MARIA-01
Snowstorm; In December, China Impored 9.3 Percent More Oil Than a Year Ago;
Yellen's Next Policy Move; Apple Stock Under Pressure; Europe Under
Pressure; Zika Virus Likely to Spread; Clinton Versus Sanders; Countdown To
Iowa; Goya Foods' Health Push - Part 1>
Ortagus; Nomiki Konst >
Zika Virus>
MARIA BARTIROMO, FBN HOST: (HEADLINES) First, though, our top story: markets this morning getting slammed; closing at the lowest levels in 13 months in Shanghai as investors are pulling cash out of the world's second largest economy. U.S. Futures following suit, indications are for a lower opening on Wall Street, as you can see. Trading begins in about 3.5 hours, and the early indication show these markets will take a cue from the international markets in Asia.
Other big market stories, more than 130 names in the S&P 500 out with earnings this week alone, big week in terms of fourth-quarter profitability, certainly; but Apple, on its first-quarter, out after the close tonight, the company expected to report slowest sale growth ever for the iPhone. That has many people expecting an impact on the stock.
Dagen McDowell, what are you expecting to see this earning season?
MCDOWELL: There is - well, earnings, in terms of, we're expecting to see earnings decline, the second quarter in a row, four quarters in a row of declining revenue growth, which is very troubling. We haven't seen that since the Recession in 2009.
As for Apple and it's low, Apple has lost about a quarter of a trillion dollars in market value. It's in full-bear market territory in the last months, losing 20-percent of its value. I say you've got think that a lot of the bad news has been factored in. We know that iPhone sales growth has slowing. We know that the watch has been an utter disaster, to be kind.
BARTIROMO: It sure has.
MCDOWELL: But if you look at this company, you to factor in -- the valuation on it looking in the next 12 months is below that of the NASDAQ, it's below of its historical valuation, it has $200 billion in cash on its balance sheet.
BARTIROMO: I think I agree with you that a lot being priced in. I mean, if you weren't expected earnings to take a hit from this global slowdown, you've been under a rock. I mean, we've been talking about how weak things are around the world. You have to expect to hit corporate earnings.
MCDOWELL: Ab -- most definitely, particularly -- the troubling thing and I've pointed it out before, you talk about the multinational companies, we know that, but you look at how hard hit these small companies have been hit here in the United States.
BARTIROMO: Yes, the Russel.
MCDOWELL: -- with no international exposure. They've been even harder hit than your big companies and they still look expensive.
BARTIROMO: That's a good point. Absolutely. Morgan?
MORGAN ORTAGUS, CO-FOUNDER, MAVERICK PAC: To Dagen's point about the iPhone and the sales, I think it's still 66-percent of Apple's revenue is still from the iPhones. So I'm looking at what kind of guidance they're going to give today. The Apple Watch is a failure. So what is Apple going to do to get beyond this iPhone malaise, so to speak. People are holding on - the customer is holding on to their iPhone longer, they're finding reasons not to upgrade. The company is going to have to diversify beyond just the iPhone sales.
BARTIROMO: And for a little while it was all about China. Okay, so you don't have the kind of growth or innovation that you may have expected in the U.S., there's that 1.3 billion people who are sort of starting from scratch, in terms of just not necessarily wanting a smartphone but just phone service and then comes the slowdown.
ORTAGUS: And analysts are expecting 75 million in iPhones sales for this last quarter, what they're wanting Apple to report today. So I'll be curious to see if they can hit that number.
BARTIROMO: We will see. It's big enough to actually have a real impact on markets after the close.
MCDOWELL: I'll tie this to the campaign trail and Donald Trump, maybe it's not a good idea to talk down the company and talk about what he is going to tell Tim Cook to do when the stocks in a slide.
BARTIROMO: Yes.
MCDOWELL: I think you have to be very careful, even if you're running for the highest office in the land, of talking down one of America's great success stories, particularly when it's looking a little weak. BARTIROMO: In fact, on to the campaign trail, the possibility of former New York City Mayor, Michael Bloomberg jumping to 2016 presidential race causing concern for some campaign. I spoke with the GOP frontrunner, Donald Trump, and got his thoughts on the possible shakeup to the field.
(BEGIN VIDEO CLIP)
DONALD TRUMP, R-NY, REPUBLICAN PRESIDENTIAL CANDIDATE: I would love to have him in. I think I would beat him. I think I'd beat him easily. Bloomberg never covers me well. I tell you, of everybody that covers me, Bloomberg is the worst. That tells me he probably wants to get into the race, you want to know the truth, and I've always suspected this because I get the worst, most unfair stories out of Bloomberg, so -- and I've let him know about it. I hope he gets into the race.
(END VIDEO CLIPO)
BARTIROMO: Joining us now Democratic Strategist and Accountability Project Founder Nomiki Konst; good to see you. Thank you so much for joining us.
NOMIKI KONST, DEMOCRATIC STRATEGIST & ACCOUNTABILITY PROJECT FOUNDER: Nice to see you.
BARTIROMO: Nomiki, what's your take on Donald Trump at this point.
[laughter]
KONST: I love that he just linked that back to Bloomberg giving him poor coverage. You know, this is fascinating to me. This entire election is obviously outside the norm, but Bloomberg's idea here is obviously he sees an opening because he doesn't want to see Bernie Sanders or Donald Trump running for president. But it signals to me, and I think a lot of other political operatives, is that there's a breakdown of the hierarchy of the Democratic Party and Republican Party. I don't know necessarily if there's room for him to steal any of Hillary's thunder and take on Bernie Sanders. I don't see the electoral mass there. I think it's actually going to aid Bernie Sanders, like, this is all about income and equality and who is more notorious for income and equality than the man who's brought in oligarch's and priced everybody out of New York. I think that's the message that Bernie Sanders is going to run on.
BARTIROMO: And that's what he's been running on, basically.
KONST: Right.
BARTIROMO: Saying, look, America is not ready for a billionaire oligarch.
ORTAGUS: Yesterday David Axelrod came out, I was quite surprised, and said that he thinks the Democratic Party needs to start taking Donald Trump more seriously.
KONST: Absolutely.
ORTAGUS: David Axelrod clearly a very accomplished democrat strategist. Do you agree with him?
KONST: Absolutely. I think that, you know, if there's one thing we've learned from Donald Trump it's that he's a master at message. He knows the demographic so well, and he knows how to speak to those demographics. So, if does win the general - make it to general election and wins the nomination on the republican side, I think Democrats should be fearful because he will be able to solidify the white-working class vote. He's been able to communicate to them in a different way than Bernie Sanders has, although they're both fighting for -- Bernie Sanders has Republican support. Donald Trump has some democratic support. They're fighting for independents.
MCDOWELL: That republican's backing Bernie Sanders?
KONST: It's crazy to me.
MCDOWELL: What are you talking about?
KONST: It's true. It's true, there's republican support on Bernie Sanders side. There's actually a guy that came out and endorsed him.
[Cross Talk]
MCDOWELL: -- LSD demos - people who are on, like, hallucinogens?
KONST: Populists, people who feel that they're willing to surrender issues like gun control --
BARTIROMO: On the republican side?
KONST: On the republican side, because they feel as if the billionaire class -- they don't see Donald Trump solving income-inequality as a member of the billionaire class. There's a demographic, it's not a large demographic, but it's there.
ORTAGUS: I haven't met him yet.
KONST: Neither have I.
BARTIROMO: Brand new Fox poll spelling trouble for Hillary Clinton. Let's talk about that for a second. Who watched the Town Hall last night?
MCDOWELL: I watched parts of it.
ORTAGUS: I was hearing parts of it.
BARTIROMO: What did you think? What did you think?
MCDOWELL: I think that if you believe that the policies of the eight years, or almost eight years, have gotten us into a really great place, in terms of our economy, then you would vote for these. I don't know how you would look at the economy today and think that raising taxes and spending and basically reregulating vast parts of the economy is going to get us somewhere down the road. If you want more of the same have at it.
BARTIROMO: I feel like it's a completely different conversation, frankly. I mean, when you look at the conversation on the democratic side and you look at the conversation on the republican side, republicans are talking about national security; they're talking about jobs and the economy. It's a completely different conversation on the democratic side. You don't hear a lot of national security or foreign policy, but you're hearing about nuances in health care; nuances, in terms of regulation, adding to it, raising taxes. It's interesting.
ORTAGUS: On your show, you weren't here, but Dagen was hosting on December 22nd, I saw this coming and I said, Bernie Sanders is really nipping at her heels and I think he's going to win Iowa and maybe New Hampshire.
BARTIROMO: Look at this lead; that is narrowing so much.
MCDOWELL: I think the choice for voters is going to be, who do you think spends your money the best, you or the government? If you want more government, you have - the Obama Administration has reregulated, ripped up healthcare, the financial services industry, the electricity business, the coal business, destroyed the coal business, the internet, I could go on but --
KONST: Let's be fair here: Bernie Sanders is speaking to go millennials now. Hopefully he'll be able to mobilize them in Iowa to win, if that's his plan; but millennials trust the government more than they trust business. And when you poll them -
BARTIROMO: Good luck with that.
MCDOWELL: They don't know any better because they're young.
KONST: I mean, they're under 36, they're not that young.
BARTIROMO: Nomiki, good stuff. Thank you so much; Nomiki Konst joining us.
Stay with us for my one-on-one interview with Donald Trump coming up in the 7:00 a.m. hour, on the East Coast. We're going to bring that interview coming up. Then, not only did blizzard stocks fare well in last weekend's epic storm, cable boxes were working overtime as well. People stayed inside, binged on television, instead of going outside. We've got a look at the numbers, coming up. Back in a moment.
(COMMERCIAL BREAK)
BARTIROMO: Welcome back; investigators say the deadly December shooting in San Bernardino could have been even worse. Cheryl Casone with the details on that and the other headlines right now; good morning, Cheryl.
CHERYL CASONE, FBN CORRESPONDENT: Good morning, Maria; good morning, guys. (HEADLINES) Comcast, that's the nation's largest TV and internet provider, saying at one time during the snowstorm this is on Saturday, a record 1.3 million customers were using their Xfinity On-Demand platform to watch TV and movies, all at the same time. If you're curious, the most watched shows were "Shades of Blue", "Game of Thrones" and "Teen Titans, Go!"; a couple of those I actually don't know. Anyway, breaking-record weekend.
BARTIROMO: I could totally see that.
ORTAGUS: I watched "Straight Out of Compton." Great movie.
MCDOWELL: You had to pay for that too.
CASONE: The Martian did really well.
MCDOWELL: I want to do the free stuff.
CASONE: Did you watch "The Martian"? Has anybody seen the "Martian"? It's really good, because that's what I did on Saturday. I watched "The Martian", but that was one of the top-streaming movies and also "The Intern," with Robert De Niro.
BARTIROMO: I watched that. I watched that.
CASONE: That looked good. You must have watched that on a plane, because you're never home.
BARTIROMO: I did.
[laughter]
BARTIROMO: I watched it on a plane, you're absolutely right.
MCDOWELL: I watched all of "Peeky Blinders" on Netflix, which is a Netflix show. I watched probably 24 hours of television, not including the football games, which is a state to my how loser a life I lead.
BARTIROMO: That is what you're supposed to do during a snowstorm.
[Laughter]
ORTAGUS: I watched "Real Housewives of Beverly Hills."
BARTIROMO: Okay.
[Cross Talk]
BARTIROMO: I'll take a short break. We have oil prices fighting to go stay above $30 this morning after falling below that mark this morning. We are going to take you to Chicago and the CME Group, get a check on markets, next; back in a minute.
(COMMERCIAL BREAK)
BARTIROMO: Welcome back. (Inaudible) oil prices this morning, holding above $30 a barrel after breaking below that overnight. Phil Flynn is at the CME Group this morning telling us what's driving trading this morning. Good morning, Phil.
PHIL FLYNN, FBN CORRESPONDENT: Hey, good morning, Maria. Really it's a tale of two cities, or two China's anyway. Obviously overnight we saw a lot of pressure when the Chinese stock market followed the U.S. stock markets down lower yesterday. We got a report from Chinese Custom Agency that actually officially says that in December China imported 9.3-percent more oil than they did a year ago at this time, about 322 million tons, which is near a record high. So even though we are seeing sign that is the Chinese economy is slowing, their demand for oil continues to be strong, at least right now.
Now, the other thing that's driving prices up today, we had comment from Iraq's Oil Minister overnight said that Saudi Arabia and Russia are starting to be at least open of the idea of talking about production cut. That's a pretty good idea because right now there's a record bet on 25 crude pits for February. So, somebody has to give you some good news; back to you.
BARTIROMO: Yes, we are waiting for that, Phil. We are looking at this - one of the top stories in "The Journal" this morning, Dagen, "Chinese Slowdown Crimping Oil Outlook"
MCDOWELL: Right.
BARTIROMO: ExxonMobil, and they're basically saying, look, it's not as strong as people thought.
MCDOWELL: Right, there was another for - this is a demand forecast out of China. Exxon has cut its forecast for annual energy demand growth in that country by almost a tenth, to 2.2-percent, so it's still growing a year, but this is over the next ten years. Phil has talked about this, that these long-term forecasts have less meaning on the day-to-day moves or week-to-week moves in oil, but this is another bullet point that demand is slowing. If you have a supply glut and then demand is slowing, that means lower oil for longer.
ORTAGUS: I'm surprised this morning, the Kuwaiti OPEC Governor came out and said they are - they're still not willing to cut production; that they think it has to be done in coordination -- maybe it's the Saudis and Russians, but I was surprised this morning that the Kuwaiti OPEC Governor said that again.
BARTIROMO: Not good news, Phil. This is the top story in "The Journal," in terms of Exxon and lowering its expectations in China, as Dagen has pointed, and then Morgan is talking about even more supply.
FLYNN: You know, if you look at the history of these long-term forecasts, even ExxonMobil, they've been pretty wrong. You know, it's pretty hard to predict what prices are going to be six months from now, and demand than ten years from now. If we would have seen what they were predicting ten years ago, they were predicting a totally different story. We would be running out of oil, supplies were going to be tight. We had the opposite story.
There's no doubt right now that the bears are coming out of the wood work right now. As I mentioned before, there's more people betting right now that crude is going to fall below $25 by February 17th than ever before in history. There's a record-amount of people that are bearish right now. Maybe that's justified by where we are. I have to believe that some of this is priced in. If China surprises to the upside on demand, some of these more bearish forecasts are going to look, you know, not as good in a couple of months.
BARTIROMO: I mean, it's all really where your expectations are, I guess. We had Jang Jen on, who is the leading real estate developer in Shanghai and Beijing. She came on the show from Davos. She basically said, yes, things have slowed down but we are not talking about a massive collapse there. So if you don't expect that things have slowed down in China, you haven't been listening; but is it as bad as some of the markets are indicating?
MCDOWELL: Right; I'll point to something in this Exxon forecast because Exxon played down this change in its figures but it is equal to over a decade, just the revision amounts equal to more than Brazil's current annual oil consumption.
BARTIROMO: Wow.
MCDOWELL: Just that change is equal to all of the oil that a single nation like Brazil consumes.
ORTAGUS: And there's still people, like former Treasury Secretary Paulsen, who's arguing that this is just growing pains for China; that this is what a not yet mature economy and stock market is going to go through.
BARTIROMO: That's true as well. Phil, thank you. D.C. is still shut down, meanwhile, from the blizzard, but the Fed is open for business. What can we expect from the first meeting of 2016 from Janet Yellen and company? The FOMC meeting, two-day meeting, begins today. We'll bring you the anticipation; back in a minute.
(COMMERCIAL BREAK)
BARTIROMO: Good Tuesday morning; welcome back. I'm Maria Bartiromo; it is Tuesday, January 26th. With me this morning, Fox Business Network's Dagen McDowell and Maverick PAC's Morgan Ortagus. First though your top stories at 6:30 a.m. on the East Coast: (HEADLINES)
GREG BRACA, TD BANK HEAD OF CORPORATE AND : But I think the expectation is clearly there will be a pause in January and perhaps you will hear some language tomorrow that this will be a data fed decision as we get later in the year.
And perhaps a little bit of a reversal of the language around three four rate hikes for the balance of 16 and we are beginning to think that maybe one or two.
BARTIROMO: That is pretty appropriate, right? I mean, when you look at the backdrop of the economy from you sit in terms of lending, how does the economy feel to you?
BRACA: You know, it's funny. Notwithstanding the choppy couple of weeks in the market, it actually does feel quite strong. The last couple of weeks has been a decisively risk off environment across all asset classes whether it is high yield commodities, equities.
But clearly we do think there is a fairly strong fundamental underpinning whether it is right here, real estate markets here in New York or the M&A market.
You know, we're coming off of a very, very strong 15 around M&A, investment in cap-ex, and we do think that strong underpinning of jobs, GDP, will continue once we get past this choppy period.
DAGEN MCDOWELL, FOX BUSINESS: But is this a payback for the excessive risk-taking that the Federal Reserve and other central banks encourage with this unprecedented monetary policy since 2008.
That you are essentially encouraging people, you are deeply indebted so the fed and all the central bank said you should borrow money at cheap rates and then take incredible risks with it. And there is going to be paid back and once it starts, can you even stop it?
BRACA: Yes, if we thought this recovery and this way out globally was going to be completely without some chopped to it, I think we were all kidding ourselves. And while it has been a gradual climb out over the last seven or eight years, I would say we do clearly believe that the U.S. market is relatively stronger than what is going on in the rest of the global.
We do believe that GDP is strong. The job numbers are strong whether it's the commercial real-estate price index, auto sales, and overall fundamentals, we do think that there is the strong underpinning for all this and we don't think that this is built on air.
UNIDENTIFIED FEMALE: When do you think the markets going to reflect this? When do you think we are going to not see so many drastic swings and volatility on a daily basis?
BARTIROMO: May be things were overvalued going into 2016, right, when you just look at prices?
BRACA: We've had strong capital markets obviously for the last six to seven years, and it's kind of been a one way bet up, and you know, a little correction and a little risk off and a little pause, we probably all would have agreed that we would not have wanted to see this as it was.
Uncertainty and certainly the devaluation of commodities and other things, but underneath all of that, though, if you look about the consumer, you know, we keep avoiding this headline.
That this is real dollars whether it is gas prices, commodity, cost of imports abroad, this is just feeding a strong consumer story in the U.S.
BARTIROMO: Let me ask you about what I ask you during the commercial break because I think this is a really important point. You mentioned the M&A environment and we know that mergers are just on fire.
I mean, we know that Johnson Controls and Tyco having this huge bet that's going to go through for $2 billion and take the headquarters to Ireland for lower tax rates.
Are you seeing much of the lending that you are seeing as a result of M&A or are companies' borrowing to actually investing in cap-ex and in their businesses?
BRACA: The very large companies and the deals over $5 billion, $10 billion obviously 15 was a record setting year and TD was certainly a big part of what was going on in the market there, but really even down throughout the ranks, smaller companies, middle market companies, we are seeing a core demand out there.
In fact, TD, we did a CFO survey of several hundred companies towards the end of 15 and decidedly the information that we have gotten back and is what we are seeing a realtime in our numbers is that whether it is commercial real estate, autos, you know, various industrial companies.
There is a commitment to invest in cap-ex infrastructure, technology, M&A - - it is pretty broad based.
BARTIROMO: They are investing in cap-ex because we have been waiting for that for a long time.
BRACA: We are seeing that real time. We are seeing them take advantage of their balance sheets. Obviously the balance sheets have become very liquid. Access to capital has been terrific and interest rates are still relatively low.
I know we want to constantly talk about this quarter point rate rises, but when you really talking to these companies, it's really an afterthought whether the rate is 50 basis points or 75 is still historically and in perspective at all-time lows.
BARTIROMO: Really good stuff. Greg, stay with us. Lots to talk about with you this morning. We want to watch one other stock, though, specifically Apple.
Technology giant releasing earnings after the bell tonight. Nicole Petallides has right now a preview. Nic, good morning.
NICOLE PETALLIDES, FOX BUSINESS: That's absolutely right, Maria. Good morning, everybody. This is a big quarter for Apple. It is the holiday report card. Analysts are expecting revenue of just over $76 billion and earnings per share of $3.23.
IPhone sales is a big-ticket item to watch. Investors looking for at least 75 million iPhones sold in the holiday quarter. Remember iPhone sales account for nearly 70 percent of Apple's revenue.
Analysts also watching Apple's forward guidance as well which will likely drive the stock action in after-hours trading. Apple shares have been taking a beating following more than 10 percent in the past three months on concerns of slowing iPhone sales as well as Apple's ability to keep growing its enormous profits.
So now the stock which we said is down about 10 percent since October's report down 25 percent over the last year down below $100, but they still have the ability to grow in China but China has an issue, right, 2015 was the slowest growth in China in 25 years. So the question is whether or not what do you think?
UNIDENTIFIED FEMALE: Well, in Q4 2014, Apple sold like a 46 percent growth in iPhone sales so I think that they are contrasting to a year ago they have a tough quarter.
BARTIROMO: Is this a lot about China do you think, Greg?
BRACA: I think this is the overall all about a slowdown across the global market whether it is Europe, Asia, and you know, China, we want to talk about whether they are growing at 7 percent or 8 percent.
But still if they're growing 5 percent or 6 percent, the world's second largest economy that still is fairly strong growth. I think once the markets normalized I do think this bodes well for the U.S.
BARTIROMO: Yes, I mean, it is growing pains, right?
MCDOWELL: It is -- the bigger worry is that Apple is turning into -- and "The Wall Street Journal" points this out today, Cisco or Microsoft. Is it now going to be this big lumbering value stock and do you need to treat it that way?
I mean, it's sold off a lot. I think that given the -- it's in a bear market. It's down more than 20 percent in the last six months.
BARTIROMO: Talking about Apple specifically that as it gets larger, it will be tougher to grow.
MCDOWELL: And it needs much lower valuation. It does have that right now. It's cheaper than -- looking ahead it is cheaper than the Nasdaq.
PETALLIDES: The idea too is about the iPhone, a cheaper iPhone, which is anticipated for the new year will help them in China as well because people don't make that much money there and that will also help them with penetration to areas of people that don't have them.
UNIDENTIFIED FEMALE: The new iPhone is supposed to be smaller, which I think is a great thing because I thought the new iPhones are too big.
PETALLIDES: Maria and I have the plus. It's pretty --
BARTIROMO: I like it. You know, what's interesting, you mentioned Europe earlier, Greg. I feel increasingly people are saying Europe is a place you want to invest right now because they passed the worst of it, but I don't know how you feel about your relative to the U.S. and what you are seeing there?
BRACA: Euro is down. Valuations are down. You know, certainly there have been strong impetus to make sure that monetary policy has been encouraging whether it is consumers or corporates to borrow over there.
BARTIROMO: But is there any other reason to invest in Europe or Japan other than monetary policy?
BRACA: Quite honestly, visibility and maybe it's because we are sitting right here in New York, the bet on for us is North America, America, I think we have especially in the U.S. has got the greatest visibility to where asset prices have recovered.
