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Apple Stock Rises; Company Making Non-Lethal Products for Police Forces Discusses New Innovations; Richard Branson Asks to Speak Directly With Vladimir Putin; U.S. Educational System's Summer Break Examined
Aired August 23, 2014 - 14:30 ET
THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.
CHRISTINE ROMANS, CNN HOST: Violent protests in Ferguson, Missouri, more bloodshed between Israel and Gaza, a stalemate in eastern Ukraine, and the gruesome murder of an American journalist -- the world may look like it's falling apart, but a closely watched part of the U.S. economy is looking stronger and stronger. Is this what a bubble feels like?
I'm Christine Romans. Welcome to CNN MONEY. The world is on edge, and it's making Richard Branson really sad. I will ask him why he wants to meet with Russian President Vladimir Putin.
Police and protesters clash in Ferguson, Missouri. Is a camera on every coop in American the answer? We will ask the co-founder and CEO of Taser how to make our communities safer.
And America's favorite stock is on fire. A new high and new products expected next month. Is it the Apple of Wall Street's eye or ripe for a drop back down to earth?
But first, a turning point for Twitter. From violent clashes over ace in America's heartland to the gruesome beheading of an American journalist by ISIS, Twitter has gone from carrying the message to defining it. When ISIS used the social network to broadcast the execution of American journalist James Foley, Twitter took action. CEO Dick Costolo vowed to suspend any account posting that video. And in Ferguson, Missouri, the story of an unarmed black teen shot to death by police and the violent protests that followed, it all unfolded on Twitter. "Hash-tag Ferguson" became the virtual diary of real time developments on the ground even before traditional news outlets.
Our CNN MONEY panelists here Laurie Segall, Jose Pagliery, and Maggie Lake. Laurie, Twitter has been a vehicle for conversation, for news before, like the Arab Spring, for example. But this time, it feels different. It feels as though Twitter has grown up here.
LAURIE SEGALL, CNN TECHNOLOGY CORRESPONDENT: This is a watershed moment for Twitter because the company is forced to make editorial decisions. When this picture was posted, Dick Costolo, normally they don't actually say, hey, we're going to take this down and they won't comment on the specific accounts. He made a stand, and for the first time we are seeing Dick Costolo in this position where he has to make decisions that we as a news organization have to make. And you also had Jack Dorsey, founder of Twitter, actually showing up to Ferguson and live tweeted, quite literally carrying the message with him. So we are really at this pivotal point where, as you say before, they went from carrying the message to almost delivering it to a degree.
ROMANS: And it is almost as if they are gatekeepers of that message, and that's, Jose, where I think the difference is.
JOSE PAGLIERY, CNN STAFF REPORTER: I have to jump in and say that Twitter is a private corporation and has a right to do this because they might put it in their terms of service. But I don't know if I want Twitter as a social media platform to be policing or censoring message here, because even though those gruesome images we saw of that journalist being killed, they are gruesome, they are horrendous, but sometimes good things come out of horrendous imagery. It sometimes incites people to do good. You mentioned the Arab Spring, that's a great point. Some of the Arab Spring was inspired because of the images that were shared on Twitter of authoritarian governments clamping down on its people.
MAGGIE LAKE, CNN BUSINESS CORRESPONDENT: The problem for Twitter, is it a news organization or is it a tech platform, even though the power of the hash-tag is clear, for investors that's not a viable business model right now. Nobody wants to advertise right next to the Ferguson or ISIS blackout. That's a problem.
ROMANS: That's a big problem. All right, but I think it's very clear that Twitter has evolved over the past few years.
OK, so much for the selling of stocks. This month, it looked like we were going to have the long awaited correction of the stock market, right? At the beginning of August it looked ugly, but then it did not last. The S&P 500 reached record highs again this month. That as warnings about the stock market bubble get louder.
The Nobel Prize winning economist Robert Schiller and hedge fund king Carl Icahn suggesting things are looking pretty frothy. And then the former treasury secretary Robert Rubin, he is warning about excesses forming maybe elsewhere in the economy. He's not saying where, but excess is forming. Maggie, Alan Greenspan famously warned about irrational exuberance in 1996. The dotcom bubble burst almost four years later and stocks doubled from there. So people will hear these clashings about a bubble and say I could make a lot of money before the bubble bursts crashes.
LAKE: And they are absolutely right because all these people warning you about it will not say when it's going to happen, and they all say it may not happen. By the way, things may be different.
But if you look at where we are, the Dow is at 17,000, S&P at record highs, there is reason to understand why this bull market is looking mature and valuations are maybe getting stretched. The problem is whether that is a bubble, that is a very, very debated issue. And I'll tell you one thing that feels different, Chris, you and I covered the other bubbles bursting. At the time there was a private sector herd mentality all running in, nobody was worried, and then they all ran for the exits at the same time. This bubble is being driven by the central banks. They are moving to
the exit. They are waving the flag, letting us know that it happens. We know this, they're telegraphing it, which raises the possibility that if there are excesses they might be able to deflate them slowly without them bursting in a disorderly way. It does not mean there won't be a correction, doesn't mean there won't be selling, but it will not be the same as a bubble bursting. I think that's what has analyst very torn.
ROMANS: What do people say about tech? Tech is looking, it feels so bubbly. It is a 14-year high for the NASDAQ.
SEGALL: Exactly. I was very interested in that. I was speaking to an investor whose name is Tony Chan yesterday, and I said, Tony, are we in a bubble? And he said, oh, god, not this question again. He said we are in a bubble with a small "b." We are nowhere near where we were in 1999 to 2000, absolutely not.
ROMANS: We are also afraid of bubbles because, boy, they hurt when they pop, but, boy, they feel good when you are making money in the last bits of them, right?
Apple is on fire. We are calling it America's favorite stock. Check out the performance this year, all-time new highs this week. New products coming next month, reportedly a new iPhone, a smart watch. Laurie, is Apple still cool, or is this just a hot spot?
SEGALL: I'll tell you, in the valley when you go and talk to investigators, it used to be everybody had a iPhone. That's no longer the case. But is Apple is so cool, is it still an innovative company, absolutely. We are seeing that with the stock pop. Everybody is very excited about the potentially seeing the iPhone 6. They want that new product. They want that when Steve Jobs would come out and say "One more thing" and deliver a mind-blowing product. They want that and they think that we might get that soon. And we also see those really interesting deals like the Beats acquisition. So I think that is why you have investors excited about the stock.
LAKE: What I think is interesting is some people are trying to say the bulls of Apple it is not about the phone. It's about the fact that Apple is a software and hardware company. They have not even begun to crack the cloud. Roger McAfee from Elevation says if they do that, watch out. They will take over the world. He thinks it could one of the cheapest stocks in the stock market, incredibly.
PAGLIERY: A lot of eyes are on the iPhone 6.0, right. But we've got to remember that this company has, and they are on top of the world. Even if something goes wrong with that product line, they still have a mountain of cash, and they can do whatever they want.
ROMANS: They could buy every brand in America a few times over if they wanted to.
All right, hacking hits the emergency room, guys. This time it's not millions of credit cards stolen from a big box store or payments from a website. Hackers hit a major hospital network. Community Health Systems runs 206 hospitals in 29 states. The hack hit all of them, 4.5 million patients affected. What did they get, Jose, and what could they do with it?
PAGLIERY: So this is terrible news. Hackers managed to break into this hospital's computer network and steal names, social security numbers, birthdays, physical addresses, telephone numbers, this is very valuable information.
But let's talk about what the value is in this information. This isn't just a person they identify. You've heard of identity theft. This is medical identity theft. This is a new concept most people aren't too aware of. There is a huge black market for our medical data because people want to use it and pose as patients going to doctor's offices and get prescription drugs that they can later sell on the street, or they can fraudulently bill Medicare or insurance companies, right.
ROMANS: So prescription drugs, defraud Medicare, there is a lucrative market there.
PAGLIERY: It really is. And the problem here is you have hackers that are using military grade weapons on one side and hospitals that are in the business of caring for patients, and it is a cyber-war.
ROMANS: And how can we protect ourselves? You can choose not to shop somewhere. You can choose what credit card you are using. It has a chip. You're bleeding, your kid is sick, you go to the hospital, you have to hand over your personal information.
PAGLIERY: That's absolutely true. You don't really have much of a choice here. This is really about the hospital protecting itself.
ROMANS: Wow. All right, moving on, guys, listen to this sound. That makes me twitch, the newborn cry. Babies are cute even when they are crying, but here is another sound for you, because that baby is expensive. All of them are. The government says it is going to cost more than $245,000 to raise a kid from cradle to high school graduation, and that does not include the cost of college. I say they are worth every penny, and the beautiful thing about the government statistics, yes, they keep government statistics on this so you can plan for your quarter of a million dollars. The beautiful thing about these statistics is the more kids you have, the economies of scale. They can share their clothes and their bedroom.
SEGALL: You will have more money if you do that.
ROMANS: I love that the government keeps these statistics.
LAKE: The one thing that really strikes me is child care. I know that housing is part of it, but the child care things strikes me is that it is not just the money. It's the emotional strain. You have that really powerful story about the Starbucks employee. Starbucks came out quickly saying that we will post the schedules ahead of time. But it is not the money. It's that having to juggle that maybe keeps you behind, strops you from taking the promotion. We could do better. ROMANS: Later in the show we're going to talk about the summer slide. We have three months a year where kids aren't in school. Parents are paying for child care for those kids. It just adds to the bottom line.
SEGALL: As a millennial, I graduated in 2008, coming out of college in a recession, right, and there was all of this pressure on income, and also what Maggie mentioned, a culture of overwork. Can you have it all? That is a question that people ask, and I think that it is something that they look at.
ROMANS: Can you have it all? You will have to pay for it if you have it all. Have a great weekend, everybody.
Coming up, one piece of technology could have changed the conversation in Ferguson, Missouri. So why doesn't every cop in America have one? The CEO of Taser will answer that next.
ROMANS: We may never know exactly what happened in the shooting of Michael Brown. Several witness accounts conflict about the killing and sparked violent clashes in Ferguson, Missouri. And no video has emerged to tell the whole story. The city of Ferguson said this week that is making a commitment raise funds to secure dash and vest cams for its police officers. One of the industry leaders in these technologies is a company called Taser. The company made its name selling stun guns and other non-lethal options for police. It's acts online includes body cameras, smaller cameras attach to eyeglasses, and a version that plugs into its stun guns.
Rick Smith is the co-founder and CEO of Taser. Rick, I'm just curious, have Ferguson officials approached you about using Taser's devices in the future?
RICK SMITH, CEO AND CO-FOUNDER, TASER INTERNATIONAL: We don't comment about specific discussions we're having with agencies. I can tell you in general we have seen about a tenfold increase in the last week in interest in the camera devices.
ROMANS: So from law enforcement around the country who want to make sure that they will eyes on a situation like this after it happens?
SMITH: Absolutely. The real issue I think here is because people don't know what happened, it is all of it conjecture, and frankly, you have to use your imagination. And then people's biases come into place, and some people think that you can give the police the benefit of the doubt, there's some people who don't, and it's tearing that community apart.
And if we all knew what happened, if the police did something terrible and it was known in public, they could begin the healing process and own up to it and take corrective actions. Or if they were justified because this was a more dangerous situation, I think we would all feel differently. It is the uncertainty that is so harmful. ROMANS: And the uncertain just breed mistrust between groups who
already don't trust each other. Let me ask you this, a lot of us have been asking, why don't police officers carry a Taser and a gun as standard operating procedure?
SMITH: In this country, most officers do. We estimate about 70 percent of police officers in this country have access to a Taser while they're on duty. So not everyone, but most do.
ROMANS: In this case, more than a Taser, you think that the camera would have been key?
SMITH: Well, we don't know what happened in the incident. I can tell you that when the city of Cincinnati deployed Tasers, they saw a dramatic drop in police shootings, and Cincinnati used to have a community torn apart by race, and we played a big part in fixing that with Tasers. And now we're trying to do it with cameras. It comes from a different angle, and that is addressing the uncertainty issue we're talking about.
ROMANS: Taser's stock price has jumped over the past two weeks. You talked about the interest from law enforcement up tenfold. The stock is up about 30 percent. Is cost the only thing keeping law enforcement from doing this, or do some cops not want to wear cameras?
SMITH: Well, I tell you, really I think the biggest hurdle historically has not been even cost. It's been technology. If you put 100 or 1,000 cameras on the street, how do you deal with all of the data that they generate? Historically, most of those officers who have to come and sit at a computer for half an hour a day and burn disks.
So we think that the real leverage here is making these cameras connected to the cloud, like Apple did with the iPod. But if there is the anything positive here that sometimes these sorts of tragedies can lead to change. You know, I started the company because I had a couple of friends who were shot and killed, and out of that tragedy came a company that has had a pretty big impact on saving lives around the world, and maybe some good will come out of all of the public discourse here.
ROMANS: Rick Smith, co-founder and CEO of Taser joining us from Seattle this morning. Thank you, sir, nice to see you.
SMITH: Thank you.
ROMANS: Coming up, 25 years after the end of the cold war, business leaders from around the globe are worried. They are worried about the return of those dark days. Why Virgin Group founder Richard Branson wants a meeting with Russia President Vladimir Putin, next.
ROMANS: A new cold war -- 25 years after the fall of the Berlin Wall some global business leaders fear the return of the iron curtain. This week Russian officials shutdown four Moscow McDonald's. Authorities there cite sanitary violations. But there is more than a sneaking suspicion that those closures are retaliation for western sanctions against Russia.
As relations deteriorate, Virgin founder Richard Branson penned an open letter calling for a peaceful solution to the Russia-Ukraine conflict. It was signed by 15 other Russian, Ukrainian, and international business leaders. I spoke to Branson about his growing concern that progress made over the last quarter century is being erased.
RICHARD BRANSON, FOUNDER, VIRGIN GROUP: We all speak with one voice, and I must have spoken over 100 Russian businessmen, over 100 Ukrainian businessmen, and western businessmen, and every one of us are incredibly sad that the e dreams of what had happened when the Berlin Wall came down of the Russian people being able to trade merrily and go on the holiday with western peoples, with working together to sort out the bigger problems of the world, seems to be diminishing rapidly.
ROMANS: Is this letter meant for Vladimir Putin, the Russian president, to take heed that we are going in the wrong direction?
BRANSON: President Putin, I think he needs to realize that Russian business people, and the people who have signed this document, you know, the biggest car manufacturer in Russia, the biggest dairy producers in Russia, the biggest supermarket chain, they are all self- made people who are very saddened and worried a about the way things are going. But the last thing that is needed is military intervention. And, you know, that should be a thing of the past. Further military intervention will result in decades, I think, of Russia being ostracized. It means that Europe won't buy its fuel form Russia. The people of Russia will suffer, and that is not the answer.
ROMANS: You are talking about people coming together to erasing differences and barriers, and the Russia that Vladimir Putin seems to envision is very different.
BRANSON: I think that there has been a breakdown of trust between president Putin and the west. When he got reelected I think he felt rather ostracized by the west. And I think that there are Republican business people and western business people, Ukrainian business people, we need to get the trust back again and we need to get President Putin feel not that Ukraine should be a part of Europe or Ukraine should be part of Russia, but that we should all be part of one world. I would be delighted to sit down with him and delighted to meet him and be delighted to see whether, you know, issues can be bridged, because they have to be bridged one day. And you know, today is better than waiting for tomorrow.
ROMANS: I asked Sir Richard to let us know if he gets that RSVP from President Putin. Coming up, American students heading back to school after a very long
summer off. Why is the world's largest economy so lazy when it comes to days spent in school?
ROMANS: It is that time of year again, back to school. Every time this year, I ask this question -- why exactly are American children out of school all summer? Is it to help bring in the harvest? Maybe that is one reason the long breaks started, but this vestige of America's agrarian past is hurting its future. Just ask Education Secretary Arnie Duncan.
(BEGIN VIDEO CLIP)
ARNIE DUNCAN, EDUCATION SECRETARY: I do worry that in other nations they're just outworking us. And again, this is about giving our children a chance to compete in a global competitive economy. And if in India, China, other places they are going to school 30, 35 more days than us, we are putting our children by definitely at a competitive disadvantage.
(END VIDEO CLIP)
ROMANS: That's 35 more days than us. Students lose about 40 percent of what they learned during the year when they stop learning in the summer. And this so called summer slide hits low-income learners hardest. Only 10 percent of children, American children, are in summer school. That is why programs like Practice Makes Perfect are so important. It is a nonprofit serving 500 New York City school kids during the summer. We stopped by to check it out.
ALISON BELINSKY, TEACHER, PRACTICE MAKES PERFECT: Well, a lot of the students could not even read or write their own names. There is still so much that you lose over the summers, and the teachers have to spend two to three months reviewing that same material, and then you are falling behind, because you are not getting as much done.
BRANDON ESPINOZA, COO, PRACTICE MAKES PERFECT: What Practice makes Perfect is trying to do is to be a seamless integration from school year to school year and be a cornerstone.
KARIM ABOUELNAGA, CEO, PRACTICE MAKES PERFECT: Two-thirds of the reason why the achievement gap exists is directly attributed to unequal summer learning opportunities for inner city and low income students.
ESPINOZA: Summer enrichment should be mandatory in every city across the country. The reality is you are putting yourself at a disservice when you are not involved in something academically challenging or enriching over the summer. It is proven. I think our current model is definitely broken.
(END VIDEO CLIP) ROMANS: Broken and old-fashioned. Programs like these battling a summer slide are a start, but there shouldn't be a summer slide in the first place. Of course, you won't hear the kids clamoring for a longer school year, I get it, and teachers don't like the idea either. But America's economy future depends on improving our education system, and three months off in the summer is a relic that no longer make sense in today's global economy. Think about it, your kids starting school this week has to relearn everything they lost from last year before they can move forward. So let's just start moving forward maybe in November? It is just unacceptable.
Thanks for watching CNN MONEY. We're here every Saturday at 2:30 p.m. Eastern. Set your DVRs, please to catch the money news that matters most to you. Check us out on the web any time at CNN MONEY and follow us in Twitter. Have a great weekend, everybody.