange fall more than 25 percent today following the announcement, released a statement early this morning, clarifying that the group would continue to work together, as well as individually.

But what is clear is that BTS is planning to take a break. That members offered several reasons for the decision to go on the so- called hiatus, including a lack of individual growth and an inability to pursue solo projects as a result of the unrealistic demands created by the K-Pop and idol system.

Now, while thanking their fans and thinking about their future, the band acknowledged that the dynamic of the group had changed during the COVID-19 pandemic, and that it's been a long and exhausting process trying to find their identity. Take a listen.

(BEGIN VIDEO CLIP)

RM, BTS MEMBER (through translator): Right now, we've lost our direction, and I just want to take some time to think, and then return. That just feels rude to our fans and like I'm letting down their expectations.

(END VIDEO CLIP)

ESSIG: Now, although it wasn't given as a reason for the group's decision to at least temporarily go their separate ways, it's worth noting that all South Korean men aged 18 to 30 are required to serve in the military for at least two years. And that band member Jin, who's 29 years old, is due for military service by the end of this year, with two other band members needing to serve by next year.

Since BTS's meteoric rise to global stardom that began in 2013, the seven-member group has achieved huge international success, winning hundreds of awards and have used their global star power to serve as cultural ambassadors, addressing important issues like anti-Asian hate crimes, Asian inclusion and diversity.

And just last month, Ivan, they were actually at the White House in Washington, D.C., to meet with U.S. President Joe Biden and discuss those issues.

WATSON: Yes. All right. Blake Essig in Tokyo, thanks. And many people may not know this, but I think I've heard that Blake is a BTS superfan. I never knew that. Anyway --

ESSIG: I'm a superfan. You're absolutely right.

WATSON: -- thanks very much for watching. All right, Blake, thanks again.

And thank you for watching CNN NEWSROOM. I'm Ivan Watson. WORLD SPORT starts right after this break.

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