MARIA-00
Bowie Dies at Age 69; Mexican Drug lord El Chapo Arrested after Interview
with Sean Penn; Chinese Stocks Fall Again Despite Surge in Yuan; Playboy
Mansion Up for Sale for $200 Million; Oil Settles Lower for a Sixth
Straight Session; Cruz Leads Trump in Iowa by 4 Points; Hillary Clinton
Continues Her Strong Lead Nationally Over Bernie Sanders - Part 4>
Ortagus, Phil Flynn, Rand Paul>
Market; Playboy Mansion; Preet Bharara; Oil; GOP; Donald Trump; Hillary
Clinton; Bernie Sanders >
MORGAN ORTAGUS, CO-CHAIR, MAVERICK PAC: Chris, this is Morgan. How does Rubio really break out of the pack? I mean, right now we're seeing in New Hampshire, Donald Trump is leading by a huge margin, by 30-percent, and then we have about 45-percent of the republican electorate tied between Rubio, Bush, Kasich and Christie. How does he really break out of the establishment pack because I'm not see an early state that he is going to win yet?
CHOCOLA: Well, you know, I think that people have underestimated Marco Rubio as a candidate really throughout his career. Just talk to people who spent some time with him and have been to one of his town halls or been to one of his events. They come away as supporters of Marco Rubio. So, you know, the Rubio campaign, I think, has been smart. They've approached this in methodical way. They have confidence in the candidate's ability to connect with voters. I think they're on track to do that. I think the media makes a big deal out of polls in the early states but this is a long effort and there are a lot elections to be had and I think he will be just fine.
MCDOWELL: Chris, good to see you. Thanks so much for being here, Chris Chocola. Be well.
CHOCOLA: Thank you.
MCDOWELL: And tune in to Lou Dobbs tonight at 7:00 p.m. Eastern time. Lou is going to announce the lineups for the next Republican Presidential Debate. You don't want to miss that, 7:00 p.m. The debate is Thursday right here on the Fox Business Network. The earlier debate moderated by FBN anchors Trish Regan and Sandra Smith. The later one moderated by Maria Bartiromo and Neil Cavuto. You want to catch every minute of it, Thursday night, 6:00 p.m., 9:00 p.m. coming to you live, from Charleston. This, Anthony Scaramucci, was all over it. He put his phone under my nose to make sure we saw this.
Shire is a major deal in the biotechnology industry. Shire making it official, buying Baxalta $32 billion in cash and stock. You wanted a quick comment, Anthony?
SCARAMUCCI: Yes, no, this is just, again, a sign of continued merger activity which does put a floor on the market. As these companies have over $2 trillion in cash on the balance sheet, Dagen, you'll see more deals coming in 2016.
MCDOWELL: I'm curious to see -
SCARAMUCCI: Or the trillion last year.
MCDOWELL: Right, and I'm curious to see- we talked about it last week, what Apple does with that the $200 billion cash hoard. Does Apple commit and make a giant acquisition? But certainly in the biotechnology industry, with such incredible innovations in that space and life-saving drugs coming out of those companies, you're likely to see a lot more activity in biotech.
Coming up, we're going to talk about Hollywood royalty stepping on the red carpet last night for the 73rd annual Golden Globe Awards. The best and the most cringe worthy moments. It was uncomfortable what Ricky Gervais was doing, but also hilarious. keep it here.
(COMMERCIAL BREAK)
MCDOWELL: Health officials in Utah investigating an outbreak of Hepatitis- C. Cheryl Casone has that story and other news you need to know right now. Cheryl?
CHERYL CASONE, FBN CORRESPONDENT: That's right, Dagen. (HEADLINES)
MCDOWELL: Switching gears, the 2016 North American International Auto Show kicking off today in Detroit, Michigan. Jeff Flock is standing by with the CEO and President, somebody I know I Pretty know pretty well, Ford Motor Company's Chief, Mark Fields. Hey, Jeff.
(BEGIN VIDEO CLIP)
JEFF FLOCK, FBN CORRESPONDENT: We thought we'd kick off our coverage right at the top. We've got Mark Fields. You know, Mark, we used to have fun walking around, looking at cars. Now, you have a big job. We've got to ask you the hard questions.
MARK FIELDS, PRESIDENT & CEO, FORD MOTOR COMPANY: Oh, well, it's the car business. We've got to have fun too, Jeff, come on.
FLOCK: I've got to ask you about this economy that you are in teeth of right now. You had a great year last year. The auto industry had a great year. There is worry out there, worry about China. You sell a lot of cars in China. Is it as slow as the fear is?
FIELDS: Well we actually project moderate growth this year China, in the car business. Part of that is the government reduced the purchase tax at the end of last year. We think that will support sales. Clearly, you know, China is going through a little volatility as it transitions from an investment - an industry-led economy to a consumer-led one. So we think moderate growth there. Here in the U.S., continued strong and moderate growth in Europe.
FLOCK: Are you worried about China dragging down the world economy, and consequently U.S. where you sell a lot of cars.
FIELDS: Well we're always on the lookout and keeping a lookout for any downturns, but what we see here in the U.S. economy is, you look at the employment report last week, wage growth is still good, labor growth is still good, low interest rates, low energy costs. Those things help fuel and support consumer spending.
FLOCK: Your competitor, GM, announcing today, actually, that it's going to take a vehicle made in China, sell it in the U.S. Any plans for Ford to make vehicles there, sell them in the U.S.?
FIELDS: Well our strategy right now is to produce where we sell. Obviously we've opened up a number of plants in China.
FLOCK: Ten in how many years?
FIELDS: We have a total of 10. We opened up 10 plants in the last three years overall, through Asia-Pacific; but we sold over a million units in China and right now we're producing for the domestic market there.
FLOCK: So no plans short term?
FIELDS: Not right now, short term, to do that.
FLOCK: Donald Trump, your friend and fellow New Yorker, talking about 35- percent tariff on vehicles made outside the U.S. that Ford brings into the U.S. Why is he picking on Ford?
FIELDS: Well, listen, it's politics season. It's presidential politics season and sometimes it's really unfortunate when the facts get clouded by politics. But, you know, facts are stubborn things and here in the U.S. we invested over $10 billion since 2011 into our U.S. plants. We've created over 25,000 jobs. In our new UAW Contract we committed another $8 billion. So when you look at that, we are doing our part to drive economic development here in the U.S., and we're very, very proud as a company.
FLOCK: You sent him an email to tell him all those things?
FIELDS: Well we just want to set the facts straight. What the candidates do with that is up to them, but we just want to make sure we just deal with the facts.
FLOCK: Love the facts. Well, you know, I miss those days when we talked around climbing in cars.
FIELDS: Can't we do a walk around? New Fusion, we're showing the new Fusion here; the new F-150 Raptor; our Ford Pass. We're showing a whole bunch of important stuff here.
FLOCK: You're too important to walk around with, we've got to stand in one place. Mark Fields, always appreciate the time.
FIELDS: Thank you.
FLOCK: Thank you, sir. There you go, Dagen?
MCDOWELL: The Ford Raptor, go shoot some of that. I want to check it out. Thank you, Jeff; and thanks to Ford CEO Mark Fields, coming to us from the Detroit Auto Show.
We're keeping an eye on stocks today coming off the worst starting week to a year ever. 54-point gain, 60-point gain for the Dow. The new news that Shire buying Baxalta, a multi-billion dollar deal in the biotech industry. And, tomorrow, don't miss Maria's exclusive sit down with JPMorgan Chairman & CEO Jamie Dimon. We have so much more to take care of, here, on Fox Business this morning, stay with us.
(COMMERCIAL BREAK)
MCDOWELL: Back to some market moving news that broke just a short while ago: The biotech company Shire making it official. buying Baxalta for $32 billion. There is a little bit of cash in there, cash and stock. it is an Ireland-based company, buying a U.S. company. Kevin your thoughts on this deal?
KELLY: My thoughts on this is getting back to the space, look at the health care space. I think this lends further credence to the market that the health care sector is still in its infancy of the bull market. we're seeing tons of deals happen, whether it's Allergan-Pfizer. This was really a defensive deal for Shire because they were actually approached in 2014 by Abvee (ps), for a $54 billion merger. So you're going to start to a see a lot of M&A happen throughout the year, whether it's defensive or companies trying to do some synergistic acquisitions in order to drive revenue growth, because we are in a slow-growth environment.
MCDOWELL: I want to bring in Anthony Scaramucci in this because such an incredible growth area; terrific drug innovations for treatments, say, in cancer; an FDA that has been very favorable to these companies but you have drug-makers, story in the "Wall Street Journal" today, still raising prices, Pfizer, Amgen, Allergan, Horizon and many others raising prices on branded drugs anywhere from nine to ten-percent. That's going to be a huge issue on the campaign trail and could it hurt these stocks?
SCARAMUCCI: Well, it already has. So we look at Valiant and some of the other stocks last year, Dagen. They got pounded by this. So for us, you know, on the hedge fund side we actually got this wrong. We had very big health care exposure. If you look where the beta was in our portfolio, we had misjudged it because of this sort of political debacle. So, if Bernie Sanders or Secretary Clinton become the president of the United States, these guys are going to get pounded by them. I don't think it's any chance that they will be able to survive these price rises.
MCDOWELL: So would you be long a lot of these companies? So you say the pricing headline risk is greater than the upside from acquisitions?
SCARAMUCCI: I think it's even. I think right now we would be in a neutral position on these companies because of the policy risk going forward makes the valuations uncertain to us.
MCDOWELL: We are going to talk more about this. Thank you, Anthony. Thank you, Kevin. Next hour I'm joined by republican presidential contender and Kentucky Senator Rand Paul. Stay right there.
(COMMERCIAL BREAK)
MCDOWELL: Good morning. I'm Dagen McDowell; Maria Bartiromo is on assignment. It is Monday, January 11th. With me this morning this hour, Skybridge Capital's, Anthony Scaramucci; Maverick PAC National Co-Chair, Morgan Ortagus; Recon Capital's Kevin Kelly; and, joining the desk, Fox News Contributor and my friend, Meghan McCain. Let's check on these wild markets. (HEADLINES)
END
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(Show: MORNINGS WITH MARIA) (Date: January 11, 2016) (Time: 06:00:00) (Tran: 011101cb.231) (Type: Show) (Head: China's Shanghai Composite Falling More Than 5 Percent Overnight; Mexico Begins Extradition Process to U.S. for Joquin "El Chapo" Guzman; Investors Bracing for Larger Swings in the Coming Weeks; Looming Layoffs At Yahoo; Golden Globes 2016; Futures Point To Higher Open ) (Sect: News; International )
(Byline: Dagen McDowell; Cheryl Casone )
(Guest: Anthony Scaramucci; Kevin Kelly; Morgan Ortagus; Adam Johnson, Phil Flynn)
(Spec: China; Asia; Stock Markets; Economy; Business; Mexico; Crime; Police; Justice; Wall Street; Investment; Finance)
DAGEN MCDOWELL, FBN ANCHOR: (HEADLINES)
Go back to our breaking news: China's Shanghai Composite falling more than five-percent overnight, extending declines from the brutal first week of trading in 2016. Futures pointing to modest gains this morning, but investors continue to worry about the global market picture and slow growth out of China. Our next guest say it's not just China but central banks are also to blame for the recent markets swings. Joining us now is Bold Global Media Markets Editor Adam Johnson, welcome all. Adam, what are the central banks going to do about it?
ADAM JOHNSON, EDITOR, BOLD GLOBAL MEDIA MARKETS: Well if they've been true to what they've done in the past that is going to be effective back and fill. In other words, one and done as far as the Fed is concerned. They already upped rates once. If there were seven different central banks - and Anthony, feel free to weigh in here - seven central bank since in 2013, have upped rates and have since lowered rates because we have a global problem.
ANTHONY SCARAMUCCI, FOUNDER, SKYBRIDGE CAPITAL: Well, okay; so let's talk about that. The globe problem is deflation and slow growth. So if you're Janet Yellen and you're looking at these job numbers, what are you recommending that she does; one and done for all of '16?
JOHNSON: One and done. The problem is, the World Bank just slower the global growth rate; you probably saw that last Thursday, to 2.9-percent. We're actually drawing slower than that in the country, 2.1-percent. Now you can argue that it was low rates for too long, which exactly what we heard out of the former Dallas Fed president, Richard Fischer, last week. That's what inflated markets, like China, as these large institutional investors had to go, farther afield, to markets to try to find returns. The problem is they overstayed their welcome and that's a concern.
SCARAMUCCI: So one of my issues though is that an economy like ours needs abut 300 basis points of stimulus every seven or so years to keep it on a rough growth trajectory. The Federal Reserve, right now, has no bullets in the chamber. They've got a 25 basis point potential cut and then, possibly, quantitative easing.
MCDOWELL: Quantitative, bond buying. Right.
SCARAMUCCI: Exactly. So those are their only bullets. Why not get --
JOHNSON: Because we waited too long, in other words, right? If they had done this a year and a half ago, then they could have upped rates to 3/4 of a point, a point, and have more cushion, but they waited too long.
MCDOWELL: But - whenever - we always turn to what is the Central Banks going to do about this, right? I mean, it's what my question to you -- what if, Kevin, they are now powerless? What if they have nothing left and this is just the payback, the inevitable payback, and you can't stop it? Is anybody talking about that because maybe it's a downturn in asset classes across the board for years to come? Why couldn't that happen? You get unprecedented stimulus.
KEVIN KELLY, CIO, RECON CAPITAL: I think you're seeing that actually happen right now. We're getting in to that story, and that's getting back to the deflationary environment that Anthony had brought up; because one of the reasons why is that they pumped all of the money into the system and look where we are. We're in tepid slow growth. I mean, the IMF is predicting less than 2-percent global growth for GDP. China is slowing down. Look at the monetary stimulus that they've been throwing at the market.
SCARAMUCCI: It's not the Fed's fought, or Central Banks fought that we're in slow growth. So, why are we in slow growth?
KELLY: You know, I think one of the reasons why we're in slow growth is because we have had unproductive assets and we've actually seen what easy money has done. It's thrown it into risky assets, especially in China because we are talking about that right now. Look at the ghost city's that they have; look at the unproductive factories that they have. They built out this excess capacity, and what did that do to global growth? It made companies go out and countries go out and build these other factories to feed the China beast.
MCDOWELL: I want to bring in Morgan, though, because with the come down in some of these asset prices like oil, for example, you have a much riskier world, in terms of the action that you're seeing from, say, just Vladimir Putin, but you have Saudi Arabia and Iran. They are desperate for oil revenue. So you have -- that actually causes rising tensions around the world, in these oil-producing countries.
MORGAN ORTAGUS, CO-CHAIR, MAVERICK PAC: Absolutely, Dagen; that's a great point. I think we're headed for a pretty tumultuous year. I mean, you all are the experts on China; but I think one of the things that I really thought over the weekend was the lack of the communication and sort of lack of a PR strategy, so to speak, on behalf of the government to ease - to make people understand exactly what's going on with the currency and what they're going to do from a policy perspective. So in my mind I see -
MCDOWELL: Because they don't know.
ORTAGUS: I think a government PR strategy as much as anything.
JOHNSON: Think of what they're trying to do in China. They're trying to orchestrate some major transitions in their economy, from and export driven economy to an internal consumption driven economy; that's hard to do. They're trying to go from Cronyism to rule of law; that's hard to do. They're also trying to go from a central planned economy to a free market economy.
Imagine if you were trying to do just one of those things. In China they're trying to do all three. That's where the problem --
ORTAGUS: While dramatically growing military spending at the same time.
JOHNSON: Correct, still way below what ours is.
ORTAGUS: Yes.
JOHNSON: Whether you want to look at gross numbers or per capita. But the fact is, they are trying to make incredible transitions and, Kevin, you talk about the ghost cities. I was actually in the ghost cities about four years ago. There are roughly twenty of them. I have to tell you guys, it is the trippiest thing you have ever seen, to be walking down an intersection where there are five lanes going this way, five lanes going that way, and then five and five. In other words, there are 20 lanes coming together, one blinking light and you're the only person there. Buildings that are empty. You know, they built up all these buildings because they thought they were going to bring all the manufacturers over to China, manufacture and then send back to the U.S. It never happened; and that's the problem.
MCDOWELL: Go ahead.
SCARAMUCCI: Just to say, i think there's a global macro force going on that we have to address. You have 2.5 billion, possibly three billion people now wanting a Western-consumption based capitalist experience, and that is driving an excess of goods and services. Daniel Alford wrote a book called "The Age of Oversupply" two years ago. He predicted this outcome. He said that the deflation, the global deflation will slow down growth. The only way that this is going to get disrupted is if the major governments and the major central banks step back now and let these markets find a fair market value.
MCDOWELL: That's really what I'm -
SCARAMUCCI: That's the only way that we're going to clear out these excesses.
JOHNSON: Correct.
MCDOWELL: That's really what I'm talking about. Do you believe for a second that any of the Central Banks will do that? Because certainly we're in a situation where, in the United States, where at least they're trying to tighten a little bit.
SCARAMUCCI: Well Stan Fischer is trying to do that.
MCDOWELL: Right.
SCARAMUCCI: Dr. Bernanke, on his book tour, we got a chance to interview him at "Wall Street Week." In the green room, says it's now time to do that. Will Mario Draghi do that? Probably -
JOHNSON: Time to let markets clear?
SCARAMUCCI: You have to let the markets clear now. We've got to get back, in his mind, to 1.5 to 2-percent.
JOHNSON: Which, by the way, given the fact that we're trading at 17.5 times earnings on the S&P 500, with earnings shrinking 4-percent, means we are going lower; right? We've got to let markets clear.
KELLY: This is the important point, right: we have to get off the central banks and monetary policies. We have to look at what's actually happening and hampering the growth. We've got too much government, too much corruption. We've got too much debt going through the system. The government needs to address that, that's from Brazil to China to everywhere else.
MCDOWELL: I want to ask you one thing, though. This is an election year, obviously, but the next president, there's going to be pressure on that individual to do something about Janet Yellen and to do something, at least exert more control over the central bank, don't you think? And that's dangerous.
SCARAMUCCI: So it's going to require super-good leadership because two weeks before Ronald Reagan was inaugurated there's a very famous story, where he met with Paul Volcker at the Mayflower Hotel, and he said to the guy, it's okay. Keep the rates where we are. We need the break the back of inflation. Volcker turned to him and said, This is probably going to cost you the mid-term elections next year. Reagan said, I'm good with it. He was with James Baker at the time. He left, probably took a 3:00 in the afternoon nap. And he struggled for the first two years of presidency but got the economy going back in the right direction.
JOHNSON: Morning in America.
SCARAMUCCI: So it's going to require a tremendous amount of will, grit and leadership. Somebody is going to have to sit there and say, hey, let this thing trade to its fair market value now. There's enough jobs in the economy to sustain that.
KELLY: Can we support that with a tax holiday? Think about all money that's overseas. If we give a holiday for the corporations to bring that back, and also peg that to jobs, that could spur -
SCARAMUCCI: I'm glad Dagen has tissues, I'm going to start crying here. We had the opportunity to do that. Governor Romney had the plan in place. He would have equalized those taxes, repatriated probably $1.5 trillion of income, brought the real unemployment rate, not the fictitious one that we are talking about -
KELLY: Yes.
SCARAMUCCI: -- but the real unemployment rate, which is still over ten- percent, into the mid-seven's, and you would have gotten the economy growing already.
[CROSS TALK]
SCARAMUCCI: Your earnings numbers that you're talking about, they' be on the rise right now.
JOHNSON: -- four-percent shrinkage, which, by the way, starts today, ALCOA after the close. Earnings down four-percent. It's tough to buy the market at 17.5 --
MCDOWELL: I'm going to leave it at that, but I'll, say as Ronald Reagan say after the '87 crash, Markets go up, markets go down. That's what he was willing to commit to.
Thank you Adam; it was good to see you. Adam Johnson.
Coming up, Republican Frontrunner Donald Trump facing a test in Iowa; what a loss to Ted Cruz could mean for Mr. Trump. And, don't forget the next Republican Presidential Debate will be right here on the Fox Business Network this Thursday night. The event will be moderated by Maria Bartiromo and Neil Cavuto. Mr. Scaramucci is flying down, as am I, to Charleston, South Carolina.
SCARAMUCCI: My arms are going to get tired.
MCDOWELL: You're flying on my back, brother; my arms are longer. We'll be right back everybody.
[LAUGHTER]
(COMMERCIAL BREAK)
MCDOWELL: Mexican officials beginning the extradition process to the United States to the infamous drug lord Joaquin "El Chapo" Guzman. Cheryl Casone has details on how he got caught.
CHERYL CASONE, FBN CORRESPONDENT: (HEADLINES)
MCDOWELL: Who's not playing? Come on. Turning back to the markets, after the worst ever start for a year for the Dow and S&P 500, investors bracing for larger swings in the coming weeks. Kevin, does this -- you talk about going to cashiers. You would sell into a downturn?
KELLY: Well, I mean, that sounds about right. I mean, listen, no one is forcing anybody to be in this market. If you're nervous, and don't have a grip on portfolio, and you don't have a view time horizon of where you want to be, whether it's, you know, oil, you're having problems with, your emerging market exposure. I mean, listen, if you're a millennial like me and you can just sit on emerging market for 20 years, you don't really need to -
MCDOWELL: Stop bragging. Stop bragging about young.
KELLY: The worst you can do, if you go to cash right now, is be down six- percent for the year. Who know, the markets may be down eight-percent; they may be up two-percent. But you can wait until there's an uptake and you get more conviction. One of the reasons why is earnings, right? We have to see what's going to happen when earnings start coming up.
MCDOWELL: What if -- go ahead.
SCARAMUCCI: You're great on TV, and you don't need a media coach, but when you're with non-Millennials you probably shouldn't mention that.
ORTAGUS: Wait a minute, I'm still a millennial. Speak for yourself.
SCARAMUCCI: There's at least one non-Millennial on this set; I won't say who.
MCDOWELL: I'm almost in Baby-Boomer territory, so - that's really said. I want to point out an article in "The Wall Street Journal" that pensions and mutual funds have pulled $200 billion out of the markets since 2014, over the last year. Pensions are running the highest cash levels they have in about 12 years.
KELLY: You know why? Because they can't lose that cash. they have liabilities they have to meet --
MCDOWELL: Speaking of Baby Boomers.
KELLY: -- and they're underfunded, right. So, if you have to make - if you have a target of making seven-percent a year and you're underfunded by 75-percent, or by 25-percent, you're only 75-percent funded, what are you going to do? They're so scared of their principal risk, they can't lose capital
MCDOWELL: So new money, you say cash but you say what?
SCARAMUCCI: I like the fact that there's a lot of cash because I think as the market breaks down, assuming that the market will break down and trade into 15/16 multiple, Dagen, then that cash is going to get released back into the market. So for me I'm cautiously optimistic that will end the year okay. we may go down another 5 to 8-percent from here between from now and the end of 2016, just because you are going to get mean reversion if the Fed really does start to raise rates, which I predict that they will at least one or two more times in calendar year 2016.
MCDOWELL: Market's factoring in that the Fed doesn't move until, at the earliest, April.
SCARAMUCCI: I think if the Fed doesn't move, I think the market trades off more because they're saying, wow, there's a bigger problem in the overall economy, in the overall earnings profile than we originally expected.
KELLY: (Inaudible) know that we don't know.
SCARAMUCCI: They have to raise rates.
MCDOWELL: Let's take a quick break. Up next, Donald Trump issuing a direct threat to potential presidential challenger, Hillary Clinton. What the two frontrunners are already sparring about. Tune in for Maria's exclusive interview with JPMorgan Chase's CEO Jamie Dimon, right here, tomorrow morning. We'll be right back.
