MARIA-01
Rice Email Woes; Barron's: Oil To $20 Per Barrel; President Obama's New Oil
Tax; Shkreli Pleads The Fifth; Brand New Super Bowl Technology - Part 1>
Rob Copeland, Cheryl Casone, Blake Burman>
Webster, Michael Warren, Joanie Courtney>
Elections; Democrats; Republicans>
SANDRA SMITH, FBN: Sparks flying at last night's Democratic debate. Hillary Clinton and Bernie Sanders clashing over who is the more progressive candidate.
(BEGIN VIDEO CLIP)
HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: If we are going to get into labels I don't think it was particularly progressive to vote against the Brady Bill five times.
I don't think it was progressive to vote against guns makers (inaudible) immunity.
I don't think it was progressive to vote against Ted Kennedy's immigration reform.
SEN. BERNIE SANDERS (I-VT), DEMOCRATIC PRESIDENTIAL CANDIDATE: Secretary Clinton does represent the establishment. I represent, I hope, ordinary Americans. And by the way, who are not all that enamored with the establishment.
(END VIDEO CLIP)
SMITH: The controversial coin tosses in Iowa also coming off as part of the debate this, after the "Des Moines Register" called for a full audit of Monday's caucus results.
On the Republican side, former President George W. Bush finally appearing in a campaign ad for his brother Jeb, calling him a leader who will keep our country safe. More on that plus the latest polls ahead of the New Hampshire primary. That is all coming up in just a minute.
First, a big day on tap for the markets and the economy, and Wall Street. The January jobs report is out at 8:30 a.m. Eastern Time this morning with the expectation right now is for 190,000 jobs added during the month. That key headline unemployment rate is expected to hold steady again at 5 percent.
Checking in on the futures, it has been a wild ride in these markets, look at that 36.5 gain in Dow futures right now, indicating a possible higher open on Wall Street a few hours from now.
Heading into today's session the major averages are now on track for a weekly drop. Oil has been a key driver of market action this week. Prices this morning are little-changed slightly to the upside by 24 cents, three quarters of a percent gain there. More on that.
Plus President Obama's proposal for a $10 per barrel tax on oil. Coming up. Taking a look at overseas market action in Europe, investors on edge ahead of the jobs report, but we are seeing some modest gains.
Overnight in Asia markets were mostly lower going into the jobs report and the lunar New Year. The Nikkei in Japan seeing the sharpest decline as the yen hit its highest level against the U.S. dollar in over a year.
The big game, Super Bowl 50 is almost here. The Denver Broncos and Carolina Panthers will hit the field for the final time today, before the game, of course. We'll take you live to San Francisco for a look at the action surrounding the NFL championships.
All right, turning back to the campaign trail now Democratic presidential candidates, Hillary Clinton and Bernie Sanders, squaring off in their first one-on-one debate just days before the New Hampshire primary. That is where we find our own Blake Burman.
Blake, it feels like, every time I see you, I've got to be at a debate. I'm not there this time, but what is the latest coming out of New Hampshire?
BLAKE BURMAN, FOX BUSINESS: We wish we had you here. It's beautiful, finally snowing here. We've had a lot of fun in New Hampshire. You know, Sandra, it is no surprise at all whatsoever that after the Iowa caucuses essentially came to draw between Hillary Clinton and Bernie Sanders.
That their first debate since then was the most contentious of this election cycle between them especially since they were one-on-one for first time.
Basically the first hour of the debate, Bernie Sanders tried to pit Hillary Clinton as one who was accepting money for paid speeches, one who was accepting money from Wall Street donors.
That is when Hillary Clinton pushed back and said, Sanders was pretty much giving an artful smear, that's the way she put it. Here was just a little bit of that exchange.
(BEGIN VIDEO CLIP)
HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: I think it's time to end the very artful smear that you and your campaign have been carrying out in recent weeks and let -- let's talk about the issues.
BERNIE SANDERS (D), PRESIDENTIAL CANDIDATE: Let's talk about issues. All right, let's talk about why in the 1990s Wall Street got deregulated. Did it have anything to do with the fact that Wall Street provided to spend billions of dollars on lobbying and campaign contributions? Some people might think that had some influence.
(END VIDEO CLIP)
BURMAN: One could read that as reference to President Bill Clinton. The "Real Clear Politics" average polling shows Bernie Sanders way out in front here in New Hampshire, up some 20 points, in latest poll from WMUR/CNN also had Sanders up by 31 here in the granite state -- Sandra.
SMITH: All right, Blake Burman, thank you. Let's bring in "Weekly Standard" writer, Michael Warren. Michael, love your reaction to the debates last night. Hillary Clinton and Bernie Sanders really going at it. Who is further to the left was a key argument last night. Who do you think won?
MICHAEL WARREN, "THE WEEKLY STANDARD" STAFF WRITER: I don't know. I mean, it is kind of a draw if you look what happened in Iowa. I still think you're seeing that kind of dynamic play out. Do Democrats want to go far, far to the left? Do they really want to be sort of championed by a socialist or are they sort of settling down with Hillary Clinton?
I've talked with people on the ground. I'm headed to New Hampshire on Saturday. I'm kind of interested to see what the dynamic is there. The fact that Bernie Sanders is so far ahead --
SMITH: In New Hampshire.
WARREN: -- the fact that he basically got 50 percent in Iowa. Right, far ahead in New Hampshire, tells me has got the momentum. Last night's debate I think sort of put that decision more starkly in the mind of Democratic primary voters.
SMITH: All right, let's talk about GOP side of the equation here for a second because you believe that Donald Trump was seriously damaged, those are your words, in the Iowa -- in Iowa election. Can he turn things around?
WARREN: Well, absolutely. I mean, he's ahead in New Hampshire by double digits, depending which polls you're looking at. But I do think Trump, this idea that Trump was unstoppable force within the Republican primary, that's over now because he lost Iowa. That doesn't mean that he has lost the nomination.
SMITH: Mike, I think other side of argument, people say you put a lot of weight on Iowa there, right? Iowa has not been a great predictor who wins the general election. That being said, you believe that Marco Rubio, we to get him in here, you believe Marco Rubio has the most upside potential?
WARREN: Absolutely. He has got all momentum coming from third place, almost second place finish. This was Donald Trump putting the all the emphasis, all the eggs in Iowa basket saying he was going to win.
So, you know, I think we can direct all of that blame to Donald Trump himself. But Rubio has got to have all of the guns pointed in his direction in New Hampshire, many ways.
He is like the Ted Cruz of New Hampshire the way Ted Cruz was focused in Iowa so I think he's got a lot of pressure to come in a strong second in New Hampshire but Donald Trump is not done.
SMITH: I want to bring Jack Otter in here. Good to have you this morning. Had a chance to talk with Governor Chris Christie yesterday morning. He said, look, I'm not even looking at Iowa anymore. I don't know why Trump and Cruz are looking at Iowa.
He is looking forward to New Hampshire. He is picking a fight with Marco Rubio. You could see that Kasich, Jeb Bush, they see Rubio as target on his back. That is where they're focusing.
JACK OTTER, BARRONS.COM EDITOR: I can understand why. I mean, Rubio is the guy who Hillary Clinton does not want to face. I had dinner with Greg Valliere, Washington pundit this week and he said that the Rubio-Kasich ticket is the one that most strikes fear into Democrats hearts.
You got Ohio covered. You've got Rubio who has crossover appeal. I think Christie could make a very strong candidate, but so far he hasn't really jelled. I'm not quite sure why.
SMITH: You know, you wonder Hillary Clinton will have to answer for a lot of things. But we will have to answer for the economy that President Obama is handing off right now because, most recently she has been giving President Obama a lot of kudos.
MICHAEL MURPHY, ROSECLIFF CAPITAL FOUNDER: She has really hitched her wagon to President Obama. If we get more weakness in the economy, I think that really plays into Bernie Sanders's hands.
Because I think people will look as Hillary as extension of that. But what are you getting when you go with Bernie Sanders. I'm hoping that --
SMITH: Socialism.
MURPHY: Yes, the divided vote, where it seems like half the Democratic side is on Hillary's side and half is squarely in Bernie's camp. I agree it's amazing but --
SMITH: It is amazing.
MURPHY: Hopefully that gives the general public or the undecided voter the ability to get behind someone who is pro-economy.
SMITH: And that female vote, Joanie, so huge in New Hampshire.
JOANIE COURTNEY, MONSTER WORLDWIDE SVP: Yes.
SMITH: More women undecided on who they will vote for than men.
COURTNEY: Yes. I think you even see, you know, certainly that all eyes are even on Carley, you know, of what's going to happen with her even though, it's still, you know, small percentage there, but the female vote really is undecided.
And there is opportunity. I think the economy is going to really start becoming much more of a big issue with jobs. They you talk a little bit about jobs.
But digging into actual jobs picture of who has the best track record of creating jobs, and what's going to happen is going to become one of like the front and center items for the next few debates.
SMITH: What is Donald Trump say he is going to be, Michael? Michael, you probably remember, Donald Trump said when he launched his campaign he is going to be the greatest jobs president the ever existed, right?
COURTNEY: He said that.
WARREN: We'll win so much that we'll get sick of winning. I do love that line. Look, I do think that the economy is going to play a bigger role, particularly, I'm interested in what happened with this proposal from the president to add $10 tax on oil.
SMITH: Thank you, Michael. That is a great tease. We'll talk about that in a little bit. I think this will take a lot of people by surprise. You have to prepare for this. Oil will not be at $30, $40 forever. That is a tax that will be around a long time. All right, Michael, thanks for joining us this morning. Michael Warren.
WARREN: Thanks.
SMITH: All right, two other top stories this morning, Wall Street gearing up for January jobs report due out at 8:30 a.m. Eastern Time on the east coast. Could play a big part in the election, could be a market mover. We'll be all over this for you.
Estimates right now calling for 190,000 jobs added last month. That would be a sharp drop from December's 292,000 jobs added. What will you be looking for, Joanie, in this report. What is key for you?
COURTNEY: You know, I really think there are a few things that we start really have to look at. Wages are going to be very important. I know we've talked about it for over a year, but we have seen that they haven't moved.
And you know, even though 200,000 has kind of become like the good normal, we had a great surprise last month, right, 292,000 jobs. But there is so much more than the headline number.
We need look at where the job growth is. Are we starting to see any growth in manufacturing or construction remains strong? Wages are important.
Are people really entering back into the workforce? Do they feel that they have the opportunity to participate in the workforce? So lots of things to dig into.
SMITH: Now that we're in this rising interest, should I call it the rising interest rate environment.
MURPHY: I don't think we can call that yet.
SMITH: But now would good news be actually interpreted as a good news and bad news, bad news?
MURPHY: That's exactly the question. Is good news good news or is it bad news? So if we get a strong report in regarding jobs today, does that mean the fed has a clear runway to raise rates again which appeared to spook the market or are we back to where we've been last few years, a negative report means the economy is not strong. Therefore the fed will not act. Therefore clear for the markets to go higher.
OTTER: I think that Janet Yellen has to be a little worried. If she gets 292 number today, which I do not expect, but they say, my God, do we have to raise in March? They don't want to raise in March, not in face what is going on around the globe economically and especially in markets right now.
They just want to stand pat, which is what the market expects right now. I mean, it's none and done, maybe one and done this year. I think that is it in terms of what Wall Street is looking for. If they have to raise, they want a 210, 220, 240 number.
SMITH: It does appear that this market has been in a wait-and-see mode for this jobs report because it's really not doing too much right now with Dow futures currently up about 30 points. All that coming up.
But first up next, a top Democrat claims former secretaries of state, Colin Powell and Condoleeza Rice have more in common with Hillary Clinton than just their job history. We'll have that story next.
(COMMERCIAL BREAK)
SMITH: Potentially damaging emails have now been released in the case of contaminated water in Flint, Michigan. Jo Ling Kent has the details on this story and other top headlines this morning. Good morning, Jo.
JO LING KENT, FOX BUSINESS: Good morning, Sandra. This is an ongoing controversy in Flint. The liberal group, Progress Michigan, releasing emails showing Governor Rick Snyder's principal aide was made aware of an outbreak of Legionnaire's disease and a possible link to the use of Flint River water last March. A spokesperson for Snyder, though, rejected the report. Snyder said he first learned about the legionnaires' cases in January.
Meanwhile despite concerns about the Zika virus, Brazil insists that carnival will go on as millions arrive from around the world. Brazilian health workers are spraying up and down the streets in preparation after the government confirmed two cases of Zika transmission through blood transfusions from donors who had been infected.
And congressional oversight panels say that former Secretary of State Colin Powell and top staffers for Condoleezza Rice received classified information on their personal e-mail accounts.
In an interview with NBC News, Powell is challenging the conclusion and saying nothing that went to his personal account was secret. Rice spokeswoman said the emails were about diplomatic communications.
SMITH: Yes, and so similar to the Hillary Clinton story, Colin Powell is making, none of the messages were marked classified when originally sent. None were determined to include information from the intelligence community. Jack, what do you make of all this?
OTTER: Well, it's the same thing that happened to Hillary. Powell said look these were not classified at time. They were subsequently deemed classifies. He says I disagree with that declaration, but that is their call. I'm out of government.
She is making the same case. I mean, to me this has always has been about judgment. The more monitoring the secretary of state, the more obvious it is you have to use your work email.
I mean, I started remember the moment when we were in the kitchen, my wife and I heard this story, thinking who does that. You use your new office email.
SMITH: So you know --
OTTER: But that said, I don't think this is quite as dastardly as her biggest critics. I don't think she was trying to share state secrets with terrorists. I think she had really bad judgment.
MURPHY: As this story comes out, it just seems to me it's like third grade. Well, I did something wrong, but now I'm going to find you did something wrong too. So it is Clinton side saying let's find someone else. Find someone on Republican side that we can pin this on also. We don't look as bad.
What Hillary did sitting in office, I mean, it seems to me the evidence is kind of indisputable, if Colin Powell, I don't know enough about it, if Colin Powell did it too that was wrong, but it doesn't change the degree of what Hillary did was 100 percent wrong.
COURTNEY: Totally different situation, having server at your home, right, using personal email for work is a completely different situation then a couple of emails might have gotten forwarded for one reason or another.
SMITH: To reiterate Colin Powell, he is strongly disputing all of this in this interview in NBC News. He characterized the contents of emails that were actually sent, they weren't classified or marked classified. He said the contents were fairly minor and he said, I wish they would release them.
COURTNEY: Normal air breathing mammal would look at them and say, what is the issue?
KENT: That is exactly what Secretary Clinton's camp is saying. We agree with Colin Powell, release all of the emails, but unfortunately, it is not that simple.
SMITH: All right, well, none of this is that simple. It would have been simple just to use the government email, though.
MURPHY: Exactly. It would have shown better judgment. Clearly what is going on with Clintons --
SMITH: All right, well, LinkedIn, a big story, may want to leave the fourth quarter off its resume. We'll break down numbers as shares are plummeting in the premarket this morning. Holy cow, you're looking at a $60 drop in those shares. We'll have the story next.
(COMMERCIAL BREAK)
SMITH: We've got an earnings alert for you this morning. A look at shares of LinkedIn right now, plummeting 30 percent in the premarket after the company posted a sharp fourth quarter loss coming in way below Wall Street expectations. Also forecasting weak growth for 2016.
But I guess it wasn't all bad news for LinkedIn. They did have some positive numbers. User growth did accelerate during the quarter hitting 414 million for first time ever.
I guess, Mike, my questioned would be why isn't that translating to stronger earnings? But in general what have you been seeing from tech earnings?
MURPHY: Well, if you're Facebook or you're Google things are great. If you're not, look at LinkedIn, people are taking money away from you. People are selling stock. Wall Street downgrading stock across the board. Seeing downgrades and price target cuts.
Look at quarter, it wasn't a terrible quarter. It's more about the guidance. One thing to look at here, Sandra, is we hear a lot about unicorns and private company valuations.
You look right now, if LinkedIn was private company this wouldn't cause a massive write-down in value of stock. The company is losing 30 percent of its value this morning on what was for all intents and purposes a good quarter.
So I think there is some support here. You never want to jump in and buy this on massive selloff. If you look for longer term hold, if you are looking for value, I think LinkedIn at some point will come in and create some value.
COURTNEY: But do you think that, you know, Facebook is kind of making a play now? They talked about that they're really wanting to get into the professional space and really do more in professional networking and jobs.
SMITH: Because they're already used in that capacity a lot.
COURTNEY: They are. From -- it is more obviously Facebook has been more that social piece, but you are hearing a lot, they're not there yet, but still good networking site. Do you think that kind of factors into this equation?
MURPHY: It does for sure. I think it is more people are looking at quarter that Facebook put out and quarter that Google put out and they are saying I will invest, for instance, Facebook is trading at about 18 times sales.
Whereas LinkedIn is trading down around eight or nine times sales. But people are saying I'll pay up for Facebook because they're doing everything right. They're unstoppable.
Whereas LinkedIn was there in the past, but now people are starting to question them. That leads to 30 percent drawdown.
SMITH: Jack, you watch these companies pretty closely. We have Twitter coming out next week as well? You like anything in the space right now?
OTTER: Well, I think it comes down to, you know, Facebook, value proposition for the user is incredibly powerful. You see that the numbers. People spend half an hour a day on Facebook. Whether it is your family, friend, what your high school girlfriend looks like these.
SMITH: Your work.
OTTER: But Twitter and LinkedIn are a little more work oriented. Some people use Twitter as tool. A lot of people in this country never looked at Twitter. That is not true. My mom and dad are on Facebook. Neither know what LinkedIn is. They love networking.
A lot of people don't care less about networking. They're not using it. People gravitate towards that they find interesting. Advertisers will put their money in but that is not happening at LinkedIn.
SMITH: President Obama set to unveil a plan for a 21st Century clean transportation system that he hopes to fund with a new tax on a barrel of oil. Why wasn't it topic on last night's Democratic debate? It was completely ignored. We have complete details on all of this. How it will affect you and your bottom line next.
(COMMERCIAL BREAK)
SMITH: Good morning, everyone. Welcome back. I'm Sandra Smith. Maria Bartiromo has the morning off. It is Friday, February 5th. And with me this hour, Monster Worldwise, Joanie Courtney is here, Rosecliff Capital's Mike Murphy, and Barron's online editor, Jack Otter.
Your top stories at 6:30 a.m. on the east coast. Sparks flying at last night's Democratic debate. Hillary Clinton and Bernie Sanders clashing over who is the more progressive candidate and Clinton is back on the defensive over her paid speeches on Wall Street.
(BEGIN VIDEO CLIP)
HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: I think I may not have done the job in explaining the record when I left the secretary of state like so many former officials, military leaders, journalists, other. I did go on the speaking circuit.
I spoke to heart doctors. I spoke to the American Camping Association. I spoke to auto dealers and yes, I spoke to firms on Wall Street. They wanted me to talk about the world, what my experience had been a secretary of state.
(END VIDEO CLIP)
SMITH: On the Republican side, new "Wall Street Journal" polling released moments ago shows Senator Marco Rubio gaining steam after his third-place finish in Iowa. While Donald Trump remains the top choice for the 30 percent voter support. Rubio coming in second place beating Iowa frontrunner, Ted Cruz.
A big day on tap for the markets and the economy, we are getting ready for it this morning, the January jobs report will be out at 8:30 a.m. Eastern. Right now expectations are for 190,000 to have been added in the latest month. The unemployment rate is expected to hold steady at 5 percent.
Looking at futures this morning. In a holding pattern, we are looking at Dow futures right now basically unchanged on the morning up just 4 points. They are waiting for that jobs report.
It's also the end of a pretty wild week. Oil has been a key factor in driving price action this week. Oil prices are right now up just slightly, up 10 cents at $31.82 a barrel. We are going to be talking about this in just a minute.
The president proposing $10 per barrel, a new tax on oil. This happened yesterday and Democrats last night in that debate didn't even mention it. We are going to talk about it.
The big game, Super Bowl 50, is almost here. The Denver Broncos and Carolina Panthers will hit the field for the final time today before heading to the big game. We'll take you live to San Francisco for a look at the action surrounding the NFL championship.
All right, "Barron's" cover story calling for oil prices to fall to $20 a barrel, but saying prices could rise as high as $55 by end of the year.
Phil Flynn is at CME Group with more on this. Phil, good morning, sir. It's been a while. Good to see you.
PHIL FLYNN, PRICE FUTURES GROUP: Good morning, Sandra. It has been, great to see you.
SMITH: Fill me in. Where are we with this wild ride in the oil market?
FLYNN: Well, if you believe "Barron's" there will be another leg down. That is what they're predicting. They stuck with their bearish call even when oil prices rallied $20 in middle of summer. But they are saying there will be another leg down.
But I agree what they're saying. Whether we get another leg down or find a bottom where we're at right now, we're getting close to the point where these prices are unsustainable.
Capital spending cuts, rate count cuts, they are going to take their toll and we are going to be shocked how quickly this market could tighten later in the year.
If the global economy doesn't fall apart, if demand hangs where it is right now, with these cuts in production, prices should rebound. Where are we at? Energy companies are struggling. Why don't we you put on a $10 a barrel tax and put them all out of business? Back to you, Sandra.
SMITH: Wow, Phil Flynn, unbelievable story there. I wish somebody from "Barron's" was here so I can ask them about the $20 call for oil. Good thing, Jack Otter, Barrons.com editor is here. At $20, you think we'll see it?
JACK OTTER, BARRONS.COM EDITOR: Well, this is essentially a capitulation low. We don't think it's going to sit at 20 for a long time. All the forces that you already know about, Iran coming online.
Storage facilities are filling up everywhere. It was such a warm winter in Europe, they're out of storage. In the U.S., we're getting close to capacity. If we should hit capacity that would force oil to go on the bidding block and the best price would get it.
Also, refineries tend to go down for maintenance in April. That is going to further reduce demand, increase supply. Finally, we looked at short interest, excuse me, short interest in the futures market.
That bottom did about 150,000 contracts in 2008. We're 250,000 short contracts now, which is low, but not at capitulation low. We think will hit that and then go up from there.
SMITH: Quick summary, you guys are saying it could go as low as $20 but "Barron's" is also saying we could see 55 by -- I want to get to this --
OTTER: For the reasons Phil just pointed out.
SMITH: I want to get to this oil tax, the president proposing $10 per barrel, a new oil tax on companies, not mentioned last night at the Democratic presidential debate but Marco Rubio, obviously currently running for the presidency, he had a little something to say about this, listen.
(BEGIN VIDEO CLIP)
MARCO RUBIO (R), PRESIDENTIAL CANDIDATE: Who's going to pay that? You are. You're going to pay it. Sure the barrel of oil is down to $35. It ain't going to be there forever, but the tax will be, all to fund this pipe-dream that he has of high speed this and clean cars that and, we don't need a tax for these things. Everything is about a tax. They're obsessed with taxes.