Trump Team Takes Shape; Focus on Trade; Chaos at Customs; Istanbul Nightclub Attack; SpaceX to Launch Sunday; Top Movies of 2016; Tech Death



Nightclub Attack; SpaceX to Launch Sunday; Top Movies of 2016; Tech Death

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DAGEN MCDOWELL, FBN ANCHOR: Deadly storms in the South. At least five people killed after tornadoes and severe thunderstorms slammed the region.

And customs chaos slamming travelers -- a computer outage impacting thousands as the holiday travel season wraps up. Authorities still trying to figure out what caused that computer system to go down.

New developments in the Turkey terror attack -- officials revealing a photo of the suspected shooter and the American who survived that attack speaking out before heading home.


WILLIAM RAAK, AMERICAN VICTIM: All I can say is this massive tragedy is very unfortunate. I don't want to talk about what happened. I want to say, you know, this is a very good country and it's so unfortunate because this is happening to you guys. And I really feel for everybody here. I would love to come back when it's a little safer. It's a good country. All the people are very good. And like I said it's so unfortunate.


MCDOWELL: The latest details coming up.

And it's the first trading day of 2017 and we have a rally on our hands. The Dow up 147 points coming off a double-digit gain last year but gains across the board also very strong in 2016, your small cap stocks and your transports.

Looking at Europe on this trading day, stocks higher across the board; a slight gain on the DAX in Germany but England and France seeing gains of almost half of 1 percent.

In Asia overnight stocks also moving higher; a reading on Chinese manufacturing coming in at its highest level since 2013. The Nikkei in Japan was closed for a holiday.

All of that and so much more coming up.

With me this morning, I'm very lucky to have these fine folks here, outstanding individuals one and all. Maverick PAC national co-chair Morgan Ortagus, Forbes Media chairman Steve Forbes and Republican strategist and Fox News contributor Tony Sayegh. Welcome everybody. Happy New Year.

TONY SAYEGH, FOX NEWS CONTRIBUTOR: Great to be with you my friend.


MCDOWELL: -- over and over and over again. You can't say it enough, I think.


MCDOWELL: Great to see you guys.

Let's move on to this story. President-Elect Trump's team continues to take shape. Donald Trump has nominated former trade official under Ronald Reagan, Robert Lighthizer to head the U.S. Trade Representative Office. This, as Trump criticized China tweeting this, quote, "China has been taking out massive amounts of money and wealth from the U.S. in totally one-sided trade but won't help with North Korea. Nice," exclamation point.

Joining me now is "National Review" editor Rich Lowry. Rich -- great to see you this morning. Happy New Year.

RICH LOWRY, "NATIONAL REVIEW": Hi there. Happy New Year.

MCDOWELL: How will Lighthizer -- based on what we know from his career and service under Ronald Reagan, how will he handle trade and will he be as tough as Trump's words have been?

LOWRY: Well, he's a real experienced hand. He's been doing this for 30 years. And on trade, Trump has built a team that entirely agrees with his view of the matter which is the U.S. has been ripped off and has a lot of experience dealing with it. Some of the other cabinet positions, you look at them, and they have various views. They may be a little at odds with Trump. This one, this team is totally coherent and on the same page as he is.

MCDOWELL: Well, he's thrown out the idea of tariff on Chinese goods in the past. Is that a potential reality? Because certainly investors would be unnerved about that. If there's one question mark in this terrific rally that we've seen, the inauguration, it is how he will handle trade.

LOWRY: Yes. I would imagine as a first blush that that is going to be a leverage point. It's going to be a threat to try to get people to sit down at the table and get what the Trump administration would consider a better deal.

But no one quite knows. And that is part of the leverage and part of the deterrent effect that Trump is hoping to create with these various threats.

ORTAGUS: Rich, because I think it's important to point out that the trade deal that most of the Democrats opposed, that Obama was pursuing in Asia did not include China, right. The point of the trade deal was a counterbalance to Chinese influence and decrease American influence in Asia.

LOWRY: Right.

ORTAGUS: So I think that perhaps the Trump administration could actually still have some sort of trade deal. They just -- I think that what the President-Elect is saying is that he wants to have favorable terms for the U.S.

MCDOWELL: But China quickly tried to move into the breach and negotiate trade deals with those nations we seem to be leaving out in the cold.

LOWRY: Yes. Well, I think the biggest argument in favor of TPP is not necessarily economic. It's geopolitical, sort of create the rules of the road around China and try to leave China out. China is delighted that we're pulling up stakes on that at the moment.

FORBES: What are the big beefs, specific beefs, other than it's a bad deal that they would want to change NAFTA and other agreements?

LOWRY: I am not sure on NAFTA. On China, they believe that China is ripping off our intellectual property, has subsidized its own business in order to --

FORBES: But those are actually violations of WTO rules and stealing property and things like that. They could move on that and have the applause of everyone. It's the worry about putting on a tariff that's got people worried.

LOWRY: Right.

FORBES: Other than blocking our companies, stealing our property, what in the specific trade deals do we know yet that they have objection to or it's the outside of the trade deal?

LOWRY: I haven't seen specifically what they want to do on NAFTA except at least get something they can say that they renegotiate it.

FORBES: What about currency? Do you see them trying to negotiate a --


LOWRY: Well, this is going to be interesting because the dollar is getting stronger which means the trade deficit is going to get higher and the trade deficit has, you know, Trump himself and Wilbur Ross especially has focused a lot on that.

So it's going to be a paradox. You know, Wilbur Ross has to be waking up with a headache every morning about the dollar getting stronger.

SAYEGH: So you have now obviously a trade representative who's going to be negotiating these deals with foreign governments and other entities. Who is going to be the most effect it in your mind in helping Congress get behind the Trump trade agenda which we know there's going to be some divisions.

Clearly Paul Ryan is a free trader. Much of the Congressional leadership supports the more traditional Republican view on trade. How does Donald Trump negotiate with Congress because ironically one of the few areas of agreement between the Obama White House and the Hill are a lot of these larger trade agreements?

LOWRY: Yes. This is -- you know, you look at the start of the Reaganism that you have on the Hill and the populism you have in the White House. There's about 80 percent, 70 percent overlap. But there are areas of major tension in trade that will be one of them.

And Paul Ryan is just an orthodox Steve Forbes-style free trader. And he's not going to like a lot of this.

Not that there's anything wrong with that.

SAYEGH: Could we unify around enforcement. I think Steve brings up a good point.



SAYEGH: Fine, you know, obviously the details of the deal are one thing, but China is violating existing tenets of the WTO.

FORBES: Well, one of the key things they do, especially in major American companies if they think that's a strategic industry for their economy they don't hesitate to block them or humiliate them. I think that would be something you can put on the table -- equal access.

MCDOWELL: I want to move on to this story turning to the GOP. House Republicans voting last night in favor of a proposal that would gut Congress' outside ethics watchdog. This places the independent Office of Congressional Ethics under House Oversight. The full House now votes on this ruling today.

Rich -- should this proposal go through? Of course, "The New York Times" this morning if you look at their front page online it's -- aaahhh -- outrage.

LOWRY: It's probably inside baseball. I would probably prefer the more independent style ethics body they had. But obviously it rubbed a lot of members the wrong way. And I don't this makes a big dent politically unless there's a sort of scandal. You can clearly see Democrats are ginning themselves up to say this is the most unethical administration and Congress in the history of the planet.

MCDOWELL: Can they get tax reform done? I say tax reform -- cutting corporate taxes, tax reform done by July 1. Is it going to happen?

LOWRY: July 1 seems ambitious to me. Maybe by the end of the year.

MCDOWELL: Wow, you didn't --


LOWRY: Retroactive.

MCDOWELL: It almost certainly would be retroactive, I would say. But a year is a given -- because we are watching the markets so closely and the markets anticipating, expecting and even individuals with consumer confidence at the highest level since before 9/11, they're looking at more money in their paycheck. They're looking at things that will help create jobs, roll back on regulations as well. And I guess the question is how long will investors wait for that to happen?

LOWRY: Yes. It's just that tax reform is one of the biggest most complex things you can do. I think in terms of getting early (inaudible) on the board, deregulation is the area to look because a lot of it is just unspooling what the Obama administration did, a lot of it unilaterally.

Sayegh: I agree with you, by the way, they have the congressional review (AUDIO GAP) congress to basically -- and the President -- take a lot of these regulations (AUDIO GAP). This is a conversation that's been prepping for a long time. And if they try to do it in a too big to fail way, I agree with you it's going to hit some roadblocks.

But I think on the corporate tax rate especially, there is unification around this idea that as the biggest economy in the world, we shouldn't have the highest corporate tax rate on these companies and it's better to create a pleasant environment for them to --

MCDOWELL: That's why Steve Moore, right out of the gate, was advocating getting the corporate tax cut done immediately and quickly because they could do that and then move on to something a great deal more complicated on the individual side.

FORBES: They've got to do something in the individual side almost from the beginning because if they just do business first that's not going to sit well politically. And so the optics they have to do something for both personal and business.

And Rich, do you hear much talk any more of having the border adjustment tax (AUDIO GAP) that putting a tax on American consumers will help our trade?

LOWRY: Yes. You still hear that and I think that's a possibility where (AUDIO GAP) trade stuff that's left (AUDIO GAP) I think that's a real possibility.

MCDOWELL: How would that work, quickly? How do you impose that -- Steve?

FORBES: In essence it would be a disguised tariff on imports in, which is why U.S. retailers are saying this is outrageous. They look at VAT rebates overseas and say ok, why don't we do a similar system here.

MCDOWELL: You have to hate this because it complicates taxes.

FORBES: It complicates the tax code.


FORBES: You start right off the bat having industries fighting each other. Some are going to be (inaudible), retailers up in arms about it. So why do you get in a fight at the beginning?

MCDOWELL: We haven't even talked about the soda tax that went into effect on January 1 in the city of Philadelphia.


ORTAGUS: Oh, Good.

MCDOWELL: It was great to see you -- Rich.

LOWRY: Thanks so much. Happy New Year.

MCDOWELL: That's Rich Lowry. Happy New Year.

Coming up severe storms tearing through the south killing at least five people, leaving tens of thousands without power. Where the storms are headed, next.

And chaos and delays at airports across the nation after a U.S. Customs system outage left passengers stranded. What caused the disruption? Do we know?

Stay tuned.


MCDOWELL: A computer glitch leaving thousands of travelers across the country outraged yesterday, myself included.

Cheryl Casone has the details on the story.

CHERYL CASONE, FBN CORRESPONDENT: Well, here is Miami which is where you were. And take a look at this video that came in. It's obviously a chaotic scene at the international airport there, thousands of inbound international travelers really at airports across the nations were stuck behind Customs screenings stations for several hours.

This all happened last night; there was a system-wide computer glitch. The Customs and Border Protection systems are back on line later in the night but not before it cause not just chaos but long lines. And as you mentioned, even for domestic passengers, a lot of headaches at airports last night.

Well, we are getting some breaking news out of Turkey right now. NTV is reporting two foreign nationals have been at Istanbul's Ataturk Airport after a deadly New Year's Eve blast at a local night club. Now this after this video -- this new video emerged overnight showing the terror suspect in the nightclub attack.

Authorities have already said they are close to identifying the gunman behind the shooting. At least 39 people died there, many of them were foreigners. We should say a Delaware man was the only American injured in the attack. 35-year-old William Jacob Raak took a bullet to the leg during the rampage which he calls a massive tragedy for that country.


RAAK: It's a very good country and it's so unfortunate that this is happening to you guys. I really feel for everybody here. For me I wake up in the United States, I eat breakfast. You guys wake up and have to think of this. So sad.


CASONE: Well, the Islamic state claimed responsibility for the attack calling the gunman a quote, "soldier of the caliphate". Turkish authorities say that they've already detained eight other people in connection with that attack.

Well, if you don't succeed, try again. That is just what Elon Musk's SpaceX plans to do. SpaceX says it's going to resume rocket launches on January 8th after one of their rockets exploded into a fireball -- that's what you're looking at from September.

The new Falcon Nine rocket is going to be carrying a communications satellite. It's expected to launch on Sunday morning.

And then there's this.


UNIDENTIFIED MALE: The force is strong.

UNIDENTIFIED FEMALE: We'll take the next jump.


CASONE: Yes, "Star Wars" helping Hollywood hit a box office record for 2016. The movie industry raked in $11.3 billion but Disney receives most of that credit. So "Finding Dory" tops the chart actually with $486 million in ticket sales. But that was followed as you just saw, "Rogue One: a Star Wars Story", that finished the year with nearly $430 million. At number three, yes another Disney film, "Captain America: Civil War" brought in $408 million. And then rounding out the top five are "The Secret Life of Pets" and "The Jungle Book".

Dagen -- the higher revenues doesn't necessarily mean that more people are going to the movies but ticket prices are up and that's good for the coffers of Hollywood producers. Back to you.

MCDOWELL: It is -- how many movies did you see -- Tony? Thank you Cheryl so much, by the way.

SAYEGH: I saw two kids' movies in the last month. That's pretty much --

MCDOWELL: What did you see?

SAYEGH: I saw "Sing". It was really funny, very cute. A little too long for my liking; I would prefer it a little shorter. And I saw "Moana" -- is that --

MCDOWELL: "Moana".

SAYEGH: "Moana" which was really incredible, very touching story, beautiful graphics.

MCDOWELL: Steve do you go to the movies?

FORBES: Only on TV.

ORTAGUS: I've been drawn to Netflix and Amazon -- all of these things. I rarely go to the -- I don't go to the movie theater. But I like it when I go in. I get the popcorn and the chips, hot dogs. I'm a pig.

MCDOWELL: I have to be careful in airports and in movie theaters just because somebody will get up in your business, so to speak.

ORTAGUS: It's because you're so famous -- Dagen.

MCDOWELL: No, no. No, I am not famous. And without makeup on, I look like Tony -- I look like Tony without makeup on.

FORBES: Natural beauty.

SAYEGH: You look like me without make up on.

FORBES: It's natural beauty.

SAYEGH: Natural -- that's right.

MCDOWELL: I avoid trouble by staying out of public places. I am going to go see "Rogue One". I'm just not going -- I'll go alone.

FORBES: You have a mustache you put on or something?


Coming up, technology in trouble -- the struggles that Yahoo and Twitter are set to face in the coming year.

And traveling with the trend -- the top vacation spot for 2017 ahead.


MCDOWELL: Severe weather slamming the South with strong storms leaving a trail of damage yesterday. Fox News senior meteorologist Janice Dean has the very latest. Hey -- Janice.


Yes, unfortunately we had deaths because of severe weather yesterday. We take a look at the map. We also had heavy rain fell across the southeast - - look at that. In some cases, four to six, even eight inches of heavy rain so flooding is going to be a concern.

The risk for tornadoes has diminished. However we could see isolated severe weather as the storm system moves to the mid-Atlantic and the northeast. We're going to see airport delays as well. Chicago O'Hare right now at a ground stop.

And then this system is going to crawl up the coast mainly a rain even although we could see some ice in northern New England and some snow as well.

Forecast precipitation, you'll notice we go to Wednesday and Thursday as our next system moves in and possibly bring snow to parts of the mid-South. So that is something we're going to have to watch.

And the other big story we're watching Dagen -- is this arctic cold front that has returned, temperatures plummeting below zero with wind chills of minus 20 and minus 30. And as you can see it's windy outside here in the northeast right here on 48th and 6th. And that's the remnants of the system we'll be watching throughout the day today.

But keep in touch with your airlines -- that's the bottom line.

Back to you.

MCDOWELL: Janice -- thank you so much. Janice Dean --

DEAN: You got it.

MCDOWELL: -- our senior meteorologist for Fox News.

Some companies are weathering a different type of storm. According to IT site Ars Technica, seven companies are on death watch for 2017. The companies on the Web site's list include Yahoo, (inaudible), Twitter, Theranos, HTC, Blackberry and RadioShack.

Joining us now is Sean Gallagher, Ars Technica IT and national security editor. Sean before we go through the list, what criteria did you use to come up with these names?

SEAN GALLAGHER, ARS TECHNICA: Well, we looked at companies that were having either management or product problems or had a significant decline in revenue or simply were becoming more and more irrelevant. And this is based largely on their financials but also on how they were doing in their different business segments.

And a number of these companies, in fact RadioShack we listed them as being a recovering company. They actually have come back from the brink since they were acquired by a hedge fund firm. And they are actually springing back.

MCDOWELL: But Yahoo topped your list. Why?

GALLAGHER: Well, Yahoo has been in trouble for a number of years. Marissa Mayer tried to bring the company around, turning it into a big media company and she wasn't very successful in that.

And the main profits from Yahoo over the last two years have come from its investment in Alibaba, the Chinese e-commerce company. So in order to make the company more profitable they first considered spinning off the Alibaba investment as a separate company but for tax reasons they decided instead to get rid of the Internet business.

And the company has been a target for acquisition for a while and they've been losing money. Over the last year, Yahoo has been trying to be -- is in the process of being acquired by Verizon. But then they had two major hacks announced over the past six months where in the last one over billion user accounts were shown to have been exposed in 2013.

MCDOWELL: Right, which happened under Marissa Mayer's watch some years ago that the public didn't know about.


MCDOWELL: I want to get to Twitter, Sean. President-Elect Donald Trump made Twitter his go-to communications tool; zero sign that that is going to stop. Why are you concerned about Twitter's future?

GALLAGHER: Well, Twitter has been losing money for a long time. They have been courted by a number of companies briefly for acquisition and nobody seems to have taken a serious interest in them. They have yet to really design a business model for making money off of what they do.

So they are in a situation now where we don't think they're going away but we think that there's going to be some significant changes to the service over the next year or so as they try to make more money off of it.

MCDOWELL: And then I do want to point out that Theranos, blood testing company is also on the list that you put together and that was -- those are problems that were uncovered single-handedly by the :Wall Street Journal" that basically people would not have known about without "Wall Street Journal's" reporting on that company which is really astounding.

Sean -- thank you for being here. It's great to see you. Happy New Year.

GALLAGHER: Thanks. Happy New Year.

MCDOWELL: Sean Gallagher -- thanks for getting up early, as always.

Coming up, a loophole that President Obama could use to make a last-minute Supreme Court appointment. And guess who is here to talk about it -- one of our favorite people on planet earth, Judge Andrew Napolitano. His take.

And Israeli Prime Minister Benjamin Netanyahu at the center of a criminal probe. The investigation into corruption charges ahead.


MCDOWELL: Welcome back, everybody. I'm Dagen McDowell. It's Tuesday, January 3rd.

Your top stories nearing 7:30 a.m. Eastern time.

President-Elect Donald Trump getting back to work. He already announced his nomination for U.S. Trade Representative. We're still waiting to find out his pick for Agriculture secretary and the person who will run the V.A.

President Obama returning from his Hawaiian vacation with a tiny window to appoint Merrick Garland to the Supreme Court. The fall out if President Obama bypasses the senate.

Israeli Prime Minister Benjamin Netanyahu on the hot seat. He's facing questions from police over receiving unlawful gifts. But Netanyahu is denying those claims.


BENJAMIN NETANYAHU, ISRAELI PRIME MINISTER (through translator): I reiterate, there will not be anything because there is nothing. We will continue to lead the state of Israel.


MCDOWELL: The latest development ahead. Plus, a belated Christmas gift for Tesla owners. The company rolling out an update for its autopilot system. Tesla's stock gaining in pre-market trading.

And it's the first trading day of 2017 for commodities, stocks, you name it. A hundred forty four-point gain on the Dow right now. Double-digit gain for the blue chips last year. We are 237.40 points away from the 20,000 mark. So certainly we're headed in the right direction. Futures across the board pointing to a higher open. We are two hours away from that opening bell here.

In Europe, stocks up across the board with the gains in Germany modest, strengthen the financials driving that action. And in Asia overnight, stocks moving up. A reading on Chinese manufacturing came in at its highest level since 2013. The Nikkei was closed for a holiday in Japan.

And take a look at oil prices. Oil, one of the big winners last year up 45 percent, biggest gain since 2009. Oil right now at almost $55 a barrel. That's the highest price we've seen since July of 2015. Optimism over OPEC production cuts are driving that action.

And everyone is getting back to work after the holidays. So that means it's already time to think about your next vacation. We have a look at some of the top destinations for the new year straight ahead.

But first, this half hour. President Obama could use a last-minute loophole to make a key appointment. A brief five-minute window between the start of the new session of the incoming congress and the outgoing congress leaves the door open potentially for President Obama to squeeze in a recess appointment for the supreme court.

Let's bring in Fox News senior judicial analyst, one of my favorite people on planet earth, Judge Andrew Napolitano on this story.

JUDGE ANDREW NAPOLITANO, FOX SENIOR JUDICIAL ANALYST: You're so kind. Good morning. Happy New Year everybody.


MCDOWELL: Happy New Year.

NAPOLITANO: Thank you.

MCDOWELL: How is it possible for a president to do this? And would he do it?

NAPOLITANO: Well, I don't think he will do it but remember the constitution was written at a time when the senate did not have permanent offices in Washington and did not sit full time as it does today. And the framers were concerned that there might be some vacancy and that it would be months and months and months before the president could nominate someone to fill the vacancy and the senate confirm them.

It's just not for the supreme court. It's for any job in the federal government where the person is appointed by the president and need senate confirmation.

So they wrote the recess clause. Which says when the senate is in recess, the president may fill the vacancy and the person would hold that job not for life as a normal supreme court appointment is but until the end of the next senate session.

So President Obama in the very, very small window today at noon when the old senate ends and the new senate has not yet begun decides to put someone on the supreme court, in that small window. Boom, like this with my fingers because it could be a split second. It has to be some measurable amount of time that person would sit for two years.

Now would the president do that? I don't think so. I think the political fallout -- you guys know this better than I, would be earth shattering. This would be a profound frustration not only to President-elect Trump but to the people who elected Donald Trump president of the United States.