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Early Start with John Berman and Zoraida Sambolin
Musk Testifies In Trial Over Controversial 'Funding Secured' Tweet; Department of Justice And 8 States Sue Google For Online Advertising Dominance; Lawmakers Keep Quoting Taylor Swift At Ticketmaster Hearing. Aired 5:30-6a ET
Aired January 25, 2023 - 05:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[05:30:00]
CHRISTINE ROMANS, CNN ANCHOR: An iceberg the size of London has broken off in Antarctica, but scientists stationed on the Brunt Ice Shelf say this event was expected and it was not because of the climate crisis.
All right. Next, Elon Musk back in a California courtroom. What he's saying from the witness stand. And senators trying to channel Taylor Swift.
(BEGIN VIDEO CLIP)
SEN. RICHARD BLUMENTHAL (D-CT): May I suggest respectfully that Ticketmaster ought to look in the mirror and say I'm the problem -- it's me.
(END VIDEO CLIP)
(COMMERCIAL)
ROMANS: Tesla CEO Elon Musk back on the witness stand for a third day in a California courtroom. After the hearing, he asked the scrum of reporters following him what they thought of his testimony.
(BEGIN VIDEO CLIP)
ELON MUSK, CEO, TWITTER: But I'm curious what you guys think.
UNIDENTIFIED MALE: Uh, we weren't listening.
MUSK: Oh, OK.
UNIDENTIFIED MALE: Way to go.
UNIDENTIFIED MALE: Do you feel good about how it went?
MUSK: Uh, yes, I think so. I think -- yes, I think so. All right.
(END VIDEO CLIP)
[05:35:00]
ROMANS: A subdued Elon Musk.
He's testifying in a class-action lawsuit over his controversial "funding secured" to take Tesla private at $420 a share. That claim that these class-action folks say cost them millions of dollars. It also cost Musk his position as Tesla's executive chairman at the time.
CNN Business writer Clare Duffy joins me here. She's been monitoring this hear -- this hearing -- this trial. How do things appear to be going? I mean, when you watch him and listen to him on social media, he can be a flamethrower. He looks a bit subdued there. What's happening inside the courtroom?
CLARE DUFFY, CNN BUSINESS WRITER: He does. Frankly, it's been a little boring. Musk has made these really strong claims about the SEC and the settlement that he came to over this same exact tweet, really calling out the SEC, saying that it's not doing its job.
And this seems like a much more, like you said, subdued Elon Musk. He has been sort of talking in circles sometimes when he gets asked these questions about his conversations about taking Tesla private and his sort of "funding secured" claim. But it has been -- it has been a little boring.
ROMANS: Yes. I mean, they asked him if the $420 a share was a reference to marijuana. And just the fact that you're in court asking a public company executive if it's like a marijuana joke in something like that, it just speaks volumes I think.
DUFFY: Exactly -- about how strange this situation is. He says it wasn't a joke. He said that was the price that he was thinking about. It was about $419 and so he rounded up to $420.
But it is just a really strange situation that we're dealing with here.
ROMANS: What does it tell you -- it basically tests whether the world's now second-richest person can be held accountable for his use of Twitter as basically a megaphone? He is -- he is a public company officer. Using Twitter in any way like that essentially -- according to the SEC, at least -- is like writing a public -- you know, a public statement. He's being tested on that theory here.
DUFFY: Exactly. And, like, Elon Musk uses Twitter differently than a lot of other -- most other public company CEOs. He's really active on there. He's sort of irreverent about his use of Twitter.
But I think this will be a big test for -- the question here is not was this a -- the judge has already ruled that this tweet was reckless. That it was a misstatement. But the question here is can they say that it was the cause of these investor losses?
ROMANS: Right.
DUFFY: And Musk is saying that you can't draw that cause of relationship. That his tweet -- he tweets all the time and it may or may not affect -- ROMANS: Right.
DUFFY: -- the share price. But that is what the jury is going to have to decide here.
ROMANS: And the stock basically went down all last year. I think down 65 percent. I mean, it was a really tough year for Tesla shareholders and especially, Tesla shareholders who were worried about his distraction with Twitter. That was hurting their overall investment.
All right, Clare Duffy. Nice to see you this morning. Thank you.
DUFFY: Thank you.
ROMANS: All right. The U.S. Justice Department is now suing Google in an attempt to break the company up.
CNN's Anna Stewart has more from London.
(BEGIN VIDEOTAPE)
ANNA STEWART, CNN REPORTER: Allegations that Google holds too much control are nothing new, but this latest legal broadside from the U.S. Justice Department -- its first major antitrust case under the Biden administration -- has certainly ramped up the pressure.
Now, this complaint argues that Google has actively and illegally dominated the digital advertising market for many years as detailed by the U.S. attorney general in a press conference Tuesday.
MERRICK GARLAND, U.S. ATTORNEY GENERAL: For 15 years, Google has pursued a course of anticompetitive conduct that has allowed it to halt the rise of rival technologies, manipulate auction mechanics to insulate itself from competition, and force advertisers and publishers to use its tools.
STEWART: Now, the lawsuit accuses the tech giant of controlling too much of the ecosystem of digital advertising, including three main areas. Firstly, the technology used by major website publishers to offer ad space. Secondly, the tools used by advertisers to buy that space. And thirdly, the largest automated ad exchange, essentially linking the publisher with the advertiser.
In fact, the complaint alleges that Google's own executives have questioned this, quoting one as saying, "An analogy would be if Goldman or Citibank owned the NYSE.
The U.S. government is calling for Google to be broken up and forced to spin off at least its online advertising exchange and ad server for publishers.
Google responded with a statement saying, "Today's lawsuit from the DOJ attempts to pick winners and losers in the highly competitive advertising tech sector." It goes on to say "...that flawed argument would slow innovation, raise advertising fees, and make it harder for thousands of small businesses and publishers to grow." Google is not new to fighting antitrust legal battles. The DOJ sued Google for its dominance in web searches in 2020. The commission launched an antitrust probe into its conduct in digital advertising last year and has already fined Google three times in antitrust cases totaling more than $9 billion so far.
Anna Stewart, CNN, London.
(END VIDEOTAPE)
[05:40:00]
ROMANS: All right, and so the fight begins.
All right. LeBron James inches ever closer to becoming the NBA's all- time leading scorer after a record-setting night against the Clippers.
Andy Scholes has this morning's Bleacher Report. Hey, Andy.
ANDY SCHOLES, CNN SPORTS CORRESPONDENT: Yes, good morning, Christine.
So, LeBron now needs just 178 points to pass Kareem Abdul-Jabbar to become the NBA's all-time leading scorer.
And last night -- well, LeBron was setting a different NBA record. He was on fire from beyond the arc. LeBron making a career-high nine 3- pointers in this one. He finished with 46 points in a losing effort against the Clippers.
But this was the first time in LeBron's 20-year career that he scored more than 40 against the Clippers. And he's now the first player ever to have a 40-point game against all 30 NBA teams.
(BEGIN VIDEO CLIP)
LEBRON JAMES, FORWARD, LOS ANGELES LAKERS: I've gotten to the place by not even thinking about it or not even being in that moment -- just trying to play the game the right way. Even with tonight -- I mean, as well as I shot the ball, I was still trying to distribute to my guys to make they were -- they felt in some type of rhythm. I just always have my -- I always have -- I've played the game throughout my -- throughout my career.
(END VIDEO CLIP)
SCHOLES: All right. Now if things hold, LeBron will once again be one of the captains for this year's All-Star Game. And they're doing it differently this year. They are going to treat it like a true pick-up game and pick the teams right before the game in person. So there's going to be lots of pressure on those two captains.
The captains and starters are going to be announced tomorrow night on our sister station TNT. The All-Star Game, February 19 in Salt Lake City.
All right, it took six tries but longtime Cardinals and Phillies third baseman Scott Rolen is heading to the Baseball Hall of Fame. The 7- time all-star barely got in, appearing on just over 76 percent of the ballots cast by the Baseball Writers' Association of America. He ended up just five votes over the 75 percent needed for induction.
But check out the really awesome moment Scott Rolen's parents found out that their son is heading to Cooperstown.
(BEGIN VIDEO CLIP)
LINDA ROLEN, SCOTT ROLEN'S MOTHER: What do we know?
SCOTT ROLEN, INDUCTED INTO BASEBALL HALL OF FAME: I'm in.
L. ROLEN: Oh!
ED ROLEN, SCOTT ROLEN'S FATHER: (Cheering).
(END VIDEO CLIP)
SCHOLES: That's great.
Rolen is going to join 5-time All-Star first baseman Fred McGriff, who was elected last month by the Contemporary Baseball Era committee as the only two inductees at Cooperstown on July 23.
All right, and finally, a young fan was captured on camera at last night's Miami Heat game with a sign saying he traveled over 4,400 miles to see Jimmy Butler play against the Celtics. So imagine how he felt when he found out his favorite player was ruled out an hour before tipoff with a back injury.
But there was a silver lining for him. Butler was watching from home and had one of his jerseys given to the kid. TNT reported also that Butler has something special planned for the boy, so stay tuned there.
Well, Christine, this is one of the biggest problems that the NBA has right now. You've got parents shelling out thousands of dollars for tickets to see -- to have their kids go see their favorite players.
Like, just last week in Cleveland, Steph Curry and the entire Warriors' starting lineup didn't play to rest (PH). So all those parents and kids didn't get to --
ROMANS: Yes.
SCHOLES: -- see Steph Curry in Cleveland.
It's just a shame that this continues to happen. The NBA -- I don't know what they do to fix it but it's so unfortunate when it happens to these kids.
ROMANS: Yes.
SCHOLES: Luckily for that kid --
ROMANS: Yes. SCHOLES: -- Jimmy Butler was watching and hooked him up. But it's unfortunate how often this happens.
ROMANS: Yes. That is cool from Butler.
All right. Nice to see you, Andy.
SCHOLES: All right.
ROMANS: Thank you so much.
Here is today's fast-forward look ahead.
Vice President Kamala Harris visits California today to meet with families of the 11 victims of Saturday's Monterey Park mass shooting, and Brandon Tsay, the man who disarmed the gunman.
The jury expected to begin deliberations today after closing arguments ended Tuesday in the trial of the New York City bike path terror suspect accused of killing eight pedestrians in 2017.
The lawyer for the teacher shot in her Virginia classroom will speak to the media today. We expect to hear about Abigail Zwerner's condition and new details about that case.
Coming up on "CNN THIS MORNING," the same storm system that brought 14 reported tornadoes to the south is about to bring several inches of snow to parts of the Midwest and northeast.
And next, right here, hundreds of thousands of workers at America's largest private employer about to get a pay raise.
(COMMERCIAL)
[05:48:26]
ROMANS: All right, your Romans' Numeral this morning, 340,000. That's how many Walmart workers are set to get a pay raise after the company announced it is raising its minimum wage from $12.00 to $14.00 an hour. It's roughly a 17 percent jump for workers who stock shelves and serve customers. They make up 21 percent of Walmart's 1.6 million employees. The goal here, to attract and retain talent in a very tight U.S. job market.
Looking at markets around the world right now, European markets are mixed this morning. U.K. factories slashed prices in December. That's another sign inflation is finally cooling. Chinese markets are closed for the week for the Lunar New Year holiday.
And on Wall Street, stock index futures, right now, leaning lower. The Dow was up more than 100 points yesterday, extending its winning streak to three days. But the S&P and the Nasdaq finished lower.
Investors bracing for more high-profile corporate earnings -- Tesla, Boeing, and AT&T later today.
And cost-cutting continues at 3M. The maker of Post-it Notes announced that it has slashed 2,500 manufacturing jobs.
On inflation watch, gas prices -- an upward climb continues, rising three cents overnight to $3.48 a gallon.
All right, let's bring in Spencer Jakab, editor of the "Heard on the Street" feature at The Wall Street Journal. So nice to see you this morning.
Look, it's been such an interesting year. Tech stocks rallying even as these CEOs are executing these big layoffs in tech.
What do you think is driving the performance in the Nasdaq? It's up something like eight percent so far this year.
SPENCER JAKAB, EDITOR, THE WALL STREET JOURNAL'S "HEARD ON THE STREET" (via Webex by Cisco): Yes, it's -- Christine, it's a headscratcher in some sense because the news from those companies has been uniformly poor. You've had some weak earnings. You're anticipating some more weak earnings throughout the rest of earnings season.
[05:50:08]
And you're seeing margins contract. As a matter of fact, this quarter, you're expected to see corporate margins contract for the sixth quarter in a row.
But the thinking with investors is pretty simple. It is that all the signs about inflation are positive. You had inflation as high as nine percent year-over-year. Most recently, it was six percent year-over- year. And a bunch of economists surveyed by The Wall Street Journal expect that to be down to 3.6 percent by the middle of this year and 3.1 percent by the end of this year. So, a real -- you know, just move back to a much lower number.
And that should allow the Federal Reserve to ease off on its Fed hike -- rate-hiking cycle. And that is seen as a positive for stocks. And if that were just the only thing happening in a vacuum, then it would be very positive for stocks. But there's all this other news that people are, for the moment, ignoring, including the threat of a recession.
ROMANS: Yes. I mean, there's been that threat of a recession hanging over us for months now. But tomorrow, we're probably going to get fourth-quarter GDP numbers that are going to look pretty good, showing that the U.S. economy was strong at the end of the year. The labor market is still quite strong here with an unemployment rate at 3 1/2 percent, matching the lowest since 1969.
If you are, indeed, facing a recession in 2023, you're coming from a pretty strong base.
JAKAB: Absolutely, and that's the strange thing. Yes, a 3 1/2 percent unemployment rate, it's the lowest in most of our lifetimes. And so, that's not consistent at all with what you typically see during a recession. There are other signs, like the index of leading economic indicators -- things like the Treasury yield curve, which is screaming recession -- which, if it's consistent with past experience, would say that we are about to enter a recession. And so, that's the strange thing.
And you just mentioned that Walmart is lifting wages by 17 percent in order to attract and retain workers.
So you have this very tight labor market, on the one hand, and very low unemployment. On the other hand, you have corporate profits that are definitely beginning to roll over. And so, it's a -- if it is a recession or if we do enter one this year, it will be a really unusual type of recession.
Certainly, we're already in what you would call an earnings recession for --
ROMANS: Yes.
JAKAB: -- the U.S. where their earnings are contracting and could contract a lot more just given how high margins are still.
ROMANS: All right, Spencer Jakab. So nice to see you this morning. Thank you for walking us through it all.
JAKAB: Thank you.
ROMANS: All right. Ticketmaster's parent company, Live Nation, getting grilled on Capitol Hill. The topic was lack of competition in the concert ticket industry in the wake of the Taylor Swift pre-sale debacle in November.
Watch as senator after senator drops Taylor Swift references.
(BEGIN VIDEO CLIP)
SEN. AMY KLOBUCHAR (D-MN): As an ode to Taylor Swift, I will say we know all too well.
SEN. MIKE LEE (R-UT): Once again, she's cheer captain and I'm on the bleachers. So it was nice --
KLOBUCHAR: Oh, you're a little more than that.
LEE: -- nice of -- nice of Taylor Swift to have written a song about this very situation.
SAL NUZZO, SENIOR VICE PRESIDENT, JAMES MADISON INSTITUTE: Those representing the dominant player in the market would contend that their growth has allowed them to innovate and make advances that greatly benefit consumers. A few million Taylor Swift fans would respond this is why we can't have nice things.
LEE: We've had a lot of talk in the last few rounds about restrictions on the ability of a consumer -- a purchaser of a ticket being able to sell it to someone else. A lot of people seem to think that's somehow a solution. I think it's a -- it's a nightmare dressed like a daydream and I don't think we ought to go there.
BLUMENTHAL: May I suggest respectfully that Ticketmaster ought to look in the mirror and say I'm the problem -- it's me.
TAYLOR SWIFT, SINGER-SONGWRITER: Singing "ME!"
(END VIDEO CLIP)
ROMANS: Serious question. Did those senators already know those lyrics or did their staffs provide them? I don't know. But despite some cringeworthy moments, the committee seriously debated ways to reduce scalping and make ticket fees more transparent.
And, by the way, it was a bipartisan bashing of company management there. Taylor Swift finds bipartisanship on Capitol Hill.
All right. Classified documents now found at former Vice President Mike Pence's house. More on what turned up in Indiana ahead.
(COMMERCIAL)
[05:58:56]
ROMANS: Welcome back.
Our top of the morning -- the top T.V. shows right now.
(BEGIN VIDEO CLIP)
Clip from Netflix's "WEDNESDAY."
(END VIDEO CLIP)
ROMANS: "WEDNESDAY" is number one topping the most popular list on FlixPatrol.
Here's number two.
(BEGIN VIDEO CLIP)
Clip from Paramount's "TULSA KING."
(END VIDEO CLIP)
ROMANS: That's Sylvester Stallone as a mafia capo trying to make a comeback in "TULSA KING." A great show.
And number three --
(BEGIN VIDEO CLIP)
Clip from "THE LAST OF US."
(END VIDEO CLIP)
ROMANS: That's "THE LAST OF US," a big hit already after just two episodes.
All right, NASA is working on developing a nuclear thermal rocket engine that could one day take humans to Mars.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: Three, two, one, boosters and ignition, and liftoff of Artemis 1. We rise together back to the moon and beyond.
(END VIDEO CLIP)
ROMANS: The space agency successfully tested its Artemis spacecraft last year as a stepping stone for putting humans back on the moon and then, Mars. NASA says with current technology, the 300-million-mile trip to Mars takes about seven months. But the nuclear technology would allow deep space travel at record speed.
The first test could occur as soon as 2027.
[06:00:00]
