Chaos at Customs; NYC Jewelry Heist; Trading Day Begins for 2017; Repeal and Replace; Trump's Nomination Debate; Assange Defends Russia;



Repeal and Replace; Trump's Nomination Debate; Assange Defends Russia;

Trump to Reveal New Details on Alleged Hacking of DNC - Part 1>

Peterson, Paul Bonicelli >

Computer Outage; Stock Markets; ObamaCare; Congress; Heist>

DAGEN MCDOWELL, FBN ANCHOR: So much to cover, a very happy new year to both to you beautiful ladies. Good morning, I'm Dagen McDowell in for Maria Bartiromo. It is Tuesday, January 3rd. Your top stories at 6:00 A.M. Eastern Time.

Back to business. President-elect Donald Trump making his final push toward inauguration day as the new republican controlled congress gets to work. One of their top priorities, confirmation hearings, for Trump's cabinet. We take a closer look at the looming battle ahead.

Chaos at customs. A computer outage causing long lines and delays for thousands of travelers at some of this country's busiest airports.


UNIDENTIFIED MALE: 5:15, so like they (INAUDIBLE) about almost three hours.

UNIDENTIFIED FEMALE: A very wrong way longer than our actual flight about over two hours in line once we got here.

UNIDENTIFIED MALE: I've never seen them that far back. They were going as far back as to the second floor. It just kept going and going and going and going.


MCDOWELL: Authorities not revealing what triggered that outage only saying that it was not packing.

Deadly storms hitting the south at least five people killed. Violent storms brought severe flooding and power outages and there could be more on the way.

While a million people rang in the New Year in Times Square, a group of thieves descended on a jewelry store, just blocks away, the criminal stealing millions of dollars' worth of jewelry, why police believe it was an inside job. That's coming up.

The first trading day of 2017, Futures pointing to a very strong open, so still optimism in the stock markets here after a double digit gain on the Dow Industrials. Last year, also on the small cap stocks in the transports.

Over to Europe, gains across the board as well, strength in the financials grabbing action there. And should I correct myself, the DAX in Germany is just slightly in the negative territory.

In Asia overnight stocks also higher. The Nikkei closed with a reading on Chinese manufacturing coming in its highest level since 2013. And again, Japanese stocks closed for a holiday.

All of that, coming up.

And with me this morning Maverick PAC national co-chair, Morgan Ortagus. Forbes Media chairman, Steve Forbes. And republican strategist and Fox News contributor, Tony Sayegh.

I could not pick a better group of people other than Maria Bartiromo. It would be nice for her to be here this morning to ring in this New Year on Wall Street. Good to see you all.


MCDOWELL: Happy New Year.


MCDOWELL: Custom's out. It actually fouled up my flight as well, so I'm working on an hour's sleep, so thumbs-up.

ORTAGUS: Hey, you never know what's going to happen.

MCDOWELL: So it is day one for the new republican controlled congress, the GOP's agenda including cutting taxes, rolling back regulations, and repealing ObamaCare.


UNIDENTIFIED MALE: We know that ObamaCare as currently exists is going to collapse upon itself just by the very wake of the program. And so there has to be a replacement. But you have to repeal it.

UNIDENTIFIED MALE: We got to find a suitable replacement for the affordable care act that's affordable for Americans. Healthcare is supposed to be a benefit for us all. It's supposed to be a way that we help our lives, that we can go out there, and not sustain you know this amazing catastrophic risk when we have healthcare issues, but it's become something that's become a daily burden for most families just in the day- to-day cost that they face.


MCDOWELL: Republicans also hope to swiftly confirm president-elect Donald Trump's cabinet picks but democrats are targeting some of those nominees and a bid to delay the process and get them to disclose personal finances. This is according to reports.

Yesterday, house republicans also voted to weaken the independent office of congressional ethics and place it under control of a committee run by lawmakers.

Joining us is the editor for Resurgent and Fox News contributor, Erick Erickson.

Erick, in terms of the republican priorities what is number one, in your mind?

ERICK ERICKSON, FOX NEWS CONTRIBUTOR: ObamaCare. They've been campaigning for a number of years now. And in fact, we to stay on the campaign trail that every republicans voted to repeal it, 70 some odd times, it would have been repealed but for Barack Obama, day one, I think they're going to processing this and that's also why the democrats are trying to block Tom Price, the incoming health and human services secretary. He's a doctor from Georgia, congressman who has a plan to replace ObamaCare. They desperately don't want him confirmed because of it.

MCDOWELL: But do the democrats have any political ammunition what you've heard out of house minority leader Nancy Pelosi, the republicans have a firm majority in the senate. Is there anything that they can do to get in the way of the cabinet nominees or any of these initiatives?

ERICKSON: As long as the republicans stick together, they can't in the senate. Because you've got 52 republicans although a couple of them are have questions about Rex Tillerson and a few of the other picks by Trump.

But generally, no, the republicans are going to set up the budget resolution for 2017, to make it so they can even filibuster to stop to repeal ObamaCare. In fact, the republicans are doing exactly what Harry Reid and Chuck Schumer did to get ObamaCare passed, in the first place.

Dangerous precedents democrats didn't care about back then. They're really worded about now.

MCDOWELL: Steve, Erick says repeal and replace ObamaCare, but looking at these markets since Trump was elected, I would argue that tax reform, cutting corporate taxes and regulation rollback are the first three things that the republicans have to tackle.


MCDOWELL: You can shoot me down if you want to --

FORBES: No, no, you're too bright for that. But on ObamaCare, yes, they can say they're going to start to process, repeal and then figure out how to replace the thing, but that they have to do. But the key thing in terms of real work, they have to do as you say get that tax cut through propose it, get a big one through, don't worry about at the projections of deficits from OMB and everyone else, congressional budget office saying you can't do this kind of thing. Do it.

Because if people don't see economic progress soon, Trump is going to lose political capital. If he has that political capital, he can do things on healthcare over the next 12 months and have to stand to go do it. And in terms of the democrats delaying those nominees, it's just pettiness. They should just ram them through.


ORTAGUS: One of the most important things, Dagen, about getting this big agenda through is to actually get the cabinet nominees confirmed that can carry out the agenda.

I think it's one of the most impressive cabinets that's we've seen nominated in modern history. And, Erick, I don't know what you think but I think it's a huge strategic miscalculation for the democrats to go after the cabinet nominees for being successful at business.

I think this is the strategy that was deployed against Trump in the general election by the democrats to go after being the fact that he's a billionaire and his business dealings around the world. It didn't work clearly. He won.

So I think if you -- if they employ that same strategy to go after his nominees, just simply because their success on business, I think it's going to backfire.

And honestly, I have no problem putting them on record for how they feel about successful businesspeople.

ERICKSON: Yes. Listen, I completely agree with that. When you look at the -- what the democrats did in 2009, they and republicans together, by unanimous consent confirmed about nine of Barack Obama's cabinet picks all in the very first day January 20th when Obama was sworn in. That was their gift to him, as he came in. If they don't do the same for the republicans, one, it just looks like sour grapes. They can't get over Merrick Garland.

But, two, but you are holding up some very successful people from getting to work. The election fooled a lot of us, got everyone surprised. There are 10 democrats in states that Trump won, and they're going to be held accountable by the voters if they try to stymie these incoming cabinet picks.

MCDOWELL: Hey, Tony, I think -- this is my own conspiracy theory. But the heart of what is behind these sanctions against Russia over packing, is related to the confirmation of Rex Tillerson, and it gives -- it's shining a spotlight on some republicans saying, hey, you got to give this guy a hard time when he comes up for his confirmation hearing.

I think because those sanctions look purely political at this point given the timing.

SAYEGH: When people all unanimously agree, even though to support sanctions that it's too late to really have Barack Obama imposing this type of policy.

He's been very weak when it comes to managing and maneuvering around Vladimir Putin for eight years. And now on the closing days of his administration he decides to do something punitive like this that's going to really have no net results, that's the other part of this. He's doing this to what end, right? So that's number one.

Number two, look, Rex Tillerson is basically -- acts like a secretary of state the job he does. He's the president, this chief executive of the largest oil and energy company in the world. He negotiates deals. He uses diplomacy. He uses leverage. His credentials are really unmatched, I think for the job of secretary of state.

So I agree with Erick. Chuck Schumer getting all his red state democrats to start picking silly petty battles is a terrible way to start off, what's going to be a very difficult two-year cycle for them right, Erick? As they enter a much more difficult senate landscape in 2018 where they can even lose a larger amount of seats and potentially republicans get closer to 60 which then would render them useless in the next congress if you have a lot of those democrats, Susan, because they're picking Chuck Schumer's silly battles.

FORBES: Republicans have only eight seats coming up in 2018, democrats 25. And by the way, having Russia involved in our election, how about President Obama trying to knock out Bibi Netanyahu several years ago in the Israeli elections. They put in money, they put in personnel. So this intervention charge, come on guys.

MCDOWELL: That is a terrific -- exactly. Erick, what were you going to say?

ERICKSON: Well, you know on the conspiracy talk on Russia. I don't think it was a coincidence that the loudest voices about Russia happened a week before the Electoral College met, as democrats thought they could pick off about 20 republicans in the Electoral College.

Once they met that Monday, suddenly you didn't hear a lot about Russia anymore, it fell out of the media until this past week. When the White House released a report that specifically said there was no evidence the Russians rigged or affected the election, all they did was hack Democratic National Committee. It's really arrogant to think that hacking the Democratic National Committee is hacking an election.

MCDOWELL: But meantime, former Georgia governor Sonny Perdue is the front- runner for secretary of agriculture. This is according to Fox News. Perdue previously met with Trump in November. He said to have discussed domestic and international agricultural commodities.

I want to get Steve Forbes' take. Do you think that there's -- are there any of these nominees for cabinet positions who don't get approved, who do not get the thumbs-up? Is there anybody you're worried about?

FORBES: No. If they've done their homework in terms of things on the side, things that would have come up in an FBI investigation, presumably they've done that job. But in terms of not blocking these people very, very tough. The only they have is ideology. The election settled that, the congress settled that. So unless they have a real scandal, they're going to go through.

MCDOWELL: Erick, I'm going to give you the final word on that. Does anybody not make it through confirmation?

ERICKSON: There's always one, even though I remember democrats couldn't approve Tom Daschle in 2009 for Barack Obama. There's always somebody who has a tax issue that comes up in the last minute and we haven't actually seen the office of ethics, hasn't gotten their tax packages yet and that's part of the requirements for the confirmation process.

MCDOWELL: Daschle's I believe was over a car service that he got as a perk, that was not -- that there were not at the time paid taxes paid on that, so that's --

ERICKSON: Yes, scuttled his nomination.

MCDOWELL: Yes, a sliver of something. Erick, thank you. So great of you to be here this morning. Happy New Year, Erick.

ERICKSON: Thank you. Happy New Year.

MCDOWELL: Coming up, chaos at customs. Frustrated travelers and widespread delays after four-hour computer outage. The details ahead.

And thieves using Times Square's New Year's Eve celebration as a distraction to steal millions of dollars of worth in jewels. How much they got away with, next.


MCDOWELL: Chaos at customs airports across the country. A computer outage causing delays for thousands of flyers, on one of the busiest travel days of the year. Cheryl Casone has more on that story. Cheryl.

CHERYL CASONE, FBN CORRESPONDENT: Yes, Dagen. U.S. customs and border officials say there was nothing malicious about last night's outage, still it was not fun for flyers. The digital disaster forcing customs officers to use alternative much slower procedures while their systems were down to get people through, the office.

Computers were down from 5:00 to 9:00 affecting the least 30 flights in Miami alone.


UNIDENTIFIED FEMALE: Well, we found long, long lines, and, ginormously long lines. And they weren't letting with kids. Families of the kids go through, none of that. Yes, very, very long.

UNIDENTIFIED FEMALE: A very long wait longer than our actual flight about over two hours in line, once we got here.


CASONE: Well, lines stretched round and round at Atlanta's busy Hartsfield-Jackson airport as people returned home from overseas and were processed by hand. Officials used Twitter to let travels know about the delays. But still no word from the agency on what caused this entire mess. We'll see if it tells this morning.

Another headline this morning, five people were dead after strong storms swept through the south, leaving a trail of destruction in their wake. The southeast quarter of Alabama was hit especially hard, strong winds knocked a tree onto a home, but killing four people inside that home. Officials believe the storm may have spun several tornados in that region. And they're still (INAUDIBLE) weather this morning in southern Alabama southwest Georgia, and throughout the Florida Panhandle.

Well, police are hunting for the three men behind a $6 million jewelry heist on New Year's Eve in Midtown Manhattan. While thousands of officers watched over the crowd in Times Square.

The men broke into a jewelry store just blocks away and stole millions of dollars' worth of luxury diamonds and another gems. Surveillance shows the thieves using a hammer and crowbar to get inside. They worked for about 10 seconds before they spotted the camera and disabled it. One good face shot though. Police say they ransacked two different safes and then they escaped.

And the French disconnection. France has granted the right to workers to ignore after-hour business emails.

The country's labor ministry says the new measures are to ensure a balance between work and personal. French unions back in the roll and smart phones and computers have created an explosion of undeclared labor hours without compensation. Officially went into effect this past Sunday.

And, Dagen, also Finland they're testing given unemployed residents 590 bucks a month for two years, whether they find work or not. That's about $7,000 a year in this test program. Whether you even look for work or not. Back to you.

MCDOWELL: Thank you so much, Cheryl. I'm waiting for Steve Forbes to weigh in on. Did the French needed to create a rule governing people using and responding to e-mail outside of the office?

FORBES: Well, this is why France should have one of the highest growth rates in the world, given their education system and the like, has one of the worse in the developed world. They keeping in these idiot rules they said they want to balance. How about a balance of real growth again? This is why one reason why Hollande, the President's ratings are equivalent, political equivalent of negative interest rates. He's not even running for reelection next year.

So this kind of -- then you see the 35-hour workweek. They spent years trying to find ways around it so the economy could function, so they put in a crazy rule then they use all their brainpower to get around the rule, so they can have a semi functioning economy.

ORTAGUS: This is what we've been talking about during the entire Obama administration, is they're creating more rules for businesses, people can't start businesses.

FORBES: This is where Trump is going to be a real, I think positive for people. When he does deregulation instead of new regulations, I think that's going to have an impact around the world in the next couple of years.

MCDOWELL: Get on it, January 20th. Thank you so much, Steve. Coming up, a stowaway scare on United Airlines flight after a worker got locked inside the plane's cargo hold.

And the first trading day of 2017. We take a look at the year ahead. And can the optimism continue?


MCDOWELL: It's the first trading day for 2017. And we have a rally in the making 140-point gain on the Dow Futures, right now, gains across the board almost exactly the same in terms of percentage gains, about 3/4 of one percent. Rough, a little more than three hours ahead of the opening bell.

Here's Rich Peterson S&P Global senior director to tell us -- hey, Rich. What's going to happen in the course of New Year? Because we look back at 2016 worst start to the year ever, for stocks, in the first trading days. Look, we have a double digit gain on the Dow, 20 percent gain on small cap stocks and the transports.

RICH PETERSON, SENIOR DIRECTOR, S&P GLOBAL: As a great seer, Yogi Berra said, it's very difficult to make predictions especially about the future. You know, back in last year in February -- about 1812 and we had a great rally, a year end, the fact when the election took through year end, the S&P gained over six percent of the biggest post-World War II, post-election rally ever. SO we had a great follow through at the year end. With expectation that regulation reform will happen, tax reform will happen that -- numbers be better going forward, in the 2017. So we'll see how it happens with the new administration.

MCDOWELL: What is evaluations look like on the market right now? Do they look rich? But have you seen the earnings expectations going up which would make stocks look little bit cheaper?

PETERSON: Well, the current expectations for 2017 are about $132 per share and the S&P 500. So based on you know year end close, we're trading about 17 times for earnings over that elevated level, not as rich as we were in March 2009. But we're not as rich as we were back in 2000, 2001 at the tech level.

So I think, you know, even got sectors value, maybe in energy, maybe in utilities, maybe perhaps in consumer staples.

FORBES: Rich, how much of the markets counting on a sharp cut in the corporate tax? Trump's talking about 15, even to get 20. If that doesn't happen, how much of the profits rise as counting on --

PETERSON: That's a good question. Because I don't think many, the consensus numbers have taken those numbers in. The fact -- because we don't know whether when it`ll take effect, when it'll be retroactive since -- individuals will be retroactive January 1st.

MCDOWELL: They better be retroactive.

PETERSON: So jury is still out. The fact is we start seeing fourth quarter 2016 numbers reporting later this month, expectations now for three points, two percent for the S&P 500. So it's kind of anemic. But that's been really the first year over year, second consecutive year over year gains for earnings since -- two years, 2015.

ORTAGUS: Rich, one of the -- Dagen was talking about how we had such volatility in our markets early last year and that was largely, I think due to what we were seeing the volatility in China. Are there any big geopolitical risk that you're looking for in the first half of this year, any hot spots globally that you think could potentially affect our markets.

SAYEGH: Possibly Italy.

PETERSON: You mentioned -- the financials in Italy, the banks, the transfers, also the geopolitical world whether Russia takes any action in the Baltics, that could be alarming to the markets --

SAYEGH: (INAUDIBLE) Steve, clearly, mark has been up since Trump has won. It's been called the Trump bump. There's an expectation that you're going to have pro-growth policies, deregulation is going to be a big theme and certainly a priority of this administration. Consumer confidence is up.

How real is all this? How long can it be sustained? And what about fed policy now which looks like it's going to begin to raise interest rates? Again, how do all of these things impact this year?

PETERSON: Well, I mean there's talk that maybe the Trump administration will foster an increase in CapEx, cap expenditures, but the jury is still out. The fact is -- for the energy sector, most importantly, CapEx spending was down 40 percent in 2016 from 2015. In fact, if you look at those numbers, last-year, they were at the lowest point since 2007.

Now, you have the recount, you have some numbers that show some increases. But I think looking for 2017, if you've got CapEx at the whole looking at lowest single digit numbers because you really need to pick up an international event to have for companies to spend more.

And plus the fact that any countries are hill leveraged. If you look at the cash to debt ratio for the financial S&P 500 companies back in 2007 was about 36 percent, now it's over 48 percent, as companies took on debt to do buybacks in M&A.

MCDOWELL: Right. And you saw buybacks pick up toward the end of the year even. You saw some announce of increase buybacks. Rich, it's good to see you. Happy New Year.

PETERSON: Happy new year to you all --

MCDOWELL: Come back often in 2017, Rich Peterson from S&P.

Coming up, tragedy in Texas leaving four children dead others injured after apparent pesticide exposure. Details on what caused this poisonous gas to be released.

And president-elect Donald Trump promises a big reveal on Russian hacks this week. What? We discuss, next.


MCDOWELL: Welcome back. I'm Dagen McDowell, in for Maria Bartiromo. It is Tuesday, January 3. Your top stories at 6:00 a.m. Eastern -- the Russian threat in focus -- President-elect Donald Trump says he will reveal new details behind the alleged hacking of the DNC and whether Russia was involved at all.

This comes amid questions over President Obama's sanctions against that country.


UNIDENTIFIED MALE: The administration acknowledged that Russia has continued to try to hack U.S. information systems, even after Barack Obama reportedly told Vladimir Putin to, quote, "cut it out." So whatever measures they have in place have not been working.

UNIDENTIFIED MALE: There is zero evidence that they influenced the election. And I think that's what we've got to get away from this, allowing the narrative to become whether or not the DNC and other entities didn't have -- lack security and whether or not there was entity that actually influenced our election.


MCDOWELL: The latest developments on that ahead. A deadly poisoning in Texas -- authorities say pesticides are to blame for the accidental death of four children -- the details on that.

A United baggage handler scores a free flight in the cargo hold, the company and authorities still trying to figure out how he got locked in with the luggage. And it's the first trading day of 2017, futures pointing to a strong open, a hundred and 50-point gain on the Dow futures at the moment.

We are very close, about 237 points away from Dow 20,000. Can we hit it to start 2017? In Europe, stocks mostly higher -- they were higher across the board.

The DAX has been toggling between positive and negative territory. But you do have green to talk about.

And then strength in the financials -- they're driving that action higher. And all your Asian markets that we're trading today, the Nikkei closed for a holiday, moving into positive territory, the Shanghai up one percent on a manufacturing data that came in at its highest level since 2013.

The performance not quite heard around the world -- the latest in the controversy over Mariah Carey's botched New Year's Eve appearance. Duke women's basketball duped the Louisville Cardinals playing a trick and the Blue Devils score in the wrong basket.

Howard went down. And turning to our top story this half hour, President- elect Donald Trump promising a big reveal possibly today over alleged hacking during the election. This comes as Wikileaks founder, Julian Assange, defends Russia against these accusations in an interview with Fox News' Sean Hannity.


SEAN HANNITY, FOX NEWS HOST: Can you say to the American people unequivocally that you did not get this information about the DNC, John Podesta's e-mails? Can you tell the American people a thousand percent you did not get it from Russia.


HANNITY: .or anybody associated with Russia?

ASSANGE: We -- we can say -- we have said repeatedly over the last two months that our source is not the Russian government. And it is not state party.


MCDOWELL: Let's bring in Paul Bonicelli, former Bush 43 foreign policy adviser.

Paul, what is your take on Assange saying -- and to be clear, he said Russian government and part (ph), the Russian state. He said that again and again. But it leaves wiggle room for -- for it to come from somebody within the country.

PAUL BONICELLI, FORMER BUSH 43 ADVISER: Yes, I think it leaves a lot of wiggle room. And I think we don't know yet. I think that if you looked at it with the way you would look at any kind of situation like this, you would say it's most likely that it was Russian-government-directed, if not actually an operation of the Russian government, or that they had knowledge of it.