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Netanyahu Expected Win Puts Israel's Far Right In Power; Ukrainian Investigators Gathering Evidence Of Possible Russian War Crimes; Food Companies Keep Raising Prices Even After Costs Are Recovered. Aired 5:30-6a ET

Aired November 03, 2022 - 05:30   ET




CHRISTINE ROMANS, CNN ANCHOR: All right. Benjamin Netanyahu is poised to complete an astonishing comeback as prime minister of Israel. Partial election results show Netanyahu and his allies are set to win a majority of 65 seats in the 120-seat Knesset.

Hadas Gold has the latest from Jerusalem. Hadas, the bigger picture here I think, right, is the shift to the right in Israeli politics.

HADAS GOLD, CNN JERUSALEM CORRESPONDENT: Yes, Christine. Well, if you look at the numbers, yes, Netanyahu's bloc has far more seats -- 65 seats -- than, really, the opinion polls were expecting. But Benjamin Netanyahu's own Likud party is still at around 32 seats, which is about where they were before.

The big difference this time around is the rise of the far-right parties. There's a far-right group of parties called Religious Zionism/Jewish Power. They are set to have 14 seats in the next Parliament. That would make them the third-largest party in the Israeli Parliament. This is something that would have been seen as astonishing even a year or two ago when these people were considered the far-right fringe of Israeli politics.

One of their leaders is named Itamar Ben-Gvir. He's a name we will likely hear a lot more of in the coming days, weeks, and months. He was once convicted of inciting racism. From the Israeli Parliament, he yelled at an Arab Israeli member of Parliament, saying that he didn't belong there. That he should be a member of Parliament in Syria.

This is somebody who, just a year ago, Benjamin Netanyahu himself dismissed the idea of this person being a minister in the government. Now, it appears as though it's not a question of whether he will be a minister but which position of power he will have. And he has been gunning for the position of public security. That would put him in charge of police.

And this is somebody who once pulled his gun in an east Jerusalem neighborhood, calling on police to shoot at stone throwers. This is obviously -- would be a very -- for some people, would be seen as a dangerous position for him to have. And this is also affecting Israel's positions, potentially, with its allies around the world when you have such a far-right politician. A State Department spokesperson, Ned Price, was asked about this yesterday and he said that while they're still waiting to see the full results, that these all -- that they hope that all Israeli government officials will continue to share the values of an open democratic society, including tolerance and respect for all in civil society, particularly for minority groups, Christine.

ROMANS: All right, Hadas Gold. Thank you so much for that in Jerusalem.

All right, quick hits around the globe right now.

The U.S. accuses North Korea of secretly supplying Russia with ammunition for the Ukraine war. According to newly-declassified evidence, North Korea is hiding the shipments by making it appear as if they're being sent to countries in the Middle East or North Africa.

Outgoing Brazilian president Jair Bolsonaro urging his supporters to end road and highway blockades after three days of nationwide protests. The protests erupted after Bolsonaro's narrow loss in a runoff election.

The party's over for illegal raves in Italy. The country's first female prime minister proposing a new law threatening organizers of illegal rave parties with up to six years in prison.

All right. Joe Biden's team probably wishes it could take back yesterday's tweet on the economy. First, CNN's Clarissa Ward hears firsthand from women who have suffered unspeakable horrible in Ukraine's war zone.






ROMANS: More horrors revealed in Russia's war on Ukraine. CNN's Clarissa Ward joins a team of Ukrainian investigators going door-to- door looking for evidence of Russian war crimes -- specifically, cases of sexual violence.


UNIDENTIFIED MALE: (Speaking foreign language).

WARD (voice-over): Day after day, they go house to house -- a team of investigators dispatched from the capital. These men are tasked with looking for cases of sexual violence. UNIDENTIFIED FEMALE: (Speaking foreign language).

WARD (voice-over): "No one was assaulted in this village," these women tell them, "but every home has suffered."

When Russian forces were pushed out of this area earlier this month they left a trail of misery behind them. Down the road, an elderly woman, inconsolable, asks for help.

VERA LAPUSHNYAK, HOME DESTROYED: (Speaking foreign language).

WARD (voice-over): "I don't know where to sleep now. There are no windows or doors," she tells the policeman.

WARD (on camera): Clarissa Ward.


WARD (on camera): (Speaking foreign language).

Seventy-one-year-old Vera Lapushnyak son was injured fighting on the front lines. She is alone and afraid.

LAPUSHNYAK: (Speaking foreign language).

WARD (on camera): OK. She wants to invite us in to see how she's living.

WARD (voice-over): This is what remains of her home. Only her precious icons are untouched.


LAPUSHNYAK: (Speaking foreign language).

WARD (voice-over): "Oh, my God! Oh, God's mother," she says, "please keep my son alive and let me see him again."

In town after town throughout the Kherson region, this is what victory looks like, and it is grim. Almost every house has been destroyed by heavy fighting and the people scarred by months of Russian occupation.

In the next village, the investigators talk to 56-year-old Tatiana. We have agreed not to name the village or show her face to protect her identity. She takes us to her brother's house where she says she was raped by a Russian soldier on August 26.

TATIANA, RAPED BY RUSSIAN SOLDIER (through translator): He pinned me against the wardrobe and groped me. He ripped my clothes off. And I was caught in his grip. It was very hard and painful for me. I was crying, begging him to stop, but with no success.

WARD (on camera): And did he say anything when it was over?

TATIANA (through translator): Do not tell anyone anything or it will be worse. That's everything he told me and then he left. It's very hard for me.

WARD (on camera): Did you tell your husband what had happened?

TATIANA (through translator): I didn't tell my husband right away, but I told my cousin and my husband overheard. He said you should have told me the truth but you kept silent. I was very ashamed -- very.

WARD (on camera): The shame is on him.

TATIANA (through translator): He's probably not ashamed -- if he's still alive. I wish that he and all his kin were dead.

WARD (voice-over): It's coming to the end of a long and emotional day. The men visit the last village on their list. Tomorrow, they will head back to Kyiv to submit their findings. They have recorded six allegations of rape in their two weeks here.

WARD (on camera): It must be a hard job.


WARD (voice-over): "It is psychologically difficult. You understand every victim is so distressed," Oleksandr Svidro says. "But this is important work."

Most cases, they say, go unreported. Like so many of the horrors that took place under Russian occupation here, they remain hidden in the dark.

Clarissa Ward, CNN, Kherson region, Ukraine.


ROMANS: Just tough to watch.

CNN has repeatedly reached out to the Russian military for comment. They have previously denied committing war crimes in Ukraine.

A federal judge orders a top Trump adviser to testify in the Mar-a- Lago case. First, food prices skyrocketing and so are corporate profits.



ROMANS: All right, you're Romans' Numeral this morning, six. That's how many times the Federal Reserve has raised interest rates this year -- a fourth-straight hike of three-quarters of a percentage point just yesterday. It's part of the Fed's aggressive battle to bring down the white-hot inflation that is plaguing the American economy.

Let's take a look at markets around the world this morning. You can see Asian shares have closed down a little bit. Hong Kong down three percent. Europe has opened lower here. European stocks lower as we await the Bank of England's decision on interest rate hikes in the U.K. The forecast is for the central bank to raise rates by 75 basis points -- its largest hike in more than 30 years.

On Wall Street, stock index futures also leaning down a little bit. Yesterday, a wild day. Stocks first rallied and then dropped after the Fed raised interest rates. Investors were spooked at the possibility of future hikes and recession fears.

Gas prices this morning up a penny, now sitting at $3.78 a gallon.

Important data today on weekly jobless claims and mortgage rates later this morning. And the big October jobs report is, of course, Friday.

Let's bring in Nela Richardson, chief economist at ADP. Good morning, Nela. Nice to see you.

NELA RICHARDSON, CHIEF ECONOMIST, ADP (via Skype): Good morning. How are you?

ROMANS: You know -- I'm great. The Fed trying to cool down the economy to get inflation under control. That means higher borrowing costs for cars, homes, credit cards. This is something that everyone will feel.

What are you thinking this morning after the Fed says there's still a ways to go on getting inflation under control?

RICHARDSON: Yes, I knew that before the press conference because I looked at the inflation Consumer Price Index at 8.2 percent -- and we've got a ways to go. And if you look at core inflation -- when you strip out those food and energy prices, 6.6 percent year-over-year -- that indicates a year to go -- a ways to go to get to that two percent target (PH). Even by the Fed's alternative measures that it prefers, we have a ways to go, Christine.

So, the fact that the Fed has promised to go the distance, I read as good news on inflation. Because while everyone will feel higher borrowing costs they're also already feeling the effects of too-high inflation.


The Fed chief, yesterday, acknowledged that the job market is still too tight. We've had six rate hikes, four of them huge. Ironically here, to get inflation under control, at some point, people have to start losing their jobs. That is this tradeoff that they're trying to do.

Why is the stock -- the job market so strong here still?

RICHARDSON: You know, this is a peculiar time in our economic maturity, right? This is not the usual playbook that the Fed is used to. The labor market is incredibly strong. Firms are still hiring.

[05:50:00] ADP put out a number yesterday that said the private sector added 239,000 jobs in September. In any economy, that is a strong, robust number. We're still seeing growth in the labor market.

So if the Fed wants to rein in inflation, it might have to go around the labor market. It might have to go to more interest rate-sensitive sectors right now, like housing, to do the work to get inflation down. Because right now, firms are still hiring.

ROMANS: So, the Fed chief, yesterday, indicated that future rate hikes could come at a slower pace at some point because they've already delivered so much tightening so quickly -- listen.


JEROME POWELL, CHAIRMAN, FEDERAL RESERVE: That's why I've said at the last two press conferences that at some point, it will become appropriate to slow the pace of increases. So that time is coming and it may come as soon as the next meeting or the one after that. No decision has been made.


ROMANS: But he also said they're far from done here.

So what do you make of his balancing act?

RICHARDSON: You know, for all you football fans out there, it's basically the difference between a running game and a passing game. You can't go as far when you run the ball as when you pass it, but the goal line never changes.

The Fed has to get to a two percent target. So even if they moderate the pace of the increases they still have to go the distance. They still have to cover the field. And so, this might be a longer episode of rate hikes, even if it's smaller in duration.

The good news is it's easier for the Fed to control the effects of its policy when they go slower than when they go faster. And I think that's why the Fed might start to slow down so they can really measure the effects of these rate hikes on the economy and on Main Street.

ROMANS: So that's an awesome sports analogy. That really brings it home.

Thank you, Nela Richardson, chief economist at ADP. Nice to see you this morning.

RICHARDSON: Thank you.

ROMANS: All right. The White House deleting a tweet that credited President Biden's leadership for an increase in Social Security checks this year. It was actually a cost of living increase triggered by inflation.

When Republicans pounced, the White House went into clean-up mode. (BEGIN VIDEO CLIP)

KARINE JEAN-PIERRE, WHITE HOUSE PRESS SECRETARY: Look, the tweet was not complete. Usually, when we put out a tweet, we post it with context, and it did not have that context.


ROMANS: Social Security benefits for about 70 million Americans will increase 8.7 percent in 2023, but because of Congress' mandated cost of living adjustments.

All right, President Biden pleading with voters to preserve democracy. Is it the right message right now? And Elon Musk and AOC trolling each other over the new Twitter chief's plan to charge people.



ROMANS: All right. The surging inflation that you feel every time you go to the grocery store -- it's causing higher food prices and higher profits. Food companies and restaurants are finding they can raise prices above inflation rates and consumers are still willing to pay.

Let's bring in CNN's Nathaniel Meyersohn with more. So, what's going on with food prices and food profits?

NATHANIEL MEYERSOHN, CNN BUSINESS REPORTER: Right. So anyone who has been to a grocery store or a restaurant recently can tell you that prices have skyrocketed. But what's also jumped are the profits of companies that are making the food.

So, Pepsi's prices last quarter were up 17 percent from a year ago. Profits were up 21 percent. Chipotle's prices last quarter, up 13 percent; profits up 26 percent.

And this has been a criticism from the left and politicians like Bernie Sanders and Elizabeth Warren that companies are engaging in what they're dubbing greed-flation.

ROMANS: Greed-flation.

So, why are food companies raising prices? I'm assuming they've got their own higher prices for what they're making. And why are consumers paying for it?

MEYERSOHN: Right. So there's no question that the companies' costs for labor, transportation, commodities have increased. We also see tight supply and that's often driven by drought and climate change --


MEYERSOHN: -- events. But at the same time, consumers want this stuff. They are willing to pay 10-15 percent more for snacks, sweets, sodas. As the CEO of Mondelez, which makes Oreos said recently consumers are saying chocolate is really something they cannot live without.

ROMANS: Chocolate recession-proof, I guess is what we're saying.

So how are shoppers making changes, I guess, to their habits?

MEYERSOHN: Right. So there's one main way that we see customers changing their habits in response to the higher prices, and that's more shoppers are going to Aldi. Aldi is a German discount grocery chain. Their prices are about 50 percent lower than traditional supermarkets. We see more customers going here. Aldi says that a million new shoppers have visited their stores in the past years.

But Aldi is a pretty quirky store. It's a -- it's a cousin company of Trader Joe's. You go to the store, you have to deposit 25 cents --

ROMANS: For a cart.

MEYERSOHN: -- to use a shopping cart. You're not going to find big brands like Coke or Pepsi.

ROMANS: Right.

MEYERSOHN: It's all of their own labels -- 90 percent of their own labels. Their stuff is displayed in cartons, not stacked nicely on shelves, and you're not going to find that many workers. And these are all cost-savings tactics that Aldi can use to then pass along lower prices to shoppers.

ROMANS: Yes. We know consumers and other things like switching to store brands, switching to smaller items that don't -- doesn't cost as much. A smaller bottle of ketchup, for example.

All right, Nathaniel Meyersohn, nice to see you -- CNN Business reporter. Thanks.

All right, thanks for joining us. I'm Christine Romans. "CNN THIS MORNING" starts right now.