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Wall Street Opens; Massachusetts Roads Reopen; New Info on White House Drone Exhausted AirAsia Divers Pause Search; First Lady's Head Scarf Controversy

Aired January 28, 2015 - 09:30   ET

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

(COMMERCIAL BREAK)

CAROL COSTELLO, CNN ANCHOR: Ah, the opening bell rings and people are wondering, what will happen today? Good morning, everyone. I'm Carol Costello. Thanks so much for joining me.

Investors on edge after Wall Street's selloff. Dismal earnings from companies, including Caterpillar and Procter & Gamble fueling yesterday's steep drop. The Dow diving nearly 300 points. The S&P falling more than 1.3 percent. Now, this is the market many Americans will want to watch since it most closely tracks yours 401(k). So, should we be worried and what will today bring?

So let's talk about that with our panel this morning. CNN global economic analyst and assistant managing editor at "Time Magazine," Rana Foroohar, chief business correspondent Christine Romans, and business correspondent Alison Kosik.

Welcome to all of you.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Hi.

COSTELLO: So, Alison -- hi. Thanks for being here.

I want to throw it to you first, Alison. What's happening on Wall Street?

KOSIK: All right, we are seeing green arrows to start. This is after the Dow took a huge plunge yesterday falling 291 points. Even during the day falling over 300 points. So it did make up some ground yesterday.

What's moving the market today? Certainly Apple shares coming out with earnings that blew away expectations. We are keeping an eye on Apple shares today, getting very close to its all-time high. Apple shares closing at $117 a share. It's all-time high, $119. So it very well could meet that or exceed that today because Apple has such a good quarter. So Apple still the darling of Wall Street, especially after it had its seven for one stock split. It means that Apple is in more mutual funds. So chances are you may be owning some shares of Apple.

Beyond Apple, what's also moving the market? The Fed. The Fed having its first meeting today -- actually ending that two-day meeting today, having its first statement. Everybody, Carol, watching and listening to hear what the Fed is going to say about what its timetable is, when it's going to raise interest rates. Everybody is looking for the Fed to have patience in when it raises interest rates because of all the global uncertainty going on, not just with the U.S., because we are getting mixed data these days, but also what's happening in Japan. There's a recession. What you're looking at with China's economy, we're seeing a slowdown there. And the European economy, we're seeing stagnation. So those are some of the things moving the market today, Carol.

COSTELLO: OK. Before we dive deeper into Apple, because the figures out of Apple are just like mind boggling, Rana, I want to talk about yesterday's drop because a company like Caterpillar causes the market to tumble. Apple today causes it to like maybe skyrocket. I don't know. Why does that happen?

RANA FOROOHAR, CNN GLOBAL ECONOMIC ANALYST: Yes. Well, it's interesting, those two companies are really proxies for a lot of the American economy. A company like Caterpillar, that's a proxy for the industrial sector, the manufacturing sector. That's where the jobs are. So when a company like that reports lower earnings, the markets do get worried. That also reflects, frankly, the stronger dollar because exports become more expensive in those global markets when the dollar goes up. Even though it makes it easier for us to go on vacation, harder for these companies to sell products.

COSTELLO: Yes. OK, let's talk about Apple because, wow.

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Yes, let's. It really -- and even Tim Cook, the CEO of that company, basically said, wow. He said it's hard to comprehend just how they sold these iPhones.

COSTELLO: It is.

ROMANS: Seventy-four and a half million iPhones. Think of that, any company sending -- selling that many of a single product, unheard of. It comes down to 34,000 every hour, nine every second. I mean people are buying these things like crazy. And this is a high value, high margin product. The company made $18 billion in a quarter.

Carol, companies don't make 18 (ph) profit, profit of $18 million in a quarter. So the Apple story really, really different from the overall tone we saw yesterday where the world -- investors were concerned. There were these alarm bells ringing for them about just how the U.S. -- whether the U.S. could be the sole, strong economy to drive the world for the rest of the year. And so these two stories really, Apple is, I mean, probably up 7 or 8 percent right now. It's really --

COSTELLO: I know, but you've got to say, Steve who? Right? I mean Tim Cook has come into his own, right?

ROMANS: Really has.

FOROOHAR: Absolutely. But, you know, the thing about Apple though is, when you look at the jobs picture, it creates jobs at the high end and at the low end, not so many in the middle. It's not a company like Caterpillar that creates those middle end jobs.

ROMANS: It creates jobs in China, in (INAUDIBLE), in places where they make them.

FOROOHAR: In China. Exactly. Global jobs.

ROMANS: That's right. It doesn't -- that's a very good point. It takes -- selling them or if you're the big brains designing them, that's where the jobs come for Apple.

FOROOHAR: Yes.

COSTELLO: So when you -- because, you know, it's only January and everybody says, oh, the economy is getting better but, of course, the wage gap still exists and so -- so --

ROMANS: It's -- I'm worried about the wage gap, Carol, but I think that this year -- I really think that this year you might see some -- you might see wages start to rise again. And here's why, because you have a pretty broad mix of the kinds of jobs that we're creating. Wages just haven't been rising for so long. I think that in some categories you're going to see wages start to rise. I think this is the best year for asking for a raise if you are gainfully employed than it has been in years.

FOROOHAR: Relatively.

ROMANS: Relatively.

FOROOHAR: I must be a little more pessimistic.

ROMANS: Pessimistic.

FOROOHAR: We're -- a rare disagreement. I think we're going to see a little bit of an uptick, but not a big uptick, in part because you've got these deflationary factors. Low oil. You know, we're having a hard time just getting general levels of inflation in the economy and that tends to keeps wages down too. So I'm not quite as optimistic as Christine.

COSTELLO: OK. Because if you're a businessman and you don't have to raise wages --

ROMANS: Yes.

COSTELLO: Because people still need jobs, why would you?

ROMANS: Because you want to keep your top talent. And when you look in certain industries, they're scared to death of losing their top talent this year.

FOROOHAR: Well, that's a good point. I think, again, we have a very bifurcated labor market. You've got -- you know, people at the top really can write their own ticket now. There's plenty of jobs at the bottom, but just not enough in the middle. That's the consistent problem over the last few years and I think that will continue. ROMANS: Yes. Yes.

COSTELLO: OK, Rana, Christine, Alison, thanks to all of you. I appreciate it.

Now to the record-setting snow that buried parts of the Northeast. Residents in hard-hit Massachusetts can return to the roads today now that the state's travel ban has been lifted. But it won't be so easy. Some parts of Massachusetts got as much as 36 inches of snow.

Let's bring in CNN's Chris Cuomo. He's live this morning from Boston, where trains are running just in time for the morning commute. And I know people are suffering there, but at least this storm's historic for them, right?

CHRIS CUOMO, ANCHOR, CNN'S "NEW DAY": Well, it's the worst kind of history, though, Carol, you know?

COSTELLO: I know.

CUOMO: When you're going to make records, you'd prefer them to be in a good way. And obviously we're joking about it. We can because the urgency has passed. Along the coast line they had a hard time. You have Nantucket, the island, there's still some problems in Massachusetts there, coastal regions in Connecticut as well.

Let's put up a graphic so you can see the totals. What Carol's referring to, what you're referring to in terms of historic is true, Boston, this storm was it -- made it the most snow that they've ever had in a January. The blizzard overall was the sixth largest storm to ever hit the state since 1935. Had two feet here in Boston, which is very tough in a big city, obviously. And then you had as much as three feet in different places as you're seeing there on the screen. And then places in Connecticut got 33, 34 inches.

But, remember, blizzard isn't just about snow, right? It's about the wind and the wind whipping the water, 10, 15 foot waves, created a lot of storm surge, flood damage. People had to evacuate. Some people listened, some people didn't. That put strain on the system.

But I think the story of this blizzard, for all the stuff we're hearing about, and people in New York and New Jersey carping about not getting hit by the blizzard, talk about mass masochism, Carol, is that government got ready in advance. And as a result, especially in Massachusetts, it made a big difference because people cooperated.

You were probably two at the time, but I was eight in 1978 when we had that blizzard here in the northeast. Ninety-nine people died, largely from carbon monoxide poisoning. That means they were in their car, people couldn't get to them, and they wound up, you know, succumbing to that. None this time. We're not hearing about any of that and that's because people voluntarily didn't take to the roads. They're being told still don't go to the road because it will slow cleanup. And you want to get into it.

Transit, obviously, is coming back. We have Amtrak that is delayed trips today for Boston to New York. Airlines, they're still going to be backed up. That's not a surprise. There are about -- just over 1,000 flights canceled in and out of the United States as of today. About 350 flights being reported as delayed. But there's going to be a cascade effect with flights across the country. They'll take a couple of days to clean up.

I want to show you some pictures we got off of Twitter, Carol, of people getting back going here in Boston. You have the red line there. That's the subway. Look how jammed it was. You know, people trying to get to work again because of the delays. They wound up clumping up. And, you know, the ongoing difficulty of being in a place that's all snowed up. Look at that bus. It had to be pushed by a, you know, a massive truck vehicle to get it going there. Like a super tow truck. And that's going to be the challenge going forward. That's why the less you have to do, the less you should do.

But we did very well in this blizzard. All the carping aside coming out of New York and Jersey. That's when we expect from my people, Carol. You know, they're always upset about something.

COSTELLO: I know. It's part of their special charm.

CUOMO: But I'd much rather have people complaining about not getting hit than God forbid they got hit and weren't ready.

COSTELLO: That's right. Chris Cuomo --

CUOMO: Yes, you can call it that, Carol. I appreciate that.

COSTELLO: Special charm. Thank you, Chris Cuomo.

Still to come in the NEWSROOM, new information surfacing about that drone that crashed on the White House lawn. Not only did the owner work for the government, he might have been drunk. Joe Johns is covering that for us from the White House. Hi, Joe.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Hi, Carol.

The drone that landed here on the White House lawn on Monday was harmless, but it sure attracted a lot of attention. Now even the president is weighing in on the need to get new rules when it comes to drones. I'll have that coming up next.

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COSTELLO: Is booze partially to blame for this week's White House security breach? Officials say this is the crashed drone that prompted a Secret Service lockdown on Monday. According to sources, the high flyer is a U.S. government employee who's admitted to throwing them back before takeoff. But perhaps the most sobering revelation of all, a real security threat is now exposed. Joe Johns is at the White House with more.

Good morning.

JOHNS: Good morning, Carol. This is prohibited air space at the White House and it's been so for decades. But this incident really pointed out how hard it is to stop even a recreational device that's so small, flying so slow, so close to the White House.

The larger issue, of course, is about rules for drones. This is something the FAA has been working on for a long time, haven't finished them yet. The president talked about the issue of rules for drones in an interview with CNN's Fareed Zakaria. Listen.

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BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I've actually asked the FAA and a number of agencies to examine how are we managing this new technology because the drone that landed on the White House you buy at Radio Shack. You know that there are companies like Amazon that are talking about using small drones to deliver packages.

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JOHNS: Now, the man who reported that the drone was his does work for the Defense Department. He works for the Geospatial Intelligence Agency. And, of course, they do mapping and imaging for the Defense Department. He actually told, according to sources, the Secret Service, that he was out doing this with some friends. That the drone was his. It was for recreational use. And they had been drinking at the time. The question, of course, what's going to happen to him? Well, prosecutors have not decided whether they're going to charge him with anything, but CNN has been told that this individual could face discipline at his job. Carol.

COSTELLO: Perhaps they should charge him with stupidity. I mean, he's a U.S. government employee, he gets drunk and he flies a drone over the White House and then forgets about it?

JOHNS: The joke's about droning while --

COSTELLO: Droning while drunk?

JOHNS: -- intoxicated, are going to go for a while.

COSTELLO: What government agency did he work at and what does it do?

JOHNS: Well, yes, the U.S. Geospatial Intelligence Agency essentially is a part of the Defense Department. It does mapping. It does imaging. It provides a lot of information for military purposes. Probably best known for helping the United States discover exactly where it was that Osama bin Laden was, but it's also done some domestic applications too, Carol.

COSTELLO: Very interesting. Joe Johns, thanks so much.

Still to come in the NEWSROOM, exhausted AirAsia recovery divers too sick to keep searching. What could this mean for the search efforts? That's next.

(COMMERCIAL BREAK) COSTELLO: Two more bodies have been spotted nearly a month after AirAsia Flight 8501 plunged into the Java Sea killing all 162 people onboard. Fishermen found those bodies more than 600 miles from where the plane went down and from where the search efforts are focused. Exhausted divers, in the meantime, are taking a few days off to recover from their grueling work.

Let's find out more from Saima Moshin. She's in Indonesia's capital, Jakarta.

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SAIMA MOSHIN, CNN CORRESPONDENT: Carol, two bodies have been found today washed up close to the island of Sulawesi. Now this is 600 miles, that's around 1,000 kilometers, away from the crash site. So a considerable distance, as you can imagine, for it to float away.

Now one of those bodies is yet to be identified. We simply don't know even if it has anything to do with Flight 8501. The other identified so far only by local police through a wallet found on that person. They believe it does match a name on the flight manifest.

Now, the search and rescue or recovery operation will continue. There was panic late last night here in Jakarta when we heard that the military was pulling out, family members distraught that search and recovery mission may well be over. Of course, more than 90 loved ones still out there somewhere in the Java Sea. Today, Basarnas, the National Search and Rescue operation, reassured and reiterated that this operation will continue. So long as they can find bodies, they will stay there.

Now, they have taken a pause, Carol, for a few days and that's because a lot of divers have been taken ill. 19 out of more than 80 divers have been suffering from suffering the bends, which is nitrogen contamination. So they've taken a pause. They are re-evaluating. They are returning on Saturday, so seven time. This time they're taking specialists with them, divers involved in oil and gas exploration and more specialist equipment to help them stay down longer. So this operation will continue.

In the meantime, the preliminary report has been submitted Monday. A press conference is due tomorrow. We're not sure if they will change their mind because the transportation minister has told me they won't be releasing it publicly. Tomorrow, we'll find out exactly whether they will share that and what will be potentially in that report. Carol?

COSTELLO: Saima Moshin reporting, thank you.

Still to come in the NEWSROOM, Michelle Obama causing quite the uproar in Saudi Arabia. I'll tell you why next.

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COSTELLO: The First Lady, Michelle Obama, skips a head scarf when meeting Saudi Arabia's new king and sparks an international debate. The First Lady accompanying the president on a quick stop to pay their respects to the late King Abdullah as well as meet the new ruler. But while the First Lady shook hands with the king, something typically forbidden by Saudi law between men and women who are not related, it was the First Lady's hair that made headlines.

"The Washington Post" reporting some 1,500 tweets have been sent, many of them calling Mrs. Obama disrespectful. But was this more about symbolism instead of a snub? My next guest says yes. Frida Ghitis is the world affairs columnist for "The Miami Herald" and a contributor for cnn.com. Frida, good morning.

FRIDA GHITIS, WORLD AFFAIRS COLUNIST, THE MIAMI HERALD: Good morning, Carol.

COSTELLO: Good morning. So do you think this was orchestrated by the Obama administration that Michelle Obama would show up at this event without covering her head?

GHITIS: Carol, can you imagine if she had worn the head scarf, what the outcry would be in the United States and in the rest of the world? I think the Obama administration made a very deliberate decision to bring Michelle to this event and bring Mrs. Obama to this event. It was a way of telling the Saudis, look, we take women seriously in the United States and the rest of the world. Women can take center stage. And you just have to get used to it.

It's a symbol of this very complicated relationship between the United States and Saudi Arabia, a country important for America's strategic reasons and that creates problems in its clash of cultures.

COSTELLO: Absolutely. I want our viewers to look at the video, because you can see how -- I just can't imagine how uncomfortable this would be. So the First Lady is in this group of very important people in Saudi Arabia and she has to wait to see if anyone will shake her hand. Look at her. So all of those muckety-mucks are shaking the president's hand and totally, completely ignoring the First Lady.

How do you -- well, you know how that feels. How does that feel?

GHITIS: Well, you know, she knew what to expect. And I have to say here, the First Lady did absolutely nothing wrong. She wore conservative attire. The Saudi rules do not require foreign visitors to wear local clothing. The men are not expected to wear Arabian clothing.

COSTELLO: But I want to know how does it feel when you're in a situation like that ,when you are ignored as a human being?

GHITIS: It's very unpleasant. And there's a reason usually women do not accompany their husbands when they go to these events. And as you know I had the opportunity to spend some time working in Saudi Arabia and it was a real eye opener. And it was an eye opener to listen to Saudi women and to foreign women living in Saudi Arabia talk about how unpleasant, how uncomfortable it was.

A lot of women in Saudi Arabia are very irritated with the rules. They are angry about the rules. We have heard a lot about the ban on driving in Saudi Arabia, which is the only country in the world that does not allow women to drive, and that is not just a symbolic thing, that is a tremendous problem for daily life. So there are a lot of problems that the United States finds very difficult to navigate.

COSTELLO: Well, let me ask you this -- and I just bring this up as an aside. When Michelle Obama visited Indonesia, she did cover her head. So this was clearly something that she meant to do, not wear a head scarf in Saudi Arabia. Also, when Laura Bush went and visited King Abdullah in Saudi Arabia, she didn't wear a head scarf either, but there wasn't quite the backlash as there is right now. Is another thing that's sensitive, so to speak, in Saudi Arabia is Michelle Obama is African-American as well as a woman?

GHITIS: Well, there's a range of ethnic varieties in Saudi Arabia. When she was wearing a head scarf in Indonesia, she was in a mosque. So I think there is a very important difference there. I believe that if she had been in the mosque in Saudi Arabia, she would have worn head cover.

COSTELLO: Got you. So does this sort of thing help? I mean, does it send a message? Do Saudis listen or don't they care?

GHITIS: There are many Saudis who care and we should put things in context. There were 1,500 tweets complaining about whether or not she wore a head scarf; there are about 5 million Twitter users in Saudi Arabia. I would suspect that there were a lot of women in particular who were cheering for the First Lady for standing there, being there, where the king was, where the entire royal family without a single female was, and for standing, not wearing a head cover, and doing it with dignity and with respect. She did dress conservatively.

COSTELLO: She did. Frida Ghitis, thank you so much for joining me this morning. I appreciate it.

The next hour of CNN NEWSROOM starts now.

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