MARIA-01
Battleground States; Reports of an Active Shooter Overnight in LAX Turned
Out to be False Alarm; 2016 on Track To Be the Worst Year for IPOs Since
Financial Crisis; Mylan to Release Generic Version of the EpiPen; ACA
Limiting Coverage; Fewer Options, More Expense; The 2016 MTV Video Music
Awards; Kaepernick Outrage - Part 1>
Consumers; Economy; Elections; Families; Government; Pharmaceuticals;
Policies; Politics; Polls; Safety; Science; Stock Market; Television and
Radio; Government; Health Insurance; Awards; VMA; Sports >
MARIA BARTIROMO, FBN ANCHOR: (HEADLINES) (MARKET HEADLINES) All those stories coming up this morning.
Joining me to talk about it, Recon Capital CIO, Kevin Kelly; Democratic Strategist Harlan Hill. Gentlemen, good to see you.
KEVIN KELLY, CIO, RECON CAPITAL PARTNERS: Good to see you. We got our Queen Bey back!
HARLAN HILL, DEMOCRATIC STRATEGIST: That's right.
[Laughter]
KELLY: That's perfect.
BARTIROMO: I like that. I like that. Thank you so much. Look, this is it; final week ahead of what's going to be an incredible election season. Once we get back here next week, it's all system. This is a big week for economic data.
KELLY: It's huge and especially Friday actually, --
BARTIROMO: Yes.
KELLY: -- we're getting the jobs number. It may reaffirm what Janet Yellen is thinking. So we'll see because everything is leading to a rate hike and you are seeing it play out in the market right now.
BARTIROMO: We've got to see if the job numbers really jive with that on Friday, the jobs numbers we're looking at that. Then, on the political side, people, right now, waiting to see how they strategize ahead of the debates, Harlan.
HILL: This is crunch time.
BARTIROMO: Yes.
HILL: And I think we've seen a new Donald Trump. Whether or not he can keep it up is another question.
BARTIROMO: Yes, it sure it. All right; we've got a lot coming up this morning; hope you'll stay with us. Former Lieutenant Governor, and Trump Campaign Economic Advisor Betsy McCaughey is with us; Former House Majority Leader Tom DeLay will join us; and, CKE Restaurant CEO, and Trump Victory Committee Member, Andy Puzder, with us. Stay with us; you don't want to miss a moment of it this morning.
We kick it off right now with our top story: Donald Trump making a huge advertising buy in key battleground states. His campaign will spend upwards of $10 million in nine states. They include Ohio, Florida, Pennsylvania, Virginia and Iowa, of course, the swing states. These are ads, he's expect to go move the needle and help close the gap he has with Hillary Clinton in the polls; but will they?
I want to bring in Kelly Riddell right now, Washington Times Reporter. Kelly, good to see you. Thank so much for being with us.
KELLY RIDDELL, REPORTER, "THE WASHINGTON TIMES," via satellite: Thank you, Maria.
BARTIROMO: What do you think; is this what he needs to offset what she's been throwing out there, which is a lot of ads, negative ads, because she's got the money to do so?
RIDDELL: Yes; I think by the end of July she had run $600 million worth of television ads to Donald Trump's $4.8 million. So he's definitely behind the eight-ball, when it comes to actually getting out there, on TV, and showing a different side of him, which is the most important thing. We don't want to let Hillary Clinton define him and his message. So to get his message out there, in these swing states, and counterbalance, kind of, what she's doing is important.
He has a lot of money and he seems to be sitting on it so a lot of us have been speculating what is he actually going to do with this money? You know, ads are number one, but he also needs to build a ground game and an infrastructure out there, so that when November come knows where his people are and he can get them out to vote. That's something we haven't seen yet.
BARTIROMO: It's a good point. Harlan, does he need to do ads knocking Hillary Clinton or does he need to do ads talking about his strength and leadership when it comes to the issues that are important, national security and the economy?
HILL: Well I think Kelly may have a take on this too, but I think what will be really interesting is does he go positive at this point and leave the negative stuff, the negative ads, the negative media to the PAC's? The PAC's are starting to put together very significant money. I would like to see them go negative while he starts to reintroduce himself as a candidate.
BARTIROMO: He should take the high road?
HILL: Yes.
KELLY: Yes, he should take the high road, and I'm interested in what Kelly has to say about this because she just mentioned the ground game. So, basically, Hillary Clinton has staff about 800 people.
RIDDELL: Yes.
KELLY: He's got 70 or so. Is that where the money that you had mentioned he's raised that he hasn't deployed yet, is that where it's going to go? Is it going to go towards the ground effort, in getting staff in those key battleground states?
RIDDELL: I mean, and that's where typically, on a traditional year with a traditional candidate, that's exactly where it would go. You would have the RNC doing their part, and they are running ground game for him, and then you would have separate ground game teams in battleground states like Florida, like Pennsylvania, like Ohio, where you're going to need the extra voter turnout to perhaps swing the election. So far we haven't seen him do this. We know that she is doing this.
In an election cycle where both candidates are so - have such high unfavorable, it's really -- you need to get these people out there. Even if they hold their nose, you have to identify them and get them out to the ballot boxes in November.
BARTIROMO: Kelly, there's a group - apparently "The Wall Street Journal" is reporting that there is a group of White Republican retirees moving to Florida, giving Donald Trump a boost in the Sunshine State. The latest Mason-Dixon Poll shows that Hillary Clinton has only a 2-point advantage there; she's at 44-percent, he's at 42-percent among registered voters. What do you think about these White GOP retirees? Is that going to be enough to help Donald Trump take Florida?
RIDDELL: Well, it will certainly move the needle and he certainly needs the needle moved any incremental bit. The NRA is also doing a lot on the ground to help get the vote out; but the Trump campaign does need to build an infrastructure there and I think they are working on it. Their latest FEC reports will be telling but so far we haven't seen much go into actual infrastructure build. A lot being spent on "Make America Great" hats, but not a lot on the ground game.
HILL: Kelly, Harlan Hill here. So one thing that I thought was so amazing about the Obamas' campaign in 2008, 2012 was they spent a lot of time on data, determining when and where to place Barack Obama because they realized the campaign's most valuable resource is their candidate and I see Donald Trump all over the place. He's doing a lot of different media appearances. Sometimes he does different events in states that I don't think that he can win.
What are you hearing about being more intelligent about resource allocation, you know, and not wasting time on events and media here in New York or New Jersey, which he's not going to win, to be honest, and spending it in Ohio, Pennsylvania, Florida, states that he can win?
RIDDELL: I think Kellyanne Conway is a greatest addition to the campaign and I think that we've seen a lot more disciplined Donald Trump's since she's been at the helm. He's also hired the Cambridge Data Analytics firm that Ted Cruz used, in terms of motivating the grassroots and identifying people. So that's a positive step there. They were also actually used in the Brexit vote, over in Europe, in terms of identifying voters who might want to vote Leave and getting them to the polls.
So he is slowly kind of getting this -- getting his ground game up and running; it's just does he have time left. I mean, we're only 70 days, or such odd days out to November, so --
BARTIROMO: Yes, and then you've got the other side of the story; right? Citizens United, they are receiving a new batch of Clinton emails during her tenure at State Department. Some of those emails reveal that the Clinton Foundation executive, Doug Band, contacted top Clinton aide Huma Abedin, seeking special treatment from donors. So, Congressman Jason Chaffetz is now calling on the FBI to act; listen to this.
(BEGIN VIDEO CLIP)
REP. JASON CHAFFETZ (R-UT): I think the public has the right to know. We certainly have been asking for these documents since 2012 and if Hillary Clinton wants to come clean, and she hasn't yet, most everything she said about this has turned out to be a lie, she should provide calendar. The Associated Press has been fighting for years, in the courts, just to get her calendar, and she has more than one calendar, but get her calendars out there she said at a press conference about this, and the FBI should provide Congress, and consequently the public, an unclassified version of the report that they had.
(END VIDEO CLIP)
BARTIROMO: So, Kelly, the calendar; why is the calendar important? We know that just last week we learned that away from heads of state and comparable positions, 50-percent of her meetings were with donors from the Clinton Foundation. That's why everyone wants to see calendars.
Why was she spending so much time with donors of the Foundation as Secretary of State? Will the FBI act on this request? What do you think?
RIDDELL: I definitely think it's going act on the request, but then you had the State Department come out over the weekend and say there's just no way we can release her calendars in time for the November election, which is so unfortunate because we will never get a complete picture of exactly who she was meeting with, who these special interest groups were with until after she either won or lost the election; and that's just unfair to the American people.
BARTIROMO: It's a good point. What a tight moment in time. Kelly, good to talk with you. Thanks so much for joining us.
RIDDELL: Thank you, Maria.
BARTIROMO: We'll see you soon. Kelly Riddell there. Chaos, meanwhile, at Los Angeles International Airport overnight. A false alarm after a shooter prompted evacuations. It was a false alarm, though, but there were shots heard; more of what caused that scare next. Then, more trouble for GM. The latest on a new recall of more than 380,000 of its SUV's and police vehicles; back in a moment.
(COMMERCIAL BREAK)
BARTIROMO: Welcome back. Well, there are reports of an active shooter overnight in LAX. That led to the evacuation of the Los Angeles International Airport; turned out to be a false alarm. Nicole Petallides with the details and rest of the headlines. Nicole, good morning to you.
NICOLE PETALLIDES, FBN CORRESPONDENT: Good morning, Maria. (HEADLINES) And, General Motors is recalling more than 383,000 cars, SUV's and police vehicles in two separate recalls. Over 367,000 2013 Equinox and GMC Terrain SUV's are recalled to fix windshield wipers that can stop working when you're driving. More than 15,000 cars and police vehicles are being recalled because the seat belts may not work correctly. GMC says 2014-2016 Chevrolet Caprice police pursuit and Chevy SS cars have driver side seatbelts tensioner cables that can wear out and break. A broken tensioner cable will leave the driver more likely to be injured during a crash. Maria, back to you.
BARTIROMO: All right, Nicole; thanks so much. You never know how the recall will affect companies. Kevin, two separate recalls for GM now. Is this going to affect confidence in the brand?
KELLY: Yes; this certainly is going to be impacting the markets for these consumer names: GM, Ford, all of them across the board. We are seeing that because we may have hit peak auto sales. You saw in most recent earnings come out from those companies, they talked about that consistently, where they are using more and more incentives. Fleet sales were really driving and consumers are buying less of these SUV's or crossover SUV's that she just mentioned, the Chevy Equinox which is that. So consumers are looking at this and it's not good because they are picking and choosing more.
BARTIROMO: And for a little bit the auto sector was one of the stronger parts of the economy. We'll get another look this week when we get the job's number out, Harlan, but it certainly, when you look at the GDP number last week, it doesn't feel like anything, broadly speaking, has become so euphoric.
HILL: I think it's going to get worse, when you look at the rise of Lyft and Uber, and GM's increasing interest in both of those platforms. Maybe we've reached peak auto, forever; you know? Are we going to see a long- term decline in the auto industry because people don't purchase cars anymore, they just do ride-sharing service?
KELLY: We are seeing subprime auto loans at peak levels before the crisis, and that's a big overhang because the consumer is actually taking on a lot more debt, so that's going to be impacting not only the car companies but also other consumer brand companies. We saw that play out in earnings most recently when retails came out over the last couple of weeks and we were talking about the GDP. We've had the worst economic recovery since the crisis. This business cycle is long in the tooth. So there's a lot of headwinds coming against the automotive sector right now.
BARTIROMO: We've got a big week, consumer confidence, factory orders, the job's number, housing stats; meanwhile, it's going to be a pretty good market for IPO's right after Labor Day.
Top story in "The Journal" this morning: a number of companies expected to go public in the next couple of weeks, right after Labor Day, but "The Journal" is saying the momentum could be short lived; we'll tell you about it. Then, Beyonc‚ takes the spotlight at the MTV Video Music Awards last night. It's not just her "Lemonade" performance that was the talk of the night. We will tell you about it; back in a moment
(COMMERCIAL BREAK)
BARTIROMO: Welcome back, Labor Day marks the unofficial end of summer, but according to "The Wall Street Journal" things are about to heat up for IPO market. It has been a rough year for offerings, that's for sure. 2016 on track to be the worst year for IPO's since the final crisis. So you wonder, Kevin Kelly, if, in fact, we are going to see more deals and if that's going to indicate a positive for the stock market or, when you have more stock, is that too much supply and that's going to suck up all the dollars out there?
KELLY: It certainly.
BARTIROMO: What's the impact on the market?
KELLY: Yes, it's certainly an interesting IPO season this year and one of the reasons why you're seeing a flood of about seven deals come out between now and early October is because there is an election season, as well. The market has done well. Volatility is low. We're up on the year; but what's actually a big take away from this IPO season, you can say, is that we've seen the lowest amount of deals since the crisis.
So we are starting to see basically -- we are starting to see 25-percent of the shares that have gone public this year are up; right? So that's one average. So every company that's gone public this year, it's up about 25- percent, including Twilio, which is one of the Silicon Valley companies. The biggest IPO to come out this season, though, is Valvoline. That's actually a spin-off that should be coming. Investors are really excited about that.
BARTIROMO: Valvoline, right; Valvoline. That's a name from the past, Valvoline.
KELLY: Exactly; and it's a spin-off right now.
[Laughter]
KELLY: So, that's pretty interesting. Five PO - here's another interesting stat. 5-percent of the IPO's have priced above their initial range. So it's a very disciplined season. The buyers of IPO's have been really strict on pricing, so I think that's going to actually dictate a lot of market action going into this IPO season in September and October.
BARTIROMO: You make a good point because even though we are going to see this huge boost in IPO's right after Labor Day, the window is short lived because six weeks into it, the uncertainly starts coming into it. Well, who is going to be president --
KELLY: Exactly.
BARTIROMO: -- going into the election. So you mention Valvoline, that's a big one. Then you've got Nutanix, Silicon Valley software company that's going to be one of the few billion-dollar startups to debut this week as well?
KELLY: Yes.
BARTIROMO: The week of Labor Day.
KELLY: So the great part about this IPO calendar is that there's a retail company, there's an industrial company, a beauty's company, a retail company and industrial company. You've got a software company. So, anything that the buyers want, and that's emblematic of what the bankers are doing. They're going out there and selling a bunch of different types of companies for different buyers.
HILL: Well, and I'm curious, I mean, this just doesn't seem to match with the reality that I'm seeing day-to-day. We are growing at 1-percent, or less, depending on who you ask. Median household income is down. When you talk to Americans, they're not feeling this. What we are seeing in the markets don't jive with -
BARTIROMO: That's true.
KELLY: Yes.
HILL: -- with the reality that Americans are living. So what's the disconnect and why?
KELLY: I'll tell you what the disconnect is. The disconnect is that we've seen unprecedented monetary policy actually push markets higher. So what's happened is, it hasn't trickled into the earnings of companies.
60-percent of the gains since 2009 have been from multiple expansion. What I mean by that is, PE multiples have gone from 14 to 15 to 16. So you are seeing the valuation of these companies grow. That's why you are seeing the IPO market starting to open up, because if you look at the market right now it's expensive relative to its history. We're trading at about 17.5 times earnings, when you go back to where we had peak earnings in 2014. So that's where the disconnect is; it hasn't really gone down. The Federal Reserve's monetary policy have led to a wealth effect.
BARTIROMO: Let me shift gears here because we have breaking news this morning, Kevin.
Mylan is announcing it's going to release a generic version of the EpiPen. We've been talking about this, obviously, every day. This is a big story. It's releasing this new version of the EpiPen because it's under so much pressure because the price of the EpiPen has gone up 400-percent; and the CEO's in the corner, basically trying to explain why the price has gone up so much.
KELLY: Yes; this is a hot-bed issue and I'm not under -- I'm not really sure about the management of this company because this has been in the headlines, actually, since last September and they continued to raise the price of this drug. We can see what happens to shareholders when management is just disconnected from reality, and you're seeing it in the stock price. I mean, it's down from over $49 to $43 now. It's not going to go away. They have a really bad optics issue. They should have never raised the price again. Now they're doing damage control, but you're see what's happening, that's it's a very convoluted and complex system in the healthcare space; right?
BARTIROMO: Well, let me tell you what she told me yesterday, and this is Heather Bresch, the CEO of Mylan, who basically is blaming the system because, you know, there are a lot of mouths to feed, if you will. Basically she says the price is $609. This is for a two-pack EpiPen. Out of $609 Mylan gets $274 because pharmacy benefit managers, insurers, wholesalers, retail pharmacy all take their take. As a result, that adds to the price and that's why the customer is paying $609.
Look, you could believe it or not, but the bottom line is there are a lot of mouths to feed when it comes to drugs. This is an ongoing issue, in terms of the price of drugs and we know what Hillary Clinton says she's going to do.
HILL: Yes; I mean, what's so frustrating about this is that healthcare in this system isn't that - or in this country, it's not about healthcare. It's about getting as many people into the system as possible. It's about raw numbers, not about outcomes. You know, this CEO just perfectly illustrates it. She's totally tone-deaf to that. So I wonder, you know, can she survive this as the leader of this company? I mean, it seems like they are just in a death spiral here. I mean, I watched it over the weekend and her interviews were terrible.
BARTIROMO: We know now that she actually did sell some stock. So that's, of course, one more - and it's not related probably, --
KELLY: No, it's not.
[CROSS TALK}
BARTIROMO: Exactly.
KELLY: Exactly.
BARTIROMO: It's just one more thing to say, wait, she got the bonus and then she sold stock and I'm paying for this EpiPen. So it's just the optics. It doesn't look good.
KELLY: It's really bad. I mean, getting bad to kind of how she's blaming everybody else. She pre-negotiates -- Mylan pre-negotiates with the pharmacy benefit managers and everybody else, and health - the insurers are the ones that are actually getting blamed but they are the ones not setting the pricing or anything, and they are passing the pricing off to consumers.
Healthcare is up 6-percent this year. You think about how everybody has gotten this tax break because oil has been low and is feeding into the gas pumps. Where is it going? It's going directly into healthcare.
BARTIROMO: Yes; well, I just want to say, though, if you're an investor and you want to invest in lifesaving drugs, you have to believe that you're going to make money on it. So to put a cap on prices, that will shut off a lot of funding. So I'm not defending the price of this; this is ridiculous and the price of drugs in general, but there has to be a balance here. You can't always say that drugs should be -
KELLY: As an investor, look at companies like Johnson and Johnson. They've navigated and done it well, and they're seen as a defensive name; but they actually did very well this earning season. Their stock is at an all-time high. That's because they are growing in their pharmaceutical space, and they are doing it the right way.
BARTIROMO: All right; we'll watch that one. American's have been left feeling the pinch as more insurers ditch Obamacare meanwhile. A new study painting a grim picture of shrinking choices and mounting costs for consumers using Affordable Care Act exchanges. Plus, outrage over Colin Kaepernick's refusal to stand for the American National Anthem. Football fans are not taking his defiant move sitting down. We have the details next.
(COMMERCIAL BREAK)
BARTIROMO: Happy Monday, everybody. Welcome back. I'm Maria Bartiromo. It is Monday morning, August 29th. We are glad you're with us. Here are your top stories at 6:30 a.m. on the east coast.
The war of words heating up on the campaign trail. Donald Trump calling for Hillary Clinton to release her medical records. While the Clinton campaign is pushing for Donald Trump to release his tax returns
Plus a key issue on the trail, health care. Obamacare facing new headwinds Americans are not signing up and now there are new concerns over monopolies. Former Obama campaign manager, David Plouffe, says he's hopeful.
(BEGIN VIDEO CLIP)
DAVID PLOUFFE, FORMER OBAMA CAMPAIGN MANAGER: You've had millions and millions of Americans and their families now have health care coverage. You're seeing a lot of innovation around payments. So I think what will happen after this election now is obviously you'll have the space to say, OK, what's working well and I think almost all of it is.
(END VIDEO CLIP)
BARTIROMO: We'll take a closer look at the president's signature legislation coming up in the program.
A devastating accident in Louisiana to report, at least two flood volunteers killed after a bus with an unlicensed driver crashes. We will bring you the story.
Flying high, new drone rules going into effect today. What you need to know if you want to use the devices for your business.
Markets this morning really flat on this kick-off to the final week unofficial of the end of summer. The markets are looking at a fractional loss at the opening trading. It's a big week, though, for economic data including the jobs numbers, consumer confidence factory orders, home prices, and it's going to be a pretty good IPO market right after Labor Day. We are seeing some signs of life there. We will tell you about it.
In Europe this morning, mix performances, take a look at where we stand in Europe right now. The FT 100 is up about 20 points. The other major averages though negative. The CAC Quarante in Paris down better than 1 percent. The DAX Index in Germany down almost 1 percent.
In Asia overnight, the Nikkei average in Japan up better than 2 percent. The Japanese yen was down versus the dollar and that triggered buying of equities.
Jersey burning average after 49ers quarterback, Colin Kaepernick, refused to stand for the national anthem, a lot of discussion about that this morning.
Plus the big weekend at the box office including the hall for the movie about the Obamas. We will tell you about it.
Britney Spears return to VMA stage last night after a decade, her performance though paled in comparison to Queen Bay in her controversial tribute. We'll tell you about Beyonce and the low lights and highlights at the awards night last night.
First though, a new study finds the Affordable Care Act exchanges will only offer one coverage option to 31 percent of the United States counties next year. Another 31 percent may only have two options.
Joining me right now is Trump supporter, Betsy McCaughey, to talk a bit about that. Betsy, good to see you.
BETSY MCCAUGHEY, FORMER NEW YORK STATE LIEUTENANT GOVERNOR: Thank you. Yes, Obamacare is in a death spiral. That's what we see happening around the country. Big insurance are pulling out.
BARTIROMO: Big time. Three majors are pulling out. You say a death spiral, what does that mean? I mean, for the guy and girl out there who is thinking --
MCCAUGHEY: It's a flawed plan. The fact is it tries to force healthy people to pay the same amount for health insurance as chronically ill people. But we know that 5 percent of the people in the country use 50 percent of health care.
So this is like trying to feed a Chihuahua and a great dane on the same budget. It won't work. The healthy people say I'm not paying enough and that's exactly what's happened.
Then the people who signed up for insurance are all sick, right. So there isn't enough money there for the insurance companies to cover their costs, and over the last three years, every year these big insurers have lost together $3 billion.
They're profitable with the rest of their business, but they are losing so much money on the Affordable Care Act that they are pulling out of the exchanges.
BARTIROMO: What gets me is how expensive it is. You are talking about what has happened in terms of people being insured and why these insurance companies are stepping out. When you look at the average family out there, their costs have skyrocketed.
MCCAUGHEY: Let me point out that this year, November 1st is when open enrolment begins for 2017. The average premium according to the Obama administration is going to be up 25 percent. In some states 50 percent. Tennessee 40 percent.
