This is a rush transcript from "Sunday Morning Futures," October 19, 2014. This copy may not be in its final form and may be updated.
MARIA BARTIROMO, HOST (voice-over): The midterm elections entering the homestretch. Hi, everyone. Good morning. I'm Maria Bartiromo. This is "Sunday Morning Futures."
The stage is set for drama with nearly a dozen Senate races still neck and neck.
Can Republicans pull through with a victory?
Congressman and former vice presidential candidate Paul Ryan joins me in a moment.
Speaking of drama, Wall Street bracing for another wild week. Meanwhile, there are plenty of other economic factors to consider.
Is our economy on the comeback or not? Former Treasury Secretary Larry Summers will be with me shortly.
Then 13 airstrikes in Syria yesterday alone, 10 in Iraq.
Sound like a lot? How about when you consider our military conducted hundreds of airstrikes a day during the two Iraq Wars.
Are we really out to degrade and destroy the enemy this time?
We will ask a retired Navy fighter pilot as we look ahead on "Sunday Morning Futures."
BARTIROMO: Good morning. A turbulent stock market and the war against ISIS, Ebola anxiety, just a few of the issues weighing on the voters' minds as we head into the last couple of weeks before Election Day.
This as the race for which party will control the Senate could not get any tighter.
Paul Ryan is the congressman from Wisconsin and chairman of the House Budget Committee.
Congressman, good to have you on the program. Welcome.
REP. PAUL RYAN, R-WIS.: Good morning, Maria. Nice to be back with you.
BARTIROMO: Good to see you. Congressman, I would like to get into three things with you: the midterms, the government's response to Ebola and ISIS and then of course talk about the economy and budget issues. So let's start with the midterms.
How confident are you that the GOP takes the Senate?
RYAN: I feel pretty good about it actually. I've been around the country. We have fantastic candidates, Joni Ernst in Iowa, Thom Tillis in North Carolina, Cory Gardner, Colorado. I was just with Pat Roberts on Friday in Kansas. I think all of our candidates are doing very well. I think we're going to prevail.
The thing is the Democrats have a lot more money. They're running extremely negative ads against our candidates to keep the races close. But at the end of the day, because people are sick and tired of the United States Senate that's doing nothing, that's sitting on 381 bills the House passed and sent to the Senate that are going nowhere because of the Senate, I think we'll prevail and I feel pretty confident that we'll get the Senate.
BARTIROMO: I want to ask you about the priorities.
If, in fact, GOP does take the Senate, what will be the main priorities in terms of policy changes?
So stay with us on that, Congressman. A lot to talk about with you this morning, Congressman Ryan.
But first, control of the Senate is hanging in the balance for these midterms.
What's the outlook for Election Night? Fox News' senior correspondent Eric Shawn has been doing the work on this.
Good morning to you, Eric.
ERIC SHAWN, FOX NEWS SENIOR CORRESPONDENT: And good morning, Maria.
And good morning, everyone.
You know, Election Night could turn into election weeks. Take a slew of dead heat Senate races add a couple of unusual state election laws and you could not end up not knowing which party controls the Senate until after Congress is already seated next year.
Remember this? The chads, the counting, the recount in Florida. It took 60 days before George Bush was certified as the winner over Al Gore in the 2000 presidential race. Now we could face a rerun of sorts in some close Senate contests.
Republicans are predicted to pick up enough seats -- at least six -- to hand them the majority. But 10 are considered tossups with two now heading to runoffs after Election Day according to the most recent polls.
And in Louisiana, the close race between Democratic Senator Mary Landrieu and her Republican challenger Congressman Bill Cassidy may not be decided until December 6th. That's when the runoff is set if neither one gets at least 50 percent next month.
The most recent Real Clear Politics poll average predicts that will happen. Landrieu is just over 38 percent, Cassidy above 35 percent. You know that guarantees practically that the contest won't be decided until three weeks before Christmas.
Take a look at Georgia. Those voters could be shaking off their New Year's hangovers in the voting booth. Their runoff is January 6th. Democrat Michelle Nunn, daughter of legendary Senator Sam Nunn, is neck and neck with Republican business man David Perdue. The latest Real Clear Politics average puts Perdue ahead by just over half a point.
Still, under that magic 50 percent threshold. A runoff could come three days after Congress convenes.
Other tight races include Alaska, Colorado, Kentucky, New Hampshire and North Carolina, not to mention of course independent Greg Orman tied with that veteran Republican Senator Pat Roberts in Kansas. So it seems the only uncertainty will be uncertainty that we have and of course the only certainty, the bean soup that's been served in the Senate dining room since 1903 -- Maria.
BARTIROMO: All right, Eric. Thank you so much, Eric Shawn with the latest there.
Back now with Congressman Paul Ryan.
Congressman, what are the priorities from your standpoint if in fact we were to see the GOP take the Senate, what's first on your agenda?
RYAN: I can tell you the only thing that Harry Reid lets move through the Senate is bean soup right now. He's not letting anything pass the Senate. So it's going to be job legislation number one. We're going to do things, pass bills that help create jobs and give people certainty.
We need certainty in regulations, certainty on taxes and certainty that our fiscal house is being put back in order and there are a lot of things on the energy front we think we can do to create jobs. We'll focus on jobs number one, getting people out of this malaise economy and getting people back to work.
So we have a whole list of issues, narrowing the skills gap and getting people back to work that Reid is sitting on and if we can get the Senate, then that breaks that logjam and we can put these bills on the president's desk. We'll give the president to chance to actually make a decision on something that Harry Reid has prevented him from doing for some time now.
BARTIROMO: Practically speaking, what's the low-hanging fruit in terms of job creation in your view?
RYAN: A list of energy bills that would pass that we have passed in the House, Keystone Pipeline, regulatory certainty, opening up our energy resources, LNG gas terminals approving those so that we can sell more LNG, helping European friends get off Putin's gas and help the Japanese. A lot of those things would actually create jobs and help our manufacturing sector. Those are number one.
Number two, there's some spending bills. We have to get back to a highway trust fund that's going bankrupt. We've got a Medicare issue dealing with doctors that needs to be dealt with.
There are a lot of things that have to get done that we will do, that we've done in the House already, that we think can add some certainty to the economy, give businesses and hard-working taxpayers a little more confidence to take a risk to save, to plan, to invest, so that we can get out of this slow growth phase we're in.
BARTIROMO: We're of course at the beginning of the third quarter reporting season for corporations. So we are really getting a window into how corporate America is doing. Yet the stock market has been as volatile as it has ever been this last week because of worries over the global growth story.
How important is the international story and what do you think has changed to make investors so rattled?
RYAN: I think the absence of American leadership is the foundation of this problem. I think that we have seen America retreat in the eyes of the world. Our allies have been weakened. Our enemies have been strengthened.
I think the president proposing to decimate the Defense Department as he has with his new budget, his very exceptionally weak foreign policy, bad decisions in Iraq and Syria which helped give rise to ISIS.
These things, the lack of American leadership, and no progress on trade, these things are giving a destabilized future.
This is telling the world that America is retreating from its place and that compromises our prosperity and our security quite frankly and then you throw on top of it things like Ebola and Ukraine, Gaza, and you have a real problem on your hands and a lot of uncertainty and I think that's why you have skittish markets in part.
BARTIROMO: What's your reaction to the government's response to Ebola and in particular Friday's announcement that Ron Klain will be the new Ebola czar?
He doesn't have any healthcare experience.
RYAN: No, I know Ron Klain. He has no healthcare experience whatsoever. He was in charge of doling out stimulus money and we saw how that worked. So I'm a little puzzled by that selection. It's an inside crony type of selection.
My bigger concern is just competence of government. Here's the problem generally. When you grow the government endlessly and spread it so thin, it doesn't do anything very well.
We believe in a limited and effective government so it does what it's supposed to do well and leads to the states and people respectively to do other things.
I think we should use every reasonable precaution possible to get ahead of Ebola and I think that does include looking at things like travel restrictions, necessary quarantines so we use every possible precaution we can think of to make sure that we can contain the spread of this.
Right now there's a huge lack of confidence in the competence of our government and I think that's in large part because of the president's failed policies.
BARTIROMO: And you think voters are thinking about this as they go to the polls?
RYAN: Absolutely. Believe me, I've been crisscrossing Wisconsin all fall and traveling the country all fall, working with candidates and people are disgusted. They are disgusted they don't think the federal government has limits. Look, we have this veteran scandal. We have the IRS targeting people based on their political views.
We have incompetence across the board. We have millions of people in poverty. Tens of millions of able-bodied people not working and not looking for work and not even being counted in statistics anymore and people are fed up.
We're fed up and we want to see some of these bills to address these concerns that we've passed out of the House, that are piling up in the Senate collecting dust. We want to see them go somewhere and that's why I think people are fed up and I think we'll have the chance to do this if we get the Senate, which I think we will.
BARTIROMO: Congressman, good to have you on the program this morning. We'll be watching. We know the next 16 days is ultra-important. We'll see you soon.
RYAN: Thanks, Maria. Take care.
BARTIROMO: Thank you so much.
Congressman Paul Ryan joining us. Wall Street meanwhile bracing for another wild week this upcoming week.
Former Treasury Secretary Summers is on deck next with how this impacts your bottom line. And I hope you'll follow me on Twitter @MariaBartiromo, @SundayFutures. Let us know what you would like to hear from Larry Summers and stay with us as we look ahead on "Sunday Morning Futures."
BARTIROMO: Volatile: that's one way to describe the stock market recently after six consecutive down days. The market rallied on Friday, but there are other aspects of the economy that are all over the place. Unemployment rate is at a 14-year low. Oil prices have plummeted.
And also retail sales are also down as we enter the crucial fourth quarter and then in Europe, weak data out of Germany.
What do we make of all of this? Larry Summers is former U.S. Treasury secretary. He joins us now.
Larry, it's wonderful to have you on the program.
LARRY SUMMERS, FORMER SECRETARY OF THE TREASURY: Good to be with you, Maria.
BARTIROMO: So there are a lot of things happening in the U.S. that are very positive. Corporate earnings doing well. Yet, you look at Europe and you look at Asia, they seem to have slowed.
What has changed in your view, Larry, to cause such nervousness in the stock market?
SUMMERS: A lot of it is what's happening abroad. People thought Europe was out of the woods and Europe is learning the same lesson we learned in the United States in the last few years and that Japan learned a decade ago, which is, just because you stop the financial emergency doesn't mean you get adequate or satisfactory growth.
And it's now clear that there's a real risk of another recession in Europe. It's now clear that, in the industrial world as a whole, the deflationary risks exceed the inflationary risks.
It's become clear that stagnation is the challenge and there's a growing -- there's a concern in the marketplace about how rapid growth will be in the industrial world and the whole world still depends crucially on what happens in the industrial world.
That's why you saw the stock market move in the way it did and, at the same time, you saw interest rates coming down rather than going up. That's a reflection of a greater concern about deflationary forces.
You see it also in commodity prices, particularly the price of oil, that there's a concern about inadequate demand, which comes in part from a concern that policy's going to be too oriented to austerity and not oriented enough to growth.
BARTIROMO: Yes. And I was reading what you were talking about in terms of infrastructure and spending on infrastructure and how that could be a positive. I want to get to that in a moment.
But let me ask you this.
Are you worried that these concerns abroad will in fact cut into earnings?
I thought it was quite interesting last weekend when Stanley Fisher, the vice chairman of the Federal Reserve, said if the international economy deteriorates, the Federal Reserve will have to rethink how quickly it raises interest rates.
And then you had Fed official James Bullard this past week, saying the Federal Reserve is supposed to get out of quantitative easing and bond buying program, maybe we need a new bond buying program, quantitative easing number four.
SUMMERS: Look, I won't prescribe for the Fed. But I'll say this. It's a more interdependent world than ever. And obviously a set of concerns about the global economy affect the U.S. economy.
It affects the U.S. economy because U.S. companies do business abroad. It affects the U.S. economy because of our exports. It affects the U.S. economy because global risk aversion on the part of investors affects our market.
So it's something that we obviously have to be watching very carefully. And I think the important thing for people to understand is that our concerns are not that somehow inflation is going to take off.
Expected inflation as measured in markets has actually come way down in the last several months and the risks are more on the deflationary side. and we've got to be conscious of that and that's why a focus on driving growth has to be the right focus for the United States.
And ironically, as the IMF pointed out last week, a proper focus on growth, especially through infrastructure investment, will actually pay for itself in the form of lower debt burdens.
BARTIROMO: Right. So we have to be careful not to think austerity in an environment when actual spending on infrastructure could be more helpful than anything else?
SUMMERS: That's right for the United States and it's crucially right for Europe. Europe, unless it changes course, is in real danger of following the path that Japan followed from the '90s onward and letting a deflation set in. And that's a very difficult thing to get out of.
It's in real danger of having its only source of economic energy be exports, which, in turn, takes economic energy away from the rest of the world. It's in real danger of a deflationary psychology creating a psychology of protection, which means that there's no innovation and little structural change.
And so that is the most dangerous point for the global economy today. At the IMF World Bank meetings last week, when all the finance ministers came together, I think there was some growing recognition of it; but perhaps enough growing recognition to alarm the markets but not enough recognition to get European policymakers to step up their actions.
BARTIROMO: Larry, real quickly, very briefly, is China growing at 3 percent or 6 percent?
SUMMERS: Probably more like 6 percent than 3 percent right now. But I would say the risks to Chinese forecasts are more on the downside than the upside.
BARTIROMO: Larry, it's wonderful to have you on the program this morning. Thank you so much.
SUMMERS: Good to be with you.
BARTIROMO: Larry Summers.
Airstrikes aimed at stopping ISIS appear to be working, at least for now. But how long can that battle last? Can the strikes stop the terror group for good? Navy Captain Chuck Nash is with me next as we look ahead on "Sunday Morning Futures."
BARTIROMO: Welcome back. The U.S. military making some gains in the fight against ISIS. The terrorists have reportedly pulled out of the west side of Kobani following U.S. bombings this past week. But the head of the U.S. Central Command is also stressing success will not happen overnight, saying the U.S. is trying to conduct this operation with as much care as possible.
(BEGIN VIDEO CLIP)
GEN. LLOYD AUSTIN, COMMANDER, CENTCOM: I would also note that we've been very careful in how we've gone about conducting strikes because we want to avoid unnecessary collateral damage. Had we killed a lot of innocent civilians and specifically in Sunni areas, I think that it's fair to say that we would be in a much different place at this point.
(END VIDEO CLIP)
BARTIROMO: This has meant conducting a fraction of the airstrikes against ISIS as we have in our other recent wars in Iraq. Retired U.S. Navy captain and fighter pilot Chuck Nash is a FOX News analyst and joins me now.
Sir, good to have you on the program.
CAPT. CHUCK NASH (RET.), U.S. NAVY: Nice to be with you, Maria.
BARTIROMO: Can you compare the quality of these airstrikes to others and is this the right path?
NASH: Well, I think what they're doing right now is being very precise, as the general said, because they don't want to have collateral damage.
So I have full trust and confidence in every one of the young men and women who are flying these sorties. They are true professionals and they've been extremely well trained and they have the best weapons that this country can offer and their weapons systems are fully integrated with them as operators.
So there's no doubt in my mind about that; the overall strategy, where the overall strategy falls short is that there is no ground force to coalesce the enemy that would allow our men and women flying this aircraft to really pound the dense targets. So instead they stay dispersed and they move in small groups and it's very difficult to roll them up.
BARTIROMO: The general just said we would be at a different place if not for this kind of strategy, that we are being ultra-careful.
Let me ask you, is it the reason that we do not have these ground troops there following up on the airstrikes, is that the reason really that we would be in a different place in terms of more successful?
NASH: That's what I think he means. In other words, if you take a ground force and you put it up against these small, dispersed ISIS forces, they would either steamroll them or the ISIS forces would have to densify to protect themselves and then they fall subject to these airstrikes.
The other thing, Maria, is if you look at what Greg Palkot has been reporting from the Turkish side with cameras looking at Kobani over the last couple weeks, what you'll notice recently is that a lot of those bombs are going off inside the city of Kobani, which tells me there is somebody inside with the targeting equipment, talking to those folks in the air, because they're taking out buildings inside a city.
We would not under any circumstances indiscriminately drop bombs inside a city unless somebody had eyes on the target and was coordinating with those people in the air.
BARTIROMO: I see.
Do you think we'll see ground forces at some point to enter this?
NASH: I think we will see U.S. advisory teams out in the field with ground forces but I really don't see American straight-leg infantry battalions and divisions being sent over as we did in Iraq and as we did in Afghanistan. No, I don't see that.
BARTIROMO: So from your standpoint, how does this end?
NASH: This ends with the Sunni reaching a political settlement with the Shia inside of Iraq, where the Shia stop persecuting them and allow them a true seat in the government. At that point, they will overthrow the ISIS.
The ISIS is a small percentage of the overall. You can't have 30,000 manned division of Iraqi army run from 10,000 -- excuse me, 3,000 ISIS people. They were in the middle of Sunni land. This is a Sunni tribal rebellion. They are using the ISIS fighters as the bloody tip of their spear to inject fear into their enemies.
Once they reach that political conclusion in Baghdad, if they can get there, then what will happen is they will throw them out, overthrow them, just as the ISIS folks, just as they did their predecessors, Al Qaeda in Iraq.
BARTIROMO: Captain, it's good to have you on the program. Thank you so much for your insights this morning.
NASH: My pleasure, Maria.
BARTIROMO: Captain Chuck Nash joining us, U.S. Navy, retired, Fox News military analyst.
Early voting begins tomorrow in Texas. But a new voter I.D. law means changes at the ballot box.
Will it prevent voter fraud or stop thousands of Texas citizens from voting? As we look ahead on "Sunday Morning Futures" with our panel.
SHAWN: From America's news headquarters, I'm Eric Shawn. Here are some of the other stories that are making headlines at this hour.
Right now authorities in Virginia are conducting forensic tests to confirm if those human remains found in a rural area are indeed those of missing University of Virginia sophomore student Hannah Graham.
Police have told Graham's parents about the discovery. Graham disappeared more than a month ago. Police believe this man, Jesse Leroy Matthew Jr. was the last person seen with her in those surveillance tapes, Matthew now sitting in jail, charged with abduction, with intent to defile.
Hurricane Ana now passing dangerously close to Hawaii. A hurricane watch has been issued for parts of the remote northwestern islands. The National Weather Service says conditions could get worse by sometime tomorrow. The center of that storm is now 100 miles south of the big island.
I'll be back with Arthel Neville at noon Eastern for half an hour of news then the doctors as always will be in, Dr. Siegel and Samadi join us for "Sunday Housecall" at 12:30 Eastern and they'll have the very latest on Ebola.
I'm Eric Shawn. Now back to "Sunday Morning Futures" and Maria.
BARTIROMO: Thanks, Eric.
Early voting gets under way tomorrow in Texas and voters without a state issued I.D. won't able to cast a ballot. The Supreme Court ruling late Friday that Texas can enforce its strict voter I.D. law. Opponents of the law say it could prevent some 600,000 registered Texas citizens from actually voting.
The court struck down a new voter I.D. law in Wisconsin but allowed I.D. restrictions to go forward in Ohio and North Carolina.
We bring in our panel now. Ed Rollins is a former principal White House adviser to President Reagan, a long-time strategist to business and political leaders and a FOX News political analyst.
Judith Miller, a Pulitzer Prize winning author and adjunct fellow at The Manhattan Institute for Policy Research, and a Fox News contributor and Keith McCullough, the CEO of Hedgeye Risk Management Research Firm.
Good to see you, everybody. Thank you so much for joining us.
All right, so the voter I.D. law.
What did you make of that? What's the implications?
ED ROLLINS, POLITICAL CAMPAIGN STRATEGIST: Well, I don't think there is big implications. The bottom line here is people should have an I.D. when they go to vote. They have to have an I.D. to get in a building. It's just an absurd type process. People who are going to vote are going to vote. And I think those who don't have I.D.s, and if they're potential voters, Democrats will make sure they have I.D.s.
BARTIROMO: Does it stop others from voting?
ROLLINS: I don't think so. There's no evidence of that. So my sense is it's more of a security issue and it needs to be there.
BARTIROMO: What's your sense of midterms right here?
Judy, any thoughts on voter I.D. on midterms?
JUDITH MILLER, AUTHOR AND JOURNALIST: Well, I really think it's too close to call at this point. I know the Republicans are very enthusiastic. I'm just amazed that given the unpopularity of Obama and his policies why this is even so close, but it is. That says a lot I think about the weakness of the Republican Party and its message.
What you heard on your show, Paul Ryan's concentration on jobs, on growth, that's what I think people want to hear and at a lot of these races they're not hearing it.
BARTIROMO: And in fact, the lack of growth has caused a whole new conversation within the Federal Reserve.
Something that you saw coming, Keith.
KEITH MCCULLOUGH, CEO HEDGEEYE RISK MANAGEMENT: Yes. Well, if you look at what could happen in the general election next year, I think the economy and the stock market will be much bigger topics than what they are right now. The Democrats have had a very big luxury in just saying, hey, look, unemployment is low. Stock market has never gone down.
There's a lot of things that are starting to come unglued as of the last couple weeks, particularly the bond market and the stock market. So if they're right, and they tend to be, then the Republicans have something that they can play with, I guess, a much bigger voice than what they currently have.
ROLLINS: The problem is you have got $5 billion being spent on negative advertising; 95 percent of all advertising is negative. And it's really in these focused states. And so it's hard to break through with any message. The message really is, if you like Obama, vote Democrat. Keep the incumbents there. If you don't like Obama, basically go vote for change.
BARTIROMO: Well, Obama said -- basically set that tone when he said I'm not on the ballot but my policies are on the ballot.
ROLLINS: People don't like his policies.
MILLER: But you know, the negative tone really contributes to the distrust and mistrust the people have of government and how we're all going to come together miraculously after this midterm and pass those 381 bills that Paul Ryan was talking about. No, we're not, if we continue to be as divided. And these ads are part of the problem.
BARTIROMO: I thought it was interesting to hear Janet Yellen talk about income inequality, basically saying, look, this is very concerning. It undermines economic growth. And yet the Federal Reserve policies are probably the lead item that is widening income inequality.
MCCULLOUGH: And this is a huge and wide open topic for any political candidate. I still can't for the life of me understand why nobody has got on that bone and eaten it really loudly. You have basically a policy to inflate. American cost of living to all-time highs. That created at least two-thirds of the country feeling like they're in a recession. You have negative wage growth. Even the Fed would accept that.
Actually, they have papers to suggest that this policy to inflate did nothing but widen the inequality gap, so for her to get out there and start whining about it apologetically, to me, again, I would make a huge example of that and I would say, Obama, that's yours and/or Hillary. If that's your. And then you can own it, too, because I think people are generally mistrusting of the Federal Reserve.
BARTIROMO: Absolutely. And mistrusting of institutions, largely speaking.
So what do you think will be the priorities? Let's say hypothetically speaking the GOP takes the Senate.
What does the GOP come out swinging with?
Is it tax reform? Is in income inequality?
ROLLINS: I think it's income. The tax reform is a long, complicated issue.
BARTIROMO: How about energy policies?
ROLLINS: Energy policy definitely is something we'll move forward on quickly, I would think, and the things that Mr. Ryan talked about I think he'll push very quickly.
BARTIROMO: All right. More on this topic.
Let's take a look at what's coming up on "MediaBuzz" and check in with Howie Kurtz for a moment here.
Howie, what have you got 20 minutes away?
HOWARD KURTZ, HOST, "MEDIABUZZ": Hi, Maria. We'll look at the reporting on the midterm elections just as you've been discussing. We'll take a good hard look at the relentless Ebola coverage.
Is it overheated?
Is it scaring people and has it turned into a partisan beltway slugfest, finger pointing, it's the administration's fault, no, it's the Republicans fault? Kind of thing that people hate about Washington but it does seem to be on your television screens just about 23 hours a day right now.
BARTIROMO: It really is relentless on Ebola, it's true.
Howie, we will be there, we'll see you at the top of the hour. Thank you so much.
Meanwhile, airstrikes in Syria shifting from the besieged city of Kobani toward oil facilities believed to be funding ISIS fighters. We'll get into that next.
Are the U.S. and coalition forces really doing all they can to wipe out the surge?
Our panel on that as we look ahead on "Sunday Morning Futures." Back in a moment.
BARTIROMO: Welcome back. Focusing now on the fight against ISIS, we bring back our panel, Ed Rollins, Judy Miller, Keith McCullough.
How do you think the campaign against ISIS is going at this point?
ROLLINS: We're not fighting to win. We're basically fighting to keep them from winning and I think that's not a good policy. At the end of the day we're -- when 20 guys are running around in pickup trucks, we're trying to bomb them, but they're not doing that anymore. They are basically scattering and they are not losing any ground but at the end of the day we're not gaining any ground.
BARTIROMO: Is this all politics again, which is just so sad?
Do you think after the midterm elections we'll actually hear the president say, OK, boots on the ground? Is this going to be his "no new taxes"?
MILLER: Well, I think we already have boots on the ground. We have 1,600 soldiers. They are not all protecting the U.S. embassy. Clearly they are advising and providing intelligence and we'll need more of them and I suspect that we'll have that, Maria, after the midterms.
However, you have to look at what's gone on on the ground. Kobani has not fallen. And everyone predicted that it would. They stepped up their airstrikes from seven to 64 in the last two days and it's working. ISIS is fleeing that city. They only control 20 percent of the city. This was a big target for them, psychologically important, and they're losing it, just with airstrikes.
Now can they do the rest that way? No, I don't think so. But they are making progress and we have to acknowledge that.
BARTIROMO: I find it extraordinary that as ISIS approaches now some of our oil facilities, oil prices have gone down.
MCCULLOUGH: They've crashed. You've seen a 25 percent decline in the price of oil since June and you would argue that the heat of the newsiness on ISIS and everything else has actually been accelerating.
So in the face of that, I spent a lot of time with institutional investors in London this past week and people are starting to talk about the game theory associated with what do the Saudis do if they don't agree to agree that the Americans are going to be there for them?
What do they do next?
Do they starve people out of their holes really with $6t to $70 oil?
There's a lot of discussion going on out there because this is not, to your point, a natural reaction for the price of oil.
BARTIROMO: When you look at oil producing countries it's very different in terms of cost. So for the cost for Saudis, they're what? They spend pennies or dollars or something on the price of oil. And now it's selling --
MCCULLOUGH: That's the point. Yes, they're the lowest cost producer. Therefore, you know, in Qatar, some could argue that the cost production's 130. So you look at different parts of the world and they are sitting there saying, OK, we can wait longer. Now my question is who has got the edge on that? I don't know.
ROLLINS: If we go bomb the oil, which is obviously what part of the strategy is today, we'll have a big impact and we'll certainly get some other countries more interested than they are today.
BARTIROMO: With oil prices going down, that's going to change our relationships around the world. It's going to change our relationship with the Saudis and change our relationship with the Russians.
MILLER: Right. I hope the dependency on that region will start to diminish so that we can have a more independent policy that reflects our core national interest. That's why this shale gas revolution is so important.
BARTIROMO: So you think that the Saudis understand that America has this shale revolution and that we're working toward it and they say, if we push prices down, maybe the Americans will think less or will put less enthusiasm into the shale revolution.
Is that the point that you were making a moment ago?
MCCULLOUGH: Yes. I think that they are sitting there looking at the longer term picture because they can. A lot of people cannot. And that's the point. Putin cannot look at a $65 oil price and feel like he'll be enriched with petrodollars. There are a lot of different players out there who do not win with that oil price and they could run the table is what I'm saying.
MILLER: No, I think Saudi Arabia has enormous internal politics that people don't look at. They have a huge dissatisfied middle class that's very tempted by the ISIS message, part which is income equality or more income equally. There's 6,000 princes who have to be paid. They cannot sustain this for a long time.
ROLLINS: The problem is we're not going to have independent -- we talk about it all the time -- energy independence unless we do some things like the pipeline and some other decisions that have to be made. We've still got a very strong environmentalist movement that's blocking a lot of this stuff. And until we free some of that, it's just not going happen.
BARTIROMO: Well, that brings me back to the midterms. The president pushed off the Keystone decision until after the midterms.
How soon after the midterms do you think we will hear some leadership on the Keystone Pipeline?
ROLLINS: I would hope certainly before Christmas.
MILLER: I'm not sure because the environmental lobby is a very important part of the Democratic base. I'm not sure.
BARTIROMO: Well, if we were to see the Keystone up and running, that's just more of the evidence that we see that the U.S. will, in fact, become an energy exporter.
ROLLINS: Well, if he basically vetoes the bill, my sense is he's more lame duck than we think he is, even with the Senate majority on the Republican side. There's nothing -- no one is going to take him seriously.
BARTIROMO: Real quick on Ebola and the new Ebola czar, Ron Klain.
What's your thought?
ROLLINS: He's a capable guy with no experience whatsoever. He's like me. He's a political hack.
At the end of the day would you put me in charge of Ebola?
MILLER: Yes, I would.
ROLLINS: Thank you.
I think it should be a doctor or someone who has run large-scale operations like a general or someone like that who basically is used to getting charged. The chief of staff of the vice president doesn't run the government or doesn't do anything besides service the vice president.
BARTIROMO: A lot of political animals running important divisions here.
ROLLINS: Well, he'll be loyal to their team. That's the --
MILLER: You need a political animal running this one because there are many, many parts. The problem is we --
BARTIROMO: With no healthcare experience?
MILLER: We have a superb epidemiologist, Tom Frieden. He is the head of the CDC. But he's not a communicator, as we've seen in the past couple of weeks. You need someone who gets everyone on message and coordinates priorities.
What's most important?
What do we do about a flight ban?
What do we do about these important issues and communicates that message effectively to the American people so we're not scaring people to death or -- ?
ROLLINS: This is more than just communication strategy, though. We have to make some steps that this president is not willing to do.
BARTIROMO: He certainly was under tremendous fire this week at the hearing, the CDC has been for their responses.
All right. Quick break and then some big corporations reporting third quarter earnings this week. We've got a whole host: Microsoft, IBM, GM.
Will they help stabilize these crazy markets? Our panel on the U.S. economy and earnings as we look ahead on "Sunday Morning Futures."
BARTIROMO: And we're back with our panel: Ed Rollins, Judy Miller, Keith McCullough.
Guys, I want to go back to something that happened last week first to give us a sense of what's going to happen in the coming weeks. Last Wednesday we had the retail sales report for the last month come in below expectations. The market crashed as a result. It was down almost 500 points in the middle of the -- in the early going.
And then James Bullard, Federal Reserve official, the next day comes out and says maybe the Fed should think about a new bond-buying program as the Fed is coming out of its quantitative easing, he's talking about a new quantitative easing program.
What went on last week, Keith?
MCCULLOUGH: Well, this is all about proactively predictable behavior by the Federal Reserve. The minute that they see anything, it's like watching "Groundhog Day." The minute that they see anything that looks bad from an economic perspective, what are they going to go to? Money printing. This is exactly what they do.
So if you look at what happened, the bond market that day had its biggest down move in bond yields that we've seen in rate of change terms ever. It was violent. It was a quick move. Hedge funds were offsides. You had a lot of people making a lot of decisions in the moment there. But again, it was on an economic data point miss, which had been my point throughout the year.
As the economy surprises to the downside it becomes a bond market issue, stock market bubbles start to pop and then the political reaction is going to have to first come from the Fed, protect the market and then Obama is going to have to wear that, which, you know, good luck with that.
BARTIROMO: Most people say they want to see a flush out. They want to see the market sell off to make them feel like, OK, we got through it, maybe I can look for opportunities and value.
Do you think there's more to come or did we see the flush out?
MCCULLOUGH: Well, they always say that they want the flush but there's different kind of well-liked flush that you can have there.
Look, the flush, I think a lot of people just say let's get over with it, raise interest rates. Get the Federal Reserve out of the way. Get a strong dollar, rising rates, Reagan had it, Clinton had it. JFK ran on it. This works in this country.
But now what you get is the flush is actually the bad kind of flush, which is, again, it's like la toilette. You get a bad economic data point and immediately the flush has to be rescued by a central planner that people on a genuine basis on the buy side, money managers do not trust the Federal Reserve's policy to inflate works economically.
It has not worked. It worked for 5 percent to 10 percent of the people. Maybe that's --
BARTIROMO: So you think there's more selloff to come?
MCCULLOUGH: Oh, yes. I mean, we're in a bubble that's popping, to be clear. The Russell 2000 specifically.
BARTIROMO: What do you think about how this plays out going into the midterms and jobs?
ROLLINS: There's not going to be any jobs. There's not going to be anything between now and the midterms. I think the president will keep trying to talk about the good economic news. But the truth of the matter is you have another week like this, my sense it would be two more senators who'll be in trouble.
MILLER: Well, I still think that when you have Janet Yellen talking about income inequality, she's on the Obama-Paul Krugman line now, this is the problem. I think they will be focused on stimulus, stimulus, stimulus to get the economy moving. I don't see a departure.
BARTIROMO: Well, Larry Summers just talked about infrastructure.
MCCULLOUGH: That's the first thing they talk about. Summers was also talking about Japan. You know, Japan spent $6.3 trillion on roads, bridges and whatever else you could slap out there. The reality is that more and more central planning or more and more what has not worked is the definition of insanity. We're at this point where all central bankers have cut to zero. The ECB, the DOJ and the Fed.
Now the policy to inflate is just that, to never let asset prices or stocks go down. Now you have the great threat of deflation. So in other words, they go down. They don't go up. We go through this election cycle. I think it will be a huge issue for politicians to have to --
ROLLINS: Infrastructure should have been the first stimulus. I think we spent $2 billion on stimulus; infrastructure would have been a great thing. At this point, if you think you'll get through this Congress when you have got to take the Defense sequester off in order to fund this war, again, more money for infrastructure, could barely get a highway bill through last time, you're crazy. It's just not going to happen.
MILLER: They can blame the Republicans for not doing it.
BARTIROMO: Real quick, one break and then the one thing to watch for the weeks ahead on "Sunday Morning Futures." Back in a moment with our panel.
BARTIROMO: We're back with our panel.
The one big thing to watch for the upcoming week?
Ed Rollins, what's your one thing?
ROLLINS: I'm watching the new government in Iraq. We finally have got a defense minister and an interior minister and I want to see whether they can really get on track here and put an army together.
BARTIROMO: Any one thing on the midterms?
ROLLINS: I'm going to watch New Hampshire. New Hampshire goes, its nation goes. Former Senator Brown from Massachusetts is now making a great race and may be a senator from New Hampshire.
MILLER: So Ed's watching Iraq. I don't have to. I'm going to watch Ebola at home. I'm going to watch for another case. I think that if we have another case, which I hope we don't have, we'll have a flight ban; absent that I don't think so.
MCCULLOUGH: I'll be looking at the Russell 2000. The reason why we look at that is because it's a broader measure of the U.S. stock market. There's 2,000 stocks instead of 30 --
BARTIROMO: Like the Dow 30, right?
MCCULLOUGH: Exactly. And 80 percent of revenues in the Russell come from the U.S. so it's a really good way to get in touch with what's actually happening out there. And again, if it starts going down again, it's been down for six of the last seven weeks. I think it's a really negative signal for the U.S. stock market.
BARTIROMO: And that's what you said earlier, the Russell 2000 that's sort of like the middle of the market because these are small and mid-cap companies.
MCCULLOUGH: Right. It's the heart of the liquidity crisis, too. There's a lot of hedge funds that are under pressure. They own these stocks and I think that there's more pain to come.
BARTIROMO: Keith McCullough, Judy Miller, Ed Rollins, good to see all of you. Thank you so much.
That will do it for us on "Sunday Morning Futures" this morning. I'm Maria Bartiromo. I'll be back tomorrow morning on "Opening Bell," 9:00 am Eastern on the Fox Business network.
Take a look at where to find FBN on your cable network or your satellite provider. Or you can just click on "Channel Finder" at foxbusiness.com. Have a great rest of your Sunday, everybody. Thanks for being with us. "MediaBuzz" with Howie Kurtz is up next.
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