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EARLY START

Will Dow Rebound After Record Fall?; Report: Trump Lawyers Concerned He'd Self-Incriminate; Trump Must Decide If He Will Declassify Democratic Memo; Pence: "We'll See What Happens" On North Korea Meeting. Aired 5:30-6a ET

Aired February 6, 2018 - 05:30   ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.


[05:30:16) (BEGIN VIDEO CLIP)

MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: It's very likely simply the ebb and flow of our stock market.

(END VIDEO CLIP)

CHRISTINE ROMANS, CNN ANCHOR: The White House attempts to ease jitters after a record sell-off on Wall Street. The gains of 2018 vanished. Look at that remarkable split screen as the president touts the economy in Ohio. Right now, global investors, they are selling, too.

DAVE BRIGGS, CNN ANCHOR: The president's lawyers reportedly concerned he could incriminate himself if he's interviewed by the Russia special counsel. Now they're trying to sway him against a sit-down with Robert Mueller.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Somebody said treasonous. I mean, yes, I guess. Why not?

(END VIDEO CLIP)

ROMANS: The president compared Democrats with people trying to overthrow the government, all because they would stand to applaud him during the State of the Union.

Welcome back to EARLY START. I'm Christine Romans.

BRIGGS: I'm Dave Briggs.

A wild ride yesterday --

ROMANS: Oh, my gosh.

BRIGGS: -- and now we are four hours away from the opening bell. Where are we headed? It should be interesting.

Investor concerns not quieting -- not just yet -- after Monday's epic sell-off on Wall Street. The Dow with its biggest single-day point loss ever.

Overnight, markets abroad were jittery. Futures on Wall Street all over the place. Overnight, now sliding again.

Our own Christine Romans has a look at what's behind this drop and how long it could last. Good morning, my friend.

ROMANS: All right, look, we're only three and a half hours -- oh, about four hours to the opening bell so let's talk about what's happening right now around the world because the world is reacting and the plunge is rippling.

This is Asia. Big losses there. In Tokyo, Hong Kong, Shanghai all down. Europe opened lower just a couple of hours ago, now down about two percent each so that's worsened. Europe has gotten a little worse in the past hour or so.

And, Dow futures are swinging widely. I've got the Dow now down one percent, about 260 points right now. It had been down as much as 700 points overnight and then it had turned higher, Dave. So it's anybody's guess how this thing is going to open.

Now, the Dow has lost more -- gosh, 1,800 points, I think, over the past couple of days. Monday was brutal. A record 1,175 points -- I can't even believe I'm saying that -- 4.6 percent.

That was actually a rebound. It had been down 1,600 points at the worst. The biggest decline -- point decline in history. The Dow's worst day in six and a half years and that wipes out all the gains for the year.

So, what's going on here? You know, the big trigger here was a jobs report Friday, particularly strong wage growth. Wage inflation is something that's great for workers but it's bad for corporate profits. If inflation picks up too fast the Federal Reserve may need to raise interest rates faster than it planned.

And the biggest concern here, a sell-off in the bond market. The bond market is telling us something here. Bond yields move opposite to price. They hit a four-year high Friday.

As those yields go up, bonds offer better returns making them much more attractive to investors and risky stocks. When bonds have a big move like this it hurts the stock market.

Now, even if stocks drop again today this is not a crash, this is not a panic. Stocks haven't even had a 10 percent drop or correction yet and a correction is long overdue.

Conditions are still good, the economy is strong, the market is robust, corporate earnings are on the rise. So, ironically, the bond market is basically telling us the economy is so good it could overheat.

BRIGGS: And that's why they coined the term "bondcano" yesterday on Wall Street. Lucky to have Christine.

Lucky to have Greg Valliere. He's the political economist and strategist for Horizon Investments.

All right, Greg, what does this all mean and where are we headed today?

GREG VALLIERE, POLITICAL ECONOMIST, CHIEF STRATEGIST, HORIZON INVESTMENTS: Well, what it all means, Dave, is a great irony. The economy could overheat. That's what the bond market is telling us, as Christine just said.

All the stimulus, tax cuts, deficits, synchronized global growth, really tight labor market -- it's all contributing to a climate that makes the bond market worry about inflation.

So where do we go from here? I think that maybe some bargain hunting could creep in later today. It's probably not going to be a pretty open. A lot of technical factors at play with program trading.

But the main point for all of the viewers is the economy, as Christine said, is still very sound.

ROMANS: And the stock market has never, in history, gone so long without a three percent move --

VALLIERE: Right.

ROMANS: -- one day or another until now. So this was a market that was moving higher, and higher, and higher, and higher.

VALLIERE: Right.

ROMANS: You know, this sentiment -- this pro-business sentiment, the animal spirits unleashed in the stock market.

VALLIERE: Yes.

ROMANS: Are we going to get to a more -- I mean, 10 years into an economic recovery now, are we going to get into a more normal set of circumstances, do you think?

VALLIERE: I think so, and looking for some silver lining in all of this, Christine, I do think it will make the Fed -- the new chairman, first day on the job, welcome on board.

So, Jerome Powell, the new Fed chairman, I think may have to rethink his plans to raise rates aggressively. To see this kind of instability in the stock market may make him go a little slower. That's probably a good story.

[05:35:03] BRIGGS: It's difficult in this world to decouple what we're seeing in the markets with the man in the Oval Office.

VALLIERE: Yes. BRIGGS: The president has cheer-leaded the Dow --

VALLIERE: Yes.

ROMANS: Yes.

BRIGGS: -- day after day, and it's still up 33 percent since Election Day. But if you get the gains, do you get the losses as well?

VALLIERE: Well, two things I say.

Number one, if you live by the sword you're going to die by the sword. And, you know, if he claims credit for things, what happens when it goes down?

Number two is I never could figure this out. Many -- maybe most of Trump supporters in Youngstown, Ohio, Bethlehem, Pennsylvania, people who live in Dunwell, they hate the stock market, they hate Wall Street. And for Trump to be a champion of the markets, I think, goes against some basic attitudes of his base.

ROMANS: Yesterday, we heard him in Ohio. He was talking about the economy --

VALLIERE: Yes.

ROMANS: -- and seeming to take credit for some of these great numbers -- listen.

BRIGGS: Sure.

(BEGIN VIDEO CLIP)

TRUMP: We've already created nearly 2.6 million jobs since the election. Unemployment claims have hit a 45-year low. This has been an incredible journey but it's happening even faster. And wait until you see GDP over the next year or two.

When I signed the tax cuts six weeks ago it set off a tidal wave of good news that continues to grow every single day. Economists estimate that our business tax cut will raise the income of a typical family by an average of $4,000.

(END VIDEO CLIP)

ROMANS: Greg, when other presidents -- the prior president was having good jobs numbers he didn't believe any of the numbers. He believes them -- he believes them now.

VALLIERE: Yes.

ROMANS: Yesterday should have been a good -- a good day for this White House. You had Melania Trump talking about opioids.

BRIGGS: Yes.

ROMANS: You know, it was an adorable picture holding this little girl. You had the president there talking to his base in Ohio.

How does this stock market decline change what should have been a good day, really, for the administration, and the message here?

VALLIERE: Well, I think the market is starting to get worried that we're overdoing it.

What did Mae West once say? Too much of a good thing is wonderful. Well, maybe too much of a good thing is not wonderful.

You have more and more stimulus. He wants to get GDP growth up to three or four percent, which I think is impossible without more legal immigrants, which he opposes.

But that aside, I think the markets are starting to worry that he wants to overdo it and get growth too high. If you get growth too high and the downside is much higher interest rates.

BRIGGS: All right. Christine mentioned the day that may have been lost for the president. He's talking about the economy, about his tax cut plan --

VALLIERE: Yes.

BRIGGS: -- and then he says this about Democrats and what it means that they sat down during the State of the Union address and did not applause when he cited record low black unemployment rate -- listen.

VALLIERE: Yes.

(BEGIN VIDEO CLIP)

TRUMP: They would rather see Trump do badly, OK, than our country do well. That's what it means. It's very selfish.

Even on positive news -- really positive news like that, they were like death and un-American -- un-American.

Somebody said treasonous. I mean, yes, I guess, why not? Can we call that reason? Why not? I mean they certainly didn't seem to love our country very much.

(END VIDEO CLIP)

BRIGGS: Why don't you answer the question, Greg? Why not call it treason?

VALLIERE: Yes, and then, he had a chance guys to build on what I thought was a pretty good State of the Union address. He talked about bipartisanship.

BRIGGS: Sure.

VALLIERE: It looked like maybe he wanted to reach out. That's demolished now with rhetoric like this that we heard from him yesterday. BRIGGS: Treason refers to the crime of trying to --

VALLIERE: Yes.

BRIGGS: -- overthrow your country's government or help its enemies during war. That's from Merriam-Webster.

VALLIERE: Yes.

BRIGGS: Greg Valliere, thank you, sir. Appreciate it.

VALLIERE: All right, you bet.

ROMANS: Nice to see you, Greg.

VALLIERE: Yes.

BRIGGS: All right.

The president's lawyers urging him not to sit down for an interview with special counsel Robert Mueller. "The New York Times" reporting last night the president's attorneys are concerned he might incriminate himself by making false statements.

CNN reported last week the Trump legal team is arguing the special counsel's office has not met what it considers the high threshold for a face-to-face interview with the president. He last said he's eager to speak with Mueller and willing to do it under oath.

ROMANS: This morning, the Democrats' memo pushing back against the Republican Nunes memo sits on President Trump's desk. The House Intelligence Committee voted unanimously to release the Democrats' rebuttal to GOP claims the FBI abused surveillance laws.

The president now has five days to decide whether to declassify it. The Democrats are raising concerns that the president may play political games, though.

More now from CNN's Pamela Brown at the White House.

(BEGIN VIDEOTAPE)

PAMELA BROWN, CNN JUSTICE CORRESPONDENT: Well, good morning, Christine and Dave.

The House has now approved the Democrats' memo to come here to the White House and now it is up to the president whether he will declassify it. It was truly a test of transparency considering the justification for releasing the Nunes memo from the White House was transparency.

And so, it will be interesting to see how the White House handles this now that it has the Democrats' memo. A White House official said that the Democrats' memo will go through the exact same process as the Republicans' memo. It will be scrubbed, it will be reviewed by White House lawyers. [05:40:14] But the question is will there be any redaction? As you'll recall, there were no redactions on the Nunes memo from the White House. Now, Republicans on Capitol Hill said that's because they already made changes from the FBI's input before it ever came here to the White House.

But, Adam Schiff, the ranking Democratic on the House Intelligence Committee, came out and said that he's concerned the White House will redact parts of the Democrats' memo for political purposes so it remains to be seen what exactly will happen.

But the president has five days to review the memo and make the decision on whether or not to declassify it.

Back to you.

(END VIDEOTAPE)

ROMANS: All right. Pamela Brown at the White House. Thank you.

In less than 72 hours, the federal government runs out of money. House Republicans planning to vote today on another short-term spending bill to keep everything running now through March 23rd. What a great way to run a country, right?

The measure has a sweetener attached, one full year of defense funding. Republicans believe that gives them a chance to push the bill through without helping Democrats, but it has little chance of passing the Senate.

BRIGGS: Also, immigration reform remains influx. Senators are supposed to debate and vote on a major immigration legislation for the first time in years but Republican leader Mitch McConnell has been silent. Members of both parties say they have no idea what he's actually planning here and the White House has rejected the latest bipartisan effort from senators Chris Coons and John McCain to protect Dreamers and improve infrastructure and technology at the border.

So yes, dueling memos and, of course, no sight on how we're going to fund the government's continuing resolutions. That's how we govern.

Colorado's governor says enough is enough after the third fatal shooting of a police officer in six weeks. Now, another widow and 7- year-old twins left in mourning.

(COMMERCIAL BREAK)

[05:46:12] ROMANS: Let's get a check on "CNN Money Stream" this morning.

There's one story -- it's the stock market. A sell-off that isn't over yet.

Global stocks jittery after Wall Street's epic plunge, down 8.5 percent from the high. And markets in Tokyo, Paris, London, Hong Kong, they are all down right now. U.S. futures, I can tell you, have been swinging wildly.

Dow futures were down as much as 700 points overnight. Now, they're down about a percent.

Look, this was the Dow's biggest single-point loss ever yesterday. It lost 1,175 points. For perspective, it's down about 8.5 percent from its all-time high. In terms of percentage declines, though, about a five percent loss there, still not even in the top 20 of biggest percentage moves, so some perspective there.

Lululemon's CEO has resigned after the company claims he fell short of its standards of conduct. Now, it did not specify how exactly he fell short, only that it expects all employees to exemplify the highest levels of integrity and respect.

Lululemon did not respond to requests for further comment on this. Laurent Potdevin has run Lululemon since 2014.

All right, Google's Waymo and Uber finally have their day in court and the result could shape the future of self-driving cars.

It's been one year since Waymo accused Uber of stealing autonomous vehicle technology. It claims that Uber cheated to get ahead in the self-driving car race. Uber denies this and says that's a conspiracy theory. The trial is expected to take two weeks.

BRIGGS: Pennsylvania's congressional maps likely headed for a makeover. The U.S. Supreme Court rejecting a request from state Republicans. They wanted the justices to block a lower court ruling that ordered the state's congressional maps redrawn.

Currently, Republicans hold 12 of Pennsylvania's 18 seats. The Pennsylvania Supreme Court earlier ruled Republicans illegally sought partisan advantage over Democrats in drawing the maps. GOP leaders say they may pursue further legal action.

The ruling could have a significant impact on the 2018 midterm elections where GOP control of the House is on the line.

A candidate with a history of anti-Semitic statements and Holocaust denial poised to represent the Republican Party in a race for a congressional seat in Illinois. Arthur Jones running unopposed the March 20th GOP primary for Illinois third district.

His Website contains a section suggesting that quote, "There is no proof such a so-called Holocaust ever took place."

The Illinois Republican Party has refused to back his candidacy. The Jones campaign did not immediately respond to CNN's request for comment.

A sheriff's deputy has died and three other officers were wounded in a shooting Monday in Colorado Springs. Officials say they were trying to detain a car theft suspect when a struggle ensued and shots were fired. Thirty-four-year-old deputy Micah Flick was killed on what was his 11th anniversary with the sheriff's office. He is survived by his wife and 7-year-old twins.

The suspect also died in the gunfire.

The deputy is the third Colorado officer to be shot and killed since New Year's Eve. Governor John Hickenlooper saying in a statement, "People must come together and say enough is enough."

Actor Robert Wagner remains a person of interest in the 1981 death of his wife, actress Natalie Wood. Wagner has declined to speak with investigators since they reopened the case seven years ago. And while he's not obligated to submit to an interview, the Los Angeles County Sheriff's Department does want to hear from him.

(BEGIN VIDEO CLIP)

JOHN CONNA, LIEUTENANT, LOS ANGELES COUNTY SHERIFF'S DEPARTMENT: The original events he's portrayed in the media, I think -- we feel that the original investigators really don't add up to what we've found.

(END VIDEO CLIP)

CNN's calls to Wagner's representative were not immediately returned.

Natalie Wood drowned in November 1981 while boating off of Southern California with Robert Wagner and their friend, Christopher Walken. In 2012, the L.A. coroner changed Natalie Wood's cause of death from accidental to undetermined.

[05:50:10] A suspected drunk driver who killed Colts linebacker Edwin Jackson and another man early Sunday morning is a twice-deported, undocumented immigrant.

Police say Manuel Orrego-Savala, a citizen of Guatemala, is in the U.S. illegally after being deported in 2007 and again in 2009. Immigration officials say he was previously convicted of driving under the influence in Redwood City, California.

Authorities say Jackson was a passenger for a ride-sharing operator, 54-year-old Jeffrey Monroe. Both men were standing outside the vehicle when they were struck.

Vice President Mike Pence says the world needs to hear the truth about North Korea but won't close the door on a meeting at the Olympics.

We're live in PyeongChang, next.

(COMMERCIAL BREAK)

[05:55:22] BRIGGS: Five fifty-five Eastern time.

Vice President Pence en route to Asia right now for the Winter Olympics. Overnight, the V.P. did not rule out a meeting with North Korean officials but also says he plans to tell the truth about North Korea at every stop.

Also, some new trouble for Olympics officials there.

For the latest, let's bring in Ivan Watson, live in PyeongChang, just about 8:00 p.m. there. Hello, Ivan.

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Hi there, Dave.

Vice President Pence has made it very clear that he wants to establish a counter-narrative when leading the U.S. delegation to the opening ceremony of the PyeongChang Winter Olympics, which will be taking place in just a few days here.

He wants to, at every stop, highlight North Korea's human rights record. He's bringing along the father of the American university student Otto Warmbier, who died after more than a year in custody in North Korea. And that he wants to make it clear that even if North Korea's cooperating by participating in the Olympics, that it does need to be isolated by the international community to make it give up its nuclear weapons.

But he added that caveat, no, the U.S. has not asked for a meeting with the North Korean delegation here in PyeongChang but it's possible. We'll wait and see what happens if they happen to bump into each other in a stadium.

In the meantime, the North Koreans are coming by the hundreds. Not only 22 athletes, but an orchestral group arrived by ferry. They were met by anti-North Korean-South Korean protesters who have been very active across South Korea.

There's a Taekwondo demonstration team coming in tomorrow with hundreds of cheerleaders, as well, so the North Koreans will be out in force.

There's been a hiccup to what is otherwise a very-prepared Winter Olympics here. All the buildings are finished but there's been this sudden outbreak of norovirus, which has the ominous nickname "winter vomiting bug."

Forty-one people -- security guards -- coming down sick with sudden diarrhea and nausea. They've had to swap out 1,200 and bring in 900 more, and then start scrubbing down and decontaminating buses and accommodations to make sure it doesn't spread through the Olympics venues -- Dave.

BRIGGS: That's just nasty.

Ivan Watson live for us, about 8:00 p.m. there in PyeongChang.

We also learned Ivanka Trump will attend the closing ceremonies.

Philadelphia will honor the Super Bowl Champion Eagles with a parade on Thursday. It's expected to start around 11:00 a.m. The victory parade route begins in South Philadelphia near Lincoln Financial Field and ends at the iconic Philadelphia Art Museum.

All Philadelphia school districts and administrative offices will be closed Thursday. Well done. The school superintendent reminding students, though, that everyone should be in school, on time and ready to learn on Friday.

Fans across the country remembering veteran actor John Mahoney who died Sunday. He's best known for playing the curmudgeonly and sharp- witted father in the classic comedy series "FRASIER."

(BEGIN VIDEO CLIP)

JOHN MAHONEY, ACTOR,"FRASIER": I accidentally stain your carpet and you set fire to the one thing in this apartment I care about and heave it out into the street.

KELSEY GRAMMER, ACTOR, "FRASIER": I'll tell you what. The healthiest thing you can do right now --

MAHONEY: You want to know the healthiest thing you can do?

GRAMMER: Shut my yap.

MAHONEY: Bingo.

(END VIDEO CLIP)

BRIGGS: The actor starred on screen and on stage. Mahoney was an ensemble member of the Steppenwolf Theatre in Chicago for 39 years.

His publicist says he died following a brief illness. John Mahoney was 77 years old.

All right, thanks for joining us. I'm Dave Briggs.

Christine Romans has the latest on where the markets are heading in "NEW DAY," and a pair of Democrats and a pair of Republicans discuss their dueling memos. It should be fun.

We'll see you tomorrow.

ANNOUNCER: This is CNN breaking news.

ALISYN CAMEROTA, CNN ANCHOR: All right. We want to welcome our viewers in the United States and around the world. This is NEW DAY. It is Tuesday, February sixth, 6:00 here in New York.

Chris is off this morning. John Berman joins me. Great to have you here.

JOHN BERMAN, CNN ANCHOR: Grab your wallets this morning.

CAMEROTA: Will do.

We begin with breaking news. Asian and European markets rattled by the steep losses on Wall Street. The Dow suffering its worst percentage decline in more than six years, and the largest single-day point drop ever. U.S. markets have now erased this year's gains in just the past two days.

BERMAN: We've been watching all the numbers come in and all signs point to a rocky day when U.S. markets open in just a few hours.

One big question is how will President Trump handle this? He bragged all over the markets when it was booming, taking credit for nearly every day of gains. He wanted to own the gains, so will he own the losses, especially if they continue today?