MARIA-03
Country an Important Political Lesson; Amazon to Enter Food Delivery
Business - Part 1>
Paul DeJoria, Joe Grano >
(BEGIN VIDEO CLIP)
MIKE PENCE, NOMINEE OF THE REPUBLICAN PARTY FOR VICE PRESIDENT OF THE UNITED STATES IN THE 2016 ELECTION: The wider Middle East from -- if you look at a map of the wider Middle East from 2009 when they took office and she became Secretary of State, and look at a map today, you can barely recognize it.
The rise, rule and reign of ISIS are a testament to this truth of history.
(END VIDEO CLIP)
MARIA BARTIROMO, HOST, MORNINGS WITH MARIA: The very latest on the race for the White House straight ahead.
The cyber threat, new details this morning about the hack attack that affected more than 20 million government workers.
How the attack could have been prevented coming up. Apple's big day, the technology giant set to unveil its newest phone, but one major change could fall on deaf ears. We'll tell you about it.
Plus, new questions about Britain's exit from the European Union, why Prime Minister Theresa May wants to take her time before revealing any plans to leave the EU.
Checking markets this morning, Futures hovering into flat line, we're expecting a lower opening for the broader averages, but not much.
The Nasdaq continues to ride on a record-setting performance yesterday, finishing at an all time high. In Europe this morning, stocks are moving between gains and losses, investors on edge a bit ahead of tomorrow's European Central Bank decision.
And in Asia overnight, markets a little changed, take a look, as you can see, fractional moves across the board.
All those stories coming up this hour, and joining me to talk about it is Fox Business Network's Dagen McDowell, Recon Capital Chief Investment Officer Kevin Kelly and "Heat Street" editor Louise Mensch.
What a show this morning, guys.
LOUISE MENSCH, EDITOR, HEAT STREET: Wow, it's in -- hope so --
KEVIN KELLY, CHIEF INVESTMENT OFFICER, RECON CAPITAL: I know, yes, we're getting fired up, and especially when it comes to Iran -- oh, my gosh.
BARTIROMO: Wow, yes --
DAGEN MCDOWELL, FOX BUSINESS: One-point seven billion dollars total cash money --
KELLY: Cash money --
MCDOWELL: Three payments, the first being the $400 million in ransom which was the principal payment. But then, two more deliveries of cash, and a little more than two weeks after the original payment was made.
BARTIROMO: And this was swiss, francs, euros.
MCDOWELL: Euros --
(CROSSTALK)
MENSCH: Bank notes --
MCDOWELL: From the two of the central banks in Europe -- by the way, but this is to a state sponsor of terrorism who funnels this money to the Assad regime to the -- rebels in Yemen, to Hezbollah, you name it, that's where the money is going --
KELLY: And this --
BARTIROMO: Joe says they're saying --
KELLY: That's why they want cash --
BARTIROMO: Death to America.
KELLY: Yes, that's why they want cash and they owe us actually $6 billion to the American families victims of terrorism. So --
BARTIROMO: All of these stories coming up this hour, we have a can't-miss lineup, so, stay with us. Former UBS PaineWebber Chairman & CEO and Root 9B Chairman Joe Grano is going to talk to us about cyber security, that's his business.
The host of "VARNEY & COMPANY" Stuart Varney will weigh in as well, you don't want to miss a moment of it.
Just 61 days now until election day, we're on countdown mode, the race for the White House could come down to one key group, the undecided group.
Republican-leaning voters could provide Donald Trump the edge he needs according to recent "Wall Street Journal", "Nbc" polling. Joining us now to weigh in, billionaire investor and Chairman of Paul Mitchell, John Paul DeJoria.
John, good to see you, thanks so much for joining us, JP.
JOHN PAUL DEJORIA, CHAIRMAN, PAUL MITCHELL: Oh, good morning, love you all out there.
BARTIROMO: So, what about that? I mean, you've got, you know, one group that are loyalist to Hillary, you've got another group that are loyalist to Donald, and then you got this huge swath of people in the middle that are undecided or independent. What does Trump have to do to make sure that those undecided voters vote Trump?
DEJORIA: Well, one thing I think he has to do is start telling the truth. In other words, if he goes out there and says I met with the president of Mexico, and we never discussed the wall. And then the president comes out and says we did discuss the wall and I said I would not pay for it.
So, in other words, he's got to really come across clean and more honest. Second of all, I think he's got to occasionally put his sock in his mouth. The man says things that are totally off the wall, that piss off a lot of people.
I mean, we see an election where people want to vote for the best of the worst, that's not very exciting. So, I think of those two areas, he's got to make some big improvements.
KELLY: John Paul, I have a question about the economy. It seems like Donald Trump's plan is the best for it, he wants to take the business tax rate to 15 percent.
We saw Apple get attacked actually over in Europe because the -- Ireland was actually -- gave him preferential treatment that you saw a super state of the EU come in and say you can't do that.
Do you think Donald Trump can differentiate himself and actually appeal to business leaders like yourself saying, I'm going to protect you, we're going to have a great capitalistic society here, no crony capitalism and we will defend you.
DEJORIA: Not coming across like that, he couldn't, because what you've got to do as a businessman, any business person knows you have to balance it out fine. If you're going to reduce the taxes, that's great, that's good for everyone.
I'm all for lower taxes. But what are you going to do to cut out a government spending so that our deficit doesn't continue to go up, it starts going down?
There's got to be a balance of the two. I think when Mr. Mark Cuban made that comment about the stock market will crash in the event that Donald Trump, you know, gets elected -- it will go down anyway.
BARTIROMO: Yes, he did say that --
DEJORIA: I think that a lot of --
BARTIROMO: Yes, the Dallas Mavericks --
DEJORIA: Yes, believe a lot of --
BARTIROMO: Oh, we want to actually play that soundbite because Mark Cuban was on Fox Business yesterday, and here is what he said if Trump becomes president. Listen to this, JP.
DEJORIA: OK.
(BEGIN VIDEO CLIP)
MARK CUBAN, BUSINESSMAN: There are so many external global influences on our market, you know what money comes here, when there's uncertainty overseas, what money goes into Treasuries, where does it go if -- you know, if rates go higher or lower.
And then there's the uncertainty of the election. I mean, I have my Trump hedge on in the event Donald wins, I have no doubt in my mind, the market tanks.
(END VIDEO CLIP)
BARTIROMO: You agree with that, John?
DEJORIA: I think there's no doubt that no matter who wins, we're going to see the market off a little bit. Because if Mr.
Trump does win, the big question mark for a lot of people in financial community would be, how the world is he going to be able to reduce taxes which we hope he can, by the way, without a plan. And that's what they need a plan to reduce our deficit. Very important. But on --
BARTIROMO: Yes --
DEJORIA: The other side, Hillary has the same challenge. During the administration, which I believe she's going to follow through with the Obama administration is we have nothing but debt and it escalates and escalates.
And then if you continue to raise taxes and at the same time, don't have a plan to get rid of that deficit and their plan sucks that they have right now. Both -- I think either candidates, you're going to see a little bit of a shift right now --
(CROSSTALK)
We're going through a period of time --
MCDOWELL: But then what -- but JP, then what happens because neither one of them are talking about that. The national debt has doubled under President Obama, it's nearly --
DEJORIA: Oh, yes --
MCDOWELL: Twenty trillion, we pay out just for entitlements, almost half of our annual budget toward entitlement --
DEJORIA: Yes --
MCDOWELL: She has another entitlement of the paid leave which is north of a trillion dollars even with --
DEJORIA: Right --
MCDOWELL: Her raising taxes, she adds to the deficit.
DEJORIA: That's right, either way that -- however you look at it right now, they're addressing both candidates what they think that people want to hear to freak them out or scare them or get them enthusiastic, get elected.
They're avoiding some of the big issues and the biggest issue, you just hit her, was a deficit. We're going to go bankrupt, we'll follow some of the other countries in the world that went down the tubes because we didn't address it.
So, I think more in mind, that's why a lot of smart people are standing on the sidelines right now. A lot of smart people saying, well, let's see if maybe something changes.
I'm also amazed that how many people I talk to said that I don't like either one, I mean, the Republican or Democrat, but if I had to vote right now, I'd vote for Gary Johnson. Because at least he's a third choice and who knows something may really come out of that avenue --
MENSCH: Do you think if he gets --
DEJORIA: A lot of people think --
MENSCH: Do you think if Gary Johnson gets into the debate, that could -- may be a game-changing play here because this is a one factor, we're 60 days out, but we haven't really addressed it yet. Do you think the debates could really shift those independents one way or the other?
Katrina Pierson came on this show and she said that Donald Trump wanted to raise interest rates. That would --
DEJORIA: Yes --
MENSCH: Be quite scary, I think --
(CROSSTALK)
BARTIROMO: Wait a minute, wait a minute, wait a minute, Louise, come on. She said that this economy is not working because the interest rates are higher, then she made a mistake.
She said obviously I meant lower, she didn't say Trump wants to raise interest rates. Let's at least --
MENSCH: Well --
BARTIROMO: Be clear here.
MENSCH: I thought --
BARTIROMO: Trump did not say he wants to raise interest rates --
MENSCH: It's true, she said lower, she said high, you can hardly tell or maybe that's the problem with Trump, we really don't know how he's going to pay for all this jam.
BARTIROMO: Yes --
MENSCH: Do you think that the debates can change that. We can get some clarity?
DEJORIA: If you put Gary Johnson in debates, you are going to see a change. I saw him on television a couple of weeks ago, I said, wow, he and his running mate make a lot of sense. They both make more sense than Trump or Hillary.
It's amazing. So, I think it would be a very good thing, I believe they need 15 percent of the vote or the proposed vote to be able to get in there, and I sure hope they get in. I think he'll make things a lot more interesting and maybe Jill will also from the green party.
I think will make it much more interesting, and I think America really needs that --
BARTIROMO: Why is it more interesting? It's just going to take votes away from one of them. And so, if Gary Johnson and Jill Stein are on the debate stage, who do --
DEJORIA: Right --
BARTIROMO: Which candidate do they take the votes from? Do they take from Hillary Clinton or do they take from Donald Trump you think?
DEJORIA: What a great question. People ask me that all the time. JP, is it that like losing a vote or just throwing one away, no, it's not. All Americans should vote, if you don't like either candidate, vote for somebody that you might like.
Not the worst of the two, it could make a big change. It could be the last minute, all of a sudden, the third party pops up and wins. It's possible. In this country, anything is possible. So, I don't think it's a wasted vote, I think it is a vote of conscience.
(CROSSTALK)
MENSCH: What about -- yes, what about Evan McMullin because he could take the state of Utah out of the Republican column, and is it possible in a tight race that these third-party candidates McMullin, Stein and Johnson could make the difference?
DEJORIA: I think could --
BARTIROMO: Or Hillary Clinton, yes --
DEJORIA: Make a great difference --
BARTIROMO: Because Hillary Clinton wins in that scenario for sure, yes, I think --
DEJORIA: For both, they could win for both. They can make a difference for both.
KELLY: Yes, John Paul, I think you brought up a great point because it's not a wasted vote when you vote your conscience and that's what --
DEJORIA: That's right --
KELLY: Vote your beliefs, and that's what Gary Johnson said. And he's actually polling very well when it comes to millennials as well as certain business leaders as you just said. But I think what's important --
DEJORIA: Right --
KELLY: To note is that most people are trying to find a difference and an alternative.
Now, do you think that should basically Hillary or Donald win the election, that they will actually tackle -- will they actually go after the entitlements or the deficits? Do you think it's something that they will do?
DEJORIA: Very good, answer, don't know. During these political years, they promised everything and not that much happens afterwards. So, the answer is, I don't know.
I would say it's probably more likely that someone that other than Hillary would go after the deficit a little stronger I would think.
MCDOWELL: But JP --
DEJORIA: But then again, you can't -- yes --
MCDOWELL: It's going to take a crisis, you have to admit that it will take a crisis of a giant spike in interest rates, where our interest expense basically is a tsunami across the economy.
That's what will end up --
DEJORIA: Oh, yes --
MCDOWELL: Happening.
DEJORIA: Yes, we're right now in a very critical spot in the United States. But overall, no matter who gets elected, you can't screw our country up that much in four years, OK?
(LAUGHTER)
You can screw up a little bit, but we'll bounce back --
BARTIROMO: That's a --
(CROSSTALK)
Yes --
DEJORIA: It's just sad there were this situation, but we'd love to see Johnson and Jill in that debate, that would be very exciting for our nation.
BARTIROMO: All right, we'll leave it there, John Paul DeJoria, good to see you, sir, thanks.
DEJORIA: I love you, guys.
BARTIROMO: Coming up, the Russian cyber threat, the new concerns over a possible plot targeting the U.S. presidential election.
Then from headphone jacks to dual cameras, the rumors circulating, but will anything be enough to satisfy customer demand? What you need to know ahead of Apple's big event later today.
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(COMMERCIAL BREAK)
BARTIROMO: Well, the next big Apple reveal is here. Apple hosting an event today, and it is expected to unveil its next iPhone and Apple watch. Fox Business' Robert Gray with the details now in San Francisco, Robert, good morning.
ROBERT GRAY, FOX BUSINESS: Hey, good morning Maria. That's right, just buying us here in about five hours time, Apple is expected to unveil the iPhone 7, the event titled "See You on the 7th", everyone of course always parsing that for clues, maybe just barely make out the sign over there that shows the clues are on the invitation there.
Everyone expecting that to mean an upgrade for the camera, of course today is the 7th and it is the iPhone 7.
So, we'll be looking for some other clues, perhaps out of that as well. They're saying maybe it's a -- and not to have been a little more waterproof.
And that is because the headphone jack expected to go away, to go the way of the old CD-DVD drives that are no longer in mark. So, the accessories you will then have to deploy into, the charging port or perhaps using Bluetooth.
So, this could be a big boost for their beats and some of the other periphery items and accessories that Apple and others will be selling, so, we'll have to wait and see what's going to go on with that. You may also see a new update for the Apple Watch.
Apple Watch 2, so, we keep an eye on that as well as new operating systems for of course IOS 10 going into the iPhone and the iPad.
Perhaps, an iPad update, MAC, OS, and also maybe an update on the Apple TV. Lots of rumors swirling around, lots of reports out there, Maria, this could of course go on sale as quickly as next Friday.
Some say it could be the following Friday, we'll have to wait for an official word there in just a couple of hours time.
But I did mention the improved camera, it could be two cameras actually on the larger-plus format phone which would be of a little bit more of the DSLR effect and allow you to do some tricky photography there.
More memory, most folks out there will like to hear that, and yes, the one function and feature that we're all hoping for, Maria, and that of course is more battery life and extraordinary amount of time to charge it up.
So, that would certainly check a lot of the boxes out there, and of course, iPhone is still a key driver, in fact, more of a key driver now than it has been for Apple.
It makes up about two-thirds of revenue. So, you've seen the iPhone growth really growing since they started selling it in China in particular.
We'll be keeping an eye on that, we're not going to probably get an update on that, but we'll see if he gave us any numbers on sale or are just going to get the straight product launch here, Maria, in just a couple of hours time, back to you.
BARTIROMO: All right, Robert, thank you, you're right. People want to see more battery life, not necessarily new ear phone buzz. Kevin, there's this buzz about the new iPhone --
KELLY: Yes --
BARTIROMO: But you're going to have to get all new -- I mean, Dagen and I have been upset about this now for weeks.
MENSCH: I've got --
KELLY: Yes --
MENSCH: I've got this --
BARTIROMO: Just bought new headphones, I'm not going to get a new one.
KELLY: Yes --
MCDOWELL: I've got three pairs of headphones in my little bag. Three, because I always lose them.
KELLY: Oh, yes, the problem is --
BARTIROMO: Yes --
KELLY: The technology, it's either like, OK, either you get the adapter or you have to get wireless, wireless hasn't really caught up on the Bluetooth side.
But what's interesting about this iPhone launch compared to the other ones is everyone is waiting for the one next year, the iPhone 8 or their 10-year anniversary.
Because the upgrades is not really incentivizing people, people aren't really excited, they don't need to upgrade.
And what's fascinating about Apple and their iPhone sales is that it's a commodity now, right? The whole cellphone space is commoditized --
BARTIROMO: Yes --
KELLY: And they got so reliant on subsidies from the carriers to bring people in, and now that has stopped. So, that's why you're seeing the stock really soar all over the last couple of years.
MENSCH: If this -- if this iPhone does not have a headphone jack, it will be the first one that I do not buy.
BARTIROMO: Really?
MENSCH: I use my headphone for running --
BARTIROMO: So, do I --
MENSCH: For jogging --
BARTIROMO: So, do I --
MENSCH: With my music --
KELLY: Right --
MENSCH: And I don't want it to be dependent on some wireless connection --
BARTIROMO: No --
(CROSSTALK)
One that goes into the charger.
MCDOWELL: They'll give you a head -- they'll give you a headphone --
BARTIROMO: I don't want it either, I know, I agree with you --
MCDOWELL: But they'll give you --
KELLY: Yes --
MCDOWELL: A set of headphones with the new phone that works with the charging --
KELLY: With the lighting --
MENSCH: It is a little ear buzz --
(CROSSTALK)
BARTIROMO: Exactly --
MENSCH: To get it --
BARTIROMO: I'm with you, Louise --
MENSCH: I'm not buying it --
KELLY: Yes --
BARTIROMO: I'm with you, you're absolutely right.
MCDOWELL: The -- I don't think, you know what? They always push people to change. People --
BARTIROMO: Yes, I know --
(CROSSTALK)
Why you spend more money --
KELLY: I mean, people were upset the lighting --
MCDOWELL: When the click -- when the click-wheel went away, people were upset about that.
MENSCH: I have a new MacBook with a single USB-C port, worse decision I ever made. They say it's a slick piece of design, it has one port. Do you know how inconvenient that is --
MCDOWELL: You know, what? The --
(CROSSTALK)
MENSCH: It is a useless computer.
MCDOWELL: The worst decision --
MENSCH: Wow --
(CROSSTALK)
MCDOWELL: Is when you've committed your digital life to the Apple world, and its iTunes and your iPhones --
KELLY: Ecosystems, right? --
MCDOWELL: And your Mac --
MENSCH: Right --
MCDOWELL: And then you try to change and manage like a Microsoft laptop or a Samsung phone in your Apple environment, that's a disaster.
KELLY: But they do --
MCDOWELL: Didn't know it --
(CROSSTALK)
BARTIROMO: Harlan yesterday, he said he liked the -- I know the Samsung Galaxy --
MCDOWELL: I know --
BARTIROMO: Recall, but --
MCDOWELL: Yes --
BARTIROMO: That's getting a lot of good marks --
KELLY: And you can go --
MENSCH: Yes --
KELLY: Under water and take under water selfies which people were doing in the Summer. So, they were looking forward to that, but it will be interesting to see if Samsung and other manufacturers start to go towards this new --
MCDOWELL: I don't allow bathing suit photos of me, so, I sure as hell don't need a waterproof phone to take photos of me in the swimming pool.
BARTIROMO: Well, you should. Still to come, Trump made some major push to the court -- to court the minority vote.
Why his campaign is confident its outreach program will bring voters to the polls. Then a new congressional probe finds that the massive OPM hack could have been prevented, back in a minute.
(MUSIC)
(COMMERCIAL BREAK)
BARTIROMO: Welcome back. A new report by the House Oversight and Government Reform Committee is blaming the Office of Personnel Management for the massive 2014 hacking.
The Chinese government is said to be behind the cyber attack which affected more than 21 million personal documents of current, former and prospective government employees.
Joining us now on what firewall should have been in place is Joe Grano; he is the former UBS PaineWebber Chairman, and currently the chairman and CEO of Root 9B of cyber security firm. Joe, good to see you.
JOE GRANO, CHAIRMAN & CHIEF EXECUTIVE OFFICER, ROOT 9B: Good to see you --
BARTIROMO: Thanks so much for joining us.
GRANO: My pleasure --
BARTIROMO: Your reaction to that hack.
GRANO: Well, one, I think it's one of the most serious issues facing America. The sovereign states-sponsored hacking that's going on, it's very prevalent, they started out going after U.S. government, now they're segueing into commercial side.
If you would ask and answer the following question. What do JPMorgan Chase, Home Depot, Target, Sony, IRS, all have in common?
It's not that they just got hacked. It's that despite spending a billion dollars on their fire walls, they were exploited. So, what it says is as a country, we have to take a whole new level of protection very serious.
BARTIROMO: Yes --
KELLY: And what do companies and corporations need to do budget for this type of a -- this type of expenditure?
BARTIROMO: I'm a little bit --
(CROSSTALK)
KELLY: To think about --
GRANO: Well, last year, Morgan Stanley spent $280 million, I understand the Bank of America is going to spend $400 million.
BARTIROMO: Jamie Dimon told me a couple of years ago --
GRANO: Yes --
BARTIROMO: He would eventually --
GRANO: Yes --
BARTIROMO: Probably spend a billion, close to --
GRANO: Yes --
BARTIROMO: A billion dollars.
GRANO: I agree, and a higher percentage of the revenues are going to go in terms of the funds. But the real issue here is you need mano-a-mano human being who really understands the attacker. And the best that we have in America came primarily out of NSA.
They're what's called 35 or so journeymen, the best that America has in terms of subject matter expertise. Fortunately for us, we have 25 of the 35 in my company, 70 percent of them. But the challenge is we have to train our CSOs and our CPOs. They have never been trained in cyber.
They're very talented people, you know, created network, gave me a process, the transaction, now they have to be trained in cyber.
So, cyber command itself in the United States have announced that they want to train 6,000 more people in terms of countering cyber attacks.
MENSCH: But we need basically a new generation of hackers, they're called the Hen House.
BARTIROMO: That's what we really need --
GRANO: That's correct, that is correct.
MENSCH: Right --
GRANO: Because it's the human component, you have to combine proprietary software, hardware and a human component that understands the data.
We have a center in Colorado, Springs, called the Adversarial Pursuit Center, where we can survey your enterprise 24/7 with one of these operators. Who can look at 10 corporations and tell you something is amiss here.
MENSCH: They see passings, they --
GRANO: Yes --
MENSCH: See passings of --
GRANO: Yes --
MENSCH: Activity --
GRANO: Exactly --
MENSCH: And they spot them.
GRANO: Absolutely.
MCDOWELL: Right, but how long -- how long are we talking about, Joe, to be safe? And will we ever be 100 percent secure because we're so far behind?
GRANO: Or again, I think that this is an issue that's not going to go away. And a new exploitation that takes place fortunately for us because we train. The Air Force will come and say, look there's a new problem, help us solve it.
It's an ongoing process. I do think though that we will as a country -- we'll raise this -- we'll rise ourselves to the situation. We'll be able to go (INAUDIBLE).
But again, the automated firewalls that we've been deploying as a nation, both in the government and in the commercial sector, any defense is better than none. But they're inadequate. You have to integrate with the human component.
BARTIROMO: So, let's talk about the bad actors, Russia, China --
GRANO: China --
BARTIROMO: On Monday, President Obama and Vladimir Putin had what looked to be a tense meeting. Look at the looks on their faces --
GRANO: Yes, true --
BARTIROMO: This was on the sidelines of the G20 in China. This coming as officials are investigating a potential covert Russian operation that could disrupt the November elections. Do you believe this -- could the 2016 election be compromised by hackers coming out of Russia?
GRANO: I don't know about the word compromise, but certainly they're going to try to influence with bogus data and information and create some excitement throughout the situation. Look, even the president has said I'm going to increase the budget by 10 percent to try to deal with these issues.