Market's rollercoaster week: What does it mean for you?

Bond rates sit at yearly low after limp earnings and slow economic growth


This is a rush transcript from "Sunday Morning Futures," May 18, 2014. This copy may not be in its final form and may be updated.


MARIA BARTIROMO, HOST: Spring hasn't sprung just yet for Wall Street.

Good morning, everyone. I'm Maria Bartiromo. This is "Sunday Morning Futures."

The Dow Jones industrial average taking its biggest tumble in five weeks. Some analysts pinning the blame on a winter hangover. But is the problem bigger than the weather? The CEO of Cisco Systems, John Chambers, will give us his take on the global story.

No fallout at the Department of Veterans Affairs in the wake of a nationwide, a report of V.A. employees falsifying records after dozens of veterans reportedly died while waiting for help. Senator Johnny Isakson, who grilled Secretary Shinseki this week, on where the investigation heads next.

And Russia digging its heels into Ukraine. Lawmakers on Capitol Hill are planning new sanctions. We'll talk to chess champion Garry Kasparov on Putin's Russia as we look ahead on SUNDAY MORNING FUTURES.


BARTIROMO: A roller coaster ride this past week for the stock market. But the real story may be bonds. Global bond rates are sitting at their lowest levels of the year. All of this after limp earnings and slow economic growth in our first quarter.

Can we pull out of the malaise?

John Chambers is CEO of the multinational technology company Cisco Systems, which just reported strong quarterly earnings.

John, good to have you on the program. Welcome.

So you have a very important investor day happening tomorrow. You just reported your quarterly numbers.

Can you characterize where we are right now in terms of the landscape and the state of business?

JOHN CHAMBERS, CEO, CISCO SYSTEMS: Sure. From Cisco's perspective, the quarter was a solid quarter. We exceeded expectations by about $200 million in revenue, 3 cents per share on earnings per share. And our gross margins were better than people thought and/or expected. We sold good book to bill. The highlight was the U.S.

The U.S. grew seven percent year over year in terms of orders. We saw good growth in the commercial and enterprise markets. And Maria, to the point you made earlier, when you grow at about 10 percent in U.S. commercial and enterprise, while we're gaining share, it's a good indication that the economy is progressing. Perhaps not as fast as we would like to see.

Going around the world, however, we saw emerging markets weak. We saw Northern Europe recovering a little bit better perhaps than people thought. And Southern Europe starting to stabilize.

BARTIROMO: Plenty more to talk about. I want to get into the global economy and what you're expecting this year, John. but first, let's dig deeper into the factors contributing to where the economy is right now. FOX News senior correspondent Eric Shawn joins us live with those numbers - - Eric.

ERIC SHAWN, FOX NEWS SENIOR CORRESPONDENT: Good morning, Maria. Good morning, everyone.

Well, we got spoiled. After last year's S&P run-up of almost 30 percent, are we now standing on the edge of a cliff or at the base of another glorious mountain? With Thursday's drop of 1 percent or 167 points indicates uncertainty ahead. Even with that slight gain we had on Friday. So far this year the Dow Jones industrial average is down only a half percent. The S&P is up more than a point and a half.

But take a look at the Russell 2000, a key small cap index. That dipped into correction territory, then bounced back on Friday. But it still remains down over 5 percent for the year, which could be a signal of what's to come.

And then there's that troubling first quarter GDP. It fell to a measly 0.1 percent. Analysts have predicted a robust 1.2 percent growth. But you know, that polar vortex being blamed for doing a snow job on the economy.

The big news last week was Walmart, hit by that winter weather. The world's largest retailer notched its smallest quarterly sales growth in five years. And the slowdown has not just been here at home.

The long-predicted deceleration in China seems to be coming to pass. "The Wall Street Journal" blaming what it calls significant slowdowns in China for depressing global progress, pointing out that China's economy grew at the slowest pace in a year and a half.

Well, here at home the Fed predicted the economy would expand this year by up to 3 percent. The lagging start in that first quarter was certainly dragged back down by year's end.

This has some predict the possibility of a possible looming bear market ahead. So is the adage that was proved so wrong last year, sell in May and go away, applicable right now?

Well, we all have 13 days until the end of the month to find out -- Maria.

BARTIROMO: All right, Eric, thank you so much. Eric Shawn with the latest there.

I'm back now with Cisco Systems CEO John Chambers.

John, when you look at the emerging markets, which has been such a weak spot and the U.S. bumping along the bottom, what do you think it's going to take to break these markets out of this very, very tight trading range that we have been watching for a while now?

CHAMBERS: Well, Maria, as you and I have discussed in prior shows, and going back to March, we're usually a very good indicator of economies looking out two to four quarters. We saw the economic downturn in the U.S. in 2007 in the summer. And we said there's a problem with the financial institutions.

And yet it didn't show up for several quarters. And if you would look in summer of 2012, we said U.S. enterprise and commercial turned up. And if you would have bought the stock market at that time you would have done very well.

The engine of growth is clear to the U.S. economy. And the U.S. is what I think emerging markets around the world are realizing, our economy would determine how quickly we pull out of this.

And I think everyone is looking towards us. Europe is doing OK, a little bit better. As you said, the emerging markets, which we saw turn down almost a year ago. And now you are seeing the results of it in GDP growth are still at a very challenging rate with Brazil and Russia being the slowest growing within our market. China was down about 8 percent year over year. So weakness we saw there as well.

BARTIROMO: All right. So no signs that emerging markets have bottomed just yet then?

CHAMBERS: It feels like it is flattening out, Maria. Some of them are doing better than they were one or two quarters ago. Some are worse. But it's going along at a negative number.

BARTIROMO: John, we're expecting a huge deal to be announced tomorrow morning that AT&T will acquire DirecTV for $50 billion. This of course on top of the Comcast acquisition of TimeWarner Cable.

As you see telecom really consolidating around you, tell us what telecom technology and media and its conversions is going to -- how this plays out in the coming years.

Are you expecting a big impact from this DirecTV-AT&T merger?

CHAMBERS: Well, first of all, I think Randall Stevenson at AT&T does a great job of anticipating where markets are going.

Secondly, the future of an economy of a country is based on its infrastructure. It used to be roads and highways. Today it is broadband.

And this is why with chairman of the FCC, Tom Wheeler, we said this week, in a formal response to them, you have got to create an environment that encourages people to invest in this new infrastructure.

Case in point would be Israel, where they are building out the first digital nation. End-to-end structure. A lot of it Cisco equipment. But their goals were job creating, inclusion of minorities such as the Arab population, orthodox Jews, moving their cities to the south, smart cities if you will devoted to health care, education differently.

So the infrastructure of the last 15 years which, Maria, you and have I watched occur, which created a lot of jobs, can be the infrastructure which is the economic engine for this next decade as well and address those job issues that you and your colleagues talked about a couple of minutes ago on the earlier show.

BARTIROMO: John, let me move to the NSA. People are just scratching their heads, unsure of what's happening with regard to the government spying on them. There's a new Glenn Greenwald book out, basically suggesting that Cisco is helping the NSA spy on people.

Can you tell us if you've had outreach from the NSA and what people should understand about this new world where there is simply no privacy?

CHAMBERS: Well, Maria, first in this new world, there has to be privacy. Customers have to understand when they get equipment from us or from other equipment makers, they can trust that.

Let me be very specific. Cisco has not and will not have any product qualities or backdoors into our products. We do not aid people in terms of intercepting the supply chain.

The allegations in Greenwald's book did not say anything that Cisco participated at all. It said it would be an issue for all high-tech companies, which is very true.

Now our view on this is very simply. This is very important for our country to understand.

We must ensure a secure supply chain. And most of our equipment is shipped from outside the U.S. directly to our customers outside the U.S.

So you have got to know you have confidence in that supply chain. And I urge our president and I have also communicated to the White House as well as to our Senate and House to understand the importance that we must be able to, as a country, lead in this global supply chain so that our customers and the jobs created by this around the world know we're in an environment that they can trust. I think this is very important. It is one that our leaders must move on.

But again, key point takeaway, Cisco does not help any government around the world, nor do we do this with any unique capabilities.

BARTIROMO: All right, John. We'll be watching that. We have got to have you back soon to talk about tax reform. So many technology companies with so much money overseas because they're getting taxed twice in the U.S. Next time you come really look forward to getting into that subject with you.

John, good to see you. Thanks so much.

CHAMBERS: Maria, it was a pleasure. And you said it very well, tax reform can create jobs. Immigration is very important to our country's future. Dealing with those issues this year become I think paramount in terms of how our economy will go.

BARTIROMO: Absolutely, bottom line. John Chambers, we'll see you soon. CEO at Cisco.

Meanwhile the top health care official at the V.A. is now out.

Is that enough considering all the disturbing allegations of corruption and misconduct?

A member of the Senate Veterans Affairs Committee will join me next live as we look ahead on "Sunday Morning Futures."




BARTIROMO: New fallout from the Veterans Affairs scandal. V.A. Secretary Eric Shinseki testifying before a Senate committee this past week about allegations of poor treatment at his department's medical centers.

So what needs to be done to make our sure our nation's veterans get the care they need?

Joining us right now is Republican Senator Johnny Isakson, a member of the Veterans Affairs Committee.

Senator, thanks for joining us.

SEN. JOHNNY ISAKSON, R-GA.: Good morning.

BARTIROMO: How would you characterize what's happening at the V.A. right now?

ISAKSON: Deplorable. And the resignation of Dr. Petzel (ph) is a sham. He had already announced his retirement last September and the president had already sent up a replacement name to the committee for confirmation purposes.

So that action had nothing to do with the terrible, deplorable actions that have taken place at the V.A.

BARTIROMO: So what are you going to do?

Why would anyone join the military?

Why would anyone fight for our country knowing the horrible treatment they would get once they have already given their lives to this?

ISAKSON: We need decisive action from the secretary and the V.A. I understand there's an inspector general's investigation going on. But while that's going on, decisive action ought to be taken. I think the secretary ought to appoint a director of quality assurance services for the V.A. first.

Second, I think he ought to create the veterans service organizations to report to him periodically on the quality of care their individual veterans are getting.

And I think any raise or any incentive pay that goes to any Veterans Administration employee ought to be predicated on zero tolerance for errors and for cooking the books. A lot of this stuff on employment changing and things like that took place to enable them to get bonuses. They ought to be incentivized for quality service, not for their own income.

BARTIROMO: Well, Secretary Shinseki has been running this since 2009. It's all happened under his watch.

Should he still keep his job while our veterans are dying, while they're waiting to be cared for, while our veterans are watching whistleblowers come out with the fact that things are trying to be pushed under the rug?

Why not push for Shinseki's resignation?

ISAKSON: Well, first of all, the facts need to determine whether that happened or not and including whether or not there's any criminal action on the part of the V.A. Some of the accusations against V.A. employees are actually criminal in nature, lying to the federal government, for example.

We need to find out what happened in every single case. And everybody should be held accountable from the top to the bottom of the Veterans Administration.

And Secretary Shinseki needs to understand the best insurance policy for him is swift and decisive action now.

We know a lot of facts. We knew them in the Atlanta V.A.; we knew them in Ft. Collins; we knew them in Raleigh, we knew them in Phoenix. It is time to take decisive action right now for our veterans.

BARTIROMO: A former doctor at the facility in Arizona says that the delays are contributing to the deaths of 40 patients. You say we have to find out and get to the bottom of this.

But how are you going to do it? What's your plan?

ISAKSON: The plan, first of all, is what I recommendation, having a quality assurance director and a team of mystery shoppers of our V.A. hospitals. So we have veterans who are going in for the express purpose of reporting back to us at the committee if there are errors or if there's cooking of the books or if there's maneuvers and such on scheduling and things of that nature.

We need an open and transparent Veterans Administration. We need the facts to determine what happens. And we need to make sure nobody is incentivized in their compensation by virtue of them cooking the books to the disservice of our veterans.

BARTIROMO: Is this more of an issue with the people underneath Mr. Shinseki? I mean, management sort of on the operating wheel there?

Because we're finding out every day more information. We're waiting on this I.G. report. But in terms of actual leadership, there hasn't really been much material change.

ISAKSON: You know, you would think an organization that's made up of veterans who served in the active duty military would understand how to follow orders. But there has been definitely a letdown by the senior management team to the secretary and the people under him.

We don't have an accountability system or a chain of command within the Veterans Administration, veterans' medical services. And it's showing. That's why our veterans are not getting the services they should.

BARTIROMO: All right. Senator, stay with us. We want to go from to the V.A. to the IRS. New e-mails coming to light this past week, connecting the tax agency scandal directly to Washington. We have got Senator Isakson to weigh in on that as we look ahead on "Sunday Morning Futures."




BARTIROMO: Welcome back.

New documents this week reveal that the IRS' headquarters may have been more involved in the Tea Party targeting scandal than previously stated. Joining us once again, Senator Johnny Isakson.

And Senator, we have these documents this week. One key e-mail string from July 2012 confirming that IRS chief party scrutiny was directed from Washington.

You have the former director of the IRS rulings and agreements division and current manager of exempt organizations guidance -- that's Holly Paz (ph) - - asking an IRS lawyer to "let Cindy and Sharon know how we are handling Tea Party applications in the last few months."

What's going on? What do you know now that you didn't know last week?

ISAKSON: Well, we know the president was wrong when he said there wasn't a smidgen of evidence there was a problem at the IRS. And I think all of us have suspected for some time that this didn't just happen with two agents in Cincinnati. Lois Lerner didn't take the Fifth Amendment because she was innocent. She took it to protect herself. I'm glad the facts are coming out because the IRS has to be respected by the American people.

And if they're targeting people, organizations for religious purposes or philosophical purposes, it needs to be stopped and there needs to be accountability.

BARTIROMO: Well, you also have the documents showing extensive pressure on the IRS by Senator Carl Evans to shut down conservative-leaning tax exempt organizations. He's pressuring the IRS to shut down conservative-leaning tax exempt organizations.

The IRS' e-mails by Lois Lerner detailing her misleading explanations to investigators.

What more do you need to do or to find out to really get to the bottom of this and prove that the IRS is targeting people who they don't agree with?

ISAKSON: We have all the evidence that they have done it. We just have got to get the specific case. It may be we have to get the House to grant immunity to Ms. Lerner, to have her come forward and tell what she knows.

But for any member of Congress, any member to use an agency of the government for a specific targeting purpose is wrong. As vice chairman of the Ethics Committee, it's an ethical violation. You should never use a government agency to enforce any political philosophy or to individually attack any individual taxpayer.

BARTIROMO: Of course not, Senator. But we all know that. We are all just trying to figure out how it is you are going to get the information from Ms. Lerner, who is taking the Fifth and is not telling anyone any of the specifics and we're getting it piece by piece in these emails.

ISAKSON: I serve on the Finance Committee. We're into the latter stages of collecting all the e-mail data necessary to conduct our investigation into individuals at the IRS. We have a bipartisan group doing that investigation. It's my hope it will turn up conclusive evidence as to where it started, who is responsible and who needs to go.

BARTIROMO: What's the argument against not giving her immunity?

Why not just give her immunity so you can get her to admit it?

ISAKSON: I'm not a lawyer. And I don't know. And I don't understand it, quite frankly. Because I think she is the key to the puzzle.

BARTIROMO: So what's the timing on this? When are you expecting to get real information and to be able to explain what went on here?

ISAKSON: The last time I inquired as to timing on the collection of all the data for us to evaluate it at the committee is by the end of June. And it's my hope it will be that soon so we can get to the bottom of it.

BARTIROMO: So what should people out there be thinking?

They may get targeted if they have conservative views on something?

ISAKSON: Let me tell you what the president needs to think about.

If the IRS loses confidence with the American people, already he's got the American people having to report their health insurance to the IRS. And they also enforce the tax law. If the credibility of the IRS goes away, the credibility of this administration goes away. We need leadership from the top to get to the bottom of this issue.

BARTIROMO: Is it going away already, sir?

ISAKSON: No. And it will not go away. As long as I'm there. I pay my taxes every April 15th; I want to make sure everybody is paying theirs. And I want to make sure nobody is being targeted for religious, political or philosophical belief.

BARTIROMO: All right, Senator. We will be watching. We'll be watching the developments. Thanks very much for joining us, Senator Johnny Isakson.

Blowback from Western businesses, even as lawmakers press for more sanctions against Russia. Chess champion Garry Kasparov and Russian national hero, he was jailed twice by Putin even though he is a national hero. He's with me live today on resolving the Ukraine crisis as we look ahead on SUNDAY MORNING FUTURES.




SHAWN: From America's news headquarters, I'm Eric Shawn. Here are some of the other stories that are making headlines right now.

Firefighters work to contain those massive wildfires that continue to scorch Southern California. This as tens of thousands of evacuees return home.

Fire crews though not expecting much rest, though, because they are anticipating one of the worst wildfire seasons this summer ever. Already there have been about twice as many of the fires as typically seen by that state so far this year. Severe drought, hot gusting winds and record temperatures all fueling the region's vulnerability to these type of wildfires.

To Turkey, where tensions are running high following Tuesday's tragic massive coal mine explosion that killed 301 miners. Now two dozen people, including mine company executives have reportedly been detained. All part of the investigation into that overwhelming disaster.

Despite widespread protests, government and mining officials insist the explosion was not caused by their negligence.

And the doctors will be in. You can catch "Sunday Housecall" two hours from now at 12:30 Eastern right after Arthel Neville and I bring you the news at 12 noon, right here on the FOX News channel.

That's it for now. I'm Eric Shawn. Back to "Sunday Morning Futures" with Maria.


BARTIROMO: Welcome back.

Round two this weekend of European brokered peace talks in Ukraine. Even as tensions remain high between the pro-Russian separatists and the Ukrainian nationalists. Meanwhile getting businesses to go along with the sanctions both in Europe and here in the U.S. is proving not as simple as it looks on paper.

You know my next guest, Garry Kasparov, as international grand master of the game of chess. He is a Russian national hero. But even he was jailed by Vladimir Putin. Today he is also the chairman of the Human Rights Foundation. And he has become a freedom fighter.

Garry, it's an honor to have you on the program.


BARTIROMO: Thank you so much for joining us.

So Putin said last week that the only way Russia will continue selling gas to Ukraine is if Ukraine pays in advance and they pay cash. He is using gas as a leverage and as a weapon.

KASPAROV: That's -- it's not a surprise. He has been using it all the time. And Putin never recognized Ukraine as a sovereign state. He made it very, very clear in numerous speeches before and after annexation of Crimea that his plan is basically to split Ukraine and to create a belt of quasi- independent regions under Russian protectorates.

BARTIROMO: So the U.S. has put some sanctions in place. Give us your sense of Putin's thinking and Putin's Russia right now.

Are these sanctions not steep enough?

How do you think this plays out?

KASPAROV: It is less than needed but it's more than expected. And I think the U.S. is now way ahead of European allies that are very, very shy by trying to find a middle way. And the problem with the sanctions is that the sanctions might work only Putin.

And even more important, people surround Putin, they believe the sanctions are serious and sanctions will last. And unfortunately, of the things that they receive, they tell them otherwise. When you hear the German minister of foreign affairs Ms. Steinmeier saying just today we have to be cautious in applying sanctions. Don't shut down the chances for diplomatic solutions.

And the former minister of finance of Russia Alexei Kudrin (ph), saying that Russia will not be isolated. So there's no threat of isolation. So by hearing all the signals, I don't think Putin takes it seriously.

BARTIROMO: Well, this is the point. And why would Europe want to go deep in terms of sanctions? Why would they ever do anything significant against Putin when, in fact, 35 percent of their gas is coming from Putin, from Russia?

KASPAROV: Yes. That's exactly the problem.

Because we think that Europe is dealing with an aged kind of dictator. And he is not shy to use gas or every other element of economy or foreign policy to blackmail his neighbors. He is now destroying the world that we used to live after World War II. He already took away part of Ukraine. And he is planning to move in further; he is threatening Moldova. And eventually he will challenge NATO in the Baltics.

If he is not stopped now, the price for preventing the massive conflict in Europe will go up. It is like a cancer. You have to do surgery at the early stage; otherwise, the territory you have to cut will grow.

BARTIROMO: So what do you think should be done right now?

When you look at the foreign policy of America, I mean, we had John Boehner on last week. He said, look, we need participation from the Europeans. We need to be --


KASPAROV: I don't think so. I think it is world leadership. OK, yes, it is nice for the Europeans to move in. But American do many things singlehandedly. And I think it's time to send a message to Putin and, again, to those who are surrounding him, his entourage that will be paying attention to what America is saying.

And most importantly, what America is doing. And also I think the Europeans' meddling position now is also somehow is a result of America not showing leadership, actually leading from behind. That's not what Europe has been expected.

So it is time to restore the credibility of the White House. If it's restored, I think even Europe will change.

BARTIROMO: Do you think we will be able to do that?

KASPAROV: I don't think that we have a choice. It seems to me that the administration's gradually recognizing the fact that if Putin is not stopped in Ukraine, eventually the challenge -- he might challenge NATO. And if something happens similar to Ukraine in crisis happens in Estonia or Latvia, then by NATO, by naming the chapter, America will have to send soldiers.

BARTIROMO: What's your sense of the fact that Putin has 80 percent approval rating?

Is this true? Lay it out for us --


KASPAROV: -- I'm sure Adolf Hitler had a 99 percent approval rating in 1939. But also I think talking about approval ratings and about pollings in the countries like Russia is really not fair. But when you make telephone calls to find out what people think, you have to understand that in a country like Russia today, there's a genetic fear.

If you receive a phone call, anonymous phone call, asking what do you think about Mr. Putin, I'm surprised that 20 percent of people saying we don't like what he is doing. Because polling, it's an institution. They are very fine instruments for the democratic society. Applying them for a dictatorship like Russia could give you a totally distorted picture.

BARTIROMO: What's your take on Putin and what he wants right now?

KASPAROV: I don't think that he has a clear agenda. So I don't think he knows what he wants to stop in Eastern Ukraine, Southern Ukraine or to go further. But I do not believe he has any choice but to create problems because nationalism has become his legend, his mythology. It's his only legitimacy. If he stops doing what he's doing now, the call from Russian people will be to remove him because there's nothing else he can offer.

So unfortunately Putin already has burned all the bridges. And our best chance is actually to cut part of his inner circle from him by convincing them that speaking to Putin might have a very high price for them.

BARTIROMO: The St. Petersburg Economic Forum is next week and next weekend. And a number of Americans have been asked not to go.

Does it matter?

I mean, this is going to be --


KASPAROV: It does matter. It does matter. But again, it's not enough. Because again, when Putin hears -- say Mr. Dudley (ph), the head BP, saying that our relationship with Russia is rock solid. Or Exxon is restoring negotiations about how the oil project, that's for him is a clear message that essentials will not last.

What is to be done is to make sure that this project will not go anywhere. The moment Putin and again, people behind him recognize that sanctions will last. You can see the dramatic change in their behavior.

BARTIROMO: What have you been doing? You have used your chess foundation to travel the world, to create and help the peacemaking process.

KASPAROV: Oh, yes, I will be promoting chess for education because I believe that's a perfect tool to enhance the critical thinking of kids, especially in the developing countries. And now I am just doing something beyond that. I'm running for the president of the International Chess Federation, which is -- surprise, surprise -- controlled by another Russian for 19 years we have an incumbent who has been ruling this organization and basically turned it into the Kremlin foreign policy hand. It's 176 countries voting; one country, one vote. And I'm going around because I believe there is a chance that it should be moved away from the highly politicized entity under Kremlin control into the sort of new global organization, not vertical but more horizontal, giant social network that will serve people and especially kids in the schools.

BARTIROMO: Garry, we will be watching your efforts. Thanks so much.

KASPAROV: Thank you very much.

BARTIROMO: Good to talk with you.

Garry Kasparov joining us.

Now let's get a look at what's coming up top of the hour on "MediaBuzz" and Howard Kurtz.

Howie, what have you got going?

HOWARD KURTZ, FOX NEWS HOST: Hi, Maria. I have got new details about what is becoming a civil war at The New York Times after the firing of Jill Abramson. The paper's first female editor, Arthur Salzburg (ph), the publisher, putting out an extraordinary statement yesterday attacking her personally and her management style, saying she publicly mistreated colleagues. All because, as you know, of this -- these allegations made by Abramson that she was paid less than some of her male predecessors at the paper.

That unequal pay issue really seems to have resonated, as you know, it comes up a lot in the corporate world.

BARTIROMO: It absolutely does. And this is the story that a lot of people in the media are focused on.

You're also giving a very nice tribute to Barbara Walters.

KURTZ: Yes, what an extraordinary career over more than five decades. We will look at what she has done. And also Karl Rove's controversial remarks, shall we say, about Hillary Clinton's health. So we've got a full plate coming up at "MediaBuzz."

BARTIROMO: Howie, we'll see you in about 20 minutes. Thank you so much.

Tomorrow, a massive $50 billion deal is expected to be announced with AT&T acquiring DirecTV. Our panel's take on how this could impact all of us and the economy as we look ahead on SUNDAY MORNING FUTURES.




BARTIROMO: Welcome back. It is a mammoth deal that could create a new television giant. The boards of AT&T and DirecTV are meeting today to discuss a merger to be announced tomorrow. A deal could be announced at any moment. It is expected to be a $50 billion deal.

How might that impact all of us and the slow economy?

Joining me right now to talk about that is Ken Rogoff. He is former IMF chief economist and an economics professor at Harvard.

Judith Miller is a Pulitzer Prize winning reporter and author and adjunct fellow at The Manhattan Institute for Policy Research.

And Jason Trennert is chief investment strategist with Strategas Research.

Good to see you all. Thank you so much for joining us.

Big deal in telecom, $50 billion on the heels of the potential closing of a Comcast acquisition of TimeWarner Cable. Lots of M&A, Jason. Is this going to have a big impact do you think?

JASON TRENNERT, CHIEF INVESTMENT STRATEGIST, STRATEGAS: I do. I think it is part and parcel of the fact that you have seen this growth of activist investors. I think lot of corporate CEO tenures come down. And there's almost a free market way in which these guys are forcing companies to use the cash or give it back to the shareholders.

So last year, Morgan was up a lot. You didn't see a lot of M&A. Now you're seeing a lot of M&A come back in 2014.

But I think this is going to be with us. This is in the early innings of this process.

BARTIROMO: And Ken, it's almost as if in a slow growth economy, companies are looking for whatever ways possible to actually grow faster.

How would you characterize the state of business and the economy today?

KEN ROGOFF, FORMER IMF CHIEF ECONOMIST: Well, I think the U.S. economy is definitely stabilizing and healing. Of course interest rates are really slow, which helps fuel things like this.

I have to say I'm a little worried about this stuff, of the concentration of power, net neutrality. Will small businesses be able to access the 'Net at the same price as others?

So some of this spooks me a little bit. But maybe new technologies will come in and break whatever monopoly they might be developing.

BARTIROMO: Well, your concern is widely felt actually in a number of corners. So because of that, because of this dominance that Comcast- TimeWarner Cable may have, now this AT&T-DirecTV, is there a sense that maybe some of these deals will be stopped, they won't be able to go through?

ROGOFF: I have no idea. But there's clearly going to be some very heavy infighting over these things. These are companies not exactly on the verge of bankruptcy. But they are trying to generate new competition mechanisms.

BARTIROMO: I wonder, you know, looking at all of the global events out there, what kind of a risk any of you would put on the fact that, you know, we could see sanctions deepen from the U.S. against Russia. Russia retaliates, Putin say, well, we're going to do this on oil and gas. Oil prices spike. And that's a disruption for the global economy.

What's the risk of that actually taking place?

ROGOFF: I have to say when we are talking about geopolitical risks being the big thing going on, that's usually a sign that the underlying economy has gotten calmer. Because there are always geopolitical risks.

I am very concerned about what's going on in Russia and the Ukraine for sure. But I think the fact that these have risen to the surface is something of a sign that some other risks like Europe falling apart have receded.


JUDITH MILLER, AUTHOR AND JOURNALIST: I think deals like this really raise the kind of questions that Senator Elizabeth Warren has been asking about. Concentration, overconcentration.

What about the customers? What about the prices we're paying for access to these now necessities? These are not luxuries anymore. And I don't think those questions are being raised enough on Capitol Hill. And it gives a big opening to Democrats who want to raise them.

BARTIROMO: Jason, for a long time, I think all year, you have to believe that the stock market is telling you there are no global risks our there. It's basically near all time highs. Nothing is priced in with the exception of a pretty good selloff on Friday. Something important happened on Friday, though. The yield on the 10-year hit 2.48 percent.

What is the bond market telling us?

TRENNERT: Well, this is the question -- I travel probably about 85-90 days a year to talk to institutional investors. And this is a question that's come up really the last three weeks, saying what does my market see that the stock market is not seeing?

The one thing that is not being talked about actually that could be a reason is simply supply and demand. The deficit this year, believe it or not, will be something like $400 billion for this fiscal year. The Fed was purchasing the equivalent of, at the peak, $540 billion of Treasury securities last year.

So it sounds crazy, given our spending the last couple of years. There may be a sense in which you're running out of Treasuries. And maybe yields -- I'm not so sure it's -- I guess what I'm getting at is I'm not so sure it's an indication of slow economic growth as much as the fact that you are running out of high-quality assets.

BARTIROMO: Ken, do you agree with that?

ROGOFF: I don't know what's going on. It's a mystery why the global interest rates are so low at the long levels because I think the global economy is healing.

BARTIROMO: All right.

We will take a short break. Growing scandals in Washington from the V.A. to the IRS.

And are Western businesses hamstringing efforts to sanction Russia? Our panel will weigh in on those topics as we look ahead on "Sunday Mornings Futures."




BARTIROMO: Welcome back. We're back with my panel, Ken Rogoff, Judith Miller, Jason Trennert.

Ken, let's talk about what just happened in India, Modi winning in a sweep.

What kind of an impact is that having, do you think, or will it have in all of the other elections going on between emerging markets in Europe?

ROGOFF: Well, India is a huge deal because they had been growing faster and then it had been grinding to a halt. The Congress Party who'd been mostly in power since India gained independence had become very corrupt, populist; India was moving backwards. And this was a real rebellion against that. He's a very, very controversial character.

He's -- some people view him as maybe being in the authoritarian mold that we've seen in Singapore and other Asian countries. So that's a big deal.

There are other elections going on a little later in Europe, the parliamentary elections.

On the one hand, you say, well, what does the European parliament do? It matters because it's really kind of a test of strength of some of the different parties across Europe and it will have an impact on who controls what in the parliaments there.

BARTIROMO: How does the U.S. get impacted?

ROGOFF: In the short run, destabilization in Europe, for example, a populist movement in Europe is not what we need, a stable Europe has helped us a lot. We're not looking for instability there.

BARTIROMO: Do you worry about instability, Jason, on the heels of valuations that have been stretched in the U.S., looking at oil prices where they are, yields where they are, rock bottom levels?

TRENNERT: I think what Dr. Rogoff's comment, I think the populist movement, Nigel Faraj (ph), UKIP, is somewhat in this new book by Piketty capital, I think it's giving you some indication that there are real concerns about income inequality, so to that extent as a free market person, I always get worried when a group of experts actually wants to fix things by fiat. So in that regard, it does worry me longer term.


MILLER: I think these elections are really a big deal. Modi in India is not only the rejection of dynastic politics, hello, George Bush; hello, Hillary Clinton. It is the elevation of a man who started life as a tea server. It gives hope to all of India that one day they, too, can grow up to be the head of the country. It's awesome.


Judy, IRS and V.A., back to America for a moment, what are your thoughts on where we are in these processes?

It feels like everyone recognizes the issues but we get to a point and we can't really do anything about it.

MILLER: We have such systemic dysfunction, that when Shinseki says, the head of V.A., I'm mad as hell, but he gives every appearance of being willing to take it some more. I mean, his big deal is to fire someone who was already on his way out who announced he was going to resign, sending Ron Nabors, the White House decision to send him over, to help is not going to clear up systemic problems. I want Shinseki, a decorated, two-time war hero, to look alive and tell us that he's dealing with these problems.

BARTIROMO: IRS, real quick?

MILLER: IRS, come on, there was not a smidgen of evidence that the White House was involved? This is more than a smidgen. This is a smoking email.

BARTIROMO: All right. We will take a short break.

When we come right back, the one thing to watch for in the week ahead or the weeks ahead on SUNDAY MORNING FUTURES.




BARTIROMO: And we're back with our panel.

What is the one thing to watch for the week ahead, Ken Rogoff?

ROGOFF: Well, I'm definitely going to watch Chair Janet Yellen addressing the New York University graduates at Yankee Stadium. And it will be a relief to see that someone can be a commencement speaker without being boycotted and having to withdraw.

BARTIROMO: Wow, you're right. I don't think there's been any boycotts about that.

Judy, your one thing?

MILLER: Russia -- Putin goes to China and he has a big party called the economic summit. Let's see who shows up.

BARTIROMO: Yes. He's going to meet with the head of China.


MILLER: He's trying to diminish the historic tensions between the brotherly formerly socialist Arab republic.

BARTIROMO: I guess so.

Jason, your one thing? A poppy?

TRENNERT: My one big thing is the poppy. We're trying to bring it back. The poppy was very popular for Memorial Day. It's still very popular obvious in the U.K. and Canada and a lot of British protectorates. It used to be very important here in U.S., until it became a day off. And now we're trying to bring it back.

BARTIROMO: For the veterans ahead of Memorial Day.

Thank you so much, Jason Trennert, Judy Miller, Ken Rogoff.

My one thing, I'm watching the Wells Fargo investor meeting next week, see what comes out of that. That could be a market mover. That's "Sunday Morning Futures" for today. I'm Maria Bartiromo, stay with Fox. "MediaBuzz" with Howard Kurtz is next.

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