Return to Transcripts main page
Will Dow Rebound After Record Fall?; Aired 5-5:30a ET
Aired February 6, 2018 - 05:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[05:00:00] CHRISTINE ROMANS, CNN ANCHOR: Four and a half hours until the Opening Bell. Global markets are open and they are down.
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 the sitdown 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 compares Democrats with people trying to overthrow the government all because they wouldn't stand to applaud during the State of the Union.
Good morning. Welcome to EARLY START. I'm Christine Romans. I'm glad you're back.
BRIGGS: Good to be back. The president says Democrats are treasonous and he's not braggadocios?
ROMANS: Hmm. OK. Words --
BRIGGS: Let that marinate. I'm Dave Briggs. It's Tuesday, February 6th. It's 5:00 a.m. in the East. We start with of course the markets, folks.
Investor concerns not quieting, not just yet after Monday's epic selloff on Wall Street. The Dow hit its biggest single-day point loss ever. Overnight markets abroad were jittery. Futures on Wall Street, though, now rebounding after falling sharply overnight.
We always have our chief financial correspondent Christine Romans here to explain what is happening.
And, Christine, how long this could last?
ROMANS: You know, well, it's continuing this morning overseas. So let's talk about what's happening. When you look at world markets they are open. They've been open for a few hours and it's rippling around the globe here. Markets in Tokyo, Hong Kong, Shanghai, all down. Europe opened a couple of hours ago. About a 2 percent loss there in Frankfurt.
The Dow futures, they're actually -- they turned lower again. So they had popped. They fell 700 points. Now they're lower. It just shows you how volatile this whole thing is here right now.
Let's talk about what happened Monday. The Dow has lost more than 1800 points over the past couple of days. Monday was brutal. It shed --
The biggest decline in history. Point decline in history and the Dow's worst day in six and a half years. This wipes out all of the Dow's gain for the year.
What was the problem here? What's going on? Well, a couple of things here. The jobs report Friday was a trigger. There was strong wage growth in there. Wage inflation is good for workers, but it's bad for corporate profits. And if inflation picks up too fast, Dave, the Federal Reserve may need to raise interest rates faster than planned.
And the biggest concern here is this bond market selloff. The bond market has been telling us for some time now that things are changing. Bond yields move opposite to price. They hit a four-year high Friday as the yields go up. Bonds offer better returns making them much more attractive to investors than risky stocks.
Now even if you see a drop again today, there is no chance of a crash or a panic. Let's be careful about the words we're using here. This is a correction. Stocks haven't yet hit a 10 percent drop or a correction. This is a market that is long overdue for a pull back. And remember the economy is still good here. The economy is strong. The job market is robust. Corporate earnings are on the rise.
So what's happening here is the stock market has been telling you the economy is bad. The stock market has been running up, up, up, up. And the bond market is adjusting to a new world of high interest rates and a little bit of inflation.
BRIGGS: The Dow still up 33 percent since Election Day.
All right. Let's talk about all of this. Joining us now live from Washington, political economist Greg Valliere, chief strategist for Horizon Investments.
Good to see you, sir.
GREG VALLIERE, CHIEF STRATEGIST, HORIZON INVESTMENTS: Good morning.
BRIGGS: All right. So where are we headed today?
VALLIERE: Well, Christine nailed it. I think that the fundamentals are still good in this economy. But until the bond markets stabilizes, Dave, we're going to still be in a period of real anxiety. Christine is right. Interest rates are moving higher. And how is this for an irony? The major reason interest rates are moving higher is that people worry the economy could overheat. There's so much stimulus. Such a tight labor market. Synchronized global growth. Maybe we're doing too much to stimulate the economy.
ROMANS: It's so interesting. Yesterday was Fed chief Jerome Powell's first day on the job.
VALLIERE: That's right.
ROMANS: Welcome --
ROMANS: And this happens. You know, if the economy is so strong that it's creating inflation for the first time in a long time and the Fed has to start raising rates, does that work at counter purposes across services to what the president is trying to do with this tax cut stimulus?
VALLIERE: Yes. It does. It takes away the impacts -- some of the impact on the tax cut.
Look, most Americans, not all, but most Americans and all corporations are going to have more money in their pockets. That's a good story. That will lead to stronger growth. But when you've got a labor market this tight, Christine, as you know, with unemployment I think going below 4 percent soon. Maybe we even get to 3.5 percent by Labor Day, that is bound to lead to wage inflation. And you talk to any central banker like Jerome Powell and they'll tell you the toughest inflation to extract is wage inflation.
BRIGGS: Greg, it's difficult to decouple the markets with the president of the United States because of course he has repeatedly day after day talked about the Dow as a measuring stick for the success of his presidency.
BRIGGS: Is this live by the sword, die by the sword?
[05:05:03] VALLIERE: Absolutely. And I think he is probably going to lie low and not talk very much about a selloff. But you know, some of this might be due to the fact that there's growing concern about instability in our own government. You know, do we get indictments from Mueller? Does he fire Rod Rosenstein?
All of these things add to an uneasy background with the addition of continued dysfunction on the budget, rising deficits and now a fight over the debt ceiling that's got to be resolved within a month.
ROMANS: So you really think that, you know, government headlines are playing into some of the sentiment on Wall Street or in the markets? Because until now, the market just went up. Nobody cared about Russia investigation in the investing world. VALLIERE: Right. Right. Well, he hinted, didn't he, last -- late
last week that he might fire Rosenstein? I mean, that could lead to a pretty dangerous environment where Washington became focused exclusively on this stuff and not a lot of other issues like the debt ceiling and a budget. They still have to be addressed.
One other real quick point. Some of this was technical. A lot of the professionals have program trading.
VALLIERE: You need a PhD to understand all this stuff. But the fact that technical trading drove this panic as we got well into the afternoon yesterday, that was a factor as well.
ROMANS: I don't have a PhD but I do know that when you look at the moving averages of the S&P 500, that's the broadest sort of gauge of the stock market health.
ROMANS: You're way beyond the 50-day and 200-day moving averages historically when you look at some of those standard deviation.
ROMANS: So clearly, clearly this market had been going up, up, up, up with no pause to refresh. I mean when you look at the S&P, Greg, it had been a record amount of time without a 3 percent daily move for the S&P.
ROMANS: It just went up. So I think it's not a surprise there is a correction. And we haven't even hit a correction yet. But what happens next?
VALLIERE: You can't stay this frothy for this long. At some point, maybe starting today, who knows, bargain hunters will start to sniff an opportunity. But the main point, as you made earlier, is that the fundamental economy is still quite strong. Ironically maybe too strong for the bond market.
BRIGGS: And that echoes exactly what Sarah Huckabee Sanders said yesterday. The fundamentals of this economy remain strong.
BRIGGS: Greg Valliere, we'll check with you again about 30 minutes. Thanks.
VALLIERE: All right.
ROMANS: All right. Thanks for coming in, Greg.
VALLIERE: Yes. ROMANS: President Trump's lawyers are urging him not to sit for an
interview with Special Counsel Robert Mueller. "The New York Times" reporting this last night that 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. The president said last month that he is eager to speak with Mueller and willing to do so under oath.
BRIGGS: This morning, the Democrats' memo pushing back against the Republican Nunes memo sits on the president's desk. Got all that? 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 this new memo but Democrats raising concerns the president may play political games.
For more we turn to CNN's Pamela Brown at the White House.
PAMELA BROWN, CNN SENIOR WHITE HOUSE 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. 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.
ROMANS: All right. Pamela, thank you so much.
President Trump mocking Democrats for their stone-faced reaction to his State of the Union address. The president was discussing tax reform and the economy at a rally outside Cincinnati Monday when he said this about Democrats who refused to stand to acknowledge record- low black unemployment during his State of the Union.
(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? You know.
[05:10:06] TRUMP: Can we call that treason? Why not? I mean they certainly didn't seem to love our country very much.
(END VIDEO CLIP)
BRIGGS: Well, since he asked why not, here's why not. The Constitution defines treason as an act of levying war against the United States or adhering to their enemies giving them aid and comfort. In other words attempting to overthrow the government by teaming up with the enemy.
ROMANS: Those comments met with a blunt rebuttal from Democrats like Rhode Island Senator Sheldon Whitehouse.
(BEGIN VIDEO CLIP)
SEN. SHELDON WHITEHOUSE (D), RHODE ISLAND: Maybe he's been watching too much North Korean television where everybody in the North Korean assembly stands up and they all clap together automatically whenever the Deal Leader said something. That's not the way America works.
(END VIDEO CLIP)
ROMANS: Illinois Senator Tammy Duckworth, a war veteran, said this, "We don't live in a dictatorship or a monarchy. I swore an oath to preserve, protect and defend the Constitution of the United States, not to mindlessly cater to the whims of Cadet Bone Spurs and clap when he demands I clap."
BRIGGS: A double amputee. The problem here for Republicans in Congress is they say we have the moral high ground here. Joe Manchin, a Democratic senator, was criticizing Democrats for not standing up. Now you gave away the moral high ground and the focus is on the word treason.
ROMANS: There's a long history, by the way, of people of the opposing party sitting there silently, stone-faced, or even -- who was it who said, you lie, to President Obama?
BRIGGS: Mr. Wilson.
ROMANS: Right. So --
ROMANS: All right.
BRIGGS: All right. Ahead, 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 are left in mourning.
[05:15:50] BRIGGS: A sheriff's deputy has died and three other officers were wounded in a shooting Monday in Colorado Springs, Colorado. Authorities say they were trying to detain a car theft suspect when a struggle ensued and shots were fired. 34-year-old Deputy Micah Flick was killed on what was his 11th anniversary with the sheriff's office. He's 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 said in a statement people must come together and say enough is enough.
ROMANS: 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 this case seven years ago. He's not obligated to submit to an interview, but the Los Angeles County Sheriff's Department wants to hear from him.
(BEGIN VIDEO CLIP)
LT. JOHN CONNA, LOS ANGELES COUNTY SHERIFF'S DEPARTMENT: The original events he's portrayed in the media, I think -- we told the original investigators really don't add up to what we've found.
(END VIDEO CLIP)
BRIGGS: CNN's calls to Wagner's rep were not immediately returned. Wood drowned in November 1981 while boating off Southern California with Wagner and friend, Christopher Walken. In 2012, the L.A. coroner changed Wood's cause of death from accidental to undetermined.
ROMANS: Another legendary musician is ready to call it a career.
Singer-songwriter Paul Simon announcing Monday his upcoming tour of North America and Europe will be his last. In a message to fans, the 76-year-old Simon says it's unsettling, exhilarating and a bit of a relief. He says touring takes away from time with his wife and family. "Homeward Bound, The Farewell Tour" kicks off in Vancouver in May. It's going to wrap up in July in London.
You know, he's the latest among major artists saying they are retiring from the road. Elton John, Neil Diamond, Ozzy Osbourne, Lynyrd Skynyrd. You know, he has been inducted into the Hall of Fame twice.
ROMANS: Once as a soloist and once as part of Simon and Garfunkel.
BRIGGS: Aren't you always amazed of how their voices endured decades of singing? Ours rarely make it through two hours of television.
ROMANS: I know. It's really remarkable.
BRIGGS: It's always incredible.
OK. Fans across the country remembering veteran actor John Mahoney. He 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: Want to know the healthiest thing you can do?
GRAMMER: Shut my yap.
(END VIDEO CLIP)
BRIGGS: That's some good stuff. The actor starred on screen and on stage. Mahoney was an ensemble member of the Steppenwolf Theater in Chicago for 39 years. His publicist says he died following a brief illness. John Mahoney was 77 years old.
Boy, was he funny.
All right. Millions of Philadelphia Eagles fans including students expected at Thursday's Super Bowl parade. Andy Scholes all thawed out from Minneapolis has more in the "Bleacher Report" next.
[05:23:24] BRIGGS: The Eagles receiving a hero's welcome as they return to the city with the franchise's first ever Super Bowl title.
ROMANS: Andy Scholes has more in this morning's "Bleacher Report." Hey, Andy.
ANDY SCHOLES, CNN SPORTS ANCHOR: Hey, good morning, guys. Eagles fans, you know, they've been waiting their entire lives to celebrate a Super Bowl title and they're certainly making the most of it.
Thousands of fans greeted the team at the airport yesterday as they arrived home with the Lombardi Trophy. A championship parade is scheduled for Thursday through downtown Philly starting at 11:00 a.m. It's going to end at the Art Museum on the famous Rocky steps. School is canceled so there's going to be lots of fans out there.
Before the season, lineman Lane Johnson and Bud Light, they promised free beer for everyone if the team won the Super Bowl. Well, they're delivering. Bud Light sending out this decree saying everyone 21 or older along the parade route is going to get one free beer. All right. Philly hero Nick Foles meanwhile taking the annual Super
Bowl MVP celebration to Disney World yesterday. He was the grand Marshall of the Mickey Mouse Parade.
Foles is in a unique position that Super Bowl MVPs don't usually find themselves in. He is going to go back to being the back-up quarterback when Carson Wentz returns next season or he could even be traded. And Foles was asked what he thinks the future holds for him.
(BEGIN VIDEO CLIP)
NICK FOLES, EAGLES QUARTERBACK: I can't wait to have more time to be a husband and a father and do those things. Go on walks. Do all the little things. That's what I look forward to and as it pertains to football, I love the city of Philadelphia. I was fortunate to come back and sign with the Eagles. I have no clue what my future holds. But I'm not worried about it. I'm just going to live in the present.
(END VIDEO CLIP)
SCHOLES: It's a rough 24 hours for Rob Gronkowski. It got a little rougher when he returned home to find that he has reportedly been the victim of a burglary.
[05:25:05] According to Boston 25 News, police were called to Gronkowski's home in Foxborough after he returned home from the Super Bowl yesterday and the police remained on-site for hours. Now police are expected to give more details on its investigation later on this morning.
Now finally Dirk Nowitzki reaching the 50,000 career minute milestone last night. The Mavs lost to Clippers. He is just the sixth player ever to play that many minutes in the NBA. But get this, his jersey was misspelled last night. The T and the K should be flipped there. Amazingly, Dirk also wore that jersey against the Kings on Saturday and nobody noticed. But guys, Dirk --
ROMANS: I wonder if he knew? It's at his back.
SCHOLES: Well, yes, he didn't know either. But he has a good sense of humor about it. He said that misspelling basically sums up their season.
BRIGGS: It does indeed.
SCHOLES: We're the worst team in the NBA this year.
ROMANS: All right.
BRIGGS: Two decades in the league, you think they'd get that right.
ROMANS: Andy Scholes, nice to see you, sir.
SCHOLES: Yes. Not the big D. (LAUGHTER)
BRIGGS: All right. The Opening Bell four hours away. U.S. futures now sliding again. Check it out. Global markets diving overnight as well. Those numbers just hard to conceptualize. Can the Dow bounce back after a record selloff? New numbers ahead.