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EARLY START

Northeast Begins Digging Out; ISIS Releases New Hostage Video; Deadly Hotel Attack; Obama Back Home in Washington

Aired January 28, 2015 - 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: The Northeast digging out this morning, hit by an historic monster blizzard. Some places, some places buried with more than three feet of snow, and the storm turning deadly, and it's not over yet.

Team coverage of the biggest damage and what's yet to come.

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

JOHN BERMAN, CNN ANCHOR: I'm John Berman. Great to see you. Thirty minutes past the hour right now.

Breaking overnight: the Northeast just now getting the chance to begin the dig out from the huge and deadly blizzard. Record-breaking snowfall, close to three feet in some places from Long Island in New York up to Maine. Catastrophic flooding in Massachusetts where a wind-blown tidal surge breached the sea wall in Marshfield and forced evacuations in the coastal town of Scituate.

But overnight, the worst of the blizzard of 2015 finally did pass. In Massachusetts, the statewide travel ban ended at midnight, but man, oh, man, is there work to do. No place more than in Scituate heading down the south shore.

I want to bring in our Nick Valencia.

Nick, what's it like there right now besides cold, so obviously as we look at you?

NICK VALENCIA, CNN NATIONAL REPORTER: Yes, people in this community hope that the worst is over, but there still is a coastal flood advisory in effect until 7:00 a.m. and that was the big issue here, John, in the last 24 hours. We saw major flooding on this very street that I'm standing on. Just less than 24 hours ago, this road was nearly impassable. That's because the Atlantic Ocean is just behind me here and it breached the sea wall.

So, the snow coming through here not only caused a problem, but it was also the wind and also that flooding. This, of course, is a coastal community. So, they're used to things like this, but residents you speak to here say that was really exceptional, what they witnessed throughout the course of the last 24 hours. Much of the National Guard had to come in here and rescue a few families.

But you see here the ice. This road is still completely iced over. That's because of the water. And it seems to have stopped snowing for now, but you get that breeze coming in off of the ocean and still has some sort of snowflakes drifting in the air.

But as you mentioned, though, it appears that the worst has passed for now. Scituate, though, really got hard hit in this severe weather system that moved through Massachusetts, John.

BERMAN: It was amazing to see that ocean in those streets right there in that beautiful little town.

VALENCIA: Oh, yes.

BERMAN: All right. Nick Valencia for us in Scituate, thanks so much.

ROMANS: So that blizzard proved deadly and dangerous in New York state, leading to the deaths of two people. It didn't stop some surfers from risking it all for a thrill on some major -- these pictures --

BERMAN: I can't get over this.

ROMANS: That must be so cold. The thrill must be so great to battle that cold.

BERMAN: You know, we have the list there, it says, "Long Island bears the brunt in New York City." What I would put down there is, "what are you thinking?"

ROMANS: Surfers, man. These guys riding the waves on the tip of Long Island, it bore the brunt of the blizzard's impact in New York state.

But New York City dodged the worst of it, despite the dire forecasts.

Our Ana Cabrera faced the storm for us. She's out on Long Island, and she has the latest.

(BEGIN VIDEOTAPE)

ANA CABRERA, CNN CORRESPONDENT: John and Christine, after more than 24 hours of pounding waves, relentless snowfall, whipping winds, the folks here on Long Island and especially here in Montauk are breathing a very big sigh of relief. It seems the worst is over.

But the misery is still upon us, with more than two feet of snow blanketing much of this region. In fact, the latest snow reports we got from just down the road in Southampton was 28.8 inches, with wind gusts continuing overnight in the 20s and 30-mile-per-hour range still causing drifting snow and dangerous driving conditions, not to mention very cold temperatures, dangerously cold temperatures that claimed at least one life, an 83-year-old man with dementia who was found frozen outside his home. We also have learned of a 17-year-old who died while sledding after hitting something and suffering a serious injury. So certainly a devastating storm for some families, but a lot of

people here telling us it could have been much worse. We watched the coastal flooding. And even though the beach was battered with 16-foot waves, we do know that much of the beach was saved. No homes reporting major damage from flooding or anything like that, and even the power remained on for the majority of the residents here on Long Island -- John and Christine.

(END VIDEOTAPE)

BERMAN: Ana Cabrera out on Long Island.

Maine was sort of the tail end of this storm, just ending there. Though the high winds are still a problem, knocking out power to thousands of homes and businesses and made driving obviously complicated.

National correspondent George Howell in Portland, Maine, with the very latest -- George.

(BEGIN VIDEOTAPE)

GEORGE HOWELL, CNN NATIONAL CORRESPONDENT: John, Christine, I want to show you here really the tail end of this storm where they got most of the snowfall. Portland, Maine, look around here. And you see these snow berms. I mean, in some cases, I mean, these are really up to my waist. They got some 16 to 18 inches of snowfall here in Portland.

It's not unusual for this city to get that much snow, but again, in one storm system, it is a lot for them to deal with. We've seen snowplows going up and down the street doing their best to clear the roads.

And then, Jordan, can we look down the street there? I want you to see where the snowplow is.

You see also the blowing snow? We've seen a lot of that. The winds have been very intense out here to the point where it could lead to whiteout conditions for a lot of the people, you know, if they were to venture out onto the roadways.

Again, most people are staying home. They were advised to stay off the streets, while crews did the work that they need to do. And now, it's just a matter of waiting for all of the snow, guys, to melt and go away. That could take several weeks for business to get back to normal here in Portland -- John, Christine.

(END VIDEOTAPE)

ROMANS: All right. Thanks for that, George.

Large swaths of Connecticut paralyzed by this blizzard. The storm dumped -- look at this -- up to 30 inches of snow in some parts of Connecticut. Look at the scene in New London. That was just one of the hardest-hit places. You can see people digging out using shovels and snowblowers. Plows were out in full force trying to clear these roads.

BERMAN: My back hurts just looking at it.

More than two feet of snow on the ground in Long Island. The streets littered with abandoned cars. Residents really just deciding to spare themselves a night in the cold. It wasn't just the cars left behind in the storm's wake.

Look at this. A revolutionary war replica ship was knocked on its side. I think that's the John Paul Jones. It broke the mast and opened a hole in the hull. That's too bad.

The travel ban in Rhode Island, it was lifted overnight. State officials are still urging people to stay home, if possible, today since the conditions could still prove dangerous. You know what? They want the roads clear so they can get the work done.

ROMANS: Yes, yes.

Some parts of the Northeast hit hard by the blizzard are facing even more snow now. That's right. More snow coming.

Let's bring in meteorologist Ivan Cabrera, who's been tracking what still to come.

Hi there. Good morning.

IVAN CABRERA, AMS METEOROLOGIST: I'll tell you, looking at some of those cars, I would just give up. We've got the Uber thing now. Just call the Uber and let them get you to work or walk.

BERMAN: Complete capitulation.

CABRERA: Oh, my goodness. Back-breaking stuff is going to take so long. But if you don't dig out quickly, the problem is the car does get encased as that snow becomes ice and then you won't see it till the spring. The storm is over.

By the way, Nick Valencia was reporting, 14-degree, wind chill minus one. So, if his face looked a little uncomfortable, that is why. That's going to continue throughout the day today. So, everybody heading out putting on their boots and trying to, well, not slip and fall because the snow is everywhere. They're going to be doing that.

Take a look some of these records. Boston, 24.4. That is a January record. So, since we've been keeping them, it has never snowed this much on any given January day. That's a big deal. That's a big storm.

And then for Worcester, we can top that. It has never snowed this much in Worcester. Probably before we were keeping records, but not since, 34.5 inches. Incredible. And then taking the three feet, Hudson, Auburn and Lunenburg, we said it would be a life-threatening storm and unfortunately, we lost a couple lives.

So, this is why you want to take these storms seriously. Yes, New York didn't get the snow, but everybody else did. Look at the winds as well. These are hurricane force. Nantucket, Mt. Washington observatory there at 78, surprised that's not a little higher. But you get the idea.

Now, as far as what's coming next after this accumulation that is going to be on the ground for quite some time, we do have this system coming in. It is not going to be a blizzard. It is not going to be a blockbuster storm, but it is going to be bringing some snow as we head through the day on Thursday. And then we're in an active pattern, John and Christine. So I think that by the weekend, we'll have another system moving in with additional snow which is what everybody, of course, wants to hear or at least in New York.

BERMAN: Now the problem --

CABRERA: Because you want more snow, apparently.

BERMAN: There's nowhere to put it. There hasn't been that much snow this year. Now they're in a situation where there's nowhere left to plow to, and that's going to be a problem.

Ivan, thanks so much.

ROMANS: The ski slopes are happy. East Coast ski mountains are happy.

The blizzard is going to be a costly one. Estimates put the cost near $500 million. That includes lost spending as people stayed home, and that includes the cost of the snow cleanup. For example, cleaning up snow in New York cost an estimated $1 million per inch. So that adds up. A huge chunk of that came from Monday when stores were shut down and traffic was banned.

But the good news, experts say this isn't even close to the economic damage during last year's polar vortex.

BERMAN: Don't call it a polar vortex.

ROMANS: We don't call it a polar vortex.

That cost up to $50 million because it lasted much longer area and affected a larger area. It actually hurt GDP, last year's weather. This seems a sort of one-off. Although Ivan is right, we get more snow, and if the snow actually lasts until May, that's another story altogether.

BERMAN: About 20 minutes until the hour right now. Some terror news to tell you about developing overnight. An American among those killed when a gunman stormed a luxury hotel in Libya.

This morning, we have new information on who was behind this attack. We're live with the new details next.

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ROMANS: Time may be running out for two hostages being held by ISIS. A new video released by the extremists has a message reportedly from Japanese hostage Kenji Goto. He says he'll be killed within 24 hours along with a captured Jordanian fighter pilot if a female terrorist on death row in Jordan is not released.

I want to bring in Will Ripley live from Tokyo with the latest.

Good morning, Will.

WILL RIPLEY, CNN INTERNATIONAL CORRESPONDENT: Christine, there's now less than five hours before that apparent ISIS deadline threatening to kill not just the Japanese journalist Kenji Goto but that Jordanian pilot, Muath al-Kasasbeh.

So, you can imagine what a difficult time it is for those two families right now. And we know that urgent and frantic discussions have been happening around the clock. Japan has a special envoy on the ground in Jordan. There are also communications that are happening from government headquarters here in Tokyo directly from the prime minister, instructing the Japanese officials that are on the ground in the Middle East to do whatever they can to ensure the safe release of Kenji Goto.

That new ISIS video demanding a prisoner swap for Sajida al-Rishawi who we've told you about her ties to a 2005 attack that left about 60 people dead, a very difficult situation right now for the governments of Japan and Jordan as they try to comply with a terror group that has continued to set the rules and then unpredictably break them throughout this whole negotiation. And now ISIS insisting that they will kill two innocent men in a matter of hours if this terrorist being held by Jordan is not allowed to walk free.

While we know that there are a lot of discussions taking place, a lot of reports out there about what may or may not be happening, the only confirmed information we have right now is that the safety of these two men is still very much in peril. And there has been no official confirmation of what could happen in the coming hours to resolve this situation, Christine. So, it's something that's unfolding as we speak. And the coming hours are going to be critical.

ROMANS: All right. Will Ripley for us this morning, thank you, Will.

BERMAN: About quarter to the hour right now.

We have breaking news this morning. The Libyan branch of ISIS, the Libyan branch of ISIS is now claiming responsibility for an attack on a luxury hotel in Tripoli that killed at least 10 people.

Among those killed, an American security contractor, a French citizen and five Libyans. The attack on the Corinthia Hotel began with a car bomb. It was followed by gunmen storming the building. Libya's interior minister says the siege is now over and that the gunmen are dead.

For the latest, let's bring in our senior international correspondent Nima Elbagir.

Nima, what is the latest?

NIMA ELBAGIR, CNN SENIOR INTERNATIONAL CORRESPONDENT: Well, John, as you said, Libyan authorities are now in control of the scene at that hotel, and they're beginning to put together the pieces of how such a complex and coordinated attack could happen in the heart of the capital. We've, of course, seen waves of violence against foreigners and diplomatic missions in other parts of the country, of course, most notably in Benghazi.

But here in the capital, that level of coordination, this is unprecedented. U.S. officials tell CNN that the Libyans will not be alone in this investigation. The FBI will be part of the investigation given, of course, the death of a U.S. citizen in addition to that French citizen and three others.

This really is a wake-up call for the international community. You have U.N.-backed peace talks going on in Geneva right now, but a key faction is not involved in that, and you have essentially two rival governments splitting the country in two -- one in Tripoli and then the internationally recognized government in the east. There is the reality of Libya's descent into what many are starting to call a failed state, John.

BERMAN: Nima Elbagir for us, covering the story. Again, the emergence of ISIS now in Libya as well. Thanks, Nima.

ROMANS: New this morning, President Obama back at the White House, greeted with threats of a new lawsuit by Republicans. Welcome home, Mr. President. Details next.

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BERMAN: President Obama is back at the White House this morning after visits to India and Saudi Arabia. This afternoon, he will speak at a farewell ceremony for outgoing Defense Secretary Chuck Hagel.

The White House also announced a reversal on the president's decision to essentially end the popular 529 college savings account. It didn't end them, but it took away a lot of the tax savings from them. After facing an uproar from parents and lawmakers on both sides of the aisle, the president is now calling on Congress to just keep the 529 provision in the upcoming budget.

ROMANS: New details this morning about the government worker who accidentally flew a drone onto the White House grounds. The unidentified employee works for the National Geospatial Intelligence Agency. That sounds smart. And CNN has learned he told the Secret Service he was drinking before launching the drone. Don't drink and drone, folks, especially at the White House.

The president says the incident highlights the need to regulate all unmanned aerial vehicles.

(BEGIN VIDEO CLIP)

BARACK OBAMA, PRESIDENT OF THE UNITED STATES: I've actually asked the FAA and a number of agencies to examine how are we managing this new technology, because the drone that landed on the White House you buy at RadioShack. You know that there are companies like Amazon that are talking about using small drones to deliver packages.

(END VIDEO CLIP)

ROMANS: Prosecutors still have not ruled out the possibility of filing charges against the employee who crash landed his drone on the White House lawn. Sources tell CNN he'll likely face disciplinary action at work. But really, the proliferation of these devices, John, makes it so interesting. How are we going to regulate who uses them, where, when and what happens if something goes wrong.

BERMAN: Serious questions. Although I would like an encore performance of your best joke of the morning.

ROMANS: Friends don't let friends drink and drone.

BERMAN: Very good.

Environmentalists don't like it, but the president plans to open up East Coast waters to oil and gas drilling. This is a move that could provide an economic boost from Virginia to Georgia. The administration also plans to open up new portions of the Gulf of Mexico for drilling, but he is standing firm on his call for a drilling ban in the Arctic Ocean, a decision that has angered some Alaskan officials.

ROMANS: House Speaker John Boehner reportedly threatening a lawsuit against the president, trying to overturn his executive action on immigration. Republican officials say Boehner preparing a resolution that could authorize different forms of legal action against the Obama administration. Last year house Republicans filed suit against the president over the affordable care act.

A major slide for U.S. stocks. We were all talking about the blizzard yesterday, but it was a dreary, gray day on Wall Street.

BERMAN: There was something else falling besides snow.

ROMANS: Yes, lousy, lousy guidance from American companies. Some of the biggest companies in the world saying it's not going to be the year they thought it was. We're going to get an early start on your money next.

BERMAN: I just made a money joke.

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ROMANS: Let's get an early start on your money this morning. What in the world happened to the stock market yesterday? Ouch! U.S. stock futures mostly higher right now, but look at that. The Dow yesterday closed down 291 points.

Big companies like Microsoft and Caterpillar warned they will not make as much money as they thought this year. The strong dollar great for American travelers to Europe, bad for companies selling there, sliding oil prices really hurting some companies, too.

And then there is Apple. Apple just posted the most profitable quarter in corporate history, in history. Profit climbed 37 percent in the quarter. But here's the big number: $18 billion. In three months, that company made $18 billion.

Record iPhone sales. How many? Seventy-four and a half million iPhones in the last three months. Huge gains in China and other markets. The CEO, Tim Cook, said Apple sold, Berman, 30,000 iPhones every hour. There's not a gadget in the world that has ever sold like that. Cars, TVs, anything you can think of -- iPhones, unbelievable, iPads, by the way, falling sales there. The stock up 7 percent before the bell.

So, you probably have Apple shares in your 401(k). You will get a little boost there.

Another stock climbing right now, Yahoo. The CEO Marissa Mayer will spin off Yahoo's stake in the Chinese online retailer Alibaba. That deal is tax free. It will bring in big bucks for Yahoo shareholders.

Yahoo has 384 million shares of Alibaba. That's a 15 percent stake. Those shares worth nearly $50 billion will be traded to a new company called SpinCo, and distributed to Yahoo investors. So, if you own Yahoo, Watch that one today as well.

BERMAN: EARLY START continues right now.