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Hundreds Of Migrants Missing And Feared Drowned In Shipwreck Off Greek Coast; U.S., U.K. Pledge New Military Aid To Ukraine; Former President Pleads Not Guilty To 37 Federal Charge; Top U.S. Diplomat To Visit Beijing This Weekend; Italy Bids Farewell To Former Prime Minister; Fed Holds Interest Rates Steady. Aired 2-2:45a ET

Aired June 15, 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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[02:00:19]

ANNA COREN, CNN CORRESPONDENT: Hello and welcome to our viewers joining us from all around the world. I'm Anna Coren live from Hong Kong. Just ahead on CNN NEWSROOM. Tragedy at sea a boat packed with migrants. Six off the coast of Greece, hundreds are feared dead. Plus.

(BEGIN VIDEO CLIP)

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: So we have to evacuate to this shelter now because apparently the guys fear that there could be aviation bombs coming in fairly soon.

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COREN: CNN reporting from the front lines as Ukraine claims games. A crew forced to take cover as Russian plane drops bombs nearby.

Plus, the U.S. Federal Reserve hits pause but signals it's not done raising rates this year.

Well, Greece has declared three days of national mourning for the unknown number of migrants who died early Wednesday after their boat sank off the Greek Coast. Just over 100 people have been rescued so far with search operations still underway. At least 78 people are confirmed dead. But with hundreds more still missing and feared drowned. The death toll is expected to rise significantly.

The Greek Coast Guard shared these aerial photos of the overcrowded vessel on Tuesday, anywhere from 400 to 750 people were believe to be on board.

Well journalist, Elinda Labropoulou joins us now from Kalamata Greece. And Elinda, tell us the latest on the search and rescue effort.

ELINDA LABROPOULOU, JOURNALIST: We know that the rescue -- search and rescue operations have resumed early this morning. But we do not have a new update of any kind. As you understand, we're now about 30 hours in in an accident that took place 47 nautical miles from shore. And I was just speaking to the Coast Guard now. And we're starting to see the possible first reasons as to why this occurred.

They are saying that there was a shift in the weight on the boat. We have seen images of this boat packed with people. We don't know if it was mechanical damage that initially caused people to panic and therefore move to system size to size and therefore this is what led to the boat capsizing and then eventually sinking. What we do know is that there were hundreds of people on board and at the moment we're looking at 104 who have been rescued so far.

Most of them are right behind me in this warehouse. They're being sheltered here. We saw it late last night. And from what I understand also this morning, a number of body bags being carried from the port to a new place where they're going to be identified. DNA identification checks are going to take place. And authorities here are telling us that from now on obviously, the time is crucial.

The helicopters have not been able to find any more people or bodies at sea. We understand that the relatives of some of the people are here. And also, from some of the survivors we're hearing accounts that there were many more people on board including women and children. And it is interesting, Anna, that so far 104 people who have been rescued, have all been male, there have not been any women or children among those. Anna.

COREN: Elinda, I believe that the area where the boat sank is 13,000 feet deep, almost 4000 meters, which means the refuge and the victims will be out of reach of the divers. What are you hearing?

LABROPOULOU: Yes. We're hearing the exact same thing, it's going to be extremely difficult for a (INAUDIBLE) to reach at that depth. It's one of the deepest parts of the Mediterranean. And at the moment, we do not have any information as to how authorities are likely to be able to handle this. We have asked if there is any plan for further operations. Because what we do also understand, Anna, is that there is a good chance that many of those who were on board were actually on the lower decks.

And this is likely to include the women and children that we've been told were on board. So, there is a chance that we'll never be able to really understand or know the number of dead on this shipwreck, Anna.

COREN: Elinda, I understand that the Greek Coast Guard was aware of this vessel before it capsized. We know that these migrants were heading from Libya to Italy. What more can you tell us about what led to this tragedy?

[02:05:00]

LABROPOULOU: Well, this is a very common route and one that's being used increasingly. So a lot of the other ships are now bypassing Greece, trying to bypass the Turkey-Greece route which used to be very popular around 2015, 2016 migrant crisis. And instead, are trying to get from Libya directly to Italy. It is not yet clear why this boat took so long and how it managed to get so much out of the way and be so much closer to Greece than Italy. That is something that we don't know. What we do know is that the Greek authorities were aware of this boat, they did approach, they did ask if they needed assistance, and they got negative response simply because, you know, the boat wanted people on board wanted to get to Italy. This was their chance to reach Europe. So they refused any kind of help until much later on, Anna.

COREN: It's absolutely tragic. Elinda Labropoulou, we certainly appreciate your reporting from Kalamata. Many thanks. Well, the Wall Street Journal has obtained remarkable video showing what appears to be a Russian soldier on the battlefield of Bakhmut surrendering to a Ukrainian drone. You can see the soldier running in the trenches and dodging mortar fire. CNN spoke to the drone commander. He says the Russian soldier threw his weapon aside, raised his hands and use hand signals to say he would not fight.

The drone then dropped a note telling him to follow if he wanted to surrender. The Wall Street Journal interviewed the soldier in the presence of a Ukrainian guard. CNN doesn't know whether he was speaking under duress. And we haven't seen the raw video. That video was edited and produced with music added.

Well, now Russian forces are putting up a fierce fight in the early stages of Ukraine's counter offensive. Ukrainian officials say they're taking both offensive and defensive positions, as Russia uses shells, airstrikes and mines to try to stop their progress. Despite those difficulties on the battlefield, Ukraine says its troops are advancing slowly but surely, in the east and south.

And this video exclusive to Reuters News Agency shows a village in the Donetsk region. Newly liberated from Russian forces. Every building is damaged that all the Russians are gone. As we see this visual evidence of Ukraine's counteroffensive progress, NATO's Secretary General warns it's still early days.

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JENS STOLTENBERG, NATO SECRETARY GENERAL: We meet us Ukraine is conducting a major counteroffensive. It is still early days and we do not know if this will be a turning point of the war. But we see that the Ukrainians are making advances and liberating more land.

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COREN: Well, Fred Pleitgen brings us this report from the frontlines.

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PLEITGEN (voiceover): Ukrainian forces laying into Russian troops holed up Blagodetne (ph) in southern Ukraine. This video shows what was the Russians' final stand here, the brigade said, but Vladimir Putin's army continues to put up stiff resistance, a drone pilot tells me.

They are good grunts, he says. Sometimes it is very difficult to knock them out of those positions.

But the Ukrainians have been making significant gains here, after launching large scale offensive operations across southern Ukraine. Heavy combat now nearly constant.

This is the area of Ukraine where the heaviest fighting is currently taking place. And you can see what it has done to a lot of the buildings in the cities and villages around this area. And that fighting is set to get even worse.

We're with the 68th Jaeger Brigade. The soldiers confident and grateful for U.S.-supplied vehicles, saying it's not only the firepower, but also the protection that matters.

A lot of times it saved my life, he says. It saved our lives every day from shrapnel, shelling and bullets.

But some vehicles have already been lost, and the Russians continue to fire back with frequent artillery barrages, but also using jets to try to hit Ukrainian forward positions. We had to take cover as a plane dropped bombs nearby.

Not the only time we had to scramble.

So we have to evacuate to the shelter now because apparently, the guys fear there could be aviation bombs coming in fairly soon. You can see the situation here is still very kinetic. There's a lot of shelling still going on.

[02:10:06]

Still, the deputy brigade commander says his soldiers are just getting started.

Our counterattack will definitely be successful, he says. We believe in victory, we are moving towards our goal, we are advancing. On this part of the front line, the Ukrainians believe they have the gear, the manpower, and the determination to advance far into Russian-held territory.

Fred Pleitgen, Velyka Novosilka, Ukraine.

(END VIDEOTAPE)

COREN: Malcolm Davis is a senior analyst with the Australian Strategic Policy Institute. He joins us now from Canberra in Australia. Malcolm, great to have you with us. The Ukrainian counteroffensive just weeks in and so far, it's pretty slow going from what we can ascertain. What is your assessment so far?

MALCOLM DAVIS, SENIOR ANALYST, AUSTRALIAN STRATEGIC POLICY INSTITUTE: Yes. Look, I think that's correct. This is early stages of this counteroffensive what you're seeing essentially are probing operations to try and find vulnerabilities and weak points in the Russian defenses. And these probing operations that are occurring in the South, in Kherson and Zaporizhzhia and in the east, and particularly around Don -- the Donbass region, essentially near Bakhmut.

And the goal of the Ukrainians is to firstly, identify those weak points. And then once they've identified those weak points to essentially break through and then send follow on forces him to exploit that breakthrough. We're very much in the early stages of this counteroffensive. It's not going to be rapid or over very soon.

COREN: I was going to say, so, the Ukrainians, they're looking for the Russian weak points, but they're yet to break through any of Russia's defensive lines. Is that to be expected?

DAVIS: I think so because the Russians have had a number of months now to prepare very solid defenses. There's three basic lines of defenses. Ukrainians are just encountering that first of three lines, the more serious defensive lines are further back. And Ukrainians haven't encountered those yet. And from what I'm reading, in terms of expertise and analysis online, that second and third line is very tough indeed.

So I think that what you will see is these continuing operations, trying to find those weak points. Once they've identified a weak point, they'll concentrate force and tried to break through. The risk, of course, is then that Russians can direct their firepower against that concentrated force and then cause greater casualties and greater losses. But the Ukrainians have to do this. This is the nature of war.

And the west just has to support Ukraine and continuing to provide them with weapons, even as the Ukrainians take losses in coming weeks and months.

COREN: Yes. I want to speak to you more about that. But firstly, we heard from the Russian President Vladimir Putin, earlier this week, speaking to war correspondents in Russia admitting that Russia was in fact lacking some equipment. Was that telling to you?

DAVIS: I think it was, and I think that, you know, everyone can see the flaws and the failings of the Russian military. And it's been painfully obvious since February of last year that the Russian military is not the predatory beast that they -- that we thought they were in terms of being a skilled and efficient and well-armed combat forces. I think the failings are very much in the leadership. And the failings are very much in the logistics.

And I think that Putin identifying that probably is thinking in terms of how to stretch this war out and how to address those failings. So he'll be counting on Russian forces to maintain a defensive line to try and essentially defeat the Ukrainian counter offensive, put in place a frozen conflict and then allow the Russians to rebuild their forces so that they can launch the war again, later on.

DAVIS: Malcolm, many experts say that this will be a battle of attrition. The concern, obviously, is that the West and NATO could lose its nerve when Ukraine begins sustaining, you know, real losses, troops and equipment. Do you share those concerns or do you believe that the West is fully committed, as it claims to be? DAVIS: Well, look, I think the current political leadership of the West is fully committed. That's very clear. When you listen to President Biden, when you listen to the NATO Secretary General and other key leaders, it's a question of how does that political leadership change in coming months? If we have a new administration in the White House, for example, then all bets are off.

And I think that the mounting -- potential by mounting losses on the part of Ukraine won't help that. But we simply have to do keep our nerve for the simple reason that if Ukraine fails, and we either end up in a frozen conflict or some sort of have negotiated settlement that leads to Russia hanging on to its territories that it's a next. Then it sows the seeds for the next war which will be much larger and much more dangerous, not only in Ukraine, but also potentially against NATO directly.

[02:15:14]

So we simply have to ensure that the Ukrainians win, and they win decisively. And that means that NATO, the United States, the E.U., all have to sustain that military assistance to Ukraine to ensure that they have -- they can remain victorious and they can continue to advance in these counter offensives.

COREN: And finally, when do you believe we will be able to gauge the success of Ukraine's counteroffensive?

DAVIS: I think this is going to go throughout this year, into probably the autumn period of -- autumn period of 2023. If the Ukrainians can break through in certain key areas in the south around Zaporizhzhia and Kherson, then there'll be well placed in the spring and summer of 2024 to be able to move against Crimea. And that's absolutely vital. They have to take every inch of their territory back, including Crimea because if they don't, they leave the Russians poised to reinitiate the conflict down the track.

So the taste of real victory I think will happen later this year if the Ukrainians can break through and if they can isolate Crimea, at the same time as holding off Russian forces in the Donbas then I think we're in striking distance of victory in 2024.

COREN: Malcolm Davis, great to get your analysis. Many thanks.

DAVIS: Thank you very much.

COREN: Well, the Trump campaign has been fundraising off the former U.S. president's indictment, arrest and arraignment saying it's raked in $7 million since last week. Well, meanwhile, the U.S. Attorney General is not weighing in on the documents case itself, but rather on the man leading it who Trump called a thug. CNN's Paul Reid has the story.

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MERRUCK GARLAND, UNITED STATES ATTORNEY GENERAL: I'll take questions.

PAULA REID, CNN SENIOR LEGAL AFFAIRS CORRESPONDENT (voiceover): Speaking for the first time since former President Trump was indicted.

GARLAND: Mr. Smith is a veteran career prosecutor.

REID (voiceover): Tonight, Attorney General Merrick Garland standing by Special Counsel Jack Smith, who is prosecuting former President Trump and addressing fears of a violent response from protesters.

GARLAND: You live in a democracy. These kinds of matters are adjudicated through the judicial system. The Justice Department will be vigilant to ensure that there are no threats of violence or actual violence.

REID (voiceover): Demonstrations Tuesday outside the Miami federal courthouse where Trump was arraigned were largely peaceful.

DONALD TRUMP, FORMER PRESIDENT OF THE UNITED STATES: I did everything right and they indicted me.

REID (voiceover): Trump gearing up for the legal and political fight of his life as the first former U.S. president to face federal criminal charges. The result of a large-scale Justice Department investigation into his handling of national security secrets after leaving office.

TRUMP: Many people have asked me why I had these boxes. Why did you want them?

REID (voiceover): Trump speaking to supporters at a fundraiser held at his New Jersey Golf Club the same day he made his first appearance in federal court telling them how the FBI ended up recovering hundreds of classified documents from his Mar Lago home last summer.

TRUMP: These boxes were containing all types of personal belongings. Many, many things. Shirts and shoes. I hadn't had a chance to go through all the boxes. It's a long tedious job, which I was prepared to do, but I have a very busy life.

TIM PARLATORE, FORMER TRUMP ATTORNEY: Don't talk about the case in public. Let your lawyer do all the talking for you.

REID (voiceover): Attorney Tim Parlatore who up until a few weeks ago was representing Trump in this matter, says ideally, Trump would stop talking about the case in public altogether.

TRUMP: Thank you very much.

REID: In court Tuesday, Trump was silent. His attorney Todd Blanche, entering a not guilty plea on his behalf. During his nearly hour-long arraignment, Trump signed his bond agreement and then judge telling him not to communicate with his codefendant and personal assistant Walt Nauta about the case. There were source tells CNN that the two men would continue to travel together and work side by side.

TRUMP: That young man right there. He's answered more subpoenas than any human being in the history of the world. REID: Parlatore worked alongside Nauta when he represented Trump asked if he thinks the President's assistant might make a deal to flip on his boss.

PARLATORE: Every criminal defendant has to make their own decision as to what they're willing to do, how much they're willing to risk. It's the client that has to live with the rest of their life.

REID: What's next in this case? The Justice Department will provide a full list of witnesses Trump would be barred from talking to except through counsel.

[02:20:05]

The discovery process begins and with it likely disputes over evidence to be decided by Trump-appointed judge Aileen Cannon and Walt Nauta's arraignment will be in two weeks.

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REID (on camera): Going forward, Trump's hearings will be held a little closer to one of his homes in West Palm Beach, the location of his Mar-a-Lago resort, and the case will be heard before Judge Aileen Cannon, she was appointed by Trump after he lost the election but before he left office. Now according to an analysis done by the New York Times, she has only overseen four trials, which amounted to a total of just 14 trial days.

Special Counsel says the Trump case is expected to last 21 days.

Paula Reid CNN, Washington.

COREN: Coming up. A joyous day turned tragic after a boat carrying a wedding party capsized in Nigeria. Plus, a slow-moving cyclone is trudging towards millions of people in Pakistan and Northwest India. And it's expected to inundate the region with heavy rain and flooding the storm's path and the forecast is next.

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COREN: New video out of the U.S. state of Alabama shows ominous storm clouds on Wednesday. According to the U.S. storm prediction center there were more than 300 Storm reports across the south, including at least 10 tornadoes three of those in Alabama, including one near where this video was taken. At one point on Wednesday, more than four million people were under tornado watches in the southeastern U.S. At last report more than 150,000 homes and businesses were still without power.

Right now, millions of people across Pakistan and India are in the path of a slow-moving cyclone set to make landfall in the coming hours. More than 100,000 people across the region have evacuated not taking any chances with this storm, which has weakened a bit and now equivalent to a strong Atlantic tropical storm.

CNN's Chad Myers has the latest forecast. CHAD MYERS, CNN METEOROLOGIST: Seems like we've been talking about this storm for a week. Tropical Storm Biparjoy barely hanging on to its cyclone category here. A long and winding road in the water finally moving to the north but moving so very slowly. Now that's a good thing in the water. And especially because there's so much dry air to the north that it's not getting any stronger.

That slow motion, that slow movement will be a bad thing when it comes on shore and makes very heavy rainfall. And I do believe that that's probably the biggest threat with this will be that inland freshwater flash flooding, rainfall flash flooding. We're going to see tremendous amounts of rain due to the slow nature of the storm. Even 36 hours it's barely onshore maybe by 100 kilometers or 60 miles on shore. So still raining very, very, very heavily.

[02:25:00]

Yes, there'll be some wind but that's not the main threat. The main threat with this will be a little bit of surge, two to three meters along the immediate coast but then as it gets inland all of this will rain out. The storm is just going to sit or the same place for hours and hours and hours. So certainly, eight to 12 inches of rainfall over 250 millimetres. If you do it in metric. That's where the heaviest rainfall will be. And that's where the biggest threat will be with this storm.

It's been a slow mover and it continues to be a slow mover. The good news is there was enough dry air to the north to make this not a big storm.

COREN: More than 100 people are dead in Nigeria after a boat carrying a wedding party capsized on one day. Almost 150 people were rescued. And police say they will be reunited with their families once they've recovered from the trauma of the accident.

CNN's Stephanie Busari has the details.

STEPHANIE BUSARI, CNN SENIOR AFRICA EDITOR: Scenes of celebration turned to tragedy as more than 100 people died in a boating accident in the early hours of Monday after a wedding party in north central Nigeria. Police say 106 of around 250 passengers drowned when the boat capsized on a river Niger. It was Africa's largest river. 144 passengers were rescued and are receiving treatment, authorities said.

A local chief Abdul Gana Lukpada told CNN that the wedding guests were stranded after heavy rains, flooded the roads and guests were forced to board that overcrowded vessel. It is common for boats in these spots to carry large numbers of passengers beyond their usual capacity and life jackets are rarely worn. The accident happened between 3:00 am and 4:00 a.m. on Monday when visibility would have been poor and hit a tree trunk the chief told CNN.

He described it as "A big tragedy" and added he had lost four of his neighbors. It is unclear whether the bride and groom were among the passengers on the boat. Nigeria is at the height of the rainy season and a country's meteorological agency as warned of heavy rains that could trigger floods, and these floods are devastating to remote communities. Boat accidents are also common in this part of the country.

And last month, at least 15 people died after a boat capsized in northwestern Sokoto state. Stephanie Busari, CNN, Lagos.

COREN: Well, still ahead, U.S. Secretary of State Antony Blinken announces a long-delayed visit to China. When he's going and what he hopes to accomplish next on CNN NEWSROOM.

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[02:30:04]

COREN: America's top diplomat is heading to Beijing this weekend for a long-delayed trip to try and mend some fences. He called off a February trip when that Chinese spy balloon was found floating over the U.S. and a pair of military close encounters in the past few weeks have raised tensions even further. Well, CNN's Kristie Lu Stout joins us now here in Hong Kong. And Kristie repairing relations must be a top priority, tell us the expectations going into this trip.

KRISTIE LU STOUT, CNN CORRESPONDENT: Yes, Anna, well, expectations are low for this long-awaited high-stake visit to Beijing. Both the U.S. and China on Wednesday confirmed that the U.S. Secretary of State America's top diplomat Antony Blinken will be making a trip to China this weekend. His original trip remember that that was scheduled back in February, but it was delayed due to the Chinese spy balloon incident. Now, this upcoming trip will be the first visit by U.S. Secretary of State to China since 2019, five years ago.

And both sides also would not comment on which officials that Mr. Blinken will have an opportunity to meet while visiting China. Now, according to the U.S. State Department, when Blinken touches down he will be addressing the situation in Ukraine. He also is expected to reiterate calls for peace and stability across the Taiwan Strait. But a senior State Department Official went out of his way to manage any thinking out there and the prospects for a breakthrough.

I want you to take a look at this statement. This is what the Assistant Secretary of State Daniel Kritenbrink said earlier, he said, quote, "We're not going to Beijing with the intent of having some sort of breakthrough or transformation the way that we deal with one another. We're coming to Beijing with a realistic, confident approach and a sincere desire to manage our competition in the most responsible way possible." Now, Secretary Blinken is also expected while in China to raise the issue of the three wrongfully detained Americans in China.

And to call for appropriate military to military cooperation and communication. Out earlier, there was that testy phone call that took place on Wednesday between Blinken and his Chinese counterpart, the Chinese Foreign Minister Qin Gang. Qin Gang urged the United States to respect China's core concerns including the issue of Taiwan. According to Chinese Ministry of Foreign Affairs readout it said this in regard to the meeting, according to the ministry he said, "The United States should respect China's position on the Taiwan question, stop interfering in China's internal affairs and stop undermining China's sovereignty, security and development interests in the name of competition."

At the diplomatic rift between the U.S. and China has been deepening over a slew of issues from access to sensitive technology like A.I. and chips to trade to Taiwan, to territorial disputes, including the spy balloon the list goes on. But U.S. officials say that they hope this upcoming visit by Blinken would pave the way for more visits, including a potential visit by the U.S. Treasury Secretary Janet Yellen. Back to you, Anna.

COREN: Maybe under promise over deliver. Kristie Lu Stout, great to see you. Thank you for the update.

LU STOUT: Thank you.

COREN: Italy has said its final farewell to Silvio Berlusconi. Wednesday's funeral was an elaborate affair that attracted thousands of mourners inside and outside the Milan Cathedral. The billionaire businessman and former Prime Minister died on Monday after a series of health problems. Milan's Archbishop called Berlusconi, a man with a desire for life, a desire for love and a desire for joy. His body will reportedly be cremated in house in a mausoleum at his villa in Northern Italy. Silvio Berlusconi was 86 years old. Well, if you have a credit card or adjustable mortgage or an auto loan. We can relax at least for the next few weeks. U.S. Federal Reserve is holding interest rates just where they are. Coming up, we'll explain why.

[02:35:00]

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COREN: The U.S. Federal Reserve is taking a break from its relentless interest rate hikes at least for now. Up to 10 consecutive interest rate increases dating back to March of last year. The Central Bank said Wednesday its keeping rates steady. But it's a chairman warned more rate hikes are likely later this year as it tries to combat inflation.

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JEROME POWELL, U.S. FEDERAL RESERVE CHAIRMAN: Nearly all Committee participants expect that it will be appropriate to raise interest rates somewhat further by the end of the year. But at this meeting, considering how far and how fast we've moved, we judged it prudent to hold the target range stay, to allow the committee to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to two percent over time. The Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation and economic and financial developments.

(END VIDEO CLIP) COREN: Well, that led to a wobbly Wednesday afternoon on Wall Street as investors tried to assess what the Feds mixed remarks could mean for the economy. As you can see the markets ended the day middle changed. For more on this I'm joined by Justin Wolfers, a Professor of Economics and Public Policy at the University of Michigan. Justin, great to have you with us. It was well telegraphed that the Fed would pause interest rates. But is it the right thing to do considering Fed Chairman Jerome Powell has also indicated that further rate hikes are ahead?

JUSTIN WOLFERS, PROFESSOR, ECONOMICS & PUBLIC POLICY, UNIV. OF MICHIGAN: Well, the Feds argument and I think it's a good one is there was still a lot of concerns about the financial system. So, we know that a couple of the smaller regional banks, Silicon Valley Bank most famously toppled. And the question was whether that would cause a broader credit tightening that we might see in the economy. And so, this was a case of a rate rise delayed rather than a rate rise for gone. And, you know, on the one hand, they didn't right -- sit right on the other. It wasn't a promise they're going to do. So -- but it was a really pregnant (PH) hint that it's coming soon.

COREN: Inflation peaked last year at over nine percent. Now, it's hovering around four percent and proving sticky. The Feds target, as we know is two percent. Will Powell need to crash the economy to bring inflation under control? In your opinion?

WOLFERS: My hope and honestly, my forecast is no. We've made a lot of progress on inflation. And one way of putting this is the inflation crisis is now behind us rates of nine percent or will in the rearview mirror. The inflation problem isn't which is a reasonable reading is inflation still running at about five percent. But Chairman Powell sounded pretty confident, pretty happy today, pretty chipper, there's a lot of good news in the works on inflation. One of the really big parts of that is we know a lot about what's going on with the housing market and house prices and rents not rising at all. And they're a big part of the cost of living and so a big part of the inflation story.

COREN: But if things go south, I mean, I know you're predicting otherwise. But if they do this could coincide with the U.S. election cycle next year, which could then plan to the hands of the Republican Presidential nominee.

WOLFERS: Well, if there's a recession, it would raise the unemployment rate now would raise it somewhat from a 50-year low. So, things would go from being splendidly good on the labor market fronter, merely good. But also, if they were to crash the economy, it would reduce inflation and that's something that's been very much on voters' minds.

[02:40:11]

So, I actually saw in today's Fed forecasts, an enormous degree of optimism. In fact, they're predicting that come election day, unemployment is going to be down at 4-1/2 percent inflation at 2-1/2 percent. Interest rates are going to be falling and By Jingo, that sounds like the sort of story that Joe Biden goes to bed each night and says his prayers, hoping you'll get an economy like that. COREN: But I think we also have to remember, Justin, the Chairman of the Fed had also said that inflation was transitory. So, he was -- he was wrong on that point. But legacy is important to Jerome Powell. This is a man who comes from, you know, the private equity industry. He's worth in excess of $100 million. Inflation is the issue that will define his reign. Some economists believe that if he needs to keep rates high to tame inflation, that is what he will do. But it doesn't seem like the market understands this. Would you agree?

WOLFERS: There's a real disjunction between what the Fed is saying. And honestly, the single best way to predict what the Fed will do is, is to listen. And what the Fed is saying has been saying for a while is this tightening cycle is not over yet. What happened was Wall Street got awfully carried away with its own recession talk. The economy kept chugging along, no matter what Wall Street kept saying.

As Wall Street economists saw recession coming, they thought the Fed would have to respond by cutting rates. And so, time and again, Powell has said no, we mean it, we're going to keep rates high to try and crash inflation. But I do want to come back to what you said. I don't think that Powell thinks that his legacy is solely being about inflation. This is a guy who I think is took us through the pandemic. And was really willing to take some risks to make sure that people stayed in work. And that's actually the thing I admire most about the Powell legacy.

COREN: Well, we'll have to wait and see as to -- as to how this all transpires. But Justin Wolfers, certainly, great to get your perspective and to catch up, many thanks.

WOLFERS: A pleasure mam.

COREN: Well, NASA's Curiosity rover has sent back a stunning picture of the surface of Mars. The rover took this photo of the Marker Band Valley in black and white. Well, NASA added in color to show the difference between light in the morning, shown in blue and afternoon light shown in yellow. Beyond the rover's tracks seen near the bottom of the screen is the side of an ancient lake previously discovered on the Red Planet. Well, thanks so much for your company. I'm Anna Coren in Hong Kong, "WORLD SPORTS" is up next. Then I'll be back with another hour of news in 15 minutes time. You are watching CNN.

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