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CNN International: Russia: Destroyed 100+ Drones And Four Missiles Overnight; Zelenskyy: Ukrainian Forces Advancing Inside Kursk; Russia's Belgorod Region Declares Emergency Amid Incursion. Aired 11a-12p ET

Aired August 14, 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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RAHEL SOLOMON, CNN ANCHOR: Good morning or good evening, depending on where you're watching. I'm Rahel Solomon live in New York.

Ahead on CNN Newsroom, Russia's Belgorod region declaring a state of emergency, as Ukraine's incursion into Russia advances. We will look at the long-term goals on the battlefield for both Russia and Ukraine. Plus, high-stakes talks in the Middle East are set for tomorrow, but now one key player will not be attending. We are live in Israel and Lebanon with the very latest here. And all eyes on the markets, as the new U.S. CPI numbers show a slowdown in inflation. So, could this mean that the Fed is on track for a rate cut? I will discuss with my guest.

The Kremlin facing a major embarrassment this week as Ukrainian President Volodymyr Zelenskyy says that his forces have advanced even further into Russia's Kursk region. Today alone, Ukraine claims to have gained one to two more kilometers. That's on top of what they say is control over 1,000 square kilometers of Russian territory. This is after that surprise assault one week ago. This incursion has prompted Russia to take peace negotiations off the table, at least for now, saying that they are on a quote, "long pause." And Russia's National Guard says that it has tightened security around the Kursk nuclear plant. The governor of Russia's Belgorod area, seen here, has declared a regional emergency.

Meanwhile, the Lithuanian Defense Minister claims that Russia is moving its troops from Kaliningrad on the Baltic coast to Kursk. In the air, Russia says it has destroyed more than 100 Ukrainian drones overnight, adding that 37 of them and four missiles were destroyed over the Kursk region.

Let's get to CNN's Fred Pleitgen, who is tracking this ongoing incursion. He joins us live now from Berlin. Fred, give us a sense of what we know about what appears to be the strategy for Ukraine right now.

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yeah. The strategy for Ukraine certainly seemingly an ever increasing problem for the Russians. One of the things, I think, that completely caught the Kremlin off guard was not just the incursion itself, but also that on day eight of this incursion, the Ukrainians are still managing to move forward, and it seems very difficult for the Russians to try and hold the Ukrainians up. We've been seeing some videos that have been released by the Russian Defense Ministry of their air force bombing Ukrainian positions using some pretty heavy what are called glide bombs to try and hit those Ukrainian positions.

But still, the Ukrainians are saying that they are managing to move forward. The Ukrainians have now outlined what they say that their strategy is. They say, in that part of Russia, they want to create something like a buffer zone to try and make sure that the Russian military cannot attack Ukraine from that part of southwestern Russia.

I want to listen into some of a phone conversation or a video conversation that took place between the President of Ukraine and his top general earlier today. Let's have a look at that.

(BEGIN VIDEO CLIP)

OLEKSANDR SYRSKYI, UKRAINIAN MILITARY CHIEF (Interpreted): The defense forces continue to conduct an offensive operation in the Kursk region. Since the beginning of the day, the troops have advanced one to two kilometers in some areas. The search for and destruction of the enemy in Sudzha been completed. Since the beginning of the day, more than 100 enemy soldiers have been captured.

(END VIDEO CLIP)

PLEITGEN: So, just to clarify that Sudzha is a fairly large town on the Russian side of the border that the Ukrainians now say that they have swept through. There was some video actually that was released from there as well. CNN has now actually also managed to speak to a Ukrainian commander who is fighting on the frontlines and who just returned from the frontlines, and he says that the Russians are trying to stop the Ukrainians and are trying to organize some sort of defense. Let's listen into some of that.

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DMYTRO KHOLOD, COMMANDER OF THE "NIGHTINGALE" BATTALION (Interpreted): The Russians are now trying to stop our advance. They have pulled in reserves, which has benefited our defense forces in other areas, because it's become easier to work there. We have information that reserves were pulled from the Zaporizhzhia, Crimea and Kharkiv regions to stop our advance. Of course, it will be harder for us to advance further, but we will still advance.

(END VIDEO CLIP)

PLEITGEN: So, there you have a Ukrainian commander of a drone unit that actually supports some of the Ukrainian infantry that is fighting there on the Russian side of the border, saying that they're seeing the Ukrainians -- that the Russians apparently pulling some forces from other areas, frontlines in Ukraine, but possibly also inside Russia, to try and deal with that Ukrainian incursion, which, of course, is ongoing and still does not seem to be stopping at all, Rahel. SOLOMON: And Fred, what about the Russian POV on all of this? I mean, how does Putin manage this event, which, as you said, is ongoing, both from a practical standpoint, but also from a PR standpoint?

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PLEITGEN: Yes. Well, the PR standpoint is certainly one that is really interesting in all this. I was actually speaking to some sources inside Russia today, and one of the things that you keep hearing, for instance, on Kremlin-controlled TV, on Russian state TV, is that they are saying, look, right now, the Ukrainians are smiling, but the Russian army is fighting. The Russian army will be back. The Russians are going to deal with this, and they are going to kick the Ukrainians out.

What we've heard from the Russians so far is that the Russian government has said that right now, peace talks with Ukraine are something that is impossible at this point in time with this incursion. They call it a crime against Russia. However, of course, we know that there weren't really any peace talks on the agenda beforehand, to begin with. And certainly, you do notice also in some of the reports that are coming on Russian state TV, from Russian reporters who are on the other side, of course, on the frontline, that they do acknowledge how difficult the situation is for the Russian military, and that this does not appear to be something that Russia is going to be able to deal with in a very quick manner, especially if those Ukrainian forces are able to dig in.

And we've already seen some signs that trenches, apparently, are already being dug. If they're able to establish defensive positions in that area, that, of course, will make that task even more difficult for the Russian military, Rahel.

SOLOMON: Wow. What an interesting turn of events. Fred Pleitgen live for us in Berlin. Fred, thank you.

Well, U.S. President Joe Biden says that the outlook for getting an agreement on a ceasefire deal for Gaza is, quote, "getting hard". Mediators are set to begin a new round of talks in Doha tomorrow, and a source now says that Hamas will not take part, but could talk to mediators afterwards if Israel delivers what Hamas considers a serious response to a U.S.-backed ceasefire proposal. Now, the U.S. has sent top officials to the region to try to rally support for a deal, including special envoy Amos Hochstein. In Beirut today, he said that no one wants a full-scale war between Lebanon and Israel. Iran, meantime, vowing to retaliate for the assassination of a Hamas leader in Tehran. President Biden says that Iran's response could depend on the success of those ceasefire talks. Listen.

(BEGIN VIDEO CLIP)

JOE BIDEN, PRESIDENT, UNITED STATES OF AMERICA: It's getting hard. We'll see what Iran does, and we'll see what happens if there is any attack. But I'm not giving up.

UNIDENTIFIED FEMALE: Are those two things tied together? Do you have any understanding that Iran could cease or stop doing an action if a ceasefire deal was possible?

BIDEN: That's my expectation, but we'll see.

(END VIDEO CLIP)

SOLOMON: All right. We have team coverage for you. We are joined by CNN's Nic Robertson, who is in Tel Aviv, and Ben Wedeman, who is in Beirut.

Nic, let me start with you. Clearly, a lot at stake, even more perhaps than ordinarily for these ceasefire talks tomorrow.

NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Hugely more than any previous ceasefire talk over Gaza is at stake here. Potentially in a worst-case scenario, it would be stability in the region, a conflict that could erupt and draw in many more countries, besides Israel and Iran and Iran's proxies in in the region. It just could get bigger and inflame already existing tensions. However, the hope was always that these talks would move the dial on the Gaza ceasefire, and this is something that Amos Hochstein spoke about earlier on today, when he was in Beirut, that if we can get a ceasefire on Gaza, move the talks there, then that will tank down tensions with Hezbollah and Israel. And the same sentiment is true for Iran.

But, both Hezbollah and Iran have indicated, despite all the mitigating factors, why it would be bad for them to escalate tensions and perhaps get into an escalated conflict with Israel. They have already said that they would strike back. And I think the anticipation is what happens in these talks will not deter at least Iran from striking back at Israel, but may set the scale at which it makes that attack. If the talks are completely unsuccessful, it could be quite large. If there is some success to be seen there, there may be lesser. But, absolutely at a maximum position, the whole stability of the region is at stake. Of course, everyone hopes diplomacy is going to win.

SOLOMON: Of course. I mean, at the center of these talks, Prime Minister Benjamin Netanyahu. Nic, talk to us a little bit about the pressure he is facing, at least among the public. I mean, how much support is there among the Israeli public for a ceasefire deal?

ROBERTSON: Yeah. The latest polling that one of the Israeli TV channels here is reporting is about two thirds of the population want Prime Minister Benjamin Netanyahu to accept the hostage deal that's on the table at the moment. And interestingly, that is Hamas' position.

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They're saying that that's where they stand. They want the deal that's on the table already accepted. But, where does the Prime Minister stand? It is so hard to know where he'll maneuver. We know that the hard-right members of his cabinet have threatened to pull out of the government if he does the deal that's on the table right now. He has put down, in previous talks, although he is saying that he isn't creating unnecessary hurdles, but has put down limitations, if you will, on the deal, the control of the border between Gaza and Egypt, the control of the crossing there, as well the return of people to the north of Gaza, and also the prisoner exchange deal. He has put limitations on that that Hamas has said is unacceptable.

But, what is he actually going to -- what are his negotiators going to say when they get there to Doha? We do know that David Barnea, the head of Mossad, is going to be there, Ronen Bar, the head of Shin Bet, the internal intelligence organization, the -- Major General Nitzan Alon, who is in charge of essentially the intelligence around the hostages, and a political advisor, that will also be there at the offer -- will also be there at the talks as well. So, it's a big delegation, it seems, at the moment.

SOLOMON: Yeah. I mean, it's a fair point, a big delegation. You have to wonder, though, where Hamas stands on all of this. Nic Robertson, thank you.

Let's get over to Ben Wedeman now in Beirut, because Ben, you have this new reporting on Hamas apparently not attending those talks. What more are you learning?

BEN WEDEMAN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, it's not necessarily, Rahel, they are not attending the talks, but they were quite explicit. Their current position is one of ambiguity. They haven't said yes. They haven't said no. I spoke to this one source who is very close to a senior Hamas official, who is privy to the details of the negotiations that going back months, and he said that short of ending of the Israeli aggression, as he called it, a complete withdrawal from Gaza, the return of the displaced people to their homes, what's left of their homes inside Gaza, and a lifting of the siege. He said that he doesn't -- Hamas doesn't want to participate in these meetings just for the sake of meetings. Clearly, they're very frustrated that they thought they'd agreed to something everyone else had agreed back in July.

But, as has been reported in many outlets, CNN, Israeli media, Prime Minister Netanyahu appears to have been imposing new conditions that have complicated negotiating process that at some point in the recent months did look like it was reaching some sort of fruition. And there is also frustration that the United States is sending these mixed signals. On the one hand, they're pushing diplomatically for some sort of agreement for a ceasefire and the release of hostages. They're expressing concern over the mounting death toll in Gaza, which is now just shy of 40,000, but at the same time, the country that expresses concern over the death toll announced last night that they are providing 20 -- they will allow $20 billion in sales of weapons to Israel, that, of course, won't be delivered for the next few years.

But, the optics coming out of Washington are confusing, and for those who are hoping for an end to this war, very troubling. Rahel.

SOLOMON: Ben Wedeman reporting for us there. Ben, thank you.

Well, still ahead for us, it's the issue that many American voters say matters the most to them, the economy. Donald Trump is back on the campaign trail today to talk about what he will do for American households. But, will he be able to stay on message? Plus, she played a Vice President who became President, but at next week's Democratic National Convention, "Veep" star Julia Louis-Dreyfus, well, she is going to have a new role. We'll tell you about it when we come back.

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SOLOMON: Welcome back. The U.S. economy is front and center this week for both U.S. presidential campaigns. Voters have been telling pollsters that it is the most important issue of the 2024 election. Donald Trump, for his part, will be speaking in Asheville, North Carolina, today. He is expected to make the case that the economy was stronger during his presidency. Now, advisors are hoping that the former President can stay on message and dial down the personal attacks on Kamala Harris. The Vice President, meantime, is expected to lay out her own economic policies in a speech in North Carolina on Friday. Aides say that she will talk about plans to lower prices.

Now, running mate, Tim Walz, made his first solo campaign appearance. This happened at a labor union convention on Tuesday, and he defended his service record after Republican counterpart J.D. Vance accused him of stolen valor.

(BEGIN VIDEO CLIP)

GOVERNOR TIM WALZ (D-MN), VICE PRESIDENTIAL CANDIDATE: I'm going to say it again as clearly as I can. I am damn proud of my service to this country, and I firmly believe you should never denigrate another person's service record. To anyone brave enough to put on that uniform for our great country, including my opponent, I just have a few simple words, thank you for your service and sacrifice.

(END VIDEO CLIP)

SOLOMON: All right. We have more now from both campaigns. Eva McKend is following the Harris camp, and Steve Contorno has the latest on Donald Trump.

Steve, let me start with you. What can we expect when we hear from Trump a little later today in North Carolina?

STEVE CONTORNO, CNN REPORTER: Well, he is going to focus there on the economy. At least, that's what his campaign hopes he will focus on. He has spent a lot of time lately talking about a lot of topics that are in the area where his campaign wants him to focus on. He has talked about Harris' crowd sizes and whether or not she is half black. And this is an area where they believe that they have some advantage over the Biden campaign because of the inflation woes that the country has faced in recent years. Take a listen to what he said yesterday, previewing what he hopes to get across in the economy later today.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), FORMER U.S. PRESIDENT AND 2024 PRESIDENTIAL CANDIDATE: We're going to get rid of inflation. Inflation has hurt the Hispanic population so badly, but it has hurt everybody. She is never going to do anything about inflation. She has no idea. She doesn't even know what it means, the word means, and she is forced to go with my policies. I came out a long time ago with no taxes on tips, and two days ago, she said no taxes on tips. She doesn't even know what it means.

(END VIDEO CLIP)

CONTORNO: Those remarks will come later today in North Carolina, one of those states that a few weeks ago was really tilting in Donald Trump's advantage. But, in this brand new race, it's a toss-up once again.

SOLOMON: Yeah. It's interesting, Steve, because you hear him there insulting Harris, but not because of her policy, necessarily on inflation, obviously we'll learn more about what her policy might be, but on her intelligence, and some of these attacks on her are raising concerns that Trump could once again question the election outcome if he loses come November.

CONTORNO: That's right. Trump has never conceded an election, really, if you go back to the 2016 Iowa caucuses. He claims that Ted Cruz, which had -- who won those caucuses, had cheated, and he called for a recount of those caucuses. Obviously, what happened in 2020 is well documented as well. And this is one of those areas that his campaign would love for him to move on from his talk about the 2020 election, but it's something he continues to be fixated on in a way that his campaign is not only -- not only feels is distracting and unproductive, but yes, is raising concerns that he once again will go into this 2024 cycle unwilling to concede the outcome and raise alarm bells about whether or not this election was, quote, "rigged".

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SOLOMON: OK. Steve Contorno live for us there in beautiful St Petersburg, Florida. Steve, thank you.

Let's turn to Eva McKend, who is in Washington. And Eva, as we said, Harris is going to hold her own speech this week, also in North Carolina, on her economic policy. What can we expect there?

EVA MCKEND, CNN U.S. NATIONAL POLITICS CORRESPONDENT: Well, they're holding this close, Rahel. But, from listening to her out on the campaign trail, the economic policy she touts on the trail, eliminating taxes on tips, tips for hospitality workers, which, yes, we know, of course, the former President has also campaigned on, but she additionally talks about taking on price gouging, banning hidden fees and surprise late charges, and then, perhaps most consequentially, taking on corporate landlords and capping unfair rent increases. This is the most persistent issue that you hear from voters that the cost of housing, buying a house, but also renting, because corporate landlords have bought up so much of the inventory, has just gotten too expensive. And we expect her to detail her solution to this. SOLOMON: Wow. I mean, housing is a huge issue for some of those

reasons you outlined, Eva, but supply is also a huge issue, which doesn't have a short term fix. Let me ask, meantime, in terms of Walz, also defending his military record yet again yesterday. What did he have to say?

MCKEND: Now, pushing back against these -- the suggestion that he has stolen valor and embellished his military career, rather than him just misspeaking, he also characterizes the former President and J.D. Vance as not really attuned to the needs of working class voters. You have Vice President Harris talking about how one of her early jobs was working at McDonald's, and Walz himself also leaning into his background as a teacher and a union guy. Take a listen to how this sounds on the campaign trail.

(BEGIN VIDEO CLIP)

WALZ: Can you simply picture Donald Trump working at a McDonald's, trying to make a McFlurry or something? He couldn't run that damn McFlurry machine if it cost him anything.

(END VIDEO CLIP)

MCKEND: And Rahel, a really busy week next week, ahead of the Democratic National Convention in Chicago. The governor, the Vice President, they're going to do a bus tour in Pennsylvania. It really indicates how important this state is to the campaign and its 19 electoral votes. They had that first joint rally in Philadelphia, and then on Sunday, they're going to be in Pittsburgh, as well as touring throughout the state. Rahel.

SOLOMON: Yeah, really interesting. I mean, Pennsylvania is a very important state. It's also a very diverse state politically. You have pockets that are very blue. You have pockets like the western part of the state that are not quite as blue. So, really interesting. Eva McKend live for us there. Eva, thank you.

And Kamala Harris, of course, will be the star of next week's Democratic National Convention, but we're also expecting an appearance from a fictional Vice President.

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Julia Louis-Dreyfus, the star of "Veep", of course, will be in Chicago to host a panel with female Democratic governors. Louis-Dreyfus won the Emmy for Outstanding Lead Actress six times in a row, playing Selina Meyer, the first female U.S. Vice President, later becoming the first woman President. The HBO show, which like CNN is part of the Warner Bros. Discovery company, is enjoying the surge in popularity since Kamala Harris took over the top of the Democratic ticket.

We are joined now by Entertainment Correspondent Elizabeth Wagmeister in Los Angeles. So, what more do we know about this panel at the DNC, Elizabeth?

ELIZABETH WAGMEISTER, CNN ENTERTAINMENT CORRESPONDENT: So, I have confirmed with Julia Louis-Dreyfus' publicist that she is moderating this panel, and the panel is intended to put a spotlight on the eight Democratic female governors in this country. Julia Louis-Dreyfus is hosting this in partnership with the Democratic Governors Association, and here is what she had to say to The Hollywood Reporter about what to expect at this panel.

She says quote, "Throughout their time in office, Democratic women governors have made history, changed the conversation surrounding women in executive roles, and gotten big things done for the good people of their states. They shattered marble ceilings and demonstrated excellent leadership. Their voices are essential." And she says that she is looking forward to putting a spotlight on these women.

Now, Julia Louis-Dreyfus has been a longtime Democratic supporter. She has a long history with the Biden-Harris administration. She spoke at the 2020 DMC, and she did a skit with President Biden, who was then the Vice President in 2014 at the White House Correspondents Dinner. We see a bit of that clip playing now. I'm sure a lot of people remember that because it did go viral.

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But, Julia Louis-Dreyfus, she has also spoken up a lot about women's issues. Just in the past week, she posted a video on to her Instagram, Rahel, about abortion and reproductive freedom. So, I would expect that this panel, in addition to shining a light on these female leaders, will also shine a light on many issues that are facing women in the country.

SOLOMON: Elizabeth, how much do we know about how critical celebrities can be when it comes to these elections? I mean, how much do their voices really matter for everyday Americans?

WAGMEISTER: They do matter. In fact, last week, I exclusively broke a study for us that came from Harvard, which says that celebrity voices can move the needle, particularly with young voters. And of course, we know that young voters, Gen Z, are going to be key in this race. Now also, I recently had some reporting with our colleagues Kayla Tausche and Priscilla Alvarez, which said that when Biden was at the top of the ticket, celebrities did not want to be involved. They were very reluctant. Nobody was showing up to the DNC. That's what a source told me. But now, with Harris, of course, we have seen this overwhelming outpouring of support from the creative community, from a lot of celebrities, and I do anticipate that in addition to Julia Louis- Dreyfus, we will see some big names at the convention next week.

SOLOMON: So, stay tuned, is what you're saying. Perhaps --

WAGMEISTER: Stay tuned.

SOLOMON: -- a lot to watch there. All right. Elizabeth Wagmeister, good to see you again. Thank you.

All right. Still ahead, dangerous wildfires are being brought under control after threatening the city of Athens. But, as people begin to return to the area, they are devastated by what they are finding. That's coming up. Plus, people in some Caribbean islands just now starting to pick up the pieces after Tropical Storm Ernesto. The big worry is now that it's turned into a Category 1 hurricane. Our meteorologist has the latest.

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SOLOMON: Welcome back. You're watching CNN Newsroom. I'm Rahel Solomon live in New York. And here are some of the international headlines we are watching for you today.

In a shocking decision, a court in Thailand has removed the country's Prime Minister from office. Srettha Thavisin was accused of violating the Constitution by appointing someone who had served prison time to his cabinet. The ruling coalition will nominate a new candidate.

In Tokyo, Japanese Prime Minister Fumio Kishida announced that he is stepping down next month. He has faced calls for his resignation after a string of scandals involving the ruling Liberal Democratic Party.

In Bangladesh, the court has opened a murder investigation focusing on former Prime Minister Sheikh Hasina and six other top figures. That is, according to state media.

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The case involves the police killing of a man during recent protests before Hasina fled to India.

And in Greece now, firefighters are on alert for possible flare-ups from the worst wildfire in Greece so far this year. It started on Sunday and ripped through 400 square kilometers in the Attica region, which is close to the suburbs of Athens. Thousands of people were evacuated from their homes, and at least one person was killed.

CNN's Eleni Giokos spoke to residents of Penteli, as they returned home to survey the damage.

(BEGIN VIDEOTAPE)

ELENI GIOKOS, CNN CORRESPONDENT (voice-over): As morning breaks in Greece, a moment of reckoning, residents return to their homes not knowing what they'd find. 70-year-old Sakis Morfis ran away, taking only his beloved dogs. Everything else is now gone.

SAKIS MORFIS, LOCAL RESIDENT (Interpreted): My house, it was utterly destroyed. Even the walls fell down.

GIOKOS (voice-over): More than 700 firefighters, almost 200 vehicles and 35 water-bombing aircraft have now managed to control the blaze, but 100,000 acres of land were lost. The extent of the damage is so great, it can be seen from space, a scenario of destruction just a few miles from Athens. Experts say the last few years of fires are drastically changing the city's climate. The loss of trees making winds and temperatures rise, along with the risk of fire. A tough challenge ahead local officials are well aware of. VASILEIOS XPYOLYTAS, MAYOR OF KIFISIA: At some point, the fire was faster than the cars and the trucks, and we are trying to cut the fire. We must find solutions in the way of evacuating and in being first at the time of the start of this fire.

GIOKOS (voice-over): Miles of beautiful green virgin forests reduced to charred barren hills. For residents like Sofia, the feeling of loss is beyond words.

SOFIA, LOCAL RESIDENT: I feel terrible. I can't explain how I feel this morning. We had such -- a green horse is here. Now I don't know after how many years it's going to be again and if it be like before. It was great.

GIOKOS (voice-over): Many like her now point the finger at the government, blaming the lack of prevention and care as part of the fuel feeding the fire that spared nothing in its part.

Eleni Giokos, CNN, Penteli, Greece.

(END VIDEOTAPE)

SOLOMON: Meantime, Ernesto, the tropical storm that has already lashed Puerto Rico and the U.S. Virgin Islands, has strengthened to become a Category 1 hurricane. That's according to the National Hurricane Center. Islands in the Eastern Caribbean have already been hit by heavy rain and flooding, while the high winds knocked out power for hundreds of thousands of people. Let's take a look now at its expected track, moving into open Atlantic waters northwest of Puerto Rico.

For the latest, let's bring in Meteorologist Allison Chinchar, joining us from the CNN Weather Center in Atlanta. Allison, give us a sense of what more you're watching here.

ALLISON CHINCHAR, CNN METEOROLOGIST: So, the latest update that came just at the top of the hour, it has now strengthened into a Category 1 hurricane with those sustained winds up around 75 miles per hour. It's moving at a pretty good clip off to the north and west, and that's some good news. That means it will kind of get out of there a little bit quicker, say, than some previous storms like Debby had moved for much of its life.

Now, here you can see this video from St. Martin again, see that wind blowing very strong. And keep in mind, it was just a tropical storm when it was here in St. Martin. It is stronger now as it pushes away from Puerto Rico, which is why we're seeing nearly half of the customers without power in Puerto Rico. Roughly 90 percent of the customers in the U.S. Virgin Islands are without power. And again, you look at some of the wind gusts that had taken place in the Virgin Islands and Puerto Rico, and it's no wonder why. And those winds are expected to remain gusty for the rest of the day today.

So, even though the center of the storm is north of the island, look at all these rain bands here on the radar. So, it's going to likely continue to rain and heavy at times for the next several hours across Puerto Rico. That's going to increase a lot of those overall rainfall totals. It's why you have a lot of these areas, the red color here indicating those flash flood warnings. A lot of these areas have already had several inches of rain. Now, we're going to be adding more on top of it. So, the threat for flooding, perhaps even some landslides, is still going to remain for the rest of the day today. Then the storm moves out over open water. And really over the next couple of days, it is expected to strengthen. It will hit more environmentally friendly conditions to a tropical system such as this.

So, right now, the Hurricane Center saying it's likely to get into a Category 3, which would make it a major hurricane, as it continues its trek up towards Bermuda, where hopefully it weakens at least just a little bit more before it finally crosses over or nearby to Bermuda, as we head into the weekend, because it would get close to there, roughly, say, around the first half of the day on Saturday. And the reason for that additional strengthening is it is still going to move over some pretty warm waters here. All of this area here, you can see, is expected to be at least a few degrees above normal.

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That is fuel for tropical systems like this, and will allow that storm to continue to intensify. And there you can see it kind of sliding up through the open waters and then gradually making its way up towards Bermuda, likely, as we said, the first portion of the weekend on Saturday, where it could, in turn, end up causing some pretty rough conditions there. We're talking very heavy rainfall, and then also some of these wave heights, again, pushing all of that water into Bermuda. The winds will also be quite gusty there too, especially if it is able to maintain Category 2 or even possibly Category 3 status, as it slides by or over the island.

So, again, looking at some of those forecast, wind gusts as it makes it up there, not out of the question for some of those to be between 80 to 100 miles per hour in some cases. Even if it doesn't move directly over it, could have some of those strong gusts nearby. So, certainly, something we'll have to keep a close eye on in the next couple of days.

SOLOMON: Yeah. And as you said, here is hoping that it weakens between now and Saturday. Allison Chinchar, thank you.

CHINCHAR: Yeah.

SOLOMON: OK. Well, later today, NASA will give an update on two astronauts who are stuck in space. Back in June, Suni Williams and Butch Wilmore flew to the International Space Station in a test flight from Boeing's Starliner spacecraft. They were only supposed to be there for a week, but now 70 days later, 70, there is still no news on when they will be heading home. NASA has spent the past two months trying to work out what's behind a number of issues the Starliner experienced on the way to the ISS. A week ago, NASA said that the two may have to stay up there until next February. Boy.

All right. Let's take a look at the big board on Wall Street, where the Dow is up almost 200 points, about half a percentage point there. The latest read on U.S. consumer prices coming out a little earlier. Coming up, we're going to have a live report on the inflation data and what it could mean for the economy, for traders, for interest rates. So much to discuss. Stay with us. Plus, chocolate or cheeses in the battle between salty and sweet, the answer, at least in my book, is almost always both. We are going to explain in a live report. We will be back.

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SOLOMON: Welcome back. And a live look again at the big board at the New York Stock Exchange, where the Dow is up about half a percentage point, or a cool 180 points. Sure. Traders will take it. Investors will take it, as traders respond to new consumer price data that was released before the markets opened a few hours ago. It showed that price increases slowed more than expected in the month of July, and for the first time since March of 2021, inflation on an annual basis, that dropped below three percent, coming in at 2.9 percent. That headline number getting closer and closer to the Fed's target of two percent.

Let's bring in CNN anchor Julia Chatterley to take us inside the report and break down, Julia, where we see prices easing and where they're proving to be a bit more stubborn.

JULIA CHATTERLEY, CNN ANCHOR, FIRST MOVE: Trend is your friend. I think the answer to that is, firstly, with the chart that you showed, yes, prices are still rising, but you're absolutely correct. Those rises are slowing overall.

[11:40:00]

My biggest takeaway, though, from this, and what really drove the price pressures that we saw in July, was the cost of housing. For the average American, it's around a third of the money that they spend, that they bring in on housing. So, when these kind of pressures continue, it's really very painful. The rise that we saw was double what we saw in the last month. I think it's going to remain a bit of a thorn or an irritant in the side of the Federal Reserve. They're going to continue to watch it. It's also a hint for prospective presidential candidates. If you want to help voters out there, talk to them about affordable housing solutions and options that we might see.

What rose in addition to what we saw, I've mentioned already, shelter, food prices, motor vehicle insurance. I've had a couple of people get in touch and say this is another pain point for them. What fell? Let's talk about some of the good news, used cars and trucks, air fares. If you're thinking about going on holiday sometime soon, perhaps now is the time. And apparel also fell. But, the big question is, I think ultimately, Rahel, as you and I well know, what does this ultimately mean for the Federal Reserve and that meeting in September?

SOLOMON: And Julia, would you say now, with inflation appearing to be behaving, that the labor reports become suddenly much more important in terms of trying to chart out what the best path forward is for the Fed?

CHATTERLEY: Everything matters. What we heard from Jay Powell at the last meeting was, look, we're not 100 percent focused on what we got today, those inflation levels. We are also focused on what we're seeing in terms of movements in the jobs market, to your point. So, we know they've got a dual mandate. They focus on both. But, that was just giving us a hint at what they're focusing on.

Look, we have more data points to come before the Federal Reserve meet. But, I do think this is consistent with them being able to begin that rate cut cycle. Most analysts out there are now saying what the market is saying, which is a quarter of a percentage point cut. And plenty of analysts out there will say, as was the fear, what, a week and a half ago, that they should have started already. So, best get cracking. Nothing in this report suggests they can't.

SOLOMON; Wow. OK. Julia Chatterley, CNN, anchor, thank you.

For more perspective on this, I am joined now by Mohamed El-Erian. He is the President of Queens' College at Cambridge University, and an advisor to Allianz and Gramercy. Mohamed, always good to see you, especially on CPI days. It was report, as Julia said, that was largely in line with expectations. Walk me through some of your takeaways from this report.

MOHAMED EL-ERIAN, PRESIDENT OF QUEENS' COLLEGE AT CAMBRIDGE UNIVERSITY, & ADVISOR TO ALLIANZ AND GRAMERCY: So, as Julia said, it was in line with expectations. When you look at the composition, there is good news, there is bad news. But, overall, and given that yesterday we also got a soft print on the Purchasing Power Index, the PPI, if you put it all together, this opens the door wide open for the Fed to start a cutting cycle in September. Like Julia, I think it's going to be 25 basis points, a quarter of a percentage point. The market believes that this will be part of a much larger journey, which will include two full percentage points in cut. So, we are go -- we are looking at the initiation of the cutting cycle by the Fed.

SOLOMON: Well, so that's interesting. So, two full percentage points. So, is it also your expectation that the Fed will ultimately hover around three percent for their federal funds rate? And the reason why I ask is because obviously where rates are now is perhaps unsustainable, but we know they're not going back to zero percent either. So, is three percent about where you expect them to remain ultimately?

EL-ERIAN: So, that's where the market expects them. I think they'll end up half a percentage point higher than where the market expects them, and that is assuming that the recession risk stays at about 35 percent. As you said in your conversation with Julia, there is a shift in emphasis now. This was an inflation Fed (ph), and now the emphasis is going more to the employment side of that mandate. And as we look forward, the employment side, and particularly higher unemployment, is going to be much more of a focus for the Fed. Put that with what I think is the vesting level for the inflation rate, which is 2.5 percent, and I see them cutting by one and a half percentage points over the next 12 months.

SOLOMON: OK. So, that has to be some good news for folks who are at least perhaps hoping to buy a home soon. Mohamed, would you go so far as saying that its mission accomplished on the inflation front?

EL-ERIAN: Well, it depends what you define as mission. If you define as mission stable prices, meaning that inflationary expectations are anchored, yes, its mission accomplished. If you go to a specific number, two percent, which is what the Fed has been saying its specific inflation target, and wants to get to sustainable two percent, then mission is not yet accomplished.

[11:45:00]

And there is a concern that that target of two percent worked for yesterday, but doesn't work for today and tomorrow, that the world has changed, that the world is getting more fragmented, that domestically we have much great emphasis in industrial policy, that the target should be higher, but I think that inflation is no longer the problem. What's the problem now is avoiding a much bigger increase in the unemployment rate.

SOLOMON: Are we there yet in terms of really worrying signs from the labor market? The reason why I ask is because, with the last payroll report, there were analysts who said, look, I mean, part of this is a supply issue, and that more people are actually joining the workforce. But, would you say that -- no, you are seeing alarm bells in the labor market. And now the Fed does need to act quickly.

EL-ERIAN: Yeah. I see flashing yellow lights, not flashing red lights, flashing yellow lights. I see hiring. The pace of hiring has come down. The unemployment rate is going up. And while it is absolutely true that the U.S. has benefited from more people entering the labor force, that's absolutely true, people worry about the unemployment rate, and this is really important, because the lower income households have used up all their pandemic savings. They've maxed out their credit cards. So, the only thing keeping their consumption going is the certainty of labor income, and if that comes under doubt, under a cloud, then they will become more cautious, and the economy will slow down much faster. So, think of it as flashing yellow, not yet flashing red, but flashing yellow, and we need to avoid it getting to flashing red.

SOLOMON: Yeah. That's a really helpful anecdote, I think. Mohamed, I mean, all signs flashing green now for a rate cut at the September meeting. But, do you think they made a mistake by not beginning sooner? I mean, you were one of the loudest sort of voices to sort of bring the alarm about transitory, maybe not being so transitory. Do you think they waited too long to start cuts?

EL-ERIAN: So, I think they waited too long in 2021 to hike rates in response to high inflation. I think this time around, they waited too long. I would have had them cut in July. I was among those who were sort of pressing them to cut in July. At the end of the day, July versus September is not the end of the world. But, it's important that, in addition to cutting in September, that in nine days' time, when chair Powell goes to Jackson Hole, which is the conference that brings central bankers together, he gives us clarity both on the journey and the destination. And that's really important, because he will be guiding markets as to how this cutting path is going to proceed.

SOLOMON: Mohamed, let me ask, for people who are watching this, I mean, you're such a trusted voice in this space and who are wondering, look, I mean, I hear the reports. I hear that inflation is moderating, but it doesn't really feel like that at home, who are trying to make sense of sort of what the state of the U.S. economy is right now for their own sense of job security. I mean, what would you say to folks in terms of how you view the U.S. economy right now, in a word, if you might?

EL-ERIAN: So, first I will tell, I totally understand, because inflation moderating doesn't mean prices coming down. Prices are still going up by 2.9 percent, so does the price level shock. So, I understand that. Having said that, we are winning the war over inflation, and just make sure that the labor side, the employment side, doesn't get away from us, because the last thing we need is to win the battle over inflation but lose the battle against unemployment.

SOLOMON: Absolutely. It is a dual mandate. Mohamed El-Erian, it's a privilege to talk to you, as always. Thank you.

EL-ERIAN: Thank you.

SOLOMON: All right. When you have a snack attack, which for me is often, do you reach for salty or do you reach for sweets? Well, now you don't have to choose. Mars, which makes candies like M&M's and Snickers and the Mars bar, has agreed to buy Kellanova. That's the maker of Pringles chips and Cheez-Its. The merger is worth nearly $36 billion.

Joining us now with more is CNN's Nathaniel Meyersohn. So, what do we know about the why behind this deal? Why does Mars want this company?

NATHANIEL MEYERSOHN, CNN BUSINESS REPORTER: I like, Rahel, that you said sweet or salty, because sometimes, it's tough to decide. So, they're just going to combine the two of them. But, the why? There are few key reasons why we're seeing this gigantic merger, one of the largest in the food industry in recent years. The first is because the cost of the two companies have -- has gone up in the past few years. So, they've had to raise prices for consumers, and combining is going to give them more scale to try to drive down prices.

The second reason why these two giants are merging is because Walmart and Amazon and retailers, they just keep getting bigger and bigger. And so, that means that Mars and Kellanova have to get bigger as well to try to be able to negotiate. I mean, imagine Mars trying to negotiate with Walmart on its own, or Kellanova with Walmart on its own.

[11:50:00]

By combining, they're going to have more leverage to negotiate for lower prices with these retailers. And then the final reason is because we've seen kind of the rise of Ozempic and Wegovy really impact the food industry and make investors very concerned about what the future of these businesses look like as more people take weight- loss drugs.

SOLOMON: So, I mean, Nathaniel, to that point. I mean, what can we glean from this deal about the state of the food industry?

MEYERSOHN: So, I think it really has to do with snacks, Rahel. Mars is buying Kellanova, which owns a ton of snack brands like Pringles, also healthier snack brands like RXBAR. And if you look at some data, snacking is on the rise. 46 percent of Americans are having at least three snacks a day, sometimes more. I know I can speak from personal experience. I am constantly snacking in between meals, and that is -- that's good business for these companies. So, snacks are very popular, more salty snacks, rather than sweets. And so, Mars, which has Snickers and all of these candies, they're really trying to stock up on the snacks.

And we've seen other candy makers buy more snack companies recently. You think of Hershey. They bought SkinnyPop popcorn, also even Campbell Soup. They've really invested in their snack brands. So snacks, Rahel, that is the place that the food players want to be.

SOLOMON: Listen, you don't have to tell me anything about snacks, Nathaniel Meyersohn, because me and snacks know each other very well.

MEYERSOHN: We'll see you in the -- Rahel, we'll see you in the cubby later for a --

SOLOMON: Yeah.

MEYERSOHN: -- few snacks. We can decide which we want.

SOLOMON: I'll see you in the break room. Nathaniel Meyersohn, thank you.

And as we just took a quick look at shares of Kellanova there, they looked -- I think they were higher, up about seven percent, if we can pull it back up, we can be clear, but yeah, about 7.6 percent. Shares trading at about $80.22 right now. But, yeah.

And one more thing. There has been an expected -- an unexpected turn in Team USA's effort to reclaim the Olympic bronze for gymnast Jordan Chiles. We're going to have the latest.

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SOLOMON: And before we go, one more thing. The Olympics may be over, but there is a new twist in the tale of Team USA's attempt to reclaim the bronze medal for gymnast Jordan Chiles. She was stripped of her first individual Olympic medal after the Romanian gymnastics team challenged her final score in the women's artistic floor exercise. Now, the medal was later awarded to Romania's Ana Barbosu. Now, it's been revealed that one of the three-member panel which ruled on the decision has a history of representing Romania in legal cases. Team USA says that it will continue to appeal. Stay tuned.

All right. A quick check of the markets, and it is green across the board, perhaps unsurprisingly after that better than expected CPI inflation report, which showed that prices continue to moderate, and headline inflation inching closer and closer and closer to the Fed's two percent target.

[11:55:00]

The Dow is up right now about half a percentage point. The NASDAQ, let's call it a quarter of a percentage point, and the S&P, about four tenths of one percent. But, you like to see green across the board. European markets closed, but also green across the board there, FTSE 100 closing up about half a percent. CAC 40, eight tenths of a percent, and the Deutsche, about four tenths of a percent, rounding up there, but we'll call it that.

Asian markets, meantime, a bit more of a mixed picture. The Nikkei closing higher. Certainly like to see that, especially with all the volatility in the Nikkei and the Japanese stocks. As of late, Hang Seng off about one third of a percent, and the Shanghai Composite off about six tenths of one percent.

OK. Speaking of time and speaking of money, we know your time is money. So, thank you for spending some time with me today. I'm Rahel Solomon live in New York. Stick with CNN. One World is coming up next.

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