♪ ♪ charles: if you are looking for a bargain computer, you can get more than you bargained for. the nsa will fill in a spy for free. welcome, everye. i'm charles payne in for neil cavuto. the nsa is secretly intercepting computer shipments in the operation is called tailored access operations. when we contacted them for statement, this is what they said. it is a unique and national asset that is on the frontlines of enabling the nsa to defend

the nation and its allies. we won't discuss specific allegation, but it's work is centered on computer network exploitation and the support of foreign intelligence collections. sales are down for the year and this won't pump them up a further. craig smith h here on the busins implications of all of this. >> one judge ruled that it's very likely a part of this. >> a judge in new york city talkedabout this. >> but was this even covered in this? >> no. >> this is a new thing, which is to put it in vernacular and suddenly that is very

problematic. charles: they were all suspects. so it didn't matter? >> yes. the nsa is intercepting data having to do with millions of phone calls and that is the horrific james bond stuff. thereality is they have only issued 277 appoints and you could argue that it's very valuable for national security and so on. it's very interesting. because there's a secret unit and i think we need to find out about it. charles: i know you would like to find out more as well. and from the very beginning, onceyou start to receive computer information that may have been intercepted, this brings down this trust factor. >> yes. and absolutely. and we are very computer sensitive and when i read this,

if they are correct on this, our government is actually paying people to steal information in the article sas that they are not mandated by the federal government. and i think this is totally illegal. putting them into room and saying that we want you to spew the information. we want you to find the vulnerabilities and take the reports to come back and something goes wrong and if that is not illegal, i don't know what is. i could be putting a new computer system and. >> i mean, we have to assume them and the receipt of these

already corrupted computers means the entire organization, not the source, but any organization goes from not just the private sector but every facet of our lives. >> indeed it does. and let me tell you what my concern is. beyond anything else. my information is extremely sensitive and you know that. because i am in the financial world. and i spend hundreds of thousands of dollars per year to protect that information. if that gets into the wrong hands, we are talking about billions of dollars worth of the lients oney and when i saw this, i immediately called the i.t. people and said i want every firewall reviewed and this is going to cost me a bunch of money. and i want to make sure that every computer, every server, that it is not susceptible to this. and when you have a team of hackers that is mandated by the governmentto do this. it is terrifying, if you ask me.

charles: to crisis craig's point, we are uuleashing and asking our government hackers to go in there and consider everyone a target and it's really like they are indiscriminately going through everything. and this violates the recent decisions notwithstanding. it just feels like common sense. >> absolutely. conventional wisdom, we need to articulaae a reasonable suspicion or a higher up probable cause to stop intercepting people's vacation. charles: but we are already doin this and so that means that anyone who gets this breach could be at risk. >> yes, they are the ones that arbitrate everything. and here is the problem.

the secrecy that is required for them is scary. and if someone is actually breaking the law, don't i have some cuupability if thatperson goes out and steals? and what a box you are you're putting on your own government says do something.

>> as of this morning. and i have already called the industry council that e worked with back in washington dc to find out there is anything we can do legislatively. charles: they are unless and that is why we are starting these two guys. thank you guys so much. happy new year. >> thank you. the health care hits coming in 2014, it might make you sick and then some. and if you thought that this one was bad, wait until you see some other serious screw ups. it gets muchñ@ç@çpçpçpç÷ñoxm

charles: there is no one more excited about ringing in the new year than the government.

you'll be struck with a list of new taxes. everything from investment income to medical devices. and it's a little bit confusing. so run down this and if you think that obamacare could be a problem, millions are expected to further coverage off. this inclus the obamacare exchanges. there is a 2-dollar penalty or three for those in the plan as well.

and also these taxes, and have a lot of loopholes and thei taxes and insurance companies have to pay and also a medical device tax on things like pacemakers.

and these this add up to big money. >> they will probably have to find more ways than the moment hasn't lived up to expectations.

in this is part of subsidizing them for not getting what they thought they were going to get, which is young and healthy pele to subsidize it. charles: can let is happening there come over here? it's not like president obama ever mention income inequality. >> you have more income inequality than many other nations.

>> court approval for salaries above 1 million euros over the threshold. while the new york mayor elect is pushing his own taxes right here. income inequality needs to be addressed.

>> they are technically not a higher rate and it is certainly carried the interest. and their art arguments and taxes and that hurts the growth of the economy not really the 1%, but some of them have much more advantageous policies.

>> if you find that somewhat ironic. >> and their stom offederal tax policy as well. and yet we are cutting food stamps are people who really need them. >> so how does that help lower

the middle income people? how does that change their lives? >> you are talking about tis. charles:will it automatically fall out of their pockets? >> welcome your talking about something the congress saying that we have cut the bounds of the budget. >> but you know, mrs. certainly part of some studies and we have increasing income inequality. and it leads to a sluggish recovery in economic idicators.

>> w are shifting to a knowledge-based economy. charles: tang the rich is not going to change it. >> i'm not a proponent of taxing th rich. i am a proponent of letting this go. >> it has sure been the year of business blunders. we have enty more after

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charles: 2013 has been the year of business blunders. but before we do, let's take a look back at companies that have dropped the ball. customers fed up with fedex and ups after thousands of packages were late for christmas. and it was a tough year for travels. no o can forget about the carnival cruise ship try him. after stranded passengers had a ne nickname, they left this disaster behind. and from being on fire to under fire.

lu lemon and abercrombie getting their share of ticked off customers. they had a problem with their pants being see-through and the ceo said it was a problem with women and their size, not a problem with their payments. that leaves these guys are honest, right? and google and facebook and rising handing over customer information to the nsa. and not giving any information to customers. and remember that these major product faux pas occurred, one word of advice. better luck next year. and a taco bell employee making a mistake, tasting a little different this year. and it turns out some of them

were not legit. the company posting an internal memo to its workers, telling them not to eat unhealthy foods like burgers and french fries and be careful what you eat and be careful what you wish for. also, these companies are wishing for a better 2014. and we will be watching and waiting so we as we can tell you about the good and the bad and the ugly blunders that are sure to happen again next year. charles: oka, to jerrod and briefs. to these do these companies have any chance? i gue so, then it would go better in 2014. >> and i think that people will continue. my biggest issue is what has happened with blackberry. here's a company to continue to falter. it wasn't just the playbook.

but behind all t products, things are great, they were great. things were falling apart and that is an instance of not just messing up, bt changing the course of the future. >> they are customers who are very loyal. the problem is that the very small percentage of the traveling public and their problem is that as far as fedex and ups go, we have no alternative. so unless amaz has drones that take over, i think the pr will not hurt them. and they sell empowerment and they do that awful statement and their produs can be replaced,

easily replace by another had company. where is abercrombie, how many kids listen to a ceo ran? it depends company by company. >> yes, i will tell you that when the ceo rst talked about this, the stock has been down about 44% since then. and the founder smart enough after compounding the problem, to step aside. >> if i was a stockholder, i would really be writing about that. it. >> they had been serious highfliers. and, you know, those are fickle and can come back. but would you look at the stocks are now? >> you know, that is a tough one. and actually, kids can be mean and children in this country and all across the world.

social media spread that stuff pretty quickly and i will tell you that they e drifting away and i think abercrombie has a big hill to climb. i still think they have nikes, adidas, other companies missing at their heels. the lulu lemon is not done just yet. if i have to pick one or the other, i would stick with th. and i think that abercrombie has some convincing to do. and i think we have to loo elsewhere. >> in this day and age, the mea culpa. u say something and be suspended for a week. and how should these guys handle it? they come out and acknowledge that they hurt peoples feelings? or do they say that we are okay

with this and this is yclical? >> it has to be sincere. if they said if i hurt you, i'm sorry you were her, that is not an apology. and by the way, where are they? gone? and then you have to show actual things that you're going to do to fix the problem. and so it does not say we can do something else. >> and i was only going to say after that you have to buy your customers back and make it clear to them that things will be different because you care first and foremost about them. >> yes, i think that may be the thing. both sides of the question here. we appreciate it and have a happy new year. >> happy new year. charles: teachers are trying to

sue the union. why this could be a game changer

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charles: a group of california teachers trying to teach the unions a leson. they are sick of paying automatic dues that the top $1000 a year. and teachers unions spend more than $19 million on political causes. now, to the lawyers. the teachers have a case. the union is right, and by the way, we tried to get a statement from the california teachers association. in the offices were closed for winter break. charting with you on that. >> yes, i think this lawsuit is long overdue. because last i checked, we are protected by the constitution.

and why would they pay for a cause that they don't believe in? i think this lawsuit is absolutely necessary and this isn't right. and the reality is that unions are political beings. charles: the point is that that seems like it would be disproportionate.

>> everyone has a uniform and a stake in better working conditions, higher employment, better pensions. and then we start to delve into political causes and that's where we are on different page. >> unfortunately, in order to get those things, let's face it. this is not ivory tower stuff. >> if you want the better work conditions and getting something tt deal with is to try to take advantage, that is what you need

is there for. if you don't like it, don't have a part of it. >> i'm glad that you brought that up. because i know that the teachers were gen a chance to opt out. and in some states you have no choice. >> absolute write. and the fact is that it's such a free rider argumentthat the supporters so out there. because the statistics show that the majority of these unions, they go towards political colleges and paying administrative fees and we saw this last month. these funds were used to file a lawsuit and them union is trying to get a guy that molested a boy

a pension. so that is where they are going. i find it so hypocritical a lot of these eachers unions re also in support of obamacare and a lot of social welfare programs. and wher is the argument they're? does it not apply? to the point remains that if you don't pay in and other people are paying and youet the benefits, the same benefits as other people do, that is called a free ride. >> should there be a democratic system within it or with this point? shouldn't some of the constitution apply to this? >> it's ludicrous to say you're making you pay because i want to be a teacher in california and i have no choice. and you're taking the money and you are implying applying it to things i don't believe in. >> how many people don't believe in what is being pushed here. we only have 10 teachers here and i think there's a lot more

teachers here in california and these kind. and it goes to the first amendment. >> go get a job that suits your ideology. no one is saying us. but if you want to get the benefits, then you have to go along. >> i find not so problematic. you are sayingbecause it's part of this and it's okay. i mean, in this particular case, look at what unions do. and why should he be forced to pay into that just to keep your job? that's totally un-american and that includes freedom of speech or the fifth amendment.

>> i will tell you, i will say that it's pretty evident when people do have a chance to opt out of th unions. and it's pretty obvious in my mind that the writing is on the wall. so guys, thank you so much. we really appreciate it. >> thank you. >> was nancy pelosi right? >> we have to pass the bill so we can find out what is in it. >> that was more than three years ago. and we are finding out that obamacare regulates vending machines. in my next guest has choice words to dispense coming up next. ♪ what super poligrip does for me is it keeps the food out.

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charles: prered to count calories along with you quaers. a newly discovered obamacare regulation now requires promoting healthy choices in vending machines. projecting $24 million per year and the administration feels even a small amount of health care health care savings will outweigh whatever the owners take. so we decided to invite one to respond. 1600 vending machines. did you know about this? were you aware of this? >> no, i was not. we found out maybe a month ago that it may happen. >> a nice holiday gift for you. >> obamacare, a new calorie counter as well. >> what do you make of it?

on that sort of disingenuous to say that many may not know that they are more fattening than maybe carrots and celery? >> the vending machine is there for convenience. >> i am looking at myself. >> the state had something about two years ago, they regulated what you could put into the schools. and now we are taking it one step too far. they want these things to be able to explain the facts. >> sort of like the zipper in times square? >> yes. the guy decides to put this

together and all that information is skewed. we have had to reset it and spend more time. >> you have to fix it? the distributor >> yes, everything. an that is a small fortune within itself. >> be passed on? we not everything up a nickel and try to pay for equipment have you compensate for that? >> wehave to pass it on a nationally that we can afford that. and it's a squeeze. you have to make a decision. so we ultimately pay for it. >> yes. and i think what is wrg is what is going on. and the producers will be able to be part of this. look at the bottom of the ckage. charles: i can see it has 200 calories, it's got 170 milligrams of sodium and

8 grams of sugar. maybe the audience can take a look at this as well. it is pretty simple to see this here and the bottom line is that, i guess,. >> i don't get it. they reque the companies to put it out. and the little guy like me won't have to worry about this and possibly laying this off or something that would affect us. little kind of adjustment. >> you're the kind of business person that we need yur the entrepreneur. you go out there, you creat something, and it's been pretty successful. and it is a serious topic and there are some serious

implications. we're so glad you were able to come in and explain that. >> have a good day. charles: stocks have been soaring. but will 2014 be eager to forget? we have everyone here to hash it

charles: the stocks keep going up. the balance since 1996, up more than 25% this year. and gary kaltbaum has headed it in. >> i'm interested in the economy and the market. the 1996 was one of the really big years that we just weren't going to get.

>> this has probably been federall induced, i you go back three years and just look at this, you could see the market going along with it and we think that it will make ben bernanke looking untrammeled by paul volcker. in the market will continue. not at this rate. regardless of the economy and money printing is part of this. >> a lot of people have said this. watch out, there she blows.

and i think that they are still printing $75 billion per month and 0% interest rate. that is humongous. they can say that they slow down and there's no slowing down or tightening. that's a big number. charles: coming up next, carl ichan versus apple.

>> the stocks have fallen and have backed down the 550. it has already had a humongous run. >> i want to stop moving higher because they have the products coming out. >> i guess there was a time i mean, people don't use that term anymore. but you take a position and then you do what they want them to do and has noting to do with fundamentally resucturing a company. >> there our company is in there are no way for them to return

this. and it sounds like they might have this at their disposal. >> yes, google is rolling out internet services and it could be by a cellular company in order they could be competing against sam's song. you can definitely come up with ways to stay competitive. and no one would think of apple as a disadvantage. but there wre years where they were disadvantaged as well. >> again, i'm not a big fan of the buyback. stocks are down 50 or 60 or 70%. and they are showing that they have some confidencin our company. i would think that apple needs to do that.

charles: okay, it is time for the nightcap. looking out for the last trading sessionf the year. >> i will probably watch you guys all day and what i'm really watching is in three weeks, and i'll give you two examples. going is up 80%. earnings are up about 3%. so we have a vuation structure based on the fed. i want to see the earnings start to improve in three weeks. f they don't come i think eventually that this little bubble burst and i'm not sure when. >> what about the difference between the topline and bottom-line? these guys had engineered have engineered a bottom line. are you concerned about the topline? >> the same thing, it has been very anemic on the topline.

there are companies during the business, 50, 60, 70 percent commandos of the os that i looked at. unless you have earnings and sales growth eventually you will hit a wall. kennedy: what are you looking at tomorrow? >> case schiller. charles: are you serious? take a vacation. >> i want to see if the rising rates are starting to slow the appreciation on the home prices. i would like to see home prices live because iant the bubble. charles: the home of rebound miracle has been foreign money, main street. it might be good from prices level off. >> the mortgage payment goes that the whole percentage from a three to 5% -- it should go down like 10 percent, but people get breezy -- crazy and jump in at any price. would like to see fla prices.

you're seeing those. that will be the thing for a 2014. >> for watching. kennedy: citizen, the love of big government or the active being in constant stasis, never moving forward, whether it is a big fat lie being sold as the cause of something awful was in an gauzy or are winning superpower trying to o we in detention. a neurosis and look into this