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Early Start with John Berman and Zoraida Sambolin

China's Stocks Plunge Overnight; White House Gives Biden Blessing to Run; Bush on the Border; Tensions Defused Between North and South Korea. Aired 4-4:30a ET

Aired August 25, 2015 - 04:00   ET

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

[04:00:15] ALISON KOSIK, CNN ANCHOR: Breaking overnight: China's markets plunging after the Dow suffered its biggest one day drop ever. Will stocks continue to slide or can they finally find stable footing? We are live.

CHRISTINE ROMANS, CNN ANCHOR: Joe Biden could be one step closer to entering the presidential race with new words of encouragement from the White House.

KOSIK: Jeb Bush campaigning on the border, defending his immigration policy, but he may have found himself wading into new controversy.

Good morning and welcome to EARLY START. I'm Alison Kosik.

ROMANS: I'm Christine Romans. So nice to have you here this morning.

KOSIK: Happy to be here with you.

ROMANS: Nice to see you. It is Tuesday, August 25th, 4:00 a.m. in the East.

And, of course, all eyes are on the stock market this morning, after yesterday's devastating plunge. The Dow -- this is unbelievable, the Dow at one point down more than 1,000 points. This chart is unbelievable. Ten minutes, it fell 1,000 points. The largest point loss ever during a trading day. Now, stocks recovered some before closing down almost 600 points.

Investors in an absolute panic. Selling risky assets like stocks and commodities. Moving into safe havens like government bonds. Trading was the heaviest in four years and some of -- trading some of America's most widely held stocks was frenzy.

Look at these names -- Bank of America, Apple, General Electric, Microsoft saw the most action. Today, U.S. stocks look ready for come back. U.S. futures are up significantly. I want to show you, Europe right now, European stocks are climbing. But Asia, the selloff, where the whole selloff started, still looks like it is in trouble.

Look at Shanghai's benchmark index down almost 8 percent, Alison, for the second day in a row. The index has fallen more than 40 percent since June, wiping out trillions of dollars in value and rattling global markets. And fears about China's weakness are sending investors around the globe into panic mode, sinking oil prices and other commodities.

I want to bring in Andrew Stevens in Hong Kong. He's watching Asian markets.

Andrew, the selloff continues in Asia, even as we're seeing Europe stable, U.S. futures are pointing to signs of life in the U.S., not the story in China.

ANDREW STEVENS, CNN CORRESPONDENT: Absolutely. And I think this is the key point that investors are now making the distinction, Christine, between what's happening in China, what's happening in the rest of the world on the equity markets. China is a law unto itself when it comes to equities.

And what's happening today, this is, by the way, is an even bigger fall than yesterday. What's happening is the government is not stepping in to help these investors out. They are letting events take their course. And it is a blood bath for investors in Shanghai.

Now, we have seen this throughout the summer -- a steady fall in Shanghai stocks. People were hoping the government would step in and they have failed them. And now, it looks like they're stepping back.

And just one other thing which is important, Christine -- there's been a lot of research notes coming out here in Hong Kong from the big banks and research houses. And the theme seems to be, basically, don't panic on the Chinese economy. Yes, that was a terrible amount on manufacturing, but the other signs the economy is not as weak as many people are thinking. And certainly, if it was, there is still fire power in Beijing to turn things around, if needed. And as yet, we're not seeing that.

So, Beijing is showing no signs of panicking about restoring economic growth at this stage.

ROMANS: Well, that's the tricky thing because if the government and does, you know, big measures to save the stock market there, then it can be as a sign that things are worse. I mean, how the government reacts is pretty critical here.

STEVENS: Absolutely. But there is this disconnect. It is important to note this disconnect between what the markets are going on, the Shanghai market, what's going on in the real economy, investors are marching to their own tune. They rode a massive bubble for about 16 months. That all ended in mid-June. Now it's deflating at the rate of deflating. There's not a great correlation there, Christine.

Yes, if the government stepped in the stock market, it would be seen as a sign that they want to show control. But just the mere fact they are not having to do big major stimulus packages right now means that they still have fire power left and they're not overtly worried at the moment.

ROMANS: All right. Andrew Stevens for us in Hong Kong on the great fall, as they're calling it. That really move, and it looks like the move is continuing this morning -- thank you so much.

KOSIK: And with the fall of the Dow comes an avalanche of political finger pointing. The Republican presidential candidates blaming plunging markets on everything from the Federal Reserve and Wall Street elites, to President Obama's spending policies.

Listen to Republican frontrunner Donald Trump sounding a warning we heard from him before.

(BEGIN VIDEO CLIP)

[04:05:03] DONALD TRUMP (R), 2016 PRESIDENTIAL CANDIDATE: I have been telling everybody for a long time, China is taking our jobs, they're taking our money. Be careful. They will bring us down. You have to know what you are doing. We have nobody that has a clue.

(END VIDEO CLIP)

KOSIK: Former Hewlett Packard CEO Carly Fiorina blames the market slide on the Federal Reserve for its easy money policies. And New Jersey Governor Chris Christie insists it's the Obama's administration's fault for borrowing and spending too much.

And Scott Walker wants a stronger message sent to China.

(BEGIN VIDEO CLIP)

GOV. SCOTT WALKER (R-WI), PRESIDENTIAL CANDIDATE: I call on the president of the United States to cancel the state visit he is providing for the head of China, Xi Jinping. Why? Because to me, not just because of what they recently done to devalue their currency, because of what they're not doing when it comes to upholding those very values. Why would we give that state visit to a country that doesn't share our values and our allegiances? I call on others to ask for the president of the United States to say we're not going to have that state visit.

(END VIDEO CLIP)

KOSIK: On the Democratic side, this tweet from Bernie Sanders. He says, "We need banks that invest in the job creating economy. We don't need more speculation with the American economy hanging in the balance."

So far, no comment on the market jitters from Jeb Bush or Hillary Clinton.

KOSIK: All right. Will he or won't he? The intrigue building on Capitol Hill as Joe Biden ponders a run for the presidency. The vice president now scheduled to meet with major Democratic fundraisers after Labor Day, another sign he is serious about mounting a political challenge to Hillary Clinton.

We get more this morning from CNN senior Washington correspondent Joe Johns.

(BEGIN VIDEOTAPE)

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: After the White House lunch with President Obama on Monday, the buzz about the vice president's long exploration of his campaign options picked up in tempo after White House Press Secretary Josh Earnest seemingly went out of his way to praise Biden.

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: The president has indicated his view that the decision he made I guess seven years ago now, to add Joe Biden to his ticket was the smartest move he ever made. And I think that should give you some sense of the president's view of Vice President Biden's aptitude for the top job.

JOHNS: The vice president himself making a series of moves behind the scenes, including scheduling more meetings with supporters and donors. And just last night, meeting with key former Obama officials at his residence at the U.S. Naval Observatory. The official message from the vice president's office is that he has not made a decision about running for president in any speculation to the contrary is false. Still, a Democratic source telling CNN, the vice president is leaning more toward running than not running.

One plan that's been discussed if Biden decides to take the plunge is to have him announce his intentions the first week of October and the run-up to the first Democratic debate. Biden has also been making a few subtle moves that only add to speculation that he just brought on Kate Bedingfield, a veteran message manager who has worked at the White House and Motion Picture Association of America, as well as in John Edwards campaign in 2008.

And Biden met over the weekend with Democratic Senator Elizabeth Warren, whose endorsement as a favorite of progressives would be very useful for another seeking the nomination.

(END VIDEOTAPE)

KOSIK: All right. Joe Johns, thanks for that.

Jeb Bush meantime making a trip to the Texas/Mexico border and taking on Republican presidential rival Donald Trump. Bush defending his use of the controversial term "anchor babies", saying he was referring to birth tourism, which he said applies more to Asians than Hispanics.

(BEGIN VIDEO CLIP)

JEB BUSH (R), PRESIDENTIAL CANDIDATE: What I was talking about was the specific case of fraud committed where there's organized efforts, and, frankly, it's more related to Asian people coming into our country, having children, in that organized effort, taking advantage of a noble concept which is birthright citizenship. I support the 14th Amendment. Nothing about what I said should be viewed as derogatory towards immigrants at all.

(END VIDEO CLIP)

KOSIK: Bush, as we mentioned, also took direct aim at Donald Trump. CNN's Polo Sandoval has more on the border war of word.

(BEGIN VIDEOTAPE)

POLO SANDOVAL, CNN CORRESPONDENT: This morning, Jeb Bush is back on the campaign trail after a brief stop here in McAllen, Texas. Just a few miles from the U.S./Mexico border, which is really the heart of this immigration debate that continues to intensify.

I have to tell you that yesterday, we noticed a different Jeb Bush. He was a bit feistier. He was working to redefine himself as a stronger pick for president. Also, a really higher level of energy. He used that new tone to take direct jabs at one of his main opponents here, Donald Trump, almost immediately after he step in front of the cameras. Take a listen.

BUSH: What I say is Mr. Trump's plans are not grounded on conservative principle.

[04:10:04] It would cost hundreds of billions of dollars. It's not realistic. It won't be implemented.

SANDOVAL: And Bush also going on to say before he can explore the idea of granting legal citizenship to the estimated 11 million undocumented people already in the country, the key would be to secure the communities that dot that international boundary between Texas and California, that is a measure and proposal that may not be taken very well by some of the GOP base.

(END VIDEOTAPE)

ROMANS: All right. Polo Sandoval, thank you for that, Polo.

Now, new information about the man accused of attempting the attack on the Paris train, taken down by hero passengers. What we are learning new about the suspect, right after the break.

(COMMERCIAL BREAK)

KOSIK: Anti terror police have until tonight to finish questioning Ayoub el Khazzani. The suspected gunman who was prevented from pulling off a massacre on a high speed train in France. El Khazzani was not known to U.S. authorities and could have easily enter the U.S. by air, raising new concerns about train safety here on American soil and across Europe.

Let's go live to Paris and bring in CNN senior European correspondent Jim Bittermann.

Jim, what are we learning about this investigation?

JIM BITTERMANN, CNN SENIOR EUROPEAN CORRESPONDENT: Well, we have heard a lot of things from the investigation. We're not sure if any has been confirmed by the prosecutor. We are awaiting the latest. The prosecutor has until this evening to bring el Khazzani before a judge or release him. That's totally unlikely. So, we expect that we will hear what the charges may be perhaps during a news conference this morning or today here.

I'd like to bring in the picture, Alison.

Thibault de Montbrial, the president of the Research Center for Internal Security.

Thibault, Alison just raised the question, what can be done to protect the train stations after something took place on Friday, something like Friday's attack?

[04:15:08] What could you do?

THIBAULT DE MONTBRIAL, PRESIDENT, RESEARCH CNETER ON INTERIOR SECURITY: Well, it's a major issue, because France is experimenting the new kind of terrorism which never hit us before. This kind is young guys using handguns and being like you Americans called active shooters. It is difficult to protect all of the public places, because the issue is not only about trains, it's about restaurants, it's about movie theaters, it's about stadiums.

So, you know, the thing that has to change is the mindset. We are not experienced about that. And one of the first things to be done is to allow all law enforcement officers to carry guns even off duty. It would allow in a blink of an eye like 10,000 to 20,000 people to carry a gun without working, but going back home and being at the restaurant with their wives or relatives and being ready for any immediate response, because the question is immediate response.

When there is an attack, if the police comes two minutes after, the difference is 50 people killed. We will not be lucky as Friday or we were last April when the terrorists which were willing to attack two churches with an AK-47, shot himself. One day, the luck will turn and we have to be ready for that day.

BITTERMANN: You mentioned before that the mindset has to change about young people taking action.

DE MONTBRIAL: Yes, because what might be very confusing for you Americans is that in France, in sixth grade, all young Frenchmen received the visit of a police officer which explains to these young Frenchmen year after year that under no circumstances, you have to take action on your own. You have to call the police. You have to wait for the help of the government.

So, the fact you have to take your own faith into your life is completely new. It is very good, because the mindset will change. We owe that to the braveness of the young American soldiers on Friday. It's a big -- it's a big game changer in the French mentality.

BITTERMANN: Thibault de Montbrial, thank you for being with us.

DE MONTBRIAL: Thank you.

BITTERMANN: Alison, back to you.

KOSIK: Interesting to hear the difference. Jim Bittermann live from Paris, thanks.

ROMANS: All right. Sweeping changes in store for the municipal court system in Ferguson, Missouri. Among the most significant, a judge ordering all of the arrest warrants before January 1st, 2015 voided. The reforms are part of an effort to rebuild trust in the police system and the court system in Ferguson after the Justice Department found both discriminated against African-Americans.

KOSIK: Damaging testimony for the defense at the prep school rape trial in New Hampshire. Several current and former students testified that Owen Labrie told them he had sex with a teenage girl, now accusing him of rape. Labrie's former roommate says on the night of the alleged attack last year, Labrie claimed he took the girl's virginity. Prosecutors alleged that the rape stemmed from a sex competition at St. Paul's school known as senior salute.

ROMANS: A fraternity at Virginia's Old Dominion University suspended for displaying banners with lewd sexually suggestive messages welcoming freshman females to the campus. The banners hanging outside the Sigma Nu fraternity house read "Freshman daughter drop off" and "go ahead and drop off mom too." Officials say the suspension will remain in effect pending the outcome of the university investigation.

KOSIK: Firefighters in Washington having a hard time gaining ground on the largest wildfire ever to hit the state. Take a look at the plains. Look at the thick smoke that they're battling. The complex fire here scorching over 250,000 acres so far.

Fire officials say the blaze is only 10 percent contained. It's amazing. People in eight communities now ordered to evacuate their homes.

Incredible pictures there.

ROMANS: It really is. It has been so tough for them.

For more on the wildfires and the rest of your forecast, let's get to meteorologist Pedram Javaheri.

PEDRAM JAVAHERI, AMS METEOROLOGIST: Hey, good morning to you.

Yes, some news when it comes to the weather pattern across the Northwest, hadn't had much of that. But notice this storm system beginning to enter the picture. As it does, the picture goes to drop in parts of coastal Washington and Oregon and assess the trend for a pattern change, pattern shift in the coming days where the potential exists for not two, not three, but maybe four consecutive days of rainfall around the Northwest and we haven't seen that since the middle portion of March.

Look at Seattle, temperature trend warms up quickly and back down into the 70s. In fact, multiple days where rain showers are a possibility there. Notice the six-to-ten day outlook also brings in above normal probability for rainfall around the northwest. So, again, all around good news. A temperature trend looking to be on the cooler side as well. And speaking of the cooler side, look at this, Cincinnati out towards Nashville this morning, 13 to 14 degrees cooler than it was this time yesterday, and kind of -- a sign of things to come for people.

[04:20:08] The temp trend generally going to be cooler one, very minimal, but still about one or two degrees cooler over the next four days around the northeast, bring us down to about 83 degrees around New York City, while around much of the eastern side of the country should be in the mid-70s and around Chicago. Let's send it back to you.

ROMANS: It looks like a nice day in Chicago.

KOSIK: Oh, yes.

ROMANS: Thanks, Pedram.

North and South Korea reaching a deal, but will the peace last? We are live after the break.

(COMMERCIAL BREAK)

ROMANS: Welcome back. Twenty-four minutes past the hour.

North and South Korea reaching agreement to ease escalating tensions there. The North Korea agreeing to express regret for its recent provocations, while the South will turn off those loud speakers that have been blaring messages, making fun of Kim Jong-un.

We'll get the latest from CNN's Kathy Novak live from Seoul.

Looks like they found an off-ramp.

KATHY NOVAK, CNN CORRESPONDENT: They have. The speakers are off. That was key, Christine, that was the key demand of the North Koreans. We know how much those broadcasts were angering the regime of Kim Jong-un.

But the president here, Park Geun-hye, of South Korea, had demanded an apology from North Koreans and neither side was willing really to step back from their bottom line. So, they were able to find this middle ground in this key phrase of expressing regret.

[04:25:00] It's significant that North Korea would express regret. It doesn't really apologize over anything. And certainly here in South Korea, it is being spun by the government as an apology. We heard the key negotiator from South Korea saying that it is significant that North has apologized for the injuries for that were sustained by the two South Korean soldiers in the land mine attack.

But, crucially for North Korea, it was able to use this language and not actually accept responsibility for planting those land mines. So, it seems that both sides can go back to their respective camps and say they got what they wanted and crucially they have been able to diffuse these tensions we know North Korea and South Korea and United States were taking seriously -- Christine.

ROMANS: All right. Kathy Novak for us in Seoul, South Korea, this morning -- thank you for that, Kathy.

KOSIK: ISIS accelerating its destruction of priceless antiquities in Syria. In just the last week, the terrorists razed a fifth century monastery and blew up one of the best preserved temples in Palmyra, dating back to the first century. Experts say the destruction represents a irreversible lost to heritage and future learning.

There are also new reports emerging of another possible chemical attack by ISIS against civilians. The attack in northern Syria last week left dozens of people, many of them children, with symptoms consistent with chemical exposure.

ROMANS: All right. Twenty-six minutes past the hour.

Happening now, China's stock market is plunging again. It's another devastating drop rocking markets around the world. The Dow tumbling 1,000 points in 10 minutes.

KOSIK: It's amazing, right, to watch that.

ROMANS: So, do markets stabilize today? We'll tell you, next.

(COMMERCIAL BREAK)