Return to Transcripts main page
Connect the World
High-Stakes U.S.-Iran Talks Underway in Geneva; Cuba: Four Killed in Shootout Involving Florida Speedboat; Kim Jong Un Vows to Strengthen North Korea's Nuclear Program; Merz Looks to Reset Relations Clouded by Huge Trade Deficit; Oil Prices in Flux as U.S. and Iran Hold Nuclear Talks. Aired 9-9:45a ET
Aired February 26, 2026 - 09:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
[09:00:00]
(COMMERCIAL BREAK)
ELENI GIOKOS, CNN HOST, CONNECT THE WORLD: This is the view of Cuba's capital after four people on a speed boat from Florida were killed by Cuban
forces. It is 09:00 a.m. in Havana. It's 06:00 p.m. here in Abu Dhabi. I'm Eleni Giokos, this is "Connect the World".
Also coming up, Iran says agreement with the U.S. is within reach as nuclear talks continue in Geneva. And Hillary Clinton is testifying later
today before U.S. House lawmakers New York as part of an investigation into Jeffrey Epstein. We are around 30 minutes to go before the start of trade
in New York.
Let's check out how futures are faring right now. You've got the DOW, S&P and NASDAQ firmly in the green. The DOW is up around two tenths of a
percent. Really important, we had Nvidia results as well as sell force numbers out today. So, markets are moving in tandem with that.
And of course, a lot of hesitation and reticence as we start to see investors wondering what is next move with regards to the U.S. and Iran. A
lot of people on hold on that question is how much of that has been priced in? We'll check in on those numbers a little later.
In the meantime, the third round of indirect U.S.-Iran talks is now in a pause in Geneva, with negotiations set to resume soon. But will this round
yield results? The stakes could not be higher, as negotiators on both sides meet with Oman's Foreign Minister. U.S. President Donald Trump has
threatened to attack Iran and deploy the largest U.S. military presence -- in the region since 2003 invasion of Iraq.
President Trump insisting that Iran will never produce a nuclear weapon while Iran maintains its nuclear program is only for peaceful purposes. Now
both countries may be looking for an off ramp to allow the leaders to claim a diplomatic victory without plunging this region into war.
Fred Pleitgen who has reported extensively for CNN from inside Iran, is with us today in Geneva. And we've also got Zachary Cohen in Washington.
Welcome to both of you. Fred. I want to start off with, you know whether we're seeing this being Groundhog Day in many ways, the talks resuming.
You've got Marco Rubio playing down expectations. Take a listen to what he said.
(BEGIN VIDEO CLIP)
MARCO RUBIO, U.S. SECRETARY OF STATE: After their nuclear program was obliterated, they were told not to try to restart it, and here they are.
You can see them always trying to rebuild elements of it. They're not enriching right now, but they're trying to get to the point where they
ultimately can.
The other thing I would point you to, however, is that Iran possesses a very large number of ballistic missiles, particularly short-range ballistic
missiles, that threaten the United States and our bases in the region and our partners in the region.
(END VIDEO CLIP)
GIOKOS: Yeah. I mean, in the meantime, Fred, you know, the Omanis are saying that you've got negotiators showing unprecedented openness. So, what
do we know about the talks? And you know whether we're going to see a resumption of it in the next few hours.
FREDERIK PLEITGEN, CNN SENIOR INTERNATIONAL CORRESPONDENT: We are going to see a resumption. The Omanis have said, we believe in a couple of hours
from now, they say, so far, things have been positive and creative between the two sides. And I don't think that this is something that really seems
like Groundhog Day.
In fact, it seems as though the two sides, the United States and Iran, have been making some progress over the last couple of rounds of these
negotiations. We have to keep in mind that this is the third round of negotiations that we're seeing right now. The first round, of course,
happened in Muscat in Oman, where the two sides met and scoped out whether or not there would be a way forward.
Essentially telling each other, look, we'd rather have a diplomatic solution to this than have a military conflict between one another. And
then the second round of negotiations, which happened about a week ago here in Geneva, the United States told the Iranians what they would like to see
from them.
The Iranians told the United States what, in general, they might be willing to give. And then the United States said, look, you guys draft a document,
come back with that, and that could be the basis of the text for a deal between the United States and Iran. And that's what the two sides have been
working on for about, I would say, three hours earlier today.
But of course, there are still a lot of pitfalls, a lot of issues. Marco Rubio, the U.S. Secretary of State, was talking about the ballistic missile
program, regional proxies, all of that, of course, not part of the negotiations that we're seeing right now. Those are strictly about Iran's
nuclear program.
The U.S., of course, wants Iran to stop enriching uranium. President Trump has said that Iran will never have, or is never allowed to have a nuclear
weapon. The Iranians are saying, look, we don't want a nuclear weapon, but we do believe that we have the right to enrich uranium, and bridging that
gap is certainly one of the main issues that these two sides have been dealing with whether or not, there's going to be token enrichment.
[09:05:00]
What's going to happen to the nuclear sites that the Iranians already have, which President Trump's claims were obliterated, but the Secretary of State
says the Iranians are trying to build back up. And then the Iranians, for their part, are saying that they want sanctions relief.
If they're going to go into a deal that puts significant constraints on their nuclear program for a very long period of time, if not indefinitely,
then they're going to want something in return as well. So that's what the two sides seem to be working on, whether or not that's going to be enough
to stop the military confrontation that the Iranian say will be catastrophic for the region, that the U.S. says will be catastrophic for
Iran.
That's something that maybe will have a little more light on that at the end of the day, Eleni.
GIOKOS: Yeah. Yeah, hopefully. Zach, I want to talk about what's happening internally in the U.S. So, we've been talking about a growing gap that has,
you know, been created between what the White House is saying publicly and what the Pentagon is warning about privately. So, explain to us what is
going on.
ZACHARY COHEN, CNN SENIOR U.S. SECURITY REPORTER: Yeah, President Donald Trump has obviously been pretty bullish in describing what he says would be
an easily won conflict with Iran, if that is ultimately what plays out. But we're told from multiple sources that behind the scenes, senior military
leaders at the Pentagon have voiced concerns about the scale, the complexity and the potential for U.S. casualties that might result from a
major military operation against Iran.
And one that they have raised in some regard to the White House and even to the president himself. But again, there is this question of whether or not
Chairman of the Joint Chiefs, Dan Caine and his other senior military advisers have really emphasized the potential risks that would come with a
military operation when they're presenting these variety of options for military strikes against Iran to the president.
And we know that Caine and the Pentagon leadership have drawn up a range of options that really go from limited strikes against potential military
targets or Iranian nuclear sites all the way to decapitation strikes aimed at facilitating the change of a regime in Iran.
So even that though, we're told that in a situation room meeting last week, General Caine was asked about what would come next if a regime change
operation was successfully carried out, and we're told that Dan Caine could not predict the outcome, and that just does underscore, again, the level of
uncertainty that would come along with a U.S. military intervention in Iran, whether it's limited or a major escalation.
GIOKOS: Fred, Geneva, once again, a crowded diplomatic stage, Ukrainian officials meeting Trump envoys, while Russia's economic negotiator is also
in town. So, what can we expect from that?
PLEITGEN: Yeah, definitely a second round of talks that Steve Witkoff and Jared Kushner also conducting, obviously going back and forth between the
venues. It was quite interesting to see, because when the talks broke here were adjourned. The first thing that we heard from the Iranian side, that
is for consultations that both sides would then talk to their respective capitals for consultations.
Well, Steve Witkoff and Jared Kushner went immediately to the next venue and started speaking to the Ukrainians there. What we're hearing there from
both sides right now is that these talks are more informal than the last round of talks that we also saw here in Geneva.
What we need to know about that is that the talks between the Russians and the Ukrainians to try and end that conflict. They center, if you will,
around territorial issues, if the Ukrainians are willing to give up any territories as part of any sort of peace deal, security guarantees by the
United States and other countries for Ukraine.
But then, but also, what's called the prosperity package, where the Ukrainians are essentially being told that, look, if you make these very
painful concessions, there will be prosperity for Ukraine. There will be United States investment, other countries investing.
And that's essentially what those talks are about today between the Ukrainians and the United States is what that prosperity package is shaping
up to be. The Ukrainian Economics Minister, or Economy Minister, is also here in Geneva as part of those talks. Those talks are bilateral, even
though you're absolutely right.
One of the main Russian negotiators Kirill Dmitriev, apparently, is also in town as well, Eleni.
GIOKOS: All right, Fred and Zach thank you so much for that update, and be sure to read story that Zach co-authored that's on CNN Digital. It takes a
deep dive into that balancing act facing Dan Caine, the Chairman of the U.S. Joint Chiefs of Staff, as he weighs military options against Iran,
while voicing concerns in private about a potential U.S. operation.
And you can find it on CNN all access available through the CNN app. Happening today a landmark moment in the Jeffrey Epstein investigation in
less than two hours, Former First Lady Hillary Clinton takes the hot seat. She'll sit for a deposition conducted by the House Oversight Committee in
Chappaqua, New York.
That's where the Clintons live on Friday. It's her husband, Former President, Bill Clinton's turn.
[09:10:00]
The Republican Chair of the Committee, James Comer insists that no one is accusing. The Clintons of any wrongdoing because says the panel has a lot
of questions. This marks a huge reversal for the Clintons, who resisted testifying for months and only agreed after they were threatened with a
criminal contempt vote.
We've got CNN Senior Reporter Annie Grayer live for us. Annie, good to see you. So, tell us more about what we're expecting to see today, and how have
the Clintons been preparing for the depositions.
ANNIE GRAYER, CNN SENIOR REPORTER: So, we are expecting this deposition to go on for hours behind closed doors where Hillary Clinton is going to be
questioned by both Democrat and Republican lawmakers. She's going to be accompanied by her legal team who's been preparing her for days to not only
remind her of what was happening in her life around the Epstein years, but to also prepare lines of attack, because we know Republicans have a history
of going after Hillary Clinton.
And I'm told that this deposition is going to focus on five major categories from sources. And those five categories are alleged
mismanagement of the federal government's investigation to Epstein and his coconspirator Ghislaine Maxwell. The circumstances and subsequent
investigations of Epstein's 2019 death.
The ways the federal government could effectively combat sex trafficking rings. How Epstein and Maxwell sought to curry favor to protect their
illegal activities. And potential violations of ethics rules related to elected officials. Now there will be a videotape and a transcript of this
deposition, but it will not come out for a number of days.
And this has been a long road to get to this point. The Clintons did not want to testify as part of this investigation. They argued that they were
being singled out for political purposes because they didn't have anything else to provide other than their written statements, and the Oversight
Committee was demanding that they testify in person.
It was only when they were going to be held in criminal contempt of Congress that the Clintons caved and agreed to the terms of the depositions
that will be happening today for Hillary Clinton and tomorrow for Former President, Bill Clinton.
GIOKOS: So, Hillary Clinton says she's never met Jeffrey Epstein. So why do Republicans want to talk to her?
GRAYER: That's exactly the question. She argues, she says she's never met Jeffrey Epstein. She's only spoken or met Epstein's coconspirator Maxwell a
handful of times. So, she argues that Republicans are singling her out for political purposes. Take a listen to how she frames it to the BBC just a
few weeks ago.
(BEGIN VIDEO CLIP)
HILLARY CLINTON, FORMER U.S. SECRETARY OF STATE: You know, we have no links. Why do they want to pull us into this to divert attention from
President Trump. This is not complicated. This is so obvious, and they keep trying to divert.
(END VIDEO CLIP)
GRAYER: Now the Clintons wanted to testify in public, but are going to have to appear first behind closed doors. We'll see if a public hearing ever
comes about, and we will keep you posted throughout the day as we learn more about Hillary Clinton's deposition, which is set to get under way in
just a few hours.
GIOKOS: Yeah, and we'll be watching that very closely. Annie Grayer, great to see you. Thank you so much. Now the U.S. is promising to find out
exactly what happened after Cuba said its forces killed four people on a Florida registered speed boat. Havana says the boat was trying to
infiltrate its territory, and that a passenger shot at a Cuban vessel, prompting Cuban forces to return fire.
Six other people aboard the speed boat were wounded and are in custody. The shoot out comes amid heightened tensions between the U.S. and Cuba. Here's
more from U.S. Secretary of State, Marco Rubio.
(BEGIN VIDEO CLIP)
RUBIO: Suffice it to say it is highly unusual to see shootouts an open sea like that. It's not something that happens every day. It's something,
frankly, that hasn't happened with Cuba in a very long time.
(BEGIN VIDEO CLIP)
GIOKOS: Right, CNN's Stefano Pozzebon is following the story for us. Stefano, good to see you. So, what more can you tell us about the
investigation and the people involved in this deadly incident?
STEFANO POZZEBON, CNN CONTRIBUTOR: Well, Eleni, what we are hearing is that bipartisan calls, I should say, to for further investigation to clarify
what really happened. It was not just Mark Rubio who said that yesterday, by the way, Rubio was in the region. He was at a meeting of Caribbean
nations in the Island of Saint Kitts and Nevis.
So, he was probably very, very close to the action. But also, the Attorney General of Florida, who has said that has opened an investigation, and the
Mayor of Miami, who is a Democratic politician, Eileen Higgins telling CNN in the early hours of today, Thursday, that she would like for all the
facts to be clarified, especially if they involve families who reside in the Miami area.
Eleni, of course, Miami is the capital of Cuban expatriates since the Castro took over the island in the 1950s. And of course, it's an area that
Secretary of State Marco Rubio knows really, really well, given that he's actually from Miami itself.
[09:15:00]
In the meantime, a lot of still an answer of the questions surrounding this incident that we're following really, really close, because, well, this has
the potential to escalate the situation very, very rapidly, especially as we are understanding now, especially from Cuban authorities, that these 10
people that were involved in this incident were identified as Cuban citizens, residents in the U.S.
However, we do not know if any of those people also hold a U.S. passport. We know that the Cubans are saying that, together with the four killed
members of that speed boat crew, they apprehended six further members of the crew. They are now in Cuba, receiving treatment while also serving
custody.
Cubans are saying the two of those six wounded and apprehended people, survivors were previously known by Cuban authorities, and the group is
pending charges being detained, pending charges of terrorism the crew -- the Cubans are saying that the crew was trying to infiltrate Cuba from the
northern tip, the northernmost part of the island, really, really close to Miami and to the Florida Keys, to infiltrate the island.
The U.S. is saying, so far, they have nothing to do with it. But clearly a situation that is a show. It's a proof of how the geopolitical tensions in
this region, in South America and Latin America, the whole Western Hemisphere, are now pointing very, very closely to Cuba, with the stated
goal of Mark Rubio and the White House to trigger a regime change in Cuba as quickly as possible.
They said that they would like the situation to change very, very quickly. Right now, Cuba is facing the most dramatic economic crisis in recent
years, with an oil blockade that is cutting all the oil provisions coming from foreign countries. There used to be, of course, oil coming down from
Venezuela.
It's no longer the case since Nicolas Maduro was removed on January the third. So, piling pressures, economic pressure, but also political, social
and geopolitical pressure on the government of Cuban Miguel Diaz-Canel, who has been steering the country in the last decade or so.
And well, clearly, a situation that could escalate very, very quickly, if indeed any of those links to the U.S. will prove to be more solid than what
we're seeing right now. We'll bring you the latest, Eleni, as soon as we hear them from either Cuban or U.S. --
GIOKOS: Yeah -- Super interesting. Well, a lot to look at there and story that is developing. Stefano Pozzebon, thank you so much. And ahead on
"Connect the World", North Korea's Kim Jong Un vastly strengthen his country's nuclear program, but military hardware was notably absent, as
recent military parade. Will explain after the break.
(COMMERCIAL BREAK)
[09:20:00]
GIOKOS: There was a spectacular show of North Korean military force in Pyongyang Wednesday, though it was a parade with the difference 14,000
troops marched in the city's main square. But for once, no military hardware was wheeled out. All the same, Kim Jong Un is vowing to strengthen
North Korea's nuclear weapons program. CNN's Will Ripley has this report.
WILL RIPLEY, CNN SENIOR INTERNATIONAL CORRESPONDENT: Very few places control a military parade like North Korea just did. We saw synchronized
paratroopers lighting up the sky, landing right in the middle of Pyongyang's Kim Il Sung Square.
We saw thousands of goose stepping, strobe lit troops marching in patterns and formations, tightly choreographed, drum majors wielding their batons.
State TV even showing shirtless soldiers training and practicing in the snow and ice. One thing we did not see weapons.
Unlike this massive military parade a few months ago for the 80th anniversary of the ruling Workers Party, there were no intercontinental
ballistic missiles or glide vehicles or giant mobile launch trucks rolling past the cameras. We did see North Korean Leader Kim Jong Un alongside his
daughter, believed to be Kim Ju Ae, both in matching black leather.
There's been a lot of speculation in South Korea Kim may be grooming his daughter as his likely successor, but so far, nothing official from
Pyongyang state media has never even publicly reported her name. Kim used his closing speech to double down on expanding North Korea's nuclear
arsenal, promising more warheads, stronger ICBMs, submarine launch capabilities, drones and AI integration.
He warned any violation of North Korea's independence would trigger immediate retaliation. At the same time, he did leave conditional room for
talks with Washington, saying it all depends on the U.S. attitude. It's worth noting President Donald Trump, in his State of the Union address, did
not mention North Korea at all.
He did honor a 100-year-old Korean War veteran in the chamber. That is a notable shift from his first term, when summit diplomacy with Kim dominated
headlines. Meanwhile, the U.S. and South Korea say their annual freedom shield military exercises will return next month, with some signs they
could be toned down from previous drills.
In late March and early April, President Trump is expected to travel to China to meet with Xi Jinping. So far, there's no sign of any plans for
Trump and Kim to meet while he's back in this region. Will Ripley, CNN, Taipei.
GIOKOS: I want to get you up to speed now on some of the stories that are on our radar. You're looking at some of the mass destruction left behind
from heavy rains, flooding and landslides that devastated a state in southeastern Brazil earlier this week. Officials say at least 40 people
were killed, while dozens of people remain missing.
Civil rights icon Jesse Jackson's body will lie in repose at Rainbow PUSH headquarters in Chicago today and tomorrow. Reverend Jackson founded the
group to further social justice and civil rights. He passed away last week at the age of 84. An Australian family is dealing with a horrific death of
the 85-year-old grandfather who was taken from his bed in a case of mistaken identity.
Authorities say they've arrested two men seen here on CCTV video for the alleged kidnap and murder of Chris Baghsarian. Detectives believe the
suspects were targeting another man for ransom. Chancellor, German Chancellor, Friedrich Merz is rounding of his inaugural trip to China.
He says talks with his Chinese counterpart were successful, but challenges still remain over trade competition. CNN's Kristie Lu Stout has more on
what this visit spells for the future of German Chinese relations.
KRISTIE LU STOUT, CNN ANCHOR AND CORRESPONDENT: After almost 10 months in office, German Chancellor Friedrich Merz is finally visiting China, a
country that has just overtaken the United States to become Germany's largest trading partner. On Wednesday, Merz met with the Chinese Leader Xi
Jinping and told him that he wanted to deepen the quote, comprehensive strategic partnership with China.
And Merz made the announcement that China ordered 120 aircraft from the European giant airbus. Our trade is at the top of the agenda here. Joining
Merz a large delegation of business leaders from top German firms including BMW and Volkswagen. Now they're visiting Beijing, as well as the Chinese
tech hub of Hangzhou, to see the Chinese human right maker unitary.
But not everyone sees China as the land of opportunity. Germany's trade deficit with China has soared, reaching $106 billion last year. And German
business groups are accusing China of unfair trade practices like overcapacity and massive subsidies. Now, ahead of this visit, the Asia-
Pacific Committee of German Business published a paper saying this, quote, Chinese competition, systemic risks, dependencies and distortions of
competition have intensified significantly and have become a key challenge for prosperity and security in Europe.
However, a statement released by China's Ministry of Foreign Affairs emphasized the strategic partnership between the two countries, saying this
quote, the greater changes and turbulence the world faces, the more important it is for our two countries to enhance strategic communication,
strengthen strategic mutual trust, and work for new progress in China- Germany, all around strategic partnership.
[09:25:00]
China wants to present itself as a reliable partner, especially now as Europe navigates a rocky relationship with U.S. President Donald Trump.
Kristie Lu Stout, CNN, Hong Kong.
GIOKOS: Just ahead, we look at the impact today's U.S.-Iran talks are having on oil prices and the markets as a whole. And how some countries are
preparing for the situation to get worse. We'll be back right after this.
(COMMERCIAL BREAK)
GIOKOS: Welcome back. I'm Eleni Giokos in Abu Dhabi, and you're watching "Connect the World". These are your headlines. Cuba says its troops shot
and killed four people on a speed boat in Cuban waters who were trying to, quote, infiltrate the island nation. The Cuban Interior Ministry says the
boat was registered in Florida and was carrying Cubans who live in the United States.
Secretary of State, Marco Rubio, says the U.S. will conduct its own investigation into the incident. Former U.S. Secretary of State, Hillary
Clinton will testify today before the House Oversight Committee investigating Jeffrey Epstein that will be followed by deposition from her
husband, Former President Bill Clinton on Friday.
They're appearing in New York. Committee Chairman James Comer says no one is accusing the Clintons of any wrongdoing. Microsoft Founder and
Philanthropist Bill Gates, has apologized to staff and his foundation of his ties to Jeffrey Epstein. That's according to "The Wall Street Journal".
Gates reportedly insisted he saw nor did anything elicit. The third round of indirect nuclear talks between the U.S. and Iran in Geneva is currently
paused for consultations with negotiations expected to resume in a few hours. A source says the U.S. is insisting on limiting Iran's nuclear
enrichment, maintaining long verification of Iran's nuclear activity.
The U.S., Iran talks are having a big impact on oil markets. It's creating a lot of concern within markets as a whole. We've got Paul Donovan, his
Chief Economist for UBS Global Wealth Management. And he joins us now live from London, as we expect the opening bell, in just a few seconds, frankly,
in just a few moments to start trade in New York.
So, I guess this is quite a big moment in time. You've got these talks happening in Geneva, Paul and then, importantly, just how much of a risk
premium has been priced into oil, into gold, for example, everyone is been running to and overall is the market prepared for this possibility?
[09:30:00]
PAUL DONOVAN, CHIEF ECONOMIST FOR UBS WEALTH MANAGEMENT: So, I think the market prices in all of the available information at any moment in time,
what you've got in the oil market, I think, is reflecting some of the likely risks. And actually, the risk to oil supply is probably not that
great.
There may be a lot of political noise and obviously humanitarian costs involved in any U.S. operation, but the oil market probably isn't going to
be that disruptive. We know U.S. President Trump is facing an affordability crisis which seems to have hit his approval ratings.
I think it's unlikely that the United States government would wish to take steps which significantly alter the global oil markets dynamics.
GIOKOS: Yeah, so I'm looking at Brent crude right now. It's down 1.3 percent you've got WTI down just over 2 percent so you know, you've got,
you've got a little bit of softness coming through today, but frankly, it's been very jittery. I also want to check it on the U.S. markets they've just
opened for trade as well, and you've got a mixed picture.
You've got the DOW up around four tenths of the percent. NASDAQ is in the red. So, as S&P look, we've had quite a lot of earnings today. We had
Nvidia, we had, you know, other companies as well. So, it's really interesting looking at the fundamentals versus geopolitical risks, as well
as just the uncertainties that have been thrust into the market because of President Trump's tariff policy.
DONOVAN: So that's a very good point. I think what we have got economically, when you look at the fundamental economics, is actually
fairly dull to be honest, the economies of the world, for the most part, are performing more or less in line with their trend rates of growth.
And the thing is, with a lot of the geopolitical noise, although it gets attention, we always have to ask the question, it does this change anything
economically? Did the U.S. consumer, for example, change their spending patterns in response to recent events in Venezuela?
Of course, not. Did Danish consumers change their consumption patterns in response to what's happened with the upsets over Greenland? No, not really.
So, when we look at the underlying fundamentals, things are actually continuing fairly OK, in spite of the political noise.
Now the uncertainty issue that is a little bit of a concern, because uncertainty, I think, held U.S. companies back from hiring and from
investing outside of the shiny new toy of AI. And so, in 2025, we did see perhaps a slightly more subdued corporate environment reflecting that
policy uncertainty, and that may be something that carries on this year, as we see this back and forth over tariffs.
GIOKOS: Yeah, so Paul, I love that the shiny new toy of AI. I think it's a brilliant way to describe what we're doing right now with the sector. But
you know, to your point, in terms of uncertainty, and you're saying, you know, some of these geopolitical issues are really not changing spending
patterns.
But I guess the big concern now is, if you see a disruption in the Strait of Hormuz, or, you know, strikes in Iran that would fundamentally impact
oil supplies, you're going to see an increase in inflation, unless OPEC comes in to try and fill in that supply gap. How are you -- what scenarios
are you looking at here that could derail the resilient global economy?
DONOVAN: So, a moderate increase in the oil price from where we are now would make some difference to inflation, but not a great deal. And
obviously, as far as Europe is concerned, consumer price inflation is a lot less sensitive to the underlying crude oil price because of taxation
structures, it will be more visible in the United States.
And it's not necessarily that you end up with a significant inflation shock coming through. There are other prices that are moderating in growth. For
example, the effect of tariffs will fade over time, because it's a one-off sales tax in its effect. But what you have in the States is, of course, a
perception of inflation that is not necessarily the same thing as reality.
And so if you were to see, for whatever reason, a higher oil price coming through that feeding through to the cost of a gas, a gallon of gasoline put
into the family sports utility vehicle in the Midwest of the United States, that changes inflation perceptions, and that then becomes a magnified
political issue, not necessarily an economic issue, but certainly something that would have political ramifications.
GIOKOS: Yeah, so I want to quickly look at the gold price, because it's been very telling in terms of the risk. I mean, the people are
anticipating. And I guess you know, you buy a lot of gold when you know interest rates, you know are low, here you go.
[09:35:00]
You've got gold at 5100. It's down eight tenths of percent, but it's doing phenomenally well. And you know, there's an old adage, when your hair
stylist starts to talk about a specific sector, then perhaps there's a little bit of a bubble and you need to sell. It's happening with gold.
I've been hearing about it the entire time. What's your sense, if you haven't bought, you missed the boat. Do you need to wait a little I mean,
do you think it's been overbought?
DONOVAN: So, I think there is the potential for gold to go higher, but perhaps with not quite so much fundamental underpinning. And I agree with
you, my indicator is when my boxing instructor starts asking my advice on an asset class. That normally is a sign that fear of missing out is driving
investors into the process.
And we have seen, for example, in the UK, in the United States, online retail sales of gold jewelry have been sky rocketing in recent months. Now,
buying gold jewelry is a really bad way of investing in gold, because gold jewelry has got a relatively low gold content relative to the consumer
price, but people have been doing that because the narrative has become so dominant.
So, I think there is a fundamental underpinning to the gold price, central bank shifts, the weakening of the dollar, the expectation of lower interest
rates coming through in the United States. Those are things, along with general geopolitical risk, which have supported the gold price, but then
we've seen it carried on.
GIOKOS: Yeah.
DONOVAN: Doesn't mean that we can't get that momentum continuing, but it's on a flimsier foundation than the move to $5,000 has been.
GIOKOS: So, I wanted to ask you about AI, as you refer to it as being a shiny new toy. Is your boxing instructor also, I was asking about the
sector, and what is your advice on AI? I mean, you made it sound like a depreciating asset, you know, like over the long term, maybe not investing
-- Tell me.
DONOVAN: I think boxing trainers are fairly secure in their jobs. They're not going to be threatened by AI anytime soon, nor, I hope are economists,
but when it comes to what we're seeing in the markets, I think what is happening now is something that we very often see, in fact, we nearly
always see in technological developments.
Whenever you get these new technological innovations, initially, the focus is on the tech itself. But ultimately, ultimately, what matters is not
technology. Economists don't actually care about technology that much. It's how you use the technology that creates the real economic value add the
real economic difference.
And what we're starting to see, I think, with regards to AI and the broader technology sector. Is the question, who is going to benefit from this?
GIOKOS: Yeah.
DONOVAN: Where are we going to see the broader economic impact? And so, what is happening is a broadening out of the AI narrative.
GIOKOS: Yeah. All right. Paul Donovan, good to have you on. That was fun. Much appreciate your insights. Right, moving on to the world of sports now,
Arsenal Football Club are still chasing for trophies this season as they star forward eyes a chance to make history at the London club. More on that
coming up next.
(COMMERCIAL BREAK)
[09:40:00]
GIOKOS: FIFA President Gianni Infantino is reassuring fans that World Cup co-host Mexico can still stage a spectacular event.
(BEGIN VIDEO CLIP)
GIANNI INFANTINO, FIFA PRESIDENT: Mexico is a great country. It is a football country, as in every country in the world, things happen. We do
not live on the moon or on another planet. Things happen. That is why we have police and authorities who will ensure order and security.
So, on my part, on behalf of FIFA, we have absolute confidence in President Sheinbaum in Mexico. We are in regular contact with the presidency and the
authorities, and in any case, we are following the situation.
(END VIDEO CLIP)
GIOKOS: 5 million visitors are expected to visit Mexico from June 11th, however, the recent killing of Mexican drug lord Nemesio El Mencho,
violence that shook parts of Mexico that was sparked because of that. Mexican President Claudia Sheinbaum has insisted that there will be no risk
to football fans.
Speaking of football, Arsenal Star Bukayo Saka recently signed a new deal to stay at the club, and speaking exclusively to CNN Sports, said that his
side has the opportunity to make history this season. We've got Amanda Davies, who caught up with Saka. Joining us now. Amanda, tell us all about
it.
AMANDA DAVIES, CNN WORLD SPORT: Yeah, Bukayo Saka very much, one of the England stars hoping to leave their mark at this year's World Cup in the
United States, Mexico and Canada. But ahead of that, he is the man on a serious trophy tilt with the Premier League leaders Arsenal.
Very early on in his career with Arsenal, he was given the nickname by club fans, Starboy. Such was his rise to prominence on the international stage.
But now he signed this contract, which takes him closer to 30 years of age, a long-term commitment to Arsenal.
And I got the opportunity really, to look back a bit about where he's come from, and to see how he wants to leave that legacy with the club. It was a
really great 20 minutes or so I spent with him. And we've got that exclusive interview coming next in "World Sports". I hope people will be
able to join us.
GIOKOS: All right. All right, fantastic. We'll see that right after the break. And I'll be back at the top of the hour with more news. We'll see
you soon.
(COMMERCIAL BREAK)
[09:45:00]
(WORLD SPORT)
END
