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EARLY START

Secretary of State's Tough Message For MBS; Ex-USA Gymnastics President Arrest On Charge Of Tampering With Evidence; Over $1.3 Billion In Lottery Jackpots Up For Grabs. Aired 5:30-6a ET

Aired October 18, 2018 - 05:30   ET

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


[05:30:00] CHRISTINE ROMANS, CNN ANCHOR: All smiles and happiness for the camera. But, Mike Pompeo's blunt message to the Saudi crown prince, we're told, his future as king is at stake. Pompeo now briefs the president this morning.

DAVE BRIGGS, CNN ANCHOR: And the former president of USA Gymnastics arrested on charges he tried to conceal evidence in the Larry Nassar investigation.

ROMANS: Anyone want to win the lottery? No Powerball jackpot winner -- $1.3 billion in lottery money now up for grabs.

BRIGGS: And the debate continues. Is this or is it not fan interference? That will be debated on the sports talk airwaves for days, weeks -- perhaps even months to come. Red Sox game-changer there.

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

ROMANS: And I'm Christine Romans. It is 30 minutes past the hour this Thursday morning.

And the president meeting with Mike Pompeo this morning. He will get a briefing on the Secretary of State's diplomatic swing through the Saudi and Turkish capitals -- a trip focused on the disappearance and presumed murder of U.S.-based Saudi journalist Jamal Khashoggi.

CNN has learned that beneath the surface of that all-smiles photo op with the Saudi crown prince there was a blunt no-nonsense meeting.

A source tells us Pompeo warned Prince Mohammad bin Salman, known as MBS, his future as king depends on his handling of this apparent killing. The source says Pompeo told the prince he must own the situation and that every fact is going to get out.

BRIGGS: "The New York Times" and "The Washington Post" both reporting this morning on the mounting evidence that connects Crown Prince Mohammad to the killing, including his ties to several members of the team that flew from Riyadh to Istanbul just as Khashoggi disappeared.

The "Post" also reports the White House and the Saudi royal family are searching for an explanation for Khashoggi's death that does not implicate Prince Mohammad.

The president says he's waiting for answers, but he also seemed to cast doubt on intel that could implicate the Saudis.

(BEGIN VIDEO CLIP)

DONALD TRUMP, PRESIDENT OF THE UNITED STATES: I'm not giving cover at all. With that being said, Saudi Arabia has been a very important ally of ours in the Middle East. I want to find out what happened and where is the fault, and we will probably know that by the end of the week.

REPORTER: You asked for this audio and video intelligence that the Turks supposedly have.

TRUMP: We have asked for it if it exists. We have asked for it, yes.

REPORTER: Yes, but you haven't gotten it.

TRUMP: We've asked for it if it exists.

REPORTER: Are you surprised that they haven't turned it over?

TRUMP: No. I'm not sure yet that it exists. It probably does -- possibly does.

(END VIDEO CLIP)

BRIGGS: Senate Foreign Relations Committee chairman Bob Corker says the administration has, quote, "clamped down on intelligence about the case," saying quote, "I suppose they don't want us to see the intel."

ROMANS: Here to help us break down the global implications, David Rohde, executive editor of "The New Yorker" Web site and a CNN global affairs analyst. Good morning.

Let's talk about "America First" and what this whole situation says about America on the global stage. I mean, you look at how this administration, vis-a-vis "America First," went after Canadian dairy farmers. And now, you look at MBS and this situation.

It seems as though we are tougher on our allies than we are on what could be a potential murderer.

DAVID ROHDE, CNN GLOBAL AFFAIRS ANALYST, EXECUTIVE EDITOR, THE NEW YORKER: It essentially says this is -- it's a message on -- it's all about money. And so, if you're a Canadian dairy farmer, we don't trust you. If you're Angela Merkel, we insult you.

We hold you to an incredibly high standard if you're a Saudi prince and you murder someone. We hide intelligence, we don't push you, we have smiling photo opportunities. We don't publicly embarrass you.

So it's a really disturbing message and I think it's a really negative one, particularly in the Middle East.

BRIGGS: There's an interesting sound bite from Mike Pompeo, the Secretary of State, following his trip, regarding the facts of this case and what he does not want to talk about -- listen. (BEGIN VIDEO CLIP)

MIKE POMPEO, U.S. SECRETARY OF STATE: I don't want to talk about any of the facts. They didn't want to, either. And they want to have the opportunity to complete this investigation in a thorough way.

(END VIDEO CLIP)

ROMANS: "I don't want to talk about the facts."

ROHDE: This is all about the facts. I mean, this is murder. This is exactly what the Saudis want. They don't want to talk about the facts, also.

There was a report in "The New York Times" about U.S. intelligence agencies getting evidence that the crown prince did order this killing.

Bob Corker, as you just played -- the senator wants that information. This should go to Congress. Whatever intelligence we have should go to Congress.

It's just such a basic American thing and I have said this before. Jamal Khashoggi was exercising a basic American right. He was expressing his political opinions -- free speech -- and he was murdered. That's outrageous and totally unacceptable.

BRIGGS: And he was a U.S. resident.

ROHDE: Absolutely.

BRIGGS: And I hear frequently from Trump supporters -- why should I care about this type of stuff. You have a new perspective on that. Why should they?

ROHDE: I think -- so I was held captive -- it was many years ago in 2008 and 2009 -- by the Taliban. And during the seven months I was in captivity they hated the Saudis. They talked about them as corrupt and liars.

[05:35:04] And they said the United States -- that we were hypocrites. That we talk about justice and the rule of law but when it comes to the Saudis and their money and their oil, they get a pass.

So I think this stance if we let this pass, it will help recruitment by extremists groups. They will say the United States doesn't care about Arab lives or individual lives in the United States. They say one thing and do another when it comes to the Saudi royal family.

ROMANS: Is this Saudi relationship with the United States so important vis-a-vis Iran that the president and the administration is willing to overlook this? I mean, is that what this is about heading into the midterms? He doesn't want higher oil prices -- or we don't want higher oil prices and the Saudis can help relieve oil prices with the Iranian oil off the market? ROHDE: That could be part of it. I mean, there's other sources of oil. There's a great increase in energy production inside the United States so I think Saudi Arabia has the leverage it did in the past. But again, is that really what the United States stands for?

ROMANS: Only for money, right.

ROHDE: It's all about money. If you have oil, do what you want. You know, kill people -- kill residents of the United States.

ROMANS: I don't know how you can -- I mean, it just -- the investigation at this point seems so much like a charade. I mean, how you can say we don't want to talk about facts.

We're going to let the crown prince investigate himself and whether he was tied to this. I mean, that doesn't even -- doesn't even seem like an investigation.

ROHDE: Again, President Trump can still do the right thing. He's a very forceful leader. He threatens countries and that has been effective.

It's just a pattern of exaggerating facts and bludgeoning them against someone he sees as a political enemy, and downplaying facts when it's someone --

ROMANS: Yes.

ROHDE: -- he wants to support.

And again, it's money. He's had these long business relationships with the Saudis. They've bought many properties from him. And it's -- I think this is a really important moment for the president to kind of stand up and do the right thing.

BRIGGS: Yes. He did talk about they gave me $40-$50 million for apartments back in 2015.

David Rohde, great to have you here.

ROMANS: Nice to see you.

BRIGGS: Thank you.

Let's turn now to "Washington Examiner" commentary writer Phil Wegmann to talk about the politics of all of this.

ROMANS: Hey, Phil.

BRIGGS: Phil, good morning to you.

PHILIP WEGMANN, COMMENTARY WRITER, "WASHINGTON EXAMINER": Good morning.

BRIGGS: What is the view from Trump country? You elected this bully to stand up for the United States and say whatever -- those tough things to other world leaders.

What's the view when you see your president strictly transactional on the gruesome murder of a journalist?

WEGMANN: Right. We know right now that the journalist probably was tortured before he died. We know that this is gruesome and this is a violation of international norms -- something that we should not be standing up -- that we should be standing up against.

And a moment ago, Christine made the remarks that it seems that we are tougher on our allies when it comes to dairy sales than we are on our allies when it comes to human rights abuses.

But let's be honest. I don't think that this is actually going to change the way that people vote in the midterms. This isn't going to change a voter's mind in West Virginia when they go to the polls to decide whether or not they're going to vote for Joe Manchin in 2018.

But I think that this becomes a much more interesting question come 2020. Please don't think for a moment that Kamala Harris and Cory Booker and Elizabeth Warren aren't watching very closely to see how President Trump handles this.

And then, I think that when you have a Democratic challenger who is across the presidential debate stage with President Trump in 2020, they are going to be the ones who are bringing up this issue and they are going to be bringing up the fact that yes, President Trump has had business dealings with the Saudis. And yes, the Saudis love to stay at the Trump hotel every time they come to Washington, D.C.

ROMANS: Yes.

Can Mike Pompeo, the Secretary of State -- can he sway President Trump? What could he say or do today that can make the president, instead of being conciliatory be condemning of the Saudis?

WEGMANN: Well, what he should say -- as we argue in our editorial at the "Washington Examiner" -- is he should let the president know that the best position here is to make certain that the Saudis know and that the rest of the world knows that this "America First" foreign policy is not a blank check when it comes to violations of human rights.

We cannot let our allies start acting like China and Russia. We can't let our allies start killing people -- extrajudicially killing people on foreign soil. That just isn't going to fly.

And so, I think that Pompeo's message to the president should be that he needs to operate from a position of strength, he needs to demand answers, and he needs to demand those answers very quickly.

And I think that it would go over very well for President Trump if he let the Saudis know that if they don't come up with answers, if they're not forthright and they don't turn over some of these recordings, some of this information, that he's willing to back an independent international investigation. He might not do that, clearly --

BRIGGS: Yes.

WEGMANN: -- but I think that that's what he ought to do.

BRIGGS: A couple of interesting dichotomies with this president and one is what I mentioned earlier. You elected a bully to push around the world leaders who appears to have been played by MBS.

ROMANS: Yes.

BRIGGS: But also, when it comes to the dealmaker. This president was elected as a dealmaker.

And, Josh Rogin was here from "The Washington Post" yesterday and pointed out our arms deal with Saudi Arabia gives us a stronger hand. He's misunderstanding the leverage in this situation because the Saudis are entirely dependent on our military and on our arms.

[05:40:10] Is he misunderstanding the fundamental relationship here?

WEGMANN: Absolutely. I mean, it reminds me of the "60 MINUTES" interview where President Trump was asked about this arms deal. He says, whoa, whoa, whoa -- I don't want to mess up this arms deal because that could hurt Lockheed, Raytheon, and Boeing. I mean, as if the military industrial complex is one arms sales away from going bankrupt.

I mean --

ROMANS: It is not. No, it is not.

WEGMANN: -- this is just a fundamental misunderstanding.

But here is something that Pompeo needs to stress, and your last guest alluded to. Pompeo needs to go into that meeting and make certain that Trump understands, like Pompeo understands, that the balance of power in the Middle East flows through Israel, Iran, and Saudi Arabia.

And while this is a gruesome murder, it needs to be handled delicately because the moment that the United States alienates Saudi Arabia, that's the moment when Russia is going to start sending those arms to Riyadh.

Say goodbye to the crown prince's liberalization and I think that we can also say goodbye to some of the humanitarian strings that are attached to our arms sales.

So it's a delicate situation that has geopolitical factors and also humanitarian factors.

And this needs to be the defining moment of Pompeo's career because yes, Trump needs to be a dealmaker. Trump also needs to know the facts and needs to know how to handle the situation in a way that it doesn't signal to our allies around the world that they can get away with this kind of behavior.

BRIGGS: And don't leave out Turkey's role as a power player in this equation.

WEGMANN: Absolutely.

BRIGGS: They are certainly -- they have some cards to play.

Phil Wegmann, great to have you here. Thank you.

WEGMANN: Thank you, guys.

BRIGGS: All right.

Ahead of the midterm elections, it's been a quiet period for the special counsel's Russia investigation, at least publicly. But behind the scenes, Robert Mueller's team has been very busy.

Sources tell CNN former Trump campaign chairman Paul Manafort visited Mueller's Washington office at least nine times in the last four weeks, with prosecutors also interviewing other witnesses, gathering a grand jury weekly, and working on some kind of secret court action.

ROMANS: Deputy Attorney General Rod Rosenstein publicly defending the Mueller probe. In a rare interview with "The Wall Street Journal" he calls the inquiry "appropriate and independent." And says, "The public will have confidence that the cases we brought were warranted."

One other potential problem for the president, his former personal attorney Michael Cohen meeting Wednesday with officials investigating Mr. Trump's family business and charitable organization.

All right.

The White House pulling out of a 144-year-old deal that keeps shipping rates low from China. It's the latest move in the economic war with Beijing. How it changes what you pay, next.

(COMMERCIAL BREAK)

[05:46:49] BRIGGS: U.S. marshals arresting the former president of USA Gymnastics on charges he tampered with evidence in the Larry Nassar sexual abuse case.

The Walker County, Texas district attorney says Steve Penny ordered documents related to Nassar removed from the USA Gymnastics training center at the Karolyi Ranch. According to an indictment, the documents were delivered to Penny at USAG headquarters in Indianapolis and have not been seen since.

The marshal's fugitive task force arrested Penny in Tennessee. He's awaiting extradition back to Texas.

ROMANS: Four thousand people near an underground gas line in California evacuated overnight as a grass fire threatens the pipeline. The fire caused by a fallen power line in Bay Point. That's 30 miles northeast of San Francisco.

Chevron, which owns the line, immediately shut it down and dispatched a field team to investigate.

BRIGGS: More than 1.3 billion bucks in lottery jackpot money is now up for grabs.

There were no winners in Wednesday's $378 million Powerball jackpot drawing. The winning numbers were 3-57-64-68-69 and 15 was your Powerball. The estimated jackpot for Saturday's drawing, $430 million.

But, Friday, the big one. The Mega Millions jackpot has climbed to $900 million with a lump-sum option of $513 million, Romans.

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

This has got a little more certainty than the lottery. President Trump opening the next front in his economic battle with China -- international shipping.

The U.S. will pull out of a 144-year-old coastal treaty that lets developing countries like China ship to the U.S. at a steep discount. It was intended to help all developing nations but China makes up 60 percent of the shipments. Many argue it's no longer a developing nation.

U.S. companies say that puts them at a disadvantage and the White House agrees, calling the current system a major economic distortion.

Here's an example. It costs less to mail a package from Beijing to New York than from San Francisco to New York. That lets Chinese companies flood the market with cheap goods and cheap shipping, like clothing, toys, and electronics.

This is the administration's latest blow against China, including tariffs on $250 billion worth of Chinese goods. The U.S. accuses Beijing of unfair trade practices and manipulating its currency. Now, the U.S. though, once again, did not label China an official currency manipulator.

In the past six months, the yuan has dropped nine percent against the dollar. Yet, in the Treasury's latest currency report, it found limited signs China was devaluing its currency.

Global stocks mixed today. U.S. futures a little bit lower here.

Wall Street fell after the Fed hinted more interest rate hikes are on the way. Investors, they don't like higher rates because higher rates eat into corporate profits.

But the U.S. economy is hot and the Fed chair, Jerome Powell and company, think higher rates are necessary to keep it in check. This is despite multiple complaints from the president. The Fed, though, is an independent agency so overt White House criticism is rare.

The Fed has hiked interest rates three times this year and likely will do so again in December.

eBay accusing Amazon of trying to poach sellers and that it used eBay's own internal messaging system to do so. eBay filed a lawsuit against Amazon claiming Amazon sales reps hid their identities to lure away high-value merchants.

[05:50:07] eBay says its rival is unwilling to fairly compete for third-party business. Amazon declined to comment.

All right.

Some Facebook investors think the company would be better off without Mark Zuckerberg as chairman. A few public funds sent a proposal to the board. They want to remove Zuckerberg as chairman and leave him in the CEO role.

However, the proposal has very little chance of passing. Why? Well, Zuckerberg holds majority voting power at Facebook.

But the plea, I think, is illustrative of the string of scandals and controversies that Facebook has had. Remember that recent hack of 30 million users? Facebook leaked info like phone numbers and e-mail addresses.

Now, "The Wall Street Journal" says Facebook thinks scammers, not a nation state, were responsible. The scammers wanted to make money through deceptive advertising.

BRIGGS: Every day, another reason for all of us to unplug --

ROMANS: Yes.

BRIGGS: -- from social media entirely.

Ahead, a Virginia company forced to throw out 50,000 pounds of meat. What one employee did that might make you nauseous and made that necessary.

And, should your child have to be an expert on police encounters to graduate high school? Well, it's now the law in one state.

(COMMERCIAL BREAK)

[05:55:44] ROMANS: An Arizona man rescued after being trapped in a mineshaft, 100 feet deep, since Monday. Authorities say John Waddell went 48 hours without food or water and broke multiple bones.

He was found by a friend who was worried when he failed to return home.

(BEGIN VIDEO CLIP)

TERRY SHRADER, FRIEND OF JOHN WADDELL: He had called me Monday and told me he was coming to the mine and we always had a deal -- well, if he's not back by Tuesday. Since he didn't come home yesterday I was bound and determined I had to come down today. (END VIDEO CLIP)

ROMANS: Waddell was airlifted from the mine with non-life-threatening injuries.

BRIGGS: The former lead detective in the Harvey Weinstein investigation has been removed from the case.

According to the Manhattan district attorney's office, Det. Nicholas DiGaudio advised a female accuser to delete anything on her cell phone she did not want seen before turning it over to authorities. The D.A. learned of the incident last week after the detective was accused of coaching a witness.

Weinstein's attorney says the incident further undermines the integrity of the case.

ROMANS: A worker at Smithfield Foods in Virginia has been suspended pending the outcome of an investigation after he's caught on video urinating while working on the production line.

BRIGGS: Oh, God.

ROMANS: The grainy video shows the employee relieving himself and putting his gloves back on and containing to work. This is the grossest story you'll see all day.

In a statement, Smithfield Foods confirmed what it calls an isolated incident and said more than 50,000 pounds of product were disposed of.

BRIGGS: English, math, and history no longer the only classes required for Texas high-schoolers to graduate.

(BEGIN VIDEO CLIP)

POLICE OFFICER 1: Passenger, put your hands on the dash. Passenger, put your hands on the dash for us.

POLICE OFFICER 2: Now, put your hands on the dash, please. Thank you.

POLICE OFFICER 3: Driver, put your hands on the steering wheel.

(END VIDEO CLIP)

BRIGGS: A new state law requires students from ninth to 12th grade to take a class and view a 16-minute video on how to deal with law enforcement during a traffic stop. The idea is to ease tension between police and students and keep unarmed citizens from getting shot by officers.

ROMANS: The puppeteer who portrayed Big Bird and Oscar the Grouch is calling it a career. Caroll Spinney has been with "SESAME STREET" since the program premiered nearly 50 years ago.

In a statement he said, "Big Bird brought me so many places, opened my mind, and nurtured my soul."

Spinney has four honorary doctorates, a lifetime achievement Emmy award, and six other Emmys.

BRIGGS: That's some versatility.

ROMANS: Yes.

BRIGGS: Big Bird and Oscar the Grouch.

All right, controversy following game four of the American League Championship Series, big time.

First inning, Jose Altuve for Houston -- long drive to right. Boston's Mookie Betts leaps to make the grab but a fan hits his glove. The umpire's ruling, Altuve's out because of fan interference. The call upheld on review even though the ball appeared to be heading over the wall.

Boy, this debate will rage for days, weeks, months ahead. He interfered with it but did he reach over the wall? That's the question.

Fast-forward to the ninth. Boston up 8-6. Astros load the bases. Craig Kimbrel on -- Alex Bregman, the line drive.

(BEGIN VIDEO CLIP)

ANNOUNCER: Benintendi dives and he makes the catch. Oh, what a play.

(END VIDEO CLIP)

ROMANS: That was something.

BRIGGS: Oh, what a play by Andrew Benintendi.

Boston leading the series 3-1. The Sox can close out the Astros tonight in Houston. What a gutsy play there.

The Dodgers now one win away from their second-straight World Series. Clayton Kershaw dealing in game five of the NLCS. Three hits over seven innings.

Dodgers beat the Brewers by two. Game six tomorrow night in Milwaukee.

ROMANS: Wow. All right, thanks for joining us, everybody. It's that time. I'm Christine Romans.

BRIGGS: I'm Dave Briggs. "NEW DAY" right now. See you tomorrow.

(BEGIN VIDEO CLIP)

TRUMP: I'm not giving cover at all. Saudi Arabia's been a very important ally.

UNIDENTIFIED MALE: We need to send a powerful message here, not one that tries to create spin.

UNIDENTIFIED MALE: Pompeo told him yesterday he has to own this situation.

UNIDENTIFIED MALE: The trip was more about getting the stories to coordinate than a fact-finding mission.

SARA MURRAY, CNN POLITICAL CORRESPONDENT: Sources believe there could be more criminal indictments.

UNIDENTIFIED MALE: They brought in Paul Manafort for at least nine interviews.

UNIDENTIFIED FEMALE: People close to the president cannot imagine that he's going to be indicted.

UNIDENTIFIED MALE: We're going through the quiet before a storm.

(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 Thursday, October 18th, 6:00 here in New York.

Alisyn is off. Erica Hill with us this morning. Great to have you here.

ERICA HILL, CNN ANCHOR: Nice to be back.

BERMAN: This morning, the White House --