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THE LEAD WITH JAKE TAPPER

North Korea Fears; Paris Terror; Stock Market Drops; World Pressures North Korea After H-Bomb Claim; Trump: Citizenship Issue a "Cloud" over Cruz's Head. Aired 4-4:30p ET

Aired January 7, 2016 - 16:00   ET

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


JAKE TAPPER, CNN ANCHOR: If you have money in the stock market, you might want to look away. THE LEAD starts right now.

Also today, a man with a meat cleaver, a fake suicide belt and an ISIS flag killed today by Paris police on the very anniversary of the "Charlie Hebdo" attacks. But does this man actually have ties to the terrorist group?

Inside the most isolated and mysterious country on Earth. CNN is the only American TV network reporting from North Korea after that country rattled the world with claims it tested its first highly destructive hydrogen bomb.

Plus, Hillary Clinton said all victims of sexual assault deserve to be believed. And she also accused Donald Trump of sexism, critics, therefore, saying she has opened the door to past accusers of her husband.

ANNOUNCER: This is CNN breaking news.

TAPPER: Good afternoon, everyone. Welcome to THE LEAD. I'm Jake Tapper.

We're going to begin with some breaking news in our money lead. High anxiety on Wall Street, the Dow off to its worst January since 2008 in the middle of the financial crisis. Stocks tumbled yet again today..

[16:00:05]

As we hear the closing bell, we're joined by CNN global economic analyst Rana Foroohar, but I want to with CNN's Alison Kosik. She's live at the New York Stock Exchange.

Alison, how bad was it today?

ALISON KOSIK, CNN CORRESPONDENT: It was pretty bad today, Jake.

I have been watching the Dow dip in and out of correction territory. That's where you see the Dow off a recent 10 percent high. As the numbers settle, I actually see them settling in correction territory. We will have to see where the numbers settle, but overall it was an ugly day.

But the selling was calm. I know it's strange to hear, especially when you hear what a trader told me earlier today, that he sees the market close to capitulation, which is a fancy Wall Street term for extreme selling, where anybody who's thinking about selling just sells.

Now, the trader tells me that we're not there yet, but the selling could get a lot worse. Now, one thing we're going to keep our eye on tonight is how the trade goes in China, because that's what's really sparking this whole sell-off. And if you see a sell-off in China, you could very well see more selling here in the U.S. and around the world, Jake.

TAPPER: Rana, let's talk about that.

China, is that what is spooking the markets and causing all of this?

RANA FOROOHAR, CNN ANALYST: Yes, absolutely. China is the world's second largest economy. And it's been in a meltdown for some time now. Growth has been slowing for over a year. You have a recession in the manufacturing sector. And you have the currency plummeting.

China is basically in the middle of a debt crisis that was very similar to what the U.S. went through in the run-up to the subprime crisis and financial crisis in 2008. It's interesting that the markets are reacting similarly right now.

TAPPER: And, Alison, oil down to its lowest level in years, and average gas prices, they're about $2 a gallon. That's great for consumers at the pump, but how is that playing into whatever's going on, on the market?

KOSIK: Yes, you see what been happening with oil, Jake, over the past 18 months. It's been like a slow-motion crash in oil.

And, yes, it's great for consumers who get to reap the rewards in their wallets for those gas prices, but you think about what makes up the Dow, what makes up the S&P, these are energy companies that rely on higher oil prices to bring in their revenues. When you see these oil prices crash as much as they have, you see these energy companies and any other companies that are even remotely related to the energy industry getting crushed as well, so everybody from the Exxons to the Halliburtons.

And before I go, I just have to say the Dow has entered correction territory, closing at a level that's a 10 percent off of its recent high, Jake.

TAPPER: All right, Alison.

Rana, our viewers at home are worried about their retirement savings. What do they need to know?

FOROOHAR: Well, the market is going to be rocky, certainly the next few days, weeks and probably for the entire year, because, frankly, there's no one country driving global growth right now.

The U.S. consumer really hasn't come back fully since the financial crisis, even now, when we have been in recovery for several years. The Chinese are not able to pull the global economy along. That had really been the hope, that China would pick up the slack where the U.S. left off. But they have got their own debt crisis brewing right now. So I think the thing to do for those of you who are watching your 401(k)s is hang tight.

It's not the time to sell when markets are down. Keep your money in blue-chip U.S. stocks. It's still a pretty good place to be. But be wary of the emerging markets. They are going to be rocky this year.

TAPPER: All right, Rana Foroohar, and Ali Kosik, thank you so much.

Let's move now to our world lead. Exactly one year after Islamic terrorists attack the office of the French satirical magazine "Charlie Hebdo," Parisians are once again on edge tonight after a man wielding a meat cleaver wearing what appeared to be a suicide belt and shouting God is great in Arabic tried to attack a city police station.

Atika Shubert is live in Paris for us.

Atika, was anybody hurt?

ATIKA SHUBERT, CNN CORRESPONDENT: No one was hurt in this, but you can easily see why Parisians are so on edge. Investigators are still piecing together exactly what happened.

(BEGIN VIDEOTAPE)

SHUBERT (voice-over): Police say the man approached the station brandishing a meat cleaver yelling "Allahu akbar," "God is great."

UNIDENTIFIED FEMALE (through translator): He had wires coming out of his coat and then backed off and came back at the police, but with his hands in the air. They shouted, get back, "Get back, get back," and when he didn't, they shot three times, three shots at once, no hesitation, bam, bam, bam.

SHUBERT: A remote control device checked the body for what appeared to be a suicide vest. Police now say that device was fake. Also found, a rambling note handwritten in Arabic stamped with the black flag of ISIS.

UNIDENTIFIED MALE (through translator): The person who committed this act of aggression and was killed when the police were forced to open fire is in the process of being identified and it's possible that in the coming hours, we will learn more about this person's plan And his motivation.

SHUBERT: This exactly one year after a gunman targeted the "Charlie Hebdo" office and a kosher market, killing 17 and barely three months after attackers with explosives belts and automatic rifles brutally murdered more than 100 people at a concert hall, cafes and a football match in Paris, a grim reminder that Paris remains on the highest terror alert.

(END VIDEOTAPE) [16:05:23]

SHUBERT: Now, just a short while ago, Jake, the justice minister said that in fact the man was known to authorities, but as a petty criminal.

Now, we are hoping to get more details tomorrow morning on who exactly he is.

TAPPER: Atika Shubert, thank you so much.

Joining me now, CNN terrorism analyst Paul Cruickshank who is also in Paris.

Paul, is there any evidence yet known whether this man had any ties to ISIS or any of its affiliates?

PAUL CRUICKSHANK, CNN TERRORISM ANALYST: Short answer, no. This appears to be an ISIS-inspired terrorist attack. He had that ISIS flag printed out, also appears to have pledged allegiance to Abu Bakr al-Baghdadi in a claim he had in Arabic on his person.

The justice minister though has suggested there may have been some mental health issues involved as well. We have obviously seen attempted attacks where you have both radicalization and mental health issues.

But this attack today took place at 11:30 in the morning in Paris, which was the exact time that a year ago the Kouachi brothers launched their killing spree in the offices of "Charlie Hebdo." So, presumably, no coincidence. Presumably, that was thought out. Presumably, he wanted to join the bandwagon of these radicals who are so upset and angered by these cartoons, perhaps because he hoped that he would be rewarded in the afterlife, Jake.

TAPPER: And yet, as you note, no evidence yet that he had any specific ties to any terrorist group, and it doesn't sound like a particularly well-thought out or planned attack. How are police treating it?

CRUICKSHANK: Well, they treated it very seriously, clearly, in the moment today. They were on high alert. This was the anniversary of the "Charlie Hebdo" attack. And ever since those attacks on November 13, they have been on even higher alert in France. ISIS has called on their supporters in the West to launch attacks on police.

We have seen other knife attacks here in France in the last year or so, in Europe more generally. So they weren't going to take any chances when he approached them. A little bit puzzling why he had this fake explosive vest, explosive pouch. Presumably, he had that because he wanted to be absolutely sure that they were going to shoot him dead, so he was going to get potentially what he wanted, so-called martyrdom.

TAPPER: Paul, let's turn to the wider terrorist threat in Europe. I understand you have new reporting on how European ISIS operatives who are currently in Syria may be trying to sneak back into Europe.

CRUICKSHANK: Yes. This comes from a senior European counterterrorism official.

And there's recent intelligence which indicates that Western and European ISIS operatives are faking their own death in Syria and Iraq, so that they can sneak potentially back into Europe to launch attacks here.

There is real concern tonight about this possibility, more and more evidence of this. And you will recall that Abdelhamid Abaaoud, the ringleader here in Paris for those Paris attacks, also faked his own death in late 2014 so he could sneak into Greece to coordinate a gun, bomb plot in Eastern Belgium which was thwarted in January of 2015.

They're on high alert here in Europe, an unprecedented threat they're facing with 6,000 European extremists having traveled to Syria and Iraq, many of them joining ISIS, 1,500 back here, and that's just the ones they know about, Jake.

TAPPER: All right. Paul Cruickshank in Paris, thank you so much.

In other world news, increased skepticism today about North Korea's claims it detonated a hydrogen bomb, but that's not stopped Kim Jong- un from bragging about the success of the test.

Our own Will Ripley is inside North Korea in its capital, Pyongyang -- that story next.

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[16:11:54]

TAPPER: Welcome back to THE LEAD. I'm Jake Tapper.

In our other world lead today, with citizens across the world terrified about the North Korean announcement of a successful hydrogen bomb test, Kim Jong-un and his regime are getting ready to celebrate his birthday and compelling the North Korean public to join them. Kim Jong-un now calling his country a nuclear world power as the hermit kingdom prepares for that birthday.

While many experts say the evidence does not suggest any H-bomb test was successful, the fact that the North Koreans detonated any sort of nuclear device is alarming. The Obama administration is vowing to punish the rogue regime, joining with other nations to impose more and more sanctions.

Reuters is reporting that South Korea has asked the Pentagon to send more strategic weapons to the Korean Peninsula, where 28,000 U.S. troops are already stationed. About six hours from now, in response to the nuclear device, the South Korean government will resume anti- regime propaganda broadcasts into North Korea.

Let's go into North Korea right now to Pyongyang. That's where we find CNN correspondent Will Ripley, the only American TV reporter in that country.

Will, last August, when South Korea started these cross-border broadcasts, North Korea fired shots at the speakers, further heightening tensions on the Korea Peninsula. What's the mood there now?

WILL RIPLEY, CNN CORRESPONDENT: Yes.

North Korea, this regime, of course, tightly controls the propaganda message, so they consider these loudspeaker broadcasts by the South tantamount to an act of war. And if the South Korean government follows through with its threat later today, it could seriously escalate the situation, an already tense situation here, as you know, given that North Korea is celebrating what it says is a successful H- bomb test, a nuclear test, no doubt, in the northern part of the peninsula, so strong that it caused an earthquake in neighboring China.

And unlike previous nuclear tests, where China got a heads-up, this time, they were blindsided just like the rest of the world. And so really it's anyone's guess right now what this regime led by Supreme Leader Kim Jong-un will do next.

TAPPER: Will, the U.S. Congress is preparing to vote to impose more sanctions on North Korea. Is there any response in Pyongyang to that threat?

RIPLEY: I met with several North Korean officials last night and specifically asked about the likelihood of more sanctions against this country.

And the response was, they said they expect more sanctions as a result of their nuclear test. They say this country has lived under crippling economic sanctions for so many years that any additional sanctions will really have a minimal impact. In their exact words, they said, "We will just tighten our belts a bit further and continue to develop our nuclear program."

They have been aggressively investing in their weapons technology, both missile program and nuclear program. And you can see by the mostly dark Pyongyang skyline behind me, they do that and they sacrifice other things, such as generating electricity or adequately feeding some members of this country of 24 million people.

TAPPER: Will, that the U.S. would assail Kim Jong-un, of course, that's no surprise, but, as you noted earlier, even Chinese officials are distressed and now publicly condemning North Korea. Any response from North Korean officials to this criticism from its basically, it's only ally?

RIPLEY: When we were having our meeting last night, one thing I asked about were Donald Trump's comments on CNN saying that essentially China has total control over North Korea. And they scoffed at that suggestion and said, nobody has control over North Korea aside from the Workers Party led by Kim Jong-un.

And so, a defiant tone even in some closed door meetings. And it's really indicative of the mindset of this country.

They compared North Korea to a hunter holding up a loaded rifle. And they compared the rest of the world as a pack of wolves waiting to strike. And they said they have their finger on the trigger and will pull their finger if provoked, Jake.

TAPPER: And, Will, you're the only American TV reporter in North Korea broadcasting from North Korea live right now. In a few hours, you're going to be touring a science lab in North Korea. What's that about?

RIPLEY: Yes. This was a previously scheduled tour. This is a science lab that was personally designed by the supreme leader. He's put a tremendous focus on developing science and technology. There's a whole new neighborhood here in Pyongyang of brand new housing complexes and office buildings devoted exclusively to scientists.

And so, this facility is where we're going to talk to, we're told, later today some scientists with close knowledge of this purported H- bomb. They're going to explain the science behind it and why North Korea says they have proof. And in fact, this was a hydrogen bomb that was detonated despite many claims internationally questioning and disputing that.

TAPPER: Will, before you go, beyond the pride that North Korean officials are obviously expressing and the triumph of this detonation of what they claim was an H-bomb, have they explained to you why they are pursuing nuclear weapons? Have they threatened anyone? Have they told you what they intend to do with these weapons?

RIPLEY: Well, it's interesting because -- and I've been talking to scientists who are, you know, closely aligned with the weapons programs here in North Korea. This is my sixth trip in the last year and a half or so, and we've talked extensively about the nuclear program, about the missile program. And then, of course, the purportedly peaceful space program because there are also -- there are several satellites waiting to be launched at any moment.

So, don't be surprised if in the coming months we see a rocket launch carrying a satellite, which the North Koreans say is a peaceful endeavor unrelated to potentially carrying miniaturized nuclear warhead.

The North Koreans have said they have no desire to drop nuclear bombs on the United States or other countries, but yet their propaganda rhetoric says otherwise. Essentially the tone here is that they will strike if they feel their sovereignty is threatened, which is again why we need to watch this situation on the demilitarized zone with the propaganda loud speakers so closely because that is an extremely provocative act, considered provocative here in Pyongyang by the government on Kim Jong-un's birthday, no less.

So, how he will respond, how the regime will respond -- it's something that certainly must be concerning. However, one might assume that the South Koreans have thought this out and they feel that at least for now, that's the appropriate response. We'll have to see what North Korea does in response.

TAPPER: All right. Will Ripley reporting live from Pyongyang, thank you so much. Appreciate it.

Joining me now State Department spokesman John Kirby.

Thanks so much for joining me, John.

First, yesterday, the White House challenged North Korea's claim saying that initial analyses showing North Korea had not successfully detonated an H-bomb. What do we know now based on the latest intelligence?

JOHN KIRBY, STATE DEPARTMENT SPOKESMAN: Nothing's changed about that assessment, Jake, the analysis is ongoing and so we don't have it concluded. It could take some time for us to actually complete it. But we've seen no evidence thus far in that analysis to lead us to conclude that their claims are accurate.

TAPPER: Right. But as former Ambassador Chris Hill pointed out yesterday, even if it wasn't a successful detonation, it was still a test and they are that much closer to detonating an H-bomb having learned whatever they learned if it was unsuccessful. We know the House is expected to vote on additional sanctions against North Korea.

Does the Obama administration support this step?

KIRBY: We do support working with Congress to look at options, obviously. We are going to work hard through the international community, through the U.N. We asked for special emergency meeting yesterday of the U.N. to consider international responses and sanctions against the North. And we're certainly not going to take off the table any unilateral opportunities to hold them to account.

[16:20:02] So, what I can tell you is we look forward to working with members of Congress.

TAPPER: Beyond possible sanctions, beyond U.N. condemnation, is there an Obama administration strategy to stop North Korea from developing nuclear weapons and missiles?

KIRBY: I think, look, there's been a concerted effort and strategy here to deal with the real problem of North Korea. And it's on many fronts. We believe that diplomatically, the best forum to discuss this and to move forward is six-party talks. We are willing and perfectly willing to return to those talks, the North is not. They've done nothing and certainly this test on the 6th even proves they're not willing to return to the table to have talks with the international community to get to a verifiable and irreversible denuclearization of the peninsula. That's on the diplomatic side.

The military side you know well, Jake, that the Asia Pacific rebalance in terms of military capabilities is very, very real. Sixty percent of our U.S. Navy is now in the Pacific. We moved two Aegis Missile Defense Destroyers to Japan, as well as a sophisticated radar system. We now have air defense system on Guam. Over the last several years, there's been much on the military front

to beef up our deterrence and our defense capabilities specifically to get after the Northeast Asia threat in North Korea.

TAPPER: And, John, let me ask you, there's a report from "Reuters" that a South Korean official says that South Korea has officially asked the Pentagon to send more strategic weapons specifically not to Japan, not to Guam, but to the Korean peninsula. Is that on the table?

KIRBY: Well, I've just been made aware of that specific request. I don't know whether it's actually accurate whether the South Koreans have asked that. What I can say is we have a very significant and serious alliance commitment with the South on the peninsula. We have as you know nearly 30,000 troops there on the peninsula, as well as other operational and strategic assets in the region.

We're fully prepared to meet our security commitments under that alliance and nothing's going to change about that. But I'm not aware of any new requests.

TAPPER: John Kirby, thank you so much.

KIRBY: My pleasure, Jake.

TAPPER: In our politics lead, Ted Cruz might be done talking about his Canadian birth, but Donald Trump definitely is not. And one other major Republican is also saying, hey, there's a legitimate question about Cruz's eligibility to be president.

Plus, a woman from Bill Clinton's past is back and tweeting an ugly accusation against the former president. That story next.

(COMMERCIAL BREAK)

[16:25:57] TAPPER: Welcome back to THE LEAD. I'm Jake Tapper.

Our politics lead now: People have been ling up since 11:00 this morning trying to be one of the first 1,411 people to make it inside the Flynn Center for Performing Arts in Vermont. That's a capacity, 1,411. All of them want their chance to see the biggest, brashest act touring the country, no, not Megadeth, Republican front-runner Donald Trump.

CNN is shadowing every campaign bus, following all the candidates.

Let's start with CNN senior Washington correspondent Jeff Zeleny. He's at the epicenter of Trump-mania today, Burlington, Vermont.

Jeff, the Trump campaign says they got requests for 20,000 tickets for the event. Let's go inside and show what it looks like inside the theater. It's kind of small.

What are police going to do with all the thousands of people who show up and can't get in there? JEFF ZELENY, CNN SENIOR WASHINGTON CORRESPONDENT: Well, Jake, it is

small by Trump standards, but most candidates in this 2016 campaign would be thrilled with an audience of 1,411 people, as you said.

But, frankly, it's not the police's problem or their issue. We talked to the police chief earlier today. They're not thrilled with the Trump campaign. They believe they kind of sprung this on them at the last minute.

That 20,000 number though may be a touch off. One campaign aide tells me it's about 6,000 people actually who are confirmed with tickets. But still, 6,000 minus 1,400 still leaves a lot of people standing outside in this Burlington, Vermont, cold.

(BEGIN VIDEOTAPE)

ZELENY (voice-over): Donald Trump isn't letting go, fanning the flames about Ted Cruz's citizenship.

TRUMP: He's got this cloud over his head, I don't think it's going to be possible for him to do very well.

ZELENY: Today, Trump sent a message to his rivals saying, Ted, free legal advice on how to preempt the Dems on citizen issue, never mind Democrats, it's Republicans raising questions, all over whether Cruz could face a legal challenge. He was born in Canada, but his mother was a U.S. citizen.

Trump told Wolf Blitzer that Cruz's birthplace raises constitutional concerns.

DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: There's this doubt. People have doubt. You know, I want to win this thing fair and square. I don't want to win on this point.

ZELENY: John McCain, who is tangled with Cruz in the Senate, once calling him a whacko bird, added legitimacy to Trump's worry. McCain himself was born outside the United States, was quick to distance his case from Cruz's, as McCain was born on a U.S. military base.

SEN. JOHN MCCAIN (R), ARIZONA: I think there is a question. I'm not a constitutional scholar on that, but I think it's worth looking into.

ZELENY: Cruz, who has emerged as one of Trump's biggest threats, said the talk was nonsense.

SEN. TED CRUZ (R-TX), PRESIDENTIAL CANDIDATE: The legal issue is straightforward. The son of a U.S. citizen born abroad is a natural born citizen.

ZELENY: He told CNN's Dana Bash he was done addressing it.

CRUZ: I'm not going to engage in this and the reason is simple. There are far too many serious issues facing this country.

ZELENY: One more sign the fault lines in the Republican primary are becoming clear. Just watch who's feuding with whom, it's not only Trump versus Cruz, but Chris Christie versus Marco Rubio.

Christie said Rubio's too weak to be the party's nominee.

GOV. CHRIS CHRISTIE (R-NJ), PRESIDENTIAL CANDIDATE: That's the kind of person we want to put on the stage against Hillary Clinton? I don't think so. She'll pat him on the head and cut his heart out.

ZELENY: But Trump is firing the most pointed attacks, with one eye on Cruz, he's not letting up on Clinton. Trump rarely mentions Bernie Sanders, but that could change tonight as he holds a rally in Sanders' hometown of Burlington, Vermont.

(END VIDEOTAPE)

ZELENY: And, Jake, you may be wondering why Donald Trump is in Vermont at all. Not exactly a Republican heavy state, but Vermont is one of those states that votes on March 1st -- Super Tuesday here. So, Donald Trump is already looking ahead past the first four contests of Iowa, New Hampshire, South Carolina and Nevada, to states like Vermont.

I can tell you when you talk to voters outside, I think this crowd tonight is going to be a mix of Bernie Sanders supporters and Donald Trump supporters. Some were standing in line side by side here.

So, I'm not sure we're going to hear much about Ted Cruz, but I expect we'll hear some about Bernie Sanders and the Democrats who, of course, Donald Trump loves to talk about and pick on, Jake.

TAPPER: All right. Jeff Zeleny in Burlington, Vermont, thanks.

Also in our politics lead, Bill Clinton's past is reemerging on the campaign trail as an accuser from decades ago comes forward once again claiming Bill Clinton raped her. That story next.

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