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Early Start with John Berman and Zoraida Sambolin
Ukraine: One Dead After Russian Missile Strike Hits Residential Area; Biden Issues New Executive Order On Gun Background Checks; March Madness Tips Off With First Four. Aired 5:30-6a ET
Aired March 15, 2023 - 05:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: The blast shattered nearly all of the windows across the courtyard from the main impact point here at kindergarten number 49. You can see that there are a lot of volunteers and a lot of school teachers who are here hard at work cleaning up the glass chards and putting up plywood that's been donated by the administration here, the director of the school tells me. She says that she was knocked to the ground by the force of the blast this morning.
Thankfully, mercifully, there were no children in this school when this explosion took place. The director says that the school has basically been closed for some six months now and that the children have all been evacuated to safer places.
This is yet another grim reminder of the terrible dangers -- the hazards that people are living with every day here in eastern Ukraine.
Ivan Watson, CNN, Kramatorsk, Ukraine.
CHRISTINE ROMANS, CNN ANCHOR: All right, Ivan. Thank you for that.
Quick hits around the globe right now.
At least 190 are dead after Cyclone Freddy tore through southern Malawi. The storm is weakening but heavy flooding and strong winds remain a threat.
Pakistani police clashed with protesters outside former Prime Minister Imran Khan's home as police tried to arrest him. At least 69 people were hurt.
Argentina's inflation topping 100 percent for the first time since July 1989. The country hit 102 1/2 percent inflation in February placing it among the highest in the world.
All right, just in time for a federal summit on airline safety yet another close call between two planes on a U.S. runway. And another disturbance in the Metaverse. Facebook's parent company laying off thousands more workers.
ROMANS: All right. Facebook parent company Meta plans to lay off another 10,000 workers and that's on top of the mass layoffs last November -- that announcement that cut 11,000 jobs from the company.
CNN Business writer Clare Duffy joins me this morning. This is the second major round for Meta in less than six months. What's going on here? Did they misfire on strategy or is the economy to blame? What's going on?
CLARE DUFFY, CNN BUSINESS WRITER: It's a bit of both, Christine. Certainly, the company is saying the economy is really in a bad place right now. And Mark Zuckerberg, in fact, said that he expects this to go on for a number of years looking forward.
And that's really taken a hit to Facebook's core business model, right? The advertising demand shrinks when companies aren't wanting to spend because they are worried about their core businesses.
DUFFY: And at the same time, Facebook has really -- over in Meta, in fact -- we should call it Meta because the --
DUFFY: -- because the company has really shifted its strategy over the last couple of years to focus on this future version of the internet called the Metaverse, which many experts think is at least 10 years away if not more than that. And the company, at the same time as its core business is taking a hit, has spent tens of billions of dollars on this future version of the internet that's many years away. And so I think the company is having to really rethink where its priorities are right now.
ROMANS: So what areas of the company do you think are going to be affected here?
DUFFY: So, Mark has talked about wanting to sort of flatten the organization and take away middle managers. They're slowing hiring so they're cutting recruiting. But what --
ROMANS: He wants decisions to be able to be made quicker, right?
DUFFY: Exactly. He has talked about this being the year of efficiency for Meta.
But what I thought was really interesting from his announcement yesterday is he was talking about wanting to refocus the company on technology. He said over the last couple of years as the company has grown they have hired people that are experts in areas outside of technology, and he wants to sort of scale that back. But it makes you wonder if he's going to be cutting people who are focused on content moderation and safety --
DUFFY: -- and AI ethics. These things that have become really core as Meta's products have grown.
ROMANS: So in his update on Meta's year of efficiency he tells employees that "At this point, I think we should prepare ourselves for the new economic reality that will continue for many years." Higher interest rates lead to the economy running leaner. There's geopolitical instability." He goes on and on and on.
I'm wondering how much of this is they just spent too much on the wrong things for too many years and now they have to readjust, and how much is blaming it on the economy?
DUFFY: I think that's exactly right. I mean, I think the company does bear a lot of responsibility here. It spent about $10 billion last year on its Metaverse vision while its company -- while its core business and advertising was struggling. And so I think they are really having to rethink.
You know, you hear Mark yesterday talking about the biggest investment -- the most important priority for us right now is AI.
ROMANS: I mean, I thought it was the Metaverse.
DUFFY: I know. We've got a big -- we've got a big shift here.
So I think he is really trying to sort of like throw stuff at the wall and try to figure out what's going to stick here. And I think seeing pressure from investors --
DUFFY: -- to focus on things like AI that are a bit more buzzy and important to consumers right now.
ROMANS: One thing that I've noticed this year is when every time one of these big companies announces layoffs stock goes up. So, I mean, for some of these CEOs it's an easy way to make your shareholders happy. It does not make your employees happy though.
All right, Clare Duffy. Nice to see you. Thank you.
All right, here is today's fast-forward lookahead.
The Federal Aviation Administration holds a safety summit today. The agency just announced it is looking into another runway close call -- this one at D.C.'s Reagan International last week.
Later this morning a judge will hear arguments in a lawsuit challenging FDA approval of a medication abortion drug. The judge could block that drug nationwide.
President Biden will speak in Las Vegas today about his plans to lower health care costs. Nevada has the fastest-rising prescription drug prices in the country.
All right. In California, President Biden meeting with mass shooting victims and issuing a new executive order aimed at reducing gun violence.
CNN's Brian Todd has more.
BRIAN TODD, CNN CORRESPONDENT (voice-over): President Biden meeting with victims of the mass shooting in Monterey Park, California where 11 people were killed and nine wounded in a dance hall in January amid the push to reduce gun violence in America.
JOE BIDEN, PRESIDENT OF THE UNITED STATES: Enough. Do something. We remember and mourn today but I am here with you today to act.
TODD (voice-over): The president marks the moment by announcing a new executive order. Among other steps, it will attempt to increase background checks by clarifying and enforcing which gun sellers need to do them.
BIDEN: ...that will accelerate and intensify this work to save more lives more quickly.
TODD (voice-over): But the president has still not been able to press into law some of the gun measures he's most passionate about, like universal background checks. As for his other ambitious goals --
BIDEN: And I am determined once again to ban assault weapons and high-capacity magazines.
TODD (voice-over): Analysts say there's no realistic chance of that with a Republican-led House of Representatives.
ALEX BURNS, POLITICO: When it comes to assault-style weapons and whether individual Americans should be able to privately own military- style weaponry, public opinion is clearly on the president's side. But what's not on his side is the numbers of Capitol Hill. And increasingly, it looks like the judiciary probably isn't on his side either.
TODD (voice-over): Last year, in the wake of the Uvalde, Texas mass school shooting, the president signed into law the most comprehensive gun control measure in almost three decades, providing incentives for states to enact red flag laws which allow for courts to temporarily deny guns to people perceived to be threats to themselves or others. And imposing enhanced background checks for gun buyers between the ages of 18 and 21. But many, including Biden himself, saw that law as just a tiny step.
And since the beginning of this year there have been at least 110 mass shootings in the U.S. leaving more than 150 dead. Gun violence is now the leading cause of death among children and teens, and getting worse. During a surge of child mortality in America over the last two years, a new study says, gun violence is a central factor responsible for nearly half the jump in 2020.
JENNIFER MASCIA, THE TRACE: I think that there is a certain numbness that's developing. We've been dealing with this at least two decades of just mass shootings, public shootings, school shootings. At the same time, 456 million guns have been produced for this market -- this domestic market since 1899.
TODD (on camera): While the politics continues to play out over stronger gun measures some of the nation's top law enforcement figures have been weighing in, pleading with lawmakers to take stronger action on guns.
In one Senate hearing recently retired Phoenix police chief Jeri Williams said, quote, "We're outgunned. We're manned. We're outstaffed. We need more responsible gun legislation."
Brian Todd, CNN, Washington.
ROMANS: All right, Brian, thank you for that.
March Madness is officially underway with two teams advancing into the first round.
Andy Scholes has this morning's Bleacher Report. Andy --
ANDY SCHOLES, CNN SPORTS CORRESPONDENT: Yes.
ROMANS: -- I haven't filled out my bracket yet. I mean, I've got what, like four hours?
SCHOLES: No, you have time.
SCHOLES: You don't have to get that in until Thursday morning, Christine --
ROMANS: OK, thank you.
SCHOLES: -- so luckily, you still can do all that research I know you wanted to do.
But, you know, I'll tell you what though. Keep an eye on these teams that win in the First Four in your bracket because since they started the First Four, teams that grab an 11 or 12 seed -- they've gone on to pull off an upset in the first round every year except for 2019. And VCU and UCLA -- they went from the First Four to the Final Four in a couple of years.
So keep an eye on those teams like Pitt and Mississippi State. They were playing last night for an 11-seed. This game went back and forth pretty much all night with 21 lead changes. Pitt's Jamarius Burton -- he makes the go-ahead jumper with just 10 seconds left. Mississippi State -- great inbounds play to try to win the game, but Shakeel Moore's shot no good. The tip-in also doesn't go.
So Pitt wins, hanging on to win 60-59. They advanced to play Xavier on Friday.
Now, in the other matchup last night, 16-seed Texas A&M-Corpus Christie earns their first NCAA Tournament win in program history beating Southeast Missouri State 75-71. Next up they're going to play the top-seed Alabama on Thursday.
And after the game head coach Steve Lutz -- well, he said his team plans on making the most of the opportunity.
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STEVE LUTZ, HEAD COACH, TEXAS A&M-CORPUS CHRISTIE: Our guys are battle-tested. They're not scared of the moment. They're -- you know, you've got to go play and you've got to embrace it. But, you know, history tells you that not many one seeds beat 16 seeds. So that's why we have the NCAA Tournament to have situations like this where you get a chance to go shock the world.
(END VIDEO CLIP)
SCHOLES: Yes, two more games tonight on our sister channel TruTV. Fairleigh Dickinson takes on Texas Southern at 6:40 eastern. The winner gets number-one seed Purdue. And then you've got Arizona State against Nevada just after 9:00 for a shot at number six TCU.
The women's tournament also tipping off tonight with their First Four. That one gets started at 7:00 eastern.
All right. Giannis Antetokounmpo, meanwhile, really making a serious push to win MVP this season. A night after scoring 46, Giannis just punishing the Suns. Poor Torrey Craig here trying to stop Giannis in transition he catches an elbow. And he also ended up losing his tooth or at least part of his tooth there -- ouch.
Giannis had 36 points as the Bucks beat the Suns 116-104 to become the first NBA team to clinch a playoff berth this season.
All right. Finally, you've got to see what the NHL did last night. ESPN simulcasted last night's Rangers-Capitals game on the Disney Channel, but they did it with an animated "BIG CITY GREENS" version. So the animated version was moving live just like the players.
Christine, the referees were actually chickens in the animated version, which is kind of funny. And when they scored goals the animated version couldn't really celebrate like the real version. They kind of just huddled together and got in a little group.
But isn't it just incredible what we can do now with technology? I mean, it's a -- I mean, to have a live person shooting a puck and then to be able to actually do that in real time animated, it's pretty cool.
ROMANS: That is really cool. And I love that the refs were chickens. I don't why. That just makes me laugh.
All right, nice to see you, Andy. Thank you.
SCHOLES: All right.
ROMANS: All right. Coming up on "CNN THIS MORNING" a Russian fighter jet forces a U.S. drone down into the Black Sea. How both sides are responding this morning.
And next right here, the Federal Reserve facing a tough decision -- a balancing act after the sudden collapse of two banks. What to do about interest rates now.
ROMANS: All right, your Romans' Numeral this morning, 75. Drugmaker Novo Nordisk cutting some insulin prices by up to 75 percent. Next year, NovoLog drops to $72 a vial. Now, this will help the uninsured and those with high deductibles.
Eli Lilly took similar action.
Last year, President Biden's Inflation Reduction Act lowered insulin for Medicare recipients to $35.00.
Looking at markets around the world, European markets are lower this morning. Shares of some of the biggest lenders in the region were down as they reel from the collapse of SVB in the U.S. Asian markets finished higher. On Wall Street, stock index futures have been wobbling this morning. Now they are leaning down.
But it was a positive day in U.S. stocks yesterday. The Nasdaq gained more than two percent. The Dow snapping a five-day losing streak. Wall Street taking a deep breath after regional bank stocks rebounded.
And February's CPI report showed inflation -- annual inflation eased though it is still uncomfortably high. Prices cooled for the eighth consecutive month.
On inflation watch, gas prices held steady overnight at $3.47 a gallon.
And the big event today, retail sales number and factory level inflation data due out at 8:30 a.m. this morning.
All right, I want to bring in chief global strategist at Principal Asset Management, Seema Shah.
Seema, Moody's Investors Service reviewing six U.S. banks for potential credit downgrades and actually putting the entire industry on watch here, essentially saying we should be prepared for more pressure in banking. What does that mean?
SEEMA SHAH, CHIEF GLOBAL STRATEGIST, PRINCIPAL ASSET MANAGEMENT (via Skype): Hi. Well, what we saw over the weekend with Silicon Valley Bank was really the impact from the very, very aggressive rate increases from the Federal Reserve.
We came into 2023 I think knowing, typically, whenever there is an aggressive rate hiking cycle like the one we've just seen something always breaks. There's always going to be some type of financial strain. So some of this could have been anticipated but it's always very difficult to identify where and when exactly it's going to hit.
Now, in light of what happened you are going to see a number of people -- analysts, credit agencies are starting to look at the banking sector with a close eye and trying to figure out where the additional weaknesses could be.
I mean, yesterday, the settling in markets with banking -- some of the regional banking stocks at least recovering is really a sigh of relief. And hopefully -- it's still very early days but hopefully, it suggests that this isn't going to be spreading through the system and becoming something a little bit more systemic which, of course, would be very concerning.
ROMANS: That's right. These three banks we're talking about that have collapsed over the past week -- you know, one was a crypto lender. Another was a bank for basically law firms that got into the crypto game as well. Silicon Valley Bank had a very unique profile of VCs and startups. So these are not sort of your plain vanilla typical midsized banks here.
So is this it? I mean, is the worst behind us do you think?
SHAH: So a lot of it is going to depend how the Federal Reserve goes from here. As you said, the three banks that were involved last week were -- had very unique conditions which had made them particularly vulnerable to the environment. But again, a lot of it is born simply from the Federal Reserve raising interest rates so aggressively. So I think we should expect there will be further strengths (PH).
Next week, of course, we have the next meeting from the Federal Reserve. We're going to see what they do. If they were to continue with rate hikes fairly aggressively in light of the inflation data -- although it moderated it's still very high -- it does suggest that the Fed still has further to go. You know, this does suggest that we are going to get further economic slowdowns through the progress of this year and unfortunately, that does mean that a lot of banks or other sectors could be under some pressure this year.
ROMANS: Does the Fed do a smaller rate hike because of the -- of the fragility in banking?
SHAH: You know, last week we had heard from Chair Powell where he had suggested that actually a 50 basis point -- a .5 percent increase next month -- next week was likely. Now, in light of what's happened it does mean that they're probably not going to move at such a -- such a big one. Probably a 25-basis point move is more likely.
The bigger question from here is going to be how much further do they go. We know that there's going to be a hike next week --
SHAH: -- but do they continue to raise rates at the next couple of meetings or not?
ROMANS: All right, Seema Shah, Principal Asset Management. Thank you so much. Nice to see you, Seema.
ROMANS: All right. Next, the powerful nor'easter pummeling New England and New York with several feet of snow.
ROMANS: All right. Our top of the morning, the top movies and T.V. shows streaming right now.
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Clip from HBO "THE LAST OF US."
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ROMANS: "THE LAST OF US" is number one after Sunday's shocking season finale.
Speaking of Sunday, here's number two.
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Clip from A24 "Everything, Everywhere All at Once."
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ROMANS: "Everything Everywhere All at Once" just named best picture at Sunday's Oscars.
And number three.