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EARLY START

Special Counsel in Russia Probe; Damaging New Reports About Michael Flynn; Markets Down After Trump Drama; LeBron & Cavs Dominate Celtics in Game 1. Aired 5-5:30a ET

Aired May 18, 2017 - 05:00   ET

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


CHRISTINE ROMANS, CNN ANCHOR: The Russia probe out of the hands of the Trump administration. A former FBI chief tapped now as special counsel. What it means for this investigation and the new investigation? The White House and members of Congress reeling from the barrage of bad headlines. Will this take down the temperature and mark a new chapter here to mix my metaphors?

Good morning and welcome to EARLY START. I'm Christine Romans.

DAVE BRIGGS, CNN ANCHOR: I'm Dave Briggs. It is Thursday, May 18th. It's 5:00 a.m. in the East.

You do get a sense there was a massive exhale in Washington, really on both sides of the aisle, even at this is now ramped up. That investigation into Russia's meddling in the 2016 election is now in the hands of a former director of the FBI. Robert Mueller appointed special counsel overseeing the probe.

[05:00:02] He has the power to investigate, question, issue subpoenas and prosecute federal crimes if any are discovered. Mueller appointed to the job by Deputy Attorney General Rod Rosenstein.

ROMANS: The appointment comes following a series of damaging headlines from the firing of the FBI Director James Comey to the president divulging sensitive intel to Russian officials inside the Oval Office, to Comey's memo saying the president asked him to end his investigation of Michael Flynn.

BRIGGS: On Capitol Hill, the news of the special counsel is being greeted with relief, especially by Republicans.

We begin this morning with Justice Reporter Laura Jarrett live in Washington.

Great to have you on this morning, Laura. Tell us how this all came down.

LAURA JARRETT, CNN JUSTICE REPORTER: Well, it all came down rather quickly, Dave. I have to tell you. I was at the Justice Department yesterday afternoon. This is a significant move. I should mention. This has only happened once before in history. And without going into any of the recent events, the deputy attorney

general really highlighted the unique circumstances we find ourselves in, requiring the special counsel saying in part: My decision is not a finding that crimes have been committed or any prosecution is warranted. I have made no such determination. What I have determined is based upon the unique circumstances, the public interest requires me to place this investigation under the authority of a person who exercises a degree of independence from the normal chain of command.

We also heard from the White House last night in a pretty short statement saying: A thorough investigation will confirm what we already know. There was no collusion between my campaign and any foreign entity. I look forward to this matter concluding quickly.

So, both the White House and the Justice Department coming out there strong, saying, look, this is now going to move forward.

ROMANS: Just two or three sentences from the White House. They look forward to the matter resolved quickly, which makes me wonder how broad the scope of Mueller's investigation because what I'm hearing so far is there will be nothing quick about this.

JARRETT: Well, yes, you are absolutely right, Christine. The latitude is wide here. Under the order issued yesterday by the deputy attorney general, Mueller is now allowed to look into any length or coordination between the Russian government and any individuals associated with the Trump campaign as well as any matters that arise or arose directly from the investigation.

So, he is given a lot. He essentially has been deputized to step into the shoes of the attorney general. As you mentioned, he can issue subpoenas, he can convene a grand jury. He can conduct interviews. It's up to him where to take this investigation from now on.

BRIGGS: He can get tax returns, he can interview the president. Everything is on the table.

But what's the first step for Mueller as special counsel?

JARRETT: So, the first step is for him to request a budget within 60 days from the Justice Department. Then he's also going to hire staff. He can go inside, outside, whatever he wants. We know he is taking two of the former law firm partners from Wilmer Hale with him. One that actually worked on Watergate, interestingly enough, and another who is a former FBI agent. So, people who are well-versed in these issues.

ROMANS: And people who clearly are closed to him, who he has confidence in and he's already putting his circle together. He has to get office space and he has to get the whole bit here.

We know that this president -- well, I mean, he will fire people if he is not pleased. Can Trump fire Mueller?

JARRETT: So, this was getting a lot buzz on social media last night. And the regulations say the special counsel can only be removed by Rosenstein, the acting A.G. in the situation, because Sessions has recused. But -- so, Trump can't fire Mueller directly. He cannot call him up and say get out.

But the president could try to repeal the regulations on the books or he could try to put pressure on the deputy attorney general to fire him. But, of course, that has significant political consequences.

So, this is not a situation like James Comey where he can just do it all on his own.

ROMANS: All right. Laura Jarrett, thank you so much for bringing us up to speed. She had a very busy long day yesterday. I have a feeling that's going to be her summer. Thank you.

BRIGGS: I think you are right about that.

Joining us this morning is CNN politics reporter Tal Kopan, and Shannon Pettypiece, White House reporter for Bloomberg News.

Good morning to both of you. Great to have you on this morning.

Shannon, let me start with you. How does this change the equation? What can and what can a special counsel not do?

SHANNON PETTYPIECE, WHITE HOUSE REPORTER, BLOOMBERG NEWS: He can pretty much do anything that, you know, an attorney general or FBI director or other law enforcement official could do. As Laura was explaining, he, though, does not answer to the attorney general or deputy attorney general or the FBI director, which are political appointments. He is independent.

And so, that will give him a lot of flexibility here. Of course, there is a scenario where he could be removed from the job, but it would be more complicated. So, it gives him independence to conduct an investigation the way a lot of people have been wanting to see for months now.

[05:05:03] ROMANS: Shannon, what is the mood? I mean, Dave and I feel when the news came down, there was suddenly a next phase of it. It is not just speculation and anger and blaming back and forth and wondering about Russia ties. This actually puts this in the hands of grown ups and we move forward. Does it feel like there's a turning point here?

PETTYPIECE: Well, and for the White House, theoretically, this could be very good. If there is nothing to hide, if there's no collusion, if there was no obstruction of justice, you know, this will now have a very credible investigator and no questions surrounding how the investigation was conducted.

If you do have something to hide, Mueller is probably the last person you would want to be investigating you. The mood in the White House yesterday, though, at this point was panic as they try to get their heads around what was happening. They were given about 30 minutes notice that this was coming. They were scrambling to come up with a statement to figure out if Kellyanne should go on TV or not. So, I think yesterday, there was a lot of trying to digest the news.

I think today we will get a better sense of what the mood is like around there.

BRIGGS: But, Tal, it was not an overheated reaction by the White House. You almost have to applaud that. We have not seen tweets. We haven't seen false statements by representatives.

How did they handle it today? Could it, in fact, to Shannon's point, be good news for the Trump White House?

TAL KOPAN, CNN POLITICS REPORTER: Yes, you almost wonder if there's even legal advice given, you know, because there have been some missteps in the past handling some of these announcements. You know, again, we have seen the White House sort of scramble to find communication strategy as certain things have broken and then sort of have to walk back some of the things that were said.

So, certainly, you could argue that last night, the strategy of a small concise statement minimize the risk of conflicting statements or things that would have to be walked back later. But one thing that's clear is the cloud over the White House that they have been extremely frustrated with since the allegations sort of started bubbling up, it's not going anywhere. This investigation can take a long time.

And Robert Mueller has a lot of latitude to dig into whatever he wants. And, you know, some of our folks on air were saying yesterday this is not a man known to leak. He is known to run a very tight ship.

But this is going to keep going. This only gives legitimacy to the investigation. So, while the White House may be relieved to know that there is a credible person conducting the investigation if it ends up clearing them, it doesn't mean that this is going to go away or something they won't have to answer to.

ROMANS: It opens up everything. It opens up everything. I mean, a million times we heard. Remember the Clinton investigation with Whitewater and ended with Monica Lewinsky. And I'm not alleging, I'm not saying that anything like that could be happening here. I'm just saying that it opens up -- you go down a rabbit hole. You never know what is on the other end.

"The Wall Street Journal" editorial says: While this provides short- term political relief, it opens up years of political risk to the Trump administration with no guarantee that the public will end up with any better understanding of what really happened.

Shannon, at the end of all this, if there are no criminal charges, it is not as if this is a commission which publishes a report where we understand what happened here. This is not meant for the public. This is a law enforcement tool.

PETTYPIECE: Right. There are other investigations going on on Capitol Hill and Congress. So, those investigations, we'll see how they play out. But those could give the public more clarity and they could come out with a full report. But, you're right, this is a law enforcement investigation. This will not result in some 20 binder report at the end of all this.

BRIGGS: Some other big news last night, Tal, regarding Michael Flynn. In fact, he admitted to the Trump transition team he was under federal investigation for lobbying on behalf of Turkey. So, they knew -- they knew before hearing from the Justice Department about Flynn's lobbying, about the federal investigation. What questions does this open up?

KOPAN: Yes, you know, that reporting, you know, we still are working to corroborate. It's from "The New York Times." certainly you have to wonder if the White House regrets a little bit how closely it intertwined itself with Michael Flynn. There is every indication the warning signs were there.

We heard over and over Obama administration officials warning the Trump transition about taking him into the inner circle, you know, sort of too closely. You heard from Sally Yates and perhaps the former president suggested it might not be a good idea. The Trump administration and transition went full steam ahead with Michael Flynn. Certainly a lot of the developments that have come out in the investigation have centered around Mike Flynn and this man.

[05:10:01] And so, you do have to wonder if the White House regrets not distancing earlier because I'm not sure this is the end of the drip, drip, drip, that comes out of the hiring of Michael Flynn and his connections overseas both in terms of lobbying and some of the speech he did in Russia.

ROMANS: Shannon, is this the pivot the White House has been wondering how it happened? Do they pivot now? The president gets, you know, an attorney, maybe a personal attorney. He stops tweeting so much. He stops contradicting his team and they get on message and he tries to sort of govern and work on his economic agenda and not so much this fight with the media and this fight with the intelligence community?

PETTYPIECE: Well, I mean, I don't know if we will see a real Trump pivot. I think on issues around Russia and around Michael Flynn, over the past few days, there is a real concerted effort to keep their mouth shut and be careful about what you say about classified information, really sort of clamping down on that. You know, President Trump is who he is. He is not going to change now. So, you know, whether they are talking less about Russia, don't expect them not to be a bizarre tweet at 6:00 a.m. about North Korea or something else.

ROMANS: All right.

BRIGGS: Yes. And this foreign trip, ho knows how fraught with peril that potentially could be.

So, Shannon and Tal, thank you both. We'll see you in about 30 minutes.

ROMANS: All right. Eleven minutes past the hour. Let's talk about what this means for investors. Investors have been high on the Trump drug for months now. So, what happens now this investigation has been announced? We will check in on how markets are reacting next.

(COMMERCIAL BREAK)

ROMANS: All right. A lot of drama you could say on Wall Street with the president after months of calm and market gains are just steady. Markets tanking yesterday on the news that president asked James Comey to end the FBI probe into his ex-national security adviser.

The Dow down 373 points, the harshest selloff since September. The dollar also erasing all post-election gains. Investor ca or calm appears to be over. Money flowed into gold and bonds and Wall Street's fear gauge, the VIX index, jumped 42 percent.

Look at that, it had been the lowest level in decades. Suddenly fear came back. That's because until now, markets were ignoring the Washington antics in favor of tax cuts and deregulation. That fueled this huge Trump rally.

But for investors, all of this latest about James Comey and memos about the president asking him to quit the Flynn investigation just doesn't signal only uncertainty about the economic agenda, but the future of his presidency.

Here is how one Wall Street trader put it.

(BEGIN VIDEO CLIP)

PETER TUCHMAN, FLOOR BROKER, QUATTRO M. SECURITIES: I kind of think, though, we're at a point where it seems like his presidency is starting to crackle and become vulnerable. And I think Wall Street is feeling that for the first time.

(END VIDEO CLIP)

ROMANS: Changing mood could mean more losses. But here, it's really important to note that corporate earnings remain strong and stocks are not very far from record highs. They hit records just a couple of days ago.

All three indices are still up for the year. It bears watching the mood about the president's agenda now that this is all in the hands of the special counselor.

BRIGGS: The context is important. Record highs. Economy is still healthy.

The U.S. State Department voicing concern over what police describe as a brutal attack on protesters outside the Turkish ambassador residence in Washington, D.C. How about this video? All this while President Recep Erdogan visited the United States.

This video is disturbing and shows Turkish government security forces, those in suits and white shirts and dark ties violently charging the protesters. The Turkish embassy said the violence was initiated by groups affiliated with the PKK or the Kurds, which Turkey's government considers a terror group.

U.S. officials condemning the incident, saying violence is never an appropriate response to free speech. Eleven people were injured, including a D.C. police officer.

ROMANS: All right. Eighteen minutes past the hour.

LeBron James and the Cavaliers are one step closer to the NBA finals. Andy Scholes has the latest in the "Bleacher Report". There he is, smiling Andy, next.

(COMMERCIAL BREAK)

[05:22:52] BRIGGS: All right. Sports now. LeBron James and the Cavs remaining undefeated in these playoffs as they take game one against the Celtics.

ROMANS: Andy Scholes has more in this morning's "Bleacher Report".

Hey, Andy.

BRIGGS: Hey, man.

ANDY SCHOLES, CNN SPORTS CORRESPONDENT: Yes, good morning, guys.

You know, I'm not sure why we held the playoffs. NBA should fast forward to the Finals between the Cavs and Warriors. Neither team has lost in the playoffs, thus far, and LeBron looking great, won against the Celtics having more than a week off where he poured in 38 points after a week off.

LeBron is three wins away now from going to his seventh straight NBA Finals, which is just incredible.

Cavs win 117-104. Game two of the Eastern Conference Finals is tomorrow night.

Game three of the eastern conference finals in the Stanley Cup playoffs was over before you could blink. Senators scoring four goals in the first eight minutes of the game. They beat the penguins 5-1 to take a 2-1 lead in the series. Game four is tomorrow night.

Now, according to the official record, Tom Brady has never had a concussion during his NFL career. That's not what his wife Gisele told "CBS This Morning" yesterday.

(BEGIN VIDEO CLIP)

GISELE BUNDCHEN, TOM BRADY'S WIFE: As you know, it's not the most, like -- let's say unaggressive sport, right? Football, like, he had a concussion last year. I mean, he has concussions pretty much every -- I mean, we don't talk about-- but he does have concussions.

(END VIDEO CLIP)

SCHOLES: Now, again, there is no record of Brady having a concussion last season or ever. The NFL releasing a statement saying nothing they reviewed indicates Brady suffered a concussion. They will continue to look into the matter.

All right. The mega fight between Connor McGregor and Floyd Mayweather is one step closer to happening. UFC president Dana White confirming last night that McGregor's side of the deal is done. Now it is all up to Mayweather. Now, both McGregor and Mayweather have said in the past they want $100 million for the fight.

All right. Finally, Astros and Marlins in Miami. Check this out, a foul ball heads to the stands. This guy here runs, you see him? He runs and grabs the ball and runs away from the poor girl who is going after it.

He soon realizes the error, though.

[05:25:01] He sees her. Gives her the ball. The best part of the whole thing is, she is so excited about getting the ball. She runs over to the guy and look at this. Gives him a big hug.

Great happy ending. Sometimes when foul balls are heading in the stands, especially men, I think, they get tunnel vision. It is all about the ball.

ROMANS: Men get tunnel vision?

SCHOLES: And you don't see anything else around here. So, I like to see how that ended.

ROMANS: Just when a foul ball? That's the only time that happened?

BRIGGS: Ring the bell and we salivate. We're pretty simple.

ROMANS: All right. Andy Scholes, we could have a whole show on that.

BRIGGS: We needed that .

ROMANS: I needed to smile. Thanks, guys.

Special counsel will investigate the Trump campaign ties to Russia despite objections from the White House.

(BEGIN VIDEO CLIP)

SEAN SPICER, WHITE HOUSE PRESS SECRETARY: There is no need for a special prosecutor. We discussed this before.

(END VIDEO CLIP)

ROMANS: So, what will Robert Mueller find? How long is his reach in this probe?

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