Return to Transcripts main page
Early Start with John Berman and Zoraida Sambolin
Chinese Stocks Continue Slide, Affecting World Markets; Latest from Campaign Trail; North Korea H-Bomb Claim Questioned; Gun Control Measures Examined. Aired 4:30-5a ET
Aired January 07, 2016 - 04:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
(COMMERCIAL BREAK)
[04:31:58] CHRISTINE ROMANS, CNN ANCHOR: New overnight. Chinese stocks dive and China suspends trading for the second time this week. The pain and fear spreads now to European markets and Wall Street where all science point to an ugly day for your investment.
JOHN BERMAN, CNN ANCHOR: Donald Trump continues to go after Ted Cruz about his eligibility to be president. Cruz, Trump, sitting down for CNN interview. They discuss the subject, Cruz now for the first time taking on the issue head on.
ROMANS: Skepticism growing over North Korea's claim, it successfully exploded a hydrogen bomb. Why aren't officials told, and what steps could be taken to the slap down of that regime.
Welcome Back to EARLY START. I'm Christine Romans.
BERMAN: Nice to see you today. I'm john Berman. 32 minutes past the hour.
ROMANS: Breaking overnight. More turmoil in China's stock market, the trade day in China ended almost as soon as it began. The Shanghai Composite look at that plunged at the open down 7 percent, the Shenzhen market down more than 8 percent.
Now that rapid sell off triggered this new automatic circuit breakers, they are designed by authorities to give investors a chance to calm down. But it really just sowed more concern and uncertainty, it's a second time this week, trading has been halted in China. Investors are nervous. China has issued new regulations limiting the number of shares traders can sell every quarter.
But in a developing market, every one of these restrictions just sows more unease. What's behind the sell off?
Two separate reports this week that the Chinese economy is slowing down and China guided its currency lower.
European markets also lower amid China concerns at fear is spreading to Europe, you can see that there Paris now down more than 3 percent, Frankfurt down almost 4 percent. Those are big moves folks for one day. Futures here in the U.S. pointing to a brutal open coming off of a big selloff. Yesterday the damage report the Dow plunged 252 points about 1.5 percent, the Dow's worst start to the trading year now since 2008.
The NASDAQ and S&P 500 also down more than 1 percent. I want to be clear here 2008 was a very bad time in global markets, a very bad time in the economy.
And then North Korea's reported hydrogen bomb test that off to selling concerns about China, the Middle East, plunges oil prices all of this adding to this fears, and we're looking at oil right now, crude oil, a barrel of crude just above $32 right now, its lowest level since 2003.
Chinese market jitters overnight expected to ripple around the world again today.
CNN's Matt Rivers live in Beijing with the latest.
And Matt, I hear again and again from market professionals, everything that the Chinese government has been trying to do to sort of assuage the fears in the Chinese stock market are having the opposite effect.
MATT RIVERS, CNN CORRESPONDENT: Yes, and they really don't seem to be working that's exactly what we're hearing from analysts both here in Beijing and then all sort of people that we've spoken to in Hong Kong.
There's actually a bit of dark humor floating around on the internet today. People saying joking that traders by the time they got in, they actually left before their coffee cooled down because it only took about a half hour or so before trading was halted for the day.
[04:35:12] In terms of what the Chinese Central Bank is doing, they put more liquidity into the market after it shutdown today, up to around $11 billion, the equivalent. And they also introduced some new regulations that would limit the amount of shares that major shareholders can sell off of their stakes in companies that are listed.
But you'd be able to forgive investors if there's not a lot of confidence in what Chinese government is doing right now. And look no further than those circuit breakers that you mentioned. The circuit breakers were specifically installed to prevent this kind of thing from happening to give investors some time to calm down, to relax a little bit.
But what you see is during that 15-minute period where trading is halted, investors actually just lined up sell orders. So by the time trading resumes they put them in and it only took a few seconds after trading resume this morning to hit that 7 percent mark. And that's what automatically halted trading for the day.
ROMANS: So Matt, most American, European investors have zero exposure to the Chinese stock market, zero exposure of Chinese stock market.
They have American stocks or they have European stocks, multinationals, they have a basket of different things.
So why are American or European investors getting slammed if this is a Chinese stock market issue? It's because right, the Chinese economy is slowing and no one knows exactly how quickly it is slowing.
RIVERS: Yes, that's exactly right. I mean and I think we've mentioned it earlier this week when you and I spoke, in the sense that when now it's when China sneezes, the whole world gets a cold.
You saw those manufacturing reports that we spoke about earlier this week. China manufacturing sector is slowing. There wasn't great news coming out of the services sector. Either the Chinese economy is so linked to so many other parts of the world whether it be through its exports or taking raw materials for example South America. It is so linked to these other stock markets. Than bad news happens here, you can expect almost every time the same thing to happen in Europe and then a little bit later on in the day, the same in New York.
ROMANS: All right, we'll see if that trend breaks today but it doesn't look like if so far.
Matt Rivers in Beijing, thank you Matt.
BERMAN: All right, fascinating new developments in the political battle over the citizenship of Ted Cruz.
This morning Donald Trump holding firm to his claim that there is a real question about whether Cruz is even eligible to be president. This despite in many legal scholars who say Cruz who was born in Canada, but to an American mother, scholar say he does qualify as a natural born U.S. citizen that is the requirement of the constitution. What is new is though is that now Cruz one day after trying to laugh off the whole controversy with a video of The Fonz, he's now taking it head on, obviously taking it seriously.
CNN's Sunlen Serfaty has the latest from Iowa.
SUNLEN SERFATY, CNN NATIONAL CORRESPONDENT: Good morning, John and Christine.
Well, it's very clear that Donald Trump is not backing down. He is now escalating the attacks on Ted Cruz with these questions over its citizenship. He is now calling for Ted Cruz to go to a court and ask a federal judge to rule whether if he is indeed eligible to run for the presidency. Here is what Trump told Wolf Blitzer yesterday.
(BEGIN VIDEO CLIP)
WOLF BLITZER, CNN ANCHOR: He says he's a natural born citizen because his mother was U.S. born, a U.S. citizen. And as a result he's a natural born citizen.
DONALD TRUMP, (R) PRESIDENTIAL CANDIDATE: I hope he's right. I don't, you know, I want to win this thing fair and square. I don't want to win on this point. What the Democrats are saying though is he had a passport.
BLITZER: He says he didn't have a passport.
TRUMP: A Canadian passport. BLITZER: He says -- he ain't say he didn't have a passport.
TRUMP: Well I have heard that...
BLITZER: ... eligible.
TRUMP: I think that's wonderful if he didn't and I never understood how he did. But everybody tells me, he had a joint passport.
(END VIDEO CLIP)
SERFATY: And Ted Cruz is trying his best to brush this off. He doesn't not want mix it up with Donald Trump over this issue. He calls this a side show in the circus of politics and insists that he never had a Canadian passport.
Here is what he told CNN's Dana Bash.
(BEGIN VIDEO CLIP)
TED CRUZ, (R) PRESIDENTIAL CANDIDATE: The legal issue is straight forward. The son of a U.S. citizen born abroad is a natural born citizen.
DANA BASH, CNN CORRESPONDENT: But it's never been tested. You know full well because you done it on other issues.
CRUZ: Listen, the constitution and laws of the United States are straight forward. The very first congress defined that child of a U.S. citizen born abroad, is a natural born citizen. And by the way many of those members of the first congress were framers at the constitutional convention.
At the end of the day, this is a non issue. But, you know, my response here, you and I were talking about just a minute ago, I tweeted a link to a video of Fonzie jumping a shark. You know, I'm not going to engage in this.
(END VIDEO CLIP)
SERFATY: And the two frontrunners have largely avoided going directly after each other, so this sort of ratcheting up of tensions and especially significant especially as it inches closer to the Iowa caucus.
John and Christine.
BERMAN: All right, Sunlen thanks so much.
You know, its interesting John McCain, who has no love for Ted Cruz, he actually thinks there are legitimate questions about the birth. He thinks they need to be explored. He's out now saying that he's not eligible to run.
[04:40:07] But it's interesting because John McCain was born in the Panama Canal Zone. And then 2008...
ROMANS: But it doesn't serving the U.S. military...
BERMAN: Gaining what John McCain says is that because it was a U.S. territory, it's a separate legal issue than the Canadian of course nevertheless. This goes to show that, you know, Republicans are talking about this to an extent.
Hillary Clinton and Bernie Sanders on the Democratic side, both campaigning in Nevada, they too, they have different focus. Hillary Clinton has trained her sights for the most part on the Republicans.
(BEGIN VIDEO CLIP)
HILLARY CLINTON, (D) PRESIDENTIAL CANDIDATE: I have listened carefully to all of the Republicans running. And many of them are very clear, very explicit. They want to chart a new course and they want to turn the clock back and rip away the progress that we made.
It matters. It matters what works and what doesn't. It matters whether we are unified or divided.
Bernie Sanders in Nevada as well, he was stumping in Las Vegas. He's talking about Hillary Clinton right now. He says he is the candidate. He is the one who can draw democrats to the polls.
(BEGIN VIDEO CLIP)
BERNIE SANDERS, (D) PRESIDENTIAL CANDIDATE: Well, I think the safe bet is to make sure that we have a candidate who's going to excite people and create a large voter turnout. Democrats win when we have a large voter turn out when young people and marital people come out. Democrats lose when the turn out is low. Look at the crowds that we are drawing. Look at the excitement, I think we're generating.
(END VIDEO CLIP)
BERMAN: Nevada is a key early voting state in the primary process. It is a test of organization as much as anything else. It's a caucus, so you need to figure out to get your people to the polls, teach them how to vote, so union support, political muscle key there.
ROMANS: All right, a new skepticism this morning over the North Korean claim that it successfully tested a hydrogen bomb amid worldwide condemnation of that nuclear test.
President Obama called South Korea's president. The two agreed on the need for stiff sanctions against the North Korea for violating international law.
U.S. officials say they have serious doubts that the underground test really was a hydrogen bomb.
One official tells CNN the air force will likely send a sniffer plane to sample air in the region for evidence approving or disproving North Korea's claim. CNN's Paula Hancocks joins us live from South Korea with the very latest. Paula?
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Hello, Christine. Well, Japan has already been sending up some of its own sniffer planes three in the air and have been since the air was really after this nuclear test on Wednesday.
They haven't found anything at this point. We've heard from Japan, from China, from South Korea there is no indication of any radiation even on the ground or in the atmosphere that they are testing.
One analysts tells me that it's possible they weren't even find particles that they will be able to test to try and find out exactly what was in this nuclear test what was it composed of most agreeing that it was unlikely to be a full hydrogen bomb.
So certainly that is a concern. The analysts saying after the third nuclear test, the one back in 2013, they didn't find any nuclear particles. So they were unable to find out exactly what was tested in that one either.
Now we had probably a first attack from South Korea. They said North Korea will pay the price, they have decided to resume their propaganda broadcasts on the border. This is a loudspeaker which booms out K-pop songs it booms out messages from defectors talking about how wonderful South Korea is and how dreadful North Korea in this effectively.
And it does annoy North Korea. And every opportunity that they can, they denounce these loud speakers. So we can expect tensions to rise a bit over the next few days. Christine.
ROMANS: Paula Hancocks, thanks you very much Paula.
BERMAN: One year to the day after the terrorist attacks at the opposite of Charlie Hebdo, the Satirical magazine in France, that magazine still provocative.
