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EARLY START WITH JOHN BERMAN AND ZORAIDA SAMBOLIN

March Snowstorm Moves East; Dow Opening At All-Time High; Venezuela's Future After Chavez; FBI, FAA Investigate NYC Drone Sighting; Potential Health "Nightmare"

Aired March 6, 2013 - 05:00   ET

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


ZORAIDA SAMBOLIN, CNN ANCHOR: Oh, it is heavy wet snow falling from Chicago to the nation's capital. This is happening right now as a major storm closes in on the East Coast.

JOHN BERMAN, CNN ANCHOR: Developing overnight: stock futures climbing with the Dow set to open at an all-time high, just hours from now.

SAMBOLIN: Can we celebrate?

And a new low for high culture. Star ballet dancer confesses his role in a vicious, acid attack on his director.

BERMAN: That is the craziest story of the day.

SAMBOLIN: Yes.

BERMAN: Meanwhile, look out below. The dramatic collapse of a construction crane. Wow. Caught on camera. Look at that.

SAMBOLIN: And, you know, we're showing it to you because nobody got hurt.

BERMAN: And I promise, we will show it again and again and again. So stay with us, everyone.

Good morning. Welcome to EARLY START. I'm John Berman.

SAMBOLIN: And I'm Zoraida Sambolin. Nice to have you with us.

It's Wednesday, March 6th. It is 5:00 in the East.

And happening right now: the Midwest is feeling the effects this morning of a vicious winter storm. It's blanketed the region with ice and snow. Crews at the Minneapolis/St. Paul International Airport worked around the clock to keep all of the runways clear.

This powerful blast broke a snowfall record in Chicago, grounding more than 1,000 flight at midway and O'Hare. Sorry if you had to feel that.

And now, the system has its sights set on Washington, D.C., with significant snowfall expected there, especially in the high elevations of Virginia, West Virginia and Maryland. D.C. public schools are closed today. That's in anticipation of the heaviest snow in several years for them.

So, meteorologist Karen Maginnis is tracking the system for us. Joe Johns is live in Winchester, Virginia, where a foot of snow could have fallen -- or could fall by this afternoon.

So, Joe, let's start with you.

JOE JOHNS, CNN CORRESPONDENT: You know, I just wanted to show you some of the snow, Zoraida. As you said, it's very thick, it's very wet, it's very heavy.

SAMBOLIN: I see.

JOHNS: And that causes a variety of problems, as you said. Right. Right.

We are here near Shenandoah University in Winchester, Virginia, watching all of this. The authorities had some trouble obviously through the evening because they were not able to put down a lot of chemicals beforehand on the roads, that's because it was raining. And now, you get this stuff which causes a lot of correlative problems, if you will.

There are among other things concerns here that the snow will get on top of the power lines and cause power outages, in addition to all the problems on the roads. The storm as you know, it started out West, blowing through the city of Chicago, setting a record for one day that day in March, of course, swooping sort of down toward the Southeastern United States, causing a lot of rain in Atlanta, and now up the mid- Atlantic where you see the problem here on the East Coast.

As you said, schools are closed. Washington, D.C., the government closed. And everybody bracing for a long day of snow, a late winter storm here on the East Coast.

Zoraida, back to you.

SAMBOLIN: You know, it looks like it's piled up behind you and they're still expecting a foot of snow to fall by this afternoon.

Joe Johns, we'll check back in with you. Thank you.

BERMAN: So where is the storm going next?

Karen Maginnis at the severe weather center in Atlanta.

And, Karen, I think the big question, is it coming here?

KAREN MAGINNIS, AMS METEOROLOGIST: Yes, for New York right now, the forecast is saying two to four inches. It's like a glancing blow. It's going to be very blustery there.

But for Washington, D.C., John, I think yesterday you were saying everything's going to shut down and, yes, it looks like because of the heavy amounts of snow we're expecting over the next several hours could be the biggest snowfall they've seen in two years. It could be the biggest snowfall for March that we have seen. It is a late winter storm system, and its impact is being felt all the way from the Great Lakes where yesterday some areas reported as much as 12 inches of snow.

What can you expect in Washington, D.C., and on to the West? Where you see these pink shaded areas, those are where the winter storm warnings are occurring. We also have winter storm watches out.

Accompanying the heavy wet snow, which could cause power outages, as we mentioned before, very dangerous driving conditions. It's already shut down government buildings as well as schools. Well, you're looking at perhaps between five to 10 inches of snow, there could be some isolated amounts much further to the west of Interstate 95 up to around 20 inches.

When we come back in the next 30 minutes, I'll let you know more about what will happen in the Northeast and New England, coming up for the next 24 to 48 hours -- John.

BERMAN: All right. Thank you so much, waiting for that very, very important news for us here. Thanks to you, Karen.

MAGINNIS: OK.

ROMANS: All right. It is four minutes past the hour.

Two burning questions on Wall Street this morning: how high can we go and how long can this last?

The Dow making history yesterday, closing at a record high, 14,253. This is unchartered territory. And we could be heading even higher, because happening right now, Dow futures are pointing higher, suggesting a bounce at the opening bell.

We're really excited about this, Christine. Break it down for us.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: Well, look, the Dow -- it was just the Dow making a record, not the S&P 500 or the NASDAQ, but the Dow. And the Dow is 30 stocks.

And I want to show you some of those 30 stocks and how they've done since the low was put in after the financial crisis.

You can see American Express since the 2009 low, up almost 500 percent.

Look at Home Depot. The housing market has begun to recover since those dark days in 2009.

Caterpillar, Walt Disney, General Electric -- those are some of the household names driving the Dow Jones Industrial Average higher.

But remember, the Dow is just 30 stocks. The stock portion of your 401(k) more likely looks like the S&P 500. That's an index of 500 stocks. It's almost there. It's almost at a record, too.

The NASDAQ is a little more tech heavy, and that is not anywhere close to its record high. So, a lot of people this morning saying, what happens next here.

And they're also asking, why if you don't have a lot of jobs created are you having so much enthusiasm on Wall Street? And that's because you have the Federal Reserve pumping money into the system, $85 billion a month the Fed is pumping right into the economy.

And take a look at how that compares with what is coming out from the so-called sequester. We're talking about taking $85 billion out of the budget, out of spending over the next seven months, but the Fed is pumping $85 billion in every single month. So, you do have this -- I guess it's a tailwind to the economy and to markets and that's something what you're seeing reflected in these highs, I think.

SAMBOLIN: All right. Thank you, Christine.

ROMANS: You're welcome.

BERMAN: So he revolutionized and polarized politics in Venezuela. So many opinions. Later this morning, thousands are expected on to line the streets to see the body of Hugo Chavez, as it's taken from the hospital where he died to a military academy in Caracas.

The country has declared seven days of mourning, closed schools for the rest of the week and deployed armed forces to keep the peace.

Shasta Darlington is following developments for us in Caracas.

And, Shasta, how are the people right now reacting there?

SHASTA DARLINGTON, CNN INTERNATIONAL CORRESPONDENT: Well, we've seen the mixed reaction obviously as a result of this polarized nation that Chavez himself built over the last 14 years. You have some people grieving out in the streets, others are just locking themselves in their homes.

But really people across the political spectrum trying to come to terms with the end of a 14-year era.

(BEGIN VIDEOTAPE)

DARLINGTON (voice-over): Tempestuous era in Venezuela's modern history. To his supporters, a golden era and they took to the streets of Caracas to proclaim the revolution will continue, many in tears.

His mantle has been passed to Vice President Nicolas Maduro, who told the people, "We civilians and military assume his legacy, his challenges, his project."

Maduro, a former foreign minister and union leader, and speaker of the parliament, Diosdado Cabello, will try to carry the torch of the revolution. But neither has Chavez's wit and populist charm.

A presidential election has to be held within 30 days and most analysts expect Maduro to ride a wave of sympathy to victory.

The revolution is embedded in the military, the courts, the bureaucracy. Chavez had 14 years to see to that.

The main opposition candidate is likely to be Henrique Capriles, who cut Chavez's margin of victory to 11 points in last October's election.

Whoever becomes the next leader of Venezuela has a host of problems to deal with. An academy battered by inefficient management and mercurial socialism, a huge public payroll, rampant inflation, astronomical levels of violent crime.

And then the question of how to continue leading a leftist front across Latin America, through generous shipments of subsidized oil to allies, like Cuba, Bolivia, and Nicaragua.

For now, the anti-U.S. rhetoric as florid as ever.

"Our enemies have damaged our commander's health," with Maduro even accusing others of causing Chavez's cancer.

In a statement, the White House set the benchmark it for warmer ties. "As Venezuela begins a new chapter in its history, the United States remains committed to policies that promote democratic principles, the rule of law and respect for human rights," it said.

Any fresh start won't be helped by the expulsion of two U.S. diplomats in the hours before Chavez died, accused of plotting against the government, a charge immediately rejected by the United States.

(END VIDEOTAPE)

DARLINGTON: But President Barack Obama didn't rise to that provocation. He joined other world leaders in offering his condolences and even said that he would like to build a more constructive relationship with Venezuela in the future -- John.

BERMAN: All right, Shasta. Shasta Darlington in Caracas today, our thanks to you.

And Shasta knows, as everyone knows, Chavez certainly had his critics especially in Miami, which has the largest Venezuelan community in the U.S. An editorial in "Miami Herald" reads, "As a national leader, he was an abject failure who plunged Venezuela into a political and economic abyss."

Many Venezuelans there cheered when they heard Chavez had died, but some say they were cheering for Venezuela's fresh start.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: It's important to say I'm not happy because Chavez died. I'm happy because my country can be free now (ph).

UNIDENTIFIED MALE: It represents a burden off our back really. You know, I'm not happy he died, but I'm just happy he's out of presidency.

(END VIDEO CLIP)

BERMAN: Chavez sought medical treatment in Cuba and he took former Cuban President Fidel Castro as his mentor. Many there consider his passing a huge loss.

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It is a loss because Chavez helps our country a great deal. Without him, I think things will be a bit more difficult.

(END VIDEO CLIP)

BERMAN: Cuba loses a lot of cheap gas and oil, too.

SAMBOLIN: That's right. There was no middle ground with this man, right? It's either you loved him or you hated him. Can't find anybody that just riding that (INAUDIBLE).

BERMAN: A lot of passion.

SAMBOLIN: Yes.

All right. Eleven past the hour.

Also developing overnight, police in Russia say the lead dancer of the famous Bolshoi ballet has allegedly confessed to ordering an acid attack on the director. This Pavel Dmitrichenko, the star performer in the red cape, he is now in custody along with the person who reportedly threw the acid and the driver of a getaway car.

The victim, Sergei Filin, he suffered third degree burns -- look at that -- in the attack which happened back this January. We will have a live report from Moscow at the bottom of the hour. I hear that he may lose his sight.

BERMAN: It is an amazing story.

SAMBOLIN: Terrible.

BERMAN: Meanwhile, we have some dramatic video to show you.

A floating crane comes crashing down. Utility workers in Waldport, Oregon, were lifting up a new support structure on to hold up high power voltage lines. One of the supports got caught up in a power line. The crane operator tried to free the support, leaned back and the pressure apparently caused the crane to give way. That's the technical explanation for that kind of amazing picture right there.

The power lines were not live at the time. Luckily, no one was hurt.

SAMBOLIN: And for the first time since 9/11 attack, the TSA is going to allow small pocketknives, souvenir baseball bats and ski poles all on board airplanes. You can imagine not everyone is happy about this. Union representing 90,000 flight attendants is calling the move a poor and short sighted decision by the TSA.

So, starting April 25th, knifes with blades that are 2.36 inches or shorter and less than a half inch wide will be permitted on the flights, as long as the blade is not fixed or it does not lock into place. Razor blades and box cutters, those are still banned.

BERMAN: It should be interesting to see how they enforce that.

So, it is spreading through the nation's hospitals, as we speak. Coming up, potentially deadly bacteria that doctors say cannot be stopped by most antibiotics.

SAMBOLIN: And FBI on the hunt for the mystery drone spotted in the sky above New York. They are now asking for your help.

BERMAN: The drone is (ph)?

(COMMERCIAL BREAK)

BERMAN: Welcome back to EARLY START, everyone.

New developments in the sighting of an unmanned drone aircraft by the pilot of a passenger jet on approach to New York's Kennedy Airport. Federal authorities are now investigating. And at this point, they have many more questions than answers.

(BEGIN VIDEO CLIP)

MARTIN FEELY, FBI SPOKESMAN: We know it's the kind of thing that could be a threat to an aircraft in the future, similar to a lot of the laser pointing incidents that we've heard a lot about. I mean, these things haven't yet caused harm. But we don't want to wait until they get to a point where they do cause harm.

(END VIDEO CLIP)

BERMAN: More on the mystery in the sky from CNN's Brian Todd.

(BEGIN VIDEOTAPE)

BRIAN TODD, CNN CORRESPONDENT (voice-over): On approach to New York's JFK airport, an Alitalia Airlines captain spotted something very close to his jet.

Here's what he said to the control tower.

TOWER: What did you see?

PILOT: We saw a drone, a drone aircraft.

TOWER: Alitalia 608 uniform heavy, roger. What altitude did you see that aircraft?

PILOT: About one thousand five hundred.

TODD: The FBI now says the unnamed drone came within 200 feet of the passenger plane. Alitalia says the co-pilot spotted it, too. The flight landed safely.

The incident Monday afternoon is now under investigation by the FAA and FBI, which is asking for the public's help in finding the aircraft and its operator.

A source with knowledge of the incident says investigators have interviewed the pilot and others on board the Alitalia plane. The pilots of two other jets which were approaching JFK at about the same time said they didn't see the unmanned aircraft. Experts say even small drones can pose a risk to commercial jets if they collide with them or get sucked into their engines like birds sometimes do.

The incident also raises questions about rules governing these vehicles.

(on camera): Unmanned aircraft can be as small as this drone or smaller or as big as a passenger plane. Under FAA rules, you can fly recreationally like this, but not more than 400 feet off the ground and not near an airport.

(voice-over): If an operator does fly one within three miles of an airport, he or she has to let air traffic control know. Experts say most drones are small, weighing on only about five pounds and are made of a carbon fiber substance, meaning many of them can't be detected by radar.

They're not allowed to fly in restricted air space. But could a terrorist weaponized one and attack places like New York and Washington anyway?

PROF. ALAN FRAZIER, UNIVERSITY OF NORTH DAKOTA: Well, I think some classified programs that the Department of Defense operates in the District of Columbia could potentially detect and neutralize a drone or manned aircraft going into that air space.

TODD: Alan Frazier, an aerospace expert at North Dakota University, says a big concern he has is that more people are using drones in unauthorized ways, breaking the rules. He says even media entities like paparazzi trying to get photographs of celebrities have at least inquired about using drones and he says he's heard of documented cases where they've used them.

Brian Todd, CNN, Washington.

(END VIDEOTAPE)

BERMAN: A whole lot of question. Two hundred feet from that aircraft, that's close.

SAMBOLIN: Very scary.

Nineteen minutes past the hour. Let's get you up-to-date.

Here's Christine with our top stories.

ROMANS: Good morning to you. Winter storm, no relief in sight. This relentless winter storm making the Midwest a mess on its way to the nation's capital.

Take a look at this happen. Almost 30,000 customers are without power this morning in eight states. Plus, Washington, D.C. The city of Chicago hasn't seen this much snow in one day since 2011.

The CDC this morning warning about a potential health nightmare with people infected at the hospital. They're calling it a "nightmare" bacteria that is resistant especially to the strongest antibiotics. It has infected patients in nearly 4 percent of all U.S. hospitals.

The CDC says cases of the bacteria known as CRE, they are on the rise, and they kill up to half of the people who get bloodstream infections from it.

Police this morning is investigating a break-in at Senator Lamar Alexander's house. This burglary was reported around 4:00 yesterday afternoon at his home in West Nashville, Tennessee. The Republican senior senator was in Washington at the time. His wife Honey Alexander called police when she returned home and found jewelry and silverware missing.

And much love for Quentin Tarantino's film "Django Unchained" at the MTV Movie Awards. "Django" received seven nominations, including one for favorite film of the year.

Seth MacFarlane's "Ted" tied for top honors. It's also up for seven golden popcorns.

The MTV Movie Awards take place April 14th, this Sunday, with Rebel Wilson as host.

BERMAN: Ted was good.

ROMANS: Was it? Did you see it?

BERMAN: Oh, yes. Funny movie. I'm telling you.

SAMBOLIN: I enjoyed "Django."

BERMAN: Very different actually.

SAMBOLIN: Very different.

Twenty minutes after the hour right now.

Martha Stewart back in the courtroom, testifying in a legal tug of war over of her brand of towels and sheets. Our very own Christine Romans caught up with the elusive Martha Stewart inside the court house.

(COMMERCIAL BREAK)

BERMAN: We're minding your business this morning. And Martha Stewart for that matter. Martha took the stand yesterday, defending her company against a lawsuit from Macy's. And during a break in testimony, she spoke with our very own Christine Romans.

So --

ROMANS: She told me she was confident. She told me she was confident about her testimony and they've been reading an awful lot of contract law, the minutia tedious contract law. And I said to her will we're going over this contract line by line. And she said, you know, yes, read the contract.

You know, it's a big -- that's what the core of the whole thing is about, right? This is her leaving court after a day of testimony.

This is all when a contract she had with Macy's to provide home goods for Macy's and then she turned around and did a similar deal with J.C. Penney. Macy's was very upset and is suing both of these companies. Now, J.C. Penney can't have her stuff yet in the stores but needs to badly, wants to have will her product in its stores by Mother's Day. And this case is tying the sale up. Macy's says no way.

Martha Stewart said yesterday, she testified that had she didn't think it was a problem, that she would be doing business on both ends of the mall. And Macy's saying, no, this definitely is a problem.

She also said about the Macy's business. She said, we thought business would be bigger, but Macy's really kept us pretty static. Which is a little bit of a dig at Macy's.

Macy's, by the way, is saying that her sales are up 8 percent in its stores which is almost double what other things are rising in the same category. And she said, "A $300 million business is not enough to sustain a company like ours."

So, Martha Stewart is looking to push her brand even further.

And the Macy's attorney was pretty tenacious. He said, look, do you really think that the typical family buying your products who makes maybe $70,000 a year, do you really think on one end of the mall, they're going to buy an 8-quart ceramic Martha Stewart casserole and then walk to the other side of the mall and buy the same thing from J.C. Penney? And she said, "They might have two houses, they might have two kitchens." And that got a lot of attention in the courtroom.

So she's off the stand now. You know, it's still unresolved. It is a jury -- it is not a jury trial, it is a judge trial. But you got three big brands really, really banking on the outcome of this deal.

SAMBOLIN: And you've gone through the contract line by line, also?

ROMANS: You know, she's saying there is little -- yes, she says there is a little bit of a loophole there that if she has her own store inside J.C. Penney, then it's OK. It's not like selling directly to a competitor.

SAMBOLIN: All right. Thanks, Christine.

ROMANS: We'll see.

SAMBOLIN: Twenty-seven minutes past the hour.

Yahoo! led the way and now another major company says no more working from home. That's ahead.

(COMMERCIAL BREAK)