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Early Start with Rahel Solomon

The Futures Before Wall Street Opening Bell; Federal Reserve Meets Amid Talk of Possible Recession; Ukrainian and Finnish Presidents Holding New Conference. Aired 5:30-6a ET

Aired March 19, 2025 - 05:30   ET

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

[05:30:00]

RAHEL SOLOMON, CNN ANCHOR: Shohei Ohtani and the L.A. Dodgers take on the Chicago Cubs in the Tokyo Series. We'll hear from fans excited to welcome their homegrown hero when we come back.

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SOLOMON: Welcome back. The opening bell is still hours away. But let's check where the futures are trading right now.

[05:35:00]

And futures are actually in the green. Nice to see some green for a change. It was a rough Tuesday, which we've become accustomed to on this wild roller coaster that we've been in on the markets. I'm watching the markets.

Meantime, the U.S. Federal Reserve is set to resume its two day monetary policy meeting in the coming hours as fears of a possible recession appear to be picking up steam. Recent surveys show that businesses are delaying investments and consumer spending weakening.

The Federal Reserve is expected to leave its key interest rate unchanged at least until more is known about the effects of President Trump's tariff policies. Fed Chair Jerome Powell is expected to speak when the policy meeting wraps up later today. That is always very eventful, at least for the markets. So watch that space.

But for now, let me bring in Mark Zandi, who is the chief economist of Moody's Analytics. And he joins us now from the great city of Philadelphia. Mark, always a pleasure to have you. As we said, the expectation is to hold rates steady. But with the signs of weakening that we've seen, is that the right move, Mark?

MARK ZANDI, CHIEF ECONOMIST, MOODY'S: Yes, Rahel, I think so. There's just a boatload of uncertainty around economic policy. You mentioned the tariff war, the global trade war.

That puts the Fed in a really tough spot, raises inflation. The tariffs are a tax on consumers that will push up through higher prices. And it weakens economic growth.

And those things run counter to each other. So the Fed doesn't know how to respond.

What do I do? Do I raise rates because of the higher inflation? Or do I cut rates because of the weaker growth? And the answer is, you know, I don't know. So I'm just going to sit on my hands. So at this point, I think it makes a lot of sense for the Fed to just stay on hold and see how this plays out a bit.

SOLOMON: Yes, because they are sort of in a tough spot, as you point out, and because there's so much confusion, you know, I think the press conference will be really enlightening, hopefully. I mean, it always tends to be closely watched, but especially now, Mark, in this politically heightened time, we're all going to be trying to read between the lines of what Powell says, what he means.

What are you watching? What are you listening for?

ZANDI: Well, Rahel, you and I would love to hear a lot from Chair Powell, a lot of clarity, crystal clear view on things. But I'm sure Chair Powell would like to stay out of the political fray. So I suspect he's going to be quite circumspect, not tell us a whole lot.

I mean, I'll reiterate what he's been saying now for the last couple of meetings, and that is, look, economic policy is all over the place. He won't say it exactly like that, but that's what it will mean until we get clarity. And I mentioned the trade war, but there's a lot of other stuff going on, as we know, that are just also scrambling things for the Fed, like the DOGE cuts to jobs and government funding.

You've got the immigration issues, the deportations. And, you know, Rahel, you've got this thing called the Treasury debt limit, which is, you know, in place now, and the Treasury is going to run out of cash later this summer, and that's going to be an issue. All these things matter to the Fed.

But I think given the political environment, Chair Powell is just going to try to put it right down the middle of the fairway and not, you know, cause any ripples.

SOLOMON: Fair point that he will be guarded, as he often is, maybe even especially so now. We can safely assume that he will be asked by reporters about what they're seeing in terms of a possible recession. Mark, hopefully you can be less guarded with us. What are your expectations? What do you see?

ZANDI: Yes, I'll do my best, Rahel. I have no loss for words when it comes to the economy. Look, the recession risks are uncomfortably high and they're rising. I think they're less than 50-50, but it really does depend on the president and what he does here. You know, I think if he continues to push on the tariffs, like, for example, right now, there's a lot of talk about reciprocal tariffs. That's broad-based tariffs coming into effect in a couple weeks, I think, early up April.

If that actually happens and those tariffs stay in place for any length of time, a couple, three, four, five months, I think that's enough to push the economy into recession, given everything else that's going on. So, you know, this would be -- this would be a really weird recession, right? I mean, it's recession by design.

You know, the economy came into the year rip-roaring, exceptionally strong, and we're pushing it in because of policy. It just doesn't feel like, you know, that's the direction we need to go. So I suspect the president and the administration at some point will say, OK, enough already. But, you know, I don't see that with confidence, and those recession risks are high.

SOLOMON: Yes. What do you think it would take to get to that point? I mean, do we see -- will it require a significant weakening in the labor market? I mean, what do you think it will take to sort of shift policy, at least from the White House?

ZANDI: Well, let me say, I don't think it will take a lot, right, because confidence is very fragile. You can see it in the consumer sentiment surveys. You can see it among businesspeople, you know, all the surveys of businesses and their capital spending plans, you know, the investments they plan to make, they're all pulling back.

You can see it, obviously, in the stock market, investor sentiment. So, you know, I think the collective psyche is very, very fragile, and it wouldn't take a lot to push it at this point. So, you know, if the tariffs actually are put into place, if we see -- well, it wouldn't take a lot to push it at this point.

So, you know, if the tariffs actually are put into place, if we see big cuts to government funding in a very short period of time, if there's significant mass deportation that disrupts labor markets, you know, many parts of the economy depend on immigrant labor, construction, manufacturing, that might be enough to push the collective psyche over the edge and push us into recession.

Because at the end of the day, Rahel, recession is a loss of faith. You know, we lose faith that we're going to be able to hold on to our job and businesses are going to be able to sell what they produce.

SOLOMON: Well, Mark, to that point, I mean, a year or so ago, you were one of the few economists who correctly predicted that not only was the U.S. not in a recession, but it did not appear that we were heading toward one. But you also were sort of sounding the alarm, I remember quite vividly, and you seemed pretty passionate about it, about the risk of talking ourselves into a recession.

And as you and I talk now about the collective psyche, I wonder, do we do we face that same risk now? Because at this point, it's become really hard to miss all of the recession warnings.

ZANDI: Yes, certainly. You know, but this go around, there's there's some reason to be nervous. I mean, because you've got these tariffs that are a tax increase on the American consumer. You know, it's a big deal.

And it looks like we're going to get retaliation from the countries that are going to face the higher tariffs from us. And that does damage to jobs here in the United States, those industries that face those retaliation. So I think there's real, you know, obviously we can push or we can we can talk ourselves into recession. But this one feels like we're being pushed into recession.

SOLOMON: Well, we will soon see certainly what the Fed expects and what the Fed sees. But, Mark, great to have your insights and perspective this morning. Thanks for being forthright with us. We appreciate it.

ZANDI: Thanks, Rahel, any time, take care.

SOLOMON: All right, see you soon. You, too.

All right, still to come, a rare review from the U.S. Supreme Court for President Donald Trump. What the chief justice is saying about the president's rhetoric on impeaching judges.

And still ahead, one of the biggest music festivals in the U.S. announces its lineup for 2025. Did your favorite singer or band make the cut? We'll be right back.

[05:45:00]

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SOLOMON: Welcome back. I'm going to take you live now to Helsinki, Finland. That's where Ukrainian President Volodymyr Zelenskyy has been on an official visit meeting with the Finnish president. Let's listen together.

ALEXANDER STUBB, FINNISH PRESIDENT: ... choices between two different worlds, Yalta or Helsinki. In other words, spheres of influence or equal rights and duties for all states. And I do always have to stress that Yalta is Ukrainian.

The principles of international law and the European security order have not changed. And there is no need to start changing them. Independence, sovereignty, and territorial integrity, these are the principles of the UN Charter and the Helsinki Charter.

We must work towards a just and sustainable peace in Ukraine based on these principles. The only solution is that Russia ends its war of aggression in Ukraine. Ukraine has an undeniable right to defend itself on its own and supported by its partners. This right cannot be restricted in any way, not now and not in the future.

We're here to talk about peace through strength. Ukraine wants peace. Finland wants peace. Europe wants peace. The United States wants peace.

Russia, on the other hand, still has to show that it wants a genuine peace. The first step in achieving peace is a ceasefire. There are only two ways to respond to the proposal of the President of the United States. It's a yes or a no, no buts, no conditions. Ukraine accepted a ceasefire without any forms of conditions. If Russia refuses to agree, we need to increase our efforts to

strengthen Ukraine and ratchet up pressure on Russia to convince them to come to the negotiating table.

I value the strong role that the United States, under the leadership of President Donald Trump, has taken in these peace talks. Yesterday's phone conversation between President Trump and President Putin was a step in the right direction towards a full, unconditional ceasefire. Trump wants to stop the killing, and he's right.

The discussions with you, Volodymyr, showed me yet again how like- minded we are in so many ways. Ukraine is a part of Europe. I stress that. Ukraine is European. I hope soon we will also be able to be together in the EU and in NATO. The cooperation between Finland and Ukraine is based on an equal partnership.

[05:50:00]

Finland has a lot to learn from Ukraine. The Ukrainian Armed Forces are the strongest and most modern in Europe. Ukrainian society has stood united. Ukrainians have showed remarkable resilience.

In Finnish, we call this sisu. Finnish people have privately donated over 100 million euros to Ukrainians in support. Finnish defense and tech industries have supported Ukraine in defending independence.

Finland will continue its strong support for Ukraine. Volodymyr, we are in this together. We Finns understand what you're going through. We will stand by your side for as long as it takes. Slava, Ukraine.

VOLODYMYR ZELENSKYY, UKRAINIAN PRESIDENT (through translator): Slava, thank you so much. Can I? OK.

This is the latest sign of strife for U.S. retailers. Many companies, including Walgreens and CVS, last year announced store closures and in fact, CoreSite Research has compiled the data and they found that over 7,300 stores in 2024 were announced to be closed. That's a rise of 57 percent from 2023, the highest number since 2020, which of course was the pandemic year, which caused mass disruption for businesses.

And there isn't one single reason for this, but a combination of factors, including rising costs for these businesses, but also, and that is of course related to high inflation. We saw a 40-year high U.S. inflation rate in 2022 of 9 percent. Retailers have struggled with this, as have consumers.

SOLOMON: OK, we've just been listening to Ukrainian President Volodymyr Zelenskyy, as well as Finnish President Alexander Stubb. The Finnish President saying, in part, we must work toward a just and sustainable peace in Ukraine. The only solution is Russia ending its war in Ukraine.

He also said that there are only two ways to respond to the President of the United States, yes or no, no conditions. Those comments, of course, coming after that two-hour call between Presidents Trump and Putin, where Putin did agree to temporarily stop attacks on energy and infrastructure targets in Ukraine, but stopped short of accepting a U.S. proposal for a ceasefire that Ukraine had already accepted. We're going to take a quick break.

We'll be right back.

[05:55:00]

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SOLOMON: An update now on the case of a missing U.S. college student, Sudiksha Konanki, who disappeared in the Dominican Republic nearly two weeks ago. On Tuesday, a judge granted a request for freedom for Joshua Steven Riibe, the man investigators believe was the last person to see the student alive. Riibe, a 22-year-old college student from Iowa, has not been considered a suspect, but a source says that authorities seized his passport last week and that he's been under police watch at a hotel.

According to one official, it's not clear when he'll get his passport back. The court hearing for Riibe came a day after Konanki's parents asked authorities that she be officially declared dead after going missing during a spring break trip. They say that investigators believe she drowned.

Chief Justice John Roberts rebuked President Trump's rhetoric on impeaching judges. In a statement, he said, quote: For more than two centuries, it has been established that impeachment is not an appropriate response to disagreement concerning a judicial decision. The normal appellate review process exists for that purpose.

Now, Roberts did not mention Trump by name, but his statement did come hours after the president wrote on social media that the judge who temporarily blocked the deportations of alleged Venezuelan gang members, quote, should be impeached. Here's what President Trump told Fox News.

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DONALD TRUMP, PRESIDENT OF THE UNITED STATES: Well, he didn't mention my name in the statement. I just saw it quickly. He didn't mention my name, but many people have called for his impeachment, the impeachment of this judge.

I don't know who the judge is, but he's radical left. He was Obama- appointed, and he actually said we shouldn't be able to take criminals, killers, murderers, horrible, the worst people, gang members, gang leaders, that we shouldn't be allowed to take them out of our country. Well, that's a presidential job. That's not for a local judge to be making that determination.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

DOJI, SINGER: Silence me, yes Anxiety, take it off of me

Somebody's watching me, it's my anxiety, yes

(END VIDEO CLIP)

SOLOMON: That song will now be in your head all day. You're welcome. Singer Doji performing her hit song, Anxiety, there. She will be one of the headliners at this year's Lollapalooza Music Festival in Chicago.

She joins other artists like Sabrina Carpenter, A$AP Rocky, Tyler, the Creator, and K-pop super group Twice. And there are dozens more acts to see. Tickets go on sale tomorrow for the festival, which begins on July 31st. You can see the entire lineup on their website. It's a great time. I've been once.

And finally this morning, a sea creature once declared the world's ugliest animal has had an underwater Cinderella story. The blobfish has now been voted New Zealand's fish of the year. The creature could grow up to 30 centimeters or about a foot long. U.S. researchers say that it looks like a big, blobbily tadpole with a big nose and beady eyes. Just goes to show beauty is in the eye of the beholder.

That'll do it for us here today. Thanks for joining us here on early start. I'm Rahel Solomon in New York. I will see you tomorrow. In the meantime, CNN "THIS MORNING" starts right now.