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EARLY START

Holy Fire Prompts State Of Emergency In Southern California; Prosecutors Expected To Rest Today In Manafort Trial; Leave Immediately: U.S. Navy Plane Warned Over South China Sea; Aired 5:30-6a ET

Aired August 10, 2018 - 05:30   ET

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


(COMMERCIAL BREAK)

[05:30:23] (BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Anybody found?

UNIDENTIFIED MALE: No, nobody's here. We need fire trucks.

UNIDENTIFIED MALE: Yes.

(END VIDEO CLIP)

PHIL MATTINGLY, CNN ANCHOR: Forced evacuations overnight as homeowners wage a desperate battle against a raging wildfire.

CHRISTINE ROMANS, CNN ANCHOR: NFL players seen kneeling during the National Anthem last night. How will President Trump respond?

MATTINGLY: And the so-called Manhattan Madam testifies in front of Robert Mueller's grand jury in just a matter of hours.

(BEGIN VIDEO CLIP)

MIKE PENCE, VICE PRESIDENT OF THE UNITED STATES: The time has come to establish the United States Space Force.

(END VIDEO CLIP)

ROMANS: The Trump administration shoots for the stars, but what would this brand new branch of the military do?

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

MATTINGLY: And I'm Phil Mattingly. We're about half past the hour into quote my esteemed colleague to my left during the commercial break. We are in the home stretch, my friend.

ROMANS: The home stretch.

MATTINGLY: And it's Friday --

ROMANS: The beginning of your Friday.

MATTINGLY: -- and that's what really matters.

All right, breaking overnight, California declaring -- California's governor declaring a state of emergency as the raging Holy Fire inches closer to homes in the southern part of the state.

Here's what we know at this hour. The inferno is only five percent contained. More than 21,000 people are under mandatory evacuation and so far, more than 10,000 acres have been burned.

These images are emerging from overnight. Massive flames from the Holy Fire bearing down on this neighborhood in Lake Elsinore. Firefighters actually urging a man to leave after he was spotted using a garden hose to put embers out on his roof.

Earlier in the evening, a man captured flames on his cell phone burning right in his backyard. He eventually left. He told CNN he's not sure if he'll even have a home when he returns.

CNN's Stephanie Elam brings us the very latest from fire-ravaged Lake Elsinore, California.

(BEGIN VIDEOTAPE)

STEPHANIE ELAM, CNN CORRESPONDENT: Christine and Phil, this is the concern.

We are here at the Holy Fire and take a look at how this hillside is going up right now. And if you look downhill -- if you slowly find your way down here you will see that firefighters are taking a stand here. These blazes going up right behind these homes.

It is casting so much dark smoke in the sky you can't even tell how bright it is here right now.

They are fighting this and one of the huge problems that they have right now are the winds, and these winds are not expected to let up anytime soon. So with that in mind, firefighters are saying that they are nowhere near containing this fire here -- Phil and Christine.

(END VIDEOTAPE)

ROMANS: All right, Stephanie -- stay safe, please.

The National Anthem kneeling controversy is alive and well in the NFL.

(BEGIN VIDEO CLIP)

National Anthem being sung, NFL players kneeling.

(END VIDEO CLIP)

A full schedule of preseason week one games last night and take a look at Miami Dolphins wide receivers Kenny Stills and Albert Wilson taking a knee during the Anthem before taking on the Tampa Bay Bucs.

Four members of the Jacksonville Jaguars and three players of the Seattle Seahawks also made statements by waiting in the tunnel during the Anthem before taking the field last night.

The NFL says no punishment will be handed out while it continues to work with the players union on a mutually agreeable policy.

MATTINGLY: Later today, the Manhattan Madam, Kristin Davis, appears before a federal grand jury in Washington. That grand jury is hearing evidence in special counsel Robert Mueller's Russia probe.

Now, it is not currently clear what prosecutors actually want to ask Davis. She interviewed voluntarily last week with members of Mueller's team.

One possible line of inquiry is from longstanding connections to Roger Stone, the veteran political consultant and very close Trump adviser who has become a central subject in the Russia investigation.

ROMANS: The prosecution is expected to rest its case today in the fraud trial of former Trump campaign chairman Paul Manafort.

Over the last eight days, the court has heard testimony about Manafort's extravagant wardrobe, secret offshore bank accounts, fake loan applications, doctored bank accounts.

His longtime deputy Rick Gates flipping to become the star prosecution witness. And as the defense prepares to offer up its case, a court filing from special counsel Robert Mueller is sending a clear signal that Gates is also assisting with the Russia probe.

We get more from CNN's Kara Scannell.

(BEGIN VIDEOTAPE)

KARA SCANNELL, CNN REPORTER: A new detail in the special counsel's investigation was revealed not in court, but in a filing. Prosecutors asked the judge to seal a portion of a sidebar that took place when Rick Gates was on the stand.

Paul Manafort's attorney had just asked Gates about any interviews he had with the special counsel's office concerning his time on the Trump campaign. Gates worked as Paul Manafort's deputy on that campaign and continued on working with the inauguration.

Now, the judge agreed to seal it after prosecutors said that it revealed substantive evidence of an ongoing investigation.

Now, inside court, the jury heard a lot of details about bank fraud allegations, specifically focused on one $3.4 million loan Paul Manafort had taken out from a bank. He had told the bank that it was a second home and prosecutors say that that was a lie and provided the bank's false information when it was actually rental property.

[05:35:15] They showed Airbnb records indicating that Manafort had rented out the property and they also had one of the mortgage bankers testify. She said had she known it was a rental that Manafort would not have gotten as much money. Instead, he exceeded the bank policy by $2.4 million. Now, prosecutors have four more witnesses they plan to call. Two of those have immunity deals. And prosecutors say they intend to wrap their case today -- Christine, Phil.

(END VIDEOTAPE)

ROMANS: All right, Kara. Thank you.

Kansas Secretary of State Kris Kobach says he will recuse himself from overseeing the still undecided gubernatorial primary race between himself and incumbent Gov. Jeff Colyer. Kobach leads by a razor-thin 91 votes.

After discrepancies were found in vote totals from at least two counties, he is expected to recuse himself today after Colyer made the demand in a letter last night.

(BEGIN VIDEO CLIP)

KRIS KOBACH (R), KANSAS GUBERNATORIAL CANDIDATE: Well, the counties did the counting of ballots so it's -- there's really no point to it. But I said if my opponent wishes me to I'd be happy to.

But it's fairly symbolic. I don't think he understands the process.

(END VIDEO CLIP)

ROMANS: Thousands of provisional and mail-in ballots still have to be counted. Election officials are blaming a clerical error in one county where Gov. Colyer was shortchanged 100 votes.

MATTINGLY: All right.

Right now, let's bring in political economist Greg Valliere, chief strategist for Horizon Investments.

ROMANS: Hey, Greg.

MATTINGLY: Good morning, Greg.

GREG VALLIERE, POLITICAL ECONOMIST, CHIEF GLOBAL STRATEGIST, HORIZON INVESTMENTS: Hey, guys.

MATTINGLY: Always a pleasure to talk to you. You're one of the smartest guys in town.

ROMANS: Yes.

MATTINGLY: I wanted to bring up -- obviously, we're talking about Kansas.

I want to bring up something else that happened on Tuesday and that was Ohio 12. Obviously, a very, very close race. You can bring up the results right now. It still hasn't actually been called.

But one of the most interesting elements about this race is towards the end Mr. Balderson, the Republican candidate, was not actually talking about an economy that was growing over four percent --

VALLIERE: Yes.

MATTINGLY: -- last quarter. He was not talking about the tax cuts.

Things are good economically right now, Greg. Why aren't they talking about this?

VALLIERE: Look, it's really a remarkable story, Phil.

You've got a situation where Republicans are almost running away from the issue of the Trump tax cuts. Polls are showing that an awful lot of voters feel that only big business and the very wealthy benefitted.

So they're not -- they're not talking enough. They're not bragging about an economy that's growing by about four percent right now.

ROMANS: Yes, and instead focusing on things like the NFL protests -- I mean, the president, at least.

VALLIERE: Yes.

ROMANS: And, you know, the things that -- we keep saying why does he keep pivoting away from the strong economy. Why doesn't he talk more about the strong economy? But it's those other issues that maybe he thinks are going to play better for those voters that he wants.

VALLIERE: Yes. I mean, there are going to be a lot of really interesting issues.

A big piece in "The Washington Post" this morning about Nancy Pelosi --

ROMANS: Right.

VALLIERE: -- who I think will be a liability.

ROMANS: Pelosi causing jitters in the party, is that right?

VALLIERE: Yes, exactly right -- yes, yes.

Obviously, immigration is going to be a strong issue, I think, for Trump.

But another one in that part of the country will resonate is tariffs. And I think that whether it's in the farm community or small manufacturers --

ROMANS: Yes.

VALLIERE: -- these tariffs have the potential to soften the economic growth by the end of the year.

ROMANS: You know, I've been in Iowa a couple of times this summer already --

VALLIERE: Yes.

ROMANS: -- and I'm surprised -- I was surprised by how much breathing space many Iowa farmers and Iowa voters are giving the president, saying wait and see how this works out.

VALLIERE: Yes.

ROMANS: He's the first one with the courage to take on -- you know, to take on trade and take on China.

So, we'll have to see how much breathing space they do give him, especially when you're looking at deficits.

VALLIERE: Yes.

ROMANS: I mean, the CBO this week showed that the federal deficit is up 20 percent after those tax cuts and a big humungous spending bill.

VALLIERE: Right.

ROMANS: If the president is going to be running -- or these candidates are going to be running on the economy they have to be careful because the traditional Republican orthodoxy is that you don't blow up deficits to give big tax cuts to companies.

VALLIERE: All discipline is gone in both parties in Washington on spending. We're probably going to give $12 billion or so to farmers because of the soybean tariffs.

We're going to spend more money, I think, on space. I think what Pence said yesterday eventually will get enacted.

Nobody is talking about fiscal restraint.

One other real quick point I'd make that I think is ironic, and that is interest rates have been falling. They fell quite a bit overnight maybe because of the Turkish lira -- a lot of reasons.

But as long as the trade wars persist, investors will look for a safe haven and the safest haven of all is treasuries. So I think rates could surprise people and head a little lower rather than go higher.

ROMANS: Interesting.

MATTINGLY: And Greg, you bring up the lira and its crash but right now, I want to bring up another currency. If you look at what happened to the Russian ruble and what --

VALLIERE: Yes.

MATTINGLY: -- continues to happen to the Russian ruble, a clear kind of off-shoot of the sanctions that were announced a couple of days ago -- yesterday, I guess, at this point --

VALLIERE: Yes.

MATTINGLY: -- down three percent already.

The question I have is you have the administration implementing these policies whether the Pentagon and the State Department and then you have the president on the other side of things saying what he said either in Helsinki.

What's your sense of what the administration's actual policy is towards Russia right now?

[05:40:01] VALLIERE: It's become much more aggressive. There's the threat of even more sanctions down the road in the fall.

So my sense is that for the financial markets that like predictability -- markets don't like surprises. All of the sudden this morning we have the specter of some currencies collapsing. When that happens, the markets could get jittery. A lot of unpredictable things could happen.

But for now, the big story is lower interest rates.

ROMANS: OK, interesting. We'll watch that.

Greg Valliere -- have a great weekend, Greg. Nice to see you.

MATTINGLY: Thanks, Greg.

VALLIERE: You, too.

MATTINGLY: Two wire reporters on one set --

ROMANS: I know.

MATTINGLY: -- and not talk about currencies.

ROMANS: I know.

MATTINGLY: All right.

ROMANS: You're so right.

MATTINGLY: Tense moments in the skies. China warns a U.S. plane on a mission over some hotly disputed islands. A live report just ahead.

ROMANS: And a teenager recovering after being pushed off a bridge by her friend.

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ROMANS: Tense moments in the skies over the South China Sea. The Chinese military warning a U.S. surveillance plane six times as it flew over a hotly-contested area where China has built up extensive military bases on manmade islands.

[05:45:13] CNN's Ivan Watson was aboard the P-8 Poseidon plane. He joins us now from Okinawa.

Tell us what happened.

IVAN WATSON, CNN SENIOR INTERNATIONAL CORRESPONDENT: Good morning, Christine.

We got rare and frankly, exclusive access and insight into this cat and mouse game that the U.S. military and Chinese military are playing in the South China Sea.

When we went on this reconnaissance plane with the U.S. Navy, close to at least four Chinese manmade islands in contested waters of the South China Sea -- a territory that is claimed by other countries here in the region but where China has staked its claim by constructing these enormous manmade islands.

And while flying past, the Chinese military challenged the U.S. Navy plane six times. Take a listen to an excerpt of those exchanges.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: U.S. aircraft, leave immediately to avoid any misunderstanding.

UNIDENTIFIED MALE: United States naval aircraft conducting lawful military activities beyond the national airspace of any coastal state. In exercising these rights guaranteed by international law, I am operating with due regard for the rights and duties of all states.

(END VIDEO CLIP)

WATSON: Now, what this comes down to is China claims virtually all of the South China Sea for itself. The U.S. government and many other countries here in the region refuse those claims and insist that this is international water and international airspace, and that's where you have this standoff.

Going one step further, the Pentagon has accused China of militarizing these formable manmade islands, arming them with surface-to-air missiles, surface-to-surface missiles, even landing warplanes on them. China insists it has the right to defend its own territory, so you have a stand-off there between two powers.

This was what the U.S. Navy describes as a routine flight where they monitor the immense amount of construction that has happened building these virtual cities in the middle of the ocean -- Christine.

ROMANS: Buildings and ports and military installations.

Thanks so much for that insight, Ivan. A fascinating story, thank you.

MATTINGLY: Vice President Mike Pence calling for the establishment of a Space Force by 2020. He laid out the preliminary plans for President Trump's Space Force during remarks at the Pentagon Thursday.

Now, in June, President Trump directed the Defense Department to establish this new military branch to oversee warfighting in space. Pence echoed the president's sentiments, saying the new move would ensure American dominance on the final frontier.

(BEGIN VIDEO CLIP)

PENCE: Previous administrations all but neglected the growing security threats emerging in space. President Trump stated clearly and forcefully that space is, in his words, a war-fighting domain just like land and air and sea.

(END VIDEO CLIP)

MATTINGLY: Now, the new military branch would require congressional approval but the Trump reelection campaign, they're already all in on this launching its own effort, calling its supporters to help select the Space Force's official logo.

I don't think it will be the official logo. It will be displayed, though, on merchandise on the president's reelection campaign site.

ROMANS: All right, let's get a check on "CNN Money" this morning.

Global stocks lower today, weighed down by trade fears and new sanctions against Russia. It was a mixed day on Wall Street. The Dow and the S&P 500 closed lower.

There was a drop in energy and financial stocks. The S&P 500, guys, it's still one percent shy of a record high. It wouldn't take much to make a record here.

And the tech-heavy Nasdaq closed higher for the eighth session in a row after Amazon hit a record high. Look at that, it's up 62 percent his year.

Tech, of course, is the best-performing sector so far this year. Tech making huge profits and they're largely immune to trade fears -- trade war fears right now.

Investors having serious doubts about Elon Musk's plan to take Tesla private. Tesla's stock fell again yesterday by nearly five percent, wiping out all gains fueled by Musk's announcement.

On Tuesday, Musk tweeted that he secured funding at $420 a share, well above the current stock price, but offered no further details. Investors look a little skeptical here.

Adding to that doubt a possible probe of Musk by Wall Street's top regulator. The SEC is looking into whether Musk's statement was true that he had secured the funding and looking into why he announced it on Twitter.

Buffalo Wild Wings wants to add something new to its menu -- sports betting. Will you wager with your wings?

In May, the Supreme Court allowed states to legalize sports betting. Three states -- New Jersey, Delaware, Louisiana have already done so. So, sports bar -- the sports bar chain is exploring ways to offer sports wagering at its restaurants. Buffalo Wild Wings has about 1,200 restaurants nationwide.

[05:50:04] All right, 50 minutes past the hour.

Firefighters in the west facing another day of hot, dry conditions. Meteorologist Ivan Cabrera has the latest.

(BEGIN VIDEOTAPE)

IVAN CABRERA, AMS METEOROLOGIST: Hey, guys, good morning.

Across the western U.S., still tracking the fires -- of course, California -- and the problem is the heat and low relative humidity and that's going to continue.

Across the east, scattered showers and thunderstorms pop up -- summer storms. But across the northeast, we have a bonafide front that's going to be coming in.

And we're talking a much cooler weekend ahead for Saturday into Sunday in New York. Look at that -- 89 for later this afternoon. And we have some rainfall coming in as well on that boundary along that front.

And then behind it, watch what happens here. The temperatures really coming down a good 10-plus degrees so that by Saturday and Sunday we're in the upper 70s. Likewise for Boston and the rest of New England.

Chicago staying nice and warm though with temps there in the mid-80s. And we'll continue to see the trend here staying below 80 degrees until about Tuesday and then we'll get back into some more summery weather by next Wednesday and Thursday into New York.

So there are the red flag warnings. That is a high fire danger and that's going to continue through the weekend. The Pacific Northwest, though, will see a front coming in and that will begin to cool things off.

But unfortunately, where we have the fires we're going to continue with hot temperatures and gusty winds as well -- guys.

(END VIDEOTAPE)

ROMANS: Just a terrible combination there, Ivan. OK, thank you.

Guess who's thinking about running against Donald Trump for president?

(BEGIN VIDEO CLIP)

MICHAEL AVENATTI, ATTORNEY FOR STORMY DANIELS: I'm serious about considering it.

(END VIDEO CLIP)

ROMANS: More from Stormy Daniels' lawyer Michael Avenatti, coming up. Plus, with friends like these who needs enemies.

(COMMERCIAL BREAK)

[05:56:08] ROMANS: NASA is set to launch a solar probe in the next two weeks that will fly closer to the sun than any previous space mission. The Parker Solar Probe will come within 3.8 million miles of the sun's surface trying to unlock mysteries like why the sun's corona is up to 100 times hotter than its surface.

The mission is expected to take about seven years.

All right. This teenager in Washington State pushed off a footbridge by a friend. She is recovering and now speaking out.

The video of the 16-year-old Jordan Holgerson being pushed has gone -- oh, it's gone viral -- hard to watch.

Speaking from the hospital she described what it was like to plummet about 50 feet.

(BEGIN VIDEO CLIP)

JORDAN HOLGERSON, PUSHED OFF BRIDGE: In the air, I think might have fainted, but when I hit the water I was definitely awake and aware. I was trying to push myself forward so I could be like straight up and down so that my feet hit first, but that didn't really work.

(END VIDEO CLIP)

ROMANS: She broke a number of ribs and damaged a lung and will take weeks to recover.

Local media report the friend that pushed her may face charges.

Michael Avenatti for president in 2020? The attorney for adult film star Stormy Daniels says he is seriously considering it. And he just traveled to Iowa, the first-in-the-nation caucus state, to test the waters.

Avenatti says his ultimate goal is to get President Trump out of office.

(BEGIN VIDEO CLIP)

AVENATTI: I'm worried about the Democratic Party nominating somebody that cannot be competitive against and beat Donald Trump in 2020. And that is the number one question that the party has to ask is can this nominee -- potential nominee beat Donald Trump?

(END VIDEO CLIP)

ROMANS: Avenatti says he will make up his mind about a bid for the presidency in the coming weeks.

All right. Space Force -- just the name sounds funny, especially if you ask Stephen Colbert. (BEGIN VIDEO CLIP)

STEPHEN COLBERT, CBS HOST, "THE LATE SHOW WITH STEPHEN COLBERT": Tonight, there's big news about Space Force. Longtime viewers of the Trump administration will remember that Space Force is the president's boldest idea that he got from a Buzz Lightyear happy meal toy.

Got a boost from Vice President Mike Pence. No surprise -- Pence is a huge fan of space. It is the farthest you can get from being alone with a human woman.

There were six. Six does not seem like enough options to us so the "LATE SHOW" has made a few of our own.

"Space Force: Mars Has Cleaner Water Than Flint," "In Space No One Can Hear You Collude," and "One Small Step For Man, Really Small Hands For A Man."

(END VIDEO CLIP)

ROMANS: Just in case you missed Stephen Colbert while you were sleeping.

Thanks for joining us. I'm Christine Romans. "NEW DAY" starts right now.

(BEGIN VIDEO CLIP)

ROMANS: The National Anthem kneeling controversy is alive and well in the NFL.

UNIDENTIFIED MALE: The president obviously does not agree with the tactics of some players that have been taking the knee.

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Wouldn't you love to see these NFL owners say get that son of a (bleep) off the field?

UNIDENTIFIED FEMALE: I'm definitely ready to get this weekend out of the way. There's a lot of fear.

ROMANS: A state of emergency declared in Charlottesville, Virginia on the one-year anniversary of those deadly protests.

UNIDENTIFIED FEMALE: Our country is being torn apart. I don't think we can come.

(END VIDEO CLIP)

ANNOUNCER: This is NEW DAY with Alisyn Camerota and John Berman.

JOHN BERMAN, CNN ANCHOR: Welcome to our viewers in the United States and all around the world. This is NEW DAY. It's Friday, August 10th, 6:00 here in New York.

Alisyn is off; Erica Hill here with us.

A lot of breaking news overnight that gets to who we are as a country.

The NFL preseason kicked off in full force. Several players on several teams took a knee or raised a fist during the National Anthem to protest racial injustice in law enforcement.

You're looking at just one of the protests. There's another right there.

The president has railed against these protests in the past. How will he respond this morning?

Remember, this is the one-year anniversary of the deadly white supremacist rally in Charlottesville, Virginia where the president said there were fine people on both sides.