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U.S. Markets Open Lower Amid Fears; U.S. Retaliates After Drone Kills Contractor; Aynne Kokas is Interviewed about TikTok; March Madness Update. Aired 9:30-10a ET

Aired March 24, 2023 - 09:30   ET

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

[09:30:00]

CAPT. JAMES KEARNEY, PHILADELPHIA POLICE: With no -- no care in the world, it seems to me. It's very concerning. It's disappointing. And these people need to be held accountable.

(END VIDEO CLIP)

BRYNN GINGRAS, CNN CORRESPONDENT: And, of course, they're still looking for those people to hold them accountable.

A gun was recovered. We're told that the serial number, though, was completely taken off, obliterated, as they said. And so the search continues, John.

But, of course, now, in Philadelphia, there is a mayoral primary coming up. We know gun issues, such a major topic all across this country. And certainly this video just brings that top of mind.

JOHN BERMAN, CNN ANCHOR: Brynn Gingras, thank you. Please keep us posted.

GINGRAS: Yes.

BERMAN: So, just moments ago, U.S. markets opened, and they did open lower as a European bank, another one, comes under the spotlight. Stocks at Germany's Deutsche Bank fell sharply today after a surge in the cost to ensure the bank against defaulting. Those fears for the European banking sector of being felt here in the U.S.

Guess who's here? CNN chief business correspondent Christine Romans.

What's going on?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Well, just because I'm here doesn't mean bad things happen all the time.

BERMAN: It kind of does, though.

ROMANS: This -- look, this, I think, is Deutsche Bank, a big German bank, a big solid -- solid German bank, the cost to insure it against default -- credit default swap has gotten a little more expensive, right? And so that's sparking some concerns in the banking sector. There was also a big analyst downgrade of the entire sector to neutral from overweight, which is, you know, wall street jargon for, don't have a lot of these stocks in your portfolio. And so investors are following suit. So we still have that -- those jitters in the banking system about changes that are happening because of a year of interest rate hikes, quite frankly, that -- that sort of change the -- change the status quo for a lot of these banks and investors get nervous about that.

So, this is more about investors being nervous in these banks, not about customers in these banks being nervous, John.

BERMAN: There's this cycle that seems to be going on. And we had the big board up there a minute ago. People can see the markets opening down about 100 -- 130 points.

There's this cycle that's happening where the banks are having these issues. People are appropriately concerned, are taking measures to deal with the fact that the banks are having these issues.

ROMANS: Right.

BERMAN: Then investors get nervous because people are taking measures to protect themselves against the issues of bank (ph) -- you're having -- I mean it's just this cycle. How does it stop?

ROMANS: That's exactly right. And you had Ken Rogoff on this program yesterday, who made a very good point, that some of that -- that tightening in the financial sector is actually going to help the Fed do its job, but it's in a disorderly way, and it doesn't affect everybody the same. It doesn't affect all the banks the same, all the customers the same. So we're in kind of a tumultuous period right now.

I keep saying that the Fed's decision is in our rear view mirror, but I'm looking out the windshield and it's just as cloudy as it was last week. We still don't know if inflation is really under control. We don't know how this medicine in the economy has worked overall. We think the banking system is solid because all these central banks have basically vowed that they're going to make sure that things are OK here. Investors, though, are -- are a little skittish.

I will say, though, I -- watching the -- the interest rate gauges, next week we're going to get the PCE. That's the Fed's preferred, you know, inflation gauge. And we'll see if that's cooled off a little bit. But mortgage rates have cooled off. Second week in a row that mortgage rates now -- a 30 year fixed, 6.42 percent, which I think is -- is sort of telling. And we're heading into the spring buying season. And so there's some actual optimism maybe that mortgage rates could track with inflation expectations. And if we get inflation coming down, that could put -- give some relief to (INAUDIBLE).

BERMAN: You're just trying to slip in that optimism at the end because you don't want to be known as someone who only brings bad news.

ROMANS: Well, do you see those bank stocks? I mean, it's going to be a tough day -- a tough morning, at least. All the bank stocks are going to -- even the big, well capitalized banks. It's just a confidence thing here.

BERMAN: Is there something you're looking for in terms of the banks that would make people feel comfortable? Is there some sign that would alert people like, hey, it really is.

ROMANS: So, the thing is -- is that confidence is so important in the American banking system. And I think that what we've been hearing from regulators and from, for example, the Treasury secretary. Also, the longer we go without a bank failure, I think is kind of good. Stability will breed stability. And I think no news would be good news on that front. And then time can heal that -- time can heal those wounds.

I do want to say though, this is a problem for investors, not for bank customers.

BERMAN: It is really important to make that distinction.

Christine Romans, great to see you.

ROMANS: You're welcome. Have a good weekend.

BERMAN: Happy Friday.

So, TikTok's CEO under fire from lawmakers on Capitol Hill over privacy concerns and the apps ties to China. Why the chair of the committee that led the hearing says that they exposed TikTok's lies.

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[09:38:38]

BERMAN: We're getting some new information in after a us contractor was killed in a drone strike in Syria overnight. The Pentagon believes it was an Iranian affiliated drone that hit a facility housing U.S. personnel. Five U.S. service members were injured, and an additional U.S. contractor was wounded. We are learning that all of the U.S. service members injured are in stable condition. So that's good news.

President Biden authorized what the U.S. calls a precision airstrike in response against facilities believed to be used by the group that they think is responsible for the attack.

CNN's Nic Robertson is with me now.

And, Nic, I was surprised to learn there have been 78 drone strikes since 2021 from these Iranian proxy groups. That's an awful lot. But this one was fatal and deadly and elicited a response, creating a pretty delicate situation.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, it does. I mean consider the delicate situation in this way, and there are many ways to consider it, of course. But one part of the puzzle at the moment is the United States trying to pull off a deal to get some American citizens that have been illegally held in Iranian jails for a number of years now, trying to get them out. And that does appear to be getting reasonably close to fruition. The Iranians seem to want to make it happen. Just a couple of weeks ago they tweeted out that actually the deal had been done. The White House said, no, that's not the case. But point being, that's going on in the background.

[09:40:03]

The Iranians want something out of this. President Biden definitely wants something out of it as well. No one's going to compromise their position. But, of course, an escalation around this attack, and there isn't an escalation at the moment, but if there was, that could put that sort of deal in jeopardy. And, of course, that would be worrying from their family members.

But, of course, you have as well, you know, Iran trying to maintain its influence in Syria where the bigger diplomatic picture is changing. President Assad has sort of been welcomed by some of his Arab neighbors. There's a rapprochement (ph) that's going on. That came out in part of the -- of the earthquake in Syria recently. The support that was provided. So that diplomatic door is opening. Could be the Iranians are worried that they see their Arab neighbors, long unfriendlies towards them, returning back to Syria and squeezing them out of space. There are so many potential dynamics here. I don't think you can put one finger on any specific one. But all of that is in the background here. But the risk of escalation, that's real.

BERMAN: Again, the Iranian proxy groups have been doing this for some time. Is there anything that the United States do -- could do, or maybe would be willing to do is the better question, to stop it?

ROBERTSON: I think there's always that concern with Iran, that as you push them in one place, than they up something somewhere else. They have a lot of proxies. Everyone at the moment is talking about how their proxies, the Houthis in Yemen, have dialed back their violence, sending missiles into Saudi Arabia. If you press down on the Iranians in Syria, do they get their proxies there to start up? Do their proxies in Hezbollah -- in -- that proxies -- Hezbollah in Lebanon start up and create increased tensions with Israel. There's anyway that Iran can ramp up.

But, primarily, that beef, if you will, their issue with the United States is they want them out of the region and will continue through proxies to try to attack, to try to diminish the will to stay. But the U.S. troops in Syria are there predominantly to tackle ISIS. And ISIS, until recently, has been more deadly against U.S. forces in Syria than the Iranians have. Again, it's a very, very complex situation. But to your point, 78 attacks since 2021. That's an average of one almost every 10 days. That's significant. And it can't be overlooked. And I think that's very clearly why there was such a fast response, not just that the president said, yes, do something quickly, that there was a target list ready to go to.

You've seen in the video those sort secondary explosions. And in the past when there have been response strikes by the United States, they've targeted ammunition dumps. We don't know what was hit this time, but it looked like it could have been.

BERMAN: It's a very good point. Apparently a target list at the ready there.

Nic Robertson, thank you so much for helping us understand this.

This morning, China says it has never and will never ask Chinese companies to turn over data on foreign users. The remarks comes -- the remarks come a day after House lawmakers grilled TikTok's CEO Shou Chew for more than five hours, who insisted China does not control TikTok through its Chinese parent company, ByteDance.

(BEGIN VIDEO CLIP)

SHOU CHEW, CEO, TIKTOK: I have seen no evidence that the Chinese government has access to that data. They have never asked us. We have not provided. I have asked that question.

UNIDENTIFIED FEMALE: But, you know what, I find that -- I find that actually preposterous.

REP. BOB LATTA (R-OH): Any ByteDance employees in China, including engineers, currently have access to U.S. data.

CHEW: Congressman, I would appreciate this -- this is a complex topic. Today, all data is stored by default (ph) --

LATTA: Yes. -- yes or no? It's not that complex. Yes or no, do they have access to user data?

CHEW: We have -- after Project Texas is done, the answer is no.

REP. JAY OBERNOITE (R-CA): I don't believe that it is technically possible to accomplish what TikTok says it will accomplish through Project Texas.

(END VIDEO CLIP)

BERMAN: All right, with us now is Aynne Kokas, a University of Virginia professor and author of "Trafficking Data: How China is winning the Battle for Digital Sovereignty."

Professor, thanks so much for being with us.

Members of Congress were not willing to take the TikTok CEO's word for it when he said, China can't get this data. There is reason for these members of Congress to be skeptical of that word. Why?

AYNNE KOKAS, PROFESSOR OF MEDIA STUDIES, UNIVERSITY OF VIRGINIA: So, there are two reasons. One has to do with China's expansive framework for digital sovereignty. So, things like the national data security law and the Hong Kong national security law, where the Chinese government claims control over data globally.

There's also the weakness of U.S. data security and data protections, which means that members of Congress and tech CEOs can't really be sure -- tech CEOs can't really -- can really be very flexible in terms of what actually they share with members of Congress given our current legal environment. [09:45:05]

BERMAN: Yes, I mean, flat out, though, for these members of Congress, hard to just take his word for it.

On the other hand, though, Professor, is there anything that he could have said to mollify members of Congress, do you think?

KOKAS: You know, I think it's really tough in this particular moment where we have China expanding its digital sovereignty, its digital oversight globally, and we also have a really exploitative environment in the U.S. where tech companies can basically gather almost whatever they want and use it in a lot of different ways that they might want to. So the -- part of the problem is that Congress has an act to protect data -- user data in the U.S.

BERMAN: Is TikTok -- granted, you know, TikTok is owned by ByteDance, which does have, you know, or the Chinese government does have access to different parts of ByteDance. That aside, if you can place it aside, is TikTok materially different from other social media companies in terms of what they can get from you, as the consumer?

KOKAS: So, I don't think that we really can place that ownership question aside, the fact that TikTok -- that TikTok's parent company is ByteDance.

That being said, I do think it is a -- it is an important point to note that a wide range of U.S. tech companies can gather data about us that we would not want them to be gathering if we -- if we really had a full, in-depth understanding of it.

The other thing is, there's a system called data brokering, which means that those companies can also sell that data to other companies that can then share it. So, it's really a complicated dynamic here in the U.S., and a lot of it has to do with the fact that we don't have the types of protections that people in Europe and Australia and Japan and Korea have over our data.

BERMAN: And I do appreciate you making the point that you really just can't put the fact that ByteDance owns TikTok aside there because that is -- is a major issue.

So, what do you say to the 150 million TikTok users here in the U.S. who just like their puppy videos and are like why -- why are they trying to ban this? Why are they trying to keep me from seeing my, you know, dancing puppies?

KOKAS: I mean it's really tough. So, at the University of Virginia I teach a class called the data ethics of TikTok, where we talk about this. And even when my students understand the geopolitical implications, their argument is, I can't socialize if I don't have access to my TikTok account. So, I think that this is why it needs to just not be an issue of closing down one company, but also looking at the larger U.S. data security environment.

Now, that being said, politically it's really tough to move forward with things like data minimization laws and data privacy laws in the U.S. So, one of the reasons why I think there might be a focus on TikTok is it's something where there's bipartisan consensus and it may be more feasible moving forward.

BERMAN: It --

KOKAS: That being said, it wouldn't be easy.

BERMAN: I was going to say, how easy would it be to ban TikTok?

KOKAS: No. So, there are a lot of technical challenges here and a lot of legal challenges. So, we saw when there was this effort to ban what -- WeChat earlier there were First Amendment challenges. I would anticipate that we would see a lot of those.

We also have the question of how technically that would work. So, does it require, for example, cooperation from Apple and their app store. Apple, which relies on China for its digital supply chains, for major markets. And so it's really difficult to see how a ban would move forward, even if it's politically feasible to get all members on board to vote for it.

BERMAN: Professor Aynne Kokas, I'm signing up for your class, if I can take it remotely. It sounds fascinating and it's right on point. Thank you so much for being with us.

KOKAS: Thank you so much. Take care.

BERMAN: A stunning finish in the Sweet Sixteen. Two powerhouses fight down to the final seconds to try to make it to the Elite Eight.

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[09:52:47]

BERMAN: And then there were 12. Gonzaga survives a wild finish against UCLA to advance in the NCAA tournament. Andy Scholes now with the story.

A lot going on last night, Andy.

ANDY SCHOLES, CNN SPORTS ANCHOR: Oh, what a night it was, John, and what a game we had in Las Vegas. You know, the second half, it was certainly a wild ride.

Gonzaga was actually down 13 at halftime, but they came all the way back. Actually had an eight point lead over UCLA with a minute to go. But the Bruins would go on a frantic 10-1 run, capped off by Amari Bailey hitting a three to give them the lead with 13 seconds to go. But then Zag's coach Mark Few, he dialed up what he calls the J-right (ph) play, the same one Villanova used to win it all a few years ago. And Julian Strawther, the Vegas native, nailing the three. UCLA had one last chance, but they turned the ball over. Zags winning a thriller. The final, 79-76.

(BEGIN VIDEO CLIP) JULIAN STRAWTHER, GONZAGA GUARD: I mean, as soon as it came off, it looked like it was online. And, I mean --

UNIDENTIFIED MALE: Butter. Saved my ass (ph).

STRAWTHER: Yes. I mean like coach said, we work on that play literally, you know, in practice all the time. And I (INAUDIBLE) it in practice. And you all maybe joking around sometimes, but -- but here we are, and it matters today.

UNIDENTIFIED MALE: I am the number one Julian Strawther fan in the planet. No one's a bigger fan of him than me, man.

(END VIDEO CLIP)

SCHOLES: All right, well, Kansas State/Michigan State also playing a thriller at Madison Square Garden. And it was another legendary performance from the Wildcats point guard Markquis Nowell. The 5'8" Harlem native, he scored 20 points to go along with an NCAA tournament record 19 assists. And no assist was bigger than this one to Keyontae Johnson in overtime when he found him for the reverse slam.

And take another look. Nowell was actually going back and forth with coach Jerome Tang right before throwing that pass in the closing seconds. Nowell also came up big. He got a steal, and he took it the other way for a layup to basically put the game away. Kansas State would win 98-93 to advance to the Elite Eight.

And here was Tang on his point guard's performance after the game.

(BEGIN VIDEO CLIP)

JEROME TANG, KANSAS STATE HEAD COACH: You know, where we was at, it was a place of fire. But we practice in a place of fire all the time. So, he was ready for it. This is a bad boy right here.

[09:55:01]

That's a bad boy.

(END VIDEO CLIP)

SCHOLES: Love the intensity.

Now, Keyontae Johnson led the Wildcats with 22 points. And he continues to be just one of the best stories of the tournament. Johnson collapsed in 2020 while playing for Florida and was in a coma for three days. He was diagnosed with heart inflammation. And instead of taking a $5 million insurance payout and never playing basketball again, he transferred to KSU and now has them a win away from the Final Four.

Now, the Wildcats will face number nine seed Florida Atlantic in the Elite Eight on Saturday. The Owls playing just their second NCAA tournament, upset Tennessee 62-55 last night. FAU had never won a tournament game before this year. Now they've won three. You see their fans were excited.

The rest of the Elite Eight, it's going to be decided later today. You've got four more games on the schedule, starting with San Diego State taking on the overall number one seed, Alabama. That one tips off at 6:30 Eastern on our sister channel TBS.

And, you know, John, if your bracket's out the window right now and you need a team to root for, it's hard not to root for those Kansas State Wildcats with Keyontae Johnson and Markquis Nowell, two great stories.

BERMAN: But full disclosure, that's not who you're rooting for, is it, Andy?

SCHOLES: No. Houston Cougars all the way. We've got to take down Miami tonight.

BERMAN: All right, Andy Sholes, thank you very much.

SCHOLES: All right.

BERMAN: That pass in overtime, I've never seen anything like that at that point in the game.

SCHOLES: Pretty special. Yes.

BERMAN: That was awesome. Thanks so much, Andy.

All right, the U.S. retaliating after an Iranian affiliated drone killed a U.S. contractor and wounded U.S. troops in Syria. We have more information coming in about this developing situation ahead.

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