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Early Start with Rahel Solomon

Crackdown On Protesters Ramps Up Amid Warnings From Trump; Concern Growing Over Major Pullback In Stocks; Maduro Being Held In Notorious NY federal Detention Facility. Aired 5:30-6a ET

Aired January 07, 2026 - 05:30   ET

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

[05:30:00]

(BEGIN VIDEOTAPE)

PAULA HANCOCKS, CNN INTERNATIONAL CORRESPONDENT (voiceover): It is a familiar and brutal response to nationwide protests now in their second week.

The Iranian currency is collapsing, inflation rising, and the cost of living becoming hard to bear. Shopkeepers, traders, and students on the streets blame government mismanagement. Officials say publicly they are willing to talk.

SANAM VAKIL, CHATHAM HOUSE: The government is trying to be more amenable to dialogue. President Pezeshkian has offered to mediate and engage. He's acknowledged responsibility.

HANCOCKS (voiceover): But as the president offers dialogue the security forces are cracking down attacking protesters hold up in this hospital in Ilam. Social media footage shows forces inside looking for injured protesters and those trying to hide.

The U.S. State Department said, "The assault on the injured with tear gas and live ammunition is a blatant crime against humanity."

The U.S. president has already threatened to step in if protesters are killed.

DONALD TRUMP, (R) PRESIDENT OF THE UNITED STATES: We're watching it very closely. If they start killing people like they have in the past, I think they're going to get hit very hard by the United States.

HANCOCKS (voiceover): A move against the Iranian regime that Israel's prime minister has been encouraging.

ESMAIL BAGHAEI, IRANIAN FOREIGN MINISTRY SPOKESPERSON (through translator): Actions or statements raised by figures such as the prime of the Zionist regime or some radical American officials regarding Iran's internal affairs amounts under international norms to nothing more than incitement to violence, incitement to terrorism, and incitement to killing.

HANCOCKS (voiceover): U.S. military attacks on Venezuela over the weekend and the capture of President Nicolas Maduro will be watched closely in Tehran.

VAKIL: I think Venezuela adds icing to a really clearly baked cake for Iran. The Islamic Republic has learned the hard way that President Trump is unpredictable.

HANCOCKS (voiceover): Although the supreme leader Ayatollah Ali Khamenei does still have some support, there are increasing calls for his removal both inside and outside the country.

Paula Hancocks, CNN, Abu Dhabi.

(END VIDEOTAPE)

RAHEL SOLOMON, CNN ANCHOR: All right. Still ahead for us, the U.S. markets are setting new record highs. But as we kick off 2026, where does the U.S. economy really stand and where does it go from here? We'll ask a market expert after this break.

(COMMERCIAL)

[05:36:35]

SOLOMON: Welcome back to EARLY START. This is your business breakout -- 5:36 now.

Let's take a look and see where U.S. futures are ahead of the open bell on Wall Street. It looks like a mixed picture at this point but a sleepy start with the Dow and S&P pretty much near the flat line. The Nasdaq off. Let's call it three-tenths of one percent.

Let's take a look at some of the other business headlines this morning.

China has banned a range of exports to Japan amid strained relations between the two countries. The sweeping restrictions include rare earth elements and other so-called dual use items that have both civilian and military applications. Unclear at this moment how this will impact Japanese industries as the scope of the ban hasn't been disclosed.

Elon Musk's XAI company has raised $20 billion in funding as it seeks to develop new AI models and infrastructure. Multiple companies, including NVIDIA and Cisco, joined as investors. The company's latest work is training Grok 5 and integrating AI onto the X platform.

U.S. coins are coming to mark the nation's 250th birthday. On Monday the U.S. Mint announced one of the coins. The Mayflower Compact quarter is now in circulation. It's the first of five new quarter designs that will be released this year. Others will mark the Revolutionary War, the Declaration of Independence, the Constitution, and the Gettysburg Address.

Well, U.S. markets hit new record highs Tuesday and that's despite all of the geopolitical uncertainty and tension. For the first time ever, the Dow Jones closing about 49,000 after gaining almost 500 points on Tuesday. And the broader S&P 500 rose more than half a percent, also hitting a record high.

Let's bring in Art Hogan who is the chief market strategist for B. Riley Financial. He joins us live this morning from Boston, Massachusetts. Art, great to have you. Thanks for waking up early to be with us.

You know, I think the start of the year always broadly feels pretty optimistic. Markets seem to be reflecting that as well.

What are you expecting for this year -- for 2026?

ART HOGAN, CHIEF MARKET STRATEGIST, B. RILEY FINANCIAL: Yeah, I think that's a really good point, especially if the last week of the year was lackluster, which we certainly saw in the last week of 2025.

We've got -- you know, we had a holiday-shortened week that kind of messed up a lot of trading. Thursday, a holiday. No one really worked on Wednesday or Friday. Volumes were light and we drifted a bit lower, so we entered with a lower bar.

And I agree with you. I think there's a -- there's more tailwinds than headwinds in the market right now. And there's -- and certainly, part of that has to do with the fact that we're actually going to get real- time economic data for the first time in a couple of months.

So the December jobs report will come out on time on Friday. I think investors are looking forward to that. And then a view into inflation next week will give us a sense of just how the U.S. economy is going and doing because over the course of the last couple of months we've basically had to guess. And we -- and there have been varying opinions as to the quality of the economic data that we were getting.

So I think getting real economic data and turning -- flipping the calendar over I certainly think has put a boost into investor sentiment.

SOLOMON: Yeah. And Art, what do you say -- I mean, for the data that's come out that's reflected a rosy picture and even thinking about GDP for this year that appears to show an optimistic picture, what do you say to people who say where is that data coming from? I mean, that does not reflect what some people are feeling. How do you -- how do you reconcile that?

HOGAN: Well, a couple of things.

[05:40:00]

First and foremost, I think that there is a -- you know, a sort of K- shaped economy going on right now. And I think that consumers that are in good position, which make up about 80 percent of consumption in an economy that's largely driven by consumption, are actually doing very well.

Unfortunately, the other part of that is there are parts of the economy that aren't doing well. Wages aren't keeping up with the cost of goods and inflation, and certainly that sentiment is heard about a whole lot more necessarily than what's going on.

But I think the key that has been driving GDP growth has more to do with things like productivity gains because of artificial intelligence and new technologies, and certainly the massive amount of capex that's been going into this artificial intelligence revolution -- and I don't think that slows down anytime in 2026.

SOLOMON: Hmm.

HOGAN: So some of the drivers in the economy kind of sit in the background where, you know, they don't necessarily touch you and I as, you know, casual consumers -- but certainly economic growth that is much higher than the average, which tends to be about two percent. We're probably trending -- exiting the year closer to three percent than two percent and this year looks to be, you know, somewhere between 2 1/2 and 2 3/4 percent GDP growth, which will likely drive earnings and likely drive stocks higher.

SOLOMON: Hmm.

Any concerns to that? I mean, what concerns you more from where you're sitting? Is it domestic issues like a potential government shutdown? You have the midterm elections. Is it geopolitical issues like Venezuela? What concerns you more?

HOGAN: Yeah, I think that's a lot to unpack right now. I certainly think, you know, the potential for another government shutdown would be much worse than the last one we went through. And clearly a very divided Congress, a very divided Washington, D.C. The potential for that to happen certainly would throw a monkey wrench into any economic growth that we've been seeing. Clearly, we saw what happened during the last shutdown and things ground to a halt and we couldn't really ascertain the pace of economic activity.

I think the second thing to contemplate is the Supreme Court is going to come down on Friday with the legality of using the Emergency Powers Act for these tariffs. If, in fact, they rule that that's not constitutional, which they likely should, that's going to cause a lot of confusion.

The treasury is going to have to pay back a lot of money that they took in. The administration is going to have to quickly pivot to plan B, whatever that may be. So the end of the trade war gets pushed up quite a bit well into 2026 where we thought we were going to see the end of that entering the first quarter of this year.

So I think those two things likely are the near term bumps in the road.

Further out, I would say right now the market seems to be taking the situation in Venezuela in stride but if this is just the first step of a prolonged military incursion into other countries -- if we, you know, start looking at the Panama Canal, if we start making noise around Cuba -- I certainly think that the larger that gets the more the market is not going to like that and certainly, the less impressed we will be looking on the international stage. And I certainly think that's probably one of the biggest concerns.

So all of those things together can certainly get larger as the year gets older.

SOLOMON: What about on the Fed, Art? We are expecting a new Fed president sometime this year obviously with Fed chair Jay Powell's term expiring. President Trump has said that he plans to nominate a new Fed chair this month.

What are you expecting there, and how destabilizing could it be if the person who was named is someone who is considered perhaps not as independent as the markets would like?

HOGAN: Yeah. I think it appears as though the president has got this down to two different Kevins. I think that Kevin Warsh would probably be better for markets and received better in terms of confidence in markets and confidence in the Fed's independence.

But I think it's really important to take a step back and understand while the Fed chair has a very large role in decision making, it's a committee and the committee has to vote. So, you know, even if you look at the last three meetings while there were dissenters on either side of the vote, no one person makes a decision. So agnostic to how independent or not the next Fed chair is. The decision really is made by a committee.

So I think that's what we can sit back and take solace in. The Fed is going to remain independent and continue to be -- apply monetary policy to get to a place --

SOLOMON: Um-hum.

HOGAN: -- where both of their mandates are satisfied. But I don't think we expect many changes there, agnostic or, you know, not dependent on whoever the next Fed chair is going to be.

SOLOMON: Yeah. No, it's a fair point. I mean, we always see the chair at the podium answering questions. You know, we see Jay Powell as of late, but it is the whole FOMC committee behind him that makes a lot of these decisions.

Art Hogan, appreciate you being here with us this morning live there from Boston. Thank you.

HOGAN: Thank you so much.

SOLOMON: Yeah.

All right. And still ahead a closer look at the notorious federal jail that has housed many high-profile inmates here in New York and now includes Venezuela's Nicolas Maduro. We'll be right back.

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[05:49:05]

SOLOMON: Welcome back. I'm Rahel Solomon. And here are some of the stories we are watching for you today.

The Trump administration will brief lawmakers today on the military raid in Venezuela. Secretary of State Marco Rubio, Defense Secretary Pete Hegseth, and Attorney General Pam Bondi are all expected to take part. And it comes as members of Congress look to limit President Trump's war powers.

The White House says it's discussing a range of options to acquire Greenland, including the use of the U.S. military. Greenland, a Danish territory, has requested a meeting with the U.S. Secretary of State. European leaders have issued a statement of support for the sovereignty of Greenland and Denmark.

The eldest son of former President Ronald Reagan has died. Michael Reagan was adopted just after his birth in 1945 by Reagan and his first wife, actress Jane Wyman. He spent his adult life raising money for charities, including Alzheimer's research, and hosting a talk radio program.

[05:50:00]

Venezuelan opposition leader Maria Corina Machado is vowing the country will be a main ally of the U.S. following Maduro's capture. The exiled politician also says that she's planning to go back to Venezuela as soon as possible.

And now Machado, who just won the Nobel Peace Prize, is openly talking and taking on the country's new leader, Delcy Rodriguez. Rodriguez had been serving as Maduro's vice president and minister of petroleum up until his capture. She currently has the cautious backing of the Trump administration.

(BEGIN VIDEO CLIP)

MARIA CORINA MACHADO, VENEZUELAN OPPOSITION LEADER: Everybody in Venezuela and abroad knows perfectly who she is and the role she has played.

(END VIDEO CLIP)

SOLOMON: Machado also accuses Rodriguez of cozying up to America's adversaries.

(BEGIN VIDEO CLIP)

MACHADO: The main link -- the main actor that has relations with Russia, with Iran, and other countries that have, you know, obscure and criminal activities in Venezuela.

(END VIDEO CLIP)

SOLOMON: Nicolas Maduro, meantime, and his wife are now being held in New York's notorious Metropolitan Detention Center as they await their federal trial. The MDC, as it's known, no stranger to high-profile prisoners and has a reputation for really rough conditions as CNN's Brynn Gingras reports. (BEGIN VIDEOTAPE)

BRYNN GINGRAS, CNN CORRESPONDENT (voiceover): From palace luxury to prison hell.

UNIDENTIFIED MALE: The Venezuelans in New York are ecstatic about this.

GINGRAS (voiceover): Brooklyn's Metropolitan Detention Center, or MDC, is where nearly 1,300 inmates, now including ousted Venezuelan president Nicolas Maduro and his wife Cilia Flores, bide their time as they await federal trial in New York.

Epstein co-conspirator Ghislaine Maxwell, crypto king Sam Bankman Fried, music stars Sean "Diddy" Combs and R. Kelly are former MDC detainees. Accused murderer Luigi Mangioni is there right now.

Maduro isn't even the first president of a country to be held there. Former leader of Honduras, Juan Orlando Hernandez, also stayed at MDC while on trial for drug trafficking charges.

Inside, MDC conditions have been described as barbaric.

SAM MANGEL, FEDERAL PRISON CONSULTANT: It truly is hell. There is very little HVAC. There's very little heating. Every inmate gets one wool blanket, which means they're probably wearing the prison jumpsuit that you saw him in yesterday to sleep as well.

GINGRAS (voiceover): The Bureau of Prisons doesn't comment on current inmates, but Maduro and his wife are likely housed in a segregated area of the prison, not with the general population, in separate cells and alone.

MANGEL: His case -- he is a security risk in general population. No one knows what other inmates might think of him, other gang members, other drug cartel members. So putting him in general population at any time I think would be a tremendous security risk for the facility.

GINGRAS (voiceover): Now, instead of being catered to, according to a Bureau of Prisons handbook, their life likely includes a 6:00 a.m. wake-up with time scheduled to meet with their attorneys daily, outdoor exercise five hours a week, and daily visits by health personnel.

In recent years judges, attorneys, and activists have sounded the alarm about the horrific state of MDC, including staff shortages, stabbings, and killings.

ELIE HONIG, CNN SENIOR LEGAL ANALYST, FORMER FEDERAL PROSECUTOR, FORMER ASSISTANT U.S. ATTORNEY, SOUTHERN DISTRICT OF NEW YORK: The Bureau of Prisons has an obligation to take care of prisoner health and safety and is really historically quite poor at it. But again, in this case they'd better be on top of it.

GINGRAS (voiceover): Brynn Gingras, CNN, New York.

(END VIDEOTAPE)

SOLOMON: The U.S. Justice Department says that it has released less than one percent of the documents it has on the Jeffrey Epstein investigation. That's despite the law passed by Congress in November ordering the release of all the files by December 19 of last year. So far, just over 12,000 documents have been made public. The department says that more than two million are still being reviewed by lawyers. On Monday, the department told a federal judge, "Substantial work remains to be done."

Still ahead, the Los Angeles area still looking to return and rebuild from the ashes of last year's two deadly, destructive wildfires. More on that after this break.

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[05:58:40]

SOLOMON: Welcome back.

Today marks the first anniversary of two of the worst wildfires in California history.

The Palisades Fire broke out on January 7 last year and ended up exploding to nearly 24,000 acres. Twelve people died and thousands of structures were destroyed in that inferno. In Altadena, California the Eaton Fire killed 19 people and destroyed more than 9,000 structures. Both fires are among the most destructive wildfires in the history of California.

Flames wiped out much of the Palisades and Altadena communities overnight. Largescale evacuation orders were issued. It took weeks for the fires to be contained while residents wondered if they had a home to go back to, and many did not.

One of the winningest coaches in NFL history is now out of a job. The Baltimore Ravens fired head coach John Harbaugh Tuesday after 18 seasons. The team started the season as Super Bowl contenders, but they were eliminated from the playoffs in a Sunday night loss to the Pittsburgh Steelers. Harbaugh led Baltimore to a Super Bowl title in 2012. The Ravens now the seventh NFL team looking for a new head coach.

Nicole Kidman and Keith Urban are now officially divorced. A judge in Nashville dissolved their 19-year marriage on Tuesday. The Oscar- winning actor and Grammy-winning country singer were a fixture on red carpets throughout their relationship. Kidman filed for divorce in September citing "marital differences -- difficulties and irreconcilable differences." The Australian stars met in Los Angeles in 2005 and have two children together.

[06:00:15]

All right, that's going to do it for us here today on EARLY START. Thanks for being with us. I'm Rahel Solomon live in New York. I'll see you tomorrow but, in the meantime, "CNN THIS MORNING" starts right now.