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Target CFO On Hill Over Data Breach; Wall Street Seeks Bounce From Big Selloff; Paralyzing Snowstorm To Hit Northeast; Woody Allen Denies Molestation, Blames Ex-Wife; Cracking The "Manning Code"; Poll: Obama Approval Edges Higher; Facebook Celebrates 10 Years

Aired February 04, 2014 - 10:00   ET

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

JOE JOHNS, CNN SENIOR WASHINGTON CORRESPONDENT: We've been able to take a look at what are his prepared remarks. They seem to add a bit to the knowledge about what happened with the target breach that apparently occurred first right after Thanksgiving. He will lay out a timeline we are told that says on December 12th, they were notified by the Department of Justice they had a problem.

On the 13th, they met with the Department of Justice and the Secret Service. On the 14th, hired forensics experts, on the 15th, confirmed the breach, removed malware from their systems and started preparing to tell customers. On the 18th, found more malware at about 25 different registers. On the 19th, made the public announcement and that's what brings us to this day when he testifies on Capitol Hill. Why is that timeline so important?

It is important for a couple reasons, most important, because members of Congress have been asking exactly why it was that it took so long for the customers to be notified. There is talk of more legislation to create a better system of notification for customers in the event something like this happens in the future.

The other headline, I think, from Capitol Hill today, is once again, John Mulligan, in an op-ed in "The Hill" newspaper here in Washington, D.C., announcing that he is accelerating a plan for chip-enabled smart cards. This is a technology that is widely used in the U.K. and now, they have invested more money in trying to speed up the process where these chips, which essentially encrypt information from individuals.

That's on their cards and makes it harder for people to steal. So we are expecting all of that to be discussed here on Capitol Hill, plus much, much more in the coming hours -- Carol.

CAROL COSTELLO, CNN ANCHOR: Going back to the testimony, Joe, did you say the Justice Department made Target aware that it had a breach. Target didn't even know it had a breach?

JOHNS: Well, we'll wait to hear the testimony, but according to what we see in the prepared testimony, it was the Department of Justice who notified Target that they had a problem.

COSTELLO: Wow. Joe Johns, can't wait for the update. I appreciate it. It's more than a half hour since the opening bell on Wall Street. Do you know how your nest egg is doing? Here is a live look at the big board as investors hope for a bounce from yesterday's big selloff. The Dow closed down more than 300 points, doing a little better today, right?

Adding an exclamation point to what has already been though a tough start to 2014. The Dow lost more than 7 percent in just the first five weeks of the New Year. Alison Kosik is at the New York Stock Exchange. Things are better today, right?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Yes, a sigh of relief today, Wall Street, Carol, you know, trying to get its legs back after the big selloff yesterday. The energy on the floor is calm as stocks move ever so slightly higher. I have been talking with a lot of analysts, and a lot of traders trying to get their hands on what's going to happen and what's happening now.

One thing a lot of them are agreeing on is that the weak data on manufacturing that we got yesterday, it was a big concern. So what they are watching for now is how that's going to factor in with other headlines that we have gotten lately. Listen to what one analyst told me this morning.

(BEGIN VIDEO CLIP)

MARK NEWTON, CHIEF TECHNICAL ANALYST, GRAYWOLF EXECUTION PARTNERS: We saw a fairly weak job numbers and payroll numbers in December. So the ISN number coming in much below expectations caused a little bit fear that maybe it is not just a blip in one month of underperformance for the economy that potentially it could be long lasting.

(END VIDEO CLIP)

KOSIK: Now we are going to get the best idea of whether that under performance is continuing. We will get that idea on Friday. That's when the government jobs report comes out. That's for the January numbers. The expectation is employers added 180,000 positions last month. You know, that report, Carol, is going to be very telling. It is going to tell us whether December's lousy job numbers was a fluke or if it was a trend -- Carol.

COSTELLO: Alison Kosik, reporting from the New York Stock Exchange. I don't have to tell you that this winter has been nothing short of miserable. But get this, the northeast bracing for another paralyzing snowstorm that could bring as much as 30 inches of snow to some areas.

The storm system is expected to stretch from the Rockies all the way up to Maine. Take a look at what drivers in Oklahoma City had to deal with earlier, a mix of snow and slush during the morning commute. It's just downright ugly in many parts of this country. Chad Myers is in New York to tell us more. Good morning, Chad.

CHAD MYERS, AMS METEOROLOGIST: Good morning, Carol. You know, it is an ice storm going on in Arkansas, a snowstorm in Kansas and parts of Oklahoma, that storm now moving through into parts of Missouri. It is a winter storm warning all the way to Bar Harbor, Maine, all the way to Massachusetts, farther north.

First snow that we had with the last storm, the storm brought snow to New York City. This storm brings an ice storm to New York City on top of the snow that we already have. But the snow is through Syracuse into Binghamton, into Burlington, Vermont and all the way up into Maine. That's where the snow is with this storm.

Now there is an ice storm south of there. This always happens. There is always an ice event where it is probably 30 degrees on the surface, 35 aloft, 10,000 feet up it is warm. So it is going to rain down. But down here, it is cold, it's below freezing. It's going to rain on that making sleet and freezing rain all night long tonight.

<10:05:14>

It's going to be very difficult travel out of the northeast for tomorrow. There is the storm right now. There is the ice storm for Arkansas. It moves very close to Paducah, probably just north of you and then finally, out to sea. So this storm puts out a foot of snow. That's the easy storm because there is another one that could develop for Sunday.

If it develops like the models were saying overnight last night, there will be 2-3 feet of snow in some spots of New England. Maybe New York, right now, it looks warm enough that it will be kind of a sloppy, slushy, rain/snow mix, so not piling up very much. There will be places, either in the Adirondacks, the Catskills or the Poconos, somewhere will pile up an awful lot of snow.

The other thing is even if does rain only rains in New York City, the wind is going to blow 50. So getting in and out of the city on Monday is going to be very, very tough.

COSTELLO: Good luck, Chad.

MYERS: Thanks so much, Carol. I think.

COSTELLO: I know.

Let's talk about Woody Allen. Woody Allen isn't just fighting back against renewed accusations he molested his adopted daughter, Dylan Farrow, two decades ago. He is blaming it all on his former wife, Mia Farrow.

Speaking out for the first time since Dylan Farrow published her accusations in the "New York Times," the filmmaker's lawyer told NBC News this morning that Mia Farrow somehow brain washed her young daughter into believing the made-up story in a plot to hurt Allen.

(BEGIN VIDEO CLIP)

ELKAN ABRAMOWITZ, WOODY ALLEN'S ATTORNEY: In my view she is not lying. I think she truly believes this happens. That's what the vice of this is. When you implant the story in a fragile 7-year-old's mind, it stays there forever. It never goes away.

(END VIDEOTAPE)

COSTELLO: Jean Casarez is live in New York with more on this. I asked a question of Paul Callan in the last hour, whether that was even possible. A lot of people tweeted me angry that I even asked that question.

JEAN CASAREZ, CNN LEGAL CORRESPONDENT: You mean about the false memory. You know, I have covered so many cases where the defense is false memory, that a memory was implanted with what is not true. That's a question of fact that we now know will never go to a jury at this point.

What's so interesting about what Elkan Abramowitz said, the attorney representing Woody Allen this morning, is that the state of mind of Dylan Farrow probably believes that it actually happened, no responsibility he places on Dylan Farrow at all. All of the responsibility, he places on Mia Farrow. Let's listen to this morning on the "Today" show.

(BEGIN VIDEO CLIP)

ABRAMOWITZ: His reaction is one of overwhelming sadness because of what has happened to Dylan. She was a pawn in a huge fight between him and Mia Farrow years ago. The idea she was molested was implanted in her by her mother. That memory is never going to go away.

(END VIDEO CLIP)

CASAREZ: This all stems from a 1992 Connecticut state police investigation. They then went to the Yale New Haven Hospital. A rape kit examination was done on Dylan Farrow. There was no forensic evidence that there had been molestation, but Carol, forensic evidence can be very difficult to retrieve if there had been a shower or there has been a time elapse.

But because of that prosecutors then believed there may be probable cause to arrest, but they could not prove beyond a reasonable doubt that a crime had occurred because of that lack of forensic evidence. Charges were not brought. Now, Dylan Farrow, of course, as we know, brought it up again in an open letter in "The New York Times."

COSTELLO: Woody Allen's lawyer also says they are not interested in suing for defamation, but if the accusations keep coming, you have to wonder.

CASAREZ: Well, that's an interesting aspect too. Woody Allen is not going to sue for defamation, according to his lawyer, but I wonder, after listening to the "Today" show today, could Mia Farrow sue for defamation because remember her character was really defamed this morning. But that they would bring out everything, Carol, because then, you would have a civil suit. There would be depositions back and forth. This case would be reborn in a civil court.

COSTELLO: Jean Casarez, many thanks. We appreciate it.

CASAREZ: Thank you. Still to come in the NEWSROOM, the Seattle Seahawks defense suffocated Denver in the Super Bowl. Did they also crack the Manning code, Joe Carter?

JOE CARTER, CNN SPORTS: Yes, if you asked Richard Herman, he said they were able to stop the highest scoring offense in NFL history by essentially decoding Peyton Manning's hand signals. We will get into that and much more after the break.

(COMMERCIAL BREAK)

<10:13:04>

COSTELLO: Record ratings for the Super Bowl and a big blunder by Peyton Manning? The future hall of famer said he was not embarrassed by the lopsided loss, but he may be feeling a little sheepish after what Richard Sherman revealed. "Bleacher Report's" Joe Carter is here with a story of stolen signs.

CARTER: It does. Here's what happened. After the game, Richard Sherman was celebrating the win and he told a "Sports Illustrated" writer that they decoded some of Peyton Manning's hand signals. Peyton is known as that quarterback that is trying to confuse defenses and take one step ahead or taking advantage of them by yelling out all kinds of audible.

He uses words like, Omaha, Carolina. We heard him say fat man. So he really tries to keep the defense one step behind. Clearly, Sunday, he had one of his worst games we have seen him have in a long time, two interceptions. Denver only scored 8 points. But basically Seattle said that they had a great advantage at some points in the first half because they were able to tell when Peyton Manning was giving a hand signal to audible or change the play call.

Peyton has a lot going to scrimmage. He looks at the defense then he changes the play called the (inaudible) where he feels like the offense is going to be most successful. They said Sherman said the defense was able to actually call out some of the offensive plays to each other so they were able to jump routes and get to their guys before the ball got to their guys.

I love the quote directly from Sherman. He said, me, Earl Thomas, Cam Chancellor, we are not all three just pros, we are all three all-pro minds. So he is saying, you know, we're not just great players. We are masters of the game. But he followed that by saying that if Peyton had thrown in some double moves.

That if he had gone out of character then perhaps the Seahawks defense could have been exposed. So essentially he is saying that they gambled. They went all in on guessing or taking an educated guess on where some of these plays where are going to go and clearly it worked for them.

COSTELLO: Well, they did that by studying the films, right? So then you wonder why Peyton Manning didn't change things up for the Super Bowl. CARTER: You know, Sherman said during this interview the "Sports Illustrated" writer that it was only really in the first half. So that maybe Peyton in the offense did make some adjustments in the second half, but it worked to their advantage in the first half.

<10:15:09>

Clearly, going into the halftime with a 22-point lead and then Percy Harven returning that kick for a touchdown. Right (inaudible) in the third quarter I think that they have all the momentum going and then he clearly gained it back when he returned that kick off to score and then put them up and, yes, it was an ugly Super Bowl for the Broncos clearly.

I think what Peyton said that it was offensive to say it wasn't embarrassment. It was kind of an embarrassment when you look at it from what we're used to seeing from the Denver Broncos. But interesting to think that you know, like in baseball, football players can actually decode signs.

COSTELLO: And 110 million people were watching. Joe Carter, thanks so much.

Still to come in the NEWSROOM, President Obama vowing to push forward on his agenda in what he hopes will be a year's action. Are Americans backing his plans, maybe not? We'll have a live report out of Washington for you.

(COMMERCIAL BREAK)

<10:19:20>

COSTELLO: Fresh off his "State of the Union" speech in a nationwide road trip to push forward on his second term agenda, it seems President Obama is getting a little tiny lift from American voters. A new CNN/ORC poll is out and it shows 45 percent now approve of the way the president is handling his job. That's up slightly from December, but still, not that great.

National political reporter, Peter Hamby, joins me now. Peter, those numbers are up a little, but the president is still having trouble selling his policy plans to the public. Explain the disconnect for us.

PETERHAMBY, CNN NATIONAL POLITICAL REPORTER: Well, look, if you go further inside thes poll numbers there are some other troubling trends for the president. One is that most Americans want to see the president's policies succeed. That number is actually down over the years. CNN has measured this number every year. It is at his lowest point of the presidency. That number of Americans who want to see his policies succeed.

<10:20:11>

Another thing we saw, most Americans didn't watch the "State of the Union" address the other night. They probably really didn't care. Two reasons here. One that event has generally sort of an overrated event, but also I think a lot of Americans, you know, are probably increasingly looking forward. They see the stagnant nature of policy- making in Washington. They aren't really confident that he can get many things done.

And then look at how 2014 Democratic candidates are reacting to the president. They don't want him in their states, especially if you are a red state Democrat, like Mark Pryor in Arkansas, Mark Vagich in Alaska. They have said they are not really comfortable with Obama coming to campaign for them.

Keep watching his approval number because if you go back to the 2010 midterms, President Obama's approval rating tracked pretty closely to how Democratic candidates did in certain states. So if the president is at 45 percent in some of these contested Senate states that means the Democratic candidate could be getting around the same share of the vote. And if the Democratic candidate is only getting 45 percent of the vote, Carol, in those states, they are probably not going to do pretty well on Election Day.

COSTELLO: CNN also asked Democrats about their choice for the next president. Hillary Clinton is the clear favorite. I know you have spent a lot of time talking to people on the ground in Iowa and across the country. What's your take on these numbers?

HAMBY: I mean, this is just one more indication that she is the unabashed frontrunner. She is certainly more inevitable than she was in 2008. This makes it harder for other Democrats who are possibly eyeing, running for national office. This makes it harder for them in the so-called invisible primary. It makes them harder to raise money, to get donors to commit to them and to really kind of get rank and file voters on the same page.

Paradoxically, though, these numbers really kind of make it a little bit harder for Clinton in some ways because she has to work for it. She can't have this nomination just handed to her on a silver platter. Talk to any early state Democrat particularly those Democrats in Iowa and New Hampshire who love to be courted.

They want the candidates to come to their backyards and shake their hands. I think the Clinton people understand this. There is sort of an air of inevitability here with a lot of these super PACs that are raising money for her and building grassroots organizations in advance.

But still she can't just assume that she is going to be -- going to have a cape walk to the nomination. Frankly, the best thing going for her right now is if you look at the Democratic field. You don't see a lot of names out there of people that could beat her.

COSTELLO: That's a true story. Peter Hamby, many thanks for your insight. We appreciate it.

Still to come in the NEWSROOM, Facebook is blowing out the candles today. The social media site that changed the way we communicate is celebrating ten years. CNN's tech correspondent, Laurie Segall is in San Francisco. Good morning.

LAURIE SEGALL, CNN TECH CORRESPONDENT: Hi, Carol. God, it is hard to believe Facebook has been around for a decade. I actually spent the day at Facebook in Menlo Park yesterday. I spoke with VP of Product, Chris Cox. He was sharing some war stories. You are going to want to hear them all coming up after the break, Carol.

(COMMERCIAL BREAK)

<10:26:54>

COSTELLO: Good morning. I'm Carol Costello. Thanks so much for joining me.

It's been about an hour since the opening bell rang on Wall Street. Here is a live look at the big board. Investors are hoping for a bounce from yesterday's big drop, of more than 300 points. So far this morning, as you can see, stocks are rising just a bit. Let's check in with Alison Kosik. She is at the New York Stock Exchange. Good morning.

KOSIK: Good morning. So the negative of this is many still think that we are actually still in a downturn, but look stocks are trying to claw their way back today. We are seeing the Dow up 36 points today, much better than yesterday. You know, Wall Street is really just taking a breath. This is, by no means, not panic.

It is normal to see this push and pull after the market makes a huge 300-point drop. I'll tell you what. It has really been a tough year so far because corporations have been issuing weak forecasts about what the road ahead is going to look like. December's job numbers, they were really weak. Manufacturing is slowing down.

Plus you have the fed pulling its stimulus money, but many feel a support system out of the economy, which has been supporting the market. You have a lot of things changing, Carol. Stocks are kind of playing catch up -- Carol.

COSTELLO: All right, Alison Kosik reporting live from the New York Stock Exchange. It is hard to believe we have been poking and friending and tagging for a decade. That's right. Facebook turns ten years old today from evolving news feeds to changing the way users use photos, the site is a long way from what it was in 2004.

Just yesterday, Facebook launched a new app called paper, which allows users to view their news feed in a digital magazine layout so what's next. Facebook's CEO Mark Zuckerberg says the possibilities are endless.

(BEGIN VIDEO CLIP)

MARK ZUCKERBERG, FOUNDER AND CEO, FACEBOOK: We have just gone through a number of periods where people just didn't believe that we could succeed at what we were trying to do. I have spent a lot of late nights pacing around in my living room, you know, with teammates just trying to plot out what our next move can be in order to keep pushing forward on this mission. There is always a next move.

(END VIDEO CLIP)

COSTELLO: Joining us now from San Francisco, CNN tech correspondent, Laurie Segall. So how is the birthday celebration going?

SEGALL: You know, I was at Menlo Park yesterday. I spent the day with VP of Product, Chris Cox. A little bit about Chris, he is a visionary when it comes to product. He is behind many of the features on Facebook. Today, he gave me some insight into what was the rocky road between being a scrappy start up and a huge company and what we can expect in the future. Check it out, Carol.

(BEGIN VIDEOTAPE)

CHRIS COX, VP OF PRODUCT, FACEBOOK: The big question was, is this something that could work outside of college? Everybody said, no, it is probably not going to work outside of college.

SEGALL (voice-over): In honor of Facebook's ten-year anniversary, we decided to take a walk down memory lane.

(on camera): Do you have some stories where you can't believe you got through it?

COX: The news feed launch was pretty crazy. I spent with a bunch of people we worked really hard on making news feed. It took us almost a year to build. We are pretty naive. Obviously, people were like, whoa, this is a lot of change. There was a protest organizing outside. We had to go out the back entrance. It was one of those things I look back on and it is hard to believe.

SEGALL (voice-over): Since then, there been a lot of landmarks that are hard to believe.