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North Korea Fires 2 Cruise Missiles Into Sea Off Its West Coast; Iran Wants Compensation If U.S. Pulls Out Of Nuke Deal Again; Cost Of Carrying A Credit Card Balance Rising Rapidly. Aired 5:30-6a ET
Aired August 17, 2022 - 05:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN ANCHOR: Welcome back.
North Korea has fired two cruise missiles into the waters off its west coast. That's according to South Korea, as fears over its nuclear capability increase.
CNN's Paula Hancocks is in Seoul for us this morning. Paula, what do we know about these missiles and about the timing of this launch?
PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT: Well, Christine, it's been a relatively quiet summer from North Korea. It's been about two months since we saw the last missile launch.
So what we saw this morning was, according to the South Korean side, two cruise missiles that were fired into the waters off the west coast. Now, the missiles themselves are not of great concern to Washington and to Seoul. They don't technically break any rules. The technology used is not against any United Nations Security Council resolutions.
But what it does do is potentially signal that North Korea is back to testing once again -- the 18th missile test so far this year. And it comes just ahead of the joint U.S.-South Korea military drills that will be starting next week.
These are live field training drills that we haven't really seen much of over recent years. Back in 2018, they were put on hold by then-U.S. President Donald Trump as he was trying to talk to Kim Jong Un. And then, the COVID-19 pandemic meant that they were much smaller and, in many cases, virtual or simulated.
So, the U.S. and South Korean militaries are getting back to these massive drills which, in the past, have always irritated North Korea. They say they see them as a practice for an invasion. The U.S. says they're defensive in nature. But that is potentially a source of tension coming up. And it also happened just before the South Korean President Yoon Suk- yeol had a press conference for his 100 days in power. And he repeated what he said on Monday that he was offering North Korea an audacious initiative, effectively saying that he would improve North Korea's economy if they would take steps to denuclearize. Now, of course, that's all very academic at this point as North Korea is not picking up the phone and is not interested at all, it appears, in talking -- Christine.
ROMANS: Yes. All right, Paula. Thank you so much for that.
CNN has learned that Iran is looking for compensation if a future U.S. president pulls out of any nuclear agreement. Tehran is considering a European Union plan to revive that 2015 nuclear deal -- the deal that was abandoned by former President Trump.
CNN's Frederik Pleitgen joins us live from Moscow this morning. And Fred, what does that compensation plan look like?
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: Yes, Christine, we've been -- we've been trying to find that out. Of course, we don't have the exact text but we are getting some information from the Iranians that seems to sort of narrow it down a little bit.
Essentially, what the Iranians are saying is that when President Trump left the Iran nuclear agreement, they were hit in two ways. On the one hand, of course, all the sanctions relief went away. They were hit with massive sanctions and that maximum pressure policy by the Trump administration. And also, they had destroyed their entire nuclear program.
And so, this time around, they say they understand that they couldn't stop the U.S. from leaving the nuclear agreement again but they want there to be some sort of period of winding down. They want some protection for companies that would have invested in Iran -- done business with Iran in that interim period. But they also say that this time around, essentially, they want to dismantle their nuclear program in a way that they could ramp it up again if the future administration decides to leave the agreement again.
Now, all this, of course, sounds pretty big, actually. However, the Iranians are saying that a lot of that is already in the text that was put forward by the European Union and that their additions are not that big. Of course, the U.S. says right now, it's studying what the Iranians want. The U.S., for a very long time, has said they believe it's the Iranians who are dragging their feet on all of this.
Generally, talking with some folks in Tehran this morning, I think the optimism that has been there on the part of the Iranians that this could get done is certainly still there. But, of course, one of the things we always have to point out is that there is very little trust between the sides and nothing is a done deal yet.
PLEITGEN: But certainly, the optimism does seem to persist, Christine.
ROMANS: All right, Fred Pleitgen for us in Moscow this morning. Thanks, Fred. Nice to see you.
All right, Palestinian leader Mahmoud Abbas is now trying to clarify comments he made -- comments comparing Israeli treatment of Palestinians to the Holocaust -- 50 Holocausts, he says. Those comments were made in Germany right in front of the chancellor.
CNN's Hadas Gold is in Jerusalem. Hadas, what did Abbas say and what's been the reaction?
HADAS GOLD, CNN JERUSALEM CORRESPONDENT: Well, Christine, this is far from the first time Mahmoud Abbas has made controversial or written controversial comments about the Holocaust. In the past, he's said things like the Jews of Europe brought the persecution and Holocaust upon themselves. He's questioned the number of victims that is widely accepted -- six million Jews have died.
But I think this is a new one. Making these comments about the Holocaust in Germany, of course, which is so sensitive about its role in the Holocaust -- about its now relationship with Israel.
Essentially, what happened was he was at a press conference standing alongside the German chancellor and he was asked whether he would apologize to Israel and Germany about -- over the Munich -- the Munich Olympic massacre where 11 Israeli athletes and one West German police officer were killed by Palestinian terrorists. And he answered in Arabic. He said, "If you want to go to the past," he said, "I have 50 slaughters Israel has committed, 50 Holocausts." And he said the word "Holocaust" in English so everybody understood.
Now, the German Chancellor Scholz did not immediately react while he was on stage next to Abbas, but I do want to pull up a tweet that he sent out a few hours later saying, "I am disgusted by the outrageous remarks made by Palestinian President Mahmoud Abbas. For us Germans, in particular, any relativization of the singularity of the Holocaust is intolerable and unacceptable. I condemn any attempt to deny the crimes of the Holocaust."
Of course, his comments are being met with widespread condemnation here in Israel. The Israeli Prime Minister Yair Lapid also tweeting, saying that his comments were "a moral disgrace and a monstrous lie." That "six million Jews were murdered in the Holocaust, including one and a half million Jewish children." And "History will never forgive him."
We also heard condemnations from the U.S. State Department special envoy to monitor and combat anti-Semitism.
And in the last few hours, we also received a clarification from Mahmoud Abbas. Like I said, this is not the first time that he's made such comments that he's later had to clarify or talk about. And in the statement we received from Mahmoud Abbas' office, he says that he reaffirms the Holocaust is the most heinous crime that has occurred in human history and that what he meant is that he meant to speak of the massacres committed against the Palestinian people by Israeli forces -- crimes that he says has not stopped until this day -- Christine.
ROMANS: All right, Hadas Gold for us in Jerusalem. Thank you so much for that.
All right, some American schools are short of more than just teachers. And what Walmart shoppers can tell us about the U.S. economy.
ROMANS: All right, let's get a check on CNN Business this Wednesday morning.
Looking at markets around the world, Asian shares have closed higher. Europe has opened lower here. U.K. inflation hitting a 40-year high -- the worst of the big economies. Soaring consumer prices there are up more than 10 percent. That's the worst since 1982. Prices for bread and milk surging even more.
On Wall Street, stock index futures leaning down here after the Dow, yesterday, notched a fifth straight day of gains thanks in part to positive quarterly numbers from Walmart and Home Depot showing a resilient consumer despite higher mortgage rates and slumping housing sentiment.
Gas prices falling again this morning. The average price dropping another penny -- $3.94 a gallon. That's down more than 60 cents from a month ago.
Those retail earnings show consumers are changing what they buy but they're still buying as they grapple with months of high inflation.
Walmart revenue up 9 percent. Walmart shoppers spending more on groceries and less on discretionary items. Walmart noted increased foot traffic by high-income consumers and said steep discounts lured in shoppers. Walmart expects the trend to continue into the second half of the year.
Critical July retail sales data released later today.
The Fed's war on inflation makes your credit card debt a lot more expensive. Just as more Americans are resorting to their credit cards to keep up with the rising cost of living, the Federal Reserve has been aggressively raising interest rates in a bid to tamp down inflation. That means higher rates on most credit cards.
And now, the Consumer Financial Protection Bureau estimates cardholders with a $5,000 credit card balance -- a give grand balance -- you're going to pay an extra $1,000 in interest over the course of the year because of those higher interest rates.
Let's bring in chief economist at Morning Consult, John Leer. Good morning, John. You know, that CFPB number --
JOHN LEER, CHIEF ECONOMIST, MORNING CONSULT (via Webex by Cisco): Good morning.
ROMANS: -- really kind of shocked me. I mean, I think people keep asking me what should I do in this uncertainty with my money, and I keep saying you've to pay down high-interest debt. I mean, that's the only thing that is a guarantee here is that interest rates are going to continue to go up. Do you agree?
LEER: I think interest rates not only are going to continue to go up, but I think they're going to stay elevated longer than a lot of folks appreciate, including the financial markets that -- the Fed's objective is to get interest -- sorry, to get inflation back down to 2 percent and they're going to have to be closer to 4-4 1/2 percent I think in terms of interest rates for quite a while to achieve that goal.
ROMANS: I know the Fed is fighting inflation and we are watching these consumer numbers from -- retail earnings, trying to see what's happening to the consumer. The consumer is still pretty resilient here changing what they buy.
For example, Walmart, yesterday, saying that people were switching from deli meat and beef to hot dogs and canned tuna, and stuff like that -- cheaper items like that. They're changing what they're buying but they're still -- they're still buying and still have excess cash.
Is that -- is that the right assessment?
LEER: I think that's very similar and consistent with what we see in our own data. I guess the point that I would note is we really do see a divergence between high-income adults and middle- and low-income adults. And so, I think a lot of the spending growth that we've seen over the last year has been driven by folks making $100,000 or more per year.
Whereas, we're seeing middle- and low-income adults pull back on spending. They're more price-sensitive. They're trading down and substituting to lower-cost goods across a range of goods and services.
So I think going forward, both in a broader economy but also as we look at some of these earnings reports, I think it's going to be particularly important to understand exactly who their consumer base is and how much income they're bringing in.
ROMANS: Yes. The Walmart CEO noting that shoppers who are inflation weary are looking for value. They go to a big-box store like a Walmart. They also mark down a lot of goods, too, and that -- and that --
ROMANS: -- a lot of inventory and that brought people in. We had some housing numbers. The National Association of Home Builders chief economist said housing is in a recession. Housing starts fell like almost 10 percent.
What's your assessment of what's happening in real estate here?
LEER: It's a complicated situation right now because while housing and housing starts are down, we continue to see that rents are up. And so, I think this, again, sort of depends on your perspective. Are you a homeowner with an outstanding mortgage, are you a homeowner who has paid off their mortgage and own a home outright, or are you a renter?
We continue to see renters, for example, really get stuck with pretty high prices, trying to make up for some of the lost rent I think that landlords lost during the pandemic.
Homeowners who own their home outright, I think are the ones who are suffering. They're seeing home values fall. It's folks who potentially are coming into the market, I think, who stand to benefit right now because prices are coming down and there's a potential I think probably over the next five to seven years for them to refinance at lower rates.
ROMANS: Yes. We talked to a real estate expert yesterday who basically said things are getting more in balance. It was -- the real estate market was so --
ROMANS: -- out of whack for so long.
We're going to get retail sales in just a few hours -- the July retail sales report. The economic data I would say over the past 10 days has maybe painted a picture of a wider path to a soft landing in the U.S. economy. What do you think? And do you think retail sales will fit into that?
LEER: Yes. I think we do continue to see some strength from consumers but that's really concentrated among higher-income adults. If we continue to see inflation play out the way that we have over the course of this past year, which is to say higher, more persistently elevated inflation, I would expect to see higher-income adults start to feel more of that pinch and I think we'll see spending contract as a result.
Thus far, I mean, for July's retail report I think we continue to see some strength among higher-income adults. I think that's likely to produce some reasonable spending numbers. Again, the retail sales picture is just part of the picture. It's really focused on goods. We'll get the full picture later this month with personal consumption expenditures where we'll see services as well.
That balance between goods and services I think is going to be particularly important as consumers reallocate a lot of their funds back toward services.
ROMANS: Yes. OK, John Leer of Morning Consult. Thank you so much. Nice to see you this morning.
LEER: My pleasure.
ROMANS: OK, Liz Cheney voted out of Congress but we haven't heard the last of her. And will Rudy Giuliani answer questions today before a grand jury or take the fifth?
ROMANS: A youth baseball player from Utah is in critical condition after he fell out of his bunk bed at the Little League World Series.
Andy Scholes has more in this morning's Bleacher Report. Hey, Andy.
ANDY SCHOLES, CNN SPORTS CORRESPONDENT: Yes, good morning, Christine.
You know, this week is supposed to be one of the most exciting in these kids' lives, but the team from Snow Canyon, Utah is now dealing with just a terrible accident.
Easton Oliverson was sleeping in the bunk beds in the players' dorm in Williamsport when, according to the Little League World Series, he fell out, fracturing his skull. The 12-year-old was airlifted to the local children's hospital where he underwent emergency surgery to stop the bleeding in his brain. Easton's mom and dad saying if it had been another 30 minutes, he might not have made it.
Easton remains in critical condition but results from his recent MRI scan came out very promising and he has been able to respond to people.
Now, the support Easton has been -- has received has been just incredible, including this video from his travel team back in Utah. And Easton's uncle thanking everyone for their thoughts and prayers.
(BEGIN VIDEO CLIP)
SPENCER BECK, EASTON OLIVERSON'S UNCLE: He's doing very well in the fight to get better, but -- and the community and the prayers and the support that we've received is unbelievable. But he's fighting the fight right now and it's just a shock today to us and it's been -- it's been really tough. Easton is a special young man and we're just praying that he comes home healthy and strong and gets back to doing well.
(END VIDEO CLIP)
SCHOLES: Yes. Easton's team is still practicing and plans to play their opener at the Little League World Series on Friday. They are the first team ever from Utah to make it to Williamsport. All right, Serena Williams, meanwhile, was back on the court last night playing at the Western-Southern Open in what was likely her second to last tournament of her career. Serena losing in straight sets to reigning U.S. Open champ Emma Raducanu. The 23-time Grand Slam champ waving to the crowd as she left the court, but she did not speak after the match.
Serena's farewell match is expected to be at the U.S. Open, which starts next week.
All right, the NBA's schedule will be released later today and when it comes out fans will see that no games are going to be played on Election Day, November 8. All teams will play the night before where they will encourage fans to get out and vote.
All right, Tiger Woods, meanwhile, isn't playing this weekend in the FedEx Cup Playoffs but he still made the trip up to Delaware to meet with the top PGA Tour players. According to ESPN, the meeting was about getting everyone on the same page and how they can strengthen the PGA Tour as players continue to leave for LIV Golf.
Commissioner Jay Monahan scheduled to meet with the players later today. Twelve former Major winners have already left the tour for the Saudi-backed series in a matter of months.
All right, and finally, Yankees fans trying anything they can to turn the team's fortunes around, including turning the bleachers into a barbershop. This guy getting a haircut mid-game. It did not work, though. The Yankees still lost to the Rays last night 3-1.
They have now lost 12 of their last 15 games. They have the worst record in baseball this month, Christine. Some Yankees fans freaking out. They've scored just nine runs in their last seven games. They've still got a big league in the division so no reason to panic just yet, but whew -- it's been rough lately for the Yanks.
ROMANS: I would say. I would say so. All right, Andy Scholes. Nice to see you. Thank you.
SCHOLES: All right.
ROMANS: And thanks for joining me. I'm Christine Romans. "NEW DAY" starts right now.
(BEGIN VIDEO CLIP)
REP. LIZ CHENEY (R-WY): This primary election is over but now the real work begins.
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JOHN BERMAN, CNN ANCHOR: Congresswoman Liz Cheney loses badly but says it was worth it. I'm John Berman with Brianna Keilar. Cheney's defeat was by a near-historic margin in a primary in as much of a sign as we have seen that Donald Trump has a vice grip on the core of the Republican Party. Cheney, who is vice chair of the January 6 committee, made it clear
she will continue her mission to keep Trump from ever returning to office.
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CHENEY: Two years ago, I won this primary with 73 percent of the votes. I could easily have done the same again. The path was clear. But it would have required that I go along with President Trump's lie about the 2020 election. It would have required that I enable his ongoing efforts to unravel our democratic system and attack the foundations of our republic. That was a path I could not and would not take.
(END VIDEO CLIP)