| 00:00:00 | Cnbc
world headquarters, this is "the
"
hkudlow.
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| 00:00:11 | >>> Good evening, everybody.
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| 00:00:11 | I'm larry kudlow.
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| 00:00:13 | Welcome back to "the kudlow
report" where we still believe
free market capitalism is the
best path to prosperity.
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| 00:00:19 | In the face of a heartbreaking
catastrophic japanese earthquake
and following yesterday's stock
market massacre, today's trading
in stocks was incredibly
resilient.
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| 00:00:28 | An almost miraculous 60-point
rise in the dow.
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| 00:00:32 | However, stocks did fall across
the board for a second
consecutive week.
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| 00:00:35 | And for whatever reason it seems
clear that the long-awaited
stock market correction is now
taking place.
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| 00:00:41 | As I discussed last night, there
are a number of known unknowns
and unknown unknowns, to requote
donald rumsfeld.
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| 00:00:49 | Add japan's recovery and
earthquake to that list.
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| 00:00:54 | Along with turmoil in libya,
saudi arabia, the economic
impact of higher oil and
gasoline prices, and ongoing
european debt problems.
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| 00:01:00 | But what we do know is that
retail sales for neb turned in a
solid performance.
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| 00:01:06 | Business sales roared in today's
report, which scored january and
inventories also jumped.
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| 00:01:13 | On the other hand, consumer
sentiments fell in march and
consumer inflation expectations
rose.
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| 00:01:18 | This is undoubtedly part of the
oil and gasoline spike story
that is well known but whose
full consequences remain
unknown.
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| 00:01:25 | A lot for investors to digest.
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| 00:01:27 | Let's bring in our market panel.
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| 00:01:28 | Here now is "fast money"
contributor brian kelly.
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| 00:01:31 | He's the president of kanaan
drum capital.
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| 00:01:38 | Stephanie cane.
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| 00:01:39 | And our friend david dietz chief
investment strategy at point
view financial services.
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| 00:01:43 | Brian, let me begin with you.
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| 00:01:45 | We're going to cover the
japanese earthquake story in
some detail throughout this
program.
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| 00:01:49 | In your judgment what is the
impact going to be on usa growth
and world growth, brian?
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| 00:01:55 | Can you start us off there?
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| 00:01:56 | >> You know, I think it probably
doesn't have a heck of a lot of
impact on usa growth.
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| 00:02:05 | When we're talking about usa
growth we're talking about the
u.s. consumer, 70% of gdp.
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| 00:02:10 | The other percentage is coming
from china.
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| 00:02:12 | This is going to be a japan
rebuilding story.
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| 00:02:14 | There will be a big
repatriation, japanese yen
coming back to japan.
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| 00:02:18 | But in terms of specifics for
-based business, I'm not
sure it will have that much of
an impact.
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| 00:02:26 | >> Does it have any particular
impact?
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| 00:02:28 | Real quick for me, brian.
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| 00:02:29 | On the u.s. stock market.
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| 00:02:30 | I mean, I thought today's market
was very resilient, almost
miraculously so.
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| 00:02:35 | All that said, it looks like a
correction to me.
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| 00:02:37 | How does japan's quake figure
into that?
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| 00:02:41 | >> Today I think was really just
short covering.
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| 00:02:43 | You know, for everybody I talked
to and the way that the market
traded there wasn't a lot of
volume.
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| 00:02:48 | But really where it's going to
impact it is with the japanese
yen.
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| 00:02:51 | If you start to see an unwind to
the carry trade and a risk off,
then you can see risk off in
executives and just
exacerbate this correction.
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| 00:03:00 | >> Risk off in u.s. equities.
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| 00:03:02 | Stephanie, as you parse through
all of the stories running
through today and the
information on the catastrophe
in japan, how does it affect
your investment thinking?
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| 00:03:08 | >> Well, we know that the market
doesn't like unknowns, right?
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| 00:03:11 | And we have had a ton of them
this week, right?
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| 00:03:15 | And as you say, it's pretty
impressive.
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| 00:03:17 | It's a small victory that we're
down just 1.3%.
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| 00:03:20 | So until you see some
clarification on some of these
events, on some of these issues,
the market's probably going to
trade in a range, especially
given we're up so much from the
market lows.
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| 00:03:31 | But I would say this.
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| 00:03:32 | You want to take advantage on
the really bad days like we had
yesterday when some stocks are
down 4%, 5%, 6%.
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| 00:03:37 | You want to buy them because the
long-term fundamentals here in
the states is actually pretty
good with strong corporate
earnings and a rebounding
economy.
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| 00:03:44 | >> David dietz, I know you've
been cautious.
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| 00:03:47 | Maybe I'm going to call you a
bear.
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| 00:03:51 | If not please correct me, people
frequently do.
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| 00:03:52 | But I want to know as you parse
through the japanese earthquake
and the aftershocks now being
reportroad very nasty, we're
going to cover that on this
program in a few moments.
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| 00:04:01 | Does it change your outlook for
the worse or not?
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| 00:04:08 | >> You cannot be the world's
third largest economy suffering
the tragedy it has -- whoever is
exporting to japan is going to
be exporting a little less.
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| 00:04:20 | However, there are a couple
mitigating factors which is one
reason the market went up today.
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| 00:04:23 | First of all, we've been worried
about supply disruption in terms
of oil.
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| 00:04:26 | Today we saw demand disruption,
we saw energy prices actually
move down, and that's been one
of the major headwinds.
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| 00:04:34 | I think that's a near-term
positive.
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| 00:04:35 | The other thing we don't know is
what's going to happen to
interest rates.
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| 00:04:40 | You're going to see a lot of
treasuries as
money gets repatriated to japan
to pay for the rebuilding.
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| 00:04:48 | On the other hand we've got an
fomc meeting next week and
whatever they were going to do i
think it's going to be pushed
off a little bit in terms of --
>> well, you didn't expect them
to take actions, did you?
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| 00:04:58 | They're going to complete qe-2
through the end of june.
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| 00:05:01 | You didn't expect them to
tighten or anything next week?
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| 00:05:04 | >> But we don't know what
they're going to do in june.
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| 00:05:06 | Stocks priced in things three to
six months away.
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| 00:05:09 | They may now stretch things out
a little bit longer.
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| 00:05:12 | They're going to be a little bit
more dovish than they were
otherwise going to be.
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| 00:05:17 | >> Brian kelly, the japanese are
a great people.
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| 00:05:19 | They've suffered a
heartbreaking, catastrophic
earthquake.
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| 00:05:22 | But they have a history of
rebounding from prior
earthquakes, brian.
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| 00:05:26 | What do you think?
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| 00:05:27 | They may surprise us once the
worst of this is over?
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| 00:05:29 | They may go back in?
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| 00:05:31 | They may rebuild?
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| 00:05:32 | They're going to get help from
their central bank and some
old-fashioned pump priming as
they must?
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| 00:05:39 | I mean, brian, maybe we're
selling japan too short.
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| 00:05:42 | This is a great people.
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| 00:05:43 | They know how to do business.
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| 00:05:45 | >> Again, I -- I agree with you
100%.
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| 00:05:47 | I think if anything this is a
positive for the japanese
economy.
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| 00:05:50 | This is an economy that need
someday kind of a stimulus.
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| 00:05:53 | You will get some kind of pump
priming.
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| 00:05:55 | I think it will be more
liquidity availability within
domestic japan.
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| 00:06:01 | But in terms of the stock
markets, the nikkei, that type
of trade, I actually think
they're probably short because
they're heavy exporters and
you're going to have a stronger
yen.
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| 00:06:10 | But in terms of the domestic
japanese economy, ultimately i
think this will be very good for
it.
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| 00:06:16 | >> One of the good things that
happened this week is that the
saudi arabian day of rage, at
least for now, is off the table.
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| 00:06:22 | It was relatively tranquil.
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| 00:06:23 | The turnout wasn't all that
good.
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| 00:06:25 | The saudis know how to control a
riot.
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| 00:06:27 | I don't want to make any value
judgments on any side.
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| 00:06:31 | All I'll say-s stephanie, oil
prices fell 3% this week.
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| 00:06:35 | Copper prices fell 5 1/2% this
week.
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| 00:06:37 | Gold down a little bit.
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| 00:06:38 | The dollar was flat.
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| 00:06:39 | But long-term interest rates in
fell by a solid ten
basis points.
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| 00:06:44 | These are whiffs of deflation.
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| 00:06:48 | What are you thinking?
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| 00:06:48 | ?
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| 00:06:50 | >> I don't know.
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| 00:06:52 | Deflation, it's very debatable
right now.
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| 00:06:54 | I think you can spin this
positively because everyone was
nervous that the margin story
had peaked in terms of corporate
earnings because of the higher
commodity prices and that it
would really be very problematic
with higher commodity prices.
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| 00:07:05 | So I think it is a positive that
commodity prices are coming
down.
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| 00:07:08 | We've got to watch it because
obviously we know if it is
really demand destruction that's
going to be an issue.
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| 00:07:13 | But I think right now it's way
too early to tell.
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| 00:07:17 | >> Brian kelly, are you buying
or selling monday morning?
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| 00:07:19 | >> I'm selling monday morgan.
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| 00:07:20 | And I would just say we'd better
hope that copper prices stay up
because a lot of loans in china
are based on that collateral and
you want that collateral to stay
up.
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| 00:07:29 | >> David dietze, are you buying
or selling monday morning?
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| 00:07:31 | >> Selectively.
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| 00:07:33 | >> Selectively buying and
selling?
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| 00:07:34 | >> Selectively trading.
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| 00:07:36 | Basically looking at some stocks
that were hit up at the end of
this week perhaps due to japan.
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| 00:07:41 | Something insurance companies
who really don't have the
exposure there that were knocked
down unfairly, I think there's
an opportunity.
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| 00:07:46 | And I'd also look at a company
like toyota.
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| 00:07:48 | Three of their factories have
been shut down.
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| 00:07:51 | However, a lot of cars have been
destroyed too.
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| 00:07:54 | They're going to --
>> I mean, I know japan hasn't
shown the world much recently,
but they have a lot of great
business acumen, and I do not
want to sell them short tonight.
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| 00:08:03 | Stephanie, I want to ask you,
you're the only bull on the
panel.
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| 00:08:06 | Sensible bull in my opinion.
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| 00:08:07 | >> Thank you.
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| 00:08:07 | >> Give me a bullish take.
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| 00:08:09 | Are you going to buy on monday
moshing?
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| 00:08:11 | Or what are you looking at?
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| 00:08:14 | Correction kbz very healthy, can
they not?
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| 00:08:16 | >> Absolutely they can.
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| 00:08:17 | Especially after the rally we've
had after the lows.
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| 00:08:22 | >> Stand up to these men.
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| 00:08:23 | I want you to stand up and make
your stand.
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| 00:08:24 | >> Let me tell you, the
figments, corporate profits are
strong.
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| 00:08:27 | Margins are not peaking.
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| 00:08:29 | These companies have done an
amazing job in cutting costs and
doing a lot of things
productivity-wise that will help
the margin story.
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| 00:08:35 | Even if the --
>> tax rates are low.
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| 00:08:37 | >> And even if demand comes down
a little bit, you're still going
to have --
>> tax powers are successfully
revolting in wisconsin,
florida -- taxpayers revolting.
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| 00:08:46 | That's good.
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| 00:08:47 | >> And by the way the consumer
remains resilient.
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| 00:08:49 | Did you see the retail sales?
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| 00:08:50 | >> I did.
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| 00:08:51 | >> I'm a buyer.
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| 00:08:52 | >> Brian kelly, stephanie link,
david dietze as always.
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| 00:08:56 | All right, folks, we are
monitoring breaking news
cometion out of japan.
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| 00:09:01 | There's a fear the three mile
island nuclear meltdown might
actually be occurring.
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| 00:09:05 | The moment we establish contact
with tokyo we are going to take
you there live.
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| 00:09:08 | And later in the show is mr.
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| 00:09:11 | Obama's green energy plan
turning the president into jimmy
carter 2.0?
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| 00:09:15 | He gave a press conference
today.
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| 00:09:17 | Not a lot.
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| 00:09:19 | The cover report continues right
after the break.
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| 00:12:21 | >>> Japanese officials are
worried a nuclear power plant
may be melting down.
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| 00:12:26 | Cnbc's kaori anjoyi is live from
tokyo with the latest.
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| 00:12:31 | Can you help us?
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| 00:12:32 | What's going on?
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| 00:12:33 | >> Reporter: Well, larry, on the
surface it seems like another
regular saturday morning here in
central tokyo, but for many
residents across the country and
also here in the capital it is a
morning that they will never
forget.
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| 00:12:47 | The country is used to
earthquakes of many kinds.
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| 00:12:49 | But the magnitude of the quake
that hit 19 hours ago was unlike
anything anyone has ever seen.
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| 00:12:59 | 46 in the
afternoon tokyo time in the
middle of what witnesses called
a beautiful calm day.
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| 00:13:07 | Terrified business workers
scrambled to safety had the
tremors hit.
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| 00:13:16 | Debris and office equipment
falling everywhere.
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| 00:13:19 | In the streets chaos as
residents tried to dodge bricks
and glass crashing to the
ground.
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| 00:13:30 | Japan is no stranger to
earthquakes.
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| 00:13:34 | With reinforced building designs
like nowhere else in the world.
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| 00:13:36 | But this one was a monster,
9,
one of the strongest in the
country's history.
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| 00:13:46 | An american university professor
in tokyo on business told us the
tremors were relentless.
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| 00:13:50 | >> The shaking got worse and
worse.
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| 00:13:52 | I don't know exactly how long it
lasted.
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| 00:13:54 | It seemed like it went on
forever.
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| 00:13:56 | >> Reporter: The country's prime
minister, naoto kan, immediately
activated an emergency response
plan.
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| 00:14:03 | After the shaking came the
warning.
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| 00:14:08 | And the wave.
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| 00:14:09 | A chilling preview of the
disaster to come.
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| 00:14:12 | The target, the city of sendai,
some 200 miles northeast of
tokyo.
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| 00:14:19 | Hundreds are reported missing
there.
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| 00:14:22 | An unbelievable sight, the force
of the swirling water sucking
boats into its center.
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| 00:14:27 | Reports of at least one vessel
missing with 100 people aboard.
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| 00:14:31 | The tsunami hit with incredible
force.
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| 00:14:34 | The sludge sweeping away
everything in its path.
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| 00:14:37 | This wall of water and mud, some
30 feet high, washed across the
low-lying coastal areas.
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| 00:14:44 | Entire towns swept away.
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| 00:14:46 | Thick and brown, strewn with
debris, fast-moving, farmlands
quickly disappeared.
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| 00:14:55 | Entire major roads, bridges, and
homes gone in a matter of
minutes.
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| 00:15:02 | The airport at sendai was
completely destroyed.
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| 00:15:05 | Workers and others scrambled
onto rooftops trying to stay
above the mud.
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| 00:15:09 | A huge fire at an oil refinery
near tokyo continues to burn.
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| 00:15:14 | At least 80 other massive fires
are still burning along the
coastline after the quake cut
off gas lines.
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| 00:15:21 | Causing a series of explosions
leaving homes and businesses
ablaze.
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| 00:15:26 | Power is out throughout parts of
the country.
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| 00:15:27 | And mass transit is down.
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| 00:15:30 | In some places trains derailed.
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| 00:15:33 | Tonight, evacuations are under
way for miles around this
nuclear power plant in
fukushima.
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| 00:15:38 | Officials say the cooling system
failed during the jolt.
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| 00:15:41 | Authorities now say that
radiation levels have surged
outside the plant.
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| 00:15:48 | With daybreak here the search
for dead and injured of this
disaster is just beginning.
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| 00:15:51 | Not to mention the cleanup,
which will likely take months if
not years.
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| 00:15:59 | on saturday
morning here, larry.
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| 00:16:04 | The public broadcaster nhk is
saying that the combined human
toll, including deaths and those
that are missing, have exceeded
1,000.
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| 00:16:12 | And a government spokesman
saying that he is bracing for
the possibility of more than
1,000 deaths.
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| 00:16:20 | Larry?
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| 00:16:21 | >> Kaori, thank you.
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| 00:16:22 | Can we focus in for a moment on
the damage in tokyo as the
aftershock footprints have
apparently spread?
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| 00:16:29 | That looks like a story within a
story.
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| 00:16:31 | What can you tell us about the
tokyo?
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| 00:16:35 | >> Reporter: Well, the
aftershocks are continuing here,
larry.
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| 00:16:38 | I continue to feel my building
shake as little as 30 minutes
ago.
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| 00:16:43 | But as you can see on the
streets here, everything looks
fairly calm.
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| 00:16:46 | The transportation system, the
public subway system is fully
operational.
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| 00:16:50 | The buses have been operating
now throughout the night.
|
| 00:16:54 | Newspapers are being delivered
normally.
|
| 00:16:56 | There's even construction work
that was scheduled on the street
that is operating as normal.
|
| 00:17:01 | But I've heard that there have
been three deaths in tokyo.
|
| 00:17:04 | Many of the structures where i
am, larry, are modern
structures, buildings that have
been built after 1987, when
stricter building codes were
enforced.
|
| 00:17:14 | But there are many outlying
areas outside the center here in
tokyo that are still wooden
structures and still vulnerable
when we have aftershocks of this
kind.
|
| 00:17:23 | Even in the center of tokyo in
the key political district not
far from here, it's about a
15-minute walking district --
distance, there was a landmark
building where I heard the
ceiling has caved in.
|
| 00:17:35 | >> And kaori, can you tell me
about the nuclear threat?
|
| 00:17:39 | There's a lot of talk now about
nuclear plants in trouble,
emitting gases and whatnot.
|
| 00:17:43 | Can you give us a quick pencil
sketch of this nuclear power
story?
|
| 00:17:51 | >> Reporter: Larry, the
government seems to be focusing
its emergency operations on this
nuclear power facility.
|
| 00:17:56 | Let me just give you the
background on this.
|
| 00:18:00 | There are four nuclear power
|
