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Fed Hikes Rates Amid Banking Turmoil; TikTok Goes To Washington; DeSantis Takes Jab At Trump Over Hush Money Payments. Aired 2-3a ET

Aired March 23, 2023 - 02:00   ET

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

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[02:00:31]

KRISTIE LU STOUT, CNN CORRESPONDENT: Hello, and welcome to our viewers joining us in the United States and all around the world. You're watching CNN NEWSROOM. I'm Kristie Lu stout. And just ahead. No indictment yet but the Manhattan grand jury gets back to work today in the Donald Trump hush money investigation. And the former president's legal troubles this week don't end there.

Now the U.S. Federal Reserve hikes interest rates for the ninth straight time. And the Fed chair says the banking crisis could complicate the path forward.

Plus, TikTok goes to Washington.

(BEGIN VIDEO CLIP)

SHOU ZI CHEW, CHIEF EXECUTIVE OFFICER, TIKTOK: Some politicians have started talking about banning Tiktok. Now this could take TikTok away from all 150 million of you.

(END VIDEO CLIP)

STOUT: The company's CEO is preparing for grilling on Capitol Hill to try and prevent TikTok from being banned in the United States.

And we begin this hour in New York, where a grand jury is expected to meet again today in the case of Donald Trump's alleged hush money payment to adult film star Stormy Daniels. It is unlikely they'll hand down any indictment as sources tell CNN that prosecutors are considering calling more witnesses. Other sources say the district attorney's office is taking a moment to regroup after the events of the past week.

Prosecutors are weighing charges that Trump allegedly falsified business records and violated campaign finance laws. Another investigation to the former president appears to be gaining momentum. Now this one involves classified documents found at his Mar-a-Lago estate in Florida. Our CNN's Katelyn Polantz has more.

KATELYN POLANTZ, CNN SENIOR CRIME AND JUSTICE REPORTER: The primary defense attorney for Donald Trump, a man named Evan Corcoran is set to return to the federal grand jury in Washington to answer more questions. The questions that prosecutors want to ask him and the answers that they believe he will give are about whether or not Donald Trump was trying to break the law in the response to the classified documents probe at Mar-a-Lago.

So, this is a crucial situation that is developed here over the past few hours and days. A federal appeals court in Washington on Wednesday essentially ordered that Corcoran would need to go and testify again to that grand jury, answer questions he hadn't before about his conversations directly with his client, Donald Trump. The appeals court also said that he would need to turn over documents that he had in his possession.

Handwritten notes and transcribed verbal notes to the grand jury investigation as well. This is the grand jury investigation into the potential mishandling of classified records at Mar-a-Lago and possibly obstruction of justice. We don't know if there will be charges that emanate from this. But what the Justice Department has done so far to get us to this point, is really putting an emphasis on how close they believe they are to locking up this case.

They believe that there was the advancing of a crime. It's quite significant. And Evan Corcoran really is the central person, the central witness to the conversations what was -- what Donald Trump was thinking and wanting to do as the Justice Department was trying to get classified records that he had at Mar-a-Lago back in their possession at the federal government, and that they weren't just turning over all of the things that were there.

Katelyn Polantz, CNN, Washington.

STOUT: As the various investigations into Donald Trump heat up, one of his top rivals for the 2024 Republican nomination is now striking back at the former president and this is a notable change for Florida Governor Ron DeSantis who until now has generally avoided criticizing Trump by name. But in a new interview, DeSantis takes a veiled job but Trump's alleged behavior regarding the hush money payments.

(BEGIN VIDEO CLIP)

GOV. RON DESANTIS (R-FL): Well, I think it's -- there's a lot of speculation about what the underlying conduct is. That is purported to be it. And yes, the reality is that's just outside my wheelhouse. I mean, that's just not something that I can speak to.

(END VIDEO CLIP)

STOUT: Now, Trump has a habit of taunting his opponents with unflattering nicknames and DeSantis is no exception. The Governor was asked to comment on the many swipes that Trump has made about him. Listen to this.

(BEGIN VIDEO CLIP)

[02:05:02] PIERS MORGAN, HOST, PIERS MORGAN UNCENSORED: What is your favorite nickname that Trumps given you so far? Is it Ron Desanctimonious or Meatball Ron?

DESANTIS: Well, I can't --

MORGAN: But even he went off Meatball Ron, right?

DESANTIS: I can't -- I don't know how to spell Desanctimonious. I don't really know what it means but I, you know, I kind of like it's long. It's got a lot of vowels. I mean, so we'll go with that. That's fine. You know, you can call me -- you can call me whatever you want. I mean, just as long as you, you know, also call me a winner.

(END VIDEO CLIP)

STOUT: All right. And Trump, he quickly responded firing off his own critique of DeSantis' record as governor and he said this, "The fact is, Ron is an average governor, but the best by far in the country in one category public relations where he easily ranks number one, but it is all a Mirage. Just look at the facts and figures. They don't lie. And we don't want Ron as our president."

Now, the U.S. Federal Reserve is raising interest rates again. The ninth time and just over a year, and it's never-ending quest to bring down inflation. Now the Fed increase its key rate by a quarter point on Wednesday. To the surprise of almost no one. Now policymakers admit that could put more than a million people out of work by the end of the year. But the Fed Chair Jerome Powell says that the end of the rate hikes could be insight.

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JEROME POWELL, UNITED STATES FEDERAL RESERVE CHAIR: We no longer state that we anticipate that ongoing rate increases will be appropriate to quell inflation. Instead, we now anticipate that some additional policy firming may be appropriate.

(END VIDEO CLIP)

STOUT: Now, U.S. financial markets did not respond well to the news. The Dow, it fell more than 500 points and NASDAQ and the S&P each lost more than 1-1/2 percent. And let's take a look at how markets here in the Asia-Pacific region are faring at the moment. Bring up the data for you. You can see the Nikkei is slipping about two tenths of one percent. But elsewhere, bucking the trend, Hong Kong Hang Seng up almost 1.7 percent.

The Shanghai Composite getting a third of one percent. And over in Seoul the KOSPI getting about two-tenths of one percent. Let's get more now from CNN's Richard Quest.

RICHARD QUEST, CNN INTERNATIONAL ANCHOR: Trust the Fed to walk this narrow tightrope, and perhaps have it both ways.

The Fed has admitted that the banking crisis is likely to restrict credit. It will be harder to borrow money. And that will help slow down the economy and ultimately bring down inflation. Therefore, they didn't need to do as much and could only raise rates by a quarter point. The banking crisis was doing their work for them. But the Feds taken a Get Out of Jail Free card by saying that if for some reason, this is all so uncertain, and it doesn't pan out that way, then they will go back to raising rates. You see inflation in the eyes of the Fed is still public enemy number one.

Richard Quest, CNN, Tokyo.

STOUT: All right. Let's get to Las Vegas now and standing by Ryan Patel, senior fellow at the Drucker School of Management at Claremont Graduate University. Thank you so much for joining us here on CNN NEWSROOM. First up, why did the Fed do this? Why did the Fed go ahead and raise interest rates again, despite all the turmoil in the banking sector?

RYAN PATEL, SENIOR FELLOW DRUCKER SCHOOL OF MANAGEMENT: Well, it had no choice Kristie, because based on what federal, you know, Chairman had said last month what the data and inflation, this was the only logical choice because what would have had signaled if he didn't do it? So, if he didn't do it, and went to zero basis points that would have told the market, told everybody that there is a deep crisis in the banking which is something that they were trying to avoid.

So, that means they're not going that way. And if they increase it further, you know, that would have been a mistake, as well. So, they stayed the course, and stayed committed to what they think is the right move. And obviously, there's a domino effect on that. And they had to do some adjustments from you know, kind of recalculating what that interest rate will look like in 2024, which they slipped in there, which now they think is 4.3 percent from 4.1.

So, it is a domino effect. I know short term, we're focusing on this, but they're looking at cutting, you know, looking at the long-term effect as well that we need to pay attention to.

STOUT: Yes. Yes. The Fed is staying the course. What about the Bank of England? It's apt to make its interest rate decision soon. What should we expect?

PATEL: Hoo. I mean, inflation is really hard. I expect them to stay -- no, I want to stay the course but to be aggressively attacking it, because they were a little bit behind the eight ball in the summertime. And so, I don't, you know, inflation, I think was projected to be anywhere from 10 to 13 percent. I think they're going to be continued to be aggressive interest rates. More so because I think they're a little bit behind for when the U.S. was attacking it. So, I expect them to be aggressive as well.

STOUT: So, this is the trend here. And just last week, the ECB went ahead with its rate hikes. So, we've got central banks all around the world doing this and actually, they're doing two things at once. They're managing rising prices and inflation. They also have to manage the banking crisis at the same time. Are they going to succeed?

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PATEL: Oh, I hope so. For all our -- for our sakes because we can't have this contagion and we saw it, right? We need to have this trust in the system with money from businesses as well. I mean, but there's another flip side of this, Kristie to that, you know, J.P. Morgan, recently came out with a defensive approach for Asian markets following the Feds latest, you know, kind of decision to do it.

So, what that means then is that people are going to be more cautious. That's going to be a lot more expensive. And that just means there's going to be a slower recovery to that degree. And even in the U.S. GDP, I think they came out in this last time that they were projecting that, you know, that they were going to go -- I think forecast growth 2.4 percent. And they're going to -- now two down.

So, you starting to see some of these forecasts starting to change going into summer, I expect the Fed -- I also expect to fit another 25 basis points sometime later this year at some point, but hopefully it's not next to kind of calm the fears down. They didn't really have a choice, Kristie to go -- they had to do this --

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STOUT: Yes. They didn't have a choice. That's where they're doing this. And look, you know, here's hoping that policy will succeed here. But be honest with us. Where do we stand right now with the banking crisis? Because it's been about what, two weeks in Silicon Valley Bank collapse? There is also that we can shotgun marriage between UBS and Credit Suisse. U.S. officials are trying and seeing what they can to calm the markets. But is all of that enough to stop this crisis from spreading?

PATEL: Well, truthfully, we're not done yet. There's so much more conversation is going to happen around this. And any one of those, even the UBS, Credit Suisse, like there's more --shareholders are not happy from Credit Suisse. That could spill over, it could cause another kind of conversation. So, for me, personally, we're not out of the woods. I don't want people to panic but like there's going to be all this information.

And it is super important for the U.S., U.S. government, the Fed, Janet Yellen, to continue to communicate and be transparent to the consumer because that is key in any country, any government at this point, because you want to get ahead of it. And you don't want to see more of these. I don't want to say scandals, but more of this news to say you're unsafe of where your money's going.

STOUT: Yes. We need -- you're absolutely right. We need to demand transparency, because as he said, we are not done yet.

Ryan Patel, thank you so much for joining us. Take care.

PATEL: Thank you.

STOUT: In the coming hours, the CEO of TikTio will testify before the U.S. House amid a push by the U.S. government to ban the app across the country. And we're getting a better idea about what he'll say to lawmakers. But his main talking point is neither TikTok nor its parent company ByteDance. It's the agents of the Chinese government but is it enough to convince lawmakers? Now CNN's Anna Coren joins me now with more.

And Anna, you know in just a few hours, this is going to take place, the boss of TikTok will be facing a grilling on Capitol Hill. Walk us through what to expect.

ANNA COREN, CNN CORRESPONDENT: Well, that's right. 10A eastern, Khristie that is when the CEO of TikTok will face a harsh grilling from U.S. lawmakers as he faces his first congressional hearing later over the video apps, potential national security risks. Now the short form video app that is owned by a Beijing-based parent company ByteDance has recently been banned by various governments around the world on official government devices.

The U.S., U.K. European Parliament, various E.U. nations and New Zealand. They've all enforced the ban this month. But the CEO, Shou Zi Chew, he has spent millions of dollars lobbying Capitol Hill and says the app poses no threat whatsoever. He's denying allegations that it colludes or has an improper relationship with the Chinese government. Let's take a listen to what Shou had to say a few days ago on a TikTok video.

(BEGIN VIDEO CLIP)

SHOU: Some politicians have started talking about banning Tiktok. Now this could take TikTok away from all 150 million of you. I'll be testifying before Congress later this week to share all that we're doing to protect Americans using the app and deliver on a mission to inspire creativity and to bring joy.

(END VIDEO CLIP)

COREN: Now TikTok collects roughly the same amount of data as Facebook or Twitter, but it's the links with the Chinese government that has everybody very concerned. The FBI director as well as the head of the U.S. National Security Agency, they both said that TikTok could be a valuable tool for China to shape public opinion in regards to elections, policymaking, even in the event of a potential war over Taiwan.

Now, the Biden administration says the only way for Tiktok to continue operating in the U.S. is if it's Chinese owners sell their stake in the company. That Kristie is highly unlikely according to the analysts that we've spoken to because the Chinese government views TikTok's technology as sensitive and critical to Chinese national interests. Since 2020, the Chinese government has taken steps to ensure that it can veto any sale by ByteDance.

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In response to the potential U.S. ban, China's Ministry of Foreign Affairs last week said, "The U.S. should stop spreading misinformation about data security, stop suppressing relevant companies and provide an open, fair, just and nondiscriminatory environment for foreign business to invest and operate in the U.S.

And Kristie, to date, we should mention there is no evidence that Beijing has used TikTok's data for intelligence or other purposes but -- and this is a big but, the deep mistrust between China and the U.S. and the awareness of Chinese espionage and certainly heightened fears of what TikTok represents.

STOUT: Yes, absolutely, Anna. The questions will be tough and the questions will zero in on national security and data security. Anna Coren reporting for us live. Anna, thank you so much.

Now, a rare tornado has been confirmed near Los Angeles. The National Weather Service says it touched down Wednesday in the city of Montebello and one person was hurt. 17 buildings and all were damaged. Many of them so severely they can no longer be used. And some say that the rattling was so intense. They thought it was an earthquake. This is the strongest tornado to hit the city in 40 years.

And while twisters are rare in California, it's actually the second one to hit the state in his many days. Extraordinary.

You're watching CNN NEWSROOM coming to you live from Hong Kong. And up next, France braces for another day of mass protests over new law to raise the retirement age. But President Macron says that there's no other alternative to fixing France's pension system. We've got the details when we come back.

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STOUT: Now, French Union leaders are calling for another national strike on Thursday, as the government pushes ahead with its controversial plan to raise the country's retirement age from 62 to 64. Some 12,000 police officers have been mobilized across the country ahead of the demonstrations, including 5000 in Paris. And despite the growing unrest, President Manuel Macron on Wednesday defended the new law as necessary to fix the country's ailing pension system.

But public outrage over the changes has led to snarled traffic close schools and tons of rotting garbage on the streets.

Now joining us from Los Angeles is CNN European Affairs commentator, Dominic Thomas. Dominic, thank you again for joining us this hour in CNN. Macron is standing firm but this is not a done deal. So, what has to happen next for pension reform to be enacted?

DOMINIC THOMAS, CNN EUROPEAN AFFAIRS COMMENTATOR (via Skype): Well, as far as Emmanuel Macron is concerned the acid the legislation will follow its constitutional paths, will be reviewed by the (INAUDIBLE) and his hope is that by early autumn, this becomes legislation. That as we know, from just history, all the way back in 1995, one of his predecessors tried to enact such reforms.

And ultimately, the streets spoke louder than the -- than the government's will. And at the end, they ended up backing down. So, we end up here in a situation where there's a kind of similar standoff with Emmanuel Macron, absolutely determined to legislate on this particular issue, and growing voices of dissent from the opposition and from the streets and from the unions that are now mobilized in opposition.

Not just to these pension reforms, Kristie, but also to Emmanuel Macron himself.

STOUT: Yes. And the streets are speaking very loudly right now. This decision has sparked widespread outrage across France. Why did President Macron feel that this was necessary to push this through? Why is he taking the stand?

THOMAS: Yes. It's really quite remarkable when you consider how controversial and this is going -- was going to be. For him, very early on, even during his first term, this was a priority. And in many ways, it was derailed because of the focus on the global COVID pandemic. And then subsequently the situation between Ukraine and the Russian Federation. So, here he is very early on in his second term, determined to get this legislation through.

For him, France is a country that does not compete on the global stage, when it comes to the retirement ages. It has one of the lowest ages of retirement and people are living longer. And it's costing more and more for the state to implement and these particular measures. The opposition see this very differently. They see it as a kind of competing social systems model. But they also think that there are other ways through taxation and so on, that these measures can be funded that they are not adequately equitable.

And also, that Emmanuel Macron has not adequately consulted over this issue, especially given the fact that he no longer holds a parliamentary majority here, Kristie.

STOUT: Yes. And Dominic, from here in Asia and also, as an American, I think a number of Americans would agree with this view as well. Being able to retire with a pension at age 64 is a very good deal. You know, it's very generous. So, why has the call there in France to shift the retirement age from 62 to 64 cause so much anger in France?

THOMAS: Yes. Well, I think there are a couple of ways of looking at it. I think, first of all, much of what is going on right now is not automatically to do with pension reform. As I mentioned, Emmanuel Macron claims to have a mandate that will people will argue is that in the first round of the 2022, general election, presidential election, they only had about 28 percent of the vote and that the rest then ultimately, in the second runoff stage voted against the far-right candidate Marine Le Pen rather than for him.

And then he was unable to secure a parliamentary majority. So, there's sort of opposition to the idea that he can legislate without building these coalitions. I think, then when it comes down to the sort of the social system issue, I think the government has done and an adequate job of actually explaining the specifics all these reforms. How for example they apply to people that have worked very hard jobs for many years. [02:25:06]

People who started working in a much younger age. People that have raised families or taking care of elderly or sick members of the family, for example. So, there's been a kind of marketing issue here. And it kind of way of speaking to the French people that has been problematic. But ultimately, you have a polarized political landscape. And Emmanuel Macron finding it very hard and difficult to build coalitions across party lines to get this policy through.

STOUT: Got it. And understood, this is not just about pension reform. It's about Macron, his mandate to lead the polarized political environment there. But as we saw with the gilets jaunes protests just a couple of years ago, this could quickly gain much more momentum. Dominic Thomas, always appreciate your insight. Thank you so much.

THOMAS: Thank you, Kristie.

STOUT: Now, Israeli protesters, they are about to kick off what they call the day of shutdown as they push back against proposed judicial reform. They've been protesting against it for weeks, saying that the reform will undermine Israel's democracy of the rallies will continue as Prime Minister Benjamin Netanyahu prepares to fly to London on Thursday. His coalition is facing international pressure to find the middle ground.

On Wednesday, the White House urged Israeli leaders to find a compromise as soon as possible.

You're watching CNN NEWSROOM. Still ahead, a judge is deciding whether a $1.6 billion defamation lawsuit against Fox News will go to trial. And some of the top brass at Fox may be compelled to testify.

Plus, we've got the latest in the investigation into the shooting of two staff members at a Denver High School. That and more next.

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STOUT: Welcome back. Now, after a shooting of two faculty members at a Denver High School on Wednesday. Authorities have found a male body less than a mile from a vehicle connected to the suspect, they have not yet identified the body. A police says 17-year-old student Austin Lyle, shot two school employees. Both victims are in hospital where officials say one is listed in critical condition, the other in serious but stable condition.

Lawyers for Dominion voting systems and the right-wing Fox News Channel are waiting to find out if Dominions $1.6 billion defamation lawsuit will go to trial. Dominion claims that Fox personalities and executives knowingly promoted false claims about the company's voting machines rigging the 2020 U.S. presidential election. Of the judge signaled on Wednesday that he is interested to hear more about the duty that Fox executives like Rupert Murdoch might have to stop, known liars from going on air. Our CNN's Jessica Schneider has the latest from Washington.

JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT: A ruling in this high stakes defamation case could come at any time from this Delaware judge. He's state court judge Eric Davis, he was appointed by a Democratic governor in 2010. He's deciding whether the facts that have been presented so far, both in his courtroom and in court filings. Whether those facts are sufficient for him to rule in favor of either Dominion or Fox News without this case, going to trial. Now, that is a very high bar and the likelihood here is that this case will go to trial, unless Fox and dominion settle before then.

And then a hearing on Wednesday morning. There were also questions about how a trial would proceed. Judge Davis actually said, he could possibly compel Fox corporation chairman Rupert Murdoch to testify at any trial. And that's because as Judge Davis put it, Rupert Murdoch has a special role at Fox Corporation, and he was aware of the guests appearing on Fox News is air. In fact, Rupert Murdoch even acknowledged in his deposition that he could have stopped Trump's legal team from appearing on the network's air.

Fox News attorneys that were saying that any compelled appearance by Rupert Murdoch on the witness stand, would just create an undue burden also a media circus. And in response to that, the judge did say that he'd consider bringing in high profile witnesses via zoom or some other teleconferencing platform. But the stakes in this case are very high. Dominion is demanding $1.6 billion in this defamation case, even though Fox News is saying that those numbers are inflated.

But Dominion at the core of this is arguing that since Fox News executives and its hosts knew that they were putting on guests who were promoting false election fraud theories. They say Fox should be held accountable here and liable for defamation. Fox, on the other hand, is arguing that they are fully protected under the First Amendment. So, no matter which way you slice it, this is a high stakes case, and we'll see if it goes to trial. Jessica Schneider, CNN, Washington.

STOUT: You're watching CNN NEWSROOM and still become residential buildings in Ukraine hit once again by a Russian missile strike. We'll hear from those who survived the attack in Zaporizhzhia.

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STOUT: Welcome back. Now, a senior Ukrainian official is accusing Russia of a deliberate strike on civilians, after missiles slammed into residential buildings in Zaporizhzhia. This disturbing moment was caught on camera and Ukraine says that this was one of six missiles fired at the city on Wednesday. At least one person was killed, dozens injured in those attacks, while eight others were killed and strikes on the Kyiv region. Ukraine's president is promising response to what he calls Russian savagery. CNN's David McKenzie has the latest.

(BEGIN VIDEO CLIP) DAVID MCKENZIE, CNN SENIOR INTERNATIONAL CORRESPONDENT (voiceover): Terror in broad daylight. Russian missiles striking an apartment block in Zaporizhzhia, Ukraine. Far from the frontline forces, lives shattered in an instant. I was at work and my child was alone at homes, Fetlanta (PH) says. She lived on the sixth floor with her son. He knows how to walk in the hallway during an air raid. She says, it may have saved his life. This is what just happened to my home says this man look. This is where I was sitting with my mom just now. But even in the aftermath fear is never far away in Ukraine.

Ukrainian officials say Russian forces fired at least six missiles at the city on Wednesday. Search and rescue teams scrambled to find people trapped under the rubble. Young children among the injured. President Zelenskyy called it savagery from a terrorist state. And overnight a swarm of to heard drones sent sirens blaring across Kyiv. Air defenses brought some down, but at least seven were killed near the Capitol, say authorities. Russia has repeatedly denied it's targeting civilians.

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And in Moscow, Vladimir Putin more concerned about the highly symbolic and choreographed visit of Chinese President Xi Jinping, who departed on Wednesday. Talks a very public show of affection between the two leaders. Xi called Putin, his dear friend. On Wednesday, President Zelenskyy travelled close to the frontlines in the east to visit injured soldiers and rally his troops and remind them what they were fighting for. It's your historical mission to protect our land and return everything belonging to Ukraine for our children. He told them David McKenzie, CNN, Odesa.

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STOUT: I'm Kristie Lu Stout and for international viewers, "WORLD SPORTS" is next. And for those of you in North America, I'll be back with more CNN NEWSROOM in just a moment.

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