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CNN NEWSROOM

New Highs for Stocks; Arrest in the McStay Murders; Ferguson Police Gearing Up for Grand Jury Decision; Ronald Reagan's Secret Tapes Released

Aired November 11, 2014 - 09:30   ET

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


(COMMERCIAL BREAK)

RANDI KAYE, CNN ANCHOR: Good morning, everyone. I'm Randi Kaye, in today for Carol Costello. Thanks so much for joining me this morning.

Stories that we're watching right now in the NEWSROOM. This morning, there are no known cases of Ebola in the U.S. New York City Dr. Craig Spencer has fully recovered from the virus and will be released from the hospital today. He tested positive last month after returning from Guinea in West Africa where he treated Ebola patients. He's expected to speak next hour and you'll see it live right here on CNN.

Opening bell just rang on Wall Street. Transportation and health care stocks helped drive the markets higher Monday, record for the Dow and the S&P 500. CNN's chief business correspondent Christine Romans joining me now.

So, Christine, can the ride continue?

CHRISTINE ROMANS, CNN CHIEF BUSINESS CORRESPONDENT: You know, that's the big question. I'll tell you, a lot of the strategists on Wall Street, Randi, have been sharpening their pencil and they're raising their targets for the end of the year. They look at all of these things that are going right. They're looking at corporate profits, companies making a lot of money, looking at very low interest rates, a U.S. economy that is growing now without the help of that Fed stimulus, and growing well despite a lot of headwinds in the rest of the world and they're saying, things look pretty good so far here for stocks.

You know, it's so interesting when you look back at the -- over the past couple of years, toward the end of the year, people keep saying -- people have thought we've had such a long rally, the bull must be getting old, but it keeps on moving higher. A 10 percent return this year for the S&P 500. The stocks in your 401(k) most likely reflect the S&P 500. A 10 percent return. That is a decent return on any kind of investment over the past 11 months. And a lot of the stock market strategists are saying they still feel pretty good about things.

Now, remember, the beginning of October, all that fear about a correction? If you had bought any of those pullbacks really over the past five years, those have been good investments to make. The stock market, every time it goes down, finds a lot of buying and it moves back up.

Now, the bond market's closed today for the Veteran's Day holiday, I should point out, so, you know, maybe that means things could be a little bit more choppy in the stock market today. But at least for now, if it can build on these gains, it will be yet another day of records, Randi.

KAYE: All right, Christine Romans, thank you very much.

ROMANS: You're welcome.

KAYE: So how did a family of four that vanished in 2010 from their Fallbrook, California, home end up dead and buried in shallow graves in the Mojave Desert? And answer has eluded police for years. But investigators may be getting close to solving the murders of Joseph and Summer McStay and their two sons, Gianni and Joseph Jr.

Last week police arrested a 57-year-old man, a business partner and friend of the McStay family. Long before he was arrested, that suspect sat down with me for a two-hour interview, his only on-camera interview. And now the father of Joseph McStay is speaking out to us as well.

Here's what they both told me in a story you will see only on CNN.

(BEGIN VIDEOTAPE)

PATRICK MCSTAY, JOSEPH MCSTAY'S FATHER: And he knew that if something happened --

KAYE (voice-over): We met Patrick McStay near his home in Houston just days after learning of an arrest in his son's murder. This is his first television interview since San Bernardino sheriff's deputies announced they had Chase Merritt in custody.

KAYE (on camera): Did you get a sense of relief when you heard that name?

MCSTAY: Well, a lot of people will say it's like lifting a ton off your shoulders. I said, no, it was more to me like a boulder falling on me.

KAYE (voice-over): That's because Patrick's son considered Chase Merritt a friend. Joseph McStay sold custom waterfalls and Merritt was one of his welders.

KAYE (on camera): Do you think that Chase Merritt is capable of something like this?

MCSTAY: After all I've seen through the years and the information we found, I still can't say yes, but I can definitely say I wonder.

KAYE (voice-over): Patrick McStay has been waiting nearly five years to find out who killed his family. It was February 4, 2010, when Joseph McStay, his wife Summer, and their two beautiful, young boys, Joseph and Gianni, disappeared. Their remains were found a year ago, buried in two shallow graves in the Mojave Desert. Investigators say they died from blunt force trauma. In our exclusive interview with Merritt earlier this year, he shared that the gravesite is just 20 miles from his home.

KAYE (on camera): Would you ever have expected that this is how it would end, in the desert like that?

CHASE MERRITT: In the desert, I had no clue.

KAYE (voice-over): We played some of our two-hour interview with Merritt for Patrick McStay.

MERRITT: Very visible from the freeway.

MCSTAY: I hear him telling you and describing the area perfectly, and telling you he knows that area really well.

KAYE: On that final day, Merritt told us he'd met Joseph McStay for what he described as a business lunch, and that they talked by phone a dozen times later that day.

KAYE (on camera): You were the last person he saw.

MERRITT: I'm definitely the last person he saw.

KAYE (voice-over): That night in 2010, at 8:28 p.m., Merritt says his phone rang, that it was Joseph calling from his cell phone, but Merritt didn't answer, he says, because he was too tired, a statement now raising eyebrows among those who have followed the case closely.

STEPH WATTS, FREELANCE INVESTIGATIVE JOURNALIST: The rest of Joey's existence was phone calls, text messages. So if I want to make you look like you're alive for several hours, what's the first thing I'm going to do, I'm going to take your phone, I'm going to text, I'm going to call myself.

KAYE: During our interview, Merritt also revealed to us he had taken a lie detector test soon after the McStays disappeared. He said he never got the results from authorities.

KAYE (on camera): Did detectives ask you if you killed Joseph McStay and his family?

MERRITT: I don't recall them asking me that.

KAYE: Nothing that direct?

MERRITT: Hmm?

KAYE: Not that directly?

MERRITT: I don't -- no, I don't recall them being that direct.

KAYE (voice-over): If Chase Merritt did kill the McStay family, Patrick McStay suspects it had to do with money. Joseph had landed a waterfall deal worth $9 million so Merritt stood to make a lot of cash. But Patrick said his son told him Merritt's work had gotten sloppy and Joseph was in the market for another welder. Patrick said he last spoke with Merritt earlier this year when the two discussed the book they were writing about the case. Looking back, he says he thinks Merritt was just digging to find out what Patrick knew about the murders. Patrick hasn't seen or spoken to him since.

KAYE (on camera): What would you ask him?

MCSTAY: I wouldn't ask him anything. There would be one person coming out of that room.

(END VIDEOTAPE)

KAYE: I want to bring in Paul Callan now. He's a CNN legal analyst and criminal defense attorney, as well as a former prosecutor.

So a lot to talk about here in this case with you. The suspect, Chase Merritt, he has a couple of felony convictions, nothing violent, though. How much will his previous record play in terms of the evidence brought against him?

PAUL CALLAN, CNN LEGAL ANALYST: Well, I think it plays heavily in terms of looking at somebody who could engage, if he's guilty, in an act of this level of violence. I mean with two children having been killed, the police, I know, believe it was a blunt force instrument that may have been used in the killings. That wouldn't suggest somebody who just did this for the first time in adulthood. You would think pathologically and psychologically there would be a history of violence.

KAYE: What about the fact, as we mentioned in the story, that Patrick McStay, at least, thinks that his son was about to cut Chase Merritt, the suspect, out of the business. He had this huge $9 million deal for waterfalls. Chase Merritt was his -- one of his welders and he thinks that maybe his son was looking for another welder. How much of their business dealings would be brought into court?

CALLAN: Well, that will be a major component because in any murder prosecution, the jury is always looking for motive. I mean nobody kills four people unless they're, you know, completely insane without some triggering motive. So I think the business angle is very, very important. And if the police manage to develop that as a reason for the killing, I think it will be an important component because, bear in mind, a case like this probably lacks any eyewitnesses and it's going to be put together though -- brick by brick through circumstantial evidence and motive is much more important in a circumstantial evidence murder prosecution.

KAYE: San Diego authorities were handling this case before San Bernardino took it over and at some point they said they thought maybe there was more than one person involved. Could that play to Chase Merritt's benefit in the courtroom because now they're saying, at least in San Bernardino, that it's only him?

CALLAN: Well, yes, it will play to his benefit because a standard defense that is used in a case like this is sort of blaming somebody else. You're obviously saying, my client is innocent and the murder must have been done by somebody else. And if police authorities in some way support that theory by saying, we were actually looking at somebody else, it can be used by a clever and talented defense attorney to create reasonable doubt in a homicide prosecution.

KAYE: If Chase Merritt did indeed do this, he certainly created an alibi for himself. He told us in our exclusive interview that he was home that night. He got a call from Joseph McStay at 8:28 p.m. on his cellphone. How will that play? I mean is that pretty good evidence in his favor because it did ping off the cell tower near his home. So the phone was there.

CALLAN: Well, yes, it's a very helpful piece of evidence, and, you know, I'd have to see more to see if you could stage something like this and, of course, technologically, you can do a lot of things. Now, to me, though, Randi, the most astounding thing is that you managed to interview him for -- it was a two-hour interview?

KAYE: A two-hour interview.

CALLAN: Now, if a suspect in a murder case, to submit to a two-hour interview --

KAYE: It was before he was arrested (INAUDIBLE).

CALLAN: Well, I understand that, but you have to be -- if you've committed a crime of this magnitude, you're going to be extraordinarily careful not to reveal anything. And a two-hour interview, it's astounding that he would have submitted to that. I think it may be an indication, if he is, in fact, the murder, that he's a psychopath and that he just -- he's drawn to the attention and maybe that will be his downfall in the end.

KAYE: Yes, the experts have said that if that is the case, that he would want to put himself in the middle of it and control the story.

CALLAN: Yes.

KAYE: So, we'll see what happens as it unfolds. Paul Callan, thank you. Appreciate it.

CALLAN: Always a pleasure. Yes.

KAYE: And, of course, we want to mention that you can watch "Buried Secrets" and see the suspect, Charles "Chase" Merritt's only on-camera interview tonight. The full interview at 9:00 p.m. Eastern only on CNN.

(COMMERCIAL BREAK)

KAYE: Any day now, a Ferguson grand jury could reach a decision on whether to indict the white police officer who shot and killed unarmed black teenager Michael Brown. That has police in Ferguson gearing up for what's to come if Officer Darren Wilson is not indicted. Some residents and business owners are also preparing and in some cases buying up weapons. (BEGIN VIDEO CLIP)

DAN MCMULLEN, BRUSINESS OWNER: So maybe I get trapped here or something, we got to have John Wayne shoot-out, you know? That's the silly part about it, you know, is that going to happen? Not a chance. But I guess could it? Because, you know, I'm the only white person here.

MAYOR JAMES KNOWLES, FERGUSON, MISSOURI: Large groups of individuals that I've never known to be or -- be shooters or be sportsmen.

UNIDENTIFIED FEMALE: They're going out and buying weapons?

KNOWLES: Now that the plus side of it is that every one of them I spoke to have went out and taken a training class, have went out and tried to learn the law.

(END VIDEO CLIP)

KAYE: Former New York City Police Commissioner Bernard Kerik joins me now to discuss this. Nice to see you, sir.

So, one gun shop there, you saw, they're saying that sales are up about 50 percent. How concerning should this be to police there in Ferguson?

BERNARD KERIK, FORMER NYC POLICE COMMISSIONER: Well, I mean, it's always got to be a concern. I honestly -- I don't think that's going to become an issue. I think the police have a job to do. They're going to keep the community safe and secure.

I think they may have learned -- they should have learned from the response, their initial response, in Ferguson, which was initially an overresponse. And I think some of the things they've done since with the community may help.

I think the problem that Ferguson is going to have is the outside, you know, people that come in and want to create all this havoc. That's where the police are going to have problems, I think.

KAYE: Yes. You've certainly dealt with bigger cities. Ferguson is a much smaller town. But if you were in charge, how would you be preparing for this grand jury decision to come down?

KERIK: Well, first and foremost, I think it's a lot of interaction with the community, the community leaders, training with the police departments that are going to be responding. There has to be an adequate response; there can't be an overresponse. They may have to have strategic offset sites where they stage police in the event that things do get out of hand.

But I -- hopefully, everybody has learned from the first time around, and when the grand jury comes out, people take it for what it's worth. And I believe you may have protests on either side, whether the officer is indicted or not indicted. KAYE: What about all the money? I mean "The Guardian" is reporting

that St. Louis County police have spent tens of thousands of dollars of riot gear, gearing up for these new protests. Their spending has topped $172,000 since Michael Brown was killed in August. Do you think that's excessive or do you think that's necessary?

KERIK: Well, I think that -- listen, the gear, the riot gear and the equipment and resources the cops have to have to do their job, to stay safe and to secure the city is extremely important. It's expensive. It's expensive not only for Ferguson but any city. And I think they have to have adequate resources.

So they've got to do what they have to do. Hopefully it will be peaceful demonstrations. I heard the family and Mr. Crump, the attorney for the family, earlier calling for peaceful demonstrations and hopefully people listen to them.

KAYE: Bernard Kerik, appreciate your time. Thank you.

KERIK: Thank you, ma'am.

KAYE: And coming up next hour, we're going to talk to Missouri state senator Maria Chapelle-Nadal about the situation in Ferguson and what effect it is having on business owners there.

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KAYE: Live pictures now as Americans mark the federal holiday of Veterans Day. Our French allies pay tribute to Armistice Day, marking the end of World War I, the so-called War to End All Wars. Right now, French President Francois Hollande is dedicating a memorials to the soldiers who died in ferocious battle conditions in the region. Foreign dignitaries are on hand there to remember the British, French and German soldiers who died in that fighting.

It is a rare look behind the curtain of diplomacy, secret tape recordings made by President Ronald Reagan himself with leaders from around the world. Those tapes have now been released and with them an amazing opportunity that puts us within earshot of history as it unfolded.

Athena Jones has the story.

(BEGIN VIDEOTAPE)

RONALD REAGAN, THEN-PRESIDENT OF THE UNITED STATES: I think we'd just see more hijackings then and more terrorism.

ATHENA JONES, CNN CORRESPONDENT (voice-over): The nation's 40th president captured on secret tapes talking about the 1985 hijacking of TWA Flight 847 by Hezbollah and Islamic Jihad. It was Ronald Reagan himself who recorded these conversations with world leaders, according to the author William Doyle, who gave the never-before-heard tapes to "The New York Post".

Here's the president speaking with his Pakistani counterpart about how to get the western hostages released from Lebanon.

REAGAN: Well, we must do that in a way that does not make the hijackers think that they have won their goal.

JONES: Reagan believed that if the hostage negotiations were not handled delicately, it would foment more terrorism.

MUHAMMAD ZIA-UL-HAQ, THEN-PRESIDENT OF PAKISTANI: I entirely agree with you, Mr. President.

JONES: Proof that many of the intractable foreign policy challenges of Reagan's time, like terrorism and Middle East unrest, remains problems today.

UNIDENTIFIED MALE: Mr. Aslan, we're still holding for president.

JONES: The tapes show that even world leaders get put on hold, like when Syrian President Hafez Al Assad was left waiting for 13 minutes while Reagan finished a horse ride at his California ranch. After finally picking up the line, Reagan congratulated the dictator, the father of the current Syrian president, for his electoral win.

REAGAN: Mr. President, let me take this opportunity to extend my congratulations on your reelection to a new term as president of Syria.

JONES: And listen as Reagan is forced to apologize to British Prime Minister Margaret Thatcher for invading Grenada, part of the British commonwealth, without giving her a heads up.

REAGAN: If I were there, Margaret, I'd throw my hat in the door before I came in.

MARGARET THATCHER, THEN-PRIME MINISTER OF THE U.K.: Well, there's no need to do that.

REAGAN: We regret very much the embarrassment that's been caused you.

JONES: The U.S. sent in Navy SEALs to help overthrow the Communist government there.

REAGAN: I guess the first thing we've been done since I've been president in which the secret actually was kept until it happened.

JONES: Of course, that invasion wasn't a secret for long, and now these long-secret tapes are seeing the light of day.

Athena Jones, CNN, Washington.

(END VIDEOTAPE)

KAYE: And the next hour of CNN NEWSROOM begins right after a break.

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