Grading the Ads; Primary Challenges; Frozen OJ Futures Squeeze - Part 2

WITH-MARIA-02

MARIA-02

Anderson >

BRIAN BRENBERG, PROFESSOR OF BUSINESS AND ECONOMICS, THE KING'S COLLEGE, off camera: Well, Dan, that's a good point and we know that there are so many companies, a lot of tech companies, a lot of pharma-companies that are in Ireland right now. Does this European Commission ruling affect them? Are they starting to make preparations to deal with this? The road ahead looks like they might be facing the same fate here?

MITCHELL: All of them have to be prepared because there is unquestionably an anti-Ireland -- anti-Irish tax system animus that is motivating the European Commission. What is ironic about this is if countries like, say France or Germany think that Apple is somehow diverting German source or French-source income to Ireland, they already have plenty of power through their transfer pricing rule - I don't want to sound all boring and gargony, but there's already he mechanisms in place that can handle this.

This is an unprecedented and amazingly destructive thing for the European Commission to be doing, in terms of international tax policy.

LEE CARTER, POLLSTER AND PARTNER, MASLANSKY AND PARTNERS: Do you think this becomes an argument for lower taxes here in the -- in the U.S.? Does this help people understand the benefits of a lower corporate tax rate?

MITCHELL: Well there is no question Ireland has benefited immensely by having a competitive corporate tax system, and, yes; the lesson is clear to the U.S., but it wouldn't matter if we brought corporate tax rate down to zero. This wouldn't stop the European Commission from going after U.S. multinationals. This is an area where the Treasury Department has actually been on the right side, fighting on behalf of (inaudible) and warning the Europeans, you know, not to do this sort of bold new effort, Brave New World of global taxation from a bunch of bureaucrats in Brussels who, oh, by the way, benefit from a preferential tax regime themselves.

BARTIROMO: Yes, I mean, it's interesting that this is okay with the U.S.; right? I mean, Apple getting, you know, getting lower taxes in Ireland, the U.S. is not getting upset about that. Meanwhile, they blocked the deal in pharmaceuticals between Pfizer and Allergan. They wouldn't allow that to go through. Is Apple getting special treatment here, from the U.S.?

MITCHELL: There's no question that the Treasury Department has gone through a lot of effort, probably because Apple is a major U.S. company; and it's not as if the U.S. Treasury Department has pure motives. They're worried that if the Europeans grab a bunch more cash from Apple, that will ultimately reduce how much money the U.S. Treasury can get from Apple. So we're really talking about a couple of jackals fighting over a carcass and I'm on the side of the carcass, not the jackals.

BARTIROMO: Wow! I think you said it right, this is a real money grab Dagen. I mean, they want the money.

MCDOWELL: Yes, it's a socialist society and they are desperately in need of money to fund all of the social welfare programs throughout Europe. How do you do it? You go after the money kingpin, and that would be Apple.

BARTIROMO: Right; more than $200 billion overseas. Dan, good to have you on the program, thanks so much.

MITCHELL: Thank you.

BARTIROMO: We appreciate it; Dan Mitchell. By the way, another big event, September 7th, Apple's got a big special event, I guess, about the Apple iPhone.

MCDOWELL: New iPhone without the headphone jack, apparently.

BARTIROMO: Great, that'll cost us more.

[Laughter]

BARTIROMO: I mean it. Changing the plug, the headphones.

MCDOWELL: That's the only thing that is significant that we all know; I think -

BARTIROMO: Yes.

MCDOWELL: -- is that they're getting rid of the headphone jack, to make the phone -

BARTIROMO: Yes, we'll see. September 7 is the big day.

Meanwhile, changes coming to Obamacare. It could be too late though. The Obama Administration is proposing a series of measures aimed at minimizing loses, including sharing the risks and costs of insuring sicker enrollees. The proposal comes after a number of insurance companies announced plans to ditch the Affordable Care Act exchanges, leaving one-third of counties with just a single Obamacare insurer by 2017.

Brian Brenberg is with us today, and I want to get your take on these new proposals. Is it going to cause insurers to rethink dropping Obamacare?

BRENBERG: You know, I really don't think so. The insurers are losing hundreds of millions of dollars a year on these insurance policies and you've seen the big players leave market. I think they could look and see this possibility but even with this kind of provision, look, if everybody is losing money, you know doesn't matter if we try to redistribute profits. Nobody is going to make gains here.

They have a real problem. You are seeing this Obamacare death spiral and this, I think, is just more evidence that the administration really understands this and is sort of try to throw everything they can at the problem.

BARTIROMO: Do you think Donald Trump or Hillary Clinton has discussed or really communicated really a better alternative? Hillary said she wants to build on it; what does that mean? And Donald Trump said he wants to replace and repeal; what does that mean?

BRENBERG: I think - I would be curious to get Lee's take on this too, but I do think Trump has really missed an opportunity to say more about healthcare. He was very weak on this in the debates. We saw some of the disasters in the debates around trying to talk healthcare policy. He hasn't said much about it since then. Look this is an area where Obamacare is failing and, look, Americans across the board can feel the premium increases. They see their insurers leaving. It's time to jump on this. It's a unifying message. I don't know why he hasn't talked about it more.

MCDOWELL: Her idea -- one of the ideas that she's floated is a public option -

CARTER: Right.

MCDOWELL: -- an option to buy health insurance from what would be the government. It would be like Medicare, if you will. Not to make it completely of government run your health insurance, but to at least provide a path to that. That is her -- but, again, isn't that what they wanted all along?

CARTER: Yes, it seems like this is just a step in that direction. Now, I think that you are right. I think that Donald Trump has missed an opportunity because I think it is easy to message this. I think it's really easy to get in and focus on those things that people are feeling the pain of Obamacare. It's not as successful as they expected. We only have 11 million people enrolled in it.

BARTIROMO: It's very expensive.

CARTER: It's very, very expensive. A lot of people are suffering because all of -- everybody else's premiums are going up.

BARTIROMO: Yes.

CARTER: I think that there has to be a solution, and I think should it be articulated. I think the one thing about Donald Trump is, he is focused on what is most important to the American voter right now: it's the economy; it's jobs; it's national security. Healthcare falls somewhere below that, and I think that is why he hasn't done it yet but he has to.

MCDOWELL: Kellyanne Conway - Kellyanne Conway has talked about this very specifically, because, again, the major changes -- you get hit with the price increases in October, I think. So it's right before election.

BARTIROMO: That's right.

MCDOWELL: I would guess that you're going to see more articulation from the Trump campaign on this, maybe even ads cut as we get closer to election about because people who don't have choice, whose healthcare prices are going up, it's because of Obamacare and they will be hitting that, because that is about the economy and it's about your family safety and security.

[Cross Talk]

BARTIROMO: -- there is not a lot of conversation about the debt and deficit. The new CBO estimate predicts budget deficit is going to spike to $590 billion this year. The national debt to hit $20 trillion next year. Could this cause a fiscal crisis?

BRENBERG: Well, I mean, we're heading, you know, headlong in this direction, and it's so interesting how little we've talked about the issue. CBO estimates come out, we see deficits going up now for the first time in several years, $600 billion almost, heading toward over a trillion dollars within nine years; that is a real problem. Trillion-dollar deficits as far as the eye can see is a real problem, but this issue can't -- doesn't seem to get traction with candidates or voters.

CARTER: What I think is so interesting is this is another issue, to me, of messaging because I think it's so hard for anyone to get their arms around trillions of dollars.

BARTIROMO: You're exactly right.

CARTER: We're so used to - there's a fatigue about the deficit is growing. So, I don't know how or who is going to do this, but it is really important that they make that relevant. What does it mean for me, for my family?

MCDOWELL: Well, Ross Perot did that, talking about the deficit going up. He did it in 1992 --

BARTIROMO: I'm all ears.

MCDOWELL: -- quite well and nobody cared, because the Federal Reserve has kept interest rates so low that people are not worried because just simply because the interest expense has not been skyrocketed. Our national debt doubled under President Obama, and because it's manageable, because interest rates are at rock bottom levels, nobody cares. Nobody's going to care until it's a crisis and the world falls out from beneath us.

BARTIROMO: We all know - we all know the areas where it's costing us so much, right? The entitlements: Social Security, Medicare, Medicaid. Have we heard any conversation about that on the campaign --

MCDOWELL: That's half the budget, every -- close to half the budget is Medicare and Social Security, every year.

BRENBERG: 80-percent of the spending increase over the next decade will come from Medicaid, Medicare, Social security and interest on the debt -

MCDOWELL: And interest on the debt.

BRENBERG: if you don't do something about those, it doesn't matter what else you do. There's nothing else that matters.

BARTIROMO: All right; we'll see. We'll see if this becomes an election issue. Up next, he created one of the most popular social media sites in the world. Now he may bring Ironman to life; Mark Zuckerberg's latest creation coming next.

Plus, ambition is timeless. The watch that hopes to change the game of luxury accessories right here in our studio. Will consumers be able to swallow the cost though? Back in a minute.

(COMMERCIAL BREAK)

BARTIROMO: Welcome back. A high school in South Carolina will now allow students to wave American flags at football games. Here's Dagen with that story and the headlines; Dagen?

MCDOWELL: That's right, Maria; good morning, everybody. (HEADLINES)

BARTIROMO: So, changing the face of time, that is the hope with this new Astronomia Sky Watch, but it comes with a price. We will test it out. Check out this watch. We're going to test it out next, live, in the studio. It's gorgeous; stay with us.

(COMMERCIAL BREAK)

BARTIROMO: "The Robb Report" features luxurious products for the most affluent consumers, and the magazines September issue no exception, highlighting the Astronomia Sky Watch valued nearly $700,000. Joining me right now is "Robb Report" Editor-in-Chief, Brett Anderson. Brett, good to see you.

BRETT ANDERSON, SENIOR VICE PRESIDENT AND EDITOR-IN-CHIEF, THE ROBB REPORT: Thank you for having me.

BARTIROMO: Thanks for joining us. Did I say that right?

ANDERSON: Astronomia Sky, yes.

BARTIROMO: So I put it on. This is a heavy watch.

ANDERSON: It is very heavy. It's 18 carat gold.

BARTIROMO: Tell us about this watch and the inspiration behind it, given the price tag $700,000?

ANDERSON: This example is 580,000.

BARTIROMO: This is 580,000?

CARTER: A bargain.

ANDERSON: So the price will vary depending on materials used, but the inspiration behind it was the old - in past centuries they created astronomical watches, or clocks that would follow the - you know, trace the movements of the planets and the stars. So this is a contemporary version of that.

BARTIROMO: It is absolutely beautiful, and you can see all the workings of it on the top; right? You can see actually the way watch works but my question is, what time is it?

[Laughter]

ANDERSON: -- so it actually moves sideways.

BARTIROMO: Okay.

ANDERSON: It actually follows the rotation -- or the revolution of the earth around the sun, and then also rotation of the earth on its axis. There's also a sapphire moon turns every 60 seconds.

BARTIROMO: All I want to know is what time --

ANDERSON: There is a time face in there as well, which -

BARTIROMO: I'm only giving you a hard time.

ANDERSON: There's a differential gear that keeps the 12 always at the top, even though it's moving around the inside face of the watch. So it's a magnificent - it's a masterpiece of transfer of energy. It has a 60-hour power reserve. It's really remarkable; wildly creative piece.

MCDOWELL: Is this fixation on super expensive watches, hasn't it starting to fade somewhat?

ANDERSON: Not really.

MCDOWELL: Men, again, it was -- not to blame the hedge fund community but men were obsessed with these extremely expensive watches and I know that some of the timepiece makers have struggled in recent months, even in the last year, in terms of sales.

ANDERSON: Well there certainly are challenges in the marketplace that watchmakers have had to deal with, currency fluctuations have been an issue for them, particularly at this level because that does make a difference. But the creativity continues. They're continuing to develop new pieces like this. This is art that's centuries old and certainly not going to go away. I mean, economics fluctuate but Geneva endures.

BARTIROMO: I feel like this is not kind of product that the iPhone watch wearer is going to say oh, I am not going to buy that watch because I have my iPhone watch.

ANDERSON: No; this is a statement piece. I mean -

BARTIROMO: Exactly.

ANDERSON: The buyer of this watch is not -- obviously there are many ways to tell time. What this is all about is creativity. It is a work of art. You are buying it because you appreciate what it is.

BARTIROMO: And you collect it, those collectors of watches. So the September issue of "Robb Report" hits stands today.

ANDERSON: Today.

BARTIROMO: Tell us about it. You're celebrating "Robb Reports" 40th Anniversary this year.

ANDERSON: We are. Our 40th Anniversary will be the October issue, next month; we're very excited about last page shipped today. September is our fashion issue, so you will find, in addition to some amazing works of art and engineering, like this, you'll also find some fantastic new styles from Italy, England, France, as well as some fantastic cars. We have the Jaguar on the cover as well.

BARTIROMO: We talked about the economy all the time. The high end still doing well do you think? What is the scoop?

ANDERSON: I think still doing well. We certainly have been. The people who can afford to spend at the level of things that we cover are continuing to do so. We certainly have seen changes over last few years, since 2008. I think it is more in terms of what people decide to focus on versus how much they are spending.

MCDOWELL: One thing: real watch collectors' and watch fanatics, men custom make their shirts so one wrist is bigger than other so the shirt cuff goes over the watch.

CARTER: Really?

BARTIROMO: Oh, okay.

MCDOWELL: Just so you know.

ANDERSON: You definitely --

MCDOWELL: Famously racecar drivers used to do that.

ANDERSON: -- a loose cuff for this one.

BARTIROMO: You need more space. It's a heavy watch, actually.

CARTER: It's so thick.

BARTIROMO: It's absolutely beautiful. $580,000, and you can check it out in Robb Report. Brett, good to see you.

ANDERSON: Thank you.

BARTIROMO: Brett Anderson there. Next hour, investors are eyeing earnings ahead of Friday's Jobs' Report. Will the data force the Fed to have raise interest rates this year? Plus, former Presidential Candidate Rick Perry will join us. He will be bringing his dancing shoes, we think. We'll ask about that. Liz Ann Sonders from Charles Schwab also with us. Stay with us.

(COMMERCIAL BREAK)

BARTIROMO: Good Tuesday morning everybody; welcome back. I am Maria Bartiromo and it is Tuesday, August 30th. Here are your top stories 8:00 a.m. on the East Coast: (HEADLINES)

END

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