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EARLY START

Day Three of Manafort Trial Brings in Several Witnesses; Iran Begins Military Exercises in Persian Gulf; Mnangagwa Wins Zimbabwe Election. Aired 4:30-5a ET

Aired August 3, 2018 - 04:30   ET

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


(BEGIN VIDEO CLIP)

[04:30:51] KIRSTJEN NIELSEN, HOMELAND SECURITY SECRETARY: Our democracy itself is in the crosshairs.

DAN COATS, NATIONAL INTELLIGENCE DIRECTOR: We acknowledge the threat. It is real.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: We are being hindered by the Russian hoax. It's a hoax.

(END VIDEO CLIP)

DAVE BRIGGS, CNN ANCHOR: The president still dismissing the Russia investigation even after his own top officials blatantly warn Russia is still meddling in U.S. elections.

KAYLEE HARTUNG, CNN ANCHOR: The July jobs report is due out this morning. Why unemployment is expected to tick down but wage growth remains stalled.

BRIGGS: And who should be responsible for kids reunited with parents who are deported? Well, the government says it falls to the ACLU.

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

HARTUNG: I'm Kaylee Hartung. 31 minutes past the hour.

BRIGGS: Hi there.

HARTUNG: And we'll remind you again, it's Friday. Dave's happy about it.

(LAUGHTER)

BRIGGS: I'm just soaking in it. Bathing in it actually.

HARTUNG: Aren't we all? Well, if you listen to the president talk about Russia and listen to his top intel officials talk about Russia, there is a bit of a disconnect.

The president ranting once again about the Russian hoax hours after his own top officials called the Kremlin for interfering in U.S. elections. At a rally in Pennsylvania last night, the president touted the Helsinki summit with Vladimir Putin and completely ignored Russian attacks on American democracy.

(BEGIN VIDEO CLIP)

TRUMP: We got along really well. By the way, that's a good thing. Not a bad thing. That's a really good thing. Now we're being hindered by the Russian hoax. It's a hoax. Everybody said wow, that was a great -- that was great. A couple of hours later, I started hearing these reports that, you know, they wanted me to walk up. They wanted me to walk up and go like this. Son of a --

(END VIDEO CLIP)

BRIGGS: Some shadow boxing there from POTUS.

Hours earlier key members of President Trump's National Security team appeared in the White House briefing room to warn the country's Russia election interference is still ongoing.

(BEGIN VIDEO CLIP)

COATS: In regards to Russian involvement in the midterm elections, we continue to see a pervasive messaging campaign by Russia to try to weaken and divide the United States.

CHRISTOPHER WRAY, FBI DIRECTOR: Russia attempted to interfere with the last election and continues to engage and malign influence operations to this day. This is a threat we need to take extremely seriously and to tackle and respond to with fierce determination and focus.

NIELSEN: Our democracy itself is in the crosshairs. Free and fair elections are the cornerstone of our democracy and it has become clear that they are the target of our adversaries who seek, as the DNI just said, to sow discord and undermine our way of life.

(END VIDEO CLIP)

BRIGGS: Director of National Intelligence Dan Coats told reporters he still doesn't fully understand what took place in President Trump's one-on-one meeting with Vladimir Putin in Helsinki.

Meanwhile, a suspected Russian spy worked at the U.S. embassy in Moscow undetected for more than a decade before she was fired last year. A senior administration official telling CNN the woman, a Russian national, worked for years with the Secret Service. She first came under suspicion in 2016. A routine State Department security review found she was having regular, unauthorized meetings with Russian intelligence.

She used the Secret Service's Internet and e-mail systems, but the official says she did not have access to highly classified information. No comment thus far from the State Department.

HARTUNG: Turns out Rick Gates may testify against his old boss, former Trump campaign chairman Paul Manafort as early as today. That was just one of the big developments in the Manafort trial on Thursday. Another, Manafort's bookkeeper testifying that despite making millions, Manafort went broke and lied to banks to secure big loans.

CNN's Jessica Schneider has more from Washington.

JESSICA SCHNEIDER, CNN JUSTICE CORRESPONDENT: Kaylee and Dave, several revelations on day three of the Manafort trial. So first, the judge seemed to entice the defense team to have Paul Manafort himself take the stand. The judge said that Manafort obviously does not have to, but if his lawyers wanted to bring up that he has never been audited by the IRS, that would be the way to do it. And that's something the defense team wants.

[04:35:06] Also prosecutors now say they will call Rick Gates to the stand. Gates of course was Manafort's right-hand man during the campaign. Also in his lobbying business. And Gates has already pleaded guilty and is now cooperating with the special counsel.

And finally, Paul Manafort's bookkeeper testified that sure, he may have made millions, but by 2016 he was flat broke, he'd maxed out his credit line, and the bookkeeper even said that Manafort and Gates were then sending out fake inflated business statements to banks so they could get loans. And of course that gets to the heart of the prosecution's bank fraud case.

Plus the government keeps hammering home these lifestyle details. They had a landscaper talk about just how much Paul Manafort paid him. $500,000 for the upkeep of hundreds of flowers and what the landscaper called the largest personal pond in the ritzy Hamptons section of Long Island. Plus Paul Manafort spent $2.2 million on home entertainment technology including $10,000 on a karaoke system.

So a lot of details prosecutors have packed in. We're going to hear more from Manafort's accountant today as prosecutors continue to delve into all of his finances -- Kaylee and Dave.

BRIGGS: Sure was living the high life, it was indeed. Thank you, Jessica.

Senator Marco Rubio has a unique suggestion for paid family leave.

(BEGIN VIDEO CLIP)

SEN. MARCO RUBIO (R), FLORIDA: We're offering as an option for working American parents to take up to 12 weeks of leave when a new child is born and to use some of their own money from their own Social Security benefits to help compensate for their lack of a paycheck.

(END VIDEO CLIP)

BRIGGS: So Rubio is introducing a bill detailing his plan that would allow parents to use their future Social Security benefits for at least two months of leave. They would then delay receiving a retirement benefit by three to six months when they retire. But critics say the funding is actually misplaced and that workers shouldn't have to choose between paid leave and retirement security. Other lawmakers have similar ideas in the works and there seems to be a potential for a bipartisan effort.

HARTUNG: First daughter and presidential adviser Ivanka Trump distancing herself from her father's rhetorical blast against the media. At a public event Thursday Ivanka said she does not agree with his characterization of the press as the enemy of the people.

(BEGIN VIDEO CLIP)

IVANKA TRUMP, WHITE HOUSE ADVISER: I've certainly received my fair share of reporting on me personally that I know not to be fully accurate. So I've, you know, had some -- I have some sensitivity around why people have concerns and gripe, especially when they're sort of feel targeted. But no, I do not feel that the media is the enemy of the people.

(END VIDEO CLIP)

HARTUNG: But hours later, President Trump put his own spin on Ivanka's remarks with a tweet saying, "She's right. It's actually the fake news that is the enemy of the people."

BRIGGS: President Trump's eldest son says the platform of the Democratic Party is scarily similar to that of the Nazi Party in the 1930s. Donald Trump Jr. spoke to Jack Posobiec, a prominent right- wing voice online who helped spread the pizzagate hoax. Posobiec interviewed Don Jr. at the premiere of a new movie by controversial right-wing personality Dinesh D'Souza. Listen to this.

(BEGIN VIDEO CLIP)

DONALD TRUMP JUNIOR, PRESIDENT TRUMP'S ELDEST SON: You know, you see the Nazi platform in the early 1930s and what was actually put out there as -- and you look at it compare it to, like, the DNC platform of today, you're saying man, those things are awfully similar. To a point where it's actually scary.

(END VIDEO CLIP)

BRIGGS: Scary is his knowledge of history. We should note Don Junior's comment is a false equivalence. The Nazi Party's violent racism and anti-Semitism has no -- no counterpart in today's Democratic Party. Don Junior later fought back against attacks on his remark with a tweet that linked to a related clip from the new D'Souza movie. Wow.

HARTUNG: Wow.

Iran launching a major military exercise in the Persian Gulf. Tehran is likely to show its ability to shut down the oil flow through the Strait of Hormuz, a move with broad implications. This exercise was planned but it starts amid intensifying rhetoric with the U.S.

CNN's Nic Robertson joins us live from the Gulf of Oman near the Strait. Nic, what are the larger implication of this exercise? NIC ROBERTSON, CNN INTERNATIONAL DIPLOMATIC EDITOR: Yes, well, given

that there's been an increase in rhetoric recently between Washington and Tehran, principally coming from Tehran because sanctions are about to be imposed again following President Trump pulling out of the Iran nuclear deal. The Iranian leadership from the leader of Iran Islamic Revolutionary Guard Corps to the president of Iran, to the supreme leader of Iran have all said if Iran cannot export its oil products through the Straits of Hormuz, then no one can.

[04:40:05] That's the threat they've mad. So these major military exercises that U.S. officials believe that they're saying in the Straits of Hormuz now involved dozens of smaller vessels, the concern is the Iranians putting meat on the bones of those threats. President Trump has been very clear. Don't threaten the United States or there will be serious consequences. So throughout this region here, everyone is watching and looking to see how it develops.

No comment from the Iranians yet. No comment, for example, from the UAE and other Gulf countries. This is a United Arab Emirates, UAE, oil port terminal. And this terminal has been developed to avoid the Iranians' ability to shutdown the Strait of Hormuz because it would -- it bypasses the strait with a pipeline that comes from further up the Gulf, passes about 1.5 million barrels of oil a day. So of course this is strategic. It's important and it has everyone worried and it's not clear at all at this time what Iran's real intent is other than some of these sanctions are going to begin to start biting next week -- Kaylee.

HARTUNG: Nic, thanks for being live with us.

Secretary of State Mike Pompeo urging Turkey to release American pastor Andrew Brunson. Pompeo said he delivered that message to Turkey's foreign minister before their meeting at a high level Conference of Asian Nations in Singapore. After their meeting, Turkish foreign minister said using threatening language or sanctions will not be productive. Earlier this week the U.S. Treasury Department placed sanctions on top Turkish officials in response to Brunson's detention. Brunson is an evangelical pastor from North Carolina who has been held for nearly two years over alleged links to a failed coup.

BRIGGS: Turns out Tennessee could play a key role in determining which party controls the U.S. Senate in the fall. Former Tennessee governor, Phil Bredesen, a moderate Democrat, and conservative Republican congresswoman, Marsha Blackburn, won their respective state primaries Thursday. The two will face off in November in a race that is expected to be one of the most hotly contested of the midterm elections. Republicans did not expect a challenge in ruby red Tennessee, but Bredesen's cross party appeal could help Democrats in the race to replace Senator Bob Corker.

This is a state President Trump carried by 26 points so this is an interesting turn and another one of those bellwethers do we see what is that national mood.

HARTUNG: Another state like Georgia who you think is ruby red in so many sense of that.

BRIGGS: Yes.

HARTUNG: Of that connotation and yet --

BRIGGS: The south will be interesting.

HARTUNG: It will be. It will be.

But, you know, the NFL preseason is under way.

BRIGGS: Right.

HARTUNG: How about that? No protests, but a video game mistake. It shows the national anthem controversy is not going away.

(COMMERCIAL BREAK)

[04:46:57] HARTUNG: Well, The trump administration believes the responsibility for finding parents deported after they were separated from their children should rest with immigrant advocates, not with the federal government. Justice Department lawyers saying the government would turn over whatever information it could on the parents who were deported, but they say the ACLU, quote, "should use their considerable resources to establish contact." ACLU lawyers argue the Trump administration is trying to shirk its responsibility, choosing to leave an estimated 431 separated kids whose parents were already deported in limbo.

BRIGGS: The Trump administration headed toward a showdown with California over fuel efficiency standards for both cars and trucks. The Trump plan calls for freezing emission standards through 2026. It would also revoke California's ability to set its own tougher standards which are followed by about a dozen states. This marks a sharp reversal from the Obama administration which worked with California and the auto industry to set uniformed national fuel economy standards. California already hinting it will file suit. If it wins, carmakers could face the prospect of manufacturing vehicles to meet rules that vary from state to state. That would be devastating for an already struggling U.S. auto industry.

HARTUNG: Houston police back at the home of Joseph Pappas overnight responding to a call about a possible sighting of the man who's the prime suspect in the shooting death of Dr. Mark Hausknecht, a prominent cardiologist who used to treat President George H. W. Bush. The day before the killing, authorities are saying Pappas transferred the deed to his home to a woman who live in Ohio. Janette Spencer tells the "News Herald" in Ohio Pappas claimed he had a terminal illness. The suspect has not been seen for several days. Police believe Pappas committed the murder over a 20-year-old grudge. It turns out his mother died during an operation performed by Dr. Hausknecht.

BRIGGS: "The New York Times" standing by its new hire despite rhetoric she's used on Twitter being blasted as racism. Sarah Jeong, who's Asian, has drawn scrutiny after old tweets she posted resurfaced. One of the tweets in question says she gets joy out of being cruel to old white men. Another referred to dumbass blanking white people, marking up the internet with their opinions like dogs kissing on fire hydrants.

The "Times" ultimately backed Jeong who will join the editorial board next month. The "Times" noted some of her tweets were in response to frequent online harassment. Jeong saying, "I engaged in what I thought of at the time as counter trolling. I deeply regret that I mimic the language of my harassers."

HARTUNG: And it was business as usual for CBS CEO Les Moonves. Addressing the company's second quarter earnings on a conference call, but avoiding what was on everyone's mind. Sexual harassment allegations against him. The company representative at the start of the call said questions would be limited to quarterly results, quote, "on the advice of counsel." Last week a "New Yorker" published allegations from six women who say Moonves sexually harassed them. Moonves has acknowledged mistakes that, quote, "may have made someone uncomfortable."

[04:50:02] CBS is hiring two outside law firms to investigate the claims. The company stock is down almost 9 percent since the news about Moonves broke.

BRIGGS: Residents in parts of Virginia being ordered to evacuate over a potential dam failure. The officials in the city of Lynchburg are urging people in the area of Black Water Creek Trail to leave. Residents in low-lying areas below the college lake dam being urged to move to higher ground. If a complete failure of the dam occurs, the water depth could climb above 17 feet in just seven minutes.

HARTUNG: EA Sports is apologizing for editing Colin Kaepernick's name out of the soundtrack for its Madden 2019 game. In a video posted on Twitter early Thursday morning, the part of Big Shawn's verse that mentions Kaepernick on rapper YG's Big Bank has been removed. EA Sports often edits sensitive or vulgar content, but the company admits it made an unfortunate mistake this time, saying, "Members of our team misunderstood the fact that while we don't have rights to include Colin Kaepernick in the game, that doesn't affect soundtracks. We messed up and the edit should never have happened."

This episode clearly shows the national anthem issue remains front and center as the NFL preseason begins. There were no protests at last night's Hall of Fame game with the Ravens defeating the Bears 17-16.

Did you know Ray Lewis go into pro-football hall of fame?

BRIGGS: I was about to say.

HARTUNG: I could not be more excited about that or a Ravens preseason --

BRIGGS: No protest. But dancing for Ray Lewis. Light sound is still in effect.

Good to have the NFL back but I don't know what they're going to do about this issue.

HARTUNG: I don't either.

BRIGGS: They clearly don't either. Let us know what you think they ought to do at EARLY START on Twitter.

Ahead, Apple is now worth $1 trillion.

HARTUNG: All the zeros.

BRIGGS: Look at all those zeroes. 12 of them. We'll put that number into perspective and show you how it got there when we get a check on CNN Money next.

(COMMERCIAL BREAK)

[04:56:36] HARTUNG: Zimbabwe has its first elected president since the fall of Robert Mugabe. Incumbent Emmerson Mnangagwa declared the winner of Monday's disputed election. This week's election marred by clashes between security forces and opposition supporters that left six people dead.

Let's go to Zimbabwe's capital city and bring in CNN's David McKenzie.

David, it looks quiet behind you. How is the situation there evolving?

DAVID MCKENZIE, CNN INTERNATIONAL CORRESPONDENT: Well, Dave, at this hour calm -- Kaylee, good morning. But you see the riot police in their armored vehicle behind me right outside the headquarters of the opposition party. So that shows that it's anything but normal here in Zimbabwe. And in the early hours of this morning, the electoral commission announced that Emmerson Mnangagwa, the incumbent, had won this election by just over 50 percent.

Now the opposition leader telling me they will contest this result by any means -- legal means necessary. But they might not gain any favors in the Zimbabwean court. U.S. citizens being asked to keep off the streets here in downtown. It will be very crucial to see what the European Union and the U.S. says about the disputed election. Already the South African president, very powerful country on this part of the world, has endorsed this election as well as the regional bloc.

So it would be very difficult for the opposition to move beyond this point. We will have to see if the opposition calls for protests. Earlier this week, they had deadly clashes that killed at least six people down here in downtown Harare -- Kaylee.

HARTUNG: David, thank you for your reporting from Zimbabwe for us.

BRIGGS: 4:58. A check on CNN Money this morning. Stock futures ticking lower this morning. The market finished mostly higher yesterday with tech stocks carrying the gains. Stock markets in Europe and Asia are a mix right now. Investors awaiting the July jobs report. Due an hour before the opening bell. The forecast is 190,000 new jobs. The unemployment rate is expected to tick down. Wages forecast to hold steady.

Apple is the darling of Wall Street this morning. The stock popped 3 percent yesterday to cap off a historic run. Apple is now the most valuable company in U.S. history. Worth more than $1 trillion in market value. The stock is up 22 percent this year. More than 200 percent over the past five years. At the start of that span, its market capital is below $500 billion.

Here is some perspective on that number. There are only 16 countries in the world that have a GDP of more than $1 trillion. Or this, the market cap for the four biggest banks in the U.S., add all four together and you get just over $1 trillion in value. Wow.

The latest company to drop plastic straws? Shake Shack. And it plans to get rid of all of them within the first quarter of next year. The burger joint CEO mentioned the move on the company's earnings call. It follows other big names ditching plastic straws including Starbucks, Disney and American Airlines. Shake Shack stock is an incredible 48 percent up this year. Set to drop, though, this morning. Though investors don't like the company's outlook following its earnings report yesterday.

The plastic straw is a big deal. McDonald's I know testing some alternatives this year. It looks like that's going to be the move across all fast food joints.

HARTUNG: I volunteer to go to Shake Shack and test out the new straws.

BRIGGS: Test them out? Let's go. When do they open? I think they serve breakfast in some locations.

HARTUNG: Not soon enough.

BRIGGS: Including the airports.

HARTUNG: It's 4:59 in the East right now. I'm guessing Shake Shack won't be open an hour from now when the show is over. EARLY START continues right now.