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Early Start with John Berman and Zoraida Sambolin

TikTok CEO to Tell Lawmakers Owner is Not "Agent of China"; NYC Prepares for Possible Trump Indictment in Hush Money Case; Body Found Near Car of Suspected Denver School Gunman; Federal Reserve Raises Interest Rates a Quarter Point. Aired 5-5:30a ET

Aired March 23, 2023 - 05:00   ET



CHRISTINE ROMANS, CNN ANCHOR: Right now on EARLY START, TikTok on the hot seat. The boss about to address Congress, where some lawmakers want to ban it.

Plus, the dramatic manhunt for a school shooter near Denver now over with a body found in the woods.

And the secret grand jury proceedings about to begin again with the indictment of presidential candidate Donald Trump hanging in the balance.


ROMANS: Welcome to our viewers in the United States and around the world. I'm Christine Romans. This is EARLY START.

If your teenager develops a sudden interest in congressional testimony this morning, here's why -- TikTok takes center stage, with the viral social media platform's CEO set appear at 10:00 a.m. before a key House committee show. Shou Chew will try to convince the panel the app is not a vehicle for Chinese government spying and propaganda, aimed at Americans.

CNN's Anna Coren is live in Hong Kong.

And, Anna, that maybe a tall order with nothing less at stake than the possible ban of the app used by more than half the U.S. population under the age of 65. How will he do it?

ANNA COREN, CNN INTERNATIONAL CORRESPONDENT: Yeah, it's a lot to deal with, and he is going to face a harsh grilling from U.S. lawmakers as he faces his first congressional hearing over the video app's potential national security risks. The short form video app that is owned by Beijing based-parent company, ByteDance, has recently been banned by various governments around the world on official government devices, including the U.S., U.K., the European parliament, various E.U. nations and New Zealand. They all enforced this ban.

But the CEO, Shou Zi Chew who has spent millions of dollars lobbying Capitol Hill, says the app which has 150 million monthly users, poses no threat, denying allegations that it alludes or has an improper relationship with the Chinese government. Well, Christine, the U.S. government is not convinced. And while TikTok collects roughly the same amount of data as Facebook or Twitter, its links with the Chinese government that everyone is worried about.

Let's take a listen to Admiral John Kirby, answering questions at the White House press briefing.


JOHN KIRBY, NATIONAL SECURITY COUNCIL COORDINATOR FOR STRATEGIC COMMUNICATIONS: Certainly, we'll be monitoring the testimony. But as you know, there's a serious review going on. We're not going to get ahead of that. And as you also know, we've made very clear our national security concerns about that particular application. That's why it's been banned on government devices.


COREN: Well, the FBI director, as well as the head of the U.S. National Security Agency, they have both said that TikTok could be a valuable tool for China to shape public opinion in regards to elections policy, making even in the event of a potential war over Taiwan.

Now, the Biden administration says the only way for TikTok to continue operating in the U.S. is if it's Chinese owners still their stake in the company that as we understand, it is highly unlikely because the Chinese government views TikTok's technology as sensitive and critical to Chinese national interests. And really, since 2020 the Chinese government has taken steps to ensure that it can veto any sale of ByteDance -- Christine.

ROMANS: All right. Anna, thank you so much for that.

Tonight on CNN "PRIMETIME" is the app and everyone's pocket a national security threat. CNN's Abby Phillip hosts "Is Time Up for TikTok?" That's tonight at 9:00 eastern.

All right. CNN has learned the New York grand jury investigating the Stormy Daniels hush money scheme will be back at work this morning. But it is unclear when or even if jurors might hand down an indictment against former President Trump.

And meantime, the suspense keeps growing over the unprecedented possibility that a former president will be criminally charged.

More now from CNN's Paula Reid.


REPORTER: Mr. President --

PAULA REID, CNN SENIOR LEGAL AFFAIRS CORRESPONDENT (voice-over): As the legal drama surrounding former President Trump reaches a fever pitch, the waiting game continues in New York for a possible indictment.

But preparations continue for any possible protests.

MAYOR ERIC ADAMS (D), NEW YORK CITY: There's a lot of speculation of the NYPD. They have deployment plans under all circumstances.

REID: Sources tell CNN that behind the scenes, the district attorney is taking a moment to regroup. One source telling CNN that the D.A.'s office has suggested to an attorney for at least one witness that they might need to provide additional testimony and as the investigation nears its final stages, prosecutors are considering the historic nature of indicting a former president, an unprecedented move in U.S. history.


Sources also tell CNN Trump has celebrated a potential indictment as a boost for his 2024 White House campaign and also complained about how unfair it would be. Trump has long denied any role in payments to silence a porn star about an alleged affair, which he denies.

REPORTER: Mr. President, did you know about the under $130,000 payments to Stormy Daniels?


ROBERT COSTELLO, FORMER ATTORNEY FOR MICHAEL COHEN: If they want to go after Donald Trump, and they have solid evidence, so be it. But Michael Cohen is far from solid evidence.

REID: Attorney Robert Costello attacking the credibility of Michael Cohen, a key witness for the prosecution whom Costello advised in the past.

MICHAEL COHEN, FORMER PERSONAL TRUMP LAWYER: If, in fact, that I waived attorney-client privilege, I'd like to know when, how, where?

REID: Paula Reid, CNN, New York.


ROMANS: All right. Police in Colorado now canceling a shelter in place alert after a manhunt for a suspected school shooter turned up a body in the woods. Authorities say 17-year-old Austin Lyle was being searched for weapons at Denver's East High School when he grabbed a gun and started shooting. Two faculty members were injured and Lyle fled.

His car was found hours later in the body, which has not yet been identified. A short time after that, East High parents and students say they are frustrated and alarmed by how frequent lockdowns are at the school now.


UNIDENTIFIED FEMALE: There's always a threat. There's always a bomb threat. There's always somebody threatening to come shoot up the school. There's always something where we're on lockdown. Like we have a lockdown near every other week or every other day. It's so consistent. It's like they don't even surprise me no more.


ROMANS: Authorities say one of the injured faculty members is in critical condition. The other is reported stable.

All right. U.S. stock market futures are up this morning, perhaps a sign of relief. The Federal Reserve didn't raise rates more than they expected quarter point at its meeting yesterday and signal that the end of the rate hike cycle is in view.

On Wall Street, stocks futures leaning higher here. The Dow 32,387 if it holds into the opening bell. Around the world, you've got global stock markets mixed here mixed performance in Asia. They are closed now for their Thursday session, and Europe has opened slightly lower here.

Investors are never happy when rates go up. But with the Fed having to thread the needle between stubborn inflation and a sudden banking crisis, investors also know things could be much worse.

CNN's Rachel Solomon has more.


RAHEL SOLOMON, CNN BUSINESS CORRESPONDENT: Wednesday's Fed announcement concludes, perhaps one of the most important Fed meetings in recent history. That's because while inflation is still a major concern as of two weeks ago, so was bank instability. Federal Reserve Chair Jerome Powell announced that the Federal Reserve would be raising rates another quarter of a percent, as most expected, they would. He also reiterated what we've heard a lot from the Biden administration since the fall of Silicon Valley Bank on March 10th. That Americans should feel confident in the banking system.

JEROME POWELL, FEDERAL RESERVE CHAIRMAN: I guess our view is that the banking system is sound and it's resilient. It's got strong capital liquidity. We took powerful actions with treasury and the FDIC, which demonstrate that all depositors savings are safe in the banking system is safe. Deposit flows in the banking system have stabilized over the last week. And the last thing I'll say is that we've undertaken -- we're undertaking a thorough internal review that will identify where we can strengthen supervision and regulation.

SOLOMON: Since March, 2022, the Fed has raised rates in extraordinary amount of 475 basis points or 4.75 percent, including this meeting. Now, when the Fed raises rates, it makes borrowing more expensive for us consumers, which leads to less spending, which ultimately brings down prices.

But higher rates also makes existing treasury bonds less valuable and that can create issues for banks that are holding a lot of these bonds if they need to sell them anytime in the near future. That's part of what happened to SVB. And there's also fear of banking concerns grow, another bank could also fall.

So that's the tightrope for the Fed to walk. That's widespread debate about whether the fed can walk the walk and talk the talk. Essentially can they strike a balance and do both things simultaneously? Prevent further damage with the banks but also address inflation?

Rahel Solomon CNN, New York.


ROMANS: All right. Rahel, thank you for that.

Russian forces heavily bombarding the eastern Ukrainian town of Avdiivka. Concerns now growing that it could become the next Bakhmut where Ukrainian forces have held out against Russian invaders for eight months. Ukrainian President Zelenskyy in the region, making a surprise visit to troops Wednesday.

CNN's Clare Sebastian live in London for us with more this morning.

Clare, why is Avdiivka becoming a new main target?

CLARE SEBASTIAN, CNN CORRESPONDENT: Yeah, Christine, the thing to understand about Avdiivka, first of all, it's a small town in pre-war population of around 30,000, so less than half of Mahmoud. It's about 50 miles to the south of Mahmoud that the interesting thing about it is it sits just west of the old contact line before February 24th last year, the -- just west of the land that was controlled before this invasion by Russian-backed separatists.


So, it has been on the front lines of this conflict for a very long time. We are hearing now about a significant uptick in fighting. Local official there, telling CNN on Wednesday that the number of assault operations on the city was -- had grown many times over. He said the situation there was changing fast.

As to why this city will look, it's further south. It could possibly provide some kind of assistance as if Russia tries to advance back to its sort of stalled offensive on Vuhledar, just south of the city of Donetsk. It also could potentially be a way to draw Ukrainian forces away from Mahmoud, where heavy fighting that still continues there the Ukrainian side they're not giving that impression.

A top general this morning saying that Ukraine could be ready very soon , he said to launch offensive operations in Bakhmut, to try to retake all of that city, he says, because of the heavy losses that Russia is experiencing, and because they're running out of energy in his words.

ROMANS: All right. Thank you so much for that. Fascinating. We'll be watching this new town on the front lines.

All right. U.K.'s Prince William meeting with Ukrainian refugees this morning during a rare unannounced visit to Warsaw. Moments from now, he will lay a wreath at the monument dedicated to Polish soldiers who have given their lives for their country. Later he's meeting with Polish President Duda at the presidential palace.

CNN's Max Foster joins us this morning live from Warsaw.

Good morning, Max.

So he met with British troops stationed near the Ukrainian Polish border on Wednesday. Pretty unusual, right, this surprise kind of visit for the prince.

MAX FOSTER, CNN ROYAL CORRESPONDENT: Yeah, and you only decided to do it very recently, I'm told. This is all about Prince William wanting to thank and give gratitude really to Poland, the troops, but also the people for welcoming so many Ukrainians and in his words protecting all our freedoms.


FOSTER (voice-over): When you walk through Warsaw today, you're almost as likely to hear a Ukrainian conversation, as you are a Polish one. More than 10 million Ukrainians have crossed over the border to Poland with at least 1.5 million refugees still remaining here.

They've been fully integrated, including access to public services, such as hospitals and schools. If they can't find accommodation, local people take them in or they're given beds in centers like this one in a converted office block visited by the Prince of Wales. He said he wanted to come here to pay tribute to the inspiring humanity of the Polish people.

Under a media blackout, he also went to thank Polish and British troops working together in the southeast of the country. He recognized how they were supporting the people of Ukraine and their freedom, which he noted also, our freedoms.

WILLIAM, PRINCE OF WALES: Really important job out here and defending our freedoms is really important in everybody back home thoroughly supports you.

FOSTER: Words verging on the political, but the royal family have been unequivocal in their support for Ukraine throughout.


FOSTER: So this is a new Prince William, if you like the way the elevated Prince William, now prince of Wales, now that the queen has passed on, and his father is king and interesting, see, really Christine, how he's asserting himself, putting himself forward on the global stage now on issues like this in Poland.

ROMANS: Interesting. All right, Max Foster. Nice to see you. Thank you, Max.

Stephen Smith's mother, speaking out on the new investigation into his death. (BEGIN VIDEO CLIP)

STEPHEN SMITH'S MOTHER: And I felt my son was murdered. He was beaten to death.


More from her just ahead.

Plus, dozens hurt when a docked ship suddenly tips.

And smoke on the water, fire in the sky, why police say these flames were no accident.




SHOU ZI CHEW, TIKTOK CEO: Today, I'm super excited to announce that more than 150 million Americans on TikTok. This includes five million businesses that use TikTok to reach the customers and the majority of these are small and medium businesses.


ROMANS: All right. That was TikTok CEO Shou Zi Chew. This morning, he will be in front of lawmakers on Capitol Hill. This is his first public testimony as chief executives.

Here's what Chew will say, according to a copy of his remarks obtained by CNN, quote, let me state this unequivocally, ByteDance is not an agent of China or any other country.

This all comes as U.S. officials are threatening to ban the app nationwide. ByteDance, of course, the parent of TikTok.

Joining me now is CNN business writer Catherine Thorbecke.

So nice to see you. We've been reading all of your -- all of your stories with great enthusiasm because this is really a big deal. As he pointed out, 150 million Americans use this app.

Lets start with Shou Chew, who is he? He's not a household name like Elon Musk or Tim Cook, but he has 150 million Americans who use his product.

CATHERINE THORBECKE, CNN BUSINESS WRITER: Right, so Shou Chew, the CEO of TikTok, has largely stayed out of the spotlight, even though the app he runs really can't seem to avoid it, especially in Washington.

And as you mentioned, he's not really a household name the way and a bunch of other big tech CEOs have become such Mark Zuckerberg. And yeah, Shou Chew. He's from Singapore. He's based in Singapore. That's something that TikTok really likes to emphasize, because,

frankly, that means he's not based in China, which is where a lot of the scrutiny sort of comfort comes from. He was originally brought on to be the CFO of ByteDance, and that was back in 2021. He quickly became the CEO of TikTok.

And as you mentioned, he's really stayed out of the spotlight. Since then, this is really his sort of moment in the hot seat, and when Americans will really sort of get to know him.

ROMANS: And it will be a hot seat. I mean, there'll be -- he'll get a grilling on Capitol Hill here.

So what does TikTok been doing leading up to this? I mean, are they really sort of flooding D.C. with influencers?

THORBECKE: Right, so TikTok has really sort of been positioning itself as almost too big to ban at this point in the U.S. you know. As you mentioned earlier, it has 150 million American users. It has five million businesses that use the app every day to reach customers.

And it also has a lot of sort of creators and small businesses that really, you know, rely on the up for their livelihood.


And they're really sort of, you know, emphasizing that element, and they did fly a few creators out to D.C. to sort of appeal to lawmakers directly and, you know, say, what would what? What they would lose at this app were taken away from that.

ROMANS: So what are the stakes here? I mean, for the company, you've got, some lawmakers are pushing for it to be banned outright or sold to a U.S. parent. And you have national security people -- I mean, it's not allowed. You heard John Kirby say there from the Pentagon. It's not allowed on U.S. military member's phones, right?

So what are the stakes here?

THORBECKE: Right. So, I mean, this hearing -- the stakes could not really be higher for TikTok. I mean, this hearing really comes at a very consequential moment for TikTok, as you mentioned. People are on both sides of the aisle now are really calling for a ban.

That said, I'm really approaching this hearing with sort of a healthy level of skepticism. You know, D.C. lawmakers, we've seen a number of big tech hearings over the years. Our lawmakers really seem to like them, but it's not --

ROMANS: Does anything really change?


THORBECKE: That's anything really change that could be really clear that they actually sort of change anything or any really regulations come out of it. That said, this does give TikTok a real moment to sort of change the narrative around itself and really defend itself in D.C. and sort of appeal to a wide audience.

ROMANS: So if -- just quickly, if the -- if the -- if the company is sold to a new owner, does that solve its problems?

THORBECKE: So that's certainly what a lot of lawmakers are calling for. You know, that said, it does take two to tango. I'm skeptical that ByteDance would be open to a sale and in the past that has actually run into quite a bit of, you know legal hurdles when they tried to go through with that.

So, you know, we'll see that. That's definitely what some lawmakers are calling for, but you know --

ROMANS: There is something called the Committee on Foreign Investment in the U.S., CFIUS, that is reviewing this. So that's all these government agencies, the highest level of national security looking at this. So we will wait for their decision as well.

Nice to see you. Thanks for coming out so bright and early for us. Thanks, Catherine.

Catherine Thorbecke, read her stuff.

All right. Today, TikTok CEO makes his case to lawmakers. Tonight, on "CNN PRIMETIME", Abby Phillip hosts "Is time up for TikTok?" Join us tonight at nine pm only on CNN.

Now to South Carolina, and new developments in the death of Stephen Smith, the state assigning more agents to the homicide investigation into the death of the 19-year-old who was a classmate of Buster Murdaugh, the surviving son of convicted murderer Alex Murdaugh.

Smith's body was found on a country road in 2015 close to the Murdaugh home. Initially, his death was deemed a hit and run.

CNN's Anderson Cooper spoke to his mother on Wednesday.


SANDY SMITH, STEPHEN SMITH'S MOTHER: Have a little bit of peace in the whole. I'm open to the evidence and the only dispute I had was that it was not a hit and run.

And that's what I've been saying from the beginning, and I felt my son was murdered. He was beaten to death. And I think it was a hate crime.


ROMANS: CNN's Dianne Gallagher has more.


DIANNE GALLAGHER, CNN NATIONAL CORRESPONDENT (voice-over): The investigation into who killed 19 year old Stephen Smith is heating up, with state investigators calling his mother's attorneys Tuesday with an update on her son's case. RONNIE RICHTER, ATTORNEY FOR STEPHEN SMITH'S FAMILY: This is not a

hit and run, that this is something more and something different. And that SLED is actively investigating this as a homicide.

GALLAGHER: Smith's body was found in the middle of this rural Hampton County, South Carolina road in July 2015. Highway patrol investigators at the time said there was no evidence he had been hit by a car, but a pathologist who performed the autopsy said Smith was the victim of a hit and run. The nursing student with dreams of becoming a doctor died from blunt force head trauma.

Sandy Smith has said she feared her son was targeted because he was gay.

ERIC BLAND, ATTORNEY FOR STEPHEN SMITH'S FAMILY: He was an openly gay young man, in an area of the state where it's not popular to be an openly gay man. And it probably had to do with one of his relationships, friendships or something that he was involved with.

GALLAGHER: Tuesday brought the first real update in Smith's homicide investigations since June 2021 when state law enforcement were SLED investigators announced they were opening a case into his killing, based on information gathered during their investigation of the murders of Paul and Maggie Murdaugh.

SLED has never revealed what that information wants.


GALLAGHER: But the trial of Alex Murdaugh was discussed on that Tuesday phone call with the SLED chief.

BLAND: He said that now there's been a conviction of Alex Murdaugh. He thinks that people are more apt to come forward and discuss what they know about Stephen Smith.

GALLAGHER: The Murdaugh name is mentioned dozens of times in the original case, like in this audio interview with the trooper mentions Buster Murdaugh.

CPL. TODD PROCTOR, SOUTH CAROLINA HIGHWAY PATROL: Buster was on our radar, the Murdaughs know that.

GALLAGHER: But there was never been any official connection made between the Murdaugh family and Stephen Smith's death this week, in a statement given to CNN, buster Murdaugh said, quote: This has gone on far too long. These baseless rumors of my involvement with Steven and his death are false. I unequivocally deny any involvement in his death, and my heart goes out to the Smith family.


Dianne Gallagher, CNN, Charlotte.


ROMANS: All right. Quick hits across America now.

Six construction workers are dead in Maryland after a vehicle struck them in a construction zone north of Washington. The driver is being treated the hospital police say a second vehicle may be involved.

Seattle police arresting a 40 year old male suspect arson after a marina fire destroyed more than two dozen boats in storage on Wednesday. Nobody was injured in the blaze.

Arkansas Governor Sarah Huckabee Sanders approves a law banning transgender students from using school bathrooms that match their gender identity and imposing fines for noncompliance.

Later today, a new focus on the property where the Murdaugh murders took place, plus Boris Johnson put on the spot.


BORIS JOHNSON, FORMER U.K. PRIME MINISTER: I am here to say to you, hand on heart, that I did not lie to the house.