MARIA-01
Attack In Midtown NYC; Fiat Chrysler Recalls 1.9M Vehicles Globally For
Airbags and Seatbelts; Samsung Pain, Apple Gain; Rising Gas Prices;
Colonial Pipeline Repairs Delayed Due To Weather; Deutsche Bank Hit With
Fine; Futures Edge Lower; DB Weighs On Europe; Trump's Economic Plan;
Revamp Trade Deals; Rolling Back Regulation; Bratton's Last Day; Market
Turbulence; Justice Dept Proposing Deutsche Bank Pay $14 Billion In
Settlements; Market Outlook; Former AIG Chairman On Trial; Income
Inequality - Part 2>
David Bailin>
Apple; iPhone 7/7Plus; Pipeline; Economy; Stock Markets; Deutsche Bank;
Trials; Business; Employment >
BARITOROMO: I don't think they were going to get for a (INAUDIBLE)
BAILIN: No, no. Of course not.
BARTIROMO: But look, in the face of all of this, David Bailin, you have to allocated capital, and you have to actually invest your client's money. So tell us how you're allocating capital right now? What are you expecting for the next 12 months from markets?
BAILIN: Right, although we've taken down the actual equity rate, you know, the amount of equity that we have for clients, we're still well above our target, in other words and we're still more aggressive on equities than we are on fixed income. We've had movements into the emerging markets for the first time over the last six months, so we do believe the emerging markets in particularly in Brazil and other places in Latin America are going to recover. And that's going to present an opportunity. We've seen low rates move to the emerging markets if we take a look at Brazilian bonds for example in dollar terms, they've done extraordinarily well, indicating that people are gaining - regaining confidence there.
When the emerging markets do that, it's a - it's a signal that people could expect continued growth in the developed markets as well in overall economic health. So, our clients are overweight, and as I mentioned, Maria, on break, one of the things that I'm seeing is, that people are now investing. Post-August, they're actually putting more money to work. We're seeing net inflows in the way that we haven't for the last three or four months prior to the summer. So, that to me indicates that people are really looking out the next 12 to 18 months and acting on our belief that, you know - and especially for wealthy clients, that this is a time for the next 12 to 18 months that we could expect more normalized markets and reasonable returns.
GABRIELLE: So tying us back to the possibility of an interest rate hike, you know, a lot of banks are coming forward saying that these low-interest rates are actually hurting their profit margins. What's your take from your perspective?
BAILIN: There's no doubt that the net interest income margin for banks is deeply impacted by these policies - by these policies, and we're all obviously watching our expenses as a result of that. Nonetheless, there's - our belief from our sort of a strategic standpoint is that the FED really doesn't have lots of options in terms of raising rates significantly. When they do, it'll be only because of this clear data. And so, we expect a benign environment here, but we also expect a continued and long benign environment in Europe and in Japan.
BARITOROMO: By the way, if Donald Trump gets in and he pushes this 15 percent corporate tax rate, do you buy the market or sell it?
BAILIN: I really can't say.
BARITOROMO: David.
(CROSSTALK)
BARITOROMO: You're no fun. You can't say.
BAILIN: I think - I think we're picking - you're picking at one data point, which is like one of those things where, you know, if economic policies are clearly favorable in terms of getting investment to really change, which I'm skeptical about in both - for both parties, then I can imagine wanting to buy the market.
BARITOROMO: Alright David Bailin. Good to see you.
BAILIN: You're welcome, Maria. Thanks so much.
BARITOROMO: Thank you so much, David Bailin, from Citi's Private Bank.
Coming up, the case Elliot Spitzer tried to bring against former AIG chairman, Hank Greenberg, finally getting his day in court after 11 years. The millions of dollars at stake as 91-year-old Hank Greenberg is still fighting the same lawsuit after 11 years.
And Dollar General set to add 10,000 workers more on the retailer's plan to expand. We will be right back.
(COMMERCIAL BREAK)
BARTIROMO: Good Friday morning, everybody. Welcome back. I am Maria Bartiromo. And it is Friday, September 16th. Here are your top stories at 6:30 a.m. on the east coast.
The race for the White House neck and neck, Hillary Clinton returns to the campaign trail following her breakthrough recovery from pneumonia.
(BEGIN VIDEO CLIP)
HILLARY CLINTON (D), PRESIDENTIAL CANDIDATE: I confess, I will never be the showman my opponent is and that is OK with me.
DONALD TRUMP (R), PRESIDENTIAL CANDIDATE: I just wanted to say it is always a lot of fun when you come up and people don't have the teleprompter working, but that's OK, just look at the way I melded into the teleprompter that just went off. Who else could have pulled that off? Who else?
(END VIDEO CLIP)
BARTIROMO: And one hour from right now Donald Trump will join me live, he will discuss that economic plan and the campaign trail and the latest coming up with us Donald Trump.
Dramatic images out of England, meanwhile, flash flooding there, two weeks' worth of rain falling in just hours, take a look at that.
Plus 11 years later, Hank Greenberg's trial finally underway. We will hear from his attorney, leading corporate attorney, David Boies in the studio with me today.
Plus an official Samsung recall finally, the botched up response to exploding batteries could be helping Apple iPhone 7's sales. The new device hitting stores today.
Shake Shack comes to a flight near you. How the company is celebrity its National Cheeseburger Day? We will tell you about it.
Markets this morning look like this after a wild volatile week, we are expecting a decline at the opening of trading this morning. As you can see markets have worsened in the last 30 minutes, the Dow industrials expected to open down about 88 points.
In Europe, Deutsche Bank has been hit with a $14 billion fine from the Justice Department. The stock slumping this morning that's weighing on the broader markets in Europe, take a look, the DAX Index in Germany down better than 1 percent as Deutsche Bank shares plummet again.
In Asia overnight, the Nikkei average in Japan, the only market open there for trading. There were holidays pretty much across the board with the exception of the Nikkei, which is up three quarters of 1 percent.
The trial of former AIG chairman and CEO, Hank Greenberg is underway right now. Former New York Attorney General Eliot Spitzer filed charges in 2005. He accused Greenberg of accounting fraud. Greenberg, now 91 years old, is facing civil charges of orchestrating a $500 million transaction to conceal insurer's financial difficulties from shareholders.
Attorney David Boies is Greenberg's lawyer and he joins me right now in this exclusive. David Boyd, it's good to see you. Thank you so much for joining us.
We have spoken a lot, David, and this case is 11 years old. Explain why you're going to argue these allegations are politically motivated and why this is still going on?
DAVID BOISE, ATTORNEY: Well, I don't there is any question that these charges were politically motivated when they were brought. Eliot Spitzer said in front of a number of people that he was angry at Hank Greenberg for criticizing Spitzer's regulatory regime.
And he served subpoenas immediately after that and he began a crusade against Hank Greenberg and unfortunately that case is continuing. The case has been stripped away of almost all its major allegations but it's still going on.
BARTIROMO: So seven out of nine charges were thrown out.
BOISE: And the thing to remember about that is that all of the charges that were thrown out with all of the charges that alleged accounting fraud that affected AIG's net income and shareholders equity, those charges involved billions of dollars and have all been thrown out. They asked for $6 billion of damages. That's all been thrown out.
Now what they are trying to do is they trying to get an injunction relief, and order that says Hank Greenberg at 91 years old, can't serve as an officer or director of a public company. He hasn't done it for 11 years and has no plans to do it. This is simply a political case.
BARTIROMO: Yes. It's extraordinary to me because when you look at the performance of AIG under Hank Greenberg, I mean, he took that company from what in market value to what when he left?
BOISE: From $100 million market value to a $140 billion market value.
BARTIROMO: Exactly. So he ran this company very successfully and now he has been trying to have this case thrown out for years. The court says there is enough evidence to proceed with the trial. How do you refute that evidence?
BOISE: Well, what the court said was that they made allegations that entitled them to a trial and under New York law you can support your allegations with hearsay, what people say other people said until you get to trial. But when you get to trial, you have to have evidence and the government doesn't have any evidence.
BARTIROMO: There is no evidence in the case?
BOISE: Not a single witness, not one, will testify that they talked to Mr. Greenberg about anything improper.
BARTIROMO: The star witness, this guy, Mr. (inaudible), tell us about him because James Freeman is with us this morning, the op-ed ahead of the "Wall Street Journal," the assistant director of the op-ed, and he says, look, I want to know why this is still the star witness? Because there is no evidence there. Had he spoken to Hank Greenberg?
BOISE: Never he spoke to Hank Greenberg about this transaction, not once. He never had an email exchange. He never had a memo. There was not a document between him and Mr. Greenberg, not a conversation between him and Mr. Greenberg. He has no admissible evidence about what this case is about.
BARTIROMO: Yes, I've spoken to Eliot Spitzer about this as well and he really was the judge, jury and executer on this when he was running this and now we see it has gone from him through Andrew Cuomo, Eric Schneiderman. Eric Schneiderman is also investigating the Trump Foundation. Isn't he involved with the Clinton Foundation?
BOISE: I am not sure. I don't know whether he is or not.
BARTIROMO: Because I'm wondering in terms of bringing politics in it, you know, why investigate the Trump Foundation now? Why continue this? Will this help him become governor? Is that what he's hoping?
BOISE: Well, I think one of the problems that you have is most attorney generals want to be governor and there is a danger that they'll influence, they'll let that political ideas influence, you saw that with Eliot Spitzer. We wouldn't have had this case if you did not have the politicization of the attorney general's office in New York.
BARTIROMO: So how is Hank Greenberg doing in all of this, 91 years old still fighting?
BOISE: He is still fighting back. He was with me when we opened on Tuesday. He flew to Argentina to meet with the new president. He's back in New York now. He is still working and it is a shame that he has to be burdened with these political charges from decades ago.
BARTIROMO: How long will this trial go on?
BOISE: Probably about three months, maybe. The judge has got a lot of other cases, 350, 400 cases in addition to this so only 3 days a week, it will probably last three months.
BARTIROMO: We talk a lot about the politicizing of the government agencies, but then you've also got things like Deutsche Bank and this huge fine today, any thoughts on that?
BOISE: I don't know about that particular thing, but I think the level of governmental fines is very troubling right now. I mean, what's happening is the government is using its power to extract huge amounts of money that in many cases are not related to damages done.
Nobody likes banks because of the financial crisis right now, and so the government is using its power in very troubling ways. I don't know about the Deutsche Bank thing personally, but I have seen a number of examples where I think there's been significant government overreach.
BARTIROMO: It's very important point that you just made there, but we appreciate you joining us today. Thank you so much. We'll be watching the trial. David Boise joining us there. We invited Eliot Spitzer on the program to join us. He did decline our request. He's invited to appear anytime.
Coming up, Delta is coming together with Shake Shack to celebrate National Cheeseburger Day. The details on the lucky passengers who could score some free burgers.
And then you will soon be able to binge watch your favorite HBO show on yet another device. More on its type up with Sony. We are back in a moment. Stay with us.
(COMMERCIAL BREAK)
BARTIROMO: Welcome back. Markets looking lower this morning, take a look at futures indicating a decline of about 80 points on the Dow Jones Industrial Average this morning. It's been a volatile week that's for sure.
A couple names we are watching this morning, Time Warner, HBO announcing it will bring its streaming channel HBO Now to Sony's Playstation View. The service will be available for $15 a month.
Dollar General in focus as the company plans to hire 10,000 additional workers just within the next month of the move coming as part of Dollar General's aggressive expansion plans, which include opening 900 new locations this fiscal year.
Flash flooding causing widespread disruption in parts of England this morning. Cheryl Casone with the story and the headlines now. Cheryl, good morning.
CHERYL CASONE, FOX BUSINESS: Quite a mess, in East, South and Southeast England right now after a post-heatwave storm dumped half a month's rain in some parts of the country overnight. Power knocked out to thousands of homes. Several highways are closed. Buildings are flooded.
A landslide from the torrential rain causing a train to derail causing some scary moments for passengers. Another train traveling in the opposite direction struck it with a glancing blow, but officials say there were no reports of injuries luckily.
The iPhone 7 on sale around the world today and some people have been sitting in line for days to get one, but Apple warning many of these iPhones are already sold out. Walk-in purchases are going to be pretty hard to get.
Meantime, the Consumer Product Safety Commission has taken the Galaxy Note 7 from Samsung, the recall out of the company at hand saying consumers should immediately stop using the phones.
Power down the recalled Galaxy Note 7 over fire concerns. Samsung was pursuing a global recall effort on its own, but the recall wasn't going so well. Samsung expects to have the new Note 7 devices at most U.S. retail locations by September 22nd. You should go into the store to get a new one.
Finally, guys, in case you didn't know it, Sunday is National Cheeseburger Day and Delta has something planned for this. Delta Airlines is going to serve Shake Shack burgers on some flights going from JFK to LAX.
Coupons are going to be given to all Delta One business customers on select flights. So if you want to observe National Cheeseburger Day, you're not flying Delta, not flying first class, go out and buy a cheeseburger and watch some football. Maria, back to you.
BARTIROMO: Yes, absolutely. We will take that advice. In case you missed it, here are some of the week's top moments meanwhile from MORNINGS WITH MARIA.
(VIDEO CLIP FROM THE WEEK'S TOP MOMENTS)
(COMMERCIAL BREAK)
BARTIROMO: Welcome back. Debunking the myths surrounding today's economy. My next guest is doing that in his new book titled, "The Upside and Inequality, How Good Intentions Undermine the Middle Class."
Joining us right now is author and founding partner of Bain Capital, Ed Conard. Ed, good to see you. Thanks so much for joining us. How is it undermining the middle class?
ED CONARD, BAIN CAPITAL FOUNDING PARTNER: I don't think that it does undermine the middle class. I think if you look at the growth rate in the United States, employment has grown two to three times faster than Europe and Japan.
We've grown at incomes that are 15 to 30 percent higher than those countries, the highest wage economies besides our own. I think one of the myths is responsible for slowing middle and working-class wages.
When I think in fact the opposite is the case. I tried to explain both phenomena, why the 1 percent is growing so fast and why middle-class incomes are stagnating.
BARTIROMO: Tell us why?
CONARD: If you see an example forward moves its production to Mexico, and I think economists on both sides of the aisle, left and right say don't worry, the entrepreneurs are coming to put you back to work and compete with each other and drive wages back to where they were.
Don't worry there is a lot of capital on the sidelines, interest rate zero, capital is not a constraint. You're going to be right back to where you were.
But they look and they see that the entrepreneurs moved to California, outsourced all the blue collar jobs to China. Meanwhile, the engineers that are left behind in their town are designing products for workers that work in Mexico, and they say where is the entrepreneur who is coming to put me back to work and raise my wages?
Because the core argument of the book is that today the binding constraint to grow is properly trained talent and entrepreneurial risk taking. Risk taking generally and we are not in the old manufacturing economy, where capital and savings, really the constraint to growth and that's had a big wide-ranging impact on the economy.
KEVIN KELLY, RECON CAPITAL PARTNERS CIO: One of the ways to address income inequality too is have the pie grow bigger instead of slices to redistribute that. One of the ways of doing it is free trade. Donald Trump is talking about that. Reducing regulation should help as well. These topics that you touch based on in the book, and what about Donald Trump's plan that he laid out yesterday concerning those two things?
CONARD: Yes, the case of corporate taxes I have the same proposal that he does. If you don't lower it to 15 percent, I don't think it's going to have much effect.
In the case of I disagree with them in part but not fully, I think you have to have free trade. You can't make for $20 what you can buy for $2.
Same with innovation, you can't make for $20, but you can innovate and make for $2, that's going to kill you in the long run. In the case of trade you have to have free-trade and I would not be taxing trade as he is proposing.
But I think you have to have free balanced trade. I think it makes no sense to let Germany and China and Mexico really dump their savings into the United States as opposed to buying goods that would balance trade when we have no use for their savings.
We are not a manufacturing economy. That stuff is sitting on sidelines unused and if you don't put that money back to work you will get slower growth, higher unemployment, lower wages, makes no sense to allow that piece of it, but I think you can restrict that without restricting trade.
UNIDENTIFIED MALE: You're talking about how entrepreneurs in this economy are not necessarily creating new businesses, employing lots of manufacturing workers, but we also have a problem of just not enough entrepreneurs, correct? I mean, we certainly see the high profile ones in Silicon Valley, but in terms of new business creation, this has not been a strong era for that.
CONARD: I think if you divide between the high potential, we have been very, very successful and the mom and pop doughnut shop, which I don't mean you take anything away from that, but that piece of it has slowed down and would be valuable.
BARTIROMO: All right, we will leave it there. Great to see you.
CONARD: Thank you.
BARTIROMO: Thanks so much. Ed Conard joining us there. Before we get to break, let's get to Cheryl with the ETF Report.
CASONE: Yes, this is for the week, Maria. Technology stocks the big winners for the week. Technology select Spider Fund ticker, XLK. Take a look at this, 3.1 percent since Friday on track for its best week since May. Of course, driving that gain was Apple accounting for almost 15 percent of XLK. More MORNINGS WITH MARIA including Donald Trump coming up.
(COMMERCIAL BREAK)
BARTIROMO: Good Friday morning, everybody. Welcome back. I'm Maria Bartiromo this morning. It is 7 a.m. on the east coast this Friday.
END
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