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New Day

Rajon Rondo Traded to Mavericks; U.S. to Name North Korea as Sony Hackers; Drop in Oil Prices Bad for the Economy?

Aired December 19, 2014 - 06:30   ET

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

MICHAELA PEREIRA, CNN ANCHOR: That's why it took so long for this latest attack to be made public and for authorities to know of it.

Nima Elbagir in London, thanks so much for that.

Here's some more of your headlines now.

U.S. officials have confirmed air strikes in Iraq have killed three senior leaders of ISIS. Their deaths had been suspected after multiple U.S. and coalition airstrikes going back to mid-November. It's taken, though, until now to determine conclusively that they were killed. Military official tells CNN that one of the militants was a key deputy, the ISIS leader, Abu Bakr al-Baghdadi.

President Obama today is going to hold his annual end-of-the-year news conference before heading to Hawaii for the holidays. Expect him to field questions on topics ranging from his executive action on immigration, this week's historic deal do reopen relations with Cuba. The Senate CIA torture report and the hack attack against Sony, among several other pressing issues.

Fresh calls for sweeping changes to the Secret Service in the wake of a new report. An independent panel appointed to review the agency says the Secret Service is stretched beyond its limits and needs more training, more staff and better leadership. The panel was created after a series of highly publicized security failures, including this, when the man jumped the White House fence, made it deep inside the building back in September.

I have an amazing reunion to tell you about. A California man whose boat that he lived aboard sank during last week's brutal storm in California, well, he thought his dog, Daisy, went down with the boat. Not so.

Steve Aliota (ph) says he had gone out to help a friend last Thursday, when he returned, he was horrified to see only the boat's mast sticking out of the water. Daisy had escaped, though, during the storm. She swam more than a mile to shore, found a church where she and Steve sometimes get a free meal.

When Steve arrived there Friday, the minister was happy to reunite them. As you can see, this is the aftermath. Daisy and Steve are now staying on a friend's boat until they get back on their feet.

CHRIS CUOMO, CNN ANCHOR: That is an impressive piffle. PEREIRA: Right?

ALISYN CAMEROTA, CNN ANCHOR: That is a piffle who can remember a map, who remembers at least direction. Wow.

CUOMO: I was going with they don't swim well, because they don't have the webbed toes, but the reading is good also.

(CROSSTALK)

CUOMO: All right. Let's turn to sports here, somewhere right now John Berman is curled up in the fetal position, sucking his thumb and rocking slowly because that's how he sleeps. But he's also upset because the Boston Celtics just lost the last cornerstone of their championship team.

And we have big news about Kevin Durant, arguably the best player in the league, went down with an injury.

So, let's bring in Andy Scholes with this morning's "Bleacher Report."

Did I say anything --

ANDY SCHOLES, BLEACHER REPORT: That's probably all correct. Berman is probably not doing too bad. This was expected, the Rondo trade.

But, first, guys, the Thunder, their fans were holding their breath, because as you say, Chris, Durant, he already missed 17 games, another injury last night, and this one was really unfortunate, because Durant was on his way to a record-setting performance. He had already scored 30 points in the game when he rolled his ankle right before halftime. Now, Durant is the first player in nearly 40 years to score 30 points in less than 20 minutes of action.

Now, the injury happened when Durant stepped on a defender's foot while driving to the basket right here. Now, without Durant on the court, the Warriors went on to win the game, 114-109.

Good news for the Thunder. X-rays on Durant's ankle were negative and he is considered day to day.

All right. Now, to the huge trade in the NBA last night. The Boston Celtics finally unloaded Rajon Rondo, sending the all-star point guard to the Dallas Mavericks. In return, the Celtics received Brandon Wright, Jae Crowder, point guard Jameer Nelson and some draft picks.

And Rondo's arrival in Dallas is going to give them arguably the best starting five in the NBA. He's likely going to make his debut for the Mavs Saturday when they take on the Spurs.

All right. Last night's NFL game was statistically the worst Thursday night game ever. You had the 2-12 Titans taking on the 2-12 Jaguars, you would think the players are going through the motions at this point.

Well, not Jags d-lineman Sen'Derrick Marks. He was one sack away from activating a $600,000 bonus clause on his contract. Well, on the very last play of the game, he brought down Charlie Widers for the sack. He popped up, made the money sign, he was mobbed by his teammates, Jaguars won the game 21-13.

Guys, I'm sure they had a fun time celebrating that third win of the season, because Marks said anyone who wanted to go out and party after the game, go out on the town. It was on him because he got the big $600,000 bonus check.

CAMEROTA: That does, that is a good offer. I wonder if we're included?

CUOMO: No.

CAMEROTA: No.

Thanks, Andy.

SCHOLES: Sadly not.

CAMEROTA: Great to see you.

SCHOLES: All right.

All right. Back to our top story: inside North Korea's vast hacker network, how did this group grow without the world noticing? A North Korean defector shares his secrets and we have the details.

(COMMERCIAL BREAK)

CAMEROTA: The U.S. government getting set to blame North Korea for the crippling hack of Sony. But not everyone thinks this was the handiwork of North Korea. Who else could be behind it?

Let's bring in Bobby Ghosh. She's our CNN global affairs analyst and managing editor of "Quartz". And Martin Williams, he's the senior correspondent and former Tokyo bureau chief of IDG News Service, also the founder of NorthKoreatech.org, that's a blog that covers technology developments in the secretive state.

Gentlemen, thanks so much for being here.

Martin, you are not convinced that North Korea was behind this. Why not?

MARTIN WILLIAMS, NORTHKOREATECH.ORG: Well, I'm not convinced with any of the evidence that we've seen so far. This doesn't look like a typical North Korean hack. The country in the past has gone in and attacked things and hasn't been as noisy, there haven't been any of these public statements that we've seen this time. Also, if we look at what happened in this hack, the hackers at the beginning didn't say anything about this movie.

So, certainly based on everything we know so far, I don't think we have enough evidence to really conclude that North Korea is behind it. CAMEROTA: So, Martin, in other words, the Web site that this shadowy

anonymous group set up talking about the threats against this movie and what they would do and 9/11-style attack, you don't think that has the fingerprints of North Korea?

WILLIAMS: I mean, it could do. It could be a group that is linked with North Korea or somehow aided by the country. But if this is North Korea, this really is nothing like we've seen before. So, it really does sort of raise a frightening new level in these kind of cyberattacks that we've seen take place in the last few years.

CAMEROTA: Bobby, what do you think of this not having the hallmarks of a typical North Korean attack?

BOBBY GHOSH, CNN GLOBAL AFFAIRS ANALYST: Well, the thing that Martin said is -- the crucial phrase was: as far as we know.

And we know so little and so little information has been given out. What we do know is so far, there was no attempt at blackmail, which suggests this is political in some way.

CAMEROTA: What do you mean, there's no attempt at blackmail? They didn't want the movie release and they said there'd be an attack if it weren't?

GHOSH: What I read was that the attackers didn't ask Sony for money in exchange for sort of removing the malware or giving them the tools to block it, which sometimes happens. North Korean state agency has said that this attack was done by sympathizers, which sometimes is code for we did it.

The fact that they picked Sony, the background of the movie, it's a Japanese company, North Korea, has a longstanding animus with Japan, that's also indicative.

And now, the Obama administration is about to announce we understand today, that they're going to finger North Korea directly. They say that they've picked up digital fingerprints. We haven't seen it, Martin and I, so it's a little hard to know for sure. But there's a lot of circumstantial evidence that does point to North Korea.

CAMEROTA: Martin, we had a White House -- a former White House official on a few minutes ago who said that she believes that they do have evidence that it's North Korea. She said they must have the signals intelligence intercepts with regional officials and human intelligence pointing to North Korea. What do you say to that level of evidence?

WILLIAMS: I think the key thing we're going to see today is the exact language used by the White House or whatever part of the government announces this. There's a big difference between North Korea attacking Sony and attackers using North Korean software. It's going to be really important to see what level of certainty the U.S. government has that North Korea is involved in and quite what it thinks its involvement is. CAMEROTA: Martin, I want to stick with you for the technology of

this. Help us understand the amount of data that was stolen from Sony, we understand is ten times that of which is in the library of Congress. Are there no triggers, no red flags that go off in a company when that amount of data is being siphoned out of their computer systems?

WILLIAMS: If that claim is true, then there should be, obviously. So far, the hackers have released online several dozens of gigabytes of information, they're talking about 100 times that. So that's what they say they've got. We haven't seen evidence of that.

Hackers are prone to over-estimating, over-stating what they've done. But it looks like Sony's security was lacking in this one. These guys should never have been able to get away with this type of information and all of the confidential stuff they got off the networks, the emails, the movies, the financial reports. This is really very damaging for Sony.

CAMEROTA: Bobby, does it suggest that there must have been somebody on the inside at Sony who was helping?

GHOSH: Well, it would appear again, the hackers were able to get access to one system administrator's password within Sony. That doesn't mean that the system administrator gave it to them, they could have stolen it. That sort ever thing has happened before. It's not conclusive one way or the other. Again, hopefully, we'll get more clarity when the Obama administration or the FBI makes their statement today.

The one thing that's is ambiguous, is that this is a company that had very poor security protocols. I mean, even the information that was released by the hackers, the passwords they were using was "password" in some cases. This is a company that needed a complete overhaul of its security protocols, it's a cautionary tale for all companies across America and around the world, that this kind of -- there are people out there, whether they've North Koreans, people out there who have the tools to break into major corporate systems and that means every company has to be on guard.

CAMEROTA: And by design, Sony said they didn't want to beef it up because they thought it would be too expensive.

Martin, last, you study this for a living. You study what North Korea is doing. What do you think North Korea wants? What is next that we should be prepared for?

WILLIAMS: I think we need to keep looking at the development of North Korea's cyber infrastructure and these teams of hackers they have, the Unit 121, which is the team that's been talked about in relation to this attack is one of several that the country has. One of the reasons we haven't seen much in the last few years is because a lot of the attacks have been on South Korea. So, it hasn't made news in the United States, or in the rest of the world.

But if they're starting to turn their attention to outside of the Asian -- outside of the Korean peninsula, and especially if they're starting to target companies rather than governments, this needs to be kept a close eye on.

CAMEROTA: Martin Williams and Bobby Ghosh, thanks so much for all that information. Great to see you.

Let's go over to Chris.

CUOMO: All right, Alisyn, the price of oil is down, the price of gas is down, the Dow is up, all good, right? Well, maybe not. We'll explain why too much of a good thing can turn out to be bad.

Stay with us.

(COMMERCIAL BREAK)

PEREIRA: Welcome back to NEW DAY.

More fluctuation in financial markets made for a great day on Wall Street Thursday. The Dow was up 421 points, the best day in three years. Now, this comes amid great news for drivers, those of you getting ready to hit the roads for Christmas week. Gas prices continue the steep decline, fuelled by the plummeting price of oil, which is hovering around, what, $55 a barrel now?

But the drop is wreaking havoc on economies of oil-producing countries, like Russia, several countries in the Middle East, Venezuela, and that could lead to major economic repercussions.

So, who do we talk about this? Oh, Rana Foroohar, CNN economic analyst, and "TIME" assistant managing editor.

Big day. We should actually start with that, because let's start with the good news, because really big day on the market. What was going on? What are the highs? Tell us about it.

RANA FOROOHAR, CNN ECONOMIC ANALYST: Well, yesterday, Fed Chair Janet Yellen said that the Fed is really going to be very careful about raising rates later in the year. They're going to take their time, they're not going to rock the boat and markets were happy about that. Low rates are generally good for the stock market and I think you can see the buoyancy in the market.

PEREIRA: Buoyancy is such a good word. I always love the words that you use when you talk about the market. Let's talk about the year. It's been a pretty -- there's been a lot of movement, there's been a tremendous amount of movement this year.

FOROOHAR: Absolutely. I think you're going to see volatility. Volatility is the word for the coming year. I think that the U.S. markets are still going to be you know the prettiest house on the ugly block, that is the global economy, if you will. But I think it's going to be up and down.

So, hang on, fasten your seat belt. PEREIRA: That's good news, because if you're looking at your own

portfolio or own economy, which we'll get to in a second when we talk about gas prices because that certainly helps.

FOROOHAR: Yes.

PEREIRA: Speaking up, let's talk about oil, because there's been much conversation about the price of a barrel of oil, $55 a gallon -- a barrel. That is a sharp decline. Why are we seeing that sharp decline?

FOROOHAR: You know, it's all about supply and demand. There's more supply on the global markets right now. But also demand is down in part because China has been in a really sharp slowdown in the last year and China is now the single-largest energy-consumer in the world. So, when it slows down, the market goes off a cliff.

PEREIRA: That slowdown, how can we attribute that? Because we know that we here in the United States have been working on fuel economy and fuel efficiency and we have set new standards and we've also put pressure on our countries, especially China. Is that putting a dent in it as well?

FOROOHAR: You know, it's putting a dent. But the Chinese are many decades behind the U.S. in terms of how they consume energy, they still use a lot of dirty coal. They have a tremendous amount of factory consumption. They're just at a different stage in their development where they're very energy-intensive, a lot of dirty fuels being used there still.

PEREIRA: Comparatively, it's low here, $55 a gallon. But we look at this. What was that, 2009? What was going on that fuel --

FOROOHAR: Well, you had $148 in 2008 and you had the financial crisis, global markets fell off the cliff. Demand goes down and that's why you see the plummet.

PEREIRA: Not quite to that level?

FOROOHAR: No. Thank heavens.

PEREIRA: Do you anticipate it's going to dip further?

FOROOHAR: I don't think. I think we're starting to stabilize, you saw it in the last couple of days, another reason that markets were buoyant, people don't want it to go too low, it starts to have bad effects on other parts of the world.

PEREIRA: You talked about supply and demand. Walk us through the graph, it's interesting to see how the disparity between the supply and the demand.

FOROOHAR: That's right. So, a few things happening on the supply side. More U.S. energy has been coming online. Countries like Libya has come back into the global markets. But also the Saudis, the single had been biggest oil producer in the world, said that they would keep pumping, they're not going to cut production which they often do when prices decline, in order to keep them higher. They're going to keep pumping, which will keep price low for a while.

PEREIRA: And for us here in the United States and North America. We found more difficult ways to find oil, the oil sands, fracking in the shale oil, et cetera.

(CROSSTALK)

FOROOHAR: But, you know, there's a funny dynamic here, because when prices go too low, that starts to impact U.S. energy independence, because our oil is expensive to get out of the ground. It costs about $70 a barrel to get out of the ground. We're around $60 now, that starts to make it not very economical.

PEREIRA: So, let's talk globally. There are several countries around the world that are oil-dependant because of how much their economies rely on the production of it. And then, also, they're used of it. This -- when we look at the price of oil, this is going to have an impact globally.

FOROOHAR: That's right.

PEREIRA: When you look at the price of oil, this going to have an impact globally.

FOROOHAR: That's right. You look here at this giant yellow mass, that's Russia. You can see the headlines, all of the problems in this country recently are basically down to oil. This is a petro state. It will rise and fall on the price of oil.

But other parts of Africa, Angola, you can see the gulf region that's suffering. Any major oil producer right now is going to have a hard time making their budgets.

PEREIRA: And also, I was thinking about Texas, they're facing -- when we talk domestically, they're facing some challenges with it.

FOROOHAR: Right.

PEREIRA: The good news is for consumers, when is the last time we saw gas for $2.60 a gallon.

FOROOHAR: And this is such a big deal for middle class people, for working-class people.

PEREIRA: Our own personal economies.

FOROOHAR: Absolutely. This is like the equivalent of a $100 billion tax rebate coming up for the American population. So, in the short- term, it's good news at home.

PEREIRA: So, here's the -- we save money on the gas, you tell us how it doesn't mean good things globally. But for us personally, consumer spending is going to have up. You have $60 billion that you can spend. That's going to be infused into the U.S. economy. FOROOHAR: That's huge.

PEREIRA: That's a good thing, is it not?

FOROOHAR: That's the best possible thing that could happen right now, because this is an economy that's made up of 70 percent consumer spending. When you get that kind of rebate and you have people pulling out their wallets and spending, that's great news for the economy.

PEREIRA: Here's the question: do we spend it or do we save it? Because you know how we are. We're a spending --

FOROOHAR: I know how I am. I've been online the last few days.

You know, I think that people are beginning to open up their wallets. People have repaired their balance sheets in this country. There's been a lot of savings in the last few years and think they're ready to spend again.

PEREIRA: All right. Going into the Christmas holidays, a lot of people spending, do you think it's going to be a good holiday season overall. Do you think retailers will come out saying, we did all right?

FOROOHAR: I think they will. I think that we've seen a shift. A lot of people are shopping online. We're not seeing the huge bump-up right after Thanksgiving that we use. People aren't going into brick- and-mortar stores so much. But I think overall, we're going to slightly over last year.

PEREIRA: My gift to you was playing at the magic wall. Did you enjoy it?

FOROOHAR: I love the magic wall.

PEREIRA: Rana Foroohar, that was really good. We might even let you draw on it the next time. Thanks so much.

FOROOHAR: Thank you.

PEREIRA: All right. We've got a whole lot of news we need to get to this morning, a lot of breaking news, we'll get to it right after this.

(BEGIN VIDEOTAPE)

UNIDENTIFIED MALE: Clearly, I believe this came from North Korea, a state sponsor of cyberterrorism.

UNIDENTIFIED MALE: The hackers stole computer credentials from a Sony system administrator.

UNIDENTIFIED FEMALE: The United States government is not blinking. We're not backing down. We're not in a crouching or fear position here. UNIDENTIFIED FEMALE: It's time for us to respond to this in a very

strong way.

UNIDENTIFIED FEMALE: Hostage, terror in Sydney.

UNIDENTIFIED MALE: The Taliban gunman entered the school after scaling its walls.

UNIDENTIFIED MALE: The ruble losing half of its value to the U.S. dollar.

UNIDENTIFIED MALE: I wouldn't rule out a visit from President Castro.

UNIDENTIFIED MALE: Today, though, the best-funded dictatorship in human history.

UNIDENTIFIED MALE: President Obama breaking his own word, breaking his own pledge.

UNIDENTIFIED MALE: The policy of engagement with the Cuban people will overtime help open things up.

(END VIDEOTAPE)

CAMEROTA: Good morning, everyone. Welcome back to NEW DAY. I'm Alisyn Camerota, alongside Chris Cuomo.

The Obama administration today expected to explain what they know about North Korea's involvement in the massive Sony hack attack. U.S. officials confirming evidence has surfaced linking the regime to the hack.

CUOMO: Lawmakers calling the hack an act of terror. They say they want to see Pyongyang punished accordingly. So, they're talking the talk. But will they walk the walk? What will it mean?

And if they don't respond effectively, what does it mean about what could happen next? Because if the North Koreans can hack into Sony, what else could be at risk?

We're going to cover every angle of the story. Let's begin with senior Washington correspondent Joe Johns -- Joe.

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: Chris, a presidential news conference is scheduled for later today. Mr. Obama is sure to get questions about the Sony hack attack.

(BEGIN VIDEOTAPE)

JOHNS (voice-over): The Obama administration is ready to point the finger at North Korea for the unprecedented Sony hack, a move that could come as early as this morning.

JEH JOHNSON, HOMELAND SECURITY SECRETARY: We're considering a range of options about how to respond.

JOHNS: Among the possible options, more sanctions. The administration insisting the response will be strong.

JENNIFER PSAKI, STATE DEPT. SPOKESPERSON: I can assure you the United States government is not blinking, we're not backing down. We're not in a crouching or fear position here.

JOHNS: Sources tell CNN there is evidence the hackers stole computer credentials from a Sony system administrator, to get access to the company's computers. The White House said it did not pressure Sony to pull "The Interview," the controversial comedy which depicts the assassination of North Korean dictator Kim Jong-un.

UNIDENTIFIED FEMALE: Take him out.

UNIDENTIFIED MALE: For coffee? For dinner?

UNIDENTIFIED MALE: For kimchee?

JOSH EARNEST, WHITE HOUSE PRESS SECRETARY: We believe that kind of artistic expression is worthy of protection and it's not something that should be subject to intimidation just because you happen to disagree with the views.

JOHNS: U.S. officials are considering how to characterize the hack, which some are calling an act of terrorism.

COL. CEDRIC LEIGHTON (RET), FORMER AIR FORCE INTELLIGENCE OFFICER: I see it as cyberterrorism and cyber extortion. I think that what they're doing is basically economic warfare and they have found a way that is disproportionate to the physical power that North Korea possesses. To actually effect economics, a particular company in this case Sony.

JOHNS: Pressure coming from lawmaker who is want to see the White House deliver a forceful response.

REP. ED ROYCE (R-CA), FOREIGN AFFAIRS CHAIRMAN: It's time for to us respond to in in a very strong way and show the rest of the international community that we're not going to allow this to happen without us imposing a cost on a regime that does it.

(END VIDEOTAPE)

JOHNS: The White House is waiting for the Justice Department and the FBI to finish their review of all the evidence. As the administration tries to deal with the fallout from Sony's decision to pull the film -- Alisyn.

CAMEROTA: All right. Joe, we'll see what time that happens today.

And if the U.S. publicly blames North Korea, what response can we expect from Pyongyang?

For more on that, let's get right to Kyung Lah. She's live on the ground in Seoul. What are we expecting, Kyung?

KYUNG LAH, CNN CORRESPONDENT: Well, if history is going to play any cue here, Alisyn, it's going to be that North Korea really loves to deny what it does. That's been its history. That's been its pattern, especially when we deal with cyberattacks.

North Korea/South Korea, they've had this ongoing cyberwar. It is very tough and the companies in South Korea have been trying to protect themselves. But every time the South Korean government has tried to finger North Korea as being the culprit, what we've heard from North Korea and Pyongyang is -- an absolute blanket denial despite the evidence.

So, that is what we are expecting.