>> susie: japan in crisis. a massive earthquake rocks the asian nation. that unleashed a powerful tsunami pushing rivers of water through coastal cities and farmland. >> tom: with damages likely in the billions of dollars, we look at whether the crisis will derail japan's economic recovery and the global comeback. you're watching "nightly business report" for friday, march 11. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by:

this program is made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt >> tom: good evening, everyone. a state of emergency in japan tonight. officials are still trying to assess the scope of the damage and casualties from that massive earthquake. susie, the magnitude of the quake 8.9 is the strongest on record in japan. >> susie: tom, it's still not clear what the devastating earthquake will do to japan's fragile economy and the global markets. here in the u.s. despite the

japan's stock index tumbled almost 180 points closing just minutes after the earthquake hit. >> tom: we spoke with our correspondent in tokyo. and began by asking lucy craft what's the initial assessment of damage to businesses and industry in japan. >> companies hit quite hard. sony, hond on, toyota, the major auto makers have a lot of factories up in northeastern japan. there's been a range of damage to these companies. so those factories will be kind of knocked out of operation for various amounts of time. fortunately, the northeastern area of japan is very sparsely populated. this is -- if you compare this to the kobe earthquake of 16 years ago, it accounts for a much smaller amount of gdp. >> reporter: what have you learned about the damage to the trainl systems and infrastructure? >> we haven't heard about the damage to the train system which is a major source of

transportation here. when you talk about energy, though, it's a whole different ball of wax, and there's a lot of different questions hanging over one or two of japan's nuclear power plants. as you know, japan is one of the leading nuclear energy countries in the world. it has no natural resources so it has to depend heavily on producing nuclear power, and when 11 nuclear power plants go out of commission like now, that means that large blocks of the country, particularly the heavily populated eastern side, tokyo area, a lot of people don't have any electricity right now. >> reporter: what other options does japan have for energy? >> it doesn't have that many. particularly with the turbulence nlt mideast. >> and energy, and that department. they really don't have much chance to fall back on. >> tom: lucy, how long before

japan is open for business again? >> i think the authorities will ensure things are back to normal as they can be post haste. >> tom: thanks, lucy. lucy craft from tokyo. we should note the bank of japan had been scheduleed to meet on tuesday, and moved that up to monday to respond to the disaster. >> susie: the aftershocks of the earthquake will be felt throughout japan's economy. but could there also be ripple effects on the global economic recovery? erika miller reports. >> reporter: it's too soon to know the full extent of the damage caused by the earthquake. but it clearly throws a question mark over the japanese economy. i spoke with kenneth cukier a reporter for the "economist" by skype to get his take on the economic impact. >> industrial production will be curtailed because factories in that area will certainly be closed. even if they are open, they might have a problem getting electricity. however, it's not the industrial heartland of the country, so it shouldn't be too dramatic. >> reporter: last year, japan's economy grew in the first three

quarters but contracted the fourth. the country has battled deflation for most of the decade. economist sara johnson points out other serious long-term economic problems. >> the aging of the population is a key concern. the extraordinary government debt burden-- about 200% of g.d.p.-- is another major concern. >> reporter: the last major earthquake in japan was in kobe 16 years ago and caused $100- billion in damage. this one is expected to cost less because it was not in a major industrial region. plus japanese companies were better prepared for this disaster. massive amounts of government spending for rebuilding will likely help the japanese economy short term. >> there will be a short term economic upside if you have billions of dollars in public works contracts flooding into northeast japan to rebuild airports and rebuild highway systems and bridges.

>> reporter: there are, of course, negative long-term consequences because that spending will be financed by debt. japan is the world's third largest economy after the u.s. and china. still, some economists don't expect the quake will have serious economic ripple effects on the u.s. >> i'd expect very little impact on the u.s. economy, frankly. we export about $60 billion a year to japan or about 5% of our total merchandise exports" >> reporter: one of the biggest u.s. exports to japan is the construction equipment. so that sector might actually benefit as japan rebuilds. erika miller, "nightly business report," new york. >> tom: here are the stories in tonight's n.b.r. newswheel: retail sales rose at their

fastest pace in four months in february up 1% to $387 billion. but analysts say rising commodities prices helped boost wisconsin governor scott walker signed into law a bill taking away nearly all collective bargaining rights for the state's public workers. walker said the law will create enough budget savings to rescind layoff notices sent to 1,500 workers. talks between the n.f.l. and its players union collapsed this afternoon. the players are moving to de- certify their union that would allow them to file an anti-trust suit against the league. nfl owners are expected to lock the players out. >> tom: still ahead, president obama takes on soaring gas prices and says he's open to tapping the nation's strategic petroleum reserve. meantime, tonight's market monitor says consumers already are feeling the pinch from higher pump prices. he's jack ablin of harris private bank. >> susie: more now on our top story-- japan. joining us with more analysis about the economic and financial impact: paul christopher chief international strategist at wells fargo advisors.

so even before the earthquake you were concerned about the economy in japan and telling clients to stay away from investing in that area. now you have more concerns. can you give us your analysis on the issues you see economically? >> that's right, susie. we had a fourth quarter decline in the japanese economy. before the earth quake things were not requesting that well. with the earthquake and the export sektdor, and the possibility of rebuilding for a while, we may have another quarter of contraction and slower growth as we recover the rest of the year. >> susie: now japan is an important trading partner of the u.s. you were talking about exports. do we lose japan as a buyer of our experts? >> well, not necessarily. i think they might shift a

bit, again, as your correspondent indicated. one of the largest categorys is construction equipment, and the japanese will certainly be in need of that in coming months. >> susie: let's talk about the investment side. you've been telling clients it's an area to invest. what do you think will happen in the japanese markets on monday when they -- when the investors have a chance to assess. we see that it's kind of in a flat trading range so far this year. that's right. the nikkei has been hurt on the one hand by the weak economy, but has enjoyed benefits from the safe haven investing that's come from the rest of the world as a result of the middle east crisis. japan is a typical safe haven destination. so when we meet again on monday for the market, i think what we're going to havea perhaps another down day as we hear first the bad news about the extent of the damage. but i also suspect that in a couple of days we'll see a bounce. there are quite a few invest

orsz who are lining up looking to get into japan and what they think might be a good or bargain price f. we get a couple of days of rebound, as we had after the kobe earthquake in 1995, i think that might be an opportunity for our clients to ease their exposure even further in japan. >> susie: what do you think that international fund managers are going to be doing? most international funds have some exposure to japan. do you think their reaction will be the same as yours to hold on, or do you think they'll be selling japanese holdings? >> i suspect the fund managers are following their benchmarks, and japan is still a significant portion of most international benchmarks. although it's not as large of a portion as it used to be in 1995. so we might have the fund managers having a bit more freedom to look for an opportunity to exit, and for that opportunity to arise, we really need to have a bounce in the nikkei coming next week or in the coming days for that exit to take place. so some should be exiting at

this point. a very large number of managers have negative long term news just as we do. but i also suspect some of the shorter term high frequency funds might be taking a larger position. again, looking for the bargain basement price. >> susie: next week is a critical week for the markets. thank you, paul, for coming on the program. >> my pleasure. >> susie: we've been speaking with paul christopher, a chief strt gist and wells fargo adviser.

>> tom: today's small gains weren't enough to push the indices into positive territory for the week. the dow industrials fell 1% this week. they were able to close above 12,000 thanks to today's gain. the nasdaq put in the worst performance among the big three falling 2.5% from a week ago. and the s&p 500 shed 1.3% over the past five sessions. leading the market today, energy stocks, especially refiners like tesoro. refiner profit margins improve as oil prices drop from recent highs. tesoro was the best performing energy stock in the s&p 500, jumping 8.5%. here are the past 90 sessions.

shares have been volatile since oil has been hitting two year highs. material and industrial stocks did well today. these three led the dow. 3m and caterpillar up better than 1.5%. alcoa stronger by more than 1%. japanese stocks sank as initial damage estimates continue coming in. this japan index e.t.f. saw volume triple as it fell almost 2%. this is a 30-session chart with the fund dropping to its lowest price of the year. insurance companies with large japanese business saw mixed reactions. a.i.g.'s chartis unit is the biggest foreign property insurer in japan. a.i.g. stock gained more than 2%. aflac's biggest business division is in japan. shares were fractionally lower. and re-insurer flagstone fell more than 12% after

acknowledging a significant amount of catastrophe business in japan. before the quake, the company behind thomas the train engine. rc-2 announced it will be bought by japanese toymaker tomy for $27.90 per share. shares closed well below that purchase price even after an 11% jump. also getting a buyout offer-- 99 cents only stores. shares hit a six and a half year high. a private equity firm is offering $19.09 per share. two new stocks hit the market this week, including the biggest since g.m.'s initial offering last fall. that was hospital chain h.c.a. is up from its initial price of $30. magna-chip semiconductor gained one penny on its first day of trading. and that's tonight's market focus.

>> susie: president obama told a news conference today he is ready to tap the nation's strategic petroleum reserve, but only in the event of a severe disruption in supplies. it's the largest emergency stockpile of oil in the world, holding more than 700 million barrels of crude. the president says, if needed, that oil could be available to refiners in a matter of days. as darren gersh reports, president obama also spoke to americans who are deeply concerned about the economic impact of rising crude prices.

>> the president aimed his oil message at both markets and consumers feeling the sting of rising gas prices. while the u.s. stands ready to tap the strategic petroleum reserve in the event of a supply disruption, mr. obama said the emergency supplies were not needed now. here's the good news. the global community can manage supply disruptions like this. other oil-producing nations have committed to filling any gaps and we will continue to coordinate closely with our international partners to keep all options on the table when it comes to any supply disruptions. here at home, energy analyst guy caruso says, by talking up the strategic petroleum reserve, the president was sending a signal to speculators who think oil prices can only go up. >> what he is saying is no, no, no. if we think the market is tightening, it needs liquidity or more barrels, we're prepared to do it and do it quickly. >> the president is also asking

the justice department to look out for any price gouging. but with few signs of a quick turnaround in crude prices, the president acknowledged what so many consumers are feeling. >> we can talk all we want in the abstract about world oil markets; what they're concerned about is, this is money out of my pocket. >> critics say the obama administration's restrictive policies have stifled oil exploration when the country needs it most. but the president pushed back, pointing out domestic oil production is at a seven-year high. darren gersh, "nightly business report," washington. >> tom: here's what we're watching for next week: our friday market monitor guest is richard steinberg, president, steinberg global asset management. next week: federal reserve policy makers hold a one-day meeting on interest rates. monday, made in the usa. we'll meet one designer trying to bring u.s. made clothes back in fashion. >> susie: an update today from boeing on its long-delayed 787

dreamliner. it's estimated time of arrival is the fall of this year. the 787 has been in development since 2004. it's the first major airliner to be built of carbon composites and offers greater fuel efficiency, flight range and passenger comfort. but a machinists strike, supplier shortages and a parts problem have thrown a monkey wrench into the production schedule. >> tom: meantime, american airlines latest fare hike has lost altitude. the carrier has given up its move to boost prices by ten dollars on domestic round trip tickets. the price increase had been in effect for only two days. american changed its mind after other carriers declined to match the higher fares.

>> tom: one place the japanese earthquake may be felt by american consumers is higher interest rates. and that comes on top of high gasoline prices. jack ablin is tonight's market monitor. he's the chief investment officer with harris private bank. he joins us from chicago. >> tom: welcome to nbr. nice to see you. >> thank you. >> tom: the earthquake damage

and destruction in japan may lead to upward pressure on u.s. interest rates. why? >> we have to keep in mained to we rely on the kindness of strangers to buy our treasury notes and bonlds. and up to now japan has been the largest buyer behind china of treas reaps owning nearly a trillion dollars of our securities. should expenses build up, and japan needs to rebuild, they're likely going to not only sell the current treasury holdings, but potentially prevent them from buying more. >> tom: so that may lead to higher consumer interest rates in the u.s. while we're dealing with 3.50 gas or higher. what's the price that it begins to impact consumers? >> i think we're at it, tom. 3.50 is probably the magic number. we look at the percentage of retail sales actually fueled

by gas purchases, so to speak, and when it gets to be above 10%, it tends to crowd out other spending. in other words, forcing consumers to make tough choices whether to drive less or perhaps cut some of their other discretionary spending like going out to dinner or buying apparel. >> tom: we've seen energy stocks rally, and despite the rally, you still like energy. what parliament of it, though? >> i -- what part of it, though. >> i find the spread between crude oil and natural gas is remarkable. we're in a position to switch over to fueling our cars with natural gas creates thi huge despairity in price. in fact, natural gas is trading on the equivalent baze of a quarter of the price of crude, and creating interesting opportunities, particularly in the oil sands facilities in northern alberta where their output is crude oil, and their input cost in natural gas. >> tom: and you like the

exchange traded fund. ticker eny off the reenlt high, but even at $22 a share it had a nice rally from the fall wha. do you see ahead for it? >> well, as long as the spread between crude oil and natural gas stays wide, which i believe it will -- because again these two commodities are not economic substitutes, then these facilities should be able to make a decent living here as again output crude, input natural gas. >> tom: and you like industrials. you'll playing xli. again it has come off the reenlt highs. give us 20 seconds. >> sure. here as big believers in the emerging growth story, we like the emerging economies and the emerging stock markets are expensive. so one of the best ways to play emerging markets economies is to sell into those markets, and the u.s. industrials are the great way

to play that. >> tom: and you were playing this trend in july. you were looking at s&p global small cap which returns 24%, boeing, one of those multicaps up 15%. general electric, another wob of those multinational almost a 40% return, and microsoft. do you still own these four? >> yeah. we still go with the large industrials and we still like the international small caps, certainly not as cheap as it was, but a decent place to be. >> tom: you own everything we mentioned tonight, right, jack? >> yes. >> the chief investment officer at harrahs private bank. >> susie: that's "nightly business report" for friday, march 11. we want to remind you this is the time of year your public television station seeks your support. >> tom: support that makes programs like "nightly business report" possible. thanks for joining us.. and don't forget to support your public television station. i'm susie gharib. >> tom: goodnight, susie. i'm tom hudson. we'll see all of you again next week.

"nightly business report" is made possible by: this program was made possible this program was made possible by contributions to your pbs station from viewers like you. thank you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org

>> gerald stern was born in pittsburgh, 1925. his parents immigrated from

poland and ukraine. gerald stern, who said, "poetry should be passionate and outrageous and political and most of all revolutionary." >> in all these rotten shops, in all this broken furniture and wrinkled ties and baseball trophies and coffee pots i have never seen a post-war philco with the automatic eye nor heard ravel's "bolero" the way i did in 1945 in that tiny living room on beechwood boulevard, nor danced as i did then, my knives all flashing, my hair all streaming, my mother red with laughter, my father cupping his left hand under his armpit, doing the dance

of old ukraine, the sound of his skin half drum, half fart, the world at last a meadow, the three of us whirling and singing, the three of us screaming and falling, as if we were dying, as if we could never stop--in 1945-- in pittsburgh, beautiful filthy pittsburgh, home of the evil mellons, 5,000 miles away from the other dancing--in poland and germany-- oh god of mercy, oh wild god. ( applause )