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Dow Soars, Sets New Records; Airline Pilot Reports Drone Near JFK; Lawmakers Tackle New Dilemma; Lawmakers React To $85B Spending Cut; Chavez Battling A New Infection; Brutal Winter Storm Heads Fast; NRA To Sponsor NASCAR Race; New Threat From North Korea; Switch Carriers, But Keep Cell Phone
Aired March 5, 2013 - 10:00 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
ASHLEIGH BANFIELD, CNN ANCHOR: - going to tell us what's happening. Christine Romans and Ali Velshi are going to tell us what it means to each and every one of us. Let's begin with Alison Kosik. Alison, it's not like we didn't expect this would happen, but it's still a big deal when it happens.
ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It is. You know, it's a great milestone if you think about it. You know, the Dow is not only surpassed the all-time closing high, Ashleigh, it's now at an all-time high. Meaning we've never ever seen the Dow at this level.
Now what it essentially means as far as today goes is there is plenty of room for to lose ground and still most likely close beyond its all- time high of 14,164 and all this excitement despite the fact that the economy still isn't strong.
I mean, you look at the spending cuts that happened on Friday. There are worries that could cut into economic growth, cut in to jobs growth. There is uncertainty about where the economy is headed at this point. The U.S. has got stagnant GDP.
You look at economic growth in the last three months of last year it was flat. It was at 0.1 percent. That is the minimum positive amount for economic growth. And then don't forget about the instability in Europe as well.
So what you're seeing is this run up, Ashleigh, fueled essentially by the Federal Reserve, which is pumping stimulus money, $85 billion every single month, they're buying up treasuries and mortgage backed securities.
That's essentially pushing interest rates lower. It's pushing investors to go into stocks because stocks are the best game, are the best investment in town, and it's not necessarily the economy that's the driver. But nonetheless, it's a great milestone to talk about.
BANFIELD: I love the way you say it's the best game in town because Ali Velshi, if I recall from your business show this weekend, you were explaining at length what TINA means. There is no alternative. I can't make money anywhere else, so why not go into the stock market?
ALI VELSHI, CNN CHIEF BUSINESS CORRESPONDENT: Yes, exactly right. I mean, you can make money if you have time in housing, if you have good credit, enough money to put down on a house, but you can invest in the stock market with a few hundred bucks. You can't buy a house with a few hundred bucks.
So this becomes the TINA economy. Interest rates are really low. The fed has kept them low in order to promote economic growth, to allow people to borrow money to buy these houses. They do that by pumping $85 billion into the economy every month.
And as a result, you can't say can't make your money on bonds -- you can't -- so where are you going to make money? You have to put to the stock market, which leads shall people to believe this might be inflated.
Remember, as Alison pointed out, the stock market is a little bit divorced from the economy. The stock market generally is forward looking and it is priced based on the earnings of the companies contained therein. So the idea is these companies get a lot of their revenue outside of the United States, they're actually doing OK.
They have a lot of cash on hand. Remember the Dow is 30 companies. The S&P 500 is doing pretty well, too, and that's what people are investing. They're saying these companies now how to make money, they will make money. Separate it entirely from the fact that the economy is still sputtering along.
So that doesn't mean you should ignore the market. You can acknowledge the fact that it's not the same as the economy. But you may still find the market your best opportunity to make money right now because of TINA. There is no alternative.
BANFIELD: There is no alternative. Listen, I understand when you say the market is forward looking, but when you don't have a job, you are forward looking because you don't have anything to spend in the future.
Let me bring in Christine Romans with that because we've been seeing jobs numbers. Let's pop up them on the board so everybody can look along and play with me with the GDP and jobs together. Here's the GDP growth. It's a no-brainer when you see this.
And then when you also see the jobs numbers coming up that we're still hovering around, what, 8 percent, right? Christine, still around 8 percent jobless rate?
CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Here's what's so interesting.
BANFIELD: I don't get the forward looking aspect when you still have a crummy economy.
ROMANS: Because something new is happening here and what's new is that companies are growing and moving forward without adding the jobs they used to. And there is this discussion going on among economists and people who cover the economy about could you have one percentage point growth in the economy, in GDP, and not create all the jobs you did a generation ago.
And that looks like what's happening here right now. So you have economic growth that benefits companies, but it's not benefiting people and their jobs. And that's a product of globalization, that's a product of still the last vestiges of the financial crisis and trying to get out of it. And technology and all these new things that are happening to the American labor market.
I mean, some could argue that we're growing faster technologically than the American labor force can keep up, the kinds of jobs we're creating, CEOs complain they can't find workers that can change their skills fast enough to keep up with it. And Ali is so right about how much money they have in cash.
And just this weekend, Warren Buffett in his letter to shareholders he chided CEOs for being too nervous, for sitting on their hands and sitting on their cash and not investing in new projects because that's what moves the economy forward.
So what's really interesting to me here is we've come to this high, but now what do you do if you're an investor, right? If you have money, do you start buying stocks right now? You know, the last leg of the bull market can be among the most profitable, but, you know, you don't want to buy at the top.
BANFIELD: So exactly. Ali, button this up for me. You got all of 15 seconds, but is this a bubble because I'm looking at it. What, we're 117 up right now today because everyone's super thrilled about it. But is this a bubble, should home traders say back off for a bit?
VELSHI: Look, the stock market has done very well in January and February. Almost as well as we thought it was going to do for the entire year. So I would invest very carefully. I would have money aside to put in when markets go down because they always do this. But generally speaking, it is the only game in town so you should be investing.
BANFIELD: So watch the popping of champagne corks. Christine, you are actually in downtown. Keep your eyes peeled for the popping champagne corks. All right, you three, thank you very much. We'll keep an eye on the Dow all day today. Christine has got the best show in town in right there.
I want to turn to another show, something that's actually pretty alarming. A sight near one of the nation's busiest airports, this happened just this morning. The FAA is right now investigating a pretty startling claim from an Italian airline pilot.
He says his flight that was coming into JFK came perilously close to a drone aircraft as he was landing at JFK. Here's the pilot's conversation with air traffic controllers and this comes to us from the web site liveatc.net.
(BEGIN VIDEO CLIP)
TOWER: What did you see? UNIDENTIFIED PILOT: We saw a drone, a drone aircraft.
TOWER: Alitalia 608 uniform heavy. Roger, what altitude did you see that aircraft?
UNIDENTIFIED PILOT: About 1500.
TOWER: Caution, report of a drone on about a five mile final by the traffic that you are following.
(END VIDEO CLIP)
BANFIELD: Miles O'Brien is a familiar face to CNN viewers. He is an aviation analyst, science correspondent for PBS News and he joins us via Skype from Washington. And you could not be a more perfect person to ask this question of. It sounds pretty alarming to a layperson like me, but is it so alarming that a pilot would see something and immediately say it's a drone?
MILES O'BRIEN, AVIATION ANALYST: Well, yes. It's a little bit alarming. You don't want your airliner coming in conflict or colliding with a drone really of any size because even a small radio controlled helicopter that you can buy at the store if it was ingested into the engine could cause the engine to shut down or perhaps worse.
So it depends on what kind of drone we're talking about here. The FAA, law enforcement officials say they didn't have any sort of law enforcement drone in the air at the time at that location. Controllers would surely have known about it if it was there, if it was an official drone by an official source.
So most likely this is probably a hobbyist who is out there with one of those devices. You've seen them in the stores. Some of them have four-blade helicopter arrangements. You're only supposed to fly them up to 400 feet according to the FAA rules. The 1500 feet is a little too high.
BANFIELD: Miles, you can buy drones and I even hate to use this homogenous term as drones because there are so many different iterations of what a drone looks like. This is one we actually were flying inside CNN. Actually this one isn't the one from CNN, but one very similar.
We were flying inside our offices. You can buy them at Brook Stone, you can get these things online. But as you said, 400 feet is where you're supposed to stay. Is will this terribly dangerous if this a hobbyist to be up at 1500?
O'BRIEN: Yes, absolutely especially that close to JFK. There are also rules about flying them near airports, as well, for obvious reasons. So you know, hobbyist, it kind of reminds me of the laser pointer scares we've seen in recent years.
You know, people buy those laser pointers and point them at aircrafts. They're extremely dangerous. It causes night blindness. It can be more than just temporary so people have to use their heads a little bit when they play with these toys.
BANFIELD: Does it make you --
O'BRIEN: These things can go very high.
BANFIELD: I'm sorry, I just -- I was going to ask you another question, but I have to cut this off because the house speaker is speaking at this moment. We'll keep an eye on it. Miles, it's good to see you again. Thank you for your insight. I do appreciate this. Obviously, the battle is brewing in Washington right now. We want to go right to John Boehner. Hear what he has to say.
(BEGIN LIVE FEED)
REPRESENTATIVE JOHN BOEHNER (R), HOUSE SPEAKER: -- both in the House and Senate. Lastly, a report on Friday once again makes clear that there is no reason for the Keystone pipeline to be blocked for another day. The president and the president alone stands between these tens of thousands of American jobs and more North American oil for our refineries.
And it's time for him to say yes. After four years of needless delays, it's time for the president to stand up for middle class jobs and we'll get that by getting the Keystone pipeline under construction.
REPRESENTATIVE ERIC CANTOR (R), HOUSE MAJORITY LEADER: Good morning. As Speaker said, we're going to bring to the floor this week a continuing resolution to, yes, avoid the government shutdown and to promote some type of economic certainty. And at the same time, try and reduce the level of spending here in Washington.
I think all of us on both sides of the aisle have said that "The Sequester" is not the smart way of accomplishing reduction in spending, but it seem like it's the only kind of reduction that the president lives with because he has to it's the law.
We remain committed to continue to try to reach some type of resolution where there's a balanced approach to managing down the debt and deficit, meaning balancing it in ten years in our way of looking at things, but also identifying where there are areas of waste.
I think there are very few Americans who wouldn't subscribe to the notion that there isn't some waste you could cut here in Washington. And that's what our committees are going to be about doing this week, next and beyond, trying to go about doing what everyone in this country has been forced to do in these tough economic times, which is to tighten the belt and learn how to do more with less.
I think that clearly from the evidence of the Gallup poll that was out lately about the president's approval rating, you know, I think that clearly people are tired of political gains in this town and they want to see resolution of some problems. We remain committed to trying to resolve problems.
We remain committed to try to help those unemployed. We'll be bringing up the skills act next week, a bill that I think both sides can come together on and to provide some assistance for those who don't have the right kind of training or skills so they can access the unfilled jobs that are out there in many of the industry sectors.
(END LIVE FEED)
BANFIELD: And as we listen to the GOP leadership with hashtag cut waste as the prominent headline on the podium, many of us were thinking as Kevin McCarthy cut him off, but the significance of this is that we're clearly in a very important week.
Not only are we dealing with spending cuts that are now about four days old, the likes of which we haven't seen before, the feelings of which we may not be necessarily experiencing right now.
Our Dana Bash is live on Capitol Hill. So the first thing I heard as we were coming into that news conference was the issue of the Keystone pipeline, which was not what I was expecting to hear about. But maybe you could put everything in context for us and why this news conference is being held and the key headline they want to make.
DANA BASH, CNN SENIOR CONGRESSIONAL CORRESPONDENT: Well, the key headline that they want to make is talking of course about the budget as you just saw. The hash tag says it all and this is the weekly meeting that Republicans have. Today's meeting, Ashleigh, was Republican leaders informing their members about several things.
But most importantly what they will be doing this week and that is legislation to keep the government running through the end of the fiscal year, September 30th. Right now the next looming Washington drama, crisis, is March 27th, not too long from now, when the government runs out of money.
So what they're trying to work through is legislation to keep it going, but also in the House Republican legislation, they're trying to give some leeway to the Pentagon to try to alleviate some of the pain from the forced cuts. That is a real difference between House Republicans and Democrats who run the Senate.
They want to give a little bit more -- help the pain a little bit more to domestic agencies, as well so that sort of the difference. But big picture we heard last week out of the meeting that the president have with leaders, they want to do their best both sides to avoid a government shutdown for a lot of reason, but mostly because they all know it's a political jump ball.
BANFIELD: Dana, let me ask you this. You know, the average person out there would hear logic in saying give us the opportunity in the discussions over the continuing resolution to maybe take a fine scalpel to the cuts when it comes to the Pentagon.
People would think that makes more sense because these across the board slashes are very painful and very indiscriminate. But at the same time, isn't that the Democrats literally handing a victory on a silver platter to the Republicans in which point they would say not so fast, it's not that easy? BASH: Many Democrats say yes. Remember, the whole political reason the president agreed to these cuts in the first place is because he didn't think they would happen and the reason he didn't think it would happen is because he thought Republicans would not allow these cuts to defense in particular because just goes against their DNA.
But he was wrong. The Republicans did allow that. So now you're exactly right, for Democrats to allow the Republicans to kind of fix at least part of that would be giving them a political victory. But more importantly they think hurting many of the people that they say they fight for on a policy level, children, people who are helped across the board in domestic priorities and domestic agencies.
BANFIELD: The staring contest continues and I'm not talking about you and me, Dana. Thank you very much. Dana Bash live on Capitol Hill with a big day in front of her.
When we come back, if you live in one of our 50 states, you may be getting a very big snowstorm. And I don't mean very big, I mean, massive. We're going to talk about it after the break.
BANFIELD: Checking the top stories now. We're keeping a very close eye on the Venezuelan president today, Hugo Chavez. The country's information minister says that Chavez is fighting a brand new infection. His breathing problems have apparently worsened and his overall condition remains very delicate.
If you live in the eastern United States, buckle up. This storm as pleasant as it looks is headed your way. This is the morning commute in Minneapolis. What a drag? Seven inches of snow so far, more of it on the way. In North Dakota, up to a foot of snow is blanketing the ground there. How would you like to drive in that?
That's what you call zero visibility. Motorists are being told to stay off the roads in fact because the high winds are creating these whiteout conditions. And then in Colorado, accidents were littering the roads and the highways.
Blizzard conditions being blamed for a 30-car pileup near Vail, Colorado. But this morning Interstate 70 is once again open in both directions, but drive at your own risk.
The National Rifle Association is going to sponsor NASCAR's Sprint Cup race next month in Texas. It will be the first time the NRA has sponsored a race for a top level NASCAR event. More than 190,000 fans are expected to attend that race.
Washington is watching a new threat from North Korea this morning. The government reportedly threatening to dissolve that truce with South Korea that ended the 1950 to 1953 civil war between those two countries.
Anna Coren is with us now. This is quite something especially since we've just been talking about Dennis Rodman's visit and his so-called diplomacy. But this sounds very, very serious. What sparked this?
ANNA COREN, CNN CORRESPONDENT: Well, Ashleigh, as you know, we are used to fire and rhetoric coming out of North Korea, but this is the first time they have threatened to scrap the armistice agreement, which as you say, was signed in 1953, the end of the Korean War.
Does this mean that there will be all out war on the Korean peninsula? Well, I think that's a little premature. But we do know that North Korea is provocative. They are unpredictable and I also to grab the world's attention now.
A high ranking official from the North Korean military came out and said that as of March 11th, which is next Monday when joint military exercises between the United States and South Korea get under way, that is when they will scrap the armistice agreement.
But let's have a listen to what the new U.S. Secretary of State John Kerry has to say about the latest developments.
(BEGIN VIDEO CLIP)
JOHN KERRY, SECRETARY OF STATE: North Korea keeps choosing to make belligerent and reckless moves that threaten the region, their neighbors, and now directly the United States of America. So it's very easy for Kim Jung-Un to prove his good intent here, also just don't fire the next missile. Don't have the next test.
(END VIDEO CLIP)
COREN: Now we know, Ashleigh, that all of this has come as a result of the U.N. Security Council due to meet in less than an hour to talk about those tougher sanctions as a result of North Korea's nuclear test conducted last month.
Now, I've spent many weeks in South Korea in the last couple of weeks and I can certainly tell you that things are tense there and will become even more so with these latest news -- Ashleigh.
BANFIELD: And it's not the first time that the U.N. Security Council has considered sanctions against North Korea. It's hardly something that the ruling class or elite there ever feel. It's just the people that get hungrier and colder. What does anyone think that these new rounds of sanctions if they're approved would actually accomplish?
COREN: Well, Ashleigh, to be quite frank, absolutely nothing. That's the problem with these sanctions. We've spoken to analysts in South Korea who say the time for sanctions is over. This has happened year after year and it absolutely gets nowhere.
We know that North Korea wants to develop a nuclear weapons program. They have proven that time and time again. And it doesn't matter what the international community throws at it, doesn't matter what China says.
Now we know that China is North Korea's main ally, its key ally providing fuel and food and just its main trading partner. And even China is backing these sanctions. So the fact that North Korea is not listening to China, not listening to the international community, analysts are saying that it is time for dialogue, it is time for the United States to sit down with North Korea and really try and make some head way -- Ashleigh.
BANFIELD: It's time for dialogue a whole long time ago. Anna Coren, thank you for that. Keep an eye on it for us if you will.
Free at last cell phone users believe it or not, the White House is teaming up with the FCC and it's all to make your cell phone use way, way better. We'll have that in a moment.
BANFIELD: So you know that cell phone that you have that you absolutely love or the app that you want that you just can't get because it's not the right manufacturer or the carrier and you're locked? There is good news potentially coming, the White House teaming with the FCC. It could mean a big unlocking of all your hassles.
Alison Kosik is following the story for us in New York. So explain to me just exactly how this could affect me and what exactly the carriers are saying about this. I don't think they would be too pleased.
KOSIK: Well, first of all, how this affects you. So this will be a huge bonus for people like most of us who are really attached to our phones that we have now. The good thing is the issue is being pushed forward because of the petition to the White House. Right now it has more than 100,000 signatures.
So the way it is now, you've always been able to keep your phone number when you go let's say from Verizon to AT&T, but here's the thing, keeping your actual physical device hasn't necessarily been an option because most phones are considered locked and not all carriers use the same technology.
And because of the ruling that was made last year by the U.S. Copyright Office, that's part of the Library of Congress, it's actually illegal for consumers to unlock their own phones without authorization.
Would you believe you could face a half million dollar penalty and five years in prison if you try to do it? Pretty nuts. So the White House and the FCC, they agree, Ashleigh, they want this law overturned.
BANFIELD: I just can't imagine anybody's actually been prosecuted. I can't say that I know because I haven't done the research on that. But do we know if people actually faced any litigation?
KOSIK: I don't think so. And then if you see what the wireless carriers are saying, they're saying, you know what? This is really much ado about nothing. In fact, there's AT&T who says it's always been willing to unlock your device once you fulfill the terms of the service agreement that you have with them. And most other carriers, you know what? They've had similar policies as well. Being able to keep your old phone would really make it a lot cheaper because right now you can buy a phone that's unlocked, but normally it's much more expensive without a service plan.
So let's say you're getting an iPhone for $649 from Apple compare that to $199 from AT&T, you get it with a two-year contract. So allowing consumers to keep phones could save them a chunk of change once they get through an agreement with the initial carrier. And you know what? The carriers aren't necessarily against overturning this regulation.
BANFIELD: I remember switching, you know, switching phone companies and getting to keep my number and I thought that was a huge victory so baby steps. Alison Kosik in New York. Thank you.
A California senior facility is now under some serious fire from families of the residents who lived there. A nurse at the center refused to provide CPR as a woman lay dying in front of her and now the families are having second thoughts.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I hesitate to walk in knowing that if I have a cardiac arrest, no one will do anything until someone with a badge walks y in the door.
(END VIDEO CLIP)