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What's Behind the Markets Tumbling; Philip Seymour Hoffman's Final Hours; Microsoft Names New CEO; Interview with Natalie Tennant; Woody Allen's Attorney Blaming Mia Farrow
Aired February 4, 2014 - 09:00 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. Thank you so much for joining me.
We begin this hour on Wall Street where in 30 minutes we'll see how well we can recover from a staggering loss yesterday.
As the Opening Bell rings, Americans are asking the big question, why did the Dow plunge more than 7 percent in the first five weeks of the new year?
Let's break that down to real money and your bottom line. The average American started this year with a 401(k) worth just over $100,000. By the Closing Bell yesterday, that nest egg shrank to less than $95,000. But experts say as you watch your portfolio shrivel, take a deep breath. Step back from the ledge.
Most 401(k) saw very healthy return in 2013. But I bet you're not feeling so good now anyway, right?
CNN's Christine Romans is tracking the market futures this morning.
What are they looking like, Christine?
CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: Well, you know, look, 30 minutes until the Opening Bell, Carol, and it looks like futures are higher. It looks like the stock market is going to find some stability this morning. And perspective is so important when you're talking about the stock market.
There has not been a meaningful correction in the S&P 500 in almost two years. In almost two years. So when the selling came, Carol, it was ferocious.
ROMANS (voice-over): It was a brutal day on Wall Street. The Dow plunging 326 points Monday, down 7 percent since the beginning of the year. The drastic drop sparked by a weak manufacturing report and disappointing sales from big auto makers like GM, Ford, and Toyota. But for many the selloff isn't surprising.
Here's why. First, stocks can't go up forever and after last year's huge rally, many are calling this an expected correction.
BEN WILLIS, MANAGING DIRECTOR, ALBERT FRIED & CO.: I don't think this correction is over. The last time around I talked about a correction it was sort of like waiting for Goodell.
ROMANS: Second, there's a new leader at the Federal Reserve. Janet Yellen is picking up where Ben Bernanke left off and has to pull billions of dollars of stimulus out of the economy without derailing the recovery.
Third, emerging markets including Turkey, South Africa, India, Brazil and Indonesia, the fragile five, are in turmoil leaving investors shaky. And finally there are questions about where the U.S. is headed. Dozens of companies have put out weak earnings forecasts. Translation, a lack of confidence. For those reasons, the selling may continue.
But how much? Many predict the markets need a staggering 10 percent decline from recent highs. They say those lows will be brief and stocks could rise in 2014. For now, buckle up and get ready for a bumpy ride.
ROMANS: So just how strong is the U.S. economy? It's going to be hard to tell, Carol, because all of this weather, the terrible weather, is probably going to make the economic data look pretty crazy. But here's some perspective for you. If you look at the Dow Jones Industrial Average or the S&P 500, all the way back to March 9th, 2009.
Carol, it has been an unbelievable rally. Look at that. The S&P 500 up 157 percent. So just that little tiny dip lower on the far right of that screen, that's what we just experienced in the last few days -- Carol.
COSTELLO: OK. So we'll chill and be patient, and hope for good things, right?
ROMANS: Chill and be patient. That's a technical economic term.
COSTELLO: I'll take it. Christine Romans, thanks so much.
On an interesting talk radio show, Chris Christie faced the voters for the first time since the bridge gate scandal erupted and the tough talking governor said despite growing questions about his role his answer remains the same.
(BEGIN VIDEO CLIP)
GOV. CHRIS CHRISTIE (R), NEW JERSEY: The most important issue is, did I know anything about the plan to close these lanes? Did I authorize it? Did I know about it? Did I approve it? Did I have any knowledge of it beforehand? And the answer is still the same, it's unequivocally no.
(END VIDEO CLIP)
COSTELLO: Christie's appearance is part of the call-in show called "Ask the Governor." It comes just days after former ally David Wildstein alleged that evidence shows Christie knew about the lane closures ahead of time.
As if winter hasn't already been bad enough, another snowstorm that could bring a paralyzing 30 inches of snow to parts of the northeast is on its way this weekend. Take a look at this map. A nasty mix of rain and snow will fall from the Midwest all the way up through the northeast starting today and into tomorrow morning.
This follows a record of eight inches of snow that fell in New York's Central Park on Monday. And forecasters are calling for nine additional inches through Wednesday.
Is this the worst winter ever, Chad Myers?
CHAD MYERS, AMS METEOROLOGIST: Not in California because it's 10 degrees above normal. But yes, the ridge in the West, the trough in the East, it has been so cold people say -- you know, they are just -- they're trying to go find Punxsutawney Phil to make him change his mind.
They're sick of it out here in New York and Long Island, and also into New England. The snow is in Kansas City. The snow is in Wichita. It is colder on the east side of the Rockies. That -- just the same way it's been.
It's warmer on the west side of the Rockies. And a winter storm warning all the way through Upstate New York for tomorrow.
Now New York City doesn't get a snowstorm. New York City tonight gets an ice storm. But the snow is in Wichita, it's in Kansas, it's in the parts of Eerie, into Buffalo, into Syracuse and Upstate New York into Maine. South of there where we are here, it will be an ice cement. There'll be ice in Baltimore, Philadelphia, Washington D.C., all the way up toward New York City.
And some of the ice could be devastating, talking maybe half an inch of ice in some of these darker regions. That will put stress on the power lines, and some of those power lines will fall because of that extra weight.
There goes the storm. This is the first one, Carol. This is the small one. Because the nor'easter that hits on Sunday is the one that could put 30 inches of snow somewhere. Still five days away. I don't know where. But somewhere we'll have three feet of snow with 60-mile- per-hour winds -- Carol.
COSTELLO: Seriously in some parts of the country --
MYERS: Somewhere. Somewhere there.
COSTELLO: Seriously in some parts of the country, people are asking, is this the worst winter ever?
MYERS: Certainly for snowfall totals in Chicago and other parts that have had such cold air. We haven't seen lakes frozen like this, the Great Lakes, in a very long time, at least in 20 years. And so is it the worst winter ever? No, not yet. But it isn't the end of winter.
COSTELLO: But we're on our way.
MYERS: We still have spring six weeks away. And that's not even Punxsutawney Phil thing. That's just, you know, that's the calendar. We still have a lot more winter to go.
COSTELLO: Chad, thanks.
MYERS: You're welcome.
COSTELLO: Former California teacher is waking up in jail this morning facing sex abuse charges after a former student's shocking allegations against her in a YouTube video.
(BEGIN VIDEO CLIP)
UNIDENTIFIED MALE: I was only 12 years old when I met you. Do you realize that you brainwashed me and you manipulated me? And that what you did was wrong?
UNIDENTIFIED FEMALE: Yes. And I regret it.
UNIDENTIFIED MALE: Are you doing this with other students, too?
UNIDENTIFIED FEMALE: No.
UNIDENTIFIED MALE: Is that how you help them?
UNIDENTIFIED FEMALE: No.
UNIDENTIFIED MALE: You should be so ashamed and so disgusted with yourself.
UNIDENTIFIED FEMALE: I am. I am.
(END VIDEO CLIP)
COSTELLO: The voice you hear on the phone is said to be that of 40- year-old Andrea Cardosa, that woman there on your screen. She was arrested Monday night and is now facing 16 felony counts of child sex abuse.
Jamie Corillo is the girl who recorded the phone call and posted it on YouTube. She says she's gratified by the arrest and hope that justice will finally be served. Also this morning, there are new details on the final hours of Philip Seymour Hoffman,. On the evening before the actor was found dead, surrounded by drugs and with a needle in his arm, he withdrew $1200 from his ATM. And even more curious that money came during six different transactions in the space of just an hour. It's the latest detail of what appears there has been descent into his addiction.
CNN entertainment correspondent Nischelle Turner has more for you.
NISCHELLE TURNER, CNN ENTERTAINMENT CORRESPONDENT (voice-over): This eerie and chilling photo of Philip Seymour Hoffman, taken at the Sundance Film Festival two weeks before his sudden death may be one of the last taken of the Oscar-winning actor.
New York Police say they found nearly 50 envelopes containing what they believe to be heroin inside Hoffmann's Manhattan apartment. Labeled with the street name "Ace of Spades." Also in his apartment, more than 20 used syringes in a plastic cup. Several other bags containing white powder and prescription drugs.
Police are trying to piece together the final moments of Hoffman's life. His Saturday beginning here at the local coffee shop.
JONATHAN HANSON, MANAGER, CHOCOLATE BAR: He seemed in good spirits, he's very happy, I mean, typical chatting with the staff.
TURNER: At 1:30 that afternoon, Hoffman's assistance spoke with him over the phone. Investigators say she said nothing seemed out of the ordinary. About a half an hour later investigators say Mimi O'Donnell, the actor's ex-partner and mother of his children, told them she saw Hoffmann near his apartment where he appeared to be, quote, "high."
Earlier that evening Hoffmann then had dinner at this local restaurant with two of his friends.
MIKE, PATRON, AUTOMATIC SLIMS: I heard he had relapsed recently. He was having trouble. So it wasn't a total shock, but it's a sad thing. So it wasn't a total shock, but it's a sad thing.
TURNER: At 8:00 that night O'Donnell said she spoke with Hoffman over the phone, telling investigators once again he seemed, quote, "high." The next morning around 9:00 Hoffman was expected to pick up their three children but never showed. That's when O'Donnell called Hoffman's friend, playwright David Katz to check on him.
At 11:00 a.m. Katz found Hoffman in the bathroom of his 4th floor apartment with a needle in his left arm, wearing a T-shirt, shorts and glasses still on his head. Minutes later he was pronounced dead.
TURNER: And there was a laundry list of prescription drugs found in Hoffman's apartment including blood pressure medication, a muscle relaxer and medication to treat addiction, attention deficit disorder and anxiety.
Now investigators say they are trying now to determine whether the actor had prescription for these drugs and they also are trying to determine where he exactly bought the heroin and if anyone was with him when he died -- Carol.
COSTELLO: Yes. We're still awaiting the results on his autopsy as well.
Nischelle Turner, many thanks to you.
A bombshell from the Super Bowl champs, the Seattle Seahawks star -- let me read that over.
A bombshell from cornerback Richard Sherman. If you're wondering why the Broncos lost so badly, well, Sherman has the answer. He says he and his teammates were able to figure out Peyton Manning's hand signals during the Super Bowl.
Sherman tells the Web site Moneymorningquarterback Seattle defenders were calling out Denver plays throughout the game and they were getting them right. Manning threw two interceptions during the game including one returned for a touchdown. So all those Omahas, maybe they did him in. Who knows?
Despite the Super Bowl being a dudd, though, it certainly made rating history. 111 million watched the game, making it the most watched television program of all time. And predictably enough, the Broncos' performance made David Letterman's top 10 list.
(BEGIN VIDEO CLIP)
DAVID LETTERMAN, HOST, "LATE NIGHT WITH DAVID LETTERMAN": Top 10 things overheard at the Broncos sideline during the Super Bowl.
Here we go, number 10, when does the game start? Number nine, well, it's a pretty nice day here in New Jersey, when does the game start? Number eighth, we should have endorsed Christie. Number seven, I hope no one is watching. Number six, this is worse than my honeymoon at the "Late Show." What?
Yes. Number five, who's that hunk in the fur coat? Number four, I can't believe they wasted all that Gatorade. Number three, Eli will motivate us. Number two, too much pregame Colorado weed. And the number one thing overheard on the Broncos sidelines during the Super Bowl, this is how the Jets feel.
There you go.
(END VIDEO CLIP)
COSTELLO: And the Lions and the Browns, we could go on and on. The Super Bowl also played out on Twitter and Facebook. Americans sent more than 25 million game related tweets over the course of the broadcast. Wow.
Still to come in the NEWSROOM, is the water in West Virginia safe to drink? The U.S. Senate is holding a hearing this morning to examine the chemical spill that left hundreds of thousands of people in the state without water for days.
After the break, we'll talk to West Virginia's secretary of state about new water concerns in West Virginia.
ANNOUNCER: This is CNN breaking news.
COSTELLO: Well, it's been in the works for quite some time. Bill Gates has stepped aside and Microsoft has a new CEO. Kind of weird, right?
Let's head to New York with Christine Romans.
Tell us more.
ROMANS: Hi, Carol, a rare change of power at Microsoft. This would be the only third CEO in the history of this company. Steve Ballmer, of course, last fall told us he was stepping aside and now Satya Nadella, the board has named Satya Nadella, the new CEO, a consummate Microsoft insider. He has been there since 1992.
Microsoft on its Web site right now introducing Satya to the rest of the world outside of those who have known him at Microsoft for many, many years. And as chairman of the board, we know that Bill Gates is now stepping down. So really it is sort of a new era at Microsoft.
MSFT is the ticker symbol. It's not really moving, the stock is not moving very much right now. But clearly, Carol, only three CEOs since 1975. Satya Nadella, an insider of the company, will be the third -- Carol.
COSTELLO: And he has a lot of big challenges ahead. Right?
ROMANS: He absolutely does. I mean Microsoft is a mature company in a world where tech changes and innovation and technology are moving very, very rapidly. Many are hoping that Microsoft, to get his mojo back, with some new leadership -- Carol.
COSTELLO: We'll see. Christine Romans, many thanks.
ROMANS: You're welcome.
COSTELLO: It has been nearly one month since thousands of gallons of chemical seeped into West Virginia's water supply, and guess what? It ain't over. There are alarming new fears over tainted water there. But state official says it's likely residents have been exposed to traces of formaldehyde. A substance that can cause cancer following last month's chemical spill into the Elk River.
Health officials say the claims are unfounded but people are still complaining of a licorice smell coming from their water and an aftertaste. The spill left 300,000 people stranded without tap water for more than a week.
In less than an hour the U.S. said it will hold a hearing on the safety and security of the states' drinking water policies amid calls for tighter regulation.
West Virginia Secretary of State Natalie Tennant will be called to testify. She joins us now live from Washington.
NATALIE TENNANT, WEST VIRGINIA SECRETARY OF STATE: Thank you, Carol. Good morning to you.
COSTELLO: Good morning and thank you for being with us.
It is unfathomable. The citizens of West Virginia have not trusted their water supply for a month. A lot of people are asking how can this be?
TENNANT: And we're all asking that same question. You're exactly right, Carol, and that's why I'm here on Capitol Hill to tell the stories of West Virginia, to tell what the families are going through, the small businesses, the minimum wage employees who have lost money because of this.
And that's what I'm asking for. I'm asking as the CDC tell us everything they know, tell us what they're testing indicates. How they're going there, testing, and make sure that we have the confidence back in our water in West Virginia. Because we can't get back to restoring our economy if we don't have trust in our water and we don't have trust in the system.
COSTELLO: It's not just the Centers of Disease Control that's causing confusion among the people in West Virginia, though, right? Health officials said with safe drinking water, but maybe we you better think about drinking bottled water, too.
And that's caused a lot of confusion among West Virginia residents. Is anyone giving him a straight story?
TENNANT: That's what I'm asking for today. We need those straights, we need that transparency that comes from this because you're right, so many people are still using -- you know, we -- the "Do Not Lift" or "Do Not Use" band has been lifted but many folks may be taking showers and washing their clothes but they're still using bottled water.
<09:15:12> And those are the answers that we want. We are also asking -- I'm going to be asking today, to this committee that it's not just about now. It's not about these four weeks into this crisis that we've had. What about the 10 years from now? Because that becomes the concern. How do we prevent something like this from happening again?
But really, how do we address potential health risks and I'm asking for a 10-year study that would study the effects of this score now and for our children in the future.
COSTELLO: The owner of the company responsible for this chemical spill, we still haven't heard much from him. Does that frustrate you?
TENNANT: It certainly does frustrate me. And it frustrates me the fact that only a couple of weeks -- if you'll remember, a couple of weeks ago into this situation, they chose to file bankruptcy even before some people in West Virginia were able to use the water.
So you want to talk about frustrating. I'm here on Capitol Hill standing up for West Virginians to say this is our story. We did not deserve to be treated this way. We want answers and we want ways that we can prevent this from ever happening again.
COSTELLO: What should be done to the owners of Freedom Industries?
TENNANT: Well, we have many investigations that are taking place. The U.S. attorney's office has been investigating. And I know that there have been FBI agents on the scene where tanks are located.
And you can see -- you know, this committee is a start. We obviously have legislation that's moving through the West Virginia state legislator that I'm happy to say that, you know, one -- I'm part of helping small businesses get back on track who have been hurt by this. And it would be telling those stories that one small business lost $40,000 in about a four-day period and continues to spend $500 a day on bottled water.
Now that's certainly not giving it back to the employees or the workers at that restaurant or being able to hire new workers or grow your business. And so, you know, we have legislation that will have greater oversight of tanks and chemicals that are stored above ground. Both on the state level and this piece of legislation we'll be talking about today at this hearing.
Natalie Tennant, the West Virginia Secretary of State, thank you so much for joining me this morning.
TENNANT: Thank you, Carol.
COSTELLO: Still to come on the NEWSROOM, a pawn and a huge fight. That's what Woody Allen's attorney is calling new sexual absolute claims Allen's adopted daughter. What else he says this morning. Next.
COSTELLO: Woody Allen's attorney says new claims of sexual abuse are just actresses Mia Farrows' way of trying to continue to hurt him. It all stems from an open letter published by Farrow's adopted daughter Dylan in the "New York Times" over the weekend.
Dylan alleges the 78-year-old director molested her when she was just 7 years old. Dylan is now 28. Allen's attorney denied the claims once again in the interview on the "Today" show.
(BEGIN VIDEO CLIP)
ELKAN ABRAMOWITZ, WOODY ALLEN'S ATTORNEY: 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. Years ago and the idea that she was molested was implanted in her by her mother. And that memory is never going to go away.
In my view, she's not lying. I think she truly believes this happened. That what -- that what's 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 VIDEO CLIP)
COSTELLO: Well, let's talk about that with CNN legal analyst Paul Callan.
PAUL CALLAN, CNN NICE LEGAL ANALYST: Nice being with you, Carol.
COSTELLO: It's a sad and fascinating tale. Right? Allen's attorney is basically putting the blame for these allegations on Mia Farrow, not on Woody Allen, not on Dylan. If you were representing Allen, how would you advice him?
CALLAN: Well, you know, I think Abramowitz is doing what he has to do as the lawyer in the case. And I'll tell you why, Carol. The reason you have statutes of limitations in criminal case is you want to investigate these cases when the charges are first made. Now these charges were made against Woody Allen as I understand it for the first time in 1992.
They were investigated by Connecticut law enforcement officials who for whatever reason, and I presumed they must have taken a good look at evidence decided it could not be prosecuted. Might be there no merit to the charge, maybe there was no evidence.
So now it's many, many years later. And to put somebody in a position where they have to defend themselves. And while it sounds like his lawyer is blaming the victim, on the other hand if you're subject to a false allegation, that's extremely damaging to your reputation. So I can understand why you'd try to fight back.
COSTELLO: Well, the other interesting thing Allen's attorney said, he said, in my view, Dylan is not lying. I think she truly believes this happened. When you implant the story in a fragile 7-year-old's mind, it stays there forever. It never goes away.
In other words he's accusing Mia Farrow of convincing Dylan that she was abused by Woody Allen. Have you ever heard of that happening in other cases?
CALLAN: I actually have, believe it or not. In the '90s there were a series of lawsuits that were filed involving something called FMS, which is false memory syndrome. And what was happening was psychologists and psychiatrists in going through therapy with patients were allegedly implanting memories of abuse and then giving therapy to help people get over that.
And there was a lot written at the time indicating that you can actually create a false memory in a person, particularly a child, if you constantly repeat the story. And obviously the mother would be in a similar position to a therapist in terms of the trust relationship and the kind of thing that a child could adopt a memory from a child.
Now I'm obviously not saying that happened here but there have been lawsuits in which that FMS, by the way which is not an official disorder, but it's called false memory syndrome, has been asserted.
COSTELLO: Interesting. Paul Callan, thanks so much for your insight. We appreciate it.
CALLAN: Thank you, Carol.
COSTELLO: You're welcome.
The Opening Bell on Wall Street just about to ring. Investors are hoping for a bounce from yesterday's plunge of more than 300 points. It's the latest speed bump in a rocky start to the new year. So far the Dow has lost more than 7 percent in just the first five weeks of 2014.
And experts say this may be just the beginning. So the bell rang. You heard it there. We're going to talk to some experts about what's happening on Wall Street.
Alison Kosik is at the New York Stock Exchange.