MARIA-02
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(COMMERCIAL BREAK)
MARIA BARTIROMO, FBN HOST: Hi, everybody. Welcome back. Happy Wednesday. It is Wednesday, February 3rd. I'm Maria Bartiromo. And joining me this morning, Fox Business Network's Dagen McDowell; Recon Capital's Kevin Kelly; and Skybridge Capital founder Anthony Scaramucci.
First though your top stories at 7:00 a.m. on the East Coast. The presidential field storming New Hampshire. The fall out from the Iowa caucuses forcing some candidates to shift their tone ahead of the nation's first presidential primary.
(BEGIN VIDEO CLIP)
SEN. TED CRUZ (R-TX), PRESIDENTIAL CANDIDATE: Marco made the decision, the conscious deliberate decision not only not to lead the fight against amnesty, but to go and stand with Barack Obama and Chuck Schumer and Harry Reid.
HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: Senators Sanders has a different approach. He shares my goal of universal coverage but he wants us to start all over. I think that would be a terrible mistake. To throw our country into a contentious debate over health care again?
(END VIDEO CLIP)
BARTIROMO: The very latest on the race for the White House coming out.
The first known case of the Zika virus transmitted in the United States has been reported. Health officials in Texas say that the virus was likely contracted through sex not a mosquito bite. The Centers for Disease Control confirming this is the first case in someone who had not traveled to a country affected by the outbreak and instead got it because of sexual transmission.
Wild weather from heavy snow to tornado is hitting the Midwest and the South. In Alabama, for example, dozens of homes have been destroyed after tornadoes ripped through the western part of the state. Plus the storm is spreading from Colorado to Michigan dumping heavy snow and causing travel headaches. We've got the latest for you.
Turning to markets this morning, futures searching for direction but now solidly positive. We're seeing a pretty good reversal of fortune in the last hour. The Dow Jones Industrial average expected to open up now 36 points; Nasdaq, S&P 500 also higher.
The selloff yesterday meanwhile weighed on Asian markets overnight. The Nikkei average in Japan saw the sharpest decline down better than 3 percent in Japan. Hang Seng down better than 2 percent.
In Europe this morning, weakness across the board we are actually now very close to the lows of the day although the DAX has bounced off of the lows, it's down about 1 percent; FT and the CAC 40 in Paris off of the lows of the day, but still negative to the tune of about 30 points.
Oil still a factor -- oversupply concerns remaining an issue but comments from Russia's foreign minister providing some support in trading. Oil today $30.44 a barrel -- that's up nearly 2 percent. Russia said it would be open to talk to OPEC about cutting production.
The stock to watch in today's trading session is Yahoo. The company reporting dismal fourth quarters results after the close last night. Yahoo says now it will cut its work force by 15 percent. It will also explore strategic alternatives for the company's web business that includes the sale. Nonetheless the stock still under pressure this morning.
Turning back to the campaign trail. Hillary Clinton winning a very tight race in Iowa Monday night but facing an even tougher challenge in New Hampshire.
Peter Barnes is in Washington this morning with all the details. Peter -- good morning to you.
PETER BARNES, FBN CORRESPONDENT: Well hey -- Maria. We're looking at a new wrinkle in all of this. Bernie Sanders is refusing to concede defeat in the Iowa caucuses following reports that some delegates were awarded by coin toss. That is allowed under the caucus rules of Iowa Democrats in the event of a tie in a vote among caucus goers. Here is some video of a coin toss actually filmed by Spanish-language network Univision in Iowa on Monday night.
But the practice has generated controversy because the final tally of so- called Iowa Democrat state delegate equivalent gave Hillary Clinton just four more than Sanders out of about 14,000 available and news reports say that in six cases of tie votes she won all six coin tosses. Sanders now says he wants to look into the matter before conceding.
(BEGIN VIDEO CLIP)
SEN. BERNIE SANDERS (I-VT), DEMOCRATIC PRESIDENTIAL CANDIDATE: I, you know, do think it's kind of unfortunate. And again I don't want to misspeak here, but it may be the case that some delegates were selected based on a flip of a coin. Not the best way to do democracy.
(END VIDEO CLIP)
BARNES: The Clinton campaign issued a statement early Tuesday declaring victory in Iowa saying quote, "Statistically there is no outstanding information that could change the results and no way that Senator Sanders can overcome Secretary Clinton's advantage," but the statement did not mention coin tosses -- Maria.
BARTIROMO: This is actually an amazing story, Peter Barnes.
I want to bring in right now Ed Rollins to the conversation, former political director for President Ronald Reagan and a Fox News political analyst. Ed -- what about this coin toss? I mean it's actually --
ED ROLLINS, FOX NEWS POLITICAL ANALYST: If I had that luck, I'd get out of politics and go to Vegas.
(CROSSTALK)
BARTIROMO: I mean I know it's funny but it's actually not funny. No, no, no. This is serious stuff.
ROLLINS: This is serious stuff. And there was chaos. There was chaos everywhere. And I think the critical that she has to understands whatever she wants to declare -- I mean they both came out of it with almost the same -- she got 22 delegates, he got 21.
But at the end of the day, he took all the young voters 70 percent advantage over voters under 35 and you forget that Barack's advantages in past elections have been about young people. So Bernie has all the young people. She has all the older people. If it's older people versus, Republicans we pretty much do well on older people. So she's got a real problem with young people.
ANTHONY SCARAMUCCI, SKYBRIDGE CAPITAL: I'm sorry.
DAGEN MCDOWELL, FBN HOST: No, I was just going to say so people in the Sanders campaign are calling for a look-see into this. The chairwoman of the Iowa Democratic Party just dismissed it so it doesn't go anywhere.
ROLLINS: It doesn't go anywhere. The party gets to call whatever it wants. It's a party election. It's not a state election. We had the same problem four years ago in our party in which they declared Romney the victor, then they declared Santorum and then they lost 18 precincts three weeks and they just called it a tie.
SCARAMUCCI: They're doing it to each other so they don't like calling out on each other. But my question to you is about the younger people. Which candidate on the Republican side can capture the imagination of those younger people who are voting for Bernie Sanders?
ROLLINS: I would assume Rubio -- I mean we have two very strong candidates and we have Trump who's obviously sort of an undefined candidate. My sense today is Rubio has a great appeal to younger voters. He has a message of hope. Obviously Cruz has young conservatives but I would say that the better opportunity to get young people would be --
SCARAMUCCI: But candidate Trump does a pretty good job capturing the younger people.
ROLLINS: Well there's a long ways to go. And we'll see how well he wears at this point in time.
BARTIROMO: What are your thoughts about what just went on in Iowa with Trump coming in second?
ROLLINS: Well, here is the reality. Trump can stand up there and say, you know, gee, I didn't come to Fox because I want to raise $6 million for vets. He's world federated wrestling all over again. And of course, you remember we had a little experience with Vince McMahon doing that.
At the end of the day, here is what it is. Polls don't matter anymore, votes don't matter anymore. Cruz has eight delegate, He has seven, Rubio has seven, Carson has three, Paul has one, Bush has one. It takes 1,237 to get half the delegates. So he's got 1,230 more to go whoever wants to be a winner.
So you know, my sense is Cruz has the momentum, showed he had a very strong organization. I've been doing this for 50 years. 50 years ago I was taught you find your voters, you communicate with your voters, you get them to the polls. Cruz did all of that with a better team.
Donald talked to everybody. He didn't understand where his voters were and obviously if he would have spent some money on get out the vote effort he might have won that.
BARTIROMO: Let me ask you about Chris Christie because the governor really coming out strong against Marco Rubio in New Hampshire. Listen to this. I'd like you to comment on it after.
ROLLINS: Sure.
(BEGIN VIDEO CLIP)
GOV. CHRIS CHRISTIE (R-NJ), PRESIDENTIAL CANDIDATE: You know who the boy in the bubble is who never answers your questions, who's constantly scripted and controlled because he can't (inaudible). So when Senator Rubio gets here -- when the boy in the bubble gets here I hope you guys ask these questions. (inaudible) him to man up and step up and stop all of his handlers write his speeches and handle those because that's what they do.
(END VIDEO CLIP)
BARTIROMO: Wow.
ROLLINS: Need I remind you he just came in 10th in Iowa and basically said I'm going to be the lead governor. That is my goal coming out of Iowa. He was the bottom governor.
My sense is his threat is Rubio in New Hampshire. He's put a lot of time and effort and Rubio today would be third, maybe second if that happens and he doesn't have any. He'll have to go back to New Jersey and try and get elected he has the last two years.
SCARAMUCCI: Who's got the most swag in the Republican Party right now?
ROLLINS: You know, I think obviously it is three people. It is the three frontrunners that basically --
BARTIROMO: Trump, Cruz, Rubio.
ROLLINS: -- and they all have money. Unlike past elections, usually someone got ahead and they ran out of money. These guys all have money. Bush has money who's obviously not doing much with it.
But at the end of the day those three can go all the way. Trump has got to spend money. Trump only spent $12 million. If he would have spent another $5 million on get out the vote effort he probably would've won Iowa.
MCDOWELL: Is it too late for that though because he really needs to build -- build down in the South right.
ROLLINS: You can't build it quickly. You know, he said yesterday I'm going to build a structure in New Hampshire. You can't do that. It takes time, it takes years to -- I mean this organization in Iowa that Cruz put together with the best operatives in the country. They worked on it for at least six, eight months. You call every voter, you know every single voter in the state.
And the story that everybody kept saying, well the vote gets high, it will be Trump because there's new voters. They knew every single voter. They knew every Trump voter and they turned out their voters. And they will do that -- they might not be able do that in New Hampshire because it's out of focus but they will do that in South Carolina.
SCARAMUCCI: Trump wins New Hampshire?
ROLLINS: I think Trump wins New Hampshire.
MCDOWELL: 22 point lead in the Real Clear Politics average right now --
ROLLINS: It will close up some.
SCARAMUCCI: And he's got a pretty good organization there.
ROLLINS: Well, his campaign manager is from there. And obviously they understand New Hampshire better than any place else.
BARTIROMO: Let me end where we began. So you think the coin toss was a setup?
ROLLINS: I think that state party types all wanted Hillary. They expected Hillary to -- you know, most of them are active Democrats. Sanders is an insurgent. He came in there and basically was 40 points behind when he started. He took the young voters away from her.
I think he is going to go all the way. I think she may eventually win but he's going to damage her and damage her immeasurably.
BARTIROMO: You don't think people are turned off by the constant meddling and changing the results of something? I mean six coin tosses in a row, Hillary wins?
MCDOWELL: When lack of honesty and when people think you are not trustworthy that is an albatross around her neck already.
BARTIROMO: That's what I'm saying.
KEVIN KELLY, RECON TRADING: This is politics as usual. People are used to it. That's why you're seeing the --
BARTIROMO: I wasn't used to this. I am like wow.
KELLY: Well no, this is exactly why people are going towards Sanders and they're going towards Trump because they think this is politics as usual. Of course Hillary can fix the election.
SCARAMUCCI: This leads to the antiestablishment movement.
ROLLINS: I remember the 1860 election.
SCARAMUCCI: And you look better today than you did in 1860.
ROLLINS: Thanks.
Kelly: The coin tossing is probably the best thing for Sanders actually because now people are pissed.
BARTIROMO: Yes. And now people are upset. Why are you changing the rules?
ROLLINS: And he's going to be energized. He'll be energized. You know, you look around that room and the spirited remarks to elderly people as an elderly man. But her room was full of old people. His room is really full of young progressives and you are going to see that in New Hampshire and the rest of the way.
MCDOWELL: I want some of whatever Sanders' young people are smoking.
BARTIROMO: They're feeling the Bern -- Dagen. Come on.
MCDOWELL: Bern in their lungs.
ROLLINS: If you don't have any money you don't have to worry about a 92 percent tax.
BARTIROMO: That's true. That's a good point. Ed -- thank you.
ROLLINS: Thank you.
BARTIROMO: Great to see you. Appreciate your time today.
Big changes coming to Yahoo. Cheryl Casone with the story headlines and the other headlines now -- Cheryl.
CHERYL CASONE, FBN CORRESPONDENT: Yes, stock to watch today -- Maria, certainly Yahoo. CEO Marissa Mayer announcing a restructuring plan intended to save the company and possibly her job. Yahoo says it will cut about 15 percent of its workforce or 1,600 jobs and it will close offices in five different locations. Yahoo may also consider putting its Internet business up for sale.
Well, Chipotle reporting its first decline in quarterly sales as a public company. Profit falling more than 40 percent from a year ago following a series of illness outbreaks included e Coli. The CDC says the e Coli outbreaks appear to be over but now Chipotle has been served with a subpoena that widens the federal investigation into the company's food safety.
And finally this, the FBI is now joining the investigation into the contamination of drinking water in Flint, Michigan. A spokesperson says the agency is trying to determine if there had been any federal violations. Meanwhile Michigan governor, Rick Snyder plans to propose $30 million in state funding to help pay the water bills of Flint residents.
Maria -- the House Oversight and Government Reform Committee is holding a hearing today on the water crisis. We're going to keep you, of course, posted throughout the day on the Fox Business Network. Back to you.
BARTIROMO: And Cheryl, the word on that was that they were trying to save money by using different pipes. I mean this Flint story is just extraordinary.
CASONE: Also Maria -- remember that there are reports now that city officials were getting water deliveries -- bottled water deliveries way before any of this went public. It makes them look incredibly bad if that is true and that is part of the investigation.
BARTIROMO: Cheryl -- thank you.
CASONE: You bet.
BARTIROMO: Coming up next, former Turing Pharmaceutical CEO Martin Shkreli is set to appear in court later today. More from my exclusive interview with the alleged fraudster straight ahead.
Then companies willing to shell out millions on Super Bowl ads -- right. But is the return worth the investment? We will take a look. Back in a minute.
(COMMERCIAL BREAK)
BARTIROMO: Welcome back.
Former Turing Pharmaceutical CEO Martin Shkreli headed to a Brooklyn courtroom later this morning with his new high-powered attorney, Benjamin Brafman. Shkreli is also scheduled to appear in front of congress tomorrow for a hearing about price gouging in the pharmaceutical industry.
Yesterday I sat down with Shkreli in an exclusive interview. Here's what he said.
(BEGIN VIDEO CLIP)
MARTIN SHKRELI, FORMER CEO OF TURING PHARMACEUTICAL: So I am going to court tomorrow in New York. And I'm going to congress on Thursday and I will be taking the Fifth Amendment. I've signed an affidavit saying I will have nothing to say to Congress. I will stick to that.
I think it's ridiculous that they would actually force me to be there in person when I've stated that I will be taking the Fifth. In fact I think it is unethical.
(END VIDEO CLIP)
BARTIROMO: My follow-up there Anthony Scaramucci was ok, so you say it's unethical for them to put you in front of cameras but it's not unethical to raise the price of an AIDS drug that so many people need by 5,000 percent.
SCARAMUCCI: Yes. So he's got a big problem. It may not be the AIDS drug because I think his argument is going to be that it's a free-market and he can put the price at anything that he wants. But where he has the problem is his body language and his arrogance is going to force the full weight of the government against him.
And so if David Boise was here or a good defense attorney they would be telling this guy to clam up and get yourself in a little bit less of an aggressive arrogant position.
BARTIROMO: Don't be a target.
SCARAMUCCI: I think so.
Kelly: Yes. I mean the hubris is outstanding but I mean the Turing Pharmaceuticals was created to go buy this drug and increase its price. It didn't exist before this and then they're talking about all the money they're going to make and put back into research. And to find other drugs that they could buy and raise again. That's the sole point of that.
BARTIROMO: Yes. But he said what he wanted to do is create a mini infectious disease company where he is finding cures for infectious diseases that other major pharmaceutical companies are not working on like Zika.
KELLY: Talk is cheap.
MCDOWELL: I think that that smells really -- I think that explanation smells awfully bad.
KELLY: In fact, look at his track record.
MCDOWELL: And the thing that bothers me so much about what Turing did, and the attention on Turing, the Hillary Clinton tweet -- it shines a light on all pharmaceutical companies as unfavorable and it's not fair.
Drug prices are a huge problem but the developments that have come out -- these drugs that have come out with some of these pharmaceutical companies, these biotech firms just in the last couple of years are breathtakingly fantastic. They are life-saving treatments for a variety of diseases and this makes them all look like bad guys. They all look like him.
BARTIROMO: And that's exactly what -- Ken Frazier said that. A number of CEOs came on the show and said, of course this is a free market but a situation like this is clearly a profiteer and it makes us look bad.
SCARAMUCCI: Our society right now -- rich people in our society are either revered for the philanthropy or they are reviled for their greed. This is way over on the greed side. It is a very bad image for him, the pharmaceutical industry and just what the society represents.
KELLY: Here's the real question. Does Turing have a lab?
(CROSSTALK)
KELLY: Right -- does Turing have a lab? Do they have doctors on staff? What is their experience? Zero. When you look at (inaudible) sciences which is pretty much cured, hepatitis C and they are coming under attack from even the Massachusetts attorney general. It's like they need these drugs because they do labs and they are reinvesting in finding cures.
MCDOWELL: This is any attention is good attention and I question that. That is something this country has fallen into the trap of.
BARTIROMO: You know, I think you're all right. I think you've got great analyst.
All right. We'll take a short break.
We're looking at oil this morning. It's bouncing after suffering the steepest two-day decline in nearly seven years. We're going to take you to the floor of the CME, check out what traders are saying with oil at $30.56 a barrel.
(COMMERCIAL BREAK)
BARTIROMO: Oil prices rebounding this morning a bit after falling below $30 a barrel yesterday, marking the steepest two-day decline in almost seven years.
Phil Flynn at the CME Group this morning with all the action -- up 2 percent, Phil.
PHIL FLYNN, FBN CONTRIBUTOR: It is. It is a big bounce Maria and let me tell you there's a lot of people that are looking around at the world right now and saying that these low prices are unsustainable.
We got a big bounce after the Russian oil minister overnight said listen we are open to talking to OPEC right now. This is where there's smoke there's fire. There's been a lot of comments about an OPEC/none OPEC summit and every time we get that news, the market rallies.
You know, at the same time you have a company like ExxonMobil talking about cutting capital spending by a whopping 25 percent. You know, when you get a company that put the big and big oil, getting the downgrades watch by S&P, you know that there's problems in the oil sector. Back to you.
BARTIROMO: Yes. Sure is. Thanks a lot, Phil.
Kevin, you're expecting some testy negotiations in terms of the oil and gas industry. That's going to even put more pressure on prices.
KELLY: Yes. That's a big overhang for this market right now. We are starting to see a lot companies cut dividends, they're cutting CapEx across the board. But the next big overhang is those negotiations they have to have with their creditors -- right. And you're seeing all the big banks. And that's why financials are down significantly this year and that is why it may be hard for us to get out of here because they're going to have to start negotiating with the big banks.
BARTIROMO: So you think the financials are down largely because of the energy space? I mean the big banks, it's relatively small.
KELLY: So here is what is happening. It is leaking into the junk bond space even more. So if we look at Moody's -- Moody's came out yesterday. They said their liquidity stress index is at its highest level since 2009. It is reverberating through the system.
MCDOWELL: Yesterday -- can I just point out -- I don't if we have it, the chart of the 10-year yield --
BARTIROMO: Yes, let's look at that.
MCDOWELL: -- what ten-year did in terms of yield. The yield decline I think was the steepest it's been in last July. The 10-year yield it closed at 1.86 percent. It's the lowest since April -- that's right.
The chart looked like this and this is according to somebody's tweet -- if you look at a chart yesterday it was like -- sorry for that. It's early. But it looked like a total collapse. And that doesn't scare the you-know- what out of you I don't know what will.
SCARAMUCCI: This is the barometer of the 10-year so at 1.88 it's showing that U.S. growth is going to be pretty slow this year.
BARTIROMO: What do you think?
SCARAMUCCI: Well, I mean the consensus is that it's going to 1 before it goes to 3 Maria and so that's a sign of the recession. I was at a Wells Fargo hedge fund conference yesterday -- over a trillion dollars in the room and the consensus was it was heading towards one versus three.
I think the big problem though in addition to the energy space is that because there's no principal trading at these banks, they're really not picking up the level of profitability that you thought they would once rates started going out. And I think that's another big problem for these guys.
KELLY: Yes. I mean that's exactly what is happening right now. I'd say we get to 1.5 before we go to 1.
BARTIROMO: We'll see. Certainly painting a bad picture for the economy.
Coming up, just one day after he sat down with me, embattled former drug CEO Martin Shkreli heads to court. The latest on the charges next.
(COMMERCIAL BREAK)
(COMMERCIAL BREAK)
MARIA BARTIROMO, HOST: Welcome back. Hi, everybody. Welcome. It is Wednesday, February 3rd. With me this morning, Fox Business Network's Dagen McDowell, Recon Capital's Kevin Kelly and SkyBridge Capital Founder Anthony Scaramucci. Your top stories this morning at 7:30 a.m. on the East Coast.
Presidential candidates back on the campaign trail now shifting their focus to New Hampshire. The results from Iowa have some presidential hopefuls shifting their tone for sure, ramping up the attacks on each other.
The first known case of the Zika virus has been transmitted in the U.S. and has been reported. Health officials in Texas a virus was likely contracted through sex, not mosquito bites. The Centers for Disease Control confirming this is the first case in someone who is not travel to a country affected by the outbreak and instead contracted it through sexual transmission.
Turning to the markets, futures rebounding this morning from yesterday's sharp selloff. The Dow Jones industrial average expected to open up the 30 points. Of course, this is the jobs week. We get the unemployment numbers out this Friday and the ADP numbers out as well this week.
Is the bookstore making a comeback? According to the "Wall Street Journal," Amazon is looking to open up 400 bookstores. The question many are asking, why. Well, the CEO of the world's largest commercial real estate company told me last hour that the demand is there, and companies are using brick and mortar in new ways.
All that coming up. First, on MORNINGS WITH MARIA, making headlines yesterday with my exclusive one-on-one interview with the former CEO of Turing Pharmaceuticals, Martin Shkreli.
(BEGIN VIDEOTAPE)
MARTIN SHKRELI, FORMER CEO, TURING PHARMACEUTICALS: I think the charges are meritless, baseless, and we'll be victorious in court. And I'll let -- I'll let the -- I'll let the courtroom speak for itself.
(END VIDEOTAPE)
BARTIROMO: Martin saying that he will plead the fifth in court today and on Capitol Hill tomorrow.
I want to bring in criminal defense attorney and Fox News legal analyst, Arthur Aidala. Arthur, good to see you.
ARTHUR AIDALA, CRIMINAL DEFENSE ATTORNEY AND FOX NEWS LEGAL ANALYST: Hi, how are you?
BARTIROMO: Yes, I'm really happy to see you. But this is such an unbelievable story.
AIDALA: What a schmuck. I mean, you know, I mean -- and I don't know if I'm allowed to say that, but I'm saying --
BARTIROMO: Well, you just did.
AIDALA: -- I'm saying it in my capacity as a criminal defense attorney.
First of all, let's start with he just hired Ben Brafman. OK? Ben Brafman, in my world, he's the best. He's a great guy.