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Target: No Evidence Pin Data Was Hacked; Dow, S&P Open At Record Highs; Retailers Lure Shoppers With Deep Discounts; Thousands Still Without Power; Cruise Ship Stuck Off Antarctica; Captive American Pleads For U.S. Help; Americans Less Than Excited About Midterms; Some States Give Workers A Raise; Violence Intensifies In South Sudan; LAX Shooting Suspect In Court Today; Fury After Shippers Miss Delivery Deadlines

Aired December 26, 2013 - 10:00   ET

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

CAROL COSTELLO, CNN ANCHOR: Good morning. I'm Carol Costello. Thanks so much for joining me. Just a short time ago, Target announced it has absolutely no evidence that PIN data was compromised during a massive hacking of credit and debit card information from its stores. 40 million customers had their data stolen between November 27th and December 15th. The Minneapolis based chain says it has been working around the clock to address customer concerns. Alison Kosik has more for you now from New York. If this is true, this is good news for customers.

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: It could be good news or if the Reuters report is correct, it could be bad news because what's happening, Carol, is that Reuters is reporting that despite what Target public relations team is saying, Reuters is saying that hackers did manage to steal encrypted personal identification numbers or PINs. Now Reuters says it was called this by a senior payments executive who is familiar with the situation, but who spoke anonymously because the data breach is under investigation.

Now the concern according to Reuters is that the kind of sophisticated cyber criminals who stole the information from 40 million credit and debit cards might be able to crack into this encrypted data and that might be one reason why we reported last week that JPMorgan Chase limited how much cash customers could take from ATMs and how much customers could spend at stores.

Now JP has since eased up on those limits. Now once again target is disputing this Reuters report, putting out a statement saying in part, to date, there was no evidence that unencrypted pin data has been compromised. In addition that Target statement goes on to say based on our communications with financial institutions, they have also seen no indications that any pin data was compromised.

And they are working to continue this investigation. So you know, we have to still wait for all of this to flush out. So we're getting sort of two different stories here, one from Target saying the pin data was not compromised and Reuters quoting its source saying PIN data was compromised -- Carol.

COSTELLO: I'm sure we're working on this throughout the day. Alison Kosik, thanks so much. Let's talk about Wall Street for just a minute because it's finishing up the final days of 2013 on an absolute tear. The Dow and the S&P 500 both opening at record highs. Zain Asher is tracking all the action at the New York Stock Exchange. Good morning, Zain.

ZAIN ASHER, CNN PERSONAL FINANCE/BUSINESS CORRESPONDENT: Hi, Carol. You know, the day after Christmas tends to be a really strong day for stocks. The S&P 500 has actually risen 79 percent of the time since 1945. But yes, if we continue on this pace, we are on track for the 50th record close, by the way, so far this year. What you have right now is a situation whereby you have the perfect ingredients for a real sustained rally.

So think about it, you got all the uncertainty regarding the fed and that's out of the way. Budget negotiations in the rear view. GDP a couple of weeks ago coming in at 4.1 percent. What's really important is that earlier this week, we did get a reading on consumer sentiment, which is crucial this time of year. We've had the best readings since July.

But that's crucial this time of year because the better people feel about the economy, the more likely they are to go out and spend. That's a crucial part of GDP. You would expect to see some degree of profit taking, especially after five or six days of rallies. We are not seeing that. We are on track for the 50th record high so far this year -- Carol.

COSTELLO: All right, Zain Asher, many thanks to you.

Retailers across the country are using deep discounts to lure you in. After Christmas, they want you to shop, shop, shop, shop, they are offering deals like $200 off a Mac Book Air at Best Buy. Bloomingdale is offering as much as 75 percent off if you shop before 1:00 pm and Sears is selling appliances for 40 percent off if you use your Sears card.

Margaret Conley is following the discounts at Macy's Herald Square in New York. Good morning, Margaret.

MARGARET CONLEY, CNN CORRESPONDENT: Good morning, Carol. There are a lot of deals inside Macy's behind me. Doors opened at 6:00 am, but there a lot of people here also making returns. Check the fine print on those receipts before you go to the stores. Most stores have a 30- day time limit, but we have a list of stores that have an unlimited time on most items, but be sure to double-check. It's not all items.

They are Macy's, Bloomingdale's, Bath and Body Works, Costco and Anthropology. Customers should also know that they are being track. I spoke with the CEO of Agile One. They are a company that tracks consumers like we would track stocks. So for example, there are consumers and they know who you are who makes few returns and there are other consumers who will buy the same sweater in three different sizes and then return two sizes.

So what they're trying to do is advise some of these stores to maybe have a deal for those consumers that are their more high-value customers and maybe for the ones that are buying all those sweaters, offer them coupons for jewelry so they have a better chance of making a sale -- Carol.

COSTELLO: I understand. Margaret Conley reporting live this morning.

Thousands of people are waking up this morning to another day without power, but there is some good news for those in Michigan, the power slowly being turned back on. Power crews are braving ice and freezing temperatures to bring back the lights and the heat. One man says instead of calling to yell at the power company, though, you should do something nice for those hard-working crews.

(BEGIN VIDEO CLIP)

RANDY HARLESS, LOST POWER IN STORM: The more you get upset about it, try to argue with somebody at customer service to get the power back on. It's not going to help. Wait. Let it happen. Treat them nice. Bring them some coffee. See what you can do for them. It's cold out here. They're stuck out here so be nice to them.

(END VIDEO CLIP)

COSTELLO: And it's Christmas. Chad Myers is live in New York. He is keeping an eye on the cold and frozen conditions. Tell us more, Chad.

CHAD MYERS, AMS METEOROLOGIST: Well, you know, it had to happen first, before we could get these power lines up and these crews in the buckets, for the wind to die off. You can't put a guy up there with 30 miles per hour with the bucket going down and the power lines still coming down. So right through this area from Vermont, Maine, right through across Toronto and all of Ontario here back to Detroit, that's where the main ice event occurred.

Now we're finally getting down to tens of thousands rather than about half a million people without power, some good news there. I know if you're one of the tens of thousands, that's still not good news because it is cold and snowing. Silver City in Michigan, that's in the U.P. of Michigan, almost a foot and a half of snow.

It's dry today, though. This is a water vapor loop showing us where there's water or humidity in the air. So all the way down to Tennessee almost to Atlanta to you, Carol. It's a static cling alert kind of day. You have to wear the natural fibers. If you wear polyester today, it will stick right to you.

COSTELLO: You are the full service weather guy, Chad.

MYERS: I do everything I can to make your life better, Carol. That's my job. Little bit of snow in New York today to make it pretty. Otherwise, airports all acting fairly well this morning.

COSTELLO: I love that forecast. Thank you so much, Chad.

MYERS: You're welcome, Carol.

COSTELLO: A Christmas cruise is taking a turn for the worst. Polar expedition ship is trapped in ice in Antarctica. Now the 74 passengers on board have been hurt and three ice-breaking ships are heading their way, but they're at least a day away. Luckily, passengers have plenty of food on board while they wait to be rescued.

Also this morning, a heart-breaking plea from an American who has taken hostage in Pakistan more than two years ago. In a video released by al Qaeda on Christmas Day, former U.S. government contractor, Warren Winestein, calls on President Obama to negotiate his release.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: Now when I need my government, it seems that I have been totally abandoned and forgotten.

(END VIDEO CLIP)

COSTELLO: That's painful to hear. CNN's Barbara Starr is at the Pentagon with more. Good morning, Barbara.

BARBARA STARR, CNN PENTAGON CORRESPONDENT: Good morning, Carol. The 72-year-old Warren Weinstein was kidnapped from his home in Lahore, Pakistan, back in August, 2011, when gunmen broke in and overtook his security guards. At the time, he was said to be working as a government contractor for a private company in Pakistan.

Now after that, the leader of al Qaeda, Ayman al-Zawahiri claimed responsibility for the attack and al Qaeda has continued to claim that they hold him. This latest of proof of life video, a lot of information from Weinstein about how he is doing and it's not very good. Carol, have a listen to what he had to say.

(BEGIN VIDEO CLIP)

WARREN WEINSTEIN, AMERICAN TAKEN HOSTAGE IN PAKISTAN: Now over 72 years of age, I'm not in good health. I have a heart condition. I suffer from acute asthma and the years have taken their toll. I've been cut off from my family, my wife, who is over 70, my two daughters, my two grandchildren, my son-in-law and perhaps new members of the family whom I have never met. Needless to say, I have been suffering deep anxiety every part of every day, not knowing what is happening to my family, not knowing how they are and because I am not with them.

(END VIDEO CLIP)

STARR: He says, again, he feels abandoned and forgotten by his government. He makes a plea for President Obama, Secretary of State John Kerry, and the American public to do anything they can to get him out. Al Qaeda has set the conditions. They want al Qaeda prisoners back in return for this man. The U.S., of course, does not negotiate and, of course, it must be said that this video was made under conditions of duress -- Carol.

COSTELLO: Barbara Starr reporting from the Pentagon this morning. Still to come in the NEWSROOM, "Duck Dynasty" and white privilege, Jesse Jackson, now taking aim at the show's star and his controversial comments.

(COMMERCIAL BREAK)

COSTELLO: Checking our top stories at 13 minutes past the hour, across much of Southern California, strong wind warnings are raising concerns over tender dry conditions and brush fires like the one you're looking at. It quickly raced across 10 acres in Simi Valley and scrambled crews from two different departments. Red flag warnings are expected to hold later today though as record-high temperatures begin to cool.

The Reverend Jesse Jackson weighing in on the "Duck Dynasty" flack with some very harsh words. He says Phil Robertson's controversial comments about gays and African-Americans smack of, quote, "white privilege." The decision by A&E to suspend Robertson ignited a firestorm on both sides of the issue. Organizers of an online petition are calling for his return, reportedly close to its goal of 250,000 signatures.

Republicans and Democrats are getting ready to square off the next year's midterm elections, the voters are really not all that jazzed. A new CNN/ORC poll shows 43 percent of registered voters are not enthusiastic about voting in the election. That's compared to 30 percent who say they are a little bit jazzed, but that lack of enthusiasm may have to do with the fact that most of you think this is the worst Congress you've ever seen in your lifetime.

CNN's chief congressional correspondent Dana Bash has that part of the story.

(BEGIN VIDEOTAPE)

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT (voice-over): Freshmen Angus King and Joe Donnelly just wrapped up their first year in the Senate. Their take on the institution is telling.

SENATOR ANGUS KING, JR. (I), MAINE: It's still pretty bad we haven't gotten more done.

SENATOR JOE DONNELLY (D), INDIANA: The more cooperation we can get the better off we'll be.

BASH: A new CNN/ORC poll shows 67 percent, two-thirds of the country, call this the worst Congress of their lifetime and nearly three- quarters of those people, 74 percent, have lived a long life. They're 50 and older, 73 percent say Congress has done nothing to address the country's problems.

(on camera): The public approval of Congress is still pretty low. Does that surprise you?

DONNELLY: No, because what they see every day on television is deadlock, fights and screaming. What you don't see every day is large groups of both Democrats and Republicans coming together saying how can we work through this process.

BASH (voice-over): One thing that is bipartisan, the blame. The public doesn't trust either party, 52 percent say policies of Democratic congressional leaders will move the country in the wrong direction. Republican leaders fare only slightly worse at 54 percent saying the GOP will move the country in the wrong direction. Moderate Republican Susan Collins spent the year organizing bipartisan discussion to solve big problems. She wants America to have hope for 2014.

SENATOR SUSAN COLLINS (R), MAINE: Now the hope that the American people will realize that there are some of us who are trying to build bridges and bring people together and solve problems.

(END VIDEOTAPE)

BASH: Congress did leave for the year on a higher note than when it started, passing a bipartisan budget through the House and the Senate. Several senators told me that they had people coming up to them all over their states thanking them for being reasonable. One told me at first he thought it was a nice compliment, but then he realized that's a pretty low bar. Dana Bash, CNN, Washington.

COSTELLO: Yes, it is.

Some minimum wage workers are about to get a much-needed pay raise next week. How much? Well, it depends on where you live. CNN's Jennifer Westhoven joins us with details. Good morning.

JENNIFER WESTHOVEN, CNN CORRESPONDENT: Good morning. Yes, in a lot of states, they're looking at, at least a little bit of a bump. Sometimes when this is your salary for the year, that little bump makes a big difference. Check out our map. You can see the states where we are seeing the minimum wage go up a bit. In some states it's only 10 cents an hour. That's not a big deal.

In New Jersey it's a dollar an hour, pretty good. Washington State has the highest minimum wage out there, it's $9.32, I think. But all of that is short of what we see all these protests, people at fast food restaurants saying they want a raise. They want $15 an hour there. They consider that a living wage. Even what's going on in Washington, D.C. among Democrats is only $10.10 so far short of that.

COSTELLO: But it is interesting that voters are taking matters into their own hands and they are voting themselves a raise in the minimum wage, right?

WESTHOVEN: Yes.

COSTELLO: However much that might be.

WESTHOVEN: Yes, and we were just looking at states, around Seattle, Tacoma Airport, they are voting for $15 an hour in the locality there. But one of the things that is really important -- a lot of people think this ruins jobs. They think this is the conventional wisdom. I've really noticed that there is a survey among economists. They're split.

I mean, they're almost dead split and the ones who have no opinions say there's not enough data about this. They are too many things that say, yes, it hurts jobs. Other things that say it creates. I would say there's really no evidence for the idea that it creates major job losses.

COSTELLO: But the poll that you cited while we were in the break is really the most interesting because even among Republican voters they are pretty much evenly split in wanting the minimum wage to come up a bit?

WESTHOVEN: Yes, I mean, among Democrats that's easy, I think it's 78 percent. This is a poll that was just done two weeks ago, but Republicans, 50 percent supporting it, 45 percent against. Statistically, that's a dead heat. That tells you that this is not just -- it's a partisan issue in Washington, not necessarily in the rest of the country.

COSTELLO: Well, there are many economists that say the biggest problem is the wage gap and it's getting wider and somehow you have to fix that. People are divided about how. But, like we said, maybe voters are taking matters into their own hands and saying this is one way to do that.

WESTHOVEN: And that's how.

COSTELLO: Jennifer Westhoven, thanks so much.

Still to come in the NEWSROOM, could these three men represent the best hope for peace in a country exploding in violence? We'll have the latest on the desperate efforts to end the bloodshed in South Sudan.

(COMMERCIAL BREAK)

COSTELLO: Tensions rise and violence escalates in South Sudan as the African country inches closer to civil was. U.S. Marines still on standby to evacuate any Americans that have not been air lifted out of that country. The country's president seen here in the black Stetson is meeting with two leaders of two neighboring countries, Kenya and Ethiopia, together they are discussing possible attempts of peace.

CNN's Frederik Pleitgen has been covering the situation in South Sudan. He joins us with more. Good morning.

FREDERIK PLEITGEN, CNN CORRESPONDENT: Good morning, Carol. Yes, and those talks that are happening in the South Sudanese capital, of course, are calling for an immediate cease fire and talking for immediate talks also between the president of that country with the main rebel leader, but so far it doesn't seem as though that is in the cards. They say that no conclusion has been reached on that just yet.

And you're absolutely right. The fighting there does continue and does seem to be expanding in many places. In the northern part of the country, which is where a lot of the oil is in South Sudan, there is reports of fighting is still going on the town of Malakal as well as in the place called the unity state, which has a lot of the oil fields there.

Then there's the town of Bur where many, many people say that there's been widespread destruction and looting. Many people had to flee their homes. The U.N. now says that the number of killed in that conflict, numbers in the thousands and there's tens of thousands of people, apparently approaching 100,000 people, who have been displaced or are seeking refuge in many of the U.N. bases.

So far the U.N. peacekeepers are not properly equipped to actually defend those bases against militias, but of course, we do know that the United Nations has decided to send in more peacekeepers, very volatile situation. As you said, the U.S. keeping a very close eye on this with those Marines poised to go in there and defend the U.S. Embassy, should the situation there get out of control -- Carol.

COSTELLO: All right, Frederik Pleitgen reporting live for us. NEWSROOM is back in a minute.

(COMMERCIAL BREAK)

COSTELLO: Good morning. I'm Carol Costello. Thank you so much for being with me. Checking the top stories at 26 minutes past the hour, an American is calling for President Obama to secure his release more than two years after he was abducted in Pakistan. Al Qaeda released Warren Weinstein's video plea on Christmas day. CNN cannot independently verify this video's authenticity.

Thousands of people woke up this morning without lights or heat, a brutal winter storm knocked down trees and power lines all the way from Michigan to Maine. Thankfully, the storm system has moved on. Power crews are still fighting through ice and bitter cold to get the power turned back on.

The man accused of shooting and killing a TSA agent at LAX last month will be arraigned today in court. Paul Ciancia is facing 11 felony charges, including first-degree murder. Three people were also wounded in that shooting rampage.

Retail giant Target says there is no evidence that PIN data was stolen during a massive credit and debit card hack. Forty million customers were affected when card numbers were stolen from late November to early December. Target says it continues to work around the clock to help those affected.

People are not happy with UPS this morning, not happy at all, in fact, some of them are enraged. UPS and FedEx were not able to deliver all packages before Christmas, that delivery date not kept. As Abby tweeted so, sad. Sorry, mom. Amazon said it would be here by Christmas eve. #upsfail.

Christmas until Thursday. I miss Santa. One UPS driver told "USA Today" this has been the worst Christmas ever. With me now, Marshal Cohen, chief industry analyst for NPD Group. Welcome.

MARSHAL COHEN, CHIEF INDUSTRY ANALYST, NPD GROUP: Pleasure to be here.

COSTELLO: Happy you're here. You don't usually hear this about UPS and FedEx. They're normally dependable. What happened?

COHEN: Basically what happened was they underestimated the power of the consumer and they didn't really read the tea leaves for this holiday very well. For example, when retailers offered up free shipping with just a few days left to go, free shipping Monday and then they also offered up all these extra deals and think about what Amazon does with Amazon prime, guaranteed two-day delivery.

All these things were leading towards a big surge at the back end of the holiday. UPS didn't read that right because they tend to look at what happened the years prior and you can no longer look at holiday from year to year. You have to read each one individually.

COSTELLO: Well, you know, I think UPS and FedEx could have maybe -- I don't know, assuaged people's pain if they had come out online and said we know we promised to deliver your gifts on time, but we can't do it.

COHEN: When you look at what happened, you know, the first thing that came out is they were both blaming the weather. Last year we had a snow storm in the Midwest, the year before that, the northeast, the year before that, the Midwest again. Weather is always going to be a factor everywhere. That's not really a good enough excuse. This is about underestimating the power of online now.

And stores, as well as online retailers were driving so much traffic and so much opportunity to buy gifts and use it as a vehicle to ship it, the consumer became very comfortable and confident in UPS and FedEx to be able to deliver and they just fell short of expectation.

COSTELLO: I will say that not all customers are upset at UPS many say procrastinating customers are also at fault. They're upset that people are maligning Santa's helpers in brown. Is that fair?

COHEN: I'm actually glad you brought that up. That is fair. There are a couple of other different things at play. Today if you were to fly and have to check baggage -- let's say you wanted to bring your gifts to your family and you were traveling across the country, you would have to check your bags and pay additional fees for that. Consumers were also shipping more goods ahead of time, shipping the presents.

Another key factor here is to recognize that because the retailers have put so many discounts at the back end of holiday, closer to Christmas, it's caused lots of procrastination even more so this year than years prior.

COSTELLO: So just on the last note, UPS and FedEx --