TSA Staffing Shortages Hit Airports Amid Gov’t Shutdown; Police Say Closs Suspect Confessed To Crimes; WSJ: Huawei CEO Denies Spying Claims;
<Show: MORNINGS WITH MARIA>
<Date: January 15, 2019>
<Head: TSA Staffing Shortages Hit Airports Amid Gov’t Shutdown; Police Say
Closs Suspect Confessed To Crimes; WSJ: Huawei CEO Denies Spying Claims;
Ocasio-Cortez’s 70 Percent Plan; Deloitte Tech Trends; Impact of A.I. On
Business; New Caravan Heading to U.S.; Shutdown Affecting Coast Guard
Members; Iran Tests Satellite; New Mexico Credit Unions Offer Help; L.A.
Teachers Strike; J.P. Morgan EPS Misses Estimates - Part 5>
<Sect: News; Financial>
<Byline: Maria Bartiromo, Jack Keane, Cheryl Casone, Dagen McDowell>
<Guest: Bill Briggs, Steve Forbes, Matt Murray, Jay Jacobs, Michael Lee>
<Spec: TSA; Airports; Jayme Closs; Huawei; Spying; Alexandria Ocasio-
Cortez; Deloitte; J.P. Morgan; Wells Fargo; Delta Airlines; Government
Shutdown; Honduras; U.S.-Mexico border; Nancy Pelosi; Iran; Mike Pompeo;
Theresa May; Brexit; European Union; Clemson Tigers; Fast Food; New Mexico;
Credit Union; Furloughed Federal Workers; Loans; Oregon; Kate Brown; Los
Angeles; Teachers Strike; J.P. Morgan; Estimates; Revenue; Stock; Jamie
Dimon; Credit Market; Federal Reserve>
BARTIROMO: Yes. And I was surprised yesterday, the started out with weakness on Citigroup that actually ended higher and all the banks actually ended higher yesterday. Today we’re numbers that obviously show that end of year weakness volatility in the markets did undercut and hit earnings.
WILLIS: And of course, those stocks traded down for -- most of the last year down 17 percent.
BARTIROMO: Yes. Great point.
BARTIROMO: Gerri, thank you.
WILLIS: Bank stocks (INAUDIBLE) thank you.
BARTIROMO: Gerri Willis on the floor of the New York Stock Exchange. Meanwhile, it is day 25 on the shutdown showdown. President Trump not blinking in the stalemate with Congress when it comes to getting the border wall funded.
(BEGIN VIDEO CLIP)
TRUMP: We have a very big crisis, a humanitarian crisis on the border, everybody knows it, they know it. And many of them are saying we agree with you, we have a priority, it’s the safety of our nation. The southern border has been horrible for decades, and it’s now because of the success of our country. It’s now at a level that we cannot put up with. The Democrats have to do something. We need their votes otherwise we can’t solve it.
(END VIDEO CLIP)
BARTIROMO: This coming as we are learning that another migrant caravan has begun its journey north towards the U.S.-Mexico border. Joining us right now to discuss, Louisiana Congressman, House Minority Whip, Steve Scalise. Congressman, it’s always a pleasure to see you. Thanks so much for being here with us.
REP. STEVE SCALISE (R-LA), HOUSE MINORITY WHIP: Good morning. Great to be with you, Maria.
BARTIROMO: So here we have another caravan on the way day 25, coast guard not getting paid, people have missed their first paycheck. What is it going to take to get the government open again and fix this stalemate?
SCALISE: Maria, it’s going to take Nancy Pelosi and Chuck Schumer finally coming to the table, to put some kind of counter offer. What President Trump from the beginning said, his experts, the people that risk their lives to keep our country safe said it’s going to cost $5.7 billion to secure the border. Nancy Pelosi’s only counteroffer was a few weeks ago when she joked she give a dollar. That’s not serious, they’ve yet to put a single counteroffer on the table to negotiate.
And the President has been open to negotiating upon ultimately to securing the border and that’s what this is about. They have -- they keep saying they love to say they’re for securing the border until it comes time to put a dollar amount to it. It’s going to cost a lot more than dollar to secure America’s border. Our experts say $5.7 billion, when are they going to finally come to the table with a credible counteroffer to solve this problem.
BARTIROMO: Well, you make a good point. We know that Nancy Pelosi has already voted for a border wall in the past. So has Barack Obama, so have many other Democrats, but now that President Trump has made it a campaign promise, they don’t want to do it. So I guess, the bigger question here is they’re digging in because this is the President, they don’t like him, they want him out frankly.
Is this going to be every issue, every bill that you want to bring, every topic that you want to get done or issue that you want to get done? If you’re going to hit constant, you know, up against this resist movement and no, no, no. What’s your plan to deal with that to get anything done in the next two years, Congressman?
SCALISE: Well, Maria, when we’re in the majority in the House, we’re able to work around that a few times. You saw on the tax cuts and jobs act and you’re just reporting all this great economic news, more people that are looking to hire workers than there are workers looking for jobs. So we cut taxes to make that happen, not one single Democrat voted with us but we were in House majority back then, we were able to get that done.
On this front, obviously with Nancy Pelosi as speaker now, they’ve made it personal and it’s unfortunate because as you pointed out, what Nancy Pelosi has voted for, Chuck Schumer, voted for the very same bill that Barack Obama voted for, that would give our Homeland Security Department the tools they need to secure the border properly but they never put any real money behind it.
What President Trump is saying is let’s end the broken promises, let’s end all this rhetoric and actually secure the border because lives are at risk. This is not just a campaign promise. He said that because it is literally costing us lives every single day that we don’t secure America’s border.
BARTIROMO: Well, is there a larger agreement that he President could put on the table? I mean, the President was in Louisiana yesterday, your home state speaking to farmers at the 100th Annual Convention of the American Farm Bureau Federation. He promised to pursue changes to immigration laws that would bring more seasonal workers and to help farmers. Watch this.
(BEGIN VIDEO CLIP)
TRUMP: When we have proper security people aren’t going to come except for the people we want to come because we want to take people and to help our farmers, et cetera, very important. We’re going to make that actually easier for them. And I’m glad I told you that because, you know, look you’re in that business and a lot of the people don’t understand this. You need those -- you need people to help you with the farms and I’m not going to rule that out. I’m going to make that easier for them to come in and to work the farms.
(END VIDEO CLIP)
BARTIROMO: So, is the President or are you planning some kind of a broader discussion to perhaps get your colleagues on the other side under the tent?
SCALISE: Well Maria, it was great seeing the President yesterday in New Orleans. I got to spend a lot of time with him as well as going book to D.C. and we talked a lot about this. The President over years, for last two years has been willing to negotiate on a lot of fronts on immigration. Obviously closing the interior loopholes that are major problems. But even on DACA, he’s been willing.
And in fact, a year and a half ago Chuck Schumer even agreed for are about 12 hours that he would support wall funding in exchange for an agreement on DACA and the President agreed to that. And then the left went nuts and Chuck Schumer backed away.
SCALISE: So the President has been open to this for a long time but they’ve yet to negotiate. A year ago you remember the President signed that omnibus spending bill. And when he signed it, he said, I’m not going to do this again. It had no money, it had money for border wall but not the request that the Department of Homeland Security was making and he said, I’m not going to do this again.
That was over a year ago, not once did Democrats try to negotiate on all these broader issues. And yet, again, day 25 of the shutdown, not one time as Nancy Pelosi or Chuck Schumer put a credible alternative on the table to negotiate. They don’t want to solve this problem. They talk about these Federal workers. We don’t want people to go without pay. But we don’t want our border to be unsecured.
SCALISE: And to not be able to protect this country against caravans like Honduras, like the other caravan. It’s a crisis every day with the drugs coming over, with murderers coming over. We got to end it. We can end it. The President has a credible offer on the table backed up by the people who risk their lives to keep our country safe. It’s time for Schumer and Pelosi to do same.
BARTIROMO: Let me move on to economics. You mentioned the tax cut plan, freshman New York Congresswoman Alexander Ocasio-Cortez has a different idea. She has her own tax plan. Let’s watch.
(BEGIN VIDEO CLIP)
REP. ALEXANDRIA OCASIO-CORTEZ (D), NEW YORK: People are going to have to start paying their fair share in taxes.
ANDERSON COOPER, ANCHOR, CNN: To be specific on the tax rate?
OCASIO-CORTEZ: You know, you look at our tax rates back in the 60s and when you have a progressive tax rate system, your tax rate -- you know, let’s say from zero to $75,000 may have been 10 percent or 15 percent, et cetera. But once you get to like the tippy tops on your $10 millionth. Sometimes you see tax rates as high as 60 or 70 percent.
(END VIDEO CLIP)
BARTIROMO: Seventy percent obviously would be more than double what we are right now in top tax rate and while she’s convinced that 70 percent marginal tax rate on the rich would raise series funds. Some are estimating it could raise $700 billion over the decade. The tax foundation says that the benefits would be much less than half of that because people will hide income. Your reaction.
SCALISE: Well, Maria, we just went through a phase where we saw what happens to high tax rates. We were losing major companies that were moving overseas. In some cases to some of these European countries that she seems to be infatuated with. A 70 percent marginal rate is -- it’s radical, it’s leftist, it’s socialist and it’s tingling because what they’re trying to do is confiscate more and more wealth from people who are creating jobs, Maria.
SCALISE: Look at her plan, her suggested 70 percent marginal rate and she says it will start at 10 million. It never starts where they say it is, it always drops down, it hits the middle class. This proposal of hers would negatively impact nearly 100,000 small businesses. Maria, small businesses that are in many of them may be because they’re selling a lot of products, they might not make a lot in revenue. She should look at that.
BARTIROMO: The message -- I mean, I get that and I know that but the messaging on the Republican side has not been forceful enough to make sure rest of America understands that. I mean, can you just give this subject up to Alexandria Ocasio-Cortez or do you need to have a bold response, a bold plan to put in place so that people understand what happens when government takes more of your money.
People sit on cash, they won’t spend it, they certainly won’t hire.
SCALISE: Right. And that’s why I’ve engaged with her and showing just how radical this is and contrasted it. Maria, we’ve never had a better time to contrast these radically high 70 percent confiscatory rates where you literally crushing and stifling and any ability for small business to grow. But if you look what we’ve done on the other side, we’ve cut rates because we were not competitive as a nation and we’re finally starting to see job growth. Let’s keep creating jobs.
BARTIROMO: All right. We will leave it there. Congressman, it’s good to see this morning. We’ll be watching the developments. Thank so much for being here.
SCALISE: Great to be with you, Maria.
BARTIROMO: Congressman Steve Scalise. Coming up. Breaking news out of Kenya. Reports of explosion and gunfire at a luxury hotel complex in Kenya. We’ll bring you there. We’ll have the latest. Stay with us and Carlos Ghosn. Stay with us.
BARTIROMO: Welcome back. Let’s check futures here. We are looking at a gain at the start of trading. It has been back-and-forth after the J.P. Morgan numbers but we are looking at a positive performance for the Dow up just about 10 points though. Fractional moves well off of the highs of the morning before the JPM earnings. NASDAQ is up 33 points, that’s one-half of one percent this morning on futures, about one hour before the open this morning.
Breaking news to report, explosions in Nairobi. Cheryl Casone with the details and headlines now. Cheryl?
CHERYL CASONE, FOX BUSINESS NETWORK ANCHOR: Yes. We’re getting this breaking news out of Africa. Gunfire explosions are being reported. This is an upscale hotel complex in the Kenyan capital. The hotel is the Dusit hotel. Explosions, gunfire, the area has now been cornered off by local authorities there. We are waiting to get of course more updates from police there as to how they are treating this attack.
We don’t have any more details and then that will bring them to you as soon as we get them in our newsroom.
Another headline we’re following for you this morning. Huawei CEO strongly denying claims that his company is spying for China. Ren Zhengfei telling the Wall Street Journal that Huawei has never spied for China’s government, never would. Ren speaking after his daughter, Huawei CFO was detained in Canada last month for allegedly violating U.S. sanctions on Iran. A Polish employee of Huawei arrested in Poland last week and charged with espionage.
Well, tensions between China and Canada also likely to rise after a Chinese court sentenced a Canadian man to death after he was convicted of drug smuggling. The man says he is innocent. All right. Staying over. The Tokyo court has denied former Nissan Chairman Carlos Ghosn’s request for bail. This means that Ghosn could spend another several months in prison as he awaits trial for charges of financial misconduct.
Ghosn’s lawyer is appealing that decision. Now Ghosn’s wife says that he lost 15 pounds in two weeks while detained. She sent a letter to human rights watchdog group to try to raise awareness of her husband’s harsh treatment in custody. Ghosn has spent, Maria, more than 50 days in jail.
And then there is this, two rival automakers just moments ago announcing plans for a global alliance. Ford and Volkswagen joining forces to develop commercial vans and pickups. They are also looking into expanding into the joint development of - yes, you guessed it, electric and self-driving cars. Shocker. Ford is trading higher in the free market as you can see up a little more than one percent. Volkswagen, stocks down 26 percent over the past year. We’re just going to have to conform, it’s all going to be self- driving at some point, Maria. Get ready.
BARTIROMO: I guess so. Cheryl, thank you.
CASONE: You bet.
BARTIROMO: Coming up. A fast-food feast. President Trump welcomed the Clemson Tigers to the White House yesterday serving up an all-American meal on silver platters. We’ll tell you a lot more when we come right back.
BARTIROMO: Welcome back. The fight for 15 headed back to Capitol Hill. Senator Bernie Sanders reintroducing legislation with hopes to double the minimum wage. The Vermont independent tweeted this, the Federal minimum wage of 7.25 is a starvation wage. That is why I along with many other members of Congress will introduce legislation this week to raise that wage to $15.00 an hour.
If you work about 40 hours a week you should not live in poverty. Joining us right now is FAT Brands chairman and former McDonald’s USA CEO, Ed Rensi. Ed, it’s good to see you this morning. Thanks so much for joining us.
ED RENSI, CHAIRMAN, FAT BRANDS: Good morning. Glad to be here.
BARTIROMO: Your reaction to Bernie Sanders’ efforts to get that minimum wage up to 15.
RENSI: Well, I want to congratulate him on being very consistent in his idiocy. He just does not understand that small business generate the vast majority of jobs in this country and they are the anchor of local economies. And the Federal minimum wage of $15.00 does not recognize the difference between living in New York City and living in Keokuk, Iowa. We don’t need a Federal minimum wage, we need to have a state minimum wages that reflect the economy where they’re at.
Secondarily, a $15.00 minimum wage will drive inflation like crazy because small businesses have to increase prices dramatically. Agricultural products will go through the roof. He just -- he just -- it’s amazing to me that he is either naive or absolutely refuses to see the reality of economics in this country.
BARTIROMO: Well, you ran McDonald’s USA. I mean, when you had higher expenses in terms of paying employees or an extra expense, what did you? Did you fire people, did you reorganize? What did you do as a manager?
RENSI: All the above. We had to go to technology to replace people, we had to create systems and processes and procedures that did not need human interaction.
RENSI: I think overall face-to-face service went down. We moved money around and ways we never wanted to. We had to cheapen up the way we did things --
BARTIROMO: Wow. Well, we got Steve Forbes here. Steve, jump in here. Go ahead.
FORBES: Yes. I love McDonald’s. I think that’s a fine cuisine, Wendy’s and Burger King and the others. But when you go to country like France which has high minimum wage, McDonald’s and others are all kiosk because that the way it’s going to be in this country, you just go to the counter to pick up your food but you punch it in on the kiosk.
RENSI: I think you’re going to see more and more of that and I also think you’re going to see a lot more delivery systems coming into play with phantom kitchens. We’re going to have to reduce occupants in cost if labor goes up. So we’re going to start building kitchens and warehouses and it’s all going to be delivery and personal services going to go in the tank.
BARTIROMO: All right. We will leave it there. It’s great to see you, Ed. You got to come back soon. I’m sorry this was -- this was shorter than normal, Ed. Thank very much you for weighing in here. Ed Rensi joining us there.
RENSI: Good to see you.
BARTIROMO: We want to take a short break because we got the PPI out on the other side of this break. It is also decision day in the U.K. What’s at stake for Britain as it decides whether to back Theresa May’s deal for leaving at the European Union. Stay with us.
BARTIROMO: Welcome back. The producer price index is out. Good morning, everyone. Thanks for joining us. I’m Maria Bartiromo and it is Tuesday, January 15th. Your top stories 8:30 a.m. on the East Coast, and we’ve got breaking news. The December producer price index just out. It is actually better than expected. It is down two-tenths of a percent. We’re expecting it to be down one-tenth of a percent, so now we’ve got even a bigger decline than expected, meaning no inflation on the producer level. We were expecting an increase year-over-year, as well, of 2 1/2 percent we are going to get you the year-over-year numbers momentarily.
Bank earnings are in focus this morning. J.P. Morgan Chase hitting the tape with disappointing numbers. Stock is down, almost three percent right now. Wells Fargo also out with a mixed report, bringing Futures well off of the highs of the morning. Futures right now indicating a mixed open for the broader averages, Dow Industrials down 24 points, the S&P 500 is up just a fraction, and the NASDAQ is up 24 points, all of this is off of the best levels of the morning this morning.
In Europe, similar story, a lot of movement on the heels of the J.P. Morgan earnings. The FT-100 us up two 2-1/2 points, the CAC Quarante is up five points, the DAX Index is now negative down 25 points, as the J.P. Morgan numbers being weaker than expected, definitely took the air out of markets this morning. December PPI year-over-year right in line up 2-1/2 percent, although month-over-month better than expected with a decline of two-tenths of a percent. Asian markets finishing higher overnight. Take a look across the board, the Hong Kong market was the best performer, Hang Seng up better than two percent.
Steve Forbes with us this morning. Your reaction to the PPI numbers on inflation.
FORBES: Just goes to show prosperity does not cause inflation, even though that still worshipped the Federal Reserve and I wish they get off this idea that prosperity’s something they have to watch out for. If you get a pay raise, you don’t feel you’re overheating, but the Fed, in regards to the economy, has a machine that tries to guide the economy and hopefully this kind of news will stay its hand, especially if we get a trade agreement, the economy rally picks up this year. Fed’s going to be a threat again.
BARTIROMO: So what do you think about the Fed in 2019? How many rate hikes would you expect?
FORCES: They’ll probably do one or two, but the key thing is they don’t try to slow the economy. And they still believe in prosperity causes inflation --
FORCES: -- and it’s nonsense, but they still worship this false shrine.
BARTIROMO: And we haven’t seen any inflation. I mean these numbers are just stunning, down two-tenths of a percent on the producer level. President Trump is tweeting again this morning. He just said this, “Moments ago, why is Nancy Pelosi getting paid when people working are not?” Wow, all right. President makes that question as we enter this morning day 25 of the government shutdown.
Our top story this half an hour, British Prime Minster Theresa May facing likely defeat on her deal for Britain to exit the European Union. Joining us right now is the President and Founder of the Eurasia Group, Ian Bremmer. Ian, it’s good to see you this morning.
IAN BREMMER, PRESIDENT AND FOUNDER REACTION TO EXPECTATION, EURASIA GROUP: Happy to be here.
BARTIROMO: Your reaction to -- an expectation rather to the happenings in Britain.
BREMMER: Well, look, you’re right, that this vote is likely to go down. It’s a very unpopular deal, and very few in her own party or the labor party are happy with it. Some because they think it doesn’t go far enough, some, they think it goes too far in terms of separation. When that happens, there’s a decent chance that the labor party declares a no- confidence vote, which everybody then votes on in parliament, which Theresa May is likely to succeed in pushing that down, which, in other words, we’re kind of back in a couple of days to where we are right now, but we’re a little close to the precipice. We aren’t close enough.
BREMMER: It’s not urgent, it’s not a crisis.
BARTIROMO: What’s your take on the whole Eurozone? Matt made a point earlier. I mean the fact that we’re looking at a slowdown, we went from the beginning of last year talking about synchronized growth across the world, now we’re talking about a synchronized slowdown, by the way. OK. So you look at Europe, you’ve got the Britain uncertainty, you’ve got fires and protesters --
BREMMER: In France.
BARTIROMO: -- in Paris, in France, you’ve got Italy and budget issues, what does the Europe story mean to the U.S.?
BREMMER: It’s is true that Macron’s approval ratings are 23 percent right now and yet her has significant executive power and you’re not going to toss him out, he’s not going anywhere. Merkel had to resign from Chairmanship of her party, but she was also able to hand select who her successor is going to be. The Italians are being run by a five-star movement league government, wish very antiestablishment.
BREMMER: But it ultimately had to back down create a budgetary compromise with Brussels. So on the on hand, all if the trends are kind of slow motion negative, but just like Brexit, there’s no urgency here.
BARTIROMO: Yes, but, now, remember for years we were saying, “Are we coupled or are we decoupled.” I mean it’s pretty much the situation that what happens in New York is going to affect the U.S.
BARTIROMO: We’re coupled.
MURRAY: Yes. But I think what Ian said is interesting, which I want to follow up on, which is that sense of urgency. Europe keeps sort of tiptoeing to the edge, never quite getting there. And what’s interesting in Brexit is you’ve got a situation in the U.K. where nobody’s happy with Theresa May, nobody’s happy with the deal, nobody’s stepping forward to seize the crown, everybody’s sitting back to watch. There’s even a chance, I supposed, that this could be extended further than the March deadline --
MURRAY: -- and they just keep going and keep going.
MURRAY: But what ultimately breaks in your estimation, Ian? How does -- how -- where -- if you had to bet, where do you think this goes? Does labor end up taking power here? Does someone else in the Tory Party step forward step format and take the crown? What do you think breaks this logjam?
BREMMER: Think back on the Brexit negotiations when the Greeks were being pushed right up against edge and the way that that got resolved is that the last day --
BREMMER: -- the Germans basically said “Here’s the best deal we’re going to give you and you’re going to take it or you’re going to be out and you’re going to get crushed.” And the Greeks had their referendum, they ended up saying “We’re staying in,” right? Now, we need to get to that razor point. We need to get to that cliff edge where the Brits finally say we’re in or we’re out.
And by the way, that means a larger chance of a no deal exit, which would be devastating for the British economy, but it also means a much more likelihood that the Brits -- the Conservatives stand up for Theresa May, get the deal done, and then move on with another election. We’re -- the point is we’re not close to that right now.
BREMMER: And I think that because the Europeans themselves are seeing that the likelihood of a hard exit would be problematic for them, too, and the numbers are looking worse and worse.
BREMMER: They are more willing to extend if the Brits come and say “We need more time to try to come to yet another deal.”
BARTIROMO: Right. And then there’s China, Steve. This has been an important issue. Let’s talk China for a moment because it’s got so many legs. Asian markets higher over trying to signal that we’ll support its struggling economy, they’re talking about tax cuts in China --
BARTIROMO: -- and implementing them this coming after Apple certainly blame part of the revenue shortfall on weakness in China, Steve.
FORBES: Yes, a couple of months ago, China started to reduce tariffs on non-American products. Do you think there’s going to be a big trade deal? There’d certainly be rumblings that the actual gas, and other things are going to be included they will separate intellectual property for another day, but come up with a big number that everyone can claim great big deal, instead of 70 billion you had with Mnuchin and the Chinese few months ago. This will be multi-hundreds of billions over 10 years. Do you see that prospect?
BARTIROMO: Yes. I think the headlined numbers are going to be significant. I would be stunned if we get to the March 1 deadline and Trump says “That’s it, we failed, and we’re going to 25 percent tariffs.” Nothing --
FORBES: But both sides need a deal.
BREMMER: Both sides need a deal, Trump said that dinner at the G20 in Buenos Aires with Xi Jinping was fantastic. They -- both sides extended negotiations by another day last week significant.