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EARLY START

Criminal Investigation into Deadly Warehouse Fire; Dakota Access Oil Pipeline Rerouted; Trump Twitter Storm on China; Federal Judge Orders Michigan to Begin a Statewide Recount; CEOs of AT&T and Time Warner to Appear Before Senate; Gas Prices Higher After OPEC Agreement. Aired 4:30-5a ET

Aired December 5, 2016 - 04:30   ET

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


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[04:31:23] ALISON KOSIK, CNN ANCHOR: The death toll climbs in Oakland where criminal investigators are now looking into what caused a warehouse to go up in flames.

Protesters in North Dakota celebrate victory, but the battle over a proposed pipeline may not be over just yet.

President-elect Trump slams China on twitter this morning. China responds.

Welcome back and good morning. I'm Alison Kosik. It's 30 minutes past the hour.

New information on that deadly blaze in Oakland, California expected in just a few hours from now when officials hold a news conference to update their investigation into the huge warehouse fire killed at least 33 people who were there to attend an electronic dance party. Criminal investigators are on the scene looking for signs of arson or criminal negligence. At least eight victims have now been identified and officials say they expect the death toll to rise.

CNN's Stephanie Elam has the latest from Oakland.

STEPHANIE ELAM, CNN CORRESPONDENT: The officials here are saying it's too early to determine what cause this fire. But what they have said as they've gone through the building, they've broken it up into quadrants and they're saying they have found victims in all four of the quadrants of this building. There is no one who says that the victims were found.

They're also saying that some of the people that lost their lives were juveniles, 17 year olds, some young adults in their early 20s and some 30 plus. They are also saying that they're in touch with embassies for people who were from other countries that also lost their lives in the fire.

At this point, they have reached out to some of the families but they are still working to identify some of the people who died here that's because they're saying some people, it's evident who they are, if they had their ID on them, they can match it with fingerprints. But for others where there is nothing there to identify them, they're having to get some source of DNA so they're asking family members if you think you lost someone here, to preserve a toothbrush or to preserve a hair brush and put it into a paper bag, a clean paper bag, and hold on to it so that they can get to them.

But at this point, they're saying they would not be surprised if they actually do expect that the number of people who died here in this Oakland fire will increase.

KOSIK: All right, Stephanie Elam, thank you.

Overnight, fireworks lighting up the night sky over North Dakota. Thousands of protesters celebrating a federal government decision to reroute a proposed oil pipeline that was set to be built under Lake Oahe on the Missouri River. Members of the Sioux tribe and their supporters fear a leak there could cause devastating environmental damage. Those protesters say they are still worried that the incoming Trump administration could reverse their victory.

CNN's Sara Sidner is at the protest site and has the latest.

SARA SIDNER, CNN CORRESPONDENT: Celebrations, tears of joy, chanting and drumming. That's what was the initial reaction when the folks here found out that the Army Corps Engineers was going to stop the pipeline by asking the Dakota Access pipeline to be rerouted -- rerouted away from the thing that has caused the flashpoint here. Rerouted and kept from going underneath the Missouri River.

It is a very big victory for the Standing Rock Sioux and all of the people who have been here for many months trying to stop this pipeline from potentially going under the water and one day leaking. However, what we have also heard from the tribe is that they are concerned that this may not be permanent depending on which administration is in place and worried about Donald Trump's role in all of this when he takes the presidency.

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CHASE IRON EYES, TRIBAL MEMBER, STANDING ROCK SIOUX: We need to stay here. Everybody here needs to stay here until we know exactly the legal ramifications of what took place today. As far as, you know, into the future, there's no guarantee that this is going to stand. If president-elect Trump could override what just happened today on January 20th and grant that easement, then we're in for a world of hurt. Nothing has changed for us.

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SIDNER: We're hearing that from other members of the tribe that even though this is truly a victory and people feel relief, there is also worry about what happens next. Right now, this camp is filling up. No one seems to be leaving.

KOSIK: All right, thank you, Sara Sidner.

Now, the corporations building the Dakota Access pipeline say the federal government decision changes nothing. Overnight, the companies released a statement calling the decision "purely political and saying they fully expect to complete construction of the pipeline without any additional rerouting in and around Lake Oahe."

Just a short time ago we got our first reaction from China to last night's new provocative tweet storm from Donald Trump. Just two days after his controversial phone call upending decades of diplomacy with China, Trump tweeted this, "Did China ask us if it was okay to devalue their currency making it hard for our companies to compete? Heavily tax our products going into their country (the U.S. doesn't tax them) or to build a massive military complex in the middle of the South China Sea? I don't think so."

And moments ago, China responded very diplomatically. Joining us now from Beijing is CNN's Alexandra Field. So, what did China say and is there any indication that there could be some sort of retaliation from China based on indications of how Trump may operate once he's in office?

ALEXANDRA FIELD, CNN CORRESPONDENT: Look, we still don't know exactly how president-elect Donald Trump will operate when he is in office, but the signs that he is sending out, those signals are being closely watched here in Beijing. They've certainly taken some officials by surprise you might speculate, but the response has been somewhat measured. Those actions, that phone call with Taiwan's president, those tweets that have raised some eyebrows including some tough talk toward Beijing were met with responses from officials in Beijing.

But in the wake of the phone call, officials from Beijing did file their complaint with Washington. They also urged president-elect Donald Trump to adhere to the longstanding one China policy through which Washington and Beijing maintain official diplomatic ties. There is no official relationship between Washington, D.C. and Taipei. So, what about the tweets? Well, officials here didn't come out and respond to them right away. They didn't just read them and fire off a response.

But a spokesperson from the Ministry of Foreign Affairs was asked about the tweets during a briefing today and he responded and again highlighting the importance of upholding the bilateral relationship between China and the U.S., talking a lot about the importance of the economic relationship that exists and between the two countries, the trade partnerships that exists between the two countries. He went on to say that China wouldn't speculate on what was motivating the actions of president-elect Donald Trump or his transition team.

And then he also went on to say that China doesn't comment on the personality of foreign politicians or their style. He said that China does pay attention to their policies. The question now, what will the Trump administration's policy toward China be and how much will it diverge from the precedent set that's been set over the past several decades. At this point, these are just tweets. Beijing officials don't know what he will do when he gets into office, but certainly this is a subject that's been closely scrutinized by news outlets here.

A "Global Times" op-ed writes this, "China should understand Trump has two faces. On the one hand, he is bluffing and unpredictable, and on the other, he has no plans to overturn international relationships, and will focus on U.S. internal affairs 'to make America great again'." So, they are closely looking at the signs and trying to determine whether or not this could signal a real policy shift or if this is part of the rhetoric that tough talk for Beijing that Donald Trump did engage with so much over those months on the campaign trail. At this point, China says it's maintaining close contact with the Trump transition team.

KOSIK: President-elect Donald Trump certainly keeping everybody on their toes. Alexandra Field, thanks so much.

And Donald Trump is taking a unique approach to zeroing in on a new secretary of state instead of narrowing the field of candidates, he's expanding it. Trump insider is telling CNN Mitt Romney and Rudy Giuliani are still under consideration and David Petraeus also remains a top contender. But now Jon Huntsman, the former governor of Utah, he's reportedly in the mix. And the president-elect's top aides say the search is widening.

We get more now from CNN's Ryan Nobles.

RYAN NOBLES, CNN CORRESPONDENT: We have originally thought that we were going to learn pretty soon who the next secretary of state will be. It appears that president-elect Trump is expanding the field. Listen to what his senior adviser Kellyanne Conway said about the search this weekend.

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KELLYANNE CONWAY, SENIOR ADVISER TO TRUMP: It's very fortunate to have interests among serious men and women who all of whom need to understand their first responsibility as secretary of state would be to implement and adhere to the president-elect's America first foreign policy and be loyal to his view of the world.

(END VIDEO CLIP)

NOBLES: Now, among the names that Trump is considering is the former governor of Utah, Jon Huntsman, who is also a former candidate for president and was the ambassador to China in the Obama administration. Huntsman not necessarily considered the frontrunner but one of a number of names that the president-elect is considering. And the president-elect also making some news about one of his signature policy proposal when he takes over as president, and that's how he's going to handle companies that attempt to move jobs overseas.

In a series of tweets, Trump laid out his economic policy agenda for companies here in the United States promising to reduce taxes and regulations on these companies, but also bound to penalize companies that attempt to move jobs out of the United States including a 35 percent tariff on goods coming into the united states for these companies. Of course this isn't something that the president-elect can just do on his own. He will need congressional support but it will be a key issue to look for in the incoming Trump administration.

KOSIK: OK, Ryan Nobles, thanks so much.

Donald Trump is stacking his cabinet with members of the rich business elite and they could be in for a huge tax break. There's already an incentive built into the tax code for nominees who join the administration and leave lucrative private sector jobs as soon as Section 1043, it allows the picks to defer paying capital gains tax on any sale as long as they reinvest the money in certain types of holdings within a certain time.

And those have to be government approved and are things like U.S. treasuries or highly diversified mutual funds. Now this could be a huge perk for commerce secretary nominee Wilbur Ross who is worth billions and treasury secretary pick Steve Mnuchin who's a former Goldman Sachs partner and until last week sat on the board of the multi-billion dollar financial company. They will likely both have to divest millions in order to avoid conflicts of interest.

A leadership shakeup. Two prime ministers stepping down including the leader of Italy. That's next.

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KOSIK: Just a short time ago, a federal judge ordered Michigan to begin a statewide recount today of some 4.8 million ballots cast in the presidential election. The ruling, a victory for Green Party nominee Jill Stein. Stein's lawyers will be in another federal court today, this one in Pennsylvania. Stein is escalating her fight for a recount there this after announcing she would abandon that effort.

Stein's lawsuit will demand a statewide recount in Pennsylvania despite the $1 million fee being imposed by election officials. Stein says the people deserve answers claiming barriers to verifying the vote are so outrageous at seeking relief in federal court is the only way forward.

The people of Austria delivering a blow to Europe's far-right movement. Former Green Party leader Alexander Van der Bellen defeating Norbert Hofer in a runoff presidential election. Hofer campaigns on an anti-immigration Austria first platform, but voters favored his pro- European rival.

CNN's Atika Shubert is live in Vienna with more on the outcome of this closely watched election.

You know, it's interesting to see that anti-establishment sentiment catch on in Italy where the prime minister announced he's resigning and then of course of the Brexit. You saw the anti-establishment sentiment catch on. Why didn't that happen in Austria?

ATIKA SHUBERT, CNN CORRESPONDENT: Well, what's interesting is that both candidates are not mainstream candidates. But while one of them, Norbert Hofer, was very railing against immigration. This was his main campaign point. Alexander Van der Bellen was basically campaigning for open Europe to sort of stay the course. And it was a very decisive victory. Van der Bellen gained 53 percent of the vote. Meanwhile, Hofer only gained 46 percent of the vote, and the deciding factor seems to have been women voters.

More than 62 percent of women actually voted for Van der Bellen. And again, it was on those fears of change relay the fact that Britain exiting the E.U. was a factor. Nobody here wants to see Austria leave the E.U. and also the Trump election probably also played into this. Many people worried about seeing populous groups actually coming into power here as well. And so the Trump bump didn't actually help the populous party here. Instead it went in the other direction, Alison.

KOSIK: All right. CNN's Atika Shubert, thanks so much.

And a crushing setback for the establishment in Italy. Prime Minister Matteo Renzi confirming he will resign today after suffering a resounding defeat in a referendum Sunday. Renzi's plan to reform Italy's constitution and revive its economy rejected by nearly 60 percent of the voters.

Let's go live to Milan and bring in CNN's Nina dos Santos. You know, it's interesting because this referendum became less about changing the way laws are passed in Italy and became really a referendum of Renzi's leadership, didn't it?

NINA DOS SANTOS, CNN CORRESPONDENT: That's right. It became a big gamble that he lost in spectacular fashion just as David Cameron lost his gamble on membership of the E.U. for the U.K. when he tabled that Brexit vote as well. It's a familiar scenario that we've seen across this block (inaudible) dangerous thing to call for these politicians. That's basically the message that's coming from the Italian people these days.

And for the investors in the building behind me, which by the way Alison, is the Italian stock exchange here in the financial capital of this country Milan, well, they're saying that it was amazing. Populism seem to take one step back over night in Austria with the outcome of the vote that Atika was telling you about, and then one big step forward here in Italy with the outcome of this vote being a resounding 60 percent of the Italian people eligible to vote voted against Renzi's plans to the constitutional reform that he had tabled here.

And the turnout was significant as well -- 70 percent. That's bigger than many general election turnouts we get across this country. So where does Italy go from here? Well, financial turmoil in markets like these behind me is very much on the cards. We're seeing the bank shares down by an excess of 2 percent. Not good news in a country with a big banking crisis.

But in the meantime, political stasis and questions about what Renzi does from here. We know he's going to resign later on today. That means does the president have to call in a caretaker government -- a technocratic government of economists rather than politicians or do they go for snap elections? There's everything to play for here in Italy today.

KOSIK: Nina, if there are elections, when exactly would they be and are you getting any indication of what -- who the candidates could be? DOS SANTOS: Yes, at the moment, the plan for elections is not before

2018, which is why one of the big possibilities here of the outcome of Renzi's decision to resign is that a member of his party could be chosen by the president as a caretaker governor to try and push through the latest sets of reforms, the budget, the end of the constitutional reforms so they can actually call elections to try and get things ready in order for 2018.

But in the meantime, one party is gaining a lot of notoriety here is the anti-establishment Eurosceptic populous Five Star Movement which is led by a former comedian called Beppe Grillo. Now, he's party wants another referendum, Alison, to take this country outside of the single currency area. And it's that fear of Euroscepticism rising across Europe that has the Euro down to a 20-month low against the U.S. dollar today.

KOSIK: OK, lots of economic and political uncertainty ahead for Italy. Nina dos Santos, thanks very much.

The world's biggest oil producers reaching a deal to cut production, that and an effort to push prices higher, but will that trickle down to U.S. drivers? You will get the EARLY START on your money, next.

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KOSIK: All right. Let's get an EARLY START on your money. Dow futures are porting (ph) lower this morning. Voting in Italy and Austria has investors on edge a bit. Global markets are dropping. Despite that solid job reports on Friday, the U.S. stock market finished the week mixed. The Dow managed to tick slightly higher for the week, and that extends its win streak to four weeks. The S&P 500 lost 1 percent last week and the Nasdaq was the big loser dropping 2.7 perecnt.

Two big corporate stories happening this week. The CEO's of AT&T and Time Warner will appear before a senate anti-trust subcommittee on Wednesday. They're going to be discussing their $85 billion mega merger. Both have said the deal is a natural path forward, but president-elect Donald Trump says it would put too much power in the hands of a few. Time Warner is the parent company of CNN and CNN Money.

Investors will also be focusing on Starbucks this week. It's hosting an event for investors on Wednesday less than a week after Starbucks CEO, Howard Schultz announced his plans to step down. The stock dropped on his news of departure and is down 4 percent -- a little over 4 percent for the year.

Gas prices already beginning to tick a little higher after OPEC's agreement to cut production last week. Crude jumped 12 percent on that news. But gas prices are not rising as quickly, thankfully. The national average for a gallon of regular now sitting at $2.18 a gallon. That's up 5 cents over the past week but it is 14 cents higher than prices this time last year.

All right, so what we really want to know is what could drivers expect this winter? So stations have switched to a cheaper blend of gasoline for the colder months so that should keep prices in check for some areas, but oil is the biggest wild card here. If OPEC's deal goes through as planned, what could wind up happening is it could push crude prices higher and that could also mean higher prices at the pump. Let's hope not.

EARLY START continues right now.

A criminal investigation now being launched into the deadly warehouse fire in Oakland. The death toll climbing with dozens still missing.

The Dakota Access oil pipeline is being rerouted. Protesters celebrating a big win against the federal government, but with Donald Trump taking office, will it be short lived?

And president-elect launching another twitter storm. This time he's targeting China. He's not mincing his words.

Good morning and welcome to EARLY START. I'm Alison Kosik. John and Christine are off this morning. In just a few hours, officials in Oakland, California will hold a news conference with a update on their investigation into the huge blaze in a converted warehouse that killed at least 33 people during a dance party.

Criminal investigators are on the scene looking for signs of arson or criminal negligence. At least eight victims have now been identified. An officials say they expect the death toll to rise. CNN's Stephanie Elam has the latest from Oakland.

ELAM: The officials here are saying it's too early to determine what caused this fire, but what they have said as they have gone through the building...