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CNN SATURDAY MORNING NEWS
Failure of First Commercial Space Launch; Chinese Activist on Way to U.S.; G-8 and NATO Summit Meetings; Manhunt For Man Accused of Stabbing His Bride; Analyzing the Facebook IPO; Witness Accounts in Trayvon Martin Case Released; What's Next For Facebook?; Going Outside the U.S. to Adopt; Bright Idea Helps those Facing Disaster; Blind Activist Heads to U.S.; Preakness Stakes Today
Aired May 19, 2012 - 08:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
RANDI KAYE, CNN ANCHOR (voice-over): From CNN World Headquarters in Atlanta this is CNN SATURDAY MORNING.
A bride stabbed to death in her bath tub. The suspect, her new husband. Now an international manhunt as the FBI follows leads to Mexico.
And it's a multimillion dollar business, international baby adoption. A heart-wrenching story sheds light on the struggles of overseas adoptions. We put the baby business in focus.
And Facebook just made a whole lot of friends with its initial public offering but some experts say there are glaring problems lurking in its mobile app. Digital lifestyle expert Mario Armstrong breaks it down.
Good morning, everyone. I'm Randi Kaye. It is 8:00. Thanks for waking up with us.
Let's get you caught up on some of the news. We start with a glitch in the space plan. That is the Dragon spacecraft on the launch pad at Cape Canaveral but it did not get of the ground. CNN John Zarrella joining me now from Miami.
John, take us through what happened here. What went wrong?
JOHN ZARRELLA, CNN CORRESPONDENT: Well, the future is on hold, isn't it, Randi? Who said space flight was easy and rocket science was easy? Not you, not me of course. I think the people at SpaceX are certainly finding that out first hand. What happened was the Falcon 9 rocket with the Dragon spacecraft on top, the Falcon 9 has nine main engines, liquid fueled engines.
One of those nine, engine five, right before liftoff, had what they call a chamber pressure issue where the pressure was going up too fast, too high. And the computer system immediately shut the whole thing down. So at 0.5 seconds before what would have been lift off, the entire system was automatically shut down. Now what's next? Well, the president of SpaceX addressed that this morning at a news conference.
(BEGIN VIDEO CLIP)
GWYNNE SHOTWELL, PRESIDENT, SPACEX: What we're doing now is we are detanking the vehicle, safing the flight termination system, doing what we call a t-tep (ph) sweeps which basically clears the ignition fluid. We should have some technicians up into that engine about noon today.
(END VIDEO CLIP)
ZARRELLA: Now, SpaceX says if everything works out, they may be able to attempt another launch on the 22nd on Tuesday.
But remember, this is a huge, huge mission. SpaceX is the first commercial company to be ready with a spacecraft to go to the space station. NASA determined that it did not have enough money to continue flying space shuttles. They've been retired. And at the same time, build a vehicle that could take astronauts out to an asteroid or on to Mars. So the space agency decided, a very risky venture, to let commercial companies take this over.
So that's where we are now, waiting for these companies to be ready to start flying cargo and astronauts to the space station. Remember, right now the Russians are the only game in town. They are the ones who are taking our astronauts to the space station.
KAYE: Yes. This is so important for so many reasons, right? Not only the future of space but also because a lot of the people from NASA ended up going to work, right, with SpaceX, so a lot of jobs are on the line as well. Hopefully they'll figure this out. Any idea when they might try this again?
ZARRELLA: Well, either the 22nd or 23rd right now is the plan. Unless they go in there with the technicians today and find out that they have a real serious problem with that engine number five, then that could delay it further, but right now 22nd or 23rd in the very early morning hours.
KAYE: All right. Set your alarm clock.
KAYE: All right. John Zarrella, thank you very much.
KAYE: Also this morning a blind Chinese human rights activist who hid out at the U.S. embassy in Beijing is on his way to the U.S. Chen Guangcheng, his wife and two children have been cleared by U.S. authorities. Their flight out of Beijing was delayed apparently for two hours, but now the plane they're supposed to be on is headed to Newark. Last month Chen escaped house arrest and found his way to the U.S. embassy, was later hospitalized. But after a lot of diplomatic back and forth, China agreed to let Chen leave the country to study abroad. He has been invited to study at New York University.
The leaders of the G-8 countries get down to business today quite literally. President Obama is hosting the summit at Camp David. Front and center on the agenda is the European economy and the Eurozone mess. They are trying to find solutions to the uncertainty with countries like Greece and Spain.
Protesters are massing in Chicago. They have gathered there ahead of Sunday's NATO summit. NATO leaders have the global economy and the future of Afghanistan as their top issues. Now back to the G-8. President Obama is expected to speak there next hour and we will of course bring that to you live.
The hunt for a man accused of killing his bride on their wedding night has moved to Mexico. That's where the FBI believes Arnaldo Jimenez has actually fled. His parents live in Mexico. It has been exactly a week now since police say Jimenez stabbed his new bride in his Illinois apartment. She was found in the bath tub. Jimenez' phone was tracked to the Texas/Mexico border and he is charged with first-degree murder.
We'll have to wait until at least Monday for a verdict in the John Edwards trial. The jury got the case Friday but hasn't come to a conclusion. Edwards faces 30 years in prison. He is accused of misusing campaign funds to cover up an extramarital affair. He denies that he did anything wrong. Edwards and his mistress Rielle Hunter did not take the stand at the trial.
We were all waiting to see how high Facebook stock would go when their IPO launched on Friday. Well, it didn't go very far. It was a rollercoaster ride for the social network. Mark Zuckerberg rang the opening bell on Friday morning, but in the end, the stock gained just 23 cents for the day ending at $38.23. Still, Facebook is expected to make around $18 billion on the stock sale.
(BEGIN VIDEO CLIP)
DAVID KIRKPATRICK, AUTHOR, "THE FACEBOOK EFFECT": If the stock drops below 38 next week, you know, it could really be a sort of ugly situation. If the stock starts really dropping significantly, it's really going to raise a lot of questions. I think a lot of people were looking to the Facebook IPO thinking we've got Europe and Greece and all this awful stuff with JPMorgan's loss and everything. Maybe Facebook is going to turn the markets toward a little happier attitude and it really did not happen.
(END VIDEO CLIP)
KAYE: In fact, the stock market had a really bad week. All three indices suffered their worst week of the entire year. The Dow, the NASDAQ and the S&P 500. You can see the numbers right there. Not pretty.
A set of wildfires is packing a one-two punch out in Arizona. The gladiator fire as it's called has spread to more than 9,000 acres while another blaze, the sun flower fire, has burned over 14,000 acres near mesa. As of today neither fire has been fully contained. Meteorologist Reynolds Wolf is here to talk about this a little bit more.
What is it, the high winds? What is causing the issue here?
REYNOLDS WOLF, AMS METEOROLOGIST: It is going to be the high winds. Certainly yesterday another issue that we have is the very low humidity. We got a couple things there working favorably in terms of this fire and of course the firefighters.
Today, the winds are expected to be a bit weaker. That is the good news. In fact, some of the latest wind gusts that we have at this time, these are some live conditions for you, around 10, 11 miles per hour, some places considerably less.
Don't get me wrong. This is not -- this isn't a big deal. It could be worse. That is certainly good news. They should have a bet dare today. Also a little cooler for the firefighters out there. The thing is they're hoping to really get a handle on some of the blazes especially this weekend because early next week, we're going to see things really get a bit worse in terms of the weather. Dry conditions and even stronger wind gusts.
As it stands here's what we have, 33 percent containment for the sun flower fire. Over 16,000 acres burned, Around 13,000 possibly a bit more at this point for the gladiator fire. Only 10 percent contained and the bull flat fire thankfully 80 percent containment at this point.
Again, weather not looking too favorable especially in Tuesday, Wednesday, and Thursday of next week. We're going to keep a very sharp eye on it, Randi. Back to you.
KAYE: All right Reynolds, thank you very much.
New evidence in the Trayvon Martin case. Lots of photos, accounts by witnesses and surveillance tape. But these new details may not really be clearing up the case at all. We'll tell you why.
KAYE: Welcome back everyone. We may be getting a clearer picture now of what really happened the night George Zimmerman shot and killed Trayvon Martin. New details in the case were released this week, 183 pages of evidence. But those details also leave us with lots of new questions.
KAYE (voice-over): The first bit of ambiguous evidence -- these pictures. George Zimmerman, who says he killed Trayvon Martin in self- defense, told investigators Trayvon attacked him and slammed his head into the concrete. If that's true, are these wounds consistent with a head hitting pavement?
Documents released Thursday show Zimmerman had abrasions to his forehead, bleeding and tenderness in his nose, and a small laceration to the back of his head.
If it was so bad, why didn't Zimmerman go to the hospital? Zimmerman declined to be transported to the hospital even after he told officers his head hurt and that he felt light headed.
And there's this. If there was a prolonged struggle, would Zimmerman's DNA be on Trayvon Martin's hands? An analysis of scrapings from under the teenager's fingernails did not show any of Zimmerman's DNA.
But the autopsy done on Martin does show a cut, a quote, "one-quarter- by-one-eighth inch small abrasion on the left fourth finger", an indication he might indeed have been punching Zimmerman.
And new details also reveal the first neighbor to encounter Zimmerman after the shooting found him winded.
WITNESS 13: He was having a hard time because he looked like he got his butt whooped. He was a little bit more not shocked, but just getting up type of thing.
KAYE: There is also this unanswered question. As the two men fought, who was it neighbors heard yelling for help? In a 911 call, one police sergeant counted a man yelling help or help me 14 times in just 38 seconds.
Listen to this 911 call. You can hear someone yelling in the background.
KAYE: The discovery documents show competing versions of the events. Of those who say they heard the struggle, some told police they thought they heard a young boy screaming for help. One witness, witness six as he's called in the documents, thought it was the voice of a grown man.
WITNESS 6: A black man with a black hoodie on top of either a white guy or now that I found out that he was a Hispanic guy with a red sweatshirt on, on the ground, yelling out help.
KAYE: The FBI looked into this too, but their audio analysis was inconclusive saying it couldn't determine whose voice it was due to the, quote, extreme emotional state of the person yelling, plus overlapping voices. The FBI said there was an insufficient voice quality on the recording.
And what about that racial slur Zimmerman, a white Hispanic, allegedly used when describing Trayvon?
ZIMMERMAN: The black entrance --
KAYE: FBI analysis released Thursday said they could not a definitively identify the words Zimmerman used due to weak signal level and poor recording quality. That word is key to the racial discrimination argument. And legal experts say without definitive evidence he used a racial slur, the chances Zimmerman might be charged with a Federal hate crime diminish.
But an interview which is also part of the discovery with one of Zimmerman's former COWORKERs says something else. The man, who was Middle Eastern, said Zimmerman is a racist and a bully.
FORMER COWORKER: I was portrayed like the um, I don't know if you've ever watched comedy this guy is called Ahmed the terrorist?
UNIDENTIFIED MALE: No.
FORMER COWORKER: OK, so this little guy. He's got this weird voice and some -- that was me in the story, so the story turned my accent to, no! I kill you! And he kept going and going and going.
KAYE: Finally, the question of drugs in Trayvon Martin's system. In his 911 call, just before the shooting, Zimmerman indicated the teenager looked like he was on drugs or something. But even though we now know Trayvon's blood had THC in it, the active ingredient in marijuana, that may not mean he was high. One toxicologist cautioned THC can linger in a person's system for days, even spike after death. HLN's Dr. Drew Pinsky warned, marijuana typically does not make someone more aggressive.
With all the new details released this week you'd think we'd be closer to learning the truth about what happened. But really the one thing we know for sure is that a single gunshot fired straight into the chest of Trayvon Martin killed him.
KAYE: George Zimmerman is charged with second-degree murder. He pled not guilty and claims it was self-defense. Zimmerman is currently out on bond.
There was plenty of hype surrounding Facebook's IPO, but investors well, they were not so impressed. The social network shares barely popped above its $38 price. We're taking a look at what going public could mean for the site and its users.
Plus you've heard the expression let sleeping dogs lie. I would guess the same thing applies to alligators. Take a look at this video. This scientist obviously did not agree.
KAYE: Good morning, Washington. What a nice shot of the White House there. It's about 16 minutes past the hour. Welcome back to CNN'S SATURDAY MORNING. Checking stories cross country now.
Watch this, a 300-pound gator chomping down on a biologist's arm in North Carolina. Whoa. Oh, my goodness. Look at that. The man works at a nearby aquarium. He was helping firefighters wrangle the gator. Neighbors called for help after seeing it lurking nearby in a ditch. They eventually captured it and even after that struggle oh, yes the scientist turned out to be OK. Today is the Preakness Stakes in Maryland so get your bets ready. It is the second leg of the U.S. triple crown but odds are against the winner of the Kentucky Derby named I'll Have Another. Instead the runner-up of the derby Bodemeister is favored to win. The race starts tonight at about 6:00 Eastern.
And a man in Kentucky bought everything inside a K-Mart, everything. The K-Mart was closing and he is donating it to charity. Rankin Paynter paid about $20,000 for it. He was going to sell it all and then well, he changed his mind. Most of it is winter clothing.
(BEGIN VIDEO CLIP)
RANKIN PAYNTER, DONATED KMART BUYOUT TO CHARITY: It will mean the needy this fall will not go cold and they won't go hungry.
(END VIDEO CLIP)
KAYE: What an amazing guy. Paynter says he was once so poor that he couldn't afford shoes and now he is a successful jeweler.
Facebook's now a public company and investors expect the social media giant to bring in profits. Will that mean major changes to the website and maybe your personal page? We'll find out next.
KAYE: Welcome back. Facebook is making some new friends, but just how much investors like the very popular social networking site is still up in the air. Facebook made its debut on the NASDAQ yesterday with initial shares selling for $38. That price was expected to go way up and it did briefly but finished the day flat.
Mario Armstrong, HLN's digital lifestyle expert joining me now from Baltimore. Good morning, Mario.
MARIO ARMSTRONG, CNN DIGITAL LIFESTYLE EXPERT: Good morning. How are you? Facebook did drop flat. It did drop flat.
KAYE: Yes. It wasn't great. But how exactly has Facebook been making money in the first place? And will the site change? I mean, I think a lot of people are wondering what's going to happen to my page now that they've gone public.
ARMSTRONG: Right. Absolutely it will because now they have much more scrutiny on them. They have investors that they have to now account for. They have to make money and they have to show steps that are going to continue to do that. How much will that change the Facebook experience that everyone has kind of grown up knowing over the years? Certainly, we'll have some changes. I'll touch on those in a bit.
To answer your direct question, they make money mostly through ads. That's the lion's share of how Facebook makes their revenue. When you look at it, just last quarter $872 million is what Facebook brought in. When you compare that to someone like Google who in the same quarter brought in $9 billion, you can see there's a lot of potential and a lot of room still to grow.
KAYE: Yes. No doubt. Do you think it is a smart buy to get, to pick up some of these shares? Are you going to do it?
ARMSTRONG: No I'm not. Here's what I did though. I bought one share through a website that's called give a share where you can actually buy a stock certificate and then frame it.
KAYE: Did you buy one for me?
ARMSTRONG: I will gift you a share.
ARMSTRONG: I'm not an investor. I certainly can't give monetary advice but I can tell you from a tech company what we research and what we watch over the years from other companies I do think the stock will actually grow a bit.
I don't think it will grow mega-busters but that is just my two cents, my opinion. They have a lot to struggle with, mainly mobile. That is their biggest problem and biggest challenge that I see for them.
KAYE: And a Facebook wallet of sorts could be in the running.
ARMSTRONG: This could be part of the change. When we talk about what could change, a couple of things -- number one this Facebook wallet. The idea is they have hundreds of millions of users on here, Randi. Why aren't they figuring out better ways to use currency to buy digital goods, to buy in app purchases or in Facebook purchases, in other words, creating an economy within the Facebook community? That is going to be a big one.
This whole mobile thing a lot of people want to interface with Facebook on mobile and it is horrible. I have screen shots of my experience on it and a lot of times it says one word - loading, loading.
KAYE: So true, been there.
ARMSTRONG: So they know they're going to work on that. They bought Instagram who has a very phenomenal mobile experience that works really, really well, also with photos. So I think we're going to see some adjustments.
Mark is a very smart guy. We all know that. We know that the team he is surrounded with is smart, so there will be some changes, many of which we may not like but some of which they will have to do.
KAYE: And it's interesting to see in the end here what Facebook is actually worth. Speaking of making money, there is actually a way to see what we're worth right to Facebook?
ARMSTRONG: That's right. You go to this website GoPrivate. (INAUDIBLE) com and basically you answer a few questions, about five or six questions about your usage on Facebook. How often do you share? How often do you comment? How often do you post, things of that nature. Can you live without it? Will you not use it anymore? And at the end, my result was that I'm worth $60 bucks to Facebook.
KAYE: I would think you'd be worth a lot more.
ARMSTRONG: I'm a pretty heavy user. I'm probably not the heaviest user, but I would certainly I think in the top percentile of heavy users of Facebook. I've seen people as high as about $72 or $75. I think is where I've seen it cap out. When you do that in the millions, hundreds of millions, when it's free, folks, you are the product. When something is free, you are the product.
KAYE: Well you are worth hundreds of millions to us here on CNN SATURDAY MORNING.
ARMSTRONG: Good close. That made my morning.
KAYE: All right. Mario, nice to see you.
ARMSTRONG: Nice to see you too Randi.
KAYE: Thank you. Of course join us every Saturday at this time as our digital lifestyle expert the guy Mario Armstrong gives us the scoop on the latest technology.
Facebook was the big deal on Friday, but did it have the power to stop what was building up to be a really rotten week on Wall Street? We'll tell you about the effect on your 401(k).
Plus it is a billion dollar business but the number of children being adopted from overseas has been dropping in recent years. We're putting the baby business in focus this morning.
KAYE: Welcome back. I'm Randi Kaye. Thanks for starting your day with us. It is just about the bottom of the hour now.
All morning we've been going in depth on an issue that goes largely unspoken, going outside the U.S. to build a family. Some would be parents are willing to pay big bucks for a child to call their own according to the Centers for Disease Control and Prevention.
Of the nearly two million adopted children in the U.S. back in 2007, 37 percent were adopted from foster care; 38 percent joined their families through private domestic adoptions and one-quarter were adopted internationally.
Dr. Jane Aronson is joining me now. She is the founder and CEO of the Worldwide Orphans Foundation. Good morning to you, Jane. So tell me, one question that a lot of folks have is why do 25 percent of the parents go outside of the U.S. to -- to adopt a child when there are so many orphans and needy children right here in the U.S.?
DR. JANE ARONSON, FOUNDER & CEO, WORLDWIDE ORPHANS FOUNDATION: I love that question. Because I -- I think that what's important for everyone to know is that there are hundreds of millions of orphans all over the world and I think it's a global issue.
So I don't think it's necessarily people preferring one or the other. I just think people are drawn to different aspects of creating their family and there are so many children that are available. That it really doesn't matter what people's choices are. I think what's important is that we try to solve the problem of orphan children and the orphan crisis.
KAYE: And you adopted as well, right?
ARONSON: Yes, I am a parent through adoption. I have two sons who are now 12 and almost 14 and both of them were adopted internationally. One is from Vietnam and one is from Ethiopia.
KAYE: Let's talk about China a little bit because a lot of children are adopted from China. According to the State Department, in 2011 more than 2,500 children were adopted from China compared to about 800 -- that is actually more -- about 800 more than Ethiopia which stands at about 1,700 or so. Why do you think that is?
ARONSON: Well over the years that I've been doing adoption medicine since the late '80s there have been growing numbers of children adopted from the top ten countries. And it's varied from you know, year to year but all through the '90s China and Russia were the top countries.
And then finally through the 2000s what happened was Chinese adoption changed. China adoption really now is in majority, special needs adoptions. And many families choose to adopt from China and adopt children who may have had a cardiac disease or some anatomical abnormality like Spina bifida or cleft lip and palate is certainly high up on the list there.
So there are many wonderfully healthy children with some underlying medical conditions that are now able to have a permanent home. So that's a good story.
The bad side of it is that adoption of -- of healthy, well children who are infants and toddlers from China has changed radically so that that waiting time is about five or six years which really is reprehensible personally.
KAYE: Yes adopting a baby though from another country certainly can cost a lot, can cost you about $64,000, about $24,000 more than hat adopting a child here in the U.S. It is a quarter billion dollar industry. But business apparently is down since averaging about 21,000 each year from 2003 to 2007 now only about 15,000 were adopted in 2008 and 2009.
So if -- if you look at the numbers, I mean, in 2011 fewer than 10,000 children were adopted from overseas. Why do you think the drop?
ARONSON: Oh, there's a -- that's a wonderful question. But I just want to say to you, that those prices are not correct. I think those are incredibly inflated. If you go to the "Adoptive Families" Magazine which is a wonderful resource for families adopting both domestically and internationally, you'll see the -- the numbers from a research project that they did a number of years back.
And there are many ways to adopt children at much less expensive prices than you, you have up there. I think that's a little bit skewed. Most international adoptions are complicated by the fact that there is international travel and that there's been added numbers of trips that go into the hopper on the total price.
But let's go back to your very important question about why adoption numbers have changed. Over the 20 -- almost 25 years that I've been doing international adoption medicine we've seen huge growth in international adoption which really is great because it provides permanent homes for children who ordinarily would not have had a permanent home.
But what's happened over that time that I've been in adoption medicine is that The Hague Convention on adoption took approximately 15 to 20 years to finally implement in 2008.
ARONSON: So that was a good thing in a way because it helped to provide a structure that would attempt to diminish the chances of trafficking and the sale of babies as you've been describing here. And I think that that is a good thing in part. The problem with The Hague is that as it -- as it created a body to accredit agencies it did not invest in the social welfare infrastructure of the countries that were sending children abroad. And so there was really no attention paid to alternative health care for children who were orphaned.
KAYE: Is it though helping you know what I would call the ugly side of the baby business? I mean is it preventing what we hear so many stories of including one from Guatemala that we've been covering this week and this morning of -- of babies being stolen from their parents in other countries and then sold to international agencies so they can be adopted out to the U.S.?
ARONSON: I'm -- I'm sure. I'm a balanced and optimistic individual in a difficult area of practice but I'm sure that much of Hague Convention was good motivation and much of it probably protects lots of children from being trafficked. But I would say to you that the bureaucracy that was created is really very sad. Again, much too bureaucratic, the process has slowed down. Many countries have closed. There are 9,000 adoptions internationally by the end of 2011 when there were 23,000 in 2004-2005.
And even those numbers are very tiny for the 153 million children recorded as orphans around the world. So I would say some good has come from The Hague Convention but the lack of investment in helping countries place children in -- in domestic adoption in their own countries, forced to care in their own countries and the provisions for birth mothers who are in a desperate state in economic conditions, education, health care, these are all the things that we should be concentrating on.
An adoption is an option which should be treasured. It's an important way to provide children with a permanent home whether it's domestic or international.
ARONSON: But the orphan crisis is really where we ought to be.
KAYE: Well you are doing a wonderful work in the orphan crisis, Dr. Jane Aronson. Thank you very much for your time this morning and for all the work that you do.
ARONSON: Thank you Randi. I appreciate it.
KAYE: And we do want to point out the numbers that I was discussing with Dr. Aronson came to us through the U.S. government from the State Department as well.
Well, he dared to speak out against China's government now a blind Chinese activist and his family are on a flight to the U.S. We'll look at whether pressure from the White House may have spurred Chen Guangcheng's exit from China.
And the stock market had its worst week of the year but that doesn't have to get you down. We've got tips to protect your investments at home.
KAYE: If you have money in the stock market well, you've been losing money the past few weeks. Those 401(k) statements are looking grim. And if you're approaching retirement well you might be getting just a little nervous.
But our financial expert, Hank McLarty President and Founder of Gratus Capital Management has some great ideas for us to keep our money safe and even grow it don't you?
HANK MCLARTY, PRESIDENT/FOUNDER, GRATUS CAPITAL MANAGEMENT: Well maybe, you know.
KAYE: All right, well listen before we get to those though I'll give you a second to think about that. But the market was up apparently over 12 percent in the first quarter of this year and now has lost over half of that in just the past few weeks. So give us your take on what exactly is going on.
MCLARTY: Yes Randi, it's been -- it's been a crazy three weeks. The market actually as you said was up 12 percent in the first quarter and then in the last three weeks has actually dropped eight percent. I would say probably 20 percent of the reason it's dropped is we've had some weakness in economic data that's come in.
But predominantly the major issue is Greece and the European debt crisis because in the first quarter, the economic data that we were having come in, unemployment, manufacturing, and jobless claims they were all positive. And when it comes to Europe no news is good news. KAYE: Yes.
MCLARTY: So in the first quarter we had no negative news coming out of Europe in fact many analysts on TV were saying Europe is a dead issue. Now it's going to be fine. So the market was just trading on fundamentals. Now we're back to this European debt crisis headline situation. It creates a lot of anxiety and a lot of nervousness in the market; the market doesn't like uncertainty.
MCLARTY: So that's why we've had to sell off.
KAYE: All right, so let's look forward, right. Because a lot of our viewers are -- are either in retirement or maybe they are thinking about retirement or nearing retirement. So if you look at how they should be investing, I mean obviously they should be investing differently in this type of environment. Let's start with those in retirement.
KAYE: What are you -- what are your -- I'm sure you have a lot of tips. So what's that going to be?
MCLARTY: Sure, you know we can call them in retirement or really just anybody that's deriving income off their portfolio. They sold a business, they're in retirement, anybody that is supporting their lifestyle from the portfolio.
Our philosophy is the number one most important thing is cash flow because cash flow creates certainty. And we're in an environment right now where interest rates are at historical lows you can't earn any money in savings accounts or CDs and stocks are very uncertain right now. Cash flow creates certainty.
So if you can build a portfolio of high quality dividend names like Johnson & Johnson and McDonald's.
KAYE: Things that generate cash flow.
MCLARTY: Absolutely. Cash flow stocks and then high quality bonds that are hedged against rising rates, you know we're generating four and a half percent, five percent cash flow off those portfolios and in a time of uncertainty when you have that certain cash flow that's there to meet your budget it creates a much more stable environment for you mentally when you're watching the markets move up and down every day.
KAYE: Yes and what about international? I mean, should you stay away from anything international?
MCLARTY: Absolutely. And then the name, the companies that I just mentioned, in most high quality dividend portfolios like the one that we run those companies are deriving 25 percent or 30 percent of their revenues overseas anyway. And I think that the CFOs and chief investment officers at these companies are equally if not more talented than a lot of international stock managers at determining how to hedge the different currencies.
MCLARTY: And where to draw the revenues from overseas.
KAYE: And in terms of those building towards retirement I know one of your -- one of your main things is to maintain a long-term growth strategy.
MCLARTY: Right. Yes, building towards retirement I think now is a great time to take a step back and look at your asset allocation. Look at your risk tolerance. Kind of determine and assess yourself.
Are you an investor or a trader? I would always recommend being an investor. If you're an investor and you own some of those high quality companies that I mentioned a minute ago then those earnings are going to grow over time regardless of what happens in Europe. Those earnings are going to grow over time and these stocks are going to do well but if you're a trader and you're watching the news every day and you're trying to figure out when to get in and to get out of the market I think that's a losing proposition over time.
KAYE: What about real estate? I mean so much has been made about the market hitting bottom. I mean is it a safe place to invest right now do you think?
MCLARTY: You know Randi I think the real estate market really has bottomed. I think there's different geographical pockets in real estate, there's different sectors in real estate; but generally I think across the board it has bottomed. I have a chart that I use at the office. I don't have it with me but I can illustrate it. There is -- it's an awesome chart that shows the real estate prices appreciating over the last hundred years.
And it's about a two percent to three percent average and it's just a steady, straight line. And when it gets to 1997, you see this straight up and then in 2007 straight down. There is literally a bubble in the line.
MCLARTY: But if you were to lay a ruler across that bubble and see where should we be, we're right about where we should have been had we stayed on that slow, steady trend. So I think we bottomed but I wouldn't anticipate any kind of pop in prices like what people got used to over the last ten years.
KAYE: Right, right. All right. Hank McLarty nice to see you, great advice. Thank you.
MCLARTY: Nice to see you again too. Thank you KAYE: When disaster strikes food, water and shelter are the first supplies immediately sent. Two young entrepreneurs however are providing a new source of relief.
Gary Tuchman has their story in this "Start Small Think Big".
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GARY TUCHMAN, CNN NATIONAL CORRESPONDENT (voice-over): After the 2010 earthquake in Haiti donations from around the world helped with the relief effort. But two graduate students felt that something was missing.
ANDREA SRESHTA, LUMINAID: We teamed up two weeks after the earthquake happened in Haiti because we both had a common interest in exploring the use of solar lighting and renewable lighting and disaster relief aid.
TUCHMAN: So Andrea Sreshta and Anna Stork came up with a bright new idea. LuminAid -- a small, solar-powered light that inflates making it water proof and easy to ship.
SRESHTA: We kind of came to believe that light is a basic human need. Light really should be a part of what is included for victims in the wake of a natural disaster.
TUCHMAN: When Japan's earthquake happened last year Andrea and Anna put their product to use.
SRESHTA: We were in Tokyo so things were relatively stable in that part of the country but what ended up happening was that there were rolling blackouts and people across the city were trying to conserve power.
TUCHMAN: LuminAid lights provide up to eight hours of light per charge and are fully charged in five hours and are currently available in 25 countries.
SRESHTA: When a disaster happens people are in fact in need of very fundamental supplies including lighting and power.
TUCHMAN: Whether as a mobile source or in cases of emergencies, LuminAid could be lighting the way for the future.
KAYE: That was Gary Tuchman reporting.
A blind Chinese activist begged President Obama for help and now he's on a flight to the U.S. and a brand new life. But why was China willing to let him go? Straight ahead.
KAYE: A blind Chinese activist who pleaded with the Obama administration and Congress for help is on his way to the U.S. and a brand new life. A motorcade took Chen Guangcheng to the Beijing airport this morning.
The self-taught lawyer set off a diplomatic storm when he fled house arrest and sought refuge at the U.S. embassy last month. Days later he went to a hospital in the Chinese capital but then said his relatives were being persecuted because of him.
CNN's Stan Grant is joining us now from Beijing; Stan, good morning to you. Chen's flight is in the air, right? On its way to Newark? I know there was a bit of a delay.
STAN GRANT, CNN INTERNATIONAL CORRESPONDENT: They are in the air now, as you say on its way to Newark and then he'll be heading to New York where he is being offered Randi this job at New York University.
You know, this was a dramatic twist in what has been an extraordinary story; you just outlined some of the events there. Chen turning up at the airport today with his family; he was saying that he had no passport with him. Officials were holding those passports and other documents for him. He went through immigration, went through security; then was given his documentation to board the flight.
Chen really is leaving China because he simply fears for his life here. He was at the U.S. embassy after escaping from house arrest. That brought the U.S. and China to loggerheads. On one side China; one side the U.S.; in the middle Chen. In the end a deal was worked out where China would provide a passport and Chen would then be able to leave the country.
He is leaving behind everything he knows. He doesn't speak English. He spent his life living in his village. He's now is leaving behind family members who he says are being persecuted and all because of him -- Randi.
KAYE: And Stan, I mean he fled to the U.S. embassy right before Hillary Clinton arrived in China for economic talks. I mean was there international pressure do you think put on China to let him go -- to let him leave?
GRANT: Well, certainly a lot of pressure between China and the United States. If you listen to some of the reports about the negotiations behind the scenes a lot of finger pointing, a lot of raised voices and China to this day is still demanding an apology from the United States for actually allowing Chen to hold out inside the embassy.
But China has really come to this on its own; many people interpreting this as an attempt by China to simply rid itself of yet another problem. Remember this is someone that they had locked away in prison for four years who had been held under house arrest for the past 18 months. Despite all of that, manages to escape, gets his way to the embassy, captures headlines all around the world, really lifts the veil on what many see as the appalling human rights record here in China.
China wants him gone. They want him gone and in the United States presumably never to come back -- Randi.
KAYE: Yes, it certainly seems that way. Stan Grant, thank you very much.
Well, get your bets ready. The Preakness Stakes is just hours away. But if you're counting on the winner of the Kentucky Derby to take the lead today, the odds may be against you.
KAYE: Welcome back everyone.
Today is the 137th running of the Preakness Stakes. That is the second leg of horse racing's Triple Crown. Of course, the first leg the Kentucky Derby kicked off the excitement two weeks ago. No horse has won the Triple Crown in more than 30 years. So the question again this year, can it be done?
Joe Carter from HLN Sports is joining me now. Good morning to you. What do you think? Can it be done? I mean who is the favorite here?
JOE CARTER, HLN SPORTS: Well, the favorite is Bodemeister. And Bodemeister and Union Rags were the two horses that are being thrown around as the favorites two weeks ago at the Kentucky Derby. Bodemeister finished second at the Kentucky Derby. Bodemeister has got the famous trainer in Bob Baffert, the most famous, popular trainer in the sport.
People were very impressed by Bodemeister's run at the Kentucky Derby two weeks ago being able to hold on to second. He was stunning down the end. He really didn't show any signs of weakness until the last few yards.
People say if this horse gets out front early today the race is going to be absolutely over. I know a lot of people are going to be pulling for that Kentucky Derby winner "I'll Have Another". You know if that horse wins today the Belmont in two weeks becomes an absolutely huge race because they'll be so close to finally breaking that 33-year streak of no Triple Crown winners.
But the Preakness and I don't want to offend the horse racing crowd up there but it is really like -- the best way to describe it is the Jan Brady of horse racing.
KAYE: That doesn't sound good.
CARTER: It's the middle race or the middle sister of the Triple Crown. It's like it's kind of overlooked at times. You got the derby of course then the Preakness then the Belmont. '78 as you said was the last time that a horse won all three of those races. So that's why today's race is so important because we'll know after the two-minute race if we're going to have a Triple Crown winner or not.
KAYE: Won't that be nice?
CARTER: Well, if we're going to have potential, I should say, the Triple Crown winner. The big tradition there, the black-eyed Susan, unlike the mint julep drink at the Kentucky Derby -- a little whiskey, a little vodka -- KAYE: Did you bring one for us this morning?
CARTER: -- a little orange juice, a little sweet and sour. I'd say bring Tums. It is very acidic.
KAYE: I love where you go out to all these races and you try -- you put on the crazy hats, you try all the drinks.
CARTER: Yes, you actually look kind of horserace-ready.
KAYE: I do?
CARTER: You just need a nice, big, orange hat and you're ready to go.
KAYE: Next time. Next time. All right Joe. Thank you.
CARTER: You bet.
KAYE: Coming up at the top of the hour President Obama is playing host to a very powerful group of world leaders. We'll hear him open up the G-8 summit live.
Wait. It is an issue a lot of us think about and many of us struggle with. A 12-year-old boy may have found the secret to dietary success. We'll talk with him and his mom.