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EARLY START WITH JOHN BERMAN AND ZORAIDA SAMBOLIN

Markets Soar on Fed News; Shutdown Deadline Looms; Washington Navy Yard Shootings; Russia Backs Assad in Chemical Weapons Blame

Aired September 19, 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: Did you hear? A record day on Wall Street. Stocks went soaring after a shocker from the Fed. What this means for you and new reaction for the markets overnight. You're going to be happy.

(BEGIN AUDIO CLIP)

CATHLEEN ALEXIS, AARON ALEXIS' MOTHER: Our son, Aaron Alexis, has murdered 12 people and wounded several others.

(END AUDIO CLIP)

JOHN BERMAN, CNN ANCHOR: Raw emotion from the mother of the Washington Navy yard gunman, as new details emerge this morning about a response team that might have saved lives. It was turned away even as the attack was happening.

SAMBOLIN: Chemical weapons denial. Russia blasting the United Nations report showing sarin gas was used in Syria. Could the White House deal with Russia to solve the weapons crisis now be in jeopardy? We are live with new details on that.

BERMAN: Good morning, everybody. Welcome to EARLY START. I'm John Berman.

SAMBOLIN: And I'm Zoraida Sambolin. It is Thursday, September 19th. It is 5:00 a.m. in the east.

BERMAN: Five a.m. in the East, that's right!

SAMBOLIN: You've got some news.

BERMAN: That's right. Five a.m. Do you know where your 401(k) is?

We start this morning with the big question that could have a huge impact on your wallet. What on earth is going on with the stock market? They are soaring!

Stocks are setting record highs on news that the Federal Reserve isn't changing its stimulus program, not now at least. And with just a few markets to go before the markets open here in the U.S., everyone wants to know what will happen today?

There is only one person on earth who can answer that question for us and she is here at this table, Christine Romans. What's going on?

SAMBOLIN: And she's super excited this morning.

CHRISTINE ROMANS, CNN BUSINESS CORRESPONDENT: I've lost my voice, of course, from all the excitement. This is called one of the biggest fake-outs in the history of Wall Street. After seeming to choreograph this summer that there will be a taper, Ben Bernanke told the markets Wednesday he was not ready to pull the switch on cutting that $85 and support the Federal Reserve has been giving the economy every month.

Investors shocked. And as soon as they regained their senses only one thing on their mind, buying. And the buying continues this morning. Stock futures are sharply higher. Stocks around the world rally. A global stock market rally. Five year highs for stocks around the world.

Now, Ben Bernanke gave his reasoning for the delay in press conference yesterday afternoon. A key line of the Fed's press release says it all, "The tightening of financial conditions observed in recent months if sustained could slow the pace of the improvement in the economy and labor market." That is the money-money sentence, which means the Fed is going to keep the juice flowing. Mortgage rates have been rising.

And the other thing fiscal battle in Washington raising the debt ceiling and avoiding a government shutdown. All of this Bernanke thought that we're in the midst of, it's better to wait and don't take the train wheels off the economy just yet.

Investors cheering this move with new record on the Dow, S&P 500 -- they all closed sharply higher. So far this month, you guys, the Dow has gained 867 points. The September surge --

BERMAN: This month?

ROMANS: This month. For the year, the Dow is up 20 percent. The NASDAQ, 25 percent. The S&P 500 -- can you see why I can't speak? 12 percent. Goldman Sachs doesn't to have an announcement until December's meeting. The Bernanke taper caper continues.

Now, let me tell you something -- gold up sharply. Interest rates this morning are down sharply. For you, the mortgage, you want to refinance a mortgage, I think we are going to have maybe lower mortgage rates in the very near term here or at least we have a lid on them here, 4.57 percent I think a 30-year fixed mortgage percentage.

We were worried the Fed was going to taper and that would shoot up those mortgage rates and not happen overnight.

BERMAN: And overseas markets right now?

ROMANS: Higher across the board. So, you got interest rates coming down. You got gold, metals, commodities rallying like crazy and you got stocks around the world up sharply. Record highs for stocks.

Check your 401(k). It's safe to look. SAMBOLIN: You know, there was a lot of cheering, but a whole lot of confusion about it and then you came in saying at some point, you pay the piper, right?

ROMANS: You have to pay the piper. Look, we're not going to pay the piper today. Someday, you have to but the money isn't free. All of the money coming into the system right now, it's moving your 401(k) higher. At some point, Bernanke has to undo that, the economy is not ready for it yet.

BERMAN: News so big it has literally taken Christine Romans' voice away. Thank you for being with us.

ROMANS: What I can say?

BERMAN: Thank you.

ROMANS: You're welcome.

SAMBOLIN: All right. One thing that could stand in the way of the economic recovery as Christine mentioned, is the growing stalemate in Washington over government spending. Both sides have just 11 days left to pass a plan to keep the federal government operating. The current issue: a fight over Obamacare.

House Republicans say they'll only approve a spending plan for the rest of the year, if it defunds the health care overhaul. The Democrats say no way.

(BEGIN VIDEO CLIPS)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: There should be no conversation shutting the government down. That's not the goal here. Our goal here is to cut spending and to protect the American people from Obamacare. It's as simple as that.

SEN. CHUCK SCHUMER (D), NEW YORK: You can't be held hostage. You can't have someone put a gun to your head and say we're going to do horrible, ridiculous things unless you give into to us.

We are not defunding Obamacare and we are not renegotiating on the debt ceiling.

(END VIDEO CLIPS)

SAMBOLIN: You heard it. The debt ceiling deadline is in mid-October. Not increasing it means the nation cannot pay off the debts it has already racked up.

BERMAN: It does not look like it is going to end well.

All right. Meanwhile, President Obama tries to continue his public focus on the economy today, meeting with members of an advisory committee focus on boosting international trade. The heads of Marriott, Lockheed Martin and IBM are all part of this committee.

SAMBOLIN: And now to the latest on the shooting at the Washington Navy Yard.

New information about the shooter and how long it will take to reopen the site of so much carnage. Here is Pamela Brown.

(BEGIN VIDEOTAPE)

PAMELA BROWN, CNN CORRESPONDENT (voice-over): As investigators sift through the evidence in the Navy Yard killings, Navy officials say damage inside Building 197 is so extensive, it may take weeks to repair and reopen it.

One official is saying there is blood everywhere. There is damage everywhere.

The mother of the gunman apologizing Wednesday to the families of the victims.

ALEXIS: I don't know why he did what he did and I'll never be able to ask him why. Aaron is now in a place where he can no longer do harm to anyone and, for that, I am glad.

To the families of the victims, I am so, so very sorry that this has happened. My heart is broken.

BROWN: Investigators still don't know why. Law enforcement sources say nothing points to a specific motive for the rampage, even after the seizure of Aaron Alexis computer and other possessions, and interviews with the social contacts for clues.

Yet, odd details are emerging. A federal law enforcement force sells CNN Alexis made unexplained etchings into a shotgun he used in the attack. The etchings read, "Better off this way." And "my elf weapon."

Investigators don't know what the sayings are supposed to mean. Though questions remain about whether the rampage could have been prevented.

Navy official in Rhode Island never passed along police reports about Alexis erratic behavior claiming he was hearing voices.

CHUCK HAGEL, SECRETARY OF DEFENSE: Where there are gaps, we will close them. Where there are inadequacies, we will address them. And where there are failures, we will correct them.

We owe the victims, their families and all of our people nothing less.

BROWN: New details have emerged suggesting authorities might have been able to contain the gunman more quickly. A government official tells CNN when the first radio call came in about a shooting at the Navy Yard, highly trained tactical capital police officers attempting to help stop the rampage were told by a watch commander to stand down.

The capital police chief has ordered an independent fact review of their response and the critical first moments after the shooting was reported. Pamela Brown, CNN, Washington.

(END VIDEOTAPE)

BERMAN: Chicago area they are trying to dry out this morning after sudden and very severe flooding last night.

You've been tweeting about this. A lot of friends and family out there.

Water levels rising across the city, wreck some havoc on the Dan Ryan Expressway, which is one of Chicago's most traveled roads, also killing a man who was working on the sewer on the city's north side. He was swept away apparently in a sudden rush of water.

SAMBOLIN: That's a tough expressway to get flooding on because it's high volume, high usage.

What is going over there, Indra?

INDRA PETERSONS, AMS METEOROLOGIST: Yes. We're actually watching a storm and another one making its way through tonight. Yesterday, it was the warm front from the same system that did kick through the area. But today, we are actually watching the cold front making its way through overnight as it progresses eastward. So, with that even more rain is possible.

Keep in mind, though, a couple of things going on. A warm front did go through and it rained but the temperatures warmed up. I mean, look at these temperatures well above normal into the Midwest. We're talking about 90s out there. St. Louis looking for about 91 degrees today.

Love this line. You're actually going to see the cold front in perfect motion here. Notice -- cold front brings in cold air, right? Look at the cool air once this rain does kick through overnight tonight and how much it will drop those temperatures from above normal back down to below normal. So, it looks like St. Louis down to 76 tomorrow. So, you are going to be feeling that change.

Now, when you have a big contrast like that you talk about the threat for severe weather. So, today, again, in the same region, pretty much going all the way down through about Wichita. We are talking about the threat even potential here for an isolated tornado. But, yes, strong winds and strong thunderstorms even hail throughout the area.

After that, we are going to watch the exact same cold front make its way to the east and bring rain to the northeast by the weekend. But don't worry. We are not there yet. Enjoy it, it's our last week of summer.

High pressure is in place and temperatures -- they are going up for a couple more days. But it looks like on the cold air or the rain? Which one?

SAMBOLIN: The last week of summer! PETERSONS: Yes, that's the shh -- that's a good one. Our last day of summer? Rain.

SAMBOLIN: Oh!

PETERSONS: Just for you guys.

SAMBOLIN: We are going to gain an hour of sleep?

PETERSONS: That's huge! See?

SAMBOLIN: Yes, that's November 3rd, I think. I think. We will check that for you.

Thank you, Indra.

It's 10 minutes past the hour.

Health care spending expected to jump next year, so says Medicare's actuary, which predicts Americans will spend about 6 percent more in 2014 as health reform kicks in. Historically, health care spending goes up about 4 percent a year any way but don't just put the blame on the health care overhaul. The report says an aging population and improving economy are also playing a role.

BERMAN: The Labor Department says same-sex marriage couples must now have the same access to pensions, retirement plans and health care benefits as other legally married people even if their home states do not recognize their unions. The Obama administration says the term spouse and marriage in a key law should be based on where the couple was married, not where they live.

SAMBOLIN: Hey, Berman, are you looking for a job?

BERMAN: This sounds good, right?

SAMBOLIN: Right, it really does. Listen to this one. It may actually interest you. It's high pay. It seems like a pretty easy job but a little bit of a catch.

NASA is looking for volunteers willing to lie in bed for 70 days! I'm just going to let that sit there for a while. How does that sound? Lying in bed for 70 days. They are going to pay you 18,000 to do that.

But you can't get up. You can read books and play on the computer. You can watch TV, you can even work, but you have to stay on that bed lying down.

The purpose of the study is research the effects of long-term space flight. The kind when you are strapped in for weeks. They want to see how the human body reacts to that.

I'm loving this. It's a guaranteed eight hours of sleep. You are awake for 16 hours. There's no carpooling. There is no cooking. There is no -- BERMAN: What about -- you know, showering? It seems like you would get rank foul fairly quickly.

SAMBOLIN: I actually read about this. I say this is really interesting, especially for people who work this crazy shift. They say you do get to get up a little bit because you have to do some testing. It's very minimal.

They did mention showering. Another thing folks were asking, conjugal gist visits. So, I believe those are not allowed either.

BERMAN: Where are you online? Seriously.

SAMBOLIN: I just read they were exploring the benefits of this. Those are the things they worried about that.

(CROSSTALK)

SAMBOLIN: They come visit you while you're hanging out in bed. No carpooling, no cooking! Sounded good to me.

BERMAN: You are way too into this.

SAMBOLIN: You never know.

BERMAN: All right. Twelve minutes after the hour now.

Coming up, changing gears here. Dozens dead and thousands stranded. Some major storms and flooding to tell you about. We will give you the hardest hit areas, just ahead.

SAMBOLIN: Yes. All right. And America's ally in getting chemical weapons out of Syria, butting heads with the Obama administration. Russia blasting the U.N.'s weapons report.

Phil Black, live in Moscow. That's coming up right after the break.

(COMMERCIAL BREAK)

SAMBOLIN: Welcome back to EARLY START.

Russia is make ago new claim who was responsible for the deadly chemical weapons attack in Syria. More than 1,400 died and a U.N. report does give indications the Assad regime may have been behind it. But Russia says that is wrong and it has evidence pointing the fingers at the rebels.

Phil Black is live in Moscow this morning.

Phil, what is this new evidence?

PHIL BLACK, CNN INTERNATIONAL CORRESPONDENT: Zoraida, we don't know the details. It's been given by the Syrian government to the Russian government. They say they are translating it from Arabic and they are going to present it. And eventually, they're going to present it to the United Nations Security Council. But crucially, they believe it supports the theory that Russia and Syria has that it's really the Syrian oppositions have been using chemical weapons in Syria.

Now, this comes after Russia has strongly criticized the United Nations report into that large chemical weapons incident in Damascus on August 21st. That report didn't blame the Syrian government specifically. But Russia says the report is deeply flawed because it examines only that one incident, not all allegations of chemical weapons used in Syria.

Now, the U.N. investigators say they're going back into Syria perhaps as early as next week to do exactly that -- Zoraida.

SAMBOLIN: Phil, last week, we heard from Russia's president, Vladimir Putin. There was an op-ed piece in "The New York Times." Now, we are hearing from Senator John McCain. It's a new op-ed piece that's online in Russia, available to us as well, and I believe the headline says Russians deserve better than Putin. What else is in that op-ed piece?

BLACK: Well, right now, at the time that Vladimir Putin wrote that op-ed piece, among the many angry American politicians was John McCain who joked at the time that he'd like to write a piece in "Pravda." Pravda" is famous as the communist party mouthpiece during the Soviet Union. That newspaper, it means truth in Russian.

"Pravda" today is an online tabloid little red news service and really no "The New York Times" by comparison. But I guess it's a symbolism of the name that McCain has gone for. And the language that he uses, as always, we are talking about Russia, is pretty strong.

As you say, it is called "Russians deserve better than Putin." He accuses the government of corruption in politics, in business, in the judicial system, as well he accuses the government of oppressing political descent and he accuses Putin of allying Russia with the world's worst tyrannies, including Syria, obviously.

McCain tries to make the point that he is not anti-Russian as he is often perceived to be within the Russian media and by Russian politics. But he wants is a government that believes in Russian people and answers to them as well.

It's going to be interesting to see what sort of reaction that generates here in Russia today and notably from President Putin himself who is giving a speech from just a few hours time. We'll be watching what he says about McCain and anything else on Syria as well -- Zoraida.

SAMBOLIN: All right. We really appreciate that. Phil Black, live for us in Moscow, thank you.

BERMAN: CNN has learned that the Pentagon is proposing a plan for U.S. forces to train and equip opposition forces in Syria. If the White House adopts this plan, the training would take place in a country near Syria, we're told. Until now, any training or arming of Syria's rebel has been handled by the CIA, with no direct acknowledgment from the U.S. government. Authorities in Mexico say the death toll from the Hurricanes Ingrid and Manuel has now reached 80. The rains have flooded out the resort town of Acapulco, leaving 40,000 tourists stranded. Look at the waters there. The death toll could rise even higher once the authorities tally up the devastation caused by a mudslide that was 50 miles west of Acapulco. At least 58 people are reported missing there. Terrible.

Coming up, world markets reacting, investors happy the Fed is not slowing down its stimulus program. But should you be? "Money Time" is coming up next.

BERMAN: Markets are going bonkers this morning.

(COMMERCIAL BREAK)

BERMAN: Record high. Do the "Money Time" dance.

SAMBOLIN: There's no way because that is a tough song. What is this?

Welcome back to EARLY START. It's "Money Time". Christine Romans is here.

Today, there are a lot of people dancing.

ROMANS: I know. I mean, look. That is the money time dance is the look at my 401(k) dance this morning.

SAMBOLIN: Yes.

ROMANS: Stock futures are higher. They're not as high as they were earlier this morning. They've been up like 150 points earlier, but they're still much higher now. Investors are digesting the Fed's surprise shock move to put its taper on hold.

We've got new records on the Dow and the S&P on Wednesday after the Fed said it would not change the $85 million it buys in bonds every single month. That goes right into the economy. It's not going to do it, at least right now.

It has been a startling near for the markets so far. Look at these numbers. The Dow is up 20 percent this year. The NASDAQ is up 25 percent. The S&P is up 21 percent. Wow.

Ben Bernanke made clear yesterday he still is concerned about the effects of higher mortgage rates and less than optimal performance in job growth. That means the Fed is keeping the training wheels on the economy. The Fed will keep pumping all that money every single month into the market for now.

More signs of those higher mortgage rates that you've been seeing are rattling the mortgage business. Wells Fargo said to be cutting 1,800 more jobs in its mortgage division. Bloomberg News says the cuts are in addition to 30,000 earlier this month. Higher mortgage rates are slowing mortgage refinances and new home purchases aren't making up the difference quite yet. Wells Fargo, the biggest employer among U.S. banks, about 247,000 workers there.

BlackBerry reportedly ready to lay off 40 percent of its workforce. "The Wall Street Journal" says these layoffs will occur across all departments. They'll be in waves. The news is not a surprise, according to analysts who cited that company shopping itself around, looking for strategic alternatives to keep it from going belly-up.

And the creator of Beanie Babies decided to plead guilty to tax evasion --

BERMAN: Uh-oh!

ROMANS: -- after hiding millions of dollars, not in Beanie Babies, in a secret Swiss Account. Ty Warner is the owner and founder of Ty Inc., which it hit big. Remember in the '90s, Beanie Babies became the world's hottest collector toys?

As part of an agreement, Warner will pay a civil penalty of $50.5 million.

And a word here again on this market rally we're seeing. Gold is up 4 percent this morning, and interest rates down sharply around the world, global stocks at five-year high, records for the Dow and for the S&P, huge, huge market moves here. Could mean cap on mortgage rates for now, may be a little bit even lower mortgage rates.

Yesterday, when we thought the Fed was going to be tapering or many thought the Fed was going to taper, the biggest risk is higher mortgage rates for all of us. They might go down a little bit.

BERMAN: If you're and investor and not making money in this stock market, you're bad at it basically.

ROMANS: Yes, I mean, fire your broker. That's what I would say.

No, if you have ETFs, exchanged traded funds, tracking the S&P 500 or you have plain vanilla S&P 500 tracking stocks in your 401(k), tracking funds in your 401(k), you are really doing great this year.

BERMAN: It's one of those days when it's fun to keep on checking.

SAMBOLIN: It's great to have this to be our top story as well.

Thank you, Christine. We appreciate it.

ROMANS: You're welcome.

SAMBOLIN: Coming up: a big battle waging in Congress comes to a head. Could the fight over Obamacare shut down the government? That's coming up next.

(COMMERCIAL BREAK)

(BEGIN VIDEO CLIPS)

BOEHNER: Our goal here is to cut spending and to protect the American people from Obamacare. It's as simple as that.

OBAMA: You have never seen in the history of the United States the debt ceiling or the threat of not raising the debt ceiling being used to extort --

(END VIDEO CLIPS)

BERMAN: Will Washington, both sides, jeopardize your jobs and the economic recovery just to score political points? The new twists in budget brinksmanship that might turn your stomach this morning.