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CNN International: US Official: Russian Air Defenses May Have Downed Plane; Parliament Votes To Impeach Acting President; Israeli Military Operations Underway At Kamal Adwan Hospital; Musk, Ramaswamy Defend Foreign Worker Visas; Non-Alcoholic U.S. Beer Brand Brews Formula For Success; Another Stowaway Caught On A Delta Flight. Aired 4-5p ET
Aired December 27, 2024 - 16:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[16:00:25]
JIM SCIUTTO, CNN HOST: Good evening. Welcome to CNN NEWSROOM. I'm Jim Sciutto in New York.
The White House now says there is reason to believe that Russia was responsible for downing the Azerbaijan Airlines flight on Christmas Day, killing more than half of the passengers on board. According to an early investigation, the airline says the plane crashed after experiencing, "physical and technical external interference."
Authorities have recovered two black box flight recorders at the crash site. Also crucial to the investigation will be the eyewitness reports from 29 survivors on board.
CNN's Nada Bashir has been following the story, and Nada, the big question is who is going to be leading the investigation here? Will it be Kazakhstan? Will Azerbaijan? What will Russia's influence be? Will we get a fair investigation?
NADA BASHIR, CNN REPORTER: That's right. And the Kazakh government has set up a commission to investigate the cause of this fatal crash that involves experts from Kazakhstan, from Azerbaijan, as well as Russian experts.
However, we have been told that law enforcement officials from both Russia and Azerbaijan will not be allowed to carry out any sort of forensic investigations independently, and it is the Kazakh government that is leading on this commission. So we will be waiting to hear from authorities within Kazakhstan with regards to the results of that investigation.
And of course, we are aware that manufacturers of the plane itself, as well as the airline officials, will be also participating, sending in experts to support in that investigation.
But again, these allegations that we are hearing, questions around the possibility that this flight may have been downed by Russian air defense systems has certainly raised concerns and questions around this investigation. As you mentioned, two black boxes have been recovered, but it could be weeks, authorities say, around two weeks before a full assessment is complete. So it remains to be seen when we will hear updates from the authorities.
But in the meantime, we are hearing terrifying and truly worrying accounts from those survivors who were on board the flight as it crashed. Take a look.
(BEGIN VIDEOTAPE)
(SUBHONKUL RAKHIMOV speaking in foreign language.)
BASHIR (voice over): Subhonkul Rakhimov thought he was plunging to his death. He said he heard a bang before oxygen masks dropped. Reciting the Shahada, the Muslim Proclamation of Faith, he says what he had thought to be his final prayer.
According to Azerbaijan Airlines, the plane had faced physical and technical external interference. As the pilot attempted an emergency landing, the plane burst into flames upon impact. Thirty-eight people on board did not survive.
RAKHIMOV: Allahu akbar.
BASHIR (voice over): Remarkably, Rakhimov was among 29 people who survived the crash.
(SUBHONKUL RAKHIMOV speaking in foreign language.)
BASHIR (voice over): "After the bang, I already had my mind set that something bad would happen because it was clear that the plane had received some damage," Rakhimov says.
"And when the plane started behaving unusually, then it became a hundred percent clear, I realized then that it was all over and decided I should film my final minutes."
Accounts from survivors like Rakhimov give a rare first hand glimpse into the terrifying final moments of the flight, and potentially what may have caused the crash.
Azerbaijani sources and a US official say preliminary evidence suggests the plane may have been hit by Russian air defenses, a possible case, one US official told CNN of mistaken identity with the Russian city of Grozny, the flights intended destination under Ukrainian drone attack at the time.
(UNIDENTIFIED MALE speaking in foreign language.)
BASHIR (voice over): "Ukrainian combat drones were mounting terrorist attacks on civil infrastructure in the cities of Grozny and Vladikavkaz," the head of Russia's federal air transport agency said. "Due to this, in the area of the Grozny Airport, the "carpet" plan was introduced, meaning all aircraft had to leave the indicated airspace immediately." Russian aviation authorities claim the plane had initially attempted to land in Grozny twice, but was later offered other airport options within Russia, but the pilot rerouted towards the Kazakh city of Aktau instead.
For those on board, it was a terrifying physical and emotional ordeal. For a brief moment, passengers thought they were out of danger.
[16:05:10]
(SUBHONKUL RAKHIMOV speaking in foreign language.)
BASHIR (voice over): "But when the Caspian Sea appeared, the clouds dispersed and the plane began to behave unusually," Rakhimov says, "The feeling of tension began to increase, both for other passengers and for myself."
Russian authorities have yet to respond to allegations that their air defenses may have played a part in the fatal crash, but clear perforations in the fuselage point to shrapnel or debris hitting the plane while still in the air, according to several aviation experts.
The hope now is that recovered black boxes will provide more definitive information regarding the plane's final moments.
(SUBHONKUL RAKHIMOV speaking in foreign language.)
BASHIR (voice over): "I was conscious when I felt the impact. I was thrown up and down and back up again. I was strapped in, yet I was being thrown back and forth," Rakhimov recounts. "It all lasted for a few seconds. Then everything went quiet. There was silence. Everything was calm, and I realized that that was it. We had landed."
(END VIDEOTAPE)
BASHIR (on camera): And Jim, earlier today we heard from Azerbaijan Airlines officials who said that the plane had faced external, physical and technical interference. So that will be a key line of inquiry, of course, for investigators.
And just in the last few hours, we've heard once again from a US official saying that the holes that have been seen in the fuselage and the body of the plane in that wreckage are consistent with shrapnel damage caused by an explosion.
So certainly a lot of questions still, and this will be the focus for investigators as they carry out their investigation.
SCIUTTO: And many experts are making comparisons between those holes and the ones seen in the fuselage of MH17, shot down by a Russian missile over Ukraine in 2014.
Nada Bashir, thanks so much.
Well, South Korea's political turmoil has now deepened even further. In a chaotic session earlier today, the Parliament voted to impeach another president, the acting President Han Duck-soo, This happening fewer than two weeks after lawmakers impeached the current president over his decision to impose martial law on the country.
CNN's Hanako Montgomery has the details.
(BEGIN VIDEOTAPE)
HANAKO MONTGOMERY, CNN INTERNATIONAL CORRESPONDENT: This is the latest development in what has been a very dramatic political saga in South Korea.
This is the first time in the country's history that an acting president has been voted to be impeached, and it comes less than two weeks after the actual president, President Yoon Suk Yeol was also voted to be impeached.
So what we are talking about here is two impeachment votes in less than two weeks. I mean, this is unprecedented not only in South Korea, but also for much of the democratic world.
Now, there are many reasons why the acting President Han Duck-soo, was voted to be impeached today by the country's Parliament. But what really stands out is a statement made by the main opposition party leader. Give this a listen.
LEE JAE-MYUNG, SOUTH KOREAN OPPOSITION LEADER (through translator): We will remove Yoon Suk Yeol from office, uproot his loyalist forces and fully suppress the insurrection. Until that moment, we will pool all our resources and fulfill our historic responsibility.
MONTGOMERY: Now for some background on the events that led to today's vote.
On December 3rd, South Korea was plunged into political turmoil after the country's president declared martial law. Then, less than two weeks after that, the country's parliament decided to vote to impeach the president and stripped him of his duties.
But in order for the formal impeachment process to conclude, a constitutional court ruling upholding that impeachment vote is necessary, but critically and here is the problem right now, South Korea's Constitutional Court doesn't have enough judges to issue such a ruling, and it is actually the job or the responsibility of the acting President Han, to fill those remaining spots, fill those vacancies on the country's bench.
But so far, he has refused to do so, leading to this political deadlock were seeing right now.
Now, looking ahead, next in line to serve as the acting president is the country's Finance minister. But South Korea is still far from politically stable. In fact, this turmoil, this political game of musical chairs, if you will, is coming at a very critical time for South Korea. It is preparing for a new Trump administration and the political instability that South Korea is seeing within its leadership is raising some questions and concerns about how well it can engage in diplomacy and maintain stable US-South Korean ties.
And the question that still remains to be answered is how much longer will this political instability in South Korea last? And that's anybody's guess.
Hanako Montgomery, CNN.
(END VIDEOTAPE)
SCIUTTO: Major questions there.
[16:10:00]
Now to a critical situation unfolding at one of the last functioning hospitals in all of Gaza. The director of Kamal Adwan Hospital says Israeli forces are besieging it in Beit Lahia and forcing everyone to evacuate. He says troops are burning all of the operating departments and have detained staff members.
Israel confirms military activity around the hospital. They call it a Hamas terrorist stronghold.
In Israel, the attorney general has ordered an investigation into the Prime Minister Benjamin Netanyahu's wife, Sara. Why?
Our Elliott Gotkine is in Jerusalem with the details.
(BEGIN VIDEOTAPE)
ELLIOTT GOTKINE, CNN CORRESPONDENT If there is one thing that riles Prime Minister Benjamin Netanyahu more than being in the dock himself, it is accusations against his wife.
Sara Netanyahu, who has a 2019 conviction for misusing public funds now faces formal investigation for allegedly intimidating a witness in her husband's corruption trial, as well as indirectly harassing the attorney general and deputy attorney general.
The allegations were first aired on Israel's Channel 12's "Uvda" program, the country's equivalent of "60 Minutes." Benjamin Netanyahu decried the report as a new blood libel, calling it biased and false propaganda.
The prime minister sees it as another strand of what he describes as a witch hunt against him, orchestrated by the left wing media, and which led to him being tried for fraud, breach of trust, and bribery, charges he vehemently denies.
Netanyahu asked that his trial be postponed due to the wars with Hezbollah in Lebanon and Hamas in Gaza, but to no avail.
In the enclave itself, the Israeli military on Friday said it was carrying out targeted operations against what it described as a Hamas terrorist stronghold in and around the Kamal Adwan Hospital in Northern Gaza. Hamas has denied that it uses hospitals for military purposes, and the IDF has not offered definitive proof of its claims. Hospital director, Dr. Hussam Abu Safiya said in a social media post that the IDF was besieging Kamal Adwan and issuing orders for its evacuation.
A few hours later, Abu Safiya said the Israeli military was burning all the operating departments in the hospital and had evacuated all displaced people and staff, some of whom he said had been arrested. Smoke could be seen billowing from the building.
The IDF said troops had facilitated the secure evacuation of civilians, patients, and medical personnel prior to the operation.
Elliott Gotkine, CNN, Jerusalem.
(END VIDEOTAPE)
SCIUTTO: Still ahead, Russia seems to have an endless supply of drones in its war on Ukraine. We are going to take a look at the dangerous technology behind those drones.
(COMMERCIAL BREAK)
SCIUTTO: Russia is further expanding its drone attacks, terrorizing Ukrainian cities and civilians on an almost daily basis. A factory near Moscow is cranking out the Russian version of Iran's Shahed drones, which Tehran has been supplying to Moscow in large numbers.
[16:15:04]
But as Clare Sebastian reports, Russian engineers are taking the Iranian knowhow to a new and a deadlier level.
(BEGIN VIDEOTAPE)
CLARE SEBASTIAN, CNN CORRESPONDENT (voice over): The caption "My mom's reaction when she found out I earn more than her." Cat videos, TikTok memes all part of a recruitment effort funneling workers into Russia's ever expanding drone program.
The videos are made by Alabuga Polytech, a technical college based at the Alabuga Special Economic Zone in Southern Russia, the same site identified by the White House last year as Russia's domestic Shahed factory producing Iranian-designed drones.
In February, the US slapped sanctions on Alabuga, noting it, "exploited underage students from an affiliated polytechnic university as laborers to assemble these attack UAVs." David Albright, a former nuclear weapons inspector, has been tracking Alabuga since 2022.
DAVID ALBRIGHT, INSTITUTE OF SCIENCE AND INTERNATIONAL SECURITY: The only benefit is the high salary, but the males get exemption from military service. And so, that -- that's a drawing card.
SEBASTIAN (voice over): A Ukrainian intelligence officer, only authorized to speak to CNN anonymously, told us those perks come at a cost.
OREST, UKRAINIAN DEFENSE INTELLIGENCE OFFICER (through translator): All students involved in the production of these UAVs live at a separate limited access compound. Once employed, they sign NDAs. Their contracts say they produce motor boats.
SEBASTIAN (voice-over): And yet, as recruitment efforts step up, this video from July allowed the facade to slip.
"Thinking of starting 10th grade," says the voiceover, "Join the super elite program Air Navigation and Drone Programming at Alabuga Polytechnic and help the Stalin's Falcons." That's a new drone unit in the Russian military.
Pause here and you see the distinctive serial number of the Russian- produced Shahed and the unit emblem.
In July, Russia fired 422 Shahed or similar drones at Ukraine. By November, it was almost six times that, Analysis of Air Force reports and official data show.
To meet that demand, Shahed production at Alabuga has more than doubled this year, say CNN sources in Ukraine's defense intelligence, and there is a new product.
This is the Gerbera, a much cheaper copy of the Shahed, pictured in a video posted in July by the Stalin's Falcons, that same drone unit.
For this volunteer air defense unit in Kyiv, it's clear the cheaper copies are fueling bigger attacks.
YURIY CHUMAK, UKRAINIAN AIR DEFENSE VOLUNTEER: Now they sent -- Russia sent every day a lot of drones. More of them are not even with the explosive things, just very cheap and very simple drones.
SEBASTIAN (voice over): For Yuriy Chumak, a serving Supreme Court judge by day, there is no denying the decoys are working.
CHUMAK: We cannot detect what it is. You just see that it's drone. So, you shall use missile or you shall use machine gun to shut down it.
SEBASTIAN (voice over): CNN sources in Ukrainian defense intelligence believe Alabuga will produce up to 10,000 Gerberas this year alone. Analysis of downed drones shows Russia has also adapted the original Shahed, making it tougher, more weatherproof, and in some cases, deadlier.
In late October, experts in Kyiv found traces of thermobaric munitions on downed Shaheds.
OLEKSIY STEPANIUK, KYIV SCIENTIFIC RESEARCH INSTITUTE OF FORENSIC EXPERTISE (through translator): There were several of them. Their effect is that they're used as incendiary munitions. In a certain radius, they disable all equipment and people.
SEBASTIAN (voice over): Ukraine has tried hitting back. This April strike, using a modified small aircraft, blew a hole in the roof of a worker dormitory at Alabuga.
SEBASTIAN (on camera): But, neither that strike nor international sanctions could stop the break-neck pace of expansion here. Between March and September this year, two entirely new buildings appeared next to the original ones.
SEBASTIAN (voice over): And this image from late November seems to confirm they're connected. New covered walkways link old and new buildings. Another looks set to join the factory to the work of dormitories, now fully repaired.
ALBRIGHT: They started to create, we thought, drone cages over the buildings. And then, as the -- as they build other buildings, it looks like they're expanding the security perimeter.
SEBASTIAN (voice over): NATO told CNN it is, "Well aware of Alabuga, and expects it to ramp up production even further." This military patriotic team-building event for Alabuga students, a glimpse into the high octane world behind that security fence.
Clare Sebastian, CNN, London.
(END VIDEOTAPE)
SCIUTTO: Of course, the war itself much deadlier than paintball.
A Georgian billionaire has been sanctioned by the US over his party's close relationship with Russia.
[16:20:02]
Bidzina Ivanishvili is the former prime minister and head of the Georgian Dream Party. That party claimed victory in recent elections contested by outside observers, as well as Georgian opposition politicians.
He then announced the suspension of EU accession talks, which sparked widespread protest protests in public there. US Secretary of State Antony Blinken says the party has left Georgia vulnerable to Russia.
Earlier, I spoke to Jill Dougherty about it.
(BEGIN VIDEOTAPE)
JILL DOUGHERTY, CNN RUSSIAN AFFAIRS CONTRIBUTOR: Aside from this breaking news tonight here in Georgia, it came in the evening about Ivanishvili.
This is already a constitutional crisis. You have the president, who was elected four years ago, who is a western oriented politician, saying that she is still the president of Georgia and she will remain so because the election, in essence, was stolen and the election was for the Parliament that chose the other candidate, the other president.
So, the culmination will be Sunday when the president chosen by the Parliament is supposed to be inaugurated, and then you have that amazing situation of having two presidents at the same time.
Now, the government, which is controlled by the Georgian Dream Party that we've been talking about says no, there is only one president and if the existing president, Salome Zourabichvili, a woman stays in the Presidential Palace, she will be breaking the law, and she could be arrested. So it is a very dramatic situation.
I don't think either side wants a lot of chaos. That is, at this point not beneficial to anyone. But nobody knows you know, passions are high. Tonight, yet again, there were more protests on the street, people marching "Death to the Parliament," and it has been going on for practically a month.
So people are tired. I talked to them last night. People are tired and concerned and they don't know exactly where all of this is headed.
SCIUTTO: Listen, you know as well as me that this is a frequent occurrence in countries that form part of Russia's former, well, the Soviet Union, former Soviet Union, but it is near abroad. It does not like those countries to move closer to the West and when countries, if you look back at Ukraine a number of years ago when they elected pro- Western leaders, Russia tried to flip elections when there were protests, they shot protestors, right?
And then, of course, two invasions followed. Georgia was already invaded by Russian forces in 2008, partially so. How do you see Russia's hand in this going forward?
DOUGHERTY: Well, they certainly have influence here, but I am not convinced that this is a situation where Russia would invade. I mean, they were already, as you pointed out, they hold two territories already, but it is -- the government here is, let's say, influenced enough by Russia that I don't think Russia has to really physically do anything.
You know, this is why the decision by the United States government to have sanctions against Bidzina Ivanishvili is very important because just to set the stage, he is a billionaire and he is the person, the richest person in Georgia. He created the Georgian Dream Party. He is now its honorary chairman, and he essentially controls the country politically.
Except that, you have this vibrant civil society that is out there on the streets wanting their western vector, their direction toward the EU to continue. So that's the drama here.
I mean, the United States and Europe have been having sanctions against Georgian officials almost on a regular basis. I think it was just a week or two ago, the United States had sanctions against two senior Georgian officials, but having them against Ivanishvili is really significant.
And you know how he will react, how it will affect him. It could affect him very strongly because of his holdings that he has around the world.
SCIUTTO: Yes.
DOUGHERTY: So a lot of questions here, Jim.
(END VIDEOTAPE)
SCIUTTO: Our thanks to Jill Dougherty for that analysis.
Still ahead, seven was indeed a lucky number on Wall Street this year. Why betting on the Magnificent Seven, as they're known, was the secret to investing success in 2024 and what weaknesses does that reveal? We will explain, coming up.
(COMMERCIAL BREAK)
[16:27:14]
SCIUTTO: Hello, I'm Jim Sciutto.
We will have more CNN NEWSROOM in just a moment. Before that, the headlines we are following this hour.
NATO says it will boost its military presence in the Baltic Sea after a suspected sabotage of an undersea power cable linking Finland and Estonia. Finnish authorities have now seized a tanker carrying Russian oil, believing it may be responsible for causing the internet and power cable outages.
White House officials say North Korean forces are suffering heavy casualties as they conduct what they describe as ineffective assaults on Ukrainian positions in Kursk, and that Russian and North Korean military leaders are treating the troops as expendable.
The US estimates more than a thousand North Korean soldiers have been killed or wounded in just the last week.
Germany's president dissolved the country's Lower House of Parliament on Friday. The expected move paves the way for snap elections in February following the collapse of Chancellor Olaf Scholz's three-way coalition.
The president also called for the election campaign to be conducted fairly and transparently.
Trump Cabinet picks, Elon Musk and Vivek Ramaswamy have sparked uproar among some of Trump's fiercest loyalists after they argued a visa program for highly skilled foreign workers should be expanded. Musk said firms need to recruit top talent wherever in the world they may come from, in order to stay competitive. Ramaswamy said tech firms often had to look outside the US for their top engineers because, "American culture has venerated mediocrity over excellence."
Joining me now is Larry Sabato. He is the director of the Center for Politics at the University of Virginia.
Larry, good to have you. This split is notable inside the MAGA Movement because one uniting force in this election for Trump supporters had been an anti-immigrant position that Trump touted, and he still touts and he is talking about a major deportation program.
But here you have two of his most trusted advisers, including one of his biggest, perhaps his biggest donors, saying, actually, we need highly educated immigrants. Is this a resolvable conflict within the movement?
LARRY SABATO, DIRECTOR, CENTER FOR POLITICS, UNIVERSITY OF VIRGINIA: Oh, yes. I suspect Trump will come down on both sides and will give both something of what they want. It is a legitimate argument, by the way.
I actually think for once that that Musk and Ramaswamy are correct in what they are saying about skilled people, and there are lots of examples of this in American history, just in modern times, especially after World War Two, when we spirited 1,600 people away from Germany, including the great Wernher Von Braun, to build our space program and the Saturn V rocket that got us to the moon. So it is not unprecedented.'
At the same time, this is revealing in that during the Trump administration, part two, you're going to find there are more factions than you think. They were submerged during the campaign for obvious reasons. They had a tough campaign. They wanted trump to win.
But now that the campaign is over, the hard right ultra-MAGA, we've been there from the beginning people are starting to fight with the hey, the high tech new MAGA people who basically are with Trump for their own interests. To a great degree, this does help Musk and Ramaswamy's own businesses.
[16:30:45]
SCIUTTO: Listen. I mean the trouble, I suppose, arises in part about how broad a brush Trump used to paint, sort of all immigrants as a foreign invasion, when there are genuine discussions about what kinds of immigrant skills, et cetera, the economy needs. The other split that became obvious in the budget debate right is that you have the folks inside the Republican Party who want to attack the deficit, don't want to raise it, even for things like, well, Trump's tax cuts which are a big part of his legislative agenda, which are going to add to the deficit.
I mean, that's the one that you can't -- you can't square that circle. I mean, you're going to -- you're going to have to upset one side or the other.
SABATO: Yes, and if you listen to what Trump has said really, since he got into politics, he basically agrees that deficits don't matter. I'm not saying they don't matter. I'm saying that's the side he's come down on, and most presidents do because it allows them to do a lot more. They don't worry about building up the debt.
SCIUTTO: I mean, the basic rule is, I like my spending, but not your spending and I'll do whatever is necessary for my priorities.
SABATO: Yes. It's a shame of other presidents have done such a poor job and built up this big debt and my spending is -- help us.
SCIUTTO: I want to ask you about another thing because a lot of attention about Trump's expansionist positions just in the last several days, including on Christmas. He wants to make Canada the 51st state. He wants to buy Greenland from Denmark. Denmark says it's not interested. But the Panama Canal in particular. And I bring this up because I spoke to David Urban last night and he made quite a case for it.
I'm not saying I was convinced by the case. I'm saying it just indicated to me that Trump is serious about going after the Panama Canal. Let me play his comments and I want to get your thoughts on the other side.
(BEGIN VIDEO CLIP)
DAVID URBAN, CNN SENIOR POLITICAL COMMENTATOR: They embraced China. They were the first country in Central or South America to sign the Belt and Road -- to ink the Belt and Road Initiative with the Chinese. If our strategic waterways are threatened, the Panama Canal being a very strategic importance for getting military ships, cargo ships back and forth from the Atlantic Pacific and that's threatened by the Chinese, there is a clause.
It's not an arcane clause in some 100-year-old document. It's in the 1977 document. There's a specific out in there saying that the neutrality was threatened. We going to do it.
(END VIDEO CLIP)
SCIUTTO: You know, I pressed him as well, Larry. I said, go in with the military. And he didn't wave that off. I just wonder do you hear what I hear which is that Trump wants the Panama Canal. He might go for it.
SABATO: Saber rattling. It's an old presidential tool, saber rattling. That's what he's doing. And by the way, David Urban is correct. There is a clause in there. Jimmy Carter was the one who got it put in. He was president at the time, and he did it to get some Republican votes in the Senate. You needed 67 votes to ratify a treaty. He actually got the Panama Canal treaty ratified. Isn't that incredible? You couldn't do it today.
But at the same time, I think David and other Trumpists need to go back to the Yankee Go Home movement. That wasn't just in Panama. It was throughout pretty much Mexico, Central America, South America. We had a lot of demonstrations, some violence. It's easy to build up public sentiment against the United States. So, I don't think you want to -- certainly you want -- don't want to do anything that's military oriented.
You can certainly use the arguments to build your case that the United States deserves lower fees, or something like that. That's perfectly reasonable.
SCIUTTO: Well, we'll see how it plays out and how far he's willing to go. Larry Sabato, thanks so much. As always.
SABATO: Thank you, Jim.
SCIUTTO: Well, the post-election Trump bump has helped propel U.S. stocks to a series of record highs. Of course, the market was already at a high prior to the election, but U.S. stocks ended the holiday short and weak lower. That said, Wall Street remains on track to end 2024 with strong gains thanks in particular, to a tiny basket of tax stocks called The Magnificent 7. The big question is, can that seven remain magnificent? Is it enough to sustain the market? Matt Egan explains.
[16:35:05]
MATT EGAN, CNN REPORTER: Do you remember the Fab Five in basketball? Well, now you have the Mag 7 in the stock market. We're talking about Alphabet, Amazon, Apple, Meta, Microsoft, Nvidia and Tesla combined. These companies are now valued at more than $18 trillion. Trillion with the T. Some context. That's more than the entire GDP of China. Pretty amazing when you think about it.
Apple alone is on the verge of becoming the first company to be valued at $4 trillion. Now, these seven stocks have been basically carrying the market higher since Election Day. These seven stocks have accounted for 86 percent of the gains in the S&P 500. 86 percent and this trend is not entirely new. Coming into today, the S&P 500 had surged almost 30 percent on the year. But without the Mag 7, the S&P would only be up 13 percent on the year.
So still up, but not nearly as much. Now, when you think about these seven stocks, what they have in common is, well, first, they're all big, big technology companies, but they're also all A.I. plays. They're investing heavily in Artificial Intelligence and investors believe that they will emerge as among the winners in this A.I. arms race. And we know that A.I. has been the hottest part of the bull market in stocks.
Of course, the question is, how long will they stay hot? Because this market has become very concentrated among just a few players. Goldman Sachs has found that the top 10 S&P 500 stocks make up 36 percent of the index's value. We've seen a similar situation play out in the past, including the late 1990s before the bursting of the dot-com bubble and in 2019 and 2020, before COVID.
But still, this is a record level of concentration, according to Goldman Sachs. So as far as what all this means for as long as A.I. stays hot, we could keep seeing the markets go higher and higher, and this will benefit passive investors, right? Everyone who has their investment portfolios blindly tied to the S&P and other market indicators. You think about everyone who is a 401(k) or college savings plan.
But in the long run, it's not really healthy to have the market depend on the success of just a few players. It would be like an NFL team that can't score without their running back. What if the running back gets hurt or gets into a slump, right? You're out of luck. And we have seen that play out in recent days where the Mag 7 stocks have fallen and they've dragged down the rest of the market.
It's almost impossible for the overall market to go up when these seven stocks are all in the red. I do think that as we close out what has been a blockbuster 2024 in the stock market, this does expose a potential vulnerability in 2025 because for the market to keep breaking records, we're either going to need to see this rally broaden out or these seven stocks are going to have to stay magnificent. Back to you.
SCIUTTO: What if I told you that one of the fastest growing beer brands here in the U.S. is alcohol free. The Athletic Brewing Company started out of a garage several years ago. Now it is producing millions of cans. Clare Duffy sat down with the company's founders, trailblazers who made it on to this year's list of CNNs risk takers.
(BEGIN VIDEO CLIP)
JOHN WALKER, CO-FOUNDER, ATHLETIC BREWING COMPANY: There were a fair amount of people who thought I was a little bit crazy and kind of risking my family's wellbeing by jumping on Bill's boat.
BILL SHUFELT, FOUNDER, ATHLETIC BREWING COMPANY: All we had was this 96-page white paper about what nonalcoholic beer could be. Understandably and rightfully so, we got a lot of nos.
WALKER: Come on into the brewery.
SHUFELT: At any given time we probably have about 30 million cans in our breweries.
CLARE DUFFY, CNN BUSINESS WRITER (voice-over): That volume of output dwarfs the garage-based hand bottle days of athletic Brewing Company just seven years ago. Today, it's one of the fastest growing, largest producing craft breweries in the country.
DUFFY (on camera): You left a pretty cushy finance job to pursue this vision. Where did the idea come from?
SHUFELT: It just developed out of a really authentic need in my life. I was trying to be a little bit healthier, a little bit more productive at work. One of those changes I wanted to make in my life was to reduce drinking and ultimately stop drinking, except there had been no evolution of adult nonalcoholic beverages. Ultimately, it got to the point where I was like complaining about this enough to my wife that my wife said you should fix that.
DUFFY (voice-over): It took you a little while to find John. Describe what it was like to find a brewer.
SHUFELT: Most people heard that word nonalcoholic and within 30 seconds, I got a click with like some niceties and a hang up. John really got it and gave me a chance to talk about it.
[16:40:00]
WALKER: It made total sense to me right off the bat. And then also being craft, for the prior seven years, I saw so much opportunity with flavor and all this experimentation that you can have in beer.
DUFFY (on camera): What was it like figuring out how to make a good tasting nonalcoholic beer?
WALKER: It was quite challenging. We kind of deconstructed the brewing process down to its bare bones and started rebuilding so that we could wind up with a fully flavored, amazing, nonalcoholic beer.
DUFFY (voice-over): Eventually, they developed a proprietary brewing process that creates fully fermented nonalcoholic beer from the start, but figuring out how to make the product wasn't the only challenge. Nonalcoholic beverages made up just 0.2 percent of total alcohol sales in 2018, the year after Athletic was founded.
DUFFY (on camera): What was it like finding investors for this project?
SHUFELT: This category basically didn't exist. We didn't have any samples to bring to people, so we did 120 plus investor meetings. And ultimately, about half of that group ended up investing in us and coming along for the ride.
DUFFY (voice-over): Nonalcoholic beverages still make up a small percentage of total alcohol sales but Athletic is optimistic about the future. The company has opened breweries on both coasts and is now the top selling beer at Whole Foods.
SHUFELT: There was a long time where we felt like we were very alone and trying to, like, push this rock up the hill. And we love what, for example, like Heineken or Guinness in the spirits category, what like ritual has done. So, we're really excited to have help building the category. There is a real opportunity here to give people something great that is the best part of their day and disrupt a 5000-year trend.
(END VIDEOTAPE)
SCIUTTO: It's quite a longtime trend. Coming up. Delta of Deja vu. A worrying one. The airline says another stowaway made it through security and onto a flight. We're going to tell you what happened, maybe how it happened in just a moment.
(COMMERCIAL BREAK)
SCIUTTO: When you think of Hong Kong, towering buildings and busy streets may be the first things that come to mind but Hong Kong is surrounded by seas that are full of life today on Call to Earth we dive into the South China Sea with a group of students. Their school sustainability programs are collaborating with a local organization helping protect the ocean.
(BEGIN VIDEOTAPE)
DAVID O'DWYER, CHAIRMAN, LIVING SEAS HONG KONG: This is a particular dive site that we think is fantastic from a biodiversity perspective, but it's currently outside the radar of other groups in terms of identifying sites that need to be protected.
[16:45:11]
JULIA VARGAS JONES, CNN NATIONAL CORRESPONDENT (voice-over): It's Saturday in the water surrounding Hong Kong's Basalt Island where a group of students from the Li Po Chun United World College are being prepped for a full day of underwater research.
SEBASTIAN PILACUARI, STUDENT, LI PO CHUN UNITED WORLD COLLEGE: Today we're doing some citizen science. We're collecting biodiversity data of marine ecosystems.
O'DWYER: As you're diving along with your buddy teams, you're going to be making a note of what you see as best as you can.
JONES (voice-over): Local nonprofit Living Seas Hong Kong set up the excursion for the school's coral monitoring group. A decades old program that teacher Craig Hamilton says has evolved in recent years.
CRAIG HAMILTON, TEACHER, LI PO CHUN UNITED WORLD COLLEGE: It's developed a lot further into more coastal sustainability practices such as oyster restoration and mangrove restoration as well.
JONES (voice-over): Today, the focus is on marine life identification in support of a Living Seas Hong Kong project that aims to create more marine-protected areas.
O'DWYER: We started the Living Seas marine life surveys during COVID 2021 we thought that there wasn't enough data coming out highlighting the marine biodiverse hot spots in Hong Kong waters.
JONES (voice-over): Only around five percent of Hong Kong seas are currently designated as marine protected areas, a number David O'Dwyer would like to see increase rapidly.
O'DWYER: Hong Kong is a signatory on the Convention on biodiversity, which has set a target of 30 percent of seas by 2030. So there actually still needs to be more. And marine-protected areas are important because the seas here are a fantastic resource, but it's under threat, and it's been under a lot of stress for many years. Too much fishing has been going on, too much damaging things happening in environment.
JONES (voice-over): With the support of Living Seas personnel once under water, the students do the best they can to identify various marine life.
CICHI CHEUNG, STUDENT, LI PO CHUN UNITED WORLD COLLEGE: I think data collection is definitely a vigorous source, and for us, if we want to like increase protection, we need to show proof that it is necessary here.
JONES (voice-over): When they return from a dive, each team discusses what they saw, reviews any notes made on their underwater slates, and record it all on identification sheets.
O'DWYER: So we should be recognized. If you don't, we can have a look at the photos.
JONES (voice-over): A recent typhoon has made today's survey particularly challenging compared to the last time they were here.
SOFIA MORA, STUDENT, LI PO CHUN UNITED WORLD COLLEGE: Today, the visibility wasn't that great, so we couldn't like catch everything. This time we didn't find as much but we found really cool things.
JONES (voice-over): The second dive site, near sharp Island, offered slightly clearer waters, but for Living Seas, any and all data collected is critical, regardless of the circumstances.
O'DWYER: It is important to do surveys at different times of year under different conditions. You've got to choose different seasons. You don't necessarily, you know, just choose the good times.
JONES (voice-over): When the students return to the classroom, they'll begin the process of cross referencing their findings.
O'DWYER: I'm sure we will see some additional species when we look at the photos.
JONES (voice-over): A thorough review of the pictures they've captured helps confirm the identities of the various marine life.
NATHAN CHEUNG, STUDENT, LI PO CHUN UNITED WORLD COLLEGE: So right now, we have spotted that this is indeed a large hermit crab, and we just rename this picture, so it's easier for us to identify in the future.
JONES (voice-over): Once validated, the information they've gathered will be added to the Living Seas database, which will ultimately be used in future efforts to establish new marine protected areas.
HAMILTON: Our goal is that we are creating the leaders of the future and we want them to have a passion for protecting the environment as well.
(END VIDEOTAPE)
SCIUTTO: What a great story. For more from Call to Earth, visit cnn.com/calltoearth. And we'll be right back.
(COMMERCIAL BREAK)
[16:50:37]
SCIUTTO: Welcome back, if you can believe it, another stowaway has been arrested after boarding a Delta flight, raising major questions about airport safety. The passenger was trying to fly from Seattle to Hawaii without a ticket on Christmas Eve. The same day, a body was found in a wheel well of United Airlines plane that had just landed in Maui from Chicago. There was another incident around Thanksgiving when a woman flew from New York to Paris on a Delta flight without a ticket at all.
Carlos Suarez joins me now from the world's busiest airport, Atlantis Hartsfield Jackson. Is there any explanation for how all these cases were able to happen? I mean, it raises major concerns about access to planes.
CARLOS SUAREZ, CNN CORRESPONDENT: Yeah, that's exactly right, Jim. So there are so many unanswered questions in this story, including just how much time this unticketed passenger was able to spend in that terminal before boarding that flight, as well as, just as you mentioned, all these questions about how this person was able to get past this the security checkpoint, and how once that plane was back at the gate, this passenger was able to run out of the plane before law enforcement arrived.
(BEGIN VIDEO CLIP)
SUAREZ (voice-over): A stowaway discovered again hiding on an airplane just moments before takeoff on Christmas Eve in Seattle. The unidentified individual cleared a standard security screening the night before the flight, bypassing identity verification and boarding status stations without a boarding pass. An airport spokesperson tells CNN, the following afternoon they were able to board the Delta flight still without a boarding pass.
UNIDENTIFIED MALE: He must have been a sweet talker Betty Crocker because I don't -- I couldn't imagine how you could ever do that.
SUAREZ (voice-over): When the person was discovered on board the plane returned to the gate to remove them. According to the airport spokesperson, the suspect then, "ran out of the plane before police arrived and hid in a bathroom in the airport terminal." Port of Seattle, police used video surveillance cameras to find and arrest the suspect.
BRADY BLY, PASSENGER ON DELTA FLIGHT 487" Nobody knew really what was going on. So we were kind of left in the dark.
SUAREZ (voice-over): All passengers on board were deplaned and rescreened by TSA, delaying the flight for nearly 2-1/2 hours.
BLY: Leaves you to wonder the worst you're stuck on the plane and what if there was explosives or something?
SUAREZ (voice-over): The incident elevating security concerns during one of the busiest seasons for travel.
MILES O'BRIEN, CNN AVIATION ANALYST: I understand that transportation security authority agents are besieged, but these are the areas where the system is, you know, blinking red.
SUAREZ (voice-over): So far, officials from the TSA, the Port of Seattle and Delta representatives have not explained how this person was able to bypass so many layers of security. Delta apologized to delayed passengers in a statement saying, "There are no matters more important than safety and security." The TSA said it takes such incidents seriously and "will independently review the circumstances of this incident."
O'BRIEN: I think the responsibility for these stowaway events so far has been sort of joint between the TSA for letting these individuals pass their I.D. checkpoints and the airline, in this case, Delta, for not being vigilant enough at the doorway to that jetway.
SUAREZ (voice-over): It's the second time in weeks that a passenger boarded a Delta flight without a ticket.
UNIDENTIFIED MALE: Folks, this is the captain, we are just waiting for the police to come on board.
SUAREZ (voice-over): Just before Thanksgiving, a woman snuck onto a Delta flight from New York's JFK Airport to Paris. It took three attempts to get her back to the U.S. to face charges.
(END VIDEO CLIP)
SUAREZ: All right. So the TSA said that this UN ticketed passenger did not have any prohibitive items, prohibited items, excuse me, that the passenger was detained, arrested on a criminal trespassing charge. And Jim, authorities have not released the passengers name just yet.
SCIUTTO: Of course. Question is, could someone with some sort of weapon or device use the same methods to get on a plane? That's the concern. Carlos Suarez, thanks so much.
Well, storms across the U.S. could derail what is expected to be yet one more busy travel weekend. Storms are expected to hit the southern and western U.S. in the coming days. Things already off to a shaky start in some places. Nearly 800 flights within -- into or out of the U.S. were canceled. Thursday, more than 100 canceled today.
[16:55:06]
Joining us now, CNN's Chad Myers. You know, I don't love your updates, right? Because sometimes they're bring bad news about holiday travel. But we need it. We need to know where the trouble is. So tell us where the trouble is.
CHAD MYERS, CNN METEOROLOGIST: You know, there's going to be more trouble, I think driving in the rain and thunderstorms, then there will be really flying. Airports are doing very, very well today. There's some showers in the East and some rain in the West, but for the most part, a little yellow airplane here means 15 or 20 minutes, and you can really deal with that. You're not even going to miss a connection there.
So, here's the rainfall now. And it's easy to say, but hard to remember that Chicago is getting rain. I mean, this shouldn't this be snow this time of year? No. And there's actually severe weather farther down to the south, down into parts of Mississippi and Alabama, even one tornado warning going on right now. So that's how warm the atmosphere is, how volatile it is. It will be more volatile tomorrow.
Significant tornadoes are possible Mississippi, Alabama and even some of the parishes of Louisiana. This is an area that could pick up EF2 tornadoes or greater. And Jim, the real threat here is that they could happen after dark, after you are asleep. So, move that map ahead here, from all the way to Saturday into Sunday. A lot of people going to be driving I-95 by the afternoon. That is going to be a wet complete mess.
At least it isn't white. Now back out to the West, this is where we're seeing all of the heavy rain, wind, winter storm warnings, wind warnings out there and for the next couple of hours here, more rain coming in could slow down Seattle and Portland, but that snow ends up in the ski resorts of the Pacific Northwest over the next 24 hours. Good news there.
SCIUTTO: Well, at least they get some snow. I still want my white Christmas. Chad Myers, I expect you to deliver it, I'll keep asking 362 more days exactly. We will have more news after this. Do stay with CNN.
(COMMERCIAL BREAK)
SCIUTTO: So you if you want to experience a winter wonderland unlike any other, head to China's northernmost province. The 26th edition of the world's largest indoor ice and snow theme park opened to the public on Saturday in Harbin, China. Harbin, also known as Ice City. The festival is open until March. Features interactive projects, entertainment, massive ice sculptures, as well as gourmet food and more.
On New Year's Eve, less than a week away now, be sure to tune in for celebrations around the world.
[17:00:03]
CNN's coverage starts Tuesday the 31st at 12:00 p.m. in London, 8:00 p.m. in Hong Kong.
