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TRISH REGAN, "THE INTELLIGENCE REPORT" HOST: Straight to Peter Barnes who is standing by in D.C. with him now.
PETER BARNES, FOX BUSINESS NETWORK SENIOR WASHINGTON CORRESPONDENT: Trish, the minutes say the Fed remains data dependent on the future course of monetary policy of course and as usual but some interesting text here that suggests that the Fed may take its time to raise rates going forward. It says that the data that it's watching closely. Almost all participants watching tighter financial conditions in the U.S. including the decline in equity prices, the widening of credit spreads, further rise in the value of the dollar and increase market volatility. The Keyline "the effects these financial developments if they were to persist maybe to -- may be roughly equivalent to those from further firming in monetary policy."
In other words, financial markets might be doing the Fed's job for it in tightening conditions. So and that suggests that may want to take its time and going slow in raising rates down the road. Trish back to you.
REGAN: All right, thank you so much.
So an indication there that we may see some continued dovishness. Of course, they're evaluating this economy which isn't enough in a especially great state as of late. We're looking at the market right now, continuing to hold up these gains right now up 224. Again on that news there that the Fed is going to continue with this persistent tightness may roughly of equal more rate hikes.
They're talking one thing, however, a lot of people really believe that when it comes down to it, they're not going to move as aggressively as they would like to.
All right, also breaking this hour, a stand-off between Apple and the U.S. government. Apple CEO Tim Cook says this company will not comply with the Federal Court order to help the FBI unlock the iPhone. The one used by the San Bernardino terrorist who killed 14 people in December because it would compromise the security of all apple users. But investigators want access to Syed Farook's contacts as they believe he was planning future attacks. They say it's critical to national security that the terrorist's iPhone be unlocked. We'll have the former director of the CIA James Woolsey here with analysis.
I am Trish Regan, and welcome everyone to "The Intelligence Report".
We're going to have more development on the story between Apple and the Fed in just a moment. Plus brand new polls out today showing that Donald Trump now has his largest lead yet on a national basis, nabbing 39 percent of Republican voters followed by Senator Marco Rubio at 19 percent and Senator Ted Cruz with 18 percent.
And the Democrats in nearly a tie nationally, check out this, Hillary Clinton barely showing a two-point lead over Bernie Sanders, the socialist. All of these just three days before the Democrats' caucus in Nevada and the Republicans' primary in South Carolina. And Hillary Clinton fights for the support of minority voters. Listen to what she had to say is the real reason Republicans have vowed to block any Supreme Court nominee that the president puts forward.
(BEGIN VIDEO CLIP)
HILLARY CLINTON, (D) PRESIDENTIAL CANDIDATE: Some are even saying he doesn't have the right to nominate anyone. As if somehow he's not the real president. Many Republicans talk in coded racial language about takers and losers. They demonize President Obama and encourage the ugliest impulses of the paranoid fringe.
(END VIDEO CLIP)
REGAN: Fringe. OK, so now racism is behind the Supreme Court fight?
Plus more trouble with the million plus Muslim migrants flooding Europe. New reports today of residents in Austria now describing train stations in other places migrants gather as "no go zones" for women, and President Obama and Hillary Clinton want to welcome thousands of them right here to the United States of America. Are we gearing up for the same kind of culture clash we're seeing in Europe?
All that coming up but first new developments amid Apple's battle with the federal government, the tech giant is refusing to hack into the San Bernardino killer's iPhone. They refuse that it could lead them mass hack attacks. The logic from Apple being that if the government forces them to create a back door into the iPhone, then others could use that same exact technology to steal private information that's putting all of us at risk.
Our own Liz MacDonald has been following the story in detail talking to all of her sources. And Liz, let's talk here first about the Judge's order, the judge is telling a private company "Hey you need to comply with the FBI." You need to help the FBI. It's your duty to help the FBI, and it's the law. So what does law enforcement really believe it can get, Liz, from this actual iPhone?
ELIZABETH MACDONALD, FOX BUSINESS CORRESPONDENT: It believes it can get any communications that Syed Farook had with potentially other terrorists. The fear on the part of law enforcement, Trish, is that they did discover a hoard of bombs and weapons material at his -- in his garage. They basically are saying that in mid-October, they found that his iCloud account went dark and they can no longer access that iCloud account for a month and a half prior to the shootings that killed 14 and injured 22.
Law enforcement is saying that Apple, prior to 2014 had been letting the government access its phones in order to track suspects and basically arrest individuals they've suspected of crimes. And especially they are also saying that you know Apple helped us before, what is different now? I'm looking right now at my notes from my interviews with law enforcement. They're saying that the iPhone is owned by the county health department for San Bernardino and it says to the FBI that, yes, you can access this phone that we own and Apple can also help. They have given us permission for that, Trish.
REGAN: All right. Thank you very much, Liz MacDonald.
REGAN: With more in this right now I am joined by James Woolsey. The big question of course being what responsibility does a private company have to come forward and work with the government? Maybe it's not just responsibility. Maybe it's a code of ethics that you need to adhere too as a company because this is so important and critical to law enforcement. Mr. Woolsey, good to see you. Good to have you back in the show.
AMB. JAMES WOOLSEY, FORMER CIA DIRECTOR: Good to see you, Trish. Thanks good to be here.
REGAN: So in your view, how big a deal is this that Apple is refusing to comply?
WOOLSEY: It's a very big deal, and it's a hard deal because there is virtue on both sides. This is a security versus liberty conflict and those are both big values guaranteed by our constitution and we got to pay attention to both of them.
On the security side, the law enforcement people have a real good case to make. They need to get into that phone in order top see who the killers may have been in touch with, who may had been guiding at things. There was a huge amount of material from blind shake case back 20 years ago that was would have been available to law enforcement. If the rules didn't have been prevent the access and we don't want to miss something like 9/11 because our law enforcement couldn't get into this material.
On the other hand Apple reasonably does not want to have back doors in all its cellphones. There's got to be a compromise solution and I think it's probably doable by having a very limited number of acces is be possible and have Apple be essentially in control of them and do it only under a court granted warrant.
REGAN: That's an interesting solution. I mean because a lot of Americans feel like hey, you know, it's not like the government have been so good at protecting information. I mean you just think of the government breaches we've had. And so that there are some real security concerns about the government being able to access all these data and then of coarse others being able to access that data.
So, you talk about this need for the two to work together, private industry and government. Is the will there though or this sort of stand out where Tim Cook is saying "Look, no way."
WOOLSEY: Well, it used to be there. I mean I -- when I was director in Central Intelligence. I had to go visited major American media outlet and pursued them giving them some very important secrets not to go public with aspect of the story and we work together and got it done. And the story was still important and understandable to people but they didn't disclose what I was really worried they would disclose. And that happens a lot. Government and law enforcement and intelligence has to works with the private companies and as technology moves and is moving -- Silicon Valley moves faster than the government.
So as technology gets more and more sophisticated quickly, these problems with larger amounts of data get harder before the FBI or lot of other organizations in the government can cath up.
REGAN: Director Woolsey, one of my concerns is that, you know, do you think that historically to World War II for example. And the allies were critical in terms in cracking the code enigma and that really helps to help us to succeed in that effort. I mean you fast-forward to today and technology is so advanced. Terrorist are using this technology to recruit to communicate and it so critical. I would think that we'd be able to break through and penetrate those selves that are operating on-line. But how do you do that if you do not have the willingness of these companies?
WOOLSEY: You're really going to get there help on the thing that matter and has to be spirit of cooperation. The problem gets harder all the time and more less understandable all the time. For example this meta data issue that was raised by Snowden sudden defection. That is a problem that was solved by the court some 20 years before with respect to first class mail. The government can look at the outside of the envelope, but not what so in the inside without the warrant. But that was one thing when you're just looking out first-class letters. There thousands of them I guess everyday .
WOOLSEY: . but not billions. And so when the number if things you've got to deal with goes up the way it can, with today's technology. It gets a lot harder.
REGAN: Well you bring up letter example and you bring up meta data. I mean my whole feeling on that has always been -- look, you know, the government can't see what's inside the letter but they can certainly see what's outside the letter.
WOOLSEY: Right. That was .
REGAN: And how is that really, that address any different than the random phone numbers also that people are dialing?
WOOLSEY: I don't think it is substantially different. I think as long as what you're keeping track of is the phone numbers and when how long the call was and where it's from and to. You're OK under the Supreme Court decisions as they now stand. But if you get inside the communication and listen to what people are saying, you've got to do that with a warrant.
REGAN: Absolutely. Absolutely.
WOOLSEY: And that general rule I think maybe able to be followed here with Apple's issue with the government.
REGAN: A very important point. All right, Ambassador Woolsey, thank you so much. Good to have your perspective on this story today.
WOOLSEY: Good to be with you.
REGAN: All right, turning to politics, everyone. South Carolina Governor Nikki Haley is going to now endorse Florida Senator Marco Rubio. Three days before Republicans and her statement in the primary. Haley has been very negative towards frontrunner Donald Trump, I mean you recall her post stated the union speech, of course. Knocking him around on that one. Well also in the political front.
New polls today, showing that Hillary Clinton has erased her huge national lead against Bernie Sanders. Now the two Democratic candidates are virtually tied nationally and in the next to vote state in Nevada. Since winning New Hampshire, Bernie Sanders has narrowed his 30 point national gap to just two points and in Nevada, Clinton has just a one point lead ahead of start of this caucuses.
Nevada is an important state to win, very important because the Democrats to the state are actually very representative of the country at-large. And so as the result, the state has a pretty good history of picking winners. Well, could this be the reason that she's courting the minority vote so hard, a key voting block in the two up coming states?
Joining me right now with more, Basil Smikle from the New York State Democratic Party and Republican strategist Boris Epshteyn. Good to see both of you guys.
BASIL SMIKLE, NEW YORK STATE DEMOCRATIC PARTY EXECUTIVE DIRECTOR: Good to be here, good afternoon.
REGAN: You heard what she said right? Can we play it again folks that talks she gave up in Harlem effectively accusing Republicans of racism? Listen to it.
(BEGIN VIDEO CLIP)
CLINTON: Some are even saying he doesn't have the right to nominate anyone. As if somehow he's not the real president. You know, that's in keeping of what we have heard all along, isn't it? Many Republicans talking coded racial language about takers and losers. They demonize President Obama and encourage the ugliest impulses of the paranoid fringe.
(END VIDEO CLIP)
REGAN: Really? Because it seems to me she's encouraging some pretty ugly impulses there. Boris is this what's it's really coming to?
BORIS EPSHTEYN, REPUBLICAN STRATEGIST: It's absolutely terrible. It's pandering and it's worse. She's someone who was desperate. There's the same day she had a terrible coughing fit to in, with all due respect. Her health doesn't seem to be that good either.
So she's in trouble, she knows it and now she's just going for the lowest bottom of the barrel. There's no .
REGAN: But I mean is it real, I mean she needs these minorities, right? She needs South Carolina.
EPSHTEYN: She's losing in South Carolina, she's losing in Nevada. Nevada is still a lot of Hispanic population, she's losing those voters.
SMIKLE: Actually, she's actually still ahead in those states. I don't want to conflict coughing with serious health issues that the greater ...
REGAN: No. Well, let's leave that one aside.
SMIKLE: That said .
REGAN: Let's continue her conversation there where she's effectively evoking racism saying Republicans don't even believe that this guy is really the President.
SMIKLE: Well .
REGAN: And what was our -- the .
SMIKLE: No, no, no, hold on. No, no, no hold on. First of all, there are code words that are used in particularly when referring to communities of color. That has always existed and I think it's interesting and important to note that it was Donald Trump himself who's running for the Republican nomination that questioned that President's birth where he was born and that wasn't just Donald Trump. There were number of Republicans and some Conservatives that wanted to go into this sort of birth area (ph). They say .
EPHSTEYN: Donald Trump has nothing to do with this nomination now.
EPSHTEYN: With the nomination, he's got nothing to do with the ...
SMIKLE: Has he not spoken about the Supreme Court nomination and whether or not the President should actually make this ...
EPSHTEYN: She's not running from Donald Trump.
SMIKLE: But she's running to get the Republican Party.
REGAN: But, why is she is trying to use race so essentially right now? I mean we didn't hear about it much before and all of the sudden they're talking about slavery reparations. And this is the scene for her on the campaign trail, why now?
SMIKLE: Well, we've talked about -- reparations have been talked about for a very long time. So it's not just now. But it is important as you noted early on that when you're looking at Nevada, when you're looking at South Carolina, those votes are very important, the communities of color, Latino African-American voters.
But I differ this -- what she's doing now from what has been considered pandering in the past. It's pandering if there's no record there. If there is a record in those communities, I mean pandering those communities and creating policies for those communities, it's not pandering. It's just going and reminding voters this is what we've done and this is what we can do ...
EPSHTEYN: Well that record has the case than over the last seven plus years. That record is President Obama's record, right?
EPSHTEYN: So she -- so it's not the Republican record she should be talking about but it's what has President Obama done or not done for those community plans.
REGAN: You think about these Democratic policies that have absolutely positively failed.
EPSHTEYN: Of course.
REGAN: A lot of these communities, Chicago is a great example.
SMIKLE: No. I wouldn't .
EPSHTEYN: She's desperate, that's what I mean. She's desperate and Bernie Sanders is starting to get in her. Not just in the national polls but if you break those down, she's getting her ...
REGAN: But can he gain with -- Basil, can he gain with minorities?
SMIKLE: I think he can. Look and going back to the president's record, more African-American graduated from high school and gone into college than ever before. They're actually more African-American in college than in prison contrary to our popular narrative.
REGAN: OK then why do we keep hearing about income inequality, income inequality now ...
SMIKLE: That is true but because that is true and that is true not just in communities of color. That's true in white communities and southern communities, in Appalachia, all over the country that is consistently true. In fact .
REGAN: So you think blacks are better off today than they were eight years ago?
SMIKLE: I think African-Americans are better of today than they were eight years ago, 20 years ago. But there's still work to be done and I think that's what she's talking about. She's saying you can't stop ...
REGAN: Look, OK, I get 30 seconds left.
EPSHTEYN: That kind of message from here is just simple not helpful. It is absolutely not helpful it is divisive to say the Republicans are somehow racist. We're not racist. We've got plenty African-Americans in our party. We're a party of opportunity, we're a party of the future. And that kind of message from her doesn't resonate .
REGAN: Hey, hey, it's politics, it's politics. All right Thank you so much guys.
SMIKLE: All right.
REGAN: I'm going to see you again in a little bit.
Coming up, airline tickets, they're going up. The airlines are hiking prices for the second time this year. And yet you get jet fuel prices going down, nearly at 70 percent. So what exactly is going on? If somebody wants to make some money, I'd say there's nothing you can do about. We're going to talk about that.
Plus, much more coming up on Intel. See you right back here in two.
REGAN: OK. We've got some airlines announcing today that they are hiking air fares for the second time this year but with jet fuel, the airline's biggest cost center down nearly 70 percent. So remarkable, right?
And airlines breaking in near record profits, why are they (inaudible) being passed on to us travelers.
Joining me right now, with more, Jeff Flock.
Jeff, well, you know, look, can you blame them? They're corporations. Their job is to make money. This is their one big opportunity to do so. They're milking it.
JEFF FLOCK, FOX NEWS BUSINESS CORRESPONDENT: I was going to say, why did we asked for more money last time we negotiated our contracts, Trish. I guess we did because number one, we thought we could get it and number two, we thought we were worth it. And the airlines would say they're investing money in new planes and that sort of thing. And you're right, they think they can get it just like we did.
REGAN: It is a market driven economy that we live in, supply and demand and they are getting it, right? I mean, if they're charging more, it shows you that the market can bear it which has go to be kind of a good indicator for the overall economy, Jeff.
FLOCK: Well, these piece flights are, you know, if you take a flight anywhere, you know they're generally packed. So there's a finite number of seats out there and they can charge.
You know, what they're in now, what are they charging extra, it's $3 a flight essentially on average, $6 for a round trip.
So, it's not a huge increase. And they're constantly always probing to see what will the market bear? What will it accept? And at this point, that's what it accepting.
REGAN: That's what it's accepting. So, you know what, more power to them, I say. It is what it is. We are all capitalist here.
Jeff, thank you so much.
REGAN: Good to see you.
FLOCK: You said it.
REGAN: All right, coming up, everyone, parts of Austria, virtual "no go zones" for women who feel unsafe after a flood of migrants are turned back from its border with Germany as Europe raises now for thousands of more migrants this spring.
It is a crisis that threatens to break up the European Union and it's a crisis that we could perhaps be here with 10,000 refugees expected to arrive on U.S. soil this year.
Judy Miller is going to join me with more. She has some perspective on just exactly how challenging it is for a western woman in this society.
REGAN: All right. New reports today of "no go zones" for women in Austria as a results of the increased in Muslim migrants to the region.
Austria is reporting a spike in crime that coincides with Germany turning away an increasing number of refuges. As such they're coming to Austria. And the harassment of women there has gotten so bad that a father's open letter to local government officials in which he said that his 16-year-old daughter is scared to go out alone now has gone viral.
In this letter, he writes, I'm going to share with you. "My daughter is 16 and is terrified when she has to come through the Linz train station in the evening. As a result, we have now arranged a travel group with other parents. My wife and I went to see it for ourselves. We traveled the same route that our daughter did and we found out that it was even worse than she described. There was not a policeman in sight and in a country like Austria it cannot be the case that our children are scared from going to and from work."
How can Europe continue to absorb more migrants when culturally these migrants are so at odds with European values?
Fox News Correspondent Judith Miller, a Pulitzer Prize winning investigative journalist who has spent a lot of time in the Middle East herself, joins me now with more.
Judy, let me start first with the "no go zone." What is that mean?
JUDITH MILLER, FOX NEWS CORRESPONDENT: These are simply areas in European countries where the people who live there no longer feel safe, either because police protection is inadequate or because there are such a concentration of refugees and migrants that they feel that they're not in their own country.
REGAN: So, when this father talks about not having any police officers .
REGAN: . on duty, is that the police that are reluctant to even be there because it's been so overrun by these migrants?
MILLER: There are just too few of them. I mean, what you have to do when you have a crisis like this and this is a crisis is you have to add police on the streets, in these areas so that the people who live in these countries feel safe and don't turn around and say, "That's it, we don't want anymore of these people."
Austria is a very small country.
REGAN: Very small.
MILLER: It's 8.5 million people. Germany is 80 million people so they can absorb a million people. Austria simply can't.
REGAN: Maybe or maybe not. I mean, you think about the thousand, upwards of a thousand assaults that happened on New Year's Eve in Germany.
REGAN: And, you know, there are a lot of questions there.
I spent time as a student studying in Austria. In Grath, Austria, it was very safe, very small kind of community. I mean, it's tragic to think and I was about 18 years old when I was there. It's tragic to think of 16, 18 year-old girls that --I don't care, 45 or 55-year-old girl out there worried for their own safety.
You spent so much time in the Middle East. What is that like as a woman? What kind of measures do you feel like you need to take when you're in a crowded situation?
MILLER: Well, if you're a woman in the Middle East, a western woman in the Middle East, just particularly a woman with blonde hair which I don't have, you're automatically a subject of great interest because you're different. So you have to be very careful about how you dress and where you go.
REGAN: OK. Interest.
MILLER: Interest. What's really happens and this is important, Trish, is the breakdown of their own civilization, their own government. And they're fleeing -- these people are fleeing for their lives, so all of the constraints that exist in the societies are suddenly gone.
They don't have governments. They don't have police. They don't have people to keep them in line. They don't have travel units anymore.
And when you leave your area of comfort and you go to a strange area, it tends to bring out the worst in some people.
REGAN: It's no excuse. It is no excuse. It's not as though .
MILLER: No, it's not excuse but .
REGAN: . you know, you can grab a western woman because she's dressed differently or has a different color hair or different color of eyes than what would normally be what you are accustomed to and that's what they're dealing with.
MILLER: Look, this is a very different world than the Middle East that I started covering when I was in 30 years ago, when I could go anywhere by myself and feel relatively safe. That world too is totally gone and what we have now are people running around, beheading the people who are fleeing.
I mean, I cannot stress the pain, the suffering that has been inflicted on these people. They come to Europe but now .
REGAN: It's awful. But the pain, the suffering on the Europeans that are now stuck dealing with all of this.
MILLER: That's the problem. That's the problem because these are two civilizations with different standards, different attitudes towards women, different ways of relating to family and an unaccompanied woman. And they simply can't understand how European women feel. And how European women are expressing .
REGAN: . we're so angry. And you know what?
MILLER: It's so terrible.
REGAN: They got to start understanding it. They got to start understanding it. Or you now what? The European nations would say, "Sorry, we're not taking you here. We're not housing you. We're not feeding you. You are not abiding by our culture .