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EARLY START

Decision Soon On Trump Interview With Mueller; Dinners & fundraisers on Trump's New Jersey's Schedule; Some International Companies Already Pulled Out Of Iran; Alcoa Seeks Exception For Aluminum Tariff; California Wildfire Explodes In Size; Ohio Special Election: A Referendum On Trump; LeBron James Partners With Showtime. Aired 4:30-5a ET

Aired August 7, 2018 - 04:30   ET

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


[04:30:41] PHIL MATTINGLY, CNN ANCHOR: Stunning testimony from the star witness against President Trump's former campaign chairman. Rick Gates says he broke the law for Paul Manafort and also stole money from him.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We're going to put all of the sanctions back in as they were before and more.

(END VIDEO CLIP)

CHRISTINE ROMANS, CNN ANCHOR: Economic sanctions on Iran now back in effect as of this midnight. Will the pressure on Tehran force a further split with Europe?

MATTINGLY: Two fast moving fires merging into one massive inferno becoming the largest ever wildfire ever in California history.

ROMANS: But why does American's largest aluminum maker want an exemption from the tariff that supposed to help its business?

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

MATTINGLY: And I'm Phil Mattingly. Its 30 minutes past the hour. We are rocking and rolling.

ROMANS: Yes, 4:31 everybody, get up.

MATTINGLY: Paul Manafort's right hand man Rick Gates is back on the witness stand this morning. And the one-time Trump campaign chairman trial on tax and fraud charges.

Now the stakes are high for the White House even though Trump in the Russian investigation all together aren't necessarily involved. Manafort and his deputy together know a great deal about what went on behind closed doors during key months of the 2016 campaign.

And yesterday, Gates admitted under a grant of immunity he committed crimes alongside his former boss and against him as well. CNN Kara Scannell has more from the federal court in Alexandra, Virginia.

KARA SCANNELL, CNN REPORTER: Rick Gates the government star witness took the stand in the showdown we've been waiting for. Gates testified for 45 minutes. And during that time, Manafort stared him down sitting just seats away from Gates in the witness chair.

Now Gates averted Manafort's gaze, addressing his answers only to the prosecutors who asked him to explain what crime he had submitted and if he committed crimes with Manafort, it's the best he had.

He explained that he helped Manafort file false tax returns and then also helped him set up 15 overseas accounts that were used as part of the alleged crime. And Gates offered a surprised twist, saying that he had of himself defrauded Manafort, his mentor and long-time boss. That he had stolen several hundred thousands dollars from him by inflating his expense accounts.

Now Gates' testimony is expected to continue again on day six of the trial. But prosecutors intend to question him for another three hours. Christine and Phil.

ROMANS: All right, Kara Scannell for us in Virginia. Thanks Kara.

Donald Trump Jr. is dismissing the significance of his Trump Tower meeting and accusing the Russian of pulling a bait and switch. The President's son selecting a sympathetic environment to discuss the controversy, a Laura Ingraham radio show.

Don Jr. claiming the Russians secured the meeting by promising dirt on Hillary Clinton, but only wanted to discuss adoptions once everybody was in the room.

(BEGIN VIDEO CLIP)

DONALD TRUMP, JR., SON OF PRESIDENT TRUMP: In a 20-minute meeting. It ended up being, about essentially nothing that was relevant to any of these things. And that's all it is. And that's all they got. That's not the premise that got them in the room. It was essentially a bait and switch to talk about that. And everyone has basically said that in testimony already. And so this is nothing new.

(END VIDEO CLIP)

ROMANS: The president's son said all of the media scrutiny surrounding his 2016 meeting with the Russians is simply an attempt to divert attention from his father's accomplishments.

MATTINGLY: Now this week, President Trump is he on with the White House calls a working vacation in New Jersey golf club, shadow President's time off, Special Counsel's Russia probe. He tweeted repeatedly for the weekend about the Trump Tower meeting and other aspects of Robert Mueller's investigation.

CNN has learned advisers are now urging the President to cool it with the Trump Tower tweets since they only give oxygen to the topic.

Senior White House correspondent Jeff Zeleny has the latest.

JEFF ZELENY, CNN SENIOR WHITE HOUSE CORRESPONDENT: Christine and Phil, President Trump continues his working vacation here in New Jersey, one thing is clear he's staying out of public view at least so far, but it's clear what his on his mind. At least one of the things on his mind, that Russia investigation.

We saw the tweets over the weekend when he was talking about specifically, again trying to explain what happened in the Trump Tower meeting, that key meeting in June of 2016. The President, of course, saying that nothing was wrong.

It was simply trying to get opposition research on Hillary Clinton. Well, of course, that is not the original explanation from a year ago. So, we know a couple of things since that tweet over the weekend. We know as we head into the week, the President's aides and lawyers are asking him not to tweet specifically about that Trump Tower meeting.

[04:35:06] And this is why. It's adding more complication every time he weighs in. It complicates the previous explanations for it. We also are hearing from the President's aides that they believe in the next coming days at least they say the President's legal team will have an answer or response at least to Bob Mueller's team.

Will he sit for the interview under what conditions will the President sit for an interview? And that someone that they hope to have accomplished by the end of this working vacation. He'll be meeting with CEOs on Tuesday night, tonight for dinner at his Bedminster golf club doing fundraisers here as well.

But so far, nothing else on the schedule. But again, it's clear this working vacation still has Russia hanging over it. Christine and Phil.

ROMANS: All right, thanks for that Jeff Zeleny.

Just a few hours ago, at midnight eastern, U.S. sanctions against Iran went back into effect by order of President Trump. The renewed sanctions targeting gold, steel, aluminum and currency, they had been suspended as part of -- remember the 2015 Iran nuclear deal.

But other nations that signed the nuclear deal remain in the agreement. And some have pledged to keep up trade and cooperation with Iran. So, is America going it alone this time?

Senior International correspondent Nick Paton Walsh joins us live from London. Nick, stroke of midnight, snap that sanctions in effect?

NICK PATON WALSH, CNN SENIOR INTERNATIONAL CORRESPONDENT: Absolutely. We're likely that I think to see suddenly this morning the Iranian economy taking it to further slip. It has been in trouble frankly for the past months if not years. Even limited pockets of protesters, as result of the collapse of the local currency, a lot of these to do with sanctions increasing and the threat of them building up to this particular midnight moment. You point out that though, the U.S. is kind of going it alone here though. But it sort of sides as the big beast in the global economy means that European allies who disagree suddenly (ph) with Trump administration pulling out of the new clear agreement that took so many years to finally construct the size of the U.S. and fact that these European allies don't necessarily want to irritate it by still doing business with Iran or even face U.S. sanctions.

Means this is having a much broader global effect. China however coming in taking up some of the short will some say in Iranian economy as well. An energy (ph) pointed out to Europe saying quite gladly they will assist legitimate business continued in Iran. I'm not sure what they mean by legitimate.

But in the backdrop of all these, some sort of last minute diplomacy, you might say here the President of Iran Hassan Rouhani saying how he could right now negotiate with Donald Trump. It seems to have a few caveats attached to it. He appears to want sanctions dropped first and says you don't talk to somebody who's got a knife in your arm or your back paraphrase slightly there.

But it does appears just feel that Iran has under duress and some of that should be lifted. Of course there are Iranian hardliners who think talks are bad idea. And of course there are American hardliners notably John Bolton and Mike Pompeo the Secretary of State who think that there should be 12 things Iran does before talks are possible.

But it could just be that Iran has seen how kind of cloudy the atmosphere was after Washington's talk with North Korea and with Vladimir Putin in Russia in Helsinki. How the enemies Frankly of Washington managed to set the agenda from those particular talks and maybe they see a window possibly there of opportunity.

We don't know, but we do know it's November where the big sanctions on banking all kicking in and seriously will have an effect right when Donald Trump has facing midterms, Christine.

ROMANS: All right. Nick Paton Walsh for us in London, thanks Nick.

MATTINGLY: Exhausted California firefighter struggling to contain the16 major wildfires now devastating the state. One has exploded over the last three days, nearly doubling in size. Mendocino Complex fire is now the largest in state history.

Flaming scorched nearly 248,000 acres. Surpassing the Thomas fire from last December. Mendocino Complex fire is actually two wildfires burning around clear lake across several Northern California counties. As of last night, the fire was just 30 percent contained. More than 100 residences already have been destroyed.

ROMANS: All right the largest U.S. aluminum maker wants an exemption from the tariffs designed to help them. Alcoa is asking the Commerce Department for exemption from a 10 percent tariff on imported aluminum. Why?

Well, Alcoa makes aluminum for beverage cans in Canada and even with new plants opening in the U.S., Alcoa says it's not enough to fill all its orders. The Trump administration slapped tariffs on foreign steel and aluminum earlier this year.

The goal was to prop up the U.S. industry. While it does helps some companies and it hurts those that relying on foreign metals, that because U.S. companies pay import tariffs and many are raising prices like Coca Cola where they issuing profit warnings as they get hit by high costs like Whirlpool, Tyson or U.S. car companies.

It's unclear if Alcoa will get an exemption. But the Wall Street Journal editorial board slamming the entire process as "Everything Republicans typically claim to hate writing, want a steel exemption? Meet your new commerce overlord. In that in addition to harm tariff do economically. They also create new opportunities for crony capitalism and corruption. Far from draining the swamp, tariffs feed the swamp."

[04:40:09: The pro business Wall Street editorial board very unhappy with the President's tariff found. Yes, regardless of your political view point.

MATTINGLY: Yes, regardless of your political viewpoint, the journal and board has a way of just kind of --

ROMANS: Getting right in there. Yes.

MATTINGLY: Stop messing around. All right, still to come, a frightening sight from behind the wheel. More on this deadly explosion caught on video just ahead.

ROMANS: Plus, what today's high stakes special election in Ohio could tell us about the November midterms.

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ROMANS: All right. Welcome back. 44 minutes past the hour this Tuesday morning. Democrats and Republicans will be glued to Ohio's 12th congressional. Tonight, as voters head to poll for special election to fill a vacant house seat.

The 12th District historically leans Republican, but 31-year-old Democrat Danny O'Connor is surging in the polls against Republican Troy Balderson in a race that could prove, could prove to be a bellwether for a blue weave in November.

[04:45:09] We have more from Jason Carroll in Delaware, Ohio.

JASON CARROLL, CNN NATIONAL CORRESPONDENT: Christine and Phil, it's really down to wire at this point that Republican state Senator Troy Balderson really should be writing his victory speech, but instead his fighting for every possible vote that he can get here in 12th District against his opponent, Danny O'Connor.

The race at this point is just too close to call, which is really come to be somewhere of a surprise for some Republican here because this is a seat that Republicans have held solidly for decades. But not this go around. What ends up happening in this race could very well end up pivot on independents, who they end up voting for.

We spoke to some independents out here in the district and they tell us who they end up voting for very much may pivot on how the President, how they feel the President has been doing while in office.

(BEGIN VIDEO CLIP)

MARA PROTICH SUPPORTS O'CONNOR: I believe that a man's character is very important and I don't believe that our President currently has my best interests at heart and I've watched some of the things that have happened in the past few months and it's a little scary.

CARROLL: So you're defining decision wasn't about both candidates, but about the President?

PROTICH: More about getting Democratic back into office and really for the people.

APRIL KENNEDY, SUPPORTS BALDERSON: I think I'm probably a lot like millions of Americans where it's not necessarily like the candidate of choice, but who you dislike less. And I think that during the presidential election, I believe that Donald Trump ended up in office. I don't think the whole world thought he was the perfect candidate nor has he proven to be, but I think this race with Balderson is the same way.

(END VIDEO CLIP)

CARROLL: Of course President Trump was here over the weekend to rally the base and try to shore up support for Balderson. It should be noticed that President Trump carried this district by some 11 points two years ago. But again, right now as voters head to the polls this morning, the race is just too close to call. Christine, Phil.

MATTINGLY: We want to keep an eye on. Thanks Jason Carroll from great state of Ohio.

Now InfoWars and its founder Alex Jones have been removed from YouTube, Apple and Facebook. All three tech giants say the site violated their content policies. The move shutdown key distribution channel that gave Jones access to millions of internet users, most dramatic action coming from YouTube, which remove his main channel and that channel had 2.4 million subscribers.

InfoWars did not respond to a request for comment. The site is notorious for it's false conspiracy theories including it claimed that Sandy Hook massacre was a hoax and they called the 9/11 attack an inside job orchestrated by the U.S. government.

ROMANS: Among many other conspiracies.

Right a deadly explosion caught on video in Italy.

The man gets the shot at the blast on his cell phone during his commute in Bologna. Official say a gas tanker exploded after running into a back of another truck. Three people were killed between 60 and 70 others were injured, some with serious burns. The cause of the accident is under investigation.

MATTINGLY: Amnesty International says the number of civilian deaths in the U.S. lead air campaign gainst ISIS in Raqqah is likely much higher than first thought. The group latest report says the U.S. military has acknowledge after earlier strong denials than it's 2017 air riads killed at least 77 civilians.

But Amnesty International says this number is "Only the tip of the ice berg". CNN's Arwa Damon has more live from Istanbul. Arwa, I think this is one the kind of untold stories right now particularly the shift and the roles of engagement in the Trump administration. What are you seeing? What are you hearing right now about what's actually happening on the ground?

ARWA DAMON, CNN SENIOR INTERNATIONAL CORRESPONDENT: It's so complicated because the U.S. military historically has been fairly reluctant to acknowledge civilian casualties and tend to really only do so when they say that they received credible information that they had taken place, which is in fact what they're doing not just in Raqqah but in Mosul as well.

But when you look at the sear scale of the bombardment, when you taken to consideration the fact that ISIS was well-known for holding civilian hostages in their own homes especially as battles were intensifies for both Raqqah and Mosul in and of itself, the numbers are most certainly only going to rise at this stage when you went into Raqqah and the days right after it was recaptured from ISIS.

There were parts of it, Phil, where you didn't see any color, because that's how decimated the building were, everything was just gray. People who we spoke too back then talking about the intensity of the fight and the intensity of the bombardment how they're literally was nowhere to run. It's truly hair raising.

The issue is not just acknowledging and taking responsibility but it's also just as important to give the families of the victim that sense of justice for there to be preparation done to them.

[04:50:10] It's these various societies are going to have a chance of trying to recover from these atrocities that they have been subjected to.

The atrocities they were subjected to under ISIS and then the horrors of the fight to liberate the various respective cities. And just to give you an idea, the coalition itself is investigating hundreds of what it says are credible reports about casualties it may cause.

And in the timeframe from August of 2014 to June of 2018, it says it carried out around 30,000 strikes. And it is at this stage saying that unintentionally caused the deaths of around 1,059 civilians. But again, these are only cases that it is in fact investigating and there's no real mechanism in place for them to look further into it.

What Amnesty International and so many others really want to see is a more concerted effort to give justice where justice is due, because that is going to have long-term implications. MATTINLY: Yes, that exactly right. We'll see if actually get that. Arwa, this is really important story. Thank you for all of your reporting on it.

The pentagon is banning deployed military personnel from using electronic devices that have geo location, where will fitness trackers in some smartphone apps that could disclose the user's location. A possible security breach.

Now the new policy comes after it was revealed back in January a fitness tracking app that maps people exercise routines may have actually inadvertently revealed the location of security forces around the world. Defense officials say the devices themselves will not be banned. Service members will be responsible for ensuring that geo location features are disabled.

ROMANS: All right, the day at the zoo turns dangerous. More on the sudden destructive weather coming up.

MATTINGLY: Plus, remember when a TV host told LeBron James to shut up and dribble? Will tell you how the NBA Super Star has turned those words around.

(COMMERCIAL BREAK)

[04:56:44] MATTINGLY: A powerful hail storm wreaked havoc at the Colorado zoo. Take a look at this.

Two animals were killed and 14 people injured as chunked of hail, some as big as softballs, rained down Monday at the Cheyenne Mountain Zoo in Colorado Springs. Sudden barrage send bears running for cover in their enclosures.

Hailstorm damaged buildings and animal habitats. Five of the people injured were taken to the hospital for treatment. Officials say that zoo will be closed today while they assess the damage.

And Showtime is partnering with LeBron James on three-part documentary entitled "Shut Up and Dribble." The series will examine the changing roles of athletes in today's cultural and political environment through the lens of NBA.

Now it is set to premier in October. Series well, you might recognize his name. It came from a comment made by Fox News host Laura Ingraham back in February.

(BEGIN VIDEO CLIP)

LAURA INGRAHAM, FOX NEWS HOST: LeBron and Kevin, you are great players, but no one voted for you. Millions elected Trump to be their coach. So keep the political commentary to yourself or someone once said shut up and dribble.

(END VIDEO CLIP)

MATTINGLY: All right. Ingraham suggested "Shut Up and Dribble" after James publicly voiced support the Golden State Warriors and their decision not to visit President Trump at the White House.

ROMANS: All right, it's about the top of the hour. Time for a check on CNN Money. This morning Corporate America making profits, both sending stocks around the world higher, Europe and Asia pushing aside those trade fears to open higher. Wall Street closed higher also thanks to some big earnings. Like Warren Buffett and Berkshire Hathaway, it rose two percent after profits jumped 67 percent there.

It's been stellar second quarter. Corporate Profits are up 23.5 percent, the second best quarter since the recession. And the season is not over yet. Today, expect to hear from Snap, Disney and Papa John's and Avis.

One of the prominent woman leading Fortune 500 Company is stepping down. Pepsi CEO Indra Nooyi exits on October 3rd. She'll be replaced by Pepsi's Global Operations Chief Ramon Laguarta. Nooyi helped turn Pepsi into one of the most successful food and beverage company in the world. Sales grew 80 percent during his 12 year tenure. She's also one of just a handful of people of color and a woman to lead a Fortune 500 Company. Her departure leaves 24 women.

Do you have a movie pass? The movie subscription service will now limit you to three movies per month. Previously customers could one movie per day. But MoviePass is running out of money and it need to save cash to stay in business is because of its low subscription price, just $10 per month, that less than some movie tickets.

And MoviePass has to pay theaters to make up the difference. MoviePass says most customers already receive three movies or less per month. The change begins of August 15th.

MATTINGLY: Kind of perplexing business model.

ROMANS: Yes, they're making promises they cannot keep.

MATTINGLY: It definitely works. We are just short of 5:00 a.m. in the east. And "EARLY START" continues right now.

Stunning testimony from the star witness against President Trump's former campaign chairman. Rick Gates says he broke the law for Paul Manafort and also stole money from him.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: We're going to put all of the sanctions back in as they were before and more.

(END VIDEO CLIP)

ROMANS: Economic sanctions on Iran now back in effect as of midnight. Will the pressure on Tehran force a further split with Europe?

MATTINGLY: Two fast moving fires merging into one massive inferno being the largest ever wildfire in California.