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Early Start with John Berman and Zoraida Sambolin

Powell Addresses "Pain" amid 0.75 Percent Rate Hike to Ease Inflation; Powell: There "Isn't a Painless Way" to Fight Inflation; Report: Cancer Death Rates in U.S. Steadily Falling; U.S. Embassy in Havana to Resume Full Immigration Visa Processing; Robert Sarver Starts Process to Sell Suns, Mercury. Aired 5:30-6a ET

Aired September 22, 2022 - 05:30   ET

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

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JEROME POWELL, FEDERAL RESERVE CHAIRMAN: We have to get inflation behind us. I wish there were painless way to do that, there isn't. We have to get supply and demand back into alignment. And the way we do that is by slowing the economy.

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CHRISTINE ROMANS, CNN HOST, EARLY START: Fed Chair Jerome Powell on the central bank's intensifying fight against the highest inflation in 40 years. U.S. stocks fell after a gigantic three quarters of a point interest rate hike the third straight, huge hike in a row.

Wall Street Futures right now this morning looking like they're going to try to bounce a little bit looking at markets around the world in Europe. But the European shares this morning because our years from now the Bank of England are also expected to raise rates.

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ROMANS: Analysts divided over whether to expect a hike of 50 or 75 basis points as the British pound plunges against the dollar. But new energy cost measures have also been announced there. It's good - let's get a quick check of Asian markets right now they have closed for the session Kristie Lu Stout live in Hong Kong for us. And what I see Hong Kong stocks at 11 year low Kristie.

KRISTIE LU STOUT, CNN ANCHOR AND CORRESPONDENT: Yes, it is a sea of red across the board here in Asia Christine after of course we had another jumbo rate hike from the U.S. Federal Reserve. And here in the region, the trading day is over in Japan you got the NIKKEI, the Seoul KOSPI the Shanghai Composite the HANG SENG here in Hong Kong as you can see all ending the day lower.

In fact, the HANG SENG closed at its lowest level in more than a decade. Of course, it was on Wednesday when the Fed hiked interest rates as expected by three quarters of a percentage point for the third time this year. And it also signaled more rate hikes to come all part of a plan to fight inflation there in the United States.

But here in Asia, all eyes were also on another central bank, the Bank of Japan. And despite this global trend, this rush to hike interest rates, the Bank of Japan is maintaining ultra-low rates and that policy gap that we have between the BOJ and the Fed has actually pushed the Yen to a 24 year low the Japanese currency very weak at the moment back to you.

ROMANS: All right, Kristie Lu Stout, thank you so much for that! There's just so much going on regards to your money. Home sales, dropping again in August for the seventh month in a row, sales of existing homes, plummeted nearly 20 percent from a year ago and fell 0.4 percent from July.

This comes as stubbornly high prices are pushing prospective buyers out of the market, but also as the Fed makes mortgages more expensive. So let me show you exactly what these higher interest rates mean, right.

Right now the average home price is more than $440,000. With today's 30 year fixed rate mortgage, assuming an average credit score and a 20 percent down payment, the monthly payment would be about $2,500. A year ago, that same mortgage, the monthly payment would have been $1,816. That is more than $700 difference for the exact same home. That's what higher interest rates do in an economy.

Let's bring in John Leer, Chief Economist for Morning Consult. So glad to have you here this morning, John, because let's talk about the morning after here, huge rate hike. That was big, historic news. But there's more the Fed members raising their forecasts for inflation for the unemployment rate for interest rates over the next couple of years and downgrading their expectations for growth. What does that mean to you?

JOHN LEER, CHIEF ECONOMIST, MORNING CONSULT: Yes, you know, I think what is interesting about this is that it's part of this consistent trend that we've seen, which is that over the last few months, the Federal Reserve has consistently signaled that they believe that inflation will run hotter than they previously expected.

And so I think that it's that trend that really tells us something that, you know, if there are risks, the risks are essentially to the downside, the risks are that inflation runs hotter for longer that interest rates have to go higher than we currently believe. And I think ultimately that unemployment is likely to raise more than folks expect.

And that's also something we learned yesterday, the Federal Reserve slowly but surely is starting to admit that unemployment is likely going to have to raise more than they had previously expected.

ROMANS: Yes, the Fed Chief talking about just the tightness in the labor market when he was looking at the quit rate and the vacancies, there are two available jobs for every worker and he said there's no painless way to kill inflation. I guess the trade-off here is that he wants to weaken the jobs market that is less painful than entrenched inflation.

LEER: I think that's right. That right now, folks are feeling inflation, that's a direct acute set of pain points. The Federal Reserve what they're able to do directly is raise interest rates and interest rates can affect the economy through slower investment and ultimately higher unemployment.

And they're hoping that that will trickle through and start affecting inflation, inflation can be very, very dangerous if it gets entrenched. We see this in a lot of emerging markets, it becomes very, very difficult for central bankers to fight inflation once it sort of develops and has its own momentum or inertia.

And so I think that's what the Federal Reserve is trying to do is just keep the U.S. in this sort of relatively low inflation rate environment compared to a lot of let's say, Argentina, Turkey, places like that, that are experiencing 70 percent year-over-year inflation.

ROMANS: Well, it's so dangerous. I mean, you're an economist, explain to our viewers why it's so dangerous to have entrenched inflation, it changes like consumer behavior and psychology, right?

LEER: That's exactly right. Inflation is one of these things that have a potential to be essentially self-perpetuating. That is folks believe prices are going to rise rapidly in the future. They go out and they make a bunch of purchases right now, that then turns to drive inflation higher and so you can get this vicious cycle very, very quickly and.

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LEER: And it does tend to happen sort of nonlinearly, where all of a sudden inflation gradually rises and then hit some sort of asymptote and skyrockets to much, much higher rates.

ROMANS: So gas prices have stopped falling, just before hitting the 100th day of a decline, we've had such a dramatic decline in gas prices. That's been the only good part of the inflation story elsewhere; you're seeing it a little bit more entrenched.

Do you think that there is a pathway here for a soft landing where the Fed can kill inflation, get it back down to its 2 percent target, from 8.3 percent and not risk a big recession?

LEER: I think there is in theory, a pathway, but it's going to be very, very challenging. And I think what we're starting to see is the Federal Reserve acknowledging more and more just how challenging it is, and that in practice, it's very, very difficult to calibrate this precisely.

And then it's very - it's likely that they will sort of end up having unemployment rise, let's say above 5 percent, which I think in this case would likely signal a recession. ROMANS: All right, John Leer come back soon there's so much to talk about and so many things happening in regards to your money. Thank you so much, John! All right, still become a Governor in the Midwest taking aim at a centuries old abortion ban, and hopeful signs in the fight against cancer.

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ROMANS: Welcome back! More people are surviving cancer in the U.S. than ever before. A new report by the American Association for Cancer Research finds death rates from cancer in the U.S. have dropped 32 percent since 1991. In just the past three years, the number of cancer survivors has increased by more than a million just over the past few years.

Let's bring in Dr. Ali Raja, Executive Vice Chair in the Department of Emergency Medicine at Massachusetts General Hospital. He's also a Professor at Harvard Medical School. Good morning!

DR. ALI RAJA, EXECUTIVE VICE CHAIR, DEPARTMENT OF EMERGENCY MEDICINE, MASSACHUSETTS GENERAL HOSPITAL: Morning, Christine.

ROMANS: So Doc, what's driving the decline in cancer rates?

DR. RAJA: You know, Christine, it's actually two things. And they're both because of the fact that funding has really been strong for cancer over the past four decades, as you mentioned. The first is early detection rates.

We have a lot of tests, and we've done a lot of screening exams on patients everything from colonoscopy to mammograms and everything in between, to really detect cancer earlier. At which point it's easier to treat. And the second thing is new treatment modality so new chemotherapy agents, new kinds of radiation, the things that we can use to treat cancer, especially cancer detected early have been really effective.

ROMANS: Are we living better? I mean, I wonder if it has anything to do with it. There must be fewer smokers today than it was in 1991.

DR. RAJA: You know that's a good point as well. I think we are living better. You know, it's arguable whether or not we're all doing enough exercise and eating well enough. But smoking is a huge difference between now and 9091. And you're right and the rates of lung cancer detection and treatment reflect that.

ROMANS: President Biden recently re-launched this Cancer Moonshot Initiative, and he has this goal of cutting cancer death rates by at least 50 percent in the next 25 years. Do you think that's a realistic goal?

DR. RAJA: Well, Christine, it really depends. And the fact is that a lot of this cancer early detection has been on the propagation of new screening modalities and sort of aggressive screening that can work in patient populations that have easy access to health care, and that we can schedule for their appropriate screening tests like getting a colonoscopy when you hit the age of 45.

But there's a lot of this country that doesn't have easy access to health care, whether that's because of, of inherent racial and ethnic biases, or socio economic status, or the fact that the a lot of folks just don't have primary care doctors. And so it's going to really depend on how well we can start screening.

The treatment modalities are there and we're going to keep working on that. But we really need to make sure that we can get everybody who needs screening for cancer screened early on to detect that early cancer.

ROMANS: Absolutely. Also, this week Doc adults under the age of 65 should now be screened for anxiety. You know, that's a first of its kind of recommendation from the U.S. Preventive Task Force. What does screening for anxiety entail? And how in your view, can it help?

DR. RAJA: It's a fantastic and honestly overdue recommendation Christine. Here's the thing we screened for cancer, we screened for high blood pressure to try to prevent heart attacks and strokes. Screening for anxiety is just as important.

It involves a simple questionnaire usually done by a primary care physician. And the reason that we screen is that people can have anxiety and just not even know it, just like you can have high blood pressure and not even know it.

And by answering those questions with a primary care physician, it actually allows people who don't even realize that they have anxiety to realize that they had to get it to get treatment for it to get there before to get on medications if they need it, and hopefully prevent something bad happening just like we prevent heart attacks and strokes from high blood pressure.

ROMANS: Fascinating. Alright, Dr. Ali Raja thanks for dropping by this morning nice to see you!

DR. RAJA: You too, Christine.

ROMANS: All right, 48 minutes past the hour. Wisconsin Governor Tony Evers calling a special session of the state legislature next month in his latest attempt to repeal an abortion ban that dates back to 1849. Democrat has met Republican resistance now the Governor wants to create a pathway for voters to change the state constitution.

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GOV. TONY EVERS (D-WI): If Republican legislators aren't going to uphold the will of the people, and the people of the state should have the right to take a stand at the ballot box.

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ROMANS: Wisconsin's current law makes it a felony to provide an abortion except when the mother's life is at risk. For the first time since 2017 the Biden Administration is said to fully resume immigrant visa processing at the U.S. Embassy in Havana, Cuba.

It's part of an effort to discourage illegal immigration from Cuba by expanding legal pathways to the U.S. officials seen a growing number of Cubans at the southern border under the new policy Cubans applying for visas will be able to interview with the Embassy in Havana instead of traveling takes effect in early next year.

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ROMANS: Alright, Vladimir Putin's military mobilization, triggering anti-war protests across Russia and the embattled owner of the NBA's Phoenix Suns now bowing to public pressure.

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ROMANS: All right, all eyes on Yankees Slugger Aaron Judge but he didn't come through with a record tying homerun last night. Andy Scholes has this morning's Bleacher Report. Hey Andy!

ANDY SCHOLES, CNN SPORTS CORRESPONDENT: --Yankee Stadium it was electric again last night as fans were hoping to see Aaron Judge tie Roger Maris' American League record of 61 homeruns.

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SCHOLES: All those fans in the bleachers you're hoping to catch a flying lottery ticket memorabilia dealer Rick - told the Action Network he's offering $100,000 for homerun number 61 $200,000 for the ball from homeruns 62. And everyone on their feet in the first inning when Judge came to the plate he doubled and this event down the line he would score on a Grand Slam by Oswaldo Cabrera.

Judge struck out in the second inning then in the fifth comes to the plate again hits this one in the air down the line the crowd though letting out a big groan as it bounces over the wall for ground rule double. Judge two doubles no homeruns Yankees win big 14 to 2. Judge was asked after the game all the extra attention bothered.

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AARON JUDGE, NEW YORK YANKEES OUTFIELDER: Not at all. Yankee Stadium gets rowdy so it's been routed these past couple days and this is just how it is. So I just try to treat it just like any other series any other game and any other moment. Fans packed it out to you know see us win the ballgame and see some homerun. So I think I got to cut out this double stuff.

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SCHOLES: Judge watch continues tonight at Yankee Stadium as they open a four game series against the Red Sox. Embattled Phoenix Sun's and Mercury Owner Robert Sarver, meanwhile, says he's selling the teams this comes eight days after the NBA released findings on a nearly year-long investigation surrounding racism and sexism during his time as owner.

Sarver was suspended for one year and fined $10 million after that investigation yesterday released a statement saying the sale is the best course of action. Sarver went on to say, as a man of faith, I believe in atonement and the path to forgiveness. I expected that the commissioners' one year suspension will provide the time for me to focus, make amends and remove my personal controversy from the teams that I and so many fans love.

But in our current unforgiving climate, it has become painfully clear that that is no longer possible. That whatever good I have done or could still do is outweighed by things I have said in the past. Now Sarver bought the team in 2004 for about $400 million. Forbes recently estimated the value of the Suns at 1.8 billion.

Alright tomorrow is going to mark the end of an era as Roger Federer says goodbye to professional tennis the 20 time Grand Slam Champion is set to play in the doubles match at the Laver Cup in London. And Federer spoke with CNN yesterday about what he will miss most after hanging up his racket.

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ROGER FEDERER, 20-TIME GRAND SLAM CHAMPION: I love tennis, everything about it. And I will miss the competition the fans cheering for or against me they usually been with me all the way so it's been it's been great.

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SCHOLES: Eagles Rookie Britain Covey played in Monday night's game against the Vikings as a punt returner. But he ran into some problems when he arrived at Lincoln Financial Field Covey tries to park his car in the players' lot before the game, but the attendants didn't believe he was a player. They wouldn't let him in the lot because he only had a practice squad pass.

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BRITAIN COVEY, PHILADELPHIA EAGLES PUNT RETURNER: I got to prove myself in Philly before I deserve to be there. So I liked it. I had to park with the grinders with you know out about a half mile away with the tailgaters and walked through and I thought it was a blast.

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SCHOLES: Of course he was a good sport about the whole deal. He paid 45 bucks to park, you know; hope he gets reimbursed for that.

ROMANS: That's cool parking out with the grinders, the tailgaters, you can pick up a couple of hot dogs on the way in you know, maybe have a beer--

SCHOLES: Some high fives.

ROMANS: --with your team. Alright, nice to see you, Andy! SCHOLES: All right.

ROMANS: All right. Thanks for joining us. I'm Christine Romans. "New Day" picks it up right now.

JOHN BERMAN, CNN HOST, NEW DAY: A bruising legal 24 hours for Donald Trump in a bizarre new defense. I'm John Berman with Briana Keilar. And overnight the Department of Justice scored a significant win in the FBI search of Mar-a-Lago for classified documents.

An appeals court reversed a judge's decision and will now allow investigators to use some 100 classified documents as part of their criminal probe. Neither the Special Master nor Trump's team will have access to them.

Part of the appeals court reasoning is that the Trump team is - has never produced any evidence or even arguments that the documents were declassified. Now on that subject also overnight, Trump offered a frankly, odd defense.

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DONALD TRUMP, 45TH U.S. PRESIDENT: If you're the President of the United States, you can declassify just by saying it's declassified even by thinking about it because you're sending it to Mar-a-Lago or to wherever you're sending it and there doesn't have to be a process--

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