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World Stock Markets Falter; China's Economic Growth Projections Reduced; Jeb Bush Links Asians to Birthright Citizenship Controversy; Suspect in Trooper Death Linked to Second Killing; Interview with Lincoln Chafee. Aired 8-8:30a ET

Aired August 25, 2015 - 08:00   ET

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


[08:00:03] UNIDENTIFIED FEMALE: The other candidates are just Trump without the pizazz or the hair.

UNIDENTIFIED FEMALE: Hearts are very heavy in Louisiana.

UNIDENTIFIED FEMALE: Chilling words of the alleged killer captured on the squad car's dash cam.

UNIDENTIFIED MALE: You can hear him breathing in there. He's telling him, boy, you're lucky. You're going to die soon.

(END VIDEO CLIP)

UNIDENTIFIED MALE: This is NEW DAY with Chris Cuomo, Alisyn Camerota, and Michaela Pereira.

CHRIS CUOMO, CNN ANCHOR: Good morning, welcome to you NEW DAY. It's Tuesday, August 25th, 8:00 in the east. And let's have some short breaking news. We are 90 minutes to the start of trading on Wall Street. Futures are pointing to a big opening, a big rebound. Why? Traders and investors are still anxious. They're awaiting this rebound after Monday's selloff. They just heard that the Chinese are going to drop interest rates. But how will that change this big 600 point drop?

ALISYN CAMEROTA, CNN ANCHOR: Overseas trading is not easing jitters this morning. Shanghai with its second straight day of heavy losses, almost eight percent. China now cutting interest rates. So will that help U.S. stocks stay back in the black? Our team coverage begins with chief business correspondent Christine Romans. What are you seeing, Christine?

CHRISTINE ROMANS, CNN ANCHOR: I'm seeing a really wild reaction this morning. You've got futures up very sharply. So if this holds, and it probably will, you're going to see a big rally on Wall Street for the opening bell, maybe several hundred points higher for the opening bell.

Why the big bounce? The bounce back from what? The bounce back from this. Yesterday, one of the craziest days in the history of Wall Street. The Dow Jones Industrial Average plunging 1,000 points in 10 minutes and then coming back. It was only down 102 points midday. And then crumbling again to be down 600 point by the closing bell. So what's happening overnight? Well, you saw Chinese markets plunge

again. But European markets have turned around. European markets are showing some optimism here. So the bloodletting has stopped and you ever selling of China and buying everything else around the world, buying including commodities, that means commodities that have been hit hard, oil prices up just a little bit.

So as we head towards the opening it looks like there will be a very big rally. But I want to put it in perspective. The Dow Jones Industrial Average is down 1,500 points in just three days. A bounce back this morning would eat away a little bit of that loss.

MICHAELA PEREIRA, CNN ANCHOR: All right, we'll be watching that, 27 minutes and counting. Meanwhile, China trying to ease some of the volatility with that new cut in the interest rates. What more can China do to stabilize its own markets and slow the global ripple effect? Will Ripley is live in Beijing with more for us. Will?

WILL RIPLEY, CNN CORRESPONDENT: Michaela, once again trying to cut interest rates. This is the fifth time since November. Clearly the central bank is trying to do damage control right now to get the stock market back rising again. The first half of this year there were tremendous gains. It's the reason why investors were pouring money into the stock market only to see it wiped away in the last couple of months.

In addition to cutting the interest rates, what the central bank is also doing is pumping $23 billion into the financial system. And they're hoping that these measures will reverse some of the dramatic losses that have been witnessed. Since mid-June stocks have lost 42 percent of their value. That's all of this year's gains erased.

And investors are watching this very closely. The state media, which encouraged a lot people to put their money, in many cases their life savings into the market, right not the newspaper headlines here are talking about the global market plunge. They are not emphasizing at all what's happening in China. In fact they're purposely trying to downplay it, surprisingly little coverage here, hoping that people will not see what's happening with the markets. Perhaps they're restore their confidence and start investing again in the world's second largest economy to prevent the free fall that we've been seeing. Chris and Alisyn?

CUOMO: Will, it is somewhat to the advantage when you control the message of the media, but that doesn't happen here. So let's bring in Rana Foroohar, a CNN global economic analyst and assistant managing editor at "TIME" magazine, and Ken Rogoff, professor of economics and public policy at Harvard University, and the former chief economist at the International Monetary Fund, also known as IMF. Christine, thank you for staying with.

Ken, let me start with you. I was reading about your perspective on China. You have been talking about China having problems for years, in this case since 2009. How much of what you're seeing right now in the markets should be a surprise? KEN ROGOFF, PROFESSOR OF ECONOMICS AND PUBLIC POLICY, HARVARD

UNIVERSITY: Well, I think you can't expect the basketball team if they win 30 games in a row to win 30 more games in a row. I think that's how to look at Chinese growth. The leaders are good, the story is impressive, but you can't have a great year every year. And I think the world has just become used to the fact that China just always goes up and never has a slowdown. And the markets now are feeling that. And also the outside risk, but it's not nothing, that they could have a much deeper crisis and then things would get worse. But I don't think that's the central scenario.

[08:05:00] CAMEROTA: But, Professor, I want to stick with you for a second, because you're seen as a bit of a visionary because you predicted the Eurozone crisis before others did, and you also have been warning anybody who will listen that China was headed for some sort of collapse or at least crisis. So what do you think is going to happen next?

ROGOFF: You know, I try to be sober but not hysterical about this. China has recessions like everybody else. And so it's at risk. I mean, their debt has piled up. When you've been growing like gangbusters for a long time -- let's not forget that when the financial crisis happened, their government stepped up big. They spent tons of money. They did a big stimulus. They made sure people were investing a lot, 50 percent of GDP.

And, you know, there has to be some kind of rebalancing. I think the concern of the leaders is not so much to keep the economy growing superfast. They know they can't. It's to maintain social stability as it slows down, and that's the big question mark.

CUOMO: So we're talking about China. But there are those who are talking about oil and saying that this is about supply and demand, but also that oil is the new subprime commodity being used in a lot of these fancy financial instruments, and the depressing of the price is making things unravel, and there's some $23 trillion of leverage, of hot money that's been put into the market, and that's what's going on as well.

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: The two things are interlinked, actually. I want to just comment to Professor Rogoff's comments on China. I'm actually more skeptical. I think the Chinese are trying to manage a very, very tricky shift to being a consumption economy. Only three countries in Asia have done that, Japan, Singapore, and South Korea. Tough stuff.

But oil is in part falling because Chinese demand is falling. There's some real fundamentals there. At the same time, all the money that not just the Chinese government but the Fed pumped into the global economy, $4 trillion right after the financial crisis, a lot of that went into commodities, a lot of it went into the kind of speculation that you're talking about. That's all unwinding, too. So it's kind of a witch's brew of all of this stuff feeding each other.

PEREIRA: Is this all China's fault, Christine? ROMANS: It's everyone's fault. It's a lot of easy money, years of easy money. It's reactions to the financial crisis and all the money that went into the system after the financial crisis.

When you have incentives out there to invest in stocks, to invest in commodities, too, and not invest in the bond market now. What's interesting to me now is money is flooding to the bond market. We thought bond yields would start to rise pretty soon but they're not. So you're seeing big moves in these. I wouldn't say it's all China's fault. I would say China is the trigger, but there's a lot of different things going on here right now. Today will be turnaround Tuesday. They're already calling it "Turnaround Tuesday." The perspective here, 1,500 point drop in the Dow Jones Industrial Average in three days. If you pop 500 points on the open, you're still down 1,000 points from where you were in the middle of last week. I expect more volatility going forward.

FOROOHAR: I was just going to say, the only think we know is we're going to see more dips like this.

CUOMO: It upsets people, though, professor, because the regular person, the mom and pop investor says this is what you guys do, you insiders, you Wall Streeters, is you play the volatility, you make your money, and the rest of us get held holding the bag here. And you guys right now, I guess the pension funds, right, they have to make their money. They have a ton of it coming into them. They have to invest it. So what is the mom and pop supposed to do?

ROGOFF: You can't compete against the professional investors. I think for most people you just have to sort of sit these things out. You decide a strategy, change its every once in a long while, and don't try to game these people.

That said, when the stock market was soaring, I think the average person wasn't feeling that great about it. And it's gone down, you know, this correction. And probably you shouldn't feel that bad about it. I mean, it's just normal. And if you're lucky enough to have lost a lot of money, you must have had a lot of money.

(LAUGHTER)

CAMEROTA: That's an interesting perspective. I like how sanguine the professor is.

ROMANS: He is sober and not hysterical. I love that.

CAMEROTA: I'm trying to take that on as a new mode.

ROMANS: Sober but not hysterical. And you're right, he has predicted crises. He has smelled the winds before the crisis had happened. So when he's concerned about China, it's important.

I will say this. The stock market is up so much over the past six years. Chris keeps talking about these professional investors who get all the advantages. Buy and hold investors had a very nice run over the past six years and they should not be reacting crazily to headlines right now.

CUOMO: Christine made a good point when the professor was talking. She's like mom and pop investors are the pension funds. That's my point is that these pension funds are going to want to get back into the market. People don't invest their own money. They can't time things the way that professional traders do. And it seems like the game is just changing.

[08:10:00] Richard was talking about the volatility, everything is so fast now. Fast for them, the institutional side, not for us.

ROMANS: If you are a regular investor you're not jumping in and out of this market like crazy anyway, right. And you're doing something called dollar cost averaging. So the professional investors, maybe they're making a lot of money on the volatility. But if you're buying stocks regularly every quarter in your 401(k) and have been doing that over the past 15 years of your career, you're buy stocks at all different prices, slowly but surely.

So there is a way to be invested in the stock market for the long- term, and you are kind of immune to some of the volatility that's happening if you are just a steady as she goes investor.

FOROOHAR: Warren Buffett told me he put his wife's money 90 percent in index funds, U.S. blue chip stocks, the rest in cash. That's what I do.

CAMEROTA: I'm going to write that down.

CUOMO: What does he do with his money, though? Maybe he's throwing his wife under the bus.

(LAUGHTER)

CUOMO: Using his wife as a hedge one of the oldest tricks in the book.

(LAUGHTER)

CAMEROTA: So basically the message that you are saying today is prepare ourselves for this rollercoaster ride and not to panic.

ROMANS: Yes. And don't look too much at your portfolio. Buckle your seatbelt.

CUOMO: Easy to say when America has just watched the thing go down 1,000 point. We thought Richard Quest's head was going to pop off. And today's called "Turnaround Tuesday"? So much for sober, not hysterical.

ROMAN: I know, but there's also going to be the next year change of the politics of China. I guarantee you the politics of the American relationship with China will be front and center going forward. And it could get testy, I would say.

CAMEROTA: It's already happening, I believe. Christine, Rana, Professor Rogoff, thanks so much, great to see you all.

CUOMO: Sober and hysterical, that may be our team name for the quiz show.

(LAUGHTER)

PEREIRA: Do I get to pick which headline I get to fall under in that one? Or can I just avoid the whole thing all together? I think I might want to do that.

(LAUGHTER)

PEREIRA: All right, guys, let's talk politics now. President Obama's team of rifles may be headed for a primary showdown. He is said to have given Vice President Biden his blessing for a 2016 run. And signs that Biden is leaning toward challenging Hillary Clinton for the Democratic nomination, well, they are growing. Michelle Kosinski is covering it all for us live at the White House. Good morning once again.

MICHELLE KOSINSKI, CNN CORRESPONDENT: Hey, Michaela. The White House is doing its best to stay out of all this. But you look at all that's been written already on what a difficult position it would be for the president to have to choose between his vice president and his former secretary of state. What an impossible position he would be in politically, and you look at Hillary Clinton's lead still over her current opponent. But the White House is now saying more about it than they have, even saying the president isn't ruling out making that decision down the road and endorsing someone when the time comes. Here's some of what the press secretary has said.

(BEGIN VIDEO CLIP)

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: The president has indicated his view that the decision he made I guess seven years ago now to add Joe Biden to the ticket as his running mate was the smartest decision he had ever made in politics.

(END VIDEO CLIP)

KOSINSKI: It's not as if the White House is saying anything negative or even questioning about Hillary Clinton. The e-mail controversy, they are not going there. The White House is still saying good things about Clinton and you might say great things about Joe Biden just as those close to him are telling CNN that it is more likely than not that he's going to go for it. Alisyn?

CAMEROTA: OK, Michelle, thanks so much for that.

A defiant Jeb Bush going head to head with GOP frontrunner Donald Trump over immigration. The Republican hopeful is trying to defend his use of the term "anchor babies," now saying he was not referring to Latinos but instead to Asians, and that's opening a whole new front for criticism. Let's get to CNN's Polo Sandoval. He is live in Texas with more. Good morning, Polo. POLO SANDOVAL, CNN CORRESPONDENT: Good morning, Alisyn. Almost

immediately after he stepped in front of the cameras Jeb Bush added his voice to the growing group of Republicans for a more secure border. During his moments here yesterday he said some of the infrastructure that's already in place, including a segment of the border wall just north of a Mexican city is simply not enough to curb the flow of drugs and people making its way north. Now, during that moment he also took really advantage of the opportunity to really explain that controversial use of the term "anchor baby," saying he was referring to a separate issue and not so much people who cross the border illegally.

(BEGIN VIDEO CLIP)

JEB BUSH, (R) PRESIDENTIAL CANDIDATE: What I was talking about was the specific case of fraud being committed where there's organized efforts, and frankly it's more related to Asian people, coming into our country, having children in that organized efforts, taking advantage of a noble concept, which is birthright citizenship. I support the 14th Amendment.

(END VIDEO CLIP)

SANDOVAL: Bush referring to Chinese birth citizenship. It's something that officials in California have recognized as a relatively new but serious issue that's happening in their state. Even though it is a legitimate problem happening out west, Chris, we do know that Trump is already slamming Bush.

[08:15:02] This morning he took to Twitter criticizing Bush for linking the Asian community with this controversial use of a term that's prompting plenty of reaction in this southern fringe of the country is absolutely not an exception, Chris.

CUOMO: Well, a headline that's laden with B's would be battling barbs is not good for Bush. That's certainly not what he's going to win on the war of words right now.

Polo, thank you very much. Appreciate the reporting.

Disturbing details surfacing this morning about the man accused of gunning down a Louisiana state trooper following a traffic stop. Now, it turns out the suspect maybe linked to another death in the state.

We have details with CNN's Rosa Flores live now with the latest. What do you know?

ROSA FLORES, CNN CORRESPONDENT: You know, Chris, disturbing details here. And people in Louisiana today in mourning for this trooper who served in law enforcement for 12 years. And hear this -- he's also an army vet. He served in Operation Desert Storm and Desert Shield.

As you said, the plot thickens this morning as investigators believe that the man who is now charged with killing this trooper is also linked to the killing of his own roommate.

(BEGIN VIDEOTAPE)

FLORES (voice-over): An emotional state police colonel describes the chilling words of the alleged killer of Trooper Steven Vincent, captured on his squad car's dash cam.

EDMONSON: You can hear him breathing in there and telling him, "Boy, you're lucky. You're lucky. You're going to die soon."

FLORES: Authorities believe 54-year-old Kevin Daigle killed his roommate before encountering the Louisiana state trooper.

SHERIFF TONY MANCUSO, CALCASIEU PARISH: I'm sure you're going to ask the question that Mr. Daigle is involved in this, and yes, we're going presume that.

FLORES: According to investigators, the pick-up Daigle was driving was stuck in a ditch Sunday. Trooper Vincent realized the vehicle matched the description of a reported reckless driver, and started asking him about it. The suspect pulled out a shotgun, shooting Trooper Vincent in the head, according to authorities.

EDMONSON: I watched that gunshot blast in that tape. I saw my trooper go backwards and then go back towards his unit, where he was going to try to get some help out there.

FLORES: Good Samaritans like this man beat authorities to the scene.

EDMONSON: This is a hero right there.

FLORES: Wrestling with Daigle, investigators say, and subduing him with the wounded officer's handcuffs.

UNIDENTIFIED MALE: Me and Sam handcuffed him, and then we tended to the officer.

UNIDENTIFIED MALE: He was an older guy. It took three men to hold him down.

FLORES: On average, a law enforcement officer is killed in the line of duty every two and a half days in this country.

JONATHAN GILLIAM, LAW ENFORCEMENT EXPERT: The potential of death is just there in everything that you do, because you don't know what is on the other side of that door or what's going to be behind the wheel of that car as you approach it.

(END VIDEOTAPE)

FLORES: Now, Daigle faces first degree murder charges. And authorities tell us that those charges could grow as the investigation into the killing of his roommate continues. As for the state trooper's family, you know that he leaves behind a wife and a 9-year- old son, Michaela.

PEREIRA: Rosa, thank you for that. We appreciate it. Turning to central Washington, it is being hit with the largest group of wildfires in that state's history. The so-called Okanogan Complex has scorched more than 250,000 acres. Officials say the flames are expected to spread even more in the coming days. They say those fires are only 10 percent contained and could burn for several more months.

CAMEROTA: All right. All eyes on the strain. You have to say this story. It's a fear many of us have, accidentally breaking very expensive items. And it came true for one boy at an art exhibit in a Taipei museum.

Watch as he loses his balance. He spills his drink on a painting. And he also, by the way, punched his hand through the painting while trying to catch his balance. There's the aftermath.

Let's watch this again. He goes whoops. Whoopsy daisy.

So, there's fingerprints on the painting and his drink. By the way, that painting happens to be worth $1.5 million. Now, fortunately, his parents do not have to pay to restore the art. I believe there might be some insurance.

PEREIRA: Insurance at the museum, yes.

CAMEROTA: But the embarrassment.

CUOMO: Counter sue. Unstable ledge.

PEREIRA: The worse, the worse.

CUOMO: The cause and fact of the injury was that what he hit his foot against was not stable and caused him to lose his balance. I'm worried about his wrist. I'm worried about the negligent infliction of emotional distress.

CAMEROTA: Wow. You're good.

(CROSSTALK)

PEREIRA: I feel I have to be bound when I walk through any museum. It's so terrifying.

CAMEROTA: I'm like that in a clothing store.

PEREIRA: But I will sneeze, well, yeah.

CUOMO: You also have a little bit of a klepto problem that people do or do not know about.

PEREIRA: That's a bit tough, are we?

CUOMO: Often still have tags on things.

PEREIRA: My things are going to missing lately.

CAMEROTA: My things do have the tags on them. That's laziness. That's not --

CUOMO: For me, it's air time.

(LAUGHTER)

[08:20:03] CUOMO: All right.

PEREIRA: No comment.

CUOMO: When's Joe Biden going to tell us whether he's going to run or not? We put a question mark at the end A We hear that it's going to happen in weeks.

So how do we read it? The way we read it by looking at his potential rivals for the Democratic nomination, what they're doing. That's how we get a sense of how real this is. We're going to ask one of them. Coming up, Lincoln Chafee on NEW DAY.

(COMMERCIAL BREAK)

CAMEROTA: Some political news now: President Obama apparently giving his blessing to Vice President Joe Biden for a 2016 run. So, if he does get into the race, what does Joe Biden's presence mean for his Democratic rivals?

Here with us now is Democratic presidential candidate Lincoln Chafee.

Governor Chafee, thanks for being on NEW DAY.

LINCOLN CHAFEE (D), PRESIDENTIAL CANDIDATE: Good morning. Thank you.

CAMEROTA: Do you think that Vice President Biden is getting into the race?

CHAFEE: Yes, I do. I just think that all the news recently seeing him standing beside the president so frequently at high profile announcements such as good relations with Cuba, the Supreme Court decisions a few months ago, a few weeks ago, the vice president standing there with President Obama, and then, of course, the news of yesterday, the two of them getting together and the press secretary saying favorable things about the vice president running his candidacy.

CAMEROTA: Yes. So, how do you think that would change the race if Joe Biden gets in?

[08:25:01] CHAFEE: I think it's good. That would make only six of us on the Democratic side compared to all those Republicans. And voters like choices.

This adds a very experienced, obviously, a vice president, a long-term member of the United States Senate, a member of the Foreign Relations Committee. I served on the Foreign Relations Committee with him. We travelled to Mexico and to Iraq and to the Middle East.

So, it's good for the voters to have choices. And this is a good addition if he gets in, I think. That's what we should have in our democracy.

CAMEROTA: Let me put up the latest polls. This is a CNN/ORC poll from last week. And here you can -- this is the one says, should Joe Biden run? And 53 percent of respondents, Democratic voters, say yes.

So, let me put up the poll of the field, the Democratic field as it's looking right now. You see Clinton there with 47 percent. Bernie Sanders 29 percent. And then all the way at the bottom there, you see Lincoln Chafee with a hash mark. What's going on, Governor?

CHAFEE: Well, it's a long way. We're in August. The first votes will be cast in the winter of -- when there's no leaves on the trees in Iowa. We have a long way to go. I'm the only one running either Republican or Democrat that's been a mayor, a governor, a United States senator, and plus, I've served on the Foreign Relations Committee. So, I've travelled all over the world.

And my character, I think that's resonating with voters, also taken courageous votes. I'm honest. I've never been in any scandals in my three decades of public service. That's what resonates with voters. So, it takes time.

CAMEROTA: Is that a veiled reference that you're making to what's going on with Hillary Clinton and the questions surrounding her e- mails? How big of a deal do you think this investigation into her email server is?

CHAFEE: I think it's a big deal. It's obviously I think having an effect on the vice president's decision where to run. We all know as Democrats who have to win in 2016. That's what we all want as Democrats to think that the Republicans could come back against the environment, against women's issues, belligerent around the world, you just can't have that.

(CROSSTALK)

CAMEROTA: You think Hillary Clinton as the Democratic front runner because of this e-mail controversy is now a vulnerable candidate?

CHAFEE: Yes, obviously. It's a huge issue. I mean, it just is. And you see it in the news and reflected in the polls.

So, voters want choices and that's what we should have. It's going to be six good candidates it looks like if the vice president gets in. And that's very manageable. It's good for democracy, good for the Democratic Party.

I'm proud of my record. I voted against the war. Vice President Biden did vote for it. Secretary Clinton voted for it.

This is what choices should be about, your judgment, your character, your past record, your vision for the future.

CAMEROTA: OK. Let's talk about choices on the Republican side. As you know, Donald Trump is getting a lot of attention. And he's brought the issue of illegal immigration to the fore. He's

been talking about it a lot. In fact, again, last night, he was on FOX. Let me play for you what he said about this issue.

(BEGIN VIDEO CLIP)

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: I have a bigger heart than anybody running, but we have a country that's totally out of control. We have no laws anymore. We have no order. We don't even know how many people are in here illegally. We have to get a process started.

(END VIDEO CLIP)

CAMEROTA: When it comes to illegal immigration, is he right? Do we have no laws about it anymore, no order?

CHAFEE: Well, he's making a big mistake. I mean, this is a problem for the Republican Party. This is the fastest growing voting bloc in the country. And they're leading in the polls is insulting this fastest growing voting bloc. So, I think it's a huge mistake for the Republicans.

Of course, we always need to improve on everything we do. We need to improve on our immigration. But there's ways to do that without insulting this important part of our population.

CAMEROTA: Such as? I mean, what is your answer to, let's say, the 11 million people who are not here legally?

CHAFEE: When I was in the Senate, there was a good bill put together by Senator Ted Kennedy and John McCain back in 2005. McCain-Kennedy, it was a path to citizenship, it had border security. If you had a criminal record, you had to be deported. You had to learn English.

It was a good bill. There were nine cosponsors, a bipartisan group of senators, out of 100 senators. I was one of the nine. But early on back in 2005 recognized we needed to fix that. And McCain-Kennedy was a good bill. We should take it off the shelf and make some minor adjustments and get it passed.

CAMEROTA: OK. Governor Lincoln Chafee, thanks so much for sharing your views with us today. Thanks for being on NEW DAY.

CHAFEE: Thank you. Have a great day.

CAMEROTA: You, too.

Let's get over to Michaela.

PEREIRA: All right. A Louisiana state trooper killed after authorities say he was trying to help the gunman. Law enforcement constantly put their lives in danger to keep us safe. What can be done to keep them safe?

We are going to speak with former New York Police Commissioner Ray Kelly, ahead. (COMMERCIAL BREAK)