SUNDAY MORNING FUTURES

Can the economy rebound in the second half of 2014?

Former George W. Bush chief economic adviser Ed Lazear on how to get back on track

 

This is a rush transcript from "Sunday Morning Futures," July 6, 2014. This copy may not be in its final form and may be updated.

MARIA BARTIROMO, HOST: Well, the stable, secure Iraq President Obama promised we left behind is now a tinder box. Good morning, everyone. I'm Maria Bartiromo. Welcome to "Sunday Morning Futures." Could Iraq become the linchpin that sets the entire Middle East on fire and puts the U.S. in the cross-hairs? Former U.N. Ambassador John Bolton will join us live.

Thousands of illegals streaming across our border and being bused away from overwhelmed facilities to other spots in the country. What can be done to stem this growing crisis?

And will the summer blockbuster movie season help turn around the economy? The CEO of IMAX is here as we look ahead on "Sunday Morning Futures."

Well, we took the lead, but we have since sat back and allowed Iraq to simmer. And now it's coming to a boiling point. Will America be forced to step into the fray once again? And is the current leadership up to the task?

Let's ask former U.S. ambassador to the United Nations John Bolton. Good to see you. Thank you so much for joining us, sir.

JOHN BOLTON, FORMER U.S. AMBASSADOR TO THE U.N.: Glad to be with you.

BARTIROMO: So, let's talk first about really the President's handling and some of his foreign policy decisions, whether it be Syria, whether it be Iraq, a lot of debate and criticism over what has occurred so far.

BOLTON: Well, I think the theme of the President's foreign policy around the world, but particularly in the Middle East, has been the decline of American influence, the voluntary removal of American efforts to affect what's happening. And it's typified by what we see today in Iraq, Syria, as you mentioned. But really, across North Africa and the Middle East. I think we're on the verge of the entire region descending into chaos, which will obviously affect us, affect our friends like Israel and the Arab monarchies of the peninsula and potentially have an enormous impact on the world if oil and gas production are affected.

BARTIROMO: Yes. So what are the implications around the world, Ambassador? Walk us through sort of the impact of this lack of leadership or just this intentional taking a back seat to all of this.

BOLTON: Well, as America pulls back under Obama as it declines to assert its interest and protect its friends, there's really only one of two things that can happen. Either nobody steps in and in the Middle East I think you can see the consequences that the disorder grows and that competition with Iran in this case with radical Sunnis like the Islamic state of Iraq and the Levant begin to move in. And other powers, as well. Russia and others. Or there's just a simple outbreak of hostilities, which is what we see happening.

So you can see it in Ukraine, with Russia. You can see it in the South China Sea, where China's aggressive territorial claims spell real potential trouble for Japan, South Korea, Taiwan, that would see their lines of trade and communication through the South China Sea potentially in China's hands. So the withdrawal of American influence really means more disorder around the world. And I think a threat to our way of life here, ultimately. And certainly to our friends in the regions affected.

BARTIROMO: More disorder around the world at a time when, of course, things are worsening in Iraq. What's your sense of what's happening in Iraq?

BOLTON: Well, I think clearly the country is on the verge of breaking apart. Functionally it has already. You know, this is not a debate any longer between one Iraq or the three Iraqs that the Vice President Biden once talked about. We've already got two Iraqs. The Kurds are out of it. I don't see any chance they're going to voluntarily reengage in a strong central government. So the real question is whether we see continued conflict between the Shia and Sunni Arabs represented by two of the most extreme forces in the Middle East. The ayatollahs of Iran and their al- Maliki regime in Iraq and ISIS or ISIL, the radical terrorists that have taken over much of the Sunni portion of the country already.

BARTIROMO: And then, of course, there's the Russia story. It feels like things have quieted down. But I don't think anyone is writing off Putin at this point in terms of his motivations, wanting more and more of Ukraine.

BOLTON: No, not at all. Look, Putin said eight years ago that the breakup of the Soviet Union was the greatest geopolitical tragedy of the 20th century. So, he wants to re-establish Russian hegemony. He has had to come from behind after the overthrow of Ukraine and the government last year. He's not where he want to be, but he certainly has not given up. Ukraine is vital to Russian interest, and what we saw there over the past six months we could well see again and in other former republics of the Soviet Union as well.

BARTIROMO: Ambassador, stand by. We want to talk with you more about the implications of the foreign policy decisions that have been made. But first, let's take a look at how Americans are responding to the situation.

FOX News senior correspondent Eric Shawn is with us live. Eric, good morning.

ERIC SHAWN, FOX NEWS SENIOR CORRESPONDENT: Good morning, Maria. And good morning, everyone. Americans have questions about U.S. foreign policy and the direction from the White House. The negative reaction of the President's handling of foreign affairs is now showing here at home.

(BEGIN VIDEO CLIP)

PRESIDENT BARACK OBAMA: American forces will not be returning to combat in Iraq. But we will help Iraqis as they take the fight to terrorists who threaten the Iraqi people, the region and American interests, as well.

(END VIDEO CLIP)

SHAWN: President Obama defends his policy, saying he is keeping the U.S. out of another war, while maintaining our national security interest. But, you know, current polls show some Americans doubt his decisions. The latest Quinnipiac poll, 57 percent disapprove of the President's handling of foreign policy, while 37 percent approve, a drop of 20 points since 2009. And take a look at a "New York Times" CBS poll that shows a 10-point drop in just one month. Almost 60 percent. Fifty eight percent disapprove, and 36 percent approve. The President's handling of Iraq cited as the main reason for that huge decline. Others though fear Iraq could already be lost. Thanks to the U.S. withdrawal and the success of Iran strategy. Maryam Rajavi, is the leader of the Iranian opposition, the National Council of Resistance of Iran, she's based in Paris. She told us the Obama administration, in her view, has not been tough enough on Iran and she says one result of that is the current Iraqi crisis.

(BEGIN VIDEO CLIP)

MARYAM RAJAVI, THE NATIONAL COUNCIL OF RESISTANCE OF IRAN (through a translator): The Mullahs on Iran received Iraq on a silver platter and this has greatly interfered in every aspect of life in that country. Such that it is common knowledge that Maliki is an Iranian operative who advances the religious dictatorship's agenda, including the countless killings in all these years of the Sunnis and Shiites who did not support Maliki. The massacre of Christians.

(END VIDEO CLIP)

SHAWN: Mrs. Rajavi is also worried about the upcoming nuclear deal with Iran, that's expected in less than three weeks, on July 20th. She fears the administration and other the western parts will give Tehran too many concessions. You know, for Americans who are skeptical about the course of our country's foreign policy, such a prospect will not likely be reassuring at all -- Maria.

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

More now with Ambassador John Bolton in Washington today. And Ambassador, you heard the numbers, and we see that Americans are, in fact, upset over the policies. What kind of implications does that have on top of another issue, where the President is just going around Congress? The reason, you know, John Boehner is suing the President? Most notably, most recently, the detainee swap.

BOSTON: Well, I think this is a reflection of great dissatisfaction with the President's lack of leadership internationally. You know, the constitution vests the President with principle responsibility for foreign affairs, and yet this president for five and a half years has ignored the subject, in effect. So I think when people understand the implications of lack of American leadership overseas for their own daily lives, that's what you're seeing reflected in these polls. They understand, there's a direct, palpable relationship between our foreign policy in the Middle East, and energy prices. And how it relates to the President's domestic energy policies, as well. And I think people view foreign policy, frankly, as a surrogate for presidential leadership. And they see Obama as weak, feckless, inattentive, indecisive, and I think that has an impact. I think you can see it in those poll results.

BARTIROMO: Yes. And I'm glad you mentioned energy prices. Because here we are, coming off of the July 4th weekend, and we were paying all weekend, the highest prices for gasoline in six years or something. You mentioned energy policies in the U.S. Do we even have an energy policy?

BOLTON: Well, no, I think that's the problem. You know, the President seems to think that algae and wind power and solar are going to take care of our energy needs. Manifestly, they're not. There is a clear choice here. Do you want to develop North America's oil and natural gas potential? And I mean, not just the United States, but Mexico and Canada, or do you want to leave the world's global energy market dependent entirely on the volatile production out of the Middle East?

We could substantially reduce not just our own, but global dependence on Middle East oil and gas by exploiting our assets here in North America. And yet the president's war on coal, war on carbon generally has made that impossible to do. We would be in a very different position, not just in terms of our domestic economy, but strategically worldwide if we had a more sensible domestic energy policy.

BARTIROMO: Yes, makes a lot of sense. Ambassador, good to have you on the program. Thanks so much.

BOLTON: Thank you.

BARTIROMO: We'll see you soon.

Ambassador John Bolton joining us. Meanwhile, a growing crisis on our southern border. Thousands of illegals, many of them unaccompanied kids, streaming in. What can be done to stop the flow? You can follow me on twitter @MariaBartiromo and our brand new account @SundayFutures. Tell us what you think of the program, talk to us, tell us what you would like to see. Stay with us as we look ahead on "Sunday Morning Futures."

(COMMERCIAL BREAK)

BARTIROMO: Welcome back, the new and growing crisis at our southern border where thousands of unaccompanied minors are pouring into the country. It also shines the spotlight on our larger immigration issues. Judith Miller is an adjunct fellow at the Manhattan Institute for Policy Research. She is a Pulitzer Prize winning author and journalist and a Fox News contributor. And Judy, always great to talk with you. And I guess, I want to talk about two things here, I want to talk about the immigration issues certainly and the domestic problems, but also the foreign policy, we just heard from John Bolton. You just log this weekend, put out a piece on Iraq, what's your sense of what's happening there?

JUDITH MILLER, MANHATTAN INSTITUTE FOR POLICY RESEARCH: My sense is that John is correct and pointing to a real problem for President Obama, which is the Kurdish part of Iraq. Everyone thinks that the Kurds are just bargaining hard about the formation of a new government. I think, and John Bolton thinks, that the Kurds are ready to bolt Iraq. They're going to say, look, this country is now in the hands of partly an Islamic caliphate and the other part Shia, who hate us, and won't give us autonomy and our rights. And therefore, we want to cut a deal with the Turks. We want out. And they're going to hold a referendum. And I take them seriously. I think they mean what they say if they can't get assurances that the Maliki government denied them for eight years.

BARTIROMO: And this has so many implications from the U.S. economy to the U.S. relationships around the world. That's one issue. The other major issue that we're focused on is immigration.

MILLER: Right. BARTIROMO: And all of these really kids flowing into the country.

MILLER: It's just extraordinary. I mean, the President, once again, under pressure, because the people from La Raza, the group that are pro- immigration, call him the deporter in chief. Because he has supported more people than any other president. On the other hand, people who want to do something about border security, Republicans and some Democrats along that border, say, wait a minute, let's deal with this border issue of who was in our country first, and then we'll talk about how to give people a path towards legalization and normalization.

BARTIROMO: And yet last week, the President came out and basically pointed the finger at Republicans.

MILLER: Right. And he said, you know, pass the darn bill. That's presidential for I'm really upset about this. Actually, he's not really upset about it, because, Maria, he knows that in the long run, he thinks that this issue is going to play very well for the Democrats. They're going to have all of these new Hispanic potential voters whom he's going to give a path to legalization. And it's odd for the Republicans to be -- appear to be on the side of anti-immigration in an immigrant country and denying people the act -- the right to work here, if they can legalize, which is what this thing is about.

BARTIROMO: But is it working? I mean, is the perception of, you know, the GOP that they are anti-immigration and getting things done? Is the President's, you know, double-talk working?

MILLER: Well, I don't know yet. Because we're going to see in terms of the midterms. I mean, this is going to be one issue that people are watching very closely. Look at what happened to Eric Cantor. That's not a good sign, if you're a republican, that if you support the President's measures, you're going to do well. You're in trouble if you do. But I think all of these kids now at the border who took the President's 2012 program, the Dreamer's Act, which deferred deportation, gave people a chance to legalize, sent a message to Central America. Hey, send your kids here, and you're in like Flynt. I mean, this is going to be fine. And now we have this huge crisis at the border that he has to deal with. If the President can't deal with it, he's going to look weak and feckless and that's not going to help him.

BARTIROMO: So implications then for the 2014 elections, you think.

MILLER: I think there are implications. I think this is an issue that continues to dog the American presidency, American presidents and the U.S. Congress. One way or another, we must do something about border security. The issue is how do we do it comprehensively, as the Republicans want or do we do it step by step as the Democrats have been promoting? That's what the message of the Republicans are trying to separate, to try to say we're not against immigration, we're not against immigrants, we're against illegally people here who don't want to go back and don't work and who we can't control and may be criminals.

BARTIROMO: And once again, last week the President said, look, if Congress doesn't act, I'm going to go it alone.

MILLER: Right. BARTIROMO: And I'm going to do what I think is best, which is the whole reason that John Boehner is suing him. He said, so sue me.

MILLER: Right. Exactly. He's almost welcoming it. Bring it on.

BARTIROMO: Yes. He's trying to empower the base again with that kind of talk.

MILLER: Yes, but you know, once again, is the President look -- does he look strong and determined when he says that, or does he look kind of hopeless and helpless? I'm not sure how that's going to play. I think a lot depends on the messaging that both parties kind of fix on to explain this problem to the American people. Right now, all the Americans are seeing are these children at the border, overcrowded facilities that look just terrible. And a crisis that once again the President doesn't seem to be dealing with.

BARTIROMO: It really is. Really is a tough story. We'll be watching. Judy, good to talk with you. Thank you so much. Judith Miller.

This weekend is the official kickoff to the second half of the year, and good riddance to the first half. President George W. Bush's former economic adviser is on deck about how he can turn the ship around as we look ahead on "Sunday Morning Futures."

(COMMERCIAL BREAK)

BARTIROMO: Well, we kick off the second half of the year with a record-setting stock market and very strong jobs report. However, the first quarter of 2014 ended with the GDP shrinking by a whopping 2.9 percent. So how do we get the economy back on the plus side in the second half? Ed Lazear is former chief economic adviser to George W. Bush, he is now professor of Human Resources Management and economics at Stanford University. Ed, good to see you. Thanks so much for joining us.

ED LAZEAR, ECONOMIC PROFESSOR, STANFORD UNIVERSITY: Great to be with you, Maria. Nice to see you.

BARTIROMO: So isn't it interesting that at the end of last week, we got a very strong jobs number, 288,000 new jobs created for the month of June. And yet we still saw the economy contract in the first quarter. What do you make of all these numbers?

LAZEAR: Well, there's no question that the decline in the first quarter is going to plague us throughout the year. So it's going to be pretty tough to have even a year with post recovery growth somewhere around two percent, given the first quarter. But I think things are somewhat better in the labor market. But before going there, the one thing I would point out is that we shouldn't be too focused on the negative number from the first quarter. And there are two reasons for that. One, of course, is as everybody points out, the weather was a factor, and we do expect a significant bounce back this quarter. But more important, the previous quarter's GDP is not a very good predictor of what's going to happen in the next year.

The best predictor of what's happening in the next year is actually the market. And if you look at the market, the S&P 500 is up, and up quite significantly over the past six months. And that predicts about a three percent growth rate for the next four quarters. So things look reasonably good. If we get three percent, that's pretty decent. That would be our 30-year average. As you know, Maria, we haven't even been close to our 30- year average throughout the entire recovery. So unfortunately, we're actually diverging rather than converging, rather than getting back to where we need to be.

BARTIROMO: I guess, you know, I'm scratching my head trying to figure out how we get to three percent growth on the heels of 2.9 percent contraction. A lot of economists and analysts that I've spoken with continue to bet that 2014 will be a grower of three percent. Is it even mathematically positive? I mean, you have to have like a six percent quarter.

LAZEAR: Right. Yes, I don't think it's -- you know, obviously, it's mathematically possible, but I don't think it's practical to expect that we're going to have a three percent 2014. I think that when I say four quarters, I'm talking about the fourth quarters from here on out. So I would say the second half of 2014, coupled with the first half of 2015, we could see something like three percent. And that's what the market is predicting. Again, I think that is consistent with what we see in the labor market. There is some good news in the labor market, not just what we saw in the jobs numbers. Probably the best couple of numbers that we see is that the -- what I like to look at, the employment to population ratio. That's the proportion of people who have jobs relative to the total number of people in the population who could have jobs.

That number is up to 59 percent. By the way, that's way below where it should be at this point. But it's up significantly from where it was last year. So that's a good number. The second thing that I think is significant is that hires are up. And to me, that's really the most important indicator. So we have -- in any given month, we have lots and lots of people being hired. Even in the depth of the recession, we had lots of people being hired. But we're well up from where we were then. We are now at 4.7 million hires per month, the depths of the recession, we are 3.6 million per month. So that's a good trend and that is something that I think is encouraging for the future of the labor market and also for the economy in general.

BARTIROMO: Let me ask you -- yes.

LAZEAR: Again, you know, we have a long way to go. I'm sorry, go ahead. Go ahead, Maria.

BARTIROMO: Well, I mean, you know, the unemployment rate declined in the month of June. We learned at the end of last week. Do you see the unemployment rate at 6.1 percent as accurate? Or do you think it's much worse than that?

LAZEAR: No, I think it is much worse than that. I think that's the point. That's why I like to look at not the unemployment rate, but the employment rate. The employment rate takes into account the labor force participation issue, as well, and it takes it into account directly. Rather than thinking about how many people would like to work who aren't working, it's better simply to think about how many people are working and what's the population? And that's the bottom line. And unfortunately, that number is not very good.

It's still about two to three percentage points below where we should be in a normal economy. So what we're talking about there is something like five million jobs, and even at the very decent numbers that we have seen for the past three months, we're talking about three years to get back to what would be normal, even at this pace. So, you know, we still have a long way to go. You know, it's good that we're growing, but it's still very, very slow relative to what we should be seeing.

BARTIROMO: What would you like to see in the way of policies to really move the needle on this economy, second half?

LAZEAR: Well, the ones I always like are taxes, trade, less regulation and budgetary responsibility. And so let me start with taxes. I think there's a lot we can do on the tax front to get things moving again. I think we have had a tax policy that's discouraged investment. One of the things that we know is that business investment has not been what it should be. And the question is how do we get that going again. Most people who have looked at this, tax economists, most people who think about this, both at a theoretical level and also by looking at the numbers, suggest that the best way to get things going is to allow full expensing.

Full expensing essentially means that businesses can deduct their investment expenses immediately and carry them forward forever. And that gives them the proper incentives to invest. It's not a subsidy. It's actually the proper incentives to invest. The current tax code discourages investment. If we remove that impediment to investment, we can see GDP jump five percent over the long haul. That's quite significant and that would get us back on track. So, I would say that's the number one thing we ought to be focusing on right now.

BARTIROMO: Yes, and you're not alone. This is probably the biggest issue that so many people point to, tax reform. Ed, good to talk with you. Thanks so much.

LAZEAR: Thank you, Maria. Great to be with you.

BARTIROMO: We'll see you soon. Ed Lazear joining us today at Stanford. One business where people are spending money, the movies. The CEO of IMAX is with us. IMAX is having a huge summer. We'll talk with him on the big business of summer entertainment as we look ahead on SUNDAY MORNING FUTURES.

(COMMERCIAL BREAK)

LELAND VITTERT, FOX NEWS ANCHOR: Live from "America's News Headquarters," good morning. I'm Leland Vittert. Swimmers are now allowed back in the waters off Southern California's Manhattan Beach after a great white shark bit a man there yesterday. The horrifying moment is actually caught on this video. The seven-foot shark was trying to free itself from a fisherman's hook for more than 30 minutes when a long-distance swimmer swam right into the fishing line. He suffered a few bites but is expected to survive.

And in Miami, three people have been confirmed dead in a boat collision. A dozen others were injured. Police say the boaters were probably out celebrating the 4th of July holiday. One man reported that the vessel that hit him did not stop after the crash. Salvage crews later found what is believed to be the second boat. The Coast Guard is still searching for one person missing in the water.

I'm Leland Vittert. Hope you're having a great and safe July 4th weekend. Now back to "Sunday Morning Futures."

BARTIROMO: Welcome back. If this summer's movie season shapes up like last year, it will go a long way to putting our miserable economy back in the black. Last summer, in the U.S. alone, the box office draw was $4.9 billion. That was a record-breaking domestic take. My next guest is among those shouting hooray for Hollywood. He is the CEO of the IMAX Corporation. Richard Gelfond is with me.

And, Richard, good to see you. Thanks very much for joining us.

RICHARD GELFOND, CEO, IMAX: Great to be here, Maria.

BARTIROMO: IMAX is having a great summer, had a record-setting weekend with "Transformers," global IMAX box office second-best opening weekend ever after "Iron Man." How much have you taken in so far for "Transformers"?

GELFOND: It's about $37 million through today. I suspect, after the long weekend, it will be in the mid 50s. So it's doing really well.

BARTIROMO: To what do you attribute the success? Congratulations. It's great.

GELFOND: Well, I think that Paramount really integrated IMAX into the DNA of the film, so Michael Bay shot about 90 minutes of the film with the IMAX aspect ratio in mind. He used IMAX cameras, and instead of a letter box, we tend to be much more vertical. He had the premiere at an IMAX theater that we built specially for the premiere.

So they did a fantastic job of promoting it in IMAX and filming it in IMAX and including us in the whole marketing campaign.

BARTIROMO: That is terrific. And, obviously, audiences reacting. And it's not just the U.S. This is a global phenomenon. You're doing really well in places like China. The international story has really been strong, as well.

GELFOND: Well, actually, the China story in particular is, kind of, incredible here. The opening weekend in China and the opening weekend in the United States were almost identical.

BARTIROMO: Wow.

GELFOND: The U.S. did around 100 and China did somewhere in the mid 90s. And I think that's the beginning of a trend we're going to see more as the growth and screen network in China keeps growing so rapidly. I think you'll see bigger box offices come out of China.

And I was talking about, you know, what they did for IMAX, but Paramount and Michael Bay were also really successful in using Chinese culture and a Chinese angle. So the world premiere was in Hong Kong. About a third of the movie takes place in Hong Kong or mainland China. And they didn't really patronize the Chinese audience. They really got the cultural aspects right.

BARTIROMO: So -- so what are you seeing in terms of the customers today? Let's take you back to the U.S. for a second. Because, you know, I mean, for a while there, people had stopped going to the movies. I recognize, when you go to an IMAX theater, you know, it's a different experience. And that's why the price is higher. But people go because it's a full, you know -- it's like the cheapest entertainment that you can do, I guess. But how have movie-goers changed their behavior?

GELFOND: Yeah. I think you're making some good points. And, also, what's happened is, in the home, a lot of the experiences have gotten better...

BARTIROMO: That's right.

GELFOND: ... with bigger screens and gaming and shorter windows. So there are all these trends. But I think people are social animals. They still want to go out. And I think what happened in the movie business is a lot of the middle movies, sort of, disappeared. And you have now the bigger movies or the niche movies.

Because I think the middle movies, people can consume on other devices like iPads or phones or whatever it is. But, for the big blockbuster movie, there is nothing like seeing it on a big screen. And, you know, a commercial message -- there's nothing like seeing it on an IMAX screen.

BARTIROMO: Yeah.

GELFOND: So I think that -- you know, people need something really special to get off their couch, and that's where the studios have gone. And that's where the exhibitors have gone.

BARTIROMO: Yeah. I mean, the movie tickets today, they're not -- they're not so cheap. I mean, what's the price of a movie ticket at IMAX these days?

GELFOND: Well, a regular ticket is around $10 or $11 in most cities of the big cities. And an IMAX ticket is more like $15 -- by the way, not just in the U.S. but in Russia and in China, it's $15 also.

So on a global basis, you hit the nail on the head. It's still a relatively inexpensive form of entertainment. You know, you go out for three hours. You can bring your family. But it has -- you know, for people to get off the couch and do something different, they're willing to pay more.

BARTIROMO: Yeah, how does that jive with the overall economic environment that you're seeing right now?

You know, we're talking about those job numbers that we saw on Thursday, and then, of course, the GDP was a contraction in the first quarter. What are you seeing, based on your vantage point?

GELFOND: You know, I do think price is definitely an issue. So when we have the kind of must-see movie like "Transformers" or "Interstellar," the Chris Nolan movie that's coming out in November, "Hobbit," those kinds of movies, I think, people will pay up for.

But I think some of the middle-level movies, I do think there is some price resistance. And I think that's one reason that the exhibition industry in general has been flat.

Now, as far as we're concerned, because we're global and most of our box office comes internationally, we're seeing different things in different countries. But I think, in a way, the U.S. price resistance is higher than it is in places like Asia, where I think there's less entertainment options and the lower price is attracting the emerging middle class.

BARTIROMO: Yeah, I think that's a really good point. So overall, then, you know, what are you expecting in the next couple years?

You've got "Star Wars" coming out, right? Is that '15 or '16?

GELFOND: '15, Christmas '15.

BARTIROMO: That's going to be a big deal for IMAX.

GELFOND: Right. And we're doing it, and we're doing Bond and "Fast & Furious" and the next -- "Jurassic World," and then, in '16, "Avatar" is scheduled. So the slate looks really good going forward.

Of course, it's the movie business, so until it opens, you never know. But the future looks really good over the next couple of years.

BARTIROMO: And would you say it is because of some of those big blockbusters that are really resonating with folks?

I mean, whether it's a "Transformers" or a "Star Wars," all of a sudden we're back to this, you know, point in the cycle where bigger is actually better?

GELFOND: Yeah, I think it really is that way. When you look at the middle level of movies, there are some comedies that maybe break out or some movies that you didn't think would do that. But in general, the vast majority of the box office is coming from the blockbusters.

BARTIROMO: And -- and from your standpoint, from international. This is a really important point. What's most important in terms of international for you? Is it China? Is it Europe? Is it Latin America? What's the big...

GELFOND: Yes, yes, yes.

(LAUGHTER)

But in general, China is by far our biggest market outside of the United States. We have 150 theaters open. We're scheduled to have 400 open over the next couple years. We're doing over 10 percent of the box office in China, when we're involved in a film. So that's really important to us.

But the studios have discovered the same thing. Years ago, it was one- third of the box office came international and two-thirds domestic. Now it's two-thirds international. So every -- the whole business has moved to focusing on a global audience right now. That's the only way you can make money in the movie business.

BARTIROMO: You've got to go where the growth is?

GELFOND: Absolutely.

BARTIROMO: And that's the growth, outside the United States.

Richard, great having you on the program.

GELFOND: Great seeing you again, Maria. Thank you.

BARTIROMO: You, too. Congratulations on great success this summer.

And a quick programming note. Be sure to stay with the Fox News Channel. "MediaBuzz" with Howard Kurtz starts at the top of the hour. Howie is talking to former George W. Bush White House press secretary Dana Perino about how the media covered his administration versus the Obama White House. Don't miss it. That's in about 20 minutes, top of the hour.

The House Oversight chair offering the IRS chief a do-over after his testimony appears to contradict Lois Lerner's. Our panel will kick off with that. We'll look at the IRS as we look ahead on "Sunday Morning Futures." Stay with us.

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BARTIROMO: Memo from Darrell Issa to John Koskinen, "Want to try again?" This after the IRS commissioner's sworn testimony appeared to contradict Lois Lerner's at the House Oversight Committee's hearings on the agency's alleged targeting of conservative groups.

Now the committee's chairman, California congressman Darrell Issa, is offering Koskinen a chance to amend his testimony.

I want to bring in our panel here. Tony Sayegh is with me. He is former press aide to Jack Kemp, when Kemp was the GOP vice presidential nominee. He is now president of Talk Radio News Service and a Fox News contributor. Mark Luschini is Janney Montgomery Scott's chief investment strategist. And because we have kicked out of our normal studio this holiday weekend and ran out of space, joining us from the newsroom is Steve Moore, chief economist for the Heritage Foundation...

MOORE: Hi, Maria.

BARTIROMO: ... also a Wall Street Journal and Fox News contributor.

Steve, good to see you. Thank you so much for joining us.

MOORE: Pleasure.

BARTIROMO: Let me get your take, first -- I'll kick it off with you, Steve -- on this new IRS revelation and what Darrell Issa is trying to do.

Do you think Koskinen is going to bite?

MOORE: I don't know, but I will say this, that there's no good resolution for the White House of this controversy right now. I mean, when it comes to the documents that were destroyed, either there was, kind of, complete incompetence at the IRS or there was a kind of willful obstruction of justice. And neither of those outcomes is very favorable to the White House.

And put this also in the context, Maria, of the fact that the IRS plays a big, big role in the Obamacare -- the Obamacare oversight. You know, they're the ones who are supposed to verify the incomes of people, make sure that people are eligible. I think a lot of Americans are scratching their heads and saying, "Wait a minute, is this the agency that should be overlooking our health care records?"

BARTIROMO: What do you think, Tony?

SAYEGH: Well, look, the fact that the big critique of this IRS targeting is there was some sort of broad conspiracy, the fact that now you have the White House, the IRS and Treasury all saying these 43,000 e-mails miraculously disappeared, fuels a conspiracy, right, because there now is blood in the water, where even Democrats -- and this is the key point now, Maria, are joining the call for an independent prosecutor to look into this.

This is another big problem for them, and you have the American people, 76 percent in our most recent Fox poll, who say we need to get to the bottom of this, because clearly something wrong happened at the IRS. In the matter of Koskinen, he went before Darrell Issa's committee, was completely arrogant, was completely detached...

BARTIROMO: He was pretty snarky.

SAYEGH: ... and, frankly, now potentially perjured himself. Now, it's nice of the chairman to give him the prerogative to amend his testimony. But this does not help the case that nothing, not a smidgen of wrongdoing occurred here.

BARTIROMO: Right. You know, when he said, "Oh, I gave up love for Lent and never looked back," I thought...

(LAUGHTER)

... I can't believe how he's joking about this, you know, rather than saying, "Hey, American people, I'm sorry, we lost these e-mails and, you know, we'll do better next time or something." He wasn't -- he just didn't take it seriously.

SAYEGH: Exactly. There is no contrition, it seems. Everybody is, kind of, putting up this barricade, including Lois Lerner, with two pleads of the fifth.

BARTIROMO: And, Mark, I know...

MOORE: And, by the way, the administration -- why isn't the administration putting some pressure on Lois Lerner to come forward? You know, in fact, they've almost encouraged her to take the fifth amendment, which only makes the American people think there really is something to hide here.

BARTIROMO: Do you think we will get a special prosecutor? Steve?

MOORE: I do. I think that the crisis worsens with every week, and it's clear that there is a kind of -- there's a kind of -- there's a kind of cloud of suspicion over the IRS. It can't function as an agency, Maria, if people don't trust it.

BARTIROMO: Mark Luschini, you're a Wall Street guy, and I think, on Wall Street, we learned that e-mails never disappear.

(LAUGHTER)

LUSCHINI: No, they don't. And in addition to that, the trail that goes along with it, associated with the lack of trust. Again, an investment community representative like myself is trying to work hard to instill on behalf of investors. This is just one more thing that begs the question among American citizens, "Can we trust this institution," like they questioned so many others at the moment.

BARTIROMO: I think that's a great point. Because everyone is questioning institutions.

OK, so, at the end of the week last week, we have got a great jobs number, Mark, much better than people expected, 288,000 new jobs created. But just a couple -- just a week earlier, we got a GDP that contracted 2.9 percent. How do these two things jibe together, from your standpoint?

LUSCHINI: Well, actually, I think we can reconcile that. And the fact is, in the first quarter, that was a weather-induced number that I don't think is necessarily likely to be repeated in subsequent quarters. We're not likely to see polar vortexes every quarter of 2014.

(LAUGHTER)

But that said, I think what we're seeing in the labor market is encouraging. Today's number, while inarguably good, is also building on a pattern of the last six months, where now we have been averaging about 230,000 jobs a month.

So it is, I think, providing the horsepower for consumer spending, which is the important driver to economic activity. We will have a snapback in two (ph) GDP reading here coming up shortly in the next couple weeks, and we'll see some moderation after that. But I think we have enough momentum now in the economy that we won't have a repeat of Q1's GDP print.

BARTIROMO: That's going to be what the big focus is in the next couple of weeks, the next GDP report. Because people want to know if we're going to see further contraction or if we're going to actually see a real snapback.

I want to get your take on that and yours as well, Steve. But let's take a short break, because President Obama says he plans to hold the banks accountable for fixing the economy. We will ask our panel how he plans to do that. He had a radio address saying that that's one piece of unfinished business, more regulation for the banks, as we look ahead on "Sunday Morning Futures."

(COMMERCIAL BREAK)

BARTIROMO: And we are back with our panel -- Tony Sayegh, Mark Luschini, Steve Moore joining us.

You know, before we went to the break, I mentioned a regulation part of the conversation. I want to get your take on this, because the president gave a radio address this weekend and basically said the one piece of unfinished business of his administration is making sure the banking system does what it's supposed to be doing. Do you read that as more rules coming, even though 50 percent of Dodd-Frank has not been implemented yet?

MOORE: Well, it makes me very nervous. I cringed when it heard the president talk about, you know, more oversight over the banks because there is a dysfunction in the banking system right now, Marie, you know what it is, banks aren't lending money. And that's one of the reasons the economy just hasn't been growing nearly as fast as we would like.

And if the president -- he was a little bit vague about what exactly he was talking about. But if he's talking about more regulations on the banks, I think it will process further contraction of the credit market and that will actually cause more of a retreat in the economy.

BARTIROMO: If you have to hold more and more money in reserve, then of course you're not going to use that money to lend it.

SAYEGH: Correct. Also the irony is the president said profit was motivating these banks too much. I had never known that there was another motivation to capitalism and banks than profit.

Look, the pivot is classic. This is what we've seen from this president. His numbers are as low as they've been, hovering in the low 40s. People are announcing he's the worst president since World War II. This is the Obama populist, the 1 percent versus the 99 argument that he's trying to rally in this kind of moment in which he's clearly vulnerable. And the pocket around him and popularity is collapsing because of his own failures.

MOORE: And Tony, you know what's really funny about that, you know, is that it is true, you know the president is trumpeting this 1 percent versus 99 percent. But Maria, guess who is doing really well in this economy right now the 1 percent, it's the other 90 percent, not so well.

BARTIROMO: Yeah, that's true. There is this income divide that really keeps getting worse.

Mark, from an investment standpoint, you're thinking about an overall investment portfolio. We kick off the second half at record highs for the stock market, 17,000, the Dow hit on Thursday, a shortened trading day for the holiday. What's your take on more regulation, what the impact is and how to invest around it?

LUSCHINI: Well, it's disconcerting, Maria, for certainly the reasons mentioned. But in addition to that, I mean, the banks are the transition mechanism to credit in the economy which is a necessary ingredient to fuel business activity. And we know, given the fact that the institutions across the land have passed the stress tests on multiple occasions at this juncture that U.S. banks are generally in pretty good order. In fact, they're over capitalized. We have $2 trillion parked at the Federal reserve earning a quarter of 1 percent. And why do they continue to hold so much cash? Part of it is the sluggishness of the economy, but also part of it is because the rules keep getting moved on them relative to prospects for regulation and what they're going to have to necessarily stave off and keep aside to make sure they comply with too big to fail.

And as a consequence, it's worrisome from an economic standpoint.

BARTIROMO: And let's not forget Dodd-Frank has not even been implemented yet.

LUSCHINI: Correct.

BARTIROMO: We've got 50 percent of Dodd-Frank hasn't been out there. They are still sort of writing it. Overall, economy, you know, the jobs number on Thursday was very strong. Mark mentioned how GDP is going to be real critical going forward. What's your take on where we are?

SAYEGH: The patriot in me, since this is the 4th of July weekend, is happy to see a jobs number like this. I wish we had seen this three years ago, which we could have gotten a better tax and regulatory policy from this administration that was pro-growth.

The reality is, two big fissures in this plan are -- or rather in this report is, number one the underemployment is still 12 percent, that's the real unemployment number. And that's a huge difference between the 6.1 being reported.

The second part is the wage pressure. People are bringing less take home pay and costs are going up and this is hurting the real economy, the middle American economy.

BARTIROMO: I think that's a great point with wages.

OK, still to come, the one thing to watch for in the week ahead or weeks ahead on Sunday morning futures. We'll be right back.

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BARTIROMO: And we are back with our panel looking ahead. What is the one big thing to watch for this week or the weeks ahead?

What do you think, Mark Luschini?

LUSCHINI: For me, we saw a reaction in the bond market today that was welcome and that is we actually saw yields go up on good news. And so given the fact that the bond markets largely given a frontal lobotomy by the federal reserve, it's nice to see some signaling mechanism coming out of a leading indicator like the bond market.

BARTIROMO: So you want to watch the bond market?

LUSCHINI: I want to see if bond yields continue to drift higher on the back of the prospects that market participants buy into this notion that maybe we have better economic news in the offing.

BARTIROMO: Tony, what are you looking at?

SAYEGH: I'm watching a lot of geopolitical crises around this world right now, Maria, from Iraq to Syria to the South China Sea to the Ukraine and Russia. And we've seen stability across the markets this first half of the year. Any one of those things escalating to create unstability and volatility for the second half. So I'm watching what's going to tip that scale.

BARTIROMO: Steve, real quick, what are you watching?

MOORE: Will the president, Maria, move forward with this EPA regulations that could really stick a knife in the back of the coal industry, the oil industry and the gas industry. The energy industry has been propelling this economy, Maria. This is a big deal. And we'll see what the president moves forward.

BARTIROMO: We've got to jump.

Thanks everybody. That will be Morning Futures. Happy July Fourth weekend.

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