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Dow Nosedives 1k Plus Points At Open, Fueling Recession Fears; Biden To Meet With National Security Team As Tensions Threaten To Boil Over In The Middle East; Vance Says Shapiro Sounds Like "A Bad Impression Of Obama". Aired 11-11:30a ET

Aired August 05, 2024 - 11:00   ET

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

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[11:00:33]

JIM ACOSTA, CNN ANCHOR: All right. Welcome back to the CNN Newsroom. I'm Jim Acosta in Washington. We are following three major stories this hour. Around the world, stock markets are tumbling as investors confront a sobering concern, as the U.S. economy suddenly slowing much faster than expected. Plus, we're in the final hours of the so called deep stakes. Who will Kamala Harris choose as her running mate? The list of contenders, we're told has been narrowed down to three, with an online announcement possibly coming at any moment. And an alarming spike in tensions in the Middle East.

Israel is bracing for new strikes from Iran and its proxies. A few hours from now, President Biden will convene his national security team at the White House, amid growing fears that the region is racing toward a wider conflict. We do start though on Wall Street, where stocks open down more than 1,000 points this morning, following Friday's dismal jobs report. The fears of a slowing U.S. economy have sent shock waves through global markets and stoke fears of a recession back here in the U.S.

Joining me now, CNN business editor-at-large, Richard Quest and Mark Zandi, chief economist at Moody's Analytics. Richard, let me go to you first. What's going on here? Is this just folks venting their frustrations at the Fed here in the U.S.? What do you think?

RICHARD QUEST, CNN BUSINESS EDITOR AT LARGE: No. I think there's a dose of reality that's coming in. We've had 10 increases in interest rates. Rate rises from just about zero to 5.5 percent, and that's taken its toll, and it's taken this long, if you will, to work through the full effects into the economy. And now people are realizing the market investors that things are slowing down, possibly faster than the Fed had anticipated. And as a result, and -- and you see this, Jim through the unemployment numbers, inflation, the hard work on inflation has been done, but the other side of that side -- scale is that unemployment is going up.

This was entirely predictable at one level. If you will, this is the Fed's medicine working. We can argue and debate whether it's taken longer than we first thought. The monetary lag of nine to 15, 18, months, but this is what you get. If you have so much interest rate increases in a short period of time, it will take its toll. And crucially, the market, in a sense, is now seeing it. It was already hyped up and doesn't like what it sees.

ACOSTA: Yes. Mark, let -- let's listen to what the Chicago Federal Reserve President Austan Goolsbee had to say when asked what emergency actions the Fed could take. Let's listen to this.

(BEGIN VIDEO CLIP)

AUSTAN GOOLSBEE, CHICAGO FEDERAL RESERVE PRESIDENT: Everything is always on the table, whether that's increases, cuts, et cetera, but the Fed's job is very straightforward, maximize employment, stabilize prices and maintain financial stability. That's what we're going to do. We're forward looking about it. And so if the conditions collectively start coming in that on the through line, the -- there's deterioration on any of those parts, we're going to fix it.

(END VIDEO CLIP)

ACOSTA: Yes. Mark your reaction to that.

MARK ZANDI, CHIEF ECONOMIST, MOODY'S ANALYTICS: Well, he's got it exactly right. The -- the Fed's got two key goals. One is full employment, the other is inflation, that's low and stable, and they've achieved those targets. In -- in fact, I think given Friday's jobs numbers in the 4.3 percent unemployment rate, you could argue that they've blown through full employment. You know, I put that at something less than 4 percent. So they're there, and now they have a funds rate target that's the key interest rate they control that's very high, 5.5 percent has been there for a year.

They got to get moving, and they got to cut interest rates. And I think what President Goolsbee was saying was they're going to start cutting interest rates. And I -- I expect some very aggressive rate cuts here in the not too distant future. The -- the next they -- they clearly made a mistake. You know, that's not, I think, obvious to everyone, including them, and I think they're going to respond. There -- I don't think they're going to respond until the next meeting, when they get all get together again and make a great decision. That won't be until September, because if they did something in between, you know, that might smack a panic or desperation, what do they know that we don't know and that -- I think that might be counterproductive.

And they don't need to, because the economy is still OK. It's still fine. It's still creating a lot of jobs. But I do expect in September that they will start cutting rates aggressively, you know, half a percentage point, and then more aggressively, going forward, you know, in November, December and -- and next year, and get that interest rate, that 5.5 percent down to something that's more consistent with, you know, an economy that struggling a bit.

[11:05:11]

ACOSTA: Yes. Richard, I mean Mark makes a good point, you don't want the markets to get more jittery than they are right now, for -- for those folks who aren't, you know, following all of this closely, but, you know, do worry about the R word. How realistic is of -- are the fears of a recession?

QUEST: Anywhere between point a quarter and a third, some may say, up to a half of probability percentage of a probability. The -- the -- the Fed, Mark has nailed it, because the Fed's trickiness, if you will, is how to cut rates, if you will, to prevent the recession. But at the same time, you don't want to restoke inflation because of this dual mandate. And the Fed is well aware of this almost impossible balancing act, the so called panacea, the soft landing, which is often spoken of and rarely seen.

And so where do you want? Where do you want your overshoot to be? Do you want it to be on the downside or on the upside? Well, my guess is now they're starting to get a little bit more concerned about Main Street than Wall Street, because they also don't want to be seen to be bailing out the market. Greenspan did it. Bernanke did it up to a point. They don't want to be seen to be knee jerk bailing out, because the markets had a few tough days when Main Street needs the help, then they'll give it.

ACOSTA: And Mark, you don't think we're in 2008 territory or anything like that at this point?

ZANDI: No, Jim, not at all. I mean, again, we're still creating a lot of jobs. I mean, you know, even with the disappointment on Friday for July, we created 114,000 jobs. That's -- that's a lot of jobs, and that was affected by Hurricane Beryl and other technical factors. Underlying job growth, abstracting from the vagaries of the day, is probably close to 150k. That's, you know, pretty darn good. The other thing about the stock market, you got to take -- you got to just -- just take one step back here.

You know, we're down 10 percent from the all-time record high, which was not too long ago. But we're still up on the S&P 500, the key stock market measure, 15 percent. So, you know, you know, I think we need to take a breath -- breath here. The -- the message is, we -- the Feds got to move, they got to move quickly. But if they do, we should be just fine.

ACOSTA: Yes. It has been a little frothy lately. All right, Richard and Mark, guys, thank you very much. Really appreciate the time.

In the meantime, tomorrow, Vice President Kamala Harris and her soon to be known running mate are expected to launch a mammoth battleground campaign blitz covering seven swing states in nearly 5,000 miles in just five days. But first she faces the most consequential decision of her campaign, who will be that running mate?

At this hour, source of South CNN, there are three front runners, Pennsylvania Governor Josh Shapiro, Minnesota Governor Tim Walz and Arizona Senator Mark Kelly. And CNN's Jeff Zeleny has all the details for us, unless Jeff it has narrowed down even further in the last minute or two. What's the latest? JEFF ZELENY, CNN CHIEF NATIONAL AFFAIRS CORRESPONDENT: A lot of Democrats believe it has narrowed down even further. And if that thinking is to be believed, and we've covered a lot of these, so the choice is Vice President Harris's, no one else's. But there is a considerable thinking this morning that it is between the two governors, Governor Tim Walz of Minnesota and Governor Josh Shapiro of Pennsylvania.

Of course, the list was wider just a few days ago. But if you look at those two governors, they have been at the center of a lot of this. And one thing I am told that the Vice President is looking for is chemistry, core values and competence. An advisor told me over the weekend, the three C's, and I said, well, what are the three C's? But chemistry, I think, is first and foremost among them.

Look, she knows what it's like to be vice president, because she is vice president at the Naval Observatory, of course. And just four years ago this week, Joe Biden called her and said, we're going to have a partnership. Only she knows if he lived up to that bargain. It seems like it from the outside, but that's what I'm told she is really trying to pick someone here with chemistry and someone who shares her values.

ACOSTA: Yes. And -- and am I, I mean, just thinking things are sometimes simpler than -- than we -- we have it cracked up to be. I mean, this is going to launch in Philadelphia tomorrow. I mean, why would you bring the governor of Minnesota to Philadelphia?

ZELENY: Because they need to win Pennsylvania in either case.

ACOSTA: Yes, yes.

ZELENY: So it's certainly possible. But this trip was planned, the swing through seven battleground states was planned before her interview. So interestingly, though, the day after, on Wednesday, they're going to Wisconsin, which is the western part of Wisconsin within a stone's throw of Minnesota.

ACOSTA: OK, there you go.

ZELENY: So, and I was thinking back, Jim, we both covered the 2012 campaign with Mitt Romney. He, of course, announced Paul Ryan in Virginia. And people are thinking, was it Bob McDonald, the governor of Virginia? It turned out to be Paul Ryan on the USS run. So who knows? But I'm told that this schedule through seven battleground states, you see them right there on screen.

ACOSTA: Yes.

ZELENY: Those are the key states that Vice President Harris is trying to put in the mix. But geography of the first spot, I don't think is driving this decision --

ACOSTA: Interesting.

ZELENY: -- unless it is, and then we'll talk about that tomorrow. I am told that this was planned in advance of her reaching a final decision. We know that these three finalists were --

[11:10:06]

ACOSTA: Yes. I won't credit for trying to predict this.

ZELENY: Right.

ACOSTA: Don't worry about that.

ZELENY: We know that the three finalists were at the Naval Observatory on Sunday, meeting with her, and now she has a decision to make. We know that she will announce this online. She wants her supporters to sort of get engaged with this. The question is always if that holds or not.

ACOSTA: And Jeff just quickly, we're -- we're looking at the stock market right now. You and I, speaking of, you know, going back to the olden days, we both covered the 2008 campaign, and remember --

ZELENY: Right.

ACOSTA: -- all too well the impact on the 2008 race and the prospects for Barack Obama winning the presidency when the market started to crash. Obviously, we're not in that territory at this point, but this has to be a little bit of a concern to the -- to the Harris campaign.

ZELENY: Without question.

ACOSTA: Yes.

ZELENY: I mean, it's -- it's yet the only latest reminder that we never know what presidential campaigns will be about at the end.

ACOSTA: Yes.

ZELENY: And the economy certainly is foremost here, and who will look better in the eyes of voters on this Vice President Harris or Donald Trump. So it is absolutely a concern. We saw that Gene Sperling, longtime economic adviser at the White House, he's leaving the White House to go to the Harris campaign. So this is absolutely a concern.

And we saw the end of the 2008 campaign when Barack Obama really seized upon that and there were meetings with the Bush administration. This is not at that point at all.

ACOSTA: We're not.

ZELENY: However, as you said earlier, when John McCain said the fundamentals of the economy are strong, he likely lost the election that day.

ACOSTA: Yes. That was a huge moment. All right, Jeff, great to see as always.

ZELENY: You bet.

ACOSTA: Thanks a lot.

Coming up, Israel on alert. Iran says it's determined to, quote, punish the country in response to the killing of Hamas' political leader. Our next guest has new reporting on what a major retaliation could look like, and when that might happen. That's next.

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[11:16:24]

ZELENY: Happening right now, President Biden is trying to head off a full blown crisis in the Middle East. He's on a call with the King of Jordan at this hour, and he'll meet with his national security team of Vice President Kamala Harris this afternoon. "Axios," in the meantime, is reporting that Secretary of State Tony Blinken has told his G7 counterparts that Iran and Hezbollah could attack Israel within the next 24 hours. Barak Ravid reported these latest developments for "Axios." He's also a CNN political and global affairs analyst, also -- also with us, retired U.S. Army Major Mike Lyons. Barak, I guess, I mean the anticipation is, is that this attack is imminent. Tell us about that.

BARAK RAVID, CNN FOREIGN POLICY ANALYST: Well, nobody knows for sure when the attack is going to take place and what exactly the Iranians and Hezbollah are planning. I think one of the things that Blinken told his G7 counterparts yesterday was that in the previous attack in April, things were much clearer to U.S. intelligence than they are right now. But he said that the U.S. assessment is that an attack by either Hezbollah or Iran or both will take place within 24 to 48 hours, meaning either today or tomorrow.

What I hear from Israeli news officials that they expect more than one wave of attack, meaning either Iran or Hezbollah will go first and the other will go second. Biden is holding a meeting with his national security team later today. I think it gives an idea of the timing that the administration expects the attack will take place.

ACOSTA: And -- and Major, if Iran does attack, are -- are you anticipating? Should the Israelis be anticipating sort of a multipronged attack from Iran and its proxies?

MAJOR MIKE LYONS, U.S. ARMY (RET.): Jim, I think so. What -- what Israel's enemies have lacked is creativity, and they have not attacked in depth. For example, they -- they kind of throw the kitchen sink all at once that last attack took place in April. They threw multiple different weapons platforms, but the U.S. and -- and Israel forces were able to knock them down. If they decide to stagger those attacks, if they continue to come from the north and Lebanon, for example, from Syrian proxies in Syria, coming from Iran over the horizon, and then also from the Houthis in the south, you have a four channel way that they can attack inside of Israel.

They could also take their proxies and say, look, you focus on American defense platforms, and go after American ships that are in the Mediterranean and in the Persian Gulf that are protecting the skyways there as well. And -- and they could complicate that. So Israel has taken advantage of the fact that Israel's enemies have not been creative, and I think they're hoping that that will be the same case this time.

ACOSTA: And Barak, does -- does Israel have the defense capabilities to deal with attacks coming from Iran, Hezbollah, perhaps the Houthis in the south, other proxies in the region?

RAVID: On its own, it's not clear if Israel can handle this thing alone. This is why you see the U.S., the U.K., France and other countries preparing to take part in this defensive effort under the leadership of Central Commander General Michael Kurilla. I think the Biden call with King Abdullah is key, because Jordan is the main country through which the Iranian attack will pass through both drones and cruise missiles. We have to also add to that pro-Iranian militias in Iraq that also said that they're going to take part in this attack. So I think that Biden is going to ask King Abdullah to allow U.S. and maybe even Israeli jets, to use Jordanian airspace to try and intercept those attacks.

[11:20:12]

ACOSTA: Major Lyons, is that what you're anticipating as well that, I mean, the Jordanians did play a very key role back in April in helping Israel defend itself, as well as other allies in -- in -- in the region and around the world. Might we see a -- a replay of that, to some extent, but on a larger scale?

LYONS: Yes, Barak is absolutely right. And the thing is, Jordan, on its eastern flank there, provides that over the horizon look at rockets and -- and drones coming from there, in particular, Iranian slow and low traveling drones, suicide drones that go in one direction. By the time the air defense systems pick up on them, it's too late, in some cases, if they don't get that help from Jordan. And so it -- it -- it will tie in that air defense systems there. They can handle perhaps some of the longer range missiles with -- with Iron Dome, and with some of the other systems they have, especially with the U.S. forces, as well as those NATO countries that were mentioned.

But Jordan is the key because of the proximity of where those -- those slow and low drones will pass through. Israel's got to have a heads up on them if they're going to stop them.

ACOSTA: All right. Barak Ravid, Major Mike Lyons, thank you both very much. We'll keep an eye on all of this.

Of course, I want to shift back to the final hours of the deep stakes now, who will Kamala Harris choose as her running mate? The list of contenders, we're told, is down to three. Joining me now to talk about this, former Democratic Congressman Tim Ryan of Ohio, he was under consideration to be Hillary Clinton's running mate in 2016 if -- if we're going all the way back, I suppose that -- that conversation did happen. Congressman, good to see you this morning. Who do you think Kamala Harris should pick? Do you have a -- do you have a dog in this fight?

TIM RYAN (D), FORMER U.S. CONGRESSMAN: Well, I got a -- a personal relationship with Tim Walz, and I'm from the Midwest, so I -- I really like Tim. He is the messenger all the way from Pittsburgh to Milwaukee. I think he would bring a lot of value there. But I think, like most people, we like all the candidates. And -- and, you know, I could certainly understand picking Governor Shapiro and taking Pennsylvania off the board. That makes a lot of sense. Governor Beshear knows how to talk to people in rural areas that -- that we need to kind of tamp down our losses.

So, you know, I -- I think it's, you know, she -- she has a really good list of people that she can pick from. So we'll be happy with whoever. It shouldn't be any infighting on this one. And let's go and win this election.

ACOSTA: And I do want to get back to talking about what's happening with the markets just a little bit, if you don't mind. I mean, in just the last several minutes, I guess Trump has been blaming the Vice President for the market selloff today, saying on Truth Social, quote, voters have a choice, Trump prosperity or the Kamala crash and Great Depression of 2024. I mean, I -- I say there's a little bit of a chuckle, because, you know, all the rhetorical flourishes there. But what's your response? I mean, Trump is already seizing on what's taking place in the markets? I suppose that was to be expected.

RYAN: Well, it's almost like Donald Trump's rooting against America, rooting against the markets, rooting against the economy, for his own political benefits, which I guess is, is nothing new. With the hostage return the other day, which was a diplomatic coup for President Biden and Kamala Harris and -- and the other countries involved, and nothing nice to say about that, except maybe for Vladimir Putin.

So I think this is all an illustration for the American people to see what kind of leadership we want moving forward. And I just think those kind of comments like -- like, anybody really believes that Kamala Harris has anything to do with the crash of the market, I mean, the economy is doing well. Wages are up. We've got a long, long way to go to -- to make sure working class people have what they need. We're reindustrializing the country. We need to expand help for -- for families who are struggling.

But we're rebuilding the country. We're reindustrializing the country for the first time in 40 years because of the Biden-Harris administration. And -- and that's building the foundation for a new middle class in the United States. That's -- that's something great to campaign on. But, again, I think what you're talking about your previous segment about the Middle East, whether you're talking about the economy, Donald Trump and J.D. Vance are destabilizing factors.

At a time when the exhausted majority in the country want a stable government, stable leadership, sane leadership in helping bring people together. So he's just illustrating every single time he does something crazy like that -- that the people aren't going to want them, independent voters, moderate Republicans aren't going to want him.

ACOSTA: Yes. And Congressman, I do want to ask you about, you know, Governor Shapiro of Pennsylvania has been facing this onslaught of attacks from some progressives over the issue of Israel. What -- what would he make of that? And is -- is it healthy for the party?

[11:24:59]

RYAN: Well, you know, the difference between Democrats and Republicans, Jim, is that we air our dirty laundry sometimes in -- in our arguments, in public, we have public discussions about these things. And the Republicans get behind their leader without any questioning, regardless of criminality, regardless of breaches of the Constitution or le -- or legal issues. I mean, it doesn't matter. There's no conversation. They get in lockstep behind someone, even if it's wrong, unlike the Republicans did with Richard Nixon back in the day, when they put the country above the president.

The Democratic side, we have these conversations. And, yes, the Middle East is a complicated issue, especially within the Democratic Party, we're going to have those conversations. But I -- I trust Kamala Harris and her team to pick the appropriate person, and we're going to have an American policy. It's not going to be the governor of Pennsylvania's policy or the governor of Minnesota's policy. It's going to be the American policy. And -- and she'll sift through all that, and we'll come together and -- and support what's best for the United States of America and our position in the world.

ACOSTA: And I did want to ask you about J.D. Vance and some of his recent comments about Governor Shapiro. Let's listen to that.

(BEGIN VIDEO CLIP)

SEN. J.D. VANCE (R-OH), VICE PRESIDENTIAL CANDIDATE: There's a lot of talk. Is going to be this guy, Josh Shapiro, from Pennsylvania, who, you know, I -- I've seen this couple clips of him talking. He talks like Barack Obama. It's like -- it's like, if I did try to do a really bad impression of Barack Obama, that's what's what it would sound like is this guy, Josh Shapiro.

GOV. JOSH SHAPIRO (D-PA): Barack Obama is probably our most gifted order of my time. So it's kind of a weird insult I guess. J.D. Vance is a total phony baloney. He is the most inorganic candidate I think I have ever seen on the national stage.

(END VIDEO CLIP)

ACOSTA: Congressman, I mean you faced J.D. Vance back in 2022. I mean, who -- who do you want to see on that debate stage with J.D. Vance? And -- and what's the best way to take them on?

RYAN: I -- I think any of our finalists would -- would clean his clock. He's got so many bad positions on women. You know, says women should stand -- stay in violent marriages. Wants a national abortion ban with no exception for rape or incest, says America needs a Caesar. I think any of our candidates would -- would come off as, one, showing his extremism, showing what a bad decision it was by Donald Trump, who's older and potentially couldn't make it through another term, and J.D. Vance would become President of the United States.

I think any of our candidates would -- would do very well. You have to play offense, because he -- he tries to say, well, I never said that. And like we've seen the videos of him saying these kind of things that I just mentioned, and he'll say, I didn't say that, very Trumpy. But our -- our candidates are very skilled, very talented. They'll hold his feet to the fire. They'll play offense. But I think mostly, Jim, what we have to do is provide that aspirational message of how we can move on from the toxic politics, the chaos, the destabilizing effects of Trump, we want to move on.

And you may not agree with everything Kamala Harris stands for or her vice president, but my goodness gracious, don't we want to move on. Have a conversation, start healing. And I think our VP candidate against J.D. Vance, will get that message out. Americans want aspiration. We want to move on. We want to do great things. We want to do big things. Kamala has already tapped into that, and I think her VP, whoever she picks, will be able to ride that wave with her.

ACOSTA: Yes. And just finally, I mean, Trump, apparently, has pulled out of the "ABC" debate. How do you think Kamala Harris should handle that?

RYAN: Well, I -- I loved her line, you know, you -- you want to say something, say it to my face. I mean, clearly Trump is afraid of her. And I said this a month ago when I was on with you and others, just saying he will not know how to handle her. She's too good. She's too skilled. And he's just in his own head. Man, I think -- I think Kamala Harris is living rent free and Donald Trump's head right now. And that's a terrible thing as a candidate, as an athlete, as a performer, if you're not focused on the moment that you're in, and you're -- you're rattling around in your head with a lot of negative thoughts, you know, you're not going to do very well.

And that's what you're seeing come out on -- on Truth Social, his comments that we started this interview about the -- the economies, Kamala Harris's fault. And my goodness, gracious, if it's over 100 degrees in Columbus, Ohio, it's going to be Kamala Harris's fault. So people are ready for that. I hope she keeps pressing him on the debate, though, because it really illustrates his -- his insecurities, deep, deep insecurity that he has, generally speaking, and it tries to cover it with bravado, but he's a deeply insecure guy. And I think you need to keep pressing that button. And I think she will, and she'll do humor, class, elegance, like she always does.

And I think this is going to be a good election for -- for weeding out the toxic politics we've been dealing with since the Vietnam era.

ACOSTA: All right, former Democratic Congressman of Ohio, Tim Ryan, thanks a lot. Appreciate it.

[11:30:03]

RYAN: Thank you, sir.

ACOSTA: All right. In the meantime, Tropical Storm Debby is slamming Florida and now Georgia and South Carolina --