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Biden Speaks With Chinese President Xi Amid Growing Taiwan Tension; U.S. Awaiting Response From Russia On Prisoner Swap Proposal; Trump Defends LIV Golf Tour On Eve Of Tournament. Aired 5:30-6a ET

Aired July 29, 2022 - 05:30   ET



DANIELLA DIAZ, CNN REPORTER: It will never be taken up by the Senate because there are just not enough Republicans to get that legislation over the finish line. But they really want to pass this legislation before the August recess so that they can campaign on this before the 2022 midterms when they all go to their home states during this recess -- Christine.

CHRISTINE ROMANS, CNN ANCHOR: All right, Daniella Diaz in Washington. Thank you so much.

Donald Trump hosting a Saudi-backed LIV Golf tournament and rewriting history to defend it. And Nancy Pelosi heading to Asia. China anxious to know if she's making a stop in Taiwan.



ROMANS: President Biden and Chinese President Xi Jinping have agreed to begin arrangements for a face-to-face summit. The two leaders talked by phone for more than two hours. Tensions over Taiwan a key component of this marathon phone call. Xi is demanding House Speaker Nancy Pelosi cancel a potential trip to Taiwan. China claims the self- governing island nation belongs to them.

CNN's Steven Jiang is live in Beijing. President Xi is warning the U.S. that if you play with fire, you get burned. That's the threat. How should the White House interpret that?

STEVEN JIANG, CNN BEIJING BUREAU CHIEF: Christine, as alarming as Xi's warning to Biden on Taiwan may sound, this actually was not the first time he uttered the exact same phrase to Biden. He last used it in November of last year when the two men also talked.

But the key difference here, of course, is now we are only some three months away from a major Communist Party Congress where Xi is all but certain to assume a precedent-breaking third term as China's top leader and paving the way for him to rule for this. So, this is a critical moment when he's also facing a myriad of domestic challenges. So, he simply cannot afford to look weak on Taiwan. So, that's what makes the promise -- the Chinese Ministry response to a potential Pelosi visit to Taiwan all the more unpredictable and dangerous. So, the hope now is the two leaders have talked at length. They have

gained a better understanding and some clarity on where each stands on this issue, so that would help them better contain any potential fallout if Pelosi decides to go ahead. But it's also clear both sides are keen to move beyond this one single issue, trying to really highlight the wide-ranging nature of their leader's conversation.

It's really worth noting that after the phone call, a senior U.S. official told reporters that despite all the saber-rattling from Beijing, on a working level, officials from both sides have been meeting up and following up on their leader's previous commitments and discussions and making progress in some areas. So, it's clear that one thing the two sides do seem to agree on is the necessity and importance to have this kind of regular presidential-level exchanges, especially at a time when tensions are running high and when there is so much fiery rhetoric being tossed around --

ROMANS: Absolutely.

JIANG: -- in public -- Christine.

ROMANS: All right, Steven Jiang. Thank you so much for that -- our bureau chief there.

All right. The Biden administration growing more frustrated with the Kremlin by the hour. Officials say there's been no meaningful response for several weeks to an offer by the U.S. to swap a convicted Russian arms trafficker for two Americans who are being held by the Russians -- WNBA star Brittney Griner and former Marine Paul Whelan.

Frederik Pleitgen is in Moscow tracking the latest developments for us. Fred, has the Kremlin said anything at all about this proposal?

FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes. Essentially, what we're hearing from the Kremlin, Christine, is that they are saying, at least in public, they don't want to talk about this at all.

It was quite interesting because when Secretary of State Blinken came out and said that there had been this substantial proposal, as the U.S. puts it, on the table to try and get both Brittney Griner and Paul Whelan released, of course, CNN understanding that Viktor Bout would possibly be in return for that -- for the Russian side.

I wrote to the spokesman for the Kremlin, and he wrote back to me. And he said no comment. That was it -- just two words. Later, in a phone call with journalists, he also said that clearly, there had been no agreement on this issue and so, therefore, they didn't want to comment on it any further.

But then, if you look at the Russian Foreign Ministry it almost looks like they're making fun of the way that the administration is handling this. The spokeswoman for the Russian Foreign Ministry said that Sergey Lavrov, the Russian foreign minister whom Secretary of State Blinken said he wants to talk to in the coming days, will pay attention to the request when time permits. So there certainly doesn't seem to be any sort of sense of urgency there.

They also wrote that the Russian foreign minister, Sergey Lavrov, is currently very busy. He's currently on a trip. He's in Uzbekistan at a conference there, but that he will pay attention to it at some point in time.

The Russians also accusing the U.S. of what they call megaphone diplomacy. Obviously, the Russians making very clear that they don't want to talk about this in public at all. They believe that this is something that needs to be handled, as they put it, through diplomatic channels.

Now, of course, for both Paul Whelan and Brittney Griner, that means that uncertainty certainly remains as the U.S. keeps saying that they've gotten no substantial response from the Russians, so far, as to how they plan to move forward with all of this.

And then on another note, Brittney Griner, of course, still there with her trial continuing. She's in the stand -- or she's on trial once again next Tuesday. We'll be paying special attention to that as well, Christine.

ROMANS: Yes, we know you will. All right, Fred, thank you so much for that from Moscow this morning.

All right, outrage this morning as a bill to help veterans who were exposed to toxic burn pits is blocked. And next, Supreme Court Justice Samuel Alito mocking critics who don't like his position on Roe v. Wade.



ROMANS: All right, let's get a check on CNN Business this morning.

Looking at markets around the world, you can see Asian shares have closed down. Europe has opened higher. And on Wall Street, stock index futures also leaning up.

Look, stocks rallied again Thursday -- one percent gains for the three major averages. July is turning out to be a strong month. The Dow up only six percent, the Nasdaq bouncing back 10 percent, and the broader S&P 500 up more than seven percent.

Despite two straight quarters of shrinking GDP, investors are apparently seeing a silver lining, hoping that interest rates -- maybe interest rate increases won't be as aggressive.

And gas prices fell again overnight, down more than two cents overnight to $4.26 a gallon, down 60 cents over the past month.


Those cooling gas prices welcomed relief for American budgets squeezed by the highest inflation in 40 years. And now, a Federal Reserve aggressively raising interest rates to try to tame it.

The once red-hot economy clearly slowing. Gross domestic product shrank again in the second quarter. Two negative quarters is often shorthand for an economy that could be in a recession. The White House, though, touting the underlying strength of the U.S. economy.


JOE BIDEN, PRESIDENT OF THE UNITED STATES: We have a record job market, record unemployment of 3.6 percent today. We've created nine million new jobs so far, just since I became president. Businesses are investing in America at record rates. That doesn't sound like a recession to me.


ROMANS: Let's bring in Nela Richardson, chief economist at ADP. So nice to see you this morning.

The president pointed to job growth. He's avoiding saying we're in a recession. After two straight quarters of negative GDP -- I mean, how should we label this economy?

NELA RICHARDSON, CHIEF ECONOMIST, ADP (via Skype): Good morning, Christine.

We should label it as very complex. Because that attribute of a recession -- two straight quarters of decline -- it's the one commonly referenced, but there are two others. One is diffusion and the second is depth.

And so, what the committee of economists who actually will determine whether or not we're in a recession this year will look at is not just the duration of a slowdown, but how broad-based was it. Did it affect every sector? How deep was it? Was it minor or was it really deep?

And the last time we saw that criterion met was in April 2020. It wasn't a very long downturn, but it was definitely a deep one and broad-based.

So, the question really isn't whether or not we're in a recession now because we won't really know until a year from now. It's whether or not the economy is slowing, and that we can see right away.

ROMANS: Yes, we can see it is slowing. And I think that's the bottom line -- is that after a gangbuster 2021, the first half of this year there has been a slowdown in the U.S. economy. Although, the job market remains so strong and that's what has been the interesting riddle to me. Almost three million jobs -- 2.7 million jobs created in the first half of the year. You don't see that in a recession usually, right?

RICHARDSON: No, you don't, and that's why the economy is complex. And it's also the reason that tight labor market -- why the Fed is hoping that they can maneuver this increase in interest rates that lowers inflation without harming the job markets too much. In fact, what they'd like to see is a slowdown in hiring and job

postings, but firms keeping headcount. That's what they're betting on -- that they can move aggressively without doing something dramatic to the labor market. And we'll see if that plays out over the course of the year.

ROMANS: There are things the Fed can do, of course, to try to attack inflation, which is to raise interest rates.

And then, you know, Congress has a role here, too. And there's this inflation reduction bill by Sen. Schumer and Manchin that aims to put a lid on inflation, I guess, by cutting drug prices, and subsidizing healthcare premiums, and reducing the deficit.

Now, The Wall Street Journal says -- you know, it has asked economists -- it will have a moderate effect on inflation and that would happen over time.

What do you think about Congress' role here? I mean, cutting prescription drug prices -- that seems to me like something that would immediately be felt by millions of people.

RICHARDSON: You know, the merits of the bill I think could be beneficial to some people, especially for older people and people who are dependent on government subsidies for healthcare.

Let's feed it back though to the inflation story because that is the challenge, number one, for the economy right at this moment. Medical prescription cost has been ongoing, so an issue to be addressed. But inflation is not just due to domestic policy, unfortunately. If it was, it would be so much easier to solve.

ROMANS: Right.

RICHARDSON: We are in a world where a lot of global shots are going to boost prices over time. And how do we get from that world into an inflation scenario that's more comfortable -- that doesn't erode the paychecks of most Americans? That's the question. And unfortunately, there's a limit to what the Federal Reserve or Congress can do --

ROMANS: Right.

RICHARDSON: -- about global supply shot other than make them more comfortable for people. But actually solving that problem -- that's going to be a hard one to solve.


Inflation data due later this morning. The Fed's favorite inflation gauge. And this isn't the CPI. It's something called the PCE.

I don't want to get too wonky, but what do you expect we're going to -- we're going to discover about the inflation story later this morning?

RICHARDSON: We're going to discover that inflation is spreading -- it's broad-based. And it's not just about food and gas prices, which tend to be volatile, but really feeds into what the Fed looks at as core inflation. Why they look at more core inflation is because that inflation tends to be more persistent.


And so, the question for the Fed is how persistent is the current trend? You know, they got that wrong a little bit last year but when it was coined as transitory. But if this inflation -- if they are seeing price increases spread beyond those volatile products into housing, for example, into medical care costs, which is the throughline to the Senate proposal, then they're going to be more concerned. But if they see a decrease -- a deceleration in that core, maybe they can breathe a sigh of relief.

ROMANS: All right, we'll be watching.

Thank you so much, Nela Richardson. Nice to see you.

RICHARDSON: Good to see you. Thanks for having me.

ROMANS: All right. Conservative Justice Samuel Alito mocking foreign leaders who criticized the Supreme Court ruling that overturned Roe v. Wade. Alito, who wrote the decision, made the remarks while speaking at a religious freedom conference in Rome last week. The video first posted online Thursday.


SAMUEL ALITO, SUPREME COURT JUSTICE: I had the honor this term of writing I think the only Supreme Court decision in the history of that institution that has been lambasted by a whole string of foreign leaders. One of these was former Prime Minister Boris Johnson, but he paid the price.

What really wounded me was when the Duke of Sussex addressed the United Nations and seemed to compare the decision whose name may not be spoken with the Russian attack on Ukraine.


ROMANS: Meantime, a new CNN poll finds nearly two-thirds of Americans, 63 percent, disapprove of the Supreme Court abortion ruling. Thirty-seven percent approve.

Deadly flash flooding in Kentucky -- some of the worst that state has ever seen -- and there's more rain coming. And the Arizona Cardinals dropping their homework assignment for quarterback Kyler Murray.



ROMANS: All right. Former President Donald Trump defends hosting the Saudi-backed LIV Golf tour event at his course in New Jersey.

Coy Wire has this morning's Bleacher Report. Hi, Coy.


The former president is hosting two of the eight LIV Golf events at his courses this year, including today's event at Bedminster as well as the season finale at Trump National Doral Miami.

Trump was one of the first to tee off at yesterday's pro-am alongside LIV stars Dustin Johnson and Bryson DeChambeau.

There's been a lot of criticism of the Saudi-backed LIV tour, especially from 9/11 families. But Trump tells ESPN he's known the Saudi owners for a long time and believes in what they're doing.


DONALD TRUMP, FORMER PRESIDENT OF THE UNITED STATES: Frankly, what they're doing for golf is so great and what they're doing for the players is so great. The salaries are going to go way up. The PGA was not loved by a lot of the players, as you know, for a long time. Now they have an alternative. And nobody would have ever known there was going to be a gold rush like this.


WIRE: Forty-eight players will take part in the LIV event, which starts this afternoon. The total purse is $25 million. For comparison, the largest-ever Masters' purse this year paid out a total of $15 million.

Let's go to the NFL where the Cardinals announced they're removing an addendum from Kyler Murray's new contract requiring him to do at least four hours of independent film study during game weeks. The 24-year- old quarterback signed a 5-year, $230 million contract over the weekend.

Murray addressed the issue yesterday, clearly less than thrilled that his commitment to the game was called into question.


KYLER MURRAY, ARIZONA CARDINALS QUARTERBACK: To think that I can accomplish everything that I've accomplished in my career and not be a student of the game and not have that passion and not take this serious is almost -- it's disrespectful and it's almost a joke.


WIRE: Now, after removing the language, the Cardinals said that the clause was clearly perceived in ways that were never intended and that their confidence in Kyler Murray is as high as it's ever been.

Baseball now, and all rise for Aaron Judge. For the 39th time this season, the slugger's walk-off solo home run saving the Yankees last night breaking a scoreless tie with the Royals -- his third walk-off homer of the season. Mickey Mantle is the only other Yankee to do that. Judge is on pace to break Roger Maris' franchise single-season home run record as well, and that stands at 61.

Finally, Trey Mancini, in possibly his last home at-bat as an Oriole, hits what looked to be a routine fly ball against the Rays. But Josh Lowe can't find it, Christine. The ball bounces off his face, it rolls way into the right-field corner. Lowe would be OK, but he goes down. One run scores.

Centerfielder Brett Phillips had a long way to go to track that ball down. And Mancini ends up beating the throw for an inside-the-park home run.

Baltimore wins 3-0 and the home crowd goes wild.

Mancini, who has been reportedly traded on Tuesday's trade deadline, said that this is home to him no matter what. And after the game, Mancini got a video tribute and standing ovation, Christine. The cancer survivor missed all of 2020 undergoing chemo for stage three colon cancer. He returned last year and has become a fan favorite, so what a way to go out for him there in Baltimore.

ROMANS: What a way to go out in Baltimore.

All right, Coy Wire. Thank you so much for that.

WIRE: You got it.

ROMANS: And thank you for joining us. I'm Christine Romans. "NEW DAY" starts right now.

BRIANNA KEILAR, CNN ANCHOR: Hello, I'm Brianna Keilar alongside John Berman on this new day.

Missing text messages surrounding January 6 -- this time from top Trump officials inside the Department of Homeland Security. And outrage after Republican lawmakers stand in the way of help for veterans exposed to burn pits.