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EARLY START

Primary Day in Six States; China Responds to Spying Accusations; Crisis in Libya; Fight for Flight 370 Satellite Data

Aired May 20, 2014 - 04:30   ET

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


(COMMERCIAL BREAK)

CHRISTINE ROMANS, CNN ANCHOR: Decision day across the country. Critical primary elections set to shape which party will control Congress this fall. We're breaking down the big races you need to watch today.

JOHN BERMAN, CNN ANCHOR: Breaking news overnight. China denying allegations that it spied on American companies, promising retaliation if the U.S. pursues charges against five accused Chinese hackers. We're live in Beijing with the very latest.

ROMANS: A minute-by-minute decision. The U.S. ready to evacuate Americans from its embassy in Libya. The country in crisis as deadly fighting takes over the streets. The very latest, ahead.

Welcome back to EARLY START. I'm Christine Romans.

BERMAN: And I'm John Berman. About 32 minutes past the hour right now, and can you smell it in the air?

ROMANS: It's election day!

BERMAN: It's election day! Voters head to the polls in six states to decide several key primary races that could shape the direction of the nation and, really, the midterm elections.

The stakes are high in Kentucky, where Senate Minority Leader Mitch McConnell is leading challenger Matt Bevin in the polls for the GOP nomination there. This has been a fairly nasty campaign. A big win for McConnell would deliver a blow to the Tea Party, which put a lot of money and effort behind his opponent, Bevin.

In Georgia, it has been a wild primary between five Republicans there. That race likely headed to a runoff in July between the top two vote- getters. This, the Republicans making a bid to take the Senate seat of the retiring Saxby Chambliss. The eventual winner faces Democrat Michelle Nunn, who is the daughter of former Senator Sam Nunn.

ROMANS: Chelsea Clinton's mother-in-law trying to make a congressional comeback in Pennsylvania. Marjorie Margolies is seeking the Democratic nod after getting considering fund-raising and robocall help from Bill and Hillary Clinton. All eyes will be on Oregon to see if it's a blue state that might turn red. Pediatric neurosurgeon, Dr. Monica Wehby, favored to win the GOP against State Representative Jason Conger. Republicans think Dr. Wehby could unseat Democratic Senator Jeff Merkley in November.

In Idaho, another big race for the Tea Party, Mike Simpson, a John Boehner ally and eight-term incumbent congressman, trying to hold off a strong challenge from Tea Party Candidate Brian Smith.

In Arkansas, Democratic Senator Mark Pryor and Republican Challenger Tom Cotton are expected to clinch their respective nominations. Republicans have liked their chances for gaining this Senate seat in Arkansas, though Mark Pryor has been hanging tough there as well.

We're going to break down today's big primary contest and trends to watch for next hour. We'll be joined by CNN political editor Paul Steinhauser, so do not touch that dial.

ROMANS: Paul's just getting out of the shower and racing to the bureau. We'll see him in an hour.

All right. Tension building between the U.S. and China. Officials in Beijing furious over the indictment of five Chinese military officers accused of hacking into U.S. companies to steal corporate secrets. They're now summoning U.S. Ambassador Max Baucus. They are threatening to retaliate against the U.S.

Let's bring in David McKenzie live from Beijing this morning.

You know, David, American companies have pursued a China strategy for a good 20 years now and they've all along complained that the Chinese government, the PLA, the People's Liberation Army, has been actually helping steal trade secrets. This is the first real move by the U.S. government to try to make that case.

DAVID MCKENZIE, CNN CORRESPONDENT: Well, many American investors I've spoken to over the years have certainly made those allegations privately. And yes, this is the first time that it's come out in an indictment by the Justice Department, run by the FBI.

And you know, Christine, you saw these wanted posters of these five individuals, some of them, in fact, in PLA uniforms. This was at best deeply embarrassing to the Chinese government. They hit back very quickly, summoning the U.S. ambassador to China, Max Baucus, to a very late-night meeting here in Beijing, a kind of slap on the wrist, but they have warned that there could be further consequences from the Chinese side.

They're also saying that the U.S. response is hypocritical, given the revelations by former NSA contractor Edward Snowden. They say that everyone is doing this, but they're saying they don't.

In fact, quote, "We have never engaged in any theft of any trade secrets."

So, China is saying it's not them, and they're saying that the U.S. is out of line -- Christine.

ROMANS: That is the standard response. I mean, when there have been allegations before of Chinese PLA-tied cyber espionage on U.S. companies -- I mean, one time the Chinese foreign ministers told me the Americans were seeing ghosts, you know? They've always said this is not happening and always have turned around and said, no, the U.S. is doing it, so that's the standard response. I mean, think there's probably no chance these accused hackers will ever see a trial, David. The big move here is that the U.S. government is publicly blasting these members and telling, putting the Chinese government on notice.

MCKENZIE: Well, that's right. It's kind of a naming and shaming. And also, the fact that one state, this being the U.S., of course, is putting forward criminal indictments against officials from another state, that being China. You know, these charges could bring 10 to 15 years in a federal prison, if they were meted out. But of course, there is very little chance, well, I'd say about zero chance the Chinese will send these officials over to the U.S. again, they deny they have anything to do with anything.

And apart from the denials, Christine, China's also pointing the finger to the U.S. just today, state media saying that, in fact, China has been under attack from U.S. sources for many years. Some analysts say there is some truth to that in terms of the NSA, allegations against the NSA and infiltrating Chinese networks. Others say there's a difference here between espionage and corporate espionage.

ROMANS: Right.

MCKENZIE: In fact, stealing secrets to help competitors get a leg up, whether it be nuclear power or solar energy, all of these are in that indictment, and it does paint a very bleak picture about the way that China uses the military, allegedly, to help its own corporate interests.

ROMANS: And let's be clear, companies -- I'm sorry, governments spy on each other a lot. That is happening all the time. But a government actually stealing intellectual property to give your own country's companies a leg up, that's what we're talking about here.

David McKenzie, thanks so much for that excellent report.

You know, companies have complained for years that they're under attack, under attack by Chinese hackers. What are they after?

OK, so, cyber security expert Brian Krebs explains.

(BEGIN VIDEO CLIP)

BRIAN KREBS, KREBS ON SECURITY: They want to know what these companies are willing to give up when they come to the negotiating table with the Chinese government, you know. They're trying to get contracts over there. That's the main thing.

They want to know -- long story short, they want our R&D. Like, who wants to spend tens of billions on R&D if you can steal it for a few million bucks? So that's essentially what they're doing.

(END VIDEO CLIP)

ROMANS: The Justice Department says hackers stole blue prints to nuclear power plants and secrets some several steel companies, spying on U.S. steel trade unions in the midst of a trade dispute in China, these allegations that the Chinese is endorsing the theft of American secrets to give its own companies a boost. In total, the attacks cost U.S. firms billions in lost profits.

ROMANS: About 20 minutes to the hour right now.

Chaos and bloodshed in Libya's capital city. The United States doubling the number of aircraft standing by in Italy just in case hundreds of Americans need to be rescued from the U.S. embassy in Tripoli. An evacuation order could come at any time this morning as fierce fighting erupts throughout the city.

Let's get more now from Pentagon correspondent Barbara Starr.

(BEGIN VIDEOTAPE)

BARBARA STARR, CNN PENTAGON CORRESPONDENT: John, Christine, with violence rising every day in Libya, the question now, is that country falling into civil war? And if it is, can the U.S. embassy remain open? Can diplomats stay on the job?

If the violence gets any worse, the State Department is prepared to evacuate the 200 or so Americans that are there. A package of heavily armed marines waiting just to the north in Italy across the Mediterranean, about 250 marines equipped with eight V-22 aircraft that can fly very quickly to Italy. They are on a two-hour string.

What does that mean? That means if the evacuation order comes, they will be in the air and on their way to Libya within two hours or less.

Just a couple of years after the disaster in Benghazi, the administration is taking no chances. It has the troops and the firepower ready to go to get Americans out of Libya if it comes to that -- John, Christine.

(END VIDEOTAPE)

BERMAN: Our thanks to Barbara for that report. We'll keep an eye on that all morning for you.

Meanwhile, the State Department is closely monitoring a potentially explosive situation unfolding this morning in Bangkok. Thailand's army declaring martial law is in effect nationwide. This is an announcement that caught the Thai government off guard.

Army officials say this is not a coup. They say it's just a move to maintain peace after six months of sometimes violent antigovernment protests.

ROMANS: All right. An EARLY START on your money this morning. Credit Suisse stock trading higher after that huge settlement announced. It's up! It's up more than 2.5 percent, putting all of its legal problems behind us, we would assume.

Overall, stocks in Europe slightly lower but hovering near a six-year high. Dow futures pointing to a slightly lower open on Wall Street. A lot can change in the next four hours, but that's a look at this moment.

BERMAN: Donald Sterling not giving up his NBA team quietly. Overnight making new demands as the league formally begins the process of taking the L.A. Clippers from him.

ROMANS: Plus, another V.A. hospital under scrutiny, accused of lying about patient care. Where investigators are looking now.

BERMAN: And construction on a college football field.

ROMANS: Oh, my!

BERMAN: Not really going as planned. There's not supposed to be that giant hole in the end zone. We'll have the story after the break.

(COMMERCIAL BREAK)

BERMAN: No comment yet from the NBA on a report that the lawyer for banned L.A. Clippers owner Donald Sterling is demanding, three months to respond to the disciplinary charges against him. On Monday, the NBA formally charged Sterling with damaging the league with his racist comments and gave him until May 27th to respond. A special board of governors meeting was set for June 3rd, at which the other NBA owners could vote to terminate Sterling's ownership of the Clippers.

ROMANS: Two planes involved in last month's near miss at Newark Airport came near feet from a collision. That's according to a new report from safety regulators, which says the planes were separated by 150 feet laterally and about 400 feet vertically. That is very close.

Some 200 people were on board those planes, which were operating on intersecting runways. A final report on that incident expected to take several months.

BERMAN: That is much too close.

ROMANS: Yes.

BERMAN: The V.A. hospital scandal growing this morning. Another medical center under investigation after allegations it kept a secret wait list for patients. Three staff members at the Gainesville, Florida, facility have been placed on leave. Whistleblowers at other facilities have claimed they were ordered to doctor records to conceal long wait times. In Arizona, some 40 veterans reportedly died while waiting for care.

ROMANS: Touchdown dances not recommended right now at Austin Peay State University in Tennessee. Look at this -- a 40-foot-deep sinkhole just opened up. BERMAN: This is the stadium's end zone right there. Work crews noticed the earth start to open up weeks ago but they couldn't stop the hole from growing. Now look at that. That sinkhole is 50 feet wide.

Governor Stadium was already undergoing renovations, probably a good idea. It is expected to be ready for the fall season. That will be where the visitors go. That's the visitors' end zone.

All right, behold now the humbling enormity and power of a super cell storm. This is really incredible.

ROMANS: Oh, my!

BERMAN: Time-lapse video shot by storm chasers near New Castle, Wyoming. The system produced torrential downpours, hail as big as baseballs. Super cells are a special kind of single-cell thunderstorm that can last for hours and spawn almost every significant tornado in the U.S.

ROMANS: They're so weirdly beautiful. I mean, they're so dangerous, but it is so weirdly beautiful to watch something like that, especially on time-lapse.

BERMAN: And we can use the word spawn.

ROMANS: I know.

BERMAN: Which is good.

ROMANS: All right, now let's get a look at your forecast with Chad Myers -- Chad.

CHAD MYERS, AMS METEOROLOGIST: Good morning, guys.

A couple severe storms across the Upper Midwest and still a fire threat in the Southwest, but not so much for L.A. and southern California. A little bit farther into the mountain states than that. It will be 88 in Albuquerque, 89 in Dallas for today, 77 in New York. So, it does warm up today, but it doesn't warm up as much tomorrow because showers move into the Northeast.

The warm front is to your South, which means the warm air isn't where you are. It's to your South. It will be into D.C. and Richmond and the like. Temperatures there will be warmer than New York City, but not really by all that much.

You see Baltimore at 82, New York tomorrow a high of 70. Back out to the West, you see Salt Lake City at 75, Kansas City at 83. Enjoy your day. If you're traveling today, airports should be pretty much on time. Keep that in mind as the day goes on, but so far, so good.

Guys, back to you.

ROMANS: I'm holding him to that.

BERMAN: Pretty much on time. That's a very precise measurement.

ROMANS: That's dangerous to say at 4:48 a.m. in the East. A lot can change.

All right. Breaking news overnight. Investigators searching for missing Malaysian Airlines Flight 370 will release the raw satellite data used to shape their search. We are live in Malaysia with reaction this morning right after the break.

(COMMERCIAL BREAK)

BERMAN: The raw satellite data that was used to determine the final path of Flight 370 could soon be made available to the public, at last. The Malaysian government and officials from the British satellite firm Inmarsat have both been denying that -- well, they've been suggesting that the other one has it. Now they've issued a joint statement, saying they're working on releasing it in the name of transparency.

Let's bring in Saima Mohsin. She's been monitoring these developments live from Kuala Lumpur.

Saima, at last, people might get a look at this.

SAIMA MOHSIN, CNN CORRESPONDENT: Yes, John, you know, it's taken us some time to get to this point, hasn't it? We've been pressing and pushing and making those calls. And so, too, of course, have the family members of those aboard Flight MH370. Finally, late Monday night here in Kuala Lumpur, we got a statement from the acting transportation minister, Hishammuddin Hussein, he's the man who often holds these press conferences saying that he has instructed the Departments of Civil Aviation to work with Inmarsat -- that's the satellite data company that first came forward with this data -- to release it.

Now, this morning here in Kuala Lumpur time, we've had another statement saying -- yes, we have now started working on this. And what they're doing, John, is providing two sets of information, really. What they're going to do is provide the raw data, and alongside it, kind of like an instruction manual, if you like, of how to read that data.

But we're not really sure if the families of the passengers on MH370 are going to be satisfied with that, because what they're saying is they want more data than just that raw data. They want data going way back, they want data from other planes.

So, it's yet to see if that is exactly what they wanted. And crucially, they want this investigated by another independent body, and that, John, is because there is just so much suspicion now around Flight MH370, suspicion including some family members tell me, whether or not the plane really did end its journey in the southern Indian Ocean -- John.

BERMAN: So many questions, including why and how this data has been released. Certainly, they'll want to take a close look at it to make sure they have all of it when it does come out. Saima Mohsin in Kuala Lumpur, thanks so much.

ROMANS: All right. Coming up, your kids probably have one of these attached to their bike helmets. It's GoPro. You know little GoPro?

BERMAN: Oh, yes.

ROMANS: It's going public.

Business news after the break.

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ROMANS: All right. Welcome back to EARLY START. It's "Money Time" for this Tuesday.

Dow futures pointing to a lower open on Wall Street today, a fear still driving the market. CNN Money looks at what's driving investors. A zero is extreme fear, 100 is extreme greed.

Where are we? Thirty-one. That means John Berman is afraid. A year ago, we were extremely greedy, 91.

Investors buying stocks and helping the S&P 500 gain 30 percent last year. That was the greed mode. Now, we're hovering near record highs, but investors are largely cautious, so something we're watching.

An extreme IPO, GoPro. GoPro is going public. It's the maker of those cameras that attach to everything. They're made popular by extreme athletes who put them on things like snowboards, helmets, handle bars. The company's claiming to raise $100 million in its first offering. It's the first look investors have at GoPro's books. The company's sales were nearly $1 billion last year, more four times when it sold in 2012.

Silicon Valley, home of companies like GoPro, is also home of the country's best savers. Fidelity analyzed savings data of 13 million Americans, found people living in Silicon Valley were stashing the highest percentage of their paychecks away into a 401(k), 14.6 percent of their paychecks into their 401(k). Residents in Raleigh and Houston were also super savers. As far as overall balances, people of Bridgeport, Connecticut, win that title, averaging more than $150,000 in their 401(k)s.

And a little known fact -- if you want to be a 401(k) millionaire, you want to get to $1 million in your 401(k), those people on average stash away 14 percent. Something to think about.

BERMAN: Keep that number in mind.

EARLY START continues right now.