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EARLY START

Rudy Giuliani Throw Trump's Legal Team Into Disarray; Hawaii's Kilauea Volcano Erupts, Prompting Mandatory Evacuations; Trump Reportedly Wants To Reduce The Numbers Of U.S. Troops In South Korea; China: Big Trade Differences Remain. Aired 5:30-6a ET

Aired May 4, 2018 - 05:30   ET

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


(COMMERCIAL BREAK)

[05:33:00] (BEGIN VIDEO CLIP)

SARAH SANDERS, WHITE HOUSE PRESS SECRETARY: I can't get into the details of the ongoing litigation. I've given the best information I had at the time. Again, I gave you the best information that I had. I gave you the best information that I had.

(END VIDEO CLIP)

DAVE BRIGGS, CNN ANCHOR: The White House struggling mightily for words there after Rudy Giuliani admitted the president paid the Stormy Daniels hush money back to Michael Cohen. Now anger in the building on the president's legal team. It's just building and it's not going away.

CHRISTINE ROMANS, CNN ANCHOR: South Korea's top national security official is in Washington ahead of nuclear talks with North Korea. Now, President Trump reportedly taking steps to consider a reduction of the U.S. military presence in the South.

BRIGGS: And mandatory evacuations in Hawaii as the Kilauea volcano erupts. Emergency resources being deployed as lava heads for residential areas.

Welcome back to EARLY START on a looney Friday, everybody. I'm Dave Briggs.

ROMANS: Looney -- may the fourth be with you. Dave --

BRIGGS: I've got my "STAR WARS" sock on.

ROMANS: "STAR WARS" socks -- I forgot to bring mine. A lightsaber -- I need that today.

I'm Christine Romans. It is --

BRIGGS: We should have a duel.

ROMANS: I know. Thirty-one minutes past the hour.

Trump attorney Rudy Giuliani seems to have thrown a wrench into the president's legal strategy.

Multiple sources tell CNN Trump's other legal advisers felt blindsided. They were angry and confused when Giuliani revealed the president reimbursed his lawyer and fixer Michael Cohen for a hush payment to porn star Stormy Daniels. That remark contradicted previous explanations by the president and Cohen.

Giuliani told CNN Thursday he and the president are on the same page aiming to quote "get everything wrapped up and done with so this doesn't take on a life of its own."

BRIGGS: But the White House struggling to explain away the contradictions after the president spent months denying he knew about the hush money or the reimbursement.

(BEGIN VIDEO CLIP)

JIM ACOSTA, CNN CHIEF WHITE HOUSE CORRESPONDENT: The president did talk about monthly retainers in his tweet and then Rudy Giuliani said that the president only knew about this 10 days to two weeks ago.

How can you only be aware of something 10 days to two weeks ago but, at the same time, be in the process of paying monthly retainers that apparently covered this reimbursement to Michael Cohen?

SANDERS: Again, I can't get into the details of the ongoing litigation. I'd refer you back to the president's outside counsel.

ACOSTA: Could I just follow up on -- you said on March seventh there was no knowledge of any payments from the president and he's denied all of these allegations.

Were you lying to us at the time or were you in the dark?

SANDERS: The president has denied and continues to deny the underlying claim. And again, I've given the best information I had at the time. He's denied the underlying claim.

ACOSTA: Why can't you just answer yes or no whether you were in the dark? I think it's a fairly simple question whether you just didn't have the information at the time --

SANDERS: I think it's a fairly simple answer that I've given you actually, several times now.

(END VIDEO CLIP)

BRIGGS: On Thursday, the president confirmed the hush payment and the reimbursement in a series of tweets while also denying any connection to his presidential campaign.

A source says the president's legal team is quote "calling it one play at a time."

To help break this all down let's bring in CNN legal analyst Areva Martin on Skype via Los Angeles. All right, Areva. ROMANS: Good morning again, Areva.

BRIGGS: All these papers, for example -- "Giuliani's Story May Fuel Prosecutor's Case", "Trump Gambit Stuns Staff", "Giuliani May Aggravate Legal and Political Peril."

Lawyers cost an awful lot of money. Is he doing the president any good?

AREVA MARTIN, CNN LEGAL ANALYST, ATTORNEY, LEGAL AFFAIRS COMMENTATOR (via Skype): I don't think so, Dave.

The problem is Rudy Giuliani hasn't practiced law in decades and he has a reputation of being a very solid prosecutor when he was a practicing attorney. But we have to remember, that's been years.

And I think the biggest part about this is there doesn't appear to have been any coordination. It's not even clear to me that Rudy Giuliani knew the numerous times that both Michael Cohen and the president had denied that the president had any knowledge.

This whole case has been really peculiar from the start. You had Michael Cohen suggesting that he went out on his own as an attorney and made a settlement. Negotiated a non-disclosure agreement, paid a settlement without his then-client Donald Trump knowing anything about these negotiations and payment.

That is extremely unusual. It's even unethical for a lawyer to do that -- to take on that kind of activity on behalf of a client without the client's knowledge. So that never felt to be an accurate account of what happened.

We had the president denying any knowledge. But now, in a very casual way in this on-air interview, Giuliani admitting to Sean Hannity that the president did know about the payment and, in fact, was reimbursing him.

[05:35:11] But even the reimbursement is strange. We're hearing about this funneling of money through a law firm -- alleged repayment via a retainer agreement which is usually used by lawyers to be compensated for legal work that they're doing.

Those retainer agreements aren't used to funnel payments for settlements negotiated by a lawyer when allegedly, the client doesn't even know about the settlement.

So I think Rudy has created more questions than answers. He's given prosecutors, at least, I think more avenues, more paths -- more inquiries to follow. I don't think he's done the president any good in his stunning disclosure.

ROMANS: The timing here -- everyone focusing in on the timing. The affair, which the president denies -- repeatedly has denied -- was in 2006. This all went down in 2016, 10 years later, in the middle of a very heated presidential election.

Let's listen to Rudy Giuliani on the payment timing.

(BEGIN VIDEO CLIP)

RUDY GIULIANI, ATTORNEY FOR PRESIDENT DONALD TRUMP: Imagine if that came out on October 15th --

STEVE DOOCY, HOST, "FOX & FRIENDS": Sure.

GIULIANI: -- 2016 in the middle of a last debate with Hillary Clinton.

DOOCY: Right. So to make it go away they made this --

GIULIANI: Cohen didn't even ask.

DOOCY: Wow.

GIULIANI: Cohen made it go away. He did his job.

(END VIDEO CLIP)

ROMANS: So, our Jeffrey Toobin says that's a confession. This is campaign-related.

What do you make of it?

MARTIN: Yes, absolutely. It absolutely -- again, just a stunning statement by Giuliani admitting that the purpose of the payment was to influence the election, and that's what this whole violation of federal campaign laws is about.

What is the purpose of a payment -- in this case, what appears to be a loan? Was it done to influence the outcome of the election? And you have Rudy Giuliani pretty much admitting that.

And then you have a statement by Stormy Daniels' attorney just yesterday saying that he has evidence -- separate evidence that there were conversations between Michael Cohen and Stormy's prior lawyer, Keith Davidson, to the same effect. That the payment had to be made, the story had to be killed before the election.

And again, I think as federal prosecutors look at this -- and not just the Stormy Daniels payment. We know that the raid on Michael Cohen's office is bigger -- involves perhaps other crimes that may have been committed by Michael Cohen.

But all of this is just one perfect, no pun intended, storm brewing for this White House.

ROMANS: All right, Areva Martin. Thank you so much for your time this morning from Los Angeles. Thank you.

BRIGGS: All right, there's your legal. Now to the politics of all this.

Joining us from Washington, Greg Valliere, political economist and chief strategist at Horizon Investments.

Only in 2018 does the normally Trump-friendly "New York Post" have this -- "Yes, I Paid the Porn Star."

ROMANS: Oh.

BRIGGS: Greg, in that, the president was spot-on when he once said as a candidate, I could stand in the middle of Fifth Avenue and shoot someone and not lose any supporters. Indeed, that is true. His 42-43 percent don't care one bit about all of this.

What are the political ramifications here?

GREG VALLIERE, POLITICAL ECONOMIST, CHIEF GLOBAL STRATEGIST, HORIZON INVESTMENTS: I think they're significant.

And you've got to say, guys, just when you think the president couldn't have a worse week, he has a worse week. One of the worst weeks of his presidency for his credibility. More and more questions being raised by Giuliani.

Yes, Trump's base will stay solid. That's a major reason why probably, the Senate will not have 67 votes to impeach. That's a long way down the road.

But I think that these revelations this week have really complicated the narrative.

ROMANS: It's also been a really tough week for Sarah Sanders. I mean --

VALLIERE: Yes.

ROMANS: -- last week it was the White House Correspondents' Dinner. That was the storyline --

VALLIERE: Yes.

ROMANS: -- on Sunday and Monday. And now, she's standing up there and has to struggle to explain away these shifting -- these shifting accounts.

You know, "The Wall Street Journal" said this.

"Mr. Trump is compiling a record that increases the likelihood that few will believe him during a genuine crisis -- say, a dispute over speaking with special counsel Robert Mueller or a nuclear showdown with Kim Jong Un. Mr. Trump should worry that Americans will stop believing anything he says."

VALLIERE: Yes. And I've got to tell you, Christine, I think there are two people at the White House who must be thinking this morning enough is enough -- the lies, the chaos. I'm referring, obviously, to Sarah Sanders and Gen. Kelly.

BRIGGS: But is it overshadowing all the positive the president is doing on the Korean Peninsula?

VALLIERE: Yes.

BRIGGS: We could be brokering a peace deal --

VALLIERE: Yes.

BRIGGS: -- removing nuclear weapons, and the economy's healthy. The jobs numbers come out today.

VALLIERE: Yes.

BRIGGS: Is it overshadowing all the positives his administration is accomplishing?

VALLIERE: It is, to a large extent.

We're talking about this -- we're talking about Giuliani when there's maybe a breakthrough with Korea. When there's maybe some signs of progress on NAFTA, the trade deal. And maybe, most importantly, why we have economic fundamentals, including a good jobs report probably this morning.

[05:40:04] Fundamentals that are still really great.

ROMANS: Yes. Even in the "The Wall Street Journal," the top story today -- the tax overhaul is driving earnings growth here.

VALLIERE: Yes.

ROMANS: About -- over half of the combined profit growth is from the drop in their tax rates. So that's what Wall Street wanted, right, and that's what the president promised -- there would be this gift.

Do you think that that story could get flipped for the midterms, though? That this becomes corporate welfare? Like companies already doing very well in this economy got a huge gift and six or seven billion --

VALLIERE: Right.

ROMANS: -- for workers?

VALLIERE: Well, Marco Rubio touched on that. He pulled it back a little --

ROMANS: Yes.

VALLIERE: -- a couple of days ago.

But there is that narrative that the corporations have done great. Their stock values have gone up. But the workers have done fair -- not terrible, but fair. So that could become a narrative.

I still think by Labor Day we could have an unemployment rate of 3.6 and you could have the economy growing at 3.5 percent. ROMANS: Yes.

VALLIERE: If we do, that still gives the Republicans a chance to have a decent election.

ROMANS: I think you're right on those economic numbers. We're going to hear from the jobs report today. Do you think it's going to be strong, yes?

VALLIERE: Yes. I think we go from 4.1 to 4.0. Non-foreign payroll should look good. They key is always -- is wages.

ROMANS: Yes.

VALLIERE: They're starting to go up. If we see a further gain in wages that's a very good story.

ROMANS: A good story. It could be a bad story for the stock market. They'll think that the Fed's going to raise interest rates faster. But --

VALLIERE: Well, yes.

ROMANS: -- yes, a good story for real people.

BRIGGS: People vote on the economy and --

ROMANS: Yes.

BRIGGS: -- national security. Both, the president is nearing some big wins on.

ROMANS: All right.

Greg, nice to see you.

VALLIERE: Yes, all right.

ROMANS: Nice to see you. Thank you so much.

All of you who use Twitter should change your password right now. The glitch that's forcing 336 million to make a change, next.

(COMMERCIAL BREAK)

[05:45:47] BRIGGS: All right, some breaking news.

Mandatory evacuations underway in Hawaii as the Kilauea volcano erupts, releasing lava into a subdivision. Evacuations affecting 1,700 people with almost 800 structures threatened.

A woman who safely evacuated took this video and if you look close you can see lava in the distance spewing out of a crack in the street.

The governor has now expedited relief efforts and activated the Hawaii National Guard to help with evacuations and security. The Red Cross has opened two shelters.

The eruption comes after hundreds of earthquakes rocked the area since Monday. Those quakes have now slowed down.

Twitter urging all of its 336 million users to change their passwords after it discovered a glitch causing user passwords to be saved unprotected on its internal computer system. The company says there's no evidence passwords have been leaked or misused and the issue has been resolved, but it would not say when the bug was discovered or how long it had been storing passwords incorrectly.

Twitter's CEO says it was important to be open about the internal defect, and their chief technology officer tweeted an apology.

ROMANS: Let's get a check on "CNN Money" this morning.

Global stocks mostly lower today as China and the U.S. wrap up trade talks. The high-stakes meeting ended today. Chinese state media said the two countries made progress but still have quote "big differences" on some issues.

More live from Beijing in just a moment.

It was a mixed day on Wall Street. Strong earnings helped the Dow close higher, ending a 4-day losing streak. The Nasdaq and the S&P closed down.

Today is the jobs report. We're expecting hiring to pick up and expect the jobless rate to fall to four percent, the lowest in more than 17 years.

Wall Street will focus on wages -- wage growth. The stock market fell in January when wages rose at the fastest pace since 2009.

Strong wages could mean inflation is picking up. That means the Federal Reserve will have to hike interest rates faster than planned and that's what makes stock markets nervous.

One reason there are so few women CEOs, women make up just 11 percent of the highest-paid jobs in corporate America.

That's how -- the stepping stone to CEO, right? This is according to a new Pew survey of S&P 500 companies. Executive roles are the stepping stone to CEO and only a small fraction are held by women.

What industry has the largest share of female executives -- utilities. Five of the 24 female CEOs in the S&P 500 run utility companies.

Now, a theory here is that these are regional jobs, meaning they don't require big international assignments like other industries. That's harder for women who have family obligations.

Wall Street's chief regulator coming for the king of New York, rapper Jay-Z. The SEC asked a federal judge to order Jay-Z to appear in court next week. Jay-Z ignored two subpoenas asking him to testify. He's not the center of an SEC probe but investigators want to ask him about the sale of his Rocawear brand. The group he sold it to is being investigated for securities fraud.

All right, 48 minutes past the hour.

Is the U.S. preparing to draw down troops in Korea -- South Korea? New reporting this morning ahead of the nuclear talks in Pyongyang. We're going to go live to Seoul, next.

(COMMERCIAL BREAK)

[05:53:15] BRIGGS: Investigators hoping to use a genealogy Website to crack one of America's most mysterious unsolved cases. Authorities in California have been trying to hunt down the Zodiac Killer for decades.

The murderer has been linked to five deaths in the late 1960s and early 1970s. The killer claimed more than 30 murders and sent a series of bizarre letters to news organizations calling himself Zodiac.

Investigators recently used genealogy Websites to catch the Golden State Killer. He also evaded capture for decades.

ROMANS: Arizona school teachers return to their classrooms this morning one day after the governor signed an education funding bill that gives them a 20 percent pay raise by the year 2020, including a 10 percent hike in the upcoming school year.

The new measure also increases funding for support staff, new textbooks, upgraded technology, and infrastructure.

The president of the Arizona Education Association says she is proud of the deal which ends a 6-day walkout.

BRIGGS: National Security Adviser John Bolton meets with South Korea's national security chief today in Washington laying the groundwork for President Trump's planned summit with Kim Jong Un. The focus will be on location which is still very much up in the air, and on broader elements of the talks.

This, as "The New York Times" reports the president is ordering the Pentagon to prepare options for reducing the number of U.S. troops in South Korea.

CNN's Alexandra Field is live in Seoul for us with the latest and reaction on that. What is the latest there, Alex?

ALEXANDRA FIELD, CNN INTERNATIONAL CORRESPONDENT: Well, Dave, just this week, officials here in South Korea defended the presence of U.S. troops on the peninsula, saying that they are needed here for big picture regional security and stability.

But you do have this "New York Times" report that notes that the president has asked for what a reduction in the number of troops might look like. At the same time, officials who are aware of that request say that a reduction in the number of troops here would not be used as a bargaining chip in terms of talks with Kim Jong Un about denuclearization.

[05:55:07] It's part of the president's broader vision for the peninsula. You'll all remember that he complained frequently on the campaign trail about the cost of maintaining forces in Asia. That was even back when he was running for president. They say this is part of the larger plan there.

But the conversations appear to be happening in the run-up to this summit between Kim Jong Un and President Donald Trump.

At the same time, Kim Jong Un has been meeting with the Chinese foreign minister again reaffirming his commitment to denuclearization.

The big question is what other moves could Kim Jong Un make before the sit-down with Donald Trump and most notably, will he release the three American detainees.

In just the last day or two, President Trump had teased that there could be a big development. His attorney, Rudy Giuliani, went much farther, saying that the three prisoners would be released on Thursday. That didn't happen.

The White House and the State Department have said that it would certainly be a show of good faith for North Korea to make that release but they say they're still working to verify reports that the prisoners may have been moved from the locations they were held in closer to Pyongyang in advance of a possible release. But no one at this point is able to say when exactly that could happen -- Dave, Christine.

BRIGGS: All right. Great reporting there from Alex. Thank you.

ROMANS: President Trump's top advisers wrapping up two days of trade talks with China. Leaders of the world's two largest economies threatening to impose billions of dollars in tariffs on each other.

Matt Rivers live from Beijing where we're just hearing from the Chinese that there are still some big differences that remain. The United States went there and the deliverables for them were market access, intellectual property protections, and cutting maybe about $100 billion off of the deficit with China.

Any movement on those?

MATT RIVERS, CNN INTERNATIONAL CORRESPONDENT: Yes, that's the number we certainly heard quite a bit from the president. And we haven't heard from the U.S. side yet. That delegation on its way back to the United States at this point -- no press availability while they were here.

We did get a short readout from the Chinese side of these negotiations. And if you don't want a trade war, Christine, then there's a little bit of good and bad for you in this. So on the one hand, they are saying that both sides did reach some agreements on expanded exports from the United States to China on things like intellectual property protection. But at the same time, they say that both sides realize there are some relatively big differences that remain on some issues.

So really, what it's confirming there is maybe there's going to be a couple of deliverables from both sides but there's major issues that are keeping both sides very far apart.

At the same time that all these trade talks were going on, big movement on the national security front between these two countries. U.S. intelligence officials saying that it's likely that China deployed missiles to the artificial islands that it's been building in the South China Sea -- a hotly-contested waterway on the southern part of China where China has massive territorial claims.

The United States not happy about that at all, saying that they will be -- there will be long-term and short-term consequences. No details on what that looks like but taken as a whole here, Christine, things very tense right now between the U.S. and China.

ROMANS: Really, and you hear this talk that the president may be exploring ways to draw down troops in South Korea. That's -- a U.S. presence in the region is something that has been a really important part of U.S. strategy for many years.

All right. Thanks, Matt, for that.

BRIGGS: All right. Back here at home, the president heads to Dallas today as the issue of guns will be front and center. Both President Trump and Vice President Pence address the National Rifle Association's convention in Dallas.

The firearms industry has been fighting back against calls for stricter gun laws in the wake of the Parkland school massacre.

You may recall the president telling lawmakers not to fear the NRA, even suggesting taking away some guns without due process. He dialed back his own rhetoric and proposals after meeting with the gun lobby. He even talked about lowering the age for purchases.

ROMAN: All right. Breaking moments ago, a law enforcement officer shot in Chicago. The officer is an ATF agent according to an official with knowledge of the investigation of the situation. This agent is in serious condition, we are told.

No information yet about a suspect.

There are reports of a second officer shot, as well.

Details throughout the day here on CNN. It's breaking just now.

BRIGGS: "NEW DAY" will have an update shortly.

Thanks for joining us, everybody. I'm Dave Briggs. ROMANS: And I'm Christine Romans. "NEW DAY" starts right now.

(BEGIN VIDEO CLIP)

SANDERS: The first awareness I had was during the interview last night.

UNIDENTIFIED FEMALE: It's as if the players are executing the plays on their own.

GIULIANI: Imagine if that came out in the middle of the last debate.

UNIDENTIFIED MALE: If you pay money to help Donald Trump get elected, those are campaign expenditures.

UNIDENTIFIED MALE: I still believe that there's not an FEC violation here.

UNIDENTIFIED MALE: If this is the guy who's going to save Donald Trump, I think Donald Trump is in trouble.

UNIDENTIFIED MALE: We've got Kim Jong Un entrusting us to be releasing three prisoners today.

SANDERS: We can't confirm the validity of any of the reports.

UNIDENTIFIED MALE: They don't want to have problems before the summit even starts. I believe that they're ready to deal.

(END VIDEO CLIP)

ANNOUNCER: This is NEW DAY with Chris Cuomo and Alisyn Camerota.

CHRIS CUOMO, CNN ANCHOR: Welcome to our viewers in the United States and around the world. This is your NEW DAY. It is Friday, May fourth, 6:00 here in New York, and here's our "Starting Line."

The White House is facing --