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Early Start with John Berman and Zoraida Sambolin

Israel Ends Jenin Incursion But Threatens More; Saudi Arabia, Russia Make Additional Cuts To Oil Supply; Stocks Fall After Fed Minutes Show More Rate Hikes Likely. Aired 5:30-6a ET

Aired July 06, 2023 - 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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[05:30:54]

RAHEL SOLOMON, CNN ANCHOR: Welcome back.

Israel says that the large-scale military operation in the West Bank that killed 12 Palestinians is now over. The Israeli Defense Force claims that all the dead in the refugee camp of Jenin were involved in terrorist attacks and threatens more raids if needed. Damage to the camp, meantime, devastating, with dozens of homes destroyed.

CNN's Salma Abdelaziz joins us from Jerusalem. Salma, look, human rights groups have been really highly critical of this latest incursion -- latest Israeli incursion. What can you tell us?

SALMA ABDELAZIZ, CNN CORRESPONDENT: This one tiny densely populated area where the United Nations says great civilian cost came during this incursion into Jenin camp. We entered just hours after Israel's military withdrew as thousands of residents who are returning to survey the damage. Take a look.

(BEGIN VIDEOTAPE)

ABDELAZIZ (voice-over): Chants of anger and defiance ring out in the city of Jenin. The morning after Israel's military withdrew, thousands filled the streets to bury the dead. The Israeli military says that all 12 killed in its incursion were combatants and that its operation aimed to dismantle terror networks here.

But this father says he is proud his 19-year-old is what he calls a martyr and was a fighter for one of the Palestinian armed factions killed in the incursion.

FIRAS ABULWAFA, FATHER OF KILLED MILITANT: (Speaking foreign language).

ABDELAZIZ (on camera): "My son told me he didn't want to get married or have a family," he says. He says all he wanted to do was to dedicate his life to Palestine and fighting the occupation.

This funeral is quickly turning into a demonstration of resistance. Many of the armed Palestinian factions are here to show that they aren't un-vowed, unbroken by Israeli raids.

ABDELAZIZ (voice-over): For many Palestinians, Jenin is a name and place synonymous with suffering and resistance, but this battle has come at a heavy cost. In the aftermath, the camp's residents were left without running water, electricity, or basic services, and families returned to destroyed homes.

Hanaa Shalaby says she and her three daughters were caught in the crossfire.

HANAA SHALABY, MOTHER, JENIN RESIDENT: (Speaking foreign language).

ABDELAZIZ (voice-over): "Our home, all these material things, they can be replaced," she says. "But how can I rebuild the psyche of my little girls? How will they ever feel safe again?"

She takes me upstairs to show me what's left of her daughter's room. "My youngest, she's only seven years old," she tells me. "She says she wishes she was never born. She says I should never have birthed her into this horror."

Israel's military says it's achieved its operational goals, wiping out weapons, depots, and command centers in Jenin. But it has also deepened the hatred and motivated the resistance in a city notorious for always fighting back.

(END VIDEOTAPE)

ABELAZIZ: Now, Israel's army says the goal was to break the mindset that Jenin is a safe haven for combatants. But as you saw in that piece there, the Palestinian armed resistance was out in full force making clear that they were unbroken by this raid. And with Israel promising that it could reenter Jenin camp anytime it seems fit, the only guarantee, it seemed, in Jenin for Palestinians was that the cycle of violence would return.

SOLOMON: Salma Abdelaziz live for us there. Thank you, Salma.

Quick hits around the globe right now.

Let's start in China where at least 15 people have died after torrential rain and flooding in southwestern China. That's according to state media there. Officials say more than 85,000 people have been displaced.

The Taliban confirms that it has ordered all women's salons in Afghanistan to close by the end of the month. Women are already mostly confined to their homes with bans on work and study.

And southern Peru has declared a state of emergency after the Ubinas volcano erupted, spewing ash more than 3,000 feet into the air. It also affected multiple towns in that region.

[05:35:06]

Well, coming up for us, Russian and Saudi oil cuts were supposed to drive up gas prices but that hasn't really happened yet. Why not, and what's next?

And five shark bites in 24 hours. What officials are planning to do now.

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SOLOMON: Welcome back, and here is today's fast-forward look ahead.

In just a couple of hours, Trump aide and White House valet -- former White House valet Walt Nauta expected to plead not guilty in a Miami federal court. Nauta has been charged with six counts in the special counsel's indictment.

Prosecutors set to call one more rebuttal witness today during the sentencing phase of the Tree of Life synagogue trial. On Wednesday, a neurologist testified that the shooter said if he could do it again he would have more victims.

And Treasury Sec. Janet Yellen arriving in Beijing a short time ago -- a visit, of course, aimed at trying to cool tensions between the U.S. and China. This comes after President Biden called President Xi a dictator last month.

[05:40:11]

Well, this week, Saudi Arabia and Russia announced that they would make additional cuts to their oil exports. Saudi Arabia, the world's largest exporter of crude oil, said that it will continue to cut oil production until the end of August. That's one million barrels a day. And Russia announced that it plans to cut exports by 500,000 barrels per day.

Let's bring in chief oil analyst at OPIS, Denton Cinquegrana. Denton, welcome. Good morning.

So look, oil prices are, I think --

DENTON CINQUEGRANA, CHIEF OIL ANALYST, OPIS (via Webex by Cisco): Good morning.

SOLOMON: -- much lower than most people would have expected on the back of that news. Why?

CINQUEGRANA: Sure. Well, one thing is Saudi Arabia originally announced these cuts in early June. They only went into effect a couple of days ago. So you're going to have to wait a little bit of time to see this kind of work its way quote-unquote "through the system." So right there, you have a little bit of a time lag if you will.

But with that being said, there is more oil coming out of places like Iran and Venezuela, so some of that is being made up for. And a country that -- like Libya, which is usually pretty fragile when it comes to its oil production -- they've been on a pretty good streak of late with not having many disruptions. So oil markets, right now, seem to be pretty well-supplied. SOLOMON: So help me understand the thinking from Saudi Arabia and Russia in terms of the export cuts. What's the thinking there?

CINQUEGRANA: Yes. I think it's to help support the market. I think they were worried about the Biden administration's kind of wherewithal to refill the Strategic Petroleum Reserve, which we emptied quite a bit out of it. There's still plenty -- there's still a lot of oil in the Strategic Petroleum Reserve. And the government just said they were going to buy three million barrels and just release an RFP for another three million for sometime in October.

So they are refilling the SPR albeit slowly. But that should set a floor for the market probably in the upper 60s to low 70s. Expectations are for the second half of the year to be -- to see a lot of this kind of excess supply that's kind of developed over the last couple of weeks and months to kind of clean up here in the third quarter.

SOLOMON: How does China factor into that? China, of course, the world's largest importer, if I remember correctly, of oil. Demand hasn't come back the way many would have expected coming out of zero COVID.

CINQUEGRANA: Yes, that's been the interesting thing. I think a lot of the tailwinds as far as demand is concerned has been in air travel. Jet fuel demand has been pretty solid throughout the world, not just here in the United States. When you see pictures of crowded airports -- and as someone who travels quite a bit, you know, I get to experience it firsthand.

But we just haven't seen that kind of just gangbusters demand that you expected from China, like you said, when they -- when they ended their zero-COVID policy. And I think they've had some economic issues there on their own, which has kind of slowed that a bit.

SOLOMON: Denton, what are you expecting for gas prices in the U.S. market? Gas prices averaging, this morning, $3.53 a gallon -- certainly much better than last summer when we were at $5.00 a gallon. What do you see?

CINQUEGRANA: Yes, absolutely, and I think gas prices are probably going to stay close to here and maybe trickle up a little bit, but not that much. And by the time the Saudis cut the Russian exports -- and again, none of that Russian oil is coming to the U.S. --

SOLOMON: Yes.

CINQEUGRANA: -- as far as crude oil is concerned. But with that being said, by the time you really start to see any impact from those we're going to be switching our formulation for gasoline and switching to that fall and winter gasoline. So I suspect that if there is some upside it's not a ton as far as gas -- retail gasoline and prices are concerned. But one thing to keep an eye out for the rest of the summer is the hurricane season.

SOLOMON: That's true. That's always a wild card. But also a great distinction that you put out there that none of the Russian oil is coming to the U.S., of course, because of the sanctions --

CINQEUGRANA: True.

SOLOMON: -- and because of the war, so a great point there.

Denton, thanks for being on the program this morning.

CINQEUGRANA: My pleasure. Thank you.

SOLOMON: You're welcome.

Now we have Carolyn Manno with this morning's Bleacher Report. A scary moment at last night's Yankee game when a wild throw ended up sending a cameraman to the hospital. Carolyn?

CAROLYN MANNO, CNN SPORTS CORRESPONDENT: Yes, good morning.

This is really tough to watch so I just kind of want to caution everybody. It could have been much worse. But we are going to show you the video of what happened, so you might find it a little bit disturbing.

This was in the bottom of the fifth inning. Orioles shortstop Gunnar Henderson rushed his throw, trying to finish a double play, and the ball sailed wide up first base and into the camera well where it hit YES Network's Pete Sandell in the face.

Now, the game was delayed for about 17 minutes while emergency personnel treated him. But as he was carted off the field he did wave to the crowd and they responded by chanting MVP. And then after the Yankees lost 6-3, YES Network did announce that he's conscious. He's undergoing tests in the hospital. So we all wish him our absolute best this morning. But a very scary moment.

Elsewhere, the Washington Nationals doing whatever they can to slow down Reds rookie sensation Elly de la Cruz. They had umpires check a handle of the knob of his bat during the second inning. Everything checking out OK. And watch what he did just three innings later after this without the knob handle attached. He blasts a 455-foot moonshot to right field.

[05:45:07]

This guy is incredible. Before he started his home run trot, the 21- year-old gesturing towards the handle of the bat, appearing to tell the Nationals dugout go ahead and check that thing again.

Cincinnati went on to win in a blowout 9-2.

And the clock is ticking ever closer to one of baseball's best events -- Monday night's Home Run Derby during the All-Star Game festivities. So take a look. The bracket officially announced yesterday with a strong first-round matchup. White Sox slugger Luis Robert Jr. the top seed. Last year's runner-up Julio Rodriguez back with a shot to win it at his home ballpark in Seattle. And Mets star Pete Alonzo looking for this third Home Run Derby trophy. And check out what else the winner will get, Rahel -- the Home Run Derby chain. This thing is a sight to behold. I am impressed. The glitzy award has the mariner scene complete with a diamond-encrusted spinning compass. These things are always over the top. But I kind of like the nautical theme.

SOLOMON: I like it. It's shining.

MANNO: Yes.

SOLOMON: It is giving all of the bling.

MANNO: It certainly is. Yes, a nice look there. It should be a lot of fun.

SOLOMON: Thank you, Carolyn.

MANNO: Sure.

SOLOMON: Good to see you.

All right. Coming up on "CNN THIS MORNING" the big revelations and developments in the two federal investigations surrounding former President Donald Trump.

And next, right here, we're learning a bit more about the Fed's plan with interest rates.

We'll be right back.

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[05:50:32]

SOLOMON: And looking at markets around the world, let's take a look. All of the major averages across the world look lower. Asian markets, as you can see, lower across the board, with the Hong Kong worse among them, down about three percent right now. European markets not doing much better. London is off about one percent and Paris off about 1 1/2 percent.

Let's take a look at U.S. markets. On Wall Street, meantime, pretty much the same. Wall Street markets off as well. Dow futures are off let's call it half a percent. The S&P off just about the same across.

Perhaps investors continuing to digest those Fed minutes that we received yesterday afternoon -- Thursday afternoon -- Wednesday afternoon, make that. All three major averages down again.

So let's bring in Mark Hamrick. He is a senior economic analyst at Bankrate.com. Mark, good morning. Always good to have you on the program.

So let me just start with it felt as if the decision to hold rates was unanimous prior to the minutes, but that doesn't seem to be the case. What stood out to you? MARK HAMRICK, SENIOR ECONOMIC ANALYST, BANKRATE.COM (via Webex by Cisco): Right on, Rahel. That's absolutely the most stunning thing to me about these minutes, and minutes are seldom stunning.

But having attended that news conference and seeing that the support for the official statement was unanimous, it seems like all things were good, right? And then we get the minutes and they indicate that there was a much more substantial debate. And I think that's going to be a potential question for the chairman at the next news conference later this month is how -- what's going on behind the scenes.

SOLOMON: The decision to hold that last month's meeting -- was that the right call?

HAMRICK: Well, we'll see. I have the good fortune of not having to be a central banker, but I do think that it's prudent to see the cumulative impact of 500 basis points in tightening that began in March of last year. Because as we saw in these minutes and as the chairman, Powell, said himself, knowing exactly what the lagged impacts of all of these rate hikes taken together have on the economy is not science. And so, a lot of it is actually art so to speak. And I think they need to see what these impacts will be and see whether they need to put some more ammunition in the barrel.

SOLOMON: You know, one of the things we saw cited is the tight labor market as a reason why some policymakers believe that they needed to continue with these rate hikes.

Speaking of the labor market, of course, we are expecting the June jobs report tomorrow -- Friday morning. What do you see there? What are you expecting?

HAMRICK: We expect that hiring will continue to moderate but still be substantial. And essentially, there's a high bar to match given what we've seen recently. Let's remember in the previous read we came in with a much better-than-expected 339,000 jobs added. We've been waiting for this job market to sort of lose its steam but it continues to have steam so to speak -- even though we see a large number of layoffs. So we see substantial hiring but we also see substantial job cuts.

But the expectation over the next year is that we will see an escalating unemployment rate. We will see slow -- slower hiring. And that will be some of those impacts of the rate hikes continuing to sort of tax the economy.

SOLOMON: Yes. The question I think is when will we start to see that reflected in the data because we haven't -- not at least with the jobs data. So really interesting times we're all living through.

Mark Hamrick of Bankrate.com. Thank you, Mark.

HAMRICK: Thank you.

SOLOMON: And just ahead on "CNN THIS MORNING" new Pentagon video shows Russian fighter jets bullying U.S. drones over Syria. And who is behind the baggy of cocaine found at the White House? The latest on the investigation.

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[05:58:36]

SOLOMON: Welcome back.

Long Island, New York is ramping up its shark patrols after five people were bitten by what authorities are calling a large marine animal -- most likely sharks. The patrol used drones to spot schools of shark. Officials say the bites were likely accidental and that the sharks are, quote, "just feeding" on fish.

And millions across the U.S. are facing record heat and severe storm threats. Let's go to meteorologist Britley Ritz in the weather center. Britley, some of this is also pretty dangerous.

BRITLEY RITZ, AMS METEOROLOGIST: Yes, absolutely. And as we're getting out and about and you want to get to the water, be mindful of that situation, too.

It's still hot across the Southwest, the Deep South back into Florida, and right on up into the Northeast. Across the Central Plains and back into the Ohio Valley finally starting to cool down a little bit as we notice the storms ramping up and the cold front moving through.

But we do have excessive heat warnings in parts of Arizona -- Phoenix included -- where it feels like upwards of 115 degrees. Heat advisories in parts of New Mexico, including Albuquerque as well.

Back on up into the Northeast, heat indices reaching up nearly 100 degrees where heat index values are, of course, what it really feels like instead of the actual temperatures. We have advisories in place there, too. Records are a possibility in places like Rochester and Montpelier where temperatures are reaching nearly 90 degrees on average. We should be in the mid-70s here.

Right on down into Florida where feels like temperatures when we factor in dew points of 70-plus well over 100 degrees -- like Naples and back into places like Fort Myers. Severe storms a possibility here and that, of course, fueling -- the heat fueling these storms.

[06:00:05]

We still have severe thunderstorm watches in places for the Panhandle of Texas back into parts of Oklahoma. And those will likely expire here within the hour, but ramping the storms back up again, especially through the afternoon and into the evening hours. Watching places like eastern Colorado where we have more of that tornado threat.

And then really ramping up as we move into the overnight hours and early Friday. Wind and hail going to be some of our bigger concerns -- Rahel.

SOLOMON: Well, we'll watch that. Britley, thank you.

RITZ: Yes.

SOLOMON: And thank you for joining us. I'm Rahel Solomon. "CNN THIS MORNING" starts right now.