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Recession Fears Fuel Topsy-Turvy Wall Street; Obama, Hillary Go for Throat at Debates; GOP Candidates Talk the Economy; Wrongly Convicted Man Freed
Aired January 22, 2008 - 13:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
DON LEMON, CO-HOST: Breaking news from the heart of the financial world. U.S. stocks are on a roller coaster, and investors all over the world had a bad case of motion sickness.
MELISSA LONG, CO-HOST: Well, the foreign markets dropped sharply on fears of a U.S. recession. Wall Street did, as well, at first, though it's since tried to fight its way back.
LEMON: Well, the Fed is taking emergency action to try to get you spend more and businesses to borrow more. And lawmakers head to the White House next hour to talk numbers.
Good afternoon, everyone. I'm Don Lemon live at the CNN world headquarters in Atlanta.
LONG: And hello. I'm Melissa Long in today for Kyra Phillips. You're in the CNN NEWSROOM.
LEMON: Well, from around the world to Wall Street, to your wallet, CNN is covering it all on the frenzied financial day. We have correspondents at major markets across the globe and right here in the -- in the U.S.
Susan Lisovicz is at the big board, and Ali Velshi gives us the big picture.
Let's get right to it now with Susan Lisovicz on the floor of the New York Stock Exchange -- Susan.
SUSAN LISOVICZ, CNN CORRESPONDENT: Hi, Don.
Well, I'm going to bring you the half-time report, where we are seeing a bruising battle between the bulls and the bears. But the bears do still have the upper hand, despite the fact we're seeing a sell-off now of 69 points. Of course, that's pretty much the best that we can say of this volatile session.
We were as low as 463 points very close to the open. We knew it was coming after two days of a global sell-off. And that was exacerbated partly by the fact the markets were closed on Martin Luther King Day.
But an hour before the opening bell the Federal Reserve, in a very rare and aggressive move, cut interest rates by three-quarters of a percentage point. We haven't seen an inter-meeting move like that since the markets reopened a week after September 11. And we haven't seen this big of a rate cut since 1984.
How are markets reacting? Well, there's an attempted rally, but we haven't gotten into positive territory.
What we are seeing is some nibbling at some of the sectors that have been so hard hit. Some of the concerns rooted in the housing sector and the financial sector. We're seeing Home Depot shares up 7.5 percent. JPMorgan, big financial company, up 3 percent. GM up 1.3 percent. Wal-Mart up 1.25 percent.
What's that saying? Well, lower interest rates perhaps will entice people to buy. That's what we're seeing, but so far the three major averages are lower -- Don.
LEMON: All right. Susan Lisovicz on the floor of the New York Stock Exchange in what is turning out to be a very wild day on Wall Street. Susan, thank you.
And you know the saying: if the U.S. sneezes the world catches a cold? Well, coming up, we'll see whether Wall Street's wild ride is making global markets even more dizzy.
Also, we talked to the average investor on this anything-but- average day, and we'll tell you what you can do to protect your portfolio, especially if retirement is just around the corner.
And make sure you stick with CNN for all the news that affects your financial security. And go to CNNMoney.com for more on money, jobs and the mortgage crisis.
LONG: Let's get now to a breaking news story. Straight to T.J. Holmes. He has more on this developing story I understand happened during the morning commute in California.
T.J. HOLMES, CNN ANCHOR: Yes. The morning commute. These commuters happened to be school children. These children were on a school bus. Palmdale, California, is where we'll take you to. And this is the scene, the video we're getting there from our affiliate in KCAL in Palmdale, a little north of downtown Los Angeles.
But you see the school bus there. Local affiliates reporting that it did crash with an SUV. Don't exactly know what caused all this melee and caused this mess, but that is the result there. That school bus ended up in that position.
Now we are told that there are eight to ten patients. All of them are school children. According to the L.A. fire -- county fire inspector, that there are at least eight minor injuries and one critical, is the word. And possibly another victim here, but just not an actually -- accurate count.
But again at least eight minor injuries, one critical injury. All of these school children. These kids apparently from the Los Amigos magnet school in the Palmdale School District there. But they were headed to school this morning. This accident happened just a bit over an hour ago. But all of those students now who were injured now are being taken to hospitals out there. Don't exactly know how many students all together were on that bus, but we do know that there are at least eight, nine, possibly ten injuries, one of them critical. We'll keep our eye on this as we get more information about what happened in that accident. Also, the conditions of those young passengers (ph), certainly pass along to you.
Also need to let you know, Melissa, we don't know the age of these youngsters, as well.
LONG: Right.
HOLMES: So several more details for us to work and to get more you. And when we get it, we'll get it on for you.
LONG: All right. I know you'll keep us posted.
HOLMES: All right.
LONG: Thank you, T.J.
LEMON: Just over an hour ago a federal judge in Miami sentenced Jose Padilla to more than 17 years in prison. Padilla was arrested in 2002 and accused of plotting to blow up a so-called dirty bomb inside the U.S. Those charges didn't stick, but last summer he and two other men were convicted of plotting to support international terrorism and al Qaeda.
Padilla's co-defendants got more than 12 and 15 years each. Prosecutors had pushed for a 30-year minimum for Jose Padilla.
LONG: Things got pretty testy, or should I say feisty, when the top three Democratic candidates for president faced off in South Carolina last night. Now, if you tuned in, you know much of the squabbling and the finger-pointing took place between Barack Obama and Hillary Clinton.
CNN's Candy Crowley offers you this recap.
(BEGIN VIDEOTAPE)
SEN. BARACK OBAMA (D-IL), PRESIDENTIAL CANDIDATE: Wait, no, Hillary. You just spoke -- you just spoke for two minutes.
SEN. HILLARY CLINTON (D-NY), PRESIDENTIAL CANDIDATE: ... had not -- I did not say anything about Ronald Reagan.
CANDY CROWLEY, CNN CORRESPONDENT (voice-over): You think this race isn't personal? Then you didn't watch.
OBAMA: While I was working on those streets, watching those folks see their jobs shift overseas, you were a corporate lawyer sitting on the board of Wal-Mart.
CROWLEY: They read their oppo research, used it frequently and never gave an inch.
CLINTON: I was fighting against those ideas when you were practicing law and representing your contributor, Rezko, in his slum landlord business in inner city Chicago.
OBAMA: No, no, no, no, no, no.
CROWLEY: Also, John Edwards was there.
JOHN EDWARDS (D), PRESIDENTIAL CANDIDATE: I also want to know, on behalf of voters here in South Carolina, this kind of squabbling, how many children is this going to get health care?
CROWLEY: So, first victim: that high-minded campaign on the issues. And even when they did get down to it, hostilities simmered, each accusing the other of distorting the truth.
On the economic stimulus plan, Obama said Clinton changed hers to match his. She said it wasn't so. Fiscal responsibility: she said he can't pay for his plans. He said it wasn't the truth.
On health care...
EDWARDS: There's nothing wrong with us arguing about this. But -- but I believe that there is not a single man, woman and child in America who's not worthy of help.
CROWLEY: It was two-on-one: Edwards and Clinton have health care plans that mandate insurance for everyone with government subsidies for those who can't afford it. Obama's plan pivots on offering the same subsidies but driving down costs so people can afford health insurance.
OBAMA: You mandate on families to buy health insurance that they can't afford, and if they don't buy it, you fine them or in some other way save money.
CROWLEY: The Clinton campaign thinks this is a winner; it's one of her favorite subjects.
CLINTON: I think that the whole idea of universal health care is such a core Democratic principle that I am willing to go to the mat for it.
CROWLEY: But mostly, this was a debate dominated by the dynamics of a tight race with big stakes.
CLINTON: Senator Obama, it is very difficult having a straight- up debate with you, because you never take responsibility for any vote.
CROWLEY: And two candidates with raw nerve endings.
OBAMA: These are the kinds of political games that we are accustomed to.
CLINTON: Whoa, wait a minute. Wait a minute.
CROWLEY: Candy Crowley, CNN, Myrtle Beach, South Carolina.
(END VIDEOTAPE)
LEMON: With South Carolina in the rear-view mirror rears, Republican candidates are focusing on Florida. The state's GOP primary is one week from today. Mark your calendars.
And CNN's Mary Snow joins us now from Palm Beach Gardens.
Hi, Mary.
MARY SNOW, CNN CORRESPONDENT: Hey there, Don.
And you know, while the candidates are really focusing on Florida, they also have an eye on Wall Street, because the economy has become center stage here in Florida in this crucial test among Republican candidates and, certainly, candidates reacting to the Federal Reserve's interest rate cuts today.
Rudy Giuliani spoke here a short time ago today, and he said that he thinks this only underscores his plan that he unveiled to cut taxes and spending. Mitt Romney, John McCain, all touting their own plans. And along the campaign trail today the candidates are making their pitch on why their experience would put them in the best position to help the economy.
(BEGIN VIDEO CLIP)
RUDY GIULIANI (R), PRESIDENTIAL CANDIDATE: Right now the most important thing that I believe a president needs to understand, a president needs to understand how to stimulate an economy like ours. And I have experience doing that.
MITT ROMNEY (R), PRESIDENTIAL CANDIDATE: And you know, at a time like this, it's critical that we have a strong economy, that we rebound and that we make sure we keep good jobs in this country. I believe that, when things like this occur, it points out just how important it is to have a president who actually has had a job in the private sector becoming our next president.
(END VIDEO CLIP)
SNOW: And Senator John McCain is campaigning in the northern part of the state as we speak. He applauds the Federal Reserve's interest rate cuts, but he's also hammering home his theme about the need to cut spending.
Should any of these candidates be elected, they will inherit this economy, so of course they are touting their own plans.
Mike Huckabee, the other Republican candidate here in this race, is not in Florida right now. He is in Georgia. He's going to be coming back here later. One of the focuses of his day today was the 35th anniversary of Roe v. Wade. He's saying that overturning that landmark Supreme Court decision it not enough, that there is a constitutional amendment needed in that ruling.
But this is a crucial battle test -- battleground test for these candidates, and it is only heating up, with each kind of taking aim at each other's plans to help revive the flailing economy -- Don.
LEMON: OK. Mary Snow in Palm Beach Gardens for us. Thank you very much for that, Mary.
Time is winding down, and the race is heating up. For the freshest polls, the latest fights, the political ticker blog and more, check out CNNPolitics.com.
LONG: Of course, the economy is becoming a big issue on the campaign trail. As you know, the Federal Reserve, the Fed, reduced the Federal Reserve's rate this morning to 3.5 percent by 75 basis points earlier today.
We had a live shot from Susan Lisovicz, who was at the New York Stock Exchange. Now let's check on the stocks of the NASDAQ. Poppy Harlow joins us live -- Poppy.
POPPY HARLOW, CNN CORRESPONDENT: That's right. That's right, Melissa. It looks like the Fed's action was just too little, too late. Tech stocks really react to Fed cuts, because those companies borrow a lot of money.
The NASDAQ opened well in bears territory, down about 5 percent at the open. It is well off those lows but still trading in the red, these stocks.
Major movers we want to tell you about. First, Yahoo! Yahoo! down about 2 percent. And what is weighing on Yahoo!, a lot of reports out that it's making job cuts, could slash up to 5 percent of its work force.
Next, Apple. Investors eagerly awaiting earnings today from Apple. That stock trading in negative territory, down about 1.3 percent. Apple is down about 20 percent so far this year. Really hard-hit.
Next Intel. I want to mention Intel, because this is considered a bellwether for tech stocks. Intel is, of course, the world's biggest chipmaker, trading in the red after disappointed with its fourth quarter earnings last week.
So sentiment here at the NASDAQ not strong at all. Really weak, just as we saw, as Susan told us from the NYSE. As I said, the NASDAQ down about 13.5 percent so far this year. That makes it the worst hit of the major U.S. indices so far in 2008 -- Melissa.
LONG: Thanks so much, Poppy Harlow, with information on the NASDAQ. And again, steep early losses today. We have not seen a rate cut like this since 1984.
LEMON: Melissa and Poppy, the Dow might be down, but it is not out. Despite what's being -- what's been happening in markets around the globe, shares dropping from Paris to Seoul and points in between. And here's a first: Ali Velshi coming to us live from the bus, Ali.
ALI VELSHI, CNN CORRESPONDENT: Don and Melissa, you know, I just saw Poppy there. She's got this fantastic wall behind her at NASDAQ. I was getting a little jealous. So if this looks a little different for you, it absolutely is.
For any of you watching out here, I am on a bus in South Carolina. We are moving from one coast to another to find out, not about the global economy but to what it means right here on the ground locally.
Stay with us. I'll come back and tell what you people are feeling about the economy right here in South Carolina.
LEMON: Ali Velshi and our entire financial team. Stock market or shock market? We'll find out between now and the closing bell, right here in the CNN NEWSROOM.
(COMMERCIAL BREAK)
LEMON: Breaking news into the CNN NEWSROOM. The evidence against him was literally -- well, it was sketchy. Tim Masters was convicted in Colorado of a 1987 murder, largely on the basis of his own violent drawings of the scene when he was 15.
Well, just moments ago, after almost ten years in prison, Masters' conviction was vacated, thanks to DNA evidence and indications he didn't get a fair trial.
Masters says he -- he's let go of the bitterness and the long -- that he carried for such a long time, and he just wants to enjoy being back with his family.
Our Drew Griffin, who was instrumental in this story, will join us straight ahead, moments away in the CNN NEWSROOM.
LONG: And now we focus on your money, your vote. Will the economy be the deciding factor in the '08 presidential race?
Senior business correspondent Ali Velshi is on the Election Express right now. He is traveling, heading west out of South Carolina and joins us now via broadband.
I know you're still on the road, but you are still able to track the markets.
VELSHI: We are. And that's the -- that's the neat thing about this. This is a first, Melissa.
I am sitting in the CNN Election Express, that bus that our viewers have seen on TV. We have just left Myrtle Beach, South Carolina, and over the course of the next week we are going to go through nine states, travel about 2,600 miles, we'll get to Los Angeles.
On the way there we are going to talk to America about the economy. As you said, we know it's the No. 1 issue for Americans, but what about the economy? Is it jobs? Is it gas prices? Is it their mortgages? Is it their interest rates or is it the stock market?
Now, look at the market, look at the way this Dow has come back. We started this day thinking that we were going to see more than a 500-point plunge. We saw pretty close to that right at the open, but now it's coming back. Why? Because we saw this massive cut in interest rates from the Federal Reserve. Poppy was talking about it; Susan Lisovicz was talking about it; Gerri Willis has talked about this.
The Fed has not done something like this before, a massive three- quarter of a percentage point cut in interest rates.
Now, what does this mean? That means interest rates in the United States, the Fed rate, stands at 3.5 percent. You add three percentage points to that you get 6.5 percent. That's the prime rate. And so many of our loans, our credit cards, our auto loans, our adjustable mortgages are connected to that prime rate, or adjustable loans are connected to prime rate.
So this basically gives everybody across the board a bit of a discount on their debt, makes it more reasonable to carry debt. And it's not necessarily a recommendation, just that it makes it cheaper. And the hope, Melissa, is that Americans will go out and use that money. They'll spend it. It will help the economy.
We're out here asking people whether that's actually true, whether they think the problems in the economy are deeper than the interest rates they pay. What are we doing about gasoline at more than $3 a gallon? What are we doing about the housing price slump? What are we doing about mortgage rates?
And most importantly -- most importantly -- the thing that matters more than any of those economic indicators is jobs. If people think they'll have an income, Melissa and Don, they will spend money. If you're fearful that your income will stop, that what slams the brakes on spending.
So we're out...
LONG: I think we may have just lost Ali Velshi, again trying some new technology there by broadband. We've been reporting with our senior business correspondent, Ali Velshi, keeping you up to date on what the Fed cut means to you today. We're going to talk to him a little bit later about what it means to your longer-term picture in terms of investments and your 401(k).
LEMON: Meantime, we have some breaking news right here into the CNN NEWSROOM. It involves that man who was in prison for ten years for a murder that today it is believed he has not -- he did not commit.
Let's go straight to our Drew Griffin, who's at the scene right now of that hearing.
Drew, take it away. I see you have something happening right behind you.
DREW GRIFFIN, CNN CORRESPONDENT: That's the family releasing balloons on the release of Tim Masters. He's been held in prison all this time, Don. It took them about three minutes to let them out.
The -- the motion that was to vacate his prosecution, that was granted, so they vacated his -- his conviction. And then he was released on his own reconnaissance, dressed dapperly, I might add, in a nice blue blazer, a shirt and a tie. He's going to experience freedom for the first time, like you said, in nine or ten years.
This was a guy who was first sought upon by the Ft. Collins police when he was a 15-year-old high school kid. They just would not let him go, followed him for 12 years until finally they said they cracked the case with so-called psychological evidence. It was basically, Tim Masters's doodle...
LEMON: Drew -- Drew, can you hear me? I hate to cut you off. Tim Masters taking some questions right now. We're going to listen in, and we're going to come back to you. OK, Drew?
TIM MASTERS, RELEASED FROM PRISON: I'm so nervous right now, I forgot all about it. My -- my attorneys -- I can't say enough good things about them. They worked so hard, so many hours overtime.
UNIDENTIFIED MALE: Enough about us!
T. MASTERS: The whole -- the whole team.
UNIDENTIFIED FEMALE: How do you feel?
UNIDENTIFIED MALE: OK. One more question. How do you feel?
T. MASTERS: I want to go see my family.
UNIDENTIFIED MALE: That's what we're going to do. Thank you, all.
LEMON: Obviously, some very exciting news, very exciting time for Tim Masters.
Drew Griffin, I hated to cut you off there, but we wanted to get that in. You said -- you know, he was so nervous he couldn't answer some of the questions. He forgot about some of the things that reporters are asking him. He said, "I just want to go home and see my family." And you can understand that sentiment.
GRIFFIN: Absolutely. And that family is right out here, waiting to greet him as he comes out of the courtroom, Don. This is a huge day for this family that never really gave up on this guy. They never really thought that he could possibly have done it, even though the police thought so.
He's going to have some kind of a celebration today, but now the big work comes in, what do you do after all this time incarcerated? You lost a big chunk of your life that you have to put back together. He's still not out of the woods, believe it or not. There is going to be a hearing on February 5, whether or not the local Larimer County district attorney wants to pursue charges still in this case. Remember, this is just a motion for a retrial. Now the prosecutor has to decide whether or not to try him.
That becomes much less predictable, since this new DNA evidence that was brought upon by the defense seems to point somewhere else.
But again, Tim Masters is going to go free, is going to walk straight out of this courtroom and into this cold, blue Colorado sky in just a matter of minutes, Don.
LEMON: And Drew, thank you. You know, you've been following this story for quite some time now and also uncovered some information and been very instrumental in what's happening today. So if you hear from him, get an interview, what have you, will you please let us know? We'd love to get him on.
GRIFFIN: I'll tell you what. We'll just have the camera pointed at that front door. And you guys can break in as you see fit.
LEMON: OK. Drew Griffin on the scene there. Thank you very much for that report. And Drew, we want to tell our viewers just a little bit later on this hour, we'll hear from two of Tim Masters's relatives about the ordeal and this, what looks like a stunning turnaround.
LONG: Again, steep early losses on Wall Street today. How does this affect you? You've invested for years, but lately it seems like your 401(k) has done a shrink. Financial expert Gerri Willis is in the NEWSROOM with some suggestions on what you can do to protect your nest egg.
(COMMERCIAL BREAK)
LEMON: Twenty-five past the hour. Three of the stories we're working on for you right here in the CNN NEWSROOM.
Live pictures of Wall Street's big board, where stocks are trying to battle back after an early beating, down some 400 points earlier. Foreign markets also dropped sharply amid fears a U.S. recession is on the way. President Bush and key lawmakers huddle next hour to talk economic stimulus.
Jose Padilla's getting less time than the government wanted. A federal judge has sentenced the terror suspect to more than 17 years in prison. Padilla, a U.S. citizen, was once accused of plotting to set off a radioactive dirty bomb, but he was convicted on other terror-related charges.
And just minutes ago, Tim Masters became a free man after serving nearly a decade in prison for a brutal murder. The Colorado judge has thrown out his conviction and ordered his release. He was exonerated based on DNA evidence. LONG: And Tim Masters' family watched helplessly as he was wrongly convicted of murder. Today, nearly a decade later, they watched joyfully as his conviction was thrown out.
Joining us live from Ft. Collins, Colorado, Tim's aunt, Bridget Masters.
Bridget, thank you so much. Again, ten years later, nearly ten years later. I'm sure it is difficult to put into words what you're feeling, what your family is experiencing today, but try to do it for us.
BRIDGET MASTERS, AUNT OF TIM MASTERS: It's overwhelming. We are so excited and so thrilled to see him be able to walk out of here today. And you can tell by the support of the family, there's close to 50 family members here today to watch him walk free.
LONG: He said in an interview with one of the local TV stations that it's his supportive family that really got him through some of the very dark days.
Going forward, he's going to need that support even more. He was talking about how he didn't have an experience with a cell phone, had never been online. Very basic things that are a part of our society. So what is your family planning to do to help him just re-acquaint himself?
B. MASTERS: Well, we're all fighting over who he gets to stay with first. And everybody in the family has a room for him. So we're all going to be there. We're all going to be supporting him and surrounding him just as much now as we have been throughout this entire ordeal for him.
LONG: He calls himself in the interview a hopeful pessimist, saying that he always hoped for the best but expected the worst. He said he almost didn't believe it would happen until he was a free man today. What is he like today? What is he saying to you?
B. MASTERS: You know, I think the biggest thing for Tim is that, all along, he felt like he'd been telling the truth, and other than the family, nobody would believe him. And I think that's the biggest thing for him now, is finally people are believing his side of the story.
LONG: He looked, as Drew Griffin mentioned earlier, dapper today in his suit and his tie in the courtroom. As you were sitting there in the courtroom and the proceedings were delayed, what was going through your mind?
B. MASTERS: We just wanted it to hurry up and get over with. That's all. Just -- he said the first -- I asked him what the first thing was that he wanted to do or have when he got out. And he said he just wanted to hug everybody in the family. And that's all that we're waiting to do, is to see him and to give him a big hug.
LONG: And I know he really doesn't have any substantial plans at this point. He really just wants to celebrate with you. And I understand you're having a party?
B. MASTERS: Yes. Yes.
LONG: Tell me a little bit about the party.
B. MASTERS: It's just going to be all the family getting together. Like I said, it's a pretty large family so it's just going to take all afternoon for him to get around and see everybody, get re- acquainted with cousins he hasn't seen for ten years and just find out who all the new members of the family are. So it's going to be a great day for him today.
LONG: Yes, good point. All the new members of the family, of course, because of ten years of incarceration.
Thank you so much for sharing your family's perspective and sharing your thoughts on what is certainly a joyous day for your family and for Mr. Masters himself.
B. MASTERS: Thank you so much.
LONG: Thank you.
LEMON: All right. So you've invested for years, but lately all your 401(k) has done is shrink. Our financial expert, Gerri Willis, is in the NEWSROOM with some tips on what you can do to protect your nest egg.
(COMMERCIAL BREAK)
(COMMERCIAL BREAK)
LEMON: Just a little past 1:30 here in the East. And we're talking about a huge sell-off in the worldwide markets and surprise interest rate cuts by the Federal Reserve sent shock waves through Wall Street.
Susan Lisovicz is at the New York Stock Exchange with the very latest on this, Susan. And you got a little reprieve, you're off the floor now and back at your perch.
LISOVICZ: That's right, Don, but no reprieve from the selling. You know, it's like those 200-point declines were really just a warm- up act for what we saw at the opening bell this morning. The Dow Industrials tumbling more than 450 points close to the open following a worldwide sell-off.
But the situation could have been worse if not for an emergency move by the Federal Reserve an hour before the opening bell. The federal reserve cutting a key interest rate by three-quarters of a percentage point. That was the biggest interest rate cut since 1984. And it was the first emergency cut from the Fed since the aftermath of September 11th.
So far for the financial markets, it has had some positive effect. Even though stock prices are still lower, clearly, we are seeing a bit of stability. The Dow Industrials are down just 131 points. It's all relative, folks. The NASDAQ composite meanwhile is down as well.
Another factor that's helping, believe it or not, to calm down the jitters: speculation about another rate cut. The Fed is still set to meet next Tuesday and Wednesday and investors are now betting with nearly 100 percent certainty that there will be an additional quarter- point cut. The Futures Market also says there's a 66 percent chance of a more steep -- steep half point cut.
What got us into this mess? A sense that credit to both individuals and businesses is drying up. That's why a rate cut is so important. Markets around the world plunged Monday and again today as fears spread that the slowdown in the U.S. economy could spill over to other parts of the world, Don.
LEMON: Yes, I'm glad you touched on that because, you know, we were talking in the morning meeting about how did we get here, how did we get to this? You know, I guess it was a whole cacophony of things. But here's what I want to ask you. When the Fed cuts interest rates, it usually comes out with a detailed statement. Did that happen for this emergency cut?
LISOVICZ: Oh, yes. The comments show how worried, Don, the Fed is about the current state of the economy. The Fed said it made its decision because of what it called "a weakening of the economic outlook and increasing downside risks to growth." It's also worried about liquidity, saying financial market conditions have continued to deteriorate and credit has tightened and that it's seeing a deepening of the housing contraction, if you can imagine that, as well as some softening in labor markets, though, jobs.
So, not a pretty picture as one senator put it this morning.
(BEGIN VIDEO CLIP)
SEN. DICK DURBIN (D), ILLINOIS: The one thing the American people certainly want us to do is to wake up and smell the coffee. And this morning, if you woke up and smelled the coffee, you also smelled something burning on Wall Street. What's burning up is the Dow Jones Industrial average.
(END VIDEO CLIP)
LISOVICZ: So, concern from Wall Street to Washington and beyond. And of course, we'll be following it throughout the afternoon.
Don, back to you.
LEMON: As I said, stock market or shock market. We'll find out between now and the closing bell exactly what happens. Susan, we'll be depending on you a lot today. Thank you very much.
In the meantime, we have some breaking news. When it concerns -- where it concerns that marine who was pregnant and was killed and they're looking for Cesar Laurean? FBI said that he may be in Mexico.
Joining us now by telephone is our correspondent there, Harris Whitbeck. And have you some new information on him, Harris?
VOICE OF HARRIS WHITBECK, CNN CORRESPONDENT: Don, we're in the city of Guadalajara where Laurean's family originally was from. We just spoke to a young man by the name of Juan Antonio Ramos who says he is a cousin of Cesar Laurean. And he told us that his cousin visited him here in Guadalajara just about one week ago.
We have spent several days tracking down family members and looking at birth certificates and trying to find addresses of homes that might have belonged to Cesar Laurean's family, and during that investigation, we came across his cousin who, again, told us that just one week ago, he saw his cousin, the marine accused of murder, here in Guadalajara, Mexico.
We asked him if at the time he knew of the charges that had been levied against his cousin. He said no, but that shortly after that visit, he saw the news on CNN that his cousin was being -- was being looked for and was being possibly prosecuted for murder.
LEMON: Hey -- hey, Harris, I got a quick question for you. If you know this information, does the FBI or any authorities interviewed this cousin that you've been speaking to?
WHITBECK: No, we asked him if anybody else had been talking to them. And he said, no, he said that we were the first ones had spoken (ph) to him. And yesterday, we spoke to the local police authorities in Guadalajara and they told us that they had no specific task. They had not been tasked specifically to look for this individual here in the Guadalajara area.
LEMON: All right, so according to this Juan Ramos -- Juan Antonio Ramos, correct, that one week ago, his cousin visited him in the Guadalajara area?
WHITBECK: That's correct. Juan Antonio Ramos who's a cousin. And we did check out his driver's license, we saw his name. We checked out the names of his parents and they all coincide with the names of the relatives of the marine that we've been investigating the last several days. And again, he said just one week ago, he was tending to his liquor store, as he does every day, and his cousin came up with three other friends and said, hi, how you doing, we're here for a few days, just wanted to say hi.
LEMON: Oh, OK, Harris Whitbeck reporting that developing news here in the CNN NEWSROOM.
And just to give you a little bit of background very quickly here, we're talking about suspected killer's -- name is Marine Corporal Cesar Laurean. According to the FBI last week, they believe that he had possibly fled to Mexico because he had family there. Of course, he is charged in the murder and death -- the murder of Lance Corporal Maria Lauterbach, who was eight months pregnant. And there was some -- a situation going on there with the Marines.
But again, according to Harris Whitbeck, a family member says he saw him in Mexico, the Guadalajara area just about one week ago. We'll follow.
LONG: And back to our big story today, your money and the markets. Days like this that have investors ringing their hands, especially investors that may be nearing retirement. The Dow drops. Well, your 401k shrinks.
So, Gerri Willis, we all need to know what can we do to protect what is still in that 401k?
GERRI WILLIS, CNN PERSONAL FINANCE EDITOR: Well, and hi there, Melissa.
You know, you don't want to be taking a lot of action on a day like today. As you watch these stocks tank, the last thing you want to do is get into the market and sell your stocks. You lose control over pricing. You lose money. And then eventually, you're going to want to get reinvested in the market and you're going to have to pay more to do it. Therefore, you're going to buy high and sell low. That's not a recipe for having a very effective investing strategy.
Also, keep in mind that it's not like stocks and their direction are going to plot what's going on with recession step by step. I know you're looking at what happened today and you're thinking wow, if this is the beginning of the recession, is every day going to be like this? The answer is no. The stock market is a forward-looking mechanism. It's going to move ahead of what's going on in the economy. Therefore, it will come out of its slump before the economy does.
So you have that to look forward to. End of the day you want to make sure that your portfolio is balanced, that you're invested in the right asset classes and not sell when fear is at its height -- Melissa.
LONG: Obviously keep -- the crunch word, the key word, well diversified. Well, for those that are concerned about losing money, is there anything we can do to protect it so the fund doesn't lose too much?
WILLIS: Well, you know, at the end of the day, you've got to be invested, even when it hurts. You should be continually putting more money in the market over time, so that on days like this you're actually paying very little for new shares. Make sure, as I said before, that you're diversified, that you're in the right asset classes for your age. There is a great calculator on CNN Money that can help you figure exactly out how much to put in stocks, bonds, overseas, you name it.
And then if you really feel overwhelmed by all of this, you can simply set it and forget it; invest in a life cycle-fund. This will make the choices for you in terms of asset allocations so you don't have to. And you can always ask a financial adviser to take a look at your portfolio right now to see if you are invested in a responsible fashion and if it makes sense the choices that you've made.
End of the day, you know, I've got to tell you, we started -- Susan said this earlier -- more than 400 points down on the Dow. Now we're down 91. You know, I don't know that the world changed that dramatically since the market opened earlier this morning. But certainly the markets have changed, and that should show you something. It's volatile. It's emotional. When it comes to your money, you shouldn't be.
LONG: And of course, as you've been talking about, as we've been talking about with our financial experts really fueling so much of this today, the fed's decision to cut interest rates the .75 basis points, or 3.5 percent. We haven't seen this happen since the mid '80s. So everybody wants to know well, how does this affect me?
WILLIS: Hey, well, in some ways this is good news for you. Interest rates are going down. The prime rate is going down, and that applies to a lot of variable-rate mortgage products and loan products that individuals have. So if you've got an adjustable-rate mortgage, if you've got a credit card with a variable rate, if you've got a home equity line of credit out there, guess what, you're going to be paying less. This is good news.
Now I have one caveat for people out there who may want to get a new mortgage, refinance maybe into a 30-year fixed, because mortgage rates right now are really low. It may be difficult for you. You're going to have to think seriously about it. If the value of your home has declined in this meltdown, this mortgage meltdown, and the home price debacle that we've seen, it may be difficult for you to get that new loan.
What's more, keep in mind, you're going to have to have 10 percent to 20 percent equity in the house to get that loan. But I've got to tell you, the way rates are today, if you're in an adjustable- rate mortgage that you don't like and you can refi, it probably makes sense, because of course I can't tell you where rates with going to go tomorrow.
LONG: Gerri Willis, sound advise as always, thank you.
WILLIS: My pleasure.
LONG: And to continue to get sound advice, find out all the news that affects your financial security, rely on our online experts. Go to CNNmoney.com for more on your money, jobs, the mortgage crisis and the change in rates today.
LEMON: Feeling groggy? Confused? Out of it? Here's a question -- where was your cell phone last night. A new study hints that it could be a real sleep wrecker.
(COMMERCIAL BREAK) LEMON: All right, here's something you probably -- you may not have known this. If you're feeling tired or frazzled, like you didn't get enough sleep, well, maybe you should give your cell phone a rest, at least at night. A new study looks at the impact of your cell phone on your shuteye.
Medical correspondent Elizabeth Cohen is here to talk more about it. I don't even leave like -- I go everywhere with it.
ELIZABETH COHEN, CNN MEDICAL CORRESPONDENT: But do you always have it next to your ear?
LEMON: No, but I never know. Sometimes it's like in the cover, sometimes it's under the pillow. Sometimes it's another room. It's in the bathroom. I never know. I never know where it is.
COHEN: Well, this is one of these who would have thunk it because if you're that kind of person you've probably heard the studies about brain tumors and cell phones, and everyone was worried about that.
Well, this is -- I just never would have thought of it. Does your cell phone use interfere with your sleep? These researchers, they were curious about that. And what they did was so interesting. They exposed 70 people to three hours of radiation, the kind of radiation you would get from a cell phone right before they went to bed, and then they had a control group and they compared, and they said, geez, when you're exposed to that radiation, does that affect your sleep. And guess what? It actually did.
What they found was that folks who had that radiation exposure, they had more headaches, they were more -- reported more confusion, and also they said they were more sleep-deprived, that actually they had eight minutes of sleep deprivation during deep sleep, which is one of the really, really important times of your sleep. Now eight minutes may not sound like much, but over time eight minutes a night adds up.
Now, Don, one of the other interesting things about this, is guess who funded this study showing this?
LEMON: Maybe the cell phone companies?
COHEN: Yes, and may not have been what they expected to find out. One of them says these results are inconclusive, and in general, there are some concerns about this study. Only 70 people. That's pretty strong. And also who spends three hours on their cell phone right before they go to bed?
LEMON: OK, so why would a cell phone -- seriously, why would it interfere with your sleep? Is it something? Is it the thing that emits, because I know with certain phones you hear that little emission, that little beeping, and I know that's an electronic something. Is that one of the reasons?
COHEN: You know, they're not sure what it is, but the doctors who did this study have two hypotheses. And one is that somehow that radiation messes with an area of your brain that has to do with stress, maybe it increases your stress level and makes it harder to sleep. And another theory is that the radiation interferes with how your body makes melatonin. We all know melatonin because can you buy it in drugstores, right? Melatonin is a hormone that has to do with sleep.
LEMON: So maybe mom knows best when she says, get the TV out of your room or eat before you sleep. So get the cell phone and don't talk on the phone before you go to bed. Is that it?
COHEN: Well, you know, no doctor is going to actually officially recommend that, because this is really the first study on this. It was pretty small. It was kind of inconclusive. But if you're having trouble sleeping and you're spending a lot of time on your cell phone before bedtime, no, go ahead, try it, try going off your cell phone. Don't go on it right before you go to bed and see if that makes a difference.
But what you really should remember is the tried and true things, which is don't have caffeine, don't have nicotine and keep your room dark. Those are proven. Those we know. We know that those work.
LEMON: Did you say something? I'm sorry I was on the cell phone.
(LAUGHTER)
LEMON: No, no, no. But I know, a lot of people do use it a lot, especially in this business. But that's really, really good advice.
COHEN: It's interesting. Very preliminary, but very interesting.
LEMON: Thank you.
COHEN: OK.
LONG: Coming up, we're not talking about cell phones and sleep deprivation. We're going to talk about going to movies to escape reality perhaps. Matthew Perry trades up from "Friends" to family in a gripping new film, and we're live coming up with more on the film at the Sundance Film Festival.
(COMMERCIAL BREAK)
LEMON: Way down, back up. Down again, up again. It's been a queasy day for investors to say the least. Right now the Dow is down almost 150 points. 148 points here. To calm fears of recession and to head off a market meltdown, the Federal Reserve took emergency action before the opening bell slashing two key interest rates.
(BEGIN VIDEO CLIP)
HENRY PAULSON, TREASURY SECRETARY: I think it is very constructive and what I think it shows to this country and the rest of the world is that our central bank is nimble and is able to move quickly and respond to market conditions, and I think that should be confidence builder.
(END VIDEO CLIP)
LEMON: Experts are betting the Fed lowers rates again next week at its regular meeting.
LONG: The movie the Birds of America, causing quite a buzz at the Sundance Film Festival. It is about fragile family relationships. As you can see, it stars Matthew Perry, a friend and Lauren Graham. Brooke Anderson with the greatest assignment of the week joins us now from Park City, Utah. Hi, Brooke.
BROOKE ANDERSON, CNN CORRESPONDENT: Hi there, Melissa. I am joined by Lauren Graham and Matthew Perry from the film Birds of America. Congratulations on getting the movie into Sundance. And, as Melissa was talking to me she said it is about fragile family relationships. And it is. A lot of people can probably relate.
If I can speak, because it's cold out here. A lot of people could relate. But, people do deal with these same types of issues that you deal with in the movie.
MATTHEW PERRY, ACTOR, 'BIRDS OF AMERICA': I think it is an easy thing. Everybody has a family, and in most families there are kooky characters so they can relate to this. Sorry about saying kooky, but I don't know how else to --.
LAUREN GRAHAM, ACTOR, 'BIRDS OF AMERICA': It's embarrassing for you, but we're OK.
ANDERSON: I think you have described it as a gentle comedy. And I know the movie does address at least thoughts of suicide. And, I found it interesting that 15 films here at Sundance do address suicide, or at least thoughts of suicide, kind of a staple of independent cinema but you find the humor in it.
GRAHAM; Well, let's face it independent films are just a bummer.
PERRY: That's why everybody's wandering the streets right now, and just going Aww.
ANDERSON: Whew. I just got out of that screening and boy.
GRAHAM: This movie more deals with sort of the after effects of suicide has happened in the family, and how it affects members of the family. And how it affects our relationship, we play husband and wife. It is not a big a bummer as most of the movies here.
ANDERSON: Well, congratulations. Quite an honor to bring a film to Sundance. And, in addition to the movie premiers and the focus on the film, there are the parties, there are the gifting suites, the concerts. Do you think it detracts at all from the mission of the Sundance Film Festival which is independent film making? PERRY: I am proud of the film we are here for, but I also really like this new jacket I am wearing. So, I don't know if that answers the question for you.
ANDERSON: He's kidding. You're kidding.
PERRY: No, I love it. I love the jacket, and it was free. I didn't have to pay anything for it.
GRAHAM: I'm sure -- I know the festival has grown quite a bit. Maybe it's gotten too big or too out of control. I would bet that a lot of the stuff that's here brings in money for the festival which in turn helps the independent filmmakers. But maybe it is just that we are all greedy pigs. I'm not really sure. It's one or the other.
PERRY: It also has pockets, and there's lining. Great lining in this coat.
ANDERSON: Well, have a great time while you are here at the Sundance Film Festival. And, best of luck finding a distributor for Birds of America. Matthew Perry, Lauren Graham. Thanks so much. Melissa, back to you.
LONG: Thanks so much for that entertaining interview, as well. Brooke Anderson, again reporting live. We have just five more days left of the Sundance Film Festival.
LEMON: The big board and big picture. We'll be checking the markets all afternoon as Wall Street heads for the closing bell. And we'll tell you how to keep your stock -- keep stock of your stocks.
(COMMERCIAL BREAK)
LEMON: Breaking news from the heart of the financial world, U.S. stocks are on a roller coaster, and investors all over the world have a bad case of motion sickness.
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